ORRVILLE, Ohio, Aug. 29,
2023 /PRNewswire/ -- The J.M. Smucker Co. (NYSE: SJM)
today announced results for the first quarter ended July 31,
2023, of its 2024 fiscal year. Financial results for the first
quarter of fiscal year 2024 reflect the divestiture of certain pet
food brands on April 28, 2023. All
comparisons are to the first quarter of the prior fiscal year,
unless otherwise noted.
EXECUTIVE SUMMARY
- Net sales decreased $67.8
million, or 4 percent. Net sales excluding the divestiture
and foreign currency exchange increased 21 percent.
- Net income per diluted share was $1.79. Adjusted earnings per share was
$2.21, an increase of 32
percent.
- Cash provided by operations was $217.9
million, compared to cash used of $39.0 million in the prior year. Free cash flow
was $67.6 million, compared to
$(127.3) million in the prior
year.
- The Company updated its full-year fiscal 2024 financial
outlook.
CHIEF EXECUTIVE OFFICER REMARKS
"Our first quarter results reflect a positive start to our
fiscal year, including volume growth in every business segment,"
said Mark Smucker, Chair of the
Board, President and Chief Executive Officer. "Our ability to
continue delivering results in a dynamic environment is due to our
talented employees, focused strategy and execution, cost and
productivity savings, partnership with our customers, and consumer
demand for our leading brands."
"Our continued business momentum gives us confidence to increase
our earnings per share expectations for this fiscal year. In the
months ahead, we will continue to support our key growth platforms
of coffee, snacking, and pet, which are well-positioned to drive
sustainable growth and deliver long-term shareholder value."
FIRST QUARTER CONSOLIDATED RESULTS
|
Three Months Ended July
31,
|
|
2023
|
|
2022
|
|
% Increase
(Decrease)
|
|
(Dollars and shares in
millions, except per share data)
|
|
|
|
|
|
|
Net
sales
|
$1,805.2
|
|
$1,873.0
|
|
(4) %
|
|
|
|
|
|
|
Operating
income
|
$303.5
|
|
$179.7
|
|
69 %
|
Adjusted operating
income
|
331.7
|
|
270.0
|
|
23 %
|
|
|
|
|
|
|
Net income per
common share – assuming dilution
|
$1.79
|
|
$1.03
|
|
74 %
|
Adjusted earnings per
share – assuming dilution
|
2.21
|
|
1.67
|
|
32 %
|
|
|
|
|
|
|
Weighted-average
shares outstanding – assuming dilution
|
102.8
|
|
106.8
|
|
(4) %
|
Net Sales
Net sales decreased 4 percent, including a 9 percent
favorable impact from Jif® peanut butter
primarily due to lapping the product recall in the prior year.
Excluding noncomparable net sales in the prior year of $374.1 million from the divested pet food brands,
as well as $3.8 million of
unfavorable foreign currency exchange, net sales increased
$310.1 million, or 21 percent.
The increase in comparable net sales was driven by a 13
percentage point increase from volume/mix, primarily driven by
Jif® peanut butter, contract manufacturing sales
related to the divested pet food brands, and coffee products.
Comparable net sales growth was also supported by an 8 percentage
point increase from net price realization, primarily due to list
price increases for the U.S. Retail Pet Foods and U.S. Retail
Consumer Foods segments and for International and Away from Home
and the favorable impact of lapping customer returns and fees
related to the Jif® peanut butter product recall
in the prior year.
Operating Income
Gross profit increased $102.3
million, or 19 percent. The increase reflects a favorable
net impact of higher net price realization and increased costs and
favorable volume/mix, including the benefits from lapping the
impact of the Jif® peanut butter product recall.
Gross profit also reflects the unfavorable impact from forgone
profits related to the divested pet food brands. Operating income
increased $123.8 million, or 69
percent, primarily reflecting the increase in gross profit, a
$30.2 million decrease in selling,
distribution, and administrative ("SD&A") expenses and a
reduction in amortization expense as a result of the divested pet
food brands. These benefits were partially offset by the lapping of
the insurance recovery from the Jif® peanut
butter product recall.
Adjusted gross profit increased $57.0
million, or 10 percent. The difference between adjusted
gross profit and generally accepted accounting principles ("GAAP")
results reflects the exclusion of the change in net cumulative
unallocated derivative gains and losses. Adjusted operating income,
which further reflects the exclusion of amortization as compared to
GAAP operating income, increased $61.7
million, or 23 percent.
Interest Expense and Income Taxes
Net interest expense decreased $7.0
million, primarily due to an increase in interest income,
reflecting higher interest rates as compared to the prior year, and
a decrease in interest expense related to the Company's commercial
paper program, as there was no balance outstanding at the end of
the quarter.
The effective income tax rate was 23.0 percent, compared to 22.2
percent in the prior year. The adjusted effective income tax rate
was 23.6 percent, compared to 23.0 percent in the prior year. The
prior year effective income tax rates included a favorable deferred
tax benefit of a state income tax rate reduction.
Cash Flow and Debt
Cash provided by operating activities was $217.9 million, compared to cash used of
$39.0 million in the prior year,
primarily reflecting less cash required to fund working capital,
lapping the $70.0 million
contribution to the Company's U.S. qualified defined benefit
pension plans in the prior year, and higher net income adjusted for
noncash items in the current year. Free cash flow was $67.6 million, compared to $(127.3) million in the prior year, reflecting
the increase in cash provided by operating activities, partially
offset by a $62.0 million increase in
capital expenditures.
The Company repurchased approximately 2.4 million of its common
shares for $372.0 million in the
first quarter.
FULL-YEAR OUTLOOK
The Company updated its full-year fiscal 2024 guidance as
summarized below:
|
|
Current
|
|
Previous
|
Net sales increase vs
prior year(A)
|
|
8.5% - 9.5%
|
|
8.5% - 9.5%
|
Adjusted earnings per
share
|
|
$9.45 -
$9.85
|
|
$9.20 -
$9.60
|
Free cash flow (in
millions)
|
|
$650
|
|
$650
|
Capital expenditures
(in millions)
|
|
$550
|
|
$550
|
Adjusted effective
income tax rate
|
|
24.0 %
|
|
24.2 %
|
(A)
Comparable net sales excludes net sales in the prior year related
to the divestiture of certain pet food brands. Net sales are
expected to decrease 10.0% to 11.0% compared to the prior
year.
|
Comparable net sales are expected to increase 8.5 to 9.5 percent
compared to the prior year. This reflects favorable volume/mix from
underlying business momentum, as well as higher net pricing. Net
sales are expected to decrease 10.0 to 11.0 percent compared to the
prior year, which reflects $1.5
billion of net sales in the prior year related to the
divested pet food brands.
Adjusted earnings per share is expected to range from
$9.45 to $9.85. This range reflects the benefits of
favorable volume/mix and higher net pricing actions, partially
offset by increased SD&A expenses. The adjusted earnings per
share range also reflects a net impact of approximately
$0.60 related to stranded overhead
from the pet food divestiture, inclusive of income and
reimbursements from transition services and contract manufacturing
agreements.
This guidance assumes an adjusted gross profit margin of
approximately 37.0 percent, an adjusted effective income tax rate
of 24.0 percent, and 102.5 million common shares outstanding. Free
cash flow is expected to be approximately $650 million with capital expenditures of
$550 million.
FIRST QUARTER SEGMENT RESULTS
(Dollar amounts in the segment tables below are reported in
millions.)
U.S. Retail Coffee
|
|
Net
Sales
|
|
Segment
Profit
|
|
Segment
Profit Margin
|
FY24 Q1
Results
|
|
$625.1
|
|
$170.1
|
|
27.2 %
|
Increase (decrease) vs
prior year
|
|
5 %
|
|
17 %
|
|
280bps
|
Net sales increased $27.2 million,
or 5 percent. Volume/mix increased net sales by 4 percentage
points, primarily driven by the Folgers® and
Café Bustelo® brands. Net price realization was
neutral in the quarter.
Segment profit increased $24.2 million, primarily reflecting
decreased commodity costs and favorable volume/mix.
U.S. Retail Consumer Foods
|
|
Net
Sales
|
|
Segment
Profit
|
|
Segment
Profit Margin
|
FY24 Q1
Results
|
|
$464.0
|
|
$105.7
|
|
22.8 %
|
Increase (decrease) vs
prior year
|
|
49 %
|
|
93 %
|
|
520bps
|
Net sales increased $152.9
million, or 49 percent, including a 43 percent favorable
impact from Jif® peanut butter primarily due to
lapping the product recall in the prior year. Volume/mix increased
net sales by 28 percentage points, primarily driven by
Jif® peanut butter and Smucker's®
Uncrustables® frozen sandwiches. Higher net price
realization increased net sales by 22 percentage points, primarily
reflecting the favorable impact of lapping customer returns and
fees related to the Jif® peanut butter product
recall.
Segment profit increased $50.9
million, primarily reflecting the net favorable impact of
lapping the Jif® peanut butter product recall and
favorable volume/mix for Uncrustables® frozen
sandwiches. Excluding the impact related to Jif®
peanut butter, the net impact of increased costs and higher net
price realization was unfavorable.
U.S. Retail Pet Foods
|
|
Net
Sales
|
|
Segment
Profit
|
|
Segment
Profit Margin
|
FY24 Q1
Results
|
|
$441.0
|
|
$81.3
|
|
18.4 %
|
Increase (decrease) vs
prior year
|
|
(40) %
|
|
(32) %
|
|
190bps
|
Net sales decreased $288.0
million, or 40 percent. Excluding $367.7 million of noncomparable net sales in the
prior year related to the divested pet food brands, net sales
increased $79.7 million, or 22
percent. Volume/mix increased net sales by 12 percentage points,
primarily driven by $50.6 million of
contract manufacturing sales related to the divestiture and an
increase for the Milk-Bone® brand,
partially offset by the Pup-Peroni® brand. Higher
net price realization increased net sales by 10 percentage points,
primarily reflecting list price increases across the portfolio.
Segment profit decreased $39.0
million, primarily reflecting the noncomparable segment
profit in the prior year related to the divested pet food brands,
increased marketing investments for the remaining brands, and
increased distribution costs, partially offset by a favorable net
impact of higher net price realization and increased costs and
favorable volume/mix.
International and Away From Home
|
|
Net
Sales
|
|
Segment
Profit
|
|
Segment
Profit Margin
|
FY24 Q1
Results
|
|
$275.1
|
|
$36.4
|
|
13.2 %
|
Increase (decrease) vs
prior year
|
|
17 %
|
|
119 %
|
|
610bps
|
Net sales increased $40.1 million,
or 17 percent, including a 12 percent favorable impact from
Jif® peanut butter primarily due to lapping the
product recall in the prior year. Excluding $6.4 million of noncomparable net sales in the
prior year related to the divested pet food brands and $3.8 million of unfavorable foreign currency
exchange, net sales increased $50.3
million, or 22 percent. Volume/mix increased net sales by 14
percentage points for the combined businesses, primarily driven by
portion control and peanut butter products. Net price realization
contributed an 8 percentage point increase to net sales, primarily
driven by list price increases across the portfolio, partially
offset by increased trade spend.
Segment profit increased $19.8
million, primarily reflecting favorable volume/mix,
primarily due to the favorable impact of lapping the
Jif® peanut butter product recall in the prior
year, and a favorable net impact of higher net price realization
and increased costs.
Financial Results Discussion and Webcast
At approximately 7:00 a.m. Eastern
Time today, the Company will post to its website at
investors.jmsmucker.com a pre-recorded management discussion of its
fiscal 2024 first quarter financial results, a transcript of the
discussion, and supplemental materials. At 9:00 a.m. Eastern Time today, the Company will
webcast a live question and answer session with Mark Smucker, Chair of the Board, President and
Chief Executive Officer, and Tucker
Marshall, Chief Financial Officer. The live webcast and
replay can be accessed at investors.jmsmucker.com.
The J.M. Smucker Co. Forward-Looking Statements
This press release contains forward-looking statements, such as
projected net sales, operating results, earnings, and cash flows
that are subject to risks and uncertainties that could cause actual
results to differ materially from future results expressed or
implied by those forward-looking statements. The risks,
uncertainties, important factors, and assumptions listed and
discussed in this press release, which could cause actual results
to differ materially from those expressed, include: the effect of
the sale of certain pet food brands on the Company's ability to
retain key personnel and to maintain relationships with customers,
suppliers, and other business partners, and any impact to the value
of the Company's investment in Post common stock or the Company's
ability to dispose of some or all of such securities at favorable
market prices; disruptions or inefficiencies in the Company's
operations or supply chain, including any impact caused by product
recalls (including the Jif® peanut butter product
recall), political instability, terrorism, armed hostilities
(including the ongoing conflict between Russia and Ukraine), extreme weather conditions, natural
disasters, pandemics (including the novel coronavirus), work
stoppages or labor shortages, or other calamities; risks related to
the availability, and cost inflation in, supply chain inputs,
including labor, raw materials, commodities, packaging, and
transportation; the impact of food security concerns involving
either the Company's products or its competitors' products,
including changes in consumer preference, consumer litigation,
actions by the U.S. Food and Drug Administration or other agencies,
and product recalls; risks associated with derivative and
purchasing strategies the Company employs to manage commodity
pricing and interest rate risks; the availability of reliable
transportation on acceptable terms; the ability to achieve cost
savings related to restructuring and cost management programs in
the amounts and within the time frames currently anticipated; the
ability to generate sufficient cash flow to continue operating
under the Company's capital deployment model, including capital
expenditures, debt repayment, dividend payments, and share
repurchases; the ability to implement and realize the full benefit
of price changes, and the impact of the timing of the price changes
to profits and cash flow in a particular period; the success and
cost of marketing and sales programs and strategies intended to
promote growth in the Company's businesses, including product
innovation; general competitive activity in the market, including
competitors' pricing practices and promotional spending levels; the
Company's ability to attract and retain key talent; the
concentration of certain of the Company's businesses with key
customers and suppliers, including single-source suppliers of
certain key raw materials and finished goods, and the Company's
ability to manage and maintain key relationships; impairments in
the carrying value of goodwill, other intangible assets, or other
long-lived assets or changes in the useful lives of other
intangible assets or other long-lived assets; the impact of new or
changes to existing governmental laws and regulations and their
application; the outcome of tax examinations, changes in tax laws,
and other tax matters; a disruption, failure, or security breach of
the Company or their suppliers' information technology systems,
including, but not limited to, ransomware attacks; foreign currency
exchange rate and interest rate fluctuations; and risks related to
other factors described under "Risk Factors" in other reports and
statements filed with the Securities and Exchange Commission,
including the Company's most recent Annual Report on Form 10-K. The
Company undertakes no obligation to update or revise these
forward-looking statements, which speak only as of the date made,
to reflect new events or circumstances.
About The J.M. Smucker Co.
At The J.M. Smucker Co., it is our privilege to make food people
and pets love by offering a diverse portfolio of brands available
across North America. We are proud
to lead in the coffee, consumer foods, dog snacks, and cat food
categories by offering brands consumers trust for themselves and
their families each day, including Folgers®,
Dunkin'®, Café Bustelo®, Jif®,
Smucker's® Uncrustables®,
Smucker's®, Milk-Bone®, and Meow
Mix®. Through our unwavering commitment to producing
quality products, operating responsibly and ethically and
delivering on our Purpose, we will continue to grow our business
while making a positive impact on society. For more information,
please visit jmsmucker.com.
The J.M. Smucker Co. is the owner of all trademarks referenced
herein, except for Dunkin'®, which is a trademark
of DD IP Holder LLC. The Dunkin'® brand is
licensed to The J.M. Smucker Co. for packaged coffee products sold
in retail channels such as grocery stores, mass merchandisers, club
stores, e-commerce and drug stores, and in certain away from home
channels. This information does not pertain to products for sale in
Dunkin'® restaurants.
The J.M. Smucker
Co.
Unaudited Condensed
Consolidated Statements of Income
|
|
|
|
Three Months Ended July
31,
|
|
2023
|
|
2022
|
|
% Increase
(Decrease)
|
|
(Dollars and shares in
millions, except
per share data)
|
|
|
|
|
|
|
Net sales
|
$1,805.2
|
|
$1,873.0
|
|
(4) %
|
Cost of products
sold
|
1,150.4
|
|
1,320.5
|
|
(13) %
|
Gross
Profit
|
654.8
|
|
552.5
|
|
19 %
|
Gross
margin
|
36.3 %
|
|
29.5 %
|
|
|
|
|
|
|
|
|
Selling, distribution,
and administrative expenses
|
313.6
|
|
343.8
|
|
(9) %
|
Amortization
|
39.8
|
|
55.6
|
|
(28) %
|
Other operating expense
(income) – net
|
(2.1)
|
|
(26.6)
|
|
(92) %
|
Operating
Income
|
303.5
|
|
179.7
|
|
69 %
|
Operating
margin
|
16.8 %
|
|
9.6 %
|
|
|
|
|
|
|
|
|
Interest expense –
net
|
(32.1)
|
|
(39.1)
|
|
(18) %
|
Other income (expense)
– net
|
(33.0)
|
|
0.5
|
|
n/m
|
Income Before Income
Taxes
|
238.4
|
|
141.1
|
|
69 %
|
Income tax
expense
|
54.8
|
|
31.3
|
|
75 %
|
Net
Income
|
$183.6
|
|
$109.8
|
|
67 %
|
|
|
|
|
|
|
Net income per
common share
|
$1.79
|
|
$1.03
|
|
74 %
|
|
|
|
|
|
|
Net income per
common share – assuming dilution
|
$1.79
|
|
$1.03
|
|
74 %
|
|
|
|
|
|
|
Dividends declared
per common share
|
$1.06
|
|
$1.02
|
|
4 %
|
|
|
|
|
|
|
Weighted-average shares
outstanding
|
102.4
|
|
106.3
|
|
(4) %
|
|
|
|
|
|
|
Weighted-average shares
outstanding – assuming dilution
|
102.8
|
|
106.8
|
|
(4) %
|
The J.M. Smucker
Co.
Unaudited Condensed
Consolidated Balance Sheets
|
|
|
|
|
|
July 31,
2023
|
|
April 30,
2023
|
|
(Dollars in
millions)
|
Assets
|
|
|
|
Current
Assets
|
|
|
|
Cash and cash
equivalents
|
$241.1
|
|
$655.8
|
Trade receivables –
net
|
592.4
|
|
597.6
|
Inventories
|
1,093.4
|
|
1,009.8
|
Investment in equity
securities
|
459.8
|
|
487.8
|
Other current
assets
|
110.1
|
|
107.7
|
Total Current
Assets
|
2,496.8
|
|
2,858.7
|
|
|
|
|
Property, Plant,
and Equipment – Net
|
2,289.6
|
|
2,239.5
|
|
|
|
|
Other Noncurrent
Assets
|
|
|
|
Goodwill
|
5,221.2
|
|
5,216.9
|
Other intangible
assets – net
|
4,391.0
|
|
4,429.3
|
Other noncurrent
assets
|
313.2
|
|
247.0
|
Total Other
Noncurrent Assets
|
9,925.4
|
|
9,893.2
|
Total
Assets
|
$14,711.8
|
|
$14,991.4
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
Current
Liabilities
|
|
|
|
Accounts
payable
|
$1,301.0
|
|
$1,392.6
|
Other current
liabilities
|
646.2
|
|
594.1
|
Total Current
Liabilities
|
1,947.2
|
|
1,986.7
|
|
|
|
|
Noncurrent
Liabilities
|
|
|
|
Long-term
debt
|
4,315.1
|
|
4,314.2
|
Other noncurrent
liabilities
|
1,446.1
|
|
1,399.7
|
Total Noncurrent
Liabilities
|
5,761.2
|
|
5,713.9
|
|
|
|
|
Total Shareholders'
Equity
|
7,003.4
|
|
7,290.8
|
Total Liabilities
and Shareholders' Equity
|
$14,711.8
|
|
$14,991.4
|
The J.M. Smucker
Co.
Unaudited Condensed
Consolidated Statements of Cash Flow
|
|
|
|
Three Months Ended July
31,
|
|
2023
|
|
2022
|
|
(Dollars in
millions)
|
Operating
Activities
|
|
|
|
Net income
|
$183.6
|
|
$109.8
|
Adjustments to
reconcile net income to net cash provided by (used for)
operations:
|
|
|
|
Depreciation
|
50.2
|
|
55.1
|
Amortization
|
39.8
|
|
55.6
|
Pension settlement
loss (gain)
|
3.2
|
|
—
|
Unrealized loss (gain)
on investment in equity securities
|
27.4
|
|
—
|
Share-based
compensation expense
|
5.1
|
|
7.9
|
Deferred income tax
expense (benefit)
|
(8.9)
|
|
—
|
Other noncash
adjustments – net
|
4.8
|
|
2.5
|
Defined benefit
pension contributions
|
(0.7)
|
|
(70.7)
|
Changes in assets and
liabilities, net of effect from divestitures:
|
|
|
Trade
receivables
|
6.1
|
|
(80.2)
|
Inventories
|
(81.4)
|
|
(223.0)
|
Other current
assets
|
(4.8)
|
|
(3.3)
|
Accounts
payable
|
(43.8)
|
|
73.1
|
Accrued
liabilities
|
(7.7)
|
|
8.9
|
Income and other
taxes
|
57.3
|
|
25.6
|
Other – net
|
(12.3)
|
|
(0.3)
|
Net Cash Provided
by (Used for) Operating Activities
|
217.9
|
|
(39.0)
|
|
|
|
|
Investing
Activities
|
|
|
|
Additions to property,
plant, and equipment
|
(150.3)
|
|
(88.3)
|
Other – net
|
(1.6)
|
|
16.8
|
Net Cash Provided
by (Used for) Investing Activities
|
(151.9)
|
|
(71.5)
|
|
|
|
|
Financing
Activities
|
|
|
|
Short-term borrowings
(repayments) – net
|
—
|
|
207.0
|
Quarterly dividends
paid
|
(105.2)
|
|
(105.1)
|
Purchase of treasury
shares
|
(372.0)
|
|
(7.8)
|
Proceeds from stock
option exercises
|
—
|
|
0.9
|
Other – net
|
(4.1)
|
|
(3.1)
|
Net Cash Provided
by (Used for) Financing Activities
|
(481.3)
|
|
91.9
|
Effect of exchange
rate changes on cash
|
0.6
|
|
0.3
|
Net increase
(decrease) in cash and cash equivalents
|
(414.7)
|
|
(18.3)
|
Cash and cash
equivalents at beginning of period
|
655.8
|
|
169.9
|
Cash and Cash
Equivalents at End of Period
|
$241.1
|
|
$151.6
|
The J.M. Smucker
Co.
Unaudited Supplemental
Schedule
|
|
|
|
Three Months Ended July
31,
|
|
2023
|
|
% of
Net Sales
|
|
2022
|
|
% of
Net Sales
|
|
(Dollars in
millions)
|
Net sales
|
$1,805.2
|
|
|
|
$1,873.0
|
|
|
Selling, distribution,
and administrative expenses:
|
|
|
|
|
|
|
|
Marketing
|
88.6
|
|
4.9 %
|
|
95.6
|
|
5.1 %
|
Selling
|
64.8
|
|
3.6 %
|
|
69.6
|
|
3.7 %
|
Distribution
|
60.9
|
|
3.4 %
|
|
72.8
|
|
3.9 %
|
General and
administrative
|
99.3
|
|
5.5 %
|
|
105.8
|
|
5.6 %
|
Total selling,
distribution, and administrative expenses
|
$313.6
|
|
17.4 %
|
|
$343.8
|
|
18.4 %
|
|
|
|
|
|
|
|
|
Amounts may not add
due to rounding.
|
|
|
|
|
|
|
|
The J.M. Smucker
Co.
Unaudited Reportable
Segments
|
|
|
|
Three Months Ended July
31,
|
|
2023
|
|
2022
|
|
(Dollars in
millions)
|
Net sales:
|
|
|
|
U.S. Retail
Coffee
|
$
625.1
|
|
$
597.9
|
U.S. Retail Consumer
Foods
|
464.0
|
|
311.1
|
U.S. Retail Pet
Foods
|
441.0
|
|
729.0
|
International and Away
From Home
|
275.1
|
|
235.0
|
Total net
sales
|
$1,805.2
|
|
$1,873.0
|
|
|
|
|
Segment
profit:
|
|
|
|
U.S. Retail
Coffee
|
$
170.1
|
|
$
145.9
|
U.S. Retail Consumer
Foods
|
105.7
|
|
54.8
|
U.S. Retail Pet
Foods
|
81.3
|
|
120.3
|
International and Away
From Home
|
36.4
|
|
16.6
|
Total segment
profit
|
$393.5
|
|
$337.6
|
Amortization
|
(39.8)
|
|
(55.6)
|
Gain (loss) on
divestitures – net
|
1.2
|
|
1.6
|
Interest expense –
net
|
(32.1)
|
|
(39.1)
|
Change in net
cumulative unallocated derivative gains and losses
|
10.4
|
|
(33.8)
|
Cost of products sold
– special project costs
|
—
|
|
(1.1)
|
Other special project
costs
|
—
|
|
(1.4)
|
Corporate
administrative expenses
|
(61.8)
|
|
(67.6)
|
Other income (expense)
– net
|
(33.0)
|
|
0.5
|
Income before income
taxes
|
$238.4
|
|
$141.1
|
|
|
|
|
Segment profit
margin:
|
|
|
|
U.S. Retail
Coffee
|
27.2 %
|
|
24.4 %
|
U.S. Retail Consumer
Foods
|
22.8 %
|
|
17.6 %
|
U.S. Retail Pet
Foods
|
18.4 %
|
|
16.5 %
|
International and Away
From Home
|
13.2 %
|
|
7.1 %
|
Non-GAAP Financial Measures
The Company uses non-GAAP financial measures, including: net
sales excluding divestitures and foreign currency exchange;
adjusted gross profit; adjusted operating income; adjusted income;
adjusted earnings per share; earnings before interest, taxes,
depreciation, amortization, impairment charges related to
intangible assets, and gains and losses on divestitures ("EBITDA
(as adjusted)"); and free cash flow, as key measures for purposes
of evaluating performance internally. The Company believes that
investors' understanding of its performance is enhanced by
disclosing these performance measures. Furthermore, these non-GAAP
financial measures are used by management in preparation of the
annual budget and for the monthly analyses of its operating
results. The Board of Directors also utilizes certain non-GAAP
financial measures as components for measuring performance for
incentive compensation purposes.
Non-GAAP financial measures exclude certain items affecting
comparability that can significantly affect the year-over-year
assessment of operating results, which include amortization expense
and impairment charges related to intangible assets; certain
divestiture, acquisition, integration, and restructuring costs
("special project costs"); gains and losses on divestitures; the
net change in cumulative unallocated gains and losses on commodity
and foreign currency exchange derivative activities ("change in net
cumulative unallocated derivative gains and losses"); and other
infrequently occurring items that do not directly reflect ongoing
operating results. Income taxes, as adjusted is calculated using an
adjusted effective income tax rate that is applied to adjusted
income before income taxes and reflects the exclusion of the
previously discussed items, as well as any adjustments for one-time
tax-related activities, when they occur. While this adjusted
effective income tax rate does not generally differ materially from
the GAAP effective income tax rate, certain exclusions from
non-GAAP financial measures can significantly impact the adjusted
effective income tax rate.
These non-GAAP financial measures are not intended to replace
the presentation of financial results in accordance with U.S. GAAP.
Rather, the presentation of these non-GAAP financial measures
supplements other metrics used by management to internally evaluate
its businesses and facilitate the comparison of past and present
operations and liquidity. These non-GAAP financial measures may not
be comparable to similar measures used by other companies and may
exclude certain nondiscretionary expenses and cash payments. A
reconciliation of certain non-GAAP financial measures to the
comparable GAAP financial measure for the current and prior year
periods is included in the "Unaudited Non-GAAP Financial Measures"
tables. The Company has also provided a reconciliation of non-GAAP
financial measures for its fiscal year 2024 outlook.
The J.M. Smucker
Co.
Unaudited Non-GAAP
Financial Measures
|
|
|
|
Three Months Ended July
31,
|
|
2023
|
|
2022
|
|
Increase
(Decrease)
|
|
%
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
Net sales
reconciliation:
|
|
|
|
|
|
|
|
Net sales
|
$1,805.2
|
|
$1,873.0
|
|
($67.8)
|
|
(4) %
|
Pet food brands
divestiture
|
—
|
|
(374.1)
|
|
374.1
|
|
20
|
Foreign currency
exchange
|
3.8
|
|
—
|
|
3.8
|
|
—
|
Net sales excluding
divestiture and foreign currency exchange
|
$1,809.0
|
|
$1,498.9
|
|
$310.1
|
|
21 %
|
|
|
|
|
|
|
|
|
Amounts may not add
due to rounding.
|
|
|
|
|
|
|
|
The J.M. Smucker
Co.
Unaudited Non-GAAP
Financial Measures
|
|
|
|
Three Months Ended July
31,
|
|
2023
|
|
2022
|
|
(Dollars in millions,
except per
share data)
|
Gross profit
reconciliation:
|
|
|
|
Gross
profit
|
$654.8
|
|
$552.5
|
Change in net
cumulative unallocated derivative gains and losses
|
(10.4)
|
|
33.8
|
Cost of products sold
– special project costs
|
—
|
|
1.1
|
Adjusted gross
profit
|
$644.4
|
|
$587.4
|
% of net
sales
|
35.7 %
|
|
31.4 %
|
|
|
|
|
Operating income
reconciliation:
|
|
|
|
Operating
income
|
$303.5
|
|
$179.7
|
Amortization
|
39.8
|
|
55.6
|
Loss (gain) on
divestitures – net
|
(1.2)
|
|
(1.6)
|
Change in net
cumulative unallocated derivative gains and losses
|
(10.4)
|
|
33.8
|
Cost of products sold
– special project costs
|
—
|
|
1.1
|
Other special project
costs
|
—
|
|
1.4
|
Adjusted operating
income
|
$331.7
|
|
$270.0
|
% of net
sales
|
18.4 %
|
|
14.4 %
|
|
|
|
|
Net income
reconciliation:
|
|
|
|
Net income
|
$183.6
|
|
$109.8
|
Income tax
expense
|
54.8
|
|
31.3
|
Amortization
|
39.8
|
|
55.6
|
Loss (gain) on
divestitures – net
|
(1.2)
|
|
(1.6)
|
Change in net
cumulative unallocated derivative gains and losses
|
(10.4)
|
|
33.8
|
Cost of products sold
– special project costs
|
—
|
|
1.1
|
Other special project
costs
|
—
|
|
1.4
|
Other infrequently
occurring items:
|
|
|
|
Unrealized loss (gain)
on investment in equity securities (A)
|
27.4
|
|
—
|
Pension plan
termination settlement charge (B)
|
3.2
|
|
—
|
Adjusted income before
income taxes
|
$297.2
|
|
$231.4
|
Income taxes, as
adjusted
|
70.2
|
|
53.3
|
Adjusted
income
|
$227.0
|
|
$178.1
|
Weighted-average
shares outstanding – assuming dilution
|
102.8
|
|
106.8
|
Adjusted earnings per
share – assuming dilution
|
$2.21
|
|
$1.67
|
|
|
|
|
(A)
Unrealized loss (gain) on investment in equity securities includes
unrealized gains and losses on the change in fair value on the
Company's investment in Post common
stock and the related equity forward contract.
(B)
Represents the nonrecurring pre-tax settlement charge recognized
during the first quarter of 2024 related to the acceleration of
prior service cost for the portion of
the plan surplus to be allocated to plan members within our
Canadian defined benefit plans,
which is subject to participant and
regulatory approval before a payout can be made.
|
The J.M. Smucker
Co.
Unaudited Non-GAAP
Financial Measures
|
|
|
|
Three Months Ended July
31,
|
|
2023
|
|
2022
|
|
(Dollars in
millions)
|
EBITDA (as adjusted)
reconciliation:
|
|
|
|
Net income
|
$183.6
|
|
$109.8
|
Income tax
expense
|
54.8
|
|
31.3
|
Interest expense –
net
|
32.1
|
|
39.1
|
Depreciation
|
50.2
|
|
55.1
|
Amortization
|
39.8
|
|
55.6
|
Loss (gain) on
divestitures – net
|
(1.2)
|
|
(1.6)
|
EBITDA (as
adjusted)
|
$359.3
|
|
$289.3
|
% of net
sales
|
19.9 %
|
|
15.4 %
|
|
|
|
|
Free cash flow
reconciliation:
|
|
|
|
Net cash provided by
(used for) operating activities
|
$217.9
|
|
($39.0)
|
Additions to property,
plant, and equipment
|
(150.3)
|
|
(88.3)
|
Free cash
flow
|
$67.6
|
|
($127.3)
|
The following tables provide a reconciliation of the Company's
fiscal 2024 guidance for estimated adjusted earnings per share and
free cash flow.
|
|
Year Ending April 30,
2024
|
|
|
Low
|
|
High
|
Net income per common
share – assuming dilution reconciliation:
|
|
|
|
|
Net income per common
share – assuming dilution
|
|
$8.01
|
|
$8.41
|
Change in net
cumulative unallocated derivative gains and losses
(A)
|
|
0.12
|
|
0.12
|
Amortization
|
|
1.16
|
|
1.16
|
Gain on
divestiture
|
|
(0.01)
|
|
(0.01)
|
Unrealized loss (gain)
on investment in equity securities (B)
|
|
0.16
|
|
0.16
|
Pension plan
termination settlement charge
|
|
0.02
|
|
0.02
|
Adjusted effective
income tax rate impact
|
|
(0.01)
|
|
(0.01)
|
Adjusted earnings per
share
|
|
$9.45
|
|
$9.85
|
|
|
|
|
|
(A) We are
unable to project derivative gains and losses on a forward-looking
basis as these will vary each quarter based on market conditions
and derivative positions taken. The change in unallocated
derivative gains and losses in the table above reflects the net
impact of the gains and losses that have been recognized in our
GAAP results and excluded from non-GAAP results as of July 31,
2023, adjusted for the gains and losses expected to be allocated to
non-GAAP results for the year ended April 30, 2024.
(B) The
unrealized loss on investment in equity securities in the table
above reflects the forward sale of 5.4 million shares of Post
common stock received from the pet food divestiture that will
settle for $466.3 million during the third quarter of
2024.
|
|
|
|
|
|
|
|
Year Ending
April 30, 2024
|
|
|
|
|
(Dollars in
millions)
|
|
|
Free cash flow
reconciliation:
|
|
|
|
|
Net cash provided by
operating activities
|
|
$1,200
|
|
|
Additions to property,
plant, and equipment
|
|
(550)
|
|
|
Free cash
flow
|
|
$650
|
|
|
View original content to download
multimedia:https://www.prnewswire.com/news-releases/the-jm-smucker-co-announces-fiscal-2024-first-quarter-results-301912346.html
SOURCE The J.M. Smucker Co.