ORRVILLE, Ohio, Nov. 17, 2016 /PRNewswire/ -- The J. M.
Smucker Company (NYSE: SJM) today announced results for the second
quarter ended October 31, 2016, of
its 2017 fiscal year. All comparisons are to the second
quarter of the prior fiscal year, unless otherwise noted.
EXECUTIVE SUMMARY
- Net sales decreased 8 percent. Excluding the
noncomparable divested U.S. canned milk business, net sales
decreased 5 percent.
- Net income per diluted share increased 3 percent to
$1.52.
- Adjusted earnings per share was $2.05, an increase of 7 percent, reflecting
incremental synergy realization, a lower tax rate, and fewer shares
outstanding.
- Incremental synergy realization was $28.5 million in the second quarter and
$60.5 million through the first half
of fiscal 2017. The Company remains on track to recognize
$100 million of incremental synergies
in fiscal 2017.
- Cash provided by operating activities was $136.4 million in the second quarter. Free
cash flow was $102.6 million in the
quarter and $291.3 million through
the first half of fiscal 2017.
- The Company maintained its full-year fiscal 2017 net sales,
earnings, and free cash flow outlook. Adjusted earnings per
share are expected to range from $7.60 to
$7.75.
CHIEF EXECUTIVE OFFICER REMARKS
"We delivered record adjusted earnings per share for the fiscal
second quarter," said Mark Smucker,
Chief Executive Officer. "We continue to make significant
progress against our current year priorities and long-term
goals. These include achieving sustainable cost reductions
that both support the bottom-line and fuel investments in the
continued growth of our brands. As an example, we are excited
to announce the launch of Nature's Recipe®
premium pet food into grocery and mass merchandise outlets later
this fiscal year. We are aggressively pursuing a variety of
growth opportunities and remain confident about enhancing
shareholder value."
NON-GAAP MEASURES AND SEGMENT RESULTS
Beginning May 1, 2016, the Company
redefined certain non-GAAP measures and modified its segment profit
calculation to exclude amortization expense related to intangible
assets, including any related impairment charges. Prior year
results have been modified to conform to the new presentation.
Additional information is included in the Company's Form 8-K,
dated July 25, 2016.
SECOND QUARTER CONSOLIDATED RESULTS
|
|
Three Months Ended
October 31,
|
|
|
|
|
|
|
% Increase
|
|
|
2016
|
|
2015
|
|
(Decrease)
|
|
|
(Dollars and shares
in millions, except per share data)
|
|
|
|
|
|
|
|
Net
sales
|
$
1,913.9
|
|
$
2,077.7
|
|
(8%)
|
|
|
|
|
|
|
|
Operating
income
|
$
303.3
|
|
$
313.8
|
|
(3%)
|
Adjusted operating
income
|
396.2
|
|
394.4
|
|
-
|
|
|
|
|
|
|
|
Net income per
common share – assuming dilution
|
$
1.52
|
|
$
1.47
|
|
3%
|
Adjusted earnings per
share
|
2.05
|
|
1.91
|
|
7%
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding – assuming dilution
|
116.6
|
|
119.7
|
|
(3%)
|
|
Results for the three
months ended October 31, 2015, include the Company's former U.S.
canned milk business, which was divested on December 31,
2015.
|
Net Sales
Net sales decreased $163.8 million, including $67.7 million attributed to the divested U.S.
canned milk business. Excluding the noncomparable divested
business and foreign currency exchange, net sales decreased
$96.2 million, or 5 percent.
This reflected a 3 percentage point decline from volume/mix driven
by the U.S. Retail Pet Foods segment and the
Folgers® and Jif® brands.
Net price realization was also lower, which was mostly attributed
to coffee.
Operating Income
Gross profit decreased $44.4 million, or 6 percent, driven by volume/mix
and the loss of U.S. canned milk profits. The impact of lower
net price realization was offset by a reduction in commodity and
manufacturing overhead costs and incremental synergy
realization. Selling, distribution, and administrative
("SD&A") expenses decreased $26.7
million, or 7 percent, primarily driven by synergy
realization. Operating income decreased $10.5 million, or 3 percent.
On a non-GAAP basis, adjusted gross profit decreased
$26.9 million, or 3 percent, with the
primary difference from GAAP results being the exclusion of a
$20.2 million unfavorable change in
unallocated derivative gains and losses. With the decrease in
SD&A expenses, adjusted operating income increased $1.8 million.
Other
Net interest expense decreased $1.6 million, due to reduced debt levels.
Income taxes decreased $5.4 million
attributed to a lower effective tax rate of 33.2 percent, compared
to 34.7 percent in the prior year.
Cash provided by operating activities was $136.4 million. This compared to
$275.5 million in the prior year,
which benefited from the Company's working capital initiatives.
FULL-YEAR OUTLOOK
The Company updated its full-year fiscal 2017 guidance as
summarized below:
|
Current
|
Previous
|
Comparable net sales
increase (decrease) vs prior year
|
0% to (1%)
|
0% to (1%)
|
Adjusted earnings per
share
|
$7.60 -
$7.75
|
$7.60 -
$7.75
|
Free cash
flow
|
$1.0
billion
|
$1.0
billion
|
Capital
expenditures
|
$240
million
|
$240
million
|
Effective tax
rate
|
33.0%
|
33.5%
|
Net sales guidance is unchanged, with net sales expected to
decrease in the range of 2 percent to 3 percent from fiscal 2016,
reflecting the U.S. canned milk divestiture. Excluding the
impact of the divestiture, net sales are expected to range from
flat to down 1 percent. Adjusted earnings per share is also
unchanged and expected to range from $7.60
to $7.75, based on 116.6 million shares outstanding, with a
bias toward the middle to high end of the range. The Company
reduced its effective tax rate guidance by 50 basis points to 33.0
percent. Included in earnings guidance is $100 million of incremental synergies in fiscal
2017.
SECOND QUARTER SEGMENT RESULTS
Dollar amounts in the segment tables below are reported in
millions.
U.S. Retail Coffee
|
|
Net
|
|
Segment
|
|
Segment
|
|
|
Sales
|
|
Profit
|
|
Profit
Margin
|
FY17 Q2
Results
|
|
$551.8
|
|
$186.5
|
|
33.8%
|
Increase (decrease)
vs prior year
|
(6%)
|
|
3%
|
|
300bps
|
Segment net sales decreased $34.3
million, driven by lower net price realization, which was
primarily attributed to the impact of the 6 percent list price
decline taken across most of the coffee portfolio effective at the
beginning of the fiscal year. Volume/mix reduced net sales by
1 percent as lower Folgers® roast and ground
volume was partially offset by gains for the Dunkin'
Donuts® and Café Bustelo®
brands. Segment profit increased $6.1
million, as lower commodity and manufacturing overhead costs
more than offset the impact of lower net pricing, volume/mix, and
increased marketing expense.
U.S. Retail Consumer Foods
|
|
Net
|
|
Segment
|
|
Segment
|
|
|
Sales
|
|
Profit
|
|
Profit
Margin
|
FY17 Q2
Results
|
|
$557.3
|
|
$118.9
|
|
21.3%
|
Increase (decrease)
vs prior year
|
(13%)
|
|
(7%)
|
|
150bps
|
Segment net sales decreased $86.7
million, primarily reflecting the impact of $62.0 million of noncomparable net sales in the
prior year related to the divested U.S. canned milk business.
Excluding the impact of the divestiture, net sales decreased 4
percent. Volume/mix reduced net sales by 4 percent driven by
the Jif® and Pillsbury® brands,
partially offset by growth in Smucker's®
Uncrustables® frozen sandwiches. Net price
realization was also slightly lower. Segment profit decreased
$8.4 million. Excluding the
loss of U.S. canned milk profits, segment profit increased 3
percent as lower manufacturing overhead costs offset the impact of
volume/mix, lower net pricing, and increased marketing expense.
U.S. Retail Pet Foods
|
|
Net
|
|
Segment
|
|
Segment
|
|
|
Sales
|
|
Profit
|
|
Profit
Margin
|
FY17 Q2
Results
|
|
$531.0
|
|
$114.5
|
|
21.6%
|
Increase (decrease)
vs prior year
|
(6%)
|
|
-
|
|
130bps
|
Segment net sales decreased $35.7
million, primarily due to volume/mix, which reduced net
sales by 5 percent. This was driven by the Meow
Mix® and Kibbles 'n Bits®
brands. Net price realization was also slightly lower.
Segment profit decreased $0.5 million
as the impact of volume/mix offset lower manufacturing costs,
incremental synergy realization, and a decrease in marketing
expense.
International and Foodservice
|
|
Net
|
|
Segment
|
|
Segment
|
|
|
Sales
|
|
Profit
|
|
Profit
Margin
|
FY17 Q2
Results
|
|
$273.8
|
|
$51.7
|
|
18.9%
|
Increase (decrease)
vs prior year
|
(3%)
|
|
(7%)
|
|
-90bps
|
Segment net sales decreased $7.1 million, reflecting
noncomparable sales of $5.7 million
in the prior year related to the divested U.S. canned milk
business. Volume/mix contributed 2 percentage points of
growth to net sales and was offset by a decrease in net price
realization. Segment profit decreased $3.9 million,
reflecting the impact of the divested U.S. canned milk business and
an unfavorable net impact of pricing and costs, which was partially
offset by volume/mix.
Conference Call
The Company will conduct an earnings conference call and webcast
today, November 17, 2016, beginning
at 8:30 a.m. Eastern time. To
access the webcast, please visit
jmsmucker.com/investor-relations.
The J. M. Smucker Company 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 ability to
achieve synergies and cost savings related to the Big Heart Pet
Brands acquisition in the amounts and within the time frames
currently anticipated and to effectively manage the related
integration costs; the ability to generate sufficient cash flow to
meet the Company's deleveraging objectives; volatility of
commodity, energy, and other input costs; risks associated with
derivative and purchasing strategies employed to manage commodity
pricing risks; the availability of reliable transportation on
acceptable terms; 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 businesses, including the
introduction of new products; general competitive activity in the
market, including competitors' pricing practices and promotional
spending levels; the impact of food security concerns involving
either the Company's or its competitors' products; the impact of
accidents, extreme weather, and natural disasters; 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 ability to
manage and maintain key relationships; the timing and amount of
capital expenditures and share repurchases; impairments in the
carrying value of goodwill, other intangible assets, or other
long-lived assets or changes in useful lives of other intangible
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; foreign
currency 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 Company
For nearly 120 years, The J. M. Smucker Company has been
committed to offering consumers quality products that bring
families together to share memorable meals and moments.
Today, Smucker is a leading marketer and manufacturer of consumer
food and beverage products and pet food and pet snacks in North
America. In consumer foods and beverages, its brands include
Smucker's®, Folgers®,
Jif®, Dunkin' Donuts®, Crisco®,
Pillsbury®, R.W. Knudsen Family®, Hungry
Jack®, Café Bustelo®, Martha White®, truRoots®,
Sahale Snacks®, Robin
Hood®, and Bick's®.
In pet food and pet snacks, its brands include Meow
Mix®, Milk-Bone®, Kibbles 'n
Bits®, Natural Balance®, and
9Lives®. The Company remains rooted in the
Basic Beliefs of Quality, People, Ethics, Growth, and
Independence established by its founder and namesake more
than a century ago. For more information about the Company,
visit jmsmucker.com.
The J. M. Smucker Company is the owner of all trademarks
referenced herein, except for the following, which are used under
license: Pillsbury® is a trademark of The
Pillsbury Company, LLC, and Dunkin' Donuts® is a
registered trademark of DD IP Holder, LLC.
Dunkin' Donuts® brand is licensed to The J. M.
Smucker Company for packaged coffee products sold in retail
channels such as grocery stores, mass merchandisers, club stores,
and drug stores. This information does not pertain to
Dunkin' Donuts® coffee or other products for sale
in Dunkin' Donuts® restaurants.
K-Cup® is a trademark of Keurig Green Mountain,
Inc., used with permission.
The J. M. Smucker
Company
|
Unaudited Condensed
Consolidated Statements of Income
|
|
|
|
Three Months Ended
October 31,
|
|
Six Months Ended
October 31,
|
|
|
|
|
|
|
% Increase
|
|
|
|
|
|
% Increase
|
|
|
2016
|
|
2015
|
|
(Decrease)
|
|
2016
|
|
2015
|
|
(Decrease)
|
|
|
(Dollars in millions,
except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
1,913.9
|
|
$
2,077.7
|
|
(8%)
|
|
$
3,729.7
|
|
$
4,029.7
|
|
(7%)
|
Cost of products
sold
|
1,171.0
|
|
1,290.4
|
|
(9%)
|
|
2,264.1
|
|
2,513.7
|
|
(10%)
|
Gross
Profit
|
742.9
|
|
787.3
|
|
(6%)
|
|
1,465.6
|
|
1,516.0
|
|
(3%)
|
|
Gross
margin
|
38.8%
|
|
37.9%
|
|
|
|
39.3%
|
|
37.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
distribution, and administrative expenses
|
363.1
|
|
389.8
|
|
(7%)
|
|
719.1
|
|
777.4
|
|
(7%)
|
Amortization
|
51.8
|
|
53.0
|
|
(2%)
|
|
103.5
|
|
106.0
|
|
(2%)
|
Other special project
costs
|
26.6
|
|
30.6
|
|
(13%)
|
|
48.8
|
|
53.5
|
|
(9%)
|
Other operating
(income) expense - net
|
(1.9)
|
|
0.1
|
|
n/m
|
|
(2.9)
|
|
(1.8)
|
|
61%
|
Operating
Income
|
303.3
|
|
313.8
|
|
(3%)
|
|
597.1
|
|
580.9
|
|
3%
|
|
Operating
margin
|
15.8%
|
|
15.1%
|
|
|
|
16.0%
|
|
14.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense -
net
|
(41.0)
|
|
(42.6)
|
|
(4%)
|
|
(82.5)
|
|
(87.0)
|
|
(5%)
|
Other income
(expense) - net
|
3.2
|
|
(1.6)
|
|
n/m
|
|
4.3
|
|
(1.5)
|
|
n/m
|
Income Before
Income Taxes
|
265.5
|
|
269.6
|
|
(2%)
|
|
518.9
|
|
492.4
|
|
5%
|
Income
taxes
|
88.2
|
|
93.6
|
|
(6%)
|
|
171.6
|
|
180.0
|
|
(5%)
|
Net
Income
|
$
177.3
|
|
$
176.0
|
|
1%
|
|
$
347.3
|
|
$
312.4
|
|
11%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per
common share
|
$
1.52
|
|
$
1.47
|
|
3%
|
|
$
2.98
|
|
$
2.61
|
|
14%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per
common share –
|
|
|
|
|
|
|
|
|
|
|
|
|
assuming
dilution
|
$
1.52
|
|
$
1.47
|
|
3%
|
|
$
2.98
|
|
$
2.61
|
|
14%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared
per common share
|
$
0.75
|
|
$
0.67
|
|
12%
|
|
$
1.50
|
|
$
1.34
|
|
12%
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding
|
116,429,632
|
|
119,670,298
|
|
(3%)
|
|
116,382,037
|
|
119,646,026
|
|
(3%)
|
Weighted-average
shares outstanding –
|
|
|
|
|
|
|
|
|
|
|
|
assuming
dilution
|
116,553,240
|
|
119,680,574
|
|
(3%)
|
|
116,514,369
|
|
119,657,766
|
|
(3%)
|
The J. M. Smucker
Company
|
Unaudited Condensed
Consolidated Balance Sheets
|
|
|
|
|
October 31,
2016
|
|
April 30,
2016
|
|
|
|
(Dollars in
millions)
|
Assets
|
|
|
|
Current
Assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
121.8
|
|
$
109.8
|
|
Trade receivables,
less allowance for doubtful accounts
|
517.8
|
|
450.1
|
|
Inventories
|
1,028.4
|
|
899.4
|
|
Other current
assets
|
137.2
|
|
114.1
|
|
|
Total Current
Assets
|
1,805.2
|
|
1,573.4
|
|
|
|
|
|
|
Property, Plant,
and Equipment - Net
|
1,586.7
|
|
1,627.7
|
|
|
|
|
|
|
Other Noncurrent
Assets:
|
|
|
|
|
Goodwill
|
6,080.0
|
|
6,091.1
|
|
Other intangible
assets - net
|
6,387.3
|
|
6,494.4
|
|
Other noncurrent
assets
|
199.0
|
|
197.5
|
|
|
Total Other
Noncurrent Assets
|
12,666.3
|
|
12,783.0
|
Total
Assets
|
$
16,058.2
|
|
$
15,984.1
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
Current
Liabilities:
|
|
|
|
|
Accounts
payable
|
$
435.8
|
|
$
459.4
|
|
Short-term
borrowings
|
406.0
|
|
284.0
|
|
Other current
liabilities
|
464.5
|
|
469.6
|
|
|
Total Current
Liabilities
|
1,306.3
|
|
1,213.0
|
|
|
|
|
|
|
Noncurrent
Liabilities:
|
|
|
|
|
Long-term
debt
|
4,945.4
|
|
5,146.0
|
|
Other noncurrent
liabilities
|
2,626.4
|
|
2,616.6
|
|
|
Total Noncurrent
Liabilities
|
7,571.8
|
|
7,762.6
|
|
|
|
|
|
|
Shareholders'
Equity
|
7,180.1
|
|
7,008.5
|
Total Liabilities
and Shareholders' Equity
|
$
16,058.2
|
|
$
15,984.1
|
The J. M. Smucker
Company
|
Unaudited Condensed
Consolidated Statements of Cash Flow
|
|
|
|
|
|
Three Months Ended
October 31,
|
|
Six Months Ended
October 31,
|
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Activities
|
|
|
|
|
|
|
|
|
Net income
|
$
177.3
|
|
$
176.0
|
|
$
347.3
|
|
$
312.4
|
|
Adjustments to
reconcile net income to net cash
|
|
|
|
|
|
|
|
|
provided by
operations:
|
|
|
|
|
|
|
|
|
|
Depreciation
|
53.0
|
|
54.7
|
|
107.0
|
|
110.4
|
|
|
Amortization
|
51.8
|
|
53.0
|
|
103.5
|
|
106.0
|
|
|
Share-based
compensation expense
|
7.0
|
|
8.7
|
|
15.1
|
|
16.4
|
|
|
Loss on disposal of
assets - net
|
0.5
|
|
1.3
|
|
1.0
|
|
2.6
|
|
|
Other noncash
adjustments
|
0.2
|
|
1.1
|
|
0.4
|
|
(2.4)
|
|
|
Defined benefit
pension contributions
|
(0.5)
|
|
(0.9)
|
|
(1.3)
|
|
(1.8)
|
|
|
Changes in assets and
liabilities, net of effect
|
|
|
|
|
|
|
|
|
|
from businesses
acquired:
|
|
|
|
|
|
|
|
|
|
|
Trade
receivables
|
4.4
|
|
(97.7)
|
|
(69.9)
|
|
(178.5)
|
|
|
|
Inventories
|
(15.4)
|
|
99.2
|
|
(132.7)
|
|
107.6
|
|
|
|
Accounts payable and
accrued items
|
(35.1)
|
|
14.1
|
|
17.8
|
|
(2.6)
|
|
|
|
Income and other
taxes
|
(83.7)
|
|
(59.6)
|
|
(38.6)
|
|
68.3
|
|
|
Other -
net
|
(23.1)
|
|
25.6
|
|
25.7
|
|
44.1
|
Net Cash Provided
by Operating Activities
|
136.4
|
|
275.5
|
|
375.3
|
|
582.5
|
|
|
|
|
|
|
|
|
|
|
|
Investing
Activities
|
|
|
|
|
|
|
|
|
Business acquired,
net of cash acquired
|
-
|
|
-
|
|
-
|
|
7.9
|
|
Additions to
property, plant, and equipment
|
(33.8)
|
|
(64.4)
|
|
(84.0)
|
|
(117.4)
|
|
Proceeds from
disposal of property, plant, and equipment
|
0.4
|
|
0.2
|
|
0.4
|
|
0.2
|
|
Other -
net
|
(0.4)
|
|
6.3
|
|
(12.7)
|
|
13.3
|
Net Cash Used for
Investing Activities
|
(33.8)
|
|
(57.9)
|
|
(96.3)
|
|
(96.0)
|
|
|
|
|
|
|
|
|
|
|
|
Financing
Activities
|
|
|
|
|
|
|
|
|
Short-term borrowings
- net
|
100.0
|
|
67.4
|
|
122.0
|
|
144.0
|
|
Repayments of
long-term debt
|
(100.0)
|
|
(200.0)
|
|
(200.0)
|
|
(450.0)
|
|
Quarterly dividends
paid
|
(87.1)
|
|
(80.1)
|
|
(164.9)
|
|
(156.5)
|
|
Purchase of treasury
shares
|
(0.7)
|
|
(0.5)
|
|
(18.8)
|
|
(7.4)
|
|
Other -
net
|
(0.1)
|
|
-
|
|
0.6
|
|
0.5
|
Net Cash Used for
Financing Activities
|
(87.9)
|
|
(213.2)
|
|
(261.1)
|
|
(469.4)
|
Effect of exchange
rate changes on cash
|
(2.5)
|
|
1.0
|
|
(5.9)
|
|
(3.7)
|
Net increase in
cash and cash equivalents
|
12.2
|
|
5.4
|
|
12.0
|
|
13.4
|
Cash and cash
equivalents at beginning of period
|
109.6
|
|
133.6
|
|
109.8
|
|
125.6
|
Cash and Cash
Equivalents at End of Period
|
$
121.8
|
|
$
139.0
|
|
$
121.8
|
|
$
139.0
|
The J. M. Smucker
Company
|
Unaudited
Supplemental Schedule
|
|
|
|
Three Months Ended
October 31,
|
|
Six Months Ended
October 31,
|
|
|
|
|
% of
|
|
|
|
% of
|
|
|
|
% of
|
|
|
|
% of
|
|
|
2016
|
|
Net Sales
|
|
2015
|
|
Net Sales
|
|
2016
|
|
Net Sales
|
|
2015
|
|
Net Sales
|
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$ 1,913.9
|
|
|
|
$ 2,077.7
|
|
|
|
$ 3,729.7
|
|
|
|
$ 4,029.7
|
|
|
Selling,
distribution, and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
administrative
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketing
|
121.1
|
|
6.3%
|
|
123.0
|
|
5.9%
|
|
229.8
|
|
6.2%
|
|
237.8
|
|
5.9%
|
|
Selling
|
67.7
|
|
3.5%
|
|
86.5
|
|
4.2%
|
|
132.7
|
|
3.6%
|
|
171.1
|
|
4.2%
|
|
Distribution
|
62.5
|
|
3.3%
|
|
62.3
|
|
3.0%
|
|
122.7
|
|
3.3%
|
|
124.0
|
|
3.1%
|
|
General and
administrative
|
111.8
|
|
5.8%
|
|
118.0
|
|
5.7%
|
|
233.9
|
|
6.3%
|
|
244.5
|
|
6.1%
|
Total selling,
distribution, and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
administrative
expenses
|
$
363.1
|
|
19.0%
|
|
$
389.8
|
|
18.8%
|
|
$
719.1
|
|
19.3%
|
|
$
777.4
|
|
19.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts may not add
due to rounding.
|
|
|
|
|
|
|
|
|
|
|
The J. M. Smucker
Company
|
Unaudited Reportable
Segments
|
|
|
|
Three Months Ended
October 31,
|
|
Six Months Ended
October 31,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
Net sales:
|
|
|
|
|
|
|
|
|
U.S. Retail
Coffee
|
$
551.8
|
|
$
586.1
|
|
$
1,065.1
|
|
$
1,151.1
|
|
U.S. Retail Consumer
Foods
|
557.3
|
|
644.0
|
|
1,094.3
|
|
1,226.2
|
|
U.S. Retail Pet
Foods
|
531.0
|
|
566.7
|
|
1,050.5
|
|
1,116.6
|
|
International and
Foodservice
|
273.8
|
|
280.9
|
|
519.8
|
|
535.8
|
Total net
sales
|
$
1,913.9
|
|
$
2,077.7
|
|
$
3,729.7
|
|
$
4,029.7
|
|
|
|
|
|
|
|
|
|
Segment
profit:
|
|
|
|
|
|
|
|
|
U.S. Retail
Coffee
|
$
186.5
|
|
$
180.4
|
|
$
360.3
|
|
$
354.2
|
|
U.S. Retail Consumer
Foods
|
118.9
|
|
127.3
|
|
230.3
|
|
246.7
|
|
U.S. Retail Pet
Foods
|
114.5
|
|
115.0
|
|
236.7
|
|
231.8
|
|
International and
Foodservice
|
51.7
|
|
55.6
|
|
91.2
|
|
91.7
|
Total segment
profit
|
$
471.6
|
|
$
478.3
|
|
$
918.5
|
|
$
924.4
|
|
Amortization
|
$
(51.8)
|
|
$
(53.0)
|
|
$
(103.5)
|
|
$
(106.0)
|
|
Interest expense -
net
|
(41.0)
|
|
(42.6)
|
|
(82.5)
|
|
(87.0)
|
|
Unallocated
derivative (losses) gains
|
(14.2)
|
|
6.0
|
|
(6.5)
|
|
(4.0)
|
|
Cost of products sold
- special project costs
|
(0.3)
|
|
(3.0)
|
|
(4.3)
|
|
(6.1)
|
|
Other special project
costs
|
(26.6)
|
|
(30.6)
|
|
(48.8)
|
|
(53.5)
|
|
Corporate
administrative expenses
|
(75.4)
|
|
(83.9)
|
|
(158.3)
|
|
(173.9)
|
|
Other income
(expense) - net
|
3.2
|
|
(1.6)
|
|
4.3
|
|
(1.5)
|
Income before income
taxes
|
$
265.5
|
|
$
269.6
|
|
$
518.9
|
|
$
492.4
|
|
|
|
|
|
|
|
|
|
Segment profit
margin:
|
|
|
|
|
|
|
|
|
U.S. Retail
Coffee
|
33.8%
|
|
30.8%
|
|
33.8%
|
|
30.8%
|
|
U.S. Retail Consumer
Foods
|
21.3%
|
|
19.8%
|
|
21.0%
|
|
20.1%
|
|
U.S. Retail Pet
Foods
|
21.6%
|
|
20.3%
|
|
22.5%
|
|
20.8%
|
|
International and
Foodservice
|
18.9%
|
|
19.8%
|
|
17.5%
|
|
17.1%
|
Non-GAAP Measures
The Company uses non-GAAP financial measures, including: net
sales excluding the noncomparable impact of the divestiture and
foreign currency exchange; adjusted gross profit, operating income,
income, and earnings per share; earnings before interest, taxes,
depreciation, and amortization ("EBITDA"); and free cash flow, as
key measures for purposes of evaluating performance
internally. The Company believes that these measures provide
useful information to investors because they are the measures used
to evaluate performance on a comparable year-over-year basis.
Non-GAAP profit measures exclude certain items affecting
comparability which include merger and integration and
restructuring costs ("special project costs") and unallocated gains
and losses on commodity and foreign currency exchange derivatives
("unallocated derivative gains and losses"). The special
project costs relate to specific merger and integration and
restructuring projects, and the unallocated derivative gains
and losses reflect the changes in fair value of the Company's
commodity and foreign currency exchange contracts. Beginning
May 1, 2016, the Company redefined
the non-GAAP measures to also exclude amortization expense related
to intangible assets, including any related impairment charges
("amortization"), and has modified prior year results to conform to
the new definition. The Company believes that excluding
amortization in its non-GAAP measures is more reflective of the
Company's operating performance and the way in which the Company
manages its business, as amortization is a non-cash expense and can
be significantly affected by the timing and size of
acquisitions. These non-GAAP financial measures are not
intended to replace the presentation of financial results in
accordance with U.S. generally accepted accounting principles
("GAAP"). Rather, the presentation of these non-GAAP
financial measures supplements other metrics used by management to
internally evaluate its businesses and facilitates 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 2017 outlook. As the amount of unallocated
derivative gains and losses varies depending on market conditions
and levels of derivative transactions with respect to a particular
fiscal year, it is not determinable on a forward-looking basis and
no guidance has been provided.
The J. M. Smucker
Company
|
Unaudited Non-GAAP
Financial Measures
|
|
|
Three Months
Ended
October 31,
|
|
Six Months Ended
October 31,
|
|
|
|
|
|
Increase
|
|
|
|
|
|
|
|
Increase
|
|
|
|
2016
|
|
2015
|
|
(Decrease)
|
|
%
|
|
2016
|
|
2015
|
|
(Decrease)
|
|
%
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
reconciliation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
1,913.9
|
|
$
2,077.7
|
|
$
(163.8)
|
|
(8%)
|
|
$
3,729.7
|
|
$
4,029.7
|
|
$
(300.0)
|
|
(7%)
|
Milk
divestiture
|
-
|
|
(67.7)
|
|
67.7
|
|
3%
|
|
-
|
|
(107.2)
|
|
107.2
|
|
3%
|
Net sales excluding
divestiture
|
$
1,913.9
|
|
$
2,010.0
|
|
$
(96.1)
|
|
(5%)
|
|
$
3,729.7
|
|
$
3,922.5
|
|
$
(192.8)
|
|
(5%)
|
Foreign currency
exchange
|
(0.1)
|
|
-
|
|
(0.1)
|
|
-
|
|
4.5
|
|
-
|
|
4.5
|
|
-
|
Net sales excluding
divestiture and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
foreign currency
exchange
|
$
1,913.8
|
|
$
2,010.0
|
|
$
(96.2)
|
|
(5%)
|
|
$
3,734.2
|
|
$
3,922.5
|
|
$
(188.3)
|
|
(5%)
|
|
Amounts may not add
due to rounding.
|
|
Net sales excluding
divestiture has been adjusted for the noncomparable impact of the
U.S. canned milk business divested on December 31, 2015.
|
The J. M. Smucker
Company
|
Unaudited Non-GAAP
Financial Measures
|
|
|
|
|
Three Months Ended
October 31,
|
|
Six Months Ended
October 31,
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
(Dollars in millions,
except per share data)
|
|
|
|
|
|
|
|
|
|
|
Gross profit
reconciliation:
|
|
|
|
|
|
|
|
|
Gross
profit
|
$
742.9
|
|
$
787.3
|
|
$
1,465.6
|
|
$
1,516.0
|
|
Unallocated
derivative losses (gains)
|
14.2
|
|
(6.0)
|
|
6.5
|
|
4.0
|
|
Cost of products sold
- special project costs
|
0.3
|
|
3.0
|
|
4.3
|
|
6.1
|
|
Adjusted gross
profit
|
$
757.4
|
|
$
784.3
|
|
$
1,476.4
|
|
$
1,526.1
|
|
|
% of net
sales
|
39.6%
|
|
37.7%
|
|
39.6%
|
|
37.9%
|
|
|
|
|
|
|
|
|
|
|
Operating income
reconciliation:
|
|
|
|
|
|
|
|
|
Operating
income
|
$
303.3
|
|
$
313.8
|
|
$
597.1
|
|
$
580.9
|
|
Amortization
|
51.8
|
|
53.0
|
|
103.5
|
|
106.0
|
|
Unallocated
derivative losses (gains)
|
14.2
|
|
(6.0)
|
|
6.5
|
|
4.0
|
|
Cost of products sold
- special project costs
|
0.3
|
|
3.0
|
|
4.3
|
|
6.1
|
|
Other special project
costs
|
26.6
|
|
30.6
|
|
48.8
|
|
53.5
|
|
Adjusted operating
income
|
$
396.2
|
|
$
394.4
|
|
$
760.2
|
|
$
750.5
|
|
|
% of net
sales
|
20.7%
|
|
19.0%
|
|
20.4%
|
|
18.6%
|
|
|
|
|
|
|
|
|
|
|
Net income
reconciliation:
|
|
|
|
|
|
|
|
|
Net income
|
$
177.3
|
|
$
176.0
|
|
$
347.3
|
|
$
312.4
|
|
Income
taxes
|
88.2
|
|
93.6
|
|
171.6
|
|
180.0
|
|
Amortization
|
51.8
|
|
53.0
|
|
103.5
|
|
106.0
|
|
Unallocated
derivative losses (gains)
|
14.2
|
|
(6.0)
|
|
6.5
|
|
4.0
|
|
Cost of products sold
- special project costs
|
0.3
|
|
3.0
|
|
4.3
|
|
6.1
|
|
Other special project
costs
|
26.6
|
|
30.6
|
|
48.8
|
|
53.5
|
|
Adjusted income
before income taxes
|
$
358.4
|
|
$
350.2
|
|
$
682.0
|
|
$
662.0
|
|
Income taxes, as
adjusted
|
119.2
|
|
121.1
|
|
225.6
|
|
242.0
|
|
Adjusted
income
|
$
239.2
|
|
$
229.1
|
|
$
456.4
|
|
$
420.0
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
common shares outstanding
|
115,885,448
|
|
119,159,257
|
|
115,845,261
|
|
119,124,508
|
Weighted-average
participating shares outstanding
|
544,184
|
|
511,041
|
|
536,776
|
|
521,518
|
Total
weighted-average shares outstanding
|
116,429,632
|
|
119,670,298
|
|
116,382,037
|
|
119,646,026
|
Dilutive effect of
stock options
|
123,608
|
|
10,276
|
|
132,332
|
|
11,740
|
Total
weighted-average shares outstanding - assuming dilution
|
116,553,240
|
|
119,680,574
|
|
116,514,369
|
|
119,657,766
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings per
share
|
$
2.05
|
|
$
1.91
|
|
$
3.92
|
|
$
3.51
|
The J. M. Smucker
Company
|
Unaudited Non-GAAP
Financial Measures
|
|
|
|
|
Three Months Ended
October 31,
|
|
Six Months Ended
October 31,
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
EBITDA
reconciliation:
|
|
|
|
|
|
|
|
|
Net income
|
$
177.3
|
|
$
176.0
|
|
$
347.3
|
|
$
312.4
|
|
Income
taxes
|
88.2
|
|
93.6
|
|
171.6
|
|
180.0
|
|
Interest expense -
net
|
41.0
|
|
42.6
|
|
82.5
|
|
87.0
|
|
Depreciation
|
53.0
|
|
54.7
|
|
107.0
|
|
110.4
|
|
Amortization
|
51.8
|
|
53.0
|
|
103.5
|
|
106.0
|
|
Earnings before
interest, taxes, depreciation, and amortization
|
$
411.3
|
|
$
419.9
|
|
$
811.9
|
|
$
795.8
|
|
|
% of net
sales
|
21.5%
|
|
20.2%
|
|
21.8%
|
|
19.7%
|
|
|
|
|
|
|
|
|
|
|
Free cash flow
reconciliation:
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
$
136.4
|
|
$
275.5
|
|
$
375.3
|
|
$
582.5
|
|
Additions to
property, plant, and equipment
|
(33.8)
|
|
(64.4)
|
|
(84.0)
|
|
(117.4)
|
|
Free cash
flow
|
$
102.6
|
|
$
211.1
|
|
$
291.3
|
|
$
465.1
|
The following tables
provide a reconciliation of the Company's fiscal 2017 guidance for
estimated adjusted earnings per share and free cash
flow.
|
|
|
|
|
Year Ending April 30,
2017
|
|
|
|
Low
|
|
High
|
|
|
|
|
|
|
Net income per common
share - assuming dilution reconciliation:
|
|
|
|
|
Net income per common
share - assuming dilution
|
$
5.85
|
|
$
6.00
|
|
Special project
costs
|
0.57
|
|
0.57
|
|
Amortization
|
1.18
|
|
1.18
|
|
Adjusted earnings per
share
|
$
7.60
|
|
$
7.75
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ending April 30,
2017
|
|
|
|
|
|
(Dollars in
millions)
|
|
|
Free cash flow
reconciliation:
|
|
|
|
|
Net cash provided by
operating activities
|
$
1,240
|
|
|
|
Additions to
property, plant, and equipment
|
(240)
|
|
|
|
Free cash
flow
|
$
1,000
|
|
|
Logo -
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To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/the-j-m-smucker-company-announces-fiscal-2017-second-quarter-results-300365036.html
SOURCE The J. M. Smucker Company