ORRVILLE, Ohio, Nov. 16, 2017 /PRNewswire/ -- The J. M.
Smucker Company (NYSE: SJM) today announced results for the second
quarter ended October 31, 2017, of
its 2018 fiscal year. All comparisons are to the second
quarter of the prior fiscal year, unless otherwise noted.
EXECUTIVE SUMMARY
- Net sales increased 1 percent, reflecting improved trends from
the prior quarter.
- Net income per diluted share increased 13 percent to
$1.71.
- Adjusted earnings per share was $2.02, a decrease of 1 percent.
- Cash provided by operating activities was $130.3 million, compared to $136.4 million in the prior year.
- Free cash flow was $69.9 million
in the quarter and $304.6 million
through the first half of fiscal 2018.
- The Company updated its full-year 2018 net sales and earnings
outlook.
CHIEF EXECUTIVE OFFICER REMARKS
"We are pleased with our second quarter results, primarily
driven by our pet food business and the strong performance of a
number of key brands across all our businesses," said Mark Smucker, Chief Executive Officer.
"This included double-digit sales increases for Nature's
Recipe® dog food, Dunkin'
Donuts® coffee, and
Jif® peanut butter. We also
experienced continued strong growth of our brands in e-commerce, as
sales in this channel doubled in the quarter for our U.S. retail
segments. We are confident in the ability of our brands to
win in the rapidly changing retail environment. In addition,
we remain focused on achieving sustainable cost reductions that
support both the bottom-line and fuel investments in future
growth."
SECOND QUARTER CONSOLIDATED RESULTS
|
|
Three Months Ended
October 31,
|
|
|
|
|
|
|
% Increase
|
|
|
2017
|
|
2016
|
|
(Decrease)
|
|
|
(Dollars and shares
in millions, except per share data)
|
|
|
|
|
|
|
|
Net
sales
|
$1,923.6
|
|
$1,913.9
|
|
1%
|
|
|
|
|
|
|
|
Operating
income
|
$330.7
|
|
$303.3
|
|
9%
|
Adjusted operating
income
|
383.2
|
|
396.2
|
|
(3%)
|
|
|
|
|
|
|
|
Net income per
common share – assuming dilution
|
$1.71
|
|
$1.52
|
|
13%
|
Adjusted earnings per
share
|
2.02
|
|
2.05
|
|
(1%)
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding – assuming dilution
|
113.6
|
|
116.6
|
|
(3%)
|
Net Sales
Net sales increased $9.7 million, or 1 percent. Net price
realization contributed 1 percentage point of growth, driven by
higher net pricing for peanut butter and the
Smucker's® brand. Lower volume/mix impacted
net sales by 1 percentage point, as declines in the oils and baking
categories were partially offset by gains in pet food.
Favorable foreign currency exchange contributed $5.4 million to net sales.
Operating Income
Gross profit increased $12.1 million, or 2 percent. A net benefit
of higher pricing and costs more than offset lower volume/mix,
primarily attributed to the oils and baking categories.
Selling, distribution, and administrative ("SD&A")
expenses decreased $2.2 million,
driven by incremental synergy realization and the Company's cost
savings initiatives. Operating income increased $27.4 million, or 9 percent, further reflecting a
reduction in special project costs.
On a non-GAAP basis, adjusted gross profit decreased
$11.2 million, or 1 percent, with the
primary difference from GAAP results being the exclusion of
a $23.9 million favorable change in unallocated
derivative gains and losses. Adjusted operating income
decreased $13.0 million, or 3
percent.
Other
Net interest expense increased $0.6 million. Income taxes increased
$9.0 million. This was
primarily attributed to higher income before income taxes, as the
effective tax rate was 33.3 percent in the current year, compared
to 33.2 percent in the prior year.
FULL-YEAR OUTLOOK
The Company updated its full-year fiscal 2018 guidance as
summarized below:
|
|
Current
|
Previous
|
|
Adjusted earnings per
share
|
$7.75 -
$7.90
|
$7.75 -
$7.95
|
|
Free cash
flow
|
$775
million
|
$775
million
|
|
Capital
expenditures
|
$310
million
|
$310
million
|
|
Effective tax
rate
|
32.5% -
33.0%
|
32.5% -
33.0%
|
Net sales are expected to be in the range of flat to down
slightly, compared to the prior year. Adjusted earnings per
share is expected to range from $7.75 to
$7.90, based on 113.6 million shares outstanding.
The change in earnings guidance further reflects
anticipated freight cost increases for the remainder of the fiscal
year, driven by industry-wide headwinds. The above guidance
excludes any potential impact following completion of the Company's
previously announced definitive agreement to acquire the
Wesson® oil brand from Conagra Brands, Inc.,
which is pending regulatory approval.
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
|
FY18 Q2
Results
|
|
$552.7
|
|
$152.6
|
|
27.6%
|
Increase (decrease)
vs prior year
|
-
|
|
(18%)
|
|
-620bps
|
Segment net sales increased $0.9
million, reflecting a slight increase in net price
realization. Lower volume/mix for the
Folgers® brand was mostly offset by gains for the
Dunkin' Donuts® and Café
Bustelo® brands. Segment profit decreased
$33.9 million primarily due to higher
green coffee costs and the unfavorable impact of volume/mix.
U.S. Retail Consumer Foods
|
|
Net
|
|
Segment
|
|
Segment
|
|
|
Sales
|
|
Profit
|
|
Profit
Margin
|
FY18 Q2
Results
|
|
$531.5
|
|
$130.9
|
|
24.6%
|
Increase (decrease)
vs prior year
|
(5%)
|
|
10%
|
|
330bps
|
Segment net sales decreased $25.8
million. Volume/mix reduced net sales by 9 percentage
points, primarily driven by the Crisco® and
Pillsbury® brands. Net price realization
increased net sales by 4 percentage points, primarily attributed to
the Jif® and Smucker's® brands.
Segment profit increased $12.0
million due to improved net pricing and reduced marketing
expense, partially offset by lower volume/mix.
U.S. Retail Pet Foods
|
|
Net
|
|
Segment
|
|
Segment
|
|
|
Sales
|
|
Profit
|
|
Profit
Margin
|
FY18 Q2
Results
|
|
$552.1
|
|
$122.9
|
|
22.3%
|
Increase (decrease)
vs prior year
|
4%
|
|
7%
|
|
70bps
|
Segment net sales increased $21.1
million. Favorable volume/mix, driven by the
Nature's Recipe® and Meow Mix®
brands, increased net sales by 5 percentage points. A slight
decline in net price realization was primarily attributed to the
Meow Mix® brand. Segment profit increased
$8.4 million primarily reflecting
synergies and cost savings initiatives, which more than offset
increased marketing expense.
International and Away From Home
|
|
Net
|
|
Segment
|
|
Segment
|
|
|
Sales
|
|
Profit
|
|
Profit
Margin
|
FY18 Q2
Results
|
|
$287.3
|
|
$53.7
|
|
18.7%
|
Increase (decrease)
vs prior year
|
5%
|
|
4%
|
|
-20bps
|
Segment net sales increased $13.5 million, reflecting
$5.4 million of favorable foreign
currency exchange and higher volume/mix driven by the
Jif® and Smucker's® brands.
Net price realization increased net sales by 1 percentage
point. Segment profit increased $2.0 million as the
contributions from favorable volume/mix and foreign currency
exchange were partially offset by expenses related to the
construction of the Smucker's®
Uncrustables® production facility in
Longmont, Colorado.
Conference Call
The Company will conduct an earnings
conference call and webcast today, November
16, 2017, 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 cost savings and synergies related to the organization
optimization and cost management programs in the amounts and within
the time frames currently anticipated and to effectively manage the
related integration and restructuring costs; the ability to satisfy
the closing conditions for the Wesson®
transaction, including receipt of required regulatory approvals,
without unexpected delays or conditions; the ability to generate
sufficient cash flow to meet the Company's cash deployment
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 product innovation; 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 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.
The J. M. Smucker
Company
Unaudited Condensed
Consolidated Statements of Income
|
|
|
|
|
Three Months Ended
October 31,
|
|
Six Months Ended
October 31,
|
|
|
|
|
|
|
% Increase
|
|
|
|
|
|
% Increase
|
|
|
2017
|
|
2016
|
|
(Decrease)
|
|
2017
|
|
2016
|
|
(Decrease)
|
|
|
(Dollars and shares
in millions, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$1,923.6
|
|
$1,913.9
|
|
1%
|
|
$3,672.5
|
|
$3,729.7
|
|
(2%)
|
Cost of products
sold
|
1,168.6
|
|
1,171.0
|
|
(0%)
|
|
2,255.4
|
|
2,264.1
|
|
(0%)
|
Gross
Profit
|
755.0
|
|
742.9
|
|
2%
|
|
1,417.1
|
|
1,465.6
|
|
(3%)
|
|
Gross
margin
|
39.2%
|
|
38.8%
|
|
|
|
38.6%
|
|
39.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
distribution, and administrative expenses
|
360.9
|
|
363.1
|
|
(1%)
|
|
711.1
|
|
719.1
|
|
(1%)
|
Amortization
|
51.6
|
|
51.8
|
|
(0%)
|
|
103.1
|
|
103.5
|
|
(0%)
|
Other special project
costs
|
9.7
|
|
26.6
|
|
(64%)
|
|
36.8
|
|
48.8
|
|
(25%)
|
Other operating
expense (income) - net
|
2.1
|
|
(1.9)
|
|
n/m
|
|
1.6
|
|
(2.9)
|
|
(155%)
|
Operating
Income
|
330.7
|
|
303.3
|
|
9%
|
|
564.5
|
|
597.1
|
|
(5%)
|
|
Operating
margin
|
17.2%
|
|
15.8%
|
|
|
|
15.4%
|
|
16.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense -
net
|
(41.6)
|
|
(41.0)
|
|
1%
|
|
(83.6)
|
|
(82.5)
|
|
1%
|
Other income
(expense) - net
|
2.7
|
|
3.2
|
|
(16%)
|
|
(0.1)
|
|
4.3
|
|
(102%)
|
Income Before
Income Taxes
|
291.8
|
|
265.5
|
|
10%
|
|
480.8
|
|
518.9
|
|
(7%)
|
Income
taxes
|
97.2
|
|
88.2
|
|
10%
|
|
159.4
|
|
171.6
|
|
(7%)
|
Net
Income
|
$194.6
|
|
$177.3
|
|
10%
|
|
$321.4
|
|
$347.3
|
|
(7%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per
common share
|
$1.71
|
|
$1.52
|
|
13%
|
|
$2.83
|
|
$2.98
|
|
(5%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per
common share –
|
|
|
|
|
|
|
|
|
|
|
|
|
assuming
dilution
|
$1.71
|
|
$1.52
|
|
13%
|
|
$2.83
|
|
$2.98
|
|
(5%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared
per common share
|
$0.78
|
|
$0.75
|
|
4%
|
|
$1.56
|
|
$1.50
|
|
4%
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding
|
113.6
|
|
116.4
|
|
(2%)
|
|
113.5
|
|
116.4
|
|
(2%)
|
Weighted-average
shares outstanding –
|
|
|
|
|
|
|
|
|
|
|
|
assuming
dilution
|
113.6
|
|
116.6
|
|
(3%)
|
|
113.6
|
|
116.5
|
|
(3%)
|
The J. M. Smucker
Company
Unaudited Condensed
Consolidated Balance Sheets
|
|
|
|
|
October 31,
2017
|
|
April 30,
2017
|
|
|
|
(Dollars in
millions)
|
Assets
|
|
|
|
Current
Assets:
|
|
|
|
|
Cash and cash
equivalents
|
$180.3
|
|
$166.8
|
|
Trade receivables,
less allowance for doubtful accounts
|
481.6
|
|
438.7
|
|
Inventories
|
1,011.7
|
|
905.7
|
|
Other current
assets
|
112.2
|
|
130.6
|
|
|
Total Current
Assets
|
1,785.8
|
|
1,641.8
|
|
|
|
|
|
|
Property, Plant,
and Equipment - Net
|
1,615.7
|
|
1,617.5
|
|
|
|
|
|
|
Other Noncurrent
Assets:
|
|
|
|
|
Goodwill
|
6,086.5
|
|
6,077.1
|
|
Other intangible
assets - net
|
6,051.1
|
|
6,149.9
|
|
Other noncurrent
assets
|
162.9
|
|
153.4
|
|
|
Total Other
Noncurrent Assets
|
12,300.5
|
|
12,380.4
|
Total
Assets
|
$15,702.0
|
|
$15,639.7
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
Current
Liabilities:
|
|
|
|
|
Accounts
payable
|
$507.4
|
|
$477.2
|
|
Current portion of
long-term debt
|
499.6
|
|
499.0
|
|
Short-term
borrowings
|
463.9
|
|
454.0
|
|
Other current
liabilities
|
383.6
|
|
402.4
|
|
|
Total Current
Liabilities
|
1,854.5
|
|
1,832.6
|
|
|
|
|
|
|
Noncurrent
Liabilities:
|
|
|
|
|
Long-term debt, less
current portion
|
4,294.1
|
|
4,445.5
|
|
Other noncurrent
liabilities
|
2,517.1
|
|
2,511.4
|
|
|
Total Noncurrent
Liabilities
|
6,811.2
|
|
6,956.9
|
|
|
|
|
|
|
Shareholders'
Equity
|
7,036.3
|
|
6,850.2
|
Total Liabilities
and Shareholders' Equity
|
$15,702.0
|
|
$15,639.7
|
The J. M. Smucker
Company
Unaudited Condensed
Consolidated Statements of Cash Flow
|
|
|
|
|
|
Three Months Ended
October 31,
|
|
Six Months Ended
October 31,
|
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Activities
|
|
|
|
|
|
|
|
|
Net income
|
$194.6
|
|
$177.3
|
|
$321.4
|
|
$347.3
|
|
Adjustments to
reconcile net income to net cash
|
|
|
|
|
|
|
|
|
provided by (used
for) operations:
|
|
|
|
|
|
|
|
|
|
Depreciation
|
50.6
|
|
53.0
|
|
105.1
|
|
107.0
|
|
|
Amortization
|
51.6
|
|
51.8
|
|
103.1
|
|
103.5
|
|
|
Share-based
compensation expense
|
6.1
|
|
7.0
|
|
12.7
|
|
15.1
|
|
|
Other noncash
adjustments
|
1.5
|
|
0.7
|
|
2.3
|
|
1.4
|
|
|
Defined benefit
pension contributions
|
-
|
|
(0.5)
|
|
(0.8)
|
|
(1.3)
|
|
|
Changes in assets and
liabilities, net of effect
|
|
|
|
|
|
|
|
|
|
from businesses
acquired:
|
|
|
|
|
|
|
|
|
|
|
Trade
receivables
|
(48.8)
|
|
4.4
|
|
(41.5)
|
|
(69.9)
|
|
|
|
Inventories
|
(32.4)
|
|
(15.4)
|
|
(103.6)
|
|
(132.7)
|
|
|
|
Accounts payable and
accrued items
|
(29.8)
|
|
(35.1)
|
|
58.0
|
|
17.8
|
|
|
|
Income and other
taxes
|
(82.7)
|
|
(83.7)
|
|
(46.8)
|
|
(38.6)
|
|
|
Other -
net
|
19.6
|
|
(23.1)
|
|
24.7
|
|
25.7
|
Net Cash Provided
by (Used for) Operating Activities
|
130.3
|
|
136.4
|
|
434.6
|
|
375.3
|
|
|
|
|
|
|
|
|
|
|
|
Investing
Activities
|
|
|
|
|
|
|
|
|
Additions to
property, plant, and equipment
|
(60.4)
|
|
(33.8)
|
|
(130.0)
|
|
(84.0)
|
|
Other -
net
|
(7.8)
|
|
-
|
|
23.7
|
|
(12.3)
|
Net Cash Provided
by (Used for) Investing Activities
|
(68.2)
|
|
(33.8)
|
|
(106.3)
|
|
(96.3)
|
|
|
|
|
|
|
|
|
|
|
|
Financing
Activities
|
|
|
|
|
|
|
|
|
Short-term borrowings
(repayments) - net
|
180.1
|
|
100.0
|
|
10.0
|
|
122.0
|
|
Repayments of
long-term debt
|
(150.0)
|
|
(100.0)
|
|
(150.0)
|
|
(200.0)
|
|
Quarterly dividends
paid
|
(88.5)
|
|
(87.1)
|
|
(173.4)
|
|
(164.9)
|
|
Purchase of treasury
shares
|
(0.1)
|
|
(0.7)
|
|
(6.7)
|
|
(18.8)
|
|
Other -
net
|
(2.6)
|
|
(0.1)
|
|
(1.1)
|
|
0.6
|
Net Cash Provided
by (Used for) Financing Activities
|
(61.1)
|
|
(87.9)
|
|
(321.2)
|
|
(261.1)
|
Effect of exchange
rate changes on cash
|
(3.9)
|
|
(2.5)
|
|
6.4
|
|
(5.9)
|
Net increase
(decrease) in cash and cash equivalents
|
(2.9)
|
|
12.2
|
|
13.5
|
|
12.0
|
Cash and cash
equivalents at beginning of period
|
183.2
|
|
109.6
|
|
166.8
|
|
109.8
|
Cash and Cash
Equivalents at End of Period
|
$180.3
|
|
$121.8
|
|
$180.3
|
|
$121.8
|
The J. M. Smucker
Company
Unaudited
Supplemental Schedule
|
|
|
|
Three Months Ended
October 31,
|
|
Six Months Ended
October 31,
|
|
|
|
|
%
of
|
|
|
|
%
of
|
|
|
|
%
of
|
|
|
|
%
of
|
|
|
2017
|
|
Net Sales
|
|
2016
|
|
Net Sales
|
|
2017
|
|
Net Sales
|
|
2016
|
|
Net Sales
|
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$1,923.6
|
|
|
|
$1,913.9
|
|
|
|
$3,672.5
|
|
|
|
$3,729.7
|
|
|
Selling,
distribution, and administrative
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketing
|
117.6
|
|
6.1%
|
|
121.1
|
|
6.3%
|
|
233.2
|
|
6.3%
|
|
229.8
|
|
6.2%
|
|
Selling
|
64.9
|
|
3.4%
|
|
67.7
|
|
3.5%
|
|
132.0
|
|
3.6%
|
|
132.7
|
|
3.6%
|
|
Distribution
|
60.6
|
|
3.2%
|
|
62.5
|
|
3.3%
|
|
118.5
|
|
3.2%
|
|
122.7
|
|
3.3%
|
|
General and
administrative
|
117.8
|
|
6.1%
|
|
111.8
|
|
5.8%
|
|
227.4
|
|
6.2%
|
|
233.9
|
|
6.3%
|
Total selling,
distribution, and administrative
expenses
|
$360.9
|
|
18.8%
|
|
$363.1
|
|
19.0%
|
|
$711.1
|
|
19.4%
|
|
$719.1
|
|
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,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
Net sales:
|
|
|
|
|
|
|
|
|
U.S. Retail
Coffee
|
$552.7
|
|
$551.8
|
|
$1,033.5
|
|
$1,065.1
|
|
U.S. Retail Consumer
Foods
|
531.5
|
|
557.3
|
|
1,023.9
|
|
1,094.3
|
|
U.S. Retail Pet
Foods
|
552.1
|
|
531.0
|
|
1,073.8
|
|
1,050.5
|
|
International and
Away From Home
|
287.3
|
|
273.8
|
|
541.3
|
|
519.8
|
Total net
sales
|
$1,923.6
|
|
$1,913.9
|
|
$3,672.5
|
|
$3,729.7
|
|
|
|
|
|
|
|
|
|
Segment
profit:
|
|
|
|
|
|
|
|
|
U.S. Retail
Coffee
|
$152.6
|
|
$186.5
|
|
$276.4
|
|
$360.3
|
|
U.S. Retail Consumer
Foods
|
130.9
|
|
118.9
|
|
241.8
|
|
230.3
|
|
U.S. Retail Pet
Foods
|
122.9
|
|
114.5
|
|
221.2
|
|
236.7
|
|
International and
Away From Home
|
53.7
|
|
51.7
|
|
92.0
|
|
91.2
|
Total segment
profit
|
$460.1
|
|
$471.6
|
|
$831.4
|
|
$918.5
|
|
Amortization
|
(51.6)
|
|
(51.8)
|
|
(103.1)
|
|
(103.5)
|
|
Interest expense -
net
|
(41.6)
|
|
(41.0)
|
|
(83.6)
|
|
(82.5)
|
|
Unallocated
derivative gains (losses)
|
9.7
|
|
(14.2)
|
|
22.3
|
|
(6.5)
|
|
Cost of products sold
- special project costs
|
(0.9)
|
|
(0.3)
|
|
(1.6)
|
|
(4.3)
|
|
Other special project
costs
|
(9.7)
|
|
(26.6)
|
|
(36.8)
|
|
(48.8)
|
|
Corporate
administrative expenses
|
(76.9)
|
|
(75.4)
|
|
(147.7)
|
|
(158.3)
|
|
Other income
(expense) - net
|
2.7
|
|
3.2
|
|
(0.1)
|
|
4.3
|
Income before income
taxes
|
$291.8
|
|
$265.5
|
|
$480.8
|
|
$518.9
|
|
|
|
|
|
|
|
|
|
Segment profit
margin:
|
|
|
|
|
|
|
|
|
U.S. Retail
Coffee
|
27.6%
|
|
33.8%
|
|
26.7%
|
|
33.8%
|
|
U.S. Retail Consumer
Foods
|
24.6%
|
|
21.3%
|
|
23.6%
|
|
21.0%
|
|
U.S. Retail Pet
Foods
|
22.3%
|
|
21.6%
|
|
20.6%
|
|
22.5%
|
|
International and
Away From Home
|
18.7%
|
|
18.9%
|
|
17.0%
|
|
17.5%
|
Non-GAAP Measures
The Company uses non-GAAP financial measures, including: net
sales excluding foreign currency exchange; adjusted gross profit,
operating income, income, and earnings per share; earnings before
interest, taxes, depreciation, amortization, and impairment charges
related to intangible assets ("EBITDA (as adjusted)"); 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 amortization expense and impairment
charges related to intangible assets, 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 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. 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 2018 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
|
|
|
|
|
|
2017
|
|
2016
|
|
(Decrease)
|
|
%
|
|
2017
|
|
2016
|
|
(Decrease)
|
|
%
|
|
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
reconciliation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$1,923.6
|
|
$1,913.9
|
|
$9.7
|
|
1%
|
|
$3,672.5
|
|
$3,729.7
|
|
($57.2)
|
|
(2%)
|
|
|
Foreign currency
exchange
|
(5.4)
|
|
-
|
|
(5.4)
|
|
-
|
|
(3.6)
|
|
-
|
|
(3.6)
|
|
-
|
|
Net sales excluding
foreign currency
exchange
|
$1,918.2
|
|
$1,913.9
|
|
$4.3
|
|
-
|
|
$3,668.9
|
|
$3,729.7
|
|
($60.8)
|
|
(2%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts may not add
due to rounding.
|
The J. M. Smucker
Company
Unaudited Non-GAAP
Financial Measures
|
|
|
|
|
|
Three Months Ended
October 31,
|
|
Six Months Ended
October 31,
|
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
(Dollars in millions,
except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
reconciliation:
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
$755.0
|
|
$742.9
|
|
$1,417.1
|
|
$1,465.6
|
|
|
Unallocated
derivative losses (gains)
|
(9.7)
|
|
14.2
|
|
(22.3)
|
|
6.5
|
|
|
Cost of products sold
- special project costs
|
0.9
|
|
0.3
|
|
1.6
|
|
4.3
|
|
|
Adjusted gross
profit
|
$746.2
|
|
$757.4
|
|
$1,396.4
|
|
$1,476.4
|
|
|
|
% of net
sales
|
38.8%
|
|
39.6%
|
|
38.0%
|
|
39.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
reconciliation:
|
|
|
|
|
|
|
|
|
|
Operating
income
|
$330.7
|
|
$303.3
|
|
$564.5
|
|
$597.1
|
|
|
Amortization
|
51.6
|
|
51.8
|
|
103.1
|
|
103.5
|
|
|
Unallocated
derivative losses (gains)
|
(9.7)
|
|
14.2
|
|
(22.3)
|
|
6.5
|
|
|
Cost of products sold
- special project costs
|
0.9
|
|
0.3
|
|
1.6
|
|
4.3
|
|
|
Other special project
costs
|
9.7
|
|
26.6
|
|
36.8
|
|
48.8
|
|
|
Adjusted operating
income
|
$383.2
|
|
$396.2
|
|
$683.7
|
|
$760.2
|
|
|
|
% of net
sales
|
19.9%
|
|
20.7%
|
|
18.6%
|
|
20.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
reconciliation:
|
|
|
|
|
|
|
|
|
|
Net income
|
$194.6
|
|
$177.3
|
|
$321.4
|
|
$347.3
|
|
|
Income
taxes
|
97.2
|
|
88.2
|
|
159.4
|
|
171.6
|
|
|
Amortization
|
51.6
|
|
51.8
|
|
103.1
|
|
103.5
|
|
|
Unallocated
derivative losses (gains)
|
(9.7)
|
|
14.2
|
|
(22.3)
|
|
6.5
|
|
|
Cost of products sold
- special project costs
|
0.9
|
|
0.3
|
|
1.6
|
|
4.3
|
|
|
Other special project
costs
|
9.7
|
|
26.6
|
|
36.8
|
|
48.8
|
|
|
Adjusted income
before income taxes
|
$344.3
|
|
$358.4
|
|
$600.0
|
|
$682.0
|
|
|
Income taxes, as
adjusted
|
114.8
|
|
119.2
|
|
198.9
|
|
225.6
|
|
|
Adjusted
income
|
$229.5
|
|
$239.2
|
|
$401.1
|
|
$456.4
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
common shares outstanding
|
112,996,645
|
|
115,885,448
|
|
112,960,063
|
|
115,845,261
|
|
Weighted-average
participating shares outstanding
|
592,543
|
|
544,184
|
|
586,781
|
|
536,776
|
|
Total
weighted-average shares outstanding
|
113,589,188
|
|
116,429,632
|
|
113,546,844
|
|
116,382,037
|
|
Dilutive effect of
stock options
|
2,725
|
|
123,608
|
|
25,760
|
|
132,332
|
|
Total
weighted-average shares outstanding - assuming dilution
|
113,591,913
|
|
116,553,240
|
|
113,572,604
|
|
116,514,369
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings per
share
|
$2.02
|
|
$2.05
|
|
$3.53
|
|
$3.92
|
The J. M. Smucker
Company
Unaudited Non-GAAP
Financial Measures
|
|
|
|
|
Three Months Ended
October 31,
|
|
Six Months Ended
October 31,
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
EBITDA (as adjusted)
reconciliation:
|
|
|
|
|
|
|
|
|
Net income
|
$194.6
|
|
$177.3
|
|
$321.4
|
|
$347.3
|
|
Income
taxes
|
97.2
|
|
88.2
|
|
159.4
|
|
171.6
|
|
Interest expense -
net
|
41.6
|
|
41.0
|
|
83.6
|
|
82.5
|
|
Depreciation
|
50.6
|
|
53.0
|
|
105.1
|
|
107.0
|
|
Amortization
|
51.6
|
|
51.8
|
|
103.1
|
|
103.5
|
|
EBITDA (as
adjusted)
|
$435.6
|
|
$411.3
|
|
$772.6
|
|
$811.9
|
|
|
% of net
sales
|
22.6%
|
|
21.5%
|
|
21.0%
|
|
21.8%
|
|
|
|
|
|
|
|
|
|
|
Free cash flow
reconciliation:
|
|
|
|
|
|
|
|
|
Net cash provided by
(used for) operating activities
|
$130.3
|
|
$136.4
|
|
$434.6
|
|
$375.3
|
|
Additions to
property, plant, and equipment
|
(60.4)
|
|
(33.8)
|
|
(130.0)
|
|
(84.0)
|
|
Free cash
flow
|
$69.9
|
|
$102.6
|
|
$304.6
|
|
$291.3
|
|
The following tables
provide a reconciliation of the Company's fiscal 2018 guidance for
estimated adjusted earnings per share and free cash
flow.
|
|
|
|
|
Year Ending April 30,
2018
|
|
|
|
Low
|
|
High
|
|
|
|
|
|
|
Net income per common
share - assuming dilution reconciliation:
|
|
|
|
|
Net income per common
share - assuming dilution
|
$6.19
|
|
$6.34
|
|
Special project
costs
|
0.38
|
|
0.38
|
|
Amortization
|
1.18
|
|
1.18
|
|
Adjusted earnings per
share
|
$7.75
|
|
$7.90
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ending April 30,
2018
|
|
|
|
|
|
(Dollars in
millions)
|
|
|
Free cash flow
reconciliation:
|
|
|
|
|
Net cash provided by
operating activities
|
$1,085
|
|
|
|
Additions to
property, plant, and equipment
|
(310)
|
|
|
|
Free cash
flow
|
$775
|
|
|
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SOURCE The J. M. Smucker Company