ORRVILLE, Ohio, Feb. 16, 2018 /PRNewswire/ -- The J. M.
Smucker Company (NYSE: SJM) today announced results for the third
quarter ended January 31, 2018, of
its 2018 fiscal year. All comparisons are to the third
quarter of the prior fiscal year, unless otherwise
noted.
EXECUTIVE SUMMARY
- Net sales increased 1 percent, reflecting growth across most of
the Company's key brands and categories.
- Net income per diluted share was $7.32, including a substantial nonrecurring
benefit related to recently enacted U.S. income tax reform,
partially offset by a noncash impairment charge within the U.S.
Retail Pet Foods segment.
- Adjusted earnings per share was $2.50, an increase of 25 percent, including
approximately $0.35 per share related
to a lower current year tax rate due to U.S. income tax
reform.
- Cash provided by operating activities was $469.0 million, compared to $419.5 million in the prior year.
- Free cash flow was $388.7 million
in the quarter and $693.3 million
through the first nine months of fiscal 2018.
- The Company increased its full-year 2018 earnings and free cash
flow outlook.
- With the benefit resulting from U.S. income tax reform, the
Company contributed an incremental $20.0
million to its employee pension plan and has announced a
one-time bonus of $1,000 to nearly
5,000 employees and a $1 million
increase to its charitable contributions.
CHIEF EXECUTIVE OFFICER REMARKS
"We had a strong third quarter, with sales growth for key brands
in every business and strong earnings per share growth fueled by
the benefits of U.S. income tax reform and ongoing cost
discipline," said Mark Smucker,
Chief Executive Officer. "These results reflect our
commitment to delivering top and bottom line growth and supporting
our portfolio of iconic and emerging brands. In addition, the
benefits of income tax reform provide incremental fuel to invest in
our growth initiatives and support our employees and communities as
well as opportunities to increase cash returned to
shareholders."
THIRD QUARTER CONSOLIDATED RESULTS
|
|
Three Months Ended
January 31,
|
|
|
|
|
|
|
% Increase
|
|
|
2018
|
|
2017
|
|
(Decrease)
|
|
|
(Dollars and shares
in millions, except per share data)
|
|
|
|
|
|
|
|
Net
sales
|
$1,903.3
|
|
$1,878.8
|
|
1%
|
|
|
|
|
|
|
|
Operating
income
|
$162.7
|
|
$237.7
|
|
(32%)
|
Adjusted operating
income
|
399.8
|
|
382.8
|
|
4%
|
|
|
|
|
|
|
|
Net income per
common share – assuming dilution
|
$7.32
|
|
$1.16
|
|
n/m
|
Adjusted earnings per
share – assuming dilution
|
2.50
|
|
2.00
|
|
25%
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding – assuming dilution
|
113.6
|
|
116.5
|
|
(2%)
|
Net Sales
Net sales increased $24.5 million, or 1 percent. Favorable
volume/mix increased net sales by 1 percentage point, primarily
driven by growth in pet food and coffee, partially offset by
declines in the oils category. Net price realization slightly
offset some of the volume/mix gains, driven by lower net pricing
within pet food. Favorable foreign currency exchange contributed
$5.8 million to net sales.
Operating Income
Gross profit increased $5.6 million, or 1 percent, reflecting favorable
volume/mix, primarily attributed to the coffee category. Selling,
distribution, and administrative ("SD&A") expenses decreased
$5.3 million, driven by the Company's
cost savings initiatives, which more than offset an increase in
marketing expense. Operating income decreased $75.0
million, primarily reflecting a $176.9 million noncash
impairment charge associated with the goodwill and certain
indefinite-lived trademarks within the Company's U.S. Retail
Pet Foods segment, while the prior year included a
$75.7 million noncash impairment
charge. The current year charge resulted from reduced growth
expectations for the U.S. Retail Pet Foods segment. A
reduction in other special project costs of $12.4 million also contributed to the change in
operating income.
On a non-GAAP basis, adjusted gross profit increased
$8.9 million, or 1 percent.
Adjusted operating income increased $17.0
million, or 4 percent, with the primary difference from GAAP
results being the exclusion of the impairment charges,
amortization, and special project costs.
Other
Net interest expense increased $2.8 million. The Company recognized an
income tax benefit of $715.3 million
in the third quarter. This included a $765.8 million net benefit related to the
recently enacted U.S. income tax reform, primarily reflecting the
remeasurement of deferred tax liabilities, partially offset by the
transition tax on undistributed foreign earnings. Excluding
these nonrecurring items, the Company's adjusted effective tax rate
was 19.7 percent in the third quarter, which included the benefit
of a lower current year tax rate due to U.S. income tax reform.
This resulted in a 28.2 percent rate through the first nine
months of fiscal 2018.
FULL-YEAR OUTLOOK
The Company updated its full-year fiscal 2018 guidance as
summarized below:
|
|
Current
|
Previous
|
|
Adjusted earnings per
share
|
$8.20 -
$8.30
|
$7.75 -
$7.90
|
|
Free cash
flow
|
$825
million
|
$775
million
|
|
Capital
expenditures
|
$310
million
|
$310
million
|
|
Adjusted effective
tax rate
|
28.0%
|
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 $8.20
to $8.30, based on 113.6 million
shares outstanding. The increase in earnings and cash flow
guidance primarily reflects the benefit of a lower effective tax
rate as a result of U.S. income tax reform, partially offset by
anticipated freight cost increases and a charge related to obsolete
inventory in the third quarter. 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. For fiscal 2019, the
Company projects an effective tax rate of 23 percent.
THIRD 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 Q3
Results
|
|
$550.5
|
|
$182.1
|
|
33.1%
|
Increase (decrease)
vs prior year
|
2%
|
|
6%
|
|
110bps
|
Segment net sales increased $12.9
million. Favorable volume/mix contributed 3 percentage
points, driven by Dunkin' Donuts®
K-Cup® pods and the Café Bustelo®
brand. The favorable volume/mix was slightly offset by lower
net price realization for
the Folgers® brand. Segment profit
increased $9.9 million primarily due
to favorable volume/mix and lower input costs, partially offset by
an increase in marketing expense.
U.S. Retail Consumer Foods
|
|
Net
|
|
Segment
|
|
Segment
|
|
|
Sales
|
|
Profit
|
|
Profit
Margin
|
FY18 Q3
Results
|
|
$511.6
|
|
$121.3
|
|
23.7%
|
Increase (decrease)
vs prior year
|
(1%)
|
|
2%
|
|
70bps
|
Segment net sales decreased $5.7
million. Volume/mix reduced net sales by 3 percentage
points, primarily driven by the Crisco® and
Pillsbury® brands, partially offset by gains for
the Smucker's® brand. Net price
realization increased net sales by 2 percentage points.
Segment profit increased $2.1
million due to improved net pricing and operational
efficiencies, which were partially offset by lower volume/mix.
U.S. Retail Pet Foods
|
|
Net
|
|
Segment
|
|
Segment
|
|
|
Sales
|
|
Profit
|
|
Profit
Margin
|
FY18 Q3
Results
|
|
$561.9
|
|
$118.0
|
|
21.0%
|
Increase (decrease)
vs prior year
|
2%
|
|
(7%)
|
|
-190bps
|
Segment net sales increased $11.0
million. Favorable volume/mix increased net sales by 3
percentage points, driven by the Nature's Recipe®
brand and gains in the Company's pet snacks portfolio. Lower
net price realization reduced net sales by 1 percentage point.
Segment profit decreased $8.3
million, reflecting an incremental $7.1 million charge related to obsolete
inventory. Higher marketing expense also contributed to the segment
profit decline.
International and Away From Home
|
|
Net
|
|
Segment
|
|
Segment
|
|
|
Sales
|
|
Profit
|
|
Profit
Margin
|
FY18 Q3
Results
|
|
$279.3
|
|
$52.6
|
|
18.8%
|
Increase (decrease)
vs prior year
|
2%
|
|
16%
|
|
210bps
|
Segment net sales increased $6.3 million, reflecting
$5.8 million of favorable foreign
currency exchange and higher volume/mix driven by the
Jif® and Smucker's® brands.
Net price realization reduced net sales by 1 percentage
point. Segment profit increased $7.1 million, reflecting
the contribution from favorable volume/mix and foreign currency
exchange, along with lower marketing expense. In addition,
the prior year included a $1.9
million write-off associated with the disposal of assets.
Conference Call
The Company will conduct an earnings
conference call and webcast today, February
16, 2018, beginning at 7:30 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 related to the organization optimization and
cost management programs in the amounts and within the time frames
currently anticipated; the ability to satisfy the closing
conditions for the Wesson® transaction, including
receipt of required regulatory approvals; 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
January 31,
|
|
Nine Months Ended
January 31,
|
|
|
|
|
|
|
% Increase
|
|
|
|
|
|
% Increase
|
|
|
2018
|
|
2017
|
|
(Decrease)
|
|
2018
|
|
2017
|
|
(Decrease)
|
|
|
(Dollars and shares
in millions, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$1,903.3
|
|
$1,878.8
|
|
1%
|
|
$5,575.8
|
|
$5,608.5
|
|
(1%)
|
Cost of products
sold
|
1,174.8
|
|
1,155.9
|
|
2%
|
|
3,430.2
|
|
3,420.0
|
|
0%
|
Gross
Profit
|
728.5
|
|
722.9
|
|
1%
|
|
2,145.6
|
|
2,188.5
|
|
(2%)
|
|
Gross
margin
|
38.3%
|
|
38.5%
|
|
|
|
38.5%
|
|
39.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
distribution, and administrative expenses
|
331.9
|
|
337.2
|
|
(2%)
|
|
1,043.0
|
|
1,056.3
|
|
(1%)
|
Amortization
|
51.6
|
|
51.7
|
|
(0%)
|
|
154.7
|
|
155.2
|
|
(0%)
|
Impairment
charges
|
176.9
|
|
75.7
|
|
134%
|
|
176.9
|
|
75.7
|
|
134%
|
Other special project
costs
|
5.6
|
|
18.0
|
|
(69%)
|
|
42.4
|
|
66.8
|
|
(37%)
|
Other operating
expense (income) - net
|
(0.2)
|
|
2.6
|
|
(108%)
|
|
1.4
|
|
(0.3)
|
|
n/m
|
Operating
Income
|
162.7
|
|
237.7
|
|
(32%)
|
|
727.2
|
|
834.8
|
|
(13%)
|
|
Operating
margin
|
8.5%
|
|
12.7%
|
|
|
|
13.0%
|
|
14.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense -
net
|
(43.1)
|
|
(40.3)
|
|
7%
|
|
(126.7)
|
|
(122.8)
|
|
3%
|
Other income
(expense) - net
|
(3.6)
|
|
0.2
|
|
n/m
|
|
(3.7)
|
|
4.5
|
|
(182%)
|
Income Before
Income Taxes
|
116.0
|
|
197.6
|
|
(41%)
|
|
596.8
|
|
716.5
|
|
(17%)
|
Income tax expense
(benefit)
|
(715.3)
|
|
63.0
|
|
n/m
|
|
(555.9)
|
|
234.6
|
|
n/m
|
Net
Income
|
$831.3
|
|
$134.6
|
|
n/m
|
|
$1,152.7
|
|
$481.9
|
|
139%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per
common share
|
$7.32
|
|
$1.16
|
|
n/m
|
|
$10.15
|
|
$4.14
|
|
145%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per
common share –
|
|
|
|
|
|
|
|
|
|
|
|
|
assuming
dilution
|
$7.32
|
|
$1.16
|
|
n/m
|
|
$10.15
|
|
$4.14
|
|
145%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared
per common share
|
$0.78
|
|
$0.75
|
|
4%
|
|
$2.34
|
|
$2.25
|
|
4%
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding
|
113.6
|
|
116.4
|
|
(2%)
|
|
113.6
|
|
116.4
|
|
(2%)
|
Weighted-average
shares outstanding –
|
|
|
|
|
|
|
|
|
|
|
|
assuming
dilution
|
113.6
|
|
116.5
|
|
(2%)
|
|
113.6
|
|
116.5
|
|
(2%)
|
The J. M. Smucker
Company
Unaudited Condensed
Consolidated Balance Sheets
|
|
|
|
|
January 31,
2018
|
|
April 30,
2017
|
|
|
|
(Dollars in
millions)
|
Assets
|
|
|
|
Current
Assets:
|
|
|
|
|
Cash and cash
equivalents
|
$186.2
|
|
$166.8
|
|
Trade receivables,
less allowance for doubtful accounts
|
422.7
|
|
438.7
|
|
Inventories
|
909.1
|
|
905.7
|
|
Other current
assets
|
91.9
|
|
130.6
|
|
|
Total Current
Assets
|
1,609.9
|
|
1,641.8
|
|
|
|
|
|
|
Property, Plant,
and Equipment - Net
|
1,633.7
|
|
1,617.5
|
|
|
|
|
|
|
Other Noncurrent
Assets:
|
|
|
|
|
Goodwill
|
5,949.4
|
|
6,077.1
|
|
Other intangible
assets - net
|
5,970.8
|
|
6,149.9
|
|
Other noncurrent
assets
|
165.4
|
|
153.4
|
|
|
Total Other
Noncurrent Assets
|
12,085.6
|
|
12,380.4
|
Total
Assets
|
$15,329.2
|
|
$15,639.7
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
Current
Liabilities:
|
|
|
|
|
Accounts
payable
|
$471.2
|
|
$477.2
|
|
Current portion of
long-term debt
|
-
|
|
499.0
|
|
Short-term
borrowings
|
254.0
|
|
454.0
|
|
Other current
liabilities
|
364.7
|
|
402.4
|
|
|
Total Current
Liabilities
|
1,089.9
|
|
1,832.6
|
|
|
|
|
|
|
Noncurrent
Liabilities:
|
|
|
|
|
Long-term debt, less
current portion
|
4,688.5
|
|
4,445.5
|
|
Other noncurrent
liabilities
|
1,746.6
|
|
2,511.4
|
|
|
Total Noncurrent
Liabilities
|
6,435.1
|
|
6,956.9
|
|
|
|
|
|
|
Shareholders'
Equity
|
7,804.2
|
|
6,850.2
|
Total Liabilities
and Shareholders' Equity
|
$15,329.2
|
|
$15,639.7
|
The J. M. Smucker
Company
Unaudited Condensed
Consolidated Statements of Cash Flow
|
|
|
|
|
|
Three Months Ended
January 31,
|
|
Nine Months Ended
January 31,
|
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Activities
|
|
|
|
|
|
|
|
|
Net income
|
$831.3
|
|
$134.6
|
|
$1,152.7
|
|
$481.9
|
|
Adjustments to
reconcile net income to net cash
|
|
|
|
|
|
|
|
|
provided by (used
for) operations:
|
|
|
|
|
|
|
|
|
|
Depreciation
|
52.1
|
|
52.6
|
|
157.2
|
|
159.6
|
|
|
Amortization
|
51.6
|
|
51.7
|
|
154.7
|
|
155.2
|
|
|
Impairment
charges
|
176.9
|
|
75.7
|
|
176.9
|
|
75.7
|
|
|
Share-based
compensation expense
|
4.1
|
|
6.9
|
|
16.8
|
|
22.0
|
|
|
Remeasurement of U.S.
deferred tax assets and liabilities
|
(791.9)
|
|
-
|
|
(791.9)
|
|
-
|
|
|
Loss on disposal of
assets – net
|
3.0
|
|
2.9
|
|
5.3
|
|
3.9
|
|
|
Other noncash
adjustments
|
4.0
|
|
-
|
|
4.0
|
|
0.4
|
|
|
Defined benefit
pension contributions
|
(31.6)
|
|
(5.2)
|
|
(32.4)
|
|
(6.5)
|
|
|
Changes in assets and
liabilities, net of effect
|
|
|
|
|
|
|
|
|
|
from businesses
acquired:
|
|
|
|
|
|
|
|
|
|
|
Trade
receivables
|
60.1
|
|
96.9
|
|
18.6
|
|
27.0
|
|
|
|
Inventories
|
105.2
|
|
34.1
|
|
1.6
|
|
(98.6)
|
|
|
|
Accounts payable and
accrued items
|
(30.4)
|
|
(34.7)
|
|
27.6
|
|
(16.9)
|
|
|
|
Income and other
taxes
|
12.9
|
|
(18.5)
|
|
(33.9)
|
|
(57.1)
|
|
|
Other -
net
|
21.7
|
|
22.5
|
|
46.4
|
|
48.2
|
Net Cash Provided
by (Used for) Operating Activities
|
469.0
|
|
419.5
|
|
903.6
|
|
794.8
|
|
|
|
|
|
|
|
|
|
|
|
Investing
Activities
|
|
|
|
|
|
|
|
|
Additions to
property, plant, and equipment
|
(80.3)
|
|
(52.6)
|
|
(210.3)
|
|
(136.6)
|
|
Proceeds from
disposal of property, plant, and equipment
|
8.9
|
|
-
|
|
8.9
|
|
0.4
|
|
Other -
net
|
5.9
|
|
0.8
|
|
29.6
|
|
(11.9)
|
Net Cash Provided
by (Used for) Investing Activities
|
(65.5)
|
|
(51.8)
|
|
(171.8)
|
|
(148.1)
|
|
|
|
|
|
|
|
|
|
|
|
Financing
Activities
|
|
|
|
|
|
|
|
|
Short-term borrowings
(repayments) - net
|
(210.0)
|
|
(264.0)
|
|
(200.0)
|
|
(142.0)
|
|
Proceeds from
long-term debt
|
799.6
|
|
-
|
|
799.6
|
|
-
|
|
Repayments of
long-term debt
|
(900.3)
|
|
-
|
|
(1,050.3)
|
|
(200.0)
|
|
Quarterly dividends
paid
|
(88.0)
|
|
(87.2)
|
|
(261.4)
|
|
(252.1)
|
|
Purchase of treasury
shares
|
(0.2)
|
|
(0.2)
|
|
(6.9)
|
|
(19.0)
|
|
Other -
net
|
(5.1)
|
|
0.1
|
|
(6.2)
|
|
0.7
|
Net Cash Provided
by (Used for) Financing Activities
|
(404.0)
|
|
(351.3)
|
|
(725.2)
|
|
(612.4)
|
Effect of exchange
rate changes on cash
|
6.4
|
|
1.4
|
|
12.8
|
|
(4.5)
|
Net increase
(decrease) in cash and cash equivalents
|
5.9
|
|
17.8
|
|
19.4
|
|
29.8
|
Cash and cash
equivalents at beginning of period
|
180.3
|
|
121.8
|
|
166.8
|
|
109.8
|
Cash and Cash
Equivalents at End of Period
|
$186.2
|
|
$139.6
|
|
$186.2
|
|
$139.6
|
The J. M. Smucker
Company
Unaudited
Supplemental Schedule
|
|
|
|
Three Months Ended
January 31,
|
|
Nine Months Ended
January 31,
|
|
|
2018
|
|
%
of
Net
Sales
|
|
2017
|
|
%
of
Net
Sales
|
|
2018
|
|
%
of
Net
Sales
|
|
2017
|
|
%
of
Net
Sales
|
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$1,903.3
|
|
|
|
$1,878.8
|
|
|
|
$5,575.8
|
|
|
|
$5,608.5
|
|
|
Selling,
distribution, and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
administrative
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketing
|
102.5
|
|
5.4%
|
|
97.7
|
|
5.2%
|
|
335.7
|
|
6.0%
|
|
327.5
|
|
5.8%
|
|
Selling
|
55.5
|
|
2.9%
|
|
60.6
|
|
3.2%
|
|
187.5
|
|
3.4%
|
|
193.3
|
|
3.4%
|
|
Distribution
|
62.0
|
|
3.3%
|
|
61.5
|
|
3.3%
|
|
180.5
|
|
3.2%
|
|
184.2
|
|
3.3%
|
|
General and
administrative
|
111.9
|
|
5.9%
|
|
117.4
|
|
6.2%
|
|
339.3
|
|
6.1%
|
|
351.3
|
|
6.3%
|
Total selling,
distribution, and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
administrative
expenses
|
$331.9
|
|
17.4%
|
|
$337.2
|
|
17.9%
|
|
$1,043.0
|
|
18.7%
|
|
$1,056.3
|
|
18.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts may not add
due to rounding.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The J. M. Smucker
Company
Unaudited Reportable
Segments
|
|
|
|
Three Months Ended
January 31,
|
|
Nine Months Ended
January 31,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
Net sales:
|
|
|
|
|
|
|
|
|
U.S. Retail
Coffee
|
$550.5
|
|
$537.6
|
|
$1,584.0
|
|
$1,602.7
|
|
U.S. Retail Consumer
Foods
|
511.6
|
|
517.3
|
|
1,535.5
|
|
1,611.6
|
|
U.S. Retail Pet
Foods
|
561.9
|
|
550.9
|
|
1,635.7
|
|
1,601.4
|
|
International and
Away From Home
|
279.3
|
|
273.0
|
|
820.6
|
|
792.8
|
Total net
sales
|
$1,903.3
|
|
$1,878.8
|
|
$5,575.8
|
|
$5,608.5
|
|
|
|
|
|
|
|
|
|
Segment
profit:
|
|
|
|
|
|
|
|
|
U.S. Retail
Coffee
|
$182.1
|
|
$172.2
|
|
$458.5
|
|
$532.5
|
|
U.S. Retail Consumer
Foods
|
121.3
|
|
119.2
|
|
363.1
|
|
349.5
|
|
U.S. Retail Pet
Foods
|
118.0
|
|
126.3
|
|
339.2
|
|
363.0
|
|
International and
Away From Home
|
52.6
|
|
45.5
|
|
144.6
|
|
136.7
|
Total segment
profit
|
$474.0
|
|
$463.2
|
|
$1,305.4
|
|
$1,381.7
|
|
Amortization
|
(51.6)
|
|
(51.7)
|
|
(154.7)
|
|
(155.2)
|
|
Impairment
charges
|
(176.9)
|
|
(75.7)
|
|
(176.9)
|
|
(75.7)
|
|
Interest expense -
net
|
(43.1)
|
|
(40.3)
|
|
(126.7)
|
|
(122.8)
|
|
Unallocated
derivative gains (losses)
|
(0.7)
|
|
0.8
|
|
21.6
|
|
(5.7)
|
|
Cost of products sold
- special project costs
|
(2.3)
|
|
(0.5)
|
|
(3.9)
|
|
(4.8)
|
|
Other special project
costs
|
(5.6)
|
|
(18.0)
|
|
(42.4)
|
|
(66.8)
|
|
Corporate
administrative expenses
|
(74.2)
|
|
(80.4)
|
|
(221.9)
|
|
(238.7)
|
|
Other income
(expense) - net
|
(3.6)
|
|
0.2
|
|
(3.7)
|
|
4.5
|
Income before income
taxes
|
$116.0
|
|
$197.6
|
|
$596.8
|
|
$716.5
|
|
|
|
|
|
|
|
|
|
Segment profit
margin:
|
|
|
|
|
|
|
|
|
U.S. Retail
Coffee
|
33.1%
|
|
32.0%
|
|
28.9%
|
|
33.2%
|
|
U.S. Retail Consumer
Foods
|
23.7%
|
|
23.0%
|
|
23.6%
|
|
21.7%
|
|
U.S. Retail Pet
Foods
|
21.0%
|
|
22.9%
|
|
20.7%
|
|
22.7%
|
|
International and
Away From Home
|
18.8%
|
|
16.7%
|
|
17.6%
|
|
17.2%
|
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, 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. During the third quarter of
2018, the Company expanded its non-GAAP measures to also exclude
certain one-time discrete tax adjustments. These adjustments
include the provisional effect of the one-time items associated
with U.S. income tax reform, which includes certain discrete
adjustments related to the U.S. deferred tax assets and liabilities
remeasurement and transition tax. Also included in the one-time
discrete tax adjustments is the permanent tax difference related to
the goodwill impairment charge that was recorded during the third
quarter of 2018. The Company believes that excluding these
one-time discrete tax adjustments in its non-GAAP measures
provides comparability across the periods presented and better
reflects the benefit of a lower
blended U.S. statutory tax rate on its current year
earnings as a result of U.S. income tax reform.
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
January 31,
|
|
Nine Months Ended
January 31,
|
|
|
|
|
|
|
|
Increase
|
|
|
|
|
|
|
|
Increase
|
|
|
|
|
|
2018
|
|
2017
|
|
(Decrease)
|
|
%
|
|
2018
|
|
2017
|
|
(Decrease)
|
|
%
|
|
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
reconciliation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$1,903.3
|
|
$1,878.8
|
|
$24.5
|
|
1%
|
|
$5,575.8
|
|
$5,608.5
|
|
($32.7)
|
|
(1%)
|
|
|
Foreign currency
exchange
|
(5.8)
|
|
-
|
|
(5.8)
|
|
-
|
|
(9.4)
|
|
-
|
|
(9.4)
|
|
-
|
|
Net sales
excluding
foreign currency
exchange
|
$1,897.5
|
|
$1,878.8
|
|
$18.7
|
|
1%
|
|
$5,566.4
|
|
$5,608.5
|
|
($42.1)
|
|
(1%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts may not add
due to rounding.
|
|
|
|
|
|
|
|
|
|
|
The J. M. Smucker
Company
Unaudited Non-GAAP
Financial Measures
|
|
|
|
|
Three Months Ended
January 31,
|
|
Nine Months Ended
January 31,
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
(Dollars and shares
in millions, except per share data)
|
|
|
|
|
|
|
|
|
|
|
Gross profit
reconciliation:
|
|
|
|
|
|
|
|
|
Gross
profit
|
$728.5
|
|
$722.9
|
|
$2,145.6
|
|
$2,188.5
|
|
Unallocated
derivative losses (gains)
|
0.7
|
|
(0.8)
|
|
(21.6)
|
|
5.7
|
|
Cost of products sold
- special project costs
|
2.3
|
|
0.5
|
|
3.9
|
|
4.8
|
|
Adjusted gross
profit
|
$731.5
|
|
$722.6
|
|
$2,127.9
|
|
$2,199.0
|
|
|
% of net
sales
|
38.4%
|
|
38.5%
|
|
38.2%
|
|
39.2%
|
|
|
|
|
|
|
|
|
|
|
Operating income
reconciliation:
|
|
|
|
|
|
|
|
|
Operating
income
|
$162.7
|
|
$237.7
|
|
$727.2
|
|
$834.8
|
|
Amortization
|
51.6
|
|
51.7
|
|
154.7
|
|
155.2
|
|
Impairment
charges
|
176.9
|
|
75.7
|
|
176.9
|
|
75.7
|
|
Unallocated
derivative losses (gains)
|
0.7
|
|
(0.8)
|
|
(21.6)
|
|
5.7
|
|
Cost of products sold
- special project costs
|
2.3
|
|
0.5
|
|
3.9
|
|
4.8
|
|
Other special project
costs
|
5.6
|
|
18.0
|
|
42.4
|
|
66.8
|
|
Adjusted operating
income
|
$399.8
|
|
$382.8
|
|
$1,083.5
|
|
$1,143.0
|
|
|
% of net
sales
|
21.0%
|
|
20.4%
|
|
19.4%
|
|
20.4%
|
|
|
|
|
|
|
|
|
|
|
Net income
reconciliation:
|
|
|
|
|
|
|
|
|
Net income
|
$831.3
|
|
$134.6
|
|
$1,152.7
|
|
$481.9
|
|
Income tax expense
(benefit)
|
(715.3)
|
|
63.0
|
|
(555.9)
|
|
234.6
|
|
Amortization
|
51.6
|
|
51.7
|
|
154.7
|
|
155.2
|
|
Impairment
charges
|
176.9
|
|
75.7
|
|
176.9
|
|
75.7
|
|
Unallocated
derivative losses (gains)
|
0.7
|
|
(0.8)
|
|
(21.6)
|
|
5.7
|
|
Cost of products sold
- special project costs
|
2.3
|
|
0.5
|
|
3.9
|
|
4.8
|
|
Other special project
costs
|
5.6
|
|
18.0
|
|
42.4
|
|
66.8
|
|
Adjusted income
before income taxes
|
$353.1
|
|
$342.7
|
|
$953.1
|
|
$1,024.7
|
|
Income taxes, as
adjusted (A)
|
69.4
|
|
109.9
|
|
268.3
|
|
335.5
|
|
Adjusted
income
|
$283.7
|
|
$232.8
|
|
$684.8
|
|
$689.2
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
common shares outstanding
|
113.0
|
|
115.9
|
|
113.0
|
|
115.9
|
Weighted-average
participating shares outstanding
|
0.6
|
|
0.5
|
|
0.6
|
|
0.5
|
Total
weighted-average shares outstanding
|
113.6
|
|
116.4
|
|
113.6
|
|
116.4
|
Dilutive effect of
stock options
|
-
|
|
0.1
|
|
-
|
|
0.1
|
Total
weighted-average shares outstanding - assuming dilution
|
113.6
|
|
116.5
|
|
113.6
|
|
116.5
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings per
share – assuming dilution
|
$2.50
|
|
$2.00
|
|
$6.03
|
|
$5.92
|
|
|
|
|
|
|
|
|
|
|
(A) Income taxes, as adjusted is based
upon the Company's GAAP effective tax rate for the nine
months ended January 31, 2018 and 2017,
and reflects the impact of items excluded from
GAAP net income to derive adjusted income. Income taxes, as
adjusted also
reflects the exclusion of certain one-time
discrete tax adjustments for the three and nine months ended
January 31, 2018.
|
The J. M. Smucker
Company
Unaudited Non-GAAP
Financial Measures
|
|
|
|
|
Three Months Ended
January 31,
|
|
Nine Months Ended
January 31,
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
EBITDA (as adjusted)
reconciliation:
|
|
|
|
|
|
|
|
|
Net income
|
$831.3
|
|
$134.6
|
|
$1,152.7
|
|
$481.9
|
|
Income tax expense
(benefit)
|
(715.3)
|
|
63.0
|
|
(555.9)
|
|
234.6
|
|
Interest expense -
net
|
43.1
|
|
40.3
|
|
126.7
|
|
122.8
|
|
Depreciation
|
52.1
|
|
52.6
|
|
157.2
|
|
159.6
|
|
Amortization
|
51.6
|
|
51.7
|
|
154.7
|
|
155.2
|
|
Impairment
charges
|
176.9
|
|
75.7
|
|
176.9
|
|
75.7
|
|
EBITDA (as
adjusted)
|
$439.7
|
|
$417.9
|
|
$1,212.3
|
|
$1,229.8
|
|
|
% of net
sales
|
23.1%
|
|
22.2%
|
|
21.7%
|
|
21.9%
|
|
|
|
|
|
|
|
|
|
|
Free cash flow
reconciliation:
|
|
|
|
|
|
|
|
|
Net cash provided by
(used for) operating activities
|
$469.0
|
|
$419.5
|
|
$903.6
|
|
$794.8
|
|
Additions to
property, plant, and equipment
|
(80.3)
|
|
(52.6)
|
|
(210.3)
|
|
(136.6)
|
|
Free cash
flow
|
$388.7
|
|
$366.9
|
|
$693.3
|
|
$658.2
|
|
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
|
$11.78
|
|
$11.88
|
|
Special project
costs
|
0.41
|
|
0.41
|
|
Amortization
|
1.27
|
|
1.27
|
|
Impairment
charges
|
1.48
|
|
1.48
|
|
U.S. income tax
reform
|
(6.74)
|
|
(6.74)
|
|
Adjusted earnings per
share - assuming dilution
|
$8.20
|
|
$8.30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ending April 30,
2018
|
|
|
|
|
(Dollars in
millions)
|
|
|
|
|
Free cash flow
reconciliation:
|
|
|
|
|
Net cash provided by
operating activities
|
$1,135
|
|
|
|
Additions to
property, plant, and equipment
|
(310)
|
|
|
|
Free cash
flow
|
$825
|
|
|
View original content with
multimedia:http://www.prnewswire.com/news-releases/the-j-m-smucker-company-announces-fiscal-2018-third-quarter-results-300599896.html
SOURCE The J. M. Smucker Company