ORRVILLE, Ohio, Aug. 24, 2017 /PRNewswire/ -- The J. M.
Smucker Company (NYSE: SJM) today announced results for the first
quarter ended July 31, 2017, of its
2018 fiscal year. All comparisons are to the first quarter of
the prior fiscal year, unless otherwise noted.
EXECUTIVE SUMMARY
- Net sales decreased 4 percent, reflecting declines within the
U.S. Retail Consumer Foods and U.S. Retail Coffee segments.
- Net income per diluted share decreased 23 percent to
$1.12. This decline was mostly
anticipated due to planned increases in marketing expense and
commodity costs.
- Adjusted earnings per share was $1.51, a decrease of 19 percent.
- Cash provided by operating activities was $304.3 million, compared to $238.9 million in the prior year. Free cash
flow was $234.7 million in the
quarter, compared to $188.7 million
in the prior year.
- The Company lowered the midpoint of its full-year fiscal 2018
adjusted earnings per share guidance range by approximately 1
percent.
CHIEF EXECUTIVE OFFICER REMARKS
"While our first
quarter results fell slightly short of our projections, primarily
driven by lower than anticipated volume for
Folgers® roast and ground coffee, we have taken
actions to improve our competitive positioning for
Folgers®. As a result, volume trends are
improving. In addition, we remain pleased with the
performance of the remainder of our coffee portfolio and look
forward to the launch of new coffee products later this fiscal
year," said Mark Smucker, Chief
Executive Officer. "We are also pleased with the progress on
our cost management programs, as we continue to deliver on our
synergy and cost savings targets. Across all our businesses,
we are executing on our strategic plan that provides a clear path
to sustainable, long-term growth by delivering on current consumer
and retail trends."
FIRST QUARTER CONSOLIDATED RESULTS
|
|
Three Months Ended
July 31,
|
|
|
|
|
|
|
% Increase
|
|
|
2017
|
|
2016
|
|
(Decrease)
|
|
|
(Dollars and shares
in millions, except per share data)
|
|
|
|
|
|
|
|
Net
sales
|
$
1,748.9
|
|
$
1,815.8
|
|
(4%)
|
|
|
|
|
|
|
|
Operating
income
|
$
233.8
|
|
$
293.8
|
|
(20%)
|
Adjusted operating
income
|
300.5
|
|
364.0
|
|
(17%)
|
|
|
|
|
|
|
|
Net income per
common share – assuming dilution
|
$
1.12
|
|
$
1.46
|
|
(23%)
|
Adjusted earnings per
share
|
1.51
|
|
1.86
|
|
(19%)
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding – assuming dilution
|
113.6
|
|
116.5
|
|
(3%)
|
Net Sales
Net sales decreased $66.9 million, or 4 percent. This reflected
a 5 percentage point impact from lower volume/mix driven by
declines in several categories, notably coffee and oils, which were
partially offset by gains in pet food. Net price realization
contributed 1 percentage point to net sales, as higher net pricing
for coffee and the Smucker's® brand was partially
offset by lower net pricing within the Company's U.S. Retail Pet
Foods segment.
Operating Income
Gross profit decreased $60.6 million, or 8 percent, primarily driven by
lower volume/mix. A net unfavorable impact of increased costs
and pricing also contributed to the gross profit decline, and was
primarily attributed to the Company's U.S. Retail Pet Foods and
U.S. Retail Coffee segments. Selling, distribution, and
administrative ("SD&A") expenses decreased $5.8 million, as benefits from the Company's cost
savings initiatives more than offset an increase in marketing
expense. Operating income decreased $60.0 million, or 20 percent.
On a non-GAAP basis, adjusted gross profit decreased
$68.8 million, or 10 percent, while
adjusted operating income decreased $63.5
million, or 17 percent.
Other
Net interest expense increased $0.5 million. A $3.9
million unfavorable change in other income (expense) was
primarily attributed to foreign currency exchange loss.
Income taxes decreased $21.2
million attributed to lower income before income taxes in
the current year, as the effective tax rate of 32.9 percent was
unchanged from the prior year.
Cash provided by operating activities was $304.3 million, compared to $238.9 million in the prior year, as lower net
income was more than offset by a reduction in working capital,
compared to 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 -
$7.95
|
$7.85 -
$8.05
|
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 down slightly compared to the prior
year. Adjusted earnings per share is expected to range from
$7.75 to $7.95, based on 113.6
million shares outstanding. The change from previous guidance
reflects the lower than anticipated results in the first quarter
and lower pricing for the remainder of the fiscal year, primarily
attributed to U.S. Retail Coffee. The above guidance excludes
any potential impact from the Company's previously announced
definitive agreement to acquire the Wesson® oil
brand from Conagra Brands, Inc., which is pending regulatory
approval.
FIRST 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 Q1
Results
|
|
$480.8
|
|
$123.8
|
|
25.7%
|
Increase (decrease)
vs prior year
|
(6%)
|
|
(29%)
|
|
-820bps
|
Segment net sales decreased $32.5
million. Volume/mix reduced net sales by 8 percent
driven by declines for the Folgers® brand,
partially offset by gains for the Dunkin'
Donuts® and Café Bustelo®
brands. Net price realization improved, adding 2 percent to
net sales. Segment profit decreased $50.0 million primarily due to the impact of
volume/mix and the net unfavorable impact of higher commodity costs
and pricing. The Company anticipates the impact of higher
costs to moderate throughout the remainder of the fiscal year.
U.S. Retail Consumer Foods
|
|
Net
|
|
Segment
|
|
Segment
|
|
|
Sales
|
|
Profit
|
|
Profit
Margin
|
FY18 Q1
Results
|
|
$492.4
|
|
$110.9
|
|
22.5%
|
Increase (decrease)
vs prior year
|
(8%)
|
|
-
|
|
180bps
|
Segment net sales decreased $44.6
million. Volume/mix reduced net sales by 11 percent,
primarily driven by the Crisco®,
Pillsbury®, and Smucker's®
brands. Net price realization increased, primarily attributed
to the Smucker's® and Crisco®
brands, adding 3 percent to net sales. Segment profit was
comparable to the prior year as the impact of lower volume/mix was
offset by higher pricing and reduced marketing expense.
U.S. Retail Pet Foods
|
|
Net
|
|
Segment
|
|
Segment
|
|
|
Sales
|
|
Profit
|
|
Profit
Margin
|
FY18 Q1
Results
|
|
$521.7
|
|
$98.3
|
|
18.8%
|
Increase (decrease)
vs prior year
|
-
|
|
(20%)
|
|
-470bps
|
Segment net sales increased $2.2
million. Improved volume/mix, primarily related to the
Nature's Recipe® and Natural
Balance® brands, increased net sales by 2 percent,
but was mostly offset by lower net price realization across the
portfolio. Segment profit decreased $23.9 million primarily due to the net
unfavorable impact of lower pricing and higher costs, as well as
increased marketing expense.
International and Away From Home
Effective May 1, 2017, the
Company's U.S. Foodservice business was renamed Away From Home to
better reflect the scope of this business, which extends beyond
traditional foodservice outlets to locations such as universities
and health care facilities, among others.
|
|
Net
|
|
Segment
|
|
Segment
|
|
|
Sales
|
|
Profit
|
|
Profit
Margin
|
FY18 Q1
Results
|
|
$254.0
|
|
$38.3
|
|
15.1%
|
Increase (decrease)
vs prior year
|
3%
|
|
(3%)
|
|
-100bps
|
Segment net sales increased $8.0 million, reflecting
favorable volume/mix driven by the Jif® and
Smucker's® brands. Net price realization
improved, but was offset by the impact of foreign currency
exchange. Segment profit decreased $1.2 million as the
contribution from the net sales increase was more than offset by
unfavorable foreign currency exchange, higher commodity costs, and
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, August 24, 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 synergies and cost savings related to the Big Heart Pet
Brands acquisition and other 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 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 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
July 31,
|
|
|
|
|
|
|
% Increase
|
|
|
2017
|
|
2016
|
|
(Decrease)
|
|
|
(Dollars and shares
in millions, except per share data)
|
|
|
|
|
|
|
|
Net sales
|
$
1,748.9
|
|
$
1,815.8
|
|
(4%)
|
Cost of products
sold
|
1,086.8
|
|
1,093.1
|
|
(1%)
|
Gross
Profit
|
662.1
|
|
722.7
|
|
(8%)
|
|
Gross
margin
|
37.9%
|
|
39.8%
|
|
|
|
|
|
|
|
|
|
Selling,
distribution, and administrative expenses
|
350.2
|
|
356.0
|
|
(2%)
|
Amortization
|
51.5
|
|
51.7
|
|
(0%)
|
Other special project
costs
|
27.1
|
|
22.2
|
|
22%
|
Other operating
expense (income) - net
|
(0.5)
|
|
(1.0)
|
|
(50%)
|
Operating
Income
|
233.8
|
|
293.8
|
|
(20%)
|
|
Operating
margin
|
13.4%
|
|
16.2%
|
|
|
|
|
|
|
|
|
|
Interest expense -
net
|
(42.0)
|
|
(41.5)
|
|
1%
|
Other income
(expense) - net
|
(2.8)
|
|
1.1
|
|
n/m
|
Income Before
Income Taxes
|
189.0
|
|
253.4
|
|
(25%)
|
Income
taxes
|
62.2
|
|
83.4
|
|
(25%)
|
Net
Income
|
$
126.8
|
|
$
170.0
|
|
(25%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per
common share
|
$
1.12
|
|
$
1.46
|
|
(23%)
|
|
|
|
|
|
|
|
|
Net income per
common share –
|
|
|
|
|
|
|
assuming
dilution
|
$
1.12
|
|
$
1.46
|
|
(23%)
|
|
|
|
|
|
|
|
Dividends declared
per common share
|
$
0.78
|
|
$
0.75
|
|
4%
|
|
|
|
|
|
|
Weighted-average
shares outstanding
|
113.5
|
|
116.3
|
|
(2%)
|
Weighted-average
shares outstanding –
|
|
|
|
|
|
assuming
dilution
|
113.6
|
|
116.5
|
|
(3%)
|
The J. M. Smucker
Company
Unaudited Condensed Consolidated Balance Sheets
|
|
|
|
|
|
|
|
|
|
|
July 31,
2017
|
|
April 30,
2017
|
|
|
|
(Dollars in
millions)
|
Assets
|
|
|
|
Current
Assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
183.2
|
|
$
166.8
|
|
Trade receivables,
less allowance for doubtful accounts
|
433.7
|
|
438.7
|
|
Inventories
|
981.3
|
|
905.7
|
|
Other current
assets
|
93.9
|
|
130.6
|
|
|
Total Current
Assets
|
1,692.1
|
|
1,641.8
|
|
|
|
|
|
|
Property, Plant,
and Equipment - Net
|
1,595.7
|
|
1,617.5
|
|
|
|
|
|
|
Other Noncurrent
Assets:
|
|
|
|
|
Goodwill
|
6,092.1
|
|
6,077.1
|
|
Other intangible
assets - net
|
6,104.3
|
|
6,149.9
|
|
Other noncurrent
assets
|
157.4
|
|
153.4
|
|
|
Total Other
Noncurrent Assets
|
12,353.8
|
|
12,380.4
|
Total
Assets
|
$
15,641.6
|
|
$
15,639.7
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
Current
Liabilities:
|
|
|
|
|
Accounts
payable
|
$
477.6
|
|
$
477.2
|
|
Current portion of
long-term debt
|
499.3
|
|
499.0
|
|
Short-term
borrowings
|
283.9
|
|
454.0
|
|
Other current
liabilities
|
490.1
|
|
402.4
|
|
|
Total Current
Liabilities
|
1,750.9
|
|
1,832.6
|
|
|
|
|
|
|
Noncurrent
Liabilities:
|
|
|
|
|
Long-term debt, less
current portion
|
4,444.8
|
|
4,445.5
|
|
Other noncurrent
liabilities
|
2,514.0
|
|
2,511.4
|
|
|
Total Noncurrent
Liabilities
|
6,958.8
|
|
6,956.9
|
|
|
|
|
|
|
Shareholders'
Equity
|
6,931.9
|
|
6,850.2
|
Total Liabilities
and Shareholders' Equity
|
$
15,641.6
|
|
$
15,639.7
|
The J. M. Smucker
Company
Unaudited Condensed Consolidated Statements of Cash Flow
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
July 31,
|
|
|
|
|
|
2017
|
|
2016
|
|
|
|
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
Operating
Activities
|
|
|
|
|
|
Net income
|
$
126.8
|
|
$
170.0
|
|
|
Adjustments to
reconcile net income to net cash
|
|
|
|
|
|
provided by (used
for) operations:
|
|
|
|
|
|
|
Depreciation
|
54.5
|
|
54.0
|
|
|
|
Amortization
|
51.5
|
|
51.7
|
|
|
|
Share-based
compensation expense
|
6.6
|
|
8.1
|
|
|
|
Other noncash
adjustments
|
0.8
|
|
0.7
|
|
|
|
Defined benefit
pension contributions
|
(0.8)
|
|
(0.8)
|
|
|
|
Changes in assets and
liabilities, net of effect
|
|
|
|
|
|
|
from businesses
acquired:
|
|
|
|
|
|
|
|
Trade
receivables
|
7.3
|
|
(74.3)
|
|
|
|
|
Inventories
|
(71.2)
|
|
(117.3)
|
|
|
|
|
Accounts payable and
accrued items
|
87.8
|
|
52.9
|
|
|
|
|
Income and other
taxes
|
35.9
|
|
45.1
|
|
|
|
Other -
net
|
5.1
|
|
48.8
|
|
Net Cash Provided
by (Used for) Operating Activities
|
304.3
|
|
238.9
|
|
|
|
|
|
|
|
|
|
Investing
Activities
|
|
|
|
|
|
Additions to
property, plant, and equipment
|
(69.6)
|
|
(50.2)
|
|
|
Other -
net
|
31.5
|
|
(12.3)
|
|
Net Cash Provided
by (Used for) Investing Activities
|
(38.1)
|
|
(62.5)
|
|
|
|
|
|
|
|
|
|
Financing
Activities
|
|
|
|
|
|
Short-term borrowings
(repayments) - net
|
(170.1)
|
|
22.0
|
|
|
Repayments of
long-term debt
|
-
|
|
(100.0)
|
|
|
Quarterly dividends
paid
|
(84.9)
|
|
(77.8)
|
|
|
Purchase of treasury
shares
|
(6.6)
|
|
(18.1)
|
|
|
Other -
net
|
1.5
|
|
0.7
|
|
Net Cash Provided
by (Used for) Financing Activities
|
(260.1)
|
|
(173.2)
|
|
Effect of exchange
rate changes on cash
|
10.3
|
|
(3.4)
|
|
Net increase
(decrease) in cash and cash equivalents
|
16.4
|
|
(0.2)
|
|
Cash and cash
equivalents at beginning of period
|
166.8
|
|
109.8
|
|
Cash and Cash
Equivalents at End of Period
|
$
183.2
|
|
$
109.6
|
|
The J. M. Smucker
Company
Unaudited Supplemental Schedule
|
|
|
|
|
Three Months Ended
July 31,
|
|
|
|
|
|
% of
|
|
|
|
% of
|
|
|
|
2017
|
|
Net Sales
|
|
2016
|
|
Net Sales
|
|
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$1,748.9
|
|
|
|
$1,815.8
|
|
|
|
Selling,
distribution, and
|
|
|
|
|
|
|
|
|
administrative
expenses:
|
|
|
|
|
|
|
|
|
|
Marketing
|
115.6
|
|
6.6%
|
|
108.7
|
|
6.0%
|
|
|
Selling
|
67.1
|
|
3.8%
|
|
65.0
|
|
3.6%
|
|
|
Distribution
|
57.9
|
|
3.3%
|
|
60.2
|
|
3.3%
|
|
|
General and
administrative
|
109.6
|
|
6.3%
|
|
122.1
|
|
6.7%
|
|
Total selling,
distribution, and
|
|
|
|
|
|
|
|
|
administrative
expenses
|
$
350.2
|
|
20.0%
|
|
$
356.0
|
|
19.6%
|
|
|
|
|
|
|
|
|
|
|
|
Amounts may not add
due to rounding.
|
|
|
|
|
|
|
|
The J. M. Smucker
Company
Unaudited Reportable Segments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
July 31,
|
|
|
|
2017
|
|
2016
|
|
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
Net sales:
|
|
|
|
|
|
U.S. Retail
Coffee
|
$
480.8
|
|
$
513.3
|
|
|
U.S. Retail Consumer
Foods
|
492.4
|
|
537.0
|
|
|
U.S. Retail Pet
Foods
|
521.7
|
|
519.5
|
|
|
International and
Away From Home
|
254.0
|
|
246.0
|
|
Total net
sales
|
$
1,748.9
|
|
$
1,815.8
|
|
|
|
|
|
|
|
Segment
profit:
|
|
|
|
|
|
U.S. Retail
Coffee
|
$
123.8
|
|
$
173.8
|
|
|
U.S. Retail Consumer
Foods
|
110.9
|
|
111.4
|
|
|
U.S. Retail Pet
Foods
|
98.3
|
|
122.2
|
|
|
International and
Away From Home
|
38.3
|
|
39.5
|
|
Total segment
profit
|
$
371.3
|
|
$
446.9
|
|
|
Amortization
|
(51.5)
|
|
(51.7)
|
|
|
Interest expense -
net
|
(42.0)
|
|
(41.5)
|
|
|
Unallocated
derivative gains (losses)
|
12.6
|
|
7.7
|
|
|
Cost of products sold
- special project costs
|
(0.7)
|
|
(4.0)
|
|
|
Other special project
costs
|
(27.1)
|
|
(22.2)
|
|
|
Corporate
administrative expenses
|
(70.8)
|
|
(82.9)
|
|
|
Other income
(expense) - net
|
(2.8)
|
|
1.1
|
|
Income before income
taxes
|
$
189.0
|
|
$
253.4
|
|
|
|
|
|
|
|
Segment profit
margin:
|
|
|
|
|
|
U.S. Retail
Coffee
|
25.7%
|
|
33.9%
|
|
|
U.S. Retail Consumer
Foods
|
22.5%
|
|
20.7%
|
|
|
U.S. Retail Pet
Foods
|
18.8%
|
|
23.5%
|
|
|
International and
Away From Home
|
15.1%
|
|
16.1%
|
|
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
July 31,
|
|
|
|
|
|
|
|
|
Increase
|
|
|
|
|
|
|
2017
|
|
2016
|
|
(Decrease)
|
|
%
|
|
|
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
reconciliation:
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
1,748.9
|
|
$
1,815.8
|
|
$
(66.9)
|
|
(4%)
|
|
|
|
Foreign currency
exchange
|
1.8
|
|
-
|
|
1.8
|
|
-
|
|
|
Net sales excluding
foreign
|
|
|
|
|
|
|
|
|
|
currency
exchange
|
$
1,750.7
|
|
$
1,815.8
|
|
$
(65.1)
|
|
(4%)
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts may not add
due to rounding.
|
|
|
|
|
|
|
|
|
The J. M. Smucker
Company
Unaudited Non-GAAP Financial Measures
|
|
|
|
|
|
|
|
|
Three Months Ended
July 31,
|
|
|
|
|
2017
|
|
2016
|
|
|
|
|
(Dollars in millions,
except per share data)
|
|
|
|
|
|
|
|
|
Gross profit
reconciliation:
|
|
|
|
|
|
Gross
profit
|
$
662.1
|
|
$
722.7
|
|
|
Unallocated
derivative losses (gains)
|
(12.6)
|
|
(7.7)
|
|
|
Cost of products sold
- special project costs
|
0.7
|
|
4.0
|
|
|
Adjusted gross
profit
|
$
650.2
|
|
$
719.0
|
|
|
|
% of net
sales
|
37.2%
|
|
39.6%
|
|
|
|
|
|
|
|
|
Operating income
reconciliation:
|
|
|
|
|
|
Operating
income
|
$
233.8
|
|
$
293.8
|
|
|
Amortization
|
51.5
|
|
51.7
|
|
|
Unallocated
derivative losses (gains)
|
(12.6)
|
|
(7.7)
|
|
|
Cost of products sold
- special project costs
|
0.7
|
|
4.0
|
|
|
Other special project
costs
|
27.1
|
|
22.2
|
|
|
Adjusted operating
income
|
$
300.5
|
|
$
364.0
|
|
|
|
% of net
sales
|
17.2%
|
|
20.0%
|
|
|
|
|
|
|
|
|
Net income
reconciliation:
|
|
|
|
|
|
Net income
|
$
126.8
|
|
$
170.0
|
|
|
Income
taxes
|
62.2
|
|
83.4
|
|
|
Amortization
|
51.5
|
|
51.7
|
|
|
Unallocated
derivative losses (gains)
|
(12.6)
|
|
(7.7)
|
|
|
Cost of products sold
- special project costs
|
0.7
|
|
4.0
|
|
|
Other special project
costs
|
27.1
|
|
22.2
|
|
|
Adjusted income
before income taxes
|
$
255.7
|
|
$
323.6
|
|
|
Income taxes, as
adjusted
|
84.1
|
|
106.4
|
|
|
Adjusted
income
|
$
171.6
|
|
$
217.2
|
|
|
|
|
|
|
|
|
Weighted-average
common shares outstanding
|
112,923,482
|
|
115,805,073
|
|
Weighted-average
participating shares outstanding
|
581,019
|
|
529,367
|
|
Total
weighted-average shares outstanding
|
113,504,501
|
|
116,334,440
|
|
Dilutive effect of
stock options
|
48,794
|
|
141,056
|
|
Total
weighted-average shares outstanding - assuming dilution
|
113,553,295
|
|
116,475,496
|
|
|
|
|
|
|
|
|
Adjusted earnings per
share
|
$
1.51
|
|
$
1.86
|
|
|
|
|
|
|
|
|
The J. M. Smucker
Company
Unaudited Non-GAAP Financial Measures
|
|
|
|
|
Three Months Ended
July 31,
|
|
|
|
|
2017
|
|
2016
|
|
|
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
EBITDA (as adjusted)
reconciliation:
|
|
|
|
|
|
Net income
|
$
126.8
|
|
$
170.0
|
|
|
Income
taxes
|
62.2
|
|
83.4
|
|
|
Interest expense -
net
|
42.0
|
|
41.5
|
|
|
Depreciation
|
54.5
|
|
54.0
|
|
|
Amortization
|
51.5
|
|
51.7
|
|
|
EBITDA (as
adjusted)
|
$
337.0
|
|
$
400.6
|
|
|
|
% of net
sales
|
19.3%
|
|
22.1%
|
|
|
|
|
|
|
|
|
Free cash flow
reconciliation:
|
|
|
|
|
|
Net cash provided by
(used for) operating activities
|
$
304.3
|
|
$
238.9
|
|
|
Additions to
property, plant, and equipment
|
(69.6)
|
|
(50.2)
|
|
|
Free cash
flow
|
$
234.7
|
|
$
188.7
|
|
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
|
|
$
6.39
|
|
|
Special project
costs
|
0.38
|
|
0.38
|
|
|
Amortization
|
1.18
|
|
1.18
|
|
|
Adjusted earnings per
share
|
$
7.75
|
|
$
7.95
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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