ORRVILLE, Ohio, Feb. 17, 2017 /PRNewswire/ -- The J. M.
Smucker Company (NYSE: SJM) today announced results for the third
quarter ended January 31, 2017, of
its 2017 fiscal year. All comparisons are to the third
quarter of the prior fiscal year, unless otherwise noted.
Results for the prior year include the Company's former U.S.
canned milk business, prior to its divestiture on December 31, 2015.
EXECUTIVE SUMMARY
- Net sales decreased 5 percent. Excluding the
noncomparable U.S. canned milk business divested in the prior year,
net sales decreased 3 percent.
- Net income per diluted share was $1.16, including a noncash impairment charge
related to certain indefinite-lived trademarks, compared to
$1.55 in the prior year. The
prior year included a $0.14 per share
gain on the U.S. canned milk divestiture.
- Adjusted earnings per share was $2.00 compared to $2.05 in the prior year. Excluding the gain
on the divestiture in the prior year, adjusted earnings per share
increased 5 percent.
- Incremental synergy realization was $26.3 million in the third quarter and
$86.8 million through the first three
quarters of fiscal 2017. The Company now expects to recognize
$120 million of incremental synergies
in fiscal 2017, an increase of $20
million from its previous guidance.
- Cash provided by operating activities was $419.5 million in the third quarter. Free
cash flow was $366.9 million in the
quarter and $658.2 million through
the first three quarters of fiscal 2017.
- The Company updated its full-year fiscal 2017 net sales,
earnings, and free cash flow outlook.
CHIEF EXECUTIVE OFFICER REMARKS
"Accelerating the realization of synergies and a concentrated
effort to reduce costs across the Company support our ability to
deliver bottom-line growth, despite the top-line softness in our
business and across the industry," said Mark Smucker, Chief Executive Officer. "We
are also aggressively pursuing a variety of growth
opportunities. During the quarter, we launched our
Nature's Recipe® premium pet food brand into
grocery and mass merchandise outlets. In addition, we
announced plans to build a new manufacturing facility to support
growth for our Smucker's®
Uncrustables® frozen sandwiches. Behind
these and other initiatives, we remain confident in achieving our
long-term growth objectives and continuously 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 and impairment charges
related to intangible assets. 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.
THIRD QUARTER CONSOLIDATED RESULTS
|
|
Three Months Ended
January 31,
|
|
|
|
|
|
|
% Increase
|
|
|
2017
|
|
2016
|
|
(Decrease)
|
|
|
(Dollars and shares
in millions, except per share data)
|
|
|
|
|
|
|
|
Net
sales
|
$
1,878.8
|
|
$
1,973.9
|
|
(5%)
|
|
|
|
|
|
|
|
Operating
income
|
$
237.7
|
|
$
318.3
|
|
(25%)
|
Adjusted operating
income
|
382.8
|
|
408.3
|
|
(6%)
|
|
|
|
|
|
|
|
Net income per
common share – assuming dilution
|
$
1.16
|
|
$
1.55
|
|
(25%)
|
Adjusted earnings per
share
|
2.00
|
|
2.05
|
|
(2%)
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding – assuming dilution
|
116.5
|
|
119.7
|
|
(3%)
|
|
Results for the three
months ended January 31, 2016, include the Company's former U.S.
canned milk business, prior to its divestiture on December 31,
2015.
|
Net Sales
Net sales decreased $95.1 million, including $46.3 million attributed to the divested U.S.
canned milk business. Excluding the noncomparable divested
business and foreign currency exchange, net sales decreased
$50.5 million, or slightly below 3
percent. This reflected a decline from volume/mix, driven by
the U.S. Retail Coffee segment, and lower net price realization,
which was mostly attributed to the U.S. Retail Pet Foods segment.
These two factors contributed somewhat equally to the lower
net sales.
Operating Income
Gross profit decreased $40.9 million, or 5 percent, driven by volume/mix
and the loss of U.S. canned milk profits. Lower net price
realization was partially offset by a reduction in commodity and
manufacturing overhead costs. Selling, distribution, and
administrative ("SD&A") expenses decreased $43.9 million, or 12 percent, primarily driven by
incremental synergy realization and lower marketing expense.
Operating income decreased $80.6
million, primarily reflecting a $75.7
million noncash impairment charge associated with certain
indefinite-lived trademarks within our U.S. Retail Pet Foods
segment. The charge resulted from an increase in the
weighted-average cost of capital used in the impairment analysis,
reflecting rising market-based interest rates during the
quarter.
On a non-GAAP basis, adjusted gross profit decreased
$37.6 million, or 5 percent.
Adjusted operating income decreased $25.5
million. Excluding $10.7
million of profit and the $25.3
million gain related to the divested U.S. canned milk
business, adjusted operating income increased 3 percent.
Other
Net interest expense decreased $3.3 million, due to debt repayments of
$200.0 million made during the first
half of the fiscal year. Income taxes decreased $27.0 million attributed to lower income before
income taxes and a lower effective tax rate of 31.9 percent,
compared to 32.7 percent in the prior year.
Cash provided by operating activities was $419.5 million. This compared to
$542.3 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
(decrease) vs prior year
|
(3%)
|
0% to (1%)
|
|
Adjusted earnings per
share
|
$7.60 -
$7.70
|
$7.60 -
$7.75
|
|
Free cash
flow
|
$950 million - $1.0
billion
|
$1.0
billion
|
|
Capital
expenditures
|
$240
million
|
$240
million
|
|
Effective tax
rate
|
32.5%
|
33.0%
|
Net sales are expected to decrease approximately 5 percent from
fiscal 2016, including a 2 percent impact of the U.S. canned milk
divestiture. Excluding the impact of the divestiture, net
sales are expected to decrease 3 percent. The change from
previous guidance reflects reduced U.S. Retail Coffee segment net
sales results in the third quarter and forecasted sales in the
fourth quarter. Adjusted earnings per share is expected to
range from $7.60 to $7.70, based on
116.6 million shares outstanding. The Company reduced its
effective tax rate guidance by 50 basis points to 32.5
percent. Included in the updated earnings guidance is
$120 million of incremental synergies
in fiscal 2017 compared to previous guidance of $100 million of incremental synergies.
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
|
FY17 Q3
Results
|
|
$537.6
|
|
$172.2
|
|
32.0%
|
Increase (decrease)
vs prior year
|
(7%)
|
|
(12%)
|
|
-180bps
|
Segment net sales decreased $37.9
million, primarily due to volume/mix, which reduced net
sales by 5 percentage points. This was driven by lower volume
for the Folgers® brand, partially offset by gains
for the Dunkin' Donuts® and Café
Bustelo® brands. Lower net price realization
reduced net sales by 1 percent. Segment profit decreased
$22.4 million due to the impact of
volume/mix, lower net pricing, and higher commodity costs.
U.S. Retail Consumer Foods
|
|
Net
|
|
Segment
|
|
Segment
|
|
|
Sales
|
|
Profit
|
|
Profit
Margin
|
FY17 Q3
Results
|
|
$517.3
|
|
$119.2
|
|
23.0%
|
Increase (decrease)
vs prior year:
|
|
|
|
|
|
As
reported
|
|
(9%)
|
|
(8%)
|
|
30bps
|
Excluding
impact of divestiture
|
(2%)
|
|
26%
|
|
510bps
|
Segment net sales decreased $52.5
million, primarily reflecting noncomparable net sales of
$42.7 million in the prior year
related to the divested U.S. canned milk business. Excluding
the impact of the divestiture, net sales decreased 2 percent.
Volume/mix reduced net sales by 3 percentage points driven by
Smucker's® fruit spreads and the
truRoots® brand within our Natural Foods
business. Net price realization was slightly higher.
Segment profit decreased $9.9
million. Excluding $9.4
million of profit and the $25.3
million gain related to the divested U.S. canned milk
business, segment profit increased 26 percent, reflecting lower
manufacturing overhead costs, higher net pricing, and reduced
marketing expense.
U.S. Retail Pet Foods
|
|
Net
|
|
Segment
|
|
Segment
|
|
|
Sales
|
|
Profit
|
|
Profit
Margin
|
FY17 Q3
Results
|
|
$550.9
|
|
$126.3
|
|
22.9%
|
Increase (decrease)
vs prior year
|
(4%)
|
|
2%
|
|
120bps
|
Segment net sales decreased $20.0
million primarily due to lower net price realization.
Volume/mix was neutral as gains for Nature's
Recipe® and Kibbles 'n Bits®
dog food were offset by declines in pet snacks. Segment
profit increased $2.3 million as
lower marketing expense and incremental synergy realization more
than offset lower volume/mix related to pet snacks and $5.0 million in costs related to a product recall
during the quarter.
International and Foodservice
|
|
Net
|
|
Segment
|
|
Segment
|
|
|
Sales
|
|
Profit
|
|
Profit
Margin
|
FY17 Q3
Results
|
|
$273.0
|
|
$45.5
|
|
16.7%
|
Increase (decrease)
vs prior year
|
6%
|
|
(7%)
|
|
-230bps
|
Segment net sales increased $15.3 million. Volume/mix
contributed 8 percentage points of growth to net sales and was
slightly offset by lower net price realization and the impact of
$3.6 million of noncomparable sales
in the prior year related to the divested U.S. canned milk
business. Segment profit decreased $3.4 million
primarily due to a $1.9 million
write-off in the current year associated with the disposal of
assets and $1.3 million of profit in
the prior year related to the divested U.S. canned milk
business.
Conference Call
The Company will conduct an earnings conference call and webcast
today, February 17, 2017, beginning
at 8:00 a.m. Eastern time. The
Company also invites interested parties to listen to a webcast of
its executive management presentation at the 2017 CAGNY
Conference on Wednesday, February 22,
2017, at 8:00 a.m. Eastern time. To access the
webcasts, 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.
The J. M. Smucker
Company
|
Unaudited Condensed
Consolidated Statements of Income
|
|
|
|
Three Months Ended
January 31,
|
|
Nine Months Ended
January 31,
|
|
|
|
|
|
|
% Increase
|
|
|
|
|
|
% Increase
|
|
|
2017
|
|
2016
|
|
(Decrease)
|
|
2017
|
|
2016
|
|
(Decrease)
|
|
|
(Dollars in millions,
except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
1,878.8
|
|
$
1,973.9
|
|
(5%)
|
|
$
5,608.5
|
|
$
6,003.6
|
|
(7%)
|
Cost of products
sold
|
1,155.9
|
|
1,210.1
|
|
(4%)
|
|
3,420.0
|
|
3,723.8
|
|
(8%)
|
Gross
Profit
|
722.9
|
|
763.8
|
|
(5%)
|
|
2,188.5
|
|
2,279.8
|
|
(4%)
|
|
Gross
margin
|
38.5%
|
|
38.7%
|
|
|
|
39.0%
|
|
38.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
distribution, and administrative expenses
|
337.2
|
|
381.1
|
|
(12%)
|
|
1,056.3
|
|
1,158.5
|
|
(9%)
|
Amortization
|
51.7
|
|
52.2
|
|
(1%)
|
|
155.2
|
|
158.2
|
|
(2%)
|
Impairment
charges
|
75.7
|
|
-
|
|
n/m
|
|
75.7
|
|
-
|
|
n/m
|
Other special project
costs
|
18.0
|
|
41.4
|
|
(57%)
|
|
66.8
|
|
94.9
|
|
(30%)
|
Other operating
expense (income) - net
|
2.6
|
|
(29.2)
|
|
(109%)
|
|
(0.3)
|
|
(31.0)
|
|
(99%)
|
Operating
Income
|
237.7
|
|
318.3
|
|
(25%)
|
|
834.8
|
|
899.2
|
|
(7%)
|
|
Operating
margin
|
12.7%
|
|
16.1%
|
|
|
|
14.9%
|
|
15.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense -
net
|
(40.3)
|
|
(43.6)
|
|
(8%)
|
|
(122.8)
|
|
(130.6)
|
|
(6%)
|
Other income
(expense) - net
|
0.2
|
|
0.6
|
|
(67%)
|
|
4.5
|
|
(0.9)
|
|
n/m
|
Income Before
Income Taxes
|
197.6
|
|
275.3
|
|
(28%)
|
|
716.5
|
|
767.7
|
|
(7%)
|
Income
taxes
|
63.0
|
|
90.0
|
|
(30%)
|
|
234.6
|
|
270.0
|
|
(13%)
|
Net
Income
|
$
134.6
|
|
$
185.3
|
|
(27%)
|
|
$
481.9
|
|
$
497.7
|
|
(3%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per
common share
|
$
1.16
|
|
$
1.55
|
|
(25%)
|
|
$
4.14
|
|
$
4.16
|
|
(0%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per
common share –
|
|
|
|
|
|
|
|
|
|
|
|
|
assuming
dilution
|
$
1.16
|
|
$
1.55
|
|
(25%)
|
|
$
4.14
|
|
$
4.16
|
|
(0%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared
per common share
|
$
0.75
|
|
$
0.67
|
|
12%
|
|
$
2.25
|
|
$
2.01
|
|
12%
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding
|
116,435,288
|
|
119,682,362
|
|
(3%)
|
|
116,399,787
|
|
119,658,138
|
|
(3%)
|
Weighted-average
shares outstanding –
|
|
|
|
|
|
|
|
|
|
|
|
assuming
dilution
|
116,508,644
|
|
119,734,947
|
|
(3%)
|
|
116,512,460
|
|
119,683,493
|
|
(3%)
|
The J. M. Smucker
Company
|
Unaudited Condensed
Consolidated Balance Sheets
|
|
|
|
|
January 31,
2017
|
|
April 30,
2016
|
|
|
|
(Dollars in
millions)
|
Assets
|
|
|
|
Current
Assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
139.6
|
|
$
109.8
|
|
Trade receivables,
less allowance for doubtful accounts
|
421.4
|
|
450.1
|
|
Inventories
|
995.6
|
|
899.4
|
|
Other current
assets
|
134.3
|
|
114.1
|
|
|
Total Current
Assets
|
1,690.9
|
|
1,573.4
|
|
|
|
|
|
|
Property, Plant,
and Equipment - Net
|
1,574.3
|
|
1,627.7
|
|
|
|
|
|
|
Other Noncurrent
Assets:
|
|
|
|
|
Goodwill
|
6,084.7
|
|
6,091.1
|
|
Other intangible
assets - net
|
6,262.0
|
|
6,494.4
|
|
Other noncurrent
assets
|
199.8
|
|
197.5
|
|
|
Total Other
Noncurrent Assets
|
12,546.5
|
|
12,783.0
|
Total
Assets
|
$
15,811.7
|
|
$
15,984.1
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
Current
Liabilities:
|
|
|
|
|
Accounts
payable
|
$
428.5
|
|
$
459.4
|
|
Short-term
borrowings
|
142.0
|
|
284.0
|
|
Other current
liabilities
|
426.7
|
|
469.6
|
|
|
Total Current
Liabilities
|
997.2
|
|
1,213.0
|
|
|
|
|
|
|
Noncurrent
Liabilities:
|
|
|
|
|
Long-term
debt
|
4,945.0
|
|
5,146.0
|
|
Other noncurrent
liabilities
|
2,627.6
|
|
2,616.6
|
|
|
Total Noncurrent
Liabilities
|
7,572.6
|
|
7,762.6
|
|
|
|
|
|
|
Shareholders'
Equity
|
7,241.9
|
|
7,008.5
|
Total Liabilities
and Shareholders' Equity
|
$
15,811.7
|
|
$
15,984.1
|
The J. M. Smucker
Company
|
Unaudited Condensed
Consolidated Statements of Cash Flow
|
|
|
|
|
|
Three Months Ended
January 31,
|
|
Nine Months Ended
January 31,
|
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Activities
|
|
|
|
|
|
|
|
|
Net income
|
$
134.6
|
|
$
185.3
|
|
$
481.9
|
|
$
497.7
|
|
Adjustments to
reconcile net income to net cash
|
|
|
|
|
|
|
|
|
provided by
operations:
|
|
|
|
|
|
|
|
|
|
Depreciation
|
52.6
|
|
55.1
|
|
159.6
|
|
165.5
|
|
|
Amortization
|
51.7
|
|
52.2
|
|
155.2
|
|
158.2
|
|
|
Impairment
charges
|
75.7
|
|
-
|
|
75.7
|
|
-
|
|
|
Share-based
compensation expense
|
6.9
|
|
10.5
|
|
22.0
|
|
26.9
|
|
|
Gain on
divestiture
|
-
|
|
(25.3)
|
|
-
|
|
(25.3)
|
|
|
Loss on disposal of
assets - net
|
2.9
|
|
1.2
|
|
3.9
|
|
3.8
|
|
|
Other noncash
adjustments
|
-
|
|
0.9
|
|
0.4
|
|
(1.5)
|
|
|
Defined benefit
pension contributions
|
(5.2)
|
|
(0.6)
|
|
(6.5)
|
|
(2.4)
|
|
|
Changes in assets and
liabilities, net of effect
|
|
|
|
|
|
|
|
|
|
from businesses
acquired:
|
|
|
|
|
|
|
|
|
|
|
Trade
receivables
|
96.9
|
|
99.5
|
|
27.0
|
|
(79.0)
|
|
|
|
Inventories
|
34.1
|
|
84.5
|
|
(98.6)
|
|
192.1
|
|
|
|
Accounts payable and
accrued items
|
(34.7)
|
|
95.9
|
|
(16.9)
|
|
93.3
|
|
|
|
Income and other
taxes
|
(18.5)
|
|
0.4
|
|
(57.1)
|
|
68.7
|
|
|
Other -
net
|
22.5
|
|
(17.3)
|
|
48.2
|
|
26.8
|
Net Cash Provided
by Operating Activities
|
419.5
|
|
542.3
|
|
794.8
|
|
1,124.8
|
|
|
|
|
|
|
|
|
|
|
|
Investing
Activities
|
|
|
|
|
|
|
|
|
Business acquired,
net of cash acquired
|
-
|
|
-
|
|
-
|
|
7.9
|
|
Equity investment in
affiliate
|
-
|
|
(16.0)
|
|
-
|
|
(16.0)
|
|
Additions to
property, plant, and equipment
|
(52.6)
|
|
(43.4)
|
|
(136.6)
|
|
(160.8)
|
|
Proceeds from
divestiture
|
-
|
|
193.7
|
|
-
|
|
193.7
|
|
Proceeds from
disposal of property, plant, and equipment
|
-
|
|
-
|
|
0.4
|
|
0.2
|
|
Other -
net
|
0.8
|
|
(7.6)
|
|
(11.9)
|
|
5.7
|
Net Cash (Used
for) Provided by Investing Activities
|
(51.8)
|
|
126.7
|
|
(148.1)
|
|
30.7
|
|
|
|
|
|
|
|
|
|
|
|
Financing
Activities
|
|
|
|
|
|
|
|
|
Short-term repayments
- net
|
(264.0)
|
|
(232.0)
|
|
(142.0)
|
|
(88.0)
|
|
Repayments of
long-term debt
|
-
|
|
(350.0)
|
|
(200.0)
|
|
(800.0)
|
|
Quarterly dividends
paid
|
(87.2)
|
|
(80.0)
|
|
(252.1)
|
|
(236.5)
|
|
Purchase of treasury
shares
|
(0.2)
|
|
(0.4)
|
|
(19.0)
|
|
(7.8)
|
|
Other -
net
|
0.1
|
|
0.1
|
|
0.7
|
|
0.6
|
Net Cash Used for
Financing Activities
|
(351.3)
|
|
(662.3)
|
|
(612.4)
|
|
(1,131.7)
|
Effect of exchange
rate changes on cash
|
1.4
|
|
(5.2)
|
|
(4.5)
|
|
(8.9)
|
Net increase in cash
and cash equivalents
|
17.8
|
|
1.5
|
|
29.8
|
|
14.9
|
Cash and cash
equivalents at beginning of period
|
121.8
|
|
139.0
|
|
109.8
|
|
125.6
|
Cash and Cash
Equivalents at End of Period
|
$
139.6
|
|
$
140.5
|
|
$
139.6
|
|
$
140.5
|
The J. M. Smucker
Company
|
Unaudited
Supplemental Schedule
|
|
|
|
Three Months Ended
January 31,
|
|
Nine Months Ended
January 31,
|
|
|
|
|
% of
|
|
|
|
% of
|
|
|
|
% of
|
|
|
|
% of
|
|
|
2017
|
|
Net Sales
|
|
2016
|
|
Net Sales
|
|
2017
|
|
Net Sales
|
|
2016
|
|
Net Sales
|
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$1,878.8
|
|
|
|
$1,973.9
|
|
|
|
$5,608.5
|
|
|
|
$6,003.6
|
|
|
Selling,
distribution, and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
administrative
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketing
|
97.7
|
|
5.2%
|
|
120.7
|
|
6.1%
|
|
327.5
|
|
5.8%
|
|
358.5
|
|
6.0%
|
|
Selling
|
60.6
|
|
3.2%
|
|
73.8
|
|
3.7%
|
|
193.3
|
|
3.4%
|
|
244.9
|
|
4.1%
|
|
Distribution
|
61.5
|
|
3.3%
|
|
61.3
|
|
3.1%
|
|
184.2
|
|
3.3%
|
|
185.3
|
|
3.1%
|
|
General and
administrative
|
117.4
|
|
6.2%
|
|
125.3
|
|
6.3%
|
|
351.3
|
|
6.3%
|
|
369.8
|
|
6.2%
|
Total selling,
distribution, and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
administrative
expenses
|
$
337.2
|
|
17.9%
|
|
$
381.1
|
|
19.3%
|
|
$1,056.3
|
|
18.8%
|
|
$1,158.5
|
|
19.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
Net sales:
|
|
|
|
|
|
|
|
|
U.S. Retail
Coffee
|
$
537.6
|
|
$
575.5
|
|
$
1,602.7
|
|
$
1,726.6
|
|
U.S. Retail Consumer
Foods
|
517.3
|
|
569.8
|
|
1,611.6
|
|
1,796.0
|
|
U.S. Retail Pet
Foods
|
550.9
|
|
570.9
|
|
1,601.4
|
|
1,687.5
|
|
International and
Foodservice
|
273.0
|
|
257.7
|
|
792.8
|
|
793.5
|
Total net
sales
|
$
1,878.8
|
|
$
1,973.9
|
|
$
5,608.5
|
|
$
6,003.6
|
|
|
|
|
|
|
|
|
|
Segment
profit:
|
|
|
|
|
|
|
|
|
U.S. Retail
Coffee
|
$
172.2
|
|
$
194.6
|
|
$
532.5
|
|
$
548.8
|
|
U.S. Retail Consumer
Foods
|
119.2
|
|
129.1
|
|
349.5
|
|
375.8
|
|
U.S. Retail Pet
Foods
|
126.3
|
|
124.0
|
|
363.0
|
|
355.8
|
|
International and
Foodservice
|
45.5
|
|
48.9
|
|
136.7
|
|
140.6
|
Total segment
profit
|
$
463.2
|
|
$
496.6
|
|
$
1,381.7
|
|
$
1,421.0
|
|
Amortization
|
(51.7)
|
|
(52.2)
|
|
(155.2)
|
|
(158.2)
|
|
Impairment
charges
|
(75.7)
|
|
-
|
|
(75.7)
|
|
-
|
|
Interest expense -
net
|
(40.3)
|
|
(43.6)
|
|
(122.8)
|
|
(130.6)
|
|
Unallocated
derivative gains (losses)
|
0.8
|
|
6.7
|
|
(5.7)
|
|
2.7
|
|
Cost of products sold
- special project costs
|
(0.5)
|
|
(3.1)
|
|
(4.8)
|
|
(9.2)
|
|
Other special project
costs
|
(18.0)
|
|
(41.4)
|
|
(66.8)
|
|
(94.9)
|
|
Corporate
administrative expenses
|
(80.4)
|
|
(88.3)
|
|
(238.7)
|
|
(262.2)
|
|
Other income
(expense) - net
|
0.2
|
|
0.6
|
|
4.5
|
|
(0.9)
|
Income before income
taxes
|
$
197.6
|
|
$
275.3
|
|
$
716.5
|
|
$
767.7
|
|
|
|
|
|
|
|
|
|
Segment profit
margin:
|
|
|
|
|
|
|
|
|
U.S. Retail
Coffee
|
32.0%
|
|
33.8%
|
|
33.2%
|
|
31.8%
|
|
U.S. Retail Consumer
Foods
|
23.0%
|
|
22.7%
|
|
21.7%
|
|
20.9%
|
|
U.S. Retail Pet
Foods
|
22.9%
|
|
21.7%
|
|
22.7%
|
|
21.1%
|
|
International and
Foodservice
|
16.7%
|
|
19.0%
|
|
17.2%
|
|
17.7%
|
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 and
impairment charges related to intangible assets, and has modified
prior year results to conform to the new definition. The
Company believes that excluding amortization expense and impairment
charges related to intangible assets 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 and
impairment charges are noncash expenses 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
January 31,
|
|
Nine Months Ended
January 31,
|
|
|
|
|
|
|
|
Increase
|
|
|
|
|
|
|
|
Increase
|
|
|
|
|
|
2017
|
|
2016
|
|
(Decrease)
|
|
%
|
|
2017
|
|
2016
|
|
(Decrease)
|
|
%
|
|
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
reconciliation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
1,878.8
|
|
$
1,973.9
|
|
$
(95.1)
|
|
(5%)
|
|
$
5,608.5
|
|
$
6,003.6
|
|
$
(395.1)
|
|
(7%)
|
|
|
Milk
divestiture
|
-
|
|
(46.3)
|
|
46.3
|
|
2%
|
|
-
|
|
(153.5)
|
|
153.5
|
|
3%
|
|
Net sales excluding
divestiture
|
$
1,878.8
|
|
$
1,927.6
|
|
$
(48.8)
|
|
(3%)
|
|
$
5,608.5
|
|
$
5,850.1
|
|
$
(241.6)
|
|
(4%)
|
|
|
Foreign currency
exchange
|
(1.7)
|
|
-
|
|
(1.7)
|
|
-
|
|
2.8
|
|
-
|
|
2.8
|
|
-
|
|
Net sales
excluding
divestiture and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
foreign currency
exchange
|
$
1,877.1
|
|
$
1,927.6
|
|
$
(50.5)
|
|
(3%)
|
|
$
5,611.3
|
|
$
5,850.1
|
|
$
(238.8)
|
|
(4%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
January 31,
|
|
Nine Months Ended
January 31,
|
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
(Dollars in millions,
except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
reconciliation:
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
$
722.9
|
|
$
763.8
|
|
$
2,188.5
|
|
$
2,279.8
|
|
|
Unallocated
derivative (gains) losses
|
(0.8)
|
|
(6.7)
|
|
5.7
|
|
(2.7)
|
|
|
Cost of products sold
- special project costs
|
0.5
|
|
3.1
|
|
4.8
|
|
9.2
|
|
|
Adjusted gross
profit
|
$
722.6
|
|
$
760.2
|
|
$
2,199.0
|
|
$
2,286.3
|
|
|
|
% of net
sales
|
38.5%
|
|
38.5%
|
|
39.2%
|
|
38.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
reconciliation:
|
|
|
|
|
|
|
|
|
|
Operating
income
|
$
237.7
|
|
$
318.3
|
|
$
834.8
|
|
$
899.2
|
|
|
Amortization
|
51.7
|
|
52.2
|
|
155.2
|
|
158.2
|
|
|
Impairment
charges
|
75.7
|
|
-
|
|
75.7
|
|
-
|
|
|
Unallocated
derivative (gains) losses
|
(0.8)
|
|
(6.7)
|
|
5.7
|
|
(2.7)
|
|
|
Cost of products sold
- special project costs
|
0.5
|
|
3.1
|
|
4.8
|
|
9.2
|
|
|
Other special project
costs
|
18.0
|
|
41.4
|
|
66.8
|
|
94.9
|
|
|
Adjusted operating
income
|
$
382.8
|
|
$
408.3
|
|
$
1,143.0
|
|
$
1,158.8
|
|
|
|
% of net
sales
|
20.4%
|
|
20.7%
|
|
20.4%
|
|
19.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
reconciliation:
|
|
|
|
|
|
|
|
|
|
Net income
|
$
134.6
|
|
$
185.3
|
|
$
481.9
|
|
$
497.7
|
|
|
Income
taxes
|
63.0
|
|
90.0
|
|
234.6
|
|
270.0
|
|
|
Amortization
|
51.7
|
|
52.2
|
|
155.2
|
|
158.2
|
|
|
Impairment
charges
|
75.7
|
|
-
|
|
75.7
|
|
-
|
|
|
Unallocated
derivative (gains) losses
|
(0.8)
|
|
(6.7)
|
|
5.7
|
|
(2.7)
|
|
|
Cost of products sold
- special project costs
|
0.5
|
|
3.1
|
|
4.8
|
|
9.2
|
|
|
Other special project
costs
|
18.0
|
|
41.4
|
|
66.8
|
|
94.9
|
|
|
Adjusted income
before income taxes
|
$
342.7
|
|
$
365.3
|
|
$
1,024.7
|
|
$
1,027.3
|
|
|
Income taxes, as
adjusted
|
109.9
|
|
119.3
|
|
335.5
|
|
361.3
|
|
|
Adjusted
income
|
$
232.8
|
|
$
246.0
|
|
$
689.2
|
|
$
666.0
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
common shares outstanding
|
115,888,341
|
|
119,167,720
|
|
115,859,621
|
|
119,138,552
|
|
Weighted-average
participating shares outstanding
|
546,947
|
|
514,642
|
|
540,166
|
|
519,586
|
|
Total
weighted-average shares outstanding
|
116,435,288
|
|
119,682,362
|
|
116,399,787
|
|
119,658,138
|
|
Dilutive effect of
stock options
|
73,356
|
|
52,585
|
|
112,673
|
|
25,355
|
|
Total
weighted-average shares outstanding - assuming dilution
|
116,508,644
|
|
119,734,947
|
|
116,512,460
|
|
119,683,493
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings per
share
|
$
2.00
|
|
$
2.05
|
|
$
5.92
|
|
$
5.56
|
The J. M. Smucker
Company
|
Unaudited Non-GAAP
Financial Measures
|
|
|
|
|
Three Months Ended
January 31,
|
|
Nine Months Ended
January 31,
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
EBITDA
reconciliation:
|
|
|
|
|
|
|
|
|
Net income
|
$
134.6
|
|
$
185.3
|
|
$
481.9
|
|
$
497.7
|
|
Income
taxes
|
63.0
|
|
90.0
|
|
234.6
|
|
270.0
|
|
Interest expense -
net
|
40.3
|
|
43.6
|
|
122.8
|
|
130.6
|
|
Depreciation
|
52.6
|
|
55.1
|
|
159.6
|
|
165.5
|
|
Amortization
|
51.7
|
|
52.2
|
|
155.2
|
|
158.2
|
|
Impairment
charges
|
75.7
|
|
-
|
|
75.7
|
|
-
|
|
Earnings before
interest, taxes, depreciation, and amortization
|
$
417.9
|
|
$
426.2
|
|
$
1,229.8
|
|
$
1,222.0
|
|
|
% of net
sales
|
22.2%
|
|
21.6%
|
|
21.9%
|
|
20.4%
|
|
|
|
|
|
|
|
|
|
|
Free cash flow
reconciliation:
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
$
419.5
|
|
$
542.3
|
|
$
794.8
|
|
$
1,124.8
|
|
Additions to
property, plant, and equipment
|
(52.6)
|
|
(43.4)
|
|
(136.6)
|
|
(160.8)
|
|
Free cash
flow
|
$
366.9
|
|
$
498.9
|
|
$
658.2
|
|
$
964.0
|
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
|
$
5.38
|
|
$
5.48
|
|
Special project
costs
|
0.58
|
|
0.58
|
|
Amortization
|
1.20
|
|
1.20
|
|
Impairment
charges
|
0.44
|
|
0.44
|
|
Adjusted earnings per
share
|
$
7.60
|
|
$
7.70
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Low
|
|
High
|
|
|
|
(Dollars in
millions)
|
Free cash flow
reconciliation:
|
|
|
|
|
Net cash provided by
operating activities
|
$
1,190
|
|
$
1,240
|
|
Additions to
property, plant, and equipment
|
(240)
|
|
(240)
|
|
Free cash
flow
|
$
950
|
|
$
1,000
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/the-j-m-smucker-company-announces-fiscal-2017-third-quarter-results-300409429.html
SOURCE The J.M. Smucker Company