ORRVILLE, Ohio, Dec. 1, 2020 /PRNewswire/ -- The J.M.
Smucker Co. (NYSE: SJM) announced today the closing of the
transaction to sell its Crisco® oils and
shortening business to B&G Foods, Inc. for $550 million, subject to a working capital
adjustment. The Company previously announced the signing of a
definitive agreement to divest its Crisco®
business on October 26, 2020. The
transaction encompasses oils and shortening products sold under the
Crisco® brand primarily in the U.S. and
Canada, certain trademarks and
licensing agreements, dedicated manufacturing and warehouse
facilities located in Cincinnati,
Ohio, and approximately 160 employees who support the
Crisco® business. The business generated net
sales of approximately $270 million
for the Company's fiscal year ended April
30, 2020. The divestiture of the Crisco®
business aligns with the Company's previously stated intent to exit
the U.S. baking category and focus more of its resources on its
core growth platforms of pet food, coffee, and snacking.
The Company updated its full-year fiscal 2021 guidance to
reflect the impact of the divested business. The outbreak of
COVID-19 continues to impact financial results and cause
uncertainty of the full-year fiscal 2021 outlook. Changes in
consumer purchasing behavior, retailer inventory levels,
macroeconomic conditions, and any manufacturing or supply chain
disruption could materially impact our actual results. This
guidance reflects expectations based on the Company's current
performance and understanding of the overall environment.
Updated guidance reflects the removal of divested net sales for
the remainder of fiscal 2021 of approximately $100 million and removal of adjusted earnings per
share of $0.20 as compared to
previous guidance, excluding any potential benefit from the use of
proceeds from the sale. Full-year fiscal 2021 net sales growth is
now expected to range from flat to 1 percent and adjusted earnings
per share is expected to range from $8.35 to $8.65. The
Company anticipates offsetting the earnings dilution and using the
after-tax proceeds for share repurchases, over time. The Company
maintains its free cash flow guidance range of $975 million to $1,025
million.
The J.M. Smucker Co. 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 impact of the COVID-19 pandemic on the Company's
business, industry, suppliers, customers, consumers, employees, and
communities, particularly with respect to the Company's Away From
Home business; disruptions or inefficiencies in the Company's
operations or supply chain, including any impact of the COVID-19
pandemic; the ability to achieve cost savings related to cost
management programs in the amounts and within the time frames
currently anticipated; the ability to generate sufficient cash flow
to continue operating under the Company's capital deployment model,
including capital expenditures, debt repayment, dividend payments,
and share repurchases; volatility of commodity, energy, and other
input costs; risks associated with derivative and purchasing
strategies the Company employs to manage commodity pricing and
interest rate risks; the availability of reliable transportation on
acceptable terms, including any impact of the COVID-19 pandemic;
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 Company's 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 products or
its competitors' products; the impact of accidents, extreme
weather, natural disasters, and pandemics (such as COVID-19); 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 Company's
ability to manage and maintain key relationships; impairments in
the carrying value of goodwill, other intangible assets, or other
long-lived assets or changes in useful lives of other intangible
assets or other long-lived assets; the impact of new or changes to
existing governmental laws and regulations and their application,
including tariffs; the outcome of tax examinations, changes in tax
laws, and other tax matters; foreign currency exchange rate 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 Co.
Each generation of
consumers leaves their mark on culture by establishing new
expectations for food and the companies that make it. It is our
privilege to be at the heart of this dynamic with a portfolio that
appeals to each generation of people and pets and is found in 90
percent of U.S. homes and countless restaurants. This includes a
mix of iconic brands consumers have always loved such as
Folgers®, Jif® and Milk-Bone® and new favorites like
Café Bustelo®, Smucker's® Uncrustables® and Rachael Ray®
Nutrish®. By continuing to immerse ourselves in consumer and
pet parent preferences for food, how it's purchased and how the
companies that make it should operate, we will maintain the
important role we play in their lives. This will allow us to
continue growing our business and the positive impact we have on
all of those who count on us. For more information, please visit
jmsmucker.com.
The J.M. Smucker Co. is the owner of all trademarks
referenced herein except for Rachael Ray®, a
registered trademark of Ray Marks II LLC, which is used under
license.
Non-GAAP Financial Measures
The Company uses non-GAAP
financial measures, including: net sales excluding foreign currency
exchange; adjusted gross profit; adjusted operating income;
adjusted income; adjusted 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 investors' understanding of
its performance is enhanced by disclosing these performance
measures. Furthermore, these non-GAAP financial measures are used
by management in preparation of the annual budget and for the
monthly analyses of its operating results. The Board of Directors
also utilizes certain non-GAAP financial measures as components for
measuring performance for incentive compensation purposes.
Non-GAAP measures exclude certain items affecting comparability
that can significantly affect the year-over-year assessment of
operating results, which include amortization expense and
impairment charges related to intangible assets; divestiture,
acquisition, integration, and restructuring costs ("special project
costs"); gains and losses related to the sale of a business;
unallocated gains and losses on commodity and foreign currency
exchange derivatives ("unallocated derivative gains and losses");
and other one-time items that do not directly reflect ongoing
operating results. Income taxes, as adjusted is calculated using an
adjusted effective income tax rate that is applied to adjusted
income before income taxes and reflects the exclusion of the
previously discussed items, as well as any adjustments for one-time
tax-related activities, when they occur. While this adjusted
effective income tax rate does not generally differ materially from
the GAAP effective income tax rate, certain exclusions from
non-GAAP results can significantly impact the adjusted effective
income tax rate.
These non-GAAP financial measures are not intended to replace
the presentation of financial results in accordance with U.S. 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.
The following tables provide a reconciliation of the Company's
fiscal 2021 guidance for estimated adjusted earnings per
share and free cash flow.
|
|
Year Ending April 30,
2021
|
|
|
Low
|
|
High
|
Net income per common
share – assuming dilution reconciliation:
|
|
|
|
|
Net income per common
share – assuming dilution
|
|
$7.16
|
|
|
$7.46
|
|
Unallocated derivative
losses (gains) (A)
|
|
(0.25)
|
|
|
(0.25)
|
|
Amortization
|
|
1.56
|
|
|
1.56
|
|
Gain on
divestiture (B)
|
|
(0.31)
|
|
|
(0.31)
|
|
Pension plan
termination settlement charge
|
|
0.19
|
|
|
0.19
|
|
Adjusted earnings per
share
|
|
$8.35
|
|
|
$8.65
|
|
|
|
|
|
|
(A) As unallocated
derivative losses (gains) vary each quarter based on market
conditions and derivative positions taken, the Company does not
project derivative gains or losses on a forward-looking basis.
Therefore, the forward-looking unallocated derivative losses
(gains) in the table above reflect the net cumulative amount
already recognized in GAAP results as of October 31, 2020, that is
expected to be allocated to non-GAAP results in future
periods.
|
(B) As disclosed in
the Company's most recent quarterly filing on Form 10-Q, the
pre-tax gain on divestiture is estimated to be approximately $115
million based on expected proceeds, including the assumed working
capital adjustment and carrying value of the net assets, less
estimated costs to sell, at the closing date.
|
|
|
|
|
|
|
|
Year Ending April 30,
2021
|
|
|
Low
|
|
High
|
|
|
(Dollars in
millions)
|
Free cash flow
reconciliation:
|
|
|
|
|
Net cash provided by
operating activities
|
|
$1,290
|
|
|
$1,340
|
|
Additions to property,
plant, and equipment
|
|
(315)
|
|
|
(315)
|
|
Free cash
flow
|
|
$975
|
|
|
$1,025
|
|
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SOURCE The J.M. Smucker Co.