ORRVILLE, Ohio, Aug. 26, 2021 /PRNewswire/ -- The J.M. Smucker
Co. (NYSE: SJM) today announced results for the first quarter ended
July 31, 2021, of its 2022 fiscal year. Financial results for
the first quarter of fiscal year 2022 reflect the divestiture of
the Crisco® business on December 1, 2020, and the divestiture of the
Natural Balance® business on January 29, 2021. All comparisons are to the
first quarter of the prior fiscal year, unless otherwise noted.
EXECUTIVE SUMMARY
- Net sales decreased $113.8
million, or 6 percent. Net sales excluding divestitures and
foreign currency exchange increased 1 percent.
- Net income per diluted share was $1.42. Adjusted earnings per share was
$1.90, a decrease of 20 percent.
- Cash from operations was $137.8
million, a decrease of 66 percent. Free cash flow was
$69.8 million, compared to
$332.4 million in the prior
year.
- The Company updated its full-year fiscal 2022 financial
outlook.
CHIEF EXECUTIVE OFFICER REMARKS
"Our first quarter results reflected organic net sales growth,
while lapping double-digit growth in the prior year, and continued
to demonstrate consumers' desire for our brands, while earnings
were in line with our expectations," said Mark Smucker, President and Chief Executive
Officer. "The progress we have made against our strategy and
executional priorities has made us a stronger company, positioning
our iconic brands for continued growth in market share."
"Our industry continues to navigate a period of significant
supply chain volatility, disruption, and cost inflation. In the
near term, we expect to experience higher raw material and
logistics cost increases. However, we are optimistic in managing
these challenges and remain confident in the momentum of our
business, the talent and commitment of our people, and our
strengthened financial position to deliver balanced top- and
bottom-line growth and long-term shareholder value."
FIRST QUARTER CONSOLIDATED RESULTS
|
Three Months Ended
July 31,
|
|
2021
|
|
2020
|
|
% Increase
(Decrease)
|
|
(Dollars and shares
in millions, except per share data)
|
|
|
|
|
|
|
Net
sales
|
$1,858.0
|
|
|
$1,971.8
|
|
|
(6)
|
%
|
|
|
|
|
|
|
Operating
income
|
$259.4
|
|
|
$361.1
|
|
|
(28)
|
%
|
Adjusted operating
income
|
323.4
|
|
|
404.5
|
|
|
(20)
|
%
|
|
|
|
|
|
|
Net income per
common share – assuming dilution
|
$1.42
|
|
|
$2.08
|
|
|
(32)
|
%
|
Adjusted earnings per
share – assuming dilution
|
1.90
|
|
|
2.37
|
|
|
(20)
|
%
|
|
|
|
|
|
|
Weighted-average
shares outstanding – assuming dilution
|
108.4
|
|
|
114.1
|
|
|
(5)
|
%
|
Net Sales
Net sales decreased 6 percent. Excluding noncomparable net sales
of $135.5 million for the divested
Crisco® and Natural Balance®
businesses, as well as $10.4 million
of favorable foreign currency exchange, net sales increased
$11.3 million, or 1 percent.
The increase in comparable net sales was primarily due to
favorable volume/mix for the Company's Away From Home operating
segment and U.S. Retail Pet Foods segment, partially offset by
reduced volume/mix for its International operating segment and U.S.
Retail Coffee segment. Net price realization was a slight benefit,
primarily reflecting higher net pricing in the U.S. Retail Consumer
Foods segment, mostly offset by lower net pricing in the U.S.
Retail Coffee segment.
Operating Income
Gross profit decreased $136.0
million, or 18 percent, reflecting higher costs, primarily
driven by increased commodity and transportation costs, the
noncomparable impact of the Crisco® and
Natural Balance® divestitures, and a decreased
contribution from volume/mix. Operating income decreased
$101.7 million, or 28 percent,
primarily driven by the decrease in gross profit, partially offset
by a $33.5 million decrease in
selling, distribution, and administrative ("SD&A") expenses,
primarily attributable to decreased marketing expense.
Adjusted gross profit decreased $113.0
million, or 15 percent, with the difference from generally
accepted accounting principles ("GAAP") results being the exclusion
of the change in net cumulative unallocated derivative gains and
losses and special project costs. Adjusted operating income
decreased $81.1 million, or 20
percent, further reflecting the exclusion of amortization and other
special project costs.
Interest Expense, Other Income (Expense), and Income
Taxes
Net interest expense decreased $3.0
million, primarily as a result of reduced debt outstanding
as compared to the prior year.
Net other expense increased $9.7
million, driven by a $6.9
million net loss on extinguishment recognized upon
prepayment of $400.0 million in
principal of Senior Notes and a $3.7
million settlement loss related to a defined benefit pension
plan.
The effective income tax rate was 25.0 percent compared to 24.4
percent in the prior year. The adjusted effective income tax rate
was 23.6 percent, compared to 24.4 percent in the prior year. The
adjusted effective income tax rate excludes a discrete deferred
state income tax adjustment in the current year.
Cash Flow and Debt
Cash provided by operating activities was $137.8 million, compared to $409.0 million in the prior year, primarily
reflecting an increase in working capital requirements, as compared
to the prior year, and a decrease in net income adjusted for
noncash items. Free cash flow was $69.8
million, compared to $332.4
million in the prior year, reflecting the decrease in cash
provided by operating activities, partially offset by a
$8.6 million decrease in capital
expenditures. Net debt repayments in the quarter totaled
$123.0 million.
FULL-YEAR OUTLOOK
The Company updated its full-year fiscal 2022 guidance as
summarized below:
|
|
Current
|
|
Previous
|
Net sales increase vs
prior year
|
|
(2.5)% -
(1.5)%
|
|
(3)% -
(2)%
|
Adjusted earnings per
share
|
|
$8.25 -
$8.65
|
|
$8.70 -
$9.10
|
Free cash flow (in
millions)
|
|
$800
|
|
$900
|
Capital expenditures
(in millions)
|
|
$380
|
|
$380
|
Adjusted effective
income tax rate
|
|
24.0%
|
|
24.0%
|
|
|
|
|
|
|
|
The pandemic and related implications, along with cost inflation
and volatility in supply chains, continue to impact financial
results and cause uncertainty and risk for the fiscal year 2022
outlook. Any manufacturing or supply chain disruption, as well as
changes in consumer mobility and purchasing behavior, retailer
inventory levels, and macroeconomic conditions could materially
impact actual results. While the broader outlook remains uncertain,
the Company continues to focus on managing the elements it can
control, including taking the necessary steps to minimize the
impact of cost inflation and any business or labor disruption. This
guidance reflects performance expectations based on the Company's
current understanding of the environment.
Net sales are expected to decrease 1.5 to 2.5 percent compared
to the prior year, which incorporates an impact of $355.6 million related to the divested
Crisco® and Natural Balance®
businesses. On a comparable basis, net sales are expected to
increase approximately 2.5 percent at the mid-point of the net
sales guidance range, reflecting a deceleration in at-home
consumption trends, more than offset by higher net pricing across
multiple categories, continued double-digit net sales growth for
the Smucker's® Uncrustables®
brand, and a recovery in away from home channels. The net sales
guidance reflects incremental net pricing actions in response to
higher costs versus previous expectations, offset by reduced
volume/mix, inclusive of anticipated price elasticity and supply
disruption for internationally sourced pet food products.
Adjusted earnings per share is expected to range from
$8.25 to $8.65, based on 108.3 million shares outstanding.
The earnings guidance reflects the decrease in net sales, adjusted
gross profit margin of approximately 36.0 percent, and SD&A
expenses down approximately 6 percent compared to the prior year.
The adjusted effective income tax rate is expected to be 24.0
percent, and free cash flow is expected to be approximately
$800 million, with capital
expenditures of $380 million.
FIRST QUARTER SEGMENT RESULTS
(Dollar amounts in the segment tables below are reported in
millions.)
U.S. Retail Pet Foods
|
|
Net
Sales
|
|
Segment
Profit
|
|
Segment
Profit Margin
|
FY22 Q1
Results
|
|
$648.0
|
|
$79.9
|
|
12.3%
|
Increase (decrease) vs
prior year
|
|
(6)%
|
|
(36)%
|
|
-580bps
|
Net sales decreased $44.6 million.
Excluding $56.0 million of
noncomparable net sales in the prior year related to the divested
Natural Balance® business, net sales increased
$11.4 million, or 2 percent.
Volume/mix increased net sales by 2 percentage points, primarily
driven by the Meow Mix®,
Milk-Bone®, and Pup-Peroni®
brands, as well as private label pet food, partially offset by
decreases for the Rachael Ray®
Nutrish® and Kibbles 'n Bits®
brands. Net price realization was neutral.
Segment profit decreased $45.4
million, primarily reflecting higher commodity and
transportation costs.
U.S. Retail Coffee
|
|
Net
Sales
|
|
Segment
Profit
|
|
Segment
Profit Margin
|
FY22 Q1
Results
|
|
$543.2
|
|
$151.3
|
|
27.9%
|
Increase (decrease) vs
prior year
|
|
(5)%
|
|
(17)%
|
|
-410bps
|
Net sales decreased $27.7 million.
Net price realization reduced net sales by 3 percentage points,
reflecting increased trade spend related to the lapping of
suspended promotions in the prior year. Volume/mix reduced net
sales by 2 percentage points, reflecting the lapping of retailer
inventory re-stocking in the prior year, driven by the
Folgers® brand, partially offset by increases for
the Dunkin'™ and Café Bustelo® brands.
Segment profit decreased $31.3 million, reflecting lower net pricing,
higher commodity costs, and the reduced contribution from
volume/mix, partially offset by decreased marketing expense.
U.S. Retail Consumer Foods
|
|
Net
Sales
|
|
Segment
Profit
|
|
Segment
Profit Margin
|
FY22 Q1
Results
|
|
$435.6
|
|
$118.7
|
|
27.2%
|
Increase (decrease) vs
prior year
|
|
(11)%
|
|
(10)%
|
|
30bps
|
Net sales decreased $53.6 million.
Excluding $71.7 million of
noncomparable net sales in the prior year related to the divested
Crisco® business, net sales increased
$18.1 million, or 4 percent. Higher
net price realization contributed 4 percentage points of growth,
primarily driven by peanut butter and
Smucker's® Uncrustables®
frozen sandwiches. Volume/mix was neutral, as growth for
Smucker's® Uncrustables®
frozen sandwiches and Jif® peanut butter was
mostly offset by a decline for Smucker's® fruit
spreads.
Segment profit decreased $12.8
million, reflecting the noncomparable segment profit in the
prior year related to the divested Crisco®
business and higher transportation, commodity, and packaging costs,
partially offset by the higher net pricing and a reduced marketing
expense.
International and Away From Home
|
|
Net
Sales
|
|
Segment
Profit
|
|
Segment
Profit Margin
|
FY22 Q1
Results
|
|
$231.2
|
|
$32.9
|
|
14.2%
|
Increase (decrease) vs
prior year
|
|
6%
|
|
6%
|
|
10bps
|
Net sales increased $12.1 million.
Excluding $7.8 million of
noncomparable net sales in the prior year related to the divested
Crisco® business and $10.4
million of favorable foreign currency exchange, net sales
increased $9.5 million, or 4 percent.
Comparable net sales growth of 27 percent for the Away from Home
operating segment was partially offset by a 12 percent decline for
the Company's International operating segment. Volume/mix for the
combined businesses increased net sales by 3 percentage points,
primarily driven by increases for portion control products, coffee,
and
Smucker's® Uncrustables®
frozen sandwiches in away from home channels, partially offset by a
decrease for flour and baking ingredients in the International
operating segment. Net price realization contributed a 1 percentage
point increase.
Segment profit increased $2.0
million, primarily reflecting favorable foreign currency
exchange, decreased marketing expense, and the favorable impact of
net pricing and costs. This was partially offset by the
noncomparable segment profit in the prior year related to the
divested Crisco® business and a reduced
contribution from volume/mix.
Financial Results Discussion and Webcast
At approximately 7:00 a.m. Eastern
Daylight Time today, the Company will post to its website at
investors.jmsmucker.com a pre-recorded management discussion of its
fiscal 2022 first quarter financial results, a transcript of the
discussion, and supplemental materials. At 9:00 a.m. Eastern Daylight Time today, the
Company will webcast a live question and answer session with
Mark Smucker, President and Chief
Executive Officer, and Tucker
Marshall, Chief Financial Officer. The live webcast and
replay can be accessed at investors.jmsmucker.com.
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 and labor
shortages; 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 achieve cost savings related to restructuring and 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; 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 the
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. At The J.M. Smucker Co., it is our privilege to be at the heart
of this dynamic with a diverse portfolio that appeals to each
generation of people and pets and is found in nearly 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 preferences and acting
responsibly, we will continue growing our business and the positive
impact we have on society. For more information, please visit
jmsmucker.com.
The J.M. Smucker Co. is the owner of all trademarks referenced
herein, except for the following, which are used under license:
Dunkin'™ is a trademark of DD IP Holder LLC, and Rachael
Ray® is a trademark of Ray Marks II LLC.
The Dunkin'™ brand is licensed to The J.M. Smucker Co.
for packaged coffee products sold in retail channels such as
grocery stores, mass merchandisers, club stores, e-commerce and
drug stores. This information does not pertain to products for sale
in Dunkin'™ restaurants.
The J.M. Smucker
Co. Unaudited Condensed
Consolidated Statements of Income
|
|
|
|
Three Months Ended
July 31,
|
|
2021
|
|
2020
|
|
% Increase
(Decrease)
|
|
(Dollars and shares
in millions, except per
share data)
|
|
|
|
|
|
|
Net sales
|
$1,858.0
|
|
|
$1,971.8
|
|
|
(6)
|
%
|
Cost of products
sold
|
1,218.6
|
|
|
1,196.4
|
|
|
2
|
%
|
Gross
Profit
|
639.4
|
|
|
775.4
|
|
|
(18)
|
%
|
Gross
margin
|
34.4
|
%
|
|
39.3
|
%
|
|
|
|
|
|
|
|
|
Selling,
distribution, and administrative expenses
|
324.0
|
|
|
357.5
|
|
|
(9)
|
%
|
Amortization
|
55.4
|
|
|
59.6
|
|
|
(7)
|
%
|
Other special project
costs
|
1.8
|
|
|
—
|
|
|
n/m
|
|
Other operating
expense (income) – net
|
(1.2)
|
|
|
(2.8)
|
|
|
(57)
|
%
|
Operating
Income
|
259.4
|
|
|
361.1
|
|
|
(28)
|
%
|
Operating
margin
|
14.0
|
%
|
|
18.3
|
%
|
|
|
|
|
|
|
|
|
Interest expense –
net
|
(43.1)
|
|
|
(46.1)
|
|
|
(7)
|
%
|
Other income
(expense) – net
|
(11.1)
|
|
|
(1.4)
|
|
|
n/m
|
|
Income Before
Income Taxes
|
205.2
|
|
|
313.6
|
|
|
(35)
|
%
|
Income tax
expense
|
51.3
|
|
|
76.6
|
|
|
(33)
|
%
|
Net
Income
|
$153.9
|
|
|
$237.0
|
|
|
(35)
|
%
|
|
|
|
|
|
|
Net income per
common share
|
$1.42
|
|
|
$2.08
|
|
|
(32)
|
%
|
|
|
|
|
|
|
Net income per
common share – assuming dilution
|
$1.42
|
|
|
$2.08
|
|
|
(32)
|
%
|
|
|
|
|
|
|
Dividends declared
per common share
|
$0.99
|
|
|
$0.90
|
|
|
10
|
%
|
|
|
|
|
|
|
Weighted-average
shares outstanding
|
108.3
|
|
|
114.1
|
|
|
(5)
|
%
|
|
|
|
|
|
|
Weighted-average
shares outstanding – assuming dilution
|
108.4
|
|
|
114.1
|
|
|
(5)
|
%
|
The J.M. Smucker
Co.
Unaudited Condensed
Consolidated Balance Sheets
|
|
|
|
|
|
|
|
July 31,
2021
|
|
April 30,
2021
|
|
|
(Dollars in
millions)
|
Assets
|
|
|
|
|
Current
Assets
|
|
|
|
|
Cash and cash
equivalents
|
|
$168.8
|
|
|
$334.3
|
|
Trade receivables –
net
|
|
566.0
|
|
|
533.7
|
|
Inventories
|
|
1,105.5
|
|
|
959.9
|
|
Other current
assets
|
|
112.6
|
|
|
113.8
|
|
Total Current
Assets
|
|
1,952.9
|
|
|
1,941.7
|
|
|
|
|
|
|
Property, Plant,
and Equipment – Net
|
|
1,988.4
|
|
|
2,001.5
|
|
|
|
|
|
|
Other Noncurrent
Assets
|
|
|
|
|
Goodwill
|
|
6,021.0
|
|
|
6,023.6
|
|
Other intangible
assets – net
|
|
5,985.2
|
|
|
6,041.2
|
|
Other noncurrent
assets
|
|
264.2
|
|
|
276.2
|
|
Total Other
Noncurrent Assets
|
|
12,270.4
|
|
|
12,341.0
|
|
Total
Assets
|
|
$16,211.7
|
|
|
$16,284.2
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
Accounts
payable
|
|
$1,041.2
|
|
|
$1,034.1
|
|
Current portion of
long-term debt
|
|
751.6
|
|
|
1,152.9
|
|
Short-term
borrowings
|
|
366.0
|
|
|
82.0
|
|
Other current
liabilities
|
|
604.4
|
|
|
598.5
|
|
Total Current
Liabilities
|
|
2,763.2
|
|
|
2,867.5
|
|
|
|
|
|
|
Noncurrent
Liabilities
|
|
|
|
|
Long-term debt, less
current portion
|
|
3,517.5
|
|
|
3,516.8
|
|
Other noncurrent
liabilities
|
|
1,760.7
|
|
|
1,775.1
|
|
Total Noncurrent
Liabilities
|
|
5,278.2
|
|
|
5,291.9
|
|
|
|
|
|
|
Total Shareholders'
Equity
|
|
8,170.3
|
|
|
8,124.8
|
|
Total Liabilities
and Shareholders' Equity
|
|
$16,211.7
|
|
|
$16,284.2
|
|
The J.M. Smucker
Co.
Unaudited Condensed
Consolidated Statements of Cash Flow
|
|
|
|
Three Months Ended
July 31,
|
|
2021
|
|
2020
|
|
(Dollars in
millions)
|
Operating
Activities
|
|
|
|
Net income
|
$153.9
|
|
|
$237.0
|
|
Adjustments to
reconcile net income to net cash provided by (used for)
operations:
|
|
|
|
Depreciation
|
58.5
|
|
|
54.1
|
|
Amortization
|
55.4
|
|
|
59.6
|
|
Pension settlement
loss (gain)
|
3.7
|
|
|
—
|
|
Share-based
compensation expense
|
5.3
|
|
|
5.9
|
|
Other noncash
adjustments – net
|
3.1
|
|
|
3.8
|
|
Make-whole payments
included in financing activities
|
7.0
|
|
|
—
|
|
Changes in assets and
liabilities:
|
|
|
|
Trade
receivables
|
(32.9)
|
|
|
55.1
|
|
Inventories
|
(146.3)
|
|
|
(98.5)
|
|
Other current
assets
|
8.0
|
|
|
0.3
|
|
Accounts
payable
|
28.5
|
|
|
41.1
|
|
Accrued
liabilities
|
(43.9)
|
|
|
7.1
|
|
Income and other
taxes
|
47.4
|
|
|
43.4
|
|
Other – net
|
(9.9)
|
|
|
0.1
|
|
Net Cash Provided
by (Used for) Operating Activities
|
137.8
|
|
|
409.0
|
|
|
|
|
|
Investing
Activities
|
|
|
|
Additions to property,
plant, and equipment
|
(68.0)
|
|
|
(76.6)
|
|
Other – net
|
(12.0)
|
|
|
27.4
|
|
Net Cash Provided
by (Used for) Investing Activities
|
(80.0)
|
|
|
(49.2)
|
|
|
|
|
|
Financing
Activities
|
|
|
|
Short-term borrowings
(repayments) – net
|
284.0
|
|
|
47.8
|
|
Repayments of
long-term debt
|
(407.0)
|
|
|
(300.0)
|
|
Quarterly dividends
paid
|
(97.2)
|
|
|
(100.1)
|
|
Purchase of treasury
shares
|
(6.8)
|
|
|
(4.6)
|
|
Proceeds from stock
option exercises
|
4.0
|
|
|
—
|
|
Other – net
|
(0.3)
|
|
|
(0.4)
|
|
Net Cash Provided
by (Used for) Financing Activities
|
(223.3)
|
|
|
(357.3)
|
|
Effect of exchange
rate changes on cash
|
—
|
|
|
3.0
|
|
Net increase
(decrease) in cash and cash equivalents
|
(165.5)
|
|
|
5.5
|
|
Cash and cash
equivalents at beginning of period
|
334.3
|
|
|
391.1
|
|
Cash and Cash
Equivalents at End of Period
|
$168.8
|
|
|
$396.6
|
|
The J.M. Smucker
Co.
Unaudited
Supplemental Schedule
|
|
|
|
Three Months Ended
July 31,
|
|
2021
|
|
% of
Net Sales
|
|
2020
|
|
% of
Net Sales
|
|
(Dollars in
millions)
|
Net sales
|
$1,858.0
|
|
|
|
|
$1,971.8
|
|
|
|
Selling, distribution,
and administrative expenses:
|
|
|
|
|
|
|
|
Marketing
|
98.5
|
|
|
5.3
|
%
|
|
121.7
|
|
|
6.2
|
%
|
Selling
|
62.0
|
|
|
3.3
|
%
|
|
65.8
|
|
|
3.3
|
%
|
Distribution
|
68.4
|
|
|
3.7
|
%
|
|
69.8
|
|
|
3.5
|
%
|
General and
administrative
|
95.1
|
|
|
5.1
|
%
|
|
100.2
|
|
|
5.1
|
%
|
Total selling,
distribution, and administrative expenses
|
$324.0
|
|
|
17.4
|
%
|
|
$357.5
|
|
|
18.1
|
%
|
|
|
|
|
|
|
|
|
Amounts may not add
due to rounding.
|
|
|
|
|
The J.M. Smucker
Co.
Unaudited Reportable
Segments
|
|
|
|
Three Months Ended
July 31,
|
|
2021
|
|
2020
|
|
(Dollars in
millions)
|
Net sales:
|
|
|
|
U.S. Retail Pet
Foods
|
$648.0
|
|
|
$692.6
|
|
U.S. Retail
Coffee
|
543.2
|
|
|
570.9
|
|
U.S. Retail Consumer
Foods
|
435.6
|
|
|
489.2
|
|
International and Away
From Home
|
231.2
|
|
|
219.1
|
|
Total net
sales
|
$1,858.0
|
|
|
$1,971.8
|
|
|
|
|
|
Segment
profit:
|
|
|
|
U.S. Retail Pet
Foods
|
$79.9
|
|
|
$125.3
|
|
U.S. Retail
Coffee
|
151.3
|
|
|
182.6
|
|
U.S. Retail Consumer
Foods
|
118.7
|
|
|
131.5
|
|
International and Away
From Home
|
32.9
|
|
|
30.9
|
|
Total segment
profit
|
$382.8
|
|
|
$470.3
|
|
Amortization
|
(55.4)
|
|
|
(59.6)
|
|
Interest expense –
net
|
(43.1)
|
|
|
(46.1)
|
|
Change in net
cumulative unallocated derivative gains and losses
|
(2.2)
|
|
|
16.2
|
|
Cost of products sold
– special project costs
|
(4.6)
|
|
|
—
|
|
Other special project
costs
|
(1.8)
|
|
|
—
|
|
Corporate
administrative expenses
|
(59.4)
|
|
|
(65.8)
|
|
Other income (expense)
– net
|
(11.1)
|
|
|
(1.4)
|
|
Income before income
taxes
|
$205.2
|
|
|
$313.6
|
|
|
|
|
|
Segment profit
margin:
|
|
|
|
U.S. Retail Pet
Foods
|
12.3
|
%
|
|
18.1
|
%
|
U.S. Retail
Coffee
|
27.9
|
%
|
|
32.0
|
%
|
U.S. Retail Consumer
Foods
|
27.2
|
%
|
|
26.9
|
%
|
International and Away
From Home
|
14.2
|
%
|
|
14.1
|
%
|
Non-GAAP Financial Measures
The Company uses non-GAAP financial measures, including: net
sales excluding divestitures and 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 financial 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; the
net change in cumulative unallocated gains and losses on commodity
and foreign currency exchange derivative activities ("change in net
cumulative 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. 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 2022 outlook.
The J.M. Smucker
Co.
Unaudited Non-GAAP
Financial Measures
|
|
|
|
Three Months Ended
July 31,
|
|
2021
|
|
2020
|
|
Increase
(Decrease)
|
|
%
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
Net sales
reconciliation:
|
|
|
|
|
|
|
|
Net sales
|
$1,858.0
|
|
|
$1,971.8
|
|
|
($113.8)
|
|
|
(6)
|
%
|
Crisco®
divestiture
|
—
|
|
|
(79.5)
|
|
|
79.5
|
|
|
4
|
|
Natural
Balance® divestiture
|
—
|
|
|
(56.0)
|
|
|
56.0
|
|
|
3
|
|
Foreign currency
exchange
|
(10.4)
|
|
|
—
|
|
|
(10.4)
|
|
|
(1)
|
|
Net sales excluding
divestitures and foreign currency exchange
|
$1,847.6
|
|
|
$1,836.3
|
|
|
$11.3
|
|
|
1
|
%
|
|
|
|
|
|
|
|
|
Amounts may not add
due to rounding.
|
|
|
The J.M. Smucker
Co.
Unaudited Non-GAAP
Financial Measures
|
|
|
|
Three Months Ended
July 31,
|
|
2021
|
|
2020
|
|
(Dollars in millions,
except per share data)
|
Gross profit
reconciliation:
|
|
|
|
Gross
profit
|
$639.4
|
|
|
$775.4
|
|
Change in net
cumulative unallocated derivative gains and losses
|
2.2
|
|
|
(16.2)
|
|
Cost of products sold
– special project costs
|
4.6
|
|
|
—
|
|
Adjusted gross
profit
|
$646.2
|
|
|
$759.2
|
|
% of net
sales
|
34.8
|
%
|
|
38.5
|
%
|
|
|
|
|
Operating income
reconciliation:
|
|
|
|
Operating
income
|
$259.4
|
|
|
$361.1
|
|
Amortization
|
55.4
|
|
|
59.6
|
|
Change in net
cumulative unallocated derivative gains and losses
|
2.2
|
|
|
(16.2)
|
|
Cost of products sold
– special project costs
|
4.6
|
|
|
—
|
|
Other special project
costs
|
1.8
|
|
|
—
|
|
Adjusted operating
income
|
$323.4
|
|
|
$404.5
|
|
% of net
sales
|
17.4
|
%
|
|
20.5
|
%
|
|
|
|
|
Net income
reconciliation:
|
|
|
|
Net income
|
$153.9
|
|
|
$237.0
|
|
Income tax
expense
|
51.3
|
|
|
76.6
|
|
Amortization
|
55.4
|
|
|
59.6
|
|
Change in net
cumulative unallocated derivative gains and losses
|
2.2
|
|
|
(16.2)
|
|
Cost of products sold
– special project costs
|
4.6
|
|
|
—
|
|
Other special project
costs
|
1.8
|
|
|
—
|
|
Adjusted income before
income taxes
|
$269.2
|
|
|
$357.0
|
|
Income taxes, as
adjusted
|
63.4
|
|
|
87.0
|
|
Adjusted
income
|
$205.8
|
|
|
$270.0
|
|
|
|
|
|
Weighted-average
common shares outstanding
|
108.0
|
|
|
113.5
|
|
Weighted-average
participating shares outstanding
|
0.3
|
|
|
0.6
|
|
Total weighted-average
shares outstanding
|
108.3
|
|
|
114.1
|
|
Dilutive effect of
stock options
|
0.1
|
|
|
—
|
|
Total weighted-average
shares outstanding – assuming dilution
|
108.4
|
|
|
114.1
|
|
Adjusted earnings per
share – assuming dilution
|
$1.90
|
|
|
$2.37
|
|
The J.M. Smucker
Co.
Unaudited Non-GAAP
Financial Measures
|
|
|
|
Three Months Ended
July 31,
|
|
2021
|
|
2020
|
|
(Dollars in
millions)
|
EBITDA (as adjusted)
reconciliation:
|
|
|
|
Net income
|
$153.9
|
|
|
$237.0
|
|
Income tax
expense
|
51.3
|
|
|
76.6
|
|
Interest expense –
net
|
43.1
|
|
|
46.1
|
|
Depreciation
|
58.5
|
|
|
54.1
|
|
Amortization
|
55.4
|
|
|
59.6
|
|
EBITDA (as
adjusted)
|
$362.2
|
|
|
$473.4
|
|
% of net
sales
|
19.5
|
%
|
|
24.0
|
%
|
|
|
|
|
|
|
Free cash flow
reconciliation:
|
|
|
|
|
|
Net cash provided by
(used for) operating activities
|
$137.8
|
|
|
$409.0
|
|
Additions to property,
plant, and equipment
|
(68.0)
|
|
|
(76.6)
|
|
Free cash
flow
|
$69.8
|
|
|
$332.4
|
|
The following tables provide a reconciliation of the Company's
fiscal 2022 guidance for estimated adjusted earnings per share and
free cash flow.
|
|
Year Ending April 30,
2022
|
|
|
Low
|
|
High
|
Net income per common
share – assuming dilution reconciliation:
|
|
|
|
|
Net income per common
share – assuming dilution
|
|
$6.07
|
|
|
$6.47
|
|
Change in net
cumulative unallocated derivative gains and losses
(A)
|
|
0.43
|
|
|
0.43
|
|
Amortization
|
|
1.54
|
|
|
1.54
|
|
Special project
costs
|
|
0.18
|
|
|
0.18
|
|
Adjusted effective
income tax rate impact
|
|
0.03
|
|
|
0.03
|
|
Adjusted earnings per
share
|
|
$8.25
|
|
|
$8.65
|
|
|
|
|
|
|
(A) We are unable to
project derivative gains and losses on a forward-looking basis as
these will vary each quarter based on market
conditions and derivative positions taken. The change in
unallocated derivative gains and losses in the table above reflects
the net impact
of the gains and losses that have been recognized in our GAAP
results and excluded from non-GAAP results as of July 31, 2021,
adjusted for the gains and losses expected to be allocated to
non-GAAP results for the year ended April 30, 2022.
|
|
|
|
|
|
|
|
Year Ending
April 30, 2022
|
|
|
|
|
(Dollars in
millions)
|
|
|
Free cash flow
reconciliation:
|
|
|
|
|
Net cash provided by
operating activities
|
|
$1,180
|
|
|
|
Additions to property,
plant, and equipment
|
|
(380)
|
|
|
|
Free cash
flow
|
|
$800
|
|
|
|
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SOURCE The J.M. Smucker Co.