ORRVILLE, Ohio, Aug. 23,
2022 /PRNewswire/ -- The J.M. Smucker Co. (NYSE: SJM)
today announced results for the first quarter ended July 31, 2022, of its 2023 fiscal year. Financial
results for the first quarter of fiscal year 2023 reflect the
divestitures of the natural beverage and grains businesses on
January 31, 2022, and the private
label dry pet food business on December 1,
2021. All comparisons are to the first quarter of the prior
fiscal year, unless otherwise noted.
EXECUTIVE SUMMARY
- Net sales increased $15.0
million, or 1 percent. Net sales excluding divestitures and
foreign currency exchange increased 4 percent. Net sales reflect a
9 percent unfavorable impact related to the Jif®
peanut butter product recall.
- Net income per diluted share was $1.03. Adjusted earnings per share was
$1.67, a decrease of 12 percent,
primarily as a result of the Jif® peanut butter
product recall.
- Cash used for operations was $39.0
million, a change of 128 percent. Free cash flow was
$(127.3) million, compared to
$69.8 million in the prior year.
- The Company increased its full-year fiscal 2023 financial
outlook for net sales, adjusted earnings per share and free cash
flow.
CHIEF EXECUTIVE OFFICER REMARKS
"Our first quarter results reflect a strong start to the fiscal
year, demonstrating our operational excellence and strength
of our strategy. Our teams have done outstanding work to manage
headwinds from cost inflation, industry-wide supply chain
challenges, and the Jif® peanut butter
recall," said Mark Smucker, Chair of
the Board, President and Chief Executive Officer. "We delivered
another quarter that exceeded our expectations, as consumers'
demand for our iconic brands continued in a rising cost
environment, driving robust organic top-line growth for our key
focus platforms of pet, coffee, and snacking."
"Due to the better-than-expected first quarter results and
sustained momentum for our trusted brands, we are raising our
net sales, adjusted earnings per share, and free cash flow
expectations for this fiscal year. In the months ahead, we will
sustain investment in our growth platforms including the
Milk-Bone®, Dunkin'®, and
Smucker's® Uncrustables®
brands. We remain confident in our ability to drive long-term
growth and shareholder value creation through the current dynamic
operating environment."
FIRST QUARTER CONSOLIDATED RESULTS
|
Three Months Ended July
31,
|
|
2022
|
|
2021
|
|
% Increase
(Decrease)
|
|
(Dollars and shares in
millions, except per share data)
|
|
|
|
|
|
|
Net
sales
|
$1,873.0
|
|
$1,858.0
|
|
1 %
|
|
|
|
|
|
|
Operating
income
|
$179.7
|
|
$259.4
|
|
(31) %
|
Adjusted operating
income
|
270.0
|
|
323.4
|
|
(17) %
|
|
|
|
|
|
|
Net income per
common share – assuming dilution
|
$1.03
|
|
$1.42
|
|
(27) %
|
Adjusted earnings per
share – assuming dilution
|
1.67
|
|
1.90
|
|
(12) %
|
|
|
|
|
|
|
Weighted-average
shares outstanding – assuming dilution
|
106.8
|
|
108.4
|
|
(1) %
|
Net Sales
Net sales increased 1 percent, including a 9 percent unfavorable
impact related to the Jif® peanut butter product
recall. Excluding noncomparable net sales in the prior year of
$58.5 million for the
divested businesses, as well as $4.4
million of unfavorable foreign currency exchange, net sales
increased $77.9 million, or 4
percent.
The increase in comparable net sales was primarily driven by a
14 percentage point increase from net price realization, primarily
reflecting list price increases for the U.S. Retail Coffee, U.S.
Retail Pet Foods, and International and Away from Home businesses,
partially offset by the unfavorable impact of customer returns and
fees related to the Jif® peanut butter product
recall. The favorable net price realization was partially offset by
a 9 percentage point decrease from volume/mix, primarily due to
manufacturing downtime related to the
Jif® peanut butter product recall and
declines for mainstream roast and ground coffee.
Operating Income
Gross profit decreased $86.9
million, or 14 percent, including an unfavorable impact
related to the Jif® peanut butter product recall.
The decrease also reflects the lower contribution from volume/mix,
primarily due to manufacturing downtime related to the
Jif® peanut butter product recall,
unsaleable inventory related to the recall, and the noncomparable
impact of the divested natural beverage and grains and private
label dry pet food businesses. Higher costs, primarily driven by
increased commodity and ingredient, manufacturing and packaging
costs, were offset by higher net price realization, inclusive of
the unfavorable impact to net price realization from customer
returns and fees related to the Jif® peanut
butter product recall. Operating income decreased $79.7 million, or 31 percent, reflecting the
decrease in gross profit and a $19.8
million increase in selling, distribution, and
administrative ("SD&A") expenses, partially offset by an
anticipated insurance recovery related to the
Jif® peanut butter product recall.
Adjusted gross profit decreased $58.8
million, or 9 percent, including an unfavorable impact
related to the Jif® peanut butter product recall.
The difference between adjusted gross profit and generally accepted
accounting principles ("GAAP") results reflects the exclusion of
the change in net cumulative unallocated derivative gains and
losses and special project costs. Adjusted operating income
decreased $53.4 million, or 17
percent, further reflecting the exclusion of amortization, gain on
divestiture, and other special project costs.
Interest Expense, Other Income (Expense), and Income
Taxes
Net interest expense decreased $4.0
million, primarily due to the prepayment of Senior Notes in
the first quarter of the prior fiscal year, partially offset by
increased debt outstanding as compared to prior year.
Net other income increased $11.6
million, due to a net loss on the prepayment of Senior Notes
and a settlement loss related to a defined benefit pension plan in
the first quarter of the prior fiscal year.
The effective income tax rate was 22.2 percent compared to 25.0
percent in the prior year, reflecting the favorable deferred tax
benefit of a state income tax rate reduction enacted in the
quarter. The adjusted effective income tax rate was 23.0 percent,
compared to 23.6 percent in the prior year.
Cash Flow and Debt
Cash used for operating activities was $39.0 million, compared to a cash provided of
$137.8 million in the prior year,
primarily reflecting a $70.0 million
contribution to our U.S. qualified defined benefit pension plans
this quarter, lower net income adjusted for noncash items in the
current year, and an increase in cash required to fund working
capital. Free cash flow was $(127.3)
million, compared to $69.8
million in the prior year, reflecting the decrease in cash
provided by operating activities and a $20.3
million increase in capital expenditures. Net debt
borrowings in the quarter totaled $207.0
million.
FULL-YEAR OUTLOOK
The Company updated its full-year fiscal 2023 guidance as
summarized below:
|
|
Current
|
|
Previous
|
Net sales increase vs
prior year
|
|
4.0% - 5.0%
|
|
3.5% - 4.5%
|
Adjusted earnings per
share
|
|
$8.20 -
$8.60
|
|
$7.85 -
$8.25
|
Free cash flow (in
millions)
|
|
$550
|
|
$500
|
Capital expenditures
(in millions)
|
|
$550
|
|
$550
|
Adjusted effective
income tax rate
|
|
24.2 %
|
|
24.2 %
|
Ongoing cost inflation, volatility in supply chains and the
overall macroeconomic environment continue to impact financial
results and cause uncertainty and risk for the fiscal year 2023
outlook. Any manufacturing or supply chain disruption, as well as
changes in consumer purchasing behavior, including the potential
impact to volume due to recent price increases, retailer inventory
levels, and broader macroeconomic conditions, could materially
impact actual results. In particular, the Jif®
peanut butter product recall will continue to impact our financial
results for the fiscal year. The Company continues to focus on
managing the elements it can control, including taking the
necessary steps to minimize the impact of cost inflation, the
product recall, and any potential business disruption. This
guidance reflects performance expectations based on the Company's
current understanding of the overall environment, inclusive of the
estimated unfavorable impact of the product recall.
Net sales are expected to increase 4.0 to 5.0 percent compared
to the prior year. Excluding noncomparable net sales in the prior
year for the divested private label dry pet food and natural
beverage and grains businesses, net sales are expected to increase
approximately 6.5 percent at the mid-point of the guidance range.
This reflects higher net pricing to recover cost inflation across
multiple categories, partially offset by the anticipated volume/mix
impact of price elasticity of demand, and an estimated 2 percent
unfavorable impact related to manufacturing downtime and customer
returns and fees from the Jif® peanut butter
product recall.
Adjusted earnings per share is expected to range from
$8.20 to $8.60, including an estimated $0.80 unfavorable impact related to the
Jif® peanut butter product recall. This range
reflects the benefits of higher net pricing actions and shares
repurchased in the prior fiscal year being more than offset by cost
inflation, the anticipated volume/mix impact of price elasticity of
demand, the unfavorable impact of the Jif® peanut
butter product recall, and increased SD&A expenses. This
guidance assumes an adjusted gross profit margin range of 33.5 to
34.0 percent, an adjusted effective income tax rate of 24.2
percent, and 106.5 million common shares outstanding. Free cash
flow is expected to be approximately $550
million, inclusive of the estimated unfavorable impact
related to the Jif® peanut butter product recall,
with capital expenditures of $550
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
|
FY23 Q1
Results
|
|
$729.0
|
|
$120.3
|
|
16.5 %
|
Increase (decrease) vs
prior year
|
|
13 %
|
|
51 %
|
|
420bps
|
Net sales increased $81.0 million,
or 13 percent. Excluding $25.1
million of noncomparable net sales in the prior year related
to the divested private label dry pet food business, net sales
increased $106.1 million, or 17
percent. Higher net price realization increased net sales by 20
percentage points, primarily reflecting list price increases across
the portfolio, partially offset by a decreased contribution from
volume/mix of 3 percentage points.
Segment profit increased $40.4
million, primarily reflecting a favorable net impact of
higher net price realization and increased commodity and
ingredient, packaging, and manufacturing costs and lower marketing
spend, partially offset by a decreased contribution from
volume/mix.
U.S. Retail Coffee
|
|
Net
Sales
|
|
Segment
Profit
|
|
Segment
Profit Margin
|
FY23 Q1
Results
|
|
$597.9
|
|
$145.9
|
|
24.4 %
|
Increase (decrease) vs
prior year
|
|
10 %
|
|
(4) %
|
|
-350bps
|
Net sales increased $54.7 million,
or 10 percent. Net price realization increased net sales by 24
percentage points, primarily reflecting list price increases across
the portfolio. A reduced contribution from volume/mix decreased net
sales by 14 percentage points, primarily driven by mainstream roast
and ground coffee.
Segment profit decreased $5.4 million, primarily reflecting a
decreased contribution from volume/mix and increased marketing
investment, partially offset by the favorable net impact of higher
net price realization and increased commodity costs.
U.S. Retail Consumer Foods
|
|
Net
Sales
|
|
Segment
Profit
|
|
Segment
Profit Margin
|
FY23 Q1
Results
|
|
$311.1
|
|
$54.8
|
|
17.6 %
|
Increase (decrease) vs
prior year
|
|
(29) %
|
|
(54) %
|
|
-960bps
|
Net sales decreased $124.5
million, or 29 percent, including a 32 percent unfavorable
impact related to the Jif® peanut butter product
recall. Excluding $31.4 million of
noncomparable net sales in the prior year related to the divested
natural beverage and grains businesses, net sales decreased
$93.1 million, or 23 percent.
Volume/mix decreased net sales by 20 percentage points, primarily
driven by manufacturing downtime for Jif® peanut
butter, partially offset by an increase for
Smucker's® Uncrustables®
frozen sandwiches. Lower net price realization also contributed 3
percentage points to the net sales decline, primarily driven by the
unfavorable impact of customer returns and fees related to the
Jif® peanut butter product recall, partially
offset by list price increases across the remainder of the
portfolio.
Segment profit decreased $63.9
million, primarily reflecting the unfavorable impact of the
Jif® peanut butter product recall and the
noncomparable segment profit in the prior year related to the
divested natural beverage and grains businesses. Excluding the
unfavorable impact of the Jif® peanut butter
product recall and divested businesses, segment profit increased
primarily due to the net favorable impact of higher net price
realization and higher commodity and ingredient, manufacturing, and
packaging costs and favorable volume/mix.
International and Away From Home
|
|
Net
Sales
|
|
Segment
Profit
|
|
Segment
Profit Margin
|
FY23 Q1
Results
|
|
$235.0
|
|
$16.6
|
|
7.1 %
|
Increase (decrease) vs
prior year
|
|
2 %
|
|
(50) %
|
|
-710bps
|
Net sales increased $3.8 million,
or 2 percent, including a 10 percent unfavorable impact related to
the Jif® peanut butter product recall. Excluding
$2.0 million of noncomparable net
sales in the prior year related to the divested natural beverage
and grains businesses and $4.4
million of unfavorable foreign currency exchange, net sales
increased $10.2 million, or 4
percent. Excluding the impact of the divested businesses and
foreign currency exchange, net sales increased 15 percent for the
Away from Home operating segment, partially offset by a 6 percent
decrease for the International operating segment, including the
impact related to the Jif® peanut butter product
recall. Net price realization contributed a 4 percentage point
increase to net sales for the combined businesses, primarily driven
by increases for coffee products and baking mixes and ingredients,
partially offset by the unfavorable impact of customer returns and
fees related to the Jif® peanut butter product
recall. Volume/mix was neutral compared to the prior year.
Segment profit decreased $16.3
million, primarily reflecting the impact of the
Jif® peanut butter product recall and higher
commodity costs, partially offset by higher net pricing.
Financial Results Discussion and Webcast
At approximately 7:00 a.m. Eastern
Time today, the Company will post to its website at
investors.jmsmucker.com a pre-recorded management discussion of its
fiscal 2023 first quarter financial results, a transcript of the
discussion, and supplemental materials. At 9:00 a.m. Eastern Time today, the Company will
webcast a live question and answer session with Mark Smucker, Chair of the Board, 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;
disruptions or inefficiencies in the Company's operations or supply
chain, including any impact caused by product recalls (including
the Jif® peanut butter product recall), political
instability, terrorism, armed hostilities (including the ongoing
conflict between Russia and
Ukraine), extreme weather
conditions, natural disasters, pandemics (including the COVID-19
pandemic), or other calamities; risks related to the availability
of, and cost inflation in, supply chain inputs, including labor,
raw materials, commodities, packaging, and transportation; the
impact of food security concerns involving either the Company's
products or its competitors' products, including product recalls;
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 Company's ability to attract and retain key
talent; 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; the outcome of tax examinations, changes in tax laws,
and other tax matters; a disruption, failure, or security breach of
the Company or their suppliers' information technology systems,
including ransomware attacks; 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 more than 80 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,
|
|
2022
|
|
2021
|
|
% Increase
(Decrease)
|
|
(Dollars and shares in
millions, except per share data)
|
|
|
|
|
|
|
Net sales
|
$1,873.0
|
|
$1,858.0
|
|
1 %
|
Cost of products
sold
|
1,320.5
|
|
1,218.6
|
|
8 %
|
Gross
Profit
|
552.5
|
|
639.4
|
|
(14) %
|
Gross
margin
|
29.5 %
|
|
34.4 %
|
|
|
|
|
|
|
|
|
Selling, distribution,
and administrative expenses
|
343.8
|
|
324.0
|
|
6 %
|
Amortization
|
55.6
|
|
55.4
|
|
— %
|
Other special project
costs
|
1.4
|
|
1.8
|
|
(22) %
|
Other operating expense
(income) – net
|
(28.0)
|
|
(1.2)
|
|
n/m
|
Operating
Income
|
179.7
|
|
259.4
|
|
(31) %
|
Operating
margin
|
9.6 %
|
|
14.0 %
|
|
|
|
|
|
|
|
|
Interest expense –
net
|
(39.1)
|
|
(43.1)
|
|
(9) %
|
Other income (expense)
– net
|
0.5
|
|
(11.1)
|
|
(105) %
|
Income Before Income
Taxes
|
141.1
|
|
205.2
|
|
(31) %
|
Income tax
expense
|
31.3
|
|
51.3
|
|
(39) %
|
Net
Income
|
$109.8
|
|
$153.9
|
|
(29) %
|
|
|
|
|
|
|
Net income per
common share
|
$1.03
|
|
$1.42
|
|
(27) %
|
|
|
|
|
|
|
Net income per
common share – assuming dilution
|
$1.03
|
|
$1.42
|
|
(27) %
|
|
|
|
|
|
|
Dividends declared
per common share
|
$1.02
|
|
$0.99
|
|
3 %
|
|
|
|
|
|
|
Weighted-average shares
outstanding
|
106.3
|
|
108.3
|
|
(2) %
|
|
|
|
|
|
|
Weighted-average shares
outstanding – assuming dilution
|
106.8
|
|
108.4
|
|
(1) %
|
The J.M. Smucker
Co.
Unaudited Condensed
Consolidated Balance Sheets
|
|
|
|
|
|
July 31,
2022
|
|
April 30,
2022
|
|
(Dollars in
millions)
|
Assets
|
|
|
|
Current
Assets
|
|
|
|
Cash and cash
equivalents
|
$151.6
|
|
$169.9
|
Trade receivables –
net
|
605.0
|
|
524.7
|
Inventories
|
1,312.8
|
|
1,089.3
|
Other current
assets
|
218.3
|
|
226.2
|
Total Current
Assets
|
2,287.7
|
|
2,010.1
|
|
|
|
|
Property, Plant,
and Equipment – Net
|
2,138.8
|
|
2,131.7
|
|
|
|
|
Other Noncurrent
Assets
|
|
|
|
Goodwill
|
6,016.7
|
|
6,015.8
|
Other intangible
assets – net
|
5,597.0
|
|
5,652.2
|
Other noncurrent
assets
|
236.5
|
|
245.2
|
Total Other
Noncurrent Assets
|
11,850.2
|
|
11,913.2
|
Total
Assets
|
$16,276.7
|
|
$16,055.0
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
Current
Liabilities
|
|
|
|
Accounts
payable
|
$1,242.6
|
|
$1,193.3
|
Short-term
borrowings
|
388.0
|
|
180.0
|
Other current
liabilities
|
546.6
|
|
579.5
|
Total Current
Liabilities
|
2,177.2
|
|
1,952.8
|
|
|
|
|
Noncurrent
Liabilities
|
|
|
|
Long-term
debt
|
4,311.5
|
|
4,310.6
|
Other noncurrent
liabilities
|
1,643.7
|
|
1,651.5
|
Total Noncurrent
Liabilities
|
5,955.2
|
|
5,962.1
|
|
|
|
|
Total Shareholders'
Equity
|
8,144.3
|
|
8,140.1
|
Total Liabilities
and Shareholders' Equity
|
$16,276.7
|
|
$16,055.0
|
The J.M. Smucker
Co.
Unaudited Condensed
Consolidated Statements of Cash Flow
|
|
|
|
Three Months Ended July
31,
|
|
2022
|
|
2021
|
|
(Dollars in
millions)
|
Operating
Activities
|
|
|
|
Net income
|
$109.8
|
|
$153.9
|
Adjustments to
reconcile net income to net cash provided by (used for)
operations:
|
|
|
|
Depreciation
|
55.1
|
|
58.5
|
Amortization
|
55.6
|
|
55.4
|
Share-based
compensation expense
|
7.9
|
|
5.3
|
Gain on
divestiture
|
(1.6)
|
|
—
|
Other noncash
adjustments – net
|
4.1
|
|
3.1
|
Make-whole payments
included in financing activities
|
—
|
|
7.0
|
Defined benefit
pension contributions
|
(70.7)
|
|
(0.9)
|
Changes in assets and
liabilities:
|
|
|
Trade
receivables
|
(80.2)
|
|
(32.9)
|
Inventories
|
(223.0)
|
|
(146.3)
|
Other current
assets
|
(3.3)
|
|
8.0
|
Accounts
payable
|
73.1
|
|
28.5
|
Accrued
liabilities
|
8.9
|
|
(43.9)
|
Income and other
taxes
|
25.6
|
|
47.4
|
Other – net
|
(0.3)
|
|
(5.3)
|
Net Cash Provided
by (Used for) Operating Activities
|
(39.0)
|
|
137.8
|
|
|
|
|
Investing
Activities
|
|
|
|
Additions to property,
plant, and equipment
|
(88.3)
|
|
(68.0)
|
Proceeds from
divestiture
|
1.6
|
|
—
|
Other – net
|
15.2
|
|
(12.0)
|
Net Cash Provided
by (Used for) Investing Activities
|
(71.5)
|
|
(80.0)
|
|
|
|
|
Financing
Activities
|
|
|
|
Short-term borrowings
(repayments) – net
|
207.0
|
|
284.0
|
Repayments of
long-term debt, including make-whole payments
|
—
|
|
(407.0)
|
Quarterly dividends
paid
|
(105.1)
|
|
(97.2)
|
Purchase of treasury
shares
|
(7.8)
|
|
(6.8)
|
Proceeds from stock
option exercises
|
0.9
|
|
4.0
|
Other – net
|
(3.1)
|
|
(0.3)
|
Net Cash Provided
by (Used for) Financing Activities
|
91.9
|
|
(223.3)
|
Effect of exchange
rate changes on cash
|
0.3
|
|
—
|
Net increase
(decrease) in cash and cash equivalents
|
(18.3)
|
|
(165.5)
|
Cash and cash
equivalents at beginning of period
|
169.9
|
|
334.3
|
Cash and Cash
Equivalents at End of Period
|
$151.6
|
|
$168.8
|
The J.M. Smucker
Co.
Unaudited Supplemental
Schedule
|
|
|
|
Three Months Ended July
31,
|
|
2022
|
|
% of
Net Sales
|
|
2021
|
|
% of
Net Sales
|
|
(Dollars in
millions)
|
Net sales
|
$1,873.0
|
|
|
|
$1,858.0
|
|
|
Selling, distribution,
and administrative expenses:
|
|
|
|
|
|
|
|
Marketing
|
95.6
|
|
5.1 %
|
|
98.5
|
|
5.3 %
|
Selling
|
69.6
|
|
3.7 %
|
|
62.0
|
|
3.3 %
|
Distribution
|
72.8
|
|
3.9 %
|
|
68.4
|
|
3.7 %
|
General and
administrative
|
105.8
|
|
5.6 %
|
|
95.1
|
|
5.1 %
|
Total selling,
distribution, and administrative expenses
|
$343.8
|
|
18.4 %
|
|
$324.0
|
|
17.4 %
|
|
|
|
|
|
|
|
|
Amounts may not add
due to rounding.
|
|
|
|
|
The J.M. Smucker
Co.
Unaudited Reportable
Segments
|
|
|
|
Three Months Ended July
31,
|
|
2022
|
|
2021
|
|
(Dollars in
millions)
|
Net sales:
|
|
|
|
U.S. Retail Pet
Foods
|
$729.0
|
|
$648.0
|
U.S. Retail
Coffee
|
597.9
|
|
543.2
|
U.S. Retail Consumer
Foods
|
311.1
|
|
435.6
|
International and Away
From Home
|
235.0
|
|
231.2
|
Total net
sales
|
$1,873.0
|
|
$1,858.0
|
|
|
|
|
Segment
profit:
|
|
|
|
U.S. Retail Pet
Foods
|
$120.3
|
|
$79.9
|
U.S. Retail
Coffee
|
145.9
|
|
151.3
|
U.S. Retail Consumer
Foods
|
54.8
|
|
118.7
|
International and Away
From Home
|
16.6
|
|
32.9
|
Total segment
profit
|
$337.6
|
|
$382.8
|
Amortization
|
(55.6)
|
|
(55.4)
|
Gain on
divestiture
|
1.6
|
|
—
|
Interest expense –
net
|
(39.1)
|
|
(43.1)
|
Change in net
cumulative unallocated derivative gains and losses
|
(33.8)
|
|
(2.2)
|
Cost of products sold
– special project costs
|
(1.1)
|
|
(4.6)
|
Other special project
costs
|
(1.4)
|
|
(1.8)
|
Corporate
administrative expenses
|
(67.6)
|
|
(59.4)
|
Other income (expense)
– net
|
0.5
|
|
(11.1)
|
Income before income
taxes
|
$141.1
|
|
$205.2
|
|
|
|
|
Segment profit
margin:
|
|
|
|
U.S. Retail Pet
Foods
|
16.5 %
|
|
12.3 %
|
U.S. Retail
Coffee
|
24.4 %
|
|
27.9 %
|
U.S. Retail Consumer
Foods
|
17.6 %
|
|
27.2 %
|
International and Away
From Home
|
7.1 %
|
|
14.2 %
|
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; certain
divestiture, acquisition, integration, and restructuring costs
("special project costs"); gains and losses on divestitures; 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 facilitate 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 2023 outlook.
The J.M. Smucker
Co.
Unaudited Non-GAAP
Financial Measures
|
|
|
|
Three Months Ended July
31,
|
|
2022
|
|
2021
|
|
Increase
(Decrease)
|
|
%
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
Net sales
reconciliation:
|
|
|
|
|
|
|
|
Net sales
|
$1,873.0
|
|
$1,858.0
|
|
$15.0
|
|
1 %
|
Private label dry pet
food divestiture
|
—
|
|
(25.1)
|
|
25.1
|
|
1
|
Natural beverage and
grains divestiture
|
—
|
|
(33.4)
|
|
33.4
|
|
2
|
Foreign currency
exchange
|
4.4
|
|
—
|
|
4.4
|
|
—
|
Net sales excluding
divestitures and foreign currency exchange
|
$1,877.4
|
|
$1,799.5
|
|
$77.9
|
|
4 %
|
|
|
|
|
|
|
|
|
Amounts may not add
due to rounding.
|
|
|
The J.M. Smucker
Co.
Unaudited Non-GAAP
Financial Measures
|
|
|
|
Three Months Ended July
31,
|
|
2022
|
|
2021
|
|
(Dollars in millions,
except per share data)
|
Gross profit
reconciliation:
|
|
|
|
Gross
profit
|
$552.5
|
|
$639.4
|
Change in net
cumulative unallocated derivative gains and losses
|
33.8
|
|
2.2
|
Cost of products sold
– special project costs
|
1.1
|
|
4.6
|
Adjusted gross
profit
|
$587.4
|
|
$646.2
|
% of net
sales
|
31.4 %
|
|
34.8 %
|
|
|
|
|
Operating income
reconciliation:
|
|
|
|
Operating
income
|
$179.7
|
|
$259.4
|
Amortization
|
55.6
|
|
55.4
|
Gain on
divestiture
|
(1.6)
|
|
—
|
Change in net
cumulative unallocated derivative gains and losses
|
33.8
|
|
2.2
|
Cost of products sold
– special project costs
|
1.1
|
|
4.6
|
Other special project
costs
|
1.4
|
|
1.8
|
Adjusted operating
income
|
$270.0
|
|
$323.4
|
% of net
sales
|
14.4 %
|
|
17.4 %
|
|
|
|
|
Net income
reconciliation:
|
|
|
|
Net income
|
$109.8
|
|
$153.9
|
Income tax
expense
|
31.3
|
|
51.3
|
Amortization
|
55.6
|
|
55.4
|
Gain on
divestiture
|
(1.6)
|
|
—
|
Change in net
cumulative unallocated derivative gains and losses
|
33.8
|
|
2.2
|
Cost of products sold
– special project costs
|
1.1
|
|
4.6
|
Other special project
costs
|
1.4
|
|
1.8
|
Adjusted income before
income taxes
|
$231.4
|
|
$269.2
|
Income taxes, as
adjusted
|
53.3
|
|
63.4
|
Adjusted
income
|
$178.1
|
|
$205.8
|
Weighted-average
shares outstanding – assuming dilution
|
106.8
|
|
108.4
|
Adjusted earnings per
share – assuming dilution (A)
|
$1.67
|
|
$1.90
|
|
|
|
|
(A) Adjusted earnings
per share – assuming dilution for the first quarter of 2023 was
computed using the treasury stock method, while the two-class
method was used for the first quarter of 2022.
|
The J.M. Smucker
Co.
Unaudited Non-GAAP
Financial Measures
|
|
|
|
Three Months Ended July
31,
|
|
2022
|
|
2021
|
|
(Dollars in
millions)
|
EBITDA (as adjusted)
reconciliation:
|
|
|
|
Net income
|
$109.8
|
|
$153.9
|
Income tax
expense
|
31.3
|
|
51.3
|
Interest expense –
net
|
39.1
|
|
43.1
|
Depreciation
|
55.1
|
|
58.5
|
Amortization
|
55.6
|
|
55.4
|
EBITDA (as
adjusted)
|
$290.9
|
|
$362.2
|
% of net
sales
|
15.5 %
|
|
19.5 %
|
|
|
|
|
Free cash flow
reconciliation:
|
|
|
|
Net cash provided by
(used for) operating activities
|
($39.0)
|
|
$137.8
|
Additions to property,
plant, and equipment
|
(88.3)
|
|
(68.0)
|
Free cash
flow
|
($127.3)
|
|
$69.8
|
The following tables provide a reconciliation of the Company's
fiscal 2023 guidance for estimated adjusted earnings per share and
free cash flow.
|
|
Year Ending April 30,
2023
|
|
|
Low
|
|
High
|
Net income per common
share – assuming dilution reconciliation:
|
|
|
|
|
Net income per common
share – assuming dilution
|
|
$6.26
|
|
$6.66
|
Change in net
cumulative unallocated derivative gains and losses
(A)
|
|
0.27
|
|
0.27
|
Amortization
|
|
1.58
|
|
1.58
|
Special project
costs
|
|
0.10
|
|
0.10
|
Gain on
divestiture
|
|
(0.01)
|
|
(0.01)
|
Adjusted effective
income tax rate impact
|
|
—
|
|
—
|
Adjusted earnings per
share
|
|
$8.20
|
|
$8.60
|
|
|
|
|
|
(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, 2022, adjusted for
the gains and losses expected to be allocated to non-GAAP results
for the year ended April 30, 2023.
|
|
|
|
|
|
|
|
Year Ending April 30,
2023
|
|
|
|
|
(Dollars in
millions)
|
|
|
Free cash flow
reconciliation:
|
|
|
|
|
Net cash provided by
operating activities
|
|
$1,100
|
|
|
Additions to property,
plant, and equipment
|
|
(550)
|
|
|
Free cash
flow
|
|
$550
|
|
|
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SOURCE The J.M. Smucker Co.