ORRVILLE, Ohio, Dec. 10, 2020 /PRNewswire/ -- Today, at a virtual
investor day, The J.M. Smucker Co. (NYSE: SJM) will outline its
strategic goals and operational priorities to create long-term and
sustainable shareholder value. The Company has also reaffirmed its
fiscal year 2021 outlook and shared long-term financial
targets.
"We are implementing a focused strategic plan, including
reshaping our portfolio, streamlining our organization, and
updating our commercial model to transform how we deliver for our
customers and consumers, as well as deliver sustainable shareholder
value," said Mark Smucker, President
and Chief Executive Officer.
During the virtual investor day, the Company's leadership team
will share steps being taken by the organization to work sharper,
stronger, and together:
- Sharper: How the Company is prioritizing investments in
brands, products, and channels to drive revenue and earnings
growth.
- Stronger: How the Company is transforming its
capabilities and cost structure to expand competitive advantage,
deliver growth, and maximize returns.
- Together: How the Company is bringing its Purpose to
life by "Feeding connections that help us thrive."
This includes an increased focus on execution excellence, which
the Company's leadership team will detail through the four pillars
of its operational priorities for the next 12 to 18 months:
- Driving commercial excellence: Transformation of both
the marketing and sales model to increase focus on both the
consumer and the customer, including the creation of a dedicated
pet food sales organization.
- Streamlining its cost infrastructure: A continued
commitment to productivity and a focus on minimizing expenses that
do not support sales or profit growth, generating $50 million of annual cost savings in each of the
next three fiscal years.
- Reshaping its portfolio: Reprioritization of investments
in the areas of highest growth potential and exit of brands and
businesses that are not consistent with the Company's long-term
strategic focus.
- Unleashing the organization to win: Delayering and
streamlining the organization to improve decision making and
achieve greater agility, unlocking the power of the Smucker family
of employees.
Long-Term Growth Targets
Based on its strategic
framework and in-depth portfolio review, the Company provided
long-term annual growth targets, including:
- Net Sales growth of 2 percent
- Operating Income growth of 5 percent
- Adjusted EPS growth of 8 percent
- Total Shareholder Return of 10 percent or greater
Fiscal Year 2021 Financial Outlook
The Company
reiterated its fiscal year 2021 financial guidance of net sales
growth to be flat to up 1 percent, adjusted earnings per share to
range from $8.35 to $8.65, and free cash flow to range from
$975 million to $1,025 million. The guidance reflects the removal
of five months of divested net sales of approximately $100 million and the removal of adjusted earnings
per share of $0.20, excluding any
potential benefit from the use of proceeds from the sale. The
guidance does not reflect any impact of the pending Natural
Balance® divestiture, which is anticipated to be
immaterial to fiscal year 2021 earnings. The Company anticipates
offsetting the earnings dilution and using the after-tax proceeds
for share repurchases, over time.
Webcast and Materials
The Company will conduct the
virtual investor day via a webcast and question and answer session
today, December 10, 2020, beginning
at 8:30 a.m. Eastern time. To access
the webcast, please visit 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 ability to
successfully complete the divestiture of the Natural
Balance® brand pet food business in a
timely and cost-effective manner; 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.