ORRVILLE, Ohio, Feb. 26, 2020 /PRNewswire/ -- The J. M.
Smucker Company (NYSE: SJM) today announced results for the third
quarter ended January 31, 2020, of its 2020 fiscal year. All
comparisons are to the third quarter of the prior fiscal year,
unless otherwise noted.
EXECUTIVE SUMMARY
- Net sales decreased $39.6
million, or 2 percent, primarily reflecting anticipated
declines within the U.S. Retail Pet Foods segment.
- Net income per diluted share was $1.64. Adjusted earnings per share was
$2.35, an increase of 4 percent.
- Cash from operations was $521.6
million, an increase of 24 percent. Free cash flow was
$465.1 million in the quarter,
compared to $333.0 million in the
prior year.
- The Company reaffirmed its full-year fiscal 2020 net sales,
adjusted earnings per share, and free cash flow outlook.
CHIEF EXECUTIVE OFFICER REMARKS
"Third quarter results were in-line with our expectations,
benefiting from continued investment in our strategic growth
imperatives and the decisive actions we are taking to improve
certain areas of the business. Net sales performance reflected
strong growth for the Smucker's®
Uncrustables® brand and improved volume
fundamentals for our coffee and peanut butter brands, which
supported market share and household penetration growth in both
categories. This helped partially offset the anticipated decline
for our dog food business," said Mark
Smucker, President and Chief Executive Officer.
"Our results in the quarter reinforced our commitment to operate
with financial discipline, highlighted by adjusted earnings per
share growth of 4 percent, strong free cash flow of $465 million, and net debt repayments exceeding
$300 million. As we look forward, we
are confident in delivering on our full-year guidance, while
positioning the business for consistent long-term growth and
shareholder value creation."
THIRD QUARTER CONSOLIDATED RESULTS
|
Three Months Ended
January 31,
|
|
2020
|
|
2019
|
|
% Increase
(Decrease)
|
|
(Dollars and shares
in millions, except per share data)
|
|
|
|
|
|
|
Net
sales
|
$1,972.3
|
|
$2,011.9
|
|
(2)%
|
|
|
|
|
|
|
Operating
income
|
$289.0
|
|
$217.6
|
|
33%
|
Adjusted operating
income
|
395.8
|
|
406.2
|
|
(3)%
|
|
|
|
|
|
|
Net income per
common share – assuming dilution
|
$1.64
|
|
$1.07
|
|
53%
|
Adjusted earnings per
share – assuming dilution
|
2.35
|
|
2.26
|
|
4%
|
|
|
|
|
|
|
Weighted-average
shares outstanding – assuming dilution
|
114.0
|
|
113.8
|
|
—
|
Net Sales
Net sales decreased 2 percent, driven by reduced volume/mix in
the U.S. Retail Pet Foods segment, primarily driven by dog food.
Lower net price realization for the remaining segments was
primarily driven by lower net pricing for coffee and peanut butter,
which was mostly offset by favorable volume/mix for coffee and the
Smucker's® Uncrustables® brand.
Operating Income
Gross profit decreased $13.8
million, or 2 percent, driven by a reduced contribution from
volume/mix and the net impact of lower prices in excess of lower
costs. Operating income increased $71.4
million, or 33 percent, primarily reflecting a $54.8 million decrease in intangible asset
impairment charges, a $15.5 million
decrease in other special project costs, and a $14.2 million decrease in selling, distribution,
and administrative ("SD&A") expenses, partially offset by the
decline in gross profit. The third quarter of 2020 included a
noncash impairment charge of $52.4
million related to the Natural Balance®
brand within the U.S. Retail Pet Foods segment, primarily driven by
the market environment and the re-positioning of the brand within
the Pet Foods portfolio.
Adjusted gross profit decreased $24.4
million, or 3 percent, with the difference from generally
accepted accounting principles ("GAAP") results being the exclusion
of a $10.6 million favorable impact,
as compared to the prior year, of unallocated derivative gains and
losses. Adjusted operating income decreased $10.4 million, or 3 percent, further reflecting
the exclusion of intangible asset impairment charges, other special
project costs, and amortization.
Interest Expense, Other Income (Expense), and Income
Taxes
Net interest expense decreased $6.5
million, primarily as a result of reduced debt due to net
repayments of $700.6 million during
the past twelve months.
Net other expense decreased by $7.4
million, primarily due to pension and litigation settlements
in the prior year.
The effective income tax rate was 22.7 percent compared to 22.8
percent in the prior year. On a non-GAAP basis, the adjusted
effective income tax rate was 23.1 percent compared to 25.8 percent
in the prior year.
Cash Flow and Debt
Cash provided by operating activities was $521.6 million, compared to $421.1 million in the prior year, primarily
reflecting a decrease in cash required to fund working capital. The
decrease in working capital requirements was primarily driven by an
increase in accounts payable due to working capital initiatives.
Free cash flow was $465.1 million,
compared to $333.0 million in the
prior year, reflecting the increase in cash provided by operating
activities and a $31.6 million
reduction in capital expenditures. Net debt repayments in the
quarter totaled $319.7 million.
FULL-YEAR OUTLOOK
The Company reaffirmed its full-year fiscal 2020 net sales,
adjusted earnings per share, and free cash flow guidance as
summarized below:
Net sales increase
(decrease) vs prior
year (3)%
|
Adjusted earnings per
share $8.10
- $8.30
|
Free cash flow (in
millions)
$850
|
Capital expenditures
(in
millions) $300
- $320
|
Effective tax
rate 24.0%
|
Net sales are expected to be down 3 percent compared to the
prior year, which includes the loss of $105.9 million of sales in the first 4 months of
fiscal 2019 related to the divested U.S. baking business and
$25.4 million of incremental
noncomparable sales for Ainsworth Pet Nutrition, LLC ("Ainsworth").
On a comparable basis, net sales are expected to be down 2
percent.
Adjusted earnings per share is expected to range from
$8.10 to $8.30, based on 114.0 million shares outstanding.
Earnings guidance reflects the contribution from sales at a gross
profit margin of approximately 38.2 percent, SD&A expenses
declining approximately 2.5 percent compared to the prior year, and
an effective tax rate of 24.0 percent. Free cash flow is expected
to be approximately $850 million.
THIRD 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
|
FY20 Q3
Results
|
|
$721.9
|
|
$146.0
|
|
20.2%
|
Increase (decrease) vs
prior year
|
|
(5)%
|
|
(1)%
|
|
70bps
|
Segment net sales decreased $37.1
million, reflecting a 5 percentage point reduction due to
volume/mix, which was mostly related to the Natural
Balance® brand and private label dog food. Net price
realization was neutral, as list price increases implemented during
the second half of the prior fiscal year were mostly offset by
increased trade spend.
Segment profit decreased $1.9
million, as a decline from volume/mix was mostly offset by
an $8.1 million recovery from a legal
settlement related to a prior year supplier issue, synergy
realization, and reduced marketing expense.
U.S. Retail Coffee
|
|
Net
Sales
|
|
Segment
Profit
|
|
Segment
Profit Margin
|
FY20 Q3
Results
|
|
$558.8
|
|
$189.5
|
|
33.9%
|
Increase (decrease) vs
prior year
|
|
—
|
|
3%
|
|
120bps
|
Segment net sales decreased $2.8
million. Net price realization reduced net sales by 5
percentage points, primarily driven by the
Folgers® and Dunkin' Donuts®
brands, which reflected promotional activity mostly supported by
lower green coffee costs. Favorable volume/mix mostly offset lower
net pricing, reflecting growth for the Dunkin'
Donuts®, Café Bustelo®, and
Folgers® brands.
Segment profit increased $5.8
million, primarily due to the favorable volume/mix and
reduced marketing expense, partially offset by the net impact of
lower net pricing in excess of lower costs.
U.S. Retail Consumer Foods
|
|
Net
Sales
|
|
Segment
Profit
|
|
Segment
Profit Margin
|
FY20 Q3
Results
|
|
$422.9
|
|
$84.2
|
|
19.9%
|
Increase (decrease) vs
prior year
|
|
—
|
|
(12)%
|
|
-280bps
|
Segment net sales increased $0.2
million, reflecting a 4 percentage point increase from
volume/mix driven by growth for the Smucker's®
Uncrustables® and Jif® brands.
Lower net pricing reduced sales by 4 percentage points, primarily
attributable to the Jif® brand.
Segment profit decreased $11.7
million, which included a $7.5
million equipment write-off related to discontinuing
Jif® Power Ups®, due to a
re-prioritization of resources toward initiatives with greater
projected returns. Excluding this impact, segment profit decreased
$4.2 million, primarily reflecting
the net impact of lower pricing in excess of lower costs, partially
offset by favorable volume/mix.
International and Away From Home
|
|
Net
Sales
|
|
Segment
Profit
|
|
Segment
Profit Margin
|
FY20 Q3
Results
|
|
$268.7
|
|
$49.0
|
|
18.2%
|
Increase (decrease) vs
prior year
|
|
—
|
|
(7)%
|
|
-130bps
|
Segment net sales increased $0.1
million, reflecting $1.3
million of favorable foreign currency exchange, offset by
slight declines from net price realization and volume/mix.
Segment profit decreased $3.5
million, primarily reflecting a decline from volume/mix.
Conference Call
The Company will conduct an earnings conference call and webcast
today, February 26, 2020, beginning at 8:30 a.m. Eastern time. Speaking on the call will
be Mark Smucker, President and Chief
Executive Officer and Mark Belgya,
Vice Chair and Chief Financial Officer. To access the webcast,
please visit investors.jmsmucker.com/.
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 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 meet the Company's cash
deleveraging objectives; volatility of commodity, energy, and other
input costs; risks associated with derivative and purchasing
strategies employed to manage commodity pricing and interest rate
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 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 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,
including tariffs; 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
Inspired by more than 120 years of business success and five
generations of family leadership, The J. M. Smucker Company makes
food that people and pets love. The Company's portfolio of 40+
brands, which are found in 90 percent of U.S. homes and countless
restaurants, include iconic products consumers have always loved
such as Folgers®, Jif®, and
Milk-Bone® plus new favorites like Café
Bustelo®, Smucker's®
Uncrustables®, and Rachael Ray™ Nutrish®.
Over the past two decades, the Company has grown rapidly by
thoughtfully acquiring leading and emerging brands, while ensuring
the business has a positive impact on its 7,000+ employees, the
communities it is a part of, and the planet. For more information
about The J. M. Smucker 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: Dunkin'™ and Dunkin'
Donuts® are trademarks of DD IP Holder
LLC, and Rachael Ray™ is a
trademark of Ray Marks II LLC.
The Dunkin'™ and Dunkin' Donuts® brands
are 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 products for sale in Dunkin'™
restaurants.
The J. M. Smucker
Company
Unaudited Condensed Consolidated Statements of Income
|
|
|
|
|
|
Three Months Ended
January 31,
|
|
Nine Months Ended
January 31,
|
|
2020
|
|
2019
|
|
% Increase
(Decrease)
|
|
2020
|
|
2019
|
|
% Increase
(Decrease)
|
|
(Dollars and shares
in millions, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$1,972.3
|
|
$2,011.9
|
|
(2)%
|
|
$5,709.0
|
|
$5,935.9
|
|
(4)%
|
Cost of products
sold
|
1,212.3
|
|
1,238.1
|
|
(2)%
|
|
3,495.4
|
|
3,712.6
|
|
(6)%
|
Gross
Profit
|
760.0
|
|
773.8
|
|
(2)%
|
|
2,213.6
|
|
2,223.3
|
|
—
|
Gross
margin
|
38.5%
|
|
38.5%
|
|
|
|
38.8%
|
|
37.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
distribution, and administrative expenses
|
358.9
|
|
373.1
|
|
(4)%
|
|
1,100.9
|
|
1,138.8
|
|
(3)%
|
Amortization
|
58.8
|
|
59.7
|
|
(2)%
|
|
176.4
|
|
179.9
|
|
(2)%
|
Other intangible
assets impairment charges
|
52.4
|
|
107.2
|
|
(51)%
|
|
52.4
|
|
107.2
|
|
(51)%
|
Other special project
costs
|
3.3
|
|
18.8
|
|
(82)%
|
|
9.9
|
|
51.9
|
|
(81)%
|
Other operating
expense (income) – net
|
(2.4)
|
|
(2.6)
|
|
(8)%
|
|
(2.4)
|
|
(29.5)
|
|
(92)%
|
Operating
Income
|
289.0
|
|
217.6
|
|
33%
|
|
876.4
|
|
775.0
|
|
13%
|
Operating
margin
|
14.7%
|
|
10.8%
|
|
|
|
15.4%
|
|
13.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense –
net
|
(45.1)
|
|
(51.6)
|
|
(13)%
|
|
(143.6)
|
|
(158.8)
|
|
(10)%
|
Other income
(expense) – net
|
(1.4)
|
|
(8.8)
|
|
(84)%
|
|
(4.5)
|
|
(16.5)
|
|
(73)%
|
Income Before
Income Taxes
|
242.5
|
|
157.2
|
|
54%
|
|
728.3
|
|
599.7
|
|
21%
|
Income tax
expense
|
55.1
|
|
35.8
|
|
54%
|
|
175.1
|
|
156.8
|
|
12%
|
Net
Income
|
$187.4
|
|
$121.4
|
|
54%
|
|
$553.2
|
|
$442.9
|
|
25%
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per
common share
|
$1.64
|
|
$1.07
|
|
53%
|
|
$4.85
|
|
$3.89
|
|
25%
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per
common share –
assuming dilution
|
$1.64
|
|
$1.07
|
|
53%
|
|
$4.85
|
|
$3.89
|
|
25%
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared
per common share
|
$0.88
|
|
$0.85
|
|
4%
|
|
$2.64
|
|
$2.55
|
|
4%
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding
|
114.0
|
|
113.8
|
|
—
|
|
114.0
|
|
113.7
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding –
assuming dilution
|
114.0
|
|
113.8
|
|
—
|
|
114.0
|
|
113.7
|
|
—
|
The J. M. Smucker
Company
Unaudited Condensed
Consolidated Balance Sheets
|
|
|
|
|
|
|
|
January 31,
2020
|
|
April 30,
2019
|
|
|
(Dollars in
millions)
|
Assets
|
|
|
|
|
Current
Assets
|
|
|
|
|
Cash and cash
equivalents
|
|
$74.4
|
|
$101.3
|
Trade receivables,
less allowance for doubtful accounts
|
|
477.3
|
|
503.8
|
Inventories
|
|
958.8
|
|
910.3
|
Other current
assets
|
|
92.2
|
|
109.8
|
Total Current
Assets
|
|
1,602.7
|
|
1,625.2
|
|
|
|
|
|
Property, Plant,
and Equipment - Net
|
|
1,911.7
|
|
1,912.4
|
|
|
|
|
|
Other Noncurrent
Assets
|
|
|
|
|
Goodwill
|
|
6,312.8
|
|
6,310.9
|
Other intangible
assets – net
|
|
6,491.4
|
|
6,718.8
|
Other noncurrent
assets
|
|
317.6
|
|
144.0
|
Total Other
Noncurrent Assets
|
|
13,121.8
|
|
13,173.7
|
Total
Assets
|
|
$16,636.2
|
|
$16,711.3
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
Accounts
payable
|
|
$575.0
|
|
$591.0
|
Current portion of
long-term debt
|
|
499.8
|
|
798.5
|
Short-term
borrowings
|
|
310.0
|
|
426.0
|
Other current
liabilities
|
|
692.6
|
|
526.0
|
Total Current
Liabilities
|
|
2,077.4
|
|
2,341.5
|
|
|
|
|
|
Noncurrent
Liabilities
|
|
|
|
|
Long-term debt, less
current portion
|
|
4,583.3
|
|
4,686.3
|
Other noncurrent
liabilities
|
|
1,805.1
|
|
1,713.0
|
Total Noncurrent
Liabilities
|
|
6,388.4
|
|
6,399.3
|
|
|
|
|
|
Total Shareholders'
Equity
|
|
8,170.4
|
|
7,970.5
|
Total Liabilities
and Shareholders' Equity
|
|
$16,636.2
|
|
$16,711.3
|
The J. M. Smucker
Company
Unaudited Condensed
Consolidated Statements of Cash Flow
|
|
|
|
|
|
Three Months Ended
January 31,
|
|
Nine Months Ended
January 31,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
(Dollars in
millions)
|
Operating
Activities
|
|
|
|
|
|
|
|
Net income
|
$187.4
|
|
$121.4
|
|
$553.2
|
|
$442.9
|
Adjustments to
reconcile net income to net cash
provided by (used for) operations:
|
|
|
|
|
|
|
|
Depreciation
|
53.3
|
|
51.2
|
|
156.7
|
|
154.1
|
Amortization
|
58.8
|
|
59.7
|
|
176.4
|
|
179.9
|
Other intangible
assets impairment charges
|
52.4
|
|
107.2
|
|
52.4
|
|
107.2
|
Share-based
compensation expense
|
6.1
|
|
6.0
|
|
19.8
|
|
16.5
|
Gain on
divestiture
|
—
|
|
(1.0)
|
|
—
|
|
(27.6)
|
Other noncash
adjustments – net
|
9.3
|
|
1.6
|
|
15.9
|
|
4.6
|
Defined benefit
pension contributions
|
(1.1)
|
|
(20.1)
|
|
(1.1)
|
|
(20.1)
|
Changes in assets and
liabilities, net of effect from
acquisition and divestiture:
|
|
|
|
|
|
|
|
Trade
receivables
|
44.9
|
|
59.8
|
|
26.7
|
|
(51.4)
|
Inventories
|
54.0
|
|
41.6
|
|
(48.0)
|
|
(18.8)
|
Other current
assets
|
(6.3)
|
|
1.9
|
|
7.0
|
|
19.5
|
Accounts
payable
|
53.6
|
|
(26.4)
|
|
12.3
|
|
(11.2)
|
Accrued
liabilities
|
18.9
|
|
12.7
|
|
44.6
|
|
73.1
|
Income and other
taxes
|
(8.3)
|
|
(8.4)
|
|
(40.9)
|
|
10.1
|
Other – net
|
(1.4)
|
|
13.9
|
|
(7.9)
|
|
(11.8)
|
Net Cash Provided
by (Used for) Operating Activities
|
521.6
|
|
421.1
|
|
967.1
|
|
867.0
|
|
|
|
|
|
|
|
|
Investing
Activities
|
|
|
|
|
|
|
|
Business acquired, net
of cash acquired
|
—
|
|
—
|
|
—
|
|
(1,903.0)
|
Additions to property,
plant, and equipment
|
(56.5)
|
|
(88.1)
|
|
(192.9)
|
|
(267.2)
|
Proceeds from
divestiture
|
—
|
|
(0.7)
|
|
—
|
|
371.4
|
Other – net
|
(16.9)
|
|
(15.1)
|
|
15.3
|
|
(24.0)
|
Net Cash Provided
by (Used for) Investing Activities
|
(73.4)
|
|
(103.9)
|
|
(177.6)
|
|
(1,822.8)
|
|
|
|
|
|
|
|
|
Financing
Activities
|
|
|
|
|
|
|
|
Short-term borrowings
(repayments) – net
|
(19.7)
|
|
114.0
|
|
(122.6)
|
|
360.0
|
Proceeds from
long-term debt
|
—
|
|
—
|
|
—
|
|
1,500.0
|
Repayments of
long-term debt
|
(300.0)
|
|
(300.0)
|
|
(400.0)
|
|
(600.0)
|
Quarterly dividends
paid
|
(100.1)
|
|
(96.5)
|
|
(296.7)
|
|
(281.4)
|
Purchase of treasury
shares
|
(0.8)
|
|
(0.2)
|
|
(4.3)
|
|
(5.2)
|
Proceeds from stock
option exercises
|
—
|
|
—
|
|
7.0
|
|
—
|
Other – net
|
(0.3)
|
|
0.1
|
|
0.5
|
|
0.2
|
Net Cash Provided
by (Used for) Financing Activities
|
(420.9)
|
|
(282.6)
|
|
(816.1)
|
|
973.6
|
Effect of exchange
rate changes on cash
|
(1.7)
|
|
0.7
|
|
(0.3)
|
|
(3.9)
|
Net increase
(decrease) in cash and cash equivalents
|
25.6
|
|
35.3
|
|
(26.9)
|
|
13.9
|
Cash and cash
equivalents at beginning of period
|
48.8
|
|
171.2
|
|
101.3
|
|
192.6
|
Cash and Cash
Equivalents at End of Period
|
$74.4
|
|
$206.5
|
|
$74.4
|
|
$206.5
|
The J. M. Smucker
Company
Unaudited
Supplemental Schedule
|
|
|
|
|
|
Three Months Ended
January 31,
|
|
Nine Months Ended
January 31,
|
|
2020
|
|
% of
Net Sales
|
|
2019
|
|
% of
Net Sales
|
|
2020
|
|
% of
Net Sales
|
|
2019
|
|
% of
Net Sales
|
|
(Dollars in
millions)
|
Net sales
|
$1,972.3
|
|
|
|
$2,011.9
|
|
|
|
$5,709.0
|
|
|
|
$5,935.9
|
|
|
Selling, distribution,
and
administrative expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketing
|
120.6
|
|
6.1%
|
|
133.8
|
|
6.7%
|
|
376.7
|
|
6.6%
|
|
411.4
|
|
6.9%
|
Selling
|
57.0
|
|
2.9%
|
|
58.9
|
|
2.9%
|
|
188.0
|
|
3.3%
|
|
191.9
|
|
3.2%
|
Distribution
|
73.7
|
|
3.7%
|
|
64.8
|
|
3.2%
|
|
207.5
|
|
3.6%
|
|
196.5
|
|
3.3%
|
General and
administrative
|
107.6
|
|
5.5%
|
|
115.6
|
|
5.7%
|
|
328.7
|
|
5.8%
|
|
339.0
|
|
5.7%
|
Total selling,
distribution, and
administrative expenses
|
$358.9
|
|
18.2%
|
|
$373.1
|
|
18.5%
|
|
$1,100.9
|
|
19.3%
|
|
$1,138.8
|
|
19.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
(Dollars in
millions)
|
Net sales:
|
|
|
|
|
|
|
|
|
U.S. Retail Pet
Foods
|
|
$721.9
|
|
$759.0
|
|
$2,101.7
|
|
$2,158.3
|
U.S. Retail
Coffee
|
|
558.8
|
|
561.6
|
|
1,567.9
|
|
1,596.0
|
U.S. Retail Consumer
Foods
|
|
422.9
|
|
422.7
|
|
1,251.2
|
|
1,367.9
|
International and Away
From Home
|
|
268.7
|
|
268.6
|
|
788.2
|
|
813.7
|
Total net
sales
|
|
$1,972.3
|
|
$2,011.9
|
|
$5,709.0
|
|
$5,935.9
|
|
|
|
|
|
|
|
|
|
Segment
profit:
|
|
|
|
|
|
|
|
|
U.S. Retail Pet
Foods
|
|
$146.0
|
|
$147.9
|
|
$403.1
|
|
$372.2
|
U.S. Retail
Coffee
|
|
189.5
|
|
183.7
|
|
500.9
|
|
505.8
|
U.S. Retail Consumer
Foods
|
|
84.2
|
|
95.9
|
|
256.6
|
|
327.5
|
International and Away
From Home
|
|
49.0
|
|
52.5
|
|
131.7
|
|
152.6
|
Total segment
profit
|
|
$468.7
|
|
$480.0
|
|
$1,292.3
|
|
$1,358.1
|
Amortization
|
|
(58.8)
|
|
(59.7)
|
|
(176.4)
|
|
(179.9)
|
Other intangible
assets impairment charges
|
|
(52.4)
|
|
(107.2)
|
|
(52.4)
|
|
(107.2)
|
Interest expense –
net
|
|
(45.1)
|
|
(51.6)
|
|
(143.6)
|
|
(158.8)
|
Unallocated derivative
gains (losses)
|
|
7.7
|
|
(2.9)
|
|
37.6
|
|
(25.0)
|
Other special project
costs
|
|
(3.3)
|
|
(18.8)
|
|
(9.9)
|
|
(51.9)
|
Corporate
administrative expenses
|
|
(72.9)
|
|
(73.8)
|
|
(214.8)
|
|
(219.1)
|
Other income (expense)
– net
|
|
(1.4)
|
|
(8.8)
|
|
(4.5)
|
|
(16.5)
|
Income before income
taxes
|
|
$242.5
|
|
$157.2
|
|
$728.3
|
|
$599.7
|
|
|
|
|
|
|
|
|
|
Segment profit
margin:
|
|
|
|
|
|
|
|
|
U.S. Retail Pet
Foods
|
|
20.2%
|
|
19.5%
|
|
19.2%
|
|
17.2%
|
U.S. Retail
Coffee
|
|
33.9%
|
|
32.7%
|
|
31.9%
|
|
31.7%
|
U.S. Retail Consumer
Foods
|
|
19.9%
|
|
22.7%
|
|
20.5%
|
|
23.9%
|
International and Away
From Home
|
|
18.2%
|
|
19.5%
|
|
16.7%
|
|
18.8%
|
Non-GAAP Financial Measures
The Company uses non-GAAP financial measures, including: net
sales excluding acquisition, divestiture, 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 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, integration and
restructuring costs ("special project costs"), and unallocated
gains and losses on commodity and foreign currency exchange
derivatives ("unallocated derivative gains and losses"), as well as
the related tax impact of these exclusions. The special project
costs relate to specific 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. Additionally, income taxes, as adjusted is
calculated using an adjusted effective income tax rate that is
applied to adjusted income before income taxes. While this adjusted
effective income tax rate does not generally differ materially from
our GAAP effective income tax rate, certain items can significantly
impact our 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.
generally accepted accounting principles. 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 2020 outlook.
The J. M. Smucker
Company
Unaudited Non-GAAP
Financial Measures
|
|
|
|
|
|
Three Months Ended
January 31,
|
|
Nine Months Ended
January 31,
|
|
2020
|
|
2019
|
|
Increase
(Decrease)
|
|
%
|
|
2020
|
|
2019
|
|
Increase
(Decrease)
|
|
%
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
reconciliation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$1,972.3
|
|
$2,011.9
|
|
($39.6)
|
|
(2)%
|
|
$5,709.0
|
|
$5,935.9
|
|
($226.9)
|
|
(4)%
|
Ainsworth
acquisition
|
—
|
|
—
|
|
—
|
|
—
|
|
(25.4)
|
|
—
|
|
(25.4)
|
|
—
|
Baking
divestiture
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(105.9)
|
|
105.9
|
|
2%
|
Net sales
excluding
acquisition and divestiture
|
1,972.3
|
|
2,011.9
|
|
(39.6)
|
|
(2)%
|
|
5,683.6
|
|
5,830.0
|
|
(146.4)
|
|
(2)%
|
Foreign currency
exchange
|
(1.3)
|
|
—
|
|
(1.3)
|
|
—
|
|
2.3
|
|
—
|
|
2.3
|
|
—
|
Net sales
excluding
acquisition, divestiture, and
foreign currency exchange
|
$1,971.0
|
|
$2,011.9
|
|
($40.9)
|
|
(2)%
|
|
$5,685.9
|
|
$5,830.0
|
|
($144.1)
|
|
(2)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts may not add
due to rounding.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The J. M. Smucker
Company
Unaudited Non-GAAP
Financial Measures
|
|
|
|
|
|
Three Months Ended
January 31,
|
|
Nine Months Ended
January 31,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
(Dollars in millions,
except per share data)
|
Gross profit
reconciliation:
|
|
|
|
|
|
|
|
Gross
profit
|
$760.0
|
|
$773.8
|
|
$2,213.6
|
|
$2,223.3
|
Unallocated derivative
losses (gains)
|
(7.7)
|
|
2.9
|
|
(37.6)
|
|
25.0
|
Adjusted gross
profit
|
$752.3
|
|
$776.7
|
|
$2,176.0
|
|
$2,248.3
|
% of net
sales
|
38.1%
|
|
38.6%
|
|
38.1%
|
|
37.9%
|
|
|
|
|
|
|
|
|
Operating income
reconciliation:
|
|
|
|
|
|
|
|
Operating
income
|
$289.0
|
|
$217.6
|
|
$876.4
|
|
$775.0
|
Amortization
|
58.8
|
|
59.7
|
|
176.4
|
|
179.9
|
Other intangible
assets impairment charges
|
52.4
|
|
107.2
|
|
52.4
|
|
107.2
|
Unallocated derivative
losses (gains)
|
(7.7)
|
|
2.9
|
|
(37.6)
|
|
25.0
|
Other special project
costs
|
3.3
|
|
18.8
|
|
9.9
|
|
51.9
|
Adjusted operating
income
|
$395.8
|
|
$406.2
|
|
$1,077.5
|
|
$1,139.0
|
% of net
sales
|
20.1%
|
|
20.2%
|
|
18.9%
|
|
19.2%
|
|
|
|
|
|
|
|
|
Net income
reconciliation:
|
|
|
|
|
|
|
|
Net income
|
$187.4
|
|
$121.4
|
|
$553.2
|
|
$442.9
|
Income tax
expense
|
55.1
|
|
35.8
|
|
175.1
|
|
156.8
|
Amortization
|
58.8
|
|
59.7
|
|
176.4
|
|
179.9
|
Other intangible
assets impairment charges
|
52.4
|
|
107.2
|
|
52.4
|
|
107.2
|
Unallocated derivative
losses (gains)
|
(7.7)
|
|
2.9
|
|
(37.6)
|
|
25.0
|
Other special project
costs
|
3.3
|
|
18.8
|
|
9.9
|
|
51.9
|
Adjusted income before
income taxes
|
$349.3
|
|
$345.8
|
|
$929.4
|
|
$963.7
|
Income taxes, as
adjusted
|
80.8
|
|
89.1
|
|
223.7
|
|
258.1
|
Adjusted
income
|
$268.5
|
|
$256.7
|
|
$705.7
|
|
$705.6
|
|
|
|
|
|
|
|
|
Weighted-average
common shares outstanding
|
113.4
|
|
113.2
|
|
113.3
|
|
113.1
|
Weighted-average
participating shares outstanding
|
0.6
|
|
0.6
|
|
0.7
|
|
0.6
|
Total weighted-average
shares outstanding
|
114.0
|
|
113.8
|
|
114.0
|
|
113.7
|
Dilutive effect of
stock options
|
—
|
|
—
|
|
—
|
|
—
|
Total weighted-average
shares outstanding – assuming
dilution
|
114.0
|
|
113.8
|
|
114.0
|
|
113.7
|
|
|
|
|
|
|
|
|
Adjusted earnings per
share – assuming dilution
|
$2.35
|
|
$2.26
|
|
$6.19
|
|
$6.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The J. M. Smucker
Company
Unaudited Non-GAAP
Financial Measures
|
|
|
|
|
|
Three Months Ended
January 31,
|
|
Nine Months Ended
January 31,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
(Dollars in
millions)
|
EBITDA (as adjusted)
reconciliation:
|
|
|
|
|
|
|
|
Net income
|
$187.4
|
|
$121.4
|
|
$553.2
|
|
$442.9
|
Income tax
expense
|
55.1
|
|
35.8
|
|
175.1
|
|
156.8
|
Interest expense –
net
|
45.1
|
|
51.6
|
|
143.6
|
|
158.8
|
Depreciation
|
53.3
|
|
51.2
|
|
156.7
|
|
154.1
|
Amortization
|
58.8
|
|
59.7
|
|
176.4
|
|
179.9
|
Other intangible
assets impairment charges
|
52.4
|
|
107.2
|
|
52.4
|
|
107.2
|
EBITDA (as
adjusted)
|
$452.1
|
|
$426.9
|
|
$1,257.4
|
|
$1,199.7
|
% of net
sales
|
22.9%
|
|
21.2%
|
|
22.0%
|
|
20.2%
|
|
|
|
|
|
|
|
|
Free cash flow
reconciliation:
|
|
|
|
|
|
|
|
Net cash provided by
(used for) operating activities
|
$521.6
|
|
$421.1
|
|
$967.1
|
|
$867.0
|
Additions to property,
plant, and equipment
|
(56.5)
|
|
(88.1)
|
|
(192.9)
|
|
(267.2)
|
Free cash
flow
|
$465.1
|
|
$333.0
|
|
$774.2
|
|
$599.8
|
The following tables provide a reconciliation of the Company's
fiscal 2020 guidance for estimated adjusted earnings per share and
free cash flow.
|
|
Year Ending April 30,
2020
|
|
|
Low
|
|
High
|
Net income per common
share – assuming dilution reconciliation:
|
|
|
|
|
Net income per common
share – assuming dilution
|
|
$6.32
|
|
$6.52
|
Unallocated derivative
losses (gains) (A)
|
|
(0.27)
|
|
(0.27)
|
Special project
costs
|
|
0.12
|
|
0.12
|
Amortization
|
|
1.58
|
|
1.58
|
Other intangible
assets impairment charges
|
|
0.35
|
|
0.35
|
Adjusted earnings per
share
|
|
$8.10
|
|
$8.30
|
|
|
|
|
|
(A) As unallocated
derivative losses (gains) vary each quarter based on market
conditions and derivative positions taken, we do 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 that is expected to be allocated to non-GAAP results
as of April 30, 2020.
|
|
|
|
|
|
|
|
Year Ending April 30,
2020
|
|
|
Low
|
|
High
|
|
|
(Dollars in
millions)
|
Free cash flow
reconciliation:
|
|
|
|
|
Net cash provided by
operating activities
|
|
$1,170
|
|
$1,150
|
Additions to property,
plant, and equipment
|
|
(320)
|
|
(300)
|
Free cash
flow
|
|
$850
|
|
$850
|
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SOURCE The J. M. Smucker Company