ORRVILLE, Ohio, Aug. 25, 2020 /PRNewswire/ -- The J. M.
Smucker Company (NYSE: SJM) today announced results for the first
quarter ended July 31, 2020, of its 2021 fiscal year. All
comparisons are to the first quarter of the prior fiscal year,
unless otherwise noted.
EXECUTIVE SUMMARY
- Net sales increased $192.9
million, or 11 percent, with growth across each of the
Company's U.S. and International retail businesses, partially
offset by a decline for its Away From Home business.
- Net income per diluted share was $2.08. Adjusted earnings per share was
$2.37, an increase of 50
percent.
- Cash from operations was $409.0
million, an increase of 85 percent. Free cash flow was
$332.4 million, compared to
$148.5 million in the prior
year.
- The Company increased its full-year fiscal 2021 net sales,
adjusted earnings per share, and free cash flow outlook.
CHIEF EXECUTIVE OFFICER REMARKS
"I am incredibly proud and thankful for our employees, who have
adapted quickly to deliver strong results and serve our
constituents in an environment marked by the COVID-19 pandemic and
social unrest. We continue to ensure employee safety and
well-being, support the communities where we do business, and
provide a steady, quality supply of food for consumers and their
pets," said Mark Smucker, President
and Chief Executive Officer.
"Our first quarter results exceeded our expectations,
particularly for the coffee and consumer foods portfolios.
Consumers continued to seek out trusted and iconic brands as we
achieved strong growth across nearly all our categories. This
exceptional performance highlights the strength of our portfolio,
the potential of our consumer-centric growth strategy, and our
commitment to operate with financial discipline."
"We expect continued momentum in the second quarter and are
pleased to raise our full-year guidance. We remain confident in our
ability to deliver on our fiscal year 2021 goals, advance our
long-term strategy, and deliver increased shareholder value."
FIRST QUARTER CONSOLIDATED RESULTS
|
Three Months Ended
July 31,
|
|
2020
|
|
2019
|
|
% Increase
(Decrease)
|
|
(Dollars and shares
in millions, except per share data)
|
|
|
|
|
|
|
Net
sales
|
$1,971.8
|
|
|
$1,778.9
|
|
|
11
|
%
|
|
|
|
|
|
|
Operating
income
|
$361.1
|
|
|
$257.6
|
|
|
40
|
%
|
Adjusted operating
income
|
404.5
|
|
|
290.7
|
|
|
39
|
%
|
|
|
|
|
|
|
Net income per
common share – assuming dilution
|
$2.08
|
|
|
$1.36
|
|
|
53
|
%
|
Adjusted earnings per
share – assuming dilution
|
2.37
|
|
|
1.58
|
|
|
50
|
%
|
|
|
|
|
|
|
Weighted-average
shares outstanding – assuming dilution
|
114.1
|
|
|
113.9
|
|
|
—
|
|
Net Sales
Net sales increased 11 percent, driven by favorable volume/mix
across all the Company's retail businesses, supported by increased
at-home consumption for the U.S. Retail Coffee and U.S. Retail
Consumer Foods segments, partially offset by reduced volume/mix for
the Away From Home business. Net price realization and foreign
currency exchange were neutral.
Operating Income
Gross profit increased $75.8
million, or 11 percent, driven by the increased contribution
from volume/mix and lower costs, partially offset by an unfavorable
change in unallocated derivative gains and losses as compared to
the prior year. Operating income increased $103.5 million, or 40 percent, primarily
reflecting the increase in gross profit and a $23.0 million decrease in selling, distribution,
and administrative ("SD&A") expenses.
Adjusted gross profit increased $88.6
million, or 13 percent, with the difference from generally
accepted accounting principles ("GAAP") results being the exclusion
of unallocated derivative gains and losses. Adjusted operating
income increased $113.8 million, or
39 percent, further reflecting the exclusion of other special
project costs and amortization.
Interest Expense, Other Income (Expense), and Income
Taxes
Net interest expense decreased $3.3
million, primarily as a result of a decrease in interest
rates and reduced debt outstanding, partially offset by interest
expense related to interest rate contracts terminated in the fourth
quarter of the prior year.
The effective income tax rate was 24.4 percent compared to 25.2
percent in the prior year.
Cash Flow and Debt
Cash provided by operating activities was $409.0 million, compared to $221.5 million in the prior year, primarily
reflecting a decrease in cash required to fund working capital and
an increase in net income adjusted for noncash items. The decrease
in working capital requirements was primarily attributable to lower
payments for accounts payable driven by working capital
initiatives. Free cash flow was $332.4
million, compared to $148.5
million in the prior year, reflecting the increase in cash
provided by operating activities, slightly offset by a $3.6 million increase in capital expenditures.
Net debt repayments in the quarter totaled $252.2 million.
FULL-YEAR OUTLOOK
The Company updated its full-year fiscal 2021 guidance as
summarized below:
|
|
Current
|
|
Previous
|
Net sales change vs
prior year
|
|
0% - 1%
|
|
(2)% -
(1)%
|
Adjusted earnings per
share
|
|
$8.20 -
$8.60
|
|
$7.90 -
$8.30
|
Free cash flow (in
millions)
|
|
$925 -
$975
|
|
$900 -
$950
|
Capital expenditures
(in millions)
|
|
$300
|
|
$300
|
Effective tax
rate
|
|
24.0%
|
|
24.0%
|
The outbreak of COVID-19 continues to impact financial results
and cause uncertainty for the full-year fiscal 2021 projections.
This guidance reflects expectations based on the Company's current
performance and understanding of the overall environment.
Net sales are expected to range from flat to up 1 percent
compared to the prior year. This reflects elevated at-home
consumption and retailer inventory re-stocking in the first quarter
primarily benefiting the U.S. Retail Coffee and U.S. Retail
Consumer Foods segments, with net sales growth anticipated to
moderate throughout the remainder of the fiscal year. This net
sales growth will be partially offset by a decline for the
Company's Away From Home business and the lapping of a $185 million incremental benefit to net sales
related to COVID-19 in the fourth quarter of the prior year.
Adjusted earnings per share is expected to range from
$8.20 to $8.60, based on 114.1 million shares outstanding.
Earnings guidance reflects the contribution from sales at a gross
profit margin range of 37.5 to 38.0 percent, SD&A expenses to
increase 1 to 2 percent compared to the prior year, and an
effective tax rate of 24.0 percent. Free cash flow is expected to
range from $925 to $975 million.
FIRST QUARTER SEGMENT RESULTS
Effective during the first quarter of fiscal year 2021, the
presentation of International and Away From Home represents a
combination of all other operating segments that are not
individually reportable. As a result of recent leadership changes,
these operating segments are now being managed and reported
separately, and no longer represent a reportable segment for
segment reporting purposes. Prior year segment results have not
been modified, as the combination of these operating segments
represents the previously reported International and Away From Home
reportable segment.
(Dollar amounts in the segment tables below are reported in
millions.)
U.S. Retail Pet Foods
|
|
Net
Sales
|
|
Segment
Profit
|
|
Segment
Profit
Margin
|
FY21 Q1
Results
|
|
$692.6
|
|
$125.3
|
|
18.1%
|
Increase (decrease) vs
prior year
|
|
3%
|
|
4%
|
|
20bps
|
Net sales increased $22.7 million,
reflecting a 5 percentage point improvement due to volume/mix. The
contribution from volume/mix primarily reflects growth for
9Lives® and Meow Mix® cat food
and Milk-Bone® dog snacks, partially offset by
decreases primarily related to Natural Balance®,
Nature's Recipe®, and private label dog food.
Lower net price realization reduced net sales by 2 percentage
points, primarily reflecting increased trade spend for dog food and
cat food.
Segment profit increased $5.2
million, driven by lower manufacturing costs, the increased
volume/mix, and lower SD&A expenses, partially offset by lower
pricing.
U.S. Retail Coffee
|
|
Net
Sales
|
|
Segment
Profit
|
|
Segment
Profit
Margin
|
FY21 Q1
Results
|
|
$570.9
|
|
$182.6
|
|
32.0%
|
Increase (decrease) vs
prior year
|
|
23%
|
|
42%
|
|
430bps
|
Net sales grew $105.2 million,
reflecting a 23 percentage point increase from volume/mix.
Favorable volume/mix was driven by Dunkin'
Donuts®, Folgers®, and Café
Bustelo® coffee, reflecting elevated at-home
consumption and re-stocking of retailer inventory following the
surge in consumer demand in the fourth quarter of the prior year.
Net price realization was neutral.
Segment profit increased $53.7
million, primarily due to the favorable volume/mix.
U.S. Retail Consumer Foods
|
|
Net
Sales
|
|
Segment
Profit
|
|
Segment
Profit
Margin
|
FY21 Q1
Results
|
|
$489.2
|
|
$131.5
|
|
26.9%
|
Increase (decrease) vs
prior year
|
|
22%
|
|
62%
|
|
680bps
|
Net sales increased $87.0 million,
reflecting a 19 percentage point increase from volume/mix driven by
growth for the Smucker's® brand, inclusive
of Uncrustables® frozen sandwiches and fruit
spreads, Crisco® oils and shortening, and
Jif® peanut butter. The increase in volume/mix
includes growth due to elevated at-home consumption and retailer
inventory re-stocking following the surge in consumer demand in the
fourth quarter of the prior year. Higher net pricing increased net
sales by 3 percentage points, primarily attributable to reduced
promotional activity for Jif® peanut butter
and Smucker's® fruit spreads.
Segment profit increased $50.5
million, primarily reflecting the contribution from
volume/mix, higher net pricing, and lower SD&A expenses.
International and Away From Home
|
|
Net
Sales
|
|
Segment
Profit
|
|
Segment
Profit
Margin
|
FY21 Q1
Results
|
|
$219.1
|
|
$30.9
|
|
14.1%
|
Increase (decrease) vs
prior year
|
|
(9)%
|
|
(4)%
|
|
70bps
|
Net sales decreased $22.0 million,
primarily reflecting a 33 percent decline for the Company's Away
From Home operating segment, partially offset by net sales growth
of 21 percent for the International operating segment, most notably
for flour and baking ingredients. Volume/mix for the combined
businesses reduced net sales by 8 percentage points and foreign
currency exchange reduced net sales by 1 percentage point. Net
price realization was neutral.
Segment profit decreased $1.4
million, primarily reflecting higher input costs and the
decline from volume/mix, partially offset by reduced SD&A
expenses.
Conference Call
The Company will conduct an earnings conference call and webcast
today, August 25, 2020, beginning at 8:30 a.m. Eastern time. Speaking on the call will
be Mark Smucker, President and Chief
Executive Officer and Tucker
Marshall, 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 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; 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 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, e-commerce, 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
July 31,
|
|
2020
|
|
2019
|
|
% Increase
(Decrease)
|
|
(Dollars and shares
in millions, except per
share
data)
|
|
|
|
|
|
|
Net sales
|
$1,971.8
|
|
|
$1,778.9
|
|
|
11
|
%
|
Cost of products
sold
|
1,196.4
|
|
|
1,079.3
|
|
|
11
|
%
|
Gross
Profit
|
775.4
|
|
|
699.6
|
|
|
11
|
%
|
Gross
margin
|
39.3
|
%
|
|
39.3
|
%
|
|
|
|
|
|
|
|
|
Selling,
distribution, and administrative expenses
|
357.5
|
|
|
380.5
|
|
|
(6)
|
%
|
Amortization
|
59.6
|
|
|
58.8
|
|
|
1
|
%
|
Other special project
costs
|
—
|
|
|
3.3
|
|
|
(100)
|
%
|
Other operating
expense (income) – net
|
(2.8)
|
|
|
(0.6)
|
|
|
n/m
|
Operating
Income
|
361.1
|
|
|
257.6
|
|
|
40
|
%
|
Operating
margin
|
18.3
|
%
|
|
14.5
|
%
|
|
|
|
|
|
|
|
|
Interest expense –
net
|
(46.1)
|
|
|
(49.4)
|
|
|
(7)
|
%
|
Other income
(expense) – net
|
(1.4)
|
|
|
(1.5)
|
|
|
(7)
|
%
|
Income Before
Income Taxes
|
313.6
|
|
|
206.7
|
|
|
52
|
%
|
Income tax
expense
|
76.6
|
|
|
52.1
|
|
|
47
|
%
|
Net
Income
|
$237.0
|
|
|
$154.6
|
|
|
53
|
%
|
|
|
|
|
|
|
Net income per
common share
|
$2.08
|
|
|
$1.36
|
|
|
53
|
%
|
|
|
|
|
|
|
Net income per
common share – assuming dilution
|
$2.08
|
|
|
$1.36
|
|
|
53
|
%
|
|
|
|
|
|
|
Dividends declared
per common share
|
$0.90
|
|
|
$0.88
|
|
|
2
|
%
|
|
|
|
|
|
|
Weighted-average
shares outstanding
|
114.1
|
|
|
113.9
|
|
|
—
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding – assuming dilution
|
114.1
|
|
|
113.9
|
|
|
—
|
|
The J. M. Smucker
Company
Unaudited Condensed
Consolidated Balance Sheets
|
|
|
|
|
|
|
|
July 31,
2020
|
|
April 30,
2020
|
|
|
(Dollars in
millions)
|
Assets
|
|
|
|
|
Current
Assets
|
|
|
|
|
Cash and cash
equivalents
|
|
$396.6
|
|
|
$391.1
|
|
Trade receivables –
net
|
|
497.6
|
|
|
551.4
|
|
Inventories
|
|
995.0
|
|
|
895.3
|
|
Other current
assets
|
|
95.6
|
|
|
134.9
|
|
Total Current
Assets
|
|
1,984.8
|
|
|
1,972.7
|
|
|
|
|
|
|
Property, Plant,
and Equipment – Net
|
|
1,948.6
|
|
|
1,969.4
|
|
|
|
|
|
|
Other Noncurrent
Assets
|
|
|
|
|
Goodwill
|
|
6,310.7
|
|
|
6,304.5
|
|
Other intangible
assets – net
|
|
6,371.6
|
|
|
6,429.0
|
|
Other noncurrent
assets
|
|
286.6
|
|
|
294.8
|
|
Total Other
Noncurrent Assets
|
|
12,968.9
|
|
|
13,028.3
|
|
Total
Assets
|
|
$16,902.3
|
|
|
$16,970.4
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
Accounts
payable
|
|
$780.6
|
|
|
$782.0
|
|
Current portion of
long-term debt
|
|
399.8
|
|
|
—
|
|
Short-term
borrowings
|
|
296.0
|
|
|
248.0
|
|
Other current
liabilities
|
|
596.7
|
|
|
557.1
|
|
Total Current
Liabilities
|
|
2,073.1
|
|
|
1,587.1
|
|
|
|
|
|
|
Noncurrent
Liabilities
|
|
|
|
|
Long-term debt, less
current portion
|
|
4,672.8
|
|
|
5,373.3
|
|
Other noncurrent
liabilities
|
|
1,811.2
|
|
|
1,819.1
|
|
Total Noncurrent
Liabilities
|
|
6,484.0
|
|
|
7,192.4
|
|
|
|
|
|
|
Total Shareholders'
Equity
|
|
8,345.2
|
|
|
8,190.9
|
|
Total Liabilities
and Shareholders' Equity
|
|
$16,902.3
|
|
|
$16,970.4
|
|
The J. M. Smucker
Company
Unaudited Condensed
Consolidated Statements of Cash Flow
|
|
|
|
Three Months Ended
July 31,
|
|
2020
|
|
2019
|
|
(Dollars in
millions)
|
Operating
Activities
|
|
|
|
Net income
|
$237.0
|
|
|
$154.6
|
|
Adjustments to
reconcile net income to net cash provided by (used for)
operations:
|
|
|
|
Depreciation
|
54.1
|
|
|
50.8
|
|
Amortization
|
59.6
|
|
|
58.8
|
|
Share-based
compensation expense
|
5.9
|
|
|
6.2
|
|
Other noncash
adjustments – net
|
3.8
|
|
|
0.2
|
|
Changes in assets and
liabilities:
|
|
|
|
Trade
receivables
|
55.1
|
|
|
30.4
|
|
Inventories
|
(98.5)
|
|
|
(102.1)
|
|
Other current
assets
|
0.3
|
|
|
6.4
|
|
Accounts
payable
|
41.1
|
|
|
(61.0)
|
|
Accrued
liabilities
|
7.1
|
|
|
63.6
|
|
Income and other
taxes
|
43.4
|
|
|
21.8
|
|
Other – net
|
0.1
|
|
|
(8.2)
|
|
Net Cash Provided
by (Used for) Operating Activities
|
409.0
|
|
|
221.5
|
|
|
|
|
|
Investing
Activities
|
|
|
|
Additions to property,
plant, and equipment
|
(76.6)
|
|
|
(73.0)
|
|
Other – net
|
27.4
|
|
|
20.9
|
|
Net Cash Provided
by (Used for) Investing Activities
|
(49.2)
|
|
|
(52.1)
|
|
|
|
|
|
Financing
Activities
|
|
|
|
Short-term borrowings
(repayments) – net
|
47.8
|
|
|
(130.0)
|
|
Repayments of
long-term debt
|
(300.0)
|
|
|
—
|
|
Quarterly dividends
paid
|
(100.1)
|
|
|
(96.5)
|
|
Purchase of treasury
shares
|
(4.6)
|
|
|
(2.9)
|
|
Proceeds from stock
option exercises
|
—
|
|
|
7.0
|
|
Other – net
|
(0.4)
|
|
|
(0.2)
|
|
Net Cash Provided
by (Used for) Financing Activities
|
(357.3)
|
|
|
(222.6)
|
|
Effect of exchange
rate changes on cash
|
3.0
|
|
|
0.7
|
|
Net increase
(decrease) in cash and cash equivalents
|
5.5
|
|
|
(52.5)
|
|
Cash and cash
equivalents at beginning of period
|
391.1
|
|
|
101.3
|
|
Cash and Cash
Equivalents at End of Period
|
$396.6
|
|
|
$48.8
|
|
The J. M. Smucker
Company
Unaudited
Supplemental Schedule
|
|
|
|
Three Months Ended
July 31,
|
|
2020
|
|
% of
Net Sales
|
|
2019
|
|
% of
Net Sales
|
|
(Dollars in
millions)
|
Net sales
|
$1,971.8
|
|
|
|
|
$1,778.9
|
|
|
|
Selling, distribution,
and administrative expenses:
|
|
|
|
|
|
|
|
Marketing
|
121.7
|
|
|
6.2
|
%
|
|
132.9
|
|
|
7.5
|
%
|
Selling
|
65.8
|
|
|
3.3
|
%
|
|
68.5
|
|
|
3.9
|
%
|
Distribution
|
69.8
|
|
|
3.5
|
%
|
|
64.0
|
|
|
3.6
|
%
|
General and
administrative
|
100.2
|
|
|
5.1
|
%
|
|
115.1
|
|
|
6.5
|
%
|
Total selling,
distribution, and administrative expenses
|
$357.5
|
|
|
18.1
|
%
|
|
$380.5
|
|
|
21.4
|
%
|
|
|
|
|
|
|
|
|
Amounts may not add
due to rounding.
|
|
|
|
|
The J. M. Smucker
Company
Unaudited Reportable
Segments
|
|
|
|
Three Months Ended
July 31,
|
|
2020
|
|
2019
|
|
(Dollars in
millions)
|
Net sales:
|
|
|
|
U.S. Retail Pet
Foods
|
$692.6
|
|
|
$669.9
|
|
U.S. Retail
Coffee
|
570.9
|
|
|
465.7
|
|
U.S. Retail Consumer
Foods
|
489.2
|
|
|
402.2
|
|
International and Away
From Home
|
219.1
|
|
|
241.1
|
|
Total net
sales
|
$1,971.8
|
|
|
$1,778.9
|
|
|
|
|
|
Segment
profit:
|
|
|
|
U.S. Retail Pet
Foods
|
$125.3
|
|
|
$120.1
|
|
U.S. Retail
Coffee
|
182.6
|
|
|
128.9
|
|
U.S. Retail Consumer
Foods
|
131.5
|
|
|
81.0
|
|
International and Away
From Home
|
30.9
|
|
|
32.3
|
|
Total segment
profit
|
$470.3
|
|
|
$362.3
|
|
Amortization
|
(59.6)
|
|
|
(58.8)
|
|
Interest expense –
net
|
(46.1)
|
|
|
(49.4)
|
|
Unallocated derivative
gains (losses)
|
16.2
|
|
|
29.0
|
|
Other special project
costs
|
—
|
|
|
(3.3)
|
|
Corporate
administrative expenses
|
(65.8)
|
|
|
(71.6)
|
|
Other income (expense)
– net
|
(1.4)
|
|
|
(1.5)
|
|
Income before income
taxes
|
$313.6
|
|
|
$206.7
|
|
|
|
|
|
Segment profit
margin:
|
|
|
|
U.S. Retail Pet
Foods
|
18.1
|
%
|
|
17.9
|
%
|
U.S. Retail
Coffee
|
32.0
|
%
|
|
27.7
|
%
|
U.S. Retail Consumer
Foods
|
26.9
|
%
|
|
20.1
|
%
|
International and Away
From Home
|
14.1
|
%
|
|
13.4
|
%
|
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, 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
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 2021 outlook.
The J. M. Smucker
Company
Unaudited Non-GAAP
Financial Measures
|
|
|
|
Three Months Ended
July 31,
|
|
2020
|
|
2019
|
|
Increase
(Decrease)
|
|
%
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
Net sales
reconciliation:
|
|
|
|
|
|
|
|
Net sales
|
$1,971.8
|
|
|
$1,778.9
|
|
|
$192.9
|
|
|
11
|
%
|
Foreign currency
exchange
|
3.1
|
|
|
—
|
|
|
3.1
|
|
|
—
|
%
|
Net sales excluding
foreign currency exchange
|
$1,974.9
|
|
|
$1,778.9
|
|
|
$196.0
|
|
|
11
|
%
|
|
|
|
|
|
|
|
|
Amounts may not add
due to rounding.
|
|
|
The J. M. Smucker
Company
Unaudited Non-GAAP
Financial Measures
|
|
|
|
Three Months Ended
July 31,
|
|
2020
|
|
2019
|
|
(Dollars in millions,
except per share
data)
|
Gross profit
reconciliation:
|
|
|
|
Gross
profit
|
$775.4
|
|
|
$699.6
|
|
Unallocated derivative
losses (gains)
|
(16.2)
|
|
|
(29.0)
|
|
Adjusted gross
profit
|
$759.2
|
|
|
$670.6
|
|
% of net
sales
|
38.5
|
%
|
|
37.7
|
%
|
|
|
|
|
Operating income
reconciliation:
|
|
|
|
Operating
income
|
$361.1
|
|
|
$257.6
|
|
Amortization
|
59.6
|
|
|
58.8
|
|
Unallocated derivative
losses (gains)
|
(16.2)
|
|
|
(29.0)
|
|
Other special project
costs
|
—
|
|
|
3.3
|
|
Adjusted operating
income
|
$404.5
|
|
|
$290.7
|
|
% of net
sales
|
20.5
|
%
|
|
16.3
|
%
|
|
|
|
|
Net income
reconciliation:
|
|
|
|
Net income
|
$237.0
|
|
|
$154.6
|
|
Income tax
expense
|
76.6
|
|
|
52.1
|
|
Amortization
|
59.6
|
|
|
58.8
|
|
Unallocated derivative
losses (gains)
|
(16.2)
|
|
|
(29.0)
|
|
Other special project
costs
|
—
|
|
|
3.3
|
|
Adjusted income before
income taxes
|
$357.0
|
|
|
$239.8
|
|
Income taxes, as
adjusted
|
87.0
|
|
|
60.1
|
|
Adjusted
income
|
$270.0
|
|
|
$179.7
|
|
|
|
|
|
Weighted-average
common shares outstanding – assuming dilution
|
113.5
|
|
|
113.3
|
|
Weighted-average
participating shares outstanding
|
0.6
|
|
|
0.6
|
|
Total weighted-average
shares outstanding
|
114.1
|
|
|
113.9
|
|
Dilutive effect of
stock options
|
—
|
|
|
—
|
|
Total weighted-average
shares outstanding – assuming dilution
|
114.1
|
|
|
113.9
|
|
Adjusted earnings per
share – assuming dilution
|
$2.37
|
|
|
$1.58
|
|
The J. M. Smucker
Company
Unaudited Non-GAAP
Financial Measures
|
|
|
|
Three Months Ended
July 31,
|
|
2020
|
|
2019
|
|
(Dollars in
millions)
|
EBITDA (as adjusted)
reconciliation:
|
|
|
|
Net income
|
$237.0
|
|
|
$154.6
|
|
Income tax
expense
|
76.6
|
|
|
52.1
|
|
Interest expense –
net
|
46.1
|
|
|
49.4
|
|
Depreciation
|
54.1
|
|
|
50.8
|
|
Amortization
|
59.6
|
|
|
58.8
|
|
EBITDA (as
adjusted)
|
$473.4
|
|
|
$365.7
|
|
% of net
sales
|
24.0
|
%
|
|
20.6
|
%
|
|
|
|
|
Free cash flow
reconciliation:
|
|
|
|
Net cash provided by
(used for) operating activities
|
$409.0
|
|
|
$221.5
|
|
Additions to property,
plant, and equipment
|
(76.6)
|
|
|
(73.0)
|
|
Free cash
flow
|
$332.4
|
|
|
$148.5
|
|
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
|
|
$6.83
|
|
|
$7.23
|
|
Unallocated derivative
losses (gains) (A)
|
|
(0.22)
|
|
|
(0.22)
|
|
Amortization
|
|
1.59
|
|
|
1.59
|
|
Adjusted earnings per
share
|
|
$8.20
|
|
|
$8.60
|
|
|
|
|
|
|
(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 as of July 31, 2020, that is expected to be allocated
to non-GAAP results in future periods.
|
|
|
|
|
|
|
|
Year Ending April 30,
2021
|
|
|
Low
|
|
High
|
|
|
(Dollars in
millions)
|
Free cash flow
reconciliation:
|
|
|
|
|
Net cash provided by
operating activities
|
|
$1,225
|
|
|
$1,275
|
|
Additions to property,
plant, and equipment
|
|
(300)
|
|
|
(300)
|
|
Free cash
flow
|
|
$925
|
|
|
$975
|
|
View original content to download
multimedia:http://www.prnewswire.com/news-releases/the-j-m-smucker-company-announces-fiscal-2021-first-quarter-results-301117744.html
SOURCE The J. M. Smucker Company