ORRVILLE, Ohio, Nov. 24, 2020 /PRNewswire/ -- The J.M. Smucker
Co. (NYSE: SJM) today announced results for the second quarter
ended October 31, 2020, of its 2021 fiscal year. All
comparisons are to the second quarter of the prior fiscal year,
unless otherwise noted.
EXECUTIVE SUMMARY
- Net sales increased $76.2
million, or 4 percent, primarily reflecting growth in the
Company's U.S. Retail Consumer Foods and U.S. Retail Coffee
segments, partially offset by a decline in its Away From Home
business.
- Net income per diluted share was $2.02. Adjusted earnings per share was
$2.39, an increase of 6 percent.
- Cash from operations was $378.7
million, an increase of 69 percent. Free cash flow was
$326.3 million, compared to
$160.6 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
"In the second quarter, we focused on meeting the demands
created by the current environment, while continuing to execute our
long-term strategy to deliver sustainable growth," said
Mark Smucker, President and Chief
Executive Officer. "Our U.S. Retail Consumer Foods and U.S. Retail
Coffee businesses experienced strong sales momentum from elevated
at-home consumption trends and grew market share. I want to thank
our employees for their ongoing hard work and dedication to provide
our customers, consumers, and their pets with a steady food supply
from trusted and iconic brands."
"We are pleased to raise our full-year financial guidance, while
making additional investments in our brands to support their
momentum. I am confident that we are strengthening our foundation
to deliver both our short-term and long-term financial objectives
and increase shareholder value."
SECOND QUARTER CONSOLIDATED RESULTS
|
Three Months Ended
October 31,
|
|
2020
|
|
2019
|
|
% Increase
(Decrease)
|
|
(Dollars and shares
in millions, except per share data)
|
|
|
|
|
|
|
Net
sales
|
$2,034.0
|
|
|
$1,957.8
|
|
|
4
|
%
|
|
|
|
|
|
|
Operating
income
|
$380.8
|
|
|
$329.8
|
|
|
15
|
%
|
Adjusted operating
income
|
408.8
|
|
|
391.0
|
|
|
5
|
%
|
|
|
|
|
|
|
Net income per
common share – assuming dilution
|
$2.02
|
|
|
$1.85
|
|
|
9
|
%
|
Adjusted earnings per
share – assuming dilution
|
2.39
|
|
|
2.26
|
|
|
6
|
%
|
|
|
|
|
|
|
Weighted-average
shares outstanding – assuming dilution
|
114.2
|
|
|
114.1
|
|
|
—
|
|
Net Sales
Net sales increased 4 percent, primarily due to favorable
volume/mix for the Company's U.S. Retail Coffee and U.S. Retail
Consumer Foods segments, reflecting elevated at-home consumption,
partially offset by reduced volume/mix for its Away From Home
operating segment. Net price realization and foreign currency
exchange were neutral.
Operating Income
Gross profit increased $64.2
million, or 9 percent, primarily due to a favorable change
in unallocated derivative gains and losses as compared to the prior
year and the increased contribution from volume/mix. Operating
income increased $51.0 million, or 15
percent, primarily reflecting the increase in gross profit,
partially offset by a $21.3 million
increase in selling, distribution, and administrative ("SD&A")
expenses.
Adjusted gross profit increased $33.6
million, or 4 percent, with the difference from generally
accepted accounting principles ("GAAP") results being the exclusion
of unallocated derivative gains and losses. Adjusted operating
income increased $17.8 million, or 5
percent, further reflecting the exclusion of other special project
costs and amortization.
Interest Expense, Other Income (Expense), and Income
Taxes
Net interest expense decreased $4.0
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.
Net other expense increased $30.6
million, reflecting pension settlement charges, including a
noncash pre-tax settlement charge of $27.9
million related to the Company's Canadian defined benefit
pension plan, which is excluded from adjusted net income.
The effective income tax rate was 24.0 percent compared to 24.3
percent in the prior year.
Cash Flow and Debt
Cash provided by operating activities was $378.7 million, compared to $224.0 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. Free cash
flow was $326.3 million, compared to
$160.6 million in the prior year,
reflecting the increase in cash provided by operating activities
and an $11.0 million decrease in
capital expenditures. Net debt repayments in the quarter totaled
$216.1 million.
FULL-YEAR OUTLOOK
The Company updated
its full-year fiscal 2021 guidance as summarized below:
|
|
|
|
Current
|
|
Previous
|
Net sales change vs
prior year
|
|
1% - 2%
|
|
0% - 1%
|
Adjusted earnings per
share
|
|
$8.55 -
$8.85
|
|
$8.20 -
$8.60
|
Free cash flow (in
millions)
|
|
$975 -
$1,025
|
|
$925 -
$975
|
Capital expenditures
(in millions)
|
|
$315
|
|
$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 outlook.
Changes in consumer purchasing behavior, retailer inventory levels,
macroeconomic conditions, and any manufacturing or supply chain
disruption could materially impact actual results. This guidance
reflects expectations based on the Company's current performance
and understanding of the overall environment.
Net sales are expected to increase 1 to 2 percent compared to
the prior year, primarily reflecting elevated at-home consumption
benefiting the U.S. Retail Coffee and U.S. Retail Consumer Foods
segments. Net sales guidance also reflects 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
$8.55 to $8.85, 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 $975 million to
$1,025 million with capital
expenditures of $315 million.
The full-year fiscal 2021 guidance does not reflect any impact
related to the Company's previously announced agreement to divest
the Crisco® oils and shortening business. The
Company expects the transaction to close during the third quarter
of the current fiscal year and estimates the fiscal 2021 net sales
impact to be approximately $100
million and adjusted earnings per share impact to be
approximately $0.20, excluding any
potential benefit from the use of proceeds from the sale.
SECOND 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
|
FY21 Q2
Results
|
|
$708.7
|
|
$124.9
|
|
17.6%
|
Increase (decrease) vs
prior year
|
|
—%
|
|
(9)%
|
|
-170bps
|
Net sales decreased $1.2 million,
reflecting a 1 percentage point impact from lower net pricing,
mostly offset by a 1 percentage point increase from volume/mix. The
contribution from volume/mix primarily reflects growth for cat food
and dog snacks driven by Meow Mix® and private
label cat food, as well as Pup-Peroni® and
Milk-Bone® dog snacks. These gains were partially
offset by reduced volume/mix for dog food, mostly driven by private
label and the Natural Balance® brand.
Segment profit decreased $12.1
million, primarily due to the impact of lower net pricing
and higher marketing expense.
U.S. Retail Coffee
|
|
Net
Sales
|
|
Segment
Profit
|
|
Segment
Profit Margin
|
FY21 Q2
Results
|
|
$594.7
|
|
$202.1
|
|
34.0%
|
Increase (decrease) vs
prior year
|
|
9%
|
|
11%
|
|
40bps
|
Net sales grew $51.3 million,
reflecting a 10 percentage point increase from volume/mix.
Favorable volume/mix was driven by the Dunkin'™, Café
Bustelo®, and Folgers® brands,
reflecting elevated at-home coffee consumption. Net price
realization reduced net sales by 1 percentage point.
Segment profit increased $19.6 million, reflecting the favorable
volume/mix and lower SD&A expenses, partially offset by the
impact of net pricing and costs.
U.S. Retail Consumer Foods
|
|
Net
Sales
|
|
Segment
Profit
|
|
Segment
Profit Margin
|
FY21 Q2
Results
|
|
$479.1
|
|
$135.3
|
|
28.2%
|
Increase (decrease) vs
prior year
|
|
12%
|
|
48%
|
|
670bps
|
Net sales increased $53.0 million,
reflecting a 7 percentage point increase from volume/mix, primarily
driven by elevated at-home consumption for
Smucker's® Uncrustables®
frozen sandwiches, Crisco® oils and shortening,
and Jif® peanut butter. Higher net pricing
increased net sales by 5 percentage points, reflecting the impact
of a peanut butter list price increase taken in the second quarter
and reduced promotional activity for the Jif®
brand.
Segment profit increased $43.9
million, reflecting the favorable impact of net pricing and
costs, the increased contribution from volume/mix, and lower
SD&A expenses.
International and Away From Home
|
|
Net
Sales
|
|
Segment
Profit
|
|
Segment
Profit Margin
|
FY21 Q2
Results
|
|
$251.5
|
|
$39.5
|
|
15.7%
|
Increase (decrease) vs
prior year
|
|
(10)%
|
|
(22)%
|
|
-240bps
|
Net sales decreased $26.9 million,
primarily reflecting a 24 percent decline for the Company's Away
From Home operating segment, partially offset by net sales growth
of 7 percent for the International operating segment. Volume/mix
for the combined businesses reduced net sales by 11 percentage
points, primarily driven by coffee and portion control products.
Net price realization contributed a 1 percentage point increase and
foreign currency exchange was neutral.
Segment profit decreased $10.9
million, reflecting the decline from volume/mix and the
impact of higher net pricing and costs, partially offset by reduced
SD&A expenses.
Conference Call
The Company will conduct an earnings conference call and webcast
today, November 24, 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 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 oils and shortening
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 the following, which are used under
license: Dunkin'™ is a trademark of DD IP Holder LLC, and
Rachael
Ray® is a registered 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
October 31,
|
|
Six Months Ended
October 31,
|
|
2020
|
|
2019
|
|
% Increase
(Decrease)
|
|
2020
|
|
2019
|
|
% Increase
(Decrease)
|
|
(Dollars and shares
in millions, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$2,034.0
|
|
|
$1,957.8
|
|
|
4
|
%
|
|
$4,005.8
|
|
|
$3,736.7
|
|
|
7
|
%
|
Cost of products
sold
|
1,215.8
|
|
|
1,203.8
|
|
|
1
|
%
|
|
2,412.2
|
|
|
2,283.1
|
|
|
6
|
%
|
Gross
Profit
|
818.2
|
|
|
754.0
|
|
|
9
|
%
|
|
1,593.6
|
|
|
1,453.6
|
|
|
10
|
%
|
Gross
margin
|
40.2
|
%
|
|
38.5
|
%
|
|
|
|
39.8
|
%
|
|
38.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
distribution, and administrative
expenses
|
382.8
|
|
|
361.5
|
|
|
6
|
%
|
|
740.3
|
|
|
742.0
|
|
|
—
|
|
Amortization
|
59.5
|
|
|
58.8
|
|
|
1
|
%
|
|
119.1
|
|
|
117.6
|
|
|
1
|
%
|
Other special project
costs
|
—
|
|
|
3.3
|
|
|
(100)
|
%
|
|
—
|
|
|
6.6
|
|
|
(100)
|
%
|
Other operating
expense (income) – net
|
(4.9)
|
|
|
0.6
|
|
|
n/m
|
|
(7.7)
|
|
|
—
|
|
|
n/m
|
Operating
Income
|
380.8
|
|
|
329.8
|
|
|
15
|
%
|
|
741.9
|
|
|
587.4
|
|
|
26
|
%
|
Operating
margin
|
18.7
|
%
|
|
16.8
|
%
|
|
|
|
18.5
|
%
|
|
15.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense –
net
|
(45.1)
|
|
|
(49.1)
|
|
|
(8)
|
%
|
|
(91.2)
|
|
|
(98.5)
|
|
|
(7)
|
%
|
Other income
(expense) – net
|
(32.2)
|
|
|
(1.6)
|
|
|
n/m
|
|
(33.6)
|
|
|
(3.1)
|
|
|
n/m
|
Income Before
Income Taxes
|
303.5
|
|
|
279.1
|
|
|
9
|
%
|
|
617.1
|
|
|
485.8
|
|
|
27
|
%
|
Income tax
expense
|
72.7
|
|
|
67.9
|
|
|
7
|
%
|
|
149.3
|
|
|
120.0
|
|
|
24
|
%
|
Net
Income
|
$230.8
|
|
|
$211.2
|
|
|
9
|
%
|
|
$467.8
|
|
|
$365.8
|
|
|
28
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per
common share
|
$2.02
|
|
|
$1.85
|
|
|
9
|
%
|
|
$4.10
|
|
|
$3.21
|
|
|
28
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per
common share –
assuming dilution
|
$2.02
|
|
|
$1.85
|
|
|
9
|
%
|
|
$4.10
|
|
|
$3.21
|
|
|
28
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared
per common share
|
$0.90
|
|
|
$0.88
|
|
|
2
|
%
|
|
$1.80
|
|
|
$1.76
|
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding
|
114.2
|
|
|
114.1
|
|
|
—
|
|
|
114.1
|
|
|
114.0
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding –
assuming dilution
|
114.2
|
|
|
114.1
|
|
|
—
|
|
|
114.1
|
|
|
114.0
|
|
|
—
|
|
The J.M. Smucker
Co.
Unaudited Condensed
Consolidated Balance Sheets
|
|
|
|
|
|
|
|
October 31,
2020
|
|
April 30,
2020
|
|
|
(Dollars in
millions)
|
Assets
|
|
|
|
|
Current
Assets
|
|
|
|
|
Cash and cash
equivalents
|
|
$405.6
|
|
|
$391.1
|
|
Trade receivables –
net
|
|
577.0
|
|
|
551.4
|
|
Inventories
|
|
993.8
|
|
|
895.3
|
|
Other current
assets
|
|
90.7
|
|
|
134.9
|
|
Total Current
Assets
|
|
2,067.1
|
|
|
1,972.7
|
|
|
|
|
|
|
Property, Plant,
and Equipment – Net
|
|
1,956.3
|
|
|
1,969.4
|
|
|
|
|
|
|
Other Noncurrent
Assets
|
|
|
|
|
Goodwill
|
|
6,311.8
|
|
|
6,304.5
|
|
Other intangible
assets – net
|
|
6,312.8
|
|
|
6,429.0
|
|
Other noncurrent
assets
|
|
281.7
|
|
|
294.8
|
|
Total Other
Noncurrent Assets
|
|
12,906.3
|
|
|
13,028.3
|
|
Total
Assets
|
|
$16,929.7
|
|
|
$16,970.4
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
Accounts
payable
|
|
$857.2
|
|
|
$782.0
|
|
Current portion of
long-term debt
|
|
957.3
|
|
|
—
|
|
Short-term
borrowings
|
|
280.0
|
|
|
248.0
|
|
Other current
liabilities
|
|
598.3
|
|
|
557.1
|
|
Total Current
Liabilities
|
|
2,692.8
|
|
|
1,587.1
|
|
|
|
|
|
|
Noncurrent
Liabilities
|
|
|
|
|
Long-term debt, less
current portion
|
|
3,914.5
|
|
|
5,373.3
|
|
Other noncurrent
liabilities
|
|
1,807.4
|
|
|
1,819.1
|
|
Total Noncurrent
Liabilities
|
|
5,721.9
|
|
|
7,192.4
|
|
|
|
|
|
|
Total Shareholders'
Equity
|
|
8,515.0
|
|
|
8,190.9
|
|
Total Liabilities
and Shareholders' Equity
|
|
$16,929.7
|
|
|
$16,970.4
|
|
The J.M. Smucker
Co.
Unaudited Condensed
Consolidated Statements of Cash Flow
|
|
|
|
|
|
Three Months Ended
October 31,
|
|
Six Months Ended
October 31,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
(Dollars in
millions)
|
Operating
Activities
|
|
|
|
|
|
|
|
Net income
|
$230.8
|
|
|
$211.2
|
|
|
$467.8
|
|
|
$365.8
|
|
Adjustments to
reconcile net income to net cash
provided by (used for) operations:
|
|
|
|
|
|
|
|
Depreciation
|
54.1
|
|
|
52.6
|
|
|
108.2
|
|
|
103.4
|
|
Amortization
|
59.5
|
|
|
58.8
|
|
|
119.1
|
|
|
117.6
|
|
Pension settlement
loss (gain)
|
30.6
|
|
|
—
|
|
|
30.6
|
|
|
—
|
|
Share-based
compensation expense
|
7.5
|
|
|
7.5
|
|
|
13.4
|
|
|
13.7
|
|
Other noncash
adjustments – net
|
3.5
|
|
|
6.4
|
|
|
7.3
|
|
|
6.6
|
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
|
Trade
receivables
|
(79.3)
|
|
|
(48.6)
|
|
|
(24.2)
|
|
|
(18.2)
|
|
Inventories
|
1.0
|
|
|
0.1
|
|
|
(97.5)
|
|
|
(102.0)
|
|
Other current
assets
|
8.2
|
|
|
6.9
|
|
|
8.5
|
|
|
13.3
|
|
Accounts
payable
|
66.4
|
|
|
19.7
|
|
|
107.5
|
|
|
(41.3)
|
|
Accrued
liabilities
|
58.7
|
|
|
(37.9)
|
|
|
65.8
|
|
|
25.7
|
|
Income and other
taxes
|
(67.5)
|
|
|
(54.4)
|
|
|
(24.1)
|
|
|
(32.6)
|
|
Other – net
|
5.2
|
|
|
1.7
|
|
|
5.3
|
|
|
(6.5)
|
|
Net Cash Provided
by (Used for) Operating Activities
|
378.7
|
|
|
224.0
|
|
|
787.7
|
|
|
445.5
|
|
|
|
|
|
|
|
|
|
Investing
Activities
|
|
|
|
|
|
|
|
Additions to property,
plant, and equipment
|
(52.4)
|
|
|
(63.4)
|
|
|
(129.0)
|
|
|
(136.4)
|
|
Other – net
|
0.7
|
|
|
11.3
|
|
|
28.1
|
|
|
32.2
|
|
Net Cash Provided
by (Used for) Investing Activities
|
(51.7)
|
|
|
(52.1)
|
|
|
(100.9)
|
|
|
(104.2)
|
|
|
|
|
|
|
|
|
|
Financing
Activities
|
|
|
|
|
|
|
|
Short-term borrowings
(repayments) – net
|
(16.1)
|
|
|
27.1
|
|
|
31.7
|
|
|
(102.9)
|
|
Repayments of
long-term debt
|
(200.0)
|
|
|
(100.0)
|
|
|
(500.0)
|
|
|
(100.0)
|
|
Quarterly dividends
paid
|
(102.3)
|
|
|
(100.1)
|
|
|
(202.4)
|
|
|
(196.6)
|
|
Purchase of treasury
shares
|
(1.6)
|
|
|
(0.6)
|
|
|
(6.2)
|
|
|
(3.5)
|
|
Proceeds from stock
option exercises
|
0.7
|
|
|
—
|
|
|
0.7
|
|
|
7.0
|
|
Other – net
|
0.8
|
|
|
1.0
|
|
|
0.4
|
|
|
0.8
|
|
Net Cash Provided
by (Used for) Financing Activities
|
(318.5)
|
|
|
(172.6)
|
|
|
(675.8)
|
|
|
(395.2)
|
|
Effect of exchange
rate changes on cash
|
0.5
|
|
|
0.7
|
|
|
3.5
|
|
|
1.4
|
|
Net increase
(decrease) in cash and cash equivalents
|
9.0
|
|
|
—
|
|
|
14.5
|
|
|
(52.5)
|
|
Cash and cash
equivalents at beginning of period
|
396.6
|
|
|
48.8
|
|
|
391.1
|
|
|
101.3
|
|
Cash and Cash
Equivalents at End of Period
|
$405.6
|
|
|
$48.8
|
|
|
$405.6
|
|
|
$48.8
|
|
The J.M. Smucker
Co.
Unaudited
Supplemental Schedule
|
|
|
|
|
|
Three Months Ended
October 31,
|
|
Six Months Ended
October 31,
|
|
2020
|
|
% of
Net Sales
|
|
2019
|
|
% of
Net Sales
|
|
2020
|
|
% of
Net Sales
|
|
2019
|
|
% of
Net Sales
|
|
(Dollars in
millions)
|
Net sales
|
$2,034.0
|
|
|
|
|
$1,957.8
|
|
|
|
|
$4,005.8
|
|
|
|
|
$3,736.7
|
|
|
|
Selling, distribution,
and
administrative expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketing
|
125.3
|
|
|
6.2
|
%
|
|
123.2
|
|
|
6.3
|
%
|
|
247.0
|
|
|
6.2
|
%
|
|
256.1
|
|
|
6.9
|
%
|
Selling
|
58.3
|
|
|
2.9
|
%
|
|
62.5
|
|
|
3.2
|
%
|
|
124.1
|
|
|
3.1
|
%
|
|
131.0
|
|
|
3.5
|
%
|
Distribution
|
70.4
|
|
|
3.5
|
%
|
|
69.8
|
|
|
3.6
|
%
|
|
140.2
|
|
|
3.5
|
%
|
|
133.8
|
|
|
3.6
|
%
|
General and
administrative
|
128.8
|
|
|
6.3
|
%
|
|
106.0
|
|
|
5.4
|
%
|
|
229.0
|
|
|
5.7
|
%
|
|
221.1
|
|
|
5.9
|
%
|
Total selling,
distribution, and
administrative expenses
|
$382.8
|
|
|
18.8
|
%
|
|
$361.5
|
|
|
18.5
|
%
|
|
$740.3
|
|
|
18.5
|
%
|
|
$742.0
|
|
|
19.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts may not add
due to rounding.
|
|
|
|
|
|
|
|
|
|
|
|
|
The J.M. Smucker
Co.
Unaudited Reportable
Segments
|
|
|
|
|
|
Three Months Ended
October 31,
|
|
Six Months Ended
October 31,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
(Dollars in
millions)
|
Net sales:
|
|
|
|
|
|
|
|
U.S. Retail Pet
Foods
|
$708.7
|
|
|
$709.9
|
|
|
$1,401.3
|
|
|
$1,379.8
|
|
U.S. Retail
Coffee
|
594.7
|
|
|
543.4
|
|
|
1,165.6
|
|
|
1,009.1
|
|
U.S. Retail Consumer
Foods
|
479.1
|
|
|
426.1
|
|
|
968.3
|
|
|
828.3
|
|
International and Away
From Home
|
251.5
|
|
|
278.4
|
|
|
470.6
|
|
|
519.5
|
|
Total net
sales
|
$2,034.0
|
|
|
$1,957.8
|
|
|
$4,005.8
|
|
|
$3,736.7
|
|
|
|
|
|
|
|
|
|
Segment
profit:
|
|
|
|
|
|
|
|
U.S. Retail Pet
Foods
|
$124.9
|
|
|
$137.0
|
|
|
$250.2
|
|
|
$257.1
|
|
U.S. Retail
Coffee
|
202.1
|
|
|
182.5
|
|
|
384.7
|
|
|
311.4
|
|
U.S. Retail Consumer
Foods
|
135.3
|
|
|
91.4
|
|
|
266.8
|
|
|
172.4
|
|
International and Away
From Home
|
39.5
|
|
|
50.4
|
|
|
70.4
|
|
|
82.7
|
|
Total segment
profit
|
$501.8
|
|
|
$461.3
|
|
|
$972.1
|
|
|
$823.6
|
|
Amortization
|
(59.5)
|
|
|
(58.8)
|
|
|
(119.1)
|
|
|
(117.6)
|
|
Interest expense –
net
|
(45.1)
|
|
|
(49.1)
|
|
|
(91.2)
|
|
|
(98.5)
|
|
Unallocated derivative
gains (losses)
|
31.5
|
|
|
0.9
|
|
|
47.7
|
|
|
29.9
|
|
Other special project
costs
|
—
|
|
|
(3.3)
|
|
|
—
|
|
|
(6.6)
|
|
Corporate
administrative expenses
|
(93.0)
|
|
|
(70.3)
|
|
|
(158.8)
|
|
|
(141.9)
|
|
Other income (expense)
– net
|
(32.2)
|
|
|
(1.6)
|
|
|
(33.6)
|
|
|
(3.1)
|
|
Income before income
taxes
|
$303.5
|
|
|
$279.1
|
|
|
$617.1
|
|
|
$485.8
|
|
|
|
|
|
|
|
|
|
Segment profit
margin:
|
|
|
|
|
|
|
|
U.S. Retail Pet
Foods
|
17.6
|
%
|
|
19.3
|
%
|
|
17.9
|
%
|
|
18.6
|
%
|
U.S. Retail
Coffee
|
34.0
|
%
|
|
33.6
|
%
|
|
33.0
|
%
|
|
30.9
|
%
|
U.S. Retail Consumer
Foods
|
28.2
|
%
|
|
21.5
|
%
|
|
27.6
|
%
|
|
20.8
|
%
|
International and Away
From Home
|
15.7
|
%
|
|
18.1
|
%
|
|
15.0
|
%
|
|
15.9
|
%
|
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. 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
Co.
Unaudited Non-GAAP
Financial Measures
|
|
|
|
|
|
Three Months Ended
October 31,
|
|
Six Months Ended
October 31,
|
|
2020
|
|
2019
|
|
Increase
(Decrease)
|
|
%
|
|
2020
|
|
2019
|
|
Increase
(Decrease)
|
|
%
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
reconciliation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$2,034.0
|
|
|
$1,957.8
|
|
|
$76.2
|
|
|
4
|
%
|
|
$4,005.8
|
|
|
$3,736.7
|
|
|
$269.1
|
|
|
7
|
%
|
Foreign currency
exchange
|
(0.1)
|
|
|
—
|
|
|
(0.1)
|
|
|
—
|
|
|
3.0
|
|
|
—
|
|
|
3.0
|
|
|
—
|
|
Net sales excluding
foreign
currency exchange
|
$2,033.9
|
|
|
$1,957.8
|
|
|
$76.1
|
|
|
4
|
%
|
|
$4,008.8
|
|
|
$3,736.7
|
|
|
$272.1
|
|
|
7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts may not add
due to rounding.
|
|
|
|
|
|
|
|
|
|
|
The J.M. Smucker
Co.
Unaudited Non-GAAP
Financial Measures
|
|
|
|
|
|
|
|
Three Months Ended
October 31,
|
|
Six Months Ended
October 31,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
(Dollars in millions,
except per share data)
|
|
Gross profit
reconciliation:
|
|
|
|
|
|
|
|
|
Gross
profit
|
$818.2
|
|
|
$754.0
|
|
|
$1,593.6
|
|
|
$1,453.6
|
|
|
Unallocated derivative
losses (gains)
|
(31.5)
|
|
|
(0.9)
|
|
|
(47.7)
|
|
|
(29.9)
|
|
|
Adjusted gross
profit
|
$786.7
|
|
|
$753.1
|
|
|
$1,545.9
|
|
|
$1,423.7
|
|
|
% of net
sales
|
38.7
|
%
|
|
38.5
|
%
|
|
38.6
|
%
|
|
38.1
|
%
|
|
|
|
|
|
|
|
|
|
|
Operating income
reconciliation:
|
|
|
|
|
|
|
|
|
Operating
income
|
$380.8
|
|
|
$329.8
|
|
|
$741.9
|
|
|
$587.4
|
|
|
Amortization
|
59.5
|
|
|
58.8
|
|
|
119.1
|
|
|
117.6
|
|
|
Unallocated derivative
losses (gains)
|
(31.5)
|
|
|
(0.9)
|
|
|
(47.7)
|
|
|
(29.9)
|
|
|
Other special project
costs
|
—
|
|
|
3.3
|
|
|
—
|
|
|
6.6
|
|
|
Adjusted operating
income
|
$408.8
|
|
|
$391.0
|
|
|
$813.3
|
|
|
$681.7
|
|
|
% of net
sales
|
20.1
|
%
|
|
20.0
|
%
|
|
20.3
|
%
|
|
18.2
|
%
|
|
|
|
|
|
|
|
|
|
|
Net income
reconciliation:
|
|
|
|
|
|
|
|
|
Net income
|
$230.8
|
|
|
$211.2
|
|
|
$467.8
|
|
|
$365.8
|
|
|
Income tax
expense
|
72.7
|
|
|
67.9
|
|
|
149.3
|
|
|
120.0
|
|
|
Amortization
|
59.5
|
|
|
58.8
|
|
|
119.1
|
|
|
117.6
|
|
|
Unallocated derivative
losses (gains)
|
(31.5)
|
|
|
(0.9)
|
|
|
(47.7)
|
|
|
(29.9)
|
|
|
Other special project
costs
|
—
|
|
|
3.3
|
|
|
—
|
|
|
6.6
|
|
|
Other one-time
items:
|
|
|
|
|
|
|
|
|
Pension plan
termination settlement charge(A)
|
27.9
|
|
|
—
|
|
|
27.9
|
|
|
—
|
|
|
Adjusted income before
income taxes
|
$359.4
|
|
|
$340.3
|
|
|
$716.4
|
|
|
$580.1
|
|
|
Income taxes, as
adjusted
|
86.2
|
|
|
82.8
|
|
|
173.2
|
|
|
142.9
|
|
|
Adjusted
income
|
$273.2
|
|
|
$257.5
|
|
|
$543.2
|
|
|
$437.2
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
common shares outstanding
|
113.7
|
|
|
113.4
|
|
|
113.6
|
|
|
113.3
|
|
|
Weighted-average
participating shares outstanding
|
0.5
|
|
|
0.7
|
|
|
0.5
|
|
|
0.7
|
|
|
Total weighted-average
shares outstanding
|
114.2
|
|
|
114.1
|
|
|
114.1
|
|
|
114.0
|
|
|
Dilutive effect of
stock options
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total weighted-average
shares outstanding – assuming
dilution
|
114.2
|
|
|
114.1
|
|
|
114.1
|
|
|
114.0
|
|
|
Adjusted earnings per
share – assuming dilution
|
$2.39
|
|
|
$2.26
|
|
|
$4.76
|
|
|
$3.84
|
|
|
|
|
|
|
|
|
|
|
|
(A) - Represents the
nonrecurring pre-tax settlement charge related to the purchase of a
group annuity contract to transfer the obligations
of the Company's Canadian defined benefit pension plan to an
insurance company.
|
|
The J.M. Smucker
Co.
Unaudited Non-GAAP
Financial Measures
|
|
|
|
|
|
Three Months Ended
October 31,
|
|
Six Months Ended
October 31,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
(Dollars in
millions)
|
EBITDA (as adjusted)
reconciliation:
|
|
|
|
|
|
|
|
Net income
|
$230.8
|
|
|
$211.2
|
|
|
$467.8
|
|
|
$365.8
|
|
Income tax
expense
|
72.7
|
|
|
67.9
|
|
|
149.3
|
|
|
120.0
|
|
Interest expense –
net
|
45.1
|
|
|
49.1
|
|
|
91.2
|
|
|
98.5
|
|
Depreciation
|
54.1
|
|
|
52.6
|
|
|
108.2
|
|
|
103.4
|
|
Amortization
|
59.5
|
|
|
58.8
|
|
|
119.1
|
|
|
117.6
|
|
EBITDA (as
adjusted)
|
$462.2
|
|
|
$439.6
|
|
|
$935.6
|
|
|
$805.3
|
|
% of net
sales
|
22.7
|
%
|
|
22.5
|
%
|
|
23.4
|
%
|
|
21.6
|
%
|
|
|
|
|
|
|
|
|
Free cash flow
reconciliation:
|
|
|
|
|
|
|
|
Net cash provided by
(used for) operating activities
|
$378.7
|
|
|
$224.0
|
|
|
$787.7
|
|
|
$445.5
|
|
Additions to property,
plant, and equipment
|
(52.4)
|
|
|
(63.4)
|
|
|
(129.0)
|
|
|
(136.4)
|
|
Free cash
flow
|
$326.3
|
|
|
$160.6
|
|
|
$658.7
|
|
|
$309.1
|
|
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
|
|
$7.05
|
|
|
$7.35
|
|
Unallocated derivative
losses (gains) (A)
|
|
(0.25)
|
|
|
(0.25)
|
|
Amortization
|
|
1.56
|
|
|
1.56
|
|
Pension plan
termination settlement charge
|
|
0.19
|
|
|
0.19
|
|
Adjusted earnings per
share
|
|
$8.55
|
|
|
$8.85
|
|
|
|
|
|
|
(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.
|
|
|
|
|
|
|
|
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.