ORRVILLE, Ohio, Feb. 25, 2021 /PRNewswire/ -- The J.M. Smucker
Co. (NYSE: SJM) today announced results for the third quarter ended
January 31, 2021, of its 2021 fiscal year. Financial results
for the third quarter and the first nine months of fiscal year 2021
reflect the divestiture of the Crisco® business
on December 1, 2020, and the
divestiture of the Natural Balance® business on
January 29, 2021. All comparisons are
to the third quarter of the prior fiscal year, unless otherwise
noted.
EXECUTIVE SUMMARY
- Net sales increased $104.4
million, or 5 percent. Net sales excluding the noncomparable
divested businesses and foreign currency exchange increased 7
percent, reflecting growth across each of the Company's U.S. and
International retail businesses, partially offset by a decline in
its Away From Home business.
- Net income per diluted share was $2.32. Adjusted earnings per share was
$2.45, an increase of 4 percent.
- Cash from operations was $486.3
million, a decrease of 7 percent. Free cash flow was
$416.6 million, compared to
$465.1 million in the prior
year.
- Return of capital to shareholders was $600.3 million, including cash dividends and
share repurchases.
- The Company increased its full-year fiscal 2021 net sales,
adjusted earnings per share, and free cash flow outlook.
CHIEF EXECUTIVE OFFICER REMARKS
"We delivered another quarter of strong financial results,
including net sales growth in each of our U.S. and International
retail businesses, driven by the elevated at-home consumption
trends and ongoing execution of our consumer-centric strategy,"
said Mark Smucker, President and
Chief Executive Officer. "We are encouraged by the momentum we are
building in our brands and continued improvement in our market
share trends. I want to thank all our employees for their
commitment to delivering food for consumers and their pets in this
unique environment."
"Furthermore, we continue to make significant progress on our
priorities to strengthen our capabilities and unlock the full
potential of our strategy. During the quarter, we completed two
divestitures, supporting our priority to further focus our
portfolio and resources toward pet food, coffee, and snacking. With
our strong performance in the third quarter and momentum for our
leading brands, we are pleased to increase our full-year financial
guidance, while continuing to invest in our brands to support
long-term growth and increase shareholder value."
THIRD QUARTER CONSOLIDATED RESULTS
|
Three Months Ended
January 31,
|
|
2021
|
|
2020
|
|
% Increase
(Decrease)
|
|
(Dollars and shares
in millions, except per share data)
|
|
|
|
|
|
|
Net
sales
|
$2,076.7
|
|
|
$1,972.3
|
|
|
5
|
%
|
|
|
|
|
|
|
Operating
income
|
$406.2
|
|
|
$289.0
|
|
|
41
|
%
|
Adjusted operating
income
|
403.9
|
|
|
395.8
|
|
|
2
|
%
|
|
|
|
|
|
|
Net income per
common share – assuming dilution
|
$2.32
|
|
|
$1.64
|
|
|
41
|
%
|
Adjusted earnings per
share – assuming dilution
|
2.45
|
|
|
2.35
|
|
|
4
|
%
|
|
|
|
|
|
|
Weighted-average
shares outstanding – assuming dilution
|
112.6
|
|
|
114.0
|
|
|
(1)
|
%
|
Net Sales
Net sales increased 5 percent. Excluding noncomparable sales of
$42.1 million for the divested
Crisco® and Natural Balance®
businesses, as well as $2.4 million
of favorable foreign currency exchange, net sales increased
$144.1 million, or 7 percent. The
increase in comparable net sales was primarily due to favorable
volume/mix for each of the Company's U.S. Retail segments,
partially offset by reduced volume/mix for its Away From Home
operating segment. Net price realization was neutral, primarily
reflecting lower net pricing in the U.S. Retail Pet Food and U.S.
Retail Coffee segments, offset by higher net pricing in the U.S.
Retail Consumer Foods segment.
Operating Income
Gross profit increased $49.4
million, or 7 percent, primarily due to the increased
contribution from volume/mix and a favorable change in unallocated
derivative gains and losses as compared to the prior year,
partially offset by higher costs and the noncomparable impact of
the Crisco® and Natural
Balance® divestitures. Operating income increased
$117.2 million, or 41 percent,
primarily attributable to a $52.4
million intangible asset impairment charge in the prior
year, the increase in gross profit, and a $27.2 million net pre-tax gain on divestitures,
partially offset by a $12.8 million
increase in selling, distribution, and administrative ("SD&A")
expenses.
Adjusted gross profit increased $23.3
million, or 3 percent, with the difference from generally
accepted accounting principles ("GAAP") results being the exclusion
of unallocated derivative gains and losses. Adjusted operating
income increased $8.1 million, or 2
percent, further reflecting exclusion of the impairment charge in
the prior year, the net pre-tax gain on divestitures, amortization,
and other special project costs.
Interest Expense and Income Taxes
Net interest expense decreased $1.6
million, primarily as a result of reduced debt outstanding
and a decrease in interest rates, 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 27.7 percent compared to 22.7
percent in the prior year, primarily reflecting the impact of net
additional income tax expense related to the divested businesses.
On a non-GAAP basis, the adjusted effective income tax rate was
23.1 percent in both the current and prior year, with the primary
difference from the GAAP effective income tax rate being the
exclusion of the net incremental income tax expense associated with
the divested businesses.
Cash Flow and Debt
Cash provided by operating activities was $486.3 million, compared to $521.6 million in the prior year, primarily
reflecting an increase in cash required to fund working capital, as
compared to the prior year, and a decrease in net income adjusted
for noncash items. Free cash flow was $416.6
million, compared to $465.1
million in the prior year, reflecting the decrease in cash
provided by operating activities and a $13.2
million increase in capital expenditures. Net debt
repayments in the quarter totaled $314.1
million.
During the quarter, the Company received total net proceeds from
the divested businesses of $569.3
million, inclusive of the preliminary working capital
adjustments and transaction costs paid to date. The Company
repurchased 4.5 million common shares for $521.9 million, of which 4.3 million settled in
the third quarter for $497.9
million.
FULL-YEAR OUTLOOK
The Company updated
its full-year fiscal 2021 guidance as summarized below:
|
|
|
|
Current
|
|
Previous
|
Net sales increase vs
prior year
|
|
2%
|
|
0% - 1%
|
Adjusted earnings per
share
|
|
$8.70 -
$8.90
|
|
$8.35 -
$8.65
|
Free cash flow (in
billions)
|
|
$1.1
|
|
$0.975 -
$1.025
|
Capital expenditures
(in millions)
|
|
$300
|
|
$315
|
Adjusted effective tax
rate
|
|
24.0%
|
|
24.0%
|
The COVID-19 pandemic 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 approximately 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, the lapping of a
$185 million incremental benefit to
net sales related to COVID-19 in the fourth quarter of the prior
year, and $166 million of
noncomparable sales in the prior year from the divested
businesses.
Adjusted earnings per share is expected to range from
$8.70 to $8.90, based on 112.6 million shares outstanding.
Earnings guidance reflects the contribution from sales at a gross
profit margin of approximately 38.0 percent, SD&A expenses to
increase 3 to 4 percent compared to the prior year, and an adjusted
effective tax rate of 24.0 percent. Free cash flow is expected to
approximate $1.1 billion, with
capital expenditures of $300
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
|
FY21 Q3
Results
|
|
$768.6
|
|
$135.1
|
|
17.6%
|
Increase (decrease) vs
prior year
|
|
6%
|
|
(7)%
|
|
-260bps
|
Net sales increased $46.7 million,
reflecting favorable volume/mix, partially offset by lower net
price realization and $1.4 million of
noncomparable net sales in the prior year related to the divested
Natural Balance® business. The favorable
volume/mix contributed 8 percentage points to net sales, primarily
reflecting growth for dog snacks and cat food driven by
Milk-Bone® and Pup-Peroni® dog
snacks, as well as Meow Mix® and
9Lives® cat food. Volume/mix for dog food was
neutral, as growth for the Rachael Ray®
Nutrish® brand was mostly offset by declines for
private label offerings and the Natural Balance®
brand. Lower net price realization reduced net sales by 2
percentage points, primarily reflecting increased trade spend.
Segment profit decreased $10.9
million, primarily reflecting an $8.1
million legal settlement related to a supplier issue
received in the prior year. Excluding this prior year impact,
segment profit decreased $2.8
million, primarily due to the impact of lower net pricing
and higher costs, partially offset by favorable volume/mix.
U.S. Retail Coffee
|
|
Net
Sales
|
|
Segment
Profit
|
|
Segment
Profit Margin
|
FY21 Q3
Results
|
|
$625.9
|
|
$210.7
|
|
33.7%
|
Increase (decrease) vs
prior year
|
|
12%
|
|
11%
|
|
-20bps
|
Net sales grew $67.1 million,
reflecting a 13 percentage point increase from volume/mix.
Favorable volume/mix was driven by the Dunkin'™,
Folgers®, and Café Bustelo®
brands, reflecting elevated at-home coffee consumption. Net price
realization reduced net sales by 1 percentage point.
Segment profit increased $21.2 million, primarily reflecting the
favorable volume/mix, partially offset by the lower net pricing and
increased marketing expense.
U.S. Retail Consumer Foods
|
|
Net
Sales
|
|
Segment
Profit
|
|
Segment
Profit Margin
|
FY21 Q3
Results
|
|
$447.6
|
|
$110.9
|
|
24.8%
|
Increase (decrease) vs
prior year
|
|
6%
|
|
32%
|
|
490bps
|
Net sales increased $24.7 million.
Excluding $36.2 million of
noncomparable sales in the prior year related to the divested
Crisco® business, net sales increased
$60.9 million, or 16 percent,
reflecting a 10 percentage point increase from volume/mix,
primarily driven by elevated at-home consumption for
Smucker's® Uncrustables®
frozen sandwiches, Jif® peanut butter, and
Smucker's® fruit spreads. Higher net pricing
increased net sales by 5 percentage points, primarily reflecting
the impact of a peanut butter list price increase taken in the
second quarter.
Segment profit increased $26.7
million, reflecting the increase from volume/mix, a
favorable net impact of higher pricing and increased input costs,
and lapping a $7.5 million equipment
write-off in the prior year, partially offset by the noncomparable
segment profit in the prior year related to the divested
Crisco® business and increased marketing
expense.
International and Away From Home
|
|
Net
Sales
|
|
Segment
Profit
|
|
Segment
Profit Margin
|
FY21 Q3
Results
|
|
$234.6
|
|
$24.5
|
|
10.4%
|
Increase (decrease) vs
prior year
|
|
(13)%
|
|
(50)%
|
|
-780bps
|
Net sales decreased $34.1 million.
Excluding $4.5 million of
noncomparable sales in the prior year related to the divested
Crisco® business, net sales decreased
$29.6 million, or 11 percent,
primarily reflecting a 27 percent decline for the Company's Away
From Home operating segment, partially offset by net sales growth
of 9 percent for the International operating segment. Volume/mix
for the combined businesses reduced net sales by 11 percentage
points, primarily driven by declines for coffee and portion control
products in away from home channels. Net price realization
contributed a 1 percentage point decrease, and foreign currency
exchange contributed a 1 percentage point increase.
Segment profit decreased $24.5
million, primarily reflecting the net impact of higher costs
and lower pricing and the decline from volume/mix.
Conference Call
The Company will conduct an earnings conference call and webcast
today, February 25, 2021, 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 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 restructuring and cost
management programs in the amounts and within the time frames
currently anticipated; the ability to generate sufficient cash flow
to continue operating under the Company's capital deployment model,
including capital expenditures, debt repayment, dividend payments,
and share repurchases; 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. At The J.M. Smucker Co., it is our privilege to be at the heart
of this dynamic with a diverse portfolio that appeals to each
generation of people and pets and is found in nearly 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 preferences and acting
responsibly, we will continue growing our business and the positive
impact we have on society. For more information, please visit
jmsmucker.com.
The J.M. Smucker Co. is the owner of all trademarks referenced
herein, except for the following, which are used under license:
Dunkin'™ is a trademark of DD IP Holder LLC, and Rachael
Ray® is a trademark of Ray Marks II LLC.
The Dunkin'™ brand is licensed to The J.M. Smucker Co.
for packaged coffee products sold in retail channels such as
grocery stores, mass merchandisers, club stores, e-commerce and
drug stores. This information does not pertain to products for sale
in Dunkin'™ restaurants.
The J.M. Smucker
Co.
Unaudited Condensed Consolidated Statements of Income
|
|
|
|
|
|
Three Months Ended
January 31,
|
|
Nine Months Ended
January 31,
|
|
2021
|
|
2020
|
|
% Increase
(Decrease)
|
|
2021
|
|
2020
|
|
% Increase
(Decrease)
|
|
(Dollars and shares
in millions, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$2,076.7
|
|
|
$1,972.3
|
|
|
5
|
%
|
|
$6,082.5
|
|
|
$5,709.0
|
|
|
7
|
%
|
Cost of products
sold
|
1,267.3
|
|
|
1,212.3
|
|
|
5
|
%
|
|
3,679.5
|
|
|
3,495.4
|
|
|
5
|
%
|
Gross
Profit
|
809.4
|
|
|
760.0
|
|
|
7
|
%
|
|
2,403.0
|
|
|
2,213.6
|
|
|
9
|
%
|
Gross
margin
|
39.0
|
%
|
|
38.5
|
%
|
|
|
|
39.5
|
%
|
|
38.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
distribution, and administrative expenses
|
371.7
|
|
|
358.9
|
|
|
4
|
%
|
|
1,112.0
|
|
|
1,100.9
|
|
|
1
|
%
|
Amortization
|
57.0
|
|
|
58.8
|
|
|
(3)
|
%
|
|
176.1
|
|
|
176.4
|
|
|
—
|
%
|
Other intangible
assets impairment charge
|
—
|
|
|
52.4
|
|
|
(100)
|
%
|
|
—
|
|
|
52.4
|
|
|
(100)
|
%
|
Other special project
costs
|
1.7
|
|
|
3.3
|
|
|
(48)
|
%
|
|
1.7
|
|
|
9.9
|
|
|
(83)
|
%
|
Other operating
expense (income) – net
|
(27.2)
|
|
|
(2.4)
|
|
|
n/m
|
|
|
(34.9)
|
|
|
(2.4)
|
|
|
n/m
|
|
Operating
Income
|
406.2
|
|
|
289.0
|
|
|
41
|
%
|
|
1,148.1
|
|
|
876.4
|
|
|
31
|
%
|
Operating
margin
|
19.6
|
%
|
|
14.7
|
%
|
|
|
|
18.9
|
%
|
|
15.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense –
net
|
(43.5)
|
|
|
(45.1)
|
|
|
(4)
|
%
|
|
(134.7)
|
|
|
(143.6)
|
|
|
(6)
|
%
|
Other income
(expense) – net
|
(1.2)
|
|
|
(1.4)
|
|
|
(14)
|
%
|
|
(34.8)
|
|
|
(4.5)
|
|
|
n/m
|
|
Income Before
Income Taxes
|
361.5
|
|
|
242.5
|
|
|
49
|
%
|
|
978.6
|
|
|
728.3
|
|
|
34
|
%
|
Income tax
expense
|
100.0
|
|
|
55.1
|
|
|
81
|
%
|
|
249.3
|
|
|
175.1
|
|
|
42
|
%
|
Net
Income
|
$261.5
|
|
|
$187.4
|
|
|
40
|
%
|
|
$729.3
|
|
|
$553.2
|
|
|
32
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per
common share
|
$2.32
|
|
|
$1.64
|
|
|
41
|
%
|
|
$6.42
|
|
|
$4.85
|
|
|
32
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per
common share –
assuming dilution
|
$2.32
|
|
|
$1.64
|
|
|
41
|
%
|
|
$6.42
|
|
|
$4.85
|
|
|
32
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared
per common share
|
$0.90
|
|
|
$0.88
|
|
|
2
|
%
|
|
$2.70
|
|
|
$2.64
|
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding
|
112.6
|
|
|
114.0
|
|
|
(1)
|
%
|
|
113.6
|
|
|
114.0
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding –
assuming dilution
|
112.6
|
|
|
114.0
|
|
|
(1)
|
%
|
|
113.6
|
|
|
114.0
|
|
|
—
|
|
The J.M. Smucker
Co.
Unaudited Condensed Consolidated Balance Sheets
|
|
|
|
|
|
|
|
January 31,
2021
|
|
April 30,
2020
|
|
|
(Dollars in
millions)
|
Assets
|
|
|
|
|
Current
Assets
|
|
|
|
|
Cash and cash
equivalents
|
|
$501.5
|
|
|
$391.1
|
|
Trade receivables –
net
|
|
604.9
|
|
|
551.4
|
|
Inventories
|
|
897.9
|
|
|
895.3
|
|
Other current
assets
|
|
74.4
|
|
|
134.9
|
|
Total Current
Assets
|
|
2,078.7
|
|
|
1,972.7
|
|
|
|
|
|
|
Property, Plant,
and Equipment – Net
|
|
1,937.8
|
|
|
1,969.4
|
|
|
|
|
|
|
Other Noncurrent
Assets
|
|
|
|
|
Goodwill
|
|
6,016.9
|
|
|
6,304.5
|
|
Other intangible
assets – net
|
|
6,099.4
|
|
|
6,429.0
|
|
Other noncurrent
assets
|
|
296.6
|
|
|
294.8
|
|
Total Other
Noncurrent Assets
|
|
12,412.9
|
|
|
13,028.3
|
|
Total
Assets
|
|
$16,429.4
|
|
|
$16,970.4
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
Accounts
payable
|
|
$896.7
|
|
|
$782.0
|
|
Current portion of
long-term debt
|
|
755.4
|
|
|
—
|
|
Short-term
borrowings
|
|
166.0
|
|
|
248.0
|
|
Other current
liabilities
|
|
714.3
|
|
|
557.1
|
|
Total Current
Liabilities
|
|
2,532.4
|
|
|
1,587.1
|
|
|
|
|
|
|
Noncurrent
Liabilities
|
|
|
|
|
Long-term debt, less
current portion
|
|
3,915.3
|
|
|
5,373.3
|
|
Other noncurrent
liabilities
|
|
1,770.1
|
|
|
1,819.1
|
|
Total Noncurrent
Liabilities
|
|
5,685.4
|
|
|
7,192.4
|
|
|
|
|
|
|
Total Shareholders'
Equity
|
|
8,211.6
|
|
|
8,190.9
|
|
Total Liabilities
and Shareholders' Equity
|
|
$16,429.4
|
|
|
$16,970.4
|
|
The J.M. Smucker
Co.
Unaudited Condensed Consolidated Statements of Cash Flow
|
|
|
|
|
|
Three Months Ended
January 31,
|
|
Nine Months Ended
January 31,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
(Dollars in
millions)
|
Operating
Activities
|
|
|
|
|
|
|
|
Net income
|
$261.5
|
|
|
$187.4
|
|
|
$729.3
|
|
|
$553.2
|
|
Adjustments to
reconcile net income to net cash
provided by (used for) operations:
|
|
|
|
|
|
|
|
Depreciation
|
53.5
|
|
|
53.3
|
|
|
161.7
|
|
|
156.7
|
|
Amortization
|
57.0
|
|
|
58.8
|
|
|
176.1
|
|
|
176.4
|
|
Other intangible
assets impairment charge
|
—
|
|
|
52.4
|
|
|
—
|
|
|
52.4
|
|
Pension settlement
loss (gain)
|
0.2
|
|
|
—
|
|
|
30.8
|
|
|
—
|
|
Share-based
compensation expense
|
7.5
|
|
|
6.1
|
|
|
20.9
|
|
|
19.8
|
|
Gain on divestitures –
net
|
(27.2)
|
|
|
—
|
|
|
(27.2)
|
|
|
—
|
|
Other noncash
adjustments – net
|
4.3
|
|
|
9.3
|
|
|
11.6
|
|
|
15.9
|
|
Changes in assets and
liabilities, net of effect from
divestitures:
|
|
|
|
|
|
|
|
Trade
receivables
|
(26.2)
|
|
|
44.9
|
|
|
(50.4)
|
|
|
26.7
|
|
Inventories
|
46.6
|
|
|
54.0
|
|
|
(50.9)
|
|
|
(48.0)
|
|
Other current
assets
|
(7.6)
|
|
|
(6.3)
|
|
|
0.9
|
|
|
7.0
|
|
Accounts
payable
|
35.2
|
|
|
53.6
|
|
|
142.7
|
|
|
12.3
|
|
Accrued
liabilities
|
22.9
|
|
|
18.9
|
|
|
88.7
|
|
|
44.6
|
|
Income and other
taxes
|
44.2
|
|
|
(8.3)
|
|
|
20.1
|
|
|
(40.9)
|
|
Other – net
|
14.4
|
|
|
(2.5)
|
|
|
19.7
|
|
|
(9.0)
|
|
Net Cash Provided
by (Used for) Operating Activities
|
486.3
|
|
|
521.6
|
|
|
1,274.0
|
|
|
967.1
|
|
|
|
|
|
|
|
|
|
Investing
Activities
|
|
|
|
|
|
|
|
Additions to property,
plant, and equipment
|
(69.7)
|
|
|
(56.5)
|
|
|
(198.7)
|
|
|
(192.9)
|
|
Proceeds from
divestitures – net
|
569.3
|
|
|
—
|
|
|
569.3
|
|
|
—
|
|
Other – net
|
20.4
|
|
|
(16.9)
|
|
|
48.5
|
|
|
15.3
|
|
Net Cash Provided
by (Used for) Investing Activities
|
520.0
|
|
|
(73.4)
|
|
|
419.1
|
|
|
(177.6)
|
|
|
|
|
|
|
|
|
|
Financing
Activities
|
|
|
|
|
|
|
|
Short-term borrowings
(repayments) – net
|
(114.1)
|
|
|
(19.7)
|
|
|
(82.4)
|
|
|
(122.6)
|
|
Repayments of
long-term debt
|
(200.0)
|
|
|
(300.0)
|
|
|
(700.0)
|
|
|
(400.0)
|
|
Quarterly dividends
paid
|
(102.4)
|
|
|
(100.1)
|
|
|
(304.8)
|
|
|
(296.7)
|
|
Purchase of treasury
shares
|
(497.9)
|
|
|
(0.8)
|
|
|
(504.1)
|
|
|
(4.3)
|
|
Proceeds from stock
option exercises
|
—
|
|
|
—
|
|
|
0.7
|
|
|
7.0
|
|
Other – net
|
(0.4)
|
|
|
(0.3)
|
|
|
—
|
|
|
0.5
|
|
Net Cash Provided
by (Used for) Financing Activities
|
(914.8)
|
|
|
(420.9)
|
|
|
(1,590.6)
|
|
|
(816.1)
|
|
Effect of exchange
rate changes on cash
|
4.4
|
|
|
(1.7)
|
|
|
7.9
|
|
|
(0.3)
|
|
Net increase
(decrease) in cash and cash equivalents
|
95.9
|
|
|
25.6
|
|
|
110.4
|
|
|
(26.9)
|
|
Cash and cash
equivalents at beginning of period
|
405.6
|
|
|
48.8
|
|
|
391.1
|
|
|
101.3
|
|
Cash and Cash
Equivalents at End of Period
|
$501.5
|
|
|
$74.4
|
|
|
$501.5
|
|
|
$74.4
|
|
The J.M. Smucker
Co.
Unaudited Supplemental Schedule
|
|
|
|
|
|
Three Months
Ended
January 31,
|
|
Nine Months Ended
January 31,
|
|
2021
|
|
% of
Net Sales
|
|
2020
|
|
% of
Net Sales
|
|
2021
|
|
% of
Net Sales
|
|
2020
|
|
% of
Net Sales
|
|
(Dollars in
millions)
|
Net sales
|
$2,076.7
|
|
|
|
|
$1,972.3
|
|
|
|
|
$6,082.5
|
|
|
|
|
$5,709.0
|
|
|
|
Selling, distribution,
and
administrative expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketing
|
128.1
|
|
|
6.2
|
%
|
|
120.6
|
|
|
6.1
|
%
|
|
375.1
|
|
|
6.2
|
%
|
|
376.7
|
|
|
6.6
|
%
|
Selling
|
59.9
|
|
|
2.9
|
%
|
|
57.0
|
|
|
2.9
|
%
|
|
184.0
|
|
|
3.0
|
%
|
|
188.0
|
|
|
3.3
|
%
|
Distribution
|
67.2
|
|
|
3.2
|
%
|
|
73.7
|
|
|
3.7
|
%
|
|
207.4
|
|
|
3.4
|
%
|
|
207.5
|
|
|
3.6
|
%
|
General and
administrative
|
116.5
|
|
|
5.6
|
%
|
|
107.6
|
|
|
5.5
|
%
|
|
345.5
|
|
|
5.7
|
%
|
|
328.7
|
|
|
5.8
|
%
|
Total selling,
distribution, and
administrative expenses
|
$371.7
|
|
|
17.9
|
%
|
|
$358.9
|
|
|
18.2
|
%
|
|
$1,112.0
|
|
|
18.3
|
%
|
|
$1,100.9
|
|
|
19.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts may not add
due to rounding.
|
|
|
|
|
|
|
|
|
|
|
|
|
The J.M. Smucker
Co.
Unaudited Reportable Segments
|
|
|
|
|
|
Three Months Ended
January 31,
|
|
Nine Months Ended
January 31,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
(Dollars in
millions)
|
Net sales:
|
|
|
|
|
|
|
|
U.S. Retail Pet
Foods
|
$768.6
|
|
|
$721.9
|
|
|
$2,169.9
|
|
|
$2,101.7
|
|
U.S. Retail
Coffee
|
625.9
|
|
|
558.8
|
|
|
1,791.5
|
|
|
1,567.9
|
|
U.S. Retail Consumer
Foods
|
447.6
|
|
|
422.9
|
|
|
1,415.9
|
|
|
1,251.2
|
|
International and Away
From Home
|
234.6
|
|
|
268.7
|
|
|
705.2
|
|
|
788.2
|
|
Total net
sales
|
$2,076.7
|
|
|
$1,972.3
|
|
|
$6,082.5
|
|
|
$5,709.0
|
|
|
|
|
|
|
|
|
|
Segment
profit:
|
|
|
|
|
|
|
|
U.S. Retail Pet
Foods
|
$135.1
|
|
|
$146.0
|
|
|
$385.3
|
|
|
$403.1
|
|
U.S. Retail
Coffee
|
210.7
|
|
|
189.5
|
|
|
595.4
|
|
|
500.9
|
|
U.S. Retail Consumer
Foods
|
110.9
|
|
|
84.2
|
|
|
377.7
|
|
|
256.6
|
|
International and Away
From Home
|
24.5
|
|
|
49.0
|
|
|
94.9
|
|
|
131.7
|
|
Total segment
profit
|
$481.2
|
|
|
$468.7
|
|
|
$1,453.3
|
|
|
$1,292.3
|
|
Amortization
|
(57.0)
|
|
|
(58.8)
|
|
|
(176.1)
|
|
|
(176.4)
|
|
Other intangible
assets impairment charge
|
—
|
|
|
(52.4)
|
|
|
—
|
|
|
(52.4)
|
|
Gain on divestitures -
net
|
27.2
|
|
|
—
|
|
|
27.2
|
|
|
—
|
|
Interest expense –
net
|
(43.5)
|
|
|
(45.1)
|
|
|
(134.7)
|
|
|
(143.6)
|
|
Unallocated derivative
gains (losses)
|
33.8
|
|
|
7.7
|
|
|
81.5
|
|
|
37.6
|
|
Other special project
costs
|
(1.7)
|
|
|
(3.3)
|
|
|
(1.7)
|
|
|
(9.9)
|
|
Corporate
administrative expenses
|
(77.3)
|
|
|
(72.9)
|
|
|
(236.1)
|
|
|
(214.8)
|
|
Other income (expense)
– net
|
(1.2)
|
|
|
(1.4)
|
|
|
(34.8)
|
|
|
(4.5)
|
|
Income before income
taxes
|
$361.5
|
|
|
$242.5
|
|
|
$978.6
|
|
|
$728.3
|
|
|
|
|
|
|
|
|
|
Segment profit
margin:
|
|
|
|
|
|
|
|
U.S. Retail Pet
Foods
|
17.6
|
%
|
|
20.2
|
%
|
|
17.8
|
%
|
|
19.2
|
%
|
U.S. Retail
Coffee
|
33.7
|
%
|
|
33.9
|
%
|
|
33.2
|
%
|
|
31.9
|
%
|
U.S. Retail Consumer
Foods
|
24.8
|
%
|
|
19.9
|
%
|
|
26.7
|
%
|
|
20.5
|
%
|
International and Away
From Home
|
10.4
|
%
|
|
18.2
|
%
|
|
13.5
|
%
|
|
16.7
|
%
|
Non-GAAP Financial Measures
The Company uses non-GAAP financial measures, including: net
sales excluding divestitures and foreign currency exchange;
adjusted gross profit; adjusted operating income; adjusted income;
adjusted earnings per share; earnings before interest, taxes,
depreciation, amortization, and impairment charges related to
intangible assets ("EBITDA (as adjusted)"); and free cash flow, as
key measures for purposes of evaluating performance internally. The
Company believes that investors' understanding of its performance
is enhanced by disclosing these performance measures. Furthermore,
these non-GAAP financial measures are used by management in
preparation of the annual budget and for the monthly analyses of
its operating results. The Board of Directors also utilizes certain
non-GAAP financial measures as components for measuring performance
for incentive compensation purposes.
Non-GAAP financial measures exclude certain items affecting
comparability that can significantly affect the year-over-year
assessment of operating results, which include amortization expense
and impairment charges related to intangible assets; 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, such as the permanent tax impacts associated with
the Crisco® and Natural
Balance® divestitures, 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
January 31,
|
|
Nine Months Ended
January 31,
|
|
2021
|
|
2020
|
|
Increase
(Decrease)
|
|
%
|
|
2021
|
|
2020
|
|
Increase
(Decrease)
|
|
%
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
reconciliation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$2,076.7
|
|
|
$1,972.3
|
|
|
$104.4
|
|
|
5
|
%
|
|
$6,082.5
|
|
|
$5,709.0
|
|
|
$373.5
|
|
|
7
|
%
|
Crisco®
divestiture
|
—
|
|
|
(40.7)
|
|
|
40.7
|
|
|
2
|
%
|
|
—
|
|
|
(40.7)
|
|
|
40.7
|
|
|
1
|
%
|
Natural
Balance® divestiture
|
—
|
|
|
(1.4)
|
|
|
1.4
|
|
|
—
|
|
|
—
|
|
|
(1.4)
|
|
|
1.4
|
|
|
—
|
|
Foreign currency
exchange
|
(2.4)
|
|
|
—
|
|
|
(2.4)
|
|
|
—
|
|
|
0.6
|
|
|
—
|
|
|
0.6
|
|
|
—
|
|
Net sales
excluding
divestitures and foreign
currency exchange
|
$2,074.3
|
|
|
$1,930.2
|
|
|
$144.1
|
|
|
7
|
%
|
|
$6,083.1
|
|
|
$5,666.9
|
|
|
$416.2
|
|
|
7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts may not add
due to rounding.
|
|
|
|
|
|
|
|
|
|
|
The J.M. Smucker
Co.
Unaudited Non-GAAP Financial Measures
|
|
|
|
|
|
|
|
Three Months Ended
January 31,
|
|
Nine Months Ended
January 31,
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
(Dollars in millions,
except per share data)
|
|
Gross profit
reconciliation:
|
|
|
|
|
|
|
|
|
Gross
profit
|
$809.4
|
|
|
$760.0
|
|
|
$2,403.0
|
|
|
$2,213.6
|
|
|
Unallocated derivative
losses (gains)
|
(33.8)
|
|
|
(7.7)
|
|
|
(81.5)
|
|
|
(37.6)
|
|
|
Adjusted gross
profit
|
$775.6
|
|
|
$752.3
|
|
|
$2,321.5
|
|
|
$2,176.0
|
|
|
% of net
sales
|
37.3
|
%
|
|
38.1
|
%
|
|
38.2
|
%
|
|
38.1
|
%
|
|
|
|
|
|
|
|
|
|
|
Operating income
reconciliation:
|
|
|
|
|
|
|
|
|
Operating
income
|
$406.2
|
|
|
$289.0
|
|
|
$1,148.1
|
|
|
$876.4
|
|
|
Amortization
|
57.0
|
|
|
58.8
|
|
|
176.1
|
|
|
176.4
|
|
|
Other intangible
assets impairment charge
|
—
|
|
|
52.4
|
|
|
—
|
|
|
52.4
|
|
|
Gain on divestitures -
net
|
(27.2)
|
|
|
—
|
|
|
(27.2)
|
|
|
—
|
|
|
Unallocated derivative
losses (gains)
|
(33.8)
|
|
|
(7.7)
|
|
|
(81.5)
|
|
|
(37.6)
|
|
|
Other special project
costs
|
1.7
|
|
|
3.3
|
|
|
1.7
|
|
|
9.9
|
|
|
Adjusted operating
income
|
$403.9
|
|
|
$395.8
|
|
|
$1,217.2
|
|
|
$1,077.5
|
|
|
% of net
sales
|
19.4
|
%
|
|
20.1
|
%
|
|
20.0
|
%
|
|
18.9
|
%
|
|
|
|
|
|
|
|
|
|
|
Net income
reconciliation:
|
|
|
|
|
|
|
|
|
Net income
|
$261.5
|
|
|
$187.4
|
|
|
$729.3
|
|
|
$553.2
|
|
|
Income tax
expense
|
100.0
|
|
|
55.1
|
|
|
249.3
|
|
|
175.1
|
|
|
Amortization
|
57.0
|
|
|
58.8
|
|
|
176.1
|
|
|
176.4
|
|
|
Other intangible
assets impairment charge
|
—
|
|
|
52.4
|
|
|
—
|
|
|
52.4
|
|
|
Gain on divestitures -
net
|
(27.2)
|
|
|
—
|
|
|
(27.2)
|
|
|
—
|
|
|
Unallocated derivative
losses (gains)
|
(33.8)
|
|
|
(7.7)
|
|
|
(81.5)
|
|
|
(37.6)
|
|
|
Other special project
costs
|
1.7
|
|
|
3.3
|
|
|
1.7
|
|
|
9.9
|
|
|
Other one-time
items:
|
|
|
|
|
|
|
|
|
Pension plan
termination settlement charge(A)
|
—
|
|
|
—
|
|
|
27.9
|
|
|
—
|
|
|
Adjusted income before
income taxes
|
$359.2
|
|
|
$349.3
|
|
|
$1,075.6
|
|
|
$929.4
|
|
|
Income taxes, as
adjusted
|
82.9
|
|
|
80.8
|
|
|
256.1
|
|
|
223.7
|
|
|
Adjusted
income
|
$276.3
|
|
|
$268.5
|
|
|
$819.5
|
|
|
$705.7
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
common shares outstanding
|
112.1
|
|
|
113.4
|
|
|
113.1
|
|
|
113.3
|
|
|
Weighted-average
participating shares outstanding
|
0.5
|
|
|
0.6
|
|
|
0.5
|
|
|
0.7
|
|
|
Total weighted-average
shares outstanding
|
112.6
|
|
|
114.0
|
|
|
113.6
|
|
|
114.0
|
|
|
Dilutive effect of
stock options
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total weighted-average
shares outstanding – assuming dilution
|
112.6
|
|
|
114.0
|
|
|
113.6
|
|
|
114.0
|
|
|
Adjusted earnings per
share – assuming dilution
|
$2.45
|
|
|
$2.35
|
|
|
$7.21
|
|
|
$6.19
|
|
|
|
|
|
|
|
|
|
|
|
(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
January 31,
|
|
Nine Months Ended
January 31,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
(Dollars in
millions)
|
EBITDA (as adjusted)
reconciliation:
|
|
|
|
|
|
|
|
Net income
|
$261.5
|
|
|
$187.4
|
|
|
$729.3
|
|
|
$553.2
|
|
Income tax
expense
|
100.0
|
|
|
55.1
|
|
|
249.3
|
|
|
175.1
|
|
Interest expense –
net
|
43.5
|
|
|
45.1
|
|
|
134.7
|
|
|
143.6
|
|
Depreciation
|
53.5
|
|
|
53.3
|
|
|
161.7
|
|
|
156.7
|
|
Amortization
|
57.0
|
|
|
58.8
|
|
|
176.1
|
|
|
176.4
|
|
Other intangible
assets impairment charge
|
—
|
|
|
52.4
|
|
|
—
|
|
|
52.4
|
|
EBITDA (as
adjusted)
|
$515.5
|
|
|
$452.1
|
|
|
$1,451.1
|
|
|
$1,257.4
|
|
% of net
sales
|
24.8
|
%
|
|
22.9
|
%
|
|
23.9
|
%
|
|
22.0
|
%
|
|
|
|
|
|
|
|
|
Free cash flow
reconciliation:
|
|
|
|
|
|
|
|
Net cash provided by
(used for) operating activities
|
$486.3
|
|
|
$521.6
|
|
|
$1,274.0
|
|
|
$967.1
|
|
Additions to property,
plant, and equipment
|
(69.7)
|
|
|
(56.5)
|
|
|
(198.7)
|
|
|
(192.9)
|
|
Free cash
flow
|
$416.6
|
|
|
$465.1
|
|
|
$1,075.3
|
|
|
$774.2
|
|
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
|
|
$7.28
|
|
|
$7.48
|
|
Unallocated derivative
losses (gains) (A)
|
|
(0.40)
|
|
|
(0.40)
|
|
Amortization
|
|
1.54
|
|
|
1.54
|
|
Other special project
costs
|
|
0.13
|
|
|
0.13
|
|
Gain on divestitures -
net
|
|
(0.18)
|
|
|
(0.18)
|
|
Pension plan
termination settlement charge
|
|
0.18
|
|
|
0.18
|
|
Incremental income tax
expense on divestitures – net
|
|
0.15
|
|
|
0.15
|
|
Adjusted earnings per
share
|
|
$8.70
|
|
|
$8.90
|
|
|
|
|
|
|
(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 January 31, 2021, that is
expected
to be allocated to non-GAAP results in future periods.
|
|
|
|
|
|
|
|
Year Ending
April 30, 2021
|
|
|
|
|
(Dollars in
billions)
|
|
|
Free cash flow
reconciliation:
|
|
|
|
|
Net cash provided by
operating activities
|
|
$1.4
|
|
|
|
Additions to property,
plant, and equipment
|
|
(0.3)
|
|
|
|
Free cash
flow
|
|
$1.1
|
|
|
|
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SOURCE The J.M. Smucker Co.