The J. M. Smucker Company (NYSE:SJM) Q4 2024 Earnings Conference Call June 6, 2024 7:00 AM ET Company Participants Aaron Broholm - Vice President of Investor Relations Mark Smucker - President and Chief Executive Officer Tucker Marshall - Chief Financial Officer Conference Call Participants Aaron Broholm Good morning, this is Aaron Broholm, Vice President, Investor Relations for The J. M. Smucker Company. Thank you for listening to our prepared remarks on our Fiscal 2024 Fourth Quarter Earnings. After this ...

FY24 Q4 Results - Net sales were $2,205.7 million, a decrease of 1% year-over-year compared to $2,234.8 million in FY23 Q4[4] - Adjusted gross profit increased by 15% to $888.4 million, compared to $771.9 million in the same quarter last year[4] - Adjusted operating income increased by 13% to $461.6 million, compared to $408.2 million in the prior year[4] - Adjusted EPS increased by 1% to $2.66, compared to $2.64 in the prior year[4] FY25 Outlook - The company projects FY25 net sales to increase by 9.5% to 10.5%[26] - The company anticipates adjusted EPS to be between $9.80 and $10.20[26] - Free cash flow is projected to be $900 million, with capital expenditures of $450 million[26, 33] Balance Sheet and Cash Flow - Free cash flow was $297.5 million, slightly less than the $298.7 million in the prior year[13, 24] - Total debt (net) was $8,302.0 million as of April 30, 2024, compared to $3,658.4 million as of April 30, 2023[24] - EBITDA (as adjusted, TTM) was $1,704.4 million, compared to $1,592.3 million in the prior year[24] Segment Performance (FY24 Q4) - U S Retail Coffee net sales were $666.1 million, a decrease of 4% year-over-year[25] - U S Retail Frozen Handheld & Spreads net sales were $450.5 million, a decrease of 1% year-over-year[25] - U S Retail Pet Foods net sales were $452.6 million, a decrease of 42% year-over-year[25] - Sweet Baked Snacks net sales were $337.0 million[25] - International & Away From Home net sales were $299.5 million, a decrease of 1% year-over-year[25]

[Financial Highlights and Executive Summary](index=1&type=section&id=Financial%20Highlights%20and%20Executive%20Summary) [Executive Summary](index=1&type=section&id=Executive%20Summary) The J.M. Smucker Co. reported a 1% Q4 net sales decrease to $2.2 billion and a 4% full-year decrease to $8.2 billion, with comparable sales growth driven by strategic portfolio adjustments Q4 FY2024 Key Financial Metrics | Metric | Q4 FY2024 | Change vs. Q4 FY2023 | | :--- | :--- | :--- | | Net Sales | $2.2 billion | -1% | | Comparable Net Sales | N/A | +3% | | Net Income per Diluted Share | $2.30 | +140% | | Adjusted Earnings per Share | $2.66 | +1% | Full-Year FY2024 Key Financial Metrics | Metric | Full-Year FY2024 | Change vs. FY2023 | | :--- | :--- | :--- | | Net Sales | $8.2 billion | -4% | | Comparable Net Sales | N/A | +8% | | Net Income per Diluted Share | $7.13 | N/A (vs. loss) | | Adjusted Earnings per Share | $9.94 | +11% | - The company's financial results reflect the acquisition of Hostess Brands (Nov 2023) and divestitures of the Canada condiment business (Jan 2024), Sahale Snacks (Nov 2023), and certain pet food brands (Apr 2023)[1](index=1&type=chunk) - CEO Mark Smucker stated that fiscal year 2025 will be a year of investment in brands, capabilities, and employees, with clear priorities to deliver the core business, integrate Hostess, achieve synergy goals, and advance cost discipline[3](index=3&type=chunk) [Consolidated Financial Results](index=2&type=section&id=Consolidated%20Financial%20Results) [Fourth Quarter Consolidated Results](index=2&type=section&id=Fourth%20Quarter%20Consolidated%20Results) Q4 net sales decreased 1% to $2.21 billion, with comparable sales up 3%, while operating income significantly improved to $406.0 million, and adjusted operating income increased 13% to $461.6 million Q4 Consolidated Financials (in millions) | Metric | Q4 2024 | Q4 2023 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $2,205.7 | $2,234.8 | (1)% | | Operating Income (Loss) | $406.0 | ($633.5) | n/m | | Adjusted Operating Income | $461.6 | $408.2 | 13% | | Net Income (Loss) per Diluted Share | $2.30 | ($5.69) | 140% | | Adjusted Earnings per Share | $2.66 | $2.64 | 1% | - Comparable net sales increased **3%**, reflecting a **2 percentage point** increase from higher net pricing and a **1 percentage point** increase from favorable volume/mix, led by Smucker's® Uncrustables® and Café Bustelo®[6](index=6&type=chunk)[7](index=7&type=chunk) - Gross profit increased by **$120.9 million** (**15%**), driven by the Hostess acquisition, lower costs, and higher net pricing, which was partially offset by divestitures[8](index=8&type=chunk) - Net interest expense increased by **$62.0 million**, primarily due to debt issued to finance the Hostess Brands acquisition[10](index=10&type=chunk) - Free cash flow was **$297.5 million**, nearly flat compared to **$298.7 million** in the prior year[12](index=12&type=chunk) [Fiscal Year 2025 Outlook](index=3&type=section&id=Fiscal%20Year%202025%20Outlook) [Full-Year 2025 Guidance](index=3&type=section&id=Full-Year%202025%20Guidance) The company projects fiscal year 2025 net sales growth of 9.5% to 10.5%, with comparable net sales up 1.5% to 2.5%, and adjusted EPS forecasted between $9.80 and $10.20 FY 2025 Full-Year Guidance | Metric | FY 2025 Outlook | | :--- | :--- | | Net Sales Increase | 9.5% to 10.5% | | Comparable Net Sales Increase | 1.5% to 2.5% | | Adjusted Earnings per Share | $9.80 - $10.20 | | Free Cash Flow | ~$900 million | | Capital Expenditures | ~$450 million | | Adjusted Effective Tax Rate | 24.4% | - The net sales growth forecast includes a full year of sales from the Hostess Brands acquisition and reflects favorable volume/mix and higher net price realization[13](index=13&type=chunk) - Guidance reflects an anticipated decline of approximately **$85.0 million** in contract manufacturing sales related to the divested pet food brands[13](index=13&type=chunk) [Segment Performance](index=3&type=section&id=Segment%20Performance) [U.S. Retail Coffee](index=3&type=section&id=U.S.%20Retail%20Coffee) U.S. Retail Coffee Q4 net sales decreased 4% to $666.1 million due to lower pricing and volume/mix, while segment profit increased 5% to $210.3 million from reduced commodity costs U.S. Retail Coffee Q4 FY24 Performance | Metric | Q4 FY24 Results | Change vs. Prior Year | | :--- | :--- | :--- | | Net Sales | $666.1M | (4)% | | Segment Profit | $210.3M | 5% | | Segment Profit Margin | 31.6% | +270bps | - Sales decline was driven by a **2 percentage point** decrease from net price realization and a **2 percentage point** decrease from volume/mix, primarily due to the Folgers® brand[14](index=14&type=chunk) - Segment profit increased due to lower commodity costs, which was partially offset by lower net prices and increased marketing and distribution expenses[14](index=14&type=chunk) [U.S. Retail Frozen Handheld and Spreads](index=4&type=section&id=U.S.%20Retail%20Frozen%20Handheld%20and%20Spreads) U.S. Retail Frozen Handheld and Spreads Q4 net sales decreased 1% to $450.5 million, but comparable sales rose 1%, while segment profit fell 7% to $95.8 million due to pre-production expenses U.S. Retail Frozen Handheld and Spreads Q4 FY24 Performance | Metric | Q4 FY24 Results | Change vs. Prior Year | | :--- | :--- | :--- | | Net Sales | $450.5M | (1)% | | Segment Profit | $95.8M | (7)% | | Segment Profit Margin | 21.3% | -150bps | - Excluding the Sahale Snacks® divestiture, net sales increased **1%**; higher net pricing (up **4 points**) was offset by lower volume/mix (down **3 points**)[15](index=15&type=chunk) - Segment profit decreased due to higher pre-production expenses for the new Smucker's® Uncrustables® manufacturing facility, increased marketing, and unfavorable volume/mix[15](index=15&type=chunk) [U.S. Retail Pet Foods](index=4&type=section&id=U.S.%20Retail%20Pet%20Foods) U.S. Retail Pet Foods Q4 net sales decreased 42% to $452.6 million due to divestitures, but comparable sales grew 11%, while segment profit decreased 22% to $114.1 million U.S. Retail Pet Foods Q4 FY24 Performance | Metric | Q4 FY24 Results | Change vs. Prior Year | | :--- | :--- | :--- | | Net Sales | $452.6M | (42)% | | Segment Profit | $114.1M | (22)% | | Segment Profit Margin | 25.2% | +670bps | - Excluding **$379.2 million** in noncomparable sales from divested brands, net sales increased **$46.5 million**, or **11%**[16](index=16&type=chunk) - Comparable sales growth was driven by an **8 percentage point** increase in volume/mix (including contract manufacturing) and a **3 percentage point** increase from higher net pricing[16](index=16&type=chunk) [Sweet Baked Snacks](index=4&type=section&id=Sweet%20Baked%20Snacks) The newly formed Sweet Baked Snacks segment, from the Hostess Brands acquisition, contributed $337.0 million in Q4 net sales and $70.2 million in segment profit Sweet Baked Snacks Q4 FY24 Performance | Metric | Q4 FY24 Results | | :--- | :--- | | Net Sales | $337.0M | | Segment Profit | $70.2M | | Segment Profit Margin | 20.8% | - This segment's results are from the Hostess Brands acquisition, completed on November 7, 2023; prior year results are not provided[1](index=1&type=chunk)[17](index=17&type=chunk) [International and Away From Home](index=4&type=section&id=International%20and%20Away%20From%20Home) International and Away From Home Q4 net sales decreased 1% to $299.5 million, but comparable sales grew 8%, while segment profit surged 28% to $61.1 million International and Away From Home Q4 FY24 Performance | Metric | Q4 FY24 Results | Change vs. Prior Year | | :--- | :--- | :--- | | Net Sales | $299.5M | (1)% | | Segment Profit | $61.1M | 28% | | Segment Profit Margin | 20.4% | +470bps | - Excluding divestitures and foreign currency effects, net sales increased **8%**, driven by a **5 percentage point** increase in net price realization and a **3 percentage point** increase in volume/mix[19](index=19&type=chunk) - Segment profit growth was primarily due to higher net pricing, lower costs, and favorable volume/mix[19](index=19&type=chunk) [Financial Statements](index=8&type=section&id=Financial%20Statements) [Unaudited Condensed Consolidated Statements of Income](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Income) FY2024 net sales decreased 4% to $8.18 billion, while gross profit increased 11% to $3.12 billion, and net income recovered to $744.0 million or $7.13 per diluted share FY 2024 vs. FY 2023 Income Statement Highlights (in millions) | Metric | Year Ended April 30, 2024 | Year Ended April 30, 2023 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $8,178.7 | $8,529.2 | (4)% | | Gross Profit | $3,115.4 | $2,801.8 | 11% | | Operating Income | $1,305.8 | $157.5 | n/m | | Net Income (Loss) | $744.0 | ($91.3) | n/m | | Net Income (Loss) per Diluted Share | $7.13 | ($0.86) | n/m | [Unaudited Condensed Consolidated Balance Sheets](index=9&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) As of April 30, 2024, total assets increased to $20.27 billion and total liabilities to $12.58 billion, primarily due to the Hostess Brands acquisition and related debt Balance Sheet Highlights (in millions) | Metric | April 30, 2024 | April 30, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $62.0 | $655.8 | | Total Current Assets | $1,966.9 | $2,858.7 | | Goodwill | $7,649.9 | $5,216.9 | | Other intangible assets - net | $7,255.4 | $4,429.3 | | Total Assets | $20,273.7 | $14,991.4 | | Total Current Liabilities | $3,761.1 | $1,986.7 | | Long-term debt, less current portion | $6,773.7 | $4,314.2 | | Total Liabilities | $12,579.8 | $7,700.6 | | Total Shareholders' Equity | $7,693.9 | $7,290.8 | [Unaudited Condensed Consolidated Statements of Cash Flow](index=10&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flow) FY2024 net cash from operations was $1.23 billion, while investing activities used $3.96 billion, primarily for the Hostess acquisition, leading to a $593.8 million net decrease in cash FY 2024 Cash Flow Highlights (in millions) | Metric | Year Ended April 30, 2024 | Year Ended April 30, 2023 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $1,229.4 | $1,194.4 | | Net Cash Provided by (Used for) Investing Activities | ($3,964.6) | $256.2 | | Net Cash Provided by (Used for) Financing Activities | $2,141.6 | ($964.6) | | Net (decrease) in cash and cash equivalents | ($593.8) | $485.9 | - Free cash flow for the full year was **$642.9 million**, down from **$717.0 million** in the prior year[4](index=4&type=chunk)[45](index=45&type=chunk) [Non-GAAP Financial Measures](index=13&type=section&id=Non-GAAP%20Financial%20Measures) [Reconciliation of Non-GAAP Measures](index=13&type=section&id=Reconciliation%20of%20Non-GAAP%20Measures) The company reconciles non-GAAP measures like comparable net sales and adjusted EPS to provide clearer performance insights, with Q4 adjusted operating income up 13% and full-year comparable net sales up 8% - Non-GAAP measures are used to enhance understanding of performance by excluding items like amortization, special project costs, gains/losses on divestitures, and derivative impacts[35](index=35&type=chunk)[36](index=36&type=chunk) FY2024 Net Sales Reconciliation (in millions) | Description | Amount | | :--- | :--- | | Net Sales (GAAP) | $8,178.7 | | Less: Hostess Brands acquisition | ($637.3) | | Less: Impact of Divestitures | $1,565.5 | | Less: Foreign currency exchange | $6.8 | | **Net Sales Excluding Items (Comparable)** | **$7,548.2** | FY2024 Adjusted EPS Reconciliation | Description | Per Share Amount | | :--- | :--- | | Net Income (Loss) per Share (GAAP) | $7.13 | | Amortization | $1.83 | | Loss on divestitures | $0.12 | | Special project & other costs | $1.47 | | Other Adjustments | $0.39 | | **Adjusted Earnings per Share** | **$9.94** |

The J. M. Smucker Company (SJM) is likely to register top-line growth when it reports fourth-quarter fiscal 2024 earnings on Jun 6. The Zacks Consensus Estimate for revenues is pegged at $2.25 billion, which suggests an increase of 0.5% from the prior-year quarter's reported figure. The consensus mark for quarterly earnings has decreased by 1 cent in the past 30 days to $2.32 per share. This indicates a decline of 12.1% from the year-ago quarter's reported figure. SJM has a trailing four-quarter earnings su ...

Core Viewpoint - Smucker (SJM) is expected to report a quarterly earnings per share (EPS) of $2.32, reflecting a 12.1% decline year-over-year, while revenues are forecasted to increase by 0.5% to $2.25 billion [1]. Earnings Estimates - Over the past 30 days, the consensus EPS estimate has been revised downward by 0.6%, indicating a collective reassessment by analysts [2]. - Revisions to earnings estimates are significant indicators for predicting investor actions regarding the stock, with empirical research showing a strong correlation between these revisions and short-term stock price performance [3]. Key Metrics Projections - Analysts estimate 'Net Sales- U.S. Retail Coffee' at $671.04 million, a year-over-year decline of 3.1% [5]. - 'Net Sales- U.S. Retail Pet Foods' is projected to be $493.83 million, reflecting a significant year-over-year decrease of 37.1% [5]. - 'Net Sales- International and Away From Home' is expected to reach $301.09 million, indicating a slight decline of 0.8% from the previous year [5]. - 'Net Sales- U.S. Retail Consumer Foods' is estimated at $450.15 million, showing a year-over-year change of -0.7% [6]. Segment Profit Estimates - 'Segment Profit- U.S. Retail Coffee' is projected at $195.96 million, down from $200.10 million in the same quarter last year [6]. - 'Segment Profit- U.S. Retail Pet Foods' is expected to be $121.96 million, compared to $145.50 million a year ago [7]. - 'Segment Profit- International and Away From Home' is estimated at $49.44 million, slightly up from $47.60 million reported in the same quarter last year [7]. - 'Segment Profit- U.S. Retail Consumer Foods' is projected to be $90.74 million, down from $103.40 million in the same quarter last year [8]. Stock Performance - Shares of Smucker have decreased by 1.3% over the past month, contrasting with a 5.1% increase in the Zacks S&P 500 composite [8].

This food maker is expected to post quarterly earnings of $2.32 per share in its upcoming report, which represents a year-over-year change of -12.1%. Revenues are expected to be $2.25 billion, up 0.5% from the year-ago quarter. Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements. For Smucker, the consensus EPS estimate for ...

The market expects Smucker (SJM) to deliver a year-over-year decline in earnings on higher revenues when it reports results for the quarter ended April 2024. This widely-known consensus outlook is important in assessing the company's earnings picture, but a powerful factor that might influence its near-term stock price is how the actual results compare to these estimates. The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on Ju ...

It doesn't matter your age or experience: taking full advantage of the stock market and investing with confidence are common goals for all investors. Luckily, Zacks Premium offers several different ways to do both. Featuring daily updates of the Zacks Rank and Zacks Industry Rank, full access to the Zacks #1 Rank List, Equity Research reports, and Premium stock screens, the research service can help you become a smarter, more self-assured investor. Zacks Premium also includes the Zacks Style Scores. What ar ...

Have you been searching for a stock that might be well-positioned to maintain its earnings-beat streak in its upcoming report? It is worth considering Smucker (SJM) , which belongs to the Zacks Food - Miscellaneous industry. This food maker has an established record of topping earnings estimates, especially when looking at the previous two reports. The company boasts an average surprise for the past two quarters of 7.05%. For the most recent quarter, Smucker was expected to post earnings of $2.27 per share, ...

The J. M. Smucker Company (SJM) is well-positioned to sustain its growth trajectory. The company's diverse brand portfolio, effective pricing strategies and operational efficiencies have been working well. Sustained demand across brands and categories also keeps this food and beverage product company in good shape. Core Strategies Aid For fiscal 2024, the company anticipates comparable net sales to rise 8.75% on elevated net pricing and a favorable volume/mix. Fourth-quarter comparable sales are expected to ...