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 ...

Financial Performance - In Q3 2024, net sales were $2,229.2 million, a 1% increase from $2,216.3 million in Q3 2023, while net sales for the nine months ended January 31, 2024, were $5,973.0 million, a 5% decrease from $6,294.4 million in the prior year[158]. - Gross profit for Q3 2024 was $823.1 million, representing a 9% increase from $755.8 million in Q3 2023, while gross profit for the nine months ended January 31, 2024, was $2,202.1 million, a 10% increase from $2,009.4 million[158]. - Operating income for Q3 2024 was $297.4 million, a 6% decrease from $317.9 million in Q3 2023, while operating income for the nine months ended January 31, 2024, was $899.8 million, a 14% increase from $791.0 million[158]. - Net income for Q3 2024 was $120.4 million, a 42% decrease from $208.5 million in Q3 2023, while net income for the nine months ended January 31, 2024, was $498.9 million, a 2% decrease from $509.4 million[158]. - Adjusted operating income increased by $167.4 million, or 17%, compared to the prior year, reflecting the exclusion of special project costs and amortization expense[171]. - Adjusted earnings per share for the nine months ended January 31, 2024, was $7.27, compared to $6.28 for the same period in 2023, reflecting a 15.7% increase[228]. Acquisitions and Divestitures - The acquisition of Hostess Brands was completed for a total consideration of $5.4 billion, expected to contribute approximately $650.0 million in net sales in 2024, with anticipated cost synergies of $100.0 million by the end of 2026[148]. - The divestiture of the Canada condiment business generated net proceeds of $25.3 million, with the brands having generated net sales of approximately $60.0 million in 2023[147]. - The Sahale Snacks business was sold for final net proceeds of $31.6 million, with net sales of approximately $48.0 million generated in 2023[150]. - The sale of certain pet food brands resulted in net proceeds of $1.2 billion, with these brands generating net sales of $1.5 billion in 2023[151]. - Integration costs related to the Hostess Brands acquisition are anticipated to be approximately $210.0 million, with over half expected to be recognized in 2024[175]. - The company expects to incur an estimated $60.0 million in additional capital expenditures related to the acquisition of Hostess Brands for the second half of 2024[219]. Sales Performance by Segment - The U.S. Retail Frozen Handheld and Spreads segment net sales increased by $10.4 million, or 2%, excluding the impact of divestitures, with higher net price realization contributing 5 percentage points[185]. - The U.S. Retail Pet Foods segment net sales decreased by 39% in the third quarter of 2024, reflecting a significant decline in sales volume[182]. - U.S. Retail Frozen Handheld and Spreads segment net sales increased by $195.4 million, or 17%, in the first nine months of 2024, excluding the impact of divested Sahale Snacks business[186]. - U.S. Retail Pet Foods segment net sales decreased by $882.6 million in the first nine months of 2024, but increased by $235.4 million, or 21%, when excluding the impact of divested brands[189]. - Sweet Baked Snacks segment contributed net sales of $300.3 million and segment profit of $68.0 million in the third quarter of 2024, following the acquisition of Hostess Brands[190]. - International and Away From Home net sales increased by $111.3 million, or 14%, in the first nine months of 2024, excluding the impact of divestitures and foreign currency exchange[192]. Cash Flow and Debt - Cash provided by operating activities increased by $50.7 million to $801.3 million in the first nine months of 2024 compared to $750.6 million in the prior year[194]. - Cash used for investing activities totaled $3.9 billion in the first nine months of 2024, primarily for the acquisition of Hostess Brands[196]. - Cash provided by financing activities included proceeds from long-term debt of $4.3 billion to partially finance the acquisition of Hostess Brands[197]. - Total debt increased to $8,539.1 million as of January 31, 2024, compared to $4,314.2 million on April 30, 2023[209]. - The company entered into a $800.0 million Term Loan in September 2023, with an interest rate of 6.69% as of January 31, 2024[209]. - The company completed a $3.5 billion Senior Notes offering in October 2023 to partially finance the acquisition of Hostess Brands[211]. Tax and Interest Expenses - Net interest expense increased by $61.9 million in the third quarter of 2024, primarily due to new Senior Notes and Term Loan issued to finance the Hostess Brands acquisition[172]. - Income taxes increased by $24.4 million, or 15%, in the first nine months of 2024, primarily due to a higher effective income tax rate of 27.0% compared to 23.9% in the prior year[173]. Market Conditions and Risks - The company anticipates continued inflationary pressures and elevated price elasticity of demand throughout 2024, impacting overall business performance[155]. - Supply chain disruptions and inflation remain uncertain, with potential adverse impacts on results of operations during the remainder of 2024[157]. - The company anticipates that the acquisition of Hostess Brands will provide synergies and cost savings, although realization of these benefits is uncertain[245]. Other Financial Information - The company recognized total direct costs of approximately $120.0 million related to the Jif peanut butter product recall, net of insurance recoveries[203]. - As of January 31, 2024, $421.3 million of outstanding payment obligations were elected and sold to a financial institution by participating suppliers[198]. - The company has accrued losses for certain contingent liabilities that are probable and reasonably estimable as of January 31, 2024[200]. - The company is in compliance with all debt covenants as of January 31, 2024, and expects to remain compliant for the next 12 months[213]. - Revenues from customers outside the U.S. represented 6% of net sales during the nine months ended January 31, 2024[242].

Financial Data and Key Metrics Changes - In the third quarter, comparable net sales increased by 6%, driven by the Pet Foods segment and growth in the Away From Home business and Frozen Handheld and Spreads segment [26] - Adjusted earnings per share increased by 12% to $2.48, reflecting improved gross profit margin and favorable selling, distribution, and administrative expenses [38][47] - Free cash flow for the third quarter was $250 million, down from $443 million in the prior year, primarily due to increased working capital needs and lower net income adjusted for noncash items [58] Business Line Data and Key Metrics Changes - U.S. Retail Pet Foods net sales decreased by 39% year-over-year, but increased by 20% when excluding noncomparable sales from divested brands [51] - The Milk-Bone brand grew net sales by double-digits, outpacing the category growth rate [6] - The Sweet Baked Snacks segment, reflecting the acquired Hostess business, contributed net sales of $300 million and segment profit of $68 million, in line with expectations [40] Market Data and Key Metrics Changes - The Away From Home business saw a 13% increase in net sales, led by a 33% growth for Uncrustables sandwiches [8] - International business net sales increased by 3%, primarily driven by Carnation milk and Uncrustables sandwiches in Canada [8] - The coffee category remains strong, with over 70% of coffee consumption occurring at home [5] Company Strategy and Development Direction - The company is focused on integrating and growing the Sweet Baked Snacks business while achieving transformation and cost management goals [22] - The acquisition of Hostess and divestitures of Sahale Snacks and Canadian condiment businesses are part of the strategy to concentrate resources on faster growth opportunities [28] - The company aims to grow Uncrustables to $1 billion in annual net sales by the end of fiscal year 2026, supported by the construction of a new manufacturing site [30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in adapting to consumer preferences and sustaining positive momentum in the business [33] - The company anticipates net sales guidance of approximately $8.22 billion for the fiscal year, reflecting a decline of about 3.6% compared to the prior year [41] - Adjusted earnings per share for the full year are projected to be in the range of $9.45 to $9.65, reflecting a $0.10 increase at the mid-point of the range [42] Other Important Information - The company completed the expansion of its second Uncrustables sandwiches plant, which has improved distribution and in-stock levels [1] - The new bakery in Arkadelphia, Arkansas, began operations, enhancing capacity for Donettes and cake products [45] - The company expects fourth quarter adjusted earnings per share to decline by a mid-teen percentage, primarily due to pre-production expenses related to Uncrustables [56] Q&A Session Summary Question: What are the expectations for the Uncrustables brand growth? - The company remains confident in growing Uncrustables to $1 billion in annual net sales by the end of fiscal year 2026, supported by new manufacturing capacity [30] Question: How is the integration of Hostess progressing? - The integration of Hostess is progressing well, with both Hostess and Voortman brands gaining volume share in the quarter [44] Question: What is the outlook for the Pet Foods segment? - The Pet Foods segment is expected to continue strong performance, with Milk-Bone and Meow Mix brands showing significant growth [52]

FISCAL 2024 THIRD QUARTER RESULTS • Net sales increased 1% Comparable net sales increased 6% (excl. acquisition, divestitures, & foreign currency exchange) • Updated full-year fiscal 2024 financial outlook CONSOLIDATED RESULTS 3 Note: Amounts may not add due to rounding THE J.M. SMUCKER Co EXECUTIVE SUMMARY • Free cash flow was $249.6 million, compared to $442.7 million in the prior year FY24 Q3 RESULTS SUPPLEMENT FY24 Q3 RESULTS SUPPLEMENT Reported Net Sales Analysis ($ in millions) FY24 Q3 RESULTS SUPPLEM ...

Fiscal 2024 Third Quarter Financial Results [Executive Summary & CEO Remarks](index=1&type=section&id=EXECUTIVE%20SUMMARY) The J.M. Smucker Co. reported strong Q3 FY2024 results with 1% net sales growth and 12% adjusted EPS increase, driven by strategic portfolio adjustments and brand loyalty | Metric | Q3 FY2024 | Change vs. Prior Year | | :--- | :--- | :--- | | Net Sales | $2,229.2M | +1% | | Net Sales (Comparable) | - | +6% | | Net Income per Diluted Share | $1.13 | -42% | | Adjusted Earnings per Share | $2.48 | +12% | | Cash Provided by Operations | $406.5M | -30.5% | | Free Cash Flow | $249.6M | -43.6% | - The company completed the acquisition of Hostess Brands and two divestitures (Canada condiment business and Sahale Snacks business) during the quarter[1](index=1&type=chunk)[3](index=3&type=chunk) - CEO Mark Smucker highlighted that the strong results were driven by focused execution, sustained brand loyalty, and volume growth across the business, reinforcing the strategic focus on coffee, snacking, and pet foods[3](index=3&type=chunk) [Consolidated Financial Performance (Q3 FY2024)](index=2&type=section&id=THIRD%20QUARTER%20CONSOLIDATED%20RESULTS) Q3 FY2024 consolidated net sales increased 1% to $2.23 billion, with adjusted operating income up 28% despite a 6% GAAP operating income decline due to acquisition costs | Metric | Q3 FY2024 ($M) | Q3 FY2023 ($M) | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $2,229.2 | $2,216.3 | 1% | | Operating Income | $297.4 | $317.9 | (6)% | | Adjusted Operating Income | $457.5 | $357.6 | 28% | - Comparable net sales increased **6%**, reflecting a **4 percentage point** increase from volume/mix (led by Meow Mix and Café Bustelo) and a **2 percentage point** increase from net price realization[6](index=6&type=chunk)[7](index=7&type=chunk) - Operating income decreased by **6%**, primarily driven by a **$98.3 million** increase in special project costs related to the Hostess Brands acquisition, which offset a **9%** increase in gross profit[8](index=8&type=chunk) - Cash provided by operating activities declined to **$406.5 million** from **$584.6 million** year-over-year, mainly due to increased cash required for working capital[12](index=12&type=chunk) [Full-Year Fiscal 2024 Outlook](index=3&type=section&id=FULL-YEAR%20OUTLOOK) Full-year FY2024 guidance updated, with adjusted EPS narrowed to $9.45-$9.65, comparable net sales growth at 8.75%, and free cash flow revised to $500 million | Metric | Current Guidance | Previous Guidance | | :--- | :--- | :--- | | Comparable Net Sales Increase | ~8.75% | 8.5% - 9.0% | | Adjusted Earnings Per Share | $9.45 - $9.65 | $9.25 - $9.65 | | Free Cash Flow | ~$500M | ~$530M | | Capital Expenditures | ~$610M | ~$610M | - The Hostess Brands acquisition is expected to have a net unfavorable impact of approximately **$0.40** on adjusted EPS for the fiscal year[14](index=14&type=chunk) - Guidance assumes an adjusted gross profit margin of approximately **37.5%** and an adjusted effective income tax rate of **24.6%**[15](index=15&type=chunk) [Segment Performance Analysis (Q3 FY2024)](index=4&type=section&id=THIRD%20QUARTER%20SEGMENT%20RESULTS) Q3 segment performance varied, with strong comparable sales growth in U.S. Retail Pet Foods (+20%) and International (+9%), while U.S. Retail Coffee declined 1% - Total segment profit increased to **$539.8 million** from **$444.7 million** in the prior year, driven by growth across most segments and the addition of Sweet Baked Snacks[34](index=34&type=chunk) [U.S. Retail Coffee](index=4&type=section&id=U.S.%20Retail%20Coffee) U.S. Retail Coffee net sales decreased 1% to $727.5 million due to lower pricing, but segment profit increased 2% to $207.8 million from favorable volume/mix | Metric | Q3 FY2024 | % Change vs. Prior Year | | :--- | :--- | :--- | | Net Sales | $727.5M | -1% | | Segment Profit | $207.8M | +2% | | Segment Profit Margin | 28.6% | +80 bps | - Volume/mix increased net sales by **3 percentage points**, primarily driven by the Café Bustelo and Dunkin' brands[16](index=16&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 net sales increased 1% to $436.8 million, with segment profit up 11% to $104.1 million, driven by higher pricing | Metric | Q3 FY2024 | % Change vs. Prior Year | | :--- | :--- | :--- | | Net Sales | $436.8M | +1% | | Segment Profit | $104.1M | +11% | | Segment Profit Margin | 23.8% | +210 bps | - Excluding the divested Sahale Snacks business, net sales increased by **2%**; higher net price realization, including a favorable impact from lapping the Jif recall, was the primary driver[17](index=17&type=chunk) [U.S. Retail Pet Foods](index=4&type=section&id=U.S.%20Retail%20Pet%20Foods) U.S. Retail Pet Foods net sales decreased 39% to $465.2 million due to divestitures, but comparable sales surged 20%, with segment profit flat at $109.5 million | Metric | Q3 FY2024 | % Change vs. Prior Year | | :--- | :--- | :--- | | Net Sales | $465.2M | -39% | | Segment Profit | $109.5M | 0% | | Segment Profit Margin | 23.5% | +910 bps | - Excluding **$372.5 million** in noncomparable sales from divested brands, net sales increased by **$79.1 million**, or **20%**, driven by strong performance from Meow Mix cat food and Milk-Bone dog snacks[18](index=18&type=chunk) [Sweet Baked Snacks](index=5&type=section&id=Sweet%20Baked%20Snacks) The new Sweet Baked Snacks segment, from the Hostess acquisition, contributed $300.3 million in net sales and $68.0 million in segment profit | Metric | Q3 FY2024 | | :--- | :--- | | Net Sales | $300.3M | | Segment Profit | $68.0M | | Segment Profit Margin | 22.6% | - This segment's results are from the acquisition of Hostess Brands on November 7, 2023; prior year comparisons are not provided[1](index=1&type=chunk)[19](index=19&type=chunk) [International and Away From Home](index=5&type=section&id=International%20and%20Away%20From%20Home) International and Away From Home net sales increased 4% to $299.4 million, with comparable sales up 9% and segment profit surging 34% to $50.4 million | Metric | Q3 FY2024 | % Change vs. Prior Year | | :--- | :--- | :--- | | Net Sales | $299.4M | +4% | | Segment Profit | $50.4M | +34% | | Segment Profit Margin | 16.8% | +380 bps | - Comparable net sales increased **9%**, with volume/mix contributing **5 percentage points** of growth, primarily driven by Smucker's Uncrustables frozen sandwiches[20](index=20&type=chunk) [Financial Statements](index=8&type=section&id=Financial%20Statements) Unaudited financial statements show a 42% Q3 net income drop to $120.4 million, total assets increased to $20.2 billion, and a $3.9 billion cash outflow for the Hostess acquisition [Condensed Consolidated Statements of Income](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Income) Q3 net sales grew 1% to $2.23 billion, but net income declined 42% to $120.4 million due to special project costs and increased interest expense | Metric (Q3) | FY2024 ($M) | FY2023 ($M) | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $2,229.2 | $2,216.3 | 1% | | Gross Profit | $823.1 | $755.8 | 9% | | Operating Income | $297.4 | $317.9 | (6)% | | Net Income | $120.4 | $208.5 | (42)% | [Condensed Consolidated Balance Sheets](index=9&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) As of January 31, 2024, total assets increased to $20.2 billion, driven by the Hostess acquisition, with long-term debt rising to $8.1 billion | Metric | Jan 31, 2024 ($M) | Apr 30, 2023 ($M) | | :--- | :--- | :--- | | Total Assets | $20,247.2 | $14,991.4 | | Goodwill | $7,667.8 | $5,216.9 | | Long-term Debt | $8,121.1 | $4,314.2 | | Total Shareholders' Equity | $7,560.1 | $7,290.8 | [Condensed Consolidated Statements of Cash Flow](index=10&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flow) Q3 net cash from operating activities decreased to $406.5 million, with investing activities showing a $3.57 billion net cash use, primarily for the Hostess acquisition | Cash Flow Activity (Q3) | FY2024 ($M) | FY2023 ($M) | | :--- | :--- | :--- | | Net Cash from Operating | $406.5 | $584.6 | | Net Cash from Investing | ($3,567.5) | ($97.5) | | Net Cash from Financing | ($428.2) | ($410.6) | [Non-GAAP Financial Measures & Reconciliations](index=13&type=section&id=Non-GAAP%20Financial%20Measures) Non-GAAP measures, including adjusted gross profit of $828.3 million and adjusted operating income of $457.5 million, are provided with reconciliations to enhance comparability - The company uses non-GAAP measures such as adjusted operating income and adjusted EPS to evaluate performance internally, excluding items like special project costs, amortization, and gains/losses on divestitures to improve year-over-year comparability[35](index=35&type=chunk)[36](index=36&type=chunk) Reconciliation of Non-GAAP Financial Measures (Q3) | Reconciliation (Q3) | GAAP | Adjustments | Non-GAAP (Adjusted) | | :--- | :--- | :--- | :--- | | Gross Profit | $823.1M | $5.2M | $828.3M | | Operating Income | $297.4M | $160.1M | $457.5M | | Net Income | $120.4M | $142.2M | $262.6M | | EPS (Diluted) | $1.13 | $1.35 | $2.48 | FY2024 Guidance Reconciliation | FY2024 Guidance Reconciliation | Low | High | | :--- | :--- | :--- | | Net Income per Share (GAAP) | $6.35 | $6.55 | | Adjustments (Amortization, Special Costs, etc.) | $3.10 | $3.10 | | Adjusted Earnings per Share | $9.45 | $9.65 |

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Q2 2024 financials show 12% net sales decrease from divestitures, but net income and operating cash flow improved, with debt rising for Hostess Brands acquisition Condensed Statements of Consolidated Income Highlights | Indicator | Three Months Ended Oct 31, 2023 | Three Months Ended Oct 31, 2022 | Six Months Ended Oct 31, 2023 | Six Months Ended Oct 31, 2022 | | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $1,938.6 M | $2,205.1 M | $3,743.8 M | $4,078.1 M | | **Gross Profit** | $724.2 M | $701.1 M | $1,379.0 M | $1,253.6 M | | **Operating Income** | $298.9 M | $293.4 M | $602.4 M | $473.1 M | | **Net Income** | $194.9 M | $191.1 M | $378.5 M | $300.9 M | | **Net Income per Share (Diluted)** | $1.90 | $1.79 | $3.69 | $2.82 | Condensed Consolidated Balance Sheet Highlights | Indicator | October 31, 2023 | April 30, 2023 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $3,623.9 M | $655.8 M | | **Total Assets** | $18,123.7 M | $14,991.4 M | | **Long-term debt** | $7,771.7 M | $4,314.2 M | | **Total Liabilities** | $11,034.8 M | $7,700.6 M | | **Total Shareholders' Equity** | $7,088.9 M | $7,290.8 M | Condensed Statements of Consolidated Cash Flows Highlights (Six Months Ended) | Indicator | October 31, 2023 | October 31, 2022 | | :--- | :--- | :--- | | **Net Cash Provided by Operating Activities** | $394.8 M | $166.0 M | | **Net Cash Used for Investing Activities** | ($293.7 M) | ($209.3 M) | | **Net Cash Provided by (Used for) Financing Activities** | $2,867.7 M | ($98.8 M) | | **Net increase (decrease) in cash** | $2,968.1 M | ($142.8 M) | [Note 3: Acquisition](index=9&type=section&id=Note%203%3A%20Acquisition) - On November 7, 2023, the company completed the acquisition of Hostess Brands, Inc. for approximately **$5.5 billion**. The transaction was funded through a combination of new debt and the issuance of common shares[23](index=23&type=chunk) - The acquisition includes brands like Hostess Donettes, Twinkies, and Voortman cookies, along with six manufacturing facilities and approximately **3,000 employees**[24](index=24&type=chunk) [Note 4: Divestitures](index=9&type=section&id=Note%204%3A%20Divestitures) - The company entered into agreements to sell its Canada condiment business (Bick's, Habitant, etc.) to TreeHouse Foods for approximately **$20.0 million** and its Sahale Snacks business to Second Nature Brands for approximately **$34.0 million**. Both were classified as held for sale as of October 31, 2023[25](index=25&type=chunk) - On April 28, 2023, the company completed the sale of certain pet food brands (Rachael Ray Nutrish, 9Lives, etc.) to Post Holdings, Inc. for final net proceeds of **$1.2 billion**, consisting of **$683.9 million** in cash and **5.4 million shares** of Post common stock[27](index=27&type=chunk) [Note 6: Reportable Segments](index=11&type=section&id=Note%206%3A%20Reportable%20Segments) Net Sales by Segment (Three Months Ended Oct 31) | Segment | 2023 | 2022 | | :--- | :--- | :--- | | U.S. Retail Coffee | $685.7 M | $709.8 M | | U.S. Retail Consumer Foods | $464.3 M | $432.2 M | | U.S. Retail Pet Foods | $464.0 M | $765.2 M | | International and Away From Home | $324.6 M | $297.9 M | Segment Profit by Segment (Three Months Ended Oct 31) | Segment | 2023 | 2022 | | :--- | :--- | :--- | | U.S. Retail Coffee | $171.0 M | $187.7 M | | U.S. Retail Consumer Foods | $128.5 M | $100.3 M | | U.S. Retail Pet Foods | $97.2 M | $120.1 M | | International and Away From Home | $60.2 M | $41.5 M | - Following the Hostess Brands acquisition, a new reportable segment, Sweet Baked Snacks, will be created starting in Q3 2024. The U.S. Retail Consumer Foods segment will be renamed U.S. Retail Frozen Handheld and Spreads[39](index=39&type=chunk) [Note 8: Debt and Financing Arrangements](index=14&type=section&id=Note%208%3A%20Debt%20and%20Financing%20Arrangements) - Total long-term debt increased to **$7.85 billion** from **$4.35 billion**, primarily due to financing for the Hostess Brands acquisition[53](index=53&type=chunk) - In October 2023, the company issued **$3.5 billion** in new Senior Notes. In September 2023, it entered into an **$800.0 million** Term Loan and a **$5.2 billion** Bridge Loan facility (which was subsequently terminated) to secure financing for the acquisition[54](index=54&type=chunk)[55](index=55&type=chunk)[56](index=56&type=chunk) [Note 15: Contingencies](index=23&type=section&id=Note%2015%3A%20Contingencies) - The company is a defendant in class action lawsuits alleging misrepresentation of the number of servings in Folgers coffee canisters. The outcome and financial impact cannot be predicted at this time[107](index=107&type=chunk)[108](index=108&type=chunk) - The May 2022 voluntary recall of Jif peanut butter resulted in total direct costs of approximately **$120.0 million**, net of insurance recoveries. The FDA issued a Warning Letter in January 2023 regarding the Lexington facility, and the outcome of any potential regulatory action or ongoing consumer litigation is not yet estimable[109](index=109&type=chunk)[111](index=111&type=chunk) [Note 16: Common Shares](index=24&type=section&id=Note%2016%3A%20Common%20Shares) - During the six months ended October 31, 2023, the company repurchased approximately **2.4 million common shares** for **$362.8 million** under its 10b5-1 plan[113](index=113&type=chunk) - In connection with the Hostess Brands acquisition on November 7, 2023, the company issued approximately **4.0 million new common shares** valued at **$450.2 million**[115](index=115&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes Q2 net sales decline to divestitures, with underlying sales growth, improved gross margin, and increased operating cash flow, following the Hostess Brands acquisition [Results of Operations](index=28&type=section&id=Results%20of%20Operations) Net Sales Reconciliation (Q2 2024 vs Q2 2023) | Metric | Amount | % Change vs PY | | :--- | :--- | :--- | | Net Sales (GAAP) | ($266.5 M) | (12)% | | Less: Pet food brands divestiture | $385.0 M | 17% | | Net sales excluding divestiture & FX | $121.0 M | 7% | - Q2 net sales decline of **12%** was driven by the pet food brand divestiture. Excluding this, sales grew **7%** due to a **4 percentage point** contribution from favorable volume/mix (led by Smucker's Uncrustables) and a **3 percentage point** contribution from higher net pricing[130](index=130&type=chunk) - Q2 gross profit margin increased to **37.4%** from **31.8%** in the prior year, reflecting higher net price realization, lower green coffee costs, and favorable volume/mix, partially offset by the impact of the divested pet food brands[127](index=127&type=chunk)[133](index=133&type=chunk) [Segment Results](index=30&type=section&id=Segment%20Results) - **U.S. Retail Coffee:** Q2 net sales decreased **3%** due to lower net price realization. Segment profit fell **9%**, primarily due to a **$39.1 million** unfavorable impact from terminating a supplier agreement[149](index=149&type=chunk)[150](index=150&type=chunk) - **U.S. Retail Consumer Foods:** Q2 net sales grew **7%**, driven by higher net pricing, including the favorable impact of lapping the prior-year Jif recall. Segment profit increased **28%** due to higher pricing and lower costs[149](index=149&type=chunk)[152](index=152&type=chunk) - **U.S. Retail Pet Foods:** Q2 net sales fell **39%** due to the divestiture. Excluding the divestiture, sales grew **20%**, driven by contract manufacturing for the divested brands and growth in dog snacks. Segment profit decreased **19%** due to the noncomparable profit from the divested brands[149](index=149&type=chunk)[154](index=154&type=chunk) - **International and Away From Home:** Q2 net sales increased **9%**. Excluding divestitures and FX, sales grew **13%**, driven by volume/mix in frozen handheld and coffee products. Segment profit rose **45%**[149](index=149&type=chunk)[156](index=156&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) Cash Flow Summary (Six Months Ended) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $394.8 M | $166.0 M | | Additions to property, plant, and equipment | ($299.0 M) | ($190.4 M) | | **Free cash flow (Non-GAAP)** | **$95.8 M** | **($24.4 M)** | - Cash from operating activities increased by **$228.8 million** for the six-month period, driven by lower working capital requirements, lapping a **$70.0 million** pension contribution in the prior year, and higher net income[161](index=161&type=chunk) - Cash provided by financing activities was **$2.87 billion**, primarily from **$3.49 billion** in proceeds from long-term debt, partially offset by **$372.4 million** in treasury share purchases and **$213.2 million** in dividends[163](index=163&type=chunk) - The company plans a **$1.1 billion** investment to build a new manufacturing and distribution facility in McCalla, Alabama, for Smucker's Uncrustables, with production expected to begin in 2025[180](index=180&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from interest rates, commodity prices, and foreign currency, using derivatives for volatility management, generally not qualifying for hedge accounting - **Interest Rate Risk:** A hypothetical **100 basis-point** decrease in interest rates would increase the fair value of the company's long-term debt by **$317.4 million** as of October 31, 2023[198](index=198&type=chunk) - **Commodity Price Risk:** The company uses derivatives to manage price volatility for key raw materials like green coffee, soybean meal, corn, and oils. These are economic hedges but are not qualified for hedge accounting, so gains/losses are recognized immediately in earnings[199](index=199&type=chunk) - **Foreign Currency Exchange Risk:** Exposure is primarily from Canadian operations. Revenues from customers outside the U.S. represented **6%** of net sales for the six-month period[202](index=202&type=chunk)[205](index=205&type=chunk) [Item 4. Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of October 31, 2023, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation as of October 31, 2023, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were **effective**[211](index=211&type=chunk) - No changes in internal control over financial reporting occurred during the six months ended October 31, 2023, that have materially affected, or are reasonably likely to materially affect, internal controls[212](index=212&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) This section incorporates legal matters from Note 15, detailing contingencies related to Folgers coffee class action lawsuits and the Jif peanut butter recall - Information on legal proceedings is incorporated by reference from Note 15: Contingencies, which covers the Folgers servings lawsuit and the Jif peanut butter recall[215](index=215&type=chunk)[106](index=106&type=chunk) [Item 1A. Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) New risk factors relate to the Hostess Brands acquisition, including integration challenges, failure to realize synergies, management diversion, and potential impairment of acquired goodwill and intangibles - New risk factors have been added related to the acquisition of Hostess Brands, including the risk of not realizing anticipated benefits and synergies, and difficulties in integrating the business[217](index=217&type=chunk)[218](index=218&type=chunk) - Specific integration challenges include diverting management's attention, managing a larger and more complex company, retaining key personnel and customers, and dealing with unanticipated expenses or liabilities[220](index=220&type=chunk)[221](index=221&type=chunk) - A significant portion of assets is goodwill and other intangibles (**$9.6 billion** of **$18.1 billion** total assets). The goodwill and intangibles from the Hostess acquisition will be recorded at fair value, making them more susceptible to future impairment charges[224](index=224&type=chunk)[228](index=228&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=43&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2024, the company repurchased 3,164 common shares at an average price of $125.58, with 1.1 million shares remaining available for repurchase under authorized plans Issuer Purchases of Equity Securities (Q2 2024) | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | August 2023 | 78 | $142.50 | | September 2023 | 3,086 | $125.15 | | October 2023 | 0 | N/A | | **Total** | **3,164** | **$125.58** | - As of October 31, 2023, approximately **1.1 million common shares** remained available for repurchase under the company's authorized plans[230](index=230&type=chunk)

The J.M. Smucker Co. (NYSE:SJM) Q2 2024 Earnings Conference Call December 5, 2023 9:00 AM ET Company Participants Aaron Broholm - Vice President of Investor Relations Tucker Marshall - Chief Financial Officer Mark Smucker - Chair of the Board, President & Chief Executive Officer Conference Call Participants Andrew Lazar - Barclays Ken Goldman - JP Morgan Robert Moskow - TD Cowen Peter Galbo - Bank of America Matt Smith - Stifel Jason English - Goldman Sachs Rob Dickerson - Jefferies Operator Good morning an ...

PART I. FINANCIAL INFORMATION This section details the company's financial statements, management's discussion, market risk, and internal controls [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The financial statements for Q1 2024 show decreased net sales but increased net income, with improved operating cash flow [Condensed Statements of Consolidated Income](index=3&type=section&id=Condensed%20Statements%20of%20Consolidated%20Income) Net sales decreased to **$1.81 billion** from **$1.87 billion**, yet gross profit, operating income, and net income significantly increased for the three months ended July 31, 2023 Three Months Ended July 31, (in millions, except per share data) | Financial Metric | 2023 | 2022 | | :--- | :--- | :--- | | Net sales | $1,805.2 | $1,873.0 | | Gross Profit | $654.8 | $552.5 | | Operating Income | $303.5 | $179.7 | | Net Income | $183.6 | $109.8 | | Net Income – Assuming Dilution (EPS) | $1.79 | $1.03 | [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets slightly decreased to **$14.71 billion**, with a significant decline in cash, while liabilities remained stable as of July 31, 2023 Balance Sheet Highlights (in millions) | Account | July 31, 2023 | April 30, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $241.1 | $655.8 | | Total Current Assets | $2,496.8 | $2,858.7 | | Total Assets | $14,711.8 | $14,991.4 | | Long-term debt | $4,315.1 | $4,314.2 | | Total Liabilities | $7,708.4 | $7,700.6 | | Total Shareholders' Equity | $7,003.4 | $7,290.8 | [Condensed Statements of Consolidated Cash Flows](index=6&type=section&id=Condensed%20Statements%20of%20Consolidated%20Cash%20Flows) Net cash from operating activities significantly improved to **$217.9 million**, while investing and financing activities used substantial cash Cash Flow Summary - Three Months Ended July 31, (in millions) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net Cash Provided by (Used for) Operating Activities | $217.9 | $(39.0) | | Net Cash Provided by (Used for) Investing Activities | $(151.9) | $(71.5) | | Net Cash Provided by (Used for) Financing Activities | $(481.3) | $91.9 | | Net increase (decrease) in cash | $(414.7) | $(18.3) | [Notes to Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the **$1.2 billion** pet food brand divestiture, strong U.S. Retail Consumer Foods growth, and share repurchases - On April 28, 2023, the company sold certain pet food brands (including Rachael Ray Nutrish, 9Lives, Kibbles 'n Bits) to Post Holdings, Inc. for net proceeds of **$1.2 billion**, consisting of cash and Post common stock[28](index=28&type=chunk) - The company is a defendant in class action lawsuits alleging misrepresentation of the number of servings in Folgers coffee canisters; the outcome is not yet predictable, and no loss contingency has been recorded[99](index=99&type=chunk)[100](index=100&type=chunk) - In May 2022, the company initiated a voluntary recall of select Jif peanut butter products due to potential salmonella contamination, incurring total direct costs of approximately **$120.0 million**, net of insurance recoveries[101](index=101&type=chunk) - During the quarter, the company repurchased approximately **2.4 million** common shares for **$362.8 million** under a 10b5-1 plan; approximately **1.1 million** shares remain available for repurchase under the current authorization[104](index=104&type=chunk) [Management's Discussion and Analysis (MD&A)](index=22&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) MD&A highlights a **4%** net sales decrease due to divestitures, masking **21%** underlying growth, driven by Jif recovery and Uncrustables expansion Q1 2024 vs Q1 2023 Performance Summary | Metric | Q1 2024 | Q1 2023 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $1,805.2M | $1,873.0M | (4)% | | Gross Profit | $654.8M | $552.5M | 19% | | Operating Income | $303.5M | $179.7M | 69% | | Net Income | $183.6M | $109.8M | 67% | | Diluted EPS | $1.79 | $1.03 | 74% | - Excluding the **$374.1 million** impact from the pet food brand divestiture, net sales increased by **$310.1 million**, or **21%**, driven by **13 percentage points** from favorable volume/mix and **8 percentage points** from higher net pricing[118](index=118&type=chunk) - The U.S. Retail Consumer Foods segment saw a **49%** increase in net sales, primarily due to the recovery of Jif peanut butter sales after the prior year's product recall and growth in Smucker's Uncrustables[129](index=129&type=chunk)[131](index=131&type=chunk) - The company is investing **$1.1 billion** to build a new manufacturing facility and distribution center in McCalla, Alabama, for Smucker's Uncrustables, with production expected to begin in calendar year 2025[154](index=154&type=chunk) [Market Risk Disclosures](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company manages market risks from interest rates, commodity prices, and foreign currency fluctuations using derivatives - A hypothetical **100 basis-point** decrease in interest rates at July 31, 2023, would increase the fair value of the company's long-term debt by **$292.0 million**[170](index=170&type=chunk) - The company uses commodity derivatives to manage price volatility for key raw materials such as green coffee, corn, soybean meal, edible oils, and wheat; these derivatives are not qualified for hedge accounting[171](index=171&type=chunk) - Foreign currency exchange risk is primarily related to Canadian operations; the company uses derivatives to manage fluctuations affecting purchases of raw materials and finished goods[174](index=174&type=chunk)[175](index=175&type=chunk) [Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO concluded that disclosure controls were effective, with no material changes to internal control over financial reporting - Management, including the CEO and CFO, concluded that as of July 31, 2023, the company's disclosure controls and procedures were effective[183](index=183&type=chunk) - No changes occurred in the company's internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[184](index=184&type=chunk) PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, share repurchases, and other relevant information [Legal Proceedings](index=34&type=section&id=Item%201.%20Legal%20Proceedings) Legal proceedings, including the Folgers coffee lawsuit and Jif product recall, are incorporated by reference from Note 14 - Information regarding legal proceedings is incorporated by reference from Note 14: Contingencies in Part I, Item 1 of this report[187](index=187&type=chunk) [Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the Annual Report on Form 10-K have occurred - The risk factors described in the Annual Report on Form 10-K for the year ended April 30, 2023, remain relevant and should be considered[188](index=188&type=chunk) [Share Repurchases](index=34&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q1 2024, the company repurchased **2.41 million** common shares, with **1.1 million** shares remaining available under authorization Share Repurchases for Q1 2024 | Period | Total Shares Purchased | Average Price Paid Per Share | Shares Purchased as Part of Program | | :--- | :--- | :--- | :--- | | May 2023 | 2,353,066 | $154.37 | 2,350,000 | | June 2023 | 57,779 | $151.81 | — | | July 2023 | 18 | $148.16 | — | | **Total** | **2,410,863** | **$154.31** | **2,350,000** | - As of July 31, 2023, there were approximately **1.1 million** common shares remaining available for repurchase under the company's authorized plans[190](index=190&type=chunk) [Other Information](index=34&type=section&id=Item%205.%20Other%20Information) No director or Section 16 officer adopted or terminated any Rule 10b5-1 trading arrangements during Q1 2024 - No director or Section 16 officer adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the first quarter of 2024[191](index=191&type=chunk) [Exhibits](index=34&type=section&id=Item%206.%20Exhibits) This section provides an index of exhibits filed with the Form 10-Q, including CEO/CFO certifications and XBRL data files - The report includes an index of exhibits, such as certifications by the CEO and CFO, and XBRL data files[192](index=192&type=chunk)[198](index=198&type=chunk)

The J.M. Smucker Co. (NYSE:SJM) Q1 2024 Results Conference Call August 29, 2023 9:00 AM ET Company Participants Aaron Broholm - VP, IR Mark Smucker - Chair of the Board, President and CEO Tucker Marshall - CFO Conference Call Participants Andrew Lazar - Barclays Peter Galbo - Bank of America Ken Goldman - JP Morgan Matt Smith - Stifel Pamela Kaufman - Morgan Stanley Rob Dickerson - Jefferies Jason English - Goldman Sachs Max Gumport - BNP Paribas Steve Powers - Deutsche Bank Robert Moskow - TD Cowen Operato ...