J. M. Smucker(SJM) - 2024 Q4 - Annual Results

Financial Highlights and Executive Summary Executive Summary 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] - 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] Consolidated Financial Results Fourth Quarter Consolidated Results 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][7] - 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] - Net interest expense increased by $62.0 million, primarily due to debt issued to finance the Hostess Brands acquisition[10] - Free cash flow was $297.5 million, nearly flat compared to $298.7 million in the prior year[12] Fiscal Year 2025 Outlook Full-Year 2025 Guidance 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] - Guidance reflects an anticipated decline of approximately $85.0 million in contract manufacturing sales related to the divested pet food brands[13] Segment Performance U.S. Retail Coffee 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] - Segment profit increased due to lower commodity costs, which was partially offset by lower net prices and increased marketing and distribution expenses[14] U.S. Retail Frozen Handheld and Spreads 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] - Segment profit decreased due to higher pre-production expenses for the new Smucker's® Uncrustables® manufacturing facility, increased marketing, and unfavorable volume/mix[15] U.S. Retail Pet Foods 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] - 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] Sweet Baked Snacks 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][17] International and Away From Home 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] - Segment profit growth was primarily due to higher net pricing, lower costs, and favorable volume/mix[19] Financial Statements Unaudited Condensed Consolidated Statements of Income 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 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 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][45] Non-GAAP Financial Measures Reconciliation of Non-GAAP Measures 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][36] 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 |