ORRVILLE, Ohio, Nov. 19, 2015 /PRNewswire/ -- The J. M. Smucker
Company (NYSE: SJM) today announced results for the second quarter
ended October 31, 2015, of its 2016
fiscal year. All comparisons are to the second quarter of the
prior fiscal year, unless otherwise noted.
EXECUTIVE SUMMARY
- Net sales increased $595.9
million, or 40 percent, reflecting the contribution of Big
Heart Pet Brands ("Big Heart"), acquired in fiscal 2015, and growth
within the U.S. Retail Coffee segment.
- Net income per diluted share was $1.47, a decrease of 5 percent, as the benefit
from Big Heart operations was offset by merger and integration
costs, higher interest expense, and the impact of additional shares
outstanding.
- Non-GAAP income per diluted share was $1.62, an increase of 6 percent, while adjusted
non-GAAP income per diluted share, which excludes amortization, was
$1.91, an increase of 13
percent.
- Free cash flow was $211.0
million, reflecting the benefits of the Company's working
capital reduction initiatives.
- The Company updated its fiscal 2016 earnings outlook with
non-GAAP income per diluted share expected to range from
$5.70 to $5.80, and adjusted non-GAAP
income per diluted share expected to range from $6.85 to $6.95.
CHIEF EXECUTIVE OFFICER REMARKS
"We are pleased to
have delivered another quarter of solid financial results, which
reflects the momentum we are seeing across our businesses," said
Richard Smucker, Chief Executive
Officer. "Much of our net sales growth is coming from the
addition of the pet food business which continues to perform
well. In addition, our coffee business had a strong second
quarter, with double-digit volume gains for
Folgers® roast and ground coffee and
contributions from our recently introduced Dunkin'
Donuts® K-Cup® pods. With a number
of key initiatives ongoing across the Company, including the
integration of Big Heart, this remains a dynamic and exciting time
for our teams, and we thank all our employees for their continued
dedication."
SECOND QUARTER CONSOLIDATED RESULTS
|
|
Three Months Ended
October 31,
|
|
|
2015
|
|
2014
|
|
% Increase
(Decrease)
|
|
|
(Dollars and shares
in millions, except per share data)
|
|
|
|
|
|
|
|
Net
sales
|
$
2,077.7
|
|
$
1,481.8
|
|
40%
|
|
|
|
|
|
|
|
Operating
income
|
$
313.8
|
|
$
254.8
|
|
23%
|
Non-GAAP operating
income
|
$
341.4
|
|
$
250.3
|
|
36%
|
|
|
|
|
|
|
|
Net income per
common share - assuming dilution
|
$
1.47
|
|
$
1.55
|
|
(5%)
|
Non-GAAP income per
common share - assuming dilution
|
$
1.62
|
|
$
1.53
|
|
6%
|
Adjusted non-GAAP
income per common share - assuming dilution
|
$
1.91
|
|
$
1.69
|
|
13%
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding – assuming dilution
|
119.7
|
|
101.8
|
|
18%
|
|
|
|
|
|
|
|
Results for the
period ended October 31, 2015, include the operations of Big Heart,
which was acquired after the comparable prior year period, and the
incremental impact of Sahale Snacks, Inc. ("Sahale"), which was
acquired on September 2, 2014. Adjusted non-GAAP income per
diluted share excludes the noncash impact of
amortization.
|
Net sales increased reflecting the contribution of $576.7 million from Big Heart. Excluding
Big Heart, the incremental impact of Sahale, and foreign currency
exchange, net sales increased $35.8
million, or 2 percent. This was driven by favorable
volume/mix led by the U.S. Retail Coffee segment. Net price
realization was 3 percentage points lower, reflecting lower net
pricing for coffee and peanut butter.
Gross profit increased $250.8
million, or 47 percent, primarily due to the addition of Big
Heart. Excluding Big Heart, gross profit was higher, driven
by Dunkin' Donuts® K-Cup® pods,
which were introduced in May 2015,
and other favorable volume/mix within the U.S. Retail Coffee
segment. The impact of lower net pricing was offset by a
reduction in commodity costs.
Selling, distribution, and administrative expenses increased
$137.4 million, or 54 percent,
primarily driven by the addition of Big Heart, higher selling
expense due to royalties related to Dunkin'
Donuts® K-Cup® pods, and a planned
increase in marketing expense. Amortization expense also
increased driven by the Big Heart acquisition.
Operating income increased $59.0
million, or 23 percent, reflecting the addition of Big
Heart, partially offset by an increase in merger and integration
costs.
On a non-GAAP basis, gross profit increased $255.1 million, or 48 percent, and operating
income increased $91.1 million, or 36
percent.
Net interest expense increased $26.4
million, due to the impact of acquisition-related debt
issued in the fourth quarter of 2015. Income taxes increased
$13.0 million due to an increase in
income before income taxes and a higher effective tax rate.
The quarterly effective tax rate increased from 33.7 percent to
34.7 percent.
For the quarter, cash provided by operating activities was
$275.4 million, compared to
$92.0 million in the prior
year. The change in operating cash flow was primarily
attributed to an increase in net income adjusted for noncash items
and a decrease in working capital, including lower inventory
levels. The Company's working capital initiatives and lower
green coffee costs were key drivers of the reduced inventory.
FULL-YEAR OUTLOOK
The Company updated its full-year fiscal 2016 guidance as
provided below:
|
Net sales
|
$7.9
billion
|
|
|
Non-GAAP income per
common share - assuming dilution
|
$5.70 -
$5.80
|
|
|
Adjusted non-GAAP
income per common share - assuming dilution
|
$6.85 -
$6.95
|
|
|
Free cash
flow
|
$925
million
|
|
|
Capital
expenditures
|
$220
million
|
|
In comparison to the prior fiscal year, net sales are expected
to increase approximately 38 percent reflecting a full year
contribution from Big Heart and an increase of approximately 3
percent on the remainder of the Company's businesses.
Included in the earnings guidance range is $25 million of synergies related to the Big Heart
acquisition, of which $8 million has
been realized through the first six months of the fiscal
year. The net sales and earnings guidance reflects the
projected impact of the previously announced canned milk
divestiture on the Company's operating results, but excludes an
estimated one-time gain of $0.10 to
$0.15 per share related to the
transaction, which is expected to close by December 31, 2015.
SECOND QUARTER SEGMENT RESULTS
Dollar amounts in the segment tables below are reported in
millions.
U.S. Retail Coffee
|
|
Net
Sales
|
|
Segment
Profit
|
|
Segment
Profit Margin
|
FY16 Q2
Results
|
|
$586.1
|
|
$161.7
|
|
27.6%
|
Change vs prior
year
|
|
10%
|
|
7%
|
|
-80bps
|
Segment net sales increased $53.1
million reflecting favorable volume/mix which contributed 13
percentage points of growth, primarily driven by Dunkin'
Donuts® K-Cup® pods. The
Folgers® brand also contributed to net sales
growth as volume gains on mainstream roast and ground offerings
more than offset lower net price realization. Segment profit
increased $10.5 million reflecting
the contribution from Dunkin' Donuts®
K-Cup® pods, other favorable volume/mix, and the benefit
of lower costs which were mostly offset by lower prices.
These combined benefits to segment profit more than offset an
increase in marketing expenses.
U.S. Retail Consumer Foods
|
|
Net
Sales
|
|
Segment
Profit
|
|
Segment
Profit Margin
|
FY16 Q2
Results
|
|
$644.0
|
|
$125.4
|
|
19.5%
|
Change vs prior
year
|
|
(3%)
|
|
-
|
|
60bps
|
Segment net sales decreased $20.4
million as net price realization was lower, reflecting price
declines on the Pillsbury® and
Jif® brands in July
2015 and November 2014,
respectively. Favorable volume/mix contributed 1 percentage
point of growth to net sales, led by Smucker's®
Uncrustables® frozen sandwiches and Eagle
Brand® canned milk. The Sahale business
contributed an incremental $3.8
million. Segment profit was flat as lower net price
realization and higher manufacturing overhead costs offset overall
lower commodity costs, primarily for milk, peanuts, and oils, and
the impact of favorable volume/mix.
U.S. Retail Pet Foods
|
|
Net
Sales
|
|
Segment
Profit
|
|
Segment
Profit Margin
|
FY16 Q2
Results
|
|
$566.7
|
|
$88.2
|
|
15.6%
|
The segment contributed net sales of $566.7 million, representing low single-digit
percent growth compared to Big Heart's results for the second
quarter of the prior year, which were reported under previous
ownership. The net sales increase was driven by growth in
Milk-Bone® dog snacks and the Natural
Balance® brand, while declines in Kibbles 'n
Bits® dry dog food offset much of the overall
growth. Profit decreased at a low double-digit percent
rate from the comparable measure in the prior year, driven by
higher amortization expense related to the acquisition and a
planned increase in marketing expense in support of new item
launches. This was partially offset by favorable volume/mix
and lower commodity costs.
International and Foodservice
|
|
Net
Sales
|
|
Segment
Profit
|
|
Segment
Profit Margin
|
FY16 Q2
Results
|
|
$280.9
|
|
$50.0
|
|
17.8%
|
Change vs prior
year
|
|
(1%)
|
|
33%
|
|
460bps
|
Net sales decreased $3.5 million,
as an unfavorable $20.9 million
impact of foreign currency exchange more than offset the
$10.0 million contribution from Big
Heart and the incremental impact of Sahale. Volume/mix was
favorable, contributing 2 percentage points of growth to net sales,
and net price realization was higher. Segment profit
increased $12.4 million, benefiting
from higher net price realization in Canada which helped offset costs attributed to
sourcing certain products from the U.S., reflecting the impact of a
weaker Canadian dollar compared to a year ago. Favorable
volume/mix in Foodservice, led by Smucker's®
Uncrustables® frozen sandwiches, also contributed
to profit growth.
Conference Call
The Company will conduct an earnings
conference call and webcast today, November
19, 2015, beginning at 8:30 a.m.
Eastern time. To access the webcast please visit
jmsmucker.com/investor-relations.
The J. M. Smucker Company 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, that could
cause actual results to differ materially from those expressed
include: the ability to successfully integrate acquired businesses
in a timely and cost-effective manner and retain key suppliers,
customers, and employees; the ability to achieve synergies
and cost savings related to the Big Heart acquisition in the
amounts and within the time frames currently anticipated; the
ability to generate sufficient cash flow to meet the Company's
deleveraging objectives; volatility of commodity, energy, and other
input costs; risks associated with derivative and purchasing
strategies employed to manage commodity pricing risks; the
availability of reliable transportation on acceptable terms; 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 businesses, including the introduction of new
products; 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 or
its competitors' products; the impact of accidents, extreme
weather, and natural disasters; the concentration of certain of the
Company's businesses with key customers and suppliers, including
single-source suppliers of certain raw materials and finished
goods, and the ability to manage and maintain key relationships;
the timing and amount of capital expenditures and share
repurchases; impairments in the carrying value of goodwill, other
intangible assets, or other long-lived assets or changes in useful
lives of other intangible assets; the impact of new or changes to
existing governmental laws and regulations and their application;
the outcome of tax examinations, changes in tax laws, and other tax
matters; foreign currency and interest rate fluctuations; the
ability to successfully complete the canned milk divestiture, which
is subject to obtaining necessary approvals and consents for the
transaction, fulfillment of other transaction conditions, and
economic conditions; and risks related to other factors described
under "Risk Factors" in other reports and statements filed
with the Securities and Exchange Commission, including the 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 Company
For more than 115
years, The J. M. Smucker Company has been committed to offering
consumers quality products that bring families together to share
memorable meals and moments. Today, Smucker is a leading
marketer and manufacturer of consumer food and beverage products
and pet food and pet snacks in North
America with projected annual net sales of approximately
$8 billion. In
consumer foods and beverages, its brands include
Smucker's®, Folgers®,
Jif®, Dunkin' Donuts®,
Crisco®, Pillsbury®,
R.W. Knudsen
Family®, Hungry Jack®,
Café Bustelo®, Martha
White®, truRoots®, Sahale
Snacks®, Robin Hood®,
and Bick's®. In pet food and pet snacks,
its brands include Meow Mix®,
Milk-Bone®, Kibbles 'n
Bits®, Natural Balance®, and
9Lives®. The Company remains rooted in the
Basic Beliefs of Quality, People,
Ethics, Growth, and Independence established
by its founder and namesake more than a century ago. For more
information about the Company, visit jmsmucker.com.
The J. M. Smucker Company is the owner of all trademarks
referenced herein, except for the following, which are used under
license: Pillsbury® is a trademark of The
Pillsbury Company, LLC and Dunkin' Donuts®
is a registered trademark of DD IP Holder LLC.
Dunkin' Donuts® brand is licensed to
The J. M. Smucker Company for packaged coffee products sold in
retail channels such as grocery stores, mass merchandisers, club
stores, and drug stores. This information does not pertain to
Dunkin' Donuts® coffee or other products
for sale in Dunkin' Donuts®
restaurants. K-Cup® is a trademark of Keurig Green
Mountain, Inc., used with permission.
The J. M. Smucker
Company
|
Unaudited Condensed
Consolidated Statements of Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
October 31,
|
|
Six Months Ended
October 31,
|
|
|
2015
|
|
2014
|
|
% Increase
(Decrease)
|
|
2015
|
|
2014
|
|
% Increase
(Decrease)
|
|
|
(Dollars in millions,
except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
2,077.7
|
|
$
1,481.8
|
|
40%
|
|
$
4,029.7
|
|
$
2,805.6
|
|
44%
|
Cost of products
sold
|
1,290.4
|
|
945.3
|
|
37%
|
|
2,513.7
|
|
1,790.4
|
|
40%
|
Gross
Profit
|
787.3
|
|
536.5
|
|
47%
|
|
1,516.0
|
|
1,015.2
|
|
49%
|
|
Gross
margin
|
37.9%
|
|
36.2%
|
|
|
|
37.6%
|
|
36.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
distribution, and administrative expenses
|
389.8
|
|
252.4
|
|
54%
|
|
777.4
|
|
505.8
|
|
54%
|
Amortization
|
53.0
|
|
25.2
|
|
111%
|
|
106.0
|
|
50.1
|
|
112%
|
Other special project
costs
|
30.6
|
|
2.8
|
|
n/m
|
|
53.5
|
|
11.4
|
|
n/m
|
Other operating
expense (income) - net
|
0.1
|
|
1.3
|
|
(90%)
|
|
(1.8)
|
|
1.5
|
|
n/m
|
Operating
Income
|
313.8
|
|
254.8
|
|
23%
|
|
580.9
|
|
446.4
|
|
30%
|
|
Operating
margin
|
15.1%
|
|
17.2%
|
|
|
|
14.4%
|
|
15.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense -
net
|
(42.6)
|
|
(16.2)
|
|
162%
|
|
(87.0)
|
|
(33.6)
|
|
159%
|
Other (expense)
income - net
|
(1.6)
|
|
0.3
|
|
n/m
|
|
(1.5)
|
|
1.6
|
|
(191%)
|
Income Before
Income Taxes
|
269.6
|
|
238.9
|
|
13%
|
|
492.4
|
|
414.4
|
|
19%
|
Income tax
expense
|
93.6
|
|
80.6
|
|
16%
|
|
180.0
|
|
140.1
|
|
28%
|
Net
Income
|
$
176.0
|
|
$
158.3
|
|
11%
|
|
$
312.4
|
|
$
274.3
|
|
14%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per
common share
|
$
1.47
|
|
$
1.55
|
|
(5%)
|
|
$
2.61
|
|
$
2.69
|
|
(3%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per
common share - assuming dilution
|
$
1.47
|
|
$
1.55
|
|
(5%)
|
|
$
2.61
|
|
$
2.69
|
|
(3%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared
per common share
|
$
0.67
|
|
$
0.64
|
|
5%
|
|
$
1.34
|
|
$
1.28
|
|
5%
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding
|
119,670,298
|
|
101,821,374
|
|
18%
|
|
119,646,026
|
|
101,794,922
|
|
18%
|
Weighted-average
shares outstanding – assuming dilution
|
119,680,574
|
|
101,824,624
|
|
18%
|
|
119,657,766
|
|
101,800,782
|
|
18%
|
The J. M. Smucker
Company
|
Unaudited Condensed
Consolidated Balance Sheets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October 31,
2015
|
|
April 30,
2015
|
|
October 31,
2014
|
|
|
|
|
(Dollars in
millions)
|
|
Assets
|
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
139.0
|
|
$
125.6
|
|
$
105.3
|
|
|
Trade receivables,
less allowance for doubtful accounts
|
605.4
|
|
430.1
|
|
453.2
|
|
|
Inventories
|
1,051.4
|
|
1,163.6
|
|
1,065.2
|
|
|
Other current
assets
|
210.2
|
|
340.9
|
|
102.1
|
|
|
|
Total Current
Assets
|
2,006.0
|
|
2,060.2
|
|
1,725.8
|
|
|
|
|
|
|
|
|
|
|
Property, Plant,
and Equipment - Net
|
1,661.5
|
|
1,678.3
|
|
1,305.0
|
|
|
|
|
|
|
|
|
|
|
Other Noncurrent
Assets:
|
|
|
|
|
|
|
|
Goodwill
|
6,001.7
|
|
6,011.6
|
|
3,142.6
|
|
|
Other intangible
assets - net
|
6,839.2
|
|
6,950.3
|
|
3,003.7
|
|
|
Other noncurrent
assets
|
186.4
|
|
182.2
|
|
151.4
|
|
|
|
Total Other
Noncurrent Assets
|
13,027.3
|
|
13,144.1
|
|
6,297.7
|
|
Total
Assets
|
$
16,694.8
|
|
$
16,882.6
|
|
$
9,328.5
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
|
|
Accounts
payable
|
$
341.4
|
|
$
402.8
|
|
$
251.3
|
|
|
Short-term
borrowings
|
370.0
|
|
226.0
|
|
545.9
|
|
|
Other current
liabilities
|
421.3
|
|
393.8
|
|
206.9
|
|
|
|
Total Current
Liabilities
|
1,132.7
|
|
1,022.6
|
|
1,004.1
|
|
|
|
|
|
|
|
|
|
|
Noncurrent
Liabilities:
|
|
|
|
|
|
|
|
Long-term
debt
|
5,494.5
|
|
5,944.9
|
|
1,884.5
|
|
|
Other noncurrent
liabilities
|
2,834.4
|
|
2,828.2
|
|
1,274.9
|
|
|
|
Total Noncurrent
Liabilities
|
8,328.9
|
|
8,773.1
|
|
3,159.4
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
Equity
|
7,233.2
|
|
7,086.9
|
|
5,165.0
|
|
Total Liabilities
and Shareholders' Equity
|
$
16,694.8
|
|
$
16,882.6
|
|
$
9,328.5
|
The J. M. Smucker
Company
|
Unaudited Condensed
Consolidated Statements of Cash Flow
|
|
|
|
|
|
Three Months Ended
October 31,
|
|
Six Months Ended
October 31,
|
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Activities
|
|
|
|
|
|
|
|
|
Net income
|
$
176.0
|
|
$
158.3
|
|
$
312.4
|
|
$
274.3
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
Depreciation
|
54.7
|
|
37.9
|
|
110.4
|
|
76.2
|
|
|
Amortization
|
53.0
|
|
25.2
|
|
106.0
|
|
50.1
|
|
|
Other noncash
adjustments
|
1.1
|
|
(0.1)
|
|
(2.4)
|
|
(0.2)
|
|
|
Share-based
compensation expense
|
8.7
|
|
5.2
|
|
16.4
|
|
12.1
|
|
|
Loss on disposal of
assets - net
|
1.3
|
|
1.5
|
|
2.6
|
|
2.0
|
|
|
Defined benefit
pension contributions
|
(0.9)
|
|
(1.8)
|
|
(1.8)
|
|
(3.1)
|
|
|
Changes in assets and
liabilities, net of effect from businesses acquired:
|
|
|
|
|
|
|
|
|
|
|
Trade
receivables
|
(97.7)
|
|
(57.7)
|
|
(178.5)
|
|
(140.7)
|
|
|
|
Inventories
|
99.2
|
|
22.9
|
|
107.6
|
|
(130.4)
|
|
|
|
Accounts payable and
accrued items
|
14.1
|
|
(59.5)
|
|
(2.6)
|
|
(83.6)
|
|
|
|
Income and other
taxes
|
(59.7)
|
|
(51.7)
|
|
66.3
|
|
(6.1)
|
|
|
Other -
net
|
25.6
|
|
11.8
|
|
44.1
|
|
33.3
|
Net Cash Provided
by Operating Activities
|
275.4
|
|
92.0
|
|
580.5
|
|
83.9
|
|
|
|
|
|
|
|
|
|
|
|
Investing
Activities
|
|
|
|
|
|
|
|
|
Business acquired,
net of cash acquired
|
-
|
|
(80.3)
|
|
7.9
|
|
(80.3)
|
|
Additions to
property, plant, and equipment
|
(64.4)
|
|
(64.7)
|
|
(117.4)
|
|
(113.7)
|
|
Proceeds from
disposal of property, plant, and equipment
|
0.2
|
|
-
|
|
0.2
|
|
1.2
|
|
Other -
net
|
6.3
|
|
3.0
|
|
13.3
|
|
(1.3)
|
Net Cash Used for
Investing Activities
|
(57.9)
|
|
(142.0)
|
|
(96.0)
|
|
(194.1)
|
|
|
|
|
|
|
|
|
|
|
|
Financing
Activities
|
|
|
|
|
|
|
|
|
Short-term borrowings
- net
|
67.4
|
|
75.9
|
|
144.0
|
|
297.5
|
|
Repayments of
long-term debt
|
(200.0)
|
|
-
|
|
(450.0)
|
|
(100.0)
|
|
Quarterly dividends
paid
|
(80.1)
|
|
(65.0)
|
|
(156.5)
|
|
(123.9)
|
|
Purchase of treasury
shares
|
(0.5)
|
|
(0.7)
|
|
(7.4)
|
|
(11.3)
|
|
Other -
net
|
0.1
|
|
1.6
|
|
2.5
|
|
9.4
|
Net Cash (Used
for) Provided by Financing Activities
|
(213.1)
|
|
11.8
|
|
(467.4)
|
|
71.7
|
Effect of exchange
rate changes on cash
|
1.0
|
|
(5.9)
|
|
(3.7)
|
|
(9.7)
|
Net increase
(decrease) in cash and cash equivalents
|
5.4
|
|
(44.1)
|
|
13.4
|
|
(48.2)
|
Cash and cash
equivalents at beginning of period
|
133.6
|
|
149.4
|
|
125.6
|
|
153.5
|
Cash and Cash
Equivalents at End of Period
|
$
139.0
|
|
$
105.3
|
|
$
139.0
|
|
$
105.3
|
The J. M. Smucker
Company
|
Unaudited
Supplemental Schedule
|
|
|
Three Months Ended
October 31,
|
|
Six Months Ended
October 31,
|
|
2015
|
|
% of
Net Sales
|
|
2014
|
|
% of
Net Sales
|
|
2015
|
|
% of
Net Sales
|
|
2014
|
|
% of
Net Sales
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$ 2,077.7
|
|
|
|
$ 1,481.8
|
|
|
|
$ 4,029.7
|
|
|
|
$ 2,805.6
|
|
|
Selling,
distribution, and administrative expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketing
|
123.0
|
|
5.9%
|
|
68.6
|
|
4.6%
|
|
237.8
|
|
5.9%
|
|
145.0
|
|
5.2%
|
Selling
|
86.5
|
|
4.2%
|
|
52.3
|
|
3.5%
|
|
171.1
|
|
4.2%
|
|
102.8
|
|
3.7%
|
Distribution
|
62.3
|
|
3.0%
|
|
40.6
|
|
2.7%
|
|
124.0
|
|
3.1%
|
|
79.7
|
|
2.8%
|
General and
administrative
|
118.0
|
|
5.7%
|
|
90.9
|
|
6.1%
|
|
244.5
|
|
6.1%
|
|
178.3
|
|
6.4%
|
Total selling,
distribution, and administrative expenses
|
$ 389.8
|
|
18.8%
|
|
$ 252.4
|
|
17.0%
|
|
$ 777.4
|
|
19.3%
|
|
$ 505.8
|
|
18.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts may not add
due to rounding.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The J. M. Smucker
Company
|
Unaudited Reportable
Segments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
October 31,
|
|
Six Months Ended
October 31,
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
Net sales:
|
|
|
|
|
|
|
|
|
|
U.S. Retail
Coffee
|
$
586.1
|
|
$
533.0
|
|
$
1,151.1
|
|
$
1,035.7
|
|
|
U.S. Retail Consumer
Foods
|
644.0
|
|
664.4
|
|
1,226.2
|
|
1,246.8
|
|
|
U.S. Retail Pet
Foods
|
566.7
|
|
-
|
|
1,116.6
|
|
-
|
|
|
International and
Foodservice
|
280.9
|
|
284.4
|
|
535.8
|
|
523.1
|
|
Total net
sales
|
$
2,077.7
|
|
$
1,481.8
|
|
$
4,029.7
|
|
$
2,805.6
|
|
|
|
|
|
|
|
|
|
|
|
Segment
profit:
|
|
|
|
|
|
|
|
|
|
U.S. Retail
Coffee
|
$
161.7
|
|
$
151.2
|
|
$
316.8
|
|
$
288.8
|
|
|
U.S. Retail Consumer
Foods
|
125.4
|
|
125.6
|
|
242.9
|
|
243.7
|
|
|
U.S. Retail Pet
Foods
|
88.2
|
|
-
|
|
178.2
|
|
-
|
|
|
International and
Foodservice
|
50.0
|
|
37.6
|
|
80.5
|
|
68.1
|
|
Total segment
profit
|
$
425.3
|
|
$
314.4
|
|
$
818.4
|
|
$
600.6
|
|
|
Interest expense -
net
|
(42.6)
|
|
(16.2)
|
|
(87.0)
|
|
(33.6)
|
|
|
Unallocated
derivative gains (losses)
|
6.0
|
|
7.6
|
|
(4.0)
|
|
(13.8)
|
|
|
Cost of products sold
- special project costs
|
(3.0)
|
|
(0.3)
|
|
(6.1)
|
|
(0.7)
|
|
|
Other special project
costs
|
(30.6)
|
|
(2.8)
|
|
(53.5)
|
|
(11.4)
|
|
|
Corporate
administrative expenses
|
(83.9)
|
|
(64.1)
|
|
(173.9)
|
|
(128.3)
|
|
|
Other (expense)
income - net
|
(1.6)
|
|
0.3
|
|
(1.5)
|
|
1.6
|
|
Income before income
taxes
|
$
269.6
|
|
$
238.9
|
|
$
492.4
|
|
$
414.4
|
|
|
|
|
|
|
|
|
|
|
|
Segment profit
margin:
|
|
|
|
|
|
|
|
|
|
U.S. Retail
Coffee
|
27.6%
|
|
28.4%
|
|
27.5%
|
|
27.9%
|
|
|
U.S. Retail Consumer
Foods
|
19.5%
|
|
18.9%
|
|
19.8%
|
|
19.5%
|
|
|
U.S. Retail Pet
Foods
|
15.6%
|
|
-
|
|
16.0%
|
|
-
|
|
|
International and
Foodservice
|
17.8%
|
|
13.2%
|
|
15.0%
|
|
13.0%
|
Non-GAAP Measures
The Company uses non-GAAP financial
measures including: net sales excluding the noncomparable impact of
acquisitions and foreign currency exchange; non-GAAP gross profit,
operating income, income, and income per diluted share; adjusted
non-GAAP income and income per diluted share; earnings before
interest, taxes, depreciation, and amortization ("EBITDA"); and
free cash flow as key measures for purposes of evaluating
performance internally. The Company believes that these
measures provide useful information to investors because they are
the measures used to evaluate performance on a comparable
year-over-year basis. Non-GAAP profit measures exclude
certain items affecting comparability. These items can
significantly affect the year-over-year assessment of operating
results and include specific restructuring and merger and
integration projects ("special project costs") that are each
nonrecurring in nature as well as unallocated gains and losses on
commodity and foreign currency exchange derivatives ("unallocated
derivative gains and losses"). Adjusted non-GAAP income per
diluted share further excludes the noncash impact of
amortization. The Company believes this provides investors an
additional metric to evaluate performance and the ability to
generate cash necessary to achieve its deleveraging
objectives. These non-GAAP financial measures are not
intended to replace the presentation of financial results in
accordance with U.S. generally accepted accounting principles
("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 full year outlook. As the amount of unallocated
derivative gains and losses varies depending on market conditions
and levels of derivative transactions with respect to a particular
fiscal year, it is not determinable on a forward-looking basis and
no guidance has been provided.
The J. M. Smucker
Company
|
Unaudited Non-GAAP
Financial Measures
|
|
|
|
|
Three Months Ended
October 31,
|
|
Six Months Ended
October 31,
|
|
|
|
2015
|
|
2014
|
|
Increase
(Decrease)
|
|
%
|
|
2015
|
|
2014
|
|
Increase
(Decrease)
|
|
%
|
|
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
reconciliation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$ 2,077.7
|
|
$ 1,481.8
|
|
$ 595.9
|
|
40%
|
|
$ 4,029.7
|
|
$ 2,805.6
|
|
$ 1,224.1
|
|
44%
|
|
Big Heart
acquisition
|
(576.7)
|
|
-
|
|
(576.7)
|
|
(39%)
|
|
(1,138.0)
|
|
-
|
|
(1,138.0)
|
|
(41%)
|
|
Sahale
acquisition
|
(4.3)
|
|
-
|
|
(4.3)
|
|
-
|
|
(12.0)
|
|
-
|
|
(12.0)
|
|
-
|
|
Net sales excluding
acquisitions
|
|
$ 1,496.7
|
|
$ 1,481.8
|
|
$
14.9
|
|
1%
|
|
$ 2,879.7
|
|
$ 2,805.6
|
|
$
74.1
|
|
3%
|
|
Foreign currency
exchange
|
20.9
|
|
-
|
|
20.9
|
|
1%
|
|
35.3
|
|
-
|
|
35.3
|
|
1%
|
|
Net sales excluding
acquisitions
and foreign currency exchange
|
$ 1,517.6
|
|
$ 1,481.8
|
|
$
35.8
|
|
2%
|
|
$ 2,915.0
|
|
$ 2,805.6
|
|
$ 109.4
|
|
4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts may not add
due to rounding.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales excluding acquisitions have been adjusted for the
noncomparable impact of the Big Heart and Sahale acquisitions. Big
Heart was acquired after the comparable prior year period and
Sahale was acquired on September 2,
2014.
The J. M. Smucker
Company
|
Unaudited Non-GAAP
Financial Measures
|
|
|
|
Three Months Ended
October 31,
|
|
Six Months Ended
October 31,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
(Dollars in millions,
except per share data)
|
|
|
|
|
|
|
|
|
|
|
Gross profit
reconciliation:
|
|
|
|
|
|
|
|
|
Gross
profit
|
$
787.3
|
|
$
536.5
|
|
$
1,516.0
|
|
$
1,015.2
|
|
Unallocated
derivative (gains) losses
|
(6.0)
|
|
(7.6)
|
|
4.0
|
|
13.8
|
|
Cost of products sold
- special project costs
|
3.0
|
|
0.3
|
|
6.1
|
|
0.7
|
|
Non-GAAP gross
profit
|
$
784.3
|
|
$
529.2
|
|
$
1,526.1
|
|
$
1,029.7
|
|
% of net
sales
|
37.7%
|
|
35.7%
|
|
37.9%
|
|
36.7%
|
|
|
|
|
|
|
|
|
|
|
Operating income
reconciliation:
|
|
|
|
|
|
|
|
|
Operating
income
|
$
313.8
|
|
$
254.8
|
|
$
580.9
|
|
$
446.4
|
|
Unallocated
derivative (gains) losses
|
(6.0)
|
|
(7.6)
|
|
4.0
|
|
13.8
|
|
Cost of products sold
- special project costs
|
3.0
|
|
0.3
|
|
6.1
|
|
0.7
|
|
Other special project
costs
|
30.6
|
|
2.8
|
|
53.5
|
|
11.4
|
|
Non-GAAP operating
income
|
$
341.4
|
|
$
250.3
|
|
$
644.5
|
|
$
472.3
|
|
% of net
sales
|
16.4%
|
|
16.9%
|
|
16.0%
|
|
16.8%
|
|
|
|
|
|
|
|
|
|
|
Net income
reconciliation:
|
|
|
|
|
|
|
|
|
Net income
|
$
176.0
|
|
$
158.3
|
|
$
312.4
|
|
$
274.3
|
|
Income tax
expense
|
93.6
|
|
80.6
|
|
180.0
|
|
140.1
|
|
Unallocated
derivative (gains) losses
|
(6.0)
|
|
(7.6)
|
|
4.0
|
|
13.8
|
|
Cost of products sold
- special project costs
|
3.0
|
|
0.3
|
|
6.1
|
|
0.7
|
|
Other special project
costs
|
30.6
|
|
2.8
|
|
53.5
|
|
11.4
|
|
Non-GAAP income
before income taxes
|
$
297.2
|
|
$
234.4
|
|
$
556.0
|
|
$
440.3
|
|
Income tax expense,
as adjusted
|
102.8
|
|
79.0
|
|
203.2
|
|
148.8
|
|
Non-GAAP
income
|
$
194.4
|
|
$
155.4
|
|
$
352.8
|
|
$
291.5
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP income
before income taxes
|
$
297.2
|
|
$
234.4
|
|
$
556.0
|
|
$
440.3
|
|
Amortization
|
53.0
|
|
25.2
|
|
106.0
|
|
50.1
|
|
Adjusted non-GAAP
income before income taxes
|
$
350.2
|
|
$
259.6
|
|
$
662.0
|
|
$
490.4
|
|
Income tax expense,
as adjusted
|
121.1
|
|
87.6
|
|
242.0
|
|
165.8
|
|
Adjusted non-GAAP
income
|
$
229.1
|
|
$
172.0
|
|
$
420.0
|
|
$
324.6
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
common shares outstanding
|
119,159,257
|
|
101,123,147
|
|
119,124,508
|
|
101,075,885
|
|
Weighted-average
participating shares outstanding
|
511,041
|
|
698,227
|
|
521,518
|
|
719,037
|
|
Total
weighted-average shares outstanding
|
119,670,298
|
|
101,821,374
|
|
119,646,026
|
|
101,794,922
|
|
Dilutive effect of
stock options
|
10,276
|
|
3,250
|
|
11,740
|
|
5,860
|
|
Total
weighted-average shares outstanding - assuming dilution
|
119,680,574
|
|
101,824,624
|
|
119,657,766
|
|
101,800,782
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP income per
common share - assuming dilution
|
$
1.62
|
|
$
1.53
|
|
$
2.95
|
|
$
2.86
|
|
Adjusted non-GAAP
income per common share - assuming dilution
|
$
1.91
|
|
$
1.69
|
|
$
3.51
|
|
$
3.19
|
The J. M. Smucker
Company
|
Unaudited Non-GAAP
Financial Measures
|
|
|
|
|
|
|
|
Three Months Ended
October 31,
|
|
Six Months Ended
October 31,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
EBITDA
reconciliation:
|
|
|
|
|
|
|
|
|
Net income
|
$
176.0
|
|
$
158.3
|
|
$
312.4
|
|
$
274.3
|
|
Income tax
expense
|
93.6
|
|
80.6
|
|
180.0
|
|
140.1
|
|
Interest expense -
net
|
42.6
|
|
16.2
|
|
87.0
|
|
33.6
|
|
Depreciation
|
54.7
|
|
37.9
|
|
110.4
|
|
76.2
|
|
Amortization
|
53.0
|
|
25.2
|
|
106.0
|
|
50.1
|
|
Earnings before
interest, taxes, depreciation, and amortization
|
$
419.9
|
|
$
318.2
|
|
$
795.8
|
|
$
574.3
|
|
% of net
sales
|
20.2%
|
|
21.5%
|
|
19.7%
|
|
20.5%
|
|
|
|
|
|
|
|
|
|
|
Free cash flow
reconciliation:
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
$
275.4
|
|
$
92.0
|
|
$
580.5
|
|
$
83.9
|
|
Additions to
property, plant, and equipment
|
(64.4)
|
|
(64.7)
|
|
(117.4)
|
|
(113.7)
|
|
Free cash
flow
|
$
211.0
|
|
$
27.3
|
|
$
463.1
|
|
$
(29.8)
|
The following tables provide a reconciliation of the Company's
2016 guidance for non-GAAP income per diluted share, adjusted
non-GAAP income per diluted share, and free cash flow.
|
Year Ending April 30,
2016
|
|
Low
|
|
High
|
|
|
|
|
Net income per common
share - assuming dilution reconciliation:
|
|
|
|
Net income per common
share - assuming dilution
|
$
5.11
|
|
$
5.21
|
Special project
costs
|
0.59
|
|
0.59
|
Non-GAAP
income
|
$
5.70
|
|
$
5.80
|
Amortization
|
1.15
|
|
1.15
|
Adjusted non-GAAP
income
|
$
6.85
|
|
$
6.95
|
|
|
|
|
|
|
|
|
|
Year Ending April 30,
2016
|
|
|
|
(Dollars in
millions)
|
|
|
Free cash flow
reconciliation:
|
|
|
|
Net cash provided by
operating activities
|
$
1,145
|
|
|
Additions to property,
plant, and equipment
|
(220)
|
|
|
Free cash
flow
|
$
925
|
|
|
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SOURCE The J. M. Smucker Company