The J.m. Smucker Company · NYSE:SJM
The J.m. Smucker — 2020 Barclays Global Consumer Staples Conference
58 slides from The J.m. Smucker's conference presentation, Sep 8, 2020
Slide 1: Barclays Global Consumer Staples Conference 2020
2020 BARCLAYS GLOBAL CONSUMER STAPLES CONFERENCE
Slide 2: Strategy and Business Update
STRATEGY AND BUSINESS UPDATE Mark Smucker President & Chief Executive Officer 2
Slide 3: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking statements, such as projected net sales, operating results, earnings, and cash flows, that are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from any future results, perf
Slide 4: Agenda
Agenda STRATEGY AND Mark Smucker BUSINESS UPDATE PRESIDENT & CHIEF EXECUTIVE OFFICER FINANCIAL OUTLOOK Tucker Marshall AND PRIORITIES CHIEF FINANCIAL OFFICER 44
Slide 5: Basic Beliefs
Basic Beliefs FOR OUR COMPANY ‘nee « govmgroveach rtorranes oe uns caso Due Wien of WevTowaceashlcorouracegangioae wa awed Soreafine nhengape estoy trio ina CRO ACTIN forme aoc wana ovbstonars Sa Reagan ‘etanar ont at ot he bare cy coatctoat he cty urd van copes nek end espana (ouem teareng tne rary
Slide 6: Our Purpose
Our Purpose “FEEDING CONNECTIONS THAT HELP US THRIVE – LIFE TASTES BETTER TOGETHER.” 6
Slide 7: 2020 Highlights
2020 HIGHLIGHTS ACCELERATED ON-TRACK TO INCLUSION & ACHIEVE 2020 DIVERSITY ENVIRONMENTAL EFFORTS GOALS DONATED 32M ENHANCED MEALS TO PEOPLE EMPLOYEE AND PETS BENEFITS JMSMUCKER.COM 7
Slide 8: Dynamic Environment
Dynamic Environment 120+ YEARS OF ADAPTING TO MEET CONSUMER NEEDS PROUD AND THANKFUL FOR OUR EMPLOYEES FOR MAINTAINING HIGH QUALITY AND SAFETY STANDARDS 8
Slide 9: Fiscal Year 2021 First Quarter Results
Fiscal Year 2021 First Quarter Results NET SALES Increased At-Home Consumption +11% Retailer Inventory Re-Stock VS PRIOR YEAR Away From Home Decline ADJUSTED EPS +50% Operating Leverage VS PRIOR YEAR SD&A Expenses 9
Slide 10: Strategic Growth Imperatives
STRATEGIC GROWTH IMPERATIVES LEAD IN THE BEST BUILD BRANDS CATEGORIES CONSUMERS LOVE BE EVERYWHERE 10 10
Slide 11: Strategic Growth Imperatives
STRATEGIC GROWTH IMPERATIVES LEAD IN THE BEST BUILD BRANDS CATEGORIES CONSUMERS LOVE BE EVERYWHERE 10 11
Slide 12: Categories Where We Hold the #1 or #2 Branded Position
CATEGORIES WHERE WE HOLD THE #1 OR #2 BRANDED POSITION CONTRIBUTE OVER 70% OF NET SALES SOURCE: SMUCKER INTERNAL MULTI-OUTLET SHARE REPORT 52 WEEKS ENDED AUGUST 9, 2020 12
Slide 13: Strategic Growth Imperatives
STRATEGIC GROWTH IMPERATIVES LEAD IN THE BEST BUILD BRANDS CATEGORIES CONSUMERS LOVE BE EVERYWHERE 10 13
Slide 14: Marketing Investment
Marketing Investment FY20 10 NEW ADVERTISING CAMPAIGNS TARGET 6% - 7% OF NET SALES 14
Slide 15: Adding New Consumers
Adding New Consumers 3.7M NET NEW HOUSEHOLDS IN THE LAST 26 WEEKS 82% REPEAT PURCHASE SOURCE: IRI PANEL DATA 26 WEEKS ENDED JULY 26, 2020 15
Slide 16: Retaining Consumers
Retaining Consumers ADAPTING MARKETING STRATEGIES TO ENGAGE CONSUMERS LEVERAGING DATA TO ATTRACT AND RETAIN CONSUMERS 16
Slide 17: On-Trend Innovation
On-Trend Innovation FY20 5% OF NET SALES FROM PRODUCTS INTRODUCED IN LAST THREE YEARS 17
Slide 18: Strategic Growth Imperatives
STRATEGIC GROWTH IMPERATIVES LEAD IN THE BEST BUILD BRANDS CATEGORIES CONSUMERS LOVE BE EVERYWHERE 10 18
Slide 19: E-commerce
E-commerce 70% Q1 E-COMMERCE GROWTH RUNWAY FOR FUTURE GROWTH 19
Slide 20: E-commerce Sales in Q1 FY21
E-commerce Sales in Q1 FY21 17% 10% 7% OF U.S. RETAIL OF U.S. RETAIL OF U.S. RETAIL PET FOODS COFFEE CONSUMER FOODS NET SALES NET SALES NET SALES 12% OF TOTAL U.S. RETAIL NET SALES 20 20
Slide 21: U.S. Retail Segments
U.S. RETAIL SEGMENTS PET COFFEE CONSUMER FOODS FOODS 21
Slide 22: $2.9B U.S. Retail Pet Foods
$2.9B U.S. RETAIL FY20 NET SALES PET FOODS DOG SNACKS FOOD 29% 38% CAT FOOD 28% 2 2 22
Slide 23: Dog Snacks Leadership
Dog Snacks Leadership #1 +10% MARKET NET SALES SHARE LAST 2 QUARTERS Source: Smucker Internal Multi-Outlet Share Report 52 weeks ended August 9, 2020 23
Slide 24: Dog Snacks Leadership
Dog Snacks Leadership 24
Slide 25: Cat Food
Cat Food #2 MARKET SHARE 12 CONSECUTIVE QUARTERS OF YoY GROWTH Source: Smucker Internal Multi-Outlet Share Report 52 weeks ended August 9, 2020 25 25
Slide 26: Dog Food
Dog Food 70% OF DOG FOOD SALES FROM PREMIUM BRANDS 26
Slide 27: Accelerating Nutrish Growth
Accelerating Nutrish® Growth ADVERTISING FEATURING RACHAEL RAY IMPROVED VALUE PROPOSITION OPTIMIZING SUB-BRANDS INNOVATION 27
Slide 28: Optimizing Nutrish Sub-Brands
Optimizing Nutrish® Sub-Brands 28
Slide 29: Leading Coffee Portfolio
Leading Coffee Portfolio Folgers® Dunkin’® Café Bustelo® #1 BRAND #3 BRAND 24% SALES GROWTH 16% MARKET SHARE 8% MARKET SHARE 2% MARKET SHARE Source: Smucker Internal Multi-Outlet Share Report 52 weeks ended August 9, 2020 29
Slide 30: $2.1B U.S. Retail Coffee
$2.1B U.S. RETAIL FY20 NET SALES COFFEE PREMIUM 16% MAINSTREAM 50% ONE CUP 26% 3 0 30
Slide 31: Increased At-Home Consumption
Increased At-Home Consumption Q1 FY21 23% U.S. RETAIL COFFEE NET SALES GROWTH LONG-TERM NEW CONSUMER HABITS ARE FORMING THAT WILL BENEFIT OUR COFFEE BUSINESS 31
Slide 32: $1.7B U.S. Retail Consumer Foods
TOPPINGS & OTHER SYRUPS 4% NATURAL FOOD 3% $1.7B U.S. RETAIL & BEVERAGE 9% CONSUMER FY20 NET SALES SHORTENING & PEANUT BUTTER 39% FOODS OILS 14% FROZEN HANDHELDS 16% FRUIT SPREADS 17% 32
Slide 33: Uncrustables Growth
® Uncrustables Growth $365M 289.4M $154M ON TRACK $500M $118M $61M $12M EXPECTED NET SALES IN FY2023 A NO-TRADE-OFF SOLUTION FOR FASTEST-GROWING BRAND IN BUSY PARENTS FROZEN SNACKING 33 33
Slide 34: Key Takeaways
Key Takeaways EXECUTING ON NEAR-TERM PRIORITIES CONFIDENT IN CONSUMER-CENTRIC STRATEGY CONTINUE TO ADAPT AND BE AGILE ON-TRACK TO DELIVER FINANCIAL COMMITMENTS 34
Slide 35: Financial Outlook and Priorities
FINANCIAL OUTLOOK AND PRIORITIES Tucker Marshall Chief Financial Officer 35
Slide 36: Fiscal Year 2021 First Quarter Results
Fiscal Year 2021 First Quarter Results NET SALES Increased At-Home Consumption +11% Retailer Inventory Re-Stock VS PRIOR YEAR Away From Home Decline ADJUSTED EPS +50% Operating Leverage VS PRIOR YEAR SD&A Expenses 36
Slide 37: Full-Year Fiscal 2021 Outlook
Full-Year Fiscal 2021 Outlook INCREASED GUIDANCE REFLECTS: 0% to +1% • STRONG FIRST QUARTER PERFORMANCE NET SALES • MODERATING AT-HOME CONSUMPTION • LAPPING CONSUMER STOCK-UP IN PY Q4 $8.20 to $8.60 ADJUSTED EPS • AWAY FROM HOME DECLINE • BALANCED REINVESTMENT AND RETURN $925M to $975M FREE CASH FLO
Slide 38: Financial Goal
Financial Goal SUPPORTING BALANCED AND SUSTAINABLE SALES AND PROFIT GROWTH BY LEVERAGING: • OUR MARKET AND CATEGORY LEADERSHIP POSITIONS • STRATEGY DEFINED BY OUR GROWTH IMPERATIVES • STRONG FINANCIAL FOUNDATION 38
Slide 39: Financial Priorities
Financial Priorities CONSISTENT AND EXECUTION INCREASED COST CONTROL BALANCED TRANSPARENT AGAINST RETURN ON AND MARGIN CAPITAL COMMUNICATION TARGETS INVESTED CAPITAL ENHANCEMENT DEPLOYMENT CREATE LONG-TERM SHAREHOLDER VALUE 39
Slide 40: Our Purpose
Our Purpose “FEEDING CONNECTIONS THAT HELP US THRIVE – LIFE TASTES BETTER TOGETHER.” 40
Slide 41: Enhanced Focus on Returns
Enhanced Focus on Returns PRIORITIZE HIGHEST RETURN INVESTMENTS INCREASE FINANCIAL OVERSIGHT STRENGTHEN ANALYTICS EVALUATE PORTFOLIO 41
Slide 42: Optimizing Cost Structure
Optimizing Cost Structure MAINTAIN STRONG MARGINS AND CASH FLOW THROUGH: • TOTAL COMPANY COMMITMENT TO PRODUCTIVITY • REDUCTION OF DISCRETIONARY SPENDING • MARGIN MANAGEMENT COST PROGRAM • TRANSPARENCY AND COLLABORATION IN PRICING 42
Slide 43: Capital Deployment
Capital Deployment INVESTING IN RETURNING CASH TO GROWTH SHAREHOLDERS • DIVIDENDS • CAPITAL EXPENDITURES • DEBT REPAYMENT • STRATEGIC PROJECTS • SHARE REPURCHASES 50% 50% 43
Slide 44: Debt Profile
Debt Profile 4.1x 3.6x 2.9x $1.3B DEBT REPAYMENTS SINCE Q1 FY19 LEVERAGE OF 3.0X ENHANCES FINANCIAL FLEXIBILITY Q1 FY19 Q1 FY20 Q1 FY21 44
Slide 45: Dividend Growth
Dividend Growth 19 CONSECUTIVE YEARS $3.60 OF DIVIDEND INCREASES $2.68 8% 10-YEAR CAGR $1.68 40-45% ADJUSTED EPS PAYOUT 45
Slide 46: Key Takeaways
Key Takeaways STRONG START TO FISCAL YEAR 2021 FINANCIAL DISCIPLINE ENABLES OUR STRATEGY ON PATH TO DELIVER CONSISTENT, SUSTAINABLE GROWTH AND INCREASE SHAREHOLDER VALUE 46
Slide 47: The J.M. Smucker Company Investor Day
The J.M. Smucker Company Investor Day Week of December 7, 2020 47
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Slide 49: Barclays Global Consumer Staples Conference 2020
2020 BARCLAYS GLOBAL CONSUMER STAPLES CONFERENCE
Slide 50: Supporting Materials
Supporting Materials
Slide 51: Non-GAAP Financial Measures
Non-GAAP Financial Measures The Company uses non-GAAP financial measures, including: net sales excluding foreign currency exchange; adjusted gross profit; adjusted operating income; adjusted income; adjusted earnings per share; earnings before interest, taxes, depreciation, amortization, and impairm
Slide 52: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking statements, such as projected net sales, operating results, earnings, and cash flows that are subject to risks and uncertainties that could cause actual results to differ materially from future results expressed or implied by thos
Slide 53: Non-GAAP Reconciliation
Non-GAAP Reconciliation ($ and shares in millions, except per share data) Three Months Ended July 31, 2020 2019 Net income reconciliation: Net income $237.0 $154.6 Income tax expense 76.6 52.1 Amortization 59.6 58.8 Unallocated derivative losses (gains) (16.2) (29.0) Other special project costs - 3.
Slide 54: Non-GAAP Reconciliation
Non-GAAP Reconciliation ($ in millions) Three Months Ended TTM Ended October 31, January 31, April 30, July 31, July 31, 2017 2018 2018 2018 2018 EBITDA (as adjusted) reconciliation: Net income $194.6 $831.3 $185.9 $133.0 $1,344.8 Income tax expense 97.2 (715.3) 78.3 40.1 (499.7) (benefit) Interest
Slide 55: Non-GAAP Reconciliation
Non-GAAP Reconciliation ($ in millions) Three Months Ended TTM Ended October 31, January 31, April 30, July 31, July 31, 2018 2019 2019 2019 2019 EBITDA (as adjusted) reconciliation: Net income $188.5 $121.4 $71.5 $154.6 $536.0 Income tax expense 80.9 35.8 30.4 52.1 199.2 Interest expense - net 53.6
Slide 56: Non-GAAP Reconciliation
Non-GAAP Reconciliation Note: Amounts may not add due to rounding ($ in millions) Three Months Ended TTM Ended October 31, January 31, April 30, July 31, July 31, 2019 2020 2020 2020 2020 EBITDA (as adjusted) reconciliation: Net income $211.2 $187.4 $226.3 $237.0 $861.9 Income tax expense 67.9 55.1
Slide 57: Non-GAAP Reconciliation
Non-GAAP Reconciliation Company Guidance Year Ending April 30, 2021 ($ in millions, except per share data) Low High Net income per common share – assuming dilution reconciliation: Net income per common share – assuming dilution $6.83 $7.23 Unallocated derivative losses (gains) (0.22) (0.22) Amortiza
Slide 58: Additional Information
Additional Information The Company is the owner of all trademarks and logos referenced herein, except for the following, which are used under license: Dunkin’® and Dunkin’ Donuts® are registered trademarks of DD IP Holder LLC and Rachael Ray® is a registered trademark of Ray Marks II LLC. The follow
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