The J.m. Smucker Company · NYSE:SJM
The J.m. Smucker — Smucker J M — Merger or Acquisition (July 2008)
38 slides from The J.m. Smucker's merger presentation, Jul 29, 2008
Slide 1: Summary Presentation The J. M. Smucker Company
Investor Presentation July 2008 Summary Presentation The J. M. Smucker Company Investor Presentation July 2008 Summary Presentation The J. M. Smucker Company Filed by The J. M. Smucker Company Pursuant to Rule 425 under the Securities Act of 1933 and Deemed Filed Pursuant to Rule 14a-12 Under the Se
Slide 2: Forward Looking Statement
Forward Looking Statement Forward Looking Statement This presentation contains forward-looking statements, such as projected 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
Slide 3: Additional Information
Additional Information Additional Information Smucker and Folgers have filed registration statements with the U. S. Securities and Exchange Commission (“SEC”) registering the common shares to be issued to P&G shareholders in connection with the Folgers transaction but those registration statements h
Slide 4: Why Invest in Smucker?
Why Invest in Smucker? Why Invest in Smucker? • A history and culture of solid returns • Clear strategy of owning a strong portfolio of #1 brands • Strategic acquisition of Folgers • Enhances #1 brand portfolio • Increases market categories from $8 billion to $15 billion • Creates sales growth to $5
Slide 5: Why Invest in Smucker?
Why Invest in Smucker? Why Invest in Smucker? • Strong cash flow and balance sheet • Continuity of management • Current value of Smucker stock vs. peers • Strong forecasted results in current fiscal year • Special $5.00 dividend in calendar 2008 • Current share performance vs. peers
Slide 6: The J. M. Smucker Company
The J. M. Smucker Company • Over 110 years old • Headquartered in Orrville, Ohio • Leading North American brands • Five generations of family management • Basic Beliefs: quality, people, ethics, growth, & independence The J. M. Smucker Company
Slide 7: Share Price Performance
Share Price Performance $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 S&P 500 DJIA SJM Share Price Performance Note: The graph shows the value of $20 (Smucker’s IPO price in 1959) invested over a 48+ year period in Smucker’s common stock, the DJIA and S&P 500. Indexed Share Price APR = 10.2% APR = 10.2
Slide 8: Vision Statement
Vision Statement We will own and market food brands which hold the #1 market position in their respective category, with an emphasis on North America We will achieve balanced growth through: • Increased market share of our brands • Acquisition of other leading food brands • New products that provide
Slide 9: Long-Term Objectives
Long-Term Objectives Net Sales Growth Dividend Payment Operating Profit Growth EPS Growth 6% Organic 3- 4% Acquisitions 2-3% 8% Improve Efficiencies +8% Share Repurchase Debt Retirement Target 40% Payout Long-Term Objectives
Slide 10: Sales Growth
Sales Growth $0.0 $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 Net Sales $650MM $1.3B $2.0B $2.1B 5-Year CAGR through FY 2008 = 15% 10-Year CAGR through FY 2008 = 16% Sales Growth $1.4B $2.2B $2.5B
Slide 11: Earnings Growth
Earnings Growth $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 Earnings Per Share (non-GAAP) $1.38 $2.14 $2.60 $2.89 Earnings Growth $2.42 $2.77 5-Year CAGR through FY 2008 = 8% 10-Year CAGR through FY 2008 = 10% $3.15 (a) Excludes merger, inte
Slide 12: Transactions
FY 2003 FY 2005 FY 2007 FY 2008 FY 2009 FY 2004 12 Transactions FY 2003 FY 2005 FY 2007 FY 2008 KING KELLY FY 2009 FY 2004 (a) Integration in process. (b) Announced but not closed. 12 Transactions (a) (b)
Slide 13: "A Perfect Fit"
“A Perfect Fit”
Slide 14: Attractive Strategic Fit
Attractive Strategic Fit • Strong #1 Brand • Center-of-Store • North America VISION STATEMENT We will own and market food brands which hold the #1 market position in their respective category, with an emphasis on North America Attractive Strategic Fit • Strong #1 Brand • Center-of-Store • North Amer
Slide 15: Percent of Sales from #1 Brands
Percent of Sales from #1 Brands Percent of Sales from #1 Brands ~75% of Sales Projected to Come From #1 Brands
Slide 16: Center-of-Store Strategy
Center-of-Store Strategy Center-of-Store Strategy Baking Aisle Spreads / Condiments Aisle Frozen Aisle Specialty Aisle Coffee Aisle Natural Beverage Aisle
Slide 17: Compelling Transaction
Compelling Transaction Compelling Transaction • $1 billion brand • Expands portfolio of #1 brands • Builds on “Center of the Store” focus • Enhanced scale • Financial benefits • Great home for Folgers brand and employees
Slide 18: Transaction Overview
Transaction Overview Transaction Overview • Reverse Morris Trust structure • P&G shareholders will own 53.5% of the combined company shares – ~63 million shares will be issued – ~118 million shares outstanding • Smucker to pay $5 special one-time dividend to Smucker shareholders, as of a record date
Slide 19: Builds on Center of Store Focus
Builds on Center of Store Focus Greater opportunity as share of market in each category expands Builds on Center of Store Focus $15.0 $8.0 $3.0 $1.0 FY 2002 FY 2004 FY2005 FY2009 Market opportunity ($ in billions)
Slide 20: U.S. Coffee Market
U.S. Coffee Market Coffee Category Highlights Coffee Market Overview At-Home Coffee Market • Large $31B market – High household penetration – Frequency of use is increasing – High consumer purchase frequency that drives traffic for retailers – Consistent performance through economic cycles • Evolvin
Slide 21: U.S. At Home Coffee Market Share by Segment
U.S. At Home Coffee Market Share by Segment Mainstream Roast & Ground 2 Gourmet Coffee 2 Single Serve 2 Folgers 48% Kraft 24% Rest of Market 28% U.S. At Home Coffee Market Share by Segment Source: P&G internal estimate based on All Outlet Data Excludes approximately $1.2B of packaged roast & ground
Slide 22: Added Scale
Added Scale Revenue (1) Added Scale ($ in billions) 1.2 Treehouse 2.0 Flower Foods 2.5 Smucker (Current) 2.9 McCormick 3.3 Ralcorp 3.7 Del Monte 4.7 Smucker (2) 6.2 Hormel 7.9 Campbell 10.1 HJ Heinz 11.6 ConAgra 11.8 Kellogg 12.3 Sara Lee $13.7 General Mills (1) Comparison company revenue based on l
Slide 23: Financial Benefits
Financial Benefits Financial Benefits • Accretive transaction • Operating margin expansion • Significantly enhanced cash flow • Strong balance sheet with modest debt level • Greater float – more shares outstanding
Slide 24: Iconic Brands
Iconic Brands Iconic Brands
Slide 25: Household Slogans
Household Slogans Household Slogans “ With a Name Like Smucker’s, It Has to be Good ” “ Choosy Moms Choose Jif ” “ The Best Part of Wakin’ Up ” “ Start Something Good With Crisco ” “ Everybody’s Happy When It’s Hungry Jack ” “ America Runs on Dunkin’ ”
Slide 26: Marketing Synergies – Meals
Marketing Synergies – Meals Marketing Synergies – Meals • The Best Part of Waking Up…
Slide 27: Marketing Synergies – Meals
Marketing Synergies – Meals Marketing Synergies – Meals • The Best Way to End the Day…
Slide 28: Smucker's
gMUCKERS,
Slide 29: Projected Sales by Category
Projected Sales by Category 42% 7% 8% 11% 6% 15% 11% Projected Sales by Category 42% 7% 8% 11% 6% 15% 11% Fruit Spreads Peanut Butter Oils & Shortening Baking Canned Milk All Other Coffee Estimated After Transaction
Slide 30: Net Sales and EBITDA
Net Sales and EBITDA 14.7% 17.3% 17.5% Net Sales and EBITDA $0.0 $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 FY2008 FY2009 FY2010 Net Sales $0 $250 $500 $750 $1,000 FY2008 FY2009 FY2010 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% EBITDA (Excluding Merger and Integration Costs) Pro forma * (a) $2.5B $4.7B $4.9B $371 $
Slide 31: Cash Flow From Operations
Cash Flow From Operations Cash Flow From Operations $ 116 $ (76) $ 192 FY 2008 $ 400 $(115) $ 515 FY2009 (a) Pro forma $ 430 Free Cash Flow $(120) Capital Expenditures $ 550 Cash Flow From Operations FY 2010 Pro forma ($ in millions) (a) Assumes Folgers transaction had closed on May 1, 2008.
Slide 32: Debt Profile Supports Continued Growth
Debt Profile Supports Continued Growth 2009 Standalone Smucker 2009 (a) Combined Smucker Total Debt $790mm $1,440mm Debt / EBITDA 2.1x 1.8x Interest Coverage 8.1x 9.7x Debt Profile Supports Continued Growth • Stronger balance sheet post-closing • Modest leverage and strong cash flow will facilitate
Slide 33: Cash Flow / Allocation of Cash
Cash Flow / Allocation of Cash (after expiration of two year repurchase limitation) Acquisition Capital Expenditures Stock Repurchase Dividends Free Cash Flow Cash From Operations Dividends Acquisition Repurchase CapEx = 2½ - 3% of Sales Cash Flow / Allocation of Cash (after expiration of two year r
Slide 34: Why Invest in Smucker?
Why Invest in Smucker? Why Invest in Smucker? • A history and culture of solid returns • Clear strategy of owning a strong portfolio of #1 brands • Strategic acquisition of Folgers • Enhances #1 brand portfolio • Increases market categories from $8 billion to $15 billion • Creates sales growth to $5
Slide 35: Why Invest in Smucker?
Why Invest in Smucker? Why Invest in Smucker? • Strong cash flow and balance sheet • Continuity of management • Current value of Smucker stock vs. peers • Strong forecasted results in current fiscal year • Special $5.00 dividend in calendar 2008 • Current share performance vs. peers
Slide 36: Additional Information
Additional Information Additional Information FOLGERS, the FOLGERS logo, AROMASEAL, FOLGERS GOURMET SELECTIONS and THE BEST PART OF WAKIN' UP IS FOLGERS IN YOUR CUP are the registered trademarks of The Proctor & Gamble Company. PILLSBURY, the PILLSBURY Logo, and Poppin' Fresh the Pillsbury Doughboy
Slide 37: Thank you!
Thank you! Thank you!
Slide 38: Summary Presentation The J. M. Smucker Company
Investor Presentation July 2008 Summary Presentation The J. M. Smucker Company Investor Presentation July 2008 Summary Presentation The J. M. Smucker Company