The J.m. Smucker Company · NYSE:SJM
The J.m. Smucker — Barclays Global Consumer Staples Conference 2016
40 slides from The J.m. Smucker's conference presentation, Sep 6, 2016
Slide 1: Barclays Global Consumer Staples Conference
Barclays Global Consumer Staples Conference September 6, 2016 Forward-Looking Statement 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 actu
Slide 2: Agenda
Barclays Global Consumer Staples Conference September 6, 2016 AGENDA Strategic Update & Key Areas of Focus Mark Smucker President and Chief Executive Officer Financial Update Mark Belgya Vice Chair and Chief Financial Officer Strategic Update & Key Areas of Focus Mark Smucker President and Chief Exe
Slide 3: Three Platforms for Growth
Barclays Global Consumer Staples Conference September 6, 2016 Three Platforms for Growth 5 Our Vision Guides our Strategy “Engage, delight, and inspire consumers through trusted food brands that bring joy throughout their lives.” A portfolio that combines #1 AND LEADING BRANDS with EMERGING, ON-TREN
Slide 4: Leveraging Our Leading Brands
Barclays Global Consumer Staples Conference September 6, 2016 Leveraging Our Leading Brands JIF SMUCKER’S MILK-BONE FOLGERS 7 Leveraging Our Smaller and Emerging Brands 8 The J. M. Smucker Company 4
Slide 5: First Quarter Fiscal 2017 Overview
Barclays Global Consumer Staples Conference September 6, 2016 First Quarter Fiscal 2017 Overview YoY FY17 Q1 ($ in millions, except per share data) CHANGE Net Sales Excluding Divested Business and FX $1,820 (5%) Adjusted EPS $1.86 16% FULL-YEAR OUTLOOK Net Sales Excluding Divested Business 0% to (1%
Slide 6: Strong Brands Beloved by Consumers
Barclays Global Consumer Staples Conference September 6, 2016 Strong Brands Beloved by Consumers 11 Favorable Pet Category Dynamics HUMANIZATION EXPANDING U.S. pet population GROWTH in pet snacks PREMIUMIZATION Opportunities in E-COMMERCE 12 The J. M. Smucker Company 6
Slide 7: Key Components of Our Pet Food Business
Barclays Global Consumer Staples Conference September 6, 2016 Key Components of Our Pet Food Business 13 Pet Snacks Meow Mix 2% Milo’s Kitchen Other 7% 10% $760M Canine Carry Outs 12% Milk-Bone 47% FY16 Net Sales Pupperoni 22% 14 The J. M. Smucker Company 7
Slide 8: Mainstream Cat Food
Barclays Global Consumer Staples Conference September 6, 2016 Mainstream Cat Food #2 MARKET SHARE in category New TV ad campaign INNOVATION to support future growth 15 Mainstream Dog Food Strengthening BRAND MESSAGING Focusing on DISTRIBUTION And MERCHANDISING execution 16 The J. M. Smucker Company
Slide 9: Mass Premium Category
Barclays Global Consumer Staples Conference September 6, 2016 Mass Premium Category Growth of PREMIUM OFFERINGS in grocery and mass market White space opportunity for Smucker portfolio Opportunities include: LICENSING, ACQUISITION, and BRAND EXPANSION 17 Premium Pet Food Benefitting from DISTRIBUTIO
Slide 10: Continued Profit Growth and Strong Cash Flow
Barclays Global Consumer Staples Conference September 6, 2016 U.S. Retail Pet Foods Segment Continued PROFIT GROWTH and STRONG CASH FLOW Portfolio of beloved PET BRANDS 19 Corporate Strategy 20 The J. M. Smucker Company 10
Slide 11: Execute Today, Building for Tomorrow
Barclays Global Consumer Staples Conference September 6, 2016 The J. M. Smucker Company Execute Today, BUILDING for Tomorrow 21 The J. M. Smucker Company Execute Today, BUILDING for Tomorrow 22 The J. M. Smucker Company 11
Slide 12: Culture and Management Continuity
Barclays Global Consumer Staples Conference September 6, 2016 Culture and Management Continuity Founded in 1897 by Jerome M. Smucker FIVE GENERATIONS of Smucker family management with only SIX CEOs in Company’s history Committed to CORE VALUES AND PRINCIPLES upon which the Company was founded 23 Exc
Slide 13: Consumers Trust Our Brands
Barclays Global Consumer Staples Conference September 6, 2016 The J. M. Smucker Company Execute Today, BUILDING for Tomorrow 25 Consumers Trust Our Brands At least one of our products can be found in 93% of all U.S. households We continue to adapt to the EVOLVING CONSUMER LANDSCAPE Source: IRI panel
Slide 14: On-Trend Platforms
Barclays Global Consumer Staples Conference September 6, 2016 On-Trend Platforms NATURAL AND ORGANIC SNACKING 27 Natural and Organic Products PEANUT BUTTER $350M FRUIT SPREADS net sales expected in FY17 BEVERAGES 9% 5-Year CAGR ANCIENT GRAINS 28 The J. M. Smucker Company 14
Slide 15: Synergy and Cost Savings Objectives
Barclays Global Consumer Staples Conference September 6, 2016 Synergy and Cost Savings Objectives $200 MILLION Annual Synergies by FY18 Additional $50 MILLION from company-wide initiatives 29 The J. M. Smucker Company Execute Today, BUILDING for Tomorrow 30 The J. M. Smucker Company 15
Slide 16: Enhancing Capabilities
Barclays Global Consumer Staples Conference September 6, 2016 Enhancing Capabilities CONSUMER INNOVATION ANALYTICS INSIGHTS CONNECTED DIGITAL TRADE COMMERCE MARKETING OPTIMIZATION 31 Revenue Management FOCUSING RESOURCES on revenue and trade management Utilizing CUSTOMER and PROGRAM ANALYTICS Re-all
Slide 17: Key Growth Drivers
Barclays Global Consumer Staples Conference September 6, 2016 The J. M. Smucker Company Execute Today, BUILDING for Tomorrow 33 Key Growth Drivers PET SMUCKER’S JIF COFFEE SNACKS BRAND BRAND 34 The J. M. Smucker Company 17
Slide 18: Coffee Business
Barclays Global Consumer Staples Conference September 6, 2016 Coffee Business Other Café Bustelo 6% 5% $2.6B Dunkin’ Donuts 19% Folgers FY16 Net Sales 70% Note: Represents total coffee sales across the Company. 35 Mainstream Coffee 55% DOLLAR SHARE of mainstream coffee Focused on increasing BRAND LO
Slide 19: Dunkin' Donuts Coffee
Barclays Global Consumer Staples Conference September 6, 2016 Dunkin’ Donuts Coffee $210 MILLION NET SALES for K-Cups during first year in market 37 Smucker’s Brand Other Peanut Butter 5% 5% Ice Cream Toppings 8% $775M Portion Control 14% Fruit Spreads 42% FY16 Net Sales Uncrustables Sandwiches 26%
Slide 20: Smucker's Uncrustables Sandwiches
Barclays Global Consumer Staples Conference September 6, 2016 Smucker’s Uncrustables Sandwiches $200M FY16 Net Sales 21% 15-Year CAGR Note: Includes U.S. Retail Consumer Foods and Foodservice. 39 Jif Brand Convenience/ Natural Snacking Alternate Peanut Butter 8% Nut Butters 11% 2% $620M FY16 Net Sal
Slide 21: Expanding the Jif Brand
Barclays Global Consumer Staples Conference September 6, 2016 Expanding the Jif Brand 41 Snacking Products 42 The J. M. Smucker Company 21
Slide 22: Financial Update
Barclays Global Consumer Staples Conference September 6, 2016 Financial Update Mark Belgya Vice Chair and Chief Financial Officer The J. M. Smucker Company 22
Slide 23: Execute Today, Building for Tomorrow
Barclays Global Consumer Staples Conference September 6, 2016 The J. M. Smucker Company Execute Today, BUILDING for Tomorrow 45 The J. M. Smucker Company Execute Today, BUILDING for Tomorrow 46 The J. M. Smucker Company 23
Slide 24: First Quarter Fiscal 2017 Overview
Barclays Global Consumer Staples Conference September 6, 2016 First Quarter Fiscal 2017 Overview YoY FY17 Q1 CHANGE ($ in millions, except per share data) Net Sales Excluding Divested Business and FX $1,820 (5%) Adjusted Gross Profit $719 (3%) Adjusted Gross Profit Margin 39.6% +160bps Adjusted Oper
Slide 25: Full-Year Fiscal 2017 Outlook by Segment
Barclays Global Consumer Staples Conference September 6, 2016 Full-Year Fiscal 2017 Outlook by Segment SEGMENT SEGMENT NET SALES PROFIT U.S. Retail Coffee - LSD Flat U.S. Retail Consumer Foods* + LSD + MSD U.S. Retail Pet Foods - LSD + LSD International & Foodservice* + LSD Flat *Note: Excludes impa
Slide 26: Mainstream Cat Food
Barclays Global Consumer Staples Conference September 6, 2016 Mainstream Cat Food Premium Pet Food Mainstream $680M 19% Cat Food 30% FY16 Net Sales Pet Snacks 34% Mainstream Dog Food 17% 51 Mainstream Dog Food Premium Pet Food Mainstream $390M 19% Cat Food 30% FY16 Net Sales Pet Snacks 34% Mainstrea
Slide 27: Pet Snacks
Barclays Global Consumer Staples Conference September 6, 2016 Pet Snacks Premium Premium Pet Food Pet 19%Food Mainstream Mainstream $760M 19% Cat Cat Food Food 30% 30% FY16 Net Sales Pet Snacks Mainstream 34% Mainstream Dog Dog Food Food 17% 17% 53 Premium Pet Food Premium Premium Pet Food Pet 19%Fo
Slide 28: Pet Specialty Channel
Barclays Global Consumer Staples Conference September 6, 2016 Pet Specialty Channel $3.1B +5.6% $4.7B vs. year ago +3.4% vs. year ago Pet Superstores Regional Chain/Independent Stores Source: GFK (Regional/Independent) 52 weeks ended June 2016, Dog and Cat Consumables; Nielsen (Superstores) 52 weeks
Slide 29: Manufacturing Facility Footprint
Barclays Global Consumer Staples Conference September 6, 2016 Manufacturing Facility Footprint Closed or sold 9 FACILITIES since 2010 Closed/Sold Existing 57 Sales & EBIT per Employee ($ in thousands) $1,400 SALES PER EMPLOYEE $250 EBIT PER EMPLOYEE $1,200 $200 $1,000 $150 $800 $600 $100 $400 $50 $2
Slide 30: Acquisition Synergies
Barclays Global Consumer Staples Conference September 6, 2016 Acquisition Synergies $200M Annual Synergies by FY18 $200M $137M As of Q1 FY17, achieved a $37M run rate of 85% of the FY18 target FY16 FY17E FY18P Timing of Realization 59 Incremental Cost Savings MANUFACTURING CORPORATE FOOTPRINT ORGANI
Slide 31: Acquisition Synergies by Line Item
Barclays Global Consumer Staples Conference September 6, 2016 Acquisition Synergies by Line Item TOTAL FY16 FY17E* ($ in millions) FY17E Cost of Products Sold $5 $25 $30 Gross Profit Impact $5 $25 $30 SD&A (Excluding Administrative Expenses) $7 $40 $47 Segment Profit Impact $12 $65 $77 Corporate Adm
Slide 32: SD&A Expenses as a Percent of Net Sales
Barclays Global Consumer Staples Conference September 6, 2016 SD&A Expenses as a Percent of Net Sales 19.3% 16.2% +310bps FY12 FY16 Increase partially attributed to: • Higher rate of marketing and advertising • Licensing costs of Dunkin’ Donuts brand 63 G&A Expenses as a Percent of Net Sales 6.7% 5.
Slide 33: Commodity Summary – Spot Market Prices
Barclays Global Consumer Staples Conference September 6, 2016 Commodity Summary – Spot Market Prices 1 YEAR 5-YEAR 5-YEAR CURRENT* AGO HIGH LOW Arabica ($/lb) 1.46 1.21 2.92 1.01 Robusta ($/lb) 0.83 0.72 1.09 0.62 Wheat ($/bu) 3.61 4.83 9.47 3.61 Peanuts ($/lb) 0.56 0.51 1.30 0.46 Soybean Oil ($/lb)
Slide 34: Current Cash Deployment Strategy
Barclays Global Consumer Staples Conference September 6, 2016 The J. M. Smucker Company Execute Today, BUILDING for Tomorrow 67 Current Cash Deployment Strategy CapEx of 3% to 3.5% of net sales Maintain current dividend payout ratio Apply 40% to 45% towards debt repayment In addition, we will deploy
Slide 35: Fiscal 2017 Cash Deployment Model
Barclays Global Consumer Staples Conference September 6, 2016 Fiscal 2017 Cash Deployment Model CASH FROM CAPEX OPERATIONS $240M $1.24B FREE CASH FLOW $1.0B DIVIDENDS DEBT STRATEGIC REPAYMENT DECISIONS $350M $450M $200M 69 Areas of M&A Interest 70 The J. M. Smucker Company 35
Slide 36: Forward-Looking Statement
Barclays Global Consumer Staples Conference September 6, 2016 Forward-Looking Statement This presentation contains forward-looking statements, such as projected net sales, operating results, earnings, and cash flows, which are subject to risks and uncertainties that could cause actual results to dif
Slide 37: Additional Information
Barclays Global Consumer Staples Conference September 6, 2016 Additional Information The Company is the owner of all trademarks and logos referenced herein, except for the following, which are used under license: Pillsbury ® is a trademark of The Pillsbury Company, LLC, and Dunkin' Donuts ® is a reg
Slide 38: Non-GAAP Reconciliation
Barclays Global Consumer Staples Conference September 6, 2016 Non-GAAP Reconciliation ($ in millions) Three Months Ended July 31, 2016 2015 Net sales reconciliation: Net sales $ 1,815.8 $ 1,952.0 Milk divestiture - (39.5) Net sales excluding divestiture $ 1,815.8 $ 1,912.5 Foreign currency exchange
Slide 39: Non-GAAP Reconciliation
Barclays Global Consumer Staples Conference September 6, 2016 Non-GAAP Reconciliation Three Months Ended July 31, ($ in millions, except per share data) 2016 2015 Net income reconciliation: Net income $ 170.0 $ 136.4 Income taxes 83.4 86.4 Amortization 51.7 53.0 Unallocated derivative (gains) losses
Slide 40: Non-GAAP Reconciliation
Barclays Global Consumer Staples Conference September 6, 2016 Non-GAAP Reconciliation Year Ended April 30, 2016 2012 Gross profit reconciliation: Gross profit $ 2,967.8 $ 1,845.2 Unallocated derivative (gains) losses (12.0) 8.5 Cost of products sold – special project costs 12.2 43.2 Adjusted gross p
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