The J.m. Smucker Company · NYSE:SJM
The J.m. Smucker — Consumer Analyst Group of New York (CAGNY) Conference 2017
50 slides from The J.m. Smucker's conference presentation, Feb 22, 2017
Slide 1: The J.M. Smucker Company
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 The J.M. Smucker Company February 22, 2017 Agenda 2 1
Slide 2: Strategy and Business Update; Forward-Looking Statements
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 Strategy and Business Update Mark Smucker President and Chief Executive Officer THE J.M. SMUCKER COMPANY Forward-Looking Statements This presentation contains forward-looking statements, such as projected net sales, operating results, earnings,
Slide 3: Food Industry Dynamics
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 Food Industry Dynamics 5 Food Industry Dynamics Significant Strong Possible cash flow balance tax reform with stable sheets benefit returns 6 3
Slide 4: Today's Key Themes
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 Food Industry Dynamics What will separate opportunity within the sector are companies who can truly innovate, be a strong participant in e-commerce, have effective digital engagement with consumers, and diligently manage their cost structure. 7
Slide 5: A Period of Transformational Growth
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 A Period of Transformational Growth Note: These figures assume all dividends are reinvested when received and are based on $100 invested in our common shares and the referenced index funds on January 2, 2002. 9 Balanced Portfolio of Iconic & Em
Slide 6: Category Leadership
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 Category Leadership Source: Smucker Internal Multi-Outlet Share Report 52 weeks ended January 22, 2017; (1) Smucker Internal Multi-Outlet Share Report 52 weeks ended January 28, 2017. 11 Our Vision Guides Our Strategy 12 6
Slide 7: Consumer Preferences
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 Consumer Preferences We are responding to changing consumer preferences to ensure our brands remain the preferred choice across multiple generations. 13 Innovation 14 7
Slide 8: Our Plan
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 Our Plan 15 Our Plan BUILD NEW & PRIORITIZE NURTURE OUR DELIVER THE ENHANCE RESOURCES FOR CULTURE BUSINESS EXISTING KEY GROWTH CAPABILITIES DRIVERS 16 8
Slide 9: Current Cost Reduction Programs
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 Our Plan BUILD NEW & PRIORITIZE NURTURE OUR DELIVER THE ENHANCE RESOURCES FOR CULTURE BUSINESS EXISTING KEY GROWTH CAPABILITIES DRIVERS 17 Current Cost Reduction Programs 18 9
Slide 10: New Cost Reduction Program
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 New Cost Reduction Program 19 Combined Cost Reduction Programs 20 10
Slide 11: Enhancing Capabilities
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 Our Plan BUILD NEW & PRIORITIZE NURTURE OUR DELIVER THE ENHANCE RESOURCES FOR CULTURE BUSINESS EXISTING KEY GROWTH CAPABILITIES DRIVERS 21 Enhancing Capabilities INNOVATION CONSUMER INSIGHTS ANALYTICS REVENUE GROWTH CONNECTED COMMERCE DIGITAL M
Slide 12: Connected Commerce
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 Connected Commerce Emphasis on accelerating our strong e-commerce sales growth in pet 60% 15% FY17 E-COMMERCE OF TOTAL food and coffee GROWTH BRAND SALES 23 Revenue Growth Management 24 12
Slide 13: Folgers Roast & Ground Canister
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 Folgers Roast & Ground Canister 25 Our Plan BUILD NEW & PRIORITIZE NURTURE OUR DELIVER THE ENHANCE RESOURCES FOR CULTURE BUSINESS EXISTING KEY GROWTH CAPABILITIES DRIVERS 26 13
Slide 14: U.S. Retail Coffee
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 U.S. Retail Segments 27 U.S. Retail Coffee THE J.M. SMUCKER COMPANY 14
Slide 15: At-Home Coffee Category
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 At-Home Coffee Category $9.5B 1% $7.0B 4% 41% 11% 10% 7% 29% 6% 24% 5-YEAR Other One Cup CAGR Instant 46% 27% Premium Mainstream R&G 2011 2016 Source: Smucker Internal Multi-Outlet Share Report 52 weeks ended January 1, 2012 and December 25, 20
Slide 16: Mainstream Roast & Ground Category
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 Mainstream Roast & Ground Category Source: Smucker Internal Multi-Outlet Share Report 52 weeks ended January 22, 2017. 31 Folgers Coffeehouse Blend 32 16
Slide 17: Folgers Simply Gourmet
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 Folgers Simply Gourmet New premium products with all natural flavors 33 Folgers Perfect Measures 34 17
Slide 18: Dunkin' Donuts Coffee
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 Dunkin’ Donuts Coffee $500M FY17E NET SALES 35 Dunkin’ Donuts K-Cups Source: Smucker Internal Multi-Outlet Share Report 52 weeks ended January 22, 2017. 36 18
Slide 19: Dunkin' Donuts Bagged Coffee
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 Dunkin’ Donuts Bagged Coffee Source: Smucker Internal Multi-Outlet Share Report 52 weeks ended January 22, 2017. 37 Dunkin’ Donuts Cold Brew 38 19
Slide 20: Café Bustelo
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 Café Bustelo Note: Represents brand sales Company-wide. 39 Café Bustelo Experience Resonates with consumers who appreciate the brand’s authentic heritage 40 20
Slide 21: Insight-Driven Coffee Innovation
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 Insight-Driven Coffee Innovation 41 Extending Folgers’ Legacy Core consumers and millenials are inspired by the Folgers heritage and view the brand as highly authentic 42 21
Slide 22: Coffee Portfolio Growth
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 Coffee Portfolio Growth DUNKIN’ DONUTS SARA LEE K-CUP FOODSERVICE PARTNERSHIP ROWLAND HOT BEVERAGE COFFEE ROASTERS ACQUISITION K-CUP ACQUISITION PARTNERSHIP FOLGERS ACQUISITION Future transactions will play a role in our coffee roadmap 43 U.S.
Slide 23: Snacking
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 Snacking $310M FY17E NET SALES CONVENIENT 15% 5-YEAR CAGR ON-THE-GO LOW PREP Note: Represents snacking sales Company-wide. 45 Smucker’s Uncrustables Frozen Sandwiches Note: Represents brand sales Company-wide. 46 23
Slide 24: Smucker's Uncrustables Frozen Sandwiches
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 Smucker’s Uncrustables Frozen Sandwiches Note: Represents brand sales Company-wide. 47 New Uncrustables Manufacturing Facility Note: Longmont production to begin in 2019. 48 24
Slide 25: Jif To Go
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 Jif To Go Source: Smucker Internal Multi-Outlet Share Report 52 weeks ended January 22, 2017. 49 Jif Snack Bars RETAIL SALES +32% LATEST 12-WEEK PERIOD Benefitting from marketing investments and new flavors Source: Smucker Internal Multi-Outlet
Slide 26: Jif Spreads
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 Jif Spreads 46% PEANUT BUTTER SHARE ACROSS ALL COMPANY BRANDS Source: Smucker Internal Multi-Outlet Share Report 52 weeks ended January 22, 2017. 51 Jif Launch in Canada 52 26
Slide 27: Sahale Snacks
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 Sahale Snacks Increasing investments in marketing and innovation and expanding distribution 53 U.S. Olympic Team Sponsor 54 27
Slide 28: Natural & Organic
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 Natural & Organic Note: Represents natural and organic sales Company-wide. 55 Leader in Natural & Organic Source: Smucker Internal Multi-Outlet Share Report 52 weeks ended January 22, 2017; (1) SPINS SRL Universe 52 weeks ended January 22, 2017
Slide 29: Santa Cruz Organic Agua Fresca
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 Santa Cruz Organic Agua Fresca Lightly sweetened, refreshing beverage with organic fruit juice Expanding distribution in traditional grocery channels 57 Numi Ready-to-Drink Tea 58 29
Slide 30: U.S. Retail Pet Foods
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 U.S. Retail Pet Foods THE J.M. SMUCKER COMPANY Progress on Pet Acquisition Financial Goals $200 million annual synergies by FY18 Non-GAAP EPS growth of 10% in FY17 and FY18 Expand EBITDA margin by over 200 bps by FY18 60 30
Slide 31: Pet Business Growth
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 Pet Business Growth 61 Pet Business Growth 62 31
Slide 32: Pet Is a Large and Growing Category
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 Pet Business Growth 63 Pet is a Large and Growing Category Source: Euromonitor January 2017. 64 32
Slide 33: Key Pet Initiatives
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 Key Pet Initiatives 65 Leader in Dog Snacks Source: Smucker Internal Multi-Outlet Share Report 52 weeks ended January 28, 2017. 66 33
Slide 34: Milk Bone Farmer's Medley
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 Milk Bone Farmer’s Medley 67 Dog Snack Portfolio Highlights New innovation focused on clean labels and functional benefits 5% #1 OPPORTUNITY RETAIL SALES MARKET POSITION TO EXPAND INCREASE SOFT & CHEWY DISTRIBUTION Source: Smucker Internal Mult
Slide 35: Nature's Recipe Mass Channel Launch
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 Nature’s Recipe Mass Channel Launch 69 Strong Presence in Dog Food GROCERY & MASS CHANNELS SPECIALTY CHANNEL VALUE SUPER PREMIUM 70 35
Slide 36: Kibbles 'n Bits
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 Kibbles ‘n Bits 71 Strong Growth Potential for Natural Balance 72 36
Slide 37: Mainstream Cat Food & Snacks
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 Mainstream Cat Food & Snacks Source: Smucker Internal Multi-Outlet Share Report 52 weeks ended January 28, 2017. 73 Today’s Key Themes BALANCE ICONIC BRANDS SIGNIFICANT BETWEEN BALANCED REMAIN OPPORTUNITIES E-COMMERCE COST DEPLOYMENT KEY TO OUR
Slide 38: Financial Update
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 Agenda Strategy and Business Update Mark Smucker President and Chief Executive Officer Financial Update Mark Belgya Vice Chair and Chief Financial Officer 75 Financial Update Mark Belgya Vice Chair and Chief Financial Officer THE J.M. SMUCKER C
Slide 39: Third Quarter Recap
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 Financial Update Topics 77 Third Quarter Recap FY17 Q3 YoY CHANGE ($ in millions, except per share data) 1 Net Sales $1,879 (2.5%) 2 Adjusted Operating Income $383 3% 2 Adjusted Operating Income Margin 20.4% +110bps 3 Adjusted EPS $2.00 5% Note
Slide 40: Full-Year Fiscal 2017 Outlook
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 Full-Year Fiscal 2017 Outlook Net Sales (5%) vs Prior Year Net Sales Excluding Divested Business (3%) vs Prior Year Adjusted EPS $7.60 - $7.70 Free Cash Flow $950M - $1.0B Capital Expenditures $240M Effective Tax Rate 32.5% 79 Progress on Pet A
Slide 41: Non-GAAP EPS Guidance - 2015 CAGNY
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 Non-GAAP EPS Guidance - 2015 CAGNY $1.20 $8.10 +10% +10% +6% $5.38 FY15E FY16E FY17E FY18E Add Back Adjusted Amortization FY18E 81 Synergies and Cost Savings 82 41
Slide 42: Timing of Synergy Realization
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 Timing of Synergy Realization $200M $160M $200 MILLION Annual Synergies by FY18 As of Q3 FY17, achieved $40M a run rate of 100% of the FY18 target FY16 FY17E FY18P 83 Company-Wide Initiatives 84 42
Slide 43: Total Cost Reduction Programs
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 Total Cost Reduction Programs 85 New Cost Reduction Program 86 43
Slide 44: Leverage Ratio Progression
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 Leverage Ratio Progression FYE15 FYE16 CURRENT Gross Debt / EBITDA 4.1x 3.4x 3.2x Repaid $1.2 BILLION of Term Loan since March 2015 87 Cash Returned to Shareholders $800 $600 $1.0 BILLION returned Millions $400 to shareholders since $200 March
Slide 45: Cash Returned to Shareholders
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 Cash Returned to Shareholders $800 $600 New 3 MILLION share Millions $400 repurchase program $200 effective today $0 Share Repurchases Repurchase Program FY16 FY17E Dividends Paid Dividends Declared Note: Assumes 3 million share repurchase in F
Slide 46: Potential Impact of Tax Law Changes
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 Potential Impact of Tax Law Changes 91 Fiscal 2017 Free Cash Flow CASH FROM CAPEX OPERATIONS $240M $1.2B FREE CASH FLOW $950M-$1B CURRENT FREE CASH FLOW YIELD 6% 92 46
Slide 47: Uses of Cash in Fiscal 2018
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 Uses of Cash in Fiscal 2018 $300M - $325M $500M Capital Expenditures Senior Note Maturity UPDATE ON CAPITAL STRUCTURE & CASH DEPLOYMENT LATER IN FY18 93 The J.M. Smucker Company February 22, 2017 47
Slide 48: Forward-Looking Statements and Non-GAAP Measures
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 Forward-Looking Statements This presentation contains forward-looking statements, such as projected net sales, operating results, earnings, and cash flows that are subject to risks and uncertainties that could cause actual results to differ mat
Slide 49: Non-GAAP Reconciliation
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 Non-GAAP Reconciliation Three Months Ended January 31, ($ in millions) 2017 2016 Net sales reconciliation: Net Sales $ 1,878.8 $ 1,973.9 Milk divestiture - (46.3) Net sales excluding divestiture $ 1,878.8 $ 1,927.6 Operating income reconciliati
Slide 50: Non-GAAP Reconciliation and Additional Information
CAGNY 2017 | The J.M. Smucker Company February 22, 2017 Non-GAAP Reconciliation Company Guidance Year Ending April 30, 2017 ($ in millions, except per share data) Low High Net income per common share – assuming dilution reconciliation: Net income per common share – assuming dilution $ 5.38 $ 5.48 Sp
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