The J.m. Smucker Company · NYSE:SJM
The J.m. Smucker — CAGNY Conference 2022
61 slides from The J.m. Smucker's conference presentation, Feb 22, 2022
Slide 1: CAGNY Conference
CAGNY CONFERENCE FEBRUARY 22, 2022
Slide 2: Mark Smucker, President & Chief Executive Officer
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: Welcome: Business Update and Financial Update
WELCOME BUSINESS UPDATE MARK SMUCKER President & Chief Executive Officer FINANCIAL UPDATE TUCKER MARSHALL Chief Financial Officer
Slide 5: Today's Messages
TODAY’S MESSAGES Advancing our Compelling Business Strategy Delivering Growth in a Dynamic Environment Taking Actions to Reshape our Portfolio Improving Execution as a more Efficient Company Advancing our ESG Priorities 5 55
Slide 6: Our Purpose
Our PURPOSE Feeding connections that help us thrive – life tastes better together. ENSURING ACCESS TO SUPPORTING ACCESS PROMOTING MAKING SUPPORTING A QUALITY FOOD TO EDUCATION EQUITABLE AND CONNECTIONS TO HEALTHIER PLANET ETHICAL TREATMENT COMMUNITY FOR ALL RESOURCES 6
Slide 7: New Environmental Goals
New Environmental Goals EMISSIONS & ENERGY WASTE WATER PACKAGING Reduce absolute Scope 1 & 2 GHG Maintain 95% waste to Reduce water intensity at Strive for 100% of packaging emissions by 28% by 2030 from a landfill diversion Company-owned materials to be recyclable, 2019 base year facilities by 5% b
Slide 8: Navigating a Dynamic Environment
Navigating a Dynamic Environment Inflation-Driven Increased Expanded ORDER and PRICING STAFFING SUPPLIER SHIPMENT Actions Levels Base Optimization 8
Slide 9: Our Vision Guides Our Strategy
OUR VISION Guides Our Strategy Engage, delight, and inspire consumers by building brands they love and leading in growing categories 9
Slide 10: $8 Billion Strong Portfolio & Sustainable Growth Opportunities
$8 BILLION Strong Portfolio & Sustainable Growth Opportunities FY21 Net Sales PET Products are found in nearly U.S. RETAIL 90% OF ALL U.S. COFFEE COFFEE HOUSEHOLDS 80% of U.S. Retail Sales from categories SNACKING where we hold the #1 or #2 branded position 10 SOURCE: IRI PANEL DATA AND SMUCKER INTE
Slide 11: Our Transformational Journey
Our Transformational Journey Redesigned Made Added Entered Enhanced Commercial Expanded Into Transformative Iconic New Innovation & Marketing New Channels Acquisitions Brands Categories Capabilities Model DELIVERING SUSTAINABLE GROWTH AND SHAREHOLDER VALUE 11
Slide 12: Strengthening our Portfolio
Strengthening our Portfolio DIVESTED NON-CORE BUSINESSES STRENGTHENED BALANCE SHEET PROVIDES FLEXIBILITY FOR NEW STRATEGIC OPTIMIZED ASSORTMENT OPPORTUNITIES REALLOCATED RESOURCES TO STRATEGIC GROWTH PLATFORMS 12
Slide 13: Executional Priorities
Executional Priorities DRIVE STREAMLINE RESHAPE UNLEASH OUR COMMERCIAL OUR COST OUR ORGANIZATION EXCELLENCE INFRASTRUCTURE PORTFOLIO TO 13
Slide 14: Advancing our Priorities
Advancing our Priorities IMPLEMENTING NEW COMMERCIAL MODEL BRANDS REPRESENTING OPTIMIZING OUR SUPPLY CHAIN 68% OF NET SALES RESHAPING OUR PORTFOLIO ARE GROWING OR REALLOCATING RESOURCES FOR FASTER GROWTH MAINTAINING SHARE ALIGNING COMPENSATION METRICS FOR GROWTH 14 SOURCE: IRI MULO FYQ3 THROUGH JANU
Slide 15: U.S. Retail Pet Food
U.S. Retail Pet Food PRIVATE $2.8B LABEL 2% DIVESTED BUSINESSES FY21 NET SALES DOG FOOD 30% SNACKS 29% CAT FOOD 30% 15 NOTE: AMOUNTS MAY NOT ADD DUE TO ROUNDING.
Slide 16: Pet Food & Pet Snacks Portfolio
Pet Food & Pet Snacks Portfolio #1 IN DOG SNACKS #2 IN CAT FOOD 22% SHARE 18% SHARE 11% SHARE OF OF OF DOG SNACKS CAT FOOD DOG FOOD CATEGORY CATEGORY CATEGORY 16 SOURCE: SMUCKER INTERNAL MULTI-OUTLET SHARE REPORT 52 WEEKS ENDED JANUARY 23, 2022.
Slide 17: Growth in Dog Snacks
Growth in Dog Snacks YOY NET SALES GROWTH IN 12 OF LAST 14 QUARTERS MARGIN OVER INDEXES TOTAL PET EXPECTED TO GROW TO $1B IN NET SALES OVER THE NEXT 3 YEARS Growth led by the Milk-Bone ® brand 17
Slide 18: Cat Food Led by Meow Mix
Cat Food Led by Meow Mix ® YOY NET SALES GROWTH IN 16 OF LAST 17 QUARTERS #1 DRY CAT FOOD BRAND IN HOUSEHOLD PENETRATION, VOLUME & DOLLAR SHARE GREW 2X THE DRY CAT FOOD CATEGORY IN THE PAST YEAR 18 SOURCE: IRI PANEL DATA AND SMUCKER INTERNAL MULTI-OUTLET SHARE REPORT 13 AND 52 WEEKS ENDED JANUARY 23
Slide 19: Dog Food Initiatives
Dog Food Initiatives Refining our dry food assortment & expanding wet food offerings ® Launching new Nutrish dog food advertising next fiscal year grounded in recent insights ® Expanding Nutrish into faster growing segments of wet dog food & dog snacks 19
Slide 20: U.S. Retail Coffee
U.S. Retail Coffee $2.4B INSTANT 8% FY21 NET SALES PREMIUM 16% MAINSTREAM 47% ONE CUP 30% 2 0 20 NOTE: AMOUNTS MAY NOT ADD DUE TO ROUNDING.
Slide 21: At-Home Coffee
At-Home Coffee 60% of Americans drink coffee 73% of coffee drinking occasions occur at-home vs. 67% pre-pandemic 25% increase in one cup brewing equipment purchased over the last year 21 SOURCE: NCA 2021 REPORT, QUARTERLY MARKET SIZING REPORTS VIA NCA, AND SMUCKER INTERNAL MULTI-OUTLET SHARE REPORT
Slide 22: Coffee Portfolio
Coffee Portfolio #1 3 10 OF TOP #1 26% SHARE OF AT-HOME DOLLAR SHARE AT-HOME COFFEE COFFEE GROWTH IN LAST CATEGORY BRANDS 52 WEEKS 22 SOURCE: SMUCKER INTERNAL MULTI-OUTLET SHARE REPORT 52 WEEKS ENDED JANUARY 23, 2022.
Slide 23: Dunkin' & Café Bustelo
Dunkin’ & Café Bustelo ® ® 8% Retail Sales Growth in the Past Year Anticipate Growing Annual Net Sales to $1B in the next 5 years 13% Retail Sales Growth in the Past Year Fastest Growing Brands in the At-Home Coffee Category Anticipate Growing Annual Net Sales to $300M in next 3 years 23 SOURCE: SMU
Slide 24: Reinvigorating Folgers
Reinvigorating Folgers ® Bold New Marketing New Packaging # 1 Dark Roast Canister Campaign Launches next FY # 1 Colombian Canister # 1 Colombian K-Cup 24 SOURCE: SMUCKER INTERNAL MULTI-OUTLET SHARE REPORT 52 WEEKS ENDED JANUARY 23, 2022.
Slide 25: Folgers Coffee Innovation
Folgers Coffee Innovation ® Leveraging 170 Years of Roasting Experience Improves Quality Assurance: • Increases Flavor Extraction • Maintains Taste Profile Improves Sustainability by: • Reducing Energy Consumption • Reducing Greenhouse Gas Emissions 25
Slide 26: U.S. Retail Consumer Foods
U.S. Retail Consumer Foods $1.8B OTHER 1% DIVESTED BUSINESSES FY21 NET SALES TOPPINGS & SYRUPS 3% NATURAL PEANUT FOODS 4% BUTTER 40% FRUIT SPREADS 17% FROZEN HANDHELD 19% 26 NOTE: AMOUNTS MAY NOT ADD DUE TO ROUNDING.
Slide 27: Retail Consumer Foods Portfolio
Retail Consumer Foods Portfolio #1 #1 #1 49% SHARE OF 42% SHARE OF GROWTH IN PEANUT BUTTER FRUIT SPREADS FROZEN HANDHELD CATEGORY CATEGORY CATEGORY 27 SOURCE: SMUCKER INTERNAL MULTI-OUTLET SHARE REPORT 52 WEEKS ENDED JANUARY 23, 2022.
Slide 28: Uncrustables Growth
Uncrustables Growth ® $430M ON TRACK TO EXCEED $500M NET SALES IN FY22 $199M EXPECTED TO GROW TO $76M $116M $1B IN ANNUAL NET SALES $12M IN NEXT 5 YEARS FY01 FY06 FY11 FY16 FY21 28 NOTE: REPRESENTS TOTAL COMPANY NET SALES INCLUSIVE OF U.S. RETAIL AND AWAY FROM HOME BUSINESSES, REPRESENTING APPROX. 8
Slide 29: Smucker's Uncrustables
Smucker’s Uncrustables ® ® Retail Sales Grew 32% in the Last Year #1 in Households with Young Kids with the #1 Repeat Rate and #1 Velocity Growth Rate Net Sales 10-year CAGR of 14% 29 SOURCE: IRI PANEL DATA AND SMUCKER INTERNAL MULTI-OUTLET SHARE REPORT 12 AND 52 WEEKS ENDED JANUARY 23, 2022.
Slide 30: Uncrustables Growth Opportunities
Uncrusta bles Growth Opportunities ® Anticipate doubling EXPECT DOUBLE-DIGIT GROWTH OVER NEXT SEVERAL YEARS household penetration Expanding capacity Distribution to new channels and geographies Increased marketing investments 30
Slide 31: Uncrustables Production
Uncrustables Production ® Scottsville, Longmont, McCalla, Orrville, KY CO AL OH Operations began Began Expanded in 2019 with construction Building a new capacity in 2013 expansion to be with operations R&D facility to and 2016 completed beginning in 2025 support the brand in 2023 INVESTING TO IMPROV
Slide 32: International and Away From Home
International and Away From Home DIVESTED BUSINESSES $948M OTHER INTL 10% FY21 NET SALES AFH - BEVERAGE CANADA 17% 42% AFH – FOOD & PET 28% 3 2 32 NOTE: AMOUNTS MAY NOT ADD DUE TO ROUNDING.
Slide 33: Away From Home
Away From Home RETURNED TO APPROXIMATELY 95% OF PRE-PANDEMIC LEVELS SMUCKER’S ® PORTION COFFEE UNCRUSTABLES ® CONTROL SPREADS WE HAVE INCREASED MARKET SHARE IN ALL 3 CATEGORIES OVER THE PAST YEAR 33 SOURCE: NPD SUPPLY TRACK (US ONLY); 3 MONTH ENDING NOVEMBER 30, 2020
Slide 34: Summary
Summary EXECUTING UNLOCKING DELIVERING STRONG OUR SUSTAINABLE FINANCIAL RESULTS STRATEGY GROWTH Powered by our unique culture and dedicated employees 34
Slide 35: Tucker Marshall, Chief Financial Officer
TUCKER MARSHALL Chief Financial Officer 35
Slide 36: Fiscal 2022 Third Quarter Earnings Q&A Session
FISCAL 2022 THIRD QUARTER EARNINGS Q&A SESSION Tuesday, March 1, 2022 | 9:00 a.m. EST PARTICIPANTS MATERIALS MARK SMUCKER PRESS RELEASE, President and Chief Executive Officer PRE-RECORDED REMARKS, TUCKER MARSHALL AND SUPPORTING MATERIALS Chief Financial Officer AVAILABLE AT 7:00 AM EST 36
Slide 37: Financial Priorities
Financial Priorities INCREASED CONSISTENT AND EXECUTION COST AND BALANCED RETURN ON TRANSPARENT AGAINST MARGIN CAPITAL INVESTED COMMUNICATION TARGETS MANAGEMENT DEPLOYMENT CAPITAL CREATE LONG-TERM SHAREHOLDER VALUE 37
Slide 38: Long-Term Growth Targets
Long-Term Growth Targets NET SALES LSD ADJUSTED OPERATING INCOME MSD ADJUSTED EPS HSD TOTAL SHAREHOLDER RETURN 10+% 38
Slide 39: Drivers of Top-Line Growth
Drivers of Top-Line Growth ® SMUCKER’S COFFEE GROWTH PET GROWTH CONTINUED ® UNCRUSTABLES DRIVEN BY DRIVEN BY GROWTH IN GROWTH TO $1B DUNKIN’ ® & MILK-BONE® AWAY FROM IN ANNUAL SALES CAFÉ BUSTELO® AND MEOW MIX ® HOME BUSINESS 39
Slide 40: Long-Term Operating Income
Long-Term Operating Income MID-SINGLE-DIGIT OPERATING INCOME GROWTH MARGIN EXPANSION OVER TIME SALES VOLUME NET REVENUE PRICING FUNDAMENTALS AND MIX OPTIMIZATION PRODUCTIVITY SUPPLY CHAIN PRIORITIZATION OF MOST INITIATIVES EFFICIENCIES PRODUCTIVE ITEMS 40
Slide 41: Continuous Productivity Model
Continuous Productivity Model REDUCING MANAGING RESTRUCTURING MINIMIZING OPTIMIZING NON-WORKING SALES & CORPORATE DISCRETIONARY MANUFACTURING MARKETING BROKERAGE SUPPORT EXPENSES & SUPPLY CHAIN SPEND EXPENSES ORGANIZATION 41
Slide 42: Balanced Capital Deployment
Balanced Capital Deployment Capital Dividends & Expenditures Share Repurchases CASH FROM 50% OPERATIONS 50% Strategic Debt Investments Repayment 42
Slide 43: Capital Expenditures
Capital Expenditures $400M $369M LONG-TERM $322M $307M OBJECTIVE $269M 3.5% OF NET SALES NEAR TERM ELEVATION DUE TO UNCRUSTABLES ® CAPACITY EXPANSION FY18 FY19 FY20 FY21 FY22E % of NS 4.4% 4.7% 3.4% 3.8% 5.0%* 43 *NOTE: BASED ON MIDPOINT OF FY22 NET SALES GUIDANCE PROVIDED ON DECEMBER 01, 2021.
Slide 44: Growth Through Acquisition
Growth Through Acquisition Acquisitions will remain a part of our strategic growth We will focus on appropriate multiples paid and financial returns in their evaluation PET, COFFEE, AND CONSUMER NEW CATEGORIES Bolt-on opportunities in our current categories Transformational opportunities: - Growing
Slide 45: Dividend Growth
Dividend Growth 8% 10-YEAR CAGR $3.96 20 CONSECUTIVE YEARS OF DIVIDEND INCREASES $1.92 40-45% ADJUSTED EPS PAYOUT TARGET FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 45
Slide 46: Debt Reduction
Debt Reduction 3.9x 3.6x DEBT LEVERAGE BELOW 2.8x 2.8x 3.0x ENHANCES FINANCIAL FLEXIBILITY Q2 FY19 Q2 FY20 Q2 FY21 Q2 FY22 46
Slide 47: Share Repurchases
Share Repurchases $672 $495 $3.1B $430 $426 $381 $359 $305 OF SHARE REPURCHASES IN LAST 10-YEARS FY11 FY12 FY13 FY14 FY16 FY17 FY21 WILL EVALUATE FUTURE OPPORTUNISTIC SHARE REPURCHASES 47
Slide 48: Near-Term Focus
Near-Term Focus Maintaining the Making EXECUTING Continuing to MOMENTUM and STRATEGIC inflation driven NAVIGATE a increased at-home INVESTMENTS to pricing actions disruptive and consumption of grow pet, coffee, and productivity dynamic supply our brands and snacking initiatives chain 48
Slide 49: FY23 Plan Considerations
FY23 Plan Considerations BUSINESS STRENGTH: Continued PRICE ELASTICITY: Consumer reaction brand momentum and expansion; ongoing to price increases due to overall inflationary recovery for our Away From Home business pressures PRICING: Full year of price increases SUPPLY CHAIN: Incremental costs for
Slide 50: Summary
Summary DELIVERING EXECUTING COMMITMENT STRONG ON TO FINANCIAL RESULTS PRIORITIES DISCIPLINE Achieving consistent, long-term sustainable growth while increasing shareholder value 50
Slide 51: Thank You
<e THE JM. SMUCKER Coe. THANK YOU THE J.M.SMUCKERCe, 517
Slide 52: Supporting Materials
Supportin Materials © e THE J.M. SMUCKER Co.
Slide 53: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking statements, such as projected net sales, operating results, earnings, and cash flows that are subject to risks and uncertainties that could cause actual results to differ materially from future results expressed or implied by thos
Slide 54: Non-GAAP Financial Measures
Non-GAAP Financial Measures The Company uses non-GAAP financial measures, including: net sales excluding divestitures and foreign currency exchange; adjusted gross profit; adjusted operating income; adjusted income; adjusted earnings per share; earnings before interest, taxes, depreciation, amortiza
Slide 55: Non-GAAP Reconciliation
Non-GAAP Reconciliation Company Guidance ($ in millions) Year Ending April 30, 2022 Free cash flow reconciliation: Net cash provided by operating activities $ 1,100 Additions to property, plant, and equipment (400) Free cash flow $ 700 55
Slide 56: Non-GAAP Reconciliation
Non-GAAP Reconciliation ($ in millions) Three Months Ended TTM Ended January 31, April 30, July 31, October 31, October 31, 2021 2021 2021 2021 2021 EBITDA (as adjusted) reconciliation: Net income $261.5 $147.0 $153.9 $206.0 $768.4 Income tax expense 100.0 46.3 51.3 62.8 260.4 Interest expense – net
Slide 57: Non-GAAP Reconciliation
Non-GAAP Reconciliation ($ in millions) Three Months Ended TTM Ended January 31, April 30, July 31, October 31, October 31, 2020 2020 2020 2020 2020 EBITDA (as adjusted) reconciliation: Net income $187.4 $226.3 $237.0 $230.8 $881.5 Income tax expense 55.1 72.1 76.6 72.7 276.5 Interest expense - net
Slide 58: Non-GAAP Reconciliation
Non-GAAP Reconciliation ($ in millions) TTM Ended January 31, April 30, July 31, October 31, October 31, 2019 2019 2019 2019 2019 EBITDA (as adjusted) reconciliation: Net income $121.4 $71.5 $154.6 $211.2 $558.7 Income tax expense 35.8 30.4 52.1 67.9 186.2 Interest expense - net 51.6 49.1 49.4 49.1
Slide 59: Non-GAAP Reconciliation
Non-GAAP Reconciliation ($ in millions) Three Months Ended TTM Ended January 31, April 30, July 31, October 31, October 31, 2018 2018 2018 2018 2018 EBITDA (as adjusted) reconciliation: Net income $831.3 $185.9 $133.0 $188.5 $1,338.7 Income tax expense (benefit) (715.3) 78.3 40.1 80.9 (516.0) Intere
Slide 60: Additional Information
Additional Information The J.M. Smucker Co. is the owner of all trademarks and logos referenced herein, except for the following, which are used under license: Dunkin’® is a trademark of DD IP Holder LLC, and Rachael Ray® is a trademark of Ray Marks II LLC. The Dunkin’® brand is licensed to The J.M.
Slide 61: Additional Information
Additional Information: Aaron Broholm Vice President, Investor Relations ir.team@jmsmucker.com Phone: (330) 682-3000 Investor Relations Website: https://investors.jmsmucker.com/ 61