The J.m. Smucker Company · NYSE:SJM
The J.m. Smucker — Barclays Back-to-School Consumer Conference 2010
38 slides from The J.m. Smucker's conference presentation, Sep 8, 2010
Slide 1: Conference Presentation
Conference Presentation September 8, 2010 Tim Smucker Chairman of the Board & Co-CEO 2
Slide 2: 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 results, performance or a
Slide 3: Agenda; Long-Term Growth
Agenda Strategy and Key Initiatives Business Segments Financial Overview 5 Long-Term Growth 5-Year ($ in millions except per share data) FY2005 FY2010 CAGR Net Sales $ 2,044 $ 4,605 18% Net Income (non-GAAP) $ 150 $ 521 28% EPS (non-GAAP) $ 2.60 $ 4.37 11% Total Shareholder Return (assuming reinvest
Slide 4: Strength of Smucker
Strength of Smucker Ability to implement strategy Strong portfolio of #1 brands Continuous improvements Strong financial position Culture and continuity of management 7 Our Foundation Our Bringing families together to share Purpose memorable meals and moments • Own and market #1 food brand
Slide 5: Strong Portfolio of #1 Brands
Strong Portfolio of #1 Brands 9 Our Purpose Bringing Families Together to Share Memorable Meals and Moments 10
Slide 6: Home Meals at Highest Level Since 1993
Home Meals at Highest Level Since 1993 Number of Annual Meals Prepared & Consumed In-Home per Person 878 877 870 872 867 866 868 861 855 855 850 846 842 840 835 835 835 817 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: The NPD Group, March 2010 Rep
Slide 7: Consumers Looking for Value
Consumers Looking for Value Trust Relevance Consistency Quality Variety Convenience Price 13 Trended Advertising Spend Advertising Spend ($ in millions) $131 Increased by 70% in FY 2010 $77 More than 15 new $57 commercials $51 $56 Over 95% share of voice in fruit spreads and peanut butter FY20
Slide 8: Digital Marketing Initiatives
Digital Marketing Initiatives 15 Restructuring Project Overview Multi-year project Streamline our coffee and fruit spreads supply chain Capital investment of approximately $220 million Annual savings of $60 million when fully implemented, excluding one-time costs 16
Slide 9: Key Milestones: Supply Chain Project
Key Milestones: Supply Chain Project Fall 2010 Spring 2011 Summer 2012 Summer 2013 Fruit Spreads, Ice Cream Toppings & Syrup Plants New Orrville plant New Orrville plant Orrville production construction begins initial production phase-in complete start up Memphis, TN plant closes Ste.Marie, Quebec p
Slide 10: Sustainability Goals
Sustainability Goals Reduce greenhouse gas emissions by 15% Reduce water usage by 25% Reduce waste sent to landfill by 75% 19
Slide 11: Business Segments
Business Segments Segment President Brands U.S. Retail Vince Coffee Market Byrd U.S. Retail Steve Consumer Oakland Market U.S. Retail Paul Oils & Baking Wagstaff Market Special Mark Markets Smucker 22
Slide 12: Segment Performance
Segment Performance Net Sales Segment Profit U.S. Retail U.S. Retail Consumer Consumer Market Market 28% U.S. Retail Coffee Market 24% U.S. Retail 38% Coffee Market U.S. Retail U.S. Retail Oils & Baking Oils & Baking 46% Market Market 12% Special Special 19% Markets Markets 14% 19% Total: $4.6 billi
Slide 13: Our U.S. Retail Coffee Market Segment
Our U.S. Retail Coffee Market Segment Single Serve Gourmet 9% 21% Mainstream Roast & Ground 70% FY 2010 Net Sales 25 Folgers Roast & Ground 26
Slide 14: Folgers Tag-Line
Folgers Tag-Line 27 Folgers Commercial: “The Ring” 28
Slide 15: Folgers Jingle Celebrates 25 Years
Folgers Jingle Celebrates 25 Years 29 Revitalized Folgers’ Core Roast Increased support of Black Silk offering and re-launched Folgers Special Roast® 30
Slide 16: Dunkin' Donuts Growth
Dunkin’ Donuts Growth Annual net sales exceed $250 million 31 Dunkin’ Donuts New Items 32
Slide 17: Dunkin' Donuts Commercial: Poof
Dunkin’ Donuts Commercial: “Poof” 33 Single Serve 34
Slide 18: Launching K-Cup Offerings
Launching K-Cup Offerings 35 K-Cup Overview Recently launched Folgers® Gourmet Selections™ and Millstone® offerings First nationally branded K-Cups® in traditional retail channels Being met with great customer acceptance 36
Slide 19: Commercial: K-Cup
Commercial: K-Cup 37 Green Coffee Costs 38
Slide 20: Folgers Pricing Actions
Folgers Pricing Actions Former Owner Smucker January 2007 4% December 2008 (4%) October 2007 4% April 2009 (100% Columbian only) 19% February 2008 6% May 2010 4% March 2008 7% August 2010 9% March 2008 (7%) October 2008 (4%) 39 U.S. Retail Consumer Market 40
Slide 21: Smucker's Orchard's Finest
Smucker’s Orchard’s Finest Expanding distribution nationally 41 Commercial: “Grandpa’s Jacket” 42
Slide 22: Peanut Butter Growth
Peanut Butter Growth Trended Net Sales 7% 5-Year CAGR FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 43 Focus on Convenience with Jif To Go 44
Slide 23: Commercial: Jif To Go
Commercial: Jif To Go 45 Smucker’s Snack’n Waffles Launched Nationally June 2010 46
Slide 24: Smucker's Uncrustables
Smucker’s Uncrustables 47 U.S. Retail Oils & Baking Market 48
Slide 25: Pillsbury New Products
Pillsbury New Products Focus on product innovation Recently launched the first nationally branded sugar-free cake mix and frosting 49 Pillsbury Seasonal Items 50
Slide 26: Crisco Oils Pricing; Special Markets
Crisco Oils Pricing Average Unpromoted Unit Price - 48 oz. $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 August 2010 Smucker Branded Competitor Private Label 51 Special Markets Int’l Natural 6% Foods 14% Canada 44% Foodservice 36% FY 2010 Net Sales 52
Slide 27: Strong Portfolio of Leading Brands
Strong Portfolio of Leading Brands 53
Slide 28: FY 2011 1st Quarter Income Statement Highlights
FY 2011 1st Quarter Income Statement Highlights Quarter Ended Quarter Ended ($ in millions, except per share) % Chg July 31, 2010 July 31, 2009 Net Sales $ 1,047 $ 1,052 0% Operating Income (non-GAAP) $ 195 $ 185 5% Operating Margin (non-GAAP) 18.7% 17.6% Net Income (non-GAAP) $ 124 $ 109 14% EPS $
Slide 29: FY 2011 1st Quarter Segment Results
FY 2011 1st Quarter Segment Results Quarter Ended Quarter Ended ($ in millions) % Chg July 31, 2010 July 31, 2009 Net Sales: U.S. Retail Coffee Market $ 394 $ 366 7% U.S. Retail Consumer Market 279 291 (4%) U.S. Retail Oils and Baking Market 174 194 (11%) Special Markets 201 200 0% Segment Profit: U
Slide 30: Commodity Cost Increases
Commodity Cost Increases ($ in millions) New Projection $175 ~6% of COGS Original Estimate $70 ~2% of COGS 59 Top Raw Materials 1. Green Coffee 2. Packaging 3. Peanuts Total account 4. Soybean Oil for approximately 5. Sweeteners 2/3 of COGS 6. Fruits / Vegetables 7. Flour 8. Milk 60
Slide 31: Coffee Pricing - Hypothetical Impact
Strong Portfolio of #1 Brands 61 Coffee Pricing - Hypothetical Impact ($ in millions) FY 2010 U.S. Retail Coffee Market net sales – reported $ 1,700 Assuming 13% price increase 221 U.S. Retail Coffee Market net sales – hypothetical $ 1,921 U.S. Retail Coffee Market segment profit – reported $ 484 U.
Slide 32: FY 2011 Outlook
FY 2011 Outlook Earnings per Share (non-GAAP) FY 2011 Guidance FY 2011 FY 2011 Excluding Guidance Amortization Amortization $4.50 - $4.60 $0.40 $4.90 - $5.00 63 Cash Flow Summary Quarter Ended Quarter Ended ($ in millions) July 31, 2010 July 31, 2009 Net Income $ 103 $ 98 Noncash Adjustments 67 50 W
Slide 33: Cash Flow / Allocation of Cash
Cash Flow / Allocation of Cash Share Repurchase 3.7 million authorized = ~$220 million Dividends Acquisitions At current rate = 3% of sales target $190 million annually or approximately $150 million annually CapEx FY 2011 target = $235 million 65 FY 2006 – FY 2010 Returned to Shareholders ($ in mill
Slide 34: Long-Term Growth Strategy
Long-Term Growth Strategy New Products 1% Market Share 2-3% Net Sales EPS 6% +8% Acquisitions 2-3% 67
Slide 35: Additional Information
Conference Presentation September 8, 2010 Additional Information Pillsbury, the Barrelhead logo, and the Doughboy character are trademarks of The Pillsbury Company LLC, used under license. Carnation is a registered trademark of Societe des Produits Nestle S.A., used under license. Dunkin’ Donuts, an
Slide 36: Regulation G Compliance
Regulation G Compliance Included in this presentation are certain non-GAAP measures, such as operating income, income, and income per diluted share excluding restructuring and merger and integration costs; income and income per diluted share excluding restructuring, merger and integration costs, and
Slide 37: The J. M. Smucker Company Unaudited Non-GAAP Measures
The J. M. Smucker Company Unaudited Non-GAAP Measures Three Months Ended July 31, Three Months Ended (Dollars in thousands, except per share data) 2010 2009 October 31, 2009 January 31, 2010 April 30, 2010 Operating income before restructuring and merger and integration costs Reconciliation to opera
Slide 38: The J. M. Smucker Company Unaudited Non-GAAP Measures
The J. M. Smucker Company Unaudited Non-GAAP Measures Company Guidance Year Ended April 30, 2011 (Dollars in thousands, except per share data) Low High Income per common share -- assuming dilution $ 4.50 $ 4.60 Weighted average shares outstanding -- assuming dilution 120,000,000 120,000,000 Income b
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