The J.m. Smucker Company · NYSE:SJM
The J.m. Smucker — Smucker J M — Lehman Brothers Back-to-School Consumer Conference 2008
73 slides from The J.m. Smucker's conference presentation, Sep 3, 2008
Slide 1: Lehman Brothers Back-to-School Consumer Conference Presentation
Lehman Brothers Back-to-School Consumer Conference Presentation September 2008 The J. M. Smucker Company Lehman Brothers Back-to-School Consumer Conference Presentation September 2008 The J. M. Smucker Company Filed by The J. M. Smucker Company Pursuant to Rule 425 under the Securities Act of 1933 a
Slide 2: Presenters
Richard Smucker Executive Chairman & Co-CEO Tim Smucker Chairman of the Board & Co-CEO Vince Byrd President, Coffee SBA Mark Belgya VP, CFO & Treasurer Sonal Robinson Director, Investor Relations Richard Smucker Executive Chairman & Co-CEO Tim Smucker Chairman of the Board & Co-CEO Vince Byrd Presid
Slide 3: The J. M. Smucker Company
The J. M. Smucker Company The J. M. Smucker Company
Slide 4: 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 5: 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 6: Agenda
Agenda Agenda • Strategy and Growth Objectives • Folgers – An Excellent Fit • “Great Brands” and Smucker Business Update • Financial Results
Slide 7: Share Price Performance
Share Price Performance Share Price Performance $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 S&P 500 DJIA SJM 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 = 10.5% APR = 10.5
Slide 8: Why Invest in Smucker?
Why Invest in Smucker? Why Invest in Smucker? • A history of solid returns • Clear strategy of owning a strong portfolio of #1 brands • Addition of an iconic #1 brand with Folgers • Enhanced cash flow and strong balance sheet • Unique culture
Slide 9: Quality
Quality | People Ethics Growth Independence GMUCKERS,
Slide 10: 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 The J. M. Smucker Company
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Slide 12: Vision Statement
Vision Statement We will achieve balanced growth through: Increased market share of our brands New products that provide convenience, are “good and good for you," and make the consumer smile Acquisition of other leading food brands Vision Statement • • • We will own and market food brands which hold
Slide 13: Long-Term Objectives
Long-Term Objectives 6% Organic 3- 4% Acquisitions 2-3% 8% Improve Efficiencies >8% Share Repurchase Debt Retirement Target 40% Payout Net Sales Growth Operating Profit Growth E.P.S. Growth Dividend Payment Long-Term Objectives
Slide 14: 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 15: 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 16: Smucker Market Share Leadership – U.S.
Smucker Market Share Leadership – U.S. Smucker Market Share Leadership – U.S. 6.9% 67.1% 66.3% 46.4% 46.4% 45.4% 44.3% 43.1% 19.9% 18.7% 18.7% 15.2% 10.1% 0% 10% 20% 30% 40% 50% 60% 70% 80% % Dollar Share of Category #2 #2 #2 #2 #1 #1 #3 #3 #3 #3 #1 #1 #1 #1 #1 #1 #1 #1 #1 #1 #1 #1 #1 #1 #1 in 8 out
Slide 17: Smucker Market Share Leadership – Canada
Smucker Market Share Leadership – Canada 3.8% 7.5% 8.1% 35.0% 48.3% 51.5% 51.9% 52.2% 58.3% 58.4% 59.6% 0% 10% 20% 30% 40% 50% 60% 70% #1 #1 #1 #1 #1 #1 #1 #1 #3 #3 #3 #3 #4 #4 Toppings Evap. Milk Flour Swtnd. Shorten. Frozen Condiments Fruit Oils Hot Cereal Peanut Cond. Milk Fruit Spreads Butter $1
Slide 18: 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 75% of Sales Projected to Come From #1 Brands
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Slide 20: Folgers
Folgers Folgers Folgers founded in San Francisco by James A. Folger The J. M. Smucker Company founded in Orrville, Ohio by Jerome M. Smucker
Slide 21: 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 22: Clear Leader in U.S. Retail Coffee
Clear Leader in U.S. Retail Coffee Clear Leader in U.S. Retail Coffee • #1 Retail Packaged Coffee Manufacturer • #1 Retail Packaged Coffee Brand • #1 Retail Packaged Coffee SKU • #1 Retail Decaffeinated Packaged Coffee Brand • #1 Retail Instant Packaged Coffee Brand • #1 Retail Gourmet Packaged Coff
Slide 23: U.S. At Home Coffee Market Share
U.S. At Home Coffee Market Share Mainstream Roast & Ground Kraft 24% Folgers 48% Rest of Market 28% U.S. At Home Coffee Market Share Source: P&G internal estimate based on All Outlet Data Excludes approximately $1.2B of packaged roast & ground product sold outside P&G / FCC channels and approximatel
Slide 24: Market Category Size
Market Category Size Greater opportunity as share of market in each category expands Market Category Size $15.0 $8.0 $3.0 $1.0 FY 2002 FY 2004 FY2005 FY2009 Market opportunity ($ in billions)
Slide 25: Projected Sales by Category
Projected Sales by Category 42% 21% 25% 12% Projected Sales by Category 42% 21% 25% 12% Spreads Baking All Other Coffee Estimated After Transaction
Slide 26: Relationships
Relationships Relationships • Same core consumer target • Marketing expertise…over 30 years of experience effectively marketing to this target “With a name like Smucker’s, it has to be good .”
Slide 27: Memorable Slogans
Memorable Slogans Memorable Slogans “ Choosy Moms Choose Jif ” “ The Best Part of Wakin’ Up ” “ With a Name Like Smucker’s, It Has to be Good ”
Slide 28: Center-of-Store Strategy
Center-of-Store Strategy Natural Beverage Aisle Center-of-Store Strategy Baking Aisle Spreads / Condiments Aisle Frozen Aisle Specialty Aisle Coffee Aisle
Slide 29: Dunkin' Donuts
Dunkin’ Donuts Dunkin’ Donuts • Strong presence in gourmet coffee category
Slide 30: 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 31: Go-to-Market Sales
Go-to-Market Sales _ Go-to-Market Sales National Sales Agent - rd largest principal Key Direct Account Teams Already in Place _
Slide 32: Folgers Financial Benefits
Folgers Financial Benefits Folgers Financial Benefits • Accretive transaction • Increases sales to almost $5 billion in first full year • Enhances cash flow and creates stronger balance sheet
Slide 33: Great Home for Folgers
Great Home for Folgers Great Home for Folgers
Slide 34: 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 35: Key Milestones
Key Milestones Key Milestones • Seamless integration with customers and consumers • Assembling the team and addressing all employee related issues • Achieve the $80 million synergy level
Slide 36: Achievements
Achievements Achievements • Regulatory clearance from FTC • Proxy and registration statement in comment period with SEC • Announced leadership team to oversee Folgers business • Ongoing integration planning sessions • Gained further insight into the brands • Expanded knowledge of coffee supply chain
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Slide 41: Folgers – An Excellent Fit
Folgers – An Excellent Fit Folgers – An Excellent Fit
Slide 42: The J. M. Smucker Company
The J. M. Smucker Company The J. M. Smucker Company
Slide 43: Focus on Consumers
Focus on Consumers Focus on Consumers
Slide 44: Making Great Brands Better
Making Great Brands Better • Increased sales over 40% • Increase operating margin • Invested in consumer marketing • $33mm capital investment in Lexington plant • Market share increased to over 40% • Jif-to-Go • Jif Natural • Jif Snack Nuts • New roaster technology • Jar light-weighting Making Great
Slide 45: Making Great Brands Better
Making Great Brands Better • Maintained share leadership through commodity volatility • Innovator in oils category • Commodity buying group key to success • $45mm capital investment in Cincinnati plant • Trans Fat Free Shortening • Crisco Peanut Oil • Crisco Olive Oil • Crisco Sprays • Simple Measur
Slide 46: Making Great Brands Better
Making Great Brands Better • Improved product quality • Leveraged presence of Doughboy • Frostings improved to #2 brand in category • Pillsbury Bake-Off • Reduced sugar cake mixes and frostings • Expand Funfetti products • Enhanced packaging Making Great Brands Better
Slide 47: The Best Part of Wakin' Up…
The Best Part of Wakin’ Up… The Best Part of Wakin’ Up…
Slide 48: The Best Way to End the Day…
The Best Way to End the Day… The Best Way to End the Day…
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Slide 50: Smucker Business Segments
Consumer Consumer Oils / Baking International Canada Foodservice Beverage Special Markets U.S. Retail Market Smucker Business Segments Business Area Segment Special Markets Brands U.S. Retail Market Smucker Business Segments
Slide 51: Eagle Brand
Eagle Brand Eagle Brand
Slide 52: Cross Promotions
Cross Promotions Cross Promotions
Slide 53: Uncrustables
Uncrustables Uncrustables • Achieved $120 million in net sales
Slide 54: Hungry Jack
Hungry Jack Hungry Jack
Slide 55: ict
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Slide 56: Canada – Category Leader
Canada – Category Leader Canada – Category Leader
Slide 57: Canada – New Categories
Canada – New Categories Canada – New Categories
Slide 58: The J. M. Smucker Company
The J. M. Smucker Company The J. M. Smucker Company
Slide 59: FY 2009 1st Quarter Income Statement Highlights
FY 2009 1 st Quarter Income Statement Highlights FY 2009 1 st Quarter Income Statement Highlights (1)% 11.4% $ 64 9.6% $ 63 Income Before Taxes 7.3% 100.0% 6.4% 100.0% $ 41 $ 562 4% $ 42 Net Income $ 664 Net Sales Quarter Ended July 31, 2008 Quarter Ended July 31, 2007 ($ in millions, except EPS) %
Slide 60: U.S. Retail Market Segment FY 2009 1st Quarter
Consumer Consumer Oils / Baking U.S. Retail Segment FY 2009 1 st Quarter U.S. Retail Market Segment Business Area Segment FY09 Net Sales vs. Prior Year +11% +11% +15% +15% +13% +13% SBAs SBAs Segments Segments • Consumer sales led by price and volume gains • Consumer oils and baking sales up due to
Slide 61: Special Markets Segment FY 2009 1st Quarter
International Canada Foodservice Beverage Special Markets Segment FY 2009 1 st Quarter Special Markets Segment Business Area Segment FY09 Net Sales vs. Prior Year +79% +79% -1% -1% +13% +13% +11% +11% +34% +34% SBAs SBAs Segments Segments • Acquisition of Carnation and Europe’s Best businesses and f
Slide 62: FY 2009 1st Quarter Margins
FY 2009 1 st Quarter Margins FY 2009 1 st Quarter Margins 2% $ 2 $ $ 72 Operating Income 12.6% 11.4% Margin % $ 5 $ 22 $ 102 $ 71 12.5% 33.1% $ 186 $ 562 7% $ 76 Operating Income (Non-GAAP) 31.3% Margin % 10.8% Margin % 12% $ 208 Gross Profit 18% $ 664 Net Sales ($ in millions) % Chg Quarter Ended J
Slide 63: Selling, Distribution & Administrative
Selling, Distribution & Administrative Selling, Distribution & Administrative Q2 Q3 Q4 Q1 Most Recent Previous Trailing four quarters Oct. 2006 19.2 Oct. 2007 18.6 Jan. 2007 20.8 Jan. 2008 18.5 April 2007 20.6 April 2008 19.4 July 2007 20.8 July 2008 19.9 Percent of Net Sales
Slide 64: Cash Flow From Operations
Cash Flow From Operations Cash Flow From Operations $ 34 $(22) $ 56 Quarter Ended July 31, 2008 $ (7) $(17) $ 10 Quarter Ended July 31, 2007 Free Cash Flow Capital Expenditures Cash Flow From Operations ($ in millions)
Slide 65: Folgers Synergies
Folgers Synergies JMS Infrastructure Net Sales Operations Sales & Supply Chain Corporate & Marketing Admin. Synergies COGS SD&A Folgers Synergies JMS Infrastructure Synergies ~$80+ million COGS SD&A
Slide 66: Net Sales and EBITDA
Net Sales and EBITDA 14.7% 17.3% Net Sales and EBITDA $0.0 $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 $3.5 $4.0 $4.5 $5.0 FY2008 FY2009 Net Sales $0 $250 $500 $750 $1,000 FY2008 FY2009 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 $371 $820 Pr
Slide 67: 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 68: Cash Flow From Operations
Cash Flow From Operations Cash Flow From Operations $ 116 $ (76) $ 192 FY 2008 $ 400 $(115) $ 515 FY 2009 (a) Pro forma Free Cash Flow Capital Expenditures Cash Flow From Operations ($ in millions) (a) Assumes Folgers transaction had closed on May 1, 2008.
Slide 69: 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 70: The J. M. Smucker Company
The J. M. Smucker Company The J. M. Smucker Company
Slide 71: Why Invest in Smucker?
Why Invest in Smucker? Why Invest in Smucker? • A history of solid returns • Clear strategy of owning a strong portfolio of #1 brands • Addition of an iconic #1 brand with Folgers • Enhanced cash flow and strong balance sheet • Unique culture
Slide 72: 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 73: Lehman Brothers Back-to-School Consumer Conference Presentation
Lehman Brothers Back-to-School Consumer Conference Presentation September 2008 The J. M. Smucker Company Lehman Brothers Back-to-School Consumer Conference Presentation September 2008 The J. M. Smucker Company
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