The J.m. Smucker Company · NYSE:SJM
The J.m. Smucker — Consumer Analyst Group of New York (CAGNY) Conference 2019
76 slides from The J.m. Smucker's conference presentation, Feb 20, 2019
Slide 1: The J.M. Smucker Company
The J.M. Smucker Company CONSUMER ANALYST GROUP OF NEW YORK CONFERENCE February 20, 2019
Slide 2: Strategy and Business Update
Strategy and Business Update Mark Smucker President and Chief Executive Officer Financial Update Mark Belgya Vice Chair and Chief Financial Officer
Slide 3: Presenters
Mark Smucker Mark Belgya Dave Lemmon Joe Stanziano Tina Floyd President & Chief Vice Chair & Chief President, Pet Senior Vice President Senior Vice President Executive Officer Financial Officer Food & Pet Snacks & General Manager, & General Manager, Coffee Consumer Foods
Slide 4: 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 5: Slide 5
Slide 6: Third Quarter Earnings Conference Call
Third Quarter Earnings Conference Call Tuesday, February 26, 2019 8:30 a.m. EST
Slide 7: Our Vision Guides Our Strategy
Our Vision Guides Our Strategy Engage, delight, and inspire consumers through trusted food and beverage brands that bring joy throughout their lives. A portfolio that combines #1 and leading brands with emerging, on-trend brands to drive balanced growth.
Slide 8: Strategic Roadmap
Strategic Roadmap TOP-LINE GROWTH COST SAVINGS EPS GROWTH INNOVATION INVESTMENTS COST SAVINGS ACQUISITIONS
Slide 9: Balanced Portfolio of Brands
Balanced Portfolio of Brands CORE, LEADING BRANDS HIGH-GROWTH, ON-TREND BRANDS #1 IN FRUIT SPREADS #1 IN NUT BUTTERS #1 IN COFFEE #1 IN PET SNACKS ANNUAL NET SALES GROWTH +2% - +3% Source: Smucker Internal Multi-Outlet Share Report 52 weeks ended January 27, 2019
Slide 10: Long-Term Guidance
Long-Term Guidance NET SALES CORE & GROWTH BRANDS +2% - +3% OPERATING LEVERAGING TOP LINE GROWTH INCOME • FAVORABLE MIX +5% • COST MANAGEMENT • SYNERGY REALIZATION CAPITAL DEPLOYMENT STRATEGIES TO MAXIMIZE EPS GROWTH AND SHAREHOLDER RETURN
Slide 11: Growth Imperatives
Growth Imperatives LEAD IN THE BEST BUILD BRANDS CONSUMERS LOVE BE EVERYWHERE CATEGORIES
Slide 12: Growth Imperatives
Growth Imperatives LEAD IN THE BEST BUILD BRANDS CONSUMERS LOVE BE EVERYWHERE CATEGORIES
Slide 13: Strategy for Growth
Strategy for Growth PET FOOD COFFEE SNACKS A portfolio that combines LEADING BRANDS with EMERGING, ON-TREND BRANDS to drive growth
Slide 14: Portfolio Optimized For Growth
Portfolio Optimized For Growth FY19 PROFORMA NET SALES SIZE OF CATEGORIES COFFEE PET FOOD & WHERE WE PARTICIPATE PET SNACKS +25% PEANUT BUTTER VERSUS 5 YEARS AGO OTHER FRUIT FROZEN SPREADS SHORTENING HANDHELD & OILS
Slide 15: Pet Food & Pet Snacks
Pet Food & Pet Snacks ~~ PET FOODS, ING. QUP, yptsdsonton MURGONE 71) t 777577777 SIISIIIITT Uj SIFITIIITA. SALLLLSA 7 SILPSAL LS
Slide 16: Premium vs. Mainstream Dog Food
Premium vs. Mainstream Dog Food Mainstream 36% Premium PREMIUM 64% FY19E DOG FOOD SALES MAINSTREAM
Slide 17: Momentum of Nutrish
Momentum of Nutrish ® $1B in 5 Years CATEGORY INCREASED BUILDING BRAND EXPANSION DISTRIBUTION AWARENESS OPPORTUNITIES
Slide 18: Diverse Channel Offerings
Diverse Channel Offerings SPECIALTY GROCERY & MASS CHANNELS CROSS CHANNEL CHANNEL VALUE VALUE PREMIUM SUPER PREMIUM
Slide 19: Leveraging Data Capabilities
LEVERAGING DATA CAPABILITIES
Slide 20: Celebrating 10 Years of Coffee Leadership
CELEBRATING 10 YEARS OF COFFEE LEADERSHIP
Slide 21: Coffee Portfolio
Coffee Portfolio | Café Espresso Molid? “MPRE P peste
Slide 22: U.S. Retail Coffee Sales
U.S. Retail Coffee Sales ▪ GROWING PREMIUM AND FY14 FY19E ONE CUP Instant Instant 8% ▪ STRENGTHENING 10% One Cup MAINSTREAM OFFERINGS 15% One Cup Mainstream 26% Mainstream 51% ▪ EXPECTING LONG TERM Premium 59% 16% GROWTH OF 2% Premium 15%
Slide 23: 1850 Single Origin Varieties
1850 Single Origin Varieties ™
Slide 24: Dunkin' Innovation
Dunkin’® Innovation 1-15 2 10SytA WNT. 02 SELECT BOLD
Slide 25: Espresso Innovation
Espresso Innovation CAFEX% DARH TALIAN ROAST + 100% ARABICA CIFEEE BUSTELO COLES Café Tostado Oscuro Dark Roast Coffee . ge ESPRESSI ESPRESSO STYLE ITALIA ROAST te} Cal
Slide 26: Folgers NOIR
® ™ Folgers NOIR Medium & Bold & Full & Robust & Complex Rich Smooth Smoky
Slide 27: Growth Imperatives
Growth Imperatives LEAD IN THE BEST BUILD BRANDS CONSUMERS LOVE BE EVERYWHERE CATEGORIES
Slide 28: Transforming our Marketing Organization
Transforming our Marketing Organization EVERYWHERE CONSUMER AGILE OMNICHANNEL INSIGHTS + INNOVATION MARKETING OPERATING FOCUS + DATA MODEL MODEL MODEL DISTRIBUTION CAPABILITIES
Slide 29: Increased Marketing Investments
Increased Marketing Investments FY15 – FY18 5%+ of Net Sales FY19E 7%+ of Net Sales
Slide 30: Marketing Driving Momentum in Cat
Marketing Driving Momentum in Cat CONSUMPTION +4% YOY SINCE CAMPAIGN LAUNCH Source: Smucker Internal Multi-Outlet Share Report 52 weeks ended January 27, 2019
Slide 31: Meow Mix Innovation
: MEOW MIX INNOVATION _ =
Slide 32: Snacking Portfolio
Snacking Portfolio: SN ® Toa (SIUCKERS =F ictsirbe) YY Yyyy). Uf. "Ugo Ut; Yh Yffjyy
Slide 33: Smucker's Uncrustables Frozen Sandwiches
Smucker’s Uncrustables Frozen Sandwiches ® ® $250M+ FY18 NET SALES $500M+ EXPECTED SALES IN 4 YEARS
Slide 34: 3.2M Households Have Tried Jif Power Ups
3.2M HOUSEHOLDS HAVE TRIED ® ™ JIF POWER UPS
Slide 35: Strength of Jif Brand
® Strength of Jif Brand #1 IN PEANUT BUTTER 40 DOLLAR SHARE Source: Smucker Internal Multi-Outlet Share Report 52 weeks ended January 27, 2019
Slide 36: Expanding the Jif Power Ups Brand
® ™ Expanding the Jif Power Ups Brand Chocolate Chip Soft Baked Bars Stacked™ Bars Creamy Clusters™
Slide 37: Sahale Snacks Innovation
Sahale Snacks® Innovation » punch Barren, SNACKS - = ~% % . , 4 : : a Z C7 . 7. ok PINEAPPLE RUM | CASHEW CHERRY COCOA ALMOND >. | COCONUT COCONUT EMUCKERS
Slide 38: Strength of Smucker's
Strength of Smucker’s ® #1 IN FRUIT SPREADS 41 DOLLAR SHARE Source: Smucker Internal Multi-Outlet Share Report 52 weeks ended January 27, 2019
Slide 39: Smucker's Brand Refresh
Smucker’s Brand Refresh ® SIMPLIFY EVOLVE INNOVATE REFRESHED AND FORMULATION AND NEW NEWS TO THE UNIFIED PACKAGING MESSAGING CATEGORY
Slide 40: Fruit Spreads Innovation
Fruit Soreads Innovation STRAWBERRY BLACKBERRY FRUI D ia STRAWBERRY BLUEBERRY — ‘ MANGO. FRUIT. SPREAD PRUITESPREAD UML, hia
Slide 41: Extending the Smucker's Brand
® Extending the Smucker’s Brand
Slide 42: Growth Imperatives
Growth Imperatives LEAD IN THE BEST BUILD BRANDS CONSUMERS LOVE BE EVERYWHERE CATEGORIES
Slide 43: Away From Home Growth
Away From Home Growth FY19E $600M NET SALES SCHOOLS HOSPITALS FOOD SERVICE
Slide 44: Convenience Channel
CONVENIENCE CONSOLIDATED NORTH CHANNEL AMERICAN TEAM TRANSFER
Slide 45: Jif Portion Control
® Jif Portion Control
Slide 46: 1850 Coffee
1850 Coffee ™ EXPANDING INTO THE AWAY FROM HOME CHANNEL
Slide 47: Accelerating E-Commerce
Accelerating E-Commerce FY18 E-COMMERCE NET SALES +71% 5% OF NET SALES FROM E-COMMERCE IN FY20
Slide 48: Long-Term Strategy
LONG-TERM STRATEGY TOP-LINE GROWTH COST SAVINGS EPS GROWTH STRATEGIC GROWTH ROADMAP IMPERATIVES LEAD IN THE BEST CATEGORIES INNOVATION INVESTMENTS COST SAVINGS ACQUISITIONS BUILD BRANDS BE CONSUMERS LOVE EVERYWHERE
Slide 49: Financial Update
Financial Update Mark Belgya Vice Chair and Chief Financial Officer
Slide 50: Portfolio Transformation
Portfolio Transformation FY14 NET SALES FY19 PROFORMA NET SALES CANNED MILK BAKING PRODUCTS PET FOOD & COFFEE OTHER PET SNACKS COFFEE FROZEN HANDHELD PEANUT BUTTER SHORTENING OTHER & OILS PEANUT FRUIT BUTTER FRUIT SPREADS FROZEN SPREADS SHORTENING HANDHELD & OILS
Slide 51: Strengthening Financial Position
Strengthening Financial Position IMPROVING CONSISTENT INCREASING DE-LEVERING RETURN ON EARNINGS FREE CASH THE BALANCE INVESTED GROWTH FLOW SHEET CAPITAL
Slide 52: Long-Term Growth
Long-Term Growth OPERATING NET SALES EPS INCOME +2% - +3% +5% +8% NEAR-TERM EPS GROWTH BELOW LONG-TERM EXPECTATIONS
Slide 53: Path to Long-Term Growth
Path to Long-Term Growth + BENEFITS OF INNOVATION + COST MANAGEMENT + SYNERGY REALIZATION + IMPROVED FINANCIAL LEVERAGE = RETURN TO LONG-TERM GROWTH TARGETS
Slide 54: Net Sales Growth
Net Sales Growth CORE, LEADING BRANDS HIGH-GROWTH, ON-TREND BRANDS #1 IN FRUIT SPREADS #1 IN NUT BUTTERS #1 IN COFFEE #1 IN PET SNACKS LONG-TERM GROWTH +2% - +3% Source: Smucker Internal Multi-Outlet Share Report 52 weeks ended January 27, 2019
Slide 55: Operating Income Growth
Operating Income Growth LONG-TERM LEVERAGING TOP LINE GROWTH OBJECTIVE • FAVORABLE MIX +5% • COST MANAGEMENT • SYNERGY REALIZATION NEAR-TERM OPERATING INCOME GROWTH BELOW LONG-TERM EXPECTATIONS
Slide 56: Projected Leverage
Projected Leverage DEBT REDUCTION ADDS 4.1X 1% 3X ANNUAL EARNINGS GROWTH 2018 2021
Slide 57: Returning Cash to Shareholders
Returning Cash to Shareholders 10% $4.00 $3.50 $3.00 10-YEAR CAGR $2.50 S&P HIGH-YIELD DIVIDEND $2.00 ARISTOCRATS® $1.50 $1.00 $0.50 $0.00 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19E
Slide 58: Focus On Increasing ROIC
Focus On Increasing ROIC NEW INCENTIVE COMPENSATION PROGRAM EFFECTIVE 2020
Slide 59: Free Cash Flow Generation
Free Cash Flow Generation FY19E LONG TERM • EARNINGS GROWTH • CAPEX REDUCTION $700-$750 $1 BILLION MILLION • WORKING CAPITAL BENEFITS
Slide 60: Capital Expenditures
Capital Expenditures $350M - $375M $322M FY19E: $248M 4.6% OF NET SALES $201M $192M LONG-TERM OBJECTIVE: 3.5% OF NET SALES FY15 FY16 FY17 FY18 FY19E
Slide 61: Fiscal 2019 and 2020 Outlook
Fiscal 2019 and 2020 Outlook y
Slide 62: FY19 Adjusted EPS Guidance
$8.00-$8.20 FY19 ADJUSTED EPS GUIDANCE
Slide 63: Peanut Butter Pricing
Peanut Butter Pricing INCREASED COMPETITION + LOWER PEANUT COSTS = PRICE DECLINE EFFECTIVE MARCH 2019
Slide 64: Fiscal 2020 Outlook
Fiscal 2020 Outlook DIVESTITURE OF PEANUT BUTTER PET PRICE U.S. BAKING INNOVATION PRICE DECLINE INCREASE BUSINESS
Slide 65: Fiscal 2020 Impact of Divested Business
Fiscal 2020 Impact of Divested Business LOST SALES AND PROFITS PRE-TAX GAIN ON SALE $0.25/share IMPACT REDUCTION IN INTEREST EXPENSE
Slide 66: Fiscal 2020 Benefits
Fiscal 2020 Benefits AINSWORTH GEOGRAPHIC COST MANAGEMENT SYNERGIES CENTRALIZATION
Slide 67: Effective Tax Rate
Effective Tax Rate FY19E FY20E 25.5% - 25% 26.0%
Slide 68: Preliminary Fiscal 2020 Outlook
Preliminary Fiscal 2020 Outlook ADJUSTED EPS GROWTH FREE CASH FLOW GROWTH 3% - 4% 10%+
Slide 69: Long-Term Strategy
LONG-TERM STRATEGY TOP-LINE GROWTH COST SAVINGS EPS GROWTH STRATEGIC GROWTH ROADMAP IMPERATIVES LEAD IN THE BEST CATEGORIES INNOVATION INVESTMENTS COST SAVINGS ACQUISITIONS BUILD BRANDS BE CONSUMERS LOVE EVERYWHERE
Slide 70: Thank You!
Slide 71: The J.M. Smucker Company
The J.M. Smucker Company CONSUMER ANALYST GROUP OF NEW YORK CONFERENCE February 20, 2019
Slide 72: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking statements, such as projected net sales, operating results, earnings, and cash flows that are subject to risks and uncertainties that could cause actual results to differ materially from future results expressed or implied by thos
Slide 73: Non-GAAP Financial Measures
Non-GAAP Financial Measures The Company uses non-GAAP financial measures, including: net sales excluding acquisition and foreign currency exchange; adjusted gross profit, operating income, income, and earnings per share; earnings before interest, taxes, depreciation, amortization, and impairment cha
Slide 74: Non-GAAP Reconciliation
Non-GAAP Reconciliation ($ in millions) Year Ended April 30, 2018 EBITDA (as adjusted) reconciliation: Net income $ 1,338.6 Income tax expense (benefit) (477.6) Interest expense - net 174.1 Depreciation 206.3 Amortization 206.8 Goodwill impairment charge 145.0 Other intangible asset impairment charg
Slide 75: Non-GAAP Reconciliation
Non-GAAP Reconciliation Company Guidance Year Ending April 30, 2019 ($ in millions, except per share data) Low High Net income per common share – assuming dilution reconciliation: Net income per common share – assuming dilution $ 5.94 $ 6.14 Special project costs 0.40 0.40 Amortization 1.66 1.66 Adj
Slide 76: Additional Information
Additional Information The Company is the owner of all trademarks and logos referenced herein, except for the following, which are used under license: Dunkin' Donuts® is a registered trademark of DD IP Holder LLC, and Rachael Ray® is a registered trademark of Ray Marks Co. LLC. The following tradema
The J.M. Smucker Company — Consumer Analyst Group of New York (CAGNY) Conference 2019 on 6ix