The J.m. Smucker Company · NYSE:SJM
The J.m. Smucker — CAGNY Conference 2021
56 slides from The J.m. Smucker's conference presentation, Feb 17, 2021
Slide 1: CAGNY Conference
CAGNY CONFERENCE FEBRUARY 17, 2021
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: Agenda
AGENDA CAGNY BUSINESS UPDATE MARK SMUCKER President & Chief Executive Officer 2021 FINANCIAL UPDATE TUCKER MARSHALL Chief Financial Officer 4
Slide 5: Presentation Themes
Presentation Themes: • COMPANY SHARPER OVERVIEW STRONGER • EXECUTIONAL PRIORITIES TOGETHER • KEY GROWTH INITIATIVES 5
Slide 6: Pet Food, Coffee, Snacking
FOUNDED NEARLY PET FOOD 125 YEARS COFFEE AGO SNACKING 6
Slide 7: Thriving Together
Thriving Together ENSURING PEOPLE AND PARTNERING WITH ORGANIZATIONS WORKING TO CREATE EQUITABLE PETS HAVE ACCESS TO COMMITTED TO EDUCATION AND OPPORTUNITIES AND INCLUSION TRUSTED, QUALITY FOOD SKILL DEVELOPMENT FOR UNDERREPRESENTED GROUPS CREATING AND STRENGTHENING ACCESS CONTRIBUTING TO A HEALTHIER
Slide 8: Focus on Execution Excellence
Focus on Execution Excellence 1 2 3 4 DRIVE STREAMLINE RESHAPE UNLEASH OUR COMMERCIAL OUR COST OUR ORGANIZATION EXCELLENCE INFRASTRUCTURE PORTFOLIO TO WIN 8
Slide 9: Drive Commercial Excellence
Drive Commercial Excellence LEAD IN THE BEST BUILD BRANDS BE CATEGORIES CONSUMERS EVERYWHERE LOVE FOCUS ON THE CONSUMER AND CUSTOMER OPPORTUNITY TO MAINTAIN & STRENGTHEN OUR CURRENT MOMENTUM 9
Slide 10: Transformed Consumer Engagement
Transformed Consumer Engagement 5M 12 NEW BREAKTHROUGH CAMPAIGNS INCREMENTAL HOUSEHOLDS REACHED +15% ROI 53% OF PORTFOLIO GROWING SHARE 10 SOURCE: SMUCKER INTERNAL MULTI-OUTLET SHARE REPORT FYQ3 THROUGH JANUARY 24, 2021
Slide 11: Market Share Growth
Market Share Growth WEIGHTED % OF SJM BRANDS GROWING DOLLAR SHARE 53% 46% 37% 39% 26% 27% FYQ2 2020 FYQ3 2020 FYQ4 2020 FYQ1 2021 FYQ2 2021 FYQ3 2021* SOURCE: SMUCKER INTERNAL MULTI-OUTLET SHARE REPORT FYQ3 THROUGH JANUARY 24, 2021 11 *EXCLUDES BUSINESSES DIVESTED DURING FY21
Slide 12: Transformed Commercial Delivery
Transformed Commercial Delivery DEDICATED PET IMPROVED AND FOOD & IN-STORE E-COMMERCE BEVERAGE EXECUTION AND ACCELERATION SALES TEAMS DIGITAL INSIGHTS 12
Slide 13: Streamlined Cost Infrastructure
Streamlined Cost Infrastructure A PERVASIVE MINDSET OF: CONTINUOUS DESIGN OPERATIONAL IMPROVEMENT TO VALUE EFFICIENCY PRESERVE OUR MARGINS $50M ANNUAL COST REDUCTIONS IN FY22-FY24 AND INVEST IN OUR BRANDS 13
Slide 14: Reshaping Our Portfolio
Reshaping Our Portfolio ALIGN OUR PORTFOLIO TO FULLY REALIZE THE POTENTIAL OF OUR KEY GROWTH PLATFORMS DIVEST DIFFERENTIATE NON-PRIORITY OPTIMIZE SKU EVALUATE NEW RESOURCE BUSINESSES ASSORTMENT OPPORTUNITIES ALLOCATION 1 2 3 4 14
Slide 15: Unleash Our Organization To Win
Unleash Our Organization To Win WE ARE FOCUSED ON COMMON GOAL BECOMING A LEANER AND MORE AGILE ORGANIZATION DRIVING TOP AND BOTTOM- OWNERSHIP OF DECISIONS, LINE GROWTH ACCOUNTABILITY, AND INCENTIVES TIED TO THE INCOME STATEMENT IMPROVE EXECUTION UNLOCK FASTER GROWTH INCREASE VALUE 15
Slide 16: Total Company Net Sales $7.3B
Total Company Net Sales $7.3B INTERNATIONAL & AWAY FROM HOME 14% FY20 PRO FORMA* U.S. RETAIL PET FOODS U.S. RETAIL 36% CONSUMER FOODS 20% U.S. RETAIL COFFEE 29% *EXCLUDES SALES FROM BUSINESSES DIVESTED DURING FY21 NOTE: AMOUNTS MAY NOT ADD DUE TO ROUNDING 16
Slide 17: U.S. Retail Pet Food $2.6B
U.S. Retail Pet Food $2.6B PRIVATE LABEL 6% FY20 PRO FORMA NET SALES* DOG FOOD SNACKS 34% 30% CAT FOOD 30% 17 *EXCLUDES SALES FROM BUSINESSES DIVESTED DURING FY21
Slide 18: Pet Food & Pet Snacks Portfolio
Pet Food & Pet Snacks Portfolio #1 #2 #3 24% SHARE OF 18% SHARE OF 13% SHARE OF DOG SNACKS CAT FOOD DOG FOOD CATEGORY CATEGORY CATEGORY SOURCE: SMUCKER INTERNAL MULTI-OUTLET SHARE 18 REPORT 52 WEEKS ENDED JANUARY 24, 2021
Slide 19: Dog Snacks
Dog Snacks YOY NET SALES GROWTH IN 13 OF LAST 14 QUARTERS INNOVATION DRIVES 60% OF CATEGORY GROWTH SNACKS IS THE FASTEST GROWING SEGMENT IN THE PET CATEGORY 19 SOURCE: IRI UNIFY, POS CAUSAL DRIVERS, 52 WEEKS ENDING SEPTEMBER 2019
Slide 20: Rachael Ray Nutrish
Rachael Ray Nutrish ® ® AMPLIFIED ASSETS ELEVATE MASTERBRAND CONSISTENCY IN COPY / CLAIMS EARLY 2021 SUMMER 2021 SHELF RESETS AND LAUNCH IMPROVED BRAND ® OF NUTRISH BIG LIFE™ ARCHITECTURE AND PACKAGING 20
Slide 21: Dog Food Initiatives
Dog Food Initiatives EXPANDING WET DISTRIBUTION AND LAUNCHING INNOVATION ACROSS SEVERAL BRANDS EXPANDING VARIETY WITH SJM WET DOG FOOD ADDITIONAL GRAIN-IN OPTIONS +21% IN LAST 26 WEEKS 21 SOURCE: IRI MULTI-OUTLET 26 WEEKS ENDING 1/24/21, NIELSEN PET SPECIALTY 26 WEEKS ENDING 1/23/21, 1010 ECOMMERCE
Slide 22: Cat Food Portfolio
Cat Food Portfolio #1 DRY CAT FOOD BRAND IN HOUSEHOLD PENETRATION AND VOLUME SHARE CONTINUING OUR MOMENTUM WITH… • UNIQUE INNOVATION • EVOLVED MARKETING • IMPROVED ASSORTMENT 14 CONSECUTIVE QUARTERS OF YoY GROWTH 22 SOURCE: SMUCKER INTERNAL MULTI-OUTLET SHARE REPORT 52 WEEKS ENDED JANUARY 24, 2021,
Slide 23: U.S. Retail Coffee $2.1B
U.S. Retail Coffee $2.1B INSTANT 8% FY20 NET SALES PREMIUM 16% MAINSTREAM 50% ONE CUP 26% 2 3 23
Slide 24: Coffee Portfolio
Coffee Portfolio #1 3 10 OF TOP +2M NET NEW SHARE OF AT-HOME AT-HOME COFFEE HOUSEHOLDS IN COFFEE CATEGORY BRANDS LAST 52 WEEKS SOURCE: SMUCKER INTERNAL MULTI-OUTLET SHARE REPORT 52 WEEKS ENDED JANUARY 24,2021 24 IRI PANEL DATA 52 WEEKS ENDED JANUARY 24, 2021
Slide 25: At-Home Coffee Consumption
At-Home Coffee Consumption ADDED MORE NET NEW HOUSEHOLDS IN THE PAST 11 MONTHS THAN ANY OTHER BRANDED MANUFACTURER 62% OF AMERICANS DRINK COFFEE 4 of 5 CUPS OF COFFEE ARE CONSUMED AT HOME 30% PURCHASE INCREASE OF AT- HOME BREWING EQUIPMENT OVER THE PAST YEAR 25 SOURCE: NCA 2020 NCDT REPORT
Slide 26: Coffee Portfolio Growth
Coffee Portfolio +3M ® K-CUP PORTFOLIO DUNKIN’ +21% GROWING NEARLY 2X ® CAFÉ BUSTELO +28% NEW HOUSEHOLDS THE CATEGORY OVER TRIED FOLGERS® L52 WEEK DOLLAR SALES THE PAST YEAR 26 SOURCE: IRI PANEL DATA 52 WEEKS ENDED NOVEMBER 1, 2020, SMUCKER INTERNAL MULTI-OUTLET SHARE REPORT 52 WEEKS ENDED JANUARY 2
Slide 27: Coffee Innovation
Coffee Innovation ® ® FOLGERS CAFÉ BUSTELO BLONDE SILK CAFÉ DE OLLA CON LECHE ® DUNKIN’ SEASONAL & FLAVORED 27
Slide 28: Consumer Foods Portfolio
Consumer Foods Portfolio #1 #1 #1 SHARE OF SHARE OF GROWTH IN PEANUT BUTTER FRUIT SPREADS FROZEN CATEGORY CATEGORY HANDHELD SOURCE: SMUCKER INTERNAL MULTI-OUTLET SHARE 28 REPORT 52 WEEKS ENDED JANUARY 24, 2021
Slide 29: U.S. Retail Consumer Foods $1.5B
U.S. Retail Consumer Foods TOPPINGS & OTHER SYRUPS 3% $1.5B 3% NATURAL FOOD & BEVERAGE 10% FY20 PRO FORMA NET SALES* PEANUT BUTTER FROZEN 46% HANDHELDS 19% FRUIT SPREADS 20% 29 *EXCLUDES SALES FROM BUSINESSES DIVESTED DURING FY21
Slide 30: Uncrustables Growth
Uncrustables ® Growth 289.4M $365M NET SALES +20% 19 YEAR CAGR $154M $118M ON TRACK TO EXCEED $61M $500M $12M FY2023 TARGET 30
Slide 31: Strong #1 Position in Peanut Butter and Fruit Spreads
STRONG # POSITION IN BOTH PEANUT BUTTER AND FRUIT SPREADS DOLLAR SHARE 46% TOTAL PEANUT BUTTER 42% TOTAL FRUIT SPREADS 31 31 SOURCE: SMUCKER INTERNAL MULTI-OUTLET SHARE REPORT 52 WEEKS ENDED JANUARY 24, 2021
Slide 32: Jif Innovation
Jif Innovation ® CONVENIENT NO MESS BALANCED NUTRITION SECOND WAVE OF DISTRIBUTION IS UNDERWAY WITH THE ® ADDITION OF JIF NATURAL IN A SQUEEZABLE POUCH 32
Slide 33: Jif Peanut Butter Gained 4.5 Points
Jif Peanut Butter ® GAINED 4.5 POINTS DOLLAR SHARE SINCE AUGUST TOTAL SJM PORTFOLIO NOW 50% OF PEANUT BUTTER CATEGORY DOLLAR SHARE 33 SOURCE: SMUCKER INTERNAL MULTI-OUTLET SHARE REPORT 4 WEEKS ENDED JANUARY 24, 2021
Slide 34: Away From Home
Away From Home SMUCKERS® ® PORTION COFFEE UNCRUSTABLES CONTROL SPREADS WE HAVE INCREASED MARKET SHARE IN ALL 3 CATEGORIES OVER THE PAST YEAR 34 SOURCE: NPD SUPPLY TRACK (US ONLY); 3 MONTH ENDING NOVEMBER 30, 2020
Slide 35: Away From Home
Away From Home REDUCING COMPLEXITY AND DISCONTINUING 30% COSTS TO FUEL A FULL OF SKUs THAT ACCOUNT RECOVERY AND DRIVE GROWTH FOR JUST 3% OF SALES CONSOLIDATING DISTRIBUTION FOOTPRINT 35
Slide 36: Key Takeaways
Key Takeaways • UNLOCKING GROWTH SHARPER POTENTIAL OF BRANDS AND DELIVERING STRONG RESULTS STRONGER • BECOMING MORE FOCUSED, EFFICIENT, AND AGILE TOGETHER • STRENGTHENING CORE CAPABILITIES TO DELIVER CONSISTENT, SUSTAINABLE GROWTH 36
Slide 37: Tucker Marshall, Chief Financial Officer
TUCKER MARSHALL Chief Financial Officer 37
Slide 38: Fiscal 2021 Outlook
Fiscal 2021 Outlook 0% - 1% INCREASE NET SALES THIRD QUARTER EARNINGS $8.35 - $8.65 ADJUSTED EPS CONFERENCE CALL THURSDAY, FEBRUARY 25, 2021 $975M-$1,025M 8:30 A.M. EST FREE CASH FLOW 38
Slide 39: Financial Priorities
Financial Priorities INCREASED CONSISTENT AND EXECUTION COST CONTROL BALANCED RETURN ON TRANSPARENT AGAINST AND MARGIN CAPITAL INVESTED COMMUNICATION TARGETS ENHANCEMENT DEPLOYMENT CAPITAL CREATE LONG-TERM SHAREHOLDER VALUE 39
Slide 40: Long-Term Growth Targets
Long-Term Growth Targets • VOLUME/MIX LSD • NET REVENUE OPTIMIZATION NET SALES 2% • INNOVATION • CATEGORY GROWTH ADJUSTED MSD • ACCRETIVE MIX MARGIN MANAGEMENT 5% • OPERATING INCOME • DESIGN TO VALUE HSD • DEBT/INTEREST REDUCTION ADJUSTED EPS 8% • TAX EFFICIENCIES • SHARE REPURCHASE TOTAL SHAREHOLDE
Slide 41: Long-Term Net Sales Drivers
Long-Term Net Sales Drivers PET SNACKS & RESHAPED PREMIUM, RETURN TO ® CAT FOOD PORTFOLIO SMUCKER’S ONE-CUP, AND GROWTH FOR ® GROWTH - FOCUSED ON UNCRUSTABLES REINVIGORATED AWAY FROM STABILITY AND KEY GROWTH BRAND FOLGERS® HOME GROWTH IN PLATFORMS BRAND COFFEE BUSINESS DOG FOOD 41
Slide 42: Long-Term Operating Income Outlook
Long-Term Operating MSD Income Outlook 5% OPERATING INCOME GROWTH TOTAL COMPANY COMMITMENT TO PRODUCTIVITY GROSS MARGIN COST REDUCTION PORTFOLIO RESHAPE EXPANSION PROGRAMS MINIMIZE EXPENSES THAT DO NOT SUPPORT SALES OR PROFIT GROWTH 42
Slide 43: Margin Management Program
Margin Management Program $ UNLOCKING COST SAVINGS BY: OPTIMIZING REDUCING RESTRUCTURING MINIMIZING MANUFACTURING NON-WORKING CORPORATE DISCRETIONARY AND SUPPLY MARKETING & SUPPORT EXPENSES CHAIN SALES BROKERAGE ORGANIZATION ENVIRONMENT $50M $150M ANNUAL COST REDUCTIONS TOTAL BY FY24 IN FY22-FY24 43
Slide 44: Balanced Capital Deployment
Balanced Capital Deployment INVESTING IN RETURNING CASH TO GROWTH SHAREHOLDERS • CAPITAL EXPENDITURES • DIVIDENDS • STRATEGIC PROJECTS • SHARE REPURCHASES • DEBT REPAYMENT 50% 50% 44
Slide 45: Free Cash Flow Generation
Free Cash Flow Generation FY21E LONG TERM $975-$1,025 $1 BILLION MILLION 45
Slide 46: Capital Expenditures
Capital Expenditures $369M FY21E $322M $315M 4.0% OF NET SALES $269M LONG-TERM $192M OBJECTIVE 3.5% OF NET SALES FY22E – FY23E ELEVATED DUE TO UNCRUSTABLES® CAPACITY EXPANSION FY17 FY18 FY19 FY20 FY21E 46 NOTE: BASED ON MIDPOINT OF FY21 NET SALES GUIDANCE PROVIDED ON DECEMBER 10, 2020
Slide 47: Dividend Growth
Dividend Growth 19 CONSECUTIVE YEARS OF $3.60 8% DIVIDEND INCREASES $2.68 10-YEAR CAGR $1.68 40-45% ADJUSTED EPS PAYOUT TARGET 47
Slide 48: Share Repurchases
Share Repurchases REPURCHASED 4% 4.5M REDUCTION SHARES IN THE OF SHARES THIRD QUARTER OUTSTANDING WILL EVALUATE FUTURE OPPORTUNISTIC SHARE REPURCHASES 48
Slide 49: FY22 Considerations
FY22 Considerations NET SALES GROSS MARGIN SD&A ADJUSTED EPS KEY GROWTH PRICING COST AND REDUCED PRIORITIES: MARGIN INTEREST EXPENSE SMUCKER’S® UNCRUSTABLES® NUTRISH® COST AND MARGIN MANAGEMENT DUNKIN’ ® CAFE BUSTELO® MANAGEMENT PROGRAMS SHARES PET SNACKS PROGRAMS REPURCHASED AFH RECOVERY MARKETING
Slide 50: Key Takeaways
Key Takeaways • EXCEPTIONAL RESULTS SHARPER DURING THESE UNPRECEDENTED TIMES STRONGER • DELIVERING OUR SHORT AND LONG-TERM FINANCIAL TARGETS TOGETHER • COMMITMENT TO FINANCIAL DISCIPLINE 50
Slide 51: Thank You
<e THE J.M. SMUCKER Ce. THANK YOU THE JM.SMUCKERCo. 517
Slide 52: Supporting Materials
Supporting Materials
Slide 53: Non-GAAP Financial Measures
Non-GAAP Financial Measures The Company uses non-GAAP financial measures, including: net sales excluding foreign currency exchange; adjusted gross profit; adjusted operating income; adjusted income; adjusted earnings per share; earnings before interest, taxes, depreciation, amortization, and impairm
Slide 54: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking statements, such as projected net sales, operating results, earnings, and cash flows that are subject to risks and uncertainties that could cause actual results to differ materially from future results expressed or implied by thos
Slide 55: Non-GAAP Reconciliation
Non-GAAP Reconciliation Company Guidance Year Ending April 30, 2021 ($ and shares in millions, except per share data) Low High Net income per common share – assuming dilution reconciliation: Net income per common share – assuming dilution $ 7.16 $ 7.46 Unallocated derivative losses (gains)(A) (0.25)
Slide 56: 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’® and Dunkin’ Donuts® are registered trademarks of DD IP Holder LLC; and Rachael Ray® is a registered trademark of Ray Marks II LLC. The follo