The J.m. Smucker Company · NYSE:SJM
The J.m. Smucker — Investor Day (December 2022)
34 slides from The J.m. Smucker's investor day presentation, Dec 14, 2022
Slide 1: Investor Day 2022
INVESTOR DAY 2022
Slide 2: Financial Priorities & Growth
Financial Priorities & Growth TUCKER MARSHALL Chief Financial Officer
Slide 3: Positioned for Long-Term Growth
POSITIONED FOR LONG-TERM GROWTH Advantaged Brand Proven Transformation Supporting & Resilient Growth Commercial Office Employees & Categories Opportunities Model Opportunities Planet 3
Slide 4: Bringing the Narrative Together
BRINGING THE NARRATIVE TOGETHER NEAR-TERM LONG-TERM INCREASING OPERATING FINANCIAL SHAREHOLDER DYNAMICS STRATEGY VALUE 4
Slide 5: A Strong Start to the Year
A STRONG START TO THE YEAR Delivered another quarter of solid results, ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ and expect this momentum to continue MODEST PRICE LEADING SHARE INVESTMENTS PRODUCTS THAT LOW RISK FROM ELASTICITY OF IN GREAT IN ICONIC SP
Slide 6: FY23 Financial Outlook
FY23 FINANCIAL OUTLOOK NET SALES GROWTH* ADJUSTED EPS** FREE CASH FLOW 5.5% -2 6.5% $8.35 - $8.75 $550M Comparable Basis (Mid-Point): +8% +2% vs. Prior Guidance Reaffirmed Guidance Positioned to deliver ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ LONG-TERM GROWTH *INCLUDES AN
Slide 7: Financial Priorities
FINANCIAL PRIORITIES CREATE LONG-TERM SHAREHOLDER VALUE Active & Execution to Prioritizing Maintaining Balanced Transparent Credible Highest-Return Productivity Focus Capital Communication Targets Opportunities & Cost Control Deployment 7
Slide 8: Total Shareholder Return
TOTAL SHAREHOLDER RETURN Goal: Consistent top quartile performer in food industry POSITIONED TO DELIVER 1-Year 3-Year 5-Year LONG-TERM CAGR CAGR CAGR GROWTH AND SJM 22% 17% 9% SHAREHOLDER VALUE Peer Group Avg. 22% 11% 7% S&P Packaged Foods 15% 7% 4% S&P 500 -14% 10% 10% 8 NOTE: DATA AS OF DECEMBER 0
Slide 9: Looking Ahead
LOOKING AHEAD Key Areas of Focus Maintain Strategic Cost Savings & Business Investments for Margin Momentum Growth Management 9
Slide 10: Long-Term Growth Targets
LONG-TERM GROWTH TARGETS NET SALES LSD ADJUSTED OPERATING INCOME MSD ADJUSTED EPS HSD TOTAL SHAREHOLDER RETURN 10+% 10
Slide 11: Our Long-Term Objectives
OUR LONG-TERM OBJECTIVES ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙A ∙ ∙ ∙steady, ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙compelling, ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙and ∙ ∙ ∙ ∙ ∙compounding ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙algorithm ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ DIVIDENDS SHARE REPURCHASE & DEBT REPAYMENT OPERATING MARGIN EXPANSION 10%+ HSD MSD LSD Net Sa
Slide 12: Net Sales
NET SALES Strengthened portfolio LOW-SINGLE -DIGIT Projected growth in our categories Percentage Growth Improved market share trends Focused growth initiatives 12
Slide 13: Drivers of Top-Line Growth
DRIVERS OF TOP-LINE GROWTH SMUCKER’S® PET GROWTH COFFEE GROWTH CONTINUED UNCRUSTABLES® DRIVEN BY MILK- DRIVEN BY GROWTH IN GROWTH TO $1B IN BONE® AND DUNKIN’® & AWAY FROM ANNUAL SALES MEOW MIX® CAFÉ BUSTELO® HOME BUSINESS 13
Slide 14: Operating Income
ADJUSTED Improved volume / mix OPERATING Stabilized supply chain INCOME Benefits from Transformation Office Productivity savings for SD&A MID-SINGLE-DIGIT Percentage Growth 14
Slide 15: Continuous Productivity Model
CONTINUOUS PRODUCTIVITY MODEL REDUCING RESTRUCTURING MINIMIZING MANAGING SALES OPTIMIZING NON-WORKING CORPORATE DISCRETIONARY & BROKERAGE MANUFACTURING MARKETING SUPPORT SPEND EXPENSES & SUPPLY CHAIN DOLLARS ORGANIZATION PROFITABILITY & MARGIN GROWTH, WHILE BALANCING RETURN & REINVESTMENT 15
Slide 16: Earnings Per Share
ADJUSTED EARNINGS Expect our PER SHARE capital deployment model to DRIVE GROWTH HIGH-SINGLE-DIGIT Percentage Growth 16
Slide 17: Cash Deployment | FY21 & FY22
CASH DEPLOYMENT | FY21 & FY22 Balancing reinvestment in the business ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ and returning cash to shareholders Capital Expenditures Debt Repayment Dividend Payments Share Repurchases $0.7B $1.1B $0.8B $0.9B Above net
Slide 18: Balanced Capital Deployment Model
BALANCED CAPITAL DEPLOYMENT MODEL Capital Dividends & Expenditures Share Repurchases CASH FROM 50% OPERATIONS 50% Strategic Debt Investments Repayment 18
Slide 19: Capital Expenditures
CAPITAL EXPENDITURES $550M LONG-TERM $418M OBJECTIVE $369M 3.5% OF NET SALES $307M $269M NEAR TERM ELEVATION DUE TO UNCRUSTABLES® CAPACITY EXPANSION FY19 FY20 FY21 FY22 FY23E % of NS 4.7% 3.4% 3.8% 5.2% 6.5%* *NOTE: BASED ON MIDPOINT OF FY23 NET SALES GUIDANCE PROVIDED ON NOVEMBER 21, 2022. 19
Slide 20: Debt Reduction
DEBT REDUCTION 3.6x 3.0x 2.8x 2.8x MAINTAIN INVESTMENT GRADE DEBT RATING ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ 2.5x - 3.0x Debt Leverage Ratio Q2 FY20 Q2 FY21 Q2 FY22 Q2 FY23 20
Slide 21: Share Repurchases
SHARE REPURCHASES $672 ($ in millions) $2.9B $495 $430 $426 $359 $305 $262 OF SHARE REPURCHASES IN LAST 10-YEARS Weighted FY12 FY13 FY14 FY16 FY17 FY21 FY22 Avg. Cost $74.51 $89.83 $100.19 $128.10 $139.14 $116.34 $131.23 per Share 21
Slide 22: Dividend Growth
DIVIDEND GROWTH 7% 10-YEAR CAGR $4.08 21 CONSECUTIVE YEARS OF DIVIDEND INCREASES $2.08 40-45% ADJUSTED EPS PAYOUT TARGET FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 22
Slide 23: Acquisitions
ACQUISITIONS ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ IMPORTANT ROLE ASSESS RESULTING REASONABLENESS IN OUR STRATEGY IMPACT TO ROIC OF MULTIPLES 23
Slide 24: Key Takeaways
KEY Continue to Transformed Deliver Strong into a Stronger Results Company TAKEAWAYS ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ Continue Commitment to Delivering Financial Growth Discipline LONG-TERM SUSTAINABLE GROWTH & SHAREHOLDER VALUE Balanced Capital Deployment 24 24 CONFIDENTIAL
Slide 25: Investor Day 2022
INVESTOR DAY 2022
Slide 26: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS This presentation contains forward-looking statements, such as projected net sales, operating results, earnings, and cash flows that are subject to risks and uncertainties that could cause actual results to differ materially from future results expressed or implied by thos
Slide 27: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES The Company uses non-GAAP financial measures, including: net sales excluding divestitures and foreign currency exchange; adjusted gross profit; adjusted operating income; adjusted income; adjusted earnings per share; earnings before interest, taxes, depreciation, amortiza
Slide 28: Unaudited Non-GAAP Financial Measures
UNAUDITED NON-GAAP FINANCIAL MEASURES ($ in millions) Three Months Ended TTM Ended January 31, April 30, July 31, October 31, October 31, 2022 2022 2022 2022 2022 EBITDA (as adjusted) reconciliation: Net income $69.7 $202.1 $109.8 $191.1 $572.7 Income tax expense 39.9 58.1 31.3 61.8 191.1 Interest e
Slide 29: Unaudited Non-GAAP Financial Measures
UNAUDITED NON-GAAP FINANCIAL MEASURES ($ 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 $768.4 Income tax expense 100.0 46.3 51.3 62.8 260.4 Interest
Slide 30: Unaudited Non-GAAP Financial Measures
UNAUDITED NON-GAAP FINANCIAL MEASURES ($ 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 $881.5 Income tax expense 55.1 72.1 76.6 72.7 276.5 Interest
Slide 31: Unaudited Non-GAAP Financial Measures
UNAUDITED NON-GAAP FINANCIAL MEASURES Three Months Ended TTM Ended ($ in millions) 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 e
Slide 32: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION Company Guidance Year Ending April 30, 2023 Low High Net income per common share – assuming dilution reconciliation: Net income per common share – assuming dilution $ 6.28 $ 6.68 Change in net cumulative unallocated derivative gains and losses (A) 0.41 0.41 Amortization 1.58
Slide 33: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION Company Guidance ($ in millions) Year Ending April 30, 2023 Free cash flow reconciliation: Net cash provided by operating activities $ 1,100 Additions to property, plant, and equipment (550) Free cash flow $ 550 33
Slide 34: 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. The Dunkin’® brand is licensed to The J.M. Smucker Co. for packaged coffee products sold in ret