The J.m. Smucker Company · NYSE:SJM
The J.m. Smucker — Barclays Global Consumer Staples Conference 2023
45 slides from The J.m. Smucker's conference presentation, Sep 5, 2023
Slide 1: Barclays Global Consumer Staples Conference
BARCLAYS GLOBAL CONSUMER STAPLES CONFERENCE September 5, 2023
Slide 2: Mark Smucker
MARK SMUCKER Chair of the Board, President and Chief Executive Officer
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: FY24 Financial Outlook
FY24 FINANCIAL OUTLOOK Provided with Q1 Earnings Release COMPARABLE ADJUSTED EPS FREE CASH FLOW NET SALES2GROWTH* $9.45 - $9.85 $650M 8.5% - 9.5% +8% YoY at Mid-Point Positioned to deliver ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ LONG-TERM GROWTH *COMPARABLE NET SALES EXCL
Slide 5: Strong Portfolio of Brands
STRONG PORTFOLIO OF BRANDS BRANDS GROWING OR MAINTAINING SHARE OVER 95% 79% 83% OF U.S. RETAIL SALES FROM CATEGORIES WHERE WE HOLD THE BASED ON DOLLAR SHARE BASED ON VOLUME SHARE #1 OR #2 BRANDED POSITION SOURCE: SMUCKER INTERNAL MULTI-OUTLET SHARE REPORT 13 WEEKS ENDED JULY 16, 2023. 5
Slide 6: Our Vision Guides Our Strategy
OUR VISION Guides Our Strategy Engage, delight and inspire consumers by building brands they love and leading in growing categories 6 6
Slide 7: Our Strategy
OUR STRATEGY Win With Improve Transform Advance Nurture & Superior Profitability & Our Portfolio Corporate Evolve Our Execution Cost Discipline Responsibility, Culture Sustainability, and ID&E 7
Slide 8: Path to $1B Net Sales
PAT H TO $ 1 B N E T S A L E S Expand distribution Canada launch and AFH expansion in first quarter Turn on demand drivers Advertising and in-store activations Increase capacity Third manufacturing site in McCalla, AL expected to begin operations in 2025 8
Slide 9: Video Commercials Playing in Room
Video Commercials Playing in Room 9
Slide 10: Smucker's Uncrustables
SMUCKER’S UNCRUSTABLES ® ® #1 Top 2 Items in Fastest Growing Frozen Handheld Brand in Category Expect +20% ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ total brand net sales growth for FY24 Velocity 3x #1 Freezer Average Repeat Rate SOURCE: SMUCKER INTERNAL MULTI-OUTLET SHARE REPORT 13 WEEKS ENDED AUGUST 08, 2023. 10
Slide 11: Fueling Future Growth
FUELING FUTURE UNLOCKING GROWTH GROWTH IN WET Expect to grow to $800 MILLION in annual net sales this fiscal year EXPECTED ANNUAL NET SALES ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ FY24 FY25 FY26 $800M +$100M +$100M 11
Slide 12: Focused Pet Portfolio
FOCUSED PET PORTFOLIO #1 IN DOG SNACKS #2 IN CAT FOOD SOURCE: SMUCKER INTERNAL IRI MULTI-OUTLET SHARE REPORT 52 WEEKS ENDED JULY 16, 2023. 12
Slide 13: Improved Portfolio
IMPROVED PORTFOLIO PET CATEGORIES as a % of Net Sales MARGIN PROFILE 33% 40% Pet Snacks Cat Food 33% Dog Food 60% 33% DIVESTITURE* IMPROVES MARGIN & MIX Previous Pet Portfolio Pet Portfolio After Divestiture* *RELATED TO THE DIVESTITURE OF CERTAIN PET BRANDS CLOSED ON APRIL 28, 2023. 13
Slide 14: Coffee Portfolio
COFFEE PORTFOLIO #1 U.S. BRANDED AT-HOME COFFEE MANUFACTURER 3 of TOP 7 26% Share of Market coffee brands SOURCE: SMUCKER INTERNAL MULTI-OUTLET SHARE REPORT 52 WEEKS ENDED JULY 16, 2023. 14
Slide 15: Growth in Cold Coffee
GROWTH IN COLD COFFEE DUNKIN’ COLD BREW ® PROVIDES CONVENIENCE ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ LAUNCHED CONCENTRATES WITH POSITIVE RETAILER ACCEPTANCE 15
Slide 16: Video Commercials Playing in Room
Video Commercials Playing in Room 16
Slide 17: Shareholder Value Creation
SHAREHOLDER VALUE CREATION INVESTMENT POSITIONED IN OUR BRANDS TO DELIVER LONG-TERM GROWTH AND RESHAPING SHAREHOLDER VALUE OUR PORTFOLIO OPERATIONAL EXCELLENCE AND TOP-LINE GROWTH 17
Slide 18: Tucker Marshall
TUCKER MARSHALL Chief Financial Officer
Slide 19: Financial Priorities
FINANCIAL PRIORITIES CREATE LONG-TERM SHAREHOLDER VALUE Active & Execution to Prioritizing Maintaining Balanced Transparent Credible Highest-Return Productivity Focus Capital Communication Financial Targets Opportunities & Cost Control Deployment 19
Slide 20: Q1 Results & FY24 Outlook
Q1 RESULTS & FY24 OUTLOOK QUARTER RESULTS FULL YEAR OUTLOOK Comparable Net Sales* Comparable Net Sales* +21% 8.5% - 9.5% Volume/mix growth in each segment Mid-Point: $7.6B | +9% YoY Adjusted Gross Margin Adjusted Gross Margin 35.7% ~37.0% +430bps YoY +380bps YoY Adjusted EPS Adjusted EPS $2.21 $9.45
Slide 21: 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 22: Net Sales
Strengthened portfolio NET SALES Projected growth in our categories Improved market share trends LOW-SINGLE-DIGIT Percentage Growth Focused growth initiatives 22
Slide 23: Adjusted Operating Income
ADJUSTED Improved volume / mix OPERATING Stabilized supply chain INCOME Benefits from Transformation Office Mitigation of stranded overhead MID-SINGLE-DIGIT Percentage Growth 23
Slide 24: Earnings Per Share
ADJUSTED EARNINGS Expectation for PER SHARE capital deployment model to DRIVE GROWTH HIGH-SINGLE-DIGIT Percentage Growth 24
Slide 25: Transformation Progress Workstreams
TRANSFORMATION PROGRESS WORKSTREAMS 3-YEAR ROADMAP OPERATIONS SUPPLY CHAIN PROCUREMENT A N T I C I PAT E D B E N E F I T S Margin enhancement DESIGN SG&A NET REVENUE TO VALUE OPTIMIZATION Support of financial targets Elimination of stranded overhead SALES MARKETING INTERNATIONAL & AFH 25
Slide 26: Driving Ownership & Accountability
DRIVING OWNERSHIP & ACCOUNTABILITY EXPECTED SAVINGS 450+ BY WORKSTREAM Procurement SG&A and Int’l/AFH INITIATIVES Net Revenue Design to Optimization Value ENGAGING OVER 700 EMPLOYEES Sales Realizing benefits this fiscal year Supply Chain Operations 26
Slide 27: Balanced Capital Deployment Model
BALANCED CAPITAL DEPLOYMENT MODEL Capital Dividends & Expenditures Share Repurchases CASH FROM 50% OPERATIONS 50% Strategic Debt Investments Repayment 27
Slide 28: Cash Deployment FY21-FY23
CASH DEPLOYMENT | FY21-FY23 Balanced capital deployment, while ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ maintaining investment grade debt rating Capital Expenditures Debt Repayment Dividend Payments Share Repurchases $1.2B $1.3B $1.3B $1.3B Above net
Slide 29: Debt Reduction
DEBT REDUCTION 4.0x 3.6x MAINTAIN 3.5x INVESTMENT GRADE DEBT RATING ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ 3.0x 2.9x 3.0x 2.5x - 3.0x TARGET LEVERAGE 2.7x 2.5x-3.0x Target Debt Leverage Ratio 2.6x 2.5x 2.0x Q1 FY20 Q1 FY21 Q1 FY22 Q1 FY23 Q1 FY24 LONG-TERM 29
Slide 30: Capital Expenditures
CAPITAL EXPENDITURES $550M $477M LONG-TERM $418M OBJECTIVE 3.5% OF NET SALES $307M $269M NEAR TERM ELEVATION DUE TO UNCRUSTABLES ® SANDWICH CAPACITY EXPANSION FY20 FY21 FY22 FY23 FY24E % of NS 3.4% 3.8% 5.2% 5.6% 7.2%* *NOTE: BASED ON MIDPOINT OF FY24 NET SALES GUIDANCE PROVIDED ON AUGUST 29, 2023.
Slide 31: Total Shareholder Return
TOTAL SHAREHOLDER RETURN Goal: Consistent top quartile performer in food industry DELIVERING 1-Year 3-Year 5-Year LONG-TERM CAGR CAGR CAGR GROWTH AND SJM 6% 10% 10% SHAREHOLDER VALUE Peer Group Avg. -10% 1% 5% S&P Packaged Foods -4% 2% 4% S&P 500 14% 10% 11% NOTE: DATA AS OF AUGUST 29, 2023. ASSUMES
Slide 32: The J.M. Smucker Co.
pe THE JM. SMUCKER Co
Slide 33: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS This presentation contains forward-looking statements, such as projected net sales, operating results, earnings, and cash flows that are subject to risks and uncertainties that could cause actual results to differ materially from future results expressed or implied by thos
Slide 34: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES The Company uses non-GAAP financial measures, including: net sales excluding divestitures and foreign currency exchange; adjusted gross profit; adjusted operating income; adjusted income; adjusted earnings per share; earnings before interest, taxes, depreciation, amortiza
Slide 35: Unaudited Non-GAAP Financial Measures
UNAUDITED NON-GAAP FINANCIAL MEASURES ($ in millions) Three Months Ended July 31, 2023 2022 Gross profit reconciliation: Gross profit $654.8 $552.5 Change in net cumulative unallocated derivative gains and losses (10.4) 33.8 Cost of products sold – special project costs - 1.1 Adjusted gross profit $
Slide 36: Unaudited Non-GAAP Financial Measures
UNAUDITED NON-GAAP FINANCIAL MEASURES Three Months Ended July 31, ($ and shares in millions, except per share data) 2023 2022 Net income reconciliation: Net income $183.6 $109.8 Income tax expense 54.8 31.3 Amortization 39.8 55.6 Loss (gain) on divestitures – net (1.2) (1.6) Change in net cumulative
Slide 37: Unaudited Non-GAAP Financial Measures
UNAUDITED NON-GAAP FINANCIAL MEASURES ($ in millions) Three Months Ended TTM Ended October 31, January 31, April 30, July 31, July 31, 2022 2023 2023 2023 2023 EBITDA (as adjusted) reconciliation: Net income $191.1 $208.5 ($600.7) $183.6 ($17.5) Income tax expense 61.8 66.9 (77.9) 54.8 105.6 Interes
Slide 38: Unaudited Non-GAAP Financial Measures
UNAUDITED NON-GAAP FINANCIAL MEASURES ($ in millions) Three Months Ended TTM Ended October 31, January 31, April 30, July 31, July 31, 2021 2022 2022 2022 2022 EBITDA (as adjusted) reconciliation: Net income $206.0 $69.7 $202.1 $109.8 $587.6 Income tax expense 62.8 39.9 58.1 31.3 192.1 Interest expe
Slide 39: Unaudited Non-GAAP Financial Measures
UNAUDITED NON-GAAP FINANCIAL MEASURES ($ in millions) Three Months Ended TTM Ended October 31, January 31, April 30, July 31, July 31, 2020 2021 2021 2021 2021 EBITDA (as adjusted) reconciliation: Net income $230.8 $261.5 $147.0 $153.9 $793.2 Income tax expense 72.7 100.0 46.3 51.3 270.3 Interest ex
Slide 40: Unaudited Non-GAAP Financial Measures
UNAUDITED NON-GAAP FINANCIAL MEASURES ($ in millions) Three Months Ended TTM Ended October 31, January 31, April 30, July 31, July 31, 2019 2020 2020 2020 2020 EBITDA (as adjusted) reconciliation: Net income $211.2 $187.4 $226.3 $237.0 $861.9 Income tax expense 67.9 55.1 72.1 76.6 271.7 Interest exp
Slide 41: Unaudited Non-GAAP Financial Measures
UNAUDITED NON-GAAP FINANCIAL MEASURES ($ in millions) Three Months Ended TTM Ended October 31, January 31, April 30, July 31, July 31, 2018 2019 2019 2019 2019 EBITDA (as adjusted) reconciliation: Net income $ 188.5 $ 121.4 $ 71.5 $ 154.6 $536.0 Income tax expense 80.9 35.8 30.4 52.1 199.2 Interest
Slide 42: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION Company Guidance Year Ending April 30, 2024 Low High Net income per common share – assuming dilution reconciliation: Net income per common share – assuming dilution $8.01 $ 8.41 Change in net cumulative unallocated derivative gains and losses (A) 0.12 0.12 Amortization 1.16 1
Slide 43: 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 $ 1,200 Additions to property, plant, and equipment (550) Free cash flow $ 650 43
Slide 44: Additional Information
ADDITIONAL INFORMATION The J.M. Smucker Co. is the owner of all trademarks and logos referenced herein, except for Dunkin’®, which 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 retail channels such as grocery stores, m
Slide 45: Additional Information
ADDITIONAL INFORMATION Aaron Broholm Vice President, Investor Relations ir.team@jmsmucker.com Phone: (330) 682-3000 Investor Relations Website: https://investors.jmsmucker.com/ 45
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