The J.m. Smucker Company · NYSE:SJM
The J.m. Smucker — 2017 Barclays Global Consumer Staples Conference
69 slides from The J.m. Smucker's conference presentation, Sep 5, 2017
Slide 1: The J.M. Smucker Company 2017 Barclays Global Consumer Staples Conference
The J.M. Smucker Company 2017 Barclays Global Consumer Staples Conference Tuesday, September 5, 2017
Slide 2: Strategy & Business Update; Financial Update
Strategy & Business Update Mark Smucker President and Chief Executive Officer Financial Update Mark Belgya Vice Chair and Chief Financial Officer
Slide 3: Key Themes
Key Themes PARTICIPATE STRONG ROBUST ENHANCED IN EXCELLENT PORTFOLIO OF INNOVATION CAPABILITIES CATEGORIES BRANDS PIPELINE 3
Slide 4: Delivering on Financial Priorities
Delivering on Financial Priorities PARTICIPATE STRONG IN EXCELLENT PORTFOLIO OF CATEGORIES BRANDS TOP-LINE GROWTH COST SAVINGS EPS GROWTH ROBUST INNOVATION ENHANCED PIPELINE CAPABILITIES 4
Slide 5: The Retail Environment is Rapidly Evolving
The Retail Environment is Rapidly Evolving ONLINE AND EXPANSION BY PRIVATE LABEL BRICK & MORTAR DISCOUNTERS BRANDS ACQUISITIONS 5
Slide 6: The Retail Environment is Rapidly Evolving
The Retail Environment is Rapidly Evolving SUPERMARKETS MASS RETAILERS CLUB & DOLLAR E-COMMERCE We will continue to GROW by EVOLVING with the changing needs of CONSUMERS and CUSTOMERS 6
Slide 7: Strong Brand Presence
Strong Brand Presence OF ALL U.S. HOUSEHOLDS HAVE 93% AT LEAST ONE OF OUR PRODUCTS Source: Smucker Internal Multi-Outlet Share Report 52 weeks ended August 6, 2017 7
Slide 8: A Portfolio of Leading Brands
A Portfolio of Leading Brands CATEGORIES WHERE WE HOLD #1 OR #2 BRANDED POSITIONS CONTRIBUTE $6.3B 75% OF NET SALES FY17 TOTAL U.S. RETAIL REPORTABLE SEGMENTS Source: Smucker Internal Multi-Outlet Share Report 52 weeks ended August 6, 2017 8
Slide 9: Evolving Consumer Landscape
Evolving Consumer Landscape We have made investments to expand our insights into CONSUMER PREFERENCES 9
Slide 10: Consumers Expect a Lot From Food
Consumers Expect a Lot From Food ENJOYABLE EXPERIENCE SOCIAL CONNECTION SATISFY CRAVINGS PROMOTE HEALTH ALIGN WITH VALUES 10
Slide 11: Trends Are Driving Consumer Choices
Trends Are Driving Consumer Choices FAST-PACED QUALITY & OCCASIONAL AUTHENTIC SCHEDULES CONVENIENCE INDULGENCE EXPERIENCE 11
Slide 12: History of Transformation
History of Transformation Culture of CONTINUOUS IMPROVEMENT EXPERIENCED Leadership Team Clear Path to Sustainable, Profitable GROWTH 12
Slide 13: Strategic Roadmap
Strategic Roadmap TOP-LINE GROWTH COST SAVINGS EPS GROWTH INNOVATION INVESTMENTS ACQUISITIONS COST SAVINGS 13
Slide 14: Strategic Roadmap
Strategic Roadmap TOP-LINE GROWTH COST SAVINGS EPS GROWTH INNOVATION INVESTMENTS ACQUISITIONS COST SAVINGS 14
Slide 15: Near-Term Innovation
Near-Term Innovation Capitalizing on KEY CONSUMER TRENDS 15
Slide 16: Upcoming Platform Launches
Upcoming Platform Launches COFFEE CONSUMER PET Extending the reach of our ICONIC BRANDS 16
Slide 17: At-Home Coffee Category
At-Home Coffee Category INSTANT INSTANT 9% 8% ONE CUP 21% ONE CUP MAINSTREAM 41% TOTAL 26% SMUCKER CATEGORY PREMIUM PORTFOLIO 14% MAINSTREAM 57% PREMIUM 24% Source: For category, Smucker Internal Multi-Outlet Share Report 52 weeks ended August 6, 2017; For Smucker, FY17 U.S. Retail Coffee Net Sales
Slide 18: Mainstream Coffee Segment
Mainstream Coffee Segment #2 COMPETITOR 25% SMUCKER 55% $2.5B MAINSTREAM SEGMENT PRIVATE LABEL 11% OTHER 9% Leveraging our SCALE, SUPERIOR SUPPLY CHAIN, and RETAIL PROGRAMS to maintain our position Source: Smucker Internal Multi-Outlet Share Report 52 weeks ended August 6, 2017 18
Slide 19: Growth Potential with Café Bustelo
Growth Potential with Café Bustelo ® TTM NET SALES $140M DOUBLE-DIGIT SALES GROWTH in the past year 4% SHARE of mainstream segment Note: Net sales represents brand sales Company-wide; Share source: Smucker Internal Multi-Outlet Share Report 52 weeks ended August 6, 2017 19
Slide 20: Premium and One Cup Segments
Premium and One Cup Segments SMUCKER SMUCKER 15% OTHER 15% 22% OTHER 34% $2.3B PREMIUM $3.9B ONE CUP #1 COMPETITOR #1 SEGMENT COMPETITOR PRIVATE SEGMENT 26% 30% LABEL 20% PRIVATE LABEL 10% #3 #2 COMPETITOR COMPETITOR 11% 17% Source: Smucker Internal Multi-Outlet Share Report 52 weeks ended August 6,
Slide 21: Dunkin' Donuts Premium Coffee
Dunkin’ Donuts Premium Coffee ® TTM NET SALES $500M+ COMING SOON! #1 BAGGED COFFEE SKU #1 K-CUP® PODS SKU Source: Smucker Internal Multi-Outlet Share Report 52 weeks ended August 6, 2017 21
Slide 22: Building on the Folgers Heritage
Building on the Folgers Heritage ® Adding NEW PLATFORM in Q4 FY18 22
Slide 23: New K-Cup Agreement
New K-Cup Agreement ® Focused on GROWING OUR SHARE of the one cup market 23
Slide 24: Building Our Snacking Portfolio
Building Our Snacking Portfolio INSIGHT-SUPPORTED snacking strategy focused on: CONVENIENCE ON-THE-GO LOW-PREP 24
Slide 25: Jif Snacking
Jif Snacking ® COMING SOON! NEW SNACKING PLATFORM launching Q1 FY19 25
Slide 26: Leader in Dog Snacks
Leader in Dog Snacks #1 IN TOTAL CATEGORY 37% SHARE #1 IN DOG BISCUITS 63% SHARE #1 IN SOFT & CHEWY SNACKS 50% SHARE Source: Smucker Internal Multi-Outlet Share Report 52 weeks ended August 6, 2017 26
Slide 27: Capitalizing on the Equity of Milk-Bone
Capitalizing on the Equity of Milk-Bone ® NEW PREMIUM BISCUITS Milk-Bone® Farmer’s Medley™ NEW LOW-CALORIE SNACK Milk-Bone® Puffs 27
Slide 28: New Pet R&D Facility
New Pet R&D Facility Centralized R&D LOCATION in Orrville, Ohio 28
Slide 29: Strategic Roadmap
Strategic Roadmap TOP-LINE GROWTH COST SAVINGS EPS GROWTH INNOVATION INVESTMENTS ACQUISITIONS COST SAVINGS 29
Slide 30: Nature's Recipe Distribution Expansion
Nature's Recipe Distribution Expansion ® NET SALES UP 32% Q1 FY18 30
Slide 31: Nature's Recipe Marketing Campaign
Nature's Recipe Marketing Campaign ® LARGEST MARKETING CAMPAIGN in Company history is driving BRAND AWARENESS and REPEAT PURCHASES 31
Slide 32: Jif Launch in Canada
Jif Launch in Canada ® 4% SHARE of $270M Canadian peanut butter market Source: Smucker Internal Multi-Outlet Share Report 12 weeks ended June 24, 2017 32
Slide 33: U.S. Olympic Team Sponsor
U.S. Olympic Team sponsor PARALYMPICS Ww Proud Sponsor of Team USA
Slide 34: Accelerating E-Commerce
Accelerating E-Commerce 5% Projected FY20 Net Sales from E-COMMERCE 34
Slide 35: Accelerating E-Commerce
Accelerating E-Commerce First quarter e-commerce sales for PET GREW 85% while COFFEE SALES more than DOUBLED 35
Slide 36: Accelerating E-Commerce
Accelerating E-Commerce Focused on increasing our share of market by: TRANSFORMING LEVERAGING CAPITALIZING ON CAPABILITIES OUR SCALE RELATIONSHIPS 36
Slide 37: Strategic Roadmap
Strategic Roadmap TOP-LINE GROWTH COST SAVINGS EPS GROWTH INNOVATION INVESTMENTS ACQUISITIONS COST SAVINGS 37
Slide 38: Areas of M&A Interest
Areas of M&A Interest PET COFFEE NATURAL & SNACKING ORGANIC 38
Slide 39: Strategic Roadmap
Strategic Roadmap TOP-LINE GROWTH COST SAVINGS EPS GROWTH INNOVATION INVESTMENTS ACQUISITIONS COST SAVINGS 39
Slide 40: Fiscal 2018 Cost Reduction Target
Fiscal 2018 Cost Reduction Target $140M FY18 INCREMENTAL COST SAVINGS TARGET $100M $40M COST MANAGEMENT PET FOOD ACQUISITION PROGRAM SYNERGIES 40
Slide 41: Summary
Summary PARTICIPATE STRONG IN EXCELLENT PORTFOLIO OF CATEGORIES BRANDS TOP-LINE GROWTH COST SAVINGS EPS GROWTH ROBUST INNOVATION ENHANCED PIPELINE CAPABILITIES 41
Slide 42: Financial Update
Financial Update Mark Belgya Vice Chair and Chief Financial Officer • FIRST QUARTER RESULTS • FULL-YEAR OUTLOOK • CASH DEPLOYMENT AND DEBT
Slide 43: First Quarter Fiscal 2018 Results
First Quarter Fiscal 2018 Results FY18 Q1 YoY CHANGE ($ in millions, except per share data) Net Sales $1,749 (4%) Adjusted Gross Profit $650 (10%) Adjusted Operating Income $301 (17%) Adjusted EPS $1.51 (19%) 43
Slide 44: Full-Year Fiscal 2018 Outlook
Full-Year Fiscal 2018 Outlook CURRENT PREVIOUS Adjusted EPS $7.75 - $7.95 $7.85 - $8.05 Free Cash Flow $775M $775M Capital Expenditures $310M $310M Effective Tax Rate 32.5% - 33.0% 32.5% - 33.0% Net sales are expected to be down slightly compared to the prior year. Note: Outlook excludes any potenti
Slide 45: U.S. Retail Coffee – Fiscal 2018
U.S. Retail Coffee – Fiscal 2018 KEY DRIVERS OF PROJECTED 2H IMPROVEMENT R&G Volume Pricing and merchandising activities Folgers® K-Cups® Improved economics beginning in Q3 New Coffee Products Launch in Q4 Green Coffee Costs Sequentially lower throughout year Harahan Coffee Facility Cost savings fro
Slide 46: Full-Year Fiscal 2018 Outlook
Full-Year Fiscal 2018 Outlook SEGMENT SEGMENT NET SALES PROFIT U.S. Retail Coffee Flat - LSD • Improved volume trends for R&G, accelerated performance of Folgers® K-Cups®, and initial contribution of new coffee products • Lower segment profit reflects increased marketing expense and unfavorable pric
Slide 47: Full-Year Fiscal 2018 Outlook
Full-Year Fiscal 2018 Outlook SEGMENT SEGMENT NET SALES PROFIT U.S. Retail Consumer Foods - LSD + HSD • Net sales trend improves sequentially through the year • Segment margin improvement driven by effective management of supply chain costs and execution of pricing strategies 47
Slide 48: Full-Year Fiscal 2018 Outlook
Full-Year Fiscal 2018 Outlook SEGMENT SEGMENT NET SALES PROFIT U.S. Retail Pet Foods - LSD - MSD • Net sales decrease primarily due to pet snacks and cat food • Lower segment profit reflects increased marketing expense and unfavorable price-to-cost relationship • Project FY18 segment profit margin t
Slide 49: Full-Year Fiscal 2018 Outlook
Full-Year Fiscal 2018 Outlook SEGMENT SEGMENT NET SALES PROFIT International & Away From Home + MSD Flat • Project consistent sales trends across each quarter • Operating income and gain on sale from divested China business included in prior year segment profit 49
Slide 50: Full-Year Fiscal 2018 Outlook
Full-Year Fiscal 2018 Outlook SEGMENT SEGMENT NET SALES PROFIT U.S. Retail Coffee Flat - LSD U.S. Retail Consumer Foods - LSD + HSD U.S. Retail Pet Foods - LSD - MSD International & Away From Home + MSD Flat 50
Slide 51: Capital Expenditures
Capital Expenditures $310M $279M $248M $201M $192M FY14 FY15 FY16 FY17 FY18E YUfk3p Yl Yu wl Uli’ GJo7U"
Slide 52: New Smucker's Uncrustables Facility
New Smucker's Uncrustables Facility ® ® LONGMONT, COLORADO PLANNED COMPLETION: FISCAL 2020 52
Slide 53: Smucker's Uncrustables
Smucker's Uncrustables ® ® 5-YEAR NET SALES CAGR 12% TTM NET SALES $225M FY22E NET SALES $500M Note: Represents brand sales Company-wide 53
Slide 54: Full-Year Fiscal 2018 Cash Deployment
Full-Year Fiscal 2018 Cash Deployment CASH FROM CAPEX OPERATIONS $310M $1.1B FREE CASH FLOW $775M DIVIDENDS DEBT REPAYMENT & STRATEGIC OPTIONALITY $350M $425M 54
Slide 55: Summary
Summary PARTICIPATE STRONG IN EXCELLENT PORTFOLIO OF CATEGORIES BRANDS TOP-LINE GROWTH COST SAVINGS EPS GROWTH ROBUST INNOVATION ENHANCED PIPELINE CAPABILITIES 55
Slide 56: The J.M. Smucker Company 2017 Barclays Global Consumer Staples Conference
The J.M. Smucker Company 2017 Barclays Global Consumer Staples Conference Tuesday, September 5, 2017
Slide 57: Supplemental Information
Supplemental Information Se,
Slide 58: Total Company
Total Company Fiscal 2017 Net Sales by Reportable Segment 58
Slide 59: U.S. Retail Reportable Segments
U.S. Retail Reportable Segments Fiscal 2017 Net Sales by Channel $6.3B Note: Other includes Military, Mass Retail, Convenience, and E-commerce 59
Slide 60: U.S. Retail Coffee Segment
U.S. Retail Coffee Segment Fiscal 2017 Net Sales $2.1B 60
Slide 61: U.S. Retail Consumer Foods Segment
U.S. Retail Consumer Foods Segment Fiscal 2017 Net Sales $2.1B 61
Slide 62: U.S. Retail Pet Foods Segment
U.S. Retail Pet Foods Segment Fiscal 2017 Net Sales $2.1B 62
Slide 63: International and Away From Home
International and Away From Home Fiscal 2017 Net Sales 63
Slide 64: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking statements, such as projected net sales, operating results, earnings, and cash flows that are subject to risks and uncertainties that could cause actual results to differ materially from future results expressed or implied by thos
Slide 65: Non-GAAP Measures
Non-GAAP Measures The Company uses non-GAAP financial measures, including: net sales excluding foreign currency exchange; adjusted gross profit, operating income, income, and earnings per share; earnings before interest, taxes, depreciation, amortization, and impairment charges related to intangible
Slide 66: Non-GAAP Reconciliation
Non-GAAP Reconciliation ($ in millions) Three Months Ended July 31, 2017 2016 Gross profit reconciliation: Gross profit $ 662.1 $ 722.7 Unallocated derivative losses (gains) (12.6) (7.7) Cost of products sold – special project costs 0.7 4.0 Adjusted gross profit $ 650.2 $ 719.0 Operating income reco
Slide 67: Non-GAAP Reconciliation
Non-GAAP Reconciliation Three Months Ended July 31, ($ in millions, except per share data) 2017 2016 Net income reconciliation: Net income $ 126.8 $ 170.0 Income taxes 62.2 83.4 Amortization 51.5 51.7 Unallocated derivative losses (gains) (12.6) (7.7) Cost of products sold – special project costs 0.
Slide 68: Non-GAAP Reconciliation
Non-GAAP Reconciliation Company Guidance Year Ending April 30, 2018 ($ in millions, except per share data) Low High Net income per common share – assuming dilution reconciliation: Net income per common share – assuming dilution $ 6.19 $ 6.39 Special project costs 0.38 0.38 Amortization 1.18 1.18 Adj
Slide 69: 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: Pillsbury ® is a trademark of The Pillsbury Company, LLC, and Dunkin' Donuts ® is a registered trademark of DD IP Holder LLC. The Numi trademark and
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