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The J. M. Smucker Company, commonly known as Smucker's, is a leading manufacturer and marketer of branded food and beverage products. The company operates primarily in North America, focusing on retail outlets with a diverse portfolio that includes coffee, peanut butter, fruit spreads, frozen handheld products, sweet baked goods, dog snacks, and cat food . Notable brands under its umbrella include Folgers, Dunkin', Café Bustelo, Jif, Smucker's Uncrustables, Hostess, Voortman, Milk-Bone, and Meow Mix . The acquisition of Hostess Brands in 2023 significantly bolstered its presence in the sweet baked goods category . The company relies heavily on major retail partners, with Walmart Inc. and subsidiaries accounting for a substantial portion of its net sales .
- U.S. Retail Coffee - Manufactures and markets popular coffee brands such as Folgers, Dunkin', and Café Bustelo, catering to a wide range of coffee preferences.
- U.S. Retail Pet Foods - Offers a variety of pet food products, including dog snacks and cat food, under well-known brands like Milk-Bone and Meow Mix.
- U.S. Retail Frozen Handheld and Spreads - Produces and sells frozen handheld products and spreads, featuring brands like Jif and Smucker's Uncrustables.
- Sweet Baked Snacks - Engages in the production and sale of sweet baked goods, significantly enhanced by the acquisition of Hostess Brands, with products like Hostess and Voortman.
- Regarding Hostess, can you elaborate on the specific aspects of execution that weakened, what caused these issues, and how you plan to fix them?
- With the rising popularity of GLP-1 weight loss drugs potentially impacting indulgent snacking, how are you gathering information on this trend, and what resources are you dedicating to adapt your product portfolio, especially with brands like Hostess?
- Considering coffee prices have reached new highs with Arabica hitting $3, and you've already implemented two rounds of pricing, how do you plan to manage further inflation without significantly affecting demand due to price elasticity?
- Your EPS guidance has fluctuated this year from a midpoint of $10 to $9.80 and now back to $9.90; can you explain the factors behind this volatility and whether it indicates lower visibility into your business performance?
- In the pet food segment, you've implemented a price cut for Meow Mix and increased trade spend in cat food and dog snacks; what competitive pressures are driving these decisions, and how do you expect them to impact your margins and market share?
Competitors mentioned in the company's latest 10K filing.
- The Kraft Heinz Company: Competitor in mainstream roast and ground coffee with brands Maxwell House and Yuban .
- Keurig Dr. Pepper: Competitor in mainstream roast and ground coffee with brand McCafé and in single serve coffee with brands Green Mountain Coffee, Donut Shop, and McCafé .
- F. Gaviña & Sons, Inc.: Competitor in mainstream roast and ground coffee with brand Cafe La Llave .
- Nestlé S.A.: Competitor in single serve coffee with brand Starbucks and in premium coffee with brands Starbucks and Seattle’s Best Coffee .
- JDE Peet’s N.V.: Competitor in single serve coffee with brand Peet’s Coffee & Tea and in premium coffee with brand Peet’s Coffee & Tea .
- Tata Global Beverages Limited: Competitor in premium coffee with brand Eight O’Clock .
- Community Coffee Company: Competitor in premium coffee with brand Community Coffee .
- Hormel Foods Corporation: Competitor in peanut butter and specialty spreads with brand Skippy .
- Ferrero SpA: Competitor in peanut butter and specialty spreads with brand Nutella .
- Post Holdings, Inc.: Competitor in peanut butter and specialty spreads with brand Peter Pan .
- Welch Foods Inc.: Competitor in fruit spreads with brand Welch’s .
- Andros Foods USA, Inc.: Competitor in fruit spreads with brand Bonne Maman .
- Nestlé S.A.: Competitor in frozen sandwiches and snacks with brand Hot Pockets .
- General Mills, Inc.: Competitor in frozen sandwiches and snacks with brand Totino’s and in pet snacks with brand Blue Buffalo and Nudges .
- Ruiz Foods: Competitor in frozen sandwiches and snacks with brand El Monterrey .
- Nestlé Purina PetCare Company: Competitor in mainstream cat food with brands Cat Chow, Friskies, Kit & Kaboodle, and Fancy Feast, and in pet snacks with brand Beggin’ Strips .
- Mars, Incorporated: Competitor in mainstream cat food with brands Iams and Sheba, and in pet snacks with brands Dentastix and Greenies .
- McKee Foods Corporation: Competitor in sweet baked goods with brand Little Debbie .
- Grupo Bimbo, S.A.: Competitor in sweet baked goods with brand Entenmann’s .
- Mondelez International: Competitor in cookies with brand Nabisco .
- Restaurant Brands International Inc.: Competitor in Canada coffee with brand Tim Hortons .
| Customer | Relationship | Segment | Details |
|---|---|---|---|
Walmart Inc. | Largest single retail customer | U.S. Retail | 33% of net sales in 2024; $211.7 million (29% of total) trade receivables as of 4/30/2024 |
None | N/A | N/A | No other single customer exceeded 10% of net sales in any year |
Recent developments and announcements about SJM.
Financial Reporting
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Revenue and Profit Performance: The company reported a 17% increase in net sales, exceeding expectations. Comparable net sales, excluding the Hostess Brands acquisition and divested businesses, increased by 2% . Adjusted gross profit rose by 17%, driven by favorable volume mix and higher net price realization .
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Management’s Forward Guidance: SJM increased its full-year adjusted earnings per share guidance, reflecting strong performance and sustained consumer demand for its brands . The company anticipates full-year net sales to increase by 8.5% to 9.5% compared to the prior year .
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Market Conditions and Strategic Initiatives: The company highlighted the growth of its Uncrustables brand, which saw a 16% increase in net sales, and the successful start of production at a new manufacturing facility in Alabama . The company is also focusing on expanding distribution and innovation for the Hostess brand to return it to growth .
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Analyst Questions and Management Responses: During the Q&A session, management addressed questions about the impact of inflationary pressures on consumer spending and the company's strategies to mitigate these challenges. They emphasized their focus on cost management and strategic investments in key growth platforms .
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Significant Comments on Market Conditions: The company noted that the sweet baked goods category is recovering slower than anticipated due to inflationary pressures and reduced discretionary income . However, they remain confident in their long-term growth strategy and the potential of their brand portfolio .
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Net Sales: The company reported net sales of $2.3 billion, marking an increase of 17% compared to the same quarter last year. Excluding the impact of acquisitions, divestitures, and foreign currency exchange, net sales increased by 2% .
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Earnings: The net loss per diluted share was $0.23, while adjusted earnings per share increased by 7% to $2.76 .
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Cash Flow: Cash provided by operations was $404.2 million, a significant increase from $176.9 million in the prior year. Free cash flow also saw a substantial rise to $317.2 million from $28.2 million in the previous year .
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Segment Performance:
- U.S. Retail Coffee: Net sales increased by 3% to $704.0 million, with a segment profit margin of 28.8% .
- U.S. Retail Frozen Handheld and Spreads: Net sales rose by 5% to $485.2 million, though segment profit decreased by 10% .
- U.S. Retail Pet Foods: Net sales decreased by 4% to $445.4 million, but segment profit increased by 25% .
- Sweet Baked Snacks: This segment contributed $315.5 million in net sales .
- International and Away From Home: Net sales decreased by 1% to $321.1 million, with a segment profit increase of 13% .
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CEO Remarks: Mark Smucker, Chair of the Board, President, and CEO, highlighted the company's strong performance in key growth platforms and the strategic focus on integrating Hostess Brands and divesting the Voortman® business to prioritize growth opportunities .
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Outlook: The company updated its full-year fiscal 2025 guidance, expecting net sales to increase by 8.5% to 9.5% compared to the prior year, with adjusted earnings per share projected to be between $9.70 and $10.10 .
Earnings Call
The J.M. Smucker Company (SJM) recently released its fiscal 2025 second quarter earnings call transcript. Here are the key points from the earnings call:
Overall, SJM is optimistic about its growth prospects, driven by strong brand performance and strategic initiatives to enhance distribution and product offerings.
Earnings Call
The SJM company recently held its fiscal 2025 second quarter earnings call, where several key points were discussed. The company reported strong performance in its coffee segment despite ongoing inflationary pressures, with Arabica coffee prices reaching $3, a level not seen in over a decade . SJM has implemented two rounds of pricing to manage these costs and expects coffee sales to remain flat in the third quarter due to these pricing adjustments .
In terms of strategic initiatives, SJM is focusing on expanding its Hostess brand through increased marketing efforts and co-promotions with other brands like coffee . The company is also addressing the impact of GLP-1 weight loss drugs on consumer behavior, although no significant effects have been observed yet .
Management provided forward guidance, indicating a cautious outlook due to economic conditions affecting consumer discretionary spending. They are working on mitigating stranded overhead costs from the pet food divestiture and expect these efforts to not impact earnings negatively in the next fiscal year .
Analysts raised questions about the company's ability to manage costs and maintain growth, particularly in the coffee and pet food segments. SJM's leadership expressed confidence in their strategies to address these challenges, including leveraging innovation and adjusting pricing strategies .
Overall, SJM is navigating a complex market environment with a focus on maintaining profitability and growth through strategic pricing, cost management, and brand expansion initiatives.
Earnings Report
The J.M. Smucker Co. Announces Fiscal 2025 Second Quarter Results
On November 26, 2024, The J.M. Smucker Co. released its financial results for the second quarter of fiscal year 2025, which ended on October 31, 2024. Here are the key highlights from the earnings report:
This report reflects the company's strategic initiatives and financial health, showcasing growth in several key areas despite challenges in others.