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Category: Stock Market and J.M Smucker's
Date: 27 August 2019 Stock Price: $112.93 We take a look at the 1st quarter earnings report of jams, snacks, mayonnaise and pet food maker, J.M Smucker's for the 1st quarter of their 2020 fiscal year.
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About J.M Smucker's
The J.M. Smucker Company is an iconic American company founded in 1897. Guided by a vision to engage, delight, and inspire consumers through trusted food and beverage brands that bring joy throughout their lives, Smucker has grown to be a well-respected North American marketer and manufacturer. Our balanced portfolio of leading and emerging, on-trend brands spans pet food and pet snacks, coffee, and consumer food and natural beverage.
For more than 120 years, our Company has remained under the constant leadership of our founding family – the Smucker’s. We are proud to have fostered success through five generations of family leadership by focusing on long-term growth and embracing a foundation of strong principles and clear communication.
Today, the Company remains rooted in our Basic Beliefs of Quality, People, Ethics, Growth, and Independence established by our founder and namesake, Jerome Monroe (J.M.) Smucker, more than a century ago. We strongly believe that our unique culture is foundational to our Company’s success and the sustained passion of our employees. When we talk about our culture, we are referring to an environment that engages our employees, inspires passion for our brands, and makes people proud to work here — an atmosphere where everyone makes a difference.
Some of the group's brands include:
For more than 120 years, our Company has remained under the constant leadership of our founding family – the Smucker’s. We are proud to have fostered success through five generations of family leadership by focusing on long-term growth and embracing a foundation of strong principles and clear communication.
Today, the Company remains rooted in our Basic Beliefs of Quality, People, Ethics, Growth, and Independence established by our founder and namesake, Jerome Monroe (J.M.) Smucker, more than a century ago. We strongly believe that our unique culture is foundational to our Company’s success and the sustained passion of our employees. When we talk about our culture, we are referring to an environment that engages our employees, inspires passion for our brands, and makes people proud to work here — an atmosphere where everyone makes a difference.
Some of the group's brands include:
- Crosse & Blackwell
- Adams
- Knotts
- Tru Roots Organic
- Santa Cruz Organic
- Sahale Snacks
Financial overview of J.M Smucker's latest results
Numbers highlighted in the earnings report:
Numbers we are interested in: (for the quarter):
Segmental analysis:
Net sales
Operating profit:
- Net Sales $1.779 billion (down 6% from $1.903 billion for the same quarter of the previous year)
- Adjusted Gross Profit $671million (down 4% from $700 million for the same quarter of the previous year)
- Adjusted Gross Profit Margin: 37.7% (up 90bps grom 36.8% for the same quarter of the previous year)
- Adjusted Operating Income: $291 million (down 8% from $317 million for the same quarter of the previous year)
- Adjusted Operating Income Margin: 16.3% (down 40bps from 16.7% for the same quarter of the previous year)
- Adjusted Effective Tax Rate: 25.1% (up 200bps from 23.1% for the same quarter of the previous year)
- Adjusted EPS – Assuming Dilution: $1.58 (down 11% from $1.78 for the same quarter of the previous year)
Numbers we are interested in: (for the quarter):
- Cash from Operations: $222million (down from $243 million for the same quarter of the previous year)
- Capital Expenditures: $73million (down from $101 million for the same quarter of the previous year)
- Free Cash Flow: $149million (up from $142 million for the same quarter of the previous year)
- Cash and equivalents: $48.8 million
- Trade receivables, less allowance for doubtful accounts: 473.7 million
- Inventories: $1.013.3 billion
- Inventories makes up 6% of the group's total assets
Segmental analysis:
Net sales
- U.S. Retail Pet Foods: $669.9 million (down from $671.2 million for the same quarter of the previous year)
- U.S. Retail Coffee: $465.7 ( down from $489.5 million for the same quarter of the previous year)
- U.S. Retail Consumer Foods: $402.2 million (down from $483.3 million for the same quarter of the previous year)
- International and Away From Home: $241.1 (down from $258.5 million for the same quarter of the previous year)
- Total net sales: $1,778.9 billion $1,902.5 billion for the same quarter of the previous year)
Operating profit:
- U.S. Retail Pet Foods:: $120.1 million (up from $100.4 million for the same quarter of the previous year)
- U.S. Retail Coffee: $128.9 million (down from $147.8 million for the same quarter of the previous year)
- U.S. Retail Consumer Foods : $81.0 (down from $97.3 million for the same quarter of the previous year)
- International and Away From Home: $32.3 million (down from $43.4 million for the same quarter of the previous year)
- Total segment profit $362.3million (down from $388.9 million for the same quarter of the previous year)
J.M Smuckers management commentary on the results and earnings guidance
ORRVILLE, Ohio, Aug. 27, 2019 /PRNewswire/ -- The J. M. Smucker Company (NYSE: SJM) today announced results for the first quarter ended July 31, 2019, of its 2020 fiscal year. Financial results include the contribution from Ainsworth Pet Nutrition, LLC ("Ainsworth"), which was acquired on May 14, 2018, and reflect the divestiture of the Company's U.S. baking business on August 31, 2018. All comparisons are to the first quarter of the prior fiscal year, unless otherwise noted.
EXECUTIVE SUMMARY
"Our first quarter performance fell short of our expectations primarily due to the timing of shipments and deflationary pricing in the coffee and peanut butter categories, as well as competitive activity in the premium dog food category," said Mark Smucker, Chief Executive Officer.
"We have continued momentum in many key product categories, and we are already taking decisive actions and prioritizing initiatives that strengthen our business. We remain confident in our strategy, which includes a continued focus on our growth imperatives to lead in the best categories, build brands consumers love, and be everywhere, combined with a relentless focus on operating with financial discipline, all of which will enhance shareholder value for the long term."
2020 Fiscal outlook
EXECUTIVE SUMMARY
- Net sales decreased $123.6 million, or 6 percent. Comparable net sales decreased 4 percent.
- Net income per diluted share was $1.36. Adjusted earnings per share was $1.58, a decrease of 11 percent.
- Cash from operations was $221.5 million, a decrease of 9 percent. Free cash flow was $148.5 million in the quarter, compared to $141.7 million in the prior year.
- The Company updated its full-year fiscal 2020 net sales and adjusted earnings per share outlook.
"Our first quarter performance fell short of our expectations primarily due to the timing of shipments and deflationary pricing in the coffee and peanut butter categories, as well as competitive activity in the premium dog food category," said Mark Smucker, Chief Executive Officer.
"We have continued momentum in many key product categories, and we are already taking decisive actions and prioritizing initiatives that strengthen our business. We remain confident in our strategy, which includes a continued focus on our growth imperatives to lead in the best categories, build brands consumers love, and be everywhere, combined with a relentless focus on operating with financial discipline, all of which will enhance shareholder value for the long term."
2020 Fiscal outlook
- Net Sales (1%) - 0%
- Adjusted EPS – assuming dilution $8.35 - $8.55
- Free Cash Flow $875M - $925M
- Capital Expenditures $300M - $320M
- Effective Tax Rate 24.5% - 25.0%
J.M Smucker's company (NYSE: SJM) stock price history
The image below, obtained from Google shows the stock price chart for J.M Smucker for the last 5 years. It has been a fairly up and down ride for the group's shareholders with the stock having periods of significant price increases and declines. 5 years ago the stock was trading at about $105 a share and its currently trading at $112.93 a share. So after all the ups and downs the group's stock basically ended at the same level it was at 5 years ago. So sideways movement at best.
J.M Smucker's (NYSE: SJM) stock valuation
Based on the group's first quarter 2020 earnings report and the guidance provided for the rest of the 2020 fiscal year we value the group's stock at $128.23 a share. We believe they offer a bit of value at its current price for long term fundamental investors who are looking to buy value stocks. They have strong brand names and goods for which there will always be a demand.