Market Overview

J.M. Smucker Q4 Conference Call

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Shares of J.M. Smucker (NYSE: SJM) traded up following its fourth quarter earnings release on Thursday.

Shares of the company closed at $104.31, up 1.44 percent.

Below are some highlights and key takeaways from its conference call:

Brand Growth:

• In Coffee, the Folgers brand grew three percent, driven by Mainstream Roast & Ground.

• The Dunkin' Donuts brand continued its strong momentum with volume up seven percent.

• Within Consumer Foods, our largest brands Jif and Smucker's grew volume two percent.

• Overall, lower net price in our two principal categories of coffee and peanut butter resulted in a net sales decline of five percent for the year.

• Second, our strong innovation pipeline enabled us to launch over 100 new items this year.

• Launched more than 250 items over the past three years, which contributed over $425 million or approximately eight percent of net sales in 2014.

• Third, brand-building efforts included our inaugural sponsorship of the U.S. Olympic team.

• Activities around our sponsorship of the 2016 Summer Games are underway, applying learnings gained through this initial effort.

• To that end, in 2014 we completed the enabling acquisition of Enray and its truRoots brand providing further growth opportunities for our Natural Foods business.

• We invested $280 million in capital expenditures including capacity expansion projects at our Scottsville, Kentucky and Toledo, Ohio facilities.

Financial Side:

• Also increased the annual dividend paid per share by 11 percent.

• This growth represented the 12th consecutive year of dividend growth and continued payments of dividends for 55 years since we went public.

• Repurchased nearly five percent of our shares, utilizing approximately $500 million in cash.

• Record non-GAAP earnings per share of $5.64, an increase of five percent.

• Results were achieved despite challenges in the current operating environment that included a sluggish economy, heightened competitive activity in several key categories and foreign exchange headwinds.

• Cash from operations allowed us to execute on all four components of our cash deployment strategy.

Key Areas of Focus for 2015

• Furthering our brand support with continued innovation.

• Launching over 225 new items this fiscal year

• Capitalizing on growing opportunities within the digital, social media and e-commerce space

• Continuing to support supply chain and growth initiatives

• Expanding the operational footprint for the Jif brand

• Responding to consumers needs for transparency of information and the desire for simple ingredients and clean labels

• Lastly, focusing on cash flow generation to support our cash deployment strategy.

• Looking ahead, we remain confident in our long-term strategy and the strength of our brands and our ability to deliver ongoing profitable growth year after year

Keurig Green Mountain Partnership

• As we start the new fiscal year, we remain optimistic about the overall K-Cup business for several reasons including our partnership with Keurig Green Mountain.

• The introduction of three new varieties including our initial launch of Caf Bustelo K-Cups.

• Expects K-Cups to achieve modest volume growth in 2015

• Overall, we are pleased with the 6% segment profit growth achieved for the full year

2015 Outlook:

• We anticipate volume growth and commodity-driven pricing actions to result in net sales growth.

• Incremental productivity savings is expected to offset higher commodity cost and marketing investment resulting in operating income growth with all three segments expected to deliver increases in segment profit.

• We anticipate depreciation and amortization expense of $280 million including share based compensation expense.

• Capital expenditures of $240 million including the continuation of supply chain projects.

• Special project cost of nearly $25 million with most having the cash impact.

• Free cash flow of $625 million to $635 million for 2015

Posted-In: Earnings News Guidance


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