Exhibit 99.1
THE J. M. SMUCKER COMPANY ANNOUNCES THIRD QUARTER RESULTS
MULTIFOODS ACQUISITION CONTRIBUTES TO RECORD SALES
GROWTH OF SMUCKER'S, JIF AND CRISCO BRANDS CONTRIBUTE TO SALES
AND EARNINGS GAINS
COMPANY CONFIRMS ITS FISCAL YEAR 2005 OUTLOOK
ORRVILLE, Ohio, Feb. 18 /PRNewswire-FirstCall/ -- The J. M. Smucker Company
(NYSE: SJM) today announced results for its third quarter ended January 31,
2005, of its 2005 fiscal year.
Third Quarter Results
Company sales were $550.2 million for the third quarter of fiscal 2005, up
60 percent compared to $343.8 million in the third quarter of 2004. The acquired
Multifoods businesses contributed $187.6 million to sales in the third quarter
of 2005. Excluding the contribution of Multifoods, sales were up five percent.
Income from continuing operations was $35.5 million, an increase of 14 percent
over $31.1 million in last year's third quarter. Sales growth and improved
margins on the Company's existing business and the addition of Multifoods were
mostly offset by merger and integration costs, an increase in restructuring
expenses, higher raw material costs, start-up costs at the Company's
Uncrustables(R) facility in Scottsville, Kentucky, and an increase in interest
expense over the third quarter of last year. Earnings per diluted share from
continuing operations for the third quarter of 2005 were $0.60, compared to
$0.62 last year.
Income from continuing operations for the third quarter of 2005 included
pretax merger and integration costs of $5.2 million or $0.06 per diluted share
and restructuring charges of $3.4 million or $0.04 per diluted share. Income
from continuing operations for the third quarter of 2004 included restructuring
charges of $2.5 million or $0.03 per diluted share. Excluding these costs, the
Company's income from continuing operations was up 25 percent and earnings per
diluted share would have been $0.70 and $0.65, in the third quarter of 2005 and
2004, respectively, an increase of eight percent.
"Our Smucker's(R), Jif(R) and Crisco(R) brands experienced good sales
growth in the quarter and the new brands we acquired from Multifoods continued
to perform well," said Tim Smucker, chairman and co-chief executive officer. "We
also continue to aggressively implement our strategy to own and market leading
North American icon food brands sold in the center of the store and to take the
necessary steps to improve our cost base. This quarter we announced the planned
sale of the foodservice and bakery products businesses acquired from Multifoods,
the sale of our industrial businesses and the closing of our Salinas, California
facility later this calendar year. These actions position us for improved
profitability."
Net income for the third quarter of 2005 was up 15 percent to $36.1 million
or $0.61 per diluted share, compared to last year's third quarter net income of
$31.3 million or $0.62 per diluted share. Included in this quarter's net income
was income from discontinued operations of $0.6 million or $0.01 per diluted
share. The operations of the Australian-based Henry Jones Foods business, the
Brazilian operations, Smucker do Brasil Ltda., and the Multifoods' U.S.
foodservice and bakery products business are included in discontinued
operations.
Nine-Month Results
Sales for the nine-month period ended January 31, 2005, were up 47 percent
to $1,552.4 million compared to $1,057.2 million for the first nine months of
fiscal 2004. The acquired Multifoods businesses contributed $472.1 million to
sales in the first nine months of 2005. Excluding the contribution of
Multifoods, sales were up two percent.
Income from continuing operations for the first nine months of 2005 was
$103.7 million or $1.81 per diluted share, compared to $90.2 million or $1.79
per diluted share last year. Income from continuing operations for the first
nine months of 2005 included pretax merger and integration costs of $11.9
million or $0.13 per diluted share and restructuring charges of $8.1 million or
$0.09 per diluted share. Income from continuing operations for the first nine
months of 2004 included restructuring charges of $8.8 million or $0.11 per
diluted share. Excluding these costs in the first nine months of 2005 and 2004,
the Company's earnings per diluted share from continuing operations would have
been $2.03 and $1.90, respectively, an increase of seven percent.
Net income for the first nine months of 2005 was $107.0 million or $1.86
per diluted share, compared to $89.2 million or $1.77 per diluted share in the
first nine months of last year. Included in net income for the first nine months
of 2005 was income from discontinued operations of $3.3 million or $0.05 per
diluted share. Loss from discontinued operations for the first nine months of
2004 was $1.0 million or $0.02 per diluted share.
The Company uses earnings from continuing operations, excluding
restructuring and merger and integration costs, as a key performance measure of
results of operations for purposes of evaluating performance internally. These
non-GAAP measurements are not intended to replace the presentation of financial
results in accordance with GAAP. Rather, management believes the presentation of
results excluding such charges offers additional information to investors to
facilitate the comparison of past and present operations and provides a more
comprehensive understanding of the financial results. A reconciliation of
non-GAAP measures to earnings from continuing operations for the current quarter
and nine-month period is included in the "Financial Highlights" table.
Scottsville Plant
During the first quarter of fiscal year 2005, the Company commenced
operations of its Uncrustables facility in Scottsville, Kentucky. As previously
announced, the new facility has experienced a longer ramp-up schedule than
originally anticipated. The Company incurred approximately $6.1 million or $0.07
per diluted share in costs associated with the start-up during the third quarter
of 2005 and $12.2 million or $0.14 per diluted share during the first nine
months of 2005. These costs consist primarily of additional labor, materials,
and unabsorbed overhead. The Company confirmed that it expects start-up costs in
the second half of the fiscal year to total approximately $10 million.
"During the quarter, we were able to meet demand levels and continued to
make operating improvements. We expect that the Scottsville plant will provide
the capacity to meet our growth and profit objectives," commented Richard
Smucker, president and co-chief executive officer. "More importantly, demand for
Uncrustables in both the retail and schools markets continues to be strong and
we expect it to be a growth platform in the years ahead."
Margins
Operating income in the third quarter of 2005 increased 21 percent from the
third quarter last year. As expected, operating margin decreased from 14.4
percent in the third quarter of 2004 to 10.9 percent in the third quarter of
2005. The Company's gross margin decreased from 36.8 percent in the third
quarter of last year to 31.7 percent in the third quarter of this year, due
primarily to the impact of the Multifoods businesses, which currently earns a
lower margin than the Company's base business, and higher commodity costs. The
Scottsville start-up costs, an increase in restructuring costs, and merger and
integration expenses further impacted operating margin.
Year-to-date operating income increased $31.2 million or 21 percent over
last year and operating margin declined from 13.7 percent to 11.4 percent, due
to the same factors noted above.
SD&A expenses as a percentage of sales declined from 21.8 percent in the
third quarter of 2004 to 19.3 percent in the current quarter. For the first nine
months of 2005, SD&A as a percentage of sales declined from 21.6 percent to 20.1
percent.
Interest expense increased from $1.4 million in the third quarter of 2004
to $6.2 million in the third quarter of 2005, and from $4.9 million for the
first nine months of 2004 to $16.4 million in the first nine months of 2005, as
a result of an increase in the Company's debt outstanding associated with the
acquisition of Multifoods. The Company's tax rate for the quarter decreased from
37 percent in fiscal 2004 to 36 percent this year, reflecting a year-to-date
adjustment of income taxes to the projected rate for the year of 36.4 percent.
Segment Performance
U.S. Retail Market
Sales in the U.S. retail market segment for the third quarter of 2005 were
$381.4 million, compared to $254.3 million in the third quarter of 2004, an
increase of 50 percent. The Multifoods' brands contributed $111.2 million of the
segment's sales in the quarter. Sales of Smucker's, Jif and Crisco combined to
increase over six percent compared to last year. Sales in the first nine months
of 2005 were $1,079.9 million, compared to $784.2 million last year, an increase
of 38 percent. The Multifoods' brands contributed $277.1 million of sales for
the first nine months of 2005.
During the third quarter of 2005, sales in the consumer area increased 21
percent over the third quarter of last year, driven by the addition of Hungry
Jack(R), growth in the Smucker's and Jif brands, and continued growth of
Uncrustables in the retail channel. In the consumer oils and baking area, sales
more than doubled in the third quarter of 2005 compared to 2004, due to the
addition of the Pillsbury(R), Martha White(R), and Pet(R) brands and a six
percent increase in Crisco sales.
Special Markets
Sales in the special markets segment were $168.9 million in the third
quarter of 2005, compared to $89.5 million for the third quarter of 2004.
Multifoods contributed $76.5 million of the segment's sales in the quarter. All
business areas were up with the exception of the U.S. industrial business, which
the Company previously announced was being divested. Key contributors included
the beverage business, up seven percent, and the foodservice business, up ten
percent with growth in Uncrustables in the schools market and traditional
portion control items. Excluding the contribution from Multifoods and the
industrial business, sales in the special markets segment increased ten percent
in the third quarter of 2005 as compared to the third quarter of last year.
Sales for the first nine months of 2005 in the special markets segment were
$472.5 million, compared to $272.9 million last year. Multifoods contributed
$194.9 million in sales for the first nine months of 2005. Excluding the
Multifoods sales and the industrial business, special markets increased six
percent in the first nine months of 2005 compared to the first nine months of
last year.
Outlook for Fiscal 2005
The Company confirmed its objective to increase its 2005 diluted earnings
per share from continuing operations by its long-term growth goal of eight
percent. This equates to an earnings growth rate of approximately 23 percent in
2005. An increase of approximately eight million shares outstanding resulting
from the Multifoods acquisition accounts for the difference in these growth
rates. This earnings goal excludes the impacts of restructuring, merger and
integration costs, and gains and losses on sales of assets.
The Company confirmed total merger and integration costs related to the
Multifoods transaction at $20 million. Approximately $15 million of these costs
will be incurred in fiscal year 2005 and the remainder is expected to be
incurred in fiscal year 2006. Earnings for 2005 are expected to include
approximately $10 to 12 million in restructuring costs. The increase in the
restructuring estimates reflects the additional costs related to the Company's
announced closing of its Salinas, California, facility and the restructuring of
its distribution operations.
Conference Call
The Company will conduct an earnings conference call and webcast on Friday,
February 18, 2005, at 8:30 a.m. E.T. The webcast can be accessed from the
Company's website at www.smuckers.com . For those unable to listen to the
webcast, an audio replay will be available following the call and can be
accessed by calling (888) 203-1112 or (719) 457-0820 and entering replay pass
code 4598871. The audio replay will be available until Friday, February 25,
2005.
About The J. M. Smucker Company
The J. M. Smucker Company ( www.smuckers.com ) was founded in 1897 when the
Company's namesake and founder sold his first product - apple butter - from the
back of a horse-drawn wagon. Today, over a century later, the Company is the
market leader in fruit spreads, peanut butter, shortening and oils, ice cream
toppings, and health and natural foods beverages in North America under such
icon brands as Smucker's(R), Jif(R) and Crisco(R). In June 2004, the Company
expanded its family of products to include such brands as Pillsbury(R) baking
mixes and ready-to-spread frostings; Hungry Jack(R) pancake mixes, syrups and
potato side dishes; and Martha White(R) baking mixes and ingredients in the
U.S., along with Robin Hood(R) flour and baking mixes and Bick's(R) pickles and
condiments in Canada. For over 107 years, The J. M. Smucker Company has been
headquartered in Orrville, Ohio, and has been family run for four generations.
Since the 1998 inception of FORTUNE Magazine's annual survey of the 100 Best
Companies to Work For, The J. M. Smucker Company has consistently been
recognized as one of the top 25 companies to work for in the United States. The
J. M. Smucker Company has over 4,200 employees worldwide and distributes
products in more than 45 countries.
The J. M. Smucker Company Forward-Looking Language
This press release contains forward-looking statements, including
statements regarding estimates of future earnings and cash flows that are
subject to risks and uncertainties that could cause actual results to differ
materially. Uncertainties that could affect actual results include, but are not
limited to, the ability to achieve the amount and timing of the estimated
savings associated with the Multifoods acquisition, the timing and amount of
capital expenditures and merger and integration costs, success and costs of new
marketing and sales programs and strategies intended to promote growth in the
Company's businesses, the ability to successfully implement price changes,
particularly in the consumer oils and baking business, the Company's ability to
effectively ramp up and manage capacity related to Uncrustables(R), the strength
of commodity markets from which raw materials are procured and the related
impact on costs, and other factors affecting share prices and capital markets
generally. Other risks and uncertainties that may materially affect the Company
are detailed from time to time in the respective reports filed by the Company
with the Securities and Exchange Commission, including Forms 10-Q, 10-K, and
8-K.
The J. M. Smucker Company
Unaudited Condensed Consolidated Statements of Income
Three Months Ended Nine Months Ended
January 31, January 31,
------------------------------ ------------------------------
2005 2004 2005 2004
------------- ------------- ------------- -------------
(Dollars in thousands, except per share data)
Net sales $ 550,234 $ 343,788 $ 1,552,423 $ 1,057,167
Cost of products sold 375,521 216,837 1,043,379 674,626
Cost of products sold -
restructuring 515 425 1,777 3,619
Gross Profit 174,198 126,526 507,267 378,922
Selling, distribution, and
administrative expenses 106,464 74,956 312,569 228,452
Other restructuring costs 2,837 2,074 6,358 5,200
Merger and integration costs 5,152 - 11,885 -
Operating Income 59,745 49,496 176,455 145,270
Interest income 1,044 851 2,429 1,952
Interest expense (6,154) (1,372) (16,359) (4,913)
Other income - net 883 383 485 746
Income from Continuing
Operations Before Income
Taxes 55,518 49,358 163,010 143,055
Income taxes 19,994 18,238 59,336 52,859
Income from Continuing
Operations 35,524 31,120 103,674 90,196
Gain on sale of discontinued
operations, net of tax - - 2,037 -
Discontinued operations,
net of tax 584 198 1,250 (1,026)
Net Income $ 36,108 $ 31,318 $ 106,961 $ 89,170
Earnings per common share:
Income from continuing
operations $ 0.61 $ 0.62 $ 1.83 $ 1.81
Discontinued operations 0.01 0.01 0.06 (0.02)
Net income $ 0.62 $ 0.63 $ 1.89 $ 1.79
Income from continuing
operations - assuming
dilution $ 0.60 $ 0.62 $ 1.81 $ 1.79
Discontinued operations
- assuming dilution 0.01 - 0.05 (0.02)
Net income - assuming
dilution $ 0.61 $ 0.62 $ 1.86 $ 1.77
Dividends declared per
common share $ 0.25 $ 0.23 $ 0.75 $ 0.69
Weighted-average shares
outstanding 58,108,123 49,867,349 56,708,018 49,775,508
Weighted-average shares
outstanding - assuming
dilution 58,743,522 50,498,462 57,356,653 50,309,783
The J. M. Smucker Company
Unaudited Condensed Consolidated Balance Sheets
JANUARY 31,
-------------------------
2005 2004
----------- -----------
(Dollars in thousands)
ASSETS
Current Assets:
Cash and cash equivalents $ 55,452 $ 107,573
Trade receivables 129,737 84,247
Inventories 301,463 174,659
Current assets of discontinued operations 34,220 28,837
Other current assets 39,179 48,694
Total Current Assets 560,051 444,010
Property, Plant, and Equipment, Net 507,833 298,932
Other Noncurrent Assets:
Goodwill 934,041 519,502
Other intangible assets, net 469,733 314,649
Marketable securities 71,276 40,722
Other assets of discontinued operations 27,526 26,602
Other assets 60,620 32,693
Total Noncurrent Assets 1,563,196 934,168
$ 2,631,080 $ 1,677,110
LIABILITIES & SHAREHOLDERS' EQUITY
Current Liabilities:
Notes payable $ 56,393 $ 0
Current portion of long-term debt 17,000 0
Accounts payable 100,872 52,592
Current liabilities of discontinued operations 18,718 6,127
Other current liabilities 188,472 98,491
Total Current Liabilities 381,455 157,210
Noncurrent Liabilities:
Long-term debt, net of current portion 432,300 135,000
Other noncurrent liabilities of
discontinued operations 28 422
Other noncurrent liabilities 138,723 188,203
Total Noncurrent Liabilities 571,051 323,625
Shareholders' Equity, net 1,678,574 1,196,275
2,631,080 $ 1,677,110
The J. M. Smucker Company
Unaudited Financial Highlights
THREE MONTHS ENDED NINE MONTHS ENDED
JANUARY 31, JANUARY 31,
------------------------- -------------------------
2005 2004 2005 2004
----------- ----------- ----------- -----------
(Dollars in thousands, except per share data)
Net sales $ 550,234 $ 343,788 $ 1,552,423 $ 1,057,167
Net income and net income per
common share:
Net income $ 36,108 $ 31,318 $ 106,961 $ 89,170
Net income per common share
-- assuming dilution $ 0.61 $ 0.62 $ 1.86 $ 1.77
Income and income per common
share from continuing
operations:
Income $ 35,524 $ 31,120 $ 103,674 $ 90,196
Income per common share --
assuming dilution $ 0.60 $ 0.62 $ 1.81 $ 1.79
Income and income per common
share from continuing
operations before
restructuring and merger and
integration costs: (1)
Income $ 40,956 $ 32,695 $ 116,407 $ 95,756
Income per common share --
assuming dilution $ 0.70 $ 0.65 $ 2.03 $ 1.90
(1) Reconciliation to income
from continuing operations:
Income from continuing
operations before income
taxes $ 55,518 $ 49,358 $ 163,010 $ 143,055
Merger and integration costs 5,152 - 11,885 -
Cost of products sold -
restructuring 515 425 1,777 3,619
Other restructuring costs 2,837 2,074 6,358 5,200
Income from continuing
operations before income
taxes, restructuring, and
merger and integration
costs 64,022 51,857 183,030 151,874
Income taxes 23,066 19,162 66,623 56,118
Income from continuing
operations before
restructuring and merger
and integration costs $ 40,956 $ 32,695 $ 116,407 $ 95,756
The J. M. Smucker Company
Unaudited Condensed Consolidated Statements of Income
Unaudited Financial Highlights, Fiscal Year 2004
THREE MONTHS ENDED
-----------------------------------------------------
JULY 31, OCTOBER 31, JANUARY 31, APRIL 30,
2003 2003 2004 2004
----------- ----------- ----------- -----------
(Dollars in thousands, except per share data)
Net sales $ 339,176 $ 374,203 $ 343,788 $ 312,389
Cost of products sold 218,362 239,427 216,837 203,865
Cost of products sold -
restructuring 1,388 1,806 425 4,845
Gross Profit 119,426 132,970 126,526 103,679
Selling, distribution, and
administrative expenses 74,721 78,775 74,956 68,502
Other restructuring costs 1,825 1,301 2,074 2,162
Merger and integration
costs - - - 1,266
Operating Income 42,880 52,894 49,496 31,749
Interest income 363 738 851 809
Interest expense (1,923) (1,618) (1,372) (1,296)
Other income (expense) - net 484 (121) 383 2,853
Income from Continuing
Operations Before Income
Taxes 41,804 51,893 49,358 34,115
Income taxes 15,447 19,174 18,238 13,013
Income from Continuing
Operations 26,357 32,719 31,120 21,102
Discontinued operations,
net of tax (572) (652) 198 1,078
Net Income $ 25,785 $ 32,067 $ 31,318 $ 22,180
Earnings per common share:
Income from continuing
operations $ 0.53 $ 0.66 $ 0.62 $ 0.42
Discontinued operations (0.01) (0.02) 0.01 0.02
Net income $ 0.52 $ 0.64 $ 0.63 $ 0.44
Income from continuing
operations - assuming
dilution $ 0.53 $ 0.65 $ 0.62 $ 0.42
Discontinued operations
- assuming dilution (0.02) (0.01) - 0.02
Net income - assuming
dilution $ 0.51 $ 0.64 $ 0.62 $ 0.44
Dividends declared per
common share $ 0.23 $ 0.23 $ 0.23 $ 0.25
Weighted-average shares
outstanding 49,674,408 49,784,767 49,867,349 49,944,566
Weighted-average shares
outstanding - assuming
dilution 50,129,828 50,301,060 50,498,462 50,657,023
Income from continuing
operations before
income taxes 41,804 51,893 49,358 34,115
Merger and integration
costs - - - 1,266
Cost of products sold -
restructuring 1,388 1,806 425 4,845
Other restructuring costs 1,825 1,301 2,074 2,162
Income from continuing
operations before income
taxes, restructuring, and
merger and integration
costs 45,017 55,000 51,857 42,388
Income taxes 16,634 20,322 19,162 16,109
Income from continuing
operations before
restructuring and
merger and integration
costs 28,383 34,678 32,695 26,279
Per share -- assuming
dilution 0.57 0.69 0.65 0.52
The J. M. Smucker Company
Unaudited Condensed Consolidated Statements of Income
Unaudited Financial Highlights, Fiscal Year 2004 (continued)
YEAR ENDED
APRIL 30, 2004
----------------
(Dollars in
thousands, except
per share data)
Net sales $ 1,369,556
Cost of products sold 878,491
Cost of products sold - restructuring 8,464
Gross Profit 482,601
Selling, distribution, and administrative expenses 296,954
Other restructuring costs 7,362
Merger and integration costs 1,266
Operating Income 177,019
Interest income 2,761
Interest expense (6,209)
Other income (expense) - net 3,599
Income from Continuing Operations Before Income Taxes 177,170
Income taxes 65,872
Income from Continuing Operations 111,298
Discontinued operations, net of tax 52
Net Income $ 111,350
Earnings per common share:
Income from continuing operations $ 2.23
Discontinued operations 0.01
Net income $ 2.24
Income from continuing operations - assuming dilution $ 2.21
Discontinued operations - assuming dilution -
Net income - assuming dilution $ 2.21
Dividends declared per common share $ 0.94
Weighted-average shares outstanding 49,816,926
Weighted-average shares outstanding - assuming dilution 50,395,747
Income from continuing operations before income taxes 177,170
Merger and integration costs 1,266
Cost of products sold - restructuring 8,464
Other restructuring costs 7,362
Income from continuing operations before income taxes,
restructuring, and merger and integration costs 194,262
Income taxes 72,227
Income from continuing operations before restructuring
and merger and integration costs 122,035
Per share -- assuming dilution 2.42
SOURCE J. M. Smucker Company
-0- 02/18/2005
/CONTACT: Investors, Mark R. Belgya, Vice President, Chief Financial
Officer and Treasurer, or George G. Sent, Jr., Director, Corporate Finance and
Investor Relations, or Media, Maribeth Badertscher, Manager, Corporate
Communications, all of The J. M. Smucker Company, +1-330-682-3000/
/First Call Analyst: /
/FCMN Contact: /
/Web site: http://www.smuckers.com /