Exhibit 99.1
THE J. M. SMUCKER COMPANY ANNOUNCES FIRST QUARTER RESULTS
INCOME FROM CONTINUING OPERATIONS UP NINE PERCENT
SALES UP 23 PERCENT
COMPANY CONFIRMS ITS FISCAL YEAR 2006 OUTLOOK
ORRVILLE, Ohio, Aug. 22 /PRNewswire-FirstCall/ -- The J. M. Smucker Company
(NYSE: SJM) today announced results for the first quarter ended July 31, 2005,
of its 2006 fiscal year.
First Quarter Results
Company sales were a record $510.3 million for the first quarter of fiscal
2006, up 23 percent, compared to $413.3 million in the first quarter of 2005.
The acquired Multifoods businesses contributed $154.3 million to sales in the
first quarter of 2006, compared to $75.5 million last year. Since the
acquisition of Multifoods closed midway through the first quarter of last year,
an additional six weeks of Multifoods' sales, totaling approximately $78.8
million, were realized in this year's first quarter. Excluding the additional
six weeks, sales were up four percent, in line with the Company's previously
stated growth goals.
Income from continuing operations was $29.9 million, an increase of nine
percent over $27.5 million in last year's first quarter. Sales growth was mostly
offset by increased marketing costs in support of the brands, costs associated
with establishing the Company's new distribution network, an increase in net
interest expense, and compensation expense related to the Company's new
restricted stock program. Earnings per diluted share from continuing operations
for the first quarter of 2006 were $0.51, compared to $0.50 last year, impacted
by the additional shares issued as part of the Multifoods transaction.
Income from continuing operations for the first quarter of 2006 included
pretax merger and integration costs of $2.9 million, or $0.03 per diluted share,
and restructuring charges of $1.6 million, or $0.02 per diluted share. Income
from continuing operations for the first quarter of 2005 included pretax merger
and integration costs of $2.8 million, or $0.03 per diluted share, and
restructuring charges of $3.0 million, or $0.04 per diluted share. Excluding
these costs in both years, the Company's income from continuing operations was
up six percent. Due to the additional shares issued as part of the Multifoods
transaction, earnings per diluted share were $0.56 and $0.57, in the first
quarters of 2006 and 2005, respectively.
"Our Smucker's(R), Jif(R), Crisco(R), and Pillsbury(R) brands continue to
experience considerable momentum," said Tim Smucker, chairman and co-chief
executive officer. "During the quarter, we made significant investments in new
products and in support of the brands, along with our supply chain initiatives.
Income from continuing operations grew nine percent for the quarter, as the
performance of the brands offset these investments. We are well-positioned for
continuing top and bottom line growth."
"We are excited about the many new products we are introducing in the
upcoming quarter and expect them to enhance our growth prospects," commented
Richard Smucker, president and co-chief executive officer. "With the solid sales
growth, new products and significant marketing support, our brands are
well-positioned for strong performance. We remain committed to our outlook for
the year of growing our earnings per share by our long-term annualized growth
rate of eight percent."
Net income for the first quarter of 2006 was $29.9 million, or $0.51 per
diluted share. Last year's first quarter net income was comprised of income from
continuing operations of $27.5 million, or $0.50 per diluted share, and earnings
from discontinued operations, primarily representing the one-time, nonrecurring
gain on the Company's sale of its Henry Jones Foods business, of $5.4 million,
or $0.10 per diluted share, for a total of $32.8 million, or $0.60 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, all sold during last year, are
included in discontinued operations in 2005.
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 U.S. 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 is included in the "Financial Highlights" table.
Margins
Gross margin was 32.3 percent in the first quarter, compared to 34.9 percent
last year, primarily due to higher commodity costs and the impact of the
incremental Multifoods businesses, which currently earn a lower margin than the
Company's base business. In addition, as part of the sale of its industrial
business last fiscal year, the Company agreed to continue to supply the
purchaser with certain industrial products through August 2005. Sales of these
products are recognized on a cost-plus basis, and will continue to have a
negative impact on gross margins through August.
SD&A expenses as a percentage of sales declined from 22.0 percent in the
first quarter of 2005 to 21.7 percent in the current quarter, despite a planned
increase in marketing expenses, which were up 15 percent over last year. Also
included in the quarter's SD&A expenses were non-cash charges of approximately
$2.4 million representing amortization expense associated with the Company's new
restricted stock program, and $1.2 million in accelerated depreciation of
certain discontinued software. Finally, distribution costs were also up during
the quarter, as the Company implemented its new distribution network.
Interest expense increased from $4.4 million in the first quarter of 2005 to
$6.1 million in the first quarter of 2006, as a result of additional debt
associated with the acquisition of Multifoods, which was outstanding for the
full quarter. Interest income also increased due to higher average investment
balances and an increase in interest rates.
The Company's first quarter earnings benefited from a decrease in the
effective tax rate from 36.6 percent in 2005 to 34.4 percent this quarter. The
Company expects a tax rate for the full year of approximately 35.5 percent.
Segment Performance
U.S. Retail Market
Sales in the U.S. retail market segment for the first quarter of 2006 were
$341.7 million, compared to $288.1 million in the first quarter of 2005, an
increase of 19 percent. Sales for the brands acquired in the Multifoods
acquisition in the first six weeks of the quarter accounted for approximately
three-fourths of the segment's increase over the prior year. Excluding these
additional sales, the segment was up five percent for the quarter.
During the first quarter of 2006, sales in the consumer area increased 11
percent over the first 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(R) in the retail channel. In the consumer oils and baking area,
sales increased 35 percent in the first quarter of 2006 compared to 2005, due to
the additional six weeks of sales of the Pillsbury, Martha White(R), and Pet(R)
brands, as well as a three percent increase in Crisco sales.
Special Markets
Sales in the special markets segment were $168.6 million in the first
quarter of 2006, compared to $125.2 million for the first quarter of 2005.
Canadian and export sales for the brands acquired in the Multifoods acquisition
in the first six weeks of the quarter accounted for over 90 percent of the
segment's increase over the prior year. Other key growth contributors included
the beverage business, up 15 percent, and the foodservice business, up eight
percent. Excluding the additional six weeks contribution from Multifoods and the
U.S. industrial business, which the Company divested last year, sales in the
special markets segment increased six percent in the first quarter of 2006 as
compared to the first quarter of last year.
Outlook for Fiscal 2006
The Company confirmed its outlook for 2006. The Company expects revenues in
2006 of approximately $2.16 billion, an increase of six percent and remains
committed to increasing its earnings per share by its long-term annualized
growth goal of eight percent, which equates to an earnings growth of
approximately ten percent. The additional outstanding shares for 2006 account
for the difference in the growth rates. This long-term growth goal applies to
continuing operations and excludes the impact of restructuring, merger and
integration costs, and gains and losses on sales of assets.
Conference Call
The Company will conduct an earnings conference call and webcast on Monday,
August 22, 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 4124704. The audio replay will be available until Monday, August 29, 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). The family of brands also
includes 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 108 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 3,500 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, the strength of commodity markets
from which raw materials are procured and the related impact on costs, energy
and fuel 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
Condensed Consolidated Statements of Income
(Unaudited)
Three Months Ended July 31,
-------------------------------
2005 2004
-------------- --------------
(Dollars in thousands,
except per share data)
Net sales $ 510,331 $ 413,267
Cost of products sold 345,486 268,426
Cost of products sold - restructuring 132 653
Gross Profit 164,713 144,188
Selling, distribution, and administrative
expenses 110,624 90,826
Other restructuring costs 1,489 2,355
Merger and integration costs 2,928 2,763
Operating Income 49,672 48,244
Interest income 1,820 718
Interest expense (6,107) (4,423)
Other income - net 194 (1,182)
Income from Continuing Operations
Before Income Taxes 45,579 43,357
Income taxes 15,682 15,870
Income from Continuing Operations 29,897 27,487
Gain on sale of discontinued operations,
net of tax - 5,678
Discontinued operations, net of tax - (317)
Net Income $ 29,897 $ 32,848
Earnings per common share:
Income from continuing operations $ 0.51 $ 0.51
Discontinued operations - 0.10
Net income $ 0.51 $ 0.61
Income from continuing operations -
assuming dilution $ 0.51 $ 0.50
Discontinued operations - assuming
dilution - 0.10
Net income - assuming dilution $ 0.51 $ 0.60
Dividends declared per common share $ 0.27 $ 0.25
Weighted-average shares outstanding 58,279,424 53,831,281
Weighted-average shares outstanding -
assuming dilution 58,920,456 54,513,281
The J. M. Smucker Company
Condensed Consolidated Balance Sheets
(Unaudited)
July 31, 2005 April 30, 2005
-------------- --------------
(Dollars in thousands)
ASSETS
Current Assets:
Cash and cash equivalents $ 47,487 $ 58,085
Marketable securities 20,017 17,739
Trade receivables 161,262 145,734
Inventories 344,209 284,487
Other current assets 45,840 49,806
Total Current Assets 618,815 555,851
Property, Plant, and Equipment, Net 521,964 521,101
Other Noncurrent Assets:
Goodwill 948,431 951,208
Other intangible assets, net 470,481 469,758
Marketable securities 49,543 59,074
Other assets 77,325 78,902
Total Noncurrent Assets 1,545,780 1,558,942
$ 2,686,559 $ 2,635,894
LIABILITIES & SHAREHOLDERS' EQUITY
Current Liabilities:
Notes payable $ 34,314 $ 33,378
Current portion of long-term debt 17,000 17,000
Accounts payable 123,987 105,290
Other current liabilities 180,699 152,624
Total Current Liabilities 356,000 308,292
Noncurrent Liabilities:
Long-term debt, net of current
portion 430,821 431,560
Other noncurrent liabilities 205,575 205,242
Total Noncurrent Liabilities 636,396 636,802
Shareholders' Equity, Net 1,694,163 1,690,800
$ 2,686,559 $ 2,635,894
The J. M. Smucker Company
Financial Highlights
(Unaudited)
Three Months Ended July 31,
---------------------------
2005 2004
------------ ------------
(Dollars in thousands,
except per share data)
Net sales $ 510,331 $ 413,267
Net income and net income per common share:
Net income $ 29,897 $ 32,848
Net income per common share -- assuming
dilution $ 0.51 $ 0.60
Income and income per common share from
continuing operations:
Income $ 29,897 $ 27,487
Income per common share -- assuming
dilution $ 0.51 $ 0.50
Income and income per common share from
continuing operations before restructuring and
merger and integration costs: (1)
Income $ 32,881 $ 31,146
Income per common share -- assuming
dilution $ 0.56 $ 0.57
(1) Reconciliation to income from continuing
operations:
Income from continuing operations before
income taxes $ 45,579 $ 43,357
Merger and integration costs 2,928 2,763
Cost of products sold - restructuring 132 653
Other restructuring costs 1,489 2,355
Income from continuing operations before
income taxes, restructuring, and merger and
integration costs 50,128 49,128
Income taxes 17,247 17,982
Income from continuing operations before
restructuring and merger and integration
costs $ 32,881 $ 31,146
SOURCE J. M. Smucker Company
-0- 08/22/2005
/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, Director, Corporate Communications,
of The J. M. Smucker Company, +1-330-682-3000/
/First Call Analyst: /
/FCMN Contact: /
/Web site: http://www.smuckers.com/
(SJM)
CO: J. M. Smucker Company
ST: Ohio
IN: FOD REA
SU: ERN CCA ERP