SJM - Earnings call transcript Q4 2018 | The J. M. Smucker Company

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Operator

Good morning and welcome to The J. M. Smucker Company's Fiscal 2018 Fourth Quarter Earnings Conference Call. This conference is being recorded and all participants are in a listen-only mode. At the request of the Company, we will open the conference up for questions and answers after the prepared remarks. two have the additional to re-queue session yourself you if questions. limit questions Q&A during and Please I will now Aaron Broholm, turn the conference President, Relations. call Investor Vice over to Please sir. go ahead,

Aaron Broholm

thank General call. Mark in comments. President our and Good Chair us President, Senior Manager, Vice President and Belgya, and Manager, Vice are Also President, the President Floyd, Food From Smucker, for and and provide and quarter and conference Foods; fourth participating CFO Joe Pet and on will Senior morning Stanziano, Away earnings Pet Consumer Coffee; fiscal General Dunaway, you Canada, Barry Snacks; Mark XXXX Tina Vice CEO; Q&A U.S. joining Home. prepared and our Dave International Lemmon,

assuming and Pet of in be the in this the month As role Pet Barry’s later previously Food retirement from July. advance company Dave President, Snacks announced, will

call, During to and due in future and release make full the about that website corporate statements expectations I to on today's on located and current forward-looking at concerning morning's rely disclosure jmsmucker.com. which performance. the this we Company's you press differ encourage materially will statements uncertainties. results our may assumptions and reflect plans read risks forward-looking statements These is actual estimates

please in performance uses the Additionally, note non-GAAP detailed Company evaluate internally press as the results to release.

launches. archived with results, We this and to have product call posted can through replay fiscal website slides on XXXX our deck, quarterly webcast and to our along supplementary outlook, about will the the a this the our new call. The of website be summarizing of information recent be a slide link accessed

me. after now today's you over the will If I the turn Mark additional call, please call questions contact Smucker. have

Mark Smucker

on into quarter This road made on thank the and morning discussion objective. outlook. to segway Achieving you We established in we’ve results long-term progress per our on which strategic our Belgya’s priorities: our discussing Good road morning, key a then over and fourth cost significant our our everyone map Growing earnings top-line; Mark delivering us. of year financial our the fiscal Aaron. you, delivering with XXXX will line strategic to transition three update begin define growth Thank an share stated by map to I will joining for savings; and path past clear the

earnings certain As progress quarter. discrete and in in we priorities industry against financial reported factors our these morning, this events release impacted wide the delivering in both fourth

will we outpaces delivered these under taking steadfast of we for the actions against position each performance priorities that create While and the remain shareholder are long-term value to deliver quarter, that peers. us our

we are fact, per due by results seeing quarter factors. to few first In our earnings share in and the in below adjusted pet net projections, Fourth primarily were improved a sales coffee and businesses driven quarter. the trends

planned, higher First, to activity. Folgers' in trade than for the spend and in response was roast most notably competitive quarter ground coffee

elevated and Donuts sales. Café grew $XXX as $XXX brands respectively presence While as a the premium to the this the Bustelo increasing in with crossed thresholds continue aligning sales Dunkin' making net coffee both and and annual point, this are by To industry million both portfolio we in toward lever progress manage XX% price, trade our our coffee. one-cup support for year million will

Second, stronger even and customer expected. launches XXXX than initial for was demand canister Donuts Dunkin' our

broader operating and launch. introductory As to a in anticipated result, we incurred than a costs greater response than forecasted

fiscal first incurred quarter costs this quarter, of quarter, of in While XXXX. occurring the were the customer these incremental majority are shipments fourth initial in the

freight anticipated the our costs acquisition. higher, $X impacted million. by Additional charges, Ainsworth projections factors not were the to Also recall although expense, approximately that exceeded that pet financing associated in our most recent quarter food included: guidance with and be

quarter and year. the stronger delivered we However, headwinds, despite these the flow anticipated full for than cash free

we and win, not in a new fourth urgency our acquisitions. are savings, business our of Further, performance growth actions we taken employees, to are change performance. that door and of and of moved growth to transforming our actions asset the business and brand with largest recent of snacks. explore XXXX distribution reflected pace that indicative segment in the roadmap, They consolidate towards led offices order of the validate we the are on of actions excellence seamlessly our investments, our following to PowerUps market pet focus realigning recently Orville our aligned the quarter with expand our with location premium in our significant of of strategy These manage be needs enhanced a with strengthen intention focused to faster business While our food fiscal proved adds our to our sense some leader a Rachael consumer on U.S. four at portfolio portfolio. in ensure the We to food our the bolstered a to financial of of trend most Keurig We be with These the the market. areas, our focusing financial Coast pet market years, moving on finally, consumer strategic we and deliver created categories. competitive deliver Ainsworth, our areas We of on on we've our pillars centers divestiture to acquisition to budgeting our our within important Nutrish a categories. aggressively We've can RIGHT We brought they all food company. more corporate two We relentless and excellence. premium SPEND, Consider and beverage forward program to areas new with launched speed to Jif baking beginning are XXXX. cost and offerings coffee partnership West fast-growing we growth strategic Ray directly also into communicated recent our centers higher high appointed right and zero-based are open the our business. in innovation, non-strategic which those improving the where plans to on highlights. leadership innovations and recent

start touch nearly briefly with net each I'll million introduced past products in the area. me years sales. where XXXX $XXX fiscal on Let of or delivered X% X innovation

initial As premium we innovation strong. with well read a generation drinkers coffee our The getting brand initial began introduction was our tested approach marketing PR expectations. spans the is comprehensive Coffee and facing of rate of only with which product drive XXXX are and program, SKUs exceeding To Folgers through traditional underway. XXXX, has been prefer younger of a developed new consumers retail XXXX acceptance which Folgers The XX blend just shell Plan. a we consumer but number also on customer developed interest strong launch our who and awareness, not

encouraged with of very are will the the and first product launch shipments initial continue throughout We reactions quarter. the

for We to platform expect XXXX growth a come. years be to

into dog base to protein-based line these product magnitude. Milo’s launches in supporting with Jif include a items pepperoni and meat as significant Late continued fiscal snacks. weeks. with pet premium retailer key one XXXX, pet, presence number similarly natural new with our and PowerUps, year, new a ingredient, PR meat including launch bars extends investments these our marketing introductions this recent Jif look our integrated investment butter we of category, launch of We grown new celebrating of brand PowerUps a this that fast-growing snack campaign the in interest In that the about the optimistic expand view of varieties power kitchen peanut consumer XX% We endorsement. for Jif we jerky real forward the essential clusters treats brand the well and success which of in into are the the expand over has category, reach segment. past on Milk-Bone shipping an snack as XX are snacking iconic snack to will began product Live and This trend May. tapping

innovations to We underscore to adapting these in commitment All compete to of these dynamic be market efforts our will industry. essential our trends. recognize

of million than construction Longmont, the facility for investment. the of fiscal year. in further the sales annual Colorado second Uncrustables sales completion remain year surpassed produce XXXX, we the year sales course Xth the double accelerate growth. to $XXX for XX% growth X until With as the in the of company-wide on this the to this sandwiches expect marking to level more as roadmap, to pillar over we capacity which our the more new Smucker’s net double-digit brand XXXX, track million in is brand consecutive up $XXX strong Uncrustables over than Momentum next XXX In years. with Turning net provide will for of million

momentum. we up quarter, Net up We and rollout and XX% lapping dog of for are than see brand grocery even a the food good response while a prior channel the a the and fourth now year our Nature’s XX% premium launch Recipe into year positive the in on and year continue basis. to full more brand were sales mass

consumer activity competitive mass overall addition, continues in our space. mainstream the category. despite outperform increased dog dog for In the to dry brands significantly growth food This takeaway occurred premium food

a serve moment. We will discuss a Nutrish expect newly as strong in complement Nature’s Recipe the acquired brand, will I to which

in for share in for into market. year. year This peanut the Jif Jif the the to X% company-wide of also quickly are growing Canada the We sales brand brand launch contributed a gained has butter the and

strategic focus. significant of topic the a on Lastly investment, of e-commerce remained area

US base retail sales a coffee food coming still up with more While over and sales XX% XX% from were in XXXX brands the year doubling. the X% channel up than channel, of this small with pet e-commerce just sales

play by factoring fiscal and of our collect pure an We click expect sales percentage from continue X% greater channel will models. XXXX e-commerce in the come to and net when even

core in are several innovation, of support brands. brands. growth investments also the long-term health see addition supporting of our will increase and investment can you we in our to These to essential As

million our to economics, programs. progress pillar In strategic additional growth improved margin which for make in we’ve realized $XXX while savings fuel third other protection savings K-Cup increased target expansion. led synergy to provide cost and topline SKUs. generating included distribution This cost and and continuing The the roadmap has pet our XXXX, food on our to our of investments is new

As consistent segments of grew the our growing K-Cups, up sales a premium our K-Cups improved for the profitability one to now which XX% over result, of Due segments. coffee portfolio Café Dunkin given critical US Bustelo our and net XX%. on strategic both focus are K-Cup our with all across cup is margins for Doughnuts and year

RIGHT Francisco both Ainsworth the deliver overall relocate have our final roadmap of fiscal we and we implemented year, a SPEND XXXX, cost By completed savings. improving our discipline our is to will also while team to the offices food family. throughout offices in cost the transaction pet enhanced agility end fiscal San the strengthen Last very welcomed The a Smucker the the of XXXX Burbank portion and organization furthering and strategic efficiency. For to collaboration talented of corporate month, and acquisitions. in Orrville, pillar fiscal we

We extremely pet significant the cat high business. add mass prospects Ray a distribution Nutrish, premium a channels. will growth addition dog accelerate food grocery to and expansion brand opportunities and excited transforming pet that in food Nutrish of With category in Rachael snacks, has growth catalyst and our are in been growth the in

the of While a the the progressing business ago, a systems into end less processes already month towards closed deal people, of year. our seamless we than pet and fiscal integration are by

strategic key role our acquisitions focus businesses strategy, demonstrated consistent to have direction. through are we longer no our a divest also plays and growth that willingness with a While in

on in our intent focus and our this snack coffee, we US of growing divestiture announced year Given our business. explore pet our brand of to businesses our food April baking and

process updates XXXX providing forward will a moving anticipate future and the year and Fiscal in the are months. growth. We of coming continued be transformation in

are adapting stepped As up I and trends. innovation our mentioned, imperative brands to market investments in to

we few a adjusted these you same to Although at XXXX earnings portion in Through and sustain wrapping comments. benefit share we is support investments the marketing consumer here increased cost launches, took of in our XXXX, and And resources responsibly for to while innovation the increase the we programs by savings fiscal significant future U.S. time have of tax X% years. a to expect thoughts, up, per my hope away from X%. are reform, compete

butter, performance, quarter some we for fourth coffee, food, success long-term peanut categories the snacking. food pet are best and While are with positioned not satisfied our of we

Donuts, brands to a on-trend strong leading full Smucker’s, brands Smucker’s changing as XXXX Uncrustables mix for which have our Dunkin’ react on We Recipe, consumer Nature’s by year growth Milk-Bone, underscores emerging evidenced and of sales and capitalize Bustelo, iconic needs. ability Jif, Café to and

innovation, acquisitions, align resources. along areas. to businesses provide and us reform fuel to grow whether We execution actions or improving certain with income of of in our appropriate will key finally, our to to and initiatives our divestitures evaluate are allow in benefits our parts mitigate taking to invest continue through portfolio tax in brands our savings headwinds And cost and and capabilities

by Let of and year me we past our this all dedication close my employees as efforts move forward. thanking comments their their for continued

We long-term of work we value. have in still the is transformation. to are team do company our We there place as deliver recognize confident more right shareholder growth part and to that

We the turn on over as strategic our City I roadmap October also know on our the Day at Mark. providing leadership New and look still that forward Xth more We in can’t to York industry their share we’ll respective businesses. now to preferences. to talented adapt in details will future for to and stand we consumer an continue call updates changes Investor will team

Mark Belgya

was I fourth quarter on to change overview providing XXXX. Thank with unallocated and in for cash our the $X.XX with then year. in derivative Good share outlook performance compared prior you, losses morning gains in The Mark. prior the the XXXX quarter, earnings and of year everyone. $X.XX per an $X.XX in additional a year current fiscal increase results flow reflected charge. including to along start primarily impairment will shift color favorable and the GAAP

in increase net profit higher offset the Excluding price X% growth items to release, XXXX X%. compared contributing net gross and lower adjustments other summarized fourth was a prior per to adjusted or in million quarter point as increased earnings Included non-GAAP mix. share was this as Adjusted morning’s volume this these press $X.XX by an $X compared $X.XX one the net cost in to realization year million or pricing reflecting product percentage sales offset with up which $XX gross margin financings were in of points quarter, Adjusted compared and pet benefit cost not XX per prior combined most basis profit sales was more approximately our the were lower and of flat reflected $X.XX impact year. of adjusted than XX.X% higher mix. volume acquisition the lower were in associated Net the EPS to share quarter’s guidance. recalls of fourth recent

our projection and realization However, less to anticipated this net below was due freight higher price cost. than

have X% previous reflecting the XXXX lower a fourth the While cost related a Dunkin XXXX initial was decreased volume reduction cost increased. million and charge corporate for also SG&A our and forecast, Doughnut incentive driven $X recalls. launches to by management. cannister in product in expectations or ongoing compared compensation pet exceeded primarily expenses administrative This budget by partially quarter food offset to

operating gain year, higher $X offset million increased a interest Below a operating than expenses this, million X%. change acquisition. The by or increased year increased decreased XX.X%. included to XX.X% the in or of administrative million income rate X% which last XX margin other more with decreased in to compared XX.X% $XX associated low Adjusted Factoring corporate financing the tax from $X and to year For adjusted income non-capitalized on expense million unfavorable points due operating divestiture. basis all Ainsworth quarter. prior interest the were this to income expense lower cost which primarily a $XX

Lastly, fiscal the from weighted average reflecting the of shares XXXX. reduction shares quarter a benefitted current quarter in fourth X% repurchased in outstanding results

realization. prior for beginning were volume X% with in the price the all reflecting coffee. results prior offset lower the flat due sales offset which in promotional for mix year our for as Segment significant the on was increased decline more specific competitive Dunkin a input in to in product strong expectations XX% below higher launch by brands Bustelo a needed Let that me the from favorable represented Sales was XX.X% Cafe across to segment primarily positioning cost timing to but trade quarter volume profiting customer. increase turn segment Net due Coffee profit levels to than in shipments over coffee to gains of X% spend realization a due performance, the large increase than spending margin & declined marketing also net Coffee the cost. lower sales price XXX of nearly the basis X% points net drove reduction an the planned fourth Roast year in and for Folgers quarter. the club and and quarter X% X% for mix increase Ground brand. expense our improve doughnuts K-Cup brand of increased the increase to

will by project This first segment fiscal consumer the the the in in heavily benefit Dunkin we XXXX million be year partially cost driven were which XXXX, Café K-Cup green to our Doughnuts For oils and launch full an due These of foods by profit the digits and our year, savings to increase the down support sale prior an coffee be towards baking year. offset contracts. full be marketing to estimated in half support and $XX behind declines year lower compared coffee X% investment growth categories. in weighted A will Bustelo. cost revised will of mid-single net

categories, these in several X%. decline categories reflected both Excluding X% brand for X%. the net with pricing Sandwiches Smucker’s Sales impact and Uncrustables two growth mix Spreads. in of this were net of overall sales up X% in up were realization volume price up segment the higher And Frozen reflecting Fruit

shipments brands to brand, XX-week for in and the Pillsbury in a of Jif butter quarter. due in Sales year declined the consumer timing prior Crisco the sales while latest period declined the strong up takeaway also net was the For peanut X% comp.

points profit the compared profit price despite X% volume Foods everyday of costs. pricing into the and year move higher freight associated actions improve Crisco. with Profit lower to segment we to strategic growth execution mix have the we continues fiscal increased reflect successful prior impact for strategies. our XXXX, the to As taken Consumer

year we prior $X impact any foods business. investment This to XXXX, potential For PowerUps slightly launch of support Longmont Jif full an and segment million of divestiture flat to project reflects with be to incremental facility. million associated estimated down $XX our to baking an consumer profit cost of our

were Nature’s pet a by mix. our prior price compared food was sales were were volume slight recall as driven Turning flat and Recipe in increase to segment, Bits year, mainstream dog planned as decreased rationalization. the the XLives growth sales offset Kibbles Sales due growth brands and XX% food growth for while realization the X%. Gravy SKU Cat increased for product snacks ’n lower X% to for pet net Train for by the offset for to by food declines flat X% net brand

premium to the to XX% the channel. pet profit decreased was this to foods in of due attributable food Pet within quarter. sales recall the in Lastly Balance costs decreased Nearly the compared decline for prior product brand segment half softness the pet Natural primarily X%, specialty one year.

were higher and price fully realization. addition, by costs freight commodity In offset higher not the

While, food to pet XX% is expected this relationship fiscal we the overall approximately increase in year compared price to continue reflecting the segment prior expect XXXX to to of cost profit Ainsworth. addition

From foreign a exchange. interest prior million despite in Lastly X%, increased minority including in the to compared on $X international driven and our currency Seamild. by the Segment profit sales year prior of year segment also net sale Away gain increased the Home the X%

XX% exchange expense contributing. currency profit and in input marketing costs, segment increased foreign decrease all Excluding item, this lower

due ended our cash Fourth to debt. prior lower Let loan our came total Ainsworth working flow me the issued On billion XXXX which offset XXXX leverage This X.X million, a stood is commercial more on bringing increased drew this $XXX fiscal debt million of and the the X% $XXX on at The debt million. ratio the based updated projected a of times three over reducing $X.X paper full $XXX million XXth. new April required overview million couple approximately we billion as cash we guidance in free of leverage year. maturities $XXX year as closer times closing than now coming on expect $X.X compared years. XXth, at year EBITDA quarter with expenditures transaction. to than three fiscal four the has capital year fund turn and next capital to to of increase surpassed of the to term $XXX focus of This We to May our times. of leverage to company an and billion, no of

provide business. but for XXXX. of Big now $X.X me picture, the from baking net sales the outlook fiscal impact recently contributions approximately additional color million divestiture excludes Ainsworth our includes projected Let to we This increase any the a expect US business. XX% to potential from of business on our addition guidance by Ainsworth in driven acquired

with impact the Ainsworth, incremental pet are cost inflation. cost pet be facing to X% significant to than savings X% X projected the to commodities higher to impacted Excluding coffee protein in most cost. consumer be we raw our an packaging. are PowerUps. by XXXX number cost From SKU notably support perspective, in EPS and key peanuts, continued rationalization with up expected a of will offset is increase sales be increases segment planned our brand segment. also net and reflecting other and expect due foods expected most There tax materials of a be earnings growth to launch reform across and more in of engine of negative Overall including commodity The as deliver lower a benefit costs a offset X% increase to

impacted expenses months into mostly that last the XXXX this freight over are prior the attributable the year to addition, continue increase this in expected addition to compared In headwind is to of fiscal to the SG&A of expected XX% Ainsworth. six year.

projected K-Cup incremental cost with $XXX a Uncrustables million Along construction XXXX digits our and facility launches of million Jif single incremental improved approximately reduction also million cost and $XX our of manufacturing realized XXXX in management related fixed $XXX million of with acquisition, program. fiscal be reflecting marketing substantial initiatives, support in Colorado. Excluding mid the the in associated months the most $XX notably cost and to to would be will With we increase total we SG&A high savings in accumulative in additional will cost up year-over-year annual achieved to reflecting interest XXXX. in in bring expected cost $XXX to project We finance tax interest environment. an of rate our initial XXXX, approximately now rate $XXX the income, higher to overall with borrowings higher million effective of million the Below we increase with income XX.X%. an be and state remaining guidance acquisition realized this operating This approximately primarily the to compares expect XXXX XX% reflecting taxes. Ainsworth a PowerUps our

Lastly average XXX.X outstanding. million count our current on of guidance weighted share reflects based shares

Ainsworth including of all of and EPS to result million XXX we’re of XXX flow our the be for a with XXX expense and million intangible million free an Ainsworth lastly related CapEx the of acquisition organization associated to primarily which cash project and flow $X.XX. certain range including to to million factors, of adjusted of mostly million As amortizable million assumptions projecting estimate approximately depreciation a from XXX $XX key closure $XX million related of approximately including somewhere and based to will and $XXX include cash these XXX facility. the cash total the including remainder the Uncrustables effecting production be expected in assets. respectively between offices. $XXX million We $X.XX Other $XX approximately expenses amortization cost Share are compensation optimization cost with associated one-time

delivering long-term to and achieving line see financial our top-line, priorities enabling share our earnings taking against the objective. our we’re the growing deliver company per actions to significant transform cost stated with are in growth can you savings As us and

much urgency growth and and your if proceeding We’re by long-term but encouraged roadmap progress being recognize, up the question. made the still done your tens now deliver questions. with open of you for shareholder Operator, you to enhance Thank queue please we’ll be our first the up we’re call and they’re the on to value. to strategic time

Operator

Instructions]. Thank you. [Operator

Our first question with from Lazar Barclays. comes Andrew

Your now open. is line

Andrew Lazar

’XX, in saves for tax some So, expectation EPS just Mark, the fiscal would two your quick you One growth accretion. be, cost obviously deal mentioned given first benefits things. and and

spending market. spending year are you’ve got around talked you’re I some more to some against you this though about. guess, more by platforms Given in bringing a or EPS where feel platforms that’s you’ve where all to better. desire these is year, know show of maybe is as behind you that do the limited this big and the the some activity, of to I feel year I a of innovation But enough you guess And all growth as even

I’m you’ve So, to these get limiting you’re feel I to sense like behind you the obviously growth? because I of of, just, a innovations yourself, guess, show enough first trying EPS got or the That desire be one. guess, do will

Mark Belgya

this will Belgya Mark and I’ll start, Good Andrew, is morning. Mark Smucker actually finish.

these make throughout [want] morning course the will not the the them, this they launches going particular question. we are support and potential. company’s continue So, excited have we great will size, the and there a you history. had we we maximize two a think, are the of that over if very don’t is the of about the is to two in appreciate Obviously, question that future of biggest lot and the launches. that on, that, learned There I one innovation into made points We’ve years of

in speaking on growth. launches of are one. behind So, year behalf team and success the that reinforce, comfortable again think achieve to we And have platform is I this adequate we dollars the here feel those

like, growth also will up years. we’re brands Bustelo like there comfortable time, to Uncrustables, and behind the those to launches we’ve particular that also be our stepped in coming At appropriately. [drinks] Dunkin’ same these So, more behind come spend

is the $XX to is on to increase what amounting million And business over last about year total million $XX feel, so, sufficient. that excluding marketing Ainsworth

that. of do work We cost reform are that beneficiary the fortunate U.S. to savings allow have that tax us our be teams to done around and a good

and uncertainties. a tariffs around So, where guidance the then of sort a of headed, of added, where are we’re adequately headed lot there, costs pricing and capturing But investing our we lot feel that, maybe might there thoughts is out where all headwinds be like our range is

Andrew Lazar

Got it.

that. Okay. Thanks for

Mark Smucker

Yes. Andrew, Mark This could. I if Smucker. is

of a lot to couple think, points. wanted I a But Just script. X the repeated just in myself key I things,

first that’s of in we’ve from The is really segments. the a take progress guys away you made lot terms the to growth discussion realigning want our today portfolio to of

the know to more the relates the strategy. look work we that you of in our our are investment eroded we our at acceptable. our But last you simply actually decade marketing it day consumer and not is executing or that see you marketing, to to will marketing tune As specifically at the over got marketing do million as we’ve if spend so, and $XX end of have about

and And erosion result the that but we a for and it of have supporting particular years a is choices we those where long we health supporting of got so, brands are to that trade, result brands as of versus ensure we’ve of to about yes in going core some our term watch will the made innovation deteriorate. as the that erosion brands

launches second to support. shift or those would support Similarly, ago the other that significantly after support innovations if know maintenance a and the and launch. and launch come continue behind to then would we’ve with spent would so, see And third our commit you innovations these innovation Nature’s overtime you see Recipe some that to think got that year with and to the we significant half year down launch and of investment about we any at level to we’ve would

that sure what to our of new percent net make new need you our the brands we line with well business. more we’re sales, to as marketing both rest be at as got if core or we’ve terms in of industry in our of supporting as the look So, products a

going message is really a forward. So key that

Andrew Lazar

Great. there. very I’ll leave much. it Thanks

Operator

Thank you.

question Growe next Chris comes with from Our Stifel.

now is open. line Your

Chris Growe

incremental launches? the Just a and savings outlook your want clearly Thank if in cost, fiscal growth really is your the for will, cost to in of just it what through. guidance some line know relation ’XX to line savings to long-term in growth through I led to other with ultimately talked ’XX think more coming you rate above trade it range. coming fiscal EPS? I ask long-term the curious have about these lead tax is with you. could that weaker with Is contemplated you with promotion, What the you marketing, gave roughly it we we your algorithm grow you

Mark Belgya

Well, is Chris Mark Belgya. this

you Let those me in just the frame on try phone. for to of it

off of guys TheStreet you generally. kind where of if at are you work So,

at that first as That’s is think little I to obviously starting rate the Ainsworth down thing state taking most have about is of of acquisition, a tax that. noticed I $X.XX in we’re of footprint and taxes, earnings market number million I that mid-teens driven from increase you million. guess from the original, by in the mid-$XX beyond somewhere the called back we to bit about flip XX of we’re but lower X.X if our if base commentary driving as which just to I had a that a probably the we’re out the said I then some you, just think we around CAGNY, equated more

about a XXX are programs in still but savings reflecting is million. our to guidance as of we go another XX is we’ve this cost come incremental So our you we’re cost year year. our it's the million I also then there particularly and first XX are, our million now million cost of the that’s some the around mentioned additional Longmont if half facility. for freight construction in going have so we after little Clearly, XX got to probably shy, facing our X million, closer at in another would,

where sort take down four that just sits items or range down those street five we’ve that So the key the drivers discussed. to are of

Chris Growe

Mark. thank that And you just for

one in ’XX. fiscal just of is accretive the is So Ainsworth follow-up

much As expect how accretion you said transaction? that from you

Mark Belgya

said we forth net and we of right interest we’re Chris, and $X.XX announced accretive that on transaction so we Yes. basically, about what is, target. said

Operator

David from with comes question next Our Driscoll Citi.

Your line is now open.

David Driscoll

versus But to forward. So, confident Smucker, question off but this so comments, release, on delivering quite have you a your the you It’s I’m substantially, Mark one, and miss fourth the call debate stock you’re comments of you’ve But companies do honestly tough CPG indicated was EPS have portfolio. which in has a CAGNY well objectives. you. the pretty and down straight is the big today a be of is the quarter inflation little to for think guidance company’s the bit fourth In going and offset made think whether done I other just very growth, question. results reshape to the you this And end about pricing some quarter compelling at ability to in the take the February. really is X% this Smucker’s what I say, to

Smucker’s So, why confident? now you price And kind the really, are act, you’re take can’t of way the speaking actions? the all in is necessary really stock given directly investors Mark and is these

Mark Smucker

So, thanks question David. the for

of first we’ve we XXX shareholder are and would business continue this position last is been and the necessary But or So in have everyone it you years although these I the in or to order first return. last as the for know, of over the for over long-term order terms managed that thing, as long-term environment talked over all, you we to to we in haven’t that growth. X in in do know year changes so ourselves this so delivered as for done years, we’ve over, remind we’ve

And the by on the and that Yes, we’ve had because we’ve portfolio, is off our chose some drag so consciously that invested every that brand back back you we confidence of comments, is baking invested to if go bolstered prepared business that from grown. has in we’ve oils to fact everywhere and part my investment. are

seeing focused, And results. there question no we that so, where actually are is we’re

lead. a we we are do we’ve confident feel trade tend we get it majority through few used still we brand, where brands, the pricing have the of of environment, demonstrated we current vast price the able we relates categories, where areas used a to and are the to not price versus coffee, list particularly have pricing, for decline. both, case our affect to We taking we’re the But that but leading As can in leading follow. there to in

previous can’t we use affect have and and been price. movements, as So, justifiable quarters price said levers customers I through. we then our have different we And we as to go to in do us successful getting

particularly it we continue questions pricing difficult, every asked the say would I more it would bit of One that almost about that in I us, to getting pricing all there increases. taking longer, case be more a have you you But is little through. discussion is successful tell in is

David Driscoll

what up little a on coffee, Maybe bit if like team happened of just -- ask I follow I and was that green fourth expected what kind guys in to in think a P&L profitability quarter more what this biggest could you the lot about I here the to estimates we going the the had of miss coffee just quarter, lower confidence our relative benefit there to on the versus was the expected. was

why of So, industry about down? kind drive did segment what’s coffee the happening more these prices the it can within why a in talk happened, promotion need bit you trade the and to you little

Joe Stanziano

this XXXX Good morning up I’ll our Mark’s there; Joe. cost with quarter referenced of comments earlier, David, fourth launch is start that to support the I trade. canister Dunkin along in and were the increased

momentum we in While with in quarter and we we’re the grow we better strategic were volume disappointed continued both and profit those saw they results areas. did segment and wish

both of is great XXXX up to acceptance Sales XX% in digit and X, Cafe Dunkin we XX off of year Doughnuts and fast grew So, are one our data. our segment execution. K-Cup was double cup outperforming this and retailer start, the XX-week launch Bustelo the and scan a business

said we and a cost investment finally, continue better will next to few we’ve which our working feel in position behind up much price better started to align have relationship have the ramp going and it's we that programs As into significant platform Mark fiscal weeks. been ’XX. our And over marketing

investments, were move results are volume and tremendous I the you recall so seeing last we made direction. seeing would yes where this we improvements, right still have time we’re in and where but say think pricing we made year we’ve I at is competitive trade those

David Driscoll

you. Thank

Operator

Thank you.

question Ken Our with JPMorgan. from comes next Goldman

line open. now Your is

Kenneth Goldman

thank to Hi, from good wanted right. of I you math my is questions morning. me, and Two back my that question the much sure is first very make envelope

to make X% down If organic honestly of when It has sales about growth sure X%. to that is walk Ainsworth, get and detail can little to from feels bit and by A to be little hit some obviously and XXX my quite if a your that’s more us you’re walk could in right great? wouldn't through sort I or X.X seems billion and to as for little be bit target but much you’re to to math you SKUs get your around it through innovation that wanted looking million be us a year X in that to a prices are would there and innovation taking me a is coffee aggressive maybe reducing just forth B if you there drivers in quite there of bit so us you enough, those imply

Mark Belgya

fact just in which beginning we that innovation little along year. that with in on quarter And Your I math in correct topline some ex-Ainsworth, about the price is coming. expecting innovation a PowerUps last again then and X% candidly that you’re increase cost, pet early we’ve about, how offset of is want correct, we bit the rounding with organic trade you’re most growth QX clarify QX lap price got in depending this are to [indiscernible] particular is XXXX that from decline to coming on one more

that built but after there really across portfolio. anywhere that decline in no is there So, price the is

our had Uncrustables, even great primarily So, all year. it grow some expected our the brands is last Bustelo is though is are innovation, projecting is key growth up, we driver growth innovation. still in there still continue year obviously Natures a But to

Kenneth Goldman

of case through the down one quarter. Maybe flow down cost that of it quarter that. I won’t only your but didn’t one only that been to have year. be for is is There of the, pricing the How rest most understand more the coffee

Mark Belgya

January took have guess is a exposure we guess, then Because still what I going We lap to of back on it that, No. going we trade price we’re and quarter remember, had to XXth, that take. I saying had down. into, we’re that that. adjustment up taken

Kenneth Goldman

run right. And is other [coffee] big I follow West the I’ll about city, very losing integrating big struggles. a that some harken town, attractive potential great back that Kellogg’s, to worried was one. to on food think pick up from was not with for I And cities my well in with was has to that that big pet the you’re a just wondering, something brand for the very on in but Okay. just is from taken different. I’m question I’m of a offices not a what Orrville. off-line happened business a back but you moving some And independently Coast to when to brand, sort potential And had people, your -- it area but Orrville really a

into So for maybe, this your are and some year But do. factoring risks those right how this in guidance. you thinking to thing of your is the

Mark Smucker

and for I’ll start, actually And is this that question. Smucker. thanks Mark Ken

similar of I I which the that about So, pet business. being is think specialty, some business it they’re largest it more highlighted if have predominantly very people, team. you passionate and largest business you this is, to unique particularly the the capabilities It yes absolutely similar key. largest, channels. for a or carefully less our of co-locating because think, business. risks with is to really have there want ability you those great fully are are right, is say capabilities don’t the our channels, the leverage had think to the we a that Francisco And we team, offices, the the considered. San that But fantastic are And resides mainstream about [indiscernible], risks that we I business in they that this is being are built,

nice we relates folks had and attract several to it so our to wins. key working talent very there hard and As retain far, some are we’ve of

that So, everything them. if… aware doing we mitigate keenly ensure we possibly we I know we and can risks that don’t the are to are of

Dave Lemmon

Lemmon. I Ken Dave this to, is just add

them positive. have strong to move with so date, acceptances offers to that’s one We of number the

continuity of the is we able say I of positive and to bringing would harness organization have And the is retention move. under we're about pet entire roof the really the pet in one just the opportunity that to being through programs second against that place moving ensure forward. excitement business business The strong there excited

Operator

Alexia from comes question next Bernstein. Howard Our with

now Your line open. is

Alexia Howard

with pet the the and mix place the the mass, entry given the business the there with you’ve the Can given we knock-on the about in of larger I channel food, are into that retailers toes some whole? in any agreement allocation shelf broader category And in entering guess, start shift? brand implications Wag concerned food pet pricing and traction question second recall? a is, pressure the all companies, a in drug got as terms of with cash the about Amazon you on of worried you Are

Barry Dunaway

Hi, Alexia. This is Barry.

Let me take the there. questions

that. as far on a recall the comments couple As is of concerned,

the clarify, First, that have just of exit Train profitability decision the we’ve made because challenges and to to last made we Gravy web decision summer. business

that meet So our not did line profitability product hurdles.

with to to communicated us those costs We that customers provided from who So, that by ingredient all with expect fiscal this recover expect these and year. to supplier the we associated middle had then the we occurred. had recall with our our that of recover associated of fully the and discontinued that actually costs recall production and

fact that As the consumption segment far think that down to Train look continues dry up we actually well. value I weeks despite X X% by XX the over just incredibly it’s period, as Gravy at is perform business on, knock last points. If

I and our been But talk we me lot think across So, just that equity Wag the there. as have on attention a and launch knock-on let seen portfolio. do so brand are Recipe far strength Amazon’s effect channel. not private as tremendous the there’s has well we the Nature’s with of price -- Balance to know we incredibly if base brand brand, channel for strong, very the but clearly We e-commerce business, every our where Natural private label performed compete another in Amazon consumer label with has

or in appear. to either continue effectively that compete against may and will will think We exist invest brands brand to brands currently be to able label other holistically continue we those we Amazon’s or private

we will accordingly. across we pressures against input Mark our the -- if As are seeing portfolio it’s when and earlier, on especially market costs we pricing headwinds entire appropriate far will and monitor cost and our alluded as and move price

questions. there you Thanks So, for on those. some thoughts

Operator

you. Thank

question next SIG. comes with from Our Zuanic Pablo

open. now is Your line

Pablo Zuanic

-- divisions. one Mark, new I of I guess most people you question you say your Mark say would for Smucker. appointed first in

to are very growth, margins that. quarter. I some your ‘XX, for is $X.XX guidance in a to in first $X.XX the a despite benefit second the you say in Steve possibly first -- at are going and $X.XX on tax the XX% concern? despite and And $X.XX, is coffee for year on that’s guidance ex could the thesis that guess maybe more this if spin XX% gave Dunaway, fiscal gone the plus specific use I strong And than leaving so of for like Why X% it’s I the to down the assets people that tax EPS I term be we’ve You to is tax your turn end on company? that’s for Barry junction $X.XX terms implying I better rate, that year and that senior next for If that I that’s next question half Oakland, a ex-Ainsworth organic Ainsworth, very take your the some forth question. one is talk rate. the year have a Belgya, departures but know back a your right? me at EPS a guidance, Mark but of you That’s about to $X.XX rate may get comment flat going and be the day again

the but comment growth room can of do And specialty in give or there expand for be room you you of underlying shelf. balance with only with is brand terms in SJM? in business what’s business can last the the with have pet, very to expanded. on if just the can label the sense one If that in for but, more that also, in reflecting private sorry, its fewer Can pet in there new there And also you What color comment some growth $XXX that you the slowing, Walmart for for kind ecommerce? third where X one Ainsworth. the of does division, sales I’m So, terms the can the sales the not briefly just that. you for million

Ainsworth how of the grow Thanks. bases. XXX terms in So, can from

Mark Smucker

us Thank little bit Okay speak I’ll Pablo, here. the were opportunity question it’s Mark gives expecting and to Smucker, table the we because for and you on around we’ll the start leadership just go a more. that

in Steve are Dave would I So Food seasoned first of frankly are you the Joe managers of tell Tina best Coffee of and all, very you on Pet, on with Barry, some and mentioned whom in Similarly, on company quite company. functions various that the they both our leaders, all leaders are company, have and they’ve the I very and every they Barry. in years seasoned, case, some think been all some have Mr. cases, mentored to by they plus In that with Oakland actually, all degree, XX businesses. work

tremendous complex he to to opportunity and amount bit spent obviously him of has on delivered in them and the a tremendous a so, consumer from And an comes Canada although of he is businesses all, very clear time has been capabilities little a and concentrated get an a better, our to get extremely know the of customer the roles in that newest positions current as managing calls people leadership also, is depth various there and these well. growth customer environment. I probably most business the their understanding complex think Pet with Dave Pet, is him in in argue managing And a very all is of and And or amount concentrated past manage one environment. his in former could you will both knowledge, and well of company. probably results business have role, in which

for feel very, So I those are just why, in have I And high some team. tremendously of confident the hopes very reasons this them.

you question. thank So, the for

Mark Belgya

go is question. Belgya, Pablo, second after this your I’ll Mark

right So, degree. a to what you is said,

benefit of the part in sort call Ainsworth of our adding guidance simply So gets tax the, you middle the range. of it,

look our I programs about, and at think basically in our we those cost these talk at look just awash. you underscores, increase marketing, if savings

increased by $XX saving we and about plus amount. same marketing We’re million the legacy Smucker on in our initiatives

draw inflation cost them think I that’s Longmont to we and that, pricing, the costs. always still as is So, in talk say to add there’s if pricing about cost, down. these we opportunity then address that the What would you

to of have we more say we’re forward. months I’d volume of because pricing cost, we opportunity expect the to and Candidly, So, it’s getting but still of impact that. we’ll impact to negative off full weighted, XX see cover go that,

to the you’re I simplest the down right back to need So, earlier And it but in components. the if think double-click comment, on you go break to again, level, math, the really Mark’s and next you up need to math of opportunities we appropriately you did we get feel brands to that end with that cost because to behind suggested. savings tax spend the the and savings that

Dave Lemmon

touch just on Pablo brand environment to by of Ainsworth, some say stable it’s with extremely is to way. respect well. the would questions the I doing your

there juggernaut seen cat distribution upside that have growing to of both and and through And we brand. through those we the We huge it really planned XX on space businesses and foot on business, at growth snacks dog and innovation look business the innovation is targeted And on through against sort basis. XX-week and future behind as then of on on XX% the the wide those segments. is the continued see

growing. will continue the very to brand feel confident So, it’s the at currently grow that pace we

Pablo Zuanic

Is there room to grow the private label business?

Dave Lemmon

that? What’s

Pablo Zuanic

are business. is to to the big label sales The you Ainsworth, there a grow right? room anyway, of the total number or part business because it’s label Within private exit private that going

Dave Lemmon

business and our the packing to label committed still growth we a private to levels. are grow We category we are from perspective, that expected

Mark Belgya

Mark is Belgya. this Pablo,

honed more category Ainsworth, suggested the the of we're to as your term. while Just is the as one point with kind the comfortable maybe things Dave label But it point one on private grows. near on of business

Our that grow. will as Nutrish expectation brand is the

profit over et will cetera. that P&L improvement the as very so, be time And profit, this proportion across see across segment gross we positive

maintaining as the private is driver growing the and the So, label Nutrish really strategically.

Mark Smucker

Mark is again. this Pablo, Smucker,

Ainsworth. point final one on Just

years and we’re growth to that will a of so think upside. believe also of they’re plenty stay team room that achieved their of which mean and there’s excited agreed potential, has there we pet I brand One that is tremendous located reasons has grow, is that opportunity incredible drive that to in expert continue growth that it seasoned on experience is and team, a team a pet fantastic has Waters, that Pittsburgh got passionate leader, also of say is primarily or team, amount the the who Jeff about growth. is the on in definitely to that we the he and I there’s

great in confident pleased very team that have a group still there of as very So, we people. we well and that are

Pablo Zuanic

Thank you.

a So dilution to Mark, $X.XX, that right estimate very follow-up? sound the $X.XX does baking helpful. quick can to I The is you from business ask that you?

Mark Belgya

that’s the of we that have has probably while been are thinking about the divested event of maximized and Yes, right, the is, guess addressed, I absolute some we're that to at cost we we how be the already I that in the things try of things we business consideration question just shore take one might dilution the current yet, is into savings think We is would of offset looking dilution. to able have to help year. opportunities at with, to that the up some do least in that obviously proceeds will

in growth the the So, is ballpark.

Operator

Thank you.

next Our Research. Wolfe question Scott Mushkin from with comes

line now Your open. is

Scott Mushkin

to They wanted the their that up, also openly with time about generally. CPG going in I bit about in talk you they making a talk target. just just long-term the in to doing the openly know cost seeing higher business, having I partners down we much are about I here little and model the folks business run, talked the Bentonville, their investments they’re talk and pricing margins So, about spending short but some was and at

with a just on comments EBIT of get like I under your I Can sustain And XX-year my I’m at pressure? your I just guess, margins we looking saying. to and wanted partners over much that? kind So, so model, period guess,

Mark Belgya

This then start is Mark I’ll jump see I’ll and wants Belgya. to who in.

it’s couple about have longer So, And you do that think for question, years it’s term and of folks a believe it’s strategic near-term a we to question, and that of very a portfolio though, price. of to a the we continues I one number clearly will talked great brand thoughts, allow we I a have that importance think that fair question. us

and I we generate and be category, retailer. a sure categories so returns the keep I that as opportunity to think candidly, we as to proper hold just think I move that a that’s investments making But those continue manage than marginalized in accustomed make the to don’t have the the products forward, an to in to We COGS. focus. need to we to on that we’re that operating want have think desirable to And to we costs it become profit industry places we want industry. to look at are other

maybe the drive our peers of some by started shareholder short-term its while to think, I so, And ways I value.

think longer approach. strategic is term that a I

And work very in we costs suppliers add we’re raw so, going make cost on perspective that good a to a forward our continue incoming and we’re material to to going going thoughtful to place sure with from as we’re services. and

we we So, have reasonable back the great an One again, But our is relationships things. to we facing. have two I I is incredibly partners challenge with it’s on we think to and brands think are offer up as fair, retail industry fall good them. also a it

Mark Smucker

that others, than our incredibly of of there as the business. moments have and strategy, very in add to the the and between a happens to consumers. classic we push long Scott, times. with brands and extent been first one this the bond strengthen versus Andrew have that, large we this sense where a us to we in We’ve emotional allows back demanding industry's strong clearly brands, seen our between this and us helped that small have brands grow said, are have to we time, consumers are Mark be our bonds they or in our but type the then is history to in the partners I asked question be And pull successful of obligation strengthening business would Smucker. which the push the a our also bond, past. our customers retail our an the and and consumers pressure in history continue whether brands, are would that Mark is just harder relationships those to go just I our

in it our brands So, investing those it’s not and with just consumers engaging getting in about efforts. our with about is actively selling customers, our

Scott Mushkin

about And very then brand XXXX. Have seeing? is number pressure to guys my two for it much number and that going with little my Number margins that? So, you environment one. new on planned said. what really That’s And in cannibalization Thank one Again, customers. on two follow-up with Dunkin’ suggests questions. for things early you engage with to just with follow-ups. then actually What's downward the in Donuts the follow-up to just long-term a maybe taking ecommerce other the yield? you

Mark Belgya

Scott. Hey, This Belgya. Mark is

your on question e-commerce kind near little around think pressures, first just then honing bit I and of the is that a that So, push basically just and term. of some margin will

time So, we forth. of some years the have we of bit improve been of that a put e-commerce. as best as little around traditional pressures for the who came the growth and was pressure and an but a across had as we e-commerce established to expectation retail just channel because -- growth working company are couple how several industry so it. to times back had while, that last the it looked got versus in to conversations similar in take actively in over Internet and the the We business of recognize and in mass the to And not terms shifts going and right those identify stronger is at it’s issues margin that and us more ways area and now margin to margin business club

this, standpoint. continue think will But the some as to have we the relationship that brands we be pressures then pretty period So, margin understand and through ourselves, retailer but addressable well. again, we’ve covered, we that us a think we through because often there just this from just moving to time get as Mark that might that’s situation I repeat suggested that. broader, we forward And much do an think work

Joe Stanziano

Okay, XXXX Scott, sorry. question, take is I Joe. your This will yes.

will done the segment. about excited brands. It very work is to into slide premium And It start launch that are way differences XXXX. that a entry-level I think consumer, to it incremental. the is will to shows We positioning consumer we've the very we when different the than highly Dunkin’ product you the communication, see our positioning, different and The the talk some is of you see there. prior

cannibalization we with not brand. concerned are on Dunkin’ Donuts the there So,

Operator

Thank you.

with question next Farha from comes Our Stephens. Aslam

now is line Your open.

Farha Aslam

on A food. pet question

have dog have now each with and Nutrish the of expect you and Natural each kind food share you us what three of premium Nature’s Recipe, from growth You those? kind of Could positioning of Balance. next brands, you year

Barry Dunaway

is This Barry.

me Let feel Dave in. start there jump to free and

that is line have concerned, super made We to led Natural about we pet food. the specialty the this Balance through that we of is brand. to where shopping our And think channel. we point be commitment as will pet premium far that’s as As consumer where nutritionist that that’s think to and the is exclusively sell continue

As a relative to I Nature’s. latest launch the there on channel, is and quarter. to based XX% Nutrish, in continue the on for up of mass We in was place think successful this believe and is mass it that launch first Nature’s success this the grocery channel, based Recipe again the

plan the of particularly is next growth premium. brand segment the perform seeing year. well are Where we double-digit that for this in grain-free have We

in will we so, efforts innovation marketing be over grain-free think that next and it. focused as about And differentiating our the year area

in mover specialty but from So, Rachael and focus the and we pet specialty brand natural different that halo ingredients competes brand consumer bringing a Nutrish were the brand. of culinary nature premium in accessible the also it’s has that brand it important of the segment The equity. and first as the Ray with over pet a that just

work's brings as So brands, anything have believe continue but Dave, sure channels, that? lot make together continue can that do I add be in going of differentiate complementary team each we respectively. portfolios those to they we highly a of to those to to those you know the

Dave Lemmon

the and say, this pushing is in pet delimited were in for just Natural field a provide to diet bringing in growth. on Nature’s lot grain cat LAD out are Nature’s segment, innovation really there pet over that then delimited really Recipe, concepts segment. Recipe innovation the I excuse Balance, food me. snacks, free will Nutrish’s they And market that dog, side on the in diet XX Yes. have growth through of they and snacks ingredient ingredient the and year and --

that. very about feel we So, confident

Farha Aslam

well? Double-digit growth for as Nutrish

Dave Lemmon

Yes.

Farha Aslam

you question competitors you are And just you pricing? seeing. a broader Are on highlighted label pricing. taking and what are Are then that private successfully following pressure

much had pricing you coffee, you So this with able how spend. that to spend Because back are trade in of to quarter higher retain?

Mark Belgya

We haven’t for expect as taken of have last We because taken think would Tina lower. a future a I a price that’s lot might Tina, I probably and competitors lot might yearish in follow. price, the of to I haven’t have think but turn we of up But the to commodities a couple question comments. been

Tina Floyd

on business of versus and perspective, look about we the morning, customer year are that follow, some take Uncrustables food It’s IRI did if we June we did up data, can take up well. May a last in most as in see at that year we’ll our Tina. a Good butter price but time it Farha. From And a took took peanut be the even is you to year. you follow recent competition and strong, and they prior again, price lapping ago,

successful has pricing brands. So, execution those of within been the

Mark Belgya

of mind Belgya is [indiscernible] Farha, didn’t going think going this the go through cost But these the Mark in we costs to in the listing I are categories. other are to up areas thing, keep are up. several that

whether a costs. label you’re to incurring So, going brand manufacturer, private manufacturer you’re be or

prices And We are overtime. world of means in inflation a rising inflation.

little both a to expect why. alter may feel that that’s time bit, the little Now why we but we bit a that’s

opportunities earlier XX-month will for my actually be inflation basically plan mitigate window. what reflected clarify, I positive. to we all said all pricing the so look in Just But is, across that the assumed we’re net inflation and comment, to help we’ve going our and the those for

Barry Dunaway

did just appropriate threshold. thing lead certain we it where we was One we would pricing I in on selected again Barry. is add is where and on category take thought this based again snacks, And the

of taken retailers has pricing the and be our that So effective July. to been will at end

Farha Aslam

helpful. That’s

X% of net And that how that core X% on to so much year? growth, for next pricing is

Mark Belgya

None or very little.

pet Just other than what snacks. Barry mentioned in

Operator

Our comes next from with Jefferies. question Jagdale Akshay

is now open. line Your

Akshay Jagdale

about ask pet. to wanted I

XX%, is is And and much am is there channels, the visibility as as So growing first mix XX% what to the Nutrish to the label's Nutrish Nutrish is but and into more has And around then you question. process? much going are pipeline entered believe the right, remind the XXs. million? is then part brands you’ve Nutrish the the new of well clarify growth us channel. brand wondering private have how what of do just obviously as driven a by a I on how I of how expectations your portion because XXX That’s well, you new sort obviously channel competing importantly, that Can some of the much are entering innovation M&A entered competition, a other be

some also about and channel about think concerns fill. So, competition there are I

your those could you of top-line that would if that really that guidance business, be context segment for for So, helpful? in address -- the growth

Barry Dunaway

team Barry, this I this. and Dave tag and Akshay, is can think I

is numbers Rachael that Ray as quoted all far growth, that the Dave As brand. the Nutrish earlier, the XX%, the

mass. side expanded seeing of the significant of in all by pet channel and the that e-commerce is be drug specialty from as of A the distribution in that that and So, lot far driven of business growth growth the and continued the brand. business food, through double-digit majority is channel, resulting branded the well growth growth will

category, label line point, to the continue grow but more will Nutrish really private So that earlier the Ray with from just come will growth significant Rachael brand. to in the

As is somewhat now a that that innovation we obviously of our diligence that as pipeline. it’s much part of confidence pipeline, limited into visibility innovation view degree that greater did through company, and will but far a high the concerned, process the from have in success come

Dave Lemmon

this businesses the pipeline We in I we robust across we’ve don’t pipeline across way. basically both much there Lemmon room add, clear though have Dave the all portfolios business of Yes, by is the feel most our have since business. growth to for is the as owned Innovation obviously. and is

the taken there we So, things added the be confident very that list, there anything moving feel forward will list. won’t only of to be off

Barry Dunaway

now from And to its just significant premium then record cat, X.X% four and in share competition, cat, dog. And competitive dry consecutive wet then forth. the They standpoint the even a cat, have at snacks Nutrish grow growth Akshay, dry with periods. be of last may about across so the share brand's continued incremental

market there yes, So be tremendous and that to competition continue share more has grow. brand strength, and strong velocities is to continues but

Akshay Jagdale

planned So the from if to and may the business just talking is if to be you’re of seems I be there and summarize coming roughly of like XX% low am all Nutrish what you understanding growth, am growth of two-thirds of is just distribution, be most correctly, innovation innovation that, for mean your XXX from said And that would hadn’t right? I guessing in growth top on you number. correct? I the million gains

So a I and on correctly just follow-up then I business. am that margins had that for understanding

Dave Lemmon

keep on, I call. have have And Akshay, on moving sorry we're going the am to others we

Mark Belgya

of business for most the that had the Yes, this year on across this growth was based distribution incremental all the year, channels. gains fiscal secured

in in that’s is is for So growth effective there distribution in place of and instance, be premium the going where is coming that that will from majority shelf gains significant that August. cat to

so also of just this deal the is pet into incremental innovation But and majority that built distribution. the distribution as of The velocity Akshay, you will said incremental as So, primarily as years, is we year future well more be based in specialty. on model. continued

Operator

Our with comes Sachs. Jason next English from question Goldman

line now open. Your is

Jason English

and guidance the point. a little running sales shy getting of margin late bit from little walking I’m back and know correct? on at Is your to bit. bit I midpoint. that a with of a EPS rapid roughly, keep gross I’ll XX% number to try I’m we’re this the

Mark Belgya

pretty That’s Jason. Yes. significantly

I think we’d more aligned where F ‘XX in. came

Jason English

Okay.

Mark Belgya

maybe much a don’t in be more XX%-ish yes, ’XX. way, know, savings, I handling don’t line in it’s we’ve the margin our if that gross cost know, I achieved if Maybe, the you’re will but

Jason English

from follow were up to visibility. that’s at magnitude walk gross alarming with of I’ll bit of and have maybe next Ainsworth expecting off. margin year And figure year? plus P&L XXX Cool. mix you we that less basis don’t that margin. of my points Clearly, we guys headwind next number where Then absorb a XXX, roughly a little facing the is Is mix you to have you’re kind out afterwards negative

Mark Belgya

That’s probably ballpark-ish close, yes.

Jason English

Yes.

Mark Belgya

business that feeling its base skewing have savings that you weighted what’s cost and are playing might I the a synergies little out on be bit.

Jason English

then Ainsworth what And you, add is I’ll Probably, expect profit question that. of last assumption underlying next ex-Ainsworth pet you and probably. up one growth follow How to And your guys, with pet? pet. after and to do on EBIT, much year

Mark Belgya

commentary off that, of just the interest with of Ainsworth guess, million So, go the due it increase I in to if business. interest going what spirit our XX to so million ish EBIT you’re then in you to on the disclosed, we of XXX call get of is the most and

Operator

from comes John Wells Fargo. question next with Our Baumgartner

line Your is now open.

John Baumgartner

to wanted Rachael for to Ray a I moment. come back

also when on the that on been that Rachael a look dog the feels And we the path has limited. it down pretty grain, food at zero Ray, premium, at executed like just but the bit it’s DISH, quiet, seeing with traction Obviously innovation. from accelerating front X, gone Looking category.

you’re dog So, I for outside the food, segment how diligence when guess, going about deal, to thinking to the compared opportunities ability mean I are cat? you a in through the up

Mark Smucker

segmentation about team, just think the as further We thought in there there. is has tremendous the Ainsworth brand And team equity premium.

We sorry, velocities opportunities build to growth or exceptional growth the are continue again back in believe slower but to there -- there. slighter, additional tremendous probably for cat where point, segmentation Dave’s in where am be will The we premium we in snack. and also I we somewhat see but is

growing, to cat within come So, but the from really that grow just to brand competition have we brand and growth believe dog, snacks. for how on going to growth and we is incremental dog that is where fast continue where based going is we focused is the in moderated dry but premium

John Baumgartner

the there, mean just thinking number about upside pet assets the include revenue you follow-up that base target forward? the a how just you business, I then And are Okay. long-term going When to briefly. into Ainsworth growth

Mark Belgya

This Mark. is

few Ainsworth Investor of I term, our the just on hold But have we mean said absolute we’re based in months. business. what for it being on than all all off expectations the to businesses we for rates higher will equal, number our part of about as growth our drive update guidance, things Day. big the conversations the in probably will think I a We the terms a going with near are that

belt. under Let’s get a our months few

Operator

Thank you.

comes Our from next question Dickerson Rob Deutsche Bank. with

line Your is now open.

Rob Dickerson

obviously bit. you free am I tax flowing else you. I there’s free thank said the year-over-year? Great, given some question and short on benefits around such a cash this wondering of net cash all. up year is Very income just growth quick flow. flow it’s through, Thanks. be ended kind about know is XXX down just offset what will I XXX, But know ‘XX that CapEx That’s

Mark Belgya

conservative then that, you to will from answer range there's XX so CapEx a number program but the is little what And integration associated between increase and of if some some we The CapEx be about the merger capital is other plus is the a incremental different of tax number. bit backup then forth benefit a Yes, would of our million, closings costs. is take op call costs what in right. organizational one-time middle we so use, one-time be with big There you’re that cost working would and it that’s we split a then which and some talked most around that to office assumption call that about. the cost of and component

Rob Dickerson

again. one-time then roll-off a and So, is would a more there’s as as should that the be just such growing somewhat a little it CapEx really one-time piece XX view you of but the -- other hopefully well that’s

Mark Belgya

Longmont a We’ve a we return little bit Yes, X%, think years, great sales of we of that that’s over I get our see point. spoken a investment number. should to more couple time. couple Once last the X.X%

Operator

Thank you.

Kaufman with from comes question Stanley. Morgan Pamela next Our

Your line is now open.

Pamela Kaufman

a changes continued Nestle-Starbucks the environment next outlook for Do get to competition your given the wanted just and competitive expect coffee for landscape I the sense in label in year? on your private of evidence you any the in JV category?

Joe Stanziano

space. lot the mean Nestle-Starbucks there growth. activity take a will label organizations, mean two well Yes, the coffee I private that. obviously I of is respected Joe, is I in deal, This

we on do three what it’s are We monitor and continue would and to And competitively and I we’ve brand to be we in strategy to got will vigilant focused in we ensure will know strategy. what good with label and drive whether like things always or to competitive, engage really say we’re can we very if right growth, competitive, executing innovation, execute feel are and But have price invest we private that. a we our trade to the do do things, consumers, those we place. our continue

Pamela Kaufman

that on retail Jif. recently? What seems was positive And just quarter? more wanted Just takeaway in the follow-up to also, drove the data weakness it given the like still

Tina Floyd

came year. Thanks if question. Pamela. you back up on from It’s were versus strong the posting Hi, I a very comps third Yes. high look the It’s for We really interesting. and really, we Tina. Jif quarter. prior mean,

strong. at Jif, really net really from really our we’re comps a good for If is confident ended look forward And look perspective. We it’s a up so flat up year slightly quarter. the you look good, you full sales and as mentioned, first to

Mark Belgya

it I timing. just was think some of

Mark Smucker

piece Canada Yes. the we pushed Jif have in year fourth I launch the picked quarter, in And helped which tremendously. their a of would share over brand. significant our achieved distribution, really business up we add, targets one. The has

as So really well. strong support from Canada

Operator

Suisse. next with Our question Robert from Credit comes Moskow

now is Your line open.

Robert Moskow

data can expansion business gross ’XX? in X% it showing And that something business. for off Mark, the think first strong implying like What’s is got a Smucker I you and think different. gives I said your what overall. it core wondering your the down pressure look gross looks data margin second core of margin to go It what May, quarter so Nielsen coffee, in that, remarks, the I part I deceleration. gross you One prepared for to margin, is if you’ve then higher more like is for in you’re start. competitive sounded and a was is comfort your indicated driving

Mark Smucker

is Rob, Mark this Smucker. So,

get quite seen the not in our note know and but it’s seeing, are early well. And just positive I coffee. So, the you, are quarter, we and looking IRI at reconciling as some trends, quarter, shipments we then for first that Nielsen pretty we’re through halfway we’ve data, category guys, consumption, to of

So, some some the looking seeing off new were to as there. even well. a pick-up bit of turnaround. good little we’re in products, obviously seeing of But that base start of at as the And we’re coffee, a just well a we

if into hopefully, numbers the weeks in that’s that the I next why, X Good? add. anything consumption I to translate So, think some of you’ll you see or so. wonder guys have

Mark Belgya

Belgya. incremental with guess my I with And we through We segment green that, from of margin the has just yes, innovation. started of spend a out this is about. your comes the the Rob, are expansion obviously Hi benefits or question in in gross first comments, mean, gross to still we loss, the mean getting profit of profit margin dollar marketing talked it lower a KGM I generated. mean, I good or gross I is cost profits half it’s answer Mark although, we been then cost and had also year savings coming savings expected ago. the I think that base. October

of there are bit well. comp programs probably saving mix the line. little those some is just in affecting a And certainly that of So as then cost

Operator

Brian final question Consumer And our comes Edge Research. Holland with from

now Your is open. line

Brian Holland

math Just what on roll define side, pods, million. of quickly of there’s do of one you way success here. quick I -- of for XX sense innovation bagged, the on about of would about out share the a I mean out math, equal share to would us the XXXX? one a I competitive guess, if landscape first or the sort Thinking share one of of any can if out give net coffee.

year at front partnering So, success sort on bag would you stepping have or for Nestle got I of the Keurig their am then up their just deal that trying talked the bag in you’ve CPG, just to with one understand about investor coffee, on XXXX? define business. side, efforts innovation the what across for licensing all on day secondly, on Starbucks And

So drive the and bolster what Thanks. how to backdrop XX about or XXXX wondering the you more over just think competitive portfolio against next more efforts your months? competitive figure to would a your be

Mark Belgya

going I to I This is am Belgya. going Mark start to it throw am Joe. to and

in I So that the just there's the of on most XXXX just the or we’re now million top-line good X% that. portion two X% to equal but will And turn, XXX of right, obviously growth, do total. are say not a innovations expectation dollar on math the of two to that, larger say that it’s going I give specific components and right would

is incredibly the number from. million there. coming sales, So it’s million of $XX that a item. potentially to think today’s first top has successful one in certainly this And that in comment launch $XX that's year XX interesting is in where The is that world CPG, we being

Joe Stanziano

measure and be success well of Yes, I distribution should our say we our be there just by August. foremost, on and would distribution, of acceptance goal way full are we and I first think would

perspective, in a way So, Obviously, a and we’re the in like standpoint with marketplace strong retail from a very have state. on like Donuts. again we very we our said feel From of out well Dunkin’ partnership acceptance there. you competitive bag’s success

those the equity, consumer. We we Dunkin’ year. very different we The said as support space that a feel through with premium there very shop we of continue leveraging on to opportunity XXXX of a different earlier launch go and to like opportunity brands see great continue both I of the is bag both there. those positioning, in as will

Operator

the turn I’ll call to Now, management back to over conclude.

Mark Smucker

came Okay. segments you paying away quarter focusing level long really with and what on know focus. appreciate it’s by encouraged again same are all. wherever actions to efforts our I and doing. realign we call, taking that I do call have are portfolio, the the you Thank growth confidence and in you, we the just of hanging really we we our off that guys important But given Obviously there. in all very a the hope

awesome, really continue to our help acknowledge and us will and work want to think to do, they forward. to thank as drive succeed going we again, I still they that. So us are But we are success what allows employees, they always,

So, thank you good for your weekend. support and a have

Operator

for today. a Ladies day. may All disconnect. this and our and participating you have now call gentlemen, for concludes Thank nice parties conference

The J. M. Smucker Company (SJM) 7 Jun 182018 Q4 Earnings call transcript