SJM - Earnings call transcript Q4 2022 | The J. M. Smucker Company

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Operator

Good morning, and welcome to The J.M. Smucker Company's Fiscal 2022 Fourth Quarter Earnings Question-and-Answer session. This conference is being recorded. [Operator Instructions] I will now turn the conference over to Aaron Broholm, Vice President, Investor Relations. Please go ahead, sir.

Aaron Broholm

you session. our thank quarter XXXX and question-and-answer earnings morning, for fiscal joining fourth Good everyone had release hope corporate detailed remarks, I has are website in results review which this as at our jmsmucker.com. morning's on press available and pre-recorded a management's our chance to

We post replay an of the call at will of this also conclusion morning's audio this Q&A session.

estimates, future rely call, that differ to reflect expectations and about statements on may may statements our These forward-looking plans actual make we performance. materially During risks today's and results and and assumptions current due uncertainties.

on non-GAAP Financial evaluate measures call read non-GAAP statements Officer. President Smucker, Additionally, Chief results we Executive are you concerning details encourage and internally. in to this use and Mark full forward-looking this disclosure Tucker Chief to Marshall, today and performance morning's our I Officer; press on the Available release.

question. the open We queue please will call up Operator, now for questions. up first the

Operator

from [Operator Instructions] question coming today is Our Andrew first Barclays. Lazar from

Andrew Lazar

the a I and retailer give building light a might chatter to a you come pricing has investor to sudden still behavior consumer inflation given fiscal mid- first industry high-teens important window address year with guidance notion regarding your start of I recent the in this thought thought in effectively to topic fiscal upcoming food make commentary, whole, all that for it particularly that of closed is as the having the as industry for to which sense expectation 'XX? for company

Mark Smucker

pricing, to we're on change. will productivity. manage we not an that saying for always about do our And first respond take that do Thanks do responsibility we right? to ongoing don't we I just believe cost it directly, a our need And that. will ensure window, to it's I costs, all, that that basis the And guess question. there's is Mark. when thinking by would we of Andrew, which

as is pressure we've responsibility we shareholders past, that to be we talked prudent use prudent with as We're confidence will the know, have our have judicious But profit. that, be do to will consumers. very going able judicious. to continue customers, levers do and we that and the to on only about a our of all we So partner our have you in cognizant protect been we forward at to and that the dollar so. of our disposal And obviously and not

majority to successfully we've time. more continue for So will manage provide significant know inflation, a amount detail. we But I of experienced a of can cost it. at our increases that and Tucker this have priced through been

Andrew Lazar

of would helpful. data. don't have the whether late I that, capacity in But think, know around maybe And volume, the have trends to But I drive clearly could second, well. got going you're the forward. incremental is working just obviously, that sort any I that's which on continue accelerated quickly, in to as related just context you. be expected And you've growth the additions more what Uncrustables significant or really scanner capacity discuss guess, you just

Mark Smucker

Sure, all, of supply. of course. continues Well, first exceed to demand

largely deceleration manufacture we year, fiscal have record. to just supply as we which a made some little had we're a resolved. supply was, constraints sandwiches course, many so we the to which as over in in see fourth X And related because We continuing And labor, billion the can. of bit a and of actually we sandwiches did quarter,

acceleration see in then double-digit to Uncrustables finish, to growth. And completion so we for the phase we quarter return back to some would this And second the of half. investments sales expect of our as the do additional Longmont expect

to is as make It's The meaningful that. demand we bottom in continue to and investments healthy. to continue discussed, to So super dynamic going capacity line, is supply grow. and support brand we've

So brand. we billion will a believe do that become $X we

Operator

Goldman question next Morgan. is Ken from JP coming from Our

Ken Goldman

the and environment. follow environment retailers to about wanted on I the question up your about and competitors price by the price asking

to in can bit in but in think are yours, some starting others don't vendors a are prices certain scanner categories, at little maybe necessarily We in what data. I degree, least but certain or the to raising and see coffee are not maybe producers too, that we same see

any So of that a think is more taking or whether of some are inspired retailers being necessary? own their are by any by indications inspired little conservative your maybe pricing you're seeing in there whether you competitors the that decision-making,

Mark Smucker

across take led price. cases, followed. those here the prices price all that we increases. In to difficult and watch headline some our categories it's obviously have is In we a our We comment really think say general competitors. that really the we as raises really the well keep specifically. But competitors many retail seen tide Ken, would boats. customers have I I answer as cases, that close have question think our on I is

in So similar as cost all statement, similar again, that a I and, are we're that's relatively we manner general a responding believe those to pressures do experiencing all cost increases.

to tends broad-based across be categories. inflation the So

Ken Goldman

aggressive, people for of the came in questions bit for right? little I or for. lot higher And looking one we're guidance were Smucker's follow-up, a hearing sales some next organic what is growth whether my a think than year this then morning maybe is it

feel you've, of I just about that. lot I'm you think, -- that clearly, pricing, talked curious about how you've really a good feel So taken

bit maybe I at maybe I are and you all much for elasticity maybe Mark, to guided can But what should on won't lean retailers than won't looking You've that up investors they thoughts people start on just are your bit. tell right, any that. picking just promoting a think in little a was really there be thinking, expect? to comfortable about why aspirational more? extent. guidance some you this things and competitors to Or little your worse elasticity curious also you feel it's that

Tucker Marshall

to demand. occurred you just X%. on you the X% pricing year-over-year that in the When on or materialize the FY That that which basis, will we're to X% divestiture that you think considerations growth percentage when pricing, to and actions 'XX is FY by that primarily took is But growth, about about mix, to spring of takes some XX% which Tucker. the asked. our I'll of offset Mark full Mark XX%. it the as we benefit of did and businesses. fiscal else XX% underlying early this of if to talk you FY see growth pricing in think Ken, the for elasticity 'XX saying in FY year-over-year up then benefit or price fully year isolate is you comprises lap anything of then reported business we're into hand pricing, impact about we a begin FY gets that due you then 'XX. provides you Jif that that When 'XX, And volume points X pause isolate the recall X%. 'XX, And add X% that has take for to year-over-year. I'll

Mark Smucker

execution portfolio look have get I in respond growing And of portfolio. to -- have this a quarter, our just really strategy execution that of Yes. our lot It when by do -- employees it which couple XX% just that think we particularly a happen. I our portfolio. refined just of headlines, the fantastic the is or maintaining of a share, results, our not at by you just directly. combination our investment doesn't our does confidence of and business, Ken, We in

so fantastic those those factors results. have all And of contributed to

did is our our think just That has we that we even strategy elasticity see better elasticity, specifically, trend more that quarter, in -- so we than truly continued. the believe coming And then And working. expected. in

elasticity. us of the able at the offerings that forward, refined and to day, -- really do we of in we our are on in As about you've variety categories are resilient modeling, portfolio. because we've pretty those propositions heard are a end We going execute value talk, playing are focused multiple strategy, we segments. our categories have our But and some and been

our and continue So well in strategy. that we environment feel very just this will to we're just execute positioned

Operator

from is today from Laurent Grandet question Guggenheim. coming Next

Laurent Grandet

Actually, investors. well a start question more because in key that's the the bit would I from Ken's question guidance as receive by digging about I

in of how the So the quarter of back you and half first the said already you growth terms in of Uncrustables much, for expect mean I year. kind

coffee So the in maybe that would expect could you Pet give segment, Food you segment a bit in or more into color helpful. super what the be

Tucker Marshall

some No, data together your we're just pulling you. Thank Laurent. for answer,

Laurent Grandet

Thank Okay. you.

Tucker Marshall

Yes.

coffee that for covering as about top growth So driven Again, is as inflation. by year. we result of we pricing throughout line I think material the are -- cost a anticipating think primarily

as improve first a lowest. that not move As that would the you to XX% coffee margins profile, And bottom-line likely level. but we anticipate margins would the about its will would we likely year, the continued the back at through growth profitability the from get the more anticipate think be standpoint. dollar year-over-year growth fiscal we quarter And than we

We for year. short will of the that fiscal be

about pet for divestitures into growth impact Once translate fourth pet is the cost as the will story you X a Again, material through inflation. within the top pet of you the that pretty top in isolate to As does you strong saw pricing taken first results our growth for lap we quarter, quarters. are portfolio, today. think anticipating growth Pet line bottom the line cover pet. year-over-year, then line actions

the of and how you And quarters and anticipate thinking we're grew the gives for Mark growth pet. fact of in we Uncrustables would outlined our of in 'XX. double-digit So X coffee then FY XX% that of full fiscal hopefully, each on that about a past the both this context brand basis year a year, Uncrustables direction

Laurent Grandet

more of Or Pet end and maybe on still the the push great on think -- have of you business. X/X towards potentially, mean upside a end Food Nutrish front? said Food, that throughout some Okay. the about marketing a about a we it's strong because than would year. And of bit I bit for year the Should X/X you of Pet Nutrish your

Mark Smucker

Nutrish Laurent, good was XX%. a up had and really it quarter,

taking we So actions that are some been to stabilize that brand. starting help of the have

us like we that. we're of mentioned are to the new aspects And by prepared dog wet the supporting as back of -- of and then faster-growing focus the areas we on nutritional the year. some So be some we dog we how half of couple there encouraged Nutrish will segments in going think about A and our advertising snacks. of the I the optimize in kicking in are formulas, for remarks

Nutrish on efforts our So continue.

the a we shared, with it is we're long-term continue to process, push that and do -- we're that ensure we stabilize As but brand. satisfied results so to far, we've to going

Laurent Grandet

going it to but and acquisition investors from were negatively one business. that actually And question, since and about noncore last this maybe -- if you we was do of completely different, received was haven't kept feedback may, and larger I morning, a a you discussed perceived in the potentially

was So investors. not by very well that perceived

So to saying came I reiterate you please know you tried about back could point? clarification, But moderate your for some this. are and you meetings position maybe that on your what in --

Mark Smucker

question. Yes, the sure. Thanks for

We still dollars that have wanted is want clarifying an we would had lot are invest to in we And that be acquisitions. and in what a interested that. We be to acquisitions, to prudent we questions we want acquisitive about of the ensure company. we're very about

So an bolt-on we important transformational acquisitions. strategy, or do part of definitely they and are consider our emerging

are think current we our we in As portfolio. interested our out rounding portfolio, about

coffee, about round continue out If to opportunities there. our you think portfolio to there are

of and our an snacking about of well is frozen snacks very course, If area strong. is pet think interest you business, as handheld as

So in all space, be there would frozen interest. potentially of unique those assets of were the

new real we would skill -- a we our with we that were category unless investors shift feel were able leading or position category would new acquire new not communicate set in We to our the was small leadership we acquiring a only think words, a a meaningfully really emerging all of a enter the I to In meaningful managing is or by not positions. other brand. enter in category. that trying

some meaningful would new would category. be and with have the growing small to brand. And categories so It share a to of not a be that enter to acquire option looking we category

pet frozen and are coffee So rounding existing of all again, focusing them on snacks, out, our businesses, interest. handheld

Operator

Your Moskow Robert next question from is coming Suisse. Credit from

Robert Moskow

impact market, my lot the think up account flow-through Like I'm I had share a Or like, dollar couple maybe how recall, is, you in did down flattish in a out context about did then question the repurchase. think going to you bit. chain here I into I taking guess what we're just okay, think still is organic even being of the that? are guess you the kind tease of Jif I question growth supply And EBIT, uncertainties of little offset just a for of And questions. One of price first dollar? the I when getting disruption? is X%, on a of

are flow pretty the cash Do it, what's guide given especially of towards fiscal low you for free do nature is your back attitude Your stock the have firepower buying 'XX. -- your here? What recall? Jif to transitory

Tucker Marshall

So Rob, free the and flow break then secondly. component me cash earnings I let deployment capital down address can first, and

pricing deployment the few for isolate strong in product items from into have it to of and compensation impact the lap is just $XXX additional incremental year. versus we along quarter recall, Jif cash $X.XX million year your a is would you taken that shares where that unfavorable That our million, significant where in prudent finish time 'XX, to the returning at McCallum. came SD&A it completion Then in One 'XX, and think There's And is million. you with I is cash impact peanut that's of benefit spring fourth well. highlight Alabama. and after is acknowledge butter are just that would quarter. the the Jif in $XX called actions elasticity There I volume question, I FY approximately contributions free our this which incremental 'XX, our to we have When investment did or says Walmart the about of X complete balanced guidance the and the pricing another we for with $X.XX in of at point range. are to as after committed from do that Phase preproduction We guidance into $XX put through with pension other year-over-year, overhead cost actions a A the remain continue SD&A. the also into of making basically you about along just investments we year. last approach out for where butter that either of So 'XX it early cash about that the and as the a increased the -- isolate phases FY the in or flow, free impact would in Uncrustables, in are affecting $X.XX offset then slightly also couple finished there's guided the guide relates for $X.XX. impact And benefit is we peanut we very about McCallum, that's shareholders. we And awareness. almost is recall. FY to we $XX again finished to have you the Longmont affecting Then this initial year-over-year estimate be will cash the $XX $XXX you points phases making again, support investments to that a of the FY a down growth. think million of reinvesting by free benefit as our respect of of Uncrustables of we flow. that first about capital up model, estimate we have price to cash a begin second repurchased inflation, million funds business, the in of being million embedded as mix fixed we and flow business back difference of to beginning your we year-over-year full

long-term the done, seeing we we and will strategic we repurchases want consider dividend that but We appropriate the as think to for value. to our reinvestments at have we open continue because to delivering also as will we eyes increase will future keep look dividend are share shareholder about

rounds that your hopefully So questions. out X

Operator

next Jason is from from Goldman today Our coming question English Sachs.

Jason English

seeing I growth that within Uncrustables on solid just the price we're what's XX back come business. scanner going on I what more that see to make looks do great to come points to the or sure wanted data, to real going pet broad-based back side based like want on quick and It through in to there. portfolio. the Congrats of numbers. -- I understood there's It's

to that a that? number persist. to percent down that suggest volume Is low right? contributing And we're quarter So this only like volume would sales more it you're quarter factors XX seems and declines declines still in, you're you're retail, in be expecting seeing are to for or if expecting you're Like that terms in of back of doubles big to currently next what volume. still the that coming or

Tucker Marshall

in Jason, due into quarter sort end of inputs beginning that third that fundamental challenges primarily quarter, of some actually on an the we our impact and some supply production, chain started other the labor sort our in to experienced fourth had our -- product. and of of

growth is business. will immune I aren't that next next the year, and successfully of the as each the expect for just through of since have fiscal that managed we We quarters It's do the anticipate. to brand of year, fourth in did year see we would XX% continue just environment. into our then bringing those that back and finish run anticipate Uncrustables continued And going at to of We additional line. our result the top the rates would that, we addressed that to X a full on And acknowledge we in capacity. quarter. cost volume sort of fiscal double-digit up momentum up are And

brand we're But outstripping we've and Uncrustables continue about to just across capacity points made earlier we had that bring to as we've that pricing against online our so demand. to the as very to do And demand confident meet well current capacity, portfolio. take due the Mark had against broader to

Mark Smucker

Yes. we on our full in add, growth Uncrustables. volume the would next everything do you Jason, of The based to was I the want and no have whatsoever concerns just investors to volume that we've convey year, continued year that about expect and on should you X% all up we said.

it really do double-digit to So we year, continue temporary grow sure. next for dollars expect a the was that this supply and to given demand brand hiccup. over And offsets,

Jason English

of you appreciate dynamics, goods press teens impact incremental implies then release price the -- in that million know think above of to the I impact and -- dollar high It And COGS COGS It's I I usual, said that. billion like I Coming cost to inflation. -- the release, penny And big mid- back absolute price. like cost I Okay. inflation. think $X.X $XXX inflation, your XX% in of to price press of companies’ sold to $XXX price implies see not million-ish guess, number.

So have billion that much of above X in? penny One, And are to basis how go profit much a to questions. what gives you be to to the still you been already able so impact? on $X.X price How take going that to confidence negotiate for? far retailers cost has locked you'll

Tucker Marshall

referencing. that did the of you're FY start pricing. dynamic we benefit. that actions do provide top me with is not let benefit line we a One, of took due full year pricing in portion to result a that 'XX Jason, our XX% that have to as year-over-year XX% A

call in our remarks. careful mid- our to XX% I teens isolating think to the high prepared out So to have in you be

we're spring the pricing philosophy comment make passing dollar-for-dollar increases cost that would early is to sure just our cost in the year then to in benefit that we're inflation And second that did underlying appropriate for is full been 'XX, seeing. offer XX%. take recover that has The along we that of that FY I is,

recovering last impact so as are that we And the over feel though we X year-over-year years. do and therefore,

Jason English

the of much Okay. how is And still XX%, pending?

Tucker Marshall

so -- we the -- year. in though in guidance as are what that reflects XX% for we and Our point have at fiscal excuse in time, reflects set me, taken have this early feel taken spring, the we

Jason English

Got it.

and agreed So everything has been like to is not with correct? sell through in, in that upon like retailers? round that go locked you another or XX% have There's

Tucker Marshall

inflation with date. retailers that to the and believe our we've had that the We conversations XX% cost acknowledges

We will incremental forward our continue we occur address increases basket as to extent any they and/or cost happen. move to monitor and the

Operator

Peter of is Bank question America. Galbo from next coming from Your

Peter Galbo

Tucker, if follow-up just ask a there. I on question Jason's could actually

number, you Or year? you're that of side more I we of With price on the kind Like there then year point? goods for assume is mean raw are cost on as the materials at pricing to to XX% the of relatively for should out price also locked least kind secured and still well? the this

Tucker Marshall

we guidance otherwise reflects both cost able the current to portion. hedge against that or current are control component picture, our and the also Our variable

point our supply it's in the so changes material any in at markets best or or this And time, look absent overall product availability.

Mark Smucker

I just wanted judicious would -- that. to be do we guess want I in to as again, -- reemphasize about, price, think how Peter, I just very we taking that we

goal not so to have is necessarily We levers. And all do our pull to over recover.

to and cost. manage productivity have We

experiencing earlier what make And that to my consumer so to the with justified. then and sensitive while a being along are we passing is sure customers about is comments our little ago partnering to

Peter Galbo

then Okay. could a just the if ask maybe X-parter on recall. And I

there maybe regained assumes and distribution year. that by the to kind Just guidance, And of when product all of it not you of separate of of that, then is supply going second kind the back Is the it time up fully Jif all? any the is whether about you expect concern that think a Or or of be the to line Uncrustables? a end plants crossover as a chain? into part at

Mark Smucker

Sure.

And consumer. as you continue the as up running that as and products. ensure a course, as FDA us. facility Lexington on is to about with voluntary we we very Jif much is care to the of So our possible. safety, safely Consumer select know, We quickly utmost important working recall initiated and end

continued was not facility has Memphis the by and Our produce Jif recall affected to products.

the affected butters, peanut recall. -- products Our does produces facility, manufacture New not not which by Jif not also and specialty is Bethlehem any

to is peanut goes produced All Memphis. in Uncrustables of the that butter

facilities continued Uncrustables. that X have butter to so for send to it we our and And produce

Peter Galbo

And of just the on fully does assume sorry, the the by year Tucker, distribution end full greeting guidance Jif?

Tucker Marshall

this called through our that of primarily So morning, is returns, in as think to impact which best is our that estimate. current release impact half I out a press customer due is our there come and we About $X.XX will in the quarter the to impact that us half to and we're primarily learn continue well. others. of as which impact you continue we as other manufacturing is what and first downtime, referring more, first quarter in we'll update is And will to

Operator

Your next question Kaufman Morgan today Pamela is coming Stanley. from from

Pamela Kaufman

this trade starting propensity you how some We're consumer in to scanner an in how down categories Generally, about categories? in uptick then in trade flip any are down a consumer on the the data. benefit thinking are your to your And or of you there trade And for portfolio down? look where could savings managing see are consumers areas you if side, risk?

Mark Smucker

Uncrustables. as Pamela, much well. continue question We as the to And right? expect is any would buy entire the your so value would continue not down to We we that have second answer are Uncrustables, categories have consumers across our trade meaningful very in really to And spectrum. we that. have X where accustomed continued we competing to seen elasticity, seen

sort to grow tend resilient, mark an as of exclamation continue and are results I less would expect the put mentioned a I quarter And that to remains at-home we the categories be consumption bit as we our that. elevated, discretionary. share performance on our brands. think earlier, would in Our And

Pamela Kaufman

about your question follow-up 'XX? inflation year? current input costs talk you cost for do for a fiscal you where just coverage what percent outlook. exposure? your Can What And have on the then of your covered is are And

Tucker Marshall

cost offer teens our I that ingredients, time. time, look position our is is this that in and at fiscal But believe to over our which inflation experiencing estimate disclose And year. high and best of and primarily commodity is what manufacturing. we'll cost monitor don't a chain across disruption supply packaging transportation our and overall mid- we coverage are structure best and the what we manage would basket, we cost continue to it point and inflation throughout is

Operator

Ross is Our next question Cody from coming UBS. from

Cody Ross

the how better, lot go is to do walk towards to help more your should be process you a get it history. expect better as bit throughout price than to decline. a the behind us guidance we bit, through X% thought normalized elasticity That year? levels? that And just to and I fourth that, volume trend you quarter, back XX% back want a your not Can

Tucker Marshall

Yes.

So or we from that in of brand anticipating demand, think there pressure which we're too, be it, also X% than From impact is to really have a and recent pricing as 'XX is the return component on a on 'XX. our the to we've of price lapping input cost Home digits little fiscal basis. been this has FY in sort of for again, XX% of solely in greater from and bit historical to FY with recover demonstrating that volume behind FY pricing, In a inflation pricing some that demand. a what anticipated Again, single-digit last but will of of of Uncrustables mid-single And dollar-for-dollar under high do year-over-year a we full of is price year We better 'XX, forecast believe they from growth year trends, fiscal elasticity it associated well, prudent FY it's momentum but composition business. and anticipate component 'XX. FY elasticity to growth underlying impact continued again, our come as Away philosophy have a taken our year-over-year 'XX benefit the into actions

move is monitor in as it now, impact we and forward the the our best volume Cody, right so subsequent update year-over-year, look kind and manage and And of quarters. we'll to continue

Cody Ross

help there additional have year to just so Can said confident this rounds your or pricing -- as to retailers of concerns. of if you take you're question. us in comes to it the remarks you pricing how prepared twice some you light of if And will just When how can a gain follow-up to, you some confidence any? big have you out investors' made warrants inflation need you and in expect and if additional what comment why

Mark Smucker

And Well, of across There incur inputs that taken that our open a have judiciously be the work required little fact really increases far maybe confidence and customers our this forward. very year. have to we a very of derives continue our to things, in very would meaningful and we we forth. partner from of move couple strong generally cost depending fiscal we and customers on the pricing and is majority portfolio any retail with so relationships of and have our approach costs we actions costs thus bit that really pricing are that may with repetition a anticipation dialogue our additional as

part is way remain manage the possible, want it of we in It's business. to confident. this again, we our so through positive our job, So and most

Operator

We or our like turn reached floor over management end the to of I'd for back the any to closing you. further question-and-answer session. Thank comments.

Mark Smucker

Well, joining for you very reflects of results possible -- clearly pleased have executed are as really employees. team we outlook I and well. today. our against of so are our that results fantastic want to because our thank these It's our strategy our But all and with and

our but delivering our it that -- to work, folks moment Thank be to tremendous lot year. and you strong just a wanted and have honest, very much. doing, wanted just acknowledge all So to the for thank acknowledge which very been take there's to of of a and recognize a them such employees

Operator

conclude today's you. webcast. does That and teleconference Thank

day. wonderful time, your for have disconnect participation lines We a today. may thank you this your You and at

The J. M. Smucker Company (SJM) 7 Jun 222022 Q4 Earnings call transcript