SJM - Earnings call 1 2024 | The J. M. Smucker Company

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning and welcome to The J.M. Smucker Company's Fiscal 2024 First Quarter Earnings Conference -- Question-and-Answer Session. This conference call is being recorded [Operator Instructions] I'll now turn the conference call over to Aaron Broholm, Vice President, Investor Relations. Please go ahead, sir.

Aaron Broholm

Good morning and thank you for joining our fiscal 2024 first quarter earnings question-and-answer session. corporate a morning's review prepared press are on had detailed results remarks, everyone available this jmsmucker.com. in release our hope chance our to as which I at website and management's

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

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

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

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

Operator

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

Andrew Lazar

off, volume as you currently I'm discussed? the this with curious have of full of so, the you X And industry impacts, volume basis earnings year. about of it dealing is still start which and sort last divestiture organic Mark, company broadly seems the if to sort to be and today. why expected were underlying company Jif weakness of if manufacturing a on out growth, the sales that peer is sort seeing for guess strip same X% where mentioned truly I the contract on see think points expected I be to call, maybe we if And other companies not necessarily

Tucker Marshall

Tucker. is this Andrew,

correct. are You

Mix Milk-Bone comparable Uncrustables as you X does growth of As pricing, largely the noted. driven of Meow you point points X% coffee, growth that guidance, X% to and X have began down have break volume/mix by and then our

Mark Smucker

it's Thanks the question. Andrew, Yes, for Mark.

we story, at as we we've all the continue to our as are ones. our And of right share categories I investing breadth more those participate that across focused. we still are our We which categories, growing, resilient the look in in categories, in participate brands. gotten and while think way you categories, the are

they had, and and the premium, products excellence, be back an continue multiple to its So affordable just value span we protein, Milk-Bone to with expect you to getting areas. invest, very cite not momentum least, Jif that both position. share growth, as continuing to really #X of as example volume an an actually then as continue good saw, to company. you've sales mean we we where of the into could to quarter meeting growth and engine consumer we continues continue a grow, I for got the peanut as butter as Uncrustables last example, of where bit, strong course, I And a execute need.

So pleased the outlook our quarter just very with for and future. the this results

Andrew Lazar

guess, what's Got expectations? pet compare weakness? growth I bit contract sales manufacturing-related slower, else? curious, And it or driving it. modeled. bit was we'd it the And if were a I then lastly, did how below what I'm to sales was guess a your And something just

Tucker Marshall

$XX agreement. we Andrew, have the on we for attributable quarter expected expectations quarter. would year would momentum in see we driver portfolio. have than full be to million noted is what coming And million, And the for the shortfall outlook our to co-manufacturing prepared a been remarks, any our for into that our the continue to pet year. decline $XXX positive the which co-manufacturing be as to revised And for the we

Andrew Lazar

decline in what -- co-man the And just it. would Got is the sales? the decline drive

Tucker Marshall

from Holdings support facility relocating supporting we products between volumes. Post what their be would and production manufacturing as It would Yes. need standpoint

be just what would So it expectation their network. their in is

Operator

America. of Bank from Galbo Peter from coming is question Next

Peter Galbo

then XX%. just we growth there's to of morning on it shows number, XX%. I bit or Tucker the just comparable closer And supplement, X reported Maybe believe Mark, think sales the confusion a around of could I your this Slide start, of

wanted folks. And able help, at for maybe, actually to just you to that the non-GAAP could the release, just be if to I Tucker, in press have GAAP bridge I So XX%. the you reconciliation think

out So the comes I were, quarter last if can to plus talk would through well that XX% the relative your as where that we for of expectations those just as think, you in what put quarter.

Tucker Marshall

XX%. Embedded down isolate our break down you with line our quarter On of let divestiture, basis, due food growth primarily to And for we comparable in basis, XX this X%. were lapping is XX% sales expectations. recall. delivered we pet in on the points the me butter as impact peanut Peter, or But the restoration up a reported that Jif we you. would be a of

within be co-manufacturing That the The points. from that we X.X approximately X.X points, of business X mix and leaves from of second or standpoint component a growth net would And X points for the required X.X volume agreement saw points growth quarter. base pricing.

Peter Galbo

Slide And between just that on Okay. the the that's that Tucker, sorry, versus XX%, XX% X, just on again printed. you

understand to delta. the trying Just

Tucker Marshall

with the reported impact on a associated It's the basis divestiture Yes. year-over-year. math

Peter Galbo

Got it.

Okay. just kind I reacceleration your you Can over a into through reacceleration Canada? quarter. push Uncrustables that like of of year the the other some planned we That's what versus of just growth as speak helpful. seeing standpoint you the spoke comments, the track then, a a maybe you and Mark, of channels be or think bit from in some prepared And might untracked in about cadence from course

Mark Smucker

the quarter, -- we're lapping really last year Yes, strong really QX of really which a very in with strong sure, a we're growth. we as allocation. that getting had well as mind Uncrustables prior a off Keep as had we Peter. result first It's completely -- all, happened of us pleased

some other mean is, continue into on So around be driving is course, expansion that to momentum channels. actually of percent runway great some full growth From of on But we but there, and I strong, have the very is expect think what's Away the Home. household lot for far a Uncrustables penetration. year. And XX-ish the new really to we relatively expansion it most Canada that so is I fact just probably into notably very, customer acceptance small

If you remarks, being my peanut penetration and just the and talking Uncrustables. household butter prepared jellies of look Xx about jams in

So start there's we're there. And pulling the runway plenty the of They and turning demand network. advertising time, activations. for to on through and really, are in-store going other first driving

$XXX positive on million to and just hit sales. the So very for around still in year Uncrustables expect

Operator

from Next Goldman from question is coming JPMorgan. Ken

Kenneth Goldman

up should your commentary on EPS mid-single sales digits second like-for-like up quarter, following be Just up and for that single. the low

about from any to headwinds lingering lapping should there guess, we're consider? about of think unusual tailwinds about just we as modeling the in think sales Just quarter? cadence how as that precisely contract as quarter, on are we the the we Jif wanted any or as there pet your bleed I think sense XQ? may do the Just recall into to get Are benefits modeling we can. anything of specific a

Tucker Marshall

about just As single-digit in bottom reinforcing top that's second you mid-single-digit squarely and line, mid-single line. quarter, think the digits, low

I quarter, a in did The would SD&A-driven. have was acknowledge first which we is is, that just largely $X.XX the over-delivery first component that

continued of a recovery the coming in the of will some as think The on with will then across predominance the coffee and continue could the quarters momentum of the co-manufacturing a second remainder third spreads the Jif the make Uncrustables. you balance in fourth. to And perform. the quarter segment, fiscal momentum sales, with back equally those come then into little pet probably through quarter, and to the year. And second expenses bit the So there's second begin the portfolio, throughout slight in category then you -- just more of slowdown

Kenneth Goldman

Got And it. about then to your just comment That's up helpful. SD&A. on follow

think, line Obviously, roughly XQ item each that on in even guided, to came year. quarter expense previously You I light. this

Or few will As it's lumpiness think each should the about around million roughly a same? guess we be might be do? little the sometimes they $XXX bit implied. be next of them -- more quarters, there as there I

Tucker Marshall

over verifying, $XXX assumption next I your X I'm around quarters. is think but the fair Ken, just million the

Kenneth Goldman

any other information? And should model in evenly that we just barring

Tucker Marshall

Correct.

Operator

Matt coming is Stifel. Smith from question from Next

Matthew Smith

that I wanted the to inflation lag Consumer continued about believe ask pricing I to in an basis, you and inflation. on dynamic U.S. said pricing Foods. underlying

about inflation? talk to more pricing that you to offset expect inflect your dynamic the and there current you can So when than in outlook

Mark Smucker

Yes.

I seeing business. we pricing are our consumer Matt, offset think, foods our inflation in

entire pricing relatively across business, would still stable. in is our I ourselves environment. think inflationary We consider generally, an

we've We sharpened of and -- price have passed had some that and consumers. coffee to on through some our customers points

help will total, in quarters inflation. well. speaking, whether that coffee as have And business in consumer or But the recovered future it's our we so generally

Matthew Smith

competitors things of not already Are the prices related -- Okay. you on to directly getting coffee where you're their a commodity-related underlying competitive And seeing other mentioned little commodity, passing not coffee there pricing, perhaps? then maybe more the business areas necessarily to lowering the consumer. lower

Mark Smucker

pretty generally is There's no. short a answer a --

We significant have across industry. seen not the deflation

Operator

is from question Pamela coming Next from Stanley. Morgan Kaufman

Pamela Kaufman

outlook wanted you Just coffee year price about pricing how pricing think segment are growth? think the given favorability of the outlook your and strategy we for And a about should how bit list into for coffee And expectations guess, changes? Can promotions the versus year? dig in for about this versus volumes talk more. potential to I balance the the to for coffee your what generally, costs

Mark Smucker

in see coffee Tucker here. of this a probably some month. I'll brands. us did bit comment little our few relief has place really that's a sharpen Pam, start took the in commodity, maybe price points and and our maybe has drove what a That to in of -- We

to start will that So and help forward. business the going impact

we decreases, We feel along try as important really that and that do we do, but manage multiple it's both price, with we prudent. to levers. to that reminder a Just pass be do increases

it's we've sometimes surgical pricing, a here. it's Sometimes, really and price, done bit just more on that's what list or getting trade little

on forward. future And so probably the we we I what expect But don't support we to at this going cannot speculate time. beyond business do movements any coffee shared, that

Pamela Kaufman

on behavior demand exhibiting just Obviously, bit the and increasing pet, in some when Great. the what from you about quarter. treating. in consumer sales Can the of category? competitors consumers in We've to pet heard in seeing And comes pet it that particularly elasticity trade-down strong then the still talk you're your some segment. were a are Milk-Bone

to the So the in seeing you're hear what in just category. dynamics curious

Mark Smucker

We range Milk-Bone is, I've did specifically said reason the to plays snacks. that quarter good a continue we is have mainstream sure. the I as speak did have Part entire strong pet mean growth premium value-oriented of good brand or on there. in Yes, I to and growth products. see snacks, from that of what some value before, to can dog more largely

shift little will. you seen if bit have biscuit, Milk-Bone standard of to a the of a -- more We this

then fact with continue just well, as our a position, Our buy sort blend also premium bit and have Mix the shift of we've do the And improved offerings product. -- Meow been speak that on #X to gotten to are into there the may continuing consumers there. chain to would mainstream volume little back that our of supply original that item but

point. our this very feel total we portfolio good So at plays pet about where

Operator

coming Our [Operator from next from Instructions] Dickerson question is Jefferies. Rob

Robert Dickerson

question it years, inflow sounds in now could like potentially the you is Post about or first derivative by like your the remarks, the of And net been kind like coming the just prepared think. the incremental QX. XX being shares Xx In that you that for leverage cash lowest you've talked maybe in your for And lower is Tucker, That, with instruments comes at are it by almost you. far, and in, seems of the year. divested. then fiscal end I cash be

stock, So But once the about you're I'm how kind And less, thinking increase incremental I seems deployment. capital of there appetite, say, just you you're realize for could hitting incremental be dividend. or let's Xx back acquisitions. buy potential curious like

how that. So thinking about just curious you're

Mark Smucker

balance feel And very our sheet has right all now. Rob, it's obviously, this intent Yes, we been Mark. about our along. good

on been we're does over As that not for We whole refining investigating a it of has in last not water. focused not lack as it's the you portfolio. really know, remain interested we have very in couple somewhat our But the lines in but the of quiet the looking, you interested. been acquisitions. keeping know, mean of as M&A And years terms and front, industry

part M&A so an or to hope continue story important we time. growth -- And our that play continue will specifically over acquisition of will

Operator

Jason English coming Sachs. is from question from Next Goldman

Jason English

a on to strong start year. the Congrats

Mark Smucker

Thank you.

Jason English

of couple A you. for questions

really it's year? was shouldn't of the And So drove SG&A that What we looks it the like it? take favorability to corporate going be bank the the lower and expense-related. to for why remainder assume

Tucker Marshall

what our of the within within our really support. of continue and is administrative and to distribution on have do favorability of then made line our some decision marketing corporate saw we And Jason, the SD&A to operations some traditional we support support also brands. functions to lines

that next we're were in we also So expenses incremental have the And the contemplating of marketing some X some timing-related. quarters.

are those second quarter. back so And coming the in

fiscal So our not in seeing our favorability having year quarter. first we are in this despite point seen SD&A it at

Jason English

So it's was full the corporate timing, is holding was because benefit year. like distribution. Within timing the assume looks timing corporate, you're line Marketing, it Because quarter? the that I that chunky. what right, because this was distribution

we Your was than expected. corporate much lower

Tucker Marshall

Yes.

items Just of so it spend projects, accruals, around forth. had timing corporate through so to on do with incentives, various various and

Jason English

back to helpful. then And of Okay. turning That's some segments. the

little right? the to no in -- going expect turn Given a like post deflating? if than volume it the made weaker you Looking still to we at is expected, sounds price segment the it's like like sounds growth it do comments the going investment you it's industry, organic just deflationary price this even it contracting. there's that based actually on growth around and b, to looks and it's is get coffee, the more was month. A, really

as should In And light XXs low of return margins a the year? we X-part price to view for investment, this sorry, EBIT question. eyereach

Tucker Marshall

maybe a to to be slightly should on green this Jason, year-over-year coffee breaking we basis, flat down -- due deflation underlying just the in coffee. So down,

from expecting marketing profit profit a have gross a in of of momentum the improvement are volume standpoint, And spending coffee for as We on segment in margin basis. We form some gross investments the we you do improvement level that sustainability. see portfolio noted. back are year-over-year, year-over-year profit of liquid a and and

segment margin the the of And so XXs. be expect in sort would profit to we high

Operator

question Paribas. Gumport from Next is today coming from BNP Max

Max Andrew Gumport

favorability. the took seeing drivers sources on due It how was and full and that you of to was wondering year for to change your I that you're X like color as around of us it quarters With gross next capability the guidance. assumptions cost margin, of were up regard you could some what might well. your give impact the if cadence sounds incremental any the

Tucker Marshall

with XX.X% our year a Max, of came as we noted, profit into XX%. you fiscal gross to margin guidance

We now a have to year. for outlook the balance of guided XX% the

just In it's us cost of of have a some conviction we've level average, in a cost What up transportation, some some points. within about on doing So that of significant. come have was you manufacturing commodities, favorability XX improvement. It's where basis may total and level gave level sold. have you areas the you seeing of in not distribution cost environment. just But goods

margin you it think balance QX, gross the we outlook order of X. the over consistent will that each the about outlook improve next XX% the the the quarters get X be X to of pretty As for profit to year, and and year, in in full for will

Max Andrew Gumport

chatter curious seeing how increased it about is think think persist. the can been well. as turning some I'm hearing data And what pet. to dynamic this driving commentary you this and in trade-down in value-seeking you the behavior also on We've it back long and

Mark Smucker

do Matt, of portfolio long. And strategy, crown on pets, it's our Pet But obviously, consumers discretionary. Mark. are pet snacks speculate bit that that in pets -- children. than have how obviously, owners little little refined think keep their as snacks bit a more to oftentimes a their fit we our pet mind I there. that won't our all pet is treat better feed in mind we answered as I earlier. Keep really food. nonetheless, jewel question our I

snacks to of as that perform to needs continue snacks dog the And be so wherever may portfolio, we particularly meet pet continue to -- and our they from we will our at believe consumers the do value premium.

really our good portfolio about positioned we feel where is So there.

Operator

Steve Powers Next Deutsche question coming from is from Bank.

Stephen Robert Powers

question a -- free flow. on cash to as relates Just it

EPS is seeing. increase, so, raised to flow $X.XX, a don't you've we that million a through, to of be Given expect decent implies bit maybe cash $XX a if outlook that mean, seem I flow cash your that free -- I little or would which

that. just you talk So what's about can maybe driving

Tucker Marshall

Steve, through didn't we through the why been to we certain of year. fiscal has the we this last incremental are had continue as seeing raise as strong that our change taxes activities And a we our look really fiscal year flow cash some finish driver cash of free to guidance.

Operator

Next question from Moskow is coming Robert Cowen. from TD

Robert Moskow

Can you hear better? me

Mark Smucker

Yes, Rob, welcome back.

Robert Moskow

Yes. -- capacity, exceed you're continues Slow that continues capacity plan going demand in to start, it the your happen? Meow that What's you In said to improving for -- Mix Mix? make consumption for grow to prepared What looks you're the Meow remarks, and say your to beginning you the for replenish your doing plants are quarter inventory. second you stretch sure. like at to that You quarter. capacity the in second above

Mark Smucker

on to Rob, around all sure highest productivity in that it it's We're is the plants already make some sure at investments capital their Mark. course, There's capacity. it's nominal are best those and process, equipment the operating that themselves can. as of making efforts. running And

really those it's types and through the demand. it's the fundamentally And so to support continue things. around the we of do second -- improvement And expect quarter

Robert Moskow

half of of half? Any in be it Okay. Or an be the will impact Will in back easy the the this comparison year? like unusual back normal kind ship-to-consumption?

Mark Smucker

normal. be should It

Operator

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

Mark Smucker

you you. for your all for Thank today time the call. Thank joining

And outstanding were always start possible course, with the fiscal our pleased made results we say, positive by really to of are year. employees. really as We our our

webcast be X at hope company. We conference that live So the from and just our them XX:XX us at Barclays website. in many to a of their of for on September also to to join accessed be presentation to take thank Investor moment I'd can week. will next you the our able Boston dedication like work A hard Relations

see Thank hope there you I So all to person virtually. or in you.

Operator

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

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

The J. M. Smucker Company (SJM) 29 Aug 232024 Q1 Earnings call transcript