The J. M. Smucker Company (SJM) Q4 2013 earnings summary

Executive summary

• FY2013 delivered record net sales of $5.9B, net income of $544.2M, and operating cash flow of $855.8M; sales rose 7% and diluted EPS rose 23% to $5.00.

• Strategy targets average annual sales growth of 6% and EPS growth above 8%; long-term organic growth objective is 3–4%, with acquisitions contributing the remainder.

Financial highlights

• Net sales increased 7% to $5,897.7M; excluding acquisition, divestiture, and FX impacts, sales rose 3% to $5,662.9M.

• GAAP gross profit was $2,027.6M, up 10%; operating income was $910.4M, up 17%; net income was $544.2M, up 18%.

• Adjusted for special project costs, gross profit was $2,039.1M, operating income $971.4M, and diluted EPS $5.37, up 14%.

• Operating cash flow rose 17% to $855.8M; free cash flow was $649.3M.

Outlook and guidance

• Restructuring is expected to generate $60M of run-rate savings in FY2014 and reach the full $70M in FY2015; nearly two-thirds of annual savings had been realized through FY2013.

• FY2014 capital expenditures are expected to be ~$270M, dividends ~$220M, and debt interest and principal payments ~$95M and $50M, respectively.

• Long-term objectives are average annual sales growth of 6% and EPS growth above 8%; organic growth, including new products, is targeted at 3–4% annually.

• The planned exits from private-label foodservice roast-and-ground coffee and part of the Uncrustables schools business are expected to reduce annual sales by ~$100M and $25M–$35M, respectively.