The J. M. Smucker Company (SJM) Q4 2018 earnings summary

Executive summary

• FY18 net sales were $7,357.1 million, roughly flat YoY; adjusted EPS rose 3% to $7.96, while reported diluted EPS of $11.78 included a $765.8 million provisional tax-reform benefit.

• Strategic priorities centered on topline growth, cost savings, and EPS growth, supported by innovation, portfolio investment, and acquisitions.

Financial highlights

• Net sales were $7,357.1 million vs. $7,392.3 million; gross profit was $2,836.1 million vs. $2,835.3 million.

• Operating income was $1,036.1 million vs. $1,031.5 million; adjusted operating income fell 3% to $1,431.8 million.

• Net income was $1,338.6 million vs. $592.3 million; the increase primarily reflected the nonrecurring tax-reform benefit.

• Operating cash flow was $1,218.0 million; free cash flow was $896.1 million, up $29.5 million YoY.

Outlook and guidance

• Long-term objectives target average annual net sales growth of 3% and adjusted EPS growth of 8%; organic growth and new products are expected to drive much of sales growth.

• Ainsworth was expected to contribute approximately $800 million in FY19 net sales; annual synergies of approximately $55 million are expected within three years, including approximately $25 million in FY19.

• E-commerce was expected to reach 5% of total net sales by FY20, from more than 2%; FY18 e-commerce sales rose 71%, with further strong growth anticipated in FY19.

• Uncrustables net sales exceeded $250 million in FY18, with a target of $500 million annually within five years; the Longmont facility was scheduled to begin production in 2020.

• Cost-savings goals include $450 million in cumulative incremental synergies and savings by FY20 and up to $50 million from Right Spend over two years.