The J. M. Smucker Company (SJM) Q4 2020 earnings summary

Executive summary

• FY20 net sales were $7.8B, with 1% organic growth; adjusted EPS rose 6% to $8.76 despite COVID-19 disruption and weaker Away From Home demand.

• Retail stock-up demand supported key brands and operations stayed open; management prioritized employee safety, supply continuity, disciplined execution, margins, and commercial improvement.

Financial highlights

• Net sales were $7,801.0M versus $7,838.0M; excluding acquisition, divestiture, and FX, sales increased $50.3M, or 1%.

• Gross profit was $3,002.0M, up 3%; gross margin was 38.5% versus 37.2%.

• Operating income was $1,223.1M, up 32%; net income was $779.5M versus $514.4M, and diluted GAAP EPS was $6.84 versus $4.52.

• Adjusted operating income was $1,508.7M, up 1%; adjusted income was $999.1M and adjusted diluted EPS was $8.76, up 6%.

• Adjusted EBITDA was $1,714.8M; operating cash flow was $1,254.8M and free cash flow was $985.5M, up 26%.

Outlook and guidance

• FY21 priorities: deliver the net sales plan, maintain leading margins, improve commercial execution, and support communities and consumer connections.

• FY21 assumptions include continued double-digit Uncrustables growth with a full year of higher capacity, coffee sales growth from lapped deflationary pricing and Dunkin' and Café Bustelo, and ongoing dog snacks and cat food strength.

• FY21 effective tax rate expected to be ~24%; projected cash requirements include $400M dividends, $300M capital expenditures, and $190M interest payments.

• Elevated retail demand could partly reverse; Away From Home sales were expected to remain pressured while restrictions and physical distancing continued.