The J. M. Smucker Company (SJM) Q4 2022 earnings summary

Executive summary

• FY22 net sales were $8.0B, up 5% on a comparable basis; adjusted EPS was $8.88 and free cash flow was $718.8M. 86% of brands maintained or grew share in Q4.

• Results reflected pricing and brand momentum, offset by inflation, supply-chain constraints, weaker volume/mix in some categories, and the Jif recall.

• Portfolio reshaping continued through two divestitures, while investment prioritized coffee, pet, and snacking growth platforms.

Financial highlights

• Net sales were $7,998.9M versus $8,002.7M; excluding divestitures and FX, sales increased $410.9M, or 5%, driven primarily by higher net pricing.

• GAAP gross profit fell 14% to $2,700.7M; operating income fell 26% to $1,023.8M and net income fell to $631.7M from $876.3M.

• Adjusted operating income decreased 6% to $1,343.5M; adjusted income was $962.2M and adjusted diluted EPS was $8.88 versus $9.12.

• Gross profit was pressured by commodity, ingredient, transportation, packaging, and manufacturing costs, divestiture impacts, unfavorable volume/mix, and Jif recall costs, partly offset by pricing.

Outlook and guidance

• FY23 priorities: invest in culture, sharpen execution, improve profitability and cost discipline, transform the portfolio, and advance diversity and inclusion.

• Inflationary pressures were expected to continue into FY23, with mitigation from pricing actions implemented in 2022 and planned for 2023.

• Expected FY23 effective tax rate was 24.2%; planned capital expenditures were $550M and dividend payments were projected at $421.6M based on current rates and shares outstanding.

• Planned restructuring costs totaled ~$70M, with activities expected to finish by end-2023 and most remaining costs in H1 2023.