The J. M. Smucker Company (SJM) Q4 2023 earnings summary

Executive summary

• FY23 delivered $8.5B net sales, 9% organic growth, and $8.92 adjusted EPS; eight consecutive quarters of organic sales growth and 13 quarters of beating Wall Street EPS expectations.

• Portfolio actions refocused Pet Foods on dog snacks and cat food; nearly 60% of brands maintained or grew share.

Financial highlights

• Net sales rose 7% to $8,529.2M; excluding divestitures and FX, sales increased 9%, with pricing adding 14 percentage points and volume/mix subtracting 5 points.

• GAAP operating income fell 85% to $157.5M, primarily on a $1.0B pretax loss from the pet-food brands sale; adjusted operating income declined 2% to $1,415.4M.

• GAAP net loss was $91.3M, or $0.86 diluted loss per share; adjusted income was $950.8M and adjusted diluted EPS was $8.92.

• Gross profit rose 4% to $2,801.8M, while gross margin was 32.8% versus 33.8% in FY22; adjusted gross profit increased 3% to $2,829.6M.

• Operating cash flow was $1,194.4M and free cash flow was $717.0M; year-end cash and equivalents reached $655.8M.

Outlook and guidance

• FY24 outlook included a ~24.2% full-year effective tax rate; the long-term objectives are low-single-digit net sales growth, mid-single-digit adjusted operating income growth, and high-single-digit adjusted EPS growth.

• Inflation, supply-chain disruption, labor shortages, and elevated price elasticity were expected to persist into FY24; management planned productivity actions and continued price realization.

• FY24 planned capital expenditures were $565.0M, dividend payments $425.9M, and interest payments $138.9M; no debt principal payments were required in FY24.

• Uncrustables production at the new McCalla, Alabama facility was expected to begin in calendar 2025; the facility investment plan totals $1.1B.