The J. M. Smucker Company (SJM) Q4 2024 [Q&A] earnings summary

Executive summary

• Fiscal 2024 ended with strong team performance and a solid financial position, setting up for profitable growth and increased shareholder value in fiscal 2025 and beyond.

• Q4 net sales were $2.2 billion, down 1%, but up 3% excluding acquisition, divestitures, and FX; FY net sales were $8.2 billion, down 4%, but up 8% on a comparable basis.

• Q4 net income per diluted share was $2.30; adjusted EPS was $2.66, up 1%. FY net income per diluted share was $7.13; adjusted EPS was $9.94, up 11%.

• Portfolio transformation included the Hostess Brands acquisition and divestitures of Canada condiment, Sahale Snacks, and certain pet food brands.

• Management expects both positive volume and pricing in fiscal 2025, with base business growth around 3% after accounting for a 1-point headwind from pet contract manufacturing.

Financial highlights

• Fiscal 2024 EPS finished at $9.94; fiscal 2025 midpoint EPS guidance is about $10, indicating flattish year-over-year growth.

• Hostess is expected to contribute about 9% to FY25 top-line, implying $1.4 billion in sales.

• Q4 gross profit rose 15% to $913.3 million; gross margin expanded to 41.4% from 35.5% year-over-year.

• Q4 operating income was $406.0 million, up from a loss of $633.5 million last year due to lapping a large divestiture loss.

• Q4 EBITDA (as adjusted) was $535.4 million, 24.3% of net sales.

Outlook and guidance

• FY25 net sales expected to rise 9.5–10.5%, driven by a full year of Hostess Brands and favorable mix/pricing.

• Adjusted EPS guidance for FY25 is $9.80–$10.20; free cash flow expected at $900 million; capex at $450 million.

• Fiscal 2025 guidance includes 2% comparable sales growth, with 2 points from volume/mix and 1 point from pricing.

• EPS growth is expected to be flat due to offsetting factors: Uncrustables investment ($0.35 headwind) and Hostess dilution recapture ($0.40 benefit).

• Fiscal 2026 is expected to be above the long-term EPS growth algorithm, driven by base business momentum, cost savings, Hostess synergies, and reduced stranded overhead.