The J. M. Smucker Company (SJM) 23 Aug 222023 Q1 Earnings call transcript

Good morning. Good morning. And welcome to The J. M. Smucker Company’s Fiscal 2023 First Quarter Earnings Question-and-Answer Session. recorded participants being listen-only in is mode. conference and are all a This to re-queue questions additional limit two Please yourself and questions. if have you Broholm, I over the turn Vice Aaron will Relations. President, conference Investor now to call ahead, go sir. Please

on release Thank which results fiscal first corporate everyone as this our our has detailed you, for a are chance I press question-and-answer XXXX Kevin. in thank quarter morning. jmsmucker.com. you and Good at to remarks, joining session. had earnings available management’s hope prepared And review website morning’s our

We will call this session. also post replay of an morning’s at this audio of the conclusion Q&A

During differ today’s rely we make due uncertainties. and materially statements and on future about reflect forward-looking statements estimates call, to current risks expectations our These may and assumptions may performance. results plans and that actual

non-GAAP this are Additionally, Chief statements concerning disclosure evaluate Chief in this Financial release. to the President Tucker Board, I morning’s our measures Officer. Executive performance Chair forward-looking read to and Officer; encourage Marshall, non-GAAP call results and press we Mark on use Smucker, you of full the and on details internally. Participating

We will the call up the for up first question. now Operator, please questions. open queue

comes Thank Our Instructions] first Barclays. question Andrew you. Lazar from today [Operator from

live. now Your line is

Great. Good you question. the morning. Thank for

Andrew. Good morning,

mentioned -- You good morning.

favorability among recovery customers under year be the your food expectations from suggest result to away you some were and of to that prevailing guidance the when mentioned able quarter end is in the maybe the of margin in versus in some for full through pressure that others. fact contrast You overall the flow as concern what expected you margin kind commodity promoted last full year side and will is provided that guidance benefit gross to a space, raise a low essentially of the investors

XX% benefit So still your for roll from costs on a was if expect so year? margin over Thanks you and talk about a bit much. the view full you little progression about hoping could I your as price

Andrew, good morning.

having We environment. are a one overall that goods coming are is continuing impact we two, Jif better continue of change the that There is the on are impact high-teens manage is end outlook sold. margin that anticipated, year. cost areas our supported infrastructure in the uplift from to product not assess; what in to our mid- extent than the our fiscal this is as two for a That we so to experience in to that cost we said initial to inflation this within able we bottom our and costs range; continue has from to of

noted, we we of is you have XXXX we anticipate is what fiscal full that is XXXX actions from as original in pricing fiscal a mid-single guidance. carrying material our taken are for And year. digits digits still again, pricing high-single change the XX to for benefit about have the points There from front. full that As the on and fiscal of not well

to that, what that remarks, of prepared just, Pet mess sense times. you. sort I their trade are times the I seen that obviously what sort respect consumer, sort with to the macroeconomic tend the the I guess, And you have you stress in under guess, of down on around higher Food the on just there’s and And it’s you the Pet I end impression consumers was front pretty often. Food I then concept space, quick growth guess, the a noticed mentioned, was I with and value you maybe Got still in in past strong any Pet? not to follow-up. of it. on seeing as in get of number of when a wanted a Thank in of from

-- content comments be any Thank would any you. helpful. there So

Yeah. of spectrum, step participate, entire segments quick portfolio, in back When Andrew. will no and our of we all on Mark. if about Sure, you is total real the that think course, value includes a different. Pet you taking our just It’s categories and

if and base having snack just very that And option segment, but how this value quite pet that you by launched, which the a actually Mix the affordable likewise, one also Milk-Bone it with Milk-Bone quarter meets snacks so spot number the equation about for has many consumers. in also And the is, have of also premiumization, pets. frankly, gained think taken by Milk-Bone, cat Meow both last in the outpaced share, driven is and particularly innovation some we for

So, I think, that categories across strategically, with and we are our in consumers spectrum that we providing sure play want to options. continue to make

you. Thank

Your next Goldman Ken JP from from Morgan. question is coming

now line Your is live.

This Ken. Hi. Good morning. for Young is Nora

Good morning.

morning. Good

-- wanted good So ask I to morning. coffee. about

you producing So are you little could the remarks, you more a for expectations provide the talked improving here. on volumes in about bit your why from prepared year growth and then color for

your that and you seeing that you how they marketing are things in actions what much by will higher like, that promotional gives and driven you. is control, Thank that are of So versus confidence competitor spending?

we so very to price and dollar monitor start shares quarter, Mark. although, first anticipate as made at we we did so taking may around but drive we our lead the forward, fact that closely consumer question. cups across competitors very the helped add. encouraged comments But, those that will And our it’s with consumed are are category. growth and our pleased consumed we and did of of largely strong coffee performance. the some over in be it Coffee XX% are very behavior, were as continue we and are in we now seeing Again, Tucker the goes dollar expected Andrew’s I continue to Nora, by as all, to lead, still in move I elasticity And would we back just home. follow pricing, our

business we coffee our good So will total continue it. in about invest and we still to feel very

that new reinvigorate to Folgers We well. also with brand campaign advertising reinvestment as a noted the in

to are signs all and drive So balanced the business growth. continuing support

Thank you.

question next of is Peter Galbo from Our coming from Bank America.

is now Your live. line

you taking question. the Thank Hey, guys. for morning. Good

morning. Good

follow up I up Food. It comments Mark, solid gave on I food. on like a cat think, maybe just question both quarter, around some dog Andrew’s pretty Pet know seems actually treats you and XX%. to had

if year Thanks. trade but over you the you dog can terms on in just saw you So are refresh in full comment know what put in expecting and there? the point, kind I you in there? what of the the specifically at quarter of down balance brand this of haven’t Nutrish just

Thanks Peter. a Sure, lot.

obviously, food dog and that the that and have that first what we offerings quarter foremost, include for overall really -- dog I cat. our food, snacks Bits. set dog seeing includes and efforts has a a Nutrish in which sure but on good So of think, you very portfolio, have our Kibbles offerings that talked to part ‘N a our food does is and and our priority dog we optimizing stabilize But that is, narrower are the then consumer. priorities, stabilizing been making food of And clearer

unique meeting a have So in disruptions that and now benefiting been and markets. we disruption manage been demand. results is food how of to industry through not us supply of some And lot Smucker. There to there that entire in dog supply a as, from of part is the lot have are ensure of that that of been across we terms also our able have

in on contemplated gotten That’s it There the wanted And just just seems recovery it. to quarter. was understand Mark. that to move Got then, questions faster. have $X.XX back to like Tucker, the was Thanks, Jif. that -- just I given, but the helpful. this I pieces guess, moving of from, the guide And on I pretty couple just things then have $X.XX, you had a believe insurance a already meaningful clarify morning, but prior wanted $X.XX that? come on in

overall? in think on quarter, relates you so were first second quarter the to Thanks. $X.XX as XQ. quarter then the maybe and understand into impact maybe a I still help bit anything just else to But little us there just it can Jif the

Absolutely. Yeah.

the both have we opportunity impact come with is back with you estimate came a year as know, a Jif did where that had the beyond fiscal again, to bit and point, refill the from in recall. we $X.XX benefit, about respective $X.XX So, in the into $X.XX. we to able beginning and to contemplate so manufacturing That to statement to the may QX a have but now did the point, left it then go resides, your into but retailers we We see the shelves To we contemplated standpoint peanut at recovery. butter the associated were was recovery faster which $X.XX To reduce $X.XX QX. from $X.XX. material enabled Therefore, in nothing be impact of quarter. and insurance always the first a little to QX, the anticipated reading Folks estimate. classification in income estimate your us

Thank you.

Next is Chris Growe from from question Stifel. coming

now Your line is live.

morning. Good

Good morning.

how quickly we more insurance want into figure? a on is of incorporated just year, Hi. on coming the that that that’s I the to just recovery be sense first I quarter, going play on just And have do that to make you wanted and the quarters? to there in to Jif follow clear, to is discussion, out insurance get sure recovery come throughout $X.XX

a did recovery. in have Chris, $X.XX still insurance and QX in quarter the the $X.XX impact the anticipated QX. exposure There’s

insurance further to best as know, recovery fair say? as no you that Okay. And is

Correct.

and We $X.XX have estimates… the what the recovery total appropriate is factored factor in for insurance our we believe

Okay.

through that was Again, QX just the acknowledged to predominance impact the that came and I you against $X.XX. the in

had the Uncrustables throughout think And quarter. then That to -- Okay. the pick up I you have one you. just expect on do you sense. Thank other makes question growth and

year. we to it expect as through go You improve the

matter the And accelerate picked today? of to dramatically. chain I capacity coming of what year, help online know kind way, it’s we seeing then mostly challenges fact, would from Longmont this the you the here, later Do it’s as continuing In just there you even are of have supply out a brand growth quite from further have that grow up and the should grow?

Chris, it’s Mark. Yes.

to very and remains related everything still on track. of We are Uncrustables terms bullish production in it on

We and facility. Longmont are is are well we finishing facility McCalla, construction the which the Alabama Denver that’s in expansion, of the underway

have so improvements in as to as remember, going online is we not seen Longmont support us but the Kentucky, all years, well of demand. all of to efficiency meeting are that a of McCalla couple that, come And going for

all get in ability over words, that time. caught supply runway So, have, over brand the meeting and demand, time are we expect to on up with quite so and is production do although, significant quite not billion we again, to other $X do not of intended the work demand, to that we is

you. Thank

Moskow question from Our from coming next is Suisse. Robert Credit

Your now is live. line

for assumptions make for can few I I the the couple have quarters year questions. rest your then next are growth doing down well a of From profit to make maybe A been sure understand just that right. profit assuming to Jif given what looks follow-up. and of Hey. operating want especially recall profit, the tell, Is year. sure flattish a it the bit first of little ahead I the for would I you quarter, want the I even but and of true, like am ex quick math kind last

$X.XX, coming you is good to SG&A brought but $X.XX that the sold, products that first then comprises at from $X.XX. the up got mix, is $X.XX guidance the of of about have is benefit $X.XX morning. from $X.XX about estimate about volume $X.XX cost coming of Rob, from your range $X.XX that embedded Jif We $X.XX of the that then from going and in midpoint

at being currently we would I that recovery about consumer balance the Jif how Home with we continue and of that’s momentum coffee maybe through just offset seeing the follow are think acknowledge continue from continue then In X.XX% And see you you of terms [ph]. the then year, flows. as offline up from Pet as for momentum see to earnings of momentum. can from we with Away that going X.XX% and International is of lastly your flows, construction rest topline and the But help we the that, by inclusive partially the to the the momentum to as year, midpoint

sense of thinking a So bottomline both to topline. you give are about and we how just

was your Okay. ago, recall. $XX down the but the maybe Retail specific Foods was Consumer in about of segment, that the a million versus $XX profit more And year Jif million then,

-- rest -- for recall, tracking the this a ahead the So year? is and this profit division’s well that should ahead year of well the of therefore, a growth assume we division commensurate a ex profit with ago in higher

up pick quarter the a the should first associated sequential gets recall. impact third peanut Jif on profit it The fourth quarters, second, basis and butter with Yeah. growth in beyond the as

you. Thank

Jason English is next question Goldman coming Sachs. Our from from

Your line is live. now

Hey. Good morning, folks.

morning. Good

questions. Hey, quick Two there.

filed there, since last around in you K, your guys down and was that your So reported spend last you it year. advertising XX% revealed

Given delivering so reinvest and why delivery that over take advertising? you are far, the of over back not some into

just I spend Yeah. start the Why fiscal marketing with around our don’t year. for assumption

experience did associated with first quarter SG&A in we the So some favorability marketing.

we health we and planned year our it’s the ongoing dollars overall growth However, the spend the and of maintaining and for brands at profitability of reinvestment company. that beginning spending those committed the sales are important X.X% to of guidance remain still believe against net the our brands. We and of of

percent and just to is investment. a year. through that would the some rest net inflation good our other I It’s has bang as the Mark. just And our buck up Jason. getting slightly topline are words, our deliver getting driven to are in the the degree, commitment brand of on in that mind they is is efficiencies, would we that are dollars going invest reinforce by of because in keep to and against committed brands the up more continue efficient we dollars later the some pricing our sales. that, dollars and to flow mute of also in assured solid to that Hey, results that for helping spend marketing some But spending

Okay.

better. the I on answer a I had think feel expect to lot the question -- Okay. didn’t was clarity I I don’t you walk And volume away, coffee to get why and back like of on there.

-- if you timing expecting so, it is are happen cadence to some of is in direct or feather promotions gaps, ask expect those will to that? question, price you because it dampen follow, closing competitors the what’s are I seeing if answer, So the more a and is price it that’s therefore and to you because already maybe the gaps, and

price It’s of former. more seeing and more you well competitors It’s a of aware fact are whether that’s number through whatnot. manage of, trade We the we that the levers as are follow.

-- those brand, our the will do So the planned period, promotions to of normal course, we to through to we lead. follow holiday continue expect our but continue have competitors support

Thank you.

Next question is coming Morgan from from Pamela Stanley. Kaufman

live. now is line Your

morning. Good Hi.

Good morning.

year pricing? of actions and and to pricing just have I going implemented or will had comes pricing whether in categories is there a pricing market the question So be further there you planned if which on that be all your for the incremental through, so, in

of have price consistent the will pricing, Pam, price, to we have so recall consistent environment, it remains we you implemented majority -- seen are generally when finished. I have never believe a there word it’s move in up if but still been the we costs, or in And that But down consider inflationary obviously, an we further do would pricing delivered use so. do -- be been may we of we we moving that it our and we in both as our coming on will whether more carefully or a year taken not watch be required the last in quarters. and depending up majority

And Pam, took the that guidance our inflation of to cost timeframe deliver acknowledge the in that fiscal I just reflects pricing the would in recovering our year. spring order we support actions in

you just all? and this your you interest year is an evaluating this that’s what changed have criteria potential strategy, acquisitions question second your remind M&A us comments and can in does given earlier my then And the been at any helpful. where your That’s stand, Thanks. if Okay. update potential acquisitions, is, on about

that. water, that and hasn’t in way our generate is refresh across always want The I again, a to return. we answer in But, question desks. good memory short a it opportunities collective in on your evaluating do invest The prudent Sure. lines have criteria constantly to the that and businesses am happy changed our to come will

And in existing out those priorities. round in significant as of interested potentially to last would over our leadership that quarters, tried our would one portfolio of newer categories We be categories position looking existing are portfolio in pet or our acquire at or a is clearly, portfolio meaningful that our more interest. unless have we the that we would ability new in be category we add the in in snacks a we acquisitions potentially acquisitions our that we well. would are to extent meaningful coffee, be To in, interested don’t So, we have articulated that key categories. several have as clear that categories enter not participate the could or we to

or it’s positions quite existing rounding leadership So portfolio. simply out our meaningful

you. Thank

question from Cody next coming is UBS. Ross Our from

now line live. Your is

questions. there. you Thank Hi, for taking our

Good morning.

bit in to from here, in Pet Did and Thanks. your the from want from chain stemming just little can acceleration a seeing what you supply have the mid-teens. nice seen discuss market a perspective? any you on sales I touch benefit are you organic pet. has share headwinds replenishment quarter inventory

answer the The question first to is no.

Okay.

there, question, of on with seen continued second -- focus, share was the Meow we growth. good share And areas your pleased part point share very around of We Mix. am and again, Meow Milk-Bone are, our share? growth a Mix results market on sorry, about Clearly, full the have Milk-Bone I Cody, and

that investments we dog spoke So are really And playing business. there earlier pleased, again, efforts segments. the and our with stabilize those about out just two food our way in then to

that. earlier revised EPS one want you to I go comments your helpful. of That’s guide. just back Thank then about to for And Tucker’s

in today versus SG&A higher Can Thank SG&A your about provide that just you EPS different outlook. what’s to details you. your is mentioned prior? about $X.XX You more adding outlook

maintaining of sales. as reinvestment consistent in of X.X% a Cody, the net marketing our is spend business of So, what’s percentage

SG&A how are in there. the some the that what of So the through quarter balance just we is and want Rather, discretionary or came trend trajectory that change we to there’s in continue through favorability side seeing on first year. the no

you. Thank

coming next is Alexia Our Howard from from question Bernstein.

Your now line live. is

Good morning, everyone.

morning. Good

morning. Good

Okay.

levels? may can it the a or over to about across whether levels guys there have to is comments retailers couple seen ask down retailer up. run -- companies need have So next it there retailer about of do shift safety to low, sit been I you if be the inventory service quarters? and conversely portfolio to run been varying Where We the and need from levels for needs be different inventory holding have stock a

Alexia, out we ordinary on really have our not seen inventory levels the anything of businesses. on

So for as us usual. it’s pretty much business

you very consumerships in much. prepared comment environment Thank Thank pass your that you Great. the now the is what the I then notes that, on. just hit are made key consumer And working are evolving. Could I you remarks, way through and right of high obviously, you the you. it a think, will

lot a Yeah. the a just -- sentiment been more There’s in being little a in and press media lot around bit the consumer cautious.

bit We that. have seen a of

I entire to there’s Similarly, store more have think of look My benefited be not and these notion down. times you we normal in tend is that back if to center some across are that. label the some than they of number around to resilient trading been sure would at from and so is notion categories and response private label categories, broader pretty again, although you offering this pre-pandemic our discussions making value one, and be it private levels. the share twofold; we seen of this have spectrum that growth, of brands

of we that is is there point there to our although a the So categories, brands. continue just our would to are shifting I in in and categories resilient will the fact -- little invest some bit

Thank you.

RX is Scott from Capital. from Our next question coming Mushkin

Your now line live. is

wanted around clarify taking Thanks, area. I actually guys. comments question. the for to the some food pet Thanks of my

on think and that haven’t guess, you I were think, So it correct? said, because was people competitors. inventory that of that’s been I guys before taking, there with some you the get Is I perspective that are out am mentioned did stock issues, I fine what replenishing, I

lot space, have I largely chain said a lot of have a been that are are that lot broad of there supply and is complicated us -- But has that the stay industry formulated our the in a for on of chain managed broadly. because and to What so pleased the allowed pet speaking Scott, and ourselves and supply. we and ability having a food products through where input, shelf ingredients which pet bit very was to makes those only in have challenges affected earlier, challenges just more supply

got retrenchment think year, That’s of were next off, Okay. the do would I but out little Then about a maybe clarification. good ask to Appreciate been wanted ranging. I if the as how guys a going to distributors as to way, that’s to have nothing to about talking think year a how happen bit going if company happen, you if cools did, actually your and what’s happen? you after, some is guys long it. it that businesses that -- inflation it Thanks. look we here

But similar Well, relief would be be we that to answer Scott, question, prudent a hard first it’s prices disciplined lot we great. still about of up -- But than cost my of been more and really had lower and this we because can’t any -- that. point, volatile, would the that have would color we provide say. prudent we simply all, take marketplace, always it’s when if disciplined at -- a over We there’s unknowns to very and little similarly time. we be in to

remain and the to of we committed and that, business. add also would I our profile Scott, margin brands profitability

what brands to continuous we continue health also productivity will as continue those strategy to as continue to company. we our in reinvest ongoing behalf we of so the we to business of to long-term think environment, the will or forward, will through and mean inflationary programs move on improvement And continue and navigate this

you. Thank

Rebecca Our Scheuneman next from coming from Morningstar. question is

now live. is line Your

Great. question. for Good thanks morning the and

question has first my So do with to coffee margins.

I expected, basis XXX some issues know volume more was I points there. down they the think I bit were obviously, that That in than quite about a that there’s quarter.

are also had Folgers mentioned investing you that marketing. in You

we I volumes… look wondering, as kind and the like, of am year at So even just if

Yeah.

in there, year-on-year … margins to start expect the given those should perform still we marketing? increases to better be lower

coffee story is the But this really our driving a is one the margin cost first year-over-year So recovered basket, be basis to has or cost of dollar-for-dollar component what inflation pressure. needed cost quarter that that is is as on and so that largest level inflationary of through the would plus we back getting take historical us will anticipate move as But coffee to sequentially fiscal the balance year, still some margins time improve. our we environment. the XX% them this we navigate

Okay. second And you. then Great. my question is dog food. Thank about

mentioned the consumers the referring some or are had you what You trading down super consumer kind given I evolving well-positioned is think prepared dog in release either is the believe and you premium you to press habits. inflation, the see to from more of comments of that could premium for there food mid-tier.

you. just is you you all, First could you yet that something or if that seeing? of are are Thank is to, and so, that what seeing that referring anticipate be you

bit Rebecca, is there’s about making We, this fact dog food the again, a done done benefit good we thirdly, a into a again, the that. through There’s little sure down. the the of are that comments Make then, value we going earlier of of we that benefited managing quarter stabilize job supply to we to work business. of have back there issues. And in to a the a providing supply bit sure and trading our of consumer, is, brands. have are my managing constraints business the through some regard, our that to of we trading little around have the bit of some because lot

Thank Okay. you. Great.

you. Thank

turn management to conclude. of back question-and-answer to end now reached session. will have We the call I our the

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All this all for our you and for may now day. a participating conference parties concludes Everyone, call nice disconnect. have Thank today.