The J. M. Smucker Company (SJM) 6 Jun 242024 Q4 Earnings call transcript

Good morning, and welcome to the J.M. Smucker Company's Fiscal 2024 Fourth Quarter Earnings Question-and-Answer session. This conference call is being recorded. [Operator Instructions] I'll now turn the conference call over to Aaron Broholm, Vice President, Investor Relations. Please go ahead, sir.

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

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

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

results Additionally, we concerning evaluate use on this encourage I you and release. statements read non-GAAP our disclosure to full press performance measures in morning's internally. the non-GAAP details to forward-looking

and Officer; Financial Chief Marshall, Chief Participating Tucker Executive Chair on this call President Mark and Officer. are Smucker, Board, of the

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

coming question first Our Instructions] today Barclays. [Operator Andrew is Lazar from from

slide both I pricing mentioned off nature start you your presentation, of to of coffee. some realize fiscal for [indiscernible] in expectation is in pricing the in the the space. Maybe not least But factor pass-through lot and volume from 'XX. at the positive something of or hearing and obviously food positive price a of, combination it's yet number a that the still packaged we're others is seeing And

what that together positive I'm -- side and that trying you the put the expecting the guess you're plan volume your of that I gives also some of to visibility just sort for guess I fiscal as on So get a given level pricing. you sense particularly underpins coming of year.

comparable X% of guidance remarks, pet year-over-year at a comparable X%. -- X manufacturing range, our Inclusive in we're midpoint the noted headwind. that contract prepared of pet we contracting is point growth in our growth demonstrating As

growth mix business within coming X coming seeing points X base that, see and pricing. from And around volume X%. we're really point we So from

in growth we our think by great to of the portfolio aspect the led continue momentum see the you about frozen of when Uncrustables. portfolio, handheld And

Meow see with also Mix to to or continue by snacks line performance. those momentum as food begin seeing key also be Home lead growth top of in We're contributors the From and We a to And level really well. opportunity in momentum dog in Away our channel that cat Milk-Bone.

And a then one. quick just

You $XX. finished the with And EPS at you're for year around EPS midpoint, $X.XX. around looking the

to close So year-over-year. flattish

growth costs. called And each solutions, headwind $X.XX Hostess offset from $X.XX in from largely no so a You investment you Uncrustables, other. benefit the stranded recapture year-over-year those from to EPS mentioned out impact of

guess I 'XX. neutral of items one-off net relatively the So the seem to in EPS

So be I'm trying for and EPS guess, that sense would would solid to sales flattish the despite some better a why comparable price. growth I of, include also you're looking volume get

and driving that that. sort I right just more in EPS I'm outlook growth curious a what if be would So flattish have of light of

way and business the you've Andrew, is for imply the outlined growth. formula growth that flattish base it Yes, doesn't in year-over-year correct,

being are and and level offset portfolio, but in the portfolio. by of peanut Away coffee our going see aspects of out really to softness From of our growth seeing Home portfolio that's our We we're International some butter that a and pet

base the demonstrating year-over-year that's to the business. flattish impact so And

from today JPMorgan. Your next question Goldman Ken is from coming

help your Aaron, thanks for all over years. the

be bit I the about will little an We to a year. for that miss sure. investment you ask will comment wanted XXXX

deeper bit dig a little into these are? to investments what trying Just

will that and percentage of marketing those the curious about sales are year-on-year. what as of mention did $X.XX similar it how we bit was learn are. if I You it And little a then out, they to very some recurring for just a could broaden more be Uncrustables. seems

you it being said wouldn't given previously spending. what and what ramping I'm Hostess about you're bit little up investment a it about why up more, go saying just year ad curious an

Ken, it's Mark.

just a So of things. couple

invest last brands. We aspiration be the consistent talking couple to up of about to this continue a to been our it marketing, percent sales over slightly Tucker years our as the can year. will total in of but have speak specifically

call out that investment would Uncrustables, that brand And demand-driven to in moving all encourage I largely right? would which way I building. supply-driven think growth But the to is growth, about we are is, us requires a the from

brand are we turn be on fortunate so And building. to to able now

marketing, so those and and And penetration supporting drive Uncrustables campaign digital to television which is in national through largely the a household trial. investments are brand really

to just not trial There related drive is and another down really the at it that's household to there's McCalla, a And price, component frozen component that is is and aisle penetration. expenses is facility. startup ultimately, Alabama merchandising. Uncrustables but the This to and support in promotion then awareness

the with $XX then at Sweet marketing that largely respect of Ken, is of full about And investment. just Snacks a to our the inclusion outlook or total you on million level. basis is Baked About million And as year-over-year year-over-year is $XX year growth of by change. company marketing, for the base Uncrustables marketing business balance year-over-year up led increase think the that that

say, in follow-up I are consumer given environment, your enough, somewhat think that of you my it's helpful. overall, that would it raising will right? up pricing coffee, given is fair be be, and I a That's prices to guess in we're challenging

coffee given about like facing. we're you more you're it's that It curious just you -- peers years your putting where level are investment me to your marketing, food focused And in talked have issues 'XX? that a asking marketing, some investing advertising I I'm enough and feel consumer in in of how also. in feels just about butter. those pet little peanut because you feel just Do maybe

might the question, Yes. a word, balanced. use is focus Ken. If good I Great word

particularly have coffee been Just in of making consumers seeking sure, value. butter out, as you point certain segments, a peanut and bit like

prudent so and had that just innovation time. the with we advertising a be we Obviously, to balanced will with very think a But competitive national now where we're butter which we peanut supporting normalize brands. our terms significant Jif, chocolate created has some as that's it of supporting in in market that campaign. we And responsibility and likely view environments, invest, over

we And investments so brands year. confident and taking our our balanced very our in road plans want that are just, high we the are feel we're marketing make to for full that -- that sure and and again, the solid that

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

as I relates guidance, start, go to it Maybe the I mean, think Hostess. through I if to particularly

Hostess seem I of And embedded quarter, first trending just challenge. bit think have sales a a sales that actually the through for given the be of the maybe least year, there been guide. in in where what's grow at embedded is to that would kind

help for that you phasing specifically the can maybe year? it either of So the guide about you're or thinking us within the piece reconcile through just how Hostess

Yes.

So a contribution the to math, Hostess is it's Hostess Peter, going that fiscal do of X% going FY about out we our top 'XX be from you in billion when XXXX. around sales to imply line line $X.X to And called outlook. top

as see third we quarters, that first up. couple around and quarters, sort so growth see get And the then quarter-over-quarter. our of you'll be fourth of year-over-year some or will continued as into flattish And in we to slightly

see it's not the only acquisition, way As over the objectives portfolio, of about pattern maybe we that that of time, and contributing near-term have. channel, pleased not around the only restoration to the growth very the think 'XX but as that our of our strategically, as to some little support opportunity synergies continue stabilization in a still we bit U.S. fiscal with convenience we're we the optimism traditional ongoing beyond. then revenue and with in retail just and continued but partners work to portfolio and And

I momentum be we'll of to continue for the positive think overall Hostess.

add, Peter, might it's I Mark.

Just going in the snacking. just brand. Sweet about little than a Baked obviously Snacks. very Baked that a is Obviously, really well. leading It's still excited brand integration a better still overall comment is Sweet the performing Snacks remain we Also

support, And into innovation all trend, support, our obviously, of time. to some existing other some that our so brand for with along that the brands brand expanding just Tucker's alluded over brand bode with joint and and merchandising channels pipeline well merchandising

very positive very X cultural and that between again, been our about going the has great. still just is fit well. So And the integration feeling businesses

about there EPS line fiscal above think growth on in then prepared a Okay. And being perspective a algorithm maybe, from your comments, in Mark, 'XX. I of kind was

Just of maybe gives be you that going you're as to you confidence you 'XX? here year unpack investment kind what kind can to an if of get fiscal the be long-term that able algorithm after into a above

it's to way see EPS fiscal momentum. from outlook, synergies productivity acquisition we continue fiscal confidence that overhead Yes. to growth about Hostess business We to get us down get pay the base what full cost stranded and think opportunity just give in Peter, realization also as relieving the or as confidence beyond debt a year of or the another ability savings ongoing gives 'XX, to to for 'XX. and advance us about and to think

question from Next from Wells Chris Fargo is coming Securities. Carey

So gross I'll a removal your and of the the contract for for year. XX% see on there? outlook you follow-up expectations gross Can margin the and just for the unpack manufacturing outlook margin, first, have then some full tailwinds you should yet just

Yes.

for 'XX fiscal gross on XX% is So outlook the year. our average margin for full

and of We benefits of We're early are seeing productivity the synergies. cost savings. our benefits the some seeing

muted the coffee through margin. But We have address the Obviously, gross to our in stranded have recovering acknowledge overhead. green. little been portfolio to we've bit of cost to gross divestitures of this implications as year is the because price that and a relieve margin supportive begun been want I and inflation

also the a spreads, the impact secondly, to due and an within And McCalla portion through seeing come handheld frozen bit facility. we're bringing of largely Uncrustables on

which And carrying (sic) margin, that so we're [ fiscal anticipated XX% 'XX, with into than exited 'XX. ] in better and we fiscal XX% a was

clarification, XX%. a Just as

Yes.

Okay. and including you Or rest? is the Very what's portfolio? perhaps your expand entire the of and roast pricing. ground? on coffee just the the the Can coffee for pricing follow-up clear. size this is a business, For on pricing it only example, coffee within then your on embedded and single-serve scope of across And pricing the

Yes.

deflationary along the pricing premium also bean the a increase level, our more the and in on and doesn't And the green portfolio. basket inflation aspect portfolio. we largely environments. the seen in have It arabica Just pass within recognition highest cost we both staying both that it's necessarily mainstream our include again, in of of of taken of at way the We've the robusta inflationary bean. single-serve coffee, side the pricing or and

Robert is Our Moskow next Cowen. from question TD today coming from

Question about coffee.

profits profit profits. you're some with pretty to coffee underlying the for your up coffee that tougher. year you competitive environment think down have profits a the out fiscal called because guiding in manage fair year? Folgers. profits it also line Typically, you've stable. become pool Is in costs. I managed to be intensity to has 'XX would commodity down you Typically, flat? And go say in down be Prices Why this competitive

Yes.

from So we Rob, top coffee by a to Volume, pricing be the year-over-year growth will are the going softer within actions. sort year-over-year. of volume largely segment, perspective driven line see

about And some just due we well. dynamics. kind to sort of of pause driven of Mark as As flattish let to elasticity. portfolio, overall and year-over-year portfolio the change. then we the we recovery the little the dynamics continue the costs think sort talk bit profitability a frames And in support of and to that's category impact price I'll are a of around seeing increased through then in over just time the marketing that of it largely just of and

Rob. Yes, sure,

activated intensity as for the more things. seems of my bit the you couple some comments, that and behaving category. consumer bit competitive to has around, in if the cautiousness consumer we're trade a Just we again, in Number category. the -- of but will, do is cautiously. one, right been have more down is what going category, to just acknowledging earlier There's think continue up a a the to The

to raise the offerings. Feel that, moving usually did with over support do the growth, to entire those is and we will brands, a time and shift a We're K-Cups we bit to of more across value. continue need activity of and invest allow to as with will into need normalize continue does. prudent partnership like in prices way portfolio to our consumers what some need type provide and with our business, to to we cold our to and it in on of what we when going cautious continue which again, spectrum And that they do now just things portfolio Keurig and our focusing the do, liquid

up? coming easy a doing Okay. second that second an cost the And in $XX comparison quarter is absorbed, quarter penalty. Is that supplier the regarding of million comparison like Or to the business? in of kind penalty you it

fiscal supplier other in of the the really second experienced that the support with full portfolio We of quarter payment offset fiscal last in in we delivering year. Yes. year, onetime levers the

really we pulled order to It to move just have so year we FY enables And impact some of forward. this doesn't restore it spend that to a us benefit fiscal back that material absorb against in in that as 'XX.

Our next Stifel. Smith from is from Instructions] Matt [Operator question coming

call there up growth the we next X investments steady? Or creating being over as fairly talked you brand think into as build the add, about the a the a growth growth versus $XXX Mark, pattern constraint. growth. million demand-driven on you is environment in should about it, demand-driven as supply revenue around that came shifting seen Uncrustables environment? years, that We've to And supporting fairly supply you look linear some phasing

that Yes, Matt, steady. relatively will our it is we be view have --

continue on that in brand aimed hear have with is don't there. investments household our which an growth. consumers are Uncrustable is. will line to largely really increasing still always It's capacity, us We do to know brought again, when our and And support There runway still in to awareness surprising demand so, and penetration. at, then we'll some the

new And aiming the tactics, consumers building is to and really we're so to brand reach opportunity what do. there some merchandising to continue and through that's traditional of

-- Tucker, manufacturing pet. And about follow-up sales talked on you lower contract for a question

about quarter. phasing a of fiscal about you we 'XX. You you million talk drag remaining talked for first through X the the million $XX That's about or as $XX the Can the million so year. in $XX move have point

off It's more the the half the of the months or X a in in of and then little indexed levels back first year. sort the first half year of it

come So the I balance your is then say half. second to in first come half will the would predominance and in the going

Citi. today is coming question Palmer from Next from Tom

actually your I on answers kind up follow wanted to Ken of to X earlier.

million. out at Uncrustables to And the the investments, then $XX I marketing works $X.XX be the think that you million. would if $XX indicated look business we base around roughly

kind Uncrustables fiscal And in in the unwind up fiscal noted marketing investments a we million versus Is total where So million $XX some of just start there between could of then, bridge these what in around in point being 'XX? you've perhaps difference the $XX Uncrustables 'XX. $XX is costs million? to start-up

$XX preproduction it X really you're that you equate it's There's areas think sort start-up continue would support. $X.XX of as aspect, along overhead. So investment, the with that Tom, One about to components, we X directionally, correct that the or about manufacturing to unabsorbed costs million. is is which the

so And that's one component.

The is And merchandising this of is brand to. shared what's Mark also development investment. the well. spoke the promotion is, as increase component $XX third in to that then And that the driving Mark support marketing and that's or around $X.XX second really all trial the Uncrustables million

get we as invest online get to but continue begin helps those will absorb this as coming salable beyond, we We we to or is contribution plant margin it happens more from fiscal McCalla in production manufacturing behind as favorable us sandwiches bring the 'XX what brand and and costs. absorption

ask wanted of elsewhere portfolio just then and outside to of -- actions in COGS kind pricing And or not. COGS anything kind pricing and out to of the consider then maybe to coffee, notable of not any Okay. in terms call on

green we're months. over where you what Actually, seeing relatively space. but No. holding the seeing this in at the Mark. volatility it's never really costs it's coffee is and has the been our say Tom, coming point, generally the steady we're never, activity And

Dickerson next Rob is Jefferies. from today question Our coming from

control the attack clarification mean like right, of previously, you until the let's like around really for get maybe there can are was or that you the And discussion co-manufacturing the right? certain year, just year. after you question overhead I potential address it. then a a to are feel through you I on can't, exit stranded there maybe there say, costs guess, areas kind I those exit before agreement. areas cost you Tucker, for the quick a as ease

did So the now, you those that's could could a as that be is through the I'm of That's think the think maybe such X be one. year, all year? And full could cost potentially today you're speaking there just we be about costs bit just there then to less little . curious, better as we get areas than

So Rob, we have year-over-year. in that today neutral outlined our impact a of overhead we prepared remarks net stranded

through around post So environment year. Post Holdings. impact to time fiscal kind year $X.XX fiscal services About network fiscal is we'll halfway And the really those we'll stranded agreement this really the from is last address us distribution same address frame, of pull 'XX. area year the $X.XX on that that this the levers move with impact from overhead to to or year enables transition our that for begin in

this and At overhead stranded outlook, impact for based the of aligns stranded I sort the $X.XX impact of game, it fiscal really really a year outlook best no any the is year-over-year to the year, address stage on see how to meaning that benefit this overhead will don't 'XX. our of teams benefits

Okay. algo but I far to ], long Got the [ follow-up just spoke not long-term as Is 'XX it. which high seems think single And being you then potentially way is, digit. that is away overhead part outlook provide above it's a driven that that or -- which business. conviction is relative on of comment a base of plus the to just say, benefit the there some by stranded assumption be fair would the partially year of that let's to the kind

correct. that's Rob,

benefit about tailwind 'XX, be overhead. stranded a think year we should fiscal relieving As or

today question Max from Gumport coming Paribas. is Next BNP from

could environment. rollbacks. you'd seeing I and pricing on was how front the about last Retail pricing commentary over if about just you you're this characterize the what weeks talk several curious

expecting Mark, and was it's that Max, question. I sure,

our a great with we've got So ships across adviser partnership customers and really retail dozen remember, categories. category our almost

transparent heard or sure types being as So coffee. increase front on use and bit manage generally different partnerships relationships customers. us promotions, price the the our and and of making those us, Obviously, in that speaking, continuing levers you've our we're or a with sort our of of we're to seeing that's trade merchandising have we retailers with little business-as-usual talk that whether about

cost least the And then see at largely hold seeing steady, can over basket months. for we what next several our

have to doesn't been simply that. just So pressure not from we undue quite additional our perspective, and justify cost usual, frankly, because, pricing business basket the seen really it's as down take

Great. trying together And of and we've then which around coffee lap that follow-up heard $X.XX is XQ terms my last of question is EPS. few tie call, in to a $XX on impact the the impact to the million in

So easy not sounds marketing it like also an some restore you it's because year. can lap this

missing So is there marketing base in more. the Is marketing? in that discussed. coffee it anything there business you've also think if $XX case, number of, of of restoration the up marketing base is the going why by terms that's I'm business million, was even I not that Is

Yes.

So onetime the levers pulled is that benefit have fiscal in that We're payment framework to supplier lapping the you we offset delivering of think year. 'XX correct. definitely Max, I the fiscal for the

support coming year, those are of largely items in fiscal the back business. activities of or Some this in

read that. up sort that We year-over-year. to of spend always the Coffee maybe making and it's will most on sure marketing slightly efficient. marketing the our be pencil into wouldn't are sharpening I flat necessarily

make investments the that do other well. within as have portfolio We we

portfolio and J. the the entire M. Company reinvesting the And that brands, in then in portfolio. continue our we doing throughout Smucker as to lastly of terms we're support of is,

coffee. not You'll that see in only

as and in segment Sweet handheld within see then in You'll that you'll see frozen also pet, spreads the well. and Snacks Baked it

further like end question-and-answer over comments. our back to for I'd floor the any closing We reached turn the of session.

shareholder deliver obviously feeling strong profitable position all just appreciate Well, energized has And teams, a then the to just we following remain growth a continue us you year everyone the and year and joining and our year good wanted and great value increase I to and work, do people this had in very to way thank this just to acknowledge we morning. through that our about financial 'XX. continue amazing

I want years. fantastic Broholm. over Aaron to thank moment He a to a just did just been take these many partner has

he future so support to we be in And his will endeavor. definitely Aaron want missed, and

they room moment but just just the do not a Cristal, in team want just So day. who with the our do pleased every employees to very in to Aaron to the I a take welcome today, room, Cristal the and team. is And and this one going every that great is of thank job. work

great summer. have thank day, So everyone their you, enjoys and hope and a

Thank and you. That conclude webcast. teleconference today's does

You a may this day. your have at participation wonderful time, We line you thank for your today. disconnect and