Key Takeaways From JM Smucker's 4th-Quarter Results
JM Smucker Co. (NYSE:SJM) released its fourth-quarter results for fiscal 2020 on June 4 before the market opened. Smucker's earnings and revenue surpassed Wall Street's estimates and also improved year-over-year.
Snapshot of the quarter
The company's robust results were primarily driven by increased customer demand for non-perishables during the quarter resulting from the Covid-19 pandemic.
The Orrville, Ohio-based company's adjusted earnings per share came in at $2.57, increasing 24% from the year-ago quarter. Analysts had anticipated EPS of $2.29. Revenue of $2.09 billion surged 10% compared to the prior-year quarter and surpassed estimates of $2.06 billion.
Reflecting on the company's performance, President and CEO Mark Smucker said:
"Our strong response is reflected in our exceptional fourth quarter results, with record-setting net sales and adjusted earnings per share. This exceptional growth is a testament to the strength of our brands and consumer-centric strategy, as consumers turned to trusted products to stock their kitchens as stay-at-home orders were implemented across North America."
Segment performance
Sales in the U.S. Retail Pet Foods segment inched up 6% on a year-over-year basis to $767.8 million owing to strong sales of private label products, which negated the decline in the Natural Balance brand. Profit climbed $18.4 million due to higher volume mix and reduced marketing expenditure.
In the U.S. Retail Consumer Foods division, sales improved 22%, or $86.9 million, thanks to higher volume mix driven by strong performance of the Smucker's Uncrustables and Jif brands. Segment profit increased $54.5 million, reflecting positive net impact of pricing and costs as well as higher volume mix.
Net sales in the coffee business rose 11%, or $55.3 million, due to strong growth of the Folgers and Dunkin' Donuts brands. Profit climbed $19.6 million on the back of a favorable volume mix.
In the overseas market, the company's sales increased $1.1 million thanks to higher volume mix, which was partly offset by the unfavourable impact from the foreign currency exchange. Segment profit fell $4.2 million, primarily due to mounting input costs.
Outlook
The company has provided fiscal 2021 guidance. Adjusted earnings are projected to be between $7.90 and $8.30 per share for the year. Smucker is expecting a top-line decline of 1-2%. Free cash flow is expected to be within the range of $900 million to $950 million. Smucker commented the following:
"Looking ahead, we anticipate increased at-home consumption to continue during the beginning of our fiscal year 2021 - though at a more moderate rate as stock-up purchasing in the fourth quarter is not anticipated to reoccur, and significant declines for the Away From Home business are expected to persist throughout the year. We remain focused on meeting the demand needs created by the current environment, while continuing to execute against our strategic priorities to position the business for long-term growth."
Disclosure: I do not hold any positions in the stocks mentioned.
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This article first appeared on GuruFocus.
