What Investors Should Know About JM Smucker's 1st-Quarter Results

Smucker raised its fiscal 2021 guidance

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Aug 25, 2020
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JM Smucker Co. (SJM, Financial) released its first-quarter results for fiscal 2021 on Aug. 25 before the market opened. Smucker's earnings and revenue surpassed FactSet consensus estimates and also improved year-over-year.

Quarter snapshot

The company's robust results were primarily driven by increased customer demand for non-perishables during the quarter.

The Orrville, Ohio-based company's adjusted earnings per share came in at $2.37, increasing 50% from the year-ago quarter. Analysts had anticipated adjusted EPS of $1.67. Revenue of $1.97 billion surged 11% compared to the prior-year quarter and surpassed estimates of $1.78 billion.

Reflecting on the company's performance, President and CEO Mark Smucker said:

"Our first quarter results exceeded our expectations, particularly for the coffee and consumer foods portfolios. Consumers continued to seek out trusted and iconic brands as we achieved strong growth across nearly all our categories. This exceptional performance highlights the strength of our portfolio, the potential of our consumer-centric growth strategy, and our commitment to operate with financial discipline."

Segment performance

Sales in the U.S. Retail Pet Foods segment inched up 3% on a year-over-year basis to $692.6 million owing to strong sales of private label products, which negated the decline in the Natural Balance brand. Profit climbed 4% to $125.3 million due to higher volume mix and reduced manufacturing costs.

In the U.S. Retail Consumer Foods division, sales improved 22%, or $87 million, thanks to higher volume mix driven by strong performance of the Smucker's Uncrustables and Jif brands. Segment profit increased $50.5 million, reflecting positive net impact of pricing and costs as well as higher volume mix.

Net sales in the coffee business rose 23%, or $105.2 million, due to strong growth of the Folgers and Dunkin Donuts brands. Profit climbed $53.7 million on the back of a favorable volume mix.

In the overseas market, the company's sales decreased 9%, or $22 million, owing to lower volume mix and unfavourable impact from the foreign currency exchange. Segment profit fell $1.4 million, primarily due to mounting input costs.

Outlook

The company has raised its fiscal 2021 guidance. Adjusted earnings are projected to be between $8.20 and $8.60 per share for the year, compared with its previous forecast of $7.90 to 8.30 per share. Smucker is expecting revenue growth of 0-1% vs. the previously forecasted decline of 1-2%. Free cash flow is expected to be within the range of $925 million to $975 million, up from $900 million to $950 million predicted earlier. According to the earnings report:

"We expect continued momentum in the second quarter and are pleased to raise our full-year guidance. We remain confident in our ability to deliver on our fiscal year 2021 goals, advance our long-term strategy, and deliver increased shareholder value."

Disclosure: I do not hold any positions in the stocks mentioned.

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