Company Again Achieves Record Full-Year Sales and Earnings
Smucker's, Jif and Crisco Brands Continue to Grow
Multifoods Acquisition Adds to Base Business Growth
Company Provides its Fiscal Year 2006 Outlook
ORRVILLE, Ohio, June 16 /PRNewswire-FirstCall/ -- The J. M. Smucker Company (NYSE: SJM) today announced results for its fourth quarter and fiscal year ended April 30, 2005.
Fourth Quarter Results
Company sales were $491.5 million for the fourth quarter of fiscal 2005, up 57 percent compared to $312.4 million in the fourth quarter of 2004. The acquired Multifoods businesses contributed $154.1 million to sales in the fourth quarter of 2005. Excluding the contribution of Multifoods, sales were up eight percent. Income from continuing operations was $26.8 million, an increase of 27 percent over $21.1 million in last year's fourth quarter. Sales growth and improved margins on the Company's existing business and the addition of Multifoods were mostly offset by merger and integration costs, an increase in restructuring expenses, start-up costs at the Company's Uncrustables(R) facility in Scottsville, Kentucky, and an increase in interest expense over the fourth quarter of last year. Earnings per diluted share from continuing operations for the fourth quarter of 2005 were $0.45, compared to $0.42 last year.
Income from continuing operations for the fourth quarter of 2005 included pretax merger and integration costs of $6.1 million, or $0.07 per diluted share, and restructuring charges of $5.2 million, or $0.06 per diluted share. Included in other income for the fourth quarter of 2004 was a net gain of approximately $0.02 per share related to the sale of the Company's Watsonville, California, facility. Income from continuing operations for the fourth quarter of 2004 included pretax merger and integration costs of $1.3 million, or $0.02 per diluted share, and restructuring charges of $7.0 million, or $0.08 per diluted share. Excluding these costs in both years, the Company's income from continuing operations was up 29 percent and earnings per diluted share would have been $0.58 and $0.52, in the fourth quarter of 2005 and 2004, respectively, an increase of twelve percent.
"Once again, our Smucker's(R), Jif(R) and Crisco(R) brands experienced good sales growth in the quarter, and the addition of the brands we acquired from Multifoods enhanced our performance," said Tim Smucker, chairman and co- chief executive officer. "For the year, the strong performance of our brands enabled us to absorb the startup costs at our new Uncrustables(R) facility and still achieve record earnings. We have positive momentum for the new year and are well-positioned to continue to grow profitably."
Net income for the fourth quarter of 2005 was down slightly to $22.1 million, or $0.38 per diluted share, compared to last year's fourth quarter net income of $22.2 million, or $0.44 per diluted share. Included in this quarter's net income was a loss from discontinued operations of $4.7 million, or $0.07 per diluted share compared to earnings from discontinued operations last year of $1.1 million, or $0.02 per diluted share. The operations of the Australian-based Henry Jones Foods business, the Brazilian operations, Smucker do Brasil Ltda., and the Multifoods' U.S. foodservice and bakery products business, all sold during the year, are included in discontinued operations.
Full-Year Results
Sales for the year ended April 30, 2005, were up 49 percent to $2,043.9 million, compared to $1,369.6 million in 2004. The acquired Multifoods businesses contributed $626.2 million to sales in 2005. Excluding the contribution of Multifoods and the industrial business, which was divested, sales were up five percent.
Income from continuing operations for 2005 was $130.5 million, or $2.26 per diluted share, compared to $111.3 million, or $2.21 per diluted share last year, an increase of 17 percent. Income from continuing operations for 2005 included pretax merger and integration costs of $18.0 million, or $0.20 per diluted share, and restructuring charges of $13.3 million, or $0.14 per diluted share. Income from continuing operations for 2004 included pretax merger and integration costs of $1.3 million, or $0.02 per diluted share, and restructuring charges of $15.8 million, or $0.19 per diluted share. Excluding these costs in 2005 and 2004, the Company's earnings per diluted share from continuing operations would have been $2.60 and $2.42, respectively.
"We are pleased with our performance for the year. We also remained focused on implementing our core strategy by selling several businesses that were not consistent with owning and marketing leading North American icon food brands sold in the center of the store," commented Richard Smucker, president and co-chief executive officer. "In addition, we made significant progress on our integration of the Multifoods businesses and took actions to generate greater supply chain savings in order to position us for improved profitability."
Net income for 2005 was $129.1 million, or $2.24 per diluted share, compared to $111.4 million, or $2.21 per diluted share last year. Included in net income for 2005 was a loss from discontinued operations of $1.4 million, or $0.02 per diluted share. Income from discontinued operations for 2004 was $0.1 million.
The Company uses earnings from continuing operations, excluding restructuring and merger and integration costs, as a key performance measure of results of operations for purposes of evaluating performance internally. These non-GAAP measurements are not intended to replace the presentation of financial results in accordance with U.S. GAAP. Rather, management believes the presentation of results excluding such charges offers additional information to investors to facilitate the comparison of past and present operations and provides a more comprehensive understanding of the financial results. A reconciliation of non-GAAP measures to earnings from continuing operations for the current quarter and year is included in the "Financial Highlights" table.
Scottsville Plant
During the first quarter of fiscal year 2005, the Company commenced operations of its Uncrustables facility in Scottsville, Kentucky. The Company has incurred start-up costs consisting primarily of additional labor, materials, and unabsorbed overhead. Production throughputs continue to improve at expected levels, and production is expected to continue to improve throughout 2006. The Company incurred approximately $6.8 million, or $0.07 per diluted share, in costs associated with the start-up during the fourth quarter of 2005 and $19.0 million, or $0.21 per diluted share, for the full year. Sales of Uncrustables for the year were approximately $60 million, an increase of 20 percent over last year. The Company continues to fully supply its customers and expects to have sufficient supply to meet future forecasted demand.
Margins
Operating income in the fourth quarter of 2005 increased 40 percent from the fourth quarter last year. As expected, operating margin decreased from 10.2 percent in the fourth quarter of 2004 to 9.0 percent in the fourth quarter of 2005. The Company's gross margin decreased from 33.2 percent in the fourth quarter of last year to 30.6 percent in the fourth quarter of this year, due primarily to the impact of the Multifoods businesses, which currently earn a lower margin than the Company's base business, and higher commodity costs. The Scottsville start-up costs, an increase in restructuring costs, and merger and integration expenses further impacted operating margin.
SD&A expenses as a percentage of sales declined from 21.9 percent in the fourth quarter of 2004 to 19.4 percent in the current quarter. For the year, SD&A as a percentage of sales declined from 21.7 percent to 20.0 percent.
Operating income for 2005 increased $43.8 million, or 25 percent, over last year and operating margin declined from 12.9 percent to 10.8 percent, due to the same factors impacting gross margin.
Interest expense increased from $1.3 million in the fourth quarter of 2004 to $6.2 million in the fourth quarter of 2005, and from $6.2 million in 2004 to $22.6 million in 2005, as a result of an increase in the Company's debt outstanding associated with the acquisition of Multifoods.
Segment Performance
U.S. Retail Market
Sales in the U.S. retail market segment for the fourth quarter of 2005 were $325.3 million, compared to $218.1 million in the fourth quarter of 2004, an increase of 49 percent. The Multifoods' brands contributed $79.0 million of the segment's sales in the quarter. Excluding the contribution of Multifoods, sales were up 13 percent for the quarter. Sales for 2005 were $1,405.2 million, compared to $1,002.3 million last year, an increase of 40 percent. The Multifoods' brands contributed $356.2 million of sales in 2005. Excluding the contribution of Multifoods, sales were up five percent for the year.
During the fourth quarter of 2005, sales in the consumer area increased 23 percent over the fourth quarter of last year, primarily driven by the addition of Hungry Jack(R), growth in the Smucker's and Jif brands, and continued growth of Uncrustables in the retail channel. In the consumer oils and baking area, sales more than doubled in the fourth quarter of 2005 compared to 2004, due to the addition of the Pillsbury(R), Martha White(R), and Pet(R) brands and an increase in Crisco sales of over 20 percent.
Special Markets
Sales in the special markets segment were $166.2 million in the fourth quarter of 2005, compared to $94.3 million for the fourth quarter of 2004. Multifoods contributed $75.1 million of the segment's sales in the quarter. Key contributors included the beverage business, up nine percent, and the foodservice business, up seven percent. Excluding the contribution from Multifoods and the U.S. industrial business, which the Company divested during the year, sales in the special markets segment increased five percent in the fourth quarter of 2005 as compared to the fourth quarter of last year.
Sales in the special markets segment were $638.7 million in 2005, compared to $367.3 million last year. Multifoods contributed $270.0 million of sales in 2005. Excluding the Multifoods sales and the U.S. industrial business, sales in the special markets segment were up five percent compared to last year.
Outlook for Fiscal 2006
Results for 2006 will include an additional one and one-half months of Multifoods' operations compared to 2005. Operations for Multifoods in 2005 were included from the acquisition closing date of June 18, 2004.
The Company expects revenues in 2006 of approximately $2.16 billion, an increase of six percent. Growth in the base business and an additional month and one-half of Multifoods operations in 2006 will be partially offset by a reduction in sales due to the exit of the Company's industrial businesses.
The Company remains committed to increasing its earnings per share by its long-term annualized growth goal of eight percent, which equates to an earnings growth of approximately ten percent. The additional share count for 2006 accounts for the difference in the growth rates. This goal applies to continuing operations and excludes the impacts of restructuring, merger and integration costs, and gains and losses on sales of assets. Earnings for 2006 are expected to include approximately $12 million, or $0.13 per diluted share, in merger and integration costs and approximately $8 million, or $0.09 per diluted share, in restructuring costs. Capital expenditures are expected to approximate $75 million to $80 million in 2006.
Conference Call
The Company will conduct an earnings conference call and webcast on Thursday, June 16, 2005, at 8:30 a.m. E.T. The webcast can be accessed from the Company's website at http://www.smuckers.com. For those unable to listen to the webcast, an audio replay will be available following the call and can be accessed by calling (888) 203-1112 or (719) 457-0820 and entering replay pass code 9042640. The audio replay will be available until Thursday, June 23, 2005.
About The J. M. Smucker Company
The J. M. Smucker Company (http://www.smuckers.com) was founded in 1897 when the Company's namesake and founder sold his first product -- apple butter -- from the back of a horse-drawn wagon. Today, over a century later, the Company is the market leader in fruit spreads, peanut butter, shortening and oils, ice cream toppings, and health and natural foods beverages in North America under such icon brands as Smucker's(R), Jif(R) and Crisco(R). The family of brands also includes Pillsbury(R) baking mixes and ready-to-spread frostings; Hungry Jack(R) pancake mixes, syrups and potato side dishes, and Martha White(R) baking mixes and ingredients in the U.S., along with Robin Hood(R) flour and baking mixes, and Bick's(R) pickles and condiments in Canada. For over 108 years, The J. M. Smucker Company has been headquartered in Orrville, Ohio, and has been family run for four generations. Since the 1998 inception of FORTUNE Magazine's annual survey of the 100 Best Companies to Work For, The J. M. Smucker Company has consistently been recognized as one of the top 25 companies to work for in the United States. The J. M. Smucker Company has over 3,500 employees worldwide and distributes products in more than 45 countries.
The J. M. Smucker Company Forward-Looking Language
This press release contains forward-looking statements, including statements regarding estimates of future earnings and cash flows that are subject to risks and uncertainties that could cause actual results to differ materially. Uncertainties that could affect actual results include, but are not limited to, the ability to achieve the amount and timing of the estimated savings associated with the Multifoods acquisition, the timing and amount of capital expenditures and merger and integration costs, success and costs of new marketing and sales programs and strategies intended to promote growth in the Company's businesses, the ability to successfully implement price changes, particularly in the consumer oils and baking business, the Company's ability to effectively ramp up and manage capacity related to Uncrustables, the strength of commodity markets from which raw materials are procured and the related impact on costs, and other factors affecting share prices and capital markets generally. Other risks and uncertainties that may materially affect the Company are detailed from time to time in the respective reports filed by the Company with the Securities and Exchange Commission, including Forms 10-Q, 10-K, and 8-K.
The J. M. Smucker Company
Unaudited Condensed Consolidated Statements of Income
Three Months Ended Year Ended
April 30, April 30,
2005 2004 2005 2004
(Dollars in thousands, except per share data)
Net sales $491,454 $312,389 $2,043,877 $1,369,556
Cost of products sold 340,616 203,865 1,383,995 878,491
Cost of products
sold - restructuring 689 4,845 2,466 8,464
Gross Profit 150,149 103,679 657,416 482,601
Selling, distribution, and
administrative expenses 95,270 68,502 407,839 296,954
Other restructuring costs 4,496 2,162 10,854 7,362
Merger and integration costs 6,069 1,266 17,954 1,266
Operating Income 44,314 31,749 220,769 177,019
Interest income 2,254 809 4,683 2,761
Interest expense (6,196) (1,296) (22,555) (6,209)
Other income - net 1,232 2,853 1,717 3,599
Income from Continuing
Operations Before
Income Taxes 41,604 34,115 204,614 177,170
Income taxes 14,818 13,013 74,154 65,872
Income from Continuing
Operations 26,786 21,102 130,460 111,298
Loss on sale of discontinued
operations, net of tax (3,290) - (1,253) -
Discontinued operations,
net of tax (1,384) 1,078 (134) 52
Net Income $22,112 $22,180 $129,073 $111,350
Earnings per common share:
Income from continuing
operations $0.46 $0.42 $2.29 $2.23
Discontinued operations (0.08) 0.02 (0.03) 0.01
Net income $0.38 $0.44 $2.26 $2.24
Income from continuing
operations - assuming
dilution $0.45 $0.42 $2.26 $2.21
Discontinued operations -
assuming dilution (0.07) 0.02 (0.02) -
Net income - assuming
dilution $0.38 $0.44 $2.24 $2.21
Dividends declared per
common share $0.27 $0.25 $1.02 $0.94
Weighted-average shares
outstanding 58,261,152 49,944,566 57,086,734 49,816,926
Weighted-average shares
outstanding - assuming
dilution 58,963,433 50,657,023 57,748,780 50,395,747
The J. M. Smucker Company
Unaudited Condensed Consolidated Balance Sheets
April 30,
2005 2004
(Dollars in thousands)
ASSETS
Current Assets:
Cash and cash equivalents $58,085 $104,551
Marketable securities 17,739 15,074
Trade receivables 145,734 93,617
Inventories 284,487 179,863
Current assets of discontinued operations - 46,202
Other current assets 49,806 11,544
Total Current Assets 555,851 450,851
Property, Plant, and Equipment, Net 521,101 317,521
Other Noncurrent Assets:
Goodwill 951,208 523,660
Other intangible assets, net 469,758 317,237
Marketable securities 59,074 41,589
Other assets 78,902 33,267
Total Noncurrent Assets 1,558,942 915,753
$2,635,894 $1,684,125
LIABILITIES & SHAREHOLDERS' EQUITY
Current Liabilities:
Notes payable $33,378 -
Current portion of long-term debt 17,000 -
Accounts payable 105,290 62,232
Current liabilities of discontinued operations - 8,548
Other current liabilities 152,624 104,440
Total Current Liabilities 308,292 175,220
Noncurrent Liabilities:
Long-term debt, net of current portion 431,560 135,000
Other noncurrent liabilities 205,242 163,212
Total Noncurrent Liabilities 636,802 298,212
Shareholders' Equity, net 1,690,800 1,210,693
$2,635,894 $1,684,125
The J. M. Smucker Company
UNAUDITED SUMMARY OF QUARTERLY RESULTS OF OPERATIONS
Summary of Quarterly Results of Operations
The following is a summary of unaudited quarterly results of operations
for the years ended April 30, 2005 and 2004.
(Dollars in thousands, except per share data)
Income From
Continuing
Quarter Ended Net Sales Gross Profit Operations Net Income
2005 July 31, 2004 $413,267 $144,188 $27,487 $32,848
October 31, 2004 588,922 188,881 40,663 38,005
January 31, 2005 550,234 174,198 35,524 36,108
April 30, 2005 491,454 150,149 26,786 22,112
2004 July 31, 2003 $339,176 $119,426 $26,357 $25,785
October 31, 2003 374,203 132,970 32,719 32,067
January 31, 2004 343,788 126,526 31,120 31,318
April 30, 2004 312,389 103,679 21,102 22,180
Earnings per Common
Share -- Assuming
Earnings per Common Share Dilution
Income From Income From
Continuing Continuing
Quarter Ended Operations Net Income Operations Net Income
2005 July 31, 2004 $0.51 $0.61 $0.50 $0.60
October 31, 2004 0.70 0.65 0.69 0.65
January 31, 2005 0.61 0.62 0.60 0.61
April 30, 2005 0.46 0.38 0.45 0.38
2004 July 31, 2003 $0.53 $0.52 $0.53 $0.51
October 31, 2003 0.66 0.64 0.65 0.64
January 31, 2004 0.62 0.63 0.62 0.62
April 30, 2004 0.42 0.44 0.42 0.44
The first quarter of 2005 and all quarters of 2004 reflect the
restatement of previously reported quarterly information for discontinued
operations.
Annual earnings per share may not equal the sum of the individual
quarters due to differences in the average number of shares outstanding
during the respective periods.
The J. M. Smucker Company
Unaudited Financial Highlights
Three Months Ended Year Ended
April 30, April 30,
2005 2004 2005 2004
(Dollars in thousands, except per share data)
Net sales $491,454 $312,389 $2,043,877 $1,369,556
Net income and net income
per common share:
Net income $22,112 $22,180 $129,073 $111,350
Net income per
common share --
assuming dilution $0.38 $0.44 $2.24 $2.21
Income and income per common
share from continuing operations:
Income $26,786 $21,102 $130,460 $111,298
Income per common share --
assuming dilution $0.45 $0.42 $2.26 $2.21
Income and income per common share
from continuing operations before
restructuring and merger and
integration costs: (1)
Income $33,994 $26,279 $150,401 $122,035
Income per common share --
assuming dilution $0.58 $0.52 $2.60 $2.42
(1) Reconciliation to income from
continuing operations:
Income from continuing
operations before
income taxes $41,604 $34,115 $204,614 $177,170
Merger and integration
costs 6,069 1,266 17,954 1,266
Cost of products sold --
restructuring 689 4,845 2,466 8,464
Other restructuring costs 4,496 2,162 10,854 7,362
Income from continuing
operations before income
taxes, restructuring,
and merger and integration
costs 52,858 42,388 235,888 194,262
Income taxes 18,864 16,109 85,487 72,227
Income from continuing
operations before
restructuring, and merger
and integration costs $33,994 $26,279 $150,401 $122,035
SOURCE J. M. Smucker Company CONTACT: Investors, Mark R. Belgya, Vice President, Chief Financial Officer and Treasurer, or
George G. Sent, Jr., Director, Corporate Finance and Investor Relations, or
Media, Maribeth Badertscher, Manager, Corporate Communications,
all of The J. M. Smucker Company,
+1-330-682-3000
Web site: http://www.smuckers.com
(SJM)
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