JM Smucker (SJM) tops Q4 EPS by 35c, FY23 EPS guidance lacks consensus


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JM Smucker (NYSE: SJM) reported fourth-quarter EPS of $2.23, $0.35 better than analysts’ estimate of $1.88. Revenue for the quarter was $2.03 billion versus consensus estimate of $1.98 billion.

TIPS:

JM Smucker sees FY2023 EPS of $7.85 to $8.25, versus consensus of $8.91.

The Company has provided its guidance for fiscal year 2023 as summarized below:

Increase in net sales compared to the previous year

3.5% – 4.5%

Adjusted earnings per share

$7.85 – $8.25

Free cash flow (in millions)

$500

Capital expenditure (in millions)

$550

Adjusted effective tax rate

24.2%

The pandemic and its related implications, along with continued cost inflation and supply chain volatility, continue to impact financial results and cause uncertainty and risk to the outlook for fiscal year 2023 Any manufacturing or supply chain disruptions, as well as changes in consumer buying behavior, retailer inventory levels and broader macroeconomic conditions, could have a material impact on actual results. In particular, the recent jif® peanut butter product recall will impact our financial results for the year. Although the outlook remains uncertain, the Company continues to focus on managing the items within its control, including taking the necessary steps to minimize the impact of cost inflation, product recalls and any disruptions additional activities. These forecasts reflect performance expectations based on the company’s current understanding of the overall environment, including the estimated adverse impact of the product recall.

Net sales are expected to increase by 3.5 to 4.5% over the previous year. Excluding non-comparable prior year net sales for the divested dry pet food and natural beverages and cereals businesses, net sales are expected to increase by approximately 6% in the mid-range forecasts. This reflects higher net pricing to recover cost inflation in several categories, partially offset by the expected volume/mix impact of the price elasticity of demand, and an unfavorable 2% impact related to lead times. estimated production stoppages and customer returns from the jif® recall of peanut butter products.

Adjusted earnings per share should be between $7.85 and $8.25, including an estimated unfavorable effect of $0.90 related to the jif® recall of peanut butter products. This range reflects the benefits of higher net prices and shares repurchased in the prior year which were more than offset by cost inflation, the anticipated volume/mix impact of the price elasticity of the demand, the unfavorable impact of the jif® recall of peanut butter products and increased SD&A expenses. These forecasts assume an adjusted gross margin range of 33.0 to 34.0%, including an estimated 1% unfavorable impact related to the jif® peanut butter product recall, an adjusted effective tax rate of 24.2% and 106.5 million common shares outstanding. Free cash flow is expected to be approximately $500 million, including the estimated unfavorable impact related to the jif® recall of peanut butter products, with capital expenditures of $550 million.

For revenue history and revenue data on JM Smucker (SJM), click here.

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