Note: EPS may not be comparable

J. M. Smucker (NYSE: SJM) reported Q3 EPS of $2.50, $0.37 better than the analyst estimate of $2.13. Revenue for the quarter came in at $1.9 billion versus the consensus estimate of $1.89 billion.

EXECUTIVE SUMMARY

• Net sales increased 1 percent, reflecting growth across most of the Company\'s key brands and categories.
• Net income per diluted share was $7.32, including a substantial nonrecurring benefit related to recently enacted U.S. income tax reform, partially offset by a noncash impairment charge within the U.S. Retail Pet Foods segment.
• Adjusted earnings per share was $2.50, an increase of 25 percent, including approximately $0.35 per share related to a lower current year tax rate due to U.S. income tax reform.
• Cash provided by operating activities was $469.0 million, compared to $419.5 million in the prior year.
• Free cash flow was $388.7 million in the quarter and $693.3 million through the first nine months of fiscal 2018.
• The Company increased its full-year 2018 earnings and free cash flow outlook.
• With the benefit resulting from U.S. income tax reform, the Company contributed an incremental $20.0 million to its employee pension plan and has announced a one-time bonus of $1,000 to nearly 5,000 employees and a $1 million increase to its charitable contributions.

Net sales are expected to be in the range of flat to down slightly, compared to the prior year. Adjusted earnings per share is expected to range from $8.20 to $8.30, based on 113.6 million shares outstanding. The increase in earnings and cash flow guidance primarily reflects the benefit of a lower effective tax rate as a result of U.S. income tax reform, partially offset by anticipated freight cost increases and a charge related to obsolete inventory in the third quarter. The above guidance excludes any potential impact following completion of the Company\'s previously announced definitive agreement to acquire the Wesson® oil brand from Conagra Brands, Inc., which is pending regulatory approval. For fiscal 2019, the Company projects an effective tax rate of 23 percent.

GUIDANCE:

J. M. Smucker sees FY2018 EPS of $8.20-$8.30, versus the consensus of $8.12.

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