J. M. Smucker (NYSE: SJM) reported Q4 EPS of $2.57, $0.28 better than the analyst estimate of $2.29. Revenue for the quarter came in at $2.09 billion versus the consensus estimate of $2.06 billion.

EXECUTIVE SUMMARY

• Net sales increased $189.9 million, or 10 percent, driven by increased consumer demand resulting from the COVID-19 pandemic.
• For the full year, net sales were $7.8 billion, a 1 percent increase of comparable sales excluding acquisition, divestiture, and foreign currency exchange.
• Net income per diluted share was $1.98. Adjusted earnings per share was $2.57, an increase of 24 percent.
• For the full year, net income per diluted share was $6.84. Adjusted earnings per share was $8.76, an increase of 6 percent.
• Cash from operations was $287.7 million compared to $274.2 million in the prior year.
• Free cash flow was $211.3 million in the quarter and $985.5 million for the full year.
• The Company provided its fiscal 2021 outlook, with an expected net sales decline of 1 to 2 percent, adjusted earnings per share to range from $7.90 to $8.30, and free cash flow to range from $900 to $950 million.

CHIEF EXECUTIVE OFFICER REMARKS

"I am extremely proud and thankful for how our employees have responded during the COVID-19 pandemic. We ensured our employee safety and well-being, supported the communities where we do business, maintained our product quality standards, and partnered with our suppliers and retailers to provide a steady supply of food for consumers and their pets," said Mark Smucker, President and Chief Executive Officer.

"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."

"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."

GUIDANCE:

J. M. Smucker sees FY2021 EPS of $7.90-$8.30, versus the consensus of $8.47.

The outbreak of COVID-19 had a material benefit to fiscal year 2020 results and has caused significant uncertainty for fiscal year 2021 projections. This guidance reflects performance expectations based on the Company's current understanding of the environment.

Net sales are expected to decrease 1 to 2 percent compared to the prior year. The decline reflects lapping the $185 million of incremental net sales in the fourth quarter of fiscal year 2020 and an estimated $120 million COVID-related reduction to fiscal year 2021 net sales primarily resulting from a significant and extended decline in the Company's Away From Home business, partially offset by increased at-home consumption benefiting the U.S. Retail Coffee and U.S. Retail Consumer Foods segments.

Adjusted earnings per share is expected to range from $7.90 to $8.30, based on 114.0 million shares outstanding. Earnings guidance reflects the decrease in net sales and estimates for adjusted gross profit margin of approximately 37.5 percent, SD&A expenses flat to slightly down compared to the prior year, and an adjusted effective tax rate of approximately 24.0 percent. Free cash flow is expected to range from approximately $900 to $950 million.

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