J. M. Smucker (NYSE: SJM) reported Q2 EPS of $2.39, $0.16 better than the analyst estimate of $2.23. Revenue for the quarter came in at $2.03 billion versus the consensus estimate of $2.01 billion.

EXECUTIVE SUMMARY

• Net sales increased $76.2 million, or 4 percent, primarily reflecting growth in the Company's U.S. Retail Consumer Foods and U.S. Retail Coffee segments, partially offset by a decline in its Away From Home business.
• Net income per diluted share was $2.02. Adjusted earnings per share was $2.39, an increase of 6 percent.
• Cash from operations was $378.7 million, an increase of 69 percent. Free cash flow was $326.3 million, compared to $160.6 million in the prior year.
• The Company increased its full-year fiscal 2021 net sales, adjusted earnings per share, and free cash flow outlook.

CHIEF EXECUTIVE OFFICER REMARKS

"In the second quarter, we focused on meeting the demands created by the current environment, while continuing to execute our long-term strategy to deliver sustainable growth," said Mark Smucker, President and Chief Executive Officer. "Our U.S. Retail Consumer Foods and U.S. Retail Coffee businesses experienced strong sales momentum from elevated at-home consumption trends and grew market share. I want to thank our employees for their ongoing hard work and dedication to provide our customers, consumers, and their pets with a steady food supply from trusted and iconic brands."

"We are pleased to raise our full-year financial guidance, while making additional investments in our brands to support their momentum. I am confident that we are strengthening our foundation to deliver both our short-term and long-term financial objectives and increase shareholder value."

GUIDANCE:

J. M. Smucker sees FY2021 EPS of $8.55-$8.85, versus the consensus of $8.66.

The outbreak of COVID-19 continues to impact financial results and cause uncertainty for the full-year fiscal 2021 outlook. Changes in consumer purchasing behavior, retailer inventory levels, macroeconomic conditions, and any manufacturing or supply chain disruption could materially impact actual results. This guidance reflects expectations based on the Company's current performance and understanding of the overall environment.

Net sales are expected to increase 1 to 2 percent compared to the prior year, primarily reflecting elevated at-home consumption benefiting the U.S. Retail Coffee and U.S. Retail Consumer Foods segments. Net sales guidance also reflects a decline for the Company's Away From Home business and the lapping of a $185 million incremental benefit to net sales related to COVID-19 in the fourth quarter of the prior year.

Adjusted earnings per share is expected to range from $8.55 to $8.85, based on 114.1 million shares outstanding. Earnings guidance reflects the contribution from sales at a gross profit margin range of 37.5 to 38.0 percent, SD&A expenses to increase 1 to 2 percent compared to the prior year, and an effective tax rate of 24.0 percent. Free cash flow is expected to range from $975 million to $1,025 million with capital expenditures of $315 million.

The full-year fiscal 2021 guidance does not reflect any impact related to the Company's previously announced agreement to divest the Crisco® oils and shortening business. The Company expects the transaction to close during the third quarter of the current fiscal year and estimates the fiscal 2021 net sales impact to be approximately $100 million and adjusted earnings per share impact to be approximately $0.20, excluding any potential benefit from the use of proceeds from the sale.

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