ORRVILLE, OHIO — Strong top-line growth in the company’s coffee and pet food businesses combined with robust growth in the Uncrustables brand led sales and earnings higher at J.M. Smucker Co. in the third quarter.
“These platforms continue to be key enablers for sustained growth and reflect the strong execution of our strategy of leading in the attractive categories of pet, coffee, and snacking,” said Mark T. Smucker, president and chief executive officer, in Feb. 28 prepared remarks related to the company’s financial results.
Net income for the period ended Jan. 31 surged 199% to $208.5 million, equal to $1.96 per share on the common stock, up from $69.7 million, or 64¢, in the same period a year ago. Fiscal 2022 results were adversely affected by a $150.4 million impairment charge related to the Rachael Ray Nutrish brand. Adjusted EBITDA was $428.7 million in the quarter, up from $414.7 million in the same period a year ago.
Quarterly sales increased 7.7% to $2.22 billion from $2.057 billion.
During the quarter J.M. Smucker completed the sale of its private label dry pet food business and its natural beverage and grains businesses.
“During the quarter, brands that were growing or maintaining share accounted for 54% of our US Retail sales, compared to 68% during the same period a year ago,” Mr. Smucker said. “We expect this decline to be temporary, as we experienced supply chain challenges both in our Meow Mix dry cat food and Smucker’s fruit spreads businesses, and the Jif brand continues to rebuild share. We remain confident in our strategy and the strength of our brands and will continue to support them with ongoing marketing investments.”
US Retail Consumer Foods unit sales edged up to $434.2 million from $433.1 million during the third quarter of fiscal 2022. Excluding $34.7 million of noncomparable net sales in the prior year related to the divested natural beverage and grains businesses, net sales increased 9%, Smucker said. Segment profit fell 5.5% to $94.1 million from $99.5 million, primarily reflecting the net impact of higher net price realization and higher manufacturing and packaging costs, inclusive of costs related to the Jif peanut butter product recall.
“Uncrustables sandwiches continued to deliver exceptional growth, with net sales increasing 38%, or nearly $40 million, driven by double digit volume/mix growth and higher pricing,” Mr. Smucker said. “Total company net sales for Uncrustables sandwiches, including the Away From Home business, were $173 million this quarter. The expansion of the Longmont, Colo., facility has begun to provide increased production capacity. As demand continues to outpace supply, we expect strong double-digit growth in both sales and volume in the fourth quarter, which would be nine consecutive fiscal years of double-digit net sales growth.”
Sales for Smucker’s US Retail Coffee business unit increased 11.1% during the quarter to $735.1 million from $661.8 million the year prior. Segment profit fell 4.5% to $204 million from $213.4 million.
“Our coffee portfolio, which features three of the top eight brands in the category, grew dollar share more than any other branded manufacturer for the seventh consecutive quarter and continued to outpace the at-home coffee category,” Mr. Smucker said. “The Folgers brand continued its momentum with double-digit net sales growth. It was the fastest growing brand in dollar share, increasing over half a point during the quarter, and has achieved dollar share growth for four consecutive quarters. Folgers continued to maintain double the volume share of any other brand in the category.
“Café Bustelo was the fastest growing brand in the at-home coffee category and increased an impressive 28% in consumer take away. The brand grew market share in both dollars and volume during the quarter and has experienced seven consecutive quarters of double-digit dollar sales growth.”
Sales increased 8.9% to $758.6 million in Smucker’s largest business unit, US Retail Pet Foods, up from $696.6 million a year ago. Excluding $9.4 million of noncomparable net sales in the prior year related to the divested private label dry pet food business, net sales increased 10%, Smucker said. Segment profit also was higher, climbing 14% to $109 million from $95.7 million. The increase primarily reflected a favorable net impact of higher net price realization and increased commodity and ingredient, manufacturing, and packaging costs, partially offset by increased marketing investment and the reduced contribution from volume/mix.
“With the anticipated divestiture of several pet food brands, our business will shift from approximately two-thirds pet food and one-third pet snacks, to approximately 60% pet snacks and 40% cat food, which significantly improves the profit margin and product mix of the business,” Mr. Smucker said. “The brands we are divesting account for approximately 20% of total company net sales, but only a mid-single digit percentage of total company profit. We are well-positioned to allocate resources and increase investments into the fast-growing and high-margin dog snacks category, where we have brands and offerings ranging from value to premium.”
International and Away From Home segment profit rose nearly 10% to $37.6 million. Sales were $288.4 million, up 8.5% from the same quarter a year ago.Smucker said its full-year net sales are expected to increase approximately 6% compared to the prior-year forecast of 5.5% to 6.5%. Adjusted earnings per share guidance was raised, to $8.55 to $8.75, up from an earlier forecast of $8.35 to $8.75.