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Lower Taxes Boost J.M. Smucker’s Fourth-Quarter EPS

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Key takeaways

J.M. Smucker (SJM) posted mixed fourth-quarter results on June 6. J.M. Smucker’s revenues continued to benefit from its acquisition. However, it missed analysts’ estimate on account of lower pricing. The acquisition of Ainsworth contributed significantly to its top-line growth. Meanwhile, volumes and mix improved. However, lower net price realization in the coffee and peanut butter categories remained a drag.

J.M. Smucker’s adjusted gross margins remained flat as benefits from improved volumes and lower input costs were offset by a decline in pricing. Meanwhile, the adjusted operating income margin remained weak, reflecting higher selling, distribution, and administrative expenses.

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The company’s adjusted earnings improved about 8% on a YoY basis and came in ahead of analysts’ estimate. A 620 basis-point decline in the adjusted effective tax rate drove J.M. Smucker’s bottom-line growth. However, a lower operating margin and higher interest expenses continued to hurt the company.

Fiscal Q4 financials

J.M. Smucker posted net sales of $1.9 billion, which increased 6.8% on a YoY basis but were marginally short of analysts’ estimate. Adjusted gross profit margins stayed flat at 37.9%. Adjusted operating margin fell 120 basis points to 18.6%. J.M. Smucker posted adjusted earnings of $2.08 per share, which increased about 8% on a YoY basis and exceeded analysts’ estimate of $1.95.

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