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$SJM 3Q15 10-Q: On Feb. 24, 2015, SJM entered into a series of forward starting interest rate swap agreements to hedge a portion of the interest rate risk related to its anticipated issuance of long-term bonds. The notional hedged amount was approx. $1.1Bil, with expected maturity tenors of 10, 20, and 30 years.
$SJM priced $300MM of 2.2% notes due 2019 and $500MM of 3.375% notes due 2027. The sale of the Notes is expected to close on Dec. 7, 2017. The expected net proceeds from the offering of the Notes will be about $793.9MM, after deducting the underwriting discount and the company's expenses related to the offering.
$SJM has slashed its guidance for FY18. The adjusted earnings per share would be in the range of $7.75 to $7.95, from the earlier outlook of $7.85-8.05. There is no change in free cash flow and capital expenditure projections at $775MM and $310MM respectively. The net sales would dip slightly compared to the prior year.
In 1Q18, the US Retail Coffee net sales for $SJM dipped by 6% to $480.8MM and sales in US Retail Consumer Foods went south by 8% at $492.4MM. Better volume/mix took sales of US Retail Pet Foods to $521.7MM, up by $2.2MM and the business in Foodservice segment spiked by 3% to $254MM.
It was a sour 1Q18 for food and beverages company $SJM as lower volume/mix sunk its net income by 25% to $126.8MM. The dip in EPS was 23% at $1.12. Decline in U.S. Retail Consumer Foods and U.S. Retail Coffee segments had shrunk net sales by 4% to $1.75Bil during the period.
$SJM has elected Joseph Stanziano as corporate officer. He will assume the role of SVP & General Manager, Consumer Foods. Kevin G. Jackson will take over as SVP, US Retail Sales & Market Development Organization. David J. Lemmon will assume the role of President, Canada and International, and US Away From Home.
Branded food company $SJM has nominated Dawn C Willoughby and Kirk L Perry to its BoD. Willoughby currently serves as EVP and COO of $CLX. Earlier, Willoughby held various positions in sales management at Procter & Gamble Company. Perry is the President of $GOOGL's Brand Solutions. Prior to joining Google, he had worked in Procter & Gamble Company.
On the consumer trends, $SJM said that some of the innovations from its pipeline is expected in the back end of this year and in the next couple of years. The company added that it expects to grow the sales and earnings with the innovations that are lined up in the near future.
For FY18, $SJM anticipates EPS performance to be significantly weighted toward the back half of the fiscal year due to timing associated with the recognition of incremental synergies and cost savings. Adjusted EPS is expected to be down annually in the mid-teen percent range during 1Q18.
For FY18, $SJM expects overall commodity costs to be higher for coffee, oils, protein meals and peanuts. The company estimates the net impact of higher commodity cost to price to be unfavorable in FY18. SG&A expenses are expected to be up low-single digits over the prior year, reflecting the increase in marketing expenses.
When discussing about the three-year strategic plan, $SJM said that it expects to deliver above average organic growth in FY19 and FY20 with an acceleration of launches beginning late in FY18. The company expects ecommerce sales for pet business to increase 50% in FY18 and 5% of the net sales to come from ecommerce in FY20.
In 4Q17, $SJM's sales decreased 1% to $505.9MM in US Retail Coffee segment; decreased 5% to $534.5MM in US Retail Pet Foods segment; and increased 4% to $269.6MM in International and Foodservice segment. Performance was almost flat in the US Retail Consumer Foods segment, where it reported sales of $473.8MM during the quarter.