J.M. Smucker's Earnings Twist: Sales Dip But Profits Soar - What's Cooking?

J.M. Smucker Company SJM reported a second-quarter FY24 sales decline of 12% year-on-year to $1.94 billion, missing the analyst consensus of $1.95 billion. Adjusted EPS of $2.59 beat the consensus estimate of $2.47.

Gross profit increased 3% Y/Y to $724.2 million, and the gross profit margin expanded by 560 basis points to 37.4%. The company's operating income increased by 2% to $298.9 million, with the margin expanding from 13.3% to 15.4%.

The company held $3.62 billion in cash and equivalents as of October 30, 2023. Operating cash flow for the quarter totaled $176.9 million, and the free cash flow was $28.2 million.

Chair and CEO Mark Smucker said, "We also advanced our portfolio reshape activities, including the acquisition of the Hostess® sweet baked snacks and Voortman® cookie brands. We are confident in our ability to capitalize on synergies and growth opportunities across snacking while also continuing to support our other growth platforms in coffee and pet."

Related: Smucker Gears Up For Q2 Print; Here's A Look At Recent Price Target Changes By The Most Accurate Analysts

Outlook: J.M. Smucker revised FY24 adjusted EPS guidance to $9.25 - $9.65 (prior $9.45 - $9.85) versus the consensus of $9.48.

The company expects FY24 comparable net sales growth of 8.5% - 9.0% (prior 8.5% - 9.5%).

The company expects net sales to decrease 3.0% - 3.5%, reflecting approximately $8.25 billion at the mid-point of the guidance range (prior 10.0%- 11.0% decline).

The net sales decrease reflects $1.5 billion of net sales in the prior year related to the divested pet food brands, $23.7 million of net sales for the previous year related to the divested Sahale Snacks business, and $650.0 million of anticipated net sales in the current fiscal year related to the acquisition of Hostess Brands.

Price Action: SJM shares are trading higher by 2.97% at $115.77 premarket on the last check Tuesday.

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