EPS of $2.30 increased by 140.6% from previous year
Gross margin of 41.4%
Net income of 245.10M
"We continue to anticipate cost synergies of approximately $100 million to be achieved by the end of fiscal year 2026." - Mark Smucker
The J. M. Smucker Company (SJM) Q4 FY2024 Earnings Review: Hostess Integration Progress, Brand Momentum, and 2025 Outlook
Executive Summary
The J. M. Smucker Company delivered a solid finish to fiscal 2024, underscoring the resilience of its brand-led strategy and the accretive potential of the Hostess acquisition. In Q4, the company achieved 3% comparable net sales growth, with adjusted earnings per share (EPS) of $2.66 for the quarter, driven by margin gains, cost discipline, and early synergies from the Hostess integration. Full-year results highlighted a strong top-line trajectory (8% comparable net sales increase) and a double-digit uplift in adjusted EPS to $9.94, reflecting leverage from scale, ongoing portfolio transformation, and cash-generative contributions.
The acquisition of Hostess Brands unlocked a meaningful foothold in the snacking category, complementing Smucker’s leadership in coffee and pet foods. Management outlined a clear three-pronged strategic focus: (1) deliver the core business through volume growth and productivity, (2) integrate Hostess operations and realize ~$100 million of cost synergies by end-FY2026, and (3) accelerate transformation and cash generation to sustain long-term shareholder value. Notably, the Uncrustables franchise continued to scale, with fresh capacity and Canada expansion underpinning a target of ~$1 billion in annual Uncrustables net sales by the end of FY2026. The coffee portfolio faced near-term headwinds from competitive dynamics and input cost volatility, prompting a planned list-price action in early June to recover green coffee costs while maintaining consumer value.
Looking into FY2025, Smucker guides to ~9.5%–10.5% net sales growth (with ~1% headwind from divested pet brands and ~1% headwind from lapped Sahale Snacks/Canadian condiments divestitures), a gross margin near 38%, and adjusted EPS of roughly $9.80–$10.20. The plan prescribes continued investments behind core brands and capabilities, a 5.5% marketing spend, and strategic deleveraging to ~3.0x net debt/EBITDA by FY2027. Investors should monitor Hostess synergy realization, gross margin trajectory amid input-cost volatility, the pace of Uncrustables capacity-driven growth, and the debt-reduction trajectory that underpins expected financial flexibility.
Key Performance Indicators
Revenue
2.21B
QoQ: -1.05% | YoY:-1.30%
Gross Profit
913.30M
41.41% margin
QoQ: 10.96% | YoY:15.26%
Operating Income
406.00M
QoQ: 36.52% | YoY:164.09%
Net Income
245.10M
QoQ: 103.57% | YoY:140.80%
EPS
2.31
QoQ: 102.63% | YoY:140.60%
Revenue Trend
Margin Analysis
Key Insights
Revenue: Q4 2024 net sales $2.2057B; YoY change -1.3%; QoQ change -1.05% (from four-quarter data). Comparable net sales for the quarter +3% (excluding divestitures, Hostess integration, and FX effects). Management cited price realization gains across multiple segments offset by lower price realization in Coffee.
Gross Profit: $913.3M; gross margin 41.40%; YoY gross profit up about 15.3%; QoQ up ~11.0% (driven by Hostess benefits, cost reductions, and pricing actions).
Operating Income: $406.0M; operating margin 18.41%; YoY operating income up ~164%; QoQ up ~36.5% (reflecting gross profit gains and SG&A dynamics).
Net Income: $245.1M; net margin 11.11%; YoY net income up ~141%; QoQ up ~104% (benefits from margins and synergies partially offset by higher interest expense).
Earnings Per Share (GAAP/adjusted): EPS $2.31; diluted $2.30; YoY EPS up ~141%; QoQ up ~103% (adjusted EPS outperformed expectations due to gross margin strength and early synergy realization).
Financial Highlights
Key quarterly metrics and trend insights (YoY and QoQ where available):
- Revenue: Q4 2024 net sales $2.2057B; YoY change -1.3%; QoQ change -1.05% (from four-quarter data). Comparable net sales for the quarter +3% (excluding divestitures, Hostess integration, and FX effects). Management cited price realization gains across multiple segments offset by lower price realization in Coffee.
- Gross Profit: $913.3M; gross margin 41.40%; YoY gross profit up about 15.3%; QoQ up ~11.0% (driven by Hostess benefits, cost reductions, and pricing actions).
- Operating Income: $406.0M; operating margin 18.41%; YoY operating income up ~164%; QoQ up ~36.5% (reflecting gross profit gains and SG&A dynamics).
- Net Income: $245.1M; net margin 11.11%; YoY net income up ~141%; QoQ up ~104% (benefits from margins and synergies partially offset by higher interest expense).
- Earnings Per Share (GAAP/adjusted): EPS $2.31; diluted $2.30; YoY EPS up ~141%; QoQ up ~103% (adjusted EPS outperformed expectations due to gross margin strength and early synergy realization).
- EBITDA and Margin: Adjusted EBITDA $535.4M; EBITDAR ~24.27% of revenue; EBITDA growth supported by Hostess contribution and cost discipline.
- Cash Flow and Capital Deployment: Operating cash flow $428.1M in Q4; Capex $130.6M; Free cash flow (FCF) for the quarter $297.5M. Full-year FCF $643M with $587M in capex (7.2% of net sales). Net debt at period-end $8.498B, total debt $8.560B; cash balance $62M; leverage (net debt/EBITDA, pro forma) ~4.2x with a plan to reach ~3.0x by FY2027.
- Dividends: Board-approved dividend growth; Smucker reaffirmed a payout policy targeting ~40%–45% of annual adjusted EPS.
- Outlook and guidance consistency: FY2025 guidance implies revenue expansion, margin resilience, and continued deleveraging alongside Hostess synergies and brand investments.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
2.21B
-1.30%
-1.05%
Gross Profit
913.30M
15.26%
10.96%
Operating Income
406.00M
164.09%
36.52%
Net Income
245.10M
140.80%
103.57%
EPS
2.31
140.60%
102.63%
Key Financial Ratios
currentRatio
0.52
grossProfitMargin
41.4%
operatingProfitMargin
18.4%
netProfitMargin
11.1%
returnOnAssets
1.19%
returnOnEquity
3.19%
debtEquityRatio
1.11
operatingCashFlowPerShare
$4.03
freeCashFlowPerShare
$2.8
dividendPayoutRatio
45.7%
priceToBookRatio
1.59
priceEarningsRatio
12.44
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key takeaways from Smucker management throughout the Q4 earnings call:
- Strategy and portfolio focus: "Fiscal 2024 was a year of significant progress... strengthen our business for the long-term" and "our strategy is working... focus on leading positions in coffee, snacking, and pet foods" (Mark Smucker).
- Hostess integration and synergies: "The integration is on-track and, with the majority of our cost synergy analysis and organization design completed, we were able to begin recognizing synergies in the quarter, which is earlier than originally anticipated. We continue to anticipate cost synergies of approximately $100 million to be achieved by the end of fiscal year 2026" (Mark Smucker).
- Uncrustables growth and capacity: "In fiscal year 2024, we grew the brand by over $100 million... the brand’s first national marketing campaign" and we expect Uncrustables to reach about $1 billion in annual net sales by the end of fiscal year 2026 (Mark Smucker).
- Coffee price dynamics and pricing strategy: management acknowledged ongoing margin pressures from coffee commodity volatility and signaled a list-price increase across parts of the portfolio in early June to recover higher input costs while preserving value for consumers (Mark Smucker and Tucker Marshall).
- FY2025 outlook: management outlined a target of 9.5%–10.5% net sales growth with a full-year impact from Hostess, modest headwinds from divestitures, gross margin ~38%, SG&A up ~13%, and adjusted EPS of ~$9.80–$10.20; free cash flow guidance around $900M with capex of ~$450M (Tucker Marshall).
- Financial discipline: emphasis on debt reduction, aiming to deleverage toward ~3.0x net debt/EBITDA by FY2027 while realizing synergies and sustaining brand momentum (Mark Smucker).
- Market and category dynamics: ongoing strength in Away From Home and confectionary-like snacking channels post-acquisition, with continued investments in core brands and innovation pipeline as a driver of mid-term growth.
We continue to anticipate cost synergies of approximately $100 million to be achieved by the end of fiscal year 2026.
— Mark Smucker
In fiscal year 2024, we grew the Uncrustables brand by over $100 million, expanded distribution, including introducing the brand in Canada, launched the brand’s first national marketing campaign, and we expect to grow it to approximately $1 billion in annual net sales by the end of fiscal year 2026.
— Mark Smucker
Forward Guidance
Outlook and critical factors underpinning Smucker’s forward trajectory:
- Net sales and earnings trajectory: The company guides for FY2025 net sales to rise 9.5%–10.5% versus the prior year, driven by a full-year contribution from Hostess and continued brand momentum. On a comparable basis, net sales are forecast to grow ~1.5%–2.5% (inclusive of ~ $50M in pet-brand contract manufacturing, vs. $136M prior year). Management also expects adjusted EPS to be roughly $9.80–$10.20, with some accretion from Hostess and a net $0.60 impact from stranded overhead related to pet-brand divestitures.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
SJM Focus
41.41%
18.40%
3.19%
12.44%
CAG
27.70%
-19.10%
-6.72%
-6.39%
K
34.50%
10.30%
0.85%
177.05%
GIS
35.80%
16.50%
5.93%
17.34%
HRL
16.60%
9.38%
2.75%
19.28%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Smucker presents a balanced yet asymmetric growth opportunity. The Hostess-driven expansion into snacking provides a meaningful secular growth runway, supported by a robust Uncrustables franchise and ongoing coffee portfolio optimization. The FY2025 guidance contemplates a high-single-digit to low-double-digit percentage lift in net sales, with EPS in a roughly $9.80–$10.20 band, and ~900M in free cash flow, enabling debt reduction and continued shareholder returns. The near-term risk profile is anchored in coffee cost volatility and execution risk around Hostess integration; however, the company’s disciplined capital allocation, potential for margin expansion through pricing and mix, and deleveraging plan to 3.0x by FY2027 provide a constructive long-term thesis. Investors should monitor synergy realization timing, price-cost dynamics in Coffee, capex efficiency from the Uncrustables facility, and the pace of debt reduction relative to operating cash flow generation.
Key Investment Factors
Growth Potential
Hostess integration is a key growth driver, with cost synergies and revenue opportunities (snacking leadership, expanded distribution, and a push toward premium and on-the-go formats). Uncrustables expansion (capacity additions and Canada entry) positions Smucker toward a ~$1B+ annual net sales run-rate by FY2026 and supports a broader, more diversified growth platform. International/Away From Home segments offer continued low-to-mid single-digit growth with share gains.
Profitability Risk
Key risks include sustained coffee commodity volatility and price competition, potential inflationary pressures offset by pricing actions, execution risk around Hostess integration and synergy realization, foreign currency exposure, and ongoing divestitures (Sahale Snacks and Canadian condiments) creating methodological shifts in reported net sales and margins. High leverage (net debt/EBITDA ~4.2x pro forma) remains a near-term concern without timely deleveraging and synergies.
Financial Position
Solid free cash flow generation supports debt reduction goals and investment in growth initiatives. Balance sheet shows $62M cash, $8.56B total debt, and $14.9B in goodwill/intangible assets, indicating substantial asset base for brand-led expansion, while the planned deleveraging to ~3.0x by FY2027 aims to restore financial flexibility and preserve investment-grade credit metrics.
SWOT Analysis
Strengths
Leading brand portfolio with scale across US Retail (Coffee, Pet Foods, Consumer Foods) and strong international/Away From Home exposure.
Hostess acquisition expanding snacking leadership and enabling cross-brand merchandising opportunities.
Uncrustables growth with expanding capacity and international expansion (Canada) supporting higher long-term net sales.
Strong cash generation and dividend history (26 consecutive years of dividend growth; target 40-45% of adjusted EPS payout).
High gross margin relative to peers (Q4 gross margin 41.4%).
Weaknesses
Significant leverage post-Hoste ss acquisition (net debt/EBITDA ~4.2x pro forma).
Short-term Coffee category volatility and promotional intensity driving margin pressure.
Exposure to commodity cost inflation (green coffee) and potential price elasticity risk.
Divestitures of pet brands and Sahale/Canadian condiments introduce mix and reporting complexity.
Opportunities
Execution of Hostess synergies and cost savings (~$100M by FY2026) to lift EBITDA.
Expanded Uncrustables capacity and distribution, including potential new markets.
Continued momentum in Pet Foods (Milk-Bone, Meow Mix) and International/Away From Home growth.
Potential further price realization to offset input costs while maintaining value for consumers.
Threats
Macro inflation pressure and commodity volatility, particularly in coffee.
Intense competition from private label and major caffeinated beverage brands.
Integration risk and potential delay in realizing Hostess-related synergies.
Regulatory and currency headwinds in international markets.
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