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J.M. Smucker (NYSE:SJM)
Q4 2021 Earnings Call
Jun 03, 2021, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Good morning and welcome to the J.M. Smucker Company's fiscal 2021 fourth-quarter earnings conference call. This conference is being recorded, and all participants are in a listen-only mode. [Operator instructions] I will now turn the conference over to Aaron Broholm, vice president, investor relations.

Please go ahead, sir.

Aaron Broholm -- Vice President, Investor Relations

Good morning and thank you for joining us for our fiscal 2021 fourth-quarter earnings conference call. In a moment, Mark Smucker, president, and CEO will give an overview of the quarter's results and an update on our strategic initiatives. Tucker Marshall, our CFO, will then provide a detailed analysis of the financial results and our fiscal 2022 outlook. During today's call, we will make forward-looking statements that reflect our current expectations about future plans and performance.

These statements rely on assumptions and estimates, and actual results may differ materially due to risks and uncertainties. I encourage you to read the full disclosure concerning forward-looking statements in this morning's press release, which is located on our corporate website at jmsmucker.com. We also posted a slide deck summarizing the quarterly results, including additional information regarding net sales by segment and cost of products sold for fiscal 2021. Included in the slide deck are schedules summarizing net sales excluding divestitures for fiscal years 2019 through 2021.

The slides will be archived on our website along with a replay of this call. Additionally, please note we use non-GAAP results to evaluate performance internally as detailed in the press release. If you have additional questions after today's call, please contact me. I will now turn the call over to Mark Smucker.

Mark Smucker -- President and Chief Executive Officer

Thank you, Aaron. Good morning, everyone, and thank you for joining us. Fiscal 2021 was a year like no other. In the face of unprecedented challenges, we delivered outstanding results.

Moreover, we believe the business is at an inflection point, and we are delivering against our strategic and executional plans. We are emerging from the pandemic along with recent strategic actions a much stronger company. From the outset of the pandemic, we prioritize the well-being of our employees, funded relief activities for our communities, and produced a record amount of products for consumers and their pets. Our people are resilient and moved with speed and agility to adapt our business, all while executing our consumer-centric growth strategy and making progress toward our four execution priorities.

These are driving commercial excellence, streamlining our costs infrastructure, reshaping our portfolio, and unleashing our organization to win. These priorities are essential to position our company for sustainable long-term growth. I'll first share some examples of the progress we are making toward our priorities before turning to a few highlights from the fourth quarter and our fiscal year 2022 outlook. Our first execution priority is driving commercial excellence.

Throughout the past year, significant changes in our industry demanded a rethink of CPG commercial models. We adapted our approach to deliver what customers and consumers need and want more efficiently These changes included standing up a new sales model with two distinct teams, one focused on pets and the other on our consumer foods and coffee businesses. The benefits from improved in-store execution and leveraging insights, combined with additional advertising and improved reach through new digital media models have been a driving factor for our market share gains. Our new commercial delivery model also includes an increased focus on e-commerce, which, for the full year, accounted for 12% of our U.S.

retail net sales. These investments in our commercial capabilities provide a competitive advantage as we partner with retailers. They also enable seamless and highly targeted consumer experiences from awareness to purchase and strong repeat purchasing. Consumers remained loyal to our brands as we maintained the 1 million net new households gained in the prior year, while dollars per buyer increased 10%.

Over the past year, we increased our marketing investment by nearly $40 million or 8%. Most importantly, we significantly improved our market share performance, where today, 55% of the brands in our portfolio are growing market share versus 26% 18 months ago. This is the sixth quarter of sequential share performance improvement for our portfolio. We also made significant progress on our second priority to increase focus on profitability and cost discipline.

We restructured our corporate support functions leading to a more lean and agile organization while continuing to optimize our supply chain and maximize network production efficiencies. Full implementation of these initiatives will deliver $50 million of incremental cost savings in each of the next three fiscal years. One example where we are driving efficiency in our supply chain is with our high-growth Dunkin' coffee. The pandemic-driven surge in demand required us to increase agility and decrease production downtime and change over.

This led to operational efficiencies and incremental capacity for our coffee production, which supported 21% sales growth for the brand this year. Our third execution priority to reshape our portfolio supports our strategy of leading in the best categories. We made excellent progress reshaping our portfolio this year having completed our exit of the U.S. baking category with the sale of the oils and shortening business following prior divestitures of the U.S.

baking mix and condensed milk businesses. In the pet business, we divested the special teaching and all exclusive Natural Balance brand. These decisions show our commitment to divesting brands and businesses that are no longer consistent with our long-term strategic focus. In turn, this allows us to optimize assortment to maximize productivity, reduce complexity, and shift resources to our fastest-growing opportunities.

We continue to evaluate opportunities to increase our portfolios' focus in the pet food, coffee, and snacking categories. Further, acquisitions will remain a part of our strategic growth and we will be prudent when considering them, ensuring we focus on appropriate multiples paid and financial returns in their evaluation. Our fourth execution priority, unleashing our organization to win, powers the first three priorities. The strength of the Smucker culture has always been a unique differentiator in achieving growth and is a critical component of our future.

With the impact of my new leadership team and through the additional organization changes implemented this past year, we are more lean, agile, and focused on delivering with excellence and winning in the marketplace. We're also increasing our focus on becoming a more inclusive and diverse company at every level of the organization. These four priorities are critical to ensuring we maintain our momentum and we're critical to our record fiscal 2021 results with full-year net sales increasing 3%. Net sales grew 5% when excluding the prior-year sales for divested businesses and foreign currency exchange.

Fiscal '21 adjusted earnings per share was $9.12, an increase of 4%, exceeding our most recent guidance range of $8.70 to $8.90. Free cash flow was $1.26 billion, above our most recent expectations of $1.1 billion. Our strong financial performance accelerated elements of our capital deployment strategy to support increased shareholder value. We returned $1.1 billion of capital to shareholders this year in the form of dividends and share repurchases.

We increased our dividend for the 19th consecutive year and through share repurchases, reduced our shares outstanding by approximately 5% on a full-year basis. And we repaid over $860 million of debt during the fiscal year, strengthening our balance sheet to provide flexibility for a balanced approach to reinvesting in the business and returning cash to shareholders. Turning to the fourth quarter, we delivered results ahead of our expectations while accelerating investments for future growth. Net sales declined 8% versus the prior year.

Excluding the non-comparable net sales from divestitures and foreign exchange, net sales decreased 3% due to lapping the initial stock upsurge related to the COVID-19 pandemic. As we are lapping the COVID-19-related demand in the prior year, we believe evaluating results over the prior two-year period is more meaningful. Adjusting for divestitures, net sales grew at a two-year CAGR of 4%, demonstrating growth across all three of our U.S. retail segments.

Fourth-quarter adjusted earnings per share declined 26%, primarily driven by the decreased sales, $40 million of incremental marketing investments, and higher costs, partially offset by higher pricing. Turning to our segment results. In pet food, we anticipated sales to be down due to lapping stock up purchasing in the prior year. Net sales, excluding sales for the divested Natural Balance business, decreased 6% and demonstrated growth on a two-year basis.

While pet food consumption was not materially impacted by at-home versus away-from-home eating trends as in other categories, the pandemic did impact how consumers shop for their pets such as accelerated growth in e-commerce channels. Also, the total U.S. pet population grew by an estimated high-single-digit percentage this past year with new pet parents showing a willingness to spend more for their pets compared to historical trends. We expect top-line growth on a comparable basis for the pet business in fiscal '22, supported by higher pricing, category growth, continued marketing support, and innovation for our leading treats portfolio, and premium food offerings.

Turning to our coffee business, net sales were comparable to the prior year despite lapping the COVID-19 stock up purchasing and demonstrated growth on a two-year basis. Consumer adoption of K-Cups continues to grow with 3 million incremental households purchasing a Keurig machine last year. In the last 52 weeks, retail sales of our brands grew 17%. This was over twice the category rate and we gained over a point of share.

Our share gains further accelerated in more recent periods as all our brands continue to grow, including Folgers. Cafe Bustelo and Dunkin' are the two fastest-growing brands in the coffee category. Over the last 52 weeks, Cafe Bustelo retail sales grew 21% and Dunkin' grew 16%. The Dunkin' brand, representing $1 billion in all-channel retail sales dollars was a top share gainer in the coffee category growing nearly triple the total at-home coffee category rate in measured channels over the last 52 weeks.

The Folgers brand gained 3 million new households at the height of the pandemic and has the highest repeat rate of any brand for new households gained during the pandemic. We will continue to build up this momentum with initiatives to reinvigorate the iconic brand rolling out in the second half of fiscal year '22. As new coffee habits formed during the pandemic, we anticipate retaining a substantial portion of these new consumers for the long term. In our consumer foods business, net sales decreased due to the Crisco divestiture and increased 1% on a comparable basis and reflected strong growth on a two-year basis.

Smucker's Uncrustables frozen sandwiches continue to deliver exceptional growth with net sales and household penetration each increasing 16% in the quarter. For our combined U.S. retail and away-from-home segments, the Uncrustables brand delivered nearly $130 million of net sales this quarter, recording its 28th consecutive quarter of growth. The brand delivered over $400 million of net sales this year and is on track to exceed our $500 million target in fiscal year 2023.

Across our retail businesses, we delivered strong financial results this year, while significantly increasing investments in our brands, strengthening our balance sheet, and returning cash to shareholders, all of which are key building blocks for supporting long-term growth and increasing shareholder value. I'll briefly touch on the current supply chain and cost environments. Our operations have run efficiently, and we have had no material disruptions to date. We continue to monitor global supply chain challenges specifically as it relates to the availability of transportation, labor, and certain materials.

Broad-based inflation is impacting many of the commodities, packaging materials, and transportation channels that are important to our business. We are mitigating the impact through a combination of higher pricing inclusive of list price increases, reduced trade, and net revenue optimization strategies, as well as continued cost management. We have recently implemented net price increases across all business segments with most becoming effective during the month of July. Let me now provide additional details on our outlook for fiscal 2022.

As the U.S. emerges from the pandemic, we believe elevated at-home consumption for our brands will continue into fiscal 2022. Our confidence is supported by the increased pet population, elevated work-from-home benefiting breakfast and lunch occasions, and consumers' investments in at-home brewing equipment. Lapping sales from divested businesses will have a material impact on year-over-year net sales growth in fiscal 2022.

When excluding the non-comparable net sales, we anticipate top-line growth supported by higher net pricing, the continued momentum of our brands, and a significant recovery in our away-from-home business. Year-over-year earnings per share is expected to decline. The growth in comparable sales and benefits from cost savings programs are anticipated to be more than offset by the impact of higher costs and the timing of pricing actions, as well as the loss of earnings from divestitures. On a two-year basis, we expect growth for both comparable net sales, as well as adjusted EPS as we continue to demonstrate underlying growth for the business.

Finally, as we emerged from the pandemic with a heightened focus on health and wellness, we remain dedicated to having a positive impact on our employees, our communities, and our planet. This includes supporting the quality of life for people and pets strengthening the communities we serve both locally and globally and ensuring a positive impact on our planet with a focus on sustainable and ethical sourcing. We look forward to sharing more details including the achievement of our 2020 environmental targets and information regarding our new ESG goals when we release our Corporate Impact Report this summer. In summary, I would like to reinforce three key points.

First, we continue to deliver strong financial results, and our actions to deliver our priorities are leading to improvement in key metrics, including market share that position us well for the future. Second, we are reshaping our portfolio to increase our focus on faster growth opportunities within pet food, coffee, and snacking. And finally, we are sharpening our focus on cost management and becoming a more efficient and agile organization. We are exiting this pandemic a stronger company, and our actions taken over the previous year support consistent delivery of long-term growth and shareholder value.

This will be achieved by leveraging our strong portfolio of brands and world-class commercial capabilities, all of which are powered by our unique culture and dedicated employees, who I would like to thank again for their outstanding contributions. I'll now turn the call over to Tucker. 

Tucker Marshall -- Chief Financial Officer

Thank you, Mark. Good morning, everyone. I'll begin by giving an overview of fourth-quarter results, which finished above our expectations, then I'll provide additional details on our financial outlook for fiscal 2022. Net sales decreased 8%.

Excluding the impact of divestitures and foreign exchange, net sales decreased 3%. This was primarily driven by unfavorable volume mix due to lapping the prior-year stock-up during the beginning of the pandemic, most notably for pet food and our Canadian baking business. Higher net price realization was a 1 percentage point benefit, primarily driven by peanut butter and our pet business. Adjusted gross profit decreased $79 million or 10% from the prior year.

This was mostly driven by unfavorable volume mix, with noncomparable impact to the domestic businesses and higher costs, partially offset by the higher net pricing. Adjusted operating income decreased $120 million, or 28%, reflecting the decreased gross profit and higher SG&A expenses. The increase in SG&A expense was primarily driven by increased marketing investments and incentive compensation, partially offset by reduced selling and distribution costs. Below operating income, interest expense decreased $3 million, and the adjusted effective income tax rate was 23.3% compared to 23.4% in the prior year.

Factoring all this in, along with share repurchases that resulted in a weighted average shares outstanding of 108.9 million, fourth-quarter adjusted earnings per share was $1.89. I'll now turn to fourth-quarter segment results, beginning with U.S. retail pet foods. Net sales decreased 12% versus the prior year.

Excluding the noncomparable net sales for the divested Natural Balance business, net sales decreased 6% versus the prior year. Net sales grew at a 2% CAGR on a two-year basis excluding the divestiture. Dog snacks continue to perform well, decreasing just 1% in the fourth quarter after growth of 12% in the prior year. Cat food decreased 4%, following an 18% growth in the prior year.

Dog food net sales decreased 15%, reflecting anticipated declines versus the prior year. Pet food segment profit declined 32%, primarily reflecting lower volume mix, increased marketing investments, and increased freight and transportation costs, partially offset by higher net pricing. Turning to the coffee segment. Net sales were comparable to the prior year and increased 5% on a two-year CAGR basis.

The Dunkin' and Cafe Bustelo brands grew 10% and 18%, respectively, offset by a 7% decline for the Folgers brand, which benefited the most from consumers stocking up on coffee in the prior year. For our K-Cup portfolio, net sales increased 14% and accounted for over 30% of the segment's net sales with growth across each brand in the portfolio. Coffee segment profit decreased 9%, primarily driven by increased marketing expense. In consumer foods, net sales decreased 13%.

Excluding the prior-year noncomparable net sales for the divested Crisco business, net sales increased 1%. On a two-year CAGR basis, net sales, excluding the divestiture, grew at a 9% rate. The fourth-quarter comparable net sales increase relative to the prior year was driven by higher net pricing of 4%, primarily due to a list price increase for peanut butter in the second quarter, partially offset by unfavorable volume mix of 3%. Growth was led by the Smucker's Uncrustables frozen sandwiches, which grew 16%.

Consumer foods segment profit decreased 29%, primarily reflecting the noncomparable profit from the divested Crisco business, higher costs, and increased marketing expense, partially offset by the higher net pricing. Lastly, in international and away-from-home, net sales declined 7%. Excluding the prior-year noncomparable net sales for the divested Crisco business., net sales declined 5%. The away-from-home business increased 7% on a comparable net sales basis, primarily driven by increases in portion control products.

International declines of 15% on a comparable net sales basis were primarily driven by declines in baking, partially offset by pet food and snacks. On a comparable two-year CGAR basis, net sales for the combined businesses declined at a rate of 2%. Overall, international and away-from-home segment profit decreased 30%, primarily driven by lower volume mix, partially offset by a net benefit of price and costs and favorable foreign currency exchange. Fourth-quarter free cash flow was $183 million, an increase in cash provided by operating activities was more than offset by a $31.6 million increase in capital expenditures.

Capital expenditures for the fourth quarter were $108 million, with the increase over the prior year, primarily related to the capacity expansion for Uncrustables frozen sandwiches. On a full-year basis, free cash flow was $1.26 billion, with capital expenditures of $307 million, representing 3.8% of net sales. In the fourth quarter, repurchases of 1.5 million common shares settled for $174 million. Over the course of the fiscal year, we repurchased 5.8 million shares for $678 million, reducing our outstanding share count by approximately 5%.

We finished the year with cash and cash equivalent balances of $334 million, compared to the prior year-end of $391 million. We paid down $84 million of debt during the quarter and $866 million for the full year, ending the year with a gross debt balance of $4.8 billion. Based on a trailing 12-month EBITDA of approximately $1.8 billion, our leverage ratio stands at 2.6 times. We anticipate maintaining a strong balance sheet and leverage ratio, enabling a balanced capital deployment model, which includes strategic reinvestment in the business through capital expenditures and acquisitions while returning cash to shareholders through increasing dividends and evaluating share repurchases over time.

Let me now provide additional color on our outlook for fiscal 2022. The pandemic and related implications, along with cost inflation and volatility in supply chains, continue to cause uncertainty for the fiscal year 2022 outlook. Any manufacturing or supply chain disruption, as well as changes in consumer mobility and purchasing behavior, retailer inventory levels, and macroeconomic conditions could materially impact actual results. We continue to focus on managing the elements we can control, including taking the necessary steps to minimize the impact of cost inflation and any business disruption.

As always, we will continue to plan for unforeseen volatility while ensuring we have contingency plans in place. This guidance reflects performance expectations based on the company's current understanding of the overall environment. Net sales are expected to decrease 2% to 3% compared to the prior year, including lapping of sales from the divested Crisco and Natural Balance businesses. On a comparable basis, net sales are expected to increase approximately 2% at the midpoint of the sales guidance range.

This reflects benefits from higher pricing actions across multiple categories, primarily to recover increased commodity and input costs, along with continued double-digit sales growth for the Smucker's, Uncrustables brand, and the recovery in away-from-home channels, partially offset by a deceleration in at-home consumption trends. We anticipate full-year gross profit margin of 37% to 37.5%, which reflects an 85-basis-point decline at the midpoint versus the prior year. This factors in higher net pricing effective in the month of July, along with cost and productivity savings and a mixed benefit associated with the divestitures. This will be more than offset by higher costs experienced throughout the full year.

These cost increases are driven by a high single-digit increase from commodities, ingredients, and packaging. SG&A expenses are projected to be favorable by approximately 4%, reflecting savings generated by cost management, and organizational restructuring programs, a reset of incentive compensation, and total marketing spend of 6% to 6.5% of net sales, which reflects a stepdown from fiscal year 2021, partially driven by programs that were pulled forward into the fourth quarter. We anticipate net interest expense of approximately $170 million and an adjusted effective income tax rate of approximately 24%, along with a full-year weighted average share count of 108.3 million. Taking all these factors into consideration, we anticipate full-year adjusted earnings per share to be in the range of $8.70 to $9.10.

At the midpoint of our guidance range, year-over-year adjusted EPS is anticipated to decline 2%, mostly attributable to around a $0.20 net impact of divested earnings and the timing of benefits from shares repurchased. Approximately one-third of the share repurchase benefit was recognized in fiscal 2021. The adjusted earnings per share guidance further reflects benefits from the increase in comparable net sales, primarily due to pricing actions along with the company's cost management and organizational restructuring programs, which are expected to fully offset higher commodity ingredient, and packaging costs, and the timing of input cost recovery. Given the timing of cost increases and recovery through higher net pricing, as well as a shift in timing of marketing expenses, earnings are anticipated to decline in the first half of the fiscal year, most notably in the first quarter with an anticipated decrease of over 20%.

We project free cash flow of approximately $900 million, with capital expenditures of $380 million for the year. The increase for capital expenditures primarily relates to capacity expansion for Smucker's Uncrustables. Other key assumptions affecting cash flow include depreciation expense of $230 million, amortization expense of $220 million, share-based compensation expense of $35 million, and restructuring costs of $25 million, which includes $15 million of noncash charges. On a two-year basis, our full-year guidance reflects net sales, excluding divestitures to grow at a 3% to 4% CAGR, and modest adjusted earnings-per-share growth at the midpoint of the guidance range.

The two-year growth reflects the recovery of earnings related to the divested businesses through both organic growth and shares repurchased and accounts for the lapping of the unprecedented stock-up purchasing during the onset of the COVID-19 pandemic. In closing, I am incredibly proud of our employees who continue to deliver exceptional financial results. Because of their dedication, our business has strong momentum and we've positioned ourselves better than ever to serve the needs of consumers and their pets. With continued financial discipline, we are committed to delivering sustainable and consistent, long-term value for our shareholders.

Thank you for your time. We will now open the call for questions. Operator, please queue up the first question.

Questions & Answers:


Operator

Thanks. The question-and-answer session will begin at this time. [Operator instructions] Our first question today is coming from Andrew Lazar from Barclays. Your line is now live.

Andrew Lazar -- Barclays -- Analyst

Good morning, everybody. Thanks for the question.

Mark Smucker -- President and Chief Executive Officer

Good morning, Andrew.

Andrew Lazar -- Barclays -- Analyst

Hi there. To start off, maybe, you know, with the inflation outlook, it's not surprising that your '22 guidance leans more heavily on the sales growth rather than the margin to kind of reach your EPS targets. Do you see the expectation for organic sales growth in '22 as a target with maybe the appropriate level of conservatism built in? And if so, sort of what underpins your confidence, you know, in this outcome given, you know, the comparisons and the, you know, the still weaker performance in pet that you're still working on sort of turning around, and things of that nature? Then I've just got a follow-up.

Tucker Marshall -- Chief Financial Officer

Andrew, good morning. You are correct on a -- not on a comparable net sales basis. We're intending on being up about 2% at the midpoint of our guidance range. That growth is predominantly driven by the benefits of higher net price realization that we will see in the second quarter and beyond for the balance of the fiscal year.

But underlying that, we do see some organic growth through our portfolio as you think about the continued momentum of the Uncrustables brand within the consumer business, as you think about the advancement of both Cafe Bustelo and Dunkin' and coffee, and then you also think about the performance of our pet snacks business within the pet portfolio. And then, we are anticipating on seeing a return of growth within the away-from-home business, which we experienced in the fourth quarter. And then I would also share that despite the continued at-home consumption that we intend to experience, we are also factoring in a deceleration there as well that is factored into our top line along with some price elasticities due to the increase that we are taking throughout the portfolio on the price front. So that's how we're seeing the composition of the top line at this point.

I'll pause and see if Mark has anything else on the strategic front.

Mark Smucker -- President and Chief Executive Officer

I think it -- Tucker answers that very well.

Andrew Lazar -- Barclays -- Analyst

Great. And then you mentioned planning for elasticities and such and I think you'd mentioned that in terms of the balance, in terms of the organic sales growth you expect between price and volume that, you know, it will be primarily pricing, which makes sense given the actions that you've taken but that that suggests that you still do expect, I guess, some even though it might be very modest volume improvement in '22 as well on an organic basis today. Am I hearing that correctly? I just want to make sure.

Tucker Marshall -- Chief Financial Officer

Andrew, I think if you work through the math, what you'll find out is that the pricing -- the price increase that is being taken is being reduced by some down volume on a year-over-year basis because of factoring in, the deceleration, and increased at-home consumption along with the potential price elasticity assumption that we've made there. So when you look at volume mix other, we would intend for that to be down on a low single-digit basis.

Andrew Lazar -- Barclays -- Analyst

Thanks so much, everybody.

Mark Smucker -- President and Chief Executive Officer

Thank you.

Operator

Thank you. The next question today is coming from Chris Growe from Stifel. Your line is now live. 

Chris Growe -- Stifel Financial Corp. -- Analyst

Hi, good morning.

Mark Smucker -- President and Chief Executive Officer

Good morning.

Chris Growe -- Stifel Financial Corp. -- Analyst

Hi. I had just two questions for you. I do want to ask about your ability to rebuild inventories. Is that something you've been in the middle of the industry has been kind of chasing here throughout the past year.? And just give a sense of maybe where that stand and then you'd expect those to rebuild their tools call it normal levels in line with your sales by the end of the year.

Mark Smucker -- President and Chief Executive Officer

Hey, Chris, this is Mark. Thanks for the question. You know I have been incredibly proud of this team and how they've been managing through the supply challenges of the past 16 months or so. I think we have fared very well in the scheme of things and just in terms of our supply meeting demand, it has not been easy.

But again, I think, you know, we have continued to perform reasonably well. It will take us the better part of the front half of the year for our inventories to get back to what we would consider sort of normal levels. But again, just managing the supply demand dynamics on a daily, if not hourly basis, has really allowed us to perform.

Chris Growe -- Stifel Financial Corp. -- Analyst

OK. Thank you. And then just one other question I have for you, which is in relation to your expectation for SD&A cost to be down 4% for the year. That's a little bit more than a decline in sales and I'm trying to ultimately get to is that you have that cost savings program in place for this year.

You talked about some restructuring and some things -- some lower cost coming through there. Is that $50 million number that we were looking at before, is that primarily coming through SD&A, or is that also flow through and cost of goods sold? Just understand kind of where those costs are coming through and is that still a good number for a lower cost for the year?

Mark Smucker -- President and Chief Executive Officer

Chris, as you think about the SD&A a change year over year and the deep decrease, that's primarily driven by our ongoing costs and margin management programs inclusive of our organizational realignment. And so you would see a portion of that 50 million come through. There's also inclusive of us continuing to sharpen the pencil on our marketing spend not only from a nonworking perspective but also from the timing of marketing spend where we spend a bit more in the fourth quarter. And so that's what you're seeing coming through.

And then lastly, I would just acknowledge that we did have an incentive compensation reset as well year over year due to the strong performance in FY '21.

Operator

The next question today is coming from Ken Goldman from J.P. Morgan. Your line is now live. 

Ken Goldman -- J.P. Morgan -- Analyst

Hi, good morning. Thank you.

Mark Smucker -- President and Chief Executive Officer

Good morning.

Ken Goldman -- J.P. Morgan -- Analyst

You know, one of the questions I'm getting today is if your expectation for volume and mix is, you know, maybe slightly optimistic for this year, I think you said to expect it to be down low single digits. But when I look at it, you're guiding to a pretty big increase in Uncrustables. You know, maybe over $100 hundred million that adds again very rough math 1.5% or so to your volume. And I guess it would imply that the rest of your business will be down maybe closer to mid-single-digit, which doesn't really seem that aggressive to me.

So I just want to make sure that I'm thinking about that math in the right way that really for, you know, coffee and pet and everything, excluding Uncrustables, you are kind of considering something in that low maybe closer to mid-single-digit volume mix decline for this year.

Mark Smucker -- President and Chief Executive Officer

Yeah, Ken, I would break it down this way and maybe just take it by each of the businesses to help you answer your question. I think in consumer, what we are seeing is continued growth across the Uncrustables brand as you've noted. I think what you're seeing is continued momentum in the spreads business but that that should be down year over year just due to the lapping of the unprecedented year. And then, you come into the coffee portfolio, we should continue to see growth and strength in the Cafe Bustelo and Dunkin' brands but you will see a deceleration in the Folgers brand because of just the intense stock up and consumption throughout the year.

But we still believe in the strength of that brand and its underlying performance. As you come into the pet category, we should continue to demonstrate growth in pet snacks across that portfolio and then continue to work through the performance not only on Meow Mix and its delivery but also in the stabilization of just the overall dog food portfolio. And so what we have thought about in crafting the volume mix side of this is it's just one -- the year-over-year impact of just deceleration and at-home consumption. What we've also considered is how we can continue to advance the momentum in the business due to what we've captured through the pandemic.

And then lastly, as we've just acknowledged that we've had to take into fact from price elasticities as we've taken pricing across basically the entire portfolio. And then lastly, as I don't want to leave out of the away-from-home or Canadian businesses, but we intend, particularly for away-from-home, to come back to growth. We're kind of anticipating that growth return to get to kind of 80% to 90% of pre-pandemic levels.

Ken Goldman -- J.P. Morgan -- Analyst

OK. That is helpful. And then, my follow-up is also on Uncrustables probably because that's where my model was most off. But, Mark, you talked about Uncrustables, you gave some numbers, I think 130 million in the quarter, 400 for the year.

You mentioned these numbers, I think, in the context of your retail consumer segment. I just wanted to confirm though that these are figures for the entire business, right, including international and away-from-home? So if that's the case, can you remind us what the rough breakout is of those sales in that consumer business versus away-from-home? Thank you for that.

Mark Smucker -- President and Chief Executive Officer

Yeah, you're right, Ken, it is the total on Uncrustables business, those numbers. And it's approximately a 70-30 split between retail and away-from-home. We continue to bring new capacity online to make sure that we're meeting demand. So that's why we continue to have a lot of optimism around that brand.

Operator

Thank you. And next question today is coming from Rob Dickerson from Jefferies. Your line is now live. 

Rob Dickerson -- Jefferies -- Analyst

Great. Thanks so much. So I guess the first question I have this just on the trade. I think, Mark, you mentioned -- maybe it was Tucker, you know, part of offset of the cost inflation is reduced trade.

I'm just curious if you can provide some color as to kind of how you view the trade spend environment currently, just kind of given what seems to be kind of a light year last year vis-a-vis cost inflation? So if you would be, let's say, spending a bit less on trade, do you kind of believe then it's likely that the industry itself is kind of headed that way this year, just given other costs? Then I have a follow-up.

Mark Smucker -- President and Chief Executive Officer

Hey, Rob, it's Mark. You know, the trade environment as we see it is generally returning to normal. You know, I would remind you guys that trade is one of the levers we use for pricing, and depending on our underlying costs and, you know, where our trade levels are. We could use that lever in our pricing actions, but you will see net pricing across almost all of our categories come through likely in the second quarter as a lot of our pricing actions will be taking effect in July.

But for the most part, our -- the trade environment is not dissimilar from what it has been historically.

Rob Dickerson -- Jefferies -- Analyst

 OK. Fair enough. And then, Tucker, more of a housekeeping question but still I need to ask. You know, it looks like what's implied in the EPS guidance is a kind of a sizable derivative gain.

And maybe if you could and I just didn't hear you touch on that in the prepared remarks. Maybe if you could just kind of touch on what that is and then kind of given how those gains are recorded, is there volatility potential in that gain, or is kind of what you wind up seeing as of April and fiscal '21 essentially booked for '22? And that's it, thank you.

Tucker Marshall -- Chief Financial Officer

No, Rob, good morning, and again, I appreciate the question. Candidly, we've gotten it from some other, so hopefully, it helps clarify for the whole group. What likely you read in the press release and our supplemental pages in the back is our reconciliation table and when we have the line item that says derivative gains and losses that are not a new line item in our guidance table. It has been a consistent approach over the years and what we attempted to do this year was improve the financial reporting disclosure on that line item.

So I would encourage you and others to read the footnote there that fully describes what that line item is, and again, it's consistent over time. But more specific to your question, you're likely referring to the $0.43 benefit. What that is -- it's unallocated derivative activity, both hedging gains and losses, that are held a corporate that will ultimately be released during the upcoming financial period in order to match a future cost. And so those two items go hand in hand in order to deliver the guidance range of $8.70 to $9.10.

Operator

Thank you. And next question today is coming from Peter Galbo from Bank of America. Your line is now live. 

Peter Galbo -- Bank of America -- Analyst

Hey, guys. Good morning. Thank you for taking the question.

Mark Smucker -- President and Chief Executive Officer

Good morning.

Peter Galbo -- Bank of America -- Analyst

Tucker, just wanted to maybe -- some of the comments you made, you know, around the Q1 EPS decline of around 20% to the guidance on gross margins. You know, just -- am I thinking about it right that the 85 basis points for the year of gross margin decline, you should see something on the order of I don't know 200 basis points to 250 basis points decline in the first quarter then?

Tucker Marshall -- Chief Financial Officer

Yeah. So maybe just pulling up for a second. What we are experiencing in the delivery of our fiscal year this year is two components of timing. The first component of timing is is that we are seeing inflationary costs impacting the entire fiscal year with a predominance of almost 60% of that impact occurring to us in the front half of the fiscal year or the first half of the fiscal year.

But more importantly, in the first quarter is the predominance of that. And we have taken pricing action that will be reflected in the month of July but really is having a three-quarters impact. And so as a result of that, 60% of the pricing benefit that we're seeing is really coming in the back half of the fiscal year. And so as a result of that, matching of the cost and the price recovery, you're seeing the impact on the gross profit margin, not only for the first quarter to your point, but also for the front half of the fiscal year with improvement in the back half of the fiscal year.

And so to your point, you will see the gross profit diminution in Q1 and to some extent in Q2, and then you'll see the recovery in Q3 and Q4. 

Peter Galbo -- Bank of America -- Analyst

Got it. No, that's very helpful. Thank you. And then just the second question.

You know, on the topic of share repurchase, just given where the leverage profile sits and the cash flow that you're still expecting to generate this year. You know, from a timing standpoint, should we be thinking about once you're through maybe some of the cost headwinds that would be -- how you would think about evaluating share repurchase? Or just give us any kind of additional color there would be helpful. Thank you.

Tucker Marshall -- Chief Financial Officer

Yeah. So share repurchases are definitely one component of returning cash to shareholders but I think we're seeing the near-term priority is as one continuing to invest through capital expenditures and supportive growth of brands like Uncrustables among others. Two is increasing the quarterly dividend. Three is continuing to pay down debt in order to maintain our leverage profile of around two and a half times.

And where we don't have a strategic opportunity either through capital spending or through acquisition opportunities, we would then look at share repurchases as another form of returning cash to shareholders. So hopefully that gives you a context of the upcoming priorities. But again, we are committed to that balanced capital deployment model.

Operator

Thank you. And next question today is coming from Laurent Grandet from Guggenheim. Your line is now live. 

Laurent Grandet -- Guggenheim Partners -- Analyst

Hey, good morning, everyone, and thanks for the question. So first I do have a follow-up, we're getting at the gain, and so on the two-year stock, I mean, '21 and '22. I mean, it seems like about 3% of us are getting growth rates, so it's way better than pre-COVID. So I like to understand specifically for '22, I mean, if you can be more granular in terms of what it could be from the inventory rebuilds you said it would be in the first half, which would be coming from, you know, more elevated in at-home sales and -- at-home consumption, sorry.

And then, I mean, market share gain as you said 55% of your business is getting a share. So if you can give us some kind of buckets as to whether the growth is coming from or the outperformance is coming from. Thanks.

Tucker Marshall -- Chief Financial Officer

Laurent, good morning. So we did note that on a two-year stock basis, looking at FY '22 guidance at the midpoint versus FY '20, we'd anticipate the total company to kind of be on 3% to 4% compounded annual growth. And when we think about that, what we're seeing here is, and again without decomposing every component, is one is the benefits of higher net pricing that are coming through this fiscal year primarily to offset increased input commodity costs. We're also seeing a continued benefit of the momentum across the various elements of our business that I've spoken to whether it be Uncrustables or advancing Dunkin' and Cafe Bustelo or the advancement of cat food.

And then as Mark spoke on the inventory front, we will continue to work to get to the right inventory levels both within our infrastructure and also within our customers. And we will continue to do that over time. But I think the first half of the fiscal year, inventory levels will still be pretty lean just as we work through supply chains that continue to remain a bit tight but yet are still working supply chain. So that's kind of how we're thinking about that growth on a two-year stock basis.

I might just share that we are seeing performance coming through on that two-year stock basis across the predominance of our U.S. retail businesses, all three, along with a return to growth and the away-from-home business. But again, it won't be 100% pre-pandemic levels by the end of this year and continued momentum in the international business as well.

Laurent Grandet -- Guggenheim Partners -- Analyst

Thanks. And then more specifically, on the pet food business, you mentioned, I mean, clearly the benefit of having those specific organizations, I mean, that focus on pet. So I to understand what are you getting there and some of the execution additions of displays, it is a bit of shelf space? I mean, if you can be a bit more explicit about what you are getting for having a specific and dedicated kind of organization there? And then, I mean, if I may, on Nutrish, you came up to the week brand up your portfolio in pet food. I mean, where are you in the terms of that brand?

Mark Smucker -- President and Chief Executive Officer

Laurent, it's Mark. So first of all, as it relates to taking on two sales forces, which has been a great decision, if I do say so myself, because it really provides focus, and it allows our teams and businesses to really focus on the unique dynamics of the pet category and the pet consumer, which is we refer to as a pet parent, and the way they shop at category. So I won't go into specifics on, you know, specific wins, but we're already seeing a higher degree of focus, a stronger degree of strategic engagement with our customers because, as you know, they think about pet as a separate category as well. And so our engagement with our retail customers is really critical and we're already starting to see the benefit of that.

Our pet strategy, you will recall, is focused first and foremost on pet snacks, the premiumization of Milk-Bone, the launch of other new products in snacks under the Meow Mix and Nutrish brands. So continuing to push out our leadership position in snacks. We have a number two position in cat, and, you know, we will continue. We've had good performance over the course of the year in Meow Mix and we will continue to support the brands in cat through traditional means, as well as innovation.

And then in our dog portfolio, we continue to focus on the stabilization of the Nutritsh brand, which is going reasonably well, expecting some modest growth over time on that brand. But Nutrish for us is really a total master brand strategy. So it is not just dog food, it is snacks, as well as cat and wet dog as well, and so making in which -- in those cases, those segments, we would expect to grow faster than our dry dog food on Nutrish. So snacks first, then cat, and then stabilization of our dog food portfolio is really where we're going to be focused going forward. 

Operator

Thank you. Our next question today is coming from Jason English from Goldman Sachs. Your line is now live.

Jason English -- Goldman Sachs -- Analyst

Hey. Good morning, folks. Thanks for --

Mark Smucker -- President and Chief Executive Officer

Good morning. 

Jason English -- Goldman Sachs -- Analyst

Just to make sure I've got my head wrapped around that derivative gain properly. Effectively, it's the benefits you have in hedge positions that give you some cost shelter through this year where it looks like it adds up to around 60 million. But effectively, it's a benefit that we shouldn't expect to recur again in fiscal '23. Do I have that right?

Tucker Marshall -- Chief Financial Officer

That is correct, but the one comment I would make to that is as we will continue to layer on hedging and risk management strategies and preparation of planning for FY '23 in order to deliver FY '23, so the quote-unquote bucket never really goes to zero, right? You always have your hedging activity that comes through there incorporate, and then will get allocated when it's realized against the cost. And so what I don't want to assume that it's a one-time anomaly, it's not. If you rewind to a year ago roughly today, you would see a very similar line item in our press release then too. Now, sometimes, it's a gain.

Sometimes, it's a loss. Like it's just -- it's depending upon the underlying strategy against the underlying cost that's embedded in your P&L.

Jason English -- Goldman Sachs -- Analyst

Sure. I think the only difference between last year and this year is the parentheses. Last year, you put the parentheses around gains, suggesting that you were backing out gains. And this year, you moved that to losses, suggesting you're adding back gains, which is where I think some of the confusion.

It looks optically like you actually flipped how you're accounting for these things from one year to the next. And it's obviously a trend and material benefit this year. 

Tucker Marshall -- Chief Financial Officer

It was more to improve the presentation and hopefully the readability for all users of our press release, inclusive of bringing a little bit more symmetry or comparability to our Form 10-K. So it was something that we did on a financial reporting front and it's not a mechanic change.

Jason English -- Goldman Sachs -- Analyst

OK. And one other question more about just the underlying components of the business. What are you guys expecting to happen with consumption of your products when we get to this fall and presumably kids go back to school, people go back to work? Are you assuming that baseline consumption rolls over, or do you think what we see today is fairly reflective of what we can see later this year and into next? 

Mark Smucker -- President and Chief Executive Officer

Yeah, Jason. The first thing I would say is we spent a tremendous amount of effort this past year making sure that we come out of this pandemic a stronger company. And so that really means that focusing on the actions that we are taking and whether that's ensuring that we can retain as many of the new consumers as we gained, ensuring that we can continue to invest in marketing and in those areas where we're going to see the most growth, and ensuring that we can engage with the new consumers. And, you know, the proof points thus far have been that we have continued to see solid share gains, as well as repeat purchase.

The external factors and tailwinds that are going to continue to help us is our expectation and what you're seeing across industries is that folks are not going back to work in the way they once did. So there is going to be some hybrid approach. Our own company is no exception on how often folks are physically in an office versus at home. And their -- people are going to be spending more time at home, which means they're going to be treating their pets more.

And in particular, because wherein our coffee and consumer categories are focused primarily on breakfast and lunch, those two eating occasions are going to continue to take place at home at a more elevated pace. So we think those tailwinds are going to continue to help. You know, more pet households and just more people brewing coffee at home are just a couple of examples of how we should continue to benefit from some of those external tailwinds. 

Operator

Thank you. And our next question is coming from Robert Moskow from Credit Suisse. Your line is now live.

Robert Moskow -- Credit Suisse -- Analyst

Hi. Thanks. Questions have been largely asked, but do you consider the benefit to consumer spending at grocery for the first five months of this year from all the government's stimulus and also the snacks benefits being unusually high? You're not alone in terms of package food companies that have sales have exceeded expectations for the first five months of the calendar year. And I'm just wondering if you think that was a factor? And if so, would it present more difficult comparisons, you know, when we're thinking about the first five months of 2022? Thanks. 

Tucker Marshall -- Chief Financial Officer

You know, Robert, it's a very good question and it's one that we'd consider across our portfolio. And, you know, an example that I would use is in coffee, right? We assumed that we would have continued at-home consumption trends through the first half of the year, and then it would slow down a little bit. And it's not only due to the government stimulus, but it's also due to the new -- have a new lifestyle or habits or migration patterns of consumers, right? They'll balance not only working from home, in a remote environment, they would go back to an office environment. So that would be one example that we did factor in.

So I guess what I would say from a planning perspective is that before we dove into all the mechanics of a financial plan, we stepped back and made some assumptions around macroeconomic impacts or just overall sort of social impacts, and those were considered. 

Robert Moskow -- Credit Suisse -- Analyst

OK. And one more question. I was a little unclear if you were guiding to sales growth for all of your segments in fiscal '22 or whether, you know, some are expected to grow and some are expected to decline a little bit, like maybe coffee declines a little bit? I was unclear. 

Tucker Marshall -- Chief Financial Officer

Yeah. So don't have the sheet right in front of me. But what we have anticipated -- just let me pull it here and I'll look it up for you, Rob. Thank you.

Well, we have anticipated is, on a full-year basis, we would see growth across pet and probably see some stability across coffee. On the consumer side, you would see some growth as well. And then in your international and away-from-home, you would also see some growth due to the return of the away-from-home segment. The pet and consumer growth that we're talking about is, again, is low single digits.

The coffee, as I've noted, is consistent year over year. And when you think about the international and away-from-home segment, that's probably in a mid-single-digit-plus just due to that recovery in away-from-home. And I would just acknowledge, the footnote there is that's all on a comparable basis, excluding the impact of the divestiture activity year over year.

Robert Moskow -- Credit Suisse -- Analyst

OK. Very helpful. Thank you.

Operator

Thanks. And our next question today is coming from Alexia Howard from Bernstein. Your line is now live.

Alexia Howard -- Bernstein -- Analyst

Good morning, everyone.

Mark Smucker -- President and Chief Executive Officer

Good morning. 

Tucker Marshall -- Chief Financial Officer

Good morning.

Alexia Howard -- Bernstein -- Analyst

OK. So a couple of questions for me. First of all, on the coffee side of the business, the coffee input cost inflation seems to be -- it's picked up, I guess, a bit since last quarter. You mentioned that you're not expecting much growth overall in sales.

That means I suspect that pricing will be up fairly meaningfully, but volumes will be down fairly meaningfully. Does that mean that we should expect margins to come down reasonably sharply to maybe more normal long-term goals are in there? And are you getting a read that competitors will match those price increases or is it too early to tell? And then I have a follow-up. 

Tucker Marshall -- Chief Financial Officer

Alexia, why don't I just talk a little bit about the -- maybe the trend in coffee to some of the cost and margin comments that you made, and then Mark can talk a little bit more about the pricing component or dynamics. But, you know, we still, at big picture, remain committed to that greater than 30% coffee margins at the segment level. We anticipate seeing a minor deceleration year over year, but still staying at pretty strong margins in coffee on a full-year basis. But as I noted in some of my prior comments, there's a bit of timing of the pricing actions that we're taking that will really be effective in the month of July and kind of realized in Q2, three, and four against the cost structure that's coming right in front of us in Q1.

And so you likely will see a pretty substantial margin decline in coffee in the first quarter with a nice rebound in the second, third, and fourth quarters. But again, still supporting that low 30% on a year-over-year basis. So I'll pause there and hand it to Mark just on the pricing front.

Mark Smucker -- President and Chief Executive Officer

Yeah, Alexia, as you know, coffee is a pass-through category, and so we will pass through costs to customers and consumers either up or down. And so, you know, we -- that has always been the case as long as we've been in the coffee business. Of course, we have a very robust hedging strategy. You know, we are constantly using whatever instruments are at our disposal to ensure that the delivered cost is, you know, consistent with what how we plan the business.

And then I guess the only other comment I would make about coffee is we have been very successful in our strategy to ensure that our portfolio tracks with that category. In other words, the growth in -- of Dunkin and Bustelo has been phenomenal, and that was -- that's been intentional because we know that there has been continued premiumization. And then, of course, the shift to single-serve or K-cups, our brand outperformed the category in this last quarter. And so we feel very good about where the total portfolio is positioned.

And then some of the reinvigorating efforts that are coming on Folgers in the back half of the year should continue to help our total coffee business.

Alexia Howard -- Bernstein -- Analyst

Great. And then in the prepared remarks, you talked about having maybe something of an appetite for more deals and possible acquisitions. Can I ask which categories are you are sitting in and what are the criteria that you'd be using to evaluate those?

Mark Smucker -- President and Chief Executive Officer

Thanks for the question, Alexia. It starts with finding the right brands at the right price. And we obviously want to be prudent in terms of the multiples that we're paying for any acquisition. Our lines, if you will, continue to be in the water and we do continue to look at assets as they come available.

We've clearly done -- been very proactive in terms of, you know, reshaping our portfolio most recently with these two divestitures. We will continue to be committed to the three categories that we are in and to the extent that we can continue to take leading positions in those three categories, we will do so. And as it relates to other categories, I think, you know, we wouldn't comment if, you know, on potentially new categories other than to say if there are categories that are growing and have attractive assets, we will consider them.

Operator

Thank you. Our next question today is coming from Pamela Kaufman from Morgan Stanley. Your line is now live. 

Pamela Kaufman -- Morgan Stanley -- Analyst

Good morning. I just wanted to build on Alexia's question about pricing, and I guess more broadly beyond coffee, can you give us a sense for the magnitude of list price increases by category, and what assumptions you're making about the competitive response? And I guess how accommodating have retailers been to your planned list price increases? 

Tucker Marshall -- Chief Financial Officer

Why don't I go ahead and get started here? Good morning. What we are seeing is high single-digit to double-digit specific commodity cost increases year over year. So the actual giving commodity or unit, which is translating into a mid-single-digit increase in our total cost of goods sold, which is then, on average, looking like a, you know, low to kind of mid-single-digit price increase at the top line on average. I don't know if we're going to break it down by the giving categories, but I'll pause, Mark, and just see if there's anything to add just on the pricing front.

Mark Smucker -- President and Chief Executive Officer

Well, Pamela, I would just add that, you know, pricing is something that we're always managing. It's part and parcel to our business. You know, we have seen inflationary pressures throughout the last year, really starting as far back as April of 2020. And so, you know, it's a critical component of our business.

We feel that managing through the inflation and the pricing is manageable. And in order to do that, we've got to continue to partner with our retail customers, making sure that those, you know, the cost recovery is justifiable. And then at the end of the day, it's a win-win for them as well. So very comfortable with the actions that we need to take and obviously built in some reasonable assumptions into our plans for the year-end guidance.

Pamela Kaufman -- Morgan Stanley -- Analyst

Great. Thank you. And can you give an update on e-commerce penetration by segment? What are you embedding in your guidance for e-commerce growth? Given the strong growth last year, would you expect to see some shift back in store or e-commerce to continue to build on top of last year's performance?

Mark Smucker -- President and Chief Executive Officer

Yeah. It's Mark again, Pamela. Twelve percent was the number I think in the script -- the scripted comments in terms of how much of our business is on e-commerce. It definitely skews toward pet, and then coffee would be a second, not a close second but second.

And again, you know, thinking of e-commerce as both pure-play, as well as the click-and-collect model, we continue to focus on the profitability of that business through price pack architecture and things like that. But do not expect that consumers will return to brick-and-mortar purchases for those who have already made the migration to e-commerce. We believe that that migration is here to stay.

Pamela Kaufman -- Morgan Stanley -- Analyst

Great. Thank you.

Operator

Thank you. We reached the end of our question-and-answer session. I'd like to turn the floor back over to management for any further or closing comments.

Mark Smucker -- President and Chief Executive Officer

Thank you. Thank you to all of you for taking the time today. We're incredibly proud of our performance for the fourth quarter and the year and continue to have optimism moving forward. Obviously, focusing strongly on ensuring that we have emerged from this pandemic a stronger company with some very keen priorities and capabilities.

And just appreciate the support. And really, thank you to our employees for their delivery in this record year. Have a great weekend.

Operator

[Operator signoff]

Duration: 79 minutes

Call participants:

Aaron Broholm -- Vice President, Investor Relations

Mark Smucker -- President and Chief Executive Officer

Tucker Marshall -- Chief Financial Officer

Andrew Lazar -- Barclays -- Analyst

Chris Growe -- Stifel Financial Corp. -- Analyst

Ken Goldman -- J.P. Morgan -- Analyst

Rob Dickerson -- Jefferies -- Analyst

Peter Galbo -- Bank of America -- Analyst

Laurent Grandet -- Guggenheim Partners -- Analyst

Jason English -- Goldman Sachs -- Analyst

Robert Moskow -- Credit Suisse -- Analyst

Alexia Howard -- Bernstein -- Analyst

Pamela Kaufman -- Morgan Stanley -- Analyst

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