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What changed in J.M. Smucker Company (The)'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of J.M. Smucker Company (The)'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+484 added−440 removedSource: 10-K (2024-06-18) vs 10-K (2023-06-20)

Top changes in J.M. Smucker Company (The)'s 2024 10-K

484 paragraphs added · 440 removed · 362 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

83 edited+23 added−17 removed32 unchanged
Biggest changeOur commitment to inclusion, diversity, and equity (“ID&E”) is focused around the following three aspirations: Enhance Workplace Diversity • Aspire to double the representation of People of Color within our U.S. salaried employee community by 2027 • Aspire to increase women at all senior levels within our U.S. salaried employee community to 45 percent by 2027 • Complete foundational work across other key demographics to establish baselines to inform future quantitative growth aspirations Increase Equity Through Expanded Opportunities • Evaluate and evolve practices, including lateral assignments and promotions, to support equitable opportunities Foster an Inclusive Workplace • Establish measurable expectations for participation in select employee resource group (“ERG”) sponsored events and education • Develop integrated strategy, aspirations, and prioritized initiatives across our ERGs In support of these aspirations, we have made important progress over the past year on our commitment to create an environment where our employees are supported and differences are truly celebrated.
Biggest changeOur commitment to inclusion, diversity, and equity (“ID&E”) is focused around the following three aspirations: • Enhance Workplace Diversity within our U.S. salaried employee community by aspiring to double the representation of People of Color and increasing the presence of women at all senior levels by 2027; • Increase Equity Through Expanded Opportunities by evaluating training programs and practices, including lateral assignments and promotions, to support equitable opportunities for all; and • Foster an Inclusive Workplace by establishing measurable expectations for participation in select employee resource group (“ERG”) sponsored events and education and the development of integrated strategy, aspirations, and prioritized initiatives across our ERGs.
We operate principally in one industry, the manufacturing and marketing of branded food and beverage products on a worldwide basis, although the majority of our sales are in the United States (the “U.S.”). Operations outside the U.S. are principally in Canada, although our products are exported to other countries as well.
We operate principally in one industry, the manufacturing and marketing of branded food and beverage products on a worldwide basis, although the majority of our sales are in the United States (“U.S.”). Operations outside the U.S. are principally in Canada, although our products are exported to other countries as well.
We believe it is important to celebrate their contributions, including recognizing organizations about which they are especially passionate about.
We believe it is important to celebrate their contributions, including recognizing organizations about which they are especially passionate.
The transaction included the Rachael Ray ® Nutrish ® , 9Lives ® , Kibbles ’n Bits ® , Nature’s Recipe ® , and Gravy Train ® brands, as well as our private label pet food business, inclusive of certain trademarks and licensing agreements, manufacturing and distribution facilities in Bloomsburg, Pennsylvania, manufacturing facilities in Meadville, Pennsylvania and Lawrence, Kansas, and approximately 1,100 employees who supported these pet food brands.
The transaction included the Rachael Ray ® Nutrish ® , 9Lives ® , Kibbles ’n Bits ® , Nature’s Recipe ® , and Gravy Train ® brands, as well as the private label pet food business, inclusive of certain trademarks and licensing agreements, manufacturing and distribution facilities in Bloomsburg, Pennsylvania, manufacturing facilities in Meadville, Pennsylvania and Lawrence, Kansas, and approximately 1,100 employees who supported these pet food brands.
Dunkin’ is a trademark of DD IP Holder LLC used under three licenses (the “Dunkin’ Licenses”) for packaged coffee products, including K-Cup ® pods, sold in retail channels, such as grocery stores, mass merchandisers, club stores, e-commerce, and drug stores, as well as in certain away from home channels.
Dunkin’ is a trademark of DD IP Holder LLC used under three licenses (the “Dunkin’ Licenses”) for packaged coffee products, including K-Cup ® pods, sold in retail channels, such as grocery stores, mass merchandisers, club stores, e- 3 commerce, and drug stores, as well as in certain away from home channels.
The transaction included dry pet food products sold under private label brands, a dedicated manufacturing facility located in Frontenac, Kansas, and approximately 220 employees who supported the private label dry pet food business. The transaction did not include any branded products or our private label wet pet food business.
The transaction included dry pet food products sold under private label brands, a dedicated manufacturing facility located in Frontenac, Kansas, and approximately 220 employees who supported the private label dry pet food business. The transaction 2 did not include any branded products or our private label wet pet food business.
In Canada, we are the branded market leader in the flour, pickles, fruit spreads, canned milk, and ice cream toppings categories. Our business is highly competitive as all of our brands compete with other branded products as well as private label products.
In Canada, we are the branded market leader in the flour, fruit spreads, canned milk, and ice cream toppings categories. Our business is highly competitive as all of our brands compete with other branded products as well as private label products.
The primary ways in which products and brands are distinguished are brand recognition, product quality, price, packaging, new product introductions, nutritional value, convenience, advertising, promotion, and the ability to identify and satisfy consumer preferences.
The primary ways in which products and brands are distinguished include brand recognition, product quality, price, packaging, new product introductions, nutritional value, convenience, advertising, promotion, and the ability to identify and satisfy consumer preferences.
Raw materials are generally available from numerous sources, although we have elected to source certain plastic packaging materials for our Folgers ® coffee products, as well as our Jif ® peanut butter, and certain finished goods, such as K-Cup ® pods, our Pup-Peroni ® dog snacks, and liquid coffee, from single sources of supply pursuant to long-term contracts.
Raw materials are generally available from numerous sources, although we have elected to source certain plastic packaging materials for our Folgers ® coffee products, as well as our Jif ® peanut butter, and certain finished goods, such as K-Cup ® pods, our Pup-Peroni ® dog snacks, and liquid coffee, from primary or single sources of supply pursuant to long-term contracts.
Further, we have partnered with the Akron Urban League, the Urban League of Greater Cleveland, the Equal Justice Initiative, the Human Rights Campaign, and the NAACP Legal Defense and Educational Fund to further our commitment to this cause and have committed more than $600,000 to these partners as part of multi-year partnerships.
Further, we have partnered with the Akron Urban League, the Urban League of Greater Cleveland, the Equal Justice Initiative, the Human Rights Campaign, and the NAACP Legal Defense and Educational Fund to further our commitment to this cause and have committed more than $680,000 to these partners as part of multi-year partnerships.
We believe we are in compliance with such laws and regulations and do not expect continued compliance to have a material impact on our capital expenditures, earnings, or competitive position in 2024. Environmental Matters: Compliance with environmental regulations and prioritizing our environmental sustainability efforts are important to us as a responsible corporate citizen.
We believe we are in compliance with such laws and regulations and do not expect continued compliance to have a material impact on our capital expenditures, earnings, or competitive position in 2025. Environmental Matters: Compliance with environmental regulations and prioritizing our environmental sustainability efforts are important to us as a responsible corporate citizen.
Our ERGs include BLAC (Black Leadership and Ally Council); PRIDE Alliance (i.e., LGBTQ+); GROW (Greater Resources and Opportunities for Women); RAICES (i.e., Latino/a/x and Hispanic contributions); AFVA (Armed Forces Veterans and Allies); CAPIA (Community of Asians, Pacific Islanders, and Allies); and ADDAPT (Advocating for Disabilities and Diverse Abilities by Partnering Together), which all employees are encouraged to join as either a member or ally.
Our ERGs include BLAC (Black Leadership and Ally Council); PRIDE Alliance (i.e., LGBTQ+); GROW (Greater Resources and Opportunities for Women); RAICES (i.e., Latino/a/x and Hispanic contributions); AFVA (Armed Forces Veterans and Allies); CAPIA (Community of Asians, Pacific Islanders, and Allies); ADDAPT (Advocating for Disabilities and Diverse Abilities by Partnering Together); and YP (Young Professionals), which all employees are encouraged to join as either a member or ally.
Additional information regarding our human capital management is available in our 2022 Corporate Impact Report that can be found on our website at www.jmsmucker.com/news-stories/corporate-publications. Information on our website, including our 2022 Corporate Impact Report, is not incorporated by reference into this Annual Report on Form 10-K.
Additional information regarding our human capital management is available in our 2023 Corporate Impact Report that can be found on our website at www.jmsmucker.com/news-stories/corporate-publications. Information on our website, including our 2023 Corporate Impact Report, is not incorporated by reference into this Annual Report on Form 10-K.
Government Business: No material portion of our business is subject to renegotiation of profits or termination of contracts at the election of the government. Competition: We are the branded market leader in the coffee, dog snacks, peanut butter, and fruit spreads categories in the U.S.
Government Business: No material portion of our business is subject to renegotiation of profits or termination of contracts at the election of the government. Competition: We are the branded market leader in the coffee, dog snacks, peanut butter, frozen snacks and sandwiches, and fruit spreads categories in the U.S.
Trademarks and Patents : Many of our products are produced and sold under various patents and patents pending, and marketed under trademarks owned or licensed by us or one of our subsidiaries. Our major trademarks as of April 30, 2023, are listed below. Primary Reportable Segment Major Trademark U.S.
Trademarks and Patents: Many of our products are produced and sold under various patents and patents pending, and marketed under trademarks owned or licensed by us or one of our subsidiaries. Our major trademarks as of April 30, 2024, are listed below. Primary Reportable Segment Major Trademark U.S.
Under our ownership, these brands generated net sales of $1.5 billion in 2023, and $1.4 billion in both 2022 and 2021, primarily included in the U.S. Retail Pet Foods segment. On January 31, 2022, we sold the natural beverage and grains businesses to Nexus Capital Management LP (“Nexus”). The transaction included products sold under the R.W.
Under our ownership, these brands generated net sales of $1.5 billion and $1.4 billion in 2023 and 2022, respectively, primarily included in the U.S. Retail Pet Foods segment. On January 31, 2022, we sold the natural beverage and grains businesses to Nexus Capital Management LP (“Nexus”). The transaction included products sold under the R.W.
We closely monitor the price gap, or price premium, between our brands and private label brands, with the view that value is about more than price and the expectation that number one brands will continue to be an integral part of consumers’ shopping baskets. 4 Our primary brands and major competitors as of April 30, 2023, are listed below.
We closely monitor the price gap, or price premium, between our brands and private label brands, with the view that value is about more than price and the expectation that number one brands will continue to be an integral part of consumers’ shopping baskets. Our primary brands and major competitors as of April 30, 2024, are listed below.
Private label brands Various Peet’s Coffee & Tea JDE Peet’s N.V. Eight O’Clock Tata Global Beverages Limited Community Coffee Community Coffee Company Gevalia The Kraft Heinz Company U.S. Retail Consumer Foods Peanut butter and specialty spreads Jif (A) Private label brands Various Skippy Hormel Foods Corporation Nutella Ferrero SpA Peter Pan Post Holdings, Inc.
Private label brands Various Peet’s Coffee & Tea JDE Peet’s N.V. Eight O’Clock Tata Global Beverages Limited Community Coffee Community Coffee Company Gevalia The Kraft Heinz Company U.S. Retail Frozen Handheld and Spreads Peanut butter and specialty spreads Jif ( A) Private label brands Various Skippy Hormel Foods Corporation Nutella Ferrero SpA Peter Pan Post Holdings, Inc.
Additionally, we employ an incentive program for eligible participants to reward both shared Company results and strong individual performance. Our Total Rewards program offers competitive, comprehensive benefits to meet the unique needs of each employee at each life stage, including insurance coverage options for domestic partners in 8 addition to married couples, and a Company-matched retirement savings program.
Additionally, we employ an incentive program for eligible participants to reward both shared Company results and strong individual performance. Our Total Rewards program offers competitive, comprehensive benefits to meet the unique needs of each employee at each life stage, including insurance coverage options for domestic partners in addition to married couples, and a retirement savings program with a Company match.
Learning and Development: We strive to foster an environment of growth for our people and support our culture of continuous learning and our focus on our basic belief, Play to Win . We support and challenge our employees to increase their knowledge, skills, and capabilities through all phases of their career.
Learning and Development: We strive to foster an environment of growth and continuous learning for our people with a focus on our basic belief, Play to Win . We support and challenge our employees to increase their knowledge, skills, and capabilities through all phases of their career.
We offer all employees a variety of free and discounted services, as well as education opportunities, to support their physical, emotional, and financial well-being, including free sessions through our Employee Assistance Program. We also offer on-site conveniences, such as health and wellness centers at several of our locations and a Child Development Center at our corporate headquarters in Orrville, Ohio.
We offer all employees a variety of free and discounted services, as well as educational opportunities, to support their physical, emotional, and financial well-being, including free sessions through our Employee Assistance Program. We also offer onsite conveniences, such as health and wellness centers at several of our locations and a Child Development Center at our corporate headquarters in Orrville, Ohio.
While availability may vary year-to-year, we believe that we will continue to obtain adequate supplies and that alternatives to single-sourced materials are available. We have not historically encountered significant shortages of key raw materials. We consider our relationships with key raw material suppliers to be in good standing.
While availability may vary year to year, we have not historically encountered significant shortages of key raw materials, and we believe that we will continue to obtain adequate supplies. We consider our relationships with key raw material suppliers to be in good standing.
Slogans or designs considered to be important trademarks include, without limitation, “ With A Name Like Smucker’s, It Has To Be Good ® , ” “ The Best Part of Wakin’ Up Is Folgers In Your Cup ® , ” “ Choosy Moms Choose Jif ® , ” “ That Jif’ing Good TM , ” “ The Only One Cats Ask For By Name ® , ” the Smucker’s banner, the Crock Jar shape, the Gingham design, the Jif Color Banner design, the Café Bustelo Angelina design, and the Milk-Bone and Meow Mix logos.
Slogans or designs considered to be important trademarks include, without limitation, “ With A Name Like Smucker’s, It Has To Be Good ® ,” “ The Best Part of Wakin’ Up Is Folgers In Your Cup ® ,” “ That Jif’ing Good ® ,” “ The Only One Cats Ask For By Name ® ,” the Smucker’s banner, the Uncrustables Round, Crustless Sandwich design, the Crock Jar shape, the Gingham design, the Jif Color Banner design, the Café Bustelo Angelina design, and the Milk-Bone and Meow Mix logos.
Building a career at our Company is fundamental to who we are and is evidenced by our Executive Leadership Team, where 5 of 7 members were promoted from within, and our trailing 12-month turnover remains below industry average.
Building a career at our Company is fundamental to who we are and is evidenced by our Executive Leadership Team, where 4 of 6 members were promoted from within, and our trailing 12-month turnover remains below the industry average.
We have supported the LeBron James Family Foundation, and its work with the I PROMISE School, including helping supply the school’s on-site food pantry, donating funds to the school’s library, and the development of the I PROMISE School’s J. M. Smucker Hometown Hall.
We have supported the LeBron James Family Foundation, and its work with the I PROMISE School, including helping supply the school’s onsite food pantry, donating funds to the school’s library, and the development of the I PROMISE School’s Smucker Hometown Hall.
During calendar year 2022, due to our increased effort to support diversity and inclusion, our Corporate Equality Index (“CEI”) from the Human Rights Campaign was 95 out of 100 points, which increased from 80 in calendar year 2021.
During calendar year 2023, due to our increased efforts to support diversity and inclusion, our Corporate Equality Index (“CEI”) from the Human Rights Campaign was 100 out of 100 points, which increased from 95 in calendar year 2022.
Green coffee, along with certain other raw materials, is sourced solely from foreign countries, and its supply and price is subject to high volatility due to factors such as weather, global supply and demand, product scarcity, plant disease, investor speculation, armed hostilities (including the ongoing conflict between Russia and Ukraine), changes in governmental agricultural and energy policies and regulation, and political and economic conditions in the source countries.
Green coffee, along with certain other raw materials, is sourced solely from foreign countries, and its supply and price is subject to high volatility due to factors such as weather, global supply and demand, product scarcity, plant disease, investor speculation, geopolitical conflicts (including the ongoing conflicts between Russia and Ukraine and Israel and Hamas), changes in governmental agricultural and energy policies and regulations, and political and economic conditions in the source countries.
Under our ownership, the businesses generated net sales of $106.7 and $143.4 in 2022 and 2021, respectively, primarily included in the U.S. Retail Consumer Foods segment. On December 1, 2021, we sold the private label dry pet food business to Diamond Pet Foods, Inc. (“Diamond Pet Foods”).
Under our ownership, the businesses generated net sales of $106.7 in 2022, primarily included in the U.S. Retail Frozen Handheld and Spreads segment. On December 1, 2021, we sold the private label dry pet food business to Diamond Pet Foods, Inc. (“Diamond Pet Foods”).
The availability, quality, and costs of many of these commodities have fluctuated, and may continue to fluctuate over time, partially driven by the elevated commodity and supply chain costs we experienced in 2023.
The availability, quality, and costs of many of these commodities have fluctuated, and may continue to fluctuate over time, partially driven by the elevated commodity and supply chain costs we have continued to experience in 2024.
In support of our commitment to environmental sustainability, we have implemented and manage a variety of programs across our operations, including energy optimization, utilization of renewable energy, water conservation, recycling, and, in our supply chains, we have partnerships with farmers who implement sustainable practices. We continue to evaluate and modify our processes to further limit our impact on the environment.
In support of our commitment to environmental sustainability, we have implemented and manage a variety of programs across our operations, including energy optimization, utilization of renewable energy, water conservation, recycling, and, in our supply chains, we support projects that increase sustainable practices. We continue to evaluate and modify our processes to further limit our impact on the environment.
Governmental regulation encompasses such matters as ingredients (including whether a product contains bioengineered ingredients), packaging, labeling, pricing, advertising, relations with distributors and retailers, health, safety, data privacy and security, and anti-corruption, as well as an increased focus regarding environmental policies relating to climate change, regulating greenhouse gas emissions, energy policies, and sustainability, including single-use plastics.
Governmental regulation encompasses such matters as ingredients (including whether a product contains bioengineered ingredients), packaging and disposal of packaging, labeling (including use of certain terms such as sugar free, healthy, low sodium, and low fat), pricing, advertising, relations with distributors and retailers, health, safety, data privacy and security, and anti-corruption, as well as an increased focus regarding environmental policies relating to climate change, regulating greenhouse gas emissions, energy, and sustainability, including single-use plastics.
No other customer exceeded 10 percent of net sales for any year. During 2023, our top 10 customers, collectively, accounted for approximately 60 percent of consolidated net sales. Supermarkets, warehouse clubs, and food distributors continue to consolidate, and we expect that a significant portion of our revenues will continue to be derived from a limited number of customers.
During 2024, our top 10 customers, collectively, accounted for approximately 60 percent of consolidated net sales. Supermarkets, warehouse clubs, and food distributors continue to consolidate, and we expect that a significant portion of our revenues will continue to be derived from a limited number of customers.
Sources and Availability of Raw Materials: The raw materials used in each of our segments are primarily commodities, agricultural-based products, and packaging materials. Green coffee, protein meals, peanuts, grains, plastic containers, oils and fats, fruit, and other ingredients are obtained from various suppliers.
Sources and Availability of Raw Materials: The raw materials used in each of our segments are primarily commodities, agricultural-based products, and packaging materials. Green coffee, peanuts, oils and fats, flour, sugar, fruit, and other ingredients are obtained from various suppliers.
We own many patents worldwide in addition to utilizing proprietary trade secrets, technology, know-how processes, and other intellectual property rights that are not registered. We consider all of our owned and licensed intellectual property, taken as a whole, to be essential to our business. 3 Seasonality: The U.S. Retail Pet Foods, U.S. Retail Coffee, and U.S.
We own many patents worldwide in addition to utilizing proprietary trade secrets, technology, know-how processes, and other intellectual property rights that are not registered. We consider all of our owned and licensed intellectual property, taken as a whole, to be essential to our business.
Net sales outside the U.S., subject to foreign currency translation, represented 5 percent of consolidated net sales for 2023. Our branded food and beverage products include a strong portfolio of trusted, iconic, market-leading brands that are sold to consumers through retail outlets in North America. We have three reportable segments: U.S. Retail Pet Foods, U.S. Retail Coffee, and U.S.
Net sales outside the U.S., subject to foreign currency translation, represented 5 percent of consolidated net sales for 2024. Our branded food and beverage products include a strong portfolio of trusted, iconic, market-leading brands that are sold to consumers primarily through retail outlets in North America.
Dentastix and Greenies Mars, Incorporated Private label brands Various U.S. Retail Coffee Mainstream roast and ground coffee Folgers (A) and Café Bustelo Maxwell House and Yuban The Kraft Heinz Company Private label brands Various McCafé Keurig Dr. Pepper Cafe La Llave F. Gaviña & Sons, Inc.
Our Primary Products Our Primary Brands Competing Brands Competitors U.S. Retail Coffee Mainstream roast and ground coffee Folgers (A) and Café Bustelo Maxwell House and Yuban The Kraft Heinz Company Private label brands Various McCafé Keurig Dr. Pepper Cafe La Llave F. Gaviña & Sons, Inc.
Retail Consumer Foods. The U.S. retail market segments in total comprised 87 percent of 2023 consolidated net sales and represent a major portion of our strategic focus – the sale of branded food and beverage products with leadership positions to consumers through retail outlets in North America.
These segments in total comprised 85 percent of consolidated net sales in 2024 and represent a major portion of our strategic focus – the sale of branded food and beverage products with leadership positions to consumers through retail outlets in North America.
These programs provide resources that respond to their changing needs throughout their careers, including access to our Child Development Center, flexible work schedules, tuition assistance, pet insurance, and expanded parental leave.
These programs provide resources that respond to their changing needs throughout their careers, including access to our Child Development Center, tuition assistance, pet insurance, paid bereavement leave, and expanded parental leave for both parents.
Our employees are among our most important resources and are critical to our success as a company. Therefore, we are committed to supporting our employees holistically, both personally and professionally. With almost 5,800 full-time employees worldwide, every employee makes a difference to our Company.
Our employees are critical to our success as a company, and we are committed to supporting them holistically, both personally and professionally. With almost 9,000 full-time employees worldwide, every employee makes a difference to our Company.
Fruit spreads Smucker’s (A) Private label brands Various Welch’s Welch Foods Inc. Bonne Maman Andros Foods USA, Inc. Frozen sandwiches and snacks Smucker’s Uncrustables Hot Pockets (A) Nestlé S.A. Totino’s General Mills, Inc. El Monterrey Ruiz Foods International and Away From Home Foodservice hot beverage Folgers, 1850 ® , and Café Bustelo Starbucks Nestlé S.A.
Fruit spreads Smucker’s (A) Private label brands Various Welch’s Welch Foods Inc. Bonne Maman Andros Foods USA, Inc. Frozen sandwiches and snacks Smucker’s Uncrustables Hot Pockets (A) Nestlé S.A. Totino’s General Mills, Inc. El Monterrey Ruiz Foods Private label brands Various U.S.
We have successfully introduced ERGs, which are all voluntary, employee-led groups that represent a unique community. The purpose of these groups is to create inclusion where all can see themselves and feel a part of our Company. We have seven ERGs, as well as our Advocate Alliance group, to support employees and encourage allyship.
The purpose of these groups is to create inclusion where all can see themselves and feel a part of our Company. We have eight ERGs, as well as our Advocate Alliance group, to support employees and encourage allyship.
Compensation and Benefits: In support of our basic beliefs, Be Kind and Play to Win , we believe in paying for performance and compensating our employees at market competitive rates and utilizing performance-based awards to support the overall well-being of our employees.
To date, $800,000 in college funds have been awarded to 160 HACU Latino students nationwide. Compensation and Benefits: In support of our basic beliefs, Be Kind and Play to Win , we believe in paying for performance and compensating our employees at market competitive rates and utilizing performance-based awards to support the overall well-being of our employees.
Our Employee Development programs offer foundational instruction on Company culture and provide employees additional learning opportunities throughout their careers. This is reflected in annual reviews, which allow management and employees to partner and determine specific opportunities for growth within each role through important work, new experiences generated through a dynamic environment, regular feedback, and purposeful development opportunities.
This is reflected in annual reviews, which allow management and employees to partner and determine specific opportunities for growth within each role through important work, new experiences generated through a dynamic environment, regular feedback, and purposeful development opportunities.
Finally, our Café Bustelo brand continues to sponsor the El Café del Futuro Scholarship, a program that invests in the Latino community by awarding scholarships to college students at HACU-member institutions seeking a better future for themselves, their families, and their communities. To date, $550,000 in college funds have been awarded to 110 Latino students nationwide.
Finally, in partnership with the Hispanic Association of Colleges and Universities (“HACU”), our Café Bustelo brand continues to sponsor the El Café del Futuro Scholarship, a program that invests in the Latino community by awarding scholarships to college students at HACU-member institutions seeking a better future for themselves, their families, and their communities.
Private label brands Various Nescafé Société des Produits Nestlé S.A. Foodservice portion control Smucker’s and Jif Private label brands Various, including Diamond Crystal Brands Heinz, Welch’s, and Private Label Brands The Kraft Heinz Company Foodservice frozen handheld Smucker’s Uncrustables Hot Off the Grill Integrated Food Service Classic Delight Classic Delight Inc.
Foodservice portion control Smucker’s and Jif Private label brands Various, including Diamond Crystal Brands Heinz , Welch’s , and Private Label Brands The Kraft Heinz Company Foodservice frozen handheld Smucker’s Uncrustables Hot Off the Grill Integrated Food Service Classic Delight Classic Delight Inc. Canada coffee Folgers Tim Hortons (A) Restaurant Brands International Inc.
Marshall was elected to his present position in May 2020, having served as Senior Vice President and Deputy Chief Financial Officer since November 2019. Prior to that time, he served as Vice President, Finance since May 2016. (F) Ms. Penrose was elected to her present position in March 2023, having served as Chief People and Administrative Officer since November 2019.
Prior to that time, she served as Senior Vice President, General Counsel and Secretary since May 2016. (D) Mr. Marshall was elected to his present position in May 2020, having served as Senior Vice President and Deputy Chief Financial Officer since November 2019. Prior to that time, he served as Vice President, Finance since May 2016. (E) Ms.
Specifically, through the American Red Cross ® and United Way ® , we have donated more than $1.2 to support the communities where we live and work.
Specifically, through the Feeding America ® , Greater Good Charities ® – Rescue Bank, American Red Cross ® , and United Way ® , we have donated more than $1.5 million to support the communities where we live and work.
Product sales information for the years 2023, 2022, and 2021 is included within Note 4: Reportable Segments. 2 In the U.S. retail market segments, our products are primarily sold through a combination of direct sales and brokers to food retailers, club stores, discount and dollar stores, online retailers, pet specialty stores, drug stores, military commissaries, mass merchandisers, and natural foods stores and distributors.
Products within our U.S. retail market segments are primarily sold through a combination of direct sales and brokers to food retailers, club stores, discount and dollar stores, online retailers, pet specialty stores, drug stores, military commissaries, mass merchandisers, and distributors.
Under our ownership, the business generated net sales of $198.9 in 2021, primarily included in the U.S. Retail Consumer Foods segment. For additional information on these divestitures, see Note 3: Divestitures.
Under our ownership, the business generated net sales of $62.3 in 2022, included in the U.S. Retail Pet Foods segment. For additional information on the acquisition and divestitures, see Note 2: Acquisition and Note 3: Divestitures.
To further support our commitment to ethics and our basic belief, Do the Right Thing , our employees were also asked to participate in an Ethics and Compliance Survey in 2023, to help us understand our strengths and identify opportunities for future ethics and compliance programs and training. We conduct this assessment on a biennial basis.
To further support our commitment to ethics and our basic belief, Do the 6 Right Thing , our employees are also asked to participate in Ethics and Compliance Surveys, to help us understand our strengths and identify opportunities for future ethics and compliance programs and training.
The scholarship program will support ACH’s ability to provide behavioral health care to meet the growing need for this specialized treatment. Diversity and Inclusion: We believe having an inclusive culture and the expertise of diverse professionals across our business that reflects our consumers is critical to our success and is in alignment with our basic belief, Thrive Together .
Diversity and Inclusion: We believe having an inclusive culture and the expertise of diverse professionals across our business that reflects our consumers is critical to our success and is in alignment with our basic belief, Thrive Together .
In addition, we broadened our family building benefits to support the desire for all aspiring parents to build their family through enhanced fertility benefits through a third-party partner as well as enhanced adoption and surrogacy financial support.
Our Total Rewards benefits package includes advocacy resources to help LGBTQ+ employees navigate obstacles and identify LGBTQ+ knowledgeable providers. In addition, our family-building benefits support the desire for all aspiring parents to build their family through enhanced fertility benefits through a third-party partner, as well as enhanced adoption and surrogacy financial support.
Information about our Executive Officers: The names, ages as of June 13, 2023, and current positions of our executive officers are listed below. All executive officers serve at the pleasure of the Board, with no fixed term of office. Name Age Years with Company Position Served as an Officer Since Mark T.
Information about our Executive Officers: The names, ages as of June 11, 2024, and current positions of our executive officers are listed below. All executive officers serve at the pleasure of the Board, with no fixed term of office.
In 2023, the Company Matching Gift Program was expanded to credit our employees’ Smucker Giving accounts for each hour of volunteering done for a non-profit charity, and these funds can be donated to an approved charity of the employee’s choice.
In addition, each year we offer employees the opportunity to nominate the organizations most important to them to be added to the program. Furthermore, the Company Matching Gift Program credits our employees’ Smucker Giving accounts for each hour of volunteering done for a non-profit charity, and these funds can be donated to an approved charity of the employee’s choice.
However, there has been an increase in sales primarily driven by changes in consumer behaviors, including employees working at home more frequently as a result of the novel coronavirus (“COVID-19”) pandemic.
However, in recent years, there has been an increase in sales primarily driven by changes in consumer behaviors, including employees working at home more frequently.
In our total U.S. retail categories, private label held a 12.1 dollar average market share during the 52 weeks ended April 23, 2023, as compared to a 11.5 dollar average market share during the same period in the prior year.
For the U.S. retail market segments, private label held a 13.7 dollar average market share during the 52 weeks ended April 21, 2024, for the categories in which we compete, as compared to a 12.1 dollar average market share during the same period in the prior 4 year.
We recognize we have work to do to ensure a more inclusive and diverse organization, which is why we are implementing changes to our recruiting, hiring, and retention programs to improve diversity at all levels within our Company.
We recognize we have work to do to ensure a more inclusive and diverse organization, which is why we are improving our recruiting, hiring, and retention programs at all levels within our Company. To further these efforts, we established human resource positions focused on improving our diversity and inclusion, specifically within talent acquisition, recruiting, and organization development.
Additionally, we have coordinated more than 750 hours of employee programming on education and understanding, hosted panels to reflect the unique experiences of underrepresented groups to increase employee awareness while encouraging empathy and allyship, and published regular content to celebrate our differences and increase understanding.
Additionally, we have coordinated more than 10,000 hours of employee programming on education and understanding, hosted panels to reflect the unique experiences of underrepresented groups to increase employee awareness while encouraging empathy and allyship, and published regular content to celebrate our differences and increase understanding. 7 We approach diversity from the top-down, exemplified by our Board of Directors (the “Board”), where 4 of 10 directors are women and 3 of 10 directors are racially or ethnically diverse.
We dedicate time to developing and coaching our people managers to provide support to our employees holistically. This means promoting resonant leadership and the practice of emotional intelligence and mindfulness, so our people managers have the knowledge and tools to support the unique needs of each employee.
This means promoting resonant leadership and the practice of emotional intelligence and mindfulness, so our people managers have the knowledge and tools to support the unique needs of each employee. Fostering an environment for growth and continuous learning for our employees is an important priority of our Company.
In addition, to further support our ERGs and charitable giving efforts, we have committed over $250,000 as an ongoing annual charitable donation to support organizations that align and are supported by our ERGs.
In addition, to further support our ERGs and charitable giving efforts, we have donated a combined $375,000 in 2024 and 2023 to support organizations that align and are supported by our ERGs.
Through these tools and resources, in 2023, we coordinated nearly 8,000 hours of professional development training for our employees. Our best-in-class “Discovering the Art of Leadership” series, developed in collaboration with Case Western Reserve University, teaches our people managers how to effectively lead teams and develop employees.
Our best-in-class “Discovering the Art of Leadership” series, developed in collaboration with Case Western Reserve University, teaches our people managers how to effectively lead teams and develop employees. We dedicate time to developing and coaching our people managers to provide support to our employees holistically.
We are fortunate to have the expertise and passion of talented employees who help us deliver high-quality products to our customers and consumers across North America. We are also fortunate to have employees who share our commitment to ensure that people, pets, and communities where we live and work have access to the support and essential resources they need.
Through our relationship with Partners in Food Solutions and TechnoServe ® , we have opened up skills-based employee volunteer opportunities to our workforce, allowing our people to share their talents and expertise with companies that work to help provide a secure and consistent food supply for families in Africa. 9 We are fortunate to have the expertise and passion of talented employees who help us deliver high-quality products to our customers and consumers across North America and who share our commitment to ensure that people, pets, and communities where we live and work have access to the support and essential resources they need.
Held was elected to her present position in September 2022, having served as Chief Strategy and International Officer since November 2019. Prior to that time, she served as Senior Vice President, Corporate Strategy, M&A, and International since March 2018. (D) Ms.
Penrose was elected to her present position in March 2023, having served as Chief People and Administrative Officer since November 2019. Prior to that time, she served as Senior Vice President, Human Resources and Corporate Communications since May 2016.
In particular, the manufacturing, marketing, transportation, storage, distribution, and sale of food products are each subject to governmental regulation that is increasingly extensive.
Additionally, we are subject to regulations and laws administered by government agencies in Canada and other countries in which we have operations and our products are sold. In particular, the manufacturing, marketing, transportation, storage, distribution, packaging disposal, and sale of food products are each subject to governmental regulation that is increasingly extensive.
Brase was elected to his present position in April 2020, having previously served at The Procter & Gamble Company (“P&G”) for 30 years. He was the Vice President and General Manager of P&G’s North American Family Care business from April 2016 through March 2020. 9 (C) Ms.
He was the Vice President and General Manager of P&G’s North American Family Care business from April 2016 through March 2020. (C) Ms. Knudsen was elected to her present position in September 2022, having served as Chief Legal and Compliance Officer and Secretary since November 2019.
In International and Away From Home, our products are distributed domestically and in foreign countries through retail channels and foodservice distributors and operators (e.g., health care operators, restaurants, lodging, hospitality, offices, K-12, colleges and universities, and convenience stores).
International and Away From Home includes the sale of all products that are distributed in foreign countries through retail channels, as well as domestically and in foreign countries through foodservice distributors and operators (e.g., healthcare operators, restaurants, educational institutions, offices, lodging and gaming establishments, and convenience stores).
Canada coffee Folgers Tim Hortons (A) Restaurant Brands International Inc. Maxwell House The Kraft Heinz Company Private label brands Various Canada flour Robin Hood ® (A) and Five Roses ® Private label brands Various (A) Identifies the current market leader within the product category.
Maxwell House The Kraft Heinz Company Private label brands Various Canada flour Robin Hood ® (A) and Five Roses ® Private label brands Various (A) Identifies the current market leader within the product category. In certain categories, the market leader is not identified as two or more brands compete for the largest share.
Penrose 50 19 Chief People and Corporate Services Officer (F) 2014 (A) Mr. Mark Smucker was elected to his present position in August 2022, having previously served as President and Chief Executive Officer since May 2016. (B) Mr.
Mark Smucker was elected to his present position in August 2022, having previously served as President and Chief Executive Officer since May 2016. (B) Mr. Brase was elected to his present position in April 2020, having previously served at The Procter & Gamble Company (“P&G”) for 30 years.
Retail Consumer Foods segments do not experience significant seasonality, as demand for our products is generally consistent throughout the year. Customers: Sales to Walmart Inc. and subsidiaries amounted to 34 percent of net sales in both 2023 and 2022, and 32 percent of net sales in 2021. These sales are primarily included in our U.S. retail market segments.
Customers: Sales to Walmart Inc. and subsidiaries amounted to 33 percent of net sales in 2024 and 34 percent in both 2023 and 2022. These sales are primarily included in our U.S. retail market segments. No other customer exceeded 10 percent of net sales for any year.
We believe that both private label and leading brands play an important role in the categories in which we compete, appealing to different consumer segments.
Within the Sweet Baked Snacks segment, private label held a 6.8 dollar average market share during the 52 weeks ended April 27, 2024, for the categories in which we compete. We believe that both private label and leading brands play an important role in the categories in which we compete, appealing to different consumer segments.
Departments of Agriculture, Commerce, and Labor, and U.S. Environmental Protection Agency. Additionally, we are subject to regulations and laws administered by government agencies in Canada and other countries in which we have operations and our products are sold.
Government Regulations: Our operations are subject to various regulations and laws administered by federal, state, and local government agencies in the U.S., including the U.S. Food and Drug Administration (the “FDA”), U.S. Federal Trade Commission, U.S. Departments of Agriculture, Commerce, and Labor, and U.S. Environmental Protection Agency.
In recognition of the need for mental health resources across society, we have partnered with the United Way ® of Summit County 211 program and the National Council for Behavioral Health to provide support for our employees and communities.
In recognition of the need for mental health resources across society, we have partnered with the National Alliance on Mental Health to provide support for our employees and communities. Their mental health services and self-care programs benefit our employees by raising awareness and providing additional support and education for mental health.
Principal Products: In 2023, our principal products were coffee, cat food, pet snacks, dog food, frozen handheld products, peanut butter, fruit spreads, portion control products, as well as baking mixes and ingredients.
Principal Products: In 2024, our principal products were coffee, pet snacks, peanut butter, cat food, frozen handheld products, sweet baked goods, fruit spreads, portion control products, baking mixes and ingredients, toppings and syrups, dog food, and cookies. Product sales information for the years 2024, 2023, and 2022 is included within Note 5: Reportable Segments.
Retail Consumer Foods Uncrustables ® , Jif ® , and Smucker’s ® Other (A) Smucker’s, Folgers, and Uncrustables (A) Represents the combined International and Away From Home operating segments.
Retail Pet Foods Meow Mix ® , Milk-Bone ® , Pup-Peroni ® , and Canine Carry Outs ® Sweet Baked Snacks Hostess ® and Voortman ® Other (A) Folgers , Smucker’s , and Uncrustables (A) Represents the combined International and Away From Home operating segments.
In addition, we are committed to providing the tools and resources our employees need to learn, develop, and grow with us, including virtual sessions. A suite of online training and education programs are available to our employees, ranging from role-specific training to education on soft skills and our Company culture.
A suite of online training and education programs is available to our employees, ranging from role-specific training to education on soft skills and our Company culture. Through these tools and resources, in 2024, we coordinated over 19,000 hours of professional development training for our employees.
Our Company Leadership Team, beginning in 2022 with all Officers, and further expanding to Senior Directors 7 and above in 2023, has 10 percent of their annual cash incentive awards based on the achievement of our environmental, social, and governance objectives, which includes our ID&E efforts, among others.
A portion of our annual cash incentive awards for our Company Leadership Team, which consists of all employees at or above the Senior Director level, is based on the achievement of our environmental, social, and governance objectives, which include our ID&E efforts.
The teams document the results and determine corrective actions to ensure we hold ourselves accountable for providing a safe work environment. 6 As part of our focus on well-being, we emphasize the need for our employees to embrace healthy lifestyles.
Our health and safety internal assessments conducted at each of our production facilities quarterly, as well as periodic external assessments, confirm our compliance with safety regulations and corporate policies. The teams document the results and determine corrective actions to ensure we hold ourselves accountable for providing a safe work environment.
Smucker 53 25 Chair of the Board, President, and Chief Executive Officer (A) 2001 John P. Brase 55 3 Chief Operating Officer (B) 2020 Amy C. Held 49 10 Chief Transformation Officer (C) 2018 Jeannette L. Knudsen 53 20 Chief Legal Officer and Secretary (D) 2009 Tucker H. Marshall 47 11 Chief Financial Officer (E) 2020 Jill R.
Name Age Years with Company Position Served as an Officer Since Mark Smucker 54 26 Chair of the Board, President, and Chief Executive Officer (A) 2001 John Brase 56 4 Chief Operating Officer (B) 2020 Jeannette Knudsen 54 21 Chief Legal Officer and Secretary (C) 2009 Tucker Marshall 48 12 Chief Financial Officer (D) 2020 Jill Penrose 51 20 Chief People and Corporate Services Officer (E) 2014 (A) Mr.
International and Away From Home represents sales outside of the U.S. retail market segments. For additional information on our reportable segments, see Note 4: Reportable Segments. On April 28, 2023, we sold certain pet food brands to Post Holdings, Inc. (“Post”).
Under our ownership, the Sahale Snacks brand generated net sales of $24.1, $48.4, and $47.4 in 2024, 2023, and 2022, respectively, primarily included in the U.S. Retail Frozen Handheld and Spreads segment. On April 28, 2023, we sold certain pet food brands to Post Holdings, Inc. (“Post”).
Furthermore, approximately 39 percent of our salaried workforce in senior-level roles are women and 12 percent of our salaried workforce are racially or ethnically diverse.
Additionally, 43 percent of our executive and senior management team members are women, inclusive of 3 of 6 members of our Executive Leadership Team, and 13 percent of our salaried workforce is racially or ethnically diverse.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThese additional demands could divert management’s attention from core business operations, potentially adversely impacting existing business relationships and employee morale, resulting in negative impacts on our financial performance. For more information, see Note 2: Special Project Costs and Note 3: Divestitures. We may not realize the benefits we expect from our cost reduction and other cash management initiatives.
Biggest changeFurther, we may incur asset impairment charges related to divestitures that reduce our profitability. Divestitures and related restructuring and integration costs require a significant amount of management and operational resources. These additional demands could divert management’s attention from core business operations, potentially adversely impacting existing business relationships and employee morale, resulting in negative impacts on our financial performance.
The growing use of social and digital media by consumers increases the speed and extent that information and opinions can be shared. Negative posts or comments about us or our brands or products on social or digital media could damage our brands and reputation.
The growing use of social and digital media by consumers increases the speed and extent that information and opinions can be shared. Negative posts or comments about us, our brands, or products on social or digital media could damage our brands and reputation.
If we are unable to complete acquisitions or to successfully integrate and develop acquired businesses, including the effective management of integration and related restructuring costs, we could fail to achieve the anticipated synergies and cost savings, or the expected increases in revenues and operating results.
If we are unable to complete acquisitions or successfully integrate and develop acquired businesses, including the effective management of integration and related restructuring costs, we could fail to achieve the anticipated synergies and cost savings, or the expected increases in revenues and operating results.
In addition, natural disasters and extreme weather conditions may disrupt the productivity of our facilities or the operation of our supply chain, which could increase our insurance or other operating costs or require us to make additional, unplanned capital expenditures.
In addition, natural disasters, extreme weather conditions, and other natural conditions may disrupt the productivity of our facilities or the operation of our supply chain, which could increase our insurance or other operating costs or require us to make additional, unplanned capital expenditures.
If we fail to achieve, are perceived to have failed, or are delayed in achieving these goals and commitments, it could negatively affect consumer preference for our products or investor confidence in our stock, as well as expose us to government enforcement actions and private litigation.
If we fail to achieve, are perceived to have failed to achieve, or are delayed in achieving these goals and commitments, it could negatively affect consumer preference for our products or investor confidence in our stock, as well as expose us to government enforcement actions and private litigation.
While we believe that, except as set forth below, alternative sources of these raw materials and finished goods could be obtained on commercially reasonable terms, loss or an extended interruption in supplies from a single-source supplier would result in additional costs, could have a disruptive short-term effect on our business, and could adversely affect our results of operations.
While we believe that, except as set forth below, alternative sources of these raw materials and finished goods could be obtained on commercially reasonable terms, loss or an extended interruption in supplies from a primary or single-source supplier would result in additional costs, could have a disruptive short-term effect on our business, and could adversely affect our results of operations.
Methodologies for reporting this data may be updated and previously reported data may be adjusted to reflect improvement in availability and quality of third-party data, changing assumptions, changes in the nature and scope of our operations (including from acquisitions and divestitures), and other changes in circumstances, which could result in significant revisions to our current goals, reported progress in achieving such goals, or ability to achieve such goals in the future.
Methodologies for reporting this data may be updated and previously reported data may be adjusted to reflect improvement in availability and quality of third-party data, changing assumptions, changes in the nature and scope of our operations (including from acquisitions and divestitures), and other 22 changes in circumstances, which could result in significant revisions to our current goals, reported progress in achieving such goals, or ability to achieve such goals in the future.
If a strike or work stoppage were to occur in connection with negotiations of new collective bargaining agreements or as a result of disputes under collective bargaining agreements with labor unions, our business, financial condition, and results of operations could be materially adversely affected. The success of our business depends substantially on consumer perceptions of our brands.
If a strike or work stoppage were to occur in connection with negotiations of a new collective bargaining agreement or as a result of disputes under collective bargaining agreements with labor unions, our business, financial condition, and results of operations could be materially adversely affected. The success of our business depends substantially on consumer perceptions of our brands.
Such disruptions could require us to take measures to conserve cash until the markets stabilize or until alternative credit arrangements or other funding for our business needs can be arranged. Disruptions in the capital and credit markets could also result in higher interest rates on publicly issued debt securities and increased costs under credit facilities.
Such disruptions could require us to take measures to conserve cash until the markets stabilize or until alternative credit arrangements or other funding for our 18 business needs can be arranged. Disruptions in the capital and credit markets could also result in higher interest rates on publicly issued debt securities and increased costs under credit facilities.
In particular, substantially all of our coffee production takes place in New Orleans, Louisiana and is subject to risks associated with hurricane and other weather-related events, and some of our production facilities are located in places where tornadoes or wildfires can frequently occur, such as Alabama, Kansas, and California.
In particular, substantially all of our coffee production takes place in New Orleans, Louisiana and is subject to risks associated with hurricane and other weather-related events, and some of our production facilities are located in places where tornadoes or wildfires can frequently occur, such as Alabama, Kansas, Arkansas, and California.
We may also be subject to complaints from or litigation by consumers who allege food and beverage-related illness, or other quality, health, or operational concerns. Adverse publicity resulting from such allegations could materially adversely affect us, regardless of whether such allegations are true or whether we are ultimately held liable.
We may also be subject to complaints from or litigation by consumers who allege food and beverage-related illness, or other quality, health, advertising, or operational concerns. Adverse publicity resulting from such allegations could materially adversely affect us, regardless of whether such allegations are true or whether we are ultimately held liable.
In many countries outside of the U.S., particularly in those with developing economies, it may be common for others to engage in business practices prohibited by laws and regulations applicable to us, such as the U.S. Foreign Corrupt Practices Act or similar local anti-bribery or anti-corruption laws.
In many countries outside of the U.S., particularly in those with developing or emerging economies, it may be common for others to engage in business practices prohibited by laws and regulations applicable to us, such as the U.S. Foreign Corrupt Practices Act or similar local anti-bribery or anti-corruption laws.
In addition, our liquidity may be adversely impacted by the cash margin requirements of the commodities exchanges or the failure of a counterparty to perform in accordance with a contract. We currently do not qualify any of our commodity or foreign currency exchange derivatives for hedge accounting treatment.
In addition, our liquidity may be adversely impacted by the cash margin requirements of the commodity exchanges or the failure of a counterparty to perform in accordance with a contract. We currently do not qualify any of our commodity or foreign currency exchange derivatives for hedge accounting treatment.
If we are unable to successfully design and implement the new EPM system as planned, our financial condition, results of operations, and cash flows could be negatively impacted. In addition, if the EPM system does not operate as intended, the effectiveness of our internal controls over financial reporting could be negatively affected.
If we are unable to successfully design and implement the new EPM system as planned, our financial condition, results of operations, and cash flows could be negatively impacted. In addition, if the EPM system does not operate as intended, the effectiveness of our internal controls over financial reporting could be adversely affected.
Retailers may also increase levels of promotional activity for lower-priced offerings as they seek to maintain sales volumes during times of economic uncertainty. Accordingly, sales volumes of our branded products 15 could be reduced or lead to a shift in sales mix toward our lower-margin offerings.
Retailers may also increase levels of promotional activity for lower-priced offerings as they seek to maintain sales volumes during times of economic uncertainty. Accordingly, sales volumes of our branded products could be reduced or lead to a shift in sales mix toward our lower-margin offerings.
Such failure, or the perception that we have failed to act 21 responsibly with respect to such matters or to effectively respond to new or additional regulatory requirements regarding climate change, whether or not valid, could result in adverse publicity and negatively affect our business and reputation.
Such failure, or the perception that we have failed to act responsibly with respect to such matters, or to effectively respond to new or additional regulatory requirements regarding climate change, whether or not valid, could result in adverse publicity and negatively affect our business and reputation.
Nevertheless, despite continued vigilance in these areas, security breaches or system failures of our infrastructure, whether due to attacks by hackers, employee error, or other causes, can create system disruptions, shutdowns, transaction errors, or unauthorized disclosure of confidential information.
Nevertheless, despite continued vigilance in these areas, security breaches or system failures of our infrastructure, whether due to attacks by hackers, employee error, or other causes, can create system disruptions, shutdowns, transaction errors, or unauthorized disclosure of confidential or proprietary information.
If the service providers to which we outsource these functions do not perform effectively, we may not be able to achieve the 22 expected benefits and may have to incur additional costs to correct errors made by such service providers.
If the service providers to which we outsource these functions do not perform effectively, we may not be able to achieve the expected benefits and may have to incur additional costs to correct errors made by such service providers.
We rely on information technology networks and systems, including the Internet, to process, transmit, and store electronic information, and the importance of such networks and systems has increased due to many of our employees working remotely.
We rely on information technology (“IT”) networks and systems, including the Internet, to process, transmit, and store electronic information, and the importance of such networks and systems has increased due to many of our employees working remotely.
Loss or interruption of supply from single-source suppliers of raw materials and finished goods could have a disruptive effect on our business and adversely affect our results of operations.
Loss or interruption of supply from primary or single-source suppliers of raw materials and finished goods could have a disruptive effect on our business and adversely affect our results of operations.
While we concluded there were no indicators of impairment as of April 30, 2023, any significant sustained adverse change in consumer purchasing behaviors, financial results, or macroeconomic conditions could result in future impairment. We work with our suppliers to extend our payment terms, which are then supplemented by a third-party administrator to assist in effectively managing our working capital.
While we concluded there were no indicators of impairment as of April 30, 2024, any significant sustained adverse change in consumer purchasing behaviors, financial results, or macroeconomic conditions could result in future impairment. We work with our suppliers to extend our payment terms, which are then supplemented by a third-party administrator to assist in effectively managing our working capital.
Volatility in financial markets and deterioration of national and global macroeconomic conditions could impact our business and results of operations in a number of ways, including, but not limited to, the following: • financial instability of our customers and suppliers could result in additional bad debts or non-performance; • value of our investments in debt and equity securities may decline, including our investment in Post common stock; • future volatility or disruption in the capital and credit markets could negatively impact our liquidity or increase costs of borrowing; • an impairment in the carrying value of goodwill, other intangible assets, or other long-lived assets, or a change in the useful life of finite-lived intangible assets could occur if there are sustained changes in consumer purchasing behaviors, government restrictions, financial results, or a deterioration of macroeconomic conditions; • volatility in commodity and other input costs could continue due to adverse macroeconomic conditions; and • consumers could choose to purchase private label or competitive products of our lower-priced products as a result of an economic downturn.
Volatility in financial markets and deterioration of national and global macroeconomic conditions could impact our business and results of operations in a number of ways, including, but not limited to, the following: • financial instability of our customers and suppliers could result in additional bad debts or non-performance; • value of our investments in debt and equity securities may decline; • future volatility or disruption in the capital and credit markets could negatively impact our liquidity or increase costs of borrowing; • an impairment in the carrying value of goodwill, other intangible assets, or other long-lived assets, or a change in the useful life of finite-lived intangible assets could occur if there are sustained changes in consumer purchasing behaviors, government restrictions, financial results, or a deterioration of macroeconomic conditions; • volatility in commodity and other input costs could continue due to adverse macroeconomic conditions; and • consumers could choose to purchase private label or competitive products of our lower-priced products as a result of an economic downturn.
If our competitors copy or develop more advanced coffee roasting or packaging or sandwich-making methods then the value of our coffee products or Smucker’s Uncrustables brand, respectively, may be diminished, and we could lose customers to our competitors. In addition, certain of our intellectual property rights, including the Dunkin’ trademarks, are owned by third parties and licensed to us.
If our competitors copy or develop more advanced coffee roasting or packaging or sandwich-making methods, the value of our coffee products or Smucker’s Uncrustables brand, respectively, may be diminished, and we could lose customers to our competitors. 12 In addition, certain of our intellectual property rights, including the Dunkin’ trademarks, are owned by third parties and licensed to us.
If we are unable to prevent such breaches or failures, our operations could be disrupted, or we may suffer financial damage or loss because of lost or misappropriated information. In addition, the cost to remediate any damages to our information technology systems suffered as a result of a cyber-based attack could be significant.
If we are unable to prevent such breaches or failures, our operations could be disrupted, or we may suffer financial damage or loss because of lost or misappropriated information. In addition, the cost to remediate any damages to our IT systems suffered as a result of a cyber-based attack could be significant.
Although we use futures, basis, options, and fixed price contracts to manage commodity price volatility in some instances, commodity price increases ultimately result in corresponding increases in our raw material and energy costs. During 2023, we continued to experience materially higher commodity and supply chain costs, including manufacturing, ingredient, and packaging costs, due to inflationary pressures.
Although we use futures, basis, options, and fixed price contracts to manage commodity price volatility in some instances, commodity price increases ultimately result in corresponding increases in our raw material and energy costs. During 2024, we continued to experience materially higher commodity and supply chain costs, including manufacturing, ingredient, and packaging costs, due to inflationary pressures.
We have elected to source certain raw materials, such as packaging for our Folgers coffee products, as well as our Jif peanut butter, and certain finished goods, such as K-Cup ® pods, our Pup-Peroni dog snacks, and liquid coffee, from single sources of supply.
We have elected to source certain raw materials, such as packaging for our Folgers coffee products, as well as our Jif peanut butter, and certain finished goods, such as K-Cup ® pods, our Pup-Peroni dog snacks, and liquid coffee, from primary or single sources of supply.
In November 2021, we announced plans to invest $1.1 billion to build a new manufacturing facility and distribution center in McCalla, Alabama dedicated to the production of Smucker’s Uncrustables frozen sandwiches. Construction of this facility began in 2022, with production expected to begin in calendar year 2025.
In November 2021, we announced plans to invest $1.1 billion to build a new manufacturing facility and distribution center in McCalla, Alabama dedicated to the production of Smucker’s Uncrustables frozen sandwiches. Construction of this facility began in 2022, with production expected to begin in 2025.
To the extent competitors do not also increase their prices or decrease product size, customers and consumers may choose to purchase competing products, including private label or other lower-priced offerings, which may adversely affect our results of operations.
To the extent competitors do not also increase their prices or decrease product size, customers and consumers may choose to purchase competing products, including private label or other lower-priced offerings, which may adversely affect our results of operations or our market share.
We must leverage our brand value to compete against private label products. In nearly all of our product categories, we compete against branded products as well as private label products. Our products must provide higher value and/or quality to our consumers than alternatives, particularly during periods of economic uncertainty, weakness, or inflation.
In nearly all of our product categories, we compete against branded products as well as private label products. Our products must provide higher value and/or quality to our consumers than alternatives, particularly during periods of economic uncertainty, weakness, or inflation.
We cannot assure that we will be able to renew these collective bargaining agreements on the same or more favorable terms as the current agreements, or at all, without production interruptions caused by labor stoppages.
We cannot be certain that we will be able to renew these collective bargaining agreements on the same or more favorable terms as the current agreements, or at all, without production interruptions caused by labor stoppages.
These and related demands on our resources may divert the organization’s attention from other business issues, have adverse effects on existing business relationships with suppliers and customers, and impact employee morale. Any failure to implement these initiatives in accordance with our plans could adversely affect our business and financial results.
These and related demands on our resources may divert the organization’s attention 14 from other business issues, have adverse effects on existing business relationships with suppliers and customers, and impact employee morale. Any failure to implement these initiatives in accordance with our plans could adversely affect our business, operating efficiency, and financial results.
Failure to respond to these changes could negatively affect our financial condition and results of operations. We may be limited in our ability to pass cost increases on to our customers in the form of price increases or may realize a decrease in sales volume to the extent price increases are implemented.
Failure to respond to these changes could negatively affect our financial condition and results of operations. 16 We may be limited in our ability to pass cost increases onto our customers in the form of price increases or may realize a decrease in sales volume to the extent price increases are implemented.
The risk factors described below should be carefully considered, together with the other information contained or incorporated by reference in this Annual Report on Form 10-K and our other filings with the SEC, in connection with evaluating the Company, our business, and the forward-looking statements contained in this Annual Report.
The following risk factors should be carefully considered, together with the other information contained or incorporated by reference in this Annual Report on Form 10-K and our other filings with the SEC, in connection with evaluating the Company, our business, and the forward-looking statements contained in this Annual Report.
In particular, the manufacturing, marketing, transportation, storage, distribution, and sale of food products are each subject to governmental regulation that is increasingly extensive.
In particular, the manufacturing, marketing, transportation, storage, distribution, packaging disposal, and sale of food products are each subject to governmental regulation that is increasingly extensive.
In particular, we depend on our information technology infrastructure to effectively manage our business data, supply chain, logistics, finance, manufacturing, and other business processes and for digital marketing activities and electronic communications between Company personnel and our customers and suppliers.
In particular, we depend on our IT infrastructure to effectively manage our business data, supply chain, logistics, finance, manufacturing, and other business processes and for digital marketing activities and electronic communications between Company personnel and our customers and suppliers.
Further, weak economic conditions, recessions, significant inflation, severe or unusual weather events, pandemics (such as COVID-19), and other factors could affect consumer preferences and demand causing a strain on our supply chain due, in part, to retailers, distributors, or carriers modifying their restocking, fulfillment, or shipping procedures.
Further, weak economic conditions, recessions, significant inflation, severe or unusual weather events, pandemics, and other factors could affect consumer preferences and demand, causing a strain on our supply chain due, in part, to retailers, distributors, or carriers modifying their restocking, fulfillment, or shipping procedures.
Introduction of new products and product extensions requires significant development, marketing investment, and consideration of our diverse consumer base.
Introduction of new products an d product extensions requires significant development, marketing investment, and consideration of our diverse consumer base.
Although we do not have any operations in Russia or Ukraine, we have experienced and may continue to experience shortages in materials and increased costs for transportation, energy, and raw materials due in part to the negative impact of the conflict on the global economy.
Although we do not have any operations in Russia, Ukraine, Israel, or Palestine, we have experienced and may continue to experience shortages in materials and increased costs for transportation, energy, and raw materials due in part to the negative impact of the conflicts on the global economy.
In addition, our failure or inability to comply with applicable regulations and laws could subject us to civil remedies, including fines, injunctions, recalls or seizures, and potential criminal sanctions, which could have a material adverse effect on our business and financial condition. Our operations in certain developing markets expose us to regulatory risks.
In addition, our failure or inability to comply with applicable 21 regulations and laws could subject us to civil remedies, including fines, injunctions, recalls or seizures, and potential criminal sanctions, which could have a material adverse effect on our business and financial condition. Our international operations expose us to regulatory risks.
If we do not succeed in these efforts, our market share growth may slow, which could have a material impact on our results of operations.
If we do not suc ceed in these efforts, our market share growth may slow, which could have a material impact on our results of operations.
Further, we have outsourced several information technology support services and administrative functions, including benefit plan administration and other functions, to third-party service providers, and may outsource other functions in the future to achieve cost savings and efficiencies. In addition, certain of our processes rely on third-party cloud computing services.
Further, we have outsourced several IT support services and administrative functions, including benefit plan administration and other functions, to third-party service providers and strategic partners, and may outsource other functions in the future to achieve cost savings and efficiencies. In addition, certain of our processes rely on third-party cloud computing services.
The ongoing conflict between Russia and Ukraine and the related disruptions to the global economy could adversely affect our business, financial condition, or results of operations. The global economy has been negatively impacted by the ongoing conflict between Russia and Ukraine.
The ongoing conflicts between Russia and Ukraine and Israel and Hamas and the related disruptions to the global economy could adversely affect our business, financial condition, or results of operations. The global economy has been negatively impacted by the ongoing conflicts between Russia and Ukraine and Israel and Hamas.
However, if we are unable to effectively compete in the expanding e-commerce market, adequately leverage technology to improve operating efficiencies, or develop the data analytics capabilities needed to generate actionable commercial insights, our business performance may be impacted, which may negatively impact our financial condition and results of operations.
However, if we are unable to effectively compete in the expanding e-commerce market, adequately leverage technology to improve operating efficiencies (including artificial intelligence, machine learning, and augmented reality), or develop the data analytics capabilities needed to generate actionable commercial insights, our business performance may be impacted, which may negatively impact our financial condition and results of operations.
If our efforts to protect our intellectual property are not adequate, if any third party misappropriates or infringes on our intellectual property, or if we are alleged to be misappropriating or infringing on the intellectual property rights of others, the value of our brands may be harmed, which could have a material adverse effect on our business.
If our efforts to protect our intellectual property are not adequate, such as in the event of a cybersecurity incident, if any third party misappropriates or infringes on our intellectual property, or if we are alleged to be misappropriating or infringing on the intellectual property rights of others, the value of our brands may be harmed, which could have a material adverse effect on our business.
In the event that climate change has a negative effect on agricultural productivity, we may be subject to decreased availability or less favorable pricing for certain commodities that are necessary for our products, such as green coffee, protein meals, peanuts, grains, plastic containers, oils and fats, fruit, and other ingredients.
In the event that climate change has a negative effect on agricultural productivity, we may be subject to decreased availability or less favorable pricing for certain commodities that are necessary for our products, such as green coffee, peanuts, oils and fats, flour, sugar, fruit, and other ingredients.
If the conflict continues for an extended period of time, it could result in cyberattacks, supply chain disruptions, lower consumer demand, changes in foreign exchange rates, increased trade barriers and restrictions on global trade, and other impacts, which may adversely affect our business, financial condition, or results of operations.
If the conflicts continue for an extended period of time, they could result in cyberattacks, supply chain disruptions, lower consumer demand, changes in foreign currency exchange rates, increased trade barriers and restrictions on global trade, and other impacts, which may adversely affect our business, financial condition, or results of operations.
The prices of these commodities, agricultural-based products, and other materials are subject to volatility and can fluctuate due to conditions that are difficult to predict, including global supply and demand, commodity market fluctuations, crop sizes and yield fluctuations, adverse weather conditions, natural disasters, water supply, pandemic illness (such as COVID-19), foreign currency fluctuations, investor speculation, trade agreements (such as tariffs and sanctions), political instability, armed hostilities (including the ongoing conflict between Russia and Ukraine), consumer demand, general economic conditions (such as inflationary pressures and rising interest rates), and changes in governmental agricultural programs.
The prices of these commodities, agricultural-based products, and other materials are subject to volatility and can fluctuate due to conditions that are difficult to predict, including global supply and demand, commodity market fluctuations, crop sizes and yield fluctuations, adverse weather conditions, natural disasters, water supply, pandemic illness, foreign currency fluctuations, investor speculation, trade agreements (such as tariffs and sanctions), political instability, geopolitical conflicts, consumer demand, general economic conditions (such as inflationary pressures and rising interest rates), and changes in governmental agricultural programs.
We and our business partners purchase and use large quantities of many different commodities and agricultural products in the manufacturing of our products, including green coffee, protein meals, peanuts, grains, oils and fats, fruit, and other ingredients.
We and our business partners purchase and use large quantities of many different commodities and agricultural products in the manufacturing of our products, including green coffee, peanuts, oils and fats, flour, sugar, fruit, and other ingredients.
These and other impacts of the ongoing conflict between Russia and Ukraine could also heighten many of the other risk factors discussed in this section.
These and other impacts of the ongoing conflicts between Russia and Ukraine and Israel and Hamas could also heighten many of the other risk factors discussed in this section.
Governmental regulation encompasses such matters as ingredients (including whether a product contains bioengineered ingredients), packaging, labeling, pricing, advertising, relations with distributors and retailers, health, safety, data privacy and security, and anti-corruption, as well as an increased focus regarding environmental policies relating to climate change, regulating greenhouse gas emissions, energy policies, and sustainability, including single-use plastics.
Governmental regulation encompasses such matters as ingredients (including whether a product contains bioengineered ingredients), packaging and disposal of packaging, labeling (including use of certain terms such as sugar free, healthy, low sodium, and low fat), pricing, advertising, relations with distributors and retailers, health, safety, data privacy and security, and anti-corruption, as well as an increased focus regarding environmental policies relating to climate change, regulating greenhouse gas emissions, energy policies, and sustainability, including single-use plastics.
A significant interruption in the operation of any of our manufacturing or distribution capabilities, or the manufacturing or distribution capabilities of our suppliers, distributors, or contract manufacturers, or a service failure by a third-party service provider, whether as a result of adverse weather conditions or a natural disaster, fire, or water availability, whether caused by climate change or otherwise; work stoppage or labor shortages; or political instability, terrorism, armed hostilities (including the ongoing conflict between Russia and Ukraine), pandemic illness (such as COVID-19), government restrictions, or other causes could significantly impair our ability to operate our business.
A significant interruption in the operation of any of our manufacturing or distribution capabilities, or the manufacturing or distribution capabilities of our suppliers, distributors, or contract manufacturers, or a service failure by a third-party service provider, whether as a result of adverse weather conditions or a natural disaster, fire, or water availability, as a result of climate change or otherwise; work stoppage or labor shortages; cybersecurity breaches; political instability, terrorism, or geopolitical conflicts (including the ongoing conflicts between Russia and Ukraine and Israel and Hamas); pandemic illness; government restrictions, or other causes could significantly impair our ability to operate our business.
Consumers may not buy our products if relative differences in value and/or quality between our products and private label products change in favor of competitors’ products or if consumers perceive this type of change.
Consumers may not buy our products if relative differences in value and/or quality between our products and private label products change in favor of competitors’ products or if consumers perceive this type of change and choose the lower-priced brands.
If consumers prefer private label products, which are typically sold at lower prices, then we could lose category share or sales volumes or shift our product mix to lower margin offerings, which could have a material effect on our business, financial position, and results of operations.
If consumers prefer private label products, which are typically sold at lower prices, then we could lose category share or sales volumes and/or shift our product mix to lower margin offerings, which could have a material effect on our business, financial position, and results of operations. Our ability to competitively serve customers depends on the availability of reliable transportation.
We continuously pursue initiatives to reduce costs, increase effectiveness, and optimize cash flow. We may not realize all of the anticipated cost savings or other benefits from such initiatives.
We continuously review our operations in an effort to pursue initiatives to reduce costs, increase effectiveness, and optimize cash flow. We may not realize all of the anticipated cost savings or other benefits from such initiatives.
If either Keurig or JDE Peet’s are unable to supply K-Cup ® pods or liquid coffee, respectively, to us for any reason, it could be difficult to find an alternative supplier for such goods on commercially reasonable terms, which could have a material adverse effect on our results of operations. Certain of our products are produced at single manufacturing sites.
If either Keurig, JDE Peet’s, or Graham Packaging is unable to supply K-Cup ® pods, liquid coffee, or packaging for Folgers coffee products, respectively, to us for any reason, it could be difficult to find an alternative supplier for such goods on commercially reasonable terms, which could have a material adverse effect on our results of operations.
The FDA or other agencies may nonetheless conclude that certain practices or controls were not in compliance with the Federal Food, Drug, and Cosmetic Act or other laws.
Although the FDA has concluded its inspection, other agencies may nonetheless conclude that certain practices or controls were not in compliance with the Federal Food, Drug, and Cosmetic Act ( “FDCA”) or other laws.
Logistics and other transportation-related costs have a significant impact on our earnings and results of operations. We use multiple forms of transportation, including ships, trucks, and railcars, to bring our products to market.
Increases in logistics and other transportation-related costs could adversely impact our results of operations. Logistics and other transportation-related costs have a significant impact on our earnings and results of operations. We use multiple forms of transportation, including ships, trucks, railcars, and third-party carriers, to bring our products to market.
We have an agreement with a third-party administrator to provide an accounts payable tracking system and facilitate a supplier financing program, which allows participating suppliers the ability to monitor and voluntarily elect to sell our payment obligations to a designated third-party financial institution. Participating suppliers can sell one or more of our payment obligations at their sole discretion.
We have an agreement with a third-party administrator to provide an accounts payable tracking system and facilitate a supplier financing program, which allows participating suppliers the ability to monitor and voluntarily elect to sell our payment obligations to a designated third-party financial institution.
If our information technology systems fail to perform adequately or we are unable to protect such information technology systems against data corruption, cyber-based attacks, or network security breaches, our operations could be disrupted, and we may suffer financial damage or loss because of lost or misappropriated information.
If our information technology systems fail to perform adequately or we are unable to protect such information technology systems against data corruption or cybersecurity incidents, our operations could be disrupted, and we may suffer financial damage or loss because of lost or misappropriated information.
As of April 30, 2023, the estimated fair value was substantially in excess of the carrying value for all reporting units and material indefinite-lived intangible assets, and in all such instances, the estimated fair value exceeded the carrying value by greater than 10 percent.
As of April 30, 2024, with the exception of the Sweet Baked Snacks reporting unit and indefinite-lived intangible assets, the estimated fair value was substantially in excess of the carrying value for all reporting units and material indefinite-lived intangible assets, and in all such instances, the estimated fair value exceeded the carrying value by greater than 10 percent.
An unfavorable report on the effects of ingredients present in our products, product recalls, such as the Jif peanut butter product recall, or negative publicity or litigation could influence consumer preferences, significantly reduce the demand for our products, and adversely affect our profitability.
An unfavorable report on the effects of ingredients present in our 20 products or packaging, product recalls, or negative publicity or litigation could influence consumer preferences, significantly reduce the demand for our products, and adversely affect our profitability.
Certain of our products contain ingredients which are the subject of public scrutiny, including the suggestion that consumption may have adverse health effects. Although we strive to respond to consumer preferences and social expectations, we may not be successful in these efforts.
Risks Related to Regulation and Litigation We could be subject to adverse publicity or claims from consumers. Certain of our products contain ingredients which are the subject of public scrutiny, including the suggestion that consumption may have adverse health effects. Although we strive to respond to consumer preferences and social expectations, we may not be successful in these efforts.
If we are unable to complete the construction of the McCalla facility within the anticipated timeframe and within our cost estimates, our financial condition and results of operations could be adversely affected. Our business could be harmed by strikes or work stoppages.
If we are unable to commence production at the McCalla facility within the anticipated timeframe, our financial condition and results of operations could be adversely affected. 13 Our business could be harmed by strikes or work stoppages.
In addition, anything that harms the Dunkin’ brand could adversely affect the success of our exclusive licensing agreements with the owner of that brand. 12 We may not be able to attract, develop, and retain the highly skilled people we need to support our business.
In addition, anything that harms the Dunkin’ brand could adversely affect the success of our exclusive licensing agreements with the owner of that brand. We may not be able to attract, develop, and retain the highly skilled people we need to support our business, and our results could be adversely impacted as a result of increased labor and employee-related expenses.
Specifically, there are a number of trends in consumer preferences that may impact us and the food industry as a whole, including convenience, flavor variety, an emphasis on protein and snacking, and the desire for transparent product labeling and simple and natural ingredients.
Specifically, there are a number of trends in consumer preferences that may impact us and the food industry as a whole, including convenience, flavor variety, an emphasis on health and wellness, including weight management (e.g., the use of medications and dieting), the desire for transparent product labeling, and simple and natural ingredients.
At April 30, 2023, the carrying value of goodwill and other intangible assets totaled $9.6 billion, compared to total assets of $15.0 billion and total shareholders’ equity of $7.3 billion.
At April 30, 2024, the carrying value of goodwill and other intangible assets totaled $14.9 billion, compared to total assets of $20.3 billion and total shareholders’ equity of $7.7 billion.
We have in the past been, and may continue to be, adversely affected by changes in national and global macroeconomic conditions, such as inflation, rising interest rates, tax rates, availability of capital markets, consumer spending rates, energy availability and costs, supply chain challenges, labor shortages, and growing recession risk.
We have in the past been, and may continue to be, adversely affected by changes in national and global macroeconomic conditions, such as inflation, rising interest rates, tax rates, availability of capital markets, consumer spending rates, energy availability and costs, supply chain challenges, labor shortages, geopolitical conflicts (including the ongoing conflicts between Russia and Ukraine and Israel and Hamas), the negative impacts caused by pandemics and public health crises, and growing recession risk.
As of April 30, 2023, 22 percent of our full-time employees, located at seven manufacturing locations, are covered by collective bargaining agreements. These contracts vary in term depending on location, with one contract expiring in 2024, representing approximately one percent of our total employees.
As of April 30, 2024, 27 percent of our full-time employees, located at eleven manufacturing locations, are covered by collective bargaining agreements, inclusive of Hostess Brands employees. These contracts vary in term depending on location, with six contracts expiring in 2025, representing approximately 10 percent of our total employees.
Production of new manufacturing facilities and distribution centers could cause delays and increased costs, such as shortages of materials or skilled labor, unforeseen construction, scheduling, engineering, or environmental problems, impacts of adverse weather, and unanticipated cost increases. In addition, any construction delays may impact the future demand for Smucker’s Uncrustables frozen sandwiches.
Production of new manufacturing facilities and distribution centers could cause delays and increased costs, such as shortages of materials or skilled labor, unforeseen construction, scheduling, engineering, or environmental problems, impacts of adverse weather, and unanticipated cost increases.
(“JDE Peet’s”) is our single-source supplier for liquid coffee for our Away From Home business, and there are a limited number of manufacturers other than JDE Peet’s that are able to manufacture liquid coffee.
Keurig is our single-source supplier for K-Cup ® pods, which are used in its proprietary Keurig ® K-Cup ® brewing system. In addition, JDE Peet’s N.V. (“JDE Peet’s”) is our single-source supplier for liquid coffee for our Away From Home business, and there are a limited number of manufacturers other than JDE Peet’s that are able to manufacture liquid coffee.
Therefore, we continuously monitor and update our information technology networks and infrastructure to prevent, detect, address, and mitigate the risk of unauthorized access, misuse, computer viruses, phishing attacks, malware, ransomware, social engineering, password theft, physical breaches, and other events that could have a security impact. In addition, the ongoing conflict between Russia and Ukraine has heightened the risk of cyberattacks.
We are regularly the target of attempted cyber and other security threats. Therefore, we continuously monitor and update our IT networks and infrastructure to prevent, detect, address, and mitigate the risk of unauthorized access, misuse, computer viruses, phishing attacks, malware, ransomware, social engineering, password theft, physical breaches, and other events that could have a security impact.
We operate in the competitive food industry whose growth potential is positively correlated to population growth. Our success depends in part on our ability to grow our brands faster than the population in general. We consider our ability to build and sustain the equity of our brands critical to our market share growth.
General Risk Factors We may be unable to grow market share of our products. We operate in the competitive food industry whose growth potential is positively correlated to population growth. Our success depends in part on our ability to drive revenue growth in our brands faster than the population in general.
We face competition across our product lines from other food companies with the primary methods and factors in competition being product quality, price, packaging, product innovation, nutritional value, taste, convenience, customer service, advertising, promotion, and brand recognition and loyalty.
We face competition across our product lines from other food and snack companies with competition based primarily on pro duct quality, price, packaging, product innovation, nutritional value, ingredient content, taste, convenience, customer service, advertising, promotion, and brand recognition and loyalty.
Retail Pet Foods segment or its brands, a sustained adverse change to macroeconomic conditions, or a change to other assumptions could result in additional impairment losses in the future, which could be significant.
However, significant adverse changes to the assumptions regarding the future performance of the Sweet Baked Snacks segment or its brands, a sustained adverse change to macroeconomic conditions, or a change to other assumptions could result in impairment losses in the future, which could be significant.
To date, we have recognized total direct costs associated with the recall of approximately $120.0, net of insurance recoveries, related to customer returns, fees, unsaleable inventory, and other product recall-related costs, primarily within our U.S. Retail Consumer Foods segment. We expect costs associated with the recall to be minimal in 2024.
During 2023 and 2022, we recognized total direct costs associated with the recall of approximately $120.0, net of insurance recoveries, related to customer returns, fees, unsaleable inventory, and other product recall-related costs, primarily within our U.S. Retail Frozen Handheld and Spreads segment. There were no significant direct costs recognized during 2024.
In addition, we have made strategic divestitures of brands and businesses, including the recent sale of certain pet food brands, as well as the natural beverage and grains, private label dry pet food, Crisco , and Natural Balance businesses, and we may do so in the future.
In addition, we have made strategic divestitures of brands and businesses, including the recently divested Sahale Snacks and Canada condiment businesses, as well as past divestitures of certain pet food brands, the natural beverage and grains, and private label dry pet food businesses, among others, and we may continue to do so in the future.
As of April 30, 2023, goodwill and indefinite-lived intangible assets totaled $5.2 billion and $2.6 billion, respectively. The carrying values of the goodwill and indefinite-lived intangible assets were $1.6 billion and $1.1 billion, respectively, within the U.S. Retail Pet Foods segment, and $2.1 billion and $1.2 billion, respectively, within the U.S.
As of April 30, 2024, goodwill and indefinite-lived intangible assets totaled $7.6 billion and $4.3 billion, respectively. The carrying values of the goodwill and indefinite-lived intangible assets were $2.4 billion and $1.8 billion, respectively, within the Sweet Baked Snacks segment, $2.1 billion and $1.2 billion, respectively, within the U.S.
We are in the process of a multi-year implementation of a new enterprise performance management (“EPM”) system, inclusive of an enterprise resource planning system (i.e., general ledger), through the use of Oracle Cloud Solutions.
W e rely on IT networks and systems to manage our business and operations and occasionally implement new and upgrade our existing IT systems. We are in the process of a multi-year implementation of a new enterprise performance management (“EPM”) system, inclusive of an enterprise resource planning system (i.e., general ledger), through the use of Oracle Cloud Solutions.
We expect that a significant portion of our revenues will continue to be derived from a limited number of customers as the traditional retail grocery environment continues to consolidate and as dollar stores, club stores, and e-commerce retailers have experienced growth. Our customers 14 are generally not contractually obligated to purchase from us.
During 2024, our top 10 customers, collectively, accounted for approximately 60 percent of consolidated net sales. We expect that a significant portion of our revenues will continue to be derived from a limited number of customers as the traditional retail grocery environment continues to consolidate and as dollar stores, club stores, and e-commerce retailers have experienced growth.
Although we take measures to mitigate inflation through the use of derivatives and pricing actions, if these measures are not effective, our financial condition, results of operations, and cash flows could be materially adversely affected. 16 We expect the green coffee commodity markets to continue to be challenging due to the significant ongoing price volatility.
We expect the pressures of cost inflation to continue into 2025, although with less volatility than experienced in 2024 and 2023. Although we take measures to mitigate inflation through the use of derivatives and pricing actions, if these measures are not effective, our financial condition, results of operations, and cash flows could be materially adversely affected.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOur corporate headquarters is located in Orrville, Ohio and our Canadian headquarters is located in Markham, Ontario. Locations Products Produced/Processed/Stored Primary Reportable Segment Buffalo, New York Dog snacks U.S. Retail Pet Foods Decatur, Alabama (A) Dry dog and cat food U.S. Retail Pet Foods Grandview, Washington Fruit U.S. Retail Consumer Foods Lexington, Kentucky Peanut butter U.S.
Biggest changeLocations Products Produced/Processed/Stored Primary Reportable Segment Arkadelphia, Arkansas Sweet baked goods Sweet Baked Snacks Buffalo, New York Dog snacks U.S. Retail Pet Foods Burlington, Ontario (A) Cookies Sweet Baked Snacks Chicago, Illinois Sweet baked goods Sweet Baked Snacks Columbus, Georgia Sweet baked goods Sweet Baked Snacks Decatur, Alabama (B) Dry dog and cat food U.S.
Item 2. Properties. The table below lists all of our manufacturing and processing facilities at April 30, 2023. All of our properties are maintained and updated on a regular basis, and we continue to make investments for expansion and safety and technological improvements.
Item 2. Properties. The table below lists all of our manufacturing and processing facilities at April 30, 2024. All of our properties are maintained and updated on a regular basis, and we continue to make investments for expansion and safety and technological improvements.
We believe that the capacity at our existing facilities will be sufficient to sustain current operations and the anticipated near-term growth of our business. We own all of the properties listed below, except as noted. Additionally, our principal distribution centers in the U.S. include one that we own and eight that we lease.
We believe that the capacity at our existing facilities will be sufficient to sustain current operations and the anticipated near-term growth of our business. We own all of the properties listed below, except as noted. Additionally, our principal distribution centers in the U.S. include one owned and seven leased facilities.
We also lease our principal distribution center in Canada. Our distribution facilities are in good condition, and we believe that they have sufficient capacity to meet our distribution needs in the near future. We lease five sales and administrative offices in the U.S. and one in Canada.
Our distribution facilities are in good condition, and we believe that they have sufficient capacity to meet our distribution needs in the near future. We lease four sales and administrative offices in the U.S. and one in Canada. Our corporate headquarters is located in Orrville, Ohio, and our Canadian headquarters is located in Markham, Ontario.
Retail Consumer Foods Longmont, Colorado Frozen sandwiches U.S. Retail Consumer Foods McCalla, Alabama (B) Frozen sandwiches U.S. Retail Consumer Foods Memphis, Tennessee Peanut butter and fruit spreads U.S. Retail Consumer Foods New Bethlehem, Pennsylvania Peanut butter and combination peanut butter and jelly products U.S. Retail Consumer Foods New Orleans, Louisiana (four facilities) (B) Coffee U.S.
Retail Frozen Handheld and Spreads Memphis, Tennessee Peanut butter and fruit spreads U.S. Retail Frozen Handheld and Spreads New Bethlehem, Pennsylvania Peanut butter and combination peanut butter and jelly products U.S. Retail Frozen Handheld and Spreads New Orleans, Louisiana (four facilities) (A) Coffee U.S. Retail Coffee Orrville, Ohio Fruit spreads, toppings, and syrups U.S.
Retail Coffee Orrville, Ohio Fruit spreads, toppings, and syrups U.S. Retail Consumer Foods Oxnard, California Fruit U.S. Retail Consumer Foods Scottsville, Kentucky Frozen sandwiches U.S. Retail Consumer Foods Seattle, Washington (C) Nut mix products U.S. Retail Consumer Foods Sherbrooke, Quebec Canned milk Other (D) Topeka, Kansas (A) Dry dog and cat food and dog and cat snacks U.S.
Retail Frozen Handheld and Spreads Oxnard, California Fruit U.S. Retail Frozen Handheld and Spreads Scottsville, Kentucky Frozen sandwiches U.S. Retail Frozen Handheld and Spreads Sherbrooke, Quebec Canned milk Other (D) Topeka, Kansas (B) Dry dog and cat food and dog and cat snacks U.S.
Retail Pet Foods (A) Our Decatur and Topeka facilities will continue to produce dry dog food under a contract manufacturing agreement as part of the divestiture of certain pet food brands. (B) Our new facility in McCalla will help meet growing demand for Smucker’s Uncrustables frozen sandwiches and will complement our existing facilities in Longmont and Scottsville.
Retail Pet Foods (A) We lease our Burlington facility and our coffee silo facility in New Orleans. (B) Our Decatur and Topeka facilities will continue to produce dry dog food under a contract manufacturing agreement as part of the divestiture of certain pet food brands.
Production is expected to begin at the McCalla facility during calendar year 2025. (C) We lease our coffee silo facility in New Orleans and our facilities in Seattle. (D) Represents the combined International and Away From Home operating segments.
(C) Our new facility in McCalla will help meet growing demand for Smucker’s Uncrustables frozen sandwiches and will complement our existing facilities in Longmont and Scottsville. Production is expected to begin at the McCalla facility during 2025. (D) Represents the combined International and Away From Home operating segments.
Added
Retail Pet Foods Emporia, Kansas Sweet baked goods Sweet Baked Snacks Grandview, Washington Fruit U.S. Retail Frozen Handheld and Spreads Indianapolis, Indiana Sweet baked goods Sweet Baked Snacks Lexington, Kentucky Peanut butter U.S. Retail Frozen Handheld and Spreads Longmont, Colorado Frozen sandwiches U.S. Retail Frozen Handheld and Spreads McCalla, Alabama (C) Frozen sandwiches U.S.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings. The information required for this Item is incorporated herein by reference to Note 15: Contingencies in Part II, Item 8 in this Annual Report on Form 10-K. Item 4. Mine Safety Disclosures. Not applicable. 24 PART II
Biggest changeItem 3. Legal Proceedings. The information required for this Item is incorporated herein by reference to Note 16: Contingencies in Part II, Item 8 in this Annual Report on Form 10-K. Item 4. Mine Safety Disclosures. Not applicable. 26 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePurchases of Equity Securities by the Issuer and Affiliated Purchasers: The following table presents the total number of shares of common stock purchased during the fourth quarter of 2023, the average price paid per share, the number of shares that were purchased as part of a publicly announced repurchase program, if any, and the approximate dollar value of the maximum number of shares that may yet be purchased under the share repurchase program: Period (a) (b) (c) (d) Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs February 1, 2023 - February 28, 2023 — $ — — 5,811,472 March 1, 2023 - March 31, 2023 2,350,000 152.34 2,350,000 3,461,472 April 1, 2023 - April 30, 2023 10,177 152.60 — 3,461,472 Total 2,360,177 $ 152.34 2,350,000 3,461,472 (a) Shares in this column include shares repurchased from stock plan recipients in lieu of cash payments.
Biggest changePurchases of Equity Securities by the Issuer and Affiliated Purchasers: The following table presents the total number of shares of common stock purchased during the fourth quarter of 2024, the average price paid per share, the number of shares that were purchased as part of a publicly announced repurchase program, if any, and the approximate dollar value of the maximum number of shares that may yet be purchased under the share repurchase program: Period (a) (b) (c) (d) Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs February 1, 2024 - February 29, 2024 — $ — — 1,111,472 March 1, 2024 - March 31, 2024 — — — 1,111,472 April 1, 2024 - April 30, 2024 1,842 121.73 — 1,111,472 Total 1,842 $ 121.73 — 1,111,472 (a) Shares in this column include shares repurchased from stock plan recipients in lieu of cash payments.
These figures assume all dividends are reinvested when received and are based on $100.00 invested in our common shares and the referenced index funds on April 30, 2018. April 30, 2018 2019 2020 2021 2022 2023 The J. M.
These figures assume all dividends are reinvested when received and are based on $100.00 invested in our common shares and the referenced index funds on April 30, 2019. April 30, 2019 2020 2021 2022 2023 2024 The J. M.
Comparison of Cumulative Total Return: The following graph compares the cumulative total shareholder return for the five years ended April 30, 2023, for our common shares, the Standard & Poor’s (“S&P”) Packaged Foods & Meats Index, and the S&P 500 Index.
Comparison of Cumulative Total Return: The following graph compares the cumulative total shareholder return for the five years ended April 30, 2024, for our common shares, the Standard & Poor’s (“S&P”) Packaged Foods & Meats Index, and the S&P 500 Index.
(c) During the fourth quarter of 2023, we repurchased approximately 2.4 million common shares under our repurchase program, as discussed in Note 16: Common Shares in Part II, Item 8 in this Annual Report on Form 10-K. (d) As of April 30, 2023, there were approximately 3.5 million common shares remaining available for repurchase pursuant to the Board’s authorizations.
(c) During the year ended April 30, 2024, we repurchased approximately 2.4 million common shares under our repurchase program, as discussed in Note 17: Common Shares in Part II, Item 8 in this Annual Report on Form 10-K. (d) As of April 30, 2024, there were approximately 1.1 million common shares remaining available for repurchase pursuant to the Board’s authorizations.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Our common shares are listed on the New York Stock Exchange – ticker symbol SJM. There were 410,418 shareholders of record as of June 8, 2023, of which 31,568 were registered holders of common shares.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Our common shares are listed on the New York Stock Exchange – ticker symbol SJM. There were 384,127 shareholders of record as of June 11, 2024, of which 29,985 were registered holders of common shares.
Smucker Company $ 100.00 $ 110.79 $ 107.08 $ 125.91 $ 135.52 $ 157.21 S&P Packaged Foods & Meats 100.00 110.49 116.11 136.53 153.65 171.17 S&P 500 100.00 113.49 114.47 167.11 167.47 171.93 Copyright© 2023 Standard & Poor’s, a division of S&P Global. All rights reserved. 25 Item 6. [Reserved]
Smucker Company $ 100.00 $ 96.65 $ 113.65 $ 122.32 $ 141.90 $ 108.97 S&P Packaged Foods & Meats 100.00 105.09 123.57 139.07 154.93 137.40 S&P 500 100.00 100.86 147.24 147.56 151.49 185.82 Copyright© 2024 Standard & Poor’s, a division of S&P Global. All rights reserved. 27 Item 6. [Reserved]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThese risks and uncertainties include, but are not limited to, those set forth under the caption “Risk Factors” in this Annual Report on Form 10-K, as well as the following: • the effect of the sale of certain pet food brands on our ability to retain key personnel and to maintain relationships with customers, suppliers, and other business partners, and any impact to the value of our investment in Post common stock or our ability to dispose of some or all of such securities at favorable market prices; • disruptions or inefficiencies in our operations or supply chain, including any impact caused by product recalls (including the Jif peanut butter product recall), political instability, terrorism, armed hostilities (including the ongoing conflict between Russia and Ukraine), extreme weather conditions, natural disasters, pandemics (including COVID-19), work stoppages or labor shortages, or other calamities; • risks related to the availability, and cost inflation in, supply chain inputs, including labor, raw materials, commodities, packaging, and transportation; • the impact of food security concerns involving either our products or our competitors’ products, including changes in consumer preference, consumer litigation, actions by the FDA or other agencies, and product recalls; • risks associated with derivative and purchasing strategies we employ to manage commodity pricing and interest rate risks; • the availability of reliable transportation on acceptable terms; • our ability to achieve cost savings related to our restructuring and cost management programs in the amounts and within the time frames currently anticipated; • our ability to generate sufficient cash flow to continue operating under our capital deployment model, including capital expenditures, debt repayment, dividend payments, and share repurchases; • our ability to implement and realize the full benefit of price changes, and the impact of the timing of the price changes to profits and cash flow in a particular period; • the success and cost of marketing and sales programs and strategies intended to promote growth in our business, including product innovation; • general competitive activity in the market, including competitors’ pricing practices and promotional spending levels; • our ability to attract and retain key talent; • the concentration of certain of our businesses with key customers and suppliers, including single-source suppliers of certain key raw materials and finished goods, and our ability to manage and maintain key relationships; • impairments in the carrying value of goodwill, other intangible assets, or other long-lived assets or changes in the useful lives of other intangible assets or other long-lived assets; • the impact of new or changes to existing governmental laws and regulations and their application; • the outcome of tax examinations, changes in tax laws, and other tax matters; • a disruption, failure, or security breach of our or our suppliers’ information technology systems, including ransomware attacks; 39 • foreign currency exchange rate and interest rate fluctuations; and • risks related to other factors described under “Risk Factors” in other reports and statements we have filed with the SEC.
Biggest changeThese risks and uncertainties include, but are not limited to, those set forth under the caption “Risk Factors” in this Annual Report on Form 10-K, as well as the following: • our ability to successfully integrate Hostess Brands’ operations and employees and to implement plans and achieve financial forecasts with respect to the Hostess Brands’ business; • our ability to realize the anticipated benefits, including synergies and cost savings, related to the Hostess Brands acquisition, including the possibility that the expected benefits will not be realized or will not be realized within the expected time period; 42 • disruption from the acquisition of Hostess Brands by diverting the attention of our management and making it more difficult to maintain business and operational relationships; • the negative effects of the acquisition of Hostess Brands on the market price of our common shares; • the amount of the costs, fees, expenses, and charges and the risk of litigation related to the acquisition of Hostess Brands; • the effect of the acquisition of Hostess Brands on our business relationships, operating results, ability to hire and retain key talent, and business generally; • disruptions or inefficiencies in our operations or supply chain, including any impact caused by product recalls, political instability, terrorism, geopolitical conflicts (including the ongoing conflicts between Russia and Ukraine and Israel and Hamas), extreme weather conditions, natural disasters, pandemics, work stoppages or labor shortages, or other calamities; • risks related to the availability of, and cost inflation in, supply chain inputs, including labor, raw materials, commodities, packaging, and transportation; • the impact of food security concerns involving either our products or our competitors’ products, including changes in consumer preference, consumer litigation, actions by the FDA or other agencies, and product recalls; • risks associated with derivative and purchasing strategies we employ to manage commodity pricing and interest rate risks; • the availability of reliable transportation on acceptable terms; • our ability to achieve cost savings related to our restructuring and cost management programs in the amounts and within the time frames currently anticipated; • our ability to generate sufficient cash flow to continue operating under our capital deployment model, including capital expenditures, debt repayment to meet our deleveraging objectives, dividend payments, and share repurchases; • a change in outlook or downgrade in our public credit ratings by a rating agency below investment grade; • our ability to implement and realize the full benefit of price changes, and the impact of the timing of the price changes to profits and cash flow in a particular period; • the success and cost of marketing and sales programs and strategies intended to promote growth in our business, including product innovation; • general competitive activity in the market, including competitors’ pricing practices and promotional spending levels; • our ability to attract and retain key talent; • the concentration of certain of our businesses with key customers and suppliers, including primary or single-source suppliers of certain key raw materials and finished goods, and our ability to manage and maintain key relationships; • impairments in the carrying value of goodwill, other intangible assets, or other long-lived assets or changes in the useful lives of other intangible assets or other long-lived assets; • the impact of new or changes to existing governmental laws and regulations and their application; • the outcome of tax examinations, changes in tax laws, and other tax matters; • a disruption, failure, or security breach of our or our suppliers’ IT systems, including, but not limited to, ransomware attacks; • foreign currency exchange rate and interest rate fluctuations; and • risks related to other factors described under “Risk Factors” in other reports and statements we have filed with the SEC.
We also continue to work closely with our customers and external business partners, taking additional actions to ensure safety and business continuity and maximize product availability. We have maintained production at all our facilities and availability of appointments at distribution centers.
We also continue to work closely with our customers and external business partners, taking additional actions to ensure safety, business continuity, and maximize product availability. We have maintained production at all our facilities and availability of appointments at distribution centers.
Cash provided by investing activities in 2023 consisted primarily of net proceeds received from the sale of certain pet food brands of $684.7 and a decrease of $37.6 in our derivative cash margin account balances.
Cash provided by investing activities in 2023 consisted primarily of net proceeds received from the sale of certain pet food brands of $684.7 and a decrease of $37.6 36 in our derivative cash margin account balances.
The impairment test incorporates estimates of future cash flows; allocations of certain assets, liabilities, and cash flows among reporting units; future growth rates; terminal value amounts; 37 and the applicable weighted-average cost of capital used to discount those estimated cash flows.
The impairment test incorporates estimates of future cash flows; allocations of certain assets, liabilities, and cash flows among reporting units; future growth rates; terminal value amounts; and the applicable weighted-average cost of capital used to discount those estimated cash flows.
We do not undertake any obligation to update or revise these forward-looking statements to reflect new events or circumstances subsequent to the filing in this Annual Report on Form 10-K.
We do not undertake any obligation to update or revise these forward-looking statements to reflect new events or circumstances subsequent to the filing in this Annual Report on Form 10-K. 43
For those jurisdictions where the expiration date of tax carryforwards or the projected operating results indicate that realization is not likely, a valuation allowance has been provided. As of April 30, 2023, a portion of our undistributed foreign earnings, primarily in Canada, is not considered permanently reinvested, and an immaterial deferred tax liability has been recognized accordingly.
For those jurisdictions where the expiration date of tax carryforwards or the projected operating results indicate that realization is not likely, a valuation allowance has been provided. As of April 30, 2024, a portion of our undistributed foreign earnings, primarily in Canada, is not considered permanently reinvested, and an immaterial deferred tax liability has been recognized accordingly.
These non-GAAP financial measures may not be comparable to similar measures used by other companies and may exclude certain nondiscretionary expenses and cash payments. The following table reconciles certain non-GAAP financial measures to the comparable GAAP financial measure. See page 29 for a reconciliation of net sales adjusted for certain noncomparable items to the comparable GAAP financial measure.
These non-GAAP financial measures may not be comparable to similar measures used by other companies and may exclude certain nondiscretionary expenses and cash payments. The following table reconciles certain non-GAAP financial measures to the comparable GAAP financial measure. See page 32 for a reconciliation of net sales adjusted for certain noncomparable items to the comparable GAAP financial measure.
These increases were partially offset by $477.4 in capital expenditures, primarily driven by investments in Smucker’s Uncrustables frozen sandwiches to support the new manufacturing and distribution facilities in McCalla, Alabama and capacity expansion in Longmont, Colorado, as well as plant maintenance across our facilities.
These increases were partially offset by $477.4 in capital expenditures, primarily driven by investments in Smucker’s Uncrustables frozen sandwiches to support the new manufacturing and distribution facilities in McCalla, Alabama, and capacity expansions in Longmont, Colorado, as well as plant maintenance across our facilities.
Based on the information known to date, with the exception of the matters discussed below, we do not believe the final outcome of these proceedings would have a material adverse effect on our financial position, results of operations, or cash flows.
Based on the information known to date, with the exception of the matters discussed below, we do not believe the final outcome of these proceedings will have a material adverse effect on our financial position, results of operations, or cash flows.
Refer to “Non-GAAP Financial Measures” in this discussion and analysis for additional information. Due to the unknown and potentially prolonged impact of the inflationary environment, challenged supply network, and increased labor shortages, we may experience difficulties or be delayed in achieving our long-term strategies; however, we continue to evaluate the effects of the macroeconomic environment on our long-term growth objectives.
Refer to “Non-GAAP Financial Measures” in this discussion and analysis for additional information. Due to the unknown and potentially prolonged impact of the inflationary environment and challenged supply network, we may experience difficulties or be delayed in achieving our long-term strategies; however, we continue to evaluate the effects of the macroeconomic environment on our long-term growth objectives.
For the comparisons of the years ended April 30, 2022 and 2021, see the Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our 2022 Annual Report on Form 10-K.
For the comparisons of the years ended April 30, 2023 and 2022, see the Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our 2023 Annual Report on Form 10-K.
The outcome and financial impact of the ongoing consumer litigation or any potential regulatory action associated with the Jif voluntary recall cannot be predicted at this time. Accordingly, no loss contingency has been recorded for these matters as of April 30, 2023, and the likelihood of loss is not considered probable or estimable.
The outcome and financial impact of the ongoing consumer litigation or any potential regulatory action associated with the Jif voluntary recall cannot be predicted at this time. Accordingly, no loss contingency has been recorded for these matters as of April 30, 2024, and the likelihood of loss is not considered probable or reasonably estimable.
Company Background At The J. M. Smucker Company, it is our privilege to make food people and pets love by offering a diverse portfolio of brands available across North America.
Company Background At The J. M. Smucker Company, it is our privilege to make food people and pets love by offering a diverse family of brands available across North America.
We source peanuts, protein meals, and oils and fats mainly from North America. We are one of the largest procurers of peanuts in the U.S. and frequently enter into long-term purchase contracts for various periods of time to mitigate the risk of a shortage of this commodity. The oils we purchase are mainly peanut and soybean.
We source peanuts, protein meals, and oils and fats mainly from North America. We are one of the largest roasters of peanuts in the U.S. and frequently enter into long-term purchase contracts for various periods of time to mitigate the risk of a shortage of this commodity. The oils we purchase are mainly palm, soybean, and peanut.
However, as a result of the current macroeconomic environment, we may experience an increase in the cost or the difficulty to obtain debt or equity financing, or to refinance our debt in the future. We continue to evaluate these risks, which could affect our financial condition or our ability to fund operations or future investment opportunities.
However, as a result of the current macroeconomic environment and the recent acquisition, we may experience an increase in the cost or the difficulty to obtain debt or equity financing, or to refinance our debt in the future. We continue to evaluate these risks, which could affect our financial condition or our ability to fund operations or future investment opportunities.
In addition, we have other liabilities which consisted primarily of projected commitments associated with our defined benefit pension and other postretirement benefit plans, as disclosed in Note 8: Pensions and Other Postretirement Benefits.
In addition, we have other liabilities which consisted primarily of projected commitments associated with our defined benefit pension and other postretirement benefit plans, as disclosed in Note 9: Pensions and Other Postretirement Benefits.
For more information see Earnings Per Share in Note 1: Accounting Policies and Note 5: Earnings Per Share. 36 CRITICAL ACCOUNTING ESTIMATES AND POLICIES The preparation of financial statements in conformity with U.S. GAAP requires that we make estimates and assumptions that in certain circumstances affect amounts reported in the accompanying consolidated financial statements.
For more information, see Earnings Per Share in Note 1: Accounting Policies and Note 6: Earnings Per Share. CRITICAL ACCOUNTING ESTIMATES AND POLICIES The preparation of financial statements in conformity with U.S. GAAP requires that we make estimates and assumptions that in certain circumstances affect amounts reported in the accompanying consolidated financial statements.
Accordingly, no loss contingency has been recorded for these matters as of April 30, 2023, and the likelihood of loss is not considered probable or 33 estimable. However, if we are required to pay significant damages, our business and financial results could be adversely impacted, and sales of those products could suffer not only in these locations but elsewhere.
Accordingly, no loss contingency has been recorded for these matters as of April 30, 2024, and the likelihood of loss is not considered probable or reasonably estimable. However, if we are required to pay significant damages, our business and financial results could be adversely impacted, and sales of those products could suffer not only in these locations but elsewhere.
Results of Operations This discussion and analysis deals with comparisons of material changes in the consolidated financial statements for the years ended April 30, 2023 and 2022.
Results of Operations This discussion and analysis deals with comparisons of material changes in the consolidated financial statements for the years ended April 30, 2024 and 2023.
In addition to the legal proceedings discussed above, we are defendants in a series of putative class action lawsuits that were transferred to the United States District Court for the Western District of Missouri for coordinated pre-trial proceedings. The plaintiffs assert claims arising under various state laws for false advertising, consumer protection, deceptive and unfair trade practices, and similar statutes.
Class Action Lawsuits : We are defendants in a series of putative class action lawsuits that were transferred to the United States District Court for the Western District of Missouri for coordinated pre-trial proceedings. The plaintiffs assert claims arising under various state laws for false advertising, consumer protection, deceptive and unfair trade practices, and similar statutes.
Differences between estimated expenditures and actual performance are recognized as a change in estimate in a subsequent period. During 2023, 2022, and 2021, subsequent period adjustments were less than 3 percent of both consolidated pre-tax adjusted income and cash provided by operating activities. Income Taxes: We account for income taxes using the liability method.
Differences between estimated expenditures and actual performance are recognized as a change in estimate in a subsequent period. During 2024, 2023, and 2022, subsequent period adjustments were less than 2 percent of both consolidated pre-tax adjusted income and cash provided by operating activities. Income Taxes: We account for income taxes using the liability method.
Under our ownership, these brands generated net sales of $1.5 billion in 2023, and $1.4 billion in both 2022 and 2021, primarily included in the U.S. Retail Pet Foods segment.
Under our ownership, these brands generated net sales of $1.5 billion and $1.4 billion in 2023 and 2022, respectively, primarily included in the U.S. Retail Pet Foods segment.
Non-GAAP financial measures exclude certain items affecting comparability that can significantly affect the year-over-year assessment of operating results, which include amortization expense and impairment charges related to intangible assets, special project costs, gains and losses on divestitures, the change in net cumulative unallocated derivative gains and losses, and other infrequently occurring items that do not directly reflect ongoing operating results, such as unrealized gains and losses on the investment in equity securities.
Non-GAAP financial measures exclude certain items affecting comparability that can significantly affect the year-over-year assessment of operating results, which include amortization expense and impairment charges related to intangible assets, special project costs, gains and losses on divestitures, the change in net cumulative unallocated derivative gains and losses, and other infrequently occurring items that do not directly reflect ongoing operating results.
Our 26 non-GAAP adjustments include amortization expense and impairment charges related to intangible assets, certain divestiture, acquisition, integration, and restructuring costs (“special project costs”), gains and losses on divestitures, the net change in cumulative unallocated gains and losses on commodity and foreign currency exchange derivative activities (“change in net cumulative unallocated derivative gains and losses”), and other infrequently occurring items that do not directly reflect ongoing operating results, such as unrealized gains and losses on the investment in equity securities.
Our non-GAAP adjustments include amortization expense and impairment charges related to intangible assets, certain divestiture, acquisition, integration, and restructuring costs (“special project costs”), gains and losses on divestitures, the net change in cumulative unallocated gains and losses on commodity and foreign currency exchange derivative activities (“change in net cumulative unallocated derivative gains and losses”), and other infrequently occurring items that do not directly reflect ongoing operating results.
During 2023 and 2022, we paid $1,495.2 and $1,042.9, respectively, to a financial institution for payment obligations that were settled through the supplier financing program. Contingencies We, like other food manufacturers, are from time to time subject to various administrative, regulatory, and other legal proceedings arising in the ordinary course of business.
During 2024 and 2023, we paid $1,685.5 and $1,495.2, respectively, to a financial institution for payment obligations that were settled through the supplier financing program. Contingencies We, like other food manufacturers, are from time to time subject to various administrative, regulatory, and other legal proceedings arising in the ordinary course of business.
Under our ownership, the businesses generated net sales of $106.7 in 2022, primarily included in the U.S. Retail Consumer Foods segment. Final net proceeds from the divestiture were $98.7, inclusive of a working capital adjustment and cash transaction costs.
Under our ownership, the businesses generated net sales of $106.7 in 2022, primarily included in the U.S. Retail Frozen Handheld and Spreads segment. Final net proceeds from the divestiture were $98.7, inclusive of a working capital adjustment and cash transaction costs.
The total liability for our unrecognized tax benefits and tax-related net interest at April 30, 2023, was $6.3 under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 740, Income Taxes ; however, we are unable to reasonably estimate the timing of cash settlements with the respective taxing authorities. For additional information, see Note 13: Income Taxes.
The total liability for our unrecognized tax benefits and tax-related net interest at April 30, 2024, was $5.5 under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 740, Income Taxes ; however, we are unable to reasonably estimate the timing of cash settlements with the respective taxing authorities. For additional information, see Note 14: Income Taxes.
Our rights and obligations to our suppliers, including amounts due and scheduled payment terms, are not impacted by our suppliers’ decisions to sell amounts under these arrangements. As of April 30, 2023 and 2022, $414.2 and $314.3 of our outstanding payment obligations, respectively, were elected and sold to a financial institution by participating suppliers.
Our rights and obligations to our suppliers, including amounts due and scheduled payment terms, are not impacted by our suppliers’ decisions to sell amounts under these arrangements. As of April 30, 2024 and 2023, $384.9 and $414.2 of our outstanding payment obligations, respectively, were elected and sold to a financial institution by participating suppliers.
Furthermore, we have implemented measures to manage order volumes to ensure a consistent supply across our retail partners during periods of high demand. However, to the extent that high demand levels or the current supply chain environment continues to disrupt order fulfillment, we may experience volume loss and elevated penalties.
Furthermore, we have implemented measures to manage order volumes to ensure a consistent supply across our retail partners during periods of high demand. However, to the extent that high demand levels or supply chain disruptions delay order fulfillment, we may experience volume loss and elevated penalties.
We regularly review and revise, when we deem necessary, estimates of costs for these promotional programs based on estimates of what will be redeemed by retailers, distributors, or consumers. These estimates are made using various techniques, including historical data on performance of similar promotional programs.
The costs of these programs are classified as a reduction of sales. We regularly review and revise, when we deem necessary, estimates of costs for these promotional programs based on estimates of what will be redeemed by retailers, distributors, or consumers. These estimates are made using various techniques, including historical data on performance of similar promotional programs.
Goodwill and Other Indefinite-Lived Intangible Assets: A significant portion of our assets is composed of goodwill and other intangible assets, the majority of which are not amortized but are reviewed for impairment at least annually on February 1, and more often if indicators of impairment exist.
For additional information, see Note 14: Income Taxes. Goodwill and Other Indefinite-Lived Intangible Assets: A significant portion of our assets is composed of goodwill and other intangible assets, the majority of which are not amortized but are reviewed for impairment at least annually on February 1, and more often if indicators of impairment exist.
Year Ended April 30, 2023 2022 Gross profit 32.8 % 33.8 % Selling, distribution, and administrative expenses: Marketing 3.3 % 3.5 % Advertising 1.9 2.2 Selling 2.8 2.8 Distribution 3.5 3.6 General and administrative 5.5 5.0 Total selling, distribution, and administrative expenses 17.1 % 17.0 % Amortization 2.4 2.8 Other intangible assets impairment charge — 1.9 Other special project costs 0.1 0.1 Loss (gain) on divestitures – net 11.9 (0.1) Other operating expense (income) – net (0.5) (0.7) Operating income 1.8 % 12.8 % Amounts may not add due to rounding.
Year Ended April 30, 2024 2023 Gross profit 38.1 % 32.8 % Selling, distribution, and administrative expenses: Marketing 3.2 % 3.3 % Advertising 2.2 1.9 Selling 3.1 2.8 Distribution 3.2 3.5 General and administrative 6.0 5.5 Total selling, distribution, and administrative expenses 17.7 % 17.1 % Amortization 2.3 2.4 Other special project costs 1.6 0.1 Loss (gain) on divestitures – net 0.2 11.9 Other operating expense (income) – net 0.4 (0.5) Operating income 16.0 % 1.8 % Amounts may not add due to rounding.
Over the past five years, net sales and adjusted earnings per share increased at a compound annual growth rate of 3 percent and 2 percent, respectively, while adjusted operating income has remained consistent. These changes were primarily driven by increased at-home consumption for the U.S. Retail Coffee and U.S.
Over the past five years, net sales, adjusted operating income, and adjusted earnings per share increased at a compound annual growth rate of approximately 1 percent, 2 percent, and 4 percent, respectively. These changes were primarily driven by increased at-home consumption for the U.S. Retail Coffee and U.S.
The estimates and projections used in the calculation of fair value are consistent with our current and long-range plans, including anticipated changes in market conditions, industry trends, growth rates, and planned capital expenditures. Changes in forecasted operations and other estimates and assumptions could impact the assessment of impairment in the future.
The estimates and projections used in the calculation of fair value are consistent with our current and long-range plans, including anticipated changes in market conditions, industry trends, growth rates, and planned capital expenditures. Changes in forecasted operations and other estimates and assumptions could impact the assessment of impairment in the future. At April 30, 2024, goodwill totaled $7.6 billion.
Furthermore, these non-GAAP financial measures are used by management in preparation of the annual budget and for the monthly analyses of our operating results. The Board also utilizes certain non-GAAP financial measures as components for measuring performance for incentive compensation purposes.
We believe that investors’ understanding of our performance is enhanced by disclosing these performance measures. Furthermore, these non-GAAP financial measures are used by management in preparation of the annual budget and for the monthly analyses of our operating results. The Board also utilizes certain non-GAAP financial measures as components for measuring performance for incentive compensation purposes.
(C) Adjusted earnings per common share – assuming dilution for 2023 and 2022 was computed using the treasury stock method.
(D) Adjusted earnings per common share – assuming dilution for 2024 and 2023 was computed using the treasury stock method.
For additional information, see Note 8: Pensions and Other Postretirement Benefits. FORWARD-LOOKING STATEMENTS Certain statements included in this Annual Report on Form 10-K contain forward-looking statements within the meaning of federal securities laws. The forward-looking statements may include statements concerning our current expectations, estimates, assumptions, and beliefs concerning future events, conditions, plans, and strategies that are not historical fact.
FORWARD-LOOKING STATEMENTS Certain statements included in this Annual Report on Form 10-K contain forward-looking statements within the meaning of federal securities laws. The forward-looking statements may include statements concerning our current expectations, estimates, assumptions, and beliefs concerning future events, conditions, plans, and strategies that are not historical fact.
The future tax benefit arising from the net deductible temporary differences and tax carryforwards was $196.8 and $193.4 at April 30, 2023 and 2022, respectively.
The future tax benefit arising from the net deductible temporary differences and tax carryforwards was $279.8 and $196.8 at April 30, 2024 and 2023, respectively.
The U.S. retail market segments in total comprised 87 percent of net sales in 2023, and represent a major portion of our strategic focus – the sale of branded food and beverage products with leadership positions to consumers through retail outlets in North America.
The U.S. retail market segments and Sweet Baked Snacks segment in total comprised 85 percent of consolidated net sales in 2024 and represent a major portion of our strategic focus – the sale of branded food and beverage products with leadership positions to consumers through retail outlets in North America.
While we cannot predict with certainty the ultimate results of these proceedings or potential settlements associated with these or other matters, we have accrued losses for certain contingent liabilities that we have determined are probable and reasonably estimable at April 30, 2023.
We are currently a defendant in a variety of such legal proceedings, and while we cannot predict with certainty the ultimate results of these proceedings or potential settlements associated with these or other matters, we have accrued losses for certain contingent liabilities that we have determined are probable and reasonably estimable at April 30, 2024.
The project demonstrates our commitment to meet increasing demand for this highly successful product and deliver on our strategy to focus on brands with the most significant growth opportunities. Construction of the facility and production will occur in three phases over multiple years and will result in the creation of up to 750 jobs.
The project demonstrates our commitment to meet increasing demand for this highly successful product and deliver on our strategy to focus on brands with the most significant growth opportunities. Construction of the facility and production will occur in three phases over multiple years, with financial investments and job creation aligning across each of the three phases.
For additional information, see Note 3: Divestitures and Note 6: Goodwill and Other Intangible Assets. Other indefinite-lived intangible assets, consisting entirely of trademarks, are also tested for impairment at least annually and more often if events or changes in circumstances indicate their carrying values may be below their fair values.
Other indefinite-lived intangible assets, consisting entirely of trademarks, are also tested for impairment at least annually and more often if events or changes in circumstances indicate that their carrying values may be below their fair values.
Although we do not have any operations in Russia or Ukraine, we continue to monitor the environment for any significant escalation or expansion of economic or supply chain disruptions, including broader inflationary costs, as well as regional or global economic recessions.
Although we do not have any operations in Russia, Ukraine, Israel, or Palestine, we continue to monitor the environment for any significant escalation or expansion of economic or supply chain disruptions, including broader inflationary costs, as well as regional or global economic recessions. Overall, broad-based supply chain disruptions and the impact of inflation remain uncertain.
In response to the inflationary pressures, we have introduced a company-wide transformation initiative to focus on deliberately translating our continuous improvement mindset into sustainable productivity initiatives to grow our profit margins and reinvest in the Company to enable future growth and cost savings.
In response to the inflationary pressures, we continue to focus on the delivery of our company-wide transformation initiative to deliberately translate our 30 continuous improvement mindset into sustainable productivity initiatives in order to grow our profit margins and reinvest in the Company to enable future growth and cost savings.
Projection Year Ending April 30, 2024 Dividend payments – based on current rates and common shares outstanding $ 425.9 Capital expenditures 565.0 Interest payments 138.9 Absent any material acquisitions or other significant investments, we believe that cash on hand, combined with cash provided by operations, borrowings available under our revolving credit facility and commercial paper program, and access to capital markets, will be sufficient to meet our cash requirements for the next 12 months, including the payment of quarterly dividends, principal and interest payments on debt outstanding, and capital expenditures.
Projection Year Ending April 30, 2025 Principal payments – excludes the impact of potential debt refinancing $ 1,000.0 Dividend payments – based on current rates and common shares outstanding 450.3 Capital expenditures 450.0 Interest payments 401.8 Absent any material acquisitions, apart from the recent acquisition of Hostess Brands, or other significant investments, we believe that cash on hand, combined with cash provided by operations, borrowings available under our revolving credit facility and commercial paper program, and access to capital markets, will be sufficient to meet our cash requirements for the next 12 months, including the payment of quarterly dividends, principal and interest payments on debt outstanding, and capital expenditures.
We are proud to lead in the coffee, consumer foods, dog snacks, and cat food categories by offering brands consumers trust for themselves and their families each day including Folgers , Dunkin’ , Café Bustelo , Jif , Smucker’s Uncrustables , Smucker’s , Milk-Bone, and Meow Mix .
We are proud to lead in the coffee, peanut butter, fruit spreads, frozen handheld, sweet baked goods, dog snacks, and cat food categories by offering brands consumers trust for themselves and their families each day, including Folgers , Dunkin’ , Café Bustelo , Jif , Smucker’s Uncrustables , Smucker’s , Hostess , Voortman , Milk-Bone , and Meow Mix .
For additional information, refer to Note 13: Income Taxes. Special Project Costs A restructuring program was approved by the Board during 2021, associated with opportunities identified to reduce our overall cost structure, optimize our organizational design, and support our portfolio reshape.
Restructuring Costs : A restructuring program was approved by the Board during 2021, associated with opportunities identified to reduce our overall cost structure, optimize our organizational design, and support our portfolio reshape.
In November 2021, we announced plans to invest $1.1 billion to build a new manufacturing facility and distribution center in McCalla, Alabama dedicated to production of Smucker’s Uncrustables frozen sandwiches. Construction of this facility began in 2022, with production expected to begin in calendar year 2025.
For additional information on the acquisition of Hostess Brands, see Note 2: Acquisition. In November 2021, we announced plans to invest $1.1 billion to build a new manufacturing facility and distribution center in McCalla, Alabama dedicated to production of Smucker’s Uncrustables frozen sandwiches. Construction of this facility began in 2022, with production expected to begin in 2025.
For additional information, see Note 15: Contingencies. Product Recall In May 2022, we initiated a voluntary recall of select Jif peanut butter products produced at our Lexington, Kentucky facility and sold primarily in the U.S., due to potential salmonella contamination.
Product Recall : In May 2022, we initiated a voluntary recall of select Jif peanut butter products produced at our Lexington, Kentucky facility and sold primarily in the U.S., due to potential salmonella contamination. At that time, we also suspended the manufacturing of Jif peanut butter products at the Lexington facility.
At April 30, 2023, other indefinite-lived intangible assets totaled $2.6 billion. Trademarks that represent our leading brands comprise approximately 95 percent of the total carrying value of other indefinite-lived intangible assets.
At April 30, 2024, other indefinite-lived intangible assets totaled $4.3 billion. Trademarks that represent our leading brands comprise more than 95 percent of the total carrying value of other indefinite-lived intangible assets.
(C) Purchase obligations includes agreements that are enforceable and legally bind us to purchase goods or services, which primarily consist of obligations related to normal, ongoing purchase obligations in which we have guaranteed payment to ensure availability of raw materials. We expect to receive consideration for these purchase obligations in the form of materials and services.
(B) Interest payments consist of the interest payments for our fixed-rate Senior Notes. (C) Purchase obligations includes agreements that are enforceable and legally bind us to purchase goods or services, which primarily consist of obligations related to normal, ongoing purchase obligations in which we have guaranteed payment to ensure availability of raw materials.
Further, the FDA issued a Warning Letter on January 24, 2023, following an inspection of our Lexington facility completed in June 2022 in connection with the Jif voluntary recall, identifying concerns regarding certain practices and controls at the facility.
Retail Frozen Handheld and Spreads segment. There were no significant direct costs recognized during 2024. Further, the FDA issued a Warning Letter on January 24, 2023, following an inspection of our Lexington facility completed in June 2022 in connection with the Jif voluntary recall, identifying concerns regarding certain practices and controls at the facility.
Through our unwavering commitment to producing quality products, operating responsibly and ethically, and delivering on our purpose, we will continue to grow our business and the positive impact we have on society. We have three reportable segments: U.S. Retail Pet Foods, U.S. Retail Coffee, and U.S. Retail Consumer Foods.
Through our unwavering commitment to producing quality products, operating responsibly and ethically, and delivering on our Purpose, we will continue to grow our business while making a positive impact on society. We have four reportable segments: U.S. Retail Coffee, U.S. Retail Frozen Handheld and Spreads, U.S. Retail Pet Foods, and Sweet Baked Snacks.
As a result, an excise tax of $3.6 was accrued on the repurchased shares during 2023, and included within additional capital in our Consolidated Balance Sheet. A total of 2.0 million common shares were repurchased for $262.5 during 2022 under authorizations by the Board, and no excise tax was accrued on the repurchased shares.
As a result, an excise tax of $3.6 was accrued on the repurchased shares during 2024, and included within additional capital in our Consolidated Balance Sheet. In 2023, we repurchased approximately 2.4 million common shares for $358.0 pursuant to the authorizations of the Board and an excise tax of $3.6 was accrued on the repurchased shares.
These purchase obligations do not represent all future purchases expected but represent only those items for which we are contractually obligated. Amounts included in the table above represent our current best estimate of payments due. Actual cash payments may vary due to the variable pricing components of certain purchase obligations.
We expect to receive consideration for these purchase obligations in the form of materials and services. These purchase obligations do not represent all future purchases expected but represent only those items for which we are contractually obligated. Amounts included in the table above represent our current best estimate of payments due.
In the U.S. retail market segments, our products are primarily sold to food retailers, club stores, discount and dollar stores, online retailers, pet specialty stores, drug stores, military commissaries, mass merchandisers, and natural foods stores and distributors.
Products within our U.S. retail market segments are primarily sold through a combination of direct sales and brokers to food retailers, club stores, discount and dollar stores, online retailers, pet specialty stores, drug stores, military commissaries, mass merchandisers, and distributors.
Net proceeds from the divestiture were $1.2 billion, consisting of $684.7 in cash, net of a preliminary working capital adjustment and cash transaction costs, and approximately 5.4 million shares of Post common stock, valued at $491.6 at the close of the transaction. Upon completion of this transaction, we recognized a pre-tax loss of $1.0 billion.
Final net proceeds from the divestiture were $1.2 billion, consisting of $683.9 in cash, net of a working capital adjustment and cash transaction costs, and approximately 5.4 million shares of Post common stock, valued at $491.6 at the close of the transaction.
While this adjusted effective income tax rate does not generally differ materially from our GAAP effective income tax rate, certain exclusions from non-GAAP results, such as the unfavorable permanent impact of the divestiture of certain pet food brands during 2023, and the one-time deferred state tax impact of the internal legal entity simplification during 2022, can significantly impact our adjusted effective income tax rate.
While this adjusted effective income tax rate does not generally differ materially from our GAAP effective income tax rate, certain exclusions from non-GAAP results, such as the unfavorable tax impacts associated with the acquisition of Hostess Brands in 2024 and unfavorable permanent tax impacts of the divestiture of certain pet food brands during 2023, can significantly impact our adjusted effective income tax rate.
In accordance with the 10b5-1 Plan, our designated broker has the authority to repurchase approximately 2.4 million commons shares, which commenced on the consummation of the sale of certain pet food brands on April 28, 2023, and will expire 45 calendar days after the closure of the transaction, which is in the first quarter of 2024, unless terminated earlier in accordance with the terms of the 10b5-1 Plan.
In accordance with the 10b5-1 Plan, our designated broker had the authority to repurchase approximately 2.4 million common shares, which commenced upon the sale of certain pet food brands on April 28, 2023, and expired 45 calendar days after the closure of the transaction.
It is possible that more significant disruptions could occur if the COVID-19 pandemic and certain geopolitical events continue to impact markets around the world, including the impact of e-commerce pressures on freight charges and potential shipping delays due to supply and demand imbalances, as well as labor shortages.
In addition, it is possible significant disruptions in our supply chain could occur if certain geopolitical events continue to impact markets around the world, including the impact of potential shipping delays due to supply and demand imbalances, as well as labor shortages.
Excluding the impact of derivative gains and losses, our overall commodity costs in 2023 were higher than in 2022, primarily due to higher costs for green coffee, protein meals, oils and fats, and grains. Segment Results We have three reportable segments: U.S. Retail Pet Foods, U.S. Retail Coffee, and U.S. Retail Consumer Foods.
Excluding the impact of derivative gains and losses, our overall commodity costs in 2024 were lower than in 2023, primarily due to lower costs for green coffee, oils and fats, and corn. Segment Results We have four reportable segments: U.S. Retail Coffee, U.S. Retail Frozen Handheld and Spreads, U.S. Retail Pet Foods, and Sweet Baked Snacks.
Year Ended April 30, 2023 2022 % Increase (Decrease) Net sales $ 8,529.2 $ 7,998.9 7 % Gross profit $ 2,801.8 $ 2,700.7 4 % of net sales 32.8 % 33.8 % Operating income $ 157.5 $ 1,023.8 (85) % of net sales 1.8 % 12.8 % Net income (loss): Net income (loss) $ (91.3) $ 631.7 (114) Net income (loss) per common share – assuming dilution $ (0.86) $ 5.83 (115) Adjusted gross profit (A) $ 2,829.6 $ 2,744.6 3 % of net sales 33.2 % 34.3 % Adjusted operating income (A) $ 1,415.4 $ 1,440.1 (2) % of net sales 16.6 % 18.0 % Adjusted income: (A) Income $ 950.8 $ 962.2 (1) Earnings per share – assuming dilution $ 8.92 $ 8.88 — (A) We use non-GAAP financial measures to evaluate our performance.
Year Ended April 30, 2024 2023 % Increase (Decrease) Net sales $ 8,178.7 $ 8,529.2 (4) % Gross profit $ 3,115.4 $ 2,801.8 11 % of net sales 38.1 % 32.8 % Operating income $ 1,305.8 $ 157.5 n/m % of net sales 16.0 % 1.8 % Net income (loss): Net income (loss) $ 744.0 $ (91.3) n/m Net income (loss) per common share – assuming dilution $ 7.13 $ (0.86) n/m Adjusted gross profit (A) $ 3,111.6 $ 2,829.6 10 % of net sales 38.0 % 33.2 % Adjusted operating income (A) $ 1,636.2 $ 1,415.4 16 % of net sales 20.0 % 16.6 % Adjusted income: (A) Income $ 1,038.0 $ 950.8 9 Earnings per share – assuming dilution $ 9.94 $ 8.92 11 (A) We use non-GAAP financial measures to evaluate our performance.
(A) Net sales excluding divestitures and foreign currency exchange is a non-GAAP financial measure used to evaluate performance internally. This measure provides useful information to investors because it enables comparison of results on a year-over-year basis. Net sales in 2023 increased $530.3, or 7 percent, which includes $181.2 of noncomparable net sales in the prior year related to divestitures.
(A) Net sales excluding acquisition, divestitures, and foreign currency exchange is a non-GAAP financial measure used to evaluate performance internally. This measure provides useful information to investors because it enables comparison of results on a year-over-year basis.
Year Ended April 30, 2023 2022 Gross profit reconciliation: Gross profit $ 2,801.8 $ 2,700.7 Change in net cumulative unallocated derivative gains and losses 21.4 23.4 Cost of products sold – special project costs (A) 6.4 20.5 Adjusted gross profit $ 2,829.6 $ 2,744.6 % of net sales 33.2 % 34.3 % Operating income reconciliation: Operating income $ 157.5 $ 1,023.8 Amortization 206.9 223.6 Other intangible assets impairment charge — 150.4 Loss (gain) on divestitures – net 1,018.5 (9.6) Change in net cumulative unallocated derivative gains and losses 21.4 23.4 Cost of products sold – special project costs (A) 6.4 20.5 Other special project costs (A) 4.7 8.0 Adjusted operating income $ 1,415.4 $ 1,440.1 % of net sales 16.6 % 18.0 % Net income (loss) reconciliation: Net income (loss) $ (91.3) $ 631.7 Income tax expense 82.1 212.1 Amortization 206.9 223.6 Other intangible assets impairment charge — 150.4 Loss (gain) on divestitures – net 1,018.5 (9.6) Change in net cumulative unallocated derivative gains and losses 21.4 23.4 Cost of products sold – special project costs (A) 6.4 20.5 Other special project costs (A) 4.7 8.0 Other infrequently occurring items: Unrealized loss (gain) on investment in equity securities (B) 3.8 — Adjusted income before income taxes $ 1,252.5 $ 1,260.1 Income taxes, as adjusted 301.7 297.9 Adjusted income $ 950.8 $ 962.2 Weighted-average shares – assuming dilution (C) 106.6 108.4 Adjusted earnings per share – assuming dilution (C) $ 8.92 $ 8.88 Free cash flow reconciliation: Net cash provided by (used for) operating activities $ 1,194.4 $ 1,136.3 Additions to property, plant, and equipment (477.4) (417.5) Free cash flow $ 717.0 $ 718.8 (A) Special project costs include certain restructuring costs, which are recognized in cost of products sold and other special project costs.
Year Ended April 30, 2024 2023 Gross profit reconciliation: Gross profit $ 3,115.4 $ 2,801.8 Change in net cumulative unallocated derivative gains and losses (6.7) 21.4 Cost of products sold – special project costs (A) 2.9 6.4 Adjusted gross profit $ 3,111.6 $ 2,829.6 % of net sales 38.0 % 33.2 % Operating income reconciliation: Operating income $ 1,305.8 $ 157.5 Amortization 191.1 206.9 Loss (gain) on divestitures – net 12.9 1,018.5 Change in net cumulative unallocated derivative gains and losses (6.7) 21.4 Cost of products sold – special project costs (A) 2.9 6.4 Other special project costs (A) 130.2 4.7 Adjusted operating income $ 1,636.2 $ 1,415.4 % of net sales 20.0 % 16.6 % Net income (loss) reconciliation: Net income (loss) $ 744.0 $ (91.3) Income tax expense 252.4 82.1 Amortization 191.1 206.9 Loss (gain) on divestitures – net 12.9 1,018.5 Change in net cumulative unallocated derivative gains and losses (6.7) 21.4 Cost of products sold – special project costs (A) 2.9 6.4 Other special project costs (A) 130.2 4.7 Other debt costs – special project costs (A) 19.5 — Other expense – special project costs (A) 0.3 — Other infrequently occurring items: Realized loss on investment in equity securities – net (B) 21.5 3.8 Pension plan termination settlement charge (C) 3.2 — Adjusted income before income taxes $ 1,371.3 $ 1,252.5 Income taxes, as adjusted 333.3 301.7 Adjusted income $ 1,038.0 $ 950.8 Weighted-average shares – assuming dilution (D) 104.4 106.6 Adjusted earnings per share – assuming dilution (D) $ 9.94 $ 8.92 Free cash flow reconciliation: Net cash provided by (used for) operating activities $ 1,229.4 $ 1,194.4 Additions to property, plant, and equipment (586.5) (477.4) Free cash flow $ 642.9 $ 717.0 (A) Includes certain divestiture, acquisition, and restructuring costs.
Trade Marketing and Merchandising Programs: In order to support our products, various promotional activities are conducted through retailers, distributors, or directly with consumers, including in-store display and product placement programs, price discounts, coupons, and other similar activities. The costs of these programs are classified as a reduction of sales.
Trade Marketing and Merchandising Programs: In order to support our products sold within the U.S. retail market segments and Sweet Baked Snacks segment, various promotional activities are conducted through retailers, distributors, or directly with consumers, including in-store display and product placement programs, price discounts, coupons, and other similar activities.
The price of peanuts, protein meals, and oils are driven primarily by weather, which impacts crop sizes and yield, as well as global demand, especially from large importing countries such as China and India.
The price of peanuts, protein meals, and oils is driven primarily by weather, which impacts crop sizes and yield, as well as global demand, especially from large importing countries such as China and India. We frequently enter into long-term contracts to purchase plastic containers, which are sourced mainly within the U.S.
The transaction included dry pet food products sold under private label brands, a dedicated manufacturing facility located in Frontenac, Kansas, and approximately 220 employees who supported the private label dry pet food business. The transaction did not include any branded products or our private label wet pet food business.
On December 1, 2021, we sold the private label dry pet food business to Diamond Pet Foods. The transaction included dry pet food products sold under private label brands, a dedicated manufacturing facility located in Frontenac, Kansas, and approximately 220 employees who supported the private label dry pet food business.
International and Away From Home includes the sale of products distributed domestically and in foreign countries through retail channels and foodservice distributors and operators (e.g., health care operators, restaurants, lodging, hospitality, offices, K-12, colleges and universities, and convenience stores).
International and Away From Home includes the sale of all products that are distributed in foreign countries through retail channels, as well as domestically and in foreign countries through foodservice distributors and operators (e.g., healthcare operators, restaurants, educational institutions, offices, lodging and gaming establishments, and convenience stores).
Events and conditions that could result in impairment include a sustained drop in the market price of our common shares, increased competition or loss of market share, obsolescence, product claims that result in a significant loss of sales or profitability over the product life, deterioration in macroeconomic conditions, or declining financial performance in comparison to projected results.
Events and conditions that could result in impairment include a sustained drop in the market price of our common shares, increased competition or loss of market share, obsolescence, product claims that result in a significant loss of sales or profitability over the product life, deterioration in macroeconomic conditions, declining financial performance in comparison to projected results, increased input costs beyond projections, or divestitures of significant brands. 41 To test for goodwill impairment, we estimate the fair value of each of our reporting units using both a discounted cash flow valuation technique and a market-based approach.
The declaration of dividends is subject to the discretion of our Board and depends on various factors, such as our net income, financial condition, cash requirements, future events, and other factors deemed relevant by the Board. 34 During the fourth quarter of 2023, we repurchased approximately 2.4 million common shares for $358.0 pursuant to the authorizations of the Board.
The declaration of dividends is subject to the discretion of our Board and depends on various factors, such as our net income (loss), financial condition, cash requirements, future events, and other factors deemed relevant by the Board.
We completed the closure of the Ripon facility during 2023, as planned, and the remaining restructuring activities were completed as of April 30, 2023. The costs incurred associated with these restructuring activities include other transition and termination costs associated with our cost reduction and margin management initiatives, inclusive of accelerated depreciation, as well as employee-related costs.
The costs incurred associated with these restructuring activities included other transition and termination costs related to our cost reduction and margin management initiatives, inclusive of accelerated depreciation, as well as employee-related costs. We incurred total cumulative restructuring costs of $63.7.
Retail Coffee segment primarily includes the domestic sales of Folgers , Dunkin’ , and Café Bustelo branded coffee; and the U.S. Retail Consumer Foods segment primarily includes the domestic sales of Smucker’s and Jif branded products.
Retail Frozen Handheld and Spreads segment primarily includes the domestic sales of Smucker’s and Jif branded products; the U.S.
The FDA or other agencies may nonetheless conclude that certain practices or controls were not in compliance with the Federal Food, Drug, and Cosmetic Act or other laws.
Although the FDA has concluded its inspection, other agencies may nonetheless conclude that certain practices or controls were not in compliance with the FDCA or other laws.
Goodwill is substantially concentrated within the U.S. Retail Coffee, U.S. Retail Pet Foods, and U.S. Retail Consumer Foods segments. During 2023, no goodwill impairment was recognized as a result of the evaluations performed throughout the year, inclusive of an assessment performed following the divestiture.
Goodwill is substantially concentrated within the U.S. retail market segments and Sweet Baked Snacks segment. During 2024, no goodwill impairment was recognized as a result of the evaluations performed throughout the year.
Income Taxes Income taxes decreased $130.0, or 61 percent, in 2023, as compared to the prior year. The effective income tax rate for 2023 varied from the U.S. statutory income tax rate of 21.0 percent primarily due to an unfavorable permanent impact of the divestiture of certain pet food brands, as well as state income taxes.
The effective income tax rate for 2023 varied from the U.S. statutory income tax rate of 21.0 percent primarily due to unfavorable permanent tax impacts associated with the divestiture of certain pet food brands, as well as state income taxes. We anticipate a full-year effective income tax rate for 2025 to be approximately 24.4 percent.
Under the repurchase plan, a total of approximately 3.5 million common shares remain available for repurchase as of April 30, 2023. In accordance with the Inflation Reduction Act, a one percent excise tax was applied to share repurchases after December 31, 2022.
In 2024, we repurchased approximately 2.4 million common shares for $362.8 under the 10b5-1 Plan, and approximately 1.1 million common shares remain available for repurchase. In accordance with The Inflation Reduction Act of 2022, H.R. 5376 (the “Inflation Reduction Act”), a one percent excise tax was applied to share repurchases after December 31, 2022.
The estimated fair value of each of our reporting units for which there is a goodwill balance was substantially in excess of its carrying value as of the annual test date, with the exception of the Pet Foods reporting unit, for which its fair value exceeded its carrying value by approximately 7 percent.
The estimated fair value exceeded the carrying value by greater than 10 percent for all of our reporting units with a goodwill balance as of the annual test date, with the exception of the Sweet Baked Snacks reporting unit, for which its fair value exceeded its carrying value by approximately 3 percent.
Refer to “Non-GAAP Financial Measures” in this discussion and analysis for a reconciliation to the comparable generally accepted accounting principles (“GAAP”) financial measure. 28 Net Sales Year Ended April 30, 2023 2022 Increase (Decrease) % Net sales $ 8,529.2 $ 7,998.9 $ 530.3 7 % Private label dry pet food divestiture — (62.3) 62.3 1 Natural beverage and grains divestiture — (106.7) 106.7 1 Pet food brands divestiture — (12.2) 12.2 — Foreign currency exchange 26.3 — 26.3 — Net sales excluding divestitures and foreign currency exchange (A) $ 8,555.5 $ 7,817.7 $ 737.8 9 % Amounts may not add due to rounding .
Refer to “Non-GAAP Financial Measures” in this discussion and analysis for a reconciliation to the comparable generally accepted accounting principles (“GAAP”) financial measure. 31 Net Sales Year Ended April 30, 2024 2023 Increase (Decrease) % Net sales $ 8,178.7 $ 8,529.2 $ (350.5) (4) % Hostess Brands acquisition (637.3) — (637.3) (7) Pet food brands divestiture — (1,522.4) 1,522.4 18 Sahale Snacks divestiture — (23.7) 23.7 — Canada condiment divestiture — (19.4) 19.4 — Foreign currency exchange 6.8 — 6.8 — Net sales excluding acquisition, divestitures, and foreign currency exchange (A) $ 7,548.2 $ 6,963.7 $ 584.5 8 % Amounts may not add due to rounding .
We recognized a pre-tax gain of $28.3 related to the natural beverage and grains businesses, of which $26.7 was recognized during 2022, and the remaining $1.6 was recognized upon finalization of the working capital adjustment during 2023. On December 1, 2021, we sold the private label dry pet food business to Diamond Pet Foods.
We recognized a pre-tax gain of $28.3 related to the natural beverage and grains businesses, of which $26.7 was recognized during 2022, and the remaining $1.6 was recognized upon finalization of the working capital adjustment in 2023, and is included within other operating expense (income) – net in the Statements of Consolidated Income.
Retail Pet Foods segment net sales increased $273.8 in 2023, inclusive of the impact of $74.3 of noncomparable net sales in the prior year related to the divested private label dry pet food business and the divestiture of certain pet food brands. Excluding the noncomparable impact of the divested businesses, net sales increased $348.1, or 13 percent.
Retail Pet Foods segment net sales decreased $1,215.3 in 2024, inclusive of the impact of $1,497.2 of noncomparable net sales in the prior year related to the divestiture of certain pet food brands. Excluding the noncomparable impact of the divested brands, net sales increased $281.9, or 18 percent.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

9 edited+1 added−0 removed10 unchanged
Biggest changeYear Ended April 30, 2023 2022 High $ 53.9 $ 72.3 Low 21.6 14.8 Average 39.7 37.1 The estimated fair value was determined using quoted market prices and was based on our net derivative position by commodity for the previous four quarters. The calculations are not intended to represent actual losses in fair value that we expect to incur.
Biggest changeYear Ended April 30, 2024 2023 High $ 26.0 $ 53.9 Low (4.0) 21.6 Average 12.8 39.7 44 The estimated fair value was determined using quoted market prices and was based on our net derivative position by commodity for the previous four quarters.
We do not qualify commodity derivatives for hedge accounting treatment. As a result, the gains and losses on all commodity derivatives are immediately recognized in cost of products sold. 40 The following sensitivity analysis presents our potential loss of fair value resulting from a hypothetical 10 percent change in market prices related to commodities.
We do not qualify commodity derivatives for hedge accounting treatment. As a result, the gains and losses on all commodity derivatives are immediately recognized in cost of products sold. The following sensitivity analysis presents our potential loss (gain) of fair value resulting from a hypothetical 10 percent change in market prices related to commodities.
Because we have foreign currency denominated assets and liabilities, financial exposure may result, primarily from the timing of transactions and the movement of exchange rates. The foreign currency balance sheet exposures as of April 30, 2023, are not expected to result in a significant impact on future earnings or cash flows.
Because we have foreign currency denominated assets and liabilities, financial exposure may result, primarily from the timing of transactions and the movement of exchange rates. The foreign currency balance sheet exposures as of April 30, 2024, are not expected to result in a significant impact on future earnings or cash flows.
Interest Rate Risk: The fair value of our cash and cash equivalents at April 30, 2023, approximates carrying value. We are exposed to interest rate risk with regard to existing debt consisting of fixed- and variable-rate maturities. Our interest rate exposure primarily includes U.S. Treasury rates, SOFR, and commercial paper rates in the U.S.
Interest Rate Risk: The fair value of our cash and cash equivalents at April 30, 2024, approximates carrying value. We are exposed to interest rate risk with regard to existing debt consisting of fixed- and variable-rate maturities. Our interest rate exposure primarily includes U.S. Treasury rates, SOFR, and commercial paper rates in the U.S.
We utilize derivative instruments to manage interest rate risk associated with anticipated debt transactions, as well as to manage changes in the fair value of our long-term debt. At the inception of an interest rate contract, the instrument is evaluated and documented for qualifying hedge accounting treatment.
From time to time, we utilize derivative instruments to manage interest rate risk associated with anticipated debt transactions, as well as to manage changes in the fair value of our long-term debt. At the inception of an interest rate contract, the instrument is evaluated and documented for qualifying hedge accounting treatment.
Therefore, the change in value of these instruments is immediately recognized in cost of products sold. Based on our hedged foreign currency positions as of April 30, 2023, a hypothetical 10 percent change in exchange rates would not materially impact the fair value.
Therefore, the change in value of these instruments is immediately recognized in cost of products sold. Based on our hedged foreign currency positions as of April 30, 2024, a hypothetical 10 percent change in exchange rates would not materially impact the fair value.
Revenues from customers outside the U.S., subject to foreign currency exchange, represented 5 percent of net sales during 2023. Thus, certain revenues and expenses have been, and are expected to be, subject to the effect of foreign currency fluctuations, and these fluctuations may have an impact on operating results. 41
Revenues from customers outside the U.S., subject to foreign currency exchange, represented 5 percent of consolidated net sales during 2024. Thus, certain revenues and expenses have been, and are expected to be, subject to the effect of foreign currency fluctuations, and these fluctuations may have an impact on operating results. 45
For more information on our derivative financial instruments and terminated contracts, see Note 9: Derivative Financial Instruments. In measuring interest rate risk by the amount of net change in the fair value of our financial liabilities, a hypothetical 100 basis-point decrease in interest rates at April 30, 2023, would increase the fair value of our long-term debt by $307.7.
For more information on our derivative financial instruments and terminated contracts, see Note 10: Derivative Financial Instruments. In measuring interest rate risk by the amount of net change in the fair value of our financial liabilities, a hypothetical 100 basis-point decrease in interest rates at April 30, 2024, would increase the fair value of our long-term debt by $607.2.
In practice, as markets move, we actively manage our risk and adjust hedging strategies as appropriate. The commodities hedged have a high inverse correlation to price changes of the derivative instrument.
The calculations are not intended to represent actual losses or gains in fair value that we expect to incur. In practice, as markets move, we actively manage our risk and adjust hedging strategies as appropriate. The commodities hedged have a high inverse correlation to price changes of the derivative instrument.
Added
In November 2023, we terminated interest rate contracts for $42.5 concurrent with the payment of the debt assumed with the acquisition of Hostess Brands. The interest rate contracts were designated as cash flow hedges and were used to manage exposure to changes in cash flows associated with variable rate debt.

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