J.M. Smucker 10-Q 2021-10-31

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

---

FORM 10-Q

---

☒			QUARTERLY REPORT PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: October 31, 2021

or

☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 1-5111

---

The J. M. Smucker Company

(Exact name of registrant as specified in its charter)

---

Ohio									34-0538550
(State or other jurisdiction of incorporation or organization)									(I.R.S. Employer Identification No.)
One Strawberry Lane
Orrville,			Ohio						44667-0280
(Address of principal executive offices)									(Zip code)
Registrant’s telephone number, including area code:									(330)			682-3000
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class						Trading symbol			Name of each exchange on which registered
Common shares, no par value						SJM			New York Stock Exchange

---

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer						ý			Accelerated filer						☐
Non-accelerated filer						☐			Smaller reporting company						☐
Emerging growth company						☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ý

The Company had 108,363,216 common shares outstanding on November 16, 2021.

TABLE OF CONTENTS

						Page No.
PART I. FINANCIAL INFORMATION
Item 1.			Financial Statements
			Condensed Statements of Consolidated Income			2
			Condensed Statements of Consolidated Comprehensive Income			2
			Condensed Consolidated Balance Sheets			3
			Condensed Statements of Consolidated Cash Flows			4
			Condensed Statements of Consolidated Shareholders’ Equity			5
			Notes to Unaudited Condensed Consolidated Financial Statements			6
Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations			20
Item 3.			Quantitative and Qualitative Disclosures About Market Risk			30
Item 4.			Controls and Procedures			32
PART II. OTHER INFORMATION
Item 1.			Legal Proceedings			33
Item 1A.			Risk Factors			33
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds			34
Item 6.			Exhibits			34
SIGNATURES						35
INDEX OF EXHIBITS						36

PART I. FINANCIAL INFORMATION

THE J. M. SMUCKER COMPANY

CONDENSED STATEMENTS OF CONSOLIDATED INCOME

(Unaudited)

			Three Months Ended October 31,												Six Months Ended October 31,
Dollars in millions, except per share data			2021						2020						2021						2020
Net sales			$	2,050.0					$	2,034.0					$	3,908.0					$	4,005.8
Cost of products sold (A)			1,338.5						1,215.8						2,557.1						2,412.2
Gross Profit			711.5						818.2						1,350.9						1,593.6
Selling, distribution, and administrative expenses			347.7						382.8						671.7						740.3
Amortization			55.4						59.5						110.8						119.1
Other special project costs (A)			1.3						—						3.1						—
Other operating expense (income) – net			(4.7)						(4.9)						(5.9)						(7.7)
Operating Income			311.8						380.8						571.2						741.9
Interest expense – net			(40.3)						(45.1)						(83.4)						(91.2)
Other income (expense) – net			(2.7)						(32.2)						(13.8)						(33.6)
Income Before Income Taxes			268.8						303.5						474.0						617.1
Income tax expense			62.8						72.7						114.1						149.3
Net Income			$	206.0					$	230.8					$	359.9					$	467.8
Earnings per common share:
Net Income			$	1.90					$	2.02					$	3.32					$	4.10
Net Income – Assuming Dilution			$	1.90					$	2.02					$	3.32					$	4.10

(A) Special project costs include divestiture, acquisition, integration, and restructuring costs, which are recognized in cost of products sold and other special project costs. For more information, see Note 3: Integration and Restructuring Costs and Note 5: Reportable Segments.

See notes to unaudited condensed consolidated financial statements.

THE J. M. SMUCKER COMPANY

CONDENSED STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME

(Unaudited)

			Three Months Ended October 31,												Six Months Ended October 31,
Dollars in millions			2021						2020						2021						2020
Net income			$	206.0					$	230.8					$	359.9					$	467.8
Other comprehensive income (loss):
Foreign currency translation adjustments			2.0						2.3						(2.0)						15.2
Cash flow hedging derivative activity, net of tax			2.7						2.7						5.0						5.3
Pension and other postretirement benefit plans activity, net of tax			6.5						28.7						3.9						30.4
Available-for-sale securities activity, net of tax			(0.1)						(0.3)						—						0.6
Total Other Comprehensive Income (Loss)			11.1						33.4						6.9						51.5
Comprehensive Income			$	217.1					$	264.2					$	366.8					$	519.3

See notes to unaudited condensed consolidated financial statements.

THE J. M. SMUCKER COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

Dollars in millions			October 31, 2021						April 30, 2021
ASSETS
Current Assets
Cash and cash equivalents			$	155.3					$	334.3
Trade receivables – net			659.1						533.7
Inventories:
Finished products			695.5						607.6
Raw materials			404.7						352.3
Total Inventory			1,100.2						959.9
Other current assets			94.2						113.8
Total Current Assets			2,008.8						1,941.7
Property, Plant, and Equipment
Land and land improvements			124.6						124.3
Buildings and fixtures			974.7						967.0
Machinery and equipment			2,508.2						2,469.7
Construction in progress			362.4						282.3
Gross Property, Plant, and Equipment			3,969.9						3,843.3
Accumulated depreciation			(1,954.7)						(1,841.8)
Total Property, Plant, and Equipment			2,015.2						2,001.5
Other Noncurrent Assets
Operating lease right-of-use assets			123.8						142.0
Goodwill			6,022.3						6,023.6
Other intangible assets – net			5,930.4						6,041.2
Other noncurrent assets			140.3						134.2
Total Other Noncurrent Assets			12,216.8						12,341.0
Total Assets			$	16,240.8					$	16,284.2
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable			$	1,031.0					$	1,034.1
Accrued trade marketing and merchandising			209.8						200.6
Current portion of long-term debt			—						1,152.9
Short-term borrowings			320.0						82.0
Current operating lease liabilities			40.9						41.1
Other current liabilities			288.8						356.8
Total Current Liabilities			1,890.5						2,867.5
Noncurrent Liabilities
Long-term debt, less current portion			4,308.8						3,516.8
Deferred income taxes			1,351.6						1,349.3
Noncurrent operating lease liabilities			94.1						112.8
Other noncurrent liabilities			309.4						313.0
Total Noncurrent Liabilities			6,063.9						5,291.9
Total Liabilities			7,954.4						8,159.4
Shareholders’ Equity
Common shares			27.1						27.1
Additiona

Showing the first 8K of 86K characters. Open the full section

(Dollars and shares in millions, unless otherwise noted, except per share data)

This discussion and analysis deals with comparisons of material changes in the unaudited condensed consolidated financial statements for the three and six months ended October 31, 2021 and 2020. All comparisons presented are to the corresponding period of the prior year, unless otherwise noted.

On December 1, 2020, we sold the Crisco oils and shortening business to B&G Foods. The transaction included oils and shortening products sold under the Crisco brand, primarily in the U.S. and Canada, certain trademarks and licensing agreements, dedicated manufacturing and warehouse facilities located in Cincinnati, Ohio, and approximately 160 employees who supported the Crisco business. Under our ownership, the business generated net sales of $198.9 in 2021, primarily included in the U.S. Retail Consumer Foods segment. We received net proceeds from the divestiture of $530.2, which were net of cash transaction costs and a working capital adjustment. Upon completion of this transaction, we recognized a pre-tax gain of $114.8 during the second half of 2021.

On January 29, 2021, we sold the Natural Balance premium pet food business to Nexus. The transaction included pet food products sold under the Natural Balance brand, certain trademarks and licensing agreements, and select employees who supported the Natural Balance business. Under our ownership, the business generated net sales of $156.7 in 2021, included in the U.S. Retail Pet Foods segment. We received net proceeds from the divestiture of $33.8, which were net of cash transaction costs and a working capital adjustment. Upon completion of this transaction, we recognized a pre-tax loss of $89.5 during the second half of 2021.

We are the owner of all trademarks referenced herein, except for the following, which are used under license: Dunkin’ is a trademark of DD IP Holder LLC, and Rachael Ray is a trademark of Ray Marks II LLC. The Dunkin’ brand is licensed to us 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. Information in this document does not pertain to products for sale in Dunkin’ restaurants. K-Cup® is a trademark of Keurig Green Mountain, Inc., used with permission.

COVID-19

The spread of novel coronavirus (“COVID-19”) throughout the United States and the international community has had, and will continue to have, an impact on financial markets, economic conditions, and portions of our business and industry.

During calendar year 2021, state governments reopened their economies, while adhering to new guidelines and enhanced safety measures, such as social distancing, face mask protocols, and vaccination requirements. However, there continues to be a significant number of U.S. cases, and as a result, consumers continue to stay at home more frequently as a precaution, causing the demand related to at-home food consumption to remain elevated, though the impact is of a lesser extent as compared to the prior year. While we continue to benefit from elevated consumption, the supply chain network remains challenged due to the increased demand, as well as high COVID-19 cases and increasing labor shortages, which continue to negatively impact our business and overall industry. We anticipate this consumer behavior and at-home food consumption will continue, to some extent, through 2022, dependent on government guidance regarding risk mitigation measures, vaccination rates and effectiveness, and the impact of additional COVID-19 variants.

In September 2021, the U.S. President issued an executive order applicable to federal contractors and employers with 100 or more employees. As a result, we announced a vaccination mandate that requires all employees to be fully vaccinated or receive an approved medical or religious exemption as early as December 2021, and no later than March 2022, dependent upon location. Furthermore, we are continuing a phased approach to reopen our corporate headquarters in Orrville, Ohio, with increased safety protocols. However, occupancy levels remain low as the majority of our office-based employees continue to work remotely where possible, and we continue to monitor the latest public health and government guidance related to COVID-19. We have crisis management teams at all our facilities, which continue to monitor their respective locations and implement additional risk mitigation actions, as necessary. All our production operations remain open, and none have experienced significant disruptions or labor reductions related to COVID-19.

During the first half of 2022, we experienced increased disruption in our supply chain network, including the supply of certain ingredients, packaging, and other sourced materials, which has resulted in higher than expected inflation, including escalating transportation and other supply chain costs. It is possible that more significant disruptions could occur if the COVID-19 pandemic continues 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, inclusive of attrition related to the

implementation of vaccination requirements. 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. Furthermore, we have implemented measures to manage order volumes to ensure a consistent supply across our retail partners during this period of high demand.

During the first six months of 2022, customer order levels remain elevated, primarily across our U.S. Retail Consumer Foods and U.S. Retail Coffee segments, in response to the increased consumer demand for our products related to the elevated at-home consumption. It is anticipated that the increase in consumer demand will continue, to a lesser extent compared to the prior year, through the remainder of 2022. A decline in products sold in away from home channels has also been experienced as a result of COVID-19, which has impacted our net sales in our Away From Home operating segment, and we expect COVID-19 will continue to adversely affect our net sales while government-mandated safety measures are in place and consumers continue to stay at home as a precaution. However, as states have reopened their economies during calendar year 2021, our net sales for the away from home channels have continued to improve compared to the initial months of the pandemic, as experienced during the first half of 2022. This trend could moderate during 2022 if cases rise and governments impose additional safety measures that further impact away from home consumption, which is partially dependent upon vaccination rates and effectiveness, as well as the impact of additional COVID-19 variants. Overall, the impact of COVID-19 remains uncertain and ultimately depends on the length and severity of the pandemic, inclusive of the introduction of new strains of the virus; the federal, state, and local government actions taken in response; vaccination rates and effectiveness; the impact of vaccination requirements; and the macroeconomic environment. We will continue to evaluate the nature and extent to which COVID-19 will impact our business, supply chain, including labor availability and attrition, consolidated results of operations, financial condition, and liquidity.

Results of Operations

			Three Months Ended October 31,																		Six Months Ended October 31,
			2021						2020						% Increase (Decrease)						2021						2020						% Increase (Decrease)
Net sales			$	2,050.0					$	2,034.0					1		%				$	3,908.0					$	4,005.8					(2)		%
Gross profit			$	711.5					$	818.2					(13)						$	1,350.9					$	1,593.6					(15)
% of net sales			34.7		%				40.2		%										34.6		%				39.8		%
Operating income			$	311.8					$	380.8					(18)						$	571.2					$	741.9					(23)
% of net sales			15.2		%				18.7		%										14.6		%				18.5		%
Net income:
Net income			$	206.0					$	230.8					(11)						$	359.9					$	467.8					(23)
Net income per common share – assuming dilution			$	1.90					$	2.02					(6)						$	3.32					$	4.10					(19)
Adjusted gross profit (A)			$	730.9					$	786.7					(7)						$	1,377.1					$	1,545.9					(11)
% of net sales			35.7		%				38.7		%										35.2		%				38.6		%
Adjusted operating income (A)			$	387.9					$	408.8					(5)						$	711.3					$	813.3					(13)
% of net sales			18.9		%				20.1		%										18.2		%				20.3		%
Adjusted income: (A)
Income			$	263.8					$	273.2					(3)						$	469.6					$	543.2					(14)
Earnings per share – assuming dilution			$	2.43					$	2.39					2						$	4.33					$	4.76					(9)

(A)We use non-GAAP financial measures to evaluate our performance. Refer to “Non-GAAP Financial Measures” in this discussion and analysis for a reconciliation to the comparable GAAP financial measure.

Net Sales

			Three Months Ended October 31,																								Six Months Ended October 31,
			2021						2020						Increase (Decrease)						%						2021						2020						Increase (Decrease)						%
Net sales			$	2,050.0					$	2,034.0					$	16.0					1		%				$	3,908.0					$	4,005.8					$	(97.8)					(2)		%
Crisco divestiture			—						(84.9)						84.9						4						—						(164.4)						164.4						4
Natural Balance divestiture			—						(50.8)						50.8						2						—						(106.8)						106.8						3
Foreign currency exchange			(5.6)						—						(5.6)						—						(16.0)						—						(16.0)						—
Net sales excluding divestitures and foreign currency exchange (A)			$	2,044.4					$	1,898.3					$	146.1					8		%				$	3,892.0					$	3,734.6					$	157.4					4		%

Amounts may not add due to rounding.

(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 the second quarter of 2022 increased $16.0, or 1 percent, which includes $135.7 of noncomparable net sales in the prior year related to the Crisco and Natural Balance divestitures. Net sales excluding divestitures and foreign currency exchange increased $146.1, or 8 percent, which was primarily due to favorable volume/mix and higher net price realization for each of the U.S. Retail segments and for International and Away From Home.

Net sales in the first six months of 2022 decreased $97.8, or 2 percent, which includes $271.2 of noncomparable net sales in the prior year related to the Crisco and Natural Balance divestitures. Net sales excluding divestitures and foreign currency exchange increased $157.4, or 4 percent, which was primarily due to favorable volume/mix and higher net price realization for each of the U.S. Retail segments and for International and Away From Home.

Operating Income

The following table presents the components of operating income as a percentage of net sales.

			Three Months Ended October 31,												Six Months Ended October 31,
			2021						2020						2021						2020
Gross profit			34.7		%				40.2		%				34.6		%				39.8		%
Selling, distribution, and administrative expenses:
Marketing			5.9		%				6.2		%				5.6		%				6.2		%
Selling			2.6						2.9						3.0						3.1
Distribution			3.4						3.5						3.6						3.5
General and administrative			5.0						6.3						5.0						5.7
Total selling, distribution, and administrative expenses			17.0		%				18.8		%				17.2		%				18.5		%
Amortization			2.7						2.9						2.8						3.0
Other special project costs			0.1						—						0.1						—
Other operating expense (income) – net			(0.2)						(0.2)						(0.2)						(0.2)
Operating income			15.2		%				18.7		%				14.6		%				18.5		%

Amounts may not add due to rounding.

Gross profit decreased $106.7, or 13 percent, in the second quarter of 2022, reflecting higher costs, primarily driven by increased commodity, manufacturing, transportation, and packaging costs, and the noncomparable impact related to the Crisco and Natural Balance divestitures, partially offset by increased pricing and favorable volume/mix.

Operating income decreased $69.0, or 18 percent, primarily reflecting the decrease in gross profit, partially offset by a $35.1 decrease in selling, distribution, and administrative (“SD&A”) expenses.

Our non-GAAP adjustments include amortization expense and impairment charges related to intangible assets, special project costs, gains and losses related to the sale of a business, the change in net cumulative unallocated derivative gains and losses, and other one-time items that do not directly reflect ongoing operating results. Refer to “Non-GAAP Financial Measures” in this discussion and analysis for additional information. Gross profit excluding non-GAAP adjustments (“adjusted gross profit”)

decreased $55.8, or 7 percent, in the second quarter of 2022, primarily reflecting the exclusion of the change in net cumulative unallocated derivative gains and losses, as compared to GAAP gross profit. Operating income excluding non-GAAP adjustments (“adjusted operating income”) decreased $20.9, or 5 percent, as compared to the prior year.

Gross profit decreased $242.7, or 15 percent, in the first six months of 2022, reflecting higher costs, primarily driven by increased commodity, transportation, and packaging costs, and the noncomparable impact related to the Crisco and Natural Balance divestitures, partially offset by increased pricing and favorable volume/mix.

Operating income decreased $170.7, or 23 percent, primarily reflecting the decrease in gross profit, partially offset by a $68.6 decrease in SD&A expenses.

Adjusted gross profit decreased $168.8, or 11 percent, in the first six months of 2022, primarily reflecting the exclusion of the change in net cumulative unallocated derivative gains and losses, as compared to GAAP gross profit. Adjusted operating income decreased $102.0, or 13 percent, as compared to the prior year.

Interest Expense

Net interest expense decreased $4.8 and $7.8 in the second quarter and first six months of 2022, respectively, primarily as a result of reduced debt outstanding as compared to the prior year. For additional information, see “Capital Resources” in this discussion and analysis.

Other Income (Expense) – Net

Net other expense decreased $29.5 and $19.8 in the second quarter and first six months of 2022, respectively, primarily attributable to decreased pension settlement charges, driven by the $27.9 pre-tax settlement charge recognized during the second quarter of 2021 related to the purchase of a group annuity contract to transfer the obligations of our Canadian defined benefit pension plan to an insurance company. For further information, refer to Note 8: Pensions and Other Postretirement Benefits.

Income Taxes

Income taxes decreased $9.9, or 14 percent, in the second quarter of 2022, and decreased $35.2, or 24 percent, in the first six months of 2022, primarily due to the decrease in income before income taxes and a lower effective income tax rate of 23.4 and 24.1 percent for the second quarter and first six months of 2022, respectively. The 2021 effective income tax rates were 24.0 percent for the second quarter and 24.2 percent for the first six months.

During the second quarter and first six months of 2022 and 2021, the effective income tax rates varied from the U.S. statutory income tax rate of 21.0 percent, primarily due to the impact of state income taxes. We anticipate a full-year effective income tax rate for 2022 of approximately 24.0 percent. For further information, refer to Note 12: Income Taxes.

Restructuring Activities

A restructuring program was approved by the Board during 2021, associated with opportunities identified to reduce our overall cost structure and optimize our organizational design, inclusive of stranded overhead associated with the divestitures of the Crisco and Natural Balance businesses. For additional information related to these divestitures, see Note 4: Divestitures. During 2021, we substantially completed an organizational redesign related to our corporate headquarters and announced plans to close our Suffolk, Virginia, production facility by the end of 2022, as a result of a new strategic partnership for the production of our Away From Home liquid coffee products. We expect to incur costs of approximately $85.0 associated with the restructuring activities approved to date. Approximately half of these costs are expected to be other transition and termination costs associated with our cost reduction and margin management initiatives, inclusive of accelerated depreciation, while the remainder represents employee-related costs. We anticipate the activities associated with this restructuring program will be completed by the end of 2023, with the majority of the costs expected to be incurred by the end of 2022. We have incurred total cumulative restructuring costs of $37.9, of which $7.4 and $13.8 were incurred during the second quarter and first six months of 2022, respectively. For further information, refer to Note 3: Integration and Restructuring Costs.

Segment Results

We have three reportable segments: U.S. Retail Pet Foods, U.S. Retail Coffee, and U.S. Retail Consumer Foods. The presentation of International and Away From Home represents a combination of all other operating segments that are not individually reportable.

The U.S. Retail Pet Foods segment primarily includes the domestic sales of Rachael Ray Nutrish, Meow Mix, Milk-Bone, 9Lives, Kibbles ’n Bits, Pup-Peroni, and Nature’s Recipe branded products; the U.S. 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. 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).

			Three Months Ended October 31,																		Six Months Ended October 31,
			2021						2020						% Increase (Decrease)						2021						2020						% Increase (Decrease)
Net sales:
U.S. Retail Pet Foods			$	701.6					$	708.7					(1)		%				$	1,349.6					$	1,401.3					(4)		%
U.S. Retail Coffee			645.1						594.7						8						1,188.3						1,165.6						2
U.S. Retail Consumer Foods			441.2						479.1						(8)						876.8						968.3						(9)
International and Away From Home			262.1						251.5						4						493.3						470.6						5
Segment profit:
U.S. Retail Pet Foods			$	99.6					$	124.9					(20)		%				$	179.5					$	250.2					(28)		%
U.S. Retail Coffee			207.8						202.1						3						359.1						384.7						(7)
U.S. Retail Consumer Foods			111.0						135.3						(18)						229.7						266.8						(14)
International and Away From Home			40.4						39.5						2						73.3						70.4						4
Segment profit margin:
U.S. Retail Pet Foods			14.2		%				17.6		%										13.3		%				17.9		%
U.S. Retail Coffee			32.2						34.0												30.2						33.0
U.S. Retail Consumer Foods			25.2						28.2												26.2						27.6
International and Away From Home			15.4						15.7												14.9						15.0

U.S. Retail Pet Foods

The U.S. Retail Pet Foods segment net sales decreased $7.1 in the second quarter of 2022, inclusive of the impact of $50.8 of noncomparable net sales in the prior year related to the divested Natural Balance business. Excluding the noncomparable impact of the divested business, net sales increased $43.7, or 7 percent. Higher net price realization across the portfolio increased net sales by 4 percentage points. Favorable volume/mix contributed 2 percentage points to net sales, primarily driven by the Milk-Bone, Meow Mix, and 9Lives brands, as well as private label pet food, partially offset by decreases for the Pup-Peroni and Kibbles ’n Bits brands. Segment profit decreased $25.3, primarily reflecting higher commodity, manufacturing, and transportation costs, partially offset by the higher net pricing.

The U.S. Retail Pet Foods segment net sales decreased $51.7 in the first six months of 2022, inclusive of the impact of $106.8 of noncomparable net sales in the prior year related to the divested Natural Balance business. Excluding the noncomparable impact of the divested business, net sales increased $55.1, or 4 percent. Higher net price realization across the portfolio increased net sales by 2 percentage points. Favorable volume/mix contributed 2 percentage points to net sales, primarily driven by the Milk-Bone and Meow Mix brands, as well as private label pet food, partially offset by decreases for the Kibbles ’n Bits and Rachael Ray Nutrish brands. Segment profit decreased $70.7, primarily reflecting higher commodity, transportation, and manufacturing costs, partially offset by the higher net pricing.

U.S. Retail Coffee

The U.S. Retail Coffee segment net sales increased $50.4 in the second quarter of 2022, driven by favorable volume/mix and higher net price realization. Volume/mix contributed 5 percentage points to net sales, driven by the Dunkin’ and Café Bustelo brands. Net price realization increased net sales by 3 percentage points, primarily reflecting list price increases and trade spend reductions for roast and ground products. Segment profit increased $5.7, primarily reflecting higher net pricing and the favorable volume/mix, partially offset by higher commodity costs.

The U.S. Retail Coffee segment net sales increased $22.7 in the first six months of 2022. Favorable volume/mix contributed 2 percentage points to net sales, driven by the Dunkin’ and Café Bustelo brands, partially offset by a decline for the Folgers brand. Net price realization contributed a slight increase to net sales, as the list price increases for roast and ground products were mostly offset by increased trade spend related to the lapping of suspended promotions in the first quarter of the prior year. Segment profit decreased $25.6, reflecting higher commodity costs, partially offset by lower marketing expense and the favorable volume/mix.

U.S. Retail Consumer Foods

The U.S. Retail Consumer Foods segment net sales decreased $37.9 in the second quarter of 2022, inclusive of the impact of $75.1 of noncomparable net sales in the prior year related to the divested Crisco business. Excluding the noncomparable impact of the divested business, net sales increased $37.2, or 9 percent. Volume/mix increased net sales by 6 percentage points, driven by Smucker’s Uncrustables® frozen sandwiches and Jif peanut butter. Higher net price realization contributed 3 percentage points to net sales, primarily driven by Smucker’s Uncrustables frozen sandwiches and Smucker’s fruit spreads. Segment profit decreased $24.3, reflecting the noncomparable segment profit in the prior year related to the divested Crisco business. Comparable segment profit growth from the favorable volume/mix and higher net pricing was partially offset by higher manufacturing, transportation, ingredient, and packaging costs.

The U.S. Retail Consumer Foods segment net sales decreased $91.5 in the first six months of 2022, inclusive of the impact of $146.8 of noncomparable net sales in the prior year related to the divested Crisco business. Excluding the noncomparable impact of the divested business, net sales increased $55.3, or 7 percent. Higher net price realization contributed 4 percentage points to net sales, primarily driven by Smucker’s Uncrustables frozen sandwiches and Jif peanut butter. Volume/mix increased net sales by 3 percentage points, driven by Smucker’s Uncrustables frozen sandwiches and Jif peanut butter, partially offset by a decline for Smucker’s fruit spreads. Segment profit decreased $37.1, reflecting the noncomparable segment profit in the prior year related to the divested Crisco business. Comparable segment profit growth from the higher net pricing and favorable volume/mix was partially offset by higher transportation, manufacturing, packaging, and ingredient costs.

International and Away From Home

International and Away From Home net sales increased $10.6 in the second quarter of 2022, including the noncomparable impact of $9.8 of net sales in the prior year related to the divested Crisco business and $5.6 of favorable foreign currency exchange. Excluding the noncomparable impact of the divested business and foreign currency exchange, net sales increased $14.8, or 6 percent, primarily reflecting a 25 percent increase for the Away From Home operating segment, partially offset by a net sales decline of 10 percent for the International operating segment. Favorable volume/mix for the combined businesses contributed 5 percentage points to net sales, primarily driven by increases for coffee, portion control, and frozen handheld products in the away from home channels, partially offset by a decrease for baking mixes and ingredients in the International operating segment. Net price realization contributed a 1 percentage point increase to net sales. Segment profit increased $0.9, primarily reflecting the increased contribution from volume/mix, higher net pricing, and favorable foreign currency exchange, partially offset by increased commodity costs and the noncomparable segment profit in the prior year related to the divested Crisco business.

International and Away From Home net sales increased $22.7 in the first six months of 2022, including the noncomparable impact of $17.6 of net sales in the prior year related to the divested Crisco business and $16.0 of favorable foreign currency exchange. Excluding the noncomparable impact of the divested business and foreign currency exchange, net sales increased $24.3, or 5 percent, primarily reflecting a 26 percent increase for the Away From Home operating segment, partially offset by a net sales decline of 11 percent for the International operating segment. Favorable volume/mix for the combined businesses contributed 4 percentage points to net sales, primarily driven by increases for portion control, coffee, and frozen handheld products in the away from home channels, partially offset by a decrease for baking mixes and ingredients in the International operating segment. Net price realization contributed a 1 percentage point increase to net sales. Segment profit increased $2.9, primarily reflecting the increased contribution from volume/mix, favorable foreign currency exchange impact, and the higher

net pricing, partially offset by the noncomparable segment profit in the prior year related to the divested Crisco business and increased commodity costs.

Financial Condition – Liquidity and Capital Resources

Liquidity

Our principal source of funds is cash generated from operations, supplemented by borrowings against our commercial paper program and revolving credit facility. At October 31, 2021, total cash and cash equivalents was $155.3, compared to $334.3 at April 30, 2021.

The following table presents selected cash flow information.

			Six Months Ended October 31,
			2021						2020
Net cash provided by (used for) operating activities			$	302.9					$	787.7
Net cash provided by (used for) investing activities			(143.0)						(100.9)
Net cash provided by (used for) financing activities			(338.8)						(675.8)
Net cash provided by (used for) operating activities			$	302.9					$	787.7
Additions to property, plant, and equipment			(127.2)						(129.0)
Free cash flow (A)			$	175.7					$	658.7

(A)Free cash flow is a non-GAAP financial measure used by management to evaluate the amount of cash available for debt repayment, dividend distribution, acquisition opportunities, share repurchases, and other corporate purposes.

The $484.8 decrease in cash provided by operating activities in the first six months of 2022 was primarily driven by greater working capital requirements in 2022, as well as lower net income adjusted for noncash items in the current year. The increase in cash required to fund working capital, as compared to the prior year, was primarily attributable to timing of payments and collections for accounts payable and trade receivables, respectively, as well as changes in accrued incentive compensation.

Cash used for investing activities in the first six months of 2022 consisted primarily of $127.2 in capital expenditures and an increase of $14.0 in our derivative cash margin account balances. Cash used for investing activities in the first six months of 2021 consisted of $129.0 in capital expenditures, partially offset by a $27.9 decrease in our derivative cash margin account balances.

Cash used for financing activities in the first six months of 2022 consisted primarily of long-term debt repayments of $1,157.0 and dividend payments of $204.1, partially offset by $797.6 in long-term debt proceeds and a net increase in short-term borrowings of $237.8. Cash used for financing activities in the first six months of 2021 consisted primarily of long-term debt repayments of $500.0 and dividend payments of $202.4, partially offset by a net increase in short-term borrowings of $31.7.

Supplier Financing Program

As part of ongoing efforts to maximize working capital, we work with our suppliers to optimize our terms and conditions, which includes the extension of payment terms. Payment terms with our suppliers, which we deem to be commercially reasonable, range from 0 to 180 days. During 2020, we entered into 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, and our rights and obligations to our suppliers are not impacted. We have no economic interest in a supplier’s decision to enter into these agreements. Our 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 October 31, 2021 and April 30, 2021, $279.4 and $304.2 of our outstanding payment obligations, respectively, were elected and sold to a financial institution by participating suppliers. During the first six months of 2022 and 2021, we paid $530.4 and $293.1, 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. We are currently a defendant in a variety of such legal proceedings, including certain lawsuits related to the alleged price-fixing of shelf stable tuna products prior to 2011 by a business previously owned by, but divested prior to our acquisition of, Big Heart Pet Brands, the significant majority of which were settled and paid during 2019 and 2020. 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 October 31, 2021. 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.

In addition to the legal proceedings discussed above, we are currently a defendant in CERT v. Brad Barry LLC, et al., which alleges that we, in addition to the Defendants who manufacture, package, distribute, or sell packaged coffee, failed to provide warnings for our coffee products of exposure to the chemical acrylamide as required under Proposition 65. CERT sought equitable relief, including warnings to consumers, as well as civil penalties in the amount of the statutory maximum of $2,500 per day per violation of Proposition 65. In addition, CERT asserted that every consumed cup of coffee, absent a compliant warning, was equivalent to a violation under Proposition 65. In June 2019, the state agency responsible for administering the Proposition 65 program, OEHHA, approved a regulation clarifying that cancer warnings are not required for coffee under Proposition 65, and in August 2020, the trial court granted the Defendants’ motion for summary judgment based on the regulation. CERT appealed the ruling in November 2020 to the California Court of Appeals for the Second Appellate District, which is currently pending.

We are also defendants in a series of putative class action lawsuits that were originally filed in federal courts in California, Florida, Illinois, Missouri, Texas, Washington, and Washington D.C., but have been 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. Their claims are premised on allegations that we have misrepresented the number of servings that can be made from various canisters of Folgers coffee on the packaging for those products.

The outcome and the financial impact of these cases, if any, cannot be predicted at this time. Accordingly, no loss contingency has been recorded for these matters as of October 31, 2021, and the likelihood of loss is not considered probable or 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.

Capital Resources

The following table presents our capital structure.

			October 31, 2021						April 30, 2021
Current portion of long-term debt			$	—					$	1,152.9
Short-term borrowings			320.0						82.0
Long-term debt, less current portion			4,308.8						3,516.8
Total debt			$	4,628.8					$	4,751.7
Shareholders’ equity			8,286.4						8,124.8
Total capital			$	12,915.2					$	12,876.5

During the second quarter of 2022, we completed an offering of $800.0 in Senior Notes due March 15, 2032, and September 15, 2041. The Senior Notes include $7.2 of capitalized debt issuance costs and $2.4 of offering discounts to be amortized to interest expense over the time for which the debt is outstanding. The net proceeds from the offering were primarily used to repay $750.0 in principal of the Senior Notes due October 15, 2021. Furthermore, during the first quarter of 2022, we prepaid $400.0 in principal of the Senior Notes due March 15, 2022, and as a result, we recognized a net loss on extinguishment of $6.9, which primarily consisted of a make-whole payment and was included in other income (expense) – net in the Condensed Statement of Consolidated Income.

We have available a $2.0 billion unsecured revolving credit facility with a group of 11 banks that matures in August 2026. Additionally, we participate in a commercial paper program under which we can issue short-term, unsecured commercial paper not to exceed $2.0 billion at any time. The commercial paper program is backed by our revolving credit facility and reduces

what we can borrow under the revolving credit facility by the amount of commercial paper outstanding. Commercial paper is used as a continuing source of short-term financing for general corporate purposes. As of October 31, 2021, we had $320.0 of short-term borrowings outstanding, all of which were issued under our commercial paper program, at a weighted-average interest rate of 0.17 percent.

We are in compliance with all our debt covenants as of October 31, 2021, and expect to be for the next 12 months. For additional information on our long-term debt, sources of liquidity, and debt covenants, see Note 7: Debt and Financing Arrangements.

During the first six months of 2022, we did not repurchase any common shares under a repurchase plan authorized by the Board. On October 22, 2021, the Board authorized the repurchase of up to 5.0 million common shares, in addition to the 2.8 million common shares that remained available for repurchase pursuant to prior authorizations of the Board. Therefore, at October 31, 2021, approximately 7.8 million common shares remain available for repurchase pursuant to the Board’s authorizations. There is no guarantee as to the exact number of shares that may be repurchased or when such purchases may occur.

On November 18, 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 third dedicated manufacturing facility is expected to begin no later than January 2022, with production commencing in calendar year 2025. 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. Financial investments and job creation will align to each of the three phases and are contingent upon approval of tax and business incentives, as well as the closing of the transaction to purchase the property where the facility will be located. As a result of these newly approved plans, our capital expenditures for 2022 are expected to increase from $380.0 to $400.0.

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. However, as a result of COVID-19, 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.

As of October 31, 2021, total cash and cash equivalents of $11.7 was held by our foreign subsidiaries, primarily in Canada. During the first six months of 2022, we did not repatriate foreign cash to the U.S.

Non-GAAP Financial Measures

We use non-GAAP financial measures, including: net sales excluding divestitures and foreign currency exchange, adjusted gross profit, adjusted operating income, adjusted income, adjusted earnings per share, and free cash flow, as key measures for purposes of evaluating performance internally. 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.

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 related to the sale of a business, the change in net cumulative unallocated derivative gains and losses, and other one-time items that do not directly reflect ongoing operating results. Income taxes, as adjusted is calculated using an adjusted effective income tax rate that is applied to adjusted income before income taxes and reflects the exclusion of the previously discussed items, as well as any adjustments for one-time tax-related activities, when they occur. 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 can significantly impact our adjusted effective income tax rate.

These non-GAAP financial measures are not intended to replace the presentation of financial results in accordance with U.S. GAAP. Rather, the presentation of these non-GAAP financial measures supplements other metrics we use to internally evaluate our businesses and facilitate the comparison of past and present operations and liquidity. 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 measures to the comparable GAAP financial measure. See page 22 for a reconciliation of net sales adjusted for certain noncomparable items to the comparable GAAP financial measure.

			Three Months Ended October 31,															Six Months Ended October 31,
			2021						2020									2021						2020
Gross profit reconciliation:
Gross profit			$	711.5					$	818.2								$	1,350.9					$	1,593.6
Change in net cumulative unallocated derivative gains and losses			13.3						(31.5)									15.5						(47.7)
Cost of products sold – special project costs			6.1						—									10.7						—
Adjusted gross profit			$	730.9					$	786.7								$	1,377.1					$	1,545.9
Operating income reconciliation:
Operating income			$	311.8					$	380.8								$	571.2					$	741.9
Amortization			55.4						59.5									110.8						119.1
Change in net cumulative unallocated derivative gains and losses			13.3						(31.5)									15.5						(47.7)
Cost of products sold – special project costs			6.1						—									10.7						—
Other special project costs			1.3						—									3.1						—
Adjusted operating income			$	387.9					$	408.8								$	711.3					$	813.3
Net income reconciliation:
Net income			$	206.0					$	230.8								$	359.9					$	467.8
Income tax expense			62.8						72.7									114.1						149.3
Amortization			55.4						59.5									110.8						119.1
Change in net cumulative unallocated derivative gains and losses			13.3						(31.5)									15.5						(47.7)
Cost of products sold – special project costs			6.1						—									10.7						—
Other special project costs			1.3						—									3.1						—
Other one-time items:
Pension plan termination settlement charge (A)			—						27.9									—						27.9
Adjusted income before income taxes			$	344.9					$	359.4								$	614.1					$	716.4
Income taxes, as adjusted			81.1						86.2									144.5						173.2
Adjusted income			$	263.8					$	273.2								$	469.6					$	543.2
Weighted-average shares – assuming dilution			108.4						114.2									108.4						114.1
Adjusted earnings per share – assuming dilution			$	2.43					$	2.39								$	4.33					$	4.76

(A)Represents the nonrecurring pre-tax settlement charge of $27.9 recognized during the second quarter of 2021 related to the purchase of a group annuity contract to transfer the obligations of our Canadian defined benefit pension plan to an insurance company. For additional information, see Note 8: Pensions and Other Postretirement Benefits.

Off-Balance Sheet Arrangements and Contractual Obligations

We do not have material off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as variable interest entities. Transactions with related parties are in the ordinary course of business and are not material to our results of operations, financial condition, or cash flows.

During the second quarter of 2022, we completed an offering of $800.0 in Senior Notes due March 15, 2032, and September 15, 2041. For additional information, see Note 7: Debt and Financing Arrangements. As of October 31, 2021, there were no other material changes to our future contractual obligations as previously reported in our Annual Report on Form 10-K for the year ended April 30, 2021.

Critical Accounting Estimates and Policies

A discussion of our critical accounting estimates and policies can be found in the “Management’s Discussion and Analysis” section of our Annual Report on Form 10-K for the year ended April 30, 2021. There were no material changes to the information previously disclosed.

(Dollars in millions, unless otherwise noted)

The following discussions about our market risk disclosures involve forward-looking statements. Actual results could differ from those projected in the forward-looking statements. We are exposed to market risk related to changes in interest rates, commodity prices, and foreign currency exchange rates.

Interest Rate Risk: The fair value of our cash and cash equivalents at October 31, 2021, 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 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. If the contract is designated as a cash flow hedge, the mark-to-market gains or losses on the contract are deferred and included as a component of accumulated other comprehensive income (loss) and reclassified to interest expense in the period during which the hedged transaction affects earnings. If the contract is designated as a fair value hedge, the contract is recognized at fair value on the balance sheet, and changes in the fair value are recognized in interest expense. Generally, changes in the fair value of the contract are equal to changes in the fair value of the underlying debt and have no net impact on earnings.

In 2020, we terminated interest rate contracts concurrent with the pricing of the Senior Notes due March 15, 2030, and March 15, 2050. They were designated as cash flow hedges and were used to manage our exposure to interest rate volatility associated with the anticipated debt financing. The termination resulted in a pre-tax loss of $239.8, which was deferred and included as a component of accumulated other comprehensive income (loss) and is being amortized as interest expense over the life of the debt.

In 2015, we terminated the interest rate swap on the Senior Notes due October 15, 2021, which was designated as a fair value hedge and used to hedge against the changes in the fair value of the debt. As a result of the early termination, we received $58.1 in cash, which included $4.6 of accrued and prepaid interest and a $53.5 benefit that is deferred as a component of the carrying value of the long-term debt and is being recognized ratably as a reduction to interest expense over the remaining life of the related debt. As of October 31, 2021, we have fully recognized the gain of $53.5, of which $1.9 and $4.0 was recognized during the three and six months ended October 31, 2021, respectively.

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 October 31, 2021, would increase the fair value of our long-term debt by $477.7.

Commodity Price Risk: We use certain raw materials and other commodities that are subject to price volatility caused by supply and demand conditions, political and economic variables, weather, investor speculation, and other unpredictable factors. To manage the volatility related to anticipated commodity purchases, we use derivatives with maturities of generally less than one year. 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 of fair value resulting from a hypothetical 10 percent change in market prices related to commodities.

			October 31, 2021						April 30, 2021
High			$	47.2					$	47.5
Low			12.2						11.7
Average			27.1						29.0

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. 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. Thus, we would expect that over time any gain or loss in the estimated fair value of its derivatives would generally be offset by an increase or decrease in the estimated fair value of the underlying exposures.

Foreign Currency Exchange Risk: We have operations outside the U.S. with foreign currency denominated assets and liabilities, primarily denominated in Canadian currency. 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 October 31, 2021, are not expected to result in a significant impact on future earnings or cash flows.

We utilize foreign currency derivatives to manage the effect of foreign currency exchange fluctuations on future cash payments primarily related to purchases of certain raw materials and finished goods. The contracts generally have maturities of less than one year. We do not qualify instruments used to manage foreign currency exchange exposures for 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 October 31, 2021, 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 the six months ended October 31, 2021. 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.

Certain Forward-Looking Statements

Certain statements included in this Quarterly Report on Form 10-Q 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. Any statement that is not historical in nature is a forward-looking statement and may be identified by the use of words and phrases such as “expect,” “anticipate,” “believe,” “intend,” “will,” “plan,” and similar phrases.

Federal securities laws provide a safe harbor for forward-looking statements to encourage companies to provide prospective information. We are providing this cautionary statement in connection with the safe harbor provisions. Readers are cautioned not to place undue reliance on any forward-looking statements, as such statements are by nature subject to risks, uncertainties, and other factors, many of which are outside of our control and could cause actual results to differ materially from such statements and from our historical results and experience. These risks and uncertainties include, but are not limited to, the following:

• the impact of the COVID-19 pandemic on our business, industry, suppliers, customers, consumers, employees, and communities, particularly with respect to our Away From Home business;

• disruptions or inefficiencies in our operations or supply chain, including any impact of the COVID-19 pandemic and labor shortages resulting from, among other things, the implementation of vaccination requirements;

• volatility of commodity, energy, and other input costs;

• 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, including any impact of the COVID-19 pandemic;

• 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 businesses, including product innovation;

• general competitive activity in the market, including competitors’ pricing practices and promotional spending levels;

• the impact of food security concerns involving either our products or our competitors’ products;

• the impact of accidents, extreme weather, natural disasters, and pandemics (such as COVID-19);

• 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, including tariffs and COVID-19 vaccination requirements;

• the outcome of tax examinations, changes in tax laws, and other tax matters;

• 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.

Readers are cautioned not to unduly rely on such forward-looking statements, which speak only as of the date made, when evaluating the information presented in this Quarterly Report on Form 10-Q. We do not undertake any obligation to update or revise these forward-looking statements to reflect new events or circumstances subsequent to the filing of this Quarterly Report on Form 10-Q.

Evaluation of Disclosure Controls and Procedures. Management, including the principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of October 31, 2021 (the “Evaluation Date”). Based on that evaluation, the principal executive officer and principal financial officer have concluded that, as of the Evaluation Date, our disclosure controls and procedures were effective in ensuring that information required to be disclosed in reports that we file or submit under the Exchange Act is (1) recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and (2) accumulated and communicated to management, including the chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

There have been no changes in our internal control over financial reporting during the three months ended October 31, 2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

Information required for Part II, Item 1 is incorporated by reference to the discussion in Note 14: Contingencies in Part I, Item 1 in this Quarterly Report on Form 10-Q.

Our business, operations, and financial condition are subject to various risks and uncertainties. The risk factors described in “Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended April 30, 2021, as revised below, should be carefully considered, together with the other information contained or incorporated by reference in this Quarterly Report on Form 10-Q and in our other filings with the SEC, in connection with evaluating the Company, our business, and the forward-looking statements contained in this Quarterly Report on Form 10-Q. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may affect us. The occurrence of any of these known or unknown risks could have a material adverse impact on our business, financial condition, and results of operations.

The risk factor described below updates the risk factors disclosed in “Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended April 30, 2021, to include the potential impact of the recently announced executive order issued by the U.S. President concerning vaccination requirements for federal contractors and employers with 100 or more employees.

The COVID-19 pandemic and related ongoing implications could negatively impact our business and results of operations.

The COVID-19 pandemic has had, and could continue to have, a negative impact on financial markets, economic conditions, and portions of our business and industry as a result of changes in consumer behaviors, retailer inventory levels, cost inflation, manufacturing and supply chain disruption, vaccination rates and effectiveness, the impact of vaccination requirements, and overall macroeconomic conditions. While our overall business has benefited from increased at-home consumption due to COVID-19, our ability to sustain heightened sales is dependent on evolving consumer mobility and purchasing behavior. Though the vaccination requirements and effectiveness may partially mitigate the risks around the continued spread of COVID-19, the related ongoing implications of the pandemic could negatively impact our business and results of operations in a number of ways, including, but not limited to, the following:

• a shutdown or slowdown of one or more of our manufacturing facilities due to illness or labor shortages, including any shortages related to the implementation of our recent vaccination mandate, could significantly disrupt our production capabilities, particularly with respect to our coffee production, substantially all of which takes place in New Orleans, Louisiana;

• a slowdown or stoppage in our supply chain could result from government restrictions or labor shortages due to illness or vaccination requirements, or if our suppliers, vendors, distributors, or third-party manufacturers fail to meet their obligations to us or experience disruptions in their ability to do so;

• a portion of our workforce, including our management team, could become unable to work as a result of illness or government restrictions, or the attention of our management team could be diverted if any key employees leave due to our vaccination mandate or become ill from COVID-19 and are unable to work;

• a strain on our supply chain could result from increased consumer demand at our retail and e-commerce customers;

• an increase in commodity and other input costs could result from market volatility, particularly with respect to protein meals, fats, and green coffee, the supply chain for which has been significantly disrupted by COVID-19;

• 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;

• a decrease in demand for away from home establishments, resulting from government restrictions and social distancing measures, has adversely affected, and may continue to adversely affect, our away from home operations;

• an increase in working capital needs could occur, caused by an increase in days sales outstanding or an extension of payment terms by our customers or a reduction of payment terms by our suppliers resulting from increased financial pressures;

• a change in demand resulting from restrictions on social interactions could affect customers’ and consumers’ plans to purchase or methods of purchasing our products;

• a change in demand for or availability of our products could result from retailers, distributors, or carriers modifying their restocking, fulfillment, or shipping practices;

• a shift in consumer spending as a result of the economic downturn could result in consumers moving to private label or competitive products or our lower-priced products;

• a change in trade promotions and marketing activities could occur in response to changes in consumer viewing and shopping habits resulting from the cancellation of major events, travel restrictions, and changes in in-store shopping practices;

• a fluctuation in foreign currency exchange rates or interest rates could result from market uncertainties;

• an increase in the cost or the difficulty to obtain debt or equity financing, or to refinance our debt in the future, could affect our financial condition or our ability to fund operations or future investment opportunities; and

• an increase in regulatory restrictions or continued market volatility could hinder our ability to implement price increases resulting from commodity or other input cost increases or to execute strategic business activities, including acquisitions and divestitures.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers: The following table presents the total number of shares of common stock purchased during the second quarter of 2022, 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
August 1, 2021 - August 31, 2021						—						$	—					—						2,811,472
September 1, 2021 - September 30, 2021						4,326						120.98						—						2,811,472
October 1, 2021 - October 31, 2021						1,298						121.63						—						7,811,472
Total						5,624						$	121.13					—						7,811,472

(a)Shares in this column include shares repurchased from stock plan recipients in lieu of cash payments.

(d) On October 22, 2021, the Board authorized the repurchase of up to 5.0 million common shares, in addition to the 2.8 million common shares that remained available for repurchase pursuant to prior authorizations of the Board. Therefore, at October 31, 2021, approximately 7.8 million common shares remain available for repurchase pursuant to the Board’s authorizations.

See the Index of Exhibits that appears on Page No. 36 of this report.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

November 23, 2021			THE J. M. SMUCKER COMPANY
			/s/ Mark T. Smucker
			By: MARK T. SMUCKER
			President and Chief Executive Officer
			/s/ Tucker H. Marshall
			By: TUCKER H. MARSHALL
			Chief Financial Officer

INDEX OF EXHIBITS

The following exhibits are either attached or incorporated herein by reference to another filing with the SEC.

Exhibit Number			Exhibit Description
4.1			Fourth Supplemental Indenture, dated as of September 24, 2021, between the Company and U.S. Bank National Association
10.1			Revolving Credit Agreement, dated as of August 19, 2021, by and among The J. M. Smucker Company, Smucker Foods of Canada Corp., Bank of America, N.A., as Administrative Agent, and the several financial institutions and U.S. subsidiaries of the Company from time to time party thereto
31.1			Certifications of Mark T. Smucker pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended
31.2			Certifications of Tucker H. Marshall pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended
32			Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002
101.INS			XBRL Instance Document – The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH			XBRL Taxonomy Extension Schema Document
101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF			XBRL Taxonomy Extension Definition Linkbase Document
101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB			XBRL Taxonomy Extension Label Linkbase Document
104			The cover page of this Quarterly Report on Form 10-Q for the quarter ended October 31, 2021, formatted in Inline XBRL