Net sales rose $533.9 million to $1.97 billion for the third quarter, of which $580.3 million came from Big Heart Pet Brands.
CLEVELAND, Ohio -- The J.M. Smucker Co. said its sales for the third quarter jumped 37 percent to $1.97 billion, due in large part to its Big Heart Pet Brands business acquired in March 2015.
Big Heart Pet Brands produces, distributes and markets pet foods and pet snack brands including: Meow Mix, Milk-Bone, Kibbles 'n Bits, 9Lives, Natural Balance Pet Foods, Pup-Peroni, Gravy Train, Nature's Recipe, Canine Carry Outs, Snausages, Meaty Bone, Pounce, Jerky Treats, Alley Cat, and Milo's Kitchen.
Smucker bought the company for about $6 billion, the largest acquisition in its 116-year history. With more than 80 million American families owning pets, Smucker is now No. 1 in dog snacks and No. 2 in cat food. The company expects about 30 percent of its annual sales to come from pet foods and snacks, and estimates it could end the year with a record $7.8 billion in sales.
Deutsche Bank last month named Smucker its top food industry pick in 2016, citing the company's growing profitability and greater operational efficiency in the wake of that acquisition.
"We delivered another quarter of solid financial results which, most notably, was attributable to the ongoing momentum for our coffee business," Chief Executive Richard Smucker said in a written statement Tuesday.
"Our overall performance continues to reflect contributions from our key growth initiatives for the fiscal year. These include launching a number of on-trend products such as Dunkin' Donuts K-Cup pods, providing consumers lower pricing on Folgers roast and ground offerings, expanding distribution for the Natural Balance brand into the largest pet specialty retailer, and delivering on our cost savings and working capital initiatives."
Highlights for the quarter that ended Jan. 31 include:
-- Net sales rose $533.9 million to $1.97 billion for the third quarter, of which $580.3 million came from Big Heart. Without the contribution from pet foods and pet snacks, the impact from foreign currency rates, and the impact of the U.S. canned milk divestiture, net sales would have declined 1 percent, or $17.9 million.
-- Net income per diluted share decreased 2 percent to $1.55, as merger and acquisition costs, higher interest expense, and the impact of additional shares outstanding pulled down increases from Big Heart and the U.S. canned milk business.
Dunkin' Donuts K-Cup pods. -- Brisk sales of Dunkin' Donuts K-Cup pods and Smucker's Uncrustables frozen sandwiches was offset by declines in sales of Folgers and Jif.
-- Gross profit rose 46 percent, or by $240.9 million, again primarily because of Big Heart, although Dunkin' Donuts K-Cup pods also contributed.
-- Smucker updated its outlook for fiscal 2016, saying its net sales are expected to be $7.8 billion, and its non-GAAP income per diluted share would range between $5.84 and $5.94. It expects to spend $240 million in capital expenditures, up from the previous estimate of $220 million.
-- Smucker's net sales for fiscal 2016 are expected to be 37 percent higher than in 2015. That includes "$35 million of synergies related to the Big Heart acquisition with approximately $15 million expected to be realized in the fourth quarter of the fiscal year." That's higher than the previous estimate of $25 million in synergies.