J.M. Smucker Q3 Report 2022

Net Sales
Net sales decreased 1 percent. Excluding noncomparable net sales in the prior year of$100.7 million for the divested businesses, as well as$1.8 million of favorable foreign currency exchange, net sales increased $79.3 million, or 4 percent. The increase in comparable net sales was due to higher net price realization for each of the Company’s U.S. Retail segments and for International and Away From Home, partially offset by decreased contribution from volume/mix.

Operating Income
Gross profit decreased $126.3 million, or 16 percent, reflecting higher costs, primarily driven by increased commodity, ingredient, manufacturing, and packaging costs, decreased contribution from volume/mix, and the noncomparable impact of the Crisco®, Natural Balance®, and private label dry pet food divestitures, partially offset by increased pricing. Operating income decreased $255.6 million, or 63 percent, reflecting a$150.4 million impairment charge related to the Rachael Ray® Nutrish® brand and the decrease in gross profit, partially offset by a$35.7 million decrease in selling, distribution, and administrative (“SD&A”) expenses.

Adjusted gross profit decreased $63.3 million, or 8 percent, with the difference from generally accepted accounting principles (“GAAP”) results being the exclusion of the change in net cumulative unallocated derivative gains and losses and special project costs. Adjusted operating income decreased $26.0 million, or 6 percent, further reflecting the exclusion of the impairment charge, the net pre-tax gain on divestitures, amortization, and special project costs.