The J.R. Smucker Company announced last week that 5000 employees will be receiving $1000 bonuses as a result of the Republican tax plan. They also plan to add $20 million to the employee pension program and donate an additional $1 million to charity.
“We had a strong third quarter, with sales growth for key brands in every business and strong earnings per share growth fueled by the benefits of U.S. income tax reform and ongoing cost discipline,” said Mark Smucker, chief executive officer, in a press release. “These results reflect our commitment to delivering top and bottom line growth and supporting our portfolio of iconic and emerging brands. In addition, the benefits of income tax reform provide incremental fuel to invest in our growth initiatives and support our employees and communities as well as opportunities to increase cash returned to shareholders.”
Smucker’s also updated its fiscal year 2018 forecast to reflect the company’s optimistic outlook.
Although net sales are expected to be down over the previous year, the company expects to see earnings increase.
“The increase in earnings and cash flow guidance primarily reflects the benefit of a lower effective tax rate as a result of U.S. income tax reform, partially offset by anticipated freight cost increases and a charge related to obsolete inventory in the third quarter,” Smucker’s said. “For fiscal 2019, the Company projects an effective tax rate of 23 percent.”
Smucker’s shared the following statistics:
- Net sales increased 1 percent, reflecting growth across most of the Company’s key brands and categories.
- Net income per diluted share was $7.32, including a substantial nonrecurring benefit related to recently enacted U.S. income tax reform, partially offset by a noncash impairment charge within the U.S. Retail Pet Foods segment.
- Adjusted earnings per share was $2.50, an increase of 25 percent, including approximately $0.35 per share related to a lower current year tax rate due to U.S. income tax reform.
- Cash provided by operating activities was $469.0 million, compared to $419.5 million in the prior year.
- Free cash flow was $388.7 million in the quarter and $693.3 million through the first nine months of fiscal 2018.
- The Company increased its full-year 2018 earnings and free cash flow outlook.
- With the benefit resulting from U.S. income tax reform, the Company contributed an incremental $20.0 million to its employee pension plan and has announced a one-time bonus of $1,000 to nearly 5,000 employees and a $1 million increase to its charitable contributions.
Five thousand of the Ohio company’s 7000 employees will be eligible for the bonuses. Smucker’s said that the 2000 employees not receiving bonuses this round are already part of the annual incentive plan.
Smucker’s joins hundreds of companies that have awarded bonuses as a result of Republican tax reforms, including American Airlines, Bank of America, Comcast, Lowe’s and AT&T. Americans for Tax Reform has a comprehensive list here. Other companies, including Walmart and Wells Fargo, have announced that minimum wage employees will be getting a raise.
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