Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Eric Katzman - Deutsche Bank
Eric Katzman - Deutsche Bank
Did I hear you correctly that you have about $3.00 of cash on the books per share?
Mark Belgya
Yes, we have $360 million, that’s correct.
Eric Katzman - Deutsche Bank
Is the fiscal fourth quarter is that normally a positive cash flow quarter or a use of cash?
Mark Belgya
It’s usually a net positive; it’s not a large one, one way or the other. We’ll start procuring fruit and starting building inventories in the first quarter of next fiscal.
Eric Katzman - Deutsche Bank
You signaled based on the adjusted EBITDA numbers being greater then target. Is the cash that you’re generating that you’ve actually put on the books above your plan?
Mark Belgya
Yes it is. As Richard said, the EBITDA is definitely targeting now, granted the quarter is a large quarter, it is ahead of plan. We expected, I think I made mentioned last week at CAGNY with the completion of the fall bake then the absolute cash flow from Folgers. It is above.
Eric Katzman - Deutsche Bank
In terms of the assumptions for the fiscal fourth quarter, are you already seeing more aggressive competition in edible oils and that’s what’s leading you to assume that Easter was going to be a tough market or is this just pure anticipation and you haven’t really seen that much of a change in the market to date.
Paul Smucker Wagstaff
We have seen competitive response already for the fourth quarter in the oils area and it is pretty aggressive.
Eric Katzman - Deutsche Bank
Is any of the sales change forecast a function of coffee pricing and the pass through? The last two moves you’ve made in coffee have been down.
Vince Byrd
Yes, we commented last week there have been two price declines taken. One right before we closed the deal and then we took one about 10 days after we closed. Those would be in the 6% to 8% range. Neither one of those would have been anticipated when we put out the original number.
Eric Katzman - Deutsche Bank
The additional $0.08 of advertising and promotional spending behind Folgers, at CAGNY you kind of indicated that competition was acting pretty rationally within the category; especially since you took ownership I guess Kraft was pretty aggressive before the close of the deal. Have you seen something recently that’s become tougher or is this part of the long term plan to reinvest in the business.
- To read the full transcript on Seeking Alpha, click here »
