SJM - Earnings call transcript Q3 2025 | The J. M. Smucker Company

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Operator

Good morning, and welcome to the J.M. Smucker Company's Fiscal 2025 Third Quarter Earnings Question-and-Answer session. This conference call is being recorded. [Operator Instructions] I'll now turn the conference call over to Crystal Beiting, Vice President, Investor Relations and Financial Planning and Analysis. Thank you.

begin. may You

Crystal Beiting

morning's thank at quarter and a joining fiscal on in our to remarks, management's Good are which question-and-answer you session. third available this detailed as earnings our corporate had release I XXXX and review prepared website morning, our results for press jmsmucker.com. hope chance everyone

will post an at this of conclusion session. also audio call We morning's the replay of Q&A this

and we call, results expectations make forward-looking These reflect assumptions that on current plans due may to actual may statements about risks our and future and During performance. materially and rely statements uncertainties. today's estimates, differ

in Additionally, non-GAAP morning's use concerning I full press performance internally. disclosure encourage measures you forward-looking statements we on this to read details the results release. to and evaluate non-GAAP our

call Mark President Chief Financial of the this Executive and on Chair are Tucker Board, Officer; Smucker, Officer. Marshall, Chief and Participating

question. the We will queue please now up open Operator, the questions. for first call

Operator

from [Operator Instructions] question coming today is Our Andrew first Barclays. Lazar from

Andrew Lazar

comparable you, pet sweet Maybe at 'XX you Obviously, see now improvement bit similar rate seems baked more somewhat a declined third it math, the sales fiscal disruptions to a by sales And revised the a are in rise the comparable X% behind sales quarter. to in snacks will our target. decline but that as probably as hit X%. maybe than in XQ than your by start, more need bit XQ to fiscal

sequential seeing improvement trying to that in I'm guess better expected of else I a sales improvement So sense where underpins the get you're XQ?

Tucker Marshall

see to within basis, math. that share We our on a driven But want comparable do with the pet lay align improvement correctly. your did you portfolio. out sequential Andrew, that we do largely I do

with along coffee outlook noted, portfolio as have our well. you within As better-than-expected

Andrew Lazar

could help a there guidance 'XX the puts little just couple drove Got and then unpack takes you I buckets maybe help Tucker, know a in are individual revision. fiscal comparable I was us sales bit quantify and there. maybe it. that maybe And hoping, the of

Tucker Marshall

Andrew. Yes,

basis And down the range. driven third relates really, Our me, at our guidance million. revision First, $XX at of X% also That things: from X.XX% guidance miss well. about in a our is quarter, to miss on a two change $XX largely reflects down what it by million by the reported excuse and or million our to fourth midpoint the the approximately as -- midpoint in second it call quarter net new in Hostess $XX the then

Operator

coming Next question Goldman Ken is JPMorgan. from from

Kenneth Goldman

optimistic I impairment but very Hostess for a paid write-down you is You've $XXX goodwill -- million a charge. approaching as on you of category, you that's And $XXX accounting, the took million took talked price still XX% how in the an about today also well on and you're Hostess. know as this but

second. up So I a back wanted to

the you've Over had acquisitions, including very food, some treats. right, years, successful pet Folgers, cat

strategy that would bit consider how of X,XXX. a with ask Cafe little process some Hostess maybe longer work taking M&A a done acquisitions. you you back, some to one Hostess tweaks kind for of to? in I than you taking a general your job what step any think of just But Smucker you progress there with also of things comfortable are to But about little light are investors the fair great are might asset, ownership lot that have about bit working no You've well. And process of thought? of And as a further quite -- it's your with making this Bustelo. your bet to the Obviously, adheres

Mark Smucker

trends it's Hostess remain acquisition We brand, and the was the a still driven by, an specific Thanks for the very it's bode snacking well acquisition, underlying category. confident We the obviously, still question. right it iconic sweet snacking in right? believe in leading Mark. for brand, the that

although which new on recognize and that One, continue leadership intended that stabilize more as we say the this to talked our being to leadership own performance morning CAGNY specific -- went down implementation fair brand, driven the that really category well, a that not temporarily it's and distribution, taking standards. to we been wanted, as consumer. confident the some things: being accelerate we that proven that brand. up announcing pace or remarks as to in more actions that to said, think week, integration That are by week, pillars normal to to obviously, last playbook at I had to has outlined selective prepared executed the X And the the obviously, bit driven that the and two way we commercial use then less very we're executional that last acknowledging the not some to we've the primarily discussed, going we by where missteps related well changes, our X team And playbook itself to in cutover the our business. are and stabilize that to related our we merchandising that confidence very back continue those of quite in integration and drive very X just

And feel time of on as focused the still portfolio the do frames Hostess, divesting value haven't returning very So getting brand about of part forth and well terms given so to more growth, that Voortman. in the brand. obviously, evolution as bullish we was of although we

shareholders progress very delivering I the leadership appreciate feel how is X to those the about it. and still pillars good against. and to continue question, the of we'll our back So report on

Kenneth Goldman

I I that a appreciate can transparency. ask quickly. question really you, Mark, it. different for thank Tucker, do And if

how to or week you the said last of green any CAGNY, impact give inflation. to elasticity at to for you obviously before but You expect 'XX, above too talked fiscal you're Algo it be coffee would related hoping early numbers,

in can't exact that would point? numbers, to again, at out light to questions expect on say algo, all about, you coming below is it algo, of early just or be Or to fact respect this too think with there -- give I you more in? with were the some

Tucker Marshall

It's too early the to could share. was that next wanted planning in adjusted algorithm last elements were a above we phase earnings And of at we see our right? outlining We're do the What considering. call to share CAGNY path we we fiscal early year. week an year for for to it, that per did innings

price growth of not. green or enter to be there'll elasticity to into too impact and just associated be due call demand, And as 'XX. However, whether meaningful of early we inflation, headwind it's with a will it coffee the earnings a level FY

Mark Smucker

on may, And just coffee. if I

coffee coffee I our as coffee that we're in healthy the the coffee been and it's remember that reminding way just high or important just the performance to to fact to most costs, the we've other still by at-home think is response merchandising, marketing terms consumer our that and in compared other of obviously, and of to consumption support record all consume affordable ourselves channels but the well despite at brand, with of the very also being far of formats. pricing, our total business pleased course, these

and do we So and the feel I offer choice very value, that spectrum, about across range we think fact of coffee play given the still category good we the just consumer a the overall. value

Operator

Peter from question from next America. Bank Galbo coming of Your is

Peter Galbo

you'll to you'll from comments of you or to going to Mark, last have the noted back pricing coffee, week,around just kind you take -- actions. have Tucker, additional that think

potential additional seeing Just you we an just fourth both increases magnitude price curious might if more want June about begin around when the post anything there's the we 'XX? think any with you in to quarter us price and share can parameters and put as October to contemplate increase

Mark Smucker

timing. you recall, pricing Yes. when our take costs we dictate we Peter, But laid physical any haven't out that. will as specific

all the green it until hedging forth. of price instruments and using we that we're to start But as so for coffee that. So would take into our we isn't really, inventory

So although in next expect fiscal happen probably is out other pricing going we half. to in it's laid year, first to the we the going do haven't happen, when

Peter Galbo

understand whether the much And longer Baked over just just longer thoughts the that's term your the changed of want top to profitability laid would Tucker, of out around taking has that X% I guess the the necessitated whether back you've Got to to it. I more there Sweet Hostess, or business number that just impairment dynamics for to all and changed obviously kind relative line flows something term, impairment on have discount that the go Snacks, of at impairment cash changed kind think, for I because long-term obviously, the back.

So would there any be additional helpful. color

Tucker Marshall

charges portfolio. and announced Yes. we the Hostess Peter, brand to that underperformance the the recent relate really recognized impairment and overall the of today

that for change. remarks outlook we of also portfolio. execution demonstration $X.X the the Voortman fiscal impact category Voortman that year impacts only that that our It's million know, you but billion or only of just divestiture a into As in this top spoke now of for the Mark with $X.X that outlook billion is seeing across in not we line we're to. the shared $XX prepared an is the and stepped And

those changes right on announced returning X portfolio and the through business our the today focus key of we and pillars. focus But Our along those have pillars stabilization time. walked the or outlook Currently, X% that is not is the the the from through advancing over to eventually business. we've growth for long-term portfolio leadership away also stabilizing with now,

Operator

coming Next question Wells Carey from Chris is Fargo. from

Christopher Carey

and a have going follow-up. Ken second a to confirmation like to confirm Goldman's then I'm question question

when as response growth, how just or as in -- you 'XX? way fiscal earnings the you response, made I because you will were earnings grow 'XX fiscal were level grow on whether how don't earnings to just fiscal you comment just question unclear the will you you saying are to you the So said as think or unclear you're that say a you're were earnings around unclear or if So a an way of that much I couldn't 'XX, to you are Ken's question to in one grow maybe tell saying you're unfair other, you much. in in but

a there context then any I helpful. And So might have be follow-up.

Tucker Marshall

at we outlook for and earnings top we outlook line. to will the But today. 'XX for continues and to certainly financial that earnings stand algorithm on to I FY trade coffee process. where for the headwind growth be our We our through our shared to we complete year, today. fiscal to quarter planning the be considering our our What green that at we for FY is is, Chris, next we commodity walk is want can that acknowledge opportunity and saw as that meaningful what we've 'XX. also call -- that, that's outlined our CAGNY, highs it's elements fourth call were in a record do above And difficult and

Christopher Carey

but question, figured unfair Okay. of I'd ask. I Yes, that I realize was kind

business, Regarding in said or remarks, coffee the actually expectations. than elasticities you trending in line were better that your prepared your

Can seeing? I it comment a the better seeing? that than unpack the hit that any just inflation what as bit in think I this of also thought was just quarter, some bit coffee And a than margins quite you there in maybe covering? the not expectations were is you context and pricing yet Just quarter. X.X. you're been well. Have the by we're Or worse

Mark Smucker

Chris, Mark. it's

of First, fraction channels, shop back -- I of a an at say, fraction example, is of very cost. -- the earlier other even coffee the a a cup to versus, about just energy is performs or how of I drink, coffee at comments K-Cup So coffee cost brewed for coffee being at at-home go made a the the coffee right? would affordable

a consumer affordable invest it of to continue is range options coffee, time things over premium to continue from the perspective a do in are expect, in the very expect to we to these are and we choice. cyclical And and and ability we our So higher brands that although normalize. very confident and at from the costs, consume offer we to coffee consumers do value commodity remain commodity

a add margins, the such price us, to available other just about to where always for strategy, we taking it's are might flexibility, we manage dollar And think extent we types comment of want basis. is a as to that levers I price, dollar if those formulation, one we that architecture, through recover leader, our as Yes, profit pulling on support that the things. hedging pack we as

other dollar but it's pricing just through a then for from So those supporting dollar, margin again, recovering our levers. perspective,

Operator

Next Robert Moskow question TD Cowen. from from today coming is

Robert Moskow

these Pet because Tucker, most But and I'll guess not. I in different could I Baked would it profit reductions. know differently then in 'XX food because year-over-year imagine answer the 'XX I you that know fiscal synergies growth segment don't of think, also I ask have way cost. you if a stranded I maybe reinvested. up, it's likely get division, of if by again, not. higher I And or could to overhead down I to But probably through would have Snacks, flow because going coffee then or the you And don't Sweet synergies. mean, profits imagine all these

So on any appreciate way just you if maybe it. address broadly there's could I'd those three more

Tucker Marshall

Yes, that or it's of own the puts to too, offer not your Baked a acknowledge just segment, the toward Snack corporate framework, $XXX elements objective give tracking company. other that We does fiscal year impact some estimates I have and what next will by by you'll did acknowledge, when Sweet the for Rob, is the area well. synergies your front we financial Two on total I pet, would and share journey. it the would 'XX. business flow of the difficult that make synergy takes directly I the haven't into stranded completed as framework that end are is, to all we for you plan that can And flow But fiscal but impacts million our is, is overhead assumptions. year to

in exit probably million will run $XX million rate about about year toward We 'XX. $XXX this million with fiscal leaving $XX that

So that points hopefully, just help those some are your will modeling. additional

Robert Moskow

maybe follow-up. It a does. And

more because out pretty guidance by Is the Or a of relationship? For spread in fourth this in quarter, happening is the price-cost it substantial coffee profit division? lot decline implies year-over-year. a of

Tucker Marshall

Yes.

I think a So of couple things. it's

charts. X through coffee the highest its in As was of you you step will will basket Yes, the that, walk the I see checking just that quarters. out quarter fourth into cost

investment continued Sweet you see in will Baked handheld and frozen and Snacks. call You in see down continued spreads, the

Operator

from Citi. from Palmer question Next is Tom coming

Thomas Palmer

spreads. handhelds you Maybe and I could what said open up frozen just following just on

earnings I from think year, start discussed kind ago, and in preproduction costs, the some earnings the A think investments. quantification the quarter. I $X.XX at of going were of around by you overhang $XX gotten costs year you other when million or start-up through we've

maybe fourth quarter help saw the And terms any in we what of then how those terms investments? the think in of in Just quarter? to third about

Tucker Marshall

Sure.

supporting and into that One correct, did the at then really just you fiscal merchandising; are $X.XX broken portfolio or marketing beginning year, portfolio; the be two, overhead the supporting and out McCalla investment was of just preproduction So the three on Tom. absorption. We this call manufacturing they or down within was headwind thirds: promotion incremental is ongoing expenses, whether expenses

favorable. a you sort As prior quarters, fourth -- year, excuse me, the come come the the because a in slightly about pre-prod in maybe expenses, better line with did think came little in did preproduction really bit of quarter

we're support As as to probably you we think continue fourth marketing we about quarter, year-over-year, just better the slightly the the but elevated will brand. see

Thomas Palmer

into the want the linger contract single-digit disruptions, third the quarter? pull and I disruptions. comment in should growth a just the what disruptions And Okay. be then to segment, XQ? excluding caused they might in support back the other brand do clarify clean low manufacturing quarter, merchandising at you you And the Or and to then had all, on Pet if about did that both extent, on it ramp to XQ? the

Tucker Marshall

our in as impacting us. a food view are primarily the nature. U.S. out it hit onetime disruption, is chain as I've do $XX We noted. supply call We You correct. segment. million did That in It did us quarter, pet retail behind third

significant acknowledge or fourth distribution, some quarter. just the or that on that material shelf would quarter is And that There the the working brand element through really third fourth on stock, nothing of that call quarter, are delay back or happen to there's incremental in full did primarily out. in pet. investment We the in Milk-Bone sequential in see I we're no to but on going being

Operator

is Next today Bernstein. Howard from coming question from Alexia

Alexia Howard

you to indeed you're data back that behavior. elasticity ask Can is be how price can Hostess, and due this to just coming from the sure seeing I that value-seeking

of more selective interest permanent heavily to due concerns about demand and mentioned processed or and behavior the to GLP-Xs due curves in disease. not shift category you think some and longevity the I consumer pressuring is foods perhaps

it Just rather that data this bit just is more a is what a long than makes temporary confident about curious about term? that you the little something problem

Mark Smucker

Sure, and specifically. And -- sweet all our see to Alexia. We snacking not on we from at generally GLP-X And continue update we right? a monthly, we least standpoint, impacts the look data and category. at material the impact to snacking trends

prices around in convenience and a are pocket. to so down having would I change being the have general. been So cautious just extra consumer more bit a Gas less you discretionary their comments just elevated, people channel back guide in

part is I think that of clearly it.

we not so the which that our the continue we the obviously, And also attributing category to as well process and would to just in breakfast we are, decline performing to the missteps, changing highlight Donettes perform is and acknowledge and improving. are we see don't I of GLP-X, -- occasion in well, that executional well. very do own the

to highlight that. just So

Alexia Howard

a just get quickly in can that update And just quick might and what's as spreads, causing a The be we and follow-up. declines how fruit resolved. quick on that Jif

Mark Smucker

we've very to little we bit Yes, little just the brand year bit a has. really of We quarter. and had first But well. just I half perform a continue is would down timing a sure. there's a expect you as of Jif had of strong to so performing the that Jif there. it remind

see of anything the has pretty and you'll that been ordinary, the or prices So performance the share share I wouldn't expect consistent. out

on mentioned, strong some and think we marketing turning fruit then butter bit of spreads, about now we've good back and advertising. in are had a feeling activity pretty And on on we've as general. competitive So peanut I

see to spreads in our well stabilization expect brand. the in some we'd so category fruit And as

Operator

from next Instructions] from [Operator Our Scott question coming is Jefferies. [indiscernible]

Unknown Analyst

Marks here Rob Scott on Dickerson. for

just sweet back and weeks, the past few everything the in over category? have snack sweet category. current retailers just I guess, that you certainly spoken to of from you've seen the wanted any maybe I you're First from dynamics, the from add channels one today to folks to to turning hesitancy ask, terms pushback snack any to, the more those [indiscernible] speaking new given

Mark Smucker

No, haven't. Scott, we

of with to we And online of Snacks continues and we're offerings, time the continuing have pretty our the into obviously shelf Baked that performance continue innovation, and to closely working fact, strong one forward come in move limited things retailers In fiscal Sweet a improve year. is to set. to that drive as new we the pipeline

new on honestly, the in conversations shelf. months, up our and as get confident coming the we'll feel how pretty into show mod So we resets about we

Unknown Analyst

stability what's with growing commodity coffee inflation Got it. me. second been you in a let's production and tied lot or Just then Do Appreciate that and discussion in into that. obviously globally? just you the know concerns speak there's to for regions, Obviously, of recently. regards been just some to kind And I say. happening. to inflation we if the there's that more ] maybe to been questions need supply question of see cocoa expand about terms sustainability has terms about feel wondering anything of in of and can And that of about coffee. [ cocoa also evident of sustainability

Mark Smucker

farmers you're for -- as to in the been deficit. seeing been looking relative down in world them there's do understand change, world the view commodity the fifth good commodity year supporting some the more really category is ourselves resistant commodity almost just cyclical. a XX is If comes or actually in been progress expect around a and nature regions and that various are right? improve helping the coffee we continues climate that been be that at crops And think breeding will we both the the of XX row But there where supply are do what moderate progress demand I simply cyclical as to participating strong. as as a This fundamentals. for years we've in well. there's in plants in there's significant is We've years, this coffee small I as their the of well historical, amount And over that question, time, holder a to coffee just commodity, programs had your undersupply with

taken we So expect and normalization I crop across over in right think some being a from time. crop the industry standpoint the steps would the are

Operator

Your next Max from question is Gumport from BNP coming Paribas.

Max Andrew Gumport

profit margin mid- discussed range you some in the half year. of to to low quarter, segment Last in expectation XX% second for be this coffee

that interplay printed there just looking color really, margin. would help elasticity, better-than-expected and of which sure XX% been cost for other Could savings. I But I'm commodity deleverage a taxes, not results? to think led favorable much anticipated. was have frame you a callout on what more on You pricing, property then inflation, the I'm

Tucker Marshall

delivering perspective did quarter, anticipated, Coffee in materialize we that slightly the Max, volume due way quarter price and a structure continue and holding cost in that from nice margin had business better line are to than portfolio. also and a the way or third that that's top come the manage we did of largely we're margin. the And the It's overall the in, mix. to elasticities

as fourth just basket basically would quarter, the you that you're third we favorability will the in so step quarter. that through highest just come down remind as quarter. the our you seeing now that We into have in And fourth cost come

see driven, for the our again, costs also coffee price the And due So sequentially. just quarter and factor. green down largely third of from demand fourth we elasticity come -- underlying that's will that the to to continued commodity

Max Andrew Gumport

billion Baked And just for impairment the $X to then Snacks. charge Sweet back going

to for $X.X better long-term that growth So [indiscernible] it a $X on I'm that. for to really more sounds $XXX that to come a so it's your better would get driver me year But the flow get is your sales billion long-term million based And expectations driving It in rate to I billion. for be X% X a still what you're like target of think trying year to free mentioned sticking you trying cut much I'm sales down that, impairment cash has sense $X.X like the billion this this charge? business. the feel to doesn't

So provide today? bit what to changed that more impairment context you led charge could that has a on has

Tucker Marshall

Max. Yes,

impairment unit is into And the down by charge. The really top are business the performance. the components: charge charges broken So impacted component unit first the two is line business

So is you unit not impacts anticipating the diminishing it the profit profit as see that and charge is, impairment performance, with at business base. top we're line level. associated the Two is obviously the to recover that

reduced So remain over long-term we on point from stabilizing some is that will do at time. be this then currently, brand at growing And X% then driven base all the And by we sales. focused the and level, growth.

getting performance sales the that the impairment charge into of component helps. up that so as And Hopefully, well. is also caught

Operator

floor end question-and-answer We our of further I'd closing like any turn back over or have the session. reached for to comments.

Mark Smucker

our of Well, loud CAGNY and think you great your the I where thank week, call see to last many And strategy you our all time why that morning. came we we It at confident of to through were was clear. share in future the for and company. this joining and excited are

Our we and on our are we brand taking strong our legacy to third year-to-date strategy. including in Hostess we business deliver Baked on leadership today building announced return to results performance to advancing change quarter, and making our the are the progress action the growth, continued Sweet Snack positive

and to that growth based strong that and operating a reshape. on continue value shareholder I our dynamic, am confident environment, you've the momentum increase a and be in seen in and to we results believe our position positive deliver delivering consumer portfolio and ongoing continued in long-term are strategy We

possible would outstanding of without be employees. All our not this

hard to to Thank I great like work always, them you I So our as company. dedication their continued a thank would hope day. have and all for you.

Operator

Everyone, does conclude today's conference that call.

a disconnect, You you day. may today. thank and participation now for We your wonderful have

The J. M. Smucker Company (SJM) 27 Feb 252025 Q3 Earnings call transcript