J. M. Smucker(SJM) - 2025 Q3 - Quarterly Report

Financial Performance - For the three months ended January 31, 2025, net sales were $2,186.0 million, a decrease of 2$2,229.2 million in the same period of 2024[153]. - Gross profit for the three months ended January 31, 2025, was $878.1 million, representing a 7$823.1 million in the prior year[153]. - The company reported a net loss of $662.3 million for the three months ended January 31, 2025, compared to a net income of$120.4 million in the same period of 2024[153]. - During the first nine months of 2025, adjusted operating income was $1,402.3 million, a 19$1,174.6 million in the same period of 2024[153]. - Net sales for the three months ended January 31, 2025, decreased by $43.2 million, or 2$609.3 million, or 10%[154][157]. - Operating income (loss) for the three months ended January 31, 2025, was (27.2)%, compared to 13.3% in the prior year, while for the nine months, it was (1.1)%, down from 15.1%[159]. - Free cash flow for the first nine months of 2025 was $517.7 million, compared to$345.4 million in the same period of 2024[189]. - Cash and cash equivalents decreased to $47.2 million as of January 31, 2025, from$62.0 million at April 30, 2024[188]. Acquisitions and Divestitures - The acquisition of Hostess Brands on November 7, 2023, was valued at $5.4 billion, contributing net sales of$927.8 million during the first nine months of 2025[144]. - The company anticipates achieving cost synergies of approximately $100.0 million from the Hostess Brands acquisition by the end of 2026, with$64.0 million already realized[144]. - The divestiture of the Voortman business generated net proceeds of $290.5 million, with a pre-tax loss of$268.4 million recognized upon closing the transaction[142]. - The Canada condiment business was sold for final net proceeds of $25.3 million, resulting in a pre-tax loss of$5.7 million[143]. - The company divested the Voortman business on December 2, 2024, resulting in the disposal of $251.1 million of goodwill[226]. Costs and Expenses - The company incurred total integration costs related to the Hostess Brands acquisition of approximately$210.0 million, with cumulative costs recognized to date of $182.3 million[172]. - The company anticipates incurring approximately$12.0 million in costs related to addressing distribution inefficiencies from recent divestitures, with half expected to be recognized in 2025[171]. - Marketing expenses as a percentage of net sales were 5.2% for both the three and nine months ended January 31, 2025, compared to 4.8% and 5.1% in the prior year, respectively[159]. Segment Performance - U.S. Retail Coffee segment net sales increased by $13.1 million in Q3 2025, with net price realization contributing 9 percentage points to the increase[178]. - U.S. Retail Frozen Handheld and Spreads segment net sales rose by$8.4 million in Q3 2025, driven by a 2 percentage point contribution from volume/mix[180]. - U.S. Retail Pet Foods segment net sales decreased by $42.2 million in Q3 2025, with volume/mix contributing a 9 percentage point decline[183]. - Sweet Baked Snacks segment reported net sales of$278.6 million in Q3 2025, with an 8 percent decrease when excluding noncomparable sales from the Hostess Brands acquisition[185]. - International and Away From Home segment net sales decreased by $0.8 million in Q3 2025, but increased by$13.8 million or 5 percent when excluding noncomparable impacts[186]. Debt and Equity - As of January 31, 2025, total debt was $7,847.3 million, down from$8,364.0 million as of April 30, 2024, indicating a reduction in overall debt levels[201]. - Shareholders' equity decreased to $6,907.3 million from$7,693.9 million over the same period, reflecting a decline in the company's net worth[201]. - The company completed a $3.5 billion offering of Senior Notes in October 2023 to finance the acquisition of Hostess Brands and pay off associated debt[202]. - The company has a$2.0 billion unsecured revolving credit facility maturing in August 2026, with $462.0 million in short-term borrowings outstanding at a weighted-average interest rate of 4.55$340.9 million in the first nine months of 2025 from $325.5 million in the same period of 2024, with dividends declared per share rising from$3.18 to $3.24[205]. Risks and Challenges - The company experienced input cost inflation and anticipates price increases across its business due to broader inflationary pressures[150]. - The company is facing uncertainties related to the sale of certain Sweet Baked Snacks value brands to JTM, with potential conditions that may not be satisfied or waived[245]. - There are challenges in successfully integrating Hostess Brands' operations and achieving financial forecasts related to the acquisition[245]. - The anticipated benefits from the Hostess Brands acquisition, including synergies and cost savings, may not be realized within the expected time frame[245]. - The acquisition of Hostess Brands could negatively affect the market price of the company's common shares[245]. - The company is exposed to risks related to supply chain disruptions, including political instability and natural disasters[245]. - Food security concerns may impact consumer preferences and lead to potential product recalls[245]. - The company must manage commodity pricing and interest rate risks through derivative and purchasing strategies[245]. - There is a risk of not achieving sufficient cash flow to support capital expenditures, debt repayment, and dividend payments[245]. - The company faces competitive pressures in the market, including pricing practices and promotional spending from competitors[245]. Other Information - The company is involved in ongoing litigation related to a product recall of Jif peanut butter, with no loss contingency recorded as of January 31, 2025, due to the uncertainty of financial impact[197]. - A new manufacturing facility for Uncrustables sandwiches is being built in McCalla, Alabama, with a total investment of$1.1 billion, expected to begin production in the second quarter of 2025[210]. - The company has returned $35.0 million of foreign cash to the U.S. from Canada during the first nine months of 2025, with no tax impacts reported[212]. - The company is in compliance with all debt covenants as of January 31, 2025, and expects to maintain compliance for the next 12 months[204]. - The company does not undertake any obligation to update or revise forward-looking statements after the filing of the Quarterly Report[247].