The J. M. Smucker Company (SJM) Q1 2025 Earnings Call August 27, 2025 07:00 AM ET Company ParticipantsCrystal Beiting - VP - IR & FP&AMark Smucker - CEO & Chair of the BoardTucker Marshall - CFOCrystal BeitingGood morning. This is Crystal Beiting, Vice President, Investor Relations and Financial Planning and Analysis for The J. M. Smucker Company. Thank you for listening to our prepared remarks on our fiscal twenty twenty six first quarter earnings call.After this brief introduction, Mark Smucker, Chief Exe ...

Financial Data and Key Metrics Changes - The company reported a 1% decrease in net sales for the first quarter, while comparable net sales increased by 2%, excluding prior year sales related to divested businesses and foreign currency exchange [31] - Adjusted gross profit decreased by $89 million or 11% compared to the prior year, primarily due to higher commodity costs and unfavorable volume mix [33] - Adjusted earnings per share was $1.90, a decrease of 22% versus the prior year, but exceeded expectations due to better-than-anticipated net sales [34] Business Line Data and Key Metrics Changes - In the US retail coffee segment, net sales increased by 15%, driven by an 18 percentage point increase from net price realization [34] - The US retail pet foods segment saw a decrease in net sales by 8%, primarily due to a decline in dog snacks and lower contract manufacturing sales related to divested pet food brands [36] - The Sweet Baked Snacks segment experienced a 24% decrease in net sales, with a 54% decrease in segment profit reflecting unfavorable volume mix and higher costs [37] Market Data and Key Metrics Changes - The away from home business grew net sales by 14% on a comparable basis, driven by coffee and Uncrustables sandwiches [39] - International net sales decreased by 6% on a comparable basis, primarily reflecting a decrease in the coffee portfolio [39] - The company anticipates a higher US tariff impact on green coffee costs, which is expected to be a 50¢ headwind for the fiscal year [29] Company Strategy and Development Direction - The company is focused on three strategic priorities: accelerating organic growth, embedding transformation in everyday operations, and fostering a bold mindset [5] - The Uncrustables brand is projected to generate over $1 billion in net sales by the end of the fiscal year, continuing strong double-digit growth [11] - The company is reducing SKU count by 25% for the Hostess brand to improve operational efficiencies and drive margin expansion [15] Management's Comments on Operating Environment and Future Outlook - Management noted that the external environment remains dynamic, with ongoing input inflation and changes in consumer behavior impacting the fiscal year outlook [41] - The company is revising its full-year net sales expectations to increase by 3% to 5%, primarily due to the strength of the coffee portfolio [28] - Management remains confident in the long-term growth outlook and the ability to deliver shareholder value despite external challenges [30] Other Important Information - The company achieved $100 million in total run rate synergies from the Hostess Brands acquisition [16] - Free cash flow for the first quarter was negative $94.9 million, reflecting a decrease in cash provided by operating activities [39] - The company plans to prioritize debt reduction, aiming to pay down approximately $500 million of debt in each of the next two fiscal years [40] Q&A Session Summary Question: What are the expectations for the coffee segment? - The coffee segment is expected to remain resilient despite inflationary pressures, with approximately 70% of coffee drinking occasions occurring at home [21] Question: How is the company addressing the impact of tariffs? - The company is working to mitigate cost increases through alternative sourcing strategies and responsible pricing [45] Question: What is the outlook for the Sweet Baked Snacks segment? - The Sweet Baked Snacks segment is anticipated to improve sequentially, with increased dollar sales and volume growth noted in the Hostess brand [25]