J. M. Smucker(SJM) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Net sales for the quarter decreased by 2%, with comparable net sales down by 1% [47][48][103] - Adjusted earnings per share for the third quarter was $2.61, an increase of 5$10.00, reflecting improved gross margin expansion and earlier realization of synergies [104][66] Business Line Data and Key Metrics Changes - Uncrustables brand net sales grew by 15%, driven by advertising campaigns and distribution gains [12][76] - Café Bustelo brand also saw a 15% increase in net sales, gaining share in all segments it competes in [15][80] - Milk-Bone brand faced supply chain disruptions but is expected to return to full distribution in the fourth quarter [18][82] - Sweet Baked Snacks segment net sales decreased by 8%, primarily due to declines in snack cakes and private label products [36][56] Market Data and Key Metrics Changes - The Coffee segment net sales increased by 2%, with net price realization contributing positively [30][52] - Pet Foods segment reported a 9% decrease in net sales, primarily due to lower contract manufacturing sales related to divested brands [54][99] - International and Away From Home segments saw a 5% increase in comparable net sales, driven by strong performance in Away From Home channels [102] Company Strategy and Development Direction - The company is focusing on key growth platforms, including Uncrustables and Café Bustelo, to drive future growth [11][79] - A comprehensive strategy is in place to stabilize and return the Hostess brand to growth, with new leadership announced for the Pet and Sweet Baked Snacks businesses [23][88] - The company is committed to evolving its portfolio and optimizing its manufacturing network to mitigate costs [28][93] Management's Comments on Operating Environment and Future Outlook - Management acknowledged supply chain disruptions impacting results but expressed confidence in returning to growth [10][11] - The company anticipates full-year net sales growth of approximately 7.25%, reflecting the impact of the Hostess Brands acquisition [62][103] - Management remains optimistic about long-term sustainable growth and generating over $1 billion in free cash flow annually [41][106] Other Important Information - The company recognized significant impairment charges of$794 million related to the Sweet Baked Snacks segment and $208 million for the Hostess brand trademark [45][109] - Cash provided by operating activities was$239 million, down from $407 million in the prior year, reflecting higher working capital requirements [60] Q&A Session Summary Question: What are the expectations for the Sweet Baked Snacks segment? - Management indicated that the Sweet Baked Snacks segment is facing challenges but is implementing a strategy to return it to growth [86][109] Question: How is the company addressing supply chain disruptions? - The company has resolved certain supply chain issues and anticipates returning to full distribution for affected brands [10][18] Question: What is the outlook for the Coffee segment? - The Coffee segment is expected to continue performing well, with price increases implemented to manage higher commodity costs [30][52]