In the introduction, Crystal Beiting, Vice President of Investor Relations and Financial Planning and Analysis at The J. M. Smucker Company, announces the presentation of their Fiscal 2025 Third Quarter Earnings. Mark Smucker, the CEO, will provide an overview of the quarter’s results and strategic initiatives. Following that, Tucker Marshall, the CFO, will dive into a detailed financial analysis and updated outlook for fiscal 2025. The discussion will involve forward-looking statements that carry risks and uncertainties and reference non-GAAP financial measures. All relevant materials and a live Q&A session at 8:30 am EST will be available on their Investor Relations website. Crystal encourages questions post-Q&A session, setting the stage for Mark Smucker to further discuss the third quarter’s progress.

The company experienced supply chain disruptions that temporarily impacted results, but these issues have been resolved. Despite these challenges, disciplined cost management allowed them to exceed earnings expectations and revise their full-year guidance positively. The Uncrustables brand saw a 15% increase in net sales, driven by advertising, distribution gains, and new merchandising efforts, making it the leading SKU in the freezer aisle. The brand is expanding into convenience stores and introducing successful new products like the Peanut Butter and Raspberry Spread sandwich, aiming for over $900 million in net sales. Additionally, the Café Bustelo brand remains one of the fastest-growing in the at-home coffee category.

In the latest quarter, the Café Bustelo brand saw a 15% increase in net sales, continuing its trend of double-digit growth. The brand is expanding nationally with new roast profiles and cold coffee offerings, including a multi-serve option and an upcoming single-serve ready-to-drink format. Meanwhile, the Milk-Bone brand is recovering from supply chain disruptions and leading in innovation, particularly with its Peanut Buttery Bites, contributing to double-digit growth in dog snacks. The Meow Mix brand maintained its leadership in dry cat food, driven by updated packaging and new product options.

The company has launched Meow Mix Gravy Bursts to innovate the dry cat food market, which has seen little recent innovation. The Hostess brand faces challenges due to inflationary pressures and distribution issues, impacting its performance in the sweet baked goods category. To address these challenges, Judd Freitag has been appointed to lead the Pet and Sweet Baked Snacks divisions, following Dan O'Leary's departure. Freitag, with 16 years at the company and a successful history in leading the Pet Foods segment, will focus on portfolio expansion, distribution, innovation, and marketing to drive growth. New packaging is being introduced, and a marketing campaign is imminent to support these efforts.

The paragraph discusses Hostess's recent and upcoming product innovations, such as Donettes Fritter Rings and Hostess Cupcake Minis, and the return of Suzy Q’s, all aimed at capitalizing on consumer trends. The company is also divesting certain value brands to streamline operations and is leveraging synergies from an acquisition by expanding Uncrustables into convenience stores and collaborating with legacy Smucker brands. Hostess has seen positive results from promotions and has delivered a strong fiscal year. Additionally, their Coffee segment has grown in net sales, successfully managing high green coffee costs through strategic pricing.

The article discusses price increases in the coffee category due to rising green coffee costs, with elasticity remaining favorable. The company expects coffee prices to normalize and aims to balance cost recovery with consumer options. The Frozen Handheld and Spreads segment saw net sales growth, driven by Uncrustables sandwiches, despite declines in Smucker's fruit spreads and Jif peanut butter. A new marketing campaign promotes peanut butter and jelly sandwiches and extends the "Save the Celery" campaign. In Pet Foods, supply chain disruptions have affected results for Milk-Bone and Meow Mix products.

The reported net sales decreased by 9% due to reduced contract manufacturing sales from divested pet food brands, but excluding these sales and accounting for supply chain issues, net sales would have shown a slight increase. The company expects full distribution recovery by the fourth quarter and remains confident in the Milk-Bone brand amid discretionary spending slowdowns caused by inflation. The cat food segment, particularly the Meow Mix brand, is benefiting from a growing cat population. E-commerce trends are favorable for both dog snacks and cat food categories. In Sweet Baked Snacks, sales fell by 8%, mainly due to declines in snack cakes and private label products, but donut sales, especially Hostess Donettes, have increased. The away-from-home segment saw a 5% growth in net sales, driven by leveraging leading national brands.

The company has revised its full-year net sales expectations due to $30 million in supply chain disruptions, softness in the Sweet Baked Snacks segment, and unfavorable foreign currency exchange impacts. Despite this, third-quarter adjusted earnings per share exceeded expectations due to improved gross margins and cost management, leading to an increased EPS guidance of $10.00 and a free cash flow guidance rise to $925 million. The legacy business, comprising 85% of total net sales, shows strong growth. Although the Hostess brand hasn't yet met expectations, a strategy is in place to restore growth. The company remains confident in delivering long-term, sustainable growth, expecting over $1 billion in annual free cash flow, and is well-positioned for future success.

The paragraph discusses the financial challenges faced by the company, including significant non-cash impairment charges related to underperformance in the Sweet Baked Snacks segment and the Hostess brand trademark. Tucker Marshall outlines how these issues are linked to distribution, merchandising, and competitive execution problems. The company is focusing on five strategic pillars to stabilize and grow the Hostess brand. Financially, the third quarter saw a 2% decrease in net sales, primarily due to lower volume mix in categories like coffee and dog snacks, despite gains from Uncrustables sandwiches. The paragraph also notes adjustments for non-comparable sales and foreign exchange impacts.

The company's net sales were impacted by a 1% decline due to lower contract manufacturing sales after divesting pet food brands, and disruptions in the supply chain caused a $30 million shortfall. Despite these challenges, net sales saw a 3% increase thanks to higher coffee prices in response to increased green coffee costs. Adjusted gross profit fell by $9 million due to higher costs, unfavorable volume mix, and divestitures, though these were partially offset by better pricing and benefits from acquiring Hostess Brands. Adjusted operating income rose by $6 million, aided by decreased selling, distribution, and administrative expenses and lower property taxes, while net interest expense dropped by $4 million after prepaying a Term Loan. The adjusted effective tax rate improved to 23.7% from 26.1% the previous year. Consequently, third-quarter adjusted earnings per share grew by 5% to $2.61, based on 106.7 million weighted-average shares outstanding.

The article highlights the quarterly financial performance of various segments of a company. In the U.S. Retail Coffee segment, net sales rose by 2%, driven by a 9% increase in net price realization largely due to higher pricing for Folgers and Café Bustelo, despite a 7% decline in volume/mix primarily from Folgers and Dunkin. The U.S. Retail Frozen Handheld and Spreads segment saw a 2% increase in net sales, led by Uncrustables, while profits fell by 5% due to higher costs. Meanwhile, the U.S. Retail Pet Foods segment experienced a 9% drop in net sales, due to decreased volume/mix from dog snacks and divested pet food brands, with cat food partly offsetting this decline. Adjusted earnings per share surpassed expectations due to better adjusted gross margin and timing of certain expenses.

In the U.S. Retail Pet Foods segment, profit rose by 7% due to lower costs, despite a decline in volume/mix. Conversely, the Sweet Baked Snacks segment experienced a 7% drop in net sales, or 8% when accounting for acquisitions and divestitures, largely due to decreased volume/mix and lower net pricing, resulting in a 19% decrease in segment profit. Meanwhile, International and Away From Home net sales were flat, but rose 5% on a comparable basis, with a 6% boost from pricing increases in coffee and Uncrustables. The Away From Home business saw a 9% increase driven by coffee and Uncrustables, though volume/mix was negatively impacted by a decline in coffee sales.

In the International business, net sales decreased by 2% due to unfavorable coffee volume/mix, despite higher net price realization. Segment profit for International and Away From Home rose by 22% due to higher pricing, though impacted by increased costs and currency exchange issues. Operating cash flow dropped to $239 million from $407 million the previous year, due to higher working capital requirements in 2025, tax payment timing, and absence of a prior year's settlement benefit, with free cash flow also decreasing to $151 million. The company ended the quarter with $47 million in cash and $7.8 billion in net debt, with a leverage ratio of 3.6 times based on a trailing 12-month adjusted EBITDA of $2.2 billion. They plan to reduce debt by over $800 million this fiscal year and $500 million annually for the next two years, aiming to bring the leverage ratio down to 3 times by fiscal year 2027, thus ensuring financial flexibility. They also intend to provide an update on their fiscal year 2025 outlook.

The paragraph outlines the company's updated expectations for full-year net sales growth, projecting an increase of approximately 7.25% compared to the previous year. This growth includes contributions from the Hostess Brands acquisition and is offset by a 1% negative impact from reduced contract manufacturing sales due to divested pet food brands and another 1% headwind from previous divestitures, including Canadian condiment and Sahale Snacks businesses. On a comparable basis, net sales are expected to grow by around 0.75%, factoring in reduced contract manufacturing sales. The guidance reflects increased pricing in response to higher green coffee costs and volume/mix growth in brands such as Uncrustables®, Meow Mix®, Café Bustelo®, and Milk-Bone®. Updated assumptions account for lower than previously expected sales in the Sweet Baked Snacks segment and adverse foreign currency impacts. The full-year net sales guidance excludes any effects from the impending divestiture of the Sweet Baked Snacks value brands. Moreover, the adjusted gross profit margin is now anticipated to be approximately 38%, attributed to stronger performance in the U.S. Retail Coffee segment.

The paragraph outlines financial forecasts and key metrics for the year, including an 8% increase in SD&A expenses due to the Hostess acquisition, an estimated marketing expense of under 5.5% of net sales, and a net interest expense of approximately $390 million. The adjusted effective income tax rate is projected at 24.1%, with a weighted-average share count of 106.7 million, resulting in anticipated full-year adjusted earnings per share of $9.85 to $10.15. The guidance excludes the impact of the divestiture of the Sweet Baked Snacks value brands, deemed immaterial for fiscal 2025 EPS. The company expects a free cash flow of about $925 million and capital expenditures of $400 million, with additional financial assumptions given for depreciation, amortization, share-based compensation, and other charges. The company expresses satisfaction with its third-quarter results, credits its strategy and employee dedication, and is optimistic about long-term growth and shareholder value enhancement.

This summary was generated with AI and may contain some inaccuracies.