In the introduction, Crystal Beiting, Vice President of Investor Relations and Financial Planning for The J.M. Smucker Company, outlines the agenda for a discussion on the company's fiscal 2025 fourth quarter earnings. Mark Smucker, the CEO, will provide a business update, followed by Tucker Marshall, the CFO, who will analyze financial results and discuss the fiscal 2026 outlook. They mention that forward-looking statements will be made, based on assumptions and subject to risks, and note the use of non-GAAP financial measures. A live Q&A session will follow, and all related materials are available on their website. Mark Smucker then begins his summary of the company's full-year performance and fourth quarter highlights.

In the paragraph, the company outlines its strategic priorities for achieving its fiscal 2026 guidance amidst a dynamic environment, highlighting fiscal year 2025's significant progress with positive results due to strong consumer demand and disciplined cost management. The company successfully navigated macroeconomic pressures, demonstrating resilience and growth driven by innovation and new product launches, including Jif peanut butter varieties and Café Bustelo coffee. It emphasizes its focus on brand building, leading to strong consumer demand and an increase in market share for its brands.

The Transformation Office achieved $75 million in benefits from the Hostess Brands acquisition and prioritized growth for key brands, including Uncrustables. Uncrustables saw its 11th year of double-digit growth, reaching approximately $920 million in net sales in fiscal year 2025, driven by advertising, distribution, and new product innovations. The brand leads the frozen category with strong performance among households with kids, millennials, and Gen Z. Expansion into convenience stores and a new manufacturing facility in Alabama support this growth, with a goal of surpassing $1 billion in net sales by the end of fiscal year 2026.

The paragraph highlights the significant growth of the Café Bustelo brand in the at-home coffee category, with a 19% increase in net sales in the U.S. Retail Coffee portfolio, reaching approximately $400 million in fiscal 2025. The brand's expansion includes new products and marketing strategies that are expected to sustain double-digit sales growth. Additionally, the paragraph mentions the success of the Milk-Bone and Meow Mix brands, which are leveraging trends like pet humanization to drive innovation and sales growth. Key developments include Milk-Bone's Peanut Buttery Bites and Meow Mix's Gravy Bursts, both contributing to increased market share and household penetration.

The paragraph discusses efforts to improve the underperforming Sweet Baked Snacks segment, which was impacted by consumers' reduced spending due to inflation and suboptimal distribution strategies. To address these issues, the company is updating its expectations for long-term net sales growth to 3% and refining its strategy with a focus on strengthening the product portfolio, enhancing execution, and reigniting sustainable growth. This includes simplifying the portfolio, reducing costs, and becoming more competitive with key price points. These actions aim to stabilize the Hostess brand and drive margin expansion.

The paragraph outlines the strategic actions taken to enhance the Sweet Baked Snacks segment. These include brand building, media investment, and improving product offerings through SKU rationalization. The company aims to boost its margin profile by closing the Indianapolis facility and focusing on cost savings. The strategy involves creating a dedicated sales organization, reorganizing marketing resources, and improving supply chain efficiency. Hostess aims to leverage its iconic brand status by focusing on core strengths, evolving demand creation, and shifting its innovation strategy to reinforce its well-loved products like Donettes and Twinkies.

The company is focused on revitalizing its Sweet Baked Snacks segment and expects major growth from key brands like Hostess over the next five years. In the fourth quarter, net sales were stable when excluding divested pet food brands. Despite facing record-high green coffee costs, the Coffee segment saw an 11% increase in net sales, achieved by implementing price increases in June and October. As costs continue to rise, further price hikes are planned for May and August to sustain margins. The company remains optimistic about the resilience of the at-home coffee market, which constitutes 70% of coffee consumption occasions.

The article highlights various aspects of the company's performance across its product lines. The portfolio is positioned as an affordable alternative to coffee shops, with a strategy to balance input cost recovery and consumer options. In Frozen Handheld and Spreads, sales remained flat, with growth in Uncrustables sandwiches offset by declines in Smucker's fruit spreads and Jif peanut butter. A price increase for Uncrustables was implemented for the first time in over three years. Pet Foods experienced a 13% sales decline due to retailer inventory issues and reduced contract manufacturing, with dog snacks down by 7% and Meow Mix cat food up by 3%. The company is optimistic about Milk-Bone's strong position and potential growth for Meow Mix as the cat population increases. Sweet Baked Snacks saw a 14% drop in comparable net sales. Overall, pet food and e-commerce are viewed as growth areas.

The paragraph discusses the financial performance and strategic priorities of a company. It mentions that net sales decreased more than expected due to trade recognition, with a 7% decline in Hostess brand sales over 13 weeks. However, there was 4% growth in International and Away From Home sales, driven by strong results in the Away From Home business. Despite weaker than expected performance in the Sweet Baked Snacks segment, the company is taking steps to stabilize it. They aim for long-term growth with ambitions for over $1 billion in annual free cash flow. Their strategy includes accelerating organic growth, particularly in the Sweet Baked Snacks segment, and maintaining a focus on safety, quality, and cost efficiency. They plan to invest in key platforms and align with consumer shopping trends to grow market share.

The company is adopting a 'Be Bold' mindset to drive competitive growth, focusing on evolving its brands and meeting consumer needs amid a dynamic environment. Challenges such as high coffee costs, tariffs, and regulatory changes are influencing their cautious fiscal year 2026 guidance, with expected net sales growth of 2% to 4% and comparable net sales growth at 4.5% mid-point. Growth is anticipated in U.S. Retail and International segments, despite declines in Sweet Baked Snacks and overall volume/mix due to coffee price elasticity. Adjusted earnings per share are projected to be $8.50 to $9.50, factoring in tariffs and increased marketing investments.

The paragraph discusses the challenges faced by a domestic food producer due to U.S. tariffs, particularly on green coffee, which they largely source from Brazil and Vietnam. The company is addressing these tariff impacts and high commodity costs with alternative sourcing, supply chain optimization, and responsible pricing. While they anticipate a dynamic external environment, they are confident in their strategy, focusing on investing in growth platforms and strategic priorities to ensure long-term growth and shareholder value. The CEO expresses appreciation for the employees' dedication before handing over to Tucker H. Marshall for financial insights and the fiscal 2026 outlook.

The paragraph discusses significant financial challenges faced by the Sweet Baked Snacks segment, including an $867 million impairment charge for goodwill and a $113 million charge for the Hostess trademark. These impairments result from underperformance and shifts in business strategy aimed at strengthening the portfolio, improving execution, and achieving sustainable growth. The company anticipates a long-term net sales growth of 3% for the segment, despite a 3% decline in net sales for the fourth quarter. This decrease is attributed to lower sales in sweet baked goods, dog snacks, and fruit spreads, offset by increased sales of Uncrustables sandwiches and higher net pricing for coffee. The quarter's results were also affected by retailer inventory issues in U.S. Retail Pet Foods and increased trade recognition for Sweet Baked Snacks.

In the latest quarter, the company's overall net sales met expectations, but adjusted gross profit fell by 9% due to higher costs, unfavorable volume/mix, and divestitures, partially countered by increased net pricing. Adjusted operating income decreased by 8%, influenced by the drop in gross profit but was somewhat alleviated by favorable selling, distribution, and administrative (SD&A) expenses. SD&A benefits resulted from lower administrative, marketing, and pre-production costs, particularly associated with the Uncrustables manufacturing facility. Net interest expense decreased slightly due to reduced debt, and the adjusted effective tax rate rose to 23.9%. As a result, adjusted earnings per share fell by 13% to $2.31. In segment results, the U.S. Retail Coffee segment saw an 11% increase in net sales due to higher pricing for Folgers and Café Bustelo, but profits were flat due to increased commodity costs. Conversely, the U.S. Retail Frozen Handheld and Spreads segment had neutral net sales, with a slight decrease in net price realization affecting Jif and Uncrustables, partially offset by a price increase for Smucker's toppings and syrups.

The paragraph discusses financial results for various segments of Smucker's business. The U.S. Retail Frozen Handheld and Spreads segment saw a 5% decrease in profit due to equipment write-off charges, higher costs, and lower net price realization, despite some cost offsets. The U.S. Retail Pet Foods segment experienced a 13% decline in net sales, primarily due to reduced dog snack sales and a $16 million drop related to divested pet food brands. The Sweet Baked Snacks segment saw a significant 26% decrease in net sales due to divestitures, with a 72% decrease in profit driven by higher costs and lower net price realization. Meanwhile, the International and Away From Home segment experienced a 3% increase in net sales.

The paragraph outlines the company's financial performance, highlighting a 4% net sales increase, driven by higher coffee prices, despite some volume declines. The Away From Home and International segments saw growth, notably in Uncrustables sandwiches. Segment profits rose 13%, aided by improved pricing and reduced pre-production costs for a new facility. Fourth-quarter free cash flow reached $299 million, with a full-year increase of $174 million, despite reduced capital expenditures, aligning with strategic targets. The company returned $455 million to shareholders via dividends and raised the quarterly dividend by 2%, marking 23 consecutive years of growth. They ended the year with $70 million in cash and $7.6 billion in net debt, maintaining a leverage ratio of 3.6x against a $2.1 billion adjusted EBITDA.

The company plans to prioritize debt reduction by paying down $500 million annually over the next two years, aiming for a leverage ratio of 3x net debt to adjusted EBITDA by fiscal year 2027. For fiscal year 2026, the company expects net sales to rise by 2% to 4%, despite facing challenges such as tariffs, input inflation, and shifts in consumer behavior. This growth outlook includes a $135 million sales headwind from divested brands and a $38 million impact from reduced contract manufacturing sales. Excluding these factors, net sales are expected to increase approximately 4.5%, driven by growth in U.S. retail segments and international sales. While sales in the Sweet Baked Snacks segment may decline slightly, higher net sales growth is anticipated from price increases in various product categories to offset rising costs.

The Retail Frozen Handheld and Spreads segment aims to recover increased costs despite unfavorable volume/mix, mainly due to price elasticity in the U.S. Retail Coffee segment and challenges in the Sweet Baked Snacks segment. Key brands like Uncrustables, Café Bustelo, Meow Mix, and Milk-Bone are expected to show volume/mix growth. The adjusted gross profit margin is projected to be 35.5%-36.0%, reflecting higher commodity and manufacturing costs, offset by price benefits and cost savings from transformation efforts. Tariffs are expected to negatively impact the margin by 50 basis points, mostly in the U.S. Retail Coffee segment. SD&A expenses are predicted to rise by 3% due to increased marketing spending, particularly for Café Bustelo and Uncrustables, with total marketing expenses accounting for 5.7% of net sales, up by 30 basis points or $40 million from the previous year. Net interest expense is projected at $380 million due to debt reduction, and the adjusted effective tax rate is anticipated to be 23.7%, with an average share count of 106.7 million. The adjusted earnings per share for the full year are expected to range from $8.50 to $9.50, impacted by $0.80 due to demand elasticity assumptions in the U.S.

The paragraph outlines various financial impacts and projections for a company, including challenges such as a $0.30 impact from increased marketing investments, a $0.25 impact from tariffs, and reduced profitability in the Sweet Baked Snacks segment. These issues offset positive influences like business momentum, cost benefits, and synergies from the Hostess acquisition. The company expects free cash flow of $875 million, with capital expenditures of $325 million and other expenses detailed. In the first fiscal quarter, net sales are projected to decline slightly, with specific impacts from divestitures and changing sales dynamics. Adjusted earnings per share are anticipated to drop by about 25% due to reduced profits in certain segments but are expected to improve over the fiscal year.

In fiscal year 2026, the company plans to maintain a disciplined financial approach while investing strategically in key platforms for long-term growth and increased shareholder value. They anticipate fiscal year 2027 to be a growth year for adjusted earnings per share, assuming stability in the green coffee market and consumer or regulatory conditions, including trade policy. The company also expresses gratitude to its employees for their commitment and performance, which sets the company up for continued success.

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