SJM

Image source: The Motley Fool. Wednesday, Aug. 26, 2026 at 9:00 a.m. ET Vice President, Investor Relations, Financial Planning and Analysis - Crystal Beiting Chief Executive Officer, President and Chair of the Board - Mark Smucker Chief Financial Officer, Executive Vice President, Frozen Handheld and Spreads and Sweet Baked Snacks - Tucker Marshall Operator: Good morning, and welcome to the J.M. Smucker Company's Fiscal 2027 First Quarter Earnings Question-and-Answer Session. This conference call is being recorded. [Operator Instructions] I will now turn the conference call over to Crystal Beiting, Vice President, Investor Relations, Financial Planning and Analysis. Thank you. You may begin. Crystal Beiting: Good morning, and thank you for joining our fiscal 2027 first quarter earnings question-and-answer session. I hope everyone had a chance to review our results as detailed in this morning's press release and management's prepared remarks, which are available on our corporate website at jmsmucker.com. We will also post an audio replay of this call at the conclusion of this morning's Q&A session. During today's call, we may make forward-looking statements that reflect our current expectations about future plans and performance. These statements rely on assumptions and estimates, and actual results could differ materially due to risks and uncertainties. Additionally, we use non-GAAP results to evaluate performance internally. I encourage you to read the full disclosure concerning forward-looking statements and details on our non-GAAP measures in this morning's press release. Participating on this call are Mark Smucker, Chief Executive Officer, President and Chair of the Board; and Tucker Marshall, Chief Financial Officer, Executive Vice President, Frozen Handheld and Spreads and Sweet Baked Snacks. We will now open the call for questions. Operator, please queue up the first question. Operator: [Operator Instructions] Our first question is coming from Andrew Lazar from Barclays. Andrew Lazar: I guess as I understand it, it looks like you received an $0.84 tariff refund benefit in fiscal 1Q and anticipate about a $0.60 benefit for the full year, net of some incremental costs and spend back. I was wondering if you're able to give us a better sense of what's incorporated in that sort of $0.24 differential in SG&A. I guess how much is higher admin expenses for the build-out of McCalla versus higher brand spend or something else? Tucker Marshall: Andrew, yes, we did receive an $0.84 benefit from tariff refunds in our first quarter, and we are choosing to reinvest a portion of that in SG&A expenses, largely coming through administrative expense, along with some incremental marketing spend and advancing preproduction expenses associated with our McCalla, Alabama facility, all in support of the Uncrustables brand and then acknowledging too, that we would use the balance of earnings or cash to pay down debt. Andrew Lazar: Got it. Okay. Okay. And then you're still looking for coffee volume to decrease for the full year by low single digits. And I just wanted to explore this a bit more just because you've seen coffee volume actually increase despite the higher pricing more recently. So I guess with the understanding that elasticity has been modest as prices went up, why would we expect volume to weaken even as coffee shelf prices moderate from here? And maybe it's just conservatism at this point, but just curious on that. Mark Smucker: Andrew, it's Mark. Thanks for the question. You are correct. Because the commodity has continued to be very volatile, which particularly this time of year is not unusual, we just feel that it's prudent given not only the commodity, but category dynamics and the consumer environment to just think about the coffee business from a prudent perspective. I would highlight that, as you pointed out, great results in the quarter on all 3 of our key brands with Bustelo growing, supported by the Game Face campaign around soccer and then Dunkin' having relative pricing in line with where it needs to be, all of that has been supportive. But it's just, again, making sure that we're thinking about the go-forward from a prudent perspective. Operator: Next question is coming from Peter Galbo from Bank of America. Peter Galbo: If I could pick up on coffee. I think there are quite a bit of investor questions just around how you're thinking about the recent run-up on, I guess, more speculative nature of Super El Nino at this point. And there was a change in terms of how you have the outlook for the year on the pricing side to actually expecting less of a headwind on coffee price for the year to go, I think, than previously. Just how kind of the recent move in coffee prices are impacting that decision? Had you planned a larger list price decrease now you're calling back on it's [indiscernible] trade promotion? Just any additional detail on how we might think about the price piece as it relates to coffee. Mark Smucker: Sure, Peter. It's Mark. So as I just mentioned, this time of year and obviously, speculation around weather and so forth is not unusual. And we had contemplated a list price decline at the end of the fiscal and wanted to just acknowledge that the commodity, the base commodity is down versus last year, but we have not crossed key thresholds that would actually justify nor have we seen sustained deflation at this point. So having not crossed key thresholds, we won't take a list price decline at this point. But we have passed along some of that deflation to consumers in the form of trade using those levers, which is pretty normal. We will continue to watch the crop the indications are having essentially finished the harvest that the crop is healthy and there could be a surplus. But at this point, since we have not seen that flow through, we'll just pause and continue to watch where the commodity goes and again, take a prudent approach. Peter Galbo: Great. Very clear and helpful. Tucker, I noticed that in the prepared remarks, you reinserted maybe a bit more forcefully commentary around share repurchase, just given where the leverage has landed, some of that being tied to obviously the tariff refund. But maybe it felt intentional. So just curious if you can expand a little bit on potential for share repurchase, what we might be able to see, it seems like potentially this year, which again seems like a bit of a pull forward. So I'll leave it there. Tucker Marshall: Peter, we remain committed to a balanced capital deployment model where we can reinvest in the business and also return capital to shareholders. So we are on the journey to pay down about $500 million of debt this year and achieve the 3x leverage ratio, which candidly we did in this first quarter. So we're a little ahead of expectations. And we remain committed to the quarterly dividend, which we recently announced an increase. And we now have the flexibility to begin contemplating share repurchases as we move forward. Operator: Our next question is coming from Tom Palmer from JPMorgan. Thomas Palmer: Maybe just to start out, I wanted to clarify some of the COGS inflation commentary. I think it's still mid-single digits, but 100 basis points higher than previously. How much of this is just related to coffee versus other costs moving around such as freight? Tucker Marshall: Yes. We are experiencing mid-single-digit inflation as you isolate the effects of green coffee tariffs and tariff refunds. And when you think of that sort of underlying mid-single-digit inflation, we're seeing an increase from our initial expectations coming into the year, largely driven by freight and some commodity and other ingredients, and that's been factored into our guidance for the balance of the year. Thomas Palmer: Okay. And then I wanted to ask on the Frozen Handheld and Spreads segment. We have seen stronger margins the last couple of quarters. There's also -- I know the plant start-up costs here and I think maybe higher marketing. What -- I guess, how sustainable do you think about the margins we've been seeing lately in this business? And at what point do we really start to see the preproduction costs at McCalla become a factor? Tucker Marshall: Yes. We delivered a nice first quarter, both from a top line momentum standpoint and also the profitability flow through as well. As we think about the business, we continue to support growth. We now expect sort of high single-digit growth for the Uncrustables brand, total company, total venture. And as we move forward, we'll continue to support the portfolio with ongoing marketing investments and also ensuring that we continue to bring production along as we support demand. And as you can see or you may have read, we are increasing preproduction expenses for the year in support of the McCalla, Alabama facility. And so the margin profile may take a slight step back in our next few quarters, but the profile continues to remain strong. Operator: The next question is coming from Robert Moskow from TD Cowen. Robert Moskow: Maybe I'll ask about retail pet food. I think you have volume mix for dog snacks flat and -- but Milk-Bone volume mix was positive. Can you tell me a little bit more about like how you're trying to manage that overall dog snacks business, which has been kind of challenged. What -- do you have any new views on kind of the tail brands like Pup-Peroni and things like that? Like are -- they've been a drag? Do you have any specific actions to try to stabilize them? Or could there be portfolio change longer term? Mark Smucker: Sure, Rob, it's Mark. Actually, really solid quarter on dog snacks and in particular, Pup-Peroni. We still feel that the category of dog snacks is a great one. So we do want to continue to participate with the brands we have. Pup-Peroni was up 5% in net sales and 7%. So it was a strong quarter, largely driven by some brand reset, fresh, sharper marketing and some specific -- some events at some of our larger customers that were helpful. And then Milk-Bone also had a good quarter, returning it to volume growth that was supported by innovation, winning in the soft and chewy segment, good marketing there. I do -- I think we've said in quarters past that we continue to focus on continuing to stabilize the biscuit segment through messaging around dog enjoyment and functional benefits. So more to come on that. But ultimately, very positive on the dog snacks category. And then it goes without saying we had a solid quarter on cat food as well. Robert Moskow: Okay. Pardon me for getting the brands wrong. So were any of the snack brands down then? Because if Pup-Peroni is up and Milk-Bone is up, then there must be something else down. Mark Smucker: Jerky Treats was down. Operator: Next question is coming from Chris Carey from Wells Fargo Securities. Christopher Carey: I wanted to ask about expectations going into fiscal Q2, quite a sharp reversal, yet it feels like momentum is good on Frozen Handheld, comps get easier, similar dynamic on pet Away From Home is doing well, supported by Uncrustables. Is this just a substantial reversal in coffee in Q2? Or is the Sweet Baked Snacks business expected to get worse going into Q2? Can you just help frame the outlook going into the next quarter and some of the key drivers in the delta relative to the run rates that you're at right post Q1? Tucker Marshall: Yes, Chris, we do believe that there is ongoing business momentum as we head into our second quarter. And we continue to acknowledge that coffee had great volume delivery in the first quarter and that we are being very prudent in our volume assumptions in the next 9 months on that portfolio. We're also sort of reversing a contemplated list price decline and bringing back the promotional activity to get to those right price points within coffee. We see ongoing momentum in the Frozen Handheld and Spreads portfolio, largely driven by the Uncrustables sandwich. And then really, the rest of the businesses are doing what we anticipated coming into this fiscal year. And so we believe that Q2 really is coming in line with sort of the expectations and has enabled us to support sort of our guidance revision for the year. Christopher Carey: Okay. And on the Sweet Baked Snacks business specifically, is -- was Q1 more or less in line with your expectations? I don't know why it felt maybe a touch light on the top line, but I think even in that response just now, you had suggested that the business, I suppose, is still running roughly in line with your expectations. Just give us a sense of where you see the business from a top line standpoint and also margins where there's been a bit of volatility in your ability to have more visibility into the segment? And just slightly connected, and apologies for, I guess, the third one here, but how are you thinking about broader portfolio? You've been nimble about making decisions when required. I just wonder what the current state of affairs as you digest your current lineup. Mark Smucker: Chris, it's Mark. The performance on Hostess in the quarter was essentially right where we expected it to be. So making progress on the stabilization journey, recognizing the journey itself is -- it's slow and steady, but we do feel good about the progress we made. And there were a couple of bright spots, honestly, Donettes has been performing really well, outperforming, particularly in the larger bag size as well as some innovation on like the mini churro doughnuts. Also the morning time occasion seems to be very strong. And that performance on Donettes was supported largely in the U.S. retail channels. We do recognize that the convenience channel as a whole continues to be challenges in terms of traffic and we have not lapped SKU rationalization. So that might be a little bit of what you're seeing, but we do -- and then some innovation like on Suzy Q's also performing well. So a couple of bright spots. And then our goal is just to continue to make incremental progress quarter-over-quarter. Operator: Your next question today is coming from Nik Modi from RBC Capital Markets. Nik Modi: One is just on coffee. When you think about what's going on between the out-of-home and in-home, it seems like while higher income consumers are certainly enjoying themselves out-of-home, some of the lower and middle-income consumers are feeling the pressure. And I'm just wondering if, Mark, do you think there's a marketing opportunity, kind of a value kind of conscious message that you can kind of be more aggressive with just to capture some of those consumers. So I just wanted to get your thoughts on that. And then I have a second question. Mark Smucker: Nik, I like that point. I do think there's an opportunity. And we've been pretty consistent in talking about this more than 70 cups, 70% of cups consumed are consumed at home. And the fact that our portfolio meets a variety of value points for the consumer. And so we agree with you. We do think that, that will continue to be an opportunity. I would note Folgers being one of our more affordable brands had some great performance around America 250. There was some specific SKUs that we supported over the holiday period in July. And so I appreciate the feedback. Nik Modi: Great. Helpful. And then I guess this one is kind of an off-the-wall question, but some observations from recent trade shows in the pet space would suggest devices are really apps and devices are really the big kind of growth drivers, right? I think treats have been under pressure, dog has been under pressure. And it just looks like with all kind of the AI enablement and kind of tracking your pet's health more in real time. I'm just curious now that leverage is where it is, like how do you think about capital allocation in the pet space? And is that something you've ever thought about? Mark Smucker: Well, it's a good question. Strategically, we have considered over time, where can we play and where can we win. And I would say our priority is going to remain on consumables, right, things that dogs eat and cats eat. So not that we wouldn't continue to think about that. But I would say right now, it's really focused on dog snacks and cat food. Operator: Next question is coming from David Palmer from Evercore ISI. David Palmer: Fiscal '27 is already going to be an investment year. Now it looks like you have the ability to lean in a little bit more, maybe $10 million to $20 million more, I guess, as of this morning. I'm wondering, I think people are used to feeling good about investment spend because they think that easy comparisons on that spend next year just increases visibility. But I think that people are equally doubtful that there's going to be a return on investment from growth spending in the food space. And I know you're leaning in on -- or you've in the past said you're leaning in on Uncrustables, dog treats and peanut butter. Uncrustables is crushing it. I wonder if you could give some detail on the types of spending you're making on those big 3 and maybe if the incremental isn't going into those, what you're spending that on? And I have a follow-up. Mark Smucker: Dave, it's Mark. Yes, we have been very disciplined in terms of where we spend dollars, and we have tools that enable us to evaluate how much bang for the buck we get and where we're going to get incremental ROI. And with Katie Williams on board as our new Chief Marketing Officer, she brings to bear also a lot of expertise in that area, along with all of our marketers that support each of our brands. And so I feel pretty confident that we can be choiceful and prudent with the dollars and put them where we're actually going to get a meaningful return. David Palmer: And when we look at the dog treats data, peanut butter data, those are 2 areas that I would say you're going to want to stabilize going into next year. Is there a sort of cadence that we should be looking at for improvement in those 2 areas that those are 2 of the 3? And any sort of color about the -- what you're doing with Uncrustables and the frozen for soft product that seems to be working. Tucker Marshall: Yes. Dave, we remain committed to advancing all of our brands. And as you noted, in dog treats, it's important for us to continue to build the brand, Milk-Bone and continue to advance its relevance in the treating occasion, and we will continue to do that. And that's certainly in our plans and has been an objective since we stepped into this fiscal year. It's important that we demonstrate our leadership in the spreads category, in particular, with peanut butter and fruit. And then as you think about Uncrustables, it continues to be a great story. It's going to demonstrate another year of growth. It continues to demonstrate growth in traditional U.S. retail channels. And also in the Away From Home channel. We're also acknowledging that we're bringing along innovation. We're supporting brand building, and we are increasing capacity in support of ongoing demand. So it continues to be a good story. And much of what you're asking is built into our outlook and is a part of our, so to speak, blocking and tackling as we build these brands and deliver organic growth. Operator: Your next question today is coming from Max Gumport from BNP Paribas. Max Andrew Gumport: First, I just wanted to go back to Uncrustables. So there has been a very clear reacceleration in track channel data. So I was hoping you could talk about consumer and retailer reception you're seeing with regards to the fridge friendly conversion and also how the innovation that you come out with is performing. Mark Smucker: Max, thanks for the question. It's a great follow-on from David's. Yes, Uncrustables, I would sum it up this way. All the fundamentals are right. In other words, we've got new marketing, the launch of fridge friendly. So obviously, you can keep the Uncrustables stored in your fridge for 5 days. So instant consumption, if you will. Price-pack architecture is right. So just competitively, I think we're sort of in the sweet spot there. The breadth of our offerings, whether that's new flavors, some of those flavors are limited time offerings, obviously, hitting on day parts with the higher protein offerings as well. And so just the combination of all of those things has led to also stronger distribution gains and our Away From Home business is performing well, still building out our C-store presence with the larger chain customers. So I would just say it's a tale of just doing all of those important things right. Max Andrew Gumport: Great. And then a follow-up on coffee. I'm hearing your commentary about how you paused the list price cut plans and you're choosing instead to lean more into promotional activity. Just curious on Folgers specifically, we are seeing the exact opposite dynamic in terms of seeing actually non-promoted list prices come down in recent weeks and then promotional activity, both in terms of frequency and depth of promotion actually get pulled back in recent weeks. So just curious how we should be reading the data for Folgers, whether this is maybe just some weekly volatility or if there's anything else going on? Mark Smucker: Yes. Our comment around just the promotional is really thinking about the full year, right? And so we have -- because of the pass-through category, wanting to make sure that customers and consumers are benefiting from a deflationary commodity even if we're not crossing thresholds that would dictate a list price decline. So it's a bit of both, right? There is some opportunity to hold prices at a slightly lower level, but also enhance promotions. Tucker Marshall: And Matt acknowledge that in the first quarter, Folgers did grow and it effectively was sort of in line with flattish Meow Mix. And we continue to be very prudent in our volume mix assumptions for the coffee portfolio as we move forward. And we've been taking that approach consistently over the last several fiscal years. Operator: Next question is coming from Peter Grom from UBS. Peter Grom: So I wanted to just follow-up on Sweet Baked Snacks. I mean your commentary at this situation especially will be helpful. But I'm just curious from a Q4 standpoint, how much is the... Crystal Beiting: Peter, sorry to interrupt you. We were just having a tough time hearing you. You sound very muffled. Peter Grom: Is it sounds better. Crystal Beiting: That is better. Peter Grom: Yes. Sorry about that. So I wanted to just follow up on Sweet Baked Snacks. And I guess I'm just trying to understand the C-store pressure. How much of it is the traffic dynamic you mentioned versus kind of lapping of the SKU rationalization? And then you reiterated plans for stabilization. The quarter was in line with your expectations. So in that context, how should we think about top line performance evolving from here? Mark Smucker: I'll start. The traffic dynamic is -- seems to be somewhat persistent. It's hard to really pin down exactly what's driving it, but I would submit that gas prices are part of that, right, where folks are filling up their tanks, but not necessarily continuing on into the store. I think that is part of the dynamic on the traffic. So I do think we are maybe cautiously optimistic that an improvement or reduction in prices at the pump might lead to better traffic, but I think we have to -- it remains to be seen. Tucker Marshall: And with respect to the top line, on a full year basis, we're probably advancing that business to being down low single digits, and that was as expected, as anticipated. Your first 2 quarters are going to be down more than that, largely driven by lapping the SKU rationalization of a year ago. And therefore, your back half is going to feel more flattish in terms of the cadence of top line flow. Peter Grom: That's very helpful. And then maybe pivoting to peanut butter and spreads still under a bit of pressure here. So can you maybe just unpack what you're seeing from a category standpoint and then as well from a market share perspective? And then you touched on some of the actions you're taking with -- around the Jif brand. So kind of curious how you see performance evolving from here. Mark Smucker: Sure, Peter. So we do still -- we're confident in our spreads business, both peanut butter and fruit spreads. We do consider them if you think holistically with our Frozen Handheld, right? PB&J sandwiches, it's all part of the same occasion in many cases. And the softness in peanut butter in the category, we don't believe is structural. And we still have a lot of activity on Jif. We recently have refreshed the packaging on the brand. We just launched some new marketing that's only a few weeks in market that is really focused on expanding usage occasions, largely around snacking. It's pretty heavy on social right now, but there will be some broadcast media there as well. And so continuing just to lead with brand building and share of voice is important. And then addressing consumer trends like shorter ingredient decks. We just launched Jif Simply, which is actually performing very well. It's a 2 to 3 ingredient offerings of Jif, right, very simple formulas. And then we also have 4 of the top 5 natural brands. So we still feel very good about peanut butter. And then fruit spreads, we have acknowledged there's been some competitive activity, but we're at the beginning stages of a brand refresh on fruit spreads as well, starting with packaging, and that is going to extend over a couple of years. Operator: Next question is coming from Steve Powers from Deutsche Bank. Stephen Robert Powers: I wanted to ask actually on the transformation office. It was something that you called out in June as a contributor to the '27 earnings algorithm. I didn't see an update on productivity in today's release and related comments. Just maybe an update on how you're thinking about productivity and the -- maybe the pipeline that's building even as we look -- think about beyond '27. Tucker Marshall: Steve, we continue to see benefits from our transformation office. The excellent work that the teams continue to do to deliver cost and productivity and also advanced ways of working, very much resonates in our P&L. And it's also supportive in terms of helping deliver earnings. It's supportive in helping offset cost inflation, and it's also supportive in reinvesting in key platforms of the company. Rob, under his leadership now, he will continue to advance the transformation efforts. We will provide updates over time. And likely in future events and forums, we can continue to bring you and others along in those efforts. Stephen Robert Powers: Okay. Very good. And if I could ask another follow-up on Uncrustables. The strength seems broad-based, but I'm just curious if there are particular pockets, whether retail, Away From Home, et cetera, where the business is particularly ahead of your expectations more so than others? And is it that demand side of the equation that's prompted you to accelerate Phase 2 of McCalla? Or is it the -- just the mere fact that you have a little bit more financial flexibility to accelerate it? Just curious as to the drivers of that decision. Tucker Marshall: Steve, we continue to be pleased with the momentum on that brand. Uncrustables coming into the fiscal year, total company, total venture, we had an outlook of sort of mid-single digits after achieving the $1 billion ambition last fiscal year. We've increased that outlook to sort of high single digits, really largely driven through the U.S. retail channels, but also acknowledging Away From Home channel as well has improved. And our ability to continue to support the growth in that business, we have made the decision to advance some preproduction expenses to start up capacity earlier in McCalla, Alabama. Operator: Next question is coming from Scott Marks from Jefferies. Scott Marks: I wanted to just ask about something that was noted in the prepared remarks as you were talking about the Frozen Handheld and Spreads business. I think you actually said you had lower marketing spend in the quarter. So wondering if you can help us understand why that was the case? And then as you think about the incremental marketing spend for the rest of the year, it sounds like Uncrustables is one area where you're going to put some of this incremental spend. So I was wondering if you could just help us understand that dynamic as well. Tucker Marshall: Yes. In the quarter, Frozen Handheld and Spreads has a little bit of lower marketing spend. That was largely driven by the timing of Jif, but we remain committed to the marketing spend for the full year. Scott Marks: Okay. Clear. And then just as we think about the Uncrustables brand, you made a number of comments about increased expectations for the year. You commented on some of the areas for growth there. As we sit here today, do you have kind of a size of the prize, let's say, for that brand in terms of what you think your total addressable market could be for that? How big could that brand get? And for how many years do you see mid-to-high single-digit growth as we look out from today? Mark Smucker: Scott, it's Mark. We have not made any statements about how far beyond $1 billion, we believe the brand can go. I think we're just right now focused on continuing to deliver. As time goes on, we may update our projections, but having come into the year, as Tucker just highlighted, with mid-single and now seeing some momentum, that is largely driven by all of our fundamentals being right and then just continuing to invest behind the brand. But I would just pause on making any future projections, but very, very comfortable with confidence in the continued growth of that brand and there being some really nice runway ahead, both in household penetration and just addressable market. Operator: Next question is coming from Alexia Howard from Bernstein. Alexia Howard: Can I start focusing on Café Bustelo. I mean it's obviously had incredible momentum over the last few years. 23% growth this quarter is obviously still incredibly impressive, although it's a bit of a slowdown, I think, from where we were a couple of quarters ago. Are there still distribution opportunities? My understanding is that it's still fairly concentrated regionally in the U.S. Would you expect this kind of momentum to continue out to the foreseeable future? Mark Smucker: Alexia, thank you for that question. Bustelo has been a rocket ship. And I would note that the -- almost every quarter, there's been -- or every quarter, there's been double-digit growth. Sometimes it's been a little bit lumpy. So I wouldn't necessarily take the 23% as necessarily a slowdown, but it is there's a ton of runway on Bustelo. We do aspire -- it's now a #6 brand in the category. We aspire to get it into the top 4. As you point out, there is distribution expansion opportunities. We continue to expand the brand in Central and Western regions. And we've launched new roast profiles. Those have performed very well. And then recently, just some other ready-to-drink options. So the authentic Latin heritage of that brand has really unlocked something unique with Gen Z and millennial consumers that are looking for something that's a little different and -- and I would say I mentioned our Game Face marketing campaign around the soccer event during the summer that was -- that really helped to drive sales as well. So just a really exciting brand that we continue to invest in. Alexia Howard: Great. And as a follow-up, can I just ask more broadly, what are the key sort of puts and takes or uncertainties both that could surprise positively or negatively as we look out through the rest of '27. It sounds though there might be a bit of conservatism on coffee volumes understandably. Obviously, where coffee input costs is kind of an unknown at this point. But if you had to prioritize freight costs, obviously, we don't know where those are headed. If you had to prioritize the top sort of things that could surprise positively or negatively, what would those be? Tucker Marshall: Alexia, we feel that our top line and bottom line guidance ranges are balanced. But as you think about opportunities, it would be ongoing momentum in your coffee portfolio where we've been conservative on volume mix assumptions, better-than-expected sort of volume assumptions across your frozen handheld portfolio, maybe better-than-anticipated sort of expectations in your pet portfolio as well. I think some of the downside would be consumers' reaction to sort of the ongoing dynamic environment by which sort of they live. I think also you've got the ongoing cost inflation environment that we continue to navigate as well would be another area of potential sort of downside. But those would be sort of the drivers to the up and maybe some of the drivers to the down. Operator: Our next question is coming from Rob Dickerson from U.S. Bancorp. Rob Dickerson: Just a question on Uncrustables and the new facility. Is the new facility -- and you might have stated this before, and I just don't remember, so apologies if so. But is the new facility just adding kind of standard issue capacity to what you got to do with the brand, what you've already done with the brand? Or is there anything within this build that could add other variations, the product with the brand overlay, I don't know, thinking of like Mini Muffin equivalent, right, like Uncrustable minis that kids can take back to school with a big back-to-school activation next year or something like that? That's all. Mark Smucker: Rob, it's Mark. This phase of the Alabama facility, it's a second phase. It's already been built out. Basically turning it on requires us to staff it, right, and then activate it. But it is focused on base -- our core format of crimped, soft bread, Uncrustables. Rob Dickerson: Okay. Fair enough. And then I guess just a lot of questions have been asked. So thinking through kind of the next few months, obviously, we're essentially already in the back-to-school period and then we are going into Halloween, Fall Bake. Is there anything just give you the opportunity to kind of note of like strategy into back-to-school very broadly speaking, like we have some products we will be pushing more right around the back-to-school period. There's activation on different flavor on Hostess and Halloween. Anything like that just that we should be aware of? Mark Smucker: Nothing specific to call out, but a resounding yes in terms of making sure that we are taking advantage of the key promotional periods, holidays and so forth. So we'll -- as stuff comes in the market, we'll be sure to point that out to you guys. Operator: Thank you I will now turn the conference call back to management to conclude. Mark Smucker: Thank you for joining us this morning. As we have shared in our prepared remarks, our fiscal year 2027 first quarter results highlight the strength of our differentiated portfolio, disciplined execution against our strategic priorities and the investments we continue to make in our brands and capabilities. Our strategy is working and the strong foundation we have established gives us confidence in our ability to deliver long-term growth and increase shareholder value. We hope many of you will be able to join us in Boston at the Barclays Global Consumer Staples Conference in 2 weeks. A live webcast of our presentation on September 8 at 12:45 p.m. Eastern can also be accessed from our Investor Relations website. Have a great day. Operator: Everyone, this concludes our conference call for today. Thank you all for participating, and have a nice day. All parties may now disconnect. Before you buy stock in J.M. 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While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has positions in and recommends J.M. Smucker. The Motley Fool has a disclosure policy. Smucker (SJM) Q1 2027 Earnings Call Transcript was originally published by The Motley Fool

The J.M. Smucker Co. SJM delivered a strong start to fiscal 2027, supported by improved profitability, pricing actions and momentum across key brands. The company reported adjusted earnings per share of $3.24, up 71% year over year, beating the Zacks Consensus Estimate of $2.21. Net sales increased 5% year over year to $2,219.3 million, topping the consensus estimate of $2,105 million. Growth was driven by higher net price realization, favorable volume/mix and tariff refunds received during the quarter. The J. M. Smucker Company price-consensus-eps-surprise-chart | The J. M. Smucker Company Quote SJM’s first-quarter adjusted gross profit increased 28% year over year to $950.2 million. Adjusted gross margin expanded to 42.8% from 35.2% in the prior-year quarter, driven by tariff refunds, higher net price realization and favorable volume/mix. Excluding the $115 million benefit from tariff refunds, adjusted gross margin still improved 240 basis points, reflecting underlying progress in profitability.Adjusted operating income increased 46% year over year to $540.7 million, with adjusted operating margin improving to 24.4% from 17.5%. The rise reflected higher adjusted gross profit, partially offset by increased selling, distribution and administrative expenses, including higher marketing and administrative investments. Smucker continued to invest in its largest growth platforms during the quarter. Uncrustables delivered 12% net sales growth at the total company level, driven by double-digit volume/mix growth, record quarterly volume and increased household penetration.Cafe Bustelo also posted strong momentum, with total company net sales increasing 23%. Management noted that the brand continues to expand household penetration and remains focused on increasing its presence in the at-home coffee category. SJM’s U.S. Retail Coffee segment generated net sales of $807.8 million, up 13% year over year. Higher pricing contributed 10 percentage points of growth, while volume/mix increased 2 percentage points, driven by Dunkin’ and Café Bustelo. Segment profit rose 124% to $300 million, aided by tariff refunds and pricing actions.The U.S. Retail Frozen Handheld and Spreads segment posted net sales of $499.3 million, up 3% year over year. Growth was supported by Uncrustables, while peanut butter and fruit spreads faced pressure. Segment profit increased 13% to $129.7 million.The U.S. Retail Pet Foods segment recorded net sales of $371.7 million, up 1% year over year, supported by cat food growth. Segment profit declined 2% to $98.9 million due to higher costs and increased marketing spending. Sweet Baked Snacks sales plunged 7% to $236.5 million, pressured by lower volume/mix in snack cakes and breakfast products.Away From Home sales rose 3% to $203.7 million, supported by Uncrustables and fruit spreads. Segment profit increased 19% to $61.2 million, reflecting tariff refunds and favorable volume/mix. Smucker raised its fiscal 2027 outlook following the better-than-expected first-quarter performance. The company now expects net sales to decline 1% to 2% compared with its previous outlook for a 3% to 4% drop.Adjusted earnings per share guidance was increased to $10.50-$11.00 from $9.75-$10.25. The updated outlook reflects stronger momentum, improved sales expectations and a net benefit of approximately $60 million related to tariff refunds after planned investments in selling, distribution and administrative expenses.The company also raised its free cash flow outlook to approximately $1,100 million from $1,000 million. Management expects adjusted gross profit margin of approximately 38.75% and capital expenditures of $325 million for fiscal 2027. SJM generated operating cash flow of $425.7 million in the quarter compared with cash used for operating activities of $10.6 million in the prior-year period. Free cash flow improved to $337.3 million from negative $94.9 million, reflecting higher earnings and lower working capital requirements.The company reduced debt by approximately $230 million during the quarter and reached its leverage target of at or below 3.0X net debt to adjusted EBITDA earlier than expected. Management remains focused on debt reduction while maintaining investments in growth initiatives, dividends and potential share repurchases. Image Source: Zacks Investment Research Shares of this Zacks Rank #3 (Hold) company have rallied 22.6% over the past three months compared with the industry’s growth of 12.6%. The Chefs' Warehouse, Inc. CHEF is a distributor of specialty food and center-of-the-plate products across the United States, Canada and the Middle East. CHEF currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for The Chefs' Warehouse’s current fiscal-year sales and earnings per share (EPS) implies growth of 10.6% and 33.7%, respectively, from the year-ago figures. CHEF delivered a trailing four-quarter earnings surprise of 30.4%, on average.The Vita Coco Company, Inc. COCO, a leading beverage company that develops, markets and distributes coconut water and other plant-based beverages, currently sports a Zacks Rank #1. COCO delivered a trailing four-quarter earnings surprise of 21.9%, on average.The Zacks Consensus Estimate for The Vita Coco Company’s current fiscal-year sales and EPS calls for growth of 31.6% and 64.7%, respectively, from the year-ago figures.Darling Ingredients Inc. DAR, a global developer and producer of sustainable natural ingredients derived from edible and inedible bio-nutrients, currently carries a Zacks Rank of 2 (Buy). The Zacks Consensus Estimate for Darling’s current fiscal-year sales suggests 11.5% growth from the prior-year levels. The consensus estimate for current fiscal-year EPS stands at $6.98, which implies a substantial improvement from the year-ago period. DAR delivered a trailing four-quarter earnings surprise of 38.9%, on average. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The J. M. Smucker Company (SJM) : Free Stock Analysis Report Vita Coco Company, Inc. (COCO) : Free Stock Analysis Report Darling Ingredients Inc. (DAR) : Free Stock Analysis Report The Chefs' Warehouse, Inc. (CHEF) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Performance was significantly bolstered by an $0.84 per share benefit from tariff refunds, which management is partially reinvesting into brand support and operational scaling. Coffee volume growth remained resilient despite higher pricing, though management maintains a 'prudent' low single-digit volume decline outlook due to volatile green coffee commodities and consumer environment uncertainty. The Uncrustables brand continues to serve as a primary growth engine, prompting an upward revision of full-year growth expectations to high single digits driven by retail and Away From Home momentum. Dog snacks saw a solid recovery, specifically with Pup-Peroni growing 5% in net sales following a brand reset and sharper marketing execution at major retailers. Sweet Baked Snacks stabilization remains a 'slow and steady' journey, with performance meeting internal expectations despite persistent traffic challenges in the convenience channel. Management is utilizing excess cash flow to accelerate debt repayment, achieving a 3x leverage ratio ahead of schedule and opening the door for potential share repurchases. Full-year guidance assumes mid-single-digit cost inflation, recently adjusted upward by 100 basis points due to rising freight and specific ingredient costs. Management has paused planned list price declines in coffee, opting instead to pass through deflationary benefits via targeted trade promotions until key commodity thresholds are sustained. Preproduction expenses for the McCalla, Alabama facility are being accelerated to bring new Uncrustables capacity online earlier than originally planned. The Sweet Baked Snacks segment is expected to remain down low single digits for the full year, with the first half of the year will be down as the company laps prior-year SKU rationalization, with the second half appearing more flattish in terms of top-line flow. Capital allocation will prioritize a balanced model of reinvestment in core consumables and returning capital to shareholders through dividends and newly flexible buyback options. A $0.24 per share differential between the Q1 tariff benefit and full-year expectations reflects a choice to reinvest a portion into SG&A expenses—including administrative build-out for the McCalla facility and incremental marketing—while utilizing the remaining balance to pay down debt. Convenience channel traffic remains a headwind for the Hostess portfolio, potentially linked to high gas prices deterring in-store discretionary spending. The Transformation Office continues to drive productivity gains used to offset inflation, though specific dollar targets for the current period were not disclosed. Portfolio strategy remains strictly focused on consumables; management explicitly downplayed expansion into pet tech or devices despite industry trends. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management explained they have not seen the sustained deflation or crossed the 'key thresholds' necessary to justify a formal list price decline. They are instead using trade promotion levers to maintain competitive price points while monitoring the health of the upcoming coffee harvest. While Q1 margins were strong, management warned of a 'slight step back' in the coming quarters due to increased preproduction expenses at the McCalla facility. Long-term margin health is supported by high single-digit growth for Uncrustables and disciplined marketing spend. Management views the 23% growth as part of a 'rocket ship' trajectory with significant runway remaining in Central and Western U.S. regions. The brand is currently the #6 coffee brand, with a strategic goal to move into the top 4 by leveraging its unique appeal to Gen Z and millennial consumers. The business is performing in line with expectations, with 'bright spots' in Donettes and morning-time occasion products. Management acknowledged that lapping SKU rationalization and C-store traffic declines will continue to weigh on the first half of the year.

One of the more delicious developments on the stock exchange on Wednesday was the latest quarterly earnings report from J.M. Smucker (NYSE:SJM). The storied food company delivered a convincing beat-and-raise quarter, but this was tempered somewhat by a large one-off payment from the U.S. federal government. Still, there's much that was impressive about Smucker's opening frame of its new fiscal year. Let's sit at the table, grab some utensils, and tuck into this one. Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue » Image source: Getty Images. Smucker's first quarter of fiscal 2027 was topped by a net sales figure of $2.2 billion, representing a 5% improvement over the same period of 2026. Breaking that down by reporting segment, Smucker's No. 1 in terms of revenue also posted the hottest growth. This is U.S. retail coffee, with net sales of almost $808 million; aided by both higher volumes and increased prices -- particularly for the Cafe Bustelo and Dunkin brands -- that figure was 13% higher year over year. The U.S. retail frozen handheld and spreads business, which houses the jams and other condiments Smucker is most readily identified with, was the No. 2 revenue generator. Higher pricing also benefited this business, as its net sales climbed 3% higher to slightly over $499 million. Also rising 3% was the company's "away from home" (i.e., sales to institutions and non-retail outlets); net sales came in at almost $204 million in the first quarter of 2027. Trailing behind and wagging its tail was U.S. retail pet foods, inching 1% higher to almost $372 million. The one laggard was sweet baked snacks. Net sales for these offerings slumped due to softness in the snack cakes and breakfast sub-categories. Higher pricing for snack cakes and donuts couldn't save the day; overall net sales declined by 7% to under $237 million. Top-line items such as unallocated corporate revenue and intersegment eliminations comprised the remainder of Smucker's overall net sales for the period. Moving all the way down the profit and loss statement, Smucker's bottom-line leap was more impressive than any of those sales gains. Net income not under generally accepted accounting principles (non-GAAP, or adjusted) rocketed 70% higher to almost $347 million. That shakes out to $3.24 per share, but we have to attach a note to that number. $0.84 of it is due to the refunds Smucker received from the U.S. government for tariffs it paid last year. These were imposed by the Trump administration but were quashed by the Supreme Court in February, putting the feds on the hook to return the considerable funds that many American companies spent. In Smucker's case, it had to pay increased duties for imports of raw materials such as coffee beans. So the aforementioned convincing beats weren't as powerful as they first appeared. The consensus analyst estimate for adjusted profitability was $2.21 per share, and that for net sales was a shade over $2.1 billion. Still, if we strip that $0.84 tariff payback out of the equation, the $2.40 we're left with is still notably above the collective pundit projection. So kudos to Smucker for its better-than-expected performance. A tip of the hat is also due the company for raising its full-year net sales guidance, indicating that the quarter wasn't just a one-time, tariff-return-enhanced blowout. Management continues to expect a decrease in the metric for fiscal 2027 compared to the previous year, but a more modest one. The new forecast is for a dip of 1% to 2%; the preceding estimate was a decrease of 3% to 4%. Meanwhile, adjusted net income should land at $10.50 to $11 per share; formerly, Smucker was estimating $9.75 to $10.25 per share. The updated range, however, includes a roughly $0.60-per-share benefit from the tariff refund (the company aims to reinvest some of it in marketing and distribution). While the company showed impressive growth this past quarter, at least some of its potential is dependent on price increases -- and this is a sensitive time for such moves, given consumer anxiety about rising costs. I also don't see continued and notable upside in volumes for any of Smucker’s businesses, even the well-performing coffee division. To me, this stock is a steady, safe income play, as it’s a dependable cash generator that consistently raises its shareholder payout. These days, it has a streak of dividend raises spanning 25 years. In fact, Smucker's quarterly disbursement qualifies as a high-yield dividend, as the yield is currently 3.4%. Before you buy stock in J.M. Smucker, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and J.M. Smucker wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $443,461!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,307,633!* Now, it’s worth noting Stock Advisor’s total average return is 973% — a market-crushing outperformance compared to 213% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of August 26, 2026. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends J.M. Smucker. The Motley Fool has a disclosure policy. J.M. Smucker's Adjusted EPS Jumped 71%. Take Out the Tariff Refund and Here's What the Quarter Actually Looked Like. was originally published by The Motley Fool

This article first appeared on GuruFocus. Fiscal Period: Fiscal 2027 first quarter. Revenue: Financial results detailed in the morning's press release and management's prepared remarks. Earnings: First quarter earnings results released in the morning's press release. Non-GAAP Measures: Used to evaluate performance internally. Release Date: August 26, 2026 Warning! GuruFocus has detected 6 Warning Sign with SJM. Is SJM fairly valued? Test your thesis with our free DCF calculator. For the complete transcript of the earnings call, please refer to the full earnings call transcript. JM Smucker Co (NYSE:SJM) received an $0.84 per share tariff refund benefit in Q1, providing a financial cushion to reinvest in the business and pay down debt. The company achieved its 3x leverage ratio target ahead of schedule, enhancing financial flexibility and enabling contemplation of share repurchases. Uncrustables brand momentum is strong, with growth expectations raised to high single digits, driven by successful marketing, fridge-friendly packaging, and expansion in both retail and Away From Home channels. Cafe Bustelo continues to deliver impressive double-digit growth (23% in Q1), supported by distribution expansion and successful marketing campaigns, positioning it as a top-tier coffee brand. Dog snacks, particularly Milk-Bone and Pup-Peroni, showed solid performance with volume growth and successful brand resets, indicating stabilization in the pet portfolio. The company is investing in growth areas like McCalla, Alabama facility preproduction and marketing, demonstrating commitment to long-term brand building and capacity expansion. JM Smucker Co (NYSE:SJM) faces mid-single-digit COGS inflation, which is 100 basis points higher than initial expectations, driven by freight and commodity costs, pressuring margins. Coffee volume is expected to decline by low single digits for the full year due to commodity volatility and a cautious consumer environment, despite recent volume growth. The company paused a planned list price decline for coffee, instead relying on promotional activity, which may not fully offset competitive pressures or consumer price sensitivity. Sweet Baked Snacks (Hostess) continues to face challenges, particularly in the convenience channel due to traffic declines and SKU rationalization, with only gradual stabilization progress. Peanut butter and fruit spreads remain under pressure, with category softness and competitive activity, though the company is taking actions like new marketing and product innovation. Higher SG&A expenses, including administrative costs and preproduction expenses for McCalla, will partially offset the tariff refund benefit, impacting near-term profitability. Q: Can you provide a better sense of what's incorporated in the $0.24 differential between the $0.84 tariff refund benefit received in fiscal 1Q and the $0.60 benefit anticipated for the full year, net of incremental costs and spend back? How much is higher admin expenses for the build-out of McCalla versus higher brand spend or something else?A: Tucker Marshall, CFO: We received an $0.84 benefit from tariff refunds in the first quarter and are choosing to reinvest a portion in SG&A expenses, largely through administrative expense, along with some incremental marketing spend and advancing preproduction expenses associated with our McCalla, Alabama facility, all in support of the Uncrustables brand. We would use the balance of earnings or cash to pay down debt. Q: You're still looking for coffee volume to decrease for the full year by low single digits. You've seen coffee volume actually increase despite the higher pricing more recently. With the understanding that elasticity has been modest as prices went up, why would we expect volume to weaken even as coffee shelf prices moderate from here?A: Mark Smucker, CEO: Because the commodity has continued to be very volatile, which particularly this time of year is not unusual, we feel it's prudent given not only the commodity, but category dynamics and the consumer environment to think about the coffee business from a prudent perspective. We had great results in the quarter on all three of our key brands with Bustelo growing, supported by the Game Face campaign around soccer, and Dunkin' having relative pricing in line with where it needs to be. Q: How are you thinking about the recent run-up on the more speculative nature of Super El Nino? How are the recent moves in coffee prices impacting the decision on pricing? Had you planned a larger list price decrease now you're calling back on it?A: Mark Smucker, CEO: We had contemplated a list price decline at the end of the fiscal year but wanted to acknowledge that the base commodity is down versus last year. However, we have not crossed key thresholds that would justify nor have we seen sustained deflation at this point. So we won't take a list price decline, but we have passed along some of that deflation to consumers in the form of trade using those levers. We will continue to watch the crop; indications are the harvest is healthy and there could be a surplus, but since we have not seen that flow through, we'll pause and take a prudent approach. Q: You reinserted more forcefully commentary around share repurchase, given where the leverage has landed, some of that being tied to the tariff refund. Can you expand on the potential for share repurchase?A: Tucker Marshall, CFO: We remain committed to a balanced capital deployment model where we can reinvest in the business and also return capital to shareholders. We are on the journey to pay down about $500 million of debt this year and achieve the 3x leverage ratio, which we did in this first quarter, a little ahead of expectations. We remain committed to the quarterly dividend, which we recently announced an increase, and we now have the flexibility to begin contemplating share repurchases as we move forward. Q: Can you clarify some of the COGS inflation commentary? It's still mid-single digits but 100 basis points higher than previously. How much of this is related to coffee versus other costs moving around such as freight?A: Tucker Marshall, CFO: We are experiencing mid-single-digit inflation as you isolate the effects of green coffee tariffs and tariff refunds. When you think of that underlying mid-single-digit inflation, we're seeing an increase from our initial expectations coming into the year, largely driven by freight and some commodity and other ingredients, and that's been factored into our guidance for the balance of the year. Q: We have seen stronger margins in the Frozen Handheld and Spreads segment the last couple of quarters. How sustainable do you think about the margins we've been seeing lately in this business? And at what point do we really start to see the preproduction costs at McCalla become a factor?A: Tucker Marshall, CFO: We delivered a nice first quarter, both from a top line momentum standpoint and profitability flow through. We now expect high single-digit growth for the Uncrustables brand, total company, total venture. As we move forward, we'll continue to support the portfolio with ongoing marketing investments and ensuring that we continue to bring production along as we support demand. We are increasing preproduction expenses for the year in support of the McCalla, Alabama facility, so the margin profile may take a slight step back in our next few quarters, but the profile continues to remain strong. Q: Can you tell me more about how you're trying to manage the overall dog snacks business, which has been kind of challenged? Do you have any new views on tail brands like Pup-Peroni? Could there be portfolio change longer term?A: Mark Smucker, CEO: Actually, it was a really solid quarter on dog snacks and in particular, Pup-Peroni. We still feel the category of dog snacks is a great one, so we do want to continue to participate with the brands we have. Pup-Peroni was up 5% in net sales, a strong quarter largely driven by some brand reset, fresh, sharper marketing, and some specific events at some of our larger customers. Milk-Bone also had a good quarter, returning to volume growth supported by innovation, winning in the soft and chewy segment. Jerky treats was down. We continue to focus on stabilizing the biscuit segment through messaging around dog enjoyment and functional benefits. Q: There's been a very clear reacceleration in track channel data for Uncrustables. Can you talk about consumer and retailer reception regarding the fridge friendly conversion and how the innovation is performing?A: Mark Smucker, CEO: All the fundamentals are right. We've got new marketing, the launch of fridge friendly, so you can keep the Uncrustables stored in your fridge for five days for instant consumption. Price-pack architecture is right, so competitively we're in the sweet spot. The breadth of our offerings, whether that's new flavors, limited time offerings, or hitting on day parts with the higher protein offerings, has led to stronger distribution gains. Our Away From Home business is performing well, still building out our C-store presence with the larger chain customers. Q: Can you help frame the outlook going into the next quarter and some of the key drivers in the delta relative to the run rates that you're at right post Q1? Is this just a substantial reversal in coffee in Q2, or is the Sweet Baked Snacks business expected to get worse? For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus. Release Date: August 26, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. JM Smucker Co (NYSE:SJM) delivered a strong first quarter with net sales up 5%, including a 1% volume/mix contribution, and raised its full-year outlook for net sales, adjusted EPS, and free cash flow. Key growth platforms showed robust performance: Uncrustables achieved 12% net sales growth with record volume and household penetration, while Cafe Bustelo grew 23% and is now the sixth-largest at-home coffee brand. Adjusted gross margin expanded 760 basis points (240 basis points excluding tariff refunds), and adjusted EPS surged 71% year-over-year, reflecting strong underlying business momentum. The company achieved its leverage target of at or below 3.0x net debt to EBITDA ahead of schedule, paying down $230 million of debt in the quarter and maintaining investment-grade ratings. JM Smucker Co (NYSE:SJM) increased its dividend for the 25th consecutive fiscal year and raised free cash flow guidance to approximately $1.1 billion, demonstrating disciplined capital deployment. Net sales are still expected to decline 1-2% for fiscal 2027, primarily due to anticipated green coffee deflation being passed through to consumers via lower prices. Sweet Baked Snacks segment net sales decreased 7%, impacted by prior-year SKU rationalization and continued challenges in the convenience channel, with segment profit down 13%. The company faces mid-single-digit inflation across its cost basket (excluding green coffee and tariffs), which is roughly 100 basis points higher than previously anticipated. SD&A expenses are projected to increase by approximately 8% due to higher administrative costs, increased marketing investments, and pre-production expenses for the McCalla facility expansion. Dog snacks net sales declined 2%, driven by a decrease in the Jerky Treats brand, and the company noted ongoing volatility in green coffee prices and a dynamic external environment. Warning! GuruFocus has detected 6 Warning Sign with SJM. Is SJM fairly valued? Test your thesis with our free DCF calculator. Q: What drove the strong first-quarter performance, and how did it impact the full-year outlook?A: CEO Mark Smucker reported that the company delivered a strong first quarter that exceeded expectations, with net sales increasing 5%, including a 1 percentage point contribution from volume/mix. This performance was driven by momentum across key growth platforms like Uncrustables, Cafe Bustelo, Meow Mix, and Milk-Bone. Based on this strength, the company raised its full-year outlook for net sales, adjusted earnings per share, and free cash flow. Q: Can you provide details on the financial results and the impact of tariff refunds?A: CFO Tucker Marshall detailed that adjusted gross profit increased $207 million, or 28%, including $115 million of tariff refunds. Excluding these refunds, adjusted gross profit increased $92 million, or 12%. Adjusted earnings per share was $3.24, an increase of 71%, which included a $0.84 benefit from tariff refunds. The company raised its full-year adjusted EPS guidance to a range of $10.50 to $11.00, an increase of $0.75 at the midpoint. Q: What is the company's strategy for its key growth platforms, and what are the early results?A: Mark Smucker highlighted that the company is prioritizing resources behind Uncrustables, Cafe Bustelo, Meow Mix, and Milk-Bone. Uncrustables delivered 12% net sales growth with record quarterly volume and household penetration, while Cafe Bustelo saw net sales increase 23%, making it the sixth-largest brand in the at-home coffee category. Meow Mix continued to lead in dry cat food, and Milk-Bone returned to volume growth, with all four brands expected to deliver volume growth in fiscal 2027. Q: How is the company managing the volatile coffee commodity environment and pricing?A: Management noted that net price realization in the Coffee segment benefited from price increases implemented in August of the prior fiscal year. They have begun passing lower green coffee commodity costs back to consumers through trade investments. The company remains disciplined in navigating the volatile commodity environment and would consider additional pricing actions in a sustained deflationary environment. Excluding tariff refunds, they anticipate segment profit margin in the high 20s for the fiscal year. Q: What is the status of the company's deleveraging plan and capital deployment priorities?A: Tucker Marshall confirmed that the company achieved its leverage target of at or below 3.0 times net debt to EBITDA earlier than anticipated, currently standing at 2.9x. In the first quarter, they paid down approximately $230 million of debt. The company remains committed to paying down at least $500 million of debt in fiscal 2027 while maintaining flexibility to evaluate share repurchases, and they increased the dividend for the 25th consecutive fiscal year. Q: Can you elaborate on the performance of the Sweet Baked Snacks segment and the Hostess Donettes brand?A: Mark Smucker explained that Sweet Baked Snacks net sales decreased 7%, primarily due to prior-year SKU rationalization and convenience channel declines. However, US retail channels saw low-single-digit growth, driven by double-digit growth for Hostess Donettes. The company is focusing on expanding distribution and innovation, including new offerings like Donettes Churro Mini Donuts, and expects segment profit margin improvement for fiscal 2027. Q: What are the key drivers behind the updated fiscal 2027 net sales guidance?A: The company now expects net sales to decrease between 1% and 2%, an improvement of approximately 2 percentage points at the midpoint, or roughly $180 million. This reflects a $100 million improvement in volume/mix and an $80 million improvement in net price realization. The increase is primarily driven by stronger expectations in US Retail Coffee and US Retail Frozen Handheld and Spreads, with volume/mix now anticipated to be approximately flat to the prior year. Q: How are cost trends evolving, and what is the expectation for gross margin?A: Tucker Marshall stated that excluding tariff refunds, the company continues to expect mid-single-digit cost deflation driven by green coffee. However, excluding green coffee, tariff expenses, and tariff refunds, they now anticipate mid-single-digit inflation across the remainder of the cost basket, an increase of roughly 100 basis points versus previous expectations. Full-year adjusted gross profit margin is expected to increase roughly 385 basis points to approximately 38.75%. Q: What is the outlook for the second quarter of fiscal 2027?A: For the second quarter, the company expects net sales to decrease 3.0% to 4.0%, with a low-single-digit decrease in net price realization as lower green coffee costs are passed through. Volume/mix is expected to be down low-single-digits. Adjusted earnings per share is expected to increase in the low 20% range, driven by higher adjusted gross profit in US Retail Coffee and lower interest expense. Q: How is the company addressing the performance of the Jif brand and the spreads portfolio?A: Mark Smucker noted that the company recently introduced the first major update to Jif's iconic identity in more than 30 years, supported by a new snacking-focused campaign. They have also expanded the portfolio with Jif Simply, which combines the brand's equity with a simpler recipe. These actions are aimed at strengthening and modernizing the spreads portfolio to meet evolving consumer needs through innovation and brand building. For the complete transcript of the earnings call, please refer to the full earnings call transcript.