Earnings call transcript: J.M. Smucker Q3 2025 results and stock dip

J.M. Smucker Company (SJM) reported its third-quarter earnings for fiscal year 2025, revealing a mixed bag of results. The company exceeded earnings per share (EPS) expectations with $2.61 against a forecast of $2.36, but missed revenue forecasts, posting $2.19 billion compared to the anticipated $2.23 billion. The stock reacted negatively, falling 4.21% to $109.16 in pre-market trading. According to InvestingPro data, SJM maintains strong fundamentals with a 38.9% gross profit margin and has raised its dividend for 15 consecutive years, demonstrating consistent shareholder returns despite market volatility. Current analysis suggests the stock is trading near its Fair Value.

Key Takeaways

• J.M. Smucker’s EPS surpassed expectations by 10.6%.
• Revenue fell short by $40 million, influenced by challenges in the Sweet Baked Snacks segment.
• The company revised its full-year sales guidance downward.
• An $800 million goodwill write-down and a $200 million impairment charge were recorded for the Hostess acquisition.
• The stock price dropped 4.21% following the earnings announcement.

Company Performance

J.M. Smucker’s overall performance in Q3 2025 was mixed, with a slight decline in comparable sales of over 1%. The company’s coffee business remained strong despite record-high coffee prices, while the Pet segment showed low single-digit growth after resolving a $30 million supply chain disruption. The Sweet Baked Snacks segment faced challenges, contributing to the company’s revenue miss. InvestingPro data reveals the company has maintained steady growth with a 7.8% year-over-year revenue increase and generates substantial free cash flow of $913.5 million. For deeper insights into SJM’s financial health and growth prospects, subscribers can access the comprehensive Pro Research Report, which covers over 1,400 US stocks.

Financial Highlights

• Revenue: $2.19 billion, down from the forecast of $2.23 billion.
• Earnings per share: $2.61, exceeding the forecast of $2.36.
• Comparable sales: Declined slightly over 1%.

Earnings vs. Forecast

J.M. Smucker’s EPS of $2.61 exceeded the forecast by $0.25, a 10.6% surprise. However, revenue fell short by $40 million, primarily due to a $20 million miss in Q3 and a $20 million reduction in Hostess portfolio expectations. This mixed performance reflects ongoing challenges in certain segments, despite strong performance in others.

Market Reaction

Following the earnings release, J.M. Smucker’s stock fell 4.21% to $109.16 in pre-market trading. The stock remains within its 52-week range, with a high of $127.59 and a low of $98.77. The decline reflects investor concerns over the revenue miss and the impact of the goodwill write-down and impairment charge.

Outlook & Guidance

The company revised its full-year sales guidance from 8% to 7.25% at the midpoint, citing the $20 million miss in Q3 and reduced expectations for the Hostess portfolio. Looking forward, J.M. Smucker anticipates potential above-algorithm earnings growth but remains cautious due to uncertainties around green coffee inflation. The company plans additional coffee pricing actions in the first half of the next fiscal year. InvestingPro analysis shows the company maintains a stable financial position with an Altman Z-Score of 3.2 and analysts project continued profitability. The stock offers a compelling 4% dividend yield, and with 55 years of consistent dividend payments, demonstrates strong commitment to shareholder returns. Get access to more exclusive financial metrics and detailed analysis through the Pro Research Report.

Executive Commentary

CEO Mark Smucker expressed confidence in the Hostess acquisition despite the challenges, stating, "We remain very confident in the Hostess acquisition." He also highlighted the resilience of the coffee business: "Despite record high coffee costs, we’ve been pleased with the performance of the coffee business." Smucker addressed commodity pricing, noting, "We do expect the commodity over time to normalize."

Risks and Challenges

• Supply chain disruptions, particularly in the Pet segment, could impact future performance.
• Competitive activity in fruit spreads and Sweet Baked Snacks may pressure margins.
• Green coffee inflation poses a risk to cost management and pricing strategies.
• The $800 million goodwill write-down and $200 million impairment charge reflect challenges with the Hostess acquisition.

Q&A

During the earnings call, analysts questioned the challenges surrounding the Hostess acquisition and the reasoning behind the impairment charge. Executives clarified the impact of coffee commodity cyclicality and assured that snacking trends remain unaffected by GLP-1 drugs.

Full transcript - JM Smucker (NYSE:SJM) Q3 2025:

Conference Operator: Good morning, and welcome to the J. M. Smucker Company’s Fiscal twenty twenty five Third Quarter Earnings Question and Answer Session. This conference call is being recorded and all participants are in a listen only mode. Please limit yourselves to two questions and re queue if you have additional questions.

Conference Moderator: I’ll now turn the conference call over to Crystal Baiting, Vice President, Investor Relations and Financial Planning and Analysis. Thank you. You may begin.

Crystal Baiting, Vice President, Investor Relations and Financial Planning and Analysis, J.M. Smucker Company: Good morning, and thank you for joining our fiscal twenty twenty five third 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 and 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 may 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, Chair of the Board, President and Chief Executive Officer, and Tucker Marshall, Chief Financial Officer. We will now open the call for questions. Operator, please queue up the first question.

Conference Moderator: Thank you. The question and answer session will begin at this time. Our first question today is coming from Andrew Lazar from Barclays (LON:BARC). Your line is now live.

Andrew Lazar, Analyst, Barclays: Great. Thanks so much. Appreciate it. Maybe to start, comparable sales in fiscal 3Q declined a bit more than 1%. And by our math, comparable sales need to rise by a bit more than 1% in your fiscal 4Q to hit the revised 25% sales target.

Obviously, you see improvement in Pet as the disruptions are now behind you, But it seems that Sweet Baked Snacks will probably decline at a somewhat similar rate maybe as the third quarter. So I guess I’m trying to get

Ken Goldman, Analyst, JPMorgan: a better sense of where else you’re seeing improvement that underpins the expected sequential sales improvement in 4Q?

Tucker Marshall, Chief Financial Officer, J.M. Smucker Company: Andrew, good morning. You did lay that out correctly. We do align with your math. But I do want to share that we do see the sequential improvement on a comparable basis largely driven within our pet portfolio as you have noted, along with better than expected outlook within our coffee portfolio as well.

Andrew Lazar, Analyst, Barclays: Got it. Thank you for that. And then I was hoping, Tucker, maybe you could just maybe help us unpack and maybe help quantify a little bit the individual buckets that drove the fiscal twenty twenty five comparable sales guidance revision? I know there were a couple of puts and takes in there. Thanks so much.

Tucker Marshall, Chief Financial Officer, J.M. Smucker Company: Yes, Andrew. Our guidance revision from 8% at the midpoint on a reported basis down to 7.25% at the midpoint of the new guidance range. That change reflects about $60,000,000 And really, what it it relates to are two things. First, it largely is driven by the miss in our second or third quarter, excuse me, the net $20,000,000 miss. And then also the call down in Hostess by approximately $20,000,000 in our fourth quarter as well.

Andrew Lazar, Analyst, Barclays: Got it. Great. Thanks so much.

Conference Moderator: Thank you. Next (LON:NXT) question is coming from Ken Goldman from JPMorgan. Your line is now live.

Ken Goldman, Analyst, JPMorgan: Hi. Thank you. You’ve talked about how you’re still very optimistic on Hostess in the category, but you also took I don’t know this is accounting, but you took an $800,000,000 write down today on goodwill as well as a $200,000,000 impairment charge. And that’s approaching 20% of the price you paid for Hostess. So I wanted to back up a second.

Over the years, you’ve had some very successful acquisitions, right, including Folgers, Cat Food, Pet Treats. You’ve done a great job with Cafe Bustelo. Obviously, a lot of things are working quite well. But I think it’s also fair for some investors to kind of ask about a little bit about the process of some of your acquisitions. And no one bats a thousand.

But as you progress further with your ownership of this Hostess asset, just taking that step back, how comfortable are you with the general M and A process that Smucker adheres to? And are there any tweaks you would consider making to your strategy in light of maybe Hostess taking a little bit longer to work than what you might have thought?

Mark Smucker, Chair of the Board, President and Chief Executive Officer, J.M. Smucker Company: Ken, it’s Mark. Thanks for the question. We remain very confident in the Hostess acquisition, right? We still believe that it was the right acquisition driven by obviously an iconic brand. It’s a leading brand.

The underlying trends in snacking and specifically sweet snacking still bode well for, the category. I think as we talked at CAGNY last week, it’s fair to say that we recognize that the performance has not been where we wanted, primarily driven by two things. One, the category temporarily being down driven by a bit more selective consumer. And then although the integration or the cutover itself went very well, acknowledging that we’ve had some executional missteps that are less related to the integration and more related to distribution, merchandising and just the way that we executed our normal playbook not being quite up to our own standards. That said, obviously, going back to our confidence in the brand, we outlined five, and in the prepared remarks as well as last week, five very specific actions that we’re taking, to stabilize the brand.

And obviously, this morning announcing some new leadership changes, which are really intended to accelerate the pace of implementation on those five pillars that we discussed. I’m very confident in that team and that leadership to continue to drive that and use our proven commercial playbook to continue to stabilize that business. So although we haven’t given time frames and so forth in terms of returning to growth, we still do feel very bullish about, the brand. And obviously, part of that was the portfolio evolution of getting more focused on Hostess, divesting the value brands as well as Voortman. So still feel very good about it.

Appreciate the question. And we’ll continue to report back to our shareholders on the progress of those five pillars and how the leadership is delivering against it.

Ken Goldman, Analyst, JPMorgan: And thank you, Mark, for that transparency. I really do appreciate it. Tucker, if I can ask a different question quickly. You talked last week at CAGNY how fiscal ’twenty six, too early to obviously give any numbers, but you said you’re hoping for or you would expect it to be above algo before the impact of elasticity related to green coffee inflation. I think there were some questions coming out about, again, in light of or with respect to the fact that you can’t give exact numbers, would you expect to be more on algo, below algo, all in, or is it just too early to say at this point?

Tucker Marshall, Chief Financial Officer, J.M. Smucker Company: Ed, thank you. It’s too early to call it, right? We’re in the early innings of our planning phase for next fiscal year. What we wanted to do last week at CAGNY was outlined in the elements that we were considering. And we did share that we could see a path to an above algorithm year for adjusted earnings per share.

However, due to green coffee inflation and the impact associated with with price elasticity of demand, it will be a meaningful headwind as we enter into FY ’26. And it’s just too early to call whether there’ll be a level of earnings growth or not.

Andrew Lazar, Analyst, Barclays: Thank you so much.

Mark Smucker, Chair of the Board, President and Chief Executive Officer, J.M. Smucker Company: And if I may, just on coffee, I think it’s important to just remember that despite the fact that we’re at these record high coffee costs, we’ve been pleased with the performance of the coffee business in total and the consumer response to, obviously pricing, but of course, our support of the brand, our merchandising, our marketing as well, and just reminding ourselves that at home coffee is still very healthy in terms of consumption and also being by far the most affordable way to consume coffee compared to all other channels or other formats. So I think just given the fact that we play across the value spectrum and we do offer the consumer a range of choice and value, we still feel very good about the coffee category overall.

Conference Moderator: Thank you. Next question is coming from Peter Galbao from Bank of America. Your line is now live.

Peter Galbao, Analyst, Bank of America: Hey, guys. Good morning. Thanks for taking the questions. Mark, Tucker, just going back to the comments from last week around coffee, you noted that you’ll have to kind of or you think you’ll have to take additional pricing actions. Just curious if there’s anything more you can share with us post the June and October price increases when we might think about seeing an additional price increase and any parameters you want to put around potential magnitude just as we begin to contemplate both the fourth quarter and 2026?

Tom Palmer, Analyst, Citi: Yes.

Mark Smucker, Chair of the Board, President and Chief Executive Officer, J.M. Smucker Company: Peter, we haven’t laid out any specific timing. But as you will recall, we take pricing when our physical costs dictate that. So we’re using all of our hedging instruments and so forth. But really, it isn’t until we take the coffee into inventory as green that we would start to price for that. So although we haven’t laid out when other pricing is is going to happen, we do expect it’s going to happen in the next fiscal year, probably in the first half.

Peter Galbao, Analyst, Bank of America: Got it. Thanks for that, Mark. And Tucker, just to go back on the impairment and Hostess, I guess, I just want to understand kind of the dynamics of obviously taking the impairment relative to the 4% top line long term number you’ve laid out for Sweet Baked Snacks. Whether that’s changed at all or whether just your thoughts around profitability for that business longer term have changed that necessitated kind of the impairment, because obviously something there has changed over the longer term, I would think, to you know, discount the cash flows that much more back. So any additional color there would be helpful.

Thanks very much.

Tucker Marshall, Chief Financial Officer, J.M. Smucker Company: Yeah. Peter, the impairment charges that we announced today and recognized really relate to the recent underperformance of the Hostess brand and overall portfolio. As you know, we stepped into this fiscal year with an outlook for $1,400,000,000 of top line for that portfolio. And we shared in our prepared remarks that the outlook is now 1,200,000,000.0. And the Voortmann impact or the Voortmann divestiture is only 65,000,000 of that change.

It’s just a demonstration of the impacts that we’re seeing not only in the category, but also across execution that Mark spoke to. Our focus today is the leadership changes that we’ve announced, also along with stabilizing the business or the portfolio through those five key pillars and eventually returning the portfolio to growth over time. Currently, we have not walked away from our long term outlook of four percent for the business. But right now, the focus is on stabilization and advancing through those pillars.

Peter Galbao, Analyst, Bank of America: Great. Thank you.

Conference Moderator: Thank you. Next question is coming from Chris Carey from Wells Fargo (NYSE:WFC). Your line is now live.

Chris Carey, Analyst, Wells Fargo: Hey, good morning, everyone. I’m going to have a confirmation, like a question to confirm, Ken Goldman’s question and then a second follow-up. So just on the response to Ken’s question around fiscal twenty twenty six, Are you the comment that you made when you say a level of earnings growth, are you saying you’re unclear as to whether you will grow earnings in fiscal twenty twenty six or you’re unclear as to how much you will grow earnings in fiscal twenty twenty six. So maybe an unfair question in a way because I don’t think you said one way or the other, but I just couldn’t tell as in that response you were saying you were unclear if you were going to grow earnings or just how much. So any context there might be helpful, then a follow-up.

Tucker Marshall, Chief Financial Officer, J.M. Smucker Company: Chris, it’s difficult to call FY twenty six outlook today. We can certainly do that on our fourth quarter earnings call as we walk through our and complete our planning process. What I want to acknowledge is, is that at CAGNY, we outlined the elements that we were considering for our earnings and for our top line. And in that, we saw the opportunity to be above algorithm growth for FY ’20 ’6. But what we’ve also shared is that the green coffee commodity continues to trade at record highs and will be a meaningful headwind to our financial outlook for next fiscal year.

And that’s where we stand today.

Chris Carey, Analyst, Wells Fargo: Okay. Yes, I realized that was kind of an unfair question, but figured I’d ask. Regarding the coffee business, in your prepared remarks, you said that elasticities were actually trending in line or better than your expectations. I think in the quarter it was a bit worse than the 0.5%. Can you maybe just unpack that comment and what you’re seeing?

And I thought coffee margins were also quite a bit better than expectations in the quarter. Have you just not been hit yet by some of this inflation that we’re seeing? Or is the pricing covering? Just any context there as well. Thanks so much.

Mark Smucker, Chair of the Board, President and Chief Executive Officer, J.M. Smucker Company: Chris, it’s Mark. First, I would just go back to the comments I made earlier about, how the at home coffee performs at being a very affordable, you know, a fraction of the cost of other channels, right? So versus, say, a coffee shop or an energy drink, for example, coffee is a brewed cup of coffee, even a K cup, is a fraction of the cost. So it is very affordable, and consumers continue to consume coffee. And we remain very confident in our ability to continue to invest in the brands, offer the consumer a range of options from value to premium and choice.

And we do expect from a coffee commodity perspective that these things are cyclical. And although we are at higher costs, we do expect the commodity over time to normalize. Yes, if I might just add one comment is that we manage through as a leader where we always as we think about taking price, we want to recover dollar for dollar on a profit basis. And to the extent that we support margins, it’s pulling the other levers at our that are available to us, such as price pack architecture, our hedging strategy, formulation flexibility, those types of things. So from a pricing perspective, again, it’s just recovering dollar for dollar, but then supporting our margin through those other levers.

Chris Carey, Analyst, Wells Fargo: Okay. All right. Thanks guys. Appreciate it.

Conference Moderator: Thank you. Next question today is coming from Robert Moskow from TD Cowen. Your line is now live.

Conference Moderator0: Hi. Thanks for the question. I guess I’ll ask fiscal twenty twenty six in a different way and Tucker maybe you could answer it differently or not. But I would imagine by division coffee profits most likely down year over year in ’26 because of the higher cost. Pet food probably up, I think, because you have these stranded overhead reductions.

And then Sweet Baked Snacks, I mean, I would imagine you could have profit growth because of these synergies. But then again, I don’t know if it’s going to get reinvested. And I also don’t know if the synergies all flow through to that segment or not. So if there’s any way you could maybe just address more broadly on those three, I’d appreciate it.

Tucker Marshall, Chief Financial Officer, J.M. Smucker Company: Yes. Rob, it’s difficult to give you the puts and takes by business for our financial plan for next fiscal year when we haven’t completed that journey. But what I can offer is, is that, your your framework is is a framework, and you’ll have to make your own estimates or assumptions. Two is I would just acknowledge that stranded overhead, does impact pet, but it impacts other elements of the total company. And I would acknowledge too that not all synergies flow directly to the Sweet Bakes Snacks segment.

Some will flow into the corporate area as well. We did share on the synergy front that we are tracking toward the hundred million dollar objective, by the end of fiscal year twenty six. We will probably exit this fiscal year with about $70,000,000 toward that $100,000,000 run rate, leaving about $30,000,000 in $26,000,000 So hopefully those are just some additional points that will help your modeling.

Conference Moderator0: It does. Thanks. And maybe a follow-up. For fourth quarter, the guidance implies a pretty substantial decline in profit year over year. Is a lot of this happening in coffee because of the price cost relationship or is it more spread out by division?

Conference Moderator1: Hello?

Tucker Marshall, Chief Financial Officer, J.M. Smucker Company: Yes. So I think it’s a couple of things as you walk through that. I just was checking the charts. Yes, you will see that coffee in the fourth quarter will step into its highest cost basket out of the four quarters. You will see continued investment in frozen handheld and spreads and you see the continued call down in Sweet Baked Snacks.

Conference Moderator0: Great. Okay. Thank you.

Conference Moderator: Thank you. Next question is coming from Tom Palmer from Citi. Your line is now live.

Tom Palmer, Analyst, Citi: Good morning. Thanks for the question. Maybe I could just open, following up what you just said on frozen handhelds and spreads. I think at the start of the year you discussed around $50,000,000

Conference Moderator2: or $0.35

Tom Palmer, Analyst, Citi: earnings in kind of earnings overhang from startup costs and other investments. A year ago when you were going through the preproduction costs, I think we’ve gotten some quantification by quarter. Just any help in terms of what we saw in the third quarter in terms of those investments to then maybe how to think about the fourth quarter? Thanks.

Tucker Marshall, Chief Financial Officer, J.M. Smucker Company: Sure. So you are correct, Tom. We did call at the beginning of this fiscal year 035 headwind or investment within that portfolio really broken down into thirds. One was supporting promotion and merchandising. Two was supporting incremental marketing on the portfolio.

And then three was just the ongoing McCullough manufacturing expenses, whether they be, preproduction expenses or just the overhead absorption. You know, as you think about sort of the the quarters, the fourth quarter really came in line with with the prior year, maybe slightly better, because pre prod did come in a little preproduction expenses, excuse me, did come in a bit favorable. As you think about the fourth quarter, we’ll probably do slightly better year over year, but we will continue to see the elevated marketing as we support the brand.

Tom Palmer, Analyst, Citi: Okay. Thanks for that. And then on the Pet segment, you had the comment about low single digit growth in the third quarter, excluding both the contract manufacturing and the disruptions. I just want to clarify the disruptions, do they linger into 4Q or should it be a clean quarter? And then to what extent, if at all, did the disruptions cause you to pull back on merchandising and other brand support that might ramp in 4Q?

Thanks.

Tucker Marshall, Chief Financial Officer, J.M. Smucker Company: Yes. So you are correct. We did call out a $30,000,000 supply chain disruption primarily impacting our U. S. Retail Pet Food segment.

That did hit us in the third quarter as I’ve noted. It is behind us. We do view it as one time in nature. We are working through being back on shelf in stock, full distribution, primarily on the Milk Bone brand. That did happen in the third quarter.

There is some element of that in the fourth quarter, but nothing material or significant to call out. And I just would acknowledge that there’s really no sequential or delay or incremental investment that we’re going to see in the fourth quarter on Pet.

Tom Palmer, Analyst, Citi: Thank you.

Conference Moderator: Thank you. Next question today is coming from Alexia Howard from Bernstein. Your line is now live.

Conference Operator: Good morning, everyone. Can I ask just coming back to Hostess, how can you be sure from the data that you’re seeing that this is indeed due to price elasticity and value seeking behavior? I think you mentioned selective behavior is pressuring the category and not due to some more permanent shift of the demand curves, perhaps due to GLP-1s or consumer interest in longevity and concerns about heavily processed foods and disease. Just curious about what it is about the data that makes you confident that this is just a temporary problem rather than something a little bit more long term?

Mark Smucker, Chair of the Board, President and Chief Executive Officer, J.M. Smucker Company: Sure, Alexia. We from a GLP-one standpoint, we update our data at least monthly, right? And we look at trends and all the impacts on snacking generally and sweet snacking specifically. And we continue to not see material impact to the category. So I would guide you back to the comments just around a more cautious consumer, convenience channel being down in general, gas prices have been elevated and so people are just having a bit less extra discretionary change in their pocket.

I think that is clearly part of it. And so we don’t see we are not attributing to that to the decline in the category to the GLP one and we do acknowledge our own, executional missteps, which we are obviously in the process of changing and improving. I would also just highlight that doughnuts continue to perform very well and the breakfast occasion is performing well as well. So just to highlight that.

Conference Operator: Thank you very much. And just as a quick follow-up, the declines in GIF and fruit spreads, can we just get a quick update on what’s causing that and how quickly that might be resolved? Thank you and I’ll pass it on.

Mark Smucker, Chair of the Board, President and Chief Executive Officer, J.M. Smucker Company: Yes, sure. GIF is performing very well. We had a little bit of a down quarter. I would just remind you that we’ve had a really strong first half of the year. And so there’s just a little bit of timing there, but we expect the Jeff brand to continue to perform as it has.

So I wouldn’t expect anything out of the ordinary. And you’ll see that the share, the share prices or the share performance has been pretty consistent. So feeling good about peanut butter in general. Then on fruit spreads, as I think we’ve mentioned, we’ve had a bit of competitive activity, and we are now turning on back on some pretty strong marketing and advertising. And so would expect to see some stabilization in the fruits beds category as well in our brand.

Conference Operator: Great. Thank you. I’ll pass it on. Appreciate it.

Conference Moderator: Thank you. Our next question is coming from Scott Marks from Jefferies. Your line is now live.

Conference Moderator2: Hey, good morning. Scott Marks here on for Rob Dickerson. Thanks for taking my questions. First one I wanted to ask, just turning back to the sweet snack category. I guess given the current dynamics, everything that you’ve spoken to today and certainly over the past few weeks, have you seen any maybe pushback from retailers just in terms of Plan A Grain maybe the new channels you’re speaking to, any hesitancy from those folks to add more from the sweet snack category?

Mark Smucker, Chair of the Board, President and Chief Executive Officer, J.M. Smucker Company: No, Scott, we haven’t. In fact, we’re working pretty closely with our retailers to continue to improve the shelf set. And one of the things that continues to drive performance in Sweet Baked Snacks is innovation, limited time offerings, and we have a strong pipeline of that continuing to come online as we move forward and into obviously the new fiscal year. So honestly, our conversations and as we get into the new mod resets in the coming months, we feel pretty confident about how we’ll show up on shelf.

Conference Moderator2: Got it. Appreciate that. And then second question from me. I know there’s been obviously a lot of discussion about coffee. Obviously, the inflation has been evident and tied into inflation that we see also in cocoa recently.

And questions about sustainability of supply and stability of cocoa growing regions, let’s say. Do you feel there is anything to that with regards to the coffee commodity just in terms of maybe concerns about sustainability or need to kind of expand production more globally? Just wondering if you can kind of speak to that and what’s been happening.

Mark Smucker, Chair of the Board, President and Chief Executive Officer, J.M. Smucker Company: Got it. If I understand your question, I think this really comes down to just the cyclical nature of the commodity, right? And what you’re seeing in the commodity is simply fundamentals. We’ve had a supply deficit. This is the fifth year in a row where there’s been a relative undersupply.

World demand for coffee continues to be strong. But we do view that as we’ve been in the coffee category for almost fifty year fifteen years, one five, the commodity is cyclical. And we do expect, just as historical, that over time, the commodity will moderate. And there’s been a significant amount of progress with ourselves participating both in supporting smallholder farmers and helping them improve their their crops in various regions around the world as well as breeding programs that are looking at coffee plants that are actually more resistant to climate change. And there’s been some good progress there as well.

So I think the right steps are being taken from a crop standpoint across the industry. And we would expect some normalization in the crop over time.

Conference Moderator2: Got it. I’ll pass it on. Thanks so much.

Conference Moderator: Thank you. Next question is coming from Max Gompert from BNP Paribas (OTC:BNPQY). Your line is now live.

Conference Moderator1: Hey, thanks for the question. Last quarter, you discussed an expectation for Coffee segment profit margin to be in a mid to low 20% range in the second half of this year. You just printed a 28% margin. Could you help frame what led to that much better than expected result? I think there was a call out on favorable property taxes, which I’m not sure would have been anticipated.

But really, I’m looking for more color on the interplay of pricing, commodity inflation, elasticity, deleverage and then other cost savings? Thanks very much.

Tucker Marshall, Chief Financial Officer, J.M. Smucker Company: Max, coffee had a nice quarter, third quarter from a top line perspective and that did materialize in the margin. And the margin did come in slightly better than we anticipated. And that’s largely due to the way that price elasticities are holding in and we’re delivering, you know, volume mix. It’s also the way that we continue to manage the cost structure of the overall business portfolio. And so you’re just seeing that favorability come through in the in the third quarter.

We would just remind you that as you step into the fourth quarter, that will come down as we, basically now have the highest cost basket in our fourth quarter. So we will see that come down for from the third to the fourth quarter sequentially. And that’s largely just driven again due to the underlying green coffee commodity costs and also our continued price elasticity of demand factor.

Conference Moderator1: Thanks. And then just going back to the $1,000,000,000 impairment charge for Sweet Baked Snacks. So it sounds like you mentioned that your $1,400,000,000 sales target for this year has come down

Conference Moderator2: to $1,200,000,000

Conference Moderator1: but I’m trying to get a better and also that you’re still sticking to the 4% long term growth rate. So I’m trying to get a better sense for that what is driving the $1,000,000,000 impairment charge. It doesn’t feel to me like a $200,000,000 cut to sales in one year would be the driver of that. And I think it’s really much more based on your long term free cash flow expectations for this business. So could you provide a bit more context on what has changed that has led to that impairment charge today?

Thanks very much.

Tucker Marshall, Chief Financial Officer, J.M. Smucker Company: Yes, Max. So the impairment charges are broken down into two components. The first component is the business unit charge. And the business unit charge really is impacted by the top line performance. So as you, see the diminishing top line performance, it obviously impacts profit.

And the impairment charge associated with the business unit is at the profit level. Two is, is that we’re not anticipating to recover that base. So we will be stabilizing from this reduced base and then growing at some point over time. And currently, we do remain, focused on the long term, 4% growth. And then at the brand level, that is all driven by sales.

And so the sales performance is also getting caught up into that component of the impairment charge as well. Hopefully, that helps.

Conference Moderator1: Yes. Thanks very much. I’ll pass it on.

Conference Operator: Thank you. We’ve reached the

Conference Moderator: end of our question and answer session. I’d like to turn the floor back over for any further or closing comments.

Mark Smucker, Chair of the Board, President and Chief Executive Officer, J.M. Smucker Company: Well, thank you all for your time and joining our call this morning. It was great to see many of you at CAGNY last week where we were excited to share our strategy and why we are confident in the future of the company. And I think that came through loud and clear. Our legacy business continued to deliver positive results in our third quarter, building on our strong year to date performance. And we are taking action to return the Hostess brand to growth, including the leadership change we announced today and the progress we are making on advancing our Sweet Baked Snacks strategy.

We are delivering positive results in a dynamic operating and consumer environment, and I am confident in our strategy and believe that we continue to be in a strong position to deliver long term growth and increase shareholder value based on the continued momentum that you’ve seen and our ongoing portfolio reshape. All of this would not be possible without our outstanding employees. So as always, I would like to thank them for their continued hard work and dedication to our company. I hope you all have a great day. Thank you.

Conference Moderator: Everyone, that does conclude today’s conference call. You may disconnect and have a wonderful day. We thank you for your participation today.

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