Q2 2024 J M Smucker Co Earnings Call

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Speaker 1: Good morning and welcome to the J.M. Smucker Company's fiscal 2024 second quarter earnings question and answer session. This conference is being recorded and all participants are listed in only mode.

Good morning, and welcome to the J M Smucker company's fiscal 'twenty 'twenty four second quarter earnings question and answer session.

This conference is being recorded and all participants are in a listen only mode.

Speaker 1: Please limit yourselves to two questions and re-queue if you have additional questions.

Please limit yourselves to two questions and re queue. If you have additional questions.

Speaker 1: I'll now turn the conference call over to Aaron Broholm, Vice President Investor Relations. Please go ahead, sir.

Now I'll turn the conference call over to Aaron brought home Vice President of Investor Relations. Please go ahead Sir.

Speaker 2: Good morning, and thank you for joining our fiscal 2024 second quarter earnings question and answer session.

Good morning, and thank you for joining our fiscal 2024 second quarter earnings question and answer session.

Speaker 2: 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.

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 J M. Smucker Dot com we.

Speaker 2: We will also post an audio replay of this call at the conclusion of this morning's Q&A session.

We will also post an audio replay of this call at the conclusion of this morning's Q&A session.

Speaker 2: 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 uncertainty.

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.

Speaker 2: 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.

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.

Speaker 2: Participating on this call are Mark Smucker, Chair of the Board, President and Chief Executive Officer, and Tucker Marshall, Chief Financial Officer.

Participating on this call are Mark Smucker Chair of the Board, President and Chief Executive Officer, and Tucker Marshall Chief Financial Officer.

Speaker 2: We will now open up the call for questions. Operator, please queue up the first question. Thank you. The question.

We will now open up the call for questions. Operator, please queue up the first question.

Thank you the question and answer session will begin at this time.

Speaker 1: If you're using a speakerphone, please pick up a handset before pressing any number.

We're using a speakerphone please pick up the handset before pressing any numbers. So do you have a question. Please press star one on your telephone.

Speaker 1: For you have a question, please press star one on your telephone. If you wish to withdraw your question, please press star two. Properter assistance, please press star zero. As a reminder, please let me yourself to two questions during the Q&A.

If you wish to withdraw your question. Please press star two for operator assistance. Please press Star Zero as a reminder, please limit yourselves to two questions. During the Q&A session should you have additional questions you may re queue and the company will take questions. As time allows our first question today is coming from Angela Zhao from Barclays.

Speaker 1: Should you have additional questions, you may re-queue and the company will take questions as time allows. Our first question today is coming from Andrew Lazar from Barclays. Your live is now live.

Your line is now live.

Great. Thanks, so much good morning, everybody.

Good morning.

Speaker 3: First off, part of, I think the company's initial 8.5 to 9.5% comparable sales growth target for fiscal 24, I think was inclusive of what we'd consider sort of true underlying organic growth of 4% with 3 points of volume growth.

I guess first off.

Part of I think the company's initial eight and a half to nine 5% comparable sales growth target for fiscal 'twenty. Four I think it was inclusive of what we would consider sort of true underlying organic growth of 4% with three points of volume growth.

Speaker 3: pricing came in a bit higher than we thought this quarter and volume perhaps a bit lower. So curious if the 4% is still sort of your expectation and if the contribution from volume is still the same around 3%.

Pricing came in a bit higher than we thought this quarter and volume, perhaps a bit a bit lower.

So curious if the 4% is still sort of your expectation and if the contribution from volume is still the same around three points of that.

Speaker 2: Andrew Good morning. So underpinning our comparable net sales growth of eight and a half to nine percent, after isolating the co-manufacturing volume in the Giff Pina Butter product recall, we are still anticipating four points of top line growth. And within that four points is three points of volume mix and one point of price.

Andrew Good morning, so underpinning our comparable net sales growth of eight 5% to 9% after isolating the co manufacturing volume and the Jif peanut butter product recall, we are still anticipating four points of top line growth.

Within that four points is three points of volume mix and one point of price.

Speaker 3: for that. And then I think you said you're expecting host to fails this fiscal year of about 650 million. Obviously if one just annualizes that it's 1.3 billion and we know that's below the one and a half that you initially talk about. But my sense is there are a number of puts and takes to consider and that it's kind of an oversimplification just to annualize the 650. So I was hoping you could go into that a little bit and give us a sense of what the puts and takes are. So we have a sense of what what you see is the sort of the true let's call it annualized sales outlook for this.

Great. Thanks for that and then.

You said, you're expecting hostess sales this fiscal year of about $650 million. Obviously, if one just annualize that it's $1 3 billion and we know that's below the one and a half that you initially talked about but my sense is there are a number of puts and takes to consider in that it's kind of an over simplification just to annualize. The 650. So I was hoping you could go and.

To that a little bit and give us a sense of what the puts and takes are so we have a sense of what what you see as the sort of the true let's call. It annualized sales outlook for this business right now.

Speaker 2: So Andrew, the $650 million reflex calendarizing the host's performance on the Smucker Fiscal Year.

So Andrew the $650 million reflects calendar rising the hostess performance on the smucker fiscal year.

Speaker 2: The second component is it reflects the time of ownership since the transaction closing. And so there is one week of lost sales in the six month period. We approximate that to be about $25 million.

The second component as it reflects the time of ownership since the transaction closing.

So there is one week of lost sales and the six month period.

We approximate that to be about $25 million.

And then also we are.

Assuming the business in a bit of a seasonality or a period of low across October November December and January as you think about the holiday season. The holiday Bank and then also as you think about new year's resolutions. So thank you would want to account for that in your <unk> and then lastly, there is a few transitory dynamic.

Speaker 2: December and January is you think about the holiday season, the holiday bake, and then also as you think about New Year's resolutions So they could want to account for that in your annualization And then lastly, there's a few transitory dynamics that the company is working through One it just relates to competition and competition's return to supply on shelf

The company is working through one just relates to competition and competition has returned to supply on shelf and two is some dynamics with the customer around getting product from the back of store under shelf and so those will restore here in the coming months and will also support the <unk>, but as we.

Speaker 2: And two is some dynamics with the customer around getting product from the back of store on the shelf. And so those will restore here in the coming months and will also support the annualization.

Speaker 2: But as we've noted in our prepared remarks, we are committed to the top line growth of 4% for this portfolio. And we do see growth in fiscal 25 and accretion from the bottom line standpoint as well.

Of note in our prepared remarks, we are committed to the top line growth of 4% for this portfolio and we do see growth in fiscal 'twenty, five and accretion from the Bottomline standpoint as well.

Speaker 1: Thank you. Next question is coming from Ken Goldman from JPMorgan. Your line is now live.

Thank you next question is coming from Ken Goldman from Jpmorgan. Your line is now live.

Speaker 4: Hi, thank you. Just a follow up on the comment that was just made about competition. Just so I understand a little bit more clearly.

Hi, Thank you just a follow up on the comment that was just made about competition, just so I understand a little bit more clearly.

Speaker 4: You know, that competitor, I assume we're talking about McKee, you know, they've been back on shelf for over a year now. Their supply chain issues were lapping their recovery there. So, I'm just curious a little bit why this would be new or something that would be cited as sort of a, I guess, a non-recurring headwind. And it also doesn't really go away, I assume. It's something that's going to be there for a while. So, just kind of wanted to make sure I understood that comment a little bit.

You know that competitor I assume we're talking about Mckee.

Back on shelf for over a year now that their supply chain issues that we're lapping the recovery there. So I'm just curious a little bit why this would be new or something that would be cited as sort of a.

The nonrecurring headwind and it also doesn't really go away I assume it's something that's going to be there for a while so just kind of wanted to make sure I understood that comment a little bit.

Dan It's mark.

Speaker 5: In your question, I think one thing where you're right is we are laughing some of that and we were aware of some of those issues as we obviously took on the business.

Yeah.

Your question I think one thing where you're right as we are lapping some of that.

And we were aware of some of the some of those.

She is as we obviously took on the business. So you know we don't have a ton of concern there.

Speaker 5: So, you know, we don't have a ton of concern there. We're, ultimately, we're extremely excited about this business. We think that it is a perfect fit at a very good time for our company as we have, you know, completely reshaped our portfolio, gotten exceptionally focused on the brands and the categories that really matter and are gonna drive growth along with the capabilities that we have been...

Ultimately we're extremely excited about this business, we think that it is a perfect fit and a very good time for our company as we have.

Completely reshaped our portfolio got.

Exceptionally focused on the brands and the categories that really matter and youre going to drive growth along with the capabilities that we have had been building.

So it.

Speaker 5: It is a little bit of timing. And, you know, if you think about the hostess business and what it brings to the table, again, a leading brand in a growing category.

It is a little bit of timing.

And if you think about the how does this business and what it brings to the table again, a leading brand in a growing category.

Speaker 5: We've got some very strong capabilities that we have built, they've got some great capabilities in innovation and steep C-store and so we just are very optimistic about the combination of these businesses, the complementary nature of the capabilities and our ability to continue to

We've got some very strong capabilities that we have built they've got some great capabilities in innovation and steep C store and so we just are very optimistic.

Mistake about the combination of these businesses the complementary nature of the capabilities and our ability to continue to grow the business and.

Speaker 4: grow the business and the expectation that it will be accretive in our next fiscal year. Okay, thank you for that. And then, can you...

And the expectation that it will be accretive in our next fiscal year.

Okay. Thank you for that and then.

<unk>.

Can you walk us through a little bit of.

Speaker 4: sort of how you see the cadence of gross margins for the rest of the year. Obviously, we can kind of back into the implied number, but you had your,

Sort of how you see the cadence of gross margins for the rest of the year, obviously, we can kind of back into the implied.

You had your Europe.

Speaker 4: I think in six years on an adjusted basis, you talked about pricing, lower coffee costs, and volume mix that helped. But your guidance implies that it'll be a little bit lower in the back half, which also I think suggests that maybe some of what helped 2Q was somewhat non-recurring. So just curious, is that the right way to think about it? And if so, you know, which of those benefits to 2Q might fade a little bit? Or am I thinking about that the wrong way?

I think in six years on an adjusted basis, you talked about pricing lower coffee costs and volume mix that helped but your guidance implies that it'll be a little bit lower in the back half, which also I think suggests that maybe some of what helped <unk> was somewhat nonrecurring. So just curious is that the right way to think about it and if so you know what.

Each of those benefits to two Q might fade, a little bit or am I thinking about that the wrong way.

Speaker 6: So our guidance for the full year is 37 and a quarter for gross margin. And what we saw was a very strong second quarter where we came in about 38.7%.

So our guidance for the full year is 37 and a quarter for gross margin.

And what we saw was a very strong second quarter, where we came in about 38, 7% as.

Speaker 6: As we think about the third and the fourth quarters, the third quarter will be a bit softer than where we landed in the second quarter, and then it will be a bit stronger in our fourth quarter in order to get you to our current outlook for gross profit for the full year.

As we think about the third and the fourth quarters, the third quarter will be a bit softer and where we landed in the second quarter and then it will be a bit stronger than our fourth quarter in order to get you to our current outlook for gross profit for the full year.

Speaker 1: Thank you. Next question is coming from Robert Moskow from TD Calendar.

Thank you next question is coming from Robert Moscow from TD calendar. Your line is now live.

Speaker 2: Hi, thanks, and good morning. Good morning. Good morning. I wanted to know about the profit contribution that you've forecasted for Hostess for the rest of the fiscal year, $120 million. Is that, it does look lower than what, you know, consensus estimates were for Hostess prior to the deal. And I wanted to know, given that you've lowered the sales, have you also had to lower the profit expectation?

Hi, Thanks, and good morning.

Good morning.

Morning, I wanted to know about the profit contribution that you've forecasted for hostess for the rest of the fiscal year, a $120 million is that it does look lower than what consensus estimates were for hostess prior to the deal and I wanted to know.

Given that you've lowered the sales have you also had to lower the profit expectation and does that include any kind of plans for reinvestment or just doing something to kind of get the sales growth re accelerating so you're heading into fiscal 'twenty five in good shape.

Speaker 4: And does that include any kind of plans for reinvestment or just doing something to kind of get the sales growth reaccelerating so you head into fiscal 25?

Speaker 6: So Rob, the outlook for segment profit for the Sweetbake Snacks is approximately $150 million of segment profit contribution, or about $1.11 from an EPS standpoint. Yes, we did soften that based on top line, but we expect that to restore as we move forward beyond this fiscal year.

So Ron.

The outlook for segment profit for the Sweet baked snacks is approximately $150 million of segment profit contribution.

About $1 11 from an EPS standpoint.

Yes, we did soften that based on top line, but we expect that to restore as we move forward beyond this fiscal year.

Speaker 6: There are a few opening balance sheet items incorporated in there that offer about $0.05 impact to segment profit. And we continue to support the hostess organization with reinvestment in the business in order to support the brand growth and development.

There are a few opening balance sheet items incorporated in there that offer about five cents impact to segment profit.

And we continue to support the hostess organization with reinvestment in the business in order to support the brand growth and development.

Okay.

Speaker 3: Um, is there anything, uh, in particular that, uh, the team came prepared, uh, for, for the next six months to accelerate, uh, the performance, like you've gotten to see their, their business plans now. Um, what in particular are they doing to, to improve the execution with that one customer, and then maybe introduce new products to accelerate?

Is there anything.

In particular that are the team came prepared.

For for the next six months to accelerate the performance like you've gotten to see their business plans now.

One in particular that you're doing to improve the execution with that one customer and then maybe introduce new products to accelerate sales.

Speaker 5: Rob, it's Mark. You know, first of all, where there was maybe a bit of a hiccup on the customer side, the teams have largely worked through that.

Rob It's Marc first of all.

Where there was maybe a bit of a hiccup on the customer side. The teams have largely worked through that and so as we approach. Our next fiscal we would expect that that issue to abate and are very confident there as I mentioned in my earlier comments, where we continue to be there.

Speaker 5: And so, as we approach our next fiscal, we would expect that issue to abate and are very confident there. As I mentioned in my earlier comments, where we continue to be very excited about the business is

We're excited about the business is just from a macro standpoint, the consumer continues to snack right and there are.

Speaker 5: just from a macro standpoint, the consumer continues to snack, right? And there are, you know, consumers are eating at more times a day. Often one of those snacks is a sweet snack.

<unk> are eating at more times, a day often one of the snacks is a sweet snack.

Speaker 5: So that supports, you know, obviously the hostess business, but it also supports things even like unpressables and coffee where folks may choose a sweet coffee beverage at some point in the afternoon.

So that supports obviously the hostess business, but it also supports things even like unprofitable and coffee where folks may choose a sweet coffee beverage at some point in the afternoon. So we're very confident in the consumer environment around snacking, but specifically to host it.

Speaker 5: So we're very confident in the consumer environment around snacking, but specifically to Hostess, where they have a lot of great capabilities is their cadence of innovation.

Yes.

Where they have a lot of great capabilities is their cadence of innovation.

Speaker 5: They have the ability to be very agile in terms of the way they approach different times of the year, sometimes seasonals.

They have the ability to be very agile in terms of.

The way they approach different times of the year, sometimes seasonal their abilities around net revenue optimization and the way they merchandise products. So those capabilities are in part what drove us to have Dan as a leader over both.

Speaker 5: their abilities around net revenue optimization and the way they merchandise products. So those capabilities are in part what drove us to have.

Speaker 5: Dan as a leader over both Hostess and Pat, because those are things that are similar.

Hostess and Pat because there are some those are things that are similar to our pet snacks business. The merchandising the NRL and the innovation cycles. So we feel very confident in those capabilities and we also like of course their expertise in C store.

Speaker 5: to our pet snacks business, the merchandising, the NRO, and the innovation cycles.

Speaker 5: So we feel very confident in those capabilities. And we also like, of course, their expertise in CSTOR, which over time will benefit the broader Smucker portfolio. So just great complimentary fit at a time when our base business is performing exceptionally well. And so just, again, feeling very confident about the way this deal has come together.

Or which over time will will benefit.

The broader smucker portfolio. So just just great complementary fit at a time when our base business is performing exceptionally well and so just.

Again, feeling feeling very confident about the way this deal has come together.

Speaker 1: Your next question today is coming from Peter Galbo from Bank of America. Your line is now live. Hey, guys. Good morning. Thanks for taking the question.

Thank you next question today is coming from Peter Galbo from Bank of America. Your line is now live.

Hey, guys. Good morning, Thanks for taking the question.

Sure. Thanks Peter.

Hmm.

Speaker 7: Tucker, in the detail you gave around kind of the twink impact for the rest of the year,

Tucker I E. In the detail you gave around kind of the the twink impact for the rest of the year. The one thing I Didnt notice was just did.

Speaker 7: clarify what you thought purchase accounting was going to be to kind of the gross margin maybe at least in the third quarter I don't know if that carries forward but but anything you do

Did you clarify what you thought purchase accounting was going to be to kind of the gross margin maybe at least in the third quarter I don't know if that carries forward, but anything you can do to help us there.

Speaker 6: So within the $0.40 impact associated with the acquisition, $0.05 of it is associated with opening balance sheet items, which predominantly is the step up in inventory. So that should give you a sense of the impact from a gross margin standpoint. Okay, got it.

So.

Within the 40.

Impact associated with the acquisition five cents of it is associated with the opening balance sheet items, which predominantly is the step up in inventory. So that should give you a sense of the impact from a gross margin standpoint.

Okay got it and then maybe more just.

Speaker 7: bigger picture question. I think if you kind of back out the impact of the supplier termination and coffee, your margins in the court.

Bigger picture question I think if you kind of back out the the impact of the supplier termination and coffee your margins in the quarter would have been north of north of 30%.

Speaker 7: percent for that business and just curious, you know, with the lower coffee costs flowing through.

For that business and just curious with the lower coffee costs flowing through just any direction you can give us on how youre thinking about coffee segment margins kind of on the go forward here for the rest of the year.

Speaker 7: Any direction you can give us on how you're thinking about coffee segment margins kind of on the go.

Speaker 6: So Peter, you are correct. In our second quarter, the segment profit margin would have been closer to 30% without the $39 million termination of a supplier agreement. As you think about the balance of the year, we will continue to see a little bit softer third quarter gross margin just as we lap some of the green coffee costs year over year. And then we will see a stronger fourth quarter to finish the fiscal year.

So Peter you are correct in our second quarter. The segment profit margin would have been closer to 30% without the $39 million termination of a supplier agreement.

As you think about the balance of the year, we will continue to see a little bit softer third quarter gross margin just as we lap some of the green coffee costs year over year.

And then we will see a stronger fourth quarter to finish the fiscal year.

Speaker 1: Thank you. Next question today is coming from Matt Smith from Steeple. Your line is now live.

Thank you. Your next question today is coming from Matt Smith from Stifel. Your line is that life.

Speaker 8: Good morning. I wanted to ask a question about the updated guidance.

Hi, Good morning, I wanted to ask a coordination about the updated guidance range.

Speaker 8: At the midpoint it's down about 20 cents, but that includes the 40 cents in initial

Mid point, it's down about 'twenty, but that includes the <unk> 40 cents an initial dilution from the hostess acquisition. So can you can you talk about the drivers of the outperformance on the base business I know there was some timing differences in SG&A between the first quarter and second quarter or are you now at a point, where SG&A your level of investment it should be fairly consistent with your prior expectations in the <unk>.

Speaker 8: Can you talk about the drivers of the outperformance on the base?

Speaker 8: I know there were some timing differences in SD&A between the first quarter and second quarter. Are you now at a point where SD&A, your level of investment should be fairly consistent with your prior expectations in the second half?

And half of the year.

Speaker 6: Yeah, so as we came into our second quarter, the midpoint of our guidance range was $9.65.

Yes, so as we came into <unk>.

Our second quarter, the midpoint of our guidance range was $9 65.

Speaker 6: And we have approximately a 10 cent over delivery in our second quarter, which was largely a result of improved gross profit margins, along with some other SDNA favorability. And we've locked that 10 cents into the guidance range.

And we have approximately a 10 cent over delivery in our second quarter, which was largely a result of improved gross profit margins along with some other SG&A favorability and we've locked that turn into the guidance range in the back half. We also see an additional 10 again.

Speaker 6: In the back half, we also see an additional $0.10, again, largely driven by the improvement and our outlook for gross profit margin that enabled us to capture another $0.10. So, absent the impact of the dilution associated with the hostess acquisition, the midpoint of the guidance range is $9.85, which demonstrates 10 points of growth year over year.

Largely driven by the improvement in our outlook for gross profit margin that enabled us to capture another 10, so absent the impact of the dilution associated with the hostess acquisition. The midpoint of the guidance range is $9 85, which demonstrates 10 points of growth year over year.

Yeah.

Speaker 8: And if I could ask a follow-up as it relates to the coffee business, you've been making investments in liquid.

Thank you for that Tucker and if I could ask a follow up as it relates to the coffee business, you've been making investments in the liquid coffee do you have a timeline when we could start to see that benefit and is that is that a topline benefit or is that more of a margin capture with you currently using outside manufacturers for some of your liquid coffee products.

Speaker 8: Do you have a timeline when we could start to see that benefit? And is that, is that a top-line benefit or is that more of a margin capture with you currently using outside manufacturers for some of your?

Speaker 5: Matt, it's Mark. It's predominantly a sales component. And keep in mind, this is something that we're going to be working on over time. And time, I mean, over a year plus time period.

Matt It's mark it's predominantly.

Our sales comp.

<unk> and keep in mind. This is this is something that we're going to be working on over over time and time I mean in over a year plus time period.

Speaker 5: And so we have begun that journey. We have a venture team that is very engaged in the liquid coffee space.

And so we have begun that journey, we have a venture team that is very engaged in the liquid coffee space, both with some of our.

Speaker 5: both with some of our smaller Bustelo single-serve options, but more recently with some multi-serve shelf state.

Smaller bustillo single serve options, but more recently with some multi serve shelf stable.

Speaker 5: Dunkin' cold brew items that you can find in the normal coffee aisle.

Duncan.

Cold brew items that you can find in the normal coffee aisle.

So we're at the.

Speaker 5: We're at the early days of our liquid coffee journey. Acknowledge that it is an important journey and that we will continue to expand our offerings in liquid, which include later in the fiscal year.

We're at the early days of our liquid coffee journey acknowledge that it is an important journey and then we will continue to expand our offerings and liquid which include.

In the in the later in the fiscal year some offerings in the booth Stello. So.

Speaker 5: some offerings in the Bustello. So, you know, it is going to be modest contribution in the near to medium term, but we are committed to that journey and will continue to look to ways to expand our liquid coffee presence in the across the entire grocery space.

Is going to be modest contribution in the near to medium term, but we are committed to that journey and we'll continue to look to ways to expand our liquid coffee presence in that across the entire grocery space.

Speaker 1: Your next question today is coming from Jason English from Goldman Sachs. Your line is now live.

Thank you. Our next question today is coming from Jason English from Goldman Sachs. Your line is now live.

Speaker 3: Hey, good morning, folks. Thanks for slotting me in, and congrats on another quarter.

Hey, good morning folks thanks for slotting and congrats on the quarter.

Speaker 3: Thank you. I'm going to... Yeah, you're welcome. Sticking on coffee, what type of supplier agreement did you terminate and why?

Thank you.

Youre welcome sticking sticking on coffee.

What type of supply agreement did you terminate in Hawaii.

Speaker 5: It was related to a packaging supplier Jason Not really

It was related to a packaging supplier Jason.

Okay.

The innovation stuff.

Speaker 5: No, nothing related to Keurig, which we have a fantastic relationship with Keurig. It's strictly around roast and ground packing.

No nothing related to <unk>, which we have a fantastic relationship with keurig is strictly around.

Roasting ground packaging.

Speaker 3: got it. Okay. And you're calling for folios, perform pretty well in the last couple of years. You've had good momentum. In that context, I'm surprised by the leadership transition. So can you talk about what's driving the choice to put new leadership on top of the business and what you expect a new leadership to do differently?

Got it okay.

And your coffee portfolios performed pretty well in the last couple of years you have had good momentum in.

That context, I'm surprised by the leadership transition. So can you talk about.

What's driving the choice to put new leadership on top of the business and what you expect in new leadership to do differently.

Speaker 5: Yeah, sure. As these types of things go, first of all, I'm incredibly proud of this leadership team. I could not be more pleased with the work that they have done. Really pleased that we've been able to maintain some strong leadership from hostess.

Yes sure.

As as you know.

These types of things go.

First of all I'm incredibly proud of this leadership team I could not be more pleased with the work that that they have done really.

I'm pleased that we've been able to maintain some strong leadership from hostess.

Really.

Speaker 5: Looking forward to working with Dan and welcome many other leaders from the hostess organization. Also just want to recognize Joe's contributions to the coffee space have been fantastic. And so as we transition, Rob will be coming in and managing the coffee business. He's done a great job on...

Looking forward to working with with Dan and welcome. Many other leaders shouldn't the hostess organization also just want to recognize Joe's contributions to the coffee space have been fantastic and so as we transition Rob will be coming in and managing that.

Coffee business. He has done a great job on our pet business and so just looking forward to his contributions I think he'll add some nice.

Speaker 5: our pet business. And so just looking forward to his contributions, I think he'll add some nice.

Speaker 5: insights to the liquid space and looking forward to driving that there. And then the other thing I would just highlight is oftentimes, you know, we have had a few individuals leave the organization to move on to larger career opportunities. I think that really speaks to the caliber of our leaders and the fact that we've done a great job preparing them for what comes next.

Insights to the liquid space and looking forward to driving that there and then the other thing I would just highlight is oftentimes when we have had a few individuals leave the organization to move on to larger career opportunities I think that really speaks to the caliber of our leaders and and the fact that we've done.

Great job preparing them for what comes next.

Speaker 1: Thank you. Next question is coming from Rob Dickerson from Jeffrey's. Your line is now live.

Thank you next question is coming from Rob Dickerson from Jefferies. Your line is now live.

Speaker 8: Great, thanks so much. Maybe a question for you Tucker, just around the EPS accretion commentary for next year. I mean, it...

Great. Thanks, so much.

Maybe a question for you Tucker.

Around the EPS accretion commentary for next year.

I mean, clearly the transaction to be accretive.

Speaker 9: Uh, from time of announcement, I guess for fiscal 25, but is that.

From time of announcement I guess for fiscal 'twenty, five but is that.

Speaker 9: I'm just curious, when you talk to a Christian in 25, is that?

I'm just curious when you talk to accretion in 'twenty five is that accretion of 24 B X host it.

Speaker 9: off of the 24 base X hostess so then if we were to have grown that let's say at the algorithm it would have been higher than the base for the algorithm on top of that which is I guess the creative or are you just kind of speaking generally saying you know it will be adding some incremental positive earnings on top of now an adjusted base on 24 so not really sure what it means so I'm just trying to get any color

So then if we were to have grown that let's say at the algorithm.

They've been higher than the base growth algorithm on top of that which is I guess the accretive or are you just kind of speaking generally saying it.

It will be adding some.

An incremental positive earnings.

Pop up now and adjusted based on 24 so.

I'm not really sure what it means so I'm just trying to get any color on cap rate.

Speaker 6: Yeah, Rob, the way that we're thinking about it is, is if you isolated...

Yeah, Rob the way that we're thinking about it is if you isolated.

Speaker 6: This fiscal year's impact of the hostess acquisition, which we've approximated to be $0.40 dilution.

This fiscal years impact of the hostess acquisition, which we've approximated to be 40 cents dilution.

Speaker 6: and you looked at base smoker, we would anticipate a level of EPS growth for base smoker year over year.

And you looked at base Smucker, we would anticipate a level of EPS growth for base smucker year over year.

Speaker 6: And then we would anticipate Postus also contributing a level of accretion to the company as well. So hopefully that gives you some context. And what gives us reason to believe in the hostess accretion for next year is a four year of ownership.

And then we would anticipate.

This also contributing a level of accretion.

The company as well so hopefully that gives you some context and what gives US reason to believe in the hostess accretion for next year is a full year of ownership.

Speaker 6: as we see business growth and delivery, as we begin to realize our synergy outlook, and as we think about the impact of paying down debt and therefore reducing some interest expense.

As we see business growth in delivery as we begin to realize our synergy outlook.

And as we think about the impact of paying down debt and therefore, reducing some interest expense.

Speaker 9: Very nice. That's helpful. And then I think Mark, there's a line in the pro-remarks around.

Alright fair enough alright, that's helpful.

Hum.

I think Mark you had a there was a lot of it in the prepared remarks around that.

Speaker 9: best in class marketing and then also potentially stepping up some investment across multiple platforms.

First in class marketing and then also potentially stepping up some investment there across multiple platforms.

Speaker 9: As we think through Q3Q4 just this year, should we be expecting that uptick in, let's call it, S-DNA, more so than the promotional side as we get through the year? Or is there some potential for kind of this balance of increased S-DNA on top of maybe some incremental promotional activity given the competitive backdrop? Thanks.

As we think through Q3 Q4 this year.

Should we be expecting kind of that.

Uptick in let's call. It S DNA more so than the promotional side as we get through the year or.

Is there some potential for kind of this balance them.

Increased SG&A on top of maybe some incremental promotional activities given the competitive backdrop.

Speaker 5: Yeah Rob, thanks for the question. First of all, promotional activity, just one quick comment there, is generally normal.

Yeah, Rob Thanks for the question first of all promotional activity just have one quick comment there is generally normal right, it's sort of as expected business as usual.

Speaker 5: right? It's sort of as expected, business as usual. And our categories are performing generally as we would expect from a promotional environment. Stay in point.

And then in our categories are performing generally as we would expect from a promotional environment standpoint.

Speaker 5: On a marketing and advertising standpoint, we do expect our marketing spend to be up in the remaining two quarters of the year.

On our marketing and advertising standpoint, we do expect our marketing spend to be up in the remaining two quarters of the year.

Speaker 5: And we have been very pleased with the performance of our marketing effort.

And we have been very pleased with the performance of our marketing efforts.

Speaker 5: One notable one is that we just launched, for the first time in over a decade, our uncrustables advertising, which actually launched during Monday night football a couple of weeks ago between the Eagles and the Chiefs.

One notable one is that we just launched for the first time in over a decade, our unprofitable advertising, which actually launched during Monday night football a couple of weeks ago between the Eagles and the chiefs.

Speaker 5: And so that has been a fantastic launch and we expect it to continue to drive awareness.

And so that has been a fantastic.

Fantastic launch and.

We expect it to continue to drive awareness foreign cross the bowls, which surprisingly not every consumer has has heard about or tried and <unk>. So we believe that's going to help.

Speaker 5: for incrustables which surprisingly not every consumer has heard about or tried incrustables.

Speaker 5: So we believe that's going to help continue to drive demand and household penetration. So just one quick example there that we're real excited about.

To drive demand and household penetration. So just just one quick example, there that were real real excited about.

Speaker 1: We reach end of our question and answer session. I'd like to turn the floor back over to management printing further closing

Thank you we've reached end of our question and answer session I would like to turn the floor back over to management for any further or closing comments.

Speaker 5: I just want to thank you all for your time this morning. We had another fantastic quarter and just really pleased with the base business and the timing of us absorbing this new fantastic business, which is hosted.

I just wanted to thank you all for your time. This morning, we had another fantastic quarter, and just really pleased with the base business and the timing of us absorbing this new fantastic business, which is hosted its really been an exciting couple of months busy couple of months, but none of it.

Speaker 5: It's really been an exciting couple of months, busy couple of months, but none of it would be possible without the outstanding Smucker and Hostess employees and really just want to thank them for their continued hard work and dedication to their company and your company and looking forward to continuing to create great shareholder value for you, our investors.

Would be possible without.

The outstanding Smucker, and hostess employees and really just want to thank them for their continued hard work and dedication to their company and your company and looking forward to continuing to create great shareholder value for you our investors.

Speaker 5: have a great holiday season and thank you for listening.

Have a great holiday season, and thank you for listening.

Speaker 1: Thank you, but it does conclude today's teleconference and webcasts to me disconnect your line out this time and have a wonderful day.

Thank you that does conclude today's teleconference and webcast you may disconnect. Your line at this time and have a wonderful day.

Thank you for your participation today.