Q1 2025 J M Smucker Co Earnings Call - Q&A

August 28, 2024

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Speaker Change: Good morning and welcome to the James Muckert Company's fiscal 2025 first quarter earnings question and answer session.

Speaker Change: This cop is called being recorded in all of the kids' been through the list and only mode.

Speaker Change: Please let me yourselves the two questions and re-cube of additional questions.

Crystal Lighting: I'll now turn the conference call over to Crystal Lighting Vice President and Best Relations and Financial Planning and Analysis. Thank you, you may begin.

Speaker Change: Good morning and thank you for joining our fiscal 2025 first quarter earnings question and answer session. I hope everyone had a chance to review our results as details in this morning's press release. The management's prepare remarks which are available on our corporate website at jamsmunker.com.

Unknown Executive: 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.

Unknown Executive: You 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.

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

Speaker Change: During today's call, we may make forward-looking statements that reflect our current expectations about future plans and performance.

Speaker Change: These statements rely on assumptions and estimates and actual results may differ materially due to risks and uncertainties.

Speaker Change: Additionally, we use non-gap results to evaluate performance internally and encourage you to read the full disclosure concerning forward-looking statements and details on our non-gap financial measures in this morning's press release.

Unknown Executive: I encourage you to read the full disclosure concerning forward-looking statements and details on our non-GAAP financial measures this morning's press release.

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

Speaker Change: For participating on this call, our Mark Smucker, Chair for 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.

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

Unknown Executive: Thank you.

Unknown Executive: The question and answer session will begin at this time. If you're using a speakerphone, please pick up your handset before pressing any numbers. Should you have a question, please press star one on your telephone. If you wish to withdraw your question, please press star two. Properly, your assistance, please press star zero.

Speaker Change: Thank you, the question and session will begin at this time. If you're using a speaker phone, please pick up your handset before pressing any numbers. Should you have a question, please press star one on your telephone. If you wish to withdraw your question, please press star two.

Unknown Executive: As a reminder, please let me ask ourselves to two questions during the Q and A session. If you have additional questions, you may recue, and the company will take questions as time allows. One moment, please, when we pull for questions.

Speaker Change: Propwriter Assistance, please press star zero. As a reminder, please let me yourselves to two questions during the Q&A session. For your additional questions, you may re-cute, and the company will take questions as time allows. One moment, please, will we pull for questions?

Andrew Lizar: Our first question today is coming from Andrew Lizar from Barclays; your line is now live. Great. Thanks. Good morning, everybody. Good morning.

Speaker Change: Our first question today is coming from Andrew Luzar from Barkley, Her Line is now live.

Speaker Change: Great, thanks for your money everybody.

Andrew Lizar: Maybe to start off, you're moderating your full year 25 comparable sales growth by about a point. And a key call out, I think you mentioned, is the impact of inflation on discretionary spending, you know, specifically on the sweet baked goods and dogs' next categories. And it seems as though there's a sort of a meaningful shift, really, just in the last quarter or maybe last month or two in terms of how you see the consumer and sort of shopping behavior. So Mark, do you talk a bit more about what shifted sort of so quickly versus your initial expectations.

Speaker Change: Morning.

Andrew Luzar: Maybe to start off your moderating your full year 25 comparable sales growth by about a point.

Unknown Executive: I don't know.

I don't know.

Speaker Change: and a key call out, I think you mentioned, is the impact of inflation on discretionary spending.

Speaker Change: specifically on the sweet baked goods and dog snacks categories.

Speaker Change: and it seems as though there was a sort of a meaningful shift really just in the last quarter or maybe last month or two.

Mark: in terms of how you see the consumer and sort of shopping behavior. So Mark, do you talk a bit more about what shifted sort of so quickly versus your initial expectations? And are you building into your outlook friends you are seeing in the business currently? We're just being more proactive on what you think could potentially develop going forward.

Andrew Lizar: And are you building into your outlook friends you are seeing in the business currently, or just being more proactive on what you think could potentially develop going forward?

Mark Smucker: Andrew, Mark, first of all, you know, let me just start by saying we are very pleased with the quarter, having grown both volume and sales, and of course our earnings per share. So we did have a solid quarter. And we saw growth in a number of places, notably, you know, Uncrustables continues to grow obviously peanut butter. Boostelo has performed exceptionally well. And so we're very pleased with the growth this quarter. But, as you point out in the convenience channel, we did see a bit of an acceleration in consumers shopping less or less frequently in the convenience stores.

Andrew Luzar: Andrews Mark, first of all, you know, let me just start by saying we are very pleased with the quarter having grown both volume and sales and of course our earnings per share.

Mark: So we did have a solid quarter and we saw growth in a number of places notably, you know, and the crest of holes continues to grow, obviously peanut butter.

Speaker Change: Bustello has performed exceptionally well and so we're very pleased with the growth this quarter but as you point out in the convenience channel we did see a bit of an acceleration.

Speaker Change: and consumers shopping less.

Mark Smucker: And although we did see some of that earlier, it did seem to accelerate a bit in the quarter. I would highlight that with our sweet baked snacks business, we do over index in the convenience channel. And we still are growing share there. So our performance in that channel is good. But as consumers have been a bit more cautious and have less discretionary income to spend.

Speaker Change: or less frequently in the convenience stores and although we did see some of that earlier it did seem to accelerate a bit in the quarter

Speaker Change: I would highlight that.

Speaker Change: with our sweet-baked snacks business we do over index in the convenience channel and we still are growing share there so our performance in that channel is good but as consumers have been a bit more cautious.

Unknown Executive: Good morning and welcome to the James Smucker Company's fiscal 2025 first quarter earnings question and answer session. This conference call is being recorded and all participants are in listening only mode.

Unknown Executive: Please let me yourselves to two questions and re-cube your additional questions.

Mark Smucker: That is why we have seen a bit of an impact on both sweet baked snacks and pet snacks.

Speaker Change: and have less discretionary income to spend. That is why we have seen a bit of an impact on both sweet-baked snacks and pet snacks.

Andrew Lizar: Thanks. Got it. Okay. That's helpful.

Unknown Executive: I'll now turn the conference call over to Crystal Biting, Vice-President Invest Relations and Financial Planning and Analysis. Thank you. You may begin.

Crystal Biting: I'll now turn the conference call over to Crystal Biting, Vice-President Invest Relations and Financial Planning and Analysis. Thank you. You may begin.

Andrew Lizar: And then I'm talking to your previous comparable sales growth outlook was predicated on both positive volume and price. How do you see both these metrics contributing to your expected 1% full year comparable sales growth outlook at this stage? Thanks so much.

Speaker Change: Got it, okay, that's helpful. And then, and talk to your previous comparable sales growth outlook was predicated on both positive volume and price. How do you see both these metrics contributing to your expected 1% full year comparable sales growth outlook at this stage? Thanks so much.

Unknown Executive: Good morning and thank you for joining our fiscal 2025 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 You 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.

Crystal Biting: Good morning and thank you for joining our fiscal 2025 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 You 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.

Tucker Marshall: Andrew, good morning, acknowledging that our outlook at this time is for 9% year-over-year growth at the midpoint as you isolate the non-comparable aspects of acquisition, investiture, foreign exchange, and you take into account the impact of the pet co-manufacturing sales. We are seeing net sales growth of 2.5%, which is a change from our previous outlook of approximately 3%. Within that 2.5%, we're seeing about 50 basis points of volume mixed growth, and we're seeing about 2 points of pricing.

Speaker Change: Andrew Goodmorting, acknowledging that our outlook at this time is for 9% your year growth at the midpoint, as you isolate the non-comparable aspects of acquisition, and the infrastructure for an exchange.

Unknown Executive: These statements rely on assumptions and estimates and actual results may differ materially due to risks and uncertainties. Additionally, we use non-gap results to evaluate performance internally. I encourage you to read the full disclosure concerning forward looking statements and details on our non-gap financial measures in this morning's press release.

Crystal Biting: These statements rely on assumptions and estimates and actual results may differ materially due to risks and uncertainties. Additionally, we use non-gap results to evaluate performance internally. I encourage you to read the full disclosure concerning forward looking statements and details on our non-gap financial measures in this morning's press release.

Speaker Change: and you take into account the impact of the pet comb manufacturing sales. We are seeing net sales growth of 2.5% which is a change from our previous outlook of approximately 3%.

Speaker Change: Within that two and a half percent we're seeing about 50 basis points of volume mixed growth.

Tucker Marshall: Pricing has increased from our previous expectation largely due to another round of pricing within our coffee portfolio due to ongoing green coffee cost increases.

Unknown Executive: 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. Thank you. The question and answer session will begin at this time. If you're using a speaker phone, please pick up your handset before pressing any numbers. Should you have a question, please press star one on your telephone.

Crystal Biting: 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. Thank you. The question and answer session will begin at this time. If you're using a speaker phone, please pick up your handset before pressing any numbers. Should you have a question, please press star one on your telephone.

Speaker Change: and we're seeing about two points of pricing. pricing has increased from our previous expectation largely due to another round of pricing within our coffee portfolio due to ongoing green coffee cost increases.

Unknown Executive: If you wish to withdraw your question, please press star two. Operator assistance, please press star zero. As a reminder, please let me ourselves to two questions during the Q&A session. Should you have additional questions, you may recue, and the company will take questions as time allows. One moment, please, when we pull for questions.

Crystal Biting: If you wish to withdraw your question, please press star two. Operator assistance, please press star zero. As a reminder, please let me ourselves to two questions during the Q&A session. Should you have additional questions, you may recue, and the company will take questions as time allows. One moment, please, when we pull for questions.

Andrew Lizar: Great. Thanks so much.

Unknown Executive: Thank you.

Ken Goldman: Next question is coming from Ken Goldman from JP Morgan. Your line is out live.

Speaker Change: Great, thanks so much.

Speaker Change: Thank you. Next question is coming from Ken Goldman from JP Morgan your line is all I've

Ken Goldman: Hi, good morning, and thank you. You know, one of the reasons given for the reduction in the top line outlook is, as you mentioned, the sweet baked goods category. You're still anticipating it looks like a similar contribution to sales from Hostess this year, though, at least just kind of roughly what we're seeing in the guidance in the slides.

Ken Goldman: Hi, good morning and thank you. You know, one of the reasons given for the reduction in the top line outlook is, as you mentioned, this week, baked goods category. You're still anticipating it looks like a similar contribution to sales from hostess this year, though at least.

Ken Goldman: Am I reading that wrong, or I just kind of wanted to reconcile the comment you made about the category softness with, you know, kind of what you're looking for specifically from Hostess.

Speaker Change: just kind of roughly what we're seeing in the guidance and the slides. Am I reading that wrong or I just kind of wanted to reconcile the comment you made about the category softness with kind of what you're looking for specifically from hostess.

Unknown Executive: Our first question today is coming from Andrew Lazar from Barclays, your line is now live. Great, thanks.

Andrew Lazar: Good morning, everybody. Good morning. Maybe to start off, you're moderating your full year 25 comparable sales growth by about a point. And a key call out, I think you mentioned, is the impact of inflation on discretionary spending, specifically on the sweet baked goods and dogs' next categories. And it seems as though there was a sort of a meaningful shift really just in the last quarter or maybe last month or two in terms of how you see the consumer and sort of shopping behavior.

Tucker Marshall: Ken, good morning. I'll speak specifically to the guidance change. So as you transition from 10% at the midpoint of growth coming into the fiscal year to now our most current outlook of 9%. That 1% has changed is approximately $8 million. About half of that, or $40 million, is coming through the sweet baked snacks, of which $25 million is in the first half of the year and the balance being in the back half of the year. Really, we're seeing the softness that March spoke to coming through the overall category, but also through the specific channel of convenience.

Speaker Change: Good morning, I'll speak specifically to the guidance change.

Speaker Change: So as you transition from 10% at the midpoint of growth coming into the fiscal year, to now our most current outlook of 9%. At one percentage change is approximately $80 million.

Andrew Lazar: So Mark, can you talk a bit more about what shifted sort of so quickly versus your initial expectations and are you building into your outlook, friends you are seeing in the business currently, or just being more proactive on what you think could potentially develop going forward.

Speaker Change: About half of that or $40 million is coming through sweet-baked snacks of which 25 million is in the first half of the year and the balance being in the back half of the year.

Speaker Change: really we're seeing the softness that Mark just spoke to coming through the overall category, but also through the specific channel of convenience, and then we're de-risking a bit of the back half. And so that is reflected now in the guidance.

Tucker Marshall: And then we're de-risking a bit of the back half. And so that is reflected now in the guidance. The balance of the 80 million really is 15 million of pet manufacturing sales that are coming in less than anticipated. And again, we don't control that volume. And then the balance is really the puts and calls that we're seeing from our coffee portfolio, our pet portfolio as they sort of reset expectations due to green coffee inflation. And price elasticity of demand is our pet portfolio addresses frequency within pet snacks. And then, as we think about the great momentum that we're seeing on the Uncrustables handheld, partially offsetting that is really what's embedded in that change from guidance coming into the fiscal year and where we see it now.

Mark Smucker: Andrew, Mark, first of all, let me just start by saying we are very pleased with the quarter, having grown both volume and sales and of course our earnings per share. So we did have a solid quarter and we saw growth in a number of places, notably, you know, uncrustables continues to grow obviously peanut butter. Boostelo has performed exceptionally well and so we're very pleased with the growth this quarter. But as you point out in the convenience channel, we did see a bit of an acceleration in consumers shopping less or less frequently in the convenience stores.

Speaker Change: The balance of the 80 million really is 15 million of pet combating factoring sales that are coming in less than anticipated and again, we don't control that volume.

Speaker Change: And then the balance is really the puts in calls that we're seeing from our coffee portfolio, our pet portfolio, as they sort of reset expectations due to green coffee inflation and price elasticity of demand. As our pet portfolio addresses frequency within pet snacks.

Mark Smucker: But as you point out in the convenience channel, we did see a bit of an acceleration in consumers shopping less or less frequently in the convenience stores. And although we did see some of that earlier, it did seem to accelerate a bit in the quarter. I would highlight that with our sweet baked snacks business, we do over index in the convenience channel. And we still are growing share there. So our performance in that channel is good.

Speaker Change: and that as we think about the great momentum that we're seeing on the across to both handheld partially offsetting that.

Speaker Change: is right what's embedded in that change from guidance coming into the fiscal year and where we see it now. The great thing is we're delivering growth and we're delivering a level of volume growth in this environment, and that continues to build well for overall portfolio.

Tucker Marshall: The great thing is we're delivering growth, and we're delivering a level of volume growth in this environment. And that continues to bow well for overall portfolio.

Ken Goldman: Okay, thank you for that. That's very helpful, and then a quick follow-up to what degree do you still expect Hostess to be a creative to EPS by a few pennies this year?

Speaker Change: Okay, thank you for that. That's very helpful and then a quick follow-up to what degree do you still expect hostess to be a creative to EPS by a few pennies this year?

Tucker Marshall: So Ken, we did step into this fiscal year and acknowledge a few sense of accretion. I think at this point, as a result of the top line revision, we are now in a dilutive state. We're probably in a range of maybe five to ten cents.

Ken Goldman: So Ken, we did step into this fiscal year and acknowledge a few cents of accretion.

Andrew Lazar: But as consumers have been a bit more cautious and have less discretionary income to spend, that is why we have seen a bit of an impact on both sweet baked snacks and pet snacks. Thanks. Got it. Okay, that's helpful.

Speaker Change: I think at this point as a result of the top line revision, we are now in a delude of state, we're probably in a range of maybe five to ten cents.

Tucker Marshall: The great thing is, is despite the top line softness, we are seeing synergies come in as anticipated and cannibly coming in better than expected, which is supporting the overall profit profile of not only the business unit, but also the total company.

Speaker Change: The great thing is, despite the top line softness, we are seeing synergies come in as anticipated and candidly coming in better than expected, which is supporting the overall profit profile of not only the business unit, but also the total company.

Mark Smucker: Thanks. Got it. Okay, that's helpful. And then, Tucker, your previous comparable sales growth outlook was predicated on both positive volume and price. How do you see both these metrics contributing to your expected 1% full year comparable sales growth outlook at this stage? Thanks so much.

Tucker Marshall: And then, Tucker, your previous comparable sales growth outlook was predicated on both positive volume and price. How do you see both these metrics contributing to your expected 1% full year comparable sales growth outlook at this stage? Thanks so much. Andrew, good morning, acknowledging that our outlook at this time is for 9% year-over-year growth at the midpoint as you isolate the non-comparable aspects of acquisition, investiture, foreign exchange, and you take into account the impact of the pet co-manufacturing sales.

Unknown Executive: Thanks so much. Thank you.

Speaker Change: Thanks so much!

Robert Moskow: Next question today is coming from Robert Moskow from TD County. Your line is now live. Hi, thanks for the questions. I guess two, two questions.

Speaker Change: Thank you. Next question today is coming from Robert Moscow from TD Cowen, your line is now live.

Robert Moscow: Thanks for the questions. I guess two two questions. One is, you know, in light of the tougher consumer environment, do you think that the hundred basis point cut here is sufficient? You know, is there a risk of further?

Robert Moskow: One is, you know, in light of the tougher consumer environment, do you think that the 100 basis point cut here is sufficient? Is there a risk of further cuts to come? Because there's still a pretty big delta between the guidance for the back half of the year and what we're seeing in the tracking data today. And, you know, it's not apples to apples, but it does imply a pretty significant inflection.

Speaker Change: cuts to come because there's still a big big delta between the guidance for the back half of the year and what we're seeing in the tracking data today and you know it's not apples to apples but it does imply a pretty significant inflection.

Tucker Marshall: We are seeing net sales growth of 2.5%, which is a change from our previous outlook of approximately 3%. Within that 2.5%, we're seeing about 50 basis points of volume mixed growth, and we're seeing about 2 points of pricing. Pricing has increased from our previous expectation largely due to another round of pricing within our coffee portfolio due to ongoing green coffee cost increases. Great. Thanks so much. Thank you.

Robert Moskow: And the second thing I wanted to understand in the guidance is it looked like you're cutting your marketing spend a little bit. I think you're now maybe about 50 basis points below as a percentage of sales. How did you evaluate the risk for words of that decision, especially considering, you know, it looks like you'll probably need more investment on Hostess to get the brand going again and get this 4% growth rate.

Speaker Change: And the second thing I wanted to understand in the guidance is it looked like you're cutting your marketing spend a little bit. I think you're now maybe about 50 basis points below as a percentage of sales.

Speaker Change: How did you evaluate the risk rewards of that decision, especially considering, you know, it looks like you'll probably need more investment on hostess to get the brand going again and get this 4% growth rate. Thanks.

Ken Goldman: Next question is coming from Ken Goldman from JPMorgan, your line is that live? Hi, good morning, and thank you. You know, one of the reasons given for the reduction in the top line outlook is, as you mentioned, the sweet baked goods category. You're still anticipating, it looks like a similar contribution to sales from hostess this year, though, at least just kind of roughly what we're seeing in the guidance in the slides. Am I reading that wrong or I just kind of wanted to reconcile the comment you made about the category softness with, you know, kind of what you're looking for specifically from hostess?

Unknown Executive: Thanks.

Tucker Marshall: Rob, good morning. As you think about the flow for the year, we've achieved the 9% growth really being driven by ongoing momentum in the uncrossable frozen handheld portfolio. Continued success with the peanut butter chocolate innovation or launch. Ongoing momentum within Kathy Bustello, which continues to perform at and above expectations. And seeing continued momentum across the Almix. And then, as you think about some of the more discretionary aspects of the portfolio, you know, overall pet snacks portfolio has slowed a little bit to mark the opening comments. We want to acknowledge that milk bond is still going to demonstrate a level of volume mixed growth.

Speaker Change: Rob good morning as you take about the flow for the year. We've seen the 9% growth really being driven by ongoing momentum in the on cross to both frozen handheld portfolio.

Speaker Change: Continued success with the peanut butter chocolate innovation or launch.

Speaker Change: I'm going momentum within Kathy Bustello which continues to perform at the above expectations and seeing continued momentum across the Almix.

Tucker Marshall: Ken, good morning. I'll speak specifically to the guidance change. So as you transition from 10% at the midpoint of growth coming into the fiscal year, to now our most current outlook of 9%. That 1% has changed is approximately $8 million. About half of that, or $40 million, is coming to the sweet baked snacks, of which 25 million is in the first half of the year and the balance being in the back half of the year.

Speaker Change: And then you can think about some of the more discretionary aspects of the portfolio. You know, overall Petsmax portfolio has slowed a little bit to marks opening comments. We want to acknowledge that no one is still going to demonstrate a level of volume mixed growth.

Tucker Marshall: And we also want to acknowledge it within sweet baked snacks.

Tucker Marshall: We felt that it was appropriate to acknowledge some of the near-term headwinds that were addressing not only at the category level, but also at the channel level, particularly that we're seeing in the front half of this fiscal year. And then to degress the back half of the fiscal year a bit. And that's really what is embedded in the overall outlook at the top line. We feel very confident in the overall portfolio. There's just some external factors that have affected more of the discretionary aspects of our portfolio.

Speaker Change: and we also want to acknowledge it within Sweetbakes Max. We felt that it was appropriate to acknowledge some of the near-term headlines that were addressing not only at the category level but also at the channel level, particularly that we're seeing in the front half of this fiscal year and then to digress the back half of the fiscal year a bit.

Tucker Marshall: Really, we're seeing the softness that Mark just spoke to coming through the overall category, but also through the specific channel of convenience, and then we're de-risking a bit of the back half. And so that is reflected now in the guidance. The balance of the 80 million, really, is 15 million of pet manufacturing sales that are coming in less than anticipated. And again, we don't control that volume. And then the balance is really the puts and calls that we're seeing from our coffee portfolio, our pet portfolio, as they sort of reset expectations due to green coffee inflation and price elasticity of demand, as our pet portfolio addresses frequency within pet snacks.

Speaker Change: And that's really what is embedded in the overall outlook at the top line. We feel very confident in the overall portfolio. There's just some external factors that have affected more of the...

Mark Smucker: Robert Mark, I might just add that we still feel very good about the portfolio overall. You know, we've taken a lot of time over these past few years to get it right. We love the brands. We feel very good about Hostess and the trajectory there. Keep in mind, too, that we will have the business fully integrated at or before the one-year anniversary of the acquisition. And from a marketing perspective, although the marketing might be down versus our expectations, we do still expect overall marketing spend in total for the company to be up slightly versus prior year.

Speaker Change: This question aspects of our portfolio.

Speaker Change: It's Mark I might just add that we still feel very good about the portfolio overall, you know, we've

Speaker Change: with...

Mark: Taking a lot of time over these past few years to get it right.

Mark: We love the brands. We feel very good about hostess and the trajectory there.

Tucker Marshall: And then as we think about the great momentum that we're seeing on the encrustables handheld partially offsetting that is really what's embedded in that change from the guidance coming into the fiscal year and where we see it now. The great thing is we're delivering growth and we're delivering a level of volume growth in this environment, and that continues to bode well for overall portfolio. Okay, thank you for that. That's the very helpful.

Mark: Keep in mind too that we will have the business fully integrated at or before the one year anniversary of the acquisition and from a marketing perspective, although the marketing.

Mark: Might be down

Mark: versus our expectations, we do still expect overall marketing span.

Tucker Marshall: And then a quick follow up to what degree do you still expect hostess to be a creative to EPS by a few pennies this year? So Ken, we did step into this fiscal year and acknowledge a few sense of accretion. I think at this point as a result of the top line revision, we are now in a dilutive state. We're probably in a range of maybe five to ten cents. The great thing is, is despite the top line softness, we are seeing synergies come in as anticipated and cannibly coming in better than expected, which is supporting the overall profit profile of not only the business unit but also the total company. Thanks so much.

Ken Goldman: And then a quick follow up to what degree do you still expect hostess to be a creative to EPS by a few pennies this year? So Ken, we did step into this fiscal year and acknowledge a few sense of accretion. I think at this point as a result of the top line revision, we are now in a dilutive state. We're probably in a range of maybe five to ten cents. The great thing is, is despite the top line softness, we are seeing synergies come in as anticipated and cannibly coming in better than expected, which is supporting the overall profit profile of not only the business unit but also the total company. Thanks so much.

Mark: in total for the company.

Mark Smucker: And we're being, you know, very committed to spending those dollars where they need to be spent, namely, uncrossables, supporting the launch of GIF peanut butter chocolate, Milk Bone, and then later in the back half of the year expect to continue to increase marketing on Hostess. And then also, you know, as we get through integration, making sure that we can continue to drive, just, you know, improve distribution. Obviously, we have very good distribution in some of the mass channels.

Mark: to be up slightly versus prior year.

Mark: and we're being very committed to spending those dollars where they need to be spent namely, uncrossables.

Unknown Executive: Thank you.

Mark: supporting the launch of GIF peanut butter chocolate, milk bone, and then later in the back half of the year, expect to continue to increase marketing on hostess.

Mark: And then also, you know, as we get through integration, making sure that we can continue to drive this, you know, improve distribution obviously.

Mark: We have

Robert Moskow: So we'll be turning on our capabilities more fully once we get through the Mark. Mark, can I ask a follow-up to that? You said marketing will be up slightly for the full year, but your sales are going to be up like 9% year over year. So are there any brands that are getting a reduction in terms of sale in terms of marketing support as a result of this? I think what the way I would think about it, Rob, is that with Hostess, because we're working through some new creative work, new advertising, new brand positioning, that will not be fully baked until the back half of the year.

Mark: Very good distribution in some of the mass channels so we'll be turning on our capabilities more fully once we get through the integration.

Robert Moskow: Next question today is coming from Robert Moskow from TD County. Your line is now live. Thanks for the questions. I guess two questions. One is in light of the tougher consumer environment. Do you think that the hundred basis point cut here is sufficient? Is there a risk of further cuts to come? Because there's still a pretty big delta between the guidance for the back half of the year and what we're seeing in the tracking data today. And it's not apples to apples, but it does imply a pretty significant inflection.

Mark: Mark and I ask if follow up to that you said marketing will be up slightly for the full year, but your sales are going to be up like 9% year over year. So, art.

Speaker Change: Are there any brands that are getting reduction in terms of sales in terms of marketing support as a result of this?

Speaker Change: I think what the way I would think about it, Rob, is that with hostess, because we're working through some new creative work, new advertising, new brand positioning, that will not be fully baked.

Robert Moskow: And it's not apples to apples, but it does imply a pretty significant inflection. And the second thing I wanted to understand in the guidance is, it looked like you're cutting your marketing spend a little bit. I think you're now maybe about 50 basis points below as a percentage of sales.

Rob Moskow: And the second thing I wanted to understand in the guidance is, it looked like you're cutting your marketing spend a little bit. I think you're now maybe about 50 basis points below as a percentage of sales. How did you evaluate the risk for words of that decision, especially considering, you know, it looks like you'll probably need more investment on hostess to get the brand going again and get this 4% growth rate. Thanks.

Robert Moskow: And so we will not be able to level up marketing on Hostess to the same degree that we would expect on some of our other brands.

Speaker Change: until the back half of the year, and so we will not be able to level up marketing on hostess to the same degree that we would expect on some of our other brands.

Robert Moskow: How did you evaluate the risk for words of that decision, especially considering, you know, it looks like you'll probably need more investment on hostess to get the brand going again and get this 4% growth rate. Thanks.

Unknown Executive: Got it, that makes sense.

Robert Moskow: Rob, I would acknowledge to and our prepared remarks, we talked about our percent of marketing to have met sales being just below five and a half. And it was around five and a half coming into this fiscal year. So yes, we have pulled back on some marketing this fiscal year, but not in a draconian way.

Speaker Change: Got it, that makes sense. Rob, I would acknowledge too, and I prepared remarks.

Speaker Change: We talked about our percent of marketing to admit sales being just below 5.5.

Speaker Change: and it was around five and a half coming into this fiscal year. So yes we have pulled back on some marketing this fiscal year but not in an interconi in West.

Tucker Marshall: Rob, good morning. As you think about the flow for the year, we see the 9% growth really being driven by ongoing momentum in the uncrossable frozen handheld portfolio. Continued success with the peanut butter chocolate, innovation, or launch. Ongoing momentum within Kathy Bustello, which continues to perform at the above expectations and seeing continued momentum across the almix. And then as you think about some of the more discretionary aspects of the portfolio, you know, overall pet snacks portfolio has slowed a little bit to mark opening comments. We want to acknowledge that milk bond is still going to demonstrate a level of volume mixed growth. And we also want to acknowledge it within sweet baked snacks.

Unknown Executive: Okay, thank you. Thank you.

Peter Galbo: Next question today is coming from Peter Galbo from Bank of America; your life is now live. Hey guys, good morning. Morning.

Speaker Change: Okay, thank you.

Speaker Change: Thank you. Next question today is coming from Peter Gallbow from Bank of America. Your line is now live.

Peter Gallbow: Hey guys, good morning.

Peter Galbo: Mark Tucker, one question we're getting a little bit in the prepared remarks is that there was no mention on fiscal 26. You know, you would kind of talk about last quarter about the ability to kind of be above valor and then at least from an EPS perspective for her next year. So maybe you can just touch on that a bit, you know, are you walking away from that just was admitted for a reason or how we should kind of think about, you know, the transition through this year and then in the next year. It's still the same as three months ago.

Peter Gallbow: Good morning.

Mark Tucker: Mark Tucker, you know, one question we're getting a little bit in the prepared remarks that there was no mention on fiscal 26, you know, you kind of talked about last quarter about.

Speaker Change: The ability to kind of be above the algorithm, at least from an EPS perspective for her next year. So maybe you can just touch on that update, you know, are you walking away from that just dig it.

Mark Smucker: We felt that it was appropriate to acknowledge some of the near term headwinds that we're addressing not only at the category level, but also at the channel level, particularly that we're seeing in the front half of this fiscal year, and then to degress the back half of the fiscal year a bit. And that's really what is embedded in the overall outlook at the top line. We feel very confident in the overall portfolio.

Speaker Change: was admitted for a reason or how we should kind of think about the transition through this year and then in the next year and it's still the same as we're going to do next.

Mark Smucker: Thanks. Yeah, Pete, we are committed to the comments that we made coming into this fiscal year around FY 26. You know, as we see ongoing base business momentum. As we see the benefits coming through our transformation office in terms of cost and productivity savings. As we mitigate or we leave stranded overhead as we advance the second year of synergies and we continue to pay down debt, that is going to newer to the benefit of our earnings growth algorithm. So we're not stepping away from that really a reflection of what today is both at the top and bottom line. There are some external factors that are affecting both category and channel.

Speaker Change: Yeah, we are committed to the comments that we made coming into this fiscal year around FY26. You know, as we see ongoing base business momentum, as we see the benefits coming through our transformation office in terms of cost and productivity savings.

Mark Smucker: There's just some external factors that have affected more of the discretionary aspects of our portfolio. Robert Mark, I might just add that we still feel very good about the portfolio overall. You know, we've taken a lot of time over these past few years to get it right. We love the brands. We feel very good about hostess and the trajectory there.

Speaker Change: as we mitigate or relieve stranded overhead.

Speaker Change: is we advance the second year of synergies.

Speaker Change: and we continue to pay down debt. That is going to newer to the benefit of our earnings growth algorithm. So we're not stepping away from that. Really a reflection of what today is both at the top and bottom line.

Mark Smucker: Keep in mind, too, that we will have the business fully integrated at or before the one year anniversary of the acquisition. And from a marketing perspective, although the marketing might be down versus our expectations, we do still expect overall marketing spend in total for the company to be up slightly versus prior year. And we're being very committed to spending those dollars where they need to be spent, namely, uncrossables, supporting the launch of GIF peanut butter chocolate, milkbone, and then later in the back half of the year expect to continue to increase marketing on hostess.

Mark Smucker: And so we're acknowledging that we're still delivering business momentum and delivering healthy profits. Okay, great.

Speaker Change: are some external factors that are affecting both category and channel. And so we're acknowledging that, but we're still delivering business momentum and delivering healthy profits.

Mark Smucker: And from a marketing perspective, although the marketing might be down versus our expectations, we do still expect overall marketing spend in total for the company to be up slightly versus prior year. And we're being very committed to spending those dollars where they need to be spent, namely, uncrossables, supporting the launch of GIF peanut butter chocolate, milkbone, and then later in the back half of the year expect to continue to increase marketing on hostess.

Tucker Marshall: And Tucker, maybe you can just help us a bit more on the gross margin side, you know, the cadence kind of through the back half of the year. Obviously, with that coming down on green coffee, but any additional color there would be helpful.

Speaker Change: Okay great and and Tucker maybe you can just help us a bit more on the gross margin side you know the cadence kind of through the the back half of the year Obviously with with that coming down on green coffee but but any additional color there it be helpful

Tucker Marshall: So stepping into the fiscal year, our outlook for gross profit margin was 38% for total company on a failure basis. We revised that down to 37 and a half. The change is solely due to taking additional pricing as a result of green coffee inflation or another round of green coffee inflation that we're seeing within the portfolio. Candidly, we are seeing a very strong margin profile on the balance of the business, either at plan expectation or slightly ahead, so that's very good for the balance of the portfolio. And then from the cadence standpoint, you know, we delivered a really strong first quarter. Will probably be around that 37 and a half, maybe slightly better in the second quarter.

Tucker: Now, so stepping into the fiscal year, our outlook for gross profit margin was 38% for total company on a full year basis.

Speaker Change: We revised that down to 37.5. The change is solely due to taking additional pricing as a result of green coffee inflation or another round of green coffee inflation that we're seeing within the portfolio.

Mark Smucker: And then also, you know, as we get through integration, making sure that we can continue to drive just, you know, improve distribution. Obviously, we have very good distribution in some of the mass channels, so we'll be turning on our capabilities more fully once we get through the industry.

Speaker Change: Candidly, we are seeing a very strong margin profile on the balance of the business, either at plan expectation or slightly ahead, so that's very good for the balance of the portfolio.

Speaker Change: and then from the cadence standpoint, you know, we deliver to really strong first quarter. We'll probably be around that 37.5 maybe slightly better in the second quarter, and then we'll be significantly below that 37.5 and third and fourth quarter, kind of on an equal number in each quarter.

Tucker Marshall: And then will be significantly below that 37 and a half, and third and fourth quarter kind of on an equal number in each quarter. And then we're seeing a very strong margin profile on the balance of the portfolio.

Rob Moskow: Mark, can I ask a follow up to that? You said marketing will be up slightly for the full year, but your sales are going to be up like 9% year over year. So are there any brands that are getting a reduction in terms of sale, in terms of marketing support as a result of this?

Robert Moskow: Mark, can I ask a follow up to that? You said marketing will be up slightly for the full year, but your sales are going to be up like 9% year over year. So are there any brands that are getting a reduction in terms of sale, in terms of marketing support as a result of this? I think what the way I would think about it Rob is that with hostess because we're working through some new creative work, new advertising, new brand positioning, that will not be fully baked until the back half of the year.

Unknown Executive: Great.

Unknown Executive: Thanks very much, guys. Thank you.

Speaker Change: great thanks very much guys.

Matt Smith: Next question is coming from Matt Smith from Steve Fuller line. Is that a lot?

Speaker Change: Thank you. Next question is coming from Matt Smith from Steve for your line is now live.

Matt Smith: Hi, good morning.

Matt Smith: I have a question regarding how you're thinking about the additional price increase in the coffee category. You talked about weaker consumer behavior. You didn't mention coffee when you talked about that, but do you expect kind of the historical elasticity factor to hold as you take that additional pricing beginning in October?

Matt Smith: I go morning and make a particular question.

Matt Smith: I want to ask a question regarding how you're thinking about the additional price increase in the coffee category. He talked about weaker consumer behavior. He didn't mention coffee when he talked about that. But do you expect kind of the historical elasticity factor to hold as you take that additional pricing beginning in October?

Rob Moskow: I think what the way I would think about it Rob is that with hostess because we're working through some new creative work, new advertising, new brand positioning, that will not be fully baked until the back half of the year. And so we will not be able to level up marketing on hostess to the same degree that we would expect on some of our other brands. Got it. That makes sense. Thank you.

Matt Smith: Matt, it's Mark. You know, I would say that as we've modeled elasticity, we've been more close to right in terms of our modeling than not. And so I think we feel reasonably good about what we've modeled. I would point out a couple of things just in general about the coffee business. We've been here before, person foremost. Obviously, it is a commodity. It can be volatile. World demand for coffee is very strong right now, particularly for Robustus. And so that's what's driving the increase in robustus. And when we take price and remember, we go up and down on price, we always are prudent.

Matt Smith: Matt it's Mark you know I would say that

Tucker Marshall: And so we will not be able to level up marketing on hostess to the same degree that we would expect on some of our other brands. Got it. That makes sense. Thank you. Rob, I would acknowledge to and our prepared remarks, we talked about our percent of marketing to have met sales being just below five and a half. And it was around five and a half coming into this fiscal year. So yes, we have pulled back on some marketing this fiscal year, but not not in a draconian way. Okay. Thank you.

Matt Smith: As we've modeled the elasticity we've been more close to right.

Matt Smith: and in terms of our modeling, then not and so I think we feel reasonably good about what we've modeled.

Rob Moskow: Rob, I would acknowledge to and our prepared remarks, we talked about our percent of marketing to have met sales being just below five and a half. And it was around five and a half coming into this fiscal year. So yes, we have pulled back on some marketing this fiscal year, but not not in a draconian way. Okay. Thank you.

Speaker Change: I would point out a couple things just in general about the coffee business. We've been here before, or some foremost, you know, obviously it is a commodity, it can be volatile. You know, world demand for coffee is very strong right now, particularly for robusts.

Speaker Change: and so that's what's driving the increase in robustness.

Peter Galbo: Next question today is coming from Peter Galbo from Bank of America. Your life is now live. Hey guys, good morning. Morning, morning.

Speaker Change: and you know when we take price and remember we go up and down on price.

Mark Smucker: We have multiple levers. We have the ability to actually flex formulas and still deliver the exact same consumer experience. So that's a lever. Obviously, trade is a lever. And in these volatile times, you do see sometimes a little wonkiness in the category, but as we've led in price, we are now seeing competition follow, which is a good thing. And that should drive a bit more stability in the category. And then finally, you know, just still feeling really good about our portfolio, the fact that we offer options from value to premium, the fact that we have demonstrated an ability to shift our coffee business to where growth is previously, you know, a decade ago with shifting that to single serve and cake up and now shifting our portfolio over time into the cold brew or more pre-brewed liquid options.

Speaker Change: We always are prudent. We have multiple levers. We have the ability to actually flex formulas and still deliver the exact same consumer experience.

Mark Smucker: Mark Tucker, you know, one question we're getting a little bit in the prepared remarks that there was no mention on fiscal 26. You know, you would kind of talk about last quarter about, you know, the ability to kind of be above valor and then at least from an EPS perspective for her next year. So maybe you can just touch on that a bit. You know, are you walking away from that? Was it submitted for a reason or how we should kind of think about, you know, the transition through this year and then in the next year.

Speaker Change: So that's a lever, obviously trade is a lever and in these volatile times you do see sometimes a little wonkyness in the category but as we've led in price we are now seeing competition follow which is a good thing.

Speaker Change: and that should drive a bit more stability in the category.

Speaker Change: And then finally...

Speaker Change: You know just

Mark Smucker: It's still the same as three months ago. Thanks. Yeah, Pete, we are committed to the comments that we made coming into this fiscal year around FY 26. You know, as we see ongoing base business momentum. As we see the benefits coming through our transformation office in terms of cost and productivity savings. As we mitigate or we leave stranded overhead as we advance the second year of synergies and we continue to pay down debt.

Speaker Change: Still feeling really good about our portfolio. The fact that we offer options from value to premium. The fact that we have demonstrated a ability to shift.

Speaker Change: Our coffee business to where growth is previously.

Speaker Change: Y'all

Speaker Change: A decade ago, shifting that too.

Speaker Change: to single serve and cake up.

Speaker Change: and now shifting our portfolio over time into this beat.

Speaker Change: cold brew or more pre-brewed liquid options and I would highlight that our boost stelo multi-servap offerings are performing very well initial reads and launch and are exceeding our expectations.

Mark Smucker: And I would highlight that our Bustello multi-serve offerings are performing very well; initial reads and launch are exceeding our expectations.

Mark Smucker: That is going to newer to the benefit of our earnings growth algorithm. So we're not stepping away from that. Really a reflection of what today is both at the top and bottom line are some external factors that are affecting both category and channel. And so we're acknowledging that but we're still delivering business momentum and delivering healthy profits. Okay, great.

Unknown Executive: Thank you, Mark.

Matt Smith: And as a follow-up to the commentary around your expectations for the sweet baked goods category, you talk about confidence in the long-term potential still that 4% growth range, but you acknowledge the categories under pressure today, given the weaker consumer environment and channel shift. I thought I heard Tucker allude to some actions you're taking in the near term around the category and channel shift.

Mark Tucker: Thank you, Mark and...

Speaker Change: As a fellow to the commentary around your expectations for the sweet baked goods category, you talk about confidence in the long-term potential, still that 4% growth range.

Tucker Marshall: And Tucker, maybe you can just help us a bit more on the gross margin side. You know, the cadence kind of through the back half of the year. Obviously with that coming down on green coffee, but but any additional color there would be helpful.

Speaker Change: But you acknowledge the categories under pressure today given the weaker consumer environment and the channel shift. I thought I heard Tucker alluded to some actions you're taking in the near term around the category and channel shift.

Mark Smucker: You just elaborate on what leverage you have to improve the business beyond just consumers adjusting to the higher price order or the consumer environment getting a little stronger. Sure, Matt. First, I would just maybe from a macro perspective highlight that snacking has continued to be a very strong category overall in all of it. and continues or has continued to outpace total food. And so we continue to see a lot of bright spots in the snacking. Consumers are still snacking twice a day, or about 70% of consumers are eating to snack the day. Obviously, Uncrustables is a great success story and sort of highlights it's snacking; it's still here to stay.

Speaker Change: to give you the elaborate on what leverage you have to improve the business beyond just consumers adjusting to the higher price for the consumer environment getting a little stronger.

Speaker Change: First I would just maybe from the macro perspective highlight that knacking has continued to be a very strong category overall in all of its forms.

Speaker Change: and continues or has continued to outface total food.

Tucker Marshall: So that's very good for the balance of the portfolio. And then from the cadence standpoint, we delivered a really strong first quarter will probably be around that 37 and a half, maybe slightly better in the second quarter. And then will be significantly below that 37 and a half and third and fourth quarter kind of on an equal number in each quarter.

Speaker Change: and so we continue to see

Unknown Executive: Great.

Speaker Change: A lot of bright spots in the in the snacking consumers are still snacking twice a day or about 70% of consumers are eating too snack the day. Obviously, on festivals is a great success story and sort of highlights.

Mark Smucker: But as it relates. Specifically, the sweet bake snack. You know, we do have opportunities in the future to continue to expand distribution into the channels where we have the most strength. We will continue to innovate; we have a solid innovation pipeline. You've heard us talk about advertising; there's significant opportunity there as well.

Speaker Change: It's knocking it's still here today but as it relates specifically

Unknown Executive: Thanks very much, guys.

Speaker Change: Sweet Bakes Knack

Unknown Executive: Thank you.

Matt Smith: Next question is coming from Matt Smith from Steve Fuller. Your line is now live.

Matthew Smith: Next question is coming from Matt Smith from Steve Fuller. Your line is now live. Hi, good morning, Nick, particularly my question. I want to ask a question regarding how you're thinking about the additional price increase in the coffee category. You talked about some weaker consumer behavior. You didn't mention coffee when you talked about that.

Speaker Change: You know, we do have opportunities in the future to continue to expand distribution into the channels where we have the most strength.

Matt Smith: Hi, good morning, Nick, particularly my question. I want to ask a question regarding how you're thinking about the additional price increase in the coffee category. You talked about some weaker consumer behavior. You didn't mention coffee when you talked about that. But do you expect kind of the historical elasticity factor to hold as you take that additional pricing beginning in October?

Matthew Smith: But do you expect kind of the historical elasticity factor to hold as you take that additional pricing beginning in October?

Speaker Change: We will continue to innovate. We have a solid innovation pipeline.

Speaker Change: You've heard us talk about advertising, their significant opportunity there as well. And maybe, you know, just one other thing I might highlight that, you know, we get the question from the media a lot as around the GLP one drug.

Mark Smucker: And maybe, you know, just one other thing I might highlight that, you know, we get the question from the media a lot is around the GLP-1 drug. And of course, we look at that very closely and actually have recently updated, gotten some new data, and really looked at that across households. And we continue to see that there is really no meaningful impact from GLP-1 drugs on this particular category. And so the softness that we've talked about is really driven more than anything by just this less discretionary income. And so, for all of those reasons, for all of the things that we can control and that we plan on doing, we still love the brand.

Mark Smucker: Matt, it's Mark. You know, I would say that as we've modeled the elasticity, we've been more close to right in terms of our modeling than not. And so I think we feel reasonably good about what we've modeled.

Speaker Change: and of course we look at that very closely and actually have recently updated gotten some new data and really looked at that across households and we continue to see that there is really no meeting for impact.

Mark Smucker: I would point out a couple things just in general about the coffee business. We've been here before, first and foremost, you know, obviously it is a commodity. It can be volatile. You know, world demand for coffee is very strong right now, particularly for robustness. And so that's what's driving the increase in robustness. And, you know, when we take price, and remember we go up and down on price, we always are prudent.

Speaker Change: from GLP-1 drugs on this particular category, and so the softness that we've talked about is really driven more than anything by just this...

Speaker Change: Les discretionary income and so for all of those regions for all of the things that we can control and that we plan on doing we still love the brand

Mark Smucker: And we're still be even in convenience. I said earlier, we're still growing share and we have, you know, optimism that we were going to continue to turn on our capabilities and continue to drive this thing.

Mark Smucker: We have multiple levers. We have the ability to actually flex formulas and still deliver the exact same consumer experience. So that's a lever. Obviously trade is a lever. And in these volatile times, you do see sometimes a little wonkiness in the category. But as we've led in price, we are now seeing competition follow, which is a good thing. And that should drive a bit more stability in the category. And then finally, you know, just still feeling really good about our portfolio, the fact that we offer options from value to premium, the fact that we have demonstrated an ability to shift our coffee business to where growth is previously, you know, a decade ago, shifting that to single serve and cake up.

Speaker Change: We're still the evening convenience, I said earlier, we're still growing chair and we have, you know, optimism that we're going to continue to turn on our capabilities and continue to drive this thing.

Unknown Executive: Thanks, Mark. I'll leave it there. Thank you.

Speaker Change: Thanks Mark. I'll leave it there.

Tom Palmer: Next question is coming from Tom Palmer from City; your line is our live. Good morning. Thanks for the question. I wanted to ask on Uncrustables. I think the plan has been for around 100 million in sales growth annually, and that this was partially dictated by capacity constraints. Could you just give an update on growth expectations for Uncrustable this year and then in subsequent years? Is 100 million a year still the right way to think about it, or is that perhaps changing a bit?

Speaker Change: Thank you. Next question is coming from Tom Palmer from City of Ireland as our live.

Speaker Change: Good morning. Thanks for the question. I wanted to ask on the on-questables. I think the plan has been for around a hundred million in sales growth annually and that this was partially dictated by capacity constraints.

Mark Smucker: And then finally, you know, just still feeling really good about our portfolio, the fact that we offer options from value to premium, the fact that we have demonstrated an ability to shift our coffee business to where growth is previously, you know, a decade ago, shifting that to single serve and cake up. And now shifting our portfolio over time into the cold brew or more pre-brewed liquid options. And I would highlight that our Bustello multi-servile offerings are performing very well, initial reach and launch, and are exceeding our expectations.

Speaker Change: If you just give an update on growth expectations for an across-school this year and then in subsequent years is a hundred million a year still the right way to think about it or is that this perhaps changing it.

Tom Palmer: And Tom, good morning. We can continue to see tremendous runway; the Uncrustable sandwich and the overall brand had another great quarter, demonstrating double-digit growth. And we are committed to the $1 billion ambition by the end of our fiscal year 2026. And so, as a result of that, we continue to bring on capacity through our Alabama facility that will be producing saleable sandwiches here shortly. We continue to advance innovation. We spoke in our prepared remarks about the raspberry flavor that's forthcoming here in the next month. And so we're very pleased with the overall Uncrustables platform in direction, and it's on track to do what we've laid out, and furthermore, it continues to perform in this fiscal year, being a real positive contributor to our. Okay, thank you.

Tom Palmer: At Tom Good Morning, we can continue to see each tremendous runway.

Mark Smucker: And now shifting our portfolio over time into the cold brew or more pre-brewed liquid options. And I would highlight that our Bustello multi-servile offerings are performing very well, initial reach and launch, and are exceeding our expectations.

Speaker Change: the Uncrustable Sandwich in the overall brand had another great quarter demonstrating double digit growth and we are committed to the $1 billion ambition by the end of our fiscal year 2020.

Speaker Change: Six and so as a result of that we continue to bring on capacity through our Alabama facility that will be

Mark Smucker: Thank you, Mark.

Unknown Executive: Thank you, Mark.

Matt Smith: And as a follow-up to the commentary around your expectations for the sweet baked goods category, you talk about confidence in the long-term potential, still that 4% growth range, but you acknowledge the categories under pressure today given the weaker consumer environment and channel shift. I thought I heard Tucker allude to some actions you're taking in the near term around the category and channel shift.

Matthew Smith: And as a follow-up to the commentary around your expectations for the sweet baked goods category, you talk about confidence in the long-term potential, still that 4% growth range, but you acknowledge the categories under pressure today given the weaker consumer environment and channel shift. I thought I heard Tucker allude to some actions you're taking in the near term around the category and channel shift. Could you elaborate on what leverage you have to improve the business beyond just consumers adjusting to the higher price order or the consumer environment getting a little stronger?

Speaker Change: producing sailable sandwiches here shortly.

Speaker Change: We continue to advance innovation. We took spoke in our prepared remarks about the Raspberry flavor that's forth coming here in the next month.

Speaker Change: and so we're very pleased with the overall across the bull's platform and direction and it's on track to do what we've laid out and furthermore it continues to to perform in this fiscal year being a real positive contributor to our outlook.

Mark Smucker: Could you elaborate on what leverage you have to improve the business beyond just consumers adjusting to the higher price order or the consumer environment getting a little stronger? Sure, Matt. First, I would just maybe from a macro perspective highlight that snacking has continued to be a very strong category overall in all of it, and continues, or has continued to outpace total food. And so we continue to see a lot of bright spots in the snacking consumers are still snacking twice a day, or about 70% of consumers are eating to snack the day.

Tom Palmer: And then we've heard from some of your US youth peers' plans for a stepped-up promotional activity, drive higher volume. To what extent have you considered a similar plan of action, especially maybe for some parts of the portfolio such as sweet, big snacks or dog treats, where underlying demand teams to be a bit softer lately? Sure, Thomas Mark, we have, in general, seen promotional activity return to normalized pre-pandemic levels.

Speaker Change: i

Speaker Change: Okay, thank you.

Speaker Change: And then we've heard from some of your U.S. newspapers planned for stepped up promotional activity drive higher balling in.

Mark Smucker: Sure, Matt. First, I would just maybe from a macro perspective highlight that snacking has continued to be a very strong category overall in all of it, and continues, or has continued to outpace total food. And so we continue to see a lot of bright spots in the snacking consumers are still snacking twice a day, or about 70% of consumers are eating to snack the day.

Speaker Change: To what extent have you considered a similar plan of action, especially maybe for some parts of the portfolio such as sweet big snacks or dog treats were underlying demand teams to be a bit softer lately.

Speaker Change: I'm sure Tom is Mark. We have in general seen.

Tom Palmer: Promotional activity returned to normalized pre-pandemic levels.

Mark Smucker: And so, although you may see spikes in promotions in any given category at any given time, those are, generally speaking, temporal. And so when we think about where we're allocating our dollars, whether that's marketing or in-store media or merchandising or what have you, we try to lean on our capabilities of our GM and our net revenue optimization and make sure that we're focused on putting those dollars where we really believe that they can actually make an impact.

Tom Palmer: and so although you may see spikes in promotions and any given category at any given time, those are generally speaking temporal.

Mark Smucker: Obviously, uncrustables is a great success story and sort of highlights it's snacking, it's still here to stay. But as it relates, specifically, the sweet bake snack. You know, we do have opportunities in the future to continue to expand distribution into the channels where we have the most strength, we will continue to innovate, we have a solid innovation pipeline. You've heard us talk about advertising, there's significant opportunity there as well. And maybe, you know, just one other thing I might highlight that, you know, we get the question from the media a lot is around the GLP1 drugs.

Tom Palmer: And so when we think about where we're allocating our dollars, whether that's marketing or in-store media or merchandising, what have you.

Tom Palmer: We tried to lean on our capabilities of our GM and our net revenue optimization and make sure that we're focused on putting those dollars where we really believe that they can actually make.

Unknown Executive: Okay, thank you. Thank you.

Mark Smucker: And of course, we look at that very closely and actually have recently updated gotten some new data and really looked at that across households. And we continue to see that there is really no meaningful impact from GLP1 drugs on this particular category. And so the softness that we've talked about is really driven more than anything by just this less discretionary income. And so for all of those reasons, for all of the things that we can control and that we plan on doing, we still love the brand. And we're still be even in convenience, I said earlier, we're still growing share and we have, you know, optimism that we were going to continue to turn on our capabilities and continue to drive this thing.

Mark Smucker: And maybe, you know, just one other thing I might highlight that, you know, we get the question from the media a lot is around the GLP1 drugs. And of course, we look at that very closely and actually have recently updated gotten some new data and really looked at that across households. And we continue to see that there is really no meaningful impact from GLP1 drugs on this particular category. And so the softness that we've talked about is really driven more than anything by just this less discretionary income.

Tom Palmer: i

Steve Powers: Next question is coming from Steve Powers from Deutsche Bank.

Speaker Change: Okay, thank you.

Steve Powers: Your line is not live. Hey, great. Thank you. Going back to the second round, I anticipated coffee pricing that you're putting in place in October. I'm wondering if you're able to provide a more perspective in terms of the likely magnitude of that increase and whether it will be focused on any particular channels, brands, or formats, for example, both pods and ground or just ground. It's just to give us a little more sense of how you're thinking about that increase.

Speaker Change: Thank you. Next question is coming from Steve Cowers from Deutsche Bankerland. Is it our life?

Steve Cowers: Hey great thank you.

Steve Cowers: Going back to the second round, I'm anticipated coffee pricing that you're putting in place enough to over. I'm wondering if you're able to provide any more perspective in terms of the likelihood of that increase.

Speaker Change: and whether it will be focused on any particular channels, brands or formats, for example, both pods and ground or just ground. It's just to give us a little more sense of how you're thinking about that increase.

Mark Smucker: Steve, it's Mark. I can't provide specifics around the magnitude, but what I can tell you is that it is across the entire portfolio. So that means roasting ground, it means single serve. It's all brands. And so it's very holistic.

David: David's Mark, I can't provide specifics around the magnitude, but what I can tell you is that it is across the entire portfolio. So that means roasting ground, it means single serve.

Mark Smucker: And so for all of those reasons, for all of the things that we can control and that we plan on doing, we still love the brand. And we're still be even in convenience, I said earlier, we're still growing share and we have, you know, optimism that we were going to continue to turn on our capabilities and continue to drive this thing.

Speaker Change: It's all brands and so it's very holistic.

Unknown Executive: Okay, that helps.

Unknown Executive: Thank you very much.

Steve Powers: And then pivoting back to the slowdown that we've seen in dog snacks that's impacting No Phone, it seems to have been relatively abrupt and struck as some of a surprise. And I guess as you look back, I'm wondering if you.

Mark Tucker: Okay, that's that helps. Thank you very much

Speaker Change: and then pivoting back to the slowdown that we've seen in dogs and acts that's impacting most bones. It seems to...

Unknown Executive: Thanks Mark, I'll leave it there.

Unknown Executive: Thanks Mark, I'll leave it there. Thank you.

Unknown Executive: Thank you.

Tom Palmer: Next question is coming from Tom Palmer from City, your line is our live.

Thomas Palmer: Next question is coming from Tom Palmer from City, your line is our live.

Speaker Change: I've been relatively abrupt and struck as some of us surprised. And I guess as you look back, I'm wondering if you...

Tom Palmer: Good morning. Thanks for the question. I wanted to ask on uncrustables. I think the plan has been for around 100 million in sales growth annually and that this was partially dictated by capacity constraints. Could you just give an update on growth expectations for uncrustable this year and then in subsequent years is 100 million a year still the right way to think about it or is that this perhaps changing a bit.

Thomas Palmer: Good morning. Thanks for the question. I wanted to ask on uncrustables. I think the plan has been for around 100 million in sales growth annually and that this was partially dictated by capacity constraints. Could you just give an update on growth expectations for uncrustable this year and then in subsequent years is 100 million a year still the right way to think about it or is that this perhaps changing a bit.

Steve Powers: Now see any markers that might have pointed to these dynamics ahead of time that you might have been underappreciated or perhaps more importantly, are there factors that you're now tracking that might be my service a barometer of demand looking forward. I guess I'm trying to get a sense of your visibility and ability to anticipate the man in this category versus she kind of having to react to things in more real time. Yes, Steve, what I would share is, first of all, Milk-Bone did grow. So our total dog snacks was down in the quarter primarily because of our soft and chewy business was a little bit soft, but Milk-Bone actually did see some modest growth to the tune of 2% in volume.

Speaker Change: Now see any markers that might have pointed to these dynamics ahead of time that you might have been under-preciated or perhaps more importantly are there factors that you're now tracking.

Speaker Change: that might be my service a barometer of demand looking forward. I guess I'm trying to get a sense of your your visibility and it obliges to state the man in this category versus having to react to things in more real time.

Mark Smucker: And Tom, good morning. We can continue to see tremendous runway, the uncrustable sandwich and the overall brand had another great quarter demonstrating double digit growth. And we are committed to the $1 billion ambition by the end of our fiscal year 2026. And so as a result of that, we continue to bring on capacity through our Alabama facility that will be producing saleable sandwiches here shortly. We continue to advance innovation. We spoke in our prepared remarks about the Raspberry flavor that's forthcoming here in the next month.

Steve Cowers: Steve, what I would share is first of all, Milpone did grow, so our total dog snacks.

Speaker Change: was down in the quarter primarily because of our soft and chewy business was a little bit soft.

Speaker Change: but Milfbone actually did see some modest growth to the tune of 2% in volume. So we attribute that to A that we continue support the brand.

Mark Smucker: So we attribute that to a that we continue to support the brain. and C, that it plays in most all segments across the category in forms and occasions, as well as offering products that are both premium to value. And on top of that, we launched the soft and chewy peanut buttery bites that contain Jeff or co-branded with Jeff. And that product, like all our innovation, currently has been brought and performing very well. And so for all of those factors, Milk-Bone continues to perform. As it relates to the consumer, I think we've been pretty specific that this lower discretionary income merely impacts the discretionary categories of pet snacks and sweet baked snacks.

Speaker Change: Be that it plays in most all segments across the category in forms and occasions as well as offering products that are both premium to value.

Mark Smucker: And so we're very pleased with the overall uncrustables platform in direction and it's on track to do what we've laid out. And furthermore, it continues to perform in this fiscal year being a real positive contributor to our.

Speaker Change: and on top of that, we launched the soft and chewy.

Now look.

Unknown Executive: Now look.

Speaker Change: Peanut buttery bites that contain GF or co-branded with GF and that product like all our innovation currently has been performing very well and so for all of those factors there's no phone continues to perform.

Thomas Palmer: Okay, thank you. And then we've heard from some of your US youth peers plans for stepped up promotional activity, drive higher volume. To what extent have you considered a similar plan of action, especially maybe for some parts of the portfolio, such as sweet big snacks or dog treats, where underlying demand seems to be a bit softer lately? Sure, Thomas Mark.

Speaker Change: As a relates to the consumer, I think we've been pretty specific that this lower discretionary income. I'm merely impact the discretionary categories of pet smack and snack.

Mark Smucker: And so that's where we've really seen most of the focus.

Mark Smucker: We have in general seen promotional activity return to normalized pre-pandemic levels. And so although you may see spikes in promotions in any given category at any given time, those are generally speaking temporal.

Speaker Change: and Sweet Bakes Knack. So that's where we've really seen most of the focus and I may maybe I just leave it there.

Unknown Executive: And I may, I just leave it there. Okay. Yep. That's there. I appreciate it. Thank you very much.

Speaker Change: Okay, yeah, that's fair. I appreciate it. Thank you very much.

Alexia Howard: Next question is coming from Alexia Howard from Bursinger line. Is our life.

Speaker Change: Thank you.

Speaker Change: Thank you next question is coming from Alexia Howard from Bernstein Airlines in our life.

Alexia Howard: Good morning, everyone. Morning. Okay.

Alexia Howard: Good morning everyone!

Mark Smucker: So two quick brand focus questions. First of all, on Hostess, I think you commented in the paper marks that you're expecting volume mixed growth in Hostess this year. Despite the disappointing top line results so far, what gives you the confidence that you'll be able to turn it around into positive character this year? Alexia, we believe that we are in the right category. Sweet baked goods category is a great category. And we have the right brand and portfolio within sweet baked snacking. And we're very pleased with that decision. The acquisition is on track from an integration standpoint.

Unknown Executive: And so when we think about where we're allocating our dollars, whether that's marketing or in-store media or merchandising or what have you, we try to lean on our capabilities of our GM and our net revenue optimization and make sure that we're focused on putting those dollars where we really believe that they can actually make an impact. Okay, thank you. Thank you.

Speaker Change: Thank you for your time.

Alexia Howard: Okay, the two quick brand focus questions. First of all, on hostess. I think you commented in the paper box that's...

Alexia Howard: your expecting volume mixed growth in hostess this year despite the disappointing top line results so far. What gives you the confidence that you'll be able to turn it around in two positive territory this year?

Alexia Howard: Alexia

Speaker Change: We believe that we are in the right category. Sweet Bay Goods category is a great category and we have the right brand and portfolio within Sweet Bay Snacking and we're very pleased.

Steve Towers: Next question is coming from Steve Towers from Deutsche Bank.

Steve Towers: Your line is not live. Hey, great. Thank you. Going back to the second round, I anticipated coffee pricing that you're putting in place in October. I'm wondering if you're able to provide a more perspective in terms of the likely magnitude of that increase. And whether it will be focused on any particular channels, brands or formats, for example, both pods and ground or just ground, just to give us a little more sense of how you're thinking about that increase.

Speaker Change: With that decision, the acquisition is on track from an immigration standpoint. It's a strong brand, and we have the right focus and tactics on the portfolio.

Mark Smucker: It's a strong brand. And we have the right focus and tactics on the portfolio. What we're seeing that's caused our top line revision this fiscal year is largely driven by the overall category and how the category has been down, but we continue to perform in the category. And demonstrating that we also have an over index to the convenience channel. And that channel has also been down in totality as well. What gives us confidence in the portfolio is one, the ongoing opportunities to see a stabilization in the sea store channel, ongoing merchandising and distribution opportunities within traditional retail, and the ability to expand into the away from home channel as well.

Speaker Change: What we're seeing that's caused our top-line revision this fiscal year is largely driven by the overall category and how the category has been down but we continue to perform in the category.

Speaker Change: and demonstrating that we also have an over-index to the convenience channel and that channel has also been down into a tallity as well.

Speaker Change: Well, what gives us confidence in the portfolio is one

Speaker Change: is the ongoing opportunities to see a stabilization in the C-store channel.

Speaker Change: I'm going merchandising and distribution opportunities within traditional retail.

Unknown Executive: Okay, that helps. Thank you very much.

Mark Smucker: Along with the opportunity to have synergy sort of come across from each business and to support one another. I will also say that we are calling down approximately 40 million, of which 25 million is in the front half, walked into the fiscal year, and we said we would be flat to slightly down in the front half of the year. We're going to be down now as a result because of the 40 million. 25, as I said, has come through the first half. The back half the additional 15 million is not simply de risking because of somebody uncertainty, particularly until we're able to see some of the stabilization and continue to advance the strategic tactics across the poor.

Speaker Change: The ability to expand into the away from home channel as well.

Steve Towers: And then pivoting back to the slowdown that we've seen in dog snacks that's impacting milkbone, it seems to have been relatively abrupt and struck as somewhat of a surprise. And I guess as you look back, I'm wondering if you now see any markers that might have pointed to these dynamics ahead of time that you might have or are there factors that you're now tracking that might be my service a barometer of demand looking forward.

Speaker Change: Along with the opportunity to have synergy sort of come across from each business.

Speaker Change: and to support one another.

Speaker Change: I would also say that we are calling down approximately 40 million of which 25 million is in the front half.

Speaker Change: We walked into the fiscal year and we said we would be flat to slightly down and the front half of the year we're going to be down now.

Speaker Change: As a result, because of the 40 million 25 as I said has come through the first half, the back cap, the additional 15 million, is not simply derisking, because of somebody on certainty, particularly until we're able to see some of the stabilization and continue to advance, but strategic tactics across the portfolio.

Steve Towers: I guess I'm trying to get a sense of your visibility and ability to anticipate the man in this category versus kind of having to react to things in more real time. And Steve, what I would share is first of all, milkbone did grow. So our total dog snacks was down in the quarter primarily because of our soft and chewy business was a little bit soft, but milkbone actually did see some modest growth to the tune of 2% in volume.

Unknown Executive: Great.

Unknown Executive: Thank you. And there's a poll.

Alexia Howard: Can we switch to Duncan? It looks so; I think volume mix and pricing was down this time in contrast with some of your other coffee brands, which did very well. Is there something going on with competitive dynamics that's specific to Duncan, or is it something else that's going on with the brand? Yeah, like it's Mark. We have continued to see some competitive dynamics, and Duncan, and I think that's really what's driving it. We still feel really good about the brand, and you know, it's a pretty large portion of our coffee business. And so, as pricing looks to be normalizing in the category, we would expect to see some stabilization of that over time.

Speaker Change: Great thank you and the follow-up to we asked which to dunk in. It looks like I think volume mix and pricing was down this time in contrast with

Speaker Change: Some of your other coffee brands which did very well.

Speaker Change: Is there something going on with competitive dynamics that's specific to dunk in or is it something else that's going on with the brand?

Steve Towers: So we attribute that to A, that we continue to support the brain, and B that it plays in most all segments across the category in forms and occasions, as well as offering products that are both premium to value. And on top of that, we launched the soft and chewy peanut buttery bites that contain Jeff or co-branded with Jeff and that product, like all our innovation currently has been brought and performing very well.

Mark Tucker: Yeah, like see it's Mark. We have continued to see some competitive dynamics in Duncan. And I think that's really what's driving it. We still feel really good about the brand and you know it's a pretty large.

Mark Tucker: portion of our coffee business. And so as pricing looks to be normalizing in the category, we would expect to see some stabilization of that over time and then of course we will continue.

Mark Smucker: And then, of course, we will continue to support the brand.

Unknown Executive: Perfect.

Unknown Executive: Thank you very much. I'll pause it on.

Mark Tucker: support the br

Speaker Change: Perfect. Thank you very much. I'll pass it on.

Steve Towers: And so for all of those factors, milkbone continues to perform. As a relate to the consumer, I think we've been pretty specific that this lower discretionary income, I merely impact the discretionary categories of pet snacks and sweet baked snacks. And so that's where we've really seen most of the focus and I may just leave it there.

Unknown Executive: Operator, I think we're waiting for a question from Rob Dickerson.

Speaker Change: that

Speaker Change: i

Speaker Change: operator I think we're waiting for a question from Rob Dickerson

Rob Dickerson: Apologies, ladies and gentlemen. We are currently experiencing technical difficulties. We move on to our next question, which is coming from the line of Rob Dickerson with Jeffries. Please proceed.

Speaker Change: Apologies, ladies and gentlemen, we are currently experiencing the type of difficulties we move We'll go on to our next question, which is coming from the line of Rob Jefferson with Jeffries. Please proceed.

Mark Smucker: Okay, yeah, that's there. I appreciate it. Thank you very much.

Rob Dickerson: Thank you so much.

Rob Dickerson: Tucker, maybe a question for you to sound pet. I mean, clearly, you know, the profitability in the quarter was very impressive. Just kind of curious how you're thinking about sustainability about margin profile, the business for the rest of the year. And then also, as we think forward to the next fiscal year, right when things like a fair amount of straight overhead should still come off. Like what we're seeing today, if that's sustainable even for this year, that also imply that pet margin could be even higher next year, actually straight overhead. That's the first question.

Rob Jefferson: Dougher, maybe a question for you to some pet, I mean clearly you know the profitability in the quarter was very impressive, just kind of curious.

Unknown Executive: Thank you.

Alexia Howard: Next question is coming from Alexia Howard from Bursinger line is our life.

Alexia Howard: Good morning, everyone. Morning, morning. Okay, so two quick brand focus questions. First of all, on hostess, I think you commented in the paper remarks that you're expecting volume mixed growth in hostess this year, despite the disappointing top line results so far, what can you do the confidence that you'll be able to turn it around into positive territory this year? Alexia, we believe that we are in the right category, sweet baked goods category is a great category.

Speaker Change: How you're thinking about sustainability of a margin profile of the business for the rest of the year, and then.

Speaker Change #100: Also as we think forward to the next fiscal year right when

Speaker Change #100: James Lake, a fair amount of strand overhead, should still come off like what we're seeing today that's sustainable even for this year. That also implied that pet margin could be even higher next year x the strand overhead. That's the first question. Thanks.

Tucker Marshall: Thanks. Rob, good morning. Yes, it's nice to see the strength of profitability in our pet portfolio and the strong performance for the quarter. You know, what is supporting that is just the positive volume mixed momentum coming across the portfolio through both had snacks and cat food. It's seeing a stabilization in the supply chain, particularly within our cat food portfolio. You're seeing the benefits of our cost and productivity savings, the initial steps to begin realizing or removing stranded overhead. And so it is definitely a good, a good first quarter. As we think going forward, you know, in that 25% range, maybe slightly better should kind of continue to be the outlook for the portfolio.

Speaker Change #101: Good morning. Yes, it's nice to see the strength of profitability in our pet portfolio and the strong performance for the quarter.

Alexia Howard: And we have the right brand and portfolio within sweet baked snacking. And we're very pleased with that decision. The acquisition is on track from an integration standpoint. It's a strong brand. And we have the right focus and tactics on the portfolio. What we're seeing that's caused our top line revision this fiscal year is largely driven by the overall category and how the category has been down, but we continue to perform in the category.

Speaker Change #102: You know, what is supporting that is is just the positive volume makes momentum coming across the portfolio through both.

Speaker Change #103: Pat Snacks and Cat Food. It's seeing a stabilization in the supply chain, particularly within our cat food portfolio. You're seeing the benefits of our cost and productivity savings.

Alexia Howard: And demonstrating that we also have an over index to the convenience channel and that channel has also been down in totality as well. But what gives us confidence in the portfolio is one is the ongoing opportunities to see a stabilization in the C store channel, ongoing merchandising and distribution opportunities within traditional retail, the ability to expand into the away from home channel as well, along with the opportunity to have synergy sort of come across from each business and to support one another.

Speaker Change #103: the initial steps to begin realizing or removing.

Speaker Change #104: I'm stranded overhead

Speaker Change #104: and so it is definitely a good first quarter.

Speaker Change #104: As we think going forward, you know, in that 25% range, maybe slightly better should kind of continue to be the outlook for the portfolio. Again, we'll be able to sharpen the pencil on that and provide more of an update as we go through this fiscal year and then to next.

Tucker Marshall: Again, we'll be able to sharpen the pencil on that and provide more of an update as we go through this fiscal year and into next. But again, it's a nice restoration of overall profit and margin in that portfolio as we've focused on the areas where, excuse me, we have the right to win in pet snacks and cats. All right, great.

Speaker Change #104: But again, it's a nice restoration of overall profit and margin in that portfolio as we've focused on areas where Excuse me, we have the right to win and pet snacks and catsuit.

Rob Dickerson: And then I guess just, you know, specifically on the lower EPS. I mean, it's not that much lower, but a little lower. You know, I guess, you know, while I respect little slower sales and hostess and dogs next for the drivers you mentioned, you know, would you say like maybe the lion share that of the lower EPS is also just off of the higher. Green coffee cost, and I'm kind of asking away also because I'm trying to understand, you know, clearly a pastor category depending on the environment, right? Maybe you can price a little bit more, and you could even manage the flat profit dollars, you know, versus a lower margin. But now I have a little bit of a lower margin, you know, at least on the gross side for the year, but then a little lower profit dollars, right?

Speaker Change #105: All right, great. And then I guess just, you know...

Alexia Howard: I will also say that we are calling down approximately 40 million of which 25 million is in the front half walked into the fiscal year and we said we would be flat to slightly down in the front half of the year. We're going to be down now as a result because of the 40 million 25 as I said has come through the first half. The back half the additional 15 9 is not simply be risking because of some of the uncertainty, particularly until we're able to see some of the stabilization and continue to advance the strategic tactics across the poor.

Speaker Change #106: specifically on the lower EPS.

Speaker Change #107: I mean, it's not that much lower, but a little lower, you know, I guess, you know, while I respect little slower sales and hostess and dogs next for the, you know, drivers you mentioned, you know, would you say, like maybe the lion share that, the lower EPS is also just.

Unknown Executive: Julia. Great, thank you. And there's a follow-up.

Speaker Change #107: Off of the higher bringing coffee cost and I'm kind of asking away also to them trying to understand

Speaker Change #108: You know, clearly a pastor category, depending on the environment, right, maybe you can praise a little bit more, and you can even match the flat profit dollars versus a lower margin, but now I have a little bit of a lower margin.

Alexia Howard: Can we switch to Duncan? It looks so, I think volume mix and pricing was down this time in contrast with some of your other coffee brands, which did very well. Is there something going on with competitive dynamics that's specific to Duncan or is it something else that's going on with the brand?

Speaker Change #109: You know, at least on the gross side for the year, but then a little while we're proud to dollars, right? So it almost seems like kind of treading really carefully from life perspective on the pricing side, just kind of given the consumer environment. Thanks. That's all.

Rob Dickerson: So it almost seems like kind of treading really carefully from my perspective. On the pricing side, just kind of given the consumer environment.

Mark Smucker: Yeah, Alexia, it's Mark. We have continued to see some competitive dynamics in Duncan and I think that's really what's driving it. We still feel really good about the brand and you know it's a pretty large portion of our coffee business. And so as pricing looks to be normalizing in the category, we would expect to see some stabilization of that over time and then of course we will continue to support the brand.

Tucker Marshall: Thanks.

Tucker Marshall: That's all, Rob. We didn't hear the initial part of your question. It came in very faint, but what I thought I heard was the change in the midpoint of our adjustments for shared guidance range approximately 20 cents to sort of how did that break down? Was that was that the question? I just want to make sure. Yeah, yeah, I mean, that's, yeah, that's, that's the simple question, and I'm also just trying to. Figure out if you're treading a little carefully on the pricing dynamic in coffee, right? So maybe not flat dollar profit in the back half, right?

Speaker Change #109: Rob, we didn't hear the initial part of your question. It came in very faint.

Speaker Change #110: But when I thought I heard was...

Speaker Change #111: The change in the midpoint of our adjusted earnings for shared guidance range, approximately 20 cents, to sort of how did that break down? Was that the question I just want to make for you?

Rob: That's the simple question, and I'm also just trying to figure out if you're treading a little carefully on the pricing dynamic and coffee, right? So maybe not flat dollar profit.

Unknown Executive: Perfect, thank you very much.

Unknown Executive: I'll pause it on. Operator, I think we're waiting for a question from Rob Dickerson. Apologies ladies and gentlemen, we are currently experiencing technical difficulties.

Tucker Marshall: But maybe a little lower margin, a little bit lower profit from coffee. So kind of what's the breakout and then like what is the thought process on the amount of pricing you would be taking in coffee relative to the consumer environment at all?

Speaker Change #113: in the back half right but maybe a little lower margin a little bit lower profit from coffee so kind of what's the breakout and then like what is the thought process on the on the out of price you would be taking in coffee relative to the consumer environment at all.

Tucker Marshall: Yeah, so there's a lot to unpack there. Why don't we just sort of start at the, at the highest level, the 20 cent change in the midpoint of our previous guidance range from 10 dollars to nine, nine dollars and 80 cents? When you break that down, it's, it's approximately 25 cent reduction from top line or net sales. It's approximately a 35 cent gross margin impact, which is largely coming through your coffee portfolio. If not all. And then that is being offset by 40 cents of S DNA favorability, which over indexes to administrative support and then also, and then to a level of marketing.

Speaker Change #114: Yeah, so there's a lot to unpack there. Why don't we just sort of start at the highest level? The 20% change of the midpoint of our previous guidance range.

Rob Dickerson: We move on to our next question, which is coming from the line of Rob Dickerson with Jeffries. Please proceed. Thank you so much. Dougher, maybe a question for you just on Pat. I mean clearly the profitability in the quarter was very impressive, just kind of curious how you're thinking about sustainability, about margin profile, the business for the rest of the year and then also as we think forward to the next fiscal year right when things like the fair amount of the straight overhead should still come off. Like what we're seeing today is that sustainable even for this year, that also imply that pet margin could be even higher next year, actually straight overhead.

Speaker Change #115: from $10 to $9.80. When you break that down, it's approximately 25% reduction from top line or net sales.

Speaker Change #116: It's approximately a 35-cent gross margin impact, which is largely coming through your coffee portfolio, it's not all.

Speaker Change #116: and then that is being offset by 40 cents of SDA favorability, which over indexes to administrative support and then also a level of marketing.

Tucker Marshall: As we think about sort of the coffee dynamic, you know, what we had to do was acknowledge rising costs, recover those costs on a dollar-for-dollar basis in an appropriate pass-through way. And as you know, we pass through both inflation and deflation as we see it on green coffee. And then what we've also acknowledged is a price elasticity of demand associated with taking that additional round of pricing in order to recover these costs.

Speaker Change #116: As we think about sort of the coffee dynamic, you know what we had to do was acknowledge rising costs.

Speaker Change #116: We covered those costs on a dollar for dollar basis on an appropriate pass-through way. As you know, we passed through both inflation and deflation as we see it on green coffee.

Tucker Marshall: That's the first question. Rob, good morning. Yes, it's nice to see the strength of profitability in our pet portfolio and the strong performance for the quarter. What is supporting that is is just the positive volume mix momentum coming across the portfolio through both pet snacks and cat food. It's seeing a stabilization in the supply chain, particularly within our cat food portfolio. You're seeing the benefits of our cost and productivity savings, the initial steps to begin realizing or removing stranded overhead.

Speaker Change #116: And then what we have also acknowledged is a price elasticity of demand associated with taking that additional round of pricing in order to recover these costs.

Unknown Executive: Okay, that's perfect.

Unknown Executive: Thank you so much.

Speaker Change #117: Okay, that's perfect. Thank you so much.

Unknown Executive: Thank you.

Max Compert: Next question is coming from Max Compert from BMP Power Byterline.

Max Compert: Is that live? Hey, thanks for the question. First ones on the dog treats weakness that you called out. So it sounds like what you're seeing is primarily a consumer dynamic with regard to discretionary income pressure. But I'm wondering how retailers are reacting. And if you're seeing any reductions in order pattern or inventory getting worked down. Thanks. Max, could you this mark? Could you repeat the second part of your question, please? I got the first part about which I'll answer about dog. Max, what was the second part? Yeah, it was the second part was on dog.

Speaker Change #117: Thank you next question is coming from Max Comfort from BMP Power by your line is now live

Speaker Change #118: Hey, thanks for the question. First one's on the dog treats weakness that you call down. The sound think what you're seeing is...

Tucker Marshall: And so it is definitely a good first quarter. As we think going forward, you know, in that 25% range, maybe slightly better should kind of continue to be the outlook for the portfolio. Again, we'll be able to sharpen the pension on that and provide more of an update as we go through this fiscal year and then to next. But again, it's a nice restoration of overall profit and margin in that portfolio as we've focused on the areas where, excuse me, we have the right to end in pet snacks and cats food.

Speaker Change #119: I'm Erioli of Timor Dynamics with regard to

Speaker Change #120: Max, could you this mark, could you repeat the second part of your question, please? I got the first part about what you'll answer about dog, to max, what was the second part?

Speaker Change #121: Yeah, with the second part with on the exact

Rob Dickerson: All right, great. And then I guess just, you know, specifically on the lower EPS. I mean, it's not that much lower, but a little lower. You know, I guess, you know, while I respect little slower sales and hostess and dogs next for the drivers you mentioned, you know, would you say like maybe the lion share that of the lower EPS is also just off of the higher. Green Coffee Cost, and I'm kind of asking away also because I'm trying to understand, you know, clearly a pastor category depending on the environment, right?

Speaker Change #122: But it's wondering if how retailers are reacting to this consumer pressure. Are they reducing inventory of drug-dog treats given the discretionary income pressure? I'm wondering there's more witness coming given what you're seeing.

Mark Smucker: I'm wondering if there's more weakness coming, given what you're seeing from a retailer order pack. Yeah, got it. On that latter part, I don't think we've seen any meaningful inventory reduction on dog snacks. It seems to be business as usual. I think what's driving a little bit of the slowdown is, again, the less discretionary income, which is leading to less frequency of buying. Pat parents are still treating their pets, treating their dogs, but with less frequency, and that is truly just driven by the economic environment and the lower discretionary income.

Trump: Trump okay tell her order. Yeah

Speaker Change #124: Got it. On that latter part, I don't think we've seen any meaningful inventory reduction on dog snacks. It seems to be business as usual. I think what's driving a little bit of the slowdown is...

Rob Dickerson: Maybe you can price a little bit more and you could even manage the flat profit dollars, you know, versus a lower margin, but now I have a little bit of a lower margin, you know, at least on the gross side for the year, but then a little lower profit dollars, right? So it almost seems like kind of treading really carefully from life perspective on the pricing side, just kind of given the consumer environment. Thanks.

Speaker Change #124: Again, the last discretionary income, which is leading to less frequency of buying, right? So...

Speaker Change #124: Pat parents are still treating their pets, treating their dogs, but with less frequency. And so that is truly just driven by the economic environment and the less the lower

Max Compert: Thanks, and then switching their hostess. I just want to better understand your comments on the risking hostess for the year. So you mentioned the $40 million cut to your full year expectation, which is really a 3% cut to your prior top line expectations. Trends so far this fiscal year versus your initial expectation for flat to modestly up in the first half look well, more than three points below where you had expected to be. And so I'm just wondering what's given you to confident, especially in that back half that you've really de-risked it and that you've taken down numbers enough, particularly given the pressure you're seeing is category and channel related and it feels like it's a bit out of your control for this fiscal year.

Speaker Change #125: Thanks and then switching their hostess. I don't want to better understand your comments on the risking hostess for the year.

Tucker Marshall: That's all. Rob, we didn't hear the initial part of your question. It came in very faint, but what I thought I heard was the change in the midpoint of our adjustments for shared guidance range with approximately 20 cents to sort of how did that break down? Was that was that the question? I just want to make sure we. Yeah, yeah. I mean, that's yeah, that's that's a simple question and I'm also just trying to figure out if you're treading a little carefully on the pricing dynamic and coffee, right?

Speaker Change #126: So you mentioned the 40 million dollar cut to your fill your expectation which is really a 3% cut to your prior top line expectations

Speaker Change #127: Trends, so far this fiscal year versus your initial application for flat to modestly up in the first half, look, well more than...

Tucker Marshall: So maybe not flat dollar profit in the back half, right? But maybe a little lower margin, a little bit lower profit from coffee. So kind of what's the breakout and then like what is the thought process on the amount of price you would be taking in coffee relative to the consumer environment.

Speaker Change #128: 3.0 where you had expected to be and some just wondering what's given you the confidence session that that's half that you've really erased it and that you've taken down number so no particularly given the pressure you're seeing is category.

Speaker Change #129: and channel related and it feels like it's a bit out of your control for this fiscal year. Thanks.

Tucker Marshall: Thanks. Max, I think you framed in the $40 million, as we've said, $25 million reduction to the front half of the fiscal year. Coming into the fiscal year, we acknowledge that we would be flat to down in the front half, and in the back half we would be up. And so we're calling down the back half about $15 million. We'll still have a level of growth in the back half, but then I think I'm on the full year basis. It's going to feel sort of flatish. You know what gives us confidence in the portfolio is one, the category; we're in the right category.

Tucker Marshall: Yeah, so there's a lot to unpack there. Why don't we just sort of start at the at the highest level, the 20 cent change in the midpoint of our previous guidance range from $10 to $9 and 80 cents when you break that down, it's it's approximately 25 cent reduction from top line or net sales. It's approximately a 35 cent gross margin impact, which is largely coming through your coffee portfolio, if not all.

Max Comfort: Max, I think you framed in the $40 million as we've said $25 million when reduction to the front half of the fiscal year coming into the fiscal year week knowledge that would be flat to down in the front half and in the back half we would be up.

Max Comfort: and so we're calling down the back half about 15 million dollars.

Speaker Change #131: I will still have a level of growth in the back half, but then I think on the full year basis it's going to feel sort of flat-ish.

Speaker Change #132: You know what gives this confidence in the portfolio is one the category. We're in the right category. Two is as we can continue to see some level of stabilization or moderation in the siege channel. See source channel. Excuse me.

Tucker Marshall: And then that is being offset by 40 cents of SKNA favorability, which over indexes to administrative support and then also and then to a level of marketing. As we think about sort of the coffee dynamic, you know, what we had to do was acknowledge rising costs, recover those costs on a dollar for dollar basis on an appropriate pass through way. And as you know, we pass through both inflation and deflation as we see it on green coffee. And then what we've also acknowledged is a price elasticity of demand associated with taking that additional round of pricing in order to recover these costs.

Tucker Marshall: Two is as we can continue to see some level of stabilization or moderation in the sea source channel; excuse me. As we think about getting to an integrated state here in the fall, we'll enable us to sort of be on one system, one platform. We've always been one team, but we'll truly be one team. And then acknowledging too that we can continue to work through merchandising and distribution in the traditional retail channels. Both of Walmart, grocery, club, as well as the dollar channel. And then you can also think of the opportunity to continue to advance growth in the way from home channel as well.

Unknown Executive: Okay, that's perfect.

Speaker Change #132: As we think about getting to an integrated state here in the fall will enable us to sort of be on one system, one platform.

Speaker Change #132: We've always been one team but we'll be truly be one team.

Unknown Executive: Thank you so much.

Speaker Change #132: and then acknowledging to that we can continue to work through merchandising and distribution.

Unknown Executive: Thank you.

Speaker Change #132: in the traditional retail channels.

Speaker Change #132: Both of Walmart Grocery Club as well as the Dollar Channel.

Speaker Change #132: and then you can also think of the opportunity to continue to advance growth in the way from home channel as well. And so we continue to have the right tactics against the portfolio and are very confident not only in the brand but also in our participation in the overall care.

Tucker Marshall: And so we continue to have the right tactics against the portfolio and are very confident not only in the brand, but also in our participation in the overall category.

Max Compert: Next question is coming from Max Compert from B&P Power Byterline. Is that live? Thanks for the question. First ones on the dog treats weakness that you called out. So it sounds like what you're seeing is primarily a consumer dynamic with regard to discretionary income pressure. I'm wondering how retailers are reacting, and if you're seeing any reductions in order pattern or inventory getting worked down. Thanks. Max, could you, this is Mark. Could you repeat the second part of your question, please?

Unknown Executive: Okay, thanks very much, Kelly, for that. Thank you.

Speaker Change #133: Okay, thanks very much, I'll tell you about this.

Unknown Executive: We reach out to our question and session.

Mark Smucker: I'd like to turn the floor back over to Mark for any further closing comments. Thank you all for your time today and for joining our call. I just want to reiterate how pleased we are with our strong first quarter results, and our transformed portfolio continued to be resilient in this dynamic consumer environment. We remain confident in our strategy, and our success continues to be powered by our dedicated employees, who, as always, I would like to thank for their outstanding contributions. We hope that many of you will be able to join us in Boston at the Barclays Global Consumer Staples Conference next week.

Speaker Change #134: Thank you. We reach in our question and session. I'd like to turn the floor back over to more for any further closing comments.

More: Thank you all for your time today and for joining our call. I just want to reiterate how please we are with our strong first quarter results in our transformed portfolio continue to be resilient in this dynamic consumer environment.

Max Compert: I got the first part about which I'll answer about dog. Max, what was the second part? Yeah, it was the second part was on dog. I'm wondering if there's more weakness coming, given what you're seeing from a retailer order pack. Yeah, got it. On that latter part, I don't think we've seen any meaningful inventory reduction on dog snacks. It seems to be business as usual. I think what's driving a little bit of the slow down is, again, the less discretionary income, which is leading to less frequency of buying. Pat parents are still treating their dogs with less frequency, and so that is truly just driven by the economic environment and the less the lower discretionary income.

Speaker Change #136: We remain confident in our strategy and our success continues to be powered by our dedicated employees who as always I would like to thank for their outstanding contributions.

Speaker Change #136: We hope that many of you will be able to join us in Boston at the Barclays Global Consumer Staples Conference next week, a live webcast of our presentation on September 3rd at 1245.

Unknown Executive: A live webcast of our presentation on September 3rd at 12:45 can also be accessed from our investor relations website.

Unknown Executive: Have a great rest of your day.

Speaker Change #136: and also be accessed from our Investor Relations website.

Unknown Executive: Thank you.

Unknown Executive: I just conclude today's teleconference webcast. Let me disconnect your lines at this time and have a wonderful day. We thank you for your participation today.

Speaker Change #136: Have a great rest of your day. Thank you.

Speaker Change #137: Thank you. That does conclude today's telecomference webcast. Let me just connect your lines at the time and have a wonderful day. We thank you for your participation today.

Speaker Change #137: [inaudible]

Max Compert: Thanks, and then switching their hostess, I just want to better understand your comments on the risking hostess for the year. So you mentioned the $40 million cut to your full year expectation, which is really a 3% cut to your prior top line expectations. Trends so far this fiscal year versus your initial expectation for flat to modestly up in the first half look well more than three points below where you had expected to be.

Max Compert: And so I'm just wondering what's given you to confident, especially in that back half that you've really de-risked it and that you've taken down numbers enough, particularly given the pressure you're seeing is category and channel related and it feels like it's a bit out of your control for this fiscal year. Thanks. Max, I think you framed in the $40 million, as we've said, $25 million reduction to the front half of the fiscal year coming into the fiscal year we acknowledge that we would be flat to down in the front half and in the back half we would be up.

Max Compert: And so we're calling down the back half about $15 million. We'll still have a level of growth from the back half, but then I think I'm on the full year basis, it's going to feel sort of flatish. What gives us confidence in the portfolio is one, the category, we're in the right category. Two is we can continue to see some level of stabilization or moderation in the sea source channel, excuse me.

Max Compert: As we think about getting to an integrated state here in the fall, we'll enable us to sort of be on one system, one platform. We've always been one team, but we'll truly be one team. And then acknowledging to that we can continue to work through merchandising and distribution in the traditional retail channels. Both of Walmart grocery club, as well as the dollar channel. And then you can also think of the opportunity to continue to advance growth in the way from home channel as well. And so we continue to have the right tactics against the portfolio and are very confident not only in the brand, but also in our participation in the overall category.

Unknown Executive: Okay, thanks very much. I'll leave it there. Thank you.

Mark Smucker: We reach into our question and session. I'd like to turn the floor back over to Mark for any further closing comments. Thank you all for your time today and for joining our call. I just want to reiterate how please we are with our strong first quarter results and our transformed portfolio continue to be resilient in this dynamic consumer environment. We remain confident in our strategy and our success continue to be powered by our dedicated employees who as always I would like to thank for their outstanding contributions.

Mark Smucker: We hope that many of you will be able to join us in Boston at the Barclays Global Consumer Staples Conference next week. A live webcast of our presentation on September 3rd at 12.45 can also be accessed from our investor relations website. Have a great rest of your day. Thank you.

Unknown Executive: I just conclude today's teleconference webcast. Let me disconnect your lines at this time and have a wonderful day. We thank you for your participation today.

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