Q4 2025 J M Smucker Co Earnings Call
Unknown Executive: Good morning and welcome to the J.M. Smucker Company's fiscal 2025 fourth quarter earnings question and answer session. This conference call is being recorded and all participants are in a listen-only mode.
Good morning, and welcome to the J M Smucker company's fiscal 2025 fourth quarter earnings question and answer session.
This conference call is being recorded and all participants are in a listen only mode.
Crystal Beiting: Please limit yourselves to two questions and recue if you have additional questions. I'll now turn the conference call over to Crystal Beiting, Vice President, Investor Relations and Financial Planning and Analysis. Thank you. You may begin. Good morning, and thank you for joining our fiscal 2025 fourth quarter earnings question and answer. I hope everyone had a chance to review our results as detailed in this morning's press release and management's prepared remarks, which are available on our corporate website at J M Smucker dot com. We will also post an audio replay of this call at the conclusion of this morning's Q&A session.
Speaker Change: Please limit yourself to two questions and re queue. If you have additional questions I'll now turn the conference call over to Crystal biting Vice President of Investor Relations and financial planning and analysis. Thank you you may begin.
Crystal Biting: Good morning, and thank you for joining our fiscal 2025 fourth quarter earnings question and answer session.
Speaker Change: Hope everyone had a chance to review our results is detailed in this morning's press release and management's prepared remarks, which are available on our corporate website at J M Smucker dotcom.
Speaker Change: We'll also post an audio replay of this call, but inclusion of this morning's Q&A session.
Crystal Beiting: During today's call, we may make forward looking statements that reflect our current expectations about future plans and performance. These statements rely on assumptions and estimates, and actual results may differ materially due to risks and uncertainty. Additionally, we use non-GAAP results to evaluate performance internally. I encourage you to read the full disclosure concerning forward-looking statements and details on our non-GAAP measures in this morning's webinar.
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. Additionally.
Speaker Change: Additionally, we use non-GAAP results to evaluate performance internally.
Speaker Change: I encourage you to read the full disclosure concerning forward looking statements in detail on our non-GAAP measures in this morning's press release.
Crystal Beiting: Participating on this call are Mark Smucker, Chief Executive Officer and Chair of the Board, and Tucker Marshall, Chief Financial Officer. We will now open the call for questions.
Speaker Change: Participating on this call are Mark Smucker, Chief Executive Officer, and chair of the Board and Tucker Marshall Chief Financial Officer.
Speaker Change: We will now open the call for questions operator, please queue up the first question.
Unknown Executive: Operator, please queue up the first Thank you.
Unknown Executive: The question and answer session will begin at this time. If you're using a speakerphone, please pick up the handset before pressing any numbers. Should you have a question, please press star 1 on your telephone keypad. If you wish to withdraw your question, please press star 2. For operator assistance, please press star 0. As a reminder, please let yourself sit two questions during the Q&A session. Should you have additional questions, you may recue, and the company will take questions as time allows. Once again, that's star 1 to be placed in the question queue.
Speaker Change: Thank you the question and answer session will begin at this time.
Speaker Change: Using a speakerphone please pick up the handset before pressing any numbers should we have a question. Please press star one on your telephone keypad. If you wish to withdraw your question. Please press star two.
Speaker Change: Operator assistance, Please press star Zero and as a reminder, please limit yourselves to two questions. During the Q&A session should you have additional questions you may re queue and the company will take questions. As time allows once again Thats star one to be placed in the question queue. Our first question is coming from Andrew was off from Barclays. Your line is now live.
Andrew Lazar: Our first question is coming from Andrew Lazar from Barclays. Your line is now live. Great. Thanks so much.
Andrew: Great. Thanks, so much good morning, everybody. Good morning, Tom Good morning, I'm, Mark I think at Cagny.
Unknown Executive: Good morning, everybody. Morning.
Andrew Lazar: Mark, I think at Cagney, you and Tucker mentioned that the company could have delivered an above algorithm EPS growth year in fiscal 26, if it were not for higher green coffee. If we exclude the 80 cent impact from coffee inflation and pricing, and also the 25 cent impact from tariff, I guess EPS is still expected to be lower year over year at the midpoint.
Speaker Change: <unk> mentioned that the company could have deliberate and above algorithm EPS growth year in fiscal 'twenty six if it were not for higher green coffee cost. If we exclude the 80 cent impact from from coffee inflation in pricing and also the 25% impact from tariffs I guess EPS is still expected to be lower year over year at the mid point, So I guess I'm.
Tucker Marshall: So I guess I'm curious what has changed since then, and sort of what drives this new, more subdued outlook, and I guess, would you consider this new EPS base as sort of de-risked, so Andrew, good morning. This is Tucker. You are correct. If you take the midpoint of our guidance range of $9 on an adjusted earnings per share basis. Can you add back the 25 cent impact of tariffs, which is new news from CAG. along with the outlook for price elasticity of demand associated with green coffee inflation of 80 cents, you'd be in the low $10.
Speaker Change: What what has changed since then and sort of what drives. This this new more subdued outlook and I guess would you consider this new EPS basis sort of de risked so to speak.
Speaker Change: Okay.
Andrew Wasoff: Andrew Good morning, this is Tucker.
Speaker Change: You are correct. If you take the midpoint of our guidance range of $9 and adjusted earnings per share basis.
Speaker Change: And you add back the 25 impact of tariffs, which is new news from Cagny, along with the outlook for a price elasticity of demand associated with green coffee inflation of 80 cents you'd be in the low $10.
Tucker Marshall: really what has changed is a couple of things. One, the importance of ongoing marketing investment to support our key growth platform. specifically around Cafe Bustelo and Uncrustables. That is a $0.30 investment. And then also the new news as it relates to the performance within our Sweetbake Snacks segment where segment profit will be down on a comparable basis, which is about another 20 cent impact. And that would put you well over $10.50.
Speaker Change: What has changed is a couple of things one.
Speaker Change: The importance of ongoing marketing investment to support our key growth platforms, specifically around cafe bustillo and on cross the bowls that is a 30 cent investment.
Speaker Change: And then also the new news as it relates to the performance within our Sweet baked snack segment, where segment profit will be down on a comparable basis, which is about another 20 cent impact and that would put you well over $10.50 and then I would just acknowledge that in this environment, we do find.
Tucker Marshall: And then I would just acknowledge that in this environment, we do find it important to provide guidance, both the top line and bottom line. We also think it's prudent that we take a very cautious approach and make sure that we have a wide range to not only reflect where we see our financial plan or outlook for the year, but also to be balanced on both sides.
Speaker Change: It important to provide guidance, both the topline and bottom line, but we also think it is prudent that we take a very cautious approach and make sure that we have a wide range to not only reflect where we see our financial plan our outlook for the year, but also to be balanced on both sides.
Speaker Change: Great. Thank you for that and then I realised coffee elasticity, thus far has come in a bit better than plan.
Speaker Change: I think you had been planning for maybe higher than let's call. It historical ask the city going forward just given the magnitude of incremental pricing that is still to come and I think in your prepared remarks, you talked about historical levels of elasticity. So I guess my question is why not take a more prudent view on coffee elasticity just in light of all the pricing coming through.
Speaker Change: Thanks, so much.
Tucker Marshall: Yeah, Andrew, it's a it's a great question. And we do believe overall, we are being prudent and balanced in our outlook, particularly with respect to our coffee portfolio. And if you think about our outlook for the year, we have just around 20% net pricing factored into our FY26 outlook against around a negative 10% volume impact due to that price elasticity of demand factor. And on average, that is an elasticity of 0.5, which is consistent with historical. But I would say that's on average over a fiscal year, and that's on average across the portfolio. In our first quarter, we will experience a greater elasticity factor.
Speaker Change: Andrew It's a great question and we do believe overall, we are being prudent and balanced in our outlook.
Speaker Change: With respect to our coffee portfolio.
Speaker Change: And if you think about our outlook for the year, we have just around 20% net pricing factored into our FY 'twenty six outlook against around a negative 10%.
Speaker Change: Volume impact due to that price elasticity of demand factor and on average that is an elasticity of a 0.5, which is consistent with historical but I would say that so on an average over our fiscal year and that's on average across the portfolio.
Speaker Change: And our first quarter, we will experience.
Speaker Change: Greater elasticity factor.
Tucker Marshall: As a result of taking pricing in our first quarter and early second quarter, and then secondly also acknowledging that our first quarter will also have its most negative cost price outlook. as we match the timing of pricing against the ultimate cost for for the first quarter.
Speaker Change: As a result of taking pricing in our first quarter and early second quarter and then secondly, also acknowledging that our first quarter will also habits.
Speaker Change: Most of the negative cost price outlook.
Speaker Change: As we match the timing of pricing against the ultimate cost for for the first quarter.
Unknown Executive: Thank you so much. Thank you.
Speaker Change: Thank you so much.
Ken Goldman: Next question today is coming from Ken Goldman from JP Morgan. Your line is now live. Hi, good morning. Thank you. I wanted to ask a little bit about hostess, in particular, the skew and display rationalizations that you highlighted.
Speaker Change: Thank you. Your next question today is coming from Ken Goldman from Jpmorgan. Your line is not a lot.
Ken Goldman: Hi, good morning, Thank you.
Ken Goldman: Hmm I wanted to ask a little bit about hostess in particular.
Speaker Change: The SKU and display rationalizations that you highlighted I'm, just hoping for a little bit more color if possible on kind of the size the impact.
Ken Goldman: I'm just hoping for a little bit more color if possible on kind of the size, the impact, you know, maybe basically which product which channels might be affected kind of any detail you can provide. So we can kind of get a little bit better vision of what to expect where the broader brand. Thanks, Ken.
Speaker Change: Babies, basically which products, which channels might be affected kind of any detail. You can provide so we can kind of get a little bit better vision of what to expect where the broader brand.
Marc: Thanks, Ken its Marc.
Mark Smucker: It's Mark. I can't give you specifics on brands and products, but the way I would couch it is that we need to focus on the largest brands and related innovation in those brands. So think Donuts and Cupcakes, primarily because both of those are number one in their respective segments. Twinkies, of course, important. But if you think about Donuts, Donuts has performed reasonably well, particularly because it's a breakfast occasion. You've seen a number of innovations that have come out around Donuts that are related. So we really need to make sure that we are focused on the platforms that are really going to drive growth.
Marc: I can't give you specifics on brands and products, but the way I would couch. It is that we need to focus on the largest brands and related innovation and those brands I think Joe Nats and cupcakes I'm merely because both of those are our number.
Marc: One in their respective segments.
Marc: Twinkies of course important, but if you think about Dow Nats Donuts has performed reasonably well, particularly because of breakfast occasion, you've seen a number of innovations that have come out around <unk> that are or that are related.
Marc: So we really need to make sure that we are focused on the platforms that are really going to drive growth and it's really those core core brands, we're going to invest behind them those those core products like donuts and cupcakes among others.
Mark Smucker: And it's really those core brands. We're going to invest behind those core products like Donuts and Cupcakes, among others. And then I would just maybe highlight as well, you know, if you think about the clarity, we have a tremendous amount of clarity now on this business, and we know what we need to do to drive improvement.
Marc: Then I would just maybe highlight as well if you think about the clarity we have a tremendous amount of clarity now on this business and we know what we need to do to drive improvement and if I could just very quickly simplify the three pillars.
Mark Smucker: And if I could just very quickly simplify the three pillars. You already hit on it. Strengthen the portfolio. And that's around optimizing the portfolio, getting more focused. The second thing is elevating execution. And that's very simply around a dedicated sales force. and streamlined operations by closing and consolidating the Indianapolis facility that will improve profit over time. And then the last thing is quite simply brand building, and that's around reigniting growth, investing in the brand. Obviously, we redesigned the packaging recently, but it's really about supporting these brands and being laser focused on what we Okay, thank you for that.
Speaker Change: You already hit on it strengthen the portfolio and that's around optimizing the portfolio.
Marc: I'm getting more focused the second thing is elevating execution and that's very simply around dedicated sales force.
Marc: And streamlined operations by by closing and consolidating the Indianapolis facility that will improve profit over time and then the last thing is quite simply brand building and that's around reigniting growth investing in the brands. Obviously, we redesigned the packaging recently, but it's really a.
Marc: Supporting these brands and being laser focused on what we have to go do.
Marc: Okay. Thank you for that and then just a quick follow up on that.
Ken Goldman: And then just a quick follow up on that.
Mark Smucker: Yeah, I know the You know, we don't want to relitigate the past in a way, but, you know, one of the stories on Hostess when it was a standalone company was You know, the excitement of new products, the fulfillment of the opportunity of getting displays in stores where it didn't previously have it, you know, just philosophically, we're taking a step back, you know, is it possible that the brand went a little too far in terms of, you know, lateral products or going into stores or channels where maybe it didn't have the right to win? I just wanted to get a little bit of a better sense for how you think you know, the brand stands now in terms of kind of where it quote unquote should be playing.
Marc: I know the.
Marc: We don't want to re litigate the past in a way, but you know one of those stories on hostess when it was a standalone company was.
Marc: The excitement of new products, the fulfillment of the opportunity of getting displays in stores, where it didnt previously have it just.
Marc: Just philosophically, we're taking a step back is it possible that the brand went a little too far in terms of lateral products or going into stores or channels, where maybe it didn't have the right to win I just wanted to get a little bit of a better sense for how you think.
Marc: The brand stands now in terms of kind of where it quote unquote should be playing.
Mark Smucker: Sure. So first of all, just taking maybe a quick step back, snacking is still very important. If you think about consumers. 70% of consumers still consume two snacks a day. Hostess plays across multiple occasions, right? I just mentioned the breakfast Of Course Of Different Day Part Um, and, uh, so we fundamentally believe that sweet snacks continue to be a very important category. And although we do view that it's going to take some time to, to obviously stabilize the brand and get it back to growth, we still are optimistic about our, uh, about our progress and that and the actions that we are taking.
Marc: Sure. So first of all just taking maybe a quick step back snacking is still very important if you think about consumers like.
Marc: 70% of consumers still consume two snacks a day.
Marc: Hostess plays across multiple occasions, right I just mentioned the breakfast occasion, but of course, a different day parts.
Marc: And so we fundamentally believe that sweet snacks continued to be a very important category and although we do view that it's going to take some time to to obviously stabilize the brand and get it back to growth we still are optimistic about our.
Marc: About our progress in that and the actions that we are taking.
Mark Smucker: so I guess the short answer to your question, Ken, is focus. And so there is a need for us to just to continue to focus on those components of the portfolio where we can drive growth and incremental innovation that is related to the core. Thank you.
Marc: Hum.
Marc: I guess the short answer to your question can is focus and so there is a need for us to just to continue to focus on those components of the portfolio, where we can drive our growth.
Marc: Growth and incremental innovation that is related to the core.
Peter Galbo: Next question is coming from Peter Galbo from Bank of America. Your line is now live. Hey, good morning, Mark and Tucker. Thanks for the question. Tucker, I just wanted to clarify maybe one of the points you made on pricing for the year. So I think you said about 20 points or so to the coffee segment, and I think your guidance implies or has nine points to the total company. So just wanted to understand the magnitude of the other price increases that you called out for the year, particularly around Uncrustables, and then maybe also, I think there's a pretty sizable coffee business in international away from home.
Speaker Change: Thank you next question is coming from Peter Galbo from Bank of America. Your line is now live.
Peter Galbo: Hey, good morning, Mark and Patrick Thanks for the question Tucker I just wanted to clarify maybe one of the points you made on pricing for the year. So I think you said about 20 points or so to the coffee segment and I think your guidance implies or has nine points to the total company. So just.
Marc: Wanted to understand the magnitude of the other price increases that you called out.
Marc: For the year, particularly around on cross the malls and then maybe also I think there was a pretty sizable coffee business and international away from home.
Tucker Marshall: So any clarity there. so that. The largest driver of pricing within that 9% relates to our green coffee portfolio. as we've communicated. The other pricing action and frozen handheld and spreads around the Uncrustables brand to recover increased cost is in the low single digit. Okay, got it. And so the balance, again, comes to that away from home business that has coffee in it, just to be clear. Yes, that's correct. That's gonna feel more like high single digits. You are correct. Okay. Okay, terrific. Thank you.
Marc: So any clarity there would be helpful.
Marc: And so the.
Marc: The largest driver of pricing within that 9% relates to our green coffee portfolio.
Marc: As we've communicated the other <unk>.
Marc: <unk> action in frozen handheld and spreads around the unprofitable brand to recover increased costs is in the low single digits.
Speaker Change: Okay got it and so the balance again comes through that away from home business, but has coffee in it just to be clear, yes. That's correct that's going to feel more like high single digits. You are correct. Okay. Okay terrific. Thank you.
Peter Galbo: And then, you know, Mark, on on hostess and the revised, you know, long term outlook, I mean, I guess the pushback or the question we're still getting this morning is You know, look, you move the long term growth rate from from four to three. Obviously, the near term data still has a pretty wide, wide gap to that. So just what gives you the confidence that the renewed kind of long term outlook is is conservative enough, you know, relative to the expectations, just given what we we don't continue to see kind of in the near term data.
Mark Smucker: And then mark.
Speaker Change: On hostess and the revised long term outlook I mean, I guess, the pushback or the question. We're still getting this morning is.
Mark Smucker: You move at a long term growth rate from four to three obviously the near term data is still has a pretty wide wide gap to that so just what gives you the confidence that the renewed kind of long term outlook is conservative enough.
Mark Smucker: Relative to your expectations, just given what we don't continue to see kind of in the near term data. Thanks very much.
Mark Smucker: Thanks very much. Yeah, Peter, I would begin by just saying the change in the long term growth algorithm at top line for the sweet baked snacks portfolio from 4% to 3%. is primarily driven by the outlook for the category. And our need just to acknowledge that it may not grow at that mid single digit level that it has in the past. And it's also a reflection of how we continue to see the overall stabilization plan, inclusive of reigniting growth, and making sure that we stay true to the hostess brand, strengthen the core, and bring along the innovation that supports the core.
Mark Smucker: Yeah, Peter I would begin by just saying, but change in the long term growth algorithm at top line for the sweet baked snacks portfolio from 4% to 3%.
Mark Smucker: Primarily driven by the outlook for the category and our need just to acknowledge that it may not grow at that mid single digit level that it has in the past.
Mark Smucker: And it's also a reflection of how we continue to see the overall stabilization plan inclusive of reigniting growth and making sure that we stay true to the hostess brand strengthen the core and bring along the innovation that supports the core.
Unknown Executive: Thanks very much. Thank you.
Mark Smucker: Thanks very much.
Chris Carey: Next question is coming from Chris Carey from Wells Fargo Security.
Speaker Change: Thank you next question is coming from Chris Carey from Wells Fargo Securities. Your line is now live.
Tucker Marshall: Your line is now live. Yes, so we are taking pricing across the entire coffee portfolio. That's reflected in the around 20% net pricing for the full fiscal year. Those actions came early Q1 and will also come in early Q2. And those actions not only cover green coffee commodity inflation, but also support recovering tariffs associated with our green coffee. Okay, that makes sense. In the prepared remarks, you mentioned an improvement in Sweet Baked into the back half of the year as you implement some of these initiatives to stabilize the business. Can you just help us understand, you know, why that that cadence gets so much better into the back half?
Chris Carey: Hey, guys good morning.
Chris Carey: I was just curious maybe if you could expand a bit on where you are going to be pricing in our coffee portfolio. Obviously, its a big numbers should we be assuming that the entire portfolio will be seeing this pricing. It's just going to focus more on the roast and ground side given that you have to hire direct commodity exposure so any additional context on.
Chris Carey: How big pricing will be relative to your specific businesses within coffee.
Chris Carey: Yes, so we are taking pricing across the entire coffee portfolio.
Chris Carey: That's reflected in the around 20% net pricing for the full fiscal year.
Mark Smucker: Those actions came.
Mark Smucker: Came early Q1 and will also come in early Q2.
Mark Smucker: And those actions not only cover green coffee commodity inflation, but also support recovering tariffs associated with our green coffee.
Speaker Change: Okay that makes sense in the prepared remarks, you mentioned an improvement in sweet baked into the back half of the year as you implement some of these initiatives to stabilize the business can.
Mark Smucker: Can you just help us understand why.
Mark Smucker: Why that that cadence gets so much better into the back half or are you contemplating easier comps or is there some innovation as they're lessening of any rationalization efforts that you're putting in so just maybe maybe some context on the sequential improvement that you're expecting in that business through the year per your prepared remarks. Thanks.
Tucker Marshall: Are you contemplating easier comps? Is there some innovation? Is there, you know, lessening of any rationalization efforts that you're putting in? So just maybe maybe some context on the sequential improvement that you're expecting in that business through the year per your prepared marks. Thanks. Yeah, so we see the Sweetbakes and Axe portfolio, improving over time as a result of our stabilization efforts that are focused first, on stabilizing share performance and improving share performance, and to improving the profitability by quarter of the overall business and the profitability improves by actions that we're taking. One example of that is the closure of the Indianapolis facility, along with looking at the overall portfolio as well of products.
Mark Smucker: Yeah. So we see the street baked snacks portfolio improving over time as a result of our stabilization efforts that are focused first on stabilizing share performance and improving share performance and to improving the profitability by quarter.
Mark Smucker: Of the overall business and the profitability improves my actions that we're taking one example of that is the closure of the Indianapolis facility, along with looking at the overall portfolio as well of products and so that's really why it gives us confidence and then to your point, we will be lapping some comps as.
Unknown Executive: And so that's really why it gives us confidence. And then to your point, we will be lapping some comps as we move forward as well. Okay, thanks so much.
Mark Smucker: We move forward as well.
Mark Smucker: Okay.
Mark Smucker: Thanks, so much.
Unknown Executive: Thank you.
Robert Moskow: Next question is coming from Robert Moskow from TD Cowell. Your line is now live. Hi, thanks. A couple of questions. The first on coffee, you're just looking at retail tracking data for the month of May. The volume's up, according to the Nielsen data anyway.
Speaker Change: Thank you next question is coming from Robert Moskow from TD calendar. Your line is now live.
Robert Moskow: Hi, Thanks, a couple of questions the.
Mark Smucker: The first on coffee just looking at retail tracking data for the month of May.
Mark Smucker: The volumes up according to the Nielsen data anyway.
Robert Moskow: So my first question is, do you expect some kind of reversal in that in June and July? Because, you know, so far so good in terms of consumers reacting to your higher pricing, according to data.
Mark Smucker: So my first question is do.
Mark Smucker: Do you expect some kind of reversal in that in June and July.
Mark Smucker: Because so far so good in terms of consumers are reacting to your higher pricing according to the data anyway.
Mark Smucker: Yeah, Rob is Mark. The first thing I would say is we're really pleased with our performance on coffee across the portfolio broadly. I mean, you know, Duncan, or Duncan, pardon me, Bustelo is on fire. And Holders has performed reasonably well as well. Duncan, we've actually seen some stabilization along with K-Cups due to, you know, more normalized relative price points. So a couple observations. First of all, the category is functioning as it should, right, in terms of, relative pricing being in line. Um, you know, and the other thing too, is just coffee is still relatively affordable and obviously folks are still consuming caffeinated beverages.
Mark Smucker: Yeah, Rob This is mark the first thing I would say is we're really pleased with our performance on coffee across the portfolio broadly I mean.
Speaker Change: You know Duncan Duncan pardon me Bustillo is on fire.
Speaker Change: And old Yours has performed reasonably well as well Duncan we've actually seen some stabilization along with K cups due to you know.
Mark Smucker: More normalize relative price points so.
Mark Smucker: Couple couple of observations first of all the category is functioning as it should.
Mark Smucker: Right and in terms of.
Mark Smucker: Relative pricing being in line.
Mark Smucker: You know and the other thing too is just coffee is still relatively affordable and obviously folks are still consuming caffeinated beverages and coffee on average brewed coffee is still about 10% 10 cents a cup right. So it's extremely affordable and we believe.
Mark Smucker: and coffee on average brewed coffee is still about 10% 10 cents a cup, right? So it's extremely affordable.
Mark Smucker: And we believe that the combination of affordability the fact that our portfolio meets multiple consumer needs, whether that's value, premium, form, liquid, et cetera, and the fact that consumers continue to consume coffee at the same rates about 70% of cups are consumed at home, all of those factors supported by our brand building efforts and particularly the growth of Bustelo continue to give us confidence that we can and should continue to perform in the.
Mark Smucker: <unk> that the combination of affordability.
Mark Smucker: The fact that our portfolio meets multiple consumer needs, whether that's value premium form liquid et cetera.
Mark Smucker: And the fact that consumers continue to consume coffee at the same rates about 70% of cups are consumed at home all of those factors.
Mark Smucker: Supported by our brand building efforts and particularly the growth of bustillo continue to to give us confidence that we can.
Mark Smucker: And should continue to perform in the category.
Tucker Marshall: Okay, well, here's here's the follow up in the transcript. It says that you experienced elevated trade recognition in sweet baked snacks, and it was unexpected. Can you give a little more detail as to why it was unexpected? I would think that, you know, I think what happens is you accrue for trade expenses during the year, and then you kind of level them out in the last fourth in the fourth quarter, or it did play out differently than that. Yeah. Rob, as it relates to the Sweetbake Stack's trade recognition. really came a part of our year end trade accrual recognition process.
Speaker Change: Okay, well, here's here's the follow up.
Speaker Change: Transcript. It says that you experienced elevated trade recognition in sweet baked snacks and it was unexpected can you give a little more detail as to why it was unexpected I would think that I.
Mark Smucker: I think what happens is you accrue for trade expenses during the year and then you kind of level of them out in the last fourth.
Mark Smucker: Fourth quarter.
Mark Smucker: It did play out differently than that.
Speaker Change: Yeah, Rob as it relates to the sweet baked snacks.
Mark Smucker: They'd recognition it just really came a part of our year end trade.
Mark Smucker: Accrual recognition process.
Tucker Marshall: And also I would just acknowledge that we did go live in the fall onto a combined system. And so also as a result of that, there was some extra true up activity in the new system as well.
Mark Smucker: And also I would just acknowledge that we did go live in the fall onto a combined system and so also as a result of that there was some extra true up activity in the new system as well.
Unknown Executive: Okay, thank you. Thank you.
Mark Smucker: Okay. Thank you.
Mark Smucker: Okay.
Mark Smucker: Okay.
Tom Palmer: Next question is coming from Tom Palmer from City. Your line is now live. Hi, thanks for the question.
Speaker Change: Thank you. Your next question is coming from Tom Palmer from Citi. Your line is now a lot.
Mark Smucker: Hi, Thanks for the question maybe.
Tom Palmer: Um, maybe I could just start quickly on Hostess as well. At the investor day, you talked about how a big focus was going to be expanded distribution for Hostess. And you would have a better idea of kind of how that went in another quarter or two. So we're kind of I think up to that point, based on some of the comments today, it sounds like maybe that's not as big of a growth driver as it might have potentially seemed, but just any update on what you're seeing on the distribution side, especially for some of the innovation that you've previously discussed.
Mark Smucker: Maybe I could just start quickly on.
Mark Smucker: Hostess as well at the Investor Day, you talked about how our big focus was going to be expanded distribution for hostess and.
Mark Smucker: And you would have a better idea of kind of how that went.
Mark Smucker: In another quarter or two so we're kind of I think up to that point based on some of the comments today. It sounds like maybe that's not as big of a growth driver as it might have potentially seemed but just any update on what youre seeing on the distribution side, especially for some of the innovation that you've previously discussed.
Tucker Marshall: Thomas Mark, yeah, we have seen good progress on that front, particularly with some of our larger, traditional retailers. We actually have seen as they've started to reset shelves, we are getting our fair share, and actually building in things like permanent seasonal space on shelves that allow for us to actually rotate seasonal products in and out of a permanent shelving. That's on top of getting some incremental display. So that will continue to help support the business going forward. And to the extent that we see some consumer stabilization that is supportive of the convenience channel, that will also support Okay, thank you for that.
Mark Smucker: Tom It's Mark Yeah, we have seen good progress on that front, particularly with some of our larger.
Mark Smucker: Traditional retailers.
Mark Smucker: We actually have seen as they've started to reset.
Mark Smucker: Shelves.
Mark Smucker: We are getting our fair share and actually building in things like.
Mark Smucker: Permanent seasonal space on shelves that allow for us to actually rotate seasoned.
Mark Smucker: Seasonal products in and out of the permanent permanent shelving that's on top of.
Mark Smucker: I'm getting some incremental display so that will continue to help support the business going forward and to the extent that we see some consumer stabilization that is supportive of the.
Mark Smucker: Convenience channel that will also support as well.
Speaker Change: Okay. Thank you for that.
Tom Palmer: And then wanted to ask on the tariff side, beyond green coffee, could you give an update on your main tariff exposure and how you plan to address it? And that 25 cent net headwind? Does that include coffee? Or when you talk about coffee inflation, that's just kind of embedded in more the coffee commentary? Thanks.
Mark Smucker: And then wanted to ask on the tariff side beyond Green coffee could you give an update on your main tariff exposure and how you plan to address it and that 25 cent net headwind does that include coffee or when you talk about coffee inflation, that's just kind of embedded in more of the coffee commentary. Thanks.
Tucker Marshall: Tom, there's there's two parts to your question. So let me start with the first part, the areas where we see exposure from tariffs are first of all, in direct material. Within directory materials, the primary driver there is green coffee, which we view as an unavailable natural resource in the United States. So we procure procure from Brazil and Vietnam among The second area is retaliatory tariffs. And so those are products that we produce in the United States and sell in the Canadian market. examples of that would be peanut butter. ice cream toppings, and also coffee as well.
Mark Smucker: Tom There's two parts to your question. So let me start with the first part the areas, where we see exposure from tariffs our first of all in direct materials.
Mark Smucker: With indirect materials. The primary driver there is green coffee.
Mark Smucker: We view is unavailable natural resource United States, So, we procure procure from Brazil, and Vietnam among others.
Mark Smucker: The second area is retaliatory tariffs and so those are products that we produced in the United States and sell in the Canadian marketplace.
Mark Smucker: Examples of that would be a peanut butter ice cream toppings and also coffee as well.
Tucker Marshall: And then you can also think of the next component of co-manufactured product. That's product that is produced outside of the United States. And the two examples there are liquid coffee and wet cat. And then the last bucket is capital goods or capital items that we put in our manufacturing plants as well that largely from the Europe greatest exposure that we have in the portfolio is across those first three areas. But the leading driver is green coffee. The approach will be to price for the tariff and then to factor in an elasticity of demand assumption and the 25 cent impact is the net impact after making a pricing decision again on a responsible basis and or seeking to find cost and productivity efforts as well.
Mark Smucker: And then you can also think of the next component of co manufactured product. That's a product that is produced outside of the United States and the two examples there are liquid coffee and wet cat food.
Mark Smucker: And then the last bucket is capital goods or capital items that we put in our manufacturing.
Mark Smucker: Plants as well that come largely from the European Union.
Mark Smucker: The greatest exposure that we have in the portfolio.
Mark Smucker: Is across those first three areas, but the leading driver is green coffee.
Mark Smucker: <unk> approach will be to price for the tariff and then to factor in and elasticity of demand assumption.
Mark Smucker: And the 25 cent impact is the net impact after making a pricing decision again on a responsible basis and are seeking to find cost and productivity efforts as well.
Tucker Marshall: But then just acknowledging that we will have to take pricing and then making an assumption as it relates to price less. that's what's embedded in the net 25 cent And I would also share that the net 25 cent impact predominantly over indexes to coffee.
Mark Smucker: Then just acknowledging that we will have to take pricing and then making an assumption as it relates to price elasticity of demand as noted so that's what's embedded in the net 25 impact.
Mark Smucker: And I would also share that the net 25 cent impact predominantly overindexes to coffee.
Unknown Executive: Okay, thank you for that. Thank you.
Mark Smucker: Okay. Thank you for that.
Megan Clapp: Next question is coming from Megan Clapp from Morgan Stanley.
Speaker Change: Thank you next question is coming from Megan Club from Morgan Stanley. Your line is that life.
Megan Clapp: Your line is not live. Hey, good morning. Thanks so much. Maybe just a couple of follow-ups for me. So first one would be a follow-up to Andy's first question. At Cagney, I think you had talked about base business momentum or growth. As the tailwind to 2026, you took out growth, if I'm not mistaken. And if we do the math on the bridge, laying out all of the things that you pointed out, I think at the midpoint of the guide, it would imply a very little benefit from the base business, maybe even negative. So two-part question is, is that math kind of consistent with what you've embedded in the guide as it relates to the base business, maybe minimal growth?
Megan Club: Hey, good morning. Thanks, So much maybe just a couple of follow ups for me first one would be a follow up to Andy first question at Cagny. I think you had talked about base business momentum or growth as a tailwind for 2020.
Megan Club: Took out growth if I'm not mistaken and when you do the math on the bridge laying out all of them that you pointed out I think at the midpoint of the guide it would imply a very little benefit from the base that that's maybe even negative. So two part question is is that now kind of consistent with what you have embedded in the guide as it relates to the base.
Megan Club: Is that maybe minimal growth in in second and that is true what changed around the base business such that you no longer would expect growth in fiscal 'twenty.
Tucker Marshall: And second, if that is true, what's changed around the base business such that you no longer would expect growth in fiscal 2026? Thank you. Megan, as we came out of Cagney, we acknowledged the midpoint of our guidance range actually came out of our third quarter earnings call of about $10 for fiscal year 2026. above algorithm growth would be for us greater than 50 cents. And so simple math would say you'd probably land somewhere between 1050 and the high $10 absent the factors that we have have called out. And if you think about those factors that we've called out, you have 80 cents associated with price elasticity of demand for green coffee.
Megan Club: Megan.
Speaker Change: As we came out of Cagny.
Speaker Change: We acknowledged the midpoint of our guidance range actually came out of our third quarter earnings call of about $10 for fiscal year 'twenty five.
Speaker Change: Above algorithm growth would be for us greater than 50, so simple math would say you'd probably land somewhere between.
Speaker Change: 10, 50, and the high $10 absent the factors that we have called out.
Speaker Change: And if you think about those factors that we've called out you have 80 cents associated with price elasticity of demand for Green coffee.
Tucker Marshall: I don't know what estimates worth factoring in. Two is you also had a 25 cent impact of tariffs, which was new news. So that's in excess of a dollar. And then we did acknowledge that it's important to demonstrate momentum from a brand standpoint, and so we're increasing our market. Estello, and on across the And then also Sweetbake Snacks is softer than anticipated. And so maybe some of the things that were thought of at the time is just where Sweetbake Snacks would be positioned. Two is some of these external factors that we've discussed. And then three, just the acknowledgement that we do see continued momentum in frozen handheld and spreads.
Speaker Change: Don't know what you.
Speaker Change: Estimates were factoring in to as you also had a 25 cent impact of tariffs, which was new news. So that's inaccessible of a dollar.
Speaker Change: And then we did acknowledge that it's important to demonstrate momentum from a brand standpoint, and so we're increasing our marketing on cafe bustillo and on across the balls and then also sweet baked snacks is softer than anticipated and so maybe some of the things that work.
Speaker Change: Sort of at the time is just where sweet baked snacks will be positioned to.
Speaker Change: As some of these external factors that we've discussed and then three just an acknowledgement that we do see continued momentum in frozen handheld and spreads we do see strength of portfolio and Pat Laurence.
Tucker Marshall: We do see strength of portfolio in pet, largely driven by cat food right now as we navigate the discretionary nature of pet treating. And then just keen continued momentum in our combined portfolio of international and away from home.
Speaker Change: Driven by Cat food right now as we navigate the discretionary nature of pet treating and then just king continued momentum in our combined portfolio of international and away from home. So.
Tucker Marshall: So hopefully that just gives you some context about A, coming out of Cagney, but really where we stand today due to some of those external factors. Okay, fair enough. That's helpful. And then a follow up to Rob's question earlier, just on one cue, maybe for the total company, we talked about flat comparable sales, just looking at overall standard data, at least quarter to date, through May, it's pretty far above that. So is there something we should be thinking about relative to the standard data that's pulling or should pull that down closer to flat in the first quarter?
Speaker Change: Hopefully that just gives you some context about it coming out at Cagny, but really where we stand today due to some of those external factors.
Speaker Change: Okay fair enough that's helpful.
Speaker Change: And then a follow up to provide the question earlier just on <unk>, maybe for the hotel.
Speaker Change: I mean, you talked about flat comparable sales just looking at overall scanner data at least quarter to date.
Speaker Change: It's pretty far above that so.
Speaker Change: Is there something we should be thinking about relative to the scanner data, that's calling I should pull that down quite a bit of flat in the first quarter.
Speaker Change: Yeah.
Tucker Marshall: Yeah, so I think you have to acknowledge one flat in the first quarter. will see some momentum and coffee and frozen handheld and spreads and top line. That will have a little bit softness just due to the ongoing discretionary nature of pet treating. You will be lapping the impact of divestiture activity within the Sweetbake Snacks portfolio. You'll see continued momentum with an international on the way from home. But on the bottom line, what I want to acknowledge is, is that we are going to see a decline year over year, as noted in our prepared remarks, and that is largely driven by the first quarter impact within our coffee portfolio.
Speaker Change: Yeah. So I think you have to acknowledge one flat in the first quarter.
Speaker Change: You will see some momentum in coffee frozen handheld and spreads and topline.
Speaker Change: That well have a little bit softness just due to the ongoing discretionary nature of pet treating you.
Speaker Change: You will be lapping the impact of divestiture activity within the sweet baked snacks portfolio, you'll see continued momentum within international and away from home.
Speaker Change: On the bottom line, what I want to acknowledge is that we are going to see a decline year over year as noted in our prepared remarks and that is largely driven by the first quarter impacts within our coffee portfolio.
Tucker Marshall: The segment profit margins in our coffee portfolio will be at their lowest level in Q1, they'll be below 20%. But they will come back on a full year basis on average to be in excess of 20%.
Speaker Change: Segment profit margins in our coffee portfolio will be at their lowest level in Q1 there'll be below 20%.
Speaker Change: But they will come back on a full year basis on average to be in excess of 20% and so it's just acknowledging the timing of pricing and the overall cost within the green coffee portfolio in Q1.
Unknown Executive: And so just acknowledging the timing of pricing, and the overall cost within the green coffee portfolio Thanks, operator.
Speaker Change: Thank you next question is coming from Peter Grom from UBS. Your line is now live.
Peter Grom: Thanks, operator, and good morning, everyone can we just walk through.
Unknown Executive: Good morning, everyone.
Tucker Marshall: Tucker, can we just walk through the SDNA guidance? You touched on the higher marketing investment, which I think was outlined for 40 million. But are there other components or costs that are also moving higher? It just would seem that after taking the higher marketing into account, there's not much of a benefit from some of the cost takeout that you outlined in the release.
Peter Grom: SG&A guidance.
Peter Grom: You touched on the higher marketing investment, which I think was outlined for $40 million, but are there other components or costs that are also moving higher it just didn't seem that after taking the higher marketing into account. There is not much of a benefit from some of the cost takeout that you outlined in the release. Thanks.
Tucker Marshall: Thanks. Yeah, so I what we're what we're seeing is some impact of lapping. TSA income, and also the reset of incentive programs would also be factored into SDNA. But we are seeing cost and productivity gains within SDNA. And we've isolated the marketing as you've noticed.
Peter Grom: Yeah. So what we're what we're seeing is some impact of lapping T.
Peter Grom: TSA income and also the reset of incentive programs would also be factored into SG&A, but we are seeing cost and productivity gains within SG&A and we've isolated the marketing as you've noted.
Tucker Marshall: Great. And then maybe, you know, just a question or follow up on, on phasing, you know, a tough start to the year, as you just outlined to Megan's question from a, from a bottom line perspective, but you, but you mentioned sequential improvement through the balance of the year. Can you maybe just provide some guardrails in terms of how we should be thinking about the phasing? Do the declines just get less severe or do you anticipate returning to bottom line growth at some point in the balance of the year?
Speaker Change: Great and then maybe just a question or a follow up on facing a tough start to the year as you just outlined the next question from it from a bottom line perspective, but you mentioned sequential improvement through the balance of the year can you maybe just provide some guardrails in terms of how we should be thinking about the phasing did the decline just yet.
Peter Grom: Severe or do you anticipate returning to bottom line growth at some point in the balance of the year. Thanks.
Tucker Marshall: Thanks. Sure. So speaking with respect to adjusted earnings per share sort of flow through the year. Our lowest or softest quarter will be Q1, based on the comments that I previously made, largely around our green coffee pork. We won't see a decline second quarter and third quarters as well. But those quarters will be consistent from an EPS standpoint, and then we will see growth in our fourth quarter has noted Great.
Peter Grom: Sure. So speaking with with respect to adjusted earnings per share sort of flow through the year.
Peter Grom: Our lowest or softest quarter will be Q1 based on the comments that I previously made largely around our green coffee portfolio.
Peter Grom: We won't see a decline in the second quarter and third quarters as well, but those quarters will be consistent from an EPS standpoint, and then we will see growth in our fourth quarter.
Peter Grom: As noted.
Unknown Executive: Thank you so much.
Peter Grom: Great. Thank you so much I'll pass it on.
Unknown Executive: I'll pass it on.
Alexia Howard: Thank you.
Alexia Howard: Our next question today is coming from Alexia Howard from Bernstein. Your line is now live. Good morning, everyone. Morning.
Speaker Change: Thank you. Our next question today is coming from Alexia Howard from Bernstein. Your line is now live.
Alexia Howard: Good morning, everyone. Good morning.
Mark Smucker: And I'm so two questions. First of all, you mentioned the pace of innovation beginning to pick up and I think you talked about $100 million from products launched over the last year. How does that compare to pre COVID levels, which I think were generally higher across the industry? And where do you expect them to get back to?
Alexia Howard: So two questions Festival, and you mentioned the pace of innovation beginning to pick up and I think he talks about $100 million from products launched over the last year.
Speaker Change: How does that compared to pre COVID-19 levels, which I think were generally higher across the industry and where do you expect them to get back to and then I have a follow up.
Alexia Howard: And then I have to have a follow up.
Mark Smucker: Alexia, it's Mark. Thanks for the question. 100 million is Great. I mean, it's definitely on the high side. We usually talk about historically innovation across products launched in the last three years. And in the last three, it's more like 250, 250 million. So 100 million in one year is actually very strong. And it's really, again, driven by focusing on the right thing. So if you if whether it's, you know, peanut butter, chocolate spread on Jif, whether it's new flavors on Uncrustables, liquid coffee on Bustelo, really strong performance on the innovation in both Miamix and Milkbone, all of those things were doing very well.
Mark Smucker: Alexia, it's mark Thanks for the question a.
Alexia Howard: 100 million is.
Alexia Howard: Great I mean, it's it's definitely on the high side, we usually talk about historically innovation across products launched in the last three years and then the last three it's more like $2 $50 million to $250 million, so $100 million in one year is actually very strong.
Alexia Howard: And it's really again driven by focusing on the right thing. So if you're in whether it's you know peanut butter chocolate spread on Jeff.
Alexia Howard: Whether it's new flavors on across the Bulls liquid coffee on bustillo really strong performance on the innovation in both meow mix and milk bone all of those things, we're doing very well and.
Mark Smucker: And, and I'm really proud of the fact that we continue to innovate in the right spaces, because we're focused on the consumer, and paying attention to what their needs are and what they want. And so our ability to continue to deliver that is is key to our success.
Alexia Howard: And I'm really proud of the fact that we continue to innovate in the right spaces, because we're focused on the consumer and paying attention to what their needs are and what they want and so our ability to continue to deliver that.
Alexia Howard: Is is key to our success.
Unknown Executive: Thank you.
Alexia Howard: And as a follow-up, just coming back to Hostess, I think you talked about the value-seeking behavior on the part of consumers and the weakness in the C-store channel as being the key drivers of category weakness.
Speaker Change: Thank you and as a follow up just coming back to host that.
Speaker Change: I think you talked about the the value seeking behavior on the part of consumers and the weakness in the C store channel as being the key drivers of category weakness, how do you factor in or how do you see your diagnosis extend and see things like the uptake of J L. P. One drugs RFK genius make America healthier.
Mark Smucker: How do you factor in or how does your diagnosis extend into things like the uptake of GLP-1 drugs, RFK Juniors Make America Healthy Again agenda, things like cutbacks in SNAP, state-level SNAP spending approvals? It just feels as though there's a lot more drivers in there. And I'm curious about how that's leading you to manage the business differently. er, it's a great question. You know, we So as we think about this and, you know, working with our policy makers and continuing to look at trends, as long as we stay focused on the consumer and making sure that our portfolio meets those needs, we feel confident that we will continue .
Alexia Howard: The agenda things like cut back then.
Alexia Howard: State level snap spending approvals it just feels as though there's a there's a lot more.
Alexia Howard: Drivers in there and I'm curious about how that's leading you to manage the business differently.
Alexia Howard: Sure. It's a great question you know we.
Alexia Howard: Continue to believe and watch the trends on snacking as I mentioned earlier snacking is still very important consumers are going to continue to snack.
Alexia Howard: And they will continue to snack, but looking for or in some cases different things that might be smaller portion sizes in some cases might be less sugar.
Alexia Howard: And we just have to make sure that what we remain focused on is providing the consumer with choice and options and so as we think about death and.
Alexia Howard: Working with our policymakers and continuing to look at trends as long as we stay focused on the consumer and making sure that our portfolio meets those needs. We feel confident that we will continue to grow.
Unknown Executive: Thank you very much. I'll pass it on.
Alexia Howard: Thank you very much I'll pass it on.
Alexia Howard: Okay.
Unknown Executive: Thank you.
Steve Towers: Next question today is coming from Steve Towers from Deutsche Bank. Your line is now live. Hey guys, good morning. Thanks for the question. Um, first of all, I just wanted to, um, test a bit your confidence in, um, driving, you know, volume mix growth in both the Meow Mix and the Milkbone brands this year, just, you know, in light of current trends and, and, and, and light of kind of the discretionary headwinds that the Tucker had, had mentioned.
Speaker Change: Thank you next question today is coming from Steve powers from Deutsche Bank. Your line is now live.
Steve Powers: Hey, guys. Good morning, Thanks for the question.
Alexia Howard: The first one I just wanted to.
Alexia Howard: Test your confidence in driving but your volume mix growth in both a meow mix and the milk bone brands. This year just.
Alexia Howard: In light of current trends.
Speaker Change: And in light of kind of the discretionary headwinds that the Tucker had had mentioned so just kind of the building blocks to get back to a get back to positive on those brands would be great.
Mark Smucker: Um, so just kind of the, the building blocks to get back to, uh, get back to positive on those brands would be great. er, you know, meow mix is supported by an increased cat population, right? And just great brand building efforts and hte leading position in TriCat, we will be able to maintain that, and support it through growth. Similarly on Milkbone, Steve, we are projecting getting Milkbone back to growth this year. It's really going to remain again brand-building, focusing on innovation, ensuring that we're providing the consumer what they're looking for. Keep in mind on Milkbone that we play in so many segments and treating occasions and you know all the way from value, base biscuits up to more premium things like dental, the soft and chewy segment has been very good and as long as we continue to innovate in the right places and support the brand we have a lot of confidence in Milkbone.
Speaker Change: Sure you know Meow mix is supported by an increased cat population right and just great brand building efforts and our share of voice and good innovation. So I think you know the leading position in dry cat, we will be able to maintain that.
Alexia Howard: And supported through two rows similarly on milk bone, Steve where we are projecting getting milk bone back to growth. This year, it's really going to remain again brand building focusing on innovation, ensuring that we're providing the consumer what they're looking for and just.
Alexia Howard: Keep in mind on milk bone that we play in so many segments and treating occasions.
Alexia Howard: And you know all the way from value base biscuits up to more premium things like dental soft and chewy segment has been very good and as long as we continue to innovate in the right places and support the brand we have a lot of confidence.
Alexia Howard: Vince and milk bone as well.
Tucker Marshall: Steve, I would just acknowledge sort of two technical items. One, in the third quarter of our fiscal year 25, we had the plant shut down associated with mobile. And then in the fourth quarter of our fiscal year 25, we also had the inventory destocking by certain retailers. Yep. Okay. Understood. Appreciate that.
Speaker Change: Okay very good acknowledge Steve I would just acknowledge sort of too technical items, one in the third quarter of our fiscal year 'twenty five we had the plant shut down associated with milk bone.
Speaker Change: And then in the fourth quarter of our fiscal year 'twenty five we also had the inventory destocking by certain retailers.
Speaker Change: Yep, Okay understood I appreciate that and then I guess.
Mark Smucker: And then, I guess, sort of a derivative question, you know, you'd offered similar commentary on terms of positive volume growth on Bustelo, which Mark, you know, you rightly said is on fire. I guess just, you know, in light of that confidence, I guess, you know, just the elasticity that implies on the balance of the portfolio, just, it seems, you know, notably worse than that 0.5 you called out for the totality, so just a little bit more color and context there if you could. Yeah, I think Steve, really what that plays into is just, you know, on average, we have a point five elasticity across the portfolio for the full When you have a brand like Cafe Bustelo, that continues to demonstrate great momentum and growth, it just implies a little bit higher factor on other aspects of the portfolio.
Speaker Change: A derivative question.
Alexia Howard: Offered similar commentary.
Alexia Howard: In terms of positive volume growth of them Bustillo, which Mark you know you rightly said is on fire I guess, just you know in light of in light of that confidence I guess.
Alexia Howard: The elasticity that employers on the balance of the portfolio just seems you know you'll.
Alexia Howard: Notably, notably worse, so that 0.5, you called out for the totality, so just a little bit more color and context, there if you could.
Alexia Howard: I think Steve really what that plays into it is just you know on average we have a 0.5 elasticity across the portfolio for the full year.
Alexia Howard: When you have a brand like cafe bustillo that continues to demonstrate great momentum and growth. It just implies you know a little bit higher factor on other aspects of the portfolio and that's why we get to an on average for the overall segment.
Unknown Executive: And that's why we get to an on average for the overall segment. All right. Very good. Thank you. Appreciate it.
Alexia Howard: Okay, Alright, very good. Thank you appreciate it.
Scott Marks: Thank you. Next question today is coming from Scott Marks from Jeffries, your line is now live. Hey, good morning. Thanks so much for taking the questions. I wanted to follow up on Steve's question on on pet. I know you called out the inventory reduction at some retailers. I'm wondering if you can share maybe magnitude of impact there. And then, you know, if there's anything maybe more than just the some of the discretionary spend headwinds that you noted. Sure.
Scott Moritz: Thank you next question today is coming from Scott Moritz from Jefferies. Your line is now live.
Alexia Howard: Yeah.
Alexia Howard: Hey, good morning. Thanks, so much for taking my questions I wanted to follow up on Steve's question on Pet I know you called out the inventory reduction at some retailers wondering if you can share maybe magnitude of impact there.
Alexia Howard: And then if there's anything maybe more than just the some of the discretionary spend headwinds.
Alexia Howard: Got it.
Scott Marks: So in the fourth quarter associated with the pet portfolio, it was around $20 million associated with the inventory de-stocking at certain retailers. Got it. And was that specifically tied to kind of just broader consumer pullback and some of that discretionary spend? Or is there maybe something something else about that? We believe that it was more retailer specific or driven, not necessarily driven by the overall consumer, because we still see strong momentum for overall pet treating portfolio. as well. Got it. Thanks for that.
Alexia Howard: Sure. So in the fourth quarter associated with the pet portfolio. It was it was around $20 million associated with the inventory destocking at certain retailers.
Alexia Howard: Got it and was that specifically tied to kind of the broader consumer pullback in some of that discretionary spend or is there maybe something something else about that.
Alexia Howard: We believe that it was more retailer specific or driven not necessarily driven by the overall consumer because we still see strong momentum her overall trading portfolio.
Alexia Howard: As well.
Alexia Howard: Got it thanks for that and then.
Scott Marks: And then last one for me, there was a comment in the prepared remarks about anticipating fiscal 27 to be an on algo growth year in terms of just the DPS. Just wondering if you can kind of share maybe some thoughts around that and how maybe you're you're setting up fiscal 26 to kind of to run into 27. Thanks.
Alexia Howard: Last one for me there was a comment in the prepared remarks about anticipating fiscal 2017, an algo growth here.
Alexia Howard: Terms of our adjusted EPS, just wondering if you can kind of share maybe some thoughts around that and how maybe youre setting up fiscal 'twenty six to kind of to run into 2007.
Tucker Marshall: Sure. So I think there's a couple of things that we want to acknowledge here on today's call. You know, absent some external factors and some internal decisions, we would have probably been somewhere above $10 The impact of price elasticity demand on green coffee, marketing investments, the softness in sweet baked snacks, and tariffs. The midpoint of our guidance range is $9. I think what we're trying to acknowledge is, is that we don't anticipate these factors reoccurring again. So depending upon where we end this fiscal year, we would anticipate an algorithm growth for next fiscal year. Thank you.
Alexia Howard: Sure. So I think Theres a couple of things that we want to acknowledge here on today's call.
Alexia Howard: Absent some external factors and some internal decisions, we would've probably been somewhere above $10.50 for this fiscal year, but when you factor in.
Alexia Howard: The impact of price less tissue demand on green coffee marketing investments, the softness and sweet baked snacks and tariffs.
Alexia Howard: Mid point of our guidance range is $9 I think what we're trying to acknowledges that we don't anticipate these factors reoccurring again, so depending upon where we end this fiscal year, we would anticipate an algorithm growth.
Alexia Howard: For for next fiscal year.
Max Gumport: Our next question today is coming from Max Gumport from BNP Paribas. Your line is now Hey, thanks for the question. I've got one on free cash flow and three parts to it. I believe some of the answers could be related to each other. So first, you meaningfully missed the FY25 guidance of $925 million with $817 million reported. What was the driver of that miss? Second would be your FY26 guidance of $875 million implies a large step up year over year, despite adjusted EPS being expected to meaningfully decline. So what's embedded in that assumption in regard to working capital and other their tell when And then the third would be the $875 million FY26 guidance.
Speaker Change: Thank you. Our next question today is coming from Max comfort from BNP Paribas. Your line is Hello.
Speaker Change: Okay.
Speaker Change: Hey, Thanks for the question I've got one on free cash flow and there's three parts to it I believe some of the answers could be to each other so first you meaningfully missed the FY 'twenty guidance of 925 million with 817 billion reported what was the driver of that Miss second wouldn't be.
Speaker Change: Your FY 'twenty six guidance at $875 million implies a large step up year over year. Despite adjusted EPS is expected to meaningfully decline so what.
Speaker Change: Embedded in that assumption with regard to working capital and other tailwind.
Speaker Change: And then the third would be.
Speaker Change: The $875 million FY 'twenty six guidance that doesn't cover the anticipated $500 million in debt pay down and then the $455 million plus dividend payment.
Max Gumport: That doesn't cover the anticipated $500 million in debt pay down, and then the $455 million plus dividend payment. So I presume there's a bit of cash you can pull on. I know you have this $70 million balance, but what other measures are you expecting to use to fund those financing needs? Thanks very much.
Speaker Change: Presume theres a bit of cash you can pile on I know you have the $70 million balance, but what other measurements are you expecting to use to fund those financing needs.
Speaker Change: Very much.
Tucker Marshall: Max, good morning. So you are correct. We finished this fiscal year with 817 million of free cash flow, which is approximately $100 million below our expectations coming out of Simply, it's associated with green coffee inflation, and our inventory balances were higher. As it relates to next fiscal year, our outlook is $875 million. And what enables that improvement year over year is, first of all, our capital expenditures are anticipated to be $325 million, which is about $75 million lower than we finished this past fiscal year. Further, we'll continue to manage working capital, and we'll continue to deliver earnings this fiscal year.
Max: Max Good morning. So you are correct. We finished this fiscal year with $817 million of free cash flow.
Speaker Change: So its approximately a $100 million below our expectations coming out of the third quarter simply it's associated with green coffee inflation.
Speaker Change: Inventory balances were higher at year end.
Speaker Change: As it relates to next fiscal year, our outlook is $875 million and what.
Speaker Change: Enables that improvement year over year is first of all our capital expenditures are anticipated to be $325 million, which is about $75 million lower than we finished this past fiscal year.
Speaker Change: Further we will continue to manage working capital and we will continue to deliver earnings this fiscal year.
Tucker Marshall: With respect to your question around debt pay down, yes, we will use a combination of cash generated from free cash flow after dividend payments, and we will also use excess cash from the balance sheet as well. Great, thanks very much. I'll leave it there. Thank you.
Speaker Change: With respect to your question around debt Paydown.
Speaker Change: Yes, we will use a combination of cash generated from free cash flow after dividend payments and we will also use excess cash on the balance sheet as well.
Speaker Change: Great. Thanks, very much I'll leave it there.
Unknown Executive: We reached the end of our question and answer session.
Speaker Change: Thank you we reached end of our question and answer session I'd like to turn the floor back over for any further or closing comments.
Mark Smucker: I'd like to turn the floor back over for any further closing comments. Thank you all and thank you for joining us this morning. As we shared, Fiscal 25 was a year of significant progress as we delivered growth in a very challenging environment. Our results are a direct result of our focus strategy and the work we have done in recent years around portfolio optimism. We operate in very attractive categories with leading brands and offerings ranging from value to premium. Looking ahead to fiscal 26, remain focused on investing in our key growth platforms and executing on our strategic priorities.
Speaker Change: Well. Thank you all and thank you for joining us. This morning, as we shared fiscal 'twenty five was a year of significant progress as we delivered growth in a very challenging environment.
Speaker Change: Our results are a direct result of our focused strategy and the work we have done in recent years around portfolio optimization.
Speaker Change: Right in very attractive categories, with leading brands and offerings ranging from value to premium.
Speaker Change: Looking ahead to fiscal 'twenty six remained focus on investing in our key growth platforms and executing on our strategic priorities. We have the right strategy and portfolio in place and are excited about our future growth opportunities largely through our key growth platforms.
Mark Smucker: have the right strategy and portfolio in place and are excited about our future growth opportunities largely through our key growth platform.
Mark Smucker: closing, I'd like to extend my sincere thanks to our employees for their exceptional work and dedication. I hope everyone has a great day. Thank you.
Speaker Change: In closing.
Speaker Change: I'd like to extend my sincere thanks to our employees for their exceptional work and dedication.
Speaker Change: I hope everyone has a great day. Thank you.
Unknown Executive: That does conclude today's
Speaker Change: Thank you that does conclude today.