Q2 2026 J M Smucker Co Earnings Call - Q&A

November 25, 2025

Speaker #1: Good morning and welcome to the J.M. Smucker Co.'s fiscal 2026 second quarter earnings question and answer session. This conference call is being recorded, and all participants are in listen-only mode.

Operator: Good morning and welcome to the J.M. Smucker Company's fiscal 2026 second quarter earnings question and answer session. This conference call is being recorded, and all participants are in a listen-only mode. Please limit yourselves to two questions and re-queue for a few additional questions. I'll now turn the call over to Crystal Beiting, Vice President, Investor Relations and Financial Planning and Analysis. Thank you. You may begin.

Speaker #1: Please let me yourselves to two questions and re-queue if you have additional questions. Oh no, I will now turn the call over to Crystal Beiting, Vice President and Best Relations and Financial cial Planning and Analysis.

Speaker #1: Thank you. You may

Speaker #2: Good morning and thank you for

Crystal Beiting: Good morning and thank you for joining our fiscal 2026 second quarter earnings question and answer session. I hope everyone had a chance to review our results as detailed in this morning's press release, and management's prepared remarks, which are available on our corporate website at jmsmucker.com. We will also post an audio replay of this call at the conclusion of this morning's Q&A session. During today's call, we may make forward-looking statements that reflect our current expectations about future plans and performance. These statements rely on assumptions and estimates, and actual results may differ materially due to risks and uncertainties. Additionally, we use non-GAAP results to evaluate performance internally. I encourage you to read the full disclosure concerning forward-looking statements, and details on our non-GAAP measures in this morning's press release.

Speaker #2: Joining our fiscal 2026 second 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.

Speaker #2: Which are available on our corporate website at jmsmucker.com. We will also post an audio replay of this call at the conclusion of this morning's Q&A session.

Speaker #2: During today's call, we may make forward-looking statements that reflect our current expectations about future plans and performance. These statements rely on assumptions and estimates, and actual results may differ materially due to risks and uncertainties.

Speaker #2: Additionally, we use non-GAAP results to evaluate performance internally. I encourage you to read the full disclosure concerning forward-looking statements and details on our non-GAAP measures in this morning's press release.

Speaker #2: 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.

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. Operator, please queue up the first question.

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. Operator, please queue up the first question.

Speaker #2: Operator, please queue up the first question.

Speaker #3: Thank you. 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.

Operator: Thank you. 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 one on your telephone keypad. If you wish to withdraw your question, please press star two. For operator assistance, please press star zero. As a reminder, please limit yourselves to two questions during the Q&A session. Should you have additional questions, you may re-queue, and the company will take questions as time allows. One moment, please, while we pull for questions. Our first question today is coming from Andrew Lazar from Barclays. Your line is now live.

Speaker #3: Should you have a question, please press star one on your telephone keypad. If you wish to withdraw your question, please press star two. For operator assistance, please press star zero.

Speaker #3: As a reminder, please let me 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.

Speaker #3: One moment, please, while we poll for questions. Our first question today is coming from Andrew Lazar from Barclays. Your line is now live.

Speaker #4: Great. Thanks so much for the question. And good morning, everybody. Maybe I wanted to start off with a question on Sweet Baked Goods, if I could.

Andrew Lazar: Great, thanks so much for the question. Good morning, everybody. Maybe I wanted to start off with a question on sweet baked goods, if I could. Organic sales in that segment came in certainly better than I think most street expectations. Trying to get a sense from you is how much of this do you see as sort of sustainable improvement versus maybe just easier year-ago compares or any transitory benefits?

Speaker #4: Organic sales in that segment came in a certain better than I think most street expectations. Trying to get a sense from you is how much of this do you see as sort of sustainable improvement versus maybe just easier, a year ago compares or any transitory benefits?

Speaker #5: Morning, Andrew. It's

Mark Smucker: Morning, Andrew. It's Mark. Thanks for the question. First, we are very pleased with the progress that we're making on sweet baked snacks and the Hostess brand. As you noted, we are seeing sequential improvement. Notably, we're seeing improved performance in C-Store. Our volume shares are improving. We've had our focus on a more focused portfolio has been helping. You'll recall that we had a three-pronged plan where we're strengthening our portfolio by actually eliminating 25% of the SKUs, and we've seen really strong flow back into our core brands, notably the number one brands of donuts, donuts, and cupcakes, which each of those are the number one in their respective segments. That has been great. We recently relaunched Susie Q's after they've been out of the market for many years, and that has been off to a pretty good start.

Speaker #5: Mark, thanks for the morning question. First, we are very pleased with the progress that we're making on Sweet Baked Snacks and the Hostess brand.

Speaker #5: As you noted, we are seeing sequential improvement. Notably, we're seeing improved performance in C-store; our volume shares are improving. We've had our focus on a more streamlined portfolio, which has been helping.

Speaker #5: You'll recall that we had a three-pronged plan where we're strengthening our portfolio by actually eliminating 25% of the SKUs. We’ve seen really strong flowback into our core brands, notably the number one brands of donuts, Donets, and cupcakes, which each of those are the number one in their respective segments.

Speaker #5: And so that has been great. We recently relaunched Susie Q's after they had been out of the market for many years, and that has been off to a pretty good start.

Speaker #5: And then just elevating our execution around sales, we're streamlining our operations. The Indianapolis closure should be complete by the fourth quarter, and then continuing to invest in the brand.

Mark Smucker: Just elevating our execution around sales. We're streamlining our operations. The Indianapolis closure should be complete by the fourth quarter, and then continuing to invest in the brand. Long and short of it is the plan we put in place, decisive actions are working, and we just need to continue to do what we're doing over subsequent quarters. We do expect to see acceleration over the next couple of quarters as well.

Just elevating our execution around sales. We're streamlining our operations. The Indianapolis closure should be complete by the fourth quarter, and then continuing to invest in the brand. Long and short of it is the plan we put in place, decisive actions are working, and we just need to continue to do what we're doing over subsequent quarters. We do expect to see acceleration over the next couple of quarters as well.

Speaker #5: is, the plan we put in So long and short of it place, decisive actions are working, and we just need to continue to do what we're doing over subsequent quarters and we do expect to see acceleration over the next couple of quarters as well.

Speaker #4: Got it. Great. Thanks for that. And then maybe, Tucker, how much of the $0.50 tariff impact this year is specifically coffee-related such that if tariff policy remains sort of unchanged from here going forward, how much of a benefit we could or should expect this to be to fiscal 2027?

Operator: Got it. Great. Thanks for that. Maybe, Tucker, how much of the $0.50 tariff impact this year is specifically coffee-related, such that if tariff policy remains sort of unchanged from here going forward, how much of a benefit we could or should expect this to be to fiscal 2027? Thanks so much.

Andrew Lazar: Got it. Great. Thanks for that. Maybe, Tucker, how much of the $0.50 tariff impact this year is specifically coffee-related, such that if tariff policy remains sort of unchanged from here going forward, how much of a benefit we could or should expect this to be to fiscal 2027? Thanks so much.

Speaker #4: Thanks so

Speaker #4: much. Andrew, good

Tucker Marshall: Andrew, good morning. The predominance of the $0.50, if not all, is related to green coffee tariffs. Therefore, stepping into FY 2027, it should be viewed as a tailwind, while in FY 2026, it continues to be a headwind.

Speaker #6: Morning. The predominance of the 50 cents, if not all, is related to green coffee tariffs. Therefore, stepping into FY 27, it should be viewed as a tailwind, while in FY 26, it continues to be a headwind.

Speaker #4: Thank you. Our next question today is coming from Tom Palmer from J.P. Morgan. Your line is now open.

Operator: Thank you. Our next question today is coming from Tom Palmer from JPMorgan. Your line is now live.

Operator: Thank you. Our next question today is coming from Tom Palmer from JPMorgan. Your line is now live

Speaker #4: live. Good

Speaker #7: Good morning. Thanks for the

Tom Palmer: Good morning. Thanks for the question.

Speaker #5: Morning.

Mark Smucker: Morning.

Tom Palmer: I wanted to follow up on coffee as well. You noted not taking the third round of pricing as an incremental earnings overhang in the prepared remarks for this year. You've provided some really helpful bridges in terms of other items, such as the tariff impact. I was wondering if you could maybe quantify how much that might have impacted your outlook, the decision not to take pricing. Just given the tariff guidance was kind of unchanged, should we think about tariffs flow through your P&L throughout fiscal 2026, or is there a point where we start to see relief this year? Thanks.

Speaker #7: to follow up question. I wanted on coffee as well. You noted not taking the third round of pricing as an incremental earnings overhang in the prepared remarks for this year.

Speaker #7: You've provided some really helpful bridges in terms of other items such as the tariff impact. I was wondering if you could maybe quantify how much that might have impacted your outlook, the decision not to take pricing, and then just given the tariff guidance was kind of unchanged, should we think about tariffs flow through your P&L throughout fiscal we start to 26?

Speaker #7: see relief this year?

Speaker #7: See relief this year? Thanks. Or is there a point where Tom—good.

Speaker #6: Good morning. As you think about this fiscal year, we came out of our first quarter earnings call and called out a net $0.50 impact as a result of tariffs.

Tucker Marshall: Good morning. As you think about this fiscal year, as we came out of our first quarter earnings call, we called out a net $0.50 impact as a result of tariffs. That net $0.50 impact was receiving the benefit of recovering dollar-for-dollar cost inflation due to tariffs through an early winter pricing action, and then ultimately making an assumption around a price elasticity of demand factor. That was all embedded in the $0.50 as we came out of the first quarter earnings call. We have essentially added that back as a result of being in a tariff-off environment moving forward. However, we have made the decision not to take pricing through US.

Speaker #6: And that net 50 cent impact was receiving the benefit of recovering dollar-for-dollar cost inflation due to tariffs through an early winter pricing action and then ultimately making an assumption around a price elasticity of demand factor.

Speaker #6: That was all embedded in the 50 cents as we came out of the first quarter earnings call. We have essentially added that back as a result of being in a tariff-off environment moving forward.

Speaker #6: However, we have made the decision not to take pricing through U.S. retail coffee in early winter, so we will be absorbing about $75 million of tariff-related costs incurred to date that we will realize, as I've noted in our third quarter, which coincidentally is $0.50, which is why we're calling it out.

Tucker Marshall: Retail coffee in early winter, we will be absorbing about $75 million of tariff-related costs incurred to date that we will realize, as I've noted, in our third quarter, which coincidentally is $0.50, which is why we're calling it out. Therefore, an impact to this fiscal year, but a tailwind to next fiscal year.

Retail coffee in early winter, we will be absorbing about $75 million of tariff-related costs incurred to date that we will realize, as I've noted, in our third quarter, which coincidentally is $0.50, which is why we're calling it out. Therefore, an impact to this fiscal year, but a tailwind to next fiscal year.

Speaker #6: Therefore, an impact to this fiscal year but a tailwind to next fiscal

Speaker #6: year. Understood.

Tom Palmer: Understood. Thank you. On the SG&A side, there was the guidance reduction, now flat year-over-year. A couple of pieces. One, is there a segment where that's going to be most evident? Any update on marketing plans? Maybe I missed it. I think they were previously expected to be up around $40 million year-over-year. Any change there? Thank you.

Speaker #4: Thank you. On the SPNA side, there was the guidance reduction, now flat year-over-year. A couple of pieces. One, is there a segment where that's going to be most evident?

Speaker #4: And then any update on marketing plans? Maybe I missed it. I think there were previously expected to be up around 40 million year-over-year. Any change there?

Speaker #4: Thank

Speaker #4: You. So, Tom, let's begin with...

Tucker Marshall: Tom, let's begin with marketing. We remain committed to investing in the long-term health of our brands, so marketing absolute dollars will be up year-over-year. We're projecting that to be about 5.5% of net sales, which is pretty consistent throughout the year. We have sharpened the pencil as it relates to SG&A spend, not only throughout the entire network, but also as we think about discretionary spend. We've also sharpened the pencil in certain areas as it relates to marketing, but we're still committed behind our growth brands, and you will see an increase year-over-year.

Speaker #6: marketing. We remain committed to investing in the long-term health of our brands. And so marketing absolute dollars will be up year-over-year. And we're projecting that to be about 5.5% of net sales, which is pretty consistent throughout the year.

Speaker #6: We have sharpened the pencil as it relates to SG&A spend, not only throughout the entire network but also as we think about discretionary spend.

Speaker #6: And we've also sharpened the pencil in certain areas as it relates to marketing, but we're still committed behind our growth brands, and you will see an increase

Speaker #4: Thank you. Next question

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

Speaker #4: is coming from Robert Moscow from TD Calendar, year-over-year. Your line is now.

Speaker #4: live. Hi.

Robert Moskow: Hi. I wanted to know, Tucker, about the profit results in sweet baked snacks. Was that also in line with your expectations? Because sequentially, it's a step down. Generally, when you have these SKU rationalizations, it improves the profitability of the business because you get rid of some waste. Is there a reason why that's not happening in Q2?

Speaker #8: I wanted to know, Tucker, about the profit results in Sweet Baked Snacks. Was that also in line with your expectations? Because sequentially, it's a step down.

Speaker #8: And generally, when you have these SKU rationalizations, it improves the profitability of the business because you get rid of some waste. Is there a reason why that's not happening in

Speaker #8: And generally, when you have these SKU rationalizations, it improves the profitability of the business because you get rid of some waste. Is there a reason why that's not happening in Q2?

Speaker #6: Rob, good morning. So, the second quarter top line for Sweet Baked Snacks did exceed our expectations. The bottom line did not meet our expectations.

Tucker Marshall: Rob, good morning. The second quarter top line for sweet baked snacks did exceed our expectations. The bottom line did not meet our expectations. We had anticipated sort of in line with Q1 to maybe slightly better in our second quarter. As you've noted, we were just over $20 million. We do expect both the third and fourth quarters to get better so that we get back toward our outlook for the full fiscal year with respect to segment profit. I would say that the second quarter shortfall to expectations really had much to do with the transition of our bakery network or environment, and just more costs that we absorb through our supply chain, whether that be absorption, overhead, just the timing of transition. We do expect benefit as we step into the third and fourth quarters.

Speaker #6: We had anticipated sort of in line with Q1 to maybe slightly better in our second quarter. And as you've noted, we were just over 20 million dollars.

Speaker #6: We do expect both the third and fourth quarters to get better, so that we get back toward our outlook for the full fiscal year with respect to segment profit.

Speaker #6: And I would say that the second quarter shortfall to expectations really had much to do with the transition of our bakery network or environment and just more costs that we absorbed through our supply chain whether that be absorption overhead just the timing of transition.

Speaker #6: So we do expect a benefit as we step into the third and fourth quarters. I would also remind you that in our fourth quarter, we should benefit by about $10 million from the closure of the Indianapolis facility, which is estimated to have a $30 million annual run rate impact, of which $10 million affects or benefits our fourth quarter this fiscal year.

Tucker Marshall: I would also remind you in our fourth quarter, we should benefit about $10 million from the closure of the Indianapolis facility, which is estimated to be a $30 million annual run rate impact, of which $10 million affects or benefits our fourth quarter this fiscal year.

I would also remind you in our fourth quarter, we should benefit about $10 million from the closure of the Indianapolis facility, which is estimated to be a $30 million annual run rate impact, of which $10 million affects or benefits our fourth quarter this fiscal year.

Speaker #6: year. Okay.

Mark Smucker: Okay. Maybe a follow-up on pet treats. In the commentary, you described the category dog treats as getting better. Your business is still down. What should we expect in the back half? I know there are some very easy, I think some easy comparisons to some disruption last year, but are there marketing plans also to improve market share in what I guess is an improving category overall? Rob, it's Mark. You actually are correct. You stated it. We are expecting a really strong lap, particularly as we get into this third quarter. You will see Milk-Bone getting back to growth, which is great news. It's not only the lap, but I would just highlight it's all the work that we've been doing. It is marketing. We have continued to push on our campaign, which is called More Dog.

Robert Moskow: Okay. Maybe a follow-up on pet treats. In the commentary, you described the category dog treats as getting better. Your business is still down. What should we expect in the back half? I know there are some very easy, I think some easy comparisons to some disruption last year, but are there marketing plans also to improve market share in what I guess is an improving category overall?

Speaker #8: And maybe a follow-up on pet treats. In the commentary you described the category, dog treats as getting better. Your business is still down. What should we expect in the back half?

Speaker #8: I know there are some very easy, I think some easy comparisons to some disruption last year. But are there marketing plans also to improve market share in what I guess is an improving category overall?

Speaker #5: Rob, it's Mark. And you are actually correct; you stated it. We are expecting a really strong lap, particularly as we get into this third quarter, so you will see Milk-Bone getting back to growth.

Mark Smucker: Rob, it's Mark. You actually are correct. You stated it. We are expecting a really strong lap, particularly as we get into this third quarter. You will see Milk-Bone getting back to growth, which is great news. It's not only the lap, but I would just highlight it's all the work that we've been doing. It is marketing. We have continued to push on our campaign, which is called More Dog.

Speaker #5: And it's not only the lap, which is great news, but I would just highlight it's all the work that we've been doing. And it is marketing.

Speaker #5: We have continued to push on our campaign, which is called More Dog. And so you've probably seen that in various media channels. That's been helping.

Mark Smucker: You've probably seen that in various media channels. That's been helping. What we always remind you guys is just the spectrum from value-based biscuits all the way to premiumization. As the consumers are looking for different things from their dog treats, the Milk-Bone brand is definitely there delivering. The innovation on Peanut Buttery Bites has been very successful. As we referenced in the prepared remarks, we are going to be launching another innovation after the beginning of the calendar year, which is also standing on another collaboration between the Jif brand and the Milk-Bone brand. That, including seasonal items, which we referenced as well, there's a lot of really strong innovation in that category. It depends a lot on news for growth. Feeling really good about Milk-Bone and the trajectory of the brand.

You've probably seen that in various media channels. That's been helping. What we always remind you guys is just the spectrum from value-based biscuits all the way to premiumization. As the consumers are looking for different things from their dog treats, the Milk-Bone brand is definitely there delivering. The innovation on Peanut Buttery Bites has been very successful. As we referenced in the prepared remarks, we are going to be launching another innovation after the beginning of the calendar year, which is also standing on another collaboration between the Jif brand and the Milk-Bone brand. That, including seasonal items, which we referenced as well, there's a lot of really strong innovation in that category. It depends a lot on news for growth. Feeling really good about Milk-Bone and the trajectory of the brand.

Speaker #5: Just the, again, what we always remind you guys is just the spectrum from value-based biscuits all the way to premiumization. As consumers are looking for different things from their dog treats, the Milk-Bone brand is definitely there delivering.

Speaker #5: And then just the innovation on peanut buttery bites has been very successful. As we referenced in the prepared remarks, we are going to be launching another innovation after the beginning of the calendar year, which is also standing on another collaboration between the GIF brand and the Milk-Bone brand.

Speaker #5: So that, including seasonal items, which we referenced as well, there's a lot of really strong innovation in that category depends a lot on news for growth.

Speaker #5: So, feeling really good about Milk-Bone and the trajectory of the brand, and then just overall our pet business, and the growth that's going to be driven by Meow Mix, we expect to continue as well.

Mark Smucker: Overall, our pet business and the growth that's going to be driven by Meow Mix, we expect to continue as well.

Overall, our pet business and the growth that's going to be driven by Meow Mix, we expect to continue as well.

Speaker #6: Rob, in support of your question, we are anticipating low single-digit growth for our pet portfolio in the third and fourth quarters, behind the momentum of Milk-Bone and Meow.

Tucker Marshall: Rob, in support of your question, we are anticipating low single-digit growth for our pet portfolio in the third and fourth quarters, behind the momentum of Milk-Bone and Meow Mix.

Speaker #6: Mix. Thank

Speaker #4: You. Next question is coming from Yasmin Dazwandi from Bank of America. Your line is now.

Operator: Thank you. Next question is coming from Yasmin Dazwandi from Bank of America. Your line is now live.

Speaker #4: live. Hey, guys.

Yasmin Dazwandi: Hey, guys. Thanks so much for the question. Just on the reduced net sales expectation for frozen handheld and spreads, I know that spreads, particularly peanut butter, was challenged in the second quarter. The expectation is for that to continue for the balance of the year. I'm asking around the reduced net sales expectation, is that simply flowing through the weaker Q2, or is that also spreads being enough of an offset that Uncrustables accelerating to double-digit growth won't be enough to offset the unforeseen weakness?

Yasmin Deswandhy: Hey, guys. Thanks so much for the question. Just on the reduced net sales expectation for frozen handheld and spreads, I know that spreads, particularly peanut butter, was challenged in the second quarter. The expectation is for that to continue for the balance of the year. I'm asking around the reduced net sales expectation, is that simply flowing through the weaker Q2, or is that also spreads being enough of an offset that Uncrustables accelerating to double-digit growth won't be enough to offset the unforeseen weakness?

Speaker #9: Thanks so much for the question. Just on the reduced net sales expectation for frozen handhelds and spreads, I know that spreads, particularly peanut butter, were challenged in the second quarter.

Speaker #9: And the expectation is for that to continue for the balance of the year. So I'm asking around the reduced net sales expectation, is that simply flowing through the week or two Q, or is that also spreads being enough of an offset that uncustables accelerating to double-digit growth won't be enough to offset the unforeseen weakness?

Speaker #6: Yeah. Yes. Good morning. As it relates to frozen handheld and spreads, we're really calling down that business a little over 80 million dollars on a full year basis.

Tucker Marshall: Yeah. Yes. Good morning. As it relates to frozen handheld and spreads, we're really calling down that business a little over $80 million on a full-year basis. You're kind of seeing half of that come through the second quarter, and the balance will come through the back half of the year. Much of that is driven by the spreads portfolio. We really haven't taken up the outlook on the Uncrustables brand, but I can tell you that it still demonstrates growth, and it is demonstrating a path or trajectory to being a billion-dollar brand by the end of this fiscal year.

Speaker #6: You're kind of seeing half of that come through the second quarter, and the balance will come through the back half of the year. Much of that is driven by the spreads portfolio.

Speaker #6: And we really haven't taken up the outlook on the uncustables brand. But I can tell you that it still demonstrates growth and it is demonstrating a path or trajectory to being a billion dollar brand.

Speaker #6: By the end of this fiscal year.

Speaker #5: Yeah. Yeah. If I may, just add a little bit of color on a couple of these items. So on Uncrustables, Tucker just highlighted that it's still going to be a $1 billion brand.

Mark Smucker: Yeah. And.

Tom Palmer: Okay, go ahead.

Mark Smucker: Yes.

Tom Palmer: Okay, go ahead.

Mark Smucker: Yes.

Tom Palmer: Yeah. If I may, just add a little bit of color on a couple of these items. On Uncrustables, Tucker just highlighted, still going to be a billion-dollar brand. The reason overall we saw 7% for the total company away from home has been extremely strong. We did see growth in retail as well, maybe not as much as we would have expected because we were lapping a very strong Q2 last year with really strong merchandising and promo. We do expect Uncrustables to get back to double-digit growth in the back half of the year, obviously supporting that billion-dollar ambition. Innovation is playing a key role, right? Where a couple of years ago, when we had been capacity constrained, we were not able to innovate, now we are launching seasonal flavors. The new one that just came out is this peanut butter and chocolate.

Yeah. If I may, just add a little bit of color on a couple of these items. On Uncrustables, Tucker just highlighted, still going to be a billion-dollar brand. The reason overall we saw 7% for the total company away from home has been extremely strong. We did see growth in retail as well, maybe not as much as we would have expected because we were lapping a very strong Q2 last year with really strong merchandising and promo. We do expect Uncrustables to get back to double-digit growth in the back half of the year, obviously supporting that billion-dollar ambition. Innovation is playing a key role, right? Where a couple of years ago, when we had been capacity constrained, we were not able to innovate, now we are launching seasonal flavors. The new one that just came out is this peanut butter and chocolate.

Speaker #5: The reason overall we saw 7% growth for the total company away from home has been extremely strong. We did see growth in retail as well.

Speaker #5: Maybe not as much as we would have expected because we were lapping a very strong Q2.

Speaker #1: Growth in the back half of the year. Obviously, supporting that billion-dollar ambition and innovation is playing a key role, right?

Speaker #1: So where , you know , a couple of years ago , when we had been capacity constrained , we weren't able to innovate .

Speaker #1: Now we're launching seasonal flavors. The new one that just came out is this peanut butter and chocolate. It's called PB Choco Craze.

Speaker #1: And then we've got two new higher protein items that are meant to target sort of a morning day part or breakfast daypart . And the uptake on those from our retail customers has been great as well .

Tom Palmer: It's called PB Choco Crazy. We've got two new higher protein items that are meant to target sort of a morning day part or a breakfast day part. The uptake on those from our retail customers has been great as well. Just on spreads, because we were expecting the question, I might just highlight peanut butter. There is a very big lap against last Q2. We had multiple tropical storms in the Caribbean, and that drove a lot of stock up. We are seeing the Jif, the peanut butter business, being down in the quarter. Regardless, it's generally holding share. Overall, still feel good about spreads, making sure that we're getting our execution right. That is obviously supportive of the Uncrustables business.

It's called PB Choco Crazy. We've got two new higher protein items that are meant to target sort of a morning day part or a breakfast day part. The uptake on those from our retail customers has been great as well. Just on spreads, because we were expecting the question, I might just highlight peanut butter. There is a very big lap against last Q2. We had multiple tropical storms in the Caribbean, and that drove a lot of stock up. We are seeing the Jif, the peanut butter business, being down in the quarter. Regardless, it's generally holding share. Overall, still feel good about spreads, making sure that we're getting our execution right. That is obviously supportive of the Uncrustables business.

Speaker #1: And then just on spreads, because we were expecting the question, I might just highlight peanut butter again; there is a very big lap against last Q2.

Speaker #1: We had multiple tropical storms in the that Caribbean and drove a lot of stock up . And so we are seeing the Jif , the , you know , peanut butter business being down in the quarter .

Speaker #1: But but regardless , it's generally holding share . So overall still feel good about spreads . You know , making sure that we're getting our execution right .

Speaker #1: But that is obviously supportive of the business Uncrustables .

Speaker #2: Okay . Great . And if I could just squeeze another one in , I think the previous expectation was for in sweet baked snacks for ski rationalization to be isolated to the second quarter .

Yasmin Dazwandi: Great. If I could just squeeze another one in. I think the previous expectation was for, in sweet baked snacks, SKU rationalization to be isolated to the second quarter. With that now extending into the third quarter, is the expectation still for top line stabilization in the second half? I guess asked another way, given the expectation for sequential improvement, could Q3 be flattish and Q4 grow, or is there still a possibility for Q3 to be down?

Yasmin Deswandhy: Great. If I could just squeeze another one in. I think the previous expectation was for, in sweet baked snacks, SKU rationalization to be isolated to the second quarter. With that now extending into the third quarter, is the expectation still for top line stabilization in the second half? I guess asked another way, given the expectation for sequential improvement, could Q3 be flattish and Q4 grow, or is there still a possibility for Q3 to be down?

Speaker #2: And with that now extending into the third quarter is the expectation still for top line stabilization in the second half . And I guess asked another way , given the expectation for sequential improvement , could three Q be flattish and four Q grow , or is there still a possibility for three Q to be down ?

Speaker #3: I would say that on the sheet, it really won't be. In respect to sort of growth, single digits are slightly flat in the second and third quarters for the comparable basis.

Tucker Marshall: I would say that, one, the SKU rationalization really won't be expect the sort of growth. Single digits to be slightly flat in the second quarter for snacks on a comparable basis, and then you should see a level of growth.

Speaker #3: Then you should see a level of growth.

Speaker #1: Your microphone is .

Speaker #4: Off .

Speaker #5: Sorry . Yes I'm sorry . We had a technical difficulty here . But to your question I just want to acknowledge that the Q3 will be the completion of the SKU rationalization associated with the closure of the Indianapolis and bakery , then with to your respect on growth , we should be flat to slightly down in the comparable basis .

Mark Smucker: Oh, your microphone is off.

Tucker Marshall: Sorry. Yes. I'm sorry. We had a technical difficulty here. To your question, I just want to acknowledge that Q3 will be the completion of the SKU rationalization associated with the closure of the Indianapolis bakery. With respect to your question on growth, we should be flat to slightly down in the third quarter on a comparable basis, and then demonstrating a level of growth on a low single-digit basis in our fourth quarter for sweet baked snacks.

Speaker #5: And then demonstrating a level of growth in the low single digits in our fourth quarter for sweet baked snacks.

Speaker #6: You. As a thank you reminder, that Star One to be placed into question Q. Our next question is coming from Megan.

Speaker #6: Clapp from Morgan Stanley. Your line is now live.

Operator: Thank you. As a reminder, that is star one to be placed into question queue. Our next question is coming from Megan Clark from Morgan Stanley. Your line is now live.

Speaker #7: morning , Mark Tucker .

Speaker #7: Thank you . Maybe . Hi . Good question . Tucker . On on coffee . Can you talk a little bit about how you're thinking about the pacing of coffee margins in three Q and four Q ?

Megan Clark: Hi. Good morning, Mark, Tucker. Thank you. Maybe another question, Tucker, on coffee. Can you talk a little bit about how you're thinking about the pacing of coffee margins in Q3 and Q4? The Q3 EPS outlook in the prepared remarks a little bit softer than where the street is. I assume most of that is just that you still have tariffed coffee flowing through the P&L that's sitting on the balance sheet today without the pricing. Is that the right way to think about it? Do you still expect to get to mid-20% margins in coffee in Q4, or will there be a lingering kind of tariff impact there as well? Thank you.

Speaker #7: The three Q EPs outlook in the prepared remarks is a little bit softer than where the street is. I assume most of that is just that you still have tariffed coffee flowing through the P&L that's sitting on the balance sheet today without the pricing.

Speaker #7: So, is that the right way to think about it? And then still expect to get to mid-20% margins in coffee in four quarters, or will there be a lingering kind of tariff impact there as well?

Speaker #7: Thank you Megan .

Speaker #5: Good morning . So we demonstrated an 18.2% second quarter segment profit margin . In coffee . We would anticipate a slight improvement to that in our third quarter .

Tucker Marshall: Megan, good morning. We demonstrated an 18.2% second quarter segment profit margin in coffee. We would anticipate a slight improvement to that in our third quarter, but it will not surpass 20%. As you step into our fourth quarter, we should move beyond 20%. I don't think that we'll get all the way to 25% just as we continue to digest a lot of cost and cost inflation. Just acknowledging not taking pricing in early winter in our US retail coffee portfolio and absorbing the incurred coffee tariffs to date. That will be approximately $75 million in our third quarter. Some of that may go into our fourth quarter, but the predominance is in the third to your question.

Speaker #5: will not surpass 20%. And then, as you step into our fourth quarter, we should move beyond 20%. I don't think that we'll get all the way to 25%.

Speaker #5: continue to Just as we digest a lot of cost and cost inflation , but just acknowledging not taking pricing in early winter and our US retail coffee portfolio and absorbing the incurred coffee tariffs to date .

Speaker #5: So, that will be approximately $75 million in our third quarter. Some of that may go into our fourth quarter, but the predominance is in the third.

Speaker #5: Your question.

Speaker #7: Okay , that's helpful . Thank you . And then maybe just putting of your together all comments on and on pet sweet baked snacks and frozen handhelds as you think about moving through the third quarter and the fourth quarter , you laid out for all segments , an expectation for an acceleration in growth .

Megan Clark: Okay. That's helpful. Thank you. Maybe just putting together all of your comments on pet, sweet baked snacks, and frozen handhelds, as you think about moving through the third quarter and the fourth quarter, you laid out for all segments an expectation for an acceleration in growth. As you think about the Q4 exit rate, I guess, how are you feeling about, outside of coffee, kind of the rest of the US retail portfolio contributing to or getting back to Algo, OSG as we finish the year? Thanks.

Speaker #7: So as you think about the four Q exit rate, I guess, how are you feeling about, outside of coffee, kind of the rest of the U.S. retail portfolio contributing to or getting back to?

Speaker #7: All go OSG as we finish the year? Thanks.

Speaker #5: Megan, I would say that when you think of the midpoint of our guidance range today at the top line, it's 4% on a reported basis, and then you affect or isolate on a comparable basis.

Tucker Marshall: Megan, I would say that when you think of the midpoint of our guidance range today at the top line, it's 4% on a reported basis. When you affect or isolate on a comparable basis divestitures and foreign exchange, it's aligning to about 5.5% comparable growth year over year. Underpinning that, we've got about $38 million worth of co-manufacturing sales that we're lapping. All else equal, we're at 6% on a comparable basis adjusted for the co-manufacturing sales for our outlook for this year. Yes, much of that is driven by our coffee portfolio. When you think about the balance of our portfolio, we're seeing tremendous momentum in the away from home aspect, we're seeing resilience and strength in our pet portfolio, and we're seeing stabilization in sweet baked snacks.

Speaker #5: Divestitures and foreign exchange . And it's it's aligning to about 5.5% comparable growth year over year . And then underpinning that , we've about got $38 million worth of co-manufacturing sales that we're we're lapping .

Speaker #5: So all else equal , we're at 6% on a on a comparable basis , adjusted for the co-manufacturing sales for our outlook for this year .

Speaker #5: yes , much And of that is driven by our coffee portfolio . But when you think about the balance of our portfolio , we're seeing tremendous momentum in the away from home aspect .

Speaker #5: We're seeing resilience and strength in our pet portfolio. We are seeing stabilization in sweet baked snacks. We obviously have great, great growth and momentum on Uncrustables.

Speaker #5: And we're addressing things within our spreads portfolio . And so while I don't want to promise sort of what the exit rate is , what we're acknowledging is that we do have great organic sales growth on a comparable basis .

Tucker Marshall: We obviously have great growth and momentum on Uncrustables, and we're addressing things within our spreads portfolio. While I don't want to promise what the exit rate is, what we're acknowledging is that we do have great organic sales growth on a comparable basis. Our strategy is working, our execution is focused, and we'll continue to drive the growth brands, and we'll continue to support the balance of the portfolio.

We obviously have great growth and momentum on Uncrustables, and we're addressing things within our spreads portfolio. While I don't want to promise what the exit rate is, what we're acknowledging is that we do have great organic sales growth on a comparable basis. Our strategy is working, our execution is focused, and we'll continue to drive the growth brands, and we'll continue to support the balance of the portfolio.

Speaker #5: Our strategy is working, our execution is focused, and we'll continue to drive the growth of our brands while also supporting the balance of the portfolio.

Speaker #6: Thank you. Next question today is coming from Peter Graham from UBS. Your line is now live.

Speaker #8: Great . Thank you . Good morning everyone . I wanted to just ask a follow up on the tariff commentary in 27 . And I know you noted to both Andrew and Tom that this will be a tailwind to earnings , but I guess specifically , you know , are you expecting those benefits to largely drop to the bottom line , or would you look to maybe reinvest some of that upside ?

Operator: Thank you. Next question today is coming from Peter Graham from UBS. Your line is now live.

Peter Graham: Great. Thank you. Good morning, everyone. I wanted to just ask a follow-up on the tariff commentary in 2027. I know you noted to both Andrew and Tom that this will be a tailwind to earnings. I guess specifically, are you expecting those benefits to largely drop to the bottom line, or would you look to maybe reinvest some of that upside?

Speaker #5: As it relates to tariff-based inflation, in a tariff-off environment, and not taking pricing for tariffs into account, we are not expecting to experience tariffs in our next fiscal year. This should benefit our bottom line, which is why we're effectively saying it should be a tailwind to our coffee portfolio.

Tucker Marshall: As it relates to tariff-based inflation, in a tariff-off environment and not taking pricing for tariffs and in turn not experiencing tariffs in our next fiscal year, that should benefit our bottom line, which is why we're effectively saying it should be a tailwind to our coffee portfolio next fiscal year. Hopefully, it helps provide a little bit of context about how we're thinking about tariffs stepping into next year.

Speaker #5: Next year's fiscal. So hopefully that helps provide a little bit of context about how we're thinking about tariffs, stepping into next year.

Speaker #8: Okay, no, that's helpful. And then maybe just on coffee, can you walk us through what you're now expecting in terms of elasticity?

Speaker #8: And I guess just about as we think top line growth modeling through the the year , can you maybe just understand how you see price versus volume at this stage , especially considering that you're not going to take that additional price increase for the winter ?

Peter Graham: Okay. No, that's helpful. Maybe just on coffee, can you walk us through what you're now expecting in terms of elasticity? I guess just as we think about modeling top-line growth through the balance of the year, can you maybe just understand how you see price versus volume at this stage, especially considering that you're not going to take that additional price increase for the winter? Thanks.

Speaker #8: Thanks .

Speaker #5: Sure . So our current outlook for the coffee portfolio is 16% year over year growth . And what's embedded in that is 22% pricing , offset by 6% down volume mix .

Tucker Marshall: Sure. Our current outlook for the coffee portfolio is 16% year-over-year growth. What's embedded in that is 22% pricing offset by 6% down volume mix. That's an improvement to when we stepped into this fiscal year, where we thought growth would be 11% against 22% pricing offset by negative 11% of volume mix. What you can see is our elasticity assumptions have improved from 0.5 stepping into this fiscal year to around 0.3 where we stand. Again, that's on average over the year. Hopefully, that provides additional context as to the strength and resilience of our coffee portfolio.

Speaker #5: That's an improvement from when we stepped into this fiscal year, where we thought growth would be 11% against 22% pricing, offset by -11% of volume mix.

Speaker #5: And so what you can see is our elasticity assumptions have improved from 0.5, stepping into this fiscal year, to around 0.3, where we stand.

Speaker #5: And again, that's on average over the year. So hopefully that provides additional context as to the strength and resilience of coffee in our portfolio.

Speaker #6: Thank you. Our next question is coming from Matt Smith from Stifel. Your line is now live.

Speaker #9: Hey , good morning . I wanted to dig in a bit on the Uncrustables sequential acceleration in the second half . Can can you talk about some of the underpinnings to that acceleration , whether there's also unique comparisons there and how we should be considering pricing in frozen handheld and spreads in the second half , as their potentially increased promotional support behind Uncrustables to support that sequential acceleration .

Operator: Thank you. Our next question is coming from Matt Smith from Stifel, your line is now live.

Crystal Beiting: Hi. Good morning. Wanted to dig in a bit on the Uncrustables sequential acceleration in the second half. Can you talk about some of the underpinnings to that acceleration, whether there's also unique comparisons there, and how we should be considering pricing in frozen handheld and spreads in the second half? Is there potentially increased promotional support behind Uncrustables to support that sequential acceleration? Thank you.

Matthew Smith: Hi. Good morning. Wanted to dig in a bit on the Uncrustables sequential acceleration in the second half. Can you talk about some of the underpinnings to that acceleration, whether there's also unique comparisons there, and how we should be considering pricing in frozen handheld and spreads in the second half? Is there potentially increased promotional support behind Uncrustables to support that sequential acceleration? Thank you.

Speaker #9: Thank you .

Speaker #5: Yes . So we demonstrated 7% growth in our second quarter , which is really good momentum as we continue to advance to the billion dollar ambition .

Tucker Marshall: Yeah. We demonstrated 7% growth in our second quarter, which is really good momentum as we continue to advance to the billion-dollar ambition. As we think about our third and fourth quarters, we would anticipate low double-digit growth on the way to that journey of being a billion-dollar brand by the end of this year. We will continue to ensure that we're supporting with marketing, continue to support our recent innovation launch around protein, continue to round out distribution, and also make sure that we have the right placement and promotion. I would also acknowledge that about 80% of sales run through our US retail portfolio, and the balance of 20% flow through our away from home portfolio. We are seeing great momentum in away from home on Uncrustables.

Speaker #5: As we think about our third and fourth quarters , we would anticipate low double digit growth on to that the way of being $1 billion journey brand by the end of this year , we will continue to ensure that we're supporting with marketing .

Speaker #5: We support our recent innovation launch around protein. We continue to round out distribution and also make sure that we have the right placement and promotion.

Speaker #5: I would also acknowledge that about 80% of sales run through our U.S. retail portfolio, and the balance of 20% flows through our away-from-home portfolio.

Speaker #5: And we are seeing great momentum in away from home on Uncrustables . And one example is the acceleration of growth in the convenience channel , not only due to our innovation behind the sandwich , but also due to the capabilities that we acquired through the hostess acquisition .

Tucker Marshall: One example is the acceleration of growth in the convenience channel, not only due to our innovation behind the sandwich, but also due to the capabilities that we acquired through the Hostess acquisition.

One example is the acceleration of growth in the convenience channel, not only due to our innovation behind the sandwich, but also due to the capabilities that we acquired through the Hostess acquisition.

Speaker #9: Thank you . And Mark , as a follow up to some of the coffee commentary , elasticities are better expected than on but average , the performance by brand in the measured channel data that we see has has varied for specifically for the Dunkin brand , elasticities have been softer than Folgers or Bustelo .

Crystal Beiting: Thank you. Mark, as a follow-up to some of the coffee commentary, elasticities are better than expected on average. The performance by brand in the measured channel data that we see has varied. Specifically for the Dunkin' brand, elasticities have been softer than Folgers or Café Bustelo. Was that expected as you went into a more price-intensive environment? Has the performance of Dunkin' been different than what you anticipated coming into the year? Thank you.

Matthew Smith: Thank you. Mark, as a follow-up to some of the coffee commentary, elasticities are better than expected on average. The performance by brand in the measured channel data that we see has varied. Specifically for the Dunkin' brand, elasticities have been softer than Folgers or Café Bustelo. Was that expected as you went into a more price-intensive environment? Has the performance of Dunkin' been different than what you anticipated coming into the year? Thank you.

Speaker #9: Was that expected as you went into a more price intensive environment ? Has the performance of Dunkin been been than than different what you anticipated coming into the year ?

Speaker #9: Thank you .

Speaker #1: Yeah , Matt , a couple of things . So first of all , you're right that we have seen obviously very strong performance on Bustelo and Folgers .

Mark Smucker: Yeah, Matt. A couple of things. First of all, you're right that we have seen obviously very strong performance on Café Bustelo and Folgers. The resilience of the category overall gives us optimism, right, in terms of just how consumers are still consuming coffee. Our brands are resonating with consumers, and the investments we're making behind these brands is working. Notably, Café Bustelo just had a phenomenal quarter. Dunkin' did grow in the quarter, so we did see a bit of improvement in Dunkin'. As we've highlighted in previous quarters, we've seen some competitive pricing pressure that we have not overcome. We are continuing to actually make surgical balancing, some surgical pricing investments, as well as supporting innovation in terms of seasonals and so forth. I think the long-term story on Dunkin' is that it's a great brand.

Speaker #1: And so the resilience of the category overall gives us optimism , right . In terms of just how we , you know , consumers are still consuming coffee .

Speaker #1: brands are Our resonating with consumers know , the . You investments we're making behind these brands is working notably Bustelo just just had a phenomenal quarter .

Speaker #1: then And Dunkin did the quarter . So grow in we did see a bit of improvement in Dunkin . But as we've highlighted in previous quarters , we've seen some competitive pricing pressure that we have not overcome .

Speaker #1: But we are continuing to actually make surgical balancing, some surgical pricing investments, as well as supporting innovation in terms of seasonals and so forth.

Speaker #1: So think the I term long story on Dunkin is that it's a great brand . We we love the brand , and we still think it has plenty of runway .

Speaker #1: over time , as we would expect , pricing to But moderate competitively , that will support the the brand overall .

Mark Smucker: We love the brand, and we still think it has plenty of runway. Over time, as we would expect pricing to moderate competitively, that will support the brand overall.

We love the brand, and we still think it has plenty of runway. Over time, as we would expect pricing to moderate competitively, that will support the brand overall.

Speaker #6: Thank you. Next question is coming from Max Comport from BNP Paribas. Your line is now live.

Speaker #10: regard

Speaker #10: regard question . thanks for the With Hey , to . Uncrustables in the volume decline that we saw , this quarter and the frozen handheld and spread segment , it sounds like you have plenty of confidence in the business .

Operator: Thank you. Our next question is coming from Max Kumper from Bernstein. Your line is now live.

Andrew Lazar: Hey, thanks for the question. With regard to Uncrustables and the volume decline that we saw this quarter in the frozen handheld and spread segment, it sounds like you have plenty of confidence in the business. Distribution is gaining, innovation is working, and you still see long-term opportunities. I'm curious, is the volume decline we saw in the quarter really just due to any lapping items that you saw with the strong Q2 a year ago? Also, could you comment on anything you're seeing from some of the new entrants in this space who have gotten distribution pretty quickly? Thank you.

Speaker #10: gaining . Innovation is Distribution working , and you still see long term opportunities . So I'm curious is the volume decline we saw in the quarter really just due to any lapping items that you saw with the strong two ?

Speaker #10: Q A year ago , and then also , could you comment on you're seeing from anything some of the new new entrants in the space who have gotten distribution pretty quickly ?

Speaker #10: Thank you .

Speaker #1: Yeah , Max , it's Mark . It is largely the lab . So you know , again that that strong merchandising and promo in the last Q2 last year is what we're lapping .

Mark Smucker: Yeah, Max, it's Mark. It is largely the lap. That strong merchandising and promo in the last Q2 last year is what we're lapping. As you highlighted, both the innovations, Tucker in his previous answer talked a bit about the support that will be not out of the ordinary, but solid merchandising support coming into the back half is going to continue to support the acceleration of that brand. In broad strokes, we have seen some competition come into the category. I would say that's largely been supportive over the longer term, seeing a couple of other brands, whether that might be private label and some of the variety that you're seeing in the category in terms of, and then pricing should continue to support the brand.

Speaker #1: And as you highlighted , both the innovations Tucker and his previous answer talked a bit about the support that , you know will be not out of the ordinary , solid but merchandising support coming into the back half is going to continue to support the of that acceleration brand .

Speaker #1: And in broad strokes, you know, we have seen some competition come into the I category. I would say that's largely been supportive.

Speaker #1: You know , over , the longer term , seeing , you know , a couple other brands , whether be that might label private and some of the , the variety that you're seeing in the category in terms of and then pricing should continue to support the brand .

Speaker #1: But overall , I think if you just think about the household penetration we've gained and the continued marketing investments , that's and the innovation will continue to drive growth .

Mark Smucker: I think overall, if you just think about the household penetration we've gained and the continued marketing investments, that and the innovation will continue to drive growth.

I think overall, if you just think about the household penetration we've gained and the continued marketing investments, that and the innovation will continue to drive growth.

Speaker #10: Great . Thanks . And then just to to wrap it up with tariff regards to the impact , I just want to confirm these $75 million in tariff expense that you're referring to .

Andrew Lazar: Great. Thanks. Just to wrap it up with regard to the tariff impact, I just want to confirm these $75 million in tariff expense that you're referring to, is that the total amount you expect to see in FY26, and it is essentially entirely due to coffee tariffs?

Speaker #10: Is that the total amount you expect to see in FY26? And is it essentially entirely due to coffee tariffs?

Speaker #5: Correct .

Speaker #6: Thank you. Our next question is coming from Alexia Howard from Bernstein. Your line is now live.

Tucker Marshall: Correct.

Speaker #11: Good morning, everyone. Can I start with the innovation and the pace of innovation? Are you able to quantify whether that's been accelerating?

Operator: Thank you. Our next question is coming from Alexia Howard from Bernstein. Your line is now live.

Alexia Howard: Good morning, everyone. Can I start with innovation and the pace of innovation? Are you able to quantify whether that's been accelerating? It sounds as though the pace has been picking up. Not sure whether you can give us numbers on percentage of sales from new products. Is that pace of innovation now where you want it to be across the portfolio, or are there pockets where you would like to increase that still?

Speaker #11: It sounds as though the pace has been picking up. I'm not sure whether you can give us numbers on the percentage of sales for new products.

Speaker #11: And is that pace of innovation now where you would like it to be across the portfolio, or are there pockets where you would like to see that?

Speaker #11: increase Still ?

Speaker #1: Alexia , thanks . It's Marc . Yes . Is the short answer . Our pace of innovation has accelerated . I would say I'm very proud .

Mark Smucker: Alexia, thanks. It's Mark. Yes, is the short answer. Our pace of innovation has accelerated. I would say I'm very proud both of, well, actually, across the board, if you look at innovation on Hostess, innovation on pet, notably pet snacks, and more recently, the innovation on Uncrustables has all accelerated. The speed to which our teams have been able to get to market is as fast as we've ever done that. I think we're very proud of the work we've done. I mean, the Uncrustables innovations have been notable. I think we expect a little bit of a faster turn out of both pet snacks and human snacks, which we've continued to deliver again. Thank you for the call out.

Speaker #1: Both of well actually across across the board , if you look at innovation on hostess , innovation on on pet notably pet snacks and more recently the innovation on Uncrustables has all accelerated the speed to which our teams have been able to get to market is as fast as we've ever done that .

Speaker #1: And so I think we're very proud of of the work we've done . I mean , the innovations have been have been notable .

Speaker #1: And then we expect a of a faster little bit turn out of both pet I think snacks and human snacks , which we've continued to deliver against .

Speaker #1: So . Thank call out

Speaker #11: And then question for Tucker on leverage.

Speaker #11: You've been hovering a little above net debt to EBITDA for the last couple of quarters, and you're getting it down to three times by the end of 2027.

Alexia Howard: Question for Tucker on leverage. You've been hovering a little above 4x net debt to EBITDA for the last couple of quarters, and you're talking about getting it down to 3x by the end of 2027. How quickly does that start coming down? Do we expect it to start coming down more substantially in the near term?

Speaker #11: ?

Speaker #5: we we are committed to Alexia . $975 million of free cash flow generation this fiscal year , which will support a half $1 billion of debt paydown this fiscal year .

Tucker Marshall: Alexia, we are committed to $975 million of free cash flow generation this fiscal year, which will support a half a billion dollars of debt paid out this fiscal year. We anticipate the ability to pay down an additional $500 million in FY27. If you think about the leverage profile this year, we'll probably hover around 4x through the balance of fiscal year 2026. As we step into 2027, we should begin to see the step down toward that 3x amount in fiscal year 2027.

Speaker #5: And we anticipate the ability to pay down an additional $500 million in fiscal year 2027. As you think about the FY leverage profile this year, we'll probably hover around four times through the balance of fiscal year 2026.

Speaker #5: And then as we step into 2027, we should begin to see the step down toward that three times amount in fiscal year 2027.

Speaker #6: Thank you. Next question is coming from Scott Marks from Jefferies. Your line is now live.

Speaker #10: Hey, good morning. Thanks so much for taking the time.

Speaker #12: Our questions. First thing I wanted to ask about, you know, we've heard some of your competitors speak to the need to reduce prices to offer value for the consumer.

Operator: Thank you. Next question is coming from Scott Marks from Jefferies. Your line is now live.

Andrew Lazar: Hey, good morning. Thanks so much for taking our questions. The first thing I wanted to ask about, we've heard some of your competitors speak to the need to reduce prices to offer value for the consumer. We obviously haven't heard your team talk about that much. Just wondering if you can share any thoughts around that and whether you see any opportunities within the portfolio where you think that might be required.

Scott Marks: Hey, good morning. Thanks so much for taking our questions. The first thing I wanted to ask about, we've heard some of your competitors speak to the need to reduce prices to offer value for the consumer. We obviously haven't heard your team talk about that much. Just wondering if you can share any thoughts around that and whether you see any opportunities within the portfolio where you think that might be required.

Speaker #12: And we obviously haven't heard your team talk about that much, so just wondering if you can share any thoughts around that and whether you see any opportunities within the portfolio or if you think that might be required?

Speaker #1: Scott . Thanks , Mark would say first and . foremost , I our portfolio is very broad . And so as we look at each category , our our the fact that we play across the value spectrum actually allows us to deliver varying degrees of value to to the consumer .

Mark Smucker: Scott, thanks. It's Mark. I would say first and foremost, our portfolio is very broad. As we look at each category, the fact that we play across the value spectrum actually allows us to deliver varying degrees of value to the consumer. If you think about Meow Mix, it's a mainstream brand that provides affordability for cat parents. Our Milk-Bone brand, similarly, from base biscuits to more premium offerings like the Peanut Buttery Bites, also has a range and obviously provides affordability to the consumer. It goes without saying in coffee as well, despite the fact that we've seen significant inflation, we're glad, of course, that the tariffs are off, and that affords us the ability to do the right thing for consumers, frankly, and our retail customers in holding our price.

Speaker #1: So, if you think about Meow Mix, it is a mainstream brand that provides affordability for cat parents. Our Milk-Bone brand, similarly, from base biscuits to more premium offerings like Peanut Butter Dog Biscuits, also has a range and obviously provides affordability to the consumer.

Speaker #1: It goes without saying in coffee as well . the fact that we've Despite seen significant inflation . We're we're we're glad , of course , that that the tariffs are off and that affords us the ability to do the right thing for consumers , frankly .

Speaker #1: And our and our retail customers and holding our price . I would say on coffee more broadly , you know , history would show that over time , coffee costs would moderate .

Mark Smucker: I would say on coffee more broadly, history would show that over time, coffee costs would moderate. Although we don't have a clear view onto if and when that takes place as we get into a new coffee season, to the extent that we do see some meaningful deflation on the commodity, we would certainly pass that along to consumers as well. I think the headline is the portfolio itself offers a tremendous amount of options for consumers, and notably value all the way to more premium offerings.

I would say on coffee more broadly, history would show that over time, coffee costs would moderate. Although we don't have a clear view onto if and when that takes place as we get into a new coffee season, to the extent that we do see some meaningful deflation on the commodity, we would certainly pass that along to consumers as well. I think the headline is the portfolio itself offers a tremendous amount of options for consumers, and notably value all the way to more premium offerings.

Speaker #1: And so, although we don't have a clear view on if and when that takes place, as we get into a new coffee season, to the extent that we do see some meaningful deflation on the commodity, we would certainly pass that along to consumers as well.

Speaker #1: So, you know, I think the headline is that the portfolio itself offers a tremendous amount of options for consumers and notably value all the way to more premium offerings.

Speaker #12: Appreciate that . Thanks . And the second question from me would be you . You've made comments again today . Just about fiscal In 27 .

Andrew Lazar: Appreciate that. Thanks. The second question for me would be, you've made comments again today just about fiscal 2027 in terms of EPS growth. Expectations for On Algo were better. Obviously, the tariff relief provides a significant tailwind. Just wondering maybe how we should be thinking about base business expectations for 2027 if you're willing to comment on it. Thanks.

Scott Marks: Appreciate that. Thanks. The second question for me would be, you've made comments again today just about fiscal 2027 in terms of EPS growth. Expectations for On Algo were better. Obviously, the tariff relief provides a significant tailwind. Just wondering maybe how we should be thinking about base business expectations for 2027 if you're willing to comment on it. Thanks.

Speaker #12: terms of growth EPs expectations on for algo were better . Obviously , the the tariff relief provides a significant tailwind . So just wondering maybe how we should be thinking about base business expectations for 27 if if you're willing to comment on it .

Speaker #12: Thanks .

Speaker #5: Yeah . Scott , it's probably early to provide the FY 27 outlook . But the essence that we were trying to communicate is , is that with the stabilizing commodity environment and an off tariff environment , as we continue to generate cash down debt , and we deliver a level of business momentum , there could be a path to that .

Tucker Marshall: Yeah, Scott, it's probably early to provide the FY27 outlook. The essence that we are trying to communicate is that with a stabilizing commodity environment and an off-tariff environment, as we continue to generate cash and pay down debt, and we deliver a level of business momentum, there could be a path to that. That is what we were trying to just lay out as you think about a $9 midpoint at this fiscal year and all of the puts and calls that we've had to deal with in this fiscal year as we consider the future. Hopefully that provides a little context. Again, as we get to our fourth quarter earnings call, we'll be able to lay out our outlook for FY27.

Speaker #5: That's what we were trying to lay out. As you think about a $9 midpoint at this fiscal year and all of the puts and calls that we've had to deal with in this fiscal year, as we consider the future.

Speaker #5: So hopefully that provides a little context . Again , as we get to our fourth quarter earnings call , we'll be able to lay out our outlook for FY 27 .

Speaker #6: Thank you. We reached the end of our question and answer session. I'd like to turn the floor back over for any further closing comments.

Speaker #1: First of all, I'd just like to thank all of you for joining our call this morning. Our second quarter results demonstrate that our strategy is working.

Operator: Thank you. We reached the end of our question and answer session. I'd like to turn the floor back over for any further closing comments.

Mark Smucker: First of all, I'd just like to thank all of you for joining our call this morning. Our second quarter results demonstrate that our strategy is working. We delivered sequential acceleration in comparable net sales growth, which we anticipate will continue into next quarter. Our bottom line results reflect increased investments in our brands, disciplined cost management, and strong execution. Our business continues to build positive momentum, and we are confident in our ability to deliver our financial outlook for this fiscal year while advancing our long-term objectives to increase shareholder value. As always, I would like to thank our outstanding employees for their continued hard work and dedication to our company. We wish all of you a very happy Thanksgiving, and a great holiday week. Have a great day.

Speaker #1: We delivered sequential acceleration in comparable net sales growth, which we anticipate will continue into next quarter. Our bottom line results reflect increased investments in our brands.

Speaker #1: Disciplined cost management and strong execution. Our business continues to build positive momentum, and we are confident in our ability to deliver our financial outlook for this fiscal year.

Speaker #1: While advancing our long-term objectives to increase shareholder value, as always, I would like to thank our outstanding employees for their continued hard work and dedication to our company.

Speaker #1: We wish all of you a very Happy Thanksgiving and a great holiday week. Have a great day.

Speaker #6: Thank you, everyone! This concludes our conference call today. Thank you all for participating, and have a nice day. All parties may now disconnect.

Operator: Everyone, this concludes our conference call for today. Thank you all for participating, and have a nice day. All parties may now disconnect.

Q2 2026 J M Smucker Co Earnings Call - Q&A

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