The J.M. Smucker Co. — Fiscal Year 2027 First Quarter Earnings Summary

Financial Performance

• Net sales reached $2.2 billion, an increase of $106.0 million (5%) compared to the prior year.
• Net income per diluted share was $3.03, compared to a loss of $0.41 per diluted share in the prior year.
• Adjusted earnings per share (EPS) was $3.24, a 71% increase year-over-year, including an $0.84 benefit from tariff refunds.
• Operating income was $511.6 million, compared to $45.6 million in the prior year.
• Adjusted operating income was $540.7 million, a 46% increase from the prior year.
• Gross profit was $979.6 million, a 106% increase from the prior year.
• Adjusted gross profit was $950.2 million, a 28% increase from the prior year.
• Cash provided by operating activities was $425.7 million, compared to $10.6 million used in the prior year.
• Free cash flow was $337.3 million, compared to ($94.9) million in the prior year.
• Net interest expense decreased $17.9 million to $82.3 million, primarily due to reduced debt outstanding.
• The effective income tax rate was 24.2%, compared to 22.3% in the prior year.
• Weighted-average shares outstanding assuming dilution were 107.1 million.

Guidance and Future Outlook

• Full-year fiscal 2027 net sales are now expected to decrease 1.0% to 2.0% (previously 4.0% to 3.0%).
• Full-year fiscal 2027 adjusted EPS is now expected to range from $10.50 to $11.00 (previously $9.75 to $10.25).
• Full-year fiscal 2027 free cash flow is now expected to be approximately $1.1 billion (previously $1.0 billion).
• Full-year fiscal 2027 capital expenditures are expected to be $325.0 million.
• Full-year fiscal 2027 adjusted effective income tax rate is expected to be 24.2%.
• The updated guidance includes approximately $115.0 million of tariff refunds received in the first quarter.
• The adjusted EPS range includes a net benefit of approximately $0.60 related to tariff refunds.
• Guidance assumes no impacts from new tariffs, changes to existing tariffs, or changes to tariff refunds received in the first quarter.

Business Segments and Product Lines

• U.S. Retail Coffee: Net sales increased 13% to $807.8 million; segment profit increased 124% to $300.0 million; segment profit margin was 37.1%.
• U.S. Retail Frozen Handheld and Spreads: Net sales increased 3% to $499.3 million; segment profit increased 13% to $129.7 million; segment profit margin was 26.0%.
• U.S. Retail Pet Foods: Net sales increased 1% to $371.7 million; segment profit decreased 2% to $98.9 million; segment profit margin was 26.6%.
• Sweet Baked Snacks: Net sales decreased 7% to $236.5 million; segment profit decreased 13% to $29.9 million; segment profit margin was 12.6%.
• Away From Home: Net sales increased 3% to $203.7 million; segment profit increased 19% to $61.2 million; segment profit margin was 30.0%.
• International (Other): Net sales were $100.3 million; segment profit was $19.3 million.
• Net sales growth was driven by a 4 percentage point increase in net price realization and a 1 percentage point increase in volume/mix.
• U.S. Retail Coffee price realization increased by 10 percentage points, while volume/mix increased by 2 percentage points.
• U.S. Retail Frozen Handheld and Spreads price realization increased by 2 percentage points, while volume/mix increased by 1 percentage point.
• Sweet Baked Snacks volume/mix decreased by 8 percentage points, while price realization increased by 2 percentage points.

Market and Competitive Landscape

• The company operates in a dynamic and evolving external environment including geopolitical, macroeconomic, and policy changes.
• Consumer behaviors are changing, which could impact the fiscal year 2027 outlook.
• The company maintains a differentiated portfolio of brands including Folgers®, Dunkin'®, Café Bustelo®, Jif®, Uncrustables®, Smucker's®, Hostess®, Milk-Bone®, and Meow Mix®.

Risks and Challenges

• Risks include operational stability, supply chain disruptions, product recalls, political instability, geopolitical conflicts, extreme weather, pandemics, and labor shortages.
• Cost inflation in supply chain inputs (labor, raw materials, commodities, packaging, transportation) remains a concern.
• Risks related to derivative and purchasing strategies for commodity pricing and interest rates.
• Potential impacts from changes in consumer preferences, litigation, and regulatory actions by the FDA.
• Risks associated with the ability to achieve cost savings, generate sufficient cash flow, and maintain credit ratings.
• Risks related to information technology security breaches, foreign currency exchange rates, and tax law changes.

Management Commentary and Tone

• CEO Mark Smucker stated results exceeded expectations for both net sales and adjusted EPS, demonstrating continued momentum.
• Management highlighted the strength of the differentiated portfolio, disciplined execution of strategic priorities, and investments in brands and capabilities.
• Management expressed confidence in delivering long-term growth and increasing shareholder value.
• Strategic priorities include driving organic volume growth, improving profitability, accelerating earnings growth, and maintaining disciplined capital deployment.

Other Key Points

• The company received approximately $115.0 million in tariff refunds during the quarter, which included $4.0 million of interest income.
• Net cash outflows related to debt were $230.8 million.
• Quarterly dividends declared per common share were $1.12, an increase from $1.10 in the prior year.
• Purchase of treasury shares was $5.7 million in the quarter.
• The company operates with a total asset base of $16.2 billion as of July 31, 2026.
• Total segment profit was $639.0 million, compared to $449.5 million in the prior year.
• Adjusted EBITDA was $637.7 million, compared to $178.9 million in the prior year.