J M SMUCKER Co (SJM Q2 FY2025 earnings call

• Hostess execution: Plans to improve display, innovation, and co-promotions across channels to drive growth. - Coffee pricing: Addressing ongoing green coffee inflation with two rounds of pricing, expecting margin changes in the coffee portfolio. - Cost synergies: Committed to $100M cost synergies from Hostess acquisition, balanced between fiscal 2025 and 2026. - Uncrustables growth: Exceeding expectations, with new products launched and expansion in production capacity. - GLP-1 trends: Monitoring impact on business, with no material impact seen to date but ongoing research. - Wortmann divestment: Impact on earnings for fiscal 2025 expected to be ten cents, with proceeds used to pay down debt.

Coffee: Anticipates flat sales in Q3 due to second round of pricing, lapping strong prior-year comps in pet, sweet baked snacks call down, offset by frozen handhelds and spreads growth. Pet: Laps strong prior-year comps, impacted by discretionary nature of pet treating and reduced co-manufacturing sales. Hostess: Sales guidance implies low single-digit year-over-year decline in second half, with sequential improvement due to execution improvements and easier comparables. Uncrustables: Exceeding expectations, on track to hit $900M in 2025 and $1B in 2026.

• EPS guidance: Midpoint revised from $10 to $9.80 then to $9.90 due to coffee inflation and top-line outlook. - Hostess sales: Low single-digit year-over-year decline in second half with sequential improvement. - Coffee pricing: Expecting to continue addressing green coffee inflation through pricing actions, monitoring elasticity impact. - Fiscal 2026 outlook: Considering base business momentum, stranded overhead mitigation, Hostess synergies, cost and product activity programs, and debt paydown.

• Coffee inflation: Volatility in coffee prices due to financial speculation and potential impact on margins. - Consumer spending: Discretionary spending impact on Hostess sales and pet treating category. - GLP-1 trends: Potential impact on snacking categories, though no material impact seen yet. - Pet co-manufacturing: Reduced co-manufacturing sales affecting pet segment performance.

Q: Andrew Lazar asked about flat year-over-year sales in fiscal third quarter and Hostess sales guidance.

A: Tucker Marshall responded on coffee pricing impact, lapping comps in pet, and Hostess sequential improvement due to execution and easier comparables.

Q: Ken Goldman asked about Hostess synergies and balance between price vs volume mix.

A: Tucker Marshall discussed cost synergies from Hostess and Tucker Marshall broke down comparable growth and price/volume mix balance.

Q: Robert Moskow asked about Hostess execution weakness and marketing indulgent snacks.

A: Mark Smucker talked about execution issues related to display and channel impact, and confidence in indulgent snacking trends.

Q: Peter Galbo asked about EPS guidance volatility and coffee price impact.

A: Tucker Marshall explained EPS guidance revision due to coffee inflation and top-line outlook, and Mark Smucker discussed coffee price volatility and passing along cost changes.

Q: Chris Carey asked about fiscal 2026 EPS and coffee category developments.

A: Tucker Marshall framed 2026 outlook components and Mark Smucker discussed coffee consumption at-home trends.

Q: Tom Palmer asked about sweet baked snacks changes and pet stranded costs.

A: Mark Smucker talked about sweet baked snacks customer engagement, and Tucker Marshall discussed stranded overhead impact on fiscal 2025 and tailwind for 2026.

Q: Alexia Howard asked about GLP-1 trends and Wortmann divestment impact.

A: Mark Smucker discussed GLP-1 trends monitoring, and Tucker Marshall explained Wortmann divestment impact on earnings.

Q: Matt Smith asked about Uncrustables growth drivers.

A: Mark Smucker talked about Uncrustables production expansion, new products, and exceeding growth expectations.

Q: Rob Dickerson asked about coffee and segment margins.

A: Tucker Marshall discussed total company gross margin outlook and coffee margin changes due to pricing.

Q: Steve Powers asked about pet business sensitivity to demand.

A: Mark Smucker talked about Milk-Bone performance, innovation, and Pup-Peroni brand refresh.

Q: Max Gumport asked about coffee top-line in second half and pet competitive environment.

A: Tucker Marshall discussed coffee sales growth in Q4 and pet brand promotional activity for Meow Mix.