Earnings call · Jul 2026 (Q1 FY27)

J M SMUCKER Q1 FY27 earnings call SJM

Aug 26, 2026 Source

Executive summary

The J. M. Smucker Company Q1 FY27 — Strong Start and Raised Full-Year Outlook

The J. M. Smucker Company delivered a strong first quarter, exceeding expectations with robust net sales and earnings growth, driven by key brands like Uncrustables and Cafe Bustelo. The company raised its full-year outlook across key financial metrics, reflecting continued business momentum and the early achievement of its leverage target. Management is focused on strategic investments, debt reduction, and returning capital to shareholders, while navigating commodity volatility and channel-specific challenges.

Highlights

Net sales increased 5%, including a 1 percentage point contribution from volume/mix.
Adjusted gross margin increased 760 basis points, or 240 basis points excluding tariff refunds.
Adjusted earnings per share increased 71% to $3.24, including an $0.84 benefit from tariff refunds.
Achieved leverage target of 2.9x net debt to EBITDA, ahead of the original expectation of reaching it by the end of FY27.
Raised full-year outlook for net sales, adjusted EPS, and free cash flow.

Concerns

Sweet Baked Snacks net sales decreased 7%, primarily due to prior year SKU rationalization and declines in the convenience channel.
Dog snacks net sales decreased 2%, driven by a decline in the Jerky Treats brand.
Anticipate mid-single-digit inflation across the cost basket (excluding green coffee, tariffs), an increase of roughly 100 basis points versus previous expectations.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year Net Sales	decrease 1% to 2% high materiality	FY27	High
Full-year Adjusted Earnings Per Share	$10.50 to $11 high materiality	FY27	High
Full-year Free Cash Flow	approximately $1.1 billion high materiality	FY27	High
Full-year Net Sales (Net Price Realization)	approximate 1.5% decrease medium materiality	FY27	High
Full-year Volume/Mix	approximately flat medium materiality	FY27	High
Full-year Adjusted Gross Profit Margin	approximately 38.75% high materiality	FY27	High
Full-year SD&A Expenses	increase by approximately 8% medium materiality	FY27	High
Full-year Total Marketing Expense	5.7% of net sales medium materiality	FY27	High
Full-year Net Interest Expense	approximately $335 million medium materiality	FY27	High
Full-year Adjusted Effective Income Tax Rate	24.2% low materiality	FY27	High
Full-year Weighted Average Share Count	107.1 million low materiality	FY27	High
Full-year Capital Expenditures	$325 million medium materiality	FY27	High
Q2 Net Sales	decrease 3% to 4% medium materiality	Q2 · FY27	High
Q2 Net Price Realization	low single-digit decrease medium materiality	Q2 · FY27	High
Q2 Volume/Mix	down low single digits medium materiality	Q2 · FY27	High
Q2 Adjusted Earnings Per Share	increase in the low 20% range high materiality	Q2 · FY27	High
Full-year Debt Repayment	at least $500 million medium materiality	FY27	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
U.S. Retail Coffee Segment profit increased 124%, primarily reflecting the receipt of tariff refunds and higher net price realization, partially offset by higher marketing spend. Net price realization: 10 percentage pointsVolume/mix: 2 percentage points (Dunkin', Cafe Bustelo)Segment profit margin (ex-tariff refunds): 25.6%	increased 13%	13%	—	37.1%
U.S. Retail Frozen Handheld and Spreads Segment profit increased 13% driven by higher net price realization, lower marketing spend and favorable volume mix, partially offset by higher costs. Net price realization: 2 percentage pointsVolume/mix: 1 percentage point (Uncrustables increase, peanut butter/fruit spreads decrease)	increased 3%	3%	—	—
U.S. Retail Pet Foods Segment profit decreased 2%, reflecting higher costs and increased marketing spend, partially offset by tariff refunds and favorable volume/mix. Volume/mix: 1 percentage point (cat food increase, dog snacks flat)Net price realization: neutral	increased 1%	1%	—	—
Sweet Baked Snacks Segment profit decreased 13%, reflecting higher costs and unfavorable volume mix, partially offset by higher net price realization and lower marketing spend. Volume/mix: -8 percentage points (snack cakes, breakfast decreases; donuts neutral)Net price realization: 2 percentage points	decreased 7%	-7%	—	—
Away From Home Segment profit increased 19%, reflecting tariff refunds and favorable volume/mix, partially offset by higher costs. Volume/mix: 2 percentage points (Uncrustables, fruit spreads increases; coffee decrease)Net price realization: neutral	increased 3%	3%	—	—

Product announcements

Product	Type	Timeline
Fridge-friendly Uncrustables sandwiches	launch	—
Uncrustables morning protein platform flavors	launch	—
Jif Simply	launch	—
Donettes Churro Mini Donuts	launch	—
Donettes sharing-size offering	launch	—

Capital programs

McCalla, Alabama facility (second phase) underway

Accelerating plans to bring the second phase of the McCalla, Alabama facility online to support Uncrustables growth. Higher preproduction expenses related to this expansion are contributing to increased SD&A expenses.

Risks & headwinds

Green coffee price volatility

volatile

Mitigation:Continue to adjust pricing as cost structure evolves; demonstrated ability to navigate commodity environment effectively.

Sweet Baked Snacks convenience channel challenges

traffic continues to be pressured

Mitigation:Focused on strengthening brand's performance across channels and positioning it to benefit when convenience traffic improves; Hostess Donettes outperforms broader category in this channel.

Dynamic external environment FY27

geopolitical, macroeconomic and policy changes as well as changes in consumer behavior

Mitigation:Guidance reflects company's expectations based on current understanding, does not assume impact from new tariffs or changes to existing tariffs/refunds.

Increased cost inflation (ex-green coffee, tariffs) FY27

mid-single-digit inflation, increase of roughly 100 bps versus previous expectations

Mitigation:Partially offset by tariff refunds benefit to gross profit margin.

Increased SD&A expenses FY27

projected to increase by approximately 8% versus the prior year

Mitigation:Driven by administrative expenses, increased marketing investments, and higher preproduction expenses related to the second phase of the McCalla, Alabama facility. Partially offset by higher adjusted gross profit and lower interest expense for Q2 EPS.

What to watch in Q2 FY27

Full-year Net Sales Guidance

next quarter

Current decrease 1% to 2%

Target Maintain or improve

Why it matters

This is a key indicator of overall business health and market demand, especially with anticipated green coffee deflation and volume/mix expectations.

We now expect net sales to decrease between 1% and 2% relative to the prior year, representing an improvement of approximately 2 percentage points at the midpoint of our guidance range or roughly $180 million.

2 min read 6 chapters

Detailed narrative

Strategic Priorities and Q1 Performance

The J. M. Smucker Company delivered a strong first quarter, exceeding expectations and demonstrating continued momentum across its portfolio. The performance reflects the strength of its differentiated brands, disciplined execution against strategic priorities, and ongoing investments. The company's three strategic priorities are driving organic volume growth, improving profitability and accelerating earnings, and maintaining a disciplined approach to capital deployment. Q1 results showed progress across all these areas, leading to a raised full-year outlook.

Key Growth Platforms Driving Volume

Organic volume growth was a significant driver, with notable contributions from Uncrustables, Cafe Bustelo, Meow Mix, and Milk-Bone. Uncrustables achieved 12% net sales growth and double-digit volume/mix increase, reaching record household penetration of 27%. Cafe Bustelo delivered 23% net sales growth and 8% volume/mix, becoming the sixth-largest brand in the at-home coffee category. Meow Mix saw 4% net sales growth, and Milk-Bone returned to volume growth, particularly in soft and chewy snacks with double-digit net sales growth.

Profitability Improvement and Capital Allocation

Profitability improved significantly, with adjusted gross margin increasing 760 basis points (240 basis points excluding tariff refunds) and adjusted EPS up 71% to $3.24. The company maintained its disciplined capital deployment, paying down approximately $230 million of debt in Q1 and achieving its 2.9x net debt to EBITDA leverage target ahead of schedule. Management reiterated its commitment to paying down at least $500 million of debt in FY27 and increased the dividend for the 25th consecutive fiscal year.

Coffee Segment Dynamics and Pricing Strategy

The U.S. Retail Coffee segment saw net sales increase 13%, driven by higher net price realization and volume/mix growth across brands like Dunkin' and Cafe Bustelo. The company is actively passing lower green coffee commodity costs back to consumers through trade investments, a strategy it has historically employed. Management anticipates continued adjustments to pricing as cost structures evolve, navigating green coffee price volatility effectively.

Spreads and Pet Foods Modernization Efforts

In Frozen Handheld and Spreads, Uncrustables' double-digit growth offset declines in Jif peanut butter and Smucker's fruit spreads. The Jif brand underwent its first major identity update in over 30 years, supported by a new snacking-focused campaign and the launch of Jif Simply. In Pet Foods, cat food momentum (Meow Mix 4% net sales growth) was partially offset by a decline in dog snacks, though Milk-Bone returned to volume growth and Pup-Peroni stabilized with 5% net sales growth.

Sweet Baked Snacks Challenges and Retail Strength

The Sweet Baked Snacks segment experienced a 7% net sales decrease, primarily due to prior year SKU rationalization and ongoing challenges in the convenience channel. However, the business showed strength in U.S. retail channels, with low single-digit net sales growth and double-digit growth for the Hostess Donettes brand. The company is focused on expanding distribution and innovation for Donettes, leveraging larger pack sizes and new offerings like Churro Mini Donuts to drive consumption.

AI-generated summary of the company's earnings call. Not investment advice.