J.M. Smucker Company Q1 2027 Earnings Call - Uncrustables Momentum and Tariff Reinvestment

Operator: Good morning, and welcome to The J. M. Smucker Company’s fiscal 2027 first quarter earnings question and answer session. This conference call is being recorded, and all participants will be in a listen-only mode. Please limit yourselves to two questions and re-queue if you have additional questions. I will now turn the conference call over to Crystal Beiting, Vice President, Investor Relations, Financial Planning and Analysis. Thank you. You may begin.

Crystal Beiting, Vice President, Investor Relations, Financial Planning and Analysis, The J. M. Smucker Company: Good morning, and thank you for joining our fiscal 2027 first 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 could 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.

Participating on this call are Mark Smucker, Chief Executive Officer, President, and Chair of the Board, and Tucker Marshall, Chief Financial Officer, Executive Vice President, Frozen, Handheld and Spreads, and Sweet Baked Snacks. We will now open the call for questions. Operator, please queue up the first question.

Operator: Thank you. The question and answer session will begin at this time. If you are using a speakerphone, please pick up the handset before pressing any numbers. Should you have a question, please press star one on your telephone. 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 question and answer session. Should you have additional questions, you may re-queue, and the company will take questions as time allows. Please stand by for the first question. Our first question is coming from Andrew Lazar from Barclays. Your line is now live.

Andrew Lazar, Analyst, Barclays: Great. Thanks so much. Good morning, everybody.

Mark Smucker, Chief Executive Officer, President, and Chair of the Board, The J. M. Smucker Company: Morning.

Andrew Lazar, Analyst, Barclays: Morning. I guess, as I understand it looks like you received an $0.84 tariff refund benefit in fiscal 1Q and anticipate about a $0.60 benefit for the full year net of some incremental costs and spend back. I was wondering if you are able to give us a better sense of what is incorporated in that sort of $0.24 differential in SD&A. I guess, how much is higher admin expenses for the build-out of McCalla versus higher brand spend or something else?

Mark Smucker, Chief Executive Officer, President, and Chair of the Board, The J. M. Smucker Company: Andrew, good morning.

Andrew Lazar, Analyst, Barclays: Morning.

Mark Smucker, Chief Executive Officer, President, and Chair of the Board, The J. M. Smucker Company: Yes, we did receive an $0.84 benefit from tariff refunds in our first quarter, and we are choosing to reinvest a portion of that in SD&A expenses, largely coming through administrative expense, along with some incremental marketing spend and advancing pre-production expenses associated with our McCalla, Alabama facility, all in support of the Uncrustables brand. Then acknowledging, too, that we would use the balance of earnings or cash to pay down debt.

Andrew Lazar, Analyst, Barclays: Got it. Okay. Thank you for that. You are still looking for coffee volume to decrease for the full year by low single digits, and I just wanted to explore this a bit more just because you have seen coffee volume actually increase despite the higher pricing more recently. So I guess with the understanding that elasticity has been modest as prices went up, why would we expect volume to weaken even as coffee shelf prices moderate from here? Maybe it is just conservatism at this point, but just curious on that. Thanks so much.

Mark Smucker, Chief Executive Officer, President, and Chair of the Board, The J. M. Smucker Company: Andrew, it is Mark. Thanks for the question. You are correct. Because the commodity has continued to be very volatile, which particularly this time of year is not unusual, we just feel that it is prudent, given not only the commodity, but category dynamics and the consumer environment, to just think about the coffee business from a prudent perspective. I would highlight that, as you pointed out, great results in the quarter on all three of our key brands with Bustelo growing, supported by the Game Face campaign around soccer, and then Dunkin’ having relative pricing in line with where it needs to be. All of that has been supportive, but it is just, again, making sure that we are thinking about the go forward from a prudent perspective.

Andrew Lazar, Analyst, Barclays: Got it. Yep. Makes sense. Thanks so much.

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

Peter Galbo, Analyst, Bank of America: Hey, good morning, Mark and Tucker. Thanks for the questions. If I could pick up on coffee. I think there are quite a bit of investor questions just around how you’re thinking about the recent run-up on, I guess, more speculative nature of Super El Niño at this point. There was a change in terms of how you have the outlook for the year on the pricing side, so actually expecting less of a headwind on coffee price for the year to go, I think, than previously. Just how kind of the recent movement coffee prices are impacting that decision. Had you planned a larger list price decrease now you’re pulling back on trade promotion? Just any additional detail on how we might think about the price piece as it relates to coffee.

Mark Smucker, Chief Executive Officer, President, and Chair of the Board, The J. M. Smucker Company: Sure, Peter. It’s Mark. As I just mentioned, this time of year, and obviously speculation around weather and so forth is not unusual, and we had contemplated a list price decline at the end of the fiscal and wanted to just acknowledge that the commodity, the base commodity is down

Tucker Marshall, Chief Financial Officer, Executive Vice President, Frozen, Handheld and Spreads, and Sweet Baked Snacks, The J. M. Smucker Company: Versus last year. We have not crossed key thresholds that would actually justify, nor have we seen sustained deflation at this point. So, having not crossed key thresholds, we won’t take a list price decline at this point. But we have passed along some of that deflation to consumers in the form of trade using those levers, which is pretty normal. We will continue to watch the crop. The indications are, having essentially finished the harvest, that the crop is healthy and there could be a surplus, but at this point, since we have not seen that flow through, we’ll just pause and continue to watch where the commodity goes, and again, take a prudent approach.

Peter Galbo, Analyst, Bank of America: Great. Thanks for that, Mark. Very clear and helpful. Tucker, I noticed that in the prepared remarks you reinserted maybe a bit more forcefully commentary around share repurchase, just given where the leverage has landed, some of that being tied, obviously, the tariff refund. But maybe it felt intentional. So just curious if you can expand a little bit on potential for share repurchase, what we might be able to see. It seems like potentially this year, which again, seems like a bit of a pull forward. So I’ll leave it there. Thanks very much.

Mark Smucker, Chief Executive Officer, President, and Chair of the Board, The J. M. Smucker Company: Peter, good morning. We remain committed to a balanced capital deployment model where we can reinvest in the business and also return capital to shareholders. We are on the journey to pay down about $500 million of debt this year and achieve the 3x leverage ratio, which candidly, we did in this first quarter. We’re a little ahead of expectations, and we remain committed to the quarterly dividend, which we recently announced an increase, and we now have the flexibility to begin contemplating share repurchases as we move forward.

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

Tom Palmer, Analyst, JPMorgan: Good morning. Thanks for the question. Maybe just to start out, I wanted to clarify some of the COGS inflation commentary. I think it’s still mid-single digits, but 100 basis points higher than previously. How much of this is just related to coffee versus other costs moving around, such as freight?

Mark Smucker, Chief Executive Officer, President, and Chair of the Board, The J. M. Smucker Company: Yeah, we are experiencing mid-single-digit inflation as you isolate the effects of green coffee tariffs and tariff refunds. When you think of that sort of underlying mid-single-digit inflation, we’re seeing an increase from our initial expectations coming into the year, largely driven by freight and some commodity and other ingredients. That’s been factored into our guidance for the balance of the year.

Tom Palmer, Analyst, JPMorgan: Okay. Thank you. I wanted to ask on the frozen handheld and spreads segment, we have seen stronger margins the last couple of quarters. There is also, I know the plant startup costs here and I think maybe higher marketing. I guess, how sustainable do you think about the margins we have been seeing lately in this business, and at what point do we really start to see the pre-production costs at McCalla become a factor?

Mark Smucker, Chief Executive Officer, President, and Chair of the Board, The J. M. Smucker Company: Yeah, we delivered a nice first quarter, both from a top-line momentum standpoint and also the profitability flowed through as well. As we think about the business, we continue to support growth. We now expect high single-digit growth for the Uncrustables brand, total company, total venture. As we move forward, we will continue to support the portfolio with ongoing marketing investments and also ensuring that we continue to bring production along as we support demand. As you can see, or you may have read, we are increasing pre-production expenses for the year in support of the McCalla, Alabama facility. So the margin profile may take a slight step back in our next few quarters, but the profile continues to remain strong.

Tom Palmer, Analyst, JPMorgan: Understood. Thank you.

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

Robert Moskow, Analyst, TD Cowen: Hey, thank you. Maybe I will ask about retail pet food. I think you have volume/mix for dog snacks flat, but Milk-Bone volume/mix was positive. Can you tell me a little bit more about how you are trying to manage that overall dog snacks business, which has been kind of challenged? Do you have any new views on kind of the tail brands like Pup-Peroni and things like that? They have been a drag. Do you have any specific actions to try to stabilize them or could there be portfolio change longer term?

Tucker Marshall, Chief Financial Officer, Executive Vice President, Frozen, Handheld and Spreads, and Sweet Baked Snacks, The J. M. Smucker Company: Sure, Rob. It is Mark. Actually, really solid quarter on dog snacks, and in particular, Pup-Peroni. We still feel that the category of dog snacks is a great one, so we do want to continue to participate with the brands we have. Pup-Peroni was up 5% in net sales and 7%. It was a strong quarter, largely driven by some brand refresh, sharper marketing, and some specific events at some of our larger customers that were helpful. Milk-Bone also had a good quarter, returning it to volume growth.

That was supported by innovation, winning in the soft and chewy segment, good marketing there. I think we have said in quarters past that we continue to focus on continuing to stabilize the biscuit segment through messaging around dog enjoyment and functional benefits. More to come on that, but ultimately, very positive on the dog snacks category. It goes without saying, we had a solid quarter on cat food as well.

Robert Moskow, Analyst, TD Cowen: Okay. Pardon me for getting the brands wrong. Were any of the snack brands down then? Because if Pup-Peroni is up and Milk-Bone is up, then there must be something else down.

Tucker Marshall, Chief Financial Officer, Executive Vice President, Frozen, Handheld and Spreads, and Sweet Baked Snacks, The J. M. Smucker Company: Jerky Treats was down.

Robert Moskow, Analyst, TD Cowen: Okay. All right. Thank you.

Operator: Thank you. Next question is coming from Chris Carey from Wells Fargo Securities. Your line is now live.

Chris Carey, Analyst, Wells Fargo Securities: Hi. Good morning, everybody. Thank you for the question.

Tucker Marshall, Chief Financial Officer, Executive Vice President, Frozen, Handheld and Spreads, and Sweet Baked Snacks, The J. M. Smucker Company: Morning.

Chris Carey, Analyst, Wells Fargo Securities: I wanted to ask about expectations going into fiscal Q2. Quite a sharp reversal, yet it feels like momentum is good on frozen and handheld comps get easier, similar dynamic on pet away from home is doing well, supported by Uncrustables. Is this just a substantial reversal in coffee in Q2, or is the sweet baked snacks business expected to get worse going into Q2? Can you just help frame the outlook going into the next quarter, and some of the key drivers in the delta relative to the run rates that you’re at post Q1?

Mark Smucker, Chief Executive Officer, President, and Chair of the Board, The J. M. Smucker Company: Yeah, Chris, we do believe that there’s ongoing business momentum as we head into our second quarter, and we continue to acknowledge that coffee had great volume delivery in the first quarter, and that we are being very prudent in our volume assumptions in the next nine months on that portfolio. We’re also sort of reversing a contemplated list price decline and bringing back the promotional activity to get to those right price points within coffee. We see ongoing momentum in the frozen handheld and spreads portfolio, largely driven by the Uncrustables sandwich. The rest of the businesses are doing what we anticipated coming into this fiscal year. We believe that Q2 really is coming in line with sort of the expectations and has enabled us to support our guidance revision for the year.

Chris Carey, Analyst, Wells Fargo Securities: Okay. Thank you. On the sweet baked snacks business specifically, was Q1 more or less in line with your expectations? I don’t know why it felt maybe a touch light on the top line, but I think even in that response just now, you had suggested that the business, I suppose, is still running roughly in line with your expectations. Just give us a sense of where you see the business from a top-line standpoint, and also margins where there’s been a bit of volatility in your ability to have more visibility into the segment. Just slightly connected, and apologies for I guess the third one here, but how are you thinking about broader portfolio? You’ve been nimble about making decisions when required. I just wonder what the current state of affairs as you digest your current lineup. Thanks so much.

Tucker Marshall, Chief Financial Officer, Executive Vice President, Frozen, Handheld and Spreads, and Sweet Baked Snacks, The J. M. Smucker Company: Chris, it’s Mark. The performance on Hostess in the quarter was essentially right where we expected it to be. So making progress on the stabilization journey, recognizing the journey itself is slow and steady, but we do feel good about the progress we made. There were a couple of bright spots. Honestly, Donettes has been performing really well, outperforming particularly in the larger bag size as well as some innovation on the mini churro donuts. Also, the morning time occasion seems to be very strong, and that performance on Donettes was supported largely in the U.S. retail channels. We do recognize that the convenience channel as a whole continues to be challenged just in terms of traffic, and we have not lapped SKU rationalization. So that might be a little bit of what you’re seeing. Then some innovation like on Suzy Q’s also performing well.

So a couple of bright spots, and then our goal is just to continue to make incremental progress quarter-over-quarter.

Chris Carey, Analyst, Wells Fargo Securities: Okay. Thank you.

Tucker Marshall, Chief Financial Officer, Executive Vice President, Frozen, Handheld and Spreads, and Sweet Baked Snacks, The J. M. Smucker Company: Thanks.

Operator: Thank you. Next question today is coming from Nik Modi from RBC Capital Markets. Your line is now live.

Nik Modi, Analyst, RBC Capital Markets: Yeah, thank you. Good morning, everyone. Just a couple of questions. One is just on coffee. When you think about what’s going on between the out-of-home and in-home, it seems like while higher income consumers are certainly enjoying themselves out-of-home, some of the lower and middle income consumers are feeling the pressure. I’m just wondering if, Mark, do you think there’s a marketing opportunity, kind of a value conscious message that you can be more aggressive with just to capture some of those consumers. So I just wanted to get your thoughts on that, and then I have a second question.

Tucker Marshall, Chief Financial Officer, Executive Vice President, Frozen, Handheld and Spreads, and Sweet Baked Snacks, The J. M. Smucker Company: Nick, I like that point. I do think there is an opportunity, and we have been pretty consistent at talking about this, more than 70% of cups consumed are consumed at home, and the fact that our portfolio meets a variety of value points for the consumer. We agree with you. We do think that will continue to be an opportunity. I would note Folgers, being one of our more affordable brands, had some great performance around America’s 250th anniversary. There were some specific SKUs that we supported over the holiday period in July, and so appreciate the feedback.

Nik Modi, Analyst, RBC Capital Markets: Great. Helpful. I guess this one is kind of an off-the-wall question, but some observations from recent trade shows in the pet space would suggest apps and devices are really the big kind of growth drivers. I think treats have been under pressure, dog has been under pressure, and it just looks like with all kind of the AI enablement and kind of tracking your pet’s health more in real time. I am just curious, now that leverage is where it is, how do you think about capital allocation in the pet space, and is that something you have ever thought about?

Tucker Marshall, Chief Financial Officer, Executive Vice President, Frozen, Handheld and Spreads, and Sweet Baked Snacks, The J. M. Smucker Company: Well, it is a good question. Strategically, we have considered over time where can we play and where can we win. I would say our priority is going to remain on consumables, right? Things that dogs eat and cats eat. Not that we would not continue to think about that, but I would say right now it is really focused on dog snacks and cat food.

Nik Modi, Analyst, RBC Capital Markets: Great. I will pass it on. Thank you so much.

Operator: Thank you. Next question is coming from David Palmer from Evercore ISI. Your line is now live.

David Palmer, Analyst, Evercore ISI: Thanks. Good morning.

Tucker Marshall, Chief Financial Officer, Executive Vice President, Frozen, Handheld and Spreads, and Sweet Baked Snacks, The J. M. Smucker Company: Good morning.

David Palmer, Analyst, Evercore ISI: FY 2027 is already going to be an investment year, and now it looks like you have the ability to lean in a little bit more, maybe $10 million-$20 million more, I guess, as of this morning. I am wondering, I think people are used to feeling good about investment spend because they think that easy comparisons on that spend next year just increases visibility. But I think that people are equally doubtful that there is going to be a return on investment from growth spending in the food space. I know you are leaning in on, or you have in the past said you are leaning in on Uncrustables, dog treats, and peanut butter. Uncrustables is crushing it. I wonder if you could give some detail on the types of spending you are making on those big three and maybe if the incremental is not going into those, what you are spending that on.

I have a follow-up.

Tucker Marshall, Chief Financial Officer, Executive Vice President, Frozen, Handheld and Spreads, and Sweet Baked Snacks, The J. M. Smucker Company: Dave, it’s Mark. We have been very disciplined in terms of where we spend dollars, and we have tools that enable us to evaluate how much bang for the buck we get and where we are going to get incremental ROI. With Katie Williams on board as our new Chief Marketing Officer, she brings to bear also a lot of expertise in that area, along with all of our marketers that support each of our brands. I feel pretty confident that we can be choiceful and prudent with the dollars and put them where we are actually going to get meaningful return.

David Palmer, Analyst, Evercore ISI: When we look at the dog treats data, peanut butter data, those are two areas that I would say you are going to want to stabilize going into next year. Is there a sort of cadence that we should be looking at for improvement in those two areas, if those are two of the three? Any sort of color about what you are doing with Uncrustables and the frozen to thaw product that seems to be working. Thanks.

Mark Smucker, Chief Executive Officer, President, and Chair of the Board, The J. M. Smucker Company: Dave, we remain committed to advancing all of our brands. As you noted, in dog treats, it’s important for us to continue to build the brand Milk-Bone and continue to advance its relevance in the treating occasion, and we will continue to do that. It’s certainly in our plans and has been an objective since we stepped into this fiscal year. It’s important that we demonstrate our leadership in the spreads category, in particular with peanut butter and fruit. As you think about Uncrustables, it continues to be a great story. It’s going to demonstrate another year of growth. It continues to demonstrate growth in traditional U.S. retail channels and also in the away-from-home channel. We are also acknowledging that we are bringing along innovation, we are supporting brand building, and we are increasing capacity in support of ongoing demand.

It continues to be a good story, and much of what you are asking is built into our outlook and is a part of our, so to speak, blocking and tackling as we build these brands and deliver organic growth.

David Palmer, Analyst, Evercore ISI: Great. Thank you.

Tucker Marshall, Chief Financial Officer, Executive Vice President, Frozen, Handheld and Spreads, and Sweet Baked Snacks, The J. M. Smucker Company: Thanks.

Operator: Thank you. Next question today is coming from Max Gumport from BNP Paribas. Your line is now live.

Max Gumport, Analyst, BNP Paribas: Hey, thanks for the question. First, just wanted to go back to Uncrustables. So there has been a very clear re-acceleration in traffic channel data. So I was hoping you could talk about consumer and retailer reception you are seeing with regards to the fridge-friendly conversion, and also how the other innovation that you have come out with is performing. Thanks very much.

Tucker Marshall, Chief Financial Officer, Executive Vice President, Frozen, Handheld and Spreads, and Sweet Baked Snacks, The J. M. Smucker Company: Max, thanks for the question. It is a great follow-on from David’s. Uncrustables, I would sum it up this way. All the fundamentals are right. In other words, we have new marketing, the launch of fridge friendly. So obviously you can keep the Uncrustables thawed in your fridge for five days. So instant consumption, if you will. Price pack architecture is right. So just competitively, I think we are sort of in the sweet spot there. The breadth of our offerings, whether that is new flavors. Some of those flavors are limited time offerings. Obviously hitting on day parts with the higher protein offerings as well. Just the combination of all of those things has led to also stronger distribution gains, and our away-from-home business is performing well. Still building out our C-store presence with the larger chain customers.

I would just say it is a tale of just doing all of the important things right.

Max Gumport, Analyst, BNP Paribas: Great. Then a follow-up on coffee. I am hearing your commentary about how you paused the list price cut plans, and you are choosing instead to lean more into promotional activity. Just curious, on Folgers specifically, we are seeing the exact opposite dynamics in terms of seeing actually non-promoted list prices come down in recent weeks, and then promotional activity, both in terms of frequency and depth of promotion, actually get pulled back in recent weeks. Just curious how we should be reading the data for Folgers. Whether this is maybe just some weekly volatility or if there is anything else going on. Thanks very much.

Tucker Marshall, Chief Financial Officer, Executive Vice President, Frozen, Handheld and Spreads, and Sweet Baked Snacks, The J. M. Smucker Company: Our comment around just the promotional is really thinking about the full year, right? Because it is a pass-through category, wanting to make sure that customers and consumers are benefiting from a deflationary commodity, even if we are not crossing thresholds that would dictate a list price decline. So it is a bit of both, right? There is some opportunity to hold prices at a slightly lower level, but also enhance promotions.

Mark Smucker, Chief Executive Officer, President, and Chair of the Board, The J. M. Smucker Company: Max, acknowledge that in the first quarter, Folgers did grow, and effectively was sort of in line with flattish volume/mix, and we continue to be very prudent in our volume/mix assumptions for the coffee portfolio as we move forward. We’ve been taking that approach consistently over the last several fiscal years.

Max Gumport, Analyst, BNP Paribas: Okay, thanks very much.

Tucker Marshall, Chief Financial Officer, Executive Vice President, Frozen, Handheld and Spreads, and Sweet Baked Snacks, The J. M. Smucker Company: Thanks, Max.

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

Peter Grom, Analyst, UBS: Great, thank you. Good morning, everyone. I wanted just to follow up on sweet baked snacks. I mean, your commentary with the Chris question was helpful, but I am just curious from a C-store standpoint, how much of the weakness is really

Crystal Beiting, Vice President, Investor Relations, Financial Planning and Analysis, The J. M. Smucker Company: Hey, sorry, Peter, we are having Peter, sorry to interrupt you. We are just having a tough time hearing you. You sound very muffled.

Peter Grom, Analyst, UBS: Am I sounding better?

Crystal Beiting, Vice President, Investor Relations, Financial Planning and Analysis, The J. M. Smucker Company: That is better. Thank you.

Peter Grom, Analyst, UBS: Yeah, sorry about that. I wanted to just follow up on sweet baked snacks, and I guess I’m just trying to understand the C-store pressure. How much of it is the traffic dynamic you mentioned versus kind of lapping of the SKU rationalization? Then, you reiterated plans for stabilization. The quarter was in line with your expectations. So in that context, how should we think about top-line performance evolving from here?

Tucker Marshall, Chief Financial Officer, Executive Vice President, Frozen, Handheld and Spreads, and Sweet Baked Snacks, The J. M. Smucker Company: I’ll start. The traffic dynamic seems to be somewhat persistent. It’s hard to really pin down exactly what’s driving it, but I would submit that gas prices are part of that, right? Where folks are filling up their tanks, but not necessarily continuing on into the store. I think that is part of the dynamic on the traffic. So I do think, we are maybe cautiously optimistic that an improvement or reduction in prices at the pump might lead to better traffic, but I think it remains to be seen.

Mark Smucker, Chief Executive Officer, President, and Chair of the Board, The J. M. Smucker Company: And with respect to the top line, on a full-year basis, we’re probably advancing that business to being down low single digits, and that was as expected, as anticipated. Your first two quarters are going to be down more than that. Largely driven by lapping the SKU rationalization of a year ago. Therefore, your back half is going to feel more flattish in terms of the cadence of top-line flow.

Peter Grom, Analyst, UBS: That’s very helpful. Then maybe pivoting to peanut butter and spreads. Still under a bit of pressure here. So if you maybe just unpack what you’re seeing from a category standpoint, and as well as from a market share perspective. Then you touched on some of the actions you’re taking around the Jif brand. So curious how you see performance evolving from here.

Tucker Marshall, Chief Financial Officer, Executive Vice President, Frozen, Handheld and Spreads, and Sweet Baked Snacks, The J. M. Smucker Company: Sure, Peter. We’re confident in our spreads business, both peanut butter and fruit spreads. We do consider them, if you think holistically with our frozen handheld, PB&J sandwiches, it’s all part of the same occasion in many cases. The softness in peanut butter in the category, we don’t believe is structural, and we still have a lot of activity on Jif. We recently have refreshed the packaging on the brand. We just launched some new marketing that’s only a few weeks in market that is really focused on expanding usage occasions, largely around snacking. It’s pretty heavy on social right now, but there will be some broadcast media there as well. Continuing just to lead with brand building and share a voice is important. Then addressing consumer trends like shorter ingredient decks. We just launched Jif Simply, which is actually performing very well.

It’s a 2 to 3 ingredient offerings of Jif. Very simple formulas. We also have four of the top five natural brands. We still feel very good about peanut butter and then fruit spreads. We have acknowledged there’s been some competitive activity, but we’re at the beginning stages of a brand refresh on fruit spreads as well, starting with packaging, and that is going to extend over a couple years.

Peter Grom, Analyst, UBS: Great, thank you so much. I’ll pass it on.

Operator: Thank you. Next question is coming from Steve Powers from Deutsche Bank. Your line is now live.

Steve Powers, Analyst, Deutsche Bank: Hey, great. Thank you very much. Good morning. I wanted to ask actually on the transformation office. It was something that you called out in June as a contributor to the 2027 earnings algorithm. I did not see an update on productivity in today’s release and related comments. Just maybe an update on how you are thinking about productivity and maybe the pipeline that is building, even as we think about beyond 2027.

Mark Smucker, Chief Executive Officer, President, and Chair of the Board, The J. M. Smucker Company: Yeah, Steve, good morning. We continue to see benefits from our transformation office. The excellent work that the teams continue to do to deliver cost and productivity and also advance ways of working. It very much resonates in our P&L. It is also supportive in terms of helping deliver earnings. It is supportive in helping offset cost inflation, and it is also supportive in reinvesting in key platforms of the company. Rob, under his leadership now, he will continue to advance the transformation efforts. We will provide updates over time and likely in future events and forums, we can continue to bring you and others along in those efforts.

Steve Powers, Analyst, Deutsche Bank: Okay. Very good. Thank you. If I could ask another follow-up on Uncrustables. The strength seems broad-based. I am just curious if there are particular pockets, whether retail, away from home, et cetera, where the business is particularly ahead of your expectations more so than others. Is it that demand side of the equation that has prompted you to accelerate phase two of McCalla? Or is it just the mere fact that you have a little bit more financial flexibility to accelerate it? Just curious as to the drivers of that decision. Thank you.

Mark Smucker, Chief Executive Officer, President, and Chair of the Board, The J. M. Smucker Company: Steve, we continue to be pleased with the momentum on that brand. Uncrustables coming into the fiscal year, total company, total venture, we had an outlook of sort of mid-single digits after achieving the billion-dollar ambition last fiscal year. We have increased that outlook to sort of high single digits, really largely driven through the U.S. retail channels, but also acknowledging away from home channel as well has improved. Our ability to continue to support the growth in that business, we have made the decision to advance some pre-production expenses, to start up capacity earlier in McCalla, Alabama.

Steve Powers, Analyst, Deutsche Bank: Okay. Very good. Thank you so much.

Tucker Marshall, Chief Financial Officer, Executive Vice President, Frozen, Handheld and Spreads, and Sweet Baked Snacks, The J. M. Smucker Company: Thanks.

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

Scott Marks, Analyst, Jefferies: Hey, good morning, all. Thanks very much for taking our questions. Wanted to just ask about something that was noted in the prepared remarks as you were talking about the frozen handheld and spreads business. I think you actually said you had lower marketing spend in the quarter. Wondering if you can help us understand why that was the case. Then as you think about the incremental marketing spend for the rest of the year, it sounds like Uncrustables is one area where you are going to put some of this incremental spend. Wondering if you could just help us understand that dynamic as well. Thanks.

Mark Smucker, Chief Executive Officer, President, and Chair of the Board, The J. M. Smucker Company: Yeah. In the quarter, frozen handheld spreads has a little bit of lower marketing spend that was largely driven by the timing of Jif. We have remained committed to the marketing spend for the full year.

Scott Marks, Analyst, Jefferies: Okay. Clear. Then just as we think about the Uncrustables brand, you made a number of comments about increased expectations for the year. You’ve commented on some of the areas for growth there. As we sit here today, do you have a size of the prize, let’s say, for that brand in terms of what you think your total addressable market could be for that? How big could that brand get? And for how many years do you see mid to high single digit growth as we look out from today? Thanks.

Tucker Marshall, Chief Financial Officer, Executive Vice President, Frozen, Handheld and Spreads, and Sweet Baked Snacks, The J. M. Smucker Company: Scott, it’s Mark. We have not made any statements about how far beyond $1 billion we believe the brand can go. I think we’re just right now focused on continuing to deliver. As time goes on, we may update our projections, but having come into the year, as Tucker just highlighted, with mid-single and now seeing some momentum, that is largely driven by all of our fundamentals being right and then just continuing to invest behind the brand. But I would just pause on making any future projections, but very, very comfortable with confidence in the continued growth of that brand and there being some really nice runway ahead, both in household penetration and just addressable market.

Scott Marks, Analyst, Jefferies: Appreciate it. Thanks.

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

Alexia Howard, Analyst, Bernstein: Good morning, everyone.

Tucker Marshall, Chief Financial Officer, Executive Vice President, Frozen, Handheld and Spreads, and Sweet Baked Snacks, The J. M. Smucker Company: Morning.

Alexia Howard, Analyst, Bernstein: Can I start focusing on Café Bustelo? It’s obviously had incredible momentum over the last few years. 23% growth this quarter is obviously still incredibly impressive, although it’s a bit of a slowdown, I think, from where we were a couple of quarters ago. Are there still distribution opportunities? My understanding is that it’s still fairly concentrated regionally in the U.S. Would you expect this kind of momentum to continue out to the foreseeable future?

Tucker Marshall, Chief Financial Officer, Executive Vice President, Frozen, Handheld and Spreads, and Sweet Baked Snacks, The J. M. Smucker Company: Alexia, thank you for that question. Bustelo has been a rocket ship, and I would note that almost every quarter there’s been double-digit growth. Sometimes it’s been a little bit lumpy. I wouldn’t necessarily take the 23% as necessarily a slowdown. But there’s a ton of runway on Bustelo. We do aspire. It’s now a number 6 brand in the category. We aspire to get it into the top 4. As you point out, there is distribution expansion opportunities. We continue to expand the brand in central and western regions. We’ve launched new roast profiles. Those have performed very well. And then recently, just some other ready-to-drink options. So the authentic Latin heritage of that brand has really unlocked something unique with Gen Z and millennial consumers that are looking for something that’s a little different.

I would say, I mentioned our Game Face marketing campaign around the soccer event during the summer that really helped to drive sales as well. So just a really exciting brand that we continue to invest in.

Alexia Howard, Analyst, Bernstein: Great. Thank you very much. As a follow-up, can I just ask more broadly, what are the key sort of puts and takes or uncertainties, both that could surprise positively or negatively as we look out through the rest of 2027? It sounds as though there might be a bit of conservatism on coffee volumes, understandably. Obviously, where coffee input cost is kind of an unknown at this point. If you had to prioritize freight costs, obviously, we don’t know whether those are heading. If you had to prioritize the top things that could surprise positively or negatively, what would those be?

Mark Smucker, Chief Executive Officer, President, and Chair of the Board, The J. M. Smucker Company: Alexia, we feel that our top line and bottom line guidance ranges are balanced. As you think about opportunities, it would be ongoing momentum in your coffee portfolio where we’ve been conservative on volume/mix assumptions. Better than expected volume assumptions across your frozen handheld portfolio. Maybe better than anticipated expectations in your pet portfolio as well. I think some of the downside would be consumers’ reaction to the ongoing dynamic environment by which they live. I think also you’ve got the ongoing cost inflation environment that we continue to navigate as well, would be another area of potential downside. Those would be the drivers to the up and maybe some of the drivers to the down.

Alexia Howard, Analyst, Bernstein: Perfect. Thank you so much. I’ll pass it on.

Operator: Thank you. Our next question is coming from Rob Dickerson from US Bank Corp. Your line is now live.

Rob Dickerson, Analyst, US Bank Corp: Great. Thanks so much. There is just a question on Uncrustables and the new facility. Is the new facility, and you might have stated this before, and I just do not remember, so apologies if so. But is the new facility just adding standard issue capacity to do with the brand what you have already done with the brand, or is there anything within this build that could add other variations, the product with the brand overlay? I do not know. I am thinking of like a mini muffin equivalent, right? Like Uncrustables minis that kids can take back to school with a big back-to-school activation next year or something like that. That is all. Thanks.

Tucker Marshall, Chief Financial Officer, Executive Vice President, Frozen, Handheld and Spreads, and Sweet Baked Snacks, The J. M. Smucker Company: Hey, Rob, it is Mark. This phase of the Alabama facility, it is a second phase. It has already been built out. Basically, turning it on requires us to staff it, right, and then activate it. But it is focused on base, our core format of crimped soft bread Uncrustables.

Rob Dickerson, Analyst, US Bank Corp: Okay, fair enough. I guess just a lot of questions have been asked. So thinking through kind of the next few months, obviously we are essentially already in the back-to-school period, and then we go into Halloween, fall bake. Is there anything, just to give you the opportunity to kind of note of strategy into back to school, very broadly speaking? Like we have some products we will be pushing more right around the back-to-school period. There is activation on different flavor on, I do not know, Hostess and Halloween. Anything like that, just that we should be aware of. Thanks.

Tucker Marshall, Chief Financial Officer, Executive Vice President, Frozen, Handheld and Spreads, and Sweet Baked Snacks, The J. M. Smucker Company: Nothing specific to call out, but a resounding yes in terms of making sure that we are taking advantage of the key promotional periods, holidays, and so forth. So as stuff comes into market, we will be sure to point that out to you guys.

Rob Dickerson, Analyst, US Bank Corp: All right, great. Thanks so much, Mark.

Operator: Thank you. I will now turn the conference call back to management to conclude.

Tucker Marshall, Chief Financial Officer, Executive Vice President, Frozen, Handheld and Spreads, and Sweet Baked Snacks, The J. M. Smucker Company: Thank you for joining us this morning. As we have shared in our prepared remarks, our fiscal year 2027 first quarter results highlight the strength of our differentiated portfolio, disciplined execution against our strategic priorities, and the investments we continue to make in our brands and capabilities. Our strategy is working, and the strong foundation we have established gives us confidence in our ability to deliver long-term growth and increase shareholder value. We hope many of you will be able to join us in Boston at the Barclays Global Consumer Staples Conference in two weeks. A live webcast of our presentation on September 8th at 12:45 P.M. Eastern can also be accessed from our investor relations website. Have a great day.

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