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J M SMUCKER Co (SJM)·Q1 2026 Earnings Summary

Executive Summary

  • Net sales were $2.11B (-1% YoY); comparable net sales rose 2% excluding divestitures/FX, while GAAP diluted EPS was ($0.41) and adjusted EPS was $1.90 .
  • Gross margin compressed sharply (22.5% GAAP vs 37.5% in prior year; adjusted GP margin 35.2%), driven by higher commodity costs and unfavorable derivative impacts; adjusted operating margin fell to 17.5% from 21.1% .
  • Management raised FY26 net sales growth guidance to 3–5% (from 2–4%) and lifted free cash flow guidance to $975M (from $875M), with adjusted EPS unchanged at $8.50–$9.50 .
  • Wall Street consensus for Q1 2026: revenue was essentially in line (estimate $2.114B*, actual $2.113B) and adjusted EPS slightly below (estimate $1.93*, actual $1.90); Q4 2025 saw an EPS beat and revenue miss* [GetEstimates].
  • Potential stock catalysts: guidance raise on sales/FCF, clarity on tariff/coffee pricing elasticity, and progress on Hostess SKU rationalization and bakery closure savings ramp .

What Went Well and What Went Wrong

  • What Went Well

    • Coffee price realization drove a 15% sales increase in U.S. Retail Coffee; CEO emphasized “continued momentum” and “discipline” in execution .
    • International and Away From Home posted 7% sales growth and 35% profit growth on pricing and lower SD&A .
    • FY26 net sales and free cash flow guidance raised; CFO flagged durable FCF tailwinds and deleveraging path to ~3x by FY27 .

  • What Went Wrong

    • Gross profit fell 40% YoY (GAAP), with material headwinds from commodity costs and net unfavorable derivative impacts; operating income down 87% .
    • Volume/mix declined across coffee, dog snacks, sweet baked goods, and fruit spreads; Pet Foods net sales down 8% and segment profit down 12% YoY .
    • Sweet Baked Snacks sales down 24% YoY and segment margin down 880 bps; rationalization benefits only begin in Q4, with majority in FY27 .

Financial Results

MetricQ1 2025Q4 2025Q1 2026
Net Sales ($USD Billions)$2.125 $2.144 $2.113
GAAP Diluted EPS ($)$1.74 ($6.85) ($0.41)
Adjusted EPS ($)$2.44 $2.31 $1.90
Gross Margin (GAAP, %)37.5% 38.4% 22.5%
Operating Margin (GAAP, %)16.4% (27.9)% 2.2%
Adjusted Gross Profit Margin (%)39.2% 37.5% 35.2%
Adjusted Operating Margin (%)21.1% 19.7% 17.5%
Cash from Operations ($USD Millions)$172.9 $393.9 ($10.6)
Free Cash Flow ($USD Millions)$49.2 $298.9 ($94.9)

Segment breakdown (Q1 2026):

SegmentNet Sales ($MM)YoY %Segment Profit ($MM)YoY %Segment Margin
U.S. Retail Coffee$717.2 +15% $134.2 (22)% 18.7%
U.S. Retail Frozen Handheld & Spreads$484.7 (2)% $114.3 (4)% 23.6%
U.S. Retail Pet Foods$368.0 (8)% $101.3 (12)% 27.5%
Sweet Baked Snacks$253.2 (24)% $34.2 (54)% 13.5%
International & Away From Home$290.2 +7% $65.5 +35% 22.6%

KPIs:

KPIQ1 2025Q1 2026
Comparable Net Sales Growth (%)N/A+2%
Cash from Operations ($MM)$172.9 ($10.6)
Free Cash Flow ($MM)$49.2 ($94.9)
Adjusted Operating Income ($MM)$447.9 $370.3

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales Increase vs Prior YearFY262.0%–4.0% 3.0%–5.0% Raised
Adjusted EPSFY26$8.50–$9.50 $8.50–$9.50 Maintained
Free Cash Flow ($MM)FY26$875 $975 Raised
Capital Expenditures ($MM)FY26$325 $325 Maintained
Adjusted Effective Tax Rate (%)FY2623.7% 23.8% Slightly Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2025, Q4 2025)Current Period (Q1 2026)Trend
Coffee pricing & elasticityPricing aided sales; volume pressure; impairments elsewhere Mid-20s pricing this year; elasticity ~0.5; Q2 costs higher due to hedging/receipts; H2 margin recovery Price-driven growth; near-term cost timing headwinds, improving later
Tariffs/MacroTariff risks flagged in outlook Net ~$0.50 EPS headwind embedded; potential relief would be timing-dependent Persistent headwind; monitoring policy relief
Sweet Baked Snacks (Hostess)Impairments; volume/mix and pricing pressure; portfolio work SKU rationalization not impacting Q1 volumes yet; $30M savings with ~$10M in Q4, balance FY27; donuts performing Stabilization actions; savings ramp in Q4/FY27
Pet (Milk-Bone)Dog snacks softness; cat food improving Milk-Bone expected to return to growth in H2; frequency of treating down; tactical pricing/promos Weakness near-term; cautious consumer, planned recovery efforts
Uncrustables momentumGrowth noted across quarters Continued growth and trade/pricing actions supporting Frozen Handheld Ongoing category strength
GLP-1 appetite suppressionMonitored; risks acknowledged No meaningful category impact; portion-size and reduced-sugar options emphasized Neutral so far; portfolio adaptable

Management Commentary

  • “Our first quarter results exceeded our expectations… strong top-line growth… disciplined cost management and execution.” — Mark Smucker, CEO .
  • “Due to the better-than-expected first quarter results… we are raising our net sales expectations for the fiscal year.” — Mark Smucker, CEO .
  • CFO on phasing: “We always knew that the first quarter was going be our highest coffee cost quarter… second quarter [will have] additional costs… but overall… coffee in line with profit expectations… shifting some of the profit to our third and fourth quarters.” — Tucker Marshall .
  • CFO on FCF: Raised FY26 FCF to $975M; benefit is ongoing, enabling deleveraging to ~3x by end of FY27 — Tucker Marshall .

Q&A Highlights

  • Coffee pricing/tariffs: Pricing now mid-20s for FY26; elasticity ~0.5 overall, with better than expected early actions; tariffs >10% drive net ~$0.50 EPS headwind and Q2 cost timing .
  • Guidance cadence: Q2 decline larger than Q1 due to hedging/receipts; H2 stronger with coffee margins mid-20s in Q4 and improved trajectory into FY27 .
  • Sweet Baked Snacks: SKU rationalization did not impact Q1 volumes; ~$30M savings ramping ($10M in Q4, ~$20M in FY27); dedicated sales focus and donut strength highlighted .
  • Pet (Milk-Bone): Expected to return to growth in H2; consumer treating frequency down, but tactical price/promo plus innovation support .
  • GLP-1: No meaningful impact detected across key categories; portfolio flexibility (portion sizes, reduced sugar) .

Estimates Context

PeriodMetricConsensus*ActualSurprise
Q1 2026Revenue ($USD)$2,114,005,350* [GetEstimates]$2,113,300,000 Roughly in line (~$0.7M below)
Q1 2026Primary EPS ($)$1.93* [GetEstimates]$1.90 (Adjusted) Slight miss (~$0.03)
Q4 2025Revenue ($USD)$2,185,842,160* [GetEstimates]$2,143,800,000 Miss (~$42M)
Q4 2025Primary EPS ($)$2.25* [GetEstimates]$2.31 (Adjusted) Beat (~$0.06)

Values retrieved from S&P Global.*

Where estimates may need to adjust:

  • FY26 top-line raised and FCF increased; EPS midpoint held flat despite tariff headwinds and coffee cost phasing — suggests consensus may lift revenue/FCF while maintaining EPS midpoint near current range .

Key Takeaways for Investors

  • Near-term margin pressure from commodity/derivatives and coffee cost timing, but H2 set-up improves with coffee margins mid-20s in Q4; expect sequential EPS recovery into H2 .
  • Coffee strategy working: robust price realization offsetting elasticity; monitor further winter pricing actions and tariff developments for volume/mix sensitivity .
  • Guidance raise is noteworthy: FY26 net sales to 3–5% and FCF to $975M, providing deleveraging support toward ~3x by FY27 — a constructive medium-term capital structure story .
  • Sweet Baked Snacks remains a drag near-term; SKU rationalization and Indianapolis bakery closure savings start in Q4 with bulk in FY27 — watch for sequential improvement and donut strength .
  • Pet segment softness (dog snacks) persists, but Milk-Bone expected to turn to growth in H2; cat food momentum continues — track scanner data and promo execution .
  • Uncrustables continues to be a growth engine across retail and away-from-home — supports Frozen Handheld & Spreads segment resilience .
  • Risk monitor: tariff trajectory, derivative volatility, and consumer discretionary treating behavior; any tariff relief could revise FY26 EPS impact, but timing matters .

Additional Notes and Cross-References

  • Comparable net sales rose 2% in Q1 excluding divestitures/FX; price realization +6 pp offset volume/mix -4 pp .
  • International & Away From Home grew profit 35% on pricing and lower SD&A .
  • Reported GAAP loss driven by derivative impacts and cost inflation; adjusted results exclude cumulative unallocated derivative gains/losses and special project costs .

Appendices

  • Webcast logistics: pre-recorded results posted at ~7:00 a.m. ET; live Q&A at 9:00 a.m. ET .