CoffeeNetwork (New York) - The J.M. Smucker Co. (NYSE: SJM) today announced results for the second quarter ended October 31, 2025, of its 2026 fiscal year.
EXECUTIVE SUMMARY
Net sales was $2.3 billion, an increase of $58.9 million, or 3 percent. Net sales excluding the divestitures and foreign currency exchange increased 5 percent.
Net income per diluted share was $2.26. Adjusted earnings per share was $2.10, a decrease of 24 percent.
Cash provided by operations was $346.5 million compared to $404.2 million in the prior year. Free cash flow was $280.2 million compared to $317.2 million in the prior year.
The Company updated its full-year fiscal 2026 financial outlook.
SECOND QUARTER CONSOLIDATED RESULTS
Net sales increased $58.9 million, or 3 percent. Excluding $50.5 million of noncomparable net sales in the prior year related to divestitures and $1.6 million of unfavorable foreign currency exchange, net sales increased $111.0 million, or 5 percent.
The increase in comparable net sales reflects an 11 percentage point increase from net price realization, primarily driven by higher net pricing for coffee. Comparable net sales also reflects a 6 percentage point decrease from volume/mix, primarily driven by decreases for coffee, peanut butter, dog snacks, and lapping contract manufacturing sales related to the divested pet food brands in the prior year.
Gross profit decreased $16.2 million, or 2 percent. The decrease primarily reflects higher commodity costs, unfavorable volume/mix, tariffs, and the noncomparable impact of divestitures, partially offset by higher net price realization and a net favorable impact of derivative gains and losses. Operating income increased $248.8 million, or 147 percent, primarily driven by lapping the $260.8 million pre-tax loss on the Voortman® business disposal group classified as held for sale in the prior year, lower amortization expense, and a decrease in other special project costs, partially offset by the decrease in gross profit and an increase in selling, distribution, and administrative ("SD&A") expenses.
Adjusted gross profit decreased $89.8 million, or 10 percent. The difference between adjusted gross profit and generally accepted accounting principles ("GAAP") results primarily reflects the exclusion of the change in net cumulative unallocated derivative gains and losses and special project costs. Adjusted operating income, which further reflects the exclusion of the pre-tax loss on the Voortman® business disposal group classified as held for sale in the prior year, amortization expense, and other special project costs as compared to GAAP operating income, decreased $96.3 million, or 20 percent.
Net interest expense was comparable to the prior year.The effective income tax rate was 24.2 percent in the quarter, as compared to 136.7 percent in the prior year. The decrease in the effective income tax rate was primarily due to unfavorable tax impacts associated with the classification of the Voortman® business as held for sale in the prior year. The adjusted effective income tax rate was 24.0 percent, compared to 24.1 percent in the prior year.
Cash provided by operating activities was $346.5 million, compared to $404.2 million in the prior year, primarily reflecting more cash required to fund working capital requirements, partially offset by a reduction in income tax payments and higher net income (loss) adjusted for noncash items. Free cash flow was $280.2 million, compared to $317.2 million in the prior year, reflecting the decrease in cash provided by operating activities, partially offset by a decrease in capital expenditures as compared to the prior year.
FULL-YEAR OUTLOOK
Net sales is now expected to increase 3.5 to 4.5 percent versus the prior year, which includes an impact of $134.7 million related to the divestitures of the Voortman® business and certain Sweet Baked Snacks value brands. Comparable net sales is expected to increase approximately 5.0 to 6.0 percent, which excludes the noncomparable sales in the prior year related to the divestitures. The increase in comparable net sales reflects higher net price realization, partially offset by a decline in volume/mix. This guidance also reflects a decline of approximately $38.0 million of contract manufacturing sales related to the divested pet food brands, as the contract manufacturing agreement concluded at the end of fiscal year 2025.
Adjusted earnings per share is now expected to range from $8.75 to $9.25. This guidance reflects the increase in net sales, adjusted gross profit margin of approximately 35.0 percent, SD&A expenses in line with the prior year, interest expense of approximately $380.0 million, an adjusted effective income tax rate of 23.8 percent, and 106.9 million weighted-average common shares outstanding. Free cash flow is expected to be approximately $975.0 million at the midpoint of our adjusted earnings per share guidance range, with capital expenditures of $325.0 million.
SECOND QUARTER SEGMENT RESULTS
U.S. Retail Coffee
Net sales increased $144.9 million, or 21 percent. Net price realization increased net sales by 27 percentage points, primarily driven by higher net pricing across the portfolio. Volume/mix decreased net sales by 6 percentage points, reflecting decreases for the Folgers® and Dunkin'® brands, partially offset by an increase for the Café Bustelo® brand.
Segment profit decreased $48.4 million, primarily reflecting higher commodity costs, tariffs, unfavorable volume/mix, and higher marketing spend, partially offset by higher net price realization.
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