J M SMUCKER Co

The J. M. Smucker Company operates principally in one industry, the manufacturing and marketing of branded food and beverage products on a worldwide basis, although the majority of its sales are in the United States. Operations outside the U.S. are principally in Canada, and net sales outside the U.S., subject to foreign currency translation, represented 4 percent of consolidated net sales for 2026. The company's branded food and beverage products include a strong portfolio of trusted, iconic, market-leading brands that are sold to consumers primarily through retail outlets in North America. The packaged foods industry has been challenged by a general long-term decline in sales volume in the center of the store, with evolving consumer trends such as a heightened focus on health and wellness, an increased desire for fresh foods, and the growing impact of social media and e-commerce on consumer behavior contributing to the longer-term decline.

The company's business is highly competitive as all of its brands compete with other branded products as well as private label products. For the U.S. Retail and Sweet Baked Snacks reportable segments, private label held a 14.0 dollar average market share during the 52 weeks ended April 19, 2026, for the categories in which we compete, as compared to a 13.7 dollar average market share during the same period in the prior year. For the Away From Home reportable segment, private label held a 22.2 dollar average market share during 2026, for the categories in which we compete, as compared to a 22.9 dollar average market share during the prior year. Positive factors pertaining to the company's competitive position include well-recognized brands, high-quality products, consumer trust, experienced brand and category management, varied product offerings, product innovation, responsive customer service, and an integrated distribution network. Principal competitors named in the filing include The Kraft Heinz Company, Keurig Dr. Pepper, Nestlé S.A., Hormel Foods Corporation, Ferrero SpA, Post Holdings, Inc., Welch Foods Inc., Andros Foods USA, Inc., General Mills, Inc., Ruiz Foods, Nestlé Purina PetCare Company, Mars, Incorporated, McKee Foods Corporation, Bon Appetit Danish, Inc., Grupo Bimbo, S.A., and Flower Foods, Inc.

The company generates revenue by manufacturing and marketing branded food and beverage products, with the majority of sales in the United States. Products within the U.S. Retail reportable segments are primarily sold through a combination of direct sales and brokers to food retailers, club stores, discount and dollar stores, online retailers, pet specialty stores, drug stores, military commissaries, mass merchandisers, and distributors. The Sweet Baked Snacks reportable segment includes products distributed across all channels, both domestically and in foreign countries, such as food retailers, convenience stores, discount and dollar stores, club stores, drug stores, the vending channel, military commissaries, and mass merchandisers. The Away From Home reportable segment includes the sale of all products domestically and in foreign countries through foodservice distributors and operators (e.g., healthcare operators, restaurants, educational institutions, offices, lodging and gaming establishments, and convenience stores). Sales to Walmart Inc. and subsidiaries, including Sam's Club, amounted to 34 percent of net sales in 2026 and 33 percent of net sales in both 2025 and 2024, and during 2026, the top 10 customers, collectively, accounted for approximately 60 percent of consolidated net sales.

The company has five reportable segments: U.S. Retail Coffee, U.S. Retail Frozen Handheld and Spreads, U.S. Retail Pet Foods, Sweet Baked Snacks, and Away From Home. The U.S. Retail Coffee reportable segment primarily includes the domestic sales of Folgers, Dunkin', and Café Bustelo branded coffee. The U.S. Retail Frozen Handheld and Spreads reportable segment primarily includes the domestic sales of Uncrustables, Jif, and Smucker's branded products. The U.S. Retail Pet Foods reportable segment primarily includes the domestic sales of Meow Mix, Milk-Bone, Pup-Peroni, and Canine Carry Outs branded products. The Sweet Baked Snacks reportable segment primarily includes all domestic and foreign sales of Hostess branded products in all channels. The Away From Home reportable segment includes the sale of all products, with the exception of Sweet Baked Snacks products, domestically and in foreign countries through foodservice distributors and operators. For fiscal 2026, U.S. Retail Coffee net sales were $3,304.9 ¹, U.S. Retail Frozen Handheld and Spreads net sales were $1,853.9 ², U.S. Retail Pet Foods net sales were $1,600.0 ³, Sweet Baked Snacks net sales were $971.3 ⁴, Away From Home net sales were $879.0 ⁵, and Other (International) net sales were $441.8 ⁶. Segment profit for fiscal 2026 was $701.5 ⁷ for U.S. Retail Coffee, $444.7 ⁸ for U.S. Retail Frozen Handheld and Spreads, $473.3 ⁹ for U.S. Retail Pet Foods, $97.2 ¹⁰ for Sweet Baked Snacks, $220.1 ¹¹ for Away From Home, and $69.6 ¹² for Other.

Principal products in 2026 were coffee, frozen handheld products, sweet baked goods, pet snacks, peanut butter, cat food, fruit spreads, portion control products, toppings and syrups, and baking mixes and ingredients. Product category net sales for 2026 included Coffee at $3,768.7 ¹³, Frozen handheld at $995.7 ¹⁴, Sweet baked goods at $971.3 ¹⁵, Pet snacks at $886.0 ¹⁶, Peanut butter at $786.1 ¹⁷, Cat food at $776.0 ¹⁸, Fruit spreads at $371.0 ¹⁹, Portion control at $194.4 ²⁰, Toppings and syrups at $109.2 ²¹, Baking mixes and ingredients at $89.5 ²², Dog food at $0.1 ²³, Cookies at $0.0 ²⁴, and Other at $102.9 ²⁵.

On November 7, 2023, the company completed a cash and stock transaction to acquire Hostess Brands, Inc., a manufacturer and marketer of sweet baked goods brands, for total purchase consideration of $5.4 billion ²⁶, reflecting an exchange offer of all outstanding shares of Hostess Brands common stock at a price of $34.25 per share ²⁷, consisting of $30.00 in cash ²⁸ and 0.03002 shares of the company's common shares ²⁹. On March 3, 2025, the company sold certain Sweet Baked Snacks value brands to JTM Foods, LLC, which generated net sales of approximately $48.4 ³⁰ and $30.0 ³¹ in 2025 and 2024, respectively. On December 2, 2024, the company sold the Voortman business to Second Nature Brands, which generated net sales of approximately $86.3 ³² and $65.0 ³³ in 2025 and 2024, respectively. On January 2, 2024, the company sold the Canada condiment business to TreeHouse Foods, Inc., which generated net sales of $43.8 ³⁴ in 2024. On November 1, 2023, the company sold the Sahale Snacks business to Second Nature, which generated net sales of $24.1 ³⁵ in 2024. During 2026, the company closed its Indianapolis, Indiana manufacturing facility and recognized total cumulative restructuring costs of $83.5 ³⁶. The company recognized total pre-tax impairment charges of $961.7 ³⁷ during the third quarter of 2026, of which $507.5 ³⁸ and $454.2 ³⁹ related to the goodwill of the Sweet Baked Snacks reporting unit and the Hostess brand indefinite-lived trademark, respectively. As of April 30, 2026, approximately 1.1 million common shares ⁴⁰ remain available for repurchase pursuant to the Board's authorizations.

For fiscal 2026, net sales were $9,050.9 ⁴¹, compared to $8,726.1 ⁴² in fiscal 2025 and $8,178.7 ⁴³ in fiscal 2024. Gross profit was $3,034.5 ⁴⁴ in fiscal 2026, compared to $3,384.7 ⁴⁵ in fiscal 2025. Operating income (loss) was $360.2 ⁴⁶ in fiscal 2026, compared to $(673.9) ⁴⁷ in fiscal 2025. Net income (loss) was $(138.7) ⁴⁸ in fiscal 2026, compared to $(1,230.8) ⁴⁹ in fiscal 2025. Diluted earnings per share was $(1.30) ⁵⁰ in fiscal 2026, compared to $(11.57) ⁵¹ in fiscal 2025. Net cash provided by operating activities was $1,473.6 ⁵² in fiscal 2026, compared to $1,210.4 ⁵³ in fiscal 2025.

The company's strategic growth objectives include net sales increasing by a low single-digit percentage and operating income excluding non-GAAP adjustments (adjusted operating income) increasing by a mid-single-digit percentage on average over the long term. Related to income per diluted share excluding non-GAAP adjustments (adjusted earnings per share), the strategic growth objective is to increase by a high single-digit percentage over the long term. The company anticipates a full-year effective income tax rate for 2027 to be approximately 24.4 percent ⁵⁴. The company expects organic growth, including new products, to drive much of the top-line growth, while the contribution from acquisitions will vary from year to year.

The company's strategic vision is to engage, delight, and inspire consumers by building brands they love and leading in attractive categories. The company expects organic growth, including new products, to drive much of the top-line growth. The company continues to focus on innovation with an increased emphasis on products that satisfy evolving consumer trends, such as convenience, flavor variety, an emphasis on health and wellness, the desire for transparent product labeling, and simple and natural ingredients. The company is committed to serving customers and consumers in e-commerce, transforming its manufacturing, commercial, and corporate operations through digital technologies, and enhancing its data analytics capabilities to develop new commercial insights.

The company remains focused on executing its company-wide transformation initiative, which is designed to translate its continuous improvement mindset into sustainable productivity gains. These efforts are intended to expand profit margins while enabling reinvestment in the Company to support future growth and cost savings. The company has a Transformation Office, which is focused on enterprise-wide continuous improvement strategies to ensure a pipeline of productivity initiatives and profit growth opportunities. In support of ongoing cost management and earnings growth, the company continues to execute its transformation initiative.

The company continues to work closely with its customers and external business partners, taking proactive measures to support safety, ensure business continuity, and maximize product availability. Production has been maintained across all facilities, and appointments at distribution centers remain available. The company is in the process of a multi-year implementation of a new ERP system through the use of Oracle Cloud Solutions. The company expects capital expenditures of $325.0 ⁵⁵ for 2027. As of April 30, 2026, 21 percent of the company's full-time employees, located at eight manufacturing locations, are covered by collective bargaining agreements, with three contracts expiring in 2027, representing approximately 5 percent of total employees.

The company's cash deployment strategy is to balance reinvesting in the business through acquisitions and capital expenditures with returning cash to shareholders through the payment of dividends and share repurchases, and the current deployment strategy also includes a significant focus on debt repayment. Dividend payments were $464.7 ⁵⁶ and $455.4 ⁵⁷ in 2026 and 2025, respectively, and dividends declared per share were $4.40 ⁵⁸ and $4.32 ⁵⁹ in 2026 and 2025, respectively. As of April 30, 2026, approximately 1.1 million common shares ⁶⁰ remain available for repurchase pursuant to the Board's authorizations. The company projects dividend payments of $469.3 ⁶¹ for 2027, capital expenditures of $325.0 ⁶², and interest payments of $343.2 ⁶³.

The company continues to experience input cost inflation and a dynamic macroeconomic environment, including tariffs, regulatory and policy changes, and shifts in consumer behavior, including health and wellness trends, which could persist into 2027. Higher costs have required price increases across certain areas of the business during 2026 as consumers faced broader inflationary pressures and were selective in their spending. The company expects the green coffee commodity markets to remain challenging due to ongoing and significant price volatility, and during 2025, experienced extreme drought impact which substantially reduced green coffee production in Brazil. Significant supply chain disruptions could arise if certain geopolitical events continue to impact global markets, including the impact of potential shipping delays driven by supply and demand imbalances, labor shortages, and tariffs.

The company is closely monitoring ongoing geopolitical conflicts, as well as evolving international trade and regulatory conditions, for any escalation that could significantly disrupt economic activity or supply chains. These factors may contribute to broader inflationary pressures, tariff impacts, increased energy costs, or regional and global economic slowdowns. The U.S. government has recently implemented significant tariffs on imports and exports, which have impacted international trade relations and resulted in retaliatory actions by foreign governments, and trade policy remains highly uncertain. The imposition, modification, or reinstatement of such tariffs, inclusive of the impact of potential tariff refunds, and retaliatory measures could have a significant adverse impact on the company's results of operations, financial position, or cash flows, depending on their timing, degree, and magnitude.

The company faces material risks from its substantial debt obligations, with $7.0 billion ⁶⁴ of short-term borrowings and long-term debt as of April 30, 2026, which could restrict operations and financial condition. A significant portion of assets is composed of goodwill and other intangible assets totaling $10.9 billion ⁶⁵ as of April 30, 2026, compared to total assets of $16.2 billion ⁶⁶ and total shareholders' equity of $5.5 billion ⁶⁷, and impairment charges of $961.7 ⁶⁸ were recognized in fiscal 2026 for the Sweet Baked Snacks reporting unit and Hostess brand trademark. Sales to Walmart Inc. and subsidiaries amounted to 34 percent ⁶⁹ of net sales in 2026, and trade receivables from Walmart were $187.4 ⁷⁰ or 29 percent of the total trade receivables balance, creating significant customer concentration risk. The company is exposed to commodity price volatility, particularly for green coffee sourced solely from foreign countries, and during 2026 continued to experience materially higher commodity and supply chain costs. The company's ability to protect its intellectual property, including proprietary coffee roasting methods and Uncrustables sandwich-making methods considered trade secrets, is essential to brand value, and the inability to protect such intellectual property could harm brand value and adversely affect sales and profitability.

Management's message emphasizes the company's strategic vision to engage, delight, and inspire consumers by building brands they love and leading in attractive categories, providing clear long-term direction, aligning the organization and guiding business priorities. The company's strategic growth objectives include net sales increasing by a low single-digit percentage and adjusted operating income increasing by a mid-single-digit percentage on average over the long term, with adjusted earnings per share increasing by a high single-digit percentage over the long term. Management notes that over the past five years, both net sales and adjusted operating income increased at a compound annual growth rate of approximately 2 percent, while adjusted earnings per share was flat. The company anticipates a full-year effective income tax rate for 2027 to be approximately 24.4 percent ⁷¹. Key strategic priorities emphasized include executing the company-wide transformation initiative to expand profit margins, a significant focus on debt repayment as part of the capital deployment strategy, and continuing to focus on innovation with an increased emphasis on products that satisfy evolving consumer trends.