The J.M. Smucker Q3 Earnings Top Estimates, Sales Dip on Low Volumes

The J. M. Smucker Company SJM posted third-quarter fiscal 2025 results, wherein the bottom line increased year over year and beat the Zacks Consensus Estimate, while the top line declined and missed the consensus mark.The company's third-quarter performance reflects the effective execution of its strategy and ability to achieve favorable results despite a dynamic operating and consumer landscape. While net sales were affected by certain supply chain disruptions, stringent cost management and strong execution led to better-than-expected adjusted earnings per share. Management stated that the company’s strategic focus and commitment to key development platforms have driven strong year-to-date performance, boosting growth in its top and bottom lines while enhancing shareholder value over time.SJM’s Quarterly Performance: Key Metrics and InsightsAdjusted earnings of $2.61 per share advanced 5% year over year and surpassed the Zacks Consensus Estimate of $2.37.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.The J. M. Smucker Company Price, Consensus and EPS Surprise The J. M. Smucker Company price-consensus-eps-surprise-chart | The J. M. Smucker Company QuoteNet sales amounted to $2,186 million, which fell 2% year over year and missed the Zacks Consensus Estimate of $2,221 million. Excluding noncomparable net sales of last year associated with divestitures, additional sales of the present year related to the Hostess Brands acquisition, as well as currency movements, net sales dipped 1%. The downtick in comparable net sales can be attributed to the lower volume/mix (down 5%), partly made up by net price realization (up 3%).The gross profit went up 7% driven by better net price realization, reduced costs and a positive impact of the Hostess Brands acquisition, partly negated by the impact of divestitures and reduced volume/mix. The adjusted gross profit fell 1%.The adjusted operating income rose 1% year over year to $463.8 million.Decoding SJM’s Segmental PerformanceU.S. Retail Pet Foods: The segment’s sales fell 9% to $423 million. The volume/mix had a 9-percentage-point adverse impact on net sales, while net price realization remained neutral. The segment’s profit jumped 7% to $116.8 million. The Zacks Consensus Estimate for segment sales was pegged at $430.1 million.U.S. Retail Coffee: The segment’s sales grew 2% to $740.6 million, backed by higher net price realization (up 9%), while volume/mix declined 7%. The segment’s profit went up by $0.8 million to $208.6 million. The consensus estimate for segment sales was pegged at $734.9 million.U.S. Retail Frozen Handheld and Spreads: Sales in the segment increased 2% to $445.2 million, while the consensus mark stood at $456.7 million. The volume/mix boosted net sales by 2%, and the net price realization remained neutral to sales. The segment’s profit tumbled 5% to $99.2 million.Sweet Baked Snacks: Sales in the segment came in at $278.6 million, down 7% year over year. Excluding noncomparable sales related to acquisitions and divestitures, net sales declined 8%. Both volume/mix and net price realization had an adverse impact on net sales. The consensus estimate for segment sales was pegged at $285 million. Segment profit slumped 19% to $54.8 million in the quarter.International and Away from Home: Net sales dropped by $0.8 million to $298.6 million, compared with the Zacks Consensus Estimate of $307.1 million. Excluding the impact of noncomparable net sales associated with divestitures and currency movements, net sales grew 5%. The volume/mix had a one-percentage-point negative effect, and the net price realization had a positive impact of six percentage points on net sales. The segment’s profit increased 22% to $61.6 million.SJM’s Financial Health SnapshotThe J. M. Smucker exited the quarter with cash and cash equivalents of $47.2 million, long-term debt (net of current portion) of $6,385.5 million and total shareholders’ equity of $6,907.3 million.Cash flow provided by operating activities amounted to $239.4 million for the three months ended Jan. 31, 2025. Free cash flow was $151.3 million in the same time frame.Free cash flow and capital expenditures are likely to be $925 million and $400 million now, respectively, in fiscal 2025. Free cash flow and capital expenditures were earlier guided to be $875 million and $450 million, respectively.What to Expect From SJM in Fiscal 2025Fiscal 2025 net sales are anticipated to increase 7.25% now, compared with the previous view of 7.5-8.5%.SJM anticipates comparable net sales to increase by nearly 0.75%. This excludes noncomparable sales in the current year related to the Hostess Brands buyout and noncomparable sales in the prior year associated with the divested Voortman, Canada condiment, and Sahale Snacks businesses. This view also includes a decrease of $100 million in contract manufacturing sales associated with the divested pet food brands.The adjusted EPS for fiscal 2025 is now envisioned in the $9.85-$10.15 band, up from the $9.70-$10.10 range expected before. The company recorded an adjusted EPS of $9.94 in fiscal 2024. The bottom-line guidance takes into account an adjusted gross profit margin of about 38% and a roughly 8% rise in SD&A expenses. The company had earlier expected the adjusted gross margin to be 37.5%-38% and SD&A expenses to grow 9%.Management’s fiscal 2025 guidance does not incorporate any effects from the previously announced deal to offload certain Sweet Baked Snacks value brands. This transaction, anticipated to close in the fourth quarter of fiscal 2025, is expected to impact fiscal 2025 net sales by approximately $10 million while having no material impact on the adjusted earnings per share. The company plans to allocate the proceeds toward debt reduction.Shares of this Zacks Rank #3 (Hold) company have tumbled 7.5% over the past three months compared with the industry’s decline of 3.6%.Three Solid BetsPost Holdings POST currently carries a Zacks Rank of 2 (Buy). POST delivered a trailing four-quarter earnings surprise of 22.3%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The consensus estimate for Post Holdings’ current fiscal-year sales and earnings indicates growth of 0.3% and 2.2%, respectively, from the year-ago period’s reported figure.Lancaster Colony LANC, which engages in the manufacturing and marketing of specialty food products, presently holds a Zacks Rank #2. LANC delivered a trailing four-quarter earnings surprise of 1.7%, on average.The Zacks Consensus Estimate for Lancaster Colony’s current fiscal year sales and earnings implies growth of 3.1% and 6.1%, respectively, from the year-ago period’s reported figure.Utz Brands UTZ, which engages in the manufacture, marketing and distribution of snack foods, currently carries a Zacks Rank #2. UTZ delivered a trailing four-quarter earnings surprise of 8.8%, on average.The consensus estimate for Utz Brands’ full-year sales and earnings calls for growth of 2% and 9.1%, respectively, from the prior-year reported levels.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The J. M. Smucker Company (SJM): Free Stock Analysis Report Post Holdings, Inc. (POST): Free Stock Analysis Report Lancaster Colony Corporation (LANC): Free Stock Analysis Report Utz Brands, Inc. (UTZ): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks