J. M. Smucker Q3 2025 Prepared Remarks Earnings Report

J. M. Smucker EPS Results

• Actual EPS: $2.61
• Consensus EPS: $2.37
• Beat/Miss: Beat by +$0.24
• One Year Ago EPS: N/A

J. M. Smucker Revenue Results

• Actual Revenue: $2.19 billion
• Expected Revenue: $2.23 billion
• Beat/Miss: Missed by -$39.11 million
• YoY Revenue Growth: N/A

J. M. Smucker Announcement Details

• Quarter: Q3 2025 Prepared Remarks
• Date: 2/27/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, February 27, 2025
• Conference Call Time: 7:00AM ET

J. M. Smucker (NYSE:SJM) manufactures and markets branded food and beverage products worldwide. It operates in three segments: U.S. Retail Pet Foods, U.S. Retail Coffee, and U.S. Retail Consumer Foods. The company offers mainstream roast, ground, single serve, and premium coffee; peanut butter and specialty spreads; fruit spreads, toppings, and syrups; jelly products; nut mix products; shortening and oils; frozen sandwiches and snacks; pet food and pet snacks; and foodservice hot beverage, foodservice portion control, and flour products, as well as dog and cat food, frozen handheld products, juices and beverages, and baking mixes and ingredients. It provides its products under the Meow Mix, Milk-Bone, Pup-Peroni, Canine Carry Outs, Folgers, Café Bustelo, Dunkin', Folgers, Café Bustelo, 1850, Jif, Smucker's, Smucker's Uncrustables, Robin Hood, and Five Roses. The company sells its products through direct sales and brokers to food retailers, club stores, discount and dollar stores, online retailers, pet specialty stores, natural foods stores and distributors, drug stores, military commissaries, and mass merchandisers. Smucker Company was founded in 1897 and is headquartered in Orrville, Ohio.

J. M. Smucker Q3 2025 Prepared Remarks Earnings Call Transcript

Presentation

[Crystal Beiting, VP - Investor Relations at The J. M. Smucker Company]

Good morning. This is Crystal Biting, vice president, investor relations and financial planning and analysis for the J. M. Smucker Company. Thank you for listening to our prepared remarks on our fiscal twenty twenty five third quarter earnings.

[Crystal Beiting, VP - Investor Relations at The J. M. Smucker Company]

After this brief introduction, Mark Smucker, chair of the board, president, and chief executive officer, will give an overview of the quarter's results and an update on our strategic initiatives. Tucker Marshall, chief financial officer, will then provide a detailed analysis of the financial results in our updated fiscal twenty twenty five outlook. Later this morning, we will hold a separate live question and answer webcast. During today's discussion, we will make forward looking statements that reflect our current expectations about future plans and performance. These statements rely on assumptions and estimates, and actual results may differ materially due to risks and uncertainties.

[Crystal Beiting, VP - Investor Relations at The J. M. Smucker Company]

Additionally, please note we will refer to non GAAP financial measures management uses to evaluate performance internally. I encourage you to read the full disclosure concerning forward looking statements and details on our non GAAP financial measures in this morning's press release. Today's press release, a supplementary slide deck summarizing the quarterly results, management's prepared remarks, and the Q and A webcast can all be accessed on our investor relations website at jmsmucker.com. We invite all interested parties to join us at 08:30AM Eastern Standard Time today for a live question and answer session with management to further discuss our third quarter results and outlook for the full 2025 fiscal year. Please contact me if you have any additional questions after today's question and answer session.

[Crystal Beiting, VP - Investor Relations at The J. M. Smucker Company]

I will now turn the discussion over to Mark Smucker.

[Mark Smucker, CEO, President & Chairman at The J. M. Smucker Company]

Thank you, Crystal, and good morning, everyone. In the third quarter, we continued to build on our strong start to the fiscal year. Net sales for the quarter would have been above our expectations. However, we experienced certain supply chain disruptions that negatively impacted our results, which I am pleased to say have been resolved. Despite these factors and through disciplined cost management and execution, we delivered adjusted earnings per share that exceeded our expectations.

[Mark Smucker, CEO, President & Chairman at The J. M. Smucker Company]

This momentum enabled us to increase our full year adjusted earnings per share and free cash flow guidance. Our strategy is working, and we are delivering positive results in a dynamic operating and consumer environment. We continue to prioritize resources towards our key platforms with the largest growth opportunities. Starting with the Uncrustables brand, which grew net sales by 15% at the total company level in the quarter. Growth was driven by our national advertising campaign, distribution gains, and new merchandising investments to drive trial and awareness.

[Mark Smucker, CEO, President & Chairman at The J. M. Smucker Company]

These actions continue to increase household penetration and fuel our ambition to have Uncrustables sandwiches everywhere. The number one SKU in the total freezer aisle is now an Uncrustables sandwich with two SKUs in the top 10. And the Incressibles brand is leading the entire freezer in new buyers for households with kids, millennials, and Gen Z. We are now expanding into c store and continue to secure commitments as we anticipate further growth in this channel. We have also accelerated our innovation efforts.

[Mark Smucker, CEO, President & Chairman at The J. M. Smucker Company]

The new Uncrustables peanut butter and raspberry spread sandwich has exceeded our expectations and is proving to be highly incremental. With this incredible momentum fueling the Incressibles brand, we continue to anticipate full year net sales for the brand to be over $900,000,000 this fiscal year. Second, the Cafe Bustelo brand continued its momentum as one of the fastest growing brands in the at home coffee category. The brand gained dollar and volume share share in every segment it competes in, including the mainstream, one cup and instant categories in the latest thirteen week period. In the quarter, the Cafe Bustelo brand grew net sales by 15%, continuing its momentum of double digit net sales growth.

[Mark Smucker, CEO, President & Chairman at The J. M. Smucker Company]

We remain focused on expanding the Cafe Bustelo brand nationally and broadening its consumer audience through marketing and innovation. We are launching new roast profiles of the Cafe Bustelo brand in both pre pack and K Cup formats in the summer and have already received strong retailer acceptances. We are also providing consumers with convenient offerings in cold coffee to drive incremental occasions. We recently launched Cafe Bustelo Multi Serve, which is off to a strong start. Further, we are launching the Cafe Bustelo brand into a single serve, ready to drink format next fiscal year at select retailers.

[Mark Smucker, CEO, President & Chairman at The J. M. Smucker Company]

Next, the Milk Bone and Meow Mix brands. In the quarter, the Milk Bone brand experienced supply chain disruptions. We're back to full production and anticipate returning to full distribution in the fourth quarter. We remain highly confident in the Milk Bone brand, which led the category in innovation for the fourth straight calendar year. Our innovation continues to perform with Milk Bone Peanut Buttery Bites, which outpaced all competitor innovation launched in 2024 and is now available nationally.

[Mark Smucker, CEO, President & Chairman at The J. M. Smucker Company]

The launch continues to exceed our expectations and contributed to the strong double digit net sales growth for our Milk Bone Soft and Chewy Dog Snacks in the quarter. Turning to the Meow Mix brand, which contributed positive volume mix in the quarter. The Meow Mix brand is the leader in household penetration and volume share in the dry cat food category. We are continuing to fuel growth through modernized packaging, elevated mainstream options and margin accretive innovation. Our most recent innovation, Meow Mix Gravy Burst, highlights our ability to bring strong innovation to the dry cat food category, a category that has lacked innovation in recent years.

[Mark Smucker, CEO, President & Chairman at The J. M. Smucker Company]

Finally, for the Hostess brand, results continue to be impacted by two primary factors. First, consumers continue to be selective in their spending, largely driven by inflationary pressures and diminished discretionary income, causing the sweet baked goods category to recover slower than we anticipated. These trends are causing a reduction in all channels inclusive of convenience. Second, we are not performing with excellence from a distribution, merchandising and competitive standpoint. This has caused us to underperform in the channels where the consumer is shopping.

[Mark Smucker, CEO, President & Chairman at The J. M. Smucker Company]

We are committed to addressing these challenges and are taking the necessary actions to stabilize and return the brand to growth. This morning, we announced that Judd Freitag will assume leadership of the Pet and Sweet Baked Snacks businesses. In Judd's sixteen years with the company, he has held leadership positions in finance, strategy, brand marketing, and most recently as the general manager and vice president of marketing for Pet. As part of this transition, Dan O'Leary will leave the company in early March. Judd was instrumental in the turnaround of the Pet Food segment and will play a critical role in advancing our Sweet Baked Snacks strategy focused on the following: delivering the base portfolio, expanding distribution, driving innovation, continuing our portfolio evolution, and establishing revenue synergies.

[Mark Smucker, CEO, President & Chairman at The J. M. Smucker Company]

We continue to make progress on these pillars. Our modernized packaging is just now beginning to show up on shelf, and we're launching a bold new marketing campaign that will begin in the coming weeks. We are focusing on distribution that includes both closing gaps in core items in existing channels and entering new channels. Our latest innovation is beginning to enter the market, and our pipeline is strong. Calendar year 2024 was the fourth straight year of innovation share leadership for the Hostess brand, and we expect continuing this trend.

[Mark Smucker, CEO, President & Chairman at The J. M. Smucker Company]

We recently launched new Donut's fritter rings, which is supported by consumers shifting toward breakfast occasions. We are also taking our iconic cupcakes, which are the number one brand in the cupcake subcategory, and creating a mini version with Hostess Cupcake Minis, which will begin shipping in our fourth quarter. Consumers want mini form offerings, and this innovation offers smaller portions for consumers still looking for a sweet treat. And Hostess Suzy Qs will return to the market this September. Suzy Qs are one of the most requested products from our consumers and we are excited for its return.

[Mark Smucker, CEO, President & Chairman at The J. M. Smucker Company]

The recently announced agreement to divest certain value brands and associated manufacturing facility demonstrates our commitment to evolving our portfolio and ensures our manufacturing network is optimized to mitigate costs and reduce complexity. We are beginning to establish revenue synergies, a key strategic benefit of the acquisition by expanding Uncrustable sandwiches into c store. We are using our new capabilities in the channel and also executing cross promotional events between the Hostess brand and legacy Smucker brands. We have executed multiple revenue driving promotions across our portfolio, and results continue to be positive. Through the execution of our focused strategy and prioritization of these key growth platforms, we have delivered a strong fiscal year to date.

[Mark Smucker, CEO, President & Chairman at The J. M. Smucker Company]

Now turning to the dynamics in each of our segments. In Coffee, net sales increased 2% versus the prior year. Our portfolio is performing well as we navigate record high green coffee costs and continue to demonstrate the ability to recover increased commodity costs through responsible pricing. Due to higher green coffee costs and the pass through nature of the coffee category, we took our first price increase in June across parts of our portfolio. In October, we successfully took a second price increase across our portfolio, which is now being reflected in our results.

[Mark Smucker, CEO, President & Chairman at The J. M. Smucker Company]

Price elasticity of demand trends continue to be in line or slightly favorable to our expectations. Overall, at home coffee remains a strong and resilient category that provides value to consumers in all economic environments, and our portfolio provides an affordable price per serving as an alternative to other beverage experiences such as the coffee shop, among others. Our belief is that the commodity will normalize over time as it has historically. As always, we will manage our coffee business through a strategy that demonstrates a balance between recovering inflationary input costs while providing consumers with attractive options ranging from value to premium. In frozen handheld and spreads, net sales grew 2%, primarily driven by double digit growth for Uncrustable sandwiches, partially offset by decreases for Smucker's fruit spreads and Jif peanut butter.

[Mark Smucker, CEO, President & Chairman at The J. M. Smucker Company]

In support of our category leading spreads business, we just launched a national marketing campaign that focuses on the original peanut butter and jelly sandwich that consumers know and love. Peanut butter and jelly remains a simple and comforting food that is easy, affordable, and provides delicious balanced nutrition for our consumers. The Jif Save the Celery campaign is also back this year and has been extended through the high snacking period of the March college basketball tournaments, and we continue to see opportunities to expand beyond sandwiches and into new usage occasions. In Pet Foods, we experienced certain supply chain disruptions that negatively impacted our results in both Milk Bone Dog Snacks and Meow Mix wet cat food. Reported net sales decreased 9% versus the prior year, primarily due to a reduction in contract manufacturing sales related to the divested pet food brands.

[Mark Smucker, CEO, President & Chairman at The J. M. Smucker Company]

When excluding these contract manufacturing sales and had the supply chain disruptions not occurred, net sales would have increased low single digits in the quarter. We anticipate returning to full distribution in the fourth quarter for both brands. Overall, the dog snacks category continues to be impacted by a slowdown in discretionary spending, largely driven by inflationary pressures. We remain confident in our portfolio as we continue to focus on driving growth for the Milk Bone brand with its strong leadership position in the category. In cat food, we continue to see tailwinds as the cat population is projected to grow and anticipate further share growth for the Meow Mix brand.

[Mark Smucker, CEO, President & Chairman at The J. M. Smucker Company]

Dog snacks and cat food remain attractive categories and e commerce trends continue to be positive for our portfolio. In Sweet Baked Snacks, comparable net sales decreased 8%, primarily driven by decreases for snack cakes and private label products, partially offset by an increase for donuts. Hostess donuts have continued to outperform the broader portfolio, and we have seen both increased dollar sales and volume growth over the last fifty two week period. Consumers view breakfast products as less discretionary than the broader sweet baked goods category, and we will continue to drive innovation in breakfast occasions. Finally, in international away from home, comparable net sales grew 5%.

[Mark Smucker, CEO, President & Chairman at The J. M. Smucker Company]

Growth was driven by the away from home business as it continues to deliver strong results by leveraging our leading national brands and key growth platforms in away from home channels. Though our momentum continued into the third quarter for our legacy business, we are revising and narrowing our full year net sales expectations primarily due to the impact of approximately $30,000,000 of supply chain disruptions in our third quarter, continued softness in the Sweet Baked Snacks segment and an anticipated unfavorable impact from foreign currency exchange. We now expect reported net sales of approximately 7.25%, reflecting a full year of net sales from the Hostess Brands acquisition and base business growth. On the bottom line, third quarter adjusted earnings per share exceeded our expectations, driven by adjusted gross margin improvement and disciplined cost management. Based on the strong earnings year to date, we are raising the midpoint of our adjusted earnings per share guidance range to $10 This increase reflects our expectations for the improved gross margin expansion and the realization of synergies earlier than anticipated.

[Mark Smucker, CEO, President & Chairman at The J. M. Smucker Company]

We also increased our free cash flow guidance to nine twenty five million dollars for the full year, reflecting a $50,000,000 increase versus previous expectations. In closing, I would like to highlight a few key points. Our legacy business, which accounts for approximately 85% of our total company net sales, is delivering strong growth. We have confidence in the Hostess brand and our strategic rationale for the acquisition remains strong. While the near term performance has not met our expectations, we have outlined a comprehensive strategy to return the brand to growth and have made initial progress on key actions in support of it.

[Mark Smucker, CEO, President & Chairman at The J. M. Smucker Company]

And our strategy is working, and we remain confident in our ability to deliver long term sustainable growth and generate over $1,000,000,000 in free cash flow annually. As we look ahead, we are well positioned to adapt to consumer preferences, execute with excellence and sustain the momentum for our business, all of which are powered by our unique culture and dedicated employees whom I would like to thank for their outstanding contributions. I'll now turn it over to Tucker to go over our quarterly financial results and our fiscal year twenty twenty five outlook in more detail.

[Tucker Marshall, CFO at The J. M. Smucker Company]

Thank you, Mark. Good morning, everyone. I will begin by providing detail on the non cash impairment charges reflected in our third quarter GAAP results. We recognized a $794,000,000 impairment charge related to the goodwill of the Sweet Baked Snacks reporting unit and a $2.00 $8,000,000 impairment charge related to the Hostess brand Indefinite Live trademark. These impairment charges are driven by the recent underperformance of the Sweet Baked Snacks segment.

[Tucker Marshall, CFO at The J. M. Smucker Company]

This reflects the slower than anticipated recovery of the Sweet Baked Goods category and our execution from a distribution, merchandising and competitive standpoint. Going forward, we are focused on our five pillars to stabilize and return the Hostess brand to growth. We are confident that these actions will support long term net sales and segment profit growth for the business. Now, I will provide an overview of our third quarter results, then I'll provide additional details on our financial outlook for fiscal year twenty twenty five. In the quarter, net sales decreased 2%.

[Tucker Marshall, CFO at The J. M. Smucker Company]

Comparable net sales decreased 1%, which excludes non comparable prior year sales related to the divested businesses, incremental current year sales for the Hostess Brands acquisition and foreign currency exchange. Net sales was flat versus the prior year when also excluding contract manufacturing sales related to the divested pet food brands. The decrease in comparable net sales reflects a five percentage point decrease from volume mix, primarily driven by a decrease for coffee, dog snacks and lower contract manufacturing sales related to the divested pet food brands, partially offset by an increase for Uncrustables sandwiches. Net sales include a 1% headwind from lower contract manufacturing sales related to the divested pet food brands. Comparable net sales also reflects a three percentage point increase from net price realization, driven by higher net pricing for coffee.

[Tucker Marshall, CFO at The J. M. Smucker Company]

This reflects price increases implemented through our coffee portfolio in June and October of this fiscal year in response to higher grain coffee costs and the pass through nature of the coffee category. Net sales were below our expectation largely driven by $30,000,000 of supply chain disruptions in our third quarter primarily impacting U. S. Retail pet foods. Adjusted gross profit decreased $9,000,000 or 1% compared to the prior year.

[Tucker Marshall, CFO at The J. M. Smucker Company]

The decrease primarily reflects higher costs on favorable volume mix and the impact of divestitures partially offset by higher net price realization and a favorable impact from the Hostess Brands acquisition. Adjusted operating income increased $6,000,000 or 1%, reflecting a decrease in SD and A and favorable property taxes, partially offset by the decreased adjusted gross profit. The decrease in SD and A was driven by lower preproduction expenses primarily related to the recently opened Uncrustable Sandwiches manufacturing facility. Below operating income, net interest expense decreased $4,000,000 primarily due to a decrease in interest expense related to the term loan that was prepaid in full during the fourth quarter of fiscal year twenty twenty four. The adjusted effective income tax rate was 23.7% compared to 26.1% in the prior year.

[Tucker Marshall, CFO at The J. M. Smucker Company]

The prior year adjusted effective income tax rate included an unfavorable impact of higher state income taxes related to the acquisition of Hostess Brands. Factoring in all these considerations along with the weighted average shares outstanding of $106,700,000 third quarter adjusted earnings per share was $2.61 an increase of 5% versus the prior year. Adjusted earnings per share exceeded our expectation in the quarter driven by better than anticipated adjusted gross margin and timing of SD and A expenses primarily marketing spend and operating support. Turning to our segment results. In The U.

[Tucker Marshall, CFO at The J. M. Smucker Company]

S. Retail Coffee segment, net sales increased 2% versus the prior year. Net price realization increased net sales by nine percentage points, reflecting higher net pricing for the Folgers and Cafe Bustelo brands. Volume mix decreased net sales by seven percentage points, reflecting declines for Folgers and Dunkin' Brands, partially offset by an increase for the Cafe Bustelo brand. Net sales growth was led by the Cafe Bustelo and Folgers brand, which grew 153% respectively, partially offset by a 6% decline for the Dunkin' brand.

[Tucker Marshall, CFO at The J. M. Smucker Company]

U. S. Retail coffee segment profit was flat, primarily reflecting higher net price realization and favorable property taxes, mostly offset by higher commodity costs and unfavorable volume mix. In U. S.

[Tucker Marshall, CFO at The J. M. Smucker Company]

Retail frozen handheld and spreads, net sales increased 2%. Volume mix increased net sales by two percentage points, primarily driven by an increase for Uncrustable sandwiches, partially offset by decreases for fruit spreads and peanut butter. Net price realization was neutral to net sales, reflecting higher trade spend for peanut butter, mostly offset by higher net pricing for toppings and syrups. U. S.

[Tucker Marshall, CFO at The J. M. Smucker Company]

Retail frozen handheld and spread segment profit decreased by 5%, primarily driven by higher costs, partially offset by lower preproduction expenses primarily related to the new Uncrustable Sandwiches manufacturing facility. In U. S. Retail Pet Foods, reported net sales decreased 9% versus the prior year. Volume mix decreased net sales by nine percentage points, primarily driven by a decrease for dog snacks and a $19,000,000 decrease in contract manufacturing sales related to the divested pet food brands, partially offset by an increase for cat food.

[Tucker Marshall, CFO at The J. M. Smucker Company]

Net price realization was neutral to net sales. Higher trade spend for cat food was mostly offset by lower trade spend for dog snacks. U. S. Retail pet food segment profit increased 7%, primarily driven by lower costs, partially offset by unfavorable volume mix.

[Tucker Marshall, CFO at The J. M. Smucker Company]

In the Sweet Baked Snacks segment, net sales decreased 7% versus the prior year. Excluding non comparable net sales in the current year related to the Hostess Brands acquisition and in the prior year related to the divested Voortman business, net sales decreased 8%. Volume mix decreased net sales by five percentage points, reflecting decreases for snack cakes and private label products, partially offset by an increase for doughnuts. Net price realization decreased net sales by two percentage points, reflecting lower net pricing across the portfolio. Sweetbake Snacks segment profit decreased 19%, driven by lower net price realization, the impact of the non comparable segment profit in the prior year related to the divested Voortman business, higher marketing spend and unfavorable volume mix, partially offset by the impact of the non comparable segment profit in the current year related to the Hostess brand acquisition and lower costs.

[Tucker Marshall, CFO at The J. M. Smucker Company]

Lastly, in international and away from home, net sales was flat. Excluding non comparable net sales in the prior year related to the divested Canadian condiment business and unfavorable foreign currency exchange, net sales increased 5%. Net price realization contributed six percentage points to net sales, reflecting higher net pricing for coffee and Uncrustable sandwiches. Volume mix decreased net sales by one percentage point, driven by a decrease for coffee, partially offset by increases for peanut butter, cat food and baking. Net sales for the away from home business increased 9% on a comparable basis, driven by coffee and Uncrustable sandwiches.

[Tucker Marshall, CFO at The J. M. Smucker Company]

Net sales for the international business decreased 2% on a comparable basis, primarily reflecting unfavorable volume mix in coffee, partially offset by higher net price realization in response to higher grain coffee costs. International and Away from Home segment profit increased 22%, primarily reflecting higher net price realization, partially offset by higher costs and unfavorable foreign currency exchange. Third quarter cash provided by operating activities was $239,000,000 compared to $4.00 $7,000,000 in the prior year. This change reflects higher working capital requirements in 2025, timing of income tax payments, and lapping the $43,000,000 of proceeds received from the settlement of the interest rate contracts assumed as part of the Hostess Brands acquisition in the prior year, partially offset by higher net income loss adjusted for non cash items in the current year. Free cash flow was $151,000,000 compared to $250,000,000 in the prior year, driven by the decrease in cash provided by operating activities, partially offset by a decrease in capital expenditures.

[Tucker Marshall, CFO at The J. M. Smucker Company]

We finished the quarter with a cash and cash equivalent balance of $47,000,000 and a total net debt balance of $7,800,000,000 Based on our trailing twelve month adjusted EBITDA of approximately $2,200,000,000 our leverage ratio stands at 3.6 times. We plan to prioritize debt reduction by paying down over $800,000,000 this fiscal year when considering use of divestiture proceeds and $500,000,000 of debt annually in each of the next two years. With this anticipated debt reduction along with the achievement of cost synergies and overall business growth, we anticipate a leverage ratio at or below three times net debt to EBITDA by the end of our fiscal year twenty twenty seven. This level of debt provides the financial flexibility for a balanced approach to capital deployment. I would like to provide an update on our outlook for fiscal year twenty twenty five.

[Tucker Marshall, CFO at The J. M. Smucker Company]

We expect full year net sales to increase approximately 7.25% compared to the prior year, reflecting a full year of sales from the Hostess brand acquisition, a 1% unfavorable impact from reduced contract manufacturing sales related to the divested pet food brands, and a 1% headwind from lapping sales of the divested Snacks businesses. On a comparable basis, net sales are now anticipated to increase approximately 0.75%, including approximately $35,000,000 of contract manufacturing sales related to the divested pet food brands versus $136,000,000 in the prior year or a 1% unfavorable impact. This guidance range reflects higher net price realization, primarily driven by the pricing actions recently implemented across our coffee portfolio in response to higher grain coffee costs. Comparable net sales growth also reflects volume mix growth for the Uncrustables, Meow Mix, Cafe Bustelo and Milk Bone brands and the away from home business for the full fiscal year. The net sales guidance reflects the following changes from our previous assumptions: third quarter results reduced expectations for our Sweet Baked Snacks business in the fourth quarter of approximately $20,000,000 versus our previous expectations.

[Tucker Marshall, CFO at The J. M. Smucker Company]

We now anticipate full year net sales for the Sweet Baked Snacks segment to be approximately $1,200,000,000 and a higher unfavorable impact from foreign currency exchange. The full year net sales guidance does not reflect any impact related to the company's previously announced agreement to divest the Sweet Baked Snacks value brands, which is expected to impact the current fiscal year by approximately $10,000,000 We now anticipate full year adjusted gross profit margin to be approximately 38%, primarily driven by better than expected margin in our U. S. Retail coffee segment than previously expected. SC and A expenses are now anticipated to increase by approximately 8% versus the prior year, primarily reflecting a full year of operating expenses from the Hostess acquisition.

[Tucker Marshall, CFO at The J. M. Smucker Company]

Total marketing expense is estimated to be slightly below 5.5% of net sales. We anticipate net interest expense of approximately $390,000,000 and an adjusted effective income tax rate of 24.1% along with a full year weighted average share count of $106,700,000 Taking all these factors into consideration, full year adjusted earnings per share is anticipated to be in the range of $9.85 to $10.15 which reflects a $0.1 increase at the midpoint of the range relative to our previous guidance. The full year adjusted earnings per share guidance does not reflect any impact related to the company's previously announced agreement to divest the Sweetbake Snacks value brands, which is expected to be immaterial to fiscal twenty twenty five earnings per share. We project free cash flow of approximately $925,000,000 with capital expenditures of 400,000,000 for the year. Other key assumptions affecting cash flow include depreciation expense of approximately $300,000,000 amortization expense of approximately $220,000,000 share based compensation expense of $35,000,000 and other non cash charges of $150,000,000 In closing, we are pleased with our third quarter results, which demonstrate the strength of our brands and the continued momentum of the business.

[Tucker Marshall, CFO at The J. M. Smucker Company]

We are taking the right actions to support execution and disciplined cost management. I am confident in our strategy and believe we are in a strong position to deliver long term growth and increase shareholder value. And I would like to express my appreciation for our employees. They have demonstrated their commitment to executing with excellence and their passion for our company positions us for continued success. Thank you.

Participants

Executives

• Crystal Beiting, VP - Investor Relations
• Mark Smucker, CEO, President & Chairman
• Tucker Marshall, CFO