SJM · Q3 2026 Earnings

Cautious

J.M. Smucker Company (The)

Reported February 26, 2026

30-second summary

Q3 revenue grew 7% to $2.34B with adjusted EPS of $2.38, and management narrowed the FY26 net sales growth range to 3.5–4.0% (from 3.5–4.5%) and comparable growth to ~5.0–5.5% (from 5.0–6.0%) to absorb the estimated impact of a February fire at the Emporia, Kansas bakery. Adjusted EPS ($8.75–$9.25) and free cash flow (~$975M) were reaffirmed, but adjusted gross margin printed 33.8% — the second consecutive quarter below the 35.0% FY point — and the company booked a $724M GAAP net loss driven by $961.7M of Sweet Baked Snacks impairment charges ($507.5M goodwill + $454.2M other intangible assets). Coffee delivered +23% and Pet treats showed signs of life, but Sweet Baked Snacks was re-labeled a multi-year "journey" with FY27 framing pushed out and bakery network costs running "much higher than anticipated."

Headline numbers

EPS

Q3 FY2026

$2.38

Revenue

Q3 FY2026

$2.34B

+7.0% YoY

Gross margin

Q3 FY2026

35.4%

Free cash flow

Q3 FY2026

$0.49B

Operating margin

Q3 FY2026

-23.4%

Key financials

Q3 FY2026

Metric	Q3 FY2026	YoY	Q2 FY2026	QoQ
Revenue	$2.34B	+7.0%	$2.33B	+0.4%
EPS	$2.38	—	$2.10	+13.3%
Gross margin	35.4%	—	37.3%	-190bps
Operating margin	-23.4%	—	18.0%	-4140bps
Free cash flow	$0.49B	—	$0.28B	+73.9%

Guidance

Company narrows FY2026 net sales and comparable sales guidance ceilings by 0.5pts each due to Emporia facility fire, while reaffirming EPS, FCF, and capital allocation targets.

Guidance is issued for both next quarter and the full year. Both may appear below.

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Net sales increase vs. prior year	FY 2026	3.5% to 4.5%	3.5% to 4.0%	-0.5pts at high end	Lowered
Comparable net sales increase	FY 2026	approximately 5.0% to 6.0%	approximately 5.0% to 5.5%	-0.5pts at high end	Lowered
Adjusted effective income tax rate	FY 2026	23.8%	24.0%	+0.2pts	Raised
Weighted-average common shares outstanding	FY 2026	106.9 million	Withdrawn — no replacement	—	Withdrawn

Reaffirmed unchanged this quarter: Adjusted earnings per share ($8.75 to $9.25), Free cash flow ($975.0 million), Capital expenditures ($325.0 million), Adjusted gross profit margin (approximately 35.0%), Interest expense (approximately $380.0 million)

Segment performance

Q3 FY2026

Segment	Q3 FY2026	YoY
U.S. Retail Coffee	$0.908B	+23.0%
U.S. Retail Frozen Handheld and Spreads	$0.454B	+2.0%
U.S. Retail Pet Foods	$0.417B	-1.0%
Sweet Baked Snacks	$0.225B	-19.0%
International and Away From Home	$0.335B	+12.0%
U.S. Retail Coffee Segment Profit Margin	21.9%	—
U.S. Retail Pet Foods Segment Profit Margin	29.2%	—
Sweet Baked Snacks Segment Profit Margin	5.4%	—
International and Away From Home Segment Profit Margin	21.5%	—

Platform metrics

Q3 FY2026

Segment	Q3 FY2026
Net Sales Organic Growth (ex-divestitures and FX)	8%

Profitability

Q3 FY2026

Segment	Q3 FY2026
Adjusted Gross Profit Margin	33.8%
Adjusted Operating Income Margin	18.4%
Free Cash Flow	$487.0 million

Management tone

Narrative arc: Wide-band caution (Q4) → Tariff arithmetic dominates (Q1) → Tariff relief earned (Q2) → Operational execution falters (Q3).

Sweet Baked Snacks has been re-narrated from "stabilization on track" to "a journey." Two quarters ago, management was articulating a Q4-strongest sequential improvement path and floating FY27 as the "on-algorithm or better" year. This quarter Mark Smucker said "this continues to be a journey as we navigate the stabilization of this portfolio" and explicitly stated "it's early for us to lean into what the outlook is for FY27." The 20% segment profit margin target that anchored the original Hostess acquisition thesis has been deferred until the Q4 earnings call for a revised number. The decision to move the Hostess trademark from indefinite to finite life — triggered by management cutting the long-term growth rate to 2% — is the accounting expression of that retreat, with the step-up in amortization beginning in Q4 and FY26 amortization now projected at $210M.

The operational story is unraveling, not consolidating. Last quarter management framed the Indianapolis bakery closure as the resolution of the major operational friction in Sweet Baked Snacks. This quarter the prepared remarks acknowledged "our bakery network cost came in much higher than we anticipated," and a February fire at the Emporia, Kansas bakery has now cost 50bps off the high end of the FY net sales growth range. The Q2 messaging that earnings pressure would peak in Q2 with sequential improvement thereafter has been replaced with "our fourth quarter should be better, but it will absorb the impact of the fire in the month of February."

Tucker Marshall tied capital allocation explicitly to a leverage gate for the first time. At Q4, the framing was portfolio reshaping with optionality. This quarter: "As we continue on our path to three times leverage or below by the end of next fiscal year, that enables the opportunity to consider share repurchases again." That is a more disciplined message, but it also means buyback optionality is at least a year out, and the silent withdrawal of the share-count guide this quarter is consistent with capital flexibility being constrained rather than expanding.

The Hostess team-stability question drew a defensive answer, not an acknowledgment. When pressed on management departures at Hostess, Mark Smucker responded "No, Rob. I'm very confident that we have the right team in place on Hostess, some of the best and brightest." That phrasing — deflecting rather than addressing — is the rhetorical opposite of the operational candor management offered on bakery network costs in the same call.

Coffee remains the structural bright spot, with FY27 setup quietly building. Management explicitly framed coffee deflation and tariff lapping as FY27 tailwinds — the inverse of the headwind story that dominated Q4 and Q1. Coffee segment margin expanding to 21.9% from 18.2% sequentially supports this; this is the cleanest piece of the bull case left on the print.

Recurring themes management leaned on this quarter:

Sweet Baked Snacks stabilization as multi-year journeyCoffee deflation and tariff lapping as FY27 tailwindOperational execution challenges offsetting cost improvementsGovernance enhancement and Elliott alignmentLeverage reduction as prerequisite for capital flexibility

Risks management surfaced:

Category trends in Sweet Baked Snacks remain pressuredManufacturing disruptions (Indy plant closure, February fire impact)Elasticity forecasting uncertainty in coffee pricingOrganic sales underperformance vs. consumption in Sweet Baked SnacksRetail inventory dynamics risk (acknowledged as absent but monitored)

Q&A highlights

Max Gomport · BNP Paribas

What is a reasonable normalized segment profit margin for Sweet Baked Snacks when the business returns to normal, given the company had previously communicated a clear path to 20% margins?

Management acknowledged profitability is below expectations, particularly in Q3, and expects improvement in Q4. They deferred providing a revised profit margin target until the Q4 earnings call, stating the team is still advancing its stabilization journey focused on bakery environment navigation and cost management.

Expects profit improvement into Q4Revised profit margin target to be disclosed at Q4 earnings callPrevious long-term sales growth target for Sweet Baked Snacks has been reduced

Max Gomport · BNP Paribas

How do you view the Uncrustables business trends with retail growing 6% while total company is at 10%, and how are you thinking about the business as it approaches the $1 billion revenue target?

Management expressed confidence in Uncrustables as a key growth driver. Highlighted tripled C-store sales, addition of 3.5 million new households, distribution gains in away-from-home channels, and continued growth driven by innovation and household penetration expansion. Emphasized the brand remains category leader despite emerging store brands.

C-store sales tripled3.5 million new households addedTotal company growth at 10%Retail growth at 6%

Scott Marks · Jefferies

What is changing in the dog snacks category that is driving rebound, and how does this relate to consumer discretionary spending pressures previously cited?

Management attributed category growth to humanization and premiumization trends in pet. Success spans both premium innovation and value-oriented base biscuits, indicating the strategy is winning across different price segments. The company is following both consumer needs and category growth drivers.

Dog snacks category continuing to growGrowth driven by humanization and premiumization trendsBase biscuit performance has been positiveStrategy spans premium to value segments

Scott Marks · Jefferies

How should investors think about distribution runway in traditional retail channels for Uncrustables versus innovation velocity on shelf in mature channels?

Management noted that distribution has expanded in traditional U.S. retail channels (grocery and mass) over the past year with gained freezer space. The company is distributed everywhere with Uncrustables, and future growth will be driven primarily by innovation (citing strong performance of new high-protein sandwiches) and household penetration expansion where runway still exists.

Distribution expanded in traditional retail channelsGained freezer space in grocery and mass channelsProduct is distributed everywhereGrowth strategy focused on innovation and household penetration

Steve Powers · Deutsche Bank

What triggered the decision to begin amortizing the Hostess trademark starting in Q4, and over what period of time will the brand be amortized?

Management stated that reduced growth rate expectations for Sweet Baked Snacks (now 2% long-term growth, down from original acquisition assumptions) and a more prudent approach to resource allocation led to the decision to amortize the Hostess trademark over a finite life rather than treat it as indefinite. Full-year amortization outlook is $210 million including the Q4 step-up.

Long-term growth rate reduced to 2% from original expectationsFull-year amortization outlook: $210 millionAmortization begins in Q4Brand moved from indefinite-life to finite-life asset

Answers to last quarter's watch list

Adjusted gross margin vs. the new 35.0% FY point estimate. Q3 printed 33.8% — below 35.0% for the second consecutive quarter and 10bps below Q2's 33.9%. Management reaffirmed the 35.0% FY point, which now requires Q4 to print well above 37% to hit the full year. The point estimate looks indefensible without further explanation.

Resolved negatively

Coffee segment profit margin trajectory. Q3 printed 21.9%, a sharp recovery from Q2's 18.2% and Q1's 18.7%. Pricing is now visibly flowing through to segment profit.

Resolved positively

Q3 comparable net sales delivery against the high-single-digit guide. Organic net sales (ex-divestitures and FX) grew 8% — at the lower end of "high single digit" but inside the guide. Reported net sales grew 7%. Status: Resolved positively, though closer to the floor than the ceiling.

Sweet Baked Snacks comparable trajectory. Reported -19% was unchanged from Q2's -19%; management did not provide a discrete comparable figure but acknowledged "top line did come in below our expectations." Worse, the long-term growth rate was cut to 2% (from the original acquisition algorithm), the brand moved to finite-life amortization, and the 20% segment margin target was deferred.

Resolved negatively

Frozen Handheld & Spreads ex-hurricane lap. Segment grew +2% in Q3, improving from -5% in Q2 as the Jif hurricane lap rolled off. The underlying trend looks closer to flat-to-modestly-positive.

Resolved positively

Any incremental tariff disclosure. No new tariff developments were disclosed; the green coffee relief established at Q2 remains the operating assumption, and management framed lapping of in-year tariff costs as an FY27 tailwind.

Continue monitoring

What to watch into next quarter

Q4 adjusted gross margin vs. the implied 37%+ requirement to hit the reaffirmed 35.0% FY point. Two consecutive prints below 35% mean Q4 must snap back sharply or the FY point cuts a third time. A Q4 print below 36% would force a guide revision.

Sweet Baked Snacks revised normalized margin target. Management explicitly deferred this to the Q4 call. Watch whether the new long-term margin is communicated as a number or remains qualitative — and whether it's anchored below the original 20% or kept open.

Emporia fire impact quantification. The fire took 50bps off the FY sales growth high end with no explicit dollar figure; watch Q4 for the actual revenue/cost impact and any insurance recovery commentary.

Pet Foods continuing recovery. Sequential trajectory has gone -8% → -7% → -1%. A Q4 print at or above flat would confirm the humanization/premiumization narrative is durable rather than a one-quarter rebound.

Hostess management departures. Mark Smucker deflected on this in Q&A. Watch whether named senior departures surface in the proxy or in trade press before Q4.

Buyback timing under the 3.0x leverage gate. Tucker tied repurchases to reaching 3.0x or below by end of FY27. Watch whether the Q4 release provides an explicit leverage trajectory.

Sources

J.M. Smucker Q3 FY2026 press release, SEC 8-K exhibit: https://www.sec.gov/Archives/edgar/data/91419/000009141926000013/sjm20260226exhibit991.htm
J.M. Smucker Q2 FY2026 press release, SEC 8-K exhibit: https://www.sec.gov/Archives/edgar/data/91419/000009141925000104/sjm20251125exhibit991.htm
J.M. Smucker Q1 FY2026 press release, SEC 8-K exhibit: https://www.sec.gov/Archives/edgar/data/91419/000009141925000069/sjm20250827exhibit991.htm

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