ORRVILLE, OHIO — The J.M. Smucker Company shared its financial results for the third quarter of its 2024 fiscal year ended Jan. 31, detailing a significant drop in sales for its pet food division. However, the company’s Meow Mix and Milk-Bone brands both witnessed double-digit growth over the quarter, demonstrating Smucker’s success toward reshaping its pet food portfolio.

For its US Retail Pet Foods segment, Q3 2024 net sales significantly dropped 39% to $465.20 million. Comparable net sales, which excludes Smucker’s divestiture of several pet foods brands, increased $79.10 million (20%). The company attributed this to an increase in volume/mix driven by Meow Mix, co-manufacturing sales related to the divestiture, and growth in Milk-Bone.

Segment profit increased by $500,000, maintaining relatively flat at $109.50 million due to higher net price realization, favorable volume/mix, lower costs from the divested brands, and increased distribution costs.

“Our pet segment results this quarter continue to highlight the benefits of focusing on brands and categories where we have a leading market share position and divesting brands where we did not,” said Mark Smucker, chair of the board, president and chief executive officer. “Profit margin improved significantly versus the prior year, driven by product mix, and profit dollars remained inline with the prior year, despite divesting half of the pet foods segment net sales.

“We are extremely pleased with how our refocused portfolio is performing from both a sales growth and margin perspective,” he added.

Milk-Bone experienced double-digit net sales growth of 11%, primarily fueled by volume/mix growth. Additionally, according to Smucker, the brand continues to outpace the dog snack category, growing at more than twice the category rate. Milk-Bone has continued to grow its dollar share for the past 10 consecutive quarters, driven by retail, product innovation and brand-building investments.

“We continue to be excited about the incremental innovation we are bringing to the category with Milk-Bone® Peanut Buttery Bites, seasonal and limited-time offerings, and continued innovation to come,” Mark Smucker said.

Meow Mix also witnessed double-digit net sales growth, this time of 28%, as well as 17% on a two-year CAGR basis. The company partly attributed this to improvements in supply, with Meow Mix having a record quarter for volume and sales growth. According to Smucker, the brand has returned to its No. 1 spot in the dry cat food segment, in terms of both dollars and volume.

“We anticipate this strong brand momentum to continue into the fourth quarter,” said Tucker Marshall, chief financial officer of Smucker.

In a Q&A call held on Feb. 27, Marshall provided more insight on this growth, adding, “We did see a normalization of our pet supply chain, specifically on Meow Mix, and support of manufacturing that was a contributor to Q3, and we would still anticipate in Q4 that pet grows double digits.”

Overall, net sales rose to $2.23 billion, an increase of $12.90 million (1%) from $2.22 billion in Q3 of 2023. Comparable net sales, which excludes Smucker’s recent divestitures and acquisition of Hostess, reached $1.93 billion, an increase of $106.50 million (6%) from $1.82 billion in the prior year.

Gross profit rose to $823.10 million, an increase of $67.30 million (9%) from $755.80 million in Q3 of 2023. However, operating income was $297.40 million, a decrease of $20.50 million (6%) from $317.90 million in Q3 of 2023. The company attributed this decrease in operating income to a $98.30 million increase in special project costs related to its acquisition and integration of Hostess.

Free cash flow was $249.60 million, a significant decrease from $442.70 million in the prior year.

“… Momentum continued across our portfolio, building on the strong start to our fiscal year,” Mark Smucker said. “We delivered another positive quarter of financial results, including organic sales growth and double-digit earnings growth. Our strong top- and bottom-line increase was led by volume growth, reflecting sustained consumer demand for our iconic brands, and our continued focus on superior execution and disciplined cost management.

“Overall, the strength of our categories and brands supported volume share gains across our portfolio,” he added. “Brands that are growing or maintaining volume share accounted for 86% of our US Retail sales in the third quarter, up from 34% in the same period a year ago.

“We also continued to make important progress in reshaping our portfolio during the quarter,” Mark Smucker added. “… These actions support our strategy of focusing our resources toward our fastest growth opportunities and leading in the attractive categories of coffee, snacking and pet foods. This focus and prioritization of resources positions us to drive continued growth and enhance shareholder value.”

Smucker also updated its full-year fiscal 2024 guidance. The company expects net sales to decrease 3.6% compared to the prior year to about $8.22 billion, reflecting its many divestitures across several segments including pet food. Comparable net sales are anticipated to increase 8.75%, in line with previous projections of between 8.5% and 9.0%. Additionally, the company expects co-manufacturing sales related to the divested pet food brands to contribute about $140 million in net sales, a $5 million decrease from previous estimates.

Adjusted earnings per share is expected to range from $9.45 to $9.65, a slight increase to the mid-point range of the previous expectation of between $9.25 and $9.65. Free cash flow is expected to be approximately $500 million, a decrease from the previous expectation of $530 million, with capital expenditures of $610.10 million.

“Looking ahead, we are well-positioned to adapt to consumer preferences, execute with excellence, and sustain the positive momentum in our business,” Mark Smucker said.

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