So, you know how everything costs more these days? Well, The J.M. Smucker Co. (SJM) does too. But in its latest quarterly report, the company showed it can still serve up a solid performance, thanks in large part to America's favorite morning ritual: coffee.
The company reported third-quarter fiscal 2026 results that beat what Wall Street was expecting. Adjusted earnings per share came in at $2.38, topping the $2.27 estimate. Net sales climbed 7% to $2.339 billion, also beating expectations. If you strip out the noise from things they've sold off and currency swings, sales were actually up 8%. Not too shabby.
But here's the thing about making money when costs are rising: it gets harder. The company's gross margin—basically, how much profit it makes on each dollar of sales before other expenses—fell to 35.4% from 40.2% a year ago. Why? The usual suspects: higher costs for raw materials (commodities), tariffs, and selling a different mix of products. Their adjusted operating income also dipped 7% to $431.6 million.
"Our business continues to deliver strong results in a dynamic external environment," said CEO Mark Smucker. He credited the company's portfolio of brands and "disciplined cost management" for the beat. It's the corporate equivalent of saying, "We're navigating some choppy waters, but the ship is steady."
On the cash front, things looked healthier. Cash from operations more than doubled to $558.5 million, and free cash flow jumped to $487.0 million. The company used some of that money to pay down $200 million of long-term debt and dole out $116.7 million in dividends to shareholders.
Where the Money Came From (And Where It Didn't)
If you want to understand Smucker's quarter, you have to look at its different business lines. It's a story of haves and have-nots, with coffee firmly in the "have" column.
U.S. Retail Coffee: This was the engine. Net sales here soared 23% to $908.2 million, driven by the company charging more for its Folgers, Dunkin', and Café Bustelo brands. But even this star segment felt the pinch. Its profit margin fell to 21.9% from 28.2%, a direct result of those higher coffee bean costs and tariffs. They're selling more, but keeping less of each dollar.
U.S. Retail Frozen Handheld and Spreads: (Think Uncrustables and Jif). Sales here inched up 2%, and the profit margin actually improved a bit to 22.8%. A quiet, stable performer.
U.S. Retail Pet Foods: Sales dipped 1%, mainly because they stopped some contract manufacturing work for brands they sold off. The silver lining? The margin on the pet food they still make expanded nicely to 29.2%.
Sweet Baked Snacks: (This is where the famous Smucker's jams and jellies live, along with other baked goods). This was the tough spot. Sales fell 19%, and the segment profit margin shrunk to just 5.4%. Ouch.
International and Away-From-Home: This smaller segment, which sells to restaurants and other countries, posted a solid 12% sales gain, with its margin rising to 21.5%.
