The J.M. Smucker Company

Good morning and welcome to the J.M. Smucker Company's Fiscal 2027 First Quarter Earnings Question and Answer Session. This conference call is being recorded and all participants will be in a listen-only mode. Please limit yourselves to two questions and re-queue if you have additional questions. I'll now turn the conference call over to Crystal Beiting, Vice President, Investor Relations, Financial Planning and Analysis. Thank you and you may begin.

Good morning and thank you for joining our fiscal 2027 first quarter earnings question and answer session. I hope everyone had a chance to review our results as detailed in this morning's press release and management's prepared remarks, which are available on our corporate website at jmsmucker.com. We will also post an audio replay of this call at the conclusion of this morning's Q&A session. During today's call, we may make forward-looking statements that reflect our current expectations about future plans and performance. These statements rely on assumptions and estimates, and actual results could differ materially due to risks and uncertainties. Additionally, we use non-GAAP results to evaluate performance internally. I encourage you to read the full disclosure concerning forward-looking statements and details on our non-GAAP measures in this morning's press release. Participating on this call are Mark Smucker, Chief Executive Officer, President and Chair of the Board, and Tucker Marshall, Chief Financial Officer, Executive Vice President, Frozen Handheld and Spreads, and Sweet Bake Snacks. We will now open the call for questions. Operator, please queue up the first question.

Thank you. The question and answer session will begin at this time. If you're using a speakerphone, please pick up the handset before pressing any numbers. Should you have a question, please press star 1 on your telephone. If you wish to withdraw your question, please press star two. For operator assistance, please press star zero. As a reminder, please limit yourselves to two questions during the question and answer session. Should you have additional questions, you may re-queue and the company will take questions as time allows. Please stand by for the first question. Our first question is coming from Andrew Lazar from Barclays. Your line is now live.

Great, thanks so much. Good morning, everybody. Morning. Yes, morning. As I understand it, it looks like you received an 84-cent tariff refund benefit in fiscal 1Q and anticipate about a 60-cent benefit for the full year, net of some incremental costs and spend back. I was wondering if you're able to give us a better sense of what's incorporated in that sort of 24-cent differential in SD&A. I guess how much is higher admin expenses for the build-out of McCalla versus higher brand spend or something else?

Andrew, good morning. Yes, we did receive an 84 cent benefit from tariff refunds in our first quarter. And we are choosing to reinvest a portion of that in SD&A expenses, largely coming through administrative expense, along with some incremental marketing spend and advancing pre-production expenses associated with our McCalla, Alabama facility, all in support of the Uncrustables brand. and then acknowledging too that we would use the balance of earnings or cash to pay down debt.

Got it. Okay. Okay. Thank you for that. And then you're still looking for coffee volume to decrease for the full year by low single digits. And I just wanted to explore this a bit more just because you've seen coffee volume actually increase despite the higher pricing more recently. So I guess with the understanding that elasticity has been modest as prices went up, why would we expect volume to weaken even as coffee shelf prices moderate from here? And maybe it's just conservatism at this point, but just curious on that. Thanks so much.

Andrew, it's Mark. Thanks for the question. You know, you are correct. Because the commodity has continued to be very volatile, which particularly this time of year is not unusual, we just feel that it's prudent, given not only the commodity but category dynamics and the consumer environment, to just think about the coffee business from a prudent perspective. I would highlight that, you know, As you pointed out, great results in the quarter on all three of our key brands with Bustelo growing, supported by the Game Face campaign around soccer. And then Duncan, you know, having relative pricing in line with where it needs to be. All of that has been supportive, but it's just, again, making sure that we're thinking about the go forward from a prudent perspective.

Got it. Yep. Makes sense. Thanks so much.

Thank you. Next question is coming from Peter Galbo from Bank of America. Your line is now live.

Hey, good morning, Mark and Tucker. Thanks for the questions. If I could pick up on coffee, I think there are quite a bit of investor questions just around how you're thinking about the recent run-up on, I guess, more speculative nature of Super El Nino and at this point. And, you know, there was a change in terms of how you have the outlook for the year on the pricing side. So actually expecting less of a headwind on coffee price for the year to go, I think, than previously. Just how, you know, kind of the recent move in coffee prices are impacting that decision. Had you planned a larger list price decrease, now you're pulling back on it. Trade promotion, just any additional detail on how we might think about the price piece. as it relates to coffee.

Sir Peter, it's Mark. So as I just mentioned, you know, this time of year and obviously speculation around weather and so forth is not unusual. And we had contemplated a list price decline at the end of the fiscal and wanted to just acknowledge that the commodity, the base commodity is down. versus last year. But we have not crossed key thresholds that would actually justify, nor have we seen sustained deflation at this point. So having not crossed key thresholds, we won't take a list price decline at this point, but we have passed along some of that deflation to consumers in the form of trade using those levers, which is pretty normal. We will continue to watch the crop. The indications are having essentially finished the harvest that the crop is healthy and there could be a surplus. But at this point, since we have not seen that flow through, we'll just pause and continue to watch where the commodity goes and again, take a prudent approach.

Great. Thanks for that, Mark. Very clear and helpful. Tucker, I noticed that in the prepared remarks, you reinserted maybe a bit more forcefully commentary around share repurchase, just given where the leverage has landed, some of that being tied, obviously, to the tariff refund. But maybe it felt intentional. So just curious if you can expand a little bit on potential for share repurchase, what we might be able to see It seems like potentially this year, which again seems like a bit of a pull forward. So I'll leave it there. Thanks very much.

Peter, good morning. You know, we remain committed to a balanced capital deployment model where we can reinvest in the business and also return capital to shareholders. So we are on the journey to pay down about $500 million of debt this year and achieve the three times leverage ratio, which candidly we did in this first quarter. So we're a little ahead of expectations and we remain committed to the quarterly dividend, which we recently announced an increase. And we now have the flexibility to begin contemplating share repurchases as we move forward.

Thank you. Our next question is coming from Tom Palmer from J.P. Morgan. Your line is now live.

Good morning. Thanks for the question. Maybe just to start out, I wanted to clarify some of the COGS inflation commentary. I think it's still mid-single digits, but 100 basis points higher than previously. How much of this is just related to coffee versus other costs moving around such as freight?

Yeah, we are experiencing mid-single-digit inflation as you isolate the effects of green coffee tariffs and tariff refunds. And when you think of that sort of underlying mid-single-digit inflation, we're seeing an increase from our initial expectations coming into the year, largely driven by freight and some commodity and other ingredients. And that's been factored into our guidance for the balance of the year.

Okay, thank you. And then I wanted to ask on the frozen, handheld, and spread segment, we have seen stronger margins the last couple quarters. There's also, I know, the planned startup costs here and I think maybe higher marketing. I guess, how sustainable do you think about the margins we've been seeing lately in this business? And at what point do we really start to see the pre-production costs at McCalla become a factor?

Yeah, we delivered a nice first quarter, both from a top line momentum standpoint and also the profitability flowed through as well. As we think about the business, we continue to support growth. We now expect sort of high single digit growth for the Uncrustables brand, Total Company, Total Venture. And as we move forward, we'll continue to support the portfolio with ongoing marketing advancements and also ensuring that we continue to bring production along as we support demand. And as you can see, or you may have read, we are increasing pre-production expenses for the year in support of the McCalla, Alabama facility. And so the margin profile may take a slight step back in our next few quarters, but the profile continues to remain strong.

Understood. Thank you.

Thank you. Next question is coming from Robert Moscow from TD County. Your line is now live.

Hey, thank you. Maybe I'll ask about retail pet food. I think you have volume mix for dog snacks flat, but milk bone volume mix was positive. Can you tell me a little bit more about how you're trying to manage that overall dog snacks business, which has been kind of challenged? Do you have any new views on kind of the tail brands like pepperoni and things like that? They've been a drag. Do you have any specific actions to try to stabilize them or could there be portfolio change longer term?

Sure, Rob. It's Mark. Actually, really solid quarter on dog snacks and in particular pepperoni. We still feel that the category of dog snacks is a great one, so we do want to continue to participate with the brands we have. Pepperoni was up 5% in net sales and 7%, so it was a strong quarter, largely driven by some brand refat, fresh, sharper marketing, and some specific... Some events at some of our larger customers that were helpful. And then Milk Bone also had a good quarter, returning it to volume growth that was supported by innovation, winning in the soft and chewy segment, good marketing there. I think we've said in quarters past that we continue to focus on continuing to stabilize the biscuit segment through messaging around dog enjoyment and functional benefits. So more to come on that, but ultimately very positive on the dog snacks category. And then it goes without saying we had a solid quarter on cat food as well.

Okay. Pardon me for getting the brands wrong. So were any of the snack brands down then? Because if Pepperoni is up and Milk Bone is up, then there must be something else down.

Jerky Treats was down.

Okay.

All right. Thank you. Thank you. Next question is coming from Chris Carey from Wells Fargo Securities. Your line is now live.

Hi. Good morning, everybody. Thank you for the question.

Good morning.

I wanted to ask about expectations going into fiscal Q2. Quite a sharp reversal, yet it feels like momentum is good on frozen handheld, comps get easier. Similar dynamic on pet away from home is doing well, supported by Uncrustables. Is this just, you know, a substantial reversal in coffee in Q2 or, you know, is the sweet baked snacks business expected to get worse going into Q2? Can you just help frame, you know, the outlook going into, you know, the next quarter and some of the key drivers in the Delta relative to the run rates that you're at right, you know, post Q1?

Yeah, Chris, we... We do believe that there is ongoing business momentum as we head into our second quarter. And we continue to acknowledge that coffee had great volume delivery in the first quarter and that we are being very prudent in our volume assumptions in the next nine months on that portfolio. We're also sort of reversing a contemplated list price decline and bringing back the promotional activity to get to those right price points within coffee. We see ongoing momentum in the frozen handheld and spreads portfolio, largely driven by the Uncrustables sandwich. And then really the rest of the businesses are doing what we anticipated coming into this fiscal year. And so we believe that Q2 really is coming in line with sort of the expectations and has enabled us to support sort of our guidance revision for the year.

Okay, thank you. And on the sweet baked snacks business specifically, was Q1 more or less in line with your expectations? I don't know why it felt maybe a touch light on the top line, but I think even in that response just now, you had suggested that the business, I suppose, is still running roughly in line with your expectations. Just give us a sense of where you see the business from a top line standpoint and also margins where there's been a bit of volatility in your ability to have more visibility into the segment. and, you know, just slightly connected and apologies for, you know, I guess the third one here, but how are you thinking about broader portfolio? You've been nimble about making decisions when required. I just wonder what the current state of affairs is, you know, as you digest, you know, your current lineup. Thanks so much.

Chris, it's Mark. The performance on Hostess in the quarter was essentially Right where we expected it to be. So making progress on the stabilization journey, recognizing the journey itself is slow and steady, but we do feel good about the progress we made. and there were a couple of bright spots. Honestly, Donets has been performing really well, outperforming particularly in the larger bag size as well as some innovation on like the mini churro donuts. Also, the morning time occasion seems to be very strong and that performance on Donets was supported largely in the U.S. retail channels. We do recognize that the convenience channel as a whole continues to be challenges in terms of traffic, and we have not lapped skew rationalization. So that might be a little bit of what you're seeing, but we do, and then some innovation like on Susie Q's also performing well. So a couple of bright spots, and then our goal is just to continue to make incremental progress quarter over quarter.

Okay. Thank you.

Thanks. Thank you. Next question today is coming from Nick Modi from RBC Capital Markets. Your line is now live.

Yeah. Thank you. Good morning, everyone. Just a couple questions. One is just on coffee. When you think about, you know, what's going on between the out-of-home and in-home, It seems like while higher income consumers are certainly enjoying themselves out of home, some of the lower and middle income consumers are feeling the pressure. And I'm just wondering if, Mark, do you think there's a marketing opportunity, kind of a value, kind of conscious message that you can kind of be more aggressive with just to capture some of those consumers? I just wanted to get your thoughts on that. And then I have a second question.

Nick, I like that point. I do think there's an opportunity. And, you know, we've been pretty consistent in talking about this more than 70 cups, 70% of cups consumed are consumed at home. And the fact that our portfolio meets a variety of value points for the consumer. And so We agree with you. We do think that will continue to be an opportunity. I would note Folgers, being one of our more affordable brands, had some great performance around America 250. There was some specific SKUs that we supported over the holiday period in July, and so appreciate the feedback.

Great, helpful. And then I guess this one's kind of an off-the-wall question, but some observations from recent trade shows in the pet space would suggest devices are really, apps and devices are really the big kind of growth drivers, right? I think treats have been under pressure, dog has been under pressure. And it just looks like with all kind of the AI enablement and kind of tracking your pet's health more in real time, I'm just curious, now that leverage is where it is, how do you think about capital allocation in the pet space? And is that something you've ever thought about?

Well, it's a good question. Strategically, we have considered over time, where can we play and where can we win? And I would say our... Our priority is going to remain on consumables, right? Things that dogs eat and cats eat. So not that we wouldn't continue to think about that, but I would say right now it's really focused on dog snacks and cat food.

Great. I'll pass it on. Thank you so much.

Thank you. Next question is coming from David Palmer from Evercore ISI. Why is that live?

Thanks. Good morning. You know, fiscal 27, good morning. Fiscal 27 is already going to be an investment year. Now it looks like you have the ability to lean in a little bit more, maybe 10 to 20 million more, I guess, as of this morning. I'm wondering, you know, I think people are used to feeling good about investment spend because they think, that easy comparisons on that spend next year just increases visibility. But I think that people are equally doubtful that there's going to be a return on investment from gross spending in the food space. And I know you're leaning in on, or you've in the past said you're leaning in on, incrustables, dog treats, and peanut butter. Uncrustables is crushing it. I wonder if you could give some detail on the types of spending you're making on those big three and maybe if the incremental isn't going into those, what you're spending that on and have a follow-up.

Dave, it's Mark. Yeah, we have been very disciplined in terms of where we spend dollars. and we have tools that enable us to evaluate how much bang for the buck we get and where we're going to get incremental ROI. And with Katie Williams on board as our new chief marketing officer, she brings to bear also a lot of expertise in that area along with all of our marketers that support each of our brands. I feel pretty confident that we can be choiceful and prudent with the dollars and put them where we're actually going to get a meaningful return.

When we look at the dog treats data, peanut butter data, those are two areas that I would say you're going to want to stabilize. Going into next year, is there a sort of cadence that we should be looking at for improvement in those two areas, if those are two of the three, and any sort of color about what you're doing with Uncrustables and the frozen to thought product that seems to be working? Thanks.

Yeah, Dave, we remain committed to advancing all of our brands and as you noted in dog treats, it's important for us to continue to build the brand Milk Bone and continue to advance its relevance in the treating occasion. And we will continue to do that. And it's certainly in our plans and has been an objective since we stepped into this fiscal year. It's important that we demonstrate our leadership in the spreads category in particular with peanut butter and fruit. And then as you think about Uncrustables, it continues to be a great story. It's gonna demonstrate another year of growth Great, thank you.

Thanks. Thank you. Next question today is coming from Max Comport from B&P Power Body Line. Is that live?

Hey, thanks for the question. First, just wanted to go back to festivals. So there has been a very clear reacceleration in traffic channel data. So I was hoping you could talk about consumer and retailer reception you're seeing with regards to the fridge-friendly conversion and also how the innovation that you come out with is performing. Thanks very much.

Max, thanks for the question. It's a great follow-on from David's. Yeah, Uncrustables, I would sum it up this way. All the fundamentals are right. In other words, we've got new marketing, the launch of fridge-friendly, so obviously you can keep the Uncrustables thawed in your fridge for five days. so instant consumption if you will price pack architecture is right so just you know competitively I think we're sort of in the sweet spot there the breadth of our offerings whether that's new flavors some of those flavors are limited time offerings obviously hitting on day parts with the higher protein offerings as well and so just the combination of All of those things has led to also, you know, stronger distribution gains and our away from home businesses performing well, still building out our C-Store presence with the larger chain customers. So I would just say it's a tale of just doing all of the important things right.

Great. And then a follow-up on coffee. I'm hearing your commentary about how you paused the list price cut plans and you're choosing instead to lean more into promotional activity. Just curious, on Folger specifically, we are seeing the exact opposite dynamics in terms of seeing actually non-promoted list prices come down in recent weeks. and then promotional activities both in terms of frequency and depth of promotion actually get pulled back in recent weeks. So just curious how we should be reading the data for fall jurisprudence, maybe just some weekly volatility or if there's anything else going on. Thanks very much.

Yeah, our comment around just the promotional is really thinking about the full year, right? We have, because it's a pass-through category, wanting to make sure that customers and consumers are benefiting from a deflationary commodity, even if we're not crossing thresholds that would dictate a list price decline. So it's a bit of both, right? There is some opportunity to hold prices at a slightly lower level, but also enhance promotions.

And Max acknowledged that in the first quarter, Folgers did grow and effectively was sort of in line with flattish vol mix. And we continue to be very prudent in our volume mix assumptions for the coffee portfolio as we move forward. And we've been taking that approach consistently over the last several fiscal years.

Okay, thanks very much. Thanks, Max. Thank you. Next question is coming from Peter Grom from UBS. Your line is now live.

Great. Thank you. Good morning, everyone. So I wanted to ask a follow-up on my two-day class. I mean, the commentaries and the questions question was helpful, but I'm just curious from a C4 standpoint, how much of the research is really... Hey, sorry, Peter.

We're having... Peter, sorry to interrupt you. We're just having a tough time hearing you. You sound very muffled.

Is that any better?

That is better. Thank you.

Yeah, so sorry about that. So I wanted to just follow up on Sweet Baked Snacks. And I guess I'm just trying to understand the C store pressure. How much of it is the traffic dynamic you mentioned versus kind of lapping of the skew rationalization? And then, you know, you reiterated plans for stabilization. The quarter was in line with your expectations. So in that context, how should we think about top line performance evolving from here?

I'll start. The traffic dynamic seems to be somewhat persistent. It's hard to really pin down exactly what's driving it, but I would submit that gas prices are part of that, right? Where folks are filling up their tanks, but not necessarily continuing on into the store. I think that is part of the dynamic. on the traffic. So I do think, you know, we are maybe cautiously optimistic that an improvement and a reduction in prices at the pump might lead to better traffic, but I think we have to, it remains to be seen.

And with respect to the top line, on a four-year basis, we're probably advancing that business to being down low single digits. And that was as expected as anticipated. Your first two quarters are going to be down more than that, largely driven by lapping the skew rationalization of a year ago. And therefore your back half is going to feel more flattish in terms of the cadence of top line flow.

That's very helpful. And then maybe pivoting to peanut butter and spreads, you know, still under a bit of pressure here. So can you maybe just unpack what you're seeing from a category standpoint? and then, you know, as well as from a market share perspective. And then you touched on some of the actions you're taking with around the GIF brand. So kind of curious how you see performance evolving from here.

Sure, Peter. So we do still, you know, we're confident in our spreads business, both peanut butter and fruit spreads. We do consider them, if you think holistically, with our frozen handheld, right? You know, PB&J sandwiches, it's all part of the same occasion in many cases. And the softness in peanut butter in the category we don't believe is structural. We still have a lot of activity on GIF. We recently have refreshed the packaging on the brand. We just launched some new marketing that's only a few weeks in market that is really focused on expanding usage occasions, largely around snacking. It's pretty heavy on social right now, but there will be some broadcast media there as well. and so continuing just to lead with brand building and share a voice is important. And then addressing consumer trends like shorter ingredient decks. We just launched Jif Simply, which is actually performing very well. It's a two to three ingredient offerings of Jif, right? Very simple formulas. And then we also have four of the top five natural brands. So we still feel very good about peanut butter and then fruit spreads. We have acknowledged there's been some competitive activity, but we're at the beginning stages of a brand refresh on fruit spreads as well, starting with packaging. And that is going to extend over a couple of years.

Great. Thank you so much. I'll pass it on.

Thank you. Next question is coming from Steve Powers from Deutsche Bank. Your line is now live.

Hey, great. Thank you very much. Good morning. I wanted to ask actually on the transformation office, there was something that you called out in June as a contributor to the 27 earnings algorithm. I didn't see an update on productivity in today's release and related comments. Just maybe an update on how you're thinking about productivity and maybe the pipeline that's building even as we think about beyond 27.

Yes, Steve, good morning. We continue to see benefits from our transformation office. The excellent work that the teams continue to do to deliver cost and productivity and also advance ways of working, it very much resonates in our P&L. And it's also supportive in terms of helping deliver earnings. It's supportive in helping offset cost inflation. And it's also supportive in reinvesting in key platforms of the company. Rob, under his leadership now, he will continue to advance the transformation efforts. We will provide updates over time, and likely in future events and forums, we can continue to bring you and others along in those efforts.

Okay, very good. Thank you. And if I could ask another follow-up on Uncrustables, the strength seems broad-based. I'm just curious if there are particular pockets, whether retail, away from home, et cetera, where the business is particularly ahead of your expectations, more so than others? And is it that demand side of the equation that's prompted you to accelerate phase two of McCalla, or is it just the mere fact that you have a little bit more financial flexibility to accelerate it? Just curious as to the drivers of that decision. Thank you.

Steve, we continue to be pleased with the momentum on that brand. Uncrustables coming into the fiscal year, total company, total venture. We had an outlook of sort of mid single digits after achieving the billion dollar ambition last fiscal year. We've increased that outlook to sort of high single digits, really largely driven through the U.S. retail channels, but also acknowledging away from home channel as well has improved. and our ability to continue to support the growth in that business. We have made the decision to advance some pre-production expenses to start up capacity earlier in McCalla, Alabama.

Okay, very good. Thank you so much.

Thanks. Thank you. Next question is coming from Scott Marks from Jeffries. Your line is now live.

Hey, good morning, all. Thanks very much for taking your questions. I wanted to just ask about something that was noted in the prepared remarks as you were talking about the frozen handheld and spreads business. I think you actually said you had lower marketing spend in the quarter. So wondering if you can help us understand why that was the case. And then as you think about the incremental marketing spend for the rest of the year, it sounds like You know, across the board is one area where you're going to put some of this incremental spend. So I'm wondering if you just help us understand that dynamic as well. Thanks.

Yeah, in the quarter, frozen hand-on spreads has a little bit of lower marketing spend. That was largely driven by the timing of GIF. But we've remained committed to the marketing spend for the full year.

Okay, clear. And then just as we think about the Uncrustable brand, you made a number of comments about increased expectations for the year. You've commented on some of the areas for growth there. As we sit here today, do you have kind of a size of the prize, let's say, for that brand in terms of what you think your total addressable market could be for that. How big could that brand get? And for how many years do you see mid-to-high single-digit growth as we look out from today? Thanks.

Scott, it's Mark. We have not made any statements about and many more. All of our fundamentals being right and then just continuing to invest behind the brand. But I would just pause on making any future projections, but very, very comfortable with confidence in the continued growth of that brand and there being some really nice runway ahead, both in household penetration and just addressable market.

Appreciate it. Thanks.

Thank you. Next question is coming from Alexia Howard from Burns Senior Live. Is that live?

Good morning, everyone. Can I start focusing on Cafe Bustelo? I mean, it's obviously had incredible momentum over the last few years. 23% growth this quarter is obviously still incredibly impressive, although it's a bit of a slowdown, I think, from where we were a couple of quarters ago. Are there still distribution opportunities? My understanding is that it's still fairly concentrated regionally in the U.S. Would you expect this kind of momentum to continue out to the foreseeable future?

Alexia, thank you for that question. Bustelo has been a rocket ship, and I would note that the, you know, Almost every quarter there's been, or every quarter there's been double digit growth. Sometimes it's been a little bit lumpy. So I wouldn't necessarily take the 23% as necessarily a slowdown, but it is, there's a ton of runway on Bustelo. We do aspire, it's now a number six brand in the category. We aspire to get it into the top four. As you point out, there is distribution expansion opportunities. We continue to expand the brand in central and western regions. We've launched new roast profiles. Those have performed very well. And then recently, just some other ready-to-drink options. So the The authentic Latin heritage of that brand has really unlocked something unique with Gen Z and millennial consumers that are looking for something that's a little different. And I would say I mentioned our Game Face marketing campaign around The soccer event during the summer that really helped to drive sales as well. So just a really exciting brand that we continue to invest in.

Great. Thank you very much. And as a follow-up, can I just ask more broadly, what are the key sort of puts and takes or uncertainties both that could surprise positively or negatively as we look out through the rest of 27? It sounds though There might be a bit of conservatism on coffee volumes, understandably. Obviously, where coffee input costs is kind of an unknown at this point. But if you had to prioritize freight costs, obviously, we don't know where those are headed. If you had to prioritize the top sort of things that could surprise positively or negatively, what would those be?

Alexia, you know, we feel that our top line and bottom line guidance ranges are balanced. But as you think about opportunities, it would be ongoing momentum in your coffee portfolio where we've been conservative on volume mix assumptions. Better than expected sort of volume assumptions across your frozen handheld portfolio. Maybe better than anticipated sort of expectations in your pet portfolio as well. I think some of the downside would be, you know, consumers reaction to sort of the ongoing dynamic environment by which sort of they live. I think also you've got the ongoing cost inflation environment that we continue to navigate as well would be another area of potential sort of downside. But those would be sort of the drivers to the up and maybe some of the drivers to the down.

Perfect. Thank you so much. I'll pass it on.

Thank you. Our next question is coming from Rob Dickerson from U.S. Bank Corp. Your line is now live.

Great. Thanks so much. There's just a question on Uncrustables and the new facility. Is the new facility, and you might have stated this before, but I just don't remember, so apologies if so, but is the new facility just adding kind of standard issue capacity to do with the brand? Hey Rob, it's Mark.

This phase of the Alabama facility, it's a second phase. It's already been built out. Basically, turning it on requires us to staff it, right, and then activate it. But it is focused on base, our core format of crimped soft bread Uncrustables.

Okay, fair enough. And then I guess just A lot of questions have been asked. So thinking through kind of the next few months, obviously we're essentially already in the back-to-school period, and then we go into Halloween, fall bake. um you know is there anything just give you the opportunity kind of you know note of like you know strategy into back to school very broadly speaking like we have some products we will be pushing more right around the back school period there's activation on different flavor on I don't know hostess and Halloween anything like that just that we should be aware of thanks um

Nothing specific to call out, but a resounding yes in terms of making sure that we are taking advantage of the key promotional periods, holidays, and so forth. So, you know, as stuff comes into market, we'll be sure to point that out to you guys.

All right, great. Thanks so much, Mark. Thank you. I will now turn the conference call back to management to conclude.

Thank you for joining us this morning. As we have shared in our prepared remarks, our fiscal year 2027 first quarter results highlight the strength of our differentiated portfolio, disciplined execution against our strategic priorities, and the investments we continue to make in our brands and capabilities. Our strategy is working and the strong foundation we have established gives us confidence in our ability to deliver long-term growth and increase shareholder value. We hope many of you will be able to join us in Boston at the Barclays Global Consumer Staples Conference in two weeks. A live webcast of our presentation on September 8th at 1245 PM Eastern can also be accessed from our investor relations website. Have a great day.

Everyone, this concludes our conference call for today. Thank you for participating and have a nice day. All parties may now disconnect.