EPS of $-6.21 decreased by 645.6% from previous year
Gross margin of 40.2%
Net income of -662.30M
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The J. M. Smucker Company (JM2.DE) QQ3 2025 Results Analysis – Margin Contraction and Charge-Heavy Quarter in the Consumer Defensive Food Confectioners Landscape
Executive Summary
The J. M. Smucker Company reported a challenging QQ3 2025, with revenue of $2.186 billion representing a YoY decline of 1.94% and a QoQ decline of 3.75%. The quarter was characterized by a pronounced margin collapse: gross profit of $878.1 million yielded a gross margin of 40.17%, yet operating income turned negative at $(594.0) million and EBITDA was $(445.0) million, driving an EBITDAR of negative 20.36%. Net income posted a substantial loss of $(662.3) million and EPS of $(6.22), reflecting a heavy burden from non-operating charges and impairment-like items totaling roughly $1.1045 billion in other expenses. Notwithstanding the bottom-line weakness, the company generated solid operating cash flow of $239.4 million and free cash flow of $151.3 million, underscoring the distinction between accounting profitability and cash generation amid working-capital movements and non-cash charges.
Net Income: $(0.662)B; Net Margin -30.30%; YoY -650.08%; QoQ -2603.27%
Financial Highlights
Overview of key metrics with YoY and QoQ context (USD, in billions unless noted):
- Revenue: $2.186B; YoY -1.94%; QoQ -3.75%
- Gross Profit: $0.878B; Gross Margin 40.17%; YoY +6.68%; QoQ -0.90%
- EBITDA: $(0.445)B; EBITDA Margin -20.36%
- Operating Income: $(0.594)B; Operating Margin -27.17%; YoY -299.73%; QoQ -450.03%
- Net Income: $(0.662)B; Net Margin -30.30%; YoY -650.08%; QoQ -2603.27%
- EPS (diluted): $(6.21); YoY -645.61%; QoQ -2604.35%
- Operating Cash Flow: $0.239B
- Free Cash Flow: $0.151B
- Cash at End of Period: $0.0472B
- Total Assets: $18.4256B; Total Liabilities: $11.5183B; Total Equity: $6.9073B
- Cash & Equivalents: $0.0472B; Net Debt: $7.8899B; Debt/Capitalization: 0.535; Debt/Equity: 1.149
- Current Ratio: 0.601; Quick Ratio: 0.270; Cash Ratio: 0.0143
- DSO, DIO, CCC, DPO: 26.94 days; 74.75 days; 101.69 days; 77.99 days
- P/S: 5.20; P/B: 1.647; P/E: negative; P/FCF: 75.17; Dividend Yield: 1.01%
- Net Debt / EBITDA proxy: negative EBITDA and elevated leverage underscore liquidity considerations
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
2.19B
-1.94%
-3.75%
Gross Profit
878.10M
6.68%
-0.90%
Operating Income
-594.00M
-299.73%
-450.03%
Net Income
-662.30M
-650.08%
-2 603.27%
EPS
-6.22
-645.61%
-2 604.35%
Key Financial Ratios
currentRatio
0.6
grossProfitMargin
40.2%
operatingProfitMargin
-27.2%
netProfitMargin
-30.3%
returnOnAssets
-3.59%
returnOnEquity
-9.59%
debtEquityRatio
1.15
operatingCashFlowPerShare
$2.25
freeCashFlowPerShare
$1.42
dividendPayoutRatio
-17.3%
priceToBookRatio
1.65
priceEarningsRatio
-4.29
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Transcript highlights are not provided in the supplied data. No earnings call transcript content or management quotes are available to extract thematic insights or quotes. If you can supply the QQ3 2025 earnings call transcript, I will extract thematic quotes by management on strategy, cost actions, and market conditions with proper attribution.
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Forward Guidance
No explicit forward guidance was provided in the supplied data. Consequently, qualitative assessment relies on the quarter’s cash generation, leverage trajectory, and industry dynamics. Based on QQ3 2025 results, the near-term outlook hinges on: (1) stabilizing gross margins, (2) de-leveraging and strengthening liquidity given current ratios below 1.0, (3) sustaining positive operating cash flow and incremental free cash flow to support debt reduction and capital allocation, and (4) managing non-operating charges and any impairment exposure. Investors should monitor management commentary on cost-reduction initiatives, portfolio optimization, commodity and freight costs, price/mromo (pricing and mix) resilience, and any updates to capital allocation commitments (dividend policy, opportunistic buybacks, or strategic investments). In a scenario where non-operating charges normalize and cost-reduction efforts take hold, revenue stability combined with improved operating leverage could drive a more constructive margin trajectory into the next fiscal year.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
40.17%
-27.20%
-9.59%
-4.29%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Bottom-line profitability remains challenged in QQ3 2025 due to heavy non-operating charges and a negative operating trajectory, despite positive cash flow generation. The stock carries a high leverage burden and limited near-term liquidity headroom, warranting a cautious stance. The investment thesis hinges on execution of cost containment, portfolio optimization, and improving working capital to stabilize margins and de-lever the balance sheet. If management can translate the cash-flow strength into sustained debt reduction and a step-change in operating margins, the stock could re-rate on cash-flow durability and balance-sheet health. Conversely, persistent impairment risk, continued margin compression, or weaker-than-expected consumer demand could sustain a challenging earnings cycle. Monitor management’s cadence on cost initiatives, capital allocation priorities (dividends vs. buybacks vs. reinvestment), and any updates to guidance or impairment assessments.
Key Investment Factors
Growth Potential
Diversified consumer staples portfolio with leading brands across coffee, consumer foods, and pet foods supports resilience to macro shocks. Potential upside from price/mix optimization, category expansion in higher-margin SKUs, and global distribution expansion through International & Foodservice channels.
Profitability Risk
High leverage and weak near-term liquidity metrics (current ratio 0.601) raise refinancing risk and constraint flexibility. Significant goodwill and intangible assets create impairment risk in a softer macro environment. Dependence on input costs and currency movements adds volatility to margins. The negative net income in QQ3 2025 highlights earnings volatility and potential equity value erosion if cash conversion does not sustain.
Financial Position
Balance sheet shows substantial intangible assets and goodwill (>$13B combined) against $7.94B total debt and only $47M in cash, yielding elevated leverage ratios (Debt/Capitalization ~0.535; Debt/Equity ~1.15). However, positive operating cash flow and free cash flow provide a buffer for debt service and potential investment in operational improvements. Liquidity could improve if working-capital efficiency and cost controls are enacted.
SWOT Analysis
Strengths
Strong, diversified brand portfolio in consumer staples (coffee, baking, confections, pet foods) providing defensible cash generation and functional resilience to short-term macro shocks.
Solid long-term franchise value and scale in the U.S. retail channels with international distribution presence.
Weaknesses
Material operating losses in QQ3 2025 driven by heavy other expenses and non-operating charges.
Very leveraged balance sheet with poor short-term liquidity indicators (current ratio 0.601) and minimal cash on hand.
High intangible and goodwill load increases impairment risk and complicates equity trajectory.
Opportunities
Cost-reduction initiatives and SG&A optimization to restore operating margin levers.
Portfolio optimization and pricing strategies to improve mix and margins.
Potential upside from growth in International & Foodservice and pet foods segments, expanding distribution and e-commerce reach.
Threats
Macro consumer spending weakness in discretionary segments could pressure volumes.
Commodity price volatility and supply-chain costs impacting input costs and logistics.
Regulatory developments and currency fluctuations could amplify earnings volatility given the international footprint.
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