JM Smucker (NYSE:SJM) held its fourth-quarter earnings conference call on Tuesday. Below is the complete transcript from the call.
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Summary
JM Smucker reported fiscal 2026 fourth quarter results with expectations of mid-single-digit deflation mainly due to green coffee, while anticipating low single-digit inflation excluding coffee.
The company expressed confidence in its coffee segment, highlighting the growth of the Bustelo brand and expected profit improvements from moderating commodity costs.
Uncrustables brand continues to perform well with a transition to fridge-friendly format expected to complete by mid-summer, supporting mid-single-digit growth expectations.
The company focuses on stabilizing and improving profitability in sweet baked snacks, particularly Hostess, with a projected 30% profit growth driven by improved cost management.
JM Smucker plans to achieve a 3x leverage profile by the end of fiscal 2027, paying down $500 million in debt, and may consider share repurchases in the future.
Marketing spend is projected to be up $30 million year-over-year, and the company remains committed to supporting brand growth through strategic investments.
Full Transcript
OPERATOR
Good morning and welcome to the James smucker company's fiscal 2026 fourth quarter earnings question and answer session. This conference call is being recorded and all participants are in 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 Bening, Vice President of Investor Relations and Financial Planning and Analysis. Thank you. You may begin.
Crystal Bening (Vice President of Investor Relations and Financial Planning and Analysis)
Good morning and thank you for joining our fiscal 2026 fourth quarter earnings question and answer session. I hope everyone had a chance to review our results as detailed in this morning's prepared press release and management's prepared remarks which are available on our corporate [email protected]. we will also post an audio replay of this call at the conclusion of this morning's Q and 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 may 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 hand held in spreads and sweet baked snacks.
We will now open the call for questions. Operator, please cue up the first question.
OPERATOR
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 one on your telephone. If you wish to withdraw your question, please press star 2. For operator assistance, please press star 0. As a reminder, please limit yourselves to two questions during the Q and A session. Should you have additional questions, you may re queue and the company will take questions as time allows. Our first question today is coming from Andrew Lazar from Barclays. Your line is now live.
Andrew Lazar (Equity Analyst at Barclays)
Great. Thanks so much. Good morning everybody.
Tucker Marshall (Chief Financial Officer, Executive Vice President, Frozen Handheld and Spreads & Sweet Baked Snacks)
Good morning. Morning.
Andrew Lazar (Equity Analyst at Barclays)
Morning. Maybe, you know, maybe to start, I know one of the biggest points of uncertainty for the group currently is really the macro outlook and what that might mean for costs. You know, understanding the challenge of needing to guide, you know, to a full year in the context of this environment. I guess I'm curious what sort of visibility you have to your low single digit inflation outlook, excluding coffee in terms of hedges and such. And you know, is there a risk that this estimate could ultimately be higher as it moves through the year if sort of the macro environment persists and sort of the offsets that you might have in terms of productivity generation to manage through that.
Tucker Marshall (Chief Financial Officer, Executive Vice President, Frozen Handheld and Spreads & Sweet Baked Snacks)
Andrew, good morning and thank you. As you've noted, within our full year outlook we do expect mid single digit percentage deflation and again that's largely driven by green coffee. But as you've shared, excluding green coffee and tariffs, we do anticipate cost inflation of low single digits across the balance of our portfolio. And that's largely coming through packaging, ingredients and transportation. And we have embedded our best outlook for those increases in our current guidance.
And as you know, in any given fiscal year, we'll monitor and address any additional cost inflation either through how we procure the given item or how we think about our hedging strategy, along with ongoing cost and productivity savings inclusive of taking pricing when and where appropriate. And so right now this really reflects the best estimate, and again, we look to absorb these changes within our total guidance range. And just acknowledging that the primary driver, of this is the geopolitical tensions in, the Middle East and depending upon the duration of those, does have an implication to the cost outlook and how we manage over time.
Andrew Lazar (Equity Analyst at Barclays)
Then in coffee, you know, given the expected mid single digit price decline or price realization year over year for the coming year, I guess why wouldn't we expect a somewhat greater volume outcome or volume improvement with pricing moving lower? Thanks so much.
Mark Smucker (Chair of the Board and CEO)
Thanks Andrew. I'll take the second question. This is Mark, of course, I can't help but at least comment first of all, that we had a great quarter and a solid outlook for our new fiscal year. And so just, you know, feeling positive about the momentum in our business and overall, the portfolio that we have being both complementary and cohesive, you know, just because we play in different categories, but they all work together to achieve a great whole.
And then specific to your question, just on coffee, you know, it is a great category. We continue to lead the category across segments and the value spectrum with Bustelo being a very significant growth brand now beyond half a billion dollars in sales. So just confident in our ability to continue to manage our branded position in coffee as well as our commodity. And as we noted, we do expect to see profit improvement in coffee from the moderating commodity. And as it relates to how we're thinking about forecasting the business, we really just wanted to be frankly prudent in terms of how we're factoring in elasticities. We acknowledge we did have some favorable, more favorable than expected elasticities in the inflationary Period. But just acknowledging that the consumer continues to be cautious.
We wanted to be prudent in how we model the deflation. And as we are starting to give back some pricing to the consumer in the form of trade, just making sure that we're thinking about those elasticities and the trends in the category from a prudent perspective. So that's really the driver there.
Andrew Lazar (Equity Analyst at Barclays)
Great, Very helpful. Thanks so much.
Tucker Marshall (Chief Financial Officer, Executive Vice President, Frozen Handheld and Spreads & Sweet Baked Snacks)
Thank you.
OPERATOR
Next question today is coming from Peter Galbo from Bank of America. Your line is now live.
Peter Galbo (Equity Analyst at Bank of America)
Hi, good morning. Thank you for the questions. Mark, I was hoping to press a little bit on that last point you made around prudence as it relates to the top line guide for the year. Obviously talking about flat sales in the first quarter and then a deceleration, I suppose, to get to the the full year down 3% to 4%. So understanding that maybe there's some prudence baked into the coffee side of the equation, maybe you can just touch a little bit more on prudence in the other segments. Particularly I think frozen handheld may be down despite uncrustable growth potential. Just if you could provide a little more detail there, please.
Mark Smucker (Chair of the Board and CEO)
Sure. So if you think about our frozen handheld and spreads business, I think it's important to think about that business holistically. Right. Because we are seeing a little bit of pressure in spreads. But our Uncrustables brand continues to perform very well. And so it is. If you think about that holistically, it's a peanut butter and jelly story. It's a sandwich story. Right. And Uncrustables hit a billion dollars. So we have tremendous performance in Uncrustables. And you know, we do expect to continue to see growth in the Uncrussables brand.
And that's going to continue to be driven by the breadth of our position in the frozen category both, and that includes our offerings, the fact that we're addressing consumer needs both through flavors, through formats, and also different occasions, notably with the higher protein sort of morning offering, if you will, and now fridge friendly. So our position in Uncrustables continues to give us great confidence that we will continue to see growth.
It won't be double digit growth, but nonetheless, as the leader in the category with the strongest share of voice, we do continue to believe that there is Runway both through distribution, household penetration, innovation, and then ultimately strategic investments in supporting the brand through our brand building efforts. So again, great confidence in Uncrustables overall. And then just the total spreads and handheld category being more about that PB&J total story
Peter Galbo (Equity Analyst at Bank of America)
okay, thanks for that, Mark. And just as a follow up, Tucker, there's obviously been some trade press around potential further actions on a portfolio review basis as it relates to the Hostess business. Just curious as you all are evaluating potential options, just how you're thinking about portfolio construction and potential for further actions across the portfolio. Thanks.
Mark Smucker (Chair of the Board and CEO)
Yeah, Peter, it's Mark. I'll take that as well. You know, as we think about our portfolio in general, we've been on this journey for quite some time in terms of our portfolio. We always consider the make up our portfolio and so that's something that is important to us. But what I would focus on right now is as it relates to sweet baked snacks and Hostess, our focus continues to be stabilizing that business and improving profitability. Notably, we have strengthened the portfolio in terms of SKU rationalization. Obviously don't grew 13% and represents about 40% of the portfolio. So that breakfast occasion for Hostess continues to perform very well. I would also highlight that we did complete our manufacturing footprint consolidation and although we did have a fire in the prior quarter, we did recover from that more quickly than expected.
So definitely some positive indicators, some innovation, notably Suzy QS among some of our other seasonal and LTO things. We're going to continue to focus on stabilizing the portfolio and it's going to take some time and it's going to take a bit of time until we actually see top line growth. But suffice it to say, stabilizing the business and improving profitability is where we're focused right now.
Peter Galbo (Equity Analyst at Bank of America)
Great, thank you.
OPERATOR
Thank you. Next question today is coming from Tom Palmer from JPMorgan. Your line is now live.
Tom Palmer (Equity Analyst at JPMorgan)
Good morning. Thanks for the question. In the prepared remarks you gave some specific margin expectations for coffee and sweet big snacks. I wonder if you might give some added detail for frozen handheld spreads and pet segments. So for pet, do you expect low single digit top line growth to translate to profit growth and then for frozen handheld, to what extent might the margin strength of the fourth quarter be sustained into 2027? Thank you.
Tucker Marshall (Chief Financial Officer, Executive Vice President, Frozen Handheld and Spreads & Sweet Baked Snacks)
Yeah, Tom, as you think about the construct of our 85 cent EPS growth year over year, what you're really seeing is 75 cents coming through our business portfolio which is driven by segment profit growth from both coffee and Hostess being offset by frozen handheld and pet. And really when you think through that is the coffee growth year over year is largely coming through lapping unmitigated tariffs and the green coffee deflation that is beginning to materialize through the portfolio. Hostess growth year over year is largely Driven by improved cost outlook inclusive of a list price increase to cover cost inflation and then frozen handheld.
And spreads will be down year over year as volume momentum in uncrustables is offsetting the spreads portfolio, but also as we continue to make strategic investments across uncrustables and we support marketing of that brand as well. And then within the pet portfolio, we see continued volume momentum across both Meowmix and Milkbone. But we are also making investments in terms of marketing and the inflation that we're experiencing is largely impacting our pet portfolio. And then lastly is, as you just think about the momentum of the portfolio, we do expect the away from home business to roughly be flat year over year from a profit standpoint.
Tom Palmer (Equity Analyst at JPMorgan)
Right. Thanks for all that detail. I did have a follow up on marketing. I think relative to what was laid out in the third quarter, marketing was a lot lower in the fourth quarter. Just any color on the decision to pull back in the fourth quarter and kind of how quickly it ramps up to start out the year. Thanks.
Tucker Marshall (Chief Financial Officer, Executive Vice President, Frozen Handheld and Spreads & Sweet Baked Snacks)
Yeah. So we are committed to supporting the growth of our brands and the development of our brands through ongoing marketing. And we've called out that we're about 5.7% of net sales for the upcoming fiscal year. It's going to look like up $30 million year over year, almost a half a billion dollars spend, and it will be fairly balanced throughout the year. But it will begin in our first quarter in terms of those investments to support the portfolio.
And I would just say there was nothing abnormal in our fourth quarter. It was probably more just around timing and focusing around various activities. But again, we are committed to the portfolio and the spend of those marketing dollars as we move forward.
Tom Palmer (Equity Analyst at JPMorgan)
Understood. Thank you.
OPERATOR
Thank you. As a reminder that Star One is to be placed into question queue, our next question is coming from Robert Moscow from TD Cowan. Your line is now live.
Robert Moscow (Equity Analyst at TD Cowen)
Hey there. Thanks, Tucker And Mark, there's some comments about what the Transformation Office is up to. They're rather brief and a lot of your peers are doing some accelerated work to reduce overhead costs and you might have some opportunities that you want to get to. Is there anything that you're looking at to accelerate the efforts of the Transformation Office, if not in fiscal 27, maybe even a year from now? Yeah, Rob, we remain committed to ongoing
Tucker Marshall (Chief Financial Officer, Executive Vice President, Frozen Handheld and Spreads & Sweet Baked Snacks)
and annual cost and productivity initiatives. And I would say that each fiscal year we target a gross cost savings amount, that is a couple points of revenue to support either reinvestment in the business, to cover inflation or to ultimately return to shareholders as we think about the ongoing positive momentum of our transformation efforts under Rob Ferguson's leadership. He's really thinking about the next generation which is refilling a multi year pipeline and really begin to focus on really two areas. I would say our make. He would refer to it as our buy, make and move environments within our supply chain. And also how we think about bringing technology forward to advance our cost picture as a company.
And so over time we will be able to share more with you and others as we think about sort of the next phase of our transformation efforts.
Robert Moscow (Equity Analyst at TD Cowen)
Okay, thank you.
OPERATOR
Thank you. Next question today is coming from Chris Carey from Wells Fargo Securities. Your line is now live.
Chris Carey (Equity Analyst at Wells Fargo Securities)
Hi, thanks so much. I wanted to start with coffee and just get a bit more context on the pricing actions. First is just from a timing perspective, at what point are you transitioning from trade spending into list price reductions? And then is that pricing strategy happening across the portfolio or is it primarily focused on the roast and ground piece given the proximity to the actual green coffee commodity?
Mark Smucker (Chair of the Board and CEO)
Chris, thanks. It's Mark. You know what we coffee is a pass through category, right? So we do pass through up and down costs to our customers and our consumers. We always are. We do it prudently, we do it in a justified manner. When we speak with our retail customers, we certainly are going to have conversations that are, you know, fair and justified as we take those, as I did mention and you point out, you know, currently focus a bit more on trade.
You know, we can't commit to specific timing, but what I will tell you is when we do cross key thresholds that are essentially dictated by us, the timing of when we take physical inventory of lower cost coffee that would dictate when we would actually take a list price decline. But we want to make sure that we of course continue to take a measured approach that also supports our financial goals for the year and our ability to both be fair with our customers and consumers and of course deliver some degree of profit recovery, which you've seen in our guidance.
Tucker Marshall (Chief Financial Officer, Executive Vice President, Frozen Handheld and Spreads & Sweet Baked Snacks)
Chris, I would also acknowledge from a flow standpoint, if we've called out a down 3 to down 4% of top line net sales.
Chris Carey (Equity Analyst at Wells Fargo Securities)
In our prepared remarks we talked about
Tucker Marshall (Chief Financial Officer, Executive Vice President, Frozen Handheld and Spreads & Sweet Baked Snacks)
our first quarter being flattish. We'll really begin to experience the deflation associated with green coffee and our second quarter onward. Just to give you a sense of kind of the flow through the year from a top line standpoint.
Chris Carey (Equity Analyst at Wells Fargo Securities)
Okay, understood. The second question is on sweet baked snacks. The outlook for the year I think implies something in the 30% growth range from A profit perspective given the margin improvement you're expecting? Thereabouts. Anyways. The visibility of this business has been a bit challenged in recent quarters. Can you just give us a sense on your ability to forecast accurately this business, how you feel about that? How did fiscal Q4 come in relative to your own expectations and maybe a bit more context on the confidence that you have in a strong profit acceleration for the business in fiscal 27. Thanks.
Mark Smucker (Chair of the Board and CEO)
Yeah, I'll start and maybe pass it to Tucker if he has anything to add. We've gotten our arms around this business in terms of visibility, as you point out. You know, last year we did have some challenges with trade and the timing of that. I think we've done a very nice job and I have to give the team and Judd a lot of credit just in terms of how we're managing through this, both in terms of the production network, the consistency of how we're producing the products, as well as how we are consistently managing our customer and trade relationships.
Tucker Marshall (Chief Financial Officer, Executive Vice President, Frozen Handheld and Spreads & Sweet Baked Snacks)
And Chris, I would acknowledge that your direction of up about 30% year over year from a segment profit standpoint is correct. We believe that we continue to work to control costs within our bakery environment. We continue to focus on executing the best level of trade against the brand or the portfolio. We are taking a list price increase across the donuts portfolio in certain select areas. And as we think about the objectives for this year, it's stabilize the business and achieve our profit targets and then over time work to growth across the portfolio.
But we also acknowledge that we will continue to deal with both headwinds and tailwinds. But we're confident, as Mark said, with the visibility that we have and the fact that the teams have their arm around. Their arms around, excuse me, what needs to be accomplished.
Chris Carey (Equity Analyst at Wells Fargo Securities)
Okay, thank you.
OPERATOR
Thank you. Our next question today is coming from Max Gumport from bmp. Powered by your line is now live.
Max Gumport (Equity Analyst at BMP)
Hey, thanks for the question. First, I just wanted to talk about the spreads business you called out. There was weakness partly due to broader category dynamics and partly due to the decision not to repeat certain promotional activities. I was hoping to get a bit more color on both. So one, what you're seeing in the category and then two, on this decision not to repeat promo activity. We've heard others in the industry talk about consumers waiting to buy in promotion and that leading to poor returns. Are you seeing this dynamic as well? Thanks very much, Max.
Mark Smucker (Chair of the Board and CEO)
Our spreads business obviously is a key component of our frozen handheld and spreads. And what I would tell you is having chosen not to repeat Some of the promotional activity, the behavior of the categories themselves, as well as competition within there continues to be mostly rational. We're not seeing unusual activity in the peanut butter category specifically. Obviously we're the leader in both categories and some of the softness that you have seen in the peanut butter category was in part driven by some volatility. There have been some weather events, some stock up because of storms and so forth. We do not believe that this is structural in the peanut butter category. We think that those are generally one off events.
And we will continue to focus on our leadership position in the peanut butter category by continuing our strong share of voice and brand building efforts and just reminding the group that we do play across that entire segment. So having the leading stabilized peanut butter and then also four of the five leading brands of natural and organic peanut butter, we are well positioned. And then notably we just launched this Jif Simply product which is a limited ingredient stabilized peanut butter which again is intended to lead where the consumer in some cases is moving towards. So feel very good about the portfolio in peanut butter and spreads broadly. And then over the coming year plus we will continue to make strides to improve our fruit spreads business as well.
But I would think about both the peanut butter and jam segments as foundational to our total frozen handheld and spreads business.
Max Gumport (Equity Analyst at BMP)
Great. Really appreciate all that color. And then on uncrustables in the fridge friendly format that we'll be launching very shortly. Just curious as one if you've got any insights on how on retail or reception and maybe even pipeline fill and then how that is looking then also if you're able to quantify what exactly is embedded in your outlook from this innovation and as also really just any difference in the margin profile of the fridge friendly versus the core product. Thanks very much.
Mark Smucker (Chair of the Board and CEO)
So first of all, thanks for the question. Great reception on fridge friendly, right? So both consumers and customers look to be very excited about that. Keep in mind that all uncrustables will be fridge friendly. So we are transitioning every sandwich to that format and the entire portfolio probably in the mid summer timeframe. So we're very close. Everything you see in the stores should be fridge friendly.
Tucker Marshall (Chief Financial Officer, Executive Vice President, Frozen Handheld and Spreads & Sweet Baked Snacks)
Max, as you think about uncrustables now being a billion dollar brand total company, you know our outlook for that business for FY27 is mid single digit growth which is really driven by volume mix momentum, just partially offset by some strategic investments. And then as you think about the composition of the portfolio, about 75% of Uncrustables go through traditional US retail sales and the balance of 25% go through away From Home. We'll see a slightly faster growth rate in Away from Home just based on its relative size and incremental opportunities. As we have prioritized over the years, the growth in US Retail ahead of Away from Home. But it continues to be a bright spot for the company and a very positive story. And we see great momentum across the portfolio through innovation. And the one example of innovation is the fridge. Friendly.
OPERATOR
Thank you. Our next question is coming from Megan Clapp from Morgan Stanley. Your line is now live.
Megan Clapp (Equity Analyst at Morgan Stanley)
Hi, good morning. Thanks so much. Maybe to follow up there, Tucker, just on crustables, in terms of the strategic investments with price being down slightly, I believe you took a price increase on the brand. I think it was for the first time in three years last year. So just in the context of that, can you maybe just unpack a bit more about where those investments are focused specifically? Thank you, Megan.
Tucker Marshall (Chief Financial Officer, Executive Vice President, Frozen Handheld and Spreads & Sweet Baked Snacks)
Over time we've talked about the importance of advancing the volume growth momentum of the portfolio both in traditional retail and away from home. And we're doing that through base distribution, we're doing that through innovation. And at times we're also doing that through pricing as well. And pricing is not only strategic, but it's also to recover some inflation as well. And so as we move forward, the important thing for us, and we've talked about this on the last couple of earnings calls over the last few fiscal years, is just to acknowledge that we need to continue to make sure that we have the right price and promotion, that is merchandising. We need to make sure that we advance marketing behind the brand and we will continue to absorb ongoing manufacturing costs as we bring on additional capacity to support the future growth.
And so this fiscal year is really just a demonstration of now growing off the billion dollar mark where we're seeing nice volume momentum. But we will strategically make the right decisions around pricing to support the brand and its growth and overall momentum in the portfolio.
Megan Clapp (Equity Analyst at Morgan Stanley)
Great, that's helpful. And then maybe a follow up on tariffs in the prepared remarks or in the release you mentioned that the outlook does not assume any impact from tariff refunds at this point. Could you just maybe give any guardrails around the potential opportunity there? Have you applied for refunds? I think it depends on whether you're the direct importer of record or not. And just help us understand anything in terms of timing or magnitude that you could share. And if refunds were to materialize, would you expect that could flow through to the bottom line or would you be more inclined to reinvest some of that. Thank you.
Tucker Marshall (Chief Financial Officer, Executive Vice President, Frozen Handheld and Spreads & Sweet Baked Snacks)
Yeah, Megan, Big picture. I would acknowledge that we experienced tariffs in FY26 and we continue to experience tariffs at the 10% level in our FY27 outlook. We are pursuing tariff refunds previously paid, but you know, honestly, the scope and realization remains uncertain and we've just made the decision not to factor any of these decisions into our outlook. And we're continuing to monitor and assess any changes to existing tariffs or new tariffs and we'll continue to provide updates over time.
But I think at this point in time, for us to make any declarations is probably not appropriate just as we navigate the overall environment.
Megan Clapp (Equity Analyst at Morgan Stanley)
Fair enough. Thank you.
OPERATOR
Thank you. Next question is coming from Scott Marks from Cherry. Your line is now live.
Scott Marks (Equity Analyst at Cherry)
Hey, good morning all. Thanks very much for taking your questions. First thing I wanted to ask about just in the quarter, as we think about both the frozen handheld segment and the PET segment profitability, I think they came in materially ahead of what folks were expecting. Just wondering if you can help us understand the drivers of that and maybe quantify magnitude of contribution from those drivers.
Tucker Marshall (Chief Financial Officer, Executive Vice President, Frozen Handheld and Spreads & Sweet Baked Snacks)
Yeah, we had roughly a 15 cent sort of over delivery to expectations in our fourth quarter of of last fiscal year and I would say we saw some volume benefit. We saw a little bit of an improvement in our gross profit margin and then we worked to control our SDNA expenses in the quarter. What we saw in the fourth quarter on frozen handheld and spreads was just nice momentum across our uncrustables portfolio as we continue to support and advance that brand. And PET came in nicely just due to the underlying momentum in Meow Mix, seeing some signs of stability in snacks but also acknowledging too their ability to control costs in the quarter as well. And I just think those elements enabled us to finish a strong fiscal year and carry that momentum into our current fiscal year as we announced our guidance today.
Scott Marks (Equity Analyst at Cherry)
Okay, appreciate the color there. And then just second one for me. I know you gave some commentary around Q1 expectations as well as expectations for the coffee segment. Kind of top line cadence through the year as we look maybe through the rest of the business, the other segments, marketing, spend, sdna. How should we be thinking about cadence as we Progress through fiscal 27?
Tucker Marshall (Chief Financial Officer, Executive Vice President, Frozen Handheld and Spreads & Sweet Baked Snacks)
Yeah. So as you think about earnings per share, we talked about a kind of a mid teens Q1. I would just acknowledge that our second quarter will be better than mid teens and then our third quarter would be sort of low single digits and then our fourth quarter would be flat to slightly down as you think about the flow over, over the year and again, that will, that, that will change directionally because we're not trying to sort of articulate quarterly guidance, but we understand that you kind of have to model sort of the outlook.
So hopefully that provides some, some context. And we're certainly happy to follow up with you post call here.
Scott Marks (Equity Analyst at Cherry)
Okay, appreciate it. We'll pass it on.
OPERATOR
Thank you. Next question is coming from Rob Dickerson from btig. Your line is now live.
Rob Dickerson (Equity Analyst at BTIG)
Great. Thanks so much. Excuse me. Just to circle back on coffee, I guess one more time. You know Tucker, just given all the comments you've already made on the call today, it's a very easy clarification question. I know you had stated the prepared remarks that retail coffee will return to the high 20s in fiscal year 27, but clearly it sounds like the real benefit starts to come through in Q2. So I'm assuming the assumption here is that Q1 is a little bit more muted and then really that benefit in high 20s is really a Q2 to Q4 event. Is that fair?
Tucker Marshall (Chief Financial Officer, Executive Vice President, Frozen Handheld and Spreads & Sweet Baked Snacks)
You are correct.
Rob Dickerson (Equity Analyst at BTIG)
All right. Simple enough. All right. And then just, I guess just to kind of touch on capital structure kind of where you stand. Haven't talked about it yet. On the call did almost 1.2 billion in free cash flow in 26, which was great, almost company high. Now we're looking for I guess around a billion in fiscal 27, you know, inclusive of probably some of the inventory benefits, especially on coffee. And you just paid down, I think 500 million or so in debt in the back half of the year in 26. So kind of like, you know, as we think about any capital, real capital needs in 27 kind of vis a vis the free cash flow. Like is this, you know, are we at a point now or maybe you feel pretty good about your leverage. You don't have as much of a deleverage need. And I know you kind of called out, you know, the guidance excludes any type of share repurchase.
So just trying to get a view as to kind of where, where you would like to place any of the excess capital and kind of how that relates to where the current stock price is. Thanks a lot.
Tucker Marshall (Chief Financial Officer, Executive Vice President, Frozen Handheld and Spreads & Sweet Baked Snacks)
Yeah. Rob, we remain committed to our financial priorities and policies and to generating a billion dollars or greater in free cash flow in support of our cash deployment model. And as you noted, in fiscal 26 we had a billion two of free cash flow. That benefit enabled us to pay down over $700 million of debt and pay just over $450 million of dividends. So as we move forward, we remain committed to free cash flow generation after capital expenditures which are roughly flat year over year, $325 million. We want to make sure that we support the quarterly dividend and grow it where and when appropriate.
We also acknowledge too that we want to pay down an additional $500 million of debt because that'll support getting down to around a three times leverage profile by the end of this fiscal year. And as a reminder, we exited this past fiscal year around 3.8 times. As we begin to achieve our leverage objectives, that opens up additional opportunity for capital or cash deployment where we could contemplate potential share repurchases in the future.
OPERATOR
Thank you, we've reached the end of our question and answer session. I'd like to turn the floor back over to Mark for any further closing comments.
Mark Smucker (Chair of the Board and CEO)
Thank you and thank you all for joining us this morning as we shared in our prepared remarks. Our fiscal year 26 results highlight the strength of our focused strategy and portfolio optimization efforts and our differentiated portfolio is delivering results. We are pleased with the momentum of our portfolio as we enter fiscal year 27. Our focus is on our three strategic priorities of driving focused organic volume growth across our key platforms, improving profitability and accelerating earnings growth for the company, and maintaining a disciplined approach to capital deployment. Our strategy is working and the strong foundation we have established gives us confidence in our ability to increase shareholder value and deliver long term growth for the company.
In closing, I would like to thank our employees for their unwavering focus, dedication and outstanding contributions. Their efforts continue to drive our momentum and position us for future success. Have a great day
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.
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