What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-26 compared with 2024-08-28 · 149 added, 96 removed, 268 unchanged (48% of the section changed)

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(Dollars and shares in millions, unless otherwise noted, except per share data)

This discussion and analysis deals with comparisons of material changes in the unaudited condensed consolidated financial statements for the three months ended July 31, 2024 and 2023.

This discussion and analysis deals with comparisons of material changes in the unaudited condensed consolidated financial statements for the three and six months ended October 31, 2024 and 2023.

All comparisons presented are to the corresponding period of the prior year, unless otherwise noted.

On October 22, 2024, we entered into a definitive agreement to sell the Voortman business to Second Nature.

We expect the transaction to close during the third quarter of 2025, subject to customary closing conditions.

The transaction includes products sold under our Voortman brand, inclusive of certain trademarks, a leased manufacturing facility in Burlington, Ontario, and approximately 300 employees who support the business.

Under our ownership, the Voortman business generated net sales of approximately $65.0 in 2024, which represents a partial year of net sales reported in the Sweet Baked Snacks segment results following the acquisition on November 7, 2023.

The transaction is valued at approximately $305.0, subject to a working capital adjustment.

As of October 31, 2024, the disposal group met the criteria to be classified as held for sale, and as a result, a valuation allowance was established to reflect the fair value of the disposal group less costs to sell, which was based on the expected proceeds and the estimated carrying value of the net assets to be disposed.

The valuation allowance was included within assets held for sale – net in the Condensed Consolidated Balance Sheet and the estimated pre-tax loss on the disposal group was included within loss (gain) on divestitures – net in the Condensed Statement of Consolidated Income and Condensed Statement of Consolidated Cash Flows.

On January 2, 2024, we sold the Canada condiment business to TreeHouse Foods.

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Under our ownership, these brands generated net sales of $43.8 in 2024, included in the International operating segment.

Final n et proceeds from the divestiture were $25.3, inclusive of a working capital adjustment and cash transaction costs.

We recognized a pre-tax loss of $5.7 during the third quarter of 2024.

Final net proceeds from the divestiture were $25.3, inclusive of a working capital adjustment and cash transaction costs, resulting in a final pre-tax loss of $5.7, of which $5.2 was recognized during the second quarter of 2024, as the disposal group met the criteria to be classified as held for sale and a valuation allowance was established to reflect the fair value of the disposal group less costs to sell.

The valuation allowance was included within loss (gain) on divestitures – net in the Condensed Statement of Consolidated Income and Condensed Statement of Consolidated Cash Flows.

On November 7, 2023, we completed a cash and stock transaction to acquire Hostess Brands.

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New debt of $5.0 billion was borrowed, consisting of $3.5 billion in Senior Notes, an $800.0 Term Loan, and $700.0 of short-term borrowings under our commercial paper program to partially fund the transaction and pay off the debt assumed as part of the acquisition.

Hostess Brands is a manufacturer and marketer of sweet baked goods brands including Hostess Donettes , Twinkies , CupCakes , DingDongs , Zingers , CoffeeCakes , HoHos , Mini Muffins , and Fruit Pies , and the Voortman cookie brand.

In addition to its headquarters in Lenexa, Kansas, the transaction included six manufacturing facilities located in Emporia, Kansas;

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and Arkadelphia, Arkansas, a distribution facility in Edgerton, Kansas, and a commercial center of excellence in Chicago, Illinois.

During the first quarter of 2025, the acquired business contributed net sales of $333.7.

During the first half of 2025, the acquired business contributed net sales of $649.2.

We anticipate cost synergies of approximately $100.0, which are expected to be achieved by the end of 2026.

To date, we have achieved cost synergies of approximately $25.0, of which approximately $14.0 was achieved during the first quarter of 2025.

To date, we have achieved cost synergies of approximately $42.0, of which approximately $31.0 was achieved during the first half of 2025.

On November 1, 2023, we sold the Sahale Snacks business to Second Nature.

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Retail Frozen Handheld and Spreads segment.

Final net proceeds from the divestiture were $31.6, inclusive of a working capital adjustment and cash transaction costs.

We recognized a pre-tax loss of $6.7 during the third quarter of 2024.

Final net proceeds from the divestiture were $31.6, inclusive of a working capital adjustment and cash transaction costs, resulting in a final pre-tax loss of $6.7, of which $6.8 was recognized during the second quarter of 2024, as the disposal group met the criteria to be classified as held for sale and a valuation allowance was established to reflect the fair value of the disposal group less costs to sell.

The valuation allowance was included within loss (gain) on divestitures – net in the Condensed Statement of Consolidated Income and Condensed Statement of Consolidated Cash Flows.

On April 28, 2023, we sold certain pet food brands to Post.

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Trends Affecting our Business

During the first quarter of 2025, we continued to experience input cost inflation and a dynamic macroeconomic environment, which we anticipate will persist through the remainder of 2025.

During the first half of 2025, we continued to experience input cost inflation and a dynamic macroeconomic environment, which we anticipate will persist through the remainder of 2025.

Further, the higher costs may require price increases across our business, and we anticipate the price elasticity of demand will remain elevated during 2025 as consumers continue to experience broader inflationary pressures.

In response to the inflationary pressures, we continue to focus on the delivery of our company-wide transformation initiative to deliberately translate our continuous improvement mindset into sustainable productivity initiatives in order to grow our profit margins and reinvest in the Company to enable future growth and cost savings.

In addition, it is possible significant disruptions in our supply chain could occur if certain geopolitical events continue to impact markets around the world, including the impact of potential shipping delays due to supply and demand imbalances, as well as labor shortages.

labor shortages.

We also continue to work closely with our customers and external business partners, taking additional actions to ensure safety, business continuity, and maximize product availability.

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Results of Operations

Three Months Ended July 31,

2024 2023 % Increase (Decrease)

Three Months Ended October 31, Six Months Ended October 31,

2024 2023 % Increase (Decrease) 2024 2023 % Increase (Decrease)

Net sales $ 2,271.2 $ 1,938.6 17 % $ 4,396.3 $ 3,743.8 17 %

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% of net sales 7.5 % 15.4 % 11.8 % 16.1 %

Net income $ 185.0 $ 183.6 1

Net income per common share – assuming dilution $ 1.74 $ 1.79 (3)

Net income (loss):

Net income (loss) $ (24.5) $ 194.9 (113) $ 160.5 $ 378.5 (58)

Net income (loss) per common share – assuming dilution $ (0.23) $ 1.90 (112) $ 1.51 $ 3.69 (59)

Adjusted gross profit (A)

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Refer to “Non-GAAP Financial Measures” in this discussion and analysis for a reconciliation to the comparable GAAP financial measure.

Three Months Ended July 31,

Three Months Ended October 31, Six Months Ended October 31,

2024 2023 Increase

(Decrease) % 2024 2023 Increase

Net sales $ 2,271.2 $ 1,938.6 $ 332.6 17 % $ 4,396.3 $ 3,743.8 $ 652.5 17 %

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This measure provides useful information to investors because it enables comparison of results on a year-over-year basis.

Net sales in the first quarter of 2025 increased $319.9, or 18 percent, which includes incremental net sales in the current year of $333.7 related to the Hostess Brands acquisition, partially offset by $28.6 of noncomparable net sales in the prior year related to divestitures.

Net sales in the second quarter of 2025 increased $332.6, or 17 percent, which includes incremental net sales in the current year of $315.5 related to the Hostess Brands acquisition, partially offset by $28.9 of noncomparable net sales in the prior year related to divestitures.

Net sales excluding acquisition, divestitures, and foreign currency exchange increased $46.5, or 2 percent.

Favorable volume/mix contributed 1 percentage point to net sales, primarily driven by increases for the Uncrustables , Café Bustelo , and Meow Mix brands, partially offset by lower contract manufacturing sales related to the divested pet food brands and a decrease for the Dunkin’ brand.

Net price realization was neutral to net sales, as higher net pricing for International and Away From Home and for our U.S.

Retail Frozen Handheld and Spreads segment was offset by lower net pricing for the U.S.

Retail Pet Foods and U.S.

Retail Coffee segments.

Favorable volume/mix contributed 2 percentage points to net sales, primarily driven by increases for the Uncrustables , Meow Mix , Café Bustelo , and Jif brands, partially offset by lower contract manufacturing sales related to the divested pet food brands and a decrease for the Dunkin’ brand.

Net price realization contributed 1 percentage point to net sales, primarily reflecting higher net pricing for the Folgers brand, partially offset by lower net pricing for the Meow Mix brand.

Net sales in the first six months of 2025 increased $652.5, or 17 percent, which includes incremental net sales in the current year of $649.2 related to the Hostess Brands acquisition, partially offset by $57.5 of noncomparable net sales in the prior year related to divestitures.

Net sales excluding acquisition, divestitures, and foreign currency exchange increased $63.4, or 2 percent.

Favorable volume/mix contributed 1 percentage point to net sales, primarily driven by increases for the Uncrustables , Meow Mix , and Café Bustelo brands, partially offset by lower contract manufacturing sales related to the divested pet food brands and a decrease for the Dunkin’ brand.

Net price realization was neutral to net sales, as higher net pricing for the Folgers , Jif , and Café Bustelo brands was mostly offset by lower net pricing for the Meow Mix , Dunkin’ , and Milk-Bone brands.

Operating Income

The following table presents the components of operating income as a percentage of net sales.

Three Months Ended July 31,

Three Months Ended October 31, Six Months Ended October 31,

2024 2023 2024 2023

Gross profit 39.0 % 37.4 % 38.3 % 36.8 %

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Other special project costs 0.5 0.4 0.4 0.2

Loss (gain) on divestitures – net 11.5 0.7 5.9 0.3

Other operating expense (income) – net (0.1) 1.6 (0.2) 0.8

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Amounts may not add due to rounding.

Gross profit increased $142.4, or 22 percent, in the first quarter of 2025, primarily reflecting the noncomparable benefit of Hostess Brands and favorable volume/mix, partially offset by the noncomparable impact of divestitures.

Operating income increased $46.0, or 15 percent, primarily driven by the increase in gross profit, partially offset by a $76.5 increase in selling, distribution, and administrative (“SD&A”) expenses and a $16.2 increase in amortization expense, mostly attributable to the addition of Hostess Brands.

Operating income also reflects a $7.1 increase in special project costs primarily related to integration costs associated with the acquisition of Hostess Brands.

Gross profit increased $161.9, or 22 percent, in the second quarter of 2025, primarily reflecting the noncomparable benefit of Hostess Brands, favorable volume/mix, higher net price realization, and lower costs, partially offset by the noncomparable impact of divestitures.

Operating income decreased $129.2, or 43 percent, primarily driven by the $260.8 pre-tax loss on the Voortman business disposal group classified as held for sale, a $57.2 increase in selling, distribution, and administrative (“SD&A”) expenses, and a $16.2 increase in amortization expense, mostly attributable to the addition of Hostess Brands.

These unfavorable impacts were partially offset by the increase in gross profit and lapping a $39.1 charge in the prior year related to the termination of a supplier agreement.

Our non-GAAP financial measures are adjusted to exclude amortization expense and impairment charges related to intangible assets, special project costs, gains and losses on divestitures, the change in net cumulative unallocated derivative gains and losses, and other infrequently occurring items that do not directly reflect ongoing operating results.

Refer to “Non-GAAP Financial Measures” in this discussion and analysis for additional information.

Gross profit excluding non-GAAP adjustments

(“adjusted gross profit”) increased $188.1, or 29 percent, as compared to the prior year, primarily reflecting a favorable impact of the exclusion of a $40.4 change in net cumulative unallocated derivative gains and losses, as compared to GAAP gross profit.

Operating income excluding non-GAAP adjustments (“adjusted operating income”) increased $116.2, or 35 percent, as compared to the prior year, further reflecting the exclusion of other special project costs and amortization expense.

Gross profit excluding non-GAAP adjustments (“adjusted gross profit”) increased $129.2, or 17 percent, as compared to the prior year, primarily reflecting an unfavorable impact of the exclusion of a $38.0 change in net cumulative unallocated derivative gains and losses, as compared to GAAP gross profit.

Operating income excluding non-GAAP adjustments (“adjusted operating income”) increased $105.2, or 27 percent, as compared to the prior year, further reflecting the exclusion of the $260.8 pre-tax loss for the assets held for sale, amortization expense, and other special project costs.

Gross profit increased $304.3, or 22 percent, in the first six months of 2025, primarily reflecting the noncomparable benefit of Hostess Brands, favorable volume/mix, higher net price realization, and lower costs, partially offset by the noncomparable impact of divestitures.

Operating income decreased $83.2, or 14 percent, primarily driven by the $260.8 pre-tax loss on the Voortman business disposal group classified as held for sale, a $133.7 increase in SD&A expenses, a $32.4 increase in amortization expense, mostly attributable to the addition of Hostess Brands, and an $11.0 increase in special project costs primarily related to integration costs associated with the acquisition of Hostess Brands.

These unfavorable impacts were partially offset by the increase in gross profit and lapping the $39.1 charge in the prior year related to the termination of a supplier agreement.

Adjusted gross profit increased $317.3, or 23 percent, as compared to the prior year, reflecting the exclusion of special project costs and the change in net cumulative unallocated derivative gains and losses, as compared to GAAP gross profit.

Adjusted operating income increased $221.4, or 31 percent, as compared to the prior year, further reflecting the exclusion of the $260.8 pre-tax loss for the assets held for sale, amortization expense, and other special project costs.

Interest Expense

Net interest expense increased $68.3 in the first quarter of 2025, primarily due to increased interest expense related to the new Senior Notes issued during 2024 to partially finance the acquisition of Hostess Brands and an increase in short-term borrowings under our commercial paper program.

Net interest expense increased $63.6 and $131.9 in the second quarter and first six months of 2025, respectively, primarily due to increased interest expense related to the new Senior Notes issued during 2024 to partially finance the acquisition of Hostess Brands.

For additional information, refer to Note 8:

Debt and Financing Arrangements.

Income taxes increased $6.2, or 11 percent, in the first quarter of 2025, primarily due to the higher effective income tax rate of 24.8 percent, as compared to 23.0 percent for the first quarter of 2024, which was primarily due to the discrete unfavorable impact of share-based compensation, as compared to the prior year.

During both the current and prior years, the effective income tax rates varied from the U.S.

statutory income tax rate of 21.0 percent, primarily due to the impact of state income taxes.

The effective income tax rates for the three months ended October 31, 2024 and 2023, were 136.7 and 21.9 percent, respectively, and for the six months ended October 31, 2024 and 2023, were 48.7 and 22.4 percent, respectively.

The increase in the effective income tax rates, as compared to the prior year, was primarily due to an unfavorable permanent tax impact and the recognition of a taxable outside basis difference reflecting the reversal of our indefinite reinvestment assertion on the Voortman Cookies Limited entity, both associated with the classification of the Voortman business as held for sale during the second quarter of 2025.

During the three and six months ended October 31, 2024, the effective income tax rate varied from the U.S.

statutory income tax rate of 21.0 percent primarily due to the unfavorable impacts of the classification of the Voortman business as held for sale.

During the three and six months ended October 31, 2023, the effective income tax rate varied from the U.S.

statutory income tax rate of 21.0 percent primarily due to state income taxes, partially offset by the recognition of a deductible outside basis difference related to the divestiture of the Sahale Snacks brand, which was classified as held for sale as of October 31, 2023.

We anticipate a full-year effective income tax rate for 2025 of approximately 34.0 percent.

For additional information, refer to Note 4:

Divestitures and Note 13:

Income Taxes.

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Divestiture Costs :

Total divestiture costs related to the divested Sahale Snacks and Canada condiment businesses are anticipated to be approximately $6.0, consisting primarily of employee-related and lease termination costs, all of which are expected to be cash charges.

The majority of these costs were recognized in 2024, and the remainder are expected to be recognized during the first half of 2025.

We have recognized total cumulative divestiture costs of $5.8, of which $0.3 were recognized during the first quarter of 2025.

Total divestiture costs incurred to date related to the divested Sahale Snacks and Canada condiment businesses were $5.9, which included $4.3 and $1.6 of employee-related and other transition and termination costs, respectively, all of which were cash charges.

We incurred divestiture costs of $0.1 and $0.4 during the three and six months ended October 31, 2024, respectively, primarily consisting of employee-related costs.

As of October 31, 2024, we have incurred the majority of the anticipated costs related to these divestitures and expect costs incurred during the second half of 2025 to be minimal.

Furthermore, we identified opportunities to address certain distribution inefficiencies, as a result of the divestiture of certain pet food brands.

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The majority of these costs are expected to be cash charges and incurred by the end of 2026, with approximately half of the costs expected to be recognized in 2025.

We have recognized total cumulative costs of $0.1 related to these efforts, all of which has been recognized during the first quarter of 2025.

We have recognized total cumulative costs of $0.9, of which $0.8 and $0.9 were recognized during the three and six months ended October 31, 2024, respectively.

Integration Costs :

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We anticipate the remaining integration costs will be incurred by the end of 2026 and are expected to be split between employee-related and other transition and termination costs.

We have recognized total cumulative integration costs of $159.4, of which $12.0 were recognized during the first quarter of 2025.

We have recognized total cumulative integration costs of $174.5, of which $15.1 and $27.1 were recognized during the three and six months ended October 31, 2024, respectively.

For further information on these costs, refer to Note 5:

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Retail Coffee segment primarily includes the domestic sales of Folgers , Dunkin’ , and Café Bustelo branded coffee;

Retail Frozen Handheld and Spreads segment primarily includes the domestic sales of Uncrustables , Smucker’s , and Jif branded products;

Retail Frozen Handheld and Spreads segment primarily includes the domestic sales of Uncrustables , Jif , and Smucker’s branded products;

Retail Pet Foods segment primarily includes the domestic sales of Meow Mix , Milk-Bone , Pup-Peroni , and Canine Carry Outs branded products;

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With the exception of Sweet Baked Snacks products, International and Away From Home includes the sale of all products that are distributed in foreign countries through retail channels, as well as domestically and in foreign countries through foodservice distributors and operators (e.g., healthcare operators, restaurants, educational institutions, offices, lodging and gaming establishments, and convenience stores).

Three Months Ended July 31,

Three Months Ended October 31, Six Months Ended October 31,

2024 2023 % Increase

(Decrease) 2024 2023 % Increase

Retail Coffee $ 704.0 $ 685.7 3 % $ 1,327.4 $ 1,310.8 1 %

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Retail Pet Foods 445.4 464.0 (4) 845.1 905.0 (7)

Sweet Baked Snacks 333.7 — n/a

Sweet Baked Snacks 315.5 — n/a 649.2 — n/a

International and Away From Home 321.1 324.6 (1) 592.6 599.7 (1)

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Retail Pet Foods 121.4 97.2 25 236.7 178.5 33

Sweet Baked Snacks 74.4 — n/a

Sweet Baked Snacks 70.6 — n/a 145.0 — n/a

International and Away From Home 68.0 60.2 13 116.6 96.6 21

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Retail Pet Foods 27.3 20.9 28.0 19.7

Sweet Baked Snacks 22.3 n/a

Sweet Baked Snacks 22.4 n/a 22.3 n/a

International and Away From Home 21.2 18.5 19.7 16.1

Retail Coffee

Retail Coffee segment net sales decreased $1.7 in the first quarter of 2025.

Net price realization decreased net sales by 1 percentage point, primarily driven by a net price decline for the Dunkin’ brand, partially offset by higher net pricing for the Folgers brand.

The decrease in net price realization was mostly offset by favorable volume/mix, reflecting an increase for the Café Bustelo brand, partially offset by a decrease for the Dunkin’ brand.

Segment profit increased $2.5, primarily reflecting lower marketing spend and selling expense, partially offset by lower net price realization and higher commodity costs.

Retail Coffee segment net sales increased $18.3 in the second quarter of 2025.

Net price realization increased net sales by 3 percentage points, primarily driven by higher net pricing for mainstream roast and ground and instant coffee.

Volume/mix was neutral to net sales, as a decline for the Dunkin’ brand was mostly offset by increases for the Café Bustelo and Folgers brands.

Segment profit increased $31.7, primarily reflecting lapping the $39.1 charge in the prior year related to the termination of a supplier agreement and higher net price realization, partially offset by higher commodity costs.

Retail Coffee segment net sales increased $16.6 in the first six months of 2025.

Net price realization increased net sales by 1 percentage point, primarily driven by higher net pricing for the Folgers and Café Bustelo brands, partially offset by lower net pricing for the Dunkin’ brand.

Volume/mix was neutral to net sales, as increases for the Café Bustelo and Folgers brands were mostly offset by a decline for the Dunkin’ brand.

Segment profit increased $34.2, primarily reflecting lapping the $39.1 charge in the prior year related to the termination of a supplier agreement, higher net price realization, and lower marketing and selling expenses, partially offset by higher commodity costs.

Retail Frozen Handheld and Spreads

Retail Frozen Handheld and Spreads segment net sales increased $32.8 in the first quarter of 2025, inclusive of the impact of $6.9 of noncomparable net sales in the prior year related to the divested Sahale Snacks business.

Retail Frozen Handheld and Spreads segment net sales increased $20.9 in the second quarter of 2025, inclusive of the impact of $8.2 of noncomparable net sales in the prior year related to the divested Sahale Snacks business.

Excluding the noncomparable impact of the divestiture, net sales increased $29.1, or 6 percent.

Volume/mix contributed 7 percentage points to net sales, primarily reflecting an increase for Uncrustables sandwiches.

Higher net price realization contributed 1 percentage point to net sales, primarily reflecting a list price increase for peanut butter implemented in the prior year.

Segment profit increased $13.3, primarily reflecting lower costs, favorable volume/mix, and higher net price realization, partially offset by higher marketing spend and pre-production expenses related to the new Uncrustables sandwiches manufacturing facility.

Volume/mix contributed 8 percentage points to net sales, primarily reflecting increases for Uncrustables sandwiches and Jif peanut butter.

Net price realization decreased net sales by 2 percentage points, primarily reflecting higher trade spend for Uncrustables sandwiches.

Segment profit decreased $12.4, primarily reflecting higher costs, lower net price realization, pre-production expenses related to the new Uncrustables sandwiches manufacturing facility, and higher marketing spend, partially offset by favorable volume/mix.

Retail Frozen Handheld and Spreads segment net sales increased $53.7 in the first six months of 2025, inclusive of the impact of $15.1 of noncomparable net sales in the prior year related to the divested Sahale Snacks business.

Excluding the noncomparable impact of the divestiture, net sales increased $68.8, or 8 percent.

Volume/mix contributed 8 percentage points to net sales, primarily reflecting increases for Uncrustables sandwiches and Jif peanut butter.

Net price realization was neutral to net sales as lower net pricing for Uncrustables sandwiches was mostly offset by higher net pricing for Jif peanut butter, reflecting a list price increase for peanut butter implemented in the prior year.

Segment profit increased $0.9, as favorable volume/mix and lower costs were mostly offset by higher marketing spend, pre-production expenses related to the new Uncrustables sandwiches manufacturing facility, and lower net price realization.

Retail Pet Foods

Retail Pet Foods segment net sales decreased $41.3 in the first quarter of 2025.

Retail Pet Foods segment net sales decreased $18.6 in the second quarter of 2025.

Volume/mix decreased net sales by 2 percentage points, primarily reflecting decreased contract manufacturing sales related to the divested pet food brands and decreases for the Canine Carry Outs and Pup-Peroni brands, partially offset by increases for the Meow Mix and Milk-Bone brands.

Net price realization decreased net sales by 2 percentage points, primarily reflecting higher trade spend for cat food and dog snacks.

Segment profit increased $24.2, reflecting lower costs, favorable volume/mix, and lower distribution and marketing expenses, partially offset by lower net price realization.

Retail Pet Foods segment net sales decreased $59.9 in the first six months of 2025.

Volume/mix decreased net sales by 4 percentage points, primarily reflecting decreased contract manufacturing sales related to the divested pet food brands, partially offset by increases for cat food and dog snacks.

Net price realization decreased net sales by 4 percentage points, primarily reflecting higher trade spend for the Jerky Treats ® and Meow Mix brands.

Segment profit increased $34.0, reflecting lower costs, favorable volume/mix, and lower distribution costs, partially offset by lower net price realization and higher marketing spend.

Net price realization decreased net sales by 3 percentage points, primarily reflecting higher trade spend for cat food and dog snacks.

Segment profit increased $58.2, reflecting lower costs, favorable volume/mix, and lower distribution expenses, partially offset by lower net price realization.

Sweet Baked Snacks

We acquired Hostess Brands on November 7, 2023, as discussed in Note 3:

During the first quarter of 2025, the Sweet Baked Snacks segment contributed net sales of $333.7 and segment profit of $74.4.

During the second quarter of 2025, the Sweet Baked Snacks segment contributed net sales of $315.5 and segment profit of $70.6.

During the first six months of 2025, the Sweet Baked Snacks segment contributed net sales of $649.2 and segment profit of $145.0.

Prior year net sales and segment profit are not provided due to differences in reporting periods and certain financial measures under previous ownership.

International and Away From Home

International and Away From Home net sales decreased $3.6 in the first quarter of 2025, including the noncomparable impact of $21.7 of net sales in the prior year related to the divestitures and $2.1 of unfavorable foreign currency exchange.

International and Away From Home net sales decreased $3.5 in the second quarter of 2025, including the noncomparable impact of $20.7 of net sales in the prior year related to the divestitures and $0.5 of unfavorable foreign currency exchange.

Excluding the noncomparable impact of the divested businesses and foreign currency exchange, net sales increased $17.7, or 6 percent.

Net price realization contributed 5 percentage points to net sales, primarily driven by list price increases across the majority of the portfolio.

Volume/mix contributed 3 percentage points to net sales, primarily reflecting increases for Uncrustables sandwiches, coffee, and portion control products, partially offset by a decrease for dog snacks.

Segment profit increased $12.2, primarily driven by higher net price realization, favorable volume/mix, lower costs, and decreased marketing spend, partially offset by the impact of noncomparable segment profit in the prior year related to the divested businesses and higher pre-production expenses related to the new Uncrustables sandwiches manufacturing facility.

Net price realization contributed 4 percentage points to net sales, primarily driven by list price increases across the majority of the portfolio, partially offset by increased trade spend.

Volume/mix contributed 2 percentage points to net sales, primarily reflecting increases for peanut butter and portion control products and Uncrustables sandwiches, partially offset by a decrease for coffee products.

Segment profit increased $7.8, primarily driven by higher net price realization and favorable volume/mix, partially offset by higher costs, the impact of noncomparable segment profit in the prior year related to the divested businesses, and pre-production expenses related to the new Uncrustables sandwiches manufacturing facility.

International and Away From Home net sales decreased $7.1 in the first six months of 2025, including the noncomparable impact of $42.4 of net sales in the prior year related to the divestitures and $2.6 of unfavorable foreign currency exchange.

Excluding the noncomparable impact of the divested businesses and foreign currency exchange, net sales increased $37.9, or 7 percent.

Net price realization contributed 5 percentage points to net sales, primarily driven by list price increases across the majority of the portfolio, partially offset by increased trade spend.

Volume/mix contributed 2 percentage points to net sales, primarily reflecting increases for Uncrustables sandwiches and portion control and peanut butter products, partially offset by decreases for coffee and dog snack products.

Segment profit increased $20.0, primarily driven by higher net price realization, favorable volume/mix, and decreased marketing spend, partially offset by the impact of noncomparable segment profit in the prior year related to the divested businesses, pre-production expenses related to the new Uncrustables sandwiches manufacturing facility, and higher costs.

LIQUIDITY AND CAPITAL RESOURCES

Our principal source of funds is cash generated from operations, supplemented by borrowings against our commercial paper program and revolving credit facility.

Total cash and cash equivalents decreased to $39.5 at July 31, 2024, compared to $62.0 at April 30, 2024.

Total cash and cash equivalents decreased to $49.2 at October 31, 2024, compared to $62.0 at April 30, 2024.

The following table presents selected cash flow information.

Three Months Ended July 31,

Six Months Ended October 31,

Net cash provided by (used for) operating activities $ 577.1 $ 394.8

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(A) Free cash flow is a non-GAAP financial measure used by management to evaluate the amount of cash available for debt repayment, dividend distribution, acquisition opportunities, share repurchases, and other corporate purposes.

The $45.0 decrease in cash provided by operating activities in the first three months of 2025 was primarily driven by higher working capital requirements in 2025, partially offset by higher net income adjusted for noncash items in the current year.

The cash required to fund working capital increased compared to the prior year primarily driven by an increase in cash used for accrued liabilities reflecting timing of interest payments, a decrease in accounts payable due to timing of spend and payments, and higher inventory levels in the current year.

Cash used for investing activities in the first three months of 2025 consisted primarily of $123.7 in capital expenditures, reflecting our investments in the new Uncrustables sandwiches manufacturing and distribution facilities in McCalla, Alabama, as well as plant maintenance across our facilities.

The $182.3 increase in cash provided by operating activities in the first six months of 2025 was primarily driven by higher net income adjusted for noncash items in the current year and timing of income tax payments, partially offset by higher working capital requirements in 2025.

The cash required to fund working capital increased compared to the prior year primarily driven by a decrease in cash from trade receivables due to timing of sales and payments, partially offset by a change in inventory levels and an increase in cash from accounts payable due to timing of spend and payments.

Cash used for investing activities in the first six months of 2025 consisted primarily of $210.7 in capital expenditures, reflecting our investments in the new Uncrustables sandwiches manufacturing and distribution facilities in McCalla, Alabama, as well as plant maintenance across our facilities.

The use of cash for 2025 also included an increase of $14.9 in our derivative cash margin account balances.

Cash used for investing activities in the first three months of 2024 consisted primarily of $150.3 in capital expenditures related to the new manufacturing and distribution facilities in McCalla, Alabama and plant maintenance across our facilities.

Cash used for financing activities in the first three months of 2025 consisted primarily of dividend payments of $112.1, partially offset by a net increase in short-term borrowings of $96.2.

Cash used for financing activities in the first three months of 2024 consisted primarily of the purchase of treasury shares of $372.0 and dividend payments of $105.2.

Cash used for investing activities in the first six months of 2024 consisted primarily of $299.0 in capital expenditures, primarily related to the new manufacturing and distribution facilities in McCalla, Alabama and plant maintenance across our facilities.

Cash used for financing activities in the first six months of 2025 consisted primarily of dividend payments of $226.5 and a net decrease in short-term borrowings of $121.6.

Cash provided by financing activities in the first six months of 2024 consisted primarily of proceeds from long-term debt of $3,485.0, partially offset by the purchase of treasury shares of $372.4 and dividend payments of $213.2.

Supplier Financing Program

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Payment terms with our suppliers, which we deem to be commercially reasonable, range from 0 to 180 days.

We have an agreement with a third-party administrator to provide an accounts payable tracking system and facilitate a supplier financing program, which allows participating suppliers the ability to monitor and voluntarily elect to sell our payment obligations to a designated third-party financial institution.

We have an agreement with a third-party administrator to provide an accounts payable tracking system and facilitate a supplier financing pr ogram, which allows participating suppliers the ability to monitor and voluntarily elect to sell our payment obligations to a designated third-party financial institution.

Participating suppliers can sell one or more of our payment obligations at their sole discretion, and our rights and obligations to our suppliers are not impacted.

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Our rights and obligations to our suppliers, in cluding amounts due and scheduled payment terms, are not impacted by our suppliers’ decisions to sell amounts under these arrangements.

As of July 31, 2024, and April 30, 2024, $366.8 and $384.9 of our outstanding payment obligations, respectively, that were elected and sold to a financial institution by partici pating suppliers.

During the first three months of 2025 and 2024, we p aid $422.6 and $441.7, respectively, to a financial institution for payment obligations that were settled through the supplier fi nancing program.

As of October 31, 2024, and April 30, 2024, $360.9 and $384.9 of our outstanding payment obligations, respectively, were elected and sold to a financial institution by participating suppliers.

During the first six months of 2025 and 2024, we paid $818.8 and $882.8, respectively, to a financial institution for payment obligations that were settled through the supplier fi nancing program.

Contingencies

We, like other food manufacturers, are from time to time subject to various administrative, regulatory, and other legal proceedings arising in the ordinary course of business.

We are currently a defendant in a variety of such legal proceedings, and while we cannot predict with certainty the ultimate results of these proceedings or potential settlements associated with these or other matters, we have accrued losses for certain contingent liabilities that we have determined are probable and reasonably estimable at July 31, 2024.

Based on the information known to date, with the exception of the matters discussed below, we do not believe the final outcome of these proceedings will have a material adverse effect on our financial position, results of operations, or cash flows.

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The outcome and the financial impact of these cases, if any, cannot be predicted at this time.

Accordingly, no loss contingency has been recorded for these matters as of July 31, 2024, and the likelihood of loss is not considered probable or reasonably estimable.

Accordingly, no loss contingency has been recorded for these matters as of October 31, 2024, as the likelihood of loss is not considered probable or reasonably estimable.

However, if we are required to pay significant damages, our business and financial results could be adversely impacted, and sales of those products could suffer not only in these locations but elsewhere.

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The outcome and financial impact of this litigation cannot be predicted at this time.

Accordingly, no loss contingency has been recorded for these matters as of July 31, 2024, and the likelihood of loss is not considered probable or reasonably estimable.

Accordingly, no loss contingency has been recorded for these matters as of October 31, 2024, as the likelihood of loss is not considered probable or reasonably estimable.

Voortman Contingency:

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Although we believe that the Claim is meritorious, no assurance can be given as to whether we will recover all, or any part, of the amounts being pursued.

Upon completion of the sale of the Voortman business, which is anticipated to occur during the third quarter of 2025, we will retain rights to the Claim.

Capital Resources

The following table presents our capital structure.

July 31, 2024 April 30, 2024

October 31, 2024 April 30, 2024

Current portion of long-term debt $ 999.7 $ 999.3

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Commercial paper is used as a continuing source of short-term financing for general corporate purposes.

As of July 31, 2024, we had $697.0 of short-term borrowings outstanding, which were issued under our commercial paper program at a weighted-average interest rate of 5.48 percent.

We are in compliance with all our debt covenants as of July 31, 2024, and expect to be for the next 12 months.

As of October 31, 2024, we had $488.0 of short-term borrowings outstanding, which were issued under our commercial paper program at a weighted-average interest rate of 4.95 percent.

We are in compliance with all our debt covenants as of October 31, 2024, and expect to be for the next 12 months.

For additional information on our long-term debt, sources of liquidity, and debt covenants, see Note 8:

Debt and Financing Arrangements.

Dividend payments were $112.1 and $105.2 in the first three months of 2025 and 2024, respectively, and quarterly dividends declared per share were $1.08 and $1.06 in the first three months of 2025 and 2024, respectively.

The declaration of dividends is subject to the discretion of our Board and depends on various factors, such as our net income, financial condition, cash requirements, future events, and other factors deemed relevant by the Board.

During the three months ended July 31, 2024, we did not repurchase any common shares under a repurchase plan authorized by the Board.

As of July 31, 2024, approximately 1.1 million common shares remain available for repurchase pursuant to the Board’s authorizations.

Dividend payments were $226.5 and $213.2 in the first six months of 2025 and 2024, respectively, and dividends declared per share were $2.16 and $2.12 in the first six months of 2025 and 2024, respectively.

The declaration of dividends is subject to the discretion of our Board and depends on various factors, such as our net income (loss), financial condition, cash requirements, future events, and other factors deemed relevant by the Board.

During the six months ended October 31, 2024, we did not repurchase any common shares under a repurchase plan authorized by the Board.

As of October 31, 2024, approximately 1.1 million common shares remain available for repurchase pursuant to the Board’s authorizations.

There is no guarantee as to the exact number of shares that may be repurchased or when such purchases may occur.

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In accordance with the 10b5-1 Plan, our designated broker had the authority to repurchase approximately 2.4 million common shares, which commenced upon the sale of certain pet food brands on April 28, 2023, and expired 45 calendar days after the closure of the transaction.

During the three months ended July 31, 2023, we repurchased approximately 2.4 million common shares for $362.8 under the 10b5-1 Plan.

During the first quarter of 2024, we repurchased approximately 2.4 million common shares for $362.8 under the 10b5-1 Plan.

In accordance with the Inflation Reduction Act, a one percent excise tax was applied to share repurchases after December 31, 2022.

As a result, an excise tax of $3.6 was accrued on the repurchased shares during the first quarter of 2024 and included within additional capital in our Condensed Consolidated Balance Sheet.

All other share repurchases during the three months ended July 31, 2024 and 2023, consisted of shares repurchased from stock plan recipients in lieu of cash payments.

An accrued excise tax of $6.7 was paid during the three and six months ended October 31, 2024, which was related to the shares repurchased under the 10b5-1 Plan during 2023 and 2024.

All other share repurchases during the six months ended October 31, 2024 and 2023, consisted of shares repurchased from stock plan recipients in lieu of cash payments.

On November 7, 2023, we acquired Hostess Brands, and as a result, we issued approximately 4.0 million common shares valued at $450.2 in exchange for the outstanding shares of Hostess Brands common stock to partially fund the acquisition.

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In November 2021, we announced plans to invest $1.1 billion to build a new manufacturing facility and distribution center in McCalla, Alabama dedicated to the production of Uncrustables sandwiches.

Construction of this facility began in 2022, with production expected to begin during the second quarter of 2025.

Construction of this facility began in 2022 and production began during the second quarter of 2025.

The project demonstrates our commitment to meet increasing demand for this highly successful product and deliver on our strategy to focus on brands with the most significant growth opportunities.

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We intend to use a combination of the aforementioned sources of liquidity to fund our obligations with respect to the Senior Notes due March 15, 2025.

However, as a result of the current macroeconomic environment and the recent

acquisition, we may experience an increase in the cost or the difficulty to obtain debt or equity financing, or to refinance our debt in the future.

However, as a result of the current macroeconomic environment and the recent acquisition, we may experience an increase in the cost or the difficulty to obtain debt or equity financing, or to refinance our

debt in the future.

We continue to evaluate these risks, which could affect our financial condition or our ability to fund operations or future investment opportunities.

As of July 31, 2024, total cash and cash equivalents of $16.5 was held by our foreign subsidiaries, primarily in Canada.

We have not repatriated foreign cash to the U.S.

during the first three months of 2025.

As of October 31, 2024, total cash and cash equivalents of $37.0 was held by our foreign subsidiaries, primarily in Canada.

During the second quarter of 2025, we returned $35.0 of foreign cash to the U.S.

from Canada, reflecting intercompany debt repayments, and as a result, there were no tax impacts.

There was no other foreign cash repatriated to the U.S.

during the first six months of 2025.

Material Cash Requirements

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Transactions with related parties are in the ordinary course of business and are not material to our results of operations, financial condition, or cash flows.

As of July 31, 2024, there were no other material changes to our material cash requirements as previously reported in our Annual Report on Form 10-K for the year ended April 30, 2024.

As of October 31, 2024, there were no other material changes to our material cash requirements as previously reported in our Annual Report on Form 10-K for the year ended April 30, 2024.

NON-GAAP FINANCIAL MEASURES

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Income taxes, as adjusted is calculated using an adjusted effective income tax rate that is applied to adjusted income before income taxes and reflects the exclusion of the previously discussed items, as well as any adjustments for one-time tax related activities, when they occur.

While this adjusted effective income tax rate does not generally differ materially from our GAAP effective income tax rate, certain exclusions from non-GAAP results can significantly impact our adjusted effective income tax rate.

While this adjusted effective income tax rate does not generally differ materially from our GAAP effective income tax rate, certain exclusions from non-GAAP results, such as the unfavorable tax impacts associated with the classification of the Voortman business as held for sale, can significantly impact our adjusted effective income tax rate.

These non-GAAP financial measures are not intended to replace the presentation of financial results in accordance with U.S.

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See page 25 for a reconciliation of net sales adjusted for certain noncomparable items to the comparable GAAP financial measure.

Three Months Ended July 31,

Three Months Ended October 31, Six Months Ended October 31,

2024 2023 2024 2023

Gross profit reconciliation:

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Other special project costs (A)

10.7 6.8 17.8 6.8

Adjusted operating income $ 490.6 $ 385.4 $ 938.5 $ 717.1

Net income reconciliation:

Net income $ 185.0 $ 183.6

Net income (loss) reconciliation:

Net income (loss) $ (24.5) $ 194.9 $ 160.5 $ 378.5

Income tax expense 91.3 54.5 152.3 109.3

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Other special project costs (A)

10.7 6.8 17.8 6.8

Other debt costs – special project costs (A)

— 19.5 — 19.5

Other expense – special project costs (A)

Other infrequently occurring items:

Unrealized loss on investment in equity securities – net (B)

Unrealized loss (gain) on investment in equity securities – net (B)

— (5.9) — 21.5

Pension plan termination settlement charge (C)

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For more information, see Note 5:

Special Project Costs and Note 6:

Reportable Segments.

(B) Unrealized loss on investment in equity securities – net includes gains and losses resulting from the change in fair value on our investment in Post common stock and the related equity forward contract, which was settled on November 15, 2023.

Special Project Costs, Note 6:

Reportable Segments, and Note 8:

Debt and Financing Arrangements.

(B) Unrealized loss (gain) on investment in equity securities – net includes losses and gains resulting from the change in fair value on our investment in Post common stock and the related equity forward contract, which was settled on November 15, 2023.

For more information, see Note 4:

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis