SJM 10-K & 10-Q changes, risk factors and insider trading

National and global macroeconomic conditions can be uncertain and volatile. We have in the past been, and may continue to be, adversely affected by changes in national and global macroeconomic conditions, such as inflation, rising interest rates, tax rates, availability of capital markets, consumer spending rates, energy availability and costs, supply chain challenges (including newchanges or increasedin tariffs imposed by the U.S. and retaliatory tariffs by other countries), labor shortages, geopolitical conflicts, the negative impacts caused by pandemics and public health crises, and growing recession risk.

•the timing, duration, and extent of newnewly imposed, increased, or increasedreduced tariffs imposed by the U.S. on imports and exports and the expected retaliatory measures by other countries on U.S. goods and the impact on our business are uncertain.

Our operations are subject to the general risks associated with acquisitions, divestitures, and restructuring programs. Specifically, we may not realize all of the anticipated benefits of the acquisition of Hostess Brands, or those benefits may take longer to realize than expected. We may also encounter significant unexpected difficulties in integrating the Hostess Brands business and may be unable to effectively manage stranded overhead resulting from recent divestitures.

Our stated strategic vision is to engage, delight, and inspire consumers by building brands they love and leading in growingattractive categories. We have historically made strategic acquisitions of brands and businesses and intend tomay do so in the future in support of this strategy. If we are unable to complete acquisitions or successfully integrate and develop acquired businesses, including the effective management of integration and related restructuring costs, we could fail to achieve the anticipated synergies and cost savings, or the expected increases in revenues and operating results. Additional acquisition risks include the diversion of managementmanagement’s attention from our existing business, potential loss of key employees, suppliers, or consumers from the acquired business, assumption of unknown risks and liabilities, and greater than anticipated operating costs of the acquired business. Any of these factors could have a material adverse effect on our financial results.

In addition, we have made strategic divestitures of brands and businesses, including the recent divestitures of certain Sweet Baked Snacks value brandsbrands, and the Voortman business, as well as past divestitures of theVoortman, Canada condimentcondiment, and Sahale Snacks businesses, and certain pet food brands, among others, and we may continue to do so in the future. If we are unable to complete divestitures or successfully transition divested businesses, including the effective management of the related separation and stranded overhead costs, transition services, and the maintenance of relationships with customers, suppliers, and other business partners, our business and financial results could be negatively impacted. Further, we may incur asset impairment charges related to divestitures that reduce our profitability. Divestitures and related restructuring and integration costs require a significant amount of management and operational resources. These additional demands could divert management’s attention from core business operations, potentially adversely impacting existing business relationships and employee morale, resulting in negative impacts on our financial performance. For more information, see Note 2: Acquisition, Note 3: Divestitures, and Note 4: Special Project Costs.

The success of our business depends significantly on our brands, know-how, and other intellectual property. We rely on a combination of trademarks, service marks, trade secrets, patents, copyrights, licensing agreements, and similar rights to protect our intellectual property. The success of our growth strategy depends on our continued ability to use our existing trademarks and service marks in order to maintain and increase brand awareness and further develop our brands. If our efforts to protect our intellectual property are not adequate, such as in the event of a cybersecurity incident, if any third party misappropriates or infringes on our intellectual property, or if we are alleged to be misappropriating or infringing on the intellectual property rights of others, the value of our brands may be harmed, which could have a material adverse effect on our business. From time to time, we are engaged in litigation to protect our intellectual property, which could result in substantial costs as well as diversion of managementmanagement’s attention.

We have elected to source certain raw materials, such as packaging for our Folgers coffee products, as well as ourand Jif peanut butter,butter andbrands, certain finished goods, such as K-Cup® pods, our Pup-Peroni dog snacks, and liquid coffee, from primary or single sources of supply. While we believe that, except as set forth below, alternative sources of these raw materials and finished goods could be obtained on commercially reasonable terms, loss or an extended interruption in supplies from a primary or single-source supplier would result in additional costs, could have a disruptive short-term effect on our business, and could adversely affect our results of operations.

KeurigKDP is our single-sourceprimary supplier forof K-Cup®single-serve pods,pods whichand are used in its proprietary Keurig® K-Cup® brewing system. In addition, JDE Peet’s N.V. (“JDE Peet’s”) is ourthe single-source supplier forof liquid coffee for our Away From Home business,business. and thereThere are a limited number of manufacturersmanufacturers, other than JDEKDP, Peet’scapable thatof are able to manufactureproducing liquid coffee.coffee Further,for use in our systems. In addition, Graham Packaging Company, L.P. (“Graham Packaging”) is ourthe single-source supplier for the packaging ofused in our Folgers coffee products and primary supplier for packaging used in our Jif peanut butter products. If either Keurig, JDE Peet’s,KDP or Graham Packaging is unable to supply K-Cup®these pods, liquid coffee,products or packaging for Folgers coffee products, respectively, to us for any reason, itwe couldmay be difficultunable to find ansecure alternative supplier for such goodssources on commercially reasonable terms, which could have a material adverse effect on our results of operations.

Our ability and the ability of our third-party suppliers, service providers, distributors, and contract manufacturers to manufacture, distribute, and sell products is critical to our success. A significant interruption in the operation of any of our manufacturing or distribution capabilities, or the manufacturing or distribution capabilities of our suppliers, distributors, or contract manufacturers, or a service failure by a third-party service provider, whether as a result of adverse weather conditions or a natural disaster, fire, or water availability, as a result of climate change or otherwise; work stoppage or labor shortages; cybersecurity breaches; political instability, terrorism, or geopolitical conflicts; pandemic illness; government restrictions or government trade policies (including newchanges or increasedin tariffs imposed by the U.S. and retaliatory tariffs by other countries); or other causes could significantly impair our ability to operate our business. In particular, substantially all of our coffee production takes place in New Orleans, Louisiana and is subject to risks associated with hurricane and other weather-related events, and some of our production facilities are located in places where tornadoes or wildfires can frequently occur, such as Alabama, Kansas, Arkansas, and California. Failure to take adequate steps to mitigate or insure against the likelihood or potential impact of such events, or to effectively manage such events if they occur, could adversely affect our business, financial condition, and results of operations. While we insure against many of these events and certain business interruption risks and have policies and procedures to manage business continuity planning, such insurance may not fully compensate us for any losses incurredincurred, and our business continuity plans may not effectively resolve the issues in a timely manner.

As of April 30, 2025,2026, 2221 percent of our full-time employees, located at nineeight manufacturing locations, are covered by collective bargaining agreements. These contracts vary in term depending on location, with three contracts expiring in 2026,2027, representing approximately 105 percent of our total employees. We cannot be certain that we will be able to renew these collective bargaining agreements on the same or more favorable terms as the current agreements, or at all, without production interruptions caused by labor stoppages. If a strike or work stoppage were to occur in connection with negotiations of a new collective bargaining agreement or as a result of disputes under collective bargaining agreements with labor unions, our business, financial condition, and results of operations could be materially adversely affected.

We are the branded market leader in several categories both in the U.S. and Canada. We believe that maintaining and continually enhancing the value of our brands is critical to the success of our business. Brand value is based, in large part, on consumer perceptions. Success in promoting and enhancing brand value depends on our ability to provide high-quality products.products that meet consumer needs. Brand value could diminish significantly as a result of a number of factors, such as if we fail to preserve the quality of our products, if there are concerns about the safety of our products, if we are perceived to act in an irresponsible manner, if the Company or our brands otherwise receive negative publicity, if our brands fail to deliver a consistently positive consumer experience, or if our products become unavailable to consumers. The growing use of social and digital media by consumers increases the speed and extent that information and opinions can be shared. Negative or untrue posts or comments about us, partners who we work with, our brands,brands or products on social or digital mediamedia, including content produced by artificial intelligence, could damage our brands and reputation. If we are unable to build and sustain brand equity by offering recognizably superior products, we may be unable to maintain premium pricing over private label products. If our brand values are diminished, our revenues and operating results could be materially adversely affected. In addition, anything that harms the Dunkin’ brand could adversely affect the success of our exclusive licensing agreements with the owner of that brand.

We depend on the skills and continued service of key employees, including our experienced management team. In addition, our ability to achieve our strategic and operating goals depends on our ability to identify, recruit, hire, train, and retain qualified individuals, including, for example, all levels of skilled labor in our manufacturing facilities.facilities or expertise related to emerging technologies, such as artificial intelligence. We compete with other companies both within and outside of our industry for talented people, and we may lose key employees or fail to attract, recruit, train, develop, and retain other talented individuals. Any such loss, failure, or negative perception with respect to these individuals may adversely affect our business or financial results. In addition, activities related to identifying, recruiting, hiring, integrating, and training qualified individuals may require significant time and expense. We may not be able to locate suitable replacements for any key employees who leave or to offer employment to potential replacements on reasonable terms, each of which may adversely affect our business and financial results.

DuringIn 2023, we created a Transformation Officeorder to support our multi-year commitment to ongoing margin enhancement efforts, inclusivewe ofhave the removal of stranded overhead costs associated with the recent divestitures of certain Sweet Baked Snacks value brands, the Voortman, Canada condiment, and Sahale Snacks businesses, and certain pet food brands. Thea Transformation OfficeOffice, which is focused on enterprise-wide continuous improvement strategies to ensure a pipeline of productivity initiatives and profit growth opportunities. It is comprised of cross-functional leaders at every level of our organization who help to establish new ways of working, along with sustainable efficiencies and cost reduction efforts throughout our Company. If we are unable to successfully implement our transformation initiatives, our business and results of operations could be adversely affected.

Sales to Walmart Inc. and subsidiariessubsidiaries, including Sam’s Club, amounted to 3334 percent of net sales in 2025.2026. These sales are primarily included in our U.S. retailRetail marketreportable segments. Trade receivables – net at April 30, 2025,2026, included amounts due from Walmart Inc. and subsidiariessubsidiaries, including Sam’s Club, of $172.3,$187.4, or 2829 percent of the total trade receivables – net balance. During 2025,2026, our top 10 customers, collectively, accounted for approximately 60 percent of consolidated net sales. We expect that a significant portion of our revenues will continue to be derived from a limited number of customers as the traditional retail grocery environment continues to consolidate and as dollar stores, club stores, and e-commerce retailers have experienced growth. Our customers are generally not contractually obligated to purchase from us as we do not have long-term supply contracts with any of our major customers. These customers make purchase decisions based on a combination of price, promotional support, product quality, consumer demand, customer service performance, their desired inventory levels, and other factors. Changes in customers’ strategies, including a reduction in the number of brands they carry or a shift of shelf space to private label products or other companies’ branded products, may adversely affect sales and profitability. Customers also may respond to price increases by reducing distribution, resulting in reduced sales of our products. Additionally, our customers may face financial or other difficulties that may impact their operations and their purchases from us, which could adversely affect our results of operations. A reduction in sales to one or more major customers could have a material adverse effect on our business, financial condition, and results of operations.

Some of our competitors have substantial financial, marketing, and other resources, and competition with them in our various markets, channels, and product lines could cause us to reduce prices, increase marketing or other expenditures, or lose category share. Category share and growth could also be adversely impacted if we are not successful in introducing new products. Introduction of new products and product extensions requires significant development, marketing investment, and consideration of our diverse consumer base. If our products fail to meet consumer preferences, or we fail to introduce new and improved products on a timely basis, then the return on that investment willmay be less than anticipated and our strategy to grow sales and profits through investment in innovation willcould be less successful. In addition, if sales generated by new products cause a decline in our sales of our existing products, our financial condition and results of operations could be negatively affected. In order to generate future revenues and profits, we must continue to sell products that appeal to our customers and consumers. Specifically, there are a number of trends in consumer preferences that may impact us and the food industry as a whole, including convenience, flavor variety, an emphasis on health and wellness, including weight management (e.g., the use of medications and dieting), the desire for transparent product labeling, and simple and natural ingredients.

Further, weak economic conditions, recessions, significant inflation, severe or unusual weather events, pandemics, war, and other factors (including newchanges or increasedin tariffs imposed by the U.S. and retaliatory tariffs by other countries) could affect consumer preferences and demand, causing a strain on our supply chain due, in part, to retailers, distributors, or carriers modifying their restocking, fulfillment, or shipping procedures. Failure to respond to these changes could negatively affect our financial condition and results of operations.

We may not be able to pass some or all of any increases in the price of raw materials, energy, and other input costs (including newchanges or increasedin tariffs imposed by the U.S. and retaliatory tariffs by other countries) to our customers by raising prices or decreasing product size. To the extent competitors do not also increase their prices or decrease product size, customers and consumers may choose to purchase competing products, including private label or other lower-priced offerings, which may adversely affect our results of operations or our market share.

Logistics and other transportation-related costs have a significant impact on our earnings and results of operations. We use multiple forms of transportation, including ships, trucks, railcars, and third-party carriers, to bring our products to market. Disruption to the timely supply of these services or increases in the cost of these services for any reason, including availability or cost of fuel, regulations affecting the industry (including newchanges or increasedin tariffs imposed by the U.S. and retaliatory tariffs by other countries), labor shortages in the transportation industry, service failures by third-party service providers, carrier capacity, accidents, natural disasters, inflation, geopolitical conflicts, a pandemic illness, or a cybersecurity breach or attack, may impact our ability to obtain reliable transportation for products. Our procurement of transportation services from a diversified group of carriers and continuous monitoring of our transportation methods could be insufficient to protect us from changes in market demand or carrier capacity. The inability to distribute our products in a cost-effective manner could have a material adverse effect on our ability to serve our customers, our business, financial condition, and results of operations.

We and our business partners purchase and use large quantities of many different commodities and agricultural products in the manufacturing of our products, including green coffee, peanuts, flour, sugar, oils andoils, fats, fruit, and other ingredients. In addition, we and our business partners utilize significant quantities of plastic, glass, metal cans, caps, carton board, and corrugate to package our products and natural gas and fuel oil to manufacture, package, and distribute our products. The prices of these commodities, agricultural-based products, and other materials are subject to volatility and can fluctuate due to conditions that are difficult to predict, including global supply and demand, commodity market fluctuations, crop sizes and yield fluctuations, adverse weather conditions, natural disasters, water supply, pandemic illness, foreign currency fluctuations, investor speculation, trade agreements (including newchanges or increasedin tariffs imposed by the U.S. and retaliatory tariffs by other countries), political instability, geopolitical conflicts, consumer demand, general economic conditions (such as inflationary pressures and rising interest rates), and changes in governmental agricultural programs.

During 2025,2026, we continued to experience materially higher commodity and supply chain costs, including manufacturing, ingredient, and packaging costs, duedriven toby inflationary pressures, andwhich may persist into 2027, although we expect thesome pressuresmoderation of cost inflationrelative to continueprior into 2026.periods. Although we take measures to mitigate inflation through the use of derivatives and pricing actions, if these measures are not effective, our financial condition, results of operations, and cash flows could be materially adversely affected.

We expect the green coffee commodity markets to continue to beremain challenging due to theongoing and significant ongoing price volatility. For example, during 2025, we experienced extreme drought impact, which substantially reduced green coffee production in Brazil. Due to the significance of green coffee to our coffee business, combined with our ability to only partially mitigate future price risk through purchasing practices and hedging activities, significant increases or decreases in the cost of green coffee could have an adverse impact on our profitability, as compared to that of our competitors. In addition, if we are not able to purchase sufficient quantities of green coffee due to any of the above factors or to a worldwide or regional shortage, we may not be able to fulfill the demand for our coffee, which could have a material adverse effect on our business, financial condition, and results of operations.

As of April 30, 2025,2026, goodwill and indefinite-lived intangible assets totaled $5.7$5.2 billion and $3.8$2.6 billion, respectively. The carrying values of the goodwill and indefinite-lived intangible assets were $0.5 billion and $1.2 billion, respectively, within the Sweet Baked Snacks segment, $2.1 billion and $1.3 billion, respectively, within the U.S. Retail Coffee segment,reportable segment and $1.6 billion and $1.1 billion, respectively, within the U.S. Retail Pet Foods reportable segment, which represent approximately 80 percent of the total goodwill and indefinite-lived intangible assets as of April 30, 2025.2026. As discussed in additional detail below, the Sweet Baked Snacks reporting unit has no remaining goodwill as a result of the impairment charges recorded during 2026, and the Hostess brand trademark was reclassified as a finite-lived intangible asset.

WeAs of February 1, 2026, we completed the annual impairment assessment, in which goodwill was tested for impairment at the reporting unit level for each reporting unit with goodwill as of the annual assessment date. As part of our annual evaluation, weWe did not recognize any impairment charges related to our reporting units or indefinite-lived intangible assets.assets as part of our annual evaluation. The estimated fair value exceeded the carrying value by greater than 10 percent for all of our reporting units and indefinite-lived intangible assets, with the exception of the Sweet Baked Snacks reporting unit and HostessPup-Peroni brand indefinite-lived trademark, aswithin the carryingU.S. valuesRetail approximatedPet estimatedFoods fairreportable valuessegment, duewhich is susceptible to thefuture impairment charges recognizedif duringthere is any significant adverse changes in our near- or long-term projections for the thirdbrand quarteror ofmacroeconomic 2025.conditions.

The goodwill and indefinite-lived trademark within the Sweet Baked Snacks segment remain susceptible to future impairment charges. Any significant adverse change in our near- or long-term projections or macroeconomic conditions would result in future impairment charges for the Sweet Baked Snacks reporting unit. There were no other indicators of impairment during the fourth quarter of 2025,2026, and as a result, we do not believe that any of our remaining reporting units or material indefinite-lived intangible assets are more likely than not impaired as of April 30, 2025.2026. For additional information, refer to Note 7: Goodwill and Other Intangible Assets.

We work with our suppliers to extend our payment terms, a portion of which are then supplemented by a third-party administrator to assist in effectively managing our working capital. If the extension of payment terms is reversed or the financial institution terminates its participation in the program, our ability to maintain acceptable levels of working capital may be adversely affected.

We could be subject to adverse publicity or claims from consumers.consumers or other stakeholders.

We may also be subject to complaints from or litigation by consumers who allege food and beverage-related illness, or other quality, health, advertising, or operational concerns.concerns, including that a product is an ultra-processed food or contains certain ingredient(s). Adverse publicity resulting from such allegations could materially adversely affect us, regardless of whether such allegations are true or whether we are ultimately held liable. Additionally, we may be subject to claims, investigations, or litigation under federal or state ingredient, labeling, packaging, or securities laws, including securities class actions arising from our public disclosures, stock price volatility, or other factors, regardless of the merits of such claims. Litigation is expensive, time consuming, and disruptive to management and may result in substantial defense costs, settlements, or judgments, as well as reputational harm and increased scrutiny from regulators and investors. A lawsuit or claim could result in an adverse decision against us, which could have a material adverse effect on our business, financial condition, and results of operations.

Our operations are subject to various regulations and laws, in addition to tax laws, administered by federal, state, and local government agencies in the U.S., including the FDA, U.S. Federal Trade Commission, the U.S. Departments of Agriculture, Commerce, and Labor, state regulatory agencies, and other agencies, as well as to regulations and laws administered by government agencies in Canada and other countries in which we have operations and our products are sold. In particular, the manufacturing, marketing, transportation, storage, distribution, packaging disposal (including extended producer responsibility regulations), and sale of food products are each subject to increasingly extensive governmental regulation that is increasingly extensive.regulation. Governmental regulation encompassesand policies encompass such matters as ingredients (including whether a product contains bioengineered ingredients oringredients, artificial dyesdyes, and ingredients that are generally recognized as safe), packaging and disposal of packaging, labeling (including use of certain terms such as sugar free, healthy, low sodium, low fat, and lowultra-processed fatfood), pricing, advertising, relations with distributors and retailers, health, safety, data privacy and security, and anti-corruption,anti-corruption. asThere wellis as analso increased focus regardingon environmental policiespolicies, relating toincluding climate change, regulating greenhouse gas emissions, energy policies, and sustainability, includingand single-use plastics. Additionally, we are routinely subject to new or modified securities regulations, other laws and regulations,regulations (including new laws and regulations governing the use of artificial intelligence), and accounting and reporting standards.

The current U.S. presidentialgovernment administrationhas announcedrecently the imposition ofimplemented significant new tariffs that will be imposed on our imports and exports, which couldhave negatively impactimpacted international trade relations,relations resultand resulted in retaliatory actions,actions by foreign governments. Although certain tariffs were subsequently lifted or invalidated, trade policy remains highly uncertain, and causethe inflationaryU.S. pressuresgovernment andmay higherimpose costs.new or modified tariffs in the future. The impositionimposition, modification, or reinstatement of such tariffstariffs, inclusive of the impact of potential tariff refunds, and retaliatory measures could have a significant adverse impact on our results of operations, financial position, or cash flows, depending on their timing, degree, and magnitude. Further, we may be required to raise prices for our products to offset the additional costs, which could reduce demand and result in the loss of customers. Additionally, tariffs may harm our competitive position in key markets, as we may be at a disadvantage as compared to our competitors who operate inin, or who purchase commodities from, countries that are subject to lesser tariffs.

We are also subject to various laws and regulations that are continuously evolving in the U.S., Canada, and other jurisdictions regarding privacy, data protection, and data security, including those related to the collection, storage, handling, use, disclosure, transfer, and security of personal data. For example, as of early 2026, 20 states in the U.S., California, Colorado, Connecticut, Delaware, Iowa, Minnesota, Montana, Nebraska, New Hampshire, New Jersey, Oregon, Tennessee, Texas, Utah, and Virginia allU.S. have comprehensive privacy laws in effect that impose privacy obligations on companies that do business in thesethose statesstates, and that collect personal information from certain individuals. In some jurisdictions, these laws impose civil penalties on companies that fail to comply with thesethe associated legal requirements including, in certain cases, a private rightrights of action for datasuch breaches.failure. In addition, several other states have passed similar comprehensive privacy laws that are set to take effect in either the second half of calendar year 2025 or in calendar year 2026, and still more states havecontinue eitherto already introduced or haveintroduce corresponding privacy rights bills in committee, which means the scope of applicable privacy laws we will be subject to willmay continue to expand beyond calendar year 2026.expand. Therefore, on an ongoing basis, we will continuously evaluate our new privacy obligations and develop additional compliance mechanisms and processes as may be required. There are also a wide range of enforcement agencies at both state and federal levels that can investigate companies for privacy and data security concerns based on general consumer protection laws. Accordingly, failureFailure to comply with federal and state laws regarding privacy and security of personal information could expose us to fines and penalties.

There is a growing focus from certain investors, customers, and other key stakeholders regarding corporate responsibility resulting in an increased emphasis on corporate responsibility ratings. Corporate responsibility ratings are released by a variety of third-party organizations who provide reports on companies in order to measure and assess corporate responsibility performance. We risk damage to our brand and reputation if it is determined that our corporate responsibility procedures or standards do not meet the standards set by our stakeholders. Any failure in our decision-making or related investments regarding corporate responsibility could affect consumer perceptions of our brand.brands.

As set forth in the Intergovernmental Panel on Climate Change Sixth Assessment Report, global average temperatures are gradually increasing due to increased concentration of carbon dioxide and other greenhouse gases in the atmosphere, which have contributed to and are expected to continue contributing to significant changes in weather patterns around the globe and an increase in the frequency and severity of extreme weather and natural disasters. In the event that climate change has a negative effect on agricultural productivity, we may be subject to decreased availability or less favorable pricing for certain commodities that are necessary for our products, such as green coffee, peanuts, oils andoils, fats, flour, sugar, fruit, and other ingredients. We may also be subjected to decreased availability or less favorable pricing for water or energy as a result of such change, which could impact our manufacturing and distribution operations. In addition, natural disasters, extremesevere weather conditions,events, and other natural conditions may disrupt the productivity of our facilities or the operation of our supply chain, which could increase our insurance or other operating costs or require us to make additional, unplanned capital expenditures. Specifically, in January 2024, a snow and ice storm in the south caused our cat food plant in Decatur, Alabama to be temporarily shut down. Although we consider these to be uncommon events, and we were able to effectively minimize any disruptions through our business continuity planning efforts, extreme weather could disrupt our production in the future, adversely affecting our ability to meet customer deadlines and supply demands.

Additionally, there is an increased focus by foreign, federal, state, and local regulatory and legislative bodies regarding environmental policies relating to climate change, regulating greenhouse gas emissions, energy policies, and sustainability, including single-use plastics.plastics and recycling instructions. Increased energy or compliance costs and expenses due to the impacts of climate change and additional legal or regulatory requirements regarding climate change designed to reduce or mitigate the effects of carbon dioxide and other greenhouse gas emissions on the environment could be costly and may cause disruptions in, or an increase in the costs associated with, our manufacturing and distribution facilities, as well as increased supply chain costs. Moreover, compliance with any such legal or regulatory requirements may require us to make significant changes to our business operations, strategy, and reporting. Collecting, measuring, and analyzing information relating to climate change and sustainability matters can be costly, time consuming, dependent on third-party cooperation, and unreliable. Furthermore, methodologies for measuring, tracking, and reporting on climate change and sustainability continue to change over time, which requires our processes and controls for such data to evolve as well.

We rely on information technology (“IT”) networks and systems, including the Internet, to process, transmit, and store electronic information, and the importance of such networks and systems has increased due to our reliance on third-party cloud computing services and many of our employees working remotely. In particular, we depend on our IT infrastructure to effectively manage our business data,data and support key operational processes, including supply chain, logistics, finance, manufacturing, and other business processes and for digital marketing activitiesactivities, and electronic communications betweenwith Company personnelpersonnel, and our customerscustomers, and suppliers. If we do not allocate and effectively manage the resources necessary to build, sustain, and protect an appropriate technology infrastructure, or we do not effectively implement system upgrades, our business or financial results could be negatively impacted. Furthermore, the rapid evolution of emerging technologies such as artificial intelligence may intensify our cybersecurity risks. We are regularly the target of attempted cyber and other security threats. Therefore, we continuously monitor and update our IT networks and infrastructure to prevent, detect, address, and mitigate the risk of unauthorized access, misuse, computer viruses, phishing attacks, malware, ransomware, social engineering, password theft, physical breaches, and other events that could have a security impact. In addition, the ongoing geopolitical conflicts have heightened the risk of cyberattacks. We invest in industry-standard security technology to protect our data and business processes against the risk of data security breaches and cyber-based attacks. We believe our security technology tools and processes provide adequate measures of protection against security breaches and reduce cybersecurity risks. Nevertheless, despite continued vigilance in these areas, security breaches or system failures of our infrastructure, whether due to attacks by hackers, employee error, or other causes, can create system disruptions, shutdowns, transaction errors, or unauthorized disclosure of confidential or proprietary information. If we are unable to prevent such breaches or failures, our operations could be disrupted, or we may suffer financial damage or loss because of lost or misappropriated information. In addition, the cost to remediate any damages to our IT systems suffered as a result of a cyber-based attack could be significant.

Further, we have outsourced several IT support services and administrative functions, including benefit plan administration and other functions,functions to third-party service providers and strategic partners and may outsource other functions in the future to achieve cost savings and efficiencies. In addition, certain of our processes rely on third-party cloud computing services. If the service providers to which we outsource these functions dofail notto perform effectively,adequately or we are unable to protect such information technology systems against data corruption or cybersecurity incidents, we may not be able to achieve the expected benefits and may have to incur additional costs to correct incidents or errors made by such service providers. Depending on the function involved, such incidents or errors may also leadresult toin business disruption, processing inefficiencies, inaccurate financial reporting, or the lossloss, ofdamage, or damageunauthorized todisclosure of intellectual property throughor a security breach, the loss ofother sensitive data through a security breach, or otherwise.breach.

We may face complications with the design or implementation of our new enterprise performanceresource managementplanning (“EPMERP”) system, which may negatively affect our business and operations.

We rely on IT networks and systems to manage our business and operations and occasionally implement new and upgrade our existing IT systems. We are in the process of a multi-year implementation of a new EPM system, inclusive of an enterprise resource planningERP system (i.e., general ledger), through the use of Oracle Cloud Solutions. The EPM system will replace our existing financial system and is designed to accurately maintain our financial records, enhance operational functionality and efficiency, and provide timely information to our management team. The EPMERP system implementation process has required, and will continue to require, the investment of significant personnel and financial resources over the duration of the project. We anticipate full integration of the EPM system in early 2026. Further, we may not be able to successfully implement the EPMERP system without experiencing delays, increased costs, and other complications, including potential design defects, miscalculations, testing requirements, and the diversion of management’s attention from day-to-day business operations. If we are unable to successfully design and implement the new EPMERP system as planned, our financial condition, results of operations, and cash flows could be negatively impacted. In addition, if the EPMERP system does not operate as intended, the effectiveness of our internal controls over financial reporting could be adversely affected.

We have fourfive reportable segments: U.S. Retail Coffee, U.S. Retail Frozen Handheld and Spreads, U.S. Retail Pet Foods, and Sweet Baked Snacks. These segments in total comprised 86 percent of consolidated net sales in 2025Snacks, and representAway aFrom major portion of our strategic focus – the sale of branded food and beverage products with leadership positions to consumers through retail outlets in North America.Home. Products within our U.S. retailRetail marketreportable segments are primarily sold through a combination of direct sales and brokers to food retailers, club stores, discount and dollar stores, online retailers, pet specialty stores, drug stores, military commissaries, mass merchandisers, and distributors. The Sweet Baked Snacks reportable segment includes products distributed across all channels, both domestically and in foreign countries, such as supermarket chains, convenience stores, national mass retailers, discount and dollar stores, club stores, the vending channel, drug stores, and military commissaries. International andThe Away From Home reportable segment 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).

Our strategic vision is to engage, delight, and inspire consumers by building brands they love and leading in growingattractive categories. ThisIt visionprovides is ourclear long-term directiondirection, thataligning guidesthe organization and guiding business priorities and aligns our organization.priorities. As a companyCompany of iconic brands#1 and newleading favorites,brands, complemented by emerging, on-trend brands, we will continue to drive balanced, long-term growth, primarily in North America. Further, we will continue to guide the transformation of our business by advancing our strategy of leading in the attractive categories of pet, coffee, and snacking.

Our strategic growth objectives include net sales increasing by a low single-digit percentage and operating income excluding non-GAAP adjustments (“adjusted operating income”) increasing by a mid-single-digit percentage on average over the long term. Related to income per diluted share excluding non-GAAP adjustments (“adjusted earnings per share”), our strategic growth objective is to increase by a high single-digit percentage over the long term. We expect organic growth, including new products, to drive much of our top-line growth, while the contribution from acquisitions will vary from year to year. Our non-GAAP adjustments include amortization expense and impairment charges related to intangible assets, certain divestiture, acquisition, integration, and restructuring costs (“special project costs”), gains and losses on divestitures, the net change in cumulative unallocated gains and losses on commodity and foreign currency exchange derivative activities (“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. Due to thea unknowndynamic andexternal potentially prolonged impact of the inflationary environment and challenged supply network,environment, we may experience difficulties or be delayed in achieving our long-term strategies; however, we continue to evaluate the effects of the macroeconomic environment on our long-term growth objectives.

Over the past five years, both net sales,sales and adjusted operating income, and adjusted earnings per shareincome increased at a compound annual growth rate of approximately 2 percent, 4while percent,adjusted andearnings 3per percent,share respectively.was flat. These changes were primarily driven by an increase in net sales from the acquisition of Hostess Brands, partially offset by the reduction in net sales from the divested Voortman business and certain Sweet Baked Snacks value brands in 2025, Sahale Snacks and Canada condiment businesses in 2024, certain pet food brands in 2023, and the private label dry pet food and natural beverage and grains businesses in 2022, and the Crisco® and Natural Balance® businesses in 2021.2022. Net cash provided by operating activities decreased at a compound annual growth rate of approximately 1 percent over the past five years. Our cash deployment strategy is to balance reinvesting in our business through acquisitions and capital expenditures with returning cash to our shareholders through the payment of dividends and share repurchases. Our current deployment strategy also includes a significant focus on debt repayment.

On March 3, 2025, we sold certain Sweet Baked Snacks value brands to JTM. The transaction included certain trademarks and licenses, a manufacturing facility in Chicago, Illinois, and approximately 400 employees who supported the business. Under our ownership, these Sweet Baked Snacks value brands generated net sales of approximately $48.4 and $30.0 in 2025 and 2024, respectively, which were included in the Sweet Baked Snacks reportable segment. Net proceeds from the divestiture were $34.6, inclusive of the final working capital adjustment and cash transaction costs. We recognized a pre-tax loss of $44.2 during 2025, within loss (gain) on divestitures – net in the Statement of Consolidated Income (Loss) and Statement of Consolidated Cash Flows.

On December 2, 2024, we sold the Voortman business to Second Nature. The transaction included products sold under the Voortman brand, inclusive of certain trademarks, a leased manufacturing facility in Burlington, Ontario, and approximately 300 employees who supported the business. Under our ownership, the Voortman business generated net sales of approximately $86.3 and $65.0 in 2025 and 2024, respectively, which were included in the Sweet Baked Snacks reportable segment. Net proceeds from the divestiture were $291.4, inclusive of the final working capital adjustment and cash transaction costs. We recognized a pre-tax loss of $265.9 during 2025, within loss (gain) on divestitures – net in the Statement of Consolidated Income (Loss) and Statement of Consolidated Cash Flows.

On January 2, 2024, we sold the Canada condiment business to TreeHouse Foods. The transaction included Bick’s pickles, Habitant pickled beets, Woodman’s horseradish, and McLarens pickled onions brands, inclusive of certain trademarks. Under our ownership, these brands generated net sales of $43.8 and $61.6 in 2024 and 2023, respectively,2024, which werewas included in the International operating segment. Final net proceeds from the divestiture were $25.3, inclusive of a working capital adjustment and cash transaction costs. Upon completion of this transaction during 2024, we recognized a pre-tax loss of $5.7, within loss (gain) on divestitures – net in the Statement of Consolidated Income (Loss) and Statement of Consolidated Cash Flows.

On November 1, 2023, we sold the Sahale Snacks business to Second Nature. The transaction included products sold under the Sahale Snacks brand, inclusive of certain trademarks and licensing agreements, a leased manufacturing facility in Seattle, Washington, and approximately 100 employees who supported the brand. Under our ownership, the Sahale Snacks brand generated net sales of $24.1 and $48.4 in 2024 and 2023, respectively,2024, primarily included in the U.S. Retail Frozen Handheld and Spreads reportable segment. Final net proceeds from the divestiture were $31.6, inclusive of a working capital adjustment and cash transaction costs. Upon completion of this transaction during 2024, we recognized a pre-tax loss of $6.7, within loss (gain) on divestitures – net in the Statement of Consolidated Income (Loss) and Statement of Consolidated Cash Flows.

During 2025,2026, we continued to experience input cost inflation and a dynamic and evolving macroeconomic environment, inclusive ofincluding tariffs, regulatory and policy changes, and changesshifts in consumer behaviors,behavior, including health and wellness trends, which we anticipate willcould persist into 2026.2027. Further, thethese higher costs have required price increases across ourcertain business, and we anticipate the price elasticityareas of demandour couldbusiness remain elevated intoduring 2026 as consumers continue to experiencefaced broader inflationary pressures and arewere selective in their spending. In responsesupport toof theongoing inflationarycost pressures,management and earnings growth, we continueremain to focusfocused on the delivery ofexecuting our company-wide transformation initiativeinitiative, which is designed to deliberately translate our continuous improvement mindset into sustainable productivity initiativesgains. inThese orderefforts are intended to growexpand our profit margins andwhile reinvestenabling reinvestment in the Company to enablesupport future growth and cost savings.

In addition, it is possibleAdditionally, significant disruptions in our supply chain disruptions could occurarise if certain geopolitical events continue to impact marketsglobal around the world,markets, including the impact of potential shipping delays duedriven toby supply and demand imbalances, as well as labor shortagesshortages, and tariffs. We also continue to work closely with our customers and external business partners, taking additionalproactive actionsmeasures to ensuresupport safety, ensure business continuity, and maximize product availability. WeProduction havehas been maintained production atacross all our facilitiesfacilities, and availability of appointments at distribution centers.centers Furthermore,remain we have implemented measures to manage order volumes to ensure a consistent supply across our retail partners during periods of high demand. However, to the extent that high demand levels or supply chain disruptions delay order fulfillment, we may experience volume loss and elevated penalties. Although we do not have any operations in Russia, Ukraine, Israel, Palestine, China or Taiwan, we continue to monitor the environment for any significant escalation or expansion of economic or supply chain disruptions, including broader inflationary costs and the impact of tariffs, as well as regional or global economic recessions.available.

(A)Net sales excluding acquisition, divestitures,divestitures and foreign currency exchange is a non-GAAP financial measure used to evaluate performance internally. This measure provides useful information to investors because it enables comparison of results on a year-over-year basis.

Net sales in 20252026 increased $547.4,$324.8, or 74 percent, which includes incremental net sales in the current year of $669.3 related to the Hostess Brands acquisition, partially offset by $134.0$134.7 of noncomparable net sales in the prior year related to divestitures. Net sales excluding acquisition, divestitures,divestitures and foreign currency exchange increased $22.8.$456.2. Net price realization contributed 29 percentage points to net sales, reflectingprimarily driven by higher net pricing for coffee, partially offset by lower net pricing for sweet baked goods, dog snacks, and cat food.coffee. Volume/mix decreased net sales by 24 percentage points, primarily driven by lowerdecreases for coffee, sweet baked goods, dog snacks, peanut butter, and fruit spreads, as well as the lapping of contract manufacturing sales related to the divested pet food brands andin decreasesthe forprior coffee, dog snacks, and sweet baked goods,year, partially offset by increasesan increase for Uncrustables sandwiches and cat food.sandwiches.

Operating income (loss) decreasedincreased $1,979.7,$1,034.1, primarily reflecting pre-taxa noncash$1.0 billion decrease in impairment charges of $1,661.6 and $320.9 related to the goodwill of the Sweet Baked Snacks reporting unit and the Hostess brand indefinite-lived trademark, respectively,the thelapping of a $310.1 net pre-tax loss on divestitures,divestitures reflectingin the $44.2prior year, and $265.9a pre-tax$32.4 losses on the divestiture of certain Sweet Baked Snacks value brands and the Voortman business, respectively, and an $82.8 increasedecrease in selling, distribution, and administrative (“SD&A”) expenses. These impacts wereexpenses, partially offset by the increasedecrease in gross profit, a $94.4 decrease in other special project costs primarily related to integration costs associated with the acquisition of Hostess Brands, and lapping a $39.1 charge in the prior year related to the termination of a supplier agreement.profit.

Our non-GAAP adjustments include the exclusion of 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”), increaseddecreased $224.0,$176.4, or 75 percent, as compared to the prior year, primarily reflecting the exclusion of the change in net cumulative unallocated derivative gains and losses and the exclusion of special project costs as compared to GAAP gross profit. Adjusted operating income,income whichdecreased $146.4, or 8 percent, as compared to the prior year, further reflectsreflecting the exclusion of theamortization expense, noncash impairment charges of $2.0 billion associated withcharges, the goodwill of the Sweet Baked Snacks reporting unit and Hostess brand indefinite-lived trademark, the $310.1 net pre-tax loss on divestitures,divestitures in the prior year, and other special project costs as compared to GAAP operating income, increased $188.5, or 12 percent, as compared to the prior year.income.

Net interest expense increaseddecreased $124.4,$7.5, or 472 percent, in 2025,2026, primarily due to increasedreduced interestdebt expenseoutstanding relatedas compared to the newprior Senior Notes issued during 2024 to partially finance the acquisition of Hostess Brands.year. For additional information, refer to Note 8: Debt and Financing Arrangements.

Income taxes increaseddecreased $68.4$107.7, or 59 percent, in 2025,2026, as compared to the prior year. The effective income tax rate for 2026 varied from the U.S. statutory income tax rate of 21.0 percent primarily due to the unfavorable permanent impact associated with the goodwill impairment charge for the Sweet Baked Snacks reporting unit and state income taxes. The effective income tax rate for 2025 varied from the U.S. statutory income tax rate of 21.0 percent primarily due to state income taxes and the unfavorable permanent impacts associated with the goodwill impairment charges for the Sweet Baked Snacks reporting unit and the sale of the Voortman business, as well as state income taxes, partially offset by favorable noncash deferred tax benefits associated with the integration of Hostess Brands into our Co mpanyCompany and certain state legislative changes enacted during the year. The effective income tax rate for 2024 varied from the U.S. statutory income tax rate of 21.0 percent primarily due to state income taxes and unfavorable tax impacts associated with the acquisition of Hostess Brands, partially offset by a favorable tax impact of the sale of the Sahale Snacks business. We anticipate a full-year effective income tax rate for 20262027 to be approximately 23.824.4 percent. For additional information, refer to Note 14: Income Taxes.

Divestiture Costs: Total divestiture costs incurred to date related to the divested Sahale Snacks and Canada condiment businesses that were divested in 2024 were $6.4, which included $4.3 and $2.1 of employee-related and other transition and termination costs, respectively.respectively, all of which were cash charges. We did not incur any divestiture costs in 2026 and incurred divestiture costs of $0.9 and $5.5 during 2025 and 2024, respectively, which2025, primarily consistedconsisting of employee-related costs and a noncash gain related to a lease termination in 2025. As of April 30, 2025, weWe do not anticipate any additional costs to be incurred related to these divestiture activities.

Furthermore,As a result of our recent divestitures, we identified opportunities to address certain distribution inefficiencies, as a result of the divestitures. We anticipate incurring approximately $12.0 of costs related to these efforts, consisting primarily of other transition and termination charges. The majority of these costs are expected to be cash charges and incurred by the end of 2026.inefficiencies. We have recognized total cumulative costs of $9.0 related to these efforts, of which $2.5 and $6.5 were recognized during 2026 and 2025, respectively, all of which were cash charges, primarily consisting of other transition and termination costs. We do not anticipate any additional costs to be incurred related to these activities. For additional information, see Note 3: Divestitures.

Integration Costs: TotalWe have recognized total cumulative integration costs related to the acquisition of Hostess Brands areof anticipated$187.4, toof bewhich approximately $190.0$2.5 and include$37.5 were recognized during 2026 and 2025, respectively. These costs primarily consisted of transaction costs, employee-related costs, and other transition and termination charges, with the majority expectedof towhich bewere cash charges. We havedo recognizednot totalanticipate cumulativeany integrationadditional costs of $184.9, of which $37.5 were recognized during 2025. We anticipate the remaining integration costs willto be incurred by the end of 2026 and are expectedrelated to bethese splitintegration between employee-related and other transition and termination costs.activities.

Restructuring Costs: OnDuring May 27, 2025,2026, we announced plans to closeclosed our Indianapolis, Indiana manufacturing facility, which manufacturesmanufactured Hostess branded products, and consolidateconsolidated operations into other existing facilities by early calendar year 2026 to further optimize operations forwithin our Sweet Baked Snacks reportable segment. We anticipatehave incurringrecognized approximatelytotal $75.0cumulative costs of costs$83.5 relatedduring to these efforts,2026, consisting primarily of $60.0 in noncash charges for accelerated depreciation and $15.0 in employee-related and other transition and termination costs. We do not anticipate remaining charges related to these restructuring activities to be material in 2027.

The raw materials we use in each of our segments are primarily commodities, agricultural-based products, and packaging materials. The most significant of these materials, based on 20252026 annual spend, are green coffee, peanuts, oils andoils, fats, flour, sugar, and fruit. Green coffee, corn, certain meals, oils, and grains are traded on active regulated exchanges, and the price of these commodities fluctuates based on market conditions. Derivative instruments, including futures and options, are used to minimize the impact of price volatility for these commodities.

We source peanutspeanuts, and oilsoils, and fats mainly from North America. We are one of the largest roasters of peanuts in the U.S. and frequently enter into long-term purchase contracts for various periods of time to mitigate the risk of a shortage of this commodity. The oils we purchase are mainly palm, soybean, and peanut. The price of peanuts,agricultural proteincommodities meals,are and oils isprimarily driven primarily by weather, which impacts crop sizes and yield, as well as global demand, especially from large importing countries such as China and India.

We frequently enter into long-term contracts to purchase plastic containers, which are sourced mainly within the U.S. Plastic resin is made from petrochemical feedstock and natural gas feedstock, and the price can be influenced by feedstock, energy, and crude oil pricesprices, as well as global economic and geopolitical conditions.

We have fourfive reportable segments: U.S. Retail Coffee, U.S. Retail Frozen Handheld and Spreads, U.S. Retail Pet Foods, and Sweet Baked Snacks.Snacks, and Away From Home. The presentation of International and Away From HomeOther represents athe combination of all otherInternational operating segmentssegment, thatwhich aredoes not individuallymeet reportable.the criteria to be presented as a reportable segment under FASB ASC 280.

The U.S. Retail Coffee reportable segment primarily includes the domestic sales of Folgers, Dunkin’, and Café Bustelo branded coffee; the U.S. Retail Frozen Handheld and Spreads reportable segment primarily includes the domestic sales of Uncustables,Uncrustables, Jif, and Smucker’s branded products; the U.S. Retail Pet Foods reportable segment primarily includes the domestic sales of Meow Mix, Milk-Bone, Pup-Peroni, and Canine Carry Outs branded products; and the Sweet Baked Snacks reportable segment primarily includes all domestic and foreign sales of Hostess branded products in all channels. WithThe Away From Home reportable segment includes the sale of all products, 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).

The U.S. Retail Coffee segment net sales increased $102.2$498.3 in 2025.2026. Net price realization increased net sales by 522 percentage points, primarily driven byreflecting higher net pricing foracross the Folgers and Café Bustelo brands, partially offset by lower net pricing for the Dunkin’ brand.portfolio. Volume/mix decreased net sales by 25 percentage points, primarily reflecting decreases for the FolgersDunkin’ and Dunkin’Folgers brands, partially offset by an increase for the Café Bustelo brand. Segment profit increaseddecreased $35.9,$93.6, primarily reflecting higher netcosts, price realization, lapping a $39.1 charge in the prior year related to the terminationinclusive of acommodity suppliercosts agreement,and lowertariffs, unfavorable volume/mix, and higher marketing spend, and favorable property taxes, partially offset by higher commoditynet costsprice and unfavorable volume/mix.realization.

The U.S. Retail Pet Foods segment net sales decreased $159.2$63.6 in 2025.2026. Volume/mix decreased net sales by 75 percentage points, primarily reflecting lowera decrease for dog snacks and the lapping of contract manufacturing sales related to the divested pet food brands,brands asin the contractprior manufacturing agreement with Post concluded at the end of 2025, and a decrease for dog snacks,year, partially offset by an increase for cat food. Net price realization decreasedincreased net sales by 21 percentage points,point, primarily reflecting higher tradenet spendpricing for cat food and dog snacks. Segment profit increased $57.5,$13.7, primarily reflecting lower costs and decreased operating and distribution expenses, partially offset by lowerhigher net price realization and lower marketing spend, partially offset by unfavorable volume/mix.

We acquired Hostess Brands on November 7, 2023, as discussed in Note 2: Acquisition. During 2025, the Sweet Baked Snacks segment contributed net sales ofdecreased $1,178.8$207.5 andin segment2026, profitinclusive of $219.8.the Excludingimpact of $134.7 of noncomparable net sales of $669.3 in the current year related to the Hostess Brands acquisition and $66.1 in the prior year related to the divestituredivested ofVoortman business and certain Sweet Baked Snacks value brandsbrands. andExcluding the Voortmannoncomparable business,impact of the divestitures, net sales decreased $61.7,$72.8, or 117 percent during 2025.percent. Volume/mix decreased net sales by 78 percentage points, primarily reflecting decreases for snack cakescakes, private label, and private label products.breakfast. Net price realization decreasedincreased net sales by 41 percentage points,point, primarily reflecting lowerhigher net pricing across the portfolio. Segment profit increaseddecreased $81.6 during 2025,$122.6, primarily reflecting thehigher impact of noncomparable segment profit in the current year related to the Hostess Brands acquisition, partially offset by lower net price realization,costs, unfavorable volume/ mix, and the impact of noncomparable segment profit in the prior year related to the divestitures,divested businesses, partially offset by higher costs,net andprice increased marketing spend.realization.

International and Away From Home

International and Away From Home net sales increased $1.5$116.0 in 2025, including the noncomparable impact of $52.8 of net sales in the prior year primarily related to the divestitures and $10.7 of unfavorable foreign currency exchange. Excluding the noncomparable impact of the divested brands and foreign currency exchange, net sales increased $65.0, or 6 percent.2026. Net price realization contributed 510 percentage points to net sales, primarily driven by higher net pricing acrossfor the majority of the portfolio.coffee. Volume/mix wascontributed neutral6 percentage points to net sales, asreflecting increases for Uncrustables sandwiches and peanut butter were mostly offset by a decrease for coffee. Segment profit increased $39.3,$44.0, 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 primarily related to the new Uncrustables sandwiches manufacturing facility.costs.

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 increaseddecreased to $58.6 at April 30, 2026, compared to $69.9 at April 30, 2025, compared to $62.0 at April 30, 2024.2025.

The $19.0$263.2 decreaseincrease in cash provided by operating activities in 20252026 was primarily driven by highera decrease in cash used for income and other taxes, primarily reflecting the timing of income tax payments and lower taxable income, as well as lower working capital requirements in 2025 and lapping the $42.5 proceeds received from settlement of the interest rate contracts assumed as part of the acquisition of Hostess Brands in the prior year,2026, partially offset by higherlower net income (loss) adjusted for noncash items in the current year. The cash required to fund working capital increaseddecreased compared to the prior yearyear, primarily driven by anlower increaseinventories, reflecting moderation in cashinput usedcost forinflation accruedduring liabilitiesthe reflectingcurrent year, the timing of interestsettling paymentsour derivative instruments, and a decreasereduction in thepayments payablerelated forto transition s ervicesservices agreements entered into in connection with the divestitures and inventories reflecting higher inventory levels and input cost inflation in the current year.divestitures. These usesincreases ofin cash were partially offset by andecreases increaserelated to changes in cash from trade receivablesreceivables, duereflecting tohigher sales and the timing of salescash collections, and cashchanges collections andin accounts payablepayable, duereflecting tothe timing of spend and cash payments.

As part of ongoing efforts to maximize working capital, we work with our suppliers to optimize our terms and conditions, which includes the extension of payment terms. 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. 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.discretion. We have no economic interest in a supplier’s decision to enter into these agreements. Our rights and obligations to our suppliers, including amounts due and scheduled payment terms, are not impacted by our suppliers’ decisions to sell amounts under these arrangements. As of April 30, 20252026 and 2024,2025, $340.4$325.1 and $384.9$340.4 of our outstanding payment obligations, respectively, were elected and sold to a financial institution by participating suppliers. During 20252026 and 2024,2025, we paid $1,562.3$1,270.1 and $1,685.5,$1,562.3, respectively, to a financial institution for payment obligations that were settled through the supplier financing program.

InWe Marchhave 2025,available wea also$2.0 entered into anbillion unsecured revolving credit facility with a group of ten banks,banks which provides for a revolving credit line of $2.0 billion andthat matures in March 2030. As a result of the new facility in March 2025, we terminated the previous $2.0 billion revolving credit facility. Additionally, we participate in a commercial paper program under which we can issue short-term, unsecured commercial paper not to exceed $2.0 billion at any time. The commercial paper program is backed by our revolving credit facility and reduces what we can borrow under the revolving credit facility by the amount of commercial paper outstanding. Commercial paper is used as a continuing source of short-term financing for general corporate purposes. As of April 30, 2025,2026, we had $641.0$421.0 of short-term borrowings outstanding, which were issued under our commercial paper program at a weighted-average interest rate of 4.734.03 percent.

(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 and nine months ended JanuaryJuly 31, 2026 and 2025. All comparisons presented are to the corresponding period of the prior year, unless otherwise noted.

(A) Net sales excluding divestitures and foreign currency exchange is a non-GAAP financial measure used to evaluate performance internally. This measure provides useful information to investors because it enables comparison of results on a year-over-year basis.

Net sales in the thirdfirst quarterthree months of 20262027 increased $153.4,$106.0, or 7 percent, which includes $26.3 of noncomparable net sales in the prior year related to divestitures. Net sales excluding divestitures and foreign currency exchange increased $177.7, or 85 percent. Net price realization contributed 104 percentage points to net sales, primarily driven by higher net pricing for coffee. Volume/mix decreasedincreased net sales by 21 percentage points,point, primarily driven by increases for Uncrustables sandwiches and coffee, partially offset by decreases for sweet baked goods and fruitpeanut spreads, and lapping contract manufacturing sales related to the divested pet food brands in the prior year, partially offset by an increase for Uncrustables sandwiches.butter.

Operating Income (Loss)

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

Gross profit decreasedincreased $389.0,$504.9, or 15106 percent, in the first ninethree months of 2026,2027, primarily drivenreflecting by higher commoditylower costs, aincluding the net unfavorablefavorable impact of derivative gains and losses, tariffs,as unfavorablewell volume/mix,as antariff increase in special project costs, and the noncomparable impact of divestitures, partially offset byrefunds, higher net price realization.realization, and favorable volume/mix.

Operating lossincome increased $9.5, or 13 percent,$466.0 in the first ninethree months of 2026,2027, primarily reflecting the decreaseincrease in gross profit, partially offset by lappingan a $311.0 net pre-tax loss on divestituresincrease in theselling, prior year, a $40.8 decrease in impairment charges related to the goodwill of the Sweet Baked Snacks reporting unitdistribution, and Hostessadministrative brand(“SD&A”) indefinite-lived trademark, lower amortization expense, and a decrease in other special project costs.expenses.

AdjustedOur 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”) decreasedincreased $207.5,$207.0, or 828 percent, as compared to the prior year, reflecting the exclusion of the change in net cumulative unallocated derivative gains and losses and special project costs as compared to GAAP gross profit. AdjustedOperating income excluding non-GAAP adjustments (“adjusted operating income”) decreasedincreased $206.1,$170.4, or 1546 percent, as compared to the prior year, further reflecting the exclusion of theamortization net pre-tax loss on the divestitures in the prior year and the change in noncash impairment charges, amortization,expense and other special project costs.

Net interest expense wasdecreased comparable$17.9, or 18 percent, during the first three months of 2027, primarily reflecting reduced debt outstanding as compared to the prior year for the three and nine months ended January 31, 2026.year. For additional information, refer to Note 86: Debt and Financing Arrangements.

Restructuring Costs: During the first quarter of 2026, we announced plans to closeclosed our Indianapolis, Indiana manufacturing facility, which manufacturesmanufactured Hostess branded products, and consolidated operations into other existing facilities during the third quarter of 2026 to further optimize operations within our Sweet Baked Snacks segment. We have recognized total cumulative costs of $74.4,$84.1, of which included $26.5$0.6 and $74.4$20.7 were recognized during the three months ended July 31, 2026 and 2025, respectively. These costs primarily consisted of employee-related and other transition and termination costs,charges and employee-related costs. The remaining charges related to these restructuring activities are not expected to be material during the threeremainder andof nine months ended January 31, 2026, respectively. We anticipate any remaining charges to be minimal.2027.

The U.S. Retail Coffee segment primarily includes the domestic sales of Folgers, Dunkin’, and Café Bustelo branded coffee; the U.S. Retail Frozen Handheld and Spreads segment primarily includes the domestic sales of Uncrustables, Jif, and Smucker’s branded products; the U.S. Retail Pet Foods segment primarily includes the domestic sales of Meow Mix, Milk-Bone, Pup-Peroni, and Canine Carry Outs branded products; and the Sweet Baked Snacks segment primarily includes all domestic and foreign sales of Hostess branded products in all channels. WithThe Away From Home reportable segment includes the sale of all products, 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).

The U.S. Retail Coffee segment net sales increased $406.3$90.6 in the first ninethree months of 2026.2027. Net price realization increased net sales by 2310 percentage points, reflecting higher net pricing across the portfolio. Volume/mix decreasedincreased net sales by 32 percentage points, primarily reflecting decreasesincreases for the Dunkin’ and Folgers brands, partially offset by an increase for the Café Bustelo brand.brands. Segment profit decreasedincreased $96.4,$165.8, primarily reflecting highertariff commodity costs, tariffs, unfavorable volume/mix,refunds and higher marketingnet spend,price realization, partially offset by higher netmarketing price realization.spend.

The U.S. Retail Frozen Handheld and Spreads segment net sales increased $8.8$14.6 in the thirdfirst quarterthree months of 2026.2027. Net price realization contributed 2 percentage points to net sales, primarily reflecting higher net pricing across the portfolio. Volume/mix increased net sales by 1 percentage point, primarily reflecting an increase for Uncrustables sandwiches, partially offset by higher trade spend for peanut butter. Volume/mix was neutral to net sales, as an increasedecreases for peanut butter was mostly offset by a decrease forand fruit spreads. Segment profit increased $4.4,$15.4, primarily driven by higher net price realizationrealization, lower marketing spend, and lowerfavorable pre-production expenses related to the new Uncrustables sandwiches manufacturing facility,volume/mix, partially offset by higher costs and unfavorable volume/mix.costs.

The U.S. Retail Pet Foods segment net sales decreasedincreased $5.9$3.7 in the thirdfirst quarterthree months of 2026.2027. Volume/mix decreasedincreased net sales by 21 percentage points,point, primarily driven by lapping contract manufacturing sales related to the divested pet food brands in the prior year and a decrease for dog snacks, partially offset byreflecting an increase for cat food. Net price realization was neutral to net sales, as higher net pricing for cat food was mostly offset by lowerhigher nettrade pricingspend for dog snacks. Segment profit increaseddecreased $5.1,$2.4, primarily reflecting lowerhigher costs and increased marketing spend.spend, partially offset by tariff refunds and favorable volume/mix.

The Sweet Baked Snacks segment net sales decreased $193.7$16.7 in the first ninethree months of 2026, inclusive of the impact of $129.6 of noncomparable net sales in the prior year related to the divested Voortman business and certain Sweet Baked Snacks value brands. Excluding the noncomparable impact of the divestitures, net sales decreased $64.1, or 8 percent.2027. Volume/mix decreased net sales by 78 percentage points, primarily reflecting decreases for snack cakes and private label products.breakfast. Net price realization decreasedcontributed 2 percentage points to net sales by 1 percentage point,sales, primarily reflecting lowerhigher net pricing acrossfor thesnack majoritycakes ofand the portfolio.donuts. Segment profit decreased $131.6,$4.3, primarily reflecting higher costs,costs and unfavorable volume/mix, thepartially impactoffset ofby noncomparablehigher segmentnet profitprice in the prior year related to the divested businesses,realization and higherlower marketing spend.

International and Away From Home

International and Away From Home net sales increased $85.1$5.4 in the first ninethree months of 2026,2027.Volume/mix including $0.2 of favorable foreign currency exchange. Excluding the noncomparable impact of foreign currency exchange,increased net sales increasedby $84.9,2 orpercentage 10points, percent.primarily driven by increases for Uncrustables sandwiches and fruit spreads, partially offset by a decrease for coffee. Net price realization contributedwas 10 percentage pointsneutral to net sales, primarily driven byas higher net pricing for coffee. Volume/mixcoffee was neutral to net sales as decreases for coffee, fruit spreads, portion control products, and dog snacks were mostly offset by anlower increasenet pricing for Uncrustables sandwiches.sandwiches and portion control products. Segment profit increased $35.7,$9.8, primarily drivenreflecting bytariff higher net price realizationrefunds and lowerfavorable selling, distribution, and administrative expenses,volume/mix, partially offset by higher costs and tariffs.costs.

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 $52.8$43.2 at JanuaryJuly 31, 2026, compared to $69.9$58.6 at April 30, 2025.2026.

The $77.9$436.3 increase in cash provided by operating activities in the first ninethree months of 20262027 was primarily driven by lower working capital requirements in 2026 and a decrease in cash used for income and other taxes, primarily reflecting lower taxable income and timing of income tax payments, partially offset by lowerhigher net income (loss) adjusted for noncash items in the current year.year and lower working capital requirements in 2027. The cash required to fund working capital decreased compared to the prior year, primarily driven by lowera decrease in cash used for inventories, reflecting a moderation in input cost inflation during the current year,year aand reductionlower inventory levels, as well as favorable changes in paymentsaccounts payable and trade receivables driven by the timing of spend, cash payments, sales, and collections, partially offset by an unfavorable impact related to transition services agreements entered into in connection with the divestitures, and the timing of settling our derivative instruments. These increases in cash were partially offset by a decrease in cash related to the change in trade receivables due to the timing of sales and payments.

Cash used for investing activities in the first ninethree months of 20262027 consisted primarily of $222.1$88.4 in capital expenditures, primarily reflecting plant maintenance and improvement of our facilities, partially offset by a decrease of $34.8 in our derivative cash margin account balances.facilities. Cash used for investing activities in the first ninethree months of 20252026 consisted primarily of $298.8 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, and also included an increase of $10.4$126.7 in our derivative cash margin account balances.balances Theseand uses$84.3 in capital expenditures, primarily reflecting plant maintenance and improvement of cashour for 2025 were partially offset by net proceeds received of $290.5 from the divested Voortman business.facilities.

As part of ongoing efforts to maximize working capital, we work with our suppliers to optimize our terms and conditions, which includes the extension of payment terms. 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. Participating suppliers can sell one or more of our payment obligations at their sole discretion. We have no economic interest in a supplier’s decision to enter into these agreements. Our rights and obligations to our suppliers, including amounts due and scheduled payment terms, are not impacted by our suppliers’ decisions to sell amounts under these arrangements. As of JanuaryJuly 31, 2026, and April 30, 2025,2026, $296.1$336.1 and $340.4$325.1 of our outstanding payment obligations, respectively, were elected and sold to a financial institution by participating suppliers. During the first ninethree months of 20262027 and 2025,2026, we paid $938.2$363.2 and $1,211.9,$340.9, respectively, to a financial institution for payment obligations that were settled through the supplier financing program.

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 JanuaryJuly 31, 2026. 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.

Class Action Lawsuits: We are defendants in a series of putative class action lawsuits that were transferred to the U.S. District Court for the Western District of Missouri for coordinated pre-trial proceedings. The plaintiffs assert claims arising under various state laws for false advertising, consumer protection, deceptive and unfair trade practices, and similar statutes. Their claims are premised on allegations that we have misrepresented the number of servings that can be made from various canisters of Folgers coffee on the packaging for those products. 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 JanuaryJuly 31, 2026, 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.

We have available a $2.0 billion unsecured revolving credit facility with a group of ten banks that matures in March 2030. Additionally, we participate in a commercial paper program under which we can issue short-term, unsecured commercial paper not to exceed $2.0 billion at any time. The commercial paper program is backed by our revolving credit facility and reduces what we can borrow under the revolving credit facility by the amount of commercial paper outstanding. Commercial paper is used as a continuing source of short-term financing for general corporate purposes. As of JanuaryJuly 31, 2026, we had $487.0$193.5 of short-term borrowings outstanding, which were issued under our commercial paper program at a weighted-average interest rate of 3.854.00 percent.

We are in compliance with all our debt covenants as of JanuaryJuly 31, 2026, 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 86: Debt and Financing Arrangements.

Dividend payments were $347.9$116.8 and $340.9$114.4 in the first ninethree months of 20262027 and 2025,2026, respectively, and dividends declared per share were $3.30$1.12 and $3.24$1.10 in the first ninethree months of 20262027 and 2025,2026, 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.