Earnings Call Transcript
J M SMUCKER Co (SJM)
Earnings Call Transcript - SJM Q3 2024
Operator, Operator
Good morning, and welcome to the J.M. Smucker Company's Fiscal 2024 Third Quarter Earnings Question-and-Answer session. This conference is being recorded. Please follow the operator's instructions. I'll now turn the conference over to Aaron Broholm, Vice President, Investor Relations. Please go ahead, sir.
Aaron Broholm, VP, Investor Relations
Good morning, and thank you for joining our fiscal 2024 third quarter earnings question-and-answer session. I hope everyone had a chance to review our results as detailed in this morning's press release and management's prepared remarks which are available on our corporate website at jmsmucker.com. We will also post an audio replay of this call at the conclusion of this morning's Q&A session. During today's call, we may make forward-looking statements that reflect our current expectations about future plans and performance. These statements rely on assumptions and estimates, and actual results may differ materially due to risks and uncertainties. Additionally, we use non-GAAP results to evaluate performance internally. I encourage you to read the full disclosure concerning forward-looking statements and details on our non-GAAP measures in this morning's press release. Participating on this call are Mark Smucker, Chair of the Board, President and Chief Executive Officer; and Tucker Marshall, Chief Financial Officer. We will now open up the call for questions. Operator, please queue up the first questions.
Operator, Operator
Thank you. Our first question is coming from Andrew Lazar from Barclays. Your line is now live.
Andrew Lazar, Analyst
Great. Thanks so much. I guess to start, obviously, Smucker delivered 6% comparable sales growth in fiscal 3Q, and I think you expect something similar in the fourth quarter as well. With Uncrustables set to accelerate, as you talked about in the prepared remarks in the fourth quarter, trying to get a sense of what would be the offset or what you expect might slow to get back to that mid-single-digit range in the fourth quarter? Or is there some conservatism built in?
Tucker Marshall, CFO
Andrew, good morning. We are certainly pleased with our third quarter performance. And as you've noted, we anticipate the business momentum to continue into the fourth quarter. Specifically to your question, we would anticipate pet to slow down a bit in the fourth quarter, but still continue its momentum across the portfolio.
Andrew Lazar, Analyst
Got it. Pet Food comparable sales increased about 20% in the quarter. Even after accounting for about 6 points of growth from contract manufacturing, there was still strong double-digit growth in Pet. While we expect that growth to slow a bit, was there something unusual in the third quarter that contributed to the strong underlying growth in Pet that might not carry over into the fourth quarter or the next few quarters? Thank you.
Tucker Marshall, CFO
Andrew, we did see a normalization of our Pet supply chain specifically on Meow Mix in support of manufacturing that was a contributor to the third quarter. And we would still anticipate in the fourth quarter the Pet gross double digits.
Operator, Operator
Thank you. Next question is coming from Ken Goldman from JP Morgan. Your line is now live.
Ken Goldman, Analyst
Hi. Good morning. Thank you. Last week, you mentioned that marketing would be a headwind to earnings next year. I think partly on Hostess and partly on the Base business, I believe. With the understanding that you’re not quite in a position yet to give exact guidance, I was just hoping to get a little bit better sense of the degree or magnitude to which marketing for the total company may rise. And I’m asking especially in light of this year where I think you're a decent amount below your longer-term target range as a percent of sales? Thank you.
Tucker Marshall, CFO
Ken, with respect to marketing associated with our Sweet Baked snacks business, we anticipate a step up in marketing in the coming quarters in support of the brand and our excitement of the portfolio and the opportunity to continue to advance and support the growth of the Hostess brands or portfolio. We have contemplated that at the time of acquisition. We have contemplated that as we gave our outlook for this fiscal year. And we've contemplated that as we think about what potential contribution Hostess could provide for FY '25. Certainly, we look forward to providing a little bit more of the detail of what that step up is on our fourth quarter earnings call when we give the outlook for next fiscal year.
Ken Goldman, Analyst
Okay. I'll follow-up offline on that one. And then I wanted to ask, maybe I missed this, but transaction and integration cash costs, I think you raised the number by around $20 million for that in terms of your expectation for this year. Can you go into a little bit of why that was increased unless I'm wrong about that? And were these pulled forward from next year, or are they additive to the total deal cost?
Tucker Marshall, CFO
Yes. So it's really a pull forward of some expenses that we had thought would time out into next fiscal year. We have not raised our outlook for the overall transaction and integration expenses. It's more of an impact of timing.
Operator, Operator
Thank you. Next question is coming from Peter Galbo from Bank of America. Your line is now live.
Peter Galbo, Analyst
Hey, guys. Good morning.
Mark Smucker, CEO
Good morning, Peter.
Peter Galbo, Analyst
Mark, maybe you could just expand a little bit on your prepared remarks around Uncrustables, specific to the retail channel. I know you had a difficult compare in the third quarter. And obviously, the Away From Home business is growing pretty nicely. But just what gives you the confidence, I guess, that you'll go from the minus to kind of do a double-digit in the fourth quarter, specifically in retail?
Mark Smucker, CEO
Sure, Peter. Thanks for your question. Let me first address the overall performance of our business before specifically talking about your inquiry. We are very pleased with our results this quarter, which we see as a confirmation of our strategic path. We know that our analysts and the sell-side community have been closely monitoring our progress over the past three years as we have restructured our portfolio, built our capabilities, focused on execution, and enhanced our marketing and selling strategies as well as our supply chain resiliency. All of these elements have validated our decisions along the way. It all begins with understanding consumer needs. We are proud of our results and the underlying momentum in our business, and we have strong confidence in the decisions we've made and the portfolio reshaping we've undertaken. Regarding Uncrustables, our confidence in that brand remains strong. We are set to open the McCalla, Alabama facility this year, and we recognize we faced a challenging comparison in last year's third quarter due to a significant expansion in Colorado which improved our distribution at that time. Nevertheless, we have continued to see very good performance in Canada and strong results in the Away From Home segment. Notably, consumer takeaway this quarter has remained robust, which supports our outlook for double-digit growth and a resurgence of the brand in the coming quarters. Finally, it's important to note that we have just commenced our marketing efforts, which include both traditional and social advertising, endorsements from professional sports partnerships, and our ongoing distribution expansion, all of which reinforce our confidence in the Uncrustables brand.
Peter Galbo, Analyst
Great. Thanks, Mark. And Tucker, maybe just to follow-up on the contract manufacturing sales. The number kind of keeps trickling down, I think, a bit quarter-on-quarter. Just you talked a little bit last week on kind of through the first 6 months of next year. But just any more color you can give us as we start to kind of model out that specific piece of it into next year?
Tucker Marshall, CFO
Yes, Peter, we have an outlook for this fiscal year of approximately $140 million, covering a 12-month period. Looking ahead to next year, we expect contract manufacturing sales to persist, especially during the first half of our fiscal year. We will provide more clarity on the cadence during our fourth quarter call. For now, it seems reasonable to plan on $140 million and focus on the first half.
Operator, Operator
Thank you. Next question is coming from Tom Palmer from Citi. Your line is now live.
Tom Palmer, Analyst
Good morning and thanks for the questions.
Tucker Marshall, CFO
Good morning.
Tom Palmer, Analyst
Could you provide an update on the contract manufacturing situation that Peter mentioned? You've reduced your sales outlook, and there are some limitations regarding stranded costs. While contract manufacturing sales will continue, you've also adjusted your earnings dilution expectation to $0.60 this year. Can you clarify if there’s a way to eliminate some of these stranded costs as you plan for the remainder of the year? Last week, there seemed to be a note about the second half of the year and the potential impact of contract roll-offs on stranded costs. However, from what I see, the accelerated roll-off hasn’t significantly affected the earnings dilution.
Tucker Marshall, CFO
Yes. Tom, maybe for awareness purposes, stranded overhead and contract manufacturing sales are independent. So first of all, speaking to contract manufacturing sales, the outlook for this fiscal year today is $140 million. It is essentially at no profit. Those sales will begin to go away halfway through next fiscal year. The removal or the elimination of contract manufacturing sales really does not address stranded overhead. Stranded overhead outlook for this fiscal year is a net $0.60 impact. We had said since the time of divestiture, there would be an impact in FY '24 and in FY '25. To date, we've not outlined what the FY '25 impact is other than to note there will be an impact. As you think about stranded overhead, really what is driving that and the predominance of what will need to be addressed is our network, largely driven by distribution. So as the post volume and/or product leaves our distribution environment, we need to right-size that in support of addressing stranded overhead among other activities that we've already identified and are beginning to address for the benefit of next fiscal year. And then ultimately, we believe by the time we step into FY '26, we should begin to have address stranded overhead and begin to get it behind us.
Tom Palmer, Analyst
Okay. Thanks for that detail. I wanted to maybe clarify some of the costs on Uncrustables. You mentioned the startup costs for 4Q and kind of the full year startup costs. I just wanted to clarify on that, how much the startup costs were in 3Q as we think about kind of the progression into 4Q? And then secondarily, just a step up in advertising, how significant that might be as we think about 3Q to 4Q? Thanks.
Tucker Marshall, CFO
So as we think about the Uncrustables venture, there's three areas where we see incremental costs. One is as we begin to bring the McCalla facility online that becomes an overhead carrying cost. The second component is as we advance the building of McCalla, there's a preproduction expense that we've also have in our full-year guidance. And then last is, we have turned on marketing and so there's incremental marketing. And a portion of the outlook for marketing, switching from the third quarter to the fourth quarter, is not only due to timing, but you're also seeing the step up associated with Uncrustables support for the business or the portfolio.
Tom Palmer, Analyst
Okay. I just was hoping for any quantification, I guess, as we think about kind of the progression 3Q into 4Q, I understood maybe you guys aren't providing that?
Tucker Marshall, CFO
Tom, we are certainly happy to follow up with you afterwards just to help you round out your model.
Operator, Operator
Thank you. Your next question is coming from Chris Carey from Wells Fargo. Your line is now live.
Chris Carey, Analyst
Good morning. I wanted to focus on the Coffee segment specifically. Can you provide insights on the performance of the Bustelo, Dunkin', and Folgers brands going forward? Additionally, how do you view the volume mix in relation to pricing, especially considering the increased competition and some pricing strategies from competitors? Any thoughts on how we should approach the evolution of the coffee market moving forward, particularly regarding the mix and pricing of these brands?
Mark Smucker, CEO
Sure, Chris. It's Mark. Overall, we feel very good about our growth outlook, which we believe will be driven by Bustelo, Dunkin', and K-Cups across all brands. Our K-Cup performance this quarter was strong, as we outpaced the category and gained just over half a point of market share, supported by solid performance from Folgers. Additionally, we've launched liquid products for Dunkin', which has already secured the second position in the liquid coffee concentrate segment. We will also be introducing similar products for Bustelo by the end of the fiscal year. We are optimistic about our performance in the Coffee category. Although Folgers is a mature brand, we are satisfied with its performance as we've maintained a strong presence in the market. We are actively advertising all our brands, which has given us a robust share of voice. Overall, we are optimistic about the coffee category and understand the need to expand our presence in the liquid segment, which is expected to continue growing. K-Cups will remain a crucial part of this segment, and our aim is to align with consumer trends.
Chris Carey, Analyst
Okay. Thanks. And just want to follow up on the marketing expense in Q4. Obviously, understanding the shift in Q3 to Q4. Can you just perhaps give a little context around what areas of the portfolio will see the marketing step up in Q4? And just in general, where you see the most potential to invest behind the portfolio from a marketing standpoint in kind of more of a medium-term perspective, understanding the comments that you made on Hostess last week? Thanks.
Mark Smucker, CEO
Yes, it's Mark again. The marketing strategy is consistent across the board and doesn't favor one business over another. It is generally applicable and spreads evenly. I want to emphasize that we are committed to supporting our brands through marketing. Over time, depending on pricing dynamics, we aim to maintain marketing expenses at around 6% to 7% of net sales, although this may vary by category. Marketing is essential to our business model, and it is crucial to keep a reasonable level of spending to support our brands over time.
Operator, Operator
Thank you. Next question is coming from Robert Moskow from TD Cowen. Your line is now live.
Robert Moskow, Analyst
Hi. Thanks for the question. I have two. First, Mark, regarding Hostess, those who are familiar with that company usually see one major product innovation that dominates the pipeline. However, based on some announcements this year, it looks like there are several smaller initiatives. Could you elaborate on how you perceive the pipeline this year compared to previous years? Secondly, Tucker, concerning free cash flow, the guidance is down by $30 million. You mentioned several factors affecting this, including an increase of $40 million in cash taxes. Can you walk us through what factors are influencing this? It seems that due to the cash taxes, the actual outcome may be even lower than the 30% guidance. What is compensating for that? Thanks.
Mark Smucker, CEO
Sure, Rob, it's Mark. I'll start on innovation. I think your question hints at some recent product launches that were significant innovations, and I am really pleased with their performance. They resonate well with various consumer insights regarding why consumers enjoy the product. Additionally, I want to highlight that Hostess has succeeded in iterative innovation, which can involve seasonal variations and changes in flavors or fillings. This approach will continue to be essential. As I mentioned earlier, the complementary capabilities of both the Hostess team and our legacy team present ongoing opportunities for growth, with innovation being a crucial factor in driving that growth moving forward. While we won't be revealing anything today, I want to emphasize our commitment to maintaining the pace of innovation and ensuring its continued focus.
Tucker Marshall, CFO
Rob, with respect to your free cash flow question, you're correct, the outlook for the fiscal year is now $500 million. The change of $30 million is largely driven by the cash taxes, as you have noted, being partially offset by just a little bit stronger earnings and also a little bit more favorability coming across all working capital.
Robert Moskow, Analyst
Could you provide a follow-up on Hostess? I understand you previously addressed a question about their pricing, which has declined in our tracking data. While a few competitors have also seen a decrease, there's another competitor whose prices have increased significantly. Can you clarify Hostess' pricing strategy over the past six months and whether it is meeting its goals?
Mark Smucker, CEO
Rob, in general, as we evaluate our categories, we aim to be thoughtful and careful with our pricing to ensure we are covering our costs without overcharging. Ultimately, we have a responsibility to our consumers and shareholders, ensuring we make the right business decisions. From a pricing standpoint, we believe we are currently well-positioned, with prices aligned appropriately. We will continue to compete effectively against other brands in the market.
Operator, Operator
Thank you. Next question today is coming from Matt Smith from Stifel. Your line is now live.
Matt Smith, Analyst
Hi. Good morning. You've talked about investing more behind Hostess bringing that advertising and marketing closer to a high single-digit as a percent of sales. And you're starting that increase, it sounds like in the fourth quarter. Should we think about the path toward your target level as a multiyear step up? Or do you expect to exit next year closer to that targeted investment level?
Tucker Marshall, CFO
We do expect to step up over time, and so we may not be completed there in fiscal '25. It will be a journey.
Matt Smith, Analyst
Thank you. And a quick follow-up on the Pet sales comment. You talked about growing in the fourth quarter, and I want to make sure, is that growth inclusive of the co-manufacturing sales? And I can leave it there. Thank you.
Tucker Marshall, CFO
Correct. My comments around Pet growth were inclusive of the co-manufacturing volume.
Operator, Operator
Thank you. Next question is coming from Alexia Howard from Bernstein. Your line is now live.
Alexia Howard, Analyst
Good morning, everyone.
Mark Smucker, CEO
Good morning.
Alexia Howard, Analyst
Can I ask about the marketing step up? Where do you currently stand on promotional activity? Are you expecting certain areas of the business to increase their promotional efforts in the upcoming quarters? If so, which areas? I'm also curious how the current depth and breadth of promotional activity compares to pre-COVID levels. Do you still need to reach those levels, or where do you stand in that transition?
Mark Smucker, CEO
Alexia, it's Mark. We are not observing anything unusual regarding our promotional spending. Generally, we have returned to the promotional levels we experienced before the pandemic across our categories. In our perspective, the categories and competition are performing normally and rationally. Therefore, we do not notice anything out of the ordinary in terms of promotions.
Alexia Howard, Analyst
Okay, great. And then just touching on the state of the U.S. consumer, I think at the CAGNY conference last week, there were a number of companies that said things seem to be improving. U.S. consumer confidence seems to be in a reasonably good place. Are you seeing any sort of glimmers of light in terms of emerging from a rather challenging last calendar year as we move into 2024?
Mark Smucker, CEO
I have a few comments to share. First, our categories have continued to perform very well in this environment. Within our categories, we operate across the value spectrum, offering products that consumers see as more affordable, like Folgers and traditional Milk-Bone dog biscuits. Additionally, some of our premium offerings are also doing well. The breadth of our offerings has been beneficial. We have a relatively low level of private-label competition compared to other categories in our portfolio, which has helped us. Even in areas where there has been some consumer shift, such as natural meat and pet products, our Pepperoni brand has experienced a slight decline, reflective of the overall Soft and Chewy pet snack category. This trend is not unique to us but is seen across competitors as well. However, brands like Milk-Bone, which cater to the value spectrum, have been able to compensate for the temporary softness observed in some of the other brands.
Alexia Howard, Analyst
Great. Thank you very much. I will pass it on.
Operator, Operator
Thank you. Our next question today is coming from Steve Powers from Deutsche Bank. Your line is now live.
Steve Powers, Analyst
Hey, thanks. Hi, Mark. Hi, Tucker.
Tucker Marshall, CFO
Good morning.
Steve Powers, Analyst
Tucker, I don't want to repeat what’s been said, but I’d like to revisit the topic of stranded overhead from your earlier discussion. It seems that much of the confusion stems from Slide 9 in your CAGNY presentation when you mentioned several considerations for fiscal '25. That slide implies a year-over-year impact, suggesting that all the points listed are compared to '24. Stranded overhead is presented as a negative factor. It's perplexing since, as you mentioned earlier, contract manufacturing and stranded overheads are separate issues. While there should be some stranded overhead carryover from '24 until it is completely rationalized in '26 and beyond, I'm having difficulty understanding how it would be worse in '25 compared to '24 based on your earlier comments. Perhaps I'm misinterpreting the slide or your previous remarks, so could you elaborate on how to specifically view stranded overhead? Thank you.
Tucker Marshall, CFO
Yes. Absolutely, Steve. And we certainly appreciate that the group is looking for clarity on this. We are doing our best without providing an estimate for FY '25. But going back to this fiscal year, we have a net $0.60 impact to earnings per share as a result of stranded overhead. That net impact is total stranded overhead costs less by TSA income and reimbursement for services. So we will end our transition services agreement about midway through the fiscal year. So therefore, we will not be collecting the income associated with those services. Secondly is, we receive reimbursement for utilization of Smucker infrastructure, such as our distribution environment. And as a result of that, when ultimately post exits our distribution facilities, we won't be receiving reimbursement. So the company through our transformation office has begun to address stranded overhead this fiscal year for the benefit of next fiscal year, but there are certain activities that we can't address until the TSA is completed, until they exit our distribution facilities, and we can rationalize some of that network. Steve, I hope that helps provide context just around the framework and the mechanics certainly appreciate you're not the only one asking. So hopefully, that additional color is helpful to you and others.
Steve Powers, Analyst
Yes, it does. It seems that when you mentioned earlier about contract manufacturing being essentially a zero margin activity, you weren't considering all of the other income factors that you just outlined. Is that correct?
Tucker Marshall, CFO
Contract manufacturing considerations are independent of stranded overhead considerations, whether they be qualitative or quantitative.
Operator, Operator
Thank you. Our next question today is coming from Pamela Kaufman from Morgan Stanley. Your line is now live.
Pamela Kaufman, Analyst
Good morning.
Mark Smucker, CEO
Good morning.
Pamela Kaufman, Analyst
I'm sorry to ask this again, but just to clarify, Steve's question on stranded overhead. Do you expect the magnitude of stranded overhead costs to moderate next year relative to the $0.60 impact this year? So that effectively creates a tailwind to year-over-year earnings growth.
Mark Smucker, CEO
Pam, I would love to tell you the number or the direction for next fiscal year, but that would be inappropriate until we finish our planning process. So unfortunately, we'll have to do that on the fourth quarter earnings call. I'm sorry.
Pamela Kaufman, Analyst
Understood. And then separately, will there be any lingering impact from the Uncrustables startup costs that impact 2025. And then can you just give an update on the progress that the transformation office has made? What have they been focused on? And what cost savings opportunities have they identified?
Tucker Marshall, CFO
As we ramp up Uncrustables production in McCalla, we will continue to see an impact associated with carrying overhead and a level of preproduction expenses we are still refining what that estimate will be. But the great thing about McCalla is it will be producing saleable sandwiches for the benefit of fiscal year '25. As you think about our transformation office, we continue to be very pleased with our initial year where we've stood up the office where we've created almost 10 active work streams and support of cost and productivity savings in support of realizing synergies associated with the Hostess acquisition and also in support of addressing stranded overhead associated with the divested pet food brands. And the exciting thing is it's not only contributing dollars for reinvestment back into the business, but it's supporting our earnings and earnings growth and delivery, but it's also enabling new ways of working for our employees and cross-functional teams to really deliver great benefits to our company and organization.
Pamela Kaufman, Analyst
Thank you.
Tucker Marshall, CFO
Thanks.
Operator, Operator
Thank you. Our next question today is coming from Rob Dickerson from Jefferies. Your line is now live.
Rob Dickerson, Analyst
Great, thank you. I want to ask a broader question about coffee. Historically, the coffee business has been very strong with operating margins typically above 30%. I understand that input costs were lower back then. However, looking at the current business, Cafe Bustelo seems to be performing exceptionally well, Dunkin' continues to innovate, and Folgers is still gaining volume as the largest brand. It appears that the business is in a good position, even as you're making some price investments. I'm trying to understand your perspective on the margin profile over the next few years regarding volume and price. Given that volume is strong and pricing typically comes through in a pass-through business, I would expect some fixed-cost leverage to help recover back to that 30% margin profile. I'm curious about your thoughts on this. Thank you.
Tucker Marshall, CFO
So Rob, as we think about the Coffee momentum through the year, the business continues to perform across the portfolio, and we're very pleased with the brands and with the formats. To your point, we've seen Coffee margins improve. As we have gone through the fiscal year, particularly as we have lapped larger cost baskets and gotten into more normalized cost baskets. And so we continue to see the strength of the portfolio. I think we are focused on sort of the high 20s, as we've said in previous earnings calls in support of having healthy margins in the portfolio, but also in support of reinvesting in the business for the health and strength of our brands. And also as we think about our desired growth in liquid coffee. And then furthermore, as we continue to think about the trajectory of coffee, we always assess the volatility in the green coffee market. And we also ensure that we are passing through pricing when appropriate and prudent, both on the upside and the downside of inflation or deflation. And then lastly is, the Coffee margin profile will continue to be strong in the fourth quarter. But then as we think about our first quarter of any fiscal year, it tends to be our sort of softer margin quarter of the full fiscal year.
Rob Dickerson, Analyst
Okay, fair enough. If I could ask a straightforward question, in the Frozen Handheld and Spreads segment, you've outlined the revenue expectations for this year and the next two years. For modeling purposes, it’s reasonable to assume that we can take what the segment finishes this year and add $100 million, which seems achievable based on Uncrustables since you have good visibility there. Are there any other factors in that segment that could raise it beyond the additional $100 million attributed to Uncrustables, considering the innovation coming from Jeff, and are there any offsets in spreads? Thanks a lot.
Tucker Marshall, CFO
Rob, we continue to be very excited about the trajectory of the Uncrustables venture brand and/or portfolio. We are still on track to the $1 billion ambition by the end of FY '26, you have noted. We said directionally, on average, that might be about $100 million per year. I think right now, that's where our focus is to ensure that we get to that ambition as we continue to build out traditional distribution channels and territories, along with new distribution channels as well. And so I think that that's probably the framework that I would use as you think about modeling the glide path of Uncrustables over the next several years.
Rob Dickerson, Analyst
All right. Great. Thanks so much.
Operator, Operator
Thank you. Your next question is coming from Max Gumport from BNP Paribas. Your line is now live.
Max Gumport, Analyst
Hi. Thanks for the question. First one is on Coffee. So on volume mix, it looked like it came in a bit better than we might have expected based on tracked channel trends during the quarter. I was hoping you could unpack the mix impact versus volume, and then also what you were seeing in tracked channels versus non-tracked channels? And how are those factors affecting your view on the fourth quarter? Thanks.
Tucker Marshall, CFO
Yes. So as we think about the third quarter performance on Coffee, we saw nice momentum from a volume mix standpoint. Obviously, we had the deflationary impact as a result of taking pricing, continue to be very pleased with the momentum on Cafe Bustelo and Dunkin' along with our K-Cup portfolio. They all performed well in the quarter. Folgers also had a very strong quarter as well, but it was a little softer from a volume mix standpoint as we were lapping a key retailer activity in the prior quarter. And we continue to be very pleased with how we are considering the momentum into our fourth quarter as well.
Max Gumport, Analyst
Thank you. I want to revisit a slide presented at CAGNY last week where you outlined two tailwinds and three headwinds for your top line. Of those, three are not related to organic growth, while two are. These two include continued brand momentum and the inflationary pressures affecting consumers. I understand you're not providing guidance for FY '25 yet, but considering these two factors, is there any indication that one is more significant than the other? I'm trying to gain insight into how this continued brand momentum might balance against the inflationary pressures on consumers. Thank you, and I will stop there.
Tucker Marshall, CFO
Yes. Max, we have really strengthened the portfolio over the last several years with investments across our key brands, along with reshaping the portfolio. And so we feel very confident in the ongoing growth of the Uncrustables, Frozen Handheld, demonstrating category leadership and spreads, continuing to demonstrate at-home coffee leadership with the continued growth of the Cafe Bustelo, Dunkin', and K-Cup portfolios. And then thinking about our pet momentum, as we think about Milk-Bone and also Meow Mix and then also the contribution from the Hostess acquisition, but to your point, back on the core portfolio. As it relates to the impact of inflationary pressures associated with consumers' purchasing behavior, we continue to monitor and assess and understand what that means to our core portfolio. But what we have seen over the last several quarters is continued growth across the portfolio and demonstrating volume growth. And our expectation is that we continue to demonstrate momentum.
Operator, Operator
Thank you. We've reached the end of our question-and-answer session. I'd like to turn the floor back over for any further or closing comments.
Mark Smucker, CEO
Thank you. Appreciate everyone joining the call this morning. It was actually great to see you all at CAGNY last week. And obviously, there, we were able to share our strategy more holistically and why we are so confident about the journey we've been on and the future of this business. Obviously, we hope you recognize the strong momentum in the third quarter, another great quarter for us, and none of that would have been possible without our awesome employees. So I just want to take a moment to acknowledge our great employees, again, welcome the Hostess folks and the brands to our portfolio and just remain optimistic for the future and hope you all have a great day.
Operator, Operator
Thank you. That does conclude today's teleconference and webcast. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation today.