Adjusted EPS for fiscal 2025 was $0.50, at the upper end of guidance, with 4% growth despite lower operating income.
Adjusted gross margin expanded by 50 basis points to 64.9% in fiscal 2025, driven by supply chain savings and pricing carryover benefits.
Fiscal year 2025 adjusted EBITDA was $1.08 billion, slightly down but with a margin expansion of 60 basis points to 18.4%.
Free cash flow was $278 million, slightly below the $300 million target due to lower cash profits and higher customer overdues.
Leverage ratio improved from 6.8x in fiscal 2021 to 3.5x in fiscal 2025, despite a 0.2 turn increase in Q4 due to U.S. dollar depreciation adding $200 million to debt.
Net revenues declined 2% like-for-like in fiscal 2025 and 9% in Q4, reflecting retailer destocking and lapping blockbuster launches from fiscal 2024.
Q4 adjusted EBITDA declined 23% due to operating deleverage from lower sales and gross margin contraction.
Coffee costs in Q1 were higher than anticipated, with additional costs expected in Q2 due to hedging and green coffee receipt timing.
Coffee segment pricing benefit updated to mid-20% for fiscal 2026, up from prior 20% estimate.
Coffee volume expected to decline low to mid-teens percentage due to tariff impacts and price elasticity.
First quarter EPS was the softest quarter; second quarter decline now expected greater than first quarter, with a more muted third quarter.
Free cash flow outlook increased from $875 million to $975 million, driven by benefits from the Inflation Reduction Act.
Hostess SKU rationalization did not impact first quarter volume but expected to improve profitability over time.
Overall profit outlook remains intact despite tariff headwinds, with coffee segment profit expected to align with original guidance after absorbing tariffs.
SKU rationalization in Sweet Baked Snacks expected to yield $30 million savings, with $10 million in Q4 and $20 million in fiscal 2027.
Adjusted EPS was $0.35 for the quarter, with adjusted SG&A up 6% due to employee expenses and advertising investments.
Cash flow from operations was $150 million, down year-over-year due to intentional inventory build; capital expenditures were $72 million, targeting capacity and technology.
Foodservice segment delivered 2% organic volume growth and 7% organic net sales growth, outperforming the industry.
Gross profit was flat year-over-year due to higher input costs offsetting top-line growth.
International business showed 8% volume growth and 6% net sales growth, led by China.
Organic net sales increased 6% year-over-year to $3 billion in Q3, with organic volume up 4%.
Raw material cost inflation was approximately 400 basis points in Q3, driven by pork, beef, and nut markets.
Retail segment volume and net sales grew 5%, supported by Turkey portfolio and other retail pillars.
Cash and short-term investments ended at $33.5 million, down from $63.2 million a year ago, with no debt and $70.1 million available on the revolving credit facility.
Comparable store sales declined 7.1%, while direct sales fell 14.4%, with sequential monthly improvement from May (-10.4%) to July (-7%).
EBITDA fell to $4.6 million from $6.5 million last year, impacted by lower sales but partially offset by expense reductions.
Gross margin rate decreased 300 basis points to 45.2%, mainly due to a 240 basis point increase in occupancy costs and higher markdown rates.
Inventory was $78.9 million, flat year-over-year, with clearance penetration steady at 10.2%. Inventory down 28.5% compared to 2019.
Merchandise margins declined by 60 basis points, partially offset by a favorable shift from national to private brands.
Net sales for Q2 2025 were $115.5 million, down from $124.8 million in Q2 2024, driven by a 9.2% decline in comparable sales.
SG&A expenses decreased by $6.1 million year-over-year, reducing SG&A as a percentage of sales to 41.2%.
Dafinchi
