Net sales for the quarter were $2.79 billion, a 1.9% decline year‑over‑year, driven by a weaker performance in the Grocery & Snacks segment. Organic net sales grew 2.4% on a 1.9% price/mix lift and a 0.5% volume gain, with the refrigerated & frozen business posting a 3.6% organic increase that helped offset the decline in other categories.
Gross profit fell 7.4% to $658 million, and gross margin slipped 141 basis points to 23.6%. Adjusted gross profit was $660 million, with an adjusted gross margin of 23.7%. The margin compression was largely attributable to higher input costs and promotional spending, as well as cost‑of‑goods‑sold inflation that the company expects to remain around 7% for fiscal 2026.
Operating income was $280.1 million, reflecting a 10.6% operating margin. This figure corrects the earlier reported $127.5 million and shows that margin compression in the refrigerated & frozen segment was driven by cost inflation, while the overall operating margin remained stable compared to the prior year.
Adjusted earnings per share were $0.39, a 2.6% miss versus the consensus estimate of $0.40. The miss was driven by higher COGS inflation and promotional spend, even as revenue beat estimates by $30 million. The company’s full‑year adjusted EPS guidance was narrowed to $1.70, at the low end of the previously stated $1.70‑$1.85 range, signaling caution amid ongoing margin pressure.
Net debt at quarter‑end was $7.3 billion, down $800 million year‑over‑year, with net leverage ending the quarter at 3.83x, “ahead of our expectations.” The company reiterated its focus on free‑cash‑flow conversion and debt reduction as key priorities for the remainder of fiscal 2026.
"I am pleased with our third quarter performance as we returned the business to organic net sales growth, reflecting continued upward inflection in our Frozen and Snacks businesses while remaining on track in our cash businesses." CEO Sean Connolly said. "Importantly, we are over‑delivering against our free‑cash‑flow conversion and debt reduction projections, reinforcing our operational agility and relentless focus on cash." Connolly added.
"Net debt was down by over $800 million versus the prior year, with net leverage ending the quarter at 3.83x, “ahead of our expectations.”" CFO Dave Marberger noted.
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