The Campbell's Company · NASDAQ:CPB
The Campbell's — Campbell Soup Company — Q2 2020 Earnings Presentation
38 slides from The Campbell's's earnings presentation, Mar 4, 2020
Slide 1: Q2 Fiscal 2020 Investor Update
Q2 Fiscal 2020 Investor Update 1
Slide 2: Q2 Fiscal 2020 Investor Update: Presenter
Q2 Fiscal 2020 Investor Update Ken Gosnell Vice President - Finance Strategy & Investor Relations 2
Slide 3: Forward-Looking Statements
Forward-Looking Statements The factors that could cause actual results to vary materially from those anticipated or expressed in any forward-looking statement include: our ability to execute on and realize the expected benefits from our strategy, including growing sales in snacks and maintaining mar
Slide 4: Agenda
Agenda CEO Perspective Q2 Fiscal 2020 Results Fiscal 2020 Guidance Q&A 4
Slide 5: CEO Perspective
CEO Perspective Mark Clouse President and Chief Executive Officer 5
Slide 6: Q2 F'20 High-Quality Results
Q2 F’20 High-Quality Results ▪ Organic net sales increased 1%* behind improved execution across company ▪ Snacks strength – organic net sales increased 2%* ▪ Meals & Beverages progress – organic net sales comparable to prior year* – Grew soup share for second consecutive quarter** ▪ Strong in-market
Slide 7: Meals & Beverages: Another Quarter of Progress
Meals & Beverages: Another Quarter of Progress ▪ Net sales comparable to prior year ▪ Improved retailer relationships ▪ Investing in core brands – Increased investments to improve food quality and build equity in our brands – Increased marketing investments; A&C up 20%, mainly in Soup ▪ Overall impr
Slide 8: Sustained Progress of our Win in Soup Plan
Sustained Progress of our “Win in Soup” Plan ✓Net sales profile improved in Q2 with growth across condensed and broth including Pacific ✓ In-market indicators show improving health – Grew soup share for 2nd consecutive quarter* – Increased household penetration** – Attracting younger households** *I
Slide 9: Stabilizing U.S. Soup in F'20
Stabilizing U.S. Soup in F’20 $ Consumption Change YTD* $ Share Change YTD* Condensed: Building equity + 1.1% Pacific returned to growth in Q2 - 0.8% Flat Swanson solid in Q2; more work needed on differentiation + 0.1% RTS: Fixing foundation; looking forward to F’21 - 3.2% Foodservice sales up 10%**
Slide 10: Meals & Beverages Progress
Meals & Beverages Progress ▪ Prego maintained #1 share position in pasta sauce category* ▪ Reshaping V8 portfolio around plant-based positioning & single-serve *IRI US MULO L13W ending 1/26/20 10
Slide 11: Snacks: Continued Strong Performance
Snacks: Continued Strong Performance ▪ Continued steady growth with organic sales and profit gains ▪ Organic net sales increased 2%* ▪ Steady progress on integration and value capture * See Non-GAAP reconciliation 11
Slide 12: 8 of 9 Power Brands Grew or Maintained Share
8 of 9 Power Brands Grew or Maintained Share* Power Brand Consumption Increased 4% Behind Increased Marketing** Partner Brands Performed In-Line with Expectations *IRI US MULO L13W ending 1/26/20 **IRI US MULO L13W ending 1/26/20 vs. YAG 12
Slide 13: Snacks: Integration on Plan
Snacks: Integration on Plan ▪ Continued strong performance in: 1. Procurement, specifically packaging 2. Consolidation of sales headquarters and related operations 3. Operational efficiency in manufacturing ▪ Actions to simplify and streamline operations, along with initiatives around manufacturing
Slide 14: CFO Perspective
CFO Perspective Mick Beekhuizen EVP & Chief Financial Officer 14
Slide 15: Second-Quarter Fiscal 2020 Summary
Second-Quarter Fiscal 2020 Summary ▪ Positive Fiscal 2020 year-to-date results ▪ Improved adjusted gross margin performance ▪ Continued delivery of cost savings ▪ Successful completion of our divestiture plans resulting in significant debt reduction ▪ Updating 2020 guidance; adjusted EPS now $2.55 t
Slide 16: Financial Summary
Financial Summary Continuing Operations ($ millions, except per share) Q2 Change vs. PY YTD Change vs. PY FY20 $ % FY20 $ % Net Sales $2,162 ($10) -% $4,345 ($29) (1)% Organic Net Sales* $21 1% $5 -% Adjusted EBIT* $364 $15 4% $756 $36 5% Adjusted EPS* $0.72 $0.07 11% $1.51 $0.15 11% *See Non-GAAP r
Slide 17: Components of Net Sales Change
Components of Net Sales Change Continuing Operations +1pt (1)pt +1pt +1% - (1)pt -% Q2 FY19 Vol/Mix Price & Sales Promotional Q2 FY20 Currency Divestiture Q2 FY20 Net Sales Allowances Spending Organic Net Net Sales Sales* * See Non-GAAP reconciliation 17
Slide 18: Adjusted Gross Margin Performance
Adjusted Gross Margin Performance* Continuing Operations +90 bps 34.4% +70 bps +10 bps (160) bps +140 bps 32.9% Q2 FY19 Mix Net Pricing Inflation/Other Productivity Cost Savings Q2 FY20 Improvements Program * See Non-GAAP reconciliation 18
Slide 19: Other Operating Items
Other Operating Items Continuing Operations ($ millions) A&C +17% Adjusted Marketing Adjusted & Selling Expenses* Administrative Expenses* 7% $219 $235 (1)% $136 $135 Q2FY19 FY19 Q2FY20 FY20 Q2FY19 FY19 Q2FY20 FY20 * See Non-GAAP reconciliation 19
Slide 20: Cost Savings
Cost Savings Continuing Operations ($ millions) $850M ▪ Total savings of $45 million realized in Q2; $90 million through the First Half $650M ▪ Enterprise cost savings and Snyder’s-Lance synergies program on track with $650 million achieved to date ▪ Outlook of approximately $150 million for FY20 ▪
Slide 21: Adjusted EPS Performance
Adjusted EPS Performance* Continuing Operations $0.05 ($0.01) ($0.01) $0.72 $0.04 $0.65 Q2 FY19 EBIT Interest Taxes Shares Q2 FY20 * See Non-GAAP reconciliation 21
Slide 22: Segment Results
Segment Results ($ millions) Net Sales & Organic Growth Rate* Operating Earnings -% $1,222 $1,224 (4)% $253 $242 Q2 FY19 Q2 FY20 Q2 FY19 Q2 FY20 * See Non-GAAP reconciliation 22
Slide 23: Segment Results
Segment Results ($ millions) Net Sales & Organic Growth Rate* Operating Earnings 2% $949 $938 ()% 3% $132 $136 Q2 FY19 Q2 FY20 Q2 FY19 Q2 FY20 * See Non-GAAP reconciliation 23
Slide 24: Cash Flow
Cash Flow Total Company ($ millions) YTD FY19 YTD FY20 Net Cash Flows from Operations $846 $663 Of which changes in working capital (net of acquisition and divestitures) $140 ($37) Net Cash Flows from Investing Activities ($203) $2,368 Of which capital expenditures ($198) ($167) Of which sale of bus
Slide 25: Successful Deleveraging
Successful Deleveraging Continuing Operations ($ billions) Net Debt* $9.1 Key Highlights $8.4 ▪ Divestitures completed; net proceeds used to $5.8 reduce debt ▪ Continued focus on cash flow generation Q2 FY19 Q4 FY19 Q2 FY20 Net Debt / Adjusted EBITDA* 5.2x 3.5x (on trailing twelve-month basis) * See
Slide 26: Fiscal 2020 Guidance for Continuing Operations
Fiscal 2020 Guidance for Continuing Operations ($ millions, except per share) Previous Updated 2019 2020 2020 Results Guidance Guidance -1% to +1% Net Sales $8,107 -1% to +1% (no change) -1% to +1% Organic Net Sales** -1% to +1% (no change) +2% to +4%*** Adjusted EBIT $1,266* +2% to +4%*** (no chang
Slide 27: Key Proof Points Fiscal 2020
Key Proof Points Fiscal 2020 1H Progress ▪ Stabilizing top line ✓ PROFITABLE ▪ Improved soup performance ✓ GROWTH ▪ Accelerated Snacks growth ✓ ▪ Stabilizing margins and EBIT ✓+ INVESTMENT ▪ Deliver cost savings to invest in growth ✓ AND PROFIT ▪ Improve working capital and reduce debt ✓+ ▪ Organiza
Slide 28: Q&A
Q&A 28
Slide 29: Appendix
Appendix Real food, Keal results, ,.
Slide 30: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) Second Quarter % Change Net Sales, Impact of Organic Net Sales, Organic January 26, 2020 As Reported Currency Net Sales As Reported Net Sales Meals & Beverages $ 1,224 $ (1) $ 1,223 0% 0% Snacks 938 - 938 -1% 2
Slide 31: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) First Half % Change Net Sales, Impact of Organic Net Sales, Organic January 26, 2020 As Reported Currency Net Sales As Reported Net Sales Meals & Beverages $ 2,418 $ 1 $ 2,419 -1% -1% Snacks 1,927 1 1,928 0% 2%
Slide 32: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions, except per share amounts) Second Quarter Diluted EBIT Earnings EPS 2020 – As Reported $ 350 $ 171 $ 0.56 Add: Restructuring charges, implementation costs and other related costs 25 19 0.06 Add: Loss on extingui
Slide 33: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions, except per share amounts) First Half Diluted EBIT Earnings EPS 2020 – As Reported $ 667 $ 340 $ 1.12 Add: Restructuring charges, implementation costs and other related costs 36 27 0.09 Add: Loss on extinguishme
Slide 34: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) Second Quarter Net Interest Gross Margin GM % Tax Tax Rate Expense 2020 – As Reported $ 742 34.3% $ 146 $ 33 16.2% Add: Restructuring charges, implementation costs and other related costs 2 - 6 Add/(Deduct): Lo
Slide 35: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) Second Quarter Marketing and Administrative Selling Expenses Expenses 2020 – As Reported $ 237 $ 148 Deduct: Restructuring charges, implementation costs and other related costs (2) (13) 2020 – Adjusted $ 235 $
Slide 36: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) Net Debt January 27, 2019 July 28, 2019 January 26, 2020 Short-Term Borrowings $ 1,177 $ 1,371 $ 902 Long-Term Debt 7,996 7,103 4,919 Total Debt $ 9,173 $ 8,474 $ 5,821 Less: Cash and Cash Equivalents (46) (31)
Slide 37: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures (a) (b) (c) = (a)-(b)+(c) Twelve Months Six Months Six Months Trailing Twelve Ended Ended Ended Months Ended (TTM) ($ millions) July 28, 2019 January 27, 2019 January 26, 2020 January 26, 2020 Earnings before interest and taxes, as reported $ 97
Slide 38: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions, except per share amounts) Full Year Gross Net Diluted Margin GM % EBIT Earnings EPS 2019 – As Reported $ 2,693 33.2% $ 979 $ 474 $ 1.57 Add: Restructuring charges, implementation costs and other related costs 1
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