The Campbell's Company · NASDAQ:CPB
The Campbell's — Campbell Soup Company — Q1 2020 Earnings Presentation
35 slides from The Campbell's's earnings presentation, Dec 4, 2019
Slide 1: Q1 Fiscal 2020 Investor Update
Q1 Fiscal 2020 Investor Update 1
Slide 2: Q1 Fiscal 2020 Investor Update
Q1 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 Q1 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: Q1 F'20 Results Largely In-Line with Expectations
Q1 F’20 Results Largely In-Line with Expectations Fiscal 2020: A Year of Stabilization ▪ Organic net sales declined just under 1%* ▪ Snacks strength – organic sales increased 2%* ▪ Meals & Beverages – organic sales decreased 3%* ▪ Strong in-market performance – Total company in-market consumption up
Slide 7: Meals & Beverages Progress
Meals & Beverages Progress ▪ Organic sales down 3%*, primarily driven by timing in U.S. soup shipments and foodservice, offset partly by gains in Prego – Strong in-market performance** ▪ Optimizing the portfolio, while infusing needed investments – A&C up 2%, including 15% increase on U.S. soup bran
Slide 8: Stabilizing U.S. Soup in F'20
Stabilizing U.S. Soup in F’20 ✓ Doing what we said we’d do ▪ Investing in the business ▪ Strengthening important retailer relationships ▪ Managing the portfolio ✓ Grew or held dollar share across all soup segments* ▪ First time in 10 quarters Campbell gained overall soup share ▪ Early indicator of p
Slide 9: Improved Soup Velocities More than Offset by Declining TDPs and Phasing of Holiday Shipments
Improved Soup Velocities More than Offset by Declining TDPs and Phasing of Holiday Shipments Q1 F’20 Soup Net Sales -3% +4 pts. -5 pts. -2 pts. Q1 F'19 Improved TDP Losses Phasing of Q1 F'20 Soup Sales Velocities Holiday Soup Sales Shipments 9
Slide 10: TDPs Declining as Expected; Mostly Offset by Improved Velocities
TDPs Declining as Expected; Mostly Offset by Improved Velocities ▪ Successful advertising Improved ▪ Increased promotional frequency Velocities ▪ Improving retailer relationships ▪ Portfolio optimization ▪ ~80% Non-regrettable TDP Losses ▪ ~20% Regrettable – Aggressively pursuing 10
Slide 11: Stabilizing Meals & Beverages
Stabilizing Meals & Beverages ▪ Prego maintained #1 share position in pasta sauce category* ▪ Reshaping V8 portfolio around plant-based positioning & single-serve – V8+ Energy outperforming category** *IRI Total U.S. MULO L13W ended 10/27/19 **IRI InfoScan, Total U.S. MULO through 10/27/19 11
Slide 12: Snacks: Continued Strong Performance
Snacks: Continued Strong Performance ▪ Organic sales increased 2%* ▪ Steady progress on integration and value capture ▪ Operating profit comparable to year-ago quarter; front-loaded marketing investments ▪ Expect profit performance to improve throughout the year * See Non-GAAP reconciliation 12
Slide 13: 8 of 9 Power Brands Grew or Maintained Share
8 of 9 Power Brands Grew or Maintained Share* Power Brand Consumption Increased 6%** Partner Brands Performed In-Line with Expectations *IRI U.S. MULO $ Share L13W 10/27/19 **IRI Total U.S. MULO L13W ended 10/27/19 13
Slide 14: Snacks: Integration on Track
Snacks: Integration on Track ▪ Continued strong performance in: 1. Procurement, specifically packaging 2. Consolidation of sales headquarters and related operations 3. Operational efficiency in manufacturing ▪ Expect new initiatives around manufacturing and logistics to contribute to savings in back
Slide 15: CFO Perspective
CFO Perspective Mick Beekhuizen Chief Financial Officer 15
Slide 16: First-Quarter Fiscal 2020 Summary
First-Quarter Fiscal 2020 Summary ▪ Fiscal 2020 results are on track ▪ Improved gross margin performance ▪ Continued delivery of cost savings ▪ Divestiture process nearing completion ▪ Updating 2020 sales guidance for sale of European chips business 16
Slide 17: Financial Summary
Financial Summary Continuing Operations ($ millions, except per share) First Change vs. PY Quarter $ % Net Sales $2,183 ($19) (1)% Organic Net Sales* ($16) (1)% Adjusted EBIT* $392 $21 6% Adjusted EPS* $0.78 $0.07 10% *See Non-GAAP reconciliation 17
Slide 18: Components of Net Sales Change
Components of Net Sales Change Continuing Operations +1% (1)% Flat (1)% Flat (1)% Q1 FY19 Vol/Mix Price & Sales Promotional Q1 FY20 Currency Q1 FY20 Net Sales Allowances Spending Organic Net Net Sales Sales* * See Non-GAAP reconciliation; does not add due to rounding 18
Slide 19: Adjusted Gross Margin Performance
Adjusted Gross Margin Performance* Continuing Operations 33.5% (1.7) 0.9 0.1 33.8% 1.3 (0.3) Q1 FY19 Inflation/Other Net Pricing Productivity Cost Savings Mix Q1 FY20 Improvements Program * See Non-GAAP reconciliation 19
Slide 20: Other Operating Items
Other Operating Items Continuing Operations ($ millions) Adjusted Marketing Adjusted & Selling Expenses* Administrative Expenses* (1)% $209 $206 (7)% $135 $126 FY19 FY20 FY19 FY20 Q1 FY19 Q1 FY20 Q1 FY19 Q1 FY20 * See Non-GAAP reconciliation 20
Slide 21: Cost Savings
Cost Savings Continuing Operations ($ millions) $850M ▪ Total savings of $45 million realized in Q1 Snyder’s- ▪ Enterprise cost savings and Snyder’s-Lance $295M Lance synergies program on track with $605 million Synergies achieved to date $605M ▪ Total incremental savings outlook in the range of $14
Slide 22: Adjusted EPS Performance
Adjusted EPS Performance* Continuing Operations $.03 $- $0.78 $.05 $0.71 Q1 FY19 EBIT Interest Taxes Q1 FY20 * See Non-GAAP reconciliation Note: Numbers do not add across due to rounding 22
Slide 23: Segment Results
Segment Results ($ millions) Net Sales Operating Earnings (3)% $1,229 $1,194 (3)% $290 ()%$282 Q1 FY19 NSQ1 FY20 Q1 FY19 Q1 FY20 Earnings 23
Slide 24: Segment Results
Segment Results ($ millions) Net Sales Operating Earnings +2% $973 $989 ()% -% $125 $125 Q1 FY19 NS Q1 FY20 Q1 FY19 Q1 FY20 Earnings 24
Slide 25: Cash Flow and Ending Net Debt
Cash Flow and Ending Net Debt Total Company ($ millions) Year-to-Date Cash Flow Q1 FY19 Q1 FY20 Net Cash Flows from Operations $231 $182 Of which changes in working capital (net of divestitures) ($136) ($173) Net Cash Flows from Investing Activities ($100) $269 Of which capital expenditures ($111) (
Slide 26: Fiscal 2020 Guidance for Continuing Operations
Fiscal 2020 Guidance for Continuing Operations ($ millions, except per share) Previous Impact from Sale of Updated 2019 2020 European Chips 2020 Results Guidance Business Guidance Net Sales $8,107 +1% to +3% -2% -1% to +1% Organic Net Sales** No Impact -1% to +1% Adjusted EBIT $1,266* +2% to +4%***
Slide 27: Key Proof Points Fiscal 2020
Key Proof Points Fiscal 2020 Q1 Progress ▪ Stabilizing top line ✓ PROFITABLE ▪ Improved soup performance ✓ GROWTH ▪ Accelerated Snacks growth ✓ ▪ Stabilizing margins and EBIT ✓+ INVESTMENT ▪ Deliver cost savings to invest in growth ✓ AND PROFIT ▪ Improve working capital and reduce debt ✓ ▪ Organizat
Slide 28: Q&A
Q&A 28
Slide 29: Appendix
Appendix Real food, Keal results, ,.
Slide 30: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) First Quarter % Change Net Sales, Impact of Organic Net Sales, Organic October 27, 2019 As Reported Currency Net Sales as Reported Net Sales Meals & Beverages $ 1,194 $ 2 $ 1,196 (3)% (3)% Snacks 989 1 990 2% 2
Slide 31: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions, except per share amounts) First Quarter Diluted EBIT Earnings EPS* 2020 – As Reported $ 317 $ 169 $ 0.56 Add: Restructuring charges, implementation costs and other related costs 11 8 0.03 Add: Charges associate
Slide 32: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) First Quarter Gross GM % Tax Tax Rate Margin 2020 – As Reported $ 738 33.8% $ 68 28.7% Add: Restructuring charges, implementation costs and other related costs - 3 Add: Charges associated with divestiture - 4 2
Slide 33: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) First Quarter Marketing and Administrative Other Expenses / Selling Expenses Expenses (Income) 2020 – As Reported $ 206 $ 134 $ 56 Deduct: Restructuring charges, implementation costs and other related costs - (
Slide 34: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) Net Debt Continuing Operations Discontinued Operations Total Company Combined October 28, October 27, October 28, October 27, October 28, October 27, 2018 2019 2018 2019 2018 2019 Short-Term Borrowings $ 1,557 $ 1,631 $ 288 $ - $ 1,
Slide 35: 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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