The Campbell's Company · NASDAQ:CPB
The Campbell's — Campbell Soup Company — Q4 2020 Earnings Presentation
53 slides from The Campbell's's earnings presentation, Sep 3, 2020
Slide 1: Q4 & Full-Year Fiscal 2020 Earnings Presentation
Q4 & Full-Year Fiscal 2020 Earnings Presentation 1 1
Slide 2: Q4 2020 Earnings Presentation
Q4 2020 Earnings Presentation Rebecca Gardy Vice President - Investor Relations 2 Good morning and welcome to Campbell’s fourth quarter and full year fiscal 2020 earnings presentation. I’m Rebecca Gardy, Vice President of Investor Relations. As usual, we've created slides to accompany our earnings p
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: impacts of, and associated responses to, the COVID-19 pandemic, our ability to execute on and realize the expected benefits from ou
Slide 4: Agenda
Agenda CEO Perspective Q4 & Full-Year Fiscal 2020 Financial Results Q1 Fiscal 2021 Guidance 4 On slide 4, you can see our agenda. You will hear from Mark Clouse, Campbell’s President and CEO, and Mick Beekhuizen, Chief Financial Officer. Mark will share his thoughts on our performance in the quarter
Slide 5: CEO Perspective
CEO Perspective Mark Clouse President and Chief Executive Officer 5 Thanks Rebecca. As we continue to navigate the COVID-19 crisis, we hope all of you listening today and your families, are staying safe and healthy. Our thoughts remain with all those impacted during these challenging times. Our most
Slide 6: COVID-19 Response
COVID-19 Response • #1 priority is safety and well-being of our people • $6 million in financial support and food to Campbell hometowns across North America • Strong collaboration with retailers 6 We also remain focused and committed to helping the communities where our people live and work. Our sup
Slide 7: Focused Strategy Has Served Us Well
Focused Strategy Has Served Us Well 1 GEOGRAPHY 2 DIVISIONS 13 CORE CATEGORIES | ~80% of BUSINESS with Leading Brands in Every Category 7 Campbell’s simplified, focused strategy and commitment to improving our execution served us very well as we faced the unprecedented challenges of the pandemic. Ou
Slide 8: Q4 Results: Exceptional Growth Across All Key Metrics
Q4 Results: Exceptional Growth Across All Key Metrics In-Market Adj. Gross Organic Sales* Consumption** Margin* Adj. EBIT* Adj. EPS* +12% +22% +190 +22% +50% bps *See Non-GAAP reconciliation **Total IRI U.S. MULO $ consumption latest 14 weeks ended 8/2/20 8 In the fourth quarter we delivered growth
Slide 9: Trends Shaping Landscape
Trends Shaping Landscape 1. Quick scratch cooking 2. Accelerated online buying including home delivery and click & collect 3. Evolution of retail shelf 4. Continued focus on value Focused on attracting and retaining households 9 As discussed last quarter, we are very focused on household penetration
Slide 10: Fiscal 2021 Guidance
Fiscal 2021 Guidance ▪ Full-year outlook difficult to predict ▪ Providing first-quarter guidance ▪ Reassess guidance approach next quarter 10 Currently, the impact and duration of the COVID-19 pandemic remains uncertain, and it is therefore difficult to predict the full year outlook for fiscal 2021.
Slide 11: Meals & Beverages: Accelerating Our Growth Strategy in Q4
Meals & Beverages: Accelerating Our Growth Strategy in Q4 Operating Consumption Marketing Organic Sales* Earnings Growth** Expense +19% +24% +24% +115% *See Non-GAAP reconciliation **Total IRI U.S. MULO $ consumption latest 14 weeks ended 8/2/20 *See Non-GAAP reconciliation ** IRI U.S. MULO $ consum
Slide 12: Turned around this important business
turned around this important business. 11
Slide 13: Heating Up Our Soup Strategy
Heating Up Our Soup Strategy ▪ Soup grew faster than total edibles* ▪ Total U.S. retail soup sales up 52%** ▪ Substantial sales gains on condensed, ready-to-serve and broth, including Pacific ▪ Addressing broth availability *IRI TSV MULO 53 weeks ending 8/2/20 **Note: Includes an 11-point benefit fr
Slide 14: Gaining New Soup Households
Gaining New Soup Households ▪ Soup household penetration up over 5 percentage points vs. FY19 Q4* ▪ Gained 6.4 million households across all generations, continued gains among Millennials** ▪ Gains most pronounced across condensed icon soups – investing to drive relevance and usage *IRI National Con
Slide 15: Stepped Up Innovation Planned for Fiscal 2021
Stepped Up Innovation Planned for Fiscal 21 Strengthening Expanding Broadening Better-for-You Offerings Convenience Platforms Kid-Specific Options 14 As we discussed previously, innovation plays an important role in our plans, and although we may be a bit behind our “soup aisle of the future” vision
Slide 16: Accelerated Progress Against our Win in Soup Strategy
Accelerated Progress Against our “Win in Soup” Strategy in Fiscal 20 ✓ Turnaround ahead of plan ▪ Increased household penetration ▪ Attracting younger households ▪ Growth of Pacific Foods brand ✓ On-track with innovation, marketing, supply chain and investments ✓ FY21 focus also includes: ▪ Addressi
Slide 17: M&B: Prego, Pace, V8 and Canada
M&B: Prego, Pace, V8 and Canada ▪ Prego maintained #1 share position in Italian sauce category* ▪ Prego, Pace and V8 double-digit consumption gains* ▪ Canada continued to perform well *Total IRI U.S. MULO $ consumption latest 14 weeks ended 8/2/20 16 In other parts of the division, we saw similar re
Slide 18: Snacks: Continued Strong Performance in Q4
Snacks: Continued Strong Performance in Q4 Operating Consumption Marketing Organic Sales* Earnings Growth** Expense +7% --% +21% +38% *See Non-GAAP reconciliation **Total IRI U.S. MULO $ consumption latest 14 weeks ended 8/2/20 *See Non-GAAP reconciliation **IRI InfoScan, Total U.S. MULO, 14 weeks e
Slide 19: New Household Gains Fueled by Power Brands
New Household Gains Fueled by Power Brands ▪ 8 of 9 power brands increased household penetration* ▪ Significantly increased marketing investments ▪ Snacks well-positioned to be a primary driver of growth for Campbell *Total U.S. All Outlet, NBD weighted (dollars for SL brands/comp; Vol for PF brands
Slide 20: Snacks Innovation On-Track and Showing Momentum
Snacks Innovation On-Track and Showing Momentum Progress on FY20 Product Q4 Innovation: Farmhouse Launches Breakfast Breads Scaled up via virtual tele-tasting Positive repeat and steady velocity growth capabilities 19 I’m also very proud of our Snacks team for continuing to drive innovation, which i
Slide 21: Snacks: Well-Positioned for the Future
Snacks: Well-Positioned for the Future ▪ Confident in ability to continue to unlock growth potential ▪ Consistent progress against portfolio role ▪ Integration remains on plan 20 Let’s finish our discussion of Snacks with a review of our progress against integration and value capture. We continue to
Slide 22: Highly Advantaged Position Going Forward
Highly Advantaged Position Going Forward Adding and retaining millions of new households Maximizing cash flows and investments Well-positioned to benefit from continued consumer behaviors 21 As we navigate this unprecedented period of remarkable growth, I hear one question rather consistently: Are t
Slide 23: CFO Perspective
CFO Perspective Mick Beekhuizen EVP & Chief Financial Officer 22 With that, let me turn it over to Mick for a deeper dive on our financial results and segment performance. 22
Slide 24: Fourth-Quarter and Fiscal 2020 Summary
Fourth-Quarter and Fiscal 2020 Summary ▪ Q4 FY20 organic net sales year-over-year growth of 12% driven by strong demand across our portfolio of iconic brands ▪ Q4 adjusted EBIT growth of 22% and adjusted EPS growth of 50% driven by strong demand and gross margin improvement ▪ FY20 net sales growth o
Slide 25: Financial Summary
Financial Summary Continuing Operations ($ millions, except per share data) Change vs. PY Full Change vs. PY Q4 Year FY20 $ % $ % 2020 Net Sales $2,108 $328 18% $8,691 $584 7% Organic Net Sales* $216 12% $541 7% Adjusted EBIT* $307 $55 22% $1,449 $183 14% Adjusted EPS* $0.63 $0.21 50% $2.95 $0.65 28
Slide 26: Components of Net Sales Change
Components of Net Sales Change Continuing Operations +8 pts (2) pts - +18% +12 pts - - +12% Q4 FY19 Vol/Mix Price & Sales Promotional Q4 FY20 53rd Week Divestiture Currency Q4 Q4 FY20 FY20 Net Sales Allowances Spending Organic Net Organic Net Sales Sales Sales* Sales* * See Non-GAAP reconciliation 2
Slide 27: Adjusted Gross Margin Performance
Adjusted Gross Margin Performance* Continuing Operations +190bps +80 bps - (210) bps +160 bps +90 bps 35.6% +70 bps 33.7% Q4 FY19 Mix Operating Net Pricing Inflation/ Productivity Cost Savings Q4FY20 Q4 FY20 Leverage** Other*** Improvements Program * See Non-GAAP reconciliation ** Reflects best esti
Slide 28: Other Operating Items
Other Operating Items** Continuing Operations ($ millions) A&C +101% Adjusted Marketing Adjusted & Selling Expenses* Administrative Expenses* +37% $265 +22% $194 $169 $139 Q4 FY19 FY19 Q4 FY20 FY20 Q4 FY19 FY19 Q4 FY20 FY20 * See Non-GAAP reconciliation **Includes the impact of the 53rd week 27 Movi
Slide 29: Cost Savings
Cost Savings Continuing Operations ($ millions) $850 ▪ Total savings of $45 million realized in Q4; $725 $165 million for FY20 ▪ Enterprise cost savings and Snyder’s-Lance synergies program on track with $725 million achieved to date ▪ Outlook of approximately $75 - 85 million for FY21 ▪ Tracking to
Slide 30: Adjusted EBIT Performance
Adjusted EBIT Performance* Continuing Operations ($ millions) +$40 ($71) +22% +$111 ($30) +$5 $307 $252 Q4 FY19 Sales Volume Adjusted* Adjusted* Adjusted Adjusted Other Q4 FY20 Q4 FY20 Growth Gross Margin Marketing & Selling Administrative Income* Improvement Expenses Expenses* *See Non-GAAP reconci
Slide 31: Adjusted EPS Performance
Adjusted EPS Performance* 53rd week Continuing Operations impact is ~ $0.04 +50% $0.03 $0.63 $0.06 $0.14 $0.42 Q4 FY19 EBIT Interest Taxes Q4 Q4 FY20 FY20 * See Non-GAAP reconciliation Note: Numbers do not add across due to rounding 30 The following chart breaks down our adjusted EPS growth between
Slide 32: Segment Results: Meals & Beverages
Segment Results ($ millions) Net Sales & Organic Growth Rate* Operating Earnings $1,018 +19% $795 +24% $184 $148 Q4 FY19 Q4 FY20 Q4 FY19 Q4 FY20 * See Non-GAAP reconciliation 31 Now turning to each of our segments. In Meals & Beverages, organic net sales increased 19% in the fourth quarter, reflecti
Slide 33: Segment Results: Snacks
Segment Results ($ millions) Net Sales & Organic Growth Rate* Operating Earnings $1,090 +7% $985 — $136 $136 Q4 FY19 Q4 FY20 Q4 FY19 Q4 FY20 * See Non-GAAP reconciliation 32 Within Snacks, Organic net sales increased 7% in the fourth quarter driven primarily by volume growth reflecting elevated dema
Slide 34: Cash Flow
Cash Flow Total Company ($ millions) Fiscal Year 2019 2020 Net Cash Flows from Operations $1,398 $1,396 Of which changes in working capital (net of acquisition and divestitures) $149 $92 Net Cash Flows from Investing Activities $153 $2,272 Of which capital expenditures ($384) ($299) Of which sale of
Slide 35: Continued Deleveraging
Continued Deleveraging Continuing Operations ($ billions) Key Highlights ▪ Strong deleveraging throughout Net Debt* FY20 $8.4 ▪ Achieved 3.0x leverage target 1 year earlier than anticipated ▪ Continue to operate in a volatile environment $5.3 ▪ Capital priorities remain intact; may opportunistically
Slide 36: Fiscal 2021 Perspective
Fiscal 2021 Perspective ▪ Maintain focus on strong execution in uncertain operating environment – Continue to invest in our brands and focus on supply chain execution to meet demand – Continued focus on cost savings, including enterprise / value capture cost savings, while targeting supply chain pro
Slide 37: Fiscal 2021 Perspective
Fiscal 2021 Perspective ▪ Likely elevated demand in H1 FY21 though moderating throughout the period as environment improves – Year ago base for many COVID-19 impacted products, like soup, are seasonally higher in H1 reducing absolute percent changes but still at elevated levels ▪ In contrast, H2 FY2
Slide 38: Fiscal 2021 – Select Assumptions
Fiscal 2021 – Select Assumptions ($ millions) FY21 Select Assumptions Cost Savings (Enterprise/Value Capture) $75 – 85 million Net Interest Expense $215 – 220 million Adjusted Tax Rate* ~24% Capital Expenditures ~$350 million *A non-GAAP reconciliation is not provided for 2021 guidance since certain
Slide 39: Q1 Fiscal 2021 Guidance for Continuing Operations
Q1 Fiscal 2021 Guidance for Continuing Operations ($ in millions, except per share) Q1 FY20 Q1 FY21 Results Guidance Net Sales $2,183 +5% to +7% Adjusted EBIT $392* +6% to +9%** +13% to +18%** Adjusted EPS $0.78* $0.88 to $0.92 *See Non-GAAP reconciliation ** A non-GAAP reconciliation is not provide
Slide 40: Key Proof Points Fiscal 2021
Key Proof Points Fiscal 2021 ▪ Retain new households ▪ Improve soup share PROFITABLE ▪ Continue Snacks growth GROWTH ▪ Increase innovation contribution ▪ Deliver cost savings and value capture ▪ Closely manage COVID-19 costs INVESTMENT ▪ Improve Snacks margin AND PROFIT ▪ Execute capital initiatives
Slide 41: Analyst Q&A @ 8:30 a.m. ET
Analyst Q&A @ 8:30 a.m. ET Investor.campbellsoupcompany.com 40 Thanks, Mark. This concludes our prepared remarks. Our live Q&A call will begin at 8:30 a.m. Eastern this morning. 40
Slide 42: Appendix
Campbell Appendix | Bale | Real food, Real results, , 41
Slide 43: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) Fourth Quarter % Change Net Sales, Net Sales, Impact of Impact of Organic As Organic August 2, 2020 As Reported Currency 53rd Week Net Sales Reported Net Sales Meals & Beverages $ 1,018 $ 3 $ (73) $ 948 28% 19%
Slide 44: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) Full Year % Change Net Sales, Net Sales, Impact of Impact of Organic As Organic August 2, 2020 As Reported Currency 53rd Week Net Sales Reported Net Sales Meals & Beverages $ 4,646 $ 7 $ (73) $ 4,580 9% 8% Snac
Slide 45: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions, except per share amounts) Fourth Quarter EBIT Earnings EBIT Margin % (Loss) Diluted EPS* 2020 – As Reported $ 167 7.9% $ 86 $ 0.28 Add: Restructuring charges, implementation costs and other related costs 19 14
Slide 46: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Continuing Operations Financial Measures ($ millions, except per share amounts) Full Year Diluted EBIT Earnings EPS* 2020 – As Reported $ 1,107 $ 592 $ 1.95 Add: Restructuring charges, implementation costs and other related costs 69 52 0.17 Add: Pension settlement
Slide 47: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) Fourth Quarter Gross Margin GM % Tax Tax Rate 2020 – As Reported $ 747 35.4% $ 21 19.6% Add: Restructuring charges, implementation costs and other related costs 3 5 Add: Pension and postretirement benefit mark-
Slide 48: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) Adjusted EBIT Impact from Adjusted Gross Margin Expansion Fourth Quarter 2020 – Reported Net Sales $ 2,108 2020 – Adjusted Gross Margin % 35.6% 2019 – Adjusted Gross Margin % 33.7% Change in Adjusted Gross Marg
Slide 49: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) Fourth Quarter Administrative Marketing & Other Expenses / Expenses Selling Expenses (Income) 2020 – As Reported $ 186 $ 265 $ 106 Deduct: Pension and postretirement benefit mark-to-market adjustments - - (121)
Slide 50: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) Net Debt July 28, 2019 August 2, 2020 Short-Term Borrowings $ 1,371 $ 1,202 Long-Term Debt 7,103 4,994 Total Debt $ 8,474 $ 6,196 Less: Cash and Cash Equivalents (31) (859) Net Debt $ 8,443 $ 5,337 49 49
Slide 51: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Twelve Months Twelve Months Ended Ended ($ millions) July 28, 2019 August 2, 2020 Adjusted Earnings before interest and taxes $ 1,266 $ 1,449 Depreciation and amortization, as reported $ 446 $ 328 Add (Deduct): Restructuring charges, implementat
Slide 52: 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
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Campbell Soup Company — Q4 2020 Earnings Presentation on 6ix