The Campbell's Company · NASDAQ:CPB
The Campbell's — Campbell Soup Company — Q1 2023 Earnings Presentation
42 slides from The Campbell's's earnings presentation, Dec 7, 2022
Slide 1: Q1 Fiscal 2023 Earnings Presentation
Q1 Fiscal 2023 Earnings Presentation 1
Slide 2: Introduction: Rebecca Gardy
Rebecca Gardy Senior Vice President Investor Relations INTRODUCTION 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: the risks related to the availability of, and cost inflation in, supply chain inputs, including labor, raw materials, commodities, p
Slide 4: Agenda
Agenda Key Messages and Q1 FY23 Financial Highlights Division Highlights Q1 FY23 Financial Results FY23 Outlook Summary Q&A 4
Slide 5: CEO Perspective: Mark Clouse
Mark Clouse President & Chief Executive Officer CEO PERSPECTIVE 5
Slide 6: Key Messages
Key Messages • Strong start to FY23 with 15% growth in Organic Net Sales*, Adj EBIT* and Adj EPS* • Highly relevant brands and improved supply chain execution fueled share progression • Pricing and productivity improvements substantially mitigated inflation • Full-year guidance raised to reflect str
Slide 7: Key Financial Highlights
Key Financial Highlights Q1 FY23 $ Consumption1 Net Sales Adj. EBIT* Adj. EPS* $2.6B $449M $1.02 +10% vs. PY +15% +15% +15% +21% vs. PY vs. PY vs. PY vs. 3YA *See Non-GAAP reconciliation 1 Total IRI US MULO $ Consumption latest 13 weeks ending 10/30/2022 7
Slide 8: Most Key Brands Q1 $ Share Remained at or Above FY20 Levels
Most Key Brands Q1 $ Share Remained at or Above FY20 Levels CONDENSED ICONS +1.6 pts. +0.4 pts. +5.1 pts. +1.2 pts. vs. 3YA vs. 3YA vs. 3YA vs. 3YA +4.0 pts. vs. 3YA COOKIES +0.6 pt. +1.6 pts. Flat Flat +0.4 pts. vs. 3YA vs. 3YA vs. 3YA vs. 3YA vs. 3YA Source: Total IRI US MULO $ Consumption latest
Slide 9: Meals & Beverages: Key Highlights
Meals & Beverages: Key Highlights Q1 FY23 GROWTH VS. PY Organic Net Sales* +15% +17% Dollar Consumption1 +8% vs. 3YA *See Non-GAAP reconciliation 1 Total IRI US MULO $ Consumption latest 13 weeks ending 10/30/2022 9
Slide 10: Strong $ Consumption in Growing Categories
Strong $ Consumption in Growing Categories Condensed Italian Sauces Category 6% Category 14% Icons* 12% 21% All 3% Condensed Ready-to-Serve Mexican Sauces (excl. Refrigerated) Category 7% Category 12% 13% 16% Source: Total IRI US MULO $ Consumption latest 13 weeks ending 10/30/2022 * Campbell's Cond
Slide 11: Quick Scratch Cooking: A Great Value and Convenient Meal
Quick Scratch Cooking: A Great Value and Convenient Meal One-Pot 3-Step Easy Skillet Spaghetti Carbonara Chicken Parmesan Campbell’s Avg. restaurant Campbell’s Avg. restaurant cost per cost per cost per cost per Scan to Scan to serving1 serving2 serving1 serving2 learn more learn more $1.53 $21.89 $
Slide 12: Meals & Beverages: Ready-to-Serve Soup Accelerating Growth
Meals & Beverages: Ready-to-Serve Soup Accelerating Growth Q1 FY23 U.S. Ready-to-Serve Soup (incl. Pacific) $ Consumption +9%; +18% vs. 3YA PACIFIC FOODS CHUNKY SOUP Ready-to-Serve Soup +1.6 pts. 5th Consecutive quarter +0.4 pts. +16% increase in Q1 dollar share Q1 dollar share holding or gaining vo
Slide 13: Meals & Beverages: Building a $1B Sauce Business
Meals & Beverages: Building a $1B Sauce Business Q1 FY23 PREGO PACE +0.4 pts. Q1 dollar share vs. PY1 +16% +21% +2.5 pts. Q1 consumption Q1 consumption +1.1 pts. Vol Share vs. Q4 vs. PY1 Dollar Share vs. vs. PY1 FY221 PY1 #1 in Italian +4.7 pts. 3rd consecutive Category Q1 repeat rate vs. quarter of
Slide 14: Snacks: Key Highlights
Snacks: Key Highlights Q1 FY23 GROWTH VS. PY Organic Net Sales* +15% +24% Consumption1 +13% vs. 3YA *See Non-GAAP reconciliation 1 Total IRI US MULO $ Consumption latest 13 weeks ending 10/30/2022 14
Slide 15: Power Brands $ Consumption: +15% vs. PY, +28% vs. 3YA
Power Brands $ Consumption1: +15% vs. PY, +28% vs. 3YA Q1 FY23 +21% +30% +9% +28% +16% +37% +11% +13% VS. PY VS. 3YA VS. PY VS. 3YA VS. PY VS. 3YA VS. PY VS. 3YA +21% +35% +17% +36% +10% +25% +9% +36% VS. PY VS. 3YA VS. PY VS. 3YA VS. PY VS. 3YA VS. PY VS. 3YA 1 Total IRI US MULO $ Consumption lates
Slide 16: Power Brands $ Consumption Growth Outpacing Categories
Power Brands $ Consumption1 Growth Outpacing Categories Q1 FY23 Crackers Kettle Potato Chips Deli Snacks Category 16% Category 4% Category 16% 21% 21% 9% 17% Organic Tortilla Chips Sandwich Crackers Category 7% Category 9% 10% 11% 1 Total IRI US MULO $ Consumption latest 13 weeks ending 10/30/2022 1
Slide 17: Goldfish, Salty, Cookies…Holiday Classics and Innovation
Goldfish, Salty, Cookies…Holiday Classics and Innovation #1 snack brand with teens 3 times in a row 1 1 Piper Sandler “Taking Stock with Teens” (Fall 2021, Spring 2022, Fall 2022) 17
Slide 18: Looking Forward
Looking Forward • Strong start to FY23; ahead of our expectations • Highly relevant brands in growing categories gaining share due to improved supply chain execution • Full-year guidance raised to reflect strong first quarter results, continuing brand momentum and a strengthened supply chain • Stron
Slide 19: CFO Perspective: Mick Beekhuizen
Mick Beekhuizen EVP & Chief Financial Officer and President, Meals & Beverages CFO PERSPECTIVE 19
Slide 20: Q1 FY23 Key Financial Messages
Q1 FY23 Key Financial Messages Financial Summary • Strong start to FY23 with 15% growth $ Millions, Except Per Share across all three key metrics: Net Sales, Adjusted EBIT* and Adjusted EPS* in the first quarter +15% +15% +15% vs. PY vs. PY vs. PY NET SALES & • Top-line growth due to inflation-drive
Slide 21: Q1 FY23 Net Sales Bridge
$ Millions Q1 FY23 Net Sales Bridge Net Sales growth reflects inflation-driven pricing partially offset by volume declines +15% vs. PY +16 pts - +15% - $2,575 $2,236 (1) pt Q1 FY22 Net Sales Volume / Mix Price & Sales Promotional Spending Q1 FY23 Organic Net Currency Q1 FY23 Net Sales Allowances Sal
Slide 22: Q1 FY23 Adjusted Gross Profit Margin Bridge
Q1 FY23 Adjusted Gross Profit Margin* Bridge Continued cost inflation and higher other supply chain costs as well as unfavorable volume and mix were mostly mitigated by inflation-driven pricing actions and productivity improvements +1,140 bps (1,260) bps (30) bps vs. PY 32.5% (150) bps +230 bps +10
Slide 23: Mitigating Accelerating Core Inflation
Mitigating Accelerating Core Inflation Inflation Mitigating Actions: Core Inflation Rate: • Net Pricing FY22 Rate: 11% FY22 Rate: 7% 18% 16% 15% 15% 11% 11% 6% 2% 9% Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 6% • Supply Chain Productivity • Cost Savings Initiatives • Manage Discretionary Spending Q1 F
Slide 24: Other Operating Items
$ Millions Other Operating Items Marketing & Selling Expenses Adjusted Administrative Expenses* +18% +1% vs. PY vs. PY $201 $170 A&C +31% $154 $155 vs. PY Q1 FY22 Q1 FY23 Q1 FY22 Q1 FY23 *See Non-GAAP reconciliation 24
Slide 25: Q1 FY23 Adjusted EBIT Bridge
$ Millions Q1 FY23 Adjusted EBIT* Bridge Growth driven by higher adjusted gross profit, partially offset by higher marketing and selling expenses and higher adjusted other expenses $102 $(31) +15% vs. PY $(1) $(10) $449 $389 Q1 FY22 Adjusted Gross Profit Marketing & Selling Adjusted Administrative A
Slide 26: Q1 FY23 Adjusted EPS Bridge
Q1 FY23 Adjusted EPS* Bridge Double-digit growth driven by strong operational performance +15% vs. PY $0.16 - $(0.04) $1.02 $0.01 $0.89 Q1 FY22 Adjusted EBIT Interest Adjusted Taxes Share Count Q1 FY23 *See Non-GAAP reconciliations for all adjusted financial measures presented 26
Slide 27: Q1 FY23 Meals & Beverages Segment Results
$ Millions Q1 FY23 Meals & Beverages Segment Results NET SALES & OPERATING EARNINGS ORGANIC GROWTH RATE* +15% vs. PY $1,455 $1,266 +18% vs. PY $331 $280 Q1 FY22 Q1 FY23 Q1 FY22 Q1 FY23 *See Non-GAAP reconciliation 27
Slide 28: Q1 FY23 Snacks Segment Results
$ Millions Q1 FY23 Snacks Segment Results NET SALES & OPERATING EARNINGS ORGANIC GROWTH RATE* +15% vs. PY $1,120 $970 +20% vs. PY $128 $153 Q1 FY22 Q1 FY23 Q1 FY22 Q1 FY23 *See Non-GAAP reconciliation 28
Slide 29: Cash Flow
Cash Flow Strong Q1 FY23 Cash Flow generation with increased investment and over $150 million returned to shareholders TOTAL COMPANY $ Millions Q1 FY22 Q1 FY23 Net Cash Flows from Operations $288 $227 of which changes in working capital $(95) ($203) Net Cash Flows from Investing Activities $(68) $(7
Slide 30: Full-Year Guidance Raised Reflecting Strong Q1
Full-Year Guidance Raised Reflecting Strong Q1, Brand Momentum and Strengthened Supply Chain FY22 Previous FY23 Updated FY23 FY23 Assumptions $ Millions, Except Per Share Results Guidance1 Guidance1 • Core inflation in the low-teens range Net Sales $8,562 +4% to +6% +7% to +9% • Productivity improve
Slide 31: Summary
Summary • Strong Q1 results with 15% growth in Net Sales, adjusted EBIT and adjusted EPS • Continued supply chain execution improvements and improved service levels • In market consumption was strong, with meaningful market share improvement on many brands as supply and investment return • FY23 guid
Slide 32: Q&A Forum
Q&A Forum Mark Clouse Mick Beekhuizen President & Chief Executive Officer EVP & Chief Financial Officer and President, Meals & Beverages 32
Slide 33: Appendix
BUILDING MOMENTUM
Slide 34: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) First Quarter % Change Net Sales, Impact of Organic Net Sales, Organic October 30, 2022 As Reported Currency Net Sales As Reported Net Sales Meals & Beverages $ 1,455 $ 7 $ 1,462 15% 15% Snacks 1,120 - 1,120 15% 15% Total Net Sales
Slide 35: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions, except per share amounts) First Quarter EBIT EBIT Margin % Earnings Diluted EPS* 2023 – As Reported $ 436 16.9% $ 297 $ 0.99 Add: Restructuring charges, implementation costs and other related costs 3 3 0.01 Add: Pension and postreti
Slide 36: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) First Quarter Gross Profit GP % EBT Tax Tax Rate 2023 – As Reported $ 834 32.4% $ 390 $ 93 23.8% Add: Restructuring charges, implementation costs and other related costs - 3 - Add: Pension and postretirement adjustments - 15 4 Deduc
Slide 37: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) First Quarter Administrative R&D Expenses Expenses Total 2023 – As Reported $ 158 $ 21 $ 179 Deduct: Restructuring charges, implementation costs and other related costs (3) - (3) 2023 – Adjusted $ 155 $ 21 $ 176 % of Net Sales – Adj
Slide 38: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) First Quarter Other Expenses / (Income) 2023 – As Reported $ 18 Deduct: Pension and postretirement adjustments (15) 2023 – Adjusted $ 3 % of Net Sales – Adjusted 0.1% 2022 – As Reported $ (1) Deduct: Pension and postretirement adjus
Slide 39: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions, except per share amounts) First Quarter – Adjusted Diluted EPS Impact from Adjusted EBIT EBIT 2023 – Adjusted $ 449 2022 – Adjusted 389 $ Change $ 60 Deduct: 2022 Adjusted tax rate impact on EBIT (12) Impact to Net Earnings $ 48 Fir
Slide 40: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions, except per share amounts) Adjusted Diluted EPS Impact from Change in Adjusted Tax Rate First Quarter 2023 – Adjusted EBT $ 403 Decrease (Increase) in Adjusted Tax Rate (3.0)% Adjusted EBT multiplied by the Change in Adjusted Tax Rat
Slide 41: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions, except per share amounts) Full Year EBIT Earnings Diluted EPS* 2022 – As Reported $ 1,163 $ 757 $ 2.51 Add: Restructuring charges, implementation costs and other related costs 31 24 0.08 Add: Pension and postretirement adjustments 4
Slide 42: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions, except per share amounts) First Quarter EBIT EBIT Margin % Earnings Diluted EPS 2021 – As Reported $ 461 19.7% $ 309 $ 1.02 Add: Restructuring charges, implementation costs and other related costs 6 5 0.02 Deduct: Pension and postre
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