The Campbell's Company · NASDAQ:CPB
The Campbell's — Campbell Soup Company — Q3 2022 Earnings Presentation
46 slides from The Campbell's's earnings presentation, Jun 8, 2022
Slide 1: Q3 Fiscal 2022 Earnings Presentation
Q3 Fiscal 2022 Earnings Presentation 1
Slide 2: Introduction: Rebecca Gardy
Rebecca Gardy Senior Vice President Investor Relations I N T RO D U C T I O N 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: Impacts of, and associated responses to, the COVID-19 pandemic on our business, suppliers, customers, consumers and employees; our a
Slide 4: Agenda
Agenda Key Q3 Messages and Highlights 6 Division Highlights 9 Q3 Financial Results & Full-year FY22 Outlook 20 Summary 32 Q&A 33 4
Slide 5: Introduction: Mark Clouse
Mark Clouse President & Chief Executive Officer I N T RO D U C T I O N 5
Slide 6: Key Q3 FY22 Messages
Key Q3 FY22 Messages • Strengthened execution amidst dynamic macro environment • Strong top-line results reflect continued consumer demand and significantly improved supply • Strong underlying portfolio health; some share pressure due to continued supply constraints and private label recovery • Retu
Slide 7: Key Q3 FY22 Highlights
CONTINUING OPERATIONS Key Q3 FY22 Highlights Q3 FY22 NET SALES ORGANIC NET SALES* ADJ. GROSS MARGIN* ADJ. EBIT* $2.1B +9% 31.5% $321M +7% vs. PY vs. PY + 90 bps vs. PY +23% vs. PY $ CONSUMPTION1 ADJ. EPS* OPERATING CASH +4% +14% FLOW $0.70 vs. PY vs. 3YA +37% vs. PY $1.1B *See Non-GAAP reconcili
Slide 8: Most Key Brands Share Remain At or Above Pre-COVID Levels
Most Key Brands Share1 Remain At or Above Pre-COVID 19 Levels, Despite Short-Term Supply-Driven Q3 Pressure +2 pts. +2 pts. +4 pts. +1 pt. vs. 3YA vs. 3YA vs. 3YA vs. 3YA +2 pts. +0.3 pts. Stable Stable vs. 3YA vs. 3YA vs. 3YA vs. 3YA 1 Total IRI US MULO $ Consumption latest 13 weeks ending 5/1/2022
Slide 9: Meals & Beverages: Key Highlights
CONTINUING OPERATIONS Meals & Beverages: Key Highlights Q3 FY22 Growth vs. PY Organic Net Sales* +9% +14% vs. 3YA Consumption1 +4% *See Non-GAAP reconciliation 1 Total IRI US MULO $ Consumption latest 13 weeks ending 5/1/2022 9
Slide 10: Positioned to Win in Current Environment
Positioned to Win in Current Environment Out-of-home meals is top area Campbell has leading brands in of 6 categories 3 staying in baskets as prices rise2 people cut back while Grocery spending is the top priority1 14% 11% 7% Out of home +23% 5% 4% 3% dining & entertainment Groceries (31)% SOUP RICE
Slide 11: Meals & Beverages: Win in Soup 2.0
Meals & Beverages: Win in Soup 2.0 U.S. Soup Consumption1 Winning where it matters $899M Condensed share1 of segment down 2.2 pts vs. PY but up 1.6 pts vs. 3YA $676M $642M $591M +14% U.S. Soup Consumption Growth vs. 3YA RTS share1 of segment down 1.1 pts; Chunky share +1.6 pts vs. PY Q3 FY19 Q3 FY20
Slide 12: Building a $1B Sauces Business
Building a $1B Sauces Business Prego still #1 in Italian Category1 25% +7% Q3 consumption 20% growth vs. PY1 15% Key 10% Competitors +25% +5pts 5% Q3 consumption Q3 repeat rate vs. 0% growth vs. 3YA1 3YA2 FY17 FY18 FY19 FY20 FY21 FY22 FY22 FY22 Q1 Q2 Q3 Pace service recovery driving strong results i
Slide 13: Leveraging Innovation to Drive Momentum
Leveraging Innovation to Drive Momentum Quick Scratch Cooking Ready to Lunch/Snack 13
Slide 14: Snacks: Key Highlights
CONTINUING OPERATIONS Snacks: Key Highlights Q3 FY22 Growth vs. PY Organic Net Sales* +8% +14% vs. 3YA Consumption1 +4% *See Non-GAAP reconciliation 1 Total IRI US MULO $ Consumption latest 13 weeks ending 5/1/2022 14
Slide 15: Snacks Power Brands Consumption
Snacks Power Brands Consumption: +6% vs. PY, +19% vs. 3YA Q3 FY22 +8% +18% (2)% +14% +9% +25% +10% +12% vs. PY vs. 3YA vs. PY vs. 3YA vs. PY vs. 3YA vs. PY vs. 3YA +10% +27% +17% +54% (16)% +15% +3% +17% vs. PY vs. 3YA vs. PY vs. 3YA vs. PY vs. 3YA vs. PY vs. 3YA 1 Total IRI US MULO $ Consumption la
Slide 16: Goldfish: Driving Relevance
Goldfish: Driving Relevance Breakthrough Innovation is LTO Strategy Activations Beating Competition Creating Excitement Tik Tok Challenge Goldfish® Frank’s RedHot Sports Fashion Music Mega Bites & Family Size Old Bay® Jalapeño Popper 16
Slide 17: Limited Edition Old Bay Seasoned Goldfish
Limited Edition Old Bay® Seasoned Goldfish® Consumers are Craving Sold out in #1 9hrs Velocity New On Launch Day1 on Cracker during Launch McCormick micro-site Week1 Attracting 1.5B 2.5x more Earned Media Household than Frank’s Impressions RedHot at Major Retailer2 Media is Raving “Goldfish and Old
Slide 18: Q4 FY22 Key Priorities
Q4 FY22 Key Priorities Mitigate Inflation • Deploy full range of tools to combat inflation and manage margin pressure • Leverage improving supply and execution to Further Recover on Shelf further distribution and inventory levels • Strengthen competitive position and stem Return to Investment privat
Slide 19: CFO Perspective: Mick Beekhuizen
Mick Beekhuizen EVP & Chief Financial Officer C FO P E RS P EC T I V E 19
Slide 20: Q3 FY22 Key Messages
Q3 FY22 Key Messages • Solid growth across all three key metrics: Net Sales, adjusted EBIT* and adjusted EPS* amidst meaningful macro headwinds • Sustained consumer demand and improved supply chain execution • Inflation-driven pricing; price elasticities below historical levels • Q3 margin improveme
Slide 21: Financial Summary
CONTINUING OPERATIONS ($ MILLIONS, EXCEPT PER SHARE) Financial Summary Q3 Change vs. PY YTD Change vs. PY FY22 $ % FY22 $ % Net Sales $2,130 $146 7% $6,575 $(28) - Organic Net Sales* 9% 1% Adjusted EBIT* $321 $60 23% $1,028 $(72) (7)% Adjusted EBIT margin** 15.1% +190 bps 15.6% (110) bps Adjusted EP
Slide 22: Q3 FY22 Net Sales Bridge
CONTINUING OPERATIONS ($ MILLIONS) Q3 FY22 Net Sales Bridge +7% Highlights +11 pts - +9% (1) pt - $2,130 • Net Sales growth reflects inflation-driven pricing $1,984 (3) pts related to increased cost inflation • Volume / mix decline primarily reflective of select supply constraints and price elastici
Slide 23: Q3 FY22 Adjusted Gross Margin Bridge
CONTINUING OPERATIONS Q3 FY22 Adjusted Gross Margin* Bridge Favorable prior year comparisons, inflation-driven pricing combined with productivity improvements and cost savings offset inflation / other; unfavorable volume / mix largely due to reduced operating leverage +800 bps (790) bps Includes +10
Slide 24: Mitigating Accelerating Core Inflation
Mitigating Accelerating Core Inflation Net Pricing Core Inflation Rate 11% 15% 6% H1 FY22: 8% 2% 2% 9% Q4 FY21 Q1 FY22 Q2 FY22 Q3 FY22 6% • Pricing and Trade Optimization 5% • Supply Chain Productivity 4% • Cost Savings Initiatives • Manage Discretionary Spending Q3 FY21 Q4 FY21 Q1 FY22 Q2 FY22 Q3 F
Slide 25: Other Operating Items
CONTINUING OPERATIONS ($ MILLIONS) Other Operating Items MARKETING & SELLING EXPENSES ADJUSTED ADMINISTRATIVE EXPENSES* $202 +3% $188 A&C (16)% vs. PY $142 $146 as spending was moderated due in part to timing of supply recovery and materials availability Q3 FY21 Q3 FY22 Q3 FY21 Q3 FY22 *See Non-GAAP
Slide 26: Q3 FY22 Adjusted EBIT Bridge
CONTINUING OPERATIONS ($ MILLIONS) Q3 FY22 Adjusted EBIT* Bridge Year-over-year sales volume decline offset by adjusted gross margin improvement drove adjusted EBIT change +23% $14 $(4) $(13) $87 $321 $261 $(24) Q3 FY21 Sales Volume Adjusted Gross Margin Marketing & Selling Adjusted Adjusted Other I
Slide 27: Adjusted EPS Bridge
CONTINUING OPERATIONS Adjusted EPS* Bridge Higher adjusted EBIT leading driver of 37% increase in adjusted EPS +37% $0.01 $0.01 $0.70 $0.02 $0.15 $0.51 Q3 FY21 Adjusted EBIT Adjusted Interest Adjusted Taxes Share Count Q3 FY22 *See Non-GAAP reconciliations for all adjusted financial measures present
Slide 28: Q3 FY22 Meals & Beverages Segment Results
($ MILLIONS) Q3 FY22 Meals & Beverages Segment Results NET SALES & OPERATING EARNINGS ORGANIC GROWTH RATE* +9% $1,131 $1,062 (30)% +18% $186 $220 Q3 FY21 Q3 FY22 Q3 FY21 Q3 FY22 *See Non-GAAP reconciliation 28
Slide 29: Q3 FY22 Snacks Segment Results
($ MILLIONS) Q3 FY22 Snacks Segment Results NET SALES & OPERATING EARNINGS ORGANIC GROWTH RATE* +8% $999 $922 +25% $102 $127 Q3 FY21 Q3 FY22 Q3 FY21 Q3 FY22 *See Non-GAAP reconciliation 29
Slide 30: Cash Flow
TOTAL COMPANY ($ MILLIONS) Cash Flow Strong YTD FY22 Cash Flow generation with over $450 million returned to shareholders YTD FY21 YTD FY22 Net Cash Flows from Operations $881 $1,101 of which changes in working capital $(178) $109 Net Cash Flows from Investing Activities $(177) $(168) of which capit
Slide 31: Updated FY22 Guidance
CONTINUING OPERATIONS ($ MILLIONS, EXCEPT PER SHARE) Updated FY22 Guidance Previous Updated • Raising Net Sales guidance to reflect Fiscal 2021 YTD performance, continued strong Fiscal 2022 Fiscal 2022 Results consumer demand, limited price Guidance1 Guidance1 elasticities and ongoing supply recover
Slide 32: Summary
Summary • Net Sales reflect inflation-driven pricing with limited elasticities and strong in-market demand, tempered by select labor and material availability constraints • Q3 margin benefitted from lapping sizeable decline in the prior year, pricing actions, productivity improvements and cost savin
Slide 33: Q&A Forum
Q&A Forum Mark Clouse Mick Beekhuizen President & Chief Executive Officer EVP & Chief Financial Officer 33
Slide 34: Appendix
Appendix Connecting people through food they love.
Slide 35: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) Third Quarter % Change Net Sales, Impact of Organic Net Sales, Organic May 1, 2022 As Reported Currency Net Sales As Reported Net Sales Meals & Beverages $ 1,131 $ 1 $ 1,132 6% 9% Snacks 999 - 999 8% 8% Total N
Slide 36: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) Nine Months % Change Net Sales, Impact of Organic Net Sales, Organic May 1, 2022 As Reported Currency Net Sales As Reported Net Sales Meals & Beverages $ 3,672 $ (7) $ 3,665 (2)% 0% Snacks 2,903 - 2,903 2% 2% T
Slide 37: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions, except per share amounts) Third Quarter EBIT EBIT Margin % Earnings Diluted EPS 2022 – As Reported $ 294 13.8% $ 188 $ 0.62 Add: Restructuring charges, implementation costs and other related costs 6 5 0.02 Add:
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) Nine Months EBIT EBIT Margin % Earnings Diluted EPS* $ 993 15.1% $ 661 $ 2.18 2022 – As Reported Add: Restructuring charges, implementation costs and other related costs 15 12 0.04 Add
Slide 39: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) Third Quarter Net Interest Gross Margin GM % Expense EBT Tax Tax Rate 2022 – As Reported $ 665 31.2% $ 50 $ 244 $ 56 23.0% Add: Restructuring charges, implementation costs and other related costs 1 - 6 1 Add: P
Slide 40: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) Adjusted EBIT Impacts from Sales Volume and Adjusted Gross Margin Rate Third Quarter 2022 – Change in Net Sales Attributable to Volume* $ (78) Multiplied by: 2021 – Adjusted Gross Margin % 30.6% Adjusted EBIT I
Slide 41: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) Third Quarter Administrative R&D Expenses Expenses Total 2022 – As Reported $ 151 $ 22 $ 173 Deduct: Restructuring charges, implementation costs and other related costs (5) - (5) 2022 – Adjusted $ 146 $ 22 $ 16
Slide 42: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) Third Quarter Other Expenses / (Income) 2022 – As Reported $ 10 Deduct: Pension and postretirement adjustments (16) 2022 – Adjusted $ (6) % of Net Sales - Adjusted (0.3)% 2021 – As Reported $ (23) Add: Pension
Slide 43: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions, except per share amounts) Third Quarter – Adjusted Diluted EPS Impact from Adjusted EBIT EBIT 2022 – Adjusted $ 321 2021 – Adjusted 261 $ Change $ 60 Deduct: 2021 Adjusted tax rate impact on EBIT (15) Impact to
Slide 44: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions, except per share amounts) Third Quarter – Adjusted Diluted EPS Impact from Adjusted Net Interest Expense Net Interest Expense 2022 – Adjusted $ 46 2021 – Adjusted 53 $ Change $ 7 Deduct: 2021 Adjusted tax rate
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) Adjusted Diluted EPS Impact from Change in Adjusted Tax Rate Third Quarter 2022 – Adjusted EBT $ 275 Change in Adjusted Tax Rate (1.6)% Adjusted EBT multiplied by the Change in Adjuste
Slide 46: 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 EBIT Earnings Diluted EPS* 2021 – As Reported $ 1,545 $ 1,008 $ 3.30 Add: Restructuring charges, implementation costs and other related costs 53 40 0.13 Deduct: Pension and p
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