The Campbell's Company · NASDAQ:CPB
The Campbell's — Campbell Soup Company — Q4 2024 Earnings Presentation
60 slides from The Campbell's's earnings presentation, Aug 29, 2024
Slide 1: Q4 Fiscal 2024 Earnings Presentation
Q4 Fiscal 2024 Earnings Presentation
Slide 2: Introduction
Rebecca Gardy SVP & Chief Investor Relations Officer Introduction 2
Slide 3: Forward-looking statements
Forward-looking statements Safe Harbor Regarding Forward-Looking Statements This presentation contains "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current expectations regarding our future resul
Slide 4: Agenda
Agenda 1. Q4 FY24 Key Messages and Financial Highlights 2. Division Highlights 3. Q4 FY24 Financial Results 4. FY 25 Outlook 5. Summary 6. Q&A 4
Slide 5: CEO Perspective
Mark Clouse President & Chief Executive Officer CEO Perspective 5
Slide 6: Q4 FY24 Key Messages
Q4 FY24 Key Messages • Sequential net sales growth and volume/mix turning positive for the company in Q4 FY24 • Double-digit growth in both adjusted EBIT and adjusted EPS • Sovos Brands performance ahead of expectations leading to neutral impact on adjusted EPS in the quarter and the year • In marke
Slide 7: Key Financial Highlights
Percentages represent change vs. prior year Key Financial Highlights Q4 FY24 Net sales Vol/mix Adj. EBIT* Adj. EPS* Consumption1 $2.3B +1% $329M $0.63 Flat Organic net sales* (1)% +36% +26% FY24 Net sales Vol/mix Adj. EBIT* Adj. EPS* Consumption1 $9.6B (2)% $1.5B $3.08 (1)% Organic net sales* (1)% +
Slide 8: The positive trajectory in food continues to improve
The positive trajectory in food continues to improve; volume/mix improving in both divisions Campbell’s year-over-year change volume / mix 2.0% Total Food $ and units are positive1 and 1.0% 1 0.0% improving in both our divisions -1.0% >75% of our sales are in categories that are -2.0% -2.0% 2 -3.0%
Slide 9: Campbell's momentum accelerated with the addition of Sovos Brands
Campbell's momentum also accelerated with the addition of Sovos Brands Q4 FY24 Q4 FY24 Pro forma combined1 (1%) +150 Flat Net sales vs. PY bps vs. PY Volume/mix 1% +110 +2% vs. PY bps vs. PY *See Non-GAAP reconciliation 1 Pro forma combined basis presented to reflect results as if the Sovos Brands a
Slide 10: Meals & Beverages
Meals & Beverages Topline growth with sequential volume/mix improvement vs. Q3 FY24; Sovos Brands adds significant acceleration Meals & Pro forma Beverages combined** Q4 FY24 Q4 FY24 vs. PY vs. PY** Organic net sales* +1% +4% Volume/mix +2% +4% Dollar consumption1 +1% +4% *See Non-GAAP reconciliatio
Slide 11: Soup share improved in Q4
Soup share improved in Q4, with category and Campbell’s $ consumption accelerating into the fall Campbell’s leading soup recovery, with remaining area of focus to improve Ready-To-Serve Wet Soup Broth Condensed RTS CPB vs. Category CPB vs. Category CPB vs. Category CPB vs. Category Q4 FY241 +2% +1%
Slide 12: $1B Sauces Portfolio building momentum
$1B Sauces Portfolio building momentum Continued strength on Rao’s and steady Prego performance Campbell’s Portfolio1,2 within the Total Italian Sauce category #1 #1 $ Consumption3 vs Q4 FY24 +19% +2% Unit share $ Share $ Share brand in +1.3 pts +1.6 pts Italian Sauce category4 #1 #2 Unit share $ Sh
Slide 13: Rao's sauce growth continues; strong runway ahead
Rao’s sauce growth continues; Strong runway still ahead Momentum Continues + Runway Ahead +280bps ~50% FY24 HHP1 vs. PY HHP1 vs. Prego Outpacing YoY dollar category growth by 60% +14pts +22pts Avg. # items3 vs. Prego Q4 FY242 FY243 Growing with millennials +19% 2.8X +30 pt gap $ consumption2 faster
Slide 14: Improving performance from other key Meals & Beverages brands
Improving performance from other key Meals & Beverages brands in growing categories * Q4 FY24 Net sales +3.6% +5.5% +2.2% $ Consumption1 +2.6% +1.5% +5.0% $ Share2 Flat Flat Flat * Includes Pacific Soup and Broth, excludes plant-based beverages 1 Total Circana US MULO $ Consumption latest 13 weeks e
Slide 15: Snacks
Snacks Improving vol/mix and in-market performance versus Q3; some headwinds from unmeasured channels Total Snacks Q3 FY24 Q4 FY24 vs. PY vs. PY Organic Net Sales* (1)% (3)% Volume / Mix (1)% Flat Dollar Consumption1 (2)% (1)% *See Non-GAAP reconciliation 1 Total Circana US MULO $ Consumption latest
Slide 16: Snacks Q4 $ Consumption sequentially improved versus Q3
Snacks Q4 $ Consumption sequentially improved versus Q3; Net sales lower due to Partner & Contract brands Four sequential quarters of improving volume trends; +1% growth in Power brands $ Consumption Organic net sales Vol/mix stable, with ~(100)bps of planned promotional investment (1)% ~(100)bps of
Slide 17: Partner/Contract brands reductions reflect strategic choices
Partner/Contract brands serve a clear purpose of scale; reductions reflect strategic choices to improve mix Partner brands are brands CPB does not own that we agree to sell through IDPs to improve route scale. Contract brands are products CPB manufactures to add scale to our plants and are shipped t
Slide 18: Health of power brands remain strong
Health of power brands remain strong, despite some shorter-term pressure Taking action to reinforce the competitive positioning of our iconic brand portfolio with stronger innovation, increased marketing, and sustainable promotional spend Q4 FY24 vs. PY Q4 FY24 vs. 2YA Q4 F24 vs YA Q4 F24 vs 2YA Pow
Slide 19: Consistent progress on Snacks margin journey
$ Millions Consistent progress on Snacks margin journey over the last two years Organic net sales* Operating earnings Operating margin growth 6% +12% +170bps FY24 2-Year CAGR FY24 2-Year CAGR FY24 vs. 2YA $5,000 Net sales Operating margin $4,500 14.8% $4,000 $4,450 $4,378 14.4% $3,500 $3,955 $3,000
Slide 20: Wrap up
Wrap up • Solid Q4 Performance • Improving volumes and mix, with improving margins • Integration of Sovos Brands off to a great start • Exciting moment for Campbell's • Investor Day Sept 10th 20
Slide 21: CFO Perspective
Carrie Anderson EVP & Chief Financial Officer CFO Perspective 21
Slide 22: Q4 FY24 Key Financial Results
$ Millions, except per share Q4 FY24 Key Financial Results Q4FY24 figures reflect the contribution of the Sovos Brands acquisition which was approximately neutral to adjusted EPS in the quarter +11% +36% +26% Net sales vs. PY Adj. EBIT* vs. PY Adj. EPS* vs. PY $329 $2,293 $2,068 $269 $1,987 $0.63 $2
Slide 23: FY24 Key Financial Results
Continuing Operations ($ Millions, except per share) FY24 Key Financial Results FY24 figures reflect the contribution of the Sovos Brands acquisition which was approximately neutral to full-year adjusted EPS +3% +6% +3% Net sales vs. PY Adj. EBIT* vs. PY Adj. EPS* vs. PY $9,636 $1,454 $9,357 $1,367
Slide 24: Q4 FY24 Net Sales Bridge
$ Millions Q4 FY24 Net Sales Bridge Net sales reflect a full quarter of sales contribution from Sovos Brands. Organic net sales decreased as net price realization was partially offset by favorable volume / mix, that sequentially improved versus Q3 FY24 +11% vs. PY (1)% 12 pts vs. PY $2,293 1 pt (2)
Slide 25: Q4 FY24 Adjusted Gross Profit Margin Bridge
Q4 FY24 Adjusted Gross Profit Margin* Bridge Adjusted gross profit margin increase mainly driven by supply chain productivity improvements, which more than offset unfavorable net price realization, higher cost inflation and other supply chain costs, and the impact of the acquisition +80 bps vs. PY +
Slide 26: Other Operating Items
$ Millions Other Operating Items Adjusted marketing & selling expenses* Adjusted administrative expenses* $194 (4)% +1% $1871 vs. PY vs. PY $164 $1651 Q4 FY23 Q4 FY24 Q4 FY23 Q4 FY24 % of Net Sales 9% 8% *See Non-GAAP reconciliation 1 Q4 FY24 figures include Sovos Brands adjusted marketing & selling
Slide 27: Q4 FY24 Adjusted EBIT Bridge
$ Millions Q4 FY24 Adjusted EBIT* Bridge Double-digit adjusted EBIT growth primarily driven by higher adjusted gross profit from the contribution of the Sovos Brands acquisition and the base business performance +36% vs. PY $87 $7 ($2) ($5) $329 $242 Q4 FY23 Adjusted gross profit Adjusted marketing
Slide 28: Q4 FY24 Adjusted EPS Bridge
Q4 FY24 Adjusted EPS* Bridge Double-digit growth in adjusted EPS vs prior year, primarily driven by adjusted EBIT growth. The impact of the acquisition was approximately neutral to adjusted EPS, inclusive of incremental net interest expense +26% vs. PY $0.22 ($0.09) - $0.63 $0.50 Q4 FY23 Adjusted EB
Slide 29: Q4 FY24 Meals & Beverages Results
$ Millions Q4 FY24 Meals & Beverages Results Continued sequential vol/mix improvement Net sales Operating earnings $5,258 $4,907 $974 +28% $894 vs. PY +60% vs. PY $1,200 $936 $211 $132 Q4 FY23 Q4 FY24 FY23 FY24 Q4 FY23 Q4 FY24 FY23 FY24 Vol / mix (5)% 2% (5)% (2)% Operating 14.1% 17.6% 18.2% 18.5% m
Slide 30: Q4 FY24 Snacks Results
$ Millions Q4 FY24 Snacks Results Continued sequential vol/mix improvement Net sales Operating earnings $4,450 $4,378 (3)% vs. PY +1% vs. PY $640 $648 $1,132 $1,093 $158 $159 Q4 FY23 Q4 FY24 FY23 FY24 Q4 FY23 Q4 FY24 FY23 FY24 Vol / mix (5)% Flat (2)% (2)% Operating 14.0% 14.5% 14.4% 14.8% margin Ne
Slide 31: Disciplined Capital Allocation
$ Millions Disciplined Capital Allocation Strong operating cash flow with a focus on investment in growth CapEx and returning cash to shareholders. Leverage ratio below 4x as expected. Net cash flows from operations $1,185 FY23 FY24 $1,143 Invest for growth Capital expenditures $370 $517 Return cash
Slide 32: FY25 Guidance
FY25 Guidance FY25 Assumptions • Net sales growth reflects a full twelve-month contribution from Sovos Brands, and an expectation of high-single digit net sales growth on a pro forma basis3; expect neutral adjusted EPS impact for full year FY25 $ Millions, FY24 • Pop Secret divestiture expected to h
Slide 33: Delivered on Our Commitments with Q4 Results; FY25 Guidance Introduced
Delivered on Our Commitments with Q4 Results; FY25 Guidance Introduced 33
Slide 34: Q&A Forum
Q&A Forum Mark Clouse Carrie Anderson President & Chief Executive Officer EVP & Chief Financial Officer 34
Slide 35: Appendix
Appendix Campbells —
Slide 36: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) Fourth Quarter % Change Net Sales, Impact of Impact of Organic Net Sales, Organic Impact of Impact of July 28, 2024 As Reported Currency Acquisition Net Sales As Reported Net Sales Divestiture Acquisition Meals & Beverages $ 1,200 $
Slide 37: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) Fourth Quarter % Change Net Sales, Impact of Organic Net Sales, Organic July 30, 2023 As Reported Currency Net Sales As Reported Net Sales Meals & Beverages $ 936 $ 4 $ 940 0% 1% Snacks 1,132 (1) 1,131 8% 9% Total Net Sales $ 2,068
Slide 38: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) Fourth Quarter % Change Net Sales, Impact of Organic Net Sales, Organic July 31, 2022 As Reported Currency Net Sales As Reported Net Sales Meals & Beverages $ 935 $ 5 $ 940 6% 7% Snacks 1,052 - 1,052 6% 6% Tota
Slide 39: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) Third Quarter % Change Net Sales, Impact of Impact of Organic Net Sales, Organic Impact of Impact of April 28, 2024 As Reported Currency Acquisition Net Sales As Reported Net Sales Divestiture Acquisition Meals & Beverages $ 1,272 $
Slide 40: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions, except per share amounts) Fourth Quarter EBIT EBIT Margin % Earnings Diluted EPS* 2024 – As Reported $ 77 3.4% $ (3) $ (0.01) Costs associated with cost savings and optimization initiatives 40 31 0.10 Pension and postretirement actu
Slide 41: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions, except per share amounts) Fourth Quarter EBIT EBIT Margin % Earnings Diluted EPS* 2023 – Adjusted $ 242 11.7% $ 150 $ 0.50 2022 – As Reported $ 170 8.6% $ 96 $ 0.32 Costs associated with cost savings and optimization initiatives 16
Slide 42: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions, except per share amounts) Fourth Quarter EBIT EBIT Margin % Earnings Diluted EPS* 2022 – Adjusted $ 269 13.5% $ 170 $ 0.56 2021 – As Reported $ 411 21.9% $ 288 $ 0.95 Costs associated with cost savings and optimization initiatives 1
Slide 43: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) Twelve Months % Change Net Sales, Impact of Impact of Organic Net Sales, Organic Impact of Impact of July 28, 2024 As Reported Currency Acquisition Net Sales As Reported Net Sales Divestiture Acquisition Meals & Beverages $ 5,258 $
Slide 44: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) Twelve Months % Change Net Sales, Impact of Organic Net Sales, Organic July 30, 2023 As Reported Currency Net Sales As Reported Net Sales Meals & Beverages $ 4,907 $ 27 $ 4,934 7% 7% Snacks 4,450 (2) 4,448 13% 13% Total Net Sales $
Slide 45: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) Twelve Months % Change Net Sales, Impact of Organic Net Sales, Organic July 31, 2022 As Reported Currency Net Sales As Reported Net Sales Meals & Beverages $ 4,607 $ (2) $ 4,605 0% 1% Snacks 3,955 - 3,955 3% 3%
Slide 46: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Twelve Months % Change Two Year CAGR Net Sales, Net Sales, Impact of Impact of Organic As Organic Net Sales, Organic July 28, 2024 As Reported Currency Acquisition Net Sales Reported Net Sales As Reported Net Sales Meals & Beverages $ 5,258 $ 33
Slide 47: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions, except per share amounts) Twelve Months EBIT EBIT Margin % Earnings Diluted EPS* 2024 – As Reported $ 1,000 10.4% $ 567 $ 1.89 Costs associated with cost savings and optimization initiatives 109 83 0.28 Pension and postretirement ac
Slide 48: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions, except per share amounts) Twelve Months EBIT EBIT Margin % Earnings Diluted EPS* 2023 – Adjusted $ 1,367 14.6% $ 903 $ 3.00 2022 – As Reported $ 1,163 13.6% $ 757 $ 2.51 Costs associated with cost savings and optimization initiative
Slide 49: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions, except per share amounts) Twelve Months EBIT EBIT Margin % Earnings Diluted EPS* 2022 – Adjusted $ 1,297 15.1% $ 861 $ 2.85 2021 – As Reported $ 1,545 18.2% $ 1,008 $ 3.30 Costs associated with cost savings and optimization initiati
Slide 50: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Fourth Quarter Gross Profit GP % EBT Tax Tax Rate 2024 – As Reported $ 675 29.4% $ (6) $ (3) 50.0% Costs associated with cost savings and optimization initiatives 17 40 9 Pension and postretirement actuarial losses - 33 8 Commodity mark-to-marke
Slide 51: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) Fourth Quarter Marketing & Other Expenses / Selling Expenses (Income) 2024 – As Reported $ 188 $ 181 Pension and postretirement actuarial losses - (33) Accelerated amortization - (7) Costs associated with acquisition (1) - Impairmen
Slide 52: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) Fourth Quarter Administrative R&D Expenses Expenses Total 2024 – As Reported $ 182 $ 26 $ 208 Costs associated with cost savings and optimization initiatives (7) - (7) Costs associated with acquisition (8) - (8) Certain litigation e
Slide 53: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions, except per share amounts) Fourth Quarter – Adjusted Diluted EPS Impact from Adjusted EBIT EBIT 2024 – Adjusted $ 329 2023 – Adjusted 242 $ Change $ 87 Deduct: 2023 Adjusted tax rate impact on EBIT (20) Impact to Net Earnings $ 67 Fo
Slide 54: 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 Fourth Quarter 2024 – Adjusted EBT $ 246 Decrease (Increase) in Adjusted Tax Rate (0.1)% Adjusted EBT multiplied by the Change in Adjusted Tax Ra
Slide 55: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) Fiscal 2024 Organic Sales Base for Fiscal 2025 Guidance Full Year Organic Net Sales Net Sales, Impact of Base for FY2025 July 28, 2024 As Reported Divestiture Guidance Meals & Beverages $ 5,258 $ - $ 5,258 Snacks 4,378 (111) 4,267 T
Slide 56: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) Net Debt July 30, 2023 July 28, 2024 Short-Term Borrowings $ 191 $ 1,423 Long-Term Debt 4,498 5,761 Total Debt $ 4,689 $ 7,184 Less: Cash and Cash Equivalents (189) (108) Net Debt $ 4,500 $ 7,076 56
Slide 57: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures (a) (b) =(a)+(b) Twelve Months Sovos August Combined Twelve ($ millions) Ended 2023 – March 11, Months Ended July 28, 2024 2024 July 28, 2024 Net Earnings, as reported $ 567 $ 24 $ 591 Taxes 190 13 203 Interest, net 243 21 264 Earnings before in
Slide 58: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Twelve Months Ended ($ millions) July 30, 2023 Net Earnings, as reported $ 858 Taxes 270 Interest, net 184 Earnings before interest and taxes, as reported $ 1,312 Costs associated with cost savings and optimization initiatives 66 Pension and pos
Slide 59: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) Fourth Quarter Net Sales Total Net Sales 2024 $ 2,293 Add: Impact of Currency 2 Total $ 2,295 Total Net Sales 2023 $ 2,068 Deduct: Impact of Divestiture (5) Add: Sovos Brands, Inc. May 1, 2023 – July 30, 2023 225 Pro Forma Combined
Slide 60: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) Fourth Quarter Net Sales Sovos Brands Net Sales 2024 $ 257 Sovos Brands, Inc. May 1, 2023 – July 28, 2023 225 $ Change $ 32 % Change 14% 60
Campbell Soup Company — Q4 2024 Earnings Presentation on 6ix