The Campbell's Company · NASDAQ:CPB
The Campbell's — Campbell Soup Company — Q1 2022 Earnings Presentation
43 slides from The Campbell's's earnings presentation, Dec 8, 2021
Slide 1: Q1 Fiscal 2022 Earnings Presentation
Q1 Fiscal 2022 Earnings Presentation 1
Slide 2: Introduction: Rebecca Gardy, VP Investor Relations
Rebecca Gardy Vice President Investor Relations I N T R O D UC T IO 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 Q1 Highlights 6 Division Highlights 9 Q1 Fiscal 2022 Financial Results 17 Fiscal 2022 Guidance 28 Q&A 30 4
Slide 5: CEO Perspective: Mark Clouse
Mark Clouse President & Chief Executive Officer C EO P E R S P EC T I V E 5
Slide 6: Key Q1 Highlights
CONTINUING OPERATIONS Key Q1 Highlights Strong financial performance despite macro headwinds and ahead of Q1 Fiscal 2020 Q1 FY2022 NET SALES ORGANIC NET SALES* ADJ. GROSS MARGIN* ADJ. EBIT* $2.2B (4)% +5% 32.5% $389M (4)% vs. PY vs. PY vs. 2YA (200) bps vs. PY (15)% vs. PY $ CONSUMPTION1 ADJ. E
Slide 7: Controlling the Controllables
Controlling the Controllables: Productivity improvements and cost savings Maintaining strong demand Coverage on Industry-wide supply chain Pricing ingredients and disruptions packaging Labor action plans Significant progress on Snacks execution 7
Slide 8: Current Share Pressure is Short Term
Current Share Pressure is Short Term Strong, underlying demand momentum built over last two years FY21 vs FY19 • Select Q1 investment decisions based on supply, return fully to targets in 2H >70% of Portfolio • Supply (labor and material availability) expected to impact Q2 share for select brands Ga
Slide 9: Meals & Beverages: Key Highlights
CONTINUING OPERATIONS Meals & Beverages: Key Highlights Q1 FY2022 Growth vs. PY Growth vs. 2YA Organic Net Sales* (6)% +5% Consumption1 Flat +9% * See Non-GAAP reconciliation 1 Total IRI US MULO $ Consumption latest 13 weeks ending 10/31/2021 9
Slide 10: Meals & Beverages: Win in Soup
Meals & Beverages Win in Soup ➢ More consumers than pre- ➢ Spending is higher as pricing ➢ Volume flat vs. prior year, pandemic, and they remain has taken hold despite pricing in category CPB Q1 Soup Buyers CPB Q1 Soup CPB Q1 Soup (in millions) $ per Buyer Volume per Buyer $12.15 7.6 7.6 59.3 59.2 $
Slide 11: Meals & Beverages: Powerful Portfolio of Brands
Meals & Beverages Powerful Portfolio of Brands CPB U.S. Soup Consumption 2% +9% U.S. Soup 7% #1 Share Consumption Growth vs. 2YA for 30 Straight +9% Months Consumption FY21 Q1 FY22 Q1 vs. 2YA Held +3pts +1.6pts 8th U.S. Soup Share Ready-to-Serve Swanson Broth/Stock Consecutive quarter vs. PY Millenn
Slide 12: Younger Buyers Increased in Key M&B Brands
Meals & Beverages % of Younger Buyers has increased in key M&B brands Percentage of buyers under age 35 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% U.S. Soup Condensed Swanson Swanson Chunky Chunky Pacific Foods Pacific Foods Prego Prego Pace Pace Spaghettios Spaghettios V8 Broth/Stock Soup/Broth Q1 FY2
Slide 13: Snacks: Key Highlights
CONTINUING OPERATIONS Snacks: Key Highlights Q1 FY2022 Growth vs. PY Growth vs. 2YA Organic Net Sales* (1)% +4% Consumption1 +5% +9% * See Non-GAAP reconciliation 1 Total IRI US MULO $ Consumption latest 13 weeks ending 10/31/2021 13
Slide 14: Snacks Power Brands: 13% 2-year Consumption
Snacks Power Brands: 13% 2-year Consumption Q1 FY2022 +7% +18% +18% +2% +12% +16% +14% +24% Total IRI US MULO $ Consumption latest 13 weeks ending 10/31/2021 14
Slide 15: Reaffirming Guidance
Reaffirming Guidance* • Given Q1 FY22 results, and line of sight to balance of year, we are reaffirming guidance* • Supply chain pressures expected to persist into Q2 • Confident our strategic actions will deliver solid second half fiscal year performance • More to come on our strategy to unlock our
Slide 16: CFO Perspective: Mick Beekhuizen
Mick Beekhuizen EVP & Chief Financial Officer C F O P E R S P EC T I V E 16
Slide 17: Q1 FY22 Results: In-line or ahead of Q1 FY20
CONTINUING OPERATIONS ($ MILLIONS, EXCEPT PER SHARE) Q1 FY22 Results: In-line or ahead of Q1 FY20 NET SALES & ADJ. EBIT* ADJ. EPS* ORGANIC GROWTH RATE* +16% +8% +5% vs 2yr (4)% vs 2yr vs. PY vs. PY +31% $2,340 vs. PY $2,183 $2,236 +1% $1.01 (12)% vs 2yr vs. PY $0.89 +18% $0.77 vs. PY (15)% vs. PY $4
Slide 18: Net Sales Bridge
CONTINUING OPERATIONS ($ MILLIONS) Net Sales Bridge (4)% Drivers $2,340 (6) pts +4 pts (2) pts (4)% (1) pt • Volume decline reflects cycling - $2,236 retailer inventory recovery in prior year and supply constraints • Price increases to help offset some inflation, partly offset by increased promotion
Slide 19: Adjusted Gross Margin Bridge
CONTINUING OPERATIONS Adjusted Gross Margin* Bridge Benefit from net price realization combined with productivity improvements and cost savings offset large proportion of accelerating core inflation (200) bps +190 bps (470) bps 34.5% (70) bps +120 bps +30 bps 32.5% Q1 FY21 Mix Net Price Realization
Slide 20: Mitigating Accelerating Core Inflation
Mitigating Accelerating Core Inflation High Single Digits CORE INFLATION RATE • Pricing and Trade Optimization 6% • Supply Chain Productivity 5% • Cost Savings Initiatives 4% • Manage Discretionary Spending 3% • Over 85% coverage on ingredient and packaging for fiscal 2022 2% Q1 FY21 Q2 FY21 Q3 FY21
Slide 21: Cost Savings & Value Capture
CONTINUING OPERATIONS Cost Savings & Value Capture $850 Million by end of FY22 • Total savings of $15 million realized in Q1 FY22 • Tracking to cumulative savings target of $850 $820M million by end of FY22 Attained Thru • FY22 cost savings will help mitigate increasing Q1 FY22 inflation headwinds 2
Slide 22: Other Operating Items
CONTINUING OPERATIONS ($ MILLIONS) Other Operating Items MARKETING & SELLING EXPENSES ADJUSTED ADMINISTRATIVE EXPENSES* +12% $208 (18)% $170 $154 Increase $137 almost entirely A&C (31)% vs. PY driven by as spending was settlement of moderated to reflect certain legal supply pressure claims Q1 FY21 Q
Slide 23: Adjusted EBIT Bridge
CONTINUING OPERATIONS ($ MILLIONS) Adjusted EBIT* Bridge Year-over-year net sales decline contributed to half of adjusted EBIT decline, remainder due to lower adjusted Gross Margin, which was only partially offset by lower MSG&A (15)% $457 $38 $(36) $(18) $(7) $389 $(44) “MSG&A” Q1 FY21 Net Sales Im
Slide 24: Adjusted EPS Bridge
CONTINUING OPERATIONS Adjusted EPS* Bridge (12)% $1.01 $(0.17) $0.04 $0.89 $0.02 Q1 FY21 Adjusted EBIT Interest Adjusted Taxes Q1 FY22 *See Non-GAAP reconciliations for all adjusted financial measures presented. Numbers may not add to rounding. 24
Slide 25: Segment Results: Meals & Beverages
($ MILLIONS) Segment Results NET SALES & OPERATING EARNINGS ORGANIC GROWTH RATE* (6)% $1,363 (30)% $1,266 (17)% $337 $280 Q1 FY21 Q1 FY22 Q1 FY21 Q1 FY22 *See Non-GAAP reconciliation 25
Slide 26: Segment Results: Snacks
($ MILLIONS) Segment Results NET SALES & OPERATING EARNINGS ORGANIC GROWTH RATE* (1)% $977 $970 (5)% $135 $128 Q1 FY21 Q1 FY22 Q1 FY21 Q1 FY22 *See Non-GAAP reconciliation 26
Slide 27: Cash Flow
TOTAL COMPANY ($ MILLIONS) Cash Flow Strong Q1 FY22 Cash Flow generation with $179 million returned to shareholders First Quarter 2021 2022 Net Cash Flows from Operations $180 $288 of which changes in working capital $(247) $(95) Net Cash Flows from Investing Activities $(72) $(68) of which capital
Slide 28: Maintaining FY22 Guidance
CONTINUING OPERATIONS Maintaining FY22 Guidance ($ MILLIONS, EXCEPT PER SHARE) Adjusting for treatment of unrealized mark-to-market gains and losses on undesignated commodity hedges Fiscal 2021 Fiscal 2021 Fiscal 2021 Results (Prior MTM Results Prior Fiscal Fiscal 2022 MTM to MTM Adjustment (Reflect
Slide 29: Summary
Summary • Net Sales reflect strong in-market demand, anticipated cycling of prior-year inventory recovery, as well as net pricing benefits and supply constraints • Q1 inflationary pressures partly mitigated by net price increases and productivity initiatives, however, expect increasing margin pressu
Slide 30: Q&A Forum
Q&A Forum Mark Clouse Mick Beekhuizen President & Chief Executive Officer EVP & Chief Financial Officer 30
Slide 31: Appendix
Y Connecting people through food they love. Appendix 31
Slide 32: 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 31, 2021 As Reported Currency Net Sales As Reported Net Sales Meals & Beverages $ 1,266 $ (6) $ 1,260 (7)% (6)% Snacks 970 - 970 (1
Slide 33: 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 EBIT EBIT Margin % Earnings Diluted EPS* 2022 – As Reported $ 376 16.8% $ 261 $ 0.86 Add: Restructuring charges, implementation costs and other related costs 4 3 0.01 Add
Slide 34: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) First Quarter Gross Margin GM % EBT Tax Tax Rate 2022 – As Reported $ 722 32.3% $ 329 $ 68 20.7% Add: Restructuring charges, implementation costs and other related costs 2 4 1 Add: Pension and postretirement ad
Slide 35: 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 First Quarter 2022 – Adjusted Gross Margin $ $ 727 2022 – Reported Net Sales $ 2,236 2021 – Adjusted Gross Margin % 34.5% 2022 – Adjusted Gross Margin $ at 2021 A
Slide 36: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) First Quarter Administrative R&D Expenses Expenses Total 2022 – As Reported $ 156 $ 21 $ 177 Deduct: Restructuring charges, implementation costs and other related costs (2) - (2) 2022 – Adjusted $ 154 $ 21 $ 17
Slide 37: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) First Quarter Other Expenses / (Income) 2022 – As Reported $ (1) Deduct: Pension and postretirement adjustments (6) 2022 – Adjusted $ (7) % of Net Sales - Adjusted (0.3)% 2021 – As Reported $ (18) Add: Pension
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) First Quarter – Adjusted Diluted EPS Impact from Adjusted EBIT EBIT 2022 – Adjusted $ 389 2021 – Adjusted 457 $ Change $ (68) Add: 2021 Adjusted tax rate impact on EBIT 16 Impact to Ne
Slide 39: 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 First Quarter 2022 – Adjusted EBT $ 342 Change in Adjusted Tax Rate (3.1)% Adjusted EBT multiplied by the Change in Adjuste
Slide 40: 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
Slide 41: 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 EBIT EBIT Margin % Earnings Diluted EPS* 2022 – Adjusted $ 389 17.4% $ 271 $ 0.89 2021 – Adjusted $ 457 19.5% $ 306 $ 1.01 2020 – As Reported $ 317 14.5% $ 169 $ 0.56 Add
Slide 42: 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 31, 2021 As Reported Currency Net Sales As Reported Net Sales Meals & Beverages $ 1,266 $ (6) $ 1,260 4% 5% Snacks 970 - 970 1% 4%
Slide 43: 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 November 1, 2020 As Reported Currency Net Sales As Reported Net Sales Meals & Beverages $ 1,363 $ - $ 1,363 11% 11% Snacks 977 - 977 2% 4%
Campbell Soup Company — Q1 2022 Earnings Presentation on 6ix