The Campbell's Company · NASDAQ:CPB
The Campbell's — Campbell Soup Company — Q3 2023 Earnings Presentation
44 slides from The Campbell's's earnings presentation, Jun 7, 2023
Slide 1: Q3 Fiscal 2023 Earnings Presentation
Q3 Fiscal 2023 Earnings Presentation 1
Slide 2: Introduction: Rebecca Gardy, SVP Investor Relations
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 Q3 FY23 Key Messages and Financial Highlights Division Highlights Q3 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: Q3 FY23 Key Messages & Financial Highlights
Q3 FY23 Key Messages & Financial Highlights • Consistent, strong results in Q3 in line with our expectations Q3 FY23 • Snacks is building broad-based momentum with a step change in Net Sales Adj. EBIT* Adj. EPS* $ Consumption1 margins $2.2B $313M $0.68 +8% • Meals & Beverages volume / mix pressured
Slide 7: Meals & Beverages: Key Highlights
Meals & Beverages: Key Highlights Q3 FY23 Q3 FY23 YTD Organic Net Sales* vs. PY (1)% +9% Dollar Consumption1 vs. PY +2% +5% Dollar Consumption1 vs. 4YA +16% +16% *See Non-GAAP reconciliation 1 Total Circana US MULO $ Consumption latest 13 weeks ending 4/30/2023 7
Slide 8: Win in Soup 2.0
Win in Soup 2.0 Total Cooking +0.6 pts. +2.0 pts. +0.9 pts. Q3 $ share Q3 $ share Q3 $ share vs. 4YA1 vs. 4YA1 Condensed vs. PY1 +31% +0.6 pts. Q3 $ Q3 $ share vs. consumption vs. PY1 4YA1 Eating Icons +1.7 pts. (0.3) pts. +0.3 pts. Q3 $ share Q3 unit share Q3 $ share vs. PY1 vs. PY1 vs. 4YA1 +1.0 p
Slide 9: Snacks: Key Highlights
Snacks: Key Highlights Q3 FY23 Q3 FY23 YTD Organic Net Sales* vs. PY +12% +14% Dollar Consumption1 vs. PY +15% +15% Dollar Consumption1 vs. 4YA +32% +30% *See Non-GAAP reconciliation 1 Total Circana US MULO $ Consumption latest 13 weeks ending 4/30/2023 9
Slide 10: Power Brands $ Consumption: +18% vs. PY, +40% vs. 4YA
Power Brands $ Consumption1: +18% vs. PY, +40% vs. 4YA Q3 FY23 +21% +42% +16% +33% +13% +41% +30% +45% VS. PY VS. 4YA VS. PY VS. 4YA VS. PY VS. 4YA VS. PY VS. 4YA +17% +48% +10% +69% +25% +45% +15% +35% VS. PY VS. 4YA VS. PY VS. 4YA VS. PY VS. 4YA VS. PY VS. 4YA 1 Total Circana US MULO $ Consumption
Slide 11: Snacks Innovation Playbook
Snacks Innovation Playbook 11
Slide 12: Snacks Q3 YTD Performance
Continuing Operations ($ Millions) Snacks Q3 YTD Performance +8% +13% +130bps Net Sales Operating Earnings Operating Margin Growth 2-Year CAGR 2-Year CAGR (FY23 vs FY21) $3,500 Net Sales $3,318 $500 Operating Earnings $482 20.0% $2,903 $450 19.0% $3,000 $2,859 $400 $377 $376 18.0% $2,500 $350 17.0%
Slide 13: Looking Ahead
Looking Ahead • Q3 FY23 results in line with our expectations • Fantastic progress in critical strategic areas • Momentum across both divisions • On track to deliver full year fiscal 23 guidance, with adjusted EPS tracking to the upper end of the outlook range 13
Slide 14: CFO Perspective: Carrie Anderson
Carrie Anderson EVP & Chief Financial Officer CFO PERSPECTIVE 14
Slide 15: Q3 FY23 Key Financial Results
Q3 FY23 Key Financial Results Financial Summary Continuing Operations ($ Millions, except per share) +5% (2)% (3)% Reflects ~$12 million and vs. PY vs. PY vs. PY ~$0.03 headwind from NET SALES & lower pension and ORGANIC ADJ. EBIT* ADJ. EPS* postretirement benefit GROWTH RATE* $2,229 income to adj.
Slide 16: Q3 YTD FY23 Key Financial Results
Q3 YTD FY23 Key Financial Results Financial Summary Continuing Operations ($ Millions, except per share) NET SALES & +11% +9% +10% Reflects ~$37 million ORGANIC vs. PY ADJ. EBIT* vs. PY ADJ. EPS* vs. PY and ~$0.09 headwind GROWTH RATE* from lower pension and postretirement benefit $7,289 $1,125 inco
Slide 17: Net Sales Variance to Consumption Reflects Cycling of Retailer Inventory Rebuild
Q3 FY23 Net Sales variance to Consumption reflects expected cycling of Q3 FY22 retailer inventory rebuild Net Sales vs. Consumption Q3 FY22 Net Sales vs. Consumption Q3 FY23 0% +5% (5)% 9% 8% +2% 4% 5% 1 2 3 4 3 $ Consumption Retailer Rebuild Non-MULO Organic Net $ Consumption Lapping PY Non-MULO Or
Slide 18: Q3 FY23 Net Sales Bridge
$ Millions Q3 FY23 Net Sales Bridge Net Sales growth reflects favorable inflation-driven net price realization partially offset by volume / mix declines 12 pts +5% - +5% $2,229 (7) pts $2,130 Q3 FY22 Net Sales Volume / Mix Net Price Realization Q3 FY23 Organic Net Sales* Currency Q3 FY23 Net Sales *
Slide 19: Q3 FY23 Adjusted Gross Profit Margin Bridge
Q3 FY23 Adjusted Gross Profit Margin* Bridge Adjusted gross profit margin generally as expected. Majority of vol / mix decline reflects PY lap. Favorable net price realization and productivity improvements more than offset higher cost inflation and other supply chain costs +880 bps (1,080) bps (60)
Slide 20: Mitigation Efforts Outpacing Continued Inflation
Mitigation Efforts Outpacing Continued Inflation Inflation Mitigating Actions: Core Inflation Rate: • Net Price Realization 16% 14% 18% 12% 11% 11% 15% 15% 14% Q3 FY22 Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 8% • Supply Chain Productivity • Cost Savings Initiatives • Manage Discretionary Spending Q3 FY22 Q4
Slide 21: Other Operating Items
$ Millions Other Operating Items Marketing & Selling Expenses Adjusted Administrative Expenses* +3% vs. PY +5% $188 $194 vs. PY A&C (2)% vs. PY $154 $146 Q3 FY22 Q3 FY23 Q3 FY22 Q3 FY23 *See Non-GAAP reconciliation 21
Slide 22: Q3 FY23 Adjusted EBIT Bridge
$ Millions Q3 FY23 Adjusted EBIT* Bridge Adjusted EBIT margin decline reflects lower adjusted gross profit margin and the expected 50 bps impact of lower pension and postretirement income year-over-year (2)% vs. PY $18 $(6) $(8) $321 $(12) $313 Q3 FY22 Adjusted Gross Profit Marketing & Selling Adjus
Slide 23: Q3 FY23 Adjusted EPS Bridge
Q3 FY23 Adjusted EPS* Bridge Decline driven by $0.03 headwind from lower pension and postretirement income and a higher adjusted effective tax rate (3)% vs. PY $0.70 $(0.02) - $(0.01) - $0.68 Q3 FY22 Adjusted EBIT* Adjusted Interest* Adjusted Taxes* Share Count Q3 FY23 *See Non-GAAP reconciliations
Slide 24: Q3 FY23 Meals & Beverages Segment Results
$ Millions Q3 FY23 Meals & Beverages Segment Results NET SALES & OPERATING EARNINGS ORGANIC GROWTH RATE* +9% +7% vs. PY vs. PY (1)% $3,971 vs. PY $3,672 (17)% vs. PY $762 $713 $1,131 $1,108 $220 $182 Q3 FY22 Q3 FY23 Q3 YTD Q3 YTD Q3 FY22 Q3 FY23 Q3 YTD Q3 YTD FY22 FY23 FY22 FY23 Operating Margin 19.
Slide 25: Q3 FY23 Snacks Segment Results
$ Millions Q3 FY23 Snacks Segment Results NET SALES & OPERATING EARNINGS ORGANIC GROWTH RATE* +14% +28% vs. PY vs. PY $3,318 +12% $2,903 +41% vs. PY vs. PY $482 $376 $1,121 $999 $179 $127 Q3 FY22 Q3 FY23 Q3 YTD Q3 YTD Q3 FY22 Q3 FY23 Q3 YTD Q3 YTD FY22 FY23 FY22 FY23 Operating 12.7% 16.0% 13.0% 14.5
Slide 26: Cash Flow
Cash Flow Strong YTD Cash Flow generation with increased investment and over $475 million returned to shareholders Total Company ($ millions) YTD FY22 YTD FY23 Net Cash Flows from Operations $1,101 $918 of which changes in working capital $109 $(170) Net Cash Flows from Investing Activities $(168) $
Slide 27: Reaffirming Full-year FY23 Guidance
Reaffirming Full-year FY23 Guidance $ Millions, FY22 FY23 FY23 Assumptions Except Per Share Results Guidance1, 2 • Core inflation in the low-teens range • Productivity improvements of ~3% to 3.5% Net Sales $8,562 +8.5% to +10% • ~$40-$45 million of cost savings • Interest expense of ~$190 million Or
Slide 28: Summary
Summary • Delivered Q3 as expected driven by strong price realization and operational execution • Volume / mix decline largely a function of prior year retailer inventory rebuild, masking base volume trends • Building momentum across the Snacks business including brand strength, innovation and margi
Slide 29: Q&A Forum
Q&A Forum Mark Clouse Carrie Anderson President & Chief Executive Officer EVP & Chief Financial Officer 29
Slide 30: Appendix
BUILDING MOMENTUM
Slide 31: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) Third Quarter % Change Net Sales, Impact of Organic Net Sales, Organic April 30, 2023 As Reported Currency Net Sales As Reported Net Sales Meals & Beverages $ 1,108 $ 8 $ 1,116 (2)% (1)% Snacks 1,121 (1) 1,120 12% 12% Total Net Sale
Slide 32: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) Nine Months % Change Net Sales, Impact of Organic Net Sales, Organic April 30, 2023 As Reported Currency Net Sales As Reported Net Sales Meals & Beverages $ 3,971 $ 23 $ 3,994 8% 9% Snacks 3,318 (1) 3,317 14% 14% Total Net Sales $ 7
Slide 33: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions, except per share amounts) Third Quarter EBIT EBIT Margin % Earnings Diluted EPS* 2023 – As Reported $ 254 11.4% $ 160 $ 0.53 Add: Restructuring charges, implementation costs and other related costs 33 24 0.08 Add: Pension actuarial
Slide 34: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions, except per share amounts) Nine Months EBIT EBIT Margin % Earnings Diluted EPS 2023 – As Reported $ 1,040 14.3% $ 689 $ 2.29 Add: Restructuring charges, implementation costs and other related costs 50 37 0.12 Add: Pension actuarial l
Slide 35: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) Third Quarter Net Interest Gross Profit GP % Expense EBT Tax Tax Rate 2023 – As Reported $ 668 30.0% $ 46 $ 208 $ 48 23.1% Add: Restructuring charges, implementation costs and other related costs 12 - 33 9 Add: Pension actuarial los
Slide 36: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) Third Quarter Administrative R&D Expenses Expenses Total 2023 – As Reported $ 167 $ 24 $ 191 Deduct: Restructuring charges, implementation costs and other related costs (13) (2) (15) 2023 – Adjusted $ 154 $ 22 $ 176 % of Net Sales –
Slide 37: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) Third Quarter Other Expenses / (Income) 2023 – As Reported $ 23 Deduct: Pension actuarial losses (17) 2023 – Adjusted $ 6 % of Net Sales – Adjusted 0.3% 2022 – As Reported $ 10 Deduct: Pension actuarial losses (16) 2022 – Adjusted $
Slide 38: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions, except per share amounts) Third Quarter – Adjusted Diluted EPS Impact from Adjusted EBIT EBIT 2023 – Adjusted $ 313 2022 – Adjusted 321 $ Change $ (8) Deduct: 2022 Adjusted tax rate impact on EBIT 2 Impact to Net Earnings $ (6) Thir
Slide 39: 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 Third Quarter 2023 – Adjusted EBT $ 267 Decrease (Increase) in Adjusted Tax Rate (0.7)% Adjusted EBT multiplied by the Change in Adjusted Tax Rat
Slide 40: 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 actuarial los
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) Third Quarter EBIT EBIT Margin % Earnings Diluted EPS 2021 – As Reported $ 272 13.7% $ 166 $ 0.54 Add: Restructuring charges, implementation costs and other related costs 15 11 0.04 De
Slide 42: 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* 2021 – As Reported $ 1,134 17.2% $ 720 $ 2.36 Add: Restructuring charges, implementation costs and other related costs 43 32 0.10 D
Slide 43: 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 44: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) Third Quarter % Change Two Year CAGR Net Sales, Impact of Organic Net Sales, Organic (Organic April 30, 2023 As Reported Currency Net Sales As Reported Net Sales Net Sales) Meals & Beverages $ 1,108 $ 8 $ 1,116
Campbell Soup Company — Q3 2023 Earnings Presentation on 6ix