The Campbell's Company · NASDAQ:CPB
The Campbell's — Campbell Soup Company — Q2 2024 Earnings Presentation
58 slides from The Campbell's's earnings presentation, Mar 6, 2024
Slide 1: Q2 Fiscal 2024 Earnings Presentation
Q2 Fiscal 2024 Earnings Presentation
Slide 2: Introduction
Rebecca Gardy SVP & Chief Investor Relations Officer 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 conditions to the completion of the Sovos Brands, Inc. (“Sovos Brands”) transaction may not be satisfied or that the closing of
Slide 4: Agenda
Agenda 1. Q2 FY24 Key Messages and Financial Highlights 2. Division Highlights 3. Q2 FY24 Financial Results 4. FY24 Outlook 5. Summary 6. Q&A 4
Slide 5: CEO Perspective
Mark Clouse President & Chief Executive Officer CEO Perspective 5
Slide 6: Q2 FY24 Key Messages
Q2 FY24 Key Messages • Delivered on our commitments, with second quarter largely in line with our expectations • Improved trajectory expected in H2 FY24 on topline, margins and earnings • Consistent execution, particularly during the crucial holiday season • Anticipate completion of the acquisition
Slide 7: Q2 FY24 Key Financial Highlights
Q2 FY24 Key Financial Highlights Net Sales Adj. EBIT* Adj. EPS* $ Consumption1 $2.5B $364M $0.80 (1)% vs. PY (1)% +9% +1% Flat vs. vs. PY vs. PY vs. PY 2YA +6% 2yr CAGR *See Non-GAAP reconciliation 1 Total Circana US MULO $ Consumption latest 13 weeks ending 01/28/2024 7
Slide 8: Winning the Holiday, While Expanding Operating Margins
Winning the Holiday, While Expanding Operating Margins Campbell’s Volume and $ Share Growth Key Seasonal Categories During Holiday Period1 Meals & Beverages Snacks Condensed Broth / Stock PF Cookies PF Stuffing Cooking Volume Share +3.1 pts +4.2 pts +0.2 pts +0.6 pts Dollar Share +0.5 pts +1.1 pts +
Slide 9: Expectations for H2 FY24 Topline
Expectations for H2 FY24 Topline Organic Net Sales* Volume / Mix 15% 13% Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 More moderate comparisons in H2 FY24 -1% -2% -2% 5% 5% -5% -5% -1% -1% Continued sequential -7% improvement expected in H2 FY24 Q1 Q2 Q3 Q4 FY23 FY24 FY23 FY24 2-Period Moving Ave
Slide 10: Meals & Beverages
Meals & Beverages Low-single digit year-over-year topline decline with sequential volume and mix improvement vs. Q1 FY24 Total Meals & Beverages Q2 FY24 Q2 FY24 vs. PY 2yr CAGR Organic Net Sales* (2)% +4% Dollar Consumption1 (2)% +2% *See Non-GAAP reconciliation 1 Total Circana US MULO $ Consumption
Slide 11: Win in Soup 2.0
Win in Soup 2.0 Consumer cooking behaviors continue to reflect “value mindset”; leaning into stretchable foods such as condensed soup and broth, pockets of pressure in areas such as Ready-to-Serve (RTS) Total Wet Soup Total Condensed Broth/Stock Total RTS (0.3) pts 1 Flat +1.3 pts (1.1) pts Q2 $ sha
Slide 12: Meals & Beverages: A Focused Brand Powerhouse
Meals & Beverages: A Focused Brand Powerhouse Iconic Category Leading Brands Distinctive and Growing Brands * * * *Closing of Sovos Brands acquisition expected week of March 11, 2024 12
Slide 13: Snacks
Snacks Strong performance on a 2-year basis, driven by double-digit growth in our Power Brands Total Snacks Power Brands Q2 FY24 Q2 FY24 Q2 FY24 Q2 FY24 vs. PY 2yr CAGR vs. PY** 2yr CAGR** Organic Net Sales* +1% +8% +4% +12% Dollar Consumption1 Flat +8% +3% +11% *See Non-GAAP reconciliation; ** Powe
Slide 14: Power Brands: Resilient and Ahead of Category
Power Brands: Resilient and Ahead of Category Q2 FY24 Power Brands $ Consumption1 +24% vs. 2YA Q2 FY24 Power Brands & Category Growth vs. 2YA1 Power Brands represent COOKIES 24% 2/3rds of total Snacks Q2 FY24 Net Sales 15% 7th Consecutive quarter holding / gaining $ share2 Category Growth Power Bran
Slide 15: Goldfish Momentum Continues
Goldfish Momentum Continues... Sales Consumption $ Share +6% +4% +0.2 pts Q2 FY24 Net Sales Q2 $ consumption1 Q2 $ share2 vs. PY FY24 vs. PY vs. PY +5% +26% +0.9 pts YTD Q2 FY24 Net Q2 $ consumption1 Q2 $ share2 Sales vs. PY vs. 2YA vs. 2YA 1 Total Circana US MULO $ Consumption latest 13 weeks endin
Slide 16: Now a $1B Brand
Now a $1B Brand * *Total Enterprise Goldfish Net Sales on a trailing 12-month basis for the period ending 01/28/2024
Slide 17: Continued Progress on Snacks Margin Journey
$ Millions Continued Progress on Snacks Margin Journey Snacks Q2 FY24 performance underscores continued profitable growth +8% Organic Net Sales* +15% Operating Earnings +200bps Operating Margin Growth 2-Year CAGR 2-Year CAGR (Q2 FY24 vs Q2 FY22) Net Sales Operating Earnings $1,200 $500 20.0% $1,077
Slide 18: Advantaged Snacks DSD Network
Advantaged Snacks DSD Network Route strategy for select markets with opportunity to operate at full scale Route Logistics Technology strategy* • Goal: Drive scale, effectiveness and efficiency and help unlock A Single, Integrated DSD Modernize and Harmonize Optimized Route growth Logistics & Warehou
Slide 19: Campbell's Next Chapter
Campbell’s Next Chapter Creating one of the most advantaged portfolios in food * * * Meals & Beverages Snacks • Strengthened core portfolio of relevant, iconic • Strong premium brand portfolio brands • Power Brands $ consumption1 growing at 7% on a • Building a high growth portfolio of distinctive 5
Slide 20: CFO Perspective
Carrie Anderson EVP & Chief Financial Officer CFO Perspective 20
Slide 21: Q2 FY24 Key Financial Results
$ Millions, except per share Q2 FY24 Key Financial Results Net Sales +6% +1% Flat 2yr CAGR Adj. EBIT* vs. PY Adj. EPS* vs. PY $2,485 $2,456 $362 $364 $2,209 $318 $0.80 $0.80 $0.69 Q2 FY22 Q2 FY23 Q2 FY24 Q2 FY22 Q2 FY23 Q2 FY24 Q2 FY22 Q2 FY23 Q2 FY24 Organic Net Sales * Growth vs. PY Adj. EBIT Marg
Slide 22: Q2 FY24 Net Sales Bridge
$ Millions Q2 FY24 Net Sales Bridge Modest organic net sales decline, with volume / mix improving versus the first quarter, in line with expectations (1)% (1)% vs. PY vs. PY $2,485 (2) pts - (1) pt 1 pt $2,456 1 Q2 FY23 Net Sales Volume / Mix Net Price Realization Q2 FY24 Organic Net Currency Divest
Slide 23: Q2 FY24 Adjusted Gross Profit Margin Bridge
Q2 FY24 Adjusted Gross Profit Margin* Bridge Adjusted gross profit margin increase driven by the benefits of productivity improvements, net price realization, cost savings initiatives and favorable volume / mix more than offsetting low-single digit cost inflation and other supply chain costs +70 bps
Slide 24: Other Operating Items
$ Millions Other Operating Items Adjusted Marketing & Selling Expenses* Adjusted Administrative Expenses* $217 $216 Flat +1% vs. PY vs. PY $157 $159 Q2 FY23 Q2 FY24 Q2 FY23 Q2 FY24 % of Net Sales 9% 9% *See Non-GAAP reconciliation 24
Slide 25: Q2 FY24 Adjusted EBIT Bridge
$ Millions Q2 FY24 Adjusted EBIT* Bridge Adjusted EBIT growth driven by higher adjusted gross profit partially offset by adjusted other expense, adjusted R&D expense and adjusted administrative expense +1% vs. PY $362 $9 $1 $(5) $(3) $364 Q2 FY23 Adjusted Gross Profit Adjusted Marketing & Adjusted A
Slide 26: Q2 FY24 Adjusted EPS Bridge
Q2 FY24 Adjusted EPS* Bridge Comparable adjusted EPS vs prior year, lapping double-digit growth in the prior year Flat vs. PY $0.80 $0.01 $0.01 $(0.01) $0.80 Q2 FY23 Adjusted EBIT* Share Count Adjusted Taxes* Q2 FY24 *See Non-GAAP reconciliation; Numbers may not add due to rounding. 26
Slide 27: Q2 FY24 Meals & Beverages Results
$ Millions Q2 FY24 Meals & Beverages Results Net Sales Operating Earnings $2,863 $2,786 (1)% $1,408 $1,382 vs. PY $580 $534 $249 $247 Q2 FY23 Q2 FY24 YTD Q2 YTD Q2 Q2 FY23 Q2 FY24 YTD Q2 YTD Q2 Organic Net Sales* FY23 FY24 FY23 FY24 2-year CAGR +4% Vol / Mix (4)% (2)% (2)% (4)% Operating 17.7% 17.9%
Slide 28: Q2 FY24 Snacks Results
$ Millions Q2 FY24 Snacks Results Net Sales Operating Earnings $2,197 $2,188 +7% $1,077 $1,074 vs. PY $303 $322 $150 $161 Q2 FY23 Q2 FY24 YTD Q2 YTD Q2 Q2 FY23 Q2 FY24 YTD Q2 YTD Q2 Organic Net Sales* FY23 FY24 FY23 FY24 2-year CAGR +8% Vol / Mix 2% (2)% - (3)% Operating 13.9% 15.0% 13.8% 14.7% Marg
Slide 29: Disciplined Capital Allocation
$ Millions Disciplined Capital Allocation Strong operating cash flow with a focus on accelerated investment in growth CapEx Net Cash Flows from Operations $732 YTD YTD FY23 FY24 $684 Invest for Growth Capital Expenditures $155 $263 Return Cash to Shareholders Dividends $226 $224 Share Repurchases $6
Slide 30: FY24 Guidance
FY24 Guidance Excluding pending acquisition of Sovos Brands, Inc. which is expected to close the week of March 11, 2024 FY24 Assumptions $ Millions, • Net Sales range predicated on pace of category stabilization/recovery; FY23 currently pacing to the lower end of net sales guidance range Except Per
Slide 31: Delivered on Our Commitments with Q2 Results; Full-Year Guidance Reaffirmed
Delivered on Our Commitments with Q2 Results; Full-Year Guidance Reaffirmed 31
Slide 32: Q&A Forum
Q&A Forum Mark Clouse Carrie Anderson President & Chief Executive Officer EVP & Chief Financial Officer 32
Slide 33: Appendix
Appendix Campbells —
Slide 34: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) Second Quarter % Change Net Sales, Impact of Organic Net Sales, Organic January 28, 2024 As Reported Currency Net Sales As Reported Net Sales Meals & Beverages $ 1,382 $ - $ 1,382 (2)% (2)% Snacks 1,074 - 1,074 0% 1% Total Net Sales
Slide 35: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) Second Quarter % Change Two Year CAGR Net Sales, Impact of Organic Net Sales, Organic Net Sales, Organic January 28, 2024 As Reported Currency Net Sales As Reported Net Sales As Reported Net Sales Meals & Beverages $ 1,382 $ 10 $ 1,
Slide 36: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions, except per share amounts) Second Quarter EBIT EBIT Margin % Earnings Diluted EPS 2024 – As Reported $ 317 12.9% $ 203 $ 0.68 Add: Restructuring charges, implementation costs and other related costs 36 27 0.09 Deduct: Commodity mark-
Slide 37: 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 29, 2023 As Reported Currency Net Sales As Reported Net Sales Meals & Beverages $ 1,404 $ 3 $ 1,407 (4)% (3)% Snacks 1,114 (1) 1,113 (1)% 1% Total Net Sa
Slide 38: 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 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 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 40: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) Second Quarter % Change Net Sales, Impact of Organic Net Sales, Organic January 29, 2023 As Reported Currency Net Sales As Reported Net Sales Meals & Beverages $ 1,408 $ 8 $ 1,416 10% 11% Snacks 1,077 - 1,077 15% 15% Total Net Sales
Slide 41: 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 42: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) First Half % Change Net Sales, Impact of Organic Net Sales, Organic January 28, 2024 As Reported Currency Net Sales As Reported Net Sales Meals & Beverages $ 2,786 $ 3 $ 2,789 (3)% (3)% Snacks 2,188 (1) 2,187 0% 1% Total Net Sales $
Slide 43: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) Second Quarter % Change Net Sales, Impact of Organic Net Sales, Organic January 30, 2022 As Reported Currency Net Sales As Reported Net Sales Meals & Beverages $ 1,275 $ (2) $ 1,273 (3)% (2)% Snacks 934 - 934 (3)% (3)% Total Net Sal
Slide 44: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) First Half % Change Net Sales, Impact of Organic Net Sales, Organic January 29, 2023 As Reported Currency Net Sales As Reported Net Sales Meals & Beverages $ 2,863 $ 15 $ 2,878 13% 13% Snacks 2,197 - 2,197 15% 15% Total Net Sales $
Slide 45: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) Fourth Quarter – Sovos Brands, Inc. % Change Net Sales, Impact of Impact of Organic Net Sales, Organic December 30, 2023 As Reported Divestiture 53rd Week Net Sales (3) As Reported Net Sales (3) Total Sovos Net Sales $ 292 $ - $ - $
Slide 46: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) % Change Organic Organic Net Sales Net Sales (b) – (a) Meals & Beverages quarter ended January 28, 2024 $ 1,382 (2)% (a) +4 pts Sovos Brands, Inc. quarter ended December 30, 2023 292 25% Combined $ 1,674 2% (b) Organic Net Sales Mea
Slide 47: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions, except per share amounts) Second Quarter EBIT EBIT Margin % Earnings Diluted EPS* 2023 – Adjusted $ 362 14.6% $ 241 $ 0.80 2022 – As Reported $ 323 14.6% $ 212 $ 0.70 Add: Restructuring charges, implementation costs and other relate
Slide 48: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions, except per share amounts) Second Quarter EBIT EBIT Margin % Earnings Diluted EPS 2022 – Adjusted $ 318 14.4% $ 208 $ 0.69 2021 – As Reported $ 401 17.6% $ 245 $ 0.80 Add: Restructuring charges, implementation c
Slide 49: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) Second Quarter Gross Profit GP % EBT Tax Tax Rate 2024 – As Reported $ 776 31.6% $ 271 $ 68 25.1% Add: Restructuring charges, implementation costs and other related costs 3 36 9 Deduct: Commodity mark-to-market adjustments (7) (7) (
Slide 50: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) Second Quarter Administrative R&D Expenses Expenses Total 2024 – As Reported $ 189 $ 25 $ 214 Deduct: Restructuring charges, implementation costs and other related costs (29) (1) (30) Deduct: Plum litigation expenses (1) - (1) 2024
Slide 51: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) Second Quarter Marketing & Other Expenses / Selling Expenses (Income) 2024 – As Reported $ 217 $ 26 Deduct: Restructuring charges, implementation costs and other related costs (1) - Deduct: Accelerated amortization - (7) Deduct: Cos
Slide 52: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions, except per share amounts) Second Quarter – Adjusted Diluted EPS Impact from Adjusted EBIT EBIT 2024 – Adjusted $ 364 2023 – Adjusted 362 $ Change $ 2 Deduct: 2023 Adjusted tax rate impact on EBIT - Impact to Net Earnings $ 2 Second
Slide 53: 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 Second Quarter 2024 – Adjusted EBT $ 318 Decrease (Increase) in Adjusted Tax Rate (0.5)% Adjusted EBT multiplied by the Change in Adjusted Tax Ra
Slide 54: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) Net Debt January 29, 2023 January 28, 2024 Short-Term Borrowings $ 578 $ 14 Long-Term Debt 3,992 4,506 Total Debt $ 4,570 $ 4,520 Less: Cash and Cash Equivalents (158) (169) Net Debt $ 4,412 $ 4,351 54
Slide 55: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures (a) (b) (c) = (a)-(b)+(c) ($ millions) Twelve Months Six Months Six Months Trailing Twelve Ended Ended Ended Months Ended (TTM) July 30, 2023 January 29, 2023 January 28, 2024 January 28, 2024 Earnings before interest and taxes, as reported $ 1,
Slide 56: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures (a) (b) (c) = (a)-(b)+(c) ($ millions) Twelve Months Six Months Six Months Trailing Twelve Ended Ended Ended Months Ended (TTM) July 31, 2022 January 30, 2022 January 29, 2023 January 29, 2023 Earnings before interest and taxes, as reported $ 1,
Slide 57: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Fiscal 2023 Organic Sales Base for Fiscal 2024 Guidance ($ millions) Third Quarter Net Sales, Impact of Organic Net Sales Base April 30, 2023 As Reported Divestiture for FY2024 Guidance Meals & Beverages $ 1,108 $ - $ 1,108 Snacks 1,121 (16) 1,1
Slide 58: 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* 2023 – As Reported $ 1,312 $ 858 $ 2.85 Add: Restructuring charges, implementation costs and other related costs 66 50 0.17 Deduct: Pension and postretirement actuarial
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