The Campbell's Company · NASDAQ:CPB
The Campbell's — Campbell Soup Company — Q1 2024 Earnings Presentation
56 slides from The Campbell's's earnings presentation, Dec 6, 2023
Slide 1: Q1 Fiscal 2024 Earnings Presentation
Q1 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 the regulatory appr
Slide 4: Agenda
Agenda 1. Q1 FY24 Key Messages and Financial Highlights 2. Division Highlights 3. Q1 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: Q1 FY24 Key Messages
Q1 FY24 Key Messages • Q1 Net Sales consistent with expectations; Adjusted EBIT and Adjusted EPS slightly ahead as we lapped 15% growth across all three key metrics in prior year • Material progress made in setting the stage for Campbell’s next chapter of growth • Expect momentum in H2 FY24 through
Slide 7: Q1 FY24 Key Financial Highlights
Q1 FY24 Key Financial Highlights Net Sales Adj. EBIT* Adj. EPS* $ Consumption1 $2.5B $407M $0.91 (2)% vs. PY (1)% +8% (9)% (11)% vs. vs. PY vs. PY vs. PY 2YA +7% 2yr CAGR *See Non-GAAP reconciliation 1 Total Circana US MULO $ Consumption latest 13 weeks ending 10/29/2023 7
Slide 8: Strategic Focus in a Dynamic Consumer Landscape
Strategic Focus in a Dynamic Consumer Landscape Being strategic and focused in three key areas as we navigate through a changing consumer landscape Ensuring the affordability of our products and maintaining competitive price gaps 1 within targeted margins 2 Commitment to sustaining marketing and inn
Slide 9: Confidence in H2 FY24 Improvement Behind Easier Comparisons and Incremental Support
Confidence in H2 FY24 Improvement Behind Easier Comparisons and Incremental Support Lapping record H1 FY23 H2 FY24 will lap easier H2 FY23 Accelerating Innovation and Organic Net Sales* Results YOY declines in Volume / Mix Marketing Programs 15% 13% Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 -1% -2% 5%
Slide 10: Meals & Beverages
Meals & Beverages Strong performance on a 2-year basis as we lap double digit growth in prior year Total Meals & Beverages Q1 FY24 Q1 FY24 vs. PY 2yr CAGR Organic Net Sales* (3)% +6% Dollar Consumption1 (6)% +1% *See Non-GAAP reconciliation 1 Total Circana US MULO $ Consumption latest 13 weeks endin
Slide 11: Win in Soup 2.0: Cooking Behaviors Continue
Win in Soup 2.0: Cooking Behaviors Continue Condensed Cooking & Broth/Stock benefiting from continuation of consumer seeking stretchable meals Total Condensed Cooking +1.5 pts. Q1 $ share vs. PY1 5th Consecutive quarter gaining $ share2 Broth/Stock $ Consumption4 Total Condensed Cooking Category 6%
Slide 12: Improving Share Trends Heading into Key Soup Season
Improving Share Trends Heading into Key Soup Season Share Trends in Key Soup $ Share • Effectively protecting share in key categories Categories Q1 L4W while managing margins vs. PY1 vs. PY2 • Strengthened brand support in anticipation of Campbell’s Wet Soup (1.7) pts. +0.2 pts. key holiday season •
Slide 13: Snacks
Snacks Strong performance on a 2-year basis for Snacking portfolio, 8 Power Brands remain resilient Total Snacks Power Brands Q1 FY24 Q1 FY24 Q1 FY24 Q1 FY24 vs. PY 2yr CAGR vs. PY** 2yr CAGR** Organic Net Sales* +1% +8% +5% +13% Dollar Consumption1 +1% +7% +3% +9% *See Non-GAAP reconciliation ** Po
Slide 14: Power Brands: 5 of 8 Holding or Gaining Share vs. PY
Power Brands: 5 of 8 Holding or Gaining Share1 vs. PY Q1 FY24 Power Brands $ Consumption2 +3% VS. PY, +19% vs. 2YA $ share vs. PY: Flat $ share vs. PY: +0.4pts $ share vs. PY: +2.2pts $ share vs. PY: Flat $ share vs. PY: +2.4pts $ consumption $ consumption $ consumption $ consumption $ consumption v
Slide 15: Goldfish Momentum Continues
Goldfish Momentum Continues #1 Favorite snack brand with teens 5 times in a row1 5 th Consecutive quarter of holding or gaining $ share2 1 Piper Sandler Consumer Research “Taking Stock with Teens” (Fall 2021, Spring 2022, Fall 2022, Spring 2023, Fall 2023) 2 Total Circana US MULO 13 weeks ending 10/
Slide 16: Goldfish Accelerating Innovation
Goldfish Accelerating Innovation Unlocking additional growth opportunities Goldfish Crisps: How Goldfish does chips 16
Slide 17: Continued Progress on Snacks Margin Journey
$ Millions Continued Progress on Snacks Margin Journey Snacks Q1 FY24 performance underscores the profitable growth of the division +8% Organic Net Sales* +12% Operating Earnings +130bps Operating Margin Growth 2-Year CAGR 2-Year CAGR (Q1 FY22 vs Q1 FY24) Net Sales Operating Earnings $1,200 $1,120 $
Slide 18: Unlocking the Full Potential of Our Advantaged Snacks DSD Network
Unlocking the Full Potential of Our Advantaged Snacks DSD Network IDP Model A Distinct Advantage EXECUTING PILOTING LOGISTICS TECHNOLOGY A Single, Integrated DSD Modernize and Harmonize ROUTE STRATEGY* Logistics & Warehouse IDP Technology and Tools Network* Improved efficiency, less More competitive
Slide 19: Fueling Our Next Chapter of Meals & Beverages Growth with Sovos Brands
Fueling Our Next Chapter of Meals & Beverages Growth with Sovos Brands Acquisition pending regulatory review • Received request from FTC for additional information on Oct 23, 2023 • Closing expected in calendar year 2024; objective is mid-2024 • Integration planning continuing Continued strong finan
Slide 20: CFO Perspective
Carrie Anderson EVP & Chief Financial Officer CFO Perspective 20
Slide 21: Q1 FY24 Key Financial Results
$ Millions, except per share Q1 FY24 Key Financial Results Net Sales (1)% Adj. EBIT* (9)% Adj. EPS* (11)% vs. PY vs. PY vs. PY $2,575 $2,518 $449 $2,236 $407 $1.02 $389 $0.89 $0.91 Q1 FY22 Q1 FY23 Q1 FY24 Q1 FY22 Q1 FY23 Q1 FY24 Q1 FY22 Q1 FY23 Q1 FY24 Organic Net Sales Growth* Adj. EBIT Margin* Adj
Slide 22: Q1 FY24 Net Sales Bridge
$ Millions Q1 FY24 Net Sales Bridge Modest organic net sales decline in line with expectations, as we lapped a 15% increase* in the prior year that was driven by double-digit pricing and supply recovery (2)% (1)% vs. PY vs. PY $2,575 (5) pts 3 pts - (1) pt $2,518 1 Q1 FY23 Net Sales Volume / Mix Net
Slide 23: Q1 FY24 Adjusted Gross Profit Margin Bridge
Q1 FY24 Adjusted Gross Profit Margin* Bridge Modest adjusted gross profit margin decline driven by unfavorable volume / mix, with the combination of net price realization, productivity improvements and cost savings initiatives offsetting higher cost inflation and other supply chain costs (10) bps vs
Slide 24: Mitigation Efforts Outpacing Continued Inflation
Mitigation Efforts Outpacing Continued Inflation Inflation Mitigating Actions: Core Inflation Rate: • Net Price Realization FY23 Rate: 12% FY23 Rate: 13% 18% 16% 14% 12% 14% 10% 3% 8% Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 6% • Supply Chain Productivity 2% • Cost Savings Initiatives Q1 FY23 Q2 FY23
Slide 25: Other Operating Items
$ Millions Other Operating Items Adjusted Marketing & Selling Expenses* Adjusted Administrative Expenses* $220 $201 +9% (3)% vs. PY vs. PY $155 $150 A&C +6% vs. PY Q1 FY23 Q1 FY24 Q1 FY23 Q1 FY24 % of Net Sales 8% 9% *See Non-GAAP reconciliation 25
Slide 26: Q1 FY24 Adjusted EBIT Bridge
$ Millions Q1 FY24 Adjusted EBIT* Bridge Adjusted EBIT margin decline largely driven by an expected step-up in adjusted marketing and selling expenses, and the expected 20 bps impact due to changes in pension and postretirement benefit income (9)% vs. PY $449 $(21) $(19) $3 $(5) $407 Q1 FY23 Adjuste
Slide 27: Q1 FY24 Adjusted EPS Bridge
Q1 FY24 Adjusted EPS* Bridge Decline driven by the decrease in adjusted EBIT and slightly higher interest expense, partially offset by a reduction in the weighted average diluted shares outstanding (11)% vs. PY $1.02 $(0.11) $(0.01) $0.01 $0.91 - Q1 FY23 Adjusted EBIT* Interest Adjusted Taxes* Share
Slide 28: Q1 FY24 Meals & Beverages Results
$ Millions Q1 FY24 Meals & Beverages Results Net Sales Operating Earnings $1,455 $1,404 (13)% vs. PY $331 $287 Q1 FY23 Q1 FY24 Q1 FY23 Q1 FY24 Organic Net Sales 2-year CAGR +6%* Vol / Mix (1)% (6)% Operating 22.7% 20.4% Margin Net Price Realization 16% 2% Organic Net Sales* vs. PY 15% (3)% * See Non
Slide 29: Q1 FY24 Snacks Results
$ Millions Q1 FY24 Snacks Results Net Sales Operating Earnings $1,120 $1,114 +5% vs. PY $153 $161 Q1 FY23 Q1 FY24 Q1 FY23 Q1 FY24 Organic Net Sales 2-year CAGR +8%* Vol / Mix (2)% (4)% Operating 13.7% 14.5% Margin Net Price Realization 17% 5% Organic Net Sales* vs. PY 15% 1% * See Non-GAAP reconcili
Slide 30: Disciplined Capital Allocation
$ Millions Disciplined Capital Allocation Strong operating and free cash flow with a focus on investment in growth CapEx; Balance sheet in a position of strength while continuing to return cash to shareholders Net Cash Flows from Operations Q1 FY23 Q1 FY24 $227 Invest for Growth $174 Capital Expendi
Slide 31: FY24 Guidance
FY24 Guidance Excluding pending acquisition of Sovos Brands, Inc. expected in calendar 2024 FY24 Assumptions $ Millions, FY23 Except Per FY24 Guidance1 • Core inflation of low-single digits Share Results • ~3% productivity improvements; ~$35 to 40 million of cost savings Net Sales $9,357 (0.5)% to +
Slide 32: Insights into Expected H2 FY24 Margin Trajectory
Insights into Expected H2 FY24 Margin Trajectory H2 FY24 Margin Drivers Productivity & Cost Savings • Core inflation outlook of low-single digits beginning to exceed Core Inflation materially improved from low double-digit average in prior year 18% • Expect greater net contribution from 14% producti
Slide 33: First-Quarter Results in Line with Expectations; Full-Year Guidance Reaffirmed
First-Quarter Results in Line with Expectations; Full-Year Guidance Reaffirmed Happy Holidays! 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: Cash Flow
$ Millions Cash Flow Strong Q1 FY24 Cash Flow generation with increased investment and over $140 million returned to shareholders Total Company Q1 FY23 Q1 FY24 Net Cash Flows from Operations $227 $174 of which changes in working capital $(203) $(206) Net Cash Flows from Investing Activities $(78) $(
Slide 37: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ 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) 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 39: 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 40: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) First Quarter % Change Two Year CAGR Net Sales, Impact of Organic Net Sales, Organic Net Sales, Organic October 29, 2023 As Reported Currency Net Sales As Reported Net Sales As Reported Net Sales Meals & Beverages $ 1,404 $ 10 $ 1,4
Slide 41: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions, except per share amounts) First Quarter EBIT EBIT Margin % Earnings Diluted EPS* 2024 – As Reported $ 358 14.2% $ 234 $ 0.78 Add: Restructuring charges, implementation costs and other related costs 13 10 0.03 Add: Commodity mark-to-
Slide 42: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions, except per share amounts) First Quarter EBIT EBIT Margin % Earnings Diluted EPS* 2023 – Adjusted $ 449 17.4% $ 307 $ 1.02 2022 – As Reported $ 376 16.8% $ 261 $ 0.86 Add: Restructuring charges, implementation costs and other related
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) First Quarter EBIT EBIT Margin % Earnings Diluted EPS 2022 – Adjusted $ 389 17.4% $ 271 $ 0.89 2021 – As Reported $ 461 19.7% $ 309 $ 1.02 Add: Restructuring charges, implementation co
Slide 44: 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 g
Slide 45: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) First Quarter Gross Profit GP % EBT Tax Tax Rate 2024 – As Reported $ 788 31.3% $ 310 $ 76 24.5% Add: Restructuring charges, implementation costs and other related costs 3 13 3 Add: Commodity mark-to-market adjustments 15 15 4 Add:
Slide 46: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) First Quarter Administrative Expenses R&D Expenses Total 2024 – As Reported $ 158 $ 24 $ 182 Deduct: Restructuring charges, implementation costs and other related costs (5) (1) (6) Deduct: Cybersecurity incident costs (1) - (1) Dedu
Slide 47: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) First Quarter Marketing & Other Expenses / Selling Expenses (Income) 2024 – As Reported $ 222 $ 24 Deduct: Restructuring charges, implementation costs and other related costs (2) - Deduct: Accelerated amortization - (7) Deduct: Cost
Slide 48: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions, except per share amounts) First Quarter – Adjusted Diluted EPS Impact from Adjusted EBIT EBIT 2024 – Adjusted $ 407 2023 – Adjusted 449 $ Change $ (42) Deduct: 2023 Adjusted tax rate impact on EBIT 10 Impact to Net Earnings $ (32) F
Slide 49: 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 First Quarter 2024 – Adjusted EBT $ 359 Decrease (Increase) in Adjusted Tax Rate (0.4)% Adjusted EBT multiplied by the Change in Adjusted Tax Rat
Slide 50: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) Net Debt October 30, 2022 October 29, 2023 Short-Term Borrowings $ 858 $ 206 Long-Term Debt 3,994 4,500 Total Debt $ 4,852 $ 4,706 Less: Cash and Cash Equivalents (130) (91) Net Debt $ 4,722 $ 4,615 50
Slide 51: 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 Three Months Three Months Trailing Twelve Ended Ended Ended Months Ended (TTM) July 30, 2023 October 30, 2022 October 29, 2023 October 29, 2023 Adjusted Earnings before interest and taxes $ 1,
Slide 52: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) (a) (b) (c) = (a)-(b)+(c) Twelve Months Three Months Three Months Trailing Twelve Ended Ended Ended Months Ended (TTM) July 31, 2022 October 31, 2021 October 30, 2022 October 30, 2022 Earnings before interest and taxes, as reported
Slide 53: 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) Full Year Organic Net Sales Net Sales, Impact of Base for FY2024 July 30, 2023 As Reported Divestiture Guidance Meals & Beverages $ 4,907 $ - $ 4,907 Snacks 4,450 (51) 4,399 To
Slide 54: 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 55: 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 56: 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
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