The Campbell's Company · NASDAQ:CPB
The Campbell's — Campbell Soup Company — Q4 2023 Earnings Presentation
47 slides from The Campbell's's earnings presentation, Aug 31, 2023
Slide 1: Q4 Fiscal 2023 Earnings Presentation
Q4 Fiscal 2023 Earnings Presentation 1
Slide 2: Introduction: Rebecca Gardy
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 conditions to the completion of the Sovos Brands, Inc. (“Sovos Brands”) transaction, including obtaining Sovos Brands shareholde
Slide 4: Agenda
Agenda Q4 FY23 Key Messages and Financial Highlights Division Highlights Q4 FY23 Financial Results FY24 Outlook Summary Q&A 4
Slide 5: CEO Perspective: Mark Clouse
Mark Clouse President & Chief Executive Officer CEO PERSPECTIVE 5
Slide 6: Key Financial Highlights
Change vs. Prior Year except as noted Key Financial Highlights Net Sales Adj. EBIT* Adj. EPS* Consumption1 Q4 FY23 $2.1B $242M $0.50 +3% Organic Net Sales* +5% (10)% (11)% +25% vs. 4YA Net Sales Adj. EBIT* Adj. EPS* Consumption2 FY23 $9.4B $1.4B $3.00 +8% Organic Net Sales* +10% ✓ +5% ✓ +5% ✓ +23% v
Slide 7: Current Environment and Category Trends Impacted by Three Drivers
Current Environment and Category Trends Impacted by Three Broad-based and Transitional Drivers Q4 FY23 1 2 3 Consumers buying fewer Lapping Current Lapping tail- categories with double-digit Drivers end of Covid a focus on inflation-driven variant surges stretchable pricing meals and value FY24 Impr
Slide 8: Meals & Beverages: Key Highlights
Meals & Beverages: Key Highlights Q4 FY23 FY23 Organic Net Sales* vs. PY +1% +7% Dollar Consumption1,2 vs. PY (4)% +3% Dollar Consumption1,2 vs. 4YA +17% +17% *See Non-GAAP reconciliation 1 Total Circana US MULO $ Consumption latest 13 weeks ending 7/30/2023. Total US Meals & Beverages. 2 Total Circ
Slide 9: Win in Soup 2.0 Strategy
Win in Soup 2.0 Strategy 70% of U.S. Soup1 Long-term Growth Focus2 30% of U.S. Soup1 Optimize3 Flat +1.2 pts. +27% (1.4) pts. (3.9) pts. Q4 Q4 $ share Q4 $ share Q4 $ share Q4 $ share $ consumption vs. PY4 vs. 4YA4 vs. PY4 vs. 4YA4 vs. 4YA5 1 Net Sales, U.S. Soup, Fiscal Year ending 07/30/2023; 2 Gr
Slide 10: Snacks: Key Highlights
Snacks: Key Highlights Q4 FY23 FY23 Organic Net Sales* vs. PY +9% +13% Dollar Consumption1,2 vs. PY +8% +13% Dollar Consumption1,2 vs. 4YA +31% +31% *See Non-GAAP reconciliation 1 Total Circana US MULO $ Consumption latest 13 weeks ending 7/30/2023. Total Snacks. 2 Total Circana US MULO $ Consumptio
Slide 11: Power Brands $ Consumption
Power Brands $ Consumption1: +10% vs. PY, +39% vs. 4YA Q4 FY23 +10% +40% +4% +43% +7% +38% +27% +41% VS. PY VS. 4YA VS. PY VS. 4YA VS. PY VS. 4YA VS. PY VS. 4YA +5% +36% +10% +57% +16% +49% +9% +36% VS. PY VS. 4YA VS. PY VS. 4YA VS. PY VS. 4YA VS. PY VS. 4YA 1 Total Circana US MULO $ Consumption lat
Slide 12: Snacks FY23 Performance
Continuing Operations ($ Millions) Snacks FY23 Performance +7% +12% +110bps Net Sales Operating Earnings Operating Margin Growth 2-Year CAGR 2-Year CAGR (FY23 vs FY21) $5,000 Net Sales $500 Operating Earnings $640 20.0% $4,450 $4,500 $450 19.0% $3,855 $3,955 $517 $4,000 $400 $514 18.0% $3,500 $350 1
Slide 13: Wrapping Up
Wrapping Up • Fiscal 23 consistent delivery and significant growth in a challenging environment • Fiscal 24 a year of continuing progress, accelerating in the second half • Overall improving volume and margin trends throughout fiscal 24 with disciplined promotional activity • Continued momentum in S
Slide 14: CFO Perspective: Carrie Anderson
Carrie Anderson EVP & Chief Financial Officer CFO PERSPECTIVE 14
Slide 15: Q4 FY23 Key Financial Results
Q4 FY23 Key Financial Results Financial Summary Continuing Operations ($ Millions, except per share) NET SALES & +5% (10)% (11)% Reflects ~$7 million and ORGANIC vs. PY ADJ. EBIT* vs. PY ADJ. EPS* vs. PY ~$0.02 impact from GROWTH RATE* lower pension and postretirement benefit income to adj. EBIT and
Slide 16: FY23 Key Financial Results
FY23 Key Financial Results Financial Summary Continuing Operations ($ Millions, except per share) NET SALES & +10% +5% +5% Reflects ~$44 million ORGANIC vs. PY ADJ. EBIT* vs. PY ADJ. EPS* vs. PY and ~$0.11 impact from GROWTH RATE* lower pension and postretirement benefit $9,357 income to adj. EBIT a
Slide 17: Q4 FY23 Net Sales Bridge
$ Millions Q4 FY23 Net Sales Bridge Net Sales growth reflects favorable inflation-driven net price realization partially offset by unfavorable volume / mix. 10 pts +5% - (1) pt +4% (5) pts $2,068 $1,987 1 Q4 FY22 Net Sales Volume / Mix Net Price Realization Q4 FY23 Organic Net Currency Divestiture Q
Slide 18: Q4 FY23 Adjusted Gross Profit Margin Bridge
Q4 FY23 Adjusted Gross Profit Margin* Bridge Adjusted gross profit generally in-line with expectations. Decline driven by unfavorable volume / mix, with favorable net price realization and supply chain productivity improvements more than offsetting higher cost inflation and other supply chain costs.
Slide 19: Mitigation Efforts Outpacing Continued Inflation
Mitigation Efforts Outpacing Continued Inflation Inflation Mitigating Actions: Core Inflation Rate: • Net Price Realization 13% 11% 15% 10% 7% 12% 11% Q4 FY22 Q4 FY23 FY22 FY23 6% • Supply Chain Productivity • Cost Savings Initiatives • Manage Discretionary Spending Q4 FY22 Q4 FY23 FY22 FY23 19
Slide 20: Other Operating Items
$ Millions Other Operating Items Adjusted Marketing & Selling Expenses* Adjusted Administrative Expenses* +9% +7% vs. PY vs. PY $194 $178 A&C +23% vs. PY $164 $153 Q4 FY22 Q4 FY23 Q4 FY22 Q4 FY23 *See Non-GAAP reconciliation 20
Slide 21: Q4 FY23 Adjusted EBIT Bridge
$ Millions Q4 FY23 Adjusted EBIT* Bridge Adjusted EBIT margin decline reflects lower adjusted gross profit margin, an expected step-up in adjusted marketing and selling expenses and the expected 40 bps impact of lower pension and postretirement income. (10)% vs. PY $10 $(16) $269 $(13) $(8) $242 Q4
Slide 22: Q4 FY23 Adjusted EPS Bridge
Q4 FY23 Adjusted EPS* Bridge Decline driven by the decrease in adjusted EBIT, inclusive of a $0.02 impact from lower pension and postretirement income. (11)% vs. PY $0.56 $(0.07) $0.01 $0.01 $0.50 $(0.01) Q4 FY22 Adjusted EBIT* Interest Adjusted Taxes* Share Count Q4 FY23 *See Non-GAAP reconciliatio
Slide 23: Q4 and Full-year FY23 Meals & Beverages Results
$ Millions Q4 and Full-year FY23 Meals & Beverages Results NET SALES & OPERATING EARNINGS ORGANIC GROWTH RATE* +7% +2% vs. PY vs. PY $4,907 +1% $4,607 (18)% $874 $894 vs. PY vs. PY $935 $936 $161 $132 Q4 FY22 Q4 FY23 FY22 FY23 Q4 FY22 Q4 FY23 FY22 FY23 Operating Margin 17.2% 14.1% 19.0% 18.2% *See N
Slide 24: Q4 and Full-year FY23 Snacks Results
$ Millions Q4 and Full-year FY23 Snacks Results NET SALES & OPERATING EARNINGS ORGANIC GROWTH RATE* +13% +24% vs. PY vs. PY +9% $4,450 $640 vs. PY $3,955 +12% vs. PY $517 $1,052 $1,132 $158 $141 Q4 FY22 Q4 FY23 FY22 FY23 Q4 FY22 Q4 FY23 FY22 FY23 Operating Margin 13.4% 14.0% 13.1% 14.4% *See Non-GAA
Slide 25: Cash Flow
$ Millions Cash Flow Strong FY23 Cash Flow generation with increased investment and nearly $590 million returned to shareholders Total Company FY22 FY23 Net Cash Flows from Operations $1,181 $1,143 of which changes in working capital $(41) $(216) Net Cash Flows from Investing Activities $(230) $(340
Slide 26: FY24 Guidance
FY24 Guidance Excluding pending acquisition of Sovos Brands, Inc. $ Millions, FY23 FY24 FY24 Assumptions Except Per Share Results Guidance1 • Core inflation of low-single digits • ~3% productivity improvements; ~$35 to 40 million of cost savings Net Sales $9,357 (0.5)% to +1.5% • Net interest expens
Slide 27: Q&A Forum
Q&A Forum Mark Clouse Carrie Anderson President & Chief Executive Officer EVP & Chief Financial Officer 27
Slide 28: Appendix
BUILDING MOMENTUM Appendix Campbells
Slide 29: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ 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 30: 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 31: 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 – As Reported $ 272 13.2% $ 169 $ 0.57 Add: Restructuring charges, implementation costs and other related costs 16 13 0.04 Deduct: Pension and po
Slide 32: 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 – As Reported $ 1,312 14.0% $ 858 $ 2.85 Add: Restructuring charges, implementation costs and other related costs 66 50 0.17 Deduct: Pension and p
Slide 33: 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 2023 – As Reported $ 167 $ 26 $ 193 Deduct: Restructuring charges, implementation costs and other related costs (3) (1) (4) 2023 – Adjusted $ 164 $ 25 $ 189 % of Net Sales –
Slide 34: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) Fourth Quarter Gross Profit GP % EBT Tax Tax Rate 2023 – As Reported $ 656 31.7% $ 225 $ 56 24.9% Add: Restructuring charges, implementation costs and other related costs 6 16 3 Deduct: Pension and postretirement actuarial gains - (
Slide 35: 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) 2023 – As Reported $ 199 $ (9) Deduct: Restructuring charges, implementation costs and other related costs (5) - Add: Pension and postretirement actuarial gains -
Slide 36: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) Twelve Months Marketing & Selling Expenses 2023 – As Reported $ 811 Deduct: Restructuring charges, implementation costs and other related costs (5) 2023 – Adjusted $ 806 % of Net Sales - Adjusted 8.6% 2022 – As Reported $ 734 Deduct
Slide 37: 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 2023 – Adjusted EBT $ 195 Decrease (Increase) in Adjusted Tax Rate 1.0% Adjusted EBT multiplied by the Change in Adjusted Tax Rate
Slide 38: 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 2023 – Adjusted $ 242 2022 – Adjusted 269 $ Change $ (27) Deduct: 2022 Adjusted tax rate impact on EBIT 7 Impact to Net Earnings $ (20) F
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) Fourth Quarter EBIT EBIT Margin % Earnings Diluted EPS* 2021 – As Reported $ 411 21.9% $ 288 $ 0.95 Add: Restructuring charges, implementation costs and other related costs 10 8 0.03 D
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) Twelve Months EBIT EBIT Margin % Earnings Diluted EPS* 2021 – As Reported $ 1,545 18.2% $ 1,008 $ 3.30 Add: Restructuring charges, implementation costs and other related costs 53 40 0.
Slide 41: 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 42: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) Net Debt July 30, 2023 Short-Term Borrowings $ 191 Long-Term Debt 4,498 Total Debt $ 4,689 Less: Cash and Cash Equivalents (189) Net Debt $ 4,500 42
Slide 43: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Twelve Months ($ millions) Ended July 30, 2023 Adjusted Earnings before interest and taxes $ 1,367 Depreciation and amortization, as reported $ 387 Deduct: Restructuring charges, implementation costs and other related costs (24) Deduct: Accelera
Slide 44: 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 45: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) Third Quarter Gross Profit GP % 2023 – As Reported $ 668 30.0% Add: Restructuring charges, implementation costs and other related costs 12 Add: Pension actuarial losses - Add: Commodity mark-to-market adjustments 9 2023 – Adjusted $
Slide 46: 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 47: 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 – As Reported $ 436 16.9% $ 297 $ 0.99 Add: Restructuring charges, implementation costs and other related costs 3 3 0.01 Add: Pension and postreti
Campbell Soup Company — Q4 2023 Earnings Presentation on 6ix