The Campbell's Company · NASDAQ:CPB
The Campbell's — Campbell Soup Company — Q4 2021 Earnings Presentation
61 slides from The Campbell's's earnings presentation, Sep 1, 2021
Slide 1: Q4 & Full-Year Fiscal 2021 Earnings Presentation
Q4 & Full-Year Fiscal 2021 Earnings Presentation 1
Slide 2: Rebecca Gardy, Vice President Investor Relations
Rebecca Gardy Vice President Investor Relations 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 Consolidated Results Division Highlights Q4 & Full-Year Fiscal 2021 Financial Highlights Fiscal 2022 Guidance Q&A Q4 FY21 4
Slide 5: CEO Perspective
Mark Clouse President and Chief Executive Officer Q4 & Full-Year Fiscal 2021 Earnings Presentation CEO Perspective 5
Slide 6: Key Financial Highlights
Key Financial Highlights Continuing Operations FY 2021 Net Sales Adj. EBIT* Adj. EPS* Strong financial $ 8.5B $ 1.4B $ 2.98 performance despite Organic Net Sales* (3)% YoY +1% YoY Flat YoY macro headwinds and challenging YoY 2 yr. CAGR comparables Organic Net Sales* Adj. EBIT* Adj. EPS* +3% +5% +14%
Slide 7: Organic Net Sales 2-year CAGR of +3%
Organic Net Sales* 2-year CAGR of +3% Continuing Operations Q1 FY21 vs Q1 FY20 Q3 FY21 vs Q3 FY20 • Elevated COVID-19 related demand • Challenged comps; margin headwinds led to weaker continued than expected quarter • Strong growth in both divisions • Very strong brand performance across both divisi
Slide 8: In-Market Results Reflects Continued Brand Strength
In-Market Results Reflects Continued Brand Strength FY 2021 Consumption1 vs. 2YA 75% +10% Total Company of Portfolio Gained or Held Share1 +9% +9% Meals & Beverages Snacks 1 Total IRI US MULO $ Consumption latest 52 weeks ending 8/1/2021 Q4 FY21 8
Slide 9: Meals & Beverages: Key Highlights
Meals & Beverages: Key Highlights Continuing Operations Q4 FY 2021 Growth vs. PY Growth vs. 2YA Organic Net Sales* (9)% +10% Consumption1 (2)% +13% FPO * See Non-GAAP reconciliation 1 Total IRI US MULO $ Consumption latest 13 weeks ending 8/1/2021 Q4 FY21 9
Slide 10: Meals & Beverages: Strong Brand Health
Meals & Beverages: Strong Brand Health Win in Soup Key M&B Brands +2pts +16% #1 Share for 27 1 Record U.S. Soup U.S. Soup Straight Months Share1 Gains vs PY Consumption1 Growth vs 2YA Repeat rates2 Double-Digit ahead of pre- Consumption1 COVID-19 levels Growth vs 2YA +2.9 pts 10th +21% +20% Consecut
Slide 11: M&B Innovation
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Slide 12: M&B Modernization
—~ ©) M&B Modernization Connecting people through food they love. vu Campbell Mushroom £:SOUP: | V Campbell Chicken Noodle vq line ve SOUP we 12
Slide 13: Snacks: Key Highlights
Snacks: Key Highlights Continuing Operations Q4 FY 2021 Growth vs. PY Growth vs. 2YA Organic Net Sales* +1% +7% Consumption1 (1)% +11% * See Non-GAAP reconciliation 1 Total IRI US MULO $ Consumption latest 13 weeks ending 8/1/2021 Q4 FY21 13
Slide 14: Snacks Power Brands: Exceptional 15% 2-year Consumption
Snacks Power Brands: Exceptional 15% 2-year Consumption* +15% +44% +13% +13% +7% +3% +18% +31% +16% * Percentages reflect in-market consumption growth on a two-year basis for total IRI US MULO $ Consumption latest 13 weeks ending 8/1/2021 Q4 FY21 14
Slide 15: Continued momentum on Goldfish
Continued momentum on Goldfish +1pt #1 Velocity Now Share1 gain vs PY new product Available! in cracker category2 1 Total IRI US MULO $ Consumption latest 13 weeks ending 8/1/2021 2 Total IRI US MULO, $/MM ACV, Total Cracker Category, latest 13 weeks ending 8/1/2021 Q4 FY21 15
Slide 16: Addressing Q3 Executional Pressures on Snacks
Addressing Q3 Executional Pressures on Snacks ▪ Simplified Agenda ▪ Driving Operational Excellence ▪ Focus on Supply Chain Network ▪ Additional Resources Q4 FY21 16
Slide 17: Fiscal 2022 Guidance for Continuing Operations
Fiscal 2022 Guidance for Continuing Operations ($ in millions, except per share) Fiscal 2021 Fiscal 2022 Results Guidance Net Sales $8,476 -2% to 0% Organic Net Sales -1% to +1% Adjusted EBIT $1,406* -8% to -5%1 -8% to -4%1 Adjusted EPS $2.98* $2.75 to $2.85 * See Non-GAAP reconciliation 1 A non-GAA
Slide 18: CFO Perspective
Mick Beekhuizen EVP & Chief Financial Officer Q4 & Full-Year Fiscal 2021 Earnings Presentation CFO Perspective 18
Slide 19: Q4 FY21 Results Reflect Tough Comps
Q4 FY21 Results Reflect Tough Comps Continuing Operations ($ in millions, except per share) Net Sales & Organic Growth Rate* Adj. EBIT* Adj. EPS* $1,873 +4% $267 +3% $0.55 +14% 2 YR CAGR 2 YR CAGR 2 YR CAGR +12% +22% +50% $2,108 $307 (13)% $0.63 (4)% (13)% $267 $1,873 $252 $0.55 $1,780 $0.42 Q4 FY19
Slide 20: FY21 Comparable to FY20, ahead of FY19
FY21 Comparable to FY20, ahead of FY19 Continuing Operations ($ in millions, except per share) Net Sales & Organic Growth Rate* Adj. EBIT* Adj. EPS* $8,476 +3% $1,406 +5% $2.98 +14% 2 YR CAGR 2 YR CAGR 2 YR CAGR +28% +1% +7% Flat +14% (3)% $2.95 $2.98 $8,691 $8,476 $1,449 $1,406 $8,107 $1,266 $2.30
Slide 21: Components of Net Sales Change
Components of Net Sales Change Continuing Operations (5) pts +1 pts +1 pts (4)% (7) pts (1) pts - (11)% Q4 PYFY20 Qtr Volume & Q4Qtr Price & Promotional CY FY21 Org 53rd Week Divestiture Currency Q4 CYFY21 Qtr Net Sales Mix Sales Spending Organic Net Sales Allowances Net Sales* * See Non-GAAP reconc
Slide 22: Inflation/Other Costs Weighed on Adj. Gross Margin
Inflation/Other Costs Weighed on Adj. Gross Margin* Continuing Operations • Mix / Leverage less of a headwind as comparisons ease • Core inflation accelerated while lapping supply chain manufacturing efficiencies • Offsets include productivity improvements, net pricing and cost savings 35.6% (70) bp
Slide 23: Other Operating Items
Other Operating Items Continuing Operations ($ millions) A&C (52)% vs. Q4 FY20; Comparable to Q4 FY19 Adjusted Marketing Adjusted & Selling Expenses* Administrative Expenses* $265 $265 (34)% (18)% $174 $174 $169 $169 $139 $139 Q4 PY FY20 Q4CY FY21 Q4 PY FY20 Q4 CY FY21 * See Non-GAAP reconciliation
Slide 24: Cost Savings & Value Capture
Cost Savings & Value Capture Continuing Operations $850 million ▪ Total savings of $25 million realized in Q4 ▪ Delivered aggregate $80 million in FY21 with the majority from Snyder's-Lance integration ▪ Tracking to cumulative savings target of $850 million by $805 million end of FY22 attained thru
Slide 25: Adjusted EBIT Bridge
Adjusted EBIT* Bridge Continuing Operations ($ millions) • Net Sales impact reflects lapping additional week, elevated demand, and inventory recovery • Adj Marketing & Selling reflects cycling elevated, pandemic-driven A&C investment (13)% $307 $(84) +$31 $(1) $267 $(77) +$91 PYFY20 Q4 Qtr Net Sales
Slide 26: Adjusted EPS Bridge
Adjusted EPS* Bridge Continuing Operations $0.63 $(0.10) (13)% $0.03 $(0.01) $0.55 Q4 PYFY20 Qtr Adjusted EBIT Interest Adjusted Taxes Q4 FY21 Q2 FY21 * See Non-GAAP reconciliation Q4 FY21 26
Slide 27: Segment Results
Segment Results ($ millions) Net Sales & Organic Growth Rate* Operating Earnings $1,018 (9)% $851 (30)% $184 $129 Q4 FY20 Q4 FY21 Q4 FY20 Q4 FY21 * See Non-GAAP reconciliation Q4 FY21 27
Slide 28: Segment Results
Segment Results ($ millions) Net Sales & Organic Growth Rate* Operating Earnings $1,090 +1% $1,022 +7% $136 $145 Q4 FY20 Q4 FY21 Q4 FY20 Q4 FY21 * See Non-GAAP reconciliation Q4 FY21 28
Slide 29: Cash Flow
Cash Flow Total Company ($ millions) Fiscal Year 2020 2021 Net Cash Flows from Operations $1,396 $1,035 Of which changes in working capital (net of divestitures) $92 ($289) Net Cash Flows from Investing Activities $2,272 $(158) Of which capital expenditures $(299) $(275) Of which sales of businesses
Slide 30: Fiscal 2022 Guidance for Continuing Operations
Fiscal 2022 Guidance for Continuing Operations ($ in millions, except per share) Fiscal 2021 Fiscal 2022 Results Guidance Net Sales $8,476 -2% to 0% Organic Net Sales -1% to +1% Adjusted EBIT $1,406* -8% to -5%1 -8% to -4%1 Adjusted EPS $2.98* $2.75 to $2.85 * See Non-GAAP reconciliation 1 A non-GAA
Slide 31: Increasing Core Inflation
Increasing Core Inflation HSD Mitigating Actions • Pricing and Trade Optimization 5% • Supply Chain Productivity Improvements 4% 3% • Cost Savings Initiatives 2% • Manage discretionary spending Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 FY22 Est Core Inflation % Q4 FY21 31
Slide 32: Fiscal 2022 – Financial Assumptions
Fiscal 2022 – Financial Assumptions Supporting Assumptions for 2022 Guidance COPS Inflation HSD COPS Productivity ~ 2-3% Cost Savings Initiatives ~ $45 million Interest Expense $190 - $195 million Adjusted Tax Rate ~ 24% Capital Expenditures ~ $330 million Q4 FY21 32
Slide 33: Summary
Summary ▪ Q4 ahead of our expectations leading to a solid year in a difficult environment ▪ Strong underlying brand health across both divisions ▪ Heading into FY22 with a stronger foundation on Snacks ▪ $500 million strategic share repurchase authorization ▪ Provided FY22 guidance reflecting macro
Slide 34: Q&A
Q&A Mark Clouse Mick Beekhuizen President and EVP and Chief Financial Officer Chief Executive Officer Q4 FY21 34
Slide 35: Appendix
Oe Appendix Connecting people through food they love. 35
Slide 36: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) Fourth Quarter % Change Net Sales, Impact of Organic Net Sales, Organic August 1, 2021 As Reported Currency Net Sales As Reported Net Sales Meals & Beverages $ 851 $ (8) $ 843 (16)% (9)% Snacks 1,022 (2) 1,020
Slide 37: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) Full Year % Change Net Sales, Impact of Organic Net Sales, Organic August 1, 2021 As Reported Currency Net Sales As Reported Net Sales Meals & Beverages $ 4,532 $ (19) $ 4,513 (2)% (1)% Snacks 3,944 (2) 3,942 (
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) 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 39: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions, except per share amounts) EBIT Full Year 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 0.13 D
Slide 40: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) Fourth Quarter Gross Margin GM % EBT Tax Tax Rate 2021 – As Reported $ 587 31.3% $ 364 $ 76 20.9% Add: Restructuring charges, implementation costs and other related costs 2 10 2 Add: Charges associated with div
Slide 41: 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 Fourth Quarter 2021 – Adjusted Gross Margin $ $ 589 2021 – Reported Net Sales $ 1,873 2020 – Adjusted Gross Margin % 35.6% 2021 – Adjusted Gross Margin $ at 2020
Slide 42: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) Fourth Quarter Marketing & Administrative R&D Selling Other Expenses Expenses Expenses Expenses / (Income) 2021 – As Reported $ 146 $ 23 $ 175 $ (168) Deduct: Restructuring charges, implementation costs and oth
Slide 43: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) Full Year Marketing & Selling Expenses 2021 – As Reported $ 817 Deduct: Restructuring charges, implementation costs and other related costs (1) 2021 – Adjusted $ 816 % of Net Sales 9.6% 2020 – As Reported $ 947
Slide 44: 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 – Adjusted Diluted EPS Impact from Adjusted EBIT EBIT 2021 – Adjusted $ 267 2020 – Adjusted 307 $ Change $ (40) Add: Adjusted tax rate impact on EBIT 9 Impact to Net Ear
Slide 45: 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 Fourth Quarter 2021 – Adjusted EBT $ 220 Change in Adjusted Tax Rate 1.8% Adjusted EBT multiplied by the Change in Adjusted
Slide 46: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) First Quarter % Change Two Year CAGR Net Sales, Impact of Organic Net Sales, Organic (Organic November 1, 2020 As Reported Currency Net Sales As Reported Net Sales Net Sales) Meals & Beverages $ 1,342 $ 2 $ 1,3
Slide 47: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) Second Quarter % Change Two Year CAGR Net Sales, Impact of Organic Net Sales, Organic (Organic January 31, 2021 As Reported Currency Net Sales As Reported Net Sales Net Sales) Meals & Beverages $ 1,300 $ (4) $
Slide 48: 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 May 2, 2021 As Reported Currency Net Sales As Reported Net Sales Net Sales) Meals & Beverages $ 1,039 $ (6) $ 1,033
Slide 49: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) Fourth Quarter % Change Two Year CAGR Net Sales, Impact of Organic Net Sales, Organic (Organic August 1, 2021 As Reported Currency Net Sales As Reported Net Sales Net Sales) Meals & Beverages $ 851 $ (6) $ 845
Slide 50: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) Full Year % Change Two Year CAGR Net Sales, Impact of Organic Net Sales, Organic (Organic August 1, 2021 As Reported Currency Net Sales As Reported Net Sales Net Sales) Meals & Beverages $ 4,532 $ (14) $ 4,518
Slide 51: 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 Earnings EBIT Margin % (Loss) Diluted EPS* 2021 – As Reported $ 411 21.9% $ 288 $ 0.95 Add: Restructuring charges, implementation costs and other related costs 10 8
Slide 52: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions, except per share amounts) EBIT Full Year 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 0.13 D
Slide 53: 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 Earnings EBIT Margin % (Loss) Diluted EPS* 2020 – As Reported $ 167 7.9% $ 86 $ 0.28 Add: Restructuring charges, implementation costs and other related costs 19 14
Slide 54: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions, except per share amounts) EBIT Full Year EBIT Margin % Earnings Diluted EPS* 2020 – As Reported $ 1,107 12.7% $ 592 $ 1.95 Add: Restructuring charges, implementation costs and other related costs 69 52 0.17 Add
Slide 55: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) Fourth Quarter % Change Estimated Net Sales, Net Sales, Impact of Impact of Organic As Organic August 2, 2020 As Reported Currency 53rd Week Net Sales Reported Net Sales Meals & Beverages $ 1,018 $ 3 $ (73) $ 9
Slide 56: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) Full Year % Change Estimated Net Sales, Net Sales, Impact of Impact of Organic As Organic August 2, 2020 As Reported Currency 53rd Week Net Sales Reported Net Sales Meals & Beverages $ 4,646 $ 7 $ (73) $ 4,580
Slide 57: 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 $ 1,342 $ - $ 1,342 12% 12% Snacks 998 - 998 1% 4%
Slide 58: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) Second Quarter % Change Net Sales, Impact of Organic Net Sales, Organic January 31, 2021 As Reported Currency Net Sales As Reported Net Sales Meals & Beverages $ 1,300 $ (2) $ 1,298 6% 6% Snacks 979 1 980 4% 4%
Slide 59: 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 2, 2021 As Reported Currency Net Sales As Reported Net Sales Meals & Beverages $ 1,039 $ (9) $ 1,030 (14)% (15)% Snacks 945 (1) 944 (8)
Slide 60: Fiscal 2021 Organic Sales Base for Fiscal 2022 Guidance
Reconciliation of GAAP and Non-GAAP Financial Measures Fiscal 2021 Organic Sales Base for Fiscal 2022 Guidance Continuing Operations ($ millions) Full Year Organic Net Sales Net Sales, Impact of Base for FY2022 August 1, 2021 As Reported Divestiture* Guidance Meals & Beverages $ 4,532 $ (68) $ 4,464
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Campbell Soup Company — Q4 2021 Earnings Presentation on 6ix