The Campbell's Company · NASDAQ:CPB
The Campbell's — Campbell Soup Company — Q2 2022 Earnings Presentation
52 slides from The Campbell's's earnings presentation, Mar 9, 2021
Slide 1: Q2 Fiscal 2022 Earnings Presentation
Q2 Fiscal 2022 Earnings Presentation 1
Slide 2: Rebecca Gardy, VP Investor Relations
Rebecca Gardy Vice President Investor Relations I N T R O D UC T I O N 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 Key Q2 Messages and Highlights 6 Division Highlights 8 Looking Ahead 15 Q2 Financial Results & FY22 Outlook 18 Summary 32 Q&A 34 4
Slide 5: Mark Clouse, President & Chief Executive Officer
Mark Clouse President & Chief Executive Officer I N T R O D UC T I O N 5
Slide 6: Key Q2 FY22 Messages
Key Q2 FY22 Messages • Industry wide constraints were expected, made tougher by winter Omicron surge and on-going commodity and logistics inflation • Strong underlying brand health reflected by HSD consumption vs. 2YA • Conditions are improving with labor and service levels • Reaffirming full-year g
Slide 7: Key Q2 FY22 Highlights
CONTINUING OPERATIONS Key Q2 FY22 Highlights Challenging Q2 as expected, made worse by COVID variant. Strong underlying brand health. Q2 FY2022 NET SALES ORGANIC NET SALES* ADJ. GROSS MARGIN* ADJ. EBIT* $2.2B (2)% +3% 30.4% $318M (3)% vs. PY vs. PY vs. 2YA (340) bps vs. PY (17)% vs. PY $ CONSUM
Slide 8: Meals & Beverages: Key Highlights
CONTINUING OPERATIONS Meals & Beverages: Key Highlights Q2 FY2022 Growth vs. PY Growth vs. 2YA Organic Net Sales* (2)% +4% Consumption1 +1% +11% *See Non-GAAP reconciliation 1 Total IRI US MULO $ Consumption latest 13 weeks ending 1/30/2022 8
Slide 9: Meals & Beverages: Win in Soup 2.0
Meals & Beverages: Win in Soup 2.0 U.S. Soup Consumption1 U.S. Share1 Under Pressure +6% consumption and gained share driven by continued supply recovery 3% +10% +4% RTS consumption; U.S. Soup Held share in Consumption Chunky & Well Yes! Growth vs. 2YA 7% +1% consumption, share declined as expected
Slide 10: Meals & Beverages: Win in Soup 2.0
Meals & Beverages: Win in Soup 2.0 Q2 FY2022 CPB Q2 Soup Buyers (in millions) 77.5 Including 500,000+ 76.7 73.4 younger 73.9 buyers on Condensed FY19 FY20 FY21 FY22 CPB Q2 Soup Dollars per Buyer CPB Q2 Soup Volume per Buyer $12.92 8.9 8.6 8.6 $12.21 $12.45 8.7 $12.13 FY19 FY20 FY21 FY22 FY19 FY20 FY
Slide 11: Meals & Beverages: Powerful Portfolio of Brands
Meals & Beverages: Powerful Portfolio of Brands Q2 FY2022 +3pts Condensed Household Penetration2 vs. 2YA #1 Share +2pts for 33 Straight Months1 +1.6pts Repeat rate2 Chunky share1 vs. 2YA vs. 2YA 4th +21% Consecutive quarter Pacific Foods growing share1 on Condensed Soup Swanson Broth/Stock Consumpti
Slide 12: Snacks: Key Highlights
CONTINUING OPERATIONS Snacks: Key Highlights Q2 FY2022 Growth vs. PY Growth vs. 2YA Organic Net Sales* (3)% +3% Consumption1 +1% +8% *See Non-GAAP reconciliation 1 Total IRI US MULO $ Consumption latest 13 weeks ending 1/30/2022 12
Slide 13: Snacks Power Brands: +9% 2-year Consumption
Snacks Power Brands: +9% 2-year Consumption Q2 FY2022 +9% +0.4% +12% +6% +20% +26% (6)% +12% Total IRI US MULO $ Consumption latest 13 weeks ending 1/30/2022 13
Slide 14: Goldfish: Driving Relevance
Goldfish: Driving Relevance Family Size Mega Bites Star Wars™ The Mandalor ian™ 14
Slide 15: H2 Fiscal 2022 Recovery Expected
H2 Fiscal 2022 Recovery Expected Topline up low to mid single H2 FY22 digits and adj EBIT/ adj EPS • Labor/materials related up double digits1 challenges • Significant inflation FY22 • Improving labor and • Omicron surge supply • Difficult comps • Pricing fully in place • Lapping easing comps H1 FY2
Slide 16: Leadership Team Update
Leadership Team Update Bob Furbee Dan Poland EVP, Global Supply Chain Officer EVP, Chief Supply Chain Officer 16
Slide 17: Mick Beekhuizen, EVP & Chief Financial Officer
Mick Beekhuizen EVP & Chief Financial Officer C F O P E R S P EC T I V E 17
Slide 18: Q2 FY22 Key Messages
Q2 FY22 Key Messages • Delivered results generally in line with our expectations despite labor and supply constraints • Accelerating core inflation pressured margins despite benefits from net price realization, productivity improvements and cost savings. Wave 2 pricing will be fully reflected in Q3
Slide 19: Q2 FY22 Financial Results
CONTINUING OPERATIONS ($ MILLIONS, EXCEPT PER SHARE) Q2 FY22 Financial Results NET SALES & ORGANIC GROWTH RATE* +3% ADJUSTED EBIT * ADJUSTED EPS * vs. 2YA (12)% vs. 2YA (4)% +5% (2)% vs. 2YA +14% +5% (16)% (17)% $2,162 $2,279 $2,209 $0.82 $363 $382 $0.72 $0.69 $318 Q2 FY20 Q2 FY21 Q2 FY22 Q2 FY20 Q2
Slide 20: Q2 YTD FY22 Financial Results
CONTINUING OPERATIONS ($ MILLIONS, EXCEPT PER SHARE) Q2 YTD FY22 Financial Results NET SALES & +4% ORGANIC GROWTH RATE* ADJUSTED EBIT * ADJUSTED EPS * vs. 2YA +6% (6)% vs. 2YA +7% vs. 2YA +22% (3)% +12% (13)% (16)% $4,619 $4,445 $1.82 $4,345 $839 $750 $1.49 $1.58 $707 Q2 YTD FY20 Q2 YTD FY21 Q2 YTD
Slide 21: Net Sales Bridge
CONTINUING OPERATIONS ($ MILLIONS) Net Sales Bridge (3)% Drivers $2,279 (8) pts • Volume decline and lower +5 pts +1 pt (2)% (1) pt - $2,209 promotional spending reflect supply constraints • Price increases helped partially offset inflation, wave 2 pricing to be fully reflected in Q3 Q2 FY21 Net Vol
Slide 22: Adjusted Gross Margin Bridge
CONTINUING OPERATIONS Adjusted Gross Margin* Bridge Benefit from net price realization combined with productivity improvements and cost savings partly offset inflation/other; unfavorable volume/mix largely due to reduced operating leverage. (340) +480 bps (820) bps bps 33.8% (170) bps +30 bps 30.4%
Slide 23: Mitigating Accelerating Core Inflation
Mitigating Accelerating Core Inflation • Pricing and Trade Optimization CORE INFLATION RATE Low DD NET PRICING 9% 6% MSD 2% 2% 6% Q4 FY21 Q1 FY22 Q2 FY22FY22 EST 5% • Supply Chain Productivity 4% • Cost Savings Initiatives 3% • Manage Discretionary Spending • Over 95% coverage on ingredient and pack
Slide 24: Cost Savings & Value Capture
CONTINUING OPERATIONS Cost Savings & Value Capture $1B by end of FY25 • Total savings of $15 million realized in Q2 FY22 • FY22 cost savings will help mitigate $835M increasing inflation headwinds Attained Thru • Tracking to cumulative savings target of $1 billion Q2 FY22 by the end of fiscal year 2
Slide 25: Other Operating Items
CONTINUING OPERATIONS ($ MILLIONS) Other Operating Items MARKETING & SELLING EXPENSES ADJUSTED ADMINISTRATIVE EXPENSES* (15)% $232 $197 (5)% A&C (27)% $152 vs. PY $144 as spending was moderated to reflect supply pressure Q2 FY21 Q2 FY22 Q2 FY21 Q2 FY22 *See Non-GAAP reconciliation 25
Slide 26: Adjusted EBIT Bridge
CONTINUING OPERATIONS ($ MILLIONS) Adjusted EBIT* Bridge Year-over-year sales volume decline drove adjusted EBIT change, as lower marketing and selling expenses offset adjusted gross margin impact (17)% $382 $(70) $35 $6 $(6) $318 $(29) Q2 FY21 Sales Volume Adjusted Gross Marketing & Selling Adjuste
Slide 27: Adjusted EPS Bridge
CONTINUING OPERATIONS Adjusted EPS* Bridge $0.82 $(0.16) (16)% $0.01 $0.01 $0.69 $0.02 Q2 FY21 Adjusted EBIT Interest Adjusted Taxes Share Count Q2 FY22 *See Non-GAAP reconciliations for all adjusted financial measures presented. Numbers may not add due to rounding. 27
Slide 28: Segment Results
($ MILLIONS) Segment Results NET SALES & OPERATING EARNINGS ORGANIC GROWTH RATE* $1,318 $1,275 (2)% (30)% (19)% $262 $213 Q2 FY21 Q2 FY22 Q2 FY21 Q2 FY22 *See Non-GAAP reconciliation 28
Slide 29: Segment Results
($ MILLIONS) Segment Results NET SALES & OPERATING EARNINGS ORGANIC GROWTH RATE* (3)% $961 $934 (14)% $140 $121 Q2 FY21 Q2 FY22 Q2 FY21 Q2 FY22 *See Non-GAAP reconciliation 29
Slide 30: Cash Flow
TOTAL COMPANY ($ MILLIONS) Cash Flow Strong YTD FY22 Cash Flow generation with $293 million returned to shareholders YTD FY21 YTD FY22 Net Cash Flows from Operations $611 $766 of which changes in working capital $(178) $78 Net Cash Flows from Investing Activities $(120) $(125) of which capital expen
Slide 31: Maintaining FY22 Guidance
CONTINUING OPERATIONS Maintaining FY22 Guidance ($ MILLIONS, EXCEPT PER SHARE) Guidance assumptions Fiscal 2021 Fiscal 2022 • H2 earnings recovery driven by: Results Guidance1 • Continued strong demand for Campbell products • Steady supply recovery and improved service Net Sales $8,476 (2)% to 0% le
Slide 32: Summary
Summary • Net Sales reflect net pricing benefits and strong in-market demand, tempered by supply constraints • Q2 margin pressured by accelerating core inflation, wave 2 pricing to be fully reflected in Q3 • Margin progress and earnings recovery expected in H2 • FY22 transition year to Long-Term Gro
Slide 33: Investor Day Key Messages
Investor Day Key Messages 3 Key Clear Roadmaps for Both Segments Long-term Advantages Growth Algorithm1 A focused and unique portfolio ~2% Org. Net Sales Strengthened capabilities & talent 4-6% Adj. EBIT Differentiated path to value creation 6-8% Adj. EPS $1B Cost Savings by end of FY2025
Slide 34: Q&A Forum
Q&A Forum Mark Clouse Mick Beekhuizen President & Chief Executive Officer EVP & Chief Financial Officer 34
Slide 35: Appendix
WY Connecting people through food they love. Appendix 35
Slide 36: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) Second Quarter % Change Net Sales, Impact of Organic Net Sales, Organic January 30, 2022 As Reported Currency Net Sales As Reported Net Sales Meals & Beverages $ 1,275 $ (2) $ 1,273 (3)% (2)% Snacks 934 - 934 (
Slide 37: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) First Half % Change Net Sales, Impact of Organic Net Sales, Organic January 30, 2022 As Reported Currency Net Sales As Reported Net Sales Meals & Beverages $ 2,541 $ (8) $ 2,533 (5)% (4)% Snacks 1,904 - 1,904 (
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) Second Quarter EBIT EBIT Margin % Earnings Diluted EPS* 2022 – As Reported $ 323 14.6% $ 212 $ 0.70 Add: Restructuring charges, implementation costs and other related costs 5 4 0.01 De
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) First Half EBIT EBIT Margin % Earnings Diluted EPS 2022 – As Reported $ 699 15.7% $ 473 $ 1.56 Add: Restructuring charges, implementation costs and other related costs 9 7 0.02 Deduct:
Slide 40: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) Second Quarter Gross Margin GM % EBT Tax Tax Rate 2022 – As Reported $ 669 30.3% $ 277 $ 65 23.5% Add: Restructuring charges, implementation costs and other related costs 2 5 1 Deduct: Pension and postretiremen
Slide 41: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) Adjusted EBIT Impacts from Sales Volume and Adjusted Gross Margin Rate Second Quarter 2022 – Change in Net Sales Attributable to Volume* $ (207) Multiplied by: 2021 – Adjusted Gross Margin % 33.8% Adjusted EBIT
Slide 42: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) Second Quarter Administrative R&D Expenses Expenses Total 2022 – As Reported $ 147 $ 21 $ 168 Deduct: Restructuring charges, implementation costs and other related costs (3) - (3) 2022 – Adjusted $ 144 $ 21 $ 1
Slide 43: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) Second Quarter Other Expenses / (Income) 2022 – As Reported $ (19) Add: Pension and postretirement adjustments 10 2022 – Adjusted $ (9) % of Net Sales - Adjusted (0.4)% 2021 – As Reported $ (45) Add: Pension an
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) Second Quarter – Adjusted Diluted EPS Impact from Adjusted EBIT EBIT 2022 – Adjusted $ 318 2021 – Adjusted 382 $ Change $ (64) Add: 2021 Adjusted tax rate impact on EBIT 15 Impact to N
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 Second Quarter 2022 – Adjusted EBT $ 272 Change in Adjusted Tax Rate (0.6)% Adjusted EBT multiplied by the Change in Adjust
Slide 46: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions, except per share amounts) Full Year EBIT Earnings Diluted EPS* 2021 – As Reported $ 1,545 $ 1,008 $ 3.30 Add: Restructuring charges, implementation costs and other related costs 53 40 0.13 Deduct: Pension and p
Slide 47: 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 – Adjusted $ 382 16.8% $ 249 $ 0.82 2020 – As Reported $ 350 16.2% $ 171 $ 0.56 Add
Slide 48: 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 30, 2022 As Reported Currency Net Sales As Reported Net Sales Meals & Beverages $ 1,275 $ (4) $ 1,271 2% 4% Snacks 934 1 935 3% 3%
Slide 49: 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 $ 1,318 $ (2) $ 1,316 5% 5% Snacks 961 1 962 6% 6%
Slide 50: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions, except per share amounts) First Half EBIT EBIT Margin % Earnings Diluted EPS 2022 – Adjusted $ 707 15.9% $ 479 $ 1.58 2021 – Adjusted $ 839 18.2% $ 555 $ 1.82 2020 – As Reported $ 667 15.4% $ 340 $ 1.12 Add: Re
Slide 51: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) First Half % Change Net Sales, Impact of Organic Net Sales, Organic January 30, 2022 As Reported Currency Net Sales As Reported Net Sales Meals & Beverages $ 2,541 $ (10) $ 2,531 3% 4% Snacks 1,904 1 1,905 2% 3
Slide 52: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) First Half % Change Net Sales, Impact of Organic Net Sales, Organic January 31, 2021 As Reported Currency Net Sales As Reported Net Sales Meals & Beverages $ 2,681 $ (2) $ 2,679 8% 8% Snacks 1,938 1 1,939 4% 5%
Campbell Soup Company — Q2 2022 Earnings Presentation on 6ix