The Campbell's Company · NASDAQ:CPB
The Campbell's — Campbell Soup Company — Q2 2023 Earnings Presentation
42 slides from The Campbell's's earnings presentation, Mar 8, 2023
Slide 1: Q2 Fiscal 2023 Earnings Presentation
Q2 Fiscal 2023 Earnings Presentation 1
Slide 2: Introduction: Rebecca Gardy, Investor Relations
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 risks related to the availability of, and cost inflation in, supply chain inputs, including labor, raw materials, commodities, p
Slide 4: Agenda
Agenda Key Messages and Q2 FY23 Financial Highlights Division Highlights Q2 FY23 Financial Results FY23 Outlook Summary Q&A 4
Slide 5: CEO Perspective: Mark Clouse
Mark Clouse President & Chief Executive Officer CEO PERSPECTIVE 5
Slide 6: Key Messages
Key Messages • We had another strong quarter with double-digit growth across all key metrics: Net Sales, Adjusted EBIT* and Adjusted EPS* compared to prior year • We are balancing growth, share, margins and volume while navigating macro volatility using a variety of levers • Elasticities remain well
Slide 7: Key Financial Highlights
Key Financial Highlights Q2 FY23 $ Consumption1 Net Sales Adj. EBIT* Adj. EPS* $2.5B $362M $0.80 +10% vs. PY +13% +14% +16% +20% vs. PY vs. PY vs. PY vs. 3YA *See Non-GAAP reconciliation 1 Total IRI US MULO $ Consumption latest 13 weeks ending 1/29/2023 7
Slide 8: Meals & Beverages: Key Highlights
Meals & Beverages: Key Highlights Q2 FY23 GROWTH VS. PY Organic Net Sales* +11% +17% Dollar Consumption1 +6% vs. 3YA *See Non-GAAP reconciliation 1 Total IRI US MULO $ Consumption latest 13 weeks ending 1/29/2023 8
Slide 9: Win in Soup 2.0
Win in Soup 2.0 GREAT RECIPES under $4 per serving!2 Condensed Icons +1.0 pt. +3.5 pts. Q2 $ share Q2 $ share vs. PY1 vs. 3YA1 1 Total IRI US MULO latest 13 weeks ending 1/29/2023 2 Based on average cost of ingredients used in recipe, pricing sourced from a large retail store, pulled 3/4/2023 9
Slide 10: Win in Soup 2.0
Win in Soup 2.0 U.S. Ready-to-Serve Soup $ Consumption +8%; +22% vs. 3YA1 Ready-to-Serve Soup +0.2 pts. 6th Consecutive quarter +0.8 pts. +0.7 pts. Q2 $ share holding or gaining volume share2 Q2 $ share Q2 unit share vs. PY1 vs. PY1 vs. PY1 +8% +35% Q2 $ consumption Q2 $ consumption +0.6 pts. +36% v
Slide 11: Building a $1B Sauce Business
Building a $1B Sauce Business +12% Q2 $ consumption vs. PY1 +0.3 pts. Q2 $ share vs. +8% (0.8) pts. +0.3 pts. PY1 Q2 $ consumption Alfredo $ share $ share vs. PY1 vs. PY1 vs. PY1 4th consecutive #1 in Italian +2.9 pts. quarter of $ share Category1 Q2 repeat rate vs. growth3 3YA2 1 Total IRI US MULO
Slide 12: Snacks: Key Highlights
Snacks: Key Highlights Q2 FY23 GROWTH VS. PY Organic Net Sales* +15% +26% Dollar Consumption1 +17% vs. 3YA *See Non-GAAP reconciliation 1 Total IRI US MULO $ Consumption latest 13 weeks ending 1/29/2023 12
Slide 13: Power Brands $ Consumption
Power Brands $ Consumption1: +20% vs. PY, +30% vs. 3YA Q2 FY23 +21% +32% +24% +24% +22% +37% +19% +26% VS. PY VS. 3YA VS. PY VS. 3YA VS. PY VS. 3YA VS. PY VS. 3YA +16% +39% +11% +41% +27% +20% +19% +33% VS. PY VS. 3YA VS. PY VS. 3YA VS. PY VS. 3YA VS. PY VS. 3YA 1 Total IRI US MULO $ Consumption lat
Slide 14: #1 Share Growth among Branded Cookie/Cracker and Salty Players
#1 Share Growth among Branded Cookie/Cracker and Salty Players Cookies / Crackers1 Salty Snacks2 Q2 $ share growth vs. PY Q2 $ share growth vs. PY Competitor 1 Competitor A Competitor 2 Competitor 3 Competitor B Competitor 4 Note: Campbell's includes total Campbell snacks in each respective category
Slide 15: The Star of the Snacks Portfolio
The Star of the Snacks Portfolio Expected Annual Net Sales $900M + +21% vs. PY 1 Total IRI US MULO $ Consumption latest 13 weeks ending 1/29/2023 15
Slide 16: Fast Start: First to Market with Kettle-Cooked, Air Finished Snack
First to Market with Kettle-Cooked, Air Finished Snack 1st to market Air Fried chip FAST 30% START less fat than original varieties Note: Slide revised as of 3/30/2023 16
Slide 17: Looking Forward
Looking Forward • Continued strong performance reflecting brand momentum and strengthened supply chain execution • Unifying headquarters will drive cost savings and benefit overall future performance • Welcome Carrie Anderson, CFO 17
Slide 18: Q2 Results: Mick Beekhuizen
Mick Beekhuizen EVP & President, Meals & Beverages Q 2 F Y 2 3 R E S U LT S 18
Slide 19: Q2 FY23 Key Financial Results
Q2 FY23 Key Financial Results • Strong double-digit growth across all Financial Summary three key metrics: Net Sales, Adjusted $ Millions, Except Per Share EBIT* and Adjusted EPS* in the second quarter +13% +14% +16% • Top-line lifted by favorable inflation- NET SALES & vs. PY vs. PY vs. PY driven n
Slide 20: Q2 FY23 Net Sales Bridge
$ Millions Q2 FY23 Net Sales Bridge Net Sales growth reflects favorable inflation-driven net price realization partially offset by volume / mix declines 14 pts +13% - +12% $2,485 (2) pts $2,209 Q2 FY22 Net Sales Volume / Mix Net Price Realization Q2 FY23 Organic Net Sales* Currency Q2 FY23 Net Sales
Slide 21: Q2 FY23 Adjusted Gross Profit Margin Bridge
Q2 FY23 Adjusted Gross Profit Margin* Bridge Favorable net price realization and productivity improvements were partially offset by continued cost inflation and higher other supply chain costs as well as unfavorable volume / mix +1,020 bps (1,140) bps +30 bps vs. PY 30.4% (130) bps +280 bps 30.7% Q2
Slide 22: Mitigating Continued Core Inflation
Mitigating Continued Core Inflation Inflation Mitigating Actions: Core Inflation Rate: • Net Pricing 16% 14% 18% 11% 11% 15% 15% 6% 14% Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Q2 FY23 9% • Supply Chain Productivity • Cost Savings Initiatives • Manage Discretionary Spending Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Q2
Slide 23: Other Operating Items
$ Millions Other Operating Items Marketing & Selling Expenses Adjusted Administrative Expenses* +10% vs. PY $217 +9% $197 vs. PY A&C +17% vs. $157 moderated $144 levels in PY Q2 FY22 Q2 FY23 Q2 FY22 Q2 FY23 *See Non-GAAP reconciliation 23
Slide 24: Q2 FY23 Adjusted EBIT Bridge
$ Millions Q2 FY23 Adjusted EBIT* Bridge Growth driven by higher adjusted gross profit, partially offset by higher marketing and selling expenses, higher adjusted other expenses and higher adjusted administrative expenses +14% $92 $(20) vs. PY $(13) $(15) $362 $318 Q2 FY22 Adjusted Gross Profit Mark
Slide 25: Q2 FY23 Adjusted EPS Bridge
Q2 FY23 Adjusted EPS* Bridge Double-digit growth driven by strong operational performance, partially offset by a higher adjusted effective tax rate +16% vs. PY $0.11 - $(0.01) - $0.80 $0.69 Q2 FY22 Adjusted EBIT* Interest Adjusted Taxes* Share Count Q2 FY23 *See Non-GAAP reconciliations for all adju
Slide 26: Q2 FY23 Meals & Beverages Segment Results
$ Millions Q2 FY23 Meals & Beverages Segment Results NET SALES & OPERATING EARNINGS ORGANIC GROWTH RATE* +11% vs. PY $1,408 $1,275 +17% vs. PY $249 $213 Q2 FY22 Q2 FY23 Q2 FY22 Q2 FY23 *See Non-GAAP reconciliation 26
Slide 27: Q2 FY23 Snacks Segment Results
$ Millions Q2 FY23 Snacks Segment Results NET SALES & OPERATING EARNINGS ORGANIC GROWTH RATE* +15% vs. PY $1,077 $934 +24% vs. PY $121 $150 Q2 FY22 Q2 FY23 Q2 FY22 Q2 FY23 *See Non-GAAP reconciliation 27
Slide 28: Cash Flow
Cash Flow Strong YTD Cash Flow generation with increased investment and over $290 million returned to shareholders Total Company $ Millions YTD FY22 YTD FY23 Net Cash Flows from Operations $766 $732 of which changes in working capital $78 $(43) Net Cash Flows from Investing Activities $(125) $(158)
Slide 29: Fiscal 2023 Outlook: Carrie Anderson
Carrie Anderson EVP & Chief Financial Officer Fiscal 2023 Outlook 29
Slide 30: Raising FY23 Guidance
Raising FY23 Guidance $ Millions, FY22 Previous FY23 Updated FY23 FY23 Assumptions Except Per Share Results Guidance1 Guidance1 • Core inflation in the low-teens range • Productivity improvements of ~3% to 3.5% Net Sales $8,562 +7% to +9% +8.5% to +10% • ~$40-$45 million of cost savings Organic • In
Slide 31: Summary
Summary • Strong Q2 results with double-digit sales and adjusted EPS* growth • Favorable net price realization and continued strength demonstrates our powerful connection to consumers, especially in current economic environment • Potent combination of a leading brand portfolio, focused execution and
Slide 32: Q&A Forum
Q&A Forum Mark Clouse Carrie Anderson President & Chief Executive Officer EVP & Chief Financial Officer 32
Slide 33: Appendix
BUILDING MOMENTUM
Slide 34: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) Second Quarter % Change Net Sales, Impact of Organic Net Sales, Organic January 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 35: 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 – As Reported $ 350 14.1% $ 232 $ 0.77 Add: Restructuring charges, implementation costs and other related costs 14 10 0.03 Deduct: Pension actuar
Slide 36: 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 2023 – As Reported $ 759 30.5% $ 305 $ 73 23.9% Add: Restructuring charges, implementation costs and other related costs - 14 4 Deduct: Pension actuarial gains - (6) (2) Add: Commodi
Slide 37: 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 2023 – As Reported $ 162 $ 21 $ 183 Deduct: Restructuring charges, implementation costs and other related costs (5) - (5) 2023 – Adjusted $ 157 $ 21 $ 178 % of Net Sales – Ad
Slide 38: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) Second Quarter Other Expenses / (Income) 2023 – As Reported $ 0 Add: Pension actuarial gains 6 2023 – Adjusted $ 6 % of Net Sales – Adjusted 0.2% 2022 – As Reported $ (19) Add: Pension actuarial gains 10 2022 – Adjusted $ (9) % of N
Slide 39: 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 2023 – Adjusted $ 362 2022 – Adjusted 318 $ Change $ 44 Deduct: 2022 Adjusted tax rate impact on EBIT (10) Impact to Net Earnings $ 34 Se
Slide 40: 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 2023 – Adjusted EBT $ 317 Decrease (Increase) in Adjusted Tax Rate (0.5)% Adjusted EBT multiplied by the Change in Adjusted Tax Ra
Slide 41: 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* 2022 – As Reported $ 1,163 $ 757 $ 2.51 Add: Restructuring charges, implementation costs and other related costs 31 24 0.08 Add: Pension and postretirement actuarial los
Slide 42: 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* 2021 – As Reported $ 401 17.6% $ 245 $ 0.80 Add: Restructuring charges, implementation costs and other related costs 22 16 0.05 Deduct: Pension actuar
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