The Campbell's Company · NASDAQ:CPB
The Campbell's — Campbell Soup Company — Q3 2020 Earnings Presentation
48 slides from The Campbell's's earnings presentation, Jun 3, 2020
Slide 1: Q3 2020 Earnings Presentation
Q3 2020 Earnings Presentation 1
Slide 2: Q3 2020 Earnings Presentation
Q3 2020 Earnings Presentation 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: our ability to execute on and realize the expected benefits from our strategy, including growing sales in snacks and maintaining mar
Slide 4: Agenda
Agenda CEO Perspective Q3 Fiscal 2020 Results Fiscal 2020 Guidance 4
Slide 5: CEO Perspective
CEO Perspective Mark Clouse President and Chief Executive Officer 5
Slide 6: To our employees, partners and their families
To our employees, partners and their families, al For answering the call. For going above and beyond. For making sure there's food on the shelves. You have America’s back. ‘And we have yours. #CampbellProud #TogetherWeCan
Slide 7: Simplified Our Mission in COVID-19 Environment
Simplified Our Mission in COVID-19 Environment 1 Take care of our people 2 Produce and distribute our products as safely and quickly as possible for our customers, consumers and communities 3 Anticipate and plan for the future 7
Slide 8: Campbell's COVID-19 Response
Campbell’s COVID-19 Response • #1 priority is safety and well-being • Introduced temporary compensation to > 11,000 front-line Our Team workers in recognition of their commitment • Enhanced protocols, including health screenings/temp checks • Plants running 24/7 to feed our neighbors Customers & • W
Slide 9: Q3 Results: Growth Across All Key Metrics
Q3 Results: Growth Across All Key Metrics Organic Sales* Adj. Gross Margin* Adj. EPS* +17% +29% +100 +31% +57% bps In-Market Consumption** Adj. EBIT* *See Non-GAAP reconciliation **IRI US MULO $ Sales latest 13 weeks ended 4/26/20 9
Slide 10: Attracting New Households to Our Brands
Attracting New Households to Our Brands ▪ Millions of new households in the quarter* ▪ Younger households representing significant incremental growth** ▪ Increasing marketing investments to retain these new buyers – Agility in creating new advertising – Celebrates our role in bringing people togethe
Slide 11: Fiscal 2020 Guidance for Continuing Operations
Fiscal 2020 Guidance for Continuing Operations ($ millions, except per share) Previous Updated 2019 2020 2020 Results Guidance Guidance Net Sales $8,107 -1% to +1% +5.5% to +6.5% Organic Net Sales** -1% to +1% +5.5% to +6.5% Adjusted EBIT $1,266* +2% to +4%*** +12% to +14%*** +11% to +13%*** +25% to
Slide 12: Consumer & Retail Trends Shaping the Landscape
Consumer & Retail Trends Shaping the Landscape 1. Quick scratch cooking 2. Accelerated online buying including home delivery and click & collect 3. Evolution of retail shelf 4. Continued focus on value Campbell's portfolio well-positioned to respond 12
Slide 13: Meals & Beverages: Fabric-of-the-Nation Brands
Meals & Beverages: Fabric-of-the-Nation Brands Organic Sales* Consumption Growth** +21% +35% +39% +26% Operating Earnings Marketing Expense *See Non-GAAP reconciliation ** IRI U.S. MULO $ consumption latest 13 weeks ended 4/26/20 13
Slide 14: Accelerating Our Soup Strategy
Accelerating Our Soup Strategy ▪ Prior foundational work has been critical – Quality improvements on icon varieties – Increased household penetration* and high repeat rates** ▪ Sales +35% behind condensed, ready-to-serve and broth including Pacific ▪ Share pressure – Worked to make food as quickly a
Slide 15: Gaining New Soup Households
Gaining New Soup Households ▪ Soup household penetration up nearly 10 percentage points* ▪ Largest = Millennial cohort** ▪ A&C +57% ▪ Marketing provided consumers with inspiration for quick-scratch cooking ▪ Improved customer relationships *IRI National Consumer Panel: Total US All Outlets, 13 weeks
Slide 16: Meals & Beverages
Meals & Beverages ▪ Prego maintained #1 share position in Italian sauce category* ▪ Prego consumption up more than 50%** ▪ Consumers turned to familiar favorites Pace, V8 and SpaghettiOs ▪ Canada performed well, led by Pacific *IRI Household Panel as of 4/19/20 **IRI US MULO, $ consumption latest 13
Slide 17: Snacks: Strong Performance Continued
Snacks: Strong Performance Continued Organic Sales* Consumption Growth** +12% +19% +19% +11% Operating Earnings Marketing Expense *See Non-GAAP reconciliation **IRI U.S. MULO $ consumption latest 13 weeks ended 4/26/20 17
Slide 18: Gaining New Households Fueled by Power Brands
Gaining New Households Fueled by Power Brands ▪ Snacking brands up 5.4 percentage points of household penetration* ▪ Increases across all 9 power brands** ▪ Increasing marketing for all brands in Q4 ▪ 7 of 9 power brands grew or held share** *IRI National Consumer Panel: Total US All Outlets; 13 wee
Slide 19: Snacks Innovation
Snacks Innovation Campbell’s First F’20 Product Launches Virtual Product Launch Early positive signs of repeat Launched in time for Memorial Day as we build awareness 19
Slide 20: Snacks: Integration Remains on Plan
Snacks: Integration Remains on Plan ▪ Consistent progress despite environment ▪ Completed actions to improve effectiveness of organization – More streamlined and effective structure ▪ Expect savings from procurement and organizational effectiveness efforts to continue in Q4 20
Slide 21: CFO Perspective
CFO Perspective Mick Beekhuizen EVP & Chief Financial Officer 21
Slide 22: Third-Quarter Fiscal 2020 Summary
Third-Quarter Fiscal 2020 Summary ▪ Organic net sales year-over-year growth of 17% driven by strong demand across our portfolio of iconic brands ▪ Adjusted gross margin expansion of 100 basis points as positive mix impact, increased operating leverage and benefits of productivity improvements and co
Slide 23: Financial Summary
Financial Summary Continuing Operations ($ millions, except per share data) Q3 Change vs. PY YTD Change vs. PY FY20 $ % FY20 $ % Net Sales $2,238 $285 15% $6,583 $256 4% Organic Net Sales* $320 17% $325 5% Adjusted EBIT* $386 $92 31% $1,142 $128 13% Adjusted EPS* $0.83 $0.30 57% $2.34 $0.45 24% *See
Slide 24: Components of Net Sales Change
Components of Net Sales Change Continuing Operations +17 pts - - +17% (2) pts - +15% Q3 FY19 Vol/Mix Price & Sales Promotional Q3 FY20 Divestiture Currency Q3 FY20 Net Sales Allowances Spending Organic Net Net Sales Sales* * See Non-GAAP reconciliation 24
Slide 25: Adjusted Gross Margin Performance
Adjusted Gross Margin Performance* Continuing Operations +110 bps (10) bps (300) bps +120 bps +130 bps +50 bps 34.7% 33.7% Q3 FY19 Mix Operating Net Pricing Inflation/ Productivity Cost Savings Q3 FY20 Leverage** Other*** Improvements Program * See Non-GAAP reconciliation ** Reflects best estimate o
Slide 26: Other Operating Items
Other Operating Items Continuing Operations ($ millions) A&C +19% Adjusted Marketing Adjusted & Selling Expenses* Administrative Expenses* +12% $239 $213 +4% $138 $144 Q3FY19 FY19 Q3FY20 FY20 Q3FY19 FY19 Q3FY20 FY20 * See Non-GAAP reconciliation 26
Slide 27: Cost Savings
Cost Savings Continuing Operations ($ millions) $850M ▪ Total savings of $30 million realized in Q3; $120 million through the first nine months $680M ▪ Enterprise cost savings and Snyder’s-Lance synergies program on track with $680 million achieved to date ▪ Outlook of approximately $150 million for
Slide 28: Adjusted EBIT Performance
Adjusted EBIT Performance* Continuing Operations ($ millions) +31% $22 ($26) $96 $1 $386 $294 Q3 FY19 Sales Volume Adjusted* Adjusted* All Other* Q3 FY20 Growth Gross Margin Marketing & Selling Improvement Expenses Note: Numbers do not add across due to rounding * See Non-GAAP reconciliations. All o
Slide 29: Adjusted EPS Performance
Adjusted EPS Performance* Continuing Operations +57% $0.09 ($0.02) - $0.83 $0.24 $0.53 Q3 FY19 EBIT Interest Taxes Shares Q3 FY20 * See Non-GAAP reconciliation 29
Slide 30: Segment Results
Segment Results ($ millions) Net Sales & Organic Growth Rate* Operating Earnings +21% $1,210 $1,006 +35% $275 $204 Q3 FY19 Q3 FY20 Q3 FY19 Q3 FY20 * See Non-GAAP reconciliation 30
Slide 31: Segment Results
Segment Results ($ millions) Net Sales & Organic Growth Rate* Operating Earnings +12% $1,028 $947 ()% +19% $129 $154 Q3 FY19 Q3 FY20 Q3 FY19 Q3 FY20 * See Non-GAAP reconciliation 31
Slide 32: Cash Flow
Cash Flow Total Company ($ millions) YTD FY19 YTD FY20 Net Cash Flows from Operations $1,148 $1,125 Of which changes in working capital (net of acquisition and divestitures) $134 $85 Net Cash Flows from Investing Activities ($222) $2,318 Of which capital expenditures ($274) ($220) Of which sale of b
Slide 33: Continued Deleveraging
Continued Deleveraging Continuing Operations ($ billions) Key Highlights Net Debt* ▪ Completed International $8.4 divestiture in Q2; net proceeds used to reduce debt ▪ Continued focus on cash $5.5 flow generation and debt reduction ▪ Further strengthened liquidity position in Q3 with Q4 FY19 Q3 FY20
Slide 34: Fiscal 2020 Guidance for Continuing Operations
Fiscal 2020 Guidance for Continuing Operations ($ millions, except per share) Previous Updated 2019 2020 2020 Results Guidance Guidance Net Sales $8,107 -1% to +1% +5.5% to +6.5% Organic Net Sales** -1% to +1% +5.5% to +6.5% Adjusted EBIT $1,266* +2% to +4%*** +12% to +14%*** +11% to +13%*** +25% to
Slide 35: Summary: Campbell Well-Positioned for Future
Summary: Campbell Well-Positioned for Future Strategic Pillars Remain Our True North CREATE A PROFITABLE GROWTH MODEL 1 STRONG EXECUTION, ENHANCED SAFETY FUEL INVESTMENTS AND MARGINS WITH PREVIOUS ACTIONS FOCUSED TARGETED COST SAVINGS 2 PORTFOLIO & ORGANIZATION BUILD A WINNING CURRENT ENVIRONMENT AD
Slide 36: Appendix
Appendix Real feed, Keal resulté, .,
Slide 37: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) Third Quarter % Change Net Sales, Impact of Organic Net Sales, Organic April 26, 2020 As Reported Currency Net Sales As Reported Net Sales Meals & Beverages $ 1,210 $ 3 $ 1,213 20% 21% Snacks 1,028 (1) 1,027 9%
Slide 38: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) Nine Months % Change Net Sales, Impact of Organic Net Sales, Organic April 26, 2020 As Reported Currency Net Sales As Reported Net Sales Meals & Beverages $ 3,628 $ 4 $ 3,632 5% 5% Snacks 2,955 - 2,955 3% 5% To
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) Third Quarter EBIT Diluted EBIT Margin % Earnings EPS* 2020 – As Reported $ 273 12.2% $ 166 $ 0.55 Add: Restructuring charges, implementation costs and other related costs 14 11 0.04 A
Slide 40: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Continuing Operations Financial Measures ($ millions, except per share amounts) Nine Months Diluted EBIT Earnings EPS* 2020 – As Reported $ 940 $ 506 $ 1.66 Add: Restructuring charges, implementation costs and other related costs 50 38 0.13 Add: Pension settlement
Slide 41: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) Third Quarter Gross Margin GM % Tax Tax Rate 2020 – As Reported $ 772 34.5% $ 52 23.9% Add: Restructuring charges, implementation costs and other related costs 4 3 Add: Investment losses - 10 Add: Pension settl
Slide 42: 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 Expansion Third Quarter 2020 – Reported Net Sales $ 2,238 2020 – Adjusted Gross Margin % 34.7% 2019 – Adjusted Gross Margin % 33.7% Change in Adjusted Gross Margi
Slide 43: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) Third Quarter Marketing & Selling Expenses 2020 – As Reported $ 239 2019 – As Reported $ 215 Deduct: Restructuring charges, implementation costs and other related costs (2) 2019 – Adjusted $ 213 % Change 12% 43
Slide 44: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) Third Quarter Research & Administrative Development Other Expenses / Expenses Expenses (Income) Total All Other 2020 – As Reported $ 154 $ 25 $ 81 $ 260 Deduct: Pension settlement - - (54) (54) Deduct: Investme
Slide 45: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Continuing Operations ($ millions) Net Debt July 28, 2019 April 26, 2020 Short-Term Borrowings $ 1,371 $ 1,504 Long-Term Debt 7,103 5,191 Total Debt $ 8,474 $ 6,695 Less: Cash and Cash Equivalents (31) (1,242) Net Debt $ 8,443 $ 5,453 45
Slide 46: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures (a) (b) (c) = (a)-(b)+(c) Twelve Months Nine Months Nine Months Trailing Twelve Ended Ended Ended Months Ended (TTM) ($ millions) July 28, 2019 April 28, 2019 April 26, 2020 April 26, 2020 Earnings before interest and taxes, as reported $ 979 $
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) Full Year Gross Net Diluted Margin GM % EBIT Earnings EPS 2019 – As Reported $ 2,693 33.2% $ 979 $ 474 $ 1.57 Add: Restructuring charges, implementation costs and other related costs 1
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