The Campbell's Company · NASDAQ:CPB
The Campbell's — Campbell Soup Company — Q3 2024 Earnings Presentation
58 slides from The Campbell's's earnings presentation, Jun 5, 2024
Slide 1: Q3 Fiscal 2024 Earnings Presentation
Q3 Fiscal 2024 Earnings Presentation
Slide 2: Introduction
Rebecca Gardy SVP & Chief Investor Relations Officer Introduction 2
Slide 3: Forward-looking statements
Forward-looking statements Safe Harbor Regarding Forward-Looking Statements This presentation contains "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current expectations regarding our future resul
Slide 4: Agenda
Agenda 1. Q3 FY24 Key Messages and Financial Highlights 2. Division Highlights 3. Q3 FY24 Financial Results 4. FY24 Outlook 5. Summary 6. Q&A 4
Slide 5: CEO Perspective
Mark Clouse President & Chief Executive Officer CEO Perspective 5
Slide 6: Q3 FY24 Key Messages
Q3 FY24 Key Messages • Sequential net sales growth and volume / mix improvement with double-digit growth in both adjusted EBIT and adjusted EPS • Sovos Brands performance ahead of expectations leading to neutral impact on adjusted EPS in the quarter • In market performance stable for Meals & Beverag
Slide 7: Q3 FY24 Key Financial Highlights
Q3 FY24 Key Financial Highlights Net Sales Adj. EBIT* Adj. EPS* $ Consumption1 vs. PY $2.4B $354M $0.75 (2)% +6% +6% +13% +10% vs. vs. PY vs. PY vs. PY 2YA Flat vs. PY *See Non-GAAP reconciliation. Organic Net Sales excludes the impact of currency, acquisitions and divestitures. 1 Total Circana US M
Slide 8: Campbell's momentum accelerated with the addition of Sovos Brands
Campbell's momentum accelerated with the addition of Sovos Brands Q3 FY24 Q3 FY24 Pro Forma Combined1 Flat +200 +2% Net Sales vs. PY bps vs. PY Volume/Mix Flat +200 +2% vs. PY bps vs. PY *See Non-GAAP reconciliation 1 Pro forma combined basis presented to reflect results as if the Sovos Brands acqui
Slide 9: Positive shifts in consumer trends expected to drive category recovery
The positive shifts in consumer trends are expected to drive continued category recovery Improving Consumer Top 50 Edible Stabilizing food volume as Confidence1 Categories2 prices normalize3 120.0 100.0 % of Categories with Flat or 80.0 Growing HHP* Q3 FY23 Q3 FY24 60.0 Q3 FY23 Q3 FY24 Volume (oz) (
Slide 10: Meals & Beverages
Meals & Beverages Topline stabilization with sequential volume and mix improvement vs. Q2 FY24; significant acceleration with Sovos Brands Pro Forma Meals & Beverages Combined** Q3 FY24 Q3 FY24 Q3 FY24 vs. PY 2yr CAGR vs. PY** Organic Net Sales* Flat (1)% +5% Dollar Consumption1 (2)% Flat +3% *See N
Slide 11: Soup improving and returning to share growth, Rao's adding growth driver
Soup improving and returning to share growth, Rao's adding another growth driver Total CPB Wet Soup* 0.3 pts Q3 $ share1 vs. PY Total Broth/Stock Total Condensed Rao’s RTS +2.6 pts +0.1 pts +0.9 pts Q3 $ share1 vs. PY Q3 $ share1 vs. PY Q3 $ share1 vs. PY Total Condensed Cooking +0.6 pts 1 Total Cir
Slide 12: Created a $1B Sauces Business
Created a $1B Sauces Business Mainstream Italian Sauce3 #1 Unit Share Campbell’s Portfolio1,2 within the #1 $ Share Total Italian Sauce Category +1.7 pts Unit Share vs PY #1 #1 +0.1 pts $ Share vs. PY Unit Share $ Share Ultra-Distinctive Italian Sauce3 #1 Unit Share +3.1 pts +3.1 pts Unit Share $ Sh
Slide 13: Rao's Sauce momentum continues, significant runway still ahead
Rao’s Sauce momentum continues, significant runway still ahead Significant additional Strongest growth with Leading velocity for White space distribution HHP opportunity younger consumers2 pasta sauce category opportunity <16% HHP +54% >78% ~12pt Difference in top 5 vs ~20% HHP for Gen Z and Millenn
Slide 14: Campbell's Frozen continues to grow with Rao's momentum
Campbell’s Frozen continues to grow with Rao’s momentum Campbell’s Total Frozen Meal business1 Rao’s Frozen Pizza 2nd Consecutive Q3 FY24 8.1% continues to grow Quarter of $ and build Velocity2 Growth Q2 FY24 1.0% distribution behind launch Rao’s Frozen Meals sees growth in $ velocities2 9x 20.1% $
Slide 15: Total noosa business back to growth with the core 8oz business
Total noosa business back to growth with the core 8oz business consistently growing 14 quarters of consecutive YoY $ consumption growth1 12.0% 10.3% 9.3% 7.9% 7.9% 7.0% 6.1% 4.9% 4.8% 4.0% 1.7% 2.0% 2.0% 0.1% +4.3% noosa’s 8oz represents 62% Q2 Q3 FY21 FY24 Q3 FY24 $ noosa 8oz consumption1 vs. of th
Slide 16: Snacks
Snacks Strong performance on a 2-year basis for Snacking portfolio with 8 Power Brands remaining resilient Total Snacks Power Brands Q3 FY24 Q3 FY24 Q3 FY24 Q3 FY24 vs. PY 2yr CAGR vs. PY** 2yr CAGR** Organic Net Sales* (1)% +6% +2% +9% Dollar Consumption1 (2)% +6% Flat +9% *See Non-GAAP reconciliat
Slide 17: Three key factors for context on Snack trends
Although Snack trends have slowed; three key factors are important for context Proof Points Snacks Q3 FY24 Category $ Snacks categories have been the most Consumption1 3yr CAGR 1 resilient across food throughout inflation, even with most recent slowdown +8% Snacks Category Magnitude of slowdown of S
Slide 18: Winning in Late July and PF Cookies
Winning in Late July and PF Cookies Late July Sales +26% Q3 FY24 Net Sales vs. PY Pepperidge Category Farm Cookies Buyer Growth1 vs. PY +5% +1% Millennial Buyer Growth1 +11% +3% vs. PY 1 Total Circana US MULO 13 weeks ending 04/28/2024 18
Slide 19: Continued Progress on Snacks Margin Progression
Continued Progress on Snacks Margin Progression Organic Net Sales* Operating Earnings Operating Margin Growth +7% +14% +190bps Q3 FY24 YTD Q3 FY24 YTD Q3 FY24 YTD 2-Year CAGR 2-Year CAGR vs. Q3 FY22 YTD Net Sales Operating Earnings $3,500 $500 20.0% $3,318 $450 $482 $489 19.0% $3,000 $3,285 $400 18.
Slide 20: Further Network Optimization
Further Network Optimization Continuing to transform Campbell’s supply chain into a competitive advantage with $230 million in capital investments through FY26, and further rationalization to drive savings and efficiency Investments Rationalization Maxton, North Carolina Hanover, Pennsylvania Tualat
Slide 21: Wrap up
Wrap up • Solid Q3 Performance • Stabilizing Volumes and Improving Margins • Integration of Sovos Brands off to a great start • Controlling the Controllables • Exciting moment for Campbell's • Looking forward to Investor Day in mid-September in NYC 21
Slide 22: CFO Perspective
Carrie Anderson EVP & Chief Financial Officer CFO Perspective 22
Slide 23: Q3 FY24 Key Financial Results
Continuing Operations ($ Millions, except per share) Q3 FY24 Key Financial Results Q3FY24 figures reflect the contribution of the Sovos Brands acquisition which was approximately neutral to adjusted EPS in the quarter +13% +10% Net Sales +2% Adj. EBIT* Adj. EPS* 2yr CAGR vs. PY vs. PY $2,369 $354 $0
Slide 24: Q3 FY24 Net Sales Bridge
$ Millions Q3 FY24 Net Sales Bridge Net sales reflect a partial quarter of sales contribution from Sovos Brands. Organic net sales stable as volume / mix improved compared to Q2 FY24 +6% vs. PY Flat vs. PY 7 pts $2,369 $2,229 - - - Q3 FY23 Net Sales Volume / Mix Net Price Realization Q3 FY24 Organic
Slide 25: Q3 FY24 Adjusted Gross Profit Margin Bridge
Q3 FY24 Adjusted Gross Profit Margin* Bridge Adjusted gross profit margin increase driven by the net benefit of productivity improvements, costs savings and favorable volume / mix that more than offset the impact of inflation, slightly negative net price realization and the impact of the acquisition
Slide 26: Other Operating Items
$ Millions Other Operating Items Adjusted Marketing & Selling Expenses* Adjusted Administrative Expenses* $194 $1981 +2% +1% vs. PY vs. PY $154 $1561 Q3 FY23 Q3 FY24 Q3 FY23 Q3 FY24 % of Net Sales 9% 8% *See Non-GAAP reconciliation 1 Q3 FY24 figures include Sovos Brands adjusted marketing & selling
Slide 27: Q3 FY24 Adjusted EBIT Bridge
$ Millions Q3 FY24 Adjusted EBIT* Bridge Double-digit adjusted EBIT growth driven by higher adjusted gross profit from the contribution of the acquisition and the base business, partially offset by higher adjusted expenses +13% vs. PY $51 $(4) $(4) $(2) $354 $313 Q3 FY23 Adjusted Gross Profit Adjust
Slide 28: Q3 FY24 Adjusted EPS Bridge
Q3 FY24 Adjusted EPS* Bridge Double-digit growth in adjusted EPS vs prior year, primarily driven by adjusted EBIT growth. The impact of the acquisition was approximately neutral to adjusted EPS, inclusive of incremental adjusted interest expense +10% vs. PY $0.10 ($0.05) $0.75 $0.01 $0.68 Q3 FY23 Ad
Slide 29: Q3 FY24 Meals & Beverages Results
$ Millions Q3 FY24 Meals & Beverages Results Net Sales Operating Earnings $3,971 $4,058 +15% vs. PY $762 $763 +26% vs. PY $1,272 $1,108 $182 $229 Q3 FY23 Q3 FY24 YTD Q3 YTD Q3 Q3 FY23 Q3 FY24 YTD Q3 YTD Q3 Organic Net Sales* FY23 FY24 FY23 FY24 2-year CAGR (1)% Vol / Mix (11)% 1% (5)% (3)% Operating
Slide 30: Q3 FY24 Snacks Results
$ Millions Q3 FY24 Snacks Results Net Sales Operating Earnings $3,318 $3,285 (2)% vs. PY (7)% vs. PY $1,121 $1,097 $482 $489 $179 $167 Q3 FY23 Q3 FY24 YTD Q3 YTD Q3 Q3 FY23 Q3 FY24 YTD Q3 YTD Q3 Organic Net Sales* FY23 FY24 FY23 FY24 2-year CAGR +6% Vol / Mix (3)% (1)% (1)% (2)% Operating 16.0% 15.2
Slide 31: Disciplined Capital Allocation
$ Millions Disciplined Capital Allocation Strong operating cash flow with a focus on investment in growth CapEx and returning cash to shareholders. Leverage ratio below 4x as expected Net Cash Flows from Operations $918 $897 YTD YTD FY23 FY24 Invest for Growth Capital Expenditures $257 $376 Return C
Slide 32: FY24 Guidance
FY24 Guidance FY24 Assumptions • Midpoint of updated organic net sales guidance represents about half a point Updated FY24 lower than the bottom end of the 0% to 2% organic net sales growth range $ Millions, FY23 Previous FY24 Guidance indicated on the company’s second quarter earnings call Except P
Slide 33: Delivered on Our Commitments with Q3 Results; Full-Year Guidance Updated
Delivered on Our Commitments with Q3 Results; Full-Year Guidance Updated 33
Slide 34: Q&A Forum
Q&A Forum Mark Clouse Carrie Anderson President & Chief Executive Officer EVP & Chief Financial Officer 34
Slide 35: Appendix
Appendix Campbells —
Slide 36: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) Third Quarter % Change Net Sales, Impact of Impact of Organic Net Sales, Organic Impact of Impact of April 28, 2024 As Reported Currency Acquisition Net Sales As Reported Net Sales Divestiture Acquisition Meals & Beverages $ 1,272 $
Slide 37: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) Third Quarter % Change Net Sales, Impact of Organic Net Sales, Organic April 30, 2023 As Reported Currency Net Sales As Reported Net Sales Meals & Beverages $ 1,108 $ 8 $ 1,116 (2)% (1)% Snacks 1,121 (1) 1,120 12% 12% Total Net Sale
Slide 38: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) Third Quarter % Change Net Sales, Impact of Organic Net Sales, Organic May 1, 2022 As Reported Currency Net Sales As Reported Net Sales Meals & Beverages $ 1,131 $ 1 $ 1,132 6% 9% Snacks 999 - 999 8% 8% Total Net Sales $ 2,130 $ 1 $
Slide 39: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) Third Quarter % Change Two Year CAGR Net Sales, Impact of Impact of Organic Net Sales, Organic Net Sales, Organic April 28, 2024 As Reported Currency Acquisition Net Sales As Reported Net Sales As Reported Net Sales Meals & Beverage
Slide 40: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) Third Quarter Net Sales Total Net Sales 2024 $ 2,369 Deduct: Impact of Currency (1) Add: Sovos Brands, Inc. January 29, 2024 – March 11, 2024 141 Pro Forma Combined $ 2,509 Total Net Sales 2023 $ 2,229 Deduct: Impact of Divestiture
Slide 41: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions, except per share amounts) Third Quarter EBIT EBIT Margin % Earnings Diluted EPS* 2024 – As Reported $ 248 10.5% $ 133 $ 0.44 Add: Costs associated with cost savings and optimization initiatives 20 15 0.05 Deduct: Commodity mark-to-m
Slide 42: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions, except per share amounts) Third Quarter EBIT EBIT Margin % Earnings Diluted EPS 2023 – Adjusted $ 313 14.0% $ 204 $ 0.68 2022 – As Reported $ 294 13.8% $ 188 $ 0.62 Add: Costs associated with cost savings and optimization initiative
Slide 43: 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 EBIT Margin % Earnings Diluted EPS 2022 – Adjusted $ 321 15.1% $ 212 $ 0.70 2021 – As Reported $ 272 13.7% $ 166 $ 0.54 Add: Costs associated with cost savings and o
Slide 44: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions, except per share amounts) Nine Months EBIT EBIT Margin % Earnings Diluted EPS* 2024 – As Reported $ 923 12.6% $ 570 $ 1.91 Add: Costs associated with cost savings and optimization initiatives 69 52 0.17 Deduct: Commodity mark-to-mar
Slide 45: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) Nine Months % Change Net Sales, Impact of Impact of Organic Net Sales, Organic April 28, 2024 As Reported Currency Acquisition Net Sales As Reported Net Sales Meals & Beverages $ 4,058 $ 3 $ (166) $ 3,895 2% (2)% Snacks 3,285 (2) -
Slide 46: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) Nine Months % Change Net Sales, Impact of Organic Net Sales, Organic April 30, 2023 As Reported Currency Net Sales As Reported Net Sales Meals & Beverages $ 3,971 $ 23 $ 3,994 8% 9% Snacks 3,318 (1) 3,317 14% 14% Total Net Sales $ 7
Slide 47: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) Nine Months % Change Two Year CAGR Net Sales, Impact of Impact of Organic Net Sales, Organic Net Sales, Organic April 28, 2024 As Reported Currency Acquisition Net Sales As Reported Net Sales As Reported Net Sales Meals & Beverages
Slide 48: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) Third Quarter Net Interest Gross Profit GP % Expense EBT Tax Tax Rate 2024 – As Reported $ 732 30.9% $ 66 $ 182 $ 49 26.9% Add: Costs associated with cost savings and optimization initiatives 3 - 20 5 Deduct: Commodity mark-to-marke
Slide 49: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) Third Quarter Administrative R&D Expenses Expenses Total 2024 – As Reported $ 208 $ 27 $ 235 Deduct: Costs associated with cost savings and optimization initiatives (13) (1) (14) Deduct: Costs associated with acquisition (39) (2) (4
Slide 50: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) Third Quarter Marketing & Other Expenses / Selling Expenses (Income) 2024 – As Reported $ 206 $ 30 Deduct: Costs associated with cost savings and optimization initiatives (6) - Deduct: Accelerated amortization - (6) Deduct: Costs as
Slide 51: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions, except per share amounts) Third Quarter – Adjusted Diluted EPS Impact from Adjusted EBIT EBIT 2024 – Adjusted $ 354 2023 – Adjusted 313 $ Change $ 41 Deduct: 2023 Adjusted tax rate impact on EBIT (10) Impact to Net Earnings $ 31 Thi
Slide 52: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions, except per share amounts) Third Quarter – Adjusted Diluted EPS Impact from Adjusted Net Interest Expense Net Interest Expense 2024 – Adjusted $ 64 2023 – Adjusted 46 $ Change $ (18) Deduct: 2023 Adjusted tax rate impact on Net Inter
Slide 53: 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 Third Quarter 2024 – Adjusted EBT $ 290 Decrease (Increase) in Adjusted Tax Rate 0.8% Adjusted EBT multiplied by the Change in Adjusted Tax Rate
Slide 54: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures ($ millions) Net Debt April 30, 2023 April 28, 2024 Short-Term Borrowings $ 263 $ 1,427 Long-Term Debt 4,496 5,752 Total Debt $ 4,759 $ 7,179 Less: Cash and Cash Equivalents (223) (107) Net Debt $ 4,536 $ 7,072 54
Slide 55: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures (a) (b) (c) =(a)+(b)+(c) Combined ($ millions) Three Months Nine Months Trailing Twelve Ended Ended Sovos May 2023 – Months Ended (TTM) July 30, 2023 April 28, 2024 March 11, 2024 April 28, 2024 Net Earnings $ 169 $ 570 $ 27 $ 766 Add: Taxes 56
Slide 56: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures (a) (b) = (a)+(b) ($ millions) Three Months Nine Months Trailing Twelve Ended Ended Months Ended (TTM) July 31, 2022 April 30, 2023 April 30, 2023 Net Earnings, as reported $ 96 $ 689 $ 785 Add: Taxes 29 214 243 Add: Interest, net 45 137 182 Ear
Slide 57: 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 58: 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 2023 – As Reported $ 1,312 $ 858 $ 2.85 Add: Costs associated with cost savings and optimization initiatives 66 50 0.17 Deduct: Pension and postretirement actuarial gains
Campbell Soup Company — Q3 2024 Earnings Presentation on 6ix