Board of Directors Elects Mick Beekhuizen
President and Chief Executive Officer; Mark Clouse Announces Plans
to Retire
- Net Sales increased 10% to $2.8 billion and decreased 1% on an
organic basis.
- Earnings Before Interest and Taxes (EBIT) were $367 million.
Adjusted EBIT increased 6% to $432 million including the impact of
the Sovos Brands, Inc. (Sovos Brands) acquisition.
- Earnings Per Share (EPS) were $0.72. Adjusted EPS decreased 2%
to $0.89.
- Increases quarterly dividend by 5% to $0.39 per share.
- Reaffirms full-year fiscal 2025 guidance.
The Campbell's Company (NASDAQ:CPB) today reported
results for its first-quarter fiscal 2025 ended October 27,
2024.
CEO Comments Mark Clouse, Campbell’s President and CEO,
said, "Our first-quarter results were largely aligned with our
expectations. While navigating this dynamic consumer environment
and uneven pace of category recovery, we remain agile, focusing on
balancing investments and earnings to meet our commitments for this
year and the long term. Our first quarter reflected our successful
efforts to achieve that goal, as do our plans for the second
quarter, which include the critical holiday season where we expect
both top line and market share sequential improvement. We are
maintaining our full-year guidance, with the upcoming second
quarter being an important indicator of progress in meeting our
expectations.” Clouse continued: “In addition, the Board of
Directors approved a 5% increase in our quarterly dividend,
showcasing our strong earnings, cash flow and confidence in our
long-term growth potential.”
Three Months Ended
($ in millions, except per share)
October 27, 2024
October 29, 2023
% Change
Net Sales
As Reported (GAAP)
$2,772
$2,518
10%
Organic
(1)%
Earnings Before Interest and Taxes
(EBIT)
As Reported (GAAP)
$367
$358
3%
Adjusted
$432
$407
6%
Diluted Earnings Per Share
As Reported (GAAP)
$0.72
$0.78
(8)%
Adjusted
$0.89
$0.91
(2)%
Note: A detailed reconciliation of the
reported (GAAP) financial information to the adjusted financial
information is included at the end of this news release.
Items Impacting Comparability The table below presents a
summary of items impacting comparability in each period. A detailed
reconciliation of the reported (GAAP) financial information to the
adjusted information is included at the end of this news
release.
Diluted Earnings Per
Share
Three Months Ended
October 27, 2024
October 29, 2023
As Reported (GAAP)
$0.72
$0.78
Costs associated with cost savings and
optimization initiatives
$0.09
$0.03
Commodity mark-to-market losses
(gains)
$(0.01)
$0.04
Accelerated amortization
$0.02
$0.02
Cybersecurity incident costs
(recoveries)
$—
$0.01
Charges associated with divestiture
$0.06
$—
Certain litigation expenses
$—
$0.01
Costs associated with acquisition
$—
$0.03
Adjusted*
$0.89
$0.91
*Numbers may not add due to rounding.
First-Quarter Results Net sales in the quarter increased
10% to $2.8 billion driven by the benefit from the Sovos Brands
acquisition, which is also referred to below as the acquisition.
Organic net sales decreased 1% to $2.5 billion with flat volume /
mix, and net price realization down 1%, as expected.
Gross profit increased to $867 million from $788 million. Gross
profit margin of 31.3% was flat compared to prior year. Excluding
items impacting comparability, adjusted gross profit increased to
$871 million from $808 million. Adjusted gross profit margin
decreased 70 basis points to 31.4% mainly driven by an approximate
60 basis-point impact of the acquisition. Excluding the impact of
the acquisition, adjusted gross margin was down only modestly,
driven by cost inflation and other supply chain costs and planned
unfavorable net price realization, partially offset by supply chain
productivity improvements and the benefits from cost savings
initiatives.
Marketing and selling expenses, which represented approximately
9% of net sales, increased 13% to $250 million. Excluding items
impacting comparability, adjusted marketing and selling expenses
increased 10% to $241 million, primarily driven by the impact of
the acquisition, partially offset by lower other marketing
expenses.
Administrative expenses increased 11% to $175 million. Excluding
items impacting comparability, adjusted administrative expenses
increased 9% to $164 million driven by higher general
administrative costs and inflation and the impact of the
acquisition, partially offset by the benefits from cost savings
initiatives.
Other expenses were $43 million compared to $24 million.
Excluding items impacting comparability, adjusted other expenses
were $9 million compared to $8 million.
EBIT increased to $367 million from $358 million. Excluding
items impacting comparability, adjusted EBIT increased 6% to $432
million primarily due to the contribution of the acquisition,
partially offset by lower adjusted EBIT in the base business.
Net interest expense was $83 million compared to $48 million,
primarily due to an increase in interest expense related to higher
levels of debt. The effective tax rate was 23.2% compared to 24.5%.
Excluding items impacting comparability, the adjusted effective tax
rate decreased 70 basis points to 23.5% primarily due to excess tax
benefits associated with stock-based compensation awards that
vested in the quarter.
EPS decreased to $0.72 per share compared to $0.78 per share.
Excluding items impacting comparability, adjusted EPS decreased 2%
to $0.89 per share primarily reflecting the higher net interest
expense, partially offset by the increase in adjusted EBIT. The
acquisition was approximately neutral to first-quarter adjusted
earnings per share.
Cash flow from operations was $225 million compared to $174
million primarily due to changes in working capital and higher cash
earnings. Capital expenditures were $110 million compared to $143
million. In line with Campbell’s commitment to return value to its
shareholders, the company paid $116 million of cash dividends and
repurchased common stock of approximately $54 million.
Cost Savings Program In the first quarter, Campbell's has
delivered approximately $30 million of savings under the new $250
million cost savings program.
Share Repurchase In September 2024, the company's Board
of Directors approved an anti-dilutive share repurchase program of
up to $250 million (September 2024 program) to offset the impact of
dilution from shares issued under the stock compensation programs.
Repurchases under the September 2024 program may be made in
open-market or privately negotiated transactions. The September
2024 program replaced an antidilutive share repurchase program of
up to $250 million that was approved by the Board of Directors in
June 2021 and has been terminated. As of the end of the first
quarter, the company had approximately $206 million remaining under
its anti-dilutive share repurchase program, in addition to
approximately $301 million remaining under its September 2021
strategic repurchase program.
Quarterly Dividend Increase The company’s Board of
Directors has approved an increase in its quarterly dividend from
$0.37 per share to $0.39 per share, an increase of 5%, or $1.56 on
an annualized basis. The quarterly dividend is payable on January
27, 2025, to shareholders of record at the close of business
January 2, 2025.
CEO Transition As announced in a separate press release
earlier today, the company’s Board of Directors elected Mick
Beekhuizen as President and CEO and a Director, effective February
1, 2025 to succeed Mark Clouse who plans to retire as President and
CEO and a Director effective January 31, 2025.
Full-Year Fiscal 2025 Guidance: Based on the company's
first quarter performance, Campbell's is re-affirming its full-year
fiscal 2025 guidance provided on August 29, 2024. Guidance ranges
reflect a balance between expected sequential progress and
pragmatism as the company continues to navigate the dynamic
consumer environment and uneven category recovery. The upper end of
the range anticipates a quicker normalization of the consumer
environment while the lower end of the range assumes a slower, more
conservative pace of recovery.
Additional underlying guidance assumptions can be found in the
accompanying investor presentation available at
https://investor.thecampbellscompany.com/events-presentations,
which will be published prior to the earnings conference call on
December 4, 2024.
The full-year fiscal 2025 guidance presented below includes the
full-year expected financial performance of the noosa yoghurt
business and excludes any impact from the pending sale, which is
expected to close in the first quarter of calendar year 2025
subject to customary closing conditions, including regulatory
approvals. The company will update its guidance on its next
regularly scheduled earnings conference call following the closing
of the transaction.
FY2024 Results
FY2025 Guidance1
($ in millions, except per share)
Net Sales
$9,636
+9% to +11%
Organic Net Sales1
$9,525
0% to 2%
Adjusted EBIT
$1,454
*
+9% to +11%
Adjusted EPS
$3.08
*
+1% to +4%
$3.12 to $3.22
* Adjusted - refer to the detailed
reconciliation of the reported (GAAP) financial information to the
adjusted financial information at the end of this news release.
1 Growth rate adjusted for Sovos Brands
which was acquired on March 12, 2024, the impact of the 53rd week
in fiscal 2025 and Pop Secret which was divested on August 26,
2024.
Note: A non-GAAP reconciliation is not
provided for fiscal 2025 guidance as the company is unable to
reasonably estimate the full-year financial impact of items such as
actuarial gains or losses on pension and postretirement plans
because these impacts are dependent on future changes in market
conditions. The inability to predict the amount and timing of these
future items makes a detailed reconciliation of these
forward-looking financial measures impracticable.
Segment Operating Review An analysis of net sales and
operating earnings by reportable segment follows:
Three
Months Ended October 27, 2024
($ in millions)
Meals & Beverages
Snacks
Total
Net Sales, as Reported
$1,706
$1,066
$2,772
Volume/Mix
1%
(1)%
—%
Net Price Realization
(1)%
(1)%
(1)%
Organic Net Sales
—%
(2)%
(1)%
Currency
—%
—%
—%
Acquisition / (Divestiture)1
22%
(2)%
11%
% Change vs. Prior Year
22%
(4)%
10%
Segment Operating Earnings
$337
$142
% Change vs. Prior Year
17%
(12)%
1 Reflects the incremental net sales
associated with the Sovos Brands acquisition, which was completed
on March 12, 2024, and the loss of net sales associated with the
divestiture of the Pop Secret popcorn business, which was completed
on August 26, 2024.
Note: A detailed reconciliation of the
reported (GAAP) net sales to organic net sales is included at the
end of this news release.
Meals & Beverages Net sales in the quarter increased
22% driven by the benefit of the acquisition. Excluding the
acquisition, organic net sales were comparable to prior year driven
by gains in Prego pasta sauces, Canada and foodservice, offset by
declines in U.S. soup. Favorable volume / mix of 1% was offset by
lower net price realization. Sales of U.S. soup declined primarily
due to movements in retailer inventory levels influenced by the
later timing of the Thanksgiving holiday this year.
Operating earnings in the quarter increased 17%. The increase
was primarily due to the benefit of the acquisition of Sovos Brands
and lower marketing and selling expenses.
Snacks Net sales in the quarter decreased 4%. Excluding
the impact of the Pop Secret divestiture, organic net sales
decreased 2% driven by declines in partner and contract brands,
Pepperidge Farm cookies, Goldfish crackers and Late July snacks.
Sales were impacted by volume / mix declines of 1% and lower net
price realization of 1%.
Operating earnings in the quarter decreased 12% primarily due to
lower gross profit. Gross profit decreased primarily due to the
impact of cost inflation and other supply chain costs and lower net
price realization, partially offset by supply chain productivity
improvements.
Corporate Corporate expense was $106 million in the
quarter compared to $88 million. The increase was primarily due to
the loss from the sale of the Pop Secret popcorn business and
higher costs associated with cost savings and optimization
initiatives, partially offset by unrealized mark-to-market gains on
outstanding commodity hedges and costs associated with the
acquisition in the prior year.
Conference Call and Webcast Campbell's will host a
conference call to discuss these results on Wednesday, December 4,
2024 at 8:00 a.m. Eastern Time. Participants calling from the U.S.
& Canada may dial in using the toll-free phone number (800)
715-9871. Participants calling from outside the U.S. & Canada
may dial in using phone number +1 (646) 307-1963. The conference
access code is 7969519. In addition to dial-in, access to a live
listen-only audio webcast and accompanying slide presentation, as
well as a replay of the webcast, will be available at
https://investor.thecampbellscompany.com/events-presentations.
Reportable Segments The Campbell's Company earnings
results are reported as follows:
Meals & Beverages, which consists
of our soup, simple meals and beverages products in retail and
foodservice in the U.S. and Canada. The segment includes the
following products: Campbell’s condensed and ready-to-serve soups;
Swanson broth and stocks; Pacific Foods broth, soups and non-dairy
beverages; Prego pasta sauces; Pace Mexican sauces; Campbell’s
gravies, pasta, beans and dinner sauces; Swanson canned poultry; V8
juices and beverages; Campbell’s tomato juice; and as of March 12,
2024, Rao's pasta sauces, dry pasta, frozen entrées, frozen pizza
and soups; Michael Angelo's frozen entrées and pasta sauces; and
noosa yogurts. The segment also includes snacking products in
foodservice and Canada; and
Snacks, which consists of Pepperidge
Farm cookies, crackers, fresh bakery and frozen products, including
Goldfish crackers, Snyder’s of Hanover pretzels, Lance sandwich
crackers, Cape Cod potato chips, Kettle Brand potato chips, Late
July snacks, Snack Factory pretzel crisps, and other snacking
products in retail in the U.S. The segment also includes the
snacking and meals and beverages retail business in Latin America.
The segment also included the results of our Pop Secret popcorn
business, which was sold on August 26, 2024.
We refer to the following products as our
“leadership brands”: Campbell’s condensed and ready-to-serve soups;
Chunky soups; Swanson broth, stocks and canned poultry; Pacific
Foods broth, soups and non-dairy beverages; Prego pasta sauces;
Pace Mexican sauces; V8 juices and beverages; Rao's pasta sauces,
dry pasta, frozen entrées, frozen pizza and soups; Pepperidge Farm
cookies, crackers and fresh bakery; Goldfish crackers; Snyder’s of
Hanover pretzels; Lance sandwich crackers; Cape Cod potato chips;
Kettle Brand potato chips; Late July snacks; and Snack Factory
pretzel crisps.
About The Campbell's Company For 155 years, The
Campbell’s Company (NASDAQ:CPB) has been connecting people through
food they love. Headquartered in Camden, N.J. since 1869,
generations of consumers have trusted us to provide delicious and
affordable food and beverages. Today, the company is a North
American focused brand powerhouse, generating fiscal 2024 net sales
of $9.6 billion across two divisions: Meals & Beverages and
Snacks. Our portfolio of 16 leadership brands includes: Campbell’s,
Cape Cod, Chunky, Goldfish, Kettle Brand, Lance, Late July, Pace,
Pacific Foods, Pepperidge Farm, Prego, Rao’s, Snack Factory pretzel
crisps, Snyder’s of Hanover, Swanson and V8. For more information,
visit www.thecampbellscompany.com.
Forward-Looking Statements This release contains
“forward-looking statements” that reflect the company’s current
expectations about the impact of its future plans and performance
on the company’s business or financial results. These
forward-looking statements, including any statements made regarding
sales, EBIT and EPS guidance, rely on a number of assumptions and
estimates that could be inaccurate, and which are subject to risks
and uncertainties. The factors that could cause the company’s
actual results to vary materially from those anticipated or
expressed in any forward-looking statement include: the risk that
the cost savings and any other synergies from the Sovos Brands,
Inc. (“Sovos Brands”) transaction may not be fully realized or may
take longer or cost more to be realized than expected, including
that the Sovos Brands transaction may not be accretive within the
expected timeframe or the extent anticipated; the risks related to
the availability of, and cost inflation in, supply chain inputs,
including labor, raw materials, commodities, packaging and
transportation; the company’s ability to execute on and realize the
expected benefits from its strategy, including growing sales in
snacks and growing/maintaining its market share position in soup;
the impact of strong competitive responses to the company’s efforts
to leverage brand power with product innovation, promotional
programs and new advertising; the risks associated with trade and
consumer acceptance of product improvements, shelving initiatives,
new products and pricing and promotional strategies; the ability to
realize projected cost savings and benefits from cost savings
initiatives and the integration of recent acquisitions; disruptions
in or inefficiencies to the company’s supply chain and/or
operations, including reliance on key contract manufacturer and
supplier relationships; the risks related to the effectiveness of
the company's hedging activities and the company's ability to
respond to volatility in commodity prices; the company’s ability to
manage changes to its organizational structure and/or business
processes, including selling, distribution, manufacturing and
information management systems or processes; changes in consumer
demand for the company’s products and favorable perception of the
company’s brands; changing inventory management practices by
certain of the company’s key customers; a changing customer
landscape, with value and e-commerce retailers expanding their
market presence, while certain of the company’s key customers
maintain significance to the company’s business; product quality
and safety issues, including recalls and product liabilities; the
possible disruption to the independent contractor distribution
models used by certain of the company’s businesses, including as a
result of litigation or regulatory actions affecting their
independent contractor classification; the uncertainties of
litigation and regulatory actions against the company; the costs,
disruption and diversion of management’s attention associated with
activist investors; a disruption, failure or security breach of the
company’s or the company's vendors' information technology systems,
including ransomware attacks; impairment to goodwill or other
intangible assets; the company’s ability to protect its
intellectual property rights; increased liabilities and costs
related to the company’s defined benefit pension plans; the
company’s ability to attract and retain key talent; goals and
initiatives related to, and the impacts of, climate change,
including from weather-related events; negative changes and
volatility in financial and credit markets, deteriorating economic
conditions and other external factors, including the impact of new
or changes to existing governmental laws and regulations and their
application; the company's indebtedness and ability to pay such
indebtedness; unforeseen business disruptions or other impacts due
to political instability, civil disobedience, terrorism,
geopolitical conflicts, extreme weather conditions, natural
disasters, pandemics or other outbreaks of disease or other
calamities; and other factors described in the company’s most
recent Form 10-K and subsequent Securities and Exchange Commission
filings. This discussion of uncertainties is by no means exhaustive
but is designed to highlight important factors that may impact the
company’s outlook. The company disclaims any obligation or intent
to update forward-looking statements in order to reflect new
information, events or circumstances after the date of this
release.
THE CAMPBELL'S COMPANY
CONSOLIDATED STATEMENTS OF
EARNINGS (unaudited)
(millions, except per share
amounts)
Three Months Ended
October 27, 2024
October 29, 2023
Net sales
$
2,772
$
2,518
Costs and expenses
Cost of products sold
1,905
1,730
Marketing and selling expenses
250
222
Administrative expenses
175
158
Research and development expenses
26
24
Other expenses / (income)
43
24
Restructuring charges
6
2
Total costs and expenses
2,405
2,160
Earnings before interest and taxes
367
358
Interest, net
83
48
Earnings before taxes
284
310
Taxes on earnings
66
76
Net earnings
218
234
Net loss attributable to noncontrolling
interests
—
—
Net earnings attributable to The
Campbell's Company
$
218
$
234
Per share - basic
Net earnings attributable to The
Campbell's Company
$
.73
$
.79
Weighted average shares outstanding -
basic
298
298
Per share - assuming dilution
Net earnings attributable to The
Campbell's Company
$
.72
$
.78
Weighted average shares outstanding -
assuming dilution
301
299
THE CAMPBELL'S COMPANY
CONSOLIDATED SUPPLEMENTAL
SCHEDULE OF SALES AND EARNINGS (unaudited)
(millions, except per share
amounts)
Three Months Ended
October 27, 2024
October 29, 2023
Percent
Change
Sales
Contributions:
Meals & Beverages
$
1,706
$
1,404
22
%
Snacks
1,066
1,114
(4
)%
Total sales
$
2,772
$
2,518
10
%
Earnings
Contributions:
Meals & Beverages
$
337
$
287
17
%
Snacks
142
161
(12
)%
Total operating earnings
479
448
7
%
Corporate income (expense)
(106
)
(88
)
Restructuring charges
(6
)
(2
)
Earnings before interest and taxes
367
358
3
%
Interest, net
83
48
Taxes on earnings
66
76
Net earnings
218
234
(7
)%
Net loss attributable to noncontrolling
interests
—
—
Net earnings attributable to The
Campbell's Company
$
218
$
234
(7
)%
Per share - assuming dilution
Net earnings attributable to The
Campbell's Company
$
.72
$
.78
(8
)%
THE CAMPBELL'S COMPANY
CONDENSED CONSOLIDATED BALANCE
SHEETS (unaudited)
(millions)
October 27, 2024
October 29, 2023
Current assets
$
3,137
$
2,239
Plant assets, net
2,684
2,429
Intangible assets, net
9,725
7,085
Other assets
566
504
Total assets
$
16,112
$
12,257
Current liabilities
$
3,465
$
2,310
Long-term debt
6,705
4,500
Other liabilities
2,098
1,690
Total equity
3,844
3,757
Total liabilities and equity
$
16,112
$
12,257
Total debt
$
7,917
$
4,706
Total cash and cash equivalents
$
808
$
91
THE CAMPBELL'S COMPANY
CONSOLIDATED STATEMENTS OF CASH
FLOWS (unaudited)
(millions)
Three Months Ended
October 27, 2024
October 29, 2023
Cash flows from operating activities:
Net earnings
$
218
$
234
Adjustments to reconcile net earnings to
operating cash flow
Restructuring charges
6
2
Stock-based compensation
19
17
Pension and postretirement benefit
expense
2
1
Depreciation and amortization
109
96
Deferred income taxes
(3
)
7
Net loss on sale of business
25
—
Other
35
29
Changes in working capital, net of
divestiture
Accounts receivable
(211
)
(207
)
Inventories
(62
)
(52
)
Other current assets
(10
)
(29
)
Accounts payable and accrued
liabilities
106
82
Other
(9
)
(6
)
Net cash provided by operating
activities
225
174
Cash flows from investing activities:
Purchases of plant assets
(110
)
(143
)
Purchases of route businesses
(31
)
(4
)
Sales of route businesses
29
10
Sale of business
70
—
Other
(5
)
—
Net cash used in investing activities
(47
)
(137
)
Cash flows from financing activities:
Short-term borrowings, including
commercial paper
668
1,103
Short-term repayments, including
commercial paper
(883
)
(1,081
)
Long-term borrowings
1,144
—
Long-term repayments
(200
)
—
Dividends paid
(116
)
(114
)
Treasury stock purchases
(54
)
(28
)
Payments related to tax withholding for
stock-based compensation
(27
)
(14
)
Payments of debt issuance costs
(9
)
—
Other
—
(1
)
Net cash provided by (used in) financing
activities
523
(135
)
Effect of exchange rate changes on
cash
(1
)
—
Net change in cash and cash
equivalents
700
(98
)
Cash and cash equivalents — beginning of
period
108
189
Cash and cash equivalents — end of
period
$
808
$
91
Reconciliation of GAAP to Non-GAAP Financial
Measures First Quarter Ended October 27, 2024
The Campbell's Company (the "company") uses certain non-GAAP
financial measures as defined by the Securities and Exchange
Commission in certain communications. These non-GAAP financial
measures are measures of performance not defined by accounting
principles generally accepted in the United States and should be
considered in addition to, not in lieu of, GAAP reported measures.
Management believes that also presenting certain non-GAAP financial
measures provides additional information to facilitate comparison
of the company's historical operating results and trends in its
underlying operating results, and provides transparency on how the
company evaluates its business. Management uses these non-GAAP
financial measures in making financial, operating and planning
decisions and in evaluating the company's performance. Management
considers quantitative and qualitative factors in assessing whether
to adjust for the impact of items that may be significant or that
could affect an understanding of the company’s performance and
trends in its underlying operating results. The adjustments on
earnings may include but are not limited to items such as: unusual
or non-recurring gains or charges; costs associated with cost
savings and optimization initiatives; actuarial gains or losses on
pension and postretirement plans; unrealized mark-to-market gains
or losses on outstanding undesignated commodity hedges; gains or
losses on the extinguishment of debt; gains or losses on
divestitures; costs associated with acquisitions; impairment
charges or accelerated amortization; certain litigation expenses or
recoveries; and costs or recoveries related to a cybersecurity
incident. Depending upon facts or circumstances, management may
change these adjustments. When these adjustments change, the
company will provide updated definitions of its non-GAAP financial
measures. When items no longer impact the company’s current or
future presentation of non-GAAP operating results, the company will
remove these items from its non-GAAP definitions.
Organic Net Sales Organic
net sales are net sales excluding the impact of currency,
acquisitions and divestitures. Management believes that excluding
these items, which are not part of the ongoing business, improves
the comparability of year-to-year results. A reconciliation of net
sales as reported to organic net sales follows.
Three Months Ended
October 27, 2024
October 29, 2023
% Change
(millions)
Net Sales,
as
Reported
Impact of Currency
Impact of Acquisition
Organic Net Sales
Net Sales,
as
Reported
Impact of Divestiture
Organic Net Sales
Net Sales,
as
Reported
Organic Net Sales
Meals & Beverages
$
1,706
$
1
$
(310
)
$
1,397
$
1,404
$
—
$
1,404
22
%
—
%
Snacks
1,066
—
—
1,066
1,114
(21
)
1,093
(4
)%
(2
)%
Total Net Sales
$
2,772
$
1
$
(310
)
$
2,463
$
2,518
$
(21
)
$
2,497
10
%
(1
)%
Twelve Months Ended
July 28, 2024
(millions)
Net Sales,
as
Reported
Impact of Divestiture
Organic Net Sales for
FY 2025 Guidance
Meals & Beverages
$
5,258
$
—
$
5,258
Snacks
4,378
(111
)
4,267
Total Net Sales
$
9,636
$
(111
)
$
9,525
Items Impacting Earnings
Adjusted Net earnings are net earnings excluding the impact of
costs associated with cost savings and optimization initiatives,
unrealized mark-to-market gains or losses on outstanding
undesignated commodity hedges, accelerated amortization, costs or
recoveries related to a cybersecurity incident, actuarial gains or
losses on pension and postretirement plans, gains or losses on
divestitures, certain litigation expenses or recoveries, costs
associated with acquisitions and impairment charges. Management
believes that financial information excluding certain items that
are not considered to reflect the ongoing operating results, such
as those listed below, improves the comparability of year-to-year
results. Consequently, management believes that investors may be
able to better understand its results excluding these items.
The following items impacted earnings:
(1)
The company has implemented several cost
savings initiatives in recent years. In the first quarter of fiscal
2025, the company recorded Restructuring charges of $6 million and
implementation costs and other related costs of $11 million in
Administrative expenses, $8 million in Cost of products sold, $1
million in Marketing and selling expenses and $1 million in
Research and development expenses related to these initiatives. In
the first quarter of fiscal 2024, the company recorded
Restructuring charges of $2 million and implementation costs and
other related costs of $5 million in Administrative expenses, $3
million in Cost of products sold, $2 million in Marketing and
selling expenses and $1 million in Research and development
expenses (aggregate impact of $10 million after tax, or $.03 per
share) related to these initiatives. For the year ended July 28,
2024, the company recorded Restructuring charges of $17 million and
implementation costs and other related costs of $54 million in
Administrative expenses, $26 million in Cost of products sold, $4
million in Marketing and selling expenses and $3 million in
Research and development expenses related to these initiatives.
In the second quarter of fiscal 2024, the
company began implementation of an optimization initiative to
improve the effectiveness of its Snacks direct-store-delivery
route-to-market network. In the first quarter of fiscal 2025, the
company recognized $8 million in Marketing and selling expenses
related to this initiative. For the year ended July 28, 2024, the
company recognized $5 million in Marketing and selling expenses
related to this initiative.
In the first quarter of fiscal 2025, the
total aggregate impact related to the cost savings and optimization
initiatives was $35 million ($27 million after tax, or $.09 per
share). For the year ended July 28, 2024, the total aggregate
impact related to the cost savings and optimization initiatives was
$109 million ($83 million after tax, or $.28 per share).
(2)
In the first quarter of fiscal 2025, the
company recognized gains in Cost of products sold of $4 million ($3
million after tax, or $.01 per share) associated with unrealized
mark-to-market adjustments on outstanding undesignated commodity
hedges. In the first quarter of fiscal 2024, the company recognized
losses in Cost of products sold of $15 million ($11 million after
tax, or $.04 per share) associated with unrealized mark-to-market
adjustments on outstanding undesignated commodity hedges. For the
year ended July 28, 2024, the company recognized losses in Cost of
products sold of $22 million ($16 million after tax, or $.05 per
share) associated with unrealized mark-to-market adjustments on
outstanding undesignated commodity hedges.
(3)
In the first quarter of fiscal 2025 and
fiscal 2024, the company recorded accelerated amortization expense
in Other expenses / (income) of $7 million ($5 million after tax,
or $.02 per share) related to customer relationship intangible
assets due to the loss of certain contract manufacturing customers,
which began in the fourth quarter of fiscal 2023. For the year
ended July 28, 2024, the company recorded accelerated amortization
expense in Other expenses / (income) of $27 million ($20 million
after tax, or $.07 per share).
(4)
In the first quarter of fiscal 2025, the
company recognized insurance recoveries in Administrative expenses
of $1 million ($1 million after tax) related to a cybersecurity
incident that was identified in the fourth quarter of fiscal 2023.
In the first quarter of fiscal 2024, the company recorded costs of
$2 million in Cost of products sold and $1 million in
Administrative expenses (aggregate impact of $2 million after tax,
or $.01 per share) related to the cybersecurity incident.
(5)
In the first quarter of fiscal 2025, the
company recognized an actuarial loss in Other expenses / (income)
of $2 million ($1 million after tax) related to an interim
remeasurement of a postretirement plan due to a plan amendment. For
the year ended July 28, 2024, the company recognized actuarial
losses on pension and postretirement plans in Other expenses /
(income) of $33 million ($25 million after tax, or $.08 per
share).
(6)
In the first quarter of fiscal 2025, the
company recorded a loss in Other expenses / (income) of $25 million
($19 million after tax, or $.06 per share) on the sale of its Pop
Secret popcorn business.
(7)
In the first quarter of fiscal 2025, the
company recorded litigation expenses in Administrative expenses of
$1 million ($1 million after tax) related to the Plum baby food and
snacks business (Plum), which was divested on May 3, 2021, and
certain other litigation matters. In the first quarter of fiscal
2024, the company recorded litigation expenses in Administrative
expenses of $2 million ($2 million after tax, or $.01 per share)
related to Plum. For the year ended July 28, 2024, the company
recorded litigation expenses in Administrative expenses of $5
million ($5 million after tax, $.02 per share) related to Plum and
certain other litigation matters.
(8)
In the first quarter of fiscal 2024, the
company announced its intent to acquire Sovos Brands, Inc. and on
March 12, 2024, the acquisition closed. In the first quarter of
fiscal 2024, the company incurred costs associated with the
acquisition in Other expenses / (income) of $9 million ($8 million
after tax, or $.03 per share). For the year ended July 28, 2024,
the company incurred $126 million of costs associated with the
acquisition, of which $21 million was recorded in Restructuring
charges, $47 million in Administrative expenses, $35 million in
Other expenses / (income), $3 million in Marketing and selling
expenses, $2 million in Research and development expenses and $18
million in Cost of products sold, of which $17 million was
associated with the acquisition date fair value adjustment for
inventory. The company also recorded costs of $2 million in
Interest expense related to costs associated with the Delayed Draw
Term Loan Credit Agreement used to fund the acquisition. The
aggregate impact was $128 million, $109 million after tax, or $.36
per share.
(9)
In the fourth quarter of fiscal 2024, the
company recognized an impairment charge of $53 million in Other
expenses / (income) on certain salty snacks and cookie trademarks
within the Snacks segment, including Tom's, Jays, Kruncher's,
O-Ke-Doke, Stella D'oro and Archway, collectively referred to as
the company's "Allied brands." In fiscal 2024, sales and operating
performance were below expectations due in part to competitive
pressure and reduced margins. In the fourth quarter of fiscal 2024,
based on recent performance and reevaluation of the position of the
Allied brands within the portfolio, the company lowered its
near-term and long-term outlook for future sales and operating
performance.
In the fourth quarter of fiscal 2024, the
company performed an impairment assessment on the assets in the Pop
Secret popcorn business within the Snacks segment as sales and
operating performance were below expectations due in part to
competitive pressure and reduced margins, and as the company
pursued divesting the business. As a result of these factors, in
the fourth quarter of fiscal 2024, the company lowered the
long-term outlook for the business and recognized an impairment
charge of $76 million in Other expenses / (income) on the
trademark. The sale of the business was completed on August 26,
2024.
For the year ended July 28, 2024, the
total aggregate impact of the impairment charges was $129 million
($98 million after tax, or $.33 per share).
The following tables reconcile financial information, presented
in accordance with GAAP, to financial information excluding certain
items:
Three Months Ended
Year Ended
(millions, except per share amounts)
October 27, 2024
October 29, 2023
Percent Change
July 28, 2024
Gross profit, as reported
$
867
$
788
10%
$
2,971
Gross profit margin, as
reported
31.3
%
31.3
%
0 pts
30.8
%
Costs associated with cost savings and
optimization initiatives (1)
8
3
26
Commodity mark-to-market losses (gains)
(2)
(4
)
15
22
Cybersecurity incident costs (recoveries)
(4)
—
2
2
Costs associated with acquisition (8)
—
—
18
Adjusted Gross profit
$
871
$
808
8%
$
3,039
Adjusted Gross profit margin
31.4
%
32.1
%
(70) pts
31.5
%
Marketing and selling expenses, as
reported
$
250
$
222
13%
$
833
Costs associated with cost savings and
optimization initiatives (1)
(9
)
(2
)
(9
)
Costs associated with acquisition (8)
—
—
(3
)
Adjusted Marketing and selling
expenses
$
241
$
220
10%
$
821
Administrative expenses, as
reported
$
175
$
158
11%
$
737
Costs associated with cost savings and
optimization initiatives (1)
(11
)
(5
)
(54
)
Cybersecurity incident recoveries (costs)
(4)
1
(1
)
(1
)
Certain litigation expenses (7)
(1
)
(2
)
(5
)
Costs associated with acquisition (8)
—
—
(47
)
Adjusted Administrative
expenses
$
164
$
150
9%
$
630
Research and development expenses, as
reported
$
26
$
24
$
102
Costs associated with cost savings and
optimization initiatives (1)
(1
)
(1
)
(3
)
Costs associated with acquisition (8)
—
—
(2
)
Adjusted Research and development
expenses
$
25
$
23
$
97
Other expenses / (income), as
reported
$
43
$
24
$
261
Accelerated amortization (3)
(7
)
(7
)
(27
)
Pension and postretirement actuarial
losses (5)
(2
)
—
(33
)
Charges associated with divestiture
(6)
(25
)
—
—
Costs associated with acquisition (8)
—
(9
)
(35
)
Impairment charges (9)
—
—
(129
)
Adjusted Other expenses /
(income)
$
9
$
8
$
37
Earnings before interest and taxes, as
reported
$
367
$
358
3%
$
1,000
Costs associated with cost savings and
optimization initiatives (1)
35
13
109
Commodity mark-to-market losses (gains)
(2)
(4
)
15
22
Accelerated amortization (3)
7
7
27
Cybersecurity incident costs (recoveries)
(4)
(1
)
3
3
Pension and postretirement actuarial
losses (5)
2
—
33
Charges associated with divestiture
(6)
25
—
—
Certain litigation expenses (7)
1
2
5
Costs associated with acquisition (8)
—
9
126
Impairment charges (9)
—
—
129
Adjusted Earnings before interest and
taxes
$
432
$
407
6%
$
1,454
Interest, net, as reported
$
83
$
48
$
243
Costs associated with acquisition (8)
—
—
(2
)
Adjusted Interest, net
$
83
$
48
$
241
Adjusted Earnings before taxes
$
349
$
359
$
1,213
Taxes on earnings, as reported
$
66
$
76
(13)%
$
190
Effective income tax rate, as
reported
23.2
%
24.5
%
(130) pts
25.1
%
Costs associated with cost savings and
optimization initiatives (1)
8
3
26
Commodity mark-to-market losses (gains)
(2)
(1
)
4
6
Accelerated amortization (3)
2
2
7
Cybersecurity incident costs (recoveries)
(4)
—
1
1
Pension and postretirement actuarial
losses (5)
1
—
8
Charges associated with divestiture
(6)
6
—
—
Certain litigation expenses (7)
—
—
—
Costs associated with acquisition (8)
—
1
19
Impairment charges (9)
—
—
31
Adjusted Taxes on earnings
$
82
$
87
(6)%
$
288
Adjusted effective income tax
rate
23.5
%
24.2
%
(70) pts
23.7
%
Net earnings attributable to The
Campbell's Company, as reported
$
218
$
234
(7)%
$
567
Costs associated with cost savings and
optimization initiatives (1)
27
10
83
Commodity mark-to-market losses (gains)
(2)
(3
)
11
16
Accelerated amortization (3)
5
5
20
Cybersecurity incident costs (recoveries)
(4)
(1
)
2
2
Pension and postretirement actuarial
losses (5)
1
—
25
Charges associated with divestiture
(6)
19
—
—
Certain litigation expenses (7)
1
2
5
Costs associated with acquisition (8)
—
8
109
Impairment charges (9)
—
—
98
Adjusted Net earnings attributable to
The Campbell's Company
$
267
$
272
(2)%
$
925
Diluted net earnings per share
attributable to The Campbell's Company, as reported
$
.72
$
.78
(8)%
$
1.89
Costs associated with cost savings and
optimization initiatives (1)
.09
.03
.28
Commodity mark-to-market losses (gains)
(2)
(.01
)
.04
.05
Accelerated amortization (3)
.02
.02
.07
Cybersecurity incident costs (recoveries)
(4)
—
.01
.01
Pension and postretirement actuarial
losses (5)
—
—
.08
Charges associated with divestiture
(6)
.06
—
—
Certain litigation expenses (7)
—
.01
.02
Costs associated with acquisition (8)
—
.03
.36
Impairment charges (9)
—
—
.33
Adjusted Diluted net earnings per share
attributable to The Campbell's Company*
$
.89
$
.91
(2)%
$
3.08
*The sum of individual per share amounts
may not add due to rounding.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241203148092/en/
INVESTOR CONTACT: Rebecca Gardy
(856) 342-6081 Rebecca_Gardy@campbells.com
MEDIA CONTACT: James Regan (856)
219-6409 James_Regan@campbells.com
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