- Reported and Organic Net Sales increased 5% led by favorable
net price realization.
- Reported Earnings Before Interest and Taxes (EBIT) decreased
14% to $254 million. Adjusted EBIT decreased 2% to $313 million
primarily due to non-operating items.
- Reported Earnings Per Share (EPS) decreased 15% to $0.53.
Adjusted EPS decreased 3% to $0.68.
- Reaffirms full-year fiscal 2023 guidance.
Campbell Soup Company (NYSE:CPB) today reported results
for its third-quarter fiscal 2023 ended April 30, 2023.
CEO Comments
“Our third-quarter results were in line with our expectations
and were driven by in-market momentum, continued best-in-class
supply chain execution and favorable inflation-driven net price
realization, all despite the anticipated challenging comparison
from the prior year's retailer inventory rebuild,” said Campbell's
President and CEO, Mark Clouse. “Our year-to-date results and
execution give us continued confidence in our ability to deliver
our full-year guidance, with adjusted EPS currently tracking to the
upper end of our guidance range."
Three Months Ended
Nine Months Ended
($ in millions, except per share)
April 30, 2023
May 1, 2022
% Change
April 30, 2023
May 1, 2022
% Change
Net Sales
As Reported (GAAP)
$2,229
$2,130
5%
$7,289
$6,575
11%
Organic
5%
11%
Earnings Before Interest and Taxes
(EBIT)
As Reported (GAAP)
$254
$294
(14)%
$1,040
$993
5%
Adjusted
$313
$321
(2)%
$1,125
$1,028
9%
Diluted Earnings Per Share
As Reported (GAAP)
$0.53
$0.62
(15)%
$2.29
$2.18
5%
Adjusted
$0.68
$0.70
(3)%
$2.50
$2.28
10%
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
Nine Months Ended
April 30, 2023
May 1, 2022
April 30, 2023
May 1, 2022
As Reported (GAAP)
$0.53
$0.62
$2.29
$2.18
Restructuring charges, implementation
costs and other related costs associated with cost savings
initiatives
$0.08
$0.02
$0.12
$0.04
Pension actuarial losses
$0.04
$0.04
$0.07
$0.03
Commodity mark-to-market adjustments
$0.02
$0.01
$0.02
$0.02
Loss on debt extinguishment
$—
$0.01
$—
$0.01
Adjusted*
$0.68
$0.70
$2.50
$2.28
*Numbers may not add due to rounding.
Third-Quarter Results
Net sales in the quarter, both reported and organic, increased
5% versus the prior year to $2.2 billion. Favorable
inflation-driven net price realization was partially offset by an
expected decline in volume / mix, which was driven by lapping the
prior year retailer inventory rebuild as well as lower volume
consumption due to elasticities.
Gross profit increased to $668 million from $665 million in the
prior year. As a percent of sales, gross profit margin was 30.0%
compared to 31.2% in the prior year. Excluding items impacting
comparability, adjusted gross profit increased to $689 million from
$671 million. Excluding items impacting comparability, adjusted
gross profit margin decreased 60 basis points to 30.9% primarily
driven by unfavorable volume / mix, with favorable net price
realization and supply chain productivity improvements more than
offsetting higher cost inflation and other supply chain costs. The
third quarter of fiscal 2022 benefited from a 50-basis point
insurance settlement.
Marketing and selling expenses increased 3% to $194 million and
represented approximately 9% of net sales. The increase was driven
by higher selling expenses, partially offset by increased benefits
from cost savings initiatives.
Administrative expenses increased 11% to $167 million. Excluding
items impacting comparability, adjusted administrative expenses
increased 5% to $154 million due to higher general administrative
costs and inflation, higher incentive compensation costs and higher
benefit-related costs, partially offset by lower expenses related
to the settlement of certain legal claims.
Other expenses were $23 million compared to $10 million in the
prior year. Excluding items impacting comparability, adjusted other
expenses were $6 million compared to adjusted other income of $6
million in the prior year primarily due to lower pension and
postretirement benefit income this year.
As reported EBIT decreased to $254 million from $294 million in
the prior year. Excluding items impacting comparability, adjusted
EBIT decreased 2% compared to the prior year to $313 million
primarily due to higher adjusted other expenses, related to lower
pension and postretirement benefit income this year. Higher
adjusted gross profit more than offset higher adjusted
administrative expenses and higher marketing and selling expenses.
Lower pension and postretirement benefit income this year drove an
approximate $12 million headwind to adjusted EBIT in the
quarter.
Net interest expense was $46 million compared to $50 million in
the prior year. Excluding items impacting comparability, adjusted
net interest expense was $46 million in the prior year. The
effective tax rate was 23.1% compared to 23.0% in the prior year.
Excluding items impacting comparability, the adjusted effective tax
rate increased 70 basis points to 23.6% compared to 22.9% in the
prior year.
As reported EPS decreased to $0.53 per share compared to $0.62
per share in the prior year. Excluding items impacting
comparability, adjusted EPS decreased $0.02, or 3%, to $0.68 per
share compared to $0.70 per share in the prior year, primarily
reflecting the decrease in adjusted EBIT and a higher adjusted
effective tax rate. Lower pension and postretirement benefit income
this year drove an approximate $0.03 headwind to adjusted EPS in
the quarter.
Nine-Month Results
Net sales, both reported and organic, increased 11% versus the
prior year to $7.3 billion driven by favorable inflation-driven net
price realization, partially offset by volume / mix declines.
As reported EBIT increased 5% compared to the prior year to
$1.04 billion. Excluding items impacting comparability, adjusted
EBIT increased 9% compared to the prior year to $1.13 billion
primarily due to higher adjusted gross profit, partially offset by
higher marketing and selling expenses, higher adjusted other
expenses and higher adjusted administrative expenses.
Net interest expense was $137 million compared to $143 million
in the prior year. Excluding items impacting comparability in the
prior year, adjusted net interest expense was $139 million. The
effective tax rate was 23.7% compared to 22.2% in the prior year.
Excluding items impacting comparability, the adjusted effective tax
rate increased 150 basis points to 23.8% compared to 22.3% in the
prior year, primarily due to the favorable resolution of several
tax matters and the impact of state tax law changes in the prior
year.
As reported EPS increased to $2.29 per share compared to $2.18
per share in the prior year. Excluding items impacting
comparability, adjusted EPS increased $0.22, or 10%, compared to
the prior year to $2.50 per share primarily reflecting the increase
in adjusted EBIT and a reduction in the weighted average diluted
shares outstanding, partially offset by a higher adjusted effective
tax rate.
Cash flow from operations decreased from $1.1 billion in the
prior year to $918 million primarily due to changes in working
capital, partially offset by higher cash earnings. Capital
expenditures were $257 million compared to $179 million in the
prior year. In line with Campbell’s commitment to return value to
its shareholders, the company paid $336 million of cash dividends
and repurchased common stock of approximately $141 million. At the
end of the third quarter, the company had approximately $301
million remaining under the current $500 million strategic share
repurchase program and approximately $104 million remaining under
its $250 million anti-dilutive share repurchase program.
Cost Savings Program from Continuing Operations
Through the third quarter, Campbell has achieved $880 million of
total savings under its multi-year cost savings program, inclusive
of Snyder’s-Lance synergies. Campbell remains on track to deliver
savings of $1 billion by the end of fiscal 2025.
Full-Year Fiscal 2023 Guidance
Campbell is reaffirming its full-year fiscal 2023 net sales,
adjusted EBIT and adjusted EPS outlook from the guidance provided
on March 8, 2023.
We anticipate that the recent Emerald nuts business divestiture,
which closed on May 30, 2023, will not have a material impact on
our fiscal year adjusted 2023 results, and accordingly, our full
year guidance is inclusive of the lost sales and profits of that
business for the remaining two months of the fiscal year.
Our reaffirmed adjusted EBIT and adjusted EPS guidance reflects
planned investments in the fourth quarter to sustain momentum and
value for consumers.
Our fiscal year 2023 pre-tax pension and postretirement benefit
income outlook is expected to be lower by approximately $45
million, or $0.12 per share, compared to the prior year. This
represents approximately 3.5% of adjusted EBIT growth and
approximately 4% of adjusted EPS growth. The plans continue to be
well funded.
The full-year fiscal 2023 guidance is set forth in the table
below:
FY2022 Results
FY2023 Guidance1
($ in millions, except per share)
Net Sales
$8,562
+8.5% to +10%
Organic Net Sales
+8.5% to +10%
Adjusted EBIT
$1,297*
+4.5% to +6.5%
Adjusted EPS
$2.85*
+3.5% to +5%
$2.95 to $3.00
* Adjusted - refer to the detailed
reconciliation of the reported (GAAP) financial information to the
adjusted financial information at the end of this news release.
1 Reflects the expected impact of the
Emerald nuts business divestiture completed on May 30, 2023, which
is not expected to be material to the full-year adjusted fiscal
2023 guidance.
Note: A non-GAAP reconciliation is not
provided for fiscal 2023 guidance as the company is unable to
reasonably estimate the full-year financial impact of items such as
actuarial gains or losses on pension and postretirement plans
because these impacts are dependent on future changes in market
conditions. The inability to predict the amount and timing of these
future items makes a detailed reconciliation of these
forward-looking financial measures impracticable.
Segment Operating Review
An analysis of net sales and operating earnings by reportable
segment follows:
Three
Months Ended April 30, 2023
($ in millions)
Meals & Beverages*
Snacks
Total
Net Sales, as Reported
$1,108
$1,121
$2,229
Volume and Mix
(11)%
(3)%
(7)%
Net Price Realization
9%
15%
12%
Organic Net Sales
(1)%
12%
5%
Currency
(1)%
—%
—%
% Change vs. Prior Year
(2)%
12%
5%
Segment Operating Earnings
$182
$179
% Change vs. Prior Year
(17)%
41%
*Numbers do not add due to rounding.
Note: A detailed reconciliation of the
reported (GAAP) net sales to organic net sales is included at the
end of this news release.
Nine
Months Ended April 30, 2023
($ in millions)
Meals & Beverages
Snacks
Total
Net Sales, as Reported
$3,971
$3,318
$7,289
Volume and Mix
(5)%
(1)%
(3)%
Net Price Realization
14%
15%
14%
Organic Net Sales
9%
14%
11%
Currency
(1)%
—%
—%
% Change vs. Prior Year
8%
14%
11%
Segment Operating Earnings
$762
$482
% Change vs. Prior Year
7%
28%
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 decreased 2% and organic net sales
decreased 1% in the quarter primarily due to declines in U.S. soup,
partially offset by gains in foodservice. The price-driven
in-market growth was more than offset by an expected decline in
volume / mix driven by lapping prior year retailer inventory
rebuild as well as lower volume consumption due to elasticities and
increased competitive pressure. The retailer inventory impact was
most pronounced in U.S. soup which had a net sales decline of 11%
in comparison to relatively flat in-market performance.
Operating earnings in the quarter decreased 17% primarily due to
lower gross profit. Gross profit margin decreased due to
unfavorable volume / mix with favorable net price realization and
supply chain productivity improvements largely offsetting higher
cost inflation and other supply chain costs.
Snacks
Net sales in the quarter, both reported and organic, increased
12% driven by sales of its 8 power brands, which were up 16%. Sales
growth was driven by increases in cookies and crackers, primarily
Goldfish crackers and Lance sandwich crackers, and in salty snacks,
primarily Kettle Brand potato chips, Snack Factory pretzel crisps,
Cape Cod potato chips and Snyder's of Hanover pretzels. Sales
benefited from favorable net price realization, partially offset by
modest volume / mix declines.
Operating earnings in the quarter increased 41% primarily due to
higher gross profit, partially offset by slightly higher marketing
and selling expenses. Gross profit margin increased due to the
impact of favorable net price realization and supply chain
productivity improvements more than offsetting higher cost
inflation and other supply chain costs as well as unfavorable
volume / mix.
Corporate
Corporate expense was $101 million in the third quarter of
fiscal 2023 compared to $53 million in the prior year. Corporate
expense in the current quarter included costs of $27 million
related to cost savings initiatives, pension actuarial losses of
$17 million and unrealized mark-to-market losses on outstanding
undesignated commodity hedges of $9 million. Corporate expense in
the third quarter of fiscal 2022 included pension actuarial losses
of $16 million, costs of $6 million related to cost savings
initiatives and unrealized mark-to-market losses on outstanding
undesignated commodity hedges of $5 million. After factoring in
these items, the remaining increase in Corporate expense was
primarily due to lower pension and postretirement benefit income
and higher administrative expenses.
Conference Call and Webcast
Campbell will host a conference call to discuss these results
today at 8:00 a.m. Eastern Time. Participants calling from the U.S.
may dial in using the toll-free phone number (888) 210-3346.
Participants calling from outside the U.S. may dial in using phone
number +1 (646) 960-0253. The conference access code is 2518868. 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
investor.campbellsoupcompany.com/events-and-presentations.
Reportable Segments
Campbell Soup Company earnings results are reported as
follows:
Meals & Beverages, which consists
of our soup, simple meals and beverage products in retail and
foodservice in 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; and Campbell’s tomato juice. The segment also
includes snacking products in foodservice and Canada.
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*, Pop
Secret popcorn, and other snacking products in retail in the U.S.
We refer to the * brands as our "power brands." The segment also
includes the retail business in Latin America. The segment included
the results of our Emerald nuts business, which was sold on May 30,
2023.
About Campbell Soup Company
For more than 150 years, Campbell (NYSE:CPB) has been connecting
people through food they love. Generations of consumers have
trusted Campbell to provide delicious and affordable food and
beverages. Headquartered in Camden, N.J. since 1869, Campbell
generated fiscal 2022 net sales of nearly $8.6 billion. Our
portfolio includes iconic brands such as Campbell’s, Cape Cod,
Goldfish, Kettle Brand, Lance, Late July, Milano, Pace, Pacific
Foods, Pepperidge Farm, Prego, Snyder’s of Hanover, Swanson and V8.
Campbell has a heritage of giving back and acting as a good steward
of the environment. The company is a member of the Standard &
Poor's 500 as well as the FTSE4Good and Bloomberg Gender-Equality
Indices. For more information, visit www.campbellsoupcompany.com or
follow company news on Twitter via @CampbellSoupCo.
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:
(1) the risks related to the availability of, and cost inflation
in, supply chain inputs, including labor, raw materials,
commodities, packaging and transportation; (2) the impacts of, and
associated responses to, the COVID-19 pandemic on our business,
suppliers, customers, consumers and employees; (3) 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; (4) the impact of strong
competitive responses to the company’s efforts to leverage its
brand power with product innovation, promotional programs and new
advertising; (5) the risks associated with trade and consumer
acceptance of product improvements, shelving initiatives, new
products and pricing and promotional strategies; (6) the ability to
realize projected cost savings and benefits from cost savings
initiatives and the integration of recent acquisitions; (7)
disruptions in or inefficiencies to the company’s supply chain
and/or operations; (8) the risks related to the effectiveness of
the company's hedging activities and the company's ability to
respond to volatility in commodity prices; (9) 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; (10) changes in
consumer demand for the company’s products and favorable perception
of the company’s brands; (11) changing inventory management
practices by certain of the company’s key customers; (12) 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; (13)
product quality and safety issues, including recalls and product
liabilities; (14) 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; (15)
the uncertainties of litigation and regulatory actions against the
company; (16) the costs, disruption and diversion of management’s
attention associated with activist investors; (17) a disruption,
failure or security breach of the company’s or the company's
vendors' information technology systems, including ransomware
attacks; (18) impairment to goodwill or other intangible assets;
(19) the company’s ability to protect its intellectual property
rights; (20) increased liabilities and costs related to the
company’s defined benefit pension plans; (21) the company’s ability
to attract and retain key talent; (22) goals and initiatives
related to, and the impacts of, climate change, including
weather-related events; (23) negative changes and volatility in
financial and credit markets, deteriorating economic conditions and
other external factors, including changes in laws and regulations;
(24) unforeseen business disruptions or other impacts due to
political instability, civil disobedience, terrorism, armed
hostilities (including the ongoing conflict between Russia and
Ukraine), extreme weather conditions, natural disasters, other
pandemics or other calamities; and (25) other factors described in
the company’s most recent Form 10-K and subsequent Securities and
Exchange Commission filings. The company disclaims any obligation
or intent to update the forward-looking statements in order to
reflect events or circumstances after the date of this release.
CAMPBELL SOUP COMPANY
CONSOLIDATED STATEMENTS OF
EARNINGS (unaudited)
(millions, except per share
amounts)
Three Months Ended
April 30, 2023
May 1, 2022
Net sales
$
2,229
$
2,130
Costs and expenses
Cost of products sold
1,561
1,465
Marketing and selling expenses
194
188
Administrative expenses
167
151
Research and development expenses
24
22
Other expenses / (income)
23
10
Restructuring charges
6
—
Total costs and expenses
1,975
1,836
Earnings before interest and taxes
254
294
Interest, net
46
50
Earnings before taxes
208
244
Taxes on earnings
48
56
Net earnings
160
188
Net loss attributable to noncontrolling
interests
—
—
Net earnings attributable to Campbell Soup
Company
$
160
$
188
Per share - basic
Net earnings attributable to Campbell Soup
Company
$
.54
$
.62
Weighted average shares outstanding -
basic
299
301
Per share - assuming dilution
Net earnings attributable to Campbell Soup
Company
$
.53
$
.62
Weighted average shares outstanding -
assuming dilution
301
302
CAMPBELL SOUP COMPANY
CONSOLIDATED STATEMENTS OF
EARNINGS (unaudited)
(millions, except per share
amounts)
Nine Months Ended
April 30, 2023
May 1, 2022
Net sales
$
7,289
$
6,575
Costs and expenses
Cost of products sold
5,028
4,519
Marketing and selling expenses
612
555
Administrative expenses
487
454
Research and development expenses
66
64
Other expenses / (income)
41
(10
)
Restructuring charges
15
—
Total costs and expenses
6,249
5,582
Earnings before interest and taxes
1,040
993
Interest, net
137
143
Earnings before taxes
903
850
Taxes on earnings
214
189
Net earnings
689
661
Net loss attributable to noncontrolling
interests
—
—
Net earnings attributable to Campbell Soup
Company
$
689
$
661
Per share - basic
Net earnings attributable to Campbell Soup
Company
$
2.30
$
2.19
Weighted average shares outstanding -
basic
299
302
Per share - assuming dilution
Net earnings attributable to Campbell Soup
Company
$
2.29
$
2.18
Weighted average shares outstanding -
assuming dilution
301
303
CAMPBELL SOUP COMPANY
CONSOLIDATED SUPPLEMENTAL
SCHEDULE OF SALES AND EARNINGS (unaudited)
(millions, except per share
amounts)
Three Months Ended
April 30, 2023
May 1, 2022
Percent Change
Sales
Contributions:
Meals & Beverages
$
1,108
$
1,131
(2)%
Snacks
1,121
999
12%
Total sales
$
2,229
$
2,130
5%
Earnings
Contributions:
Meals & Beverages
$
182
$
220
(17)%
Snacks
179
127
41%
Total operating earnings
361
347
4%
Corporate income (expense)
(101
)
(53
)
Restructuring charges
(6
)
—
Earnings before interest and taxes
254
294
(14)%
Interest, net
46
50
Taxes on earnings
48
56
Net earnings
160
188
(15)%
Net loss attributable to noncontrolling
interests
—
—
Net earnings attributable to Campbell Soup
Company
$
160
$
188
(15)%
Per share - assuming dilution
Net earnings attributable to Campbell Soup
Company
$
.53
$
.62
(15)%
CAMPBELL SOUP COMPANY
CONSOLIDATED SUPPLEMENTAL
SCHEDULE OF SALES AND EARNINGS (unaudited)
(millions, except per share
amounts)
Nine Months Ended
April 30, 2023
May 1, 2022
Percent Change
Sales
Contributions:
Meals & Beverages
$
3,971
$
3,672
8%
Snacks
3,318
2,903
14%
Total sales
$
7,289
$
6,575
11%
Earnings
Contributions:
Meals & Beverages
$
762
$
713
7%
Snacks
482
376
28%
Total operating earnings
1,244
1,089
14%
Corporate income (expense)
(189
)
(96
)
Restructuring charges
(15
)
—
Earnings before interest and taxes
1,040
993
5%
Interest, net
137
143
Taxes on earnings
214
189
Net earnings
689
661
4%
Net loss attributable to noncontrolling
interests
—
—
Net earnings attributable to Campbell Soup
Company
$
689
$
661
4%
Per share - assuming dilution
Net earnings attributable to Campbell Soup
Company
$
2.29
$
2.18
5%
CAMPBELL SOUP COMPANY
CONDENSED CONSOLIDATED BALANCE
SHEETS (unaudited)
(millions)
April 30, 2023
May 1, 2022
Current assets
$
2,104
$
1,852
Plant assets, net
2,364
2,313
Intangible assets, net
7,140
7,186
Other assets
465
496
Total assets
$
12,073
$
11,847
Current liabilities
$
2,288
$
2,699
Long-term debt
4,496
3,998
Other liabilities
1,701
1,755
Total equity
3,588
3,395
Total liabilities and equity
$
12,073
$
11,847
Total debt
$
4,759
$
4,748
Total cash and cash equivalents
$
223
$
196
CAMPBELL SOUP COMPANY
CONSOLIDATED STATEMENTS OF CASH
FLOWS (unaudited)
(millions)
Nine Months Ended
April 30, 2023
May 1, 2022
Cash flows from operating activities:
Net earnings
$
689
$
661
Adjustments to reconcile net earnings to
operating cash flow
Restructuring charges
15
—
Stock-based compensation
48
46
Pension and postretirement benefit expense
(income)
20
(31
)
Depreciation and amortization
284
251
Deferred income taxes
(2
)
39
Other
78
66
Changes in working capital
Accounts receivable
1
81
Inventories
(40
)
(111
)
Other current assets
(8
)
(1
)
Accounts payable and accrued
liabilities
(123
)
140
Other
(44
)
(40
)
Net cash provided by operating
activities
918
1,101
Cash flows from investing activities:
Purchases of plant assets
(257
)
(179
)
Purchases of route businesses
(13
)
(1
)
Sales of route businesses
—
2
Other
1
10
Net cash used in investing activities
(269
)
(168
)
Cash flows from financing activities:
Short-term borrowings, including
commercial paper
2,479
821
Short-term repayments, including
commercial paper
(2,473
)
(700
)
Long-term borrowings
500
—
Long-term repayments
(566
)
—
Dividends paid
(336
)
(340
)
Treasury stock purchases
(141
)
(116
)
Treasury stock issuances
22
1
Payments related to tax withholding for
stock-based compensation
(19
)
(18
)
Payments related to extinguishment of
debt
—
(453
)
Other
(1
)
—
Net cash used in financing activities
(535
)
(805
)
Effect of exchange rate changes on
cash
—
(1
)
Net change in cash and cash
equivalents
114
127
Cash and cash equivalents — beginning of
period
109
69
Cash and cash equivalents — end of
period
$
223
$
196
Reconciliation of GAAP to Non-GAAP Financial
Measures Third Quarter Ended April 30, 2023
Campbell Soup 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; restructuring charges and
related costs; actuarial gains or losses on pension and
postretirement plans; unrealized mark-to-market gains and losses on
outstanding undesignated commodity hedges; gains or losses on the
extinguishment of debt; gains or losses on divestitures; or
impairment charges. 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
April 30, 2023
May 1, 2022
% Change
(millions)
Net Sales, as
Reported
Impact of Currency
Organic Net Sales
Net Sales, as
Reported
Net Sales, as
Reported
Organic Net Sales
Meals & Beverages
$
1,108
$
8
$
1,116
$
1,131
(2)%
(1)%
Snacks
1,121
(1
)
1,120
999
12%
12%
Total Net Sales
$
2,229
$
7
$
2,236
$
2,130
5%
5%
Nine Months Ended
April 30, 2023
May 1, 2022
% Change
(millions)
Net Sales, as
Reported
Impact of Currency
Organic Net Sales
Net Sales, as
Reported
Net Sales, as
Reported
Organic Net Sales
Meals & Beverages
$
3,971
$
23
$
3,994
$
3,672
8%
9%
Snacks
3,318
(1
)
3,317
2,903
14%
14%
Total Net Sales
$
7,289
$
22
$
7,311
$
6,575
11%
11%
Items Impacting Earnings
Adjusted Net earnings are net earnings excluding the impact of
restructuring charges and related costs, actuarial gains or losses
on pension and postretirement plans, unrealized mark-to-market
gains or losses on outstanding undesignated commodity hedges, and
losses on the extinguishment of debt. 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 third quarter of fiscal 2023, the
company recorded Restructuring charges of $6 million and
implementation costs and other related costs of $13 million in
Administrative expenses, $12 million in Cost of products sold and
$2 million in Research and development expenses (aggregate impact
of $24 million after tax, or $.08 per share) related to these
initiatives. In the third quarter of fiscal 2022, the company
recorded implementation costs and other related costs of $5 million
in Administrative expenses and $1 million in Cost of products sold
(aggregate impact of $5 million after tax, or $.02 per share)
related to these initiatives. In the nine-month period of fiscal
2023, the company recorded Restructuring charges of $15 million and
implementation costs and other related costs of $21 million in
Administrative expenses, $12 million in Cost of products sold and
$2 million in Research and development expenses (aggregate impact
of $37 million after tax, or $.12 per share) related to these
initiatives. In the nine-month period of fiscal 2022, the company
recorded implementation costs and other related costs of $10
million in Administrative expenses and $5 million in Cost of
products sold (aggregate impact of $12 million after tax, or $.04
per share) related to these initiatives. For the year ended July
31, 2022, the company recorded Restructuring charges of $5 million
and implementation costs and other related costs of $20 million in
Administrative expenses, $5 million in Cost of products sold and $1
million in Marketing and selling expenses (aggregate impact of $24
million after tax, or $.08 per share) related to these
initiatives.
(2)
In the third quarter of fiscal 2023, the
company recognized actuarial losses in Other expenses / (income) of
$17 million ($13 million after tax, or $.04 per share). In the
third quarter of fiscal 2022, the company recognized actuarial
losses in Other expenses / (income) of $16 million ($12 million
after tax, or $.04 per share). In the nine-month period of fiscal
2023, the company recognized actuarial losses in Other expenses /
(income) of $26 million ($20 million after tax, or $.07 per share).
In the nine-month period of fiscal 2022, the company recognized
actuarial losses in Other expenses / (income) of $12 million ($9
million after tax, or $.03 per share). The actuarial losses related
to interim remeasurements of certain pension plans due to lump sum
distributions that exceeded or are expected to exceed service and
interest costs resulting in settlement accounting for the plans.
For the year ended July 31, 2022, the company recognized actuarial
losses on pension and postretirement plans in Other expenses /
(income) of $44 million ($33 million after tax, or $.11 per
share).
(3)
In the third quarter of fiscal 2023, the
company recognized losses in Cost of products sold of $9 million
($7 million after tax, or $.02 per share) associated with
unrealized mark-to-market adjustments on outstanding undesignated
commodity hedges. In the third quarter of fiscal 2022, the company
recognized losses in Cost of products sold of $5 million ($4
million after tax, or $.01 per share) associated with unrealized
mark-to-market adjustments on outstanding undesignated commodity
hedges. In the nine-month period of fiscal 2023, the company
recognized losses in Cost of products sold of $9 million ($7
million after tax, or $.02 per share) associated with unrealized
mark-to-market adjustments on outstanding undesignated commodity
hedges. In the nine-month period of fiscal 2022, the company
recognized losses in Cost of products sold of $8 million ($6
million after tax, or $.02 per share) associated with unrealized
mark-to-market adjustments on outstanding undesignated commodity
hedges. For the year ended July 31, 2022, the company recognized
losses in Cost of products sold of $59 million ($44 million after
tax, or $.15 per share) associated with unrealized mark-to-market
adjustments on outstanding undesignated commodity hedges.
(4)
In the third quarter of fiscal 2022, the
company recorded a loss in Interest expense of $4 million ($3
million after tax, or $.01 per share) on the extinguishment of
debt.
The following tables reconcile financial information, presented
in accordance with GAAP, to financial information excluding certain
items:
Three Months Ended
April 30, 2023
May 1, 2022
(millions, except per share amounts)
As reported
Adjustments(a)
Adjusted
As reported
Adjustments(a)
Adjusted
Adjusted Percent
Change
Gross profit
$
668
$
21
$
689
$
665
$
6
$
671
3%
Gross profit margin
30.0
%
30.9
%
31.2
%
31.5
%
(60) pts
Administrative expenses
$
167
$
(13
)
$
154
$
151
$
(5
)
$
146
5%
Research and development expenses
$
24
$
(2
)
$
22
$
22
$
—
$
22
Other expenses / (income)
$
23
$
(17
)
$
6
$
10
$
(16
)
$
(6
)
Restructuring charges
$
6
$
(6
)
$
—
$
—
$
—
$
—
Earnings before interest and taxes
$
254
$
59
$
313
$
294
$
27
$
321
(2)%
Interest, net
46
—
46
50
(4
)
46
—%
Earnings before taxes
$
208
$
59
$
267
$
244
$
31
$
275
Taxes
48
15
63
56
7
63
Effective income tax rate
23.1
%
23.6
%
23.0
%
22.9
%
70 pts
Net earnings attributable to Campbell Soup
Company
$
160
$
44
$
204
$
188
$
24
$
212
(4)%
Diluted net earnings per share
attributable to Campbell Soup Company
$
.53
$
.15
$
.68
$
.62
$
.08
$
.70
(3)%
(a) See following tables for additional
information.
Three Months Ended
April 30, 2023
(millions, except per share amounts)
Restructuring charges,
implementation costs and other related costs (1)
Pension and postretirement
adjustments (2)
Commodity mark-to- market
(3)
Adjustments
Gross profit
$
12
$
—
$
9
$
21
Administrative expenses
(13
)
—
—
(13
)
Research and development expenses
(2
)
—
—
(2
)
Other expenses / (income)
—
(17
)
—
(17
)
Restructuring charges
(6
)
—
—
(6
)
Earnings before interest and taxes
$
33
$
17
$
9
$
59
Interest, net
—
—
—
—
Earnings before taxes
$
33
$
17
$
9
$
59
Taxes
9
4
2
15
Net earnings attributable to Campbell Soup
Company
$
24
$
13
$
7
$
44
Diluted net earnings per share
attributable to Campbell Soup Company*
$
.08
$
.04
$
.02
$
.15
*The sum of individual per share amounts
may not add due to rounding.
Three Months Ended
May 1, 2022
(millions, except per share amounts)
Restructuring charges,
implementation costs and other related costs (1)
Pension and postretirement
adjustments (2)
Commodity mark-to- market
(3)
Loss on debt
extinguishment (4)
Adjustments
Gross profit
$
1
$
—
$
5
$
—
$
6
Administrative expenses
(5
)
—
—
—
(5
)
Other expenses / (income)
—
(16
)
—
—
(16
)
Earnings before interest and taxes
$
6
$
16
$
5
$
—
$
27
Interest, net
—
—
—
(4
)
(4
)
Earnings before taxes
$
6
$
16
$
5
$
4
$
31
Taxes
1
4
1
1
7
Net earnings attributable to Campbell Soup
Company
$
5
$
12
$
4
$
3
$
24
Diluted net earnings per share
attributable to Campbell Soup Company
$
.02
$
.04
$
.01
$
.01
$
.08
Nine Months Ended
April 30, 2023
May 1, 2022
(millions, except per share amounts)
As reported
Adjustments(a)
Adjusted
As reported
Adjustments(a)
Adjusted
Adjusted Percent
Change
Gross profit
$
2,261
$
21
$
2,282
$
2,056
$
13
$
2,069
10%
Gross profit margin
31.0
%
31.3
%
31.3
%
31.5
%
(20) pts
Administrative expenses
$
487
$
(21
)
$
466
$
454
$
(10
)
$
444
5%
Research and development expenses
$
66
$
(2
)
$
64
$
64
$
—
$
64
Other expenses / (income)
$
41
$
(26
)
$
15
$
(10
)
$
(12
)
$
(22
)
Restructuring charges
$
15
$
(15
)
$
—
$
—
$
—
$
—
Earnings before interest and taxes
$
1,040
$
85
$
1,125
$
993
$
35
$
1,028
9%
Interest, net
137
—
137
143
(4
)
139
(1)%
Earnings before taxes
$
903
$
85
$
988
$
850
$
39
$
889
Taxes
214
21
235
189
9
198
Effective income tax rate
23.7
%
23.8
%
22.2
%
22.3
%
150 pts
Net earnings attributable to Campbell Soup
Company
$
689
$
64
$
753
$
661
$
30
$
691
9%
Diluted net earnings per share
attributable to Campbell Soup Company
$
2.29
$
.21
$
2.50
$
2.18
$
.10
$
2.28
10%
(a) See following tables for additional
information.
Nine Months Ended
April 30, 2023
(millions, except per share amounts)
Restructuring charges,
implementation costs and other related costs (1)
Pension and postretirement
adjustments (2)
Commodit mark-to- market
(3)
Adjustments
Gross profit
$
12
$
—
$
9
$
21
Administrative expenses
(21
)
—
—
(21
)
Research and development expenses
(2
)
—
—
(2
)
Other expenses / (income)
—
(26
)
—
(26
)
Restructuring charges
(15
)
—
—
(15
)
Earnings before interest and taxes
$
50
$
26
$
9
$
85
Interest, net
—
—
—
—
Earnings before taxes
$
50
$
26
$
9
$
85
Taxes
13
6
2
21
Net earnings attributable to Campbell Soup
Company
$
37
$
20
$
7
$
64
Diluted net earnings per share
attributable to Campbell Soup Company
$
.12
$
.07
$
.02
$
.21
Nine Months Ended
May 1, 2022
(millions, except per share amounts)
Restructuring charges,
implementation costs and other related costs (1)
Pension and postretirement
adjustments (2)
Commodity mark-to- market
(3)
Loss on debt
extinguishment (4)
Adjustments
Gross profit
$
5
$
—
$
8
$
—
$
13
Administrative expenses
(10
)
—
—
—
(10
)
Other expenses / (income)
—
(12
)
—
—
(12
)
Earnings before interest and taxes
$
15
$
12
$
8
$
—
$
35
Interest, net
—
—
—
(4
)
(4
)
Earnings before taxes
$
15
$
12
$
8
$
4
$
39
Taxes
3
3
2
1
9
Net earnings attributable to Campbell Soup
Company
$
12
$
9
$
6
$
3
$
30
Diluted net earnings per share
attributable to Campbell Soup Company
$
.04
$
.03
$
.02
$
.01
$
.10
(millions, except per share amounts)
Year Ended July 31,
2022
Gross profit, as reported
$
2,627
Add: Restructuring charges, implementation
costs and other related costs (1)
5
Add: Commodity mark-to-market adjustments
(3)
59
Adjusted Gross profit
$
2,691
Adjusted Gross profit margin
31.4
%
Earnings before interest and taxes, as
reported
$
1,163
Add: Restructuring charges, implementation
costs and other related costs (1)
31
Add: Pension and postretirement
adjustments (2)
44
Add: Commodity mark-to-market adjustments
(3)
59
Adjusted Earnings before interest and
taxes
$
1,297
Interest, net, as reported
$
188
Deduct: Loss on debt extinguishment
(4)
(4
)
Adjusted Interest, net
$
184
Adjusted Earnings before taxes
$
1,113
Taxes on earnings, as reported
$
218
Add: Tax benefit from
restructuring charges, implementation costs and other related costs
(1)
7
Add: Tax benefit from pension and
postretirement adjustments (2)
11
Add: Tax benefit from commodity
mark-to-market adjustments (3)
15
Add: Tax benefit from loss on debt
extinguishment (4)
1
Adjusted Taxes on earnings
$
252
Adjusted effective income tax
rate
22.6
%
Net earnings attributable to Campbell
Soup Company, as reported
$
757
Add: Net adjustment from restructuring
charges, implementation costs and other related costs (1)
24
Add: Net adjustment from pension and
postretirement adjustments (2)
33
Add: Net adjustment from commodity
mark-to-market adjustments (3)
44
Add: Net adjustment from loss on debt
extinguishment (4)
3
Adjusted Net earnings attributable to
Campbell Soup Company
$
861
Diluted net earnings per share
attributable to Campbell Soup Company, as reported
$
2.51
Add: Net adjustment from restructuring
charges, implementation costs and other related costs (1)
.08
Add: Net adjustment from pension and
postretirement adjustments (2)
.11
Add: Net adjustment from commodity
mark-to-market adjustments (3)
.15
Add: Net adjustment from loss on debt
extinguishment (4)
.01
Adjusted Diluted net earnings per share
attributable to Campbell Soup Company*
$
2.85
*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/20230606005903/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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