Reaffirms Full-Year Fiscal 2024
Guidance
- Net Sales were $2.5 billion, decreasing 2% or 1% on an organic
basis. On a two-year-compound annual growth rate (CAGR), net sales
increased approximately 6% and organic net sales increased
approximately 7% due to favorable net price realization and brand
strength.
- Earnings Before Interest and Taxes (EBIT) were $358 million;
Adjusted EBIT was $407 million, down 9%.
- Earnings Per Share (EPS) were $0.78; Adjusted EPS was $0.91,
down 11%.
- Reaffirms full-year fiscal 2024 guidance and continues to
expect the acquisition of Sovos Brands, Inc. (Sovos Brands) to
close in calendar year 2024.
Campbell Soup Company (NYSE:CPB) today reported results
for its first-quarter fiscal 2024 ended October 29, 2023.
CEO Comments “Our first-quarter results were in line with
our expectations, as we continue to effectively navigate the
current consumer landscape, while lapping 15% growth rates from a
year ago,” said Mark Clouse, Campbell's President and CEO. "We are
off to an encouraging start in our important holiday season, and we
expect to build momentum for the balance of the fiscal year behind
disciplined execution, stepped up innovation, and the overall
relevance of our brands in this current environment. As a result,
we are confident in reaffirming our full-year guidance. Lastly, we
remain excited about adding the Sovos Brands portfolio and expect
to close the transaction in calendar year 2024.”
Three Months Ended
($ in millions, except per share)
October 29, 2023
October 30, 2022
% Change
Net Sales
As Reported (GAAP)
$2,518
$2,575
(2)%
Organic
(1)%
Earnings Before Interest and Taxes
(EBIT)
As Reported (GAAP)
$358
$436
(18)%
Adjusted
$407
$449
(9)%
Diluted Earnings Per Share
As Reported (GAAP)
$0.78
$0.99
(21)%
Adjusted
$0.91
$1.02
(11)%
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 29, 2023
October 30, 2022
As Reported (GAAP)
$0.78
$0.99
Restructuring charges, implementation
costs and other related costs associated with cost savings
initiatives
$0.03
$0.01
Commodity mark-to-market adjustments
$0.04
$(0.01)
Accelerated amortization
$0.02
$—
Costs associated with pending
acquisition
$0.03
$—
Cybersecurity incident costs
$0.01
$—
Plum litigation expenses
$0.01
$—
Pension actuarial losses (gains)
$—
$0.04
Adjusted*
$0.91
$1.02
*Numbers may not add due to rounding.
First-Quarter Results Net sales in the quarter decreased
2%. Organic net sales decreased 1% to $2.5 billion, following a 15%
increase in the prior year that reflected double-digit inflation
driven pricing and supply chain recovery. As expected, volume / mix
in the first quarter was down 5% versus prior year and was
partially offset by net price realization of 3%.
Gross profit decreased to $788 million from $834 million. Gross
profit margin was 31.3% compared to 32.4%. Excluding items
impacting comparability, adjusted gross profit was $808 million
compared to $829 million in the prior year. Adjusted gross profit
margin declined 10 basis points to 32.1% and was primarily driven
by unfavorable volume / mix, with net price realization, supply
chain productivity improvements and cost savings initiatives
offsetting higher cost inflation and other supply chain costs.
Marketing and selling expenses increased 10% to $222 million.
Excluding items impacting comparability in the current year,
adjusted marketing and selling expenses increased 9% to $220
million. The increase included higher advertising and consumer
promotion expense (A&C), which increased 6%, primarily driven
by increased spend in Snacks. On both a reported and adjusted
basis, marketing and selling expenses represented approximately 9%
of net sales.
Administrative expenses were comparable to the prior year at
$158 million. Excluding items impacting comparability, adjusted
administrative expenses decreased 3% to $150 million primarily due
to lower general administrative costs, partially offset by
inflation.
Other expenses were $24 million compared to other expenses of
$18 million in the prior year. Excluding items impacting
comparability, adjusted other expenses were $8 million compared to
adjusted other expenses of $3 million in the prior year primarily
due to lower benefits from pension and postretirement income.
As reported EBIT decreased to $358 million from $436 million.
Excluding items impacting comparability, adjusted EBIT decreased 9%
to $407 million primarily due to lower adjusted gross profit,
higher adjusted marketing and selling expenses and changes in
pension and postretirement benefit income, partially offset by
lower adjusted administrative expenses.
Net interest expense was $48 million compared to $46 million.
The effective tax rate was 24.5% compared to 23.8%. Excluding items
impacting comparability, the adjusted effective tax rate increased
40 basis points to 24.2%.
As reported EPS decreased to $0.78 per share compared to $0.99
per share. Excluding items impacting comparability, adjusted EPS
decreased $0.11, or 11%, to $0.91 per share compared to $1.02 per
share primarily reflecting the decrease in adjusted EBIT and
slightly higher interest expense, partially offset by a reduction
in the weighted average diluted shares outstanding.
Cash flow from operations was $174 million compared to $227
million primarily due to lower cash earnings. Capital expenditures
were $143 million compared to $77 million. In line with Campbell’s
commitment to return value to its shareholders, the company paid
$114 million of cash dividends and repurchased common stock of
approximately $28 million. At the end of the first quarter, the
company had approximately $301 million remaining under the current
$500 million strategic share repurchase program and approximately
$76 million remaining under its $250 million anti-dilutive share
repurchase program.
Cost Savings Program from Continuing Operations Through
the first quarter, Campbell has achieved $895 million of total
savings under its multi-year cost savings program, inclusive of
Snyder’s-Lance synergies. The company remains on track to deliver
savings of $1 billion by the end of fiscal 2025.
Full-Year Fiscal 2024 Guidance: Based on the company’s
first quarter performance, Campbell is reaffirming its full-year
fiscal 2024 guidance range provided on August 31, 2023. Net sales
for the full year are expected to reflect volume declines in the
first half of fiscal 2024 with sequential improvement leading to
positive volume trends in the second half. Additionally, net sales
growth will reflect lower contribution from pricing and disciplined
levels of promotion. The company continues to expect modest
earnings and margin progress in fiscal 2024, weighted to the second
half, reflecting a moderating inflationary environment and on-going
productivity improvements. Other additional guidance assumptions
can be found in the accompanying investor presentation available at
investor.campbellsoupcompany.com/events-and-presentations.
The pending acquisition of Sovos Brands is currently expected to
close in calendar 2024 and is not included in Campbell's current
fiscal 2024 outlook. After the transaction closes, the company
expects to update guidance expectations for the combined
business.
The full-year fiscal 2024 guidance is set forth in the table
below:
FY2023 Results
FY2024 Guidance
($ in millions, except per share)
Net Sales
$9,357
(0.5)% to +1.5%
Organic Net Sales1
$9,306*
0% to +2%
Adjusted EBIT2
$1,367*
+3% to +5%
Adjusted EPS2
$3.00*
+3% to +5%
$3.09 to $3.15
* 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 the Emerald
nuts business, which was divested on May 30, 2023.
2 Adjusted EBIT in fiscal 2023 included
approximately $14 million and adjusted EPS included approximately
$0.04 of litigation expenses related to the Plum baby food and
snacks business (Plum), which was divested on May 3, 2021. We will
exclude these expenses from our fiscal 2024 adjusted EBIT and
adjusted EPS and thereafter as we do not believe that these
expenses reflect our underlying operating performance.
Note: A non-GAAP reconciliation is not
provided for fiscal 2024 guidance as the company is unable to
reasonably estimate the full-year financial impact of items such as
actuarial gains or losses on pension and postretirement plans
because these impacts are dependent on future changes in market
conditions. The inability to predict the amount and timing of these
future items makes a detailed reconciliation of these
forward-looking financial measures impracticable.
Segment Operating Review An analysis of net sales and
operating earnings by reportable segment follows:
Three
Months Ended October 29, 2023
($ in millions)
Meals & Beverages*
Snacks
Total*
Net Sales, as Reported
$1,404
$1,114
$2,518
Volume/Mix
(6)%
(4)%
(5)%
Net Price Realization
2%
5%
3%
Organic Net Sales
(3)%
1%
(1)%
Currency
—%
—%
—%
Divestiture1
—%
(2)%
(1)%
% Change vs. Prior Year
(4)%
(1)%
(2)%
Segment Operating Earnings
$287
$161
% Change vs. Prior Year
(13)%
5%
*Numbers do not add due to rounding.
1 Reflects the loss of net sales
associated with the divestiture of the Emerald nuts business, which
was completed on May 30, 2023.
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
4% and organic net sales decreased 3% as declines in U.S. retail
products, primarily declines in U.S. soup and beverages, were
partially offset by an increase in foodservice. Volume / mix
declines of 6% were partially offset by net price realization of
2%. Following an 11% increase in the prior year, sales of U.S. soup
decreased 5% primarily due to decreases in condensed soups and
ready-to-serve soups, partially offset by an increase in broth. On
a two-year CAGR basis, Meals & Beverages reported and organic
net sales grew approximately 5% and 6%, respectively.
Operating earnings in the quarter decreased 13% primarily due to
lower gross profit. Gross profit margin decreased due to higher
cost inflation and other supply chain costs as well as unfavorable
volume / mix, net of supply chain productivity improvements and net
price realization.
Snacks Net sales in the quarter decreased 1%. Excluding
the impact from the divestiture of the Emerald nuts business,
organic net sales increased 1% driven by sales of its 8 power
brands, which were up 5%. Sales growth was driven by increases in
cookies and crackers, primarily Lance sandwich crackers and
Goldfish crackers, partially offset by declines in sales of
third-party partner brands. Sales benefited from net price
realization of 5%, partially offset by volume / mix declines of 4%.
On a two-year CAGR basis, Snacks reported and organic net sales
grew approximately 7% and 8%, respectively.
Operating earnings in the quarter increased 5% primarily due to
higher gross profit, partially offset by planned higher marketing
and selling expenses. Gross profit margin increased due to net
price realization and supply chain productivity improvements more
than offsetting higher cost inflation and other supply chain
costs.
Corporate Corporate expense was $88 million in the first
quarter of fiscal 2024 compared to $48 million in the prior
year.
Corporate expense in the current quarter included the
following:
- $15 million of unrealized mark-to-market losses on outstanding
undesignated commodity hedges;
- $11 million of costs related to cost savings initiatives;
- $9 million of costs associated with the pending acquisition of
Sovos Brands;
- $7 million of accelerated amortization;
- $3 million of costs associated with the cybersecurity incident;
and
- $2 million of Plum litigation expenses.
Corporate expense in the first quarter of fiscal 2023
included:
- $15 million of pension actuarial losses;
- $3 million of costs related to cost savings initiatives;
and
- $5 million of unrealized mark-to-market gains on outstanding
undesignated commodity hedges.
After factoring in these items, the remaining increase in
Corporate expense was primarily changes in pension and
postretirement benefit income.
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 For more than 150 years, Campbell
(NYSE:CPB) has been connecting people through food they love.
Generations of consumers have trusted us to provide delicious and
affordable food and beverages. Headquartered in Camden, N.J. since
1869, the company generated fiscal 2023 net sales of $9.4 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.
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 conditions
to the completion of the Sovos Brands, Inc. (“Sovos Brands”)
transaction may not be satisfied, or the regulatory approvals
required for the transaction may not be obtained on the terms
expected, on the anticipated schedule, or at all; long-term
financing for the Sovos Brands transaction may not be obtained on
favorable terms, or at all; closing of the Sovos Brands transaction
may not occur or be delayed, either as a result of litigation
related to the transaction or otherwise or result in significant
costs of defense, indemnification and liability; the risk that the
cost savings and any other synergies from the 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; completing the Sovos Brands transaction may
distract our management from other important matters; 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 its 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 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 weather-related events; negative changes
and volatility in financial and credit markets, deteriorating
economic conditions and other external factors, including changes
in laws and regulations; unforeseen business disruptions or other
impacts due to political instability, civil disobedience,
terrorism, armed hostilities (including the ongoing conflict
between Russia and Ukraine and in Israel and Gaza), 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. 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
October 29,
2023
October 30, 2022
Net sales
$
2,518
$
2,575
Costs and expenses
Cost of products sold
1,730
1,741
Marketing and selling expenses
222
201
Administrative expenses
158
158
Research and development expenses
24
21
Other expenses / (income)
24
18
Restructuring charges
2
—
Total costs and expenses
2,160
2,139
Earnings before interest and taxes
358
436
Interest, net
48
46
Earnings before taxes
310
390
Taxes on earnings
76
93
Net earnings
234
297
Net loss attributable to noncontrolling
interests
—
—
Net earnings attributable to Campbell Soup
Company
$
234
$
297
Per share - basic
Net earnings attributable to Campbell Soup
Company
$
.79
$
.99
Weighted average shares outstanding -
basic
298
299
Per share - assuming dilution
Net earnings attributable to Campbell Soup
Company
$
.78
$
.99
Weighted average shares outstanding -
assuming dilution
299
301
CAMPBELL SOUP COMPANY
CONSOLIDATED SUPPLEMENTAL
SCHEDULE OF SALES AND EARNINGS (unaudited)
(millions, except per share
amounts)
Three Months Ended
October 29,
2023
October 30, 2022
Percent
Change
Sales
Contributions:
Meals & Beverages
$
1,404
$
1,455
(4
)%
Snacks
1,114
1,120
(1
)%
Total sales
$
2,518
$
2,575
(2
)%
Earnings
Contributions:
Meals & Beverages
$
287
$
331
(13
)%
Snacks
161
153
5
%
Total operating earnings
448
484
(7
)%
Corporate income (expense)
(88
)
(48
)
Restructuring charges
(2
)
—
Earnings before interest and taxes
358
436
(18
)%
Interest, net
48
46
Taxes on earnings
76
93
Net earnings
234
297
(21
)%
Net loss attributable to noncontrolling
interests
—
—
Net earnings attributable to Campbell Soup
Company
$
234
$
297
(21
)%
Per share - assuming dilution
Net earnings attributable to Campbell Soup
Company
$
.78
$
.99
(21
)%
CAMPBELL SOUP COMPANY
CONDENSED CONSOLIDATED BALANCE
SHEETS (unaudited)
(millions)
October 29,
2023
October 30, 2022
Current assets
$
2,239
$
2,304
Plant assets, net
2,429
2,312
Intangible assets, net
7,085
7,160
Other assets
504
401
Total assets
$
12,257
$
12,177
Current liabilities
$
2,310
$
3,033
Long-term debt
4,500
3,994
Other liabilities
1,690
1,681
Total equity
3,757
3,469
Total liabilities and equity
$
12,257
$
12,177
Total debt
$
4,706
$
4,852
Total cash and cash equivalents
$
91
$
130
CAMPBELL SOUP COMPANY
CONSOLIDATED STATEMENTS OF CASH
FLOWS (unaudited)
(millions)
Three Months Ended
October 29,
2023
October 30, 2022
Cash flows from operating activities:
Net earnings
$
234
$
297
Adjustments to reconcile net earnings to
operating cash flow
Stock-based compensation
17
15
Pension and postretirement benefit
expense
1
11
Depreciation and amortization
96
91
Deferred income taxes
7
3
Other
31
25
Changes in working capital
Accounts receivable
(207
)
(198
)
Inventories
(52
)
(118
)
Other current assets
(29
)
(10
)
Accounts payable and accrued
liabilities
82
123
Other
(6
)
(12
)
Net cash provided by operating
activities
174
227
Cash flows from investing activities:
Purchases of plant assets
(143
)
(77
)
Purchases of route businesses
(4
)
(1
)
Sales of route businesses
10
—
Net cash used in investing activities
(137
)
(78
)
Cash flows from financing activities:
Short-term borrowings, including
commercial paper
1,103
557
Short-term repayments, including
commercial paper
(1,081
)
(512
)
Dividends paid
(114
)
(115
)
Treasury stock purchases
(28
)
(41
)
Treasury stock issuances
—
2
Payments related to tax withholding for
stock-based compensation
(14
)
(18
)
Other
(1
)
—
Net cash used in financing activities
(135
)
(127
)
Effect of exchange rate changes on
cash
—
(1
)
Net change in cash and cash
equivalents
(98
)
21
Cash and cash equivalents — beginning of
period
189
109
Cash and cash equivalents — end of
period
$
91
$
130
Reconciliation of GAAP to Non-GAAP Financial
Measures First Quarter Ended October 29, 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; costs
associated with acquisitions; impairment charges or accelerated
amortization; certain litigation expenses; and costs 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 29, 2023
October 30, 2022
% Change
(millions)
Net Sales,
as
Reported
Impact of
Currency
Organic
Net Sales
Net Sales,
as
Reported
Impact of
Divestiture
Organic
Net Sales
Net Sales,
as
Reported
Organic
Net Sales
Meals & Beverages
$
1,404
$
3
$
1,407
$
1,455
$
—
$
1,455
(4
)%
(3
)%
Snacks
1,114
(1
)
1,113
1,120
(17
)
1,103
(1
)%
1
%
Total Net Sales
$
2,518
$
2
$
2,520
$
2,575
$
(17
)
$
2,558
(2
)%
(1
)%
Three Months Ended
October 29, 2023
October 31, 2021
Two-Year CAGR
(millions)
Net Sales,
as
Reported
Impact of
Currency
Organic
Net Sales
Net Sales,
as
Reported
Impact of
Divestiture
Organic
Net Sales
Net Sales,
as
Reported
Organic
Net Sales
Meals & Beverages
$
1,404
$
10
$
1,414
$
1,266
$
—
$
1,266
5
%
6
%
Snacks
1,114
(1
)
1,113
970
(19
)
951
7
%
8
%
Total Net Sales
$
2,518
$
9
$
2,527
$
2,236
$
(19
)
$
2,217
6
%
7
%
Three Months Ended
October 30, 2022
October 31, 2021
% Change
(millions)
Net Sales,
as
Reported
Impact of
Currency
Organic Net
Sales
Net Sales,
as
Reported
Net Sales,
as
Reported
Organic Net
Sales
Total Net Sales
$
2,575
$
7
$
2,582
$
2,236
15
%
15
%
Year Ended
July 30, 2023
(millions)
Net Sales,
as
Reported
Impact of
Divestiture
Organic Net
Sales for
FY 2024
Guidance
Meals & Beverages
$
4,907
$
—
$
4,907
Snacks
4,450
(51
)
4,399
Total Net Sales
$
9,357
$
(51
)
$
9,306
Items Impacting Earnings
Adjusted Net earnings are net earnings excluding the impact of
restructuring charges and related costs, unrealized mark-to-market
gains or losses on outstanding undesignated commodity hedges,
accelerated amortization, costs associated with acquisitions, costs
related to a cybersecurity incident, certain litigation expenses,
actuarial gains or losses on pension and postretirement plans, and
gains or losses on divestitures. 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
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. In the
first quarter of fiscal 2023, the company recorded implementation
costs and other related costs of $3 million in Administrative
expenses ($.01 per share) related to these initiatives. For the
year ended July 30, 2023, the company recorded Restructuring
charges of $16 million and implementation costs and other related
costs of $24 million in Administrative expenses, $18 million in
Cost of products sold, $5 million in Marketing and selling expenses
and $3 million in Research and development expenses (aggregate
impact of $50 million after tax, or $.17 per share) related to
these initiatives.
(2)
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. In the first quarter of fiscal 2023, the company
recognized gains 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. For the year ended July 30, 2023, the company recognized
gains in Cost of products sold of $21 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
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. For
the year ended July 30, 2023, 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.
(4)
In the first quarter of fiscal
2024, the company announced its intent to acquire Sovos Brands,
Inc. and incurred costs in Other expenses / (income) of $9 million
($8 million after tax, or $.03 per share) associated with the
pending acquisition, which the company expects to close in calendar
2024. For the year ended July 30, 2023, the company incurred costs
in Other expenses / (income) of $5 million ($4 million after tax,
or $.01 per share) associated with the pending acquisition.
(5)
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 a cybersecurity
incident that was identified in the fourth quarter of fiscal
2023.
(6)
In the first quarter of fiscal
2024, the company recorded pre- and after-tax litigation expenses
in Administrative expenses of $2 million ($.01 per share) related
to the Plum baby food and snacks business (Plum), which was
divested on May 3, 2021.
(7)
In the first quarter of fiscal
2023, the company recognized an actuarial loss in Other expenses /
(income) of $15 million ($11 million after tax, or $.04 per share).
The actuarial loss related to interim remeasurements of a U.S.
pension plan due to lump sum distributions that were expected to
exceed service and interest costs resulting in settlement
accounting for the plan. For the year ended July 30, 2023, the
company recognized actuarial gains on pension and postretirement
plans in Other expenses / (income) of $15 million ($11 million
after tax, or $.04 per share).
(8)
For the year ended July 30, 2023,
the company recorded a pre- and after-tax loss in Other expenses /
(income) of $13 million ($.04 per share) on the sale of its Emerald
nuts business.
The following tables reconcile financial information, presented
in accordance with GAAP, to financial information excluding certain
items:
Three Months Ended
October 29, 2023
October 30, 2022
(millions, except per share amounts)
As reported
Adjustments(a)
Adjusted
As reported
Adjustments(a)
Adjusted
Adjusted
Percent
Change
Gross profit
$
788
$
20
$
808
$
834
$
(5
)
$
829
(3
)%
Gross profit margin
31.3
%
32.1
%
32.4
%
32.2
%
(10) pts
Marketing and selling expenses
$
222
$
(2
)
$
220
$
201
$
—
$
201
9
%
As a percentage of Net sales
9
%
9
%
8
%
8
%
Administrative expenses
$
158
$
(8
)
$
150
$
158
$
(3
)
$
155
(3
)%
Research and development expenses
$
24
$
(1
)
$
23
$
21
$
—
$
21
Other expenses / (income)
$
24
$
(16
)
$
8
$
18
$
(15
)
$
3
Restructuring charges
$
2
$
(2
)
$
—
$
—
$
—
$
—
Earnings before interest and taxes
$
358
$
49
$
407
$
436
$
13
$
449
(9
)%
Interest, net
48
—
48
46
—
46
4
%
Earnings before taxes
$
310
$
49
$
359
$
390
$
13
$
403
Taxes
76
11
87
93
3
96
Effective income tax rate
24.5
%
24.2
%
23.8
%
23.8
%
40 pts
Net earnings attributable to Campbell Soup
Company
$
234
$
38
$
272
$
297
$
10
$
307
(11
)%
Diluted net earnings per share
attributable to Campbell Soup Company
$
.78
$
.13
$
.91
$
.99
$
.03
$
1.02
(11
)%
(a) See following tables for additional
information.
Three Months Ended
October 29, 2023
(millions, except per share amounts)
Restructuring
charges,
implementation
costs and other
related costs
(1)
Commodity
mark-to-
market
(2)
Accelerated
amortization
(3)
Costs
associated
with
pending
acquisition
(4)
Cybersecurity
incident costs
(5)
Plum
litigation
expenses
(6)
Adjustments
Gross profit
$
3
$
15
$
—
$
—
$
2
$
—
$
20
Marketing and selling expenses
(2
)
—
—
—
—
—
(2
)
Administrative expenses
(5
)
—
—
—
(1
)
(2
)
(8
)
Research and development expenses
(1
)
—
—
—
—
—
(1
)
Other expenses / (income)
—
—
(7
)
(9
)
—
—
(16
)
Restructuring charges
(2
)
—
—
—
—
—
(2
)
Earnings before interest and taxes
$
13
$
15
$
7
$
9
$
3
$
2
$
49
Interest, net
—
—
—
—
—
—
—
Earnings before taxes
$
13
$
15
$
7
$
9
$
3
$
2
$
49
Taxes
3
4
2
1
1
—
11
Net earnings attributable to Campbell Soup
Company
$
10
$
11
$
5
$
8
$
2
$
2
$
38
Diluted net earnings per share
attributable to Campbell Soup Company*
$
.03
$
.04
$
.02
$
.03
$
.01
$
.01
$
.13
*The sum of individual per share amounts
may not add due to rounding.
Three Months Ended
October 30, 2022
(millions, except per share amounts)
Restructuring
charges,
implementation
costs and other
related costs
(1)
Commodity
mark-to-
market
(2)
Pension and
postretirement
adjustments
(7)
Adjustments
Gross profit
$
—
$
(5
)
$
—
$
(5
)
Administrative expenses
(3
)
—
—
(3
)
Other expenses / (income)
—
—
(15
)
(15
)
Earnings before interest and taxes
$
3
$
(5
)
$
15
$
13
Interest, net
—
—
—
—
Earnings before taxes
$
3
$
(5
)
$
15
$
13
Taxes
—
(1
)
4
3
Net earnings attributable to Campbell Soup
Company
$
3
$
(4
)
$
11
$
10
Diluted net earnings per share
attributable to Campbell Soup Company*
$
.01
$
(.01
)
$
.04
$
.03
*The sum of individual per share amounts
may not add due to rounding.
(millions, except per share amounts)
Year Ended July 30,
2023
Gross profit, as reported
$
2,917
Add: Restructuring charges, implementation
costs and other related costs (1)
18
Deduct: Commodity mark-to-market
adjustments (2)
(21
)
Adjusted Gross profit
$
2,914
Adjusted Gross profit margin
31.1
%
Earnings before interest and taxes, as
reported
$
1,312
Add: Restructuring charges, implementation
costs and other related costs (1)
66
Deduct: Commodity mark-to-market
adjustments (2)
(21
)
Add: Accelerated amortization (3)
7
Add: Costs associated with pending
acquisition (4)
5
Deduct: Pension and postretirement
adjustments (7)
(15
)
Add: Divestiture (8)
13
Adjusted Earnings before interest and
taxes
$
1,367
Interest, net, as reported
$
184
Adjusted Earnings before taxes
$
1,183
Taxes on earnings, as reported
$
270
Add: Tax benefit from restructuring
charges, implementation costs and other related costs (1)
16
Deduct: Tax expense from commodity
mark-to-market adjustments (2)
(5
)
Add: Tax benefit from accelerated
amortization (3)
2
Add: Tax benefit from costs associated
with pending acquisition (4)
1
Deduct: Tax expense from pension and
postretirement adjustments (7)
(4
)
Adjusted Taxes on earnings
$
280
Adjusted effective income tax
rate
23.7
%
Net earnings attributable to Campbell
Soup Company, as reported
$
858
Add: Net adjustment from restructuring
charges, implementation costs and other related costs (1)
50
Deduct: Net adjustment from commodity
mark-to-market adjustments (2)
(16
)
Add: Net adjustment from accelerated
amortization (3)
5
Add: Net adjustment from costs associated
with pending acquisition (4)
4
Deduct: Net adjustment from pension and
postretirement adjustments (7)
(11
)
Add: Net adjustment from divestiture
(8)
13
Adjusted Net earnings attributable to
Campbell Soup Company
$
903
Diluted net earnings per share
attributable to Campbell Soup Company, as reported
$
2.85
Add: Net adjustment from restructuring
charges, implementation costs and other related costs (1)
.17
Deduct: Net adjustment from commodity
mark-to-market adjustments (2)
(.05
)
Add: Net adjustment from accelerated
amortization (3)
.02
Add: Net adjustment from costs associated
with pending acquisition (4)
.01
Deduct: Net adjustment from pension and
postretirement adjustments (7)
(.04
)
Add: Net adjustment from divestiture
(8)
.04
Adjusted Diluted net earnings per share
attributable to Campbell Soup Company
$
3.00
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231205902104/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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