Campbell Reports Second-Quarter Fiscal 2024 Results
Expects to complete Sovos Brands, Inc. acquisition in
-
Net Sales were$2.5 billion , decreasing 1% on both a reported and organic basis. On a two-year-compound annual growth rate (CAGR), net sales increased 5% and organic net sales increased 6% due to favorable net price realization and continued brand strength. -
Earnings Before Interest and Taxes (EBIT) were
$317 million ; Adjusted EBIT was$364 million , an increase of 1%. -
Earnings Per Share (EPS) were
$0.68 ; Adjusted EPS were$0.80 , comparable to the prior year. - Reaffirms full-year fiscal 2024 guidance.
-
Subject to the satisfaction or waiver of customary closing conditions, Campbell expects to complete the acquisition of Sovos Brands, Inc. (Sovos Brands) the week of
March 11, 2024 .
CEO Comments
“We once again delivered on our commitments, with a sequential improvement in volume trends and year-over-year operating margin expansion in both our Meals & Beverages and Snacks divisions,” said Campbell's President and CEO,
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Three Months Ended |
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Six Months Ended |
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($ in millions, except per share) |
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% Change |
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% Change |
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As Reported (GAAP) |
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(1)% |
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(2)% |
Organic |
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(1)% |
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(1)% |
Earnings Before Interest and Taxes (EBIT) |
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As Reported (GAAP) |
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(9)% |
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(14)% |
Adjusted |
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1% |
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(5)% |
Diluted Earnings Per Share |
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As Reported (GAAP) |
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(12)% |
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(17)% |
Adjusted |
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—% |
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(6)% |
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.
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Diluted Earnings Per Share |
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Three Months Ended |
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Six Months Ended |
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As Reported (GAAP) |
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Restructuring charges, implementation costs and other related costs associated with cost savings initiatives |
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Commodity mark-to-market adjustments |
|
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|
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|
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$— |
Accelerated amortization |
|
|
$— |
|
|
|
$— |
Costs associated with pending acquisition |
|
|
$— |
|
|
|
$— |
Plum litigation expenses |
$— |
|
$— |
|
|
|
$— |
Cybersecurity incident costs |
$— |
|
$— |
|
|
|
$— |
Pension actuarial losses (gains) |
$— |
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$— |
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Adjusted |
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Second-Quarter Results
Net sales in the quarter decreased 1%. Organic net sales decreased 1% to
Gross profit increased to
Marketing and selling expenses were comparable to the prior year at
Administrative expenses increased 17% to
Other expenses were
As reported EBIT decreased to
Net interest expense was
As reported EPS were
First-Half Results
Net sales decreased 2% and organic net sales decreased 1% to
As reported EBIT decreased 14% to
Net interest expense was
As reported EPS increased to
Cash flow from operations was
Cost Savings Program from Continuing Operations
Through the second quarter, Campbell has achieved
Full-Year Fiscal 2024 Guidance:
Given the sequential volume and margin improvement for its key brands and categories, the company is reaffirming its full-year fiscal 2024 guidance provided on
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 the week of
The full-year fiscal 2024 guidance is set forth in the table below:
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FY2023
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FY2024
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($ in millions, except per share) |
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(0.5)% to +1.5% |
Organic |
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0% to +2% |
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Adjusted EBIT2 |
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+3% to +5% |
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Adjusted EPS2 |
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+3% to +5% |
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* 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 |
2 Adjusted EBIT in fiscal 2023 included approximately |
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:
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Three Months Ended |
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($ in millions) |
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Meals & Beverages |
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Snacks |
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Total* |
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|
|
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Volume/Mix |
(2)% |
|
(2)% |
|
(2)% |
Net Price Realization |
—% |
|
3% |
|
1% |
Organic |
(2)% |
|
1% |
|
(1)% |
Currency |
—% |
|
—% |
|
—% |
Divestiture1 |
—% |
|
(1)% |
|
(1)% |
% Change vs. Prior Year |
(2)% |
|
—% |
|
(1)% |
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|
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Segment Operating Earnings |
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% Change vs. Prior Year |
(1)% |
|
7% |
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*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 |
Note: A detailed reconciliation of the reported (GAAP) net sales to organic net sales is included at the end of this news release. |
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Six Months Ended |
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($ in millions) |
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Meals & Beverages |
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Snacks |
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Total |
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Volume/Mix |
(4)% |
|
(3)% |
|
(3)% |
Net Price Realization |
1% |
|
4% |
|
2% |
Organic |
(3)% |
|
1% |
|
(1)% |
Currency |
—% |
|
—% |
|
—% |
Divestiture1 |
—% |
|
(1)% |
|
(1)% |
% Change vs. Prior Year |
(3)% |
|
—% |
|
(2)% |
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Segment Operating Earnings |
|
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% Change vs. Prior Year |
(8)% |
|
6% |
|
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1 Reflects the loss of net sales associated with the divestiture of the Emerald nuts business, which was completed on |
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, both reported and organic, decreased 2% as declines in
Operating earnings in the quarter decreased 1% primarily due to lower gross profit, partially offset by lower marketing and selling expenses. Gross profit margin decreased due to higher cost inflation and other supply chain costs, partially offset by supply chain productivity improvements, the benefit from cost savings initiatives, favorable net price realization and favorable volume / mix.
Snacks
Net sales in the quarter were flat. 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 4%, partially offset by declines in third-party partner brands. Sales growth was driven by increases in cookies and crackers, primarily Goldfish crackers and Lance sandwich crackers, and in salty snacks. Within salty snacks, increases primarily in Kettle Brand and
Operating earnings in the quarter increased 7% primarily due to higher gross profit, partially offset by planned higher marketing and selling expenses. Gross profit margin increased due to favorable net price realization, supply chain productivity improvements, the benefit from cost savings initiatives and favorable volume / mix more than offsetting higher cost inflation and other supply chain costs.
Corporate
Corporate expenses were
Corporate expense in the current quarter included the following:
-
$34 million of costs related to cost savings initiatives; -
$10 million of costs associated with the pending acquisition of Sovos Brands; -
$7 million of accelerated amortization; -
$1 million of Plum litigation expenses; and -
$7 million of unrealized mark-to-market gains on outstanding undesignated commodity hedges.
Corporate expense in the second quarter of fiscal 2023 included:
-
$5 million of costs related to cost savings initiatives; -
$4 million of unrealized mark-to-market losses on outstanding undesignated commodity hedges; and -
$6 million of pension actuarial gains.
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
Reportable Segments
Meals & Beverages, which consists of our soup, simple meals and beverage products in retail and foodservice in
Snacks, which consists of
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
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 that the closing of the proposed transaction might not otherwise occur; long-term financing for the Sovos Brands transaction may not be obtained on favorable terms, or at all; 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
CONSOLIDATED STATEMENTS OF EARNINGS (unaudited) (millions, except per share amounts) |
||||||
|
|
Three Months Ended |
||||
|
|
|
|
|
||
Net sales |
|
$ |
2,456 |
|
$ |
2,485 |
Costs and expenses |
|
|
|
|
||
Cost of products sold |
|
|
1,680 |
|
|
1,726 |
Marketing and selling expenses |
|
|
217 |
|
|
217 |
Administrative expenses |
|
|
189 |
|
|
162 |
Research and development expenses |
|
|
25 |
|
|
21 |
Other expenses / (income) |
|
|
26 |
|
|
— |
Restructuring charges |
|
|
2 |
|
|
9 |
Total costs and expenses |
|
|
2,139 |
|
|
2,135 |
Earnings before interest and taxes |
|
|
317 |
|
|
350 |
Interest, net |
|
|
46 |
|
|
45 |
Earnings before taxes |
|
|
271 |
|
|
305 |
Taxes on earnings |
|
|
68 |
|
|
73 |
Net earnings |
|
|
203 |
|
|
232 |
Net loss attributable to noncontrolling interests |
|
|
— |
|
|
— |
Net earnings attributable to |
|
$ |
203 |
|
$ |
232 |
Per share - basic |
|
|
|
|
||
Net earnings attributable to |
|
$ |
.68 |
|
$ |
.78 |
Weighted average shares outstanding - basic |
|
|
298 |
|
|
299 |
Per share - assuming dilution |
|
|
|
|
||
Net earnings attributable to |
|
$ |
.68 |
|
$ |
.77 |
Weighted average shares outstanding - assuming dilution |
|
|
299 |
|
|
301 |
CONSOLIDATED STATEMENTS OF EARNINGS (unaudited) (millions, except per share amounts) |
||||||
|
|
Six Months Ended |
||||
|
|
|
|
|
||
Net sales |
|
$ |
4,974 |
|
$ |
5,060 |
Costs and expenses |
|
|
|
|
||
Cost of products sold |
|
|
3,410 |
|
|
3,467 |
Marketing and selling expenses |
|
|
439 |
|
|
418 |
Administrative expenses |
|
|
347 |
|
|
320 |
Research and development expenses |
|
|
49 |
|
|
42 |
Other expenses / (income) |
|
|
50 |
|
|
18 |
Restructuring charges |
|
|
4 |
|
|
9 |
Total costs and expenses |
|
|
4,299 |
|
|
4,274 |
Earnings before interest and taxes |
|
|
675 |
|
|
786 |
Interest, net |
|
|
94 |
|
|
91 |
Earnings before taxes |
|
|
581 |
|
|
695 |
Taxes on earnings |
|
|
144 |
|
|
166 |
Net earnings |
|
|
437 |
|
|
529 |
Net loss attributable to noncontrolling interests |
|
|
— |
|
|
— |
Net earnings attributable to |
|
$ |
437 |
|
$ |
529 |
Per share - basic |
|
|
|
|
||
Net earnings attributable to |
|
$ |
1.47 |
|
$ |
1.77 |
Weighted average shares outstanding - basic |
|
|
298 |
|
|
299 |
Per share - assuming dilution |
|
|
|
|
||
Net earnings attributable to |
|
$ |
1.46 |
|
$ |
1.76 |
Weighted average shares outstanding - assuming dilution |
|
|
299 |
|
|
301 |
CONSOLIDATED SUPPLEMENTAL SCHEDULE OF SALES AND EARNINGS (unaudited) (millions, except per share amounts) |
||||||||||
|
||||||||||
|
Three Months Ended |
|
|
|||||||
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|
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Percent
|
|||||
Sales |
|
|
|
|
|
|||||
Contributions: |
|
|
|
|
|
|||||
Meals & Beverages |
$ |
1,382 |
|
|
$ |
1,408 |
|
|
(2)% |
|
Snacks |
|
1,074 |
|
|
|
1,077 |
|
|
—% |
|
Total sales |
$ |
2,456 |
|
|
$ |
2,485 |
|
|
(1)% |
|
Earnings |
|
|
|
|
|
|||||
Contributions: |
|
|
|
|
|
|||||
Meals & Beverages |
$ |
247 |
|
|
$ |
249 |
|
|
(1)% |
|
Snacks |
|
161 |
|
|
|
150 |
|
|
7% |
|
Total operating earnings |
|
408 |
|
|
|
399 |
|
|
2% |
|
Corporate income (expense) |
|
(89 |
) |
|
|
(40 |
) |
|
|
|
Restructuring charges |
|
(2 |
) |
|
|
(9 |
) |
|
|
|
Earnings before interest and taxes |
|
317 |
|
|
|
350 |
|
|
(9)% |
|
Interest, net |
|
46 |
|
|
|
45 |
|
|
|
|
Taxes on earnings |
|
68 |
|
|
|
73 |
|
|
|
|
Net earnings |
|
203 |
|
|
|
232 |
|
|
(13)% |
|
Net loss attributable to noncontrolling interests |
|
— |
|
|
|
— |
|
|
|
|
Net earnings attributable to |
$ |
203 |
|
|
$ |
232 |
|
|
(13)% |
|
Per share - assuming dilution |
|
|
|
|
|
|||||
Net earnings attributable to |
$ |
.68 |
|
|
$ |
.77 |
|
|
(12)% |
CONSOLIDATED SUPPLEMENTAL SCHEDULE OF SALES AND EARNINGS (unaudited) (millions, except per share amounts) |
||||||||||
|
||||||||||
|
Six Months Ended |
|
|
|||||||
|
|
|
|
|
Percent Change |
|||||
Sales |
|
|
|
|
|
|||||
Contributions: |
|
|
|
|
|
|||||
Meals & Beverages |
$ |
2,786 |
|
|
$ |
2,863 |
|
|
(3)% |
|
Snacks |
|
2,188 |
|
|
|
2,197 |
|
|
—% |
|
Total sales |
$ |
4,974 |
|
|
$ |
5,060 |
|
|
(2)% |
|
Earnings |
|
|
|
|
|
|||||
Contributions: |
|
|
|
|
|
|||||
Meals & Beverages |
$ |
534 |
|
|
$ |
580 |
|
|
(8)% |
|
Snacks |
|
322 |
|
|
|
303 |
|
|
6% |
|
Total operating earnings |
|
856 |
|
|
|
883 |
|
|
(3)% |
|
Corporate income (expense) |
|
(177 |
) |
|
|
(88 |
) |
|
|
|
Restructuring charges |
|
(4 |
) |
|
|
(9 |
) |
|
|
|
Earnings before interest and taxes |
|
675 |
|
|
|
786 |
|
|
(14)% |
|
Interest, net |
|
94 |
|
|
|
91 |
|
|
|
|
Taxes on earnings |
|
144 |
|
|
|
166 |
|
|
|
|
Net earnings |
|
437 |
|
|
|
529 |
|
|
(17)% |
|
Net loss attributable to noncontrolling interests |
|
— |
|
|
|
— |
|
|
|
|
Net earnings attributable to |
$ |
437 |
|
|
$ |
529 |
|
|
(17)% |
|
Per share - assuming dilution |
|
|
|
|
|
|||||
Net earnings attributable to |
$ |
1.46 |
|
|
$ |
1.76 |
|
|
(17)% |
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (millions) |
|||||
|
|
|
|
||
Current assets |
$ |
2,070 |
|
$ |
2,087 |
Plant assets, net |
|
2,470 |
|
|
2,318 |
Intangible assets, net |
|
7,071 |
|
|
7,152 |
Other assets |
|
495 |
|
|
410 |
Total assets |
$ |
12,106 |
|
$ |
11,967 |
Current liabilities |
$ |
2,056 |
|
$ |
2,699 |
Long-term debt |
|
4,506 |
|
|
3,992 |
Other liabilities |
|
1,693 |
|
|
1,675 |
Total equity |
|
3,851 |
|
|
3,601 |
Total liabilities and equity |
$ |
12,106 |
|
$ |
11,967 |
Total debt |
$ |
4,520 |
|
$ |
4,570 |
Total cash and cash equivalents |
$ |
169 |
|
$ |
158 |
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (millions) |
|||||||
|
Six Months Ended |
||||||
|
|
|
|
||||
Cash flows from operating activities: |
|
|
|
||||
Net earnings |
$ |
437 |
|
|
$ |
529 |
|
Adjustments to reconcile net earnings to operating cash flow |
|
|
|
||||
Restructuring charges |
|
4 |
|
|
|
9 |
|
Stock-based compensation |
|
36 |
|
|
|
31 |
|
Pension and postretirement benefit expense |
|
3 |
|
|
|
3 |
|
Depreciation and amortization |
|
192 |
|
|
|
176 |
|
Deferred income taxes |
|
6 |
|
|
|
2 |
|
Other |
|
76 |
|
|
|
51 |
|
Changes in working capital |
|
|
|
||||
Accounts receivable |
|
(116 |
) |
|
|
(63 |
) |
Inventories |
|
102 |
|
|
|
(6 |
) |
Other current assets |
|
(22 |
) |
|
|
(12 |
) |
Accounts payable and accrued liabilities |
|
(17 |
) |
|
|
38 |
|
Other |
|
(17 |
) |
|
|
(26 |
) |
Net cash provided by operating activities |
|
684 |
|
|
|
732 |
|
Cash flows from investing activities: |
|
|
|
||||
Purchases of plant assets |
|
(263 |
) |
|
|
(155 |
) |
Purchases of route businesses |
|
(6 |
) |
|
|
(3 |
) |
Sales of route businesses |
|
13 |
|
|
|
— |
|
Net cash used in investing activities |
|
(256 |
) |
|
|
(158 |
) |
Cash flows from financing activities: |
|
|
|
||||
Short-term borrowings, including commercial paper |
|
1,416 |
|
|
|
1,389 |
|
Short-term repayments, including commercial paper |
|
(1,596 |
) |
|
|
(1,626 |
) |
Dividends paid |
|
(224 |
) |
|
|
(226 |
) |
|
|
(29 |
) |
|
|
(66 |
) |
|
|
— |
|
|
|
22 |
|
Payments related to tax withholding for stock-based compensation |
|
(14 |
) |
|
|
(18 |
) |
Other |
|
(1 |
) |
|
|
— |
|
Net cash used in financing activities |
|
(448 |
) |
|
|
(525 |
) |
Effect of exchange rate changes on cash |
|
— |
|
|
|
— |
|
Net change in cash and cash equivalents |
|
(20 |
) |
|
|
49 |
|
Cash and cash equivalents — beginning of period |
|
189 |
|
|
|
109 |
|
Cash and cash equivalents — end of period |
$ |
169 |
|
|
$ |
158 |
|
Reconciliation of GAAP to Non-GAAP Financial Measures
Second Quarter Ended
Organic
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 |
||||||||||||||||||||
|
|
|
|
|
% Change |
|||||||||||||||
(millions) |
|
Impact of
|
Organic
|
|
|
Impact of
|
Organic
|
|
|
Organic
|
||||||||||
Meals & Beverages |
$ |
1,382 |
$ |
— |
$ |
1,382 |
|
$ |
1,408 |
$ |
— |
|
$ |
1,408 |
|
(2 |
)% |
(2 |
)% |
|
Snacks |
|
1,074 |
|
— |
|
1,074 |
|
|
1,077 |
|
(13 |
) |
|
1,064 |
|
— |
% |
1 |
% |
|
Total |
$ |
2,456 |
$ |
— |
$ |
2,456 |
|
$ |
2,485 |
$ |
(13 |
) |
$ |
2,472 |
|
(1 |
)% |
(1 |
)% |
Six Months Ended |
||||||||||||||||||||
|
|
|
|
|
% Change |
|||||||||||||||
(millions) |
|
Impact of
|
Organic
|
|
|
Impact of
|
Organic
|
|
|
Organic
|
||||||||||
Meals & Beverages |
$ |
2,786 |
$ |
3 |
|
$ |
2,789 |
|
$ |
2,863 |
$ |
— |
|
$ |
2,863 |
|
(3 |
)% |
(3 |
)% |
Snacks |
|
2,188 |
|
(1 |
) |
|
2,187 |
|
|
2,197 |
|
(30 |
) |
|
2,167 |
|
— |
% |
1 |
% |
Total |
$ |
4,974 |
$ |
2 |
|
$ |
4,976 |
|
$ |
5,060 |
$ |
(30 |
) |
$ |
5,030 |
|
(2 |
)% |
(1 |
)% |
Three Months Ended |
||||||||||||||||||||
|
|
|
|
|
Two-Year CAGR |
|||||||||||||||
(millions) |
|
Impact of
|
Organic
|
|
|
Impact of
|
Organic
|
|
|
Organic
|
||||||||||
Meals & Beverages |
$ |
1,382 |
$ |
10 |
|
$ |
1,392 |
|
$ |
1,275 |
$ |
— |
|
$ |
1,275 |
|
4 |
% |
4 |
% |
Snacks |
|
1,074 |
|
(1 |
) |
|
1,073 |
|
|
934 |
|
(13 |
) |
|
921 |
|
7 |
% |
8 |
% |
Total |
$ |
2,456 |
$ |
9 |
|
$ |
2,465 |
|
$ |
2,209 |
$ |
(13 |
) |
$ |
2,196 |
|
5 |
% |
6 |
% |
Six Months Ended |
||||||||||||||||||||
|
|
|
|
|
Two-Year CAGR |
|||||||||||||||
(millions) |
|
Impact of
|
Organic
|
|
|
Impact of
|
Organic
|
|
|
Organic
|
||||||||||
Meals & Beverages |
$ |
2,786 |
$ |
20 |
|
$ |
2,806 |
|
$ |
2,541 |
$ |
— |
|
$ |
2,541 |
|
5 |
% |
5 |
% |
Snacks |
|
2,188 |
|
(2 |
) |
|
2,186 |
|
|
1,904 |
|
(32 |
) |
|
1,872 |
|
7 |
% |
8 |
% |
Total |
$ |
4,974 |
$ |
18 |
|
$ |
4,992 |
|
$ |
4,445 |
$ |
(32 |
) |
$ |
4,413 |
|
6 |
% |
6 |
% |
Three Months Ended |
|||||||||||||||
|
|
|
|
|
% Change |
||||||||||
(millions) |
|
Impact of
|
Organic
|
|
|
|
|
Organic
|
|||||||
Total |
$ |
2,485 |
$ |
8 |
$ |
2,493 |
|
$ |
2,209 |
|
12 |
% |
13 |
% |
Year Ended |
|||||||
|
|
||||||
(millions) |
|
Impact of
|
Organic Net
|
||||
Meals & Beverages |
$ |
4,907 |
$ |
— |
|
$ |
4,907 |
Snacks |
|
4,450 |
|
(51 |
) |
|
4,399 |
Total |
$ |
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, certain litigation expenses, costs related to a cybersecurity incident, 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 second quarter of fiscal 2024, the company recorded Restructuring charges of |
|
(2) |
In the second quarter of fiscal 2024, the company recognized gains in Cost of products sold of |
|
(3) |
In the second quarter of fiscal 2024, the company recorded accelerated amortization expense in Other expenses / (income) of |
|
(4) |
In the first quarter of fiscal 2024, the company announced its intent to acquire Sovos Brands, Inc. In the second quarter of fiscal 2024, the company incurred costs in Other expenses / (income) of |
|
(5) |
In the second quarter of fiscal 2024, the company recorded pre- and after-tax litigation expenses in Administrative expenses of |
|
(6) |
In the six-month period of fiscal 2024, the company recorded costs of |
|
(7) |
In the second quarter of fiscal 2023, the company recognized actuarial gains in Other expenses / (income) of |
|
(8) |
For the year ended |
The following tables reconcile financial information, presented in accordance with GAAP, to financial information excluding certain items:
|
Three Months Ended |
|
|
|||||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||
(millions, except per share amounts) |
As reported |
|
Adjustments(a) |
|
Adjusted |
|
As reported |
|
Adjustments(a) |
|
Adjusted |
|
Adjusted Percent Change |
|||||||||||||
Gross profit |
$ |
776 |
|
|
$ |
(4 |
) |
|
$ |
772 |
|
|
$ |
759 |
|
|
$ |
4 |
|
|
$ |
763 |
|
|
1% |
|
Gross profit margin |
|
31.6 |
% |
|
|
|
|
31.4 |
% |
|
|
30.5 |
% |
|
|
|
|
30.7 |
% |
|
70 pts |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Marketing and selling expenses |
$ |
217 |
|
|
$ |
(1 |
) |
|
$ |
216 |
|
|
$ |
217 |
|
|
$ |
— |
|
|
$ |
217 |
|
|
—% |
|
Administrative expenses |
$ |
189 |
|
|
$ |
(30 |
) |
|
$ |
159 |
|
|
$ |
162 |
|
|
$ |
(5 |
) |
|
$ |
157 |
|
|
1% |
|
Research and development expenses |
$ |
25 |
|
|
$ |
(1 |
) |
|
$ |
24 |
|
|
$ |
21 |
|
|
$ |
— |
|
|
$ |
21 |
|
|
|
|
Other expenses / (income) |
$ |
26 |
|
|
$ |
(17 |
) |
|
$ |
9 |
|
|
$ |
— |
|
|
$ |
6 |
|
|
$ |
6 |
|
|
|
|
Restructuring charges |
$ |
2 |
|
|
$ |
(2 |
) |
|
$ |
— |
|
|
$ |
9 |
|
|
$ |
(9 |
) |
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Earnings before interest and taxes |
$ |
317 |
|
|
$ |
47 |
|
|
$ |
364 |
|
|
$ |
350 |
|
|
$ |
12 |
|
|
$ |
362 |
|
|
1% |
|
Interest, net |
|
46 |
|
|
|
— |
|
|
|
46 |
|
|
|
45 |
|
|
|
— |
|
|
|
45 |
|
|
2% |
|
Earnings before taxes |
$ |
271 |
|
|
$ |
47 |
|
|
$ |
318 |
|
|
$ |
305 |
|
|
$ |
12 |
|
|
$ |
317 |
|
|
|
|
Taxes |
|
68 |
|
|
|
10 |
|
|
|
78 |
|
|
|
73 |
|
|
|
3 |
|
|
|
76 |
|
|
|
|
Effective income tax rate |
|
25.1 |
% |
|
|
|
|
24.5 |
% |
|
|
23.9 |
% |
|
|
|
|
24.0 |
% |
|
50 pts |
|||||
Net earnings attributable to |
$ |
203 |
|
|
$ |
37 |
|
|
$ |
240 |
|
|
$ |
232 |
|
|
$ |
9 |
|
|
$ |
241 |
|
|
—% |
|
Diluted net earnings per share attributable to |
$ |
.68 |
|
|
$ |
.12 |
|
|
$ |
.80 |
|
|
$ |
.77 |
|
|
$ |
.03 |
|
|
$ |
.80 |
|
|
—% |
|
(a) See following tables for additional information. |
|
Three Months Ended |
||||||||||||||||||||||
|
|
||||||||||||||||||||||
(millions, except per share amounts) |
Restructuring charges, implementation costs and other related costs
|
|
Commodity mark-to-market
|
|
Accelerated amortization
|
|
Costs associated with pending acquisition
|
|
Plum litigation expenses
|
|
Adjustments |
||||||||||||
Gross profit |
$ |
3 |
|
|
$ |
(7 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(4 |
) |
Marketing and selling expenses |
|
(1 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1 |
) |
Administrative expenses |
|
(29 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1 |
) |
|
|
(30 |
) |
Research and development expenses |
|
(1 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1 |
) |
Other expenses / (income) |
|
— |
|
|
|
— |
|
|
|
(7 |
) |
|
|
(10 |
) |
|
|
— |
|
|
|
(17 |
) |
Restructuring charges |
|
(2 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2 |
) |
Earnings before interest and taxes |
$ |
36 |
|
|
$ |
(7 |
) |
|
$ |
7 |
|
|
$ |
10 |
|
|
$ |
1 |
|
|
$ |
47 |
|
Interest, net |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Earnings before taxes |
$ |
36 |
|
|
$ |
(7 |
) |
|
$ |
7 |
|
|
$ |
10 |
|
|
$ |
1 |
|
|
$ |
47 |
|
Taxes |
|
9 |
|
|
|
(2 |
) |
|
|
2 |
|
|
|
1 |
|
|
|
— |
|
|
|
10 |
|
Net earnings attributable to |
$ |
27 |
|
|
$ |
(5 |
) |
|
$ |
5 |
|
|
$ |
9 |
|
|
$ |
1 |
|
|
$ |
37 |
|
Diluted net earnings per share attributable to |
$ |
.09 |
|
|
$ |
(.02 |
) |
|
$ |
.02 |
|
|
$ |
.03 |
|
|
$ |
— |
|
|
$ |
.12 |
|
|
Three Months Ended |
|||||||||||||
|
|
|||||||||||||
(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 |
$ |
— |
|
|
$ |
4 |
|
$ |
— |
|
|
$ |
4 |
|
Administrative expenses |
|
(5 |
) |
|
|
— |
|
|
— |
|
|
|
(5 |
) |
Other expenses / (income) |
|
— |
|
|
|
— |
|
|
6 |
|
|
|
6 |
|
Restructuring charges |
|
(9 |
) |
|
|
— |
|
|
— |
|
|
|
(9 |
) |
Earnings before interest and taxes |
$ |
14 |
|
|
$ |
4 |
|
$ |
(6 |
) |
|
$ |
12 |
|
Interest, net |
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
Earnings before taxes |
$ |
14 |
|
|
$ |
4 |
|
$ |
(6 |
) |
|
$ |
12 |
|
Taxes |
|
4 |
|
|
|
1 |
|
|
(2 |
) |
|
|
3 |
|
Net earnings attributable to |
$ |
10 |
|
|
$ |
3 |
|
$ |
(4 |
) |
|
$ |
9 |
|
Diluted net earnings per share attributable to |
$ |
.03 |
|
|
$ |
.01 |
|
$ |
(.01 |
) |
|
$ |
.03 |
|
|
Six Months Ended |
|
|
|||||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||
(millions, except per share amounts) |
As reported |
|
Adjustments(a) |
|
Adjusted |
|
As reported |
|
Adjustments(a) |
|
Adjusted |
|
Adjusted Percent Change |
|||||||||||||
Gross profit |
$ |
1,564 |
|
|
$ |
16 |
|
|
$ |
1,580 |
|
|
$ |
1,593 |
|
|
$ |
— |
|
|
$ |
1,593 |
|
|
(1 |
)% |
Gross profit margin |
|
31.4 |
% |
|
|
|
|
31.8 |
% |
|
|
31.5 |
% |
|
|
|
|
31.5 |
% |
|
30 pts |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Marketing and selling expenses |
$ |
439 |
|
|
$ |
(3 |
) |
|
$ |
436 |
|
|
$ |
418 |
|
|
$ |
— |
|
|
$ |
418 |
|
|
4 |
% |
Administrative expenses |
$ |
347 |
|
|
$ |
(38 |
) |
|
$ |
309 |
|
|
$ |
320 |
|
|
$ |
(8 |
) |
|
$ |
312 |
|
|
(1 |
)% |
Research and development expenses |
$ |
49 |
|
|
$ |
(2 |
) |
|
$ |
47 |
|
|
$ |
42 |
|
|
$ |
— |
|
|
$ |
42 |
|
|
|
|
Other expenses / (income) |
$ |
50 |
|
|
$ |
(33 |
) |
|
$ |
17 |
|
|
$ |
18 |
|
|
$ |
(9 |
) |
|
$ |
9 |
|
|
|
|
Restructuring charges |
$ |
4 |
|
|
$ |
(4 |
) |
|
$ |
— |
|
|
$ |
9 |
|
|
$ |
(9 |
) |
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Earnings before interest and taxes |
$ |
675 |
|
|
$ |
96 |
|
|
$ |
771 |
|
|
$ |
786 |
|
|
$ |
26 |
|
|
$ |
812 |
|
|
(5 |
)% |
Interest, net |
|
94 |
|
|
|
— |
|
|
|
94 |
|
|
|
91 |
|
|
|
— |
|
|
|
91 |
|
|
3 |
% |
Earnings before taxes |
$ |
581 |
|
|
$ |
96 |
|
|
$ |
677 |
|
|
$ |
695 |
|
|
$ |
26 |
|
|
$ |
721 |
|
|
|
|
Taxes |
|
144 |
|
|
|
21 |
|
|
|
165 |
|
|
|
166 |
|
|
|
6 |
|
|
|
172 |
|
|
|
|
Effective income tax rate |
|
24.8 |
% |
|
|
|
|
24.4 |
% |
|
|
23.9 |
% |
|
|
|
|
23.9 |
% |
|
50 pts |
|||||
Net earnings attributable to |
$ |
437 |
|
|
$ |
75 |
|
|
$ |
512 |
|
|
$ |
529 |
|
|
$ |
20 |
|
|
$ |
549 |
|
|
(7 |
)% |
Diluted net earnings per share attributable to |
$ |
1.46 |
|
|
$ |
.25 |
|
|
$ |
1.71 |
|
|
$ |
1.76 |
|
|
$ |
.07 |
|
|
$ |
1.82 |
|
|
(6 |
)% |
(a) See following tables for additional information. |
||||||||||||||||||||||||||
*The sum of individual per share amounts may not add due to rounding. |
|
Six Months Ended |
||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||
(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) |
|
Plum litigation expenses (5) |
|
Cybersecurity incident costs (6) |
|
Adjustments |
|
|||||||||||||
Gross profit |
$ |
6 |
|
|
$ |
8 |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
2 |
|
|
$ |
16 |
|
|
Marketing and selling expenses |
|
(3 |
) |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3 |
) |
|
Administrative expenses |
|
(34 |
) |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
(3 |
) |
|
|
(1 |
) |
|
|
(38 |
) |
|
Research and development expenses |
|
(2 |
) |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2 |
) |
|
Other expenses / (income) |
|
— |
|
|
|
— |
|
|
(14 |
) |
|
|
(19 |
) |
|
|
— |
|
|
|
— |
|
|
|
(33 |
) |
|
Restructuring charges |
|
(4 |
) |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(4 |
) |
|
Earnings before interest and taxes |
$ |
49 |
|
|
$ |
8 |
|
$ |
14 |
|
|
$ |
19 |
|
|
$ |
3 |
|
|
$ |
3 |
|
|
$ |
96 |
|
|
Interest, net |
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Earnings before taxes |
$ |
49 |
|
|
$ |
8 |
|
$ |
14 |
|
|
$ |
19 |
|
|
$ |
3 |
|
|
$ |
3 |
|
|
$ |
96 |
|
|
Taxes |
|
12 |
|
|
|
2 |
|
|
4 |
|
|
|
2 |
|
|
|
— |
|
|
|
1 |
|
|
|
21 |
|
|
Net earnings attributable to |
$ |
37 |
|
|
$ |
6 |
|
$ |
10 |
|
|
$ |
17 |
|
|
$ |
3 |
|
|
$ |
2 |
|
|
$ |
75 |
|
|
Diluted net earnings per share attributable to |
$ |
.12 |
|
|
$ |
.02 |
|
$ |
.03 |
|
|
$ |
.06 |
|
|
$ |
.01 |
|
|
$ |
.01 |
|
|
$ |
.25 |
|
|
|
Six Months Ended |
||||||||||
|
|
||||||||||
(millions, except per share amounts) |
Restructuring charges, implementation costs and other related costs (1) |
|
Pension and postretirement adjustments (7) |
|
Adjustments |
||||||
Administrative expenses |
$ |
(8 |
) |
|
$ |
— |
|
|
$ |
(8 |
) |
Other expenses / (income) |
|
— |
|
|
|
(9 |
) |
|
|
(9 |
) |
Restructuring charges |
|
(9 |
) |
|
|
— |
|
|
|
(9 |
) |
Earnings before interest and taxes |
$ |
17 |
|
|
$ |
9 |
|
|
$ |
26 |
|
Interest, net |
|
— |
|
|
|
— |
|
|
|
— |
|
Earnings before taxes |
$ |
17 |
|
|
$ |
9 |
|
|
$ |
26 |
|
Taxes |
|
4 |
|
|
|
2 |
|
|
|
6 |
|
Net earnings attributable to |
$ |
13 |
|
|
$ |
7 |
|
|
$ |
20 |
|
Diluted net earnings per share attributable to |
$ |
.04 |
|
|
$ |
.02 |
|
|
$ |
.07 |
|
*The sum of individual per share amounts may not add due to rounding. |
(millions, except per share amounts) |
|
Year Ended |
||
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 |
|
$ |
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 |
|
$ |
903 |
|
Diluted net earnings per share attributable to |
|
$ |
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 |
|
$ |
3.00 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20240305047630/en/
INVESTOR CONTACT:
(856) 342-6081
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