CORRECTING and REPLACING Campbell Reports Fourth-Quarter Fiscal 2024 Results; Provides Full-Year Fiscal 2025 Guidance

 


CAMDEN, N.J.–(BUSINESS WIRE)–Campbell Soup Company (NASDAQ:CPB) – Earlier today, Campbell issued its fourth quarter earnings press release. The purpose of this press release is to correct one error under the heading Full-Year Fiscal 2025 Guidance. The earnings release stated: The benefit of the 53rd week is included in the fiscal 2025 guidance below and is estimated to be worth approximately 2 points of growth to both reported and organic net sales and adjusted EBIT, along with $0.06 of adjusted EPS. The corrected statement is: The benefit of the 53rd week is included in the fiscal 2025 guidance below and is estimated to be worth approximately 2 points of growth to reported net sales and adjusted EBIT, along with $0.06 of adjusted EPS.

The updated release reads:

CAMPBELL REPORTS FOURTH-QUARTER FISCAL 2024 RESULTS; PROVIDES FULL-YEAR FISCAL 2025 GUIDANCE

For the fourth quarter:

  • Net Sales increased 11% to $2.3 billion and decreased 1% on an organic basis.
  • Earnings Before Interest and Taxes (EBIT) decreased to $77 million. Adjusted EBIT increased 36% to $329 million including the impact of the Sovos Brands, Inc. (Sovos Brands) acquisition.
  • Earnings Per Share (EPS) decreased to $(0.01). Adjusted EPS increased 26% to $0.63.

For the full year:

  • Net Sales increased 3% to $9.6 billion and decreased 1% on an organic basis.
  • EBIT decreased to $1 billion. Adjusted EBIT increased 6% to $1.5 billion including the impact of the Sovos Brands acquisition.
  • EPS decreased to $1.89. Adjusted EPS increased 3% to $3.08.
  • Returned $512 million to shareholders including $445 million in dividends.
  • Fiscal 2025 Investor Day to be held on September 10, 2024 at Nasdaq MarketSite.

Campbell Soup Company (NASDAQ:CPB) today reported results for its fourth-quarter and full-year fiscal 2024 ended July 28, 2024. Unless otherwise stated, all comparisons are to the same period of fiscal 2023.

CEO Comments

We finished fiscal 2024 with solid fourth-quarter performance including sequential volume improvement and margin expansion versus prior year and delivered significant progress against our longer-term strategic plan despite an evolving consumer landscape,” said Campbell’s President and CEO, Mark Clouse. “I’d like to thank the entire Campbell’s team for finding ways to deliver solid results in this dynamic environment. The strength of the Meals & Beverages recovery, including Soup, was a standout in the quarter as was the competitive advantage of our supply chain. The integration of Sovos Brands is progressing ahead of our expectations, marking a transformative shift in our Meals & Beverages growth trajectory. We’ve also advanced our Snacks margin journey, while delivering significant innovation and improved sales and marketing capabilities. All of this provides continued confidence in our ability to deliver sequential progress in fiscal 2025 as we continue to navigate the steady and ongoing recovery in the industry. More importantly, as we look ahead, we are strengthening our conviction in our longer-term outlook driven by our advantaged market-leading brands, capabilities and execution. We look forward to providing the roadmap and expectations for Campbell’s next chapter of growth at our upcoming investor day.”

 

Three Months Ended

 

Twelve Months Ended

($ in millions, except per share)

July 28, 2024

 

July 30, 2023

 

% Change

 

July 28, 2024

 

July 30, 2023

 

% Change

Net Sales

 

 

 

 

 

 

 

 

 

 

 

As Reported (GAAP)

$2,293

 

$2,068

 

11%

 

$9,636

 

$9,357

 

3%

Organic

 

 

 

 

(1)%

 

 

 

 

 

(1)%

Earnings Before Interest and Taxes (EBIT)

 

 

 

 

 

 

 

 

 

 

 

As Reported (GAAP)

$77

 

$272

 

(72)%

 

$1,000

 

$1,312

 

(24)%

Adjusted

$329

 

$242

 

36%

 

$1,454

 

$1,367

 

6%

Diluted Earnings Per Share

 

 

 

 

 

 

 

 

 

 

 

As Reported (GAAP)

$(0.01)

 

$0.57

 

n/m

 

$1.89

 

$2.85

 

(34)%

Adjusted

$0.63

 

$0.50

 

26%

 

$3.08

 

$3.00

 

3%

 

n/m – not meaningful

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

 

Twelve Months Ended

 

July 28, 2024

 

July 30, 2023

 

July 28, 2024

 

July 30, 2023

As Reported (GAAP)

$(0.01)

 

$0.57

 

$1.89

 

$2.85

Costs associated with cost savings and optimization initiatives

$0.10

 

$0.04

 

$0.28

 

$0.17

Costs associated with acquisition

$0.04

 

$0.01

 

$0.36

 

$0.01

Commodity mark-to-market losses (gains)

$0.07

 

$(0.08)

 

$0.05

 

$(0.05)

Accelerated amortization

$0.02

 

$0.02

 

$0.07

 

$0.02

Pension and postretirement actuarial losses (gains)

$0.08

 

$(0.10)

 

$0.08

 

$(0.04)

Impairment charges

$0.33

 

$—

 

$0.33

 

$—

Certain litigation expenses

$0.01

 

$—

 

$0.02

 

$—

Cybersecurity incident costs

$—

 

$—

 

$0.01

 

$—

Charges associated with divestiture

$—

 

$0.04

 

$—

 

$0.04

Adjusted*

$0.63

 

$0.50

 

$3.08

 

$3.00

 

*Numbers may not add due to rounding.

 

Fourth-Quarter Results

Net sales in the quarter increased 11% to $2.3 billion driven by the benefit from the Sovos Brands acquisition, which is also referred to below as the acquisition. Organic net sales decreased 1% to $2.0 billion with net price realization down 2%, partially offset by 1% favorable volume / mix that sequentially improved from the third quarter.

Gross profit increased to $675 million from $656 million. Gross profit margin was 29.4% compared to 31.7%. Excluding items impacting comparability, adjusted gross profit increased to $719 million from $632 million. Adjusted gross profit margin increased 80 basis points to 31.4% mainly driven by supply chain productivity improvements, which more than offset unfavorable net price realization, higher cost inflation and other supply chain costs, and the impact of the acquisition.

Marketing and selling expenses, which represented approximately 8% of net sales, decreased 6% to $188 million. Excluding items impacting comparability, adjusted marketing and selling expenses decreased 4% to $187 million, primarily driven by lower advertising and consumer expense (A&C) on the base business as the company lapped significant spending in the prior year. Reductions in A&C on the base business and lower incentive compensation were partially offset by the impact of the acquisition.

Administrative expenses increased 9% to $182 million. Excluding items impacting comparability, adjusted administrative expenses increased 1% to $165 million driven by the impact of the acquisition and higher general and administrative costs, mostly offset by the benefits from cost savings initiatives and lower incentive compensation.

Other expenses were $181 million compared to other income of $9 million, primarily driven by $129 million of non-cash impairment charges related to Pop Secret and Allied brands (including Tom’s, Jays, Kruncher’s, O-Ke-Doke, Stella D’oro and Archway) and by pension and postretirement actuarial adjustments. Excluding items impacting comparability, adjusted other expenses were $12 million compared to $7 million, driven by higher amortization of intangible assets related to the acquisition and lower pension and postretirement benefit income.

As reported EBIT decreased to $77 million from $272 million primarily driven by the above-mentioned impairment charges and pension and postretirement actuarial adjustments. Excluding items impacting comparability, adjusted EBIT increased 36% to $329 million primarily due to higher adjusted gross profit from the contribution of the acquisition and base business performance.

Net interest expense was $83 million compared to $47 million, primarily due to an increase in interest expense related to higher levels of debt to fund the acquisition. The effective tax rate was 50.0% compared to 24.9% driven by the impact of impairment charges. Excluding items impacting comparability, the adjusted effective tax rate increased 10 basis points to 23.2%.

As reported EPS were a loss of $0.01 per share compared to earnings of $0.57 per share. Excluding items impacting comparability, adjusted EPS increased 26% to $0.63 per share primarily reflecting the increase in adjusted EBIT, partially offset by higher net interest expense. The acquisition was approximately neutral to fourth-quarter adjusted earnings per share.

Full-Year 2024 Results

Net sales increased 3% to $9.6 billion driven by the benefit of the recent acquisition. Organic net sales decreased 1% to $9.2 billion with unfavorable volume / mix partially offset by the benefit of net price realization.

As reported EBIT decreased 24% to $1.0 billion primarily driven by the impact of impairment charges and costs associated with the acquisition. Excluding items impacting comparability, adjusted EBIT increased 6% to $1.5 billion primarily due to higher adjusted gross profit from the contribution of the acquisition, partially offset by higher adjusted marketing and selling and adjusted other expenses.

Net interest expense increased 32% to $243 million. Excluding items impacting comparability, adjusted net interest expense was $241 million compared to $184 million, primarily due to an increase in interest expense related to higher levels of debt to fund the acquisition. The effective tax rate increased 120 basis points to 25.1%. Excluding items impacting comparability, the adjusted effective tax rate was comparable to the prior year at 23.7%.

As reported EPS decreased to $1.89 per share compared to $2.85 per share. Excluding items impacting comparability, adjusted EPS increased $0.08, or 3%, to $3.08 per share primarily reflecting the increase in adjusted EBIT, partially offset by higher adjusted net interest expense. The acquisition was approximately neutral to full-year adjusted earnings per share.

Cash flow from operations was $1.2 billion compared to $1.1 billion primarily due to changes in working capital. Capital expenditures were $517 million compared to $370 million. In line with Campbell’s commitment to return value to its shareholders, the company paid $445 million of cash dividends and repurchased common stock of approximately $67 million. As of the fiscal year end, the company had approximately $301 million remaining under the current $500 million strategic share repurchase program and approximately $37 million remaining under its $250 million anti-dilutive share repurchase program.

Cost Savings Program from Continuing Operations

Through the fourth quarter, Campbell has delivered $950 million of total savings under its $1 billion multi-year cost savings program, inclusive of $60 million realized in fiscal 2024.

Additionally, post-closing, the company achieved $10 million in cost synergies related to the Sovos Brands integration plan.

Full-Year Fiscal 2025 Guidance:

Campbell’s full-year fiscal 2025 guidance reflects a balance between sequential progress and pragmatism as the company continues to navigate the on-going consumer recovery. The upper end of the range anticipates a quicker normalization of the consumer environment while the lower end of the range assumes a slower, more conservative pace of recovery.

The recent Pop Secret business divestiture closed on August 26, 2024, and accordingly, full-year guidance is inclusive of the lost sales and earnings of that business for the remaining eleven months of fiscal year 2025. The estimated impact of this divestiture is expected to reduce reported net sales growth by approximately 1% and have an expected dilutive impact of $0.04 to adjusted EPS in fiscal 2025.

Guidance reflects the following underlying assumptions:

  • Fiscal 2025 comprises 53 weeks, one additional week compared to fiscal 2024. The benefit of the 53rd week is included in the fiscal 2025 guidance below and is estimated to be worth approximately 2 points of growth to reported net sales and adjusted EBIT, along with $0.06 of adjusted EPS.
  • Net sales growth of 9% to 11% reflecting a full twelve-month contribution from Sovos Brands and the loss of eleven months of net sales from the divestiture of Pop Secret.
  • Organic net sales flat to up 2% reflecting modestly positive volume/mix compared to fiscal 2024.
  • Adjusted EBIT growth of 9% to 11%, including the contribution from the acquisition, the impact of the divestiture of Pop Secret and reflecting the following:

    • Inflation in the low-single digit range, with continued mitigation through a variety of levers including productivity improvements of approximately 3% and cost savings initiatives of approximately $70 million, inclusive of cost synergies related to the integration of Sovos Brands.
  • A continued commitment to brand investments, with marketing and selling expenses as a percent of net sales expected to return into the targeted range of 9-10%, including an increase in the first quarter of fiscal 2025.
  • Total company adjusted EBIT margin comparable to fiscal 2024. Snacks operating margin is expected to reflect modest growth inclusive of the near-term margin impact of the Pop Secret divestiture. Meals & Beverages operating margin is expected to be modestly lower reflecting the mix impact of Sovos Brands, partially offset by a modest margin improvement in the base business.
  • Adjusted EPS growth of 1% to 4% with Sovos Brands expected to be approximately neutral and including the impact of the Pop Secret divestiture.
  • Adjusted net interest expense expected to be between $350 million and $355 million.

    • Net interest expense is expected to be higher than fiscal 2024 reflecting a full year of incremental debt related to the Sovos Brands acquisition and higher expected interest expense associated with the anticipated refinancing of the company’s March 2025 bond maturities, with expected debt issuance timing driven by market conditions.

Other additional guidance assumptions can be found in the accompanying investor presentation available at investor.campbellsoupcompany.com/events-and-presentations.

The full-year fiscal 2025 guidance is set forth in the table below:

 

 

 

FY2024 Results

 

FY2025 Guidance

 

 

($ in millions, except per share)

 

 

 

 

 

 

 

 

Net Sales

 

 

$9,636

 

 

+9% to +11%

 

 

Organic Net Sales1

 

 

$9,525

 

 

0% to 2%

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBIT

 

 

$1,454

*

 

+9% to +11%

 

 

 

 

 

 

 

 

 

 

 

Adjusted EPS

 

 

$3.08

*

 

+1% to +4%

 

 

 

 

 

 

 

 

$3.12 to $3.22

 

 

* Adjusted – refer to the detailed reconciliation of the reported (GAAP) financial information to the adjusted financial information at the end of this news release.

1 Growth rate adjusted for Sovos Brands which was acquired on March 12, 2024, the impact of the 53rd week in fiscal 2025 and Pop Secret which was divested on August 26, 2024.

Note: A non-GAAP reconciliation is not provided for fiscal 2025 guidance as the company is unable to reasonably estimate the full-year financial impact of items such as actuarial gains or losses on pension and postretirement plans because these impacts are dependent on future changes in market conditions. The inability to predict the amount and timing of these future items makes a detailed reconciliation of these forward-looking financial measures impracticable.

Segment Operating Review

An analysis of net sales and operating earnings by reportable segment follows:

 

Three Months Ended July 28, 2024

 

($ in millions)

 

Meals & Beverages

 

Snacks*

 

Total

Net Sales, as Reported

$1,200

 

$1,093

 

$2,293

 

 

 

 

 

 

Volume/Mix

2%

 

—%

 

1%

Net Price Realization

(1)%

 

(2)%

 

(2)%

Organic Net Sales

1%

 

(3)%

 

(1)%

Currency

—%

 

—%

 

—%

Acquisition / (Divestiture)1

27%

 

—%

 

12%

% Change vs. Prior Year

28%

 

(3)%

 

11%

 

 

 

 

 

 

Segment Operating Earnings

$211

 

$159

 

 

% Change vs. Prior Year

60%

 

1%

 

 

 

*Numbers may not add due to rounding.

1 Reflects the incremental net sales associated with the Sovos Brands acquisition, which was completed on March 12, 2024, and the loss of net sales associated with the divestiture of the 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.

 

Twelve Months Ended July 28, 2024

 

($ in millions)

 

Meals & Beverages*

 

Snacks

 

Total

Net Sales, as Reported

$5,258

 

$4,378

 

$9,636

 

 

 

 

 

 

Volume/Mix

(2)%

 

(2)%

 

(2)%

Net Price Realization

—%

 

1%

 

1%

Organic Net Sales

(1)%

 

(1)%

 

(1)%

Currency

—%

 

—%

 

—%

Acquisition / (Divestiture)1

9%

 

(1)%

 

4%

% Change vs. Prior Year

7%

 

(2)%

 

3%

 

 

 

 

 

 

Segment Operating Earnings

$974

 

$648

 

 

% Change vs. Prior Year

9%

 

1%

 

 

 

*Numbers may not add due to rounding.

1 Reflects the incremental net sales associated with the Sovos Brands acquisition, which was completed on March 12, 2024, and the loss of net sales associated with the divestiture of the 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 increased 28% driven by the benefit of the Sovos Brands acquisition. Excluding the acquisition, organic net sales increased 1% driven by gains in U.S. Soup, foodservice and Prego pasta sauces, partially offset by declines in beverages. Favorable volume / mix of 2% was partially offset by lower net price realization of 1%. Sales of U.S. soup increased 2% primarily due to an increase in broth, partially offset by decreases in ready-to-serve soups and condensed soups.

Operating earnings in the quarter increased 60% primarily driven by the contribution of the acquisition and higher gross profit in the base business. Gross profit margin increased due to lower other supply chain costs, supply chain productivity improvements and favorable mix, partially offset by moderate inflation, the impact of the recent acquisition and planned unfavorable net price realization.

Snacks

Net sales, both reported and organic, decreased 3% in the quarter. Volume / mix was flat with approximately 1% growth in power brands and a 1% reduction in partner and contract brands. In addition, there was slightly more than a 2% unfavorable net price realization of which approximately half was a planned net pricing investment and the balance reflecting the lapping of favorable trade phasing in the fourth quarter of fiscal 2023.

Operating earnings in the quarter increased 1% primarily due to lower marketing and selling expenses, partially offset by lower gross profit. Gross profit margin decreased due to higher other supply chain costs and lower net price realization, partially offset by supply chain productivity improvements.

Corporate

Corporate expense was $272 million in the fourth quarter of fiscal 2024 compared to $17 million. The increase was primarily due to non-cash items impacting comparability, partially offset by lower 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; and as of March 12, 2024, Rao’s pasta sauces, dry pasta, frozen entrées, frozen pizza and soups; Michael Angelo’s frozen entrées and pasta sauces; and noosa yogurts. The segment also includes snacking products in foodservice and Canada.

Snacks, which consists of Pepperidge Farm cookies*, crackers, fresh bakery and frozen products, including Goldfish crackers*, Snyder’s of Hanover pretzels*, Lance sandwich crackers*, Cape Cod potato chips*, Kettle Brand potato chips*, Late July snacks*, Snack Factory pretzel crisps*, and other snacking products in retail in the U.S. 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, and Pop Secret business, which was sold on August 26, 2024.

About Campbell

For more than 150 years, Campbell (Nasdaq: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 2024 net sales of $9.6 billion. Our portfolio includes iconic brands such as Campbell’s, Cape Cod, Goldfish, Kettle Brand, Lance, Late July, Milano, Michael Angelo’s, noosa, Pace, Pacific Foods, Pepperidge Farm, Prego, Rao’s, 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 risk that the cost savings and any other synergies from the Sovos Brands, Inc. (“Sovos Brands”) transaction may not be fully realized or may take longer or cost more to be realized than expected, including that the Sovos Brands transaction may not be accretive within the expected timeframe or the extent anticipated; the risks related to the availability of, and cost inflation in, supply chain inputs, including labor, raw materials, commodities, packaging and transportation; the company’s ability to execute on and realize the expected benefits from its strategy, including growing sales in snacks and growing/maintaining its market share position in soup; the impact of strong competitive responses to the company’s efforts to leverage 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 co-manufacturer and supplier relationships; the risks related to the effectiveness of the company’s hedging activities and the company’s ability to respond to volatility in commodity prices; the company’s ability to manage changes to its organizational structure and/or business processes, including selling, distribution, manufacturing and information management systems or processes; changes in consumer demand for the company’s products and favorable perception of the company’s brands; changing inventory management practices by certain of the company’s key customers; a changing customer landscape, with value and e-commerce retailers expanding their market presence, while certain of the company’s key customers maintain significance to the company’s business; product quality and safety issues, including recalls and product liabilities; the possible disruption to the independent contractor distribution models used by certain of the company’s businesses, including as a result of litigation or regulatory actions affecting their independent contractor classification; the uncertainties of litigation and regulatory actions against the company; the costs, disruption and diversion of management’s attention associated with activist investors; a disruption, failure or security breach of the company’s or the company’s vendors’ information technology systems, including ransomware attacks; impairment to goodwill or other intangible assets; the company’s ability to protect its intellectual property rights; increased liabilities and costs related to the company’s defined benefit pension plans; the company’s ability to attract and retain key talent; goals and initiatives related to, and the impacts of, climate change, including 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, geopolitical conflicts, extreme weather conditions, natural disasters, pandemics or other outbreaks of disease or other calamities; and other factors described in the company’s most recent Form 10-K and subsequent Securities and Exchange Commission filings.

Contacts

INVESTOR CONTACT:

Rebecca Gardy

(856) 342-6081

Rebecca_Gardy@campbells.com

MEDIA CONTACT:

James Regan

(856) 219-6409

James_Regan@campbells.com

Read full story here

Artículos Relacionados