Earnings call transcript Q3 2023

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Operator

Greetings, ladies and gentlemen, and welcome to the Campbell Soup Company Third Quarter Fiscal 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] As a reminder, this conference call is being recorded.

It is now my pleasure to introduce your host Rebecca Gardy, Chief Investor Relations Officer. ahead. go Please

Rebecca Gardy

President welcome conference and Officer third fiscal Officer. Mark quarter Campbell. Carrie Officer; Good Chief Anderson, I'm to Rebecca earnings Financial Clouse, are today call. joining Relations Chief Gardy, XXXX Executive And and morning, me Campbell's and Chief at Investor

Today's session. to we to prepared conclude accommodate remarks remarks, and a time more we effort been an pre-recorded transition live the Q&A webcast for have will reflect better Q&A. Once

as participants to possible opportunity us to many For that yourself as questions, ask limit ask two the we give to you questions.

today's The slide campbellsoupcompany.com. deck been press and our Relations earnings Investor to section website on posted the have release

the will of a Following of transcript Q&A at replay call followed a the be XX within by of the webcast hours. conclusion the the session, available same location

we Slide of today, our and on rely make statements. list are subject actual Please will These anticipated for could filings which vary from in to be and results of forward-looking those or assumptions expectations. current a factors reflect forward-looking materially cause inaccurate X call that risk. our our to On presentation our our statements SEC estimates to could which statements refer

we these a appendix directly have non-GAAP of each presentation. reconciliation of this of Because use GAAP measure we measures measures, most the the to provided comparable in

the full Carrie discuss third guidance for on Slide our as X, will XXXX. On more year you'll results well by see detail fiscal will quarter share quarter in performance our division. review in-market today's overall thoughts of Mark the his and agenda. as the performance financial

Mark. pleased over I'm to call that, to And the with turn

Mark Clouse

for earnings fiscal Thanks, Rebecca. call. you joining third our quarter morning, XXXX Good and everyone, thank

sales our by very inventory led press by rebuild. net read net we realization, to morning, in with third price favorable digit year-ago the strong in line you this release expectations, with our comparison partially retailer As growth mitigated quarter mid-single much our delivered

year-over-year EPS and items. higher declines primarily planned non-operating in low-single adjusted also adjusted digit experienced due We EBIT to

Overall, driven by strong of another net recovery, results service best-in-class levels, our it by supply inflation-driven quarter chain fueled was realization. favorable consistent sustained price in-market performance, and

these All areas company. key and of continue focus our be of for have to

we performance tremendous as broad-based Beverages, inventory experience benefit share, Our value rebuild. on meaningful & both from step build we Snacks, to on momentum expected and they where another We by margins. and cycled to did In growth strong made retailer quarter continue continued consumers. provide volume/mix in our was a led year the pressure and convenience change brands some prior Meals

are mid- It's fully worth to which back that in turn currently advantage. competitive service we supply as pre-COVID a to operations the continue is levels chain noting best-in-class our into to we high-XXs,

further inventory-driven in of taking addition, service volatility improvements In inventory we levels. significant expect these have as targeted advantage levels, to returned don't retailers our

out to range. tracking fiscal outlook our financial look fiscal and strong ranges for currently we the guidance of our are another adjusted we are 'XX adjusted sales and As we year, reaffirming EBIT, end EPS close full upper to year net

absorbs the and Our of May business, was on levels, environment, which divestiture normalized announced considers guidance current Emerald year the comparisons, the prior appropriately investment nuts XX.

in X%, of to significant sales driven the more which Now, net in-market inventory was decreased results, QX Organic Meals pronounced X%, turn & Meals primarily XXXX, I'll division. Beverages. consumption dollar quick the cycling our starting in by fiscal discussion of Beverages with a grew while the & divisional retailer with rebuild variance

pre-pandemic customer to to been return significantly up in improved Our year, and service tier points supply third the class, retailers versus top chain levels. execution inventory recovery prior has in approximately led XX to best levels, quarter our enabling

supply as same also the activity elasticities price and norm competitive by impacted well was quarter as others some increased historical the in inventory as Volume dynamic, improved. below

expect we volume Once we comparisons, cycle improve trends prior sequentially. to the tough year

We have & the growth years momentum progress remain over business last in potential several continued across confident Meals made and sustainable and relevance brands. Beverages considerable the in of the creating iconic our

Turning was elasticities versus flat to pricing year, below and on inflation-driven by historical reflecting share norm X. our essentially mitigated Slide prior Dollar some soup pressure. consumption portfolio increasing

As some year promotional this from inventory sales decline. was supply, of which improve majority of net for the ago, XX%, basis, On activity. competitors a we soup cycling seeing the are down impact reflecting primarily the accounts recovery increased disproportionate a

soup pleased leading relevance the four Strategically, renewed we've we last with our progress strongly over to continue believe are the the ability made the years. to in of business in grow and category the

soup, condensed relevance supported in-home example, have the we of growth For of improved especially cooking, where the meals.

new Importantly, to this consumers younger Campbell's. attracted has

addition our up Noodle significantly cooking, a from foundation are and eating to also including for providing levels, Chicken our Tomato, condensed pre-COVID business. In strong icons,

flankers of our recent which some Request Kids' like of softness However, an area opportunity. been have Healthy remain drivers flavors in share key

in-home to a promotion the discount is great primarily with This fundamentally product compelling growth to focuses current from position food on especially Next relevant quick value complete away-from-home options. deep Chunky or economic higher-priced restage been on younger the and and that frozen a transformed protein of consumers, brand and everyday with This climate particularly been a positioning has given purchase lunches. in has Soup. contrast

points return line. QX, consumption our weeks. latest in by some the step-up did dollar and pricing, growth, Spicy X and four-year seeing fueled pressure marketing, point we're XX% We up to impressive the but inflation-driven been share a in experience share four great X up already The has growth effective competitive like innovation in of in

gives a category and driving across offerings over results in the as a broth growth to Its four keep XX% to ready-to-serve dollar Pacific share consumers acquisition, line expanding performance consumption portfolio. up premium soup, us our last and premium points. to years Pacific organic have impressive, and the With business. platform of soup high-growth Finally, X.X our engine. a incremental been be the This proven has fantastic

tough will to a be confidence a These comparisons soup with the robust steady a that future three through cycle areas return field. of we strength the solidifies contributor and for as level-playing paired some of pipeline our

X, business. strong this to double consecutive growth, delivered our business Turning Slide its of sales continuing of momentum net quarter Snacks third digit the

by sales our net benefit slight mix. eight pricing norm XX% and volume fueled net below growth brands, reflecting decline historical a in of in Our resulted the and elasticities, which power was

business over also total consumption In-market year to our the our dollar power ago, grew and by prior Snacks years driven XX% in XX% brands. compared four

& from Although not Meals recovery in as significant the as inventory lapping some year also we of Beverages, a ago. were

chain XX%. are supply fact, our with customer significant In now our service recovery, levels averaging

of XX, four-year was basis, in growth, by steady growing driven digits up double with which power all On dollar Slide Drilling volume into share eight dollar dollar impactful our innovation. XX%, and a consumption quarter. consumption XX% was and brands a drumbeat strong on with the increased brands marketing

dollar both is and For categories. outsized outpacing consumption six their cookie that consumer highlighting for salty unique our portfolio the power our categories, our respective cracker of Snacks eight spans and demand growth brands, differentiated

contributions prior shows levels, consecutive shared for packaging a With innovations, over systematically year, each product significant investments, planned improvement increased service of new the our power the and quarters. the from four and rising brands trajectory of last

a Teens $X being the we great where with Piper XXXX continue is on most pace the when which Our preferred engaging marketing teens' named consumers and also fourth to a survey. Spring as according row, approach we Sandler's example, impact. on billion for greatest Taking Goldfish, to snack a have to win can Stock time focus is in brand brand efforts

of Brand. Building with as BAY innovation driving such on as Goldfish, innovation brands model portfolio, the success RedHot we Frank's snacking now our Kettle on the and such Goldfish our other LTOs are OLD increased in

taking have a chips the potato two air-finish and in We've performed kettle-cook Goldfish out new page market. of released also Our strong extremely with successful results, playbook. well LTOs

adding on innovation supply. fully like We're has on July recovered Late brands also that now

investment this will across innovation continue quarter. to and step we'll the up continue the behind in which brand As portfolio, we fourth build momentum building,

progress roadmap. we're to on grown past Snacks Our profit margin years, starting and two business has these now our and steadily see

Over seen we the operating earnings margins average have expand. growth even XX% strength top-line, also and with the our period, seen we've of same

ago year margin a XX%. also operating margin confident of two basis pacing track fiscal continue QX to goal. we'll XXXX, for Snacks in remain In improvement over points are our remaining and on an We XXX show we year-to-date, up operating steady versus the fact, to longer-term for absolute years that and while

year our Overall, comparison performance In we a to many critical and from across the year, every of facet as for another although showing continue & Beverages consistency business, and momentum of for the the with our business. to continued ago, line strong including supply in QX execution more be full with strong were margins, Snacks progress in a results pleased to chain, and leading cycle Campbell. on of our Meals sustained we're our track business our relevance importantly, year in summary, was remain right strategic tougher such and momentum We expectations. areas, fantastic

Carrie. to I'll over that, With turn it

Carrie Anderson

Thanks, good everyone. morning, Mark, and

as reflecting the third prior I'll as supply begin of overview benefit expected, discussed earlier. in-market an momentum, ongoing dynamics, Mark in the environment quarter pricing well of waves and chain and with which of inventory retailer as which our results, came

sales declines. realization, and year, X% mix by prior inflation-driven net increased organic partially versus offset favorable quarter Third price reflecting net volume

Higher higher higher adjusted and Adjusted postretirement this selling other than EBIT and adjusted income profit lower offset year. benefit decreased X%, primarily administrative higher adjusted and expenses related to driven by expenses. gross marketing pension more expenses

effective $X.XX, adjusted and lower EPS $X.XX decreased margin adjusted and XX%. income reduced XXX the by basis declined by EPS higher EBIT by XX Adjusted adjusted in by impact benefit points EBIT prior quarter. pension tax lower margin rate. The of and basis Adjusted versus a EBIT year to to X% driven postretirement points

our to EPS month million compared by relatively period when postretirement The last period lower EBIT last and top-line pension digits adjusted for stable view, by adjusted of Of year-to-date adjusted income reduced XX.X% benefit EPS year-to-date up note, up a and year. at to year-to-date XX.X% was the were EBIT compared $XX $X.XX. was and year, to impact margin double both the Turning adjusted QX and nine adjusted X%. EBIT

was in which service retailer net net estimate our we non-measured quarter. Slide period the bridge As growth inventory contributed points rebuild channels sales reflected in the sales growth levels growth measured consumption by X% third were year of in and largely organic driven lapping growth channels, offset in by XX, net X%, partially dollar sales the outpaced in between of approximately growth this percentage consumption expected recovering. of X This dollar on quarter when prior

net Volume the points consumption drivers higher as percentage in percentage as X 'XX, of inventory both and to well from the in inflation-driven QX quarter. elasticities. fiscal of lower volume the of net X% price our mix summarizes retailer of Slide third XX growth sales points, We of reflecting XX due generated declined cycling growth rebuild realization.

retailer implied digits, consistent for the we mid-single decline approximately of balance inventory, the of fiscal the Excluding the 'XX. underlying expect cycling with was rate impact of mix and volume run the

cycle fully strength below we Price as 'XX fiscal the illustrating elasticities levels, into improve continued remain brands. pricing. of underlying to trends volume our expect We historical

adjusted Our year, declining third and XX.X% volume as quarter gross from was by primarily last XX basis driven generally XX.X% this profit unfavorable expected, year, mix. to margin points

As the chain supply 'XX Beverages related in and costs, storm realization are to favorable by shown XX on price costs. Texas a in fiscal chain of chain insurance more and our XXXX. productivity than other improvements one-time basis bridge, other disruption QX benefit supply caused supply a Meals operations cost inflation & Within we lapping in offset net points temporary

page basis in third which was X% next the a mitigate have inflation, of we taken XX% highlights The third rate quarter to compared on quarter core the 'XX. to steps the fiscal in approximately

optimization. trade Our and actions include pricing targeted

reflected third and quarter, the impact three net of XX% and For was pricing pricing four. the waves

at of wave of fiscal start to four As 'XX. place pricing rounds third compared reminder, pricing, and was of July was effect of wave beginning went other in XXXX, selective the more quarter at the into a three which

across productivity We a enhancing to range margin a focus levers supply mitigate to the broader of including initiatives, discretionary other spending on improvements chain and continue deploy organization. inflation, including

commodity of of closely essentially balance and all are monitor markets. we exposure, year, raw fiscal continue our covered of materials the for terms In commodity to the the overall

higher selling selling net XX% by offset or expenses Overall, selling a of Marketing year. for million for expenses X% at marketing and net This cost the the expenses, of Moving was low by marketing of basis. and on sales operating fiscal end quarter items. and increased initiatives. quarter X% $X represented savings expenses to and targeted of to range we the our to on selling increase in from approximately year-over-year increased sales benefits the be our X% partially driven to full continue expect other

the promotion, and marketing or of current Within value-driven consumer versus and driven by landscape. to consumer selling, focus to prior match A&C, down was advertising programs a year, on X% prioritizing investments mix

X% settlement or benefit and and certain million offset increased higher incentive related $XXX to the general by expenses higher partially expenses costs, administrative Adjusted cost related higher to claims. legal administrative million $X by lower due compensation, to of inflation,

net As prior year. in with of administrative a percentage X.X%, adjusted line expenses were sales,

decreased benefit administrative income adjusted As other gross explained shown the increase expenses on of expenses expenses. the than Slide than lower to XX, $XX related X% and adjusted and postretirement million and EBIT in by selling this adjusted more more profit marketing pension higher Higher offset year. higher adjusted combination

EBIT than on adjusted administrative XX% to in our primarily growth. and of and year-over-year. margin selling a the income and impact The sales was the fairly decreased pension net higher impact of neutral R&D the Overall, margin higher basis postretirement adjusted points lower expenses as benefit point margin was higher quarter marketing expense expected adjusted and by expenses growth lower XXX quarter, profit driven XX gross in basis and

XX, share compared benefit tax lower $X.XX pension which adjusted X% the year. in just rate income EPS with by adjusted EPS Turning we impact effective was to was $X.XX per prior a along driven Slide quarter. a or $X.XX the to higher and of slightly discussed, to This adjusted down the postretirement was

primarily Meals in the volume to net sales foodservice elasticity-driven mix price by net third X%. X%, decreased net partially sales and declines, Turning In and reported Organic offset gains & to realization. Beverages, and inventory quarter decreased segments. due

year. Beverages settlement gross to of prior the due Third quarter decreased nearly profit, to the lapping XX% for operating insurance with Meals the decline earnings due XX% in & lower

XX.X% to decreased and and Third settlement. insurance in quarter margin productivity XXX and was cost realization segment XX.X%, profit On chain to basis retail, comparable impact largely shift due inflation operating price improvements at stable a the of mix by unfavorable driven compared stayed gross basis, year-ago lower other an in offset which XX.X%, segment margin, margin between year-to-date operating lapping point part costs. the relatively the net in quarter to Favorable third supply foodservice and the period. supply chain

third the driven up sales, double This which brands, by Snacks, third favorable Snacks price of net organic, business. XX%, XX% in realization, net mix. quarter was partially power is For and modest for of reported consecutive which digit volume offset our both increased declines and sales by and sales reflected growth net were quarter

slightly supply to higher profit margin chain marketing more gross chain operating due profit, costs. and Segment in the and expenses. earnings realization quarter partially offset primarily by productivity price selling increased XX%, net Gross cost than to improvements, due inflation favorable higher supply increased offsetting and other

increased points within quarter Overall, margin by XXX XX%. third our Snack basis to operating division, year-over-year

basis, we the quarter indicative to XX% is of margin year-to-date period. XX.X% XXX momentum On This for points we comparable third invest in expect the to full more margin business. year-ago the Snack year-to-date versus the operating as continue increased basis year in margin of the the

turn flow now I'll to our liquidity. and cash

lower with value our to shareholders, cash with line In we higher the and generation changes through capital, of Cash quarter. in flow the the to operations flow share over remains $XXX from working commitment earnings. due have strong $XXX was primarily year-to-date, from prior cash of cash year, to than end repurchases. Our million offset partially million returned by third dividends through operations return

year-to-date cash investing were Our previous $XXX the capital million year. from $XXX of million, outflows up of expenditures in from reflective activities

program million of million $XXX of dividends $XXX of end repurchase $XXX approximately share repurchase our financing including the we strategic under $XXX Our repurchases. quarter, million activities under million remaining approximately At the share million million paid anti-dilutive program. million, year-to-date $XXX and $XXX remaining $XXX current from outflows had were cash and share the

with equivalents million. cash quarter of $XXX the and ended cash We

EBIT net outlook sales, EPS our adjusted on XX, we adjusted and earnings are Slide to quarter second provided reaffirming call. our Turning

year-to-date are XXXX performance, fiscal Given tracking guidance. adjusted end upper our our EPS to we the of full year

on year and remaining two we months full And for accordingly, divestiture of the core May closed given of sales material inclusive the Emerald year the of business, the a not brands, the lost And our that momentum guidance results. of is will impact which year. our nuts recent fiscal have that of XXXX business our on fiscal XX, adjusted anticipate the profits

quarter we Snacks reaffirmed Our business consumers EBIT important into and marketing, especially reflects fourth value guidance sales in drive for as planned investments our adjusted continued months. summer momentum these EPS and adjusted and in

million Additionally, Snacks we business. 'XX, as expenditures expecting $XXX fiscal from to guidance are our capital manufacturing now of previous our million, in key $XXX capacity for full investments year up we look of accelerate

including the share approximately per represents by or X.X% the year other Our items to to pre-tax is all approximately compared growth postretirement lower million of income, be of adjusted EBIT EPS This and unchanged, full X% prior $X.XX remain year $XX benefit for which approximately full adjusted growth. and expected pension year. guidance

our execution, supply strong to To wrap expectations, chain. realization price and by operational driven third up, including quarter in tracked our our

the While function a which of and we see base volume volume did in largely quarter, year-over-year mix masked trends. decline comparisons, it was

We meeting in for managing and business, demonstrate activity, our year-to-date particularly growth margin to & our and quality, private continues competitive while consumer and are Meals business steady while label, progression. convenience value, needs accelerated Beverages Snacks

capital defined highest flow Our priorities we allocation opportunities. consistent, look strong deploying are cash to the well our against forward ROI and and

me the the begin let And over to Q&A. with call operator to that, turn

Operator

question And from from Lazar Andrew Instructions] your the comes line of Barclays. [Operator first

line is open. Your

Andrew Lazar

Great. Thank you so much. Good morning, everyone.

Mark Clouse

Andrew. Hey,

Andrew Lazar

bunch fair how in were gross But we Campbell's peers your and line could But growth about think curious this as relates to it and recently. related. it's compare, suppose, that results to should not I maybe some, I'm And be of for quarter. timing to food results packaged results on seen we've sales organic that a upsides some mentioned you Mark, with margin expectations. both sizable really

this in, a as transition more able as operating sort starts through And period of see normal approach let's say, to being way? sort do relatively some environment, you question. then, we the Campbell a So, Or benefit maybe keeled the volatility slack? group and more just pricing even to two-part should you. sort manage the ultimately pick of to of wane volume from Thank as up expect a to needs of important, starts sort

Mark Clouse

Sure. Yes, thanks, Andrew.

we're enabled I chain quarter like while. kind catch had dramatic third tough what had our quite to like. all always little up hand-to-mouth in think we where two a set cycling step-up such been a we up essentially It's year, that levels when what of low that XXs it's through we supply of in a had help last the the variables years XXs us and service of will a people as always hovering kind see lap and those in for to quarter look

But optically maybe few year not do a of if things or QX think I I are why can pieces try is distil indicator unique. quite think come, to down necessarily there an that this of are I harbinger to

when top-line, right, look X% worth also vol/mix was it or you the negative we if net So, directly we the dramatically that We from know X% replenishment sales net significantly side. X ago, on about which impact the sales, at to year cycle going a about is with a delivered but vol/mix. on growth inventory points,

of that supply would many. levels returns service. case levels And service chains you out, lot the essentially are pre-COVID now you our at pace fact, marketplace, reasons although for so, fully look how players We're back at back And to chain with a and if be we absolutely best-in-class. in of that or I than of where inventory if kind but to right it the needed don't their faster good recovered perhaps they would levels that to our do have look, a make recovered, retail other in supply I know in

little gave a faster some than supply so, And bit our in arguably, might probably other a places. it benefit chain have us

it, rate you feeling into the you that kind better that tell X% of consumption context got if growth of about with you've would much nonetheless, But you're quarter, put what run given especially rate. of the underlying, the underpinning market in kind for let's the X%, call I is

to of kind important pricing begin expect through lens. to down improve, at we to that come Although it and to do look volumes that's

kind ripple What is clear the then as of may you down not into margin. have as been immediately

bps XX have really on margin that. factors on bps So, gross margin. we to were off three and EBIT But XXX there's that you build about important about into

we've settlement each was expect the to as First, is also the dynamic for is one, mix about storm. QX. the about obvious had income XX me and was frustrating bps the there we'll into as impact There this that And that this insurance XX of pension to that the headwind share business, really quarter, inventory bps all of and to of it year, see continue perhaps Meals the less if cycling. on Beverage of related you & the

lot the in soup. And so, of a benefit ago a year was

lower in the well & points. So what soup is Beverage, you Meals that away-from-home basis number better number, and impact a was see, of over especially mix XXX

for fact, of those kind and pieces say was that about And margin contemplated you you in, with we're the different guidance elements a those year," And line track "Hey, if it's planning where when we as right the to it. our the EBIT you pretty how also see out we were picture. were expectations, year. laid together on came when So, think for kind put why EBIT of in relative we we're in saying,

Now, as historical be out that invest. to with And a of supply we've stepping we're levels. nothing the true that into to bit, room see I I up or that's but we is make to as going competition, to got others QX it want a sure continue recovering in that line always to dysfunctional look expect are

to going invest. be we're in able ourselves a position to So, keep to

basis about a and you at standpoint, really back of we is I see is on the all above for growth, But the a mean, on We're really we're this Snack on I a and improving share where up points XXX look your of bit and, which underlying vol/mix, from as broad-based XX%, question the there's cylinders. starting to the no year, seeing strong is improvement, mean lead and runway. business, kind margin fire. business feel what's I traction now when in on second great are. about into going significant for you the little my hitting part, the just peel really first it's that time,

than be see forward step what quarter the year. next in going for think, be to a we'll delivering, little meaningful we're better This in the But business quarter. I might really essence, a

so, feel 'XX, as It continue or for very down is to price I guidance outlook strong dynamic full growth. to profit And But good. to going I able see all be fronts. notwithstanding and again, I sustain come margins forward, progress a make to and volume different does and across improves. very potential look as And that's including being

unpack So, as is I quarter, matter variables, expected. And in think to far as few will the not although unfold what the us bellwether I this those ahead. this have that we way over very at quarters the world for industry or do we a end, the with necessarily of a the for line think much

Andrew Lazar

Okay. that Thanks so much. detail. Really appreciate

Operator

And your Goldman Ken line JPMorgan. next of the from question comes from

open. is line Your

Ken Goldman

Good Hi. morning.

Mark Clouse

Ken. Hey,

Ken Goldman

but looks you're what a requiring price seeing And the marketplace to And unit of then little competitor is touched on in of bit are it's for share it price. about Campbell a little soup. for in decelerating RTS, condensed, your investment. primary this, maybe but you Hi. ask like in some wanted I more a investing heavier losses

overstate want don't I what's in to So, scanner.

It's it more not we're getting of used are than those to be. getting been phrase, better a category. is soup kind race But were of long little since us for uncommon. dynamic who remember the You're But hey, those non-measured one lack competitions, we've tooth longer much questions there been in a It's a price of the that in when seen really a time rational bottom, kind to of channels. clearly risk that of right? is, a starting the this that is benefit from another

on So thoughts just the heading. direction about your curious is category

Mark Clouse

do point because and segments. different dynamic No, to we there a that talk kind by tend underneath do we it's that as to of you're you think -- soup macro. the see describing. Yes. out, a is are, would variables about of fights you I that And it it. different variety tell good not question, are the I begin

So, we're health us, look we've really soup, if focused you for long-term three think set up about in sustainability what previously, we areas. as big of about and

last The is relevancy over through around to we that able up condensed, the biggest relevance question we perhaps here saw And the that certainly over arguably, has the COVID?" which is, longer the picking to years continue first horizon, soup that sustain I've has growing been really, in history, year. CAGR remember pretty time why. may of X% that seen for been performance. we at the of steady But four any A years, I factors about Can a have drive question a nonetheless, a lot don't it. we gotten "Are it?

that I condensed, we it, there that areas look really And think in dialed at as are on. two we're

How condensed. lot, does very Cream that, sure strong. us icons have good a Tomato, Mushroom, The Those look?" X of making in of are strong pre-COVID? core very, better have really to compelling and is of share because competitive that's for Cream versus points differentiation, Chicken those foundation. we first that continues Noodle, set thing grown where get And off Chicken, a it asked "Are solid you icons be a And I

a people the was And it business that's think strategic exciting condensed, at grow. we there drive a last to big the attract where some think lot we world into questions signal I the that private the a the is for other overall cooking future. And millennials?" cooking. think versatility of on seeing the households great a were are a was of younger you lot a within part that continue label. to share But of I you In clear X.X pressure answer more were category "Can the most yes. which growth And on look of condensed where particular, area, I in is was if up the of point from the from relevant condensed coming we even and quarter, focus, see with

the In versatility on distortion fact, bit up to X if of a as in about you segment. that continued go back points see we've share based and our pre-COVID cooking to little now, focus of we're

our Now, bit on on to that a is value higher-priced sharper benefit. we're have make that proposition but flankers, of does going price little some to at get sure not that imply what more and

So, as do a not the all. race to this see I bottom at

Although in experience strategic thoughtful very pressure longer-term label, about we're being we condensed. do private the game some on

I I day, probe was I see going people and it. different it get different But want Ken, very are to So, a I that this understand to think it really space that and in know is really than on to past. do a in it, the

you're On ready-to-serve, right.

people bit supply, some which has into more really we're seeing there a competition, in an come Chunky, and but the game just been have And fact, nothing back transformation. is think unbelievable dysfunctional. I little

said it my this it delivering innovation. to something kind comments, value, protein repositioning to item value that's has convenience I be with really pair on successful, from low-cost you As when especially the promotion proven in and some of of

four and great little this saw where And in X the of I it's point we've Although business where headed. in about up since we're in COVID. time, pressure we back share a go grown And last you just it's quarter, points weeks, bit share feel the if overall, X again. at

world business. quarter. extremely the sleeper this the it's some of food, good or especially debunking down, there, other of I was our that been of the setting in great people a Pacific than brand are brand I buy bit premium perhaps well our Interestingly myth ready-to-serve trading it, if And value. the little of in going out it's of to whether ready-to-serve jars. jarred Chunky. has Pacific done concern category with kind think think really combination this If whole cans has Pacific are in faster a soups in fastest-growing That's enough that

you lower a Home little see but within our something is is in like in ready-to-serve value the quarter. share don't some Style, And of that perhaps high up quality, numbers and which was elements the bit growing priced XX%

Pacific adding So, a just Style little you distort Chunky, story. and between bit may the not see us to more Home ready-to-serve but

though categories, with working want generally great within that, more we're pressure, to really keep this think I some we're got things line So, see we resurgence we're we've forward, as come, premium sign of loss. contrast And speaking, category even right spaces for the feel of of look from be. like share expected a there. where to feeling positioned overall. flanker well in any to the I the kind where places I I in in don't these in to some is or benefit to to But

Pacific. And I talked about

the third Pacific, said, line share acquisition for more especially up great canned the growing The us. as COVID. area, we launched products. of And broadly beginning It's But of course, almost is just XX% include rapidly, since been a ready-to-serve, I it's to that's new been in of been where broth.

level this a different a a different probably think I'm on different a I certainly big and really all a longer to history. that bit return at soup, but that's is question. there's So, I of not little commitment. portfolio know just convinced day,

Ken Goldman

so Great. much. Thank you

Operator

next Your Bank line of Peter question comes Galbo from Lynch. America from the of Merrill

line open. is Your

Peter Galbo

Carrie. and Mark morning. Hey, Good

Mark Clouse

Hi.

Peter Galbo

the bit marketing point Mark, finer lot I put on on a of maybe just little we spent side. a know time to Maybe soup.

competitive in that sharper to spend, volume. you drive fourth on soup fiscal You the get get Snacks strategy is it the But Just get next the kind more of in season marketing us into to into kind talked bit I wanting of soup help get a value lever understand to year, think, just 'XX? about on again, as as part ramping eventually to marketing maybe not positions, in price, as we quarter. but of the pull

Mark Clouse

we year. Yes. pretty said, consistent Well, through I think, as the been

driven return kind of this start to combination but a been this has think the equity let's bit again, it's As of the of really end little promotion equalized at call got field, we significant I the going on points, supply, playing frequency, day, to the of or of balancing that the act be, also price the right more little a ensuring a to or level it, cycle of what's a right? benefit business, we've amount

it's that dilemma Chunky, cooking for we've you the work there, in condensed solving the Pacific. is pair in now into And what the year. dilemma, eating whether dinner, of that backdrop economic will been tool I'm runway great next idea continue that -- So, quick some for again, innovation for great we're with that to value just right able the position and or this as a

some bit you do of I think us, up little Peter, see said, a flankers. I of As dial might our

not businesses perhaps SpaghettiOs ready-to-serve, things of that or as some the are Style really in Swanson that's One talk & Beverages, the Home like interesting Chicken about, but well Meals don't more insignificant, of much all we broadly are or these positioned.

In I up businesses fact, named in were the XX% third and growing of quarter, the three all share. just

can few core complement in the a you will, that And so, bag, quite businesses. our we've if tools got

mind need in chase what right? not here That's not is price to do. to goal we down, The

four I think the given have to is news good an equity. and opportunity us the really strengthen us brand these years for

got but want And goal drive also basis to get right here We've right, be really to so, it going of differentiation. pricing and attack, we the our right? on to a is balanced promotion

soup but think, a And it's it's -- why we four of end I grown category four consistently -- our years the confidence well, although future. as a over or to, of there's the growing us that said, in I good. the always why conviction I gives point the been At rate always day, at and reason can years, lot was it's better the

Peter Galbo

reported? just when it. numbers this then, wondering much. you very hedging. that just market and that start you than two kind the unpack bridge, last one. want maybe In But gap the Carrie, through might I quickly that's that And core to think and the of it, for see quarter, to quick just inflation P&L that, can Thanks I was gross kind And we a quarter. you wider margin Thanks of whatever spread shrink rate, real came to if between bit what think between start call Mark. the Got of a kind the

Carrie Anderson

Yes.

fact which start think is in core I X% inflation at let's in quarter, with quarter, XX%. Last came the the overall, the was it direction. right that in trending

environment, was well. we're a in healthy going direction. definitely, us for And an in contributor still the as right in still but price certainly, the it's quarter inflationary So,

improvements, at essentially that price the job coming bridge, are nice realization then, on of covered when that And basis, there. core a a you the with improvement inflation combine our and business. through showing dollar doing think I you bridge and other And that look inflation we're productivity so, the really net if we you look in at

you've back we of settlement there cycling the some in we got going But on some got insurance a fact bps you've impact little as had XX last unpack what this year talked this unfavorable that as this inventory year. about that bit that to earlier, the well of is volume didn't storm Mark you what said have favorability and mix of with

got So, those more items the the offsetting I are that the think price bridge We've direction. bit those right two challenging. going core healthy is still items. there that make some the a But is in little inflation

Mark Clouse

had about shows the there bucket XX were well. that you Peter, that in bps too, remember, as we cycling was insurance And what, that that up

Operator

question next Lavery Piper comes the your line And Michael from from Sandler. of

Your open. line is

Michael Lavery

Thank you. Good morning.

Mark Clouse

Hey, Michael.

Michael Lavery

unpack consumer mentioned -- had A&C And be of a just maybe quarter. the mindful of some bit it? surprise. those consumer a trying of a about can you point I'm would if you're that the to bit, in couple a little you was value And what that spending percentage in You attribute time to was mindful think of some to and look you down points And switching, version just that of adjustments down how little like? the shifts a actually and at of where

Mark Clouse

Yes.

say a in and bit were I you of I support. selling get -- number we would -- if the relatively and balance A&C marketing most think so look at and right reduction. our trying we're -- would of in-market a of this marketing traditional a little call bit investment between very it What little overall, was small what and then to is we

the like was the whole Beverage people it's by extremely tactics put that Meals of value, the one we right by, our is really we're in sound meal solution a in together a throwback days did, a that gone working things you platform how meal the going to of & for And store to where a for through effective little do One primarily but low business. tool a us and simple that way, of helping now, well bit difference, price. the is lens

desire consumers with seeing you we're stretch what is would expect. this to ever-growing dollar think I their really as

trying marketing, in double and categories very we to a quarter, could gear that upward share. effective -- context. Pace soup These up on so, like which our And that matter, good Prego, really or even for digits had especially are where

make the QX, into continuing going bit of we little invest. go of it's as think So, to a us bit stable. a I A&C little the that more mix might the see to spending do you're

range goal company. and about selling that about for X% to talked under the In we've marketing X.X%, get to quarter, Remember, XX% that before mind for is we this of to this in at the X%. so were kind just

back quarter, go were you just the If we first under to X%.

creeping that So, we been have up.

underpinning QX, with try I fueling that value I'd getting close better. mind Beverage on in in to in we're & Meals think continuing going thought our business. QX, the us Snacks provide momentum to the good to see XX% do and to really of like equity to pretty on message

a more we was bit a ago we so, number. really did store. have little more down, A&C bit in focus it a it would wasn't shows where And been big on where year little a although And than

Michael Lavery

M&A, might from in was changed, gears billion should your the space progress anything of so meant just target extensions of the there have and or opportunities. we to shifting a looks $X XX%-ish about bit, about plans year-and-a-half that those come kind bit or of Day helpful. premium sauces thinking And can terms just of to the Investor going ago, if a white plan? brand Any or what's latest? And specifically, be on little update you maybe Okay. That's like back a little us it

Mark Clouse

the consumer we in sweet win. grocery, truly of opportunity this feel and and there's store meals want around to an relevance about Beverage of is that quick the dynamic be cooking & where is to think center area the right I sauce see So, consumer still will, the where you think we When in what second really business, muscle as in, a spot the great really think and we that momentum, if Meals we of you punch, is high kind right? now

gives of growth we a the between that the have. us more But love there's of And runway. happening a that's is Pace, in of we've fair lot spaces. foundation to it some and these got of think that mainstream a I great segments I that brands lot also premium say Prego

nothing more of think continuing in to already some endeavor the us in swing so, our for a in combination And a I I'd the the strategically tuck-in makes we to portfolio for balance fence on say, M&A there, is our great sense while the about mean M&A, continue and have in drive. brands sheet position. to I that aligned think

our at brands Late like has not business a I in So, think I got mean, could and like Snacks contributing Pacific changed that spot. we're like role. a remember, great we've even brands also all, feel vision we I July on our play think and

soup consistent what really great very to said it's Day. complement see rejuvenated that to sustainable think business. I a Investor We is So, in sauces and we a area

Operator

from Palmer question next comes Your line David from the of ISI. Evercore

open. is line Your

David Palmer

Thanks.

mentioned segment that already about step was that step You sustainable? more A&C Is on side. thinking down Snacks. margin Beverage First, how that. up. the Meals you're was a XX% & that at question That quarter strong a on wonder I this just

wondering ahead So, sort you're if journey of that segment margin? of on I'm

Mark Clouse

it the overall I was support and we results. a Pepperidge infuse Farm where Snacks take brands, could Yes. we really marketing continues great world acquisition, the would those imagined our say would describe and drive this from And quarter. muscle for as the kind I differentiated and thesis what of margin, really, it of Snyder's-Lance see where to innovation some to unique

you if share. X X. those of is is which the from up up on to up in business four X. deli, sandwich [indiscernible] crackers Pepperidge side, share pre-COVID up Factory, fact, Kettle Pretzel Cape of kind ago even X Crisps right, years X. is Snyder's-Lance points up and in Lance Snack the And And at are Goldfish our now points, brands look are

the what that So, demonstrating I now what like brands, exactly thesis we're was. of really with these feel we an evidence proposition of can do

step we've from benefit fairness, in of a up synergy little our that scale to of we've the the see for to think, bit is what all ability the the as translation waiting driven I Snyder's-Lance of been margins. and the acquisition

ways, look to us if at was being points, where of although of think same indicator period bit in a the many about here point hit I at And just where the and external we're acquisition. But about years, at a better how of think that a great Investor XX% basis finish. step we're that I run we're forward. last for of we we a to us see on like lot see at is little I'll that trajectory where pressure feel stuck XXX going XX%, us there up over out talked And year you the year, so, probably this a that's able up that, think And to you expecting year-to-date, we're was at a couple Day also in forward, that we time. for as the really when live look about continuing again, track to and I point vision that into think

the feeling relative Snacks now possible. believe you believe evidence, what So, on I right think a was good board lot if will, to putting in we're that we the in about to and quite

David Palmer

that sort you've into you fiscal has results Could advantage. just 'XX? Thank chain you of your about that And prepared will had I What mentioned like? make ultimately to there. heading trying thanks. know supply mean helpful. some And that you. a journey change That's in competitive for remarks been about talk in what leadership

Mark Clouse

that open about years, Yes. I of clock average, I this. chain back being our If It's and a pretty if been fairness, think bit was probably that a was the turn would I argue optimistic two In kind I supply view. we've probably in great question.

attack of good us waiting really I making give supply volatile not about it point was the environment that of improvements. think starting news kind and this in luxury chain the did the COVID through to

that even it's or emerged do now, what so, I a have later, is did challenge that had during it period. think several a years as really that now may strength. And been to And where found that, we we really a liability,

levels. about that all opportunity driving us puts position. And Our efficiently, this is that at you service are when in a and as now as pre-COVID you that in unique going too pretty also environment well running think know really productivity right there's best-in-class additional forward. levels chain And operating is supply

we the going. be think imagine momentum world opportunity see to So, can supply proof why and we an do we as future, point really a in we the the chain as contributor to keep a

see and businesses and world in I that and as as underlying Perhaps I that work that our margin self-help feel create just why that chapter. elements next confidence one positioned into the where think to of would Snacks on great quarter, going I story we're now next think organically of to us you the to chapter. navigate side very right about has environment. the unique credible we a Andrew's the to earnings today, reasons, well I and that we period the our also this this ways, albeit of a in one many through are why in opportunity first this the advantaged business good question conviction ability about do in that that feel truly of that say and lot I And opportunity, us into help we the to still as out particular, have momentum on outsized fuel come margin think, growth in through give

Operator

Stanley. question line Kaufman the from from of final your And comes Pamela Morgan

Your line open. is

Pamela Kaufman

to and and morning. backdrop. step take that thinking about see leading a a think How label? you into then a elasticities going price you the Do point you do good more how private I from down? are current back retailer And to we're where characterize we're see Mark, you operating wanted consumer Hi, likely anticipate would just at perspective, accelerating trade forward? and

Mark Clouse

on consumer overall first the perspective, has the I think think proven be. consumer and to I So, continued

they to probably is share think through on, we've to But of expensive do feel people seeing items. they're buying, migration they're greater away like When migration you the day amount what relative from paychecks I there Whether month, find purchase can. the of of no stretch as and I can a pressure. of shelf the question categories at store that seen perimeter as to we're long trying beginning to lens buying, to as resilient. as word beginning goes are the things grocery stable a that the that the is time imagine, of more it's what consumers

be that in. having to without on that But away with gave home, versus I chase question itself really messaging in We may a pricing necessarily relevant comparison but that the relevant something important primary said, be section can we're But as I that, to down. that protect categories our within different or meal affordability of both, way focus, in that you of the moment cooked of I also frame it's on even soup focusing in highly value. that all the to frozen to also opportunity that we focus value example always think that not creates or earlier value condensed ways the the ordering No relates brands something ways, different it the that make a right? buying think portfolio, we in from there's the you're lot and from in that our in within may be as we're the

is And going need. that of think or consumers real of what about of are be bringing what to to the operating relationships, solutions success then, I who's this helping determine a a customer lot address environment the will customers lot

we're you think in. that going timing to feeling important we're we're that to will, our execute that into I winning outperform, we those the into we're being much innovation, things we're and competition, is competitors, play chain as are whether very how market how will, sequence be marketing be environment heading in that's do also, thinking our real plans, private strong are to the able those in so, of hallmark a position think, I supply And is bringing those label of And where why and a going other execute I think, that be the of the how about or very, in. that a like promotions, well all if period very

Operator

We Ladies for and your concludes participation. conference today's you call. thank gentlemen, this

now You may disconnect.

Campbell Soup (CPB) 7 Jun 232023 Q3 Earnings call transcript