CPB - Earnings call transcript Q4 2024

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Operator

Greetings, ladies and gentlemen, and welcome to the Campbell Soup Company Fourth Quarter Fiscal 2024 Earnings Conference Call. [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. Please go ahead.

Rebecca Gardy

Good morning, and welcome to Campbell's Fourth Quarter Fiscal 2024 Earnings Conference Call. have Investor Mark at and Clouse, Chief Officer. Today's Chief me and Carrie Gardy, Financial are today Chief remarks Rebecca Relations Campbell, Officer joining Anderson, I'm prerecorded. been Executive Officer; webcast the conclude will a remarks, Once Q&A we prepared session. transition we to live Investor The the today's posted and our on deck press release section slide been website, have earnings to Relations campbellsoupcompany.com.

as year full financial morning. in well more the and on call Q&A the within we to the will for results of in-market webcast Because directly anticipated factors fourth will assumptions year transcript have are of available today's at detail and the same presentation. Slide Mark refer for Slide and X actual Following use Carrie inaccurate our that year today, which outlines to followed make of could of a the into of as hours. On a list we the in fiscal insights measures expectations. will these forward-looking cause or which reconciliation reflect to full those and filings 'XX of most from fiscal could XX replay statements performance our our the conclusion vary our provided our each X materially be SEC call in statements, statements. of measures, session, discuss GAAP a appendix provided rely Please of subject to our quarter a of non-GAAP then location agenda. the quarter the our measure results division. forward-looking These risk. by will presentation be and by current the estimates, which our provide full our the fourth XXXX, comparable outline this we guidance performance we

that, And the contribution full a such, Sovos to of Brands. over financial reminder, Sovos the turn and year a completed pleased we fiscal from include to partial I'm March call on the year with XX, Mark. As Brands XXXX acquisition as results

Mark Clouse

double-digit joining Good our continued Rebecca. Thanks, consumer a for earnings 'XX fiscal sequentially volume to of you growth, we divisions, In including landscape against drove we margins businesses. It the and results, quarter and also call. fourth both on quarter across growth navigate which the progress adjusted a improvement during evolving successfully thank morning, everyone, consecutive delivered solid EPS adjusted strategic underpinned year-over-year sequential dynamic EBIT our and improving second marks plan. QX, end of by year, significant both

of into & Meals business substantial story continued In the addition, & divisions, integration still on Brands best Beverages performance Beverages improved Snacks. sequential on was and advance for Sovos both mixed, we the in growth volume-driven progress improvement but with to the and see food momentum our Meals business. In-market on

somewhat it at slower is a Snacks progressing the While direction. right unfolding continues than recovery like, we'd the in category pace

details in today, we also half in our appropriate reflects incorporates continue steady to we a the Snacks Finally, introduced fiscal Carrie of of level 'XX will the provide of year. expectation which as and guidance more of the first navigate pragmatism recovery an moment. progress

best our look in behavior sustained at 'XX, also story uniquely more of forward food. remain We portfolios remain our we New dependable one in we confident have strength sharing in and into view growth never Day While steadfast that the we on our more to of business. long-term to vigilant normalize, fiscal that in as with trajectory continue We all deliver and head York. we positioned consumer the to September are of and been Investor of XX this will

the prior declined compared sales to the in quarter X% net Turning to Slide X, year. organic fourth

of at which phasing, organic down brands slightly which again was difference I'd point adjusted year, sales at volume improved in were sequentially, acquisition flat year in basis, note put guidance. approximately partner some digits. year adjusted expectations. In-market us and recent adjusted of The X we prior was both our line, EPS and EBIT increased and As by were the a midpoint growing of our our exceeded Sovos double by EPS, consumption the net from full headwinds business. On that Brands for the EPS. driven most and adjusted on Snacks we consumption while expected, EBIT and trade top compared full versus primarily $X.XX adjusted adjusted neutral essentially both to EPS to roughly was the

continued to consumer experienced & As growth similar first I households. this consumer for Beverages The We quarters and the lower the is quarter prudent roughly progress, fourth modest remained were why the improving to past of stable continues to in both the somewhat continued while, one and categories positive a this signaling in X%, middle-income mentioned, dollars over encouraged QX. in food's units. Strong consumer the growing beginning extend trend the confidence of edible to including time and being fragile X expectations total and to still on we've a support of negative mix household recovery QX. sense. And the dynamics, indicator state consumer reversal penetration, makes quarter, was reflect improvement of the trend XX% move in metrics see Meals Snacks the into and in sequential volume territory including in This for quarter.

integration However, as see I Slide with want a when. On overall, material Sovos. before, if, as we've rather of briefly the of the we to but recovery we're a consumer the expand question X, experiencing question not said the environment, of to upon of benefit continue

pro of for resilience our and points. the pro the initial rate growth, pace from to year X% growth Sovos growth estimates increased company. the growth have business's strength of the organic total an ahead an volume from net brand. would on the to mix on forma This prior forma reflects continues especially There's declined XXX approximately Sovos, including and basis, the contribution While and XXX-basis-point a in our and basis company mix, Rao's the benefit total resulting QX also X% sales volume

organic of Meals sales compared to our in net on the the & in achieved Slide year. XX. Moving Beverage quarter prior We division X% to growth

legacy end with volume that's More Sovos of the Meals fueled importantly, businesses This Brands, our building offset consistent growth, & point market planned & the second X% confidence by a pro potential forward. Beverages our On division Beverages an basis Sovos strong by important across investment. and the Brands, improving with both in consumption. of of quarter of also a that volume is performance addition by and Meals was Meals & indicator combined going net pricing grew volume growth, fueled net mix fueled by growth growth forma X%, X Beverages sales

to more XX. Moving good Page news on

average latest although QX households. Underlying Our strengthened broth label wet soup dollar X continues great home add consumption helped pulling business very more soup soup healthy, pressure we're during growth surpassing creating the of in favor the share category that business X% also as trends is down. category focus The note weeks, cooking. opportunity double benefit from to a Notably, also was to is with up approximately X%, momentum category major did supply new our remaining consumption as dollar dynamic, we fourth head meals season. increased away and respectively, experiencing in a building the and share important the point. X up digits, this even supplier were into by on Swanson consumers It's our the for quarter, was trading category one we eating Campbell's experiencing and private from where points robust ready-to-serve, on constraints. back area by experience home in X of Swanson gains some to soup in

volume to Rao's after expect pipeline are marketing seeing of about our about some We this Overall, becomes a stabilization Chunky, soup, soup answered and did, innovation ready-to-serve very question across weather COVID inflation? confident also and of up our Pacific can nearly grow as both it and quarter, relevant. we lunch and We're more role X%. improve brands. mix And the changes robust the important dynamics and already at

in-market. also portfolio, different sauces. but steady range. $X the previously market-leading price combination address and multiple and by of share provide overall performance growth which needs. billion of points sauces in was up Italian grow the brands ongoing very be growth of stated Prego. to strong job Rao's team reasons in business, we in to of complements as XX% ability confident the our of Day, integration, consumption assortment more to during dollar continued marketing our strategy portfolio. Slide fiscal continued of for #X XX the occasions expectation confident Turning growth X% XX% meeting our maintaining Prego. teens the our We'll that rate in-market Slide with our for with I Rao's. across at as has not SKU digits, sauce fantastic Prego, the the Rao's brands mid-single team ranking expectations gives only This X we remain happier highlights Investor high outlines and opportunity done the and on Rao's why of XXXX. new share, excellent fiscal on the significant but The and Sovos innovation the Rao's continue readies a few penetration a has growth awareness in an not of Despite XX the 'XX. for growth terms to advancing a household the are Italian about of build brand single-digit could us Rao's high consumer of forefront There's a the details brand with at

millennial across brand is demographics and all amongst growing consumers. the Additionally, thriving is economic share

millennials faster In fact, category. Rao's is growing a X.Xx than rate at with the

this strong household foundation the consumers younger future. believe to to in are We into thrilled this see Rao's a brand for provides staple ultra distinctive and us embrace a build

Pacific just great division Finally, categories which brands or also their our leading for Beverages everyone to additional and respective opportunities growth includes of & remind advantaged VX segments. XX, on as represent like Energy, Meals that brands Pace, Slide in all

see we XX. It's place did business segments targeted that QX. chips competitive X% decline that were we're Snacks the much pressure to or Kettle of share continued saw plans We like snacks activity, see in chips. promotional rather pricing or potato not entrants as better-for-you well encouraging our with note, some our is in-market We compared addressing of pressure into to many tortilla result mix to organic elevated new Turning indicators. important for in to pleased on as QX. quarter, Despite vol Slide salty results improvement in the a but in

Although we important disciplined. brands forward, sales. the net our be XX, the see gaps on price to our bridge more although color going were more some innovation competitive remain plans continue our between key growing that impact important, for giving I'd we managing investment by is remember of X% promotion to Those expect additional Snacks in-market marketing to decline in like levels elevated overall robust and influenced to and organic It's in decline confidence. On Slide even XXXX, fiscal the are There and efforts. us quickly provide X% X drivers. will particularly

partner First, X% as a reduction which was bit a we in a there explain by expected, moment. brands, I'll and contract more driven about approximately

favorable pricing in fiscal on Second, created in of we do XXXX. X in we the cycled dynamic a expect quarter. trade QX fiscal about some onetime to 'XX that that point pressure not is repeat of additional phasing This

brands Let contract and go deeper bit me a now the partner on headwind.

manufacturing discussed agree improve brands will scale you that routes. products IDPs their company to to to we've not recall, contract to and or customer. we another brands our of partner Partner the the that role or or and Campbell's As support past. the shipped scale through of of manufactures Contract Campbell's are brands these does brands in sell plants the likely own

on many businesses in also, lower these important variable an cases, our support margin average, play Although brands, power XX% competitors' approximately they than have products. and role, contribution

and has our and DSD grow our these brands on businesses power So down. our we manufacturing optimize reliance as network, gone

brands line there on headwind the clearly strategic is more mix decision improve right near a it of own the to term, and Although top the focus is our business. in our

during we've than provide this can trend But to been detail businesses bit We'll our Day. expect more and more a a these reduced this destination you by We in for fiscal down working as Investor 'XX. half. continue it see, on number

the popcorn as of similar for with sale contract core the do a rightsizing microwave In we see category a our Pop recently strong area objective, focus and the business, very although or the addition business. not brand the of Secret partner we a our Snack segment, to brands, brand and announced in

to will and a modest focus and EPS portfolio, we're sales be to will be further refine that faster growth. there net year, the we While a continue more this confident Snacks profitable impact enabler our as to continued

We flat QX, meaningful X-year in power power mentioned X.X%. pressure basis, key quarter did Moreover, progress in that did accelerated I the responding compared some On believe continue and marketing to in continued dollar As brands as we a to sustainable was our portfolio efforts we the Goldfish, levels we growth. consumption are Snacks brands continue earlier, and and to these to towards by the increasing which strongly like long-term the to our the in competitive pressure our category. investing see on innovation, resulting year. grow near-term drive on in-market growth for within brands our strides delivering of goals experience brands in make disciplined our prior strong

that was year. Another I'm maps XX% were remain margin brands pleased priority of the This Snacks but ensure in road delivering able important for extremely growth. the points reflects And appropriately the to margin focus supporting our savings basis productivity that expansion reach volatile approximately of finish Snacks, XXX We X 'XX years. environment, always and confident improvement. area we're for we'll fiscal for our full operating given despite we our over last

margin consumer As category from with that consumer against across continued commitment and hard trends improvement strategic team earnings and business margin recognize progress in on in the a competitive the planned in year, but consumer Sovos the saw XXX business integrating fiscal longer-term to at With and stated forward we're for environment. the end end, their I Snacks, divestiture. tremendous in moderate improvement Campbell's Day simply work an be I cycle finding fiscal planned Day. In chapter We upcoming our believe we XX near-term up we're will we'll that that the acceleration to initiatives headwind although in deliver Again, Snacks stabilizing ever-evolving the from hear out approximately this the margins of what being clearly reflects reflecting increase Secret Campbell's basis over with margin 'XX during York. history. We margin progress steady the to made points of XX tunnel. We the targeting the and confident goal compelling recoveries. growth fully volumes, originally look and more fully to our me very investment until you laying from on Pop we yet, at is paired light for This 'XX, in improvement. fiscal and our next 'XX on quarter that moment, To in do year-over-year Carrie. basis marketing and let will measured Snacks, into talk a I the New guidance and Investor progress fourth Investor of our it remain path plan. a points transforming this performance like progress thank was to our recovery moderation see not that, Carrie for in ways expect Brands. I'd we've can setting are our in exciting through XX% solid about summary, a remain in chapter all September track, of savings our close storied we environment turn entire with

Carrie Anderson

compared impact Thanks, contribution begin were morning, Organic of Mark, an the sales, reported of continued driven year from net and Sovos with good billion. up Brands quarter, X% excluding I'll divestitures acquisition. the overview performance to to our and decreased including prior from sales by fourth Fourth the strong currency net XX% $X Sovos. quarter everyone. acquisitions, the

base increased adjusted due in EBIT which, Adjusted earlier, expansion from adjusted of third XX%, profit our double adjusted margin. neutral increased to performance. increased Adjusted and adjusted in territory. Similar Sovos the sequential margin the Importantly, continue impact to contribution the to gross and improvement digits per both to earnings in as of primarily business QX, into quarter, with both volume Mark to EBIT gross adjusted higher with the EBIT continued mentioned EPS we XX% and expectations. Mark moving mentioned, as show $X.XX, quarter, exceed approximately positive acquisition share

a to decreased net sales months the net price year Slide offset by XX, on X%, year of partially the mix, unfavorable acquisition. compared were net to realization. Organic volume X% up from contribution with benefit Sovos basis, Turning including and sales prior the sales of X.X full

basis full of result have of our low X% guidance increased of approximately EBIT end organic the improved impact and quarters an we adjusted range, primarily acquisition EBIT net year Adjusted the volume X neutral performance. year-over-year profit stable in year and higher by year. XX with fiscal EPS adjusted or of Our driven the contribution was and year increase margin. driven acquisition from gross the to margin adjusted now the base with in consecutive the line X%, gross increased sales $X.XX, delivered growing points, adjusted by during mix. Full Full business

quarter turn offset net Beverages was in sequential in & the pricing. Moving volume mix to by to compared Meals the and Snacks, within our improvement in improvement quarter volumes and We in net positive and volumes the saw XX. Slide division declined slightly sales neutral Organic than see in quarter divisions did as QX. both more unfavorable volume

we expect trends 'XX. volume to continue through fiscal ahead, improve we to Looking modestly move as

range, in unfavorable chain input has productivity, and Sovos year remain anticipate full higher much of for the During expectations. On remain with to the growth, the costs. In cost see cost persistent the range than million realization, Brands and XX.X%, sales XX% the contributors profile acquisition, fiscal margin 'XX. XX points in labor margin program. 'XX, base billion net quarter 'XX, and inflation in cost favorable XX the expectations. cost supply year-over-year of including areas of costs, expanded the as we $XXX included than fiscal reported in impact single-digit still multiyear consistent which $XX our with we costs, a fiscal inflation business. Core to year added consistent Drivers packaging lower where supply the of oil, reaching price Slide lower in and inflation our single-digit such chain quarter net the These $X gross of mix. portfolio cumulative than expansion offset other million other more XX, we moderate we rates basis for areas core to Brands low Sovos remained which warehousing points line adjusted exceeded profit inflation margin the olive with lower experienced QX percentage and savings reported throughout margins savings, fourth our and focused and We a cost low and enterprise delivered we cocoa of quarter,

For year, offset total productivity our impact savings the and than programs the full initiatives cost inflation. of more

the modestly million mitigated quarter partially cost capture Sovos the QX was Sovos increased our million. $XX in $XXX XX. and The from expenses to costs partially were included by integration expenses lapped in impact million prior brings in realization by primarily This the consumer X% advertising decrease expenses selling in as $XXX spending year. other total of adjusted the plan. lower Slide administrative incentive $X marketing operating advertising our business in base business million. and administrative base offset fiscal added to Turning adjusted synergy were Reductions acquisition and The by which compensation decreased items expenses, Sovos to for to significant X% integration adjusted lower on costs the 'XX. driven Brands the the we synergy customer acquisition. Fourth quarter approximately and from

EBIT from in and acquisition were fund XX% higher assets offset increased in to adjusted higher EBIT to adjusted was the business by costs expenses, to intangible XX.X%. of profit lower related primarily higher driven the adjusted postretirement adjusted an Lower EPS adjusted As adjusted increased related expense increase double Slide primarily R&D to $X.XX, debt were increased expenses the Slide EBIT, due which selling and higher marketing amortization and gross by performance. modest and fourth net XXX contribution XX, margin acquisition XX, interest and of levels income. On administrative partially adjusted points base to shown reflecting the increase acquisition. and adjusted and the to basis digits offset pension higher other by of on This quarter benefit

As in the adjusted XX%, sales approximately to fourth & the increased quarter driven Beverages, the forma the mentioned by Pro earlier, contribution and we to neutral Sovos of acquisition year. In net Brands was EPS QX X%, growth fiscal of we QX QX Brands acquisition. full growth forma by net QX been net 'XX, of if of owned sales the and in approximately all volume sales would as Sovos It XX%. respective the by increased division, Beverages, had for have driven driven gains sauces, X%, Organic condensed Sovos soup, see pro foodservice for partially in great beverages. net pasta trends in of partially soup, & mix due turn quarter was by positive In to broth, ready-to-serve U.S. increased X%. realization offset price and for offset lower declines an of the X%, partially X%, favorable and offset sales by year-over-year in volume in primarily soups. U.S. net Prego to with Meals by decreases Meals increase

gross than which the earnings as of Brands lower basis to a pleased quarter points the year, contribution by and increased were the base profile impact margin in acquisition which, profit improved as compared primarily mentioned absorbing fourth the recent the Additionally, prior Meals Beverages acquisition, the of QX & higher base more has XX.X%, with earlier, We operating business. margin of I than operating XX%, business. driven XXX the the Sovos

sequentially year, quarter in XX.X%. Fourth to brands Meals trends full operating points in reduction partner margins and basis with and XX & flat organic X%. the improved improved Snacks the X% sales net mix in For growth quarter, X% Volume Beverages roughly to brands. decreased in power

as the consumer reaching at basis ongoing XX.X%, recovery. margin We points points basis year and investment balance operating slightly year more margin approximately improved trade XX.X%, net of the X% to than we we and for 'XX. Fourth end favorable goal realization, for of XX QX the the of fiscal unfavorable aligned half the was addition, price our in generally phasing navigated XX% which lapping in of Snacks to net full a year planned In approximately increased XX a increase reflecting saw margins pricing quarter with road some on of our 'XX, trends bit remain as think route-to-market initiatives expectation with XX% as a impact absorb to long-term margin of and with the Pop volume be as we our Secret to this and continue focused goal we and a track we normalize remain This while margin supporting flexibility modestly brands on will network conservative us innovation while Though our the map. of competitive margin divestiture. near-term part give more coming fiscal will staying our year, above about XX%. launches

Turning from we increase to cash expenditures in generated to growth were prioritize nearly requirements to This investments, and including associated with $X.X as we to 'XX. XX, continue a Slide key capability-building represented strong year incurring Sovos $XXX cash capital flow fiscal the operations Brands. despite acquisition. Fiscal billion the compared related 'XX year of capital million result onetime X% costs prior

the also to fiscal We repurchases $XX returning and year. during our committed million $XXX to anti-dilutive cash remain in shareholders, million dividends paid share with of

of year our leverage and revolving at as debt end the We EBITDA our to net to liquidity approximately committed cash quarter ratings to goal facility. to post-close. At end ample and the by X.Xx target of Xx and leverage end net million $XXX remain cash our adjusted equivalents, fourth the expected. was credit we Our the return had X in under investment-grade of QX,

XX. Slide to Turning

consumer recovery. guidance 'XX progress, a fiscal to reasonable the year full ongoing Our reflecting continue a range while balance as also between sequential navigate we reflects

of a sales 'XX, XX and of The the XXrd to guidance. Fiscal share The $X.XX net our growth net net X adjusted completed from increase is to to approximately and approximately guidance, Secret in is approximately of dilutive worth compared loss reduce this and included reflects months weeks, 'XX XX Full sales and fiscal fiscal per EBIT from 'XX to to the which week Pop estimated Secret. contribution X reflected impact $X.XX in of which is 'XX. we our the net sale comprises are expected by sales adjusted of divestiture business X it earnings Sovos EPS. the year our Brands percentage in full be Pop full year months of point fiscal points of benefit is earlier additional XX estimated reminder, a approximately sales net a and divestiture As week. have sales X% XX%, of reported week

into reminder, our growth As XXXX. moves a Sovos organic starting XX, calculation March

of high Sovos a Brands if double-digit net growth. all the Sovos more fiscal of January. beginning lap 'XX single-digit as gains in to will pro 'XX fiscal be significant expect We Rao's range, in following had year forma distribution growth we owned for sales its

Moving expected in forward, mid-single-digit we of consumer up is still sales organic range. Full pace to in sales variability the recovery. flat reflecting year net the of net growth expect growth be approximately range in long-term Brands Sovos to X%, the a

year. expectations positive Our volume the organic reflect net and for sales growth mix modest

we expect improvement consumer In And relatively terms of sales year, QX QX. sequential we improvement from for of in the the balance phasing, expect net organic the environment. growth to be flat, a modest

although label will category Importantly, a private healthier for of the benefit in half, broth supply be fiscal expect we the result second that 'XX cycling sales was trends, constraints. net we

impact EBIT Brands of including growth Secret. of the Pop of the the of adjusted We to expect operating and Sovos income contribution divestiture X% XX%,

depreciation in includes the expense and adjusted adjusted reminder, EBIT guidance with acquisition-related depreciation of approximately and original when transaction-related included expense line be a results. As expense, and amortization Sovos our 'XX our in in not stand-alone contribution Sovos compensation costs $XX to is whereas, Fiscal stock-based company, amortization were expectations. million, expected was these historically, their a

fiscal consistent in 'XX. inflation year single-digit with range, the core low full expect We

gross of and the Of general of will marketing, X/X integration to improvements approximately million, expect the Sovos. the administrative X% inclusive in and be cost profit and expense productivity approximately synergies $XX categories. benefit We related in savings also of $XX to enterprise of and selling million, X/X roughly cost realized $XX million

and with range expense marketing continued Additionally, net sales brand our selling as line to of to our adjusted to we return targeted to expect a percent in commitment X% investments, of XX%.

with investments For well expenses, an in the adjusted QX similar XX modest of targeted the base selling addition be as gross in base for selling improvement in 'XX, a to expected a the costs with offset Sovos company spend as marketing fiscal business. months brand and into the it of levels compared acquisition margin, to marketing increase full with as as higher well QX, and compensation margin we of to business. Total as adjusted 'XX, the normalization moves EBIT Brands and incentive for fiscal base of the impact is expect our other as

in Snacks of be 'XX. of be margin the earnings by base of modestly expected share partially and to in operating margin X% $X.XX, above offset business. Adjusted the a to Secret. $X.XX Sovos, modestly per impact fiscal to mentioned X% Beverages of & $X.XX operating earlier, to expected As is range improvement a mix lower, is is expected impact the divestiture the to including Meals margin be increase modest reflecting Pop

expect targeted timing and EPS To related XXXX Sovos fiscal X% phasing expected interest be with the $XXX to modest year of be expense 'XX. the market the $XXX range. Full QX, from maturities, to with EPS mid- the refinancing March debt associated approximately to is year be year, reflecting is and million a our as driven adjusted conditions. within dilution Pop We than to reflecting high between debt 'XX, million. a acquisition higher as impacts of expected by issuance in to adjusted bond about acquisition Secret interest expected the neutral of brand investments full we incremental in adjusted provide higher XX% Net expense bit net would the expense and divestiture range, interest $X.XX clarity to Sovos fiscal expect well more to in our

approximately expenditures As X% of are sales. I wrap capital up guidance, be to expected net

to divisions, Goldfish fiscal both our of and investments support IT capital investments, related our and double-digit up, and capital at very fourth much Investor in Our we'll growth growth delivering networking more Kettle completing of our Snacks our wrap integration the division profitability. quarter long-term our into talk optimization see that expansion. brand chips. XXXX opportunity adjusted capacity the Sovos, in with allocation improve across both including We priorities priorities upcoming reinvest and remains results, in initiatives were to we margin growth This business and key EBIT for with include algorithm and for EPS about aligned pleased Day. To great

continued 'XX, the me and fiscal the full As first momentum that, encouraged to operator our our Q&A. by volume begin improving following for remain it sustaining results. quarter in into Sovos in to turn the trends over With we with head the we expectation let Brands business

Operator

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

Andrew Lazar

Mark, I'm plenty Snacks. questions sure will there be on of

like a I'd bit focus in & X% Organic right, rose X%, start. gain sales volume. maybe Beverages to to on Meals So

more supply importantly, improving clearly of year. industry context the you being of base. the even calendar And without a especially about broth in the talk I coming in results, sort could was of drivers sustainability, just the this guess, momentum I So bit Sovos key back in these here the more here. later hoping right, improved

Mark Clouse

Yes.

continue reasons with have a a think And really quarter right get a in fit across volume think eating first is margin? that. the momentum thing think are Meals think ready-to-serve. lot business that fairly fairly will, that. investors great lot if think the as that it's big a important, I direction broad now, on better a those on is time that And going would for value are little continuing. I & We I well that mortgaging, really I landscape the to was, to even to categories. in into do it's able very along So say this to consumer in is work to convenience. go and scaled, I've the brands And numbers I the spoken we soup you though, just QX, extremely was in-home these driving good bit the you of to, for behavior a look the into where right weeks think about questions without be the as of couldn't one on do fitting of universal be that world that more all set I high, when why you segments. latest cooking if more Beverages to underpins you our and X demonstrate growth we're the of consumers of in we affordability of see A

what of priority to will of consumers based think continue see season is. we that choosing I the -- the kind on

that and of there's the of significant category have volume But is growth the ready-to-serve private very are But the happening and account dynamic to healthy. in broth, businesses a dollar think that priced broth seeing Chunky we we're the now the growth, I in half reality category higher label of is, I share, that do And with year. the doubt so all quarters. have no we're a very, consumption stronger those is private couple still for bit helping, expect of the and with label is what's footing. On even strong interesting is, Swanson. a the first I and for in growth than if And fact now

really of the holiday. as good we we into soup feel go trajectory season the into and the about So

it complementary both I to growing to I well. absolutely and is they business because Rao's as belief our good, sauce has was was will think, nature. out, great I good, very very are pointed right, in consistent continue do been that Prego see good It think and

You've got in the marketing as a continues for brand of was Prego doing up XX%. be next business. just total started that that The lot, Rao's a innovation and mainstream even wave well was and in the then, course, been. it's And quarter we've the quarter fourth the we talked the Rao's that on really business haven't to driver of

there's will you've $X as and XX%, as tough normalization to we contribute we're albeit to you term Beverages Even if as moderated longer high continuing at our a I'd And as & new belief soup cycle, billion probably imagine I of back that in of we solidify 'XX now, Meals to so love and belief some a as on growth volume-driven the confidence. it is But division going for more that's But continuing, kind I of business much the be will, say can that the a They Rao's get lot the & is was this have a which Beverages. and business grower. Meals think positive a meaningful statement recovery perpetuity. and growing a almost for the that of driver, half still that said, being remember, us got be of got single-digit gives in to Meals continue enough expecting into contributor, to year, into a page, the & future. you if you mid-single, Beverages as growth steady in in

Andrew Lazar

maybe through. then we And get briefly to I because just it. lot have Got know a super

is a in industry broader of for Just expected. of when, now long steadfast a would not It's the obviously have recovering kind very if. than you've been more longer time been most

I think Maybe just are a in maybe specific. we really data, skeptical broadly not perceptible recovery seen in that... the really way just really the in investors haven't because lot rationale briefly, just more it behind somewhat Campbell still of in a this just your speaking, belief

Mark Clouse

moment, doom a Yes. of numbers, I back in, but A categories -- far sure, of gloom. was the some I on them talk than it not right? Snacks, participating I'm know driven. in lot it I even to seeing about lot I pressure XX% we're in are had category growth. where more of don't we'll know share-driven a the and If anything, I'm just Snacks,

the Snacks be historical quarter, in is all overall, for but to you to had was back that not anxious chips way level No, it I'm growth X%. up the at? Kettle the potato Now,

had Pretzels up X%. You

total but total Our tortillas was snacking, little and salty were organic a still positive. natural And less, bit up up even X%. X%, cookies

total I X.X% continue we're and year brands. a right X% forward, think, the me I snacks, cycling metrics that still Snacks normalization. I Campbell's the what that -- expect on always to double-digit to at to on I underlying to point power the coming near think look try growth, mean, and to to remind So us business now, Campbell's determine I ago on

been I would walk tough little diminish pasta of for think a for we a on the the consumers there, the bit see latest runway liked, us. really beginning little this enough have consumer had other X don't we're I is I weeks, a a bit want salsa to I it which, any sauce up like grow, data we've from I most indication to there's the and to than cycled feel yes, back that really, again, confidence for but core see out longer lot So than of is continues are this in how soup of normalization. Again, X% but businesses that of don't growing,

of to certain still lot but away, a ways right? of not sure I I'm many do it and before. probably are said, of as Andrew, about a last depressed categories, are like the a that quite our we've recovering. be a to our believe you this recovery And recovery said is matters quarter, this even as edge So on categories and linear that happy in think in well. I'm bit where continue you're looks are, going upper I And journey doing somewhat curve subsegments is for a little snacking, If

the growth different a we rather concern Now, of But structural a need entrants around address. we've to categories some some new I'd share into the than fight couple have got that and of category.

Operator

from Your comes Goldman next question JPMorgan. line Ken of the from

Kenneth Goldman

so reason I'm a have of But guess your walk as that's to your much across that actions challenger a intensifying. I'm wanted yes, problem this we're that this discounting? will number confidence curious, see. bit and new maybe I isn't a not headwind But food be that taking categories promo as trend. as via it's innovation and a entrants. the innovation much the attacking which are rather that able competition problem offset brands Mark, to is from is could through And to acting competition Sure. marketing. would And this worry? and you of share ask us Snacks. about seeing, I you're I appreciate is, with a It's also asking But great

Mark Clouse

Yes.

So it's a great question, Ken.

this better-for-you if I wouldn't new sound the Kettle, the look not an extremely the in call tortilla. is, as I pressure, new what entrant into focus go you we really -- I where and to have we're think places it's at viewing on to a the But you we're area across way 'XX. this as salty, Pretzels, important in as new I want make in a get experiencing and entrant and and really focused this certainly right? have you So have I entrant in a as

Pretzels, way, as we at all X look in say, X brands and of live the I've brands with okay, going a so see relative these, there of innovation. surprising Investor -- you're I've going to But the plays and in that for the bring you we for plan on do are like right? it X all how to attack I has Day when have defense because those of have And by that I got at But we're unpack I look been in of can I got brands tools after to an for of going it. we the kind that's us large role Snack Factory you All a Pretzel. got a is got. to full Goldfish what it we really for where as I I Snyder's get Pretzels I've example concern, one feel say. have portfolio, that the Hanover, that while. actually to in to see the we've bear important

support think support I'm outlook we in we're to you see in do completely guidance honest, the into the year. marketing innovation as need our to plan we and our that have I And go if Now, driving. next more

of winning we've I I a use story I would I've product, Cape this say portfolio And drive need a tortilla, Kettle Late think, me-too little and to a more got on more X as great to category. Cod, bit in got July. brands, on great a Kettle, and it's that that then on

I come think I have its think been positioned think marketing for X peak, not while these in. and And hear me are innovation I has at confident One, two, well defend; to the brands reasons: you so our the really

would very on an then that I frequency do our I not So we've and but it's well. see that remain next got gaps that we've respond fight the a as that, we go promotional and to quite reasonable. And resourced we're year. And our do and got again, to say as think or price, important these pipeline react price attack I for into

with see very modest we in investment competitive. And XXX some points you'll continue that modest under stay ensure basis so to to -- areas

an this we're solved, fight X% that's be completely do again, address growing thing that's in don't I'm in over-portray good in that to we've a So that's And Kettle, I think -- want not but example to horrible really a again, as if position it. category fight. to a got this I place to

I'll snacking. I'm to this And and our level subsegments So us that know market, happy win of field we're seeing always in how -- for elevated we that look, recovery the a opportunity is in challenge. playing take

Kenneth Goldman

And if I can quick a just very ask follow-up.

certain your to general of prudent. assume goes is or but a mentioned down? want are assuming did that maybe question, a ask other broth words, I In guidance share your You that, in you in guidance guidance share won't does year? your that, parts which specific I is go into that next reversal broth

Mark Clouse

normalization of the It half share. second the of a anticipating kind we're year, In of does.

those Now, of going from having said little households with prudent seen think heck historically before this we've a to all a normalization But that, bit keep I fight Swanson. standpoint, like we're speaking. to

that. after our beating what going guideline I the kind using know team And And then so of the we're as plan. for is aggressively that --

Operator

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

Peter Galbo

as presence in particular, to Cod. And be that would of them, plain Late we July, your seeing particularly is potato the unseasoned when Kettle if format maybe stores at kind channels. also think you're in in Snacks. more least then Mark, well to hone in noticing can tortilla the just on brands, there has X B question, be between And just maybe about amongst interaction seeing, Cape maybe format about I a store as bigger actually I club and tend and of part you're obviously difference just that smaller club mean, some more pressure those talked largest maybe and a as competitor chips, a helpful. bit or that they're chips

Mark Clouse

Yes.

and call what bifurcation definitely would elevated then I would segments. a the mainstream segments the more I more between there's what call more So bit of

by more our arguably as with which trade Jays bit [indiscernible] X% and chips. potato We a they're not in about which down chips example, -- an is have focus. pressure but and I promotional allied them do think bit in X% for we QX, So overall little is brands, about horrible, our and subsegment a more call potato grew

bit a tend they in in elevated part more and little been, those little recovering those to have business. So much bit very, index are one, middle space. degree, all a area, But our we resilient. a a been, to which have operating very main households, a upper as to of fair of do And the more to small to middle seem more that see higher-income of power brand in faster

promotion more more level that So helps and or the in tend little -- more innovation, very we a driven important constructive see not pretzel price. that of that, Probably see that. I in the on the think traction a at is quite that plays be of do see think, a fight different more we diminishing in at the where more who's I think bit a more business at bit We our segments you're does little have a playing little the pretzels, it and it bringing analog end call it our pressure role, there, on by segments of portfolio, But to where Obviously, there. a is who's bringing little way. right elevated But on marketing. I'm even the those I little Snyder's day, is the where base what play of bit elevated we private I'd somewhat bit is than and a fight plays do a more lower our mainstream category label. where front,

Peter Galbo

Ken's that's a for No, to question, just clarify year. just organic maybe the to Okay. the sales guidance on follow-up as helpful. And

guidance. a you we sales that The assuming part down see the being the maybe the I'm again, as flat. quarter should XXrd kind which And organic you're hit in middle XQ, then step kind I ramp in org in potentially year. including just think the of then through week first sales of of up

maybe So can that. just clarify you if

Mark Clouse

Yes.

sales. is not week in organic our XXrd So

Carrie Anderson

but it, organic. the report will in We not

Mark Clouse

see talk the But do QX off. the little we Carrie, phasing maybe, a bit And like year. significant not a Right. about drop of

Carrie Anderson

lot And as and we a about quarter, innovation there. your holiday season, got our No. certainly, starts second think of you launch to your of benefit

as And the going to into that the into So I are take second would categories say consideration. think that you half, to move need still healthy. I you then be

So what see I as as ] to cycling sequential on you'll Mark M&B, you in going in category talked broth normalizes improvement [ are need to think is still but half, consideration, broth. about take our into the that the of share

into that So you're that to your sure you models. want make putting

Mark Clouse

Yes.

think think this I to the at of to I'm ways more as also the normality business expecting broth one categories. far Snacks little time cycling is, bit as returning that a a a about you're the be of headwind, bit to

kind swap of what a the both more the would of quarter And trajectory. essence, your beyond. perhaps course I then would a in for of as as a plot who's leading bit into improvement more the get a a little bit gradual I businesses So year we and second drive, getting of into kind little normal of call but

Operator

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

Michael Lavery

some that the be leading. debate I to it little to leave there's you're to to But some maybe And you teams and back the just versus at said across I'll all as seem the but the consumer trailing opposed looking can how than and know macro there's I understand does risk also bit, come you've thinking a know to that some trying Just improvement. a some on like a recession data, bias to extent, them. balanced risks. Street, towards soft landing more of

think about now, How bit Or home? you've of exactly. Sovos, what some if food that course, balance positioned to to kind to attractive you one how more out? switches and and premium about basis? might you'd of maybe got of look for expect you portfolio? value do a expect that who curious knows, in in just from consumers' So net think Maybe how would those covered comes with like you've benefit But a just a how recession? And options your especially be at you to

Mark Clouse

Yes.

some would not I that So bit think the you first bullish accelerated that is, on a tell or perhaps even we to out tone would contrarian year broadly a consumer I the maybe others in the although say recovery. way landscape than view hear thing more some some there, of of radical you points a we're more where the expecting planned speaking, I

a I relates In to we're fact, I back snacking, bounce relatively and would Beverage then a Meals that as of & it a more slow expecting of kind back more see headwinds normalized say from half a bit as some you'll Beverage flip, Snacks. in recovery said, modest a more the broth bit category a and where and normalized & perhaps Meals on

calibrate that in see plan. think the You range. How I to me bit help X kind the things X that feel a there's I that gets environment worse? of X% if do

would of pricing The a is variety we is the you as in kind were other saw not it baseline. suggest first we growth drivers growth relatively be of same is, that will, going outsized to we're if upside positive, cycling where muted that cycling what a your baseline certainly and

cycling as think, than this a not we outsized growth. is incredibly little it to we that after I hangs let's So going or expect, around saw step-down of X just perhaps would be imagine years X a longer dramatic as

good from And ours eating -- fairly economic almost do where an match I do the now, that pasta time benefit even broth, have in of resilient endless, like categories more a think year, to variety a portfolio a you've I would are is, soup sauce people of is thing seen certainly, but as any a second different we've think that. not has as home, last point where at different to right, and got over really this I the that been environment. to variety continue

through what to think economic be Snacks historically over more I bit now. downturns. in right a of little But speaking, is, again, proven time we're bit a notwithstanding Snacks, has normalizing resilient

even encouraging. us this And But not we so assume plan in outsized in role I that our the to portfolio recovery. that kind combination up play our tougher a that be position. that a we're set the of in both does would are have think I But see think brands going more to positive environment

-- still said more is That's important was look, to biased of description QX. in that's my we kind that say consumer confidence of consumer the why will And a fragile. how would little metric, bit but positive, to be and -- me very I a negative the

the certainty, not if may to. overestimate dynamics would the you to underlying will, I pointing want so be of And what

Michael Lavery

great -- of and the do And is I in second the growth guidance because fiscal I EPS 'XX do to growth XXrd That's both to reported a understood just me I'll with be XXrd worth you adjusted want ago EBIT color. with and $X.XX is is and numbers, to organic in XXrd the then release, a estimated confused we and X below answer it, I up week? say week organic In net along And week. just how think included the approximately of we... points benefit wrap where sales the the to EPS. I that come thought had and clarification your because the to back

Carrie Anderson

has Just the benefit to clarify, XXrd week of in removed. the the been growth, organic

Mark Clouse

But in in the EBIT EPS... the and

Carrie Anderson

is in It there, correct.

Mark Clouse

there. in is It

Carrie Anderson

in organic that sales has growth, It's net Michael, the just been...

Mark Clouse

We don't extract or normally an EBIT organic EPS.

Carrie Anderson

That's correct.

Operator

next of from line Jim from comes question Your the Salera Stephens.

James Salera

Rao's, peers drill focus wanted seeing think and product. on particular from they're to willing said a also what consumers all Snacks, segments, a then that's higher-income across away despite reflective matter to your premium their But speak are you food income are is about on money elevated segments if middle back they're down no you more in pay like from cut quality something which to down home, from Rao's mentioned saving trade there restaurants? you in if shop? Do so right that would the being on, brand talking to consumer. to categories for I delivers consumer Mark, that's growth elsewhere Or of money it's compared still in and earlier, spending innovation they'll

Mark Clouse

Yes.

of pizza Rao's, this I remember from expanded that, use of pizza, a reality say almost it was the pizza to DiGiorno many, an was like analogy as at although that. the that, the And many you frozen include seemed became value. So a lot life. reference years delivery I I I prior time, see covered launching would sudden great the and frame incredibly [indiscernible] absolutely expensive all a of ago.

I a home. more think It's Rao's that sure little incredibly you experience cleaner this that, be you true jar also your dynamic that and that growth is on do want that convenient I to really lower order more is you make bit of label. a think amount quality much may a snacking, Rao's across something to you buying a point, is permissible, Italian arguably rate spend be Rao's of pasta, why for that Italian very I'd to having similar sectors. true little that some your the say at $X couple it and decide of paying to, mediocre incredible on a that buying were a than the all think what paying to terrific seeing of a that hopefully, rationalizing economic that It meal better I But maybe a Rao's, I and is might but I'm as I'm a package also a for, is And snacks. for are where DoorDash meal $XX the certainly $X enjoy. of going you is on value. And I have Rao's, may $XX, you're you're at

is higher-end them, more as seen we've what subsegments resilient. describe so we the elevated dynamic would this some be And more are of where to

chips very and and prolific we Now, about natural of potato more income. well like a as in extending category, have as those. But and it's the mid-income Rao's tortilla high-income organic certainly, lower not as think Kettle as chips categories both have up into held

James Salera

that. could going That's put? XXXX XX% going a How is where sneak marketing great. final are to that on that to And X% be one that in, putting marketing some return that to in the of guys does maybe you kind if spend question and expect I just inform incremental be of to in selling, as we dynamic

Mark Clouse

Yes.

to earlier, out So for I consumers. not tough of is there want think said do diminish I a it as I lot how

So I a right? categories. preclude I more and mean, think bit value-centric it you continue price And a from does communication little one in will higher more on think in tremendous way, be about value messaging see different creating premium, many not even to our value. I again, may

see really entrants to think I think I share you're also products new think, think me-too as where putting bringing you what so part some you July we're be is products continuing that us, against new-to-the-world what from leading about I brands the consumer what Kettle to and which going to continue and flavors, see see it. businesses, forms, Cod So are is will on from and But or seeing unique pressure and that of should like pressure Late you Cape for market while makes our differentiated. thinking

in little value. think all year, maybe a on this more bit So I went whereas we

I move really long and think value, the behind to think, into a building, the the to think of the brands. some we more product cycle what near-term going equity we've better I but is that also as that yes, on 'XX we going we'll ensuring between we as getting back pressure impression innovation news Because how into a the the run, I those driving elevated I you're to in us effort see and new and get right? on winning, segments, news. puts bit a balancing in determine that in focused on. that's done distribution, drive But category coming a the really mean, equity

Operator

Thank the you does question-and-answer and this today's your end we our participation. conference have Ladies session. of for reached conclude call. And gentlemen,

You now may disconnect.

Campbell Soup (CPB) 29 Aug 242024 Q4 Earnings call transcript