Campbell Soup(CPB) - 2024 Q4 - Annual Results

Performance Overview Q4 & Full-Year 2024 Financial Highlights Q4 fiscal 2024 net sales grew 11% to $2.3 billion (organic sales down 1%), with full-year net sales up 3% to $9.6 billion and adjusted EPS at $3.08 Q4 Fiscal 2024 Performance Summary | Metric | Reported Value | Change | Adjusted Value | Change | | :--- | :--- | :--- | :--- | :--- | | Net Sales (USD) | $2.3 billion | +11% | Organic Sales | -1% | | EBIT (USD) | $77 million | - | $329 million | +36% | | EPS (USD) | $(0.01) | - | $0.63 | +26% | Full-Year Fiscal 2024 Performance Summary | Metric | Reported Value | Change | Adjusted Value | Change | | :--- | :--- | :--- | :--- | :--- | | Net Sales (USD) | $9.6 billion | +3% | Organic Sales | -1% | | EBIT (USD) | $1.0 billion | - | $1.5 billion | +6% | | EPS (USD) | $1.89 | - | $3.08 | +3% | - The company returned a total of $512 million to shareholders in fiscal 2024, comprising $445 million in dividends and the remainder in share repurchases[2] CEO Commentary CEO Mark Clouse highlighted solid Q4 performance with sequential volume improvement and margin expansion, noting successful Sovos Brands integration and progress on Snacks margin goals - The company finished fiscal 2024 with solid Q4 performance, including sequential volume improvement and margin expansion versus the prior year[3] - The integration of Sovos Brands is progressing ahead of expectations, significantly shifting the growth trajectory for the Meals & Beverages division[3] - The company has advanced its Snacks margin journey while improving sales, marketing, and innovation capabilities, leading to confidence in continued progress in fiscal 2025[3] Detailed Financial Results Fourth-Quarter Fiscal 2024 Results Q4 net sales increased 11% to $2.3 billion due to the Sovos Brands acquisition, while organic sales fell 1%; adjusted EBIT grew 36% to $329 million, and adjusted EPS rose 26% to $0.63 - Q4 organic net sales decreased 1% as a 2% decline in net price realization was partially offset by a 1% improvement in volume/mix[6] - Adjusted gross profit margin increased by 80 basis points to 31.4%, driven by supply chain productivity improvements that outweighed unfavorable net pricing and cost inflation[8] - Reported EBIT was significantly impacted by $129 million in non-cash impairment charges related to the Pop Secret and Allied brands (including Tom's, Jays, Stella D'oro, etc.)[9][10] - The Sovos Brands acquisition was approximately neutral to fourth-quarter adjusted EPS[11] Full-Year Fiscal 2024 Results For fiscal 2024, net sales rose 3% to $9.6 billion (organic sales dipped 1%), adjusted EBIT increased 6% to $1.5 billion, and adjusted EPS grew 3% to $3.08, with the Sovos acquisition having a neutral impact Full-Year 2024 Financial Performance | Metric | FY2024 Value | Change vs. FY2023 | | :--- | :--- | :--- | | Net Sales (USD) | $9.6 billion | +3% | | Organic Net Sales (USD) | $9.2 billion | -1% | | Reported EBIT (USD) | $1.0 billion | -24% | | Adjusted EBIT (USD) | $1.5 billion | +6% | | Reported EPS (USD) | $1.89 | -34% | | Adjusted EPS (USD) | $3.08 | +3% | - The decrease in reported EBIT was primarily driven by impairment charges and costs associated with the Sovos Brands acquisition[12] - The Sovos Brands acquisition was approximately neutral to full-year adjusted EPS[13] Cash Flow and Shareholder Returns Fiscal 2024 cash flow from operations increased to $1.2 billion, with capital expenditures at $517 million, and $512 million returned to shareholders through dividends and stock repurchases FY2024 Cash Flow and Capital Allocation | Item | FY2024 Value | FY2023 Value | | :--- | :--- | :--- | | Cash Flow from Operations (USD) | $1.2 billion | $1.1 billion | | Capital Expenditures (USD) | $517 million | $370 million | | Cash Dividends Paid (USD) | $445 million | - | | Stock Repurchases (USD) | $67 million | - | Cost Savings Program Campbell has achieved $950 million in total savings under its multi-year cost savings program, with $60 million realized in fiscal 2024, plus $10 million in Sovos Brands integration synergies - The company has delivered $950 million in savings towards its $1 billion multi-year cost savings program target[15] - In fiscal 2024, $60 million in savings were realized from the ongoing program, and an additional $10 million in cost synergies were achieved from the Sovos Brands integration[15] Full-Year Fiscal 2025 Guidance Guidance Overview and Assumptions Fiscal 2025 guidance reflects a balanced outlook, incorporating a 53rd week (adding 2% to sales/EBIT, $0.06 to EPS) and the Pop Secret divestiture (reducing sales by 1%, EPS by $0.04) - Fiscal 2025 will include a 53rd week, estimated to contribute 2 points of growth to net sales and adjusted EBIT, and $0.06 to adjusted EPS[16] - The divestiture of the Pop Secret business is expected to reduce reported net sales growth by approximately 1% and have a dilutive impact of $0.04 to adjusted EPS[16] - The company anticipates low-single-digit inflation, to be mitigated by productivity improvements (approx. 3%) and cost savings (approx. $70 million, including Sovos synergies)[17] - Adjusted net interest expense is projected to be between $350 million and $355 million, higher than fiscal 2024 due to a full year of debt from the Sovos acquisition[18] Key Financial Projections For fiscal 2025, Campbell's projects net sales growth of 9% to 11%, organic net sales flat to up 2%, adjusted EBIT growth of 9% to 11%, and adjusted EPS of $3.12 to $3.22 Fiscal 2025 Guidance | Metric | FY2024 Result | FY2025 Guidance Range | | :--- | :--- | :--- | | Net Sales (USD) | $9,636 million | +9% to +11% | | Organic Net Sales (USD) | $9,525 million | 0% to +2% | | Adjusted EBIT (USD) | $1,454 million | +9% to +11% | | Adjusted EPS (USD) | $3.08 | +1% to +4% ($3.12 to $3.22) | Segment Performance Meals & Beverages In Q4, the Meals & Beverages segment saw a 28% increase in net sales, primarily driven by the Sovos Brands acquisition, with organic net sales growing 1% and operating earnings surging 60% Q4 Meals & Beverages Performance | Metric | Q4 FY2024 | Change vs. Q4 FY2023 | | :--- | :--- | :--- | | Net Sales (USD) | $1,200 million | +28% | | Organic Net Sales | - | +1% | | Operating Earnings (USD) | $211 million | +60% | - The strong sales growth was driven by the Sovos Brands acquisition. Organically, sales increased 1% due to gains in U.S. Soup (up 2%), foodservice, and Prego pasta sauces[26] Snacks The Snacks segment reported a 3% decrease in both reported and organic net sales in Q4, driven by unfavorable net price realization, while operating earnings increased a modest 1% Q4 Snacks Performance | Metric | Q4 FY2024 | Change vs. Q4 FY2023 | | :--- | :--- | :--- | | Net Sales (USD) | $1,093 million | -3% | | Organic Net Sales | - | -3% | | Operating Earnings (USD) | $159 million | +1% | - The sales decline was attributed to a greater than 2% unfavorable net price realization, partly from planned pricing investments and lapping favorable trade phasing from the prior year[29] Financial Statements and Reconciliations Consolidated Financial Statements This section presents the unaudited consolidated financial statements for Q4 and full fiscal year 2024, including Statements of Earnings, Balance Sheets, and Statements of Cash Flows, detailing the company's financial position and performance - The Consolidated Statements of Earnings for the three and twelve months ended July 28, 2024, are presented[38][40] - The Consolidated Balance Sheets as of July 28, 2024, and July 30, 2023, are provided, showing an increase in total assets to $15.2 billion from $12.1 billion, largely due to the Sovos acquisition[46] - The Consolidated Statements of Cash Flows for the twelve months ended July 28, 2024, detail operating, investing, and financing activities[48] Reconciliation of GAAP to Non-GAAP Measures This section provides detailed reconciliations of reported GAAP to non-GAAP measures like organic net sales, adjusted EBIT, and adjusted EPS, offering better comparability by excluding items such as acquisition costs and impairment charges - Organic net sales are reconciled by excluding the impacts of currency, acquisitions (Sovos Brands), and divestitures (Emerald nuts, Pop Secret)[50][51] - Major items excluded from GAAP earnings to arrive at adjusted earnings include costs for savings initiatives, acquisition costs, mark-to-market adjustments, impairment charges, and pension actuarial adjustments[53] FY2024 GAAP to Adjusted EPS Reconciliation | Item | Per Share Impact (USD) | | :--- | :--- | | Reported Diluted EPS | $1.89 | | Cost savings initiatives | +$0.28 | | Acquisition costs | +$0.36 | | Commodity mark-to-market losses | +$0.05 | | Accelerated amortization | +$0.07 | | Pension actuarial losses | +$0.08 | | Impairment charges | +$0.33 | | Other items | +$0.02 | | Adjusted Diluted EPS | $3.08 |