Campbell Soup(US:CPB)2024-06-05 11:21Financial Performance - Net sales for the three months ended April 28, 2024, were $2,369 million, an increase of 6.3% compared to $2,229 million for the same period in 2023[10] - Net earnings attributable to Campbell Soup Company for the three months ended April 28, 2024, were $133 million, a decrease of 16.9% from $160 million in the same period last year[10] - Total comprehensive income for the three months ended April 28, 2024, was $141 million, a decrease of 10.8% from $158 million in the same period last year[11] - Net earnings for the nine months ended April 28, 2024, were $570 million, a decrease from $689 million for the same period in 2023, representing a decline of approximately 17.2%[18] - The company’s earnings before interest and taxes for the nine months ended April 28, 2024, were $923 million, down 11.3% from $1,040 million for the same period in 2023[10] Assets and Liabilities - Total assets increased to $15,243 million as of April 28, 2024, compared to $12,058 million as of July 30, 2023, reflecting a growth of 26.3%[14] - The company reported a total current liability of $3,457 million, up from $2,222 million, indicating a significant increase of 55.6%[14] - Long-term debt rose to $5,752 million as of April 28, 2024, compared to $4,498 million, representing a 27.9% increase[14] - The company experienced a restructuring charge of $17 million for the nine months ended April 28, 2024, compared to $15 million in the prior year[18] - Negative working capital was reported at $1.318 billion as of April 28, 2024, compared to $161 million as of July 30, 2023[176] Cash Flow and Investments - Net cash provided by operating activities for the nine months ended April 28, 2024, was $897 million, slightly down from $918 million in the prior year[18] - The company reported a net cash used in investing activities of $2.987 billion, significantly higher than $269 million in the same period last year, primarily due to the acquisition of Sovos Brands[18] - Cash and cash equivalents at the end of the period were $107 million, down from $223 million at the end of the same period last year[18] - The company expects to invest approximately $705 million in capital expenditures through 2025, with $508 million already invested as of April 28, 2024[55] Acquisition of Sovos Brands - The acquisition of Sovos Brands was completed on March 12, 2024, for a total purchase consideration of $2.899 billion[121] - Total cash consideration for the acquisition of Sovos Brands was $2.899 billion, which included $2.307 billion paid to shareholders and $486 million for repayment of existing indebtedness[28] - Sovos Brands contributed $166 million to net sales and a loss of $75 million to net earnings for the period from March 12, 2024, to April 28, 2024, after accounting for transaction and integration costs[35] - The company incurred transaction and integration costs of $95 million and $114 million for the three- and nine-month periods ended April 28, 2024, respectively[34] - The company issued replacement equity awards valued at $42 million in connection with the Sovos Brands acquisition, which is included in the total purchase consideration[31] Segment Performance - The Meals & Beverages segment reported net sales of $1.272 billion for the three months ended April 28, 2024, up from $1.108 billion in the same period last year, representing a growth of 14.8%[46] - The Snacks segment generated net sales of $1,152 million for the three months ended April 28, 2024, down from $1,169 million in the same period last year, a decrease of 1.5%[49] - The Meals & Beverages segment reported a 15% sales increase, primarily due to the acquisition of Sovos Brands, while the Snacks segment saw a 2% decline[131] Expenses and Costs - Research and development expenses for the three months ended April 28, 2024, were $27 million, up from $24 million in the same period last year, marking a 12.5% increase[10] - Marketing and selling expenses increased by 6% in 2024, representing 8.7% of sales, primarily due to acquisition impacts and higher costs associated with optimization initiatives[136] - Administrative expenses rose by 25% in 2024, accounting for 8.8% of sales, largely driven by acquisition-related costs and inflation[137] - Interest expense increased to $70 million in 2024 from $47 million in 2023, primarily due to higher debt levels for the acquisition[143] Financial Instruments and Derivatives - The company entered into forward starting interest rate swaps with a notional value of $1.1 billion, settling them at a loss of $11 million, which will be recognized as additional interest expense over the debt's lifespan[194] - The notional amount of commodity contracts not designated as accounting hedges increased to $211 million as of April 28, 2024, from $194 million as of July 30, 2023[78] - The effective portion of changes in fair value for the nine months ended April 28, 2024, included a loss of $11 million from forward starting interest rate swaps[84] Strategic Initiatives and Risks - The company continues to pursue cost savings initiatives, with a focus on optimizing supply chain and manufacturing networks[159] - The company anticipates continued supply chain productivity and previously implemented pricing actions to mitigate inflationary pressures throughout 2024[122] - The company faces risks related to supply chain inputs, including labor and raw materials, which could impact its financial performance[192] - The company has identified potential risks from competitive responses to its product innovations and promotional strategies[194] Internal Controls and Reporting - The company has evaluated its disclosure controls and procedures as effective as of April 28, 2024[195] - There were no changes in internal control over financial reporting that materially affected the company during the quarter ended April 28, 2024[196] - The company will exclude Sovos Brands' operations from its annual assessment of internal control effectiveness for the year ending July 28, 2024, as permitted by SEC guidance[198]