Core Insights - Campbell's Co. reported quarterly net sales of $2.68 billion, exceeding the consensus estimate of $2.66 billion, with adjusted EPS of $0.77, surpassing expectations of $0.73 [3] - Despite strong performance in the meals and beverages division, shares fell over 4% intra-day due to concerns over the snacks business and tariff-related pressures [1][4] - The company plans to remove synthetic dyes from its products, aligning with health trends and initiatives [2] Financial Performance - First-quarter net sales were $2.68 billion, slightly above the consensus of $2.66 billion [3] - Adjusted EPS was reported at $0.77, exceeding the estimate of $0.73 [3] - Pricing and allowances in the meals and beverages division increased by 1% [3] Strategic Initiatives - Campbell's intends to raise prices and implement cost-saving measures to mitigate the impact of new U.S. tariffs, which are expected to affect about 4% of its fiscal 2026 cost of goods sold [4] - The company is committed to removing synthetic dyes from its food and beverage products, replacing them with natural alternatives [2] Outlook - The company reaffirmed its fiscal 2026 outlook, projecting organic net sales to range from a 1% decline to a 1% increase [4] - EPS is forecasted to drop by 12% to 18%, with a range of $2.40 to $2.55 [4]

Financial Data and Key Metrics Changes - In-market consumption during Q4 declined by 1%, while organic net sales decreased by 3%, primarily due to favorable shipment timing in Q3 reversing in Q4 [7][26] - Reported net sales increased by 1%, adjusted EBIT and adjusted EPS both decreased by 2% compared to the prior year [8][26] - For the full year, net sales grew by 6%, driven mainly by the Sovos Brands acquisition, while adjusted EBIT increased by 2% [8][29] Business Line Data and Key Metrics Changes - Meals and Beverages organic net sales decreased by 3% in Q4, with volume and mix down by 4% [13][31] - Snacks reported a 2% increase in net sales, but organic net sales decreased by 2%, driven by lower volume and mix [32][33] - The consumption of Meals and Beverages leadership brands increased by 1% in Q4, while Snacks leadership brand consumption declined by 2% [12][13] Market Data and Key Metrics Changes - The overall consumer environment remained cautious, with at-home cooking trends benefiting the Meals and Beverages segment [5][12] - The broth category saw a 7% consumption growth, while the soup portfolio's dollar share declined by 0.8 points due to the discontinuation of the Well Yes brand [15][17] - The Italian sauce category grew by 2% year-over-year, with Campbell's Italian sauce portfolio outpacing this at 4% growth [16] Company Strategy and Development Direction - The company plans to increase marketing investments and focus on innovation to support its brand portfolio [6][24] - A new growth office has been established to align innovation with consumer needs, emphasizing health and elevated taste experiences [10][24] - The company is committed to mitigating tariff impacts through various strategies, including cost savings initiatives and pricing actions [35][39] Management Comments on Operating Environment and Future Outlook - Management noted that consumers are increasingly seeking value, flavor-forward offerings, and health benefits, which are driving innovation [5][10] - The company expects a more significant impact from tariffs in fiscal 2026, projecting gross tariffs at approximately 4% of cost of products sold [34][38] - Despite challenges, management is optimistic about sustainable growth in fiscal 2026, focusing on productivity and cost savings [39][40] Other Important Information - The company plans to remove FD&C colors from its food and beverage products by the second half of fiscal 2026 [11] - The Sovos Brands acquisition performed well, contributing positively to net sales growth and integration synergies [29] Q&A Session Summary Question: Insights on fiscal 2026 outlook and factors affecting guidance - Management discussed the importance of brand support and innovation in navigating the dynamic operating environment, with a focus on productivity and cost savings [44][46] Question: Stabilization in the snacks category - Management highlighted that snacking occasions are stable, with a focus on premiumization and flavor exploration to connect with consumers [56][58] Question: Impact of tariffs on pricing strategy - Management indicated a surgical approach to pricing, balancing the need to offset tariffs while maintaining product quality [64][66] Question: Sustainability of tariff mitigation strategies - Management explained that inventory management and supplier collaboration are key levers, with alternative sourcing being explored where feasible [70][72]