Campbell Soup(CPB)2025-06-02 13:00Financial Data and Key Metrics Changes - The company reported a 4% increase in net sales, driven by the Sovos acquisition and organic net sales growth of 1% [30][31] - Adjusted EBIT increased by 2% year-over-year, with a slight margin decrease due to lower net pricing realization [9][30] - Adjusted EPS was down 3% compared to the prior year, with a net positive contribution from the Sovos acquisition [10][30] Business Line Data and Key Metrics Changes - Meals and Beverages division saw organic net sales growth of 6%, driven by volume and mix growth of 7% [13][36] - Snacks division experienced an 8% decrease in net sales, with organic net sales declining by 5% due to lower volume and mix [37][20] - The overall consumption in Meals and Beverages increased by 2%, while Snacks leadership brand consumption declined by 3% [11][12] Market Data and Key Metrics Changes - The in-market performance of the company's 16 leadership brands remained stable, with more than half holding or gaining market share [10][11] - The Meals and Beverages category outpaced overall category consumption, while Snacks lagged behind due to competitive pressures [6][10] - Consumer trends indicate a growing preference for home-cooked meals, benefiting the Meals and Beverages division [11][65] Company Strategy and Development Direction - The company is focused on near-term in-market execution and mitigating tariff impacts while investing in brand growth [7][28] - A growth office has been established to enhance capabilities in consumer insights, brand activation, and innovation [28] - The company aims to improve efficiency and effectiveness across the organization to facilitate long-term growth [28][43] Management's Comments on Operating Environment and Future Outlook - Management noted that consumer spending is becoming more intentional, impacting the Snacks business negatively [5][6] - The company expects adjusted earnings to be at the low end of the guidance range due to slower recovery in the Snacks business [6][41] - Management remains confident in the strength and long-term growth potential of the Snacks brands despite current challenges [12][27] Other Important Information - The company has estimated the net incremental headwind of tariff-related costs to be up to 0.05 per share for fiscal 2025 [41][42] - Capital expenditures for fiscal 2025 are expected to be approximately 4.5% of net sales, reflecting a decrease from prior guidance [43] - The company delivered approximately $110 million in total savings under its cost savings program, with 30% realized in cost of products sold [33] Q&A Session Summary Question: What is the pressure on the Snacks business? - Management indicated that about two-thirds of the pressure is due to worsening category dynamics, with one-third attributed to in-market performance [46][49] Question: What needs to happen for improvement in the Snacks category? - Management highlighted the need for improved consumer confidence and continued focus on meeting consumer needs through innovation [74][75] Question: What is the expectation for REOs growth this year? - Management expects high single-digit growth for REOs, with recent market consumption showing positive trends [88][89] Question: What is the margin outlook for the fourth quarter? - Management indicated that while Snacks margins improved sequentially in Q3, the outlook for Q4 remains cautious due to slower recovery [90]