Double-digit Net Sales and EPS Growth;
Raises Fiscal 2023 Guidance
- Net Sales increased 12% and Organic Net Sales increased 13% due
to favorable net price realization and continued brand
strength.
- Reported Earnings Before Interest and Taxes (EBIT) increased 8%
to $350 million. Adjusted EBIT increased 14% to $362 million.
- Reported Earnings Per Share (EPS) increased 10% to $0.77.
Adjusted EPS increased 16% to $0.80.
- Raises full-year fiscal 2023 net sales guidance and raises the
midpoint of adjusted EBIT and adjusted EPS guidance range
reflecting the continued strength of the company's performance
Campbell Soup Company (NYSE:CPB) today reported results
for its second-quarter fiscal 2023 ended January 29, 2023.
CEO Comments
“The momentum of our business continued as we delivered
double-digit sales and earnings per share growth for a second
consecutive quarter. While the top line benefited from favorable
net price realization, we also continued to see strong brand
health. This demonstrates our powerful connection with consumers,
especially as they turn to our products for the value they need to
navigate the current economic environment,” said Campbell's
President and CEO, Mark Clouse. “The second-quarter results were
consistent with our expectations and driven by the teams' focused
execution and improved capabilities that are turning our supply
chain into a competitive advantage. We are confident in our ability
to deliver strong performance for the full year as reflected in our
updated fiscal 2023 guidance.”
Three Months Ended
Six Months Ended
($ in millions, except per share)
January 29,
2023
January 30,
2022
% Change
January 29,
2023
January 30,
2022
% Change
Net Sales
As Reported (GAAP)
$2,485
$2,209
12%
$5,060
$4,445
14%
Organic
13%
14%
Earnings Before Interest and Taxes
(EBIT)
As Reported (GAAP)
$350
$323
8%
$786
$699
12%
Adjusted
$362
$318
14%
$812
$707
15%
Diluted Earnings Per Share
As Reported (GAAP)
$0.77
$0.70
10%
$1.76
$1.56
13%
Adjusted
$0.80
$0.69
16%
$1.82
$1.58
15%
Note: A detailed reconciliation of the reported (GAAP) financial
information to the adjusted financial information is included at
the end of this news release.
Items Impacting Comparability
The table below presents a summary of items impacting
comparability in each period. A detailed reconciliation of the
reported (GAAP) financial information to the adjusted information
is included at the end of this news release.
Diluted Earnings Per
Share
Three Months Ended
Six Months Ended
January 29,
2023
January 30,
2022
January 29,
2023
January 30,
2022
As Reported (GAAP)
$
0.77
$
0.70
$
1.76
$
1.56
Restructuring charges, implementation
costs and other related costs associated with cost savings
initiatives
$
0.03
$
0.01
$
0.04
$
0.02
Pension actuarial losses (gains)
$
(0.01
)
$
(0.03
)
$
0.02
$
(0.01
)
Commodity mark-to-market adjustments
$
0.01
$
—
$
—
$
0.01
Adjusted*
$
0.80
$
0.69
$
1.82
$
1.58
*Numbers may not add due to rounding.
Second-Quarter Results
Net sales in the quarter increased 12% versus the prior year to
$2.5 billion. Organic net sales increased 13% as favorable
inflation-driven net price realization was partially offset by
volume / mix declines.
Gross profit increased to $759 million from $669 million in the
prior year. As a percent of sales, gross profit margin was 30.5%
compared to 30.3% in the prior year. Excluding items impacting
comparability, adjusted gross profit increased to $763 million from
$671 million. Excluding items impacting comparability, adjusted
gross profit margin increased 30 basis points to 30.7% as favorable
net price realization and supply chain productivity improvements
were partially offset by continued cost inflation and higher other
supply chain costs as well as unfavorable volume / mix.
Marketing and selling expenses increased 10% to $217 million and
represented approximately 9% of net sales. The increase was driven
by higher advertising and consumer promotion expense (A&C),
which increased 17% versus moderated levels in the prior year, and
higher selling expenses, partially offset by increased benefits
from cost savings initiatives.
Administrative expenses increased 10% to $162 million. Excluding
items impacting comparability, adjusted administrative expenses
increased by $13 million, or 9%, to $157 million due to higher
general administrative costs and inflation, higher benefit-related
costs and higher incentive compensation, partially offset by lower
expenses related to the settlement of certain legal claims.
Other expenses / (income) were $0 million compared to other
income of $19 million in the prior year. Excluding items impacting
comparability, adjusted other expenses were $6 million compared to
adjusted other income of $9 million in the prior year primarily due
to lower pension and postretirement benefit income this year.
As reported EBIT increased to $350 million from $323 million in
the prior year. Excluding items impacting comparability, adjusted
EBIT increased 14% compared to the prior year to $362 million
primarily due to higher adjusted gross profit, partially offset by
higher marketing and selling expenses, higher adjusted other
expenses and higher adjusted administrative expenses.
Net interest expense was $45 million compared to $46 million in
the prior year. The tax rate was 23.9% compared to 23.5% in the
prior year. Excluding items impacting comparability, the adjusted
tax rate increased 50 basis points to 24.0% compared to 23.5% in
the prior year primarily due to the impact of state tax law changes
in the prior year.
As reported EPS increased to $0.77 per share compared to $0.70
per share in the prior year. Excluding items impacting
comparability, adjusted EPS increased $0.11, or 16%, to $0.80 per
share compared to $0.69 per share in the prior year, primarily
reflecting the increase in adjusted EBIT, partially offset by a
higher adjusted effective tax rate.
First-Half Results
Net sales, both reported and organic, increased 14% versus the
prior year to $5.1 billion driven by favorable inflation-driven net
price realization, partially offset by volume / mix declines.
As reported EBIT increased 12% compared to the prior year to
$786 million. Excluding items impacting comparability, adjusted
EBIT increased 15% compared to the prior year to $812 million
primarily due to higher adjusted gross profit, partially offset by
higher marketing and selling expenses, higher adjusted other
expenses and higher adjusted administrative expenses.
Net interest expense was $91 million compared to $93 million in
the prior year. The tax rate was 23.9% compared to 21.9% in the
prior year. Excluding items impacting comparability, the adjusted
tax rate increased 190 basis points to 23.9% compared to 22.0% in
the prior year, primarily due to the favorable resolution of
several tax matters and the impact of state tax law changes in the
prior year.
As reported EPS increased to $1.76 per share compared to $1.56
per share in the prior year. Excluding items impacting
comparability, adjusted EPS increased $0.24, or 15% compared to the
prior year, to $1.82 per share primarily reflecting the increase in
adjusted EBIT, lower interest expense and a benefit in a reduction
of the weighted average diluted shares outstanding, partially
offset by a higher adjusted tax rate.
Cash flow from operations decreased from $766 million in the
prior year to $732 million primarily due to changes in working
capital, partially offset by higher cash earnings. Capital
expenditures were $155 million compared to $129 million in the
prior year. In line with the company’s commitment to return value
to its shareholders, the company paid $226 million of cash
dividends and repurchased common stock of approximately $66
million. At the end of the second quarter, the company had
approximately $375 million remaining under the current $500 million
strategic share repurchase program and approximately $106 million
remaining under its $250 million anti-dilutive share repurchase
program.
Cost Savings Program from Continuing Operations
In the second quarter, Campbell achieved $10 million of total
savings under its multi-year cost savings program, inclusive of
Snyder’s-Lance integration synergies, bringing total
program-to-date cost savings to $870 million. Campbell remains on
track to deliver savings of $1 billion by the end of fiscal
2025.
Full-Year Fiscal 2023 Guidance
Campbell is raising its full-year fiscal 2023 net sales outlook
and raising the midpoint of its adjusted EBIT and adjusted EPS
outlook from the guidance provided on December 7, 2022. The higher
revenue expectations reflect the strength of Campbell’s brands with
price elasticities remaining favorable to historical norms and
continued strong supply chain execution.
Updated adjusted EBIT and adjusted EPS guidance reflect planned
investment to sustain momentum and value for consumers, as well as
higher year-over-year estimated pension and post retirement
headwinds.
Fiscal year 2023 pre-tax pension and post-retirement benefit
income is now expected to be lower by approximately $45 million, or
$0.12 per share, compared to the prior year. This represents
approximately 3.5% of adjusted EBIT growth and approximately 4% of
adjusted EPS growth, a 50-basis point increase from previous
estimates as a result of interim remeasurements. The plans continue
to be well-funded.
The full-year fiscal 2023 guidance is set forth in the table
below:
FY2022
Results
Previous
FY2023
Guidance
Updated
FY2023
Guidance
($ in millions, except per share)
Net Sales
$8,562
+7% to +9%
+8.5% to +10%
Organic Net Sales
+7% to +9%
+8.5% to +10%
Adjusted EBIT
$1,297*
+2.5% to +6.5%
+4.5% to +6.5%
Adjusted EPS
$2.85*
+2% to +5%
+3.5% to +5%
$2.90 to $3.00
$2.95 to $3.00
* Adjusted - refer to the detailed reconciliation of the
reported (GAAP) financial information to the adjusted financial
information at the end of this news release.
Note: A non-GAAP reconciliation is not provided for fiscal 2023
guidance as the company is unable to reasonably estimate the
full-year financial impact of items such as actuarial gains or
losses on pension and postretirement plans because these impacts
are dependent on future changes in market conditions. The inability
to predict the amount and timing of these future items makes a
detailed reconciliation of these forward-looking financial measures
impracticable.
Segment Operating Review
An analysis of net sales and operating earnings by reportable
segment follows:
Three
Months Ended January 29, 2023
($ in millions)
Meals & Beverages
Snacks
Total*
Net Sales, as Reported
$1,408
$1,077
$2,485
Volume and Mix
(4)%
2%
(2)%
Net Price Realization
15%
13%
14%
Organic Net Sales
11%
15%
13%
Currency
(1)%
—%
—%
% Change vs. Prior Year
10%
15%
12%
Segment Operating Earnings
$249
$150
% Change vs. Prior Year
17%
24%
*Numbers do not add due to rounding.
Note: A detailed reconciliation of the reported (GAAP) net sales
to organic net sales is included at the end of this news
release.
Six
Months Ended January 29, 2023
($ in millions)
Meals & Beverages*
Snacks
Total*
Net Sales, as Reported
$2,863
$2,197
$5,060
Volume and Mix
(2)%
—%
(1)%
Net Price Realization
16%
15%
16%
Organic Net Sales
13%
15%
14%
Currency
(1)%
—%
—%
% Change vs. Prior Year
13%
15%
14%
Segment Operating Earnings
$580
$303
% Change vs. Prior Year
18%
22%
*Numbers do not add due to rounding.
Note: A detailed reconciliation of the reported (GAAP) net sales
to organic net sales is included at the end of this news
release.
Meals & Beverages
Net sales increased 10%. Organic net sales increased 11% in the
quarter primarily due to increases in U.S. retail products,
including U.S. soup, Prego pasta sauces and Pace Mexican sauces, as
well as gains in foodservice. Favorable net price realization was
partially offset by modest volume / mix declines. Sales of U.S.
soup increased 7% primarily due to increases in ready-to-serve
soups and condensed soups.
Operating earnings in the quarter increased 17% primarily due to
higher gross profit, partially offset by higher marketing and
selling expenses. Gross profit margin increased slightly due to the
impact of favorable net price realization and supply chain
productivity improvements, partially offset by higher cost
inflation and other supply chain costs and unfavorable volume /
mix.
Snacks
Net sales, both reported and organic, increased 15% driven by
sales of power brands, which were up 20%. Sales growth was driven
by increases in cookies and crackers, primarily Goldfish crackers
and Pepperidge Farm cookies, and in salty snacks, primarily
Snyder's of Hanover pretzels, Snack Factory pretzel crisps, and
Kettle Brand potato chips. Sales benefited from favorable net price
realization and volume / mix increases lapping significant supply
constraints in the prior year.
Operating earnings in the quarter increased 24% primarily due to
higher gross profit, partially offset by higher marketing and
selling expenses. Gross profit margin increased due to the impact
of favorable net price realization and supply chain productivity
improvements, partially offset by higher cost inflation and other
supply chain costs.
Corporate
Corporate expense was $40 million in the second quarter of
fiscal 2023 compared to $11 million in the prior year. Corporate
expense in the current quarter included costs of $5 million related
to cost savings initiatives, unrealized mark-to-market losses on
outstanding undesignated commodity hedges of $4 million and pension
actuarial gains of $6 million. Corporate expense in the second
quarter of fiscal 2022 included costs of $5 million related to cost
savings initiatives and pension actuarial gains of $10 million.
After factoring in these items, the remaining increase in Corporate
expense was primarily due to lower pension and postretirement
benefit income and higher administrative expenses.
Conference Call and Webcast
Campbell will host a conference call to discuss these results
today at 8:00 a.m. Eastern Time. Participants calling from the U.S.
may dial in using the toll-free phone number (888) 210-3346.
Participants calling from outside the U.S. may dial in using phone
number +1 (646) 960-0253. The conference access code is 2518868. In
addition to dial-in, access to a live listen-only audio webcast and
accompanying slide presentation, as well as a replay of the
webcast, will be available at
investor.campbellsoupcompany.com/events-and-presentations.
Reportable Segments
Campbell Soup Company earnings results are reported as
follows:
Meals & Beverages, which consists
of our soup, simple meals and beverage products in retail and
foodservice in U.S. and Canada. The segment includes the following
products: Campbell’s condensed and ready-to-serve soups; Swanson
broth and stocks; Pacific Foods broth, soups and non-dairy
beverages; Prego pasta sauces; Pace Mexican sauces; Campbell’s
gravies, pasta, beans and dinner sauces; Swanson canned poultry; V8
juices and beverages; and Campbell’s tomato juice. The segment also
includes snacking products in foodservice and Canada.
Snacks, which consists of Pepperidge
Farm cookies*, crackers, fresh bakery and frozen products,
including Goldfish crackers*, Snyder’s of Hanover pretzels*, Lance
sandwich crackers*, Cape Cod potato chips*, Kettle Brand potato
chips*, Late July snacks*, Snack Factory pretzel crisps*, Pop
Secret popcorn, Emerald nuts, and other snacking products in retail
in the U.S. We refer to the * brands as our "power brands." The
segment also includes the retail business in Latin America.
About Campbell Soup Company
For more than 150 years, Campbell (NYSE:CPB) has been connecting
people through food they love. Generations of consumers have
trusted Campbell to provide delicious and affordable food and
beverages. Headquartered in Camden, N.J. since 1869, Campbell
generated fiscal 2022 net sales of nearly $8.6 billion. Our
portfolio includes iconic brands such as Campbell’s, Cape Cod,
Goldfish, Kettle Brand, Lance, Late July, Milano, Pace, Pacific
Foods, Pepperidge Farm, Prego, Snyder’s of Hanover, Swanson and V8.
Campbell has a heritage of giving back and acting as a good steward
of the environment. The company is a member of the Standard &
Poor's 500 as well as the FTSE4Good and Bloomberg Gender-Equality
Indices. For more information, visit www.campbellsoupcompany.com or
follow company news on Twitter via @CampbellSoupCo.
Forward-Looking Statements
This release contains “forward-looking statements” that reflect
the company’s current expectations about the impact of its future
plans and performance on the company’s business or financial
results. These forward-looking statements, including any statements
made regarding sales, EBIT and EPS guidance, rely on a number of
assumptions and estimates that could be inaccurate and which are
subject to risks and uncertainties. The factors that could cause
the company’s actual results to vary materially from those
anticipated or expressed in any forward-looking statement include:
(1) the risks related to the availability of, and cost inflation
in, supply chain inputs, including labor, raw materials,
commodities, packaging and transportation; (2) the impacts of, and
associated responses to, the COVID-19 pandemic on our business,
suppliers, customers, consumers and employees; (3) the company’s
ability to execute on and realize the expected benefits from its
strategy, including growing sales in snacks and growing/maintaining
its market share position in soup; (4) the impact of strong
competitive responses to the company’s efforts to leverage its
brand power with product innovation, promotional programs and new
advertising; (5) the risks associated with trade and consumer
acceptance of product improvements, shelving initiatives, new
products and pricing and promotional strategies; (6) the ability to
realize projected cost savings and benefits from cost savings
initiatives and the integration of recent acquisitions; (7)
disruptions in or inefficiencies to the company’s supply chain
and/or operations; (8) the risks related to the effectiveness of
the company's hedging activities and the company's ability to
respond to volatility in commodity prices; (9) the company’s
ability to manage changes to its organizational structure and/or
business processes, including selling, distribution, manufacturing
and information management systems or processes; (10) changes in
consumer demand for the company’s products and favorable perception
of the company’s brands; (11) changing inventory management
practices by certain of the company’s key customers; (12) a
changing customer landscape, with value and e-commerce retailers
expanding their market presence, while certain of the company’s key
customers maintain significance to the company’s business; (13)
product quality and safety issues, including recalls and product
liabilities; (14) the possible disruption to the independent
contractor distribution models used by certain of the company’s
businesses, including as a result of litigation or regulatory
actions affecting their independent contractor classification; (15)
the uncertainties of litigation and regulatory actions against the
company; (16) the costs, disruption and diversion of management’s
attention associated with activist investors; (17) a disruption,
failure or security breach of the company’s or the company's
vendors' information technology systems, including ransomware
attacks; (18) impairment to goodwill or other intangible assets;
(19) the company’s ability to protect its intellectual property
rights; (20) increased liabilities and costs related to the
company’s defined benefit pension plans; (21) the company’s ability
to attract and retain key talent; (22) goals and initiatives
related to, and the impacts of, climate change, including
weather-related events; (23) negative changes and volatility in
financial and credit markets, deteriorating economic conditions and
other external factors, including changes in laws and regulations;
(24) unforeseen business disruptions or other impacts due to
political instability, civil disobedience, terrorism, armed
hostilities (including the ongoing conflict between Russia and
Ukraine), extreme weather conditions, natural disasters, other
pandemics or other calamities; and (25) other factors described in
the company’s most recent Form 10-K and subsequent Securities and
Exchange Commission filings. The company disclaims any obligation
or intent to update the forward-looking statements in order to
reflect events or circumstances after the date of this release.
CAMPBELL SOUP COMPANY CONSOLIDATED STATEMENTS
OF EARNINGS (unaudited) (millions, except per share amounts)
Three Months Ended
January 29, 2023
January 30, 2022
Net sales
$
2,485
$
2,209
Costs and expenses
Cost of products sold
1,726
1,540
Marketing and selling expenses
217
197
Administrative expenses
162
147
Research and development expenses
21
21
Other expenses / (income)
—
(19
)
Restructuring charges
9
—
Total costs and expenses
2,135
1,886
Earnings before interest and taxes
350
323
Interest, net
45
46
Earnings before taxes
305
277
Taxes on earnings
73
65
Net earnings
232
212
Net loss attributable to noncontrolling
interests
—
—
Net earnings attributable to Campbell Soup
Company
$
232
$
212
Per share - basic
Net earnings attributable to Campbell Soup
Company
$
.78
$
.70
Weighted average shares outstanding -
basic
299
302
Per share - assuming dilution
Net earnings attributable to Campbell Soup
Company
$
.77
$
.70
Weighted average shares outstanding -
assuming dilution
301
303
CAMPBELL SOUP COMPANY CONSOLIDATED STATEMENTS
OF EARNINGS (unaudited) (millions, except per share amounts)
Six Months Ended
January 29, 2023
January 30, 2022
Net sales
$
5,060
$
4,445
Costs and expenses
Cost of products sold
3,467
3,054
Marketing and selling expenses
418
367
Administrative expenses
320
303
Research and development expenses
42
42
Other expenses / (income)
18
(20
)
Restructuring charges
9
—
Total costs and expenses
4,274
3,746
Earnings before interest and taxes
786
699
Interest, net
91
93
Earnings before taxes
695
606
Taxes on earnings
166
133
Net earnings
529
473
Net loss attributable to noncontrolling
interests
—
—
Net earnings attributable to Campbell Soup
Company
$
529
$
473
Per share - basic
Net earnings attributable to Campbell Soup
Company
$
1.77
$
1.57
Weighted average shares outstanding -
basic
299
302
Per share - assuming dilution
Net earnings attributable to Campbell Soup
Company
$
1.76
$
1.56
Weighted average shares outstanding -
assuming dilution
301
303
CAMPBELL SOUP COMPANY CONSOLIDATED SUPPLEMENTAL
SCHEDULE OF SALES AND EARNINGS (unaudited) (millions, except per
share amounts)
Three Months Ended
January 29, 2023
January 30, 2022
Percent
Change
Sales
Contributions:
Meals & Beverages
$
1,408
$
1,275
10%
Snacks
1,077
934
15%
Total sales
$
2,485
$
2,209
12%
Earnings
Contributions:
Meals & Beverages
$
249
$
213
17%
Snacks
150
121
24%
Total operating earnings
399
334
19%
Corporate income (expense)
(40
)
(11
)
Restructuring charges
(9
)
—
Earnings before interest and taxes
350
323
8%
Interest, net
45
46
Taxes on earnings
73
65
Net earnings
232
212
9%
Net loss attributable to noncontrolling
interests
—
—
Net earnings attributable to Campbell Soup
Company
$
232
$
212
9%
Per share - assuming dilution
Net earnings attributable to Campbell Soup
Company
$
.77
$
.70
10%
CAMPBELL SOUP COMPANY CONSOLIDATED SUPPLEMENTAL
SCHEDULE OF SALES AND EARNINGS (unaudited) (millions, except per
share amounts)
Six Months Ended
January 29, 2023
January 30, 2022
Percent
Change
Sales
Contributions:
Meals & Beverages
$
2,863
$
2,541
13%
Snacks
2,197
1,904
15%
Total sales
$
5,060
$
4,445
14%
Earnings
Contributions:
Meals & Beverages
$
580
$
493
18%
Snacks
303
249
22%
Total operating earnings
883
742
19%
Corporate income (expense)
(88
)
(43
)
Restructuring charges
(9
)
—
Earnings before interest and taxes
786
699
12%
Interest, net
91
93
Taxes on earnings
166
133
Net earnings
529
473
12%
Net loss attributable to noncontrolling
interests
—
—
Net earnings attributable to Campbell Soup
Company
$
529
$
473
12%
Per share - assuming dilution
Net earnings attributable to Campbell Soup
Company
$
1.76
$
1.56
13%
CAMPBELL SOUP COMPANY CONDENSED CONSOLIDATED
BALANCE SHEETS (unaudited) (millions)
January 29, 2023
January 30, 2022
Current assets
$
2,087
$
1,980
Plant assets, net
2,318
2,330
Intangible assets, net
7,152
7,197
Other assets
410
484
Total assets
$
11,967
$
11,991
Current liabilities
$
2,699
$
2,322
Long-term debt
3,992
4,565
Other liabilities
1,675
1,752
Total equity
3,601
3,352
Total liabilities and equity
$
11,967
$
11,991
Total debt
$
4,570
$
5,029
Total cash and cash equivalents
$
158
$
357
CAMPBELL SOUP COMPANY CONSOLIDATED STATEMENTS
OF CASH FLOWS (unaudited) (millions)
Six Months Ended
January 29, 2023
January 30, 2022
Cash flows from operating activities:
Net earnings
$
529
$
473
Adjustments to reconcile net earnings to
operating cash flow
Restructuring charges
9
—
Stock-based compensation
31
31
Pension and postretirement benefit expense
(income)
3
(35
)
Depreciation and amortization
176
166
Deferred income taxes
2
31
Other
51
40
Changes in working capital
Accounts receivable
(63
)
(17
)
Inventories
(6
)
22
Other current assets
(12
)
(5
)
Accounts payable and accrued
liabilities
38
78
Other
(26
)
(18
)
Net cash provided by operating
activities
732
766
Cash flows from investing activities:
Purchases of plant assets
(155
)
(129
)
Purchases of route businesses
(3
)
—
Sales of route businesses
—
2
Other
—
2
Net cash used in investing activities
(158
)
(125
)
Cash flows from financing activities:
Short-term borrowings, including
commercial paper
1,389
444
Short-term repayments, including
commercial paper
(1,626
)
(486
)
Dividends paid
(226
)
(228
)
Treasury stock purchases
(66
)
(65
)
Treasury stock issuances
22
1
Payments related to tax withholding for
stock-based compensation
(18
)
(18
)
Net cash used in financing activities
(525
)
(352
)
Effect of exchange rate changes on
cash
—
(1
)
Net change in cash and cash
equivalents
49
288
Cash and cash equivalents — beginning of
period
109
69
Cash and cash equivalents — end of
period
$
158
$
357
Reconciliation of GAAP to Non-GAAP Financial
Measures Second Quarter Ended January 29, 2023
Campbell Soup Company (the "company") uses certain non-GAAP
financial measures as defined by the Securities and Exchange
Commission in certain communications. These non-GAAP financial
measures are measures of performance not defined by accounting
principles generally accepted in the United States and should be
considered in addition to, not in lieu of, GAAP reported measures.
Management believes that also presenting certain non-GAAP financial
measures provides additional information to facilitate comparison
of the company's historical operating results and trends in its
underlying operating results, and provides transparency on how the
company evaluates its business. Management uses these non-GAAP
financial measures in making financial, operating and planning
decisions and in evaluating the company's performance. Management
considers quantitative and qualitative factors in assessing whether
to adjust for the impact of items that may be significant or that
could affect an understanding of the company’s performance and
trends in its underlying operating results. The adjustments on
earnings may include but are not limited to items such as: unusual
or non-recurring gains or charges; restructuring charges and
related costs; actuarial gains or losses on pension and
postretirement plans; unrealized mark-to-market gains and losses on
outstanding undesignated commodity hedges; gains or losses on the
extinguishment of debt; gains or losses on divestitures; or
impairment charges. Depending upon facts or circumstances,
management may change these adjustments. When these adjustments
change, the company will provide updated definitions of its
non-GAAP financial measures. When items no longer impact the
company’s current or future presentation of non-GAAP operating
results, the company will remove these items from its non-GAAP
definitions.
Organic Net Sales
Organic net sales are net sales excluding the impact of
currency, acquisitions and divestitures. Management believes that
excluding these items, which are not part of the ongoing business,
improves the comparability of year-to-year results. A
reconciliation of net sales as reported to organic net sales
follows.
Three Months Ended
January 29, 2023
January 30,
2022
% Change
(millions)
Net Sales,
as
Reported
Impact of
Currency
Organic Net
Sales
Net Sales,
as
Reported
Net Sales,
as
Reported
Organic
Net Sales
Meals & Beverages
$
1,408
$
8
$
1,416
$
1,275
10
%
11
%
Snacks
1,077
—
1,077
934
15
%
15
%
Total Net Sales
$
2,485
$
8
$
2,493
$
2,209
12
%
13
%
Six Months Ended
January 29, 2023
January 30, 2022
% Change
(millions)
Net Sales,
as
Reported
Impact of
Currency
Organic Net
Sales
Net Sales,
as
Reported
Net Sales,
as
Reported
Organic
Net Sales
Meals & Beverages
$
2,863
$
15
$
2,878
$
2,541
13
%
13
%
Snacks
2,197
—
2,197
1,904
15
%
15
%
Total Net Sales
$
5,060
$
15
$
5,075
$
4,445
14
%
14
%
Items Impacting Earnings
Adjusted Net earnings are net earnings excluding the impact of
restructuring charges and related costs, actuarial gains or losses
on pension and postretirement plans, unrealized mark-to-market
gains or losses on outstanding undesignated commodity hedges, and
losses on the extinguishment of debt. Management believes that
financial information excluding certain items that are not
considered to reflect the ongoing operating results, such as those
listed below, improves the comparability of year-to-year results.
Consequently, management believes that investors may be able to
better understand its results excluding these items.
The following items impacted earnings:
(1)
The company has implemented several cost
savings initiatives in recent years.
In the second quarter of fiscal 2023, the
company recorded Restructuring charges of $9 million and
implementation costs and other related costs of $5 million in
Administrative expenses (aggregate impact of $10 million after tax,
or $.03 per share) related to these initiatives. In the second
quarter of fiscal 2022, the company recorded implementation costs
and other related costs of $3 million in Administrative expenses
and $2 million in Cost of products sold (aggregate impact of $4
million after tax, or $.01 per share) related to these initiatives.
In the six-month period of fiscal 2023, the company recorded
Restructuring charges of $9 million and implementation costs and
other related costs of $8 million in Administrative expenses
(aggregate impact of $13 million after tax, or $.04 per share)
related to these initiatives. In the six-month period of fiscal
2022, the company recorded implementation costs and other related
costs of $5 million in Administrative expenses and $4 million in
Cost of products sold (aggregate impact of $7 million after tax, or
$.02 per share) related to these initiatives. For the year ended
July 31, 2022, the company recorded Restructuring charges of $5
million and implementation costs and other related costs of $20
million in Administrative expenses, $5 million in Cost of products
sold and $1 million in Marketing and selling expenses (aggregate
impact of $24 million after tax, or $.08 per share) related to
these initiatives.
(2)
In the second quarter of fiscal 2023, the
company recognized actuarial gains in Other expenses / (income) of
$6 million ($4 million after tax, or $.01 per share). In the second
quarter of fiscal 2022, the company recognized actuarial gains in
Other expenses / (income) of $10 million ($8 million after tax, or
$.03 per share). In the six-month period of fiscal 2023, the
company recognized actuarial losses in Other expenses / (income) of
$9 million ($7 million after tax, or $.02 per share). In the
six-month period of fiscal 2022, the company recognized actuarial
gains in Other expenses / (income) of $4 million ($3 million after
tax, or $.01 per share). The actuarial gains and losses related to
interim remeasurements of certain pension plans due to lump sum
distributions that exceeded or are expected to exceed service and
interest costs resulting in settlement accounting for the plans.
For the year ended July 31, 2022, the company recognized actuarial
losses on pension and postretirement plans in Other expenses /
(income) of $44 million ($33 million after tax, or $.11 per
share).
(3)
In the second quarter of fiscal 2023, the
company recognized losses in Cost of products sold of $4 million
($3 million after tax, or $.01 per share) associated with
unrealized mark-to-market adjustments on outstanding undesignated
commodity hedges. In the six-month period of fiscal 2022, the
company recognized losses in Cost of products sold of $3 million
($2 million after tax, or $.01 per share) associated with
unrealized mark-to-market adjustments on outstanding undesignated
commodity hedges. For the year ended July 31, 2022, the company
recognized losses in Cost of products sold of $59 million ($44
million after tax, or $.15 per share) associated with unrealized
mark-to-market adjustments on outstanding undesignated commodity
hedges.
(4)
For the year ended July 31, 2022, the
company recorded a loss in Interest expense of $4 million ($3
million after tax, or $.01 per share) on the extinguishment of
debt.
The following tables reconcile financial information, presented
in accordance with GAAP, to financial information excluding certain
items:
Three Months Ended
January 29, 2023
January 30, 2022
(millions, except per share amounts)
As
reported
Adjustments(a)
Adjusted
As
reported
Adjustments(a)
Adjusted
Adjusted
Percent
Change
Gross profit
$
759
$
4
$
763
$
669
$
2
$
671
14%
Gross profit margin
30.5
%
30.7
%
30.3
%
30.4
%
30 pts
Administrative expenses
$
162
$
(5
)
$
157
$
147
$
(3
)
$
144
9%
Other expenses / (income)
$
—
$
6
$
6
$
(19
)
$
10
$
(9
)
Restructuring charges
$
9
$
(9
)
$
—
$
—
$
—
$
—
Earnings before interest and taxes
$
350
$
12
$
362
$
323
$
(5
)
$
318
14%
Interest, net
45
—
45
46
—
46
(2)%
Earnings before taxes
$
305
$
12
$
317
$
277
$
(5
)
$
272
Taxes
73
3
76
65
(1
)
64
Effective income tax rate
23.9
%
24.0
%
23.5
%
23.5
%
50 pts
Net earnings attributable to Campbell Soup
Company
$
232
$
9
$
241
$
212
$
(4
)
$
208
16%
Diluted net earnings per share
attributable to Campbell Soup Company
$
.77
$
.03
$
.80
$
.70
$
(.01
)
$
.69
16%
(a)See following table for additional
information.
Three Months Ended
January 29, 2023
January 30, 2022
(millions, except per share amounts)
Restructuring
charges,
implementation
costs and
other related
costs (1)
Pension and
postretirement
adjustments
(2)
Commodity
mark-to-
market
(3)
Adjustments
Restructuring
charges,
implementation
costs and
other related
costs (1)
Pension and
postretirement
adjustments
(2)
Adjustments
Gross profit
$
—
$
—
$
4
$
4
$
2
$
—
$
2
Administrative expenses
(5
)
—
—
(5
)
(3
)
—
(3
)
Other expenses / (income)
—
6
—
6
—
10
10
Restructuring charges
(9
)
—
—
(9
)
—
—
—
Earnings before interest and taxes
$
14
$
(6
)
$
4
$
12
$
5
$
(10
)
$
(5
)
Interest, net
—
—
—
—
—
—
—
Earnings before taxes
$
14
$
(6
)
$
4
$
12
$
5
$
(10
)
$
(5
)
Taxes
4
(2
)
1
3
1
(2
)
(1
)
Net earnings attributable to Campbell Soup
Company
$
10
$
(4
)
$
3
$
9
$
4
$
(8
)
$
(4
)
Diluted net earnings per share
attributable to Campbell Soup Company*
$
.03
$
(.01
)
$
.01
$
.03
$
.01
$
(.03
)
$
(.01
)
*The sum of individual per share amounts
may not add due to rounding.
Six Months Ended
January 29, 2023
January 30, 2022
(millions, except per share amounts)
As
reported
Adjustments(a)
Adjusted
As
reported
Adjustments(a)
Adjusted
Adjusted
Percent
Change
Gross profit
$
1,593
$
—
$
1,593
$
1,391
$
7
$
1,398
14%
Gross profit margin
31.5
%
31.5
%
31.3
%
31.5
%
0 pts
Administrative expenses
$
320
$
(8
)
$
312
$
303
$
(5
)
$
298
5%
Other expenses / (income)
$
18
$
(9
)
$
9
$
(20
)
$
4
$
(16
)
Restructuring charges
$
9
$
(9
)
$
—
$
—
$
—
$
—
Earnings before interest and taxes
$
786
$
26
$
812
$
699
$
8
$
707
15%
Interest, net
91
—
91
93
—
93
(2)%
Earnings before taxes
$
695
$
26
$
721
$
606
$
8
$
614
Taxes
166
6
172
133
2
135
Effective income tax rate
23.9
%
23.9
%
21.9
%
22.0
%
190 pts
Net earnings attributable to Campbell Soup
Company
$
529
$
20
$
549
$
473
$
6
$
479
15%
Diluted net earnings per share
attributable to Campbell Soup Company*
$
1.76
$
.07
$
1.82
$
1.56
$
.02
$
1.58
15%
(a)See following table for additional
information.
*The sum of individual per share amounts
may not add due to rounding.
Six Months Ended
January 29, 2023
January 30, 2022
(millions, except per share amounts)
Restructuring
charges,
implementation
costs and
other related
costs (1)
Pension and
postretirement
adjustments
(2)
Adjustments
Restructuring
charges,
implementation
costs and
other related
costs (1)
Pension and
postretirement
adjustments
(2)
Commodity
mark-to-
market
(3)
Adjustments
Gross profit
$
—
$
—
$
—
$
4
$
—
$
3
$
7
Administrative expenses
(8
)
—
(8
)
(5
)
—
—
(5
)
Other expenses / (income)
—
(9
)
(9
)
—
4
—
4
Restructuring charges
(9
)
—
(9
)
—
—
—
—
Earnings before interest and taxes
$
17
$
9
$
26
$
9
$
(4
)
$
3
$
8
Interest, net
—
—
—
—
—
—
—
Earnings before taxes
$
17
$
9
$
26
$
9
$
(4
)
$
3
$
8
Taxes
4
2
6
2
(1
)
1
2
Net earnings attributable to Campbell Soup
Company
$
13
$
7
$
20
$
7
$
(3
)
$
2
$
6
Diluted net earnings per share
attributable to Campbell Soup Company*
$
.04
$
.02
$
.07
$
.02
$
(.01
)
$
.01
$
.02
*The sum of individual per share amounts
may not add due to rounding.
(millions, except per share amounts)
Year Ended
July 31, 2022
Gross profit, as reported
$
2,627
Add: Restructuring charges, implementation
costs and other related costs (1)
5
Add: Commodity mark-to-market adjustments
(3)
59
Adjusted Gross profit
$
2,691
Adjusted Gross profit margin
31.4
%
Earnings before interest and taxes, as
reported
$
1,163
Add: Restructuring charges, implementation
costs and other related costs (1)
31
Add: Pension and postretirement
adjustments (2)
44
Add: Commodity mark-to-market adjustments
(3)
59
Adjusted Earnings before interest and
taxes
$
1,297
Interest, net, as reported
$
188
Deduct: Loss on debt extinguishment
(4)
(4
)
Adjusted Interest, net
$
184
Adjusted Earnings before taxes
$
1,113
Taxes on earnings, as reported
$
218
Add: Tax benefit from restructuring
charges, implementation costs and other related costs (1)
7
Add: Tax benefit from pension and
postretirement adjustments (2)
11
Add: Tax benefit from commodity
mark-to-market adjustments (3)
15
Add: Tax benefit from loss on debt
extinguishment (4)
1
Adjusted Taxes on earnings
$
252
Adjusted effective income tax
rate
22.6
%
Net earnings attributable to Campbell
Soup Company, as reported
$
757
Add: Net adjustment from restructuring
charges, implementation costs and other related costs (1)
24
Add: Net adjustment from pension and
postretirement adjustments (2)
33
Add: Net adjustment from commodity
mark-to-market adjustments (3)
44
Add: Net adjustment from loss on debt
extinguishment (4)
3
Adjusted Net earnings attributable to
Campbell Soup Company
$
861
Diluted net earnings per share
attributable to Campbell Soup Company, as reported
$
2.51
Add: Net adjustment from restructuring
charges, implementation costs and other related costs (1)
.08
Add: Net adjustment from pension and
postretirement adjustments (2)
.11
Add: Net adjustment from commodity
mark-to-market adjustments (3)
.15
Add: Net adjustment from loss on debt
extinguishment (4)
.01
Adjusted Diluted net earnings per share
attributable to Campbell Soup Company*
$
2.85
*The sum of individual per share amounts
may not add due to rounding.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230307005827/en/
INVESTORS: Rebecca Gardy (856) 342-6081
rebecca_gardy@campbells.com
MEDIA: James Regan (856) 219-6409 James_Regan@campbells.com
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