Campbell Soup Co Q3 Fiscal 2024 Financial Report

Date: June 6, 2024

Exchange: NYSE

Ticker: CPB

Sector: Consumer Defensive

Industry: Packaged Foods

Introduction

Campbell Soup Co reported its financial results for the third quarter of fiscal 2024. Chief Executive Officer Mark Clouse and Chief Financial Officer Carrie Anderson provided insights into various elements of the company's performance, integration progress of Sovos Brands, and expectations for future quarters.

Third Quarter Highlights

Campbell Soup Co experienced a solid third quarter with improvements in metrics such as sequential volume, organic net sales, and margins. Sovos Brands, acquired on March 12, 2023, contributed significantly to Q3 growth.

Key achievements during the quarter include:

• Reported net sales of $2.37B
• Gross profit of $732M
• Adjusted EBIT and EPS grew in double digits YoY
• Successful integration of Sovos Brands, adding substantial incremental growth
• Stabilizing in-market performance in the Meals & Beverages division, despite moderate pressure in the Snacks business

Division Performance

Meals & Beverages

The Meals & Beverages division reported a 15% increase in net sales driven by Sovos Brands' contribution. On a pro forma basis, net sales grew approximately 5%, with strong growth in Rao’s. Additionally, foodservice saw robust demand, and U.S. soup sales increased by 2%. Operating margin improved by 160 basis points to 18% YoY.

Snacks

The Snacks division reported a 1% decline in organic net sales, though sequential improvement in volume trends was observed. Power brands like Goldfish and Late July saw net sales rise by 2%. Operating margin for the segment was at 15.2%, as anticipated, due to tough comparisons from the previous year. The division is aiming for a 17% margin and robust growth in the upcoming quarters.

Key Financial Metrics

Key financial metrics for Q3 include:

• Gross profit margin: 30.9%
• Adjusted EBIT: $248M (13% YoY increase)
• Adjusted EPS: $0.75 (10% YoY increase)
• Net income: $440K

The Altman Z Score stands at 1.92, indicating moderate risk of financial distress, and the Piotroski Score is average at 5. The company's market capitalization is $13.15B, with a total working capital of -$1.32B.

Outlook and Guidance

Campbell Soup Co updated its fiscal year 2024 outlook to reflect the Sovos Brands acquisition and ongoing consumer recovery trends. Key expectations include:

• Full-year reported net sales growth: 3% - 4%
• Full-year adjusted EBIT growth: 6.5% - 7%
• Full-year adjusted EPS: $3.07 - $3.10

The company aims to return to a net leverage target of 3 times by the end of three years post-acquisition.

Conclusion

Q3 Fiscal 2024 was marked by steady improvement and successful integration of new acquisitions, setting a solid foundation for continued growth. Campbell Soup Co remains focused on executing its strategic priorities effectively to drive long-term value for shareholders.