Consumer Staples
Packaged Foods
$12.07B
14K
The Campbell's Company, together with its subsidiaries, manufactures and markets food and beverage products in the United States and internationally. The company operates through Meals & Beverages and Snacks segments. The Meals & Beverages segment engages in the retail and foodservice businesses in the United States and Canada. This segment provides 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; Campbell’s tomato juice; Rao's pasta sauces, dry pasta, frozen entrées, frozen pizza and soups; Michael Angelo's frozen entrées and pasta sauces; and noosa yogurts, as well as snacking products in foodservice in Canada. The Snacks segment retails Pepperidge Farm cookies, crackers, fresh bakery, and frozen products, that includes Goldfish crackers, Snyder’s of Hanover pretzels, Lance sandwich crackers, Cape Cod and Kettle Brand potato chips, Late July snacks, Snack Factory pretzel crisps, and other snacking products. This segment is also involved in the retail business in Latin America. It sells its products through retail food chains, mass discounters and merchandisers, club stores, convenience stores, drug stores, and dollar stores, as well as e-commerce and other retail, commercial, and non-commercial establishments, and independent contractor distributors. The company was formerly known as Campbell Soup Company and changed its name to The Campbell's Company in November 2024. The company was founded in 1869 and is headquartered in Camden, New Jersey.
Key insights and themes extracted from this filing
Net sales decreased to $2.518 billion from $2.575 billion in the prior year, primarily due to volume/mix declines, partially offset by net price realization. On a two-year compounded annual growth rate (CAGR), net sales increased approximately 6%.
Gross profit margin decreased to 31.3% from 32.4% in the prior year. This decline was attributed to higher cost inflation, supply chain costs, and unfavorable volume/mix, partially offset by favorable net price realization and supply chain productivity improvements.
Earnings per share decreased to $0.78 from $0.99 in the prior year. The current quarter included expenses of $0.13 per share and the prior-year quarter included expenses of $0.03 per share from items impacting comparability.
The closing of the Sovos Brands acquisition is now expected in calendar 2024, as both Campbell Soup Company and Sovos Brands received a request for additional information from the FTC. The issuance of the Second Request extends the waiting period under the HSR Act.
On May 30, 2023, Campbell Soup Company completed the sale of its Emerald nuts business for $41 million. The results of the business through the date of sale were reflected within the Snacks reportable segment.
In 2022, the company expanded initiatives to pursue cost savings by further optimizing the supply chain and manufacturing network and through effective cost management. In the second quarter of 2023, the company announced plans to consolidate Snacks offices.
The company expects the initiatives, once all phases are implemented, to generate annual ongoing savings of approximately $1 billion by the end of 2025. As of October 29, 2023, the company has generated total program-to-date pre-tax savings of $895 million.
The company reports that it is in compliance with the covenants contained in its credit facilities and debt securities, indicating sound financial management and adherence to debt obligations.
Current assets are less than current liabilities, which include debt maturing in one year, as the company focuses on lowering core working capital requirements. This resulted in a negative working capital of $71 million as of October 29, 2023.
The pending acquisition of Sovos Brands is subject to regulatory approval, and the company and Sovos Brands have received a request for additional information from the FTC. If any condition to the acquisition is not satisfied or waived, the completion of the acquisition could be significantly delayed or not occur at all.
The company is exposed to changes in foreign currency exchange rates, interest rates and commodity prices. In order to manage these exposures, the company follows established risk management policies and procedures, including the use of derivative contracts.
The company is exposed to the risk that counterparties to derivative contracts will fail to meet their contractual obligations. The company closely monitors credit risk associated with counterparties and customers.
Sales in Meals & Beverages decreased 4% primarily due to declines in U.S. retail products, including U.S. soup and beverages, partially offset by gains in foodservice. This indicates increased competition in the retail segment.
In Snacks, sales decreased 1%. Excluding the impact from the divestiture of the Emerald nuts business, sales increased driven by sales of our power brands, which increased 5%. This suggests a strong competitive position for key snack brands.
The company acknowledges the impact of strong competitive responses to its efforts to leverage brand power with product innovation, promotional programs and new advertising, indicating an ongoing need to maintain competitive advantages.
Gross profit margin decreased due to higher cost inflation and other supply chain costs, which were partially offset by favorable net price realization and supply chain productivity improvements, indicating ongoing efforts to improve operational efficiency.
The company is focused on lowering core working capital requirements, which has resulted in a negative working capital position. This indicates a strategic focus on optimizing operational efficiency.
The company has implemented several cost savings initiatives in recent years, with restructuring charges and implementation costs recorded in the first quarter of 2024.
The company recorded costs of $2 million in Cost of products sold and $1 million in Administrative expenses related to a cybersecurity incident that was identified in the fourth quarter of 2023. This highlights the importance of investing in cybersecurity and technology.
The company continues to optimize its information technology infrastructure and applications, including implementation of its existing SAP enterprise-resource planning system for Snyder's-Lance, indicating an ongoing focus on technology-driven improvements.
The company acknowledges the impact of strong competitive responses to its efforts to leverage brand power with product innovation, promotional programs and new advertising, indicating an ongoing need to invest in R&D and product development.
During the three-month period ended October 29, 2023, the company repurchased 679 thousand shares at a cost of $28 million pursuant to its June 2021 program. As of October 29, 2023, approximately $76 million remained available under the June 2021 program and approximately $301 million remained available under the September 2021 program.
Dividend payments were $114 million in 2024 and $115 million in 2023. The regular quarterly dividend paid on the capital stock was $.37 per share in both the first quarter of 2024 and 2023.
Capital expenditures were $143 million in 2024 and $77 million in 2023. Capital expenditures in the first three months of 2024 included upgrades of assets across both segments of the business, chip and cracker capacity expansion for our Snacks business, network optimization for our Meals & Beverages business and enhancements to our headquarters in Camden, New Jersey.
The provided 10-Q filing does not contain specific information regarding new or ongoing ESG initiatives. This suggests that ESG factors are not currently a primary focus in the company's quarterly reporting.
The company notes that its industry continues to be impacted by commodity cost fluctuations, labor cost inflation, input cost inflation and other global macroeconomic challenges.
The company has experienced a reduction to its volumes due to lower consumption trends seen throughout the industry, indicating a challenging market environment.
The company is facing regulatory review of its pending acquisition of Sovos Brands by the U.S. Federal Trade Commission, which could delay or prevent the acquisition.