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    Campbell's Co (CPB)

    CEO Change
    Board Change

    Campbell Soup Company, known as CPB, is a prominent manufacturer and marketer of high-quality, branded food and beverage products . The company operates through two main segments: Meals & Beverages and Snacks, offering a wide range of products from soups and sauces to snacks and bakery items . CPB's products are distributed through various channels, with Wal-Mart Stores, Inc. being its largest customer, accounting for a significant portion of its sales in 2024 .

    1. Meals & Beverages - Offers a diverse range of products including 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 . Following the acquisition of Sovos Brands in March 2024, this segment also includes Rao's pasta sauces, dry pasta, frozen entrées, frozen pizza and soups, Michael Angelo's frozen entrées and pasta sauces, and noosa yogurts .

    2. Snacks - Comprises a variety of snack products such as 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, and Snack Factory pretzel crisps . The segment included the Pop Secret popcorn business until its sale in August 2024 .

    Initial Price$48.50August 2, 2024
    Final Price$46.33November 2, 2024
    Price Change$-2.17
    % Change-4.47%

    What went well

    • The integration of Sovos Brands, particularly the Rao's brand, is exceeding expectations, now expected to be accretive to adjusted EPS in fiscal '25, and contributing positively to organic growth in the second half.
    • Cost savings initiatives and productivity improvements are progressing well, with confidence in achieving margin expansion, especially in the Snacks division, driven by higher leadership brand mix and operational efficiencies.
    • The company anticipates organic growth to modestly improve in the second half of fiscal '25, supported by the addition of Sovos into organic growth, improving consumer trends, and sequential top line and market share momentum.

    What went wrong

    • The company's expectations for second-half improvement may be overly optimistic, relying on factors like cost savings, integration benefits, and a 53rd week, while other industry players anticipate continued challenges, potentially leading to disappointment in meeting guidance.
    • Gross margins were pressured due to a softer organic business and unfavorable mix, partly because of stronger performance from lower-margin acquisitions like Sovos; this could continue to impact profitability if organic sales do not improve.
    • Snacks operating margin decreased 120 basis points to 13.3%, lower than expected, with competitive pressures in the salty snacks category potentially leading to a value correction and impacting the company's ability to achieve margin targets both this year and longer term.
    NamePositionStart DateShort Bio
    Mark A. ClousePresident and CEOJanuary 22, 2019Mark A. Clouse was named President and CEO of Campbell Soup Company effective January 22, 2019. He previously served as CEO of Pinnacle Foods, Inc. and held executive roles at Mondelēz International and Kraft Foods .
    Carrie L. AndersonExecutive Vice President and CFO2023Carrie L. Anderson serves as the Executive Vice President and CFO at CPB since 2023. She was previously CFO at Integra LifeSciences Holdings Corporation and Vice President and Controller at Dover Corporation .
    Mick J. BeekhuizenExecutive Vice President and President, Meals & Beverages2022Mick J. Beekhuizen joined Campbell's in September 2019 as CFO and has served as President of Meals & Beverages since 2022. He was previously CFO at Chobani LLC .
    Diane Johnson MayExecutive Vice President and Chief People and Culture OfficerNovember 2021Diane Johnson May joined CPB in November 2021, leading initiatives for an inclusive, high-performing culture and overseeing HR functions .
    Daniel L. PolandExecutive Vice President and Chief Supply Chain OfficerJanuary 2022Daniel L. Poland joined CPB in January 2022, leading the end-to-end supply chain, including procurement, food safety, and logistics .
    Charles A. Brawley, IIIExecutive Vice President, General Counsel, and Corporate Secretary2023Charles A. Brawley, III serves as the Executive Vice President, General Counsel, and Corporate Secretary at CPB, having been in an executive role for at least five years .
    Christopher D. FoleyExecutive Vice President and President, Snacks2019Christopher D. Foley has been with CPB in an executive capacity for at least five years, appointed as an executive officer in 2019 .
    Anthony J. SanzioExecutive Vice President and Chief Communications Officer2022Anthony J. Sanzio has been with CPB in an executive capacity for at least five years, appointed as an executive officer in 2022 .
    Mark A. ClouseCurrent President and CEO (Retiring January 31, 2025)January 31, 2025Mark A. Clouse is set to retire from Campbell's on January 31, 2025. He has been President and CEO since January 22, 2019, with prior roles at Pinnacle Foods, Mondelēz International, and Kraft Foods .
    Mick BeekhuizenUpcoming President and CEO (Effective February 1, 2025)February 1, 2025Mick Beekhuizen will become President and CEO of Campbell's effective February 1, 2025. He joined Campbell's in September 2019 as CFO and has been President of Meals & Beverages since 2022 .
    1. Given the strong momentum of Rao's among millennial households despite its premium pricing, how can you leverage learnings from Rao's to apply to other parts of your portfolio, and are there opportunities to drive similar value propositions with other brands?

    2. With the second half earnings growth guidance being higher than some investors might be comfortable with, are there any unusual timing benefits or tailwinds we should consider, and how confident are you in achieving this guidance given current market conditions?

    3. Considering the modest increase in full-year marketing and promotional investment, particularly in Q2 to support the holiday period, how does your current promotional spending compare to pre-pandemic levels, and could this increased activity impact your margins?

    4. Gross margin and marketing expenses came in below expectations; can you explain how these components of EBIT margin performed versus your own projections, and what measures are you implementing to address any variances?

    5. With Snacks margins at 13.3% this quarter, lower than expected, and facing pressures from pricing and supply chain inflation, can you still achieve your margin targets for this year and your longer-term goal of 17% margins in Snacks, especially if the category requires a value correction post-pandemic?

    Program DetailsProgram 1Program 2
    Approval DateSeptember 2021 September 2024
    End Date/DurationNo expiration date No expiration date
    Total Additional Amount$500 million $250 million
    Remaining Authorization$301 million $206 million
    DetailsOpen-market or privately negotiated transactions Anti-dilutive, open-market or privately negotiated transactions

    Q1 2025 Earnings Call

    • Issued Period: Q1 2025
    • Guided Period: FY 2025
    • Guidance:
      1. Full Year Adjusted Net Interest Expense: $340 million to $345 million .
      2. Sovos Brands Growth: Pro forma growth slightly above 10% .
      3. Adjusted EPS: Expected to be accretive in the second half and full fiscal year .
      4. Q2 Organic Net Sales Growth: Expected to be relatively flat .
      5. Q2 Adjusted EPS: Expected to be in the low $0.70 range .
      6. Second Half Organic Growth: Expected to modestly improve .
      7. Second Half Adjusted EPS: Expected to progress with a $0.07 benefit from the 53rd week .
      8. Full Year Guidance: Reaffirmed with a range based on consumer landscape normalization .
      9. Cost Savings: Expected to be $90 million .
      10. Impact of Noosa Divestiture: Dilutive by approximately $0.01 .

    Q4 2024 Earnings Call

    • Issued Period: Q4 2024
    • Guided Period: FY 2025
    • Guidance:
      1. Adjusted EBIT Growth: 9% to 11% .
      2. Core Inflation: Low single-digit range .
      3. Productivity Improvements: Approximately 3% .
      4. Enterprise Cost Savings: $70 million .
      5. Adjusted Marketing and Selling Expense: 9% to 10% of net sales .
      6. Adjusted EPS: Increase 1% to 4%, $3.12 to $3.22 .
      7. Adjusted Net Interest Expense: $350 million to $355 million .
      8. Capital Expenditures: Approximately 5% of net sales .
      9. Snacks Operating Margin: Modestly above fiscal 2024 .
      10. Meals & Beverages Operating Margin: Modestly lower .
      11. Full Year Reported Net Sales: Increase 9% to 11% .
      12. Full Year Organic Net Sales Growth: Flat to up 2% .
      13. 53rd Week Benefit: Contributes approximately 2 points to growth .
      14. Sovos Brands Pro Forma Net Sales Growth: High single-digit range .
      15. Q1 Adjusted EPS: Mid- to high $0.80 range .

    Q3 2024 Earnings Call

    • Issued Period: Q3 2024
    • Guided Period: FY 2024
    • Guidance:
      1. Net Sales: Increase 3% to 4% .
      2. Adjusted EBIT Growth: 6.5% to 7% .
      3. Adjusted EPS: Up 2% to 3%, $3.07 to $3.10 .
      4. Cost Savings: $55 million to $60 million .
      5. Adjusted Net Interest Expense: Approximately $245 million .
      6. Capital Expenditures: Approximately $500 million .
      7. Transaction-related Depreciation and Amortization Expense: $15 million to $20 million .

    Q2 2024 Earnings Call

    • Issued Period: Q2 2024
    • Guided Period: FY 2024
    • Guidance:
      1. Full Year Guidance: Reaffirmed with expected earnings growth and margin progress .
      2. Adjusted EPS: Q3 expected in the lower $0.70 range .
      3. Net Sales Guidance: Pacing to the lower end of the range .
      4. Marketing and Selling Expenses: Low end of 9% to 10% range .
      5. Snacks Operating Margin: Increase by 100 basis points per year .
      6. Cost Savings Program: On track for $1 billion by fiscal 2025 .
      7. Inflation: Low single-digit range .
      8. Sovos Brands Acquisition: Expected to close in March 2024 .

    Recent developments and announcements about CPB.

    Financial Reporting

      Earnings Call

      ·
      Dec 4, 2024, 3:55 PM

      Campbell's recently held its first quarter fiscal 2025 earnings call, where several key points were discussed:

      1. Revenue and Profit Performance: Campbell's reported a 10% increase in net sales, driven by the acquisition of Sovos Brands. However, organic net sales, excluding acquisitions, divestitures, and currency impacts, decreased by 1% due to a dynamic consumer environment and inventory level changes influenced by the timing of Thanksgiving . Adjusted EBIT grew by 6%, while adjusted EPS decreased by 2% to $0.89, primarily due to higher interest expenses .

      2. Management's Forward Guidance: The company reaffirmed its fiscal 2025 guidance, expecting steady progress and incorporating a pragmatic approach to the dynamic macroeconomic environment. They anticipate sequential improvement in the second quarter, particularly during the holiday season, and expect the acquisition of Sovos Brands to be accretive to adjusted EPS in fiscal 2025 .

      3. Market Conditions and Strategic Initiatives: Campbell's highlighted the strong performance of its leadership brands, including Rao's and Prego, which showed significant growth. The company is focusing on innovation and marketing to maintain competitiveness, especially in the snacks segment, where they face pressure from new entrants and private labels .

      4. Analyst Questions and Management Responses: Analysts inquired about the impact of promotional activities and the competitive landscape in the snacks category. Management emphasized the importance of maintaining a balanced promotional strategy and highlighted the strength of their leadership brands in navigating competitive pressures .

      5. Significant Comments: Mark Clouse, the CEO, announced his retirement and transition to a new role as the team President of the Washington Commanders, expressing confidence in Campbell's future under the new leadership of Mick Beekhuizen .

      Overall, Campbell's is focusing on leveraging its recent acquisition, maintaining strong brand performance, and navigating a challenging consumer environment with strategic investments and cost-saving initiatives.

      Earnings Report

      ·
      Dec 3, 2024, 9:38 PM

      The Campbell's Company has released its first-quarter fiscal 2025 earnings results, reporting a 10% increase in net sales to $2.8 billion, although organic net sales decreased by 1%. The company's Earnings Before Interest and Taxes (EBIT) were $367 million, with adjusted EBIT increasing by 6% to $432 million, influenced by the acquisition of Sovos Brands, Inc. Earnings Per Share (EPS) were $0.72, with adjusted EPS decreasing by 2% to $0.89. The company also announced a 5% increase in its quarterly dividend to $0.39 per share .

    Corporate Leadership

      Leadership Change

      ·
      Dec 3, 2024, 9:39 PM

      Mark A. Clouse is leaving his position as President and CEO of Campbell's to become President of the NFL's Washington Commanders. He will retire from Campbell's effective January 31, 2025 . Clouse has been a transformational leader since 2019, significantly reshaping the company's portfolio and driving growth . Mick J. Beekhuizen will step up as the new President and CEO, effective February 1, 2025. Beekhuizen has been with Campbell's since 2019, serving as Executive Vice President and President of Meals & Beverages .

      CEO Change

      ·
      Dec 3, 2024, 9:38 PM

      Mark A. Clouse, the current President and CEO of Campbell's Company, has announced his retirement effective January 31, 2025. He will be succeeded by Mick J. Beekhuizen, who will assume the roles of President and CEO on February 1, 2025 .

      Board Change

      ·
      Dec 3, 2024, 9:38 PM

      Mick J. Beekhuizen has been elected as a director of the Campbell's Company Board of Directors, effective February 1, 2025. He will also assume the roles of President and Chief Executive Officer on the same date, succeeding Mark A. Clouse, who will retire from his positions on January 31, 2025 .