Campbell Soup Company (CPB - Free Report) delivered fourth-quarter fiscal 2024 results, as both the top and bottom lines increased year over year, and earnings beat the Zacks Consensus Estimate.
CPB experienced sequential volume improvements and achieved year-over-year margin growth during the quarter. The company made significant progress toward its long-term strategic objectives despite a changing consumer environment. Key highlights of the quarter included a notable recovery in the Meals & Beverages segment, especially in Soup, and a competitive edge gained from the supply chain. The integration of Sovos Brands is surpassing expectations, indicating a pivotal shift in the growth trajectory for Meals & Beverages.
Advancements were made in enhancing margins within the Snacks division, driving innovation, and strengthening sales and marketing capabilities. These accomplishments bolster confidence in the company’s ability to maintain sequential progress in fiscal 2025 while navigating the ongoing industry recovery. Looking forward, management remains optimistic about the long-term outlook, supported by its leading brands and capabilities.
CPB’s Quarterly Performance: Key Metrics and Insights
Adjusted earnings came in at 63 cents, up 26% from the year-ago quarter’s figure. The bottom line came a penny ahead of the Zacks Consensus Estimate of 62 cents. Earnings growth was backed by higher adjusted earnings before interest and taxes (EBIT), partly negated by increased interest expenses.
Net sales of $2,293 million grew 11% year over year while missing the Zacks Consensus Estimate of $2,303 million. Sales were backed by the Sovos Brands acquisition. Organic net sales dipped 1% due to a 2% decline in net price realization, partly made up by a 1% improvement in the volume/mix.
The company’s adjusted gross profit was $719 million, up from $632 million reported in the prior-year quarter. The adjusted gross profit margin expanded 80 basis points (bps) to 31.4% on supply-chain productivity gains, which helped offset adverse net price realization, elevated cost inflation and other supply-chain costs.
Adjusted marketing and selling expenses fell 4% to $187 million due to reduced advertising and consumer expenses. Adjusted administrative expenditures rose 1% to $165 million due to the acquisition impact, and increased general and administrative costs, compensated by cost savings efforts and lower incentive compensation.
The adjusted EBIT jumped 36% to $329 million, mainly driven by the increased adjusted gross profit.
Decoding CPB’s Segmental Performance
Meals & Beverages: Net sales in the segment came in at $1,200 million. Sales surged 28% year over year on the Sovos Brands acquisition. Excluding this, organic sales jumped 1% year over year, backed by improvements in U.S. Soup, foodservice and Prego pasta sauces, partly negated by softness in beverages. The volume/mix remained favorable to the tune of 2%, while net price realization declined 1%. Sales of U.S. soup rose 2%. Operating earnings in the unit ascended 60%.
Snacks: Net sales in the division amounted to $1,093 million. Sales fell 3% on a reported and organic basis. Sales were affected by adverse net price realization of a little more than 2%, while the volume/mix remained flat. Segmental operating earnings grew 1%.
A Look at CPB’s Other Financial Metrics
As of the end of the reported quarter, Campbell Soup had cash and cash equivalents of $108 million and total debt of $7,184 million. CPB generated $1,185 million in net cash from operating activities for the twelve months ended July 28, 2024. Capital expenditures were $517 million in the said period. CPB paid $445 million in cash dividends and bought back nearly $67 million worth of shares.
At the fiscal year-end, it had nearly $301 million remaining under its current $500-million share repurchase plan and about $37 million remaining under its $250 million anti-dilutive share repurchase plan.
Through the fourth quarter of fiscal 2024, Campbell Soup generated $950 million in savings under its $1 billion multi-year cost-saving program. The company also generated cost synergies of $10 million related to the Sovos Brands integration plan.
CPB’s Fiscal 2025 Guidance
Campbell's fiscal 2025 guidance reflects a balanced approach, combining both optimistic and cautious expectations as the company navigates ongoing consumer recovery. The higher end of the forecast suggests a more rapid return to normal consumer conditions, while the lower end predicts a more conservative recovery.
Following the recent divestiture of the Pop Secret business, which was completed on Aug. 26, the full-year guidance accounts for the loss of sales and earnings from that segment for the remaining eleven months of fiscal 2025. This divestiture is projected to decrease reported net sales growth by about 1% and is anticipated to dilute adjusted EPS by roughly 4 cents in fiscal 2025.
For fiscal 2025, the company expects net sales growth in the range of 9-11%, including contributions from the Sovos Brands acquisition and the impact of Pop Secret’s divestiture. The company expects organic net sales growth in the range of flat to up 2%, suggesting a slight improvement in the volume/mix compared to fiscal 2024.
Adjusted EBIT growth is likely to be roughly 9-11%, including the impacts of the abovementioned acquisition and divestiture. The guidance also includes expectations of inflation in the low-single-digit range. The adjusted EBIT margin is likely to be in line with the fiscal 2024 level. While the operating margin of the Snacks unit is expected to see modest improvement, the same for the Meals & Beverages segment is anticipated to be somewhat lower year over year.
Adjusted EPS is envisioned to increase 1-4% to $3.12-$3.22 in fiscal 2025 compared with $3.08 delivered in fiscal 2023. The view includes the impacts of the abovementioned acquisition and divestiture.
Fiscal 2025 includes an additional week compared with fiscal 2024, which is factored into the guidance. The extra week is estimated to contribute about 2 percentage points to both reported and organic net sales, as well as adjusted EBIT. It is also expected to add nearly 6 cents to adjusted EPS.
Shares of this Zacks Rank #3 (Hold) company have rallied 18.7% in the past three months against the industry's decline of 0.4%.
Better-Ranked Staple Bets
The Chef’s Warehouse (CHEF - Free Report) , which distributes specialty food and center-of-the-plate products, has a trailing four-quarter earnings surprise of 33.7%, on average. CHEF currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for The Chef’s Warehouse’s current financial-year sales and earnings calls for growth of 9.7% and 12.6%, respectively, from the prior-year reported level.
Flowers Foods (FLO - Free Report) produces and markets packaged bakery food products. It currently carries a Zacks Rank #2 (Buy). FLO has a trailing four-quarter earnings surprise of 1.9%, on average.
The Zacks Consensus Estimate for Flowers Foods’ current financial-year earnings indicates growth of 4.2% from the year-ago reported number.
Nomad Foods (NOMD - Free Report) , carrying a Zacks Rank #2, manufactures and distributes frozen foods. NOMD has a trailing four-quarter earnings surprise of 3.1%, on average.
The Zacks Consensus Estimate for Nomad Foods’ current financial-year sales and earnings implies growth of 4.3% and 11.5%, respectively, from the prior-year reported level.
Campbell Soup Company (CPB - Free Report) delivered fourth-quarter fiscal 2024 results, as both the top and bottom lines increased year over year, and earnings beat the Zacks Consensus Estimate.
CPB experienced sequential volume improvements and achieved year-over-year margin growth during the quarter. The company made significant progress toward its long-term strategic objectives despite a changing consumer environment. Key highlights of the quarter included a notable recovery in the Meals & Beverages segment, especially in Soup, and a competitive edge gained from the supply chain. The integration of Sovos Brands is surpassing expectations, indicating a pivotal shift in the growth trajectory for Meals & Beverages.
Advancements were made in enhancing margins within the Snacks division, driving innovation, and strengthening sales and marketing capabilities. These accomplishments bolster confidence in the company’s ability to maintain sequential progress in fiscal 2025 while navigating the ongoing industry recovery. Looking forward, management remains optimistic about the long-term outlook, supported by its leading brands and capabilities.
CPB’s Quarterly Performance: Key Metrics and Insights
Adjusted earnings came in at 63 cents, up 26% from the year-ago quarter’s figure. The bottom line came a penny ahead of the Zacks Consensus Estimate of 62 cents. Earnings growth was backed by higher adjusted earnings before interest and taxes (EBIT), partly negated by increased interest expenses.
Net sales of $2,293 million grew 11% year over year while missing the Zacks Consensus Estimate of $2,303 million. Sales were backed by the Sovos Brands acquisition. Organic net sales dipped 1% due to a 2% decline in net price realization, partly made up by a 1% improvement in the volume/mix.
The company’s adjusted gross profit was $719 million, up from $632 million reported in the prior-year quarter. The adjusted gross profit margin expanded 80 basis points (bps) to 31.4% on supply-chain productivity gains, which helped offset adverse net price realization, elevated cost inflation and other supply-chain costs.
Adjusted marketing and selling expenses fell 4% to $187 million due to reduced advertising and consumer expenses. Adjusted administrative expenditures rose 1% to $165 million due to the acquisition impact, and increased general and administrative costs, compensated by cost savings efforts and lower incentive compensation.
The adjusted EBIT jumped 36% to $329 million, mainly driven by the increased adjusted gross profit.
Decoding CPB’s Segmental Performance
Meals & Beverages: Net sales in the segment came in at $1,200 million. Sales surged 28% year over year on the Sovos Brands acquisition. Excluding this, organic sales jumped 1% year over year, backed by improvements in U.S. Soup, foodservice and Prego pasta sauces, partly negated by softness in beverages. The volume/mix remained favorable to the tune of 2%, while net price realization declined 1%. Sales of U.S. soup rose 2%. Operating earnings in the unit ascended 60%.
Snacks: Net sales in the division amounted to $1,093 million. Sales fell 3% on a reported and organic basis. Sales were affected by adverse net price realization of a little more than 2%, while the volume/mix remained flat. Segmental operating earnings grew 1%.
A Look at CPB’s Other Financial Metrics
As of the end of the reported quarter, Campbell Soup had cash and cash equivalents of $108 million and total debt of $7,184 million. CPB generated $1,185 million in net cash from operating activities for the twelve months ended July 28, 2024. Capital expenditures were $517 million in the said period. CPB paid $445 million in cash dividends and bought back nearly $67 million worth of shares.
At the fiscal year-end, it had nearly $301 million remaining under its current $500-million share repurchase plan and about $37 million remaining under its $250 million anti-dilutive share repurchase plan.
Through the fourth quarter of fiscal 2024, Campbell Soup generated $950 million in savings under its $1 billion multi-year cost-saving program. The company also generated cost synergies of $10 million related to the Sovos Brands integration plan.
CPB’s Fiscal 2025 Guidance
Campbell's fiscal 2025 guidance reflects a balanced approach, combining both optimistic and cautious expectations as the company navigates ongoing consumer recovery. The higher end of the forecast suggests a more rapid return to normal consumer conditions, while the lower end predicts a more conservative recovery.
Following the recent divestiture of the Pop Secret business, which was completed on Aug. 26, the full-year guidance accounts for the loss of sales and earnings from that segment for the remaining eleven months of fiscal 2025. This divestiture is projected to decrease reported net sales growth by about 1% and is anticipated to dilute adjusted EPS by roughly 4 cents in fiscal 2025.
For fiscal 2025, the company expects net sales growth in the range of 9-11%, including contributions from the Sovos Brands acquisition and the impact of Pop Secret’s divestiture. The company expects organic net sales growth in the range of flat to up 2%, suggesting a slight improvement in the volume/mix compared to fiscal 2024.
Adjusted EBIT growth is likely to be roughly 9-11%, including the impacts of the abovementioned acquisition and divestiture. The guidance also includes expectations of inflation in the low-single-digit range. The adjusted EBIT margin is likely to be in line with the fiscal 2024 level. While the operating margin of the Snacks unit is expected to see modest improvement, the same for the Meals & Beverages segment is anticipated to be somewhat lower year over year.
Adjusted EPS is envisioned to increase 1-4% to $3.12-$3.22 in fiscal 2025 compared with $3.08 delivered in fiscal 2023. The view includes the impacts of the abovementioned acquisition and divestiture.
Fiscal 2025 includes an additional week compared with fiscal 2024, which is factored into the guidance. The extra week is estimated to contribute about 2 percentage points to both reported and organic net sales, as well as adjusted EBIT. It is also expected to add nearly 6 cents to adjusted EPS.
Shares of this Zacks Rank #3 (Hold) company have rallied 18.7% in the past three months against the industry's decline of 0.4%.
Better-Ranked Staple Bets
The Chef’s Warehouse (CHEF - Free Report) , which distributes specialty food and center-of-the-plate products, has a trailing four-quarter earnings surprise of 33.7%, on average. CHEF currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for The Chef’s Warehouse’s current financial-year sales and earnings calls for growth of 9.7% and 12.6%, respectively, from the prior-year reported level.
Flowers Foods (FLO - Free Report) produces and markets packaged bakery food products. It currently carries a Zacks Rank #2 (Buy). FLO has a trailing four-quarter earnings surprise of 1.9%, on average.
The Zacks Consensus Estimate for Flowers Foods’ current financial-year earnings indicates growth of 4.2% from the year-ago reported number.
Nomad Foods (NOMD - Free Report) , carrying a Zacks Rank #2, manufactures and distributes frozen foods. NOMD has a trailing four-quarter earnings surprise of 3.1%, on average.
The Zacks Consensus Estimate for Nomad Foods’ current financial-year sales and earnings implies growth of 4.3% and 11.5%, respectively, from the prior-year reported level.
Get the latest research report on CPB - FREE
Get the latest research report on FLO - FREE
Get the latest research report on CHEF - FREE
Get the latest research report on NOMD - FREE