On June 5, 2024, Campbell Soup Co (CPB, Financial) released its 8-K filing reporting robust third-quarter fiscal 2024 results. The company, a leading packaged food manufacturer in North America, has shown significant growth and resilience amidst market challenges.
Company Overview
Over the past 150-plus years, Campbell Soup has evolved into a leading packaged food manufacturer in North America, with a portfolio that extends beyond its iconic red-and-white labeled canned soup. In fiscal 2023, snacks accounted for half of its revenue (50%), followed by soup (29%), other simple meals (13%), and beverages (8%). Outside its namesake, its brands include Pepperidge Farm, Goldfish, Snyder's of Hanover, Swanson, Pacific Foods, Prego, Pace, V8, and recently acquired Rao's (closed in March 2024). Nearly 90% of its revenue results from the US and the remainder from Canada and Latin America.
Performance and Challenges
Campbell Soup Co (CPB, Financial) reported net sales of $2.4 billion for the third quarter, marking a 6% increase compared to the same period last year. This growth was primarily driven by the acquisition of Sovos Brands, Inc., completed on March 12, 2024. Organic net sales remained flat, indicating stable performance in the core business despite market volatility.
However, the company faced challenges with a slight decline in volume/mix and increased costs associated with the acquisition and inflationary pressures. These factors impacted the overall profitability, but the strategic acquisition and cost-saving initiatives helped mitigate some of these challenges.
Financial Achievements
Campbell Soup Co (CPB, Financial) achieved significant financial milestones in Q3 fiscal 2024:
- Net Sales: $2.4 billion, up 6% year-over-year
- Adjusted EBIT: $354 million, a 13% increase
- Adjusted EPS: $0.75, a 10% increase
These achievements are crucial for the company as they reflect the successful integration of Sovos Brands and the effectiveness of cost-saving measures. The growth in adjusted EBIT and EPS highlights the company's ability to enhance profitability despite external pressures.
Income Statement Highlights
| Three Months Ended | Nine Months Ended | |||||
|---|---|---|---|---|---|---|
| April 28, 2024 | April 30, 2023 | % Change | April 28, 2024 | April 30, 2023 | % Change | |
| Net Sales | $2,369 million | $2,229 million | 6% | $7,343 million | $7,289 million | 1% |
| EBIT (GAAP) | $248 million | $254 million | (2)% | $923 million | $1,040 million | (11)% |
| Adjusted EBIT | $354 million | $313 million | 13% | $1,125 million | $1,125 million | 0% |
| EPS (GAAP) | $0.44 | $0.53 | (17)% | $1.91 | $2.29 | (17)% |
| Adjusted EPS | $0.75 | $0.68 | 10% | $2.46 | $2.50 | (2)% |
Analysis and Commentary
Campbell Soup Co (CPB, Financial) has demonstrated resilience and strategic growth through its recent acquisition and cost-saving initiatives. The increase in adjusted EBIT and EPS indicates effective management and operational efficiency. However, the decline in GAAP EPS and EBIT highlights the impact of acquisition-related costs and inflationary pressures.
"We delivered a solid third quarter with sequential volume improvement, stable organic net sales, double-digit adjusted EBIT and adjusted EPS growth," said Campbell’s President and CEO, Mark Clouse. "We are excited about the integration of the Sovos Brands business, which already is bringing significant incremental growth to our company as we continue to navigate the pace of consumer recovery."
Conclusion
Campbell Soup Co (CPB, Financial) has shown strong performance in Q3 fiscal 2024, exceeding analyst estimates and demonstrating effective strategic growth. The company's ability to navigate market challenges and integrate new acquisitions positions it well for future growth. For more detailed insights and analysis, visit GuruFocus.com.
Explore the complete 8-K earnings release (here) from Campbell Soup Co for further details.
