Campbell Soup Company Q3 FY2025 earnings call

Good morning, third quarter earnings performance exceeded expectations with meals and beverages contributing. Snacks performance mixed due to category softness. Consumers cooking at home and being intentional with spending. Meals and beverages division had organic net sales growth, support portfolio strong. Snacks business saw pressure but has plans. Reigniting Pepperidge Farm with bakery and cookies growth. Focus on near-term in-market execution and long-term value creation.

Meals and beverages organic net sales increased 6% for the quarter, led by volume and mix growth of 7%. Snacks organic net sales declined by 5%, driven by lower volume and mix. Meals and beverages leadership brand consumption increased by 2% in the quarter, while overall snack's leadership brand consumption declined by 3% in the quarter. Meals and beverages' organic net sales were led by volume and mix growth, with support portfolio showing strong performance like Campbell's Total Wet Soup growing dollar share. Snacks business faced pressure with 3% lower in-market consumption year-over-year, organic net sales down 5% due to lower volume and mix.

Reaffirm full year fiscal 2025 guidance ranges. Adjusted earnings expected at low end due to slower snacks recovery. Excludes impact of import tariffs. Estimated fiscal 2025 tariff impact up to $0.03 - $0.05 per share. Fiscal 2025 has 53 weeks, benefit included in guidance. Cost savings expectation increased to $130 million. Capital expenditures expected to be approximately 4.5% of net sales.

Tariff impact on business, including Canada retaliatory tariffs, section 232 tariffs, etc. Consumer confidence deterioration affecting snacking categories. Intense competition in snacking categories.

Q: Andrew Lazar from Barclays asked about snacks pressure, how much from category vs execution and future plans.

A: About two-thirds of snacks pressure from worsening categories, one-third from in-market performance. Focus on innovation, distribution expansion, LTOs, price pack architecture.

Q: Ken Goldman from JPMorgan asked about sustainability of at-home cooking trend in meals and beverages.

A: Meals and beverages have six quarters of positive in-market consumption growth. Portfolio well-positioned, focus on innovation and meeting consumer needs.

Q: Peter Galbo from Bank of America asked about category needs for snack improvement and tariff impact on Q4.

A: Improvement in consumer confidence and meeting consumer needs. Tariff impact from Canada retaliatory tariffs, section 232 tariffs, etc., phased in, net of mitigation.

Q: Megan Clap from Morgan Stanley asked about RAYOS growth and snacks margin expectations.

A: Expect high single digits for RAYOS in fiscal 2025. Snacks margins expected at 13% for full year, focus on margin building blocks.

Q: Jim Solera from Stephens asked about portfolio under better-for-you umbrella and Rails tariffs.

A: Portfolio has brands meeting consumer needs, surgical approach. Rails impact from tariffs, looking at levers to mitigate.