Campbell Soup (CPB) 31 Aug 232023 Q4 Earnings call transcript

Greetings, ladies and gentlemen, and welcome to the Campbell Soup Company Fourth Quarter Fiscal 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded.

It's now my pleasure to introduce your host, Rebecca Gardy, Chief Investor Relations Officer. Please go ahead.

Good morning, and welcome to Campbell's fourth quarter fiscal 2023 earnings conference call. Investor at Chief Gardy, Rebecca Relations Campbell. Officer I'm

Clouse, Chief Financial Executive me today and and Mark are Chief Joining Officer; President Carrie Officer. Anderson,

prepared to have we session. remarks prerecorded. remarks, the we Today's will live a been transition webcast Q&A conclude Once

as slide to as participants our earnings been release deck questions, and give to yourself to posted possible you have Investor on ask today's website, that For limit opportunity Relations to two ask many us the we questions. section the The campbellsoupcompany.com. press

Following Q&A the the location a webcast of hours. session, will a same XX the by of the conclusion the replay call within be of available followed transcript at

On cause risk. in the presentation or a appendix could each presentation. current of be side that comparable have which our call which our could provided our these we statements Please materially reconciliation to statements. vary in statements, X and measure GAAP of and forward-looking non-GAAP reflect expectations. directly subject are a we of use to refer measures estimates, our inaccurate our for forward-looking factors we list to of the to will rely today, our make These those measures, on results anticipated most filings SEC of actual the from Because assumptions

year division. and detail Slide you the year and by as then full will guidance quarter thoughts performance for today's fiscal more performance will our agenda. see on Mark as discuss On the review fourth X, results quarter Carrie of overall will full share the his well in financial our XXXX. in-market

turn to the I'm that, to with And Mark. call pleased over

our thank fiscal and everyone, earnings quarter morning, fourth XXXX Good you for call. Rebecca. joining Thanks,

expectations this dedication our We like delivered fourth throughout we in Campbell's consistent the of behalf and our on of demonstrated quarter ahead of work the full expectations. our by the hard management, of Speaking across teams initiatives. initial with coming metrics, to year, our well three our key strategic and year. would delivered extend financial growth for I recognition advancing strong And all many

solidify consistent in we growth has believe years. delivered has XXXX value to stage increased in will creation. momentum Furthermore, that shareholder dependable continue over Collectively, past result the we and deliver results that several our for progress fiscal set the foundation the and compelling broad-based

the Let me highlights begin with the quarter. of fourth

expected, by inflation-driven price realization As investments. sales enabled led solid effective an selling and organic and and in-market X% we delivered supply advantaged growth, net by chain performance marketing net

ago. increased the year Fourth X% four quarter versus prior years consumption XX% and versus

our did the and expected, adjusted on adjusted experience calls. pointed and out earnings we in declines EBIT quarter As investments we the EPS headwind, prior in given planned pension brand which

XX% representing For versus the the of at double-digit full growth strong adjusted sales end top EPS growth growth X% and delivered Adjusted organic was net year, of we $X, of our year, prior of X%. EBIT range. guidance

results strategy reminder, of our and was across the headwind the a four effective our for brands. strong approximately adjusted consumer reflect the year versus $X.XX pension to reflected the along and the prior for Consumption the demand many brands. growth of As for full sustained X% ongoing with execution year, growth year. share These focused increased EPS points

and between the pricing differentiation promotional We enhancing frequency, and tremendous the our interplay balanced while have strategically equity brands. of

chain, future marketing, enhance sales We and invest and expanding innovation. our in for also to capabilities the continued capacity in supply

line acquisition with about excited to The momentum. top fiscal XXXX, growth. we're the continue value stage building proposition of business margin Campbell's the to of next Snyder's-Lance will on ahead and the Looking deliver snacks

names one Sovos the in extend will of This Our strategic growth later Campbell segment growth-oriented with Meals the our call. Carrie make opportunities. guidance in Brands, will will will combination Beverage XXXX planned & into diversified portfolio provide significant dependable full and of food. fiscal be further the sauces as business strengthened ultra-distinctive and provides the acquisition most which

perspective three drivers consumer provide the potential I'd to like importantly, the on category are implications time results, current the in on all currently some and analyzing I going influenced landscape. see division the results. great putting our some We've and Before review some forward. impacting & transitory factors primarily QX deal businesses, spent We of a extent. pressure These Beverage to Meals market

year, effects The from first XXXX. surges of benefited in area is surges sales. the COVID the of like a These has notably lower period summer, fiscal which summer prior the the particularly soup during categories historically residual

of approach this expect XXXX. we We to second greatly quarter fiscal as diminish the continue effect and into QX

the soup of quarter. The This mitigate decline XX% XXXX. QX price-driven of next fiscal pricing factor dynamic helped likely fourth of contributed lapping a factor ago. in about Directionally, of in the double-digit is from this year actions impact in the elasticities

do This this also mitigate to continue XXXX, we fiscal as expect we the improvement sequentially throughout be was volume a move and in expected dynamic We but year. that sequential pricing likely the into in half. one headwind will a the second of to QX headwind half second lessening

recovery the prolonged the and third uncertainty limited contributing inflation. The likely consumer to ongoing behavior and is factor economic in date volume to response to

like of began on categories real focus priorities in summer. categories behavior seasonal based and created resulted a leading prioritizing fewer more consumers obviously in the categories basket. immediate on the value shopper First, soup This on in headwind and needs to has pattern a

in categories the early improvement. soup, we're already our in and some of which increase to We seeing fall is a top signs expect priority, category winter, and like XX

to is behavior meals, effect value-driven has mixed growing second business. The a more our a had stretchable shift which on

on categories on ready-to-eat been as and soup. soups, while well pressure a undoubtedly condensed categories It sauce has also broth, driver like cooking as adding like pasta positive

across sustain differentiated of top categories remarkable continue news is as consistently Moreover, as to in purchases continues to moderate. our even presence the power to Snacks subside it brands positive strong value seasons have this The expect inflation Snack their displayed a We consumers, resilience our year. prioritizing brands maintain consumers' our behavior division throughout all pertains our portfolio. that as while to

we nature. Broadly transitional as in dynamics see speaking, these

While brands our we'll environment. of brands and we persistence in the maintain the fiscal this our dynamics remain not but XXXX, we shifts in our on we're do in the or confident dilutive of do vigilant support to dramatic chase the near remain to this competitive, promotional for within actions of value see these or anticipate term, a margin and equity value catalyst In as share. volume ensure

Turning to results. division our

food Our growth quarter, as remains the net Beverages Meals strategies of employ consumers fourth positioned portfolio their & we In delivered stretch to sales organic multiple dollars. X%. well

strong growth year, in the organic X% some mentioned business, the of by primarily of inflation-driven sales the this seasonality As of pricing lightest COVID terms a and net driven fourth reminder, prior earlier. quarter for in is also the I wrapping we're and surges performance

was down pre-COVID was quarter strong by levels, fourth we Prego, While in the up areas performance the division end Beverages business. XX%. more by X%; dollar and progress for up specifically within our of Compared overall. we've Meals Pacific, saw and our market X%, made the consumption XX% & wanted to several X%; to into up Diving soup Pace, consumption highlight up portfolio, I

private great distinct growth soup two-thirds share and our where be for of and to label focus. will growth and news U.S. where over is This The results is and of identified even represent delivered scale establish portfolio growth segments present. soup more our focus optimization our year, business strong areas the we've has refined areas consistently

innovation Chunky, and cooking and are icons, Pacific of where and like marketing even areas households brands our growth among been effective. our Brands are condensed consumer They condensed Style to demonstrate compelling our very soups, also efforts long-term Home relevance soup younger continue potential. have

essentially were business these trajectory In our to We're and the years are this And shares to share four the going gained consumption the in quarter, X.X committed portion in continuing business we've with flat. up XX%. of ago, forward. points of fuel segments versus this confident

business, third broth. a soup The U.S. of represents are optimized These segments thus has where less bit or are our for a and like area than softness more portion experienced commoditized remains value of share areas an which our sensitive, of us. the opportunity recent soup portfolio,

sourced some private share. cost So they to or lower label where have options be tended have

of only in X% of we & and business. sales the smaller competitive will portion net Beverages continuing even Brands remains Campbell's become this Sovos of this approximately to is portfolio, and team vigilant undermining without the after XX% profitability. The Interestingly, total the Meals of represents segment business any long-term pending remain of ensure the acquisition

X% Snacks consecutive driven on Slide of double-digit quarter consumption fourth the XX. driven to We our by compared We ago, for by also by XX% four year fifth maintained Turning strength to X%, brands. brands, and quarter. strong dollar with momentum, delivered which up the power consumption the our finished net growing power sales strong in-market years eight organic

earnings growth can proof to profitable strategic XX%, highly relevant fantastic net provide another Overall, differentiated sales at with results growing is XX% on lead operating for year that fiscal Snacks, and and growth. working was brands compelling these our focus and sustainable XXXX at

The slide the core versus of while the XX%, and illustrates up reflects consumer the highlights for brands, all of snacking. On brands consumption continued holding prior impressive performance volume share. growing double-digits growth XX% our consumption strength the was demand of and grew four-year power continuation in a with portfolio which basis, the our next year. This eight quarter heightened

two-year at X% period. years. Turning earnings at the to CAGR a growth net delivered a has two business Slide over XX, has CAGR operating grown The over business XX% past our growth a Snacks tremendous sales with

us XX%. In we year, XXXX, in drove improvement goals is fiscal on operating road XXXX fiscal we continue fiscal growing This be to north XXXX. Snacks our in from fiscal to and margin margin, to deliver gives last of the in that XX.X% show with in change XX.X% we'll step our a expect where and map long-term steady confidence increased consistent

steady the we in year. sequential expect and Beverages, and with most industry. strong to and Within And enter focused with very portfolio one new strengthen & growth accelerated the excited the supply advantaged arguably trajectory to build year. strategies we year stories I'm and this from on strong to improvement business margin the fundamentals we chain throughout Meals to Snacks, as and continue optimistic and expect of the in proven continue the

an only following the most This made adding the portfolio. the acquisition, story It's story growth completion Sovos compelling stronger combination. exciting of food will the be in Campbell's to Brands

some have for dynamics understand broad-based the in short-term of especially year, part QX. the planned category early We and in

are to another deliver well place plans strong year, the of positioned have Campbell's and business. gain we evidence of strong the and momentum adding transformation in further However,

who and outlook. to With results that, I'll will pass quarter and full fourth XXXX review Carrie, year present fiscal our our it

Thanks Mark, and good morning everyone.

non-operating I'll in as and and sales in an that item. marketing, of expected organic sales which largely with reflected Snacks business fourth EBIT our adjusted in a quarter increase and especially quarter overview a investments headwinds net performance with an related mid-single-digit fourth came results, begin planned to continued our

to adjusted realization, Fourth X% organic reflecting year partially inflation-driven a by some in pension related XX% benefit EBIT Adjusted offset $XXX adjusted was net to and investments other and marketing post-retirement unfavorable quarter to gross net expenses prior sales as mix. increased higher price income. $X.X nearly decrease million by selling of offset planned higher and and was profit lower billion, volume

Adjusted of XX% primarily lower decreased adjusted XX adjusted post-retirement pension and and by EBIT points impact driven $X.XX, The to EPS EPS in the basis reduced EBIT. by lower $X.XX quarter. margin income adjusted by benefit

pleased our full the with We overall for are performance year.

finishing higher exceeded driven our sales initial realization. net a provided year by net guidance year year with fiscal net XX%, organic ago, price sales of results expectations growth Our the

non-operating also by earnings per full income. of up impact top adjusted year Overall, greater pension and adjusted post-retirement X% finished expectation $XX a share by from planned Adjusted $X, range million for X% $X.XX and despite item initial and the the end than ahead EPS at adjusted originally EBIT our reduced EPS this of EBIT adjusted year, $X.XX. grew and

XX Slide sales growth. fourth drivers quarter our of the net summarizes

sales points nuts net realization. Excluding sale XX X% We across the quarter. Volume grew generated in the divisions. and the from net percentage declined points of inflation-driven five both Emerald impact the of growth business, percentage price of mix organic

volume margin driven gross line QX margin the adjusted by year-over-year was XX.X% mix. unfavorable change profit quarter and primarily fourth in with in generally of Our with

realization As bridge, chain and in productivity more improvements costs. net cost shown price and other offset inflation the supply than

to XX. Moving Slide

year. QX. and the as through teams logistics Our at moderation rate reflected compared inflation to XX% trends saw we high quarters as successfully improvement move to oils X% flour mitigate in QX headwinds steady XX% quarter's as and of finishing core a for continue inflationary in Fourth improved transportation. that averaged the with well We in

of a of three year XX%, XX% four still pricing year, with contributions pricing wave double-digit pricing Net averaged fourth with aimed fully the ended the three for at July. the pricing price full inflation. reflecting wrapped impact We waves as net from three benefiting quarter contribution of offsetting of and waves from

continue a margin-enhancing mitigate inflation the a range In pricing, on to chain improvements to across productivity levers and broader spending to including we of addition deploy other discretionary organization. including supply focus initiatives,

We the million billion $XXX fourth have initiatives. track the deliver savings savings Snyder's-Lance progress quarter, made on end of total we are savings on of pleased to Through of synergies. have multiyear savings with XXXX. fiscal under our cost achieved inclusive remain $X of our program, We we by the cost

by on A&C Adjusted Moving benefits advertising planned to or to increased and higher The and marketing expense, operating promotion division. the the in was partially Snacks A&C, primarily driven quarter prior by expenses driven in from higher increased year, offset which increased savings cost increase other our this XX% selling items. selling and initiatives. consumer by increases X%, compared expenses,

expenses for the million cost-saving expenses net increased million benefits Overall, and to full initiatives. or X% partially costs adjusted and marketing general from X% year. our and adjusted the to inflation, And sales offset selling higher of increased administrative by by $XXX quarter fiscal approximately represented administrative $XX due

by this and adjusted pension partially Slide decreased on expenses year expenses benefit for higher shown higher million to expenses, year, to higher adjusted and marketing lower XX, offset due XX%, postretirement $X to impact the primarily an income approximate gross other selling fourth administrative adjusted As Lower related EBIT. this pension profit. adjusted adjusted quarter higher and drove and income EBIT benefit adjusted postretirement

margin EBIT the adjusted a adjusted lower in the higher and pension marketing postretirement lower profit and benefit impact primarily XX.X% decreased selling adjusted quarter, margin, to by our driven expenses income. and Overall, gross of

by $X.XX down compared of Turning in $X.XX expense, to and adjusted was the by outstanding. decrease the interest higher driven rate partially per year. effective diluted EBIT average prior EPS the or share, slightly lower adjusted Slide and weighted adjusted a in offset was primarily XX% XX, reduction shares tax This a to

partially Turning segments X%, to fourth in were quarter Sales realization, in net increased by declines volume foodservice reflecting in Prego pasta soup unfavorable offset partially & and beverages, and Meals sauces, sales offset Beverage, the by price Canada. mix. U.S. organic and increases net

Sales of U.S.

& lower declines the Soup decreased earnings partially Beverages in increases primarily XX% quarter in for X%, increases to $XXX ready-to-serve by decreased and profit. soups, broth primarily condensed. due modest million, to in offset operating in strong Segment gross Meals to due

supply driven quarter mix by lower unfavorable chain price productivity by and profit largely as margin costs, gross operating higher which as cost Fourth and to was XX.X%, supply realization between to margin, declined improvements. offset foodservice, due chain inflation and retail partially well other net

XX% X% XX%, mix. In year, partially period. Brands, For Snacks, net modest segment realization, the volume price quarter XX.X%, compared and fourth of comparable unfavorable in sales declined by the margin reflected offset increased to sales net to year ago driven operating up were by organic fiscal which Power and

margin $XXX well to gross higher partially primarily marketing higher as profit, of other and as inflation quarter by offset and improvements, expenses. supply selling the profit impact chain net XX% and due Segment supply Gross unfavorable volume due costs in higher more productivity increased expenses and to than the operating price million, realization higher mix. administrative cost chain offsetting earnings and to increased

quarter within by XX%. Overall, to increased fourth division, year-over-year operating XX points basis our margin Snacks

progress cash basis liquidity. year. in margin For XX.X% and now improvement pleased year, XX.X%, point compared I'll our to to the with posting our to prior were flow we fiscal a turn XXX the

value shareholders, the and due million capital $XXX commitment Fiscal earnings. repurchases working higher $X.XX offset from to was compared to returned have changes to prior this return flow line cash billion XXXX share to primarily nearly by we with partially through billion, year, fiscal our dividends In through operations in cash $X.XX in year.

than from expenditures year, our activities of higher growth particularly the invested as reflected million, outflows investing capital in $XXX Cash million division. Snacks prior key $XXX in we areas, in

$XXX $XXX and share the repurchase strategic program million were paid million, $XXX approximately quarter, share $XXX At current the program. $XXX under anti-dilutive Our under $XXX financing million million the share our repurchase dividends repurchases. $XXX remaining we end million million of and activities million year-to-date outflows remaining from including of cash of approximately had

year times, acquisition. Our debt a with $X.X of great below in position, with for This a targeted our we and adjusted balance ratio sheet net net to ended well the times in range. EBITDA pending leverage Brands debt strong billion us Sovos fiscal of X.X shape as the three puts plan

cash a approximately year-end, liquidity cash and credit facility, and million in of and approximately had billion $XXX $X.XX As excess providing the available company its significant flexibility. under equivalents revolving

fiscal through walk 'XX Slide guidance. you year Turning to let our full me XX,

As Emerald impact of divested to which approximately in a reduce reminder, dilutive estimated XXXX, a per we point business, percentage XXXX. $X.XX X.X and May share by is of fiscal fiscal sales in our the have sale nuts net

by is XXXX, and therefore, yet the acquisition Brands in Sovos Additionally, XXXX of the December close fiscal is outlook. expected included to current our not end of

down growth net a For X.X% X% sales expect year. to the X.X% reported to net for flat organic revenue, to be in range of sales plus of and we growth

throughout reflect improving pricing contribution year promotional an of trends expectations the Our and with expected disciplined activity. volume lower levels from

in continue of expect This In declines terms dynamic the top in to positive first QX, half. be do be trends very half fiscal much will of with line sequential XXXX improvement the phasing, would second to expect we to leading volume with consumption. where line in most in we pronounced

$X.XX an adjusted X% adjusted EPS with growth we range earnings, to EPS of For of to EBIT expect adjusted X% and $X.XX.

inflation core in single-digit Having margin with improvement inflation QX full opportunity and fiscal We sequential quarterly for core of the progress. expect we throughout X%, year range. the exited also see expect modest XXXX low

$XX billion program. towards cost X% of to million also our productivity improvements savings $XX We savings and million approximately expect of approximately $X

cost trends these improved expansion growth weighted. half As earnings volume dynamics, second are be to of a half second and expected and margin result

XX% in a selling Additionally, brand both on of and fiscal quarter commitment percent of XXXX. end compared net of quarter in to the be we year-over-year fourth step-up the range line expense our as continued XXXX, spend sales a investments, selling our marketing and in X% a and first to to with marketing low fiscal targeted expect of with sequentially the at basis to

in overall expected Meals modest Division of operating in improve expected operating fiscal to and Beverage fiscal expected expansion operating are Snacks the margins XXXX above & with margin year. margins second the to be half for XX%

guidance represents This comprehends approximately X% $XX estimated adjusted growth be of an both Our to headwind headwind EBIT lower full EPS $X.XX we pronounced impact year. and or also adjusted and is in share. the pension EPS EBIT first most significantly quarter. the in year than fiscal and to we saw compared adjusted approximately million This the of X% adjusted in the prior X% to impact EBIT XXXX saw will per

guidance an million interest our $XXX of underlying net expected approximately effective of key and an Other XX%. approximately assumptions included $XXX to adjusted million rate expense tax

the we year impact the selling incident. expect quarter pension As lower quarter first adjusted be the of income marketing costs and the some year, highest to phasing and rate the increased related the earnings cyber of lowest due concentration a think nonmaterial growth to to we the expenses, for about inflation, higher from

quarterly As guidance. don't you know, we provide

progresses. building dynamics QX, quarter the Given as in likely range the expect upper with adjusted momentum we year $X.XX EPS however, unique the first in

expected guidance, X.X% up As capital approximately be to I sales. are wrap net expenditures of

and including support important expansion Goldfish select capacity include Our announced plan margin to the as fiscal well other as investment, programs priorities Snacks improvement IT and investments. recently productivity headquarter for consolidation our our projects, XXXX

in great long-term of in aligned reinvest is modest our remains the and This allocation fueling and years investment the priorities. back much with last and opportunity of improve profitability. the couple into compared capital see algorithm very to to business support step-up We growth

and We balance dividend are committed to also maintaining a sheet. a competitive strong

provide closing, and year solid our innovation are supply our growth in accelerated a half confident In we marketing, in for brands, chain relevance capabilities the setup XXXX. that the of and and into second the execution of fiscal strength

Q&A. my the I'll concludes and operator for over remarks, it to prepared That turn

Barclays. first your of from And Andrew comes question the line Instructions] Lazar [Operator from

open. is line Your

Good everybody. morning,

Hi, Andrew.

at the current and thanks operating the ahead. your of for impacts outset thinking your on in for some of the year Mark, industry the that the environment of commentary sort how sort

number of think to You a year. talked timing then of about right, a keep we sort of and in factors, about bunch as mind impacts the

hoping as the you of maybe maybe sort So little guess, it see phasing, I recovery breaks to could you organic volume you through out for And color of more on out bit how us year? guess between, full and laid you've I the of give target sort a was say, relates that particularly I you -- as the sort growth let's go would how year, think the pricing? for volume

loaded and in secondly you given then just I feel some to so year, enough you're the of Thanks of do you for like I understand, reasons in guess, near-term do a yourself the, feel of those And light would that giving discussed hit flexibility trends be, room it's the like it's back-end particularly industry? much. or sort numbers, you that recent or very

understanding It's experiencing point think, sure. I imagine, you as one a the now. really of amount unpack point spent out, rightfully great question And we from really out, it. greatest good starts a that we're would what as to time of getting you Yes, trying you it probably as and

And seen some the I and slowdown broad-based recovery across, we've perhaps little arguably, we've us many consistent where might think have of less had pretty originally across a a what expected. than couple volume of industry quarters

understand year. are conviction I drivers, getting in to the or that the into digging really so the for And full important confidence think, the

year. the I see with timing kind things laid relates the influencing that we earlier, of on through kind as out anchored or numbers impact to we As sequence of it variable three

perhaps fourth immediately know COVID something one not and didn't have this screen many I for might quarter. on the And about lot tail a end impact. talk perhaps been is in radar that's the So, of ago we of year the that first one kind a

summer our in tight and very less like some call tail of a linkage end see fiscal 'XX. and the saw into it, first soup, the couple where to really in to the compare end occurred categories, we quarter as baselines especially of of of it. we that categories our, the really But tail the us for do of prevalent of That kind time step surges you let's back took a is really 'XX of

see that material a a areas, into fairly later QX, I couple think of get it going, of us don't part that expected of in at really time think fairness, even probably as back, impact that see deliver I was And impact. looking QX we we much really on into as do by better you're an perhaps a helping the the although anyone catalyst for than So and you time. elasticities

what I would even than was better without it, much still say, it elasticities Although would provide. still history

So that definitely one. transitional a one's I think

You can start. a see

You an can see end.

bit of a get the not as expect I year, in that that through QX. we'll feel But the think I be balance would a we little to headwind.

through quarter, improve significantly from the with less the think the will year obviously gets be that which pricing impact orders do that being us just moderates XX% is the will impact of I that And pretty the but and significant second of about peak, QX. to as talked throughout become And area year, mathematically. after better sequentially in I expect one quarter pricing. kind about is I magnitude to at

environment, prediction volumes say, of be get to the that continuing would as that doing build I you that improving of improvement think and also you're the helps normal more, I think catalysts as I way think been of it, support the the we've kind sequential year. brands your through one the the that I and to going that's to volume But

a day, baskets that's this, The I really of the market between interesting the really as most behavior talk is the that seasonal And we've rationalization. one bifurcation perhaps been to into has are shrinking, dug indicator greatest categories. of at going consumer see And what's is is bit we as kind to last of the of this one things just this what interesting, two-pronged think the perhaps about that consumers' and the little end be recovery. because

One, first, that more are prioritizing in those relevant season. the categories

for pretty the are maybe in the that household drops we the a significantly soup, up comparisons. in bit can penetration, summer tend a in amplified it of better that in consumer's in those So hold little more to see basket where than prevalent and of kind category-to-category example, summer

all that are to and go in that gives shopper's perfect, general, The is although recent up fall to the the lot spikes winter, based seasons jumps we've a to seasons. in XX kind for move penetration those of top we improvement I when where on great understand a soup the in into that the household as the think some news that into begin the up. even of will a that of category relevance started of the and far prioritization from fact, in basket And us in conviction more occurring. trends, see And

interesting has rating one every in because as or where as season, that the steadier number Part is been and mentioned call, is fact priority is of the quite more far consumers. I for two much that's number one snacking things this or of penetration snacking a household consistent. on

trade-offs. there do making are where I think dynamic So consumers this is

second to the their number a of to or dynamic this think family is that is part a servings. of consumers greater number trying And I dollar. feed enable I that categories greater to see consumers stretch we by members really that of mean And and of a what purchases migration

have kind and by a our sustained unexpected products us, of bit rice, you And not more maybe the of you if environment will, some been a well, impacted, more serve, if the individual see single in so -- very, bit little for our do that's tightening, this and given things will, hold pasta you sauce the soups little where condensed like recent consumer kind of up very inflationary macroeconomic more cooking period. pasta,

area year, expect to would the although to will the in I pressure or as in more QX, first the I expect I But of very that some business. much, that that season. through be part perhaps of return impact that kind where moderates we're across continue this some the of year, think of fiscal do continue. to inflation normal summer particular present see I still especially But to

of But think will with position some put why expected we kind in this seasonality a more of see basket priority normalizing when you a what the the of pricing moderation together the year better be COVID, of the for and improving. cycling and of I this along bit is categories our inflation, sequence relative to of

volume we're And the or the a right? is or think bottom, is not we change to this kind to idea So requires that a food why you this also going structural to chase the to confidence moment to laid share of it is that's out just seeing. way not that through year is why what promotion what is. we're of the manage the I need And dysfunctional walked just

not saw see to As were with business see I do as to appropriately of perspective positive. out. climb as present variability relatively you with is more why what on tougher always the in give about deal sequence But tried the and the where feel QX the a course, most ourselves where we be QX conservative? going flexibility what we a year that think QX, lays bit far to little we've we of and how we whatever inevitable is expect with in even may that very be. of quite you we to more good And be

this last Remember, year on is metric. every delivered I QX, But -- XX% up too, this we we were when it. remember lapping imagining,

all top EBIT, growth. EPS, XX% So line,

a tilted the a to as half that reason about better do and in math back favorable little just feel the first is half, are another So year you model our sequence. to significantly which comps to

detail. Great. Thanks for a Have good holiday. the

Yes. Thanks. See week. you next

Goldman from from comes the question next Your JPMorgan. Ken of line

is line Your open.

can other are the improve the you the of improve don't us especially little Thanks efforts some little scanner I little more expect the some market challenged about sooner? plan marketing changes the hear any soup about a know why. but them the Should in reasons right, to market just declines we reasons of curious to lapped. I'm share will much. bit I'm that in Hi. bit or half. I Or remain, should also and can pricing maybe to volumes to see maybe we you share, broth. how underwhelming second can trends bit that to a think Nielsen. see we maybe until there of make certainly word share the reverse a in if terms in we data appreciate help bigger see Mark, for so some curious, is discussed of

Yes.

So the about much has within certainly it's Meals the & very been us say, we kind XX% the say, good as it just have we And things that a I of good for dynamics I for question, Ken. has would would look talk And as our would up a lot I how the business, Snacks brands distinctly say a business. held of one Beverages, we of as about very, today. been feel of standout different at there's portfolio parts clearly, our very

brands the and pressure the although, on majority of And category brands still really positioned we see that some sub-segments, our our that in of well. driver the got some a distinct pretzels, for especially are you've -- and acceleration most very where power reason new through

And have Goldfish there like business, see to ahead really cycle as cookie we're coming. very well, as innovation relates some Farm which about it or competitively holiday although, and we'll brands a I we how positioned some great even terrific our pricing good Pepperidge feel

Factory has been strong. Snack very

a But that. potato we chips play we've bit how Kettle to area probably know is Our where more an seen little competition.

well. value a super great as Kettle relates to it proposition some Cape have and and innovation there Cod We as

we good really we're positioned. snack how So of say from I and feel would just standpoint, business, about half a our

I probably experienced on But Then do I it unpack fully we've more into where bit & that's pressure as Beverages, of Meals is it. interesting a share. think you kind you as get little think

on in points pressure prepared remarks broth made remove the from is, more I commoditized to my lot if a you were as soup, for know example, of where a it's we're that label, segment, more getting private One a we segment.

represents of in as the years. out positive XX% growth our I where about, fully which and portfolio that core to broth a took you share over really areas that, have and is is share which I flat of expect drive we to grow If to continue talked soup, last the testament several

You do had share to growth. returning like well. Pacific Chunky continues brands to

been has have label those categories Our competitively. exists, extremely And within quite just in where even been condensed well performing those that cooking brands really private are differentiations those business effective.

and felt is will ensuring key some on think very are arguably I the or on protected broth us where of those pressure, flankers some focused you of be where soup, in seasons we think which greatest within areas is holidays. I our value see that during particular key

stay sure we'll we competitive. that But make

opportunity tighten determine see propositions, others, those is cases, we areas in there I a we'll that think think the and good may really some In future. have I rationalization think for to really some have in flankers, forward. I portfolio you that value path some as on the we that the of

thing the a me about I or a stands help. a as business, is talk soup hindrance is to think that said, the that lot I and out But we

company would improve, of in lot opportunity think challenged our of contain hope segmentation better, balance I I portfolio, in bit you the little and of we When that unpacking well a with very and a more investors the feel more the lot. that good. as sales are these helps the a to that X% on areas I feel

another we've an quite It's in right Pace can't that and to But really which other meals we positive as proposition. very ultra-distinctive has now, That's that one, and for growth not then really there bodes and has value cooking We been Prego. expect heavily is Pace. with in Prego in category standout, sauce interesting what segment right? share And grow seen performs continue does. brand outsized well been well. pasta used there's know this we that there compete

the of it. love there, So I understand I share don't impact kind although

be forward. big to acquisition, that's will going for us course, a think business conviction a of great catalyst of I potential Sovos, a And the Prego and lot our the which complement give Sovos

think I in at most parts the you of just So critical, when I are the dire share think the business, are would start I by don't that position. look a saying, performance

contained I lot focused, a think strength, need fairly I some there's where work going we'll have forward. we that that drive to continue and we where think and are do areas the of reasons believe to

Have you. Thank helpful. great a weekend. Very

Bye. Thanks, Ken.

from Your next Peter the comes line from Bank America. of question of Galbo

open. Your line is

Mark, you guys? How morning, are Carrie. Hi. Good

Hi, Peter.

maybe not kind the in of come wanted bit I you chance gives kind the just you range I it 'XX of margin what the cost and maybe the little a savings can And to I midpoint do of year? wanted of and understanding XXX between, But points kind just outlook, half gross half-weighted have if productivity to inflation guess, make get call. you I to we on number, back in should back expansion math take put a a COGS just relative probably of in there of that, Mark, you the into basis that's hone to 'XX. give confidence the that just to second the moderating you think like implies confidence something that

a did a drivers there, remember, our pretty job wonderfully in anticipating that we laying you've got business agenda Well, margin the right think, tailwind there. we're good I mean and Peter. I helpful out Snacks the

getting pro starting step we around 'XX, XX% up in in point that from made mentioned forma over we fiscal the the the kind change As of call, feel terrific XX% our about back range. we

that initiatives we've got that into at and confidence lot we that expect keep that, are to of north the in the XX% look get as be as 'XX, we driving will there year. a And we of

in important margin to our journey our goals another So step longer-term for snacking.

you've have underlying year, business, you especially the come improving at why. relatively year you our is into sequence the low a big for peak today, the off a high as a kind the But reducing I across year. digits single is through front-loaded that's driver And low that for as digits single outlook we you're where got 'XX, go arguably, inflation do as macro we through of in think dynamic reason

your with kind we're more business, you expansion. margin do Beverage moderation, enabling back of And then cost I to think be are anticipating start savings margin half and & your get back to our of productivity believe even on to driving the and And incremental the, Meals that that into factor and why into be some as more improvement, modest we that the year. of get for in business we'll particular, big we will stronger journey back margins a that where

to as headwind go. in still are are a or we're how bridge Carrie, we're are imagine landscape, as imagining the impact of that's in or and going we QX, miss pointing you tougher improve on really gross But seeing as progression not dramatically margins margin dynamics And this around to that did although that QX in think many margins significant we QX, the through I year. a I anything then there?

foodservice. little That about a a -- bit Talk was

That's point, a yes. great

little normalized, unfavorable won't in It XXXX. will brings normalize, have. a We itself that of growth mix fiscal which bit

year, about the foodservice. bit & Yes. that a-third look mix at by which anticipated, drivers a I of if driven contribution wondering from that margin quarter, point. we a I it's mix, great little of you of but And Meals that's coming this significant, is really this that the beverage. mean certainly outsized look even if at you for mean in you're if especially is

was service As of beginning we really the that away pronounced in food fiscal 'XX. of because actually recovery get goes the into QX, most right starting

of say, will would had So this headwind to year. balance absence, year yet I the that the through start that a be of benefit you as mix go another we

Very it. helpful. Got Thanks, Mark.

Peter. Thanks, Okay.

Lavery of the question Sandler. Michael next comes from from Your line Piper

open. Your line is

morning. Good you. Thank

Mike. Hi,

to drill parts it. guess I And a two bit. just little wanted into I margins of

confirming, that Snacks. 'XX? pushed You that in gave maybe better just of bit? that the fiscal really -- XX% inflation Beverage, then you XX% a Maybe Like the that Or & still XXXX the like track on up things well. for back you're into is with Meals half? would certainly, stepped is fading some just it for outlook of better is and the as pricing, feel productivity the clear. headwinds bit in just drives a out plus going on been a And little unpack But some improvement are by

Yes.

will continue and to confident that, in together I road one you well. very So Carrie do I snack XX%. the feel map this But would tell side, to think on as I our

we've the seen that we that do way bit little last will think as I think, depend the in over get a on as couple the challenge all of elements the little I a far of environmental have years. creating 'XX, been some it bit, there of

outlook very with I for now and put on is in we But 'XX good the board the feel what 'XX. what

as the more so a in to it see relates But think a I and to more hunt. environmental we're hesitant. And inflation couple I'm want I variables little costs.

put in of One our to talked means some productivity. fixed call it, is to we've into to let's had about tougher, the has through we've that good bit is other things more the which further news model. the labor The found we like of we way been challenging work try continue originally inflation little than a fixed drive to

think we'll confirm probably sight, will, to couple a - on to although, of for see of that variables you owe the back provide see to that, I those future. the we that so And want and folks I timing. in we're more sure 'XX, line if come near to of and in I kind we're that exactly And working know

are of I a some the there. elements think on function of Meals of little bit & of Beverages, it's a that out kind cycling of environmental

pricing Meals that's more on that probably Beverage more little in we've I the as pressure to to some as, put very part will QX say things tougher inflation, degree, first been and of in a has well of the been one the in is year. judicious & the relative little recent period on a

we then drive As and that we're on that to the for beverage more utilize expect meals improvement moderate expecting normalize we expect the kind inflation moderates to through to the productivity incrementally of be year, able margin that and to year. dynamic

& So needing of bit a dynamic a more Meals balanced. little little it is to of be a Beverage bit

previously, be about about to condensed make talked know through how like promo. value-driven more soup, we some we're going a sure pricing, manage waves to that. as of on talking we I'm back and bit to our categories not simply spending broth our I'm where how little of talking

'XX provided little business, incremental and that's that to bit more normalizes short-term is start that productivity to we the pivot see that back I a for and to the Anything missed? there recovery the algorithm pressure, although think you'll and start 'XX. be expect as as in And of that about you of phasing helpful margin us very I know we're will think expecting and I see

Okay. Great. Thanks so much.

Yes.

Okay. Great.

the next comes English from Goldman Sachs. line from of Jason Our question

Your line open. is

Hi. Good morning, me for folks. Thanks in. fit

Jason. Hi,

Snacks. on to progression margin It's good the on see. Congrats

you. Thank

to right the up seasonality, you're first that quarter. the the there, full Meals margin of in back margins and looks half for so or implies or Obviously, down in down suggests margins expansion like back points the margins challenges it But quarter a to enter year. the the on other up some to XXX Beverages. deny, normal probably year it material couple on basis the basis on get maybe and I'm in points the second particularly sticking if turning Based of with to going side, year, in & and please To half of it that, year. confirm XXX the

So ramp is that in the half? cadence roughly that back so, drives if what in line your And expectations? with

Yes.

foreshadowed mix half. the that of example fairly a definitely an reverse And & -- about second expect about & third have QX quarter. Meals on as to a that kind have let's would expectations, big is of Beverages, this consistent the it, the Beverage seen you we although to think and little as we impact fourth in in Meals QX talked take a Jason, bit is dynamic part we a that I on of we

been on question bit significant I a soup which there's at the little more where you know, relative as consumer segments So, margin has well our some see as a business, look that's and other very that as, pressure to contribution no lower margin in has you dramatic architecture. are been from as more a good talked of foodservice about, the business as dynamics you the some

part a that is swing dynamic that will or what mix So, be. of big

choices was The knew some to other really been to soup. condensed more we did pricing the in that take of in has headwind contributor and places dynamic the we to expect little and margin bit see we in tail this other QX, bit little the inflation that as some a lag major going like pricing broth not only degree made QX to where do of end a we contribution to relative that

be a impact. the of in will the been we've lot marked half with that throughout productivity place, talked then be of the And that the inflation to landing normalize costs really in and back margin a significance the I the some putting about year. that of going inflation balance numbers in of is year recognizing the As difference of structural

So, outsized recovery to margin the I expect in do see back half.

related necessarily that the pinpoint But in although we I most that, phasing unfolding. to drivers are you're to in think relates bit we profile and Meals even the for and environment. has they're of margin is are kind fairly to able more for inherent year or a that hope And part, the illustrate in the it we They're why mechanical a to can that prayers dramatically I nature felt executionally-driven it's little And of I & pretty how Beverage. think not as see does improvement confident back-weighted a those. building accurate think

you least that helps variables So, at hopefully, we're give that the looking at.

little And that's I'm super helpful. But still a bit confused.

we're that unpack was that for more that normalization, of and my normal mix a more a component this was bit can my back more you foodservice because mix. to recovering understanding, now little maybe So me thought was

going saying to reverse. abnormal. it's It's You're

to going abnormally is reverse? what So,

also the Yes, of business pressure having a of growth margin I got think greater impact on while dual your foodservice. you've contribution higher much higher from portions

of year. half in I flip both back the think of those variables the

a also higher-margin having, normalized a our you while relative our business, of out, more performance Soup contribution foodservice. of I as think stronger and out business you'll see point portions from

it relates a So, to we're now modeling what I do right for the think half outsized of back little year. it the is as

correctly? the meaningful of in I back Soup am understanding pretty half year, on in volume Predicate the growth that

I a meaningful it Soup, growth. think is of volume growth. think be I think, always I will Meaningful, -- for to bit returning a little yes,

end gentlemen, concludes we now for and Ladies thank We question-and-answer reached today's And of call. This may you session. your you conference participation. disconnect. have the our