Campbell Soup Co (CPB) Reports First-Quarter Fiscal 2024 Results
Net Sales decreased by 2% to $2.5 billion, with a 1% decrease on an organic basis.
Adjusted EBIT and EPS both declined, by 9% and 11% respectively.
Despite a challenging quarter, Campbell Soup Co (NYSE:CPB) maintains its full-year fiscal 2024 guidance.
On December 6, 2023, Campbell Soup Co (NYSE:CPB) released its 8-K filing, detailing the financial outcomes for the first quarter of fiscal 2024, which ended on October 29, 2023. The company experienced a slight dip in net sales, which were reported at $2.5 billion, a 2% decrease from the previous year. Organic sales also saw a marginal decline of 1%. Despite these figures, Campbell Soup Co (NYSE:CPB) has reaffirmed its full-year fiscal 2024 guidance, signaling confidence in its future performance.
Financial Highlights and Challenges
Adjusted Earnings Before Interest and Taxes (EBIT) fell by 9% to $407 million, while Adjusted Earnings Per Share (EPS) saw an 11% decrease, landing at $0.91. The company attributes these declines to a combination of factors, including lower adjusted gross profit and increased marketing and selling expenses, which were only partially offset by lower administrative expenses.
Income Statement Insights
The gross profit margin contracted slightly to 31.3% from 32.4% in the previous year. Marketing and selling expenses rose by 10% to $222 million, driven primarily by increased spending in the Snacks segment. Administrative expenses remained stable at $158 million, with a slight decrease in adjusted administrative expenses due to lower general administrative costs.
Balance Sheet and Cash Flow Statement Review
Net interest expense increased marginally to $48 million, and the effective tax rate rose to 24.5%. Cash flow from operations decreased to $174 million, primarily due to lower cash earnings, and capital expenditures were up significantly to $143 million. The company continued its shareholder return policy, paying out $114 million in dividends and repurchasing approximately $28 million in common stock.
Segment Performance
Segment-wise, Meals & Beverages net sales decreased by 4%, with operating earnings down by 13%. The Snacks segment fared better, with a 1% increase in organic net sales and a 5% rise in operating earnings, reflecting strong performance in core brands like Lance sandwich crackers and Goldfish crackers.
Outlook and Guidance
Campbell Soup Co (NYSE:CPB) is staying the course with its full-year fiscal 2024 guidance, expecting modest earnings and margin progress, particularly in the second half of the fiscal year. The acquisition of Sovos Brands, Inc. is anticipated to close in calendar year 2024, which is not included in the current fiscal outlook but is expected to update guidance upon completion.
The company's CEO, Mark Clouse, commented on the results, stating,
Our first-quarter results were in line with our expectations, as we continue to effectively navigate the current consumer landscape, while lapping 15% growth rates from a year ago,"
and expressed confidence in the company's full-year guidance.
Investors and stakeholders can access the detailed financial tables and reconciliations of GAAP to non-GAAP financial measures at the end of the news release provided in the filing.
Conclusion
While Campbell Soup Co (NYSE:CPB) faced some headwinds in the first quarter of fiscal 2024, its reaffirmed guidance and strategic initiatives, including the upcoming Sovos Brands acquisition, suggest a steady outlook for the company. Investors and analysts will be watching closely to see if the company's efforts to navigate a challenging market environment will pay off in the coming quarters.
Explore the complete 8-K earnings release (here) from Campbell Soup Co for further details.
This article first appeared on GuruFocus.
