The Campbell's Company (CPB) Earnings Call Transcript & Summary

Since it appears that all those who desired to vote have done so, the polls are now closed. I will ask the Secretary to report the final voting results.

Mr. Chair, the Inspector of Election has determined that based on the votes cast and received, that each of the director nominees set forth in the proxy statement has been elected for a 1-year term and that the ratification of the appointment of PricewaterhouseCoopers and the advisory resolution on fiscal 2020 executive compensation have both been approved.

Thank you, Charlie. I will now open the meeting up to questions related to the formal agenda items.

Mr. Chair, there are no questions regarding the formal agenda items.

Thank you, [ Keevy ]. There being no additional business to come before this meeting, I declare this meeting adjourned. Now I will ask Mark Clouse, our President and Chief Executive Officer, to make a brief statement, and we will then respond to questions submitted relating to the business or operations of the company. Mark?

Thank you, Keith. Good morning, everyone. Fiscal 2020 illustrated the importance of a focused strategic plan and a dynamic team as we delivered exceptional results amid the unprecedented challenges of the COVID-19 pandemic. Through the first 2 quarters, we made steady progress implementing our strategic plan and turned in a solid performance. By early March, the world changed dramatically and never has our purpose rooted in providing real food resonated as profoundly as it has at this moment. While much of North America took steps to slow the spread of the virus, Campbell stepped up to produce and distribute food in quantities not seen in many years, to millions of consumers who sought comfort, quality, convenience and value. The unwavering commitment and tremendous effort of our employees, especially our frontline teams, led to the exceptional financial results we delivered in fiscal 2020. I am humbled by their resolve and resiliency. Throughout this time, taking care of our people has been and remains our top priority. And that starts with protecting the well-being and safety of our employees through rigorous protocols in the workplace. It also includes rewarding their enormous contributions through the increased compensation we implemented through the end of fiscal 2020 to more than 11,000 of our frontline employees. In support of the extended Campbell family and the communities in need in which we operate, we've contributed over $6.5 million in food and financial support. With historic demand for our products, we significantly invested in our brands at a time when we were welcoming millions of new households to the Campbell portfolio. Our brands garnered increased relevance, particularly with younger households who represent incremental growth, and we saw strong sustained repeat purchase rates. We ended the year with a high level of confidence that regardless of the duration of the pandemic, we'll be able to retain a sizable portion of these households, driven by sustained consumer behaviors, such as quick scratch cooking and online food shopping. In fiscal 2020, we delivered growth in all key metrics and strong performance across both divisions. Net sales from continuing operations were $8.69 billion, an increase of 7% over last year. Our Meals & Beverages and Snacks divisions delivered net sales growth of 9% and 5%, respectively. We made significant progress in advancing our Snacks integration plans and our cost savings program, both of which remain on track. For the full year, adjusted EPS from continuing operations of $2.95 represented a 28% increase over fiscal 2019. This performance was enabled by the extraordinary work of our teams who remained agile and resilient in a challenging operating environment. Reviewing these financial results, there is no doubt that the groundwork we established in the first half of the fiscal year and the progress we made in our strategic plan served us well during the second half of the year and accelerated our progress toward our long-term financial goals. We also continued to advance key business metrics and strategic plan initiatives in fiscal 2020, including adjusted gross margin expansion, supported by productivity improvements, cost savings and favorable product mix. We continued to make strong progress against our cost savings target of $850 million by the end of fiscal 2022, delivering $165 million of incremental savings this past fiscal year, bringing the program-to-date total for continuing operations to $725 million. We also strengthened our balance sheet in fiscal 2020, significantly reducing our long-term debt and generating $1.4 billion in cash flow from operations in fiscal 2020. This year, we also achieved notable wins in the areas of corporate responsibility and sustainability. First, we launched 4 new sustainable packaging commitments focused on packaging recyclability, recycled content, consumer education and expanding access to recycling infrastructure. We advanced our farmer engagement work in our tomato, wheat and potato supply chains and reached our wheat fertilizer optimization goal 1 year ahead of schedule. Finally, we reduced the environmental footprint of our operations and advanced traceability of priority raw materials along our supply chain. It's been a year of great accomplishments on many fronts. In addition to all that I just mentioned, we added 2 key members to the Campbell's leadership team. We appointed Valerie Oswalt as Executive Vice President and President of Campbell Snacks. With over decades of experience in the snack food industry, her leadership is accelerating momentum across the Snacks portfolio. Camille Pierce joined as Vice President and Chief Culture Officer. Campbell recently introduced a comprehensive inclusion and diversity strategy focused on the standardization of key business processes and increased learning opportunities, advocacy for ally networks and communities and transparency and accountability. Camille will lead this strategy by working across the organization to build a winning team and culture and aligning our I&D goals with business outcomes. Before I close my remarks, I want to reiterate how grateful I am of all of our teams throughout the company. The work we do at Campbell, our purpose, the connection to our communities makes me incredibly proud. We are completely aligned against our strategic plan and excited about the opportunities that are ahead of us. We are already planning for what comes next, and I have never been as optimistic as I am today. Thank you. With that, I'd like to answer any questions that you may have.

Okay. I see that we have one question from [ Mr. Whitehead ]. Why was this platform for the meeting chosen instead of virtualshareholdermeeting.com? [ Mr. Whitehead ], thank you for the question. We chose this platform because Computershare is also our transfer agent, which allowed a seamless transition from our record holders to the meeting and a better method of ensuring that votes are properly accounted for. We also performed due diligence on various platforms and found this one to work very smoothly, and the platform received very good reviews from other users. Okay. With no other questions present, I will now conclude the Q&A. We will respond to appropriate questions that we didn't get to after the meeting. I will now turn the meeting back over to our Chairman.

Thank you, Mark. And thank you to our shareholders and other guests for attending this year's annual meeting. With there being no additional business to discuss, the meeting is now concluded. Please stay safe, everyone, and thank you.

This concludes the meeting. You may now disconnect.