Campbell's Co Q2 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Andrew Lazar - Barclays - Analyst : Mick, as we think about the fiscal second half, I guess I'm trying to get a better sense of sort of what actions are specifically driving the lower profit outlook, really with an eye towards understanding if the revised guidance is sort of giving the company enough room to get snacks back on track in the context of a slower sort of category rebound and more competitive environment? And maybe as a second piece to this, last quarter, Campbell expected net price to be less than 100 basis point headwind to organic sales. And I'm just wondering if that's changed with the new guidance.

Question: Jim Salera - Stephens Inc. - Analyst : Mick, I actually wanted to follow up on some of your commentary there. So could you maybe walk us through what you're assuming for the consumer recovery in the back half of the year? And if I think about the mix of where potential outperformance, underperformance could come from in snacks, would it be that the category improves and you guys kind of improve alongside the category? Or there's opportunity with some of the innovation that you have and maybe some of the promotional activity you have to gain share even if the category remains softer? Maybe as like a second piece to that, on slide 7, Goldfish was one of the brands, I believe, did not grow or hold share, and you spoke to some of that in the prepared remarks. But just thinking about some of the innovation there, and I know you guys had some flavor extensions on Crisps and you mentioned Harry Potter LTOs, just how should we think that particularly contributing to either share gains or holding or losing share in the context of the broader category of recovery? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 05, 2025 / 1:00PM, CPB.OQ - Q2 2025 Campbell's Co Earnings Call

Question: Ken Goldman - J.P. Morgan Securities LLC - Analyst : On snacking, just in light of some of the top line challenges as well as your comment that the margin will be down this year. How confident are you that you can still achieve your target of 17% in fiscal '27? And maybe more importantly, how confident are you that 17%, regardless of the timeline, is still a reasonable goal as we look ahead into future years? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 05, 2025 / 1:00PM, CPB.OQ - Q2 2025 Campbell's Co Earnings Call

Question: Ken Goldman - J.P. Morgan Securities LLC - Analyst : Can I ask a very quick follow-up? And thank you for that. Rao's, you kept your guidance. The data has been decelerating in both one and two-year basis or on those bases. How comfortable are you with the rate of change in consumption? I mean, obviously, you seem to be pretty comfortable given that you reiterated. But how should investors think about what we're seeing from some of the syndicated and alternative data out there for that brand?

Question: Peter Galbo - BofA Global Research - Analyst : I wanted to sort of go back on the EPS cadence for the back half of the year. I believe, Carrie, in your remarks, you mentioned that EPS delivery would be relatively even between 3Q and 4Q if we kind of ignore the 53rd week. And I just -- like very quickly going back to the history, that's just never been the case. 4Q has always been a much lower EPS delivery quarter relative to 3Q, maybe outside of one year over the past 20. But historically, it's been much, much lower seasonally. So just what gives you the confidence in delivering kind of on that even delivery in the back half of the year, given seasonality, given what we've seen historically, I think that's going to be just a big question from investors as they kind of contemplate the updated guidance?

Question: Peter Galbo - BofA Global Research - Analyst : Got it. That's helpful. And Mick, just if I could, I think your tone has -- or the company's tone has changed a bit in your prepared remarks as it relates to broth. It seemed like there was maybe a better delivery in the quarter, maybe even than you expected, and potentially that there's been a slight change in how you're viewing the back half as you think about private label coming back online. Not that that's not contemplated, but that at least maybe things are holding up a touch better. So just wanted to understand, anticipating the broth headwinds, kind of whether your expectations have changed at all in the back half from maybe more negative to maybe slightly less negative versus your initial expectations.

Question: Robert Moskow - TD Cowen - Analyst : You mentioned on the call that competitive intensity in crackers is heightened now. And for the past three quarters or so, I think we've been dealing with competitive intensity being higher in salty snacks. So Mick, do you view both of these as similar phenomenon? I can see it in the data, there's been price investments in crackers. Do you need to make similar investments for Goldfish to keep up with that? And should we be thinking about kind of a bit of reset for the Goldfish margin as well?

Question: Robert Moskow - TD Cowen - Analyst : Okay. Can I ask a quick follow-up? Have you started doing any math on what the tariff environment might mean for your steel can costs? I know it was an issue several years ago, and these tariffs even more substantial than that, so would it pass through in terms of like price surcharges from your suppliers?