The Campbell's Company Common Stock 2026 Q4 Earnings Call

Good morning, and welcome to The Campbell’s Company’s fourth quarter fiscal 2026 earnings question and answer session. Earlier this morning, the company published its earnings press release and slide presentation, as well as both a written and audio recording of management's prepared remarks. All of these materials can be found on the Investors section of our website. Shortly after the conclusion of today's live Q&A session, we will post a transcript and audio replay of this call. Joining me today are Mick Beekhuizen, President and Chief Executive Officer, and Todd Cunfer, our Chief Financial Officer. During today's discussion, management may make forward-looking statements that reflect our current expectations about future plans and performance. These statements rely on assumptions and estimates and are subject to risks and uncertainties.

Please refer to Slide 3 of our presentation or our SEC filings for a discussion of factors that could cause actual results to differ materially. Management may also use non-GAAP financial measures, which we believe provide useful information for investors. Non-GAAP financial measures are not intended to be considered in an isolation from or as a substitute for the financial information presented in accordance with GAAP. Reconciliations to the most directly comparable GAAP measures are included in the appendix of our earnings presentation. Finally, please note that this is the first quarter following our acquisition of a 49% interest in La Regina, whose results are fully consolidated into Campbell’s financial statements. The remaining 51% interest we do not own is reflected as earnings from non-controlling interest.

Campbell’s financial statements prepared in accordance with GAAP also includes certain fair value adjustments associated with the acquisition, including for the deferred payment of the second tranche due on May 4, 2027, and for the option to acquire remaining interests at a future date. These fair value adjustments will be excluded from our adjusted earnings. We will now open the call for questions.

Yeah, absolutely. Morning, Tom. Let me first start off with net sales, and then Todd, I'll hand it over to you for EBIT. On net sales, if we focus on the midpoint of the range of the organic net sales range, down about 3%. For MNB, we expect MNB to be down slightly, and this is fairly consistent throughout the year. Then with regard to snacks, we are expecting that Q1 to be the low point, and then we are assuming a modest improvement throughout the year. That's really driven by innovation flowing in, as well as the brand support that's flowing in throughout the year and some improved execution throughout.

From a cost perspective, let's kind of go through some of the buckets and the timing. From an inflation standpoint, right now, we believe, the inflation hit is going to be fairly consistent, throughout the year, about +5% to +6%. As we talked about, logistics is going to be around double digits. That will get a little bit better at the end of the year as we lap some of the inflation that we already had embedded in Q4 of this year. Negative price realization we will have in Q1. As I mentioned in the prepared remarks, we are spending significantly, particularly from a meals perspective, on innovation, some slotting fees and activation in Q1, which we're very excited about that innovation. Then we have some terrific holiday programming that will have some trade associated with it as well in Q1.

We think that's going to be fantastic. That will put pressure on margins in the first quarter. We'll have negative price realization in Q1. Then as the pricing action that we took at the end of the fiscal year starts to come aboard in Q2 and throughout the rest of the year, we'll have some very positive price realization again beginning in Q2. From a productivity and enterprise cost savings perspective, we got some great programming there and lots of good things are going to happen from a supply chain perspective, but they will build sequentially as the year goes on. They will be more second half weighted, but we feel very confident that we're going to be able to bring those cost savings to fruition. From a gross margin perspective, it will be down significantly in Q1. Again, there's no pricing. In fact, there's negative pricing in Q1 with all the inflation that's already embedded in our plan.

That gross margin will get much better in Q2. Then we anticipate will actually be positive in the second half. Gross margin for the total year, probably down 50-100 basis points, but will get sequentially better as the year goes on. From an EPS perspective, obviously a fairly sharp decline in Q1 will get sequentially better, and we think we will be positive EPS by the fourth quarter.

Thank you. Yep. Let me put it this way, ongoing dialogue and the conversation is appropriately constructive with the retailer, with where we're at.