What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-03-05 compared with 2024-12-04 · 252 added, 81 removed, 276 unchanged (55% of the section changed)

5 unchanged sentences

Executive Summary

Unless otherwise stated, the terms "we," "us," "our" and the "company" refer to The Campbell's Company, formerly known as Campbell Soup Company, and its consolidated subsidiaries.

Unless otherwise stated, the terms "we," "us," "our" and the "company" refer to The Campbell's Company and its consolidated subsidiaries.

We are a manufacturer and marketer of high-quality, branded food and beverage products.

6 unchanged sentences

For additional information on the divestiture, see Note 4 to the Consolidated Financial Statements.

In November 2024, we entered into an agreement to sell our noosa yoghurt business for $200 million, subject to certain customary purchase price adjustments.

The closing of the transaction is subject to certain customary conditions, including regulatory approval.

On February 24, 2025, we completed the sale of our noosa yoghurt business for $188 million, subject to certain customary purchase price adjustments.

For additional information on the divestiture, see Note 4 to the Consolidated Financial Statements.

Business Trends

Our industry continues to navigate a steady and ongoing recovery in light of supply chain disruptions, commodity cost volatility, changes in consumer purchasing and spending patterns, labor market issues, economic uncertainties and impacts of a change in administration as a result of the 2024 presidential election and other global macroeconomic challenges.

Through the first quarter, we continued to experience some moderation in input cost inflation, as we continue to see improvement across certain ingredients and packaging materials.

We anticipate continued supply chain productivity and benefits from cost savings initiatives to mitigate some of the inflationary pressures and expect such benefits to offset incremental costs in 2025.

Our industry continues to navigate an ongoing recovery in light of global macroeconomic challenges, including changes in consumer purchasing and spending patterns;

supply chain pressures;

commodity cost volatility;

labor market issues;

and economic uncertainties amplified by increased regulatory activity, potential or actual imposition of tariffs and shifting global trade policies.

Twenty-five percent tariffs on product imports from Mexico and Canada, and additional 10% tariffs on product imports from China (for an aggregate of 20%) went into effect on March 4, 2025.

These actions are expected to result in retaliatory measures on U.S.

We are continuing to monitor the rapidly evolving tariff and global trade policies and are working with our suppliers to mitigate potential impacts on our business.

The extent and duration of the tariffs and the resulting impact on general economic conditions and on our business are uncertain and depend on various factors, such as negotiations between the U.S.

and affected countries, the responses of other countries or regions, exemptions that may be granted, availability and cost of alternative sources of supply and demand for our products in affected markets.

Through the second quarter, we continued to experience some moderation in input cost inflation, as we continue to see cost improvement across certain ingredients and packaging materials.

We anticipate continued supply chain productivity and benefits from cost savings initiatives to mitigate inflationary pressures and expect such benefits to offset incremental costs in 2025, excluding potential impacts of tariffs.

We expect consumer trends to continue to evolve and our volumes to improve over time;

however, economic pressures on consumers, including the challenges of persistent inflation, may continue to negatively impact our volumes throughout 2025.

however, economic pressures, including the challenges of persistent inflation and impacts of tariffs, may continue to negatively impact our volumes throughout 2025.

We will continue to evaluate the evolving macroeconomic environment to take action to mitigate the impact on our business, consolidated results of operations and financial condition.

4 unchanged sentences

• Net sales increased 9% in the quarter to $2.685 billion primarily due to a 13-point benefit from the acquisition of Sovos Brands.

• Gross profit, as a percent of sales, was 31.3% in 2025 and the prior-year quarter.

The performance reflected benefits from supply chain productivity improvements and mark-to-market adjustments on outstanding undesignated commodity hedges offset by the impact of cost inflation and other supply chain costs, unfavorable net price realization and the impact of the acquisition.

• Gross profit, as a percent of sales, was 30.5% in 2025 compared to 31.6% in the prior-year quarter.

The decrease was primarily due to unfavorable net price realization, the impact of cost inflation and other supply chain costs and the impact of the acquisition, partially offset by benefits from supply chain productivity improvements.

• Earnings per share were $.58 in 2025, compared to $.68 in the prior-year quarter.

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• We implemented several cost savings initiatives in recent years.

In the first quarter of 2025, we recorded Restructuring charges of $6 million and implementation costs and other related costs of $11 million in Administrative expenses, $8 million in Cost of products sold, $1 million in Marketing and selling expenses and $1 million in Research and development expenses related to these initiatives.

In the first quarter of 2024, we recorded Restructuring charges of $2 million and implementation costs and other related costs of $5 million in Administrative expenses, $3 million in Cost of products sold, $2 million in Marketing and selling expenses and $1 million in Research and development expenses (aggregate impact of $10 million after tax, or $0.03 per share) related to these initiatives.

In the second quarter of 2025, we recorded Restructuring charges of $5 million and implementation costs and other related costs of $10 million in Cost of products sold, $8 million in Administrative expenses, $1 million in Marketing and selling expenses and $1 million in Research and development expenses related to these initiatives.

In the second quarter of 2024, we recorded Restructuring charges of $2 million and implementation costs and other related costs of $29 million in Administrative expenses, $3 million in Cost of products sold, $1 million in Marketing and selling expenses and $1 million in Research and development expenses (aggregate impact of $27 million after tax, or $.09 per share) related to these initiatives.

Year-to-date in 2025, we recorded Restructuring charges of $11 million and implementation costs and other related costs of $19 million in Administrative expenses, $18 million in Cost of products sold, $2 million in Marketing and selling expenses and $2 million in Research and development expenses related to these initiatives.

Year-to-date in 2024, we recorded Restructuring charges of $4 million and implementation costs and other related costs of $34 million in Administrative expenses, $6 million in Cost of products sold, $3 million in Marketing and selling expenses and $2 million in Research and development expenses (aggregate impact of $37 million after tax, or $.12 per share) related to these initiatives.

In the second quarter of 2024, we began implementation of an optimization initiative to improve the effectiveness of our Snacks direct-store-delivery route-to-market network.

In the first quarter of 2025, we recognized $8 million in Marketing and selling expenses related to this initiative.

In the first quarter of 2025, the total aggregate impact related to the cost savings and optimization initiatives was $35 million ($27 million after tax, or $0.09 per share).

Year-to-date in 2025, we recognized $8 million in Marketing and selling expenses related to this initiative.

In the second quarter of 2025, the total aggregate impact related to the cost savings and optimization initiatives was $25 million ($19 million after tax, or $.06 per share).

Year-to-date in 2025, the total aggregate impact related to the cost savings and optimization initiatives was $60 million ($46 million after tax, or $.15 per share).

See Note 8 to the Consolidated Financial Statements and "Restructuring Charges, Cost Savings Initiatives and Other Optimization Initiatives" for additional information;

• In the first quarter of 2025, we recognized gains in Cost of products sold of $4 million ($3 million after tax, or $.01 per share) associated with unrealized mark-to-market adjustments on outstanding undesignated commodity hedges.

In the first quarter of 2024, we recognized losses in Cost of products sold of $15 million ($11 million after tax, or $.04 per share) associated with unrealized mark-to-market adjustments on outstanding undesignated commodity hedges;

• In the first quarter of 2025 and 2024, we recorded accelerated amortization expense in Other expenses / (income) of $7 million ($5 million after tax, or $.02 per share) related to customer relationship intangible assets due to the loss of certain contract manufacturing customers, which began in the fourth quarter of 2023;

• In the first quarter of 2025, we recognized insurance recoveries in Administrative expenses of $1 million ($1 million after tax) related to a cybersecurity incident that was identified in the fourth quarter of 2023.

In the first quarter of 2024, we recorded costs of $2 million in Cost of products sold and $1 million in Administrative expenses (aggregate impact of $2 million after tax, or $.01 per share) related to the cybersecurity incident;

• In the first quarter of 2025, we recorded litigation expenses in Administrative expenses of $1 million ($1 million after tax) related to the Plum baby food and snacks business (Plum), which was divested on May 3, 2021, and certain other litigation matters.

In the first quarter of 2024, we recorded litigation expenses in Administrative expenses of $2 million ($2 million after tax, or $.01 per share) related to Plum;

• In the first quarter of 2025, we recognized an actuarial loss in Other expenses / (income) of $2 million ($1 million after tax) related to an interim remeasurement of our postretirement plan due to a plan amendment;

• In the second quarter of 2025, we recognized gains in Cost of products sold of $14 million ($10 million after tax, or $.03 per share) associated with unrealized mark-to-market adjustments on outstanding undesignated commodity hedges.

In the second quarter of 2024, we recognized gains in Cost of products sold of $7 million ($5 million after tax, or $.02 per share) associated with unrealized mark-to-market adjustments on outstanding undesignated commodity hedges.

Year-to-date in 2025, we recognized gains in Cost of products sold of $18 million ($13 million after tax, or $.04 per share) associated with unrealized mark-to-market adjustments on outstanding undesignated commodity hedges.

Year-to-date in 2024, we recognized losses in Cost of products sold of $8 million ($6 million after tax, or $.02 per share) associated with unrealized mark-to-market adjustments on outstanding undesignated commodity hedges;

• In the second quarter of 2025 and 2024, we recorded accelerated amortization expense in Other expenses / (income) of $7 million ($5 million after tax, or $.02 per share) related to customer relationship intangible assets due to the loss of certain contract manufacturing customers, which began in the fourth quarter of 2023.

Year-to-date in 2025 and 2024, we recorded accelerated amortization expense in Other expenses / (income) of $14 million ($10 million after tax, or $.03 per share);

• In the second quarter of 2025, we performed an interim impairment assessment on certain salty snacks and cookie trademarks within our Snacks segment, including Tom's , Jays , Kruncher's , O-Ke-Doke , Stella D'oro and Archway , collectively referred to as our "Allied brands," and recognized an impairment charge of $15 million on the trademarks.

In the second quarter of 2025, we performed an interim impairment assessment on the Late July trademark within our Snacks segment and recognized an impairment charge of $11 million on the trademark.

In the second quarter of 2025, the total aggregate impact of the impairment charges was $26 million ($19 million after tax, or $.06 per share).

The charges were included in Other expenses / (income);

• In the second quarter of 2025, we recorded $15 million ($.05 per share) of deferred tax expense related to the sale of the noosa yoghurt business, which was completed on February 24, 2025.

In the first quarter of 2025, we recorded a loss in Other expenses / (income) of $25 million ($19 million after tax, or $.06 per share) on the sale of our Pop Secret popcorn business.

Year-to-date in 2025, the total aggregate impact of charges associated with divestitures was $25 million ($34 million after tax, or $.11 per share);

• In the second quarter of 2025, we recorded litigation expenses in Administrative expenses of $1 million ($1 million after tax) related to the Plum baby food and snacks business (Plum), which was divested on May 3, 2021, and certain other litigation matters.

In the second quarter of 2024, we recorded litigation expenses in Administrative expenses of $1 million ($1 million after tax) related to Plum.

Year-to-date in 2025, we recorded litigation expenses in Administrative expenses of $2 million ($2 million after tax, or $.01 per share) related to Plum and certain other litigation matters.

Year-to-date in 2024, we recorded litigation expenses in Administrative expenses of $3 million ($3 million after tax, or $.01 per share) related to Plum;

• Year-to-date in 2025, we recognized insurance recoveries in Administrative expenses of $1 million ($1 million after tax) related to a cybersecurity incident that was identified in the fourth quarter of 2023.

Year-to-date in 2024, we recorded costs of $2 million in Cost of products sold and $1 million in Administrative expenses (aggregate impact of $2 million after tax, or $.01 per share) related to the cybersecurity incident;

• Year-to-date in 2025, we recognized an actuarial loss in Other expenses / (income) of $2 million ($1 million after tax) related to an interim remeasurement of our postretirement plan due to a plan amendment;

• In the first quarter of 2024, we announced our intent to acquire Sovos Brands and on March 12, 2024, the acquisition closed.

In the first quarter of 2024, we incurred costs associated with the acquisition in Other expenses / (income) of $9 million ($8 million after tax, or $.03 per share).

In the second quarter of 2024, we incurred costs associated with the acquisition in Other expenses / (income) of $10 million ($9 million after tax, or $.03 per share).

Year-to-date in 2024, we incurred costs associated with the acquisition in Other expenses / (income) of $19 million ($17 million after tax, or $.06 per share).

The items impacting comparability are summarized below:

Three Months Ended

October 27, 2024 October 29, 2023

January 26, 2025 January 28, 2024

(Millions, except per share amounts) Earnings

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Costs associated with cost savings and optimization initiatives $ (19) $ (.06) $ (27) $ (.09)

Commodity mark-to-market gains 10 .03 5 .02

Accelerated amortization (5) (.02) (5) (.02)

Impairment charges (19) (.06) — —

Charges associated with divestitures (15) (.05) — —

Certain litigation expenses (1) — (1) —

Costs associated with acquisition — — (9) (.03)

Impact of items on Net earnings $ (49) $ (.16) $ (37) $ (.12)

Six Months Ended

January 26, 2025 January 28, 2024

(Millions, except per share amounts) Earnings

Net earnings attributable to The Campbell's Company $ 391 $ 1.30 $ 437 $ 1.46

Costs associated with cost savings and optimization initiatives $ (46) $ (.15) $ (37) $ (.12)

Commodity mark-to-market gains (losses) 13 .04 (6) (.02)

Accelerated amortization (10) (.03) (10) (.03)

Cybersecurity incident recoveries (costs) 1 — (2) (.01)

Impairment charges (19) (.06) — —

Charges associated with divestitures (34) (.11) — —

Certain litigation expenses (2) (.01) (3) (.01)

Cybersecurity incident recoveries (costs) 1 — (2) (.01)

Postretirement actuarial losses (1) — — —

Charges associated with divestiture (19) (.06) — —

Costs associated with acquisition — — (17) (.06)

4 unchanged sentences

Net earnings attributable to The Campbell's Company were $173 million ($.58 per share) in the current quarter, compared to $203 million ($.68 per share) in the year-ago quarter.

After adjusting for items impacting comparability, earnings decreased primarily due to higher marketing and selling expenses and higher interest expense, partially offset by an increase in gross profit.

Net earnings attributable to The Campbell's Company were $391 million ($1.30 per share) in the six-month period this year, compared to $437 million ($1.46 per share) in the year-ago period.

After adjusting for items impacting comparability, earnings decreased primarily due to higher interest expense, higher marketing and selling expenses and higher administrative expenses, partially offset by an increase in gross profit.

FIRST-QUARTER DISCUSSION AND ANALYSIS

SECOND-QUARTER DISCUSSION AND ANALYSIS

An analysis of net sales by reportable segment follows:

Three Months Ended

(Millions) October 27, 2024 October 29, 2023 % Change

(Millions) January 26, 2025 January 28, 2024 % Change

Meals & Beverages $ 1,679 $ 1,382 21

2 unchanged sentences

An analysis of percent change of net sales by reportable segment follows:

Meals & Beverages Snacks

Meals & Beverages (2)

Volume/mix 1% (2)% —%

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(1) Includes revenue reductions from trade promotion and consumer coupon redemption programs.

(2) Sum of the individual amounts does not add due to rounding.

In Meals & Beverages, sales increased 21%, primarily due to a 23-point benefit from the acquisition of Sovos Brands.

Excluding the benefit from the acquisition of Sovos Brands, sales were comparable as gains in Prego pasta sauces, Canada and foodservice were offset by declines in U.S.

Favorable volume/mix was offset by lower net price realization.

Excluding the benefit from the acquisition of Sovos Brands, sales decreased primarily due to declines in SpaghettiOs and U.S.

soup, partially offset by gains in foodservice.

Lower net price realization was partially offset by favorable volume/mix.

Sales of U.S.

soup decreased 4% primarily due to movements in retailer inventory levels influenced by the later timing of the Thanksgiving holiday this year.

soup decreased 1% primarily due to declines in ready-to-serve soups and condensed soups, partially offset by increases in broth.

In Snacks, sales decreased 6%.

Excluding the impact from the divestiture of the Pop Secret popcorn business, sales decreased due to declines in third-party partner brands and contract manufacturing, Pepperidge Farm cookies, Goldfish crackers and Late July snacks.

Excluding the impact from the divestiture of the Pop Secret popcorn business, sales decreased due to declines in third-party partner brands and contract manufacturing, Goldfish crackers and Snyder's of Hanover pretzels.

Sales were impacted by volume/mix declines and lower net price realization.

Gross profit, defined as Net sales less Cost of products sold, increased by $43 million in 2025 from 2024.

As a percent of sales, gross profit was 31.3% in 2025 and 2024.

Gross profit margin performance was impacted by the following:

As a percent of sales, gross profit was 30.5% in 2025 and 31.6% in 2024.

The 110 basis-point decrease in gross profit margin was due to the following factors:

Margin Impact

Productivity improvements 150

Volume/mix (1)

Net price realization (110)

Cost inflation, supply chain costs and other factors (1)

Impact of acquisition

Higher costs associated with cost savings initiatives (30)

Cost inflation, supply chain costs and other factors (2)

Productivity improvements 110

Volume/mix (2)

__________________________________________

(1) Includes an estimated positive margin impact of 50 basis points from the benefit of cost savings initiatives and a 30 basis-point positive impact from the change in unrealized mark-to-market adjustments on outstanding undesignated commodity hedges, which were more than offset by the impact of cost inflation and other factors.

(2) Includes the impact of operating leverage.

(2) Includes an 80 basis-point positive impact from the change in unrealized mark-to-market adjustments on outstanding undesignated commodity hedges, an estimated positive margin impact of 40 basis points from the benefit of cost savings initiatives and a 10-basis point prior-year impact from a cybersecurity incident, which were more than offset by the impact of cost inflation and other factors.

Marketing and Selling Expenses

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Marketing and selling expenses increased 18% in 2025 from 2024.

The increase was primarily due to the impact of the acquisition (approximately 12 points) and higher costs associated with costs savings and optimization initiatives (approximately 3 points), partially offset by lower other marketing expenses (approximately 2 points).

The increase was primarily due to the impact of the acquisition (approximately 11 points) and higher advertising and consumer promotion expense (approximately 7 points) driven by Meals & Beverages and Snacks.

Administrative Expenses

Administrative expenses as a percent of sales were 6.3% in 2025 and 2024.

Administrative expenses increased 11% in 2025 from 2024.

The increase was primarily due to higher general administrative costs and inflation (approximately 7 points);

the impact of the acquisition (approximately 5 points) and higher costs associated with cost savings initiatives (approximately 4 points), partially offset by increased benefits from cost savings initiatives (approximately 4 points).

Administrative expenses as a percent of sales were 6.1% in 2025 compared to 7.7% in 2024.

Administrative expenses decreased 13% in 2025 from 2024.

The decrease was primarily due to lower costs associated with cost savings initiatives (approximately 11 points) and increased benefits from cost savings initiatives (approximately 6 points), partially offset by the impact of the acquisition (approximately 5 points).

Other Expenses / (Income)

Other expenses were $41 million in 2025 compared to $26 million in 2024 .

Other expenses in 2025 included a loss of $25 million on the sale of the Pop Secret popcorn business, accelerated amortization expense of $7 million and a postretirement actuarial loss of $2 million.

Other expenses in 2025 included impairment charges related to the Allied brands and Late July trademarks of $26 million and accelerated amortization expense of $7 million.

Other expenses in 2024 included costs associated with the acquisition of $10 million and accelerated amortization expense of $7 million.

Operating Earnings

Segment operating earnings increased 7% in 2025 from 2024.

Segment operating earnings decreased 1% in 2025 from 2024.

An analysis of operating earnings by segment follows:

Three Months Ended

(Millions) October 27, 2024 October 29, 2023 % Change

(Millions) January 26, 2025 January 28, 2024 % Change

Meals & Beverages $ 291 $ 247 18

6 unchanged sentences

Operating earnings from Meals & Beverages increased 18%.

The increase was primarily due to the benefit of the acquisition of Sovos Brands and lower marketing and selling expenses.

The increase was primarily due to the benefit of the acquisition of Sovos Brands, partially offset by higher marketing and selling expenses.

Operating earnings from Snacks decreased 29%.

The decrease was primarily due to lower gross profit.

Gross profit decreased primarily due to the impact of cost inflation and other supply chain costs as well as unfavorable net price realization, partially offset by supply chain productivity improvements.

The decrease was primarily due to lower gross profit and higher marketing and selling expenses.

Gross profit decreased primarily due to the impact of cost inflation and other supply chain costs, unfavorable volume/mix and unfavorable net price realization, partially offset by supply chain productivity improvements and the benefits from cost savings initiatives.

Corporate expense in 2025 included the following:

• $26 million of impairment charges related to the Allied brands and Late July trademarks;

• costs of $20 million related to costs savings and optimization initiatives;

• $7 million of accelerated amortization expense;

• $1 million of certain litigation expenses, including expenses related to Plum ;

• $14 million of unrealized mark-to-market gains on outstanding undesignated commodity hedges.

Corporate expense in 2024 included the following:

• costs of $34 million related to cost savings initiatives;

• $10 million of costs associated with the acquisition of Sovos Brands;

• $7 million of accelerated amortization expense;

• $1 million of Plum litigation expenses;

• $7 million of unrealized mark-to-market gains on outstanding undesignated commodity hedges.

Excluding these amounts, the remaining decrease was primarily due to lower administrative costs.

Interest Expense

Interest expense of $88 million in 2025 increased from $46 million in 2024 primarily due to higher levels of debt.

Taxes on Earnings

The effective tax rate was 30.0% in 2025 and 25.1% in 2024.

The increase in the effective tax rate was primarily due to $15 million of deferred tax expense recognized related to the sale of the noosa yoghurt business in the current quarter, partially offset by nondeductible costs associated with the acquisition of Sovos Brands in the year-ago quarter .

SIX-MONTH DISCUSSION AND ANALYSIS

An analysis of net sales by reportable segment follows:

Six Months Ended

(Millions) January 26, 2025 January 28, 2024 % Change

Meals & Beverages $ 3,385 $ 2,786 22

Snacks 2,072 2,188 (5)

$ 5,457 $ 4,974 10

An analysis of percent change of net sales by reportable segment follows:

Meals & Beverages (2)

Volume/mix 1% (2)% —%

Net price realization (1)

Divestiture — (2) (1)

Acquisition 22 — 13

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(1) Includes revenue reductions from trade promotion and consumer coupon redemption programs.

(2) Sum of the individual amounts does not add due to rounding.

In Meals & Beverages, sales increased 22%, primarily due to a 22-point benefit from the acquisition of Sovos Brands.

Excluding the benefit from the Sovos Brands acquisition, sales decreased primarily due to declines in U.S.

soup and SpaghettiOs , partially offset by gains in foodservice and Prego pasta sauces.

Lower net price realization was partially offset by favorable volume/mix.

Sales of U.S.

soup decreased 3% primarily due to decreases in ready-to-serve soups and condensed soups, partially offset by an increase in broth.

In Snacks, sales decreased 5%.

Sales were impacted by volume/mix declines and lower net price realization.

Gross profit, defined as Net sales less Cost of products sold, increased by $122 million in 2025 from 2024.

As a percent of sales, gross profit was 30.9% in 2025 and 31.4% in 2024.

The 50 basis-point decrease in gross profit margin was due to the following factors:

Margin Impact

Net price realization (100)

Impact of acquisition

Cost inflation, supply chain costs and other factors (1)

Higher costs associated with cost savings initiatives (20)

Productivity improvements 140

Volume/mix (2)

__________________________________________

(1) Includes a 50 basis-point positive impact from the change in unrealized mark-to-market adjustments on outstanding undesignated commodity hedges and an estimated positive margin impact of 50 basis points from the benefit of cost savings initiatives, which were more than offset by cost inflation and other factors.

(2) Includes the impact of operating leverage.

Marketing and Selling Expenses

Marketing and selling expenses as a percent of sales were 9.3% in 2025 and 8.8% in 2024.

Marketing and selling expenses increased 15% in 2025 from 2024.

The increase was primarily due to the impact of the acquisition (approximately 11 points), higher advertising and consumer promotion expense (approximately 3 points) and higher costs related to cost savings and optimization initiatives (approximately 2 points), partially offset by lower other marketing expenses (approximately 1 point).

The increase in advertising and consumer promotion expense was driven by Snacks and Meals & Beverages.

Administrative Expenses

Administrative expenses as a percent of sales were 6.2% in 2025 compared to 7.0% in 2024.

Administrative expenses decreased 2% in 2025 from 2024.

The decrease was primarily due to increased benefits from cost savings initiatives (approximately 5 points);

lower costs related to cost savings initiatives (approximately 4 points);

lower incentive compensation (approximately 1 point) and lower benefit-related costs (approximately 1 point), partially offset by the impact of the acquisition (approximately 5 points) and higher general administrative costs (approximately 4 points).

Other Expenses / (Income)

Other expenses were $84 million in 2025 compared to $50 million in 2024.

Other expenses in 2025 included impairment charges related to the Allied brands and Late July trademarks of $26 million, a loss of $25 million on the sale of the Pop Secret popcorn business, accelerated amortization expense of $14 million and a postretirement actuarial loss of $2 million.

Other expenses in 2024 included costs associated with the acquisition of $19 million and accelerated amortization expense of $14 million.

Operating Earnings

Segment operating earnings increased 3% in 2025 from 2024.

An analysis of operating earnings by segment follows:

Six Months Ended

(Millions) January 26, 2025 January 28, 2024 % Change

Meals & Beverages $ 628 $ 534 18

Snacks 256 322 (20)

Corporate income (expense) (179) (177)

Restructuring charges (1)

Earnings before interest and taxes $ 694 $ 675

__________________________________________

(1) See Note 8 to the Consolidated Financial Statements for additional information on restructuring charges.

Operating earnings from Meals & Beverages increased 18%.

The increase was primarily due to the benefit of the acquisition of Sovos Brands.

Operating earnings from Snacks decreased 20%.

The decrease was primarily due to lower gross profit and higher marketing and selling expenses.

Corporate expense in 2025 included the following:

• costs of $49 million related to costs savings initiatives;

• $26 million of impairment charges related to the Allied brands and Late July trademarks;

• $25 million loss on the sale of the Pop Secret popcorn business;

5 unchanged sentences

Corporate expense in 2024 included the following:

• $15 million of unrealized mark-to-market losses on outstanding undesignated commodity hedges;

• costs of $45 million related to cost savings initiatives;

1 unchanged sentence

• $14 million of accelerated amortization expense;

• $3 million of costs related to a cybersecurity incident;

• $8 million of unrealized mark-to-market losses on outstanding undesignated commodity hedges;

• $3 million of Plum litigation expenses;

• $3 million of costs associated with a cybersecurity incident.

Interest Expense

2 unchanged sentences

The effective tax rate was 26.4% in 2025 and 24.8% in 2024.

The decrease in the effective tax rate was primarily due to excess tax benefits associated with the vesting of stock-based compensation awards.

The increase in the effective tax rate was primarily due to $15 million of deferred tax expense recognized related to the sale of the noosa yoghurt business in the current year, partially offset by excess tax benefits associated with the vesting of stock-based compensation awards in the current year and nondeductible costs associated with the acquisition of Sovos Brands in the prior year.

Restructuring Charges, Cost Savings Initiatives and Other Optimization Initiatives

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A summary of the pre-tax charges recognized in the Consolidated Statements of Earnings related to these initiatives is as follows:

Three Months Ended

January 28, 2024

(Millions, except per share amounts)

October 29, 2023 Total Program

Three Months Ended Six Months Ended Total Program

Restructuring charges $ 2 $ 4 $ 297

33 unchanged sentences

A summary of the pre-tax charges recorded in the Consolidated Statement of Earnings related to these initiatives is as follows:

Three Months Ended

(Millions, except per share amounts) October 27, 2024

January 26, 2025

(Millions, except per share amounts) Three Months Ended Six Months Ended

Restructuring charges $ 5 $ 11

7 unchanged sentences

A summary of the pre-tax costs associated with the initiatives is as follows:

(Millions) Recognized as of October 27, 2024

(Millions) Recognized as of January 26, 2025

Severance pay and benefits

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Of the aggregate $190 million of pre-tax costs identified to date, we expect approximately $135 million will be cash expenditures.

In addition, we expect to invest approximately $215 million in capital expenditures, of which we invested $18 million as of October 27, 2024.

In addition, we expect to invest approximately $215 million in capital expenditures, of which we invested $57 million as of January 26, 2025.

The capital expenditures primarily relate to optimization of production within our manufacturing network, implementation of our existing SAP enterprise-resource planning system for Sovos Brands and optimization of information technology infrastructure and applications.

We expect the initiatives, once all phases are implemented, to generate annual ongoing savings of approximately $250 million by the end of 2028.

As of October 27, 2024, we have generated total program-to-date pre-tax savings of $30 million.

As of January 26, 2025, we have generated total program-to-date pre-tax savings of $65 million.

Segment operating results do not include restructuring charges, implementation costs and other related costs because we evaluate segment performance excluding such charges.

A summary of the pre-tax costs associated with segments is as follows:

Three Months Ended

(Millions) October 27, 2024

January 26, 2025

(Millions) Three Months Ended Six Months Ended

Meals & Beverages $ 16 $ 37

Corporate 7 10

Total $ 25 $ 52

Other Optimization Initiatives

2 unchanged sentences

We expect to execute this program in a staggered rollout and to incur expenses of up to approximately $115 million through 2029.

In the three-month period ended October 27, 2024, we incurred $8 million in Marketing and selling expenses related to this initiative.

As of October 27, 2024, we have incurred $13 million in Marketing and selling expenses related to this initiative.

In the six-month period ended January 26, 2025, we incurred $8 million in Marketing and selling expenses related to this initiative.

As of January 26, 2025, we have incurred $13 million in Marketing and selling expenses related to this initiative.

LIQUIDITY AND CAPITAL RESOURCES

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We believe that our sources of financing will be adequate to meet our future requirements.

Operating Activities

We generated cash flows from operations of $737 million in 2025, compared to $684 million in 2024.

The increase in 2025 was primarily due to changes in working capital and higher cash earnings.

We had negative working capital of $328 million as of October 27, 2024, and $1.386 billion as of July 28, 2024.

The increase in 2025 was primarily due to higher cash earnings and changes in working capital.

We had negative working capital of $232 million as of January 26, 2025, and $1.386 billion as of July 28, 2024.

Current assets were less than current liabilities, which included debt maturing in one year, due to a focus on lowering core working capital requirements.

Total debt maturing within one year was $1.212 billion as of October 27, 2024, and $1.423 billion as of July 28, 2024.

Total debt maturing within one year was $1.179 billion as of January 26, 2025, and $1.423 billion as of July 28, 2024.

As part of our focus to lower core working capital requirements, we have worked with our suppliers to optimize our terms and conditions, including the extension of payment terms.

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The payment of these obligations is included in cash provided by operating activities in the Consolidated Statements of Cash Flows.

Amounts outstanding under these programs, which are included in Accounts payable on the Consolidated Balance Sheets, were approximately $269 million at October 27, 2024 and $243 million at July 28, 2024.

Amounts outstanding under these programs, which are included in Accounts payable on the Consolidated Balance Sheets, were approximately $269 million at January 26, 2025 and $243 million at July 28, 2024.

Investing Activities

Capital expenditures were $211 million in 2025 and $263 million in 2024.

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On August 26, 2024, we sold our Pop Secret popcorn business for $70 million.

Financing Activities

Dividend payments were $227 million in 2025 and $224 million in 2024.

The regular quarterly dividend paid on our capital stock was $.37 per share in both the first quarter of 2025 and 2024.

On September 18, 2024, the Board of Directors declared a regular quarterly dividend of $.37 per share payable on October 28, 2024 to shareholders of record at the close of business on October 3, 2024.

The regular quarterly dividend paid on our capital stock was $.39 and $.37 per share in the second quarter of 2025 and 2024, respectively.

On December 3, 2024, the Board of Directors approved an increase in the regular quarterly dividend from $.37 per share to $.39 per share, or 5%.

They then declared a regular quarterly dividend of $.39 per share payable on January 27, 2025 to shareholders of record at the close of business on January 2, 2025.

On February 26, 2025, the Board of Directors declared a regular quarterly dividend of $.39 per share payable on April 28, 2025 to shareholders of record at the close of business on April 3, 2025.

In September 2021, the Board approved a strategic share repurchase program of up to $500 million (September 2021 program).

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The September 2024 program replaced an anti-dilutive share repurchase program of up to $250 million that was approved by the Board in June 2021 and has been terminated.

During the three-month periods ended October 27, 2024 and October 29, 2023, we repurchased 1.098 million shares at a cost of $54 million and 679 thousand shares at a cost of $28 million, respectively, pursuant to our anti-dilutive share repurchase programs.

As of October 27, 2024, approximately $206 million remained available under the September 2024 program and approximately $301 million remained available under the September 2021 program.

During the six-month periods ended January 26, 2025 and January 28, 2024, we repurchased 1.134 million shares at a cost of $56 million and 707 thousand shares at a cost of $29 million, respectively, pursuant to our anti-dilutive share repurchase programs.

As of January 26, 2025, approximately $205 million remained available under the September 2024 program and approximately $301 million remained available under the September 2021 program.

See Note 15 to the Consolidated Financial Statements and “Unregistered Sales of Equity Securities and Use of Proceeds” for additional information.

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If a change of control triggering event occurs, we will be required to offer to purchase the notes at a purchase price equal to 101% of the principal amount plus accrued and unpaid interest, if any, to the purchase date.

I n October 2024, we used a portion of the net proceeds from the issuance of the notes to repay $200 million of the $400 million outstanding under our 2022 Delayed Draw Term Loan Credit Agreement due November 15, 2025 and a portion of our outstanding commercial paper.

I n October 2024, we used a portion of the net proceeds from the issuance of the notes to repay $200 million of the $400 million outstanding under our 2022 Delayed Draw Term Loan Credit Agreement (the 2022 DDTL Credit Agreement) due November 15, 2025 and a portion of our outstanding commercial paper.

In November 2024, we repaid the remaining $200 million outstanding under the 2022 DDTL Credit Agreement.

We have $1.15 billion aggregate principal amount of senior notes maturing in March 2025, which we intend to repay by using a portion of the proceeds from the issuance of the notes along with cash on hand and issuing commercial paper.

As of October 27, 2024, we had $1.212 billion of short-term borrowings due within one year, of which $34 million was comprised of commercial paper borrowings.

As of October 27, 2024, we issued $27 million of standby letters of credit.

As of January 26, 2025, we had $1.179 billion of short-term borrowings due within one year, of which none was comprised of commercial paper borrowings.

As of January 26, 2025, we issued $27 million of standby letters of credit.

On April 16, 2024, we entered into a Five-Year Credit Agreement for an unsecured, senior revolving credit facility (the 2024 Revolving Credit Facility Agreement) in an aggregate principal amount equal to $1.85 billion with a maturity date of April 16, 2029 or such later date as extended pursuant to the terms set forth in the 2024 Revolving Credit Facility Agreement.

The 2024 Revolving Credit Facility Agreement remained unused at October 27, 2024, except for $1 million of standby letters of credit that we issued under it.

The 2024 Revolving Credit Facility Agreement remained unused at January 26, 2025, except for $1 million of standby letters of credit that we issued under it.

We may increase the 2024 Revolving Credit Facility Agreement commitments up to an additional $500 million, subject to the satisfaction of certain conditions.

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The accounting policies we used in preparing these financial statements are substantially consistent with those we applied in our 2024 Annual Report on Form 10-K.

The following areas all require the use of subjective or complex judgments, estimates or assumptions:

trade and consumer promotion programs;

the valuation of long-lived assets;

pension and postretirement benefits and income taxes.

Our critical accounting estimates are described in Management’s Discussion and Analysis included in the 2024 Annual Report on Form 10‑K.

Valuation of long-lived assets — The valuation of long-lived assets is an area that requires the use of subjective or complex judgments, estimates and assumptions.

Goodwill and intangible assets deemed to have indefinite lives are not amortized but rather are tested at least annually in the fourth quarter for impairment, or more often if events or changes in circumstances indicate that the carrying amount of the asset may be impaired.

During the second quarter of 2025, we performed an interim impairment assessment on certain salty snacks and cookie trademarks within our Snacks segment, including Tom’s , Jays , Kruncher’s , O-Ke-Doke , Stella D’oro and Archway , collectively referred to as our "Allied brands." In 2025, sales performance was below expectations.

In the second quarter of 2025, based on recent performance, we lowered our long-term outlook and recognized an impairment charge of $15 million on the Allied brands trademarks.

As of January 26, 2025, the carrying value of the Allied brands trademarks was $28 million.

During the second quarter of 2025, we performed an interim impairment assessment on the Late July trademark within our Snacks segment.

In 2025, sales performance was below expectations.

In the second quarter of 2025, based on recent performance, we lowered our long-term outlook and recognized an impairment charge of $11 million on the trademark.

As of January 26, 2025, the carrying value of the Late July trademark was $47 million.

The impairment charges were recorded in Other expenses / (income) in the Consolidated Statement of Earnings.

As of January 26, 2025, the carrying value of indefinite-lived trademarks was $3.828 billion as detailed below:

Rao's $ 1,470

Snyder's of Hanover 620

Kettle Brand 318

Pacific Foods 280

Various other Snacks (1)

Total $ 3,828

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(1) Includes the Late July and Allied brands trademarks.

The $1.47 billion carrying value of the Rao's trademark associated with the Sovos Brands acquisition approximates fair value.

Excluding the carrying value of the Rao's trademark, based on the 2024 annual impairment testing and interim assessments described above, indefinite-lived trademarks with approximately 10% or less of excess coverage of fair value over carrying value had an aggregate carrying value of $1.267 billion as of January 26, 2025, and included the Snyder's of Hanover , Pace , Pacific Foods, Late July and Allied brands trademarks.

Although assumptions are generally interdependent and do not change in isolation, sensitivities to changes are provided below.

Holding all other assumptions in our interim impairment assessment constant, changes in the assumptions below would reduce fair value of trademarks and result in impairment charges of approximately:

(Millions) Allied brands Late July

1% increase in the weighted-average cost of capital $ 5 $ 10

1% reduction in revenue growth $ 5 $ 5

1% decrease in royalty rate $ 10 $ 25

The estimates of future cash flows used in impairment testing are made at a point in time, involve considerable management judgment, and are based upon assumptions about expected future operating performance, assumed royalty rates, economic conditions, market conditions and cost of capital.

Inherent in estimating the future cash flows are uncertainties beyond our control, such as changes in capital markets.

The actual cash flows could differ materially from management’s estimates due to changes in business conditions, operating performance and economic conditions.

If our assumptions change or market conditions decline, potential impairment charges could result.

RECENT ACCOUNTING PRONOUNCEMENTS

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We wish to caution the reader that the following important factors and those important factors described in our other Securities and Exchange Commission filings, or in our 2024 Annual Report on Form 10-K, could affect our actual results and could cause such results to vary materially from those expressed in any forward-looking statements made by, or on behalf of, us:

• the risk that the cost savings and any other synergies from the Sovos Brands transaction may not be fully realized or may take longer or cost more to be realized than expected, including that the Sovos Brands transaction may not be accretive within the expected timeframe or the extent anticipated;

• the risks related to the availability of, and cost inflation in, supply chain inputs, including labor, raw materials, commodities, packaging and transportation;

• the risks associated with imposed and threatened tariffs by the U.S.

and reciprocal tariffs by its trading partners;

• the risks related to the availability of, and cost inflation in, supply chain inputs, including labor, raw materials, commodities, packaging and transportation, including those related to tariffs;

• disruptions in or inefficiencies to our supply chain and/or operations, including reliance on key contract manufacturer and supplier relationships;

• declines or volatility in financial markets, deteriorating economic conditions and other external factors, including the impact and application of new or changes to existing governmental laws, regulations, and policies;

• our ability to execute on and realize the expected benefits from our strategy, including growing sales in snacks and growing/maintaining our market share position in soup;

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• the risks associated with trade and consumer acceptance of product improvements, shelving initiatives, new products and pricing and promotional strategies;

• changes in consumer demand for our products and favorable perception of our brands;

• our ability to realize projected cost savings and benefits from cost savings initiatives and the integration of recent acquisitions;

• disruptions in or inefficiencies to our supply chain and/or operations, including reliance on key contract manufacturer and supplier relationships;

• risks related to the effectiveness of our hedging activities and our ability to respond to volatility in commodity prices;

• our ability to manage changes to our organizational structure and/or business processes, including selling, distribution, manufacturing and information management systems or processes;

• changes in consumer demand for our products and favorable perception of our brands;

• changing inventory management practices by certain of our key customers;

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• the uncertainties of litigation and regulatory actions against us;

• the costs, disruption and diversion of management's attention associated with activist investors;

• a disruption, failure or security breach of our or our vendors' information technology systems, including ransomware attacks;

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• goals and initiatives related to, and the impacts of, climate change, including from weather-related events;

• negative changes and volatility in financial and credit markets, deteriorating economic conditions and other external factors, including the impact of new or changes to existing governmental laws and regulations and their application;

• the costs, disruption and diversion of management's attention associated with activist investors;

• our indebtedness and ability to pay such indebtedness;

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis