What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-06-02 compared with 2025-03-05 · 187 added, 134 removed, 394 unchanged (45% of the section changed)

13 unchanged sentences

On August 26, 2024, we completed the sale of our Pop Secret popcorn business.

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

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.

On February 24, 2025, we completed the sale of our noosa yoghurt business.

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

Business Trends

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

Our industry continues to navigate global macroeconomic challenges, including tariffs and shifting global trade policies;

changes in consumer purchasing and spending patterns;

supply chain pressures;

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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.

and economic uncertainties amplified by increased regulatory activity.

Tariffs on China, Canada, Mexico, the European Union and other countries have and are expected to result in retaliatory measures on U.S.

goods, such as the 25% tariffs imposed by Canada on imports of certain U.S.

goods, and increase costs.

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.

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 recent legal challenges to the U.S.'s imposition of tariffs, 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.

In addition, in light of recent actions by the United States Department of Health and Human Services, Food and Drug Administration (FDA) and states, we anticipate continued legislative and regulatory developments with respect to food ingredients, labeling and packaging at the state and federal levels, along with related changes in consumer expectations and behavior.

In April 2025, the FDA announced a series of actions aimed at phasing out all “petroleum-based synthetic dyes” from the nation’s food supply, and in May 2025, the Make America Healthy Again (MAHA) Commission published a report discussing factors contributing to chronic childhood disease including diet, environmental exposure, lack of physical activity and healthcare.

While the effects of all of these proposals remain uncertain at this time, we are continuing to monitor changes to laws and regulations that affect the food industry and evaluate their impact on our business and financial condition.

Through the third quarter, we experienced a moderate level of input cost inflation and other supply chain costs.

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.

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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.

Company Name Change

On November 19, 2024, at the 2024 Annual Meeting of Shareholders of the company, our shareholders approved an amendment to the company’s Restated Certificate of Incorporation to change the company’s name from “Campbell Soup Company” to “The Campbell’s Company.” The company’s name change became effective on November 19, 2024.

Summary of Results

This Summary of Results provides significant highlights from the discussion and analysis that follows.

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

• Net sales increased 4% in the quarter to $2.475 billion primarily due to the benefit from the acquisition of Sovos Brands and favorable volume/mix, partially offset by the impact of divestitures and lower net price realization.

The increase in volume/mix was partially related to the favorable timing of shipments this quarter.

• Gross profit, as a percent of sales, was 29.4% in 2025 compared to 30.9% 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.

The decrease was primarily due to the impact of cost inflation and other supply chain costs, mark-to-market adjustments on outstanding undesignated commodity hedges and unfavorable net price realization, partially offset by benefits from supply chain productivity improvements, the prior-year impact from a Sovos Brands acquisition date fair value adjustment for inventory and favorable volume/mix.

• Earnings per share were $.22 in 2025, compared to $.44 in the prior-year quarter.

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• We implemented several cost savings initiatives in recent years.

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.

In the third quarter of 2025, we recorded Restructuring charges of $6 million and implementation costs and other related costs of $7 million in Cost of products sold, $7 million in Administrative expenses and $1 million in Research and development expenses related to these initiatives.

In the third quarter of 2024, we recorded implementation costs and other related costs of $13 million in Administrative expenses, $3 million in Cost of products sold, $1 million in Marketing and selling expenses, $1 million in Research and development expenses and a reduction to Restructuring charges of $3 million related to these initiatives.

Year-to-date in 2025, we recorded Restructuring charges of $17 million and implementation costs and other related costs of $26 million in Administrative expenses, $25 million in Cost of products sold, $3 million in Research and development expenses and $2 million in Marketing and selling expenses related to these initiatives.

Year-to-date in 2024, we recorded Restructuring charges of $1 million and implementation costs and other related costs of $47 million in Administrative expenses, $9 million in Cost of products sold, $4 million in Marketing and selling expenses and $3 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.

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).

In the third quarter of 2025, we recognized $9 million in Marketing and selling expenses and $1 million in Administrative expenses related to this initiative.

In the third quarter of 2024, we recognized $5 million in Marketing and selling expenses related to this initiative.

Year-to-date in 2025, we recognized $17 million in Marketing and selling expenses and $1 million in Administrative expenses related to this initiative.

In the third quarter of 2025, the total aggregate impact related to the cost savings and optimization initiatives was $31 million ($24 million after tax, or $.08 per share).

In the third quarter of 2024, the total aggregate impact related to the cost savings and optimization initiatives was $20 million ($15 million after tax, or $.05 per share).

Year-to-date in 2025, the total aggregate impact related to the cost savings and optimization initiatives was $91 million ($70 million after tax, or $.23 per share).

Year-to-date in 2024, the total aggregate impact related to the cost savings and optimization initiatives was $69 million ($52 million after tax, or $.17 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 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.

• In the third quarter of 2025, we recognized losses in Cost of products sold of $10 million ($7 million after tax, or $.02 per share) associated with unrealized mark-to-market adjustments on outstanding undesignated commodity hedges.

In the third quarter of 2024, we recognized gains in Cost of products sold of $13 million ($10 million after tax, or $.03 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 $8 million ($6 million after tax, or $.02 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 2024, we recognized gains in Cost of products sold of $5 million ($4 million after tax, or $.01 per share) associated with unrealized mark-to-market adjustments on outstanding undesignated commodity hedges;

• In the third quarter of 2025 and 2024, we recorded accelerated amortization expense in Other expenses / (income) of $6 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 $20 million ($15 million after tax, or $.05 per share);

• In the third quarter of 2025, the company performed an interim impairment assessment on the Snyder's of Hanover trademark within the Snacks segment and recognized an impairment charge of $150 million ($112 million after tax, or $.37 per share) on the trademark.

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.

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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).

Year-to-date in 2025, the total aggregate impact of the impairment charges was $176 million ($131 million after tax, or $.44 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 third quarter of 2025, we completed the sale of our noosa yoghurt business.

In the second quarter of 2025, we recorded $15 million ($.05 per share) of tax expense related to the sale.

Year-to-date in 2025, we recorded an after-tax loss of $15 million ($.05 per share) on the sale of the business, which is subject to the finalization of certain purchase price adjustments.

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.

• In the third quarter of 2025, we recorded litigation expenses in Administrative expenses of $4 million ($4 million after tax, or $.01 per share) related to the Plum baby food and snacks business (Plum), which was divested on May 3, 2021, and certain other litigation matters.

Year-to-date in 2025, we recorded litigation expenses in Administrative expenses of $6 million ($6 million after tax, or $.02 per share) related to Plum and certain other litigation matters.

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

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).

In the third quarter of 2024, we incurred $93 million of costs associated with the acquisition, of which $16 million was recorded in Restructuring charges, $39 million in Administrative expenses, $16 million in Other expenses / (income), $2 million in Marketing and selling expenses, $2 million in Research and development expenses and $18 million in Cost of products sold, of which $17 million was associated with the acquisition date fair value adjustment for inventory.

We also recorded costs of $2 million in Interest expense related to costs associated with the Delayed Draw Term Loan Credit Agreement (the 2024 DDTL Credit Agreement) used to fund the acquisition.

The aggregate impact was $95 million, $81 million after tax, or $.27 per share.

Year-to-date in 2024, we incurred $114 million of costs associated with the acquisition, of which $16 million was recorded to Restructuring charges, $39 million in Administrative expenses, $35 million in Other expenses / (income), $2 million in Marketing and selling expenses, $2 million in Research and development expenses, $18 million in Cost of products sold and $2 million in Interest expense.

The aggregate after-tax impact was $98 million, or $.33 per share.

The items impacting comparability are summarized below:

Three Months Ended

January 26, 2025 January 28, 2024

April 27, 2025 April 28, 2024

(Millions, except per share amounts) Earnings

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Costs associated with cost savings and optimization initiatives $ (24) $ (.08) $ (15) $ (.05)

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

Commodity mark-to-market gains (losses) (7) (.02) 10 .03

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

Impairment charges (112) (.37) — —

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

Certain litigation expenses (4) (.01) — —

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Impact of items on Net earnings (1)

Six Months Ended

January 26, 2025 January 28, 2024

$ (152) $ (.51) $ (91) $ (.30)

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(1) Sum of the individual amounts may not add due to rounding.

Nine Months Ended

April 27, 2025 April 28, 2024

(Millions, except per share amounts) Earnings

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Costs associated with cost savings and optimization initiatives $ (70) $ (.23) $ (52) $ (.17)

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

Commodity mark-to-market gains 6 .02 4 .01

Accelerated amortization (15) (.05) (15) (.05)

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Impact of items on Net earnings $ (250) $ (.83) $ (166) $ (.56)

$ (98) $ (.33) $ (75) $ (.25)

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(1) Sum of the individual amounts may not add due to rounding.

Net earnings attributable to The Campbell's Company were $66 million ($.22 per share) in the current quarter, compared to $133 million ($.44 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.

SECOND-QUARTER DISCUSSION AND ANALYSIS

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

Net earnings attributable to The Campbell's Company were $457 million ($1.52 per share) in the nine-month period this year, compared to $570 million ($1.91 per share) in the year-ago period.

THIRD-QUARTER DISCUSSION AND ANALYSIS

An analysis of net sales by reportable segment follows:

Three Months Ended

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

(Millions) April 27, 2025 April 28, 2024 % Change

Meals & Beverages $ 1,463 $ 1,272 15

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Net price realization (1)

Divestiture — (3) (1)

Divestitures (2) (3) (2)

Acquisition 12 — 6

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In Meals & Beverages, sales increased 15%, primarily due to a 12-point benefit from the acquisition of Sovos Brands.

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.

Excluding the benefit from the acquisition of Sovos Brands and the impact from the divestiture of the noosa yoghurt business, sales increased primarily due to gains in U.S.

soup, Rao's pasta sauces and Canada, partially related to the favorable timing of shipments.

Sales of Rao's pasta sauces increased due primarily to the timing of shipments related to the implementation of our

existing SAP enterprise-resource planning system for Sovos Brands.

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

Sales of U.S.

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

soup increased 7% primarily due to increases in condensed soups, broth and ready-to-serve soups.

In Snacks, sales decreased 8%.

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.

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

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

Gross profit, defined as Net sales less Cost of products sold, decreased by $4 million in 2025 from 2024.

As a percent of sales, gross profit was 29.4% in 2025 and 30.9% in 2024.

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Margin Impact

Net price realization (110)

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

Impact of acquisition

Net price realization (80)

Higher costs associated with cost savings initiatives (20)

Productivity improvements 130

Impact of acquisition (2)

Volume/mix (3)

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(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.

(1) Includes an estimated positive margin impact of 60 basis points from the benefit of cost savings initiatives, which was more than offset by cost inflation and other factors, including a 90 basis-point negative impact from the change in unrealized mark-to-market adjustments on outstanding undesignated commodity hedges.

(2) Prior year included a negative margin impact of 70 basis points from a Sovos Brands acquisition date fair value adjustment for inventory.

(3) Includes the impact of operating leverage.

Marketing and Selling Expenses

Marketing and selling expenses as a percent of sales were 9.5% in 2025 compared to 8.8% in 2024.

Marketing and selling expenses as a percent of sales were 8.7% in 2025 and 2024.

Marketing and selling expenses increased 5% in 2025 from 2024.

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.

The increase was primarily due to the impact of the acquisition (approximately 5 points).

Administrative Expenses

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Administrative expenses decreased 22% 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).

The decrease was primarily due to costs associated with the acquisition in the prior year (approximately 19 points);

increased benefits from cost savings initiatives (approximately 9 points) and lower costs associated with cost savings initiatives (approximately 2 points), partially offset by higher general administrative costs and inflation (approximately 5 points) and the impact of the acquisition (approximately 2 points).

Other Expenses / (Income)

Other expenses were $160 million in 2025 compared to $30 million in 2024 .

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 2025 included an impairment charge related to the Snyder's of Hanover trademark of $150 million and accelerated amortization expense of $6 million.

Other expenses in 2024 included costs associated with the acquisition of $16 million and accelerated amortization expense of $6 million.

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Three Months Ended

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

(Millions) April 27, 2025 April 28, 2024 % Change

Meals & Beverages $ 248 $ 229 8

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Operating earnings from Meals & Beverages increased 8%.

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

The increase was primarily due to the benefit of the acquisition of Sovos Brands, partially offset by a decline in the base business.

Operating earnings from Snacks decreased 13%.

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.

The decrease was primarily due to lower gross profit, partially offset by lower administrative expenses.

Corporate expense in 2025 included the following:

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

• $150 million of an impairment charge related to the Snyder's of Hanover trademark;

• costs of $25 million related to costs savings and optimization initiatives;

• $10 million of unrealized mark-to-market losses on outstanding undesignated commodity hedges;

• $6 million of accelerated amortization expense;

• $4 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;

• $77 million of costs associated with the acquisition of Sovos Brands;

• costs of $23 million related to cost savings and optimization initiatives;

• $6 million of accelerated amortization expense;

• $1 million of Plum litigation expenses;

• $13 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.

Interest expense of $85 million in 2025 increased from $70 million in 2024 primarily due to higher levels of debt and higher average interest rates on the debt portfolio.

Taxes on Earnings

The effective tax rate was 18.5% in 2025 and 26.9% 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

The decrease in the effective tax rate was primarily due to the items impacting comparability, including nondeductible costs associated with the acquisition of Sovos Brands in the year-ago quarter and the timing of recognition of tax expense related to the impairment charge.

NINE-MONTH DISCUSSION AND ANALYSIS

An analysis of net sales by reportable segment follows:

Six Months Ended

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

Nine Months Ended

(Millions) April 27, 2025 April 28, 2024 % Change

Meals & Beverages $ 4,848 $ 4,058 19

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

Meals & Beverages (2)

Meals & Beverages Snacks (2)

Volume/mix 3% (3)% —%

Net price realization (1)

Divestiture — (2) (1)

Divestitures (1) (3) (1)

Acquisition 19 — 11

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In Meals & Beverages, sales increased 19%, primarily due to a 19-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.

Excluding the benefit from the Sovos Brands acquisition and the impact from the divestiture of the noosa yoghurt business, sales increased primarily due to gains in Rao's pasta sauces, foodservice and Canada, partially offset by declines in SpaghettiOs .

Sales of Rao's pasta sauces increased due primarily to the timing of shipments related to the implementation of our existing SAP enterprise-resource planning system for Sovos Brands.

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

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.

soup were comparable with prior year as decreases in ready-to-serve soups and condensed soups were 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, Goldfish crackers, Pepperidge Farm cookies and Snyder's of Hanover pretzels.

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, Snyder's of Hanover pretzels, Pepperidge Farm cookies, Kettle Brand potato chips, Late July snacks and Lance sandwich crackers.

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

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Margin Impact

Net price realization (100)

Impact of acquisition

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

Net price realization (100)

Higher costs associated with cost savings initiatives (20)

Impact of acquisition (2)

Productivity improvements 140

1 unchanged sentence

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(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.

(1) Includes an estimated positive margin impact of 50 basis points from the benefit of cost savings initiatives, which was more than offset by cost inflation and other factors.

(2) Prior year included a negative margin impact of 20 basis points from a Sovos Brands acquisition date fair value adjustment for inventory.

(3) 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 as a percent of sales were 9.1% in 2025 compared to 8.8% in 2024.

Marketing and selling expenses increased 12% 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.

The increase was primarily due to the impact of the acquisition (approximately 9 points);

higher advertising and consumer promotion expense (approximately 2 points) and higher costs related to cost savings and optimization initiatives (approximately 2 points).

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

Administrative Expenses

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Administrative expenses decreased 10% 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).

The decrease was primarily due to costs associated with the acquisition in the prior year (approximately 7 points);

increased benefits from cost savings initiatives (approximately 7 points);

lower costs related to cost

savings initiatives (approximately 4 points);

lower benefit-related costs (approximately 1 point) and lower incentive compensation (approximately 1 point), partially offset by higher general administrative costs and inflation (approximately 6 points) and the impact of the acquisition (approximately 4 points).

Other Expenses / (Income)

Other expenses were $244 million in 2025 compared to $80 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 2025 included impairment charges related to the Snyder's of Hanover , Allied brands and Late July trademarks of $176 million, a loss of $25 million on the sale of the Pop Secret popcorn business, accelerated amortization expense of $20 million and a postretirement actuarial loss of $2 million.

Other expenses in 2024 included costs associated with the acquisition of $35 million and accelerated amortization expense of $20 million.

2 unchanged sentences

An analysis of operating earnings by segment follows:

Six Months Ended

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

Nine Months Ended

(Millions) April 27, 2025 April 28, 2024 % Change

Meals & Beverages $ 876 $ 763 15

Snacks 401 489 (18)

1,277 1,252 2

Corporate income (expense) (405) (312)

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Operating earnings from Snacks decreased 18%.

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

The decrease was primarily due to lower gross profit and higher marketing and selling expenses, partially offset by lower administrative 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;

• $176 million of impairment charges related to the Snyder's of Hanover , Allied brands and Late July trademarks;

• costs of $74 million related to costs savings and optimization initiatives;

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

• $20 million of accelerated amortization expense;

• $2 million postretirement actuarial loss;

• $6 million of certain litigation expenses, including expenses related to Plum;

• $2 million postretirement actuarial loss;

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

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Corporate expense in 2024 included the following:

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

• $96 million of costs associated with the acquisition of Sovos Brands;

• costs of $68 million related to cost savings and optimization initiatives;

• $20 million of accelerated amortization expense;

• $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;

• $5 million of unrealized mark-to-market gains on outstanding undesignated commodity hedges.

Interest Expense

Interest expense of $175 million in 2025 increased from $95 million in 2024 primarily due to higher levels of debt.

Interest expense of $260 million in 2025 increased from $165 million in 2024 primarily due to higher levels of debt and higher average interest rates on the debt portfolio.

Taxes on Earnings

The effective tax rate was 25.3% in 2025 and 25.3% 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 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.

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

January 28, 2024

April 28, 2024

(Millions, except per share amounts)

Three Months Ended Six Months Ended Total Program

Three Months Ended Nine Months Ended Total Program

Restructuring charges $ (3) $ 1 $ 297

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We identified opportunities for cost synergies as we integrate Sovos Brands.

In the three-month period ended April 28, 2024, we recorded Restructuring charges of $16 million for severance pay and benefits related to initiatives to achieve the synergies.

In 2024, we recorded Restructuring charges of $21 million for severance pay and benefits related to initiatives to achieve the synergies and generated pre-tax savings of $10 million.

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

January 26, 2025

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

April 27, 2025

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

Restructuring charges $ 6 $ 17

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

(Millions) Recognized as of January 26, 2025

(Millions) Recognized as of April 27, 2025

Severance pay and benefits

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Of the aggregate $210 million of pre-tax costs identified to date, we expect approximately $150 million will be cash expenditures.

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.

In addition, we expect to invest approximately $215 million in capital expenditures, of which we invested $88 million as of April 27, 2025.

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

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

As of April 27, 2025, we have generated total program-to-date pre-tax savings of $110 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:

January 26, 2025

(Millions) Three Months Ended Six Months Ended

April 27, 2025

(Millions) Three Months Ended Nine Months Ended

Meals & Beverages $ 14 $ 51

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

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.

In the three- and nine-month periods ended April 27, 2025, we incurred $9 million and $17 million in Marketing and selling expenses and $1 million in Administrative expenses related to this initiative, respectively.

In the three- and nine-month periods ended April 28, 2024, we incurred $5 million in Marketing and selling expenses related to this initiative.

As of April 27, 2025, we have incurred $22 million in Marketing and selling expenses and $1 million in Administrative expenses related to this initiative.

LIQUIDITY AND CAPITAL RESOURCES

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We generated cash flows from operations of $872 million in 2025, compared to $897 million in 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.

The decline in 2025 was primarily due to changes in working capital.

We had negative working capital of $623 million as of April 27, 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 $1.179 billion as of January 26, 2025, and $1.423 billion as of July 28, 2024.

Total debt maturing within one year was $799 million as of April 27, 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 January 26, 2025 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 $254 million at April 27, 2025 and $243 million at July 28, 2024.

Investing Activities

Capital expenditures were $296 million in 2025 and $376 million in 2024.

Capital expenditures in 2025 included chip and cracker capacity expansion for our Snacks business, enhancements to our headquarters in Camden, New Jersey and network optimization for our Meals & Beverages business.

Capital expenditures in 2025 included chip and cracker capacity expansion for our Snacks business, network optimization for our Meals & Beverages business and enhancements to our headquarters in Camden, New Jersey.

Capital expenditures are expected to total approximately $450 million in 2025.

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The purchase and sale proceeds of the routes are reflected in investing activities.

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

On August 26, 2024, we sold our Pop Secret popcorn business for $70 million and on February 24, 2025, we sold the noosa yoghurt business for $188 million, subject to certain customary purchase price adjustments.

On March 12, 2024, we completed the acquisition of Sovos Brands.

Cash consideration was $2.857 billion.

The acquisition was funded through the 2024 DDTL Credit Agreement of $2 billion and cash on hand.

Financing Activities

Dividend payments were $343 million in 2025 and $334 million in 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.

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

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.

On May 13, 2025, the Board of Directors declared a regular quarterly dividend of $.39 per share payable on August 4, 2025 to shareholders of record at the close of business on July 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 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.

During the nine-month periods ended April 27, 2025 and April 28, 2024, we repurchased 1.247 million shares at a cost of $60 million and 1.08 million shares at a cost of $46 million, respectively, pursuant to our anti-dilutive share repurchase programs.

As of April 27, 2025, approximately $200 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.

On October 10, 2023, we entered into the 2024 DDTL Credit Agreement totaling up to $2 billion scheduled to mature on October 8, 2024.

Loans under the 2024 DDTL Credit Agreement bear interest at the rates specified in the 2024 DDTL Credit Agreement, which vary based on the type of loan and certain other conditions.

The 2024 DDTL Credit Agreement contains customary representations and warranties, affirmative and negative covenants, including a financial covenant with respect to a minimum consolidated interest coverage ratio of consolidated adjusted EBITDA to consolidated interest expense (as each is defined in the 2024 DDTL Credit Agreement) of not less than 3.25:1.00, and events of default for credit facilities of this type.

The proceeds of the loans under the 2024 DDTL Credit Agreement could only be used in connection with the acquisition of Sovos Brands and the payment of fees and expenses incurred in connection therewith.

On March 12, 2024, we borrowed $2 billion under the 2024 DDTL Credit Agreement and used the proceeds in order to fund the acquisition of Sovos Brands, along with the fees and expenses incurred in connection therewith.

In August 2023, we filed a registration statement with the Securities and Exchange Commission that registered an indeterminate amount of debt securities.

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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 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.

In March 2025, we used a portion of the net proceeds from the issuance of the notes along with cash on hand and the issuance of commercial paper to repay a $1.15 billion aggregate principal amount of senior notes that matured in March 2025.

On March 19, 2024, pursuant to the registration statement, we issued senior unsecured notes of $2.5 billion, consisting of:

• $400 million aggregate principal amount of notes bearing interest at a fixed rate of 5.30% per annum, due March 20, 2026, with interest payable semi-annually on each of March 20 and September 20 commencing September 20, 2024;

• $500 million aggregate principal amount of notes bearing interest at a fixed rate of 5.20% per annum, due March 19, 2027, with interest payable semi-annually on each of March 19 and September 19 commencing September 19, 2024;

• $600 million aggregate principal amount of notes bearing interest at a fixed rate of 5.20% per annum, due March 21, 2029, with interest payable semi-annually on each of March 21 and September 21 commencing September 21, 2024;

• $1 billion aggregate principal amount of notes bearing interest at a fixed rate of 5.40% per annum, due March 21, 2034, with interest payable semi-annually on each of March 21 and September 21 commencing September 21, 2024.

The notes contain customary covenants and events of default.

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.

We used the net proceeds from the sale of the notes to repay the $2 billion of outstanding borrowings under the 2024 DDTL Credit Agreement used to fund the Sovos Brands acquisition, including fees and expenses in connection therewith, and the remainder of the net proceeds to repay commercial paper.

On April 5, 2024, we repaid $100 million of the $500 million outstanding under the 2022 DDTL Credit Agreement due November 15, 2025.

As of April 27, 2025, we had $799 million of short-term borrowings due within one year, of which $370 million was comprised of commercial paper borrowings.

As of April 27, 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 January 26, 2025, except for $1 million of standby letters of credit that we issued under it.

The 2024 Revolving Credit Facility Agreement remained unused at April 27, 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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We prepare our consolidated financial statements in conformity with accounting principles generally accepted in the United States.

The preparation of these financial statements requires the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the periods presented.

during the periods presented.

Actual results could differ from those estimates and assumptions.

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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.

Second Quarter Assessment

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.

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, reducing the carrying value to $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.

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, reducing the carrying value to $47 million.

Third Quarter Assessment

During the third quarter of 2025, we performed an interim impairment assessment on the Snyder's of Hanover trademark within our Snacks segment.

In 2025, sales and operating performance were below expectations.

In the third quarter of 2025, based on recent performance, we lowered our long-term outlook and recognized an impairment charge of $150 million on the trademark, reducing the carrying value to $470 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:

As of April 27, 2025, the carrying value of indefinite-lived trademarks was $3.678 billion as detailed below:

Rao's $ 1,470

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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.

Holding all other assumptions used in the acquisition valuation measurement constant, changes in the assumptions below would reduce the fair value of this trademark and result in impairment charges of approximately:

(Millions) Rao's

1% increase in the weighted-average cost of capital $ 215

1% reduction in revenue growth $ 95

1% decrease in royalty rate $ 155

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 $1.117 billion as of April 27, 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

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

(Millions) Snyder's of Hanover (1)

Pacific Foods (2)

Allied brands (1)

Late July (1)

1% increase in the weighted-average cost of capital $ 80 $ 10 $ 40 $ 5 $ 10

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1% decrease in royalty rate $ 60 $ 5 $ 45 $ 10 $ 25

____________________________________

(1) Based on 2025 interim impairment testing.

(2) Based on 2024 annual impairment testing.

While the 1% changes in assumptions would not result in impairment charges on our other trademarks, some changes would reduce the excess coverage of fair value over carrying value to less than 10% for the Cape Cod trademark.

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.

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

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

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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