What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-03-11 compared with 2025-12-09 · 203 added, 75 removed, 267 unchanged (51% of the section changed)

25 unchanged sentences

Our industry continues to navigate a dynamic operating and regulatory environment driven by commodity cost volatility, supply chain pressures, tariffs and shifting global trade policies, evolving consumer purchasing and spending patterns and other economic uncertainties.

Through the first quarter, we experienced significantly elevated input cost inflation and other supply chain costs, primarily driven by the impacts of tariffs.

We anticipate continued supply chain productivity and benefits from cost savings initiatives to mitigate some of these costs in 2026.

Through the second quarter, we experienced elevated input cost inflation, impacts from tariffs and other supply chain costs.

We anticipate continued supply chain productivity, benefits from cost savings initiatives and tariff mitigation efforts to offset some of these costs, and we expect inflationary pressures to moderate throughout 2026.

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

however, shifting consumer behaviors may continue to negatively impact our volumes throughout 2026.

On February 28, 2026, a military conflict commenced in the Middle East involving the United States, Israel and Iran.

Although we have no operations in the Middle East, the ongoing geopolitical conflicts in the region could lead to significant disruption of energy supplies and increases in global energy prices, which could heighten inflationary pressures, disrupt global supply chains and adversely impact consumer spending patterns.

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

1 unchanged sentence

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

• Net sales decreased 3% in the quarter to $2.677 billion primarily due to unfavorable volume/mix and the impact of divestitures, partially offset by favorable net price realization.

• Net sales decreased 5% in the quarter to $2.564 billion primarily due to unfavorable volume/mix and the impact of divestiture with neutral net price realization.

Net sales were impacted by an approximate 1% headwind as a result of storm-related shipment delays in January.

• Gross profit, as a percent of sales, was 28.0% in 2026 compared to 30.5% in the prior-year quarter.

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

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

• Earnings per share were $.48 in 2026, compared to $.58 in the prior-year quarter.

3 unchanged sentences

• We implemented several cost savings initiatives in recent years.

In the first quarter of 2026, we recorded Restructuring charges of $3 million and implementation costs and other related costs of $8 million in Administrative expenses and $7 million in Cost of products sold related to these initiatives.

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 second quarter of 2026, we recorded Restructuring charges of $3 million and implementation costs and other related costs of $9 million in Cost of products sold, $7 million in Administrative expenses, $2 million in Marketing and selling expenses and $1 million in Research and development expenses 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.

Year-to-date in 2026, we recorded Restructuring charges of $6 million and implementation costs and other related costs of $16 million in Cost of products sold, $15 million in Administrative expenses, $2 million in Marketing and selling expenses and $1 million in Research and development expenses 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.

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 2026, we recognized $16 million in Marketing and selling expenses related to this initiative.

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

In the first quarter of 2026, the total aggregate impact related to the cost savings and optimization initiatives was $34 million ($26 million after tax, or $.09 per share).

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 $.09 per share).

In the second quarter of 2026, we recognized $2 million in Marketing and selling expenses related to this initiative.

Year-to-date in 2026, we recognized $18 million in Marketing and selling expenses related to this initiative.

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

In the second quarter of 2026, the total aggregate impact related to the cost savings and optimization initiatives was $24 million ($18 million after tax, or $.06 per share).

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 2026, the total aggregate impact related to the cost savings and optimization initiatives was $58 million ($44 million after tax, or $.15 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 2026, we recognized losses in Cost of products sold of $2 million ($2 million after tax, or $.01 per share) associated with unrealized mark-to-market adjustments on outstanding undesignated commodity hedges.

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 2026, we recorded litigation expenses in Administrative expenses of $10 million ($7 million after tax, or $.02 per share) 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 2025, we recorded litigation expenses in Administrative expenses of $1 million ($1 million after tax) related to Plum and certain other litigation matters;

• In the first quarter of 2026 and 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 2026, we recognized costs associated with a pending acquisition in Other expenses / (income) of $2 million ($2 million after tax, or $.01 per share);

• 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 first quarter of 2025, 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 second quarter of 2026, we recognized gains in Cost of products sold of $16 million ($12 million after tax, or $.04 per share) associated with unrealized mark-to-market adjustments on outstanding undesignated commodity hedges.

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.

Year-to-date in 2026, 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.

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;

• In the second quarter of 2026, 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 2025, we recorded litigation expenses in Administrative expenses of $1 million ($1 million after tax) related to Plum and certain other litigation matters.

Year-to-date in 2026, we recorded litigation expenses in Administrative expenses of $11 million ($8 million after tax, or $.03 per share) related to Plum and certain other litigation matters.

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;

• In the second quarter of 2026, we entered into purchase agreements to acquire 49% of the issued and outstanding equity interests of La Regina.

The acquisition is subject to certain customary conditions.

Year-to-date in 2026, we recognized costs associated with the pending acquisition in Other expenses / (income) of $2 million ($2 million after tax, or $.01 per share);

• Year-to-date in 2026 and 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 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 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, we recorded accelerated amortization expense in Other expenses / (income) of $14 million ($10 million after tax, or $.03 per share);

• 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.

The items impacting comparability are summarized below:

Three Months Ended

November 2, 2025 October 27, 2024

February 1, 2026 January 26, 2025

(Millions, except per share amounts) Earnings

1 unchanged sentence

Costs associated with cost savings and optimization initiatives $ (18) $ (.06) $ (19) $ (.06)

Commodity mark-to-market gains (losses) (2) (.01) 3 .01

Commodity mark-to-market gains 12 .04 10 .03

Certain litigation expenses (1) — (1) —

Cybersecurity incident recoveries 1 — 1 —

Impairment charges — — (19) (.06)

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

Accelerated amortization — — (5) (.02)

Impact of items on Net earnings $ (7) $ (.02) $ (49) $ (.16)

Six Months Ended

February 1, 2026 January 26, 2025

(Millions, except per share amounts) Earnings

Net earnings attributable to The Campbell's Company $ 339 $ 1.13 $ 391 $ 1.30

Costs associated with cost savings and optimization initiatives $ (44) $ (.15) $ (46) $ (.15)

Commodity mark-to-market gains 10 .03 13 .04

Certain litigation expenses (8) (.03) (2) (.01)

Costs associated with acquisition (2) (.01) — —

Postretirement actuarial losses — — (1) —

Cybersecurity incident recoveries 1 — 1 —

Impairment charges — — (19) (.06)

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

Accelerated amortization — — (10) (.03)

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

Postretirement actuarial losses — — (1) —

Impact of items on Net earnings (1)

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Net earnings attributable to The Campbell's Company were $145 million ($.48 per share) in the current quarter, compared to $173 million ($.58 per share) in the year-ago quarter.

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

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

The estimated net impact of tariffs was approximately $.06 per share in the current quarter.

The negative impact from divestitures was approximately $.01 per share in the current quarter.

FIRST-QUARTER DISCUSSION AND ANALYSIS

The estimated net impact of January storm-related shipment delays and incremental supply chain costs was approximately $.04 per share in the current quarter.

The negative impact from the divestiture was approximately $.01 per share in the current quarter.

Net earnings attributable to The Campbell's Company were $339 million ($1.13 per share) in the six-month period this year, compared to $391 million ($1.30 per share) in the year-ago period.

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

The estimated net impact of tariffs was approximately $.10 per share in the current period.

The estimated net impact of January storm-related shipment delays and incremental supply chain costs was approximately $.04 per share in the current period.

The negative impact from divestitures was approximately $.02 per share in the current period.

SECOND-QUARTER DISCUSSION AND ANALYSIS

An analysis of net sales by reportable segment follows:

Three Months Ended

(Millions) November 2, 2025 October 27, 2024 % Change

(Millions) February 1, 2026 January 26, 2025 % Change

Meals & Beverages $ 1,650 $ 1,711 (4)

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Excluding the impact from the divestiture of the noosa yoghurt business, sales decreased primarily due to declines in U.S.

soup, Canada, SpaghettiOs, Pace Mexican sauces and V8 beverages, partially offset by gains in Rao's .

soup, Prego pasta sauces, foodservice and V8 beverages, partially offset by gains in Rao's.

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

Sales were impacted by an approximate 1% headwind as a result of storm-related shipment delays in January.

Sales of U.S.

soup decreased 4% with decreases in condensed soups, ready-to-serve soups and broth.

In Snacks, sales decreased 6% primarily due to declines in chips and pretzels, fresh bakery related to supply constraints, and third-party partner brands and contract manufacturing.

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

Gross profit, defined as Net sales less Cost of products sold, decreased by $102 million in 2026 from 2025.

As a percent of sales, gross profit declined to 28.0% in 2026 from 30.5% in 2025, due in part to the negative impact of tariffs.

The 250 basis-point decrease in gross profit margin was due to the following factors:

Margin Impact

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

Volume/mix (2)

Productivity improvements 270

Net price realization 50

Lower costs associated with cost savings initiatives 10

__________________________________________

(1) Includes an estimated negative margin impact of 230 basis points from the gross impact of tariffs, partially offset by an estimated positive margin impact of 30 basis points from the benefit of cost savings initiatives and a positive margin impact of 10 basis points from the change in unrealized mark-to-market adjustments on outstanding undesignated commodity hedges.

(2) Includes the impact of operating leverage.

Marketing and Selling Expenses

Marketing and selling expenses as a percent of sales were 9.8% in 2026 compared to 9.5% in 2025.

Marketing and selling expenses decreased 2% in 2026 from 2025.

The decrease was primarily due to lower selling expenses (approximately 2 points) and increased benefits from cost savings initiatives (approximately 1 point), partially offset by higher costs associated with costs savings and optimization initiatives (approximately 1 point).

Administrative Expenses

Administrative expenses as a percent of sales were 6.2% in 2026 compared to 6.1% in 2025.

Administrative expenses decreased 3% in 2026 from 2025.

The decrease was primarily due to increased benefits from cost savings initiatives (approximately 5 points) and lower costs associated with cost savings initiatives (approximately 1 point), partially offset by higher benefit-related costs (approximately 2 points) and inflation (approximately 1 point).

Other Expenses / (Income)

Other expenses were $7 million in 2026 compared to $41 million in 2025.

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.

Operating Earnings

Segment operating earnings decreased 21% in 2026 from 2025.

An analysis of operating earnings by segment follows:

Three Months Ended

(Millions) February 1, 2026 January 26, 2025 % Change

Meals & Beverages $ 252 $ 296 (15)

Snacks 67 109 (39)

Corporate income (expense) (43) (73)

Restructuring charges (1)

Earnings before interest and taxes $ 273 $ 327

__________________________________________

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

Operating earnings from Meals & Beverages decreased 15%.

The decrease was primarily due to lower gross profit and the impact of the divestiture, partially offset by lower marketing and selling expenses.

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

Operating earnings from Snacks decreased 39%.

The decrease was primarily due to lower gross profit.

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

Corporate expense in 2026 included the following:

• costs of $21 million related to costs savings and optimization initiatives;

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

• $16 million of unrealized mark-to-market gains on outstanding undesignated commodity hedges.

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 cost 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.

Interest Expense

Interest expense of $82 million in 2026 decreased from $88 million in 2025 primarily due to lower levels of debt.

Taxes on Earnings

The effective tax rate was 24.9% in 2026 and 30.0% in 2025.

The decrease 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 prior year, partially offset by lower tax expense associated with stock-based compensation awards in the prior year.

SIX-MONTH DISCUSSION AND ANALYSIS

An analysis of net sales by reportable segment follows:

Six Months Ended

(Millions) February 1, 2026 January 26, 2025 % Change

Meals & Beverages $ 3,315 $ 3,450 (4)

Snacks 1,926 2,007 (4)

$ 5,241 $ 5,457 (4)

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

Meals & Beverages (2)

Volume/mix (2)% (5)% (3)%

Net price realization (1)

Divestitures (2) — (2)

(4)% (4)% (4)%

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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 decreased 4%.

Excluding the impact from the divestiture of the noosa yoghurt business, sales decreased primarily due to declines in U.S.

soup, Prego pasta sauces, Canada, V8 beverages and Pace Mexican sauces, partially offset by gains in Rao's .

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

Sales were impacted by an approximate 1% headwind as a result of storm-related shipment delays in January.

Sales of U.S.

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

In Snacks, sales decreased 4%.

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

fresh bakery, Goldfish crackers and Cape Cod potato chips, partially offset by gains in Pepperidge Farm cookies.

Excluding the impact from the divestiture of the Pop Secret popcorn business, sales decreased primarily due to declines in chips, third-party partner brands and contract manufacturing, fresh bakery related to supply constraints, and declines in crackers and pretzels, partially offset by gains in Pepperidge Farm cookies.

Sales were impacted by volume/mix declines, partially offset by favorable net price realization.

7 unchanged sentences

Net price realization 70

Lower costs associated with cost savings initiatives 10

__________________________________________

(1) Includes an estimated negative margin impact of 200 basis points from the gross impact of tariffs, a negative margin impact of 20 basis points from the change in unrealized mark-to-market adjustments on outstanding undesignated commodity hedges, partially offset by a positive margin impact of 20 basis points from the benefit of cost savings initiatives.

(1) Includes an estimated negative margin impact of 220 basis points from the gross impact of tariffs and a negative margin impact of 10 basis points from the change in unrealized mark-to-market adjustments on outstanding undesignated commodity hedges, partially offset by an estimated positive margin impact of 20 basis points from the benefit of cost savings initiatives.

(2) Includes the impact of operating leverage.

1 unchanged sentence

Marketing and selling expenses as a percent of sales were 9.6% in 2026 compared to 9.3% in 2025.

Marketing and selling expenses increased 1% in 2026 from 2025.

The increase was primarily due to higher costs associated with costs savings and optimization initiatives (approximately 3 points) and higher marketing expenses (approximately 2 points), partially offset by lower selling expenses (approximately 2 points);

increased benefits from cost savings initiatives (approximately 1 point) and lower incentive compensation (approximately 1 point).

Marketing and selling expenses were comparable in 2026 and 2025.

Lower selling expenses (approximately 2 points) and increased benefits from cost savings initiatives (approximately 1 point) were offset by higher costs associated with costs savings and optimization initiatives (approximately 2 points) and higher benefit-related costs (approximately 1 point).

Administrative Expenses

Administrative expenses as a percent of sales were 6.2% in 2026 compared to 6.3% in 2025.

Administrative expenses as a percent of sales were 6.2% in 2026 and 2025.

Administrative expenses decreased 4% in 2026 from 2025.

1 unchanged sentence

lower incentive compensation (approximately 2 points);

lower benefit-related costs (approximately 2 points) and lower costs associated with cost savings initiatives (approximately 2 points), partially offset by higher certain litigation expenses (approximately 5 points).

and lower costs associated with cost savings initiatives (approximately 1 point), partially offset by higher certain litigation expenses (approximately 3 points).

Other Expenses / (Income)

1 unchanged sentence

Other expenses in 2026 included costs associated with a pending acquisition of $2 million.

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, 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.

Operating Earnings

1 unchanged sentence

An analysis of operating earnings by segment follows:

Three Months Ended

(Millions) November 2, 2025 October 27, 2024 % Change

Six Months Ended

(Millions) February 1, 2026 January 26, 2025 % Change

Meals & Beverages $ 549 $ 639 (14)

7 unchanged sentences

The decrease was primarily due to lower gross profit and the impact of the divestiture.

Gross profit margin decreased primarily due to the gross impact of tariffs, cost inflation and other

supply chain costs and unfavorable volume/mix, partially offset by supply chain productivity improvements and favorable net price realization.

Operating earnings from Snacks decreased 22%.

The decrease was primarily due to lower gross profit.

Gross profit margin decreased primarily due to cost inflation and other supply chain costs, the gross impact of tariffs and unfavorable volume/mix,

partially offset by supply chain productivity improvements, favorable net price realization and benefits from cost savings initiatives.

Corporate expense in 2026 included the following:

1 unchanged sentence

• $11 million of certain litigation expenses, including expenses related to Plum;

• $2 million of unrealized mark-to-market losses on outstanding undesignated commodity hedges;

• $2 million of costs associated with a pending acquisition;

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

• $1 million of insurance recoveries related to a cybersecurity incident.

1 unchanged sentence

• costs of $49 million related to cost savings and optimization 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;

8 unchanged sentences

The effective tax rate was 24.5% in 2026 and 26.4% in 2025.

The increase in the effective tax rate was primarily due to excess tax benefits in the prior year and shortfalls in the current year associated with the vesting of stock-based compensation awards, partially offset by the favorable resolution of certain state tax m atters in the current year.

The decrease in the effective tax rate was primarily due to $15 million of deferred tax expense related to the sale of the noosa yoghurt business in the prior year and the favorable resolution of certain state tax m atters in the current year, partially offset by excess tax benefits in the prior year and shortfalls in the current year associated with the vesting of stock-based compensation awards.

Restructuring Charges, Cost Savings Initiatives and Other Optimization Initiatives

8 unchanged sentences

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

Three Months Ended

(Millions, except per share amounts) November 2, 2025 October 27, 2024 Recognized as of November 2, 2025

Three Months Ended Six Months Ended

(Millions, except per share amounts) February 1, 2026 January 26, 2025 February 1, 2026 January 26, 2025 Recognized as of February 1, 2026

Restructuring charges $ 3 $ 5 $ 6 $ 11 $ 30

6 unchanged sentences

Per share impact $ .05 $ .06 $ .10 $ .13

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

(Millions) Recognized as of November 2, 2025

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

(Millions) Recognized as of February 1, 2026

Severance pay and benefits

11 unchanged sentences

Of the aggregate $245 million of pre-tax costs identified to date, we expect approximately $185 million will be cash expenditures.

In addition, we expect to invest approximately $205 million in capital expenditures, of which we invested $164 million as of November 2, 2025.

In addition, we expect to invest approximately $215 million in capital expenditures, of which we invested $187 million as of February 1, 2026.

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 $375 million by the end of 2028.

As of November 2, 2025, we have generated total program-to-date pre-tax savings of $160 million.

As of February 1, 2026, we have generated total program-to-date pre-tax savings of $180 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:

November 2, 2025

(Millions) Three Months Ended Costs Incurred to Date

February 1, 2026

(Millions) Three Months Ended Six Months Ended Costs Incurred to Date

Meals & Beverages $ 10 $ 20 $ 94

Snacks 7 13 27

Corporate 5 7 23

Total $ 22 $ 40 $ 144

In the third quarter of 2026, we commenced a voluntary early retirement program as part of our cost savings initiatives.

The program is available to certain salaried employees who meet age and length-of-service criteria.

We currently do not know which employees will elect to participate and therefore are unable to estimate the costs of the program, although we expect these costs to consist primarily of severance pay and benefits, including enhanced pension benefits.

We will provide an estimate of the costs expected to be incurred as the program is executed.

Other Optimization Initiatives

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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 three-month period ended November 2, 2025, we incurred $16 million in

Marketing and selling expenses related to this initiative.

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

As of November 2, 2025, we have incurred $41 million in Marketing and selling expenses and $1 million in Administrative expenses related to this initiative.

In the three-month period ended February 1, 2026, we incurred $2 million in Marketing and selling expenses related to this initiative.

In the six-month periods ended February 1, 2026 and January 26, 2025, we incurred $18 million and $8 million in Marketing and selling expenses related to this initiative, respectively.

As of February 1, 2026, we have incurred $43 million in Marketing and selling expenses and $1 million in Administrative expenses related to this initiative.

Potential Future Initiatives

We continue to explore additional opportunities for cost savings designed to enhance operating efficiency, which may result in additional restructuring actions in the future.

LIQUIDITY AND CAPITAL RESOURCES

7 unchanged sentences

We generated cash flows from operations of $740 million in 2026, compared to $737 million in 2025.

The decline in 2026 was primarily due to lower cash earnings mostly offset by changes in working capital.

We had negative working capital of $567 million as of November 2, 2025, and $674 million as of August 3, 2025.

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 $874 million as of November 2, 2025, and $762 million as of August 3, 2025.

We have $400 million aggregate principal amount of senior notes maturing in March 2026 that we expect to repay and/or refinance using available resources, which may include cash on hand, accessing the capital markets, commercial paper and/or revolving credit facility.

The increase in 2026 was primarily due to changes in working capital mostly offset by lower cash earnings.

We had positive working capital of $40 million as of February 1, 2026, and negative working capital of $674 million as of August 3, 2025.

As of August 3, 2025, 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 $428 million as of February 1, 2026, and $762 million as of August 3, 2025.

We have $400 million aggregate principal amount of senior notes maturing in March 2026 that we expect to repay using available resources, which may include cash on hand, commercial paper and/or our revolving credit facility.

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.

Our outstanding obligations confirmed as valid under these programs, which are included in Accounts payable on the Consolidated Balance Sheets, were approximately $264 million at November 2, 2025 and $240 million at August 3, 2025.

Our outstanding obligations confirmed as valid under these programs, which are included in Accounts payable on the Consolidated Balance Sheets, were approximately $254 million at February 1, 2026 and $240 million at August 3, 2025.

Investing Activities

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Dividend payments were $237 million in 2026 and $227 million in 2025.

The regular quarterly dividend paid on our capital stock was $.39 and $.37 per share in the first quarter of 2026 and 2025, respectively.

On September 17, 2025, the Board of Directors declared a regular quarterly dividend of $.39 per share payable on November 3, 2025 to shareholders of record at the close of business on October 2, 2025.

The regular quarterly dividend paid on our capital stock was $.39 per share in both the second quarter of 2026 and 2025.

On November 18, 2025, the Board of Directors declared a regular quarterly dividend of $.39 per share payable on February 2, 2026 to shareholders of record at the close of business on January 8, 2026.

On February 25, 2026, the Board of Directors declared a regular quarterly dividend of $.39 per share payable on May 4, 2026 to shareholders of record at the close of business on April 2, 2026.

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 November 2, 2025 and October 27, 2024, we repurchased 748 thousand shares at a cost of $24 million and 1.098 million shares at a cost of $54 million, respectively, pursuant to our anti-dilutive share repurchase programs.

As of November 2, 2025, approximately $174 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 February 1, 2026 and January 26, 2025, we repurchased 805 thousand shares at a cost of $26 million and 1.134 million shares at a cost of $56 million, respectively, pursuant to our anti-dilutive share repurchase programs.

As of February 1, 2026, approximately $172 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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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.

As of November 2, 2025, we had $874 million of short-term borrowings due within one year, of which $447 million was comprised of commercial paper borrowings.

As of November 2, 2025, we issued $27 million of standby letters of credit.

On December 15, 2025, pursuant to the registration statement, we completed the issuance of senior unsecured notes, consisting of $550 million aggregate principal amount of notes bearing interest at a fixed rate of 4.55% per annum, due March 21, 2031, with interest payable semi-annually on each of March 21 and September 21 commencing March 21, 2026.

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 a portion of the proceeds from the issuance of the notes to repay a portion of our outstanding commercial paper and plan to use the remaining proceeds to repay existing indebtedness and for general corporate purposes.

As of February 1, 2026, we had $428 million of short-term borrowings due within one year, of which none was comprised of commercial paper borrowings.

As of February 1, 2026, we issued $45 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.

On August 5, 2025, we entered into an Extension Agreement to extend the maturity date of the 2024 Revolving Credit Facility Agreement by one year from April 16, 2029 to April 16, 2030.

The 2024 Revolving Credit Facility Agreement remained unused at November 2, 2025, except for $1 million of standby letters of credit that we issued under it.

The 2024 Revolving Credit Facility Agreement remained unused at February 1, 2026, 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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These forward-looking statements reflect our current expectations regarding our future results of operations, economic performance, financial condition and achievements.

These forward-looking statements can be identified by words such as

"anticipate," "believe," "estimate," "expect," "intend," "plan," "pursue," "strategy," "target," "will" and similar expressions.

These forward-looking statements can be identified by words such as "anticipate," "believe," "estimate," "expect," "intend," "plan," "pursue," "strategy," "target," "will" and similar expressions.

One can also identify forward-looking statements by the fact that they do not relate strictly to historical or current facts, and may reflect anticipated cost savings or implementation of our strategic plan.

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• 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 to the extent anticipated;

• the risks related to the La Regina transaction, including that the conditions to the completion of the transaction may not be satisfied, any regulatory approvals required for the transaction may not be obtained on the schedule or terms expected, the closing of the transaction may not occur or be delayed, and benefits from the transaction may not be fully realized or may take longer or cost more to be realized than expected;

• the risks related to the La Regina transaction, including that the conditions to the completion of the transaction may not be satisfied, the closing of the transaction may not occur or be delayed, and benefits from the transaction may not be fully realized or may take longer or cost more to be realized than expected;

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

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We disclaim any obligation or intent to update forward-looking statements made by us in order to reflect new information, events or circumstances after the date they are made.

Quantitative and Qualitative Disclosure About Market Risk

For information regarding our exposure to certain market risk, see Item 7A, Quantitative and Qualitative Disclosure About Market Risk, in the 2025 Annual Report on Form 10-K.

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