CAMPBELL SOUP CO

Previous wording

Sovos Brands, Inc. (Sovos Brands) Acquisition Update

Current wording

On March 12, 2024, we completed the acquisition of Sovos Brands, Inc. (Sovos Brands) for total purchase consideration of $2.899 billion. For additional information on the Sovos Brands acquisition, see Note 3 to the Consolidated Financial Statements. All references to the acquisition below refer to the Sovos Brands acquisition.

Previous wording

We anticipate continued supply chain productivity and previously implemented pricing actions to mitigate some of the inflationary pressures, and expect such benefits to largely offset the incremental costs in 2024. 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. We will also be lapping 2023 price increases and favorable net price realization will represent a reduced contribution to sales in 2024.

Current wording

Our industry continues to be impacted by commodity cost fluctuations, rising labor costs and other global macroeconomic challenges. Through the third quarter, we experienced a moderate amount of input cost inflation, and we expect inflation to continue to moderate throughout the remainder of 2024. We anticipate continued supply chain productivity and previously implemented pricing actions to mitigate some of the inflationary pressures and expect such benefits to largely offset the incremental costs in 2024. 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.

Previous wording

•Gross profit, as a percent of sales, was 31.6% in 2024 compared to 30.5% in the prior-year quarter. The increase was primarily due to benefits from supply chain productivity improvements and favorable net price realization, partially offset by higher cost inflation and other supply chain costs.

Current wording

•Gross profit, as a percent of sales, was 30.9% in 2024 compared to 30.0% in the prior-year quarter. The increase was primarily due to benefits from supply chain productivity improvements, mark-to-market adjustments on outstanding undesignated commodity hedges and lower costs associated with cost savings initiatives, partially offset by higher cost inflation and other supply chain costs and the impact of the acquisition.

Previous wording

•Earnings per share were $.68 in 2024, compared to $.77 a year ago. The current quarter included expenses of $.12 per share and the prior-year quarter included expenses of $.03 per share from items impacting comparability as discussed below.

Current wording

•Earnings per share were $.44 in 2024, compared to $.53 a year ago. The current quarter included expenses of $.30 per share and the prior-year quarter included expenses of $.15 per share from items impacting comparability as discussed below.

Previous wording

•We implemented several cost savings initiatives in recent years. In the second quarter of 2024, we recorded Restructuring charges of $2 million and implementation costs and other related costs of $29 million in Administrative expenses, $3 million in Cost of products sold, $1 million in Marketing and selling expenses and $1 million in Research and development expenses (aggregate impact of $27 million after tax, or $.09 per share) related to these initiatives. Year-to-date in 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 $0.12 per share) related to these initiatives. In the second quarter of 2023, we recorded Restructuring charges of $9 million and implementation costs and other related costs of $5 million in Administrative expenses (aggregate impact of $10 million after tax, or $.03 per share) related to these initiatives. Year-to-date in 2023, we recorded Restructuring charges of $9 million and implementation costs and other related costs of $8 million in Administrative expenses (aggregate impact of $13 million after tax, or $.04 per share) related to these initiatives. See Note 6 to the Consolidated Financial Statements and "Restructuring Charges and Cost Savings Initiatives" for additional information;

Current wording

•We implemented several cost savings initiatives in recent years. 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 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. In the third quarter of 2023, we recorded Restructuring charges of $6 million and implementation costs and other related costs of $13 million in Administrative expenses, $12 million in Cost of products sold and $2 million in Research and development expenses (aggregate impact of $24 million after tax, or $.08 per share) related to these initiatives. Year-to-date in 2023, we recorded Restructuring charges of $15 million and implementation costs and other related costs of $21 million in Administrative expenses, $12 million in Cost of products sold and $2 million in Research and development expenses (aggregate impact of $37 million after tax, or $.12 per share) related to these initiatives;

Previous wording

•In the second quarter of 2024, we recognized gains in Cost of products sold of $7 million ($5 million after tax, or $.02 per share) associated with unrealized mark-to-market adjustments on outstanding undesignated commodity hedges. Year-to-date in 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 2023, we recognized losses 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;

Current wording

•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 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 2023, we recognized losses in Cost of products sold of $9 million ($7 million after tax, or $.02 per share) associated with unrealized mark-to-market adjustments on outstanding undesignated commodity hedges. Year-to-date in 2023, we recognized losses in Cost of products sold of $9 million ($7 million after tax, or $.02 per share) associated with unrealized mark-to-market adjustments on outstanding undesignated commodity hedges;

Previous wording

•In the second quarter of 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 recorded accelerated amortization expense in Other expenses / (income) of $14 million ($10 million after tax, or $.03 per share) related to customer relationship intangible assets;

Current wording

•In the third quarter of 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 2024, we recorded accelerated amortization expense in Other expenses / (income) of $20 million ($15 million after tax, or $.05 per share) related to customer relationship intangible assets;

Previous wording

•In the second quarter of 2024, we recorded pre- and after-tax litigation expenses in Administrative expenses of $1 million related to the Plum baby food and snacks business (Plum), which was divested on May 3, 2021. Year-to-date in 2024, we recorded pre- and after-tax litigation expenses in Administrative expenses of $3 million ($.01 per share) related to Plum;

Current wording

•Year-to-date in 2024, we recorded pre- and after-tax litigation expenses in Administrative expenses of $3 million ($.01 per share) related to the Plum baby food and snacks business (Plum), which was divested on May 3, 2021;

Previous wording

•In the second quarter of 2023, we recognized actuarial gains in Other expenses / (income) of $6 million ($4 million after tax, or $.01 per share). Year-to-date in 2023, we recognized actuarial losses in Other expenses / (income) of $9 million ($7 million after tax, or $.02 per share). The actuarial gains and losses related to interim remeasurements of certain U.S. pension plans due to lump sum distributions that exceeded or were expected to exceed service and interest costs resulting in settlement accounting for the plans.

Current wording

•In the third quarter of 2023, we recognized actuarial losses in Other expenses / (income) of $17 million ($13 million after tax, or $.04 per share). Year-to-date in 2023, we recognized actuarial losses in Other expenses / (income) of $26 million ($20 million after tax, or $.07 per share). The actuarial losses related to interim remeasurements of certain U.S. pension plans due to lump sum distributions that exceeded or were expected to exceed service and interest costs resulting in settlement accounting for the plans.

Previous wording

Net earnings attributable to Campbell Soup Company were $203 million ($.68 per share) in the current quarter, compared to $232 million ($.77 per share) in the year-ago quarter. After adjusting for items impacting comparability, earnings decreased slightly reflecting higher other expenses, higher research and development expenses, higher administrative expenses and a higher effective tax rate, largely offset by improved gross profit. Earnings per share benefited from a reduction in the weighted average diluted shares outstanding.

Current wording

Net earnings attributable to Campbell Soup Company were $133 million ($.44 per share) in the current quarter, compared to $160 million ($.53 per share) in the year-ago quarter. After adjusting for items impacting comparability, earnings increased primarily due to improved gross profit, partially offset by higher interest expense.

Previous wording

Net earnings attributable to Campbell Soup Company were $437 million ($1.46 per share) in the six-month period this year, compared to $529 million ($1.76 per share) in the year-ago period. After adjusting for items impacting comparability, earnings decreased reflecting higher marketing and selling expenses, lower gross profit, higher other expenses, higher interest expense and a higher effective tax rate. Earnings per share benefited from a reduction in the weighted average diluted shares outstanding.

Current wording

Net earnings attributable to Campbell Soup Company were $570 million ($1.91 per share) in the nine-month period this year, compared to $689 million ($2.29 per share) in the year-ago period. After adjusting for items impacting comparability, earnings decreased reflecting higher marketing and selling expenses, higher interest expense, higher other expenses and higher research and development expenses, partially offset by improved gross profit. Earnings per share benefited from a reduction in the weighted average diluted shares outstanding.

Previous wording

In Meals & Beverages, sales decreased 2% as declines in U.S. retail products, primarily declines in U.S. soup, beverages and Pace Mexican sauces, were partially offset by gains in Canada and foodservice. Sales were impacted by volume/mix declines with neutral net price realization. On a two-year CAGR basis, net sales increased 4%. Following a 7% increase in the prior year, 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.

Current wording

In Meals & Beverages, sales increased 15%, primarily due to a 15-point benefit from the acquisition of Sovos Brands. Favorable volume/mix was offset by lower net price realization. Excluding the benefit from the acquisition of Sovos Brands, sales were comparable as gains in foodservice were offset by declines in U.S. retail products. Within U.S. retail products, declines in beverages and Campbell's pasta and Swanson canned poultry were partially offset by gains in Prego pasta sauces and U.S. soup. Sales of U.S. soup increased 2% primarily due to an increase in broth, partially offset by decreases in ready-to-serve soups and condensed soups. On a two-year CAGR basis, net sales increased 6%, including the impact of the acquisition.

Previous wording

In Snacks, sales were flat. Excluding the impact from the divestiture of the Emerald nuts business, sales increased driven by sales of our power brands, which increased 4%, partially offset by declines in sales of third-party partner brands. Sales increased due to increases in cookies and crackers, primarily Goldfish crackers and Lance sandwich crackers, and in salty snacks. Within salty snacks, increases primarily in Kettle Brand and Cape Cod potato chips more than offset declines in Pop Secret popcorn and Late July snacks. Sales benefited from favorable net price realization, partially offset by volume/mix declines. On a two-year CAGR basis, net sales increased 7%.

Current wording

In Snacks, sales decreased 2%. Excluding the impact from the divestiture of the Emerald nuts business, sales decreased driven by declines in third-party partner brands, contract manufacturing, frozen products and fresh bakery, partially offset by sales of our power brands, which increased 2%. Sales of power brands were driven by increases in cookies and crackers, primarily Goldfish crackers, and in salty snacks. Sales were impacted by volume/mix declines and neutral net price realization. On a two-year CAGR basis, net sales increased 5%.

Previous wording

Gross profit, defined as Net sales less Cost of products sold, increased by $17 million in 2024 from 2023. As a percent of sales, gross profit was 31.6% in 2024 and 30.5% in 2023.

Current wording

Gross profit, defined as Net sales less Cost of products sold, increased by $64 million in 2024 from 2023. As a percent of sales, gross profit was 30.9% in 2024 and 30.0% in 2023.

Previous wording

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

Current wording

The 90 basis-point increase in gross profit margin was due to the following factors:

Previous wording

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

Current wording

(2)Includes a 90 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.

Previous wording

Marketing and selling expenses as a percent of sales were 8.8% in 2024 compared to 8.7% in 2023. Marketing and selling expenses in 2024 were comparable to 2023, as higher selling expenses (approximately 3 points) were offset by lower advertising and consumer promotion expense (approximately 3 points) driven by Meals & Beverages.

Current wording

Marketing and selling expenses as a percent of sales were 8.7% in 2024 and 2023. Marketing and selling expenses increased 6% in 2024 from 2023. The increase was primarily due to the impact of the acquisition (approximately 7 points) and higher costs associated with costs savings and optimization initiatives (approximately 3 points), partially offset by lower advertising and consumer promotion expense (approximately 2 points) driven by Meals & Beverages and lower incentive compensation (approximately 2 points).

Previous wording

Administrative expenses as a percent of sales were 7.7% in 2024 compared to 6.5% in 2023. Administrative expenses increased 17% in 2024 from 2023. The increase was primarily due to higher costs associated with cost savings initiatives (approximately 15 points) and higher general administrative costs and inflation (approximately 7 percentage points), partially offset by increased benefits from cost savings initiatives (approximately 7 points).

Current wording

Administrative expenses as a percent of sales were 8.8% in 2024 compared to 7.5% in 2023. Administrative expenses increased 25% in 2024 from 2023. The increase was primarily due to costs associated with the acquisition (approximately 23 points), higher general administrative costs and inflation (approximately 7 points) and the impact of the acquisition (approximately 3 points), partially offset by increased benefits from cost savings initiatives (approximately 5 points) and lower incentive compensation (approximately 3 points).

Previous wording

Other expenses were $50 million in 2024 compared to other expenses of $18 million in 2023. Other expenses in 2024 included costs associated with the pending acquisition of $19 million and accelerated amortization expense of $14 million. Other expenses in 2023 included pension actuarial losses of $9 million. Excluding these amounts, the remaining change was primarily due to higher net periodic pension and postretirement benefit income in the prior year.

Current wording

Other expenses were $30 million in 2024 compared to other expenses of $23 million in 2023. Other expenses in 2024 included costs associated with the acquisition of $16 million and accelerated amortization expense of $6 million. Other expenses in 2023 included pension actuarial losses of $17 million. Excluding these amounts, the remaining change was primarily due to higher net periodic pension and postretirement benefit income in the prior year.

Previous wording

Segment operating earnings increased 2% in 2024 from 2023.

Current wording

Segment operating earnings increased 10% in 2024 from 2023.

Previous wording

Operating earnings from Snacks increased 6%. The increase was primarily due to higher gross profit, partially offset by higher marketing and selling expenses. Gross profit margin increased due tofavorable net price realization and supply chain productivity improvements more than offsetting higher cost inflation and other supply chain costs.

Current wording

Operating earnings from Meals & Beverages increased 26%. The increase was primarily due to the benefit of the acquisition of Sovos Brands, higher gross profit and lower marketing and selling expenses. Gross profit margin increased due to supply chain productivity improvements, favorable volume/mix and benefits from cost savings initiatives, partially offset by higher cost inflation and other supply chain costs, unfavorable net price realization and the dilutive impact of the acquisition.

Previous wording

Operating earnings from Meals & Beverages decreased 1%. The decrease was primarily due to lower gross profit, partially offset by lower marketing and selling expenses. Gross profit margin decreased due to higher cost inflation and other supply chain costs, partially offset by supply chain productivity improvements, benefits from cost savings initiatives, favorable net price realization and favorable volume/mix.

Current wording

Operating earnings from Snacks decreased 7%. The decrease was primarily due to lower gross profit. Gross profit margin decreased due to higher cost inflation and other supply chain costs as well as unfavorable volume/mix, partially offset by supply chain productivity improvements and the benefits from cost savings initiatives.

Previous wording

•$14 million of accelerated amortization expense;

Current wording

•$6 million of accelerated amortization expense; and

Previous wording

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

Current wording

•$13 million of unrealized mark-to-market gains on outstanding undesignated commodity hedges.

Previous wording

•$9 million of pension actuarial losses; and

Current wording

•$17 million of pension actuarial losses; and

Previous wording

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

Current wording

•$9 million of unrealized mark-to-market losses on outstanding undesignated commodity hedges.

Previous wording

Interest expense of $46 million in 2024 increased from $45 million in 2023 primarily due to higher average interest rates on the debt portfolio.

Current wording

Interest expense of $70 million in 2024 increased from $47 million in 2023 primarily due to higher levels of debt to fund the acquisition.

Previous wording

The effective tax rate was 25.1% in 2024 and 23.9% in 2023. Theincrease in the effective tax rate was primarily due to nondeductible costs associated with the pending acquisition of Sovos Brands.

Current wording

The effective tax rate was 26.9% in 2024 and 23.1% in 2023. Theincrease in the effective tax rate was primarily due to nondeductible costs associated with the acquisition.

Previous wording

In Meals & Beverages, sales decreased 3% as declines in U.S. retail products, including U.S. soup, beverages and Pace Mexican sauces, were partially offset by gains in Canada and foodservice. Volume/mix declines were partially offset by favorable net price realization. On a two-year CAGR basis, sales increased 5%. Following a 9% increase in the prior year, sales of U.S. soup decreased 4% primarily due to decreases in ready-to-serve soups and condensed soups, partially offset by an increase in broth.

Current wording

In Meals & Beverages, sales increased 2% reflecting a 4-point benefit from the acquisition of Sovos Brands. Volume/mix declines were partially offset by favorable net price realization. Excluding the benefit from the acquisition, sales decreased primarily due to declines in U.S. retail products, including U.S. soup and beverages, partially offset by gains in foodservice and Canada. 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. On a two-year CAGR basis, sales increased 5%, including the impact of the acquisition.

Previous wording

In Snacks, sales were flat. Excluding the impact from the divestiture of the Emerald nuts business, sales increased driven by sales of our power brands, which increased 4%, partially offset by declines in sales of third-party partner brands. Sales increased due to increases in cookies and crackers, primarily Goldfish crackers and Lance sandwich crackers. Within salty snacks, increases primarily in Kettle Brand potato chips and Snack Factory pretzel crisps more than offset declines in Pop Secret popcorn and Snyder's of Hanover pretzels. Sales benefited from favorablenet price realization, partially offset by volume/mix declines. On a two-year CAGR basis, sales increased 7%.

Current wording

In Snacks, sales decreased 1%. Excluding the impact from the divestiture of the Emerald nuts business, sales were comparable as sales of our power brands, which increased 4%, were offset by declines in sales of third-party partner brands, fresh bakery and contract manufacturing. Sales of power brands were driven by increases in cookies and crackers, primarily Goldfish crackers and Lance sandwich crackers, and in salty snacks. Sales benefited from favorablenet price realization, partially offset by volume/mix declines. On a two-year CAGR basis, sales increased 6%.

Previous wording

Gross profit, defined as Net sales less Cost of products sold, decreased by $29 million in 2024 from 2023. As a percent of sales, gross profit was 31.4% in 2024 and 31.5% in 2023.

Current wording

Gross profit, defined as Net sales less Cost of products sold, increased by $35 million in 2024 from 2023. As a percent of sales, gross profit was 31.3% in 2024 and 31.0% in 2023.

Previous wording

The 10 basis-point decrease in gross profit margin was due to the following factors:

Current wording

The 30 basis-point increase in gross profit margin was due to the following factors:

Previous wording

(1)Includes an estimated positive margin impact of 20 basis points from the benefit of cost savings initiatives, which was more than offset by cost inflation and other factors, including a 20 basis-point negative impact from the change in unrealized mark-to-market adjustments on outstanding undesignated commodity hedges and a 10 basis-point negative impact from a cybersecurity incident.

Current wording

(1)Includes an estimated positive margin impact of 30 basis points from the benefit of cost savings initiatives and a 20 basis-point positive impact from the change in unrealized mark-to-market adjustments on outstanding undesignated commodity hedges, which were more than offset by cost inflation and other factors, including a 10 basis-point negative impact from a cybersecurity incident.

Previous wording

(2)Includes the impact of operating leverage.

Current wording

(3)Includes the impact of operating leverage.

Previous wording

Marketing and selling expenses as a percent of sales were 8.8% in 2024 and 8.3% in 2023. Marketing and selling expenses increased 5% in 2024 from 2023. The increase was primarily due to higher selling expenses (approximately 3 points), higher other marketing expenses (approximately 1 point) and higher costs related to cost savings initiatives (approximately 1 point).

Current wording

Marketing and selling expenses as a percent of sales were 8.8% in 2024 and 8.4% in 2023. Marketing and selling expenses increased 5% in 2024 from 2023. The increase was primarily due to the impact of the acquisition (approximately 2 points), higher selling expenses (approximately 2 points), higher costs related to cost savings and optimization initiatives (approximately 1 point) and higher other marketing expenses (approximately 1 point), partially offset by lower advertising and consumer promotion expense (approximately 1 point) driven by Meals & Beverages, and lower incentive compensation (approximately 1 point).

Previous wording

Administrative expenses as a percent of sales were 7.0% in 2024 compared to 6.3% in 2023. Administrative expenses increased 8% in 2024 from 2023. The increase was primarily due to higher costs related to cost savings initiatives (approximately 8 points) and higher general administrative costs and inflation (approximately 3 points), partially offset by increased benefits from cost savings initiatives (approximately 4 points).

Current wording

Administrative expenses as a percent of sales were 7.6% in 2024 compared to 6.7% in 2023. Administrative expenses increased 14% in 2024 from 2023. The increase was primarily due to costs associated with the acquisition (approximately 8 points), higher costs related to cost savings initiatives (approximately 5 points), higher general administrative costs and inflation (approximately 5 points), and the impact of the acquisition (approximately 1 point), partially offset by increased benefits from cost savings initiatives (approximately 5 points).

Previous wording

Other expenses were $26 million in 2024 compared to other expenses / (income) of $0 million in 2023. Other expenses in 2024 included costs associated with the pending acquisition of $10 million and accelerated amortization expense of $7 million. Other expenses / (income) in 2023 included pension actuarial gains of $6 million. Excluding these amounts, the remaining change was primarily due to higher net periodic pension and postretirement benefit income in the prior year.

Current wording

Other expenses were $80 million in 2024 compared to other expenses of $41 million in 2023. Other expenses in 2024 included costs associated with the acquisition of $35 million and accelerated amortization expense of $20 million. Other expenses in 2023 included pension actuarial losses of $26 million. Excluding these amounts, the remaining change was primarily due to higher net periodic pension and postretirement benefit income in the prior year.

Previous wording

Operating earnings from Meals & Beverages decreased 8%. The decrease was primarily due to lower gross profit, partially offset by lower marketing and selling expenses. Gross profit margin decreased due to higher cost inflation and other supply chain costs, partially offset by supply chain productivity improvements and favorable net price realization.

Current wording

Operating earnings from Meals & Beverages were comparable with prior year due to lower gross profit offset by the benefit of the acquisition of Sovos Brands and lower marketing and selling expenses. Gross profit margin decreased due to higher cost inflation and other supply chain costs and the dilutive impact of the acquisition, partially offset by supply chain productivity improvements, favorable net price realization, favorable volume/mix and the benefits of cost savings initiatives.

Previous wording

Operating earnings from Snacks increased 7%. The increase was primarily due to higher gross profit, partially offset by higher marketing and selling expenses. Gross profit margin increased due tofavorable net price realization, supply chain productivity improvements, benefits from cost savings initiatives and favorable volume/mix more than offsetting higher cost inflation and other supply chain costs.

Current wording

Operating earnings from Snacks increased 1%. The increase was primarily due to higher gross profit, partially offset by higher marketing and selling expenses. Gross profit margin increased due to supply chain productivity improvements, favorable net price realization, benefits from cost savings initiatives and favorable volume/mix more than offsetting higher cost inflation and other supply chain costs.

Previous wording

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

Current wording

•costs of $68 million related to costs savings initiatives;