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Campbell Lowers Full-Year Guidance for Fiscal 2015; Expects Results for Second Quarter to Be Weaker Than Planned

CAMDEN, N.J.–(BUSINESS WIRE)–Feb. 12, 2015–
Campbell Soup Company (NYSE: CPB) today announced that the
company is lowering its previous full-year sales and earnings guidance
for fiscal 2015, based on its expectation that results for the second
quarter and the remainder of the year will be weaker than anticipated,
including the negative impact of foreign currency translation.

For the full fiscal year, the company now expects that the
year-over-year change in net sales will be in the range of -1% to +1%
reflecting the negative impact of currency translation, which is
currently estimated at 2 percentage points. Excluding the impact of
currency translation, the company’s sales guidance is unchanged. The
company now expects that adjusted EBIT will decline by -7% to -5%, and
that adjusted EPS from continuing operations will be in the range of
$2.32 to $2.38, a decline of -5% to -3%. The changes in the full-year
guidance for EBIT and EPS are due primarily to the company’s gross
margin performance and to the negative impact of currency translation.
This guidance is based on an adjusted 52-week 2014 base. A detailed
reconciliation of the reported financial information to the adjusted
financial information is included at the end of this news release.

Campbell will report its results for the second fiscal quarter ending
Feb. 1, 2015, on Wed., Feb. 25. The company estimates that reported net
sales for the second quarter will decline by approximately 2% reflecting
the negative impact of currency translation. The company estimates that
second-quarter adjusted EBIT will decline by approximately 17%, due
primarily to lower gross margin performance and the negative impact of
currency translation. EPS from continuing operations for the quarter is
estimated at approximately $0.65 to $0.66 per share.

In connection with its release of second-quarter results, the company
will conduct a conference call on Wed., Feb. 25, beginning at 8:30 a.m.
Eastern Standard Time.

About Campbell Soup Company

Campbell (NYSE:CPB) is driven and inspired by our Purpose, “Real food
that matters for life’s moments.” The Company makes a range of products
from high-quality soups and simple meals to snacks and healthy
beverages. For generations, people have trusted Campbell to provide
authentic, flavorful and readily available foods and beverages that
connect them to each other, to warm memories, and to what’s important
today. Led by its iconic Campbell’s brand, the company’s
portfolio includes Pepperidge Farm, Goldfish, Bolthouse
Farms
, V8, Swanson, Prego, Pace, Plum
Organics
, Arnott’s, Tim Tam, Royal Dansk and Kjeldsens.
Founded in 1869, Campbell has a heritage of giving back and acting
as a good steward of the planet’s natural resources. The company is a
member of the Standard & Poor’s 500 and the Dow Jones Sustainability
Indexes. For more information, visit www.campbellsoupcompany.com
or follow company news on Twitter via @CampbellSoupCo.

Forward-Looking Statements

This release contains “forward-looking statements” that reflect the
company’s current expectations about the impact of its future plans and
performance on the company’s business or financial results. These
forward-looking statements, including the statements made regarding
sales, EBIT and EPS in fiscal 2015, rely on a number of assumptions and
estimates that could be inaccurate and which are subject to risks and
uncertainties. The factors that could cause the company’s actual results
to vary materially from those anticipated or expressed in any
forward-looking statement include (1) the company’s ability to manage
organizational change effectively; (2) the company’s ability to realize
projected cost savings and benefits from its efficiency programs; (3)
the impact of strong competitive responses to the company’s efforts to
leverage its brand power in the market; (4) the impact of changes in
consumer demand for the company’s products; (5) the risks associated
with trade and consumer acceptance of the company’s initiatives,
including its trade and promotional programs; (6) the practices,
including changes to inventory practices, and increased significance of
certain of the company’s key trade customers; (7) the impact of
fluctuations in the supply or costs of energy and raw and packaging
materials; (8) the impact of portfolio changes; (9) the uncertainties of
litigation; (10) the impact of changes in currency exchange rates, tax
rates, interest rates, debt and equity markets, inflation rates,
economic conditions and other external factors; (11) the impact of
unforeseen business disruptions in one or more of the company’s markets
due to political instability, civil disobedience, armed hostilities,
natural disasters or other calamities; and (12) other factors described
in the company’s most recent Form 10-K and subsequent Securities and
Exchange Commission filings. The company disclaims any obligation or
intent to update the forward-looking statements in order to reflect
events or circumstances after the date of this release.

Reconciliation of GAAP to Non-GAAP Financial Measures
Second
Quarter Ended January 26, 2014

Fiscal Year Ended August 3,
2014

Campbell Soup Company uses certain non-GAAP financial measures as
defined by the Securities and Exchange Commission in certain
communications. These non-GAAP financial measures are measures of
performance not defined by accounting principles generally accepted in
the United States and should be considered in addition to, not in lieu
of, GAAP reported measures.

Items Impacting Earnings

The company believes that financial information excluding certain
transactions that are not considered to be part of the ongoing business
improves the comparability of year-to-year results. Consequently, the
company believes that investors may be able to better understand its
earnings results excluding these transactions.

The following items impacted earnings:

(1)   In fiscal 2014, the company implemented initiatives to streamline
its salaried workforce in North America and its workforce in the
Asia Pacific region; restructure manufacturing and streamline
operations for its soup and broth business in China; improve supply
chain efficiency in Australia; and reduce overhead across the
organization. In the second quarter of fiscal 2014, the company
recorded pre-tax restructuring charges of $13 million ($5 million
after tax or $.02 per share in earnings from continuing operations
attributable to Campbell Soup Company). In fiscal 2014, the company
recorded pre-tax restructuring charges of $54 million ($33 million
after tax or $.10 per share in earnings from continuing operations
attributable to Campbell Soup Company).
 
In fiscal 2013, the company implemented initiatives to improve its
U.S. supply chain cost structure and increase asset utilization
across its U.S. thermal plant network; expand access to
manufacturing and distribution capabilities in Mexico; improve its
Pepperidge Farm bakery supply chain cost structure; and reduce
overhead in North America. In fiscal 2014, the company recorded
pre-tax restructuring charges of $1 million and
restructuring-related costs of $3 million in Cost of products sold
(aggregate impact of $3 million after tax or $.01 per share on
earnings from continuing operations).
 
(2) In fiscal 2014, the company recognized pension settlement charges
associated with a U.S. pension plan. The settlements resulted from
the level of lump sum distributions from the plan’s assets in 2014,
primarily due to the closure of the facility in Sacramento,
California. In fiscal 2014, the company recognized pre-tax pension
settlement charges in Cost of products sold of $22 million ($14
million after tax or $.04 per share in earnings from continuing
operations).
 
(3) On October 28, 2013, the company completed the sale of its simple
meals business in Europe. The results of the business were reported
as discontinued operations. In fiscal 2014, the company recorded a
loss of $9 million ($6 million after tax or $.02 per share) on
foreign exchange forward contracts used to hedge the proceeds from
the sale of the European simple meals business. The loss was
included in earnings from continuing operations. In addition, the
company recorded tax expense of $7 million ($.02 per share) in
earnings from continuing operations associated with the sale. In
fiscal 2014, the company recognized a pre-tax gain of $141 million
($72 million after tax or $.23 per share) in earnings from
discontinued operations.
 

The following tables reconcile financial information, presented in
accordance with GAAP, to financial information excluding certain
transactions:

 
Three Months Ended
(millions, except per share amounts) January 26, 2014
Earnings before interest and taxes, as reported $ 361
Add: Restructuring charges and related costs (1)   13  
Adjusted Earnings before interest and taxes $ 374  
Interest, net, as reported $ 29  
Adjusted Earnings before taxes $ 345  
Taxes on earnings, as reported $ 104
Add: Tax benefit from restructuring charges and related costs (1)   3  
Adjusted Taxes on earnings $ 107  
Adjusted effective income tax rate 31.0 %
Earnings from continuing operations, as reported $ 228
Deduct: Net loss from noncontrolling interests   (7 )
Earnings from continuing operations attributable to Campbell Soup
Company, as reported
$ 235
Add: Net adjustment from restructuring charges and related costs (1) 10
Deduct: Restructuring charges attributable to noncontrolling
interest (1)
  (5 )
Adjusted Earnings from continuing operations attributable to
Campbell Soup Company
$ 240  
Diluted earnings per share – continuing operations attributable
to Campbell Soup Company, as reported
$ .74
Add: Net adjustment from restructuring charges and related costs
attributable to Campbell Soup Company (1)
  .02  
Adjusted Diluted earnings per share – continuing operations
attributable to Campbell Soup Company
$ .76  
 
 
Year Ended
(millions, except per share amounts) August 3, 2014
Earnings before interest and taxes, as reported $ 1,192
Add: Restructuring charges and related costs (1) 58
Add: Pension settlement charges (2) 22
Add: Loss on foreign exchange forward contracts (3)   9  
Adjusted Earnings before interest and taxes $ 1,281  
Interest, net, as reported $ 119  
Adjusted Earnings before taxes $ 1,162  
Taxes on earnings, as reported $ 347
Add: Tax benefit from restructuring charges and related costs (1) 17
Add: Tax benefit from pension settlement charges (2) 8
Add: Tax benefit from loss on foreign exchange forward contracts (3) 3
Deduct: Tax expense associated with sale of European business (3)   (7 )
Adjusted Taxes on earnings $ 368  
Adjusted effective income tax rate 31.7 %
Earnings from continuing operations, as reported $ 726
Deduct: Net loss from noncontrolling interests   (11 )
Earnings from continuing operations attributable to Campbell Soup
Company, as reported
$ 737
Add: Net adjustment from restructuring charges and related costs (1) 41
Deduct: Restructuring charges attributable to noncontrolling
interest (1)
(5 )
Add: Net adjustment from pension settlement charges (2) 14
Add: Net adjustment from loss on foreign exchange forward contracts
(3)
6
Add: Tax expense associated with sale of European business (3)   7  
Adjusted Earnings from continuing operations attributable to
Campbell Soup Company
$ 800  
Earnings from discontinued operations, as reported $ 81
Deduct: Gain on sale of European business (3)   (72 )
Adjusted Earnings from discontinued operations $ 9  
Adjusted Net earnings attributable to Campbell Soup Company $ 809  
Diluted earnings per share – continuing operations attributable
to Campbell Soup Company, as reported
$ 2.33
Add: Net adjustment from restructuring charges and related costs
attributable to Campbell Soup Company (1)
.11
Add: Net adjustment from pension settlement charges (2) .04
Add: Net adjustment from loss on foreign exchange forward contracts
(3)
.02
Add: Tax expense associated with sale of European business (3)   .02  
Adjusted Diluted earnings per share – continuing operations
attributable to Campbell Soup Company*
$ 2.53  
Diluted earnings per share – discontinued operations, as reported $ .26
Deduct: Gain on sale of European business (3)   (.23 )
Adjusted Diluted earnings per share – discontinued operations $ .03  
Diluted net earnings per share attributable to Campbell Soup
Company, as reported
$ 2.59
Add: Net adjustment from restructuring charges and related costs
attributable to Campbell Soup Company (1)
.11
Add: Net adjustment from pension settlement charges (2) .04
Add: Net adjustment from loss on foreign exchange forward contracts
(3)
.02
Add: Tax expense associated with sale of European business (3) .02
Deduct: Gain on sale of European business (3)   (.23 )
Adjusted Diluted net earnings per share attributable to Campbell
Soup Company*
$ 2.56  
*The sum of the individual per share amounts may not add due to
rounding.
 

Adjusted Base for Fiscal 2015 Guidance

The company believes that financial information excluding certain
transactions that are not considered to be part of the ongoing business
improves the comparability of year-to-year results. The previous tables
reconcile financial information, presented in accordance with GAAP, to
financial information excluding certain items. Fiscal 2014 included 53
weeks. Consequently, the company believes that investors may be able to
better understand its fiscal 2015 performance excluding certain
transactions and the estimated impact of the 53rd week. In establishing
guidance for fiscal 2015, the adjusted fiscal 2014 results are revised
to exclude the estimated impact of the 53rd week below:

 
Year Ended
(millions, except per share amounts) August 3, 2014
Net sales, as reported $ 8,268
Deduct: Impact of 53rd week   (129 )
Adjusted Net sales base $ 8,139  
 
Adjusted Earnings before interest and taxes $ 1,281
Deduct: Impact of 53rd week   (37 )
Adjusted Earnings before interest and taxes base $ 1,244  
 
Adjusted Earnings from continuing operations attributable to
Campbell Soup Company
$ 800
Deduct: Impact of 53rd week   (25 )
Adjusted Earnings from continuing operations attributable to
Campbell Soup Company base
$ 775  
 
Adjusted Diluted earnings per share – continuing operations
attributable to Campbell Soup Company
$ 2.53
Deduct: Impact of 53rd week   (.08 )
Adjusted Diluted earnings per share – continuing operations
attributable to Campbell Soup Company base
$ 2.45  
 

Source: Campbell Soup Company

Campbell Soup Company
INVESTOR CONTACT:
Jennifer Driscoll,
856-342-6081
jennifer_driscoll@campbellsoup.com
or
MEDIA
CONTACT:
Carla Burigatto, 856-342-3737
carla_burigatto@campbellsoup.com