• Campbell Reaffirms Fiscal 2019 Guidance
• Net Sales Increased 25 Percent Reflecting Impact of Recently Completed
  Acquisitions; Organic Sales Decreased 3 Percent
• Earnings Per Share (EPS) of $0.64; Adjusted EPS of $0.79

CAMDEN, N.J.–(BUSINESS WIRE)–Nov. 20, 2018–
Campbell Soup Company (NYSE:CPB) today reported its first-quarter
results for fiscal 2019.

Note: A detailed reconciliation of the reported (GAAP) financial
information to the adjusted financial information is included at the end
of this news release.

CEO Comments

Keith McLoughlin, Campbell’s interim President and CEO stated, “We are
on track with our plans and are encouraged by the progress we are making
against the significant actions we announced on August 30^th
to simplify, focus and optimize our portfolio. Through considerable
cross-functional efforts in October, we were able to overcome the supply
chain challenges that we faced early in the quarter and deliver results
that enabled us to reaffirm our fiscal 2019 guidance.

“As we focus Campbell on our Snacks and Meals and Beverages businesses
in our core North American market, we are driving increased operating
discipline across the company. During the quarter we started to see
improved trends in U.S. soup, a return to sales growth in our V8
business, and continued solid performance in Campbell Snacks.
Additionally, we are delivering targeted cost savings and synergies, as
well as driving higher cash flow through improvements in working
capital. In line with the key priorities of our strategic review, we
also launched the processes to divest Campbell International and
Campbell Fresh, both of which have garnered strong interest from a range
of potential buyers.

“We continue to expect fiscal 2019 to be a transition year as we fully
operationalize our plans to turn around Campbell. We remain focused on
executing our strategic initiatives and confident that our go-forward
plan will drive long-term organic growth and profitability that
maximizes value for all shareholders.”

Items Impacting Comparability

The table below presents a summary of items impacting comparability in
each period. A detailed reconciliation of the reported (GAAP) financial
information to the adjusted information is included at the end of this
news release.

First-Quarter Results

Sales increased 25 percent to $2.7 billion reflecting a 29-point benefit
from the recent acquisitions of Snyder’s-Lance and Pacific Foods.
Organic sales declined 3 percent driven primarily by higher promotional
spending, including a 1-point negative impact from the adoption of new
accounting guidance for revenue recognition, as well as lower volume. In
the first quarter of fiscal 2019, Campbell adopted new accounting
guidance for revenue recognition which impacts the timing of expense
related to promotional programs. The impact from the adoption of this
guidance is not expected to be material on an annual basis.

Gross margin decreased from 36.2 percent to 30.6 percent. Excluding
items impacting comparability, adjusted gross margin decreased 4.9
percentage points to 31.6 percent, including a 190-basis-point negative
impact from the recent acquisitions. The remaining decline in adjusted
gross margin was driven primarily by cost inflation and higher supply
chain costs, as well as higher promotional spending including the impact
from the change in revenue recognition, offset partly by productivity
improvements and the benefits from cost savings initiatives. The
increase in supply chain costs was driven primarily by higher than
expected distribution costs associated with the start-up of a new
distribution facility in Findlay, Ohio, operated by a third-party
logistics service provider.

Marketing and selling expenses increased 13 percent to $248 million
reflecting a 28-point increase from the inclusion of the recent
acquisitions. Excluding items impacting comparability in the current
year and the impact of the recent acquisitions, adjusted marketing and
selling expenses decreased driven primarily by lower advertising and
consumer promotion expenses within Meals and Beverages. Administrative
expenses increased 18 percent to $176 million reflecting a 15-point
increase from the inclusion of the recent acquisitions. Excluding items
impacting comparability and the impact of the recent acquisitions,
adjusted administrative expenses increased slightly, reflecting costs
associated with the proxy contest in the current year.

Other expenses were $4 million in the current quarter as compared to
other income of $29 million in the prior-year quarter. Excluding items
impacting comparability in the prior year, other expenses increased
driven primarily by amortization of intangible assets associated with
recent acquisitions.

As reported EBIT decreased 15 percent to $350 million. Excluding items
impacting comparability, adjusted EBIT of $410 million decreased 2
percent inclusive of a negative 4-point impact from the change in
revenue recognition. The remaining change in adjusted EBIT reflects
incremental earnings from recent acquisitions, offset partly by declines
in the base business.

Net interest expense was $93 million compared to $30 million in the
prior year reflecting higher levels of debt associated with the recent
acquisitions and higher average interest rates on the debt portfolio.
The tax rate was 24.5 percent as compared to 28.0 percent in the prior
year. Excluding items impacting comparability, the adjusted tax rate
decreased 3.9 percentage points to 24.3 percent due primarily to the
lower U.S. federal tax rate, offset partly by the favorable settlement
of certain U.S. state tax matters in the prior-year quarter.

The company reported EPS of $0.64. Excluding items impacting
comparability, adjusted EPS decreased 14 percent to $0.79 per share
reflecting adjusted EBIT declines on the base business, inclusive of a
negative $0.04 per share impact from the change in revenue recognition,
offset partly by a lower adjusted tax rate. In aggregate, the
acquisitions of Snyder’s-Lance and Pacific Foods were neutral to
adjusted EPS in the quarter.

Cash flow from operations increased to $231 million from $188 million a
year ago primarily due to lower working capital requirements and lower
payments on hedging activities, offset partly by lower cash earnings. In
line with the company’s commitment to returning value to shareholders,
during the first quarter of fiscal 2019, the company paid $107 million
of cash dividends, or the equivalent of $0.35 per share, to common stock
shareholders.

Campbell Reaffirms Fiscal 2019 Guidance

Following first-quarter results, Campbell continues to expect full-year
performance to be consistent with guidance provided on Aug. 30, 2018. As
previously announced, given the strategy to pursue divestitures, the
company has provided an outlook for fiscal 2019 based on the company’s
existing portfolio of businesses, as well as on a pro forma basis
assuming the planned divestitures are completed as of the beginning of
fiscal 2019. This fiscal 2019 guidance and pro forma, as shown in the
table below, include the impact of the Snyder’s-Lance and Pacific Foods
acquisitions and assumes the impact from currency translation will be
nominal.

Cost Savings Program

In the first quarter of fiscal 2019, Campbell achieved $45 million in
savings under its multi-year cost savings program, inclusive of
Snyder’s-Lance synergies, bringing total program-to-date savings to $500
million. As previously announced, the company expects to deliver
cumulative annualized savings of $945 million by the end of fiscal 2022.

Segment Operating Review

An analysis of net sales and operating earnings by reportable segment
follows:

Meals and Beverages

Sales of $1.2 billion were comparable to the prior year. Organic sales
decreased 5 percent driven primarily by declines in U.S. soup, Prego
pasta sauces and Canada, offset partly by gains in beverages. Excluding
the benefit from the acquisition of Pacific Foods and the impact from
the change in revenue recognition, sales of U.S. soup decreased 6
percent driven by declines in ready-to-serve soups and condensed soups,
offset partly by gains in broth. The sales decline in U.S. soup was
driven primarily by continued competitive pressure across the market and
increased promotional spending.

Segment operating earnings decreased 11 percent to $294 million. The
decrease was driven primarily by a lower gross margin percentage offset
partly by lower advertising expenses. The lower gross margin performance
reflects the impact of higher levels of cost inflation, increased
promotional spending including the change in revenue recognition, and
higher distribution costs associated with the start-up of a new
distribution facility in Findlay, Ohio, operated by a third-party
logistics service provider.

Global Biscuits and Snacks

Sales in the quarter increased 77 percent to $1.2 billion. Excluding the
benefit from the acquisition of Snyder’s-Lance and the negative impact
of currency translation, organic sales decreased 1 percent driven
primarily by declines in Kelsen cookies in the U.S. Sales of Goldfish
crackers increased slightly. As expected, sales of Goldfish
crackers were negatively impacted by the voluntary product recall in
July 2018.

Segment operating earnings increased 32 percent to $154 million,
reflecting a 45-point benefit from the acquisition of Snyder’s-Lance.
Excluding the impact of the acquisition, segment operating earnings
declined due primarily to a lower gross margin percentage reflecting
higher levels of cost inflation.

Campbell Fresh

Sales in the quarter decreased 1 percent to $232 million driven by
declines in refrigerated soup, as well as declines in Garden Fresh
Gourmet and Bolthouse Farms refrigerated beverages, offset partly
by gains in carrots.

Segment operating loss was $3 million compared to a loss of $6 million
in the prior year. The $3 million year-over-year improvement reflects
improved operational efficiency on beverages offset partly by the
decline in refrigerated soup volume.

Corporate

Corporate in the first quarter of fiscal 2019 included charges related
to cost savings initiatives of $27 million and a non-cash impairment
charge of $14 million related to U.S. refrigerated soup plant assets.
Corporate in the first quarter of fiscal 2018 included pension and
postretirement mark-to-market gains of $14 million and charges related
to cost savings initiatives of $17 million. The remaining increase in
expenses primarily reflects lower pension and postretirement benefit
income as well as costs associated with the proxy contest in the current
year.

Conference Call and Webcast

Campbell will host a conference call to discuss these results today at
10:00 a.m. Eastern Time. To join, dial +1 (409) 350-3941. The access
code is 9379198. Access to a live webcast of the call with accompanying
slides, as well as a replay of the call, will be available at investor.campbellsoupcompany.com.
A recording of the call will also be available until midnight on Dec. 4,
2018, at +1 (404) 537-3406. The access code for the replay is 9379198.

Reportable Segments

Campbell Soup Company earnings results are reported as follows:

Meals and Beverages includes the retail and food service
businesses in the U.S. and Canada. The segment includes the following
products: Campbell’s condensed and ready-to-serve soups; Swanson
broth and stocks; Pacific broth, soups, non-dairy beverages and
other simple meals; Prego pasta sauces; Pace Mexican
sauces; Campbell’s gravies, pasta, beans and dinner sauces; Swanson
canned poultry; Plum food and snacks; V8 juices and
beverages; and, Campbell’s tomato juice. Beginning in fiscal
2019, the segment also includes the simple meals and shelf-stable
beverages business in Latin America. Prior to fiscal 2019, the business
in Latin America was managed as part of the Global Biscuits and Snacks
segment. Prior-period segment results have been adjusted retrospectively
to reflect this change.

Global Biscuits and Snacks includes the U.S. snacks portfolio
consisting of Pepperidge Farm cookies, crackers, bakery and frozen
products in U.S. retail, and Snyder’s-Lance pretzels, sandwich crackers,
potato chips, tortilla chips and other snacking products. The segment
also includes Arnott’s biscuits in Australia and Asia Pacific, Kelsen
cookies globally, and the simple meals and shelf-stable beverages
business in Australia and Asia Pacific.

Campbell Fresh includes Bolthouse Farms fresh carrots, carrot
ingredients, refrigerated beverages and refrigerated salad dressings;
Garden Fresh Gourmet salsa, hummus, dips and tortilla chips; and, the
U.S. refrigerated soup business.

About Campbell Soup Company

Campbell (NYSE:CPB) is driven and inspired by our Purpose, “Real food
that matters for life’s moments.” For generations, people have trusted
Campbell to provide authentic, flavorful and affordable snacks, soups
and simple meals, and beverages. 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 and Poor’s
500 and the Dow Jones Sustainability Indexes. For more information,
visit www.campbellsoupcompany.com
or follow company news on Twitter via @CampbellSoupCo.
To learn more about how we make our food and the choices behind the
ingredients we use, visit www.whatsinmyfood.com.

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 any statements made regarding
sales, EBIT and EPS guidance, 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 execute
on and realize the expected benefits from the actions it intends to take
as a result of its recent strategy and portfolio review, (2) the ability
to differentiate its products and protect its category leading
positions, especially in soup; (3) the ability to complete and to
realize the projected benefits of planned divestitures and other
business portfolio changes; (4) the ability to realize the projected
benefits, including cost synergies, from the recent acquisitions of
Snyder’s-Lance and Pacific Foods; (5) the ability to realize projected
cost savings and benefits from its efficiency and/or restructuring
initiatives; (6) the company’s indebtedness and ability to pay such
indebtedness; (7) disruptions to the company’s supply chain, including
fluctuations in the supply of and inflation in energy and raw and
packaging materials cost; (8) the company’s ability to manage changes to
its organizational structure and/or business processes, including
selling, distribution, manufacturing and information management systems
or processes; (9) the impact of strong competitive responses to the
company’s efforts to leverage its brand power with product innovation,
promotional programs and new advertising; (10) the risks associated with
trade and consumer acceptance of product improvements, shelving
initiatives, new products and pricing and promotional strategies; (11)
changes in consumer demand for the company’s products and favorable
perception of the company’s brands; (12) changing inventory management
practices by certain of the company’s key customers; (13) a changing
customer landscape, with value and e-commerce retailers expanding their
market presence, while certain of the company’s key customers maintain
significance to the company’s business; (14) product quality and safety
issues, including recalls and product liabilities; (15) the costs,
disruption and diversion of management’s attention associated with
campaigns commenced by activist investors; (16) the uncertainties of
litigation and regulatory actions against the company; (17) the possible
disruption to the independent contractor distribution models used by
certain of the company’s businesses, including as a result of litigation
or regulatory actions affecting their independent contractor
classification; (18) the impact of non-U.S. operations, including trade
restrictions, public corruption and compliance with foreign laws and
regulations; (19) impairment to goodwill or other intangible assets;
(20) the company’s ability to protect its intellectual property rights;
(21) increased liabilities and costs related to the company’s defined
benefit pension plans; (22) a material failure in or breach of the
company’s information technology systems; (23) the company’s ability to
attract and retain key talent; (24) changes in currency exchange rates,
tax rates, interest rates, debt and equity markets, inflation rates,
economic conditions, law, regulation and other external factors; (25)
unforeseen business disruptions in one or more of the company’s markets
due to political instability, civil disobedience, terrorism, armed
hostilities, extreme weather conditions, natural disasters or other
calamities; and (26) 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.

Beginning in fiscal 2019, the business in Latin America is managed as
part of the Meals and Beverages segment. In fiscal 2018, the business in
Latin America was managed as part of the Global Biscuits and Snacks
segment. Segment results have been adjusted retrospectively to reflect
this change.

Reconciliation of GAAP to Non-GAAP Financial Measures
First
Quarter Ended October 28, 2018

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. Management believes that also presenting
certain non-GAAP financial measures provides additional information to
facilitate comparison of the company’s historical operating results and
trends in its underlying operating results, and provides transparency on
how the company evaluates its business. Management uses these non-GAAP
financial measures in making financial, operating and planning decisions
and in evaluating the company’s performance.

Organic Net Sales

Organic net sales are net sales excluding the impact of currency and
acquisitions. Management believes that excluding these items, which are
not part of the ongoing business, improves the comparability of
year-to-year results. A reconciliation of net sales as reported to
organic net sales follows.

Items Impacting Earnings

The company believes that financial information excluding certain items
that are not considered to reflect the ongoing operating results, such
as those listed below, improves the comparability of year-to-year
results. Consequently, the company believes that investors may be able
to better understand its results excluding these items.

The following items impacted earnings:

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

View source version on businesswire.com: https://www.businesswire.com/news/home/20181120005086/en/

Source: Campbell Soup Company

INVESTOR CONTACT:
Ken Gosnell
(856)
342-6081
[email protected]

MEDIA CONTACT:
Thomas Hushen
(856)
342-5227
[email protected]

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