CAMDEN, N.J.–(BUSINESS WIRE)–Aug. 31, 2017–
Campbell Soup Company (NYSE:CPB) today reported its
fourth-quarter and full-year results for fiscal 2017.
Three Months Ended
Twelve Months Ended
n/m – not meaningful
Note: A detailed reconciliation of the reported (GAAP) financial
information to the adjusted financial information is included at the end
of this news release.
Denise Morrison, Campbell’s President and Chief Executive Officer, said,
“The operating environment for the packaged foods industry remains
challenging due to shifting demographics, changing consumer preferences
for food, the adoption of new shopping behaviors and the dynamic
retailer landscape. In these times, sales growth remains a challenge.
Despite multiple headwinds, we finished the year within our guidance and
delivered another year of growth in adjusted EBIT and adjusted EPS.
“In the fourth quarter, Global Biscuits and Snacks was soft on the top
line but generated a solid double-digit earnings increase versus the
year-ago quarter. Americas Simple Meals and Beverages continued to
deliver against its portfolio role, with sales performance in line with
the categories in which we compete and margin expansion. While Campbell
Fresh sales increased slightly and the bottom line was disappointing, we
expect to return to profitable growth going forward.
“In fiscal 2017, we have made progress in several key areas, including
increasing our successful multi-year cost savings initiative to $450
million by the end of fiscal 2020. The pending acquisition of Pacific
Foods will add a purpose-driven, real food brand with a solid track
record of growth to our portfolio. Additionally, our new Campbell Fresh
leadership team has taken steps to enhance our quality processes and
address capacity constraints toward our objective of returning the
division to growth.”
Morrison concluded, “Looking ahead to fiscal 2018, we expect the
operating environment to remain difficult. We will continue to position
Campbell for long-term growth by managing costs aggressively and
re-investing a portion of those savings back in the business with a
focus on our strategic imperatives of real food, digital and e-commerce,
health and well-being, and snacking.”
Fiscal 2018 Guidance
Campbell expects sales to change by -2 to 0 percent, adjusted earnings
before interest and taxes (EBIT) to change by -1 to 1 percent, and
adjusted EPS to change by 0 to 2 percent, or $3.04 to $3.11 per share.
This guidance assumes the impact from currency translation will be
nominal. A non-GAAP reconciliation is not provided for 2018 guidance
since certain items are not estimable, such as pension and
postretirement mark-to-market adjustments, and these items are not
considered to be part of the company’s ongoing business results.
Items Impacting Comparability in the Quarter
Items impacting comparability in the quarter are as follows:
A detailed reconciliation of the reported (GAAP) financial information
to the adjusted information is included at the end of this news release.
Sales decreased 1 percent to $1.664 billion driven by a 1 percent
decline in organic sales, reflecting lower volume.
Gross margin increased from 32.4 percent to 43.0 percent. Excluding
items impacting comparability, adjusted gross margin increased 0.8
percentage points from 36.1 percent to 36.9 percent. The increase in
adjusted gross margin was primarily driven by productivity improvements
and the benefits from cost savings initiatives, partly offset by cost
inflation and higher supply chain costs.
Marketing and selling expenses decreased 34 percent to $143 million.
Excluding items impacting comparability, adjusted marketing and selling
expenses decreased 12 percent primarily due to lower advertising and
consumer promotion expenses lapping marketing levels above historical
levels in the prior-year quarter and the benefits from cost savings
initiatives. Administrative expenses decreased 54 percent to $86
million. Excluding items impacting comparability, adjusted
administrative expenses decreased 5 percent primarily due to the
benefits from cost savings initiatives.
The company reported EBIT of $440 million as compared to a loss of $37
million in the prior-year quarter. Excluding items impacting
comparability, adjusted EBIT increased 11 percent to $282 million,
reflecting lower adjusted marketing and selling expenses, as well as a
higher adjusted gross margin percentage, partly offset by lower sales.
Net interest expense decreased 18 percent to $23 million. Excluding
items impacting comparability in the current year, adjusted net interest
expense increased $1 million to $29 million, reflecting higher average
interest rates on the debt portfolio, partly offset by lower average
levels of debt. The tax rate was 23.7 percent as compared to 24.6
percent in the prior year. Excluding items impacting comparability, the
adjusted tax rate increased 0.8 percentage points to 37.2 percent.
The company reported EPS of $1.04 in the quarter. Excluding items
impacting comparability in both periods, adjusted EPS increased 13
percent to $0.52 per share, compared with $0.46 per share in the
Sales decreased 1 percent to $7.890 billion driven by a 1 percent
decline in organic sales, reflecting lower volume and higher promotional
EBIT increased from $960 million to $1.400 billion. Excluding items
impacting comparability, adjusted EBIT increased 2 percent to $1.492
billion, reflecting a higher adjusted gross margin percentage and lower
adjusted administrative expenses, due in part to lower incentive
compensation costs, partly offset by lower sales volume.
Net interest expense decreased 4 percent to $107 million. Excluding
items impacting comparability in the current year, adjusted net interest
expense increased $2 million to $113 million, reflecting higher average
interest rates on the debt portfolio, partly offset by lower average
levels of debt. The tax rate decreased 2.3 percentage points to 31.4
percent. Excluding items impacting comparability, the adjusted tax rate
decreased 0.2 percentage points to 32.4 percent.
The company reported EPS of $2.89. Excluding items impacting
comparability in both years, adjusted EPS increased 3 percent to $3.04
per share, compared with $2.94 per share a year ago.
Cash flow from operations was $1.291 billion as compared to $1.491
billion a year ago. The year-over-year decline was primarily due to
lapping significant working capital reductions in the prior year, as
well as lower cash earnings and lower receipts from hedging activities
in the current year.
Segment Operating Review
An analysis of net sales and operating earnings by reportable segment
Three Months Ended July 30, 2017
AmericasSimple Mealsand Beverages
Global Biscuitsand Snacks
* Numbers do not add due to rounding.
Note: A detailed reconciliation of the reported (GAAP) net sales to
organic net sales is included at the end of this news release.
Twelve Months Ended July 30, 2017
Americas Simple Meals and Beverages
Sales in the quarter decreased 3 percent to $815 million driven
primarily by declines in soup and V8 beverages. Sales of U.S.
soup decreased 4 percent driven by declines in condensed soups, broth
and ready-to-serve soups, reflecting a reduction in retailer inventory
levels while consumer takeaway in measured channels was comparable to
the prior-year quarter. For the fiscal year, sales of U.S. soup
decreased 1 percent.
Segment operating earnings in the quarter increased 4 percent to $198
million. The increase was primarily driven by lower advertising and
consumer promotion expenses and lower administrative expenses, partly
offset by lower sales volume and a lower gross margin percentage.
Global Biscuits and Snacks
Sales in the quarter were comparable to the prior year at $624 million,
as gains in Pepperidge Farm snacks, reflecting continued growth in Goldfish
crackers, as well as gains in Arnott’s biscuits in Australia,
were offset by declines in Indonesia.
Segment operating earnings increased 35 percent to $109 million. The
increase was primarily driven by a higher gross margin percentage, lower
advertising and consumer promotion expenses and lower administrative
Sales in the quarter increased 1 percent to $225 million driven
primarily by higher sales of Garden Fresh Gourmet, carrots and carrot
ingredients. Sales of Bolthouse Farms refrigerated beverages
declined slightly, reflecting supply constraints.
Segment operating earnings in the quarter decreased from $8 million to a
loss of $8 million, reflecting higher administrative expenses, higher
carrot costs and the continued cost impact of enhanced quality processes
and related beverage capacity constraints.
Segment operating earnings for the year decreased from $60 million to a
loss of $9 million, reflecting lower sales volume and unfavorable mix,
higher carrot costs, and the full year cost impact of enhanced quality
processes and related beverage capacity constraints, as well as higher
Corporate in the fourth quarter of fiscal 2017 included pension and
postretirement mark-to-market gains of $198 million and charges related
to cost savings initiatives of $22 million. Corporate in the fourth
quarter of fiscal 2016 included a non-cash impairment charge of $141
million, pension and postretirement mark-to-market losses of $138
million and charges related to cost savings initiatives of $12 million.
The remaining decrease in expenses primarily reflects gains on open
Campbell will host a conference call to discuss these results today at
8:30 a.m. Eastern Daylight Time. To join in the U.S., dial (833)
659-8619. To join outside of the U.S., dial +1 (703) 639-1316. The
access code is 6692641. Access to a live webcast of the call with
accompanying slides, as well as a replay of the call, will be available
A recording of the call will also be available until midnight on Sept.
14, 2017, at +1 (404) 537-3406. The access code for the replay is
About Campbell Soup Company
Campbell (NYSE:CPB) is driven and inspired by our Purpose, “Real food
that matters for life’s moments.” We make a range of high-quality soups
and simple meals, beverages, snacks and packaged fresh foods. 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 our
iconic Campbell’s brand, our portfolio includes Pepperidge
Farm, Bolthouse Farms, Arnott’s, V8, Swanson, Pace, Prego, Plum, Royal
Dansk, Kjeldsens and Garden Fresh Gourmet. 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.
To learn more about how we make our food and the choices behind the
ingredients we use, visit www.whatsinmyfood.com.
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 guidance for fiscal 2018, 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 changes to its organizational structure and/or business
processes; (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 and favorable perception of the company’s brands;
(5) the impact of product quality and safety issues, including recalls
and product liabilities; (6) the risks associated with trade and
consumer acceptance of the company’s initiatives, including its trade
and promotional programs; (7) the impact of a changing customer
landscape, with value and e-commerce retailers expanding their market
presence, while certain of the company’s key customers continue to
increase their significance to the company’s business; (8) the impact of
changing inventory management practices by certain of the company’s key
customers; (9) the impact of disruptions to the company’s supply chain,
including fluctuations in the supply of and inflation in energy and raw
and packaging materials cost; (10) the impact of non-U.S. operations,
including trade restrictions, public corruption and compliance with
foreign laws and regulations; (11) the ability to complete and to
realize the projected benefits of acquisitions, divestitures and other
business portfolio changes; (12) the uncertainties of litigation and
regulatory actions against the company; (13) 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; (14) the
company’s ability to protect its intellectual property rights; (15) the
impact of an impairment to goodwill or other intangible assets; (16) the
impact of increased liabilities and costs related to the company’s
defined benefit pension plans; (17) the impact of a material failure in
or breach of the company’s information technology systems; (18) the
company’s ability to attract and retain key talent; (19) the impact of
changes in currency exchange rates, tax rates, interest rates, debt and
equity markets, inflation rates, economic conditions, law, regulation
and other external factors; (20) the impact of unforeseen business
disruptions in one or more of the company’s markets due to political
instability, civil disobedience, terrorism, armed hostilities, natural
disasters or other calamities; and (21) 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.
Payments related to tax withholding for stock-based compensation
The company adopted new accounting guidance for stock-based compensation
in the first quarter of 2017. Certain amounts in the prior year were
reclassified to conform to the current-year presentation.
Reconciliation of GAAP to Non-GAAP Financial MeasuresFiscal
Year Ended July 30, 2017
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.
Management believes that excluding this item, which is 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.
Net Sales, as Reported
Net Sales,as Reported
Items Impacting Earnings
The company believes that financial information excluding certain items
that are not considered to be part of the ongoing business, 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:
and otherrelated costs(2)
and otherrelated costs
View source version on businesswire.com: https://www.businesswire.com/news/home/20170831005297/en/
Source: Campbell Soup Company
Campbell Soup CompanyINVESTOR CONTACT:Ken
Gosnell, 856-342-6081[email protected]orMEDIA
CONTACT:Carla Burigatto, 856-342-3737[email protected]
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