CAMDEN, N.J.–(BUSINESS WIRE)–May 19, 2017–
Campbell Soup Company (NYSE:CPB) today reported its third-quarter
results for fiscal 2017.
Three Months Ended
Nine Months Ended
Earnings Before Interest and Taxes
Diluted Earnings Per Share
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,
“While organic sales declined 1 percent in the quarter, the team
performed well in a difficult environment, gaining market share in many
of our categories and continuing to execute our cost savings program.
“This was a challenging quarter across the food industry as top-line
growth remained scarce, especially in center store categories. The
industry, including Campbell, experienced significant consumption
declines early in the calendar year. These industry trends coincided
with weak consumer spending, which was at its lowest growth rate since
2009. While we rebounded with sales growth in March and April, we were
unable to offset the earlier declines.
“In this context, Campbell delivered competitive performance. A bright
spot in the quarter was our Global Biscuits and Snacks division, which
delivered top-line and double-digit bottom-line growth. Looking ahead as
we finish the fiscal year, we expect Global Biscuits and Snacks to
maintain its positive momentum, and we will also be cycling the C-Fresh
protein drink recall from last year.
“We are adjusting our fiscal 2017 guidance, reflecting our performance
in the quarter, the difficult operating environment and our outlook for
the remainder of the year. We lowered our sales outlook by one
percentage point to a range of -1 to 0 percent. We raised our
expectations for adjusted EBIT and adjusted EPS, increasing the low end
of both ranges to 2 to 4 percent and 3 to 5 percent, respectively.
Despite the challenges on the top line, we expect that we will be able
to offset the impact of lower sales with our ongoing cost-savings
efforts, which are ahead of our expectations for the fiscal year.”
Items Impacting Comparability
The company reported earnings of $0.58 per share in the quarter. The
current-quarter results reflect pre-tax charges related to cost savings
initiatives of $7 million, or $0.01 per share. The prior-year quarter
included a pre-tax charge related to a pension benefit mark-to-market
adjustment of $54 million, or $0.11 per share, and pre-tax charges
related to cost savings initiatives of $15 million, or $0.03 per share.
The prior-year quarter also included a gain from the settlement of a
claim related to the Kelsen acquisition of $25 million, or $0.08 per
share. Excluding items impacting comparability in both periods, adjusted
EPS decreased 9 percent to $0.59 per share, compared with $0.65 per
share in the year-ago quarter. 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 $1.853 billion driven by a 1 percent
decline in organic sales, reflecting higher promotional spending, while
volumes were comparable to the prior year. Organic sales declines in
Americas Simple Meals and Beverages and Campbell Fresh were partly
offset by gains in Global Biscuits and Snacks.
Gross margin increased from 35.3 percent to 36.6 percent. Excluding
items impacting comparability in the prior year, adjusted gross margin
decreased 0.4 percentage points from 37.0 percent to 36.6 percent. The
decrease in adjusted gross margin was primarily driven by higher supply
chain costs and inflation, including the unfavorable impact of lapping
gains on open commodity contracts in the prior-year quarter, as well as
higher promotional spending, partly offset by productivity improvements
and the benefits from cost savings initiatives.
Marketing and selling expenses decreased 8 percent to $209 million.
Excluding items impacting comparability in the prior year, adjusted
marketing and selling expenses decreased 5 percent primarily due to
lower advertising and consumer promotion expenses and the benefits from
cost savings initiatives. Administrative expenses decreased 9 percent to
$140 million. Excluding items impacting comparability, adjusted
administrative expenses increased 1 percent.
EBIT increased 11 percent to $298 million. Excluding items impacting
comparability, adjusted EBIT decreased 2 percent to $305 million
reflecting a lower adjusted gross margin percentage and lower sales,
partly offset by lower marketing and selling expenses.
Net interest expense was comparable to prior year at $28 million
reflecting lower levels of debt offset by higher average interest rates
on the debt portfolio. The tax rate increased to 34.8 percent as
compared with a tax rate of 22.9 percent in the prior year. Excluding
items impacting comparability, the adjusted tax rate increased 6.5
percentage points to 35.0 percent driven by lower taxes on foreign
earnings in the prior year. In the fourth quarter of fiscal 2016, a $13
million correction on deferred tax expense was recognized, most of which
related to the third quarter of fiscal 2016.
Sales decreased 1 percent to $6.226 billion driven by a 1 percent
decline in organic sales, reflecting higher promotional spending and
EBIT decreased 4 percent to $960 million. Excluding items impacting
comparability, adjusted EBIT was comparable to the prior year at $1.210
billion reflecting a higher adjusted gross margin percentage offset by
lower sales volume and higher marketing and selling expenses.
Net interest expense increased 1 percent to $84 million reflecting
higher average interest rates on the debt portfolio, partly offset by
lower levels of debt. The tax rate increased 5.5 percentage points to
35.0 percent. Excluding items impacting comparability, the adjusted tax
rate decreased 0.5 percentage points to 31.3 percent.
Cash flow from operations was $1.011 billion compared to $1.211 billion
in the prior year, which benefited from significant reductions in
Fiscal 2017 Guidance
Campbell has revised its fiscal 2017 guidance. Campbell now expects
sales to change by -1 to 0 percent (previously 0 to 1 percent); adjusted
EBIT to increase by 2 to 4 percent (previously 1 to 4 percent), and
adjusted EPS to increase by 3 to 5 percent (previously 2 to 5 percent),
or $3.04 to $3.09 per share. This guidance assumes the impact from
currency translation will be nominal. A non-GAAP reconciliation is not
provided for 2017 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
Segment Operating Review
An analysis of net sales and operating earnings by reportable segment
Three Months Ended Apr. 30, 2017
AmericasSimple Mealsand Beverages
Global Biscuitsand Snacks
Nine Months Ended Apr. 30, 2017
Americas Simple Meals and Beverages
Sales in the quarter decreased 2 percent to $982 million driven by
declines in soup and V8 beverages, partly offset by gains in Prego
pasta sauces. Sales of U.S. soup decreased 4 percent driven by declines
in condensed soups and broth, partly offset by gains in ready-to-serve
soups. For the first nine months of fiscal 2017, sales of U.S. soup
decreased 1 percent.
Segment operating earnings for the quarter were comparable to prior year
at $226 million, as a higher gross margin percentage was offset by lower
Global Biscuits and Snacks
Sales in the quarter increased 2 percent to $623 million driven by gains
in Pepperidge Farm, as well as gains in Arnott’s biscuits in both
Australia and Indonesia. Pepperidge Farm sales increased due to gains in Goldfish
crackers and Pepperidge Farm cookies, partly offset by
declines in fresh bakery and frozen products.
Segment operating earnings increased 14 percent to $98 million. The
increase was primarily driven by higher sales volume and lower
advertising and consumer promotion expenses.
Sales in the quarter decreased 6 percent to $248 million driven by lower
sales of Bolthouse Farms refrigerated beverages.
Segment operating earnings decreased from $13 million to $1 million
driven by unfavorable sales volume and mix, as well as the cost impact
of both reduced beverage capacity and enhanced quality processes.
Unallocated Corporate Expenses
Unallocated corporate expenses for the quarter were $27 million compared
to $54 million in the prior year. The current quarter included $7
million of charges associated with cost savings initiatives. The
prior-year quarter included $54 million of charges related to a pension
benefit mark-to-market adjustment and $13 million of charges associated
with cost savings initiatives. The prior-year quarter also included a
$25 million gain from the settlement of a claim related to the Kelsen
acquisition. The remaining increase in expenses reflects the unfavorable
impact of lapping gains on open commodity contracts in the prior-year
quarter, partly offset by lower postretirement benefit costs.
Campbell will host a conference call to discuss these results today at
8:30 a.m. Eastern Daylight Time. To join, dial +1 (703) 639-1316. The
conference ID is 6692640. 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 June 2,
2017, at +1 (404) 537-3406. The access code for the replay is 6692640.
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 2017, 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 practices, including changes to
inventory practices, and increased significance of certain of the
company’s key trade customers; (8) the impact of disruptions to the
company’s supply chain, including fluctuations in the supply or costs of
energy and raw and packaging materials; (9) the impact of non-U.S.
operations, including trade restrictions, public corruption and
compliance with foreign laws and regulations; (10) the impact of
business portfolio changes; (11) the uncertainties of litigation and
regulatory actions against the company; (12) disruption to the
independent contractor distribution models used by certain of the
company’s businesses, including the results of litigation or regulatory
actions that could affect their independent contractor classification;
(13) the company’s ability to protect its intellectual property rights;
(14) the impact of an impairment to goodwill or other intangible assets;
(15) the impact of increased liabilities and costs related to the
company’s defined benefit pension plans; (16) the impact of a material
failure in or breach of the company’s information technology systems;
(17) the company’s ability to attract and retain key talent; (18) 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; (19) 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 (20) 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
Third Quarter Ended April 30, 2017
Organic Net Sales
Items Impacting Gross Margin, Costs and
Expenses, and Earnings
Restructuring charges,implementation costsand
other related costs(2)
Restructuring charges,implementation costsand
other related costs
and otherrelated costs
View source version on businesswire.com: http://www.businesswire.com/news/home/20170519005247/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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