Third-Quarter Sales Increased 15 Percent to $2.094 Billion
Third-Quarter Adjusted Net Earnings per Share Increased 11 Percent to $0.62
Year-to-Date Adjusted Net Earnings per Share Increased 8 Percent to $2.19
Fiscal 2013 Guidance Revised
CAMDEN, N.J.–(BUSINESS WIRE)–May. 20, 2013– Campbell Soup Company (NYSE:CPB) today reported its results for the third quarter of fiscal 2013.
Third-Quarter Overview
Net earnings for the quarter ended April 28, 2013, were $181 million, or $0.57 per share, compared with $177 million, or $0.55 per share, in the prior year. The current and prior years’ reported net earnings included charges associated with restructuring programs. Excluding restructuring and restructuring-related charges, adjusted net earnings increased 8 percent to $195 million, compared with $180 million in the prior year’s quarter, and adjusted net earnings per share increased 11 percent to $0.62 compared with $0.56 in the year-ago quarter. A detailed reconciliation of the reported financial information to the adjusted information is included at the end of this news release.
Denise Morrison, Campbell’s President and Chief Executive Officer, said, “I am very pleased by our results in the third quarter and the strong performances by a number of our key businesses. In U.S. Soup, our condensed, ready-to-serve soups and broth businesses delivered double-digit sales growth. Global Baking and Snacking also posted solid top-line growth across Pepperidge Farm crackers, cookies and bakery, as well as in Arnott’s biscuits. At Bolthouse Farms, we delivered another quarter of strong results in super-premium beverages, carrots and salad dressings.”
“We remain committed to our dual mandate,” Morrison continued. “We are strengthening our core portfolio through consistent excellence in execution, optimized investment and sustaining product innovation. We are also expanding into higher-growth categories, adjacencies and geographies.
“In the third quarter, we drove profitable growth in several of our core North American businesses through successful execution against all of the drivers of demand, including enhanced products, stronger advertising and effective in-store presence. Across our entire portfolio, innovation contributed meaningfully to our growth, including core brand expansions such as new varieties of ‘Campbell’s Chunky’ soups. We are also encouraged by our early breakthrough innovation efforts in U.S. Simple Meals.
“Our International business was up two percent for the quarter. We continued to drive the expansion of ‘Pepperidge Farm’ products in Canada and began to implement our new manufacturing and distribution arrangements with Grupo Jumex and Conservas La Costeña in Mexico. Indonesia, Malaysia and Hong Kong delivered solid sales gains.
“We are disappointed that certain parts of our portfolio did not perform well in the quarter. U.S. Beverages faced ongoing softness in the shelf-stable juice category and heightened competition. North America Foodservice continued to be challenged by the loss of a major restaurant customer and structural shifts in the food service sector. We are aggressively pursuing plans to improve the performance of these businesses.”
Morrison concluded, “Our strategic plan is intended to deliver sustainable, profitable net sales growth. We are still in the early stages of executing this plan, and we know that more work lies ahead. We believe our encouraging third-quarter results demonstrate the long-term promise of the plan. We are making good progress in changing Campbell’s growth trajectory.”
Campbell Revises Fiscal 2013 Guidance
The company revised its previous fiscal 2013 guidance. Campbell now expects to grow sales at the upper end of the 10- to 12-percent range and adjusted EBIT at the upper end of the 4- to 6-percent range. Adjusted EPS, benefitting from a favorable tax rate and the EBIT improvement, is now expected to exceed the previous range of 3 to 5 percent. The company now expects adjusted EPS to grow between 6 and 7 percent, putting adjusted EPS in the range of $2.58 to $2.62. This guidance includes the estimated impact of the Bolthouse Farms business and excludes the impact of acquisition transaction costs and restructuring charges. In fiscal 2013, Campbell expects Bolthouse Farms to contribute approximately $750 million to sales and add approximately $0.06 to adjusted EPS, including the impact of the suspension of Campbell’s strategic share repurchase program.
Third-Quarter Results
For the third quarter, sales increased 15 percent to $2.094 billion. The increase in sales for the quarter reflected the following factors:
Third-Quarter Financial Details
Nine-Month Results
Net earnings for the first nine months were $616 million, or $1.94 per share, compared with $647 million, or $2.01 per share, in the year-ago period. Excluding restructuring, restructuring-related charges and acquisition transaction costs, adjusted net earnings increased 6 percent to $694 million. Adjusted net earnings per share increased 8 percent to $2.19.
For the first nine months of fiscal 2013, sales were $6.763 billion, an increase of 11 percent from the year-ago period. The increase in sales for the period reflected the following factors:
Nine-Month Financial Details
Summary of Fiscal 2013 Third-Quarter and Nine-Month Results by Segment
U.S. Simple Meals
Sales for U.S. Simple Meals were $627 million for the third quarter, an increase of 11 percent compared with the year-ago period. A breakdown of the change in sales follows:
U.S. Soup sales increased 14 percent compared to the year-ago quarter.
Sales of U.S. Sauces increased 3 percent versus the prior-year quarter driven by gains in “Prego” pasta sauce and “Pace” Mexican sauce, partially offset by lower sales in “Campbell’s” canned pasta. Sales benefitted from the introduction of “Campbell’s” Skillet Sauces.
U.S. Simple Meals operating earnings increased 30 percent to $156 million, compared with $120 million in the prior-year period. Operating earnings increased driven by higher volumes, increased selling prices and productivity improvements, partly offset by increased promotional spending. The increase in operating earnings was fueled by strong earnings gains in U.S. Soup, partly offset by a decline in U.S. Sauces.
For the first nine months, sales for U.S. Simple Meals grew 4 percent to $2.356 billion. A breakdown of the change in sales follows:
U.S. Soup sales rose 5 percent with gains across all product segments. Sales of ready-to-serve soups increased 9 percent, while sales of condensed soups increased 2 percent and sales of broth increased 3 percent.
U.S. Simple Meals operating earnings were $621 million in the nine months compared with $554 million in the year-ago period, an increase of 12 percent. Higher selling prices, productivity savings and lower marketing expenses were partly offset by cost inflation and increased promotional spending. The improvement in operating earnings was driven by solid gains in U.S. Soup, partly offset by a decline in U.S. Sauces.
Global Baking and Snacking
Sales for Global Baking and Snacking were $568 million for the third quarter, an increase of 5 percent from a year ago. The rise in sales reflected the following factors:
Further details of sales results included the following:
Operating earnings for the quarter were $73 million, comparable to the prior year. Operating earnings reflected the benefit of higher sales offset by increased marketing expenses and administrative costs.
For the first nine months, sales increased 4 percent to $1.703 billion. A breakdown of the change in sales follows:
Operating earnings in the first nine months were $232 million, comparable to the prior year, reflecting growth in Pepperidge Farm and the favorable impact of currency, offset by lower earnings in Arnott’s.
International Simple Meals and Beverages
Sales for International Simple Meals and Beverages were $357 million for the third quarter, an increase of 2 percent from a year ago. The sales gain reflected the following factors:
Excluding the impact of currency, higher sales in Europe, Latin America and the Asia Pacific region were partially offset by declines in Canada.
Operating earnings were $40 million compared with $37 million in the year-ago period. The increase in operating earnings was primarily due to higher earnings in Europe.
For the first nine months, sales were $1.116 billion, an increase of 1 percent. A breakdown of the change in sales follows:
Excluding the impact of currency, sales increased in the Asia Pacific region, Latin America and Europe.
Operating earnings were $141 million, rising 2 percent from $138 million in the prior year, reflecting earnings gains in the Asia Pacific region and Latin America, partially offset by declines in Europe and Canada.
U.S. Beverages
Sales for U.S. Beverages were $198 million for the third quarter, a decrease of 5 percent compared to the year-ago period. A breakdown of the change in sales follows:
The decrease in sales was due to declines in “V8” vegetable juice.
Operating earnings for the quarter were $33 million compared with $45 million in the prior year. The decrease in operating earnings was primarily due to lower volume on 100% juice varieties, cost inflation and increased promotional spending, partly offset by productivity improvements.
For the first nine months, sales decreased 4 percent to $569 million. A breakdown of the change in sales follows:
Sales of “V8” vegetable juice and “V8 V-Fusion” beverages declined, while sales of “V8 Splash” beverages increased.
Operating earnings in the first nine months decreased to $100 million from $109 million due to volume declines on 100% juice varieties, cost inflation and increased promotional spending, partly offset by productivity improvements and lower marketing expenses.
Bolthouse and Foodservice
Sales for Bolthouse and Foodservice were $344 million for the third quarter, with the acquisition of Bolthouse Farms contributing $205 million. Sales in North America Foodservice declined 10 percent compared with a year ago. A breakdown of the change in North America Foodservice sales follows:
North America Foodservice sales decreased primarily due to declines in frozen soup, reflecting the loss of a major restaurant customer.
Operating earnings increased by $7 million to $27 million, reflecting the acquisition of Bolthouse Farms, which contributed $17 million, partially offset by lower earnings in North America Foodservice.
For the first nine months, sales were $1.019 billion, with the acquisition of Bolthouse Farms contributing $571 million. North America Foodservice sales declined 9 percent to $448 million. A breakdown of the change in North America Foodservice sales follows:
Operating earnings for the first nine months were $91 million compared with $75 million in the year-ago period. The increase in operating earnings was primarily due to the acquisition of Bolthouse Farms, which contributed $46 million, offset by lower earnings in North America Foodservice.
Unallocated Corporate Expenses
Unallocated corporate expenses for the quarter were $56 million compared with $27 million a year ago. The current quarter included $20 million of restructuring-related costs. Unallocated corporate expenses for the first nine months were $196 million compared with $90 million in the prior year. The current year included $81 million of restructuring-related costs and $10 million of transaction costs related to the Bolthouse Farms acquisition. The balance of the increase for the current quarter and first nine months is primarily due to higher incentive compensation costs.
Non-GAAP Financial Information
A detailed reconciliation of the reported financial information to the adjusted financial information is included at the end of this news release.
Conference Call
Campbell will host a conference call to discuss these results on May 20, 2013, at 10:00 a.m. Eastern Daylight Time. Participants may access the call at +1 (703) 639-1328. Participants should call at least ten minutes prior to the starting time. The passcode is “Campbell Soup” and the conference leader is Jennifer Driscoll. The call will also be broadcast live over the Internet at investor.campbellsoupcompany.com and can be accessed by clicking on the “News & Events” button. A recording of the call will be available approximately two hours after it is completed through midnight on June 3, 2013 at +1 (703) 925-2533. The access code is 1614133. To download the new Campbell investor relations app, which offers access to SEC documents, news releases, audiocasts and more, please visit the Apple App store to download on your iPhone or iPad, or Google Play for your Android mobile device.
Reporting Segments
Campbell Soup Company earnings results are reported for the following segments:
U.S. Simple Meals aggregates the U.S. Soup and U.S. Sauces businesses. The U.S. Soup business includes the following products: “Campbell’s” condensed and ready-to-serve soups, and “Swanson” broth and stocks. The U.S. Sauces business includes “Prego” pasta sauce, “Pace” Mexican sauce, “Swanson” canned poultry, “Campbell’s” canned pasta, gravies, and beans.
Baking and Snacking aggregates the following: “Pepperidge Farm” cookies, crackers, breads and frozen products in U.S. retail; and “Arnott’s” biscuits in Australia and Asia Pacific.
International Simple Meals and Beverages aggregates the following: soup, sauce and beverage products outside of the United States, including Europe, Latin America, Asia Pacific, China and the retail business in Canada.
U.S. Beverages represents the following products: “V8” vegetable juices, “V8 V-Fusion” juices and juice beverages, “V8 Splash” juice beverages, and “Campbell’s” tomato juice.
Bolthouse and Foodservice includes the Bolthouse Farms and North America Foodservice businesses. Bolthouse Farms consists of the following products: super-premium refrigerated beverages, refrigerated salad dressings and carrot products, including fresh carrots, juice concentrate and fiber. North America Foodservice represents the distribution of products such as soup, specialty entrees, beverage products, other prepared foods and “Pepperidge Farm” products through various food service channels in the United States and Canada.
About Campbell Soup Company
Campbell Soup Company is a manufacturer and marketer of high-quality foods and simple meals, including soup and sauces, baked snacks and healthy beverages. Founded in 1869, the company has a portfolio of market-leading brands, including “Campbell’s,” “Pepperidge Farm,” “Arnott’s,” “V8” and “Bolthouse Farms.” Through its corporate social responsibility program, the company strives to make a positive impact in the workplace, in the marketplace and in the communities in which it operates. Campbell is a member of the Standard & Poor’s 500 and the Dow Jones Sustainability Indexes. For more information, visit www.campbellsoupcompany.com and https://twitter.com/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 sales, earnings, and margins. These forward-looking statements 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 impact of strong competitive responses to the company’s efforts to leverage its brand power in the market; (2) the impact of changes in consumer demand for the company’s products; (3) the risks associated with trade and consumer acceptance of the company’s initiatives; (4) the company’s ability to realize projected cost savings and benefits; (5) the company’s ability to manage changes to its business processes; (6) the 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, including the Bolthouse Farms acquisition; (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.
In the third quarter of fiscal 2013, the company recorded restructuring-related costs of $20 in Cost of products sold associated with the initiatives announced in September 2012 to improve its U.S. supply chain cost structure and increase asset utilization across its U.S. thermal plant network.
In the third quarter of fiscal 2013, the company also recorded pre-tax restructuring charges of $1 associated with commercial arrangements the company entered into with third-party providers that will expand the company’s access to manufacturing and distribution capabilities in Mexico and result in the closure of its plant in Mexico.
The aggregate impact of the restructuring initiatives in the third quarter of fiscal 2013 was pre-tax restructuring charges of $1 and restructuring-related costs of $20 in Cost of products sold (aggregate impact of $14 after tax or $.04 per share).
In the third quarter of fiscal 2012, the company recorded pre-tax restructuring charges of $4 ($3 after tax or $.01 per share) associated with the initiatives announced in June 2011 to improve supply chain efficiency, reduce overhead costs across the organization, and exit the Russian market.
In fiscal 2013, the company recorded pre-tax transaction costs of $10 ($7 after tax or $.02 per share) associated with the acquisition of Bolthouse Farms, which closed on August 6, 2012. The costs are included in Other expenses.
In fiscal 2013, the company recorded pre-tax restructuring charges of $24 and restructuring-related costs of $81 in Cost of products sold associated with the initiatives announced in September 2012 to improve its U.S. supply chain cost structure and increase asset utilization across its U.S. thermal plant network.
In fiscal 2013, the company also recorded pre-tax restructuring charges of $7 associated with commercial arrangements the company entered into with third-party providers that will expand the company’s access to manufacturing and distribution capabilities in Mexico and result in the closure of its plant in Mexico.
The aggregate impact of the restructuring initiatives in fiscal 2013 was pre-tax restructuring charges of $31 and restructuring-related costs of $81 in Cost of products sold (aggregate impact of $71 after tax or $.22 per share).
In fiscal 2012, the company recorded pre-tax restructuring charges of $9 ($6 after tax or $.02 per share) associated with the initiatives announced in June 2011 to improve supply chain efficiency, reduce overhead costs across the organization, and exit the Russian market.
Change
Sales
Earnings
In the third quarter of fiscal 2013, the company recorded restructuring-related costs of $20 in Unallocated corporate expenses associated with the initiatives announced in September 2012 to improve its U.S. supply chain cost structure and increase asset utilization across its U.S. thermal plant network.
The aggregate impact of the restructuring initiatives in the third quarter of fiscal 2013 was pre-tax restructuring charges of $1 and restructuring-related costs of $20 in Unallocated corporate expenses (aggregate impact of $14 after tax or $.04 per share).
In fiscal 2013, the company recorded pre-tax transaction costs of $10 ($7 after tax or $.02 per share) associated with the acquisition of Bolthouse Farms, which closed on August 6, 2012. The costs are included in Unallocated corporate expenses.
In fiscal 2013, the company recorded pre-tax restructuring charges of $24 and restructuring-related costs of $81 in Unallocated corporate expenses associated with the initiatives announced in September 2012 to improve its U.S. supply chain cost structure and increase asset utilization across its U.S. thermal plant network.
In the fiscal 2013, the company also recorded pre-tax restructuring charges of $7 associated with commercial arrangements the company entered into with third-party providers that will expand the company’s access to manufacturing and distribution capabilities in Mexico and result in the closure of its plant in Mexico.
The aggregate impact of the restructuring initiatives in fiscal 2013 was pre-tax restructuring charges of $31 and restructuring-related costs of $81 in Unallocated corporate expenses (aggregate impact of $71 after tax or $.22 per share).
Reconciliation of GAAP to Non-GAAP Financial Measures
Third Quarter Ended April 28, 2013
Net Debt
Organic Net Sales
Items Impacting Gross Margin and Earnings
*The sum of the individual per share amounts does not add due to rounding.
Adjusted Earnings Before Interest and Taxes Excluding Acquisition
Source: Campbell Soup Company
Campbell Soup CompanyCarla Burigatto (Media)(856) 342-3737[email protected]orJennifer Driscoll (Analysts/Investors)(856) 342-6081[email protected]
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