Adjusted Net Earnings Per Share Increased 13 Percent
CAMDEN, N.J., May 24, 2010 (BUSINESS WIRE) –Campbell Soup Company (NYSE:CPB) today reported its fiscal 2010 third-quarter results.
Third-Quarter Summary
Net earnings for the quarter ended May 2, 2010, were $168 million, or $0.49 per share, compared with $174 million, or $0.49, in the prior year. Excluding all items impacting comparability in both periods, adjusted net earnings rose 9 percent to $186 million compared with $171 million in the prior year’s quarter, and adjusted net earnings per share grew 13 percent to $0.54 in the current quarter compared with $0.48 in the year-ago quarter. The current quarter’s reported net earnings included adjustments related to the previously announced restructuring program and a deferred tax expense related to the enactment of U.S. health care legislation in March 2010. A detailed reconciliation of current and prior-year adjusted financial information to the reported information is included at the end of this news release.
Douglas R. Conant, Campbell’s President and CEO, said, “We delivered another quarter of strong adjusted earnings growth, driven by an improvement in volume trends, coupled with continued gains from productivity and favorable currency. Our U.S. beverages and sauces businesses had an outstanding quarter with strong top- and bottom-line performance, led by ‘V8 V-Fusion’ juices and ‘Prego’ and ‘Pace’ sauces. In addition, U.S. soup delivered strong volume gains, particularly in ready-to-serve soups. The promotional plans we executed in the third quarter drove volume growth in all formats–condensed, ready-to-serve and broth. We also were pleased with the earnings growth of our Baking and Snacking segment, led by Pepperidge Farm.
“Importantly, our products used to prepare meals at home continued to resonate with consumers. Meal makers–which include condensed cooking soups, broth and sauces–are crucial to how we will compete and win in the simple meals category.”
Conant concluded, “Based on our third-quarter performance and outlook for the remainder of the year, we expect adjusted net earnings per share growth to be at the high end of our range.”
Fiscal 2010 Guidance
Campbell expects sales growth of 2.5 to 3.5 percent, adjusted earnings growth before interest and taxes (EBIT) of 6 to 7 percent and adjusted net earnings per share growth (EPS) at the high end of the 9- to 11-percent range from the fiscal 2009 adjusted base of $2.21. This guidance includes the anticipated impact of currency translation.
Third-Quarter Results
For the third quarter, sales increased 7 percent to $1.802 billion. The increase in sales reflected the following factors:
Third-Quarter Financial Details
Nine-Month Results
Net earnings for the first nine months were $731 million, or $2.09 per share, compared with $667 million, or $1.83 per share, in the year-ago period. Excluding all items impacting comparability in both periods, adjusted net earnings per share increased by 13 percent.
For the first nine months of fiscal 2010, sales were $6.158 billion, an increase of 2 percent over the year-ago period. The change in sales for the periodreflected the following factors:
Year-to-Date Financial Details
Summary of Fiscal 2010 Third-Quarter and Year-to-Date Results by Segment
U.S. Soup, Sauces and Beverages
Sales for U.S. Soup, Sauces and Beverages were $848 million for the third quarter, an increase of 5 percent compared with a year ago. The change in sales reflected the following factors:
Soup sales for the quarter increased 2 percent, as 5-percent volume growth was partly offset by increased promotional spending.
Beverage sales increased 13 percent driven by volume gains.
Sauces sales improved reflecting good gains in “Prego” pasta sauce and double-digit growth in “Pace” Mexican sauce.
Operating earnings were $214 million, compared with $195 million in the prior-year period. The increase in operating earnings was primarily due to higher sales and improved gross margin performance.
For the first nine months, U.S. Soup, Sauces and Beverages sales decreased 2 percent to $3.056 billion. A breakdown of the change in sales follows:
For the first nine months, U.S. soup sales declined 4 percent due to a 10-percent decrease in ready-to-serve soups. Sales of condensed soup fell 1 percent, with an increase in cooking varieties more than offset by a decline in eating varieties. Broth sales increased 2 percent.
Operating earnings were $804 million, compared with $779 million in the year-ago period. The increase in operating earnings was due to improved gross margin performance and lower advertising expense, partially offset by lower sales.
Baking and Snacking
Sales for Baking and Snacking were $477 million in the third quarter, an increase of 11 percent from a year ago. A breakdown of the change in sales follows:
Further details of sales results included the following:
Operating earnings were $76 million, compared with $57 million in the prior-year period. The prior-year quarter included $1 million in costs related to the restructuring program. The increase in operating earnings was due to the favorable impact of currency and margin growth in Pepperidge Farm.
For the first nine months, sales increased 8 percent to $1.496 billion. A breakdown of the change in sales follows:
Operating earnings were $249 million, compared with $193 million in the year-ago period. The prior-year period included $3 million in costs related to the restructuring program. The increase in operating earnings was due to the favorable impact of currency and margin growth in both Pepperidge Farm and Arnott’s.
International Soup, Sauces and Beverages
Sales for International Soup, Sauces and Beverages were $331 million for the third quarter, an increase of 11 percent compared with a year ago. The change in sales reflected the following factors:
Operating earnings were $37 million, compared with $29 million in the year-ago period. The increase in operating earnings was due to the favorable impact of currency and margin growth in Europe, partly offset by declines in Canada.
For the first nine months, sales increased 7 percent to $1.142 billion. A breakdown of the change in sales follows:
Excluding the impact of currency and divestitures, declines in Europe and Canada were partly offset by gains in Asia Pacific.
Operating earnings were $155 million, compared with $117 million in the year-ago period. The increase in operating earnings was primarily driven by the favorable impact of currency and growth in Europe.
North America Foodservice
Sales were $146 million for the third quarter, a decrease of 3 percent compared with a year ago. A breakdown of the change in sales follows:
Sales declined primarily due to continued weakness in the food service sector.
There was an operating loss of $3 million compared with a $13 million gain in the prior-year quarter. The current quarter included a $12 million restructuring charge, while the prior-year quarter included $5 million in restructuring-related costs. The remaining decrease was primarily due to lower sales.
For the first nine months, sales were $464 million compared with $476 million in the year-ago period. A breakdown of the change in sales follows:
Operating earnings were $40 million, compared with $34 million in the prior period. The current year included a $12 million restructuring charge, while the prior-year period included $18 million in restructuring-related costs. Excluding these items, operating earnings were comparable to a year ago.
Unallocated Corporate Expenses
Unallocated corporate expenses increased to $32 million in the current quarter from $8 million a year ago. The prior year included a favorable net adjustment of $11 million related to commodity hedging. The remaining increase was primarily due to higher equity-related benefit costs. Unallocated expenses for the first nine months were $87 million versus $83 million in the prior year. The prior year included $14 million of unrealized losses on commodity hedges. The remaining increase was primarily due to higher equity-related benefit costs.
Non-GAAP Financial Information
A reconciliation of the adjusted fiscal 2010 and 2009 financial information to the reported financial information is attached to this news release.
Conference Call
Campbell will host a conference call to discuss these results on May 24, 2010, at 10:00 a.m. Eastern Daylight Time. U.S. participants may access the call at 1-866-238-1640 and non-U.S. participants at 1-703-639-1161. Participants should call at least five 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 June 7, 2010, at 1-888-266-2081 or 1-703-925-2533. The access code is 1457585.
Reporting Segments
Campbell Soup Company earnings results are reported for the following segments:
U.S. Soup, Sauces and Beverages includes the following retail businesses: “Campbell’s” brand condensed and ready-to-serve soups, “Swanson” broth, stock and canned poultry businesses, “Prego” pasta sauce, “Pace” Mexican sauce, “Campbell’s” canned pasta, gravies and beans, “V8” vegetable juices, “V8 V-Fusion” juices,“V8 Splash” juice beverages, “Campbell’s” tomato juice, and“Wolfgang Puck” soups, stocks and broths.
Baking and Snacking includes the following businesses: “Pepperidge Farm” cookies, crackers, breads and frozen products in U.S. retail and “Arnott’s” biscuits in Australia and Asia Pacific.
International Soup, Sauces and Beverages includes the soup, sauce and beverage businesses outside of the United States, including Europe, Mexico, Latin America, the Asia Pacific region,as well asthe emerging markets of Russia and China,and the retail business in Canada.
North America Foodservice includes the Away FromHome business in the U.S. and Canada.
About Campbell Soup Company
Campbell Soup Company is a global 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” and “V8.” 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.campbellsoup.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 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 risks associated with trade and consumer acceptance of the company’s initiatives; (3) the company’s ability to realize projected cost savings and benefits; (4) the company’s ability to manage changes to its business processes; (5) the increased significance of certain of the company’s key trade customers; (6) the impact of fluctuations in the supply or costs of energy and raw and packaging materials; (7) the risks associated with portfolio changes; (8) the uncertainties of litigation; (9) the impact of changes in currency exchange rates, tax rates, interest rates, debt and equity markets, inflation rates, economic conditions and other external factors; (10) 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 (11) 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.
THREE MONTHS ENDED
Sales
Earnings
NINE MONTHS ENDED
Reconciliation of GAAP and Non-GAAP Financial Measures
Third Quarter Ended May 2, 2010
Items Impacting Gross Margin and Earnings
The tables below reconcile financial information, presented in accordance with GAAP, to financial information excluding certain transactions:
(millions, except per share amounts)
Third Quarter
Deduct: Net adjustment on commodity hedges (3)
Add: Restructuring related costs (1)
Add: Restructuring charges and related costs (1)
Add: Tax benefit from restructuring charges and related costs (1)
Add: Net adjustment from restructuring charges and related costs (1)
Add: Tax expense from health care legislation (2)
Add: Unrealized losses on commodity hedges (3)
Add: Tax benefit from unrealized losses on commodity hedges (3)
Add: Net adjustment from unrealized losses on commodity hedges (3)
Aug. 2, 2009
Add: Non-cash impairment charge on intangible assets (5)
Add: Tax benefit from non-cash impairment charge on intangible assets (5)
Add: Tax benefit from restructuring related costs (1)
Add: Net non-cash impairment charge on intangible assets (5)
Add: Net adjustment from restructuring related costs (1)
SOURCE: Campbell Soup Company
Campbell Soup CompanyAnthony Sanzio (Media)856-968-4390orJennifer Driscoll (Analysts)856-342-6081