Adjusted Net Earnings Per Share Increased 12 Percent to $0.48
CAMDEN, N.J.–(BUSINESS WIRE)–May. 21, 2009– Campbell Soup Company (NYSE:CPB) today reported net earnings for the quarter ended May 3, 2009 of $174 million, or $0.49 per share, compared to $532 million, or $1.40 per share, in the prior year. Excluding items impacting comparability, adjusted net earnings were $171 million in the current quarter compared to adjusted net earnings of $165 million in the prior year’s quarter. Adjusted net earnings per share were $0.48 in the current quarter compared to adjusted net earnings per share of $0.43 in the prior year’s quarter, an increase of 12 percent. Reflecting a stronger U.S. dollar, adjusted net earnings per share for the quarter were negatively impacted by $0.04 due to currency translation.
Douglas R. Conant, Campbell’s President and Chief Executive Officer, said, “We delivered strong earnings growth this quarter. Reflecting our previous pricing actions and ongoing productivity improvements, gross margin performance improved versus the prior year, as expected. Following increased spending in the first half to launch new products, we reduced marketing expenses, as planned, particularly in U.S. Soup.
“Despite softer sales in the quarter, year to date we’ve delivered one of the strongest U.S. Soup sales performances in years, with sales up 6 percent. Consumers continued to view soup as a simple, nourishing and affordable meal. In particular, condensed cooking soups provided strong growth, as our value marketing message resonated with consumers. We also are pleased with the introduction and ongoing performance of ‘Campbell’s Select Harvest’ and ‘Campbell’s’ ‘V8’ ready-to-serve soups and ‘Swanson’ stock.”
Conant continued, “Beyond U.S. Soup, our Sauces business turned in a stellar quarter with double-digit sales growth and very strong earnings growth. Pepperidge Farm also delivered double-digit sales gains in ‘Goldfish’ snack crackers and ‘Milano’ cookies. On the other hand, our beverage and North America Foodservice businesses have been negatively impacted by the poor economy.
“Internationally, we delivered solid performance in Asia Pacific, behind double-digit sales gains in the Australian soup business. However, our European business declined in the face of a very challenging operating environment. In emerging markets, we continued to build our capabilities in Russia and China.”
Conant concluded, “We are successfully managing our way through the challenging economic conditions, we are gaining momentum in our key areas of focus and we are on track to deliver solid full-year results.”
Fiscal 2009 Guidance
On a currency neutral basis, the company expects to deliver sales growth, excluding the negative impact of one less week in the fiscal year and divestitures, within its long-term target range of between 3 and 4 percent; adjusted earnings before interest and taxes (EBIT) growth slightly below its long-term growth target of between 5 and 6 percent, reflecting the impact of one less week, higher marketing spending and increased investment spending in Russia and China. On a currency neutral basis, Campbell now expects growth in adjusted net earnings per share (EPS) to exceed the 5 to 7 percent range from the fiscal 2008 adjusted base of $2.09.
The company expects its fiscal 2009 sales, EBIT and EPS growth rates will be negatively impacted by approximately 5 percentage points as a result of currency translation.
Third Quarter Financial Results
The items impacting comparability of third-quarter net earnings are summarized below:
Third Quarter
(millions, except per share amounts)
Continuing Operations
Discontinued Operations
A detailed reconciliation of the adjusted fiscal 2009 and 2008 financial information to the reported information is attached to this release.
For the third quarter, sales declined 10 percent to $1.686 billion. The decline in sales reflects the following factors:
Additional Third Quarter Financial Details
Year-to-Date Financial Results
The current and prior period’s net earnings included items that impacted comparability. These items are summarized below:
$
667
Net earnings for the first nine months were $667 million, or $1.85 per share, compared to $1.076 billion, or $2.79 per share, in the year-ago period. Excluding items impacting comparability, adjusted net earnings were $686 million compared to $701 million in the year-ago period. Adjusted net earnings per share were $1.90 in the current period compared to $1.82 in the prior period, an increase of 4 percent. Adjusted net earnings per share growth benefited from a decline in average diluted shares outstanding. In the first nine months of 2009, adjusted net earnings per share were negatively impacted by $0.08 due to currency translation.
For the first nine months of fiscal 2009, sales were $6.058 billion, a decrease of 4 percent. The change in sales for the period reflects the following factors:
Additional Year-to-Date Financial Details
Summary of Fiscal 2009 Third Quarter and Year-To-Date Results by Segment
U.S. Soup, Sauces and Beverages
Sales for U.S. Soup, Sauces and Beverages were $808 million compared to $811 million a year ago. The change in sales reflects the following factors:
Total soup sales for the quarter decreased 2 percent, driven by the following:
Further details of the sales results of this segment’s other businesses include:
Operating earnings were $195 million compared to $172 million in the prior-year period, an increase of 13 percent. The increase in operating earnings was due to lower advertising and lower administrative expenses.
For the first nine months, U.S. Soup, Sauces and Beverages sales increased 4 percent to $3.134 billion. A breakdown of the change in sales follows:
For the first nine months, soup sales increased 6 percent:
Operating earnings were $779 million compared to $767 million in the year-ago period. The increase in operating earnings reflected the higher level of sales, partly offset by a decline in gross margin percentage, as pricing and productivity improvements were not sufficient to offset cost inflation.
Baking and Snacking
Sales for Baking and Snacking were $431 million, a decrease of 14 percent from a year ago. A breakdown of the change in sales follows:
Further details of sales results include the following:
Operating earnings were $57 million compared with a loss of $92 million in the prior-year period. In connection with the previously announced restructuring initiative, the current quarter included $1 million in costs compared to $144 million in the prior year’s quarter. The remaining increase in operating earnings was due to gains in Pepperidge Farm and Arnott’s, partially offset by the unfavorable impact of currency.
For the first nine months, sales decreased 10 percent to $1.380 billion. A breakdown in the change in sales follows:
Operating earnings were $193 million compared to $48 million in the year-ago period. In connection with the previously announced restructuring initiative, the current year included $3 million in accelerated depreciation and other exit costs, compared to a $144 million restructuring charge in the prior year. The remaining increase was primarily due to significant growth in Arnott’s, partially offset by the negative impact of currency.
International Soup, Sauces and Beverages
Sales for International Soup, Sauces and Beverages were $297 million, a decrease of 26 percent compared to a year ago. The change in sales reflects the following factors:
Excluding the unfavorable impact of currency and divestitures, further details of sales results include the following:
Operating earnings were $29 million compared to $40 million a year ago. The prior-year quarter included $6 million in restructuring charges. The decrease was due to the unfavorable impact of currency and lower earnings in Europe, partly offset by gains in the Asia Pacific region and Canada.
For the first nine months, sales decreased 14 percent to $1.068 billion. A breakdown of the change in sales follows:
Excluding the impact of currency and divestitures, sales were comparable to a year ago, as gains in the Asia Pacific region and Canada were offset by declines in Europe.
Operating earnings were $117 million compared to $152 million in the year-ago period. The prior year included $6 million in restructuring charges. The decline was due to the unfavorable impact of currency and costs to launch products in Russia and China.
North America Foodservice
Sales were $150 million, a decrease of 10 percent compared to a year ago. A breakdown of the change in sales follows:
Operating earnings were $13 million compared to a loss of $4 million in the prior period. In connection with the previously announced restructuring initiative, the current quarter included $5 million in accelerated depreciation and other exit costs, compared to a $22 million restructuring charge in the prior-year quarter. Excluding these charges, operating earnings were flat versus the prior-year quarter.
For the first nine months, sales were $476 million compared to $509 million in the year-ago period. A breakdown of the change in sales follows:
Operating earnings were $34 million compared to $40 million in the prior period. In connection with the previously announced restructuring initiative, the current year included $18 million in accelerated depreciation and other exit costs, compared to a $22 million restructuring charge in the prior year. The decline in operating earnings was primarily due to lower volumes.
Unallocated Corporate Expenses
Unallocated corporate expenses decreased from $34 million a year ago to $8 million in the current quarter. The decrease was primarily due to a favorable net adjustment of $11 million related to commodity hedges, lower long-term compensation costs and lower expenses associated with the company’s North American SAP implementation. For the first nine months, unallocated corporate expenses decreased from $97 million to $83 million. The decrease was primarily due to lower expenses associated with the company’s North American SAP implementation and lower long-term compensation costs, partially offset by a net $14 million unrealized loss on commodity hedges.
Non-GAAP Financial Information
A reconciliation of the adjusted fiscal 2009 and 2008 financial information to the reported financial information is attached to this release.
Conference Call
Campbell will host a conference call to discuss these results on May 22, 2009 at 10:00 a.m. Eastern Standard Time. U.S. participants may access the call at 1-866-219-5631 and non-U.S. participants at 1-703-639-1122. Participants should call at least five minutes prior to the starting time. The passcode is “Campbell Soup” and the conference leader is Len Griehs. The call and accompanying slides also will be broadcast live over the Internet at www.thecampbellscompany.com and can be accessed by clicking on the “Shareholder Event / Webcast” banner. A recording of the call will be available approximately two hours after it is completed through midnight May 29, 2009 at 1-888-266-2081 or 1-703-925-2533. The access code is 1359864.
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 and canned poultry businesses, “Prego” pasta sauce, “Pace” Mexican sauce, “Campbell’s Chunky” chili, “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, “Arnott’s” biscuits in Australia and Asia Pacific, and “Arnott’s” salty snacks in Australia.
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 as the emerging markets of Russia and China, and the retail business in Canada.
North America Foodservice includes the Away From Home 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, 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.” For more information on the company, visit Campbell’s website at www.campbellsoup.com.
Forward-Looking Statements
This release contains “forward-looking statements” that reflect the company’s current expectations about its future plans and performance, including statements concerning the impact of marketing investments and strategies, pricing, share repurchase, new product introductions and innovation, cost-saving initiatives, quality improvements, inflation, commodity hedging, currency translation and portfolio strategies, including divestitures, 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
Weighted average shares outstanding – assuming dilution
NINE MONTHS ENDED
Sales
Earnings
Reconciliation of GAAP and Non-GAAP Financial MeasuresThird Quarter Ended May 3, 2009
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.
Net Debt
The company believes that net debt is a non-GAAP measure that provides additional meaningful comparisons between the company’s financial position at May 3, 2009 and April 27, 2008, and also a useful perspective on the financial condition of the business. Interest income earned on cash and cash equivalents partially offsets interest expense on debt. Cash and cash equivalents are available to repay outstanding debt upon maturity.
The table below summarizes information on total debt and cash and cash equivalents:
May 3, 2009
628
1,954
2,582
(61
)
2,521
Items Impacting Gross Margin and Net Earnings
The company believes that financial information excluding certain transactions not considered to be part of the ongoing business improves the comparability of year-to-year results. Consequently, the company believes that investors may be able to better understand its gross margin and earnings results if these transactions are excluded.
The following items impacted gross margin and/or net earnings:
The tables below reconcile financial information, presented in accordance with GAAP, to financial information excluding certain transactions:
Add: Restructuring related costs (2)
* The sum of the individual per share amounts does not equal due to rounding.
Adjusted Diluted net earnings per share*
Source: Campbell Soup Company
Campbell Soup CompanyLeonard F. Griehs (Analysts), 856-342-6428Anthony Sanzio (Media), 856-968-4390
