Reaffirms Fiscal 2017 Full-year Guidance and
Long-Term Targets
Campbell Soup Company (NYSE: CPB), led by President and
Chief Executive Officer Denise Morrison, will meet with investors
today to discuss Campbell’s strategic imperatives designed to
diversify its portfolio and meet consumers’ changing
preferences.
Morrison will outline steps Campbell is taking to deliver
sustainable, profitable topline growth in the rapidly-changing food
industry by strengthening its core business while expanding into
faster-growing spaces. These plans include building greater trust
with consumers through real food, transparency and sustainability;
accelerating digital marketing and e-commerce efforts; continuing
to diversify Campbell’s portfolio in health and well-being; and
broadening how Campbell views the faster-growing snacking
category.
Management will also provide an overview of Campbell’s plans for
its three divisions for the upcoming fiscal year, as well as review
the company’s cost savings initiatives and plans to reinvest in the
business.
Reaffirms Fiscal 2017 Guidance
Campbell reaffirmed its previous full-year guidance for fiscal
2017, which ends July 30, 2017. For the year, Campbell continues to
expect net sales to change by -1 to 0 percent; adjusted Earnings
Before Interest and Taxes (EBIT) to increase by 2 to 4 percent; and
adjusted Earnings Per Share (EPS) to increase by 3 to 5 percent, or
$3.04 to $3.09 per share.*
Campbell plans to provide fiscal 2018 guidance for net sales,
adjusted EBIT and adjusted EPS when it reports fourth-quarter
fiscal 2017 results on Aug. 31, 2017.
Cost Savings Initiatives and Cash Flow
Campbell expects to reach approximately $310 million in annual
cost savings by the end of fiscal 2017. The company also continues
to expect its current cost savings initiatives to deliver $450
million, or approximately 6 percent of sales, in annual savings by
the end of fiscal 2020. This cost savings goal is incremental to
the company's ongoing supply chain productivity program. Campbell
expects an adjusted gross margin of approximately 38 percent* for
fiscal 2017, and expects to generate approximately $1.25 billion in
cash flow from operations in fiscal 2017.
Long-Term Growth Targets
Campbell reiterated its long-term targets for organic sales and
earnings. The company is targeting long-term organic sales growth
of 1 to 3 percent. Excluding currency translation, the company is
targeting adjusted EBIT growth of 4 to 6 percent and adjusted EPS
growth of 5 to 7 percent.
An audio and video webcast of the event, along with accompanying
slides, will be broadcast simultaneously at
investor.campbellsoupcompany.com beginning at 12:15 p.m. EDT today.
A replay and transcript will be available after the event.
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.
*Non-GAAP Reconciliation
A reconciliation of the fiscal 2016 reported (GAAP) financial
information to the adjusted financial information is included at
the end of this news release. 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 results.
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 the company’s business or financial
results. These forward-looking statements, including the statements
made regarding fiscal 2017 sales, gross margin, EBIT and EPS
guidance and long-term growth targets, 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.
Reconciliation of GAAP and Non-GAAP Financial Measures Fiscal
Year Ended July 31, 2016
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.
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 earnings results
excluding these items. In addition, management uses these non-GAAP
financial measures in making financial, operating and planning
decisions and in evaluating the company's performance.
The following tables reconcile financial information, presented
in accordance with GAAP, to financial information excluding certain
items.
Year Ended July 31, 2016 (millions, except per share
amounts)
EBIT
Net EarningsAttributable
toCampbell SoupCompany
Diluted Earnings Per Share -Net
Earnings Attributable toCampbell Soup Company
2016, As reported
$ 960 $ 563 $
1.81 Add: Pension and postretirement benefit mark-to-market
adjustments (1) 313 200 0.64 Add: Restructuring charges,
implementation costs and other related costs (2) 78 49 0.16 Deduct:
Claim settlement (3) (25 ) (25 ) (0.08 ) Add: Impairment charges
(4) 141 127 0.41
Adjusted 2016 $ 1,467 $
914 $ 2.94
(1) In fiscal 2016, the company incurred losses of $313 million
in Costs and expenses ($200 million after tax, or $.64 per share)
associated with mark-to-market adjustments for defined benefit
pension and postretirement plans.
(2) In fiscal 2015, the company implemented a new enterprise
design and initiatives to reduce costs and to streamline its
organizational structure. In fiscal 2016, the company recorded
Restructuring charges of $35 million and implementation costs and
other related costs of $47 million in Administrative expenses
related to the fiscal 2015 initiatives. The company also recorded a
reduction to Restructuring charges of $4 million related to the
fiscal 2014 initiatives. The aggregate after-tax impact of
Restructuring charges, implementation costs and other related costs
was $49 million, or $.16 per share.
(3) In fiscal 2016, the company recorded a gain of $25 million
in Other expenses / (income) ($.08 per share) from a settlement of
a claim related to the Kelsen acquisition.
(4) In fiscal 2016, as part of the annual review of intangible
assets, the company recorded a non-cash impairment charge of $141
million in Other expenses / (income) ($127 million after tax, or
$.41 per share) related to the intangible assets of the Bolthouse
Farms carrot and carrot ingredients reporting unit.
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Campbell Soup CompanyINVESTOR
CONTACT:Ken Gosnell,
856-342-6081Ken_Gosnell@campbellsoup.comorMEDIA CONTACT:Thomas Hushen,
856-342-5227Thomas_Hushen@campbellsoup.com
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