- Fourth-Quarter Net Sales Increased 33
Percent Reflecting Impact of Recently Completed Acquisitions;
Organic Sales Decreased 3 Percent
- Fourth-Quarter Earnings Per Share (EPS)
of $0.31; Adjusted EPS of $0.25
- Full-Year Net Sales Increased 10
Percent Reflecting Impact of Recently Completed Acquisitions;
Organic Sales Decreased 2 Percent
- Full-Year EPS of $0.86; Adjusted EPS of
$2.87
- Campbell Provides Fiscal 2019
Guidance
Campbell Soup Company (NYSE:CPB) today reported its
fourth-quarter and full-year results for fiscal 2018.
Three Months
Ended
Twelve Months
Ended
($ in millions, except per share)
Jul.
29,2018
Jul.
30,2017
%Change
Jul.
29,2018
Jul.
30,2017
%Change
Net Sales
As Reported (GAAP)
$2,219 $1,664 33%
$8,685 $7,890
10% Organic (3%) (2%)
Earnings Before Interest and
Taxes
As Reported (GAAP)
$289 $440 (34%)
$469* $1,400 (67%)
Adjusted
$281 $282 -%
$1,408 $1,492 (6%)
Diluted Earnings Per Share
As Reported (GAAP)
$0.31 $1.04 (70%)
$0.86 $2.89
(70%) Adjusted
$0.25 $0.52 (52%)
$2.87 $3.04 (6%)
*Includes previously reported impairment charges
primarily related to the Campbell Fresh segment. Note: A detailed
reconciliation of the reported (GAAP) financial information to the
adjusted financial information is included at the end of this news
release.
CEO Comments
Keith McLoughlin, Campbell’s interim President and CEO said,
“Fiscal 2018 was a challenging year for Campbell. These results and
our outlook for fiscal 2019 reinforce the need for the significant
actions we announced this morning as part of our comprehensive,
Board-led strategy and portfolio review. We believe these actions
will put us on a path to create sustainable shareholder value.”
Details of the actions following the company’s strategy and
portfolio review are outlined in a separate press release that was
also issued today.
Items Impacting Comparability
The table below presents a summary of items impacting
comparability in each period. A detailed reconciliation of the
reported (GAAP) financial information to the adjusted information
is included at the end of this news release.
Diluted Earnings Per Share
Three Months Ended Twelve Months Ended Jul.
29, Jul. 30, Jul. 29, Jul.
30, 2018 2017 2018 2017 As Reported
(GAAP)
$0.31 $1.04
$0.86 $2.89 Impairment
charges related to Campbell Fresh segment and Plum trademark
$0.14 -
$2.03 $0.59
Restructuring charges, implementation
costs and other related costs associated with cost savings
initiatives
$0.11
$0.09
$0.45
$0.12
Transaction and integration costs related to the acquisition
of Snyder’s-Lance
$0.03 -
$0.24 - Claim
settlement
- -
$0.05 - Pension and
postretirement benefit mark-to-market adjustments
($0.31)
($0.42)
($0.34) ($0.38) Nonrecurring net tax benefit
related to U.S. Tax Reform
($0.02) -
($0.42) -
Sale of notes
- ($0.18)
- ($0.18) Adjusted
$0.25* $0.52*
$2.87 $3.04
*Numbers do not add due to rounding.
Fourth-Quarter Results
Sales increased 33 percent to $2.219 billion reflecting a
36-point benefit from the recent acquisitions of Snyder’s-Lance and
Pacific Foods. Organic sales declined 3 percent driven primarily by
decreases in Americas Simple Meals and Beverages.
Gross margin decreased from 35.9 percent to 29.2 percent.
Excluding items impacting comparability, adjusted gross margin
decreased 5.6 percentage points to 30.6 percent including a 3-point
negative impact from the recent acquisitions. The remaining decline
in adjusted gross margin was driven primarily by cost inflation and
higher supply chain costs, costs associated with the voluntary
recall of flavor-blasted Goldfish crackers on July 23, 2018,
unfavorable mix and higher promotional spending, partly offset by
productivity improvements and the benefits from cost savings
initiatives.
Marketing and selling expenses increased 29 percent to $223
million due primarily to the inclusion of the recent acquisitions.
Excluding items impacting comparability in the current year and the
impact of the recent acquisitions, adjusted marketing and selling
expenses declined slightly. Administrative expenses increased 25
percent to $177 million due primarily to the inclusion of the
recent acquisitions. Excluding items impacting comparability and
the impact of the recent acquisitions, adjusted administrative
expenses were comparable to the prior year as consulting costs
incurred in connection with the Board-led strategic review and
higher benefit costs were offset by lower incentive compensation
expenses.
Other income was $69 million as compared to $206 million in the
prior year. Excluding items impacting comparability, adjusted other
income decreased $7 million to $1 million.
EBIT decreased 34 percent to $289 million. Excluding items
impacting comparability, adjusted EBIT of $281 million was
comparable to the prior year as the net benefit of the recent
acquisitions of Snyder’s-Lance and Pacific Foods was offset by
declines on the base business.
Net interest expense was $93 million compared to $23 million in
the prior year. Excluding items impacting comparability in the
prior year, adjusted net interest expense increased $64 million due
to debt associated with the acquisition of Snyder’s-Lance and
higher average interest rates on the debt portfolio. The tax rate
was 52.0 percent as compared to 23.7 percent in the prior year.
Excluding items impacting comparability, the adjusted tax rate
increased 21.8 percentage points to 59.0 percent as the timing of
tax expense on an adjusted basis was negatively impacted by
impairment charges, as described last quarter.
Earnings were $0.31 per share in the quarter compared to $1.04
in the prior year. Excluding items impacting comparability,
adjusted EPS decreased 52 percent to $0.25 per share, reflecting a
higher adjusted tax rate, adjusted EBIT declines on the base
business and the dilutive impact of the recent acquisitions.
Full-Year Results
Sales increased 10 percent to $8.685 billion driven by an
11-point benefit from the recent acquisitions of Snyder’s-Lance and
Pacific Foods. Organic sales declined 2 percent driven primarily by
decreases in Americas Simple Meals and Beverages, partly offset by
gains in Global Biscuits and Snacks.
EBIT decreased from $1.400 billion to $469 million. Excluding
items impacting comparability, adjusted EBIT decreased 6 percent to
$1.408 billion reflecting performance of the base business, partly
offset by incremental earnings from the recent acquisitions. EBIT
declines in the base business were driven primarily by lower gross
margin performance, including the impact of organic sales declines,
partly offset by an increase in adjusted other income and lower
marketing and selling expenses.
Net interest expense was $197 million compared to $107 million
in the prior year. Excluding items impacting comparability,
adjusted net interest expense increased $102 million to $215
million due to debt associated with the acquisition of
Snyder’s-Lance and higher average interest rates on the debt
portfolio. The tax rate was 4.0 percent as compared to 31.4 percent
in the prior year reflecting the one-time favorable net tax benefit
recorded as part of the Tax Cuts and Jobs Act. Excluding items
impacting comparability, the adjusted tax rate decreased 5.2
percentage points to 27.2 percent, due primarily to the lower U.S.
federal tax rate.
The company reported EPS of $0.86. Excluding items impacting
comparability, adjusted EPS decreased 6 percent to $2.87 per share,
reflecting EBIT declines on the base business and the dilutive
impact of the recent acquisitions, partly offset by a lower
adjusted tax rate and the benefit of lower weighted average shares
outstanding.
Cash flow from operations increased to $1.305 billion from
$1.291 billion a year ago. The year-over-year increase was due
primarily to lower working capital requirements, partly offset by
lower cash earnings.
Fiscal 2019 Guidance
Given the strategy to pursue divestitures, the company has
provided an outlook for fiscal 2019 based on the company’s existing
portfolio of businesses, as well as on a pro forma basis assuming
the planned divestitures are completed as of the beginning of
fiscal 2019. This fiscal 2019 guidance and pro forma, as shown in
the table below, include the impact of the Snyder’s-Lance and
Pacific Foods acquisitions and assumes the impact from currency
translation will be nominal.
($ in millions, except
per share)
2018 2019 Guidance 2019 Pro Forma
Results Pre-Divestitures Assuming Divestitures
Net Sales $8,685 $9,975 to $10,100 $7,925 to $8,050
Incremental Net Sales over 2018 from
Snyder’s-Lance and Pacific Foods
$1,500 to $1,550
$1,500 to $1,550
Adjusted EBIT $1,408* $1,370 to $1,410 $1,230 to $1,270
Adjusted EPS $2.87* $2.45 to $2.53 $2.40 to $2.50
* Adjusted – refer to the detailed reconciliation of the
reported (GAAP) financial information to the adjusted financial
information at the end of this news release. Note: A non-GAAP
reconciliation is not provided for 2019 guidance or 2019 pro forma
since certain items are not estimable, such as pension and
postretirement mark-to-market adjustments, and these items are not
considered to reflect the company's ongoing business results. The
pro forma scenario is provided for illustrative purposes to provide
approximate impact of potential divestitures as if they occurred at
the beginning of Fiscal 2019 and is based on the use of estimated
sales proceeds.
Segment Operating Review
An analysis of net sales and operating earnings by reportable
segment follows:
Three Months
Ended Jul. 29, 2018
($ in millions)
AmericasSimple Mealsand
Beverages
Global Biscuitsand
Snacks
Campbell Fresh
Total Net Sales, as Reported $789 $1,202 $228 $2,219**
Volume and Mix (4)% 1% 1% (2)% Price and Sales Allowances (1)% -%
-% (1)% Promotional Spending (1)% (1)% -% (1)% Organic Net Sales
(6)% -% 1% (3)%* Currency -% -% -% -% Acquisitions 5% 88% -% 36% %
Change vs. Prior Year (1)% 87%* 1% 33% Segment Operating
Earnings $155 $158 ($7) % Change vs. Prior Year (21)% 42% n/m
n/m – not meaningful * Numbers do not add due to rounding.
** Includes Corporate. Note: A detailed reconciliation of the
reported (GAAP) net sales to organic net sales is included at the
end of this news release.
Twelve Months
Ended Jul. 29, 2018
($ in millions)
AmericasSimple Mealsand
Beverages
Global Biscuitsand
Snacks
Campbell Fresh
Total Net Sales, as Reported $4,213 $3,499 $970 $8,685**
Volume and Mix (3)% 1% 1% (1)% Price and Sales Allowances (1)% 1%
-% -% Promotional Spending -% -% -% -% Organic Net Sales (4)% 1%*
-%* (2)%* Currency -% 1% -% -% Acquisitions 3% 29% -% 11% % Change
vs. Prior Year (1)% 31% -% 10%* Segment Operating Earnings
$982 $540 ($43) % Change vs. Prior Year (12)% 17% n/m n/m –
not meaningful * Numbers do not add due to rounding. ** Includes
Corporate. Note: A detailed reconciliation of the reported (GAAP)
net sales to organic net sales is included at the end of this news
release.
Americas Simple Meals and
Beverages
Sales in the quarter decreased 1 percent to $789 million.
Organic sales decreased 6 percent driven primarily by declines in
U.S. soup and Canada. Excluding the benefit from the acquisition of
Pacific Foods, sales of U.S. soup decreased 14 percent driven by
declines in condensed soups, ready-to-serve soups and broth.
Shipment declines of U.S. soup reflect increased competitive
pressure across the market.
Segment operating earnings decreased 21 percent to $155 million.
The decrease was driven primarily by a lower gross margin
percentage.
Global Biscuits and Snacks
Sales in the quarter increased 87 percent to $1.202 billion.
Excluding the benefit from the acquisition of Snyder’s-Lance,
organic sales were comparable to the prior year as gains in
Pepperidge Farm cookies were offset by declines of Arnott’s
biscuits in Indonesia and Goldfish crackers. Sales of Goldfish
crackers were negatively impacted by the voluntary product
recall.
Segment operating earnings increased 42 percent to $158 million,
reflecting a 45-point benefit from the acquisition of
Snyder’s-Lance. Excluding the impact of the acquisition, segment
operating earnings declined due primarily to a lower gross margin
percentage, including the adverse impact from the voluntary product
recall, partly offset by lower marketing and selling expenses and
lower administrative expenses.
The voluntary product recall had a negative 2-point impact on
segment sales and a negative 14-point impact on operating
earnings.
Campbell Fresh
Sales in the quarter increased 1 percent to $228 million driven
primarily by higher sales of Garden Fresh Gourmet and carrot
ingredients, partly offset by declines in Bolthouse Farms
refrigerated beverages.
Segment operating loss was $7 million compared to a loss of $8
million in the prior year.
Corporate
Corporate in the fourth quarter of fiscal 2018 included pension
and postretirement mark-to-market and curtailment gains of $122
million, non-cash impairment charges of $54 million related to the
Plum trademark, charges related to cost savings initiatives of $46
million, and transaction and integration costs of $11 million
related to the acquisition of Snyder’s-Lance. Corporate in the
fourth quarter of fiscal 2017 included pension and postretirement
mark-to-market gains of $198 million and charges related to cost
savings initiatives of $22 million. The remaining increase in
expenses primarily reflects losses on open commodity contracts as
compared to gains in the year-ago quarter.
Cost Savings Program
In the fourth quarter of fiscal 2018, Campbell achieved $30
million in savings under its multi-year cost savings program,
bringing total program-to-date savings to $420 million. Based on
the strategic actions announced separately this morning following
the comprehensive Board-led strategy and portfolio review, as well
as the identification of additional savings opportunities, Campbell
has increased the annualized savings target to $650 million by the
end of fiscal 2022 from $500 million by fiscal 2020. These actions
bring Campbell’s expected total savings targets, including the
expected Snyder’s-Lance savings of $295 million, to $945
million.
Conference Call and Webcast
Campbell will host a 90-minute conference call to discuss its
earnings results and the outcome of its strategic review today at
8:30 a.m. EDT. To join, dial +1 (844) 428-1627 in the U.S. or +1
(409) 350-3941 internationally. The access code is 5676627. Access
to a live webcast of the call with accompanying slides, as well as
a replay of the call, will be available at
investor.campbellsoupcompany.com. A recording of the call will also
be available until 11:59 p.m. on Sept. 13, 2018, at +1 (404)
537-3406. The access code for the replay is 5676627.
Reportable Segments
Campbell Soup Company earnings results are reported as
follows:
Americas Simple Meals and Beverages
includes the retail and food service businesses in the U.S. and
Canada. The segment includes the following products: Campbell’s
condensed and ready-to-serve soups; Swanson broth and stocks;
Pacific broth, soups, non-dairy beverages and other simple meals;
Prego pasta sauces; Pace Mexican sauces; Campbell’s gravies, pasta,
beans and dinner sauces; Swanson canned poultry; Plum food and
snacks; V8 juices and beverages; and, Campbell’s tomato juice.
Global Biscuits and Snacks includes
the U.S. snacks portfolio consisting of Pepperidge Farm cookies,
crackers, bakery and frozen products in U.S. retail, and
Snyder’s-Lance pretzels, sandwich crackers, potato chips, tortilla
chips and other snacking products. The segment also includes
Arnott’s biscuits in Australia and Asia Pacific, Kelsen cookies
globally, and the simple meals and shelf-stable beverages business
in Australia, Latin America and Asia Pacific.
Campbell Fresh includes Bolthouse
Farms fresh carrots, carrot ingredients, refrigerated beverages and
refrigerated salad dressings; Garden Fresh Gourmet salsa, hummus,
dips and tortilla chips; and, the U.S. refrigerated soup
business.
About Campbell Soup Company
Campbell (NYSE:CPB) is driven and inspired by our Purpose, "Real
food that matters for life's moments." For generations, people have
trusted Campbell to provide authentic, flavorful and affordable
snacks, soups and simple meals, and beverages. 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 and 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.
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 any statements
made regarding sales, EBIT and EPS guidance, 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 execute on and realize the expected
benefits from the actions it intends to take as a result of its
recent strategy and portfolio review; (2) the ability to
differentiate its products and protect its category leading
positions, especially in soup; (3) the ability to complete and to
realize the projected benefits of planned divestitures and other
business portfolio changes; (4) the ability to realize the
projected benefits, including cost synergies, from the recent
acquisitions of Snyder’s-Lance and Pacific Foods; (5) the ability
to realize projected cost savings and benefits from its efficiency
and/or restructuring initiatives; (6) the company’s indebtedness
and ability to pay such indebtedness; (7) disruptions to the
company’s supply chain, including fluctuations in the supply of and
inflation in energy and raw and packaging materials cost; (8) the
company’s ability to manage changes to its organizational structure
and/or business processes, including selling, distribution,
manufacturing and information management systems or processes; (9)
the impact of strong competitive responses to the company’s efforts
to leverage its brand power with product innovation, promotional
programs and new advertising; (10) the risks associated with trade
and consumer acceptance of product improvements, shelving
initiatives, new products and pricing and promotional strategies;
(11) changes in consumer demand for the company’s products and
favorable perception of the company’s brands; (12) changing
inventory management practices by certain of the company’s key
customers; (13) a changing customer landscape, with value and
e-commerce retailers expanding their market presence, while certain
of the company’s key customers maintain significance to the
company’s business; (14) product quality and safety issues,
including recalls and product liabilities; (15) the costs,
disruption and diversion of management’s attention associated with
campaigns commenced by activist investors; (16) the uncertainties
of litigation and regulatory actions against the company; (17) 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; (18) the impact of non-U.S.
operations, including trade restrictions, public corruption and
compliance with foreign laws and regulations; (19) impairment to
goodwill or other intangible assets; (20) the company’s ability to
protect its intellectual property rights; (21) increased
liabilities and costs related to the company’s defined benefit
pension plans; (22) a material failure in or breach of the
company’s information technology systems; (23) the company’s
ability to attract and retain key talent; (24) changes in currency
exchange rates, tax rates, interest rates, debt and equity markets,
inflation rates, economic conditions, law, regulation and other
external factors; (25) unforeseen business disruptions in one or
more of the company’s markets due to political instability, civil
disobedience, terrorism, armed hostilities, extreme weather
conditions, natural disasters or other calamities; and (26) 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.
CAMPBELL SOUP COMPANY CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited) (millions, except per share amounts)
Three
Months Ended July 29, 2018 July 30, 2017 Net
sales
$ 2,219 $ 1,664 Costs and
expenses Cost of products sold
1,570 1,066 Marketing and
selling expenses
223 173 Administrative expenses
177
142 Research and development expenses
26 31 Other expenses /
(income)
(69 ) (206 ) Restructuring charges
3
18 Total costs and expenses
1,930 1,224
Earnings before interest and taxes
289 440 Interest,
net
93 23 Earnings before taxes
196 417
Taxes on earnings
102 99 Net earnings
94 318 Net loss attributable to noncontrolling interests
— — Net earnings attributable to Campbell Soup
Company
$ 94 $ 318 Per share - basic
Net earnings attributable to Campbell Soup Company
$
.31 $ 1.05 Dividends
$ .35
$ .35 Weighted average shares outstanding - basic
301 303 Per share - assuming dilution Net
earnings attributable to Campbell Soup Company
$ .31
$ 1.04 Weighted average shares outstanding - assuming
dilution
302 305
The company adopted new accounting guidance on the presentation
of net periodic pension cost and net periodic postretirement
benefit cost in the first quarter of fiscal 2018. Certain amounts
in the prior year were reclassified to conform to the current-year
presentation.
CAMPBELL SOUP COMPANY CONSOLIDATED STATEMENTS OF EARNINGS
(millions, except per share amounts)
Twelve Months
Ended July 29, 2018 July 30, 2017 Net sales
$ 8,685 $ 7,890 Costs and expenses Cost
of products sold
5,869 4,965 Marketing and selling expenses
902 855 Administrative expenses
654 550 Research and
development expenses
110 111 Other expenses / (income)
619 (9 ) Restructuring charges
62 18
Total costs and expenses
8,216 6,490 Earnings
before interest and taxes
469 1,400 Interest, net
197
107 Earnings before taxes
272 1,293 Taxes on
earnings
11 406 Net earnings
261 887
Net loss attributable to noncontrolling interests
— —
Net earnings attributable to Campbell Soup Company
$
261 $ 887 Per share - basic Net earnings
attributable to Campbell Soup Company
$ .87 $
2.91 Dividends
$ 1.40 $ 1.40
Weighted average shares outstanding - basic
301 305
Per share - assuming dilution Net earnings attributable to
Campbell Soup Company
$ .86 $ 2.89
Weighted average shares outstanding - assuming dilution
302
307
The company adopted new accounting guidance on the presentation
of net periodic pension cost and net periodic postretirement
benefit cost in the first quarter of fiscal 2018. Certain amounts
in the prior year were reclassified to conform to the current-year
presentation.
CAMPBELL SOUP COMPANY CONSOLIDATED SUPPLEMENTAL
SCHEDULE OF SALES AND EARNINGS (unaudited) (millions, except per
share amounts)
Three Months Ended Percent
July 29, 2018 July 30, 2017 Change
Sales
Contributions: Americas Simple Meals and Beverages
$
789 $ 797 (1)% Global Biscuits and Snacks
1,202 642
87% Campbell Fresh
228 225 1% Total sales
$ 2,219 $ 1,664 33%
Earnings
Contributions: Americas Simple Meals and Beverages
$
155 $ 196 (21)% Global Biscuits and Snacks
158 111
42% Campbell Fresh
(7 ) (8 ) n/m Total operating
earnings
306 299 2% Corporate
(14 ) 159
Restructuring charges
(3 ) (18 ) Earnings before
interest and taxes
289 440 (34)% Interest, net
93 23
Taxes on earnings
102 99 Net earnings
94 318 (70)% Net loss attributable to noncontrolling
interests
— — Net earnings attributable to
Campbell Soup Company
$ 94 $ 318 (70)%
Per share - assuming dilution Net earnings attributable to Campbell
Soup Company
$ .31 $ 1.04 (70)%
n/m - not meaningful
Beginning in fiscal 2018, the business in Latin America is
managed as part of the Global Biscuits and Snacks segment. Prior to
fiscal 2018, the business in Latin America was managed as part of
the Americas Simple Meals and Beverages segment. Segment results
have been adjusted retrospectively to reflect this change.
CAMPBELL SOUP COMPANY CONSOLIDATED SUPPLEMENTAL
SCHEDULE OF SALES AND EARNINGS (millions, except per share amounts)
Twelve Months Ended Percent
July 29,
2018 July 30, 2017 Change
Sales
Contributions: Americas Simple Meals and Beverages
$
4,213 $ 4,256 (1)% Global Biscuits and Snacks
3,499
2,667 31% Campbell Fresh
970 967 —% Corporate
3
— n/m Total sales
$ 8,685 $
7,890 10%
Earnings
Contributions: Americas Simple Meals and Beverages
$
982 $ 1,111 (12)% Global Biscuits and Snacks
540 463
17% Campbell Fresh
(43 ) (9 ) n/m Total operating
earnings
1,479 1,565 (5)% Corporate
(948 )
(147 ) Restructuring charges
(62 ) (18 ) Earnings
before interest and taxes
469 1,400 (67)% Interest, net
197 107 Taxes on earnings
11 406 Net
earnings
261 887 (71)% Net loss attributable to
noncontrolling interests
— — Net earnings
attributable to Campbell Soup Company
$ 261 $
887 (71)% Per share - assuming dilution Net earnings
attributable to Campbell Soup Company
$ .86 $
2.89 (70)%
n/m - not meaningful
Beginning in fiscal 2018, the business in Latin America is
managed as part of the Global Biscuits and Snacks segment. Prior to
fiscal 2018, the business in Latin America was managed as part of
the Americas Simple Meals and Beverages segment. Segment results
have been adjusted retrospectively to reflect this change.
CAMPBELL SOUP COMPANY CONDENSED CONSOLIDATED BALANCE
SHEETS (millions)
July 29, 2018
July 30, 2017 Current assets
$ 2,296 $ 1,900 Plant
assets, net
3,233 2,454 Intangible assets, net
8,776
3,233 Other assets
224 139 Total assets
$
14,529 $ 7,726 Current liabilities
$
3,594 $ 2,395 Long-term debt
7,998 2,499 Other
liabilities
1,564 1,187 Total equity
1,373
1,645 Total liabilities and equity
$ 14,529 $
7,726 Total debt
$ 9,894 $ 3,536 Cash and cash
equivalents
$ 226 $ 319 CAMPBELL
SOUP COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (millions)
Twelve Months Ended July 29, 2018 July
30, 2017 Cash flows from operating activities: Net earnings
$ 261 $ 887 Adjustments to reconcile net earnings to
operating cash flow Impairment charges
748 212 Restructuring
charges
62 18 Stock-based compensation
61 60
Amortization of inventory fair value adjustment from acquisition
42 — Pension and postretirement benefit income
(187
) (258 ) Depreciation and amortization
394 318
Deferred income taxes
(133 ) 93 Other, net
34
18 Changes in working capital, net of acquisitions Accounts
receivable
56 28 Inventories
(84 ) 46 Prepaid
assets
27 (27 ) Accounts payable and accrued liabilities
78 (48 ) Net receipts from hedging activities
6 2
Other
(60 ) (58 ) Net cash provided by operating
activities
1,305 1,291 Cash flows from
investing activities: Purchases of plant assets
(407
) (338 ) Purchases of route businesses
(9 ) —
Sales of route businesses
10 — Businesses acquired, net of
cash acquired
(6,772 ) — Other, net
(19
) (30 ) Net cash used in investing activities
(7,197
) (368 ) Cash flows from financing activities: Short-term
borrowings
10,222 8,247 Short-term repayments
(9,944
) (8,002 ) Long-term borrowings
6,224 211 Long-term
repayments
(63 ) (90 ) Repayments of notes payable
— (400 ) Dividends paid
(426 ) (420 ) Treasury
stock purchases
(86 ) (437 ) Treasury stock issuances
— 2 Payments related to tax withholding for stock-based
compensation
(23 ) (22 ) Repurchase of noncontrolling
interest
(47 ) — Payments of debt issuance costs
(50 ) — Net cash provided by (used in)
financing activities
5,807 (911 ) Effect of exchange
rate changes on cash
(8 ) 11 Net change in
cash and cash equivalents
(93 ) 23 Cash and cash
equivalents — beginning of period
319 296 Cash
and cash equivalents — end of period
$ 226 $
319
Reconciliation of GAAP to Non-GAAP
Financial Measures
Fiscal Year Ended July 29, 2018
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. Management
believes that also presenting certain non-GAAP financial measures
provides additional information to facilitate comparison of the
company's historical operating results and trends in its underlying
operating results, and provides transparency on how the company
evaluates its business. Management uses these non-GAAP financial
measures in making financial, operating and planning decisions and
in evaluating the company's performance.
Organic Net
Sales
Organic net sales are net sales excluding the impact of
currency and acquisitions. Management believes that excluding these
items, which are not part of the ongoing business, improves the
comparability of year-to-year results. A reconciliation of net
sales as reported to organic net sales follows.
Three Months Ended July 29, 2018
July 30,2017
% Change (millions)
Net
Sales,asReported
Impact ofCurrency
Impact ofAcquisitions
OrganicNet Sales
Net
Sales,asReported
Net
Sales,asReported
OrganicNet Sales
Americas Simple Meals and Beverages $ 789
$ (2 ) $ (40
) $ 747 $ 797 (1 )% (6 )%
Global Biscuits and Snacks 1,202 3 (565
) 640 642 87 % — %
Campbell Fresh 228
— —
228 225 1 % 1 %
Total Net Sales
$ 2,219 $ 1
$ (605 ) $ 1,615 $
1,664 33 % (3 )%
Year Ended
July 29, 2018
July 30,2017
% Change (millions)
Net
Sales,asReported
Impact ofCurrency
Impact ofAcquisitions
OrganicNet Sales
Net
Sales,asReported
Net
Sales,asReported
OrganicNet Sales
Americas Simple Meals and Beverages $ 4,213
$ (18 ) $ (123 ) $
4,072 $ 4,256 (1 )% (4 )%
Global Biscuits and Snacks
3,499 (21 ) (772 ) 2,706
2,667 31 % 1 %
Campbell Fresh 970 — —
970 967 — % — %
Corporate 3
— — 3 —
n/m n/m
Total Net Sales $
8,685 $ (39 )
$ (895 ) $ 7,751 $
7,890 10 % (2 )%
n/m - not meaningful
Items Impacting
Earnings
The company believes that financial information excluding
certain items that are not considered to reflect the ongoing
operating results, 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
results excluding these items. The following items impacted
earnings: (1) In the fourth quarter of fiscal 2018, the
company incurred gains of $122 million in Other expenses / (income)
($93 million after tax, or $.31 per share) associated with
mark-to-market adjustments and curtailments for defined benefit
pension and postretirement plans. In fiscal 2018, the company
incurred gains of $136 million in Other expenses / (income) ($103
million after tax, or $.34 per share) associated with
mark-to-market adjustments and curtailments for defined benefit
pension and postretirement plans. In the fourth quarter of fiscal
2017, the company incurred gains of $198 million in Other expenses
/ (income) ($129 million after tax, or $.42 per share) associated
with mark-to-market adjustments for defined benefit pension and
postretirement plans. In fiscal 2017, the company incurred gains of
$178 million in Other expenses / (income) ($116 million after tax,
or $.38 per share) associated with mark-to-market adjustments for
defined benefit pension and postretirement plans. (2) In
fiscal 2015, the company implemented initiatives to reduce costs
and to streamline its organizational structure. In fiscal 2017, the
company expanded these cost savings initiatives by further
optimizing its supply chain network, primarily in North America,
continuing to evolve its operating model to drive efficiencies, and
more fully integrating its recent acquisitions. In January 2018, as
part of the expanded initiatives, the company authorized additional
costs to improve the operational efficiency of its thermal supply
chain network in North America by closing its manufacturing
facility in Toronto, Ontario, and to optimize its information
technology infrastructure by migrating certain applications to the
latest cloud technology platform. In the fourth quarter of
fiscal 2018, the company recorded implementation costs and other
related costs of $20 million in Administrative expenses, $25
million in Cost of products sold, and $1 million in Marketing and
selling expenses (aggregate impact of $33 million after tax, or
$.11 per share) related to these initiatives. In fiscal 2018, the
company recorded Restructuring charges of $49 million and
implementation costs and other related costs of $88 million in
Administrative expenses, $45 million in Cost of products sold, and
$3 million in Marketing and selling expenses (aggregate impact of
$136 million after tax, or $.45 per share) related to these
initiatives. In the fourth quarter of fiscal 2017, the company
recorded Restructuring charges of $18 million and implementation
costs and other related costs of $18 million in Administrative
expenses, and $4 million in Cost of products sold (aggregate impact
of $26 million after tax, or $.09 per share) related to these
initiatives. In fiscal 2017, the company recorded Restructuring
charges of $18 million and implementation costs and other related
costs of $36 million in Administrative expenses, and $4 million in
Cost of products sold (aggregate impact of $37 million after tax,
or $.12 per share) related to these initiatives. (3) In the
second quarter of fiscal 2018, the company announced its intent to
acquire Snyder's-Lance, Inc and on March 26, 2018, the acquisition
closed. In the fourth quarter of fiscal 2018, the company incurred
$14 million of transaction and integration costs, of which $3
million was recorded in Restructuring charges, $6 million in
Administrative expenses, and $5 million in Cost of products sold
associated with an acquisition date fair value adjustment for
inventory. The aggregate impact was $8 million after tax, or $.03
per share. In fiscal 2018, the company incurred $120 million of
transaction and integration costs, of which $13 million was
recorded in Restructuring charges, $12 million in Administrative
expenses, $53 million in Other expenses / (income), and $42 million
in Cost of products sold. The company also recorded a gain in
Interest expense of $18 million on treasury rate lock contracts
used to hedge the planned financing of the acquisition. The
aggregate impact was $102 million, $73 million after tax, or $.24
per share. (4) In fiscal 2018, the company reflected the
impact on taxes of the enactment of the Tax Cuts and Jobs Act that
was signed into law in December 2017. In the fourth quarter of
fiscal 2018, the company recorded a tax benefit of $6 million ($.02
per share) related to the transition tax on unremitted foreign
earnings. In fiscal 2018, the company recorded a tax benefit of
$179 million due to the remeasurement of deferred tax assets and
liabilities, and a tax charge of $53 million related to the
transition tax on unremitted foreign earnings. The net impact was a
tax benefit of $126 million ($.42 per share). (5)
In the fourth quarter of fiscal 2018, the
company performed an impairment assessment on the Plum trademark.
In fiscal 2018, sales and operating performance were well below
expectations due in part to competitive pressure and reduced
margins. In the fourth quarter of fiscal 2018, as part of a
strategic review initiated by a new leadership team and based on
recent performance, the company lowered its long-term outlook for
future sales. The company recorded a non-cash impairment charge of
$54 million ($41 million after tax, or $.14 per share) in Other
expenses / (income).
In the third quarter of fiscal 2018, the company performed
interim impairment assessments within Campbell Fresh on the deli
reporting unit, which includes Garden Fresh Gourmet and the U.S.
refrigerated soup business, and the Bolthouse Farms refrigerated
beverages and salad dressings reporting unit. Within the deli unit,
the company revised its long-term outlook due to the anticipated
loss of refrigerated soup business with certain private label
customers, as well as the recent performance of the business. In
addition, the operating performance of the Bolthouse Farms
refrigerated beverages and salad dressing reporting unit was below
expectations. The company revised its long-term outlook for future
earnings and cash flows for each of these reporting units. The
company recorded a non-cash impairment charge of $11 million on the
tangible assets and $94 million on the intangible assets ($80
million after tax, or $.27 per share) of the deli reporting unit,
and a non-cash impairment charge of $514 million ($417 million
after tax, or $1.39 per share) related to the intangible assets of
the Bolthouse Farms refrigerated beverages and salad dressings
reporting unit. The aggregate impact of the impairment charges was
$619 million, of which $11 million was recorded in Cost of products
sold and $608 million in Other expenses / (income), ($497 million
after tax, or $1.65 per share). In the second quarter of
fiscal 2018, the company performed an interim impairment assessment
on the intangible assets of the Bolthouse Farms carrot and carrot
ingredients reporting unit as operating performance was below
expectations. The company revised its outlook for future earnings
and cash flows and recorded a non-cash impairment charge of $75
million in Other expenses / (income) ($74 million after tax, or
$.25 per share). In fiscal 2018, the total non-cash
impairment charges recorded were $748 million, of which $11 million
was recorded in Cost of products sold and $737 million in Other
expenses / (income), ($612 million after tax, or $2.03 per share).
In the second quarter of fiscal 2017, the company performed
an interim impairment assessment on the intangible assets of the
Bolthouse Farms carrot and carrot ingredients reporting unit and
the Garden Fresh Gourmet reporting unit as operating performance
was well below expectations and a new leadership team of the
Campbell Fresh division initiated a strategic review which led to a
revised outlook for future sales, earnings, and cash flow. The
company recorded a non-cash impairment charge of $147 million ($139
million after tax, or $.45 per share) related to intangible assets
of the Bolthouse Farms carrot and carrot ingredients reporting unit
and a non-cash impairment charge of $65 million ($41 million after
tax, or $.13 per share) related to the intangible assets of the
Garden Fresh Gourmet reporting unit (aggregate pre-tax impact of
$212 million, $180 million after tax, or $.59 per share). The
charges were included in Other expenses / (income). (6) In
the third quarter of fiscal 2018, the company recorded a loss of
$22 million in Other expenses / (income) ($15 million after tax, or
$.05 per share) from a settlement of a legal claim. (7) In
the fourth quarter of fiscal 2017, the company recorded a tax
benefit of $52 million in Taxes on earnings primarily related to
the sale of intercompany notes receivable to a financial
institution, which resulted in the recognition of foreign exchange
losses on the notes for tax purposes. In addition, the company
recorded a $6 million reduction to interest expense ($4 million
after tax) related to premiums and fees received on the sale of the
notes. The aggregate impact was $56 million after tax, or $.18 per
share. The following tables reconcile financial
information, presented in accordance with GAAP, to financial
information excluding certain items:
Three Months
Ended July 29, 2018 July 30, 2017
(millions, except per share amounts)
Asreported
Adjustments(a)
Adjusted
Asreported
Adjustments(a) Adjusted
AdjustedPercentChange
Gross margin
$ 649 $ 30 $
679 $ 598 $ 4 $ 602 13 % Gross margin percentage
29.2
% 30.6 % 35.9 % 36.2 % Marketing and selling
expenses
$ 223 $ (1 ) $
222 $ 173 $ — $ 173 Administrative expenses
$
177 $ (26 ) $ 151 $ 142 $
(18 ) $ 124 Other expenses / (income)
$ (69 )
$ 68 $ (1 ) $ (206 ) $ 198 $ (8
) Restructuring charges
$ 3 $ (3
) $ — $ 18 $ (18 ) $ — Earnings before
interest and taxes
$ 289 $ (8
) $ 281 $ 440 $ (158 ) $ 282
— % Interest, net
93 — 93
23 6 29 Earnings before taxes
$
196 $ (8 ) $ 188
$ 417 $ (164 ) $ 253 Taxes
102 9
111 99 (5 ) 94 Effective income tax rate
52.0
% 59.0 % 23.7 % 37.2 % Net
earnings attributable to Campbell Soup Company
$ 94
$ (17 ) $ 77 $ 318
$ (159 ) $ 159 (52 )% Diluted net earnings per share
attributable to Campbell Soup Company
$ .31
$ (.06 ) $ .25 $ 1.04
$ (.52 ) $ .52 (52 )% (a)See following tables for
additional information.
Three Months Ended
July 29, 2018 (millions, except per share amounts)
Mark-to-market(1)
Restructuringcharges,implementationcosts
and otherrelated costs(2)
Transactionandintegrationcosts(3)
Taxreform(4)
Impairmentcharges(5)
Adjustments Gross margin
$ — $
25 $ 5 $ — $ —
$ 30 Marketing and selling expenses
—
(1 ) — — — (1 )
Administrative expenses
— (20 ) (6
) — — (26 ) Other expenses /
(income)
122 — — — (54 )
68 Restructuring charges
— —
(3 ) — — (3
) Earnings before interest and taxes
$ (122
) $ 46 $ 14
$ — $ 54 $
(8 ) Interest, net
— —
— — — —
Earnings before taxes
$ (122 ) $
46 $ 14 $ —
$ 54 $ (8 ) Taxes
(29 ) 13 6 6
13 9 Net earnings attributable
to Campbell Soup Company
$ (93 ) $
33 $ 8 $ (6
) $ 41 $ (17 )
Diluted net earnings per share attributable to Campbell Soup
Company*
$ (.31 ) $ .11
$ .03 $ (.02 ) $
.14 $ (.06 ) *The sum of
individual per share amounts may not add due to rounding.
Three Months Ended July 30, 2017 (millions,
except per share amounts)
Mark-to-market(1)
Restructuringcharges,implementationcosts
and otherrelated costs(2)
Sale ofnotes(7)
Adjustments Gross margin $ — $ 4 $ — $ 4
Administrative expenses — (18 ) — (18 ) Other expenses / (income)
198 — — 198 Restructuring charges — (18 ) — (18 )
Earnings before interest and taxes $ (198 ) $ 40 $ —
$ (158 ) Interest, net — — 6 6 Earnings
before taxes $ (198 ) $ 40 $ (6 ) $ (164 ) Taxes (69 ) 14
50 (5 ) Net earnings attributable to Campbell Soup
Company $ (129 ) $ 26 $ (56 ) $ (159 ) Diluted net earnings
per share attributable to Campbell Soup Company* $ (.42 ) $ .09
$ (.18 ) $ (.52 ) *The sum of individual per share amounts
may not add due to rounding.
Year Ended
July 29, 2018 July 30, 2017 (millions, except
per share amounts)
Asreported
Adjustments(a) Adjusted
Asreported
Adjustments(a) Adjusted
AdjustedPercentChange
Gross margin
$ 2,816 $ 98 $
2,914 $ 2,925 $ 4 $ 2,929 (1 )% Gross margin percentage
32.4 % 33.6 % 37.1 % 37.1 % Marketing
and selling expenses
$ 902 $ (3
) $ 899 $ 855 $ — $ 855 Administrative
expenses
$ 654 $ (100 ) $
554 $ 550 $ (36 ) $ 514 Other expenses / (income)
$
619 $ (676 ) $ (57
) $ (9 ) $ (34 ) $ (43 ) Restructuring charges
$
62 $ (62 ) $ — $ 18 $ (18
) $ — Earnings before interest and taxes
$ 469
$ 939 $ 1,408 $ 1,400
$ 92 $ 1,492 (6 )% Interest, net
197
18 215 107 6 113
Earnings before taxes
$ 272 $
921 $ 1,193 $ 1,293 $ 86
$ 1,379 Taxes
11 314 325 406 41
447 Effective income tax rate
4.0 %
27.2 % 31.4 % 32.4 % Net earnings attributable
to Campbell Soup Company
$ 261 $
607 $ 868 $ 887 $ 45
$ 932 (7 )% Diluted net earnings per share
attributable to Campbell Soup Company
$ .86
$ 2.01 $ 2.87 $ 2.89
$ .15 $ 3.04 (6 )% (a)See following tables for
additional information.
Year Ended July 29,
2018 (millions, except per share amounts)
Mark-to-market(1)
Restructuringcharges,implementationcosts
and otherrelated costs(2)
Transactionandintegrationcosts(3)
Taxreform(4)
Impairmentcharges(5)
Claimsettlement(6)
Adjustments Gross margin
$ — $
45 $ 42 $ — $ 11
$ — $ 98 Marketing and selling expenses
— (3 ) — — — —
(3 ) Administrative expenses
— (88
) (12 ) — — — (100
) Other expenses / (income)
136 — (53
) — (737 ) (22 )
(676 ) Restructuring charges
—
(49 ) (13 ) — —
— (62 ) Earnings before interest
and taxes
$ (136 ) $ 185
$ 120 $ — $
748 $ 22 $ 939
Interest, net
— — 18
— — — 18
Earnings before taxes
$ (136 ) $
185 $ 102 $ —
$ 748 $ 22
$ 921 Taxes
(33 ) 49
29 126 136
7 314 Net earnings attributable to
Campbell Soup Company
$ (103 ) $
136 $ 73 $ (126
) $ 612 $ 15
$ 607 Diluted net earnings per share
attributable to Campbell Soup Company
$ (.34 )
$ .45 $ .24 $
(.42 ) $ 2.03 $
.05 $ 2.01 Year
Ended July 30, 2017 (millions, except per share amounts)
Mark-to-market(1)
Restructuringcharges,implementationcosts
and otherrelated costs(2)
Impairmentcharges(5)
Sale ofnotes(7)
Adjustments Gross margin $ — $ 4 $ — $ — $ 4
Administrative expenses — (36 ) — — (36 ) Other expenses / (income)
178 — (212 ) — (34 ) Restructuring charges — (18 ) —
— (18 ) Earnings before interest and taxes $ (178 ) $ 58
$ 212 $ — $ 92 Interest, net — —
— 6 6 Earnings before taxes $ (178 ) $
58 $ 212 $ (6 ) $ 86 Taxes (62 ) 21 32
50 41 Net earnings attributable to Campbell
Soup Company $ (116 ) $ 37 $ 180 $ (56 ) $ 45
Diluted net earnings per share attributable to Campbell Soup
Company $ (.38 ) $ .12 $ .59 $ (.18 ) $ .15
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180830005302/en/
Campbell Soup CompanyINVESTOR
CONTACT:Ken Gosnell,
856-342-6081ken_gosnell@campbellsoup.comorMEDIA CONTACT:Thomas Hushen,
856-342-5227thomas_hushen@campbellsoup.com
Campbell Soup (NYSE:CPB)
Historical Stock Chart
From Jun 2024 to Jul 2024
Campbell Soup (NYSE:CPB)
Historical Stock Chart
From Jul 2023 to Jul 2024