- Earnings Per Share (EPS) from Continuing Operations of $0.80
increased 43%. Adjusted EPS of $0.84 increased 17%.
- Earnings Before Interest and Taxes (EBIT) increased 15% to $401
million. Adjusted EBIT increased 8% to $393 million.
- Net Sales increased 5% reflecting continued elevated demand for
Campbell's brands.
- Fiscal 2021 Adjusted EPS guidance of $3.03 to $3.11, reflecting
growth of 3% to 5%.
Campbell Soup Company (NYSE:CPB) today reported results
for its second-quarter fiscal 2021 ended January 31, 2021.
Continuing Operations
Three Months Ended
Six Months Ended
($ in millions, except per share)
Jan. 31, 2021
Jan. 26, 2020
% Change
Jan. 31, 2021
Jan. 26, 2020
% Change
Net Sales
As Reported (GAAP)
$2,279
$2,162
5%
$4,619
$4,345
6%
Organic
5%
7%
Earnings Before Interest and Taxes
(EBIT)
As Reported (GAAP)
$401
$350
15%
$862
$667
29%
Adjusted
$393
$364
8%
$856
$756
13%
Diluted Earnings Per Share
As Reported (GAAP)
$0.80
$0.56
43%
$1.82
$1.12
63%
Adjusted
$0.84
$0.72
17%
$1.86
$1.51
23%
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
Mark Clouse, Campbell’s President and CEO, said, "We delivered
another quarter of strong results, with top-line growth in both
segments—partly tempered by foodservice and supply constraints
caused by COVID-19—as well as continued growth in EBIT and EPS. In
addition, nearly 75% of our brands grew or held share which was an
important goal for the quarter. Given this strong performance, we
are providing full-year fiscal 2021 guidance and we are confident
in the long-term growth potential of Campbell."
Items Impacting Comparability for Continuing
Operations
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
Six Months Ended
Jan. 31, 2021
Jan. 26, 2020
Jan. 31, 2021
Jan. 26, 2020
As Reported (GAAP)
$0.80
$0.56
$1.82
$1.12
Restructuring charges, implementation
costs and other related costs associated with cost savings
initiatives
$0.05
$0.06
$0.07
$0.09
Net pension settlement gains
$(0.08)
$(0.03)
$(0.09)
$(0.03)
Deferred tax charge
$0.06
$—
$0.06
$—
Charges (gains) associated with
divestiture
$—
$(0.06)
$—
$0.14
Loss on extinguishment of debt
$—
$0.19
$—
$0.19
Adjusted*
$0.84
$0.72
$1.86
$1.51
*Numbers may not add due to rounding.
Second-Quarter Results from Continuing Operations
Net sales, both reported and organic, increased 5% to $2.28
billion driven by gains in both Meals & Beverages and Snacks.
The growth was driven by a 4% increase in volume and mix reflecting
heightened demand as at-home food consumption remained elevated as
a result of the COVID-19 pandemic, partly offset by declines in
foodservice and in partner brands within the Snyder's-Lance
portfolio. Lower promotional spending net of price and sales
allowances contributed a 1% increase to net sales growth.
Gross margin increased from 34.3% to 34.4%. Excluding items
impacting comparability, adjusted gross margin decreased 10 basis
points to 34.3% as cost inflation, other operational costs and
continued COVID-19 related costs were partially offset by the
benefits of supply chain productivity improvements and cost savings
initiatives, as well as moderated promotional spending.
Marketing and selling expenses decreased 2% to $232 million.
Excluding items impacting comparability in the prior year, adjusted
marketing and selling expenses decreased 1% driven by the benefits
of cost savings initiatives and lower marketing overhead costs,
largely offset by an 8% increase in advertising and consumer
promotion (A&C). Administrative expenses increased 7% to $158
million. Excluding items impacting comparability, adjusted
administrative expenses increased by $17 million, or 13%, to $152
million driven primarily by higher benefit-related costs and higher
general administrative costs, partially offset by the benefits of
cost savings initiatives.
Other income was $45 million compared to other income of $22
million in the prior year. Excluding items impacting comparability,
adjusted other income was $15 million compared to $11 million in
the prior year.
As reported EBIT increased 15% to $401 million. Excluding items
impacting comparability, adjusted EBIT increased 8% to $393 million
primarily due to higher sales volumes, offset partly by higher
adjusted administrative expenses.
Net interest expense was $54 million compared to $146 million in
the prior year reflecting a loss on the extinguishment of debt in
the second quarter of fiscal 2020. Excluding items impacting
comparability in the prior year, net interest expense declined 24%
from $71 million to $54 million, reflecting lower levels of debt.
The tax rate was 29.4% as compared to 16.2% in the prior year.
Excluding items impacting comparability, the adjusted tax rate
decreased 70 basis points to 24.2% from 24.9%.
As reported EPS from continuing operations were $0.80 per share.
Excluding items impacting comparability, adjusted EPS from
continuing operations increased 17% to $0.84 reflecting an increase
in adjusted EBIT and lower adjusted net interest expense.
First-Half Results from Continuing Operations
Net sales increased 6% to $4.62 billion. Organic net sales,
which exclude the impact from the sale of the European chips
business, increased 7% from the prior year driven by gains in both
Meals & Beverages and Snacks.
As reported EBIT increased 29% to $862 million. Excluding items
impacting comparability, adjusted EBIT increased 13% to $856
million reflecting higher sales volume, improved gross margin
performance and higher adjusted other income, offset partly by
increased adjusted administrative expenses. Within marketing and
selling expenses, a 12% increase in A&C was more than offset by
lower selling and other marketing costs.
Net interest expense was $109 million compared to $226 million
in the prior year. Excluding items impacting comparability in the
prior year, adjusted net interest expense decreased 28% from $151
million in the prior year to $109 million reflecting lower levels
of debt. The tax rate was 26.4% as compared to 22.9% in the prior
year. Excluding items impacting comparability, the adjusted tax
rate decreased 50 basis points to 24.0% from 24.5%.
The company reported EPS of $1.82 per share. Excluding items
impacting comparability, adjusted EPS increased 23% to $1.86 per
share reflecting the increase in adjusted EBIT and lower adjusted
net interest expense.
Cash flows from operations decreased from $663 million in the
prior year to $611 million primarily due to changes in working
capital, which reflect a significant increase in accounts payable
in the prior year, partially offset by higher cash earnings.
Capital investments were $132 million compared to $167 million in
the prior year. The decline was primarily due to capital
expenditures associated with discontinued operations in the prior
year. In line with the company’s commitment to returning value to
shareholders, the company paid $215 million of cash dividends.
Cost Savings Program from Continuing Operations
In the second quarter of fiscal 2021, Campbell achieved just
over $20 million in savings under its multi-year cost savings
program, inclusive of Snyder’s-Lance synergies, bringing total
program-to-date savings to approximately $760 million. Campbell
remains on track to deliver annualized savings of $850 million by
the end of fiscal 2022.
Campbell Provides Full Year Fiscal 2021 Guidance
Following strong first half results, Campbell is providing
full-year fiscal 2021 guidance that reflects cycling the COVID-19
related surge in demand during the second half of fiscal 2020, and
an expected sequential improvement in margin as we progress through
the remainder of fiscal 2021. Fiscal 2020 benefited from a 53rd
week, which was estimated to be worth 2 percentage points of net
sales, and approximately $0.04 on adjusted EPS.
Based on the foregoing, the company is providing full-year
fiscal 2021 guidance as set forth in the table below:
Continuing Operations
FY 2020
Results
FY 2021
Guidance
($ in millions, except per share)
Net Sales
$8,691
-3.5% to -2.5%
Organic Net Sales
$8,515
*
-1.5% to -0.5%
Adjusted EBIT
$1,449
*
-1% to +1%
Adjusted EPS
$2.95
*
+3% to +5%
$3.03 to $3.11
* Adjusted - refer to the detailed
reconciliation of the reported (GAAP) financial information to the
adjusted financial information at the end of this news release.
Note: A non-GAAP reconciliation is not
provided for 2021 adjusted EBIT and adjusted EPS guidance as
certain amounts are not estimable, such as pension and
postretirement mark-to-market adjustments, and these items are not
considered to reflect the company's ongoing business results.
Segment Operating Review
An analysis of net sales and operating earnings by reportable
segment follows:
Three
Months Ended Jan. 31, 2021
($ in millions)
Meals & Beverages
Snacks*
Total
Net Sales, as Reported
$1,300
$979
$2,279
Volume and Mix
5%
3%
4%
Price and Sales Allowances
(1)%
—%
(1)%
Promotional Spending
2%
2%
2%
Organic Net Sales
6%
4%
5%
Currency
—%
—%
—%
% Change vs. Prior Year
6%
4%
5%
Segment Operating Earnings
$258
$144
% Change vs. Prior Year
7%
6%
*Numbers do not add due to rounding.
Note: A detailed reconciliation of the
reported (GAAP) net sales to organic net sales is included at the
end of this news release.
Six
Months Ended Jan. 31, 2021
($ in millions)
Meals & Beverages
Snacks
Total
Net Sales, as Reported
$2,642
$1,977
$4,619
Volume and Mix
8%
2%
5%
Price and Sales Allowances
(1)%
—%
—%
Promotional Spending
2%
2%
2%
Organic Net Sales
9%
4%
7%
Currency
—%
—%
—%
Divestiture
—%
(1)%
(1)%
% Change vs. Prior Year
9%
3%
6%
Segment Operating Earnings
$591
$283
% Change vs. Prior Year
13%
8%
Note: A detailed reconciliation of the
reported (GAAP) net sales to organic net sales is included at the
end of this news release.
Meals & Beverages
Net sales, both reported and organic, in the quarter increased
6% reflecting increases across U.S retail products, including gains
in U.S. soup, V8 beverages, Prego pasta sauces and Campbell’s
pasta, partially offset by a decline in foodservice. Volume was
favorable in U.S. retail driven by increased demand of food
purchases for at-home consumption, offset partly by the negative
impact on foodservice which experienced an increase in COVID-19
related restrictions in the quarter. Sales of U.S. soup increased
10% primarily due to volume gains in condensed soups and
ready-to-serve soups. Promotional activity was moderated in part
due to supply constraints, particularly on broth.
Segment operating earnings increased 7%. The increase was
primarily due to sales volume gains, offset partly by lower gross
margin performance and higher administrative expenses.
Snacks
Net sales, both reported and organic, in the quarter increased
4% driven by volume gains fueled by the majority of our power
brands and lower levels of promotional spending on supply
constrained brands. Sales gains were driven by our salty snacks
including Kettle Brand potato chips, Late July snacks, Cape Cod
potato chips and Pop Secret popcorn as well as our fresh bakery,
including Pepperidge Farm Farmhouse products. These gains were
partially offset by declines in partner brands within the
Snyder's-Lance portfolio and Lance sandwich crackers which faced
supply constraints in the quarter.
Segment operating earnings increased 6% driven by sales volume
gains and lower selling expenses, partly offset by higher marketing
investment, administrative expenses and lower gross margin
performance.
Corporate
Corporate income was $17 million in the second quarter of fiscal
2021 compared to expense of $21 million in the prior year.
Corporate income in the second quarter of fiscal 2021 included
pension settlement gains of $30 million and costs related to cost
savings initiatives of $4 million. Corporate expenses in the second
quarter of fiscal 2020 included costs related to cost savings
initiatives of $18 million and pension settlement gains of $11
million. Excluding these amounts, the remaining decrease in
expenses primarily reflects mark-to-market gains on outstanding
commodity hedges.
Conference Call and Webcast
Campbell will host a conference call to discuss these results
today at 8:00 a.m. Eastern Time. To join, dial +1 (703) 639-1316.
The access code is 8366876. 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/events-and-presentations. A
recording of the call will also be available until 11:59 p.m. ET on
March 24, 2021, at +1 (404) 537-3406. The access code for the
replay is 8366876.
Reportable Segments
Campbell Soup Company earnings results are reported as
follows:
Meals & Beverages includes the
retail and foodservice 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 Foods
broth, soups and non-dairy beverages; Prego pasta sauces; Pace
Mexican sauces; Campbell’s gravies, pasta, beans and dinner sauces;
Swanson canned poultry; Plum baby food and snacks; V8 juices and
beverages; and Campbell’s tomato juice.
Snacks includes Pepperidge Farm
cookies, crackers, fresh bakery and frozen products in U.S. retail,
including Pepperidge Farm Farmhouse* cookies and bakery products,
Milano* cookies and Goldfish* crackers; and Snyder’s of Hanover*
pretzels, Lance* sandwich crackers, Cape Cod* and Kettle Brand*
potato chips, Late July* snacks, Snack Factory Pretzel Crisps,* Pop
Secret popcorn, Emerald nuts, and other snacking products in the
U.S. and Canada. The segment also includes the retail business in
Latin America. We refer to the * trademarks as our "power
brands."
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 FTSE4Good Index. For more
information, visit www.campbellsoupcompany.com or follow company
news on Twitter via @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 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) impacts of, and associated responses to, the COVID-19 pandemic
on our business, suppliers, customers, consumers and employees; (2)
the company’s ability to execute on and realize the expected
benefits from its strategy, including growing sales in snacks and
maintaining its market share position in soup; (3) the impact of
strong competitive responses to the company’s efforts to leverage
its brand power with product innovation, promotional programs and
new advertising; (4) the risks associated with trade and consumer
acceptance of product improvements, shelving initiatives, new
products and pricing and promotional strategies; (5) the ability to
realize projected cost savings and benefits from cost savings
initiatives and the integration of recent acquisitions; (6)
disruptions in or inefficiencies to the company’s supply chain
and/or operations, including the impacts of the COVID-19 pandemic,
as well as fluctuations in the supply of and inflation in energy
and raw and packaging materials cost; (7) 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; (8) changes in
consumer demand for the company’s products and favorable perception
of the company’s brands; (9) changing inventory management
practices by certain of the company’s key customers; (10) 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; (11)
product quality and safety issues, including recalls and product
liabilities; (12) 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; (13)
the uncertainties of litigation and regulatory actions against the
company; (14) the costs, disruption and diversion of management’s
attention associated with activist investors; (15) a material
failure in or breach of the company’s information technology
systems; (16) impairment to goodwill or other intangible assets;
(17) the company’s ability to protect its intellectual property
rights; (18) increased liabilities and costs related to the
company’s defined benefit pension plans; (19) the company’s ability
to attract and retain key talent; (20) negative changes and
volatility in financial and credit markets, deteriorating economic
conditions and other external factors, including changes in laws
and regulations; (21) 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, other pandemics or other calamities;
and (22) 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
January 31, 2021
January 26, 2020
Net sales
$
2,279
$
2,162
Costs and expenses
Cost of products sold
1,496
1,420
Marketing and selling expenses
232
237
Administrative expenses
158
148
Research and development expenses
19
22
Other expenses / (income)
(45
)
(22
)
Restructuring charges
18
7
Total costs and expenses
1,878
1,812
Earnings before interest and taxes
401
350
Interest, net
54
146
Earnings before taxes
347
204
Taxes on earnings
102
33
Earnings from continuing operations
245
171
Earnings from discontinued operations
—
1,037
Net earnings
245
1,208
Net loss attributable to noncontrolling
interests
—
—
Net earnings attributable to Campbell Soup
Company
$
245
$
1,208
Per share - basic
Earnings from continuing operations
attributable to Campbell Soup Company
$
.81
$
.57
Earnings from discontinued operations
—
3.43
Net earnings attributable to Campbell Soup
Company
$
.81
$
4.00
Weighted average shares outstanding -
basic
303
302
Per share - assuming dilution
Earnings from continuing operations
attributable to Campbell Soup Company
$
.80
$
.56
Earnings from discontinued operations
—
3.41
Net earnings attributable to Campbell Soup
Company
$
.80
$
3.97
Weighted average shares outstanding -
assuming dilution
305
304
CAMPBELL SOUP COMPANY
CONSOLIDATED STATEMENTS OF
EARNINGS (unaudited)
(millions, except per share
amounts)
Six Months Ended
January 31, 2021
January 26, 2020
Net sales
$
4,619
$
4,345
Costs and expenses
Cost of products sold
3,023
2,865
Marketing and selling expenses
440
443
Administrative expenses
299
282
Research and development expenses
39
44
Other expenses / (income)
(63
)
34
Restructuring charges
19
10
Total costs and expenses
3,757
3,678
Earnings before interest and taxes
862
667
Interest, net
109
226
Earnings before taxes
753
441
Taxes on earnings
199
101
Earnings from continuing operations
554
340
Earnings from discontinued operations
—
1,034
Net earnings
554
1,374
Net loss attributable to noncontrolling
interests
—
—
Net earnings attributable to Campbell Soup
Company
$
554
$
1,374
Per share - basic
Earnings from continuing operations
attributable to Campbell Soup Company
$
1.83
$
1.13
Earnings from discontinued operations
—
3.44
Net earnings attributable to Campbell Soup
Company*
$
1.83
$
4.56
Weighted average shares outstanding -
basic
303
301
Per share - assuming dilution
Earnings from continuing operations
attributable to Campbell Soup Company
$
1.82
$
1.12
Earnings from discontinued operations
—
3.41
Net earnings attributable to Campbell Soup
Company
$
1.82
$
4.53
Weighted average shares outstanding -
assuming dilution
305
303
*The sum of individual per share amounts
may not add due to rounding.
CAMPBELL SOUP COMPANY
CONSOLIDATED SUPPLEMENTAL
SCHEDULE OF SALES AND EARNINGS (unaudited)
(millions, except per share
amounts)
Three Months Ended
January 31, 2021
January 26, 2020
Percent Change
Sales
Contributions:
Meals & Beverages
$
1,300
$
1,224
6
%
Snacks
979
938
4
%
Total sales
$
2,279
$
2,162
5
%
Earnings
Contributions:
Meals & Beverages
$
258
$
242
7
%
Snacks
144
136
6
%
Total operating earnings
402
378
6
%
Corporate
17
(21
)
Restructuring charges
(18
)
(7
)
Earnings before interest and taxes
401
350
15
%
Interest, net
54
146
Taxes on earnings
102
33
Earnings from continuing operations
245
171
43
%
Earnings from discontinued operations
—
1,037
n/m
Net earnings
245
1,208
(80
)%
Net loss attributable to noncontrolling
interests
—
—
Net earnings attributable to Campbell Soup
Company
$
245
$
1,208
(80
)%
Per share - assuming dilution
Earnings from continuing operations
attributable to Campbell Soup Company
$
.80
$
.56
43
%
Earnings from discontinued operations
—
3.41
n/m
Net earnings attributable to Campbell Soup
Company
$
.80
$
3.97
(80
)%
n/m - not meaningful
CAMPBELL SOUP COMPANY
CONSOLIDATED SUPPLEMENTAL
SCHEDULE OF SALES AND EARNINGS (unaudited)
(millions, except per share
amounts)
Six Months Ended
January 31, 2021
January 26, 2020
Percent Change
Sales
Contributions:
Meals & Beverages
$
2,642
$
2,418
9
%
Snacks
1,977
1,927
3
%
Total sales
$
4,619
$
4,345
6
%
Earnings
Contributions:
Meals & Beverages
$
591
$
524
13
%
Snacks
283
261
8
%
Total operating earnings
874
785
11
%
Corporate
7
(108
)
Restructuring charges
(19
)
(10
)
Earnings before interest and taxes
862
667
29
%
Interest, net
109
226
Taxes on earnings
199
101
Earnings from continuing operations
554
340
63
%
Earnings from discontinued operations
—
1,034
n/m
Net earnings
554
1,374
(60
)%
Net loss attributable to noncontrolling
interests
—
—
Net earnings attributable to Campbell Soup
Company
$
554
$
1,374
(60
)%
Per share - assuming dilution
Earnings from continuing operations
attributable to Campbell Soup Company
$
1.82
$
1.12
63
%
Earnings from discontinued operations
—
3.41
n/m
Net earnings attributable to Campbell Soup
Company
$
1.82
$
4.53
(60
)%
n/m - not meaningful
CAMPBELL SOUP COMPANY
CONDENSED CONSOLIDATED BALANCE
SHEETS (unaudited)
(millions)
January 31, 2021
January 26, 2020
Current assets
$
2,535
$
1,556
Plant assets, net
2,329
2,336
Intangible assets, net
7,320
7,361
Other assets
314
401
Total assets
$
12,498
$
11,654
Current liabilities
$
2,801
$
2,536
Long-term debt
4,996
4,919
Other liabilities
1,776
1,700
Total equity
2,925
2,499
Total liabilities and equity
$
12,498
$
11,654
Total debt
$
6,021
$
5,821
Total cash and cash equivalents
$
946
$
58
CAMPBELL SOUP COMPANY
CONSOLIDATED STATEMENTS OF CASH
FLOWS (unaudited)
(millions)
Six Months Ended
January 31, 2021
January 26, 2020
Cash flows from operating activities:
Net earnings
$
554
$
1,374
Adjustments to reconcile net earnings to
operating cash flow
Restructuring charges
19
10
Stock-based compensation
34
33
Pension and postretirement benefit
income
(66
)
(47
)
Depreciation and amortization
154
162
Deferred income taxes
69
32
Net gain on sales of businesses
—
(972
)
Loss on extinguishment of debt
—
75
Other
47
53
Changes in working capital, net of
divestitures
Accounts receivable
(124
)
(112
)
Inventories
57
73
Prepaid assets
(3
)
11
Accounts payable and accrued
liabilities
(108
)
(9
)
Other
(22
)
(20
)
Net cash provided by operating
activities
611
663
Cash flows from investing activities:
Purchases of plant assets
(132
)
(167
)
Purchases of route businesses
(1
)
(6
)
Sales of route businesses
6
5
Sales of businesses, net of cash
divested
—
2,533
Other
7
3
Net cash provided by (used in) investing
activities
(120
)
2,368
Cash flows from financing activities:
Short-term borrowings, including
commercial paper
—
3,680
Short-term repayments, including
commercial paper
(176
)
(4,350
)
Long-term repayments
—
(499
)
Dividends paid
(215
)
(213
)
Treasury stock issuances
—
4
Payments related to tax withholding for
stock-based compensation
(14
)
(9
)
Payments related to extinguishment of
debt
—
(1,765
)
Net cash used in financing activities
(405
)
(3,152
)
Effect of exchange rate changes on
cash
1
—
Net change in cash and cash
equivalents
87
(121
)
Cash and cash equivalents — beginning of
period
859
31
Cash balance of discontinued operations —
beginning of period
—
148
Cash balance of discontinued operations —
end of period
—
—
Cash and cash equivalents — end of
period
$
946
$
58
Reconciliation of GAAP to Non-GAAP Financial
Measures Second Quarter Ended January 31, 2021
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, acquisitions and divestitures. 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
January 31, 2021
January 26, 2020
% Change
(millions)
Net Sales, as
Reported
Impact of Currency
Organic Net Sales
Net Sales, as
Reported
Net Sales, as
Reported
Organic Net Sales
Meals & Beverages
$
1,300
$
(2
)
$
1,298
$
1,224
6
%
6
%
Snacks
979
1
980
938
4
%
4
%
Total Net Sales
$
2,279
$
(1
)
$
2,278
$
2,162
5
%
5
%
Six Months Ended
January 31, 2021
January 26, 2020
% Change
(millions)
Net Sales, as
Reported
Impact of Currency
Organic Net Sales
Net Sales, as
Reported
Impact of Divestiture
Organic Net Sales
Net Sales, as
Reported
Organic Net Sales
Meals & Beverages
$
2,642
$
(2
)
$
2,640
$
2,418
$
—
$
2,418
9
%
9
%
Snacks
1,977
1
1,978
1,927
(25
)
1,902
3
%
4
%
Total Net Sales
$
4,619
$
(1
)
$
4,618
$
4,345
$
(25
)
$
4,320
6
%
7
%
Year Ended
August 2, 2020
(millions)
Net Sales, as
Reported
Estimated Impact of 53rd
Week
Impact of Divestiture
Organic Net
Sales
Total Net Sales
$
8,691
$
(151
)
$
(25
)
$
8,515
Items Impacting Earnings
Management 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, management believes that
investors may be able to better understand its results excluding
these items.
The following items impacted earnings:
Continuing Operations
(1)
The company has implemented several cost
savings initiatives in recent years.
In the second quarter of fiscal 2021, the
company recorded Restructuring charges of $18 million and
implementation costs and other related costs of $6 million in
Administrative expenses, and a reduction to Cost of products sold
of $2 million (aggregate impact of $16 million after tax, or $.05
per share) related to these initiatives. In the second quarter of
fiscal 2020, the company recorded Restructuring charges of $7
million and implementation costs and other related costs of $13
million in Administrative expenses, $2 million in Cost of products
sold, $2 million in Marketing and selling expenses, and $1 million
in Research and development expenses (aggregate impact of $19
million after tax, or $.06 per share) related to these initiatives.
In the six-month period of fiscal 2021, the company recorded
Restructuring charges of $19 million and implementation costs and
other related costs of $10 million in Administrative expenses, and
a reduction to Cost of products sold of $1 million (aggregate
impact of $21 million after tax, or $.07 per share) related to
these initiatives. In the six-month period of fiscal 2020, the
company recorded Restructuring charges of $10 million and
implementation costs and other related costs of $21 million in
Administrative expenses, $2 million in Cost of products sold, $2
million in Marketing and selling expenses, and $1 million in
Research and development expenses (aggregate impact of $27 million
after tax, or $.09 per share) related to these initiatives. For the
year ended August 2, 2020, the company recorded Restructuring
charges of $9 million and implementation costs and other related
costs of $48 million in Administrative expenses, $9 million in Cost
of products sold, $2 million in Marketing and selling expenses, and
$1 million in Research and development expenses (aggregate impact
of $52 million after tax, or $.17 per share) related to these
initiatives.
(2)
In the second quarter of fiscal 2021, the
company recognized pension settlement gains in Other expenses /
(income) of $30 million ($23 million after tax, or $.08 per share).
In the second quarter of fiscal 2020, the company recognized
pension settlement gains in Other expenses / (income) of $11
million ($8 million after tax, or $.03 per share). In the six-month
period of fiscal 2021, the company recognized pension settlement
gains in Other expenses / (income) of $34 million ($26 million
after tax, or $.09 per share). For the year ended August 2, 2020,
the company recognized pension settlement charges in Other expenses
/ (income) of $43 million ($33 million after tax, or $.11 per
share).
(3)
In the second quarter of fiscal 2021, the
company recorded a $19 million ($.06 per share) deferred tax charge
in connection with a legal entity reorganization as part of the
continued integration of Snyder's-Lance, Inc.
(4)
In the second quarter of fiscal 2020, the
company recorded a tax benefit of $19 million ($.06 per share) on
the sale of its European chips business. In the six-month period of
fiscal 2020, the company recorded a loss in Other expenses /
(income) of $64 million ($41 million after tax, or $.14 per share)
on the sale of its European chips business. For the year ended
August 2, 2020, the company recorded a loss in Other expenses /
(income) of $64 million ($37 million after tax, or $.12 per share)
on the sale of its European chips business.
(5)
In the second quarter of fiscal 2020, the
company recorded a loss in Interest expense of $75 million ($57
million after tax, or $.19 per share) on the extinguishment of
debt.
(6)
For the year ended August 2, 2020, the
company recognized a loss in Other expenses / (income) of $45
million ($35 million after tax, or $.12 per share) associated with
the sale of its limited partnership in Acre Venture Partners,
L.P.
(7)
For the year ended August 2, 2020, the
company recognized losses of $121 million in Other expenses /
(income) ($92 million after tax, or $.30 per share) associated with
mark-to-market adjustments for defined benefit pension and
postretirement plans.
Discontinued Operations
(4)
In the second quarter of fiscal 2020, the
company recognized gains of $1.09 billion associated with the sale
of the Arnott's business and certain other international
operations. In addition, the company recorded tax expense of $4
million associated with the sale of the Kelsen Group. The aggregate
impact was $1.03 billion after tax, or $3.37 per share. In the
six-month period of fiscal 2020, the company recognized net gains
of $1.04 billion ($998 million after tax, or $3.29 per share)
associated with the sale of the Kelsen Group and the Arnott's
business and certain other international operations (Campbell
International). For the year ended August 2, 2020, the company
recognized net gains of $1.04 billion ($1.00 billion after tax, or
$3.29 per share) associated with the sale of Campbell
International.
The following tables reconcile financial information, presented
in accordance with GAAP, to financial information excluding certain
items:
Three Months Ended
January 31, 2021
January 26, 2020
(millions, except per share amounts)
As reported
Adjustments(a)
Adjusted
As reported
Adjustments(a)
Adjusted
Adjusted
Percent
Change
Gross margin
$
783
$
(2
)
$
781
$
742
$
2
$
744
5
%
Gross margin percentage
34.4
%
34.3
%
34.3
%
34.4
%
(0.1) pts
Marketing and selling expenses
232
—
232
237
(2
)
235
(1
)%
Administrative expenses
158
(6
)
152
148
(13
)
135
13
%
Research and development expenses
19
—
19
22
(1
)
21
Other expenses / (income)
(45
)
30
(15
)
(22
)
11
(11
)
Restructuring charges
18
(18
)
—
7
(7
)
—
Earnings before interest and taxes
$
401
$
(8
)
$
393
$
350
$
14
$
364
8
%
Interest, net
54
—
54
146
(75
)
71
(24
)%
Earnings before taxes
$
347
$
(8
)
$
339
$
204
$
89
$
293
Taxes
102
(20
)
82
33
40
73
Effective income tax rate
29.4
%
24.2
%
16.2
%
24.9
%
(0.7) pts
Earnings from continuing operations
$
245
$
12
$
257
$
171
$
49
$
220
17
%
Earnings from discontinued operations
—
—
—
1,037
(1,025
)
12
n/m
Net earnings attributable to Campbell Soup
Company
$
245
$
12
$
257
$
1,208
$
(976
)
$
232
11
%
Diluted earnings per share - continuing
operations attributable to Campbell Soup Company
$
.80
$
.04
$
.84
$
.56
$
.16
$
.72
17
%
Diluted earnings per share - discontinued
operations
—
—
—
3.41
(3.37
)
.04
n/m
Diluted net earnings per share
attributable to Campbell Soup Company
$
.80
$
.04
$
.84
$
3.97
$
(3.21
)
$
.76
11
%
(a)See following tables for additional
information.
n/m - not meaningful
Three Months Ended
January 31, 2021
(millions, except per share amounts)
Restructuring charges,
implementation costs and other related costs (1)
Pension settlement
(2)
Deferred tax charge
(3)
Adjustments
Gross margin
$
(2
)
$
—
$
—
$
(2
)
Administrative expenses
(6
)
—
—
(6
)
Other expenses / (income)
—
30
—
30
Restructuring charges
(18
)
—
—
(18
)
Earnings before interest and taxes
$
22
$
(30
)
$
—
$
(8
)
Interest, net
—
—
—
—
Earnings before taxes
$
22
$
(30
)
$
—
$
(8
)
Taxes
6
(7
)
(19
)
(20
)
Earnings from continuing operations
$
16
$
(23
)
$
19
$
12
Earnings from discontinued operations
—
—
—
—
Net earnings attributable to Campbell Soup
Company
$
16
$
(23
)
$
19
$
12
Diluted earnings per share - continuing
operations attributable to Campbell Soup Company*
$
.05
$
(.08
)
$
.06
$
.04
Diluted earnings per share - discontinued
operations
—
—
—
—
Diluted net earnings per share
attributable to Campbell Soup Company*
$
.05
$
(.08
)
$
.06
$
.04
*The sum of individual per share amounts
may not add due to rounding.
Three Months Ended
January 26, 2020
(millions, except per share amounts)
Restructuring charges,
implementation costs and other related costs (1)
Pension settlement
(2)
Divestitures
(4)
Loss on debt
extinguishment (5)
Adjustments
Gross margin
$
2
$
—
$
—
$
—
$
2
Marketing and selling expenses
(2
)
—
—
—
(2
)
Administrative expenses
(13
)
—
—
—
(13
)
Research and development expenses
(1
)
—
—
—
(1
)
Other expenses / (income)
—
11
—
—
11
Restructuring charges
(7
)
—
—
—
(7
)
Earnings before interest and taxes
$
25
$
(11
)
$
—
$
—
$
14
Interest, net
—
—
—
(75
)
(75
)
Earnings before taxes
$
25
$
(11
)
$
—
$
75
$
89
Taxes
6
(3
)
19
18
40
Earnings from continuing operations
$
19
$
(8
)
$
(19
)
$
57
$
49
Earnings from discontinued operations
—
—
(1,025
)
—
(1,025
)
Net earnings attributable to Campbell Soup
Company
$
19
$
(8
)
$
(1,044
)
$
57
$
(976
)
Diluted earnings per share - continuing
operations attributable to Campbell Soup Company
$
.06
$
(.03
)
$
(.06
)
$
.19
$
.16
Diluted earnings per share - discontinued
operations
—
—
(3.37
)
—
(3.37
)
Diluted net earnings per share
attributable to Campbell Soup Company
$
.06
$
(.03
)
$
(3.43
)
$
.19
$
(3.21
)
Six Months Ended
January 31, 2021
January 26, 2020
(millions, except per share amounts)
As reported
Adjustments(a)
Adjusted
As reported
Adjustments(a)
Adjusted
Adjusted Percent
Change
Gross margin
$
1,596
$
(1
)
$
1,595
$
1,480
$
2
$
1,482
8
%
Gross margin percentage
34.6
%
34.5
%
34.1
%
34.1
%
0.4 pts
Marketing and selling expenses
440
—
440
443
(2
)
441
—
%
Administrative expenses
299
(10
)
289
282
(21
)
261
11
%
Research and development expenses
39
—
39
44
(1
)
43
Other expenses / (income)
(63
)
34
(29
)
34
(53
)
(19
)
Restructuring charges
19
(19
)
—
10
(10
)
—
Earnings before interest and taxes
$
862
$
(6
)
$
856
$
667
$
89
$
756
13
%
Interest, net
109
—
109
226
(75
)
151
(28
)%
Earnings before taxes
$
753
$
(6
)
$
747
$
441
$
164
$
605
Taxes
199
(20
)
179
101
47
148
Effective income tax rate
26.4
%
24.0
%
22.9
%
24.5
%
(0.5) pts
Earnings from continuing operations
$
554
$
14
$
568
$
340
$
117
$
457
24
%
Earnings from discontinued operations
—
—
—
1,034
(998
)
36
n/m
Net earnings attributable to Campbell Soup
Company
$
554
$
14
$
568
$
1,374
$
(881
)
$
493
15
%
Diluted earnings per share - continuing
operations attributable to Campbell Soup Company*
$
1.82
$
.05
$
1.86
$
1.12
$
.39
$
1.51
23
%
Diluted earnings per share - discontinued
operations
—
—
—
3.41
(3.29
)
.12
n/m
Diluted net earnings per share
attributable to Campbell Soup Company*
$
1.82
$
.05
$
1.86
$
4.53
$
(2.91
)
$
1.63
14
%
(a)See following tables for additional
information.
*The sum of individual per share amounts
may not add due to rounding.
n/m - not meaningful
Six Months Ended
January 31, 2021
(millions, except per share amounts)
Restructuring charges,
implementation costs and other related costs (1)
Pension settlement
(2)
Deferred tax charge
(3)
Adjustments
Gross margin
$
(1
)
$
—
$
—
$
(1
)
Administrative expenses
(10
)
—
—
(10
)
Other expenses / (income)
—
34
—
34
Restructuring charges
(19
)
—
—
(19
)
Earnings before interest and taxes
$
28
$
(34
)
$
—
$
(6
)
Interest, net
—
—
—
—
Earnings before taxes
$
28
$
(34
)
$
—
$
(6
)
Taxes
7
(8
)
(19
)
(20
)
Earnings from continuing operations
$
21
$
(26
)
$
19
$
14
Earnings from discontinued operations
—
—
—
—
Net earnings attributable to Campbell Soup
Company
$
21
$
(26
)
$
19
$
14
Diluted earnings per share - continuing
operations attributable to Campbell Soup Company*
$
.07
$
(.09
)
$
.06
$
.05
Diluted earnings per share - discontinued
operations
—
—
—
—
Diluted net earnings per share
attributable to Campbell Soup Company*
$
.07
$
(.09
)
$
.06
$
.05
*The sum of individual per share amounts
may not add due to rounding.
Six Months Ended
January 26, 2020
(millions, except per share amounts)
Restructuring charges,
implementation costs and other related costs (1)
Pension settlement
(2)
Divestitures
(4)
Loss on debt
extinguishment (5)
Adjustments
Gross margin
$
2
$
—
$
—
$
—
$
2
Marketing and selling expenses
(2
)
—
—
—
(2
)
Administrative expenses
(21
)
—
—
—
(21
)
Research and development expenses
(1
)
—
—
—
(1
)
Other expenses / (income)
—
11
(64
)
—
(53
)
Restructuring charges
(10
)
—
—
—
(10
)
Earnings before interest and taxes
$
36
$
(11
)
$
64
$
—
$
89
Interest, net
—
—
—
(75
)
(75
)
Earnings before taxes
$
36
$
(11
)
$
64
$
75
$
164
Taxes
9
(3
)
23
18
47
Earnings from continuing operations
$
27
$
(8
)
$
41
$
57
$
117
Earnings from discontinued operations
—
—
(998
)
—
(998
)
Net earnings attributable to Campbell Soup
Company
$
27
$
(8
)
$
(957
)
$
57
$
(881
)
Diluted earnings per share - continuing
operations attributable to Campbell Soup Company
$
.09
$
(.03
)
$
.14
$
.19
$
.39
Diluted earnings per share - discontinued
operations
—
—
(3.29
)
—
(3.29
)
Diluted net earnings per share
attributable to Campbell Soup Company*
$
.09
$
(.03
)
$
(3.16
)
$
.19
$
(2.91
)
*The sum of individual per share amounts
may not add due to rounding.
(millions, except per share
amounts)
Year Ended August 2,
2020
Gross margin, as reported
$
2,999
Add: Restructuring charges, implementation
costs and other related costs (1)
9
Adjusted Gross margin
$
3,008
Adjusted Gross margin
percentage
34.6
%
Earnings before interest and taxes, as
reported
$
1,107
Add: Restructuring charges, implementation
costs and other related costs (1)
69
Add: Pension settlement (2)
43
Add: Divestitures (4)
64
Add: Investment losses (6)
45
Add: Pension and postretirement benefit
mark-to-market adjustments (7)
121
Adjusted Earnings before interest and
taxes
$
1,449
Interest, net, as reported
$
341
Deduct: Loss on debt extinguishment
(5)
(75
)
Adjusted Interest, net
$
266
Adjusted Earnings before taxes
$
1,183
Taxes on earnings, as reported
$
174
Add: Tax benefit from restructuring
charges, implementation costs and other related costs (1)
17
Add: Tax benefit from pension settlement
(2)
10
Add: Tax benefit from divestitures (4)
27
Add: Tax benefit from loss on debt
extinguishment (5)
18
Add: Tax benefit from investment losses
(6)
10
Add: Tax benefit from pension and
postretirement benefit mark-to-market adjustments (7)
29
Adjusted Taxes on earnings
$
285
Adjusted effective income tax
rate
24.1
%
Earnings from continuing operations, as
reported
$
592
Add: Net adjustment from restructuring
charges, implementation costs and other related costs (1)
52
Add: Net adjustment from pension
settlement (2)
33
Add: Net adjustment from divestitures
(4)
37
Add: Net adjustment from loss on debt
extinguishment (5)
57
Add: Net adjustment from investment losses
(6)
35
Add: Net adjustment from total pension and
postretirement benefit mark-to-market adjustments (7)
92
Adjusted Earnings from continuing
operations
$
898
Earnings from discontinued operations,
as reported
$
1,036
Deduct: Net adjustment from divestitures
(4)
(1,000
)
Adjusted Earnings from discontinued
operations
$
36
Adjusted Net earnings attributable to
Campbell Soup Company
$
934
Diluted earnings per share - continuing
operations attributable to Campbell Soup Company, as
reported
$
1.95
Add: Net adjustment from restructuring
charges, implementation costs and other related costs (1)
.17
Add: Net adjustment from pension
settlement (2)
.11
Add: Net adjustment from divestitures
(4)
.12
Add: Net adjustment from loss on debt
extinguishment (5)
.19
Add: Net adjustment from investment losses
(6)
.12
Add: Net adjustment from total pension and
postretirement benefit mark-to-market adjustments (7)
.30
Adjusted Diluted earnings per share -
continuing operations attributable to Campbell Soup
Company*
$
2.95
Diluted earnings per share -
discontinued operations, as reported
$
3.41
Deduct: Net adjustment from divestitures
(4)
(3.29
)
Adjusted Diluted earnings per share -
discontinued operations
$
.12
Diluted net earnings per share
attributable to Campbell Soup Company, as reported
$
5.36
Add: Net adjustment from restructuring
charges, implementation costs and other related costs (1)
.17
Add: Net adjustment from pension
settlement (2)
.11
Deduct: Net adjustment from divestitures
(4)
(3.17
)
Add: Net adjustment from loss on debt
extinguishment (5)
.19
Add: Net adjustment from investment losses
(6)
.12
Add: Net adjustment from total pension and
postretirement benefit mark-to-market adjustments (7)
.30
Adjusted Diluted net earnings per share
attributable to Campbell Soup Company*
$
3.07
*The sum of individual per share amounts
may not add due to rounding.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210310005227/en/
INVESTOR CONTACT: Rebecca Gardy
(856) 342-6081 rebecca_gardy@campbells.com
MEDIA CONTACT: Thomas Hushen (856)
342-5227 thomas_hushen@campbells.com
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