- Net Sales decreased 11% as a result of lapping the demand surge
at the onset of the pandemic in the prior year.
- Earnings Before Interest and Taxes (EBIT) was $272 million,
comparable to prior year. Adjusted EBIT decreased 27% to $283
million.
- Earnings Per Share (EPS) from Continuing Operations decreased
2% to $0.54. Adjusted EPS decreased 31% to $0.57.
- Nearly 75% of brand portfolio grew or held share highlighting
strong brand health and continued momentum.
- Updates full-year fiscal 2021 guidance.
Campbell Soup Company (NYSE:CPB) today reported results
for its third-quarter fiscal 2021 ended May 2, 2021.
Continuing Operations
Three Months Ended
Nine Months Ended
($ in millions, except per share)
May 2, 2021
Apr. 26, 2020
% Change
May 2, 2021
Apr. 26, 2020
% Change
Net Sales
As Reported (GAAP)
$1,984
$2,238
(11)%
$6,603
$6,583
—%
Organic
(12)%
1%
Earnings Before Interest and Taxes
(EBIT)
As Reported (GAAP)
$272
$273
—%
$1,134
$940
21%
Adjusted
$283
$386
(27)%
$1,139
$1,142
—%
Diluted Earnings Per Share
As Reported (GAAP)
$0.54
$0.55
(2)%
$2.36
$1.66
42%
Adjusted
$0.57
$0.83
(31)%
$2.43
$2.34
4%
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, “While we
recognized the third quarter would be a challenging net sales
comparison to the demand surge at the onset of the COVID-19
pandemic a year ago, we faced additional headwinds. Our results
were impacted by a rising inflationary environment, short-term
increases in supply chain costs, and some executional pressures as
we continued to advance our transformation agenda, primarily in our
Snacks division. We are confident that these are all addressable,
and we are taking appropriate actions, including putting pricing in
place for the next fiscal year. Our confidence is further
strengthened by the underlying health of our brands. Nearly
three-quarters of our portfolio gained or held share in the
quarter, with most of our core categories having grown at higher
rates than pre-pandemic levels."
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
Nine Months Ended
May 2, 2021
Apr. 26, 2020
May 2, 2021
Apr. 26, 2020
As Reported (GAAP)
$0.54
$0.55
$2.36
$1.66
Restructuring charges, implementation
costs and other related costs associated with cost savings
initiatives
$0.04
$0.04
$0.10
$0.13
Net pension settlement (gains) /
losses
$(0.01)
$0.13
$(0.10)
$0.11
Deferred tax charge
$—
$—
$0.06
$—
Investment losses
$—
$0.12
$—
$0.12
Charges associated with divestiture
$—
$—
$—
$0.13
Loss on extinguishment of debt
$—
$—
$—
$0.19
Adjusted*
$0.57
$0.83
$2.43
$2.34
*Numbers may not add due to rounding.
Third-Quarter Results from Continuing Operations
Net sales decreased 11% to $1.98 billion and organic net sales
decreased 12% primarily as a result of lapping unprecedented demand
of food purchases for at-home consumption at the onset of the
COVID-19 pandemic in the prior-year quarter.
Gross margin decreased to 31.7% from 34.5% last year. Excluding
items impacting comparability, adjusted gross margin decreased 290
basis points to 31.8% as higher cost inflation and other supply
chain costs, as well as unfavorable mix and reduced operating
leverage were partially offset by a net benefit from the change in
mark-to-market adjustments on outstanding commodity hedges, supply
chain productivity improvements and cost savings initiatives.
Marketing and selling expenses decreased 15% to $202 million
driven by lower advertising and consumer promotion expense
(A&C), lower incentive compensation, lower selling expenses and
the benefits of cost savings initiatives. A&C decreased 14%
primarily due to a reduction of spending in U.S. soup. As a
percentage of sales, marketing and selling expenses were 10.2%
compared to 10.7% in the prior year.
Administrative expenses decreased 1% to $153 million. Excluding
items impacting comparability, adjusted administrative expenses
decreased by $2 million, or 1%, to $142 million driven primarily by
lower incentive compensation partially offset by higher
benefit-related costs.
Other income was $23 million compared to other expenses of $81
million in the prior year. Excluding items impacting comparability,
adjusted other income was $19 million compared to $18 million in
the prior year.
As reported EBIT of $272 million was comparable to prior year.
Excluding items impacting comparability, adjusted EBIT decreased
27% to $283 million primarily due to sales volume declines and
lower adjusted gross margin performance, partially offset by lower
marketing and selling expenses.
Net interest expense was $53 million compared to $55 million in
the prior year reflecting lower levels of debt. The tax rate was
24.2% as compared to 23.9% in the prior year. Excluding items
impacting comparability, the adjusted tax rate increased 70 basis
points to 24.3% from 23.6%.
As reported EPS from continuing operations were $0.54 per share.
Excluding items impacting comparability, adjusted EPS from
continuing operations decreased 31% to $0.57 primarily reflecting
the decrease in adjusted EBIT.
Nine-Month Results from Continuing Operations
Net sales of $6.60 billion were comparable to prior year.
Organic net sales increased 1% from the prior year driven by lower
promotional spending in both divisions. Meals & Beverages
increased 1%, driven by growth in U.S. soup and V8 beverages,
partially offset by declines in foodservice. In Snacks, organic net
sales were flat as declines in Lance sandwich crackers and in
partner brands within the Snyder's-Lance portfolio were offset by
gains in salty snacks and fresh bakery products.
As reported EBIT increased 21% to $1.13 billion. Excluding items
impacting comparability, adjusted EBIT of $1.14 billion was
comparable to prior year, reflecting lower adjusted gross margin
performance and increased adjusted administrative expenses offset
by lower adjusted marketing and selling expenses, higher adjusted
other income and sales volume gains. Within marketing and selling
expenses, lower selling and other marketing costs were partially
offset by a 3% increase in A&C.
Net interest expense was $162 million compared to $281 million
in the prior year. Excluding items impacting comparability in the
prior year, adjusted net interest expense decreased 21% from $206
million in the prior year to $162 million reflecting lower levels
of debt. The tax rate was 25.9% as compared to 23.2% in the prior
year. Excluding items impacting comparability, the adjusted tax
rate of 24.1% was comparable to the prior year.
The company reported EPS from continuing operations of $2.36 per
share. Excluding items impacting comparability, adjusted EPS from
continuing operations increased 4% to $2.43 per share primarily
reflecting lower adjusted net interest expense.
Cash flows from operations decreased from $1.13 billion in the
prior year to $881 million primarily due to changes in working
capital, principally lower accrued liabilities and a significant
increase in accounts payable in the prior year. Capital investments
were $190 million compared to $220 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 $327 million of cash dividends.
Share Repurchase
Effective today, the Board of Directors authorized a new
anti-dilutive share repurchase program of up to $250 million to
offset the impact of dilution from shares issued under the
company's stock compensation programs. The program has no
expiration date, but it may be suspended or discontinued at any
time. Repurchases under the program may be made in open-market or
privately negotiated transactions. The company's March 2017
strategic share repurchase program remains suspended.
Cost Savings Program from Continuing Operations
In the third quarter of fiscal 2021, Campbell achieved $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 $780 million. Campbell
remains on track to deliver annualized savings of $850 million by
the end of fiscal 2022.
Campbell Updates Full-Year Fiscal 2021 Guidance
Campbell is updating its full-year fiscal 2021 guidance to
reflect its third-quarter results and the impact of the sale of the
Plum baby food and snacks business on May 3, 2021. In the fourth
quarter, the company expects continued margin pressure related to
its transition out of the COVID-19 environment, and more pronounced
inflation while pricing actions take hold in the beginning of
fiscal 2022. As a reminder, fiscal 2020 benefited from a 53rd week,
which was estimated to be worth 2 percentage points of net sales,
and approximately $0.04 on adjusted EPS.
Based on the foregoing, the company is now providing full-year
fiscal 2021 guidance as set forth in the table below:
Continuing Operations
FY 2020 Results
Previous FY 2021 Guidance
Updated FY 2021 Guidance
($ in millions, except per share)
Net Sales
$8,691
-3.5% to -2.5%
-3.5% to -3.0%
Organic Net Sales
$8,492
*
-1.5% to -0.5%
-1.2% to -0.7%
Adjusted EBIT
$1,449
*
-1% to +1%
-5% to -4%
Adjusted EPS
$2.95
*
+3% to +5%
-2% to -1%
$3.03 to $3.11
$2.90 to $2.93
* Adjusted - refer to the detailed
reconciliation of the reported (GAAP) financial information to the
adjusted financial information at the end of this news release.
Note: A non-GAAP reconciliation is not
provided for 2021 guidance as certain amounts are not estimable,
such as pension and postretirement mark-to-market adjustments, and
these items are not considered to reflect the company's ongoing
business results.
Segment Operating Review
An analysis of net sales and operating earnings by reportable
segment follows:
Three
Months Ended May 2, 2021
($ in millions)
Meals & Beverages*
Snacks
Total*
Net Sales, as Reported
$1,039
$945
$1,984
Volume and Mix
(15)%
(9)%
(12)%
Price and Sales Allowances
(1)%
1%
—%
Promotional Spending
—%
—%
—%
Organic Net Sales
(15)%
(8)%
(12)%
Currency
1%
—%
—%
% Change vs. Prior Year
(14)%
(8)%
(11)%
Segment Operating Earnings
$179
$109
% Change vs. Prior Year
(35)%
(29)%
*Numbers do not add due to rounding.
Note: A detailed reconciliation of the
reported (GAAP) net sales to organic net sales is included at the
end of this news release.
Nine
Months Ended May 2, 2021
($ in millions)
Meals & Beverages*
Snacks*
Total*
Net Sales, as Reported
$3,681
$2,922
$6,603
Volume and Mix
—%
(2)%
(1)%
Price and Sales Allowances
(1)%
—%
—%
Promotional Spending
1%
1%
1%
Organic Net Sales
1%
—%
1%
Currency
—%
—%
—%
Divestiture
—%
(1)%
—%
% Change vs. Prior Year
1%
(1)%
—%
Segment Operating Earnings
$770
$392
% Change vs. Prior Year
(4)%
(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.
Meals & Beverages
Net sales in the quarter decreased 14% and organic net sales
decreased 15% primarily due to declines across U.S. retail
products, including U.S. soup and Prego pasta sauces as well as
declines in Canada and foodservice. Volume decreased in U.S. retail
driven by lapping increased demand of food purchases for at-home
consumption at the onset of the COVID-19 pandemic in the prior-year
quarter. Sales of U.S. soup decreased 21% due to volume declines in
condensed soups, ready-to-serve soups and broth.
Segment operating earnings decreased 35%. The decrease was
primarily due to sales volume declines and lower gross margin
performance partially offset by lower marketing and selling
expenses. Gross margin performance was impacted by higher cost
inflation and other supply chain costs, reduced operating leverage
and unfavorable product mix, partially offset by the benefits of
supply chain productivity improvements.
Snacks
Net sales in the quarter, both reported and organic, decreased
8% driven by volume declines within the salty snacks portfolio,
including Pop Secret popcorn, Cape Cod potato chips and Snyder's of
Hanover pretzels, as well as in Lance sandwich crackers, partner
brands and fresh bakery. Volume declines were partially driven by
lapping increased demand of food purchases for at-home consumption
at the onset of the COVID-19 pandemic in the prior-year
quarter.
Segment operating earnings decreased 29% for the quarter driven
by lower gross margin performance and sales volume declines,
partially offset by lower marketing and selling expenses and lower
administrative expenses. Gross margin performance was impacted by
higher cost inflation and other supply chain costs, reduced
operating leverage and unfavorable product mix, partially offset by
the benefits of supply chain productivity improvements.
Corporate
Corporate expenses were $14 million in the third quarter of
fiscal 2021 compared to $156 million in the prior year. Corporate
expenses in the third quarter of fiscal 2021 included costs of $13
million related to cost savings initiatives and pension settlement
gains of $4 million. Corporate expenses in the third quarter of
fiscal 2020 included pension settlement charges of $54 million,
investment losses of $45 million and costs of $14 million related
to cost savings initiatives. Excluding these amounts, the remaining
decrease in expenses was primarily due to mark-to-market gains on
outstanding commodity hedges in the current year compared to losses
in the prior year, partially offset by higher administrative
expenses.
Conference Call and Webcast
Campbell will host a conference call to discuss these results
today at 8:00 a.m. Eastern Time. Participants calling from the U.S.
may dial in using the toll-free phone number 833-329-1694.
Participants calling from outside the U.S. may dial in using phone
number +1 236-714-3946. The conference access code is 9188518. In
addition to dial-in, access to a live audio 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
June 22, 2021, at +1 416-621-4642 or 800-585-8367. The access code
for the replay is 9188518.
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 or the company's vendors'
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
May 2, 2021
April 26, 2020
Net sales
$
1,984
$
2,238
Costs and expenses
Cost of products sold
1,356
1,466
Marketing and selling expenses
202
239
Administrative expenses
153
154
Research and development expenses
22
25
Other expenses / (income)
(23
)
81
Restructuring charges
2
—
Total costs and expenses
1,712
1,965
Earnings before interest and taxes
272
273
Interest, net
53
55
Earnings before taxes
219
218
Taxes on earnings
53
52
Earnings from continuing operations
166
166
Earnings (loss) from discontinued
operations
(6
)
2
Net earnings
160
168
Net loss attributable to noncontrolling
interests
—
—
Net earnings attributable to Campbell Soup
Company
$
160
$
168
Per share - basic
Earnings from continuing operations
attributable to Campbell Soup Company
$
.55
$
.55
Earnings (loss) from discontinued
operations
(.02
)
.01
Net earnings attributable to Campbell Soup
Company
$
.53
$
.56
Weighted average shares outstanding -
basic
303
302
Per share - assuming dilution
Earnings from continuing operations
attributable to Campbell Soup Company
$
.54
$
.55
Earnings (loss) from discontinued
operations
(.02
)
.01
Net earnings attributable to Campbell Soup
Company*
$
.52
$
.55
Weighted average shares outstanding -
assuming dilution
305
304
*The sum of individual per share amounts
may not add due to rounding.
CAMPBELL SOUP COMPANY
CONSOLIDATED STATEMENTS OF
EARNINGS (unaudited)
(millions, except per share
amounts)
Nine Months Ended
May 2, 2021
April 26, 2020
Net sales
$
6,603
$
6,583
Costs and expenses
Cost of products sold
4,379
4,331
Marketing and selling expenses
642
682
Administrative expenses
452
436
Research and development expenses
61
69
Other expenses / (income)
(86
)
115
Restructuring charges
21
10
Total costs and expenses
5,469
5,643
Earnings before interest and taxes
1,134
940
Interest, net
162
281
Earnings before taxes
972
659
Taxes on earnings
252
153
Earnings from continuing operations
720
506
Earnings (loss) from discontinued
operations
(6
)
1,036
Net earnings
714
1,542
Net loss attributable to noncontrolling
interests
—
—
Net earnings attributable to Campbell Soup
Company
$
714
$
1,542
Per share - basic
Earnings from continuing operations
attributable to Campbell Soup Company
$
2.38
$
1.68
Earnings (loss) from discontinued
operations
(.02
)
3.43
Net earnings attributable to Campbell Soup
Company
$
2.36
$
5.11
Weighted average shares outstanding -
basic
303
302
Per share - assuming dilution
Earnings from continuing operations
attributable to Campbell Soup Company
$
2.36
$
1.66
Earnings (loss) from discontinued
operations
(.02
)
3.41
Net earnings attributable to Campbell Soup
Company
$
2.34
$
5.07
Weighted average shares outstanding -
assuming dilution
305
304
CAMPBELL SOUP COMPANY
CONSOLIDATED SUPPLEMENTAL
SCHEDULE OF SALES AND EARNINGS (unaudited)
(millions, except per share
amounts)
Three Months Ended
May 2, 2021
April 26, 2020
Percent Change
Sales
Contributions:
Meals & Beverages
$
1,039
$
1,210
(14)%
Snacks
945
1,028
(8)%
Total sales
$
1,984
$
2,238
(11)%
Earnings
Contributions:
Meals & Beverages
$
179
$
275
(35)%
Snacks
109
154
(29)%
Total operating earnings
288
429
(33)%
Corporate
(14
)
(156
)
Restructuring charges
(2
)
—
Earnings before interest and taxes
272
273
—%
Interest, net
53
55
Taxes on earnings
53
52
Earnings from continuing operations
166
166
—%
Earnings (loss) from discontinued
operations
(6
)
2
n/m
Net earnings
160
168
(5)%
Net loss attributable to noncontrolling
interests
—
—
Net earnings attributable to Campbell Soup
Company
$
160
$
168
(5)%
Per share - assuming dilution
Earnings from continuing operations
attributable to Campbell Soup Company
$
.54
$
.55
(2)%
Earnings (loss) from discontinued
operations
(.02
)
.01
n/m
Net earnings attributable to Campbell Soup
Company*
$
.52
$
.55
(5)%
*The sum of individual per share amounts
may not add due to rounding.
n/m - not meaningful
CAMPBELL SOUP COMPANY
CONSOLIDATED SUPPLEMENTAL
SCHEDULE OF SALES AND EARNINGS (unaudited)
(millions, except per share
amounts)
Nine Months Ended
May 2, 2021
April 26, 2020
Percent Change
Sales
Contributions:
Meals & Beverages
$
3,681
$
3,628
1%
Snacks
2,922
2,955
(1)%
Total sales
$
6,603
$
6,583
—%
Earnings
Contributions:
Meals & Beverages
$
770
$
799
(4)%
Snacks
392
415
(6)%
Total operating earnings
1,162
1,214
(4)%
Corporate
(7
)
(264
)
Restructuring charges
(21
)
(10
)
Earnings before interest and taxes
1,134
940
21%
Interest, net
162
281
Taxes on earnings
252
153
Earnings from continuing operations
720
506
42%
Earnings (loss) from discontinued
operations
(6
)
1,036
n/m
Net earnings
714
1,542
(54)%
Net loss attributable to noncontrolling
interests
—
—
Net earnings attributable to Campbell Soup
Company
$
714
$
1,542
(54)%
Per share - assuming dilution
Earnings from continuing operations
attributable to Campbell Soup Company
$
2.36
$
1.66
42%
Earnings (loss) from discontinued
operations
(.02
)
3.41
n/m
Net earnings attributable to Campbell Soup
Company
$
2.34
$
5.07
(54)%
n/m - not meaningful
CAMPBELL SOUP COMPANY
CONDENSED CONSOLIDATED BALANCE
SHEETS (unaudited)
(millions)
May 2, 2021
April 26, 2020
Current assets
$
1,741
$
2,746
Assets of business held for sale
122
—
Plant assets, net
2,313
2,340
Intangible assets, net
7,232
7,343
Other assets
322
289
Total assets
$
11,730
$
12,718
Current liabilities
$
1,950
$
3,269
Liabilities of business held for sale
25
—
Long-term debt
4,997
5,191
Other liabilities
1,763
1,677
Total equity
2,995
2,581
Total liabilities and equity
$
11,730
$
12,718
Total debt
$
5,201
$
6,695
Total cash and cash equivalents
$
209
$
1,242
CAMPBELL SOUP COMPANY
CONSOLIDATED STATEMENTS OF CASH
FLOWS (unaudited)
(millions)
Nine Months Ended
May 2, 2021
April 26, 2020
Cash flows from operating activities:
Net earnings
$
714
$
1,542
Adjustments to reconcile net earnings to
operating cash flow
Restructuring charges
21
10
Stock-based compensation
51
47
Pension and postretirement benefit
income
(87)
(11)
Depreciation and amortization
233
241
Deferred income taxes
99
35
Net gain on sales of businesses
—
(975)
Loss on extinguishment of debt
—
75
Investment losses
—
49
Other
66
74
Changes in working capital, net of
divestitures
Accounts receivable
(4)
(121)
Inventories
(2)
118
Prepaid assets
(23)
(4)
Accounts payable and accrued
liabilities
(149)
92
Other
(38)
(47)
Net cash provided by operating
activities
881
1,125
Cash flows from investing activities:
Purchases of plant assets
(190)
(220)
Purchases of route businesses
(1)
(10)
Sales of route businesses
7
8
Sales of businesses, net of cash
divested
—
2,537
Other
7
3
Net cash provided by (used in) investing
activities
(177)
2,318
Cash flows from financing activities:
Short-term borrowings, including
commercial paper and revolving line of credit
—
5,610
Short-term repayments, including
commercial paper
(295)
(6,405)
Long-term borrowings
—
1,000
Long-term repayments
(721)
(499)
Dividends paid
(327)
(320)
Treasury stock issuances
2
23
Payments related to tax withholding for
stock-based compensation
(15)
(10)
Payments related to extinguishment of
debt
—
(1,768)
Payments of debt issuance costs
—
(9)
Net cash used in financing activities
(1,356)
(2,378)
Effect of exchange rate changes on
cash
2
(2)
Net change in cash and cash
equivalents
(650)
1,063
Cash and cash equivalents — beginning of
period (including discontinued operations)
859
179
Cash balance of discontinued operations —
end of period
—
—
Cash and cash equivalents — end of
period
$
209
$
1,242
Reconciliation of GAAP to Non-GAAP Financial
Measures Third Quarter Ended May 2, 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
May 2, 2021
April 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
$
1,039
$
(9)
$
1,030
$
1,210
(14)%
(15)%
Snacks
945
(1)
944
1,028
(8)%
(8)%
Total Net Sales
$
1,984
$
(10)
$
1,974
$
2,238
(11)%
(12)%
Nine Months Ended
May 2, 2021
April 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
$
3,681
$
(11
)
$
3,670
$
3,628
$
—
$
3,628
1%
1%
Snacks
2,922
—
2,922
2,955
(25
)
2,930
(1)%
—%
Total Net Sales
$
6,603
$
(11
)
$
6,592
$
6,583
$
(25
)
$
6,558
—%
1%
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 third quarter of fiscal 2021, the
company recorded Restructuring charges of $2 million and
implementation costs and other related costs of $11 million in
Administrative expenses and $2 million in Cost of products sold
(aggregate impact of $11 million after tax, or $.04 per share)
related to these initiatives. In the nine-month period of fiscal
2021, the company recorded Restructuring charges of $21 million and
implementation costs and other related costs of $21 million in
Administrative expenses and $1 million in Cost of products sold
(aggregate impact of $32 million after tax, or $.10 per share)
related to these initiatives. In the third quarter of fiscal 2020,
the company recorded implementation costs and other related costs
of $10 million in Administrative expenses and $4 million in Cost of
products sold (aggregate impact of $11 million after tax, or $.04
per share) related to these initiatives. In the nine-month period
of fiscal 2020, the company recorded Restructuring charges of $10
million and implementation costs and other related costs of $31
million in Administrative expenses, $6 million in Cost of products
sold, $2 million in Marketing and selling expenses, and $1 million
in Research and development expenses (aggregate impact of $38
million after tax, or $.13 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 third quarter of fiscal 2021, the
company recognized pension settlement gains in Other expenses /
(income) of $4 million ($3 million after tax, or $.01 per share).
In the nine-month period of fiscal 2021, the company recognized
pension settlement gains in Other expenses / (income) of $38
million ($29 million after tax, or $.10 per share). In the third
quarter of fiscal 2020, the company recognized pension settlement
charges in Other expenses / (income) of $54 million ($41 million
after tax, or $.13 per share). In the nine-month period of fiscal
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 nine-month period 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 third quarter of fiscal 2020, the
company recognized a loss in Other expenses / (income) of $45
million ($35 million after tax, or $.12 per share) associated with
the pending sale of its limited partnership in Acre Venture
Partners, L.P.
(5)
In the nine-month period of fiscal 2020,
the company recorded a loss in Other expenses / (income) of $64
million ($41 million after tax, or $.13 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.
(6)
In the nine-month period 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.
(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
(5)
In the nine-month period of fiscal 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 the
Kelsen Group and the Arnott's business and certain other
international operations (Campbell International).
The following tables reconcile financial information, presented
in accordance with GAAP, to financial information excluding certain
items:
Three Months Ended
May 2, 2021
April 26, 2020
(millions, except per share amounts)
As reported
Adjustments(a)
Adjusted
As reported
Adjustments(a)
Adjusted
Adjusted Percent
Change
Gross margin
$
628
$
2
$
630
$
772
$
4
$
776
(19)%
Gross margin percentage
31.7
%
31.8
%
34.5
%
34.7
%
(2.9) pts
Administrative expenses
$
153
$
(11
)
$
142
$
154
$
(10
)
$
144
(1)%
Other expenses / (income)
$
(23
)
$
4
$
(19
)
$
81
$
(99
)
$
(18
)
Restructuring charges
$
2
$
(2
)
$
—
$
—
$
—
$
—
Earnings before interest and taxes
$
272
$
11
$
283
$
273
$
113
$
386
(27)%
Interest, net
53
—
53
55
—
55
(4)%
Earnings before taxes
$
219
$
11
$
230
$
218
$
113
$
331
Taxes
53
3
56
52
26
78
Effective income tax rate
24.2
%
24.3
%
23.9
%
23.6
%
0.7 pts
Earnings from continuing operations
$
166
$
8
$
174
$
166
$
87
$
253
(31)%
Earnings (loss) from discontinued
operations
(6
)
—
(6
)
2
—
2
n/m
Net earnings attributable to Campbell Soup
Company
$
160
$
8
$
168
$
168
$
87
$
255
(34)%
Diluted earnings per share - continuing
operations attributable to Campbell Soup Company*
$
.54
$
.03
$
.57
$
.55
$
.29
$
.83
(31)%
Diluted earnings (loss) per share -
discontinued operations
(.02
)
—
(.02
)
.01
—
.01
n/m
Diluted net earnings per share
attributable to Campbell Soup Company*
$
.52
$
.03
$
.55
$
.55
$
.29
$
.84
(35)%
(a)See following tables for additional
information.
*The sum of individual per share amounts
may not add due to rounding.
n/m - not meaningful
Three Months Ended
May 2, 2021
(millions, except per share amounts)
Restructuring charges,
implementation costs and other related costs (1)
Pension settlement
(2)
Adjustments
Gross margin
$
2
$
—
$
2
Administrative expenses
(11
)
—
(11
)
Other expenses / (income)
—
4
4
Restructuring charges
(2
)
—
(2
)
Earnings before interest and taxes
$
15
$
(4
)
$
11
Interest, net
—
—
—
Earnings before taxes
$
15
$
(4
)
$
11
Taxes
4
(1
)
3
Earnings from continuing operations
$
11
$
(3
)
$
8
Earnings from discontinued operations
—
—
—
Net earnings attributable to Campbell Soup
Company
$
11
$
(3
)
$
8
Diluted earnings per share - continuing
operations attributable to Campbell Soup Company
$
.04
$
(.01
)
$
.03
Diluted earnings per share - discontinued
operations
—
—
—
Diluted net earnings per share
attributable to Campbell Soup Company
$
.04
$
(.01
)
$
.03
Three Months Ended
April 26, 2020
(millions, except per share amounts)
Restructuring charges,
implementation costs and other related costs (1)
Pension settlement
(2)
Investment losses
(4)
Adjustments
Gross margin
$
4
$
—
$
—
$
4
Administrative expenses
(10
)
—
—
(10
)
Other expenses / (income)
—
(54
)
(45
)
(99
)
Earnings before interest and taxes
$
14
$
54
$
45
$
113
Interest, net
—
—
—
—
Earnings before taxes
$
14
$
54
$
45
$
113
Taxes
3
13
10
26
Earnings from continuing operations
$
11
$
41
$
35
$
87
Earnings from discontinued operations
—
—
—
—
Net earnings attributable to Campbell Soup
Company
$
11
$
41
$
35
$
87
Diluted earnings per share - continuing
operations attributable to Campbell Soup Company
$
.04
$
.13
$
.12
$
.29
Diluted earnings per share - discontinued
operations
—
—
—
—
Diluted net earnings per share
attributable to Campbell Soup Company
$
.04
$
.13
$
.12
$
.29
Nine Months Ended
May 2, 2021
April 26, 2020
(millions, except per share amounts)
As reported
Adjustments(a)
Adjusted
As reported
Adjustments(a)
Adjusted
Adjusted Percent
Change
Gross margin
$
2,224
$
1
$
2,225
$
2,252
$
6
$
2,258
(1)%
Gross margin percentage
33.7
%
33.7
%
34.2
%
34.3
%
(0.6) pts
Marketing and selling expenses
642
—
642
682
(2
)
680
(6)%
Administrative expenses
452
(21
)
431
436
(31
)
405
6%
Research and development expenses
61
—
61
69
(1
)
68
Other expenses / (income)
(86
)
38
(48
)
115
(152
)
(37
)
Restructuring charges
21
(21
)
—
10
(10
)
—
Earnings before interest and taxes
$
1,134
$
5
$
1,139
$
940
$
202
$
1,142
—%
Interest, net
162
—
162
281
(75
)
206
(21)%
Earnings before taxes
$
972
$
5
$
977
$
659
$
277
$
936
Taxes
252
(17
)
235
153
73
226
Effective income tax rate
25.9
%
24.1
%
23.2
%
24.1
%
0.0 pts
Earnings from continuing operations
$
720
$
22
$
742
$
506
$
204
$
710
5%
Earnings (loss) from discontinued
operations
(6
)
—
(6
)
1,036
(1,000
)
36
n/m
Net earnings attributable to Campbell Soup
Company
$
714
$
22
$
736
$
1,542
$
(796
)
$
746
(1)%
Diluted earnings per share - continuing
operations attributable to Campbell Soup Company*
$
2.36
$
.07
$
2.43
$
1.66
$
.67
$
2.34
4%
Diluted earnings (loss) per share -
discontinued operations
(.02
)
—
(.02
)
3.41
(3.29
)
.12
n/m
Diluted net earnings per share
attributable to Campbell Soup Company*
$
2.34
$
.07
$
2.41
$
5.07
$
(2.62
)
$
2.45
(2)%
(a)See following tables for additional
information.
*The sum of individual per share amounts
may not add due to rounding.
n/m - not meaningful
Nine Months Ended
May 2, 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
(21
)
—
—
(21
)
Other expenses / (income)
—
38
—
38
Restructuring charges
(21
)
—
—
(21
)
Earnings before interest and taxes
$
43
$
(38
)
$
—
$
5
Interest, net
—
—
—
—
Earnings before taxes
$
43
$
(38
)
$
—
$
5
Taxes
11
(9
)
(19
)
(17
)
Earnings from continuing operations
$
32
$
(29
)
$
19
$
22
Earnings from discontinued operations
—
—
—
—
Net earnings attributable to Campbell Soup
Company
$
32
$
(29
)
$
19
$
22
Diluted earnings per share - continuing
operations attributable to Campbell Soup Company*
$
.10
$
(.10
)
$
.06
$
.07
Diluted earnings per share - discontinued
operations
—
—
—
—
Diluted net earnings per share
attributable to Campbell Soup Company*
$
.10
$
(.10
)
$
.06
$
.07
*The sum of individual per share amounts
may not add due to rounding.
Nine Months Ended
April 26, 2020
(millions, except per share amounts)
Restructuring charges,
implementation costs and other related costs (1)
Pension settlement
(2)
Investment losses
(4)
Divestitures
(5)
Loss on debt
extinguishment (6)
Adjustments
Gross margin
$
6
$
—
$
—
$
—
$
—
$
6
Marketing and selling expenses
(2
)
—
—
—
—
(2
)
Administrative expenses
(31
)
—
—
—
—
(31
)
Research and development expenses
(1
)
—
—
—
—
(1
)
Other expenses / (income)
—
(43
)
(45
)
(64
)
—
(152
)
Restructuring charges
(10
)
—
—
—
—
(10
)
Earnings before interest and taxes
$
50
$
43
$
45
$
64
$
—
$
202
Interest, net
—
—
—
—
(75
)
(75
)
Earnings before taxes
$
50
$
43
$
45
$
64
$
75
$
277
Taxes
12
10
10
23
18
73
Earnings from continuing operations
$
38
$
33
$
35
$
41
$
57
$
204
Earnings from discontinued operations
—
—
—
(1,000
)
—
(1,000
)
Net earnings attributable to Campbell Soup
Company
$
38
$
33
$
35
$
(959
)
$
57
$
(796
)
Diluted earnings per share - continuing
operations attributable to Campbell Soup Company*
$
.13
$
.11
$
.12
$
.13
$
.19
$
.67
Diluted earnings per share - discontinued
operations
—
—
—
(3.29
)
—
(3.29
)
Diluted net earnings per share
attributable to Campbell Soup Company*
$
.13
$
.11
$
.12
$
(3.15
)
$
.19
$
(2.62
)
*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: Investment losses (4)
45
Add: Divestitures (5)
64
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
(6)
(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 investment losses
(4)
10
Add: Tax benefit from divestitures (5)
27
Add: Tax benefit from loss on debt
extinguishment (6)
18
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 investment losses
(4)
35
Add: Net adjustment from divestitures
(5)
37
Add: Net adjustment from loss on debt
extinguishment (6)
57
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
(5)
(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 investment losses
(4)
.12
Add: Net adjustment from divestitures
(5)
.12
Add: Net adjustment from loss on debt
extinguishment (6)
.19
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
(5)
(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
Add: Net adjustment from investment losses
(4)
.12
Deduct: Net adjustment from divestitures
(5)
(3.17
)
Add: Net adjustment from loss on debt
extinguishment (6)
.19
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/20210609005455/en/
INVESTOR CONTACT: Rebecca Gardy
(856) 342-6081 rebecca_gardy@campbells.com
MEDIA CONTACT: Amanda Pisano (856)
342-8590 Amanda_Pisano@campbells.com
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