- Net Earnings Per Share (EPS) of $0.28;
Adjusted Net EPS of $0.56
- Net Sales from Continuing Operations
Increased 16 Percent; Total Combined Net Sales of $2.388 Billion;
Organic Sales from Continuing Operations Comparable to the Prior
Year
- Campbell Fresh Segment Reported as
Discontinued Operations
- Campbell Updates Fiscal 2019 Guidance
to Reflect Improved EPS Outlook and Divestitures
- Campbell to Host an Investor Day
on June 13, 2019
Campbell Soup Company (NYSE:CPB) today reported its
third-quarter results for fiscal 2019.
CEO Comments
Mark Clouse, Campbell’s President and CEO stated, “Our results
this quarter were ahead of our expectations, making it the third
consecutive quarter that we met or exceeded our outlook. I am also
pleased to see profitability trends are improving, driven by
sequential gross margin improvement.
“In the quarter, we continued to drive sales growth in Global
Biscuits and Snacks, fueled by our U.S. Snacks portfolio. The
business continues its growth trends on Pepperidge Farm, coupled
with improvements in the Snyder’s-Lance portfolio. In the Meals and
Beverages segment, although there is more to do, we are making
steady improvements on gross margin and profit and this business is
showing signs of stabilization.”
Background on the Presentation of Results
On April 12, 2019, the company announced that it had entered
into an agreement to sell its Bolthouse Farms business. As a result
of this, and along with the recently completed divestitures of the
U.S. refrigerated soup and Garden Fresh Gourmet businesses in the
third quarter of fiscal 2019, Campbell Fresh is now reported as
discontinued operations. The following table is a summary of the
third-quarter results for sales, earnings before interest and taxes
(EBIT) and EPS for continuing operations, discontinued operations
and on a total combined basis. Prior-year results have been
adjusted to conform to the current-year presentation. A detailed
reconciliation of the reported (GAAP) financial information to the
non-GAAP information is included at the end of this news
release.
Three Months
Ended
($ in millions, except per share)
Apr. 28, 2019 Apr. 29,
2018 % Change
Continuing
Operations
Net Sales as Reported (GAAP)
$2,178 $1,878 16% Organic -%
EBIT as Reported (GAAP)
$266 $158 68% Adjusted EBIT
$316 $321 (2)% Diluted EPS as Reported (GAAP)
$0.43 $0.24 79% Adjusted Diluted EPS
$0.56 $0.59 (5)%
Discontinued
Operations
Net Sales
$210 $247 (15)% EBIT (Loss)
$(17)
$(633) n/m Adjusted EBIT (Loss)
$7 $(13) n/m Diluted
Loss Per Share as Reported (GAAP)
$(0.16) $(1.55) n/m
Adjusted Diluted EPS
$- $0.10 n/m
Total Combined
Company
Combined Net Sales
$2,388 $2,125 12% Combined EBIT
(Loss)
$249 $(475) n/m Adjusted Combined EBIT
$323
$308 5% Diluted Net EPS as Reported (GAAP)
$0.28
$(1.31) n/m Adjusted Diluted Net EPS
$0.56 $0.70 (20)%
n/m – not meaningful
Third-Quarter Results
Continuing Operations
Sales increased 16 percent to $2.2 billion reflecting a 17-point
benefit from the acquisition of Snyder’s-Lance, which was completed
on March 26, 2018, partly offset by a 1-point negative impact from
currency translation. Organic sales were comparable to the prior
year as gains in Global Biscuits and Snacks were offset by declines
in Meals and Beverages. Sales in the quarter benefited by
approximately 30 basis points from the change in the new revenue
recognition standard adopted in fiscal 2019, which impacts the
timing of expense related to promotional programs. The annual
impact is not expected to be material.
Gross margin increased from 32.7 percent to 33.2 percent.
Excluding items impacting comparability, adjusted gross margin
decreased 2.1 percentage points to 33.4 percent, including a
170-basis-point dilutive mix impact from the acquisition of
Snyder’s-Lance. The remaining decline in adjusted gross margin was
driven primarily by cost inflation mostly offset by supply chain
productivity improvements, lower promotional spending, the benefit
from pricing actions and the benefits from cost savings
initiatives.
Marketing and selling expenses increased 11 percent to $245
million reflecting a 14-point increase from the inclusion of the
Snyder’s-Lance acquisition. Excluding items impacting comparability
and the impact of the acquisition, adjusted marketing and selling
expenses decreased driven primarily by lower marketing overhead and
selling expenses, including the benefits from cost savings
initiatives, partly offset by higher incentive compensation.
Administrative expenses increased 8 percent to $165 million.
Excluding items impacting comparability, adjusted administrative
expenses increased 28 percent to $151 million primarily due to
higher incentive compensation expense and the inclusion of the
Snyder’s-Lance acquisition. The incentive compensation headwinds
were due to lapping below-target levels in the prior-year quarter
and improved performance in fiscal 2019.
Other expenses were $20 million as compared to $35 million in
the prior year. Excluding items impacting comparability, other
income decreased from $16 million in the prior year to $8 million
reflecting amortization of intangible assets associated with
acquisition of Snyder’s-Lance.
As reported EBIT was $266 million. Excluding items impacting
comparability, adjusted EBIT decreased 2 percent to $316 million
driven by declines in the base business reflecting higher adjusted
administrative costs and gross margin pressure, offset mostly by
incremental earnings from the acquisition of Snyder’s-Lance. The
change in revenue recognition had a favorable 2-point impact in the
quarter.
Net interest expense was $91 million compared to $42 million in
the prior year. Excluding items impacting comparability in the
prior year, adjusted net interest expense increased $31 million
reflecting the debt associated with the acquisitions of
Snyder’s-Lance and Pacific Foods, as well as higher short-term
interest rates. The tax rate was 25.1 percent as compared to 37.1
percent in the prior year. Excluding items impacting comparability,
the adjusted tax rate decreased 6.5 percentage points from 31.4
percent to 24.9 percent reflecting a lower U.S. federal tax
rate.
The company reported EPS from continuing operations of $0.43 per
share. Excluding items impacting comparability, adjusted EPS from
continuing operations decreased 5 percent to $0.56 per share
reflecting higher adjusted net interest expense, partly offset by a
lower adjusted tax rate. The change in revenue recognition had a
favorable $0.01 per share impact in the quarter.
Discontinued Operations
Sales decreased 15 percent to $210 million driven primarily by
declines in refrigerated soup reflecting the previously announced
plans of certain major private label customers to insource
production in 2019. Adjusted EBIT was $7 million compared to a loss
of $13 million in the prior-year quarter reflecting improved
operational efficiency, including the benefit from cost saving
initiatives. The company reported a loss from discontinued
operations of $0.16 per share. Excluding items impacting
comparability, adjusted EPS from discontinued operations was
breakeven, compared to $0.10 per share in the prior year.
Total Combined Results
Total combined sales from continuing and discontinued operations
increased 12 percent to $2.4 billion reflecting a 15-point benefit
from the acquisition of Snyder’s-Lance. Adjusted combined gross
margin decreased 0.4 percentage points to 31.6 percent. Adjusted
combined EBIT increased 5 percent to $323 million reflecting
incremental earnings from the acquisition, partly offset by
declines on the base business. Adjusted net EPS was $0.56 per share
compared to $0.70 per share in the prior year.
Nine-Month Results
The following table is a summary of the nine-month results for
sales, EBIT and EPS for continuing operations, discontinued
operations and on a total combined basis.
Nine Months
Ended
($ in millions, except per share)
Apr. 28, 2019 Apr. 29,
2018 % Change
Continuing
Operations
Net Sales as Reported (GAAP)
$7,129 $5,743 24% Organic (1)%
EBIT as Reported (GAAP)
$1,010 $900 12% Adjusted EBIT
$1,134 $1,151 (1)% Diluted EPS as Reported (GAAP)
$1.82 $2.28 (20)% Adjusted Diluted EPS
$2.14 $2.46
(13)%
Discontinued
Operations
Net Sales
$666 $723 (8)% EBIT (Loss)
$(392)
$(720) n/m Adjusted EBIT (Loss)
$- $(24) n/m Diluted
Loss Per Share as Reported (GAAP)
$(1.10) $(1.73) n/m
Adjusted Diluted Earnings (Loss) per Share
$(0.01) $0.16 n/m
Total Combined
Company
Combined Net Sales
$7,795 $6,466 21% Combined EBIT
$618 $180 n/m Adjusted Combined EBIT
$1,134 $1,127 1%
Diluted Net EPS as Reported (GAAP)
$0.73 $0.55 33%
Adjusted Diluted Net EPS
$2.13 $2.62 (19)% n/m – not
meaningful
Nine-Month Results
Continuing Operations
Sales increased 24 percent to $7.1 billion reflecting a 26-point
benefit from the acquisitions of Snyder’s-Lance and Pacific Foods.
Organic sales declined 1 percent.
As reported EBIT increased 12 percent to $1.0 billion. Excluding
items impacting comparability, adjusted EBIT decreased 1 percent to
$1.1 billion reflecting declines in the base business offset mostly
by incremental earnings from the acquisitions.
The company reported EPS from continuing operations of $1.82 per
share. Excluding items impacting comparability, adjusted EPS from
continuing operations decreased 13 percent to $2.14 per share
reflecting higher adjusted net interest expense, partly offset by a
lower adjusted tax rate. The change in revenue recognition had no
impact on a year-to-date basis.
Discontinued Operations
Sales decreased 8 percent to $666 million. Adjusted EBIT was
breakeven. The company reported a loss from discontinued operations
of $1.10 per share. Excluding items impacting comparability,
adjusted loss from discontinued operations was $0.01 per share,
compared to earnings of $0.16 per share in the prior year.
Total Combined Results
Total combined sales from continuing and discontinued operations
increased 21 percent to $7.8 billion reflecting a 23-point benefit
from the acquisitions of Snyder’s-Lance and Pacific Foods. Adjusted
combined EBIT increased 1 percent to $1.1 billion. Adjusted net EPS
declined 19 percent to $2.13 per share.
Cash flow from operations increased to $1.1 billion from $1.0
billion a year ago due primarily to significant improvements from
the company’s working capital management efforts, partly offset by
lower cash earnings. In line with the company’s commitment to
returning value to shareholders, during the first nine months of
fiscal 2019, the company paid $318 million of cash dividends
reflecting the quarterly dividend rate of $0.35 per share.
Campbell Updates Fiscal 2019 Guidance
Based on the company’s improved earnings outlook for fiscal 2019
and the impact of the Campbell Fresh divestitures, Campbell has
updated its guidance as shown in the table below. This fiscal 2019
guidance includes an estimated 1 percentage-point negative impact
from currency translation. As mentioned earlier in this release,
Campbell Fresh is now reported as a discontinued operation and
prior-year results have been adjusted to conform to the
current-year presentation.
($ in millions,
except per share)
As Previously Disclosed Updated Results
and Guidance
2018Results*
Previous 2019Guidance
2018Results
Revised 2019Guidance
Net Sales $8,685 $9,975 to $10,100 $7,735 $9,075 to $9,125
Adjusted EBIT $1,408** $1,370 to $1,410 $1,433** $1,390 to
$1,410 Adjusted EPS from continuing operations n/a n/a
$2.90** $2.50 to $2.55 Adjusted Net EPS $2.87** $2.45 to
$2.53 $2.87** $2.50 to $2.55 n/a – not applicable * Amounts
represent 2018 results as previously disclosed prior to the
presentation change for discontinued operations. ** 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 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.
Cost Savings Program
In the third quarter of fiscal 2019, Campbell achieved $55
million in savings under its multi-year cost savings program,
inclusive of Snyder’s-Lance synergies, bringing total
program-to-date savings to $605 million. Year-to-date savings were
$150 million through the first nine months of fiscal 2019,
benefiting both continuing and discontinued operations. The
previously announced cost savings target of $945 million included
$95 million of savings related to Campbell Fresh, which is now
reported as discontinued operations. For continuing operations,
Campbell is targeting cumulative annualized savings of $850 million
by the end of fiscal 2022, of which $535 million has been achieved
program-to-date.
Segment Operating Review
An analysis of net sales and operating earnings by reportable
segment follows:
Three Months
Ended Apr. 28, 2019($ in millions)
Meals andBeverages
Global Biscuitsand
Snacks
Total Net Sales, as Reported $1,024 $1,154
$2,178
Volume and Mix (3)% 1% (1)% Price and Sales Allowances 1% (1)% -%
Promotional Spending 1% 1% 1% Organic Net Sales -%* 1% -% Currency
-% (2)% (1)% Acquisition -% 38% 17% % Change vs. Prior Year (1)%*
37% 16% Segment Operating Earnings $207 $139 % Change vs.
Prior Year (5)% 15% * Numbers do not add due to rounding.
Note: A detailed reconciliation of the reported (GAAP) net sales to
organic net sales is included at the end of this news release.
Nine Months Ended
Apr. 28, 2019($ in millions)
Meals andBeverages
Global Biscuitsand
Snacks
Total Net Sales, as Reported $3,513 $3,615
$7,129**
Volume and Mix (1)% 1% (1)% Price and Sales Allowances -% 1% -%
Promotional Spending (1)% -% (1)% Organic Net Sales (2)% 1%* (1)%*
Currency -% (2)% (1)% Acquisitions 3% 63% 26% % Change vs. Prior
Year -%* 61%* 24% Segment Operating Earnings $753 $478 %
Change vs. Prior Year (9)% 27% * 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.
Meals and Beverages
Sales in the quarter decreased 1 percent to $1.024 billion.
Organic sales were comparable to the prior year reflecting mixed
results, as solid performance in Canada was offset by decreases in
V8 beverages and Prego pasta sauces in the U.S. The adoption of new
accounting guidance for revenue recognition resulted in a positive
1-point impact on sales. Sales of U.S. soup were comparable to the
prior year as gains in broth were offset by moderating declines in
condensed and ready-to-serve soups.
Segment operating earnings in the quarter decreased 5 percent to
$207 million. The decrease was driven primarily by cost inflation
and higher administrative expenses, partly offset by supply chain
productivity programs, lower promotional spending and the benefit
of recent pricing actions.
Global Biscuits and Snacks
Sales in the quarter increased 37 percent to $1.154 billion.
Excluding the benefit from the acquisition of Snyder’s-Lance and
the negative impact of currency translation, organic sales
increased 1 percent. This performance reflects continued solid
growth in Pepperidge Farm, driven by consumption gains in
Pepperidge Farm fresh bakery products and Goldfish crackers, offset
partly by declines in the international biscuits and snacks
operating segment.
Segment operating earnings in the quarter increased 15 percent
to $139 million, reflecting a 21-point benefit from the acquisition
of Snyder’s-Lance. Excluding the impact of the acquisition, segment
operating earnings decreased driven primarily by cost inflation and
higher administrative expenses, partly offset by supply chain
productivity programs.
Corporate
Corporate in the third quarter of fiscal 2019 included a pension
settlement charge of $28 million associated with a U.S. pension
plan, charges related to cost savings initiatives of $19 million,
and costs of $2 million associated with the planned divestiture of
the company’s international biscuits and snacks operating segment.
Corporate in the third quarter of fiscal 2018 included transaction
and integration costs of $72 million related to the acquisition of
Snyder’s-Lance, charges related to cost savings initiatives of $45
million, and a charge of $22 million related to the settlement of a
legal claim. The remaining increase in expenses primarily reflects
losses on open commodity contracts and higher administrative
expenses.
Conference Call and Webcast
Campbell will host a conference call to discuss these results
today at 8:30 a.m. Eastern Time. To join, dial +1 (409) 350-3941.
The access code is 2279106. 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 midnight on Jun. 19, 2019, at +1
(404) 537-3406. The access code for the replay is 2279106.
Reportable Segments
Campbell Soup Company earnings results are reported as
follows:
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. Beginning in
fiscal 2019, the segment also includes the simple meals and
shelf-stable beverages business in Latin America. Prior to fiscal
2019, the business in Latin America was managed as part of the
Global Biscuits and Snacks segment. Beginning in the third quarter
of fiscal 2019, the segment also includes a portion of the U.S.
refrigerated soup business that was previously managed as part of
the Campbell Fresh segment. Prior-period segment results have been
adjusted retroactively to reflect these changes.
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 and Asia Pacific.
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
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 COMPANYCONSOLIDATED
STATEMENTS OF EARNINGS (unaudited)(millions, except per share
amounts)
Three Months Ended April 28, 2019
April 29, 2018 Net sales
$ 2,178
$ 1,878 Costs and expenses Cost of products sold
1,455 1,263 Marketing and selling expenses
245 220
Administrative expenses
165 153 Research and development
expenses
26 25 Other expenses / (income)
20 35
Restructuring charges
1 24 Total costs and
expenses
1,912 1,720 Earnings before interest
and taxes
266 158 Interest, net
91 42
Earnings before taxes
175 116 Taxes on earnings
44
43 Earnings from continuing operations
131 73
Loss from discontinued operations
(47 ) (466 ) Net
earnings (loss)
84 (393 ) Net loss attributable to
noncontrolling interests
— — Net earnings
(loss) attributable to Campbell Soup Company
$ 84
$ (393 ) Per share - basic Earnings from continuing
operations attributable to Campbell Soup Company
$
.44 $ .24 Loss from discontinued operations
(.16
) (1.55 ) Net earnings (loss) attributable to Campbell Soup
Company
$ .28 $ (1.31 ) Dividends
$
.35 $ .35 Weighted average shares outstanding
- basic
301 301 Per share - assuming dilution
Earnings from continuing operations attributable to Campbell Soup
Company
$ .43 $ .24 Loss from discontinued operations
(.16 ) (1.55 ) Net earnings (loss) attributable to
Campbell Soup Company*
$ .28 $ (1.31 )
Weighted average shares outstanding - assuming dilution
302
301
*The sum of the individual per share
amounts may not add due to rounding.
CAMPBELL SOUP COMPANYCONSOLIDATED
STATEMENTS OF EARNINGS (unaudited)(millions, except per share
amounts)
Nine Months Ended April 28, 2019
April 29, 2018 Net sales
$ 7,129 $
5,743 Costs and expenses Cost of products sold
4,781
3,624 Marketing and selling expenses
738 645 Administrative
expenses
492 444 Research and development expenses
74
79 Other expenses / (income)
13 (7 ) Restructuring charges
21 58 Total costs and expenses
6,119
4,843 Earnings before interest and taxes
1,010
900 Interest, net
276 104 Earnings before
taxes
734 796 Taxes on earnings
184 106
Earnings from continuing operations
550 690 Loss from
discontinued operations
(331 ) (523 ) Net earnings
219 167 Net loss attributable to noncontrolling interests
— — Net earnings attributable to Campbell Soup
Company
$ 219 $ 167 Per share - basic
Earnings from continuing operations attributable to Campbell Soup
Company
$ 1.83 $ 2.29 Loss from discontinued
operations
(1.10 ) (1.74 ) Net earnings attributable
to Campbell Soup Company
$ .73 $ .55
Dividends
$ 1.05 $ 1.05 Weighted
average shares outstanding - basic
301 301 Per
share - assuming dilution Earnings from continuing operations
attributable to Campbell Soup Company
$ 1.82 $ 2.28
Loss from discontinued operations
(1.10 ) (1.73 ) Net
earnings attributable to Campbell Soup Company*
$ .73
$ .55 Weighted average shares outstanding - assuming
dilution
302 302
*The sum of the individual per share
amounts may not add due to rounding.
CAMPBELL SOUP COMPANYCONSOLIDATED
SUPPLEMENTAL SCHEDULE OF SALES AND EARNINGS (unaudited)(millions,
except per share amounts)
Three Months Ended April 28,
2019 April 29, 2018
PercentChange
Sales
Contributions: Meals and Beverages
$ 1,024 $ 1,033
(1)% Global Biscuits and Snacks
1,154 843 37% Corporate
— 2 n/m Total sales
$ 2,178
$ 1,878 16%
Earnings
Contributions: Meals and Beverages
$ 207 $ 218 (5)%
Global Biscuits and Snacks
139 121 15% Total
operating earnings
346 339 2% Corporate
(79 )
(157 ) Restructuring charges
(1 ) (24 ) Earnings
before interest and taxes
266 158 68% Interest, net
91 42 Taxes on earnings
44 43 Earnings
from continuing operations
131 73 Loss from discontinued
operations
(47 ) (466 ) Net earnings (loss)
84
(393 ) 121% Net loss attributable to noncontrolling interests
— — Net earnings (loss) attributable to
Campbell Soup Company
$ 84 $ (393 ) 121% Per
share - assuming dilution Earnings from continuing operations
attributable to Campbell Soup Company
$ .43 $ .24
Loss from discontinued operations
(.16 ) (1.55 ) Net
earnings (loss) attributable to Campbell Soup Company*
$
.28 $ (1.31 ) 121%
*The sum of the individual per share
amounts may not add due to rounding.
n/m - not meaningful
Beginning in fiscal 2019, the business in Latin America is
managed as part of the Meals and Beverages segment. In fiscal 2018,
the business in Latin America was managed as part of the Global
Biscuits and Snacks segment. On April 12, 2019, the company
announced it had signed a definitive agreement for the sale of
Bolthouse Farms. In the third quarter of fiscal 2019, the company
also sold its refrigerated soup plant and its Garden Fresh Gourmet
business. Beginning in the third quarter of fiscal 2019, the
results of these businesses were reported as discontinued
operations. The businesses were historically included in the
Campbell Fresh segment. A portion of the U.S. refrigerated soup
business was retained and is now reported in Meals and Beverages.
Prior periods have been adjusted retrospectively to reflect these
changes.
CAMPBELL SOUP COMPANYCONSOLIDATED
SUPPLEMENTAL SCHEDULE OF SALES AND EARNINGS (unaudited)(millions,
except per share amounts)
Nine Months Ended
April 28, 2019 April 29, 2018
PercentChange
Sales
Contributions: Meals and Beverages
$ 3,513 $ 3,501 —%
Global Biscuits and Snacks
3,615 2,239 61% Corporate
1 3 n/m Total sales
$ 7,129
$ 5,743 24%
Earnings
Contributions: Meals and Beverages
$ 753 $ 832 (9)%
Global Biscuits and Snacks
478 375 27% Total
operating earnings
1,231 1,207 2% Corporate
(200
) (249 ) Restructuring charges
(21 ) (58 )
Earnings before interest and taxes
1,010 900 12% Interest,
net
276 104 Taxes on earnings
184 106
Earnings from continuing operations
550 690 Loss from
discontinued operations
(331 ) (523 ) Net earnings
219 167 31% Net loss attributable to noncontrolling
interests
— — Net earnings attributable to
Campbell Soup Company
$ 219 $ 167 31%
Per share - assuming dilution Earnings from continuing operations
attributable to Campbell Soup Company
$ 1.82 $ 2.28
Loss from discontinued operations
(1.10 ) (1.73 ) Net
earnings attributable to Campbell Soup Company*
$ .73
$ .55 33%
*The sum of the individual per share
amounts may not add due to rounding.
n/m - not meaningful
Beginning in fiscal 2019, the business in Latin America is
managed as part of the Meals and Beverages segment. In fiscal 2018,
the business in Latin America was managed as part of the Global
Biscuits and Snacks segment. On April 12, 2019, the company
announced it had signed a definitive agreement for the sale of
Bolthouse Farms. In the third quarter of fiscal 2019, the company
also sold its refrigerated soup plant and its Garden Fresh Gourmet
business. Beginning in the third quarter of fiscal 2019, the
results of these businesses were reported as discontinued
operations. The businesses were historically included in the
Campbell Fresh segment. A portion of the U.S. refrigerated soup
business was retained and is now reported in Meals and Beverages.
Prior periods have been adjusted retrospectively to reflect these
changes.
CAMPBELL SOUP COMPANYCONDENSED
CONSOLIDATED BALANCE SHEETS (unaudited)(millions)
April 28, 2019 April 29, 2018
Current assets
$ 1,941 $ 2,076 Current assets of
discontinued operations
220 253 Plant assets, net
2,769 2,765 Intangible assets, net
8,289 8,497 Other
assets
203 178 Noncurrent assets of discontinued operations
346 797 Total assets
$ 13,768 $
14,566 Current liabilities
$ 3,411 $ 3,276 Current
liabilities of discontinued operations
100 127 Long-term
debt
7,507 8,080 Other liabilities
1,509 1,668
Noncurrent liabilities of discontinued operations
4 4 Total
equity
1,237 1,411 Total liabilities and equity
$ 13,768 $ 14,566 Total debt
$
9,280 $ 9,843 Cash and cash equivalents
$
202 $ 195
On April 12, 2019, the company announced it had signed a
definitive agreement for the sale of Bolthouse Farms. The assets
and liabilities of the business were reported as assets and
liabilities of discontinued operations as of April 28, 2019 and
April 29, 2018. In the third quarter of fiscal 2019, the company
also sold its refrigerated soup plant and its Garden Fresh Gourmet
business. The assets and liabilities of these businesses were
reported as assets and liabilities of discontinued operations as of
April 29, 2018.
CAMPBELL SOUP COMPANYCONSOLIDATED
STATEMENTS OF CASH FLOWS (unaudited)(millions)
Nine Months Ended April 28, 2019
April 29, 2018 Cash flows from operating activities: Net
earnings
$ 219 $ 167 Adjustments to reconcile net
earnings to operating cash flow Impairment charges
360 694
Restructuring charges
22 59 Stock-based compensation
45 48 Noncurrent income taxes
— 52 Amortization of
inventory fair value adjustment from acquisition
— 37
Pension and postretirement benefit income
(16 ) (48 )
Depreciation and amortization
349 266 Deferred income taxes
50 (192 ) Losses on sales of discontinued operations
businesses
18 — Other, net
21 10 Changes in working
capital, net of acquisitions and divestitures Accounts receivable
(63 ) (18 ) Inventories
156 50 Prepaid assets
(19 ) (84 ) Accounts payable and accrued liabilities
60 26 Other
(54 ) (43 ) Net cash provided by
operating activities
1,148 1,024 Cash flows
from investing activities: Purchases of plant assets
(274
) (223 ) Purchases of route businesses
(27 )
(5 ) Sales of route businesses
29 5 Businesses acquired, net
of cash acquired
(18 ) (6,773 ) Sales of discontinued
operations businesses, net of cash divested
54 — Other, net
14 (12 ) Net cash used in investing activities
(222 ) (7,008 ) Cash flows from financing activities:
Short-term borrowings
4,681 7,811 Short-term repayments
(4,995 ) (7,577 ) Long-term borrowings
— 6,200
Long-term repayments
(300 ) (43 ) Dividends paid
(318 ) (321 ) Treasury stock purchases
— (86 )
Payments related to tax withholding for stock-based compensation
(8 ) (23 ) Repurchase of noncontrolling interest
— (47 ) Payments of debt issuance costs
(1 )
(49 ) Net cash provided by (used in) financing activities
(941 ) 5,865 Effect of exchange rate changes
on cash
(5 ) (1 ) Net change in cash and cash
equivalents
(20 ) (120 ) Cash and cash equivalents —
beginning of period
218 314 Cash balance of discontinued
operations — beginning of period
8 5 Cash balance of
discontinued operations — end of period
(4 ) (4 )
Cash and cash equivalents — end of period
$ 202
$ 195
Reconciliation of GAAP to Non-GAAP Financial
MeasuresThird Quarter Ended April 28, 2019
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. In the third quarter of
fiscal 2019, the results of the Campbell Fresh segment are reported
as discontinued operations. As this is the first quarter presenting
the segment as discontinued operations, we have provided certain
combined financial measures of continuing operations and
discontinued operations to facilitate comparison of the company’s
historical operating results.
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 and combined net sales
follows.
Three Months Ended April 28,
2019
April 29,2018
% Change (millions)
Net
Sales,asReported
Impact ofCurrency
Impact ofAcquisitions
OrganicNet Sales
Net
Sales,asReported
Net
Sales,asReported
OrganicNet Sales
Meals and Beverages $ 1,024
$ 5 $ —
$ 1,029 $ 1,033 (1)% —%
Global
Biscuits and Snacks 1,154 18 (318 )
854 843 37% 1%
Corporate —
— —
— 2 n/m n/m
Total Net
Sales $ 2,178 $
23 $ (318 )
$ 1,883 $ 1,878 16%
—%
Net Sales included in discontinued operations
$ 210 $ 247
Combined Net Sales
$ 2,388 $ 2,125 12%
Nine Months Ended April 28, 2019
April 29,2018
% Change (millions)
Net
Sales,asReported
Impact ofCurrency
Impact ofAcquisitions
OrganicNet Sales
Net
Sales,asReported
Net
Sales,asReported
OrganicNet Sales
Meals and Beverages $ 3,513
$ 17 $ (100 )
$ 3,430 $ 3,501 —% (2)%
Global Biscuits and Snacks 3,615 50
(1,401 ) 2,264 2,239 61% 1%
Corporate
1 —
— 1 3 n/m
n/m
Total Net Sales $ 7,129
$ 67 $
(1,501 ) $ 5,695 $
5,743 24% (1)%
Net Sales included in
discontinued operations $ 666 $ 723
Combined Net Sales $ 7,795 $ 6,466
21%
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 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
August 2018, the company announced that it will continue to
streamline its organization, expand its zero-based budgeting
efforts and optimize its manufacturing network. In fiscal 2019, the
company began to include costs associated with the Snyder's-Lance
cost transformation program and integration with these
initiatives.
In the third quarter of fiscal 2019, the company recorded
Restructuring charges of $1 million and implementation costs and
other related costs of $12 million in Administrative expenses, $4
million in Cost of products sold, $2 million in Marketing and
selling expenses, and $1 million in Research and development
expenses (aggregate impact of $15 million after tax, or $.05 per
share) in Earnings from continuing operations related to these
initiatives. In the nine-month period of fiscal 2019, the company
recorded Restructuring charges of $21 million and implementation
costs and other related costs of $35 million in Administrative
expenses, $25 million in Cost of products sold, $6 million in
Marketing and selling expenses, and $2 million in Research and
development expenses (aggregate impact of $67 million after tax, or
$.22 per share) in Earnings from continuing operations related to
these initiatives. The company also recorded a $1 million pre-tax
and after-tax charge in Earnings from discontinued operations
related to these initiatives. In the third quarter of fiscal 2018,
the company recorded Restructuring charges of $14 million and
implementation costs and other related costs of $29 million in
Administrative expenses, $14 million in Cost of products sold, and
$2 million in Marketing and selling expenses (aggregate impact of
$45 million after tax, or $.15 per share) in Earnings from
continuing operations related to these initiatives. The company
also recorded a $1 million pre-tax charge in Earnings from
discontinued operations related to these initiatives. In the
nine-month period of fiscal 2018, the company recorded
Restructuring charges of $48 million and implementation costs and
other related costs of $67 million in Administrative expenses, $20
million in Cost of products sold, and $2 million in Marketing and
selling expenses (aggregate impact of $102 million after tax, or
$.34 per share) in Earnings from continuing operations related to
these initiatives. The company also recorded a $2 million charge
($1 million after tax) in Earnings from discontinued operations
related to these initiatives. For the year ended July 29, 2018, the
company recorded Restructuring charges of $48 million and
implementation costs and other related costs of $87 million in
Administrative expenses, $45 million in Cost of products sold, and
$3 million in Marketing and selling expenses (aggregate impact of
$135 million after tax, or $.45 per share) in Earnings from
continuing operations related to these initiatives. The company
also recorded a $2 million charge ($1 million after tax) in
Earnings from discontinued operations related to these initiatives.
(2)
In the second quarter of fiscal 2019,
interim impairment assessments were performed on the intangible and
tangible assets within Campbell Fresh, which includes Garden Fresh
Gourmet, Bolthouse Farms carrot and carrot ingredients, and
Bolthouse Farms refrigerated beverages and salad dressings, as the
company continued to pursue the divestiture of these businesses.
The company revised its future outlook for earnings and cash flows
for each of these businesses as the divestiture process
progressed.
The company recorded non-cash impairment charges of $104
million on the tangible assets and $73 million on the intangible
assets of Bolthouse Farms carrot and carrot ingredients; $96
million on the intangible assets and $9 million on the tangible
assets of Bolthouse Farms refrigerated beverages and salad
dressings; and $62 million on the intangible assets and $2 million
on the tangible assets of Garden Fresh Gourmet. The aggregate
impact of the impairment charges was $346 million, of which $115
million was recorded in Cost of products sold and $231 million in
Other expenses / (income), ($264 million after tax, or $.88 per
share). In the first quarter of fiscal 2019, the company recorded a
non-cash impairment charge of $14 million in Cost of products sold
($11 million after tax, or $.04 per share) on its U.S. refrigerated
soup plant assets. For the nine-month period of fiscal 2019, the
total non-cash impairment charges recorded were $360 million, of
which $129 million was recorded in Cost of products sold and $231
million in Other expenses / (income), ($275 million after tax, or
$.91 per share). 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 performance of the
business. In addition, the operating performance of the Bolthouse
Farms refrigerated beverages and salad dressings 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 the nine-month period of fiscal 2018 and
for the year ended July 29, 2018, the total non-cash impairment
charges recorded were $694 million, of which $11 million was
recorded in Cost of products sold and $683 million in Other
expenses / (income), ($571 million after tax, or $1.89 per share).
These impairment charges were all recorded in Earnings from
discontinued operations. 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 Earnings
from continuing operations in Other expenses / (income).
(3)
In the first quarter of fiscal 2019, the
company announced its intent to divest its international biscuits
and snacks operating segment and Campbell Fresh operating segment.
In the third quarter of fiscal 2019, the company incurred costs of
$2 million recorded in Administrative expenses ($1 million after
tax) in Earnings from continuing operations associated with the
planned divestiture of the international biscuits and snacks
operating segment. The company also recorded pre-tax expenses of
$24 million associated with the sale process of the businesses in
Campbell Fresh, including losses on the sale of its U.S.
refrigerated soup business and Garden Fresh Gourmet. In addition,
due to the pending sale of Bolthouse Farms, the company recorded
tax expense of $29 million as deferred tax assets are not
realizable. The aggregate impact was $47 million after tax, or $.16
per share, in Earnings from discontinued operations. In the
nine-month period of fiscal 2019, the company incurred costs of $7
million recorded in Administrative expenses ($5 million after tax,
or $.02 per share) in Earnings from continuing operations
associated with the planned divestiture of the international
biscuits and snacks operating segment. The company also recorded
pre-tax expenses of $31 million associated with the sale process of
the businesses in Campbell Fresh, including losses on the sale of
its U.S. refrigerated soup business and Garden Fresh Gourmet. In
addition, due to the pending sale of Bolthouse Farms, the company
recorded tax expense of $29 million as deferred tax assets are not
realizable. The aggregate impact was $52 million after tax, or $.17
per share, in Earnings from discontinued operations.
(4)
In the third quarter of fiscal 2019, the
company recognized a pre-tax pension settlement charge in Other
expenses / (income) of $28 million ($22 million after tax, or $.07
per share) in Earnings from continuing operations associated with a
U.S. pension plan. The settlement resulted from the level of lump
sum distributions from the plan's assets in 2019.
(5)
In fiscal 2018 and 2019, the company
reflected the impact of taxes on the enactment of the Tax Cuts and
Jobs Act that was signed into law in December 2017. In the
nine-month period of fiscal 2019, the company recorded a tax charge
of $2 million ($.01 per share) related to a transition tax on
unremitted foreign earnings. In the nine-month period of 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 $59 million related to a transition tax on unremitted
foreign earnings. The net impact was a tax benefit of $120 million
($.40 per share). For the year ended July 29, 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). These charges and benefits were all recorded in
Earnings from continuing operations.
(6)
In the nine-month period of fiscal 2018,
the company incurred gains of $14 million in Other expenses /
(income) ($10 million after tax, or $.03 per share) in Earnings
from continuing operations associated with mark-to-market
adjustments for defined benefit pension and postretirement plans.
For the year ended July 29, 2018, the company incurred gains of
$136 million in Other expenses / (income) ($103 million after tax,
or $.34 per share) in Earnings from continuing operations
associated with mark-to-market and curtailment adjustments for
defined benefit pension and postretirement plans.
(7)
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 third quarter of
fiscal 2018, the company incurred transaction costs of $29 million
recorded in Other expenses / (income), $37 million in Cost of
products sold associated with an acquisition date fair value
adjustment for inventory, and recorded a gain in Interest expense
of $18 million on treasury rate lock contracts used to hedge the
planned financing of the acquisition. The company also incurred
integration costs in association with its cost savings initiatives,
of which $10 million was recorded in Restructuring charges and $6
million in Administrative expenses. The aggregate impact was $64
million, $46 million after tax, or $.15 per share. In the
nine-month period of fiscal 2018, the company incurred transaction
costs of $53 million in Other expenses / (income), $37 million in
Cost of products sold and a gain in Interest expense of $18 million
on the treasury rate lock contracts. The company also incurred
integration costs in association with its cost savings initiatives,
of which $10 million was recorded in Restructuring charges and $6
million in Administrative expenses. The aggregate impact was $88
million, $65 million after tax, or $.22 per share. For the year
ended July 29, 2018, the company incurred transaction costs of $53
million recorded in Other expenses / (income), $42 million in Cost
of products sold and a gain in Interest expense of $18 million on
the treasury rate lock contracts. The company also incurred
integration costs in association with its cost savings initiatives,
of which $13 million was recorded in Restructuring charges and $12
million in Administrative expenses. The aggregate impact was $102
million, $73 million after tax, or $.24 per share. These costs were
all recorded in Earnings from continuing operations.
(8)
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) in Earnings from
continuing operations from a settlement of a legal claim.
The following tables reconcile financial information, presented
in accordance with GAAP, to financial information excluding certain
items:
Three Months Ended April 28,
2019 April 29, 2018 (millions, except per
share amounts)
Asreported
Adjustments(a)
Adjusted
Asreported
Adjustments(a)
Adjusted
AdjustedPercentChange
Gross margin
$ 723 $ 4 $
727 $ 615 $ 51 $ 666 9% Gross margin percentage
33.2
% 33.4 % 32.7 % 35.5 % Marketing and selling
expenses
245 (2 ) 243 220 (2 ) 218
Administrative expenses
165 (14 ) 151
153 (35 ) 118 Research and development expenses
26 (1
) 25 25 — 25 Other expenses / (income)
20
(28 ) (8 ) 35 (51 ) (16 ) Restructuring
charges
1 (1 ) — 24
(24 ) — Earnings before interest and taxes
$
266 $ 50 $ 316
$ 158 $ 163 $ 321 (2)% Interest, net
91 — 91 42 18
60 Earnings before taxes
$ 175
$ 50 $ 225 $ 116 $
145 $ 261 Taxes
44 12 56 43 39
82 Effective income tax rate
25.1 %
24.9 % 37.1 % 31.4 % Earnings from continuing
operations
$ 131 $ 38 $
169 $ 73 $ 106 $ 179 (6)% Earnings (loss) from discontinued
operations
(47 ) 47 —
(466 ) 497 31 n/m Net earnings (loss) attributable to
Campbell Soup Company
$ 84 $ 85
$ 169 $ (393 ) $ 603 $ 210
(20)% Diluted earnings per share - continuing operations
attributable to Campbell Soup Company
$ .43 $
.13 $ .56 $ .24 $ .35 $ .59 (5)% Diluted
earnings (loss) per share - discontinued operations
(.16
) .16 — (1.55 ) 1.65 .10
n/m Diluted net earnings (loss) per share attributable to
Campbell Soup Company*
$ .28 $
.28 $ .56 $ (1.31 ) $ 2.00
$ .70 (20)% (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 April 28, 2019 (millions, except per share
amounts)
Restructuringcharges,implementationcosts
and otherrelated costs(1)
Costsassociatedwith
planneddivestitures(3)
Pensionsettlement(4)
Adjustments Gross margin
$ 4
$ — $ — $ 4 Marketing and
selling expenses
(2 ) — — (2
) Administrative expenses
(12 ) (2
) — (14 ) Research and development
expenses
(1 ) — — (1 )
Other expenses / (income)
— — (28 )
(28 ) Restructuring charges
(1 )
— — (1 ) Earnings before
interest and taxes
$ 20 $ 2
$ 28 $ 50
Interest, net
— — —
— Earnings before taxes
$ 20
$ 2 $ 28 $
50 Taxes
5 1 6
12 Earnings from continuing operations
$ 15 $ 1 $ 22 $
38 Earnings from discontinued operations
—
47 — 47 Net earnings
attributable to Campbell Soup Company
$ 15
$ 48 $ 22 $
85 Diluted earnings per share - continuing operations
attributable to Campbell Soup Company*
$ .05 $
— $ .07 $ .13 Diluted earnings
per share - discontinued operations
— .16
— .16 Diluted net earnings per
share attributable to Campbell Soup Company*
$ .05
$ .16 $ .07
$ .28 *The sum of individual per share amounts
may not add due to rounding.
Three Months
Ended April 29, 2018 (millions, except per share
amounts)
Restructuringcharges,implementationcosts
and otherrelated costs(1)
Impairmentcharges(2)
Transactionandintegrationcosts(7)
Claimsettlement(8)
Adjustments Gross margin $ 14 $ — $ 37 $ — $
51 Marketing and selling expenses (2 ) — — — (2 ) Administrative
expenses (29 ) — (6 ) — (35 ) Other expenses / (income) — — (29 )
(22 ) (51 ) Restructuring charges (14 ) — (10 ) — (24
) Earnings before interest and taxes $ 59 $ — $ 82
$ 22 $ 163 Interest, net — — 18
— 18 Earnings before taxes $ 59 $ —
$ 64 $ 22 $ 145 Taxes 14 —
18 7 39 Earnings from continuing
operations $ 45 $ — $ 46 $ 15 $ 106 Earnings from discontinued
operations — 497 — — 497 Net
earnings attributable to Campbell Soup Company $ 45 $ 497
$ 46 $ 15 $ 603 Diluted earnings per
share - continuing operations attributable to Campbell Soup Company
$ .15 $ — $ .15 $ .05 $ .35 Diluted earnings per share -
discontinued operations — 1.65 — — 1.65
Diluted net earnings per share attributable to Campbell Soup
Company $ .15 $ 1.65 $ .15 $ .05 $ 2.00
Nine Months Ended
April 28, 2019 April 29, 2018
(millions, except per share amounts)
Asreported
Adjustments(a)
Adjusted
Asreported
Adjustments(a)
Adjusted
AdjustedPercentChange
Gross margin
$ 2,348 $ 25 $
2,373 $ 2,119 $ 57 $ 2,176 9% Gross margin percentage
32.9 % 33.3 % 36.9 % 37.9 % Marketing
and selling expenses
738 (6 ) 732 645
(2 ) 643 Administrative expenses
492 (42 )
450 444 (73 ) 371 Research and development expenses
74 (2 ) 72 79 — 79 Other expenses /
(income)
13 (28 ) (15 ) (7 ) (61
) (68 ) Restructuring charges
21 (21 )
— 58 (58 ) — Earnings before interest
and taxes
$ 1,010 $ 124
$ 1,134 $ 900 $ 251 $ 1,151
(1)% Interest, net
276 —
276 104 18 122 Earnings before
taxes
$ 734 $ 124
$ 858 $ 796 $ 233 $ 1,029
Taxes
184 28 212 106 181 287 Effective income
tax rate
25.1 % 24.7 % 13.3 %
27.9 % Earnings from continuing operations
$
550 $ 96 $ 646 $ 690 $ 52 $ 742
(13)% Earnings (loss) from discontinued operations
(331
) 328 (3 ) (523 ) 572 49
n/m Net earnings attributable to Campbell Soup Company
$ 219 $ 424 $
643 $ 167 $ 624 $ 791 (19)%
Diluted earnings per share - continuing operations attributable to
Campbell Soup Company*
$ 1.82 $ .32
$ 2.14 $ 2.28 $ .17 $ 2.46 (13)% Diluted earnings
(loss) per share - discontinued operations
(1.10 )
1.09 (.01 ) (1.73 ) 1.89 .16
n/m Diluted net earnings per share attributable to Campbell
Soup Company*
$ .73 $ 1.40
$ 2.13 $ .55 $ 2.07 $
2.62 (19)% (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 April 28, 2019 (millions, except per share
amounts)
Restructuringcharges,implementationcosts
and otherrelated costs(1)
Impairmentcharges(2)
Costsassociatedwithplanneddivestitures(3)
Pensionsettlement(4)
Taxreform(5)
Adjustments Gross margin
$ 25
$ — $ — $ — $
— $ 25 Marketing and selling expenses
(6 ) — — — — (6
) Administrative expenses
(35 ) —
(7 ) — — (42 ) Research
and development expenses
(2 ) — —
— — (2 ) Other expenses / (income)
— — — (28 ) — (28
) Restructuring charges
(21 ) —
— — — (21 )
Earnings before interest and taxes
$ 89
$ — $ 7 $
28 $ — $ 124
Interest, net
— — —
— — — Earnings
before taxes
$ 89 $ —
$ 7 $ 28 $
— $ 124 Taxes
22
— 2 6 (2 )
28 Earnings from continuing operations
$
67 $ — $ 5 $ 22
$ 2 $ 96 Earnings from discontinued
operations
1 275 52
— — 328 Net earnings
attributable to Campbell Soup Company
$ 68
$ 275 $ 57 $
22 $ 2 $ 424
Diluted earnings per share - continuing operations
attributable to Campbell Soup Company
$ .22 $
— $ .02 $ .07 $
.01 $ .32 Diluted earnings per share -
discontinued operations*
— .91
.17 — — 1.09
Diluted net earnings per share attributable to Campbell Soup
Company*
$ .23 $ .91
$ .19 $ .07 $
.01 $ 1.40 *The sum of
individual per share amounts may not add due to rounding.
Nine Months Ended April 29, 2018
(millions, except per share amounts)
Restructuringcharges,implementationcosts
and otherrelated costs(1)
Impairmentcharges(2)
Taxreform(5)
Mark-to-market(6)
Transactionandintegrationcosts(7)
Claimsettlement(8)
Adjustments Gross margin $ 20 $ — $ — $ — $ 37
$ — $ 57 Marketing and selling expenses (2 ) — — — — — (2 )
Administrative expenses (67 ) — — — (6 ) — (73 ) Other expenses /
(income) — — — 14 (53 ) (22 ) (61 ) Restructuring charges (48 ) —
— — (10 ) — (58 ) Earnings before
interest and taxes $ 137 $ — $ — $ (14 ) $ 106
$ 22 $ 251 Interest, net — — —
— 18 — 18 Earnings before taxes
$ 137 $ — $ — $ (14 ) $ 88 $ 22
$ 233 Taxes 35 — 120 (4 ) 23 7
181 Earnings from continuing operations $ 102 $ — $
(120 ) $ (10 ) $ 65 $ 15 $ 52 Earnings from discontinued operations
1 571 — — — — 572
Net earnings attributable to Campbell Soup Company $ 103 $
571 $ (120 ) $ (10 ) $ 65 $ 15 $ 624
Diluted earnings per share - continuing operations attributable to
Campbell Soup Company* $ .34 $ — $ (.40 ) $ (.03 ) $ .22 $ .05 $
.17 Diluted earnings per share - discontinued operations —
1.89 — — — — 1.89 Diluted
net earnings per share attributable to Campbell Soup Company* $ .34
$ 1.89 $ (.40 ) $ (.03 ) $ .22 $ .05 $
2.07 *The sum of individual per share amounts may not add
due to rounding.
Year Ended (millions,
except per share amounts)
July 29, 2018 Gross margin
$ 2,743 Add: Restructuring charges, implementation
costs and other related costs (1)
45 Add: Transaction and
integration costs (7)
42 Adjusted Gross margin
$ 2,830 Adjusted Gross margin
percentage 36.6 % Earnings before interest and
taxes, as reported $ 1,190 Add: Restructuring
charges, implementation costs and other related costs (1)
183 Add: Impairment charges (2)
54 Deduct: Total
pension and postretirement benefit mark-to-market and curtailment
adjustments (6)
(136 ) Add: Transaction and
integration costs (7)
120 Add: Claim settlement (8)
22 Adjusted Earnings before interest and taxes
$ 1,433 Interest, net, as reported
$ 197 Add: Transaction and integration costs (7)
18 Adjusted Interest, net $ 215
Adjusted Earnings before taxes $ 1,218
Taxes on earnings, as reported $ 153
Add: Tax benefit from restructuring charges, implementation costs
and other related costs (1)
48 Add: Tax benefit from
impairment charges (2)
13 Add: Tax benefit from tax reform
(5)
126 Deduct: Tax expense from total pension and
postretirement benefit mark-to-market and curtailment adjustments
(6)
(33 ) Add: Tax benefit from transaction and
integration costs (7)
29 Add: Tax benefit from claim
settlement (8)
7 Adjusted Taxes on earnings
$ 343 Adjusted effective income tax
rate 28.2 % Earnings from continuing
operations, as reported $ 840 Add: Net adjustment
from restructuring charges, implementation costs and other related
costs (1)
135 Add: Net adjustment from impairment charges
(2)
41 Deduct: Net adjustment from tax reform (5)
(126 ) Deduct: Net adjustment from total pension and
postretirement benefit mark-to-market and curtailment adjustments
(6)
(103 ) Add: Net adjustment from transaction and
integration costs (7)
73 Add: Net adjustment from claim
settlement (8)
15 Adjusted Earnings from
continuing operations $ 875 Loss from
discontinued operations, as reported $ (579
) Add: Net adjustment from restructuring charges,
implementation costs and other related costs (1)
1 Add: Net
adjustment from impairment charges (2)
571
Adjusted Loss from discontinued operations $
(7 ) Adjusted Net earnings attributable to
Campbell Soup Company $ 868 Diluted
earnings per share - continuing operations attributable to Campbell
Soup Company, as reported $ 2.78 Add: Net
adjustment from restructuring charges, implementation costs and
other related costs (1)
.45 Add: Net adjustment from
impairment charges (2)
.14 Deduct: Net adjustment from tax
reform (5)
(.42 ) Deduct: Net adjustment from total
pension and postretirement benefit mark-to-market and curtailment
adjustments (6)
(.34 ) Add: Net adjustment from
transaction and integration costs (7)
.24 Add: Net
adjustment from claim settlement (8)
.05 Adjusted
Diluted earnings per share - continuing operations attributable to
Campbell Soup Company $ 2.90 Diluted
loss per share - discontinued operations, as reported $
(1.92 ) Add: Net adjustment from restructuring
charges, implementation costs and other related costs (1)
—
Add: Net adjustment from impairment charges (2)
1.89
Adjusted Diluted loss per share - discontinued operations*
$ (.02 ) Diluted net earnings per share
attributable to Campbell Soup Company, as reported $
.86 Add: Net adjustment from restructuring charges,
implementation costs and other related costs (1)
.45 Add:
Net adjustment from impairment charges (2)
2.03 Deduct: Net
adjustment from tax reform (5)
(.42 ) Deduct: Net
adjustment from total pension and postretirement benefit
mark-to-market and curtailment adjustments (6)
(.34 )
Add: Net adjustment from transaction and integration costs (7)
.24 Add: Net adjustment from claim settlement (8)
.05
Adjusted Diluted net earnings per share attributable to
Campbell Soup Company* $ 2.87
*The sum of individual per share amounts
may not add due to rounding.
Adjusted Gross
Margin on a Combined Basis (Continuing Operations and Discontinued
Operations)
Three Months Ended (millions)
April 28,2019
April 29,2018
Adjusted Gross margin - continuing operations $
727 $ 666
Gross margin - discontinued
operations $ 28 $ 3 Add: Impairment charges (2)
— 11
Adjusted Gross margin - discontinued
operations $ 28 $ 14
Adjusted
Combined Gross margin $ 755 $ 680
Adjusted Combined Gross margin percentage 31.6
% 32.0 %
Adjusted Earnings
Before Interest and Taxes on a Combined Basis (Continuing
Operations and Discontinued Operations)
Three Months Ended April 28,
2019 April 29, 2018 (millions)
Asreported
Costsassociatedwithplanneddivestitures(3)
Adjusted
Asreported
Restructuringcharges,implementationcosts
and otherrelated costs(1)
Impairmentcharges(2)
Adjusted
AdjustedPercentChange
Earnings (loss) from discontinued operations $
(47 ) $ 47 $ — $ (466 ) $
— $ 497 $ 31 Add (Deduct): Taxes on earnings (loss) from
discontinued operations
30 (23 ) 7 (167
) 1 122 (44 ) Add: Interest, net
— —
— — — — —
Earnings
(loss) before interest and taxes - discontinued operations
$ (17 ) $ 24 $
7 $ (633 ) $ 1 $ 619 $ (13 ) Earnings
before interest and taxes - continuing operations
266
316 158 321
Combined Earnings before
interest and taxes $ 249 $
323 $ (475 ) $ 308
5
%
Nine Months Ended April 28, 2019
(millions)
Asreported
Restructuringcharges,implementationcosts
and otherrelated costs(1)
Impairmentcharges(2)
Costsassociatedwithplanneddivestitures(3)
Adjusted
Earnings (loss) from discontinued operations $
(331 ) $ 1 $ 275 $
52 $ (3 ) Add (Deduct): Taxes on
earnings (loss) from discontinued operations
(61 )
— 85 (21 ) 3 Add: Interest, net
— — — —
— Earnings (loss) before interest and taxes -
discontinued operations $ (392 ) $
1 $ 360 $ 31
$ — Earnings before interest and taxes
- continuing operations
1,010 1,134
Combined Earnings before interest and taxes $
618 $ 1,134
Nine Months Ended April 29, 2018 (millions)
Asreported
Restructuringcharges,implementationcosts
and otherrelated costs(1)
Impairmentcharges(2)
Adjusted Earnings (loss) from discontinued
operations $ (523 ) $ 1 $ 571 $ 49 Add (Deduct): Taxes on
earnings (loss) from discontinued operations (197 ) 1 123 (73 )
Add: Interest, net — — — —
Earnings
(loss) before interest and taxes - discontinued operations $
(720 ) $ 2 $ 694 $ (24 ) Earnings before interest and
taxes - continuing operations 900 1,151
Combined
Earnings before interest and taxes $ 180 $ 1,127
Adjusted Combined EBIT percentage change Nine Months
Ended 2019/2018 1 % Year
Ended July 29, 2018 (millions)
Asreported
Restructuringcharges,implementationcosts
and otherrelated costs(1)
Impairmentcharges(2)
Adjusted Earnings (loss) from discontinued
operations $ (579 ) $ 1 $ 571 $ (7 ) Add (Deduct): Taxes on
earnings (loss) from discontinued operations (142 ) 1 123 (18 )
Add: Interest, net — — — —
Earnings
(loss) before interest and taxes - discontinued operations $
(721 ) $ 2 $ 694 $ (25 ) Earnings before interest and
taxes - continuing operations 1,190 1,433
Combined
Earnings before interest and taxes $ 469 $ 1,408
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190605005190/en/
INVESTOR CONTACT:Ken Gosnell(856)
342-6081ken_gosnell@campbellsoup.com
MEDIA CONTACT:Thomas Hushen(856)
342-5227thomas_hushen@campbellsoup.com
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