Campbell Lowers Full-Year Guidance for Fiscal 2015; Expects Results for Second Quarter to Be Weaker Than Planned
For the full fiscal year, the company now expects that the
year-over-year change in net sales will be in the range of -1% to +1%
reflecting the negative impact of currency translation, which is
currently estimated at 2 percentage points. Excluding the impact of
currency translation, the company’s sales guidance is unchanged. The
company now expects that adjusted EBIT will decline by -7% to -5%, and
that adjusted EPS from continuing operations will be in the range of
Campbell will report its results for the second fiscal quarter ending
In connection with its release of second-quarter results, the company
will conduct a conference call on
About
Campbell (NYSE:CPB) is driven and inspired by our Purpose, “Real food
that matters for life’s moments.” The Company makes a range of products
from high-quality soups and simple meals to snacks and healthy
beverages. For generations, people have trusted Campbell to provide
authentic, flavorful and readily available foods and beverages that
connect them to each other, to warm memories, and to what’s important
today. Led by its iconic Campbell’s brand, the company’s
portfolio includes
Forward-Looking Statements
This release contains “forward-looking statements” that reflect the
company’s current expectations about the impact of its future plans and
performance on the company’s business or financial results. These
forward-looking statements, including the statements made regarding
sales, EBIT and EPS in fiscal 2015, rely on a number of assumptions and
estimates that could be inaccurate and which are subject to risks and
uncertainties. The factors that could cause the company’s actual results
to vary materially from those anticipated or expressed in any
forward-looking statement include (1) the company’s ability to manage
organizational change effectively; (2) the company’s ability to realize
projected cost savings and benefits from its efficiency programs; (3)
the impact of strong competitive responses to the company’s efforts to
leverage its brand power in the market; (4) the impact of changes in
consumer demand for the company’s products; (5) the risks associated
with trade and consumer acceptance of the company’s initiatives,
including its trade and promotional programs; (6) the practices,
including changes to inventory practices, and increased significance of
certain of the company’s key trade customers; (7) the impact of
fluctuations in the supply or costs of energy and raw and packaging
materials; (8) the impact of portfolio changes; (9) the uncertainties of
litigation; (10) the impact of changes in currency exchange rates, tax
rates, interest rates, debt and equity markets, inflation rates,
economic conditions and other external factors; (11) the impact of
unforeseen business disruptions in one or more of the company’s markets
due to political instability, civil disobedience, armed hostilities,
natural disasters or other calamities; and (12) other factors described
in the company’s most recent Form 10-K and subsequent
Reconciliation of GAAP to Non-GAAP Financial Measures
Second
Quarter Ended
Items Impacting Earnings
The company believes that financial information excluding certain transactions that are not considered to be part of the ongoing business improves the comparability of year-to-year results. Consequently, the company believes that investors may be able to better understand its earnings results excluding these transactions.
The following items impacted earnings:
| (1) | In fiscal 2014, the company implemented initiatives to streamline its salaried workforce in North America and its workforce in the Asia Pacific region; restructure manufacturing and streamline operations for its soup and broth business in China; improve supply chain efficiency in Australia; and reduce overhead across the organization. In the second quarter of fiscal 2014, the company recorded pre-tax restructuring charges of $13 million ($5 million after tax or $.02 per share in earnings from continuing operations attributable to Campbell Soup Company). In fiscal 2014, the company recorded pre-tax restructuring charges of $54 million ($33 million after tax or $.10 per share in earnings from continuing operations attributable to Campbell Soup Company). | |
| In fiscal 2013, the company implemented initiatives to improve its U.S. supply chain cost structure and increase asset utilization across its U.S. thermal plant network; expand access to manufacturing and distribution capabilities in Mexico; improve its Pepperidge Farm bakery supply chain cost structure; and reduce overhead in North America. In fiscal 2014, the company recorded pre-tax restructuring charges of $1 million and restructuring-related costs of $3 million in Cost of products sold (aggregate impact of $3 million after tax or $.01 per share on earnings from continuing operations). | ||
| (2) | In fiscal 2014, the company recognized pension settlement charges associated with a U.S. pension plan. The settlements resulted from the level of lump sum distributions from the plan's assets in 2014, primarily due to the closure of the facility in Sacramento, California. In fiscal 2014, the company recognized pre-tax pension settlement charges in Cost of products sold of $22 million ($14 million after tax or $.04 per share in earnings from continuing operations). | |
| (3) | On October 28, 2013, the company completed the sale of its simple meals business in Europe. The results of the business were reported as discontinued operations. In fiscal 2014, the company recorded a loss of $9 million ($6 million after tax or $.02 per share) on foreign exchange forward contracts used to hedge the proceeds from the sale of the European simple meals business. The loss was included in earnings from continuing operations. In addition, the company recorded tax expense of $7 million ($.02 per share) in earnings from continuing operations associated with the sale. In fiscal 2014, the company recognized a pre-tax gain of $141 million ($72 million after tax or $.23 per share) in earnings from discontinued operations. | |
The following tables reconcile financial information, presented in accordance with GAAP, to financial information excluding certain transactions:
| Three Months Ended | ||||
| (millions, except per share amounts) | January 26, 2014 | |||
| Earnings before interest and taxes, as reported | $ | 361 | ||
| Add: Restructuring charges and related costs (1) | 13 | |||
| Adjusted Earnings before interest and taxes | $ | 374 | ||
| Interest, net, as reported | $ | 29 | ||
| Adjusted Earnings before taxes | $ | 345 | ||
| Taxes on earnings, as reported | $ | 104 | ||
| Add: Tax benefit from restructuring charges and related costs (1) | 3 | |||
| Adjusted Taxes on earnings | $ | 107 | ||
| Adjusted effective income tax rate | 31.0 | % | ||
| Earnings from continuing operations, as reported | $ | 228 | ||
| Deduct: Net loss from noncontrolling interests | (7 | ) | ||
| Earnings from continuing operations attributable to Campbell Soup Company, as reported | $ | 235 | ||
| Add: Net adjustment from restructuring charges and related costs (1) | 10 | |||
| Deduct: Restructuring charges attributable to noncontrolling interest (1) | (5 | ) | ||
| Adjusted Earnings from continuing operations attributable to Campbell Soup Company | $ | 240 | ||
| Diluted earnings per share - continuing operations attributable to Campbell Soup Company, as reported | $ | .74 | ||
| Add: Net adjustment from restructuring charges and related costs attributable to Campbell Soup Company (1) | .02 | |||
| Adjusted Diluted earnings per share - continuing operations attributable to Campbell Soup Company | $ | .76 | ||
| Year Ended | ||||
| (millions, except per share amounts) | August 3, 2014 | |||
| Earnings before interest and taxes, as reported | $ | 1,192 | ||
| Add: Restructuring charges and related costs (1) | 58 | |||
| Add: Pension settlement charges (2) | 22 | |||
| Add: Loss on foreign exchange forward contracts (3) | 9 | |||
| Adjusted Earnings before interest and taxes | $ | 1,281 | ||
| Interest, net, as reported | $ | 119 | ||
| Adjusted Earnings before taxes | $ | 1,162 | ||
| Taxes on earnings, as reported | $ | 347 | ||
| Add: Tax benefit from restructuring charges and related costs (1) | 17 | |||
| Add: Tax benefit from pension settlement charges (2) | 8 | |||
| Add: Tax benefit from loss on foreign exchange forward contracts (3) | 3 | |||
| Deduct: Tax expense associated with sale of European business (3) | (7 | ) | ||
| Adjusted Taxes on earnings | $ | 368 | ||
| Adjusted effective income tax rate | 31.7 | % | ||
| Earnings from continuing operations, as reported | $ | 726 | ||
| Deduct: Net loss from noncontrolling interests | (11 | ) | ||
| Earnings from continuing operations attributable to Campbell Soup Company, as reported | $ | 737 | ||
| Add: Net adjustment from restructuring charges and related costs (1) | 41 | |||
| Deduct: Restructuring charges attributable to noncontrolling interest (1) | (5 | ) | ||
| Add: Net adjustment from pension settlement charges (2) | 14 | |||
| Add: Net adjustment from loss on foreign exchange forward contracts (3) | 6 | |||
| Add: Tax expense associated with sale of European business (3) | 7 | |||
| Adjusted Earnings from continuing operations attributable to Campbell Soup Company | $ | 800 | ||
| Earnings from discontinued operations, as reported | $ | 81 | ||
| Deduct: Gain on sale of European business (3) | (72 | ) | ||
| Adjusted Earnings from discontinued operations | $ | 9 | ||
| Adjusted Net earnings attributable to Campbell Soup Company | $ | 809 | ||
| Diluted earnings per share - continuing operations attributable to Campbell Soup Company, as reported | $ | 2.33 | ||
| Add: Net adjustment from restructuring charges and related costs attributable to Campbell Soup Company (1) | .11 | |||
| Add: Net adjustment from pension settlement charges (2) | .04 | |||
| Add: Net adjustment from loss on foreign exchange forward contracts (3) | .02 | |||
| Add: Tax expense associated with sale of European business (3) | .02 | |||
| Adjusted Diluted earnings per share - continuing operations attributable to Campbell Soup Company* | $ | 2.53 | ||
| Diluted earnings per share - discontinued operations, as reported | $ | .26 | ||
| Deduct: Gain on sale of European business (3) | (.23 | ) | ||
| Adjusted Diluted earnings per share - discontinued operations | $ | .03 | ||
| Diluted net earnings per share attributable to Campbell Soup Company, as reported | $ | 2.59 | ||
| Add: Net adjustment from restructuring charges and related costs attributable to Campbell Soup Company (1) | .11 | |||
| Add: Net adjustment from pension settlement charges (2) | .04 | |||
| Add: Net adjustment from loss on foreign exchange forward contracts (3) | .02 | |||
| Add: Tax expense associated with sale of European business (3) | .02 | |||
| Deduct: Gain on sale of European business (3) | (.23 | ) | ||
| Adjusted Diluted net earnings per share attributable to Campbell Soup Company* | $ | 2.56 | ||
| *The sum of the individual per share amounts may not add due to rounding. | ||||
Adjusted Base for Fiscal 2015 Guidance
The company believes that financial information excluding certain transactions that are not considered to be part of the ongoing business improves the comparability of year-to-year results. The previous tables reconcile financial information, presented in accordance with GAAP, to financial information excluding certain items. Fiscal 2014 included 53 weeks. Consequently, the company believes that investors may be able to better understand its fiscal 2015 performance excluding certain transactions and the estimated impact of the 53rd week. In establishing guidance for fiscal 2015, the adjusted fiscal 2014 results are revised to exclude the estimated impact of the 53rd week below:
| Year Ended | ||||
| (millions, except per share amounts) | August 3, 2014 | |||
| Net sales, as reported | $ | 8,268 | ||
| Deduct: Impact of 53rd week | (129 | ) | ||
| Adjusted Net sales base | $ | 8,139 | ||
| Adjusted Earnings before interest and taxes | $ | 1,281 | ||
| Deduct: Impact of 53rd week | (37 | ) | ||
| Adjusted Earnings before interest and taxes base | $ | 1,244 | ||
| Adjusted Earnings from continuing operations attributable to Campbell Soup Company | $ | 800 | ||
| Deduct: Impact of 53rd week | (25 | ) | ||
| Adjusted Earnings from continuing operations attributable to Campbell Soup Company base | $ | 775 | ||
| Adjusted Diluted earnings per share - continuing operations attributable to Campbell Soup Company | $ | 2.53 | ||
| Deduct: Impact of 53rd week | (.08 | ) | ||
| Adjusted Diluted earnings per share - continuing operations attributable to Campbell Soup Company base | $ | 2.45 | ||
Source:
Campbell Soup Company INVESTOR CONTACT: Jennifer Driscoll, 856-342-6081 jennifer_driscoll@campbellsoup.com or MEDIA CONTACT: Carla Burigatto, 856-342-3737 carla_burigatto@campbellsoup.com
