CAMPBELL SOUP CO (CPB) SEC Filing 10-Q Quarterly report for the period ending Sunday, October 28, 2018

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Exhibit 99.1
campbelllogoearnings.gif

FOR IMMEDIATE RELEASE
INVESTOR CONTACT:
 
MEDIA CONTACT:
 
Ken Gosnell
 
Thomas Hushen
 
(856) 342-6081
 
(856) 342-5227
 
ken_gosnell@campbellsoup.com
 
thomas_hushen@campbellsoup.com
 
            
CAMPBELL REPORTS FIRST-QUARTER RESULTS

Campbell Reaffirms Fiscal 2019 Guidance
Net Sales Increased 25 Percent Reflecting Impact of Recently Completed Acquisitions; Organic Sales Decreased 3 Percent
Earnings Per Share (EPS) of $0.64; Adjusted EPS of $0.79

CAMDEN, N.J., Nov. 20, 2018—Campbell Soup Company (NYSE:CPB)
today reported its first-quarter results for fiscal 2019.
 
Three Months Ended
($ in millions, except per share)
 
 
 
 
 
 
Oct. 28, 2018
 
Oct. 29, 2017
 
% Change
Net Sales
 
 
 
 
 
As Reported (GAAP)
$2,694
 
$2,161
 
25%
Organic
 
 
 
 
(3)%
Earnings Before Interest and Taxes (EBIT)
 
 
 
 
 
As Reported (GAAP)
$350
 
$412
 
(15)%
Adjusted
$410
 
$417
 
(2)%
Diluted Earnings Per Share
 
 
 
 
 
As Reported (GAAP)
$0.64
 
$0.91
 
(30)%
Adjusted
$0.79
 
$0.92
 
(14)%
Note: A detailed reconciliation of the reported (GAAP) financial information to the adjusted financial information is included at the end of this news release.
CEO Comments
Keith McLoughlin, Campbell’s interim President and CEO stated, “We are on track with our plans and are encouraged by the progress we are making against the significant actions we announced on August 30th to simplify, focus and optimize our portfolio. Through considerable cross-functional efforts in October, we were able to overcome the supply chain challenges that we faced early in the quarter and deliver results that enabled us to reaffirm our fiscal 2019 guidance.




The following information was filed by CAMPBELL SOUP CO on Tuesday, November 20, 2018 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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  • 18471630_104
    Financial - Expense
    A summary of the pre-tax costs associated with both programs is as follows: Severance pay and benefits $ 212 Asset impairment/accelerated depreciation 58 Implementation costs and other related costs 250 Total $ 520 Includes $13 million of charges associated with the Snyder's-Lance cost transformation program and integration recognized in 2018.
  • 18471630_47
    Financial - Earnings
    After adjusting for items impacting comparability, earnings decreased primarily due to declines in earnings before interest and taxes in the base business, including the impact of the new accounting guidance for revenue recognition, partially offset by a lower effective tax rate.
  • 18471630_57
    Revenue - Product
    Excluding Snyder?s-Lance, sales decreased primarily due to the negative impact of currency translation and declines in Kelsen cookies in the U.S. Sales of Goldfish crackers increased slightly.
  • 18471630_115
    Financial - Expense
    The annual pre-tax savings generated by both programs were as follows: Segment operating results do not include restructuring charges, implementation costs and other related costs because we evaluate segment performance excluding such charges.
  • 18471630_85
    Financial - Expense
    Corporate in 2018 included a $14 million gain associated with pension and postretirement benefit mark-to-market adjustments and costs of $17 million related to cost savings initiatives.
  • 18471630_54
    Revenue - Product
    Excluding Pacific Foods and the impact of the adoption of the new revenue recognition guidance, sales of U.S. soup declined 6% due to declines in ready-to-serve soups and condensed soups, partly offset by gains in broth.
  • 18471630_44
    Financial - Expense
    See Note 7 to the Consolidated Financial Statements and "Restructuring Charges and Cost Savings Initiatives" for additional information; In the first quarter of 2019, we recorded a non-cash impairment charge of $14 million in Cost of products sold ($11 million after tax, or $.04 per share) on our U.S. refrigerated soup plant assets; and In the first quarter of 2018, we recognized gains of $14 million in Other expenses / (income) ($9 million after tax, or $.03 per share) associated with mark-to-market adjustments for defined benefit pension and postretirement plans.
  • 18471630_59
    Revenue - Product
    In Campbell Fresh, sales decreased 1% primarily due to declines in refrigerated soup, Garden Fresh Gourmet and Bolthouse Farms refrigerated beverages, partly offset by gains in carrots.
  • 18471630_63
    Financial - Earnings
    Includes a negative margin impact of 0.5 from the adoption of new revenue recognition guidance.
  • 18471630_83
    Revenue - Product
    The increase was primarily due to improved operational efficiency on beverages, partly offset by the decline in refrigerated soup volume.
  • 18471630_81
    Financial - Earnings
    Excluding Snyder's-Lance, operating earnings declined primarily due to a lower gross profit percentage, reflecting higher levels of cost inflation.
  • 18471630_159
    Revenue - Product
    The mix between these forms of variable consideration, which are classified as reductions in revenue and recognized upon sale, and advertising or other marketing activities, which are classified as marketing and selling expenses, fluctuates between periods based on our overall marketing plans, and such fluctuations have an impact on revenues.
  • 18471630_90
    Financial - Expense
    The following items impacted the effective rate in 2019 and 2018: In 2019, we recognized an $11 million tax benefit on $46 million of restructuring charges, implementation costs and other related costs.
  • 18471630_116
    Financial - Expense
    A summary of the pre-tax costs associated with segments is as follows: _______________________________________ Includes $25 million of pre-tax costs associated with the Global Biscuits and Snacks segment recognized in 2018 related to the Snyder's-Lance cost transformation program and integration.
  • 18471630_23
    Financial - Earnings
    Gross profit, as a percent of sales, decreased to 30.6% from 36.2% a year ago.
  • 18471630_88
    Financial - Expense
    The increase in interest expense was due to higher levels of debt associated with funding the acquisitions and higher average interest rates on the debt portfolio.
  • 18471630_113
    Other - Other
    We expect the initiatives for actions that have been identified to date under both programs to generate pre-tax savings of $575 million in 2019, and once all phases are implemented, to generate annual ongoing savings of approximately $945 million by the end of 2022.
  • 18471630_124
    Financial - Debt
    Current assets are less than current liabilities as a result of our level of current maturities of long-term debt and short-term borrowings and our focus to lower core working capital requirements by reducing trade receivables and inventories while extending payment terms for accounts payables.
  • 18471630_21
    MA - Other
    Excluding the acquisitions, net sales declined due to higher promotional spending, including a 1-point negative impact from the adoption of new accounting guidance for revenue recognition and increased promotional spending in U.S soup, lower volume and the negative impact from currency translation.
  • 18471630_112
    Financial - Expense
    We expect to incur substantially all of the costs for the actions that have been identified to date through 2020 and to fund the costs through cash flows from operations and short-term borrowings.
  • 18471630_117
    Financial - Cash Flow
    We expect foreseeable liquidity and capital resource requirements to be met through anticipated cash flows from operations; long-term borrowings; short-term borrowings, including commercial paper; credit facilities; and cash and cash equivalents.
  • 18471630_73
    Financial - Earnings
    Segment operating earnings increased 1% in 2019 from 2018.
  • 18471630_79
    Financial - Earnings
    Operating earnings from Global Biscuits and Snacks increased 32%.
  • 18471630_108
    Financial - Expense
    We expect the costs for actions that have been identified to date under both programs to consist of the following: approximately $220 million in severance pay and benefits; approximately $95 million in asset impairment and accelerated depreciation; and approximately $325 million to $370 million in implementation costs and other related costs.
  • 18471630_29
    Financial - Expense
    Other expenses / (income) increased to expense of $4 million in 2019 from income of $29 million in 2018, primarily due to gains of $14 million on pension and postretirement benefit mark-to-market adjustments in the prior year and higher amortization of intangible assets from the recent acquisitions in the current year.
  • 18471630_58
    Revenue - Product
    Sales of Goldfish crackers were negatively impacted due to the voluntary product recall of flavor-blasted Goldfish crackers in July 2018.
  • 18471630_12
    Financial - Debt
    The Board of Directors concluded, at this time, the best path forward is to: optimize our portfolio and focus on our core businesses with an emphasis on execution; divest certain non-core businesses in order to focus the company, while significantly paying down debt; and increase our cost savings initiatives, while driving improved asset efficiency.
  • 18471630_100
    Other - Other
    We expect to continue to implement this program and to achieve a majority of the program's targeted savings.
  • 18471630_27
    Financial - Expense
    Administrative expenses increased 18% to $176 million from $149 million a year ago.
  • 18471630_30
    Financial - Expense
    Interest expense increased to $94 million from $31 million primarily due to higher levels of debt associated with funding the acquisitions discussed above.
  • 18471630_174
    Other - Other
    They rely on several assumptions regarding future events and estimates which could be inaccurate and which are inherently subject to risks and uncertainties.
  • 18471630_96
    Financial - Expense
    In January 2018, as part of the expanded initiatives, we authorized additional pre-tax costs to improve the operational efficiency of our thermal supply chain network in North America by closing our manufacturing facility in Toronto, Ontario, and to optimize our information technology infrastructure by migrating certain applications to the latest cloud technology platform.
  • 18471630_164
    Financial - Expense
    Differences between estimates and actual costs are recognized as a change in estimate in a subsequent period.
  • 18471630_84
    Financial - Expense
    Corporate in 2019 included costs of $27 million related to cost savings initiatives and a non-cash impairment charge of $14 million related to U.S. refrigerated soup plant assets.
  • 18471630_52
    Revenue - Product
    In Meals and Beverages, sales were comparable to the prior year as the benefit of the acquisition of Pacific Foods and gains in V8 beverages were offset by declines in U.S. soup, the retail business in Canada and Prego pasta sauces.
  • 18471630_31
    Other - Other
    The effective tax rate declined to 24.5% in 2019 from 28.0% in 2018, primarily due to to the lower U.S. federal tax rate as a result of the Tax Cuts and Jobs Act of 2017 (the Act), partially offset by the favorable resolution of a state tax matter in 2018.
  • 18471630_62
    Financial - Earnings
    The 5.6 percentage-point decrease in gross profit percentage was due to the following factors: __________________________________________ Includes a positive margin impact of 0.8 from cost savings initiatives, which was more than offset by cost inflation and other factors, including 0.5 from higher than expected distribution costs associated with the startup of a new distribution facility in Findlay, Ohio, operated by a third-party logistics provider.
  • 18471630_69
    Financial - Expense
    Administrative expenses increased 18% in 2019 from 2018.
  • 18471630_20
    Revenue - Product
    Net sales increased 25% in 2019 to $2.694 billion, primarily due to a 29-point benefit from the acquisitions of Snyder's-Lance and Pacific Foods.
  • 18471630_56
    Revenue - Product
    In Global Biscuits and Snacks, sales increased 77% with an 81-point benefit from the acquisition of Snyder?s-Lance.
  • 18471630_53
    Revenue - Product
    The adoption of new accounting guidance for revenue recognition had a negative 1-point impact on sales.
  • 18471630_92
    Other - Other
    After adjusting for the items above, the remaining decline in the effective rate was primarily due to the ongoing benefit of the lower U.S. federal tax rate as a result of the Act, partially offset by the favorable resolution of a state tax matter in 2018.
  • 18471630_95
    Revenue - Geography
    In February 2017, we announced that we were expanding these initiatives by further optimizing our supply chain network, primarily in North America, continuing to evolve our operating model to drive efficiencies, and more fully integrating our recent acquisitions.
  • 18471630_76
    Financial - Earnings
    Operating earnings from Meals and Beverages decreased 11%.
  • 18471630_72
    Financial - Expense
    The increase in expenses was due to higher net periodic benefit income in 2018, including gains of $14 million on pension and postretirement benefit mark-to-market adjustments, and an increase in amortization of intangible assets in 2019 associated with recent acquisitions.
  • 18471630_91
    Financial - Expense
    In 2018, we recognized a $7 million tax benefit on $19 million of restructuring charges, implementation costs and other related costs; In 2019, we recognized a $3 million tax benefit on the $14 million impairment charge on the U.S. refrigerated soup plant assets; and In 2018, we recognized tax expense of $5 million on $14 million of pension and postretirement benefit mark-to-market gains.
  • 18471630_172
    Financial - Expense
    One can also identify forward-looking statements by the fact that they do not relate strictly to historical or current facts, and may reflect anticipated cost savings or implementation of our strategic plan.
  • 18471630_87
    Financial - Expense
    Interest expense increased to $94 million in 2019 from $31 million in 2018.
  • 18471630_25
    Financial - Expense
    Marketing and selling expenses increased 13% to $248 million from $219 million a year ago.
  • 18471630_106
    Financial - Expense
    The total estimated pre-tax costs for actions that have been identified under both programs are approximately $640 million to $685 million.
  • 18471630_89
    Other - Other
    The effective tax rate was 24.5% in 2019 and 28.0% in 2018.
  • 18471630_137
    Other - Other
    As of October 28, 2018, we had $1.845 billion of short-term borrowings due within one year, of which $1.171 billion was comprised of commercial paper borrowings.
  • 18471630_67
    Financial - Expense
    The reduction in advertising and consumer promotion expenses was primarily in Meals and Beverages, reflecting a reallocation from advertising to promotional spending classified as revenue reductions, reduced support levels in light of distribution challenges faced earlier in the quarter and a later start to our U.S. soup campaign relative to the prior year.
  • 18471630_110
    Financial - Expense
    Of the aggregate $640 million to $685 million of pre-tax costs identified to date, we expect approximately $535 million to $580 million will be cash expenditures.

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  • Form Type: Quarterly
  • Number of times amended: 0
  • Accession Number: 0000016732-18-000085
  • Submitted to the SEC: Thursday, December 6, 2018 8:54:53 AM EST
  • Accepted by the SEC: Thursday, December 6, 2018
  • Period ending: October 2018
  • Industry: Food And Kindred Products
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