• Net Sales Comparable to Prior Year, Organic Sales Decreased 1 Percent
• Earnings Before Interest and Taxes (EBIT) Increased 45 Percent, Adjusted EBIT Increased 1 Percent
• Earnings Per Share (EPS) Increased 52 Percent to $0.94, Adjusted EPS Increased 5 Percent to $1.00
• Campbell Reaffirms Fiscal 2017 Guidance

CAMDEN, N.J.--(BUSINESS WIRE)--Nov. 22, 2016-- Campbell Soup Company (NYSE:CPB) Yesterday reported its first-quarter results for fiscal 2017.

Three Months Ended
($ in millions, except per share)
Oct. 30, 2016 Nov. 1, 2015 % Change
Net Sales
As Reported (GAAP) $2,202 $2,203 - %
Organic (1 )%
Earnings Before Interest and Taxes
As Reported (GAAP) $457 $315 45 %
Adjusted $486 $479 1 %
Diluted Earnings Per Share
As Reported (GAAP) $0.94 $0.62 52 %
Adjusted $1.00 $0.95 5 %


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

Denise Morrison, Campbell’s President and Chief Executive Officer, said, “Fiscal 2017 is off to a solid start relative to our expectations. We continue to execute against our strategic imperatives, reinvest in our business to stimulate topline growth and aggressively manage our costs. We delivered expanded gross margin, and adjusted EBIT and EPS growth cycling a strong year-ago quarter. As expected, organic sales were down slightly compared to the prior year, due to the performance of Campbell Fresh. Campbell Fresh continues to rebuild capacity for Bolthouse Farms Protein PLUS drinks following a voluntary recall last quarter, and remains focused on working to regain lost carrot customers over time with improved quality.

“Looking ahead, I remain optimistic about plans to accelerate growth with improving trends in U.S. soup and the upcoming launch of Well Yes! ready-to-serve soup, continued strong performance in Pepperidge Farm and a return to growth in Campbell Fresh. Our guidance for the year remains unchanged.”

Items Impacting Comparability

The company reported earnings of $0.94 per share in the quarter. The current quarter results reflect pre-tax pension and postretirement mark-to-market losses of $20 million, or $0.04 per share, and pre-tax charges related to cost savings initiatives of $9 million, or $0.02 per share. The prior-year quarter included pre-tax pension and postretirement mark-to-market losses of $128 million, or $0.26 per share, and pre-tax charges related to cost savings initiatives of $36 million, or $0.07 per share. Excluding items impacting comparability in both periods, adjusted EPS increased 5 percent to $1.00 per share, compared with $0.95 per share in the year-ago quarter. A detailed reconciliation of the reported (GAAP) financial information to the adjusted information is included at the end of this news release.

First-Quarter Results

Sales of $2.202 billion were comparable to the prior year as the favorable impact of currency translation was offset by the decline in organic sales. Organic sales decreased 1 percent driven by declines in Campbell Fresh, partly offset by gains in Global Biscuits and Snacks.

Gross margin increased from 34.3 percent to 38.2 percent. Excluding items impacting comparability, adjusted gross margin increased 1.2 points from 37.9 percent to 39.1 percent driven by gross margin expansion in Americas Simple Meals and Beverages. Overall, the increase in adjusted gross margin was primarily driven by productivity improvements and the benefits from cost savings initiatives, partly offset by cost inflation, and increased carrot and beverage supply chain costs within Campbell Fresh.

Marketing and selling expenses increased 1 percent to $228 million. Excluding items impacting comparability in the prior year, adjusted marketing and selling expenses increased 11 percent primarily due to higher advertising and consumer promotion expenses and higher selling expenses. Administrative expenses decreased 21 percent to $123 million. Excluding items impacting comparability, adjusted administrative expenses decreased 4 percent to $115 million primarily due to the benefits from cost savings initiatives, partly offset by inflation and investments in long-term innovation.

EBIT increased 45 percent to $457 million. Excluding items impacting comparability, adjusted EBIT increased 1 percent to $486 million reflecting a higher adjusted gross margin percentage and lower administrative expenses, partly offset by higher marketing and selling expenses.

Net interest expense was comparable to the prior year at $28 million reflecting higher average interest rates on the debt portfolio, offset by lower levels of debt. The tax rate decreased to 31.9 percent as compared with a tax rate of 32.4 percent in the prior year. Excluding items impacting comparability, the adjusted tax rate decreased 2 percentage points to 32.1 percent. The company adopted new accounting guidance for stock-based compensation in the first quarter of 2017. The decrease in the adjusted tax rate reflects the recognition of excess tax benefits in connection with stock-based compensation in accordance with this new accounting guidance.

Cash flow from operations decreased to $221 million from $244 million a year ago primarily due to lower cash earnings and higher working capital requirements.

Fiscal 2017 Guidance

As previously announced, Campbell expects sales to increase by 0 to 1 percent, adjusted EBIT to increase by 1 to 4 percent, and adjusted EPS to increase by 2 to 5 percent, or $3.00 to $3.09 per share. This guidance assumes the impact from currency translation will be nominal. A non-GAAP reconciliation is not provided for 2017 guidance since certain items are not estimable, such as pension and postretirement mark-to-market adjustments, and these items are not considered to be part of the company's ongoing business results.

see more on
http://investor.campbellsoupcompany.com/phoenix.zhtml?c=88650&p=irol-newsArticle&ID=2225192