Campbells cagny 2014
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Transcript of Campbells cagny 2014
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Denise MorrisonPresident & Chief Executive Officer
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Anthony DiSilvestroSenior Vice President & CFO Effective May 1, 2014
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• 2% increase in net sales, 1% organic net sales decline*
• 5% decrease in adjusted EBIT*
• 4% decline in adjusted EPS, which decreased to $1.42 per share*
Q2 and First-Half Results – Continuing Operations
• 6% increase in net sales, 3% organic net sales growth*
• 15% growth in adjusted EBIT*
• 19% increase in adjusted EPS, which rose to $0.76 per share*
* See Non-GAAP reconciliation
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Q2 – U.S. Soup
+4%
+5%U.S. Soup
Sales FLAT
+21%7
888
Q2 – Global Baking & Snacking
+14%Total Sales
999
Q2 – Bolthouse Farms
+6%Sales
1010
Campbell Fiscal Year 2014 Guidance
2013 Base 2014 Growth Rates
Net Sales $8,052 4% to 5%
Adjusted EBIT* $1,232 4% to 6%
Adjusted Net Earnings per Share* $2.48 2% to 4%
* See Non-GAAP reconciliation
($ millions, except per share)Continuing Operations
($2.53 - $2.58)
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• Why we are on the right course
• Highlights of our progress
• How we are driving productivity
• Work that lies ahead
The Bigger Picture . . . Our Strategic Vision
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to to to
Long-term Growth Targets
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TUMULTUOUS TIMEin the FOOD INDUSTRY
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in the16
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2020
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Maintaining Our FocusIn Our Three Core Categories
SnacksSimple Meals Healthy Beverages
21Thinking Bigger & Acting Bolder
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> Profitably grow North America Soup and Simple Meals
> Expand our International presence
> Grow faster in Snacks and Healthy Beverages
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Strengthen and Grow the Core
• Optimized marketing spend
• Improved marketing effectiveness
• Disciplined execution against all drivers of demand
• Consumer-driven innovation & brand building
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MOVES
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1stMOVE
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2ndMOVE
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3rdMOVE
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4thMOVE
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Highlights of Our Progress
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Highlights of Our Progress
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Highlights of Our Progress
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Highlights of Our Progress
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Highlights of Our ProgressTrio of New Growth Engines
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Highlights of Our Progress
James WongPresident of Greater China
and Far East
Ümit SubaşiPresident of Asia Pacific
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• Exited business in Russia
• Closed five plants
• Reduced headcount by more than 2,000
• Restructuring programs provide annualized savings of approximately $160 million
Significant Progress in Managing Our Costs
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Things We Still Have to Accomplish
Execute new strategy for shelf-stable Beverages
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Things We Still Have to Accomplish
Execute new strategy for shelf-stable Beverages
Restore growth in core business in Australia
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Things We Still Have to Accomplish
Execute new strategy for shelf-stable Beverages
Restore growth in core business in Australia
Realize the full benefits of innovation platforms, acquisitions and channel initiatives
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Things We Still Have to Accomplish
Execute new strategy for shelf-stable Beverages
Restore growth in core business in Australia
Realize the full benefits of innovation platforms, acquisitions and channel initiatives
Maintain our focus on smart external development
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Anthony DiSilvestroSenior Vice President –Finance
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Agenda
• Performance Overview
• Priorities for Uses of Cash
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Growth RatesF’12
ActualF’13
ActualF’14
Guidance
Net Sales 0% 12% 4-5%
Organic Net Sales* 0% 2% 1%
EBIT* (8%) 6% 4-6%
EPS* (3%) 7% 2-4%
Continuing Operations
* Adjusted results; please refer to the non-GAAP reconciliations in the appendix.
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Continuing Operations – Fiscal 2014
* Adjusted results; please refer to the non-GAAP reconciliations in the appendix.
Growth Rates Q2 First HalfFull-YearGuidance
Net Sales 6% 2% 4-5%
Organic Net Sales* 3% (1%) 1%
EBIT* 15% (5%) 4-6%
EPS* 19% (4%) 2-4%
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• Improved sales performance, benefitting from stronger promotional programs and accelerated new products
• Accelerating productivity gains including benefits from a robotics installation in Australia
• SG&A reductions from restructuring programs and lower incentive compensation
• An extra week in the fourth quarter
Second-half Performance Drivers
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Cost Management Initiatives
$70
$30 $10 $13
$40 $163
$-
$50
$100
$150
$200
4Q11 1Q13 2Q13 4Q13 1Q14 Total
• Plant Closures• Overhead Reductions• Automation – Workforce Reductions
Annualized Savings in
U.S. $Millions
Restructuring Programs
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Agenda
• Performance Overview• Priorities for Uses of Cash
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0
200
400
600
800
1,000
1,200
FY09 FY10 FY11 FY12 FY13
Cash from Operations
Strong Operating Cash Flows
Interest Coverage12 times*
Net Debt/EBITDA2.7 times*
Credit RatingsA2/BBB+
*See non-GAAP reconciliation
U.S. $ Millions
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1. Capital Expenditures
2. Dividends
3. External Development
4. Share Repurchases
Priorities for the Use of Cash
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Cash Allocation History(U
.S. $
mill
ions
)
0
500
1,000
1,500
2,000
2,500
F'09 F'10 F'11 F'12 F'13Capital Expenditures Dividends
5-YR Totals:M&A Share Repurchases
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Current Projects:• Increased capacity for:
– Goldfish crackers
– Bolthouse beverages
– Swanson broth
• Soup common platform• Australia automation project
Investing Capital in the Core Business
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$-
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 EST
Dividends Paid
Maintaining a Competitive Dividend
• Payout ratio of 48-49% (FY14 forecast)
• Increased by 8% last fall to nearly $1.25 annualized
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External Development to Reshape the PortfolioAcquiring Brands with Faster Growth Profiles
Divested our European Simple Meals Business
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1st Year Assessment of Bolthouse Farms• No. 1 share position in
super-premium beverages*• Salad dressings growing
consumption and share• Carrots delivering growth
0%5%
10%15%20%25%30%35%40%
Bolthouse Naked Odwalla Pom
Super Premium Beverages $Share*
U.S. $ Millions F’13 F’14 H1
Sales $756 $392
EBIT $63 $32 *Source: IRI Total U.S. Multi-Outlet Data for 52-week period ending Jan. 26, 2014
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Long-Term Targets
Sales 3-4%
Adjusted EBIT 4-6%
Adjusted EPS 5-7%
Positioned for Improving Growth
• Pursue dual mandate– Sustainable, profitable growth
in the core– Expanding into higher growth
spaces
• Improve financial performance
• Return to long-term targets
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Forward-looking StatementsThis presentation contains “forward-looking statements.” Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “believes,” “estimates,” “expects” and similar references to future periods. Examples of forward-looking statements include, but are not limited to, statements we make on guidance for 2014 and on our long-term growth targets, on our uses of our cash, on our ability to execute our new business strategies successfully, and on our expectations that we can accelerate innovation across our portfolio, integrate acquisitions and expand our international footprint. Forward-looking statements are based on our current expectations and assumptions regarding our business, our industry and other future conditions. Forward-looking statements are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements due to factors such as the impact of strong competitive responses to our marketing strategies; risks associated with trade and consumer acceptance of our new and improved products; the effectiveness of our promotional programs; the impact of portfolio changes; our ability to realize projected cost savings; and the other factors described in “Risk Factors” in the company’s most recent Form 10-K and in subsequent SEC filings. We undertake no obligation to update these statements to reflect new information or future events.
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This presentation includes certain “non-GAAP” measures as defined by SEC rules. We have provided a reconciliation of those measures to the most directly comparable GAAP measures, which is posted on our investor Web site, which can be found at investor.campbellsoupcompany.com.
Non-GAAP Measures
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Q&A
Anthony DiSilvestroSVP-Finance
Denise MorrisonPresident and CEO
Jennifer DriscollVP-IR
B. Craig OwensSVP, CFO and CAO
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Reconciliation of GAAP and Non-GAAP Financial Measures
Continuing Operations
Net Sales, Impact of Impact of Organic Net Sales, OrganicJuly 28, 2013 As Reported Acquisitions Currency Net Sales As Reported Net Sales
Net Sales from continuing operations 8,052$ (770)$ 13$ 7,295$ 12% 2%
Net Sales, Impact of Impact of Organic Net Sales, OrganicJuly 29, 2012 As Reported Acquisitions Currency Net Sales As Reported Net Sales
Net Sales from continuing operations 7,175$ -$ (2)$ 7,173$ 0% 0%
Net Sales,July 31, 2011 As Reported
Net Sales from continuing operations 7,143$
Organic Net SalesFor the Fiscal Year Ended
($ millions)% Change
% Change
6666
Reconciliation of GAAP and Non-GAAP Financial Measures
Continuing Operations
Net Sales, Impact of Impact of Impact of Organic Net Sales, OrganicJanuary 26, 2014 As Reported Acquisitions Currency Net Accounting Net Sales As Reported Net Sales
Net Sales from continuing operations 2,281$ (109)$ 40$ 7$ 2,219$ 6% 3%
January 27, 2013
Net Sales from continuing operations 2,162$
Net Sales, Impact of Impact of Impact of Organic Net Sales, OrganicJanuary 26, 2014 As Reported Acquisitions Currency Net Accounting Net Sales As Reported Net Sales
Net Sales from continuing operations 4,446$ (190)$ 71$ 10$ 4,337$ 2% -1%
January 27, 2013
Net Sales from continuing operations 4,367$
For the Six Months Ended % Change
Organic Net Sales($ millions)
% ChangeFor the Three Months Ended
6767
Reconciliation of GAAP and Non-GAAP Financial Measures
($ millions, except per share)
Second Quarter
DilutedEBIT EPS*
2014 - As Reported 361$ 0.74$
Add: Restructuring charges and related costs 13 0.02
2014 - Adjusted 374$ 0.76$
2013 - As Reported 277$ 0.54$
Add: Restructuring charges and related costs 48 0.09
2013 - Adjusted 325$ 0.64$
% Change 15% 19%
Continuing Operations
*May not add due to rounding
6868
Reconciliation of GAAP and Non-GAAP Financial Measures
($ millions, except per share)Six Months
DilutedEBIT EPS
2014 - As Reported 666$ 1.32$
Add: Restructuring charges and related costs 36 0.06
Add: Loss on foreign exchange forward contracts 9 0.02
Add: Tax expense associated with sale of business - 0.02
2014 - Adjusted 711$ 1.42$
2013 - As Reported 645$ 1.28$
Add: Restructuring charges and related costs 91 0.18
Add: Acquisition transaction costs 10 0.02
2013 - Adjusted 746$ 1.48$
% Change -5% -4%
Continuing Operations
6969
Reconciliation of GAAP and Non-GAAP Financial Measures
*May not add due to rounding
Continuing Operations
EBIT July 28, 2013 July 29, 2012 July 31, 2011
As Reported 1,080$ 1,155$ 1,212$
Add: Restructuring charges and related costs 142 7 60
Add: Acquisition transaction costs 10 5 -
Adjusted 1,232$ 1,167$ 1,272$
% Change 6% -8%
Diluted EPS July 28, 2013* July 29, 2012 July 31, 2011
As Reported 2.17$ 2.29$ 2.26$
Add: Restructuring charges and related costs 0.28 0.01 0.12
Add: Acquisition transaction costs 0.02 0.01 -
Adjusted 2.48$ 2.31$ 2.38$
% Change 7% -3%
EBIT and EPSFor the Fiscal Year Ended
($ millions, except per share)
7070
($ millions)
Reconciliation of GAAP and Non-GAAP Financial Measures
Adjusted Interest Coverage
July 28, 2013As Reported Depreciation & Amortization 407$
Discontinued Operations (11) Restructuring Related Costs (86)
Adjusted Depreciation & Amortization 310$
Adjusted EBIT 1,232
Adjusted EBITDA 1,542$
Interest, Net 125$
Adjusted Interest Coverage 12
Continuing Operations
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($ millions)
Reconciliation of GAAP and Non-GAAP Financial Measures
July 28, 2013Short-Term Borrowings 1,909$
Long-Term Debt 2,544
Total Debt 4,453$
Less Cash and Cash Equivalents (333)
Net Debt 4,120$
Adjusted EBITDA 1,542$
Net Debt/Adjusted EBITDA 2.7
Net Debt/ Adjusted EBITDA