Campbell Soup Company (CPB)

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Campbell Soup Company (CPB)

F4Q09 Earnings Call

September 11, 2009 10:00 am ET


Jennifer Driscoll – Vice President, Investor Relations

Douglas R. Conant – President and Chief Executive Officer

Anthony DiSilvestro –Corporate Controller

B. Craig Owens – Chief Financial Officer


Terry Bivens - J.P. Morgan

Judy Hong - Goldman Sachs & Company, Inc.

Edward Aaron - RBC Capital Markets

Alexia Howard - Sanford Bernstein

David Driscoll - Citi Investments

Eric Serotta - Consumer Edge Research

Jonathan Feeney - Janney Montgomery Scott

Edgar Roesch – Soleil Securities

Vincent Andrews - Morgan Stanley



Good day ladies and gentlemen and welcome to the Campbell Soup Company fourth quarter 2009 earnings conference call. (Operator Instructions) As a reminder, today’s call is being recorded. I would now like to introduce your host for today’s conference, Ms. Jennifer Driscoll, Vice President of Investor Relations.

Jennifer Driscoll

[Good morning everyone and welcome to Campbell’s fourth quarter fiscal 2009 conference call. Our agenda for this morning’s call will be as follows. Doug Conant, President and Chief Executive Officer will have some opening remarks. Anthony DiSilvestro, Vice President and Controller will discuss our results for the fourth quarter. And Craig Owens, Senior Vice President, Chief Financial Officer and Chief Administrative Officer will have some closing comments.] Following their remarks, as usual, we'll take questions from investors and analysts.

Similar to last quarter, we have created slides to accompany our presentation. You can find those posted on our Web site this morning. A replay of our conference call will be available approximately two hours after our call completes. It will be accessible until midnight on September 18, 2009. Our replay number is 1-888-266-2081 or 1-703-925-2533. The access code is 1387520. You also may listen to a replay and view the accompanying slides by logging onto our Web site, and clicking on the Web cast banner

As a matter of policy, our conference calls are open to all interested investors. Members of the media also are listening to our call.

As a reminder, our presentation today includes certain forward-looking statements that reflect the company’s current expectations about future plans and performance, including statements concerning the impact of marketing investments and strategies, pricing, share repurchase, new product introductions and innovation, productivity and cost savings initiatives, quality improvements, inflation, commodity hedging, currency translation, and portfolio strategies, including acquisitions and divestures and their impact on our sales, earnings, and margins. These forward-looking statements rely on a number of assumptions and estimates that could be inaccurate and which inherently are subject to risks and uncertainties. Please refer to Slide 3 on the presentation or to the company’s most recent Form 10-K and subsequent SEC filings for a list of factors that could cause our actual results to vary materially from those anticipated or expressed in any forward-looking statement.

Our presentation also 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 as an Appendix to the slides accompanying the presentation. These slides, including the Appendix, can be found on our Web site as well.

And with that, I give you Doug Conant.

Douglas R. Conant

Thank you, Jennifer. It's good to have you on our team. Good morning everyone. Before I share a few thoughts with you on the highlights for the quarter and the year, I would like to personally thank all of you who sent me warm wishes for a speedy recovery after my auto accident. I am pleased to report that I am doing well, getting a little better every day. And let me tell you, it sure feels great to be back in the office again.

Now I would like to provide my perspective on our fourth quarter and fiscal year performance. Overall, I am very pleased with our results for the quarter, including adjusted net earnings per share of $0.30, a 15% increase. We finished the year on a high note.

Solid organic sales growth was driven primarily by a healthy increase in our U.S. soup business. We also, as promised, expanded our gross margin percentage through our pricing strategy and productivity gains. The fourth quarter was a strong finish to a good year and we look forward to fiscal 2010 with confidence.

Now, let me share my perspective on the year as a whole. As with most companies, virtually all companies in our sector, we confronted a very challenging set of economic conditions and we still delivered our long-term target of adjusted EPS growth of 5% to 7%. At the outset of the year, as you recall, we thought we could deliver the 5% to 7% EPS growth, excluding currency.

Ultimately, we hit our targets, including currency. This performance was enabled by the agility and adaptability of our teams during the year, as we offset a number of headwinds, particularly negative currency impacts and high cost of inflation.

Our growth was broad-based. U.S. soup sales increased 5%, an outstanding performance for our flagship business. Condensed soup led the way as our marketing efforts resonated with consumers who increasingly turned to Campbell soups as a key part of the meals they prepare at home.

We delivered strong performance in our ready-to-serve soup business, mainly driven by the successful introduction of our Select Harvest line.

Our broth business also had a strong year in a very competitive category, highlighted by the launch of Swanson stock and the continued growth of the base business.

In addition, our Prego and Pace sauce businesses performed well, as they were key elements of simple, great-tasting, and good-value meals at home.

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