Campbell Soup Company (CPB)

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Campbell Soup Company (CPB)

F1Q10 Earnings Call

November 23, 2009 10:00 am ET


Jennifer Driscoll – Vice President Investor Relations

Douglas R. Conant – President and Chief Executive Officer

B. Craig Owens – Chief Financial Officer and Chief Administrative Officer

Anthony DiSilvestro – Vice President and Controller


Eric Katzman - Deutsche Bank Securities

Andrew Lazar - Barclays Capital

Chris Growe - Stifel Nicolaus

Robert Moskow - Credit Suisse

Bryan Spillane - BofA Merrill Lynch

[Jeff Brown] for David Palmer - UBS

Alexia Howard - Sanford Bernstein

Terry Bivens - J.P. Morgan

Vincent Andrews - Morgan Stanley

David Driscoll - Citi

Eric Serotta - Consumer Edge Research

Judy Hong - Goldman Sachs

Jonathan Feeney - Janney Montgomery Scott LLC



Good day, ladies and gentlemen, and welcome to your Campbell Soup Company first quarter 2010 earnings conference call. (Operator Instructions)

I would now like to introduce Ms. Jennifer Driscoll, Vice President of Investor Relations. Please go ahead.

Jennifer Driscoll

Thank you operator. Good morning everyone, and welcome to the Campbell Soup Company first quarter earnings webcast. With me here today are Doug Conant, President and CEO; Craig Owens, the CFO and Chief Administrative Officer; and Andy DiSilvestro, Vice President and Controller.

Doug and Craig are our primary speakers for today’s call, while all three leaders will actively participate in our Q&A session here with me. Doug Conant will begin our call with his perspective on the quarter, then Craig will provide comments on our financial results for the quarter as well as more color on our updated guidance for fiscal 2010. Following their remarks we will take questions from investors and analysts.

Similar to last quarter, we have created slides to accompany our presentation. You’ll find those posted on our website this morning.

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

As a reminder, our presentation today includes certain forward-looking statements, which reflect the company’s current expectations about future plans and performance. 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 in the presentation or to the company’s most recent Form 10-K and subsequent SEC filings for a list of the 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 our presentation. These slides, including the appendix, can be found on our website as well.

In our remarks we provide earnings comparisons with fiscal 2009 results. As a reminder, this quarter we adopted and retrospectively applied new accounting guidance related to the calculation of EPS. This resulted in a $0.01 reduction of diluted net earnings per share and a reduction in diluted shares outstanding for both the quarter and full year of fiscal 2009. Our comments today are made in reference to the restated basis.

Last, there were no items affecting comparability in this year’s first quarter. And with that I give you Doug Conant.

Douglas R. Conant

Thank you, Jennifer, and good morning everyone. I’d like to share with you my perspective on the quarter.

This morning we reported a significant increase in adjusted net earnings per share. All four of our segments contributed to the increase. I’m pleased with these results, especially in light of the challenging environment and the difficult top line comparisons we faced.

In last year’s first quarter we had strong organic sales growth of a positive 6%, led by exceptional U.S. Soup sales growth up 12%. Our strategy last year in U.S. Soup was to get off to a fast start with our marketing spending, beginning in August, our first month, to support the launches of Campbell’s Select Harvest Soups, Campbell’s V-8 Premium Soups and Swanson Stock. This year our approach was to wait until October to step up our marketing support to very competitive levels. For the full year we expect to have good soup sales growth behind solid marketing support, although sales will flow a little differently by quarter.

Our earnings increase in the first quarter was fueled by a significant improvement in margins led by productivity in our supply chain and some carry forward pricing. On top of quality productivity gains last year, we are continuing to advance our productivity efforts this year, leveraging them against a lower but still modestly rising cost inflation environment to improve our gross margin profile. Importantly, we delivered this earnings growth while continuing to invest appropriately in all of our key strategic initiatives related to our brands, our innovation, and our geographic expansion. Overall we are off to a good start in fiscal 2010.

We’re confident in our expectations for the company over the coming year on both the top line and the bottom line. In terms of sales growth, we have benefits from currency as well as strong product news, quality value propositions and very solid, well paced marketing support across the portfolio. In terms of earnings growth, we expect to leverage our sales performance with an excellent cost management program.

As a result of our strong start and our outlook for the coming three quarters, including currency, we’re raising our adjusted EPS guidance for fiscal 2010 from our targeted long term guidance of 5% to 7% growth to the 9% to 11% range. We also increased our dividend last week, reflecting our optimism for the long term prospects of the business.

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