Campbell Soup Company (CPB)
F4Q2010 Earnings Call Transcript
September 3, 2010 10:00 am ET
Jennifer Driscoll – VP, IR
Doug Conant – President and CEO
Craig Owens – SVP, CFO and Chief Administrative Officer
Eric Katzman – Deutsche Bank
Andrew Lazar – Barclays Capital
Alexia Howard – Sanford Bernstein
Chris Growe – Stifel Nicolaus
Bryan Spillane – Bank of America-Merrill Lynch
David Palmer – UBS
Vincent Andrews – Morgan Stanley
Ed Aaron – RBC Capital Markets
Diane Geissler – Credit Agricole Securities
Akshay Jagdale – KeyBanc Capital Markets
Robert Moskow – Credit Suisse
Terry Bivens – JP Morgan
David Driscoll – Citi Investments
Previous Statements by CPB
» Campbell Soup Company F3Q10 (Qtr End 05/02/2010) Earnings Call Transcript
» Campbell Soup Company F2Q10 (Qtr End 01/31/10) Earnings Call Transcript
» Campbell Soup Company F1Q10 (Qtr End 11/01/09) Earnings Call Transcript
I would now like to turn the conference over to your host, Jennifer Driscoll, Vice President, Investor Relations. Please begin.
Thank you, Mary. Good morning, everyone. Welcome to the Campbell Soup Company's fourth quarter earnings webcast. We appreciate you joining us in advance of a holiday weekend. With me here in New Jersey today are Doug Conant, our President and CEO; Craig Owens, Senior Vice President and CFO, as well as Chief Administrative Officer; and Anthony DiSilvestro, Senior Vice President of Finance.
Doug and Craig each will provide you with their perspectives on our performance for the quarter and the fiscal year, as well as our expectations for fiscal 2011. Following their remarks, we will take questions from analysts and investors.
As usual, we have created slides to accompany our presentation. You will find the slides posted on our website this morning at investor.campbellsoupcompany.com. Please keep in mind that as usual, our call is open to members of the media who are participating in listen-only mode.
As a reminder, our presentation today includes certain forward-looking statements that reflect the company's current expectations about future plans and performance. These forward-looking statements rely on a number of assumptions and estimates, which could be inaccurate and which inherently are subject to risks and uncertainties, all of which are listed in our slides. You can refer to that slide or to our most recent 10-K and other 8-K 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 statements that we make on our call.
Consistent with our previous disclosures, the results presented today all have been adjusted for items impacting comparability. There were no additional items impacting comparability of our results in the fourth quarter of 2010, they are all in prior periods. We will present organic sales results today, which do exclude the impacts of currency and M&A activity, as we believe this is a better indicator of our ongoing business performance. We will also present segment operating earnings adjusted for the items impacting comparability.
Since our presentation includes certain non-GAAP measures as defined by the SEC rules, we have provided a reconciliation of these 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 website as well.
And with that, I give you our President and CEO, Doug Conant.
Thank you, Jennifer, and good morning, everyone. Thanks to all of you on the phone and the webcast for joining our fiscal 2010 earnings conference call. I would like to share a few comments on our performance in the fourth quarter and the fiscal year, and our plans for fiscal 2011. Then, I will turn the call over to Craig for a more detailed discussion.
Our net earnings per share increased 10% for the fourth quarter to $0.33, including a favorable tax rate and the impact of our share repurchase program. Our healthy beverages business led the way, posting significant sales growth in the fourth quarter. Our quarter's results brought us to an increase in net earnings per share for the fiscal year of 12%. In a challenging environment, we delivered strong earnings growth, overcoming softer-than-expected sales to finish slightly above the high end of our earnings range and well above our long-term target.
I am pleased with how well we managed our margins this year. I am also pleased with our cash flow performance including more than $1 billion in cash flow from operations this year, despite an extraordinarily high contribution to our pension fund. We delivered those results, while continuing to invest for long-term growth, including spending on our IT infrastructure, wellness and nutrition innovation, and our work in emerging markets.
In a year when sales growth was difficult for the entire food industry and short of our own expectations, we benefited from a great deal of hard work on cost and expense initiatives across the organization. Improved productivity, favorable currency, and our share repurchase program all contributed to our EPS growth this year.
That having been said, we recognized that growing the top line is the key challenge for us and for the food industry as a whole in order to deliver quality earnings growth in a sustainable way. As we enter our fiscal year 2011, I am confident that we have the programs and plans in place to address this challenge.
Leaning into our businesses in healthy beverages and baked snacks, we will offer a full slate of innovation, including V8 V-Fusion plus Tea; upgrades to the company's largest baked snacks brand; Goldfish, which is the largest children's snack cracker in the world; and Arnott's shapes; new varieties and a re-launch of Chunk cookies for Pepperidge Farm and line extensions for Arnott's Vita-Weat just to name a few of our renovation efforts.
Our healthy beverages and baked snacks brands will also be supported by stepped-up marketing. In this regard, we will be leveraging advertising campaigns that have already shown positive results, such as our Numbers campaign on V8 healthy beverages. We are funding the increased marketing with our expense reduction initiatives, such as our improved indirect procurement effort.
In addition, we will significantly strengthen our competitiveness in simple meals. The primary initiative in our soup business this year is to fire up condensed soup. This initiative will benefit both cooking soups, which are part of our broader meal-makers portfolio, and our eating soups. We will also improve the competitiveness of our ready-to-serve soups through more consistent promotional activity commencing this fall.