Core Viewpoint - Conagra Brands is currently at a low stock price, presenting a potential buying opportunity for long-term investors, with expectations of returning to growth in FY2026 despite ongoing challenges in the consumer staples sector [1][10]. Financial Performance - In Q4 FY2025, Conagra reported a revenue decline of 4.3%, with an organic decline of 3.5%, influenced by divestitures, consumption trends, and foreign exchange headwinds [8][9]. - The organic decline was attributed to a 1% reduction in price realization and a 2.5% decline in volume, with the International segment experiencing a 13% decline due to M&A activity and FX headwinds [9]. - The forecast for FY2026 indicates revenue contraction will be offset by flat to slightly higher organic growth, supporting balance sheet health and dividend distributions [10]. Dividend Insights - Conagra offers a 7% dividend yield, which is considered safe for income investors, although there are risks associated with potential cuts in 2025 [5][11]. - The payout ratio for 2026 is projected at 80% relative to the 2025 payout, which is high but manageable given the free cash flow outlook [5][6]. Market Sentiment - Analysts have mixed views on Conagra, with price target reductions and downgrades impacting stock performance, yet the overall sentiment remains bullish with expectations for significant upside [12][13]. - Institutional investors own over 80% of Conagra's stock, providing a solid support base and showing buying activity throughout the year [11]. Stock Forecast - The 12-month stock price forecast for Conagra is $22.73, indicating a potential upside of 17.21% from the current price of $19.39 [8]. - Following recent price declines, analysts suggest that the stock is positioned for a rebound, potentially increasing by low-single to high-double digits, with a possibility of up to 30% if traction is gained in FY2026 [12][13].

Group 1 - The US stock market closed at a historic high on Thursday, with the S&P 500 index rising by 0.27%, and 9 out of 11 sectors showing gains, particularly in consumer discretionary and energy stocks [1] - Delta Air Lines (DAL.US) saw its stock price surge by 11.99% after announcing a restored full-year profit outlook and an increase in passenger numbers, which also positively impacted travel-related companies and car rental stocks [1] - MP Materials (MP.US) experienced a dramatic stock price increase of 50.62%, marking its largest single-day gain, following a multi-billion dollar agreement with the US Department of Defense to build a magnet factory and expand rare earth production [1] Group 2 - Trade policy uncertainty continues as President Trump threatens to impose a 50% tariff on Brazil, while also announcing a 50% tariff on copper imports starting August 1 [4] - Analysts express concerns that the unpredictable tariff policies may weigh on the stock market, with a noted decrease in the likelihood of interest rate cuts in September due to policy delays [4] - There is a noticeable rotation in market performance, with previously underperforming sectors rebounding strongly, while early-year leaders are losing momentum, reflecting investor attempts to balance between optimistic consumption recovery and concerns over escalating trade tensions [4]

Core Viewpoint - Conagra Brands reported quarterly earnings of $0.56 per share, missing the Zacks Consensus Estimate of $0.59 per share, and showing a decline from $0.61 per share a year ago, indicating a negative earnings surprise of -5.08% [1][2] Financial Performance - The company posted revenues of $2.78 billion for the quarter ended May 2025, which was 2.18% below the Zacks Consensus Estimate and down from $2.91 billion year-over-year [2] - Over the last four quarters, Conagra Brands has surpassed consensus EPS estimates only once and has topped consensus revenue estimates just once [2] Stock Performance - Conagra Brands shares have declined approximately 26.6% since the beginning of the year, contrasting with the S&P 500's gain of 6.5% [3] - The current Zacks Rank for Conagra Brands is 5 (Strong Sell), indicating expectations of underperformance in the near future [6] Earnings Outlook - The consensus EPS estimate for the upcoming quarter is $0.50 on revenues of $2.72 billion, while for the current fiscal year, the estimate is $2.19 on revenues of $11.64 billion [7] - The trend of estimate revisions for Conagra Brands has been unfavorable leading up to the earnings release [6] Industry Context - The Food - Miscellaneous industry, to which Conagra Brands belongs, is currently ranked in the bottom 27% of over 250 Zacks industries, suggesting a challenging environment for stock performance [8] - Mondelez, another company in the same industry, is expected to report quarterly earnings of $0.67 per share, reflecting a year-over-year decline of -22.1% [9]

Part I [Business Overview](index=3&type=section&id=Item%201.%20Business) Conagra Brands is a leading North American branded food company operating across four segments, focusing on innovation and managing risks, with a significant portion of sales concentrated with Walmart [Reporting Segments](index=3&type=section&id=Reporting%20Segments) Conagra's operations are structured into four distinct reporting segments: Grocery & Snacks, Refrigerated & Frozen, International, and Foodservice - The company's four reporting segments are Grocery & Snacks, Refrigerated & Frozen, International, and Foodservice[14](index=14&type=chunk)[15](index=15&type=chunk)[16](index=16&type=chunk) [Business Operations and Environment](index=5&type=section&id=Business%20Operations%20and%20Environment) Conagra navigates a competitive food industry, managing fluctuating raw material costs, seasonal demand, intellectual property, and extensive government regulation - The company experiences intense competition from both branded and private label food items, competing on quality, innovation, value, and brand loyalty[21](index=21&type=chunk) - The company's largest customer, Walmart, Inc. and its affiliates, accounted for approximately **29% of consolidated net sales for fiscal 2025**, up from **28% in fiscal 2024 and 2023**[26](index=26&type=chunk) - The company's intellectual property, including owned trademarks (e.g., Healthy Choice®, Slim Jim®) and licensed trademarks (e.g., P.F. Chang's®, Wendy's®), is of material importance[23](index=23&type=chunk) [Human Capital Resources](index=7&type=section&id=Human%20Capital%20Resources) Conagra manages approximately 18,300 employees, with a focus on health, safety, and human capital development, including collective bargaining agreements and ERGs - As of May 25, 2025, the company had approximately **18,300 employees**, with about **44%** being parties to collective bargaining agreements[28](index=28&type=chunk) - The OSHA Incident Rate has shown consistent improvement, decreasing from **1.58 in FY2023 to 1.40 in FY2024**, and further to **1.32 in FY2025**, with no employee fatalities in the last three fiscal years[30](index=30&type=chunk)[31](index=31&type=chunk) [Executive Officers](index=12&type=section&id=Information%20About%20Our%20Executive%20Officers) The executive leadership team, led by Sean M. Connolly, comprises experienced professionals overseeing key functions including finance and operations - Sean M. Connolly has served as President and CEO since April 2015[45](index=45&type=chunk) - David S. Marberger has served as Executive Vice President and Chief Financial Officer since August 2016[46](index=46&type=chunk) [Risk Factors](index=14&type=section&id=Item%201A.%20Risk%20Factors) Conagra faces diverse risks including economic downturns, commodity price volatility, supply chain disruptions, high debt levels, intense competition, evolving consumer preferences, and cybersecurity threats - Deterioration of general economic conditions, inflation, and rising interest rates could reduce consumer spending and harm business operations[59](index=59&type=chunk)[61](index=61&type=chunk) - The company is subject to price increases in raw materials and other inputs; it may not be able to fully offset this inflation in a timely manner[65](index=65&type=chunk)[66](index=66&type=chunk)[67](index=67&type=chunk) - Supply chain disruptions, such as those experienced in recent years due to transportation issues and labor challenges, could continue to negatively impact profitability[71](index=71&type=chunk) - The company's debt of approximately **$8.07 billion** as of May 25, 2025, could limit cash flow for business needs and restrict its ability to return cash to stockholders[83](index=83&type=chunk) - Failure to identify and adapt to changing consumer preferences, including health and wellness trends and the growing use of weight loss medication, could negatively impact sales[96](index=96&type=chunk) - Impairment of the **$10.50 billion** in goodwill or **$2.42 billion** in other intangibles could result in significant charges and negatively impact net worth[136](index=136&type=chunk) [Cybersecurity](index=39&type=section&id=Item%201C.%20Cybersecurity) Conagra maintains a comprehensive cybersecurity program, integrated with ERM and overseen by the Board, focusing on risk management, monitoring, and training to mitigate threats - The cybersecurity program is integrated with the company's Enterprise Risk Management (ERM) and is overseen by the Board of Directors and its Audit/Finance Committee[150](index=150&type=chunk)[158](index=158&type=chunk)[164](index=164&type=chunk) - The program includes ongoing monitoring, annual employee training, vulnerability assessments like penetration testing, and engagement with law enforcement and intelligence-sharing organizations[149](index=149&type=chunk)[153](index=153&type=chunk) - The cybersecurity team is led by a Chief Information Security Officer (CISO) with over **25 years of experience**, who reports to the Chief Information Officer (CIO)[160](index=160&type=chunk) - While threats have been experienced, the company is not aware of any cybersecurity breach to date that has had a material impact on its operations or business[154](index=154&type=chunk) [Properties](index=43&type=section&id=Item%202.%20Properties) Conagra operates 38 domestic and international manufacturing facilities, primarily owned, with headquarters in Chicago, Illinois - As of July 10, 2025, Conagra operated **38 domestic manufacturing facilities** and also has international facilities in Canada and Mexico[168](index=168&type=chunk) - The company owns most of its manufacturing facilities but leases a limited number of plants, transportation equipment, and distribution centers[169](index=169&type=chunk) [Legal Proceedings](index=45&type=section&id=Item%203.%20Legal%20Proceedings) Conagra is involved in product liability and legacy litigation, with an accrual of $204.5 million for all matters as of May 25, 2025 - The company is party to product liability claims regarding cooking spray products and has settled most matters, paying **$25 million in fiscal 2025** with an additional **$185 million** to be paid in fiscal 2026 and 2027[422](index=422&type=chunk) - The total accrual for all litigation matters was **$204.5 million** as of May 25, 2025[425](index=425&type=chunk) Part II [Market for Common Equity and Shareholder Matters](index=46&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Conagra's common stock trades on the NYSE under CAG, with no share repurchases in the fourth quarter of fiscal 2025 - The company's common stock is listed on the NYSE under the ticker symbol CAG[174](index=174&type=chunk) - No shares of common stock were repurchased during the fourth quarter of fiscal 2025[175](index=175&type=chunk) [Management's Discussion and Analysis (MD&A)](index=46&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Fiscal 2025 saw a 3.6% net sales decrease and significant diluted EPS growth driven by a tax benefit, as Conagra navigates inflation, supply chain pressures, and manages its $8.07 billion debt Fiscal 2025 vs. 2024 Key Financial Results | Metric | Fiscal 2025 | Fiscal 2024 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $11,612.8 M | $12,050.9 M | (3.6)% | | Gross Profit | $3,003.5 M | $3,333.4 M | (9.9)% | | Operating Profit | $1,364.6 M | $852.8 M | 60.0% | | Net Income | $1,152.5 M | $347.7 M | 231.5% | | Diluted EPS | $2.40 | $0.72 | 233.3% | - The company anticipates continued challenges in fiscal 2026 from supply chain issues, commodity cost volatility, and economic pressures on consumers, which are expected to negatively impact volumes[186](index=186&type=chunk) [Segment Performance Review](index=49&type=section&id=Segment%20Review) In fiscal 2025, most segments experienced net sales and operating profit declines, with Refrigerated & Frozen particularly impacted by manufacturing challenges and inflation Net Sales by Segment (Fiscal 2025 vs. 2024) | Reporting Segment | FY2025 Net Sales ($M) | FY2024 Net Sales ($M) | % Change | | :--- | :--- | :--- | :--- | | Grocery & Snacks | $4,899.3 | $4,958.7 | (1.2)% | | Refrigerated & Frozen | $4,662.3 | $4,865.5 | (4.2)% | | International | $956.5 | $1,078.3 | (11.3)% | | Foodservice | $1,094.7 | $1,148.4 | (4.7)% | | **Total** | **$11,612.8** | **$12,050.9** | **(3.6)%** | Operating Profit by Segment (Fiscal 2025 vs. 2024) | Reporting Segment | FY2025 Operating Profit ($M) | FY2024 Operating Profit ($M) | % Change | | :--- | :--- | :--- | :--- | | Grocery & Snacks | $1,017.0 | $1,100.3 | (7.6)% | | Refrigerated & Frozen | $651.7 | $815.9 | (20.1)% | | International | $143.9 | $155.1 | (7.1)% | | Foodservice | $131.0 | $151.3 | (13.4)% | - The Refrigerated & Frozen segment's operating profit was significantly impacted by manufacturing challenges at a primary facility for chicken, leading to increased costs from using third-party manufacturers and temporary production stoppages[205](index=205&type=chunk) [Consolidated Results of Operations](index=53&type=section&id=Consolidated%20Results%20of%20Operations) Fiscal 2025 saw increased SG&A, decreased net interest expense, and a significant income tax benefit of $225.8 million, which substantially boosted diluted EPS - Income tax expense for fiscal 2025 was **$3.7 million**, a steep decline from **$262.5 million in fiscal 2024**, principally due to a **$225.8 million tax benefit** from the release of a valuation allowance related to a federal audit settlement[211](index=211&type=chunk) - The effective tax rate was **0.3% in fiscal 2025**, compared to **43.0% in fiscal 2024**, with an expectation of approximately **23% for fiscal 2026**[211](index=211&type=chunk)[212](index=212&type=chunk) - Net interest expense decreased by **3.2% to $416.7 million** in fiscal 2025, driven by an overall reduction in debt balances[209](index=209&type=chunk) [Liquidity and Capital Resources](index=57&type=section&id=Liquidity%20and%20Capital%20Resources) Conagra manages liquidity through operations, a $2.0 billion credit facility, and commercial paper, with total debt at $8.07 billion and decreased operating cash flow in fiscal 2025 - As of May 25, 2025, the company had total debt of approximately **$8.07 billion**[83](index=83&type=chunk) - The company has a **$2.0 billion revolving credit facility**, which was extended to June 27, 2030, subsequent to the fiscal year-end, with no borrowings outstanding as of May 25, 2025[217](index=217&type=chunk)[350](index=350&type=chunk) - Cash generated from operating activities decreased to **$1.69 billion in fiscal 2025** from **$2.02 billion in fiscal 2024**, primarily due to lower operating profits and higher inventory balances[238](index=238&type=chunk) - During fiscal 2025, the company repurchased **2.1 million shares for $64.0 million**, with **$852.6 million** remaining under the share repurchase authorization[228](index=228&type=chunk) [Critical Accounting Estimates](index=61&type=section&id=Critical%20Accounting%20Estimates) Critical accounting estimates involve significant judgment, particularly for marketing costs, income taxes, employee benefits, and the annual impairment testing of goodwill and intangible assets - Goodwill and other intangible assets, valued at **$10.50 billion and $2.42 billion** respectively, are tested annually for impairment using methods that require significant management judgment on future cash flows, growth rates, and discount rates[136](index=136&type=chunk)[263](index=263&type=chunk) - For brands with less than **10% excess fair value** over carrying amount, a **50-basis-point increase** in the discount rate would decrease their aggregate fair value by **$70.9 million**, while a **100-basis-point decrease** in the royalty rate would decrease it by **$247.9 million**, indicating sensitivity to these assumptions[264](index=264&type=chunk)[265](index=265&type=chunk) - Pension benefit accounting requires significant estimates, including a weighted-average discount rate of **6.17%** for service and interest expense for fiscal 2026 and an expected long-term rate of return on plan assets of **5.89%**[255](index=255&type=chunk)[256](index=256&type=chunk) [Market Risk Disclosures](index=67&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Conagra manages market risks from commodity prices, interest rates, and foreign currency using derivatives, with a 1% interest rate increase impacting fixed-rate debt by $302.8 million - A **1% increase in interest rates** would decrease the fair value of the company's fixed-rate debt by approximately **$302.8 million** as of May 25, 2025[272](index=272&type=chunk) Fair Value Impact of a Hypothetical 10% Fluctuation | In Millions | Average During FY Ended May 25, 2025 | Average During FY Ended May 26, 2024 | | :--- | :--- | :--- | | Energy commodities | $5.7 | $4.4 | | Agriculture commodities | $8.4 | $4.5 | | Foreign exchange | $9.6 | $10.0 | [Financial Statements and Supplementary Data](index=70&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents consolidated financial statements and notes for fiscal years 2023-2025, audited by KPMG LLP, with the Birds Eye intangible asset valuation noted as a critical audit matter [Consolidated Financial Statements](index=70&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements show fiscal 2025 net sales of $11.61 billion, a significant increase in net income to $1.15 billion, and total assets of $20.93 billion Consolidated Statement of Earnings Highlights (FY2025) | Metric (in millions) | FY2025 | FY2024 | FY2023 | | :--- | :--- | :--- | :--- | | Net sales | $11,612.8 | $12,050.9 | $12,277.0 | | Gross profit | $3,003.5 | $3,333.4 | $3,264.8 | | Operating profit | $1,364.6 | $852.8 | $1,075.3 | | Net income attributable to Conagra | $1,152.4 | $347.2 | $683.6 | Consolidated Balance Sheet Highlights (at year-end) | Metric (in millions) | May 25, 2025 | May 26, 2024 | | :--- | :--- | :--- | | Total Current Assets | $3,071.0 | $3,149.5 | | Total Assets | $20,933.9 | $20,862.3 | | Senior Long-Term Debt | $6,234.1 | $7,492.6 | | Total Liabilities | $12,001.2 | $12,351.0 | | Total Stockholders' Equity | $8,932.7 | $8,511.3 | [Selected Notes to Consolidated Financial Statements](index=77&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes to financial statements detail fiscal 2025 acquisitions, significant divestitures, intangible asset impairments, a $225.8 million tax benefit, litigation accruals, and a major pension de-risking action - In fiscal 2025, the company acquired Sweetwood Smoke & Co. for **$179.4 million** and a contract manufacturer for **$51.2 million**, adding **$176.3 million** to goodwill[327](index=327&type=chunk)[328](index=328&type=chunk)[369](index=369&type=chunk) - Subsequent to fiscal year-end, the company completed the sale of its Chef Boyardee® business for **$601.2 million** and its frozen fish business (Van De Kamp's®, Mrs. Paul's®) for **$42.4 million**[356](index=356&type=chunk)[359](index=359&type=chunk) - In fiscal 2025, the company recorded **$72.1 million** in brand intangible impairment charges, primarily related to its spreads businesses (Earth Balance®, Smart Balance®), following significant impairments of **$430.2 million in FY2024** and **$589.2 million in FY2023**[374](index=374&type=chunk)[377](index=377&type=chunk)[379](index=379&type=chunk) - During fiscal 2025, the company transferred **$760.6 million** of its U.S. defined benefit pension plan obligations to an insurance company via an annuity contract, resulting in a noncash pre-tax settlement gain of **$13.0 million**[447](index=447&type=chunk) [Report of Independent Registered Public Accounting Firm](index=141&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) KPMG LLP issued an unqualified opinion on financial statements and internal controls, identifying the Birds Eye intangible asset valuation as a critical audit matter - The auditor, KPMG LLP, issued an unqualified opinion on the financial statements and internal controls[507](index=507&type=chunk) - A critical audit matter was identified concerning the evaluation of the recoverability of the Birds Eye indefinite-lived intangible asset, highlighting the subjective and challenging nature of the assumptions used in its valuation[516](index=516&type=chunk)[517](index=517&type=chunk) [Controls and Procedures](index=146&type=section&id=Item%209A.%20Controls%20and%20Procedures) As of May 25, 2025, management concluded that disclosure controls and internal control over financial reporting were effective, with no material changes in the fourth quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures and its internal control over financial reporting were effective as of May 25, 2025[521](index=521&type=chunk)[524](index=524&type=chunk) Part III [Directors, Executive Compensation, and Corporate Governance](index=149&type=section&id=Item%2010%2C%2011%2C%2012%2C%2013%2C%2014) This section incorporates information on directors, executive compensation, and security ownership by reference from the forthcoming 2025 Proxy Statement - Information regarding directors, executive compensation, security ownership, and related transactions is incorporated by reference from the forthcoming 2025 Proxy Statement[531](index=531&type=chunk)[537](index=537&type=chunk)[538](index=538&type=chunk) Equity Compensation Plan Information (as of May 25, 2025) | Plan Category | Securities to be Issued Upon Exercise (a) | Weighted-Average Exercise Price (b) | Securities Remaining Available for Future Issuance (c) | | :--- | :--- | :--- | :--- | | Equity compensation plans approved by security holders | 7,876,676 | $33.76 | 13,798,410 | | Equity compensation plans not approved by security holders | — | — | — | | **Total** | **7,876,676** | **$33.76** | **13,798,410** | Part IV [Exhibits and Financial Statement Schedules](index=151&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section provides a comprehensive list of all exhibits filed with the Form 10-K, including governance documents, debt agreements, and compensation plans - This section provides a comprehensive list of all exhibits filed with the annual report, including the Restated Certificate of Incorporation, debt indentures, credit agreements, and various management and compensation plans[547](index=547&type=chunk)[550](index=550&type=chunk)[552](index=552&type=chunk)

Core Insights - Conagra Brands, Inc. (CAG) reported fourth-quarter fiscal 2025 results with both net sales and earnings falling short of the Zacks Consensus Estimate, experiencing year-over-year declines [1][11] Financial Performance - Adjusted earnings per share (EPS) were 56 cents, missing the estimate of 59 cents, and reflecting an 8.2% decline year over year [3][11] - Net sales totaled $2,781.8 million, down 4.3% year over year, also missing the estimate of $2,844 million, attributed to a decrease in organic net sales, adverse currency movements, and M&A impacts [3][11] - Organic net sales decreased by 3.5% year over year, driven by a 1% negative impact from price/mix and a 2.5% decline in volume due to softer consumption trends [4][11] - Adjusted gross profit fell 10.7% to $717 million, with adjusted gross margin contracting 184 basis points to 25.8% [5][11] - Adjusted EBITDA was $544 million, down 5.7% year over year [6] Segment Performance - Grocery & Snacks segment net sales were $1,150.2 million, down 2.1% year over year, with organic sales declining 3.3% [7] - Refrigerated & Frozen segment net sales decreased 4.4% year over year to $1,121.8 million, slightly beating estimates [8] - International segment net sales fell 13.8% year over year to $230.1 million, with organic sales increasing by 0.8% [9] - Foodservice segment reported sales of $279.7 million, down 4% year over year, but above estimates [10] Future Outlook - For fiscal 2026, Conagra expects organic net sales growth between -1% and 1%, with adjusted EPS forecasted between $1.70 and $1.85, down from $2.30 in fiscal 2025 [11][14] - The company plans to focus on snacks and frozen foods, supply-chain resilience, and cost discipline to drive sustainable growth [2][14] - Capital expenditures are projected to be around $450 million for fiscal 2026 [14] Financial Health - Conagra ended the quarter with cash and cash equivalents of $68 million and long-term debt of $6,234.1 million [12] - The company generated $1,691.9 million in net cash flows from operating activities, with free cash flow amounting to $1,302.6 million [12] - A quarterly dividend of 35 cents per share was declared, reflecting an annualized dividend of $1.40 [13]

Conagra Brands, Inc. (NYSE:CAG) Q4 2025 Earnings Q&A Conference Call July 10, 2025 9:30 AM ET Company Participants David S. Marberger - Executive VP & CFO Matthew Neisius - Senior Director of Investor Relations Sean M. Connolly - President, CEO & Director Conference Call Participants Andrew Lazar - Barclays Bank PLC, Research Division Bryan Andrew Adams - UBS Investment Bank, Research Division Christopher Michael Carey - Wells Fargo Securities, LLC, Research Division David Sterling Palmer - Evercore ISI Ins ...

Core Viewpoint - Conagra Brands, Inc. reported contrasting performance in fiscal year 2025, with a focus on returning to volume growth in the first half and outlining strategies for long-term value creation in fiscal year 2026 [4][5]. Group 1: Fiscal Year 2025 Performance - The fiscal year 2025 was characterized by two distinct halves, with initial efforts aimed at regaining volume growth [5]. - The company made progress in the first half of fiscal 2025, indicating a positive trajectory [5]. Group 2: Future Outlook - The CEO provided insights into the near-term environment and the actions being taken to manage the business proactively for long-term value [4].

Shares of Conagra Brands fell Thursday morning after the snack foods giant's fiscal fourth-quarter results came in below expectations. https://t.co/Uie4428MfA ...

Financial Data and Key Metrics Changes - The company reported a cumulative increase of over $2 billion in total delivered costs due to sustained inflation over six consecutive years, starting from the second half of fiscal 2021 [8][10] - Fiscal 2026 is expected to see an additional 11% cost increase due to inflation, leading to temporary margin compression [10][11] - The company anticipates a return to margin expansion in the future, particularly in the frozen segment, driven by productivity improvements and pricing actions [11][12] Business Line Data and Key Metrics Changes - The company has prioritized investments in volume growth for frozen and snacks, which have shown a strong consumer response [7][10] - The canned food business is expected to remain stable, focusing on cash generation rather than volume growth [45] Market Data and Key Metrics Changes - The company is experiencing double-digit inflation in animal protein costs, which significantly impacts overall inflation rates [18][19] - The company expects core inflation of 4% for fiscal 2026, with additional tariff-related costs contributing to overall inflation [19][20] Company Strategy and Development Direction - The company is committed to investing in brand building and volume growth despite current inflationary pressures, viewing healthy volumes as essential for long-term value creation [11][12] - A strategic focus on modernizing brands and leveraging technology, including AI, is part of the company's plan to drive growth and lower costs [13][33] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the ongoing inflationary environment and its impact on margins but remains optimistic about future margin recovery through productivity and pricing strategies [10][55] - The company is focused on overcoming supply chain challenges and is optimistic about returning to positive volume growth in key categories [36][55] Other Important Information - The company plans to maintain its dividend while also investing in infrastructure and paying down debt, forecasting a cash flow conversion rate of 90% [24][25] - The company has undergone significant portfolio reshaping, divesting non-strategic businesses to focus on growth areas in frozen and snacks [70][71] Q&A Session Summary Question: Current challenges in the industry - Management indicated that the current challenges are not structural but rather temporary, with expectations for margin expansion in the future [11][12] Question: Core inflation breakdown - The CFO provided details on the 4% core inflation, highlighting that 60% of costs are material, with significant inflation in animal proteins [17][19] Question: Dividend strategy amidst high leverage - Management reiterated their commitment to maintaining the dividend while also focusing on debt reduction and investment in the business [24][25] Question: Pricing strategy in competitive categories - Management discussed their tailored pricing approach, emphasizing the importance of maintaining brand equity and consumer connection [45][66] Question: Innovation impact on pricing - Management highlighted successful innovations, such as the Banquet Mega Chicken Filets, which have allowed for premium pricing despite market challenges [95][98]

Financial Data and Key Metrics Changes - The company is experiencing a cumulative increase of over $2 billion in total delivered costs due to sustained inflation over six consecutive years, starting from the second half of fiscal 2021 [10][11]. - Fiscal 2026 is projected to have a core inflation rate of 4%, with an additional 3% attributed to tariffs, leading to a total inflation impact on costs [21][82]. Business Line Data and Key Metrics Changes - The company is prioritizing investments in volume growth, particularly in frozen and snacks, despite ongoing inflationary pressures, indicating a strategic shift towards maintaining brand health and consumer engagement [12][36]. - The frozen snacks segment has shown a strong consumer response to investments made in the first half of fiscal 2025, leading to a return to absolute volume growth [9][10]. Market Data and Key Metrics Changes - The company is facing significant inflation in material costs, particularly in animal proteins, which are inflating at double-digit rates, impacting overall cost structures [19][20]. - The company has noted a slight decline in total volumes, with scanner data indicating a decrease of about 1%, but anticipates a recovery as supply chain issues are resolved [34][36]. Company Strategy and Development Direction - The company is focused on building brands and driving volume growth, viewing healthy volumes as essential for long-term value creation, despite temporary margin compression due to inflation and increased investments [12][36]. - There is an ongoing initiative to reengineer core work processes using technology, including AI, to enhance growth and reduce costs [14][36]. Management's Comments on Operating Environment and Future Outlook - Management acknowledges the current inflationary environment is not transitory and expects continued inflationary pressures, but remains optimistic about margin expansion in the future [11][12]. - The company is committed to maintaining its dividend while also investing in infrastructure and paying down debt, indicating a balanced approach to financial management [25][26]. Other Important Information - The company is actively reshaping its portfolio to focus more on growth areas like frozen and snacks, while considering divestitures of non-strategic grocery businesses [68][70]. - The company has seen success with innovative products, such as the Banquet Mega Chicken Filets, which have exceeded sales expectations and contributed to premiumization efforts [95][99]. Q&A Session Summary Question: Should the aggressive investment approach suggest that current industry challenges are more structural? - Management believes the current challenges are not structural but rather a result of sustained inflation and supply chain issues, and they expect margin expansion in the future [12][36]. Question: Can you unpack the 4% core inflation number for fiscal 2026? - The CFO explained that 60% of total costs are material costs, with significant inflation in animal proteins being a major driver of the 4% inflation estimate [21][22]. Question: Why maintain the dividend despite high leverage and capital spending needs? - The CFO reiterated the commitment to an attractive dividend while also focusing on debt reduction and maintaining an investment-grade credit rating, forecasting a cash flow conversion of 90% [25][26]. Question: How does the company view price and promotion in major categories? - Management stated they are not searching for answers to drive volume growth, as they have successfully achieved it in the past and are focused on modernizing brands and investing in high-quality displays [32][33]. Question: What is the outlook for productivity and its impact on gross margins? - Management expressed confidence in achieving strong productivity levels, with expectations of over 5% productivity in fiscal 2026, which will help mitigate inflation impacts [78][80]. Question: How does the company plan to address competition from private label products? - Management noted that while they are below average in private label development, they will monitor competitive pricing closely, particularly in categories like canned foods [85][86].