CHICAGO, Jan. 4, 2024 /PRNewswire/ -- Today Conagra Brands, Inc. (NYSE: CAG) reported results for the second quarter of fiscal year 2024, which ended on November 26, 2023. All comparisons are against the prior-year fiscal period, unless otherwise noted. Second Quarter Highlights Conagra Brands Reports Second Quarter Results Conagra Brands Reports Second Quarter Results Net sales decreased 3.2% from the prior year quarter; organic net sales decreased 3.4% Operating margin was 14.0%, representing a 261 ...

Financial Performance - Net sales for the thirteen weeks ended November 26, 2023, were $3,208.1 million, a decrease of 3.2% compared to $3,312.9 million in the same period last year[5] - Net income attributable to Conagra Brands, Inc. for the twenty-six weeks ended November 26, 2023, was $605.9 million, an increase of 99.0% compared to $304.4 million in the same period last year[5] - Earnings per share (diluted) for the twenty-six weeks ended November 26, 2023, were $1.26, compared to $0.63 in the same period last year, reflecting a 100% increase[5] - Comprehensive income attributable to Conagra Brands, Inc. for the twenty-six weeks ended November 26, 2023, was $611.6 million, compared to $291.0 million in the same period last year, reflecting a 110.2% increase[9] - Net income for the twenty-six weeks ended November 26, 2023, was $606.1 million, compared to $304.7 million in the same period last year[17] - Net income attributable to Conagra Brands, Inc. common stockholders for the thirteen weeks ended November 26, 2023 was $286.2 million, compared to $381.9 million for the same period in 2022[62] - Net income attributable to Conagra Brands, Inc. for the twenty-six weeks ended November 26, 2023 was $286.2 million[87] - Net income attributable to Conagra Brands, Inc. was $381.9 million for the period ending November 27, 2022[89] - Net sales for the 13 weeks ended November 26, 2023, were $3,208.1 million, a decrease from $3,312.9 million in the same period last year[5] - Net income attributable to Conagra Brands, Inc. for the 13 weeks ended November 26, 2023, was $286.2 million, compared to $381.9 million in the same period last year[5] - Earnings per share (diluted) for the 13 weeks ended November 26, 2023, were $0.60, down from $0.79 in the same period last year[5] - Net sales for the 26 weeks ended November 26, 2023, were $6,112.1 million, a decrease from $6,217.2 million in the same period last year[5] - Net income attributable to Conagra Brands, Inc. for the 26 weeks ended November 26, 2023, was $605.9 million, compared to $304.4 million in the same period last year[5] - Earnings per share (diluted) for the 26 weeks ended November 26, 2023, were $1.26, up from $0.63 in the same period last year[5] Costs and Expenses - Cost of goods sold for the twenty-six weeks ended November 26, 2023, was $4,442.4 million, a decrease of 2.9% compared to $4,574.6 million in the same period last year[5] - Selling, general, and administrative expenses for the twenty-six weeks ended November 26, 2023, were $732.2 million, a decrease of 34.3% compared to $1,114.3 million in the same period last year[5] - Cost of goods sold for the 13 weeks ended November 26, 2023, was $2,361.5 million, compared to $2,390.6 million in the same period last year[5] - Selling, general and administrative expenses for the 13 weeks ended November 26, 2023, were $398.1 million, up from $372.7 million in the same period last year[5] - Interest expense, net for the 13 weeks ended November 26, 2023, was $113.3 million, compared to $100.3 million in the same period last year[5] - SG&A expenses for Q2 FY2024 increased by $25.4 million to $398.1 million, including a $34.2 million charge for impairment of a business held for sale[134] - Net interest expense increased to $113.3 million in Q2 FY2024 from $100.3 million in Q2 FY2023, due to a higher weighted average interest rate on outstanding debt[147] - Income tax expense decreased to $102.9 million in Q2 FY2024 from $122.5 million in Q2 FY2023, with an effective tax rate of 26.5% in Q2 FY2024 compared to 24.3% in Q2 FY2023[148] Cash Flow and Liquidity - Cash and cash equivalents decreased from $93.3 million to $61.5 million[13] - Net cash flows from operating activities were $854.6 million, compared to $297.8 million in the same period last year[17] - Additions to property, plant, and equipment were $214.0 million, compared to $188.4 million in the same period last year[17] - Repayment of long-term debt was $760.6 million, compared to $265.8 million in the same period last year[17] - Cash dividends paid were $324.7 million, compared to $308.6 million in the same period last year[17] - Net cash flows from operating activities increased to $854.6 million, up from $297.8 million in the previous year[17] - Cash generated from operating activities totaled $854.6 million in the first half of FY2024, up from $297.8 million in the first half of FY2023, driven by changes in inventory balances and timing of accounts payable payments[164] - Cash used in financing activities totaled $683.4 million in the first half of FY2024, primarily due to repayments of long-term debt of $760.6 million and cash dividends paid of $324.7 million[166] - The company had $55.2 million in cash held by international subsidiaries as of November 26, 2023, with a deferred tax liability provided for certain undistributed foreign earnings[167] Assets and Liabilities - Total current assets increased from $3,385.0 million to $3,469.1 million[13] - Property, plant, and equipment, net increased from $2,736.4 million to $2,876.5 million[13] - Total liabilities decreased from $13,245.3 million to $13,045.8 million[13] - Assets held for sale include current assets of $30.2 million and noncurrent assets of $89.5 million[26] - Total inventories as of November 26, 2023 were $2,277.6 million, up from $2,212.2 million as of May 28, 2023[63] - Total equity as of November 26, 2023 was $9,074.2 million[87] - Total equity decreased from $8,862.2 million at May 29, 2022, to $8,737.7 million at November 27, 2022, primarily due to net loss and share repurchases[89] - Accumulated other comprehensive loss improved from $(44.4) million at May 28, 2023, to $(38.7) million at November 26, 2023, driven by derivative adjustments and pension benefits[90] - Derivative assets decreased from $10.0 million at May 28, 2023, to $4.2 million at November 26, 2023, reflecting changes in market conditions[97][98] - Long-term debt carrying amount decreased from $8.60 billion at May 28, 2023, to $8.51 billion at November 26, 2023, with fair value estimated at $8.11 billion[102] - Deferred compensation liabilities increased from $67.0 million at May 28, 2023, to $71.7 million at November 26, 2023[97][98] Restructuring and Impairment - Conagra's restructuring plan incurred cumulative charges of $180.3 million since inception through November 26, 2023, with $228.8 million approved for various projects, including $69.5 million in cash charges and $159.3 million in non-cash charges[28] - In the first half of fiscal 2024, Conagra recognized $27.4 million in restructuring charges, including $5.7 million in cash outflows and $21.7 million in non-cash charges[30] - The company recognized an impairment charge of $34.2 million related to assets held for sale in the second quarter of fiscal 2024[24] - Total charges related to the Conagra Restructuring Plan amounted to $27.4 million in the first half of fiscal 2024, with $5.7 million resulting in cash outflows and $21.7 million in non-cash charges[29][30] - Impairment charges totaled $34.2 million in the International segment during the second quarter of fiscal 2024[100] - Goodwill impairment charges of $141.7 million were recognized in the Refrigerated & Frozen segment during the first quarter of fiscal 2023[101] - The company experienced a charge of $34.2 million related to the impairment of a business held for sale in Q2 2024[121] Debt and Financing - Conagra repaid $500.0 million of 0.50% senior notes in fiscal 2024 and issued $500.0 million of 5.30% senior notes due October 1, 2026[34] - Conagra prepaid $250.0 million of its $500.0 million term loan in fiscal 2024, with the remaining balance maturing on August 26, 2025[35] - Conagra's revolving credit facility provides for a maximum principal amount of $2.0 billion, with no outstanding borrowings as of November 26, 2023[36] - The company repaid $500.0 million of senior notes in the first quarter of fiscal 2024 and issued new senior notes of the same amount with a 5.30% interest rate due October 1, 2026[34] - The revolving credit facility provides for a maximum aggregate principal amount of $2.0 billion, with no outstanding borrowings as of November 26, 2023[36] - The company has a revolving credit facility of $2.0 billion, with no outstanding borrowings as of November 26, 2023[153] Segment Performance - Net sales for Grocery & Snacks decreased to $1,295.1 million in Q2 2024 from $1,349.9 million in Q2 2023, a decline of 4.1%[106] - Refrigerated & Frozen segment net sales dropped to $1,338.5 million in Q2 2024 from $1,421.5 million in Q2 2023, a decrease of 5.8%[106] - International segment net sales increased to $279.6 million in Q2 2024 from $258.7 million in Q2 2023, a growth of 8.1%[106] - Total net sales for the company decreased to $3,208.1 million in Q2 2024 from $3,312.9 million in Q2 2023, a decline of 3.2%[106] - Operating profit for Grocery & Snacks fell to $279.2 million in Q2 2024 from $340.4 million in Q2 2023, a decrease of 18.0%[106] - Total operating profit decreased to $543.3 million in Q2 2024 from $656.1 million in Q2 2023, a decline of 17.2%[106] - Net income attributable to Conagra Brands dropped to $286.2 million in Q2 2024 from $381.9 million in Q2 2023, a decrease of 25.1%[106] - Net sales for the Grocery & Snacks segment decreased by 4.1% to $1,295.1 million in Q2 FY2024 compared to $1,349.9 million in Q2 FY2023, with a volume decline of 3.7%[128] - Refrigerated & Frozen segment net sales decreased by 5.8% to $1,338.5 million in Q2 FY2024, with a volume decline of 3.3%[129] - International segment net sales increased by 8.1% to $279.6 million in Q2 FY2024, driven by a 3.3% volume increase and favorable foreign exchange rates[130] - Foodservice segment net sales increased by 4.3% to $294.9 million in Q2 FY2024, with price/mix up 6.8% but volumes down 2.5%[133] - Operating profit for the Grocery & Snacks segment decreased by 18.0% to $279.2 million in Q2 FY2024, driven by lower gross profits and higher advertising expenses[138] - Refrigerated & Frozen segment operating profit decreased by 12.0% to $220.2 million in Q2 FY2024, impacted by lower gross profits and input cost inflation[140] - International segment operating profit decreased by 84.0% to $5.9 million in Q2 FY2024, including a $34.2 million impairment charge[142] - Foodservice segment operating profit increased by 33.2% to $38.0 million in Q2 FY2024, driven by higher gross profits and a $2.6 million insurance benefit[144] - Total net sales for the company decreased by 3.2% to $3,208.1 million in Q2 FY2024, with declines in Grocery & Snacks and Refrigerated & Frozen segments partially offset by growth in International and Foodservice[128] Derivatives and Hedging - Unrealized derivative adjustments for the twenty-six weeks ended November 26, 2023, resulted in a gain of $5.5 million, compared to a gain of $5.6 million in the same period last year[9] - Gross derivative losses incurred for the thirteen weeks ended November 26, 2023 were $10.0 million, compared to gains of $5.2 million for the same period in 2022[54] - Net derivative losses recognized in general corporate expenses were $11.2 million for the thirteen weeks ended November 26, 2023, compared to $2.4 million for the same period in 2022[54] - Total gains from derivative instruments not designated as hedging instruments were $9.5 million for the twenty-six weeks ended November 26, 2023, compared to $14.8 million for the same period in 2022[57] - The notional value of open commodity contracts as of November 26, 2023 was $83.6 million, down from $134.6 million as of May 28, 2023[57] - Derivative losses in Q2 2024 were $11.2 million, compared to $2.4 million in Q2 2023[121] Pension and Post-Employment Benefits - Pension and post-employment benefit obligations for the twenty-six weeks ended November 26, 2023, resulted in a net loss of $1.8 million, compared to a net loss of $1.6 million in the same period last year[9] - Total pension cost for the twenty-six weeks ended November 26, 2023 was $10.3 million[80] - Total postretirement cost for the twenty-six weeks ended November 26, 2023 was $(1.8) million[81] - Weighted-average discount rates for pension cost in fiscal 2024 were 5.64% for service cost and 5.44% for interest cost[82] - The company distributed approximately $135 million from pension plan assets in connection with a voluntary lump-sum settlement offer[84] - Pension and postretirement non-service expense was $0.4 million in Q2 FY2024, compared to income of $6.1 million in Q2 FY2023, driven by higher interest costs[146] Litigation and Guarantees - The company has accrued $28.8 million as of November 26, 2023 for litigation matters related to lead-based paint, down from $40.7 million as of May 28, 2023[69] - Litigation accrual totaled $54.5 million as of November 26, 2023, with $26.1 million in other accrued liabilities and $28.4 million in other noncurrent liabilities[73] - Beatrice-related environmental matters accrual was $38.8 million as of November 26, 2023, with $1.5 million in other accrued liabilities and $37.3 million in other noncurrent liabilities[75] - The company guarantees a maximum of $75.0 million for Lamb Weston's sublease agreement obligations[76] - Guaranteed future payments for an exited facility lease arrangement totaled $7.4 million as of November 26, 2023[77] Other Financial Metrics - Stock-based compensation expense for the second quarter of fiscal 2024 was $6.2 million, compared to $36.0 million for the same period in 2023[58] - Total depreciation expense increased to $86.0 million in Q2 2024 from $77.8 million in Q2 2023, a rise of 10.5%[109] - The amount of gross unrecognized tax benefits for uncertain tax positions was $25.2 million as of November 26, 2023, up from $23.7 million as of May 28, 2023[66] - Equity method investment earnings were $54.3 million in Q2 FY2024, up from $49.3 million in Q2 FY2023, driven by improved product margins despite lower volume trends[149] - Diluted earnings per share decreased to $0.60 in Q2 FY2024 from $0.79 in Q2 FY2023, reflecting lower net income[150] - Capital expenditures for FY2024 are estimated at approximately $450 million[162]

Key PointsConAgra is a major manufacturer of packaged and frozen foods selling under iconic brands like Birds Eye, Slim Jim, Vlasic, Reddi-wip, and Orville Redenbacher. It produced its sixth consecutive earnings beat with its fiscal first-quarter 2024 earnings release.ConAgra shares fell 26.19% in 2023 but could see a rebound in consumer consumption as disposable income improves with interest rate cuts in 2024.ConAgra stock trades at 10.7X forward earnings and pays a 4.9% annual yield.5 stocks we like bette ...

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