Core Viewpoint - Conagra is facing significant backlash after missing earnings expectations due to a larger-than-expected year-over-year sales decline in Q1, marking a surprising deviation from its previous performance since Q3 2020 [1] Group 1: Financial Performance - Conagra's earnings and sales fell by 19.7% and 3.8% year-over-year, respectively [2] - Organic net sales, excluding foreign exchange impacts, divested businesses, and M&A, declined by 3.5% [2] - Volumes decreased by 1.6% year-over-year, marking Conagra's 14th consecutive quarter of volume decline [2] Group 2: Operational Challenges - A manufacturing disruption at the Hebrew National hotdog plant during peak grilling season led to a 47% drop in sales year-over-year for that brand [2] - The disruption reduced consolidated volumes by 60 basis points and total organic sales by 90 basis points [2] - The Refrigerated and Frozen segment experienced a loss of an estimated 150 basis points in volumes and 210 basis points in organic net sales [2] Group 3: Management Outlook - Management expects Q1 to be an outlier, with most of the impact from the plant disruption confined to this quarter [3] - The company reiterated its FY25 guidance, including adjusted EPS of $2.60-2.65 and organic sales growth from negative 1.5% to flat year-over-year [3] - Management noted that staples volumes should continue to improve as the company exits Q1, with around 71% of Conagra's portfolio holding or gaining volume share in Q1 [2]

Core Insights - Conagra Brands reported revenue of $2.79 billion for the quarter ended August 2024, a year-over-year decline of 3.8% and an EPS of $0.53 compared to $0.66 a year ago [1] - The revenue fell short of the Zacks Consensus Estimate of $2.84 billion, resulting in a surprise of -1.57%, while the EPS also missed the consensus estimate of $0.59 by -10.17% [1] Financial Performance Metrics - Net Sales growth in Grocery & Snacks was -1.7%, slightly worse than the estimated -1.6% [2] - Net Sales growth in Refrigerated & Frozen was -5.7%, compared to the estimated -3.2% [2] - Price/Mix for Foodservice was 3.2%, below the estimated 3.8% [2] - Organic Volume for Foodservice decreased by -11.1%, worse than the estimated -7.5% [2] - Price/Mix for International was 2.4%, exceeding the estimated 0.2% [2] - Organic Volume for International was 0.6%, below the estimated 1.2% [2] - Price/Mix for Refrigerated and Frozen was -5.8%, compared to the estimated -3.3% [2] - Net Sales growth in Foodservice was -7.8%, worse than the estimated -3.7% [2] - Sales in Grocery & Snacks were $1.18 billion, matching the average estimate [2] - Sales in Foodservice were $266.70 million, below the average estimate of $278.86 million [2] - Sales in International were $259.10 million, slightly below the estimated $260.36 million [2] - Sales in Refrigerated & Frozen were $1.09 billion, below the average estimate of $1.11 billion [2] Stock Performance - Shares of Conagra Brands have returned +2.5% over the past month, outperforming the Zacks S&P 500 composite's +1.2% change [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Financial Performance - Conagra's Q1 Organic Net Sales decreased by 3.5% to $2,801 million[49] - Adjusted Gross Margin decreased by 163 bps to 26.0%[49] - Adjusted Operating Margin decreased by 244 bps to 14.2%[49] - Adjusted EPS decreased by 19.7% to $0.53[49] Segment Performance - Grocery & Snacks organic net sales decreased by 1.9% to $1,183 million[50] - Refrigerated & Frozen organic net sales decreased by 5.7% to $1,086 million[50] - International organic net sales increased by 3.0% to $259 million[50] - Foodservice organic net sales decreased by 7.9% to $267 million[50] Guidance and Expectations - Conagra reaffirms fiscal year 2025 guidance for organic net sales growth of (1.5)% to flat, adjusted operating margin of 15.6% to 15.8%, and adjusted EPS of $2.60 to $2.65[46] - The company expects full year net inflation at approximately 3.2% with the peak expected in Q2[62] - The company anticipates volume and margin recovery to be most meaningful in the second half of the fiscal year[62]

Conagra Brands (CAG) came out with quarterly earnings of $0.53 per share, missing the Zacks Consensus Estimate of $0.59 per share. This compares to earnings of $0.66 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -10.17%. A quarter ago, it was expected that this company would post earnings of $0.56 per share when it actually produced earnings of $0.61, delivering a surprise of 8.93%.Over the last four quarters, the company ha ...

Financial Data and Key Metrics Changes - The company reported total organic net sales down 3.5% in Q1, with an estimated 2.6% decline excluding the impact of the Hebrew National manufacturing disruption [26][28] - Adjusted operating margin declined 244 basis points year-over-year to 14.2% due to increased cost of goods sold inflation and higher merchandising investments [30][32] - Adjusted EPS was $0.53, down from $0.66 a year ago, primarily due to lower adjusted operating profit and unfavorable foreign exchange rates [32] Business Line Data and Key Metrics Changes - Grocery and Snacks segment delivered organic net sales of approximately $1.2 billion, a decline of 1.9% year-over-year, primarily from lower volumes [26] - Refrigerated and Frozen segment net sales were approximately $1.1 billion, down 5.7% from the prior year, significantly impacted by the Hebrew National disruption [27] - The International segment saw a 3% increase in organic net sales, driven by strong performance in global exports [28] Market Data and Key Metrics Changes - The company maintained a strong share performance, with approximately 71% of the portfolio holding or gaining volume share, outperforming peers [11][12] - In the frozen and snack domains, 93% of brands held or gained volume share during the quarter, indicating effective consumer engagement strategies [12][19] - The overall promotional environment remains rational, with Conagra operating with lower promotional volume compared to peers [13][14] Company Strategy and Development Direction - The company is focused on a value over volume strategy, particularly in foodservice, to sustain margins at pre-COVID levels [6][20] - Active portfolio reshaping initiatives were resumed, including the acquisition of Fatty Smoked Meat Sticks and divestiture of the Indian joint venture [7][23] - The company aims to achieve $1 billion in cost savings by the end of fiscal 2025 through productivity initiatives [6][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving fiscal 2025 goals despite challenges in the consumer environment [5][24] - The company anticipates sequential volume recovery each quarter and expects adjusted operating margin improvement in the second half of the fiscal year [35] - Inflationary pressures are expected to be around 3.2% for total cost of goods sold, with specific increases in proteins and sweeteners [36] Other Important Information - The company generated $269 million in net cash flows from operating activities in Q1, with capital expenditures of $133 million and dividends paid of $167 million [33][34] - Net leverage at the end of the quarter was 3.6 times, with a target of approximately 3.2 times by year-end [34] Q&A Session Summary Question: What were the impacts of the Hebrew National disruption on sales? - The disruption resulted in a 47% decline in revenue for the Hebrew National brand, equating to a 60 basis point reduction in total volume and a 90 basis point reduction in total organic net sales [7][8] Question: How is the company addressing inflationary pressures? - The company expects inflation of approximately 3.2% for total cost of goods sold, with specific pressures in proteins and sweeteners, but does not anticipate material impacts on margins or adjusted EPS from recent M&A transactions [36][37]

[First Quarter Fiscal 2025 Performance Overview](index=1&type=section&id=First%20Quarter%20Fiscal%202025%20Performance%20Overview) Conagra Brands reported decreased net sales and adjusted operating margins, but a significant tax benefit boosted reported EPS, leading to reaffirmed full-year guidance [Key Highlights](index=1&type=section&id=Key%20Highlights) Conagra Brands experienced declines in net sales and adjusted operating metrics, yet reported EPS significantly increased due to a tax benefit, with full-year guidance reaffirmed Q1 FY2025 Key Financial Metrics | Metric | Value | Change | | :--- | :--- | :--- | | Reported Net Sales | $2.8 billion | -3.8% | | Organic Net Sales | - | -3.5% | | Reported Operating Margin | 14.4% | -247 bps | | Adjusted Operating Margin | 14.2% | -244 bps | | Reported Diluted EPS | $0.97 | +44.8% | | Adjusted EPS | $0.53 | -19.7% | - The significant increase in reported diluted EPS to **$0.97** was primarily driven by a **$210.4 million** income tax benefit from releasing a valuation allowance[8](index=8&type=chunk) [CEO Perspective](index=1&type=section&id=CEO%20Perspective) CEO Sean Connolly affirmed confidence in the company's strategic execution and underlying business momentum, leading to the reaffirmation of fiscal 2025 guidance despite a challenging quarter - The company is confident in the underlying momentum of its business, leading to the reaffirmation of its **fiscal 2025 guidance** despite a challenging first quarter[4](index=4&type=chunk) [Consolidated Financial Results](index=1&type=section&id=Consolidated%20Financial%20Results) Consolidated financial results show a decline in net sales and gross profit, while reported net income increased due to a tax benefit, despite higher SG&A [Net Sales and Gross Profit](index=1&type=section&id=Net%20Sales%20and%20Gross%20Profit) First-quarter net sales declined 3.8% to $2.8 billion, with gross profit falling 10.2% to $739 million, primarily due to lower sales, inflation, and manufacturing disruptions Q1 FY2025 Net Sales Breakdown | Component | Impact on Net Sales | | :--- | :--- | | Organic Net Sales | -3.5% | | Unfavorable Foreign Exchange | -0.4% | | Favorable M&A | +0.1% | | **Total Net Sales Change** | **-3.8%** | - The **3.5%** decrease in organic net sales was composed of a **1.9%** negative impact from price/mix and a **1.6%** decrease in volume[5](index=5&type=chunk) - Gross profit was negatively impacted by approximately **$11 million** due to temporary manufacturing disruptions in the Hebrew National business[6](index=6&type=chunk) [Operating Expenses and Net Income](index=2&type=section&id=Operating%20Expenses%20and%20Net%20Income) SG&A expenses increased to $338 million, while reported net income rose to $467 million due to a tax benefit, despite adjusted net income declining to $253 million - Adjusted SG&A (excluding A&P) increased **7.3%** to **$277 million**, primarily due to higher incentive compensation compared to the prior year[7](index=7&type=chunk) - Adjusted EBITDA decreased **13.8%** to **$528 million**, driven by the decline in adjusted operating profit[8](index=8&type=chunk) [Segment Performance](index=2&type=section&id=Segment%20Performance) All segments experienced net sales declines, with varying impacts on operating profit due to factors like price/mix, volume, and operational disruptions [Grocery & Snacks](index=2&type=section&id=Grocery%20%26%20Snacks) Grocery & Snacks net sales decreased 1.7% to $1.2 billion, with adjusted operating profit falling 3.8% to $253 million, despite dollar share gains in key categories Grocery & Snacks Q1 FY2025 Performance | Metric | Value | Change | | :--- | :--- | :--- | | Net Sales | $1.2 billion | -1.7% | | Organic Net Sales | - | -1.9% | | Adjusted Operating Profit | $253 million | -3.8% | - The company gained dollar share in snacking and staples categories including microwave popcorn, seeds, pudding, and pickles[9](index=9&type=chunk) [Refrigerated & Frozen](index=2&type=section&id=Refrigerated%20%26%20Frozen) Refrigerated & Frozen net sales decreased 5.7% to $1.1 billion, with adjusted operating profit declining 21.0% to $159 million, significantly impacted by manufacturing disruptions Refrigerated & Frozen Q1 FY2025 Performance | Metric | Value | Change | | :--- | :--- | :--- | | Net Sales | $1.1 billion | -5.7% | | Organic Net Sales | - | -5.7% | | Adjusted Operating Profit | $159 million | -21.0% | - The segment was impacted by approximately **$24 million** in sales and **$10 million** in operating profit due to temporary manufacturing disruptions for Hebrew National[10](index=10&type=chunk)[11](index=11&type=chunk) [International](index=3&type=section&id=International) International net sales decreased 0.4% to $259 million, despite organic growth, while adjusted operating profit declined 15.5% to $36 million due to foreign exchange and inflation International Q1 FY2025 Performance | Metric | Value | Change | | :--- | :--- | :--- | | Net Sales | $259 million | -0.4% | | Organic Net Sales | - | +3.0% | | Adjusted Operating Profit | $36 million | -15.5% | [Foodservice](index=3&type=section&id=Foodservice) Foodservice net sales fell 7.8% to $267 million, primarily due to volume declines, resulting in a 13.8% decrease in adjusted operating profit to $35 million Foodservice Q1 FY2025 Performance | Metric | Value | Change | | :--- | :--- | :--- | | Net Sales | $267 million | -7.8% | | Organic Net Sales | - | -7.9% | | Adjusted Operating Profit | $35 million | -13.8% | - The volume decline of **11.1%** was attributed to the ongoing impact of previously disclosed lost business and continued softness in restaurant traffic[13](index=13&type=chunk) [Cash Flow and Capital Structure](index=5&type=section&id=Cash%20Flow%20and%20Capital%20Structure) Operating cash flow and free cash flow decreased, while net debt was reduced, and the company repurchased shares [Cash Flow and Debt Update](index=5&type=section&id=Cash%20Flow%20and%20Debt%20Update) Net cash from operating activities decreased to $269 million, and free cash flow to $136 million, while net debt was reduced to $8.6 billion, and shares were repurchased Q1 FY2025 Cash Flow and Debt | Metric | Q1 FY2025 | Q1 FY2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $269 million | $444 million | | Capital Expenditures | $133 million | $144 million | | Free Cash Flow | $136 million | $300 million | | Net Debt (End of Quarter) | $8.6 billion | $9.2 billion | | Net Leverage Ratio | 3.60x | N/A | - The company repurchased **$64 million** in shares during the first quarter[7](index=7&type=chunk) [Fiscal 2025 Outlook](index=5&type=section&id=Fiscal%202025%20Outlook) Conagra Brands reaffirmed its full-year fiscal 2025 guidance, with updated expectations for capital expenditures and net inflation [Reaffirmed Guidance](index=5&type=section&id=Reaffirmed%20Guidance) Conagra Brands reaffirmed its full-year fiscal 2025 guidance, including updated capital expenditure expectations of $450 million and net inflation of approximately 3.2% Fiscal 2025 Full-Year Guidance | Metric | Guidance Range | | :--- | :--- | | Organic Net Sales vs. FY24 | (1.5)% to 0.0% | | Adjusted Operating Margin | 15.6% to 15.8% | | Adjusted EPS | $2.60 to $2.65 | | Free Cash Flow Conversion | ~90% | | Net Leverage Ratio | ~3.2x | - The company updated its outlook for capital expenditures to approximately **$450 million** and expects full-year net inflation to be around **3.2%**[18](index=18&type=chunk) [Financial Statements and Reconciliations](index=9&type=section&id=Financial%20Statements%20and%20Reconciliations) Detailed financial statements provide a comprehensive overview of the company's earnings, balance sheet, and cash flow performance for the quarter [Consolidated Statements of Earnings](index=9&type=section&id=Consolidated%20Statements%20of%20Earnings) Consolidated Statements of Earnings show a decrease in net sales to $2.79 billion, while net income attributable to Conagra significantly increased to $466.8 million due to a tax benefit Q1 FY2025 vs Q1 FY2024 Income Statement (in millions) | Line Item | Q1 FY2025 | Q1 FY2024 | | :--- | :--- | :--- | | Net Sales | $2,794.9 | $2,904.0 | | Gross Profit | $739.3 | $823.1 | | Income before income taxes | $328.0 | $418.2 | | Income tax expense (benefit) | $(138.9) | $98.3 | | Net income attributable to Conagra | $466.8 | $319.7 | | Diluted EPS | $0.97 | $0.67 | [Consolidated Balance Sheets](index=10&type=section&id=Consolidated%20Balance%20Sheets) As of August 25, 2024, total assets increased to $21.25 billion, total liabilities rose, and total stockholders' equity grew to $8.70 billion Balance Sheet Summary (in millions) | Account | August 25, 2024 | May 26, 2024 | | :--- | :--- | :--- | | Total Current Assets | $3,416.2 | $3,149.5 | | Total Assets | $21,247.8 | $20,862.3 | | Total Current Liabilities | $3,646.8 | $3,241.8 | | Total Stockholders' Equity | $8,695.6 | $8,511.3 | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities decreased to $268.6 million, while net cash used in investing activities increased, and net cash from financing activities shifted to a positive $70.1 million Q1 Cash Flow Summary (in millions) | Cash Flow Activity | Q1 FY2025 | Q1 FY2024 | | :--- | :--- | :--- | | Net cash from operating activities | $268.6 | $443.5 | | Net cash from investing activities | $(286.3) | $(138.4) | | Net cash from financing activities | $70.1 | $(307.1) | | Net change in cash | $51.0 | $(1.6) |

CHICAGO, Oct. 2, 2024 /PRNewswire/ -- Today Conagra Brands, Inc. (NYSE: CAG) reported results for the first quarter of fiscal year 2025, which ended on August 25, 2024. All comparisons are against the prior-year fiscal period, unless otherwise noted.HighlightsReported net sales decreased 3.8%; organic net sales decreased 3.5%.Reported operating margin was 14.4% representing a 247 basis point decrease. Adjusted operating margin was 14.2% representing a 244 basis point decrease.Reported diluted earnings per s ...

With the rate cuts starting now, wrapping up Q3 and entering the final stretch of 2024, I felt it was a good time to review and update my “top picks” forInterested in more income ideas? Check out Cash Builder Opportunities, where we provide ideas about high-quality and reliable dividend growth ideas. These investments are designed to build growing income for investors. A special focus on investments that are leaders within their industry to provide stability and long-term wealth creation. Along with this, t ...

CHICAGO, Oct. 1, 2024 /PRNewswire/ -- Conagra Brands, Inc. (NYSE: CAG) today announced that its Board of Directors approved a quarterly dividend payment of $0.35 per share of CAG common stock to be paid on November 27, 2024 to stockholders of record as of the close of business on October 31, 2024.  Conagra Brands, Inc. has paid consecutive quarterly dividends since January 1976.About Conagra BrandsConagra Brands, Inc. (NYSE: CAG), is one of North America's leading branded food companies. We combine a 100-ye ...

Providing alpha-generating investment ideas. I am an independent investor managing my family's portfolio, primarily via a Self Managed Super Fund. You can expect my articles to deliver a clearly structured, evidence-based thesis. But first and foremost, I encourage readers to judge me on my performance.I have a generalist approach as I explore, analyze and invest in any sector so long there is perceived alpha potential vs the S&P500. The typical holding period ranges between a few quarters to multiple years ...