Conagra(CAG) - 2026 Q1 - Quarterly Report

PART I ITEM 1. FINANCIAL STATEMENTS Presents Conagra Brands' unaudited Q1 FY26 and Q1 FY25 consolidated financial statements and detailed notes Unaudited Condensed Consolidated Statements of Earnings | Metric (in millions) | Thirteen Weeks Ended August 24, 2025 | Thirteen Weeks Ended August 25, 2024 | Change (%) | | :------------------- | :----------------------------------- | :----------------------------------- | :--------- | | Net sales | $2,632.6 | $2,794.9 | (5.8%) | | Gross profit | $640.6 | $739.3 | (13.4%) | | Operating profit | $347.4 | $401.6 | (13.5%) | | Net income | $164.5 | $466.9 | (64.8%) | | Diluted EPS | $0.34 | $0.97 | (64.9%) | Unaudited Condensed Consolidated Statements of Comprehensive Income This section details Conagra Brands' comprehensive income, including net income and other comprehensive income components | Metric (in millions) | Thirteen Weeks Ended August 24, 2025 | Thirteen Weeks Ended August 25, 2024 | Change (%) | | :------------------- | :----------------------------------- | :----------------------------------- | :--------- | | Net income | $164.5 | $466.9 | (64.8%) | | Comprehensive income | $164.9 | $524.3 | (68.6%) | - Unrealized currency translation gains shifted from a loss of $19.3 million in Q1 FY25 to a gain of $1.1 million in Q1 FY26[11] Unaudited Condensed Consolidated Balance Sheets This section presents Conagra Brands' financial position, including assets, liabilities, and equity, as of August 24, 2025, and May 25, 2025 | Metric (in millions) | August 24, 2025 | May 25, 2025 | Change (%) | | :------------------- | :-------------- | :----------- | :--------- | | Cash and cash equivalents | $698.1 | $68.0 | 926.6% | | Inventories | $2,258.2 | $2,048.3 | 10.2% | | Total current assets | $3,840.1 | $3,071.0 | 24.9% | | Total assets | $21,172.8 | $20,933.9 | 1.1% | | Total current liabilities | $3,629.6 | $4,317.0 | (15.9%) | | Senior long-term debt | $7,222.6 | $6,234.1 | 15.9% | | Total liabilities | $12,257.0 | $12,001.2 | 2.1% | | Total stockholders' equity | $8,915.8 | $8,932.7 | (0.2%) | Unaudited Condensed Consolidated Statements of Cash Flows This section outlines Conagra Brands' cash inflows and outflows from operating, investing, and financing activities for Q1 FY26 and Q1 FY25 | Metric (in millions) | Thirteen Weeks Ended August 24, 2025 | Thirteen Weeks Ended August 25, 2024 | Change (%) | | :------------------- | :----------------------------------- | :----------------------------------- | :--------- | | Net cash flows from operating activities | $120.6 | $268.6 | (55.1%) | | Net cash flows from investing activities | $502.0 | $(286.3) | 275.3% | | Net cash flows from financing activities | $7.2 | $70.1 | (89.7%) | | Net change in cash and cash equivalents | $630.1 | $51.0 | 1135.5% | Notes to Unaudited Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the unaudited condensed consolidated financial statements 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Company's financial statements are prepared in accordance with U.S. GAAP, with no significant changes to accounting policies from the prior fiscal year - No significant changes to accounting policies from the prior fiscal year were reported[18] - The FASB issued ASU 2023-09 (Improvements to Income Tax Disclosures), ASU 2024-03 (Disaggregation of Income Statement Expenses), and ASU 2025-06 (Intangibles – Goodwill and Other – Internal-Use Software), which the Company is analyzing for impact and plans to adopt in fiscal 2026, 2027, and 2028, respectively[19][20][21] 2. ACQUISITIONS In Q1 FY25, Conagra Brands completed two acquisitions: a contract manufacturer and Sweetwood Smoke & Co., resulting in significant goodwill allocations - In July 2024, Conagra acquired the manufacturing operations of an existing contract manufacturer for $51.2 million, with approximately $46.3 million classified as goodwill[22] - In August 2024, the Company acquired Sweetwood Smoke & Co. for $179.4 million, allocating approximately $130.0 million to goodwill and $61.3 million to intangible assets[23] - Goodwill from these acquisitions is primarily attributable to anticipated synergies, future growth opportunities, and other non-separately recognized intangibles, with results included in the Grocery & Snacks segment[24][25] 3. DIVESTITURES AND ASSETS HELD FOR SALE Conagra Brands completed the sale of its Chef Boyardee® business and frozen fish business in Q1 FY26, recognizing a net gain on divestitures - Completed the sale of Chef Boyardee® business for net proceeds of $601.2 million, recognizing a gain of $42.8 million[26] - Completed the sale of the frozen fish business (Van De Kamp's® and Mrs. Paul's® brands) for net proceeds of $42.4 million, recognizing a loss of $0.4 million[28] - In Q1 FY25, sold 51.8% ownership in Agro Tech Foods Limited (ATFL) for $76.8 million, recognizing a loss of $2.3 million and releasing $79.8 million in currency translation losses[30] 4. RESTRUCTURING ACTIVITIES Conagra Brands continued its restructuring plan to improve SG&A effectiveness and supply chain optimization, recognizing $4.4 million in charges during Q1 FY26 - The Conagra Restructuring Plan, aimed at improving SG&A effectiveness and supply chain optimization, has approved $349.0 million in costs since fiscal 2019, with $325.6 million recognized cumulatively[34] | Expense Category (in millions) | Q1 Fiscal 2026 Charges | | :----------------------------- | :--------------------- | | Total cost of goods sold | $0.7 | | Total SG&A | $3.7 | | Total | $4.4 | - As of August 24, 2025, the balance of liabilities recorded for the restructuring plan was $13.8 million[36] 5. DEBT AND REVOLVING CREDIT FACILITY In Q1 FY26, Conagra issued $1.0 billion in senior unsecured notes and prepaid $500 million in term loans, reducing net interest expense - Issued $500.0 million of 5.00% senior unsecured notes due August 1, 2030, and $500.0 million of 5.75% senior unsecured notes due August 1, 2035[37] - Prepaid $500.0 million in aggregate principal amount of unsecured term loans using divestiture proceeds and new note issuances[38][39] | Metric (in millions) | Thirteen Weeks Ended August 24, 2025 | Thirteen Weeks Ended August 25, 2024 | Change (%) | | :------------------- | :----------------------------------- | :----------------------------------- | :--------- | | Net interest expense | $93.8 | $105.8 | (11.4%) | 6. FINANCING ARRANGEMENTS