Conagra(US:CAG)2022-10-05 16:00Financial Performance - Conagra Brands reported net sales of $2,904.3 million for the first quarter of fiscal 2023, a 9% increase compared to $2,653.3 million in the same period of fiscal 2022[136]. - The Grocery & Snacks segment saw net sales of $1,188.3 million, an 11% increase, despite a 6% decrease in volumes due to inflation-driven pricing actions[136]. - The Refrigerated & Frozen segment reported net sales of $1,207.6 million, a 10% increase, with a 2% decrease in volumes also attributed to inflation-driven pricing[137]. - The Foodservice segment experienced a 15% increase in net sales to $274.9 million, reflecting a recovery in consumer traffic in away-from-home food outlets[136]. - The International segment's net sales decreased by 1% to $233.5 million, with a 7% decrease in volumes and a 2% negative impact from unfavorable foreign exchange rates[137]. - Net sales in the Foodservice segment decreased by 4% in Q1 fiscal 2023 compared to the prior year, with a price/mix increase of 19% driven by inflation[138]. Earnings and Losses - Diluted loss per share for the first quarter of fiscal 2023 was $0.16, compared to diluted earnings per share of $0.49 in the first quarter of fiscal 2022[119]. - The company recognized charges totaling $385.7 million related to goodwill and brand impairments in the Refrigerated & Frozen segment[123]. - The Refrigerated & Frozen segment experienced an operating loss of $216.3 million in Q1 fiscal 2023, including $385.7 million in goodwill impairments[142]. - Diluted loss per share in Q1 fiscal 2023 was $0.16, compared to diluted earnings per share of $0.49 in Q1 fiscal 2022[150]. - Equity method investment earnings increased to $49.2 million in Q1 fiscal 2023 from $20.2 million in Q1 fiscal 2022, reflecting favorable market conditions[149]. Costs and Expenses - Input cost inflation and elevated supply chain costs negatively impacted gross margins, with expectations for continued inflation throughout fiscal 2023[120]. - SG&A expenses totaled $741.6 million in Q1 fiscal 2023, an increase of $431.5 million from Q1 fiscal 2022, impacted by goodwill impairments and restructuring charges[139]. - The company has incurred $180.6 million in charges related to the Conagra Restructuring Plan as of August 28, 2022[125]. Cash Flow and Capital Expenditures - Cash generated from operating activities in Q1 fiscal 2023 was $263.7 million, up from $139.8 million in Q1 fiscal 2022, primarily due to higher gross profits and accelerated receipt of receivables[171]. - The company utilized customer payment term offerings to increase cash flow from operations by approximately $164 million in Q1 fiscal 2023[171]. - Cash used in investing activities totaled $123.4 million in Q1 fiscal 2023, down from $154.9 million in Q1 fiscal 2022, mainly due to capital expenditures[172]. - Cash used in financing activities was $154.4 million in Q1 fiscal 2023, compared to cash generated of $5.5 million in Q1 fiscal 2022, reflecting net short-term borrowing issuances and cash dividends paid[173]. - The company expects capital expenditures of approximately $500 million for fiscal 2023[167]. Debt and Financing - The carrying amount of long-term debt was $8.79 billion as of August 28, 2022, with a fair value estimated at $8.71 billion[180]. - A 1% increase in interest rates would decrease the fair value of the company's fixed-rate debt by approximately $457.2 million[180]. - As of August 28, 2022, the company had $248.0 million outstanding under its commercial paper program, with a maximum borrowing of $398.0 million during Q1 fiscal 2023[154]. - The company repurchased 1.4 million shares for $50.0 million during Q1 fiscal 2023, with a remaining authorization of $1.02 billion[161]. External Factors - The ongoing conflict between Russia and Ukraine has led to increased costs for transportation and raw materials, although it has not materially impacted the company's operations to date[121]. - The company has entered into commodity hedges to manage price risk associated with commodity inputs[179]. - The company may use interest rate swaps to manage the effect of interest rate changes on the fair value of existing debt[180]. Taxation - The effective tax rate for Q1 fiscal 2023 was approximately (22.8)%, significantly impacted by non-deductible goodwill impairments[148].