Conagra (CAG) Q4 Earnings Top Despite Soft Consumption Trends

Core Insights - Conagra Brands, Inc. reported a decline in both revenue and earnings for the fourth quarter of fiscal 2024, with net sales of $2,905.9 million, down 2.3% year over year, missing the Zacks Consensus Estimate of $2,939 million [2][6] - The company experienced a challenging industry environment characterized by a slowdown in consumption, leading to a 1.6% year-over-year decline in adjusted earnings per share (EPS) to 61 cents, although this exceeded the Zacks Consensus Estimate of 56 cents [2][6] - Despite these challenges, strategic investments in brands have led to volume improvements in the Domestic Retail business, particularly in the Frozen and Snacks categories, and management anticipates a gradual easing of difficult industry trends [1][6] Financial Performance - Adjusted gross profit remained flat at $803 million, while adjusted gross margin improved by 62 basis points to 27.6%, driven by higher productivity [3] - Adjusted EBITDA decreased to $577 million from $594.2 million in the previous year [3] - The company generated $2 billion in net cash flows from operating activities for fiscal 2024, with capital expenditures of $388 million and free cash flow of $1.6 billion [6] Segment Performance - Grocery & Snacks segment net sales were $1,174.7 million, down 2.1% year over year, with organic sales also declining by 2.1% due to a 3.6% drop in volumes [4] - Refrigerated & Frozen segment saw net sales decline by 3.8% to $1,173 million, with volumes up 0.9% but a price/mix decrease of 4.7% [4] - International segment net sales increased by 6.4% to $266.8 million, driven by improved organic sales and positive currency effects [5] Guidance - For fiscal 2025, Conagra anticipates organic net sales growth to be between a 1.5% decline and flat, with adjusted operating margin expected between 15.6% and 15.8% [7] - Management projects adjusted EPS in the range of $2.60 to $2.65, compared to $2.67 in fiscal 2024 [7] - The company plans to maintain its dividend rate at $1.40 per share, with a quarterly dividend of 35 cents per share scheduled for payment on August 29, 2024 [6]