Conagra Faces Rare Earnings Miss Amid Manufacturing Disruption

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]