Conagra Q1 Earnings Lag Estimates, Organic Sales Decline Y/Y

Core Insights - Conagra Brands, Inc. (CAG) reported disappointing first-quarter fiscal 2025 results, with both earnings and sales declining year over year and missing Zacks Consensus Estimates [1][2] - Despite challenges, the company made progress on key priorities, including meeting domestic retail volume expectations and expanding market share [1] Financial Performance - Adjusted EPS for the quarter was 53 cents, missing the Zacks Consensus Estimate of 59 cents, representing a negative surprise of -10.2% and a year-over-year decline of 19.7% [2] - Net sales totaled $2,794.9 million, down 3.8% year over year and below the Zacks Consensus Estimate of $2,839 million, with a 0.4% negative impact from currency movements [2] - Organic net sales decreased by 3.5% year over year, driven by a 1.6% drop in volumes and a 1.9% adverse effect from price/mix due to strategic investments [2] Segment Performance - Grocery & Snacks segment reported net sales of $1,182.7 million, down 1.7% year over year, with organic sales falling 1.9% due to a 1.8% drop in volumes [4] - Refrigerated & Frozen segment saw net sales decline 5.7% year over year to $1,086.4 million, with organic sales also down [4] - International segment net sales dropped 0.4% year over year to $259.1 million, while Foodservice sales declined 7.8% year over year to $266.7 million [5] Profitability Metrics - Adjusted gross profit decreased 9.4% year over year to $726 million, with adjusted gross margin contracting by 163 basis points to 26% [3] - Adjusted EBITDA fell 13.8% year over year to $528 million [3] Financial Health - The company ended the quarter with cash and cash equivalents of $128.7 million and long-term debt of $7,485.6 million [6] - Conagra generated $269 million in net cash flows from operating activities, with capital expenditures of $133 million and free cash flow of $136 million [6] Future Outlook - For fiscal 2025, organic net sales growth is expected to range from a 1.5% decline to flat, with adjusted EPS projected between $2.60 and $2.65 [7] - The company anticipates a net leverage ratio of nearly 3.2 and full-year net inflation around 3.2% [7] - Capital expenditures are expected to be approximately $450 million, with interest expenses projected at $415 million [7]