CONAGRA BRANDS REPORTS SECOND QUARTER RESULTS

Core Insights - Conagra Brands, Inc. reported a slight decrease in net sales of 0.4% for Q2 FY2025, with organic net sales increasing by 0.3% [1][2] - The company experienced a decrease in operating margins, with reported operating margin at 12.6%, down 138 basis points, and adjusted operating margin at 15.3%, down 57 basis points [1][2] - Diluted earnings per share (EPS) decreased by 1.7% to $0.59, while adjusted EPS decreased by 1.4% to $0.70 [1][2] Financial Performance - Total net sales for the quarter were $3.2 billion, with a breakdown showing a 0.4% decrease from M&A impacts and a 0.3% decrease from foreign exchange, while organic net sales increased by 0.3% [2] - Gross profit remained flat at $847 million, with adjusted gross profit decreasing by 2.3% to $842 million due to inflation in cost of goods sold [2] - Selling, general, and administrative expenses (SG&A) rose by 11.6% to $444 million, primarily due to non-cash charges related to restructuring plans [2][6] Segment Performance - The Grocery & Snacks segment saw a 2.0% increase in net sales to $1.3 billion, driven by a 1.2% increase in organic net sales [2][3] - The Refrigerated & Frozen segment's net sales were flat at $1.3 billion, with a volume increase of 1.9% offset by a 1.9% decrease in price/mix [3][4] - The International segment experienced a 12.9% decrease in net sales to $243 million, impacted by M&A and foreign exchange [4][5] Cash Flow and Debt - For the first half of FY2025, the company generated $754 million in net cash flows from operating activities, down from $855 million in the prior year [7] - Free cash flow decreased by $102 million to $539 million, while dividends paid increased by 3.2% to $335 million [7] - The company ended the quarter with net debt of $8.4 billion, a 6.5% reduction year-over-year, resulting in a net leverage ratio of 3.54x [7] Outlook - Conagra Brands updated its fiscal 2025 guidance, expecting organic net sales to be near the midpoint of (1.5)% to flat compared to FY2024 [8] - The adjusted operating margin is projected to be approximately 14.8%, with adjusted EPS expected to be between $2.45 and $2.50 [8] - The company anticipates inflation to be closer to 4% and an adjusted effective tax rate of approximately 23.0% [8]