Core Points - The Federal Reserve has cut rates for the third time this year, aligning with expectations, but future decisions may not be as predictable [1] - Fed Chair Jerome Powell has maintained consistency and transparency in his projections, notably forecasting three rate cuts in 2025 [2] - Diverging opinions among Fed members regarding inflation and employment management have led to increased uncertainty, highlighted by three dissenting votes in the latest meeting [3] Summary by Sections Rate Cuts and Projections - The Fed's latest "dot plot" indicates one rate cut is expected next year, but individual forecasts vary significantly among members [4] - Powell's term is set to end in May, with potential changes in leadership that could influence future rate decisions [4] Leadership and Market Reactions - Kevin Hassett, a potential replacement for Powell, has advocated for aggressive rate cuts, raising concerns among investors about inflation management [5] - Investors are prepared to respond to unconventional Fed policies, with "bond vigilantes" historically opposing monetary policies they disagree with [6] Market Stability Concerns - The ongoing tension between investors and the Fed could disrupt the bond market's traditional role as a stable investment [9]

Financial Data and Key Metrics Changes - Net sales for Q3 2025 increased approximately 9.6% to $1.021 billion from $931.5 million in Q3 2024 [12] - Gross profit increased 10% to $247.2 million for Q3 2025 compared to $224.7 million for Q3 2024 [13] - GAAP net income was $19.1 million or $0.44 per diluted share for Q3 2025, compared to net income of $14.1 million or $0.34 per diluted share for Q3 2024 [15] - Adjusted EBITDA for Q3 2025 was $65.1 million compared to $54.5 million for the prior year [15] Business Line Data and Key Metrics Changes - Specialty sales were up 7.7% over the prior year, driven by unique placement growth of 5.3% and reported specialty case growth of 3.2% [8] - Excluding the impact of the Texas Produce Processing and Packaging Program, specialty case growth was 5.4% versus the prior year quarter [8] - Center-of-the-plate pounds growth was 9.6% higher than the prior year when excluding the Texas Commodity Poultry Program attrition [9] Market Data and Key Metrics Changes - Reported inflation was 7.4% in Q3 2025, with 4.4% inflation in the specialty category and 12.3% inflation in the center-of-the-plate category [12] - Unique customer growth was approximately 5.8% year-over-year when excluding the impacts of the Texas poultry attrition and Middle East conflict [9] Company Strategy and Development Direction - The company completed the acquisition of Italco Food Products, enhancing its presence in the Colorado market [10] - The focus remains on leveraging a unique go-to-market and supply chain model to grow in urban and resort markets [10] - The company is cautiously optimistic about the fourth quarter performance, with strong holiday bookings anticipated [74] Management's Comments on Operating Environment and Future Outlook - Management noted that business and demand trends improved sequentially through Q3, with continued momentum into October [6] - The company has not seen a material impact from the government shutdown and remains optimistic about market performance [26][27] - Management highlighted the importance of maintaining a diverse customer base to mitigate risks associated with economic downturns [41] Other Important Information - The company raised its full-year financial guidance, estimating net sales for 2025 to be in the range of $4.085 billion to $4.115 billion [17] - Total liquidity at the end of Q3 was $224.6 million, with net debt approximately $575.2 million [16] Q&A Session Summary Question: Can you expand on the case growth trends and backdrop? - Management noted that July and August were stronger than expected this year, with good results continuing into October [22] Question: What is the potential impact of the government shutdown? - Management indicated that they have not seen a significant impact from past government shutdowns and remain cautiously optimistic [26][27] Question: Can you discuss the updated guidance and any conservatism in it? - Management raised full-year revenue guidance and feels confident about the mid to higher end of the guidance based on October trends [31] Question: How is the acquisition of Italco expected to impact capacity in Colorado? - Management expressed excitement about the acquisition, noting it aligns well with their growth strategy in the Rockies [32] Question: Have you seen accelerating share gains recently? - Management reported that high growth markets are growing low double digits, with mature markets also performing well [38] Question: What are the trends in beef costs and inflation? - Management acknowledged elevated protein prices but noted effective management of the inflationary environment [44] Question: How is the digital penetration progressing? - Management reported over 60% adoption on the specialty side, with digital tools enhancing salesforce efficiency [67] Question: What is the outlook for business-related travel? - Management noted ongoing domestic tourism and strong performance despite complaints about travel [69] Question: What are the operational challenges in key markets? - Management indicated that while challenges exist, they are optimistic about growth opportunities in Texas and other markets [85]

Financial Data and Key Metrics Changes - Net sales for Q3 2025 increased approximately 9.6% to $1.021 billion from $931.5 million in Q3 2024 [11] - Gross profit increased 10% to $247.2 million for Q3 2025 compared to $224.7 million for Q3 2024 [12] - GAAP net income was $19.1 million or $0.44 per diluted share for Q3 2025, compared to net income of $14.1 million or $0.34 per diluted share for Q3 2024 [13] - Adjusted EBITDA for Q3 2025 was $65.1 million compared to $54.5 million for Q3 2024 [13] Business Line Data and Key Metrics Changes - Specialty sales were up 7.7% year-over-year, driven by unique placement growth of 5.3% and reported specialty case growth of 3.2% [6] - Center-of-the-plate pounds were approximately 1.1% lower than the prior year, but excluding the Texas Commodity Poultry Program attrition, growth was 9.6% higher than the prior year [8] Market Data and Key Metrics Changes - Unique customer growth was reported at 2.6% year-over-year, impacted by the Texas commodity poultry attrition and temporary conflict in the Middle East [7] - In the Middle East, the business continued to grow and exceed expectations despite temporary impacts [8] Company Strategy and Development Direction - The company completed the acquisition of Italco Food Products, aiming to leverage its supply chain model to grow in urban and resort markets [9] - The company is focused on maintaining a diverse customer base and is cautiously optimistic about future growth despite economic uncertainties [50] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for Q4 2025, noting strong holiday bookings and positive trends continuing into October [77] - The company has not seen a material impact from government shutdowns historically and remains optimistic about its customer base's resilience [27][28] Other Important Information - The company raised its full-year financial guidance for 2025, estimating net sales between $4.085 billion and $4.115 billion [15][16] - Total liquidity at the end of Q3 was $224.6 million, with net debt approximately $575.2 million [14] Q&A Session Summary Question: Can you expand on the growth trends observed in Q3? - Management noted that July and August were stronger than expected, with good results continuing into September and October [23] Question: What impact do you foresee from the government shutdown? - Management indicated that they have not seen a significant impact from past government shutdowns [27][28] Question: How does the acquisition of Italco fit into your growth strategy? - The acquisition is seen as a strategic move to enhance market presence in the Rockies and leverage existing capabilities [41][66] Question: How is the company managing inflation and beef costs? - Management acknowledged elevated protein prices but emphasized effective supply chain management to navigate inflation [54] Question: What is the outlook for digital penetration and its impact on customer engagement? - Digital tools are enhancing salesforce efficiency, with adoption rates over 60% [72][73]

Core Insights - The Federal Reserve is expected to announce its first interest rate cut since December, which could have significant implications for consumer confidence and corporate spending [2][3] - Concerns have been raised about the Fed's ability to manage inflation and maintain financial stability, reflecting a shift in perception compared to previous administrations [2][4] - Recent political drama surrounding the Fed, including threats from President Trump and changes in governance, may further impact the institution's credibility and market reactions [4] Group 1: Federal Reserve Actions - The anticipated interest rate cut of 0.25 percentage points aims to stimulate various economic activities such as homebuying and hiring [3] - There is uncertainty regarding how other variables, such as tariffs and technology, will influence the effectiveness of the rate cut [3] Group 2: Market Reactions and Sentiment - Leaders express skepticism about the Fed's current management of inflation and labor market shifts, indicating a lack of confidence in its decision-making [2][4] - The potential for the President to claim victory from a rate cut could further complicate the Fed's credibility and market dynamics [4]

Financial Data and Key Metrics Changes - Net sales increased approximately 8.4% to $1,035 million from $954.7 million in the second quarter of 2024 [12] - Gross profit increased 11.1% to $254.3 million for 2025 compared to $229 million for 2024 [14] - GAAP net income was $21.2 million or $0.49 per diluted share for 2025 compared to $15.5 million or $0.37 per diluted share for 2024 [16] - Adjusted EBITDA for 2025 was $65.4 million compared to $56.2 million for the prior year [16] - Adjusted net income was $22.5 million or $0.52 per diluted share for 2025 compared to $17 million or $0.40 per diluted share for the prior year [17] Business Line Data and Key Metrics Changes - Specialty sales were up 8.7% over the prior year, driven by unique customer growth of approximately 3.6% and placement growth of 8.7% [9] - Center of the Plate pounds were approximately 4% lower than the prior year, but excluding the attrition related to the Texas commodity protein program, growth was 5.8% higher [10][36] - Gross profit margins increased approximately 59 basis points to 24.6% [14] Market Data and Key Metrics Changes - Net inflation was 7.2% in the second quarter, with 5% inflation in the specialty category and 10.8% in the center of the plate category [13] - Excluding the impact of attrition from the commodity poultry program, net inflation in the center of the plate category was 4.1% [13] Company Strategy and Development Direction - The company is focused on integrating Hardee's operations in Texas with its legacy operations to drive top-line and bottom-line improvements [8] - The company aims to create a $500 million CW business across Texas through cross-selling and expanding its customer base [71] - The company is exploring tuck-in acquisitions to utilize the capacity of its facilities while continuing to grow organically [77] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the operating environment, noting that customers are generally resilient and the company is gaining market share [21][22] - The company raised its full-year guidance for 2025, estimating net sales in the range of $4 billion to $4.06 billion [19] - Management indicated that the second half of the year is expected to show typical seasonality with a projected 6% revenue growth [68] Other Important Information - The company achieved the Great Place to Work certification for the fourth consecutive year, highlighting its focus on people as its greatest asset [7] - Total liquidity at the end of the second quarter was $260.3 million, comprised of $96.9 million in cash and $163.4 million available under its ABL facility [18] Q&A Session Summary Question: Are there any pockets of weakness or elevated restaurant closures? - Management noted some choppiness but overall expressed satisfaction with market share gains and customer resilience [21][22] Question: Have you seen an uplift in business dining with the return to office policies? - Management indicated a net positive effect on lunch business in major cities but noted it is balanced with local market impacts [24][25] Question: How is summer travel impacting demand? - Management observed a good July, suggesting a rebalancing of tourism and local dining [30][32] Question: What should be expected regarding Hardee's planned attrition? - Management expects continued impacts on reported volume numbers but sees long-term profitability benefits from shedding low-margin programs [36][41] Question: What is the outlook for inflation in the second half? - Management indicated that aggregate inflation is expected to remain moderate, with potential unforeseen impacts from tariffs [47][60] Question: Can you elaborate on gross margin improvements? - Management acknowledged moving parts affecting gross margin but highlighted ongoing initiatives contributing to improvements [52][54] Question: What is the outlook for M&A activity? - Management remains opportunistic regarding M&A, looking for tuck-in acquisitions to complement organic growth [77] Question: Are the 2028 goals contributing to current results? - Management confirmed that several initiatives related to the 2028 goals are contributing positively to current performance [82]

Financial Data and Key Metrics Changes - Net sales increased by approximately 8.4% to $1,035 million from $954.7 million in Q2 2024 [10] - Gross profit increased by 11.1% to $254.3 million, with gross profit margins rising approximately 59 basis points to 24.6% [12] - GAAP net income was $21.2 million or $0.49 per diluted share, compared to $15.5 million or $0.37 per diluted share in Q2 2024 [13] - Adjusted EBITDA was $65.4 million for Q2 2025, up from $56.2 million in the prior year [14] Business Line Data and Key Metrics Changes - Specialty sales grew by 8.7% year-over-year, driven by unique customer growth of approximately 3.6% and placement growth of 8.7% [7] - Center of the Plate pounds were approximately 4% lower than the prior year, but excluding the impact of the Texas commodity protein program, growth was 5.8% [8][33] - Adjusted operating expenses increased by 9.3% year-over-year, representing 18.25% of net sales for Q2 2025 [13] Market Data and Key Metrics Changes - Net inflation was reported at 7.2%, with 5% inflation in the specialty category and 10.8% in the center of the plate category [11] - Excluding the impact of attrition from the commodity poultry program, net inflation in the center of the plate category was 4.1% [11] Company Strategy and Development Direction - The company is focused on integrating Hardee's operations in Texas with its legacy operations to drive top-line and bottom-line improvements [6] - The strategy includes shedding non-core programs to enhance distribution capacity and profitability [7][35] - The company aims to grow its business in Texas to over $500 million through cross-selling and expanding its customer base [70] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the resilience of their customer base and the ability to gain market share despite industry challenges [19][20] - The company raised its full-year guidance for 2025, estimating net sales between $4 billion and $4.06 billion [17] - Management noted that the second half of the year is expected to show typical seasonality, with a projected 6% revenue growth [66] Other Important Information - The company achieved the Great Place to Work certification for the fourth consecutive year, highlighting its focus on employee culture [6] - Total liquidity at the end of Q2 was $260.3 million, including $96.9 million in cash [14] Q&A Session Summary Question: Are there any pockets of weakness or elevated restaurant closures? - Management noted some choppiness but overall expressed satisfaction with market share gains and customer resilience [19] Question: Have you seen an uplift in business dining with return to office policies? - Management indicated a net positive impact on lunch business in major cities but noted a balance with local markets [21] Question: How is summer travel impacting demand? - Management observed a good July, suggesting a rebalancing of tourism and restaurant spending [28][30] Question: What is the expected impact of Hardee's planned attrition on reported case growth? - Management expects continued impacts from the attrition, particularly in high-volume, low-margin programs [35][39] Question: What is the outlook for inflation in the second half? - Management indicated moderate inflation expectations, with potential unforeseen impacts from tariffs [46] Question: Can you elaborate on gross margin performance? - Management acknowledged moving parts affecting gross margin but highlighted improvements from various operational initiatives [52] Question: What is the outlook for M&A activity? - Management remains opportunistic regarding M&A, with ongoing evaluations of potential tuck-in acquisitions [72][75] Question: Are the 2028 goals contributing to current results? - Management confirmed that several initiatives related to the 2028 goals are contributing positively to current performance [80]

Financial Data and Key Metrics Changes - Conagra reported organic net sales of $3.2 billion in Q2, reflecting a 30 basis point increase year-over-year, driven by volume growth in the domestic retail business [19] - Adjusted gross margin was 26.4%, and adjusted operating margin was 15.3%, down 52 and 57 basis points respectively compared to the prior year, but up 110 basis points from Q1 [20] - Adjusted earnings per share (EPS) were $0.70, a decrease of $0.01 from Q2 of the previous year [20] Business Line Data and Key Metrics Changes - Grocery and Snacks segment delivered net sales of $1.3 billion, representing 1.2% organic growth driven by increased volumes and favorable price mix [21] - Refrigerated and Frozen segment also reported $1.3 billion in net sales, flat compared to the prior year, with increased volumes offset by negative price mix [21] - International segment saw organic net sales decline by 0.7%, driven by a 2.4% volume decline, partially offset by a 1.7% increase in price mix [21] Market Data and Key Metrics Changes - Conagra's portfolio held or gained volume share in 67% of its categories in Q2, marking the fifth consecutive quarter of share gains [8] - In the frozen and snacks domains, 87% of the portfolio held or gained volume share in Q2 [9] - The company outperformed its closest peer by 24 percentage points in share performance [10] Company Strategy and Development Direction - The company plans to maintain its strategy focused on brand building and innovation, despite economic pressures and inflation [5][17] - Conagra aims to prioritize top-line momentum and consumer loyalty through continued investments in brand building [17] - Limited pricing actions will be implemented to offset rising cocoa and sugar prices while maintaining a disciplined approach to brand management [17][29] Management's Comments on Operating Environment and Future Outlook - Management noted that inflation and unfavorable foreign exchange rates will pressure profitability in the second half of the fiscal year [5][15] - The expectation for inflation relief has been pushed to fiscal 2026, with ongoing economic pressures shaping consumer purchasing decisions [5][15] - The company updated its guidance for fiscal 2025, expecting organic net sales growth near the midpoint of a range of down 1.5% to flat [18][29] Other Important Information - Conagra generated $754 million in net cash flows from operating activities in the first half of fiscal 2025, down from the prior year [26] - The company has repaid over $600 million of debt in the last twelve months, aiming for a long-term net leverage goal of three times by the end of fiscal 2026 [28][31] - The adjusted tax rate is expected to be approximately 23%, down from 23.5% based on year-to-date favorability [31] Q&A Session Summary Question: What are the expectations for organic net sales growth? - The company now expects full-year organic net sales growth to be near the midpoint of the guidance range of minus 1.5% to flat growth versus fiscal 2024 [29] Question: How is the company addressing inflation and foreign exchange impacts? - Limited pricing actions will be taken to offset some inflation in cocoa and sugar, while the company remains committed to brand investments [17][29] Question: What is the outlook for free cash flow conversion? - The company expects full-year free cash flow conversion to be greater than 100%, with stronger performance anticipated in the second half of the year [28][31]