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]

Financial Data and Key Metrics Changes - Q3 net sales were approximately $3 billion, reflecting an organic net sales decline of 2% [7][19] - Adjusted gross margin increased by 52 basis points to 28.7%, driven by increased productivity [7][20] - Adjusted operating margin was 16.4%, representing a 49 basis point decrease compared to the prior year quarter [7] - Q3 adjusted EPS was $0.69, a decrease of $0.07 over the prior year quarter [7][20] - Free cash flow for the year to date reached $1.2 billion, with a conversion rate of approximately 124% [17][27] Business Line Data and Key Metrics Changes - Grocery and Snacks segment net sales increased by 3.4% compared to the prior year, driven by improved price mix [22] - Refrigerated and Frozen segment net sales declined by 8.1%, primarily due to increased strategic investments [22] - International segment saw volume and net sales increase over the prior year quarter, driven by strong performance in Mexico and global exports [16] - Foodservice segment net sales decreased due to reduced or exited less profitable business and softness in food away from home traffic [16] Market Data and Key Metrics Changes - Approximately 52% of brands held or gained unit share, a 12% increase compared to the prior year [13] - In the frozen category, Conagra's portfolio outperformed the market on a volume basis [12][14] - Recent four weeks of volume consumption improved to -1.2% year-over-year, a 6.5 percentage point improvement since Q1 [12] Company Strategy and Development Direction - The company continues to prioritize brand building investments across merchandising, innovation, and advertising to drive volumes while sustaining gross margin recovery [10][11] - Innovation remains a key strategic tool, with plans to modernize recipes and expand product offerings [15] - The company is focused on operational efficiency and cost savings to improve margins while maintaining investment in brands [23][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving targets and driving shareholder value based on consumer response to investments and cost savings progress [5] - The company is increasing expectations for adjusted operating margin while reaffirming net sales and adjusted EPS guidance [5][28] - Management noted that the stabilization in the supply chain has enabled further productivity initiatives [8] Other Important Information - The company reduced its net leverage ratio to 3.44 times, reflecting strong free cash flow and debt reduction efforts [17][27] - Adjusted SG&A increased by 7.4%, primarily due to the timing of incentive compensation expense [20] Q&A Session Summary Question: What are the expectations for the adjusted operating margin? - The company has modestly increased its adjusted operating margin expectations to approximately 15.8% for the full year [28] Question: How is the company addressing the challenges in the Foodservice segment? - The company is focusing on reducing or exiting less profitable business while managing price mix increases to offset volume declines [16][22]