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Conagra Brands Reports First Quarter Results

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Conagra Brands (NYSE: CAG) reported Q1 FY2025 results with net sales decreasing 3.8% to $2.8 billion and organic net sales declining 3.5%. The company's reported operating margin fell 247 basis points to 14.4%, while adjusted EPS decreased 19.7% to $0.53. Despite challenges, Conagra reaffirmed its fiscal 2025 guidance, projecting organic net sales between -1.5% to flat and adjusted EPS between $2.60 and $2.65.

Key factors affecting Q1 performance included:

  • Negative price/mix impact of 1.9%
  • Volume decrease of 1.6%
  • $27 million impact from temporary manufacturing disruptions in Hebrew National
  • Gross profit decrease of 10.2% to $739 million
  • SG&A increase of 1.1% to $338 million

The company maintained its market share in several categories and continued its portfolio reshaping initiatives.

Conagra Brands (NYSE: CAG) ha riportato i risultati del primo trimestre dell'anno fiscale 2025, con le vendite nette che sono diminuite del 3,8% a 2,8 miliardi di dollari e le vendite nette organiche in calo del 3,5%. Il margine operativo riportato è sceso di 247 punti base al 14,4%, mentre l'EPS rettificato è diminuito del 19,7% a 0,53 dollari. Nonostante le difficoltà, Conagra ha ribadito le previsioni per l'anno fiscale 2025, prevedendo vendite nette organiche tra -1,5% e stabile e EPS rettificato tra 2,60 e 2,65 dollari.

I fattori chiave che hanno influenzato la performance del Q1 includono:

  • Impatto negativo di prezzo/mix dell'1,9%
  • Riduzione del volume dell'1,6%
  • Impatto di 27 milioni di dollari a causa di interruzioni temporanee nella produzione in Hebrew National
  • Diminuzione dell'utile lordo del 10,2% a 739 milioni di dollari
  • Aumento delle spese SG&A dell'1,1% a 338 milioni di dollari

La società ha mantenuto la sua quota di mercato in diverse categorie e ha proseguito le sue iniziative di rimodellamento del portafoglio.

Conagra Brands (NYSE: CAG) reportó los resultados del primer trimestre del año fiscal 2025, con una disminución del 3.8% en las ventas netas a 2.8 mil millones de dólares y una caída del 3.5% en las ventas netas orgánicas. El margen operativo reportado cayó 247 puntos básicos al 14.4%, mientras que el EPS ajustado disminuyó un 19.7% a 0.53 dólares. A pesar de los desafíos, Conagra reafirmó su guía fiscal para 2025, proyectando ventas netas orgánicas entre -1.5% y estables y EPS ajustados entre 2.60 y 2.65 dólares.

Los factores clave que afectaron el rendimiento del Q1 incluyeron:

  • Impacto negativo de precio/mix del 1.9%
  • Disminución del volumen del 1.6%
  • Impacto de 27 millones de dólares por interrupciones temporales en la producción de Hebrew National
  • Disminución del beneficio bruto del 10.2% a 739 millones de dólares
  • Aumento de SG&A del 1.1% a 338 millones de dólares

La empresa mantuvo su participación en el mercado en varias categorías y continuó sus iniciativas de reestructuración de portafolio.

Conagra Brands (NYSE: CAG)는 2025 회계연도 1분기 결과를 보고했으며, 총 매출이 3.8% 감소하여 28억 달러에 이르고 유기적 순매출이 3.5% 감소했습니다. 보고된 운영 마진은 247BP 감소하여 14.4%로 감소했으며, 조정된 EPS는 19.7% 감소하여 0.53달러에 이릅니다. 어려움에도 불구하고 Conagra는 2025 회계연도 가이던스를 재확인하며 유기적 순매출이 -1.5%에서 보합으로 예상되며, 조정된 EPS는 2.60달러에서 2.65달러로 예상했습니다.

1분기 성과에 영향을 미친 주요 요인은 다음과 같습니다:

  • -가격/혼합의 부정적 영향은 1.9%
  • 1.6%의 물량 감소
  • Hebrew National의 일시적인 제조 중단으로 인한 2700만 달러의 영향
  • 총 이익이 10.2% 감소하여 7억 3900만 달러로 줄어듦
  • SG&A가 1.1% 증가하여 3억 3800만 달러

회사는 여러 카테고리에서 시장 점유율을 유지했으며, 포트폴리오 재구성을 계속 진행하고 있습니다.

Conagra Brands (NYSE: CAG) a publié les résultats du premier trimestre de l'exercice fiscal 2025, avec une diminution de 3,8% des ventes nettes à 2,8 milliards de dollars et une baisse de 3,5% des ventes nettes organiques. La marge opérationnelle reportée a chuté de 247 points de base à 14,4%, tandis que l'EPS ajusté a diminué de 19,7% pour atteindre 0,53 dollar. Malgré les difficultés, Conagra a réaffirmé ses prévisions pour l'exercice 2025, projetant des ventes nettes organiques entre -1,5% et stables et un EPS ajusté compris entre 2,60 et 2,65 dollars.

Les facteurs clés ayant affecté la performance du Q1 incluent :

  • Un impact négatif du prix/mélange de 1,9%
  • Une diminution du volume de 1,6%
  • Un impact de 27 millions de dollars en raison de perturbations temporaires de la production chez Hebrew National
  • Une diminution du bénéfice brut de 10,2% à 739 millions de dollars
  • Une augmentation des SG&A de 1,1% à 338 millions de dollars

L'entreprise a maintenu sa part de marché dans plusieurs catégories et a continué ses initiatives de restructuration de portefeuille.

Conagra Brands (NYSE: CAG) hat Ergebnisse für das 1. Quartal des Geschäftsjahres 2025 gemeldet, mit einem Rückgang des Nettoumsatzes um 3,8% auf 2,8 Milliarden Dollar und einem Rückgang des organischen Nettoumsatzes um 3,5%. Die gemeldete operative Marge fiel um 247 Basispunkte auf 14,4%, während der bereinigte EPS um 19,7% auf 0,53 Dollar zurückging. Trotz der Herausforderungen hat Conagra seine Prognosen für das Geschäftsjahr 2025 bekräftigt, mit einer Prognose für organischen Nettoumsatz zwischen -1,5% und stabil sowie bereinigtem EPS zwischen 2,60 und 2,65 Dollar.

Wichtige Faktoren, die die Leistung im 1. Quartal beeinflussten, waren:

  • Negativer Preis/Mix-Einfluss von 1,9%
  • Volumenrückgang von 1,6%
  • Einfluss von 27 Millionen Dollar durch vorübergehende Störungen in der Produktion bei Hebrew National
  • Rückgang des Bruttoergebnisses um 10,2% auf 739 Millionen Dollar
  • SG&A-Anstieg um 1,1% auf 338 Millionen Dollar

Das Unternehmen hielt seinen Marktanteil in mehreren Kategorien und setzte seine Initiativen zur Portfolio-Neugestaltung fort.

Positive
  • Reaffirmed fiscal 2025 guidance, showing confidence in business momentum
  • Gained dollar share in snacking, staples, frozen single-serve meals, and frozen breakfast categories
  • Reduced net debt by 5.8% compared to prior year period
  • Increased dividends paid by 6.4% to $167 million
  • Strong performance in Global Exports business
Negative
  • Net sales decreased 3.8% to $2.8 billion
  • Organic net sales declined 3.5%
  • Reported operating margin fell 247 basis points to 14.4%
  • Adjusted EPS decreased 19.7% to $0.53
  • Gross profit decreased 10.2% to $739 million
  • $27 million impact from temporary manufacturing disruptions in Hebrew National business
  • Free cash flow decreased by $164 million to $136 million

Insights

Conagra Brands' Q1 FY2025 results show mixed performance. The 3.8% decrease in net sales to $2.8 billion and 3.5% decline in organic net sales indicate challenges in the current market environment. The company's adjusted EPS decreased by 19.7% to $0.53, primarily due to lower gross profit and higher SG&A expenses.

However, there are some positive aspects:

  • Market share gains across the portfolio
  • Progress in portfolio reshaping initiatives
  • Reaffirmation of FY2025 guidance, suggesting confidence in future performance

The temporary manufacturing disruptions in the Hebrew National business had a significant impact, reducing results by approximately $27 million. This one-time event should be closely monitored for resolution.

The company's focus on productivity improvements and strategic investments is notable, but these are currently being offset by inflation and lower sales. The 5.8% reduction in net debt is positive for the company's financial health.

Conagra's Q1 results reflect broader industry trends and consumer behavior shifts. The 1.6% decrease in volume suggests ongoing challenges in maintaining consumer demand. However, the company's ability to gain market share in key categories like microwave popcorn, seeds and frozen meals indicates effective product positioning and marketing strategies.

The 7.8% decrease in Foodservice segment sales, driven by an 11.1% volume decline, highlights the continued softness in restaurant traffic. This trend warrants attention as it may signal broader economic pressures affecting out-of-home dining.

Conagra's strategic investments and price/mix adjustments demonstrate a proactive approach to navigating the challenging environment. The company's ability to maintain its full-year guidance despite Q1 headwinds suggests confidence in its strategy and potential for recovery in subsequent quarters.

Investors should monitor the company's performance in inflation management and its ability to balance pricing strategies with volume retention in the coming quarters.

CHICAGO, Oct. 2, 2024 /PRNewswire/ -- Today Conagra Brands, Inc. (NYSE: CAG) reported results for the first quarter of fiscal year 2025, which ended on August 25, 2024. All comparisons are against the prior-year fiscal period, unless otherwise noted.

Highlights

  • Reported net sales decreased 3.8%; organic net sales decreased 3.5%.
  • Reported operating margin was 14.4% representing a 247 basis point decrease. Adjusted operating margin was 14.2% representing a 244 basis point decrease.
  • Reported diluted earnings per share (EPS) was $0.97, a 44.8% increase. Adjusted EPS was $0.53, a 19.7% decrease.
  • The company is reaffirming its fiscal 2025 guidance reflecting:
    • Organic net sales of (1.5)% to flat compared to fiscal 2024
    • Adjusted operating margin between 15.6% and 15.8%
    • Adjusted EPS between $2.60 and $2.65
    • Free cash flow conversion of approximately 90%

CEO Perspective
Sean Connolly, president and chief executive officer of Conagra Brands, commented, "Our team executed well to deliver on key priorities across the business during the first quarter in what continued to be a challenging environment. Our domestic retail volume progressed in-line with expectations, we increased share across the portfolio and advanced our portfolio reshaping initiatives. Overall, we are reaffirming our guidance for fiscal 2025, reflecting confidence in the underlying momentum of our business."

Total Company First Quarter Results
In the quarter, net sales decreased 3.8% to $2.8 billion reflecting:

  • a 3.5% decrease in organic net sales,
  • a 0.4% decrease from the unfavorable impact of foreign exchange; and
  • a 0.1% increase from the favorable impact of M&A

The 3.5% decrease in organic net sales was driven by a 1.9% negative impact from price/mix, largely driven by the company's strategic investments in the quarter, and a 1.6% decrease in volume. Additionally, the company estimates that results in the quarter were impacted by approximately $27 million due to temporary manufacturing disruptions in the Hebrew National business during the key grilling season.

Gross profit decreased 10.2% to $739 million in the quarter, and adjusted gross profit decreased 9.4% to $726 million. First quarter gross profit decreased as higher productivity was more than offset by the negative impacts of lower organic net sales, cost of goods sold inflation, and unfavorable operating leverage. Additionally, gross profit was negatively impacted by approximately $11 million due to the temporary manufacturing disruptions in the Hebrew National business. Gross margin decreased 189 basis points to 26.5% in the quarter, and adjusted gross margin decreased 163 basis points to 26.0%.

Selling, general, and administrative expense (SG&A), which includes advertising and promotional expense (A&P), increased 1.1% to $338 million in the quarter driven primarily by higher incentive compensation compared to the prior year quarter, partially offset by a 14.0% decrease in A&P. Adjusted SG&A, which excludes A&P, increased 7.3% to $277 million primarily driven by higher incentive compensation compared to the prior year quarter.

Net interest expense was $106 million in the quarter, a 0.1% decrease compared to the prior-year period due to a reduction in total debt.

The average diluted share count in the quarter was 480 million shares reflecting $64 million in share repurchases during the first quarter.

In the quarter, net income attributable to Conagra Brands increased 46.0% to $467 million, or $0.97 per diluted share compared to $320 million, or $0.67 per diluted share in the prior year quarter driven primarily by releasing an allowance resulting in a $210.4 million income tax benefit in the first quarter of fiscal 2025. Adjusted net income attributable to Conagra Brands decreased 20.0% to $253 million, or $0.53 per diluted share, primarily as a result of the decrease in gross profit and increase in SG&A.

Adjusted EBITDA, which includes equity method investment earnings and pension and postretirement non-service expense (income), decreased 13.8% to $528 million in the quarter, primarily driven by the decrease in adjusted operating profit.

Grocery & Snacks Segment First Quarter Results
Net sales for the Grocery & Snacks segment decreased 1.7% to $1.2 billion in the quarter, reflecting:

  • a 1.9% decrease in organic net sales; and
  • a 0.2% increase from the favorable impact of M&A.

The decrease in organic net sales was driven by a price/mix decrease of 0.1%, partially attributable to an increase in strategic investments, and a volume decrease of 1.8%. The company gained dollar share in snacking and staples categories including microwave popcorn, seeds, pudding, and pickles.

Operating profit for the segment decreased 3.7% to $249 million in the quarter and adjusted operating profit decreased 3.8% to $253 million as higher productivity, and lower A&P and SG&A were more than offset by the negative impacts of cost of goods sold inflation, lower organic net sales, and unfavorable operating leverage.

Refrigerated & Frozen Segment First Quarter Results
Reported and organic net sales for the Refrigerated & Frozen segment decreased 5.7% to $1.1 billion in the quarter as price/mix decreased 5.8%, primarily attributable to an increase in strategic investments, and volume increased 0.1%. Additionally, the company estimates that results in the quarter were impacted by approximately $24 million due to temporary manufacturing disruptions in the Hebrew National business during the key grilling season. The company gained dollar share in select categories such as frozen single-serve meals, frozen multi-serve meals, and frozen breakfast.

Operating profit for the segment decreased 11.6% to $176 million in the quarter. Adjusted operating profit decreased 21.0% to $159 million as higher productivity and lower A&P and SG&A were more than offset by the negative impacts of lower organic net sales, cost of goods sold inflation, and unfavorable operating leverage. Additionally, the company estimates that operating profit was negatively impacted by approximately $10 million due to the temporary manufacturing disruptions in the Hebrew National business.

International Segment First Quarter Results
Net sales for the International segment decreased 0.4% to $259 million in the quarter reflecting:

  • a 3.4% decrease from the unfavorable impact of foreign exchange; and
  • a 3.0% increase in organic net sales.

On an organic net sales basis, price/mix increased 2.4% and volume increased 0.6%, primarily driven by a strong performance in the company's Global Exports business.

Operating profit for the segment increased 42.1% to $34 million in the quarter primarily due to the wrap of certain non-cash restructuring charges in the prior year period. Adjusted operating profit decreased 15.5% to $36 million as the benefits from higher organic net sales and productivity were more than offset by the negative impacts of unfavorable foreign exchange and cost of goods sold inflation.

Foodservice Segment First Quarter Results
Net sales for the Foodservice segment decreased 7.8% to $267 million in the quarter, reflecting:

  • a 7.9% decrease in organic net sales; and
  • a 0.1% increase from the favorable impact of M&A.

Organic net sales were driven by a price/mix increase of 3.2% and volume decrease of 11.1% due to the ongoing impact of previously disclosed lost business and ongoing softness in restaurant traffic.

Operating profit for the segment decreased 20.4% to $35 million. Adjusted operating profit decreased 13.8% to $35 million in the quarter as higher productivity was more than offset by the negative impacts of lower organic net sales, cost of goods sold inflation, unfavorable operating leverage, and one-time costs related to capital investment projects.

Additionally, the company estimates that organic net sales in the quarter were impacted by approximately $3 million and gross profit was impacted by approximately $1 million due to the temporary manufacturing disruptions in the Hebrew National business.

Other First Quarter Items
Corporate expenses increased 151.2% to $92 million in the quarter and adjusted corporate expense increased 34.1% to $85 million in the quarter driven primarily by higher incentive compensation compared to the prior year quarter.

The company incurred pension and post-retirement non-service income of $3.1 million in the quarter compared to $0.3 million of expense in the prior-year quarter, due primarily to lower interest costs.

In the quarter, equity method investment earnings decreased 18.1% to $29 million as results from the company's joint venture, Ardent Mills, reflected slightly lower volume trends in the milling industry.

In the quarter, the effective tax rate was (42.4)% compared to 23.5% in the prior-year quarter. The effective tax rate in the first quarter reflected a $210.4 million deferred tax benefit that was related to the release of valuation allowances booked against certain deferred tax assets. The adjusted effective tax rate was 22.1% compared to 23.6% in the prior-year quarter.

In the quarter, the company paid a dividend of $0.35 per share.

Cash Flow and Debt Update
For the first quarter, the company generated $269 million in net cash flows from operating activities compared to $444 million in the prior year period, driven primarily by lower operating profit and anticipated changes in working capital. Capital expenditures were $133 million compared to $144 million in the prior year period. Additionally, our free cash flow decreased from the prior year quarter by $164 million to $136 million. Dividends paid increased 6.4% to $167 million.

The company ended the quarter with net debt of $8.6 billion, representing a 5.8% reduction in net debt versus the prior year period, resulting in a 3.60x net leverage ratio at the end of the quarter.

Outlook
The company is reaffirming its fiscal 2025 guidance reflecting:

  • Organic net sales of (1.5)% to flat compared to fiscal 2024
  • Adjusted operating margin between 15.6% and 15.8%
  • Adjusted EPS between $2.60 and $2.65
  • Free cash flow conversion of approximately 90%
  • Net leverage ratio of approximately 3.2x

Additionally, the company now expects capital expenditures of approximately $450M and full year net inflation (input cost inflation including the impacts of hedging and other sourcing benefits) to be roughly 3.2%. Other guidance metrics including interest expense, the adjusted effective tax rate, Ardent Mills' contribution, and pension income that were provided in our fourth quarter fiscal 2024 earnings release remain unchanged.

The inability to predict the amount and timing of the impacts of foreign exchange, acquisitions, divestitures, and other items impacting comparability makes a detailed reconciliation of forward-looking non-GAAP financial measures impracticable. Please see the end of this release for more information.

Items Affecting Comparability of EPS
The following are included in the $0.97 EPS for the first quarter of fiscal 2025 (EPS amounts are rounded and after tax). Please see the reconciliation schedules at the end of this release for additional details.

  • Approximately $0.01 per diluted share of net expense related to restructuring plans
  • Approximately $0.03 per diluted share of net benefit related to fire-related insurance recoveries
  • Approximately $0.01 per diluted share of net expense related to legal matters
  • Approximately $0.44 per diluted share of net benefit related to a valuation allowance adjustment
  • Approximately $0.01 per diluted share of net expense related to rounding

The following are included in the $0.67 EPS for the first quarter of fiscal 2024 (EPS amounts are rounded and after tax). Please see the reconciliation schedules at the end of this release for additional details.

  • Approximately $0.04 per diluted share of net expense due to restructuring plans
  • Approximately $0.04 per diluted share of net benefit related to corporate hedging derivative gains
  • Approximately $0.01 per diluted share of net benefit related to rounding

Please note that certain prior year amounts have been reclassified to conform with current year presentation.

Discussion of Results and Outlook
Conagra Brands will issue pre-recorded remarks prior to hosting a live Q&A conference call and webcast at 9:30 a.m. Eastern time today to discuss the company's results and outlook. The live audio webcast Q&A conference call, pre-recorded remarks, transcript of the pre-recorded remarks, and presentation slides will be available on www.conagrabrands.com/investor-relations under Events & Presentations. The Q&A conference call may be accessed by dialing 1‑877‑883‑0383 for participants in the U.S. and 1‑412‑902‑6506 for all other participants and using passcode 7095043. Please dial in 10 to 15 minutes prior to the call start time. A replay of the Q&A conference call will be available on www.conagrabrands.com/investor-relations under Events & Presentations until October 2, 2025.

About Conagra Brands
Conagra Brands, Inc. (NYSE: CAG), is one of North America's leading branded food companies. We combine a 100-year history of making quality food with agility and a relentless focus on collaboration and innovation. The company's portfolio is continuously evolving to satisfy consumers' ever-changing food preferences. Conagra's brands include Birds Eye®, Duncan Hines®, Healthy Choice®, Marie Callender's®, Reddi-wip®, Slim Jim®, Angie's® BOOMCHICKAPOP®, and many more. As a corporate citizen, we aim to do what's right for our business, our employees, our communities and the world. Headquartered in Chicago, Conagra Brands generated fiscal 2024 net sales of more than $12 billion. For more information, visit www.conagrabrands.com.

Note on Forward-Looking Statements
This document contains forward-looking statements within the meaning of the federal securities laws. Examples of forward-looking statements include statements regarding the company's expected future financial performance or position, results of operations, business strategy, plans and objectives of management for future operations, and other statements that are not historical facts. You can identify forward-looking statements by their use of forward-looking words, such as "may", "will", "anticipate", "expect", "believe", "plan", "should", or comparable terms. Readers of this document should understand that these statements are not guarantees of performance or results. Forward-looking statements provide our current expectations and beliefs concerning future events and are subject to risks, uncertainties, and factors relating to our business and operations, all of which are difficult to predict and could cause our actual results to differ materially from the expectations expressed in or implied by such forward-looking statements. These risks, uncertainties, and factors include, among other things: risks associated with general economic and industry conditions, including inflation, reduced consumer confidence and spending, recessions, increased energy costs, supply chain challenges, labor shortages, and geopolitical conflicts; risks related to our ability to deleverage on currently anticipated timelines, and to continue to access capital on acceptable terms or at all; risks related to the company's competitive environment, cost structure, and related market conditions; risks related to our ability to execute operating and value creation plans and achieve returns on our investments and targeted operating efficiencies from cost-saving initiatives, and to benefit from trade optimization programs; risks related to the availability and prices of commodities and other supply chain resources, including raw materials, packaging, energy, and transportation, weather conditions, health pandemics or outbreaks of disease, actual or threatened hostilities or war, or other geopolitical uncertainty; risks related to our ability to respond to changing consumer preferences and the success of our innovation and marketing investments; risks associated with actions by our customers, including changes in distribution and purchasing terms; risks related to the effectiveness of our hedging activities and ability to respond to volatility in commodities; disruptions or inefficiencies in our supply chain and/or operations; risks related to the ultimate impact of, including reputational harm caused by, any product recalls and product liability or labeling litigation, including litigation related to lead-based paint and pigment and cooking spray;  risks related to the seasonality of our business; risks associated with our co-manufacturing arrangements and other third-party service provider dependencies; risks associated with actions of governments and regulatory bodies that affect our businesses, including the ultimate impact of new or revised regulations or interpretations including to address climate change or implement changes to taxes and tariffs; risks related to the company's ability to execute on its strategies or achieve expectations related to environmental, social, and governance matters, including as a result of evolving legal, regulatory, and other standards, processes, and assumptions, the pace of scientific and technological developments, increased costs, the availability of requisite financing, and changes in carbon pricing or carbon taxes; risks related to a material failure in or breach of our or our vendors' information technology systems and other cybersecurity incidents; risks related to our ability to identify, attract, hire, train, retain and develop qualified personnel; risk of increased pension, labor or people-related expenses; risks and uncertainties associated with intangible assets, including any future goodwill or intangible assets impairment charges; risk relating to our ability to protect our intellectual property rights; risks relating to acquisition, divestiture, joint venture or investment activities; the amount and timing of future dividends, which remain subject to Board approval and depend on market and other conditions; the amount and timing of future stock repurchases; and other risks described in our reports filed from time to time with the Securities and Exchange Commission.

We caution readers not to place undue reliance on any forward-looking statements included in this document, which speak only as of the date of this document. We undertake no responsibility to update these statements, except as required by law.

Note on Non-GAAP Financial Measures
This document includes certain non-GAAP financial measures, including adjusted EPS, organic net sales, adjusted gross profit, adjusted operating profit, adjusted SG&A, adjusted corporate expenses, adjusted gross margin, adjusted operating margin, adjusted effective tax rate, adjusted net income attributable to Conagra Brands, free cash flow, net debt, net leverage ratio, and adjusted EBITDA. Management considers GAAP financial measures as well as such non-GAAP financial information in its evaluation of the company's financial statements and believes these non-GAAP financial measures provide useful supplemental information to assess the company's operating performance and financial position. These measures should be viewed in addition to, and not in lieu of, the company's diluted earnings per share, operating performance and financial measures as calculated in accordance with GAAP.

Organic net sales excludes, from reported net sales, the impacts of foreign exchange, divested businesses and acquisitions, as well as the impact of any 53rd week. All references to changes in volume and price/mix throughout this release are on an organic net sales basis.

Free cash flow is net cash from operating activities less additions to property, plant and equipment. Free cash flow conversion is free cash flow divided by adjusted net income attributable to Conagra Brands, Inc.

References to adjusted items throughout this release refer to measures computed in accordance with GAAP less the impact of items impacting comparability. Items impacting comparability are income or expenses (and related tax impacts) that management believes have had, or are likely to have, a significant impact on the earnings of the applicable business segment or on the total corporation for the period in which the item is recognized, and are not indicative of the company's core operating results. These items thus affect the comparability of underlying results from period to period.

References to earnings before interest, taxes, depreciation, and amortization (EBITDA) refer to net income attributable to Conagra Brands before the impacts of discontinued operations, income tax expense (benefit), interest expense, depreciation, and amortization. References to adjusted EBITDA refer to EBITDA before the impacts of items impacting comparability.

Hedge gains and losses are generally aggregated, and net amounts are reclassified from unallocated corporate expense to the operating segments when the underlying commodity or foreign currency being hedged is expensed in segment cost of goods sold. The net change in the derivative gains (losses) included in unallocated corporate expense during the period is reflected as a comparability item, Corporate hedging derivate gains (losses).

Note on Forward-Looking Non-GAAP Financial Measures
The company's fiscal 2025 guidance includes certain non-GAAP financial measures (organic net sales growth, adjusted operating margin, adjusted EPS, net leverage ratio, and adjusted effective tax rate) that are presented on a forward-looking basis. Historically, the company has calculated these non-GAAP financial measures excluding the impact of certain items such as, but not limited to, foreign exchange, acquisitions, divestitures, restructuring expenses, the extinguishment of debt, hedging gains and losses, impairment charges, legacy legal contingencies, and unusual tax items. Reconciliations of these forward-looking non-GAAP financial measures to the most directly comparable GAAP financial measures are not provided because the company is unable to provide such reconciliations without unreasonable effort, due to the uncertainty and inherent difficulty of predicting the timing and financial impact of such items. For the same reasons, the company is unable to address the probable significance of the unavailable information, which could be material to future results.

Conagra Brands, Inc.

Consolidated Statements of Earnings

(in millions)

(unaudited)

 












FIRST QUARTER



Thirteen Weeks Ended


Thirteen Weeks Ended





August 25, 2024


August 27, 2023


Percent Change

Net sales


$

2,794.9


$

2,904.0


(3.8) %

Costs and expenses:









Cost of goods sold



2,055.6



2,080.9


(1.2) %

Selling, general and administrative expenses



337.7



334.1


1.1 %

Pension and postretirement non-service income (expense)



3.1



(0.3)


N/A

Interest expense, net



105.8



106.0


(0.1) %

Equity method investment earnings



29.1



35.5


(18.1) %

Income before income taxes


$

328.0


$

418.2


(21.6) %

Income tax expense (benefit)



(138.9)



98.3


N/A

Net income


$

466.9


$

319.9


45.9 %

Less: Net income attributable to noncontrolling interests



0.1



0.2


(62.6) %

Net income attributable to Conagra Brands, Inc.


$

466.8


$

319.7


46.0 %










Earnings per share - basic









Net income attributable to Conagra Brands, Inc.


$

0.97


$

0.67


44.8 %

Basic weighted average shares outstanding



478.8



478.2


0.1 %










Earnings per share - diluted









Net income attributable to Conagra Brands, Inc.


$

0.97


$

0.67


44.8 %

Diluted weighted average shares outstanding



480.3



479.8


0.1 %

 

Conagra Brands, Inc.

Consolidated Balance Sheets

(in millions)

(unaudited)

 










August 25, 2024



May 26, 2024

ASSETS







Current assets







Cash and cash equivalents


$

128.7


$

77.7

Receivables, less allowance for doubtful accounts of $2.2 and $3.0



933.4



871.8

Inventories



2,220.6



2,083.0

Prepaid expenses and other current assets



133.5



85.0

Current assets held for sale





32.0

Total current assets



3,416.2



3,149.5

Property, plant and equipment, net



2,877.0



2,875.5

Goodwill



10,758.0



10,582.7

Brands, trademarks and other intangibles, net



2,756.4



2,708.4

Other assets



1,419.0



1,435.6

Noncurrent assets held for sale



21.2



110.6



$

21,247.8


$

20,862.3

LIABILITIES AND STOCKHOLDERS' EQUITY







Current liabilities







Notes payable


$

1,266.4


$

928.4

Current installments of long-term debt



20.2



20.3

Accounts and other payables



1,537.7



1,493.7

Accrued payroll



108.2



193.3

Other accrued liabilities



714.3



591.3

Current liabilities held for sale





14.8

Total current liabilities



3,646.8



3,241.8

Senior long-term debt, excluding current installments



7,485.6



7,492.6

Other noncurrent liabilities



1,419.8



1,614.7

Noncurrent liabilities held for sale





1.9

Total stockholders' equity



8,695.6



8,511.3



$

21,247.8


$

20,862.3

 

Conagra Brands, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in millions)

 









Thirteen Weeks Ended


Thirteen Weeks Ended



August 25, 2024


August 27, 2023

Cash flows from operating activities:







Net income


$

466.9


$

319.9

Adjustments to reconcile net income to net cash flows from operating activities:







Depreciation and amortization



99.1



96.6

Asset impairment charges



0.1



15.2

Equity method investment earnings in excess of distributions



(5.2)



(6.7)

Stock-settled share-based payments expense (benefit)



20.6



(2.7)

Contributions to pension plans



(2.9)



(3.1)

Pension expense (benefit)



(0.8)



2.8

Other items



11.6



10.5

Change in operating assets and liabilities excluding effects of business acquisitions and dispositions:







Receivables



(60.1)



(11.1)

Inventories



(112.5)



(161.8)

Deferred income taxes and income taxes payable, net



(165.9)



90.6

Prepaid expenses and other current assets



(43.0)



(35.6)

Accounts and other payables



67.7



81.4

Accrued payroll



(83.7)



(49.0)

Other accrued liabilities



84.4



95.4

Litigation accruals



(7.7)



1.1

Net cash flows from operating activities



268.6



443.5

Cash flows from investing activities:







Additions to property, plant and equipment



(133.0)



(143.6)

Sale of property, plant and equipment



0.3



0.2

Purchase of marketable securities





(0.7)

Sale of marketable securities





0.7

Purchase of business, net of cash acquired



(230.4)



Proceeds from divestitures, net of cash divested



76.8



Other items





5.0

Net cash flows from investing activities



(286.3)



(138.4)

Cash flows from financing activities:







Issuances of short-term borrowings, maturities greater than 90 days



35.1



43.5

Repayment of short-term borrowings, maturities greater than 90 days



(35.3)



(54.8)

Net issuance (repayment) of other short-term borrowings, maturities less than or equal to 90 days



336.4



(117.0)

Issuance of long-term debt





500.0

Repayment of long-term debt



(14.9)



(504.3)

Debt issuance costs





(2.8)

Repurchase of Conagra Brands, Inc. common shares



(64.0)



Cash dividends paid



(167.3)



(157.4)

Exercise of stock options and issuance of other stock awards, including tax withholdings



(19.8)



(13.7)

Other items



(0.1)



(0.6)

Net cash flows from financing activities



70.1



(307.1)

Effect of exchange rate changes on cash and cash equivalents



(2.7)



1.4

Net change in cash and cash equivalents, including cash balances classified as assets held for sale



49.7



(0.6)

Less: Net change in cash balances classified as assets held for sale



(1.3)



1.0

Net change in cash and cash equivalents



51.0



(1.6)

Cash and cash equivalents at beginning of period



77.7



93.3

Cash and cash equivalents at end of period


$

128.7


$

91.7

 

Conagra Brands, Inc.

Reconciliation of Q1 FY25 Organic Net Sales by Segment - YOY Change

(in millions)

 

















Refrigerated &








Total Conagra

Q1 FY25


Grocery & Snacks


Frozen


International


Foodservice


Brands

Net Sales


$

1,182.7


$

1,086.4


$

259.1


$

266.7


$

2,794.9

Impact of foreign exchange







9.0





9.0

Net sales from acquired businesses



(2.7)







(0.2)



(2.9)

Organic Net Sales


$

1,180.0


$

1,086.4


$

268.1


$

266.5


$

2,801.0

















Year-over-year change - Net Sales



(1.7) %



(5.7) %



(0.4) %



(7.8) %



(3.8) %

Impact of foreign exchange (pp)







3.4





0.4

Net sales from acquired businesses (pp)



(0.2)







(0.1)



(0.1)

Organic Net Sales



(1.9) %



(5.7) %



3.0 %



(7.9) %



(3.5) %

















Volume (Organic)



(1.8) %



0.1 %



0.6 %



(11.1) %



(1.6) %

Price/Mix



(0.1) %



(5.8) %



2.4 %



3.2 %



(1.9) %






















Refrigerated &








Total Conagra

Q1 FY24


Grocery & Snacks


Frozen


International


Foodservice


Brands

Net Sales


$

1,202.9


$

1,151.6


$

260.2


$

289.3


$

2,904.0

Net sales from divested businesses











Organic Net Sales


$

1,202.9


$

1,151.6


$

260.2


$

289.3


$

2,904.0

 

Conagra Brands, Inc.

Reconciliation of Q1 FY25 Adj. Operating Profit by Segment - YOY Change

(in millions)

 

















Grocery &


Refrigerated &








Corporate


Total Conagra

Q1 FY25


Snacks


Frozen


International


Foodservice


Expense


Brands

Operating Profit


$

249.1


$

176.0


$

33.6


$

35.1


$

(92.2)


$

401.6

Restructuring plans



4.2



0.1



(0.1)





0.1



4.3

Legal matters











3.4



3.4

Fire related insurance recoveries





(17.0)









(17.0)

Consulting fees on tax matters











2.0



2.0

Loss on sale of business







2.3







2.3

Corporate hedging derivative losses (gains)











1.3



1.3

Adjusted Operating Profit


$

253.3


$

159.1


$

35.8


$

35.1


$

(85.4)


$

397.9




















Operating Profit Margin



21.1 %



16.2 %



13.0 %



13.2 %






14.4 %

Adjusted Operating Profit Margin



21.4 %



14.6 %



13.8 %



13.2 %






14.2 %

Year-over-year % change - Operating Profit



(3.7) %



(11.6) %



42.1 %



(20.4) %



151.2 %



(17.9) %

Year-over year % change - Adjusted Operating Profit



(3.8) %



(21.0) %



(15.5) %



(13.8) %



34.1 %



(17.8) %

Year-over-year bps change - Operating Profit



(44) bps



(110) bps



388 bps



(209) bps






(247) bps

Year-over-year bps change - Adjusted Operating Profit



(48) bps



(284) bps



(247) bps



(92) bps






(244) bps






















Grocery &


Refrigerated &








Corporate


Total Conagra

Q1 FY24


Snacks


Frozen


International


Foodservice


Expense


Brands

Operating Profit


$

258.7


$

199.2


$

23.7


$

44.1


$

(36.7)


$

489.0

Restructuring plans



4.8



0.6



18.6





0.4



24.4

Acquisitions and divestitures











0.2



0.2

Fire related costs (insurance recoveries), net





1.6





(3.3)





(1.7)

Corporate hedging derivative losses (gains)











(27.6)



(27.6)

Adjusted Operating Profit


$

263.5


$

201.4


$

42.3


$

40.8


$

(63.7)


$

484.3




















Operating Profit Margin



21.5 %



17.3 %



9.1 %



15.3 %






16.8 %

Adjusted Operating Profit Margin



21.9 %



17.5 %



16.3 %



14.1 %






16.7 %

 

Conagra Brands, Inc.

Reconciliation of Q1 FY25 Adj. Gross Margin, Adj. Gross Profit, Adj. SG&A, Adj. Net Income, and Adj. EPS - YOY Change

(in millions)





Q1 FY25



Gross profit



Selling,
general and
administrative
expenses



Operating
profit 1



Income
before
income taxes



Income tax
expense
(benefit)


Income tax
rate



Net income
attributable
to Conagra
Brands, Inc.



Diluted EPS
from income
attributable
to Conagra
Brands, Inc
common
stockholders

Reported


$

739.3


$

337.7


$

401.6


$

328.0


$

(138.9)


(42.4) %


$

466.8


$

0.97

% of Net Sales



26.5 %



12.1 %



14.4 %















Restructuring plans



2.1



2.2



4.3



4.3



1.1





3.2



0.01

Loss on sale of business





2.3



2.3



2.3



0.8





1.5



Corporate hedging derivative losses (gains)



1.3





1.3



1.3



0.1





1.2



Advertising and promotion expenses 2





50.4













Fire related insurance recoveries



(17.0)





(17.0)



(17.0)



(4.2)





(12.8)



(0.03)

Consulting fees on tax matters





2.0



2.0



2.0



0.5





1.5



Legal matters





3.4



3.4



3.4



0.8





2.6



0.01

Valuation allowance adjustment











211.4





(211.4)



(0.44)

Rounding

















0.01

Adjusted


$

725.7


$

277.4


$

397.9


$

324.3


$

71.6


22.1 %


$

252.6


$

0.53

% of Net Sales



26.0 %



9.9 %



14.2 %















Year-over-year % of net sales
change - reported



(189) bps



58 bps



(247) bps















Year-over-year % of net sales
change - adjusted



(163) bps



102 bps



(244) bps







































Year-over-year change - reported



(10.2) %



1.1 %



(17.9) %



(21.6) %



N/A





46.0 %



44.8 %

Year-over-year change - adjusted



(9.4) %



7.3 %



(17.8) %



(21.6) %



(26.4) %





(20.0) %



(19.7) %

























Q1 FY24



Gross profit



Selling,
general and
administrative
expenses



Operating
profit 1



Income
before
income taxes



Income tax
expense


Income tax
rate



Net income
attributable
to Conagra
Brands, Inc.



Diluted EPS
from income
attributable
to Conagra
Brands, Inc
common
stockholders

Reported


$

823.1


$

334.1


$

489.0


$

418.2


$

98.3


23.5 %


$

319.7


$

0.67

% of Net Sales



28.3 %



11.5 %



16.8 %















Restructuring plans



4.3



20.1



24.4



24.4



6.3





18.1



0.04

Acquisitions and divestitures





0.2



0.2



0.2







0.2



Corporate hedging derivative losses (gains)



(27.6)





(27.6)



(27.6)



(6.8)





(20.8)



(0.04)

Advertising and promotion expenses 2





58.7













Fire related costs (insurance recoveries), net



1.6



(3.3)



(1.7)



(1.7)



(0.4)





(1.3)



Rounding

















(0.01)

Adjusted


$

801.4


$

258.4


$

484.3


$

413.5


$

97.4


23.6 %


$

315.9


$

0.66

% of Net Sales



27.6 %



8.9 %



16.7 %
















1 Operating profit is derived from taking Income before income taxes, adding back Interest expense, net and removing Pension and postretirement non-service income and Equity method investment earnings.

2 Advertising and promotion expense (A&P) has been removed from adjusted selling, general and administrative expense because this metric is used in reporting to management, and management believes this adjusted measure provides useful supplemental information to assess the company's operating performance. Please note that A&P is not removed from adjusted profit measures.

 

Conagra Brands, Inc.

Reconciliation of Free Cash Flow, Net Debt, and Net Leverage Ratio

(in millions)








Q1 FY25



Q1 FY24


% Change

Net cash flows from operating activities


$

268.6


$

443.5


(39.4) %

Additions to property, plant and equipment



(133.0)



(143.6)


(7.4) %

Free cash flow


$

135.6


$

299.9


(54.8) %

 











August 25, 2024



August 27, 2023

Notes payable


$

1,266.4


$

509.3

Current installments of long-term debt



20.2



1,015.4

Senior long-term debt, excluding current installments



7,485.6



7,745.1

Total Debt


$

8,772.2


$

9,269.8

Less: Cash



128.7



91.7

Net Debt


$

8,643.5


$

9,178.1

 

















FY24



Q1 FY24



Q1 FY25



Q1 FY25 TTM




(a)



(b)



(c)



(a)-(b)+(c)

Net Debt1











$

8,643.5














Net income attributable to Conagra Brands, Inc.


$

347.2


$

319.7


$

466.8


$

494.3

Add Back: Income tax expense (benefit)



262.5



98.3



(138.9)



25.3

Income tax expense attributable to noncontrolling interests



(0.2)







(0.2)

Interest expense, net



430.5



106.0



105.8



430.3

Depreciation



347.3



83.1



85.7



349.9

Amortization



53.6



13.5



13.4



53.5

Earnings before interest, taxes, depreciation, and amortization (EBITDA)


$

1,440.9


$

620.6


$

532.8


$

1,353.1

Restructuring plans2



51.5



21.0



2.9



33.4

Acquisitions and divestitures



0.2



0.2





Impairment of business held for sale



36.4







36.4

Corporate hedging derivative losses (gains)



(16.1)



(27.6)



1.3



12.8

Goodwill and brand impairment charges



956.7







956.7

Legal matters, net of recoveries



34.8





3.4



38.2

Fire related insurance recoveries, net



(8.7)



(1.7)



(17.0)



(24.0)

Loss on sale of business







2.3



2.3

Pension settlement and valuation adjustment



(11.5)







(11.5)

Consulting fees on tax matters







2.0



2.0

Adjusted EBITDA


$

2,484.2


$

612.5


$

527.7


$

2,399.4














Net Debt to Adjusted EBITDA3












3.60


1 As of August 25, 2024.

2 Excludes comparability items related to depreciation.

3 The company defines its net debt leverage ratio as net debt divided by adjusted EBITDA for the trailing twelve month (TTM) period.

 

Conagra Brands, Inc.

Reconciliation of Q1 FY25 EBITDA - YOY Change

(in millions)

 











Q1 FY25


Q1 FY24


% Change

Net income attributable to Conagra Brands, Inc.


$

466.8


$

319.7


46.0 %

Add Back: Income tax expense (benefit)



(138.9)



98.3



Interest expense, net



105.8



106.0



Depreciation



85.7



83.1



Amortization



13.4



13.5



Earnings before interest, taxes, depreciation, and amortization


$

532.8


$

620.6


(14.1) %

Restructuring plans 1



2.9



21.0



Acquisitions and divestitures





0.2



Corporate hedging derivative losses (gains)



1.3



(27.6)



Fire related insurance recoveries, net



(17.0)



(1.7)



Consulting fees on tax matters



2.0





Legal matters



3.4





Loss on sale of business



2.3





Adjusted Earnings before interest, taxes, depreciation, and amortization


$

527.7


$

612.5


(13.8) %


1 Excludes comparability items related to depreciation.

 

For more information, please contact:
MEDIA: Mike Cummins
312‑549‑5257
Michael.Cummins@conagra.com
INVESTORS: Melissa Napier
312‑549‑5738
IR@conagra.com

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/conagra-brands-reports-first-quarter-results-302264862.html

SOURCE Conagra Brands, Inc.

FAQ

What were Conagra Brands' (CAG) Q1 FY2025 earnings results?

Conagra Brands reported Q1 FY2025 net sales of $2.8 billion, a 3.8% decrease, with organic net sales declining 3.5%. Adjusted EPS decreased 19.7% to $0.53.

How did Conagra Brands' (CAG) operating margin perform in Q1 FY2025?

Conagra Brands' reported operating margin fell 247 basis points to 14.4% in Q1 FY2025, while adjusted operating margin decreased 244 basis points to 14.2%.

What is Conagra Brands' (CAG) guidance for fiscal year 2025?

Conagra Brands reaffirmed its FY2025 guidance, projecting organic net sales between -1.5% to flat, adjusted operating margin between 15.6% and 15.8%, and adjusted EPS between $2.60 and $2.65.

How did Conagra Brands' (CAG) different segments perform in Q1 FY2025?

Grocery & Snacks segment sales decreased 1.7%, Refrigerated & Frozen segment sales decreased 5.7%, International segment sales decreased 0.4%, and Foodservice segment sales decreased 7.8%.

Conagra Brands, Inc.

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