Conagra Brands Reports Second Quarter Results
- Improved volume trends in domestic retail business
- Strong lifts and market share gains in frozen business
- Net sales increase of 0.2% from the favorable impact of foreign exchange
- Increase in International segment net sales by 8.1%
- Adjusted operating profit increase of 24.3% in the Foodservice segment
- 3.4% decrease in organic net sales
- Operating profit decrease in Grocery & Snacks, Refrigerated & Frozen segments
- Net income decrease of 25.1%
- Adjusted EBITDA decrease of 7.0%
Insights
Conagra Brands' recent financials reveal a contraction in net sales and organic net sales, indicating a challenging market environment. A 3.2% decline in net sales and a more pronounced 3.4% decrease in organic net sales highlight the company's struggle to maintain growth amidst inflationary pressures and changing consumer behavior. The reported decrease in operating margin by 261 basis points and adjusted operating margin by 108 basis points reflects a squeeze on profitability, likely due to increased costs and strategic investments that have yet to yield proportional returns.
The reduction in diluted EPS by 24.1% and adjusted EPS by 12.3% year-over-year is a significant concern for shareholders, as it directly affects the return on their investment. The company's updated fiscal 2024 guidance suggests a cautious outlook, with an expected decline in organic net sales and a modest operating margin. This revision may influence investor sentiment and could potentially lead to a reevaluation of the stock's value.
From a balance sheet perspective, the increase in net interest expense by 13.0% due to a higher weighted average interest rate on outstanding debt signals a potential increase in financial risk, especially in an environment of rising interest rates. This could impact future profitability and cash flows. The net leverage ratio projection of approximately 3.55x, while within a manageable range, should be monitored closely for signs of financial stress.
Conagra's performance in the second quarter reflects broader consumer trends, with volume declines indicative of lower consumption patterns. This could be attributed to a shift in consumer preferences or increased competition. The company's strategic investments in the frozen business segment, which have led to market share gains, demonstrate an attempt to adapt to these evolving market dynamics. However, the overall decrease in volume suggests that these efforts have not fully offset the broader consumption downturn.
The company's international segment, particularly in Mexico, presents a bright spot with organic net sales increasing by 5.6%. This suggests that Conagra's international strategy may be better aligned with local market conditions or that it is benefiting from a less competitive landscape. The positive performance in the Foodservice segment, with a 4.3% increase in reported and organic net sales, could indicate resilience in this sector, possibly due to inflation-driven pricing actions.
Conagra's forward-looking statements and guidance adjustments indicate a strategic pivot towards increased brand investments in the latter half of the fiscal year. This move could be aimed at stimulating demand and defending market share but also carries the risk of increased costs that may not be immediately recouped through sales revenue.
The reported increase in Selling, General and Administrative expenses due to legal reserve adjustments and an impairment associated with a business being reclassified to held for sale raises questions about potential future liabilities and asset realignment. These factors can have a material impact on the company's financial health and require careful scrutiny by stakeholders. The legal matters resulting in a $0.02 per diluted share expense suggest ongoing or potential litigation risks that could have implications for future earnings and operational focus.
It is also important to consider the effective tax rate, which has increased to 26.5% from 24.3% in the prior year. While the adjusted effective tax rate remains unchanged, any future changes in tax legislation or the company's tax positions could further affect net income. Stakeholders should be aware of these tax implications as they can influence the company's net profitability and cash flows available for reinvestment or distribution.
Second Quarter Highlights
- Net sales decreased
3.2% from the prior year quarter; organic net sales decreased3.4% - Operating margin was
14.0% , representing a 261 basis point decrease over the prior year quarter. Adjusted operating margin was15.9% , representing a 108 basis point decrease over the prior year quarter. - Diluted earnings per share (EPS) was
$0.60 , a24.1% decrease over the prior year quarter. Adjusted EPS was$0.71 , a12.3% decrease over the prior year quarter. - The company is updating its fiscal 2024 guidance and now expects:
- Organic net sales to decrease between
1.0% and2.0% compared to fiscal 2023 - Adjusted operating margin of approximately
15.6% - Adjusted EPS between
$2.60 $2.65
- Organic net sales to decrease between
CEO Perspective
Sean Connolly, president and chief executive officer of Conagra Brands, commented, "Despite an ongoing challenging macro environment, we saw several positive signs in Q2. In particular, volume trends in our domestic retail business improved substantially, as inflation-driven volume declines were cut in half compared to Q1. Most importantly, our targeted investments in our frozen business generated strong lifts and market share gains. These developments reinforced our confidence in investing to build momentum in the second half and set up a strong FY25."
Total Company Second Quarter Results
In the quarter, net sales were
- a
0.2% increase from the favorable impact of foreign exchange; and - a
3.4% decrease in organic net sales.
The
Gross profit decreased
Selling, general, and administrative expense (SG&A), which includes advertising and promotional expense (A&P), increased
Net interest expense was
The average diluted share count in the quarter was 480 million shares.
In the quarter, net income attributable to Conagra Brands decreased
Adjusted EBITDA, which includes equity method investment earnings and pension and postretirement non-service expense (income), decreased
Grocery & Snacks Segment Second Quarter Results
Reported and organic net sales for the Grocery & Snacks segment decreased
Operating profit for the segment decreased
Refrigerated & Frozen Segment Second Quarter Results
Reported and organic net sales for the Refrigerated & Frozen segment decreased
Operating profit for the segment decreased
International Segment Second Quarter Results
Net sales for the International segment increased
- a
2.5% increase from the favorable impact of foreign exchange; and - a
5.6% increase in organic net sales.
On an organic net sales basis, price/mix increased
Operating profit for the segment decreased
Foodservice Segment Second Quarter Results
Reported and organic net sales for the Foodservice segment increased
Operating profit for the segment increased
Other Second Quarter Items
Corporate expenses decreased
We incurred pension and post-retirement non-service expense in the quarter compared to
In the quarter, equity method investment earnings increased
In the quarter, the effective tax rate was
In the quarter, the company paid a dividend of
Outlook
The company is lowering its fiscal 2024 organic net sales growth, operating margin, and adjusted EPS outlook to reflect year-to-date results, expectations for a slower volume recovery, and increased brand investments in the second half of the fiscal year.
The company's fiscal 2024 guidance reflects:
- Organic net sales to decrease between
1.0% and2.0% compared to fiscal 2023 - Adjusted operating margin is expected to be approximately
15.6% - Adjusted EPS is expected to be between
$2.60 $2.65 - Net Leverage Ratio of approximately 3.55x
- Capital expenditures of approximately
$450M - Interest expense of approximately
$440M - Adjusted effective tax rate of approximately
24% - No pension income
- Ardent Mills contribution of approximately
$170M
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
- Approximately
$0 - Approximately
$0 - Approximately
$0.07 - Approximately
$0 - Approximately
$0
The following are included in the
- Approximately
$0.01 - Approximately
$0.01
Please note that certain prior year amounts have been reclassified to conform with current year presentation.
Discussion of Results
Conagra Brands will host a webcast and conference call at 9:30 a.m. Eastern time today to discuss the results. The live audio webcast and presentation slides will be available on www.conagrabrands.com/investor-relations under Events & Presentations. The conference call may be accessed by dialing 1-877-883-0383 for participants in the
About Conagra Brands
Conagra Brands, Inc. (NYSE: CAG), headquartered in
Note on Forward-Looking Statements
This document contains forward-looking statements within the meaning of the federal securities laws. These forward-looking statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Readers of this document should understand that these statements are not guarantees of performance or results. Many factors could affect our actual financial results and cause them to vary materially from the expectations contained in the forward-looking statements, including those set forth in this document. These risks, uncertainties, and factors include, among other things: risks associated with general economic and industry conditions, including inflation, rising interest rates, decreased availability of capital, volatility in financial markets, declining consumer spending rates, recessions, decreased energy availability, increased energy costs (including fuel surcharges), supply chain challenges, labor shortages, and geopolitical conflicts (including the ongoing conflict between
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.
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
Our fiscal 2024 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) | ||||||||||||
SECOND QUARTER | ||||||||||||
Thirteen Weeks | Thirteen Weeks | |||||||||||
November 26, | November 27, | Percent Change | ||||||||||
Net sales | $ | 3,208.1 | $ | 3,312.9 | (3.2) | % | ||||||
Costs and expenses: | ||||||||||||
Cost of goods sold | 2,361.5 | 2,390.6 | (1.2) | % | ||||||||
Selling, general and administrative expenses | 398.1 | 372.7 | 6.8 | % | ||||||||
Pension and postretirement non-service expense (income) | 0.4 | (6.1) | N/A | |||||||||
Interest expense, net | 113.3 | 100.3 | 13.0 | % | ||||||||
Income before income taxes and equity method investment earnings | 334.8 | 455.4 | (26.5) | % | ||||||||
Income tax expense | 102.9 | 122.5 | (16.0) | % | ||||||||
Equity method investment earnings | 54.3 | 49.3 | 10.3 | % | ||||||||
Net income | $ | 286.2 | $ | 382.2 | (25.1) | % | ||||||
Less: Net income attributable to noncontrolling interests | — | 0.3 | (100.0) | % | ||||||||
Net income attributable to Conagra Brands, Inc. | $ | 286.2 | $ | 381.9 | (25.1) | % | ||||||
Earnings per share - basic | ||||||||||||
Net income attributable to Conagra Brands, Inc. | $ | 0.60 | $ | 0.80 | (25.0) | % | ||||||
Weighted average shares outstanding | 478.7 | 479.4 | (0.1) | % | ||||||||
Earnings per share - diluted | ||||||||||||
Net income attributable to Conagra Brands, Inc. | $ | 0.60 | $ | 0.79 | (24.1) | % | ||||||
Weighted average share and share equivalents outstanding | 479.8 | 480.9 | (0.2) | % | ||||||||
Conagra Brands, Inc. Consolidated Statements of Earnings (in millions) (unaudited) | ||||||||||||
SECOND QUARTER YEAR TO DATE | ||||||||||||
Twenty-Six | Twenty-Six | |||||||||||
November 26, | November 27, | Percent Change | ||||||||||
Net sales | $ | 6,112.1 | $ | 6,217.2 | (1.7) | % | ||||||
Costs and expenses: | ||||||||||||
Cost of goods sold | 4,442.4 | 4,574.6 | (2.9) | % | ||||||||
Selling, general and administrative expenses | 732.2 | 1,114.3 | (34.3) | % | ||||||||
Pension and postretirement non-service expense (income) | 0.7 | (12.2) | N/A | |||||||||
Interest expense, net | 219.3 | 197.4 | 11.1 | % | ||||||||
Income before income taxes and equity method investment earnings | 717.5 | 343.1 | 109.1 | % | ||||||||
Income tax expense | 201.2 | 136.9 | 47.0 | % | ||||||||
Equity method investment earnings | 89.8 | 98.5 | (8.8) | % | ||||||||
Net income | $ | 606.1 | $ | 304.7 | 99.0 | % | ||||||
Less: Net income attributable to noncontrolling interests | 0.2 | 0.3 | (8.3) | % | ||||||||
Net income attributable to Conagra Brands, Inc. | $ | 605.9 | $ | 304.4 | 99.1 | % | ||||||
Earnings per share - basic | ||||||||||||
Net income attributable to Conagra Brands, Inc. | $ | 1.27 | $ | 0.63 | 101.6 | % | ||||||
Weighted average shares outstanding | 478.4 | 480.0 | (0.3) | % | ||||||||
Earnings per share - diluted | ||||||||||||
Net income attributable to Conagra Brands, Inc. | $ | 1.26 | $ | 0.63 | 100.0 | % | ||||||
Weighted average share and share equivalents outstanding | 479.8 | 481.6 | (0.4) | % | ||||||||
Conagra Brands, Inc. Consolidated Balance Sheets (in millions) (unaudited) | ||||||||
November 26, | May 28, 2023 | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 61.5 | $ | 93.3 | ||||
Receivables, less allowance for doubtful accounts of | 974.1 | 952.8 | ||||||
Inventories | 2,277.6 | 2,212.2 | ||||||
Prepaid expenses and other current assets | 125.7 | 92.4 | ||||||
Current assets held for sale | 30.2 | 34.3 | ||||||
Total current assets | 3,469.1 | 3,385.0 | ||||||
Property, plant and equipment, net | 2,876.5 | 2,736.4 | ||||||
Goodwill | 11,109.3 | 11,109.4 | ||||||
Brands, trademarks and other intangibles, net | 3,165.4 | 3,192.3 | ||||||
Other assets | 1,410.2 | 1,506.2 | ||||||
Noncurrent assets held for sale | 89.5 | 123.3 | ||||||
$ | 22,120.0 | $ | 22,052.6 | |||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities | ||||||||
Notes payable | $ | 559.0 | $ | 636.3 | ||||
Current installments of long-term debt | 1,017.3 | 1,516.0 | ||||||
Accounts and other payables | 1,474.6 | 1,525.5 | ||||||
Accrued payroll | 129.5 | 163.5 | ||||||
Other accrued liabilities | 639.6 | 583.3 | ||||||
Current liabilities held for sale | 13.1 | 16.1 | ||||||
Total current liabilities | 3,833.1 | 4,440.7 | ||||||
Senior long-term debt, excluding current installments | 7,493.3 | 7,081.3 | ||||||
Other noncurrent liabilities | 1,717.5 | 1,718.0 | ||||||
Noncurrent liabilities held for sale | 1.9 | 5.3 | ||||||
Total stockholders' equity | 9,074.2 | 8,807.3 | ||||||
$ | 22,120.0 | $ | 22,052.6 | |||||
Conagra Brands, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (in millions) (unaudited) | ||||||||
Twenty-Six | Twenty-Six | |||||||
November 26, | November 27, | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 606.1 | $ | 304.7 | ||||
Adjustments to reconcile net income to net cash flows from operating activities: | ||||||||
Depreciation and amortization | 195.9 | 185.5 | ||||||
Asset impairment charges | 50.7 | 413.7 | ||||||
Equity method investment earnings less than (in excess) of distributions | 76.9 | (55.6) | ||||||
Stock-settled share-based payments expense | 3.5 | 59.0 | ||||||
Contributions to pension plans | (6.0) | (5.9) | ||||||
Pension expense (benefit) | 5.5 | (6.9) | ||||||
Other items | 24.0 | (4.5) | ||||||
Change in operating assets and liabilities: | ||||||||
Receivables | (29.8) | (46.1) | ||||||
Inventories | (61.8) | (380.9) | ||||||
Deferred income taxes and income taxes payable, net | 24.0 | (39.4) | ||||||
Prepaid expenses and other current assets | (30.6) | (13.8) | ||||||
Accounts and other payables | 7.7 | (109.8) | ||||||
Accrued payroll | (34.1) | (32.2) | ||||||
Other accrued liabilities | 22.6 | 30.0 | ||||||
Net cash flows from operating activities | 854.6 | 297.8 | ||||||
Cash flows from investing activities: | ||||||||
Additions to property, plant and equipment | (214.0) | (188.4) | ||||||
Sale of property, plant and equipment | 0.5 | 2.4 | ||||||
Purchase of marketable securities | (5.1) | (1.6) | ||||||
Sale of marketable securities | 5.1 | 1.6 | ||||||
Other items | 9.6 | 4.1 | ||||||
Net cash flows from investing activities | (203.9) | (181.9) | ||||||
Cash flows from financing activities: | ||||||||
Issuances of short-term borrowings, maturities greater than 90 days | 93.9 | 172.2 | ||||||
Repayment of short-term borrowings, maturities greater than 90 days | (99.3) | (168.8) | ||||||
Net (repayment) issuance of other short-term borrowings, maturities less than or equal to 90 days | (75.8) | 72.0 | ||||||
Issuance of long-term debt | 500.0 | 500.0 | ||||||
Repayment of long-term debt | (760.6) | (265.8) | ||||||
Debt issuance costs | (3.1) | (4.0) | ||||||
Repurchase of Conagra Brands, Inc. common shares | — | (150.0) | ||||||
Cash dividends paid | (324.7) | (308.6) | ||||||
Exercise of stock options and issuance of other stock awards, including tax withholdings | (13.3) | (5.7) | ||||||
Other items | (0.5) | 1.3 | ||||||
Net cash flows from financing activities | (683.4) | (157.4) | ||||||
Effect of exchange rate changes on cash and cash equivalents | 1.6 | (2.1) | ||||||
Net change in cash and cash equivalents, including cash balances classified as assets held for sale | (31.1) | (43.6) | ||||||
Less: Net change in cash balances classified as assets held for sale | 0.7 | (0.4) | ||||||
Net change in cash and cash equivalents | (31.8) | (43.2) | ||||||
Cash and cash equivalents at beginning of period | 93.3 | 82.2 | ||||||
Cash and cash equivalents at end of period | $ | 61.5 | $ | 39.0 | ||||
Conagra Brands, Inc. Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures (in millions) | ||||||||||||||||||||
Q2 FY24 | Grocery & | Refrigerated | International | Foodservice | Total | |||||||||||||||
Net Sales | $ | 1,295.1 | $ | 1,338.5 | $ | 279.6 | $ | 294.9 | $ | 3,208.1 | ||||||||||
Impact of foreign exchange | — | — | (6.5) | — | (6.5) | |||||||||||||||
Organic Net Sales | $ | 1,295.1 | $ | 1,338.5 | $ | 273.1 | $ | 294.9 | $ | 3,201.6 | ||||||||||
Year-over-year change - Net Sales | (4.1) | % | (5.8) | % | 8.1 | % | 4.3 | % | (3.2) | % | ||||||||||
Impact of foreign exchange (pp) | — | — | (2.5) | — | (0.2) | |||||||||||||||
Organic Net Sales | (4.1) | % | (5.8) | % | 5.6 | % | 4.3 | % | (3.4) | % | ||||||||||
Volume (Organic) | (3.7) | % | (3.3) | % | 3.3 | % | (2.5) | % | (2.9) | % | ||||||||||
Price/Mix | (0.4) | % | (2.5) | % | 2.3 | % | 6.8 | % | (0.5) | % | ||||||||||
Q2 FY23 | Grocery & | Refrigerated | International | Foodservice | Total | |||||||||||||||
Net Sales | $ | 1,349.9 | $ | 1,421.5 | $ | 258.7 | $ | 282.8 | $ | 3,312.9 | ||||||||||
Net sales from divested businesses | — | — | — | — | — | |||||||||||||||
Organic Net Sales | $ | 1,349.9 | $ | 1,421.5 | $ | 258.7 | $ | 282.8 | $ | 3,312.9 | ||||||||||
Q2 FY24 YTD | Grocery & | Refrigerated | International | Foodservice | Total | |||||||||||||||
Net Sales | $ | 2,498.0 | $ | 2,490.1 | $ | 539.8 | $ | 584.2 | $ | 6,112.1 | ||||||||||
Impact of foreign exchange | — | — | (13.9) | — | (13.9) | |||||||||||||||
Organic Net Sales | $ | 2,498.0 | $ | 2,490.1 | $ | 525.9 | $ | 584.2 | $ | 6,098.2 | ||||||||||
Year-over-year change - Net Sales | (1.6) | % | (5.3) | % | 9.7 | % | 4.7 | % | (1.7) | % | ||||||||||
Impact of foreign exchange (pp) | — | — | (2.9) | — | (0.2) | |||||||||||||||
Organic Net Sales | (1.6) | % | (5.3) | % | 6.8 | % | 4.7 | % | (1.9) | % | ||||||||||
Volume (Organic) | (4.0) | % | (6.7) | % | 1.9 | % | (3.8) | % | (4.7) | % | ||||||||||
Price/Mix | 2.4 | % | 1.4 | % | 4.9 | % | 8.5 | % | 2.8 | % | ||||||||||
Q2 FY23 YTD | Grocery & | Refrigerated | International | Foodservice | Total | |||||||||||||||
Net Sales | $ | 2,538.2 | $ | 2,629.1 | $ | 492.2 | $ | 557.7 | $ | 6,217.2 | ||||||||||
Net sales from divested businesses | — | — | — | — | — | |||||||||||||||
Organic Net Sales | $ | 2,538.2 | $ | 2,629.1 | $ | 492.2 | $ | 557.7 | $ | 6,217.2 | ||||||||||
Conagra Brands, Inc. Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures (in millions) | ||||||||||||||||||||||||
Q2 FY24 | Grocery & | Refrigerated | International | Foodservice | Corporate | Total | ||||||||||||||||||
Operating Profit | $ | 279.2 | $ | 220.2 | $ | 5.9 | $ | 38.0 | $ | (94.8) | $ | 448.5 | ||||||||||||
Restructuring plans | 2.7 | 0.5 | 0.5 | — | (0.2) | 3.5 | ||||||||||||||||||
Impairment of business held for sale | — | — | 34.2 | — | — | 34.2 | ||||||||||||||||||
Legal matters | — | — | — | — | 14.0 | 14.0 | ||||||||||||||||||
Fire related cost (benefit) | — | 1.5 | — | (2.6) | — | (1.1) | ||||||||||||||||||
Corporate hedging derivative losses (gains) | — | — | — | — | 11.2 | 11.2 | ||||||||||||||||||
Adjusted Operating Profit | $ | 281.9 | $ | 222.2 | $ | 40.6 | $ | 35.4 | $ | (69.8) | $ | 510.3 | ||||||||||||
Operating Profit Margin | 21.6 | % | 16.5 | % | 2.1 | % | 12.9 | % | 14.0 | % | ||||||||||||||
Adjusted Operating Profit Margin | 21.8 | % | 16.6 | % | 14.5 | % | 12.0 | % | 15.9 | % | ||||||||||||||
Year-over-year % change - Operating Profit | (18.0) | % | (12.0) | % | (84.0) | % | 33.2 | % | (10.9) | % | (18.4) | % | ||||||||||||
Year-over year % change - Adjusted Operating Profit | (17.3) | % | (14.2) | % | 10.3 | % | 24.3 | % | (31.9) | % | (9.3) | % | ||||||||||||
Year-over-year bps change - Operating Profit | (366) bps | (115) bps | (1,214) bps | 279 bps | (261) bps | |||||||||||||||||||
Year-over-year bps change - Adjusted Operating Profit | (348) bps | (162) bps | 30 bps | 193 bps | (108) bps | |||||||||||||||||||
Q2 FY23 | Grocery & | Refrigerated | International | Foodservice | Corporate | Total | ||||||||||||||||||
Operating Profit | $ | 340.4 | $ | 250.3 | $ | 36.9 | $ | 28.5 | $ | (106.5) | $ | 549.6 | ||||||||||||
Restructuring plans | (0.1) | 0.8 | (0.1) | — | 1.2 | 1.8 | ||||||||||||||||||
Acquisitions and divestitures | — | — | — | — | 0.5 | 0.5 | ||||||||||||||||||
Fire related costs | — | 7.9 | — | — | — | 7.9 | ||||||||||||||||||
Municipal water break costs | 0.6 | — | — | — | — | 0.6 | ||||||||||||||||||
Corporate hedging derivative losses (gains) | — | — | — | — | 2.4 | 2.4 | ||||||||||||||||||
Adjusted Operating Profit | $ | 340.9 | $ | 259.0 | $ | 36.8 | $ | 28.5 | $ | (102.4) | $ | 562.8 | ||||||||||||
Operating Profit Margin | 25.2 | % | 17.6 | % | 14.3 | % | 10.1 | % | 16.6 | % | ||||||||||||||
Adjusted Operating Profit Margin | 25.3 | % | 18.2 | % | 14.2 | % | 10.1 | % | 17.0 | % | ||||||||||||||
Conagra Brands, Inc. Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures (in millions) | ||||||||||||||||||||||||
Q2 FY24 YTD | Grocery & | Refrigerated | International | Foodservice | Corporate | Total | ||||||||||||||||||
Operating Profit | $ | 537.9 | $ | 419.4 | $ | 29.6 | $ | 82.1 | $ | (131.5) | $ | 937.5 | ||||||||||||
Restructuring plans | 7.5 | 1.1 | 19.1 | — | 0.2 | 27.9 | ||||||||||||||||||
Impairment of business held for sale | — | — | 34.2 | — | — | 34.2 | ||||||||||||||||||
Acquisitions and divestitures | — | — | — | — | 0.2 | 0.2 | ||||||||||||||||||
Legal matters | — | — | — | — | 14.0 | 14.0 | ||||||||||||||||||
Fire related cost (benefit) | — | 3.1 | — | (5.9) | — | (2.8) | ||||||||||||||||||
Corporate hedging derivative losses (gains) | — | — | — | — | (16.4) | (16.4) | ||||||||||||||||||
Adjusted Operating Profit | $ | 545.4 | $ | 423.6 | $ | 82.9 | $ | 76.2 | $ | (133.5) | $ | 994.6 | ||||||||||||
Operating Profit Margin | 21.5 | % | 16.8 | % | 5.5 | % | 14.0 | % | 15.3 | % | ||||||||||||||
Adjusted Operating Profit Margin | 21.8 | % | 17.0 | % | 15.4 | % | 13.0 | % | 16.3 | % | ||||||||||||||
Year-over-year % change - Operating Profit | (8.9) | % | 1,134.6 | % | (53.6) | % | 176.5 | % | (30.8) | % | 77.5 | % | ||||||||||||
Year-over year % change - Adjusted Operating Profit | (8.3) | % | (2.6) | % | 30.4 | % | 51.7 | % | (26.7) | % | 3.5 | % | ||||||||||||
Year-over-year bps change - Operating Profit | (174) bps | 1,555 bps | (748) bps | 872 bps | 684 bps | |||||||||||||||||||
Year-over-year bps change - Adjusted Operating Profit | (159) bps | 48 bps | 244 bps | 403 bps | 82 bps | |||||||||||||||||||
Q2 FY23 YTD | Grocery & | Refrigerated | International | Foodservice | Corporate | Total | ||||||||||||||||||
Operating Profit | $ | 590.8 | $ | 34.0 | $ | 63.8 | $ | 29.7 | $ | (190.0) | $ | 528.3 | ||||||||||||
Restructuring plans | 0.2 | 1.4 | (0.2) | — | 5.3 | 6.7 | ||||||||||||||||||
Impairment of businesses held for sale | 0.5 | 5.7 | — | 20.5 | — | 26.7 | ||||||||||||||||||
Acquisitions and divestitures | — | — | — | — | 0.6 | 0.6 | ||||||||||||||||||
Goodwill and brand impairment charges | — | 385.7 | — | — | — | 385.7 | ||||||||||||||||||
Fire related costs | — | 7.9 | — | — | — | 7.9 | ||||||||||||||||||
Municipal water break costs | 3.2 | — | — | — | — | 3.2 | ||||||||||||||||||
Corporate hedging derivative losses (gains) | — | — | — | — | 1.9 | 1.9 | ||||||||||||||||||
Adjusted Operating Profit | $ | 594.7 | $ | 434.7 | $ | 63.6 | $ | 50.2 | $ | (182.2) | $ | 961.0 | ||||||||||||
Operating Profit Margin | 23.3 | % | 1.3 | % | 13.0 | % | 5.3 | % | 8.5 | % | ||||||||||||||
Adjusted Operating Profit Margin | 23.4 | % | 16.5 | % | 12.9 | % | 9.0 | % | 15.5 | % | ||||||||||||||
Conagra Brands, Inc. Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures (in millions) | ||||||||||||||||||||||||||||||||
Q2 FY24 | Gross | Selling, | Operating | Income | Income tax | Income tax | Net income | Diluted EPS | ||||||||||||||||||||||||
Reported | $ | 846.6 | $ | 398.1 | $ | 448.5 | $ | 334.8 | $ | 102.9 | 26.5 | % | $ | 286.2 | $ | 0.60 | ||||||||||||||||
% of Net Sales | 26.4 | % | 12.4 | % | 14.0 | % | ||||||||||||||||||||||||||
Restructuring plans | 2.8 | 0.7 | 3.5 | 3.5 | 0.8 | 2.7 | 0.01 | |||||||||||||||||||||||||
Corporate hedging derivative losses (gains) | 11.2 | — | 11.2 | 11.2 | 2.6 | 8.6 | 0.02 | |||||||||||||||||||||||||
Advertising and promotion expenses 2 | — | 72.5 | — | — | — | — | — | |||||||||||||||||||||||||
Fire related cost (benefit) | 1.5 | (2.6) | (1.1) | (1.1) | (0.3) | (0.8) | — | |||||||||||||||||||||||||
Impairment of business held for sale | — | 34.2 | 34.2 | 34.2 | (0.1) | 34.3 | 0.07 | |||||||||||||||||||||||||
Legal matters | — | 14.0 | 14.0 | 14.0 | 3.6 | 10.4 | 0.02 | |||||||||||||||||||||||||
Rounding | — | — | — | — | — | — | (0.01) | |||||||||||||||||||||||||
Adjusted | $ | 862.1 | $ | 279.3 | $ | 510.3 | $ | 396.6 | $ | 109.5 | 24.3 | % | $ | 341.4 | $ | 0.71 | ||||||||||||||||
% of Net Sales | 26.9 | % | 8.7 | % | 15.9 | % | ||||||||||||||||||||||||||
Year-over-year % of net sales change - reported | (145) bps | 116 bps | (261) bps | |||||||||||||||||||||||||||||
Year-over-year % of net sales change - adjusted | (129) bps | (9) bps | (108) bps | |||||||||||||||||||||||||||||
Year-over-year change - reported | (8.2) | % | 6.8 | % | (18.4) | % | (26.5) | % | (16.0) | % | (25.1) | % | (24.1) | % | ||||||||||||||||||
Year-over-year change - adjusted | (7.6) | % | (4.1) | % | (9.3) | % | (15.3) | % | (12.9) | % | (12.9) | % | (12.3) | % | ||||||||||||||||||
Q2 FY23 | Gross | Selling, | Operating | Income | Income tax | Income tax | Net income | Diluted EPS | ||||||||||||||||||||||||
Reported | $ | 922.3 | $ | 372.7 | $ | 549.6 | $ | 455.4 | $ | 122.5 | 24.3 | % | $ | 381.9 | $ | 0.79 | ||||||||||||||||
% of Net Sales | 27.8 | % | 11.3 | % | 16.6 | % | ||||||||||||||||||||||||||
Restructuring plans | 0.1 | 1.7 | 1.8 | 1.8 | 0.5 | 1.3 | — | |||||||||||||||||||||||||
Acquisitions and divestitures | — | 0.5 | 0.5 | 0.5 | 0.1 | 0.4 | — | |||||||||||||||||||||||||
Corporate hedging derivative losses (gains) | 2.4 | — | 2.4 | 2.4 | 0.6 | 1.8 | — | |||||||||||||||||||||||||
Advertising and promotion expenses 2 | — | 78.8 | — | — | — | — | — | |||||||||||||||||||||||||
Fire related costs | 7.4 | 0.5 | 7.9 | 7.9 | 1.9 | 6.0 | 0.01 | |||||||||||||||||||||||||
Municipal water break costs | 0.6 | — | 0.6 | 0.6 | 0.2 | 0.4 | — | |||||||||||||||||||||||||
Rounding | — | — | — | — | — | — | 0.01 | |||||||||||||||||||||||||
Adjusted | $ | 932.8 | $ | 291.2 | $ | 562.8 | $ | 468.6 | $ | 125.8 | 24.3 | % | $ | 391.8 | $ | 0.81 | ||||||||||||||||
% of Net Sales | 28.2 | % | 8.8 | % | 17.0 | % | ||||||||||||||||||||||||||
1 Operating profit is derived from taking Income from continuing operations before income taxes and equity method investment earnings, adding back Interest expense, net and removing Pension and postretirement non-service (income) expense. |
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 Non-GAAP Financial Measures to Reported Financial Measures (in millions) | ||||||||||||||||||||||||||||||||
Q2 FY24 YTD | Gross | Selling, | Operating | Income | Income tax | Income tax | Net income | Diluted EPS | ||||||||||||||||||||||||
Reported | $ | 1,669.7 | $ | 732.2 | $ | 937.5 | $ | 717.5 | $ | 201.2 | 24.9 | % | $ | 605.9 | $ | 1.26 | ||||||||||||||||
% of Net Sales | 27.3 | % | 12.0 | % | 15.3 | % | ||||||||||||||||||||||||||
Restructuring plans | 7.1 | 20.8 | 27.9 | 27.9 | 7.1 | 20.8 | 0.04 | |||||||||||||||||||||||||
Acquisitions and divestitures | — | 0.2 | 0.2 | 0.2 | — | 0.2 | — | |||||||||||||||||||||||||
Corporate hedging derivative losses (gains) | (16.4) | — | (16.4) | (16.4) | (4.2) | (12.2) | (0.03) | |||||||||||||||||||||||||
Advertising and promotion expenses 2 | — | 131.2 | — | — | — | — | — | |||||||||||||||||||||||||
Fire related cost (benefit) | 3.1 | (5.9) | (2.8) | (2.8) | (0.7) | (2.1) | — | |||||||||||||||||||||||||
Impairment of business held for sale | — | 34.2 | 34.2 | 34.2 | (0.1) | 34.3 | 0.07 | |||||||||||||||||||||||||
Legal matters | — | 14.0 | 14.0 | 14.0 | 3.6 | 10.4 | 0.02 | |||||||||||||||||||||||||
Rounding | — | — | — | — | — | — | 0.01 | |||||||||||||||||||||||||
Adjusted | $ | 1,663.5 | $ | 537.7 | $ | 994.6 | $ | 774.6 | $ | 206.9 | 23.9 | % | $ | 657.3 | $ | 1.37 | ||||||||||||||||
% of Net Sales | 27.2 | % | 8.8 | % | 16.3 | % | ||||||||||||||||||||||||||
Year-over-year % of net sales change - reported | 90 bps | (594) bps | 684 bps | |||||||||||||||||||||||||||||
Year-over-year % of net sales change - adjusted | 59 bps | (11) bps | 82 bps | |||||||||||||||||||||||||||||
Year-over-year change - reported | 1.7 | % | (34.3) | % | 77.5 | % | 109.1 | % | 47.0 | % | 99.1 | % | 100.0 | % | ||||||||||||||||||
Year-over-year change - adjusted | 0.5 | % | (2.9) | % | 3.5 | % | (0.1) | % | (0.2) | % | (1.4) | % | (0.7) | % | ||||||||||||||||||
Q2 FY23 YTD | Gross | Selling, | Operating | Income | Income tax | Income tax | Net income | Diluted EPS | ||||||||||||||||||||||||
Reported | $ | 1,642.6 | $ | 1,114.3 | $ | 528.3 | $ | 343.1 | $ | 136.9 | 31.0 | % | $ | 304.4 | $ | 0.63 | ||||||||||||||||
% of Net Sales | 26.4 | % | 17.9 | % | 8.5 | % | ||||||||||||||||||||||||||
Restructuring plans | 0.3 | 6.4 | 6.7 | 6.7 | 1.7 | 5.0 | 0.01 | |||||||||||||||||||||||||
Acquisitions and divestitures | — | 0.6 | 0.6 | 0.6 | 0.1 | 0.5 | — | |||||||||||||||||||||||||
Corporate hedging derivative losses (gains) | 1.9 | — | 1.9 | 1.9 | 0.5 | 1.4 | — | |||||||||||||||||||||||||
Advertising and promotion expenses 2 | — | 140.7 | — | — | — | — | — | |||||||||||||||||||||||||
Fire related costs | 7.4 | 0.5 | 7.9 | 7.9 | 1.9 | 6.0 | 0.01 | |||||||||||||||||||||||||
Municipal water break costs | 3.2 | — | 3.2 | 3.2 | 0.8 | 2.4 | — | |||||||||||||||||||||||||
Impairment of businesses held for sale | — | 26.7 | 26.7 | 26.7 | 6.6 | 20.1 | 0.04 | |||||||||||||||||||||||||
Goodwill and brand impairment charges | — | 385.7 | 385.7 | 385.7 | 58.9 | 326.8 | 0.68 | |||||||||||||||||||||||||
Rounding | — | — | — | — | — | — | 0.01 | |||||||||||||||||||||||||
Adjusted | $ | 1,655.4 | $ | 553.7 | $ | 961.0 | $ | 775.8 | $ | 207.4 | 23.7 | % | $ | 666.6 | $ | 1.38 | ||||||||||||||||
% of Net Sales | 26.6 | % | 8.9 | % | 15.5 | % | ||||||||||||||||||||||||||
1 Operating profit is derived from taking Income from continuing operations before income taxes and equity method investment earnings, adding back Interest expense, net and removing Pension and postretirement non-service (income) expense. |
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 Non-GAAP Financial Measures to Reported Financial Measures (in millions) | ||||||||||||
November 26, | November 27, | % Change | ||||||||||
Net cash flows from operating activities | $ | 854.6 | $ | 297.8 | 187.0 | % | ||||||
Additions to property, plant and equipment | (214.0) | (188.4) | 13.6 | % | ||||||||
Free cash flow | $ | 640.6 | $ | 109.4 | 485.6 | % | ||||||
Q2 FY24 | Q2 FY23 | |||||||
Notes payable | $ | 559.0 | $ | 363.1 | ||||
Current installments of long-term debt | 1,017.3 | 954.3 | ||||||
Senior long-term debt, excluding current installments | 7,493.3 | 8,081.8 | ||||||
Total Debt | $ | 9,069.6 | $ | 9,399.2 | ||||
Less: Cash | 61.5 | 39.0 | ||||||
Net Debt | $ | 9,008.1 | $ | 9,360.2 | ||||
Q2 FY24 | ||||
Net Debt1 | $ | 9,008.1 | ||
Net income attributable to Conagra Brands, Inc. | $ | 985.1 | ||
Add Back: Income tax expense | 283.0 | |||
Income tax expense attributable to noncontrolling interests | (0.5) | |||
Interest expense, net | 431.5 | |||
Depreciation | 326.2 | |||
Amortization | 54.1 | |||
Earnings before interest, taxes, depreciation, and amortization (EBITDA) | $ | 2,079.4 | ||
Restructuring plans2 | 27.4 | |||
Acquisitions and divestitures | 8.0 | |||
Corporate hedging derivative losses (gains) | 18.8 | |||
Goodwill and brand impairment charges3 | 343.6 | |||
Legal matters | 17.8 | |||
Fire related costs | 2.7 | |||
Municipal water break costs | 0.3 | |||
Third-party vendor cybersecurity incident | 4.4 | |||
Impairment of business held for sale | 34.2 | |||
Adjusted EBITDA | $ | 2,536.6 | ||
Net Debt to Adjusted EBITDA4 | 3.55 | |||
1 As of November 26, 2023. |
2 Excludes comparability items related to depreciation. |
3 Excludes comparability items attributable to noncontrolling interests. |
4 The company defines its net debt leverage ratio as net debt divided by adjusted EBITDA for the trailing twelve month period. |
Conagra Brands, Inc. Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures (in millions) | ||||||||||||
Q2 FY24 | Q2 FY23 | % Change | ||||||||||
Net income attributable to Conagra Brands, Inc. | $ | 286.2 | $ | 381.9 | (25.1) | % | ||||||
Add Back: Income tax expense | 102.9 | 122.5 | ||||||||||
Income tax expense attributable to noncontrolling interests | (0.1) | (0.1) | ||||||||||
Interest expense, net | 113.3 | 100.3 | ||||||||||
Depreciation | 86.0 | 77.8 | ||||||||||
Amortization | 13.3 | 14.7 | ||||||||||
Earnings before interest, taxes, depreciation, and amortization | $ | 601.6 | $ | 697.1 | (13.7) | % | ||||||
Restructuring plans 1 | 0.8 | 1.8 | ||||||||||
Acquisitions and divestitures | — | 0.5 | ||||||||||
Corporate hedging derivative losses (gains) | 11.2 | 2.4 | ||||||||||
Fire related cost (benefit) | (1.1) | 7.9 | ||||||||||
Municipal water break costs | — | 0.6 | ||||||||||
Impairment of business held for sale | 34.2 | — | ||||||||||
Legal matters | 14.0 | — | ||||||||||
Adjusted Earnings before interest, taxes, depreciation, and amortization | $ | 660.7 | $ | 710.3 | (7.0) | % | ||||||
Q2 FY24 YTD | Q2 FY23 YTD | % Change | ||||||||||
Net income attributable to Conagra Brands, Inc. | $ | 605.9 | $ | 304.4 | 99.1 | % | ||||||
Add Back: Income tax expense | 201.2 | 136.9 | ||||||||||
Income tax expense attributable to noncontrolling interests | (0.1) | (0.1) | ||||||||||
Interest expense, net | 219.3 | 197.4 | ||||||||||
Depreciation | 169.1 | 156.0 | ||||||||||
Amortization | 26.8 | 29.5 | ||||||||||
Earnings before interest, taxes, depreciation, and amortization | $ | 1,222.2 | $ | 824.1 | 48.3 | % | ||||||
Restructuring plans 1 | 21.8 | 6.7 | ||||||||||
Acquisitions and divestitures | 0.2 | 0.6 | ||||||||||
Corporate hedging derivative losses (gains) | (16.4) | 1.9 | ||||||||||
Fire related cost (benefit) | (2.8) | 7.9 | ||||||||||
Municipal water break costs | — | 3.2 | ||||||||||
Impairment of businesses held for sale | 34.2 | 26.7 | ||||||||||
Goodwill and brand impairment charges | — | 385.7 | ||||||||||
Legal matters | 14.0 | — | ||||||||||
Adjusted Earnings before interest, taxes, depreciation, and amortization | $ | 1,273.2 | $ | 1,256.8 | 1.3 | % | ||||||
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
View original content to download multimedia:https://www.prnewswire.com/news-releases/conagra-brands-reports-second-quarter-results-302025807.html
SOURCE Conagra Brands, Inc.
FAQ
What is the ticker symbol for Conagra Brands?
What were the net sales for Conagra Brands in the second quarter of fiscal year 2024?
What was the percentage decrease in organic net sales for Conagra Brands in the second quarter of fiscal year 2024?
What was the percentage decrease in operating margin for Conagra Brands in the second quarter of fiscal year 2024?
What was the diluted EPS for Conagra Brands in the second quarter of fiscal year 2024?
What is the updated guidance for Conagra Brands' organic net sales in fiscal year 2024?
