CONAGRA BRANDS REPORTS THIRD QUARTER RESULTS
- Improvements in operating margin and gross profit.
- Strategic investments in domestic retail business resulted in volume trends improvement and margin recovery.
- Adjusted operating margin guidance increased.
- Fiscal 2024 guidance for organic net sales and adjusted EPS reaffirmed.
- 1.7% decrease in net sales.
- 9.9% decline in diluted EPS.
Insights
The reported decrease in net sales and organic net sales by Conagra Brands indicates a contraction in revenue streams, which is often a red flag for investors. The decline in diluted EPS by 9.9% is another critical metric, as EPS is a direct indicator of a company's profitability on a per-share basis. However, the increase in gross profit and gross margin suggests an effective cost management strategy that has helped mitigate the impact of sales declines. The commitment to increase the adjusted operating margin guidance, despite the revenue decrease, shows confidence in operational efficiency moving forward.
From a financial perspective, the increase in SG&A expenses, particularly due to higher incentive compensation, raises questions about cost structure sustainability. Additionally, the increase in net interest expense, although marginal, is noteworthy in the context of rising interest rates, which could affect future debt servicing costs. The reaffirmation of the adjusted EPS guidance provides a stable outlook, yet the projected decrease in organic net sales reflects ongoing challenges in driving top-line growth.
Overall, the mixed financial results, with some positive aspects like margin improvements and cost savings, juxtaposed with challenges in sales volume and increased expenses, present a nuanced picture for stakeholders. The company's performance in the face of industry headwinds, such as inflation and changing consumer trends, will be closely monitored by investors.
The reported results from Conagra Brands offer insights into consumer behavior and market trends. The decrease in volume, particularly in the Refrigerated & Frozen segment, could be indicative of a broader shift in consumer preferences or increased competition. The company's strategic investments in this segment, while impacting price/mix negatively, suggest a response to these market dynamics aimed at defending or growing market share.
The Grocery & Snacks segment's performance, with an increase in both reported and organic net sales, highlights resilience in certain product categories. The ability to gain dollar share in snacking and staples might reflect effective marketing strategies or a consumer trend towards trusted, staple goods amid economic uncertainty. The contrast between segments underscores the importance of portfolio diversification and the need for targeted strategies to cater to different consumer demands.
Internationally, the positive impact of foreign exchange and organic sales growth in Mexico exemplifies the benefits of geographical diversification. These results also highlight the potential for international markets to contribute to the overall health of the company during periods of domestic market challenges.
Third quarter Highlights
- Net sales decreased
1.7% from the prior year quarter; organic net sales decreased2.0% - Operating margin was
15.5% representing a 33 basis point decrease over the prior year quarter. Adjusted operating margin was16.4% representing a 49 basis point decrease over the prior year quarter. - Diluted earnings per share (EPS) was
$0.64 9.9% decrease over the prior year quarter. Adjusted EPS was$0.69 9.2% decrease over the prior year quarter. - The company is increasing fiscal 2024 adjusted operating margin guidance and reaffirming organic net sales and adjusted EPS guidance.
CEO Perspective
Sean Connolly, president and chief executive officer of Conagra Brands, commented, "Our Q3 results demonstrate steady progress stemming from strong execution. Volume trends in our domestic retail business continued to improve as targeted investments, particularly in frozen, generated strong lifts and unit share gains. Outstanding progress on our cost savings initiatives allowed us to support strategic investments in our brands while sustaining margin recovery. We also continued to deliver substantial improvements in free cash flow enabling us to meaningfully reduce our net leverage ratio over the first three quarters of 2024. Our long-term focus remains on executing our strategic priorities and generating value for our shareholders."
Total Company Third Quarter Results
In the quarter, net sales were
- a
0.3% increase from the favorable impact of foreign exchange; and - a
2.0% decrease in organic net sales.
The
Gross profit increased
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 Third Quarter Results
Reported and organic net sales for the Grocery & Snacks segment increased
Operating profit for the segment increased
Refrigerated & Frozen Segment Third Quarter Results
Reported and organic net sales for the Refrigerated & Frozen segment decreased
Operating profit for the segment decreased
International Segment Third Quarter Results
Net sales for the International segment increased
- a
3.6% increase from the favorable impact of foreign exchange; and - a
1.0% increase in organic net sales.
On an organic net sales basis, price/mix decreased
Operating profit for the segment increased
Foodservice Segment Third Quarter Results
Reported and organic net sales for the Foodservice segment decreased
Operating profit for the segment increased
Other Third Quarter Items
Corporate expenses increased
We incurred pension and post-retirement non-service expense of
In the quarter, equity method investment earnings decreased
In the quarter, the effective tax rate was
In the quarter, the company paid a dividend of
Outlook
The company is increasing fiscal 2024 Adjusted Operating Margin guidance to approximately
- Net Leverage Ratio of approximately 3.44x
- Capital expenditures of approximately
$425M - Interest expense of approximately
$435M
The company is reaffirming fiscal 2024 guidance for the following:
- Organic net sales to decrease between
1.0% and2.0% compared to fiscal 2023 - Adjusted EPS is expected to be between
$2.60 $2.65 - 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
$0.01 - Approximately
$0.03 - Approximately
$0.01
The following are included in the
- Approximately
$0.01 - Approximately
$0.04
Please note that certain prior year amounts have been reclassified to conform with current year presentation.
Discussion of Results
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. 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
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) | ||||||||||||
THIRD QUARTER | ||||||||||||
Thirteen Weeks | Thirteen Weeks | |||||||||||
February 25, | February 26, | Percent Change | ||||||||||
Net sales | $ | 3,032.9 | $ | 3,086.5 | (1.7) | % | ||||||
Costs and expenses: | ||||||||||||
Cost of goods sold | 2,174.1 | 2,247.7 | (3.3) | % | ||||||||
Selling, general and administrative expenses | 387.4 | 348.8 | 11.0 | % | ||||||||
Pension and postretirement non-service expense (income) | 1.4 | (6.0) | N/A | |||||||||
Interest expense, net | 106.5 | 104.2 | 2.2 | % | ||||||||
Income before income taxes and equity method investment earnings | 363.5 | 391.8 | (7.2) | % | ||||||||
Income tax expense | 95.9 | 100.1 | (4.2) | % | ||||||||
Equity method investment earnings | 41.2 | 50.5 | (18.5) | % | ||||||||
Net income | $ | 308.8 | $ | 342.2 | (9.8) | % | ||||||
Less: Net income attributable to noncontrolling interests | 0.2 | 0.5 | (70.9) | % | ||||||||
Net income attributable to Conagra Brands, Inc. | $ | 308.6 | $ | 341.7 | (9.7) | % | ||||||
Earnings per share - basic | ||||||||||||
Net income attributable to Conagra Brands, Inc. | $ | 0.64 | $ | 0.72 | (11.1) | % | ||||||
Basic weighted average shares outstanding | 478.8 | 477.5 | 0.3 | % | ||||||||
Earnings per share - diluted | ||||||||||||
Net income attributable to Conagra Brands, Inc. | $ | 0.64 | $ | 0.71 | (9.9) | % | ||||||
Diluted weighted average shares outstanding | 480.0 | 479.4 | 0.2 | % | ||||||||
Conagra Brands, Inc. Consolidated Statements of Earnings (in millions) (unaudited) | ||||||||||||
THIRD QUARTER YEAR TO DATE | ||||||||||||
Thirty-Nine | Thirty-Nine | |||||||||||
February 25, | February 26, | Percent Change | ||||||||||
Net sales | $ | 9,145.0 | $ | 9,303.7 | (1.7) | % | ||||||
Costs and expenses: | ||||||||||||
Cost of goods sold | 6,616.5 | 6,822.3 | (3.0) | % | ||||||||
Selling, general and administrative expenses | 1,119.6 | 1,463.1 | (23.5) | % | ||||||||
Pension and postretirement non-service income | 2.1 | (18.2) | N/A | |||||||||
Interest expense, net | 325.8 | 301.6 | 8.0 | % | ||||||||
Income before income taxes and equity method investment earnings | 1,081.0 | 734.9 | 47.1 | % | ||||||||
Income tax expense | 297.1 | 237.0 | 25.4 | % | ||||||||
Equity method investment earnings | 131.0 | 149.0 | (12.1) | % | ||||||||
Net income | $ | 914.9 | $ | 646.9 | 41.4 | % | ||||||
Less: Net income attributable to noncontrolling interests | 0.4 | 0.8 | (48.1) | % | ||||||||
Net income attributable to Conagra Brands, Inc. | $ | 914.5 | $ | 646.1 | 41.5 | % | ||||||
Earnings per share - basic | ||||||||||||
Net income attributable to Conagra Brands, Inc. | $ | 1.91 | $ | 1.35 | 41.5 | % | ||||||
Basic weighted average shares outstanding | 478.5 | 479.3 | (0.2) | % | ||||||||
Earnings per share - diluted | ||||||||||||
Net income attributable to Conagra Brands, Inc. | $ | 1.91 | $ | 1.34 | 42.5 | % | ||||||
Diluted weighted average shares outstanding | 479.9 | 481.0 | (0.2) | % | ||||||||
Conagra Brands, Inc. Consolidated Balance Sheets (in millions) (unaudited) | ||||||||
February 25, | May 28, | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 78.5 | $ | 93.3 | ||||
Receivables, less allowance for doubtful accounts of | 916.5 | 952.8 | ||||||
Inventories | 2,143.4 | 2,212.2 | ||||||
Prepaid expenses and other current assets | 117.2 | 92.4 | ||||||
Current assets held for sale | 30.2 | 34.3 | ||||||
Total current assets | 3,285.8 | 3,385.0 | ||||||
Property, plant and equipment, net | 2,876.7 | 2,736.4 | ||||||
Goodwill | 11,109.9 | 11,109.4 | ||||||
Brands, trademarks and other intangibles, net | 3,152.1 | 3,192.3 | ||||||
Other assets | 1,404.8 | 1,506.2 | ||||||
Noncurrent assets held for sale | 90.6 | 123.3 | ||||||
$ | 21,919.9 | $ | 22,052.6 | |||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities | ||||||||
Notes payable | $ | 166.3 | $ | 636.3 | ||||
Current installments of long-term debt | 1,019.2 | 1,516.0 | ||||||
Accounts and other payables | 1,418.0 | 1,525.5 | ||||||
Accrued payroll | 168.3 | 163.5 | ||||||
Other accrued liabilities | 686.2 | 583.3 | ||||||
Current liabilities held for sale | 12.9 | 16.1 | ||||||
Total current liabilities | 3,470.9 | 4,440.7 | ||||||
Senior long-term debt, excluding current installments | 7,491.8 | 7,081.3 | ||||||
Other noncurrent liabilities | 1,729.4 | 1,718.0 | ||||||
Noncurrent liabilities held for sale | 2.3 | 5.3 | ||||||
Total stockholders' equity | 9,225.5 | 8,807.3 | ||||||
$ | 21,919.9 | $ | 22,052.6 | |||||
Conagra Brands, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (in millions)
| ||||||||
(unaudited) | Thirty-Nine | Thirty-Nine | ||||||
February 25, | February 26, | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 914.9 | $ | 646.9 | ||||
Adjustments to reconcile net income to net cash flows from operating activities: | ||||||||
Depreciation and amortization | 291.7 | 277.0 | ||||||
Asset impairment charges | 50.9 | 417.7 | ||||||
Equity method investment earnings less than (in excess) of distributions | 69.5 | (69.8) | ||||||
Stock-settled share-based payments expense | 18.7 | 68.8 | ||||||
Contributions to pension plans | (9.2) | (9.6) | ||||||
Pension expense (benefit) | 9.3 | (10.4) | ||||||
Other items | 13.9 | (0.9) | ||||||
Change in operating assets and liabilities: | ||||||||
Receivables | 25.5 | (96.7) | ||||||
Inventories | 73.3 | (340.4) | ||||||
Deferred income taxes and income taxes payable, net | 43.1 | (58.8) | ||||||
Prepaid expenses and other current assets | (31.3) | 2.4 | ||||||
Accounts and other payables | (36.5) | (157.9) | ||||||
Accrued payroll | 4.6 | 7.4 | ||||||
Other accrued liabilities | 76.2 | 71.8 | ||||||
Litigation accruals | 16.7 | (18.6) | ||||||
Deferred employer payroll taxes | — | (25.5) | ||||||
Net cash flows from operating activities | 1,531.3 | 703.4 | ||||||
Cash flows from investing activities: | ||||||||
Additions to property, plant and equipment | (309.6) | (267.4) | ||||||
Sale of property, plant and equipment | 0.6 | 3.1 | ||||||
Purchase of marketable securities | (8.2) | (3.4) | ||||||
Sale of marketable securities | 8.2 | 3.4 | ||||||
Proceeds from insurance recoveries | 11.9 | — | ||||||
Other items | 1.5 | 4.1 | ||||||
Net cash flows from investing activities | (295.6) | (260.2) | ||||||
Cash flows from financing activities: | ||||||||
Issuances of short-term borrowings, maturities greater than 90 days | 134.5 | 239.5 | ||||||
Repayment of short-term borrowings, maturities greater than 90 days | (146.6) | (259.8) | ||||||
Net (repayment) issuance of other short-term borrowings, maturities less than or equal to | (461.7) | 388.2 | ||||||
Issuance of long-term debt | 500.0 | 500.0 | ||||||
Repayment of long-term debt | (766.8) | (708.0) | ||||||
Debt issuance costs | (3.3) | (4.1) | ||||||
Repurchase of Conagra Brands, Inc. common shares | — | (150.0) | ||||||
Cash dividends paid | (492.0) | (466.4) | ||||||
Exercise of stock options and issuance of other stock awards, including tax withholdings | (13.8) | 0.9 | ||||||
Other items | (0.6) | 5.2 | ||||||
Net cash flows from financing activities | (1,250.3) | (454.5) | ||||||
Effect of exchange rate changes on cash and cash equivalents | — | (0.8) | ||||||
Net change in cash and cash equivalents, including cash balances classified as assets held for | (14.6) | (12.1) | ||||||
Less: Net change in cash balances classified as assets held for sale | 0.2 | — | ||||||
Net change in cash and cash equivalents | (14.8) | (12.1) | ||||||
Cash and cash equivalents at beginning of period | 93.3 | 82.2 | ||||||
Cash and cash equivalents at end of period | $ | 78.5 | $ | 70.1 | ||||
Conagra Brands, Inc. Reconciliation of Q3 FY24 QTD and YTD Organic Net Sales by Segment - YOY Change (in millions)
| ||||||||||||||||||||
Q3 FY24 | Grocery | Refrigerated | International | Foodservice | Total | |||||||||||||||
Net Sales | $ | 1,286.0 | $ | 1,202.4 | $ | 271.7 | $ | 272.8 | $ | 3,032.9 | ||||||||||
Impact of foreign exchange | — | — | (9.4) | — | (9.4) | |||||||||||||||
Organic Net Sales | $ | 1,286.0 | $ | 1,202.4 | $ | 262.3 | $ | 272.8 | $ | 3,023.5 | ||||||||||
Year-over-year change - Net Sales | 3.4 | % | (8.1) | % | 4.6 | % | (1.0) | % | (1.7) | % | ||||||||||
Impact of foreign exchange (pp) | — | — | (3.6) | — | (0.3) | |||||||||||||||
Organic Net Sales | 3.4 | % | (8.1) | % | 1.0 | % | (1.0) | % | (2.0) | % | ||||||||||
Volume (Organic) | (0.8) | % | (3.3) | % | 2.7 | % | (4.8) | % | (1.8) | % | ||||||||||
Price/Mix | 4.2 | % | (4.8) | % | (1.7) | % | 3.8 | % | (0.2) | % | ||||||||||
Q3 FY23 | Grocery & | Refrigerated | International | Foodservice | Total Conagra | |||||||||||||||
Net Sales | $ | 1,243.7 | $ | 1,307.7 | $ | 259.7 | $ | 275.4 | $ | 3,086.5 | ||||||||||
Net sales from divested businesses | — | — | — | — | — | |||||||||||||||
Organic Net Sales | $ | 1,243.7 | $ | 1,307.7 | $ | 259.7 | $ | 275.4 | $ | 3,086.5 | ||||||||||
Q3 FY24 YTD | Grocery & | Refrigerated | International | Foodservice | Total | |||||||||||||||
Net Sales | $ | 3,784.0 | $ | 3,692.5 | $ | 811.5 | $ | 857.0 | $ | 9,145.0 | ||||||||||
Impact of foreign exchange | — | — | (23.3) | — | (23.3) | |||||||||||||||
Organic Net Sales | $ | 3,784.0 | $ | 3,692.5 | $ | 788.2 | $ | 857.0 | $ | 9,121.7 | ||||||||||
Year-over-year change - Net Sales | 0.1 | % | (6.2) | % | 7.9 | % | 2.9 | % | (1.7) | % | ||||||||||
Impact of foreign exchange (pp) | — | — | (3.1) | — | (0.3) | |||||||||||||||
Organic Net Sales | 0.1 | % | (6.2) | % | 4.8 | % | 2.9 | % | (2.0) | % | ||||||||||
Volume (Organic) | (3.0) | % | (5.6) | % | 2.1 | % | (4.1) | % | (3.7) | % | ||||||||||
Price/Mix | 3.1 | % | (0.6) | % | 2.7 | % | 7.0 | % | 1.7 | % | ||||||||||
Q3 FY23 YTD | Grocery & | Refrigerated | International | Foodservice | Total Conagra | |||||||||||||||
Net Sales | $ | 3,781.9 | $ | 3,936.8 | $ | 751.9 | $ | 833.1 | $ | 9,303.7 | ||||||||||
Net sales from divested businesses | — | — | — | — | — | |||||||||||||||
Organic Net Sales | $ | 3,781.9 | $ | 3,936.8 | $ | 751.9 | $ | 833.1 | $ | 9,303.7 | ||||||||||
Conagra Brands, Inc. Reconciliation of Q3 FY24 Adj. Operating Profit by Segment - YOY Change (in millions) | ||||||||||||||||||||||||
Q3 FY24 | Grocery & | Refrigerated | International | Foodservice | Corporate | Total Conagra | ||||||||||||||||||
Operating Profit | $ | 299.3 | $ | 201.5 | $ | 42.2 | $ | 35.4 | $ | (107.0) | $ | 471.4 | ||||||||||||
Restructuring plans | 0.2 | 0.5 | 1.1 | — | (0.1) | 1.7 | ||||||||||||||||||
Legal matters | — | — | — | — | 17.9 | 17.9 | ||||||||||||||||||
Fire related costs | — | 0.6 | — | — | — | 0.6 | ||||||||||||||||||
Corporate hedging derivative losses | — | — | — | — | 6.8 | 6.8 | ||||||||||||||||||
Adjusted Operating Profit | $ | 299.5 | $ | 202.6 | $ | 43.3 | $ | 35.4 | $ | (82.4) | $ | 498.4 | ||||||||||||
Operating Profit Margin | 23.3 | % | 16.8 | % | 15.6 | % | 13.0 | % | 15.5 | % | ||||||||||||||
Adjusted Operating Profit Margin | 23.3 | % | 16.9 | % | 15.9 | % | 13.0 | % | 16.4 | % | ||||||||||||||
Year-over-year % change - Operating | 16.7 | % | (23.6) | % | 13.9 | % | 48.7 | % | 17.6 | % | (3.8) | % | ||||||||||||
Year-over year % change - Adjusted | 16.5 | % | (25.2) | % | 16.4 | % | 40.6 | % | 21.2 | % | (4.6) | % | ||||||||||||
Year-over-year bps change - Operating | 265 bps | (340) bps | 126 bps | 434 bps | (33) bps | |||||||||||||||||||
Year-over-year bps change - Adjusted | 261 bps | (385) bps | 161 bps | 383 bps | (49) bps | |||||||||||||||||||
Q3 FY23 | Grocery & | Refrigerated | International | Foodservice | Corporate | Total | ||||||||||||||||||
Operating Profit | $ | 256.4 | $ | 263.6 | $ | 37.1 | $ | 23.8 | $ | (90.9) | $ | 490.0 | ||||||||||||
Restructuring plans | 0.3 | 1.9 | 0.1 | — | 0.2 | 2.5 | ||||||||||||||||||
Acquisitions and divestitures | — | — | — | — | 0.2 | 0.2 | ||||||||||||||||||
Fire related costs | — | 5.2 | — | 1.4 | — | 6.6 | ||||||||||||||||||
Municipal water break costs | 0.3 | — | — | — | — | 0.3 | ||||||||||||||||||
Corporate hedging derivative losses | — | — | — | — | 22.7 | 22.7 | ||||||||||||||||||
Adjusted Operating Profit | $ | 257.0 | $ | 270.7 | $ | 37.2 | $ | 25.2 | $ | (67.8) | $ | 522.3 | ||||||||||||
Operating Profit Margin | 20.6 | % | 20.2 | % | 14.3 | % | 8.6 | % | 15.9 | % | ||||||||||||||
Adjusted Operating Profit Margin | 20.7 | % | 20.7 | % | 14.3 | % | 9.1 | % | 16.9 | % | ||||||||||||||
Conagra Brands, Inc. Reconciliation of Q3 FY24 YTD Adj. Operating Profit by Segment - YOY Change (in millions) | ||||||||||||||||||||||||
Q3 FY24 YTD | Grocery & | Refrigerated | International | Foodservice | Corporate | Total | ||||||||||||||||||
Operating Profit | $ | 837.2 | $ | 620.9 | $ | 71.8 | $ | 117.5 | $ | (238.5) | $ | 1,408.9 | ||||||||||||
Restructuring plans | 7.7 | 1.6 | 20.2 | — | 0.1 | 29.6 | ||||||||||||||||||
Impairment of business held for sale | — | — | 34.2 | — | — | 34.2 | ||||||||||||||||||
Acquisitions and divestitures | — | — | — | — | 0.2 | 0.2 | ||||||||||||||||||
Legal matters | — | — | — | — | 31.9 | 31.9 | ||||||||||||||||||
Fire related costs (benefit) | — | 3.7 | — | (5.9) | — | (2.2) | ||||||||||||||||||
Corporate hedging derivative losses | — | — | — | — | (9.6) | (9.6) | ||||||||||||||||||
Adjusted Operating Profit | $ | 844.9 | $ | 626.2 | $ | 126.2 | $ | 111.6 | $ | (215.9) | $ | 1,493.0 | ||||||||||||
Operating Profit Margin | 22.1 | % | 16.8 | % | 8.9 | % | 13.7 | % | 15.4 | % | ||||||||||||||
Adjusted Operating Profit Margin | 22.3 | % | 17.0 | % | 15.6 | % | 13.0 | % | 16.3 | % | ||||||||||||||
Year-over-year % change - Operating | (1.2) | % | 108.6 | % | (28.8) | % | 119.6 | % | (15.1) | % | 38.4 | % | ||||||||||||
Year-over year % change - Adjusted | (0.8) | % | (11.2) | % | 25.2 | % | 48.0 | % | (13.7) | % | 0.7 | % | ||||||||||||
Year-over-year bps change - Operating | (28) bps | 926 bps | (457) bps | 729 bps | 446 bps | |||||||||||||||||||
Year-over-year bps change - Adjusted | (19) bps | (96) bps | 214 bps | 397 bps | 38 bps | |||||||||||||||||||
Q3 FY23 YTD | Grocery & | Refrigerated | International | Foodservice | Corporate | Total | ||||||||||||||||||
Operating Profit | $ | 847.2 | $ | 297.6 | $ | 100.9 | $ | 53.5 | $ | (280.9) | $ | 1,018.3 | ||||||||||||
Restructuring plans | 0.5 | 3.3 | (0.1) | — | 5.5 | 9.2 | ||||||||||||||||||
Impairment of businesses held for sale | 0.5 | 5.7 | — | 20.5 | — | 26.7 | ||||||||||||||||||
Acquisitions and divestitures | — | — | — | — | 0.8 | 0.8 | ||||||||||||||||||
Goodwill and brand impairment charges | — | 385.7 | — | — | — | 385.7 | ||||||||||||||||||
Fire related costs | — | 13.1 | — | 1.4 | — | 14.5 | ||||||||||||||||||
Municipal water break costs | 3.5 | — | — | — | — | 3.5 | ||||||||||||||||||
Corporate hedging derivative losses | — | — | — | — | 24.6 | 24.6 | ||||||||||||||||||
Adjusted Operating Profit | $ | 851.7 | $ | 705.4 | $ | 100.8 | $ | 75.4 | $ | (250.0) | $ | 1,483.3 | ||||||||||||
Operating Profit Margin | 22.4 | % | 7.6 | % | 13.4 | % | 6.4 | % | 10.9 | % | ||||||||||||||
Adjusted Operating Profit Margin | 22.5 | % | 17.9 | % | 13.4 | % | 9.1 | % | 15.9 | % | ||||||||||||||
Conagra Brands, Inc. Reconciliation of Q3 FY24 Adj. Gross Margin, Adj. Gross Profit, Adj. SG&A, Adj. Net Income, and Adj. EPS - YOY Change (in millions) | ||||||||||||||||||||||||||||||||
Q3 FY24 | Gross | Selling, | Operating | Income | Income tax | Income tax | Net income | Diluted EPS | ||||||||||||||||||||||||
Reported | $ | 858.8 | $ | 387.4 | $ | 471.4 | $ | 363.5 | $ | 95.9 | 23.7 | % | $ | 308.6 | $ | 0.64 | ||||||||||||||||
% of Net Sales | 28.3 | % | 12.8 | % | 15.5 | % | ||||||||||||||||||||||||||
Restructuring plans | 1.1 | 0.6 | 1.7 | 1.7 | 0.5 | 1.2 | — | |||||||||||||||||||||||||
Corporate hedging derivative | 6.8 | — | 6.8 | 6.8 | 1.7 | 5.1 | 0.01 | |||||||||||||||||||||||||
Advertising and promotion | — | 85.6 | — | — | — | — | — | |||||||||||||||||||||||||
Fire related cost (benefit) | 2.8 | (2.2) | 0.6 | 0.6 | 0.2 | 0.4 | — | |||||||||||||||||||||||||
Legal matters | — | 17.9 | 17.9 | 17.9 | 4.3 | 13.6 | 0.03 | |||||||||||||||||||||||||
Rounding | — | — | — | — | — | — | 0.01 | |||||||||||||||||||||||||
Adjusted | $ | 869.5 | $ | 285.5 | $ | 498.4 | $ | 390.5 | $ | 102.6 | 23.8 | % | $ | 328.9 | $ | 0.69 | ||||||||||||||||
% of Net Sales | 28.7 | % | 9.4 | % | 16.4 | % | ||||||||||||||||||||||||||
Year-over-year % of net sales | 114 bps | 147 bps | (33) bps | |||||||||||||||||||||||||||||
Year-over-year % of net sales | 52 bps | 80 bps | (49) bps | |||||||||||||||||||||||||||||
Year-over-year change - | 2.4 | % | 11.0 | % | (3.8) | % | (7.2) | % | (4.2) | % | (9.7) | % | (9.9) | % | ||||||||||||||||||
Year-over-year change - | 0.1 | % | 7.4 | % | (4.6) | % | (7.9) | % | (5.1) | % | (10.1) | % | (9.2) | % | ||||||||||||||||||
Q3 FY23 | Gross | Selling, | Operating | Income | Income tax | Income tax | Net income | Diluted EPS | ||||||||||||||||||||||||
Reported | $ | 838.8 | $ | 348.8 | $ | 490.0 | $ | 391.8 | $ | 100.1 | 22.6 | % | $ | 341.7 | $ | 0.71 | ||||||||||||||||
% of Net Sales | 27.2 | % | 11.3 | % | 15.9 | % | ||||||||||||||||||||||||||
Restructuring plans | 0.5 | 2.0 | 2.5 | 2.5 | 0.6 | 1.9 | — | |||||||||||||||||||||||||
Acquisitions and divestitures | — | 0.2 | 0.2 | 0.2 | 0.1 | 0.1 | — | |||||||||||||||||||||||||
Corporate hedging derivative | 22.7 | — | 22.7 | 22.7 | 5.6 | 17.1 | 0.04 | |||||||||||||||||||||||||
Advertising and promotion | — | 80.5 | — | — | — | — | — | |||||||||||||||||||||||||
Fire related costs | 6.4 | 0.2 | 6.6 | 6.6 | 1.7 | 4.9 | 0.01 | |||||||||||||||||||||||||
Municipal water break costs | 0.3 | — | 0.3 | 0.3 | — | 0.3 | — | |||||||||||||||||||||||||
Adjusted | $ | 868.7 | $ | 265.9 | $ | 522.3 | $ | 424.1 | $ | 108.1 | 22.8 | % | $ | 366.0 | $ | 0.76 | ||||||||||||||||
% of Net Sales | 28.1 | % | 8.6 | % | 16.9 | % | ||||||||||||||||||||||||||
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 Q3 FY24 YTD Adj. Gross Margin, Adj. Gross Profit, Adj. SG&A, Adj. Net Income, and Adj. EPS - YOY Change (in millions) | ||||||||||||||||||||||||||||||||
Q3 FY24 YTD | Gross | Selling, | Operating | Income | Income tax | Income tax | Net income | Diluted EPS | ||||||||||||||||||||||||
Reported | $ | 2,528.5 | $ | 1,119.6 | $ | 1,408.9 | $ | 1,081.0 | $ | 297.1 | 24.5 | % | $ | 914.5 | $ | 1.91 | ||||||||||||||||
% of Net Sales | 27.6 | % | 12.2 | % | 15.4 | % | ||||||||||||||||||||||||||
Restructuring plans | 8.2 | 21.4 | 29.6 | 29.6 | 7.6 | 22.0 | 0.05 | |||||||||||||||||||||||||
Acquisitions and divestitures | — | 0.2 | 0.2 | 0.2 | — | 0.2 | — | |||||||||||||||||||||||||
Corporate hedging derivative | (9.6) | — | (9.6) | (9.6) | (2.5) | (7.1) | (0.01) | |||||||||||||||||||||||||
Advertising and promotion | — | 216.8 | — | — | — | — | — | |||||||||||||||||||||||||
Fire related costs (benefit) | 5.9 | (8.1) | (2.2) | (2.2) | (0.5) | (1.7) | — | |||||||||||||||||||||||||
Impairment of business held | — | 34.2 | 34.2 | 34.2 | (0.1) | 34.3 | 0.07 | |||||||||||||||||||||||||
Legal matters | — | 31.9 | 31.9 | 31.9 | 7.9 | 24.0 | 0.05 | |||||||||||||||||||||||||
Rounding | — | — | — | — | — | — | (0.01) | |||||||||||||||||||||||||
Adjusted | $ | 2,533.0 | $ | 823.2 | $ | 1,493.0 | $ | 1,165.1 | $ | 309.5 | 23.9 | % | $ | 986.2 | $ | 2.06 | ||||||||||||||||
% of Net Sales | 27.7 | % | 9.0 | % | 16.3 | % | ||||||||||||||||||||||||||
Year-over-year % of net sales | 98 bps | (348) bps | 446 bps | |||||||||||||||||||||||||||||
Year-over-year % of net sales | 57 bps | 19 bps | 38 bps | |||||||||||||||||||||||||||||
Year-over-year change - | 1.9 | % | (23.5) | % | 38.4 | % | 47.1 | % | 25.4 | % | 41.5 | % | 42.5 | % | ||||||||||||||||||
Year-over-year change - | 0.4 | % | 0.4 | % | 0.7 | % | (2.9) | % | (1.9) | % | (4.5) | % | (4.2) | % | ||||||||||||||||||
Q3 FY23 YTD | Gross | Selling, | Operating | Income | Income tax | Income tax | Net income | Diluted EPS | ||||||||||||||||||||||||
Reported | $ | 2,481.4 | $ | 1,463.1 | $ | 1,018.3 | $ | 734.9 | $ | 237.0 | 26.8 | % | $ | 646.1 | $ | 1.34 | ||||||||||||||||
% of Net Sales | 26.7 | % | 15.7 | % | 10.9 | % | ||||||||||||||||||||||||||
Restructuring plans | 0.8 | 8.4 | 9.2 | 9.2 | 2.3 | 6.9 | 0.01 | |||||||||||||||||||||||||
Acquisitions and divestitures | — | 0.8 | 0.8 | 0.8 | 0.2 | 0.6 | — | |||||||||||||||||||||||||
Corporate hedging derivative | 24.6 | — | 24.6 | 24.6 | 6.1 | 18.5 | 0.04 | |||||||||||||||||||||||||
Advertising and promotion | — | 221.2 | — | — | — | — | — | |||||||||||||||||||||||||
Fire related costs | 13.8 | 0.7 | 14.5 | 14.5 | 3.6 | 10.9 | 0.02 | |||||||||||||||||||||||||
Municipal water break costs | 3.5 | — | 3.5 | 3.5 | 0.8 | 2.7 | 0.01 | |||||||||||||||||||||||||
Impairment of businesses held | — | 26.7 | 26.7 | 26.7 | 6.6 | 20.1 | 0.04 | |||||||||||||||||||||||||
Goodwill and brand | — | 385.7 | 385.7 | 385.7 | 58.9 | 326.8 | 0.68 | |||||||||||||||||||||||||
Rounding | — | — | — | — | — | — | 0.01 | |||||||||||||||||||||||||
Adjusted | $ | 2,524.1 | $ | 819.6 | $ | 1,483.3 | $ | 1,199.9 | $ | 315.5 | 23.4 | % | $ | 1,032.6 | $ | 2.15 | ||||||||||||||||
% of Net Sales | 27.1 | % | 8.8 | % | 15.9 | % | ||||||||||||||||||||||||||
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 YTD Free Cash Flow, Net Debt, and Net Leverage Ratio (in millions) | ||||||||||||
February 25, | February 26, | % Change | ||||||||||
Net cash flows from operating activities | $ | 1,531.3 | $ | 703.4 | 117.7 | % | ||||||
Additions to property, plant and equipment | (309.6) | (267.4) | 15.8 | % | ||||||||
Free cash flow | $ | 1,221.7 | $ | 436.0 | 180.2 | % | ||||||
Q3 FY24 | Q3 FY23 | |||||||
Notes payable | $ | 166.3 | $ | 653.7 | ||||
Current installments of long-term debt | 1,019.2 | 516.6 | ||||||
Senior long-term debt, excluding current installments | 7,491.8 | 8,081.2 | ||||||
Total Debt | $ | 8,677.3 | $ | 9,251.5 | ||||
Less: Cash | 78.5 | 70.1 | ||||||
Net Debt | $ | 8,598.8 | $ | 9,181.4 | ||||
Q3 FY24 | ||||
Net Debt1 | $ | 8,598.8 | ||
Net income attributable to Conagra Brands, Inc. | $ | 952.0 | ||
Add Back: Income tax expense | 278.8 | |||
Income tax expense attributable to noncontrolling interests | (0.3) | |||
Interest expense, net | 433.8 | |||
Depreciation | 330.9 | |||
Amortization | 53.7 | |||
Earnings before interest, taxes, depreciation, and amortization (EBITDA) | $ | 2,048.9 | ||
Restructuring plans2 | 26.8 | |||
Acquisitions and divestitures | 7.8 | |||
Corporate hedging derivative losses (gains) | 2.9 | |||
Goodwill and brand impairment charges3 | 343.6 | |||
Legal matters | 35.7 | |||
Fire related benefit | (3.3) | |||
Third-party vendor cybersecurity incident | 4.4 | |||
Impairment of business held for sale | 34.2 | |||
Adjusted EBITDA | $ | 2,501.0 | ||
Net Debt to Adjusted EBITDA4 | 3.44 | |||
1 As of February 25, 2024. |
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 Q3 FY24 QTD and YTD EBITDA - YOY Change (in millions) | ||||||||||||
Q3 FY24 | Q3 FY23 | % Change | ||||||||||
Net income attributable to Conagra Brands, Inc. | $ | 308.6 | $ | 341.7 | (9.7) | % | ||||||
Add Back: Income tax expense | 95.9 | 100.1 | ||||||||||
Income tax expense attributable to noncontrolling interests | — | (0.2) | ||||||||||
Interest expense, net | 106.5 | 104.2 | ||||||||||
Depreciation | 82.4 | 77.7 | ||||||||||
Amortization | 13.4 | 13.8 | ||||||||||
Earnings before interest, taxes, depreciation, and amortization | $ | 606.8 | $ | 637.3 | (4.8) | % | ||||||
Restructuring plans 1 | 1.5 | 2.1 | ||||||||||
Acquisitions and divestitures | — | 0.2 | ||||||||||
Corporate hedging derivative losses (gains) | 6.8 | 22.7 | ||||||||||
Fire related costs | 0.6 | 6.6 | ||||||||||
Municipal water break costs | — | 0.3 | ||||||||||
Legal matters | 17.9 | — | ||||||||||
Adjusted Earnings before interest, taxes, depreciation, and | $ | 633.6 | $ | 669.2 | (5.3) | % | ||||||
Q3 FY24 YTD | Q3 FY23 YTD | % Change | ||||||||||
Net income attributable to Conagra Brands, Inc. | $ | 914.5 | $ | 646.1 | 41.5 | % | ||||||
Add Back: Income tax expense | 297.1 | 237.0 | ||||||||||
Income tax expense attributable to noncontrolling interests | (0.1) | (0.3) | ||||||||||
Interest expense, net | 325.8 | 301.6 | ||||||||||
Depreciation | 251.5 | 233.7 | ||||||||||
Amortization | 40.2 | 43.3 | ||||||||||
Earnings before interest, taxes, depreciation, and amortization | $ | 1,829.0 | $ | 1,461.4 | 25.2 | % | ||||||
Restructuring plans 1 | 23.3 | 8.8 | ||||||||||
Acquisitions and divestitures | 0.2 | 0.8 | ||||||||||
Corporate hedging derivative losses (gains) | (9.6) | 24.6 | ||||||||||
Fire related costs (benefit) | (2.2) | 14.5 | ||||||||||
Municipal water break costs | — | 3.5 | ||||||||||
Impairment of businesses held for sale | 34.2 | 26.7 | ||||||||||
Goodwill and brand impairment charges | — | 385.7 | ||||||||||
Legal matters | 31.9 | — | ||||||||||
Adjusted Earnings before interest, taxes, depreciation, and | $ | 1,906.8 | $ | 1,926.0 | (1.0) | % | ||||||
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
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SOURCE Conagra Brands, Inc.
FAQ
What was the percentage decrease in net sales for Conagra Brands in the third quarter of fiscal year 2024?
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How did Conagra Brands perform in the Grocery & Snacks segment in the third quarter of fiscal year 2024?
What was the operating profit for the Refrigerated & Frozen segment of Conagra Brands in the third quarter of fiscal year 2024?
What was the net income attributable to Conagra Brands in the third quarter of fiscal year 2024?
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How did Conagra Brands perform in the International segment in the third quarter of fiscal year 2024?
