Conagra Brands, Inc. · NYSE:CAG
Conagra Brands — Q4 2022 Earnings Presentation
46 slides from Conagra Brands's earnings presentation, Jul 14, 2022
Slide 1: FY22 Q4 Earnings Presentation
FY22 Q4 Earnings Presentation July 14, 2022 1
Slide 2: Today's Presenters
Today’s Presenters Melissa Napier Investor Relations Sean Connolly President and Chief Executive Officer Dave Marberger Executive Vice President and Chief Financial Officer 2
Slide 3: Legal Disclosure
Legal Disclosure Note on Forward-Looking Statements The information contained in this document includes forward-looking statements within the meaning of the federal securities laws. Examples of forward-looking statements include statements regarding our expected future financial performance or posit
Slide 4: Sean Connolly
Sean Connolly President and Chief Executive Officer 4
Slide 5: Key Messages
Key Messages • Throughout FY22, we took decisive actions to offset inflation and invest in our business • Our brands continued to resonate with consumers resulting in year-over-year share gains • Operating margin improvement in Grocery & Snacks and Foodservice segments in Q4; operating margin improv
Slide 6: Agenda
Agenda Business Update Looking Ahead 6
Slide 7: Elevated Inflation in FY22 Required Decisive Actions
Elevated Inflation in FY22 Required Decisive Actions FY22 COGS Inflation (excluding hedging and other sourcing benefits) 16% 9% As of Q4 FY21 Earnings Call Actual FY22 7
Slide 8: Pricing Actions Across the Portfolio Successfully Reflected on Shelf in Fiscal 2022
Pricing Actions Across the Portfolio Successfully Reflected on Shelf in Fiscal 2022 Conagra Price per Unit (% Change vs. YA) Total CAG Frozen Snacks Staples 16.0% 14.2% 14.0% 13.8% 13.4% 12.0% 13.3% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Source: IRI POS, Total US MULO + C, T
Slide 9: Price Elasticities Have Remained Below Historical Levels
Price Elasticities Have Remained Below Historical Levels Conagra Unit Sales vs. Price per Unit (3-Year CAGR) Price per Unit 3-Year CAGR Unit Sales 3-Year CAGR +6.9% (1.1)% Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Source: IRI POS, Total US – MULO+C, Total Edible excluding Bever
Slide 10: Margin Recovery Has Begun
Margin Recovery Has Begun Q4 Adj. Operating Margin Improvement vs. YA1 Grocery & Snacks Foodservice Refrigerated & Frozen International Total Conagra 1. Adjusted operating margin excludes equity method investment earnings and pension and postretirement non-service expense (income). 10
Slide 11: FY22 Q4 Results
FY22 Q4 Results Q4 Q4 vs. YA Organic Net Sales1 $2,914 +6.8% Adj. Operating Margin2 15.0% +96 bps Adj. EPS $0.65 +20.4% Note: “Adjusted” financial measures and organic net sales are non-GAAP. See the end of this presentation for a reconciliation of these measures to the most directly comparable GAAP
Slide 12: Frozen Growth Has Remained Strong
Frozen Growth Has Remained Strong Conagra Frozen Retail Sales (% Change vs. YA) Conagra Frozen Retail Sales 25.0% (Q4, % Change vs. YA) Plant-Based Protein 20.0% +17.4% +18% +20% +19% 15.0% Breakfast Sausage +16% +16.2% 10.0% Single-Serve Meals +6% +6% +10.8% +4% +5% 5.0% Desserts +6.9% 0.0% Q1 FY22
Slide 13: Snacks Maintained Strong 1-Year Growth and Accelerated on a 3-year Basis
Snacks Maintained Strong 1-Year Growth and Accelerated on a 3-year Basis Conagra Snacks Retail Sales (% Change vs. YA) Conagra Snacks Retail Sales (Q4, % Change vs. YA) +35% +34% Meat Snacks +29% +17.0% +28% Hot Cocoa +12.2% +11% +11% +11% MW Popcorn +10.7% +5% Salty Snacks +8.7% Q1 FY22 Q2 FY22 Q3
Slide 14: Staples Growth Continued to Accelerate on a 3-year Basis
Staples Growth Continued to Accelerate on a 3-year Basis Conagra Staples Retail Sales (% Change vs. YA) Conagra Staples Retail Sales (Q4, % Change vs. YA) +10% Syrup +7% +19.6% +5% Canned Meat +4% +7.8% +2% Canned Tomatoes +7.5% (2)% SS Dinners/Entrees (3)% +6.6% (5)% Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22
Slide 15: FY22 Innovation Aligned with Consumer Trends
FY22 Innovation Aligned with Consumer Trends Conagra Innovation Performance FY22 New Product Highlights (Q4 FY22 vs. YA) +28% Top Selling New SKU Top Selling New SKU - Whipped Toppings - - Single Serve Meals - +17% 3 of the Top 5 Selling New SKUs - Frozen Plant Based Protein - Avg. $ per SKU Avg. $
Slide 16: We Grew Share on Both a 1- and 3-Year Basis
We Grew Share on Both a 1- and 3-Year Basis Conagra Retail Sales Growth Conagra Weighted Share Growth (FY22, % Change) (FY22, Pt. Change) +15.8% +0.8 +3.5% +0.2 % Chg vs YA % Chg vs 3YA Pt Chg vs YA Pt Chg vs 3YA Source: IRI POS, Total US MULO+C, Custom Conagra Hierarchy, 52 Weeks Ended May 29, 2022
Slide 17: Agenda
Agenda Business Update Looking Ahead 17
Slide 18: FY23 Outlook
FY23 Outlook • Expect top-line growth and margin improvement from strong brands, on-trend innovation, effective pricing, and strengthened supply chain • Guidance assumes continued inflationary pressure and increasing elasticities, albeit below historical levels • More details to be shared at our Inv
Slide 19: Fiscal 2023 Guidance
Fiscal 2023 Guidance1,2 1 1 Guidance FY23 Organic Net Sales Growth (vs. FY22) 3 +4% to +5% Adj. Operating Margin4 ~15% Adj. EPS +1% to +5% 1. The inability to predict the amount and timing of the impacts of future items makes a detailed reconciliation of these forward-looking financial measures impr
Slide 20: Conagra Brands 2022 Virtual Investor Day
Conagra Brands 2022 Virtual Investor Day • July 27, 2022 with presentations beginning at 10:00am ET / 9:00am CT • Update on how we’re continuing to execute the Conagra Way for future success • Communicate new financial algorithm beyond FY23 • Registration details can be found on our website 20
Slide 21: Dave Marberger
Dave Marberger Executive Vice President and Chief Financial Officer 21
Slide 22: Performance Summary
Performance Summary Dollars in Millions, except per share data Increase/(Decrease) Q4 vs. YA FY22 vs. YA Reported Net Sales $2,910 +6.2% $11,536 +3.1% Organic Net Sales Growth1 +6.8% +3.8% Adj. Gross Profit 723 +0.3% 2,865 (10.5)% Adj. Gross Margin 24.9% (147) bps 24.8% (378) bps A&P 46 (38.7)% 245
Slide 23: Net Sales Bridge vs. Year Ago
Net Sales Bridge vs. Year Ago Q4 Drivers of Net Sales Change Organic Net Sales1: +6.8% (% Change vs. YA) +13.2% +6.2% (0.5)% (0.1)% (6.4)% Volume Price/Mix Divestitures Foreign Total (incl. Retailer Exchange Conagra Investments) Brands FY22 Drivers of Net Sales Change Organic Net Sales1: +3.8% (% Ch
Slide 24: Net Sales Growth Across All Segments
Net Sales Growth Across All Segments Dollars in Millions Increase/(Decrease) Net Sales 1 1 Reported Organic Reported Organic Q4 FY vs. YA vs. YA1 vs. YA vs. YA1 Grocery & Snacks $1,159 +7.2% +7.2% $4,697 +1.6% +2.5% Refrigerated & Frozen 1,233 +3.4% +4.3% 4,859 +1.8% +2.7% Foodservice 287 +21.5% +21
Slide 25: Operating Margin Bridge
Operating Margin Bridge Q4 Adj. Operating Margin1 (% Change vs. YA) Adj. Gross Margin: (147) bps vs. YA Q4 Market Inflation2: 17.3% Note: “Adjusted” financial measures are non-GAAP. See the end of this presentation for a reconciliation of these measures to the most directly comparable GAAP measures.
Slide 26: Segment Adjusted Operating Profit & Margin Summary
Segment Adjusted Operating Profit & Margin Summary Dollars in Millions Increase/(Decrease) Adj. Op. Profit1 Adj. Op. Margin1 1 1 Q4 vs. YA Q4 vs. YA Grocery & Snacks $255 +17.0% 22.0% +184 bps Refrigerated & Frozen 185 (6.4)% 15.0% (156) bps Foodservice 29 +53.0% 10.1% +208 bps International 20 (25.
Slide 27: Q4 Inflation Exceeded Expectations From Harder to Hedge Commodities
Q4 Inflation Exceeded Expectations From Harder to Hedge Commodities Select Commodity Trends and Estimated Q4 COGS Inflation vs. YA Inflation Impact vs Q3 Guidance Chicken $3.50 17.3% $2.80 $2.10 Chicken Breast Meat $1.40 ~16.0% $0.70 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY21 FY21 FY21 FY21 FY22 FY22 FY22 FY22 Po
Slide 28: Q4 Adjusted EPS Bridge
Q4 Adjusted EPS Bridge Drivers of Q4 Adjusted EPS vs. YA 1 Note: “Adjusted” financial measures are non-GAAP. See the end of this presentation for a reconciliation of these measures to the most directly comparable GAAP measures; Numbers may not add due to rounding. 1. Adjusted operating profit exclud
Slide 29: Key Balance Sheet & Cash Flow Metrics
Key Balance Sheet & Cash Flow Metrics May 29, May 30, (dollars in millions) 2022 2021 Debt1 $8,980 $9,006 Cash $83 $79 Ending Net Debt1 $8,897 $8,927 Net Leverage Ratio2 4.0x 3.6x (dollars in millions) FY22 FY21 Net Cash Flow from Operating $1,177 $1,468 Activities Capital Expenditures $464 $506 Fre
Slide 30: Fiscal 2023 Guidance
Fiscal 2023 Guidance1,2 1 1 Guidance FY23 Organic Net Sales Growth (vs. FY22) 3 +4% to +5% Adj. Operating Margin4 ~15.0% Adj. EPS Growth (vs. FY22) +1% to +5% 1. The inability to predict the amount and timing of the impacts of future items makes a detailed reconciliation of these forward-looking fin
Slide 31: FY23 P&L Considerations and Assumptions
FY23 P&L Considerations and Assumptions • Low-teens % Inflation • Currently covered on ~50% of the portfolio • Wrap pricing from FY22 Pricing • Additional price increases going into effect in Q1 and Q2 • Capex ~$500M for investment in facility capacity expansion and Investment automation • Increased
Slide 32: Q&A
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Slide 33: Appendix
<b VY wbx CONAGRA “BRANDS -° Appendix
Slide 34: Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures
Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures (in millions) 34
Slide 35: Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures
Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures (in millions) 35
Slide 36: Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures
Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures (in millions) 36
Slide 37: Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures
Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures (in millions) 37
Slide 38: Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures
Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures (in millions) 38
Slide 39: Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures
Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures (in millions) 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
Slide 40: Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures
Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures (in millions) 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
Slide 41: Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures
Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures (in millions) 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
Slide 42: Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures
Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures (in millions) 42
Slide 43: Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures
Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures (in millions) 43
Slide 44: Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures
Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures (in millions) 44
Slide 45: Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures
Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures (in millions) 45
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