Conagra Brands, Inc. · NYSE:CAG
Conagra Brands — Q1 2023 Earnings Presentation
35 slides from Conagra Brands's earnings presentation, Oct 6, 2022
Slide 1: FY23 Q1 Earnings Presentation
FY23 Q1 Earnings Presentation October 6, 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 • Summary of Q1 results: • Robust net sales growth • Continued solid share performance • Adjusted operating profit growth and continued strong performance from Ardent Mills JV • Pricing largely offset inflation and supply chain continued to improve; operational challenges still impacted
Slide 6: FY23 Q1 Results
FY23 Q1 Results Q1 Q1 vs. YA Organic Net Sales1 $2,910 +9.7% Adj. Operating Margin2 13.7% (42) bps Adj. EPS $0.57 +14.0% 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 GAA
Slide 7: We Continued To Grow Sales and Share Especially Within Frozen & Snacks
We Continued To Grow Sales and Share Especially Within Our Frozen & Snacks Strategic Domains Conagra Retail Sales Growth Conagra Weighted Share Growth (% Change) (Pt. Change) Total Conagra Frozen & Snacks +24.2% +1.5 pts +0.8 pts +0.7 pts +8.8% +0.1 pts % Chg vs YA % Chg vs 3YA Pt. Chg. vs. YA Pt. C
Slide 8: Frozen Growth Has Remained Strong
Frozen Growth Has Remained Strong Conagra Frozen Retail Sales (% Change vs. YA) Conagra Frozen Retail Sales 30.0% (Q1, % Change vs. YA) +27% 25.0% Breakfast Sausage +19.5% +19% +20% 20.0% +18% Plant-Based Protein +15% +13.2% 15.0% Single-Serve Meals 10.0% +8% +11.1% +6% +6% +5% 5.0% +4% Vegetables +
Slide 9: 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 +36% (Q1, % Change vs. YA) +35% +34% MW Popcorn +28% +29% +21.7% Meat Snacks +15.9% +13% Seeds +11% +11% +11% +14.7% +5% RTE Popcorn +9.5% Q1 FY22 Q2 FY2
Slide 10: 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 (Q1, % Change vs. YA) +15% SS Dinners/Entrees +10.7% +8% +10% Whipped Topping +7% +5% +8.5% +4% +2% Pickles +7.7% (2)% (3)% (5)% Canned Tomatoes +6.3% Q1 FY22 Q2 FY22
Slide 11: Steady Elasticities Despite Implementation of Inflation-Driven Pricing
Steady Elasticities Despite Implementation of Inflation-Driven Pricing Conagra Elasticities vs. Price per Unit (Rolling 52 Week Periods) Conagra Price per Unit % Change vs YA Conagra Price Elasticities +16.0% +12.1% +0.7 +11.0% +9.7% +0.5 Price per Unit % Change vs. YA +7.3% +6.1% +6.0% +4.2% +4.5%
Slide 12: Private Label Share Increased Slightly, But Less So in Our Categories
Private Label Share Increased Slightly, But Less So in Our Categories Private Label Dollar Share (Quad Weeks, Share Point Change vs. YA) Edible xBeverages Conagra Categories Current +1.5 pts Private Label Share Index to 2019 Average +1.0 pts +0.8 pts 102 +0.5 pts +0.3 pts 96 +0.0 pts (0.5) pts (1.0)
Slide 13: Supply Chain Improving But Not Yet Fully Normalized
Supply Chain Improving But Not Yet Fully Normalized Pricing Actions Largely Offset Service Metrics Inflation in the Quarter Continued to Improve Responding to Operational Disruptions 13
Slide 14: Summary
Summary • Strong start to fiscal year • Improving service levels and delivering on supply chain productivity initiatives • Considerations on year to go results: • External operating environment will remain dynamic • Expect consumer response to our brands to remain strong • Planning for a Q2 volume i
Slide 15: Dave Marberger
Dave Marberger Executive Vice President and Chief Financial Officer 15
Slide 16: Performance Summary
Performance Summary Dollars in Millions, except per share data Increase/(Decrease) Q1 vs. YA Reported Net Sales $2,904 +9.5% Organic Net Sales Growth1 +9.7% Adj. Gross Profit 723 +7.1% Adj. Gross Margin 24.9% (54) bps A&P 62 (0.3)% A&P as % of NS 2.1% (21) bps Adj. SG&A 263 +10.5% Adj. SG&A as % of
Slide 17: Net Sales Bridge vs. Year Ago
Net Sales Bridge vs. Year Ago Q1 Drivers of Net Sales Change (% Change vs. YA) Organic Net Sales1: +9.7% +14.3% +9.5% (0.2)% (4.6)% Volume Price/Mix Foreign Total (incl. Retailer Exchange Conagra Investments) Brands Note: Organic net sales is non-GAAP. See the end of this presentation for a reconcil
Slide 18: Net Sales Growth Across All Segments
Net Sales Growth Across All Segments Dollars in Millions Increase/(Decrease) Net Sales 1 1 Reported Organic Q1 vs. YA vs. YA1 Grocery & Snacks $1,188 +10.5% +10.5% Refrigerated & Frozen 1,208 +9.6% +9.6% International 234 (1.3)% +1.0% Foodservice 275 +14.6% +14.6% Total Conagra Brands $2,904 +9.5% +
Slide 19: Operating Margin Bridge
Operating Margin Bridge Q1 Adj. Operating Margin1 (% Change vs. YA) Adj. Gross Margin: (54) bps vs. YA Realized Productivity & Other COGS: +1.2% Market-Based Sourcing: (1.6)% Q1 Market Inflation2: 15.0% Note: “Adjusted” financial measures are non-GAAP. See the end of this presentation for a reconcil
Slide 20: 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 Q1 vs. YA Q1 vs. YA Grocery & Snacks $254 +15.4% 21.4% +90 bps Refrigerated & Frozen 176 +8.0% 14.5% (21) bps International 27 (21.4)% 11.5% (294) bps Foodservice 22 +5.5%
Slide 21: Q1 Adjusted EPS Bridge
Q1 Adjusted EPS Bridge Drivers of Q1 Adjusted EPS vs. YA Op Profit +$0.04 vs YA1 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 o
Slide 22: Q1 Key Balance Sheet & Cash Flow Metrics
Q1 Key Balance Sheet & Cash Flow Metrics August August (dollars in millions) 28, 2022 29, 2021 Debt1 $9,042 $9,260 Cash $67 $67 Ending Net Debt1 $8,975 $9,193 Net Leverage Ratio2 3.9x 4.0x (dollars in millions) Q1 FY23 Q1 FY22 Net Cash Flow from Operating Activities $264 $140 Capital Expenditures $1
Slide 23: Reaffirming Fiscal 2023 Guidance
Reaffirming 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
Slide 24: FY23 P&L Considerations and Assumptions
FY23 P&L Considerations and Assumptions • Low-teens % for FY23, more weighted to H1 Inflation • Expecting inflation for full calendar year 2023 • Currently covered on ~67% of the portfolio • Previously announced pricing accepted and effective in early Q2 Pricing • Targeted pricing actions planned to
Slide 25: Q&A
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Slide 26: Appendix
<b VY wbx CONAGRA “BRANDS -° Appendix
Slide 27: Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures
Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures (in millions) 27
Slide 28: Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures
Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures (in millions) 28
Slide 29: 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 30: 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 31: Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures
Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures (in millions) 31
Slide 32: Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures
Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures (in millions) 32
Slide 33: Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures
Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures (in millions) 33
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: Conagra Brands
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