Conagra Brands, Inc. · NYSE:CAG
Conagra Brands — Q2 2025 Earnings Presentation
39 slides from Conagra Brands's earnings presentation, Dec 19, 2024
Slide 1: FY25 Q2 Earnings Presentation
FY25 Q2 Earnings Presentation December 19, 2024 1
Slide 2: Legal Disclosure
Legal Disclosure Note on Forward-Looking Statements This document contains forward-looking statements within the meaning of the federal securities laws. Examples of forward-looking statements include statements regarding the company’s expected future financial performance or position, results of ope
Slide 3: Sean Connolly
Sean Connolly President and Chief Executive Officer 3
Slide 4: Key Messages
Key Messages • Conagra is winning with the consumer and returned to growth in Q2, despite ongoing economic pressures • Volume and organic net sales positive • Investments drove strong market share performance • Two factors will pressure H2: • Higher than expected inflation • Unfavorable FX • Updatin
Slide 5: Economic Pressures Continue to Impact Consumer Behavior
Economic Pressures Continue to Impact Consumer Behavior Value-Seeking Behavior Manufacturers Investing Continues to Return to Growth Results differ by category & company 5
Slide 6: Conagra Returned to Growth in Q2
Conagra Returned to Growth in Q2 Total Conagra Organic Shipments (Conagra Volume, % Change vs. YA) +0.4% (1.8)% (1.8)% (1.6)% (2.9)% (6.6)% Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Q1 FY25 Q2 FY25 Note: Data represents total Conagra view of organic shipment volume as presented at the respective quarter shown
Slide 7: Domestic Retail Drove Conagra's Q2 Growth
Domestic Retail Drove Conagra’s Q2 Growth Total Conagra Domestic Retail Organic Shipments (Conagra CSU Volume, % Change vs. YA) +1.0% (1.0)% (1.8)% (1.7)% (3.5)% (7.0)% Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Q1 FY25 Q2 FY25 Note: Total Domestic Retail consists of Refrigerated and Frozen and Grocery and Sna
Slide 8: Conagra's Share Performance Remained Strong
Conagra’s Share Performance Remained Strong % of Conagra Portfolio Holding or Gaining Volume Share 66% 66% 67% 57% 40% 87% 37% For Strategic Frozen & Snacks Domains Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Q1 FY25 Q2 FY25 Source: Circana POS, Total US-MULO+ with Convenience, Syndicated Hierarchy, Fiscal Quar
Slide 9: Share Performance Led Near-In Peer Set
Share Performance Led Near-In Peer Set % of Portfolio Holding or Gaining Volume Share (13 Weeks Ended November 24, 2024) 67% 43% 42% 41% 31% 5% Peer A Peer B Peer C Peer D Peer E Source: Circana POS, Total US-MULO+ with Convenience, Syndicated Hierarchy, 13 Weeks Ended November 24, 2024. Near-in pee
Slide 10: Merchandising Environment in Food Remains Rational
Merchandising Environment in Food Remains Rational Share of Volume Sales Sold on Promotion Average Discount on Promotion FY20 Q2 (Pre-Covid) FY25 Q2 FY20 Q2 (Pre-Covid) FY25 Q2 37% 36% 31% 30% 24% 22% 21% 20% Near-In Peerset Near-In Peerset Source: Circana POS, Total US MULO+ with Convenience, Syndi
Slide 11: Conagra's Frozen Consumption Continued to Be Very Strong
Conagra’s Frozen Consumption Continued to Be Very Strong Conagra Frozen Volume Sales (% Change vs. YA) +3.2% +1.7% (0.4)% (3.0)% (5.0)% (7.5)% Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Q1 FY25 Q2 FY25 Source: Circana POS, Total US- MULO+ with Convenience, Conagra Custom Hierarchy, Fiscal Quarters. Data repres
Slide 12: Conagra's Frozen Performance Outpaced Total Frozen
Conagra’s Frozen Performance Outpaced Total Frozen CAG Outpacing Total Frozen Share Drivers Q2 Volume Share Q2 Volume Sales Change vs. YA % Change vs. YA Single-Serve Meals 3.2% +1.3 pts 2.8% Vegetables +1.1 pts 0.3% Multi-Serve Meals Total Edible Frozen Department +3.0 pts Frozen Source: Circana PO
Slide 13: Investments in Frozen Single-Serve Meals Drive Share Gains
Our Investments in Frozen Single-Serve Meals Continued to Drive Strong Share Gains Conagra Frozen Single-Serve Meals Conagra Frozen Single-Serve Meals Volume Share of Category Volume Share of Category Enhanced Investments All Other 54.1% Manufacturers 52.7% +1.3 52.2% 52.2% +1.2 51.2% vs. +1.5 +1.6
Slide 14: Conagra's Snacks Portfolio Continued to Grow
Conagra’s Snacks Portfolio Continued to Grow Excluding Swiss Miss Conagra Snacks Volume Sales Q2 Volume Sales % Change vs. YA (% Change vs. YA) +9% Excl. Hot Cocoa +1.1% +0.3% +0.6% +5% (2.4)% (2.4)% (2.1)% (2.8)% +4% Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Q1 FY25 Q2 FY25 (18)% Source: Circana POS, Total U
Slide 15: Solid Performance in Conagra's Staples Portfolio in Q2
Solid Performance in Conagra’s Staples Portfolio in Q2 Conagra Staples Volume Sales Q2 Volume Sales % Change vs. YA (% Change vs. YA) +18% (0.5)% (1.7)% (2.4)% (2.5)% +11% (4.9)% (7.6)% +10% Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Q1 FY25 Q2 FY25 Source: Circana POS, Total US-MULO+ with Convenience, Conagra
Slide 16: Two Factors Expected to Pressure H2
Two Factors Expected to Pressure H2 • H2 inflation higher than planned INFLATION • Expected relief in protein inflation deferred FOREIGN • International segment impacted by strengthening USD EXCHANGE 16
Slide 17: Our Response to H2 Headwinds
Our Response to H2 Headwinds • Maintain brand investments; continue to prioritize top-line momentum • Limited new pricing actions; expect to offset some cocoa and sugar inflation • Continue to focus on maximizing cash flow, debt reduction, and portfolio reshaping 17
Slide 18: Updating Fiscal 2025 Guidance
Updating Fiscal 2025 Guidance 1 Guidance Old 1 New Organic Net Sales1 Growth (1.5)% to Flat (1.5)% to Flat (vs. FY24) ~Midpoint Adj. Operating Margin1 15.6% to 15.8% ~14.8% Adj. EPS1 $2.60 to $2.65 $2.45 to $2.50 1. Forward-looking non-GAAP financial measure. See the appendix for more information. 1
Slide 19: Dave Marberger
Dave Marberger Executive Vice President and Chief Financial Officer 19
Slide 20: FY25 Q2 Results
FY25 Q2 Results Q2 Q2 vs. YA Organic Net Sales1 $3,194 +0.3% Adj. Gross Margin1 26.4% (52) bps Adj. Operating Margin1 15.3% (57) bps Adj. EPS1 $0.70 (1.4)% 1. Non-GAAP financial measure. See the appendix for certain definitions and reconciliations to the most directly comparable GAAP measure. 20
Slide 21: Net Sales by Segment
Net Sales by Segment Dollars in Millions Increase/(Decrease) Q2 1 1 Organic1 Price/Mix Organic1 Net Sales vs. YA vs. YA Volume vs. YA Grocery & Snacks $1,321 +1.2% 0.9% 0.3% Refrigerated & Frozen 1,339 Flat (1.9)% 1.9% International 243 (0.7)% 1.7% (2.4)% Foodservice 292 (1.0)% 2.9% (3.9)% Total Con
Slide 22: Net Sales Bridge vs. Year Ago
Net Sales Bridge vs. Year Ago Q2 Drivers of Net Sales Change (% Change vs. YA) Organic Net Sales1: +0.3% +0.4% (0.1)% (0.3)% (0.4)% (0.4)% Volume Price/Mix Foreign M&A Total (incl. Retailer Exchange Conagra Investments) Brands 1. Non-GAAP financial measure. See the appendix for certain definitions a
Slide 23: Q2 Adjusted Operating Margin Bridge
Q2 Adjusted Operating Margin1 Bridge Q2 Adjusted Operating Margin1 (% Change vs. YA) 1 Q2 F 2 Price Mix COGS Productivity, P dj. SG F M Q2 F 2 incl. Retailer nflation2 et of Operational nvestments Offsets 1. Non-GAAP financial measure. See the appendix for certain definitions and reconciliations to
Slide 24: Segment Adjusted Operating Profit & Margin Summary
Segment Adjusted Operating Profit1 & Margin1 Summary Q2 Adjusted Operating Profit1 & Margin1 Dollars in Millions Increase/(Decrease) Adj. Op. Profit1 1 Adj. Op. Margin 1 1 Q2 vs. YA Q2 vs. YA Grocery & Snacks $296 +4.8% 22.4% +60 bps Refrigerated & Frozen 198 (10.8)% 14.8% (179) bps International 39
Slide 25: Q2 Adjusted EPS Bridge
Q2 Adjusted EPS1 Bridge Drivers of Q2 Adjusted EPS1 vs. YA Q2 F 2 dj. Pension, nterest dj. uity F M Q2 F 2 dj. Op. ncome Tax xp.1 Method dj. PS 1 Profit1 nvestment PS 1 arnings rdent Mills, etc 1. Non-GAAP financial measure. See the appendix for certain definitions and reconciliations to the most di
Slide 26: Key Balance Sheet & Cash Flow Metrics
Key Balance Sheet & Cash Flow Metrics Q2 FY25 Q2 FY24 (dollars in millions) Debt $8,464 $9,070 Cash $37 $62 Ending Net Debt1 $8,426 $9,008 Net Leverage2 3.54x 3.55x (dollars in millions) H1 FY25 H1 FY24 Net Cash Flow from Operating $754 $855 Activities Capital Expenditures $215 $214 Free Cash Flow1
Slide 27: Strong Free Cash Flow Supporting Debt Reduction
Strong Free Cash Flow1 Supporting Debt Reduction H1 Free Cash Flow1 Conversion Full Year FCF(1,2) Conversion 127% 97% 91% >100% 35% 16% 1% 1 FY21 FY22 FY23 FY24 FY25 FY24 FY25 2 Updated Est. • Back-to-back years of strong H1 and projected full-year free cash flow(1,2) conversion • Debt reduction of
Slide 28: Updating Fiscal 2025 Guidance
Updating Fiscal 2025 Guidance Guidance Key Drivers • Continued sequential volume improvement 1 1 Organic Net Sales1 Growth (1.5)% to Flat • Limited pricing in H2 to offset some inflation (vs. FY24) ~Midpoint • Q3 price/mix larger headwind due to trade investment timing • Full year inflation expected
Slide 29: Other Fiscal 2025 Considerations
Other Fiscal 2025 Considerations Guidance Old New Free Cash Flow1 Conversion ~90% >100% Net Leverage1 ~3.2x ~3.4x Adj. Tax Rate ~23.5% ~23.0% Capital Expenditures $450 Unchanged Ardent Mills ~$150 Unchanged Interest Expense ~$415 Unchanged Pension Income ~$12 Unchanged 1. Forward-looking non-GAAP fi
Slide 30: Appendix
<b VY wbx CONAGRA “BRANDS -° Appendix
Slide 31: Notes on Non-GAAP Financial Measures
Notes on Non-GAAP Financial Measures This document includes certain non-GAAP financial measures. 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
Slide 32: Reconciliation of Q2 FY25 Organic Net Sales by Segment
Reconciliation of Q2 FY25 Organic Net Sales by Segment (in millions) - YOY Change 32
Slide 33: Reconciliation of Q2 FY25 Adj. Operating Profit by Segment
Reconciliation of Q2 FY25 Adj. Operating Profit by Segment (in millions) – YOY Change 33
Slide 34: Reconciliation of Q2 FY25 Adj. Gross Margin, SG&A, Net Income and EPS
Reconciliation of Q2 FY25 Adj. Gross Margin, Adj. Gross Profit, Adj. SG&A, Adj. Net Income, (in millions) and Adj. EPS – YOY Change 1. Operating profit is derived from taking Income before income taxes, adding back Interest expense, net and removing Pension and postretirement non-service income and
Slide 35: Reconciliation of Q2 FY25 Adj. Gross Margin, SG&A, Net Income and EPS Cont.
Reconciliation of Q2 FY25 Adj. Gross Margin, Adj. Gross Profit, Adj. SG&A, Adj. Net Income, (in millions) and Adj. EPS – YOY Change Cont. 1. Operating profit is derived from taking Income before income taxes, adding back Interest expense, net and removing Pension and postretirement non-service incom
Slide 36: Reconciliation of Q2 FY25 Free Cash Flow and Net Debt
Reconciliation of Q2 FY25 Free Cash Flow and Net Debt (in millions) 36
Slide 37: Reconciliation of Q2 FY25 Net Leverage Ratio
Reconciliation of Q2 FY25 Net Leverage Ratio (in millions) 1. As of November 24, 2024. 2. Excludes comparability items related to depreciation.. 3. The company defines its net debt leverage ratio as net debt divided by adjusted EBITDA for the trailing twelve month (TTM) period. 37
Slide 38: Reconciliation of Q2 FY24 Net Leverage Ratio
Reconciliation of Q2 FY24 Net Leverage Ratio (in millions) FY23 Q2 FY23 YTD Q2 FY24 YTD Q2 FY24 TTM (a) (b) (c) =(a)-(b)+(c) 1 Net Debt $ 9,008.1 Net income attributable to Conagra Brands, Inc. $ 683.6 $ 304.4 $ 605.9 $ 985.1 Add Back: Income tax expense 218.7 136.9 201.2 283.0 Income tax expense at
Slide 39: Reconciliation of Q2 FY21 to Q2 FY25 YTD and FY24 Free Cash Flow
Reconciliation of Q2 FY21 to Q2 FY25 YTD and FY24 Free Cash Flow (in millions), Free Cash Flow YOY Change & Conversion Rate Q2FY21 YTD Q2FY22 YTD Q2FY23 YTD Q2FY24 YTD FY24 Q2FY25 YTD Net income attributable to Conagra Brands, Inc. $ 707.9 $ 510.9 $ 304.4 $ 605.9 $ 347.2 $ 751.3 Restructuring plans