Conagra Brands, Inc. · NYSE:CAG
Conagra Brands — Q1 2025 Earnings Presentation
42 slides from Conagra Brands's earnings presentation, Oct 2, 2024
Slide 1: FY25 Q1 Earnings Presentation
FY25 Q1 Earnings Presentation October 2, 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, President and Chief Executive Officer
Sean Connolly President and Chief Executive Officer 3
Slide 4: FY25 Remains On Track After Q1
FY25 Remains On Track After Q1 Q1 Plan Priorities • Continued volume progress ✓ • Strong share performance ✓ • Sustained margins in Foodservice ✓ • Strong productivity ✓ • Resumed portfolio reshaping ✓ Q1 Out of Plan Dynamic • Temporary manufacturing disruptions in the Hebrew National hot dog busine
Slide 5: Volume Trajectory Continued To Progress
Volume Trajectory Continued To Progress Total Domestic Retail Organic Shipments (Conagra CSU Volume, % Change vs. YA) Excl. Hot Dogs1 -0.4% -1.0% -1.8% -1.7% -3.5% -7.0% Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Q1 FY25 Note: Total Domestic Retail consists of Refrigerated and Frozen and Grocery and Snacks seg
Slide 6: Consumption Turned Positive in Frozen and Continued to Grow in Snacks
Consumption Turned Positive in Frozen and Continued to Grow in Snacks Conagra Retail Sales (Volume Sales, % Change vs. YA) Frozen Snacks +1.7% +1.2% +0.3% (0.4)% (2.4)% (2.4)% (3.0)% (2.8)% (5.0)% (7.5)% Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Q1 FY25 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Q1 FY25 Source: Circana
Slide 7: Volume Progress in Staples ex. Hot Dogs
Volume Progress in Staples ex. Hot Dogs Volume Sales (% Change vs. YA) Staples Excl. Hot Dogs1 (1.8)% (1.7)% (2.4)% (2.5)% (4.9)% (7.6)% Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Q1 FY25 Source: Circana POS, Total US-MULO+ with Convenience, Conagra Custom Hierarchy, Fiscal Quarters. 7 1. Dotted line metric in
Slide 8: Impressive Share Performance Across Portfolio
Impressive Share Performance Across Portfolio… % of Conagra Portfolio Holding or Gaining Volume Share 71% 65% 57% 40% 37% Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Q1 FY25 Source: Circana POS, Total US-MULO+ with Convenience, Syndicated Hierarchy, Fiscal Quarters 8
Slide 9: … and Led Near-In Peer Set
… and Led Near-In Peer Set % of Portfolio Holding or Gaining Volume Share (13 Weeks Ended August 25, 2024) 71% 58% 24% 18% 16% 15% Peer A Peer B Peer C Peer D Peer E Source: Circana POS, Total US-MULO+ with Convenience, Syndicated Hierarchy, 13 Weeks Ended August 25, 2024. Near-in peer set consist o
Slide 10: Acceleration of Share Performance in Strategic Domains of Frozen and Snacks
Acceleration of Share Performance in Strategic Domains of Frozen and Snacks Conagra Frozen and Snacks Domains % of Portfolio Holding or Gaining Volume Share 93% 79% 69% 40% 35% Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Q1 FY25 Source: Circana POS, Total US-MULO+ with Convenience, Syndicated Hierarchy, Fiscal
Slide 11: Merchandising Environment in Food Remains Rational
Merchandising Environment in Food Remains Rational Share of Volume Sales Sold on Promotion Average Discount on Promotion FY20 Q1 (Pre-Covid) FY25 Q1 FY20 Q1 (Pre-Covid) FY25 Q1 33.2% 30.4% 23.0% 22.8% 22.4% 20.0% 20.5% 18.5% Near-In Peerset Near-In Peerset Source: Circana POS, Total US MULO+ with Co
Slide 12: Conagra is Winning Within Competitive Frozen Set
Conagra is Winning Within Competitive Frozen Set CAG Outpacing Frozen Universe Share Drivers Q1 Volume Share Q1 Volume Sales Change vs. YA % Change vs. YA Single-Serve Meals 1.7% +1.9 pts Vegetables +0.5 pts 0.2% Multi-Serve Meals -0.1% +0.8 pts Total Edible Relevant Frozen Categories Source: Circan
Slide 13: Investments in Frozen Single-Serve Meals Contributed to Share Gains
Our Investments in Frozen Single-Serve Meals Continued to Contribute to Strong Share Gains Conagra Frozen Single-Serve Meals Conagra Frozen Single-Serve Meals Volume Share of Category Volume Share of Category Change vs. YA Enhanced Investments All Other Manufacturers +1.9 pts +1.6 pts +1.5 pts 51% $
Slide 14: Frozen Vegetable Share Performance Remains Stable and Positive
Frozen Vegetable Share Performance Remains Stable and Positive Birds Eye Frozen Vegetables Volume Share of Category Change vs. YA +0.5 pts +0.5 pts (0.3) pts (0.4) pts (1.3) pts FY24 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY25 Q1 Source: Circana POS, Total US-MULO+ with Convenience, Conagra Custom Hierarchy, Fi
Slide 15: Snacks Portfolio Continued to Outpace Total Category
Snacks Portfolio Continued to Outpace Total Category Driven by Volume Growth in Key Categories CAG Outpacing Total Snacks Growth Drivers Q1 Volume Sales Q1 Volume Sales % Change vs. YA % Change vs. YA Meat Snacks 1.2% +1.2% Popcorn +0.9% -0.9% Seeds +9.0% Total Snacks Source: Circana POS, Total US-M
Slide 16: Welcome The FATTY to the Conagra Family
Welcome The FATTY to the Conagra Family Volume Sales 4 Year CAGR (Data Ended Aug 25, 2024) Edible xBev -0.9% Total Snacks -0.3% Meat Snacks 4.5% Meat Sticks 8.7% “Trifecta Smokehouse” to capitalize on high-growth #1 Meat Stick protein snacking behaviors Manufacturer! Source: Circana POS, Total US-MU
Slide 17: Foodservice Sustained FY24 Margin Recovery
Foodservice Sustained FY24 Margin Recovery Organic Net Sales1 $1,148 $973 FY19 FY20 FY21 FY22 FY23 FY24 Adj. Operating Profit1 Adj. Operating Margin1 13.2% 13.2% 13.2% $151 $134 FY19 FY20 FY21 FY22 FY23 FY24 FY19 FY20 FY21 FY22 FY23 FY24 FY25 Q1 1. Non-GAAP financial measure. See the appendix for ce
Slide 18: Supply Chain Is Operating Efficiently and Effectively
Supply Chain Is Operating Efficiently and Effectively REDUCED CASH ANNUAL COST SERVICE LEVELS1 CONVERSION SAVES CYCLE $350 $340 $310 3.6 % 97% 95% 7 DAYS FY23 FY24 FY25 Projection Remain on track to deliver $1B of cost savings by end of FY25 1 Represents Case Fill Rate 18
Slide 19: Resumed Active Portfolio Reshaping
Resumed Active Portfolio Reshaping 1 Acquired FATTY Smoked Meat Sticks 2 Divested Agro Tech Foods Limited (ATFL) 3 Assessing further opportunities 19
Slide 20: Reaffirming Fiscal 2025 Guidance
Reaffirming Fiscal 2025 Guidance 1 1 Guidance Organic Net Sales1 Growth (vs. FY24) (1.5)% to Flat Adj. Operating Margin1 15.6% to 15.8% Adj. EPS1 $2.60 to $2.65 1. Forward-looking non-GAAP financial measure. See the appendix for more information. 20
Slide 21: Dave Marberger, Executive Vice President and Chief Financial Officer
Dave Marberger Executive Vice President and Chief Financial Officer 21
Slide 22: FY25 Q1 Results
FY25 Q1 Results Q1 Q1 vs. YA Organic Net Sales1 $2,801 (3.5)% Adj. Gross Margin1 26.0% (163) bps Adj. Operating Margin1 14.2% (244) bps Adj. EPS1 $0.53 (19.7)% 1. Non-GAAP financial measure. See the appendix for certain definitions and reconciliations to the most directly comparable GAAP measure. 22
Slide 23: Net Sales by Segment
Net Sales by Segment Dollars in Millions Increase/(Decrease) Q1 1 1 Organic1 Net Sales Price/Mix Volume vs. YA Grocery & Snacks $1,183 (1.9)% (0.1)% (1.8)% Refrigerated & Frozen 1,086 (5.7)% (5.8)% 0.1% International 259 +3.0% 2.4% 0.6% Foodservice 267 (7.9)% 3.2% (11.1)% Total Conagra Brands $2,795
Slide 24: Net Sales Bridge vs. Year Ago
Net Sales Bridge vs. Year Ago Q1 Drivers of Net Sales Change (% Change vs. YA) Organic Net Sales1: (3.5)% (0.3)% (1.6)% (1.9)% (3.8)% Volume Price/Mix Foreign Total (incl. Retailer Exchange / M&A Conagra Investments) Brands 1. Non-GAAP financial measure. See the appendix for certain definitions and
Slide 25: Q1 Adj. Operating Margin Bridge
Q1 Adj. Operating Margin1 Bridge Q1 Adj. Operating Margin1 (% Change vs. YA) 1 2 1. Non-GAAP financial measure. See the appendix for certain definitions and reconciliations to the most directly comparable GAAP measure. 2. COGS Inflation reflects market inflation net of market-based sourcing. 25
Slide 26: Segment Adjusted Operating Profit & Margin Summary
Segment Adjusted Operating Profit1 & Margin1 Summary Q1 Adj. Operating Profit1 & Margin1 Dollars in Millions Increase/(Decrease) Adj. Op. Profit1 Adj. Op. Margin1 1 1 Q1 vs. YA Q1 vs. YA Grocery & Snacks $253 (3.8)% 21.4% (48) bps Refrigerated & Frozen 159 (21.0)% 14.6% (284) bps International 36 (1
Slide 27: Q1 Adjusted EPS Bridge
Q1 Adjusted EPS1 Bridge Drivers of Q1 Adjusted EPS1 vs. YA 1 1 1 1 1. Non-GAAP financial measure. See the appendix for certain definitions and reconciliations to the most directly comparable GAAP measure. Numbers may not add due to rounding. 27
Slide 28: Key Balance Sheet & Cash Flow Metrics
Key Balance Sheet & Cash Flow Metrics Q1 FY25 Q1 FY24 (dollars in millions) Debt $8,772 $9,270 Cash $129 $92 Ending Net Debt1 $8,644 $9,178 Net Leverage2 3.60x 3.55x (dollars in millions) Q1 FY25 Q1 FY24 Net Cash Flow from Operating $269 $444 Activities Capital Expenditures $133 $144 Free Cash Flow1
Slide 29: Reaffirming Fiscal 2025 Guidance
Reaffirming Fiscal 2025 Guidance 1 1 Guidance Organic Net Sales1 Growth (vs. FY24) (1.5)% to Flat Adj. Operating Margin1 15.6% to 15.8% Adj. EPS1 $2.60 to $2.65 1. Forward-looking non-GAAP financial measure. See the appendix for more information. 29
Slide 30: Year To Go Expectations
Year To Go Expectations • Volume and margin recovery most meaningful in H2 • Sequential volume, top-line, adj. gross margin1 and adj. operating margin1 progress in Q2 • Highest merchandising spend planned for Q2 • Full year net inflation* now expected at ~3.2% with expected peak in Q2 • ~$30M decrea
Slide 31: Appendix
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Slide 32: 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 33: Reconciliation of FY19 to FY24 Foodservice Organic Net Sales
Reconciliation of FY19 to FY24 Foodservice Organic Net Sales (in millions) FY24 FY23 FY22 FY21 FY20 FY19 Net Sales $ 1,148.4 $ 1,136.4 $ 1,008.4 $ 846.8 $ 968.9 $ 1,030.3 Impact of 53rd week 1 — — — — (13.0) — Net sales from divested businesses — — — (2.1) (17.7) (55.7) Net sales from sold Trenton p
Slide 34: Reconciliation of FY19 to FY24 Foodservice Adj. Operating Profit
Reconciliation of FY19 to FY24 Foodservice Adj. Operating Profit (in millions) FY24 FY23 FY22 FY21 FY20 FY19 Operating Profit $ 157.2 $ 85.0 $ 60.3 $ 80.0 $ 97.6 $ 134.3 Restructuring plans — — 0.3 — — — Impairment of businesses held for sale — 20.5 14.9 — — — Fire related costs (insurance recoverie
Slide 35: Reconciliation of Q1 FY25 Organic Net Sales by Segment
Reconciliation of Q1 FY25 Organic Net Sales by Segment (in millions) & YOY Change 35
Slide 36: Reconciliation of Q1 FY25 Adj. Operating Profit by Segment
Reconciliation of Q1 FY25 Adj. Operating Profit by Segment (in millions)– YOY Change 36
Slide 37: Reconciliation of Q1 FY25 Adj. Operating Profit by Segment Cont.
Reconciliation of Q1 FY25 Adj. Operating Profit by Segment (in millions) – YOY Change Cont. 37
Slide 38: Reconciliation of Q1 FY25 Adj. Gross Margin, Adj. EPS and Other Measures
Reconciliation of Q1 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 39: Reconciliation of Q1 FY25 Adj. Gross Margin, Adj. EPS Cont.
Reconciliation of Q1 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 40: Reconciliation of Q1 FY25 Free Cash Flow and Net Debt
Reconciliation of Q1 FY25 Free Cash Flow and Net Debt (in millions) 40
Slide 41: Reconciliation of Q1 FY25 Net Leverage Ratio
Reconciliation of Q1 FY25 Net Leverage Ratio (in millions) 1. As of August 25, 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 period. 41
Slide 42: Reconciliation of Q1 FY24 Net Leverage Ratio
Reconciliation of Q1 FY24 Net Leverage Ratio (in millions) FY23 Q1 FY23 Q1 FY24 Q1 FY24 TTM (a) (b) (c) (a)-(b)+(c) 1 Net Debt $ 9,178.1 Net income (loss) attributable to Conagra Brands, Inc. $ 683.6 $ (77.5) $ 319.7 $ 1,080.8 Add Back: Income tax expense 218.7 14.4 98.3 302.6 Income tax expense att