Conagra Brands, Inc. · NYSE:CAG
Conagra Brands — Q1 2024 Earnings Presentation
40 slides from Conagra Brands's earnings presentation, Oct 5, 2023
Slide 1: FY24 Q1 Earnings Presentation
FY24 Q1 Earnings Presentation October 5, 2023 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 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. Reader
Slide 4: Sean Connolly
Sean Connolly President and Chief Executive Officer 4
Slide 5: Key Messages
Key Messages • Macro dynamics affecting consumer behavior continue to impact industry • CAG Q1 results: • Net sales impacted by elongated volume recovery timetable • Strong margin and EPS performance • Net leverage reduction on track • Strong supply chain recovery • Targeted and disciplined investme
Slide 6: Economic Pressures Changing Consumer Behavior
Economic Pressures Changing Consumer Behavior Consumer Balance Conscious Choices Sheets Strained to Stretch Budgets Expecting behavior shifts to be temporary 6
Slide 7: Near-Term Behavioral Trends
Near-Term Behavioral Trends Limited discretionary purchases Actively reducing household inventories More hands-on prep, less convenience More meals-for-many, fewer meals-for-one More use of leftovers, less waste 7
Slide 8: Volume Recovery Has Been Elongated; Peer Set Within a Tight Band
Volume Recovery Has Been Elongated; Peer Set Within a Tight Band Near-in Peers Unit Sales Retail Performance Unit Sales % Change vs. YA Unit Sales 2-Year CAGR Peer 4W 13W 52W Peer 4W 13W 52W Competitor A 2.9% 8.9% (0.5)% Competitor A (3.2)% (3.1)% (3.1)% Competitor B (5.5)% (6.7)% (7.0)% Competitor
Slide 9: FY24 Q1 Results
FY24 Q1 Results Q1 Q1 vs. YA Organic Net Sales1 $2,897 (0.3)% Adj. Gross Margin1 27.6% +272 bps Adj. Operating Margin1 16.7% +297 bps Adj. EPS1 $0.66 15.8% 1. Non-GAAP financial measure. See the appendix for certain definitions and reconciliations to the most directly comparable GAAP measure. 9
Slide 10: Staples Flat To Prior Year
Staples Flat To Prior Year Conagra Staples Retail Sales Conagra Staples (% Change vs. YA) Unit Share Gains (Q1, Pt. Change vs. YA) +10% +8% +7% Canned Chili +4.6 +4% Flat Canned Value Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Tomatoes Convenient Meals +1.6 +0.4 The Wendy’s name and design and Cameo de
Slide 11: Snacks Continued to Grow
Snacks Continued to Grow Conagra Snacks Conagra Snacks Retail Sales Unit Share Gains (% Change vs. YA) (Q1, Pt. Change vs. YA) +14% +13% +7% Microwave +5% Popcorn +2.5 +1% RTE Pudding Seeds Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 & Gel +0.4 +2.2 Source (Left Chart): IRI POS, Total US MULO+C, Total E
Slide 12: Frozen Most Impacted by Shifts in Consumer Behavior
Frozen Most Impacted by Shifts in Consumer Behavior Conagra Frozen Retail Sales Conagra Frozen (% Change vs. YA) Unit Share Gains (Q1, Pt. Change vs. YA) 9% 8% Frozen Sides +0.9 4% 2% Multi-Serve Meals Single-Serve Meals -4% +0.2 +0.1 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Source (Left Chart): IRI
Slide 13: Frozen Remains an Attractive Space Poised for Future Growth
Frozen Remains an Attractive Space Poised for Future Growth Frozen Meals Share of In-Home Occasions 4% 4.0 CAGR 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 1995 2002 2014 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1996 1997 1998 1999 2000 2001 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2
Slide 14: Positive Progress In Supply Chain
Positive Progress In Supply Chain SERVICE LEVELS BACK PRODUCTIVITY TO PRE-PANDEMIC ON TRACK LEVELS 14
Slide 15: Action Plan for Rest of Year
Action Plan for Rest of Year • Maintain and capitalize on strong supply chain recovery • Fill rates back to pre-pandemic levels • Remain focused on productivity initiatives • Strong slate of innovation in market • Prudent incremental investments • Quality merchandising • Targeted A&P investment • Pr
Slide 16: Reaffirming Fiscal 2024 Guidance
Reaffirming Fiscal 2024 Guidance 1 1 Guidance FY24 Organic Net Sales1 Growth (vs. FY23) ~+1% Adj. Operating Margin1 16.0% to 16.5% Adj. EPS1 $2.70 to $2.75 1. Forward-looking non-GAAP financial measure. See the appendix for more information. 16
Slide 17: Dave Marberger
Dave Marberger Executive Vice President and Chief Financial Officer 17
Slide 18: Performance Summary
Performance Summary Dollars in Millions, except per share data Increase/(Decrease) Q1 vs. YA Reported Net Sales $2,904 Flat Organic Net Sales1 Growth (0.3)% Adj. Gross Profit1 801 +10.9% Adj. Gross Margin1 27.6% +272 bps A&P 59 (5.3)% A&P as % of NS 2.0% (11) bps Adj. SG&A1 258 (1.5)% Adj. SG&A1 as
Slide 19: Net Sales Bridge vs. Year Ago
Net Sales Bridge vs. Year Ago Q1 Drivers of Net Sales Change (% Change vs. YA) Organic Net Sales1: (0.3)% +6.3% +0.3% (0.0)% (6.6)% Volume Price/Mix Foreign Total (incl. Retailer Exchange Conagra Investments) Brands 1. Non-GAAP financial measure. See the appendix for certain definitions and reconcil
Slide 20: Net Sales by Segment
Net Sales by Segment Dollars in Millions Increase/(Decrease) Net Sales 1 1 Reported Organic1 Q1 vs. YA vs. YA Grocery & Snacks $1,203 +1.2% +1.2% Refrigerated & Frozen 1,152 (4.6)% (4.6)% International 260 +11.4% +8.2% Foodservice 289 +5.2% +5.2% Total Conagra Brands $2,904 Flat (0.3)% 1. Non-GAAP f
Slide 21: Operating Margin Bridge
Operating Margin Bridge Q1 Adj. Operating Margin1 (% Change vs. YA) Adj. Gross Margin1: +272 bps 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 mar
Slide 22: Segment Adjusted Operating Profit & Margin Summary
Segment Adjusted Operating Profit1 & Margin1 Summary Dollars in Millions Increase/(Decrease) Adj. Op. Profit1 Adj. Op. Margin1 1 1 Q1 vs. YA Q1 vs. YA Grocery & Snacks $264 +3.8% 21.9% +55 bps Refrigerated & Frozen 201 +14.7% 17.5% +294 bps International 42 +57.8% 16.3% +478 bps Foodservice 41 +87.5
Slide 23: Q1 Adjusted EPS Bridge
Q1 Adjusted EPS1 Bridge Drivers of Q1 Adjusted EPS1 vs. YA Adj. Op Profit1 +$0.13 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. 23
Slide 24: Q1 Key Balance Sheet & Cash Flow Metrics
Q1 Key Balance Sheet & Cash Flow Metrics August May 28, (dollars in millions) 27, 2023 2023 Debt $9,274 $9,239 Cash $93 $94 Ending Net Debt1 $9,180 $9,145 Net Leverage Ratio1 3.55x 3.63x (dollars in millions) Q1 FY24 Q1 FY23 Net Cash Flow from Operating $444 $264 Activities Capital Expenditures $144
Slide 25: Reaffirming Fiscal 2024 Guidance
Reaffirming Fiscal 2024 Guidance 1 1 Guidance FY24 Organic Net Sales1 Growth (vs. FY23) ~+1% Adj. Operating Margin1 16.0% to 16.5% Adj. EPS1 $2.70 to $2.75 1. Forward-looking non-GAAP financial measure. See the appendix for more information. 25
Slide 26: Q2 and H2 Dynamics
Q2 and H2 Dynamics Q2 H2 Organic Net Sales1 Low-single-digit decline Low-single-digit growth Volume Improves as pricing is wrapped Return to YOY growth Trade and A&P Investments ramp up Higher investment than H1 Margins Below Q1 ~ Flat to Q2 Adj. EPS1 ~ Flat to Q1 ~ Flat to prior year H2 1. Forward-
Slide 27: Q&A
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Slide 28: Appendix
<b VY wbx CONAGRA “BRANDS -° Appendix
Slide 29: 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 30: Reconciliation of Q1 FY24 Organic Net Sales by Segment YOY Change
Reconciliation of Q1 FY24 Organic Net Sales by Segment YOY Change (in millions) 30
Slide 31: Reconciliation of Q1 FY24 Adj. Operating Profit by Segment
Reconciliation of Q1 FY24 Adj. Operating Profit by Segment – YOY Change (in millions) 31
Slide 32: Reconciliation of Q1 FY24 Adj. Operating Profit by Segment Cont.
Reconciliation of Q1 FY24 Adj. Operating Profit by Segment – YOY Change Cont. (in millions) 32
Slide 33: Reconciliation of Q1 FY24 Adj. Gross Margin, Net Income, and EPS
Reconciliation of Q1 FY24 Adj. Gross Margin, Adj. Gross Profit, Adj. SG&A, Adj. Net Income, and Adj. EPS – YOY Change (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, ne
Slide 34: Reconciliation of Q1 FY24 Adj. Gross Margin, Net Income, and EPS Cont.
Reconciliation of Q1 FY24 Adj. Gross Margin, Adj. Gross Profit, Adj. SG&A, Adj. Net Income, and Adj. EPS – YOY Change Cont. (in millions) 1. Operating profit is derived from taking Income from continuing operations before income taxes and equity method investment earnings, adding back Interest expen
Slide 35: Reconciliation of Q1 FY24 Free Cash Flow and Net Debt
Reconciliation of Q1 FY24 Free Cash Flow and Net Debt – YOY Change (in millions) 35
Slide 36: Reconciliation of FY23 Free Cash Flow and Net Debt
Reconciliation of FY23 Free Cash Flow and Net Debt – YOY Change (in millions) 36
Slide 37: Reconciliation of Q1 FY24 Net Leverage Ratio
Reconciliation of Q1 FY24 Net Leverage Ratio (in millions) 1. As of August 27, 2023 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 EB
Slide 38: Reconciliation of FY23 Net Leverage Ratio
Reconciliation of FY23 Net Leverage Ratio (in millions) 1. As of May 28, 2023 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 f
Slide 39: Reconciliation of Q1 FY24 EBITDA
Reconciliation of Q1 FY24 EBITDA (in millions) 1. Excludes comparability items related to depreciation. 39
Slide 40: Conagra Brands
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