Conagra Brands: Reports First Quarter 2025 Results

Chicago / IL. (cag) ConAgra Brands Inc. reported results for the first quarter of fiscal year 2025, which ended on August 25, 2024. All comparisons are against Q1-2024, unless otherwise noted. Highlights:

• Reported net sales decreased 3.8 percent; organic net sales decreased 3.5 percent.
• Reported operating margin was 14.4 percent representing a 247 basis point decrease. Adjusted operating margin was 14.2 percent representing a 244 basis point decrease.
• Reported diluted earnings per share (EPS) was USD 0.97, a 44.8 percent increase. Adjusted EPS was USD 0.53, a 19.7 percent decrease.
• The company is reaffirming its fiscal 2025 guidance reflecting:
  • Organic net sales of (1.5) percent to flat compared to fiscal 2024
  • Adjusted operating margin between 15.6 percent and 15.8 percent
  • Adjusted EPS between USD 2.60 and USD 2.65
  • Free cash flow conversion of approximately 90 percent

Chief Executive’s Perspective

Sean Connolly, president and chief executive officer: «Our team executed well to deliver on key priorities across the business during the first quarter in what continued to be a challenging environment. Our domestic retail volume progressed in-line with expectations, we increased share across the portfolio and advanced our portfolio reshaping initiatives. Overall, we are reaffirming our guidance for fiscal 2025, reflecting confidence in the underlying momentum of our business.»

Total Company First Quarter Results

In the quarter, net sales decreased 3.8 percent to USD 2.8 billion reflecting:

• a 3.5 percent decrease in organic net sales,
• a 0.4 percent decrease from the unfavorable impact of foreign exchange; and
• a 0.1 percent increase from the favorable impact of M+A

The 3.5 percent decrease in organic net sales was driven by a 1.9 percent negative impact from price/mix, largely driven by the company’s strategic investments in the quarter, and a 1.6 percent decrease in volume. Additionally, the company estimates that results in the quarter were impacted by approximately USD 27 million due to temporary manufacturing disruptions in the Hebrew National business during the key grilling season.

Gross profit decreased 10.2 percent to USD 739 million in the quarter, and adjusted gross profit decreased 9.4 percent to USD 726 million. First quarter gross profit decreased as higher productivity was more than offset by the negative impacts of lower organic net sales, cost of goods sold inflation, and unfavorable operating leverage. Additionally, gross profit was negatively impacted by approximately USD 11 million due to the temporary manufacturing disruptions in the Hebrew National business. Gross margin decreased 189 basis points to 26.5 percent in the quarter, and adjusted gross margin decreased 163 basis points to 26.0 percent.

Selling, general, and administrative expense (SG+A), which includes advertising and promotional expense (A+P), increased 1.1 percent to USD 338 million in the quarter driven primarily by higher incentive compensation compared to the prior year quarter, partially offset by a 14.0 percent decrease in A+P. Adjusted SG+A, which excludes A+P, increased 7.3 percent to USD 277 million primarily driven by higher incentive compensation compared to the prior year quarter.

Net interest expense was USD 106 million in the quarter, a 0.1 percent decrease compared to the prior-year period due to a reduction in total debt.

The average diluted share count in the quarter was 480 million shares reflecting USD 64 million in share repurchases during the first quarter.

In the quarter, net income attributable to Conagra Brands increased 46.0 percent to USD 467 million, or USD 0.97 per diluted share compared to USD 320 million, or USD 0.67 per diluted share in the prior year quarter driven primarily by releasing an allowance resulting in a USD 210.4 million income tax benefit in the first quarter of fiscal 2025. Adjusted net income attributable to Conagra Brands decreased 20.0 percent to USD 253 million, or USD 0.53 per diluted share, primarily as a result of the decrease in gross profit and increase in SG+A.

Adjusted Ebitda, which includes equity method investment earnings and pension and postretirement non-service expense (income), decreased 13.8 percent to USD 528 million in the quarter, primarily driven by the decrease in adjusted operating profit. For additional information please read the PDF file below (131 KB):

20241004-CONAGRA-Q12025.