On October 2, 2024, Conagra Brands Inc (CAG, Financial) released its 8-K filing reporting the financial results for the first quarter of fiscal year 2025, which ended on August 25, 2024. Conagra Brands, a leading packaged food company in the United States, operates with a diverse portfolio of brands including Marie Callender's, Healthy Choice, Banquet, Birds Eye, Duncan Hines, Hunt's, Slim Jim, and more.
Performance Overview
Conagra Brands Inc (CAG, Financial) reported a 3.8% decrease in net sales to $2.8 billion, missing the estimated revenue of $2.844 billion. The company also reported earnings per share (EPS) of $0.53, falling short of the analyst estimate of $0.61. The decline in net sales was primarily driven by a 1.9% negative impact from price/mix and a 1.6% decrease in volume. Additionally, temporary manufacturing disruptions in the Hebrew National business during the key grilling season impacted results by approximately $27 million.
Financial Achievements and Challenges
Despite the challenging environment, Conagra Brands Inc (CAG, Financial) managed to increase its net income attributable to the company by 46.0% to $467 million, or $0.97 per diluted share, compared to $320 million, or $0.67 per diluted share, in the prior year quarter. This increase was primarily driven by a $210.4 million income tax benefit. However, adjusted net income decreased by 20.0% to $253 million, or $0.53 per diluted share, due to lower gross profit and higher SG&A expenses.
Segment Performance
In the Grocery & Snacks segment, net sales decreased by 1.7% to $1.2 billion, with a price/mix decrease of 0.1% and a volume decrease of 1.8%. The Refrigerated & Frozen segment saw a 5.7% decline in net sales to $1.1 billion, primarily due to a 5.8% decrease in price/mix. The International segment experienced a slight decrease of 0.4% in net sales to $259 million, while the Foodservice segment reported a 7.8% decline in net sales to $267 million.
Income Statement Highlights
| Metric | Q1 FY25 | Q1 FY24 | Change |
|---|---|---|---|
| Net Sales | $2,794.9 million | $2,904.0 million | (3.8)% |
| Gross Profit | $739 million | $823 million | (10.2)% |
| Net Income | $466.9 million | $319.9 million | 45.9% |
| EPS (Diluted) | $0.97 | $0.67 | 44.8% |
Balance Sheet and Cash Flow
Conagra Brands Inc (CAG, Financial) ended the quarter with total assets of $21.25 billion, up from $20.86 billion at the end of the previous fiscal year. The company reported net cash flows from operating activities of $269 million, a decrease from $444 million in the prior year period. Capital expenditures were $133 million, and free cash flow decreased by $164 million to $136 million.
CEO Commentary
"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."
Analysis
Conagra Brands Inc (CAG, Financial) faced a challenging first quarter with declines in net sales and adjusted net income. The company's strategic investments and temporary manufacturing disruptions impacted its performance. However, the significant increase in net income attributable to the company, driven by a tax benefit, is a positive highlight. The reaffirmation of fiscal 2025 guidance indicates management's confidence in the company's long-term strategy and underlying business momentum.
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Explore the complete 8-K earnings release (here) from Conagra Brands Inc for further details.
