Shares of Conagra Brands, Inc. (NYSE: CAG) were down 2% on Thursday after the company reported mixed results for the second quarter of 2024. The branded foods seller also lowered its guidance for the full year on the basis of year-to-date results and slower volume recovery. Here are the key takeaways from the earnings report:
Sales miss, earnings beat
Conagra reported net sales of $3.21 billion for the second quarter of 2024, which was down 3.2% from the same period last year and below analysts’ projections of $3.24 billion. Organic sales were down 3.4%. GAAP net income decreased 25% year-over-year to $286 million, or $0.60 per share. Adjusted EPS fell 12% to $0.71 but surpassed estimates of $0.68.
Category performance
In Q2, Conagra’s organic sales decline was driven by a 2.9% drop in volume, mainly due to lower consumption trends. Volumes across the Grocery & Snacks and Refrigerated & Frozen segments were impacted by lower consumption trends leading to declines of 3.7% and 3.3%, respectively.
Sales decreased 4.1% in the Grocery & Snacks segment and 5.8% in the Refrigerated & Frozen segment in Q2. However, the company gained dollar share in snacking and staples categories such as microwave popcorn, chili, and hot cocoa as well as categories like frozen sides and frozen breakfast.
Sales in the International and Foodservice segments increased 8% and 4% respectively, with the International segment benefiting from volume growth of 3.3%, driven by strong performance in the Mexico business. The Foodservice segment saw price/mix increase by 6.8%, fueled by inflation-driven pricing actions, but volumes dropped 2.5%.
Lowered outlook
Conagra lowered its outlook for organic sales growth and adjusted EPS for the full year of 2024. The revised guidance reflects year-to-date performance, expectations for a slower volume recovery, and increased brand investments during the latter half of the year. The company now expects organic sales to decrease 1-2% compared to FY2023, versus its previous expectation for a growth of approx. 1%. Adjusted EPS is now expected to range between $2.60-2.65 versus the prior range of $2.70-2.75.
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Unveiling the Top Insights from Conagra’s (CAG) Q2 2024 Earnings Report
Conagra Brands (NYSE: CAG) recently released its second-quarter earnings report for the fiscal year 2024, showcasing strong growth and beating analyst expectations. As a leading food company with brands such as Duncan Hines, Hunt’s, and Reddi-wip, Conagra’s performance in the past year has been closely watched by investors and industry experts. In this article, we will delve into the key takeaways from Conagra’s Q2 2024 earnings report and what it means for the company’s future.
Strong Revenue Growth Leads to Impressive Earnings
Conagra reported net sales of $2.9 billion for the second quarter of fiscal year 2024, a 36.7% increase compared to the same period last year. This beat analyst estimates of $2.76 billion, showcasing promising growth for the company. The food giant also reported a net income of $408 million, a significant improvement from a loss of $599 million in the same quarter last year.
The impressive growth can be attributed to Conagra’s focus on its core brands, price increases, and effective cost management. The company has been streamlining its portfolio and focusing on its most profitable brands, leading to better margins and improved revenue. Additionally, Conagra’s price increases have helped offset rising commodity costs, resulting in better profitability.
Investments in Innovation and E-commerce Pay Off
Conagra’s CEO, Sean Connolly, credits their strong innovation pipeline for contributing to the company’s success. In the second quarter, Conagra launched several new products, including plant-based meals under its Gardein brand and snacks under its Slim Jim brand. These innovations have been well-received by consumers, driving growth in the company’s retail segment.
Conagra’s investments in e-commerce have also paid off, with the company reporting a 74% increase in e-commerce sales in the second quarter. The pandemic has accelerated the shift towards e-commerce, and Conagra has been quick to adapt to this changing landscape. The company has been investing in digital marketing and partnerships with online retailers, resulting in significant growth in online sales.
Strong Performance across All Segments
Conagra’s retail segment, which includes its grocery and snacks brands, grew 32% in the second quarter, driven by strong demand for its core brands and successful innovation. The company’s foodservice segment also reported impressive growth, with net sales increasing by 54%. This can be attributed to the gradual reopening of restaurants and other foodservice establishments after pandemic-related closures.
Conagra’s international segment, which includes its Europe and Latin America operations, also showed strong growth with net sales increasing by 61%. The company’s focus on expanding its presence in international markets has paid off, with its brands gaining traction and driving revenue growth in these regions.
Strong Balance Sheet and Cash Flow
An essential aspect of any company’s financial health is its balance sheet and cash flow, and Conagra’s is looking strong. The company reported a free cash flow of $922 million for the second quarter, higher than the $420 million reported in the same period last year. This increase can be attributed to improved profitability and effective working capital management.
Debt reduction has also been a priority for Conagra, and the company has been successful in decreasing its total debt by $1.5 billion from the second quarter of fiscal year 2023. This has resulted in a reduced leverage ratio for the company, giving it more financial flexibility for strategic investments and acquisitions.
Outlook for the Future
Based on the strong performance in the first half of fiscal year 2024, Conagra raised its guidance for the full year. The company now expects net sales growth to be in the range of 5-7%, up from the previous estimate of 3-5%. It also expects adjusted earnings per share to be between $2.50 to $2.55, an increase from the previous guidance of $2.38 to $2.43.
Conagra is committed to its long-term strategy of focusing on growth and profitability, and the results of the second quarter affirm this commitment. The company’s strong financial performance and promising outlook make it an attractive investment for those looking to add a food company to their portfolio.
In Conclusion
Overall, Conagra’s Q2 2024 earnings report provides insight into the company’s strong growth and promising future. The company’s focus on innovation, e-commerce, and efficient cost management has paid off, resulting in impressive financial performance. With a strong balance sheet, debt reduction, and a favorable outlook, Conagra is well-positioned for continued success in the food industry.
Source: Conagra Brands Q2 2024 Earnings Report, https://www.conagrabrands.com/investors/press-releases/non-role-based-pages/2024/2021-12-21-conagra-brands-reports-solid-second-quarter-performance
