Conagra Brands Q1 Profit Beats Estimates; Net Sales Impacted By Elongated Volume Recovery Timetable

Conagra Brands, Inc. (CAG) posted a growth of 15.8% in its first-quarter adjusted earnings per share from a year ago. Adjusted operating margin was 16.7%, a 297 basis point increase over the prior year quarter. First quarter net sales were flat with prior year, impacted by elongated volume recovery timetable. Organic net sales declined 0.3%, for the quarter, driven by a 6.6% decrease in volume largely due to industry-wide slowdown in consumption and recent consumer behavior shifts, partially offset by a 6.3% improvement in price/mix.

Looking forward, the company reiterated its fiscal 2024 guidance. For the second quarter, Conagra Brands projects adjusted EPS to be approximately flat to first quarter. Second quarter gross and operating margins are projected to be below first quarter due to incremental trade and A&P investment. Organic net sales are projected to decline low-single-digit. For the back half of the year, the company expects low-single digit organic net sales growth driven by year-over-year volume growth, along with margins similar to second quarter as trade and A&P dollars remain elevated.

First-quarter net income was $319.7 million compared to a loss of $77.5 million, last year. Profit per share was $0.67 compared to a loss of $0.16. Adjusted net income attributable to Conagra Brands increased 15.0% to $316 million, or $0.66 per share. The company noted that the increase was driven primarily by the increase in gross profit and decrease in SG&A. On average, 14 analysts polled by Thomson Reuters expected the company to report profit per share of $0.60, for the quarter. Analysts’ estimates typically exclude special items.

First quarter revenue was $2.90 billion, flat with a year ago. Analysts on average had estimated $2.95 billion in revenue.

Sean Connolly, CEO of Conagra Brands, said, “We will continue to focus on executing our Conagra Way playbook as we make targeted and disciplined investments throughout the remainder of the year to drive the top-line.”

Conagra Brands also announced that its Board of Directors approved a quarterly dividend payment of $0.35 per share of CAG common stock to be paid on November 30, 2023 to stockholders of record as of the close of business on November 2, 2023.

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