In This Article:
Release Date: October 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Conagra Brands Inc (NYSE:CAG) achieved year-over-year volume growth in its strategic frozen and snack domains, demonstrating effective strategic investments.
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The company maintained pre-COVID margins in its foodservice segment, showcasing successful execution of its value-over-volume strategy.
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Conagra Brands Inc (NYSE:CAG) advanced its supply chain productivity initiatives, remaining on track to deliver $1 billion in cost savings by the end of fiscal '25.
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The acquisition of FATTY Smoked Meat Sticks expanded Conagra's leading position in the high-growth, high-margin meat sticks category.
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Conagra Brands Inc (NYSE:CAG) achieved four consecutive quarters of share progress, outperforming its peers in a challenging consumer environment.
Negative Points
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A manufacturing disruption at the Hebrew National hot dog plant led to a significant 47% decline in brand revenue for Q1.
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Total organic net sales were impacted by the Hebrew National disruption, resulting in a 90-basis-point reduction in total organic net sales.
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The refrigerated and frozen segment experienced a 5.7% decline in net sales, partly due to the Hebrew National disruption.
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Adjusted operating margin declined by 244 basis points over the prior year, affected by higher cost of goods sold inflation and increased trade merchandising investments.
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The foodservice business continued to face challenges from lower-margin business exits and ongoing softness in restaurant traffic.
Q & A Highlights
Q: Can you elaborate on the impact of the Hebrew National manufacturing disruption on your Q1 results? A: Sean Connolly, CEO: The disruption at our Hebrew National hot dog plant during the peak grilling season resulted in a 47% decline in revenue for the brand in Q1. This equated to a 60-basis-point reduction in total volume and a 90-basis-point reduction in total organic net sales. The impact was particularly felt in our Refrigerated & Frozen segment, with a 150-basis-point reduction in volume and a 210-basis-point reduction in organic net sales. We expect the majority of this impact to be isolated to the first quarter.
Q: How did Conagra's strategic frozen and snack domains perform in Q1? A: Sean Connolly, CEO: We achieved year-over-year volume growth in both our strategic frozen and snack domains. Approximately 93% of our frozen and snack brands held or gained volume share during the quarter, demonstrating the effectiveness of our investments in these areas.