Conagra Brands reports solid 2022 first-quarter results; foodservice organic sales rise 21%

Oct. 11, 2021

Food giant Conagra Brands Inc. (NYSE: CAG) reported results for the first quarter of fiscal year 2022, which ended on Aug. 29, 2021, with a 1%  net sales decrease to $2.7 billion.

Conagra said the decline in net sales primarily reflects a 1.1% net decrease from the divestitures of the H.K. Anderson, Egg Beaters and the Peter Pan peanut butter business. Also contributing to the decline were a 0.5% increase from the favorable impact of foreign exchange and the 0.4% decrease in organic net sales.

Conagra's net sales for the foodservice segment increased 20.9% to $240 million in the quarter, reflecting a 21.7% increase in organic net sales and an 0.8% decrease from the impact of the sold businesses mention above.

On an organic net sales basis, volume increased 20.1% as restaurant traffic continued to recover from the impacts of the COVID-19 pandemic. Price/mix was favorable at 1.6% in the quarter primarily driven by inflation-justified pricing.

Operating profit for Conagra's foodservice segment decreased 20.1% to $20 million and adjusted operating profit decreased 19% to $21 million in the quarter. Conagra said the impacts of cost of goods sold inflation more than offset the benefits of higher organic net sales and favorable supply chain realized productivity.

KEY POINTS

  • First-quarter net sales decreased 1%; organic net sales decreased 0.4%. On a two-year compounded annualized basis, fiscal 2022 first quarter net sales increased 5.3% and organic net sales increased 7%.
  • Operating margin decreased 534 basis points to 13.7%; adjusted operating margin decreased 604 basis points to 14.1%.
  • Diluted earnings per share from continuing operations (EPS) for the first quarter decreased 26.9% to $0.49, and adjusted EPS decreased 28.6% to $0.50. On a two-year compounded annualized basis, first quarter EPS increased 16.6% and adjusted EPS increased 7.8%.
  • During the first quarter, the company repurchased approximately 1.5 million shares of its common stock for approximately $50 million.
  • The company is reaffirming its fiscal 2022 adjusted EPS guidance and updating its expected path to achieving that guidance. The company's updated fiscal 2022 guidance is as follows:
    • Organic net sales growth is expected to be approximately +1% versus prior guidance of approximately flat
    • Gross inflation (input cost inflation before the impacts of hedging) is expected to be approximately 11% versus prior guidance of approximately 9%.
    • Adjusted operating margin is expected to be approximately 16%, representing no change to prior guidance.
    • Adjusted EPS is expected to be approximately $2.50, representing no change to prior guidance.

Related

[Credit: Conagra Brands]
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