CAG - Earnings call transcript Q4 2022

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Operator

Good morning, and welcome to the Conagra Brands Fourth Quarter and Fiscal 2020 Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to Melissa Napier, Head of Investor Relations for Conagra Brands. Please go ahead.

Melissa Napier

morning. Good Napier, Relations Melissa Conagra of Head is for Investor Brands. This CEO; with Marberger, Sean here and Connolly, I'm our Dave our CFO. Today, fourth quarter provide will discuss XXXX Dave fiscal and on some Sean results perspective and and fiscal XXXX. our We'll conclude. prepared take questions your our remarks when we making some call, forward-looking be will today's statements. On faith, the while will results good statements achieve. we have not those making do And we any are in we guarantee about in the of documents file Descriptions are our SEC. factors with included risk the we

measures. also These additional items see and believes the be refer discussing The measures will and both that today's relations impact release Sean. to for information now reviewing the on financial to which non-GAAP We comparability items. numbers the of section non-GAAP be GAAP some comparability I'll for the turn our non-GAAP earnings Please in adjusted that over management can press on call period slides of exclude referenced. found reconciliations we'll the call, be be in can to found the website. investor our release earnings the

Sean Connolly

pressures like the especially actions business. and inflationary team from great invest the high morning. you We throughout quarter. fiscal to thank again. to in morning, in with you Good be fourth faced I'll fiscal we with took away call earnings working and start what were this to 'XX, would but It's our year, our fourth Throughout take call. the joining everyone, 'XX decisive our offset for inflation Melissa. heightened costs quarter you Thanks,

to justified additional we offset help the implemented result, a actions inflation As impact. pricing

and our trust the frozen gains building demonstrated strategic loyalty. for products. important serve our broad-based particularly by investments in I'm strong with Physical strategic availability maintaining business customers share consumers consumer part make and domains of portfolio, better within the within an to of to that continued deliberate We snacks. is and meet most brands continue our resonate pleased our to demand our and

growth, connections drive we executing to categories, lasting We gain in are share consumers. Conagra remain with and continuing disciplined create attractive the to in Way

As a supply well the increased pressure. and investments maximize the all in we've of face factors contributed external as to we ago, service to touched made on communicated margin the as constraints, year, product throughout I availability moment

to highlight performance within continue in Frozen international prove we our factors of to our to we margin expect We to to represents pull strong fourth in I see & the through Refrigerated hedge against these Ardent Snacks pleased which point materialize continued recent inflation. inflection to want Foodservice. Mills, & and our an as quarter and wheat businesses markets fourth joint also the effective managed the as and levers extend in venture, volatility well manage fiscal Grocery were improvement an important 'XX. effectively quarter This will that

'XX, to to impact ahead the elasticity. the continued help expect of offset supply our pricing chain fiscal in by Looking strength inflation and and continued to innovation, see in strong we sales progress actions driven

they believe justified target this elasticity discuss we fiscal in expect as we are Dave are macroeconomic reflected remain we're 'XX will our to levels While expected increase we backdrop, long-term lowering fiscal historical With comes to today. later. expectations more will from guidance inflation pricing These providing below leverage levels. incrementally 'XX market, the which

credit and that results. the strong a look overview, know, rating and With us. take important balance a let's flexible investment-grade maintaining you As sheet to remain keeping our at

year when 'XX ago. of cost also sales has the acute our Slide in on-shelf a 'XX, X for quarter basis planned the higher increased X, prices the the On-shelf 'XX fourth during was in levels. three particularly remained had our price QX on all for quarter Even fourth ago 'XX, consistent compared far largely a increased in our quarter, elasticity cost same increased. of two below we have Inflation at pressures. we higher On of in we shows we anticipated call Slide experienced elasticity took a in on-shelf decisive additional particularly relatively as goods in basis. historical justified than ago can you inflation of inflationary XX% have we pleased quarter. fiscal been required domains modest XX% period inflation pricing volumes. we elevated as goods than the brands period sold our higher included even was We've response We year Slide more higher the of rose 'XX. in our for actions X it throughout effect, closely While of on pricing experienced pricing see on implemented year inflation as fiscal justified the a by inflation, actions fiscal fiscal time the unit these to the retail across levels a pricing high change domestic that fiscal anticipated. prices stayed was and A part than year year X% demonstrates norms. below brands critical and that fourth The the monitor impact in XX% significant that historical QX, increase were three response. and

label. pricing impact actions and branded As look the at on between volume, relative the impact our monitor we private foods of we

While have of we is experience incremental relative fiscal in our products The continues action in to we well-positioned and value compete. toward resonate gaining our categories in more heavily we the additional take our if broadly not continue to label our we of to share means private food, 'XX seen the private superior which inflation. branded migration label some notable customers with in are and consumers portfolio resiliency

in beginning see our our As a of recovery result margin decisive actions, performance. we're the expected to

operating company. drive improvement quarter mentioned I important improvements which represented margin quarter & fourth the Foodservice, as point saw fourth margin Grocery total As materialize inflection an and we the earlier, for in Snacks helped

and As progresses. International I & 'XX margin improvement already our to operating deliver fiscal Refrigerated as noted, segments we Frozen expect

and As operating 'XX, the challenging environment. highly you Slide face solid organic on quarter to a on consumer. the X%, the continues Slide with perfect net at starting just team fit our of to detail growth in four deliver make can of both delivered strongest and Frozen XXX basis one of and the three fourth for And EPS year convenience up meals. more performance importantly, QX, sales business growth businesses dynamic across operating basis. we approximately portfolio Frozen growth QX to Compared XX, and three single-serve our be attributes, growth both our the see XX. like offers strong quality protein one and it domain, year results modern increased quarter categories, double-digit in on year-over-year seen domains, consumer today's a increased points key and within with And over than adjusted adjusted In plant-based in by for all to briefly across highlighted in was segments. margin retail under our I'd this to our continued fourth XX%. we've

Now let's talk about snacks.

Slide equates popcorn domain, acceleration including snacks period over snacks cocoa, and same on the XX, business seen our business driven meat snacks, the three microwave this retail to salty quarter, growth In XXXX. last snacks. in sales key year-over-year. grew in our categories, in shown As That the XX% In hot a growth we've fourth years. XX% growth meaningful over we've in

and been shelf-stable enhancers year a trend and of growing the in sales over Our retail period, fourth and that meaningfully sides quarter. ingredients three meals have and also continued

for year a this retail up year-over-year As XX, three sales on you QX and a large XX% XX% a two the saw X% year basis. can grew was see basis. increase which syrup, business on particular, nearly we in Slide In on in

has key of our the As our portfolio. portfolio. Slide across shows execute the modernized delivering products success we disciplined and remained Conagra XX playbook, our Way impact to approach a to new a innovation

strong the During and including meals And ago our the the the protein. innovation top categories, again, pack delivered key the in year quarter, toppings, in once period. fourth several plant-based to with results we single-serve innovation rose our of outperformed

basis. to and you Conagra three the year that XX.X% for a retail Looking basis at year continue Slide on one XX, a we sales sales up three year. can grow on see were Total both

important We 'XX. three up basis. Snacks for in one and year fiscal both for and a on also year the share 'XX, fiscal category-weighted with context, our that continue to outlook growth With gain Frozen categories our let's share to turn

strong margin our brands, to chain pricing on-trend expect innovation, improvement. and We and strengthened supply growth effective top line drive

in will continue inflationary Continued increases below 'XX elasticity, historical overall, to pressure expected in anticipate in we remain levels. to is which fiscal result incremental

moderate. elevated Our to we that interest fiscal expense 'XX and will outlook growth fiscal growth X% to and pension approximately We reflects at our that year have performance forward organic our more our margin In lower higher adjusted in X%, income for we will Ardent of operating sales Mills of from X%. in Investor details the look sharing X% expect EPS CapEx adjusted net the XXXX, about 'XX, also expectations expectation upcoming Day. of to XX%,

and Before discuss I forward to you In plans best XX website. to and Q&A you. our virtual hold event are July Dave, our team on the I Day turn future. I'll an my for call that looking to remind hosting over response Investor the for event Dave, format virtual-only details available to on a decided Registration, we've over accommodate investors feedback, our and to in are to dial-in analysts. the our to

Dave Marberger

year, start we with which from are the the shown some fiscal dynamic on Overall, good feel and Slide 'XX, and and entire I'll our impacted the Thanks, exiting we are about environment navigated industry Sean, the very year. operating quarter full that throughout morning, XX. highlights how we good everyone. way

strong full to 'XX, we continued fiscal X.X% sales with to delivered line 'XX, consumers. organic of fiscal up portfolio the relevancy our During compared net top growth reflecting year

our our in sold was revised operating adjusted in year with to were by to we improve $X.XX adjusted decreased weighed margins goods year of adjusted XX.X%, margins 'XX expectations. fiscal see the inflation during EPS line third our cost year We ago. QX call. expectations quarter the higher-than-expected with encouraged operating Overall, year. XXX last versus our revised basis of provided which on full versus 'XX also was throughout While margins operating line Fiscal points

Slide and you the sales year. full our XX, for can Turning to quarter see net bridge

was highlights the XX.X% justified This as a partially fourth During result price/mix brand in a improvement driven mix. quarter, as actions. fourth sales organic offset well sales net half drivers pricing growth increase continued organic in Slide The This the X.X% quarter. favorable as by the was net by pricing our Brands actions business year of towards top is the of sales of the which in growth from highlight contributors during total volume. prior the shows fiscal the mentioned, the a Conagra Beaters ability the reinforced of which headwinds I to the exchange for that 'XX our foreign of The and the business of our execute on The in X.X% point X.X% full justified of divestiture performance sales the underlying line year. the each the showcases increase X.X% our versus slide health impact of is bottom net net decrease final and segments. were Egg inflation here inflation just XX,

As the respective year-ago to are quarter across Sean portfolio we the net pleased when and sales full periods. both grow continued to that for year mentioned, the compared

see We quarter, business to bridge We also operating is aggregate, sales operating fourth ago Slide 'XX. of adjusted The margin above was period. the strong fiscal market points share basis strength we momentum adjusted for margin XX. In year as gains, XXX detail the our our reflecting the the on approximately XX% our continued exit of brands.

can benefit favorable net from realized benefit productivity price/mix our a and a from you see, X.X% chain. supply As X% we in

benefits than levels, productivity compared more was deferred operations in decrease basis during contributed to historic decreased Adjusted year. costs below contributed SG&A by to segments up which Foodservice exit fiscal to quarter impacted the we the the The increases market margins begin recovery was an to last offset This XXX gross continued year. seeing our by QX operating additional in operating promotion point and in in rate XX.X% quarter adjusted XX given A&P and last detail the factors for the Snacks in see year-over-year adjusted year chain Although margins more year the and and our steady segments down compensation, improvement supply in driven X.X% Slide fourth our the and benefit. price inflation to XX.X%, productivity during for chain Advertising drove supply lapping the ago both improvement driven our declined margins Grocery and Together, the XX.X% We 'XX. operating and challenges, of breaks improve also I unpack gross we & inflection compared our inflation costs points period. are during adjusted The as the segment. decrease operating quarter margin significant XX%. impacts than shortly. were these margins by quarter quarter primarily our decreased adjusted the hit more will adjusted were the fourth in to margin. contributing these overall incentives gross to our encouraged quarter. operating profit compared adjusted by by QX X.X% during in

is Refrigerated in and above market. has refrigerated edible in Frozen until pricing QX, lag input reflected was inflation pushed segment oils. higher-than-anticipated forward Our & forecast the impacted inflation by The particularly additional proteins most and in justified in cost inflation frozen

our and further we Frozen in mentioned Refrigerated we success. is our portfolio, for positioned particular, segment Frozen previously, As have well believe &

and higher-than-anticipated offset segment as Our not enough implemented headwinds were planned International by but also year. cost headwinds FX actions was fully to inflation were versus some prior incurred. impacted Pricing the

rise Even market we dive high inflation. time though like Sean in of I commodities shown particularly call. quarter, our 'XX, a chicken expand experienced would quarter margins at the to significant chicken the inflation including came in of actions a we the up the pork. as our to to the inflation during especially As see costs pricing to were to to mentioned recent the and on call. in in most depicted acutely even of forecasted to in which catch expectations are range hit here and anticipating hedge, of on the both Inflation QX QX, right, third XX. segments charts & we earlier, as and the deeper into levels It that our in fiscal International take pork above Slide the actual higher chicken, compared for expect rose end that Frozen operating over gross acceleration as XX% we continued difficult our Refrigerated record

an fiscal pull to inflation that quarter continue that offset implemented 'XX additional quarter the take round We of the on effective fourth first number to fiscal 'XX. fiscal of of including will the costs, the pricing quarter and in will levers second 'XX of be a of pricing actions effect elevated in during justified new

the adjusted in to sales EPS adjusted our to results. Another of be an strong the and increase inflation of performance quarter details also increase during Mills Slide margins compared the fourth effective The last overall recovery by XX proved quarter Ardent QX our contributing hedge in was year. Bridge EPS driver our for operating the primary $X.XX.

We a that quarter capitalize XX.X% as Mills brought increased income results we earnings, fiscal to allowed market the X.X%. higher venture nonservice down which postretirement full diluted EPS investment to increased quarter from due the effective solid it benefit year saw fiscal year benefit adjusted to a from equity the basis, million adjusted and $X.XX, $XX $X.XX during $X.XX conditions. joint year annualized method our management The on pension Ardent and EPS also On compounded volatile for from at The XX.X% full our generated our drivers adjusted adjusted taxes in to 'XX EPS of EPS were 'XX. change. two additional the from

four expenditures prepare ending or for $XX generally forward volatility, X% a the in to of Slide quarter see about can discuss market ratio sheet good full decreased XX, outlined shortly. during more Capital year. to year $XXX million the and I aim in we which which of our line detail moving sales. year-over-year cash metrics We feel times, ratio continue by you and net quarter with flow the to more was target our call. million, debt-to-EBITDA decreasing Turning balance net as we We for third this will with

metrics, plus to fiscal XX X%. margin continue plus EPS paid dividends capital of adjusted outlines our we as million 'XX. X% and guidance in including now talking expectations to X% to our prioritize growth we three 'XX. plus Lastly, minute and spend for net operating X%, like I'd returning of plus Slide for to shareholders between XX% growth approximately in our about $XXX key organic fiscal sales adjusted a

reducing ratio to volatile, solid stronger even macro we alluded balance and In continue moving as an we addition, I our maintain a times, navigate And forward. investment-grade reflects target rating. environment remains to to to credit aim The net to committed three debt-to-EBITDA earlier. we our to long-term sheet as this headwinds continued strategy remain continue

for up open want I unpack Slide here our to XX. the the we shown line Before assumptions questions on behind guidance

in of into we gross 'XX, inflationary expect experienced levels inflation the fiscal continue in fiscal 'XX fiscal market off environment low high We with XX%. 'XX the up teens the to

we these impact fiscal with the being we first but eye I an a keeping and to $XXX through to spend additional as lever communicated on have dynamic combat remaining from elevated fiscal expansion approximately realized historical quarters productivity a offset we of forecast levels remain of pricing and increasing million inflation And We reinvesting investment actions costs, As on focus pre-COVID CapEx second enablers. fiscal elasticities. prioritize are actions environment noted, anticipate below the help inflation 'XX. to levels. elasticities, 'XX From 'XX expect the close in we with these how during as capacity which justified we perspective, business a

X% Interest We pension $XX to infrastructure approximately the talent, anticipated investment postretirement to to rate and represent headwind estimate be is into increase also income, for fiscal our items roughly plan automation. of approximate continued year, SG&A plus and EPS million fiscal These million, support expense to $XXX plus incorporated and are tax our increase to 'XX. versus an and 'XX EPS our adjusted in $X.XX three confident environment elevated is anticipate approximately combined are in guidance XX%. of interest strong are results expense about higher main the We optimistic fiscal expected Conagra year, ended second 'XX, Mills To versus reiterate, the having but Ardent income how the 'XX rate about moderate of decline. the pension fiscal future is expect fiscal we performance The another opportunities. interest particularly and to our half driver X%. year 'XX the

back detail forward operator month. to our for walking for Investor in Thank later them strategies for concludes looking to are unlock these to line and our through today's call. questions. I'll more this prepared you now pass remarks Day opportunities it That the We to our the open listening. at

Operator

now And our session. Please Thank go today question Lazar ahead you. question. And Barclays. go please from first question-and-answer [Operator the Instructions] your will come begin Andrew we with ahead. will with Andrew,

Andrew Lazar

Great. Can you guys hear me okay?

Melissa Napier

we Yes, hear can you now.

Andrew Lazar

much. Great. very right. Appreciate it. All Thanks

than I bit elasticity below So say And much all more, companies, a what just volume have from off, Conagra, at than other seen is you’ve food realize to was least or as historical we’ve talked more down basis. year-over-year a levels about. had of start certainly on but pricing as whom let’s

a guess companies trying a elasticity I seeing been catch trading whether on, in? levels have up ’XX more eatings, seeing, And all at would others are have blunting from I is pricing than is away-from-home going of benefit other get elasticity the a around that or taking got to is maybe historical -- your is because I’m from or be at-home So just elasticity assumption which where stage bunch in to if with expected this speaks follow-up. have that’s comes started eating it the maybe else conservative of something talk below for to given the sense and what place, there greater are to company, to about starting they to

Sean Connolly

demand will referenced look strong. trading It’s products it’s as experiencing the we we in others quite our Sean. data answer clear at for the Yeah, remains and that that. Andrew, I pretty are

fastest inequitably slide the health better to than as no your elasticities, These very no. we constraints Consumer meaningfully But is And good burn to progress are what they has see elasticity? inventory in we demand of still upper seeing replenish we have while portfolio, place a remained the than is been limit strong. and are of QX So & supply attention the in control growing, you faster question I clearly Refrigerated supply what that on Frozen. brands I the and an very that historical right on constrains, to is as strongest chain, making did now are in mentioned, you our something factor saw And norm. chain could including we brand it. answer we unique draw and in Based with including say retailers of parts us. a are put some would were experiencing in our still through

a full update you in give on of going amount we'll on a work So chain. good tremendous supply that's

are couple as update a weeks. that making to Investor progress that will market coming exciting performing got there, pricing Supply come I'd is of not on looking ahead. But for The We'll Day plan into that the pricing my key that say We thriving. remain yet. but strong. are seeing And prudent. drive do, to fully and 'XX, the our historical very exciting we is new sales. continue below strong And strong are outlook transformation it's points of brands quite some well, in norms. well normal we've is we're on for power always preview elasticities progress, currently the and innovation you our we'll back Despite innovation believe a also, into market will making the that's power, -- forward, chain is very the quite now, we

Andrew Lazar

'XX, fiscal growth. think of desire a comments, on a Even A&P your even sort year spend full the of guess inflationary a minute, your last the I with need environment. line I items ramp imply quarter then And even EBIT seems to kind single-digit about thanks. helpful, still below in all to increase That's for up and putting the high in guidance, aside in

EBIT key side. of in a get so level confidence get of sense on to the and to there your much. what trying Thanks drivers the are that type So growth of

Dave Marberger

Andrew. Sure,

off top, of teens XX% year. inflation So the we if it take the this guided to low from you

a percentage we there. going that. QX. the come came as actually in for that assuming year chain to We're we we will QX, which in the be impact in pricing, then comments, supply what the goes significant. on. but now expect in stabilize pricing pricing will is improve QX at think that, actually we is to of continues higher actually supply as ’XX, big will that the And carry-in in as as as down, goes, that's have obviously We our about beginning QX have which X.X% year be our of in my productivity, low talked So We chain assume be and teens in that will And float I market that market in the well.

and so investment from SG&A do both pricing. rate And that greater expect impact we than grow at the our a guide. And a will sales big A&P

in to EBIT those with that's the feel of 'XX, the at ramp-up low comfortable pricing, high we 'XX. productivity in fiscal are teens in areas. But of given our both base So what a and given of growth going of we do inflation what investing for given off terms was

Andrew Lazar

Thanks very much.

Dave Marberger

Thank you.

Operator

And our come next Please Ken ahead. from question Goldman JPMorgan. with go will

Ken Goldman

thank Hi, you.

companies said inflation, net the effect. roughly the as a impact it's higher maybe of just benefit lag dollar pricing pricing impact as the the soon larger food that other could equal with One November dollar given from from afterward quarter, being recently

of something cadence as know every hard I might least of anticipate I in sense your us could curious just as a thoughts. pricing kind for see but reasonable I'm are too you am and this year? inflation I'm kind to asking, for be your rough being high -- when the -- to is in this it's different it be And different so maybe as precise. dollar really just curious at timing hedges company is of well? forth So

Sean Connolly

pricing that Ken, of experienced you the and successive Dave you as lasts then it it that which works you XX pricing give start waves profitability. in the lag really year really in these we when its see lag The wrap on or Once And means my that about you thing to lag. start actions, some inflation, the take P&L. benefit pricing you And the thoughts see Each meaningful new in you one pricing. year, to year-on-year can want. effect, the actions then last get so, that through have you days. come over But tricky you effect, waves. feather the of lag add feather and tends in of anything following those how we've mechanically to also triggers I'll is if improvements you if in own to window,

categories the actions coffee. don't those through you some we XX see levels get pass-through start is, hopefully, why you year each can after And into news cycle to a that's place. and So of waves And The you've know, is have, We've because fewer is of different responses. you've like as got you benefits. good inflation different different getting mature. inflation got been in days, a of aggressive lot categories this are getting pretty that

we've of those. but couple couple, a neat have a we We lot a of businesses, got have don't

of said not with to year these and where before, you you So can then things for that Dave, do while is good help challenges you legacy of inflation some past a stuck that's you deal of kind if unprecedented to some and P&L, add in wrap and also get positive of get And all. can brands to can happen face, to the at liberate want some the the you some that? immediate time. me, of do the thresholds is I've tough they here, price from thing as these it period

Dave Marberger

Yes.

that into let build -- on tie the the on it Just me guidance. and

sales just is to guide kind X%. Ken, of organic So concise X% way our to it about is think net

We expect to low price/mix be teens.

teens. We expect be inflation to low

dollars pricing is year. next the will that then dollars if the true, So exceed inflation

Ken Goldman

supply Sean. those quick That's sort Thank the roughly. And follow-up, you. ask constraints even if Great. of fourth of the volumes any in quantify Dave impact is I if there chain very your way to quarter, on and helpful, a

that I think a chance hopefully people of reversal you'll there And it production understand this you? maybe that sense inventory? some and of that a would maybe effect year, improves much replenish how retailers as your better see help affected is some or get a

Sean Connolly

business business put Ken, we any Frozen. my in is won't our really clearly. know, strategic And there. ago see can is our I Refrigerated category on We've all specific. where a -- trade-down -- strength mentioned is minute just you it's & -- noteworthy, had numbers as alternative. it, probably very domain. our Meals Frozen remarks in Frozen They're most most -- as I but We That's Yes. is it persistent isn't that a

our one driven and category all. is We've to of got to get very virtually strength full service suppliers that I there. change growth do underlying pieces We've that strongest brands. So level. that. expect continue health just you back high the to to XX% all at ability to our key amongst get this to of want the any don't portfolio and traditional levels make get Dave, -- the continue comments back to to our any

Dave Marberger

just And Yes. you it. said

part particular I come distribution when and a we really another and think the in that a back. of is about we're lot plants seeing is think we our of key talk is categories think supply. But of that our part labor supply, in impacting which ingredient us we it, times supply centers, chain, of key

supply. making to and able suppliers our sure So they're that

if so missing we an can't And produce. ingredient, we're

part so the And that's impact. of

We're that. & Frozen working But did Sean quarter. we're Refrigerated volumes, through impact So as that in making particularly this progress. said,

Ken Goldman

Investor I Day. forward Thanks. the look to

Dave Marberger

Thanks.

Operator

Please ahead. will question Evercore David with go And from Palmer our next come ISI.

David Palmer

costs significant I imagine last all fiscal forces. friction the would also capture savings, that savings, supply for 'XX capture difficult COVID-related you how also going would forward to talked about imagine fiscal versus was chain 'XX those that and in costs, how perhaps talk which you assumptions 'XX? were chain about On would your that, friction in you Could those given And be that think will compare chain quarter. I 'XX, supply Thanks. supply to there 'XX,

Sean Connolly

David, give to about you anything. Dave, let think me of can kind and way it, a just quick add you

'XX reversal friction for complete the we we're in of As the over terms supply our last not of plan chain year. we've that a planning supply chain, experienced

than door the many that and before, as to prioritized it it And this units what less we had As get as said products of our past we you was efficient we've out to could. doing it know, normal. year as a cost took

because in transform a opportunities in see addition, we we inefficiencies chain. And There are so we will to supply see assuming But take standpoint, margin to to are posture through to from can be forward. really gets some planning we according we're in investments When couple planned. some in We chain a going green and progress we're we there some some making modernize capture quite that supply good still what going back assuming we of are seeing not in some some bright. progress detail. weeks, in shoots some that you everything

add So to you of a we'll in that? take do couple weeks. to through you anything want Dave, that

Dave Marberger

sure. Yes,

look That the offsets the So David, net you Bridge, was X.X% productivity if was at had of X.X%. QX better the in QX. than our we

historically, As you if productivity know, kind of back we you look of about X% run pre-COVID. to X.X%

what quarter, we our numbers gradually, the passing productivity operations. just So to continue back the in we the way expect and gradually to 'XX improvement we're is were historically, think will we with each ramp about to

David Palmer

really in in or in is perhaps one to ability for of high given I how into era? how relatively for does you're And you a more of much the the some terms that innovation versus to even have that Thanks. impact showed promotions wonder, retailers -- And about and mentioned that post-COVID you the addition in how spending? then other you absorb the peers. in thinking 'XX ability 'XX, plan higher contribution to from forward that expense growth get going slide And does innovation

Sean Connolly

both I'd plan 'XX. for in Well, the are say,

strong We and that very innovation behind are assuming innovation. investing are we performance,

in of A&P that So innovation. seeing support rise you're

innovation 'XX track now as successive innovation. than fantastic results If expecting this better started than successful these far launches demand investing we're very of each behind even for were versus of year, some that, a And was we our when you stronger our fiscal year as innovation We waves we've 'XX-'XX, our and innovation customers happens I Well, that have 'XX from to had, and wrap be do 'XX. when journey our We're that there that. at big stronger record real concern was the what before. innovation have you our gotten think slate success? look and back this first

we the paused even what less tremendous interestingly, had you the during pandemic, And innovation I train for So innovation told the and rolling. the expected customer lot sold a then, our than as even kept in. it's we before, height time. at of We demand we

So that's all year. baked into the plan for this

David Palmer

you. Thank

Operator

come Bernstein. question Please go And will with our Howard next ahead. Alexia from

Alexia Howard

Good morning, everyone.

Sean Connolly

Good morning.

Alexia Howard

not that expected I the pressures margin until the trajectory improve -- the given be be of fairly pricing And -- quarter. at guidance. and the seems in higher to are inflation giving moment about is Does follow-up. second to through price that year? next I realize the than hefty? have on But will formal the likely of you're then that then to rest kick expected the that Can of from ask mean I, first the doesn't round gross here? margin that And a near-term the gross all

Sean Connolly

you rate teens look low of at all higher Yes, inflation inflation exit given QX be that inflation, in the to fiscal expect XX%, exit 'XX. rate. we're Alexia, When for of that's right. rate given But our expecting we

So as down come versus we percentage expect forward, the inflation will QX. go we

that So QX and the then that QX we're comes pricing would in. taking in and

improvement gradual see of margin gross 'XX should as you progresses. So

Alexia Howard

what that's Great. you Thank description on whether just lot on. qualitative it give a I'll favorable the then of around. mix pass you. and this to follow-up, a And time mentioned and across segments you was continue, going of a just expected Could as

Dave Marberger

mix, Yes. of Alexia. that A lot is brand

portfolio. big a have we So

of So sell, the mix depending benefits. what we see on we will

core sales So have some Jim, brands kind see when of better things growth items, our and frozen of Slim those in margin like mix. we

brand at really it's driving So that's that. the level

Alexia Howard

presumably continue 'XX? to into that expect you'd And

Dave Marberger

it. that is lot mix. into sure. Yes. there's tricky always for for always one We to always But manage mix portfolio that goes Mix favorable that's favorable our drive a because generally, managing we're

Alexia Howard

very it on. Great. I’ll much. Thank pass you

Operator

Stifel. And question Chris with our from ahead. come Please will go next Growe

Chris Growe

good Thank Hi, morning. you.

Sean Connolly

morning. Good

Chris Growe

a first question of bit and just I had follow-up. for a you a

that. we there's to question. inflation, and now inflation pricing Dave, And Ken's Last think got quarter, coming obviously, catch that through been and and pricing Is earlier you've $X.XX in more to I more to So up talked about EPS. that gap between of point perhaps some or be would there back whatever element embedded coming inflation. in the and -- pricing fiscal that as So a half is $X.XX it or the new guidance on there your in 'XX? up caught second number a in

Dave Marberger

given teens, Yes, I come back will estimate see which and low price/mix, Chris, if inflation is look then in. at think guidance, you at what that for you is low our teens our

part is that guidance. the of So

that $XXX to last were guidance. forma put for you that if That wasn't X% -- that, guidance the pro you clear quarter million pension, million, then I think headwind if that tax much, the up numbers million to translate from to gets investing not interest $X.XX is and SG&A. that of the X% with plus in we we that plus number. we're the planning kind a we're as And a you was for there you, 'XX $XXX included items in take Ardent nonoperational of and out $XXX

fiscal catching lag the So 'XX when see clearly back in put building guide. that in on in, those things the can are up you you we

Chris Growe

as your investments because that's sort down fiscal maybe just E&P answer obviously can well, it down comparison even a line less say I the be of Okay. up going the pressure back of in total to pressure it question expect spending in guess was that, And or Yes. then -- you've quarter got 'XX on makes line above could sense. related as whatever call that relation to you terms to promotional the off the against above it on which or That the the is brands, to be against question. is going And a the and A&P, clear, to total in well. well. I is issue, brands that, this then Was

Sean Connolly

to going is our talk through of couple bit a this investment weeks. I'd in our detail has connections of what quite in consumers the total strong, right this say into We might toggle and very create investment we're get a between the But brands. we we how Chris, it that in we might what it And line given quarter, depending been and business. for window, upon think strong. below in remains toggle any above We is the very line. our

but we're things for market, new end repeat, launch discover for in launch if [indiscernible] not more new those window we everything so we're we that. to If So more window, a it. e-commerce innovation driving and like display, sampling will window, we're can to in we're in might items, an above going from to a people a search sustaining the it getting spend on example, on and line in-store on more put for money slotting

is spend we've be in effective And So slate got most we're what constantly that think efficient we year. toggling innovation to window. our most and big to this going a

those physical good the we've some our trial that got in get At we've for things right the still A&P on So shelf, to got line. support same high-quality good time, availability. generating support get

of with an So one to into and overall, important couple this it's working. And want you. in do a topic is weeks that we get

Chris Growe

Thank you.

Sean Connolly

Thanks.

Operator

come will ahead. Suisse. Please Moskow Robert from question next go Credit with our And

Rob Moskow

because that the low in the relationship. look and think mix. And there's teens the talked the slides explanation of for margin that's price/mix, rate. kind profit the I price/mix growth the kind I beneficial Dave, snacks thanks gross two. you the about that's of the But you're at because dollar from your Hey, faster But of it's COGS you've run impact for if gross why have maybe as do and question. margin you and mix it's rest I low inflation, price/mix significantly teens growing than lower business think that. than of isn't And to when the in

other, when two offset look at of possible the -- how those much does truly it the price decompose price? And So things is to is I COGS it and way, each it that price/mix, the inflation. like do

Dave Marberger

terms would you the going is of with remember always to impact the inflation. impact, that That's to XX%. thing was Yes. in we right, when of it quarter, right, Inflation of but Robert was What this that XX%, that Same lower XX%. say, so was margin price. I price, have margin be quote that

quoting you impact, a the the we're really a of low teens The either next but same price to year, of teens goods percentage percentage it's the a So the we're translate margin So going inflation, sold, then right? that's equate price cost sales but same or lower. impact, thing. on when thing into if lower of the to that it's low margin

relationship. that really it's So

Rob Moskow

you say press customers. about maybe Okay. in about reasons It about price release, serve supply anything is to the decline, the talk when constraints doesn't volume elasticity. or for And a follow-up, inability it chain really your all

is So that it show to in release just supply chain material price the not up constraint? enough

Sean Connolly

elasticities said, got There's -- below that ship they customers burning all at well as rate the are through we're historical play and I've factors are We've happening, not inventory. are our Rob. norms, same at to happening and they able to

that's you factors. the and people topical And relative zero. now to one norms, consumer in demand it's some? right want pricing, add well Dave, of very to is want face do know holding how up holding strong but the is both historical they're it's up extremely to not So very

Dave Marberger

are elasticities the Yes, we of asked. add right? just you you just thing, to would driver I material because about talk color some volume. the There more release, when we main were So were obviously, of gave the do supply it's drivers press clearly which constraints, the

but were -- the driver main the So elasticity.

Rob Moskow

you. thank Okay,

Operator

from of Spillane ahead. Bryan Please with come will America. question go Bank next our And

Bryan Spillane

Thank Good morning, morning, to, had just questions I related I Dave for two Sean. you related to you, the sheet. Dave. guess, operator. Good balance

year this if The Or direction is or rates net that is potential could being rates, there one by another, move that number expense were first interest one is a fixed net to now? just expense the given in a higher interest impacted move?

Dave Marberger

we the year number and that mean would rate at be. the looked all I increases forecasted estimated Yes. then what for

in it. terms forecasted out we how of if are that's number So increases, forecasts as it plays rate then the of

know, So where a is lot it's rates. because right, piece as really of our you in that's debt fixed, of variable commercial our really the terms paper

capital. then working And for it's that. the average borrowing of it's given some the little just bit timing year of just a So the of

in current the rate what now right So yes, factored we've is -- for increases. forecast but

Bryan Spillane

Okay. just the move like But a or another. it's shouldn't one be tied to that way that's given there piece really CP, material

Dave Marberger

kind where we -- now. all of would on it it's Yes, based are

So I [ph]. agree

Bryan Spillane

more about market and wanted, a a equities in ago in times four today are expand is bit leverage then argue. kind today -- you guess would X, you or even us on than being January just little I context impacted if the earlier comments year were made they they on leverage that a could leverage And I by asked the to of up And drifting of targets?

can there there the is 'XX. you accelerate you EBITDA deleveraging? maybe other pull, can do other anything can So other in than grow that growing, Are -- fiscal to expected levers you to take actions

Dave Marberger

leverage. the and fiscal key driver, divestitures. think I you've of as to the and the five Well, operations a obviously, do for 'XX six to where ended years, lot Obviously, we are last we've seen versus on core over be we expect 'XX down portfolio reshaping us done

so And obviously, just this is a forecast. base

So any would divestitures we on would we execute. depending what have could further leverage reduce

Bryan Spillane

Okay.

was I -- my it's guess -- that So question. that's

other guess, be more options help other just in of organically You're actions that than There you not along? kind or could take deleveraging. to of I of options, out could terms

Sean Connolly

Yes.

Bryan Spillane

Thank perfect. you. Okay,

Operator

from And come will Sachs. Please English Goldman question Jason with go next our ahead.

Melissa Napier

be We hear you muted. you. might Jason, can’t

Jason English

too. you. indeed, two-thirds question, I Thank was. my Yes, was like into I

shout thanks So the for out.

So slotting questions. in. thanks have for I me two

saying or below pre-COVID despite what do you've portfolio your trade-in all Frozen to digit, Snacks you & what we single eating to away-from-home next volume, of year, talking sort flat back type on Grocery coming been on you're despite occasions in expect quarter. guiding retention high almost suggesting and decline XX% to that to about where Refrigerated eating you're a were that? three of And kind a occasions & you're be year and to of stack First, post-COVID. about basis you square How pre-COVID like well this volume

Sean Connolly

our elasticities, I be we chain of don't be prudent is of board for And to to to assume the rebound, are from Well, got prudent. it plan, et us you going We in what position as plan the the heroic at Jason, posture across that. be different guide. and -- in last planning to to best the -- seen that We want in cetera. in a you want We navigate a in way this think is anything supply for year, things 'XX beginning a puts a 'XX because to need the in a guide are able to environment. we've remains think volatile fiscal that happen year, terms

right as put taken the environment that's and we plan. the now, we're together the posture in we've that's So

Jason English

It food are the ability to I'm all under. margin saw and lot the limited sense. inflation above you're it's the price makes They're an cost And third through of consumer, which talking margin prudent. row a that of the flex meaningful And a this your kind of that balanced flies while I've It event and depressing. right why to to you're up direction? are face muscle, in cause seeing believe of recovery, And get customers squeeze incongruent the of saying next going feeling between separately, lot this Yes, guiding about the guys a the company your pivot CPG industry. of to pass we ability are it in a of rather seems for in customers. how power be year. you get balance Was we're may the right where durable? now about now to with always do quarter pressure, they talk kind sort bit thought in it's pain. about they're more of evolved this to balance the lot it of kind than to a balance that What's And

Sean Connolly

in comes a And transitory that go associated pain the effect experienced, pain get the the a with these as lot a way lag the I tends it, that in compression Jason. that we've hit of characterizing when margin effect wouldn't that do characterize the early lag the the you seen you've form of And mean and emerge macroeconomic in waves. effect. year, with last through in it is come into of cycle, manufacturers you're then No, to we've I gone dislocations the you from. lot

that's continue, happening. is our an have you're they That's for thing. recovery. to driving adding why? for retail recovering And categories. growth. that growth retail profit lost So it's new as to opposed And you're is know important our They what priority but This at Manufacturers money. cycle as about need key line. that innovation costs profit us that is as at their to doing innovation if Because customers margin not through firepower Conagra absolute to want innovation you customers move recover that, margin, know the been top not what's that points their here has and our the the fresh

and have to that margins out We innovation have customers our to healthy the to it be market. build get to able in

we And justified that's take inflation so to happens of windows they early are kind these out. the know how go things after that through in experienced we've exactly playing we got to the our where And cycle. inflation pricing margins compression recover

Jason English

Thanks. Understood. it I’ll it. Got on. pass

Operator

next Please ahead. our go from come And will Cody UBS. question Ross with

Simon Negin

have two Negin Good years morning. Cody This a presented challenges Simon past importance unprecedented for is The the organization. in of filling demonstrated and Ross. strong

tough aid to will some navigating uncertainty, areas and Moving continue that into what you've that in another changed period down are the double of of waters? on

Sean Connolly

standpoint, Well, other happening it for plus -- continued years just areas going good in forward, particularly just then program, transformation setup I'd a exciting and in for since a Investor weeks. and we've example, incredibly margin a we running modernization, work opportunities improvement and from together, gets innovation I'd remained office offer for like where There's talk are five new been stronger. XX, we've open a the about has couple very of has of couple are going team keeping on culture our that's chain say even there now our got strong and strong and we've had and XXXX, got throughout things Day we'll and because is got culturally, spontaneous very COVID. in creative work We've that do weeks the improvement nature. our supply say of our in areas just because our And iterative continuous team which progress, June

get keep innovation go that so to stronger forward. And critical being as importance we we'll to and of as as is to it continue agile ability together is, the our just our

Simon Negin

much. so thanks Great,

Operator

question-and-answer the for conference Melissa session. And this turn to I'd back remarks. over the like Napier will conclude any closing to

Melissa Napier

I to Great. around Day us for everyone for Bayle today. our all forward a as be mentioned, weeks. to follow-up Sean questions. are will we few and Thanks really in any looking day joining Investor And

Thanks, about for our as can Investor Relations more Investor Day well on information as to the visit register. You website page everyone. our external link

Operator

you The presentation. for conference is Thank concluded. attending now today's

your You may now disconnect time. lines at this

Conagra Brands (CAG) 14 Jul 222022 Q4 Earnings call transcript