CAG - Earnings call transcript Q3 2024

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Operator

Good day, and welcome to the Conagra Brands Third Quarter Fiscal Year 2024 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Melissa Napier, SVP, Investor Relations. Please go ahead.

Melissa Napier

Good morning. us our joining on question-and-answer for results. today's you today live for session Thank joined by this CEO; I'm again, Once morning Marberger, CFO. and Sean our Dave our Connolly,

our financial forward-looking items. We Investor making prepared Relations factors, in website information which remarks, risk filings our see statements can measures and release, during for materials section including the our and our may on of non-GAAP earnings this some descriptions to more the discussing reconciliations with be presentation all Please session. found of non-GAAP GAAP information, SEC, be and comparability

Operator, question. introduce please the first

Operator

The Lazar Andrew first with comes question today Barclays. from

Andrew Lazar

I & & dynamic many was guess, I Grocery Snacks expected, and think, most certainly more maybe Frozen. This extreme, more scanner the think, Sean, Refrigerated I based I quarter a than, data, in had in think, some in upside bit modeled. on weakness

So well thought. I benefit & mix, X% Grocery price and Conagra of a about ahead Snacks, had guess, in that what was from we

So trying in curious about that's meals, organic with decline drove single-serve X% in and then segment, function we in success you in And but & the that. Frozen, way. more Frozen corroborate of Refrigerated of some marry talk how sales sort Refrigerated that kind maybe a of that to of what versus

So aspects X those would be really helpful.

Sean Connolly

Yes.

all Let you, that me of unpack Andrew. for

down prepared recent modest had from volume swing unfolded as in much very to X.X%. scanner weeks things in driven QX the our X-point what fairly in in remarks, us you heard And volume the said we say, with a came most where in expected. As our a I line investments X nearly Frozen

of which progress the in because investment. Frozen So our important been is very strong overall, that's focus

the inflection reason way, our it's and by the and businesses rolled of creates with in R&F also deflation segment through, the noise what back the until we part preserved rare of due experienced that pass-through which And volatility numbers the you're being and importantly, Refrigerated was, in in predominantly base the in areas anticipated. Recall, of What business, is the short-term while same Refrigerated reason don't where we've for as magnitude show is actually our the the bit total optics some confusing a the the seeing consistent categories dollars passes portfolio one in to as do. lower prices margins pass-through accordingly are categories deflation COGS. are

point to a piece, particularly spreads out in The chain R&F a there due that due table to other to addition competitor year our ago having large I'll challenges. QX supply in benefited dynamic that quarter a is, in business weak

kind on why that's of some Frozen the and divergence Refrigerated. and R&F So color between

canned our in a we we've but Chili, remember share. you meat like Wendy's expected also in With And pricing several got also respect were Snacks solid and significant quarter Grocery bounce where market new grown to there innovation & had a segment, period, it. where like year G&S to tomatoes we the we recall strong the from sausage, ago chili, there factors back in Vienna segment, in

are us. make grocery consumer great to at good So who also convenient overall, our for mix brands value. people great are options for a meals a It's seeking

scale, for courses. diversified think horses of I picture of the are as there benefits one they big But the is is a say, portfolio that,

I further less I from So I've than in seen expect volume stable like for you're Big the QX. I the momentum and we inherently when is so like QX, progress saw us, here. normal. hedged picture what far in macro environment

Andrew Lazar

down, the Got and a but it. investment that's it, guess, quarter in I the were what step-up improvement, And obviously in just got then spend. volumes obviously, expected still sequential lastly,

you right characterize dynamics peg now? of start the hard you guess, the Or to volume industry expect how are to you FY bit, trends get such little of broader time by we And would the this bit would the a a kind but to little still positively 'XX? in inflect momentum? to talked I current So volume that's

Sean Connolly

one why referenced closely. mere it's at scanner of we're looking being reasons why down and recent of one the most so this the the Well, Frozen data, reasons I X.X. of X-week a It's

We obviously, you to operating month. going that cross annual we have not sand it's the is to obviously seeing up, guidance draw we'll This going and fully where quarter, color. expect to give We're is 'XX "This give when to line over." see -- our it's progress. the are say, the in to further Next continue plans and rolled and day going the

moving Everybody wants in is thing. direction. direction. in go the line. food bottom it's the this to That's a right right mean, But volumes the see I

think want is, you and willing getting results overall see volume I that. to see investments the in making do your to think you are that investment can people investors to order companies I you're what gross margins But while those want to see. and hold

into intended we encouraging what that's particularly We've inflation continued volume years QX. got to the gross of this pretty all We a claw from is after see. we wanted we compression And much to to of while huge ago. the experienced investments And the in couple even the we've margins hard make. we made got maintaining kind me to we -- volume that the quarter work initial got we all was progress done improvements expanding back that very

foreshadows the think, I And I is positive. think here. a momentum just that, from it continued So

Operator

next with The comes JPMorgan. Goldman Ken question from

Kenneth Goldman

ask to wanted about question Just XQ. quick a

similar growth. Your to suggest might implied what posted guidance you in sales around pretty X% minus organic XQ. in It's

easier little that both X- X-year basis, an given say -- and have just prudent a through. just might on though comparison, do looking X-, X-, you it's Some

You have the the lapping issue. of Americold

are little Just to you it's get building less trying that's little may a from So just I'm about maybe curious think be blocks a perhaps, some throwing bit that there? on as out a that. Or color help of if just offsets there to those right think a bit that, bit prudent. of to mix of

Sean Connolly

just volume has elongated been let's of more recovery, make Dave. quick because last comment one prudent to posture of, and I I'll flip the X macro than volatile has Ken, kind lean expected. anybody the think overall environment our after of it a But toward months been

and been. That's like And for posture didn't than our so that is -- been But good. QX. anything bake the in right will And why heroic see in set continue back we I that's it's think just the we're posture. that we and up I our direction, in inherently I the think going we're it's that's way in bouncier macro plans, a to our be half until

make additional on point? comments want any you do Ken's Dave, to

David Marberger

No.

it QX. you volume I continue pretty But to improvement, think hit also expect we've about and we're we through I been Ken, much mean, it. expecting that, and investing. we've seen sequential talking

obviously, both those impact top So of things the line.

positive have in be And this they slightly any you impacts quarter. mix. and referenced do slightly mix portfolio, can or negative We

mentioned, -- Sean drivers the the as guidance the we key to towards be low that year. the us end for So prudent, to want of the but get are they X sales range

Sean Connolly

for innovation May, fiscal our Ken, to an this into month. our of -- the way, also rolling is too, is And Yes. is think what's about new is odd us which kind marketplace. happening in But to ends it May in just

like July, the fiscal We and year to the of next build are of the big in school. events and point how focused year momentum do fiscal Fourth at that always next back we on

dates next so up in plans now things our year trying a of set is year possible, and and to to getting so these that really operating getting as and And focused as we're like late that. holidays finalized lot be strong key the around on attention including annual

Kenneth Goldman

as while them too I But -- quantitative to year, at or [ And algo ]. ask for you you're to possible on to be as we're be what realize provide I talking kind you quantitative soon information any then of CAGNY, wouldn't said about can next doing numbers, it's rather. close

And line I a might could top how on friendly continue maybe and what be cash where your was savings, progress level thinking maybe so stood with environment, about some I balancing you're be confidence forth. to consumer that challenging of comparisons, what on flow today, also curious topic guess, cost just

directionally how trying you are guys about now. think that Just to thinking

Sean Connolly

right. you're Well, XXX%

give next call. view you total complete We and on will our 'XX of fiscal our

this the getting the I investors to are, on we line. messages I for momentum are our key think call, think, volume

wants We are where see us moving everybody over kind to cross here at some point. of toward Mendoza that Line

plans. consumer if think of of That the that kind readiness it. their behaviors. well nudge said see we're about reestablish for been along Exactly, will we've We've their that that watching I of their true when readiness. mistake happens, as as heard we other typical willing to you'll kind from the companies, And them on be get to perspective make finalize people coming no But us. months you've more in

monitoring measuring the not if out methodical last the it getting their the and accelerated only but close. readiness, response carefully. the getting And We're there been in we've If we're good so response. is very It's momentum And in putting anything, as them slowing. to a not nudge investment quarter.

is that margin. chain protecting our that's is you saw materials at of been all mindset I And to it is just setup. point to is what of today I our things doing, the is of team that in do which so think drive So but volume why say continue important. I this We the have we've can is continue important, one supply so like more to

That volumes with how supply how that going a got in and on expect haul, really positive over going maximize critical right to now. savings that's we on back cost continue. we've again. fuel savings And work to -- drive ultimately, to tremendous We chain for supply got long the in cost chain really going growth, stuff we're provides that's

Officer, our years, Ale in to on floor performance that Supply presentation in saw of shop couple the overall. implement CAGNY, Chief you next are half our as outstanding track connected our we facilities Chain in program at is And and Eboli's

that's will across the look going position in forward. industry, If that be a and leading to you key expansion margin industry, the

the that And excited in legs so of and it has us. about front that still we're very work

Operator

comes Evercore. The next question from Palmer with David

David Palmer

returning what's I'm between each to the return entrees, frozen frozen curious, about growth if entrees business and to question frozen A any on view for there's of and vegetables and growth? and sales that how would frozen. there challenges in on a you you that thought and make the juxtaposition your opportunities in sort particularly

Sean Connolly

David, Single-Serve producer comments And of had just Single-Serve from in the the up we've food the share, Sure. -- that States, in is remember year years. success over McGough's the in ago. Frozen X.X today the XX% a become Frozen presentation Tom Meal in United frozen of leading CAGNY, last 'XX, we've we a points over QX Meals you largely business versus have saw achieved if because you which market our X

and we And label. by many to the stellar, times be our with comment terms in So to continue gain we performance I've made company continues under-index there that of the private way, share. a as competing

frozen Nowhere meals. is single-serve that truer in than

label So the is example, frozen entire size of private in X.X single-serve points. for meals

is quarter was And last share. market business in label. market share of private X.X total points, almost -- growth unit XX.X the the equivalent Our in points is fact, in market our which

we great why market feel no we So that And years, We structure and like continue. a reason and been there. the -- like see position, X our I for juggernaut the it's our about for market last us it. growth won't our and brands,

and of year, we In behaviors. vegetables, categories Birds one consumers exhibit value-seeking Eye in where, the the vegetables saw earlier is of terms

and trade down quality frozen the some So fresh from saw -- vegetables to for despite obvious canned to we trade-offs. vegetables, example,

also Birds with other we a value that frozen Eye one against relative choices. superior vegetables of the the of are clear versus investing is businesses on focus But

to freezing is of vegetables mentioned the In the peak the consumer and I fact, directly of until fresh the comparative, process, running keeps now which freezes features freshness stay time our clear ready. advertising and you flash the consumer is basically we're as benefit previously, for at our

X even advantage. So on most in though of our grew weeks share, it's really a focus value-added clear is Eye tier. scanner the overall And recent the Birds data,

And brand. support got and We've got front. and see the important marketing So there, the momentum to we've not on it's us going you're innovation slow down investments there. an

David Palmer

just you you're contemplate to business 'XX? Maybe to question. up I to wanted months reviewing to how ask fiscal one your are as way be the how follow really coming -- what in ways be going Ken's going you guiding on is

the just business simply to overall there be that flat Is particularly you it think will help of any are for in the be will Or business? would -- getting really that on about areas volumes how closer guide 'XX? you you you focused

Sean Connolly

an are I management ROI-minded about way is David, think, principally, think I the it, Well, team. we

We we are the not the drives to to see if bashful turn that marketplace, which on return about investment. they putting the want investments our support in in brands drive out there impact

consumers we what's looking planning dynamics, where operating the market competitive brand, are the know annual need normal happening of by those of kind stimulus, typical of So back at those for to in category, can the what we within brand nudge the is dynamics expect. we in categories kind about have of process and behaviors, to to our brand the their them what fundamentals kind on do some lift

we our that investment ultimately a on that So do basis, to and profile. brand-by-brand leads

of right now. that So we're in the midst

now. we I We is seeing I in those going lot markets QX those understanding But are. think bodes forward. terms might we're in consider are ROI. a what's right of we to what and ROIs that we've run test good it seeing starting are responsiveness, obviously encouraging and you think are well -- And what up of racking investments be And

Operator

Carey The comes next from Fargo. with Chris question Wells

Christopher Carey

was One to did worse think respect that's incremental by Can mentioned stand you impact that, inflation you on thing driven did a the that little noncommodities? quarter-over-quarter. pricing. with if tomatoes some to expand I margins get out that commodities, just bit

context on driving is what that if nuances? there any and any Just are

Sean Connolly

overall a make to I'll slowed, in has but flip still Chris, Dave. Yes. inflationary inflation quick an and comment, we're environment. it Obviously,

inflated, And some led that some have price. things recently to more taking and has

get the that. So of you benefit

But it a lag -- effect. there's also

of And that to then effect, in that you that get pretty from mechanics of get part works, when bit got through while pressure a on. see get take days, kind rapid new bit it, -- waiting get a inflation, As point a new you taken little of you lag so early all you of you we've right? of that, So inflection pricing, margin you that's and for a the reflected. you you're how the

that it. a be may of So piece

Dave, do you color more to want add that? to

David Marberger

Yes.

Just a little color.

inflation cost in sold which the see our -- X.X%, we rate as quarter of for yes, a impact margin percentage was X.X% you the Chris, So the of materials. goods drove that

we're still above we approximately still So full maybe for on on said for that. a X%. year track that, track -- tick We're

in that. sweeteners, big more We've the seen about ingredients, We've in Grocery the a broadly mentioned in inflationary you've areas, mix pricing. tomatoes. the of Snacks But quarter. for in & talked inflation taken driver That price also was vegetables, different We've starches.

areas. inflationary some have We

and still bit and transportation labor have about we've ebb things These is relatively our manufacturing this in flow. in We operations, we little a the still with past, inflation -- talked both our inflationary. And and flat, overhead.

line. we're So much full the expectation. year slightly is we're pretty higher. But generally, to in it It managing

Christopher Carey

Perfect. Okay.

and comment a follow-up -- Just pricing. the on then regarding

the Just characterize you the you & pricing mentioned Snacks positive How Grocery in other among would in things, tomatoes, quarter? the there business.

or durable at here pricing, now lingering being in reflected in anomalies Or period, anomalies a your fully pricing be to mix due that to itself? P&L? the the is new Was division more we the are looking base quarter from that in on positive appears what for price which

David Marberger

was and we mean, benefit and The I expected we pricing, got the -- line with expected. the elasticities there. from in obviously what were benefits Yes. the tomato saw we good biggest

benefit did mix quarter. also have We in a of the

So which as did of for little a our contributed mix, well. benefit over price/mix, a was we the X% quarter, get which

Snacks we of our a lot so in & expected. progressing as are businesses Grocery And

us. for mix good a driving that's so And

part was the that well So as of quarter. the in equation

Operator

with Bernstein. The next comes from question Alexia Howard

Alexia Howard

Okay.

likely I improvements Is going ask forward? foodservice to as It can quarter. were about they the strong So just this though to seemed particularly continue productivity the channels? in with begin that

Sean Connolly

Alexia. was very and example I weakness a foodservice. expect bit quarter. cost was been I'd little And is that performance across definitely It overall, But productivity for just in in the a think say, traffic portfolio, performance we good foodservice. it of There's an strong of margin a savings total the

So foodservice got opportunities as retail and across the business the business has opportunities, in we've but U.S. international the well. also

across total the savings So we cost continued performance portfolio. expect strong

Alexia Howard

just or hone frozen actually more just I area? confusion to here There seems can in about on private it's then label a whether whether becoming private out label problem fairly some contained. And broadly still Great. of be in is vegetable the

label, in or more overcome challenges is there that chain of doesn't becoming that on be private more Or red anything it's frozen horizon? would it to major any the private the you're really label have or in suggest either Is on seeing terms that of an vegetables the broadly supply been side, there but issue? seem anything flags

Sean Connolly

Yes.

frame you. of kind me Let for that up

that That label. category of works. a a big ago, the company, picture got private obviously versus we as you've few specific. how is under-index, Overall, I as minutes So mentioned

A that you've good you've private that got brands have tomatoes, categories private is label the you more regional where some got of are example got basically then area. label. kind Hunts, there and are in So canned smaller some

there One where store. section. food vegetables sold is the categories there. in are in section more center private label a in frozen frozen. of as out a of is other you sold been of larger the piece between sold And about But And have vegetables. the They're the been broadly, movement vegetables behaviors the value-seeking canned as of lot that there's produce they're think

into tier, steamer trade and soft, of is tier, been that back. of things one of -- can, there and and there's that months then are frozen Within that. about Alexia, frozen then X ago, which seeing we're seasoned, the the come vegetables, some has there's value-added commodity And vegetable more like actually kind out premium

before. business. talk on Not building space, value-added heard we actually value that pipeline back that's is our last more over business and oriented. for premium and you've the volume, the surprisingly, because in reason focused a on pulling veg as lower-margin more And it's X us doing our For innovation space commodity have commodity years, the been the

business but commodity play there's for role fastest resources a role within not much in to for arguably a a to bit we vegetable and growers a tier that plays because a misuse plants, aspiration or of of company elsewhere the otherwise that's people of be pool could world in and veg terms our -- that our there's just a of leaders frozen is overhead absorption not there's because profit us there. put in us as our So

frozen looking there premium So more tier. When and pipeline certain that purposes, in vegetables, of more for but can where innovation business we see to we strategically look are is products absorption overhead and scale play. a important you us it's at maintain for our not -- and we value-added

Operator

The next question Rob Jefferies. from comes with Dickerson

Robert Dickerson

just, guess, mean, Sean, I the ROI sounds on Great. been have specific a it Frozen. I question to attractive. the like investments

very kind of the and seem on the business. momentum upbeat encouraged to You

But Frozen. seem quarter, by same lot like driven what's Refrigerated component of that really volume the and kind of we think when at necessarily speak, kind within time, so of was that doesn't upside, the about in happened a within to

So pack easier right kind trying speak you're curious, investments, was, activity, of doing and kind just as Refrigerated, optically, better not the and what promotional number kind those I'm as good which to we think, bit are of of an -- there perspective because, it's you to ROIs in gauge what's at the and more bigger you're does to better little and we a as pack include why sizes? Just doing your look I are of talking better really compare. the segment,

one color trying bit get more a to piece. on little just So that gauge,

Sean Connolly

Yes.

if our combined our think evidence we're the key presentation not segment, in that's point from in R&F look I was of our think the what kind which too XX of consumption investments. you of at, domains, Page twisted today, the really I consumer get seeing optics of it was, to up

that Frozen, line a a us. investments as there recent change heavily X.X%. strategic the mentioned, volume for moved 'XX from is terms fiscal been to most minus first in about that number the minus X.X% I business our -- in of So that's very that in -- X.X% of 'XX. because QX QX line And of minus towards fourth consumption in And has have month in quarter, the skewed

that's that And we've precisely X-point So nearly move of very terms the couple in that I'm referenced is seen that's about. when last swing I very, talking in consumption a over of the what the meaningful category. quarters,

in move think to hard-pressed a be bigger I broadly find more food. you'll

is which the the -- referenced. here in What there in prices the of in categories noise things is X that the I segment creating function table we is because have One I rollback business. data -- ramp for a volumes spreads and Refrigerated, that which R&F of one in you deflationary don't also had dollars our the the is out, broken the of our in absolute,

the for It's that basis that. really in you movement I continued come can volume and ROI that's But behind is very the how has material out. the see So comment what's movement that the made, and in... been

Robert Dickerson

question margin, on of gross simplistically. Grocery efficiencies, then in Snacks all And & around hear the productivity and just quick all comments prepared your more very Clearly, a kind remarks the I pricing positive.

would now, maybe But back be it like months. QX. kind that to But in relative I'm early changed over half relative out QX, clearly to X better margin was the for be I relative seems probably just Because January? commentary the place QX, back gross course and of the right, what took similar curious, of half to of think coming year in previously will the it

like seems like just I the know it to upside. something So That's to changed all. what.

David Marberger

Rob.

that think chain. there's So X our agree been a volatility the you last supply over you'd if quarters, lot of in I look

we're And scenarios all forecasting operations. to margin, we that so sure gross want we considering when be make to -- around want

had The ago, is in you fact things we look that had going supply with the lot did -- on and challenges year still we of profitability. impact that is, some a lot the chain of recalls that some a of other had matter a if we

productivity executing. talked We're track. the are We're core on So our Sean on about, focused programs as projects.

we're headwind The from is are of We're benefit. the so those investing, inventory driving importantly, part as because in. down. seeing have a still you and really see -- we're inflation absorption, volumes And still down. coming So margin. still And that we

to had -- for. couple execute years productivity really environment to production managing and margins our That's the haven't programs other that want we're down, encouraged that. the supply But investments in fund to we're plants we're that the last make like we're has the in So headwind. now been gross a disruptions we our and fund drive given we've been that of looking had any our and -- able able we're we chain

So one quarter year, but this and doesn't what encouraged we're we're we a to on really make by saw going it. quarter, build

Operator

concludes the question-and-answer This call. Thank you conference session concludes attending for our and today's presentation.

You may now disconnect.

Conagra Brands (CAG) 4 Apr 242024 Q3 Earnings call transcript