Vending

Conagra Brands beats Q1 2021 earnings estimate, boosts dividend

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October 1, 2020

Conagra Brands Inc. reported a Q1 2021 net sales increase of 12.1% to $2.7 billion, a 15% organic net sales increase, with growth in the company's retail segments, boosted by higher at-home consumer buying due to COVID-19.

The company's 15% organic net sales increase beat its 10.9% estimate, according to Seeking Alpha. Shares were up 2.2% in premarket trading, and the stock price was $35.73 today against a 52-week high of $39.34.

The board of directors approved a 29% increase in the quarterly dividend to 27.5 cents per share, or $1.10 per share on an annualized basis. The increase was enabled by the firm's deleveraging progress, which reflects confidence in the long-term outlook.

Diluted earnings per share from continuing operations grew 86.1% to 67 cents, with adjusted earnings per share growing 62.8% to 70 cents.

For the second fiscal quarter, the company expects organic net sales growth of 6% to 8%, adjusted operating margin in the range of 18% to 18.5% and adjusted earnings per share in the range of 70 cents to 74 cents.

"We exceeded our expectations on net sales, profitability and deleveraging, and continued to make investments to ensure the physical availability of our products, maintain momentum with consumers, and build brand health," Sean Connolly, president and CEO, said in the press release. "Now that customers have begun rebuilding inventories and we have increased production capacity in certain areas of our business."

The net sales growth reflects a 2.4% net decrease from the divestitures of the direct store delivery snack business, the Lender's Bagel business and the exit of the private label peanut butter business. The growth also reflects a 0.5% net decrease due to foreign exchange and a 15% increase in organic net sales.

The volume increase for the quarter was mainly driven by consumers buying more for at-home consumption due to the COVID-19 pandemic, which benefitted the retail segments but negatively affected the foodservice segment.

The grocery and snacks segment net sale increased 15% to $1.1 billion, reflecting a 4.7% decrease from the impact of the sold business and a 20.7% increase in organic net sales.

Grocery and snack brands with double digit organic sales growth included Hunts, PAM, Vlasic, Duncan Hines, Wishbone, Slim Jim, Orville Redenbacher's, Act II, Swiss Miss and Snack Pack.

Refrigerated and frozen segment net sales increased 17.9% to $1.1 billion, reflecting a 1.1% decrease from the impact of the sold business and a 19% increase in organic net sales. Volume in this segment also benefitted from higher at-home eating. Brands posting double digit gains were Birds Eye, Marie Callender's, Hungry Man, Healthy Choice, P.F. Chang's Home Menu, Odom's Tennessee Pride, Hebrew National and Reddi-wip.

Foodservice segment net sales decreased 21.8% to $195 million, reflecting a 1.5% decrease from the impact of the sold business and a 20.3% decrease in net sales. Organic net sales volume decreased 24.2% due to lower restaurant traffic due to COVID-19.

The impact of COVID-19 remains uncertain for the full year. The company expects the demand in retail to remain level and in foodservice to remain challenged.

The company expects organic net sales to increase 5% to 8% in the second quarter, with adjusted operating margin of 18% to 18.5% and adjusted earnings per share of 70 cents to 74 cents.

For an update on how the coronavirus has affected convenience services, click here.