Vending

Conagra Brands boosts Q4 2021 income on 16.7% sales drop

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July 13, 2021

Conagra Brands Inc.'s net sales fell 16.7% from $3.29 billion for the Q4 2020 to $2.74 billion for the quarter ending May 30, 2021, while organic net sales decreased 10.1% from $3.01 billion to $2.71 billion in the comparative quarters, driven by lapping the prior year's surge in at-home food consumption at the onset of the COVID-19 pandemic, according to a press release.

Net income rose 54% from $201.3 million to $309.9 million in the comparative quarters.

Both basic and diluted earnings per share from continuing operations rose 56.1% from 41 cents in Q4 2020 to 64 cents in Q4 2021, and adjusted EPS declined 28% to 54 cents. On a two-year compounded annualized basis, fourth quarter EPS increased 56.9% and adjusted EPS increased 22.5%.

The decline in reported net sales primarily reflects:

• A 1.5% decrease from the sold businesses, which include the H.K. Anderson business, the Peter Pan peanut butter business as well as the Egg Beaters business, which was sold at quarter end.
• A 0.5% increase from the impact of foreign exchange.
• A 5.6% decrease from the impact of last year's 53rd week.
• A 10.1% decrease in organic net sales.

Net sales for the refrigerated and frozen segment decreased 12.0% from $1.34 billion to $1.2 billion in the quarter reflecting:

• A 0.2% decrease from the impact of the sold businesses.
• A 6.3% decrease from the impact of last year's 53rd week.
• A 5.5% decrease in organic net sales.

Net sales for the foodservice segment increased 20.8% from $193 million in Q4 2020 to $233 million for Q4 2021 reflecting:

• A 1.4% decrease from the impact of the sold businesses.
• An 8.8% decrease from the impact of last year's 53rd week.
• A 31% increase in organic net sales.

Net sales for grocery and snacks fell from $1.47 billion in Q4 2020 to $1.08 billion in Q3 2021.

For full year fiscal 2021, net sales increased 1.2% and organic net sales increased 5.1%. Organic net sales benefited from strong growth in each of the company's three retail reporting segments. On a two-year compounded annualized basis, fiscal 2021 net sales increased 8.3% and organic net sales increased 5.4%.

EPS for fiscal 2021 grew 54.7% to $2.66 while adjusted EPS grew 15.8% to $2.64. On a two-year basis, adjusted EPS grew 14.6%.

The $2.74 billion in fourth quarter revenue beat analyst expectations by $30 million while the Non-GAAP EPS of 54 cents beat expectations by 2 cents and the GAAP EPS of 64 cents beat expectations by 13 cents, according to Seeking Alpha.

Shares traded at $34.66 today against a 52-week range of $32.06-$39.09.

"We successfully responded to the heightened consumer demand while continuing to invest in the long-term health of the business," Sean Connolly, president and chief executive officer, said in the release. "Our business remains very strong, and we believe we are well-positioned to continue to win with consumers."

The company is providing the following updated fiscal 2022 guidance:

• Organic net sales growth is expected to be approximately flat compared to fiscal 2021.
• Adjusted operating margin is expected to be approximately 16%.
• Adjusted EPS is expected to be approximately $2.50.
• Adjusted EPS in the second half of the fiscal year is expected to be in-line with what was assumed for the second half of fiscal 2022 in the company's prior fiscal 2022 guidance.

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