Vending

Conagra Brands lifts Q2 2023 results, buoyed by pricing

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January 5, 2023

Conagra Brands Inc. lifted its Q2 2023 sales and profits driven largely by improved pricing, according to an earnings report. Highlights include:

• Net sales increased 8.3% from $3.06 billion in Q2 2022 to $3.31 billion for the quarter ending Nov. 27, 2022, reflecting a a 0.3% decrease from the unfavorable impact of foreign exchange and an 8.6% increase in organic net sales. The 8.6% increase in organic net sales was driven by a 17% improvement in price/mix, which was partially offset by an 8.4% decrease in volume. Price/mix was driven by the company's inflation-driven pricing actions that were reflected in the marketplace throughout the quarter.
• Net income increased 38.5% from $275.9 million to $382.2 million.
• Adjusted net income increased 27.9% to $392 million, driven primarily by the increase in gross profit and a strong performance from the company's Ardent Mills joint venture.
• Basic earnings per share rose 40.4% from 57 cents to 80 cents, while diluted EPS rose 38.6% from 57 cents to 79 cents.
• Adjusted EPS increased 26.6% to 81 cents.
• Net sales for the grocery and snacks segment increased 6.8% to $1.3 billion. The price/mix increased 18.4% and volume decreased 11.6%. Price/mix was driven by favorability in inflation-driven pricing. The volume decrease was primarily a result of the elasticity impact from inflation-driven pricing actions. The company gained share in snacking categories including meat snacks and microwave popcorn, and staples categories including refried beans and canned meat.
• Net sales for the refrigerated and frozen segment increased 10.5% to $1.4 billion. Price mix increased 16% and volume decreased 5.5%. The price/mix increase was driven by favorability in inflation-driven pricing. The volume decrease was primarily a result of the elasticity impact from inflation-driven pricing actions. The company gained share in categories such as frozen single-serve meals, plant-based protein, and frozen breakfast.
• Net sales for the international segment decreased 1.3% to $259 million in the quarter reflecting a 3.4% decrease from the unfavorable impact of foreign exchange and a 2.1% increase in organic net sales.
• Net sales for the foodservice segment increased 14.8% to $283 million in the quarter. Price/mix increased 18.2% and volume decreased 3.4%. The price/mix increase was driven by inflation-driven pricing while the volume decline was primarily a result of the elasticity impact from inflation-driven pricing actions.

Shares traded today at $39.68 against a 52-week range of $30.06-$40.78.

The quarterly revenue of $3.31 billion beat analyst expectations by $30 million and the non-GAAP EPS of 81 cents beat expectations by 15 cents, according to Seeking Alpha.

"Our decisive actions to offset inflation, coupled with improved service levels and productivity, allowed us to successfully navigate ongoing inflationary pressures and industrywide supply chain challenges as each segment delivered adjusted operating margin expansion in the quarter," Sean Connolly, president and CEO at Conagra, said in the press release.

The company updated its fiscal 2023 guidance as follows:
• Organic net sales growth is expected to be 7% to 8% compared to fiscal 2022.
• Adjusted EPS is expected to be between $2.60 and $2.70, representing growth of 10% to 14% compared to fiscal 2022