Vending

Conagra Brands lifts Q3 2023 results supported by pricing action

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April 5, 2023

Conagra Brands Inc. lifted its Q3 2023 sales and earnings over the prior year period, boosted largely by pricing action, according to an earnings report. Highlights include:

• Net sales increased 5.9% from $2.91 billion in Q3 2022 to $3.09 billion for the quarter ending Feb.26, 2023. The increase primarily reflects a 0.2% decrease from the unfavorable impact of foreign exchange and a 6.1% increase in organic net sales.
• The 6.1% increase in organic net sales was driven by a 15.1% improvement in price/mix, which was partially offset by a 9% decrease in volume that was primarily driven by the elasticity impact from inflation-driven pricing actions and supply chain, including manufacturing disruptions.
• Net income increased 56.4% from $219 million to $342 million in the comparative quarters, while adjusted net income increased 31.3% to $366 million.
• EPS on both a basic and diluted basis rose 60% from 45 cents to 72 cents.
• Adjusted EPS rose 31% from 71 cents to 76 cents, driven primarily by the increase in gross profit.
• Organic net sales for the grocery and snacks segment increased 3.7% to $1.2 billion. Price/mix increased 13.7% driven by favorability in inflation-driven pricing while volume decreased 10% primarily driven by the elasticity impact from inflation-driven pricing actions and shortages from supply chain disruptions. The company gained share in snacking categories including meat snacks and microwave popcorn, and some staples categories including refried beans and Asian sauces and marinades.
• Organic net sales for the refrigerated and frozen segment increased 5.6% to $1.3 billion. Price mix increased 15.4% driven by favorability in inflation-driven pricing while volume decreased 9.8% primarily driven by the elasticity impact from inflation-driven pricing actions and shortages from supply chain disruptions.
• Organic net sales for the foodservice segment increased 17.3% to $275 million. Price/mix increased 18.5% driven by inflation-driven pricing while volume decreased 1.2%, primarily a result of the elasticity impact from inflation-driven pricing actions.
• Net sales for the international segment increased 7.7% to $260 million reflecting a 1.8% decrease from the unfavorable impact of foreign exchange and a 9.5% increase in organic net sales. Organic net sales price/mix increased 16.5% driven by inflation-driven pricing while volume decreased 7%, primarily a result of the elasticity impact from inflation-driven pricing actions.

Shares traded at $38.45 today against a 52-week range of $31.02-$41.30.

The $3.09 billion in quarterly revenue beat analyst expectations by $10 million, while the non-GAAP EPS of 76 cents beat expectations by 12 cents, according to Seeking Alpha.

"We delivered another quarter of strong results reflecting the ongoing strength of our brands and successful execution of the Conagra Way playbook," Sean Connolly, president and CEO, said in the press release. "Our top-line posted solid growth as we demonstrated strong pricing execution with modest elasticities."

The company's updated fiscal 2023 guidance is as follows:

• Organic net sales growth is expected to be 7%-to-7.5% compared to fiscal 2022.
• Adjusted operating margin is expected to be between 15.5% and 15.6%.
• Adjusted EPS is expected to be between $2.70 and $2.75, representing growth of 14% to 17%.