Vending

ConAgra Brands' Q1 2022 sales, earnings fall

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October 7, 2021

ConAgra Brands Inc. reported a sales decline for the first fiscal quarter of 2022, partly on account of some business divestitures, according to an earnings release.

In the first quarter of fiscal 2022, net sales decreased 1% from $2.67 billion in Q1, 2021 to $2.65 billion for the quarter ending Aug. 29, 2021. The decline in net sales primarily reflects:

• A 1.1% net decrease from the divestitures of the H.K. Anderson business, the Peter Pan peanut butter business and the Egg Beaters business.
• A 0.5% increase from the favorable impact of foreign exchange.
• A 0.4% decrease in organic net sales.

The 0.4% decrease in organic net sales was driven by a 2.0% decrease in volume and a favorable price/mix impact of 1.6%. The volume decrease was primarily a result of lapping the prior year's surge in at-home food demand due to the COVID-19 pandemic.

The year-over-year comparison negatively impacted fiscal 2022 first quarter growth rates in the company's three retail reporting segments. The price/mix favorability was primarily driven by favorable net pricing and brand mix as the company continued executing inflation-justified pricing actions, many of which began to be reflected in the marketplace late in the first quarter.

Net income fell 28.6% from $329.8 million in the quarter ending Aug. 30, 2020 to $235.7 million in the quarter ending Aug. 29, 2021.

Diluted earnings per share fell 26.9% from 67 cents to 49 cents in the comparative quarters.

Adjusted net income decreased 30.2% to $241 million, or 50 cents per diluted share. The decreases were driven primarily by the decrease in gross profit.

"Overall, I am pleased with the results we delivered in the first quarter, which have kept us on-track with our profit plan for the year," Sean Connolly, president and CEO, said in a prepared statement. "Our team showed great agility in navigating the dynamic external environment. We continue to experience ongoing inflationary pressure, but expect the sustained elevated consumer demand and the comprehensive actions we have executed and expect to execute in the future, will enable us to successfully deliver our adjusted EPS guidance for the year."

The $2.65 billion in quarterly revenue beat analyst expectations by $120 million, while the non-GAAP EPS of 50 cents beat expectations by one cent and the GAAP EPS of 49 cents beat expectations by two cents, according to Seeking Alpha.

Shares traded at $34.55 today against a 52-week range of $32.25-$30.

Net sales for the grocery and snacks segment decreased 4.9% to $1.1 billion in the quarter reflecting a 1.6% decrease from the impact of the sold businesses and a 3.3% decrease in organic net sales.

Net sales for the refrigerated and frozen segment decreased 2.5% to $1.1 billion in the quarter reflecting a 0.8% decrease from the impact of the sold businesses and a 1.7% decline in organic net sales.

Net sales for the foodservice segment increased 20.9% to $240 million in the quarter reflecting an 0.8% decrease from the impact of the sold businesses and a 21.7% increase in organic net sales.

The company reaffirmed its fiscal 2022 adjusted EPS guidance and updated its expected path to achieving that guidance:

• Organic net sales growth is expected to be approximately 1% up versus prior guidance of approximately flat.
• Adjusted EPS is expected to be approximately $2.50, representing no change to prior guidance.