Foodservice

ConAgra Brands Q2 2021 sales and earnings beat expectations, boosted by divestitures, retail gains

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January 7, 2021

ConAgra Brands Inc.'s net sales increased 6.2%, from $2.8 billion in the prior year's second quarter to $3.0 billion in the 2021 second quarter ending Nov. 29, 2020, beating expectations by $20 million and non-GAAP earnings per share of 81 cents surpassed expectations by 7 cents, according to Seeking Alpha, while its 8.1% organic sales fell shy of an expected 8.3%. Shares traded at $35.14 today against a 52-week range of $23.67-$38.47.

Results were driven by a 1.7% net decrease from the divestitures of the direct store delivery snacks business, the Lender's bagel business, the H.K. Anderson business and the exit of the private label peanut butter business, according to a press release.

Each of the company's three retail segments posted gains, primarily driven by consumers increasing their at-home food consumption as a result of the COVID-19 pandemic, which benefited the company's retail segments but negatively impacted the foodservice segment.

Diluted earnings per share from continuing operations for the second quarter grew 45.3% from 53 cents in last year's second quarter to 77 cents, and adjusted EPS grew 28.6% to 81 cents.

The company reaffirmed its fiscal 2022 guidance, which does not yet include the impact of the pending sale of the Peter Pan peanut butter business.

"We exceeded expectations on net sales, profitability and de-leveraging while continuing to invest in the business," Sean Connolly, president and CEO, said in the release. "We remain confident that Conagra Brands is well-positioned to capture the benefits of the shifting consumer behavior, many of which we believe will continue well into the future."

Net income increased 45.4% from $261.5 million in the prior year's second quarter to $379 million, while adjusted net income increased 29.5% to $396 million. Diluted earnings per share rose from 53 cents in last year's second quarter to 77 cents for 2021.

Sales for the grocery and snacks business rose 12.5% to $1.3 billion. Brands experiencing strong organic sales growth included Orville Redenbacher's, Act II, Swiss Miss, Snack Pack, and Duncan Hines, RO*TEL, Libby's, Chef Boyardee, PAM, Hunt's and Armour Star.

Refrigerated and frozen sales increased 6.8% to $1.2 billion, boosted by brands including P.F. Chang's Home Menu, Reddi-wip, Hebrew National, Hungry-Man, Gardein, Marie Callender's and Birds Eye.

International sales increased 6.6% to $250 million, while foodservice sales fell 23.1% to $212 million.

The company expects third quarter sales growth of 6-8%, and adjusted EPS of 56 cents to 60 cents.

The company affirmed its fiscal 2022 guidance of sales growth of 1-2% and adjusted EPS of $2.66 to $2.76.

On Dec. 7, 2020, the company entered into a definitive agreement to sell its Peter Pan peanut butter business to Post Holdings, Inc. The transaction is subject to customary closing conditions and is expected to be completed in the first calendar quarter of 2021.

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