Vending

Conagra Brands reports Q2 2022 sales gain, earnings loss

Image provided by iStock.

January 6, 2022

Conagra Brands Inc. improved its Q2 2022 sales by 2.1% over the prior year's second quarter while earnings took a double digit hit.

The company's second quarter net sales increased 2.1% from $2.99 billion in Q2 2020 to $3.1 billion in the quarter ending Nov. 28, 2021, according to a press release.

Organic net sales increased 2.6%. On a two-year compounded annualized basis, fiscal 2022 second quarter net sales increased 4.1% and organic net sales increased 5.3%.

Net income declined 27.3% from $378.9 million to $275.5 million in the comparative quarters.

Diluted earnings per share decreased 26% from 77 cents to 57 cents while adjusted EPS decreased 21% to 64 cents for the comparative quarters.

On a two-year compounded annualized basis, second quarter EPS increased 3.7% and adjusted EPS increased 0.8%.

The $3.1 billion in quarterly revenue beat analyst expectations by $80 million while the non-GAAP EPS of 64 cents missed expectations by 4 cents and the GAAP EPS of 57 cents missed expectations by 10 cents, according to Seeking Alpha.

Shares traded at $32.95 today against a 52-week range of $30.44 to $39.09.

"Our business delivered another quarter of strong net sales growth as we continued to experience elevated levels of demand across our portfolio," Sean Connolly, president and chief executive officer, said in the press release. "Our focus on strategic innovation and our intentional approach to investment helped us maintain brand momentum in the second quarter and continue capturing share across each of our domains — frozen, snacks and staples."

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 second quarter volume growth rates in the company's retail reporting segments.

Net sales for the grocery and snacks segment decreased 1.4% to $1.3 billion in the quarter reflecting an 0.8% decrease from the impact of the sold businesses and an 0.6% decrease in organic net sales.

Net sales for the refrigerated and frozen segment increased 3.0% to $1.3 billion in the quarter reflecting a 0.9% decrease from the impact of the sold businesses and a 3.9% increase in organic net sales.

Net sales for the foodservice segment increased 14.9% to $246 million in the quarter reflecting a 0.3% decrease from the impact of the sold businesses and a 15.2% increase in organic net sales.

The company restated its adjusted EPS guidance for fiscal 2022 and updated its organic net sales and adjusted operating margin guidance to reflect continued top line strength, higher inflation expectations and the timing of additional pricing actions. The company updated fiscal 2022 guidance is as follows:

Organic net sales growth is expected to be approximately 3% versus prior guidance of approximately 1%.

Adjusted EPS is expected to be approximately $2.50, representing no change to prior guidance.

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