Vending

Conagra Brands suffers earnings drops despite sales gains for Q4 and FY 2023

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July 13, 2023

Conagra Brands Inc. reported hefty losses against sales gains for Q4 and FY 2023 compared to the prior year period, according to an earnings report. Highlights include:

• Reported and organic net sales increased 2.2% from $2.9 billion in Q4 2022 to $2.97 billion in the quarter ending May 28, 2023.
• Net income fell 76.9% from $157.7 million to $36.3 million in the comparative quarters.
• Basic and diluted EPS both fell 75.8% from 33 cents to 8 cents.
• Adjusted EPS fell 4.6% to 62 cents.
• Reported and organic net sales for the grocery and snacks segment increased 3.6% to $1.2 billion.
• Reported and organic net sales for the refrigerated and frozen segment decreased 1.1% to $1.2 billion.
• Reported and organic net sales for the foodservice segment increased 5.5% to $303 million.
• International segment sales increased 8.6% to $251 million.
• The 2.2% revenue increase was driven by a 9.9% improvement in price/mix, which was partially offset by a 7.7% decrease in volume. Price/mix was driven by the company's inflation-driven pricing actions and favorable brand mix. The volume decrease was primarily driven by the elasticity impact from inflation-driven pricing actions and shortages from supply chain disruptions.
• For the full year, net sales rose 6.4% from $11.5 billion to $12.27 billion.
• Full year net income fell 23.1% from $888.2 million to $683.2 million.
• Full year basic EPS fell 22.7% from $1.85 to $1.43.
• Full year diluted EPS fell 22.8% from $1.84 to $1.42.

Shares traded at $33.22 today against a 52-week range of $32.30 to $41.30.

The $2.97 billion in quarterly revenue missed analyst expectations by $30 million while the non-GAAP EPS of 62 cents beat expectations by 3 cents, according to Seeking Alpha.

The company approved an increase of the annual dividend from $1.32 per share to $1.40 per share.

The quarterly dividend payment of 35 cents per share of common stock will be paid on Aug. 31, 2023 to stockholders of record as of the close of business on July 31, 2023.

"Our business delivered strong results in fiscal 2023, as we successfully delivered on our priorities to execute inflation-justified pricing, drive gross margin recovery and reduce net leverage while investing to maintain the strength of our brands," Sean Connolly, president and CEO, said in the press release. "Looking ahead, we anticipate transitioning toward a more normalized operating environment in fiscal 2024 — with easing inflationary pressures and improved supply chain operations — and remain committed to our long-term financial algorithm."

Organic net sales growth is expected to be approximately 1% compared to fiscal 2023 while adjusted EPS is expected to be between $2.70 and $2.75.