CONAGRA BRANDS INC. Q2 FY2025 earnings call

• Q2 results showed return to growth with volume improvement, organic net sales increase, and market share gains.
• 67% of Conagra's portfolio held or gained volume share in Q2, fifth consecutive quarter of share gains; 87% in frozen and snacks domains.
• Frozen segment had 5 consecutive quarters of volume sales improvement, outperformed total edible and frozen department.
• Snacking portfolio performing well, excluding Swiss Miss due to cocoa prices and weather, snacks volume up 0.6% ex-Swiss Miss.
• Staples had sequential volume sales improvement, chili business including Wendy's chili with new No Bean variety showing innovation.

Total Conagra organic net sales increased 30 basis points over the previous year, with volumes up 40 basis points and price/mix down 10 basis points. In Grocery and Snacks, net sales were $1.3 billion, representing 1.2% organic growth driven by increased volumes and favorable price/mix. The Refrigerated and Frozen segment had $1.3 billion in net sales, flat to prior year, with increased volumes offset by negative price/mix due to strategic trade investments. The International segment's organic net sales declined 0.7% versus the prior year, driven by volume declines of 2.4% partially offset by a 1.7% increase in price/mix. Organic net sales in the Foodservice business declined 1% over prior year, as volume declines of 3.9% were partially offset by favorable price/mix of 2.9%.

• Revised guidance: organic net sales near midpoint of down 1.5% to flat; adjusted operating margin ~14.8%; adjusted EPS $2.45-$2.50.
• Inflation relief expected in fiscal '26, not Q2/Q3.
• FX headwind from strong USD expected to persist.
• Free cash flow conversion expected >100% for full year.
• Net leverage expected ~3.4x, up from prior estimate, due to adjusted earnings, not debt repayment.

• Economic pressures leading to value-seeking behaviors.
• Higher inflation and unfavorable FX rates pressuring profitability.
• Impact of seasonality and weather on certain products (e.g., Swiss Miss).
• Softness in restaurant traffic affecting Foodservice.