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Overview of Third Quarter Results

On April 3, 2025, Conagra Brands, Inc. (NYSE: CAG) shared its financial results for the third quarter of fiscal year 2025, which concluded on February 23, 2025. This quarter saw a reported net sales decline of 6.3%, with organic net sales decreasing by 5.2%. Additionally, the adjusted earnings per share dropped by 26.1% to $0.51. These figures highlighted challenges the company faced in the market, primarily attributed to cost pressures and supply chain disruptions.

Detailed Financial Performance

Conagra's total net sales for the quarter reached $2.8 billion, a noticeable decrease from the previous year. Among the various segments, the Grocery & Snacks segment reported a 3.2% decline in sales, while the Refrigerated & Frozen segment experienced a steeper fall of 7.2%. The company indicated that part of this dip resulted from notable decreases in both price/mix and volume.

Despite this downturn, CEO Sean Connolly expressed confidence in the resilience of the brand, citing strong consumption trends and market share performance. However, he acknowledged the ongoing challenges due to supply constraints that have impacted shipments.

Sales and Operating Results

The company reported a gross profit of $710 million, marking a 17.3% decrease compared to the same quarter last year. This was attributed to lower net sales and the inflationary pressures on the cost of goods sold. The gross margin also decreased to 25.0% from previous levels, reflecting the comprehensive impacts across the business segments.

Segmentation breakdown revealed:

• - Grocery & Snacks: 3.2% decline in net sales, with ongoing shifts in consumer purchasing patterns hindering performance.
• - Refrigerated & Frozen: This segment saw sales fall by 7.2%, largely impacted by previous supply chain disruptions that hit product availability.
• - International: Net sales declined by 17.6%, affected by foreign exchange ratios and decreased organic sales.
• - Foodservice: Experienced a drop of 6.1% in net sales with the company noting ongoing challenges in commercial traffic.

Strategic Investments and Future Outlook

Despite the mixed results, Conagra maintained its fiscal year guidance for organic net sales to be approximately -2% compared to FY2024, and adjusted operating margins expected at around 14.4%. The company also projects EPS to be approximately $2.35, with an emphasis on strong free cash flow conversion exceeding 100%.

Continued strategic investments in key areas, especially in retail, were noted as the company aims to adapt and cater to shifting consumer trends. However, the company remains watchful of external market dynamics that can affect its operations.

Closing Higher in The Long Term

Conagra Brands’ ability to navigate current challenges while executing continued product innovation and strategic investment gives it a foundation to potentially recover and grow long term. The confidence from the management team points toward a commitment to restoring consumer demand and operational efficiency. With favorable projections ahead, stakeholders will be keenly observing how these strategies unfold in the subsequent quarters of fiscal year 2025.