On October 5, 2023, Conagra Brands Inc (CAG, Financial) released its earnings report for the first quarter of fiscal year 2024, which ended on August 27, 2023. Despite facing industry-wide macro dynamics that affected consumer purchasing behavior, the company managed to deliver strong margin recovery and EPS growth.
Key Financial Highlights
Conagra Brands Inc (CAG, Financial) reported net sales of $2.9 billion for the quarter, reflecting a 0.3% decrease in organic net sales due to a 6.6% decrease in volume. This was partially offset by a 6.3% improvement in price/mix. Gross profit increased by 14.3% to $823 million, primarily due to inflation-driven pricing and productivity. Net income attributable to Conagra Brands was $320 million, or $0.67 per diluted share, compared to a net loss of $0.16 per diluted share in the prior year quarter.
CEO Commentary
Sean Connolly, president and chief executive officer of Conagra Brands, commented, "I am proud of our team for delivering another quarter of strong margin recovery and EPS growth despite facing industry-wide macro dynamics that have affected consumer purchasing behavior and elongated the volume recovery period. We will continue to focus on executing our Conagra Way playbook as we make targeted and disciplined investments throughout the remainder of the year to drive the top-line. We are reaffirming our guidance for fiscal 2024, reflecting confidence in our plans, people and agility as we continue to navigate a shifting consumer environment."
Segment Performance
The Grocery & Snacks segment reported a 1.2% increase in net sales to $1.2 billion, driven by a price/mix increase of 5.6%. The Refrigerated & Frozen segment reported a 4.6% decrease in net sales to $1.2 billion due to a volume decrease of 10.5%. The International segment reported an 11.4% increase in net sales to $260 million, and the Foodservice segment reported a 5.2% increase in net sales to $289 million.
Outlook
Conagra Brands Inc (CAG, Financial) is reiterating its fiscal 2024 outlook, expecting a low-single digit organic net sales decline for the second quarter and low-single digit organic net sales growth for the back half of the year. The company's fiscal 2024 guidance reflects an expected Adjusted EPS between $2.70 and $2.75 and a Net Leverage Ratio of approximately 3.4x.
