1. CAG's Q4 net sales fell 4.3% to $2.8 billion. 2. Organic sales decreased 3.5% due to lower consumption trends. 3. Operating margin increased by 467 basis points to 11.8% for FY25. 4. EPS increased 233.3% due to prior goodwill impairment charges. 5. FY26 guidance anticipates sales growth of -1% to 1%.
Despite strong EPS growth, declining sales and inflation concerns likely deter investor confidence. Historical instances show investors reacting negatively to declining sales, as it indicates weakening demand.
The article presents key financial metrics that impact CAG's valuation and future guidance, essential for investors.
Short-term fluctuations in stock price are expected due to immediate sales concerns. Previous trends indicate continued scrutiny over earnings performance can lead to stock volatility.
Today Conagra Brands, Inc. (NYSE: CAG) reported results for the fourth quarter and full year fiscal year 2025, which ended on May 25, 2025. All comparisons are against the prior-year fiscal period, unless otherwise noted.
Sean Connolly, president and chief executive officer of Conagra Brands, commented, "I'm proud of the Conagra team for their hard work throughout fiscal 2025 as we navigated an environment that proved to be more challenging than we anticipated. We entered the year focused on returning volume to growth and delivered consistent progress through the first half. This resulted in a return to absolute volume growth in domestic retail in the second quarter, best-in-class market share performance, and first half EPS in line with our plan. While the second half was impacted by higher than expected inflation, foreign exchange headwinds, and supply constraints, our long-term value creation strategy remains unchanged."
He continued, "In fiscal 2026, we expect elevated inflation and macroeconomic uncertainty to persist but remain focused on proactively managing the business by investing in our high-potential frozen and snacks domains, prioritizing volume strength, and further enhancing supply chain resiliency while continuing disciplined cost management and focus on cash flow. We believe that these actions will enable Conagra to deliver sustainable growth and stronger margins over time, creating meaningful long-term value for our stakeholders."
In the quarter, reported net sales decreased 4.3% to $2.8 billion reflecting:
The 3.5% decrease in organic net sales was driven by a 1.0% negative impact from price/mix and a 2.5% decrease in volume, primarily due to lower consumption trends. In the quarter, the company gained volume share in categories including frozen desserts, microwave popcorn, refrigerated whipped topping, and pudding.
Gross profit decreased 12.1% to $707 million in the quarter and adjusted gross profit decreased 10.7% to $717 million versus the prior year as productivity was more than offset by lower net sales, the negative impact of cost of goods sold inflation, and unfavorable operating leverage. Gross margin decreased 228 basis points to 25.4% in the quarter, and adjusted gross margin decreased 184 basis points to 25.8%.
Selling, general, and administrative expense (SG&A), which includes advertising and promotional expense (A&P), decreased 17.2% to $333 million in the quarter and adjusted SG&A, which includes A&P, decreased 10.8% to $333 million primarily due to lower incentive compensation compared to the prior year quarter. A&P decreased 14.7% to $62 million compared to the prior year quarter.
Net interest expense was $102 million in the quarter. Compared to the prior-year period, net interest expense decreased 2.8% or $3 million due to a reduction in total debt.
The average diluted share count in the quarter was 480 million shares.
In the quarter, net income attributable to Conagra Brands was $256 million, or $0.53 per diluted share. Adjusted net income attributable to Conagra Brands was $270 million, or $0.56 per diluted share.
Adjusted EBITDA, which includes equity method investment earnings and pension and postretirement non-service income, was $544 million in the quarter.
For the full fiscal year, net sales decreased 3.6% to $11.6 billion reflecting:
For the full fiscal year, gross profit decreased 9.9% to $3.0 billion and adjusted gross profit decreased 10.4% to $3.0 billion as higher productivity was more than offset by lower net sales, the negative impact of cost of goods sold inflation, and unfavorable operating leverage. Gross margin decreased 180 basis points to 25.9% and adjusted gross margin decreased 194 basis points to 25.7%.
For the full fiscal year, EPS increased 233.3% to $2.40 primarily due to wrapping non-cash goodwill and brand impairment charges in the prior year, and adjusted EPS decreased 13.9% to $2.30.
Net sales for the Grocery & Snacks segment decreased 2.1% to $1.2 billion in the quarter, reflecting:
The decrease in organic net sales was driven by a price/mix decrease of 1.7% of and a volume decrease of 1.6%.
Operating profit for the segment increased 19.6% to $210 million in the quarter and adjusted operating profit decreased 11.7% to $226 million as higher productivity and lower SG&A were more than offset by lower net sales and the negative impact cost of goods sold inflation. In addition, we wrapped a $7 million net benefit from insurance proceeds in the prior year related to lost sales from our fiscal 2023 canned meat recall.
Reported and organic net sales for the Refrigerated & Frozen segment decreased 4.4% to $1.1 billion in the quarter driven by a price/mix decrease of 2.3% and a volume decrease of 2.1%.
Operating profit for the segment was $127 million and adjusted operating profit decreased 10.1% to $171 million as higher productivity and lower SG&A were more than offset by lower net sales and the negative impact of cost of goods sold inflation.
Net sales for the International segment decreased 13.8% to $230 million in the quarter, reflecting:
On an organic net sales basis, price/mix increased 4.7% and volume decreased 3.9%.
Operating profit for the segment increased 35.6% to $35 million in the quarter and adjusted operating profit increased 22.7% to $35 million as higher productivity and lower SG&A more than offset the unfavorable impact of foreign exchange and the negative impact of cost of goods sold inflation.
Net sales for the Foodservice segment decreased 4.0% to $280 million in the quarter, reflecting:
The decrease in organic net sales was driven by a price/mix increase of 3.3% and a volume decrease of 7.6%.
Operating profit and adjusted operating profit for the segment decreased 20.8% to $32 million in the quarter as higher productivity was more than offset by lower net sales, the negative impact of cost of goods sold inflation, and unfavorable operating leverage.
Corporate expenses decreased 2.2% to $82 million in the quarter and adjusted corporate expense decreased 6.7% to $78 million in the quarter driven by lower incentive compensation compared to the prior year quarter.
Pension and post-retirement non-service income was $17 million in the quarter compared to $12 million of income in the prior-year period. The increase was due to a non-cash settlement gain recognized in connection with our purchase of an annuity contract with a third-party insurance provider. Adjusted pension and post-retirement non-service income increased $3 million to $4 million in the quarter.
In the quarter, equity method investment earnings increased 23.4% to $57 million and adjusted equity method investment earnings increased 30.9% to $61 million driven by the results from the company's joint venture, Ardent Mills, reflecting improved commodity revenue, partially offset by continued lower volume trends as seen throughout the industry.
For the full fiscal year, the company generated $1.7 billion in net cash flows from operating activities compared to $2.0 billion in the prior year period. Capital expenditures were $389 million compared to $388 million in the prior year period, and free cash flow was $1.3 billion compared to $1.6 billion in the prior year. Dividends paid increased 1.5% versus the prior year to $669 million.
The company ended the year with net debt of $8.0 billion, representing a 4.4% reduction in net debt versus the prior year, resulting in a 3.6x net leverage ratio at fiscal year-end.
The company announced on July 9, 2025 that its Board of Directors had approved a quarterly dividend payment of $0.35 per share of Conagra common stock which will be paid on August 28, 2025 to stockholders of record as of the close of business on July 30, 2025, reflecting an annualized dividend rate of $1.40 per share.
The company is providing the following guidance for fiscal 2026:
The company also expects cost of goods sold inflation to continue at an elevated level into fiscal 2026. Guidance anticipates core inflation to be approximately 4%. In addition, the company expects an impact to fiscal 2026 from previously announced U.S. tariffs. While the tariff situation remains fluid, guidance contemplates a 50% tariff rate on imported tin plate steel and aluminum, a 30% rate on limited imports from China, and a 10% reciprocal rate on imports from certain other countries. Combined, these tariffs are expected to increase cost of goods sold by approximately 3% annually, prior to mitigating actions including accelerated cost savings initiatives, sourcing alternatives, and targeted pricing actions. Taken together, the company expects total cost of goods sold inflation of approximately 7%.
Conagra Brands will issue pre-recorded remarks prior to hosting a live Q&A conference call and webcast at 9:30 a.m. Eastern time today to discuss the company's results and outlook. The live audio webcast Q&A conference call, pre-recorded remarks, transcript of the pre-recorded remarks, and presentation slides will be available on www.conagrabrands.com/investor-relations under Events & Presentations. The Q&A conference call may be accessed by dialing 1-877-883-0383 for participants in the U.S. and 1-412-902-6506 for all other participants and using passcode 5130344. Please dial in 10 to 15 minutes prior to the call start time. A replay of the Q&A conference call will be available on www.conagrabrands.com/investor-relations under Events & Presentations until July 10, 2026.
Conagra Brands, Inc. (NYSE: CAG), is one of North America's leading branded food companies. We combine a 100-year history of making quality food with agility and a relentless focus on collaboration and innovation. The company's portfolio is continuously evolving to satisfy consumers' ever-changing food preferences. Conagra's brands include Birds Eye®, Duncan Hines®, Healthy Choice®, Marie Callender's®, Reddi-wip®, Slim Jim®, Angie's® BOOMCHICKAPOP®, and many more. As a corporate citizen, we aim to do what's right for our business, our employees, our communities and the world. Headquartered in Chicago, Conagra Brands generated fiscal 2025 net sales of nearly $12 billion. For more information, visit www.conagrabrands.com.
The information contained in this document includes forward-looking statements within the meaning of the federal securities laws. Examples of forward-looking statements include statements regarding our expected future financial performance or position, results of operations, business strategy, plans and objectives of management for future operations, and other statements that are not historical facts. You can identify forward-looking statements by their use of forward-looking words, such as "may", "will", "anticipate", "expect", "believe", "estimate", "intend", "plan", "should", "seek", or comparable terms.
Readers of this document should understand that these forward-looking statements are not guarantees of performance or results. Forward-looking statements provide our current expectations and beliefs concerning future events and are subject to risks, uncertainties, and factors relating to our business and operations, all of which are difficult to predict and could cause our actual results to differ materially from the expectations expressed in or implied by such forward-looking statements.
This document includes certain non-GAAP financial measures, including adjusted EPS, organic net sales, adjusted gross profit, adjusted operating profit, adjusted SG&A, adjusted corporate expenses, adjusted gross margin, adjusted operating margin, adjusted effective tax rate, adjusted net income attributable to Conagra Brands, free cash flow, net debt, net leverage ratio, and adjusted EBITDA. Management considers GAAP financial measures as well as such non-GAAP financial information in its evaluation of the company's financial statements.
We believe these non-GAAP financial measures provide useful supplemental information to investors to facilitate year-over-year comparisons by removing non-recurring items and other items impacting comparability such as the impacts of foreign exchange, divested businesses and acquisitions, as well as the impact of any 53rd week, as noted in more detail for each measure below. We also believe the below financial measures are used by investors and analysts to assess the company's operating performance and financial position. These measures should be viewed in addition to, and not in lieu of, the company's diluted earnings per share, operating performance and financial measures as calculated in accordance with GAAP.
For more information, please contact:
MEDIA: Mike Cummins
Phone: 312-549-5257
Email: mcummins@conagrabrands.com
INVESTORS: Matthew Neisius
Phone: 402-240-3226
Email: mneisius@conagrabrands.com
SOURCE Conagra Brands, Inc.