1. CAG updates fiscal 2025 guidance, citing service constraints and foreign exchange impacts. 2. Supply issues with chicken and vegetables led to lower sales expectations. 3. New innovations for 2025 will be unveiled at CAGNY Conference. 4. Long-term targets remain unchanged despite current short-term challenges. 5. Strong demand for frozen vegetables indicates potential growth post-constraints.
CAG's lowered EPS and organic net sales growth forecasts indicate weakening performance. Past examples show similar guidance adjustments often lead to stock price declines.
The financial outlook changes and recent challenges heavily influence CAG's market position. Consistently improving demand can offset concerns but short-term forecasts are critical for investors.
Factors affecting guidance are temporary but likely to impact quarterly results. Previous instances of operational challenges have temporarily hindered stock price performance.
CHICAGO, Feb. 17, 2025 /PRNewswire/ -- Conagra Brands, Inc. (NYSE: CAG) announced that its upcoming presentation at the annual Consumer Analyst Group of New York (CAGNY) Conference will detail Conagra's advantaged market position, perspective on the evolving consumer environment, and unique focus on the science of growth. Conagra will also preview a series of new innovations expected to launch in calendar year 2025 and provide detail on its updated fiscal 2025 financial guidance.
As previously announced, Sean Connolly, president and chief executive officer, Dave Marberger, executive vice president and chief financial officer, and Bob Nolan, senior vice president, growth science, will present on February 18 at 9:00 a.m. ET.
The company has experienced customer service interruptions during the third quarter due to supply constraints on two product platforms: frozen meals containing chicken and frozen vegetables. In addition, foreign exchange rates are now expected to provide a further headwind to adjusted earnings per share.
| Metric | Prior Fiscal 2025 Guidance | Updated Fiscal 2025 Guidance |
|---|---|---|
| Organic Net Sales Growth (vs. FY24) | Near the midpoint of (1.5)% to flat | ~(2.0)% |
| Adjusted Operating Margin | ~14.8% | ~14.4% |
| Adjusted EPS | $2.45 to $2.50 | ~$2.35 |
| Net Leverage Ratio | ~3.4x | ~3.55x |
The company's expectations for capital expenditures, free cash flow conversion, interest expense, Ardent Mills' contribution, pension income, adjusted effective tax rate and inflation remain unchanged from our second quarter earnings materials. The company's updated guidance does not include any potential impacts from new tariffs. Conagra's long-term financial targets are unchanged.
Sean Connolly, president and chief executive officer of Conagra Brands, commented, "We are committed to investing behind our brands and innovation, and delivering the high-quality products our customers expect. We are pleased with the strong and consistently improving demand we have experienced this year as a result of those investments. While we've faced recent challenges servicing that demand, our investments in infrastructure and strategic partnerships position us for long-term success."
In the third quarter, the company has experienced manufacturing challenges at the primary facility that prepares and cooks chicken used in frozen meals. When the company began to see product quality inconsistencies coming off the production lines it promptly took corrective action. This included temporarily stopping production, implementing operational adjustments, and restarting at a slower pace to restore product consistency. The company also engaged with third-party manufacturers. While these actions enabled the company to resume production that meets our strict quality standards, the net impact of this issue is lower volume, net sales, and profit in the second half of the fiscal year.
Conagra had previously planned to implement substantial modernization upgrades to this facility this upcoming summer. That work remains on track, with targeted completion by the end of the first quarter of fiscal 2026. To ensure supply during this period, the company is continuing to work with third-party manufacturers to build up inventory ahead of the planned upgrades. In the short term, the facility will maintain operations at a reduced pace.
Building on strong second quarter performance, consumption growth rates in Conagra's frozen vegetable business nearly doubled through December and early January versus the year-ago period. The higher-than-anticipated demand depleted inventory on hand and led to out-of-stocks in stores. In turn, the company put customers on a strict product allocation and reduced merchandising from January through March 2025 in an effort to rebuild inventories ahead of the Easter holiday. The net effect is lost volume, primarily in the third quarter of fiscal 2025.
Given the strong consumer response to Conagra's investments in its frozen vegetables business in fiscal 2025, the company has invested in increased surge capacity moving forward to accommodate the sustained growth in demand.
A live audio webcast of the CAGNY presentation and presentation slides will be available on Feb. 18, at approximately 9 AM Eastern, on conagrabrands.com/investor-relations under Events & Presentations. A replay of the webcast will be available until Feb. 18, 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 2024 net sales of more than $12 billion. For more information, visit www.conagrabrands.com.
This document contains forward-looking statements within the meaning of the federal securities laws. Examples of forward-looking statements include statements regarding the company's 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 "Outlook", "may", "will", "anticipate", "expect", "believe", "plan", "should", 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 diluted EPS, organic net sales, and adjusted operating margin. Management considers GAAP financial measures as well as such non-GAAP financial information in its evaluation of the company's financial statements and believes these non-GAAP financial measures provide useful supplemental information 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.
The company's fiscal 2025 guidance includes certain non-GAAP financial measures (organic net sales growth, adjusted operating margin, and adjusted diluted EPS) that are presented on a forward-looking basis. Historically, the company has calculated these non-GAAP financial measures excluding the impact of certain items such as, but not limited to, foreign exchange, acquisitions, divestitures, restructuring expenses, the extinguishment of debt, hedging gains and losses, impairment charges, legacy legal contingencies, and unusual tax items. Reconciliations of these forward-looking non-GAAP financial measures to the most directly comparable GAAP financial measures are not provided because the company is unable to provide such reconciliations without unreasonable effort, due to the uncertainty and inherent difficulty of predicting the timing and financial impact of such items. For the same reasons, the company is unable to address the probable significance of the unavailable information, which could be material to future results.
For more information, please contact:
MEDIA: Mike Cummins
312‑549‑5257
Email: info@conagrabrands.com
INVESTORS: Matthew Neisius
402‑240‑3226
Email: info@conagrabrands.com
SOURCE Conagra Brands, Inc.