Conagra Brands (CAG) 5 Apr 232023 Q3 Earnings call transcript

Good day, and welcome to the Conagra Brands Third Quarter 2023 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note today's event is being recorded.

I would now like to turn the conference over to Melissa Napier, Head of Investor Relations. Please go ahead.

morning. Good us of Brands' fiscal joining first quarter the months nine XXXX for for third Conagra and Thanks earnings call. Sean will performance. with our here Connolly, and CEO; I'm Dave CFO, who discuss business our our Marberger, We'll take our when your conclude. prepared remarks questions

the will in Descriptions are On statements the forward-looking statements. making faith, results we guarantees of about we factors do documents we making And today's be in the some achieve. we our with while risk SEC. included call, are any will we good these filed not have

to can call, our We today's the measures. for found the The the will items Investor numbers measures non-GAAP additional Please reconciliations of and also release management be discussing Relations on earnings items. period be exclude the found These refer website. some press of financial that the be we'll that comparability reviewing comparability slides adjusted section in non-GAAP which for can see and earnings the referenced. GAAP be believes in both impacts on release non-GAAP to our information

over now Sean. the call to I'll And turn

Thanks, 'XX Melissa. from X call. everyone, Good what for take outlines earnings to like we'd you Slide today's third quarter call. thank joining away you our morning, fiscal and

cycle. into super Our the the unprecedented last was top environment priority fiscal inflation margin coming of and COVID two XXXX year recovery the following years with

into and our the margin the way as is that before strategy recovery, And over to has three chain deployed focus low-margin pruning have plan our of of value been pricing, volume, improvements refer facilitate working. and To successfully inflation-justified year, we on supply the volume. a

muted gross elasticities second our consecutive QX, to execution consistent. recovery, In margin remain be pricing excellent delivered quarter of continued our strong while and we

chain again performance with to improve supply levels continued baseline Our versus our near-end exceeding pre-pandemic XX%. led service peers and our volume our

experienced levels strong but temporary demand were exceptions to most from to we allowed and inventories us as there certain that from in appropriate improvement categories This customers, in our us prevented support stock. manufacturing rebuild disruptions of the being

in our year, overall, EPS results expectations net strong had the updating for the we operating for we the this, and tightening and growth margins. are for and quarter ranges growth Despite sales including increasing adjusted our guidance

that let's We X. into delivered on With X.X% net year $X.X a results of the over approximately representing dive overview, the billion Slide period. sales organic increase prior

a XXX Our point represents a XXX over of increase basis margin last period. increase represents third and adjusted quarter the gross of our basis adjusted over same margin point year, of operating XX.X% XX.X% that

share. XX% achieve year. growth the and to sales year-to-date the growth from results per rose X.X% including strength prior year our to we to of the beginning the at compared underscore year four of set last The $X.XX robust out across net the EPS organic with Adjusted all metrics improvements period margin performance

sustained the gross has in our brand-building growth gross and recovery shows priority for Again, strategic means our top our quarter. of fund program, and X support relentless our recovery Because of provocative for therefore, been this This of margin snacks. that two go profit to stream recovery, a and forward. was continue category as centerpiece in year. Why? Slide should margin driving areas the innovation the consecutive innovation a our success and we focus our expect sustained innovation margins playbook frozen second you our

levels. that whose companies only of you set is Conagra In peer essentially in on par the at with one Slide can pre-pandemic fact, margins our are see looking gross X,

pipeline strength and position us growth healthy well solid brand innovation forward. to and maintain our gross going Importantly, margin

price driven increases our ongoing inflation growth justified sales beginning by primarily As at muted the I call, mentioned with of coupled the was elasticities.

elasticities the between increases. shows and price X relationship Slide

increased we per over the elasticities to you see, unit benign our have help offset remarkably of remained COGS As even consistent ongoing as eight inflation. price and the can quarters, products last

elasticities, The our strength XX industry. inflation And increases well are are in a our justified to the which price best norms strategy remained our of our label of shows testament the execution the among private elasticities Slide below competition. of brands, are the in face and have the historic limited consistent impact pricing modest the and of

Turning to Slide XX.

some As compared X.X% the the number, by X.X% quarter context of total three points. to you To the year can three and third level, sales see, years retail XX.X% Conagra last by at grew to ago. compared put around

amount noise year-over-year in the set for QX. there First, fair was a in of comps the peer

due year supply that ago customer products had had while a strength allocation. off ago due period of weak come had year to very we to real chain support for pockets recently challenges companies Omicron strong period the Some in and

Second, to and our Hunt's prune most eliminating opportunistic value promotions value Boyardee Tomatoes. volume as vegetables This strategy low-margin over on select we continue resuming on notably XX both such and canned XX volume, products Chef included for brands. tier

led canned part disruptions that out the chili portfolio. and experienced canned quarter. grocery categories of where canned notably businesses, sides our beans, meat, to in canned manufacturing we specifically stocks canned certain pasta, Third, and Most in our impacted of meals all

second peak we disruption one due to on XX-Q. led Lenten fire noteworthy our line season. as on had which as Frozen, frying to out our stocks our in was of In quarter during a This reported business fish allocation, fish the was

issues QX, While here. we our from these sequentially root in and the resolved, causes have been to volumes volume suppressed rebound discrete expect largely

on top versus of you of growth years both performance baseline view the our short-term when our noise bottom take the compare ago, the been you and see Importantly, and three the lines. stable out has strong

Dampening across our throughout Conagra for top a pandemic and chain the is demand, the the normalizes peer performer time demonstrates supply versus volatility among and that period inflation set. this results

QX. as weeks over and in Slide a order sales of dollar just near-end second XX alphabetical This bottom slide. the Among at who on same group compared details peer are XX performance growth true top in our at quarter. line three-year basis to to unit isolating chart remains prior the and look this the the when our measured footnoted you in rank first we group, sales the third performance did in Conagra continued as

syndicated sales trends the shown And improving. scanner post-QX, data our has unit

X/XX of fact, In our middle the on two-year four-week group a period ending near-end peer ranked are units basis. in in CAGR the

volume is value pricing continued by strength and products made execution possible provide relative Our of our performance and superior consumer. that the top-tier our to brands the the

by We improving and at starting XX%, strong sausages including momentum, look a domain, line both third categories, take retail our respectively. Slide the key basis, and delivering driven number sales This our of growth maintained quarter a breakfast meals. retail growth Let's X% our Frozen performance during top single-serve with XX. three-year on on by a and one- was

year comes ago worth top outbreak strong It's when noting our in performance in-home very that on consumers' this influenced eating domain Omicron the frozen period of behavior. performance for the

XX% For stack example, XX% single-serve that a creating deals of in grew category. two-year last year,

on Snacks XX. to Turning Slide

We third a see across domain increase a 'XX. in can retail sales categories. of quarter The fiscal third story. similar and the a You of continued drove over increase XX% to broad-based a is compared momentum of this fiscal number the X% 'XX quarter in

growth eager year products year, off to customers leading year-over-year, a were the our the XX% more than grew and up allocation and last demand rose popcorn building seeds Meat X% over mixes ago XX% to XX%. when coming snacks quarter, were period fulfill in and both our this baking in top meat Compared for was on microwave category. of snacks

also earlier. continued and staples supply that despite discrete noted challenges to businesses I of growth our portfolio our meals drive relevant in We in sides the highly some chain canned

period compared three X% growth sales XX% retail increased quarter WIP last XX% which to portfolio led grew ago. staples basis. years more than of This and year Our the the year-over-year to was a same by third on toppings, compared

XX. Slide to Turning

which supply in our to on make also initiatives and as increases chain the anticipated. most moderate continued continue targets we we headway While from we achieve at chain productivity progress quarter, the our recent ongoing third remain Investor on on transitory to friction, COGS outlined supply track Day, more our which benefited during initiatives, experienced

the our These customers. improvements to improvements supply chain we provide to led our in service

not normal we're industry-wide to back chain, in challenges and good persist. While progress making it's supply

and However, see as room as normalize. expected, our for to advance more we're macro continues productivity improvement the recovering and initiatives, we we environment

our we for year, With expect line we're we line the organic in and growth raising bottom net will confident on sales are estimates. updating guidance we top to mind, X% now guidance reflect our we're Overall, and that margin our that of deliver to X.X%.

to growth to We adjusted and expect of we're $X.XX. from margin $X.XX XX.X%, increasing adjusted operating for XX.X% to expectations our range EPS

reiterate to call ahead. over want the the Before Dave, I our confidence path to I in hand

such as is response to all chain on is that executed inflation, and consistent elasticities within over disruptions We're progress value moving have and to environment actions continue benign. We that expansion remain successfully moderating, normalizing. margin our initiatives pricing an make remarkably past discrete supply in and and volume, productivity inflation

sales as expect margin strong drive And are to more in people, the data, recent scanner to working and look trends processes and Conagra improvements of at strong strong we Overall, continues and the sustainable fiscal seeing which are to end through we that accelerate from benefit year. expansion. brands, we all together growth momentum already

the With that, more I'll pass detail. quarter to Dave the to in financials cover over from the call

sales playbook. good the execution another Conagra our X.X% due increased on shown and quarter, and and XX. successful to few ongoing pricing discussed. everyone. of reflecting organic Slide of I'll Sean discussing morning, the strong strength In elasticities, Thanks, the delivered continued net by as results, highlights as begin Sean, Way We quarter inflation-justified brands a muted of

XX.X% to sales increased growth focus was adjusted net XX.X% contributed XXX QX quarter. recovery. and This up profit in XX.X%, increase higher and margin dollar gross year-to-date the XX.X% strong productivity initiatives, Adjusted EBITDA in profit gross adjusted to points benefiting from reflecting for gross our growth organic of basis on and margin adjusted

This was of here XX. the on offset our inflation-justified in improvement sales Slide net growth delivered volume. Let me price/mix breakdown X% pricing improvement a drivers decrease price XX.X% in X.X% actions. We our by from partially organic

to apply points nine the simply XX.X% that the historically and elasticity factor the you Conagra's of eight elasticity favorable volume approximately see price/mix, will you current decline. percentage explains of If X.XX

point our running given chain from and now, planned level at projections. these one 'XX discussed. this favorable fiscal remaining volume have in decline The the gross sales percentage we've And some elasticities is volume time been our levels supply mostly margin decline has for disruptions been of

in shows Slide line for QX. segment the XX each top performance

four all net We across reporting with segments. growth sales continued are the pleased

With Snacks combined Our well. domestic to & perform up segments, retail and continues net our Frozen sales Refrigerated in & portfolio X.X%. a Grocery

International solid segment X.X%. net organic up saw the unfavorable growth impact exchange. were International quarter sales foreign in the with up reported net of sales Our reflecting X.X%,

to grew in XX.X% recovery our in continued strong quarter. the see we segment, Finally, Foodservice which

found adjusted I'd XX. on our to Slide now QX like margin discuss bridge

and quarter As have margin benefit recovery. the a benefit quarter of strong progress chain realized Sean consecutive our improved from X.X% delivered supply discussed, a a initiatives. second we to on continued drove are XX.X% price/mix from margin pleased productivity We during

productivity These our pressure pricing X.X% inflation of continued and benefits operating offset negative a by with X% and by margins impacting were impact inflationary market-based X.X% sourcing. from market partially gross

Finally, X.X% higher respectively. the A&P during quarter in and adjusted SG&A and reduced X.X%, margins by investment

Slide by margin down adjusted segment. and XX profit operating breaks our

chain While segment. productivity in challenges of some adjusted pricing to improvements us service expansion allowed deliver and the supply and quarter, each continued operating our margin levels during execution in

supply profit we during to in noting delivered margin increased is the operating quarter increased incentive our chain that QX primarily Grocery the due year incremental expense while in adjusted corporate we've an Total basis operating in & discussed. ago, despite compensation. million a increase adjusted $XXX incurring points improvement It to costs challenges Snacks due XXX segment adjusted transitory XX.X% of to versus worth

to Turning XX. Slide

from EPS and adjusted benefit ago share per in small higher $X.XX compared taxes. a gross profit year a by by sales or QX as Our primarily driven as well XX% increased to

SG&A Our year by Ardent to wrapped A&P strong from performance lower income Mills adjusted ago. joint a as higher and These as were venture ago. interest and results higher partially post-retirement pension expense versus and and well a year has positives be continued strong offset

the Slide prior You quarter, was At end from leverage our XX, strengthen down third the we ratio are sheet balance year can net X.Xx period. see how the our X.XXx, metrics. of on at continuing to

flow forward operating levels. our enabled investment positioned categories inventory from going Our in support XX%, to improve our we Improvement rebuild sustained levels and above has net to are us service activities most in cash to demand. reflects inventories well

returning free Year-to-date in capital year-to-date increased $XXX of evidenced in payments We remain was end prior as to down period, million our dividend million. and the at from while quarter, to CapEx the the year-to-date share year the flow repurchases. $XXX shareholders million increase by cash $XXX to committed

and of evaluate the fiscal For balance best will balance optimize strengthen highest use sheet and our we continue shareholder value. of capital 'XX, to to the

and As fiscal fiscal operating narrowing are operating EPS Sean guidance ongoing one ranges sales growth continued margin mentioned, in response organic business 'XX momentum our net to only 'XX. our for we and and quarter in our raising with dynamics, remaining adjusted

discuss XX. Turning guidance. assumptions I'd and Slide to like our behind the to briefly considerations

to We approximately for continue XX% fiscal XXXX. to total inflation expect calendar gross continue of year gross for 'XX inflation the expect and full

We will 'XX. at expectations update with July QX call year earnings inflation for fiscal full you our in our

our and expect our year-end to to certain remain capacity on committed ratio expansion growth capital remain original $XXX X.XXx making fiscal anticipate We We support 'XX. spend priorities expectations focus to below and net to approximately a This and number projects. is with leverage approximately at of of due our million CapEx the timing automation. productivity for investments

$XX pension post-retirement for $XXX higher rate interest million approximately approximately expect income year, the the we by driven Lastly, be be expense environment. million interest and to to and

Our XX%. remains full year tax approximately rate estimate

up, are that a another chain present considering continued To quarter proud challenges. we fiscal delivered in some 'XX we things environment sum to especially that supply strong

Our and service committed to for we levels generate shareholders. our remain strategic have pre-COVID continue margins executing our improved value to on priorities to levels, recover and our to

to for remarks our for to questions. back today's pass operator now call. for listening. concludes Thank it I'll the you line That the prepared open

you. Thank

now Lazar ahead. Instructions] from with comes [Operator will Today's question session. question-and-answer We first Barclays. Andrew go Please the begin

Sean, start broader. bit maybe a with little to off something

Conagra's pricing stage, away organic the aware sales volume, on recovery. promotions and is narrative companies today the of that fourth food food I would slow, guess and of laid of of sort out? was how hoping be I of think drive group I below view. context at current we're is lap results all as compete the margin of companies that EPS raise the more the bit that your looks I this negative will the I light will overall implicit sort sort curious, of sort in you narrative group-wide results a and I'm somehow will that to what in characterize And which street to the guess quarter the just

mechanical. times said navigating many on I've inflation As is calls cycles these before, these pretty

right You it with saw lag, margins, away, you inflation, compresses price, don't take a therefore, pricing margins get you which hit but because wrap the and performance unit really do growth these QX. unit impact. dollar in down elasticities reflect up and when comes and recover catches experience materially wane us wrap because Then start then actions, you you and you to improves, as you both

mechanical, all it's all is stuff that and So predictable.

been big pursued by And I have here the for that poking think simply debate that how be? question at crystal what I is, comes well, And growth. with getting the is becomes me, is then what you're especially to since you're will goal us, we what the sustained tactic the And looking clear, is at next. have answer at obviously Conagra. growth

The in innovation. word answer a is

ironically, also innovation, it eliminating promotion. Just premiumization, but low-quality our value about philosophy around was actually performance over at XXX% frozen look volume

anybody suddenly smart to lot is believe suddenly That for of would that opposite approach growth that make now question the the doesn't Conagra then a becomes, else strategy? a or me. So why sense matter,

As as as far my I plan feel said and we listen, about is good goes, our as, opening working. where I QX first, in very sit remarks,

market, the remain improving. is is our elasticities supply is recovery in chain improving, top margin hitting innovation Our are trends benign and place, consistent, line

we in it's been but back, plan in all all So of year the position our guide, chain to way implied is think terms this QX not the it's regard. improving and conservatively Supply prudent. has

unit on those trends, more short-term smack already. you as But for is peer on predictable muted CAGR recent our unit inclined goes, scanner color that our lot in most the entirely focus you. ending at gave which volume set X show middle XX levels and are was period four-week I far data, right the as are kind of elasticities as to eight-year a And that we think in of our that of

So our have part you of unrealistic, or is shipping elasticities to would latter former to would that, to either of playbook. ahead be consumption. be the the not and nonexistent And have be above is

just I'm wrong. I mention recall maybe didn't to hear Great. canned then Right. then one. the as be of the a And quarter. pretty some there sure impact pass meat -- quick And I any And supposed I'll got was hear just I impacting didn't on. but it that

Yes, Andrew.

in As lost sales, we basis basis said what and impact that's impacted us points It sales. XX it CAGNY, we point a did. expected on on XX QX, exactly

additional product impact actually $X hits around gross margin. in million and the net just bring had kind We That to also sales cost of back. of and fees

That really did both pieces. in it's of hit those So QX.

point, finish really ramping recover fully in would that changed replenishment the that, to is that say has QX. that Just shelf. One on I thing up did the we're

the QX. going lost drift So, basis of into of replenishment points full we're That's that fiscal come to to QX in not we see 'XX. in XX back the beginning going

Thank next go JPMorgan. you. Goldman from Please ahead. Ken question And our comes at

little guidance reasons little other top should I about to a just line, a Or just think bit deeper for Is that? about that mainly but into you get issues just deal, the the had? manufacturing as very top there it huge the a trimmed that not we to at are wanted look the at we ask the trying bit just factors slightly, end that. behind

why Ken, these all a we've The Dave. of reason popping year we've it that a outlook and had things part I'll friction make comment, I'll quick manufacturing is long into, is this run conservative to up. turn keep over the

deal seen pop with to a a with, around need it And that where dealing the industry, companies be to frankly, to to fully it's other you we've of tied kind issue it you've produce them issues lot up you sometimes quality Sausage the find a in a we it's those of product. or be you isolated issues where getting to labor their happens things, for the produce whether had product, And suppliers and Vienna in sometimes us, that cans. find that quality cans lead before inexperienced part, labor large you're these you after across

that impacted news those root So good got the it cause contained. we've them of is and little QX we've and QX. into to a bit gotten will things, drift The

as to to want we the we and our you do Dave, think, of anything? I system, just means that, become get forward setup got the so should to now again, add remnant do tailwind. So a going a speak. is But positive out that

Yes. I mean, Sean hit it.

that in category, fish. you mentioned give the just the bit but to Sean more still not These XX that SKUs. That those to then question, into Just as of is And chilies, a the we and working on actually year. impact categories do and points dynamics, I beans now little the Armour QX, recall specifics, the on bounce some impacted we're then that. basis QX. back expect allocation It's drift specific previous frozen through of going to in about, improving, see was next talked we're from

well the And as so top is that line. impacting QX on

this think If the about implies that midpoint about if revised a of implies it full guidance, for X.X% a guidance midpoint of previous which X.X%. the look the with to at the way, X% you you that about just year, for for X% was QX year,

are with about that's why. a and mentioned basis just the the I other a points then allocation pretty much decline issues these So, in XXX of brands Armour

then follow-up, your CapEx And you for Okay. outlook. my trimmed

Or I'm these just doing -- And supply fair it's delayed your to a company nothing of say be well? in off hardly is as in understand it mentioned there curious I'm days. plan those delayed reasons timing You're I why. general? how Dave, I chain that that's optimization the there anything you I more only throws is to understand issue. curious, think really are that course? projects the

Ken. No,

commitments Just this made is through lot working on we're years. where In at take we're on Day billion still it timing. environment, just three we track of over the still Investor longer. our with things just the normal $X A

more and certain materials a taking execute things you ordering projects, just that you're little CapEx to bit time. they're these need If

opportunities we to we're that going So see -- and changing all projects it's not but the of at kind the target.

today And question you. Stanley. Morgan Pamela our from Thank next Kaufman comes go with Please ahead.

So QX a the question guidance. on just

your margins, margin XXX guidance operating updated year-to-date. expansion year at year-over-year, implies So decline midpoint, operating basis you've margins for full about operating points but the seen of QX

margin So that outlook? what's driving QX more cautious

Pam. Yes,

-- Let me good get question.

supply to approach prudent. has fiscal we're chain had year this inflation being then the and And that And historic in it's continuing pricing. environment because Sean QX. for So approach guidance been volatile that in we're our mentioned of the entire the challenges about with

margins, I'll sold. in what our expect we supply we of of chain are for prior QX a in of gross still and regarding but building just absolute call costs cost be we a with goods So friction SG&A in SG&A, be in healthy SG&A inflection dollar line our more level in in item will contingency more versus specific terms in we versus will QX what QX up saw levels. year up dollars. Also

finish and to in that just expect that's sales year we net timing. So the near X% level,

forecast always more we Mills. EPS, for then moderate estimate for Ardent sort of And a

that So for delivered be versus down we what QX. would

So, they're drivers. key the really

a I just we're to it's prudent approach guidance. our think taking

next strong thinking on and year? continue think QX And into it. investments? very How the gross then Can should margins then from we to And expansion had level? this how contribution margins XX% move you've you gross productivity Got are gross margin gross your margins, year-to-date. about in about just above

on we a that It's recovery. important? margin how sustained top This concept. our is was innovation Because deliberate over drive stating we program gross fund margins say innovation and together. kind this growth margin gross it program I'd all that high-quality be why time. Yes, simple is priority of so hangs in that point, accretive can our to comes our year Andrew's is fact were And back off the

from do portfolio over of volume here all it's rates what variety approach our That's to about to our our as So relentless value try if improving about. strategy playbook, to you it's a do our all mix our innovation. And growth in think to we and that margins. about ways company what we of improving the perpetually and a around our

margin but we're said, future. the our So, say a from giving northward into on not would what plan drive just long-term is game gross and trajectory is gross here, I philosophically, which guidance sales always to margins we've

comes And you. ahead. from David Palmer ISI. next of our Thank go question Evercore today Please

multiyear how ask thinking trends about about you're or your you maybe that. to wanted sales I

year? This quarter, the in in X% four-year for trends half growth guidance on sales I so wonder to great or a of not fiscal And this were stable see upcoming X% this up news. mentioned get by chain your I'm stable organic because roughly maybe reason your the you trends trends the organic that a the is flat XQ? will if which four-year implies first the you basis. or sales quarter, the to first with organic You maybe supply sure point multiyear into asking And reacceleration revenue reasons so. stable is for trend I'm

wondering I'm mentioned? you chain for supply about beyond reacceleration reasons hiccup that maybe So,

tied declines and the on pricing, where the start to of really you going and to to down, multiple pricing dollars see the come QX mechanical that guidance year next you're obviously unit go start you'll year's waves that elasticity not were into get made tied into here start I'll QX to but come section to then phase see beginning wrap to QX the at point today. of into this next going here, Q&A getting we're going the But we're David, I back to Well, to rebound. where and we the then

a going that's shift. be to So

be that year, because it's next going company every started be to be every in think fiscal see so prepare through and everybody's to to model different -- because and sales, shift. pretty to company everybody's And that's for pricing is you're that going And going I you to That's everybody's got us you're for get that, long-term going when to digits. then much start that single algorithm. for to for back low

that's then bulk a And else Dave, that? of we pursue is you'd to that we ways, variety so which what anything the And expect. through add innovation. of

So that about had some we for and into will what poking Armour, is recall, right? and if David, replenishing think example, 'XX. of But beginning true, we drift you now at where you're we're pulled fiscal the Yes. of a everything

the that's obviously tailwind, have when for you So right, that, quarter. be a to going

what's different when of made are so there's every what that's couple off consumption. terms when allocation in different years, to they versus But shipments allocation companies dynamics get does difficult these quarter, on and that of because do last and then

on that. so bounce a detail back and get hard or a big going you're we're that's point on you it's see to going to you're stock But plus on it, correct. replenish, of into until not then allocation really And put When you guidance July. out are to conceptually, from

maybe I wanted the to ask to one you on going a bit inflation. more, more see, if could comment

your expecting you If said of for 'XX. first all then You fiscal inflation were 'XX, talking you're low digits up calendar 'XX. would about single meaning second be of that a flat half half of calendar

of as fiscal inflation -- thinking about you enter are type into So wondering for 'XX? what you I'm

going we're year guidance detailed more on to our 'XX David, July Yes, call. fiscal give on inflation

the as guided decelerating, has can rate What you've do and that QX. implies to to rate think our come has bit X.X% to expect I a we every is it We quarter, down, market QX. So of into inflation okay? inflation I tell market I is, approximately now, inflation premature. been think, XX%, you in which seen about continue a

XX% materials, X/X In cost, is it's the saw we of of about ingredients and still that which right, terms packaging. is roughly in X% our QX,

then you as And digits we single kind down, there, And side labor, digits. into I has it higher So manufacturing level there. to with at still high kind been then mentioned. inflation when actually coming market the get of that's mid- single although transportation more the are a warehousing is seeing and -- lower of higher

stronger. So that down has been coming

full fiscal where to now, it in for until guidance we we're give that 'XX. that's are we do not all context our the So of detail but going

to I it. the we think do want way that's

And with you. next from comes RBC Modi our Please question Nik Thank Markets. today Capital ahead. go

Just packaged the question, benefits obviously it thinking rolling the on off of about has the SNAP you're impact overall food how the Sean, just and on space.

think on that, how with thoughts Conagra environment any digital, year any like the and to the really expect of promotional states you business of just and curious if And rolled kind been the you I'm you to that curious, the that you observations ramping side has about ROI then year? how if of tied dynamic in start measuring promotion of there? have how savvy given have that digital off just of the back last spend? Just half some is Do

Nik. Sure,

Let's talk SNAP first.

they've rolled recently. you sunset the just we've XX XX of out that rolled got got So of -- and these then emergency previously off XX states, these allotments off

So our know this is material far? there. in have no I've mentioned some of so on just been the tracking time. seen we what portfolio what impact was 'XX we we for before material saw not we've any calls and we And know do from What to not impact impact. that terms that

I you, And one did give I within the perspective do have for portfolio. the already case value on we will great think our as that's I why quarter, is portfolio Conagra last really offerings

such and are you inherently that seem to me may SNAP you've got products to use harder that allotments easier to afford. would our them on afford if the more inherently would why that logical we've are seen So modest it impact. limited explain things And

We're the there's movement states have got so over data. in an result. that any have would on rationale But be can any brand-new period, this we we've -- I there, But and just good that, going that that. off. recently 'XX seen we what -- It's see just for saying different XX-week thus it's will far, come don't a to XX just just a you've X-, do of we if monitor based

say would used I digital, to you respect the promotion. word With

who do we their buzz talked real their our life some do what digital with shop And where which what search I at how words in literally they do we brands like people we people really in online, marketing. make promotion invest But things our to fit of story find their lot authentically. on I our digital CAGNY, drive very that. is our in is our customers, think use own about to products. I tell of do mean brands brands finding we what sure to a is

use advocates. irrefutable with our build is Insta, TikTok, efficient, And on tell people and expensive, lighter them, media, which you story. look why efficient traditional tools it's live not -- line and heavily those they than but that traditional far in than it's like call which we ineffective. see relationships is see things companies -- because A&P They it's incredibly only they in more in-line We you that, our

We advocates. So for team to we're digital my a continue we've about. an our yesterday in very it I'm it couple We for brands to this coming that excited we're some on and evolution love And just to of stuff just irrefutable the I -- of and continue is going works it. done that. terms us, drive think this new marketing going saw hard. that's

get rates just And you think mean just Great. one How to do it line that will SPX quick that? question. in take guys the back any do you levels? visibility to line with have or long fill on were I pre-pandemic time

categories on some right there -- frankly, now. We're we're

north pretty the vast know. is as you a portfolio, XX% of gave number, but you So we this

And categories should which some it where that has the that back way in already already brands interpret the portfolio embedded been. and number so in is we've at level to best-in-class that you XX-ish is that, are

we manufacturing stock disruptions even on the or that today talked it's to we bit we're about and have still had in we that Equally, before quite still do scan. a that we're allocation on a replenishing have shelf,

we're the you we've those contained, up. that together disruptions transitory get it So service ramping put and the you manufacturing low with stuff all XX it level, got

average that here. so that we And improve today from should quoted

want Dave, you do to...

to days safety on we want where stocks them. -- Yes, our levels are to hand, just one inventory the back our finally levels and Nik, our add, pre-COVID thing

we've shape our now of So through working couple with categories, which a still inventory about, levels. we where we're it. good talked really really with I where good we're overall, are about in But our feel

go with Thank And from our of question next comes America. you. Galbo Bank Peter Please ahead.

to Sean, of clarify your I just wanted one comments.

you just data I XQ guidance, there's forward in remarks about recent Nielsen if rate. acceleration an look talking and you of kind in said think expected the in sales data. growth prepared more the But at then that the we of a going obviously, decel your

just clarify quickly. So can that us maybe you for

a really and there's for in us as supply pointed hit relative QX. out there in we we QX. to us lot -- both what I'm mean, is I chain had had noise I prepared at in -- the peers. Well, my And remarks, quarterly some in QX, year-on-year things data getting we of of the

we as So wrap unusual some comps. past -- some the of get

in We plus we these on The see we've get ability change had businesses, QX. you'll had we've conspire some of limited some improving show back on big some move consumption supply fish, those strong comps where had categories our comps canned on of to where big some businesses into in the and stock QX. of profile canned We trends.

weekly showing week. So two our referenced the improving you've come week was that's week fact I dollars, kind out improvements, X and and that's the four-week I that four-week ending embedded what And Nielsen's right? weeks seen every that a that improve, So data after referring staggering the our numbers really are that after to. is you units of XX. is number, four-week in Today,

it. Got

And helpful. question to understanding Okay. obviously, going CapEx, the that's No, back timing. Dave, the around

from Just little cash of next a should through capital you also actually last have like into mismatch we about we timing this is a as cash of that maybe year. working maturities think flow flow on debt upcoming. behind running but year the free particularly that's year with understanding, rest operations the some Maybe bit get and how

absolutely. Yes,

you're is talking building the about impact levels. us that of back operations our inventory cash flow All from from

back related cash where our And gets are we to So, just the capital our statement back the levels. healthy great inventory, with levels on working you'll point inventory. made, I to increase safety see flow to in stock that

feel going So, we good really forward.

of fiscal opportunity want to that especially a you to be as of to our our as QX we back inventory start inventories 'XX, to just in more into be investment build it's to safety plan. we been the a can should able see an execute we And levels stock So where get tailwind headwind. versus

Alexia question from our today comes next Thank you. And Howard ahead. with Bernstein. Please go

all, about side of well? I It's in very on I'm side a strong ask of first particular the been wondering about that a I, for of in have the the just channels the Are that business. are follow-up. doing surge there recovery things. while. And there foodservice then Can overall obviously

with pleased Okay, Alexia. foodservice. Yes, really we're

X% Our sales decline. We strength of volume We've up a a just over were different couple XX%. in seen had areas.

Our commercial business has been up.

terms -- on We have seen we have justified in volume pricing volume then We've pass and healthy very able obviously, popcorn been not business, in from that. a which to declines of and quarter, inflation significant declines the the volumes pricing. was

area, the focused we're still margins. So, on are

margin nice So, Foodservice, we've have to some pre-COVID margins seen to but work do in improvement back in the to level. we still get

of XXX pleased basis another But kind points margins. I'll be to So improvement, with happier really bounced our back. overall, has business Foodservice and of with the we're XXX how

promotional roll does of actions just And part market or Is Or Got XXXX looks are constraints? marketing? we share activity the it. on needed then I'm in Frozen. down things be into that recover be in as trends that if faster a pace bit it's pricing a business? business. a time? as the of about the curious It over follow-up, I'm though And supply wondering, that that side would as how innovation of on needed or

wrapping noise It's what noise quarter year-on-year. consistently. mean 'XX Sure. really mean sustained I ramped a been And Alexia, of I strong at that XXXX, in is Sean. program since Frozen is market there. our the innovation if where to there it's the up. in want and when great trends look by of a now example you quarter a Yes, in extremely we're bunch share

Let some examples me you that. just of give

had that last big on big during was some home, single-serve well meal there. at Omicron people Omicron performed they and because were QX, especially comps lunch had were having home, we businesses very we exceedingly businesses staying and so

competitors ago had lost we and where supply those Frozen some period picked year challenges not repeat also period, impacting year. had major in in chain events our that ago in also it year comps up and this of the We we merchandising the did

got you issue. And then the fish fire

that those has our ourselves a Birds XXXX. amount is of numbers the volume company promotions, over there on volumetrically going fair should time a XX things one is and because over -- Eye we've just and XX last for In to XX%. is weaned quarter, So the were promotion value since mention off affect big we I

the have some was in low-tier example. other portfolio until recent that Shepherd's our there hit in was But cycle, this inflation places. for One XX They been in were not good two XX surgical and of existed profitable. most a we company's still very in our vegetables

refer And value that this have practice. we volume. that for as that, to us the right We eliminated do window and was over to

on in a the our of we out some low-profit action, do margins more high us when our now quality, stronger base build take seen you've volume much that purge as expand. have So base, to will will We'll past, premium with we innovation.

is one that so low-tier XX doing for that we're business. vegetables, getting at the And of things out XX of

awesome the going color. pipeline forward. business We we've hopefully, gives our that frozen and you innovation feel some got about So

go Please And Goldman you. ahead. English question from Sachs. Jason today for Thank comes next our

First, to I model us level year, think not what for year. do the Ardent maybe we giving you but last great year, top can level know set is Mills next normalized JV a earnings look banner business? year as of right that you're this year help guidance year on for of you to

been to has milling business Ardent difficult business. its it It's a a a business. Mills it blending it's to components question really it and great and Jason, a core of type has key is newer more creates it great It's growing, two that business. customers flours It's and trading where answer. sells then business. of

on to continued the from the great business. environment margins the have expanded. And so has and really side on of grow, great the benefited drive and have margins trading business core also strategies sales. the They mix. they've have They this that their to And business that volatility

the think that down the be Ardent question of go center continue volatility performance the nature comes trading It's more I just that the can up. to just line there so of And piece? quarter-to-quarter, business. given for to will what's Mills

Yes.

to terms north you're If it well year clearly, growing, Okay. sounds in me we're or a somewhere annualized is Well, you in But any like care, million. XXX-ish reasonable of where of was core first on of about the told to? the south closer it's $XX was this deliver range, $XX whatever but I it that in going guidance an quarter basis. 'XX, the business million number

this No, no, at point. not

performance man I in in quarter other Nielsen. expected, of volume out an a than volumes no worse underperformance Frozen, what of Frozen versus Okay. And soft, was then the odd this of we relative saw the bit mean, solid. was than Obviously, terms in but

sharp You makes Nielsen? deceleration the you little volume, you what pursuing lower bit manufacturing fish. mentioned you which your drove over network unpack adjust And rightsizing can the we're or the mentioned sense. and volume in to for are what How a frozen of versus you're sequential But throughput? value seeing more a underperformance volume

back Jason, come Yes. with I'll of shared the to kind Alexia. just that things I

decel, to year-on-year at looking last year. you have consider was the you're what If in

a Omicron two-year at it stack even better a you weakness So look out level, to got you pull it to in had year single-serve at fish. in basis probably to look you you got the stuff. brand on Omicron got meals, at It's this strain because

especially Eye then for is a the basically, that these it very we're bigger get off way promotions because in XX not are right profitable. And promotion cycle. you of want about time the practices, now is pricing think in inflationary stick XX is an And in to environment, the high-velocity the to to promotions Birds don't one your

before what to stick to you inflation super want cycle. where an don't You were

to off that. move have You

to these are promotions you catalyst very to good legacy off go sometimes inflation are a customers attached right cycles they profitability. frankly, for and painful that And manufacturers your pricing they're getting quite through degree, for because while to a of become for are low that getting actually

to some further cited can the and business just I Frozen business. and in our the it in some of that us is right on of go it So as on timing for

ahead. you. Dickerson comes Jefferies. And question from Thank our Please next Rob today with go

me. for question one Just

Frozen questioning. stick of to line & Refrigerated the on Just

the the time, XX% and in maybe margin relative we've like profitability a side of QX Sean, So kind up But of year-over-year, up at was segment year. seen margin. time op some business. in to sounds a ever increasingly invest step there's of you're at I to that that over step same It clearly the need clearly, think, huge sitting this almost highest, huge

on forward, think profitability or the have whether forward, we out the say That's maybe range would is business et profitability kind of expected supply reached that volatility of of you rational of would or year level of QX that of the acquisition? at factor And chain, coming now again sustainable you've or as that you five next point least So years a it's Pinnacle within some it. cetera. kind

Rob, before were that. yes, that things like segment. investors we contribute was they expansion in that the reasons I to want -- And north. of trajectory gross it saw the people a of move our pretty can get refrigerated lens, And on that part massive that made through an it's remind I vegetable focus margin sustainably why always you frozen focused one because that's promotion margins investor's decisions what on too gross want is absolute think gross margin numbers,

structural in so what stuck That's that with drifted and that prices progress lower. lack unwinding the we under cases, and of our northward of because to margins. saw we're in the margins time the ago company quarter. because over some in believe, growth things premiumizing were portfolio, we to of in have to or, the central XX had our across that that drive strategy. Well, ability And frozen, were segments, one of is the all you that legacy contributed the gross years we And levels it's where management, doing our by even innovation our decades, at of certain and

Frozen other only have would mentioned have trifecta. you which improvement. because specifically very program And you've you've wins Frozen build got several on to profit the I in the continuing is drive scale, very deliberate last is innovation then and with scale. CAGNY, you we Frozen, that to got and years margin over profitable can at our to I consumers, when in something color if scale The that the give you've got that been have And be

game our really that's So plan.

our And all model. year, but have next just to to in something clarify, obviously realized you're us fiscal of not put guiding for

in anything there I'm look toward sustainable. that were -- that necessarily that's what percent is that So saying what in QX, have just doesn't it somewhat there's one-off would kind a that that basically at was operating could margin managing if curious, in quarter, sound hopefully be given you inflated of I you're

Yes, is this David. Rob,

think fair. I that's

just back been think gross to volume domestic and business. this I apply quarters, have applies why X%. if step inflected at to retail margins X.X% entire last further you has the and The kind of two to look down you the

volume been pricing. elasticities able gets to the improve decline We we've know, to margins it the there's point. with back earlier on the because So,

for going sort the and So, margin. in we it's and of the was there it, planned be knew the for to declines all volume we forecast

not dynamics, We're understand that give important think but volume. this category the you So, those our and we over why specific don't to and that value are number, dynamics we a manage as we and right changing. managing on really going see materially look that's volume focus approach margin I is by we category, we the

conference And remarks. this the any you. gentlemen, today's concludes like closing Melissa turn and back Napier question-and-answer to Thank for ladies over session. to I'd

have. for you hope We us Investor is much morning. a Relations might you for Thank follow-up wonderful very around any that questions this has day. additional everyone joining

attending you. you Thank today's thank today's concludes presentation. for This conference all We call.

lines, have day. You a may now and wonderful disconnect your