Conagra Brands (CAG) 19 Dec 242025 Q2 Earnings call transcript

Good morning, and welcome to the Conagra Brands Second Quarter and First Half Fiscal 2025 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded.

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

Thanks. Wyatt. everyone. morning, Good us today's joining our question-and-answer live Thanks today on results. session for for I'm by Senior Once CEO; this joined again, morning our and Relations. Dave Sean CFO; Matthew Investor Neisius, Director, Marberger; our Connolly,

information, Investor may information website SEC, during session. descriptions prepared which to found measures including remarks, can making non-GAAP release, and for materials the our this forward-looking and reconciliations be Please statements non-GAAP We risk discussing on Relations be our filings our financial comparability factors, presentation earnings more items. see our section of the some of with in the GAAP and

Wyatt, please first introduce question. our

first It our question looks from Barclays. Andrew like Lazar with comes

quarter of I course between sort expect quarter, Sean, up benefit the you the have in sort we Thanksgiving sort of the timing change during fiscal scanner guess, if similar Conagra discussed others the kind just third volume saw, on curious in years gap I'm of would this a that shipments. the and saw just sort of reverse And dynamic. any open you with given little of bit of from quarter of a to

Andrew. idea, Good Yes.

in I differs some detailed Let's get this Thanksgiving by because the grounded around suspect company. facts of dynamics that

For plus X%, plus X.X%. our us, was in QX, and consumption shipments were

So they tracked very, very closely.

equal, And after the is this and actually important our our an shipments are first half, consumption fact. and

essentially customers As with exited we were year even ago. our with levels inventory the QX,

So there our effect for company. really not timing was a Thanksgiving

our company and you but shipment can inventories patterns entering I that's QX, Now I speak to our tell other can't situation.

the expectations. half reasons inflation part investment, and consumer Is EPS this or for talked pressure about some as FX then previous well? incremental the as you of whether trade, incremental versus key back of And

seem we to the the spoke the are remarks, hear would trends consumer and being some the on of and for you a I continue longer volume prepared you of expected. spending -- it in many with more seeing value-seeking return because share ask And that about than

sense part to is of trying the dynamic just not. of back that if around get sort or I'm year the So the a estimate changes half for of

Good very question, clarify this. and think important we it's I

decision my line the fiscal drive in back always not prepared and to is mentioned to We strategy last remarks, into concept a for for the those this I in have to year, growth invest plan our As investments top implemented that been built QX us. year. new

said investments working. as earlier, those obviously are And I

been going at our bit a slightest If frozen a see surprised consistently you lines at my nor weren't trend and real strength look to all surprise we north, this back to so our positive the it's quarters, see business. -- X going in quarter, snack territory in break

that's back So good be to but north. it's satisfying,

and our of planned, we quarter. QX, actual trade component spend true versus we than plan As we've our lower for them. to QX quarterly of each at those up cutting spend the then came In mechanically, funds a redeployed investments, bit in the and actual end

it's important we're think going place in characterize work our to line us X dissatisfied top to a had not forward. being I It's for support. to adequate with working, quarters. scrambling So to it small support and shift. I that you'd guess, confuse as add But see continue and We've that with momentum going

Goldman question Instructions] [Operator And our next Ken will come from

unpack trade bit. this by consumer the you in significantly innovation, and In varied a I'm response hoping to said industry's kind Sean, higher advertising, of discussing and has company. promo the category investments

or of just behaviors? consumer best are as those From your vantage there point, challenges those industry perhaps can whole, given to maybe that practices thoughtfully applied the any value-seeking be some a

Sure, Ken.

Here's it. I how think about

spending shifts throwing last one, we QX maybe that opposed meals more those to series to from behavior leftovers out cooking esthetic the called preserving saw for more many cutting of for I year. discretionary cooking emerge first of a last in to as garbage, scratch from that fiscal in we Somewhere saw things

benefit that the said last of is convenience most I've along been unshakable the over that the what has And trend XX one all is years.

saw it's some to like cook, told So Consumers like They to to They impact And on in exactly to we like meals. don't up. early was that single-serve don't not like don't clean frozen they and unfolded. prep. that, to you that's plan. how going I last. don't meal

a little is if has their benefits important, a balance convenience those it's really, category before forever. shift really that to like make a they household If isn't that that, the going sheet behavioral make specific. comment my benefits last while are category for to So shift But for, can really consumers long work.

The and that been say of area of is on signal that. our obviously movement I'd snacks, protein snacks healthy what's a is within toward There's within categories are trend other squarely kind a snacking. and

people kind a out, trading maybe magnetic rate strong. and were cutting bit, the saw buying their So and but of pull convenience snacking little a we pretty is of year helpfulness ago, healthy

we've is it's caps sampling all in we and high-quality certain those done we've they're to advertising that, trade trade, for longing battery know effective. along, the channels of and of consumer times, that we've as like said like behaviors a using investments things what innovation to many an to nudged been from end So whole back

we've spaces. have but and just in lot happen snacks, lot don't resonating in of effective, of investments and -- have mind, we in our to we've -- categories with where are brands it we consumers frozen I focused those been keep a that a well hasn't

Chris Next question with Carey come Wells Fargo. from will

a on as a down. better. Free kicking it like it's up for just the to looks inching targets your expand more What's coming it you debt cash leverage is bit? about the year that, assume in conversion, bit? profit leverage flow opposed full I pay perhaps driving Can up

to about course, deployment M&A? can leverage over and, Can perhaps just over the how thinking between and you free visibility the next of dividend and, on year the in on, us targets you and share next get you your update quickly maybe how several years cash general, flow, repurchases think guess, I cash you're

Chris, Dave. it's

the me top. that Let from take

So yes, is year our X.Xx. X.Xx now forecasted ratio versus for this leverage

in that's in As my profit. I our prepared the remarks, to takedown entirely said due

So our track free of is conversion flow of now flow XXX% plan in free our terms net metric above we on to that in cash The we're much with income. to terms flow, down. forecasted free debt how of related cash cash expect pay is because

income that's go net obviously, down, with going up. So to coming

that flow. of making COVID, -- on And with really great inventory. in pleased there working company come we're is we're with free capital, performance broader So it we've focused progress the out point really in but an organization. cash now The very is our particularly as

inventory of Things chain other like cash, doing supply organization just we're goals really focused just tax, is Our areas fantastic to take job of setting on a out. days it.

us. progress, going priority we're to be for pleased it's the to So really and continue a with

So as the I said 'XX. we of prepared leverage still fiscal hit also of to remarks, Xx in expect by it long-term end my target our

that's so where we And are.

always then And talked balanced a to about we've approach capital allocation.

you've and end are of Xx our we share acquisitions, by of that Over candidly seen divestitures, do both debt. focused target for and -- the we in we fiscal paying of up have, paying 'XX. would terms to to We're M&A, down that things years, the everything, repurchase, open but leverage a the super then levering like on lot flexibility us getting

come Palmer from Citi. question next And the Thomas will with

Wanted lowest in expected quarter that to the ask, indicates the is third operating the to the presentation margin year. be of

of think year. the be I imply highest that then the would this XQ would

kind of sure I So want inflection I expected this of understand make to XQ. just key drivers the come

pricing. Are incremental to Just the on investments there third I in the noted inflection. help that for fourth quarter? some know taper quarter off is expected you the any

Yes, Tom.

some give perspective on to try me that. Let you

the little it bit from take give color top, of more me QX. a kind let So on you

Sean So a to did to improve, in as and the we talk -- the QX do the sort with third summarizing We nice volumes of expect from about and QX. we about of trade talked job sequentially shift dynamic did quarter.

in there. So that's

in in quarters the us be QX. kind comment We going year. have We do a for little investment, all will, the impacting That's lowest innovation also more that if that's will margin there. operating bit to of slotting you believe for come the we of did

to SG&A with be in A&P going line a are year ago. Our and

we've and it year, basically from than then inflation it's And forecast full an QX be QX. in that. our up to the obviously, higher taken perspective, So will X% for to close

So that's another kind of there. dynamic

of that's how flow will So the just QX go.

And Galbo come the from America. Bank question of next Peter with will

kind you growing there have wanted said I Thanksgiving quarter, no the double timing portfolio was XX, the Sean, kind brands you but I that benefit of of with were several Slide the to know Staples to of digits. just ask,

some of And if shipments just for there in if wondering quantify the maybe might quarter that benefit could impact not any if So hurricane just helped us. that was so, you that repeat. the

Pete, it results the there a benefit segment, our material I very to quarter. from the overall was not G&S a hurricane in as but the for characterize say, -- would small

And the with Cowen. next come will Robert question Moskow TD from

took I'm Weston going to all side, out energy sell try inject of I going into the call one. Lamb more a this think to the so to the little

had just to a because consumer guidance than where your normal right the raised more offset it's impact it put costs now? through bit, earnings a outlook. your higher Is you've pricing and pretty Sean, So to substantial little inflation difficult of to is

right -- a back you look know again. guidance assumes I the sticky, come down I But some cocoa. these little them costs that particularly And of know

stay So fiscal 'XX? high what those happens if into costs

Yes.

Rob. unpack me that for Let you,

the the have it we taking plus the equates call EPS identically basically in First, expected, that's inflation of from the FX. versus down the today back half what previously majority to it, top,

leverage and sure question -- to that. and It's the more So any of that not caught from is need up to up, invest don't around -- to back that, queues X.X want the and queued make I the in -- it that it's reason get just X.X. or the earlier it we to going

X% -- it on ties. -- so X% in and to basis, percentage terms hey, impact a on the and looks, while it inflation basis on dollar it a ticks EPS, of just So it

inflation As the that. been that. portfolio, and like really, we things for It's and on meats, will sweeteners, protein. to narrow our us has that's yes, what's to and it's But driving driver offset there's be eggs, cocoa that, very pricing in bigger

be that we a of going are we board, to lower. will And inflation anticipate down the in that the peak but anticipated And a but much still there there's level inflation that. costs we those pretty protein that bit second of come anticipate for across did deferral be half, would

to So the then to whole the believe curves it is are effect. that down, cycle forward a call of you -- kind want the coming of start leaves which lag, going price, for ours, do again judgment elasticity all companies do like the it be if as you you over

the in doing. and value momentum. in with creation And our of interest respect what's think what that's line and shareholder we're best keep flows top long-term the And the kind we interest right is of now, to to the of best consumer cash

It's for been It working very great to well get to positive back territory. was us.

And changing. but so obviously, we do near implication that margin see a term, there's

half inflationary. that's on just a thought to in We deal with know. next things we're and now. that we'll find inflation, how never we be you little the more color Now of ourselves If back was there's But at kind less looking going fiscal then.

headline share to we've that think keep performance. And right brand industry-leading strong to is the We've got thing is the I think really got momentum. performance. do We

come next with And will from Howard Bernstein. Alexia question the

Just track. taking of a bit different little a

about messaging Track the what On time? segment GLP-X recently. maybe Can program Choice Healthy insights expanding over talk that you've for that you and gathered your plans announced from You

centerpiece Sure. and forthcoming promotional Snacking. Future the at our be CAGNY to going our presentation of give to me, of titled the little for is this CAGNY of opportunity Alexia, presentation a of kind Well, is this The Frozen shout-out an year. Future to

protein-centric positioned macro that is think that around of well. and dynamic like and benefit kind are and the including think environment macro that environment like environment, snacks really GLP-Xs Healthy well that. really, Choice categories And in a point fiber-centric our can things brands regulatory and we has And are extremely we as speculation we there a in think

using might a as on including of people for With add that respect front the GLP-X. we to package what Choice, proactively, think you managing Healthy are did their of wayfinder the diet

into was So and on it week wayfinder called kind the that Track, about the the dig friendly that of there last and in talked of anybody wants article the if GLP-X used On is title there, paper language an we more. to

that But interesting the obviously, about off solution it. are it a now on seeking be of right like can in they've number do go small that what's And but people for then drug, progress think, people The both on GLP-X. but brand it's maintain to terms made we somebody a bit. Healthy is a on who still somebody up taking gives Choice, actively GLP-X of it the is who also a who is while dropping

Those for consumers provides an off-ramp, them of excellent well. a and as Healthy bit need Choice an off-ramp

we're focus know people So and our our we that. marketing on packaging trend, make will sure and to

the will come with And from next BNP. question Gumport

sounds presentation food on move might to industry healthy This be the from touched in the thunder your we're like. and for the that you Sean, year. within a microcosm that's this what packaged broader upcoming really, stealing protein And snacks. CAGNY But snacking seeing

what's side. driving categories You've persist? shakes, cottage And you protein the that categories higher got got In showing all trend? it declines. on do then cheese, think nutrition yogurt, are larger leading how growth long this snacking like unhealthy can view, Greek And your you've

big it's variety. It's hot has a tremendous see how $XX billion. are, macro had variety. it's from -- variety huge that trends a the is depending upon shifting to that a amount of within snacking space snacking, space you'll and always Well, what space, And some

things any knows how being protein in really fiber It for see trend happens of host just will the so change. are who protein -- right like a And and horizon on that super now. I carb and trend. of terms low fiber and whole reasons, being on that change on don't

brands highly like just retailers in areas. And to concentrated happens the snack are new to benefit demand. those grow when we is -- our so And satisfy and in get business on add categories the you trend that what

So you a about an big you industry, cookies food think and the when see variety, see in example, that's needed you of categories satisfy as lot demand. to

and it's see acquired like up why playing you at textbook. new because FATTY in brand, it's brands why fast that a Meat a we sticks, business Smoked the new growing showing rate. areas it's that's role And that's meat So super because that's

capitalizing do what Slim in those So we combination changing. FATTY. is a the being call And we don't and now have brands see between not we I the snack popcorn, just trifecta That's in And smokehouse having we there, and sticks Duke's think protein-centric, in that business. I of meat suite like like continue But fiber-centric, good to growth. Jim, trends best being way like for I on DSD. a seeds

Dickerson next the question with will Rob come And Jefferies. from

the more to hear thought might quick be there's I question. kind of be little advertising shift. terms just easy in then little going I but heard promotion. a Just year I wrong, the time maybe highest QX was of for into QX, bit But spend and trade supposed a and also I a

the I in higher. And will SG&A to implies is you total promo also, relative last QX said ad year's kind and think right, QX, then be same of and which QX

some also promote kind that December, innovations of hey, more maybe of So QX, quarter little that we new just was to say, there occurred "Okay, few anything a you promo or shift the so want bit holidays?" have a we'll maybe the into in and slipped might that in where have might we ad

gauge Just just promo, of a guess, kind seasonality it's we of kind that thinking about through trying how ad certain to you're extent I -- to and as of on kind but move QX. the

Do to want that? you take

Yes, Rob. that, let take me

of terms it terms QX So a the just spend absolute top. to of From of from trade dollar in we perspective, most in just take in the kind merchandising dollars.

were QX. we bit that a some forecast, it, of about talked Sean Although our shifted to favorable and to

ramping From we A&P. perspective, an up A&P are

the our much So year pretty the the line will continue percentage that A&P year, prior what end to by think with we in so I said. is ramp of that up, is

in obviously will start would ramp QX. up, that so and that And

a that be -- really what of it had did bit mentioned, not higher innovation was forecasted have we I investment had in what little that forecasted we that increase expect versus an too, before. is versus to material, we we higher Again, but QX before.

of we're terms SG&A -- same to be. our where So still expect had -- commented, you we as then kind is the commentary and of SG&A, in

So would I say. your hopefully they're answered really dynamics, That the question.

Christmas events of plan, Lent. Yes. to most and Rob, easy Thanksgiving and are those

to they where you moves is around. the business and around the stay where in like where for is hits. support a the want agile to say when weather you to know variability with I investment fall The more in Miss type material track at that scheme weather you your have the ones wouldn't have try of calendar But all spend. You our plan Swiss of

from will question come Sachs. the with Goldman And next Jordan Leah

growth. the its up stepping to on could in environment A the capacity talked frozen. and investments category you large if adding support comment some Seeing peer competitive in has about

any how going seen could continue your and So forward. impact drive just ability these volume think if to you have changes in yet shift seeing behavior you to improvement

awesome exclusively XX years. an been Well, frozen for pretty much that is space. absolutely about We've saying

the vast people retailer starting glad in who only the store. space been I'm have because domain ones in So that. to driving the the been opportunity active are a recognize it's And really within we've

as result, innovation our And machine are -- out our products competition. well is ahead our and of a

You can share. see strong that market in extremely

share the way. the love and, we going frozen upside the how appreciate faster drive numbers, can degree space we leaders certainly, globally in to continue and to it we're to and overall it. in remains And to U.S., And just to lead going intend innovation in clearly, see category the our So frozen, We're stay retailers grow. the you much by is continue the model. that to the

I to for closing turn further would like There to over Neisius time. the are remarks. And call questions no Matthew -- at this call

and today. out all Relations Wyatt, Investor to Please reach questions. joining any us thank you, additional for Thank with you

everyone. holidays, a Have happy

Thank concluded. now you for is conference today's The indeed. presentation. holidays, Happy attending

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