CHICAGO - Conagra Brands, Inc. (NYSE: NYSE:CAG) today reported its fourth-quarter earnings, surpassing analyst expectations for adjusted earnings per share (EPS) but falling short on revenue.
The company's Q4 EPS came in at $0.61, $0.04 higher than the analyst estimate of $0.57. However, revenue for the quarter was $2.91 billion, missing the consensus estimate of $2.93 billion.
The company's stock experienced a 2.3% decline following the announcement. Conagra's guidance for FY2025 includes an adjusted EPS range of $2.60 to $2.65, which is below the consensus of $2.69. Additionally, the company anticipates organic net sales ranging from a decrease of 1.5% to flat compared to fiscal 2024.
Conagra's fourth-quarter reported net sales decreased by 2.3% compared to the same period last year, with organic net sales also down by 2.4%. Despite the sales dip, the company's adjusted operating margin for the quarter was 14.8%. Sean Connolly, president and CEO, attributed the volume improvement in the Domestic Retail business to investments in brands, particularly in the Frozen and Snacks segments, where market share gains were also noted.
The company's adjusted net income for the quarter was $294 million, translating to the reported $0.61 adjusted EPS. Conagra also highlighted its supply chain productivity initiatives and balance sheet strengthening, with a reduction in net leverage ratio noted.
Looking ahead, Conagra expects the challenging industry trends observed throughout fiscal 2024 to gradually wane as consumers adapt to new reference prices. Connolly emphasized the company's commitment to investing wisely to support its brands during this transition.
For fiscal 2025, in addition to the adjusted EPS guidance, the company forecasts an adjusted operating margin between 15.6% and 15.8%, free cash flow conversion of approximately 90%, and a net leverage ratio of about 3.2x. Capital expenditures are expected to be around $500 million, with interest expenses projected at approximately $415 million. The adjusted effective tax rate is anticipated to be around 23.5%, and contributions from the joint venture, Ardent Mills, are expected to be about $150 million. Pension income is projected at approximately $12 million.
Conagra also anticipates continued cost of goods sold inflation into fiscal 2025, with net inflation expected to be around 3%.
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