CHICAGO, Dec. 20, 2018 /PRNewswire/ -- Today Conagra
Brands, Inc. (NYSE: CAG) reported results for the second quarter of
fiscal year 2019, which ended on November
25, 2018. The Company completed the acquisition of Pinnacle
Foods Inc. (Pinnacle) on October 26,
2018; these second quarter results include the impact of 31
days of Pinnacle ownership. All comparisons for Legacy Conagra
results are against the prior-year fiscal period, unless otherwise
noted. Certain terms used in this release, including "organic net
sales," "retail sales," "Legacy Conagra," and certain "adjusted"
results, are defined on page 6 of this release under the section
entitled "Definitions."
Highlights
- As noted above, the Company completed the acquisition of
Pinnacle on October 26, 2018.
- In the quarter, net sales grew 9.7%, driven primarily by the
Pinnacle acquisition. Organic net sales excluding the sale of the
Trenton, Missouri production
facility (Trenton), decreased
1.6%. The Company estimates that 220 basis points of the decline in
organic net sales growth is attributable to the impact of
hurricanes in the prior-year period.
- The Refrigerated & Frozen segment continued its momentum in
the second quarter, with net sales growth of 1.7% and organic net
sales growth of 0.5%. The Legacy Conagra frozen business continued
to deliver solid growth behind innovation-driven gains in
distribution.
- Second quarter adjusted operating margin for Legacy Conagra was
above the previously-provided second quarter guidance range and
adjusted operating profit showed strong double-digit growth.
- Diluted earnings per share (EPS) from continuing operations
decreased from $0.54 to $0.32 in the quarter, and adjusted diluted EPS
from continuing operations grew 21.8% from $0.55 to $0.67. On
a Legacy Conagra basis, adjusted diluted EPS for the quarter was
above the Company's previously-provided second quarter guidance
range.
- Informed by eight weeks of Pinnacle ownership, the Company
expects to exceed the $215 million
Pinnacle-related cost synergy target.
- The Company will host an Investor Day on April 10, 2019 in Chicago, Illinois where it will share more
information on the Pinnacle synergy opportunities and the Company's
long-term algorithm.
CEO Perspective
Sean
Connolly, president and chief executive officer of Conagra
Brands, commented on both the Legacy Conagra results and the newly
acquired Pinnacle business. "For the Legacy Conagra Brands
business, our second quarter results reflect continued
momentum. Net sales were largely in line with our
expectations. Our Refrigerated & Frozen and Grocery &
Snacks segments continued to gain share with consistent,
accelerating consumption trends behind strong innovation,
particularly in our frozen and snacks & sweet treats
businesses. Accordingly, we are reaffirming our fiscal 2019
net sales and margin guidance for Legacy Conagra Brands."
He continued, "In the short time since completing the Pinnacle
acquisition, our team has been working hard on a seamless
integration and an intense diagnostic to clarify both the
challenges and opportunities within the Pinnacle portfolio. While
we have identified challenges, they are clearly executional, not
structural, in nature. We are aggressively applying Conagra's
proven brand-building and innovation playbook to restore share
growth. While this work will take time, we have done this
before and remain confident in our ability to enhance Pinnacle's
portfolio of leading brands and drive long-term shareholder
value. Additionally, we expect to over-deliver on our cost
synergy target. While we are starting from a lower base in fiscal
2019, we expect to deliver strong EPS growth off that base and hit
the fiscal 2022 EPS target that drove our original EPS accretion
guidance for this transaction, and we remain committed to our
previously-communicated leverage target. We look forward to
providing a more comprehensive update at our Investor Day."
Total Company Second Quarter Results
In the quarter,
net sales increased 9.7%, reflecting:
- A 13.2 percentage point benefit from the acquisitions of
Pinnacle, Angie's BOOMCHICKAPOP and Sandwich Bros. of Wisconsin
- A 1.5 percentage point decrease from the sales of the
Trenton facility and the Canadian
Del Monte business
- A 0.4 percentage point decrease from foreign exchange
On an organic net sales basis, excluding Trenton, net sales decreased 1.6% in the
quarter. Largely in line with expectations, these results
reflect:
- A 0.6 percentage point increase in price/mix in the Legacy
Conagra business, with increased pricing in each Legacy Conagra
reporting segment more than offsetting increases in retailer
marketing
- An estimated 2.2 percentage point negative impact from the
hurricanes in last year's comparable period; the volume decline of
2.2 percentage points in the Legacy Conagra business was primarily
a result of the hurricane-related impact
In the quarter, gross profit increased 2.9% to $677 million. Adjusted gross profit
increased 7.6% to $704 million or
29.5% of net sales. The addition of Pinnacle's gross profit,
together with supply chain realized productivity and improved
pricing in the Legacy Conagra business, more than offset higher
transportation and input costs and the previously-mentioned
increases in retailer marketing for the Legacy Conagra
business.
In the quarter, selling, general, and administrative (SG&A)
expenses increased 50.1% to $487
million, primarily due to the expenses related to the
Pinnacle acquisition and associated restructuring
plans. Adjusted SG&A expenses decreased 4.4% to
$217 million, primarily as a result
of lower incentive compensation expense in the Legacy Conagra
business, including lower stock-based compensation expense due to a
lower stock price compared to the prior-year period, partially
offset by the addition of expenses related to the Pinnacle
business.
Advertising and promotional (A&P) expense decreased 19.4% to
$69 million in the quarter as the
Company continued to shift investments in the Legacy Conagra
business from A&P investments to retailer marketing.
Net interest expense increased $43
million to $81 million in the
quarter. Adjusted interest expense increased $36 million to $74
million, primarily driven by higher levels of debt
outstanding compared to the prior-year period. The increased
level of debt outstanding was driven by the net debt incurred in
connection with the Pinnacle acquisition.
The average diluted share count increased 11 million shares in
the quarter to 422 million shares. The increase was primarily
driven by the shares issued in connection with the Pinnacle
acquisition, partially offset by share repurchases executed during
fiscal 2018.
In the quarter, diluted EPS from continuing operations declined
40.7% to $0.32. Adjusted diluted
EPS from continuing operations grew 21.8% to $0.67 as higher operating profit and a lower tax
rate more than offset higher interest expense and an increased
share count.
Grocery & Snacks Segment Second Quarter
Results
Net sales for the Grocery & Snacks segment were
relatively flat at $900 million in
the quarter, and organic net sales declined 1.9%. The
acquisition of Angie's BOOMCHICKAPOP added 180 basis points to the
net sales growth rate, with the approximate 190 basis point impact
of the hurricanes in the prior-year period more than offsetting
this benefit. Volume declined 2.2%. The segment's net sales
were negatively impacted by the previously-mentioned hurricane
effects and declines in certain non-core grocery brands, as well as
a reduction in certain shipments late in the second quarter, which
shifted to the third quarter. However, the trends in the
snacks & sweet treats business in the quarter were strong, with
6.4% retail sales growth. In addition, price/mix increased 0.3% as
favorable pricing more than offset increased investments in
retailer marketing.
Operating profit for the segment increased 4.6% to $209 million in the quarter and adjusted
operating profit was approximately flat at $211 million. The segment delivered supply chain
realized productivity and lower SG&A expenses to more than
offset higher transportation and input costs.
Refrigerated & Frozen Segment Second Quarter
Results
Net sales for the Refrigerated & Frozen
segment increased 1.7% to $771
million in the quarter, and organic net sales grew
0.5%. The acquisition of Sandwich Bros. of Wisconsin added 120 basis points to the net
sales growth rate. Volume grew 0.5% behind frozen innovation
from brands across the portfolio, including Banquet, Healthy
Choice, Marie Callender's, P.F.
Chang's, and Frontera. The benefits of this innovation more
than offset declines in net sales for specific refrigerated
businesses. Frozen single serve meals continued to show positive
trends, growing 11.3% in retail sales in the
quarter. Price/mix was flat to the prior-year year period as
the Company secured favorable pricing and mix but chose to support
new innovation with increased retailer marketing.
Operating profit increased 7.6% in the quarter and adjusted
operating profit increased 7.7% to $138
million. Increased net sales, coupled with solid supply
chain realized productivity, and lower SG&A expenses more than
offset higher transportation and input costs.
International Segment Second Quarter Results
Net sales
for the International segment decreased 5.4% to $208 million in the quarter, and organic net
sales increased 3.9%. The sale of the Canadian Del Monte business reduced the net sales growth
rate by 600 basis points and the acquisition of Angie's
BOOMCHICKAPOP increased the growth rate by 80 basis
points. The impact of foreign exchange unfavorably impacted
the net sales growth rate by 410 basis points. Volume grew 0.6%,
led by strong growth in the snacking portfolio, specifically
popcorn. Price/mix increased by 3.3% with the segment delivering
favorable pricing and mix.
Operating profit increased 22.8% to $25
million in the quarter while adjusted operating profit
increased 18.1%. The Company's ability to secure favorable
pricing and mix, as well as supply chain realized productivity,
offset higher input costs.
Foodservice Segment Second Quarter Results
Net sales
for the Foodservice segment decreased 16.5% to $246 million in the quarter, and organic net
sales excluding Trenton decreased
10.4%. The sale of the Trenton
facility lowered the net sales growth rate by 6.1 percentage points
and the Company estimates that the effect of the prior-year
hurricanes reduced the organic net sales growth by approximately
10.2 percentage points. Volume declined 12.9% in the quarter,
primarily driven by the previously-mentioned hurricane impact.
Price/mix increased 2.5% as inflation-driven price increases more
than offset unfavorable mix.
Operating profit decreased 31.2% in the quarter as the impacts
of lower volume, unfavorable customer mix, and higher input costs
more than offset supply chain realized productivity and lower
SG&A expenses.
Pinnacle Segment Second Quarter Results
For the 31
days between the Pinnacle acquisition closing date and the quarter
end, net sales for the Pinnacle segment totaled $259 million. Net sales were below
expectations due to weak performance across a range of significant
brands, as well as the impact of a product recall on Duncan Hines.
Operating profit for the Pinnacle segment totaled $29 million for the 31 days of the Company's
ownership, and adjusted operating profit was $57 million. This performance was below
expectations as the impacts of higher transportation costs and
lower net sales were only partially offset by lower SG&A and
A&P expenses in the business.
Other Second Quarter Items
Corporate expenses
increased $181 million to
$243 million in the
quarter. Adjusted corporate expenses decreased 30.9% to
$46 million, $47 million of which is related to Legacy
Conagra; a $1 million gain is related
to Pinnacle. The decrease is mainly due to lower incentive
compensation expense, including lower stock-based compensation
expense due to a lower stock price compared to the prior-year
period.
Pension and postretirement non-service income decreased 44.4%,
or $8 million, to $10 million in the quarter, reflecting the
previously-disclosed asset mix shift in the Company's pension plans
and the lapping of higher plan fees in the prior-year period.
Equity method investment earnings increased 83.4% to
$38 million primarily due to a gain
on the sale of an asset by the Ardent Mills joint
venture. Adjusted equity method investment earnings increased
9.8% as the Ardent Mills joint venture continued to improve
operational efficiencies and benefited from improved market
conditions.
In the quarter, the effective tax rate was 14.3%, and the
adjusted effective tax rate was 24.5%.
In the quarter, the Company paid a quarterly dividend of
$0.2125 per share.
Portfolio Update
As previously noted, the Company
completed its acquisition of Pinnacle on October 26, 2018.
As previously announced on December 18,
2018, the Company entered into a definitive agreement to
divest the Wesson oil business. The Company expects to
complete the transaction by the end of the first calendar quarter
of 2019, subject to the satisfaction of customary closing
conditions, including receipt of regulatory approval.
Fiscal 2019 Outlook
All guidance metrics shown below
include the expected results for the Wesson oil business for the
full time period indicated.
|
Reaffirming Legacy Conagra
FY19 Guidance
|
Pinnacle*
(Oct. 26, 2018
to
May 26, 2019)
|
Impact of
Pinnacle to
Conagra
|
Updated Total
Conagra FY19
Guidance
|
Reported Net
Sales
|
+0.5% to
+1.5%
|
$1.70 to $1.75
billion
|
+$1.70 to $1.75
billion
|
+22% to
+23%
|
Organic Net Sales
Growth (excl. Trenton impact)
|
+1.0% to
+2.0%
|
n/a
|
n/a
|
+1.0% to
+2.0%
|
Adj. Gross
Margin
|
29.7% to
30.0%
|
27.0% to
27.3%
|
~ (40) bps
|
29.3% to
29.6%
|
Inflation Rate (% of
COGS)
|
3.0% to
3.2%
|
> 5%
|
n/a
|
n/a
|
Adj. Operating
Margin
|
15.0% to
15.3%
|
14.6% to
14.9%
|
(10) bps
|
14.9% to
15.2%
|
Adj. Effective Tax
Rate
|
23% to 24%
|
n/a
|
+ ~1 ppt
|
24% to 25%
|
Adj. Net Interest
Expense
|
n/a
|
n/a
|
n/a
|
$390 to $395
million
|
Avg. Diluted
Shares
|
n/a
|
n/a
|
n/a
|
~ 446
million
|
Adj. Diluted EPS from
Cont. Ops.
|
n/a
|
n/a
|
n/a
|
$2.03 to
$2.08
|
|
* The Pinnacle
adjusted operating margin provided above is based on the expected
profit in the Pinnacle segment, which includes $17 million of
transaction-related amortization expense, and approximately $20
million of cost reduction synergies, as well as Pinnacle-related
corporate expense.
|
The inability to predict the amount and timing of the impacts of
foreign exchange, acquisitions, divestitures, and other items
impacting comparability makes a detailed reconciliation of these
forward-looking non-GAAP financial measures
impracticable. Please see the end of this release for more
information.
Items Affecting Second Quarter Fiscal 2019
Comparability
Included in the $0.32 diluted EPS from continuing operations for
the second quarter of fiscal 2019 (EPS amounts rounded and after
tax)
- Approximately $0.21 per diluted
share of net expense, or $110.9
million pre-tax ($86.6 million
after tax), related to restructuring plans ($5.6 million in COGS and $105.3 million in SG&A)
- Approximately $0.01 per diluted
share of net expense, or $4.6 million
pre-tax ($3.4 million after tax),
related to costs associated with the integration of Pinnacle (all
SG&A)
- Approximately $0.18 per diluted
share of net expense, or $96.8
million pre-tax ($76.7 million
after tax), related to costs associated with acquisitions and
divestitures ($6.3 million in
interest expense and $90.5 million in
SG&A)
- Approximately $0.04 per diluted
share of net expense, or $24.4
million pre-tax ($18.2 million
after tax), related to Pinnacle inventory fair value mark-up
adjustment (all COGS)
- Approximately $0.03 per diluted
share of net gain, or $15.1 million
pre-tax ($11.6 million after tax),
related to the gain on the sale of an asset within the Ardent Mills
joint venture (all equity method investment earnings)
- Approximately $0.06 per diluted
share of net tax benefit, or $24.3
million, related to the tax adjustment of valuation
allowance associated with the planned divestiture of the Wesson oil
brand (all Tax)
- Approximately $0.01 per diluted
share of net tax expense, or $2.2
million, related to unusual tax items (all Tax)
- Approximately $0.01 per diluted
share of beneficial impact due to rounding
Included in the $0.54 diluted
EPS from continuing operations for the second quarter of fiscal
2018 (EPS amounts rounded and after tax)
- Approximately $0.01 per diluted
share of net expense, or $7.1 million
pre-tax ($4.6 million after tax),
related to restructuring plans ($3.4
million in COGS and $3.7
million in SG&A)
- Approximately $0.01 per diluted
share of net expense, or $7.8 million
pre-tax ($5.0 million after tax),
related to costs associated with acquisitions and divestitures (all
SG&A)
- Approximately $0.01 per diluted
share of net expense, or $4.1 million
pre-tax ($2.5 million after tax),
related to pension remeasurement (all Pension and Postretirement
Non-Service Income)
- Approximately $0.01 per diluted
share of net gain, or $7.1 million
pre-tax ($4.4 million after tax),
related to corporate hedging of derivatives (all COGS)
- Approximately $0.01 per diluted
share of net tax benefit, or $5.3
million, related to unusual tax items (all Tax), related to
an adjustment to the estimated tax expense on the earnings of
foreign entities resulting from the repatriation of cash that
occurred in the second quarter and the estimated taxes recorded in
the first quarter on earnings of foreign entities that were not
permanently reinvested
Definitions
Organic net sales growth excludes from
reported net sales the impacts of foreign exchange, divested
businesses and acquisitions, including the Pinnacle acquisition
(until the anniversary date of the acquisitions). All
references to changes in volume and price/mix throughout this
release are on an organic net sales basis.
References to Legacy Conagra throughout this release refer to
measures that exclude any income or expenses associated with the
recently acquired Pinnacle business.
References to adjusted items throughout this release refer to
measures computed in accordance with GAAP less the impact of items
impacting comparability. Items impacting comparability are income
or expenses (and related tax impacts) that management believes have
had, or are likely to have, a significant impact on the earnings of
the applicable business segment or on the total corporation for the
period in which the item is recognized, and not indicative of the
Company's core operating results. These items thus affect the
comparability of underlying results from period to period.
References to retail sales are based on Conagra's IRI custom
category definitions for the 13-week period ended November 25, 2018.
Discussion of Results
Conagra Brands will host a
webcast and conference call at 9:30 a.m.
Eastern time today to discuss the results. The live
audio webcast and presentation slides will be available on
www.conagrabrands.com/investor-relations under Events &
Presentations. The conference call may be accessed by dialing
1-877-883-0383 for participants in the continental U.S. and
1-412-902-6506 for all other participants and using passcode
1874533. Please dial in 10 to 15 minutes prior to the call start
time. Following the Company's remarks, the conference call will
include a question-and-answer session with the investment
community.
A replay of the webcast will be available on
www.conagrabrands.com/investor-relations under Events &
Presentations until December 20,
2019.
About Conagra Brands
Conagra Brands, Inc. (NYSE: CAG),
headquartered in Chicago, is one
of North America's leading branded
food companies. Guided by an entrepreneurial spirit, Conagra Brands
combines a rich heritage of making great food with a sharpened
focus on innovation. The company's portfolio is evolving to satisfy
people's changing food preferences. Conagra's iconic brands, such
as Birds Eye®, Marie Callender's®,
Banquet®, Healthy Choice®, Slim Jim®, Reddi-wip®, and Vlasic®, as
well as emerging brands, including Angie's® BOOMCHICKAPOP®,
Duke's®, Earth Balance®, Gardein®, and Frontera®, offer choices for
every occasion. For more information, visit
www.conagrabrands.com.
Note on Forward-looking Statements
This document
contains forward-looking statements within the meaning of the
federal securities laws. These forward-looking statements are based
on management's current expectations and are subject to uncertainty
and changes in circumstances. Readers of this document should
understand that these statements are not guarantees of performance
or results. Many factors could affect our actual financial results
and cause them to vary materially from the expectations contained
in the forward-looking statements, including those set forth in
this document. These risks and uncertainties include, among other
things: the risk that the cost savings and any other synergies from
the acquisition of Pinnacle Foods (the "acquisition") may not be
fully realized or may take longer to realize than expected; the
risk that the acquisition may not be accretive within the expected
timeframe or to the extent anticipated; the risks that the
acquisition and related integration will create disruption to
Conagra Brands and its management and impede the achievement of
business plans; the risk that the acquisition will negatively
impact the ability to retain and hire key personnel and maintain
relationships with customers, suppliers and other third parties;
risks related to Conagra Brands' ability to successfully address
Pinnacle Foods' business challenges; risks related to Conagra
Brands' ability to achieve the intended benefits of recent and
pending acquisitions and divestitures, including the spin-off of
Conagra Brand's Lamb Weston business in the second quarter of
fiscal 2017 and the planned divestiture of Conagra Brand's Wesson
oil business; risks related to the timing to complete a potential
divestiture of certain assets related to the Wesson oil brand;
risks related to the ability and timing to obtain required
regulatory approvals and satisfy other closing conditions for the
Wesson oil brand transaction; risks associated with general
economic and industry conditions; risks associated with Conagra
Brands' ability to successfully execute its long-term value
creation strategies, including those in place for specific brands
at Pinnacle Foods before the acquisition; risks related to Conagra
Brands' ability to deleverage on currently anticipated timelines,
and to continue to access capital on acceptable terms or at all;
risks related to Conagra Brands' ability to execute operating and
restructuring plans and achieve targeted operating efficiencies
from cost-saving initiatives, related to the acquisition and
otherwise, and to benefit from trade optimization programs, related
to the acquisition and otherwise; risks related to the
effectiveness of Conagra Brands' hedging activities and ability to
respond to volatility in commodities; risks related to the
Company's competitive environment and related market conditions;
risks related to Conagra Brands' ability to respond to changing
consumer preferences and the success of its innovation and
marketing investments; risks related to the ultimate impact of any
product recalls and litigation, including litigation related to the
lead paint and pigment matters; risk associated with actions of
governments and regulatory bodies that affect Conagra Brands'
businesses, including the ultimate impact of recently enacted U.S.
tax legislation and related regulations or interpretations; risks
related to the availability and prices of raw materials, including
any negative effects caused by inflation or weather conditions;
risks and uncertainties associated with intangible assets,
including any future goodwill or intangible assets impairment
charges, related to the acquisition or otherwise; the costs,
disruption, and diversion of management's attention associated with
campaigns commenced by activist investors or due to the integration
of the acquisition; and other risks described in Conagra Brands'
reports filed from time to time with the Securities and Exchange
Commission. We caution readers not to place undue reliance on
any forward-looking statements included in this document, which
speak only as of the date of this document. We undertake no
responsibility to update these statements, except as required by
law.
Note on Non-GAAP Financial Measures
This document
includes certain non-GAAP financial measures, including adjusted
diluted EPS from continuing operations, organic net sales, adjusted
gross profit, adjusted operating profit, adjusted gross margin,
adjusted SG&A expenses, adjusted corporate expenses, adjusted
equity method investment earnings, adjusted operating margin,
adjusted effective tax rate and adjusted net interest expense.
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 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.
Certain of these non-GAAP measures, such as organic net sales,
adjusted gross margin, adjusted operating margin, adjusted
effective tax rate, adjusted net interest expense, and adjusted
diluted EPS from continuing operations, are forward-looking.
Historically, the Company has excluded the impact of certain items
impacting comparability, such as, but not limited to, restructuring
expenses, the impact of the extinguishment of debt, the impact of
foreign exchange, the impact of acquisitions and divestitures,
hedging gains and losses, impairment charges, the impact of legacy
legal contingencies, and the impact of unusual tax items, from the
non-GAAP financial measures it presents. 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 occurrence and the financial impact of
such items impacting comparability and the periods in which such
items may be recognized. For the same reasons, the Company is
unable to address the probable significance of the unavailable
information, which could be material to future results.
Hedge gains and losses are generally aggregated, and net amounts
are reclassified from unallocated corporate expense to the
operating segments when the underlying commodity or foreign
currency being hedged is expensed in segment cost of goods sold.
The Company identifies these amounts as items that impact
comparability within the discussion of unallocated Corporate
results.
For more information, please contact:
MEDIA: Mike Cummins
312-549-5257
Michael.Cummins@conagra.com
INVESTORS: Brian Kearney
312-549-5002
IR@conagra.com
Conagra Brands,
Inc.
|
Consolidated
Statements of Earnings
|
(in
millions)
|
(unaudited)
|
|
|
SECOND
QUARTER
|
|
Thirteen weeks
ended
|
|
Thirteen weeks
ended
|
|
|
|
November 25,
2018
|
|
November 26,
2017
|
|
Percent
Change
|
Net sales
|
$
|
2,383.7
|
|
|
$
|
2,173.4
|
|
|
9.7
|
%
|
Costs and
expenses:
|
|
|
|
|
|
Cost of goods
sold
|
1,706.5
|
|
|
1,515.1
|
|
|
12.6
|
%
|
Selling, general and
administrative expenses
|
487.3
|
|
|
324.8
|
|
|
50.1
|
%
|
Pension and
postretirement non-service income
|
(9.7)
|
|
|
(17.5)
|
|
|
(44.4)
|
%
|
Interest expense,
net
|
80.6
|
|
|
38.0
|
|
|
112.5
|
%
|
Income from
continuing operations before income taxes and equity method
investment earnings
|
119.0
|
|
|
313.0
|
|
|
(62.0)
|
%
|
|
|
|
|
|
|
Income tax
expense
|
22.4
|
|
|
109.5
|
|
|
(79.6)
|
%
|
Equity method
investment earnings
|
37.7
|
|
|
20.6
|
|
|
83.4
|
%
|
Income from
continuing operations
|
134.3
|
|
|
224.1
|
|
|
(40.1)
|
%
|
Income (loss) from
discontinued operations, net of tax
|
(1.9)
|
|
|
0.4
|
|
|
N/A
|
|
Net income
|
$
|
132.4
|
|
|
$
|
224.5
|
|
|
(41.0)
|
%
|
Less: Net income
attributable to noncontrolling interests
|
0.8
|
|
|
1.0
|
|
|
(17.9)
|
%
|
Net income
attributable to Conagra Brands, Inc.
|
$
|
131.6
|
|
|
$
|
223.5
|
|
|
(41.1)
|
%
|
|
|
|
|
|
|
Earnings per share -
basic
|
|
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations
|
$
|
0.32
|
|
|
$
|
0.55
|
|
|
(41.8)
|
%
|
Loss from
discontinued operations
|
(0.01)
|
|
|
—
|
|
|
—
|
%
|
Net income
attributable to Conagra Brands, Inc.
|
$
|
0.31
|
|
|
$
|
0.55
|
|
|
(43.6)
|
%
|
|
|
|
|
|
|
Weighted average
shares outstanding
|
419.9
|
|
|
406.5
|
|
|
3.3
|
%
|
|
|
|
|
|
|
Earnings per share -
diluted
|
|
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations
|
$
|
0.32
|
|
|
$
|
0.54
|
|
|
(40.7)
|
%
|
Loss from
discontinued operations
|
(0.01)
|
|
|
—
|
|
|
—
|
%
|
Net income
attributable to Conagra Brands, Inc.
|
$
|
0.31
|
|
|
$
|
0.54
|
|
|
(42.6)
|
%
|
|
|
|
|
|
|
Weighted average
share and share equivalents outstanding
|
421.8
|
|
|
410.4
|
|
|
2.8
|
%
|
Conagra Brands,
Inc.
|
Consolidated
Statements of Earnings
|
(in
millions)
|
(unaudited)
|
|
|
SECOND
QUARTER
|
|
Twenty-six weeks
ended
|
|
Twenty-six weeks
ended
|
|
|
|
November 25,
2018
|
|
November 26,
2017
|
|
Percent
Change
|
Net sales
|
$
|
4,218.1
|
|
|
$
|
3,977.6
|
|
|
6.0
|
%
|
Costs and
expenses:
|
|
|
|
|
|
Cost of goods
sold
|
3,025.4
|
|
|
2,800.3
|
|
|
8.0
|
%
|
Selling, general and
administrative expenses
|
744.6
|
|
|
584.4
|
|
|
27.4
|
%
|
Pension and
postretirement non-service income
|
(19.9)
|
|
|
(38.1)
|
|
|
(47.7)
|
%
|
Interest expense,
net
|
129.6
|
|
|
74.4
|
|
|
74.3
|
%
|
Income from
continuing operations before income taxes and equity method
investment earnings
|
338.4
|
|
|
556.6
|
|
|
(39.2)
|
%
|
|
|
|
|
|
|
Income tax
expense
|
79.8
|
|
|
229.5
|
|
|
(65.2)
|
%
|
Equity method
investment earnings
|
53.9
|
|
|
50.6
|
|
|
6.7
|
%
|
Income from
continuing operations
|
312.5
|
|
|
377.7
|
|
|
(17.3)
|
%
|
Income (loss) from
discontinued operations, net of tax
|
(1.9)
|
|
|
0.1
|
|
|
N/A
|
|
Net income
|
$
|
310.6
|
|
|
$
|
377.8
|
|
|
(17.8)
|
%
|
Less: Net income
attributable to noncontrolling interests
|
0.8
|
|
|
1.8
|
|
|
(54.7)
|
%
|
Net income
attributable to Conagra Brands, Inc.
|
$
|
309.8
|
|
|
$
|
376.0
|
|
|
(17.6)
|
%
|
|
|
|
|
|
|
Earnings per share -
basic
|
|
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations
|
$
|
0.76
|
|
|
$
|
0.91
|
|
|
(16.5)
|
%
|
Income from
discontinued operations
|
—
|
|
|
—
|
|
|
—
|
%
|
Net income
attributable to Conagra Brands, Inc.
|
$
|
0.76
|
|
|
$
|
0.91
|
|
|
(16.5)
|
%
|
|
|
|
|
|
|
Weighted average
shares outstanding
|
407.7
|
|
|
411.1
|
|
|
(0.8)
|
%
|
|
|
|
|
|
|
Earnings per share -
diluted
|
|
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations
|
$
|
0.76
|
|
|
$
|
0.91
|
|
|
(16.5)
|
%
|
Income from
discontinued operations
|
—
|
|
|
—
|
|
|
—
|
%
|
Net income
attributable to Conagra Brands, Inc.
|
$
|
0.76
|
|
|
$
|
0.91
|
|
|
(16.5)
|
%
|
|
|
|
|
|
|
Weighted average
share and share equivalents outstanding
|
409.9
|
|
|
415.1
|
|
|
(1.3)
|
%
|
Conagra Brands,
Inc.
|
Consolidated Balance
Sheets
|
(in
millions)
|
(unaudited)
|
|
|
|
November 25,
2018
|
|
May 27,
2018
|
ASSETS
|
|
|
|
|
Current
assets
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
442.3
|
|
|
$
|
128.0
|
|
Receivables, less
allowance for doubtful accounts of $2.8 and $2.0
|
|
958.1
|
|
|
582.6
|
|
Inventories
|
|
1,729.7
|
|
|
997.1
|
|
Prepaid expenses and
other current assets
|
|
108.7
|
|
|
186.8
|
|
Current assets held
for sale
|
|
36.6
|
|
|
44.4
|
|
Total current
assets
|
|
3,275.4
|
|
|
1,938.9
|
|
Property, plant and
equipment, net
|
|
2,360.8
|
|
|
1,620.1
|
|
Goodwill
|
|
11,167.2
|
|
|
4,502.5
|
|
Brands, trademarks
and other intangibles, net
|
|
5,132.2
|
|
|
1,284.5
|
|
Other
assets
|
|
960.4
|
|
|
906.3
|
|
Noncurrent assets
held for sale
|
|
110.8
|
|
|
137.2
|
|
|
|
$
|
23,006.8
|
|
|
$
|
10,389.5
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities
|
|
|
|
|
Notes
payable
|
|
$
|
0.9
|
|
|
$
|
277.3
|
|
Current installments
of long-term debt
|
|
17.2
|
|
|
307.0
|
|
Accounts
payable
|
|
1,246.1
|
|
|
915.1
|
|
Accrued
payroll
|
|
177.0
|
|
|
163.9
|
|
Other accrued
liabilities
|
|
793.3
|
|
|
672.9
|
|
Total current
liabilities
|
|
2,234.5
|
|
|
2,336.2
|
|
Senior long-term
debt, excluding current installments
|
|
11,349.5
|
|
|
3,035.6
|
|
Subordinated
debt
|
|
195.9
|
|
|
195.9
|
|
Other noncurrent
liabilities
|
|
1,923.6
|
|
|
1,065.2
|
|
Total stockholders'
equity
|
|
7,303.3
|
|
|
3,756.6
|
|
|
|
$
|
23,006.8
|
|
|
$
|
10,389.5
|
|
Conagra Brands, Inc.
and Subsidiaries
|
Condensed
Consolidated Statements of Cash Flows
|
(in
millions)
|
(unaudited)
|
|
|
Twenty-six weeks
ended
|
|
November 25,
2018
|
|
November 26,
2017
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
|
310.6
|
|
|
$
|
377.8
|
|
Income (loss) from
discontinued operations
|
(1.9)
|
|
|
0.1
|
|
Income from
continuing operations
|
312.5
|
|
|
377.7
|
|
Adjustments to
reconcile income from continuing operations to net cash flows from
operating activities:
|
|
|
|
Depreciation and
amortization
|
140.3
|
|
|
129.0
|
|
Asset impairment
charges
|
2.3
|
|
|
8.8
|
|
Gain on
divestiture
|
(13.2)
|
|
|
—
|
|
Earnings of
affiliates in excess of distributions
|
(26.1)
|
|
|
(50.6)
|
|
Stock-settled
share-based payments expense
|
18.7
|
|
|
17.7
|
|
Contributions to
pension plans
|
(7.9)
|
|
|
(6.1)
|
|
Pension
benefit
|
(13.8)
|
|
|
(21.5)
|
|
Proceeds from
settlement of interest rate swaps
|
47.5
|
|
|
—
|
|
Other
items
|
22.5
|
|
|
3.8
|
|
Change in operating
assets and liabilities excluding effects of business acquisitions
and dispositions:
|
|
|
|
Receivables
|
(186.5)
|
|
|
(109.8)
|
|
Inventories
|
(75.2)
|
|
|
(130.5)
|
|
Deferred income taxes
and income taxes payable, net
|
17.9
|
|
|
95.3
|
|
Prepaid expenses and
other current assets
|
(21.2)
|
|
|
0.1
|
|
Accounts
payable
|
39.0
|
|
|
132.3
|
|
Accrued
payroll
|
(1.2)
|
|
|
(39.7)
|
|
Other accrued
liabilities
|
(4.9)
|
|
|
(1.8)
|
|
Net cash flows from
operating activities — continuing operations
|
250.7
|
|
|
404.7
|
|
Net cash flows from
operating activities — discontinued operations
|
11.2
|
|
|
16.0
|
|
Net cash flows from
operating activities
|
261.9
|
|
|
420.7
|
|
Cash flows from
investing activities:
|
|
|
|
Additions to
property, plant and equipment
|
(133.3)
|
|
|
(123.4)
|
|
Sale of property,
plant and equipment
|
17.7
|
|
|
6.9
|
|
Purchase of
businesses, net of cash acquired
|
(5,119.2)
|
|
|
(249.6)
|
|
Proceeds from
divestiture
|
32.2
|
|
|
—
|
|
Other
items
|
0.1
|
|
|
—
|
|
Net cash flows from
investing activities
|
(5,202.5)
|
|
|
(366.1)
|
|
Cash flows from
financing activities:
|
|
|
|
Net short-term
borrowings
|
(277.4)
|
|
|
38.9
|
|
Issuance of long-term
debt
|
8,310.5
|
|
|
500.0
|
|
Repayment of
long-term debt
|
(3,061.3)
|
|
|
(4.8)
|
|
Debt issuance costs
and bridge financing fees
|
(87.0)
|
|
|
(2.6)
|
|
Payment of intangible
asset financing arrangement
|
(14.0)
|
|
|
(14.4)
|
|
Issuance of Conagra
Brands, Inc. common shares, net
|
555.9
|
|
|
—
|
|
Repurchase of Conagra
Brands, Inc. common shares
|
—
|
|
|
(580.0)
|
|
Cash dividends
paid
|
(166.3)
|
|
|
(171.6)
|
|
Exercise of stock
options and issuance of other stock awards, including tax
withholdings
|
(3.7)
|
|
|
4.0
|
|
Net cash flows from
financing activities
|
5,256.7
|
|
|
(230.5)
|
|
Effect of exchange
rate changes on cash and cash equivalents and restricted
cash
|
(1.8)
|
|
|
8.5
|
|
Net change in cash
and cash equivalents and restricted cash
|
314.3
|
|
|
(167.4)
|
|
Cash and cash
equivalents and restricted cash at beginning of period
|
129.0
|
|
|
252.4
|
|
Cash and cash
equivalents and restricted cash at end of period
|
$
|
443.3
|
|
|
$
|
85.0
|
|
Conagra Brands,
Inc.
|
Reconciliation of
Non-GAAP Financial Measures to Reported Financial
Measures
|
(in
millions)
|
|
Q2
FY19
|
Grocery &
Snacks
|
Refrigerated
&
Frozen
|
International
|
Foodservice
|
Pinnacle
Foods
|
Total Conagra
Brands
|
Net
Sales
|
$
|
899.7
|
|
$
|
770.9
|
|
$
|
208.3
|
|
$
|
246.0
|
|
$
|
258.8
|
|
$
|
2,383.7
|
|
Impact of foreign
exchange
|
—
|
|
—
|
|
9.1
|
|
—
|
|
—
|
|
9.1
|
|
Net sales from
acquired businesses
|
(16.4)
|
|
(9.0)
|
|
(1.8)
|
|
—
|
|
(258.8)
|
|
(286.0)
|
|
Organic Net Sales
ex Trenton
|
$
|
883.3
|
|
$
|
761.9
|
|
$
|
215.6
|
|
$
|
246.0
|
|
$
|
—
|
|
$
|
2,106.8
|
|
|
|
|
|
|
|
|
Year-over-year
change - Net Sales
|
(0.1)
|
%
|
1.7
|
%
|
(5.4)
|
%
|
(16.5)
|
%
|
100.0
|
%
|
9.7
|
%
|
Impact of foreign
exchange (pp)
|
—
|
|
—
|
|
4.1
|
|
—
|
|
—
|
|
0.4
|
|
Net sales from
acquired businesses (pp)
|
(1.8)
|
|
(1.2)
|
|
(0.8)
|
|
—
|
|
(100.0)
|
|
(13.2)
|
|
Net sales from
divested businesses (pp)
|
—
|
|
—
|
|
6.0
|
|
—
|
|
—
|
|
0.6
|
|
Net sales from sold
Trenton plant (pp)
|
—
|
|
—
|
|
—
|
|
6.1
|
|
—
|
|
0.9
|
|
Organic Net Sales
ex Trenton Growth
|
(1.9)
|
%
|
0.5
|
%
|
3.9
|
%
|
(10.4)
|
%
|
—
|
%
|
(1.6)
|
%
|
|
|
|
|
|
|
|
Volume
(Organic)
|
(2.2)
|
%
|
0.5
|
%
|
0.6
|
%
|
(12.9)
|
%
|
—
|
%
|
(2.2)
|
%
|
Price/Mix
|
0.3
|
%
|
—
|
%
|
3.3
|
%
|
2.5
|
%
|
—
|
%
|
0.6
|
%
|
|
|
|
|
|
|
|
Q2
FY18
|
Grocery &
Snacks
|
Refrigerated
&
Frozen
|
International
|
Foodservice
|
Pinnacle
Foods
|
Total Conagra
Brands
|
Net
Sales
|
$
|
900.4
|
|
$
|
758.1
|
|
$
|
220.3
|
|
$
|
294.6
|
|
$
|
—
|
|
$
|
2,173.4
|
|
Net sales from
divested businesses
|
—
|
|
—
|
|
(12.6)
|
|
—
|
|
—
|
|
(12.6)
|
|
Net sales from sold
Trenton plant
|
—
|
|
—
|
|
—
|
|
(20.2)
|
|
—
|
|
(20.2)
|
|
Organic Net Sales
ex Trenton
|
$
|
900.4
|
|
$
|
758.1
|
|
$
|
207.7
|
|
$
|
274.4
|
|
$
|
—
|
|
$
|
2,140.6
|
|
|
Q2 FY19
YTD
|
Grocery &
Snacks
|
Refrigerated
&
Frozen
|
International
|
Foodservice
|
Pinnacle
Foods
|
Total Conagra
Brands
|
Net
Sales
|
$
|
1,670.8
|
|
$
|
1,406.1
|
|
$
|
402.1
|
|
$
|
480.3
|
|
$
|
258.8
|
|
$
|
4,218.1
|
|
Impact of foreign
exchange
|
—
|
|
—
|
|
15.0
|
|
—
|
|
—
|
|
15.0
|
|
Net sales from
acquired businesses
|
(41.3)
|
|
(19.6)
|
|
(3.7)
|
|
—
|
|
(258.8)
|
|
(323.4)
|
|
Net sales from
divested businesses
|
—
|
|
—
|
|
(4.1)
|
|
—
|
|
—
|
|
(4.1)
|
|
Net sales from sold
Trenton plant
|
—
|
|
—
|
|
—
|
|
(2.0)
|
|
—
|
|
(2.0)
|
|
Organic Net Sales
ex Trenton
|
$
|
1,629.5
|
|
$
|
1,386.5
|
|
$
|
409.3
|
|
$
|
478.3
|
|
$
|
—
|
|
$
|
3,903.6
|
|
|
|
|
|
|
|
|
Year-over-year
change - Net Sales
|
1.5
|
%
|
2.4
|
%
|
(2.2)
|
%
|
(12.1)
|
%
|
100.0
|
%
|
6.0
|
%
|
Impact of foreign
exchange (pp)
|
—
|
|
—
|
|
3.7
|
|
—
|
|
—
|
|
0.4
|
|
Net sales from
acquired businesses (pp)
|
(2.5)
|
|
(1.5)
|
|
(0.8)
|
|
—
|
|
(100.0)
|
|
(8.1)
|
|
Net sales from
divested businesses (pp)
|
—
|
|
—
|
|
4.3
|
|
—
|
|
—
|
|
0.4
|
|
Net sales from sold
Trenton plant (pp)
|
—
|
|
—
|
|
—
|
|
6.5
|
|
—
|
|
1.0
|
|
Organic Net Sales
ex Trenton Growth
|
(1.0)
|
%
|
0.9
|
%
|
5.0
|
%
|
(5.6)
|
%
|
—
|
%
|
(0.3)
|
%
|
|
|
|
|
|
|
|
Volume
(Organic)
|
(1.2)
|
%
|
0.5
|
%
|
2.4
|
%
|
(9.2)
|
%
|
—
|
%
|
(1.2)
|
%
|
Price/Mix
|
0.2
|
%
|
0.4
|
%
|
2.6
|
%
|
3.6
|
%
|
—
|
%
|
0.9
|
%
|
|
|
|
|
|
|
|
Q2 FY18
YTD
|
Grocery &
Snacks
|
Refrigerated
&
Frozen
|
International
|
Foodservice
|
Pinnacle
Foods
|
Total Conagra
Brands
|
Net
Sales
|
$
|
1,646.2
|
|
$
|
1,373.8
|
|
$
|
411.2
|
|
$
|
546.4
|
|
$
|
—
|
|
$
|
3,977.6
|
|
Net sales from
divested businesses
|
—
|
|
—
|
|
(21.3)
|
|
—
|
|
—
|
|
(21.3)
|
|
Net sales from sold
Trenton plant
|
—
|
|
—
|
|
—
|
|
(39.8)
|
|
—
|
|
(39.8)
|
|
Organic Net Sales
ex Trenton
|
$
|
1,646.2
|
|
$
|
1,373.8
|
|
$
|
389.9
|
|
$
|
506.6
|
|
$
|
—
|
|
$
|
3,916.5
|
|
Conagra Brands,
Inc.
|
Reconciliation of
Non-GAAP Financial Measures to Reported Financial
Measures
|
(in
millions)
|
|
Q2
FY19
|
Grocery &
Snacks
|
Refrigerated
& Frozen
|
International
|
Foodservice
|
Pinnacle
Foods
|
Corporate
Expense
|
Total
Conagra
Brands
|
Operating
Profit
|
$
|
209.0
|
|
$
|
138.1
|
|
$
|
24.8
|
|
$
|
32.7
|
|
$
|
28.7
|
|
$
|
(243.4)
|
|
$
|
189.9
|
|
Restructuring
plans
|
2.1
|
|
0.1
|
|
—
|
|
—
|
|
3.8
|
|
104.9
|
|
110.9
|
|
Adjustment to gain on
sale of Del Monte business
|
—
|
|
—
|
|
0.1
|
|
—
|
|
—
|
|
—
|
|
0.1
|
|
Acquisitions and
divestitures
|
0.3
|
|
—
|
|
—
|
|
—
|
|
—
|
|
90.2
|
|
90.5
|
|
Integration
costs
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
4.6
|
|
4.6
|
|
Inventory fair value
mark-up rollout
|
—
|
|
—
|
|
—
|
|
—
|
|
24.4
|
|
—
|
|
24.4
|
|
Corporate hedging
derivative losses (gains)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(2.8)
|
|
(2.8)
|
|
Adjusted Operating
Profit
|
$
|
211.4
|
|
$
|
138.2
|
|
$
|
24.9
|
|
$
|
32.7
|
|
$
|
56.9
|
|
$
|
(46.5)
|
|
$
|
417.6
|
|
|
|
|
|
|
|
|
|
Operating Profit
Margin
|
23.2
|
%
|
17.9
|
%
|
11.9
|
%
|
13.3
|
%
|
11.1
|
%
|
|
8.0
|
%
|
Adjusted Operating
Profit Margin
|
23.5
|
%
|
17.9
|
%
|
11.9
|
%
|
13.3
|
%
|
22.0
|
%
|
|
17.5
|
%
|
Year-over-year %
change - Operating Profit
|
4.6
|
%
|
7.6
|
%
|
22.8
|
%
|
(31.2)
|
%
|
100.0
|
%
|
290.4
|
%
|
(43.1)
|
%
|
Year-over year %
change - Adjusted Operating Profit
|
(0.2)
|
%
|
7.7
|
%
|
18.1
|
%
|
(31.2)
|
%
|
100.0
|
%
|
(30.9)
|
%
|
22.3
|
%
|
Year-over-year bps
change - Adjusted Operating Profit
|
(2) bps
|
100 bps
|
238 bps
|
(282) bps
|
N/A
|
|
181 bps
|
|
|
|
|
|
|
|
|
Q2
FY18
|
Grocery &
Snacks
|
Refrigerated
& Frozen
|
International
|
Foodservice
|
Pinnacle
Foods
|
Corporate
Expense
|
Total
Conagra
Brands
|
Operating
Profit
|
$
|
199.8
|
|
$
|
128.5
|
|
$
|
20.2
|
|
$
|
47.4
|
|
$
|
—
|
|
$
|
(62.4)
|
|
$
|
333.5
|
|
Restructuring
plans
|
4.0
|
|
—
|
|
0.9
|
|
—
|
|
—
|
|
2.2
|
|
7.1
|
|
Acquisitions and
divestitures
|
7.8
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
7.8
|
|
Corporate hedging
derivative losses (gains)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(7.1)
|
|
(7.1)
|
|
Adjusted Operating
Profit
|
$
|
211.6
|
|
$
|
128.5
|
|
$
|
21.1
|
|
$
|
47.4
|
|
$
|
—
|
|
$
|
(67.3)
|
|
$
|
341.3
|
|
|
|
|
|
|
|
|
|
Operating Profit
Margin
|
22.2
|
%
|
16.9
|
%
|
9.2
|
%
|
16.1
|
%
|
—
|
%
|
|
15.3
|
%
|
Adjusted Operating
Profit Margin
|
23.5
|
%
|
16.9
|
%
|
9.6
|
%
|
16.1
|
%
|
—
|
%
|
|
15.7
|
%
|
Conagra Brands,
Inc.
|
Reconciliation of
Non-GAAP Financial Measures to Reported Financial
Measures
|
(in
millions)
|
|
Q2 FY19
YTD
|
Grocery &
Snacks
|
Refrigerated
& Frozen
|
International
|
Foodservice
|
Pinnacle
Foods
|
Corporate
Expense
|
Total
Conagra
Brands
|
Operating
Profit
|
$
|
387.7
|
|
$
|
233.6
|
|
$
|
62.1
|
|
$
|
60.2
|
|
$
|
28.7
|
|
$
|
(324.2)
|
|
$
|
448.1
|
|
Restructuring
plans
|
2.2
|
|
0.1
|
|
0.2
|
|
—
|
|
3.8
|
|
105.8
|
|
112.1
|
|
Gain on sale of Del
Monte business
|
—
|
|
—
|
|
(13.2)
|
|
—
|
|
—
|
|
—
|
|
(13.2)
|
|
Acquisitions and
divestitures
|
0.9
|
|
—
|
|
2.9
|
|
—
|
|
—
|
|
97.7
|
|
101.5
|
|
Integration
costs
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
8.9
|
|
8.9
|
|
Inventory fair value
mark-up rollout
|
—
|
|
—
|
|
—
|
|
—
|
|
24.4
|
|
—
|
|
24.4
|
|
Corporate hedging
derivative losses (gains)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
3.6
|
|
3.6
|
|
Adjusted Operating
Profit
|
$
|
390.8
|
|
$
|
233.7
|
|
$
|
52.0
|
|
$
|
60.2
|
|
$
|
56.9
|
|
$
|
(108.2)
|
|
$
|
685.4
|
|
|
|
|
|
|
|
|
|
Operating Profit
Margin
|
23.2
|
%
|
16.6
|
%
|
15.4
|
%
|
12.5
|
%
|
11.1
|
%
|
|
10.6
|
%
|
Adjusted Operating
Profit Margin
|
23.4
|
%
|
16.6
|
%
|
12.9
|
%
|
12.5
|
%
|
22.0
|
%
|
|
16.2
|
%
|
Year-over-year %
change - Operating Profit
|
3.1
|
%
|
1.4
|
%
|
58.8
|
%
|
(14.8)
|
%
|
100.0
|
%
|
163.3
|
%
|
(24.4)
|
%
|
Year-over year %
change - Adjusted Operating Profit
|
(1.0)
|
%
|
1.5
|
%
|
30.1
|
%
|
(14.8)
|
%
|
100.0
|
%
|
(7.3)
|
%
|
10.7
|
%
|
Year-over-year bps
change - Adjusted Operating Profit
|
(60) bps
|
(14) bps
|
321 bps
|
(40) bps
|
N/A
|
|
68 bps
|
|
|
|
|
|
|
|
|
Q2 FY18
YTD
|
Grocery &
Snacks
|
Refrigerated
& Frozen
|
International
|
Foodservice
|
Pinnacle
Foods
|
Corporate
Expense
|
Total
Conagra
Brands
|
Operating
Profit
|
$
|
376.0
|
|
$
|
230.4
|
|
$
|
39.1
|
|
$
|
70.6
|
|
$
|
—
|
|
$
|
(123.2)
|
|
$
|
592.9
|
|
Restructuring
plans
|
10.2
|
|
—
|
|
0.9
|
|
—
|
|
—
|
|
7.4
|
|
18.5
|
|
Acquisitions and
divestitures
|
8.6
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
8.6
|
|
Corporate hedging
derivative losses (gains)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(1.1)
|
|
(1.1)
|
|
Adjusted Operating
Profit
|
$
|
394.8
|
|
$
|
230.4
|
|
$
|
40.0
|
|
$
|
70.6
|
|
$
|
—
|
|
$
|
(116.9)
|
|
$
|
618.9
|
|
|
|
|
|
|
|
|
|
Operating Profit
Margin
|
22.8
|
%
|
16.8
|
%
|
9.5
|
%
|
12.9
|
%
|
—
|
%
|
|
14.9
|
%
|
Adjusted Operating
Profit Margin
|
24.0
|
%
|
16.8
|
%
|
9.7
|
%
|
12.9
|
%
|
—
|
%
|
|
15.6
|
%
|
Conagra Brands,
Inc.
|
Reconciliation of
Non-GAAP Financial Measures to Reported Financial
Measures
|
(in
millions)
|
|
Q2
FY19
|
Gross
profit
|
Selling,
general and
administrative
expenses
|
Operating profit
1
|
Income from
continuing operations
before income taxes
and equity method
investment earnings
|
Income
tax
expense
|
Income
tax rate
|
Net income
attributable
to Conagra
Brands, Inc.
|
Diluted EPS
from
income from
continuing
operations
attributable to
Conagra Brands,
Inc. common
stockholders
|
Reported
|
$
|
677.2
|
|
$
|
487.3
|
|
$
|
189.9
|
|
$
|
119.0
|
|
$
|
22.4
|
|
14.3
|
%
|
$
|
131.6
|
|
$
|
0.32
|
|
% of Net
Sales
|
28.4
|
%
|
20.4
|
%
|
8.0
|
%
|
|
|
|
|
|
|
Restructuring
plans
|
5.6
|
|
105.3
|
|
110.9
|
|
110.9
|
|
24.3
|
|
|
86.6
|
|
0.21
|
|
|
Acquisitions and
divestitures
|
—
|
|
90.5
|
|
90.5
|
|
96.8
|
|
20.1
|
|
|
76.7
|
|
0.18
|
|
|
Integration
costs
|
—
|
|
4.6
|
|
4.6
|
|
4.6
|
|
1.2
|
|
|
3.4
|
|
0.01
|
|
|
Corporate hedging
derivative losses (gains)
|
(2.8)
|
|
—
|
|
(2.8)
|
|
(2.8)
|
|
(0.7)
|
|
|
(2.1)
|
|
—
|
|
|
Advertising and
promotion expenses 2
|
—
|
|
69.4
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
Inventory fair value
mark-up rollout
|
24.4
|
|
—
|
|
24.4
|
|
24.4
|
|
6.2
|
|
|
18.2
|
|
0.04
|
|
|
Adjustment to gain on
sale of Del Monte business
|
—
|
|
0.1
|
|
0.1
|
|
0.1
|
|
—
|
|
|
0.1
|
|
—
|
|
|
Gain on Ardent JV
asset sale
|
—
|
|
—
|
|
—
|
|
—
|
|
(3.5)
|
|
|
(11.6)
|
|
(0.03)
|
|
|
Wesson valuation
allowance adjustment
|
—
|
|
—
|
|
—
|
|
—
|
|
24.3
|
|
|
(24.3)
|
|
(0.06)
|
|
|
Unusual tax
items
|
—
|
|
—
|
|
—
|
|
—
|
|
(2.2)
|
|
|
2.2
|
|
0.01
|
|
|
Loss from
discontinued operations, net of noncontrolling interests
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
1.9
|
|
—
|
|
|
Rounding
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
(0.01)
|
|
Adjusted
|
$
|
704.4
|
|
$
|
217.4
|
|
$
|
417.6
|
|
$
|
353.0
|
|
$
|
92.1
|
|
24.5
|
%
|
$
|
282.7
|
|
$
|
0.67
|
|
% of Net
Sales
|
29.5
|
%
|
9.1
|
%
|
17.5
|
%
|
|
|
|
|
|
Year-over-year
% of net sales change - reported
|
(188)
bps
|
550
bps
|
(738)
bps
|
|
|
|
|
|
Year-over-year
% of net sales change - adjusted
|
(58)
bps
|
(134)
bps
|
181
bps
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year-over-year
change - reported
|
2.9
|
%
|
50.1
|
%
|
(43.1)
|
%
|
(62.0)
|
%
|
(79.6)
|
%
|
|
(41.1)
|
%
|
(40.7)
|
%
|
Year-over-year
change - adjusted
|
7.6
|
%
|
(4.4)
|
%
|
22.3
|
%
|
8.6
|
%
|
(22.6)
|
%
|
|
25.3
|
%
|
21.8
|
%
|
|
|
|
|
|
|
|
|
|
|
Q2
FY18
|
Gross
profit
|
Selling,
general and
administrative
expenses
|
Operating profit
1
|
Income from
continuing operations
before income taxes
and equity method
investment earnings
|
Income
tax
expense
|
Income
tax rate
|
Net income
attributable
to Conagra
Brands, Inc.
|
Diluted EPS
from
income from
continuing
operations
attributable to
Conagra Brands,
Inc. common
stockholders
|
Reported
|
$
|
658.3
|
|
$
|
324.8
|
|
$
|
333.5
|
|
$
|
313.0
|
|
$
|
109.5
|
|
32.8
|
%
|
$
|
223.5
|
|
$
|
0.54
|
|
% of Net
Sales
|
30.3
|
%
|
14.9
|
%
|
15.3
|
%
|
|
|
|
|
|
|
Restructuring
plans
|
3.4
|
|
3.7
|
|
7.1
|
|
7.1
|
|
2.5
|
|
|
4.6
|
|
0.01
|
|
|
Acquisitions and
divestitures
|
—
|
|
7.8
|
|
7.8
|
|
7.8
|
|
2.8
|
|
|
5.0
|
|
0.01
|
|
|
Corporate hedging
derivative losses (gains)
|
(7.1)
|
|
—
|
|
(7.1)
|
|
(7.1)
|
|
(2.7)
|
|
|
(4.4)
|
|
(0.01)
|
|
|
Pension settlement
and valuation adjustment
|
—
|
|
—
|
|
—
|
|
4.1
|
|
1.6
|
|
|
2.5
|
|
0.01
|
|
|
Advertising and
promotion expenses 2
|
—
|
|
86.0
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
Unusual tax
items
|
—
|
|
—
|
|
—
|
|
—
|
|
5.3
|
|
|
(5.3)
|
|
(0.01)
|
|
|
Income from
discontinued operations, net of noncontrolling interests
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
(0.4)
|
|
—
|
|
Adjusted
|
$
|
654.6
|
|
$
|
227.3
|
|
$
|
341.3
|
|
$
|
324.9
|
|
$
|
119.0
|
|
34.4
|
%
|
$
|
225.5
|
|
$
|
0.55
|
|
% of Net
Sales
|
30.1
|
%
|
10.5
|
%
|
15.7
|
%
|
|
|
|
|
|
|
1
Operating profit is derived from taking Income from continuing
operations before income taxes and equity method investment
earnings, adding back Interest expense, net and removing Pension
and postretirement non-service income.
|
|
2 Advertising and promotion expense
(A&P) has been removed from adjusted selling, general and
administrative expense because this metric is used in reporting to
management, and management believes this adjusted measure provides
useful supplemental information to assess the Company's operating
performance. Please note that A&P is not removed from
adjusted profit measures.
|
Conagra Brands,
Inc.
|
Reconciliation of
Non-GAAP Financial Measures to Reported Financial
Measures
|
(in
millions)
|
|
Q2 FY19
YTD
|
Gross
profit
|
Selling,
general and
administrative
expenses
|
Operating profit
1
|
Income from
continuing operations
before income taxes
and equity method
investment earnings
|
Income
tax
expense
|
Income
tax rate
|
Net income
attributable
to Conagra
Brands,
Inc.
|
Diluted EPS
from
income from
continuing
operations
attributable to
Conagra Brands,
Inc. common
stockholders
|
Reported
|
$
|
1,192.7
|
|
$
|
744.6
|
|
$
|
448.1
|
|
$
|
338.4
|
|
$
|
79.8
|
|
20.3
|
%
|
$
|
309.8
|
|
$
|
0.76
|
|
% of Net
Sales
|
28.3
|
%
|
17.7
|
%
|
10.6
|
%
|
|
|
|
|
|
|
Restructuring
plans
|
7.9
|
|
104.2
|
|
112.1
|
|
111.5
|
|
24.5
|
|
|
87.0
|
|
0.21
|
|
|
Acquisitions and
divestitures
|
—
|
|
101.5
|
|
101.5
|
|
113.4
|
|
22.4
|
|
|
91.0
|
|
0.22
|
|
|
Integration
costs
|
—
|
|
8.9
|
|
8.9
|
|
8.9
|
|
2.3
|
|
|
6.6
|
|
0.02
|
|
|
Corporate hedging
derivative losses (gains)
|
3.6
|
|
—
|
|
3.6
|
|
3.6
|
|
0.9
|
|
|
2.7
|
|
0.01
|
|
|
Advertising and
promotion expenses 2
|
—
|
|
112.1
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
Inventory fair value
mark-up rollout
|
24.4
|
|
—
|
|
24.4
|
|
24.4
|
|
6.2
|
|
|
18.2
|
|
0.04
|
|
|
Gain on sale of Del
Monte business
|
—
|
|
(13.2)
|
|
(13.2)
|
|
(13.2)
|
|
(3.6)
|
|
|
(9.6)
|
|
(0.02)
|
|
|
Gain on Ardent JV
asset sale
|
—
|
|
—
|
|
—
|
|
—
|
|
(3.5)
|
|
|
(11.6)
|
|
(0.03)
|
|
|
Wesson valuation
allowance adjustment
|
—
|
|
—
|
|
—
|
|
—
|
|
24.3
|
|
|
(24.3)
|
|
(0.06)
|
|
|
Unusual tax
items
|
—
|
|
—
|
|
—
|
|
—
|
|
2.6
|
|
|
(2.6)
|
|
(0.01)
|
|
|
Loss from
discontinued operations, net of noncontrolling interests
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
1.9
|
|
—
|
|
Adjusted
|
$
|
1,228.6
|
|
$
|
431.1
|
|
$
|
685.4
|
|
$
|
587.0
|
|
$
|
155.9
|
|
24.9
|
%
|
$
|
469.1
|
|
$
|
1.14
|
|
% of Net
Sales
|
29.1
|
%
|
10.2
|
%
|
16.2
|
%
|
|
|
|
|
|
Year-over-year
% of net sales change - reported
|
(132)
bps
|
296
bps
|
(428)
bps
|
|
|
|
|
|
Year-over-year
% of net sales change - adjusted
|
(59)
bps
|
(39)
bps
|
68
bps
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year-over-year
change - reported
|
1.3
|
%
|
27.4
|
%
|
(24.4)
|
%
|
(39.2)
|
%
|
(65.2)
|
%
|
|
(17.6)
|
%
|
(16.5)
|
%
|
Year-over-year
change - adjusted
|
3.9
|
%
|
2.1
|
%
|
10.7
|
%
|
—
|
%
|
(28.4)
|
%
|
|
12.3
|
%
|
12.9
|
%
|
|
|
|
|
|
|
|
|
|
|
Q2 FY18
YTD
|
Gross
profit
|
Selling,
general and
administrative
expenses
|
Operating profit
1
|
Income from
continuing operations
before income taxes
and equity method
investment earnings
|
Income
tax
expense
|
Income
tax rate
|
Net income
attributable to
Conagra
Brands,
Inc.
|
Diluted EPS
from
income from
continuing
operations
attributable to
Conagra Brands,
Inc. common
stockholders
|
Reported
|
$
|
1,177.3
|
|
$
|
584.4
|
|
$
|
592.9
|
|
$
|
556.6
|
|
$
|
229.5
|
|
37.8
|
%
|
$
|
376.0
|
|
$
|
0.91
|
|
% of Net
Sales
|
29.6
|
%
|
14.7
|
%
|
14.9
|
%
|
|
|
|
|
|
|
Restructuring
plans
|
5.7
|
|
12.8
|
|
18.5
|
|
18.5
|
|
6.5
|
|
|
12.0
|
|
0.03
|
|
|
Acquisitions and
divestitures
|
—
|
|
8.6
|
|
8.6
|
|
8.6
|
|
3.1
|
|
|
5.5
|
|
0.01
|
|
|
Corporate hedging
derivative losses (gains)
|
(1.1)
|
|
—
|
|
(1.1)
|
|
(1.1)
|
|
(0.4)
|
|
|
(0.7)
|
|
—
|
|
|
Pension settlement
and valuation adjustment
|
—
|
|
—
|
|
—
|
|
4.1
|
|
1.6
|
|
|
2.5
|
|
0.01
|
|
|
Advertising and
promotion expenses 2
|
—
|
|
140.9
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
Unusual tax
items
|
—
|
|
—
|
|
—
|
|
—
|
|
(22.5)
|
|
|
22.5
|
|
0.05
|
|
|
Income from
discontinued operations, net of noncontrolling interests
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
(0.1)
|
|
—
|
|
Adjusted
|
$
|
1,181.9
|
|
$
|
422.1
|
|
$
|
618.9
|
|
$
|
586.7
|
|
$
|
217.8
|
|
34.2
|
%
|
$
|
417.7
|
|
$
|
1.01
|
|
% of Net
Sales
|
29.7
|
%
|
10.6
|
%
|
15.6
|
%
|
|
|
|
|
|
|
1
Operating profit is derived from taking Income from continuing
operations before income taxes and equity method investment
earnings, adding back Interest expense, net and removing Pension
and postretirement non-service income.
|
|
2 Advertising and promotion expense
(A&P) has been removed from adjusted selling, general and
administrative expense because this metric is used in reporting to
management, and management believes this adjusted measure provides
useful supplemental information to assess the Company's operating
performance. Please note that A&P is not removed from
adjusted profit measures.
|
Conagra Brands,
Inc.
|
Reconciliation of
Non-GAAP Financial Measures to Reported Financial
Measures
|
(in
millions)
|
|
|
Q2
FY19
|
Q2
FY18
|
%
Change
|
Interest expense,
net
|
$
|
80.6
|
|
$
|
38.0
|
|
112.5
|
%
|
Acquisitions and
divestitures
|
(6.3)
|
|
—
|
|
|
Adjusted interest
expense, net
|
$
|
74.3
|
|
$
|
38.0
|
|
95.8
|
%
|
|
|
Q2
FY19
|
Q2
FY18
|
%
Change
|
Equity method
investment earnings
|
$
|
37.7
|
|
$
|
20.6
|
|
83.4
|
%
|
Gain on Ardent JV
asset sale
|
(15.1)
|
|
—
|
|
|
Adjusted equity
method investment earnings
|
$
|
22.6
|
|
$
|
20.6
|
|
9.8
|
%
|
|
|
Q2
FY19
|
Q2
FY18
|
%
Change
|
Pension and
postretirement non-service income
|
$
|
(9.7)
|
|
$
|
(17.5)
|
|
(44.4)
|
%
|
Pension settlement
and valuation adjustment
|
—
|
|
(4.1)
|
|
|
Adjusted pension
and postretirement non-service income
|
$
|
(9.7)
|
|
$
|
(21.6)
|
|
(54.9)
|
%
|
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SOURCE Conagra Brands, Inc.