Executive Summary
In the first quarter of fiscal 2025, Conagra Brands Inc (CAG) reported notable challenges, notably a temporary manufacturing disruption impacting its Hebrew National hot dog segment, which resulted in a significant 47% decline in revenue from this brand. The company nonetheless demonstrated resilience in other areas, achieving meaningful volume improvements in its domestic retail business and exhibiting share gains across a majority of its portfolio. With revenue declining to $2.794 billion, a year-over-year decrease of 3.76%, Conagra continues to maintain its focus on productivity advancements aimed at achieving $1 billion in cost savings by the end of fiscal 2025. Management has reaffirmed confidence in reaching fiscal 2025 guidance despite external pressures.
Key Performance Indicators
QoQ: -8.15% | YoY:-10.18%
QoQ: 172.22% | YoY:-17.87%
QoQ: 182.28% | YoY:46.01%
QoQ: 182.20% | YoY:44.78%
Key Insights
For Q1 2025, Conagra reported revenues of $2.794 billion, down 3.76% year-over-year and 3.82% quarter-over-quarter. Gross profit decreased by 10.18% to $739 million, leading to a gross profit margin of 26.4%. Notably, net income stood at $466.8 million, reflecting a robust increase of 46.1% year-over-year, and earnings per share (EPS) increased to $0.97, up 44.78% from the prior year. Operating income fell to $401.6 million, showing a significant drop of 17.87% from the previous quarter, indicat...
Financial Highlights
For Q1 2025, Conagra reported revenues of $2.794 billion, down 3.76% year-over-year and 3.82% quarter-over-quarter. Gross profit decreased by 10.18% to $739 million, leading to a gross profit margin of 26.4%. Notably, net income stood at $466.8 million, reflecting a robust increase of 46.1% year-over-year, and earnings per share (EPS) increased to $0.97, up 44.78% from the prior year. Operating income fell to $401.6 million, showing a significant drop of 17.87% from the previous quarter, indicating pressures on operating leverage from increased costs.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
2.79B |
-3.76% |
-3.82% |
| Gross Profit |
739.30M |
-10.18% |
-8.15% |
| Operating Income |
401.60M |
-17.87% |
172.22% |
| Net Income |
466.80M |
46.01% |
182.28% |
| EPS |
0.97 |
44.78% |
182.20% |
Key Financial Ratios
operatingProfitMargin
14.4%
operatingCashFlowPerShare
$0.56
freeCashFlowPerShare
$0.28
dividendPayoutRatio
35.8%
Management Commentary
Sean Connolly emphasized, "Despite a temporary manufacturing disruption that pressured performance, we remain on track to achieve our fiscal 2025 goals," reinforcing the company’s commitment to maintaining operational efficiency and strategic investments. He further noted the volume recovery in retail and strong share performance across the portfolio, stating that approximately 71% of the portfolio held or gained volume share. Additionally, management addressed the robust performance of the Foodservice segment, contributing positively to margin recovery.
Sean Connolly stated, "We are excited to resume our portfolio reshaping initiatives with the acquisition of FATTY, which expands our position in the high growth, high margin meat sticks product category."
— Sean Connolly
"Our results this quarter, while impacted by short-term disruptions, illustrate the underlying strength of our business model and our commitment to our strategic objectives," stated Dave Marberger.
— Dave Marberger
Forward Guidance
Looking forward, management has indicated a cautious yet optimistic outlook, suggesting quarter-over-quarter volume recovery and improved margins in the second half of fiscal 2025. They foresee inflation at 3.2% for total cost of goods sold, slightly increasing from previous projections, but remain firm in their guidance on achieving $1 billion worth of cost savings, which should bolster net income and overall financial health.