Executive Summary
Conagra Brands Inc (CAG) reported a challenging fourth quarter of fiscal year 2024, with total revenues declining year-over-year by 2.27% to $2.91 billion. Despite these hurdles, the company demonstrated resilience through strategic investments aimed at enhancing consumer engagement, resulting in improved volume and market share, particularly within their frozen and snacks segments. Management emphasized the gradual normalization of operating conditions as consumer trends begin to adapt, projecting an upcoming fiscal year with targeted organic net sales stabilization between -1.5% to flat compared to FY 2024. Overall, the forward-looking guidance highlights a commitment to cost-saving initiatives and continued investment in brand innovation, signaling potential upside for investors willing to navigate the current climate.
Key Performance Indicators
QoQ: -217.97% | YoY:-1 075.61%
QoQ: -283.83% | YoY:-1 612.80%
QoQ: -284.38% | YoY:-1 575.00%
Key Insights
For Q4 2024, Conagra posted a net loss of $567.3 million, translating to an EPS of -$1.18, both marking significant declines from the previous year due to higher interest expenses and a reduction in equity earnings from joint ventures. The gross profit margin improved slightly to 27.7%, reflecting productivity enhancements amid ongoing inflation pressures of approximately 2.7% on cost of goods sold. Management reported adjusted operating margins expanding by 34 basis points year-over-year to app...
Financial Highlights
For Q4 2024, Conagra posted a net loss of $567.3 million, translating to an EPS of -$1.18, both marking significant declines from the previous year due to higher interest expenses and a reduction in equity earnings from joint ventures. The gross profit margin improved slightly to 27.7%, reflecting productivity enhancements amid ongoing inflation pressures of approximately 2.7% on cost of goods sold. Management reported adjusted operating margins expanding by 34 basis points year-over-year to approximately 14.8%, demonstrating the effectiveness of cost management measures. Notably, the company generated free cash flow of $405 million, indicating healthy operational cash generation despite net losses, underscoring a solid balance sheet position with a net leverage ratio reduction to 3.37 times, from 5.5 times five years ago, showing an improved financial leverage capability post-COVID.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
2.91B |
-2.27% |
-4.19% |
| Gross Profit |
804.90M |
2.74% |
-6.28% |
| Operating Income |
-556.10M |
-1 075.61% |
-217.97% |
| Net Income |
-567.30M |
-1 612.80% |
-283.83% |
| EPS |
-1.18 |
-1 575.00% |
-284.38% |
Key Financial Ratios
operatingProfitMargin
-19.1%
operatingCashFlowPerShare
$1.01
freeCashFlowPerShare
$0.85
dividendPayoutRatio
-29.5%
Management Commentary
Management highlighted progress within key product segments, stating, 'In Q4, we continued to see positive impact from our investments to maximize consumer engagement with our brands... Our strong free cash flow enabled us to continue to reduce our net leverage ratio and strengthen our balance sheet.' They emphasized the strong performance in frozen and snacks, noting, 'Approximately 65% of our portfolio held or gained volume share amid a slow environment, marking the fourth consecutive quarter of share gains.' Furthermore, in discussing future guidance, CEO Sean Connolly stated, 'We expect fiscal 2025 to be a continued transition toward a normalized operating environment.'
"Our strong free cash flow enabled us to continue to reduce our net leverage ratio and strengthen our balance sheet consistent with our goals."
â Sean Connolly
"We expect fiscal 2025 to be a continued transition toward a normalized operating environment."
â Sean Connolly
Forward Guidance
Looking ahead, management projects organic net sales for FY 2025 to range from a decline of 1.5% to flat. They anticipate steady margins, estimating adjusted operating margins of 15.6% to 15.8%. The strategic emphasis remains on brand and category investments alongside a projected 3% net inflation on costs, yet with expectations of around $350 million in productivity savings. They forecast free cash flow conversion of approximately 90%, reinforcing the commitment to maintain robust cash generation capability even in uncertain market conditions.