- Soft Consumer Foods volumes reduce
fiscal 2014 fourth-quarter EPS
- Fiscal 2014 fourth-quarter GAAP results
include large non-cash impairment charges
- Fiscal 2014 operating cash flow and
debt reduction goals exceeded
- Fiscal 2015 comparable EPS growth
expectations of mid-single-digit rate
- Fiscal 2016-2017 comparable EPS growth
expectations of high-single-digit rate
Today ConAgra Foods (NYSE:CAG) is announcing that comparable
fiscal 2014 fourth quarter earnings per share (EPS) will be below
prior expectations. While all financial details are not yet
finalized and the results in today’s release are preliminary,
diluted per share performance from continuing operations for the
fiscal 2014 fourth-quarter, which ended on May 25, 2014 and will be
reported in more detail on June 26, 2014, is expected to be
approximately $(0.76) as reported, reflecting significant non-cash
impairment charges as well as other items impacting comparability.
After adjusting for items impacting comparability, fiscal 2014
fourth-quarter EPS is expected to be approximately $0.55; the
company’s previous guidance anticipated comparable EPS slightly in
excess of $0.60 for the quarter. The lower-than-planned comparable
EPS is largely the result of a 7% quarterly volume decline for the
Consumer Foods segment, as well as weak profits for the Private
Brands segment. Items impacting comparability are detailed on page
5 of this document.
Gary Rodkin, CEO of ConAgra Foods, commented, “We are
disappointed with the Consumer Foods volume performance, which
negatively impacted comparable EPS. As we have communicated, we are
in the process of improving product mix and promotion strategies in
the Consumer Foods segment for better results and greater
effectiveness, and we expect our volume performance to improve in
fiscal 2015 as a result of this. Given the profit challenges in our
Private Brands segment, we are also focused on margin improvement
initiatives to offset the impact of pricing concessions. Even
though our earnings are below expectations, we exceeded our fiscal
2014 operating cash flow and debt reduction targets.”
He continued, “Given the challenges we faced in fiscal 2014 with
regard to Consumer Foods volumes and Private Brands profitability,
we are in the process of gradually strengthening several areas of
our company. We anticipate fiscal 2015 to be a year of
stabilization and recovery that delivers mid-single-digit
comparable EPS growth. Comparable EPS growth in fiscal 2016 and
2017 should accelerate to a high-single-digit rate as we benefit
from stronger underlying operations, generate sizeable productivity
and administrative savings, and continue to realize substantial
synergies from the Ralcorp transaction. Administrative savings are
expected to play a growing role in future EPS performance as we
implement effectiveness and efficiency initiatives resulting from
significant work over the past fiscal year. Throughout this period
of anticipated stabilization, recovery, and eventual acceleration
of EPS performance, we expect to have the flexibility to invest in
our business for good long-term growth. We plan to continue our
current $1.00 per share annual dividend payment, and remain
committed to a strong dividend policy in the future.”
Quarterly operating profit for the Private Brands is expected to
show a comparable year-over-year decline of approximately $60
million. While the majority of the profit shortfall was driven by
pricing concessions previously discussed, cost challenges
associated with integration and business transition also weighed on
profit performance. The company remains highly confident in the
long-term growth opportunities for the Private Brands segment given
the company’s strong value-added capabilities that will be
leveraged in the years ahead, the fundamental appeal of private
brands to consumers, and the strategic importance of private brands
to the retail customer base.
Based on the challenges in the Private Brands segment in fiscal
2014 and the gradual nature of the anticipated recovery from fiscal
2014 earnings levels, the company’s current profit projections for
the Private Brands segment are below original plans for the next
several years, despite continued expectations for achievement of
strong cost-related synergies in line with original plans.
These revised profit projections, as well as expectations for
continued profit challenges for some retail brands (primarily Chef
Boyardee), have resulted in an estimated $681 million of non-cash
impairment charges in the fiscal 2014 fourth quarter. These
non-cash charges, most of which relate to the Private Brands
segment, reduce the amount of goodwill and other intangibles on the
company’s balance sheet, and the resulting non-cash expenses will
be treated as items impacting comparability. The revised profit
projections for the applicable segments have been taken into
consideration in the fiscal 2015-2017 EPS growth expectations cited
earlier in this release.
The company notes that it generated in excess of $1.5 billion of
cash from operations and repaid approximately $600 million of debt
during fiscal 2014, exceeding targets for the fiscal year. The
company is confident in its ability to meet its fiscal year 2015
debt repayment goals as well. The company will provide more
financial and operating details on the current quarter performance,
and future EPS outlook, with its regularly scheduled earnings
release on June 26, 2014.
About ConAgra Foods
ConAgra Foods, Inc., (NYSE: CAG) is one of North America's
largest packaged food companies with branded and private branded
food found in 99 percent of America’s households, as well as a
strong commercial foods business serving restaurants and
foodservice operations globally. Consumers can find recognized
brands such as Banquet®, Chef Boyardee®, Egg Beaters®, Healthy
Choice®, Hebrew National®, Hunt's®, Marie Callender's®, Orville
Redenbacher's®, PAM®, Peter Pan®, Reddi-wip®, Slim Jim®, Snack
Pack® and many other ConAgra Foods brands, along with food sold by
ConAgra Foods under private brand labels, in grocery, convenience,
mass merchandise, club and drug stores. Additionally, ConAgra Foods
supplies frozen potato and sweet potato products as well as other
vegetable, spice, and bakery products to commercial and foodservice
customers. ConAgra Foods operates ReadySetEat.com, an interactive
recipe website that provides consumers with easy dinner recipes and
more. For more information, please visit us at
www.conagrafoods.com.
Note on Forward-looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. These forward-looking statements are based on management’s
current expectations and assumptions and are subject to certain
risks, uncertainties and changes in circumstances that could cause
actual results to differ materially from potential results
discussed in the forward-looking statements. These risks and
uncertainties include, among other things: ConAgra Foods’ ability
to realize the synergies and benefits contemplated by the
acquisition of Ralcorp Holdings, Inc. (“Ralcorp”) and its ability
to promptly and effectively integrate the business of Ralcorp;
ConAgra Foods’ ability to realize the synergies and benefits
contemplated by the recently formed joint venture combining the
flour milling businesses of ConAgra Foods, Cargill, Incorporated,
and CHS Inc.; risks and uncertainties associated with intangible
assets, including any future goodwill impairment charges; the
availability and prices of raw materials, including any negative
effects caused by inflation or adverse weather conditions; the
effectiveness of ConAgra Foods’ product pricing, including product
innovation, any pricing actions and changes in promotional
strategies; the ultimate outcome of litigation, including the lead
paint matter; future economic circumstances; industry conditions;
ConAgra Foods’ ability to execute its operating and restructuring
plans; the success of ConAgra Foods’ cost-savings initiatives, and
innovation and marketing investments; the competitive environment;
operating efficiencies; the ultimate impact of any ConAgra Foods
product recalls; access to capital; actions of governments and
regulatory factors affecting ConAgra Foods’ businesses, including
the Patient Protection and Affordable Care Act; the amount and
timing of repurchases of ConAgra Foods’ common stock and debt, if
any; and other risks described in ConAgra Foods’ reports filed with
the Securities and Exchange Commission, including its most recent
annual report on Form 10-K and subsequent reports on Forms 10-Q and
8-K. Investors and security holders are cautioned not to place
undue reliance on these forward-looking statements, which speak
only as of the date they are made. ConAgra Foods disclaims any
obligation to update or revise statements contained in this press
release to reflect future events or circumstances or otherwise.
Regulation G Disclosure
Below is a reconciliation of preliminary Q4 FY14 diluted
earnings per share from continuing operations, adjusted for items
impacting comparability. Amounts may be impacted by rounding.
Q4 FY14 Diluted EPS from Continuing Operations
Q4 FY14 Diluted EPS from continuing operations
$ (0.76 ) Items impacting
comparability: Net expense related to impairment charges, including
the impact on diluted share count 1.47 Net benefit related to sale
of flour mills (0.13 ) Net expense related to restructuring,
transaction, and integration costs 0.08 Net benefit related to
unusual tax matters (0.06 ) Net benefit related to unallocated
mark-to-market impact of derivatives (0.02 ) Net benefit related to
historical legal matters (0.01 ) Net gain from sale of
non-operating asset in the Commercial Foods segment (0.01 )
Rounding (0.01 )
Diluted EPS, adjusted for items
impacting comparability $ 0.55
ConAgra Foods, Inc.Media:Teresa Paulsen,
402-240-5210Vice President, Communication & External
RelationsorAnalysts:Chris Klinefelter, 402-240-4154Vice
President, Investor Relationswww.conagrafoods.com
ConAgra Brands (NYSE:CAG)
Historical Stock Chart
From Mar 2024 to Apr 2024
ConAgra Brands (NYSE:CAG)
Historical Stock Chart
From Apr 2023 to Apr 2024