ConAgra Foods Revises Fiscal 2015 EPS Outlook; Fiscal 2015 Comparable EPS $2.13-$2.18; Fiscal 2015 Debt Reduction Goal Reaffi...
February 12 2015 - 4:25PM
Business Wire
Today ConAgra Foods (NYSE: CAG) is announcing that fiscal 2015
comparable EPS is expected to be lower than previously planned. The
company originally expected to post a mid-single digit rate of
comparable EPS growth in fiscal 2015; the company now expects
comparable fiscal 2015 EPS to be in the range of $2.13-$2.18.
Fiscal 2015 operating cash flow is expected to approximate $1.6
billion, and the company expects to meet its debt reduction goals
this year. The company remains committed to a strong dividend.
A strengthening dollar has negatively impacted the EPS outlook,
as has a higher-than-planned mark-to-market loss from certain
commodity index hedges as discussed in the company’s fiscal
second-quarter earnings release. Two operating issues account for
the majority of the change in EPS expectations:
- Profitability for the Private Brands
segment is weaker than planned due to a highly competitive bidding
environment, as well as execution shortfalls, which together have
negatively impacted recent results and near-term expectations for
volumes, pricing, and margins. The company is highly focused on
implementing significant changes to improve execution, strengthen
customer relationships, and improve the outcome of future bids;
these changes have begun and will continue to be implemented over
the next several quarters, and are expected to start improving
results in fiscal 2016. As a result of the weaker profit outlook,
the company will be evaluating the need for an additional non-cash
impairment charge on the carrying value of goodwill in the Private
Brands segment in connection with the preparation of the company’s
fiscal third-quarter financial statements.
- The ongoing longshoremen labor dispute
on the U.S. West Coast has continued longer than the company
expected, which has negatively impacted exports of Lamb Weston
potato products (in the Commercial Foods segment) to international
markets. To a lesser extent, some international shipments for
branded products in the Consumer Foods segment have been impacted
as well. The company originally expected the labor dispute to be
resolved in the winter, but now assumes the dispute will continue
into the spring. The company also expects a backlog of shipments
for some period of time after the dispute is resolved. The items
discussed above are reflected in the company’s expectations for
lower-than-planned financial performance for the remainder of the
fiscal year. The company also assumes that the situation
surrounding the dispute does not deteriorate even further and
impact shipment volumes more severely.
- The impact of these issues has been
partially offset by strong SG&A efficiencies.
The company currently expects fiscal 2015 full year comparable
EPS to be in the range of $2.13-$2.18. Taking all of the previously
mentioned factors into consideration, as well as the timing of the
mark-to-market loss, the company currently expects:
- Comparable fiscal 2015 third-quarter
EPS to be in the range of $0.10 below the comparable $0.62 earned
in the third quarter of fiscal 2014.
- Growth in comparable 2015 fiscal
fourth-quarter EPS partially due to the fifty-third week this
fiscal year.
The company will discuss relevant financial details in its
fiscal 2015 third quarter earnings release scheduled for March 26,
2015.
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, bakery and grain 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 are subject to uncertainty and changes in
circumstances. These risks and uncertainties include, among other
things: ConAgra Foods’ ability to realize the synergies and
benefits contemplated by the acquisition of 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 Ardent Mills joint venture; risks and
uncertainties associated with intangible assets, including any
future goodwill or intangible assets impairment charges; the
availability and prices of raw materials, including any negative
effects caused by inflation or 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
litigation related to the lead paint and pigment matters; future
economic circumstances; industry conditions; the effectiveness of
ConAgra Foods’ hedging activities, including volatility in
commodities that could negatively impact ConAgra Foods’ derivative
positions and, in turn, ConAgra Foods’ earnings; ConAgra Foods’
ability to execute its operating and restructuring plans and
achieve operating efficiencies; the success of ConAgra Foods’
cost-saving initiatives, innovation, and marketing investments; the
competitive environment and related market conditions; 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; the longshoremen labor dispute on
the U.S. West Coast and its impact on ConAgra Foods’ exports; 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 DisclosureBelow is a reconciliation of Q3
FY14 diluted earnings per share from continuing operations, and
FY14 diluted earnings per share from continuing operations,
adjusted for items impacting comparability. Amounts may be impacted
by rounding.
Q3 FY14 Diluted EPS from Continuing Operations
Reconciliation for Regulation G Purposes Q3
FY14 Diluted EPS from continuing operations $
0.52 Items impacting comparability: Net expense related to
settlement of interest rate derivatives 0.08 Restructuring and
integration costs (including acquisition-related restructuring)
0.06 Net expense related to impairment costs in the Commercial
Foods segment 0.02 Net benefit related to the resolution of certain
tax matters (0.04 ) Net benefit related to unallocated
mark-to-market impact of derivatives (0.08 ) Rounding 0.01
Diluted EPS from continuing operations, adjusted for
items impacting comparability $ 0.57 Net EPS
contribution previously within continuing operations and
subsequently reclassified to discontinued operations: From milling
operations 0.05
Diluted EPS adjusted for items
impacting comparability $ 0.62
FY14 Diluted EPS from Continuing Operations
Reconciliation for Regulation G Purposes Total
FY14 Diluted EPS from continuing operations $
0.37 Items impacting comparability: Net expense related to
intangible asset impairment charges 1.46 Net expense related to
restructuring, transaction, and integration costs 0.23 Net expense
related to settlement of interest rate derivatives 0.08 Net expense
related to impairment costs, net of gain on sale of non-operating
asset, in the Commercial Foods segment 0.03 Net expense related to
year-end remeasurement of pensions and early retirement of debt
0.01 Net benefit related to historical legal, insurance, and
environmental matters (0.02 ) Net benefit related to unallocated
mark-to-market impact of derivatives (0.05 ) Net benefit related to
unusual tax matters (0.16 )
Diluted EPS from continuing
operations, adjusted for items impacting comparability $
1.95 Net EPS contribution previously within continuing
operations and subsequently reclassified to discontinued
operations: From milling operations 0.32 Net expense related to
transaction costs 0.02 From other divested businesses 0.01 Net
benefit related to sale of flour mills (0.13 )
Diluted
EPS adjusted for items impacting comparability $
2.17
ConAgra FoodsMedia:Teresa Paulsen,
402-240-5210Vice President,Communication & External
RelationsorAnalystsChris Klinefelter, 402-240-4154Vice
President, Investor Relationswww.conagrafoods.com
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