CHICAGO, Sept. 28, 2017 /PRNewswire/ -- Today Conagra
Brands, Inc. (NYSE: CAG) reported results for the first quarter
fiscal year 2018, which ended on August
27, 2017.
Highlights
(all comparisons are against the prior year fiscal period,
unless otherwise noted)
- Diluted earnings per share (EPS) from continuing operations
grew 63.6% from $0.22 to $0.36; adjusted1 diluted EPS from
continuing operations grew 17.9% from $0.39 to $0.46.
- The Company delivered continued sequential improvement in its
net sales growth rate. Net sales decreased 4.8% and organic
net sales2 decreased 3.0%. The Company estimates
that incremental slotting fees associated with innovation launches
negatively impacted the net sales and organic net sales growth
rates by approximately 50 basis points and 42 basis points,
respectively.
- Refrigerated & Frozen segment net sales grew 2% behind
volume growth of 1%.
- Gross margin expanded as higher price/mix and the impact of
divesting lower margin businesses offset higher than expected
inflation and incremental slotting fees.
CEO Perspective
Sean Connolly, president and
chief executive officer of Conagra Brands, commented, "Fiscal 2018
is off to a strong start. We continued to see gross margin
expansion, despite higher than expected inflation and our planned
increase in slotting investments to fund innovation. Most notably,
our sales trends improved further this quarter. Our sales
trend improved as a result of accelerating velocities on our
existing business as well as a strong start to our
innovation. Overall, we remain encouraged that our value over
volume strategy, as well as our rebuilt innovation capabilities,
continued to deliver as expected. We are confident in our
ability to build on this momentum and drive long-term shareholder
value."
Total Company Results
Net sales decreased 4.8%, and organic net sales decreased 3.0%,
reflecting continued sequential improvement. Investments in
slotting fees increased year-over-year, to support innovation
launches in the current year quarter. This higher level of
investment negatively impacted the net sales and organic net sales
growth rates by approximately 50 basis points and 42 basis points,
respectively.
Gross margin3 increased 3 basis points to
28.8%. Adjusted gross margin increased 26 basis points to
29.2%. Improvements in price/mix and the impact of divesting lower
margin businesses more than offset the impact of input cost
inflation. The Company estimates that incremental slotting
fees reduced adjusted gross margin expansion by approximately 35
basis points.
Diluted EPS from continuing operations grew 63.6% from
$0.22 to $0.36; adjusted diluted EPS from continuing
operations grew 17.9% from $0.39 to
$0.46. The growth primarily
reflects lower interest expense, lower selling, general, and
administrative (SG&A) expenses, increased earnings in the
Ardent Mills joint venture, and the benefit of fewer shares
outstanding. These benefits were partially offset by volume
declines, the impact of the divestitures of the Spicetec Flavors
& Seasonings and JM Swank businesses in the first quarter of
fiscal 2017, and a higher effective tax rate compared to the prior
year period.
Grocery & Snacks Segment Results
Net sales for the Grocery & Snacks segment decreased 2% to
$746 million. The acquisitions
of the Duke's, BIGS, and Frontera businesses added over 3% to the
growth rate. Organic net sales decreased 5%. As planned,
volume declined 6% principally from continued actions to drive
improvements in trade productivity, as well as the timing of
merchandising and planned discontinuations of certain
lower-performing products. Price/mix increased 1% as continued
progress in pricing and trade productivity more than offset the
impacts of increased slotting fees to support innovation in the PAM
and P.F. Chang's Home Menu businesses.
Operating profit for the segment decreased 2%, and adjusted
operating profit decreased 1%. The impacts of increased
slotting investments, input costs, and acquisition-related SG&A
expenses more than offset favorable net pricing and a shift in
timing of advertising and promotion (A&P) investments.
Refrigerated & Frozen Segment Results
Net sales for the Refrigerated & Frozen segment increased 2%
to $616 million. The acquisition
of the Frontera business added 1% to the growth rate. Organic
net sales increased 1%, aided by base business improvements and
innovation launches under the Marie Callender's and Healthy Choice
trademarks. The Reddi-wip business also experienced an
improved base business in the quarter. Segment volume increased 1%,
primarily driven by innovation launches. Price/mix was flat
compared to the prior-year period as improvements in net pricing
were offset by increased slotting investments associated with
innovation launches.
Operating profit for the segment increased 11% in the quarter,
and adjusted operating profit increased 5%. The increases were
primarily driven by increased net sales, the timing of A&P
investments, reductions in SG&A expenses, and non-recurring
recall expenses in the prior-year period.
International Segment Results
Net sales for the International segment decreased 2% to
$191 million, and organic net sales
decreased 4% as the segment executes the value over volume
strategy. Volume decreased 8% from a reduction in promotional
intensity and the planned discontinuation of certain
lower-performing products. Price/mix increased 4% from improvements
in pricing and trade productivity. Foreign exchange favorably
impacted net sales by 2%.
The segment reported an operating profit of $19 million as compared to an operating loss of
$149 million in the prior-year
period, as the prior-year period included pre-tax goodwill and
intangible impairment charges of $164
million related to the Canadian business. Adjusted operating
profit increased 29% behind higher price/mix and lower A&P
expenses, which were partially offset by increased input costs.
Foodservice Segment Results
Net sales for the Foodservice segment decreased 6% to
$252 million as the segment executes
the value over volume strategy. Volume decreased 18% and price/mix
increased 12%, primarily reflecting the impact of exiting non-core
and low-performing businesses.
Operating profit for the segment increased 7%. Adjusted
operating profit decreased 1% as the impact of lower net sales more
than offset expanding margins and reduced SG&A expenses.
Other Items
Corporate expenses increased 13% to $40
million. Adjusted corporate expenses decreased 15% to
$29 million, primarily reflecting the
benefits from the Company's cost savings efforts.
A&P expense decreased 15% to $55
million as the Company optimized the timing of A&P
investments to support innovation through the year.
Equity method investment earnings increased $17 million to $30
million as the Ardent Mills joint venture benefitted from
more favorable market conditions and continued improvement in
operating efficiencies.
Net interest expense decreased 38% to $36
million, driven by significant debt reduction over the past
several quarters.
Capital Allocation
In the first quarter, the Company paid a quarterly dividend of
$0.20 per share. As previously
announced, the Company's board of directors approved a dividend
payment at the quarterly rate of $0.2125 per share to be paid on November 30, 2017 to stockholders of record as of
the close of business on October 31,
2017.
In the first quarter, the Company repurchased approximately 9
million shares of its common stock for $300
million.
Portfolio Update
On September 21, 2017 (subsequent
to quarter-end) the Company entered into a definitive agreement to
acquire Angie's Artisan Treats, LLC, the maker of Angie's
BOOMCHICKAPOP ready-to-eat popcorn, from TPG Growth for
$250 million in cash, net of cash
acquired and subject to a working capital adjustment. The
transaction is expected to close by the end of the calendar year,
subject to customary closing conditions, including the receipt of
regulatory approvals.
The business is expected to generate approximately $100 million in annual net sales for the calendar
year 2017.
As previously disclosed on May 30,
2017, the Company entered into a definitive agreement to
sell the Wesson® oil business to The J.M. Smucker Company. The
transaction is subject to certain customary closing conditions,
including the termination or expiration of the waiting period under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR
Act).
On August 28, 2017, Smucker and
the Company each received a request for additional information
under the HSR Act (a second request) from the U.S. Federal Trade
Commission (FTC) in connection with the FTC's review of the
transaction. Issuance of the second request extends the waiting
period under the HSR Act until 30 days after both the Company and
Smucker have substantially complied with the request, unless the
waiting period is terminated earlier by the FTC. The parties are
cooperating fully with the FTC as it conducts its review of the
transaction.
Fiscal 2018 Outlook
The Company is reaffirming its fiscal 2018 guidance as
summarized below:
- Reported net sales growth in the range of (2)% to flat
- Organic net sales growth in the range of (2)% to flat
- Adjusted operating margin in the range of 15.9% to 16.3%
- Effective tax rate in the range of 32.5% to 33.5%
- Adjusted diluted EPS from continuing operations in the range of
$1.84 to $1.89
- The Company expects to repurchase approximately $1.1 billion of shares of its common stock in the
fiscal year, subject to market and other conditions
- Input cost inflation is now expected to be approximately 3.3%
for the full fiscal year. The impact of inflation is expected
to be weighted to the first half of the fiscal year.
The fiscal 2018 outlook includes the expected results of the
Wesson oil business for the full fiscal year.
The inability to predict the amount and timing of the impacts of
foreign exchange, acquisitions, and 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 First Quarter Fiscal 2018
Comparability
Included in the $0.36 diluted
EPS from continuing operations for the first quarter of fiscal 2018
(EPS amounts rounded and after tax)
- Approximately $0.02 per diluted
share of net expense, or $11.4
million pre-tax ($7.3 million
after tax), related to restructuring plans ($2.3 million in cost of goods sold (COGS) and
$9.1 million in SG&A)
- Approximately $0.01 per diluted
share of net expense, or $6.0 million
pre-tax ($3.7 million after tax),
related to hedging derivative losses (all COGS)
- Approximately $0.07 per diluted
share of net tax expense, or $27.8
million, related to the planned repatriation of cash from
foreign subsidiaries and the tax expense related to earnings of
foreign subsidiaries previously deemed to be indefinitely
reinvested (all Tax)
Included in the $0.22 diluted
EPS from continuing operations for the first quarter of fiscal 2017
(EPS amounts rounded and after tax)
- Approximately $0.02 per diluted
share of net expense, or $14.1
million pre-tax ($9.1 million
after tax), related to restructuring plans ($5.2 million in COGS and $8.9 million in SG&A)
- Approximately $0.17 per diluted
share of net gain, or $198.2 million
pre-tax ($75.3 million after tax),
related to the gain on the sales of the Spicetec Flavors &
Seasonings and JM Swank businesses (all SG&A)
- Approximately $0.34 per diluted
share of net expense, or $163.6
million pre-tax ($149.5
million after tax), related to an impairment charge in the
Canadian business (all SG&A)
- Approximately $0.02 per diluted
share, or $7.5 million, of net gain
from favorable adjustments to state tax assets related to net
operating and capital losses (all Tax)
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 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
7338896. 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 for one year beginning
Thursday, September 28, 2017, at
12:30 p.m. ET on
conagrabrands.com/investor-relations under Events &
Presentations.
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 Marie Callender's®, Reddi-wip®,
Hunt's®, Healthy Choice®, Slim Jim® and Orville Redenbacher's®, as well as emerging
brands, including Alexia®, Blake's®, Frontera® and Duke's®, 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. We undertake
no responsibility for updating these statements. 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 timing to complete the acquisition
of Angie's Artisan Treats, LLC; the timing to complete the pending
divestiture of certain assets related to the Wesson oil business;
the ability and timing to obtain required regulatory approvals and
satisfy other closing conditions for the Angie's and Wesson
transactions; our ability to achieve the intended benefits of
acquisitions and divestitures, including the recent spin-off of our
Lamb Weston business; general economic and industry conditions; our
ability to successfully execute our long-term value creation
strategy; our ability to access capital; our ability to execute our
operating and restructuring plans and achieve our targeted
operating efficiencies from cost-saving initiatives and to benefit
from trade optimization programs; the effectiveness of our hedging
activities, and our ability to respond to volatility in
commodities; the competitive environment and related market
conditions; our ability to respond to changing consumer preferences
and the success of our innovation and marketing investments; the
ultimate impact of any product recalls and litigation, including
litigation related to the lead paint and pigment matters; actions
of governments and regulatory factors affecting our businesses; 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; the costs,
disruption, and diversion of management's attention associated with
campaigns commenced by activist investors; and other risks
described in our 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.
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 operating profit for certain segments, adjusted
corporate expenses, and adjusted gross margin. 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 operating margin, 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 Operations
(in
millions)
(unaudited)
|
|
|
|
FIRST
QUARTER
|
|
|
Thirteen weeks
ended
|
|
Thirteen weeks
ended
|
|
|
|
|
August 27,
2017
|
|
August 28,
2016
|
|
Percent
Change
|
Net sales
|
|
$
|
1,804.2
|
|
|
$
|
1,895.6
|
|
|
(4.8)
|
%
|
Costs and
expenses:
|
|
|
|
|
|
|
Cost of goods
sold
|
|
1,285.2
|
|
|
1,351.0
|
|
|
(4.9)
|
%
|
Selling, general and
administrative expenses
|
|
239.0
|
|
|
231.7
|
|
|
3.2
|
%
|
Interest expense,
net
|
|
36.4
|
|
|
58.2
|
|
|
(37.5)
|
%
|
Income from
continuing operations before income taxes and equity method
investment earnings
|
|
243.6
|
|
|
254.7
|
|
|
(4.4)
|
%
|
|
|
|
|
|
|
|
Income tax
expense
|
|
120.0
|
|
|
169.2
|
|
|
(29.1)
|
%
|
Equity method
investment earnings
|
|
30.0
|
|
|
13.1
|
|
|
129.0
|
%
|
Income from
continuing operations
|
|
153.6
|
|
|
98.6
|
|
|
55.8
|
%
|
Income (loss) from
discontinued operations, net of tax
|
|
(0.3)
|
|
|
91.4
|
|
|
N/A
|
|
Net income
|
|
$
|
153.3
|
|
|
$
|
190.0
|
|
|
(19.3)
|
%
|
Less: Net income
attributable to noncontrolling interests
|
|
0.8
|
|
|
3.8
|
|
|
(78.9)
|
%
|
Net income
attributable to Conagra Brands, Inc.
|
|
$
|
152.5
|
|
|
$
|
186.2
|
|
|
(18.1)
|
%
|
|
|
|
|
|
|
|
Earnings per share -
basic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations
|
|
$
|
0.37
|
|
|
$
|
0.22
|
|
|
68.2
|
%
|
Income from
discontinued operations
|
|
—
|
|
|
0.20
|
|
|
(100.0)
|
%
|
Net income
attributable to Conagra Brands, Inc.
|
|
$
|
0.37
|
|
|
$
|
0.42
|
|
|
(11.9)
|
%
|
|
|
|
|
|
|
|
Weighted average
shares outstanding
|
|
415.1
|
|
|
439.0
|
|
|
(5.4)
|
%
|
|
|
|
|
|
|
|
Earnings per share -
diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations
|
|
$
|
0.36
|
|
|
$
|
0.22
|
|
|
63.6
|
%
|
Income from
discontinued operations
|
|
—
|
|
|
0.20
|
|
|
(100.0)
|
%
|
Net income
attributable to Conagra Brands, Inc.
|
|
$
|
0.36
|
|
|
$
|
0.42
|
|
|
(14.3)
|
%
|
|
|
|
|
|
|
|
Weighted average
share and share equivalents outstanding
|
|
419.2
|
|
|
442.7
|
|
|
(5.3)
|
%
|
Conagra Brands,
Inc.
Segment Operating
Results
(in
millions)
(unaudited)
|
|
|
|
FIRST
QUARTER
|
|
|
Thirteen weeks
ended
|
|
Thirteen weeks
ended
|
|
|
|
|
August 27,
2017
|
|
August 28,
2016
|
|
Percent
Change
|
SALES
|
|
|
|
|
|
|
Grocery &
Snacks
|
|
$
|
745.8
|
|
|
$
|
757.2
|
|
|
(1.5)
|
%
|
Refrigerated &
Frozen
|
|
615.7
|
|
|
604.6
|
|
|
1.8
|
%
|
International
|
|
190.9
|
|
|
194.7
|
|
|
(2.0)
|
%
|
Foodservice
|
|
251.8
|
|
|
268.0
|
|
|
(6.1)
|
%
|
Commercial
|
|
—
|
|
|
71.1
|
|
|
(100.0)
|
%
|
Total
|
|
$
|
1,804.2
|
|
|
$
|
1,895.6
|
|
|
(4.8)
|
%
|
|
|
|
|
|
|
|
OPERATING
PROFIT
|
|
|
|
|
|
|
Grocery &
Snacks
|
|
$
|
176.2
|
|
|
$
|
180.5
|
|
|
(2.4)
|
%
|
Refrigerated &
Frozen
|
|
101.9
|
|
|
92.2
|
|
|
10.5
|
%
|
International
|
|
18.9
|
|
|
(149.2)
|
|
|
N/A
|
|
Foodservice
|
|
23.2
|
|
|
21.7
|
|
|
6.9
|
%
|
Commercial
|
|
—
|
|
|
203.3
|
|
|
(100.0)
|
%
|
Total operating
profit for segments
|
|
$
|
320.2
|
|
|
$
|
348.5
|
|
|
(8.1)
|
%
|
|
|
|
|
|
|
|
Reconciliation of
total operating profit to income from continuing operations before
income taxes and equity method investment earnings
|
|
|
|
|
|
|
Items excluded from
segment operating profit:
|
|
|
|
|
|
|
General corporate
expense
|
|
(40.2)
|
|
|
(35.6)
|
|
|
12.9
|
%
|
Interest expense,
net
|
|
(36.4)
|
|
|
(58.2)
|
|
|
(37.5)
|
%
|
Income from
continuing operations before income taxes and equity method
investment earnings
|
|
$
|
243.6
|
|
|
$
|
254.7
|
|
|
(4.4)
|
%
|
Segment operating profit excludes general corporate expense,
equity method investment earnings, and net interest expense.
Management believes such amounts are not directly associated with
segment performance results for the period. Management believes the
presentation of total operating profit for segments facilitates
period-to-period comparison of results of segment operations.
Conagra Brands,
Inc.
Consolidated Balance
Sheet
(in
millions)
(unaudited)
|
|
|
|
August 27,
2017
|
|
May 28,
2017
|
ASSETS
|
|
|
|
|
Current
assets
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
251.4
|
|
|
$
|
251.4
|
|
Receivables, less
allowance for doubtful accounts
|
|
|
|
|
of $3.2 and
$3.1
|
|
577.1
|
|
|
563.4
|
|
Inventories
|
|
1,068.8
|
|
|
934.2
|
|
Prepaid expenses and
other current assets
|
|
188.5
|
|
|
228.7
|
|
Current assets held
for sale
|
|
39.2
|
|
|
35.5
|
|
Total current
assets
|
|
2,125.0
|
|
|
2,013.2
|
|
Property, plant and
equipment, net
|
|
1,647.3
|
|
|
1,655.0
|
|
Goodwill
|
|
4,301.7
|
|
|
4,301.1
|
|
Brands, trademarks
and other intangibles, net
|
|
1,223.6
|
|
|
1,229.3
|
|
Other
assets
|
|
827.5
|
|
|
790.6
|
|
Noncurrent assets
held for sale
|
|
100.5
|
|
|
107.1
|
|
|
|
$
|
10,225.6
|
|
|
$
|
10,096.3
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities
|
|
|
|
|
Notes
payable
|
|
$
|
323.5
|
|
|
$
|
28.2
|
|
Current installments
of long-term debt
|
|
198.7
|
|
|
199.0
|
|
Accounts
payable
|
|
845.7
|
|
|
773.1
|
|
Accrued
payroll
|
|
95.5
|
|
|
167.6
|
|
Other accrued
liabilities
|
|
590.2
|
|
|
552.6
|
|
Total current
liabilities
|
|
2,053.6
|
|
|
1,720.5
|
|
Senior long-term
debt, excluding current installments
|
|
2,571.1
|
|
|
2,573.3
|
|
Subordinated
debt
|
|
195.9
|
|
|
195.9
|
|
Other noncurrent
liabilities
|
|
1,522.4
|
|
|
1,528.8
|
|
Total stockholders'
equity
|
|
3,882.6
|
|
|
4,077.8
|
|
|
|
$
|
10,225.6
|
|
|
$
|
10,096.3
|
|
Conagra Brands,
Inc. and Subsidiaries
Condensed
Consolidated Statements of Cash Flows
(in
millions)
(unaudited)
|
|
|
Thirteen Weeks
Ended
|
|
August 27,
2017
|
|
August 28,
2016
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
|
153.3
|
|
|
$
|
190.0
|
|
Income (loss) from
discontinued operations
|
(0.3)
|
|
|
91.4
|
|
Income from
continuing operations
|
153.6
|
|
|
98.6
|
|
Adjustments to
reconcile income from continuing operations to net cash flows from
operating activities:
|
|
|
|
Depreciation and
amortization
|
64.7
|
|
|
67.2
|
|
Asset impairment
charges
|
6.0
|
|
|
164.1
|
|
Gain on
divestitures
|
—
|
|
|
(198.2)
|
|
Earnings of
affiliates in excess of distributions
|
(30.0)
|
|
|
(6.9)
|
|
Stock-settled
share-based payments expense
|
8.2
|
|
|
7.5
|
|
Contributions to
pension plans
|
(3.8)
|
|
|
(3.0)
|
|
Pension
benefit
|
(12.6)
|
|
|
(10.4)
|
|
Other
items
|
5.5
|
|
|
11.7
|
|
Change in operating
assets and liabilities excluding effects of business acquisitions
and dispositions:
|
|
|
|
Receivables
|
(13.7)
|
|
|
14.8
|
|
Inventories
|
(138.4)
|
|
|
(83.3)
|
|
Deferred income taxes
and income taxes payable, net
|
132.1
|
|
|
215.3
|
|
Prepaid expenses and
other current assets
|
(6.5)
|
|
|
(4.8)
|
|
Accounts
payable
|
67.8
|
|
|
56.5
|
|
Accrued
payroll
|
(72.1)
|
|
|
(121.2)
|
|
Other accrued
liabilities
|
(19.3)
|
|
|
0.4
|
|
Net cash flows from
operating activities — continuing operations
|
141.5
|
|
|
208.3
|
|
Net cash flows from
operating activities — discontinued operations
|
(5.5)
|
|
|
117.6
|
|
Net cash flows from
operating activities
|
136.0
|
|
|
325.9
|
|
Cash flows from
investing activities:
|
|
|
|
Additions to
property, plant and equipment
|
(42.6)
|
|
|
(58.1)
|
|
Sale of property,
plant and equipment
|
4.0
|
|
|
2.0
|
|
Proceeds from
divestitures
|
—
|
|
|
486.3
|
|
Net cash flows from
investing activities — continuing operations
|
(38.6)
|
|
|
430.2
|
|
Net cash flows from
investing activities — discontinued operations
|
—
|
|
|
(58.3)
|
|
Net cash flows from
investing activities
|
(38.6)
|
|
|
371.9
|
|
Cash flows from
financing activities:
|
|
|
|
Net short-term
borrowings
|
295.3
|
|
|
(3.3)
|
|
Repayment of
long-term debt
|
(2.3)
|
|
|
(553.9)
|
|
Payment of intangible
asset financing arrangement
|
(14.4)
|
|
|
(14.9)
|
|
Repurchase of Conagra
Brands, Inc. common shares
|
(300.0)
|
|
|
(85.6)
|
|
Cash dividends
paid
|
(83.3)
|
|
|
(109.5)
|
|
Exercise of stock
options and issuance of other stock awards
|
(2.4)
|
|
|
32.6
|
|
Net cash flows from
financing activities — continuing operations
|
(107.1)
|
|
|
(734.6)
|
|
Net cash flows from
financing activities — discontinued operations
|
—
|
|
|
(3.1)
|
|
Net cash flows from
financing activities
|
(107.1)
|
|
|
(737.7)
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
9.7
|
|
|
—
|
|
Net change in cash
and cash equivalents
|
—
|
|
|
(39.9)
|
|
Add: Cash balance
included in assets held for sale and discontinued operations at
beginning of period
|
—
|
|
|
36.4
|
|
Less: Cash balance
included in assets held for sale and discontinued operations at end
of period
|
—
|
|
|
72.4
|
|
Cash and cash
equivalents at beginning of period
|
251.4
|
|
|
798.1
|
|
Cash and cash
equivalents at end of period
|
$
|
251.4
|
|
|
$
|
722.2
|
|
Q1 FY18 & Q1
FY17 Diluted EPS from Continuing Operations
|
|
|
Q1
FY18
|
|
Q1
FY17
|
|
%
Change
|
Diluted EPS from
continuing operations
|
$
|
0.36
|
|
|
$
|
0.22
|
|
|
63.6
|
%
|
Net expense related
to restructuring plans
|
0.02
|
|
|
0.02
|
|
|
|
Gain on sale of
Spicetec and J.M. Swank businesses
|
—
|
|
|
(0.17)
|
|
|
|
Net expense related
to goodwill and intangible impairment charges
|
—
|
|
|
0.34
|
|
|
|
Corporate hedging
derivative losses
|
0.01
|
|
|
—
|
|
|
|
Net expense (benefit)
related to unusual tax items
|
0.07
|
|
|
(0.02)
|
|
|
|
Adjusted diluted
EPS from continuing operations
|
$
|
0.46
|
|
|
$
|
0.39
|
|
|
17.9
|
%
|
Grocery &
Snacks Segment Operating Profit Reconciliation
|
|
(Dollars in
millions)
|
Q1
FY18
|
|
Q1
FY17
|
|
%
Change
|
Grocery &
Snacks Segment Operating Profit
|
$
|
176.2
|
|
|
$
|
180.5
|
|
|
(2.4)
|
%
|
Net expense related
to restructuring plans
|
6.2
|
|
|
4.9
|
|
|
|
Net expense related
to planned divestiture
|
0.8
|
|
|
—
|
|
|
|
Grocery &
Snacks Segment Adjusted Operating Profit
|
$
|
183.2
|
|
|
$
|
185.4
|
|
|
(1.2)
|
%
|
Refrigerated &
Frozen Segment Operating Profit Reconciliation
|
|
|
(Dollars in
millions)
|
Q1
FY18
|
|
Q1
FY17
|
|
%
Change
|
Refrigerated &
Frozen Segment Operating Profit
|
$
|
101.9
|
|
|
$
|
92.2
|
|
|
10.5
|
%
|
Net expense related
to restructuring plans
|
—
|
|
|
5.0
|
|
|
|
Refrigerated &
Frozen Segment Adjusted Operating Profit
|
$
|
101.9
|
|
|
$
|
97.2
|
|
|
4.9
|
%
|
International
Segment Operating Profit Reconciliation
|
|
(Dollars in
millions)
|
Q1
FY18
|
|
Q1
FY17
|
|
%
Change
|
International
Segment Operating Profit (Loss)
|
$
|
18.9
|
|
|
$
|
(149.2)
|
|
|
N/A
|
Net expense related
to restructuring plans
|
—
|
|
|
0.2
|
|
|
|
Net expense related
to goodwill and intangible impairment charges
|
—
|
|
|
163.6
|
|
|
|
International
Segment Adjusted Operating Profit
|
$
|
18.9
|
|
|
$
|
14.6
|
|
|
29.1
|
%
|
Foodservice
Segment Operating Profit Reconciliation
|
|
(Dollars in
millions)
|
Q1
FY18
|
|
Q1
FY17
|
|
%
Change
|
Foodservice
Segment Operating Profit
|
$
|
23.2
|
|
|
$
|
21.7
|
|
|
6.8
|
%
|
Net expense related
to restructuring plans
|
—
|
|
|
1.8
|
|
|
|
Foodservice
Segment Adjusted Operating Profit
|
$
|
23.2
|
|
|
$
|
23.5
|
|
|
(1.4)
|
%
|
Commercial Segment
Operating Profit Reconciliation
|
|
(Dollars in
millions)
|
Q1
FY18
|
|
Q1
FY17
|
|
%
Change
|
Commercial Segment
Operating Profit
|
$
|
—
|
|
|
$
|
203.3
|
|
|
(100.0)
|
%
|
Gain on sale of
Spicetec and J.M. Swank businesses
|
—
|
|
|
(198.2)
|
|
|
|
Commercial Segment
Adjusted Operating Profit
|
$
|
—
|
|
|
$
|
5.1
|
|
|
(100.0)
|
%
|
Corporate Expense
Reconciliation
|
|
(Dollars in
millions)
|
Q1
FY18
|
|
Q1
FY17
|
|
%
Change
|
Selling, general
and administrative expenses
|
$
|
239.0
|
|
|
$
|
231.7
|
|
|
3.2
|
%
|
Less: selling,
general and administrative expenses from reporting
segments
|
204.8
|
|
|
195.4
|
|
|
|
Plus: Corporate cost
of goods sold
|
6.0
|
|
|
(0.7)
|
|
|
|
Corporate
expenses
|
$
|
40.2
|
|
|
$
|
35.6
|
|
|
|
Net expense related
to restructuring plans
|
(5.2)
|
|
|
(2.2)
|
|
|
|
Net income (expense)
related to hedging
|
(6.0)
|
|
|
0.7
|
|
|
|
Corporate adjusted
expenses
|
$
|
29.0
|
|
|
$
|
34.1
|
|
|
(15.3)
|
%
|
Net Sales
Reconciliation
|
|
Q1 FY18
(Dollars in millions)
|
Grocery &
Snacks
|
|
Refrigerated
& Frozen
|
|
International
|
|
Foodservice
|
|
Commercial
|
|
Total
Conagra
Brands
|
Net
Sales
|
$
|
745.8
|
|
|
$
|
615.7
|
|
|
$
|
190.9
|
|
|
$
|
251.8
|
|
|
$
|
—
|
|
|
$
|
1,804.2
|
|
Impact of foreign
exchange
|
—
|
|
|
—
|
|
|
(3.2)
|
|
|
—
|
|
|
—
|
|
|
(3.2)
|
|
Net sales from
acquired businesses
|
(27.6)
|
|
|
(3.4)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(31.0)
|
|
Organic Net
Sales
|
$
|
718.2
|
|
|
$
|
612.3
|
|
|
$
|
187.7
|
|
|
$
|
251.8
|
|
|
$
|
—
|
|
|
$
|
1,770.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 FY17
(Dollars in millions)
|
Grocery &
Snacks
|
|
Refrigerated
& Frozen
|
|
International
|
|
Foodservice
|
|
Commercial
|
|
Total
Conagra
Brands
|
Net
Sales
|
$
|
757.2
|
|
|
$
|
604.6
|
|
|
$
|
194.7
|
|
|
$
|
268.0
|
|
|
$
|
71.1
|
|
|
$
|
1,895.6
|
|
Net sales from
divested businesses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(71.1)
|
|
|
(71.1)
|
|
Organic Net
Sales
|
$
|
757.2
|
|
|
$
|
604.6
|
|
|
$
|
194.7
|
|
|
$
|
268.0
|
|
|
$
|
—
|
|
|
$
|
1,824.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
%
Change
|
Grocery &
Snacks
|
|
Refrigerated
& Frozen
|
|
International
|
|
Foodservice
|
|
Commercial
|
|
Total
Conagra
Brands
|
Net
Sales
|
(1.5)
|
%
|
|
1.8
|
%
|
|
(2.0)
|
%
|
|
(6.1)
|
%
|
|
(100.0)
|
%
|
|
(4.8)
|
%
|
Impact of foreign
exchange (pp)
|
—
|
|
|
—
|
|
|
(1.6)
|
|
|
—
|
|
|
—
|
|
|
(0.2)
|
|
Net sales from
acquired businesses (pp)
|
(3.6)
|
|
|
(0.5)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.6)
|
|
Net sales from
divested businesses (pp)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
100.0
|
|
|
3.6
|
|
Organic Net
Sales
|
(5.1)
|
%
|
|
1.3
|
%
|
|
(3.6)
|
%
|
|
(6.1)
|
%
|
|
—
|
%
|
|
(3.0)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Volume
(Organic)
|
(5.9)
|
%
|
|
1.4
|
%
|
|
(7.7)
|
%
|
|
(17.6)
|
%
|
|
—
|
|
|
(5.3)
|
%
|
Price/Mix
(Organic)
|
0.8
|
%
|
|
(0.1)
|
%
|
|
4.1
|
%
|
|
11.5
|
%
|
|
—
|
|
|
2.3
|
%
|
Gross Margin
Reconciliation
|
|
Gross Margin: Gross
Profit as a % of Net sales
|
|
|
|
|
Q1
FY18
|
|
Q1
FY17
|
Net sales
|
$
|
1,804.2
|
|
|
$
|
1,895.6
|
|
Cost of goods
sold
|
1,285.2
|
|
|
1,351.0
|
|
Gross
Profit
|
$
|
519.0
|
|
|
$
|
544.6
|
|
|
|
|
|
Net expense related
to restructuring plans included in cost of goods sold
|
2.3
|
|
|
5.2
|
|
Net expense (income)
related to hedging
|
6.0
|
|
|
(0.7)
|
|
Gross Profit
adjusted for items impacting comparability
|
$
|
527.3
|
|
|
$
|
549.1
|
|
Adjusted Gross
Margin
|
29.2
|
%
|
|
29.0
|
%
|
SG&A
Reconciliation
|
|
|
Q1
FY18
|
|
Q1
FY17
|
Selling, general,
and administrative (SG&A) expenses
|
$
|
239.0
|
|
|
$
|
231.7
|
|
Gain on sale of
Spicetec and J.M. Swank businesses
|
—
|
|
|
(198.2)
|
|
Advertising and
promotion expenses
|
54.9
|
|
|
64.7
|
|
Net expense related
to restructuring plans
|
9.1
|
|
|
8.9
|
|
Net expense related
to goodwill and intangible impairment charges
|
—
|
|
|
163.6
|
|
Net expense related
to planned divestiture
|
0.8
|
|
|
—
|
|
Adjusted SG&A
expenses
|
$
|
174.2
|
|
|
$
|
192.7
|
|
___________________________
1 "Adjusted" financial measures, including organic net
sales, are non-GAAP financial measures. Please see the end of
this release for reconciliations to the most directly comparable
GAAP financial measures.
2 Organic net sales excludes the impact of foreign
exchange and divested businesses, as well as acquisitions (until
the anniversary date of the acquisitions). All references to
changes in volume and price/mix are based organic or net sales.
3 Gross margin is defined as gross profit as a percent
of net sales.
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SOURCE Conagra Foods