CHICAGO, Feb. 17, 2020 /PRNewswire/ -- Conagra Brands,
Inc. (NYSE: CAG) today announced that it is revising its fiscal
2020 outlook as a result of softer than expected category
performance during the company's fiscal third quarter, which ends
on February 23, 2020. Third quarter
consumption declines have impacted a wide range of categories
across the food industry, including categories in which Conagra
Brands competes.
The Company now expects fiscal 2020 organic net sales growth to
be flat to 0.5%. Adjusted operating margin is now expected to be
15.8% to 16.2%. The Company expects adjusted diluted earnings per
share from continuing operations of $2.00 to $2.07.
Sean Connolly, president and
chief executive officer of Conagra Brands, commented, "Consumption
softness in the quarter first emerged in the foodservice industry,
with holiday restaurant traffic weaker than last year. Softness
pivoted to retail in January and impacted numerous categories
across food, including several in which we compete. While we
planned for tougher year-over-year comparable results in the third
quarter, we did not plan for this level of category softness.
Accordingly, we are updating our fiscal 2020 outlook."
Connolly continued, "Despite the unplanned third quarter
consumption downturn, we remain encouraged by the health of our
brands and the traction we have made on our fiscal 2020 innovation
slate. We have gained share in many of our categories during the
quarter and, based on our analysis, believe the recent consumption
weakness is abating. We expect a resumption of year-over-year
organic net sales growth in our fourth fiscal quarter."
The Company remains committed to achieving its fiscal 2021
leverage goal. In addition, it is also committed to
delivering on its fiscal 2022 targets, which have been updated for
recent divestitures.
Connolly noted, "We remain confident in our brands, the proven
Conagra Way playbook and the long runway of growth ahead. As such,
we are reaffirming our commitment to achieving our fiscal 2021
deleveraging and delivering on our long-term fiscal 2022
targets."
The Company's CAGNY presentation slides will be available today,
February 17, at approximately
10:00 a.m. ET on
conagrabrands.com/investor-relations under Events &
Presentations.
Updated Fiscal 2020 Outlook
Note that organic net sales growth continues to exclude the
impact of fiscal 2020's 53rd week. All other
metrics continue to include the impact of the 53rd
week. The Company's updated guidance also reflects the impact
of the divestiture of the Lender's bagel business, which closed
early in the third quarter.
Metric
|
Prior Fiscal 2020
Guidance
|
Updated Fiscal
2020 Guidance
|
Organic Net Sales
Growth
|
+1.0% to
+1.5%
|
Flat to
+0.5%
|
Reported Net Sales
Growth
|
+12.4% to
+12.9%
|
+10.0% to
+10.5%
|
Adj. Op.
Margin
|
16.2% to 16.8
%
|
15.8% to
16.2%
|
Adj. Net Interest
Expense
|
Slightly below $505
million
|
~$500
million
|
Adj. Effective Tax
Rate
|
~24%
|
23% to 24%
|
Avg. Diluted
Shares
|
~488
million
|
~488
million
|
Adj. Diluted EPS from
Cont. Ops.
|
$2.07 to
$2.17
|
$2.00 to
$2.07
|
Free Cash
Flow
|
Slightly below
$1 billion
|
~950
million
|
Updated Fiscal 2022 Targets
Metric
|
Updated Fiscal
2022 Targets
|
Organic Net Sales
Growth (3-yr. CAGR ending FY22)
|
+1% to +2% (no
change)
|
FY22 Adjusted
Operating Margin
|
18% to 19% (no
change)
|
FY22 Adjusted Diluted
EPS from Cont. Ops.
|
$2.66 to $2.76
(reduced $0.02 for recent divestitures)
|
Free Cash Flow
Conversion (% of Adjusted Net Income; 3-yr. Average Ending
FY22)
|
95%+ (no
change)
|
The inability to predict the amount and timing of the impacts of
foreign exchange, acquisitions, 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.
CAGNY Conference Presentation Webcast
As previously announced, Conagra Brands will present at the 2020
CAGNY (Consumer Analyst Group of New
York) Conference on Tuesday, February
18, at 9 a.m. ET.
A live audio webcast of the presentation will be available on
conagrabrands.com/investor-relations under Events &
Presentations. A replay of the webcast will be available
until February 18,
2021.
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 Birds Eye®, Marie Callender's®,
Banquet®, Healthy Choice®, Slim Jim®, Reddi-wip®, and Vlasic®, as
well as emerging brands, including Angie's® BOOMCHICKAPOP®,
Duke's®, Earth Balance®, Gardein®, and Frontera®, 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. 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, uncertainties, and
factors include, among other things: the risk that the cost savings
and any other synergies from the acquisition of Pinnacle (the
"acquisition") may not be fully realized or may take longer to
realize than expected; the risk that the acquisition may not be
accretive within the expected timeframe or to the extent
anticipated; the risks that the acquisition and related integration
will create disruption to the Company and its management and impede
the achievement of business plans; the risk that the acquisition
will negatively impact the ability to retain and hire key personnel
and maintain relationships with customers, suppliers, and other
third parties; risks related to our ability to successfully address
Pinnacle's business challenges; risks related to our ability to
achieve the intended benefits of other recent acquisitions and
divestitures; risks associated with general economic and industry
conditions; risks associated with our ability to successfully
execute our long-term value creation strategies, including those in
place for specific brands at Pinnacle before the acquisition; risks
related to our ability to deleverage on currently anticipated
timelines, and to continue to access capital on acceptable terms or
at all; risks related to our ability to execute operating and
restructuring plans and achieve targeted operating efficiencies
from cost-saving initiatives, related to the acquisition and
otherwise, and to benefit from trade optimization programs, related
to the acquisition and otherwise; risks related to the
effectiveness of our hedging activities and ability to respond to
volatility in commodities; risks related to the Company's
competitive environment and related market conditions; risks
related to our ability to respond to changing consumer preferences
and the success of its innovation and marketing investments; risks
related to the ultimate impact of any product recalls and
litigation, including litigation related to the lead paint and
pigment matters, as well as any securities litigation, including
securities class action lawsuits; risk associated with actions of
governments and regulatory bodies that affect our businesses,
including the ultimate impact of new or revised regulations or
interpretations; risks related to 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, related to the acquisition or otherwise;
the costs, disruption, and diversion of management's attention due
to the integration of the acquisition; 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. We undertake no
responsibility to update these statements, except as required by
law.
Note on Non-GAAP Financial Measures
This document includes certain forward-looking non-GAAP
financial measures, including adjusted diluted earnings per share
from continuing operations, organic net sales, adjusted operating
margin, adjusted net interest expense, free cash flow, and adjusted
effective tax rate. 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.
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
View original content to download
multimedia:http://www.prnewswire.com/news-releases/conagra-brands-updates-fiscal-2020-outlook-remains-committed-to-long-term-targets-301005919.html
SOURCE Conagra Brands, Inc.