In the first paragraph, Melissa Napier from Conagra Brands introduces their first quarter earnings presentation. She mentions that a live Q&A session will be held later in the day, accessible via webcast, and that related materials and a transcript are available on their Investor Relations website. She notes that they will be making forward-looking statements and discusses non-GAAP financial measures, urging listeners to refer to their SEC filings and earnings release for more details. Sean Connolly, the CEO, then expresses sympathy for those affected by Hurricane Helene and outlines the company's support efforts. He begins discussing their earnings by highlighting the progress made in the first quarter and the challenges encountered, including one unanticipated issue.

The paragraph outlines the company's positive performance in the quarter, emphasizing that they are on track to meet their fiscal 2025 goals. They achieved growth in domestic retail, especially in strategic frozen and snack segments, and improved market share. Their Foodservice value-over-volume strategy maintained margins, and supply chain initiatives are set to save $1 billion by 2025. They expanded their portfolio by acquiring FATTY Smoked Meat Sticks and divested from ATFL. However, a manufacturing disruption at their Hebrew National hot dog plant led to significant sales losses, impacting overall volume and organic net sales in Q1.

The paragraph discusses the impact of a temporary manufacturing disruption on a company's Refrigerated and Frozen segment, leading to reduced volume and organic net sales, mostly affecting the first quarter. Despite this, the company's results mostly aligned with internal plans, excluding the organic net sales setback. The company remains confident in achieving its fiscal 2025 guidance, citing successful execution of its priorities and overall business momentum. It highlights strong domestic retail volume recovery, year-over-year growth in frozen and snacks, and sequential improvement in staples, excluding temporary issues with hot dogs. The company expects pricing impact on tomatoes to diminish in future quarters.

The paragraph discusses the company's strong performance in terms of volume and market share, despite a challenging consumer environment. In Q1, 71% of the company’s portfolio held or gained volume share, with notable achievements in the frozen and snacks categories, where 93% of brands showed volume share improvement. This performance surpasses that of their peers, emphasizing the success of their strategic investments in consumer engagement. The company has achieved these gains while securing expected returns on investment. It also notes a rational merchandising environment, with slightly reduced promotional activity compared to pre-pandemic levels, as shown in their industry comparisons.

The paragraph discusses Conagra's approach to promotions, highlighting that they are less reliant on them compared to peers and maintain a disciplined, long-term brand strategy. In the frozen foods sector, especially in single-serve meals and vegetables, Conagra has achieved significant market share growth, with strategic investments driving their success in fiscal 2024 and 2025. The company's focus on premium value-added products, particularly in the Birds Eye brand, has stabilized and positively impacted their frozen vegetables business. In the snacks category, Conagra's portfolio allows them to outperform the broader market.

The paragraph discusses Conagra's strength in the snacking industry, highlighting its portfolio of brands such as Slim Jim, Duke's, and Angie's BOOMCHICKAPOP within popular snacking subspaces like meat snacks, popcorn, and seeds. It notes that permissible snacking, which emphasizes low-carb and protein-rich options, is outpacing the overall snacking market. Conagra's acquisition of The FATTY enhances its leadership in the meat sticks category, catering to the demand for convenient, healthy snacks. In its Foodservice business, Conagra has successfully rebuilt margins to pre-COVID levels by focusing on organic growth and an efficient supply chain.

The company expects to achieve $350 million in savings by fiscal 2025 through productivity initiatives, maintaining a strong service level of 97% in Q1 and improving free cash flow by shortening the cash conversion cycle. These efforts are aligned with the goal of $1 billion in cost savings by fiscal 2025, supporting brand investments and portfolio reshaping. They are resuming active portfolio reshaping through investments in innovation, M&A, and divestitures, after focusing on debt reduction. With strengthened financials, the company is well-positioned to pursue acquisitions and divestitures while maintaining a net leverage target of 3x. Recent actions include acquiring The FATTY and divesting the majority stake in Agro Tech Foods Limited, as part of ongoing efforts to enhance growth and margins.

The paragraph summarizes a conference call where David Marberger discusses the company's Q1 financial performance, emphasizing the impact of a manufacturing disruption on Hebrew National. Excluding this disruption, total organic net sales would have declined 2.6% instead of 3.5%. The Grocery and Snacks segment saw a 1.9% decline in organic net sales, largely due to lower volumes and slight price/mix decreases from brand investments and a previous price increase in the tomato business. The Refrigerated and Frozen segment experienced a 5.7% decline, primarily due to the Hebrew National issue, but would have seen a 3.6% decline without it, with volumes up 1.6% and price/mix down 5.2%.

The paragraph provides an overview of the financial performance for Conagra's recent quarter. The Refrigerated and Frozen segment faced challenges due to reduced pricing in some brands experiencing deflation and increased trade merchandising investments, particularly impacting the frozen business. There was also an unfavorable shift in product mix. The International segment saw a 3% organic net sales increase, driven by strong performance in Global Exports. The Foodservice segment was affected by exiting a lower margin business and reduced restaurant traffic, although it remains important to Conagra's portfolio. Net sales were negatively impacted by foreign exchange, particularly the U.S. Dollar to Mexican Peso rate, but slightly boosted by acquiring FATTY Smoked Meat Sticks. The adjusted operating margin fell by 244 basis points to 14.2%, impacted by prior-discussed factors, increased cost of goods sold due to inflation in proteins, sweeteners, and warehousing, higher SG&A, and foreign exchange losses. However, productivity improvements helped finance trade investments.

In the first quarter, all segments of Conagra reported declines in adjusted operating profit and margins due to lower organic net sales, increased merchandising investments, higher costs, and negative operating leverage, despite some productivity gains. The Refrigerated and Frozen segment was particularly affected by a $10 million impact from Hebrew National manufacturing disruptions, while the International segment faced negative effects from unfavorable foreign exchange rates. The adjusted earnings per share (EPS) decreased to $0.53 from $0.66, impacted by these factors and lower equity earnings from Ardent Mills, which saw reduced commodity revenue due to less market volatility. Conagra generated $269 million in net cash flow from operations, with a decrease due to lower operating profit and anticipated changes in seasonal working capital. They spent $133 million on capital expenditures, paid $167 million in dividends, and resumed share repurchases of $64 million to counter dilution from equity compensation plans.

In the first quarter of fiscal 2025, the company reduced its net debt by repaying debts during fiscal 2024 and making key acquisitions, including FATTY Smoked Meat Sticks and a co-manufacturer of cooking spray products. Net leverage ended at 3.6x, with an aim to reach 3.2x by year-end. The sale of its ATFL business in India, along with acquisitions, used $154 million in cash. The company maintains its fiscal 2025 guidance, expecting improved volumes, topline, and margins in Q2 and higher merchandising investments in Q2. The full-year inflation forecast increased to 3.2%, primarily due to higher protein and sweetener costs, partially offset by deflation in fats and oils, with minimal expected impact on margins or EPS from Q1 transactions, but a $30 million decrease in net sales projected for the year.

The paragraph discusses Conagra Brands' financial targets, specifically aiming for a year-end net leverage of around 3.2x. This goal is based on anticipated favorable free cash flow due to better working capital, reduced capital expenses, and lower cash taxes from a beneficial tax settlement. Additionally, the company expects the full-year adjusted gross margin to remain relatively stable compared to fiscal 2024.

This summary was generated with AI and may contain some inaccuracies.