Conagra Brands (CAG) Q2 2025 Prepared Remarks earnings summary

Executive summary

• Q2 FY2025 saw a return to organic net sales and volume growth, with strong market share gains in frozen and snacking, despite economic pressures and value-seeking consumer behavior.

• Profitability was pressured by higher inflation and unfavorable FX, leading to updated FY25 guidance.

• Net sales for Q2 FY2025 were $3.20 billion, down 0.4% year-over-year; organic net sales up 0.3%.

• Adjusted EPS was $0.70, down 1.4% year-over-year; reported EPS was $0.59.

• Segment performance was mixed, with gains in Grocery & Snacks and declines in Refrigerated & Frozen and Foodservice.

Financial highlights

• Q2 organic net sales were $3.2 billion, up 0.3% year-over-year; adjusted gross margin was 26.4% (down 52 bps), and adjusted operating margin 15.3% (down 57 bps).

• Adjusted EPS was $0.70, down 1.4% year-over-year; free cash flow for H1 FY25 was $539 million, with >100% full-year conversion expected.

• Net leverage at quarter-end was 3.54x, with net debt reduced to $8.4 billion.

• SG&A expenses for Q2 FY2025 were $444 million, up due to restructuring and impairment charges.

• Dividend payments totaled $335 million in the first half; $64 million in share repurchases YTD.

Outlook and guidance

• FY25 organic net sales growth expected near midpoint of (1.5)% to flat versus FY24.

• Adjusted operating margin guidance updated to approximately 14.8%; adjusted EPS forecasted at $2.45–$2.50, including a $0.04 FX headwind.

• Free cash flow conversion expected above 100%; net leverage targeted at ~3.4x by year-end.

• Adjusted effective tax rate forecasted at ~23%.

• Capital expenditures for FY25 estimated at $450 million.