Conagra Brands Reports Mixed Q2 Results, Notes Margin Pressure

Conagra Brands Inc CAG reported second-quarter FY22 sales growth of 2.1% year-on-year, to $3.06 billion, beating the analyst consensus of $3.02 billion.
Grocery & Snacks segment sales fell 1.4% Y/Y to $1.3 billion, and Refrigerated & Frozen segment sales increased 3% Y/Y to $1.3 billion.
Adjusted EPS of $0.64 missed the consensus of $0.68.
Adjusted gross profit fell 14.4% to $767 million. The gross margin decreased 500 basis points Y/Y to 24.7%, and the adjusted gross margin decreased 483 basis points to 25.1%.
Adjusted operating margin decreased 500 basis points Y/Y to 14.6%.
The company reported $345 million in adjusted selling, general, and administrative expense, a 3.5% decrease Y/Y.
Adjusted EBITDA of $585 million fell 17.9% Y/Y.
Cash and equivalents totaled $68.7 million as of November 28, 2021.
"Looking ahead, we expect to continue experiencing cost pressures above original expectations in the second half of fiscal 2022," said CEO Sean Connolly.
Outlook: Conagra sees an organic net sales growth outlook of +3% versus prior guidance of +1%.
The company reiterated its adjusted EPS guidance of $2.50, above the consensus of $2.47.
Price Action: CAG shares are trading lower by 3.22% at $33.06 on the last check Thursday.

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