Conagra Brands Clocks 5% Top-Line Growth In Q3; Cuts FY22 EPS Outlook

Conagra Brands Inc CAG reported third-quarter FY22 sales growth of 5.1% year-on-year, to $2.91 billion, beating the consensus of $2.84 billion.
Grocery & Snacks segment sales increased 6.2% Y/Y to $1.2 billion, and Refrigerated & Frozen segment sales increased 2.9% Y/Y to $1.2 billion.
Adjusted EPS of $0.58 was in line with the consensus.
Adjusted gross profit fell 7.9% to $701 million. The gross margin decreased 344 basis points Y/Y to 23.9%, and the adjusted gross margin decreased 342 basis points to 24.1%.
Adjusted operating margin decreased 230 basis points Y/Y to 13.7%.
The company reported $237 million in adjusted selling, general, and administrative expense, a 3.3% decrease Y/Y.
Adjusted EBITDA of $553 million fell 2.4% Y/Y.
Cash and equivalents totaled $79.7 million as of February 27, 2022.
"We experienced higher-than-expected cost pressures as the third quarter progressed and expect those pressures to continue into the fourth quarter, particularly in certain frozen, refrigerated, and snacks businesses," said CEO Sean Connolly.
Outlook: Conagra sees an organic net sales growth outlook of +7% for Q4. The company expects Q4 adjusted EPS of about $0.64 versus the consensus of $0.70.
Conagra sees FY22 organic net sales growth of +4% versus the prior outlook of +3%. It expects FY22 adjusted EPS of $2.35 versus previous guidance of $2.50 and the consensus of $2.42.
Price Action: CAG shares are trading lower by 2.45% at $33.50 in premarket on the last check Thursday.

Overview Rating:

Speculative

0100

Earnings Calendar