Conagra Brands Inc Q1 2026 Earnings Call- Q&A Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Andrew Lazar - Barclays - Analyst : Great, thanks so much. Sean, Conagra expects to return to positive organic sales growth in the fiscal second half, but also mentioned recent consumption trends been pointing to a low single-digit decline expected in the second quarter. What's driving the fiscal second half inflection? Or is it really just easy year-ago comps and do recent consumption trends that you mentioned sort of give you any pause, particularly in light of the planned tactical pricing actions that you're taking? And I guess, to what do you attribute the recent consumption weakness?

Question: Andrew Lazar - Barclays - Analyst : Got it, thank you for that. And then fiscal first quarter came in ahead of expectations. Fiscal second quarter was moderated a bit in terms of your outlook. Net-net, do you see fiscal first half as potentially coming in a bit better than originally planned? And then Dave, how much was the benefit from trade expense timing to organic sales growth in the quarter? Thanks so much.

Question: Andrew Lazar - Barclays - Analyst : Great. Thanks so much.

Question: Peter Galbo - Bank of America - Analyst : Hi, good morning, thanks for the questions. Sean and Dave, I just wanted to maybe touch on the updated core inflation outlook that you gave. I know you talked about some of the moving pieces within kind of the Animal Proteins. But maybe you can just remind us, a, kind of how your bought for the remainder of the year on some of those items? Are you kind of locked in now for the rest of the year, just given that some of these cuts are very volatile that have moved, particularly chicken over the past month has maybe moved more favorably. So just want to understand the flex in that inflation guide as we get in the back half?

Question: Peter Galbo - Bank of America - Analyst : Great. Thanks for that, Dave, very helpful. I wanted to pivot maybe to the balance sheet and the cash flow, Dave. I know you called out that there would be some debt down in the quarter. I've gotten a few questions this morning just on the cash flow generation in the quarter. It was a bit maybe lighter than expectations than some of the inventory build. So maybe you can unpack both the debt paydown, how we should think about that in 2Q and the remainder of the year? And then just anything around kind of inventory build that happened in the quarter? Thanks very much. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Peter Galbo - Bank of America - Analyst : Awesome thanks Chris.

Question: David Palmer - Evercore ISI - Analyst : Okay, thank you. Good morning. Frozen entrees, obviously, it's been a great long-term category for Conagra. Just looking at the recent data. And I know there's reasons for this, maybe some overhang, some of the past supply chain stuff. But wondering what is your state of the union with that category? It looks like you guys are losing share and the category is declining for years, you guys were driving the majority of growth in the category that was oftentimes growing at least a little bit. So I wonder what your Frozen outlook is, frozen entree in particular, outlook is through the rest of the year? And I have a quick follow-up.

Question: David Palmer - Evercore ISI - Analyst : And thank you for that. And just a very general big picture question. You're going to have those easier comparisons in the second half of the year, and you're going to be more on your front foot. I'm wondering what are some -- I don't know, if there's an exact metrics you can share, but what are the things you're going to be looking for in the second half that will really tell you that you get back to balanced sales and profit growth in fiscal '27, if that is -- the goal here is to get back to it on algo in '27. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: David Palmer - Evercore ISI - Analyst : Thank you very much.

Question: Bryan Adams - UBS - Analyst : Hey morning guys, thanks for the question. Maybe just first a quick housekeeping one, following up on David's question there. So 1Q volume performance for Refrigerated and Frozen came in a lot better than I think maybe scanner trends would have suggested. And I think in the prepared remarks, you said volumes for Frozen itself were up like 3% or so. Was there any like elevated shipments in the 1Q as you were finishing up restoring supply shelf? Or is this pretty consistent with that the consumption trends that you were seeing?

Question: Bryan Adams - UBS - Analyst : Okay, awesome. Thanks, like -- yeah, not my best reading comprehension, I guess. On the margin claw back opportunities that you just actually spoke to. Can you kind of just like run through those high level for us as we think about '27? Because some of the stuff -- like some of the costs you've had this year, like tariffs, like that's not necessarily something you can assume goes away, but then I also know you have some work in process on the chicken and then I'm not really sure the puts and takes on SG&A. Do you mind just running through those, Sean, as you've seen today?

Question: Bryan Adams - UBS - Analyst : Okay, really helpful. Thanks Sean. Thanks, Dave, we'll pass on.

Question: Robert Moskow - TD Cowen - Analyst : Hi, thanks. I have a phasing question about 2Q volume, Dave and Sean. Just looking at comparisons versus a year ago on volume. And it would appear that the volume growth comp would get tougher in 2Q compared to 1Q, because of the Hebrew comparison and also because you had a lot of frozen vegetable volume in 2Q. So should I assume that volume growth is -- or volume declines are similar in 2Q as in 1Q because of those comps? Or is the merchandising activity enough to provide some sequential improvement in volume?

Question: Robert Moskow - TD Cowen - Analyst : In terms of growth, okay.

Question: Robert Moskow - TD Cowen - Analyst : Thank you very much.

Question: Robert Moskow - TD Cowen - Analyst : Yeah, thanks a lot.

Question: Robert Moskow - TD Cowen - Analyst : Got it. Thanks, Sean. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Megan Clapp - Morgan Stanley - Analyst : Hi, thanks. Good morning. I wanted to start with maybe a follow-up, Sean, to Andrew's second question at the beginning just around how the quarter played out and how you're tracking so far. You made a comment last quarter that you view the fiscal '26 guidance prudent given the operating environment. And you talked about a lot of encouraging things that you saw in 1Q. At the same time, consumer sentiment suite. You talked about value-seeking behavior, cost inflation is a bit higher. So just putting all those puts and takes together, I guess when you think about the fiscal '26 guide today, you reiterated it. Would you still characterize it as prudent and maybe where is the guide in your mind, the most conservative? Thank you.

Question: Megan Clapp - Morgan Stanley - Analyst : Okay, great, thanks. And that's a good segue to my follow-up, which is as you think about implementing tariff-related pricing, which I think you said will come on late in the second quarter, have your views on elasticity and the expected elasticity change at all? Just given you're still seeing some value-seeking behavior with the consumer. And if we just think bigger picture around the macro, the consumer is going to be seeing a lot of -- it seems like inflation-driven pricing start to roll in around the same time. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Megan Clapp - Morgan Stanley - Analyst : Awesome. Thank you.

Question: Max Gumport - BNP Paribas - Analyst : Hey, thanks for the question. Sean, I'm curious for an update on the value-seeking behavior that you're still seeing. It's been a few years now. So I'm just wondering how you see this cycle playing out, and how you're positioning Conagra to come out of this cycle in a better place? Thanks very much.

Question: Max Gumport - BNP Paribas - Analyst : Right. And then as a follow-up, it was nice to see service levels get back to 98% and then that enabling a recovery to some degree, in quality merchandising and improved volume share performance as well. As we look to the remainder of the year, is there any color or guardrails you could provide on how you expect your promotional levels and your volume share performance to progress from here? Thanks very much.

Question: Scott Marks - Jefferies - Analyst : Hey, good morning, Sean, Dave. Thanks so much for taking your questions. First thing I wanted to ask about coming back to some of the recovery of the supply chain disruption from earlier this year, you've spoken about, obviously, recovery in your own service levels, rebuilding of your own inventories as well. Wondering how you're seeing it from the retailer side? In terms of their inventory levels relative to where they were prior to the disruption on Frozen Vegetables and some of the chicken products. Thanks.

Question: Scott Marks - Jefferies - Analyst : Got it, thanks for that. And then a follow-up question just on some of the chicken facility modernization, I know you made the comment that you're still expecting the bake chicken facility to be completed in Q2. I think you're still working through a fried chicken modernization that's a little bit later. How should we be thinking about maybe cadence of recovery of the margin, let's say, I know you spoke about some benefits in H2, but just trying to gauge how we should be thinking about the restoration of margin from that perspective? Thanks.

Question: Scott Marks - Jefferies - Analyst : Got it. I'll pass it on. Thanks very much.

Question: Thomas Palmer - JPMorgan Chase & Co - Analyst : Hey, thank you. Is round two here, you can hear me? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Thomas Palmer - JPMorgan Chase & Co - Analyst : All right, a third Palmer on the call. I wanted to just ask on the timing of inflation and kind of how it plays out over the course of the year. It's -- I think from the materials, it seems like to start off the year, maybe it was a little bit favorable to that kind of 7% plus. Is 2Q just given what we're seeing with protein maybe heightened or just, I guess, any help in kind of the cadence over the next three quarters as you see it today?

Question: Thomas Palmer - JPMorgan Chase & Co - Analyst : Okay. Understood, thank you for that. And then, Sean, I just wanted to kind of clarify, I guess, one item, and I know it's been asked about already a little bit. But it seems like you are seeing benefits from promotional activity, but at the same time, as you have kind of taken some pricing initially, maybe you noted a little bit lower elasticity than you might see in the past. I mean, look, I get some of this is maybe we're talking about different products, where these two are applied. But I guess in the current environment, are you guys kind of baking in that one of these two sides shifts a little bit to converge?

Question: Thomas Palmer - JPMorgan Chase & Co - Analyst : Thank you for that.