Conagra Brands Inc Q3 2024 Earnings Call (Pre-Recorded) Transcript

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

Question: Andrew Lazar - Barclays - Analyst : Great. Thanks so much. Good morning, everybody. 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: Andrew Lazar - Barclays - Analyst : Good morning. I guess, Sean, based on scanner data, most expected, I think, some upside in grocery and snacks and maybe a bit more weakness in refrigerated and frozen. This dynamic was certainly more extreme, I think, in the quarter than I think many had modeled. So, I guess, in grocery and snacks, Conagra had about a 4% benefit from price mix, and that was well ahead of what we'd thought. So curious what drove that. And then in refrigerated and frozen, you talked about success in single-serve meals, but trying to corroborate how we sort of marry that with the 8% organic sales decline in that segment? And maybe that's more of a function of refrigerated versus frozen in some way. So those two aspects would be really helpful.

Question: Andrew Lazar - Barclays - Analyst : Got it. Then I guess, just lastly, it's -- obviously, volumes in the quarter we're still down, but a sequential improvement, and that's obviously what the expected step-up in investment spend. So, I guess you talked to this a little bit, but how would you characterize the current volume momentum and would you expect volume trends to inflect positively by the time we get to the start of FY '25 or are dynamics still such, in the broader industry, that that's a little bit hard to peg right now? Thank you.

Question: Andrew Lazar - Barclays - Analyst : Thank you.

Question: Ken Goldman - JPMorgan Chase and Company - Analyst : Hi. Thanks and good morning. I just wanted to ask a quick question about 4Q. Your implied guidance might suggest around minus 2% in organic sales growth. It's pretty similar to what you posted in 3Q. You know, some might say it's a little prudent, though, just given you do have an easier comparison both on one-, two-, three-, and four-year basis, just looking that through. You have the lapping of the Americold issue. So, I'm just curious if it's right to think that's a little bit prudent or there may be some offsets that maybe a little bit of a less of a help from mix perhaps, just throwing that out there. Just trying to get a bit of color on those building blocks as you think about that. 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: Ken Goldman - JPMorgan Chase and Company - Analyst : And then while we're talking about next year, and thank you for that, I realize it's too soon to provide any quantitative numbers. I wouldn't ask for them -- or quantitative information rather. But at CAGNY, you said you're doing what you can to be as close as possible to be on algo, and I was just cuirous where your level of confidence on that topic stood today? how you're thinking about maybe balancing what might continue to be a challenging consumer environment, I guess, with maybe what also could be some friendly top-line comparisons, progress on cost savings, cash flow, and so forth. Just trying to think directionally how you guys are thinking about that now.

Question: David Palmer - Evercore ISI - Analyst : Good morning, guys. A question on frozen. I'm curious, particularly on frozen entrees, what's your thought there about a return to growth in sales in that business? And if there's any sort of juxtaposition that you would make between frozen entrees and frozen vegetables and how you view the challenges and opportunities for each in returning to growth? Thanks.

Question: David Palmer - Evercore ISI - Analyst : I just wanted to follow up on Ken's question, maybe one way to ask how -- is what ways are you going to be really reviewing your business in the coming months as you contemplate how you're going to be guiding fiscal '25? Is it simply just volumes getting closer to flat overall in the business or are there any areas of the business you would be particularly focused on that you will be -- that will really help you think about how you guide for '25? Thanks.

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

Question: Chris Carey - Wells Fargo Securities - Analyst : Hi. Good morning. One thing that did stand out was that the inflation impact to margins did get a little bit worse quarter over quarter. Can you just expand on that if that's driven by commodities, non-commodities? I think you mentioned tomatoes with respect to some incremental pricing. Just any context on what is driving that and if there are any nuances?

Question: Chris Carey - Wells Fargo Securities - Analyst : Ok. Perfect. Just -- and then a follow-up regarding the comment on pricing, just you mentioned tomatoes, among other things, in the grocery and snacks business. How would you characterize the positive pricing there in the quarter? Was that due to anomalies in the base period, anomalies in the quarter itself, or are we looking at what appears to be a more durable positive price mix for that division from here on new pricing or lingering pricing, which is now being fully reflected in the P&L? Thank you very much.

Question: Chris Carey - Wells Fargo Securities - Analyst : Okay. All right. Thank you.

Question: Alexia Howard - AllianceBernstein - Analyst : Good morning, everyone.

Question: Alexia Howard - AllianceBernstein - Analyst : Okay. So, can I ask to begin with just about the productivity improvements in the food service channels? It seemed as though they were particularly strong this quarter. Is that likely to continue going forward?

Question: Alexia Howard - AllianceBernstein - Analyst : Great. Thank you. And then can I just hone in on private label in the frozen vegetable area? There seems to be some confusion out here about whether private label is becoming more of a problem just broadly or whether it's actually still fairly contained. Is there anything that you're seeing in terms of private label, either in frozen vegetables or more broadly, that would suggest it's becoming more of an issue, or is it really that it's the supply chain challenges have been overcome on the private label side but there doesn't seem to be any major red flags or anything on the horizon?

Question: Alexia Howard - AllianceBernstein - Analyst : Great. Thank you very much. I'll pass it on.

Question: Rob Dickerson - Jefferies - Analyst : Great. Thanks so much. Sean, just, I guess a question specific to frozen. It sounds like the ROIs on the investment -- on the investments have been attractive. You seem very upbeat and encouraged to the momentum on the business. But at the same time when we think about what's happened in the quarter, it doesn't really seem like a lot of that was driven necessarily by upside, so to speak within that volume component within refrigerated and frozen. So I'm just curious, as you speak to those investments are we talking more promotional activity? You're doing better and better pack and bigger pack sizes. Just trying to gauge what's your perspective as to why the ROIs are good and what you're doing right because, optically, as we look at the number in the segment which does include refrigerated it's not really better and there was, I think, a little bit of an easier compare? So I'm just trying to gauge -- get a little bit more color on that one piece.

Question: Rob Dickerson - Jefferies - Analyst : And then just a quick question on gross margin, very simplistically. You know, clearly, we heard all your comments and prepared remarks around productivity, efficiencies, got a little bit more pricing in grocery and snacks. It's all positive. But I'm just curious, like, what changed relative to coming out of Q2, right, in early January? Because I think the commentary there previously for the year was gross margin would probably be similar back half maybe relative to Q2, but now, it seems like it'll clearly be better in the back half relative to Q2, and that took place over the course of two months. So it seems like something changed to the upside, just like to know what. That's all. Thanks. 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: Rob Dickerson - Jefferies - Analyst : All right. Super. Thanks, Dave. Appreciate it.