Conagra Brands Inc Q4 2024 Earnings Call Summary

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

Question: Andrew Lazar - Barclays Bank PLC - Analyst : Great. Thanks so much. Good morning, everybody. Sean. You talked in the prepared remarks about you're expecting sort of gradual transition in fiscal '25 to a more normal operating environment as consumers adjust their reference prices. And I know you've talked a lot through the back part of this last fiscal year that consumers are increasingly ready to sort of engage in your categories just needed to be not just a bit. And it seems like that adjustments taking longer, not just for Conagra, obviously, but the industry at large, why do you think that is and isn't going to require? Or is it requiring more investment than maybe you initially anticipated? And obviously, I ask is one of the biggest debate in the space right now.

Question: Andrew Lazar - Barclays Bank PLC - Analyst : Thanks for that. And I know a good portion of the negative year over year pricing in Refrigerated & Frozen is, I think, more pass through on some refrigerated items. But I guess I'm more curious on what the pricing and competitive environment looks like in the frozen space specifically and sort of how you see that playing out as we start the new fiscal year. Thanks so much.

Question: Andrew Lazar - Barclays Bank PLC - Analyst : Thanks so much.

Question: Ken Goldman - J.P. Morgan - Analyst : Hi, good morning and thank you. I wanted to first better understand the comment about the outlook being prudent. On the one hand, your sales and EPS guidance is lower than the Street expected. I think that's helpful and certainly setting a lower bar. On the other hand, as Andrew mentioned, your outlook requires volume accelerate, especially on a two-year basis and you're relying on the consumer getting used to higher prices, as you mentioned, and we just haven't seen that yet. So I'm just trying to dig in a little bit on where you think you're being most

Question: Ken Goldman - J.P. Morgan - Analyst : Thank you for that. And then for my follow-up, I wanted to clarify the first quarter outlook. It's the messaging first that the gross margin from on an absolute level will be down or will be the lowest of the year. Is that year on year ex? Wanted to clarify the gross margin comment? And then more broadly, you talked about on volume and gross margin, tough SG&A lap . It certainly seems like consensus of $0.65 or so many to come down a bit. So understanding you don't provide quarterly specifics, but just trying to get maybe a slightly tighter sense of where you think some of the puts and takes in 1Q will be just so maybe investor expectations are properly aligned

Question: David Palmer - Evercore ISI - Analyst : Thanks. I wanted to just ask you about the challenging environment comments you made that comment a few times during the prepared remarks, but sometimes we can assume what you mean by that. But I would assume also that there's going to be some differences in the types of challenges you see for category. And I said that you might have more category issues, for example, in Andrent Mills for the you speak to price cap issues, perhaps in vegetables, for example. So could you speak specifically to what those challenges you're talking about, the types of investments that you're making, whether that's just price adjustments through promotion, display or other activity?

Question: David Palmer - Evercore ISI - Analyst : Thanks for that. By the way, on AP margin, do you mentioned that fear and maybe is this the type of year that may be advertising is in this much of the priority, but maybe that starts to step up from future years? How are you thinking about advertising in the past going forward?

Question: David Palmer - Evercore ISI - Analyst : Thanks very much.

Question: Peter Galbo - Bank of America - Analyst : Hey, guys, good morning. Thanks for taking the question. Davis, kind of going through your comments. If we take kind of the productivity savings net of the inflation rate, it's roughly, I think $85 million that will kind of get reinvested back into back into brand investment or price came at a verify that that that kind of checked out on on your end. And maybe just give us a sense maybe of this being kind of incremental investment where and where in the second half, it was it, is it more weighted to refrigerated or way at the grocery? Any kind of color there would be helpful.

Question: Peter Galbo - Bank of America - Analyst : Got it. Okay. That's all it. And then, Sean, just kind of thinking about the productivity number and it's a question your peers as well. I guess just what's the risk that we start to push the productivity lever to hard and you know that did that create, I don't know, lower lower ingredient quality or potential issue is just in your as your kind of getting maybe to productive. I think it's a question that we face a lot of well. So thanks very. much

Question: Peter Galbo - Bank of America - Analyst : Thanks Sean.

Question: Robert Moskow - TD Cowen - Analyst : Hi, thank you, Sean. Getting you have a lot of brands that skew more heavily towards towards lower income consumers and you have a lot of brands that skew the other way. Are you seeing any differences in terms of how those brands are performing, like low income versus high income? Because there's a lot of of when food companies are asking why things are slowing, they tend to point to that that cohort and you have a pretty broad portfolio. So do you see more in one versus the other?

Question: Robert Moskow - TD Cowen - Analyst : Great. Thank you. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. PRELIMINARY JULY 11, 2024 / 1:30PM, CAG.N - Q4 2024 Conagra Brands Inc Earnings Call

Question: Nik Modi - RBC Capital Markets - Analyst : Thanks. Good morning, everyone. I just thought maybe I can just follow up on Rob's question out from a different angle. And Sean, I'd love your perspective on this . I mean, I'm wondering if there's a mismatch between, you know, where the consumers are versus how you're spending on in Canagra has been very on a on the forefront of digital on marketing for many years. But it seems like a lot of older consumers tend to over-index categories. And I'm curious if you think there's a mismatch between where you're spending the money, which is more digital versus kind of more traditional media, which is where some of these older consumers tend to Tropic . Any thoughts on that?

Question: Nik Modi - RBC Capital Markets - Analyst : That's helpful. And then just maybe if you can give us an update on plunging and some of the channel work with suggest there's some pressure there, some kind of encroachment competitors McFadden. I'm just curious if you have any perspective on kind of how that brand is faring right now?

Question: Nik Modi - RBC Capital Markets - Analyst : Great. I'll pass it on. Thank you.

Question: Thomas Palmer - Citi - Analyst : Thanks for fitting in. I just wanted to clarify on promotional activity, other types of brand building that you referenced, both in response to consumers compare to historical norms and relative to what we might have seen, say in late 2023? And then are you seeing much response from your competitors are based on your actions?

Question: Thomas Palmer - Citi - Analyst : Thanks for that. And then just a quick one on Ardent Mills. The language in the release or the prepared remarks will refer to it is moving towards a more normalized level of operation. I just want to make sure I understand this because we think about that $150 million outlook, which is kind of consistently started off last year as well as a more normalized rate, or is that like normalizing and we should look for maybe a glide path slightly lower for over a series of years?

Question: Thomas Palmer - Citi - Analyst : Okay, thank you for that.

Question: Chris Harris - Wells Fargo - Analyst : Hey, thank you very much. So I just wanted to maybe clarify or clarify, but get a bit more context on the pricing comments in the presentation around competitive price tomato pricing will be lapping and then you'll be taking new pricing on some cocoa? I guess when you when you think about those two things, does that net out neutral for the year? And then how would you see overall pricing trending perhaps ex those items for the broader business, especially after the context of the stable gross margin, despite some investments. Then I have a quick follow-up.

Question: Chris Harris - Wells Fargo - Analyst : Okay, great. I said it would be a quick follow-up, maybe maybe a bit more than that, but we'll still see some 80% holding or gaining share. And the strategic frozen and snacks, clearly very good share momentum in those areas w here your focus you did, however, mention that the Staples work in progress. Can you just comment on the areas where you are seeing competitive encroachment and perhaps specifically how you see private label developing and some of these areas that given the that's a retailer focus? Just any context on this that comes to mind is helpful. Thank you.

Question: Chris Harris - Wells Fargo - Analyst : Okay. Thank you. Both .

Question: Robert Dickerson - Jefferies - Analyst : Great. Thanks so much. I guess, Sean, just to come back to the grocery will be more Staples business. There does seem like it's lagging a little bit there for the various reasons you mentioned and feel a bit more investment going in there as we get through the year . But I am just curious kind of we're much more broadly speaking as we if we go back to pre-COVID, right cut as you enter the company and we look through all the different brands and segments, there did seem to be kind of a feel a bit of a the potential of divestment. You know, on some of those grocery brands just to kind of focus the overall portfolio, right? And then we can come back particularly will 80% holding didn't share and strategic domains. This is our focus. So I'm just curious, as you think forward in the next few years, like, I guess, why not just kind of step away, you know, from some of those brands sort of in line with what you've been speaking about Oilfield Service side?

Question: Robert Dickerson - Jefferies - Analyst : Got it. Yes, fair enough. And then just maybe quickly for Dave. I normally don't ask about impairments of the quarter, the colored being called out previously, well, I understand it changes in rates. What have you like? Are there certain areas that we should just be aware of or certain brands that maybe have been driving a bit more those impairments? And that's all I guess.

Question: Robert Dickerson - Jefferies - Analyst : Makes sense. Thank you so much. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. PRELIMINARY JULY 11, 2024 / 1:30PM, CAG.N - Q4 2024 Conagra Brands Inc Earnings Call