Q1 2025 Conagra Brands Inc Earnings Call - Pre-Recorded Remarks

October 2, 2024

Our prepared remarks for Conagra brands first quarter earnings.

At 930 Eastern time. This morning, we will hold a separate live question and answer session on today's results, which you can access via webcast on our Investor Relations website.

Our press release presentation materials and a transcript of these prepared remarks are also available there.

Speaker Change: I am joined this morning by Shaun Connolly, our CEO and Dave Marburger, our CFO.

Speaker Change: We will be making some forward looking statements today and while we're making these statements in good faith based on current information, we do not have any guarantee about the results we will achieve.

Speaker Change: A description of our risk factors are included in our filings with the SEC.

Speaker Change: We will also be discussing some non-GAAP financial measures. Please see the earnings release and the slides for GAAP to non-GAAP reconciliations and information on our comparability items, which can be found in the Investor Relations section of our website.

Speaker Change: I'll now turn the call over to Sean.

Sean: Thanks, Melissa and thank you all for joining our first quarter fiscal 'twenty five earnings call before we begin I'd like to extend our sympathies to everyone affected by Hurricane Helene.

Sean: We are supporting World Kitchen, American Red Cross and feeding America.

We'll continue to monitor the situation to determine how we can further help those in need.

Sean: Now, let's get started on slide four.

Sean: Q1 marked another quarter of progress in many areas and I'm proud of the way our team executed within a dynamic environment.

Sean: Look the actions we told you we would take and.

Sean: And by and large we got the results we expected to get.

We told you last quarter that Q1 would have plenty of noise in it and it did.

Sean: Beyond the anomalies, we planned for we have one out of planned dynamic to contend with.

Sean: Today, we will endeavor to unpack the quarter and provide a clear understanding of the underlying state of our business, which is encouraging.

Sean: In fact, the most important thing for you to take away from our call today.

Sean: We remain on track to achieve our fiscal 'twenty five goals.

Sean: Had clear priorities for Q1 and delivered on all of them.

Sean: We continued to drive meaningful volume improvement in our domestic retail business, including year over year growth in our strategic frozen and snack domains.

Sean: Our share improvements stands out.

Sean: Not just in the absolute but among peers as we drove strong share performance across the majority of the portfolio.

Speaker Change: Continuing to drive our value over volume strategy in foodservice helped us sustain our margins at pre COVID-19 levels Despite channel softness.

We continued to advance our supply chain productivity initiatives, which remain on track to deliver $1 billion of cost savings by the end of fiscal 'twenty five.

Speaker Change: Finally, we were excited to resume our portfolio reshaping initiatives with the acquisition of fatty smoked meat sticks, which expanded our leading position in the high growth high margin meat sticks product category.

Speaker Change: As well as the divestiture of our Indian joint venture.

Speaker Change: F L.

Speaker Change: Our team delivered on these priorities despite an out of planned dynamic that pressured performance during the quarter, namely a manufacturing disruption that required us to pause production at our Hebrew National Hot dog plant in the middle of grilling season.

Speaker Change: While we were able to fully resumed plant operations the temporary manufacturing pause resulted in lost sales.

Speaker Change: Revenue for the Hebrew National brand was down 47% in Q1, we.

Speaker Change: We estimate that this equated to a 60 basis point reduction in total volume and a 90 basis point reduction in total organic net sales during the first quarter.

[Company Representative] (Conagra Brands): Thank you for listening to our prepared remarks for Conagra Brands' first quarter earnings. At 9:30AM Eastern Time this morning, we will hold a separate live question-and-answer session on today's results, which you can access via webcast on our investor relations website. Our press release, presentation materials, and a transcript of these prepared remarks are also available there. I'm joined this morning by Sean Connolly, our CEO, and Dave Marburger, our CFO. We will be making some forward-looking statements today, and while we are making these statements in good faith based on current information, we do not have any guarantee about the results we will achieve. Descriptions of our risk factors are included in our filings with the SEC. We will also be discussing some non-GAAP financial measures.

Thank you for listening to our prepared remarks for Conagra brands first quarter earnings at.

Speaker Change: The loss was particularly apparent within refrigerated and frozen where we estimated that it accounted for up 150 basis point reduction in volume and a 210 basis point reduction in organic net sales for the segment.

At 930 Eastern time. This morning, we will hold a separate live question and answer session on today's results, which you can access via webcast on our Investor Relations website.

We estimate that the majority of the impact of this disruption will be isolated to the first quarter.

Our press release presentation materials and a transcript of these prepared remarks are also available there.

Speaker Change: Taking all of this into account our results for the quarter were in line or above our internal plan for most metrics, except organic net sales, which was impacted by the temporary manufacturing disruption I just discussed.

Speaker Change: I am joined this morning by Shaun Connolly, our CEO and Dave Marburger, our CFO.

Speaker Change: I'm pleased with our team's continued execution against our key priorities, which has strengthened the underlying momentum of our business. As a result, we remain on track to deliver our fiscal 'twenty five guidance.

Speaker Change: A description of our risk factors are included in our filings with the SEC.

Speaker Change: We will also be discussing some non-GAAP financial measures. Please see the earnings release and the slides for GAAP to non-GAAP reconciliations and.

[Company Representative] (Conagra Brands): Please see the earnings release and the slides for GAAP to non-GAAP reconciliations and information on our comparability items, which can be found in the investor relations section of our website. I'll now turn the call over to Sean.

Please see the earnings release and the slides for GAAP to non-GAAP reconciliations and information on our comparability items, which can be found in the investor relations section of our website. I'll now turn the call over to Sean.

Speaker Change: Let's take a closer look at each of our priorities beginning with our volume progress on slide five.

Speaker Change: And information on our comparability items, which can be found in the Investor Relations section of our website.

Speaker Change: As you can see our proven playbook and strategic investments have generated continuous volume recovery in our domestic retail business over the past year and.

Sean Connolly: Thanks, Melissa, and thank you all for joining our first quarter fiscal '25 earnings call. Before we begin, I'd like to extend our sympathies to everyone affected by Hurricane Helene. We are supporting World Kitchen, American Red Cross, and Feeding America, and we'll continue to monitor the situation to determine how we can further help those in need. Now, let's get started on slide four. Q1 marked another quarter of progress in many areas, and I'm proud of the way our team executed within a dynamic environment. We took the actions we told you we would take, and by and large, we got the results we expected to get. We told you last quarter that Q1 would have plenty of noise in it, and it did. Beyond the anomalies we planned for, we had one out-of-plan dynamic to contend with.

Speaker Change: I will turn the call over to Sean.

Sean: Thanks Melissa.

Sean: You all for joining our first quarter fiscal 'twenty five earnings call.

Speaker Change: In fact domestic retail volume performance in Q1 exceeded our expectations and our volume recovery would have been higher but for the temporary impact of Hebrew national.

Sean: We begin I'd like to extend our sympathies to everyone affected by Hurricane Helene.

Speaker Change: We are supporting World Kitchen American Red Cross and feeding America, and we'll continue to monitor the situation to determine how we can further help those in need.

Speaker Change: Importantly, as you can see on slide six we delivered year over year volume growth across both of our strategic domains frozen and snacks.

Speaker Change: Now, let's get started on slide four.

Speaker Change: We focused our investments to maximize consumer engagement within these domains and their return to growth demonstrates that our plan is working.

Speaker Change: Q1 marked another quarter of progress in many areas and I'm proud of the way our team executed within a dynamic environment. We took the actions. We told you we would take and.

Speaker Change: Okay.

Speaker Change: Slide seven shows the volume trends in our Staples domain.

Speaker Change: And by and large we got the results we expected to get.

Speaker Change: Excluding the temporary disruption in hot dogs, the rest of our Staples domain also delivered sequential volume improvement during the quarter.

Speaker Change: We told you last quarter that Q1 would have plenty of noise in it and it did.

Speaker Change: And don't forget Q1, Staples volume was impacted by the elasticity effect of last year's price increase on our Tomatoes platform.

Speaker Change: Beyond the anomalies, we planned for we have one out of planned dynamic to contend with.

Sean Connolly: Today, we will endeavor to unpack the quarter and provide a clear understanding of the underlying state of our business, which is encouraging. In fact, the most important thing for you to take away from our call today is that we remain on track to achieve our fiscal 2025 goals. We had clear priorities for Q1 and delivered on all of them. We continued to drive meaningful volume improvement in our domestic retail business, including year-over-year growth in our strategic frozen and snack domains. Our share improvement stands out not just in the absolute, but among peers as we drove strong share performance across the majority of the portfolio. Continuing to drive our value-over-volume strategy in food service helped us sustain our margins at pre-COVID levels despite channel softness.

Today, we will endeavor to unpack the quarter and provide a clear understanding of the underlying state of our business, which is encouraging. In fact, the most important thing for you to take away from our call today is that we remain on track to achieve our fiscal 2025 goals. We had clear priorities for Q1 and delivered on all of them. We continued to drive meaningful volume improvement in our domestic retail business, including year-over-year growth in our strategic frozen and snack domains. Our share improvement stands out not just in the absolute, but among peers as we drove strong share performance across the majority of the portfolio. Continuing to drive our value-over-volume strategy in food service helped us sustain our margins at pre-COVID levels despite channel softness.

Speaker Change: Today, we will endeavor to unpack the quarter and provide a clear understanding of the underlying state of our business, which is encouraging.

Speaker Change: Since we wrapped those pricing actions as we exited Q1 this impact will wane going forward and.

In fact, the <unk>.

Speaker Change: Important thing for you to take away from our call today.

Speaker Change: And to give you a sense of the magnitude staples consumption in Q1 ex Tomatoes, and Hotdogs would also have been positive.

We remain on track to achieve our fiscal 'twenty five goals.

Speaker Change: Had clear priority for Q1 and delivered on all of them.

So overall, while we anticipate the consumer environment will remain a challenge in fiscal 'twenty five our proven ability to navigate through it gives us confidence that we will continue to drive volume across our business.

Speaker Change: We continued to drive meaningful volume improvement in our domestic.

Speaker Change: Business, including year over year growth in our strategic frozen and snack domains.

Speaker Change: Our share improvement stands out not just in the absolute but among peers as we drove strong share performance across the majority of the portfolio.

Speaker Change: Even more impressive than the strength of our volume improvement is our share performance seen here on slide eight.

Speaker Change: Achieving four consecutive quarters of share progress is a solid achievement in any period.

Speaker Change: Continuing to drive our value over volume strategy in foodservice helped us sustain our margins at pre COVID-19 levels.

Speaker Change: But to do so amid todays challenging consumer environment underscores the strength of our strategy and the resiliency of our portfolio.

Sean Connolly: We continue to advance our supply chain productivity initiatives, which remain on track to deliver $1 billion of cost savings by the end of fiscal 2025. And finally, we were excited to resume our portfolio reshaping initiatives with the acquisition of Fatty smoked meat sticks, which expanded our leading position in the high-growth, high-margin meat sticks product category, as well as the divestiture of our Indian joint venture, ATFL. Our team delivered on these priorities despite an out-of-plan dynamic that pressured performance during the quarter, namely a manufacturing disruption that required us to pause production at our Hebrew National hot dog plant in the middle of grilling season. While we were able to fully resume plant operations, the temporary manufacturing pause resulted in lost sales. Revenue for the Hebrew National brand was down 47% in Q1.

We continue to advance our supply chain productivity initiatives, which remain on track to deliver $1 billion of cost savings by the end of fiscal 2025. And finally, we were excited to resume our portfolio reshaping initiatives with the acquisition of Fatty smoked meat sticks, which expanded our leading position in the high-growth, high-margin meat sticks product category, as well as the divestiture of our Indian joint venture, ATFL. Our team delivered on these priorities despite an out-of-plan dynamic that pressured performance during the quarter, namely a manufacturing disruption that required us to pause production at our Hebrew National hot dog plant in the middle of grilling season. While we were able to fully resume plant operations, the temporary manufacturing pause resulted in lost sales. Revenue for the Hebrew National brand was down 47% in Q1.

Despite softness.

Speaker Change: We continued to advance our supply chain productivity initiatives, which remain on track to deliver $1 billion of cost savings by the end of fiscal 'twenty five.

Speaker Change: In Q1, approximately 71% of our portfolio held or gained volume share and the vast majority of that was share gains.

Speaker Change: And finally, we were excited to resume our portfolio reshaping initiatives with the acquisition of fatty smoked meat sticks, which expanded our leading position in the high growth high margin meat sticks product category as.

Speaker Change: And as you can see on slide nine.

Speaker Change: Our share performance is far ahead of our near end peer set.

Speaker Change: Only one of our closest peers as more than half of their portfolio holding or gaining share and we are outperforming them by a solid margin.

As well as the divestiture of our Indian joint venture <unk>.

Speaker Change: F L.

Speaker Change: If you zoom in on our strategic frozen and snack domains shown here on slide 10, the share performance is even stronger.

Speaker Change: Our team delivered on these priorities and have planned dynegy pressured performance during the quarter, namely a manufacturing disruption.

Speaker Change: 93% of our frozen and snack brands held or gained volume share during the quarter.

Speaker Change: That required us to pause production at our Hebrew National Hotdogs plant in the middle of grilling season.

Speaker Change: This slide demonstrates the continual improvement of our share performance over the past year, highlighting the effectiveness of our enhanced investments to drive consumer engagement.

Speaker Change: While we were able to fully resumed plant operations the temporary manufacturing pause resulted in lost sales.

Speaker Change: Revenue for the Hebrew National brand was down 47% in Q1, we.

Speaker Change: Importantly, we continue to deliver volume progress and strong share gains while achieving the expected ROI.

Sean Connolly: We estimate that this equated to a 60 basis point reduction in total volume and a 90 basis point reduction in total organic net sales during the first quarter. The loss was particularly apparent within refrigerated and frozen, where we estimated that it accounted for a 150 basis point reduction in volume and a 210 basis point reduction in organic net sales for the segment. We estimate that the majority of the impact of this disruption will be isolated to the first quarter. Taking all of this into account, our results for the quarter were in line or above our internal plan for most metrics except organic net sales, which was impacted by the temporary manufacturing disruption I just discussed. I'm pleased with our team's continued execution against our key priorities, which has strengthened the underlying momentum of our business.

We estimate that this equated to a 60 basis point reduction in total volume and a 90 basis point reduction in total organic net sales during the first quarter. The loss was particularly apparent within refrigerated and frozen, where we estimated that it accounted for a 150 basis point reduction in volume and a 210 basis point reduction in organic net sales for the segment. We estimate that the majority of the impact of this disruption will be isolated to the first quarter. Taking all of this into account, our results for the quarter were in line or above our internal plan for most metrics except organic net sales, which was impacted by the temporary manufacturing disruption I just discussed. I'm pleased with our team's continued execution against our key priorities, which has strengthened the underlying momentum of our business.

Speaker Change: We estimate that this equated to a 60 basis point reduction in total volume and a 90 basis point reduction in total organic net sales during the first quarter.

Speaker Change: Lied 11 demonstrates how the industry merchandising environment remains rational.

Speaker Change: There are two key metrics to consider when evaluating the state of merchandising.

Speaker Change: The share of volume sold on promotion.

Speaker Change: And the average depth of promotion.

Speaker Change: In both key metrics Conagra and are nearing peer set are promoting slightly less today than we did and the most comparable pre pandemic period.

Speaker Change: We estimate that the majority of the impact of this disruption will be isolated to the first quarter.

Taking all of this into account our results for the quarter were in line or above our internal plan for most metrics, except organic net sales, which was impacted by the temporary manufacturing disruption I just discussed.

Speaker Change: Said differently. The overall promotional environment is roughly consistent with historic norms.

Speaker Change: And when you double click on each of these metrics youll find that conagra is actually less promotional than our closest peers.

Speaker Change: Pleased with our team's continued execution against our key priorities.

Speaker Change: Both today and in the pre pandemic period, Conagra sells a lower percentage of our volume on promotion.

Speaker Change: Which has strengthened the underlying momentum of our business.

Sean Connolly: As a result, we remain on track to deliver our fiscal 2025 guidance. Let's take a closer look at each of our priorities, beginning with our volume progress on slide five. As you can see, our proven playbook and strategic investments have generated continuous volume recovery in our domestic retail business over the past year. In fact, domestic retail volume performance in Q1 exceeded our expectations, and our volume recovery would have been higher, but for the temporary impact of Hebrew National. Importantly, as you can see on slide six, we delivered year-over-year volume growth across both of our strategic domains, frozen, and snacks. We focused our investments to maximize consumer engagement within these domains, and their return to growth demonstrates that our plan is working. Slide seven shows the volume trends in our staples domain.

As a result, we remain on track to deliver our fiscal 2025 guidance. Let's take a closer look at each of our priorities, beginning with our volume progress on slide five. As you can see, our proven playbook and strategic investments have generated continuous volume recovery in our domestic retail business over the past year. In fact, domestic retail volume performance in Q1 exceeded our expectations, and our volume recovery would have been higher, but for the temporary impact of Hebrew National. Importantly, as you can see on slide six, we delivered year-over-year volume growth across both of our strategic domains, frozen, and snacks. We focused our investments to maximize consumer engagement within these domains, and their return to growth demonstrates that our plan is working. Slide seven shows the volume trends in our staples domain.

Speaker Change: As a result, we remain on track to deliver our fiscal 'twenty five items.

Speaker Change: And when we do have targeted promotions our average discount is also less.

Let's take a closer look at each of our priorities beginning with our volume progress on slide five.

Speaker Change: The takeaway is clear we continue to operate in a rational merchandising environment Conagra remains less reliant on promotions to drive volume and we continue to maintain a disciplined approach to prioritize the long term health of our brands.

Speaker Change: As you can see our proven playbook and strategic investments have generated continuous volume recovery in our domestic retail business over the past year in.

Speaker Change: In fact domestic retail volume performance in Q1 exceeded our expectations and our volume recovery would have been higher but for the temporary impact of Hebrew national.

Speaker Change: Now, let's dive into each of our domains.

Speaker Change: Starting with frozen on slide 12.

Speaker Change: Our Q1 volume sales outpaced both edible and relevant frozen categories led by our strong volume share performance in single serve meals and share increases in vegetables, and multi serve meals.

Speaker Change: Importantly, as you can see on slide six we delivered year over year volume growth across both of our strategic domains frozen and snacks.

Speaker Change: Slide 13 takes a closer look at single serve meals, our largest frozen category.

Speaker Change: We focused our investments to maximize consumer engagement within these domains and their return to growth demonstrates that our plan is working.

Speaker Change: Conagra now represents a majority of all industry volume in the $6 $5 billion category, a tremendous achievement in this dynamic and competitive environment.

Speaker Change: Okay.

Slide seven shows the volume trends in our staples.

Sean Connolly: Excluding the temporary disruption in hot dogs, the rest of our staples domain also delivered sequential volume improvement during the quarter. And don't forget, Q1 staples volume was impacted by the elasticity effect of last year's price increase on our tomatoes platform. Since we wrapped those pricing actions as we exited Q1, this impact will wane going forward. And to give you a sense of the magnitude, staples consumption in Q1, ex tomatoes and hot dogs, would also have been positive. So overall, while we anticipate the consumer environment will remain a challenge in fiscal 2025, our proven ability to navigate through it gives us confidence that we will continue to drive volume across our business. Even more impressive than the strength of our volume improvement is our share performance seen here on slide eight.

Excluding the temporary disruption in hot dogs, the rest of our staples domain also delivered sequential volume improvement during the quarter. And don't forget, Q1 staples volume was impacted by the elasticity effect of last year's price increase on our tomatoes platform. Since we wrapped those pricing actions as we exited Q1, this impact will wane going forward. And to give you a sense of the magnitude, staples consumption in Q1, ex tomatoes and hot dogs, would also have been positive. So overall, while we anticipate the consumer environment will remain a challenge in fiscal 2025, our proven ability to navigate through it gives us confidence that we will continue to drive volume across our business. Even more impressive than the strength of our volume improvement is our share performance seen here on slide eight.

Speaker Change: Exclusive.

Speaker Change: The rest of our Staples domain also delivered sequential volume improvement during the quarter.

Speaker Change: Our investments have enabled us to drive steady share improvement in this category throughout fiscal 'twenty four and we built upon that success during the first quarter of fiscal 'twenty five.

And don't forget Q1 stable volume was impacted by the elasticity effect.

Speaker Change: Of last year's price increase on our <unk> platform.

Speaker Change: Frozen vegetables is another category that contributed to our improved share performance during the quarter.

Speaker Change: Since we wrap those pricing actions as we exited Q1 this impact will wane going forward and to give you a sense of the magnitude staples consumption in Q1 ex Tomatoes, and hot dogs would also have been positive.

Speaker Change: Recall that birds eye was the focus of our value over volume approach as we pulled back activity on the commodity veg space, while building our business and innovation pipeline in the premium value added space.

Speaker Change: So overall, while we anticipate the consumer environment will remain a challenge in fiscal 'twenty five our proven ability to navigate through it gives us confidence that we will continue to drive volume across our business.

Speaker Change: As you can see on slide 14, our efforts are paying off our frozen vegetables business remains stable and positive.

Speaker Change: Moving to snacks on slide 15.

Speaker Change: We continue to considerably outpaced the total snacking category largely due to our advantage portfolio.

Speaker Change: Even more impressive than the strength of our volume improvement is our share performance seen here on slide eight.

Sean Connolly: Achieving four consecutive quarters of share progress is a solid achievement in any period, but to do so amid today's challenging consumer environment underscores the strength of our strategy and the resiliency of our portfolio. In Q1, approximately 71% of our portfolio held or gained volume share, and the vast majority of that was share gains. As you can see on slide nine, our share performance is far ahead of our near-end peer set. Only one of our closest peers has more than half of their portfolio holding or gaining share, and we are outperforming them by a solid margin. If you zoom in on our strategic frozen and snack domains shown here on slide 10, the share performance is even stronger. 93% of our frozen and snack brands held or gained volume share during the quarter.

Achieving four consecutive quarters of share progress is a solid achievement in any period, but to do so amid today's challenging consumer environment underscores the strength of our strategy and the resiliency of our portfolio. In Q1, approximately 71% of our portfolio held or gained volume share, and the vast majority of that was share gains. As you can see on slide nine, our share performance is far ahead of our near-end peer set. Only one of our closest peers has more than half of their portfolio holding or gaining share, and we are outperforming them by a solid margin. If you zoom in on our strategic frozen and snack domains shown here on slide 10, the share performance is even stronger. 93% of our frozen and snack brands held or gained volume share during the quarter.

Speaker Change: <unk> four consecutive quarters of share progress is a solid achievement in any period.

Speaker Change: Our brands span on trend permissible snacking sub spaces like meat snacks, popcorn and seeds as consumers opt for low carb protein and fiber rich snacks offered by Slim, Jim Duke's, David <unk> boom, Chick a pop and more <unk>.

Speaker Change: To do so amid todays challenging consumer environment underscores the strength of our strategy and the resiliency of our portfolio.

Speaker Change: In Q1, approximately 71% of our portfolio held or gained volume share and the vast.

Speaker Change: <unk> snacking is growing much faster than the overall snacking category in our portfolio of well known brands is benefiting.

Speaker Change: Majority of that was.

Speaker Change: Share gains.

Speaker Change: And as you can see on slide nine.

Speaker Change: Our share performance is far ahead of our industry.

Speaker Change: During the first quarter, we took another step to build upon the strength by welcoming the fatty to the Conagra family.

Speaker Change: Only one of our closest peers as more than half of their portfolio holding or gaining share and we are outperforming them by a solid margin.

Speaker Change: <unk> 16 highlights some of the key points that make this acquisition so attractive.

Speaker Change: If you zoom in on our strategic frozen and snack domains shown here on slide 10, the share performance is even stronger now.

Speaker Change: Conagra is a leader in the meat snacks category with significant scale.

But within meat snacks Conagra is the leader in meat sticks, a high margin business that is growing faster than all other snacking categories as demand for more convenient healthy and affordable experiences continues to attract new buyers.

Speaker Change: 93% of our frozen and snack brands held or gained volume share during the quarter.

Sean Connolly: This slide demonstrates the continual improvement of our share performance over the past year, highlighting the effectiveness of our enhanced investments to drive consumer engagement. Importantly, we continue to deliver volume progress and strong share gains while achieving the expected ROI. Slide 11 demonstrates how the industry merchandising environment remains rational. There are two key metrics to consider when evaluating the state of merchandising: the share of volume sold on promotion and the average depth of promotion. In both key metrics, Conagra and our near-end peer set are promoting slightly less today than we did in the most comparable pre-pandemic period. Said differently, the overall promotional environment is roughly consistent with historic norms. When you double-click on each of these metrics, you'll find that Conagra is actually less promotional than our closest peers.

This slide demonstrates the continual improvement of our share performance over the past year, highlighting the effectiveness of our enhanced investments to drive consumer engagement. Importantly, we continue to deliver volume progress and strong share gains while achieving the expected ROI. Slide 11 demonstrates how the industry merchandising environment remains rational. There are two key metrics to consider when evaluating the state of merchandising: the share of volume sold on promotion and the average depth of promotion. In both key metrics, Conagra and our near-end peer set are promoting slightly less today than we did in the most comparable pre-pandemic period. Said differently, the overall promotional environment is roughly consistent with historic norms. When you double-click on each of these metrics, you'll find that Conagra is actually less promotional than our closest peers.

Speaker Change: That he smoked meat sticks joins consumer favorites slim, Jim and Duke's to form a trifecta smokehouse, which will allow us to capitalize on high growth protein focused snacking behaviors.

Speaker Change: Importantly, we continue to deliver volume progress and strong share gains while achieving the expected ROI slide.

Speaker Change: Slide 11 demonstrates how the industry merchandising environment remains rational.

Speaker Change: The addition of a premium brand like the fatty furthers conagra's position of strength as we focus on growing our snacking business across advantaged categories.

Speaker Change: There are two key metrics to consider when evaluating the state of merchandising.

Speaker Change: The share of volume sold on promotion and the average depth of promotion.

Speaker Change: Turning to our foodservice business on slide 17.

Speaker Change: And both key metrics Conagra and our near end peers at our produce slightly less today than we did and the most comparable pre pandemic period.

Speaker Change: No secret that Covid posed an unprecedented challenge for the entire foodservice industry in our foodservice segment was no exception.

Speaker Change: Separately.

Speaker Change: The overall promotional environment is roughly consistent with historic norms.

Speaker Change: Over the last five years, we've been laser focused on building, a better business and returning margins to pre COVID-19 levels.

And when you double click on each of these metrics youll find that conagra is actually less promotional than our closest peers.

As a result of our efforts over the past few years, we grew organic net sales and adjusted operating profit.

Sean Connolly: Both today and in the pre-pandemic period, Conagra sells a lower percentage of our volume on promotion. When we do have targeted promotions, our average discount is also less. The takeaway is clear. We continue to operate in a rational merchandising environment. Conagra remains less reliant on promotions to drive volume, and we continue to maintain a disciplined approach to prioritize the long-term health of our brands. Now, let's dive into each of our domains. Starting with frozen on Slide 12, our Q1 volume sales outpaced both edible and relevant frozen categories, led by our strong volume share performance in single-serve meals and share increases in vegetables, and multi-serve meals. Slide 13 takes a closer look at single-serve meals, our largest frozen category. Conagra now represents a majority of all industry volume in this $6.5 billion category, a tremendous achievement in this dynamic and competitive environment.

Both today and in the pre-pandemic period, Conagra sells a lower percentage of our volume on promotion. When we do have targeted promotions, our average discount is also less. The takeaway is clear. We continue to operate in a rational merchandising environment. Conagra remains less reliant on promotions to drive volume, and we continue to maintain a disciplined approach to prioritize the long-term health of our brands. Now, let's dive into each of our domains. Starting with frozen on Slide 12, our Q1 volume sales outpaced both edible and relevant frozen categories, led by our strong volume share performance in single-serve meals and share increases in vegetables, and multi-serve meals. Slide 13 takes a closer look at single-serve meals, our largest frozen category. Conagra now represents a majority of all industry volume in this $6.5 billion category, a tremendous achievement in this dynamic and competitive environment.

Speaker Change: Both today and in the pre pandemic period, Conagra sells a lower percentage of our volume on promotion.

Speaker Change: And this past year, we were able to restore foodservice margins to their fiscal 19 levels.

Speaker Change: And when we do have targeted promotions our average discount is also less.

During Q1, we sustained that margin as we continued to execute our value over volume strategy.

Speaker Change: Our margin recovery has also been supported by our efficient and effective supply chain highlighted here on slide 18.

Speaker Change: We expect to drive approximately $350 million in savings during fiscal 'twenty five through multiple productivity initiatives.

Speaker Change: Now, let's dive into each of our domains.

Speaker Change: Starting with frozen on slide 12.

Speaker Change: Our Q1 volume sales outpaced both edible and relevant frozen categories led by our strong volume performance in single serve meals and share increases in vegetables and officer meals.

Speaker Change: Further Q1 service levels remained at the strong pre COVID-19 level of 97%.

Speaker Change: We also continued to deliver improvements in free cash flow, reducing our cash conversion cycle by seven days relative to the prior period.

Speaker Change: <unk> takes a closer look single serve meals, our largest frozen category.

Speaker Change: As a result of these efforts we remain on track to deliver $1 billion of cost savings by the end of fiscal 'twenty five our productivity.

Speaker Change: <unk> now represents the majority of all industry volume in the $6 $5 billion category, a tremendous achievement in this dynamic and competitive environment.

Speaker Change: <unk> initiatives remain a key tool in our strategic playbook as the savings we realize helped fuel our brand building investments and portfolio reshaping efforts.

Sean Connolly: Our investments have enabled us to drive steady share improvement in this category throughout fiscal 2024, and we built upon that success during the first quarter of fiscal 2025. Frozen vegetables is another category that contributed to our improved share performance during the quarter. Recall that Birds Eye was the focus of our Value-Over-Volume approach as we pulled back activity on the commodity veg space while building our business and innovation pipeline in the premium value-added space. As you can see on slide 14, our efforts are paying off. Our frozen vegetables business remains stable and positive. Moving to snacks on slide 15, we continue to considerably outpace the total snacking category, largely due to our advantage portfolio.

Our investments have enabled us to drive steady share improvement in this category throughout fiscal 2024, and we built upon that success during the first quarter of fiscal 2025. Frozen vegetables is another category that contributed to our improved share performance during the quarter. Recall that Birds Eye was the focus of our Value-Over-Volume approach as we pulled back activity on the commodity veg space while building our business and innovation pipeline in the premium value-added space. As you can see on slide 14, our efforts are paying off. Our frozen vegetables business remains stable and positive. Moving to snacks on slide 15, we continue to considerably outpace the total snacking category, largely due to our advantage portfolio.

Speaker Change: Turning to slide 19, we were excited to resume our historical practice of active portfolio reshaping.

Speaker Change: Frozen vegetables is another category that contributed to our improved share performance during the quarter.

Speaker Change: With both inbound and outbound activities.

<unk> tastes and habits are constantly changing and we continuously evaluate opportunities to reshape our portfolio to position the company for further growth and margin expansion, whether that be through investments in innovation and brand modernization M&A or value accretive divestiture.

Speaker Change: As you can see on slide 14, our efforts are paying off our frozen vegetables business remains stable and positive.

Speaker Change: <unk> or Spence.

Speaker Change: Portfolio reshaping is in our DNA and Conagra has taken substantial actions over the past decade to transform our portfolio. However in recent years, we've been more single mindedly focused on debt Paydown.

Moving to snacks on slide 15.

Speaker Change: We continue to considerably outpace the total snacking category.

Sean Connolly: Our brands span on-trend permissible snacking subspaces like meat snacks, popcorn, and seeds as consumers opt for low-carb, protein, and fiber-rich snacks offered by Slim Jim, Duke's, David, Angie's Boom Chick-a-Pop, and more. Permissible snacking is growing much faster than the overall snacking category, and our portfolio of well-known brands is benefiting. During the first quarter, we took another step to build upon this strength by welcoming the FATTY to the Conagra family. Slide 16 highlights some of the key points that make this acquisition so attractive. Conagra is a leader in the meat snacks category with significant scale. But within meat snacks, Conagra is the leader in meat sticks, a high-margin business that is growing faster than all other snacking categories as demand for more convenient, healthy, and affordable experiences continues to attract new buyers.

Our brands span on-trend permissible snacking subspaces like meat snacks, popcorn, and seeds as consumers opt for low-carb, protein, and fiber-rich snacks offered by Slim Jim, Duke's, David, Angie's Boom Chick-a-Pop, and more. Permissible snacking is growing much faster than the overall snacking category, and our portfolio of well-known brands is benefiting. During the first quarter, we took another step to build upon this strength by welcoming the FATTY to the Conagra family. Slide 16 highlights some of the key points that make this acquisition so attractive. Conagra is a leader in the meat snacks category with significant scale. But within meat snacks, Conagra is the leader in meat sticks, a high-margin business that is growing faster than all other snacking categories as demand for more convenient, healthy, and affordable experiences continues to attract new buyers.

Speaker Change: Largely due to our advantage portfolio.

Speaker Change: Our branch expansion on trend permissible snacking sub spaces like meat snacks popcorn and seats.

Speaker Change: Now given the progress we've made on debt and cash flow as well as other market dynamics, we are in a strong position to resume.

Speaker Change: As consumers opt for low carb protein and fiber rich snacks offered by <unk>.

Speaker Change: Active portfolio reshaping and importantly, still meet our long term three times net leverage target through a combination of bolt on acquisitions and divestitures of low growth businesses.

Speaker Change: Duke's, David and chicken chicken kebab and more.

Speaker Change: Permissible snacking is growing much faster than the overall snacking category in our portfolio of well known brands is benefiting.

In Q1, we advanced these efforts through the acquisition of the fatty and the divestiture of our majority stake in Indian subsidiary Agro Tech Foods limited looking.

Speaker Change: During the first quarter, we took another step to build upon the strength by welcoming the fatty to the Conagra family slide.

Speaker Change: Looking ahead, we will continue to assess opportunities to reshape our portfolio for faster growth and stronger margins.

Speaker Change: Slide 16 highlights some of the key points that make this acquisition so attractive.

Speaker Change: Conagra is a leader in the meat snacks category with significant scale.

Speaker Change: As discussed at the top of the call our execution across each of our priorities in Q1 has reinforced our confidence in the underlying strength of our brands people and strategy.

Speaker Change: With that I am pleased to reaffirm our fiscal 'twenty five guidance.

Sean Connolly: FATTY smoked meat sticks join consumer favorites Slim Jim, and Duke's to form a trifecta smokehouse, which will allow us to capitalize on high-growth, protein-focused snacking behaviors. The addition of a premium brand like the FATTY furthers Conagra's position of strength as we focus on growing our snacking business across advantaged categories. Turning to our food service business on slide 17, it's no secret that COVID posed an unprecedented challenge for the entire food service industry, and our food service segment was no exception. Over the last five years, we've been laser-focused on building a better business and returning margins to pre-COVID levels. As a result of our efforts over the past few years, we grew organic net sales, and adjusted operating profit. This past year, we were able to restore food service margins to their fiscal 2019 levels.

FATTY smoked meat sticks join consumer favorites Slim Jim, and Duke's to form a trifecta smokehouse, which will allow us to capitalize on high-growth, protein-focused snacking behaviors. The addition of a premium brand like the FATTY furthers Conagra's position of strength as we focus on growing our snacking business across advantaged categories. Turning to our food service business on slide 17, it's no secret that COVID posed an unprecedented challenge for the entire food service industry, and our food service segment was no exception. Over the last five years, we've been laser-focused on building a better business and returning margins to pre-COVID levels. As a result of our efforts over the past few years, we grew organic net sales, and adjusted operating profit. This past year, we were able to restore food service margins to their fiscal 2019 levels.

Speaker Change: I'll now pass the call over to Dave to discuss our financials in more detail.

Speaker Change: That is smoked meat sticks joins consumer favorites slim, Jim and <unk>.

Dave Marburger: Thanks, Sean and good morning, everyone.

Speaker Change: To form a trip out to small caps.

Dave Marburger: Slide 22 shows our financial results for key metrics in the quarter Sean.

Speaker Change: Which will allow us to capitalize on high growth protein focused snacking behaviors.

Speaker Change: <unk> provided a good overview of how our business performed in Q1, highlighting our continued volume improvements in domestic retail share gains and strong productivity.

Speaker Change: The addition of a premium brand like the fatty.

Speaker Change: Conagra's position of strength as we focus on growing our snacking business across advantaged categories.

Dave Marburger: To most effectively unpack our Q1 results I'll move to our segment performance on the next slide.

Speaker Change: Turning to our foodservice business on slide 17.

Speaker Change: Slide 23 shows the composition of organic net sales by segment and also highlights the estimated impact of the Hebrew National manufacturing disruption on total company sales.

Speaker Change: It's no secret that Covid posed an unprecedented challenge for the entire foodservice industry in our foodservice segment was no exception.

Speaker Change: Total organic net sales, excluding Hebrew would've been down two 6% or 90 basis points better than the minus three 5% we deliver.

Speaker Change: Over the last five years, we've been laser focused on building, a better business and returning margins to pre COVID-19 levels.

Speaker Change: And grocery and snacks, we delivered organic net sales of approximately $1 2 billion a decline of one 9% versus last years first quarter, primarily from lower volumes.

As a result of our efforts over the past few years, we grew organic net sales and adjusted operating profit.

Speaker Change: And this past year, we were able to restore foodservice margins to their fiscal 19 levels.

Speaker Change: Price mix decreased slightly.

Sean Connolly: During Q1, we sustained that margin as we continued to execute our value-over-volume strategy. Our margin recovery has also been supported by our efficient and effective supply chain, highlighted here on slide 18. We expect to drive approximately $350 million in savings during fiscal 2025 through multiple productivity initiatives. Further, Q1 service levels remained at the strong pre-COVID level of 97%. We also continued to deliver improvements in free cash flow, reducing our cash conversion cycle by seven days relative to the prior period. As a result of these efforts, we remain on track to deliver $1 billion of cost savings by the end of fiscal 2025. Our productivity initiatives remain a key tool in our strategic playbook as the savings we realize help fuel our brand-building investments and portfolio reshaping efforts.

During Q1, we sustained that margin as we continued to execute our value-over-volume strategy. Our margin recovery has also been supported by our efficient and effective supply chain, highlighted here on slide 18. We expect to drive approximately $350 million in savings during fiscal 2025 through multiple productivity initiatives. Further, Q1 service levels remained at the strong pre-COVID level of 97%. We also continued to deliver improvements in free cash flow, reducing our cash conversion cycle by seven days relative to the prior period. As a result of these efforts, we remain on track to deliver $1 billion of cost savings by the end of fiscal 2025. Our productivity initiatives remain a key tool in our strategic playbook as the savings we realize help fuel our brand-building investments and portfolio reshaping efforts.

Speaker Change: <unk> of investments and selected brands, partially offset by a price increase taken in the prior year on our tomato business.

Speaker Change: During Q1, we sustained that margin as we continued to execute our value over volume strategy.

Speaker Change: Our refrigerated and frozen segment delivered approximately $1 1 billion in net sales a decline of five 7% from prior year.

Speaker Change: Our margin recovery has also been supported by our efficient and extended supply chain highlighted here on slide 18.

Speaker Change: Volume and price mix were both impacted by the temporary manufacturing disruption in Hebrew national.

Speaker Change: We expect drive approximately $350 million in savings during fiscal 'twenty five.

Speaker Change: Through multiple productivity initiatives.

Speaker Change: Excluding Hebrew, we estimate that refrigerated and frozen net sales in the quarter would have been down three 6% vol.

Speaker Change: Further Q1 service levels remained at the strong pre COVID-19 level of 97%.

Speaker Change: Volume for the quarter would have increased one 6% and price mix would've been down five 2%.

Speaker Change: We also continued to deliver improvements in free cash flow, reducing our cash conversion cycle by seven days relative to the prior period.

Speaker Change: Refrigerated and frozen price mix was impacted by pass through pricing reductions in certain brands that were experiencing deflation primarily in our spreads business.

Speaker Change: As a result of these efforts we remain on track to deliver $1 billion of cost savings by the end of fiscal 'twenty five.

Speaker Change: And increased trade merchandising investments, particularly in our frozen business.

Speaker Change: Our productivity initiatives remain a key tool in our strategic playbook as the savings we realize helped fuel our brand building investments and portfolio reshaping efforts.

Speaker Change: We also experienced a shift in the mix of products sold which was a headwind to price mix in the quarter.

Sean Connolly: Turning to slide 19, we were excited to resume our historical practice of active portfolio reshaping with both inbound and outbound activities. Consumer tastes and habits are constantly changing, and we continuously evaluate opportunities to reshape our portfolio to position the company for further growth and margin expansion, whether that be through investments in innovation and brand modernization, M&A, or value accretive divestitures or spends. Portfolio reshaping is in our DNA, and Conagra has taken substantial actions over the past decade to transform our portfolio. However, in recent years, we've been more single-mindedly focused on debt paydown. Now, given the progress we've made on debt and cash flow, as well as other market dynamics, we are in a strong position to resume active portfolio reshaping and, importantly, still meet our long-term 3x net leverage target through a combination of bolt-on acquisitions and divestitures of low-growth businesses.

Turning to slide 19, we were excited to resume our historical practice of active portfolio reshaping with both inbound and outbound activities. Consumer tastes and habits are constantly changing, and we continuously evaluate opportunities to reshape our portfolio to position the company for further growth and margin expansion, whether that be through investments in innovation and brand modernization, M&A, or value accretive divestitures or spends. Portfolio reshaping is in our DNA, and Conagra has taken substantial actions over the past decade to transform our portfolio. However, in recent years, we've been more single-mindedly focused on debt paydown. Now, given the progress we've made on debt and cash flow, as well as other market dynamics, we are in a strong position to resume active portfolio reshaping and, importantly, still meet our long-term 3x net leverage target through a combination of bolt-on acquisitions and divestitures of low-growth businesses.

Speaker Change: Turning to slide 19, we were excited to resume our historical practice of active portfolio reshaping.

Our international segment delivered an organic net sales increase of 3% over prior year, driven primarily by another strong double digit quarter in our global exports business.

Speaker Change: With both inbound and outbound activities.

<unk> tastes and habits are constantly changing and we continuously evaluate opportunities to reshape our portfolio to.

Speaker Change: Finally, our foodservice business performance continued to be impacted by the lower margin business. We exited that was first called out in our Q3 fiscal 'twenty four call along with ongoing softness in restaurant traffic as.

Speaker Change: Positioning the company for further growth and margin expansion, whether that be through investments in innovation.

Speaker Change: Shawn discussed our foodservice business is larger and more profitable than it was at the start of the pandemic and remains an important contributor to the conagra business portfolio.

Speaker Change: Brand modernization M&A or value accretive divestiture ensures we're spending.

Slide 24 shows our net sales bridge I've already unpack, the quarter's volume and price mix dynamics for you.

Speaker Change: The remaining elements of our foreign exchange, which negatively impacted net sales by 40 basis points, largely driven by the U S dollar to Mexican peso exchange rates and 10 basis points of favorable impact from the acquisition of fatty smoked meat sticks.

Speaker Change: Now given the progress we've made on debt and cash flow as well as other market dynamics, we are in a strong position to resume active portfolio reshaping.

Speaker Change: And importantly, still meet our long term three times net leverage target through a combination of bolt on acquisitions and divestitures of low growth businesses.

Speaker Change: The components of our Q1 adjusted operating margin bridge are shown on slide 25.

Speaker Change: Adjusted operating margin declined 244 basis points over prior year to 14, 2%.

Sean Connolly: In Q1, we advanced these efforts through the acquisition of the Fatty and the divestiture of our majority stake in Indian subsidiary Agro Tech Foods Limited. Looking ahead, we will continue to assess opportunities to reshape our portfolio for faster growth and stronger margins. As discussed at the top of the call, our execution across each of our priorities in Q1 has reinforced our confidence in the underlying strength of our brands, people, and strategy. With that, I'm pleased to reaffirm our fiscal '25 guidance. I'll now pass the call over to Dave to discuss our financials in more detail. Thanks, Sean, and good morning, everyone. Slide 22 shows our financial results for key metrics in the quarter. Sean provided a good overview of how our business performed in Q1, highlighting our continued volume improvements in domestic retail, share gains, and strong productivity.

In Q1, we advanced these efforts through the acquisition of the Fatty and the divestiture of our majority stake in Indian subsidiary Agro Tech Foods Limited. Looking ahead, we will continue to assess opportunities to reshape our portfolio for faster growth and stronger margins. As discussed at the top of the call, our execution across each of our priorities in Q1 has reinforced our confidence in the underlying strength of our brands, people, and strategy. With that, I'm pleased to reaffirm our fiscal '25 guidance. I'll now pass the call over to Dave to discuss our financials in more detail.

Speaker Change: In Q1, we advanced these efforts through the acquisition of the fatty and the divestiture of our majority stake in Indian subsidiary Agro Tech Foods limited.

In addition to the price mix and trade merchandising investments I have already discussed we also saw year over year cost of goods sold inflation of three 3% primarily from proteins sweeteners and warehousing costs.

Speaker Change: Looking ahead, we will continue to assess opportunities to reshape our portfolio for faster growth and stronger margins.

Speaker Change: SG&A was higher due to wrapping lower incentive compensation a year ago.

Speaker Change: As discussed at top of the call.

Speaker Change: And foreign exchange was a headwind.

Speaker Change: Our execution across each of our priorities in Q1 has reinforced our confidence and underlying strength of our brands.

Productivity improvements, which approximated three 6% of cost of goods sold helped fund our trade investments in the quarter.

Speaker Change: And strategy.

Speaker Change: With that I am pleased to reaffirm our fiscal <unk> guidance.

Speaker Change: This productivity was partially offset by the impact of the Hebrew national disruption.

Speaker Change: I'll now pass the call over to Dave to discuss our financials in more detail.

David S.Marburger: Thanks, Sean, and good morning, everyone. Slide 22 shows our financial results for key metrics in the quarter. Sean provided a good overview of how our business performed in Q1, highlighting our continued volume improvements in domestic retail, share gains, and strong productivity.

Speaker Change: We don't expect these unfavorable cost to continue going forward.

Dave Marburger: Thanks, Sean and good morning, everyone.

Speaker Change: Slide 26 details our adjusted operating profit and adjusted operating margin performance by segment for Q1.

Dave Marburger: Slide 22 shows our financial results for key metrics in the quarter Shawn provided a good overview of how our business performed in Q1, highlighting our continued volume improvements in domestic retail share gains and strong productivity.

Speaker Change: All segments reported a decline from prior year and adjusted operating profit and adjusted operating margin and all segments were impacted by the same dynamics, primarily lower organic net sales, which included increased merchandising investment.

Sean Connolly: To most effectively unpack our Q1 results, I'll move to our segment performance on the next slide. Slide 23 shows the composition of organic net sales by segment, and also highlights the estimated impact of the Hebrew National manufacturing disruption on total company sales. Total organic net sales, excluding Hebrew National, would have been down 2.6%, or 90 basis points better than the -3.5% we delivered. In grocery and snacks, we delivered organic net sales of approximately $1.2 billion, a decline of 1.9% versus last year's first quarter, primarily from lower volumes. Price mix decreased slightly, a result of investments in selected brands partially offset by a price increase taken in the prior year on our tomato business. Our refrigerated and frozen segment delivered approximately $1.1 billion in net sales, a decline of 5.7% from prior year.

To most effectively unpack our Q1 results, I'll move to our segment performance on the next slide. Slide 23 shows the composition of organic net sales by segment, and also highlights the estimated impact of the Hebrew National manufacturing disruption on total company sales. Total organic net sales, excluding Hebrew National, would have been down 2.6%, or 90 basis points better than the -3.5% we delivered. In grocery and snacks, we delivered organic net sales of approximately $1.2 billion, a decline of 1.9% versus last year's first quarter, primarily from lower volumes. Price mix decreased slightly, a result of investments in selected brands partially offset by a price increase taken in the prior year on our tomato business. Our refrigerated and frozen segment delivered approximately $1.1 billion in net sales, a decline of 5.7% from prior year.

Dave Marburger: To most effectively unpack our Q1 results I'll move to our segment performance on the next slide.

Dave Marburger: Slide 23 shows the composition of organic net sales by segment and also highlights the estimated impact of the Hebrew National manufacturing disruption on total company sales.

Speaker Change: Higher cost of goods sold inflation and unfavorable unfavorable operating leverage partially offset by favorable productivity.

Speaker Change: Additionally, refrigerated and frozen adjusted operating profit was impacted by approximately $10 million from the manufacturing disruptions in Hebrew national and.

Total organic net sales, excluding ebro would've been down two 6% or 90 basis points better than the minus three 5% we deliver.

Speaker Change: In our international segment saw an outsized negative impact from unfavorable foreign exchange rates.

Dave Marburger: And grocery and snacks, we delivered organic net sales of approximately $1 1 billion a decline of one 9% versus last year's first quarter.

Speaker Change: The adjusted EPS Bridge for Q1 fiscal 'twenty five as shown on slide 27.

Speaker Change: Adjusted EPS was <unk> 53 in the current quarter compared to <unk> 66, a year ago due to a decline in adjusted operating profit unfavorable FX rates and lower equity earnings from ardent mills.

Dave Marburger: Primarily from lower volumes.

Dave Marburger: Price mix decreased slightly.

Dave Marburger: Our investments in select brands, partially offset.

Dave Marburger: <unk> offset by a price increase taken in prior year on our tomato business.

Dave Marburger: Our refrigerated and frozen segment delivered approximately $1 1 billion in net sales a decline of five 7% from prior year.

Speaker Change: Pension and adjusted taxes contributed <unk> <unk> of EPS in the quarter.

Speaker Change: Our ardent mills joint venture continued to perform well and its core flower business delivered lower commodity revenue in Q1 compared to last year due to lower market volatility.

Sean Connolly: Volume and price mix were both impacted by the temporary manufacturing disruption in Hebrew National. Excluding Hebrew, we estimate that refrigerated and frozen net sales in the quarter would have been down 3.6%. Volume for the quarter would have increased 1.6%, and price mix would have been down 5.2%. Refrigerated and frozen price mix was impacted by pass-through pricing reductions in certain brands that were experiencing deflation, primarily in our spreads business, and increased trade merchandising investments, particularly in our frozen business. We also experienced a shift in the mix of products sold, which was a headwind to price mix in the quarter. Our international segment delivered an organic net sales increase of 3% over prior year, driven primarily by another strong double-digit quarter in our global exports business.

Volume and price mix were both impacted by the temporary manufacturing disruption in Hebrew National. Excluding Hebrew, we estimate that refrigerated and frozen net sales in the quarter would have been down 3.6%. Volume for the quarter would have increased 1.6%, and price mix would have been down 5.2%. Refrigerated and frozen price mix was impacted by pass-through pricing reductions in certain brands that were experiencing deflation, primarily in our spreads business, and increased trade merchandising investments, particularly in our frozen business. We also experienced a shift in the mix of products sold, which was a headwind to price mix in the quarter. Our international segment delivered an organic net sales increase of 3% over prior year, driven primarily by another strong double-digit quarter in our global exports business.

Dave Marburger: Volume and price mix were both impacted by the temporary manufacturing disruption in Hebrew national.

Dave Marburger: Excluding Hebrew, we estimate that refrigerated and frozen net sales in the quarter would have been down three 6%.

Key balance sheet and cash flow metrics are shown on slide 28.

Speaker Change: Conagra generated $269 million and net cash flows from operating activities in Q1.

Dave Marburger: Volume for the quarter would have increased one 6% and price mix would have been down five 2%.

Speaker Change: The decline from prior year was driven primarily by lower operating profit.

Dave Marburger: Refrigerated and frozen price mix was impacted by pass through pricing reductions in certain brands that were experiencing deflation primarily in our spreads business.

And changes in seasonal working capital that we expected.

Speaker Change: Capital expenditures were 133 million dividends paid were $167 million.

Speaker Change: We resumed share repurchases of $64 million to offset dilution from our share based equity incentive compensation plans.

Dave Marburger: And increased trade merchandising investments, particularly in our frozen business.

Dave Marburger: We also experienced a shift in the mix of products sold which was a headwind to price mix in quarter.

Speaker Change: Our Q1 fiscal 'twenty five ending net debt reduction from prior year reflects debt paydowns during fiscal 'twenty four and includes funding the Q1 acquisitions of both the fatty smoked meat snacks business as well as the manufacturing operations of an existing co manufacturer of our cooking spray product.

Our international segment delivered an organic net sales increase of 3% over prior year, driven primarily by another strong double digit quarter.

Sean Connolly: Finally, our food service business performance continued to be impacted by the lower margin business we exited that was first called out in our Q3, fiscal 2024 call, along with ongoing softness in restaurant traffic. As Sean discussed, our food service business is larger and more profitable than it was at the start of the pandemic and remains an important contributor to the Conagra business portfolio. Slide 24 shows our net sales bridge. I've already unpacked the quarter's volume and price mix dynamics for you. The remaining elements are foreign exchange, which negatively impacted net sales by 40 basis points, largely driven by the US dollar to Mexican peso exchange rates, and 10 basis points of favorable impact from the acquisition of Fatty smoked meat sticks. The components of our Q1 adjusted operating margin bridge are shown on slide 25.

Finally, our food service business performance continued to be impacted by the lower margin business we exited that was first called out in our Q3, fiscal 2024 call, along with ongoing softness in restaurant traffic. As Sean discussed, our food service business is larger and more profitable than it was at the start of the pandemic and remains an important contributor to the Conagra business portfolio. Slide 24 shows our net sales bridge. I've already unpacked the quarter's volume and price mix dynamics for you. The remaining elements are foreign exchange, which negatively impacted net sales by 40 basis points, largely driven by the US dollar to Mexican peso exchange rates, and 10 basis points of favorable impact from the acquisition of Fatty smoked meat sticks. The components of our Q1 adjusted operating margin bridge are shown on slide 25.

Dave Marburger: In our global sports business.

Dave Marburger: Finally, our foodservice business performance continued to be impacted by the lower margin business. We exited that was first called out in our Q3 fiscal 'twenty four call along with ongoing softness in restaurant traffic.

Speaker Change: <unk>.

Speaker Change: Net leverage at the end of the quarter was three six times and was in line with our expectations as we remain on track to finish the fiscal year around three two times.

Dave Marburger: Shawn discussed our foodservice business is larger and more profitable than it was at the start of the pandemic and remains an important contributor to the conagra business portfolio.

Speaker Change: In addition to the acquisitions in Q1, we also closed on the sale of our <unk> business in India.

Speaker Change: The net of those three transactions resulted in additional cash uses of approximately $154 million.

Shawn: Slide 24 shows our net sales bridge I've already unpack, the quarter's volume and price mix dynamics for you.

Speaker Change: We remain focused on reducing our net leverage and continuing to generate strong free cash flow.

Shawn: The remaining elements are foreign exchange, which negatively impacted net sales by 40 basis points, largely driven by the U S dollar to Mexican peso exchange rates and 10 basis points of favorable impact from the acquisition of fatty smoked meat sticks.

Speaker Change: As Sean said, we are reaffirming our full year fiscal 'twenty five guidance as shown on slide 29.

I will provide some more color on the next slide.

Sean: As we stated last quarter when initially providing our full year fiscal 'twenty five guidance, we expect sequential volume recovery each quarter.

Shawn: The components of our Q1 adjusted operating margin bridge are shown on slide 25.

Sean Connolly: Adjusted operating margin declined 244 basis points over prior year to 14.2%. In addition to the price mix and trade merchandising investments I've already discussed, we also saw year-over-year cost of goods sold inflation of 3.3%, primarily from proteins, sweeteners, and warehousing costs. SG&A was higher due to wrapping lower incentive compensation a year ago, and foreign exchange was a headwind. Productivity improvements, which approximated 3.6% of cost of goods sold, helped fund our trade investments in the quarter. This productivity was partially offset by the impact of the Hebrew National disruption. We don't expect these unfavorable costs to continue going forward. Slide 26 details our adjusted operating profit and adjusted operating margin performance by segment for Q1.

Adjusted operating margin declined 244 basis points over prior year to 14.2%. In addition to the price mix and trade merchandising investments I've already discussed, we also saw year-over-year cost of goods sold inflation of 3.3%, primarily from proteins, sweeteners, and warehousing costs. SG&A was higher due to wrapping lower incentive compensation a year ago, and foreign exchange was a headwind. Productivity improvements, which approximated 3.6% of cost of goods sold, helped fund our trade investments in the quarter. This productivity was partially offset by the impact of the Hebrew National disruption. We don't expect these unfavorable costs to continue going forward. Slide 26 details our adjusted operating profit and adjusted operating margin performance by segment for Q1.

Shawn: Adjusted operating margin declined 244 basis points over prior year to 14, 2%.

Speaker Change: And we expect adjusted operating margin improvement to be greater in the second half.

Speaker Change: For Q2, we expect improvement in volume top line and margin compared to Q1.

Shawn: In addition to the price mix and trade merchandising investments I've already discussed we also saw year over year cost of goods sold inflation of three 3% primarily from proteins sweepers and warehousing costs.

Speaker Change: We do expect our fiscal 'twenty five merchandising investment to be at the highest level in Q2.

Speaker Change: Also we are now forecasting full year fiscal 'twenty five inflation of approximately three 2% of total cost of goods sold.

Shawn: SG&A was higher due to wrapping lower incentive compensation a year ago.

Shawn: And foreign exchange was a headwind.

Speaker Change: That is up from approximately 3% originally projected for the year.

Shawn: Productivity improvements, which approximated three 6% of cost of goods sold helped fund our trade investments in the quarter.

Speaker Change: We are seeing inflationary pressure, primarily in the areas of proteins and sweeteners.

Shawn: This productivity was partially offset by the impact of the Hebrew National disruption. We don't expect these unfavorable cost to continue going forward.

Speaker Change: While we are seeing deflation in select areas, such as edible fats and oils.

Net impact is a 20 basis point increase in the annual overall inflation estimate.

Slide 26 details our adjusted operating profit and adjusted operating margin performance by segment for Q1 <unk>.

Speaker Change: We don't expect any material impact on fiscal 'twenty, five margin or adjusted EPS from our first quarter M&A transactions, but we expect a decrease in overall reported net sales of approximately $30 million for the remainder of the fiscal year.

Sean Connolly: All segments reported a decline from prior year in adjusted operating profit and adjusted operating margin, and all segments were impacted by the same dynamics, primarily lower organic net sales, which included increased merchandising investment, higher cost of goods sold inflation, and unfavorable operating leverage, partially offset by favorable productivity. Additionally, refrigerated and frozen adjusted operating profit was impacted by approximately $10 million from the manufacturing disruptions in Hebrew National, and our international segment saw an outsized negative impact from unfavorable foreign exchange rates. The adjusted EPS bridge for Q1, fiscal 2025, is shown on slide 27. Adjusted EPS was $0.53 in the current quarter compared to $0.66 a year ago due to a decline in adjusted operating profit, unfavorable FX rates, and lower equity earnings from Ardent Mills. Pension and adjusted taxes contributed $0.01 of EPS in the quarter.

All segments reported a decline from prior year in adjusted operating profit and adjusted operating margin, and all segments were impacted by the same dynamics, primarily lower organic net sales, which included increased merchandising investment, higher cost of goods sold inflation, and unfavorable operating leverage, partially offset by favorable productivity. Additionally, refrigerated and frozen adjusted operating profit was impacted by approximately $10 million from the manufacturing disruptions in Hebrew National, and our international segment saw an outsized negative impact from unfavorable foreign exchange rates. The adjusted EPS bridge for Q1, fiscal 2025, is shown on slide 27. Adjusted EPS was $0.53 in the current quarter compared to $0.66 a year ago due to a decline in adjusted operating profit, unfavorable FX rates, and lower equity earnings from Ardent Mills. Pension and adjusted taxes contributed $0.01 of EPS in the quarter.

Shawn: All segments reported a decline from prior year and adjusted operating profit and adjusted operating margin and all segments were impacted by the same dynamics, primarily lower organic net sales, which included increased merchandising investment.

Speaker Change: Our year ended net leverage target of approximately three two times assumes expected favorability in free cash flow, resulting from improved working capital lower expected capital expenditures and lower estimated cash taxes from a favorable tax settlement.

Higher cost of goods sold inflation and unfavorable unfavorable operating leverage.

Shawn: Partially offset by favorable productivity.

Additionally, refrigerated.

Shawn: Refrigerated and further adjusted operating profit was impacted by approximately $10 million.

Speaker Change: And finally, we expect full year adjusted gross margin to be relatively flat versus fiscal 'twenty four.

Shawn: From the manufacturing disruptions in international.

Speaker Change: That concludes our prepared remarks for today's call. Thank you for your interest in Conagra brands.

Shawn: In our international segment saw an outsized negative impact from unfavorable foreign exchange rates.

Shawn: The adjusted EPS Bridge for Q1 fiscal 'twenty five as shown on slide 27.

Shawn: Adjusted EPS was <unk> 53 in the current quarter compared to <unk> 66, a year ago due to a decline in adjusted operating profit unfavorable FX rates and lower equity earnings from ardent mills.

Shawn: Pension and adjusted taxes contributed <unk> <unk> of EPS in the quarter.

Sean Connolly: Our Ardent Mills joint venture continued to perform well in its core flour business but delivered lower commodity revenue in Q1 compared to last year due to lower market volatility. Key balance sheet and cash flow metrics are shown on slide 28. Conagra generated $269 million in net cash flows from operating activities in Q1. The decline from prior year was driven primarily by lower operating profit and changes in seasonal working capital that we expected. Capital expenditures were $133 million, dividends paid were $167 million, and we resumed share repurchases of $64 million to offset dilution from our share-based equity incentive compensation plans. Our Q1 fiscal 2025 ending net debt reduction from prior year reflects debt paydowns during fiscal 2024 and includes funding the Q1 acquisitions of both the Fatty smoked meat sticks business as well as the manufacturing operations of an existing co-manufacturer of our cooking spray products.

Our Ardent Mills joint venture continued to perform well in its core flour business but delivered lower commodity revenue in Q1 compared to last year due to lower market volatility. Key balance sheet and cash flow metrics are shown on slide 28. Conagra generated $269 million in net cash flows from operating activities in Q1. The decline from prior year was driven primarily by lower operating profit and changes in seasonal working capital that we expected. Capital expenditures were $133 million, dividends paid were $167 million, and we resumed share repurchases of $64 million to offset dilution from our share-based equity incentive compensation plans. Our Q1 fiscal 2025 ending net debt reduction from prior year reflects debt paydowns during fiscal 2024 and includes funding the Q1 acquisitions of both the Fatty smoked meat sticks business as well as the manufacturing operations of an existing co-manufacturer of our cooking spray products.

Shawn: Our ardent mills joint venture continued to perform well and its core flower business, but delivered lower commodity revenue in Q1 compared to last year due to lower market volatility.

Shawn: Key balance sheet and cash flow metrics are shown on slide 28.

Shawn: Conagra generated $269 million and net cash flows from operating activities in Q1.

Shawn: The decline from prior year was driven primarily by lower operating profit.

Shawn: And changes in seasonal working capital that we expected.

Shawn: Capital expenditures were $133 million dividend.

Shawn: Dividends paid were $107 million.

Shawn: And we resumed share repurchases of $64 million to offset dilution from our share based equity incentive compensation plans.

Shawn: Our Q1 fiscal 'twenty five ending net debt reduction from prior year reflects debt paydowns during fiscal 'twenty four and includes funding the Q1 acquisitions of both the fatty smoked meat sticks business as well as the manufacturing operations of an existing co manufacturer of our cooking spray product.

Sean Connolly: Net leverage at the end of the quarter was 3.6x and was in line with our expectations as we remain on track to finish the fiscal year around 3.2x. In addition to the acquisitions in Q1, we also closed on the sale of our ATFL business in India. The net of those three transactions resulted in additional cash uses of approximately $154 million. We remain focused on reducing our net leverage and continuing to generate strong free cash flow. As Sean said, we are reaffirming our full-year fiscal 2025 guidance as shown on slide 29. I will provide some more color on the next slide. As we stated last quarter, when initially providing our full-year fiscal 2025 guidance, we expect sequential volume recovery each quarter, and we expect adjusted operating margin improvement to be greater in the second half.

Net leverage at the end of the quarter was 3.6x and was in line with our expectations as we remain on track to finish the fiscal year around 3.2x. In addition to the acquisitions in Q1, we also closed on the sale of our ATFL business in India. The net of those three transactions resulted in additional cash uses of approximately $154 million. We remain focused on reducing our net leverage and continuing to generate strong free cash flow. As Sean said, we are reaffirming our full-year fiscal 2025 guidance as shown on slide 29. I will provide some more color on the next slide. As we stated last quarter, when initially providing our full-year fiscal 2025 guidance, we expect sequential volume recovery each quarter, and we expect adjusted operating margin improvement to be greater in the second half.

Shawn: <unk>.

Shawn: Net leverage at the end of the quarter was three six times and was in line with our expectations as we remain on track to finish the fiscal year around three two times.

Shawn: In addition to the acquisitions in Q1, we also closed on the sale of our <unk> business in India.

Shawn: The net of those three transactions resulted in additional cash uses of approximately $154 million.

Shawn: We remain focused on reducing our net leverage and continuing to generate strong free cash flow.

Shawn: As Sean said, we are reaffirming our full year fiscal 'twenty guidance as shown on slide 29.

Shawn: We'll provide some more color on the next slide.

Sean: As we stated last quarter when initial providing our full year fiscal 'twenty five items, we expect sequential volume recovery each quarter.

Speaker Change: And we expect adjusted operating margin improvement to be greater in the second half.

Sean Connolly: For Q2, we expect improvement in volume, top line, and margin compared to Q1. We do expect our fiscal 2025 merchandising investment to be at the highest level in Q2. Also, we are now forecasting full-year fiscal 2025 inflation of approximately 3.2% of total cost of goods sold. That is up from approximately 3% originally projected for the year. We are seeing inflationary pressure primarily in the areas of proteins and sweeteners. While we are seeing deflation in select areas such as edible fats and oils, the net impact is a 20 basis point increase in the annual overall inflation estimate. We don't expect any material impact on fiscal 2025 margin or adjusted EPS from our first quarter M&A transactions, but we expect a decrease in overall reported net sales of approximately $30 million for the remainder of the fiscal year.

For Q2, we expect improvement in volume, top line, and margin compared to Q1. We do expect our fiscal 2025 merchandising investment to be at the highest level in Q2. Also, we are now forecasting full-year fiscal 2025 inflation of approximately 3.2% of total cost of goods sold. That is up from approximately 3% originally projected for the year. We are seeing inflationary pressure primarily in the areas of proteins and sweeteners. While we are seeing deflation in select areas such as edible fats and oils, the net impact is a 20 basis point increase in the annual overall inflation estimate. We don't expect any material impact on fiscal 2025 margin or adjusted EPS from our first quarter M&A transactions, but we expect a decrease in overall reported net sales of approximately $30 million for the remainder of the fiscal year.

Speaker Change: For Q2, we expect improvement in volume top line and margin compared to Q1.

We do expect our fiscal 'twenty five merchandising investment to be at the highest level in Q2.

Speaker Change: Also we are now forecasting full year fiscal 'twenty five inflation of approximately three 2% of total cost of goods sold that is up from approximately 3% originally projected for the year.

Speaker Change: We are seeing inflationary pressure, primarily in the areas of proteins and sweeteners.

Speaker Change: While we are seeing deflation in select areas, such as edible fats and oils. The net impact is a 20 basis point increase in the annual overall inflation estimate.

Speaker Change: We don't expect any material impact on fiscal 'twenty five margin or adjusted EPS.

Speaker Change: From our first quarter and a <unk> session.

Speaker Change: But we expect a decrease in overall reported net sales of approximately $30 million for the remainder of this fiscal year.

Sean Connolly: Our year-end net leverage target of approximately 3.2x assumes expected favorability in free cash flow resulting from improved working capital, lower expected capital expenditures, and lower estimated cash taxes from a favorable tax settlement. And finally, we expect full-year adjusted gross margin to be relatively flat versus fiscal 2024. That concludes our prepared remarks for today's call. Thank you for your interest in Conagra Brands.

Our year-end net leverage target of approximately 3.2x assumes expected favorability in free cash flow resulting from improved working capital, lower expected capital expenditures, and lower estimated cash taxes from a favorable tax settlement. And finally, we expect full-year adjusted gross margin to be relatively flat versus fiscal 2024. That concludes our prepared remarks for today's call. Thank you for your interest in Conagra Brands.

Our year end net leverage target of approximately three two times.

Speaker Change: Assumes expected favorability in free cash flow, resulting from improved working capital.

Speaker Change: Lower expected capital expenditures and lower estimated cash taxes from a favorable tax settlement.

Speaker Change: And finally, we expect full year adjusted gross margin to be relatively flat versus fiscal 'twenty for.

Speaker Change: That concludes our prepared remarks for today's call. Thank you for your interest in Conagra brands.

Q1 2025 Conagra Brands Inc Earnings Call - Pre-Recorded Remarks

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