Key Highlights
- Third-quarter adjusted earnings per share of $0.39 fell short of the $0.40 analyst consensus
- Quarterly revenue reached $2.79 billion, surpassing the $2.76 billion expectation
- Annual adjusted EPS outlook trimmed to approximately $1.70, representing the lower boundary of previous projections
- Organic net sales climbed 2.4%, propelled by strong performance in Frozen and Snacks divisions
- Full-year cost of goods sold inflation projected at roughly 7%, incorporating tariff impacts
Conagra Brands (CAG) delivered mixed third-quarter financial results, falling short on earnings while exceeding revenue expectations. The packaged foods manufacturer reported adjusted earnings per share of $0.39, trailing the Wall Street consensus of $0.40. However, quarterly revenue of $2.79 billion outpaced analyst projections of $2.76 billion.
Total net sales declined 1.9% compared to the year-ago period. Despite this decrease, organic net sales advanced 2.4%, supported by a 1.9% improvement in price/mix and a modest 0.5% uptick in volume.
The Refrigerated & Frozen division emerged as a bright spot in the quarter. This segment achieved 3.6% organic net sales growth, with volume jumping 3.9% as the company regained market position previously lost during supply chain disruptions in the prior year.
The Grocery & Snacks division delivered 1.8% organic net sales expansion. The Foodservice channel contributed 3.6% growth.
Chief Executive Officer Sean Connolly expressed satisfaction with the quarterly trajectory. “I am pleased with our third quarter performance as we returned the business to organic net sales growth, reflecting continued upward inflection in our Frozen and Snacks businesses while remaining on track in our cash businesses,” he stated.
Volume increases were recorded across frozen single serve meals, frozen vegetables, meat snacks, and hot cocoa product lines.
Profitability Faces Headwinds
Adjusted gross margin contracted 112 basis points to 23.7%. Gains from higher organic sales and productivity initiatives were insufficient to counterbalance escalating input expenses.
Cost of goods sold inflation is now anticipated to hit approximately 7% for the complete fiscal year, accounting for tariff-related costs. Adjusted net income tumbled 22.3% to $188 million.
Adjusted operating margin stood at 10.6% during the third quarter. Management expects the full-year metric to approach the upper end of its 11.0%–11.5% target range.
Annual Outlook Adjusted Downward
Conagra revised its full-year adjusted EPS guidance to approximately $1.70. This represents the bottom threshold of its prior $1.70 to $1.85 range — a clear signal of caution, though the company maintains its commitment to achieving this target.
The organization now anticipates annual net sales performance at the midpoint of its earlier projection, which forecast a range spanning from a 1% decrease to a 1% increase.
Escalating input expenses have presented persistent challenges. Conagra had implemented strategic price adjustments to counter rising costs across key commodities including cocoa, olive oil, and palm oil, along with tariffs imposed on tin-plate steel.
Cost-sensitive shoppers reducing expenditures and gravitating toward value-oriented alternatives have complicated these pricing strategies. The accelerating consumer shift toward healthier dietary choices, partially fueled by increased adoption of GLP-1 weight-loss medications, has also created revenue pressures across the packaged food industry.
Full-year cost of goods sold inflation, encompassing tariff impacts, is projected to approximate 7%.
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