ConAgra Brands (CAG) Falls After Lowering FY20 Outlok

Conagra Brands, Inc. (NYSE: CAG) is 6.8% lower after announcing Monday it is revising its fiscal 2020 outlook as a result of softer than expected category performance during the company's fiscal third quarter, which ends on February 23, 2020. Third quarter consumption declines have impacted a wide range of categories across the food industry, including categories in which Conagra Brands competes.

The Company now expects fiscal 2020 organic net sales growth to be flat to 0.5%. Adjusted operating margin is now expected to be 15.8% to 16.2%. The Company expects adjusted diluted earnings per share from continuing operations of $2.00 to $2.07. (*** consensus is $2.09).

Sean Connolly, president and chief executive officer of Conagra Brands, commented, "Consumption softness in the quarter first emerged in the foodservice industry, with holiday restaurant traffic weaker than last year. Softness pivoted to retail in January and impacted numerous categories across food, including several in which we compete. While we planned for tougher year-over-year comparable results in the third quarter, we did not plan for this level of category softness. Accordingly, we are updating our fiscal 2020 outlook."

Connolly continued, "Despite the unplanned third quarter consumption downturn, we remain encouraged by the health of our brands and the traction we have made on our fiscal 2020 innovation slate. We have gained share in many of our categories during the quarter and, based on our analysis, believe the recent consumption weakness is abating. We expect a resumption of year-over-year organic net sales growth in our fourth fiscal quarter."

The Company remains committed to achieving its fiscal 2021 leverage goal. In addition, it is also committed to delivering on its fiscal 2022 targets, which have been updated for recent divestitures.

Connolly noted, "We remain confident in our brands, the proven Conagra Way playbook and the long runway of growth ahead. As such, we are reaffirming our commitment to achieving our fiscal 2021 deleveraging and delivering on our long-term fiscal 2022 targets."

The Company's CAGNY presentation slides will be available today, February 17, at approximately 10:00 a.m. ET on conagrabrands.com/investor-relations under Events & Presentations.

Updated Fiscal 2020 Outlook

Note that organic net sales growth continues to exclude the impact of fiscal 2020's 53rd week. All other metrics continue to include the impact of the 53rd week. The Company's updated guidance also reflects the impact of the divestiture of the Lender's bagel business, which closed early in the third quarter.

Updated Fiscal 2022 Targets

The inability to predict the amount and timing of the impacts of foreign exchange, acquisitions, divestitures, and other items impacting comparability makes a detailed reconciliation of these forward-looking non-GAAP financial measures impracticable. Please see the end of this release for more information.

CAGNY Conference Presentation Webcast

As previously announced, Conagra Brands will present at the 2020 CAGNY (Consumer Analyst Group of New York) Conference on Tuesday, February 18, at 9 a.m. ET.

A live audio webcast of the presentation will be available on conagrabrands.com/investor-relations under Events & Presentations. A replay of the webcast will be available until February 18, 2021.

You May Also Be Interested In

• Gap taps Coach architect Reed Krakoff for $29.95-$498 handbag line
• Yum! Brands completes Pizza Hut sale to LongRange for $1.5B
• Hawaiian Electric trades at 8.8x P/E, but wildfire risk clouds value case