ConAgra Foods, Inc., (NYSE: CAG) one of North America’s leading
packaged food companies, today reported results for the fiscal 2012
second quarter ended Nov. 27, 2011. Diluted EPS from continuing
operations was $0.41, including $0.06 per diluted share of net
expense from items impacting comparability. Adjusting for those
items, diluted EPS from continuing operations was $0.47. For the
same period a year ago, diluted EPS from continuing operations as
reported and adjusted for items impacting comparability was $0.45.
Items impacting comparability in the second quarter of the current
year and prior year are summarized toward the end of this release
and reconciled for Regulation G purposes starting on page 9.
Gary Rodkin, ConAgra Foods’ chief executive officer, commented,
“We are pleased with our progress in both operating segments. The
quarter’s higher-than-planned comparable EPS reflects strong
double-digit operating profit growth for our Commercial Foods
segment, which has successfully overcome difficult operating
conditions and implemented pricing. We are encouraged by our
progress in fighting inflation in the Consumer Foods segment;
volumes for that segment have performed largely as expected given
ongoing price increases. The marketplace environment remains
difficult due to continuing inflationary pressures and the impact
of the current economy on consumers, so we are cautious about
business conditions. Our team is managing through these
circumstances well by focusing on net price realization,
productivity, and appropriate brand support, and we are confident
in our ability to deliver our overall EPS and cash flow
expectations for the fiscal year.”
Consumer Foods Segment (63% of YTD
sales)
Branded and non-branded food sold in retail and
foodservice channels.
The Consumer Foods segment posted sales of $2,178 million for
the fiscal second quarter, up 4% year-over-year due to price/mix
contribution of 5% and a 1% volume decline.
- Brands posting sales growth for the
quarter include Banquet, Chef Boyardee, Hunt’s, Marie Callender’s,
Orville Redenbacher’s, PAM, Peter Pan, Reddi-wip, Rosarita, Slim
Jim, Snack Pack, Swiss Miss, Van Camp’s, Wesson, Wolf, and
others.
- More brand details can be found in the
Q&A document accompanying this release.
Operating profit of $256 million was 8% below last year’s $279
million, as reported. Restructuring charges of $15 million in the
current quarter and $5 million in the year-ago period are included
in reported results; adjusting for these amounts, current quarter
operating profit of $271 million was 4% below the comparable $284
million in the year-ago period. In terms of operating profit
impact, the combination of pricing and strong cost savings almost
offset inflation of 10% this quarter; marketing investment was
slightly higher, as planned.
The company is encouraged by its pricing progress to date, and
remains cautious in its near-term outlook for this segment largely
due to upwardly revised estimates for near-term inflation and the
possibility of further volume impact given ongoing pricing
initiatives. Largely reflecting the timing of inflation and
marketing investments, the company expects this segment’s
second-half operating profit growth to occur in the fiscal fourth
quarter.
Commercial Foods Segment (37% of YTD
sales)
Specialty potato, seasonings, blends, flavors,
and milled grain products sold to foodservice and commercial
channels worldwide.
Sales for the Commercial Foods segment were $1,226 million, 16%
above year-ago amounts; the growth reflects the pass-through of
higher wheat costs in the milling operations as well as price
increases at Lamb Weston potato operations necessitated by high
operating costs. The segment’s sales performance also reflects
volume growth for the major product lines.
The segment’s operating profit increased 26% to $161 million,
which was higher than planned. The segment’s most significant
profit improvement came from the Lamb Weston operations, which
benefited from pricing actions taken over the last few months to
address input cost inflation; Lamb Weston also benefited from
operating efficiencies and volume growth. Sweet potato products for
the foodservice channel and Alexia branded products in the retail
channel continue to demonstrate momentum, helping drive favorable
mix. The milling operations also posted improved profitability due
to favorable market conditions, efficiencies and mix.
As previously communicated, the company expects this segment to
post improved year-over-year profitability in the second half of
the year.
Hedging Activities – This language primarily relates to
operations other than the company’s milling operations.
The company recorded $27 million of net hedging loss as
unallocated Corporate expense in the current quarter, and $9
million of net hedging gain as unallocated Corporate expense in the
year-ago period. The company identifies these amounts as items
impacting comparability. Those amounts are reclassified from
unallocated Corporate expense to the operating segments when the
underlying commodity or foreign currency being hedged is expensed
in segment cost of goods sold (COGS).
Other Items
- Corporate expense was $116 million for
the quarter and $74 million in the year-ago period. Current-quarter
amounts include $27 million of hedge losses, and year-ago amounts
include $9 million of hedge gains. Excluding these amounts,
Corporate expense was $89 million for the current quarter and $83
million in the year-ago period.
- Equity method investment earnings were
$12 million for the fiscal second quarter, up from $5 million a
year ago. The increase reflects better performance for an
international potato joint venture.
- Net interest expense was $51 million in
the current quarter, compared with $34 million in the year-ago
period; interest income from the notes receivable held in
connection with the divestiture of the Trading & Merchandising
operations benefited year-ago amounts by $19 million. That note was
repaid in December 2010.
- The effective tax rate for continuing
operations for the quarter was 33%. The company expects the
effective tax rate for the full fiscal year 2012 to be
approximately 34%, excluding items impacting comparability.
Capital Items
- Shortly after quarter-end, ConAgra
Foods closed the following transactions:
- ConAgra Foods purchased National
Pretzel Company, a leading private label pretzel company,
furthering ConAgra Foods’ product offerings in private label
snacks. This fits with the company’s previously stated goal of
expanding its private label platform. National Pretzel’s annual
sales approach $200 million. ConAgra Foods paid a cash purchase
price of approximately $300 million and will receive significant
future cash tax benefits associated with how the transaction was
structured. The company expects the EPS contribution from this
acquisition to be in the range of $0.04 over the next twelve
months, with the contribution increasing as that period
progresses.
- The company increased its stake in Agro
Tech Foods, Limited, of India (ATFL) by purchasing approximately
3.7% of ATFL stock from a third party for approximately $10 million
in cash. ATFL has demonstrated good sales and earnings growth over
the past 5 years and furthers ConAgra Foods’ goal of expanding
internationally. ConAgra Foods now holds a majority interest in,
and will prospectively consolidate the financial statements of,
this company. ConAgra Foods estimates that consolidating this
entity will add approximately $150 million of sales over the next
twelve months to the Consumer Foods segment. After the impact of
incremental amortization and adjusting for minority interest,
ConAgra Foods expects no substantial comparable near-term EPS
impact resulting from consolidating this entity. ConAgra Foods
expects to record a gain on the transaction, which will be treated
as an item impacting comparability, in the fiscal 2012 third
quarter.
- During the quarter, the company repaid
$343 million of current portion of long-term debt. As a guiding
principle of the company’s capital allocation activities, ConAgra
Foods is committed to an investment grade credit rating and a
strong balance sheet.
- Dividends for the current quarter
totaled $95 million versus $88 million in the year-ago period; the
increase reflects a higher dividend rate partially offset by fewer
shares outstanding.
- The company repurchased approximately 4
million shares of its common stock for approximately $95 million
during the quarter. After quarter-end, the Board of Directors
increased the share repurchase authorization by $750 million;
shares are expected to be repurchased periodically over several
years, depending on market conditions and other factors, through
open market or privately negotiated transactions, and to be funded
by cash generated through operations. After the increase, the total
share repurchase authorization outstanding was approximately $780
million.
- For the current quarter, capital
expenditures from continuing operations for property, plant, and
equipment were $65 million, compared with $82 million in the
year-ago period. Depreciation and amortization expense from
continuing operations was approximately $95 million for the
quarter; this compares with a total of $88 million in the year-ago
period.
Fiscal 2012 Guidance Reaffirmed – Second-half Details
The company continues to expect fiscal 2012 full-year diluted
EPS, adjusted for items impacting comparability, to grow at a low-
to mid-single-digit rate over the comparable $1.75 earned last
fiscal year. The fiscal year’s EPS expectations reflect the benefit
of the strong performance in the fiscal second quarter and recent
acquisitions, as well as upwardly revised inflation estimates and
continued challenging business conditions in the second half of the
year. The company currently estimates that inflation for the
Consumer Foods segment will be in the range of 10% for the full
fiscal year. Based on its assessment of the overall business
climate as well as the nature of the quarterly year-over-year EPS
comparisons, the company expects its fiscal 2012 second-half EPS
growth to be concentrated in the fiscal fourth quarter.
Major Items Impacting Second-quarter Fiscal 2012 EPS
Comparability
Included in the $0.41 diluted EPS from continuing operations for
the second quarter of fiscal 2012 (EPS amounts rounded and after
tax):
- Approximately $0.04 per diluted share
of net expense, or $27 million pretax, related to the
mark-to-market impact of derivatives used to hedge input costs,
temporarily classified in unallocated Corporate expense. This
expense will later be reclassified to the operating segments when
underlying hedged items are expensed in segment cost of goods
sold.
- Approximately $0.02 per diluted share
of net expense, or $16 million (rounded) pretax, related to
restructuring activities designed to improve efficiencies. $15
million (rounded) of these are in the Consumer Foods segment ($8
million in cost of goods sold (COGS), $8 million in selling,
general, and administrative (SG&A) expense), and $1 million
(rounded) are in the Commercial Foods segment (all SG&A).
Included in the $0.45 diluted EPS from continuing operations for
the second quarter of fiscal 2011 (EPS amounts rounded and after
tax):
- Approximately $0.01 per diluted share
of net benefit, or $9 million pretax, related to the mark-to-market
impact of derivatives used to hedge input costs, temporarily
classified in unallocated Corporate expense. This will later be
reclassified to the operating segments when underlying hedged items
are expensed in segment cost of goods sold.
- Approximately $0.01 per diluted share
of expense, or $5 million pretax, related to restructuring plans;
this expense is classified within the Consumer Foods segment ($4
million COGS, $1 million SG&A).
Discussion of Results
ConAgra Foods will host a conference call at 9:30 a.m. EST today
to discuss the results. Following the company’s remarks, the call
will include a question-and-answer session with the investment
community. Domestic and international participants may access the
conference call toll-free by dialing 1-888-438-5491 and
1-719-325-2314, respectively. No confirmation or pass code is
needed. This conference call also can be accessed live on the
Internet at http://investor.conagrafoods.com.
A rebroadcast of the conference call will be available after 1
p.m. EST today. To access the digital replay, a pass code number
will be required. Domestic participants should dial 1-888-203-1112,
and international participants should dial 1-719-457-0820 and enter
pass code 5159037. A rebroadcast also will be available on the
company’s website.
In addition, the company has posted a question-and-answer
supplement relating to this release at
http://investor.conagrafoods.com. To view recent company news,
please visit http://media.conagrafoods.com.
ConAgra Foods, Inc., (NYSE: CAG) is one of North America's
leading food companies, with brands in 97 percent of America’s
households. Consumers find Banquet, Chef Boyardee, Egg Beaters,
Healthy Choice, Hebrew National, Hunt’s, Marie Callender’s, Orville
Redenbacher’s, PAM, Peter Pan, Reddi-wip, Slim Jim, Snack Pack and
many other ConAgra Foods brands in grocery, convenience, mass
merchandise and club stores. ConAgra Foods also has a strong
business-to-business presence, supplying frozen potato and sweet
potato products as well as other vegetable, spice and grain
products to a variety of well-known restaurants, foodservice
operators and commercial customers. For more information, please
visit us at www.conagrafoods.com.
Note on Forward-looking StatementsThis release contains
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements are
based on management’s current views and assumptions of future
events and financial performance and are subject to uncertainty and
changes in circumstances. The company undertakes no responsibility
for updating these statements. Readers of this release should
understand that these statements are not guarantees of performance
or results. Many factors could affect the company’s actual
financial results and cause them to vary materially from the
expectations contained in the forward-looking statements. These
factors include, among other things: availability and prices of raw
materials; including any negative effects caused by inflation; the
effectiveness of the company’s product pricing; future economic
circumstances; industry conditions; the company’s ability to
execute its operating and restructuring plans; the success of the
company's innovation, marketing, and cost-saving initiatives; the
competitive environment and related market conditions; operating
efficiencies; the ultimate impact of the company’s recalls; access
to capital; actions of governments and regulatory factors affecting
the company’s businesses, including the Patient Protection and
Affordable Care Act, the amount and timing of repurchases of the
company’s common stock, if any, and other risks described in the
company’s reports filed with the Securities and Exchange
Commission. The company cautions readers not to place undue
reliance on any forward-looking statements included in this
release, which speak only as of the date made.
Regulation G DisclosureBelow is a reconciliation of Q2
FY12 and Q2 FY11 diluted earnings per share, Consumer Foods segment
operating profit, and FY11 diluted earnings per share, adjusted for
items impacting comparability. Amounts may be impacted by
rounding.
Q2 FY12 & Q2 FY11 Diluted EPS from Continuing
Operations - Reconciliation for Regulation G Purposes
Year-over- year %
Q2 FY12
Q2 FY11
change Diluted EPS from continuing operations
$ 0.41 $ 0.45 -9 % Items
impacting comparability: Net expense (benefit) related to
unallocated mark-to-market impact of derivatives 0.04 (0.01 )
Expense related to restructuring charges 0.02 0.01
Diluted EPS adjusted for items impacting
comparability $ 0.47 $ 0.45
4 % Consumer Foods Segment Operating
Profit Reconciliation
Year-over- year %
(Dollars in millions)
Q2 FY12
Q2 FY11
change Consumer Foods Segment Operating Profit
$ 256 $ 279 -8 % Expense
related to restructuring charges 15 5
Consumer Foods Segment Adjusted Operating Profit $
271 $ 284 -4 %
FY11 EPS - Reconciliation for Regulation G Purposes
Total FY11 Diluted EPS from continuing operations
$ 1.90 Items impacting comparability: Expense related
to restructuring charges 0.08 (Benefit) related to unallocated
mark-to-market impact of derivatives (0.05 ) (Benefit) related to
receipt of insurance proceeds from Garner, N.C., accident (0.15 )
(Benefit) of gain on early repayment of Trading & Merchandising
divestiture-related PIK note (0.04 ) Rounding 0.01
Diluted EPS adjusted for items impacting comparability
$ 1.75
ConAgra Foods, Inc. Segment Operating Results (in
millions) (unaudited) SECOND QUARTER 13 Weeks Ended 13 Weeks
Ended
November 27, 2011
November 28, 2010 Percent Change
SALES
Consumer Foods $ 2,178.2 $ 2,091.4 4.2 % Commercial Foods
1,225.7 1,056.1 16.1 % Total 3,403.9
3,147.5 8.1 %
OPERATING
PROFIT
Consumer Foods $ 256.3 $ 278.5 (8.0 )% Commercial Foods
160.8 127.4 26.2 % Total operating profit for
segments 417.1 405.9 2.8 %
Reconciliation of total operating
profit to income from continuing operations before income
taxes and equity method investment earnings
Items excluded from segment operating profit: General corporate
expense (115.6 ) (74.2 ) 55.8 % Interest expense, net (50.6
) (33.7 ) 50.1 %
Income from continuing operations before
income taxesand equity method investment earnings
$ 250.9 $ 298.0 (15.8 )%
Segment operating profit excludes general corporate expense,
equity method investment earnings, and net interest expense.
Management believes such amounts are not directly associated with
segment performance results for the period. Management believes the
presentation of total operating profit for segments facilitates
period-to-period comparison of results of segment operations.
ConAgra Foods, Inc.
Segment Operating Results (in millions) (unaudited) SECOND QUARTER
26 Weeks Ended 26 Weeks Ended
November 27, 2011
November 28, 2010 Percent Change
SALES
Consumer Foods $ 4,069.9 $ 3,902.9 4.3 % Commercial Foods
2,406.0 2,048.9 17.4 % Total 6,475.9
5,951.8 8.8 %
OPERATING
PROFIT
Consumer Foods $ 452.5 $ 486.2 (6.9 )% Commercial Foods
258.3 240.5 7.4 % Total operating profit for
segments 710.8 726.7 (2.2 )%
Reconciliation of total operating
profit to income from continuing operations before income
taxes and equity method investment earnings
Items excluded from segment operating profit: General corporate
expense (233.5 ) (153.7 ) 51.9 % Interest expense, net
(103.5 ) (71.0 ) 45.8 %
Income from continuing operations before
income taxes and equitymethod investment earnings
$ 373.8 $ 502.0 (25.5 )%
Segment operating profit excludes general corporate expense,
equity method investment earnings, and net interest expense.
Management believes such amounts are not directly associated with
segment performance results for the period. Management believes the
presentation of total operating profit for segments facilitates
period-to-period comparison of results of segment operations.
ConAgra Foods, Inc.
Consolidated Statements of Earnings (in millions, except per share
amounts) (unaudited) SECOND QUARTER 13 Weeks Ended 13 Weeks Ended
Percent November 27, 2011 November 28, 2010 Change Net sales $
3,403.9 $ 3,147.5 8.1 % Costs and expenses: Cost of goods sold
2,646.6 2,387.5 10.9 % Selling, general and administrative expenses
455.8 428.3 6.4 % Interest expense, net 50.6 33.7
50.1 % Income from continuing operations before income taxes and
equity method investment earnings 250.9 298.0 (15.8 )% Income tax
expense 87.7 101.4 (13.5 )% Equity method investment earnings
11.5 4.6 150.0 % Income from continuing operations
174.7 201.2 (13.2 )% Income from discontinued operations,
net of tax - 0.6 (100.0 )% Net income $ 174.7
$ 201.8 (13.4 )% Less: Net income attributable to noncontrolling
interests 2.9 0.9 222.2 % Net income attributable to
ConAgra Foods, Inc. $ 171.8 $ 200.9 (14.5 )% Earnings per
share – basic Income from continuing operations $ 0.41 $
0.46 (10.9 )% Income from discontinued operations - -
-- % Net income attributable to ConAgra Foods, Inc. $ 0.41 $ 0.46
(10.9 )% Weighted average shares outstanding 413.6
437.8 (5.5 )% Earnings per share – diluted
Income from continuing operations $ 0.41 $ 0.45 (8.9 )% Income from
discontinued operations - - -- % Net income
attributable to ConAgra Foods, Inc. $ 0.41 $ 0.45 (8.9 )%
Weighted average share and share equivalents
outstanding
418.6 441.6 (5.2 )%
ConAgra Foods, Inc. Consolidated Statements of
Earnings (in millions, except per share amounts) (unaudited) SECOND
QUARTER 26 Weeks Ended 26 Weeks Ended Percent November 27, 2011
November 28, 2010 Change Net sales $ 6,475.9 $ 5,951.8 8.8 % Costs
and expenses: Cost of goods sold 5,119.9 4,540.5 12.8 % Selling,
general and administrative expenses 878.7 838.3 4.8 % Interest
expense, net 103.5 71.0 45.8 % Income from continuing
operations before income taxes and equity method investment
earnings 373.8 502.0 (25.5 )% Income tax expense 131.3 168.3 (22.0
)% Equity method investment earnings 17.7 10.8 63.9 %
Income from continuing operations 260.2 344.5 (24.5 )%
Income from discontinued operations, net of tax 0.1
3.6 (97.2 )% Net income $ 260.3 $ 348.1 (25.2 )% Less: Net
income attributable to noncontrolling interests 3.2
0.8 300.0 % Net income attributable to ConAgra Foods, Inc. $ 257.1
$ 347.3 (26.0 )% Earnings per share – basic Income
from continuing operations $ 0.62 $ 0.78 (20.5 )% Income from
discontinued operations - - -- % Net income
attributable to ConAgra Foods, Inc. $ 0.62 $ 0.78 (20.5 )%
Weighted average shares outstanding 413.0 439.7 (6.1
)% Earnings per share – diluted Income from
continuing operations $ 0.61 $ 0.77 (20.8 )% Income from
discontinued operations - 0.01 (100.0 )% Net income
attributable to ConAgra Foods, Inc. $ 0.61 $ 0.78 (21.8 )%
Weighted average share and share equivalents
outstanding
418.4 443.8 (5.7 )%
ConAgra Foods, Inc. Consolidated Balance Sheets (in
millions) (unaudited)
November 27, 2011
May 29, 2011
ASSETS Current assets Cash and cash equivalents $ 706.5 $
972.4 Receivables, less allowance for doubtful accounts of $9.2 and
$7.8 972.0 849.4 Inventories 2,032.0 1,803.4 Prepaid expenses and
other current assets 297.3 274.1
Total current assets (4,007.8 ) (3,899.3 ) Property,
plant and equipment, net 2,603.5 2,670.1 Goodwill 3,602.5 3,609.4
Brands, trademarks and other intangibles, net 984.7 936.3 Other
assets 279.9 293.6 $
11,478.4 $ 11,408.7
LIABILITIES AND
STOCKHOLDERS' EQUITY Current liabilities Current installments
of long-term debt $ 48.3 $ 363.5 Accounts payable 1,404.9 1,083.7
Accrued payroll 135.4 124.1 Other accrued liabilities 754.5
554.3 Total current liabilities
2,343.1 2,125.6 Senior long-term debt, excluding current
installments 2,650.0 2,674.4 Subordinated debt 195.9 195.9 Other
noncurrent liabilities 1,601.7 1,704.3 Total stockholders' equity
4,687.7 4,708.5 $
11,478.4 $ 11,408.7
ConAgra Foods, Inc. Condensed Consolidated Statements of
Cash Flows (in millions) (unaudited)
Twenty-six
weeks ended Nov. 27, Nov.
28,
2011
2010
Cash flows from operating activities: Net income $ 260.3 $ 348.1
Income from discontinued operations
0.1
3.6 Income from continuing operations
260.2 344.5 Adjustments to reconcile income from continuing
operations to net cash flows from operating activities:
Depreciation and amortization 186.5 174.2 Asset impairment charges
7.4 0.4 Insurance recoveries recognized related to Garner accident
— (1.8 ) Advances from insurance carriers related to Garner
accident — 10.9 Distributions from affiliates less than current
earnings (11.2 ) (2.7 ) Proceeds from settlement of interest rate
swaps — 31.5 Contributions to pension plans (71.5 ) (112.0 )
Share-based payments expense 24.4 22.7 Non-cash interest income on
payment-in-kind notes — (37.3 ) Other items 15.3 58.8 Change in
operating assets and liabilities before effects of business
acquisitions and dispositions: Accounts receivable (115.1 ) (48.0 )
Inventory (228.9 ) (353.2 ) Prepaid expenses and other current
assets (23.2 ) 59.1 Accounts payable 347.4 207.5 Accrued payroll
11.3 (139.7 ) Other accrued liabilities
84.9
99.3 Net cash flows from
operating activities – continuing operations 487.5 314.2 Net cash
flows from operating activities – discontinued operations
2.4 4.9 Net cash
flows from operating activities
489.9
319.1 Cash flows from investing
activities: Additions to property, plant and equipment (160.5 )
(211.0 ) Sale of property, plant and equipment 5.7 13.1 Advances
from insurance carriers related to Garner accident — 1.5 Purchase
of businesses and intangible assets
(57.5
) (136.0 ) Net cash flows from
investing activities – continuing operations (212.3 ) (332.4 ) Net
cash flows from investing activities – discontinued operations
— 245.5 Net
cash flows from investing activities
(212.3 )
(86.9 ) Cash flows from financing
activities: Repayment of long-term debt (348.1 ) (289.3 )
Repurchase of ConAgra Foods common shares (84.0 ) (200.0 ) Cash
dividends paid (189.7 ) (176.4 ) Exercise of stock options and
issuance of other stock awards 88.8 21.6 Other items
— (0.2 ) Net cash flows
from financing activities – continuing operations (533.0 ) (644.3 )
Net cash flows from financing activities – discontinued operations
— (0.1 ) Net cash
flows from financing activities
(533.0 )
(644.4 ) Effect of exchange rate changes on cash and
cash equivalents (10.5 ) 4.2 Net change in cash and cash
equivalents (265.9 ) (408.0 ) Cash and cash equivalents at
beginning of period
972.4
953.2 Cash and cash equivalents at end of
period
$ 706.5 $
545.2
ConAgra Brands (NYSE:CAG)
Historical Stock Chart
From Apr 2024 to May 2024
ConAgra Brands (NYSE:CAG)
Historical Stock Chart
From May 2023 to May 2024