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Share Name | Share Symbol | Market | Type |
---|---|---|---|
ConAgra Brands Inc | NYSE:CAG | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.29 | -0.94% | 30.56 | 30.90 | 30.555 | 30.87 | 4,098,145 | 01:00:00 |
Fiscal 2014 fourth-quarter highlights (% cited vs. year-ago period amounts, where applicable):
ConAgra Foods, Inc., (NYSE: CAG) one of North America’s leading food companies, today reported results for the fiscal 2014 fourth quarter ended May 25, 2014. Diluted loss per share from continuing operations was $(0.76) as reported for the fiscal fourth quarter vs. diluted EPS of $0.45 in the year-ago period. After adjusting for items impacting comparability, current-quarter diluted EPS of $0.55 was 8% below the comparable $0.60 earned in the year-ago period. Items impacting comparability are summarized toward the end of this release and reconciled for Regulation G purposes on pages 12-13.
Gary Rodkin, ConAgra Foods’ chief executive officer, said, “We are disappointed with fiscal 2014 overall, and we have a very focused sense of urgency directed toward improving our results. Despite the difficult year, we were able to generate substantial cash, meet our debt reduction commitments, and pay a strong dividend.”
He continued, “Our focus is on improving branded volumes through more effective trade, marketing, and resource allocation, particularly on several large underperforming brands. We expect private brand profitability to strengthen through organic growth, strong synergies, and gradually improving price/mix. Some of the challenges from fiscal 2014 will still be with us in fiscal 2015, although we believe results will gradually improve throughout the fiscal year. Given that, we consider fiscal 2015 to be a year of stabilization and recovery with a mid-single digit rate of EPS growth, which we expect to accelerate in fiscal 2016 and 2017 based on a stronger foundation. Throughout this period, we expect to benefit from strong productivity, robust cost synergies related to the Ralcorp acquisition, and SG&A efficiency and effectiveness initiatives. We will remain focused on growing our top line, continually improving our cost structure, and sound capital allocation.”
Consumer Foods Segment
Branded food items sold worldwide in retail channels.
The Consumer Foods segment posted sales of approximately $1.8 billion for the quarter and operating profit of $177 million as reported. Sales declined 7%, with a 7% volume decrease, 1% favorable price/mix, and a 1% unfavorable impact of foreign exchange.
Operating profit of $177 million was 34% below year ago amounts, as reported. After adjusting for $91 million of expense in the current quarter (principally impairment charges) and $4 million of expense in the year-ago period from items impacting comparability, current quarter operating profit of $268 million was 3% below the comparable $275 million in the year-ago period. Cost savings in excess of inflation, as well as lower advertising and promotion expenses, offset a meaningful portion of the profit shortfall resulting from weak volumes. Regarding fiscal 2015, the company expects branded volume to improve gradually through a focus on faster-growing customer channels, opportunities in international markets, and more effective trade and marketing support.
Commercial Foods Segment
Specialty potato, bakery products, seasonings, blends, flavors, as well as consumer branded and private branded packaged food items, sold to foodservice and commercial channels worldwide.
Sales for the Commercial Foods segment were $1.63 billion, up 1% compared with $1.61 billion in the year-ago period, as reported. Segment operating profit of $281 million was 49% above year-ago period amounts, as reported. After adjusting for $91 million of net benefit in the current quarter primarily related to gains on divesting mills in connection with the formation of the Ardent Mills joint venture, comparable current quarter operating profit of $190 million was 1% above year-ago period amounts.
Lamb Weston potato products posted sales and profit growth largely due to strong international volumes, as well as productivity initiatives that helped offset crop quality challenges. Flour milling sales decreased, reflecting the pass-through of lower wheat costs, and comparable milling profits declined reflecting market conditions.
After the close of the quarter, the Ardent Mills joint venture was formed, and the company contributed its milling operations for a 44% interest in Ardent Mills and cash proceeds. Other Ardent Mills details are discussed under the Capital Items portion of this document.
Private Brands
Private brand food items sold in domestic markets.
Sales for the Private Brands segment were approximately $1 billion in the quarter, in line with year-ago period amounts. The segment posted an operating loss of $573 million, as reported, due to impairment charges. After adjusting for $617 million of net expense from impairment charges and other items impacting comparability, current quarter operating profit of $44 million was $60 million below comparable year-ago period amounts. The significant profit decline reflects pricing concessions made earlier in the year necessitated by competitive bids and customer service issues; higher-than-planned operating costs resulting from business transition also weighed on profits.
While operating profits for the Private Brands segment are expected to remain below prior year amounts for the first half of fiscal 2015 given the pricing concessions, year-over-year performance in the second half of fiscal 2015 is expected to improve. This reflects pricing concessions to be lapped, new business to be added with favorable price/mix, and significant synergies and other operating efficiencies to be realized.
Current projections are for modest sales and profit growth in this segment in fiscal 2015, and for growth to accelerate in fiscals 2016 and 2017. Over the long term, the company remains confident in the growth prospects for its private brands business based on the fundamental appeal to consumers, the strategic importance of private brands to trade customers, and value-added capabilities of the ConAgra Foods’ private brand operations.
Hedging Activities – This language primarily relates to operations other than the company’s milling operations or significant financing activities.
Hedge gains and losses are aggregated, and net 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. The net of these activities resulted in $14 million of favorable impact in the current quarter and $37 million of unfavorable impact in the year-ago period. The company identifies these amounts as items impacting comparability.
Other Items
Capital Items
Outlook
The company expects fiscal 2015 EPS to reflect a mid-single digit rate of growth over the comparable fiscal 2014 EPS of $2.17. Fiscal 2016 and 2017 EPS is expected to show a high-single digit rate of annual EPS growth as the company benefits from a stronger underlying business, sizeable synergies, good productivity and efficiencies, and lower interest expense. Other long-term goals are unchanged.
With regard to specific fiscal 2015 assumptions, the company expects:
Major Items Impacting Fourth-quarter Fiscal 2014 EPS Comparability
Included in the $(0.76) diluted loss per share from continuing operations for the fourth quarter of fiscal 2014 (EPS amounts rounded and after tax):
Included in the $0.45 diluted EPS from continuing operations for the fourth quarter of fiscal 2013 (EPS amounts rounded and after tax):
Discussion of Results
ConAgra Foods will host a conference call at 9:30 a.m. EDT 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 1-800-500-0311 and 1-719-325-2118, 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. EDT 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 9659870. 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 largest packaged food companies with branded and private branded food found in 99 percent of America’s households, as well as a strong commercial foods business serving restaurants and foodservice operations globally. Consumers can find recognized brands such as 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, along with food sold by ConAgra Foods under private brand labels, in grocery, convenience, mass merchandise, club and drug stores. Additionally, ConAgra Foods supplies frozen potato and sweet potato products as well as other vegetable, seasoning blends, flavors, and bakery products to commercial and foodservice customers. ConAgra Foods operates ReadySetEat.com, an interactive recipe website that provides consumers with easy dinner recipes and more. For more information, please visit us at www.conagrafoods.com.
Note on Forward-looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s current expectations and assumptions and are subject to certain risks, uncertainties and changes in circumstances that could cause actual results to differ materially from potential results discussed in the forward-looking statements. These risks and uncertainties include, among other things: ConAgra Foods’ ability to realize the synergies and benefits contemplated by the acquisition of Ralcorp Holdings, Inc. (“Ralcorp”) and its ability to promptly and effectively integrate the business of Ralcorp; ConAgra Foods’ ability to realize the synergies and benefits contemplated by the recently formed joint venture combining the flour milling businesses of ConAgra Foods, Cargill, Incorporated, and CHS Inc.; risks and uncertainties associated with intangible assets, including any future goodwill impairment charges; the availability and prices of raw materials, including any negative effects caused by inflation or adverse weather conditions; the effectiveness of ConAgra Foods’ product pricing, including product innovation, any pricing actions and changes in promotional strategies; the ultimate outcome of litigation, including the lead paint matter; future economic circumstances; industry conditions; ConAgra Foods’ ability to execute its operating and restructuring plans; the success of ConAgra Foods’ cost-savings initiatives, and innovation and marketing investments; the competitive environment; operating efficiencies; the ultimate impact of any ConAgra Foods product recalls; access to capital; actions of governments and regulatory factors affecting ConAgra Foods’ businesses, including the Patient Protection and Affordable Care Act; the amount and timing of repurchases of ConAgra Foods’ common stock and debt, if any; and other risks described in ConAgra Foods’ reports filed with the Securities and Exchange Commission, including its most recent annual report on Form 10-K and subsequent reports on Forms 10-Q and 8-K. Investors and security holders are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. ConAgra Foods disclaims any obligation to update or revise statements contained in this press release to reflect future events or circumstances or otherwise.
Regulation G Disclosure Below is a reconciliation of Q4 FY14 and Q4 FY13 diluted earnings per share from continuing operations, Consumer Foods segment operating profit, Commercial Foods segment operating profit, Private Brands segment operating profit, and FY14 and FY13 diluted earnings per share from continuing operations, adjusted for items impacting comparability. Amounts may be impacted by rounding. Q4 FY14 & Q4 FY13 Diluted EPS from Continuing Operations Q4 FY14 Q4 FY13 % change Diluted EPS from continuing operations $ (0.76 ) $ 0.45 N/A Items impacting comparability: Net expense related to impairment charges, including the impact on diluted share count 1.47 - Net benefit related to sale of flour mills (0.13 ) - Net expense related to restructuring, transaction, and integration costs 0.08 0.10 Net expense (benefit) related to unusual tax matters (0.06 ) 0.01 Net expense (benefit) related to unallocated mark-to-market impact of derivatives (0.02 ) 0.05 Net benefit related to historical legal matters (0.02 ) (0.03 ) Net gain from sale of non-operating asset in the Commercial Foods segment (0.01 ) - Net expense related to year-end remeasurement of pensions and early retirement of debt - 0.02 Diluted EPS adjusted for items impacting comparability $ 0.55 $ 0.60 -8% Consumer Foods Segment Operating Profit Reconciliation (Dollars in millions) Q4 FY14 Q4 FY13 % change Consumer Foods Segment Operating Profit $ 177 $ 270 -34% Restructuring, integration, and transactions costs (including acquisition-related restructuring) 18 4 Intangible asset impairment charges 73 - Consumer Foods Segment Adjusted Operating Profit $ 268 $ 275 -3% Commercial Foods Segment Operating Profit Reconciliation (Dollars in millions) Q4 FY14 Q4 FY13 % change Commercial Foods Segment Operating Profit $ 281 $ 189 49% Restructuring costs 5 - Gain on sale of non-operating assets (5 ) - Gain on sale of flour mills (91 ) - Commercial Foods Segment Adjusted Operating Profit $ 190 $ 189 1% Private Brands Segment Operating Profit Reconciliation (Dollars in millions) Q4 FY14 Q4 FY13 % change Private Brands Segment Operating Profit $ (573 ) $ 102 N/A Restructuring, integration, and transactions costs (including acquisition-related restructuring) 12 2 Goodwill and intangible asset impairment charges 605 - Private Brands Segment Adjusted Operating Profit $ 44 $ 104 -58% FY14 and FY13 Diluted EPS from Continuing Operations Total FY14 Total FY13 % change Diluted EPS from continuing operations $ 0.70 $ 1.85 -62% Items impacting comparability: Net expense related to intangible asset impairment charges 1.46 - Net expense related to restructuring, transaction, and integration costs 0.25 0.32 Net expense (benefit) related to unusual tax matters (0.16 ) 0.04 Net benefit related to sale of flour mills (0.13 ) - Net expense related to settlement of interest rate derivatives 0.08 - Net benefit related to unallocated mark-to-market impact of derivatives (0.05 ) (0.07 ) Net expense related to impairment costs, net of gain on sale of non-operating asset, in the Commercial Foods segment 0.03 0.02 Net benefit related to historical legal, insurance, and environmental matters (0.02 ) - Net expense related to year-end remeasurement of pensions and early retirement of debt 0.01 0.02 Note: EPS contribution subsequently reclassed to discontinued operations originally in guidance 0.01 - Rounding (0.01 ) (0.02 ) Diluted EPS adjusted for items impacting comparability $ 2.17 $ 2.16 0% ConAgra Foods, Inc. Segment Operating Results (in millions) (unaudited) FOURTH QUARTER 13 Weeks Ended 13 Weeks EndedMay 25, 2014
May 26, 2013 Percent ChangeSALES
Consumer Foods $ 1,779.7 $ 1,922.1 (7.4)% Commercial Foods 1,627.2 1,611.2 1.0% Private Brands 1,029.9 1,030.0 0.0% Total 4,436.8 4,563.3 (2.8)%OPERATING PROFIT
Consumer Foods $ 177.1 $ 270.2 (34.5)% Commercial Foods 280.8 189.4 48.3% Private Brands (573.1 ) 102.2 N/A Total operating profit (loss) for segments (115.2 ) 561.8 N/A 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 (65.0 ) (181.3 ) (64.1)% Interest expense, net (93.0 ) (102.3 ) (9.1)% Income (loss) from continuing operations before income taxes and equity method investment earnings $ (273.2 ) $ 278.2 N/ASegment 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) FOURTH QUARTER 52 Weeks Ended 52 Weeks EndedMay 25, 2014
May 26, 2013 Percent ChangeSALES
Consumer Foods $ 7,315.5 $ 7,551.4 (3.1)% Commercial Foods 6,191.2 6,067.0 2.0% Private Brands 4,195.9 1,808.2 132.0% Total 17,702.6 15,426.6 14.8%OPERATING PROFIT
Consumer Foods $ 899.4 $ 1,000.2 (10.1)% Commercial Foods 774.6 731.3 5.9% Private Brands (375.0 ) 123.1 N/A Total operating profit for segments 1,299.0 1,854.6 (30.0)% 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 (343.6 ) (429.0 ) (19.9)% Interest expense, net (379.0 ) (275.6 ) 37.5% Income from continuing operations before income taxes and equity method investment earnings $ 576.4 $ 1,150.0 (49.9)%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) FOURTH QUARTER 13 Weeks Ended 13 Weeks Ended Percent May 25, 2014 May 26, 2013 Change Net sales $ 4,436.8 $ 4,563.3 (2.8)% Costs and expenses: Cost of goods sold 3,531.3 3,602.2 (2.0)% Selling, general and administrative expenses 1,085.7 580.6 87.0% Interest expense, net 93.0 102.3 (9.1)% Income (loss) from continuing operations before income taxes and equity method investment earnings (273.2 ) 278.2 N/A Income tax expense 57.3 89.5 (36.0)% Equity method investment earnings 12.2 5.1 139.2% Income (loss) from continuing operations (318.3 ) 193.8 N/A Income (loss) from discontinued operations, net of tax (3.1 ) 0.2 N/A Net income (loss) $ (321.4 ) $ 194.0 N/A Less: Net income attributable to noncontrolling interests 2.8 1.8 55.6% Net income (loss) attributable to ConAgra Foods, Inc. $ (324.2 ) $ 192.2 N/A Earnings per share – basic Income (loss) from continuing operations $ (0.76 ) $ 0.46 N/A Income (loss) from discontinued operations (0.01 ) - (100.0)% Net income (loss) attributable to ConAgra Foods, Inc. $ (0.77 ) $ 0.46 N/A Weighted average shares outstanding 422.0 418.4 0.9% Earnings per share – diluted Income (loss) from continuing operations $ (0.76 ) $ 0.45 N/A Income (loss) from discontinued operations (0.01 ) - (100.0)% Net income (loss) attributable to ConAgra Foods, Inc. $ (0.77 ) $ 0.45 N/AWeighted average share and share equivalents outstanding
422.0 426.2 (1.0)% ConAgra Foods, Inc. Consolidated Statements of Earnings (in millions, except per share amounts) (unaudited) FOURTH QUARTER 52 Weeks Ended 52 Weeks Ended Percent May 25, 2014 May 26, 2013 Change Net sales $ 17,702.6 $ 15,426.6 14.8% Costs and expenses: Cost of goods sold 13,980.1 11,864.4 17.8% Selling, general and administrative expenses 2,767.1 2,136.6 29.5% Interest expense, net 379.0 275.6 37.5%Income from continuing operations before income taxes and equity method investment earnings
576.4 1,150.0 (49.9)% Income tax expense 298.2 400.7 (25.6)% Equity method investment earnings 32.8 37.5 (12.5)% Income from continuing operations 311.0 786.8 (60.5)% Income (loss) from discontinued operations, net of tax 4.1 (0.7 ) N/A Net income $ 315.1 $ 786.1 (59.9)% Less: Net income attributable to noncontrolling interests 12.0 12.2 (1.6)% Net income attributable to ConAgra Foods, Inc. $ 303.1 $ 773.9 (60.8)% Earnings per share – basic Income from continuing operations $ 0.71 $ 1.88 (62.2)% Income from discontinued operations 0.01 - 100.0% Net income attributable to ConAgra Foods, Inc. $ 0.72 $ 1.88 (61.7)% Weighted average shares outstanding 421.3 410.8 2.6% Earnings per share – diluted Income from continuing operations $ 0.70 $ 1.85 (62.2)% Income from discontinued operations - - N/A Net income attributable to ConAgra Foods, Inc. $ 0.70 $ 1.85 (62.2)%Weighted average share and share equivalents outstanding
427.5 417.6 2.4% ConAgra Foods, Inc. Consolidated Balance Sheets (in millions) (unaudited)May 25, 2014
May 26, 2013
ASSETS Current assets Cash and cash equivalents $ 183.1 $ 183.9Receivables, less allowance for doubtful accounts of $5.3 and $7.6
1,230.8 1,279.4 Receivable on sale of flour milling assets 162.4 - Inventories 2,292.6 2,340.9 Prepaid expenses and other current assets 361.9 510.8 Current assets held for sale - 64.8 Total current assets (4,230.8 ) (4,379.8 ) Property, plant and equipment, net 3,811.9 3,757.6 Goodwill 7,836.5 8,426.7 Brands, trademarks and other intangibles, net 3,205.8 3,403.6 Other assets 270.5 293.5 Noncurrent assets held for sale 10.9 144.1 $ 19,366.4 $ 20,405.3 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Notes payable $ 141.8 $ 185.0 Current installments of long-term debt 84.2 517.9 Accounts payable 1,492.4 1,498.1 Accrued payroll 156.6 287.0 Other accrued liabilities 767.4 908.5 Current liabilities held for sale - 4.8 Total current liabilities 2,642.4 3,401.3 Senior long-term debt, excluding current installments 8,571.7 8,691.0 Subordinated debt 195.9 195.9 Other noncurrent liabilities 2,601.2 2,754.0 Noncurrent liabilities held for sale - 0.1 Total stockholders' equity 5,355.2 5,363.0 $ 19,366.4 $ 20,405.3 ConAgra Foods, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (in millions) (unaudited) Fifty-two weeks ended May 25, 2014 May 26, 2013 Cash flows from operating activities: Net income $ 315.1 $ 786.1 Income (loss) from discontinued operations 4.1 (0.7 ) Income from continuing operations 311.0 786.8 Adjustments to reconcile income from continuing operations to net cash flows from operating activities: Depreciation and amortization 602.9 443.4 Asset impairment charges 720.0 20.2 (Gain) loss on sale of fixed assets (85.2 ) 10.9 Earnings of affiliates less than (in excess of) distributions 13.3 (11.1 ) Share-based payments expense 60.2 67.4 Contributions to pension plans (18.3 ) (19.8 ) Pension expense (5.9 ) 23.5 Other items (6.3 ) (8.6 ) Change in operating assets and liabilities excluding effects of business acquisitions and dispositions: Accounts receivable 63.3 (72.3 ) Inventory 49.4 19.5 Deferred income taxes and income taxes payable, net 23.3 123.4 Prepaid expenses and other current assets 4.0 (22.0 ) Accounts payable (5.2 ) 6.5 Accrued payroll (130.0 ) 109.9 Other accrued liabilities (44.9 ) (69.2 ) Net cash flows from operating activities — continuing operations 1,551.6 1,408.5 Net cash flows from operating activities — discontinued operations (0.4 ) 3.7 Net cash flows from operating activities 1,551.2 1,412.2 Cash flows from investing activities: Additions to property, plant and equipment (602.4 ) (453.7 ) Sale of property, plant and equipment 42.5 18.0 Purchase of businesses, net of cash acquired (39.9 ) (5,018.8 ) Purchase of intangible assets (1.0 ) (4.8 ) Investment in equity method investee — (1.5 ) Net cash flows from investing activities — continuing operations (600.8 ) (5,460.8 ) Net cash flows from investing activities — discontinued operations 86.7 (5.0 ) Net cash flows from investing activities (514.1 ) (5,465.8 ) Cash flows from financing activities: Net short-term borrowings (43.2 ) 145.0 Issuance of long-term debt — 6,217.7 Debt issuance costs — (56.6 ) Repayment of long-term debt (569.2 ) (2,074.0 ) Issuance of ConAgra Foods, Inc. common shares — 269.2 Repurchase of ConAgra Foods, Inc. common shares (100.0 ) (245.0 ) Cash dividends paid (420.9 ) (400.7 ) Exercise of stock options and issuance of other stock awards 103.7 274.4 Other items (4.5 ) 3.0 Net cash flows from financing activities(1,034.1
) 4,133.0 Effect of exchange rate changes on cash and cash equivalents (3.8 ) 1.5 Net change in cash and cash equivalents (0.8 ) 80.9 Cash and cash equivalents at beginning of period 183.9 103.0 Cash and cash equivalents at end of period $ 183.1 $ 183.9
ConAgra Foods, Inc.Media:Teresa Paulsen, 402-240-5210Vice President,Communication & External RelationsorAnalysts:Chris Klinefelter, 402-240-4154Vice President, Investor Relationswww.conagrafoods.com
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