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ConAgra Foods, Inc., (CAG):
Fiscal 2013 First-quarter Highlights (% cited vs. year-ago amounts,
where applicable):
--
Diluted EPS from continuing operations of $0.61 as reported and
$0.44 adjusted for items impacting comparability, up 177% as reported
and up 42% on a comparable basis.
--
Consumer Foods’ operating profit increased 20% as reported and 14%
on a comparable basis, even with a strong increase in marketing
investment. Segment sales increased 8%, driven by acquisitions.
--
Commercial Foods’ operating profit grew 43% as reported and 37% on
a comparable basis, as Lamb Weston potato operations delivered good
volume, favorable price/mix, and operational efficiencies. Segment
sales increased 5%.
--
The company has raised its EPS expectations for the fiscal year and
now expects fiscal 2013 EPS, adjusted for items impacting
comparability, to be in the range of $2.03 - $2.06, which includes a
strong year-over-year increase in marketing investment.
--
The company continues to expect operating cash flow in excess of
$1.2 billion for the fiscal year.
--
The board of directors raised the quarterly dividend by $0.01 to
$0.25 per share, starting with the dividend to be paid in December
2012. With this change, the annualized dividend becomes $1.00 per
share.
ConAgra Foods, Inc., (CAG) one of North America’s leading packaged
food companies, today reported results for the fiscal 2013 first quarter
ended Aug. 26, 2012. Diluted EPS from continuing operations was $0.61 in
the current quarter, up 177% over $0.22 earned in the year-ago period.
Excluding $0.17 of net benefit in the current quarter and $0.09 of net
expense in the year-ago period from items impacting comparability,
current quarter comparable EPS of $0.44 was 42% above the comparable
$0.31 earned in the year-ago period. Items impacting comparability in
the current year and prior year are summarized toward the end of this
release and reconciled for Regulation G purposes starting on page 10.
Gary Rodkin, ConAgra Foods’ chief executive officer, said, "We are very
pleased with our strong start to fiscal 2013. Based on continued
momentum in our potato operations, effective margin management
initiatives across the portfolio, and contribution from acquisitions, we
are able to post a strong EPS performance in the midst of difficult
marketplace conditions. It is clear that our operating capabilities,
strategic initiatives, and prudent capital allocation are accelerating
EPS performance. We have raised our EPS expectations for fiscal 2013
while continuing to make strong levels of marketing investment as part
of long-term brand building initiatives."
Consumer Foods Segment (62% of first-quarter sales) Branded
and non-branded food sold in retail and foodservice channels.
The Consumer Foods segment posted sales of $2,043 million and operating
profit of $235 million for the first quarter. Sales increased 8%,
reflecting 8% contribution from acquisitions, 5% favorable price/mix,
and a 4% organic volume decline. Foreign exchange rates negatively
impacted sales by 1%.
--
Brands posting sales growth for the quarter include ACT II,
Lightlife, Marie Callender’s, Orville Redenbacher’s, PAM, Peter Pan,
Reddi-wip, Ro*Tel, Rosarita, Slim Jim, Wesson, and others.
--
More brand details can be found in the Q&A document accompanying this
release.
Operating profit of $235 million grew 20% over $196 million in the
year-ago period, as reported. After adjusting for $7 million of net
expense in the current period, and $16 million of net expense a year
ago, from items impacting comparability, current-quarter operating
profit of $242 million increased 14% over the comparable $212 million a
year ago. Marketing investment increased at a double-digit rate, as
planned, reflecting the company’s commitment to building long-term brand
strength. Operating profit growth reflects success with margin
management initiatives (notably, price increases necessitated by
inflation, and productivity programs that target in excess of $240
million of cost savings this fiscal year), as well as less severe
inflation (approximately 3% of cost of goods sold this quarter),
contribution from acquisitions, and favorable product mix.
Despite the recent increase in many commodities prices, net inflation
for the Consumer Foods segment is expected to be slightly lower than
originally planned; this reflects the company’s effective procurement
and hedging programs as well as the nature of the company’s raw input
needs. The segment’s year-over-year volume performance is expected to
improve throughout the fiscal year as the company laps the volume impact
of price increases taken in fiscal 2012; the segment’s innovation
pipeline and increased marketing investment are expected to contribute
to sequentially improved volume performance as the fiscal year
progresses.
Commercial Foods Segment (38% of first-quarter sales) Specialty
potato, seasonings, blends, flavors, and milled grain products sold to
foodservice and commercial channels worldwide.
Sales for the Commercial Foods segment were $1,269 million, 5%
above year-ago amounts. The sales increase was due to a strong top-line
performance for the Lamb Weston potato operations, which posted good
volume growth, particularly in international markets, as well as
favorable price/mix. All of the segment’s product lines posted volume
growth.
Segment operating profit was $140 million, 43% above year-ago amounts as
reported. After adjusting for $4 million of net expense from items
impacting comparability in the year-ago period, current quarter profits
increased 37% on a comparable basis. Lamb Weston’s potato operations
drove the segment’s profit growth due to strong sales and a focus on
operating efficiencies; international results for Lamb Weston were
notably strong. Flour milling profits were in line with year-ago amounts.
Hedging Activities - This language primarily relates to
operations other than the company’s milling operations.
The company recorded $130 million of net hedge gains in the current
quarter, and $34 million of net hedging loss in the year-ago period, as
unallocated Corporate expense. The company identifies these amounts as
items impacting comparability. 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.
Other Items
--
Unallocated Corporate amounts were a net gain of $43 million for the
current quarter, and a net expense of $104 million in the year-ago
period, as reported. Current-quarter amounts include $130 million of
net benefit due to hedge gains and $12 million of expense related to
other items impacting comparability, while year-ago amounts include
$34 million of hedge losses and $3 million of restructuring charges.
Excluding these amounts, unallocated Corporate expense was $75 million
for the current quarter and $67 million in the year-ago period.
--
Equity method investment earnings were $8 million for the fiscal first
quarter, ahead of $6 million in the year-ago period.
--
Net interest expense was $49 million in the current quarter and $53
million a year ago.
--
The company expects the effective tax rate for the full fiscal year
2013 to be approximately 34%, excluding items impacting comparability.
Capital Items
--
During the quarter, the company completed its acquisition of the Bertolli
and P.F. Chang’s Home Menu frozen meals businesses from
Unilever PLC. Annual sales for these operations in aggregate are
approximately $300 million; the purchase price was approximately $267
million. The company utilized its commercial paper program to finance
the cash transaction.
--
The board of directors raised the quarterly dividend to $0.25 per
share, starting with the dividend to be paid in December 2012. With
this change, the annualized dividend becomes $1.00 per share.
--
Dividends for the current quarter totaled $98 million versus $94
million in the year-ago period; the increase reflects a higher
dividend rate partially offset by fewer shares outstanding.
--
The company repurchased approximately 2.95 million of its shares of
common stock during the quarter for approximately $75 million; as of
quarter end, the company has approximately $450 million remaining on
its current share repurchase authorization.
--
For the current quarter, capital expenditures from continuing
operations for property, plant and equipment were $99 million,
compared with $96 million in the year-ago period. Depreciation and
amortization expense from continuing operations was approximately $91
million for the fiscal first quarter; this compares with a total of
$91 million in the year-ago period.
--
Subsequent to the quarter end, on September 13, 2012, the company
issued senior unsecured notes with a face value totaling $750 million.
As a result of the company’s strong balance sheet and an attractive
market environment, the company obtained historically low coupons on
each tranche issued. The three tranches of $250 million each and their
respective coupon rates were for 3 years at 1.35%, 5.5 years at 2.10%,
and 10 years at 3.25%. Proceeds will be used for general corporate
purposes, including repayment of outstanding commercial paper mostly
utilized for a recent acquisition.
Fiscal 2013 EPS Outlook
Based on the strong start to the fiscal year, the company now expects
fiscal 2013 diluted EPS to be in the range of $2.03 - $2.06, adjusted
for items impacting comparability.
The company expects its operating capabilities, strategic initiatives,
and prudent capital allocation to continue to drive good underlying
performance for the remainder of fiscal 2013. Relative to the strong
comparable year-over-year EPS growth rate posted for the fiscal first
quarter, the remaining fiscal quarters of fiscal 2013 are expected to
show more modest rates of comparable year-over-year EPS growth,
reflecting more difficult year-over-year comparisons as well as
continued increases in marketing investment.
Major Items Impacting First-quarter Fiscal 2013 EPS Comparability
Included in the $0.61 diluted EPS from continuing operations for the
first quarter of fiscal 2013 (EPS amounts rounded and after tax):
--
Approximately $0.20 per diluted share of net benefit, or $130 million
pretax, related to the mark-to-market impact of derivatives used to
hedge input costs, temporarily classified in unallocated Corporate
expense. 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.
--
Approximately $0.02 per diluted share of net expense, or $8 million
pretax, related to historical legal matters, classified as unallocated
Corporate expense. This amount is not tax-deductible.
--
Approximately $0.01 per diluted share of net expense, or $4 million
pretax, related to restructuring activities designed to improve
efficiencies. $3 million of these are in the Consumer Foods segment
($2 million cost of goods sold (COGS) / $1 million Selling, General, &
Administrative expenses (SG&A)), and $1 million is in unallocated
Corporate expense (SG&A).
--
Approximately $0.01 per diluted share of net expense, or $7 million
pretax, from acquisition and related costs. $4 million is classified
within the Consumer Foods segment ($2 million COGS, $2 million in
SG&A) and $3 million is classified within unallocated Corporate
expense (SG&A).
Included in the $0.22 diluted EPS from continuing operations for the
first quarter of fiscal 2012 (EPS amounts rounded and after tax):
--
Approximately $0.05 per diluted share of net expense, or $34 million
pretax, related to the mark-to-market impact of derivatives used to
hedge input costs, temporarily classified in unallocated Corporate
expense. 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.
--
Approximately $0.04 per diluted share of net expense, or $24 million
pretax, related to restructuring activities designed to improve
efficiencies. $16 million of these are in the Consumer Foods segment
($3 million COGS, $13 million in SG&A expense), $4 million are in the
Commercial Foods segment (all SG&A), and $3 million are unallocated
Corporate expense (SG&A).
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 1-877-675-4750 and 1-719-325-4747, 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 2164760. 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.
Annual Stockholders’ Meeting Webcast
The company will webcast its 2012 Annual Stockholders’ Meeting on
Friday, Sept. 21, 2012. This event will be webcast live beginning at
2:30 p.m. EDT. The webcast will be archived starting at 4:30 p.m. EDT on
Friday, Sept. 21, and can be accessed at http://investor.conagrafoods.com.
ConAgra Foods, Inc., (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 Statements
This 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 and adverse weather conditions; the effectiveness of its
product pricing, including any pricing actions and promotional changes;
future economic circumstances; industry conditions; the company’s
ability to execute its operating and restructuring plans; the success of
the company’s innovation, marketing, including increased marketing
investments, and cost-saving initiatives; the competitive environment
and related market conditions; operating efficiencies; the ultimate
impact of the company’s product recalls; access to capital; the
company’s success in effectively and efficiently integrating its
acquisitions, 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 Disclosure
Below is a reconciliation of Q1 FY13 and Q1 FY12 diluted earnings per
share from continuing operations, Consumer Foods segment operating
profit, and Commercial Foods segment operating profit, adjusted for
items impacting comparability. Amounts may be impacted by rounding.
Q1 FY13 & Q1 FY12 Diluted EPS from Continuing Operations
Q1 FY13 Q1 FY12 % change
--------------- ----------- --------
Diluted EPS from continuing operations $ 0.61 $ 0.22 177%
Items impacting comparability:
Net expense (benefit) related to unallocated mark-to-market impact (0.20 ) 0.05
of derivatives
Expense related to historical legal matters 0.02 -
Expense related to transaction costs of acquisitions 0.01 -
Expense related to restructuring charges 0.01 0.04
Rounding (0.01 ) -
----- --- ----
Diluted EPS adjusted for items impacting comparability $ 0.44 $ 0.31 42%
=== ===== === ==== ========
Consumer Foods Segment Operating Profit Reconciliation
(Dollars in millions) Q1 FY13 Q1 FY12 % change
--------------- ----------- --------
Consumer Foods Segment Operating Profit $ 235 $ 196 20%
Expense related to restructuring charges 3 16
Expense related to transaction costs of acquisitions 4 -
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Consumer Foods Segment Adjusted Operating Profit $ 242 $ 212 14%
=== ===== === ==== ========
Commercial Foods Segment Operating Profit Reconciliation
(Dollars in millions) Q1 FY13 Q1 FY12 % change
--------------- ----------- --------
Commercial Foods Segment Operating Profit $ 140 $ 98 43%
Expense related to restructuring charges - 4
----- ----
Commercial Foods Segment Adjusted Operating Profit $ 140 $ 102 37%
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ConAgra Foods, Inc.
Segment Operating Results
(in millions)
(unaudited)
FIRST QUARTER
---------------------------------------------------
13 Weeks Ended 13 Weeks Ended
---------------- ----------------
August 26, 2012 August 28, 2011 Percent Change
------------- ------------- -------------
SALES
-------------------------------------------------------
Consumer Foods $ 2,042.6 $ 1,891.7 8.0%
Commercial Foods 1,269.3 1,213.6 4.6%
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Total 3,311.9 3,105.3 6.7%
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OPERATING PROFIT
-------------------------------------------------------
Consumer Foods $ 235.3 $ 196.2 19.9%
Commercial Foods 139.6 97.5 43.2%
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Total operating profit for segments 374.9 293.7 27.6%
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 42.5 (104.3 ) N/A
Interest expense, net (49.3 ) (52.9 ) (6.8)%
------- - ------- -
Income from continuing operations before income taxes
and equity method investment earnings $ 368.1 $ 136.5 169.7%
===== ======= ===== =======
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) FIRST QUARTER
---------------------------------------------
13 Weeks Ended 13 Weeks Ended Percent
------------ ------------
August 26, 2012 August 28, 2011 Change
--------------- --------------- --------
Net sales $ 3,311.9 $ 3,105.3 6.7%
Costs and expenses:
Cost of goods sold 2,440.6 2,509.3 (2.7)%
Selling, general and administrative expenses 453.9 406.6 11.6%
Interest expense, net 49.3 52.9 (6.8)%
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Income from continuing operations before income taxes and
equity method investment earnings 368.1 136.5 169.7%
Income tax expense 123.5 48.7 153.6%
Equity method investment earnings 7.6 6.2 22.6%
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Income from continuing operations 252.2 94.0 168.3%
Income from discontinued operations, net of tax - 0.1 (100.0)%
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Net income $ 252.2 $ 94.1 168.0%
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Less: Net income attributable to noncontrolling interests 2.1 0.3 600.0%
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Net income attributable to ConAgra Foods, Inc. $ 250.1 $ 93.8 166.6%
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Earnings per share - basic
Income from continuing operations $ 0.61 $ 0.23 165.2%
Income from discontinued operations - - 0.0%
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Net income attributable to ConAgra Foods, Inc. $ 0.61 $ 0.23 165.2%
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Weighted average shares outstanding 407.1 412.7 (1.4)%
======= =======
Earnings per share - diluted
Income from continuing operations $ 0.61 $ 0.22 177.3%
Income from discontinued operations - - 0.0%
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Net income attributable to ConAgra Foods, Inc. $ 0.61 $ 0.22 177.3%
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Weighted average share and share equivalents outstanding 412.0 418.1 (1.5)%
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ConAgra Foods, Inc.
Consolidated Balance Sheets
(in millions)
(unaudited)
August 26, 2012 May 27, 2012
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ASSETS
Current assets
Cash and cash equivalents $ 116.5 $ 103.0
Receivables, less allowance for doubtful accounts
of $5.7 and $5.9 963.9 924.8
Inventories 2,065.7 1,869.6
Prepaid expenses and other current assets 329.8 321.4
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Total current assets (3,475.9 ) (3,218.8 )
Property, plant and equipment, net 2,784.5 2,741.9
Goodwill 4,166.6 4,015.4
Brands, trademarks and other intangibles, net 1,221.2 1,191.5
Other assets 280.4 274.3
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$ 11,928.6 $ 11,441.9
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LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Notes Payable $ 272.0 $ 40.0
Current installments of long-term debt 23.2 38.1
Accounts payable 1,224.7 1,190.3
Accrued payroll 147.2 177.2
Other accrued liabilities 927.2 779.6
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Total current liabilities 2,594.3 2,225.2
Senior long-term debt, excluding current installments 2,663.8 2,662.7
Subordinated debt 195.9 195.9
Other noncurrent liabilities 1,824.4 1,822.1
Total stockholders’ equity 4,650.2 4,536.0
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$ 11,928.6 $ 11,441.9
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ConAgra Foods, Inc.
Condensed Consolidated Statements of Cash Flows
(in millions)
(unaudited)
Thirteen weeks ended
------------------------------------------------------
August 26, August 28,
2012 2011
----------------------- -----------------------
Cash flows from operating activities:
Net income $ 252.2 $ 94.1
Income from discontinued operations -- 0.1
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Income from continuing operations 252.2 94.0
Adjustments to reconcile income from continuing operations to net
cash flows from operating activities:
Depreciation and amortization 91.4 91.5
Asset impairment charges 0.3 7.1
Earnings of affiliates less than (in excess of) distributions 1.2 (2.2 )
Pension expense 6.1 6.2
Contributions to Company pension plans (3.8 ) (3.0 )
Share-based payments expense 13.1 12.3
Other items (1.5 ) (15.7 )
Change in operating assets and liabilities excluding effects of
business acquisitions and dispositions:
Accounts receivable (35.9 ) (63.1 )
Inventory (152.0 ) (12.1 )
Deferred income taxes and income taxes payable, net 113.5 48.9
Prepaid expenses and other current assets (33.9 ) (3.0 )
Accounts payable 53.1 108.9
Accrued payroll (30.1 ) 1.6
Other accrued liabilities 50.2 40.6
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Net cash flows from operating activities - continuing operations 323.9 312.0
Net cash flows from operating activities - discontinued operations -- 3.1
-------------- --------------
Net cash flows from operating activities 323.9 315.1
-------------- --------------
Cash flows from investing activities:
Additions to property, plant and equipment (98.6 ) (95.6 )
Sale of property, plant and equipment 1.9 3.8
Purchase of businesses (268.6 ) --
Purchase of intangible assets -- (57.5 )
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Net cash flows from investing activities (365.3 ) (149.3 )
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Cash flows from financing activities:
Net short-term borrowings 232.0 --
Repayment of long-term debt (16.9 ) (2.5 )
Repurchase of ConAgra Foods common shares (75.0 ) --
Cash dividends paid (97.9 ) (94.3 )
Exercise of stock options and issuance of other stock awards 10.8 55.7
Other items 0.2 --
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Net cash flows from financing activities 53.2 (41.1 )
-------------- --------------
Effect of exchange rate changes on cash and cash equivalents 1.7 (1.9 )
Net change in cash and cash equivalents 13.5 122.8
Cash and cash equivalents at beginning of period 103.0 972.4
-------------- --------------
Cash and cash equivalents at end of period $ 116.5 $ 1,095.2
=== ============== === ==============
SOURCE: ConAgra Foods, Inc.
ConAgra Foods, Inc.
MEDIA
Teresa Paulsen, 402-240-5210
Vice President,
Communication & External Relations
or
ANALYSTS
Chris Klinefelter, 402-240-4154
Vice President, Investor Relations
www.conagrafoods.com
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