CONAGRA BRANDS INC

Previous wording

The discussion that follows should be read together with the unaudited Condensed Consolidated Financial Statements and related notes contained in this report and with the financial statements, related notes, and Management's Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the fiscal year ended May 28, 2023 and subsequent filings with the SEC. Results for the second quarter of fiscal 2024 are not necessarily indicative of results that may be attained in the future.

Current wording

The discussion that follows should be read together with the unaudited Condensed Consolidated Financial Statements and related notes contained in this report and with the financial statements, related notes, and Management's Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the fiscal year ended May 28, 2023 and subsequent filings with the SEC. Results for the third quarter of fiscal 2024 are not necessarily indicative of results that may be attained in the future.

Previous wording

In the second quarter of fiscal 2024, results reflected a decrease in net sales, with organic (excludes the impact of foreign exchange) decreases in our Grocery & Snacks and Refrigerated & Frozen segments, offset by increases in our International and Foodservice segments, in each case compared to thesecond quarter of fiscal 2023. The overall decrease in net sales was primarily due to lower consumption trends and continued behavior shifts and an increase in strategic trade investments. Overall gross profit decreased primarily as a result of the net sales declines discussed above, moderate input cost inflation, and unfavorable operating leverage, partially offset byhigher productivity and lower transportation costs. Overall segment operating profit decreased in our Grocery & Snacks, Refrigerated & Frozen, and International segments, partially offset by an increase in our Foodservice segment. Corporate expenses were lower primarily due to lower share-based payment expense compared to thesecond quarter of fiscal 2023. Selling, general and administrative ("SG&A") expenses were higher due primarily to items impacting comparability as discussed below. We recognized higher equity method investment earnings, higher interest expense, and lower income tax expense, in each case compared to the second quarter of fiscal 2023. Excluding items impacting comparability, our effective tax rate was consistent with the second quarter of fiscal 2023.

Current wording

In the third quarter of fiscal 2024, results reflected a decrease in net sales, with organic (excludes the impact of foreign exchange) decreases in our Refrigerated & Frozen and Foodservice segments, offset by increases in our Grocery & Snacks and International segments, in each case compared to thethird quarter of fiscal 2023. The overall decrease in net sales was primarily due to lower consumption trends and continued behavior shifts and an increase in strategic trade investments. Overall gross profit increased primarily as a result ofhigher productivity, lower transportation costs, and lower inventory write-offs, partially offset by the net sales declines discussed above, moderate input cost inflation, and unfavorable operating leverage. Overall segment operating profit decreased in our Refrigerated & Frozen segment, partially offset by increases in our Grocery & Snacks, International, and Foodservice segments. Corporate expenses were higher primarily due to higher incentive compensation expense compared to thethird quarter of fiscal 2023. Selling, general and administrative ("SG&A") expenses were higher due primarily to higher incentive compensation expense and items impacting comparability, as discussed below. We recognized lower equity method investment earnings, higher interest expense, and lower income tax expense, in each case compared to the third quarter of fiscal 2023. Excluding items impacting comparability, our effective tax rate was slightly higher than the third quarter of fiscal 2023.

Previous wording

Diluted earnings per share in the second quarter of fiscal 2024 and 2023 was $0.60 and $0.79, respectively. Diluted earnings per share was affected by lower net income in the second quarter of fiscal 2024 compared to the second quarter of fiscal 2023.

Current wording

Diluted earnings per share in the third quarter of fiscal 2024 and 2023 was $0.64 and $0.71, respectively. Diluted earnings per share was affected by lower net income in the third quarter of fiscal 2024 compared to the third quarter of fiscal 2023.

Previous wording

Our industry continues to be impacted by commodity cost fluctuations, labor cost inflation, input cost inflation, and other global macroeconomic challenges. We experienced a moderate amount of input cost inflation during the first half of fiscal 2024, which we expect to continue throughout the remainder of the fiscal year. However, we have experienced increased stability in our supply chain during the first half of fiscal 2024 and we expect supply chain productivity to mitigate some of the inflationary pressures.

Current wording

Our industry continues to be impacted by commodity cost fluctuations, labor cost inflation, input cost inflation, and other global macroeconomic challenges. We experienced a moderate amount of input cost inflation during the first three quarters of fiscal 2024, which we expect to continue throughout the remainder of the fiscal year. However, we have experienced increased stability in our supply chain during the first three quarters of fiscal 2024 and we expect supply chain productivity to mitigate some of the inflationary pressures.

Previous wording

We also have experienced a reduction to our volumes due to lower consumption trends seen throughout the industry and continued consumer behavior shifts. We expect consumer trends to evolve and our volumes to improve over time, however, economic pressures on consumers, including the challenges of high inflation, may continue to negatively impact our volumes throughout fiscal 2024. We will continue to evaluate the evolving macroeconomic environment to take action to mitigate the impact on our business, consolidated results of operations, and financial condition.

Current wording

We also have experienced a reduction to our volumes due to lower consumption trends seen throughout the industry and continued consumer behavior shifts. We expect consumer trends to continue to evolve and our volumes to improve over time, however, economic pressures on consumers, including the challenges of high inflation, may continue to negatively impact our volumes throughout fiscal 2024. We will continue to evaluate the evolving macroeconomic environment to take action to mitigate the impact on our business, consolidated results of operations, and financial condition.

Previous wording

Segment presentation of gains and losses from derivatives used for economic hedging of anticipated commodity input costs and foreign currency exchange rate risks of anticipated transactions is discussed in further detail in Note 7,“Derivative Financial Instruments”, to the Condensed Consolidated Financial Statements contained in this report. We had $11.2 million and $2.4 million of derivative losses in the second quarter of fiscal 2024 and 2023, respectively, and $16.4 million of derivative gains and $1.9 million of derivative losses in the first half of fiscal 2024 and 2023, respectively, which were included in general corporate expenses and reflected as items impacting comparability.

Current wording

Segment presentation of gains and losses from derivatives used for economic hedging of anticipated commodity input costs and foreign currency exchange rate risks of anticipated transactions is discussed in further detail in Note 7,“Derivative Financial Instruments”, to the Condensed Consolidated Financial Statements contained in this report. We had $6.8 million and $22.7 million of derivative losses in the third quarter of fiscal 2024 and 2023, respectively, and $9.6 million of derivative gains and $24.6 million of derivative losses in the first three quarters of fiscal 2024 and 2023, respectively, which were included in general corporate expenses and reflected as items impacting comparability.

Previous wording

Other items of note impacting comparability for the second quarter of fiscal 2024 included the following:

Current wording

Other items of note impacting comparability for the third quarter of fiscal 2024 included the following:

Previous wording

Net sales for the second quarter and first half of fiscal 2024 in our Grocery & Snacks segment included a decrease in volumes of 3.7% and 4.0%, respectively, when compared to the second quarter and first half of fiscal 2023 primarily due to lower consumption trends seen throughout the industry. Price/mix decreased by 0.4% for the second quarter of fiscal 2024 when compared to the second quarter of fiscal 2023, partially attributable to an increase in strategic trade investments. Price/mix increased by 2.4% when compared to the first half of fiscal 2023 due to favorability in inflation-driven pricing that was implemented in the prior year partially offset by an increase in strategic trade investments.

Current wording

Net sales for the third quarter and first three quarters of fiscal 2024 in our Grocery & Snacks segment included a decrease in volumes of 0.8% and 3.0% when compared to the third quarter and first three quarters of fiscal 2023, respectively, primarily due to lower consumption trends seen throughout the industry. Price/mix increased by 4.2% and 3.1% for the third quarter and first three quarters of fiscal 2024, respectively, when compared to the third quarter and first three quarters of fiscal 2023, primarily due to favorable brand mix and favorability in inflation-driven pricing that was primarily implemented in the prior year, partially offset by an increase in strategic trade investments. In the third quarter of fiscal 2023, we had a product recall primarily related to ourArmour Star® brand, which resulted in a $7.8 million reduction to net sales for estimated customer returns and fees in addition to estimated lost sales of approximately $16 million for the quarter.

Previous wording

Net sales for the second quarter and first half of fiscal 2024 in our Refrigerated & Frozen segment reflected a decrease in volumes of 3.3% and 6.7%, respectively, when compared to the second quarter and first half of fiscal 2023. The decrease was primarily due to lower consumption trends seen throughout the industry. Price/mix decreased by 2.5% when compared to the second quarter of fiscal 2023, partially attributable to an increase in strategic trade investments. Price/mix increased by 1.4% when compared to the first half of fiscal 2023 due to favorability in inflation-driven pricing that was implemented in the prior year partially offset by an increase in strategic trade investments.

Current wording

Net sales for the third quarter and first three quarters of fiscal 2024 in our Refrigerated & Frozen segment reflected a decrease in volumes of 3.3% and 5.6%, respectively, when compared to the third quarter and first three quarters of fiscal 2023. The decrease was primarily due to lower consumption trends seen throughout the industry. Price/mix decreased by 4.8% and 0.6% for the third quarter and first three quarters of fiscal 2024, respectively, when compared to the third quarter and first three quarters of fiscal 2023, primarily attributable to an increase in strategic trade investments slightly offset by favorability in inflation-driven pricing that was implemented in the prior year.

Previous wording

Net sales for the second quarter of fiscal 2024 in our International segment reflected a 3.3% increase in volumes, a 2.5% increase due to favorable foreign exchange rates, and a 2.3% increase in price/mix, in each case compared to the second quarter of fiscal 2023. The increase in volumes was driven by growth in our Mexico business compared to the second quarter of fiscal 2023.

Current wording

Net sales for the third quarter of fiscal 2024 in our International segment reflected a 3.6% increase due to favorable foreign exchange rates, a 2.7% increase in volumes, and a 1.7% decrease in price/mix, in each case compared to the third quarter of fiscal 2023. The favorable foreign exchange rates were primarily due to appreciation in the Mexican Peso and volume increases were driven by growth in our Mexico business compared to the third quarter of fiscal 2023.

Previous wording

Net sales for the first half of fiscal 2024 in our International segment reflected a 1.9% increase in volumes, a 2.9% increase due to favorable foreign exchange rates, and a 4.9% increase in price/mix, in each case compared to the first half of fiscal 2023. The increase in volumes was driven by growth in our Mexico business compared to the first half of fiscal 2023. The increase in price/mix was primarily due to favorability in inflation-driven pricing that was implemented in the prior year.

Current wording

Net sales for the first three quarters of fiscal 2024 in our International segment reflected a 3.1% increase due to favorable foreign exchange rates, a 2.7% increase in price/mix, and a 2.1% increase in volumes, in each case compared to the first three quarters of fiscal 2023. The increase in volumes was driven by growth in our Mexico business compared to the first three quarters of fiscal 2023. The increase in price/mix was primarily due to favorability in inflation-driven pricing that was implemented in the prior year.

Previous wording

Net sales for the second quarter and first half of fiscal 2024 in our Foodservice segment reflected an increase in price/mix of 6.8% and 8.5%, respectively, compared to the second quarter and first half of fiscal 2023, reflecting inflation-driven pricing that was primarily implemented in the prior year. Volumes decreased by 2.5% and 3.8% in the second quarter and first half of fiscal 2024, respectively, when compared to the second quarter and first half of fiscal 2023. The decrease in volumes was driven by the elasticity impact from inflation-driven pricing actions and shortages from supply chain disruptions.

Current wording

Net sales for the third quarter and first three quarters of fiscal 2024 in our Foodservice segment reflected a decrease in volumes of 4.8% and 4.1%, respectively, when compared to the third quarter and first three quarters of fiscal 2023. The decrease in volumes was driven by a decrease in customer demand and the elasticity impact from inflation-driven pricing actions. Price/mix increased by 3.8% and 7.0%, respectively, compared to the third quarter and first three quarters of fiscal 2023, reflecting inflation-driven pricing.

Previous wording

SG&A expenses totaled $398.1 million for the second quarter of fiscal 2024, an increase of $25.4 million, as compared to the second quarter of fiscal 2023. SG&A expenses for the second quarter of fiscal 2024 reflected the following:

Current wording

SG&A expenses totaled $387.4 million for the third quarter of fiscal 2024, an increase of $38.6 million, as compared to the third quarter of fiscal 2023. SG&A expenses for the third quarter of fiscal 2024 reflected the following:

Previous wording

Other changes in expenses compared to the second quarter of fiscal 2023

Current wording

Other changes in expenses compared to the third quarter of fiscal 2023

Previous wording

SG&A expenses for the second quarter of fiscal 2023 included the following items impacting comparability of earnings:

Current wording

SG&A expenses for the third quarter of fiscal 2023 included the following items impacting comparability of earnings:

Previous wording

SG&A expenses totaled $732.2 million for the first half of fiscal 2024, a decrease of $382.1 million, as compared to the first half of fiscal 2023. SG&A expenses for the first half of fiscal 2024 reflected the following:

Current wording

SG&A expenses totaled $1.12 billion for the first three quarters of fiscal 2024, a decrease of $343.5 million, as compared to the first three quarters of fiscal 2023. SG&A expenses for the first three quarters of fiscal 2024 reflected the following:

Previous wording

Other changes in expenses compared to the first half of fiscal 2023

Current wording

Other changes in expenses compared to the first three quarters of fiscal 2023

Previous wording

SG&A expenses for the first half of fiscal 2023 included the following items impacting the comparability of earnings:

Current wording

SG&A expenses for the first three quarters of fiscal 2023 included the following items impacting the comparability of earnings:

Previous wording

Operating profit in our Grocery & Snacks segment for the first half of fiscal 2024 reflected a decrease in gross profits of $31.5 million compared to the first half of fiscal 2023. The lower gross profit was driven by the net sales decline discussed above, the impacts of input cost inflation, and unfavorable fixed cost leverage, partially offset by inflation driven pricing that was implemented in the prior year, productivity, andlower transportation costs. Advertising and promotion expenses increased $8.5 million compared to thefirst half of fiscal 2023. Operating profit in the first half of fiscal 2024 included $7.5 million of net charges related to our restructuring plans. The first half of fiscal 2023 also included expenses of $3.2 million related to a municipal water line break.

Current wording

Operating profit in our Grocery & Snacks segment for the first three quarters of fiscal 2024 reflected an increase in gross profits of $12.8 million compared to the first three quarters of fiscal 2023. The higher gross profit was due to inflation driven pricing that was primarily implemented in the prior year, productivity, lower transportation costs, lower inventory write-offs, and a net benefit of $7.4 million related to insurance proceeds received for lost sales from ourArmour Star® brand recall. These increases were partially offset by the impacts of input cost inflation and unfavorable fixed cost leverage. Advertising and promotion expenses increased $7.8 million compared to thefirst three quarters of fiscal 2023. Operating profit in the first three quarters of fiscal 2024 included $7.7 million of net charges related to our restructuring plans. The first three quarters of fiscal 2023 also included expenses of $3.5 million related to a municipal water line break.

Previous wording

Operating profit in our Refrigerated & Frozen segment for the second quarter of fiscal 2024 reflected a decrease in gross profits of $35.9 million compared to the second quarter of fiscal 2023. The decrease was driven by the net sales decline discussed above, impacts of input cost inflation, and unfavorable fixed cost leverage, partially offset by productivity and lower transportation costs. Advertising and promotion expenses decreased $13.4 million compared to thesecond quarter of fiscal 2023. Operating profit in the second quarter of fiscal 2023 included charges of $7.9 million associated with a fire occurring at one of our manufacturing facilities.

Current wording

Operating profit in our Refrigerated & Frozen segment for the third quarter of fiscal 2024 reflected a decrease in gross profits of $59.5 million compared to the third quarter of fiscal 2023. The decrease was driven by the net sales decline discussed above, impacts of input cost inflation, and unfavorable fixed cost leverage, partially offset by productivity, lower transportation costs, and lower inventory write-offs. Operating profit in the third quarter of fiscal 2023 included charges of $5.2 million associated with a previous fire that occurred at one of our manufacturing facilities.

Previous wording

Operating profit in our Refrigerated & Frozen segment for the first half of fiscal 2024 reflected a decrease in gross profits of $14.5 million compared to the first half of fiscal 2023. The decrease was driven by the net sales decline discussed above, impacts of input cost inflation, and unfavorable fixed cost leverage, partially offset by inflation driven pricing that was implemented in the prior year, productivity, lower transportation costs, andlower inventory write-offs. Advertising and promotion expenses decreased $21.1 million compared to thefirst half of fiscal 2023. Operating profit in thefirst half of fiscal 2023 included charges of $385.7 million related to the goodwill andBirds Eye® brand impairments in connection with certain reporting unit changes within our Refrigerated & Frozen segment. Operating profit in the first half of fiscal 2023 included charges of $7.9 million associated with a fire occurring at one of our manufacturing facilities and $5.7 million related to the impairment of businesses previously held for sale.

Current wording

Operating profit in our Refrigerated & Frozen segment for the first three quarters of fiscal 2024 reflected a decrease in gross profits of $74.0 million compared to the first three quarters of fiscal 2023. The decrease was driven by the net sales decline discussed above, impacts of input cost inflation, and unfavorable fixed cost leverage, partially offset by inflation driven pricing that was implemented in the prior year, productivity, lower transportation costs, and lower inventory write-offs. Advertising and promotion expenses decreased $19.1 million compared to thefirst three quarters of fiscal 2023. Operating profit in the first three quarters of fiscal 2024 and 2023 included charges of $3.7 million and $13.1 million, respectively, associated with a previous fire that occurred at one of our manufacturing facilities. Operating profit in thefirst three quarters of fiscal 2023 included charges of $385.7 million related to the goodwill andBirds Eye® brand impairments in connection with certain reporting unit changes within our Refrigerated & Frozen segment and $5.7 million related to the impairment of businesses previously held for sale.

Previous wording

Operating profit in our International segment for the second quarter of fiscal 2024 reflected an increase in gross profits of $9.1 million when compared to the second quarter of fiscal 2023. The increase was driven by the net sales growth discussed above and productivity, partially offset by the impacts of input cost inflation. Operating profit in thesecond quarter of fiscal 2024 included a charge of $34.2 million related to the impairment of a business held for sale.

Current wording

Operating profit in our International segment for the third quarter of fiscal 2024 reflected an increase in gross profits of $9.7 million when compared to the third quarter of fiscal 2023. The increase was driven by the net sales growth discussed above and productivity, partially offset by the impacts of input cost inflation and an increase in inventory write-offs. Advertising and promotion expenses increased $3.7 million compared to the third quarter of fiscal 2023.

Previous wording

Operating profit in our International segment for the first half of fiscal 2024 reflected an increase in gross profits of $25.9 million when compared to the first half of fiscal 2023. The increase was driven by the net sales growth discussed above, productivity, and lower inventory write-offs, partially offset by the impacts of input cost inflation. Operating profit in thefirst half of fiscal 2024 included a charge of $34.2 million related to the impairment of a business held for sale and$19.1 million of net charges related to our restructuring plans.

Current wording

Operating profit in our International segment for the first three quarters of fiscal 2024 reflected an increase in gross profits of $35.6 million when compared to the first three quarters of fiscal 2023. The increase was driven by the net sales growth discussed above and productivity, partially offset by the impacts of input cost inflation and an increase in inventory write-offs. Advertising and promotion expenses increased $5.7 million compared to thefirst three quarters of fiscal 2023. Operating profit in thefirst three quarters of fiscal 2024 included a charge of $34.2 million related to the impairment of a business held for sale and$20.2 million of net charges related to our restructuring plans.

Previous wording

Operating profit in our Foodservice segment for the first half of fiscal 2024 reflected an increase in gross profits of $28.9 million compared to the first half of fiscal 2023. The increase in gross profit was driven by the net sales growth discussed above and productivity, partially offset by the impacts of input cost inflation and unfavorable fixed cost leverage. Operating profit in thefirst half of fiscal 2024 included a benefit of $5.9 million associated with insurance proceeds from the previous fire that occurred at one of our manufacturing facilities. Operating profit in the first half of fiscal 2023 included expense of $20.5 million related to the impairment of businesses previously held for sale.

Current wording

Operating profit in our Foodservice segment for the first three quarters of fiscal 2024 reflected an increase in gross profits of $38.5 million compared to the first three quarters of fiscal 2023. The increase in gross profit was driven by the net sales growth discussed above, productivity, and lower transportation costs, partially offset by the impacts of input cost inflation and unfavorable fixed cost leverage. Operating profit in thefirst three quarters of fiscal 2024 included a benefit of $5.9 million associated with insurance proceeds from the previous fire that occurred at one of our manufacturing facilities. Operating profit in the first three quarters of fiscal 2023 included expense of $20.5 million related to the impairment of businesses previously held for sale.

Previous wording

In the second quarter of fiscal 2024, pension and postretirement non-service expense was$0.4 million compared to income of $6.1 million in thesecond quarter of fiscal 2023. In the first half of fiscal 2024, pension and postretirement non-service expense was $0.7 million compared to income of $12.2 million in thefirst half of fiscal 2023. Thesecond quarter andfirst half of fiscal 2024 reflected higher interest costs.

Current wording

In the third quarter of fiscal 2024, pension and postretirement non-service expense was$1.4 million compared to income of $6.0 million in thethird quarter of fiscal 2023. In the first three quarters of fiscal 2024, pension and postretirement non-service expense was $2.1 million compared to income of $18.2 million in thefirst three quarters of fiscal 2023. Thethird quarter andfirst three quarters of fiscal 2024 reflected higher interest costs.

Previous wording

Net interest expense was $113.3 million and $100.3 million for the second quarter of fiscal 2024 and 2023, respectively. Net interest expense was $219.3 million and $197.4 million for the first half of fiscal 2024 and 2023, respectively. The increase was driven bya higher weighted average interest rate on outstanding debt. See Note 4,"Debt and Revolving Credit Facility", to the Condensed Consolidated Financial Statements contained in this report for further discussion.

Current wording

Net interest expense was $106.5 million and $104.2 million for the third quarter of fiscal 2024 and 2023, respectively. Net interest expense was $325.8 million and $301.6 million for the first three quarters of fiscal 2024 and 2023, respectively. The increase was driven bya higher weighted average interest rate on outstanding debt. See Note 4,"Debt and Revolving Credit Facility", to the Condensed Consolidated Financial Statements contained in this report for further discussion.

Previous wording

In the second quarter of fiscal 2024 and 2023, we recognized income tax expense of $102.9 million and $122.5 million, respectively. In the first half of fiscal 2024 and 2023, we recognized income tax expense of $201.2 million and $136.9 million, respectively. The effective tax rate (calculated as the ratio of income tax expense to pre-tax income, inclusive of equity method investment earnings) was approximately 26.5% and 24.3% for the second quarter of fiscal 2024 and 2023, respectively. The effective tax rate was approximately 24.9% and 31.0% for the first half of fiscal 2024 and 2023, respectively. See Note 11,"Income Taxes", to the Condensed Consolidated Financial Statements contained in this report for a discussion on the change in effective tax rates.

Current wording

In the third quarter of fiscal 2024 and 2023, we recognized income tax expense of $95.9 million and $100.1 million, respectively. In the first three quarters of fiscal 2024 and 2023, we recognized income tax expense of $297.1 million and $237.0 million, respectively. The effective tax rate (calculated as the ratio of income tax expense to pre-tax income, inclusive of equity method investment earnings) was approximately 23.7% and 22.6% for the third quarter of fiscal 2024 and 2023, respectively. The effective tax rate was approximately 24.5% and 26.8% for the first three quarters of fiscal 2024 and 2023, respectively. See Note 11,"Income Taxes", to the Condensed Consolidated Financial Statements contained in this report for a discussion on the change in effective tax rates.

Previous wording

Equity method investment earnings were$54.3 million and$49.3 million for thesecond quarter of fiscal 2024 and 2023, respectively. Equity method investment earnings were $89.8 million and $98.5 million for thefirst half of fiscal 2024 and 2023, respectively. Ardent Mills earnings for thesecond quarter of fiscal 2024 continued to reflect slightly lower volume trends as seen throughout the industry but were more than offset by improved product margins.

Current wording

Equity method investment earnings were$41.2 million and$50.5 million for thethird quarter of fiscal 2024 and 2023, respectively. Equity method investment earnings were $131.0 million and $149.0 million for the first three quarters of fiscal 2024 and 2023, respectively. Ardent Mills earnings for the third quarter of fiscal 2024 continued to reflect slightly lower volume trends as seen throughout the industry, partially offset by improved product margins.

Previous wording

Diluted earnings per share in the second quarter of fiscal 2024 and 2023 was $0.60 and $0.79, respectively. The decrease reflected lower net income in the second quarter of fiscal 2024. Diluted earnings per share in the first half of fiscal 2024 and 2023 was $1.26 and $0.63, respectively. The increase in diluted earnings per share for the first half of fiscal 2024 reflected higher net income.

Current wording

Diluted earnings per share in the third quarter of fiscal 2024 and 2023 was $0.64 and $0.71, respectively. The decrease reflected lower net income in the third quarter of fiscal 2024. Diluted earnings per share in the first three quarters of fiscal 2024 and 2023 was $1.91 and $1.34, respectively. The increase in diluted earnings per share for the first three quarters of fiscal 2024 reflected higher net income.

Previous wording

As of November 26, 2023, we had $503.0 million outstanding under our commercial paper program. The highest level of borrowings outstanding during the first half of fiscal 2024 was $697.0 million. We had $576.0 million outstanding under our commercial paper program as of May 28, 2023.

Current wording

As of February 25, 2024, we had $116.0 million outstanding under our commercial paper program. The highest level of borrowings outstanding during the first three quarters of fiscal 2024 was $697.0 million. We had $576.0 million outstanding under our commercial paper program as of May 28, 2023.

Previous wording

We have $1.00 billion aggregate principal amount of 4.30% senior notes maturing on May 1, 2024 that we expect to refinance with short-term and/or long-term debt along with cash on hand.

Current wording

We have $1.00 billion aggregate principal amount of 4.30% senior notes maturing on May 1, 2024 that we expect to pay and/or refinance using available sources which may include the investment grade note market, bank loans, commercial paper, and cash on hand.

Previous wording

As of the end of the second quarter of fiscal 2024, our senior long-term debt ratings were all investment grade. A significant downgrade in our credit ratings would not affect our ability to borrow amounts under the Revolving Credit Facility, although borrowing costs would increase. A downgrade of our short-term credit ratings would impact our ability to borrow under our commercial paper program by negatively impacting borrowing costs and causing shorter durations, as well as making access to commercial paper more difficult, or impossible.

Current wording

As of the end of the third quarter of fiscal 2024, our senior long-term debt ratings were all investment grade. A significant downgrade in our credit ratings would not affect our ability to borrow amounts under the Revolving Credit Facility, although borrowing costs would increase. A downgrade of our short-term credit ratings would impact our ability to borrow under our commercial paper program by negatively impacting borrowing costs and causing shorter durations, as well as making access to commercial paper more difficult, or impossible.

Previous wording

We repurchase shares of our common stock from time to time after considering market conditions and in accordance with repurchase limits authorized by our Board. Under our current share repurchase authorization, we may repurchase our shares periodically over several years, depending on market conditions and other factors, and may do so in open market purchases or privately negotiated transactions. The share repurchase authorization has no expiration date. We did not repurchase any shares of common stock during the first half of fiscal 2024. The Company's total remaining share repurchase authorization as of November 26, 2023 was $916.6 million.

Current wording

We repurchase shares of our common stock from time to time after considering market conditions and in accordance with repurchase limits authorized by our Board. Under our current share repurchase authorization, we may repurchase our shares periodically over several years, depending on market conditions and other factors, and may do so in open market purchases or privately negotiated transactions. The share repurchase authorization has no expiration date. We did not repurchase any shares of common stock during the first three quarters of fiscal 2024. The Company's total remaining share repurchase authorization as of February 25, 2024 was $916.6 million.

Previous wording

On November 30, 2023, the Company paid a quarterly cash dividend on shares of itscommon stock of $0.35 per share to stockholders of record as of close of business on November 2, 2023. On December 14, 2023, we announced that our Board approved a quarterly dividend payment of $0.35 per share to be paid on February 29, 2024, to stockholders of record as of close of business on January 30, 2024.

Current wording

On February 29, 2024, the Company paid a quarterly cash dividend on shares of itscommon stock of $0.35 per share to stockholders of record as of close of business on January 30, 2024.

Previous wording

We continue to make investments in our business and operating facilities. Our estimate of capital expenditures for fiscal 2024 is approximately $450 million.

Current wording

We continue to make investments in our business and operating facilities. Our estimate of capital expenditures for fiscal 2024 is approximately $425 million.

Previous wording

During the first half of fiscal 2024, we used $31.1 million of cash, which was the net result of $854.6 million generated from operating activities, $203.9 million used in investing activities, $683.4 million used in financing activities, and an increase of $1.6 million due to the effects of changes in foreign currency exchange rates.

Current wording

During the first three quarters of fiscal 2024, we used $14.6 million of cash, which was the net result of $1.53 billion generated from operating activities, $295.6 million used in investing activities, and $1.25 billion used in financing activities.

Previous wording

Cash generated from operating activities totaled $854.6 million and $297.8 million in the first half of fiscal 2024 and 2023, respectively. The increase in operating cash flows for the first half of fiscal 2024 compared to the first half of fiscal 2023 was primarily driven by our change in inventory balances, which were impacted by reduced inventory volumes due to recent consumption trends in addition to an inventory rebuild from previous supply chain constraints in fiscal 2023, and timing of payments of accounts payable. Operating cash flows in the first half of fiscal 2024 also benefited from higher dividend payments received from one of our equity method investments in the second quarter.

Current wording

Cash generated from operating activities totaled $1.53 billion and $703.4 million in the first three quarters of fiscal 2024 and 2023, respectively. The increase in operating cash flows for the first three quarters of fiscal 2024 compared to the first three quarters of fiscal 2023 was primarily driven by our change in inventory balances, which were impacted by reduced inventory volumes due to recent consumption trends in addition to an inventory rebuild from previous supply chain constraints in fiscal 2023. Other changes in working capital were positively impacted by decreased accounts receivables and extended payment terms with certain vendors resulting in reduced cash outflows for accounts and other payables. Operating cash flows in the first three quarters of fiscal 2024 also benefited from higher dividend payments received from one of our equity method investments in the second quarter.

Previous wording

Cash used in investing activities totaled $203.9 million and $181.9 million in the first half of fiscal 2024 and 2023, respectively. Net cash outflows from investing activities in the first half of fiscal 2024 and 2023 consisted primarily of capital expenditures totaling $214.0 million and $188.4 million, respectively.

Current wording

Cash used in investing activities totaled $295.6 million and $260.2 million in the first three quarters of fiscal 2024 and 2023, respectively. Net cash outflows from investing activities in the first three quarters of fiscal 2024 and 2023 consisted primarily of capital expenditures totaling $309.6 million and $267.4 million, respectively.

Previous wording

Cash used in financing activities totaled $683.4 million and $157.4 million in the first half of fiscal 2024 and 2023, respectively. Financing activities in the first half of fiscal 2024 principally reflected repayments of long-term debt of $760.6 million, the issuance of long-term debt totaling $500.0 million, net short-term borrowing repayments of $81.2 million, and cash dividends paid of $324.7 million. Financing activities in the first half of fiscal 2023 principally reflected repayments of long-term debt of $265.8 million, the issuance of long-term debt totaling $500.0 million, net short-term borrowing issuances of $75.4 million, cash dividends paid of $308.6 million, and common stock repurchases of $150.0 million.

Current wording

Cash used in financing activities totaled $1.25 billion and $454.5 million in the first three quarters of fiscal 2024 and 2023, respectively. Financing activities in the first three quarters of fiscal 2024 principally reflected repayments of long-term debt of $766.8 million, the issuance of long-term debt totaling $500.0 million, net short-term borrowing repayments of $473.8 million, and cash dividends paid of $492.0 million. Financing activities in the first three quarters of fiscal 2023 principally reflected repayments of long-term debt of $708.0 million, the issuance of long-term debt totaling $500.0 million, net short-term borrowing issuances of $367.9 million, cash dividends paid of $466.4 million, and common stock repurchases of $150.0 million.

Previous wording

The Company had cash and cash equivalents of $61.5 million at November 26, 2023 and $93.3 million at May 28, 2023, of which $55.2 million at November 26, 2023 and $84.9 million at May 28, 2023 was held in foreign countries. A deferred tax liability is provided for certain undistributed foreign earnings that are not considered to be indefinitely reinvested or cannot be remitted in a tax-neutral transaction. Other undistributed foreign earnings are invested indefinitely and therefore we have not provided deferred taxes on those earnings.

Current wording

The Company had cash and cash equivalents of $78.5 million at February 25, 2024 and $93.3 million at May 28, 2023, of which $67.4 million at February 25, 2024 and $84.9 million at May 28, 2023 was held in foreign countries. A deferred tax liability is provided for certain undistributed foreign earnings that are not considered to be indefinitely reinvested or cannot be remitted in a tax-neutral transaction. Other undistributed foreign earnings are invested indefinitely and therefore we have not provided deferred taxes on those earnings.