CONAGRA BRANDS INC
For the period ended Aug 25, 2024. Filed Oct 2, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Aug 25, 2024 · Filed Oct 2, 2024
CAG$15.24-1.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-02-25; filed 2024-04-04.
0001437749-24-011081
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-08-25; filed 2024-10-02.
0001558370-24-013126
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 93 previous paragraphs and 82 current paragraphs.
36 unchanged; 32 reworded; 11 added; 24 removed; 1 previous and 3 current paragraphs rearranged.
Tables are not compared: 33 previous and 16 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (11)
Current report
Fiscal 2025 First Quarter Results
Current report
Our industry continues to be impacted by shifting consumer behavior, commodity cost fluctuations, exchange rate volatility, labor cost inflation, input cost inflation, supply chain disruptions, and other global macroeconomic challenges. During the first quarter of fiscal 2025, we experienced a moderate amount of input cost inflation and negative impacts from exchange rates, which we were able to be partially offset through our on-going productivity initiatives.
Current report
Net sales for the first quarter of fiscal 2025 in our Grocery & Snacks segment included a decrease in volumes of 1.8% and a price/mix decrease of 0.1%, excluding the impact of acquisitions, when compared to the first quarter of fiscal 2024. The lower volumes are primarily due to the elasticity impact from inflation-driven pricing actions on certain brands within the portfolio and continued lower consumption trends. Price/mix was negatively impacted by an increase in strategic trade investments, offset by favorability in inflation-driven pricing that was implemented in the prior year. The acquisitions of Sweetwood Smoke & Co. in August 2024 and an existing co-manufacturer of our cooking spray products in July 2024 contributed $2.7 million to our Grocery & Snacks segment net sales during the first quarter of fiscal 2025.
Current report
Net sales for the first quarter of fiscal 2025 in our Foodservice segment reflected a decrease in volumes of 11.1%, excluding the impact of acquisitions, when compared to the first quarter of fiscal 2024. The decrease in volumes was driven by the ongoing impact of lost business from the prior year and ongoing softness in restaurant traffic. Price/mix increased by 3.2%, compared to the first quarter of fiscal 2024, reflecting inflation-driven pricing and the value-over-volume strategy. Additionally, we estimate that net sales in our Foodservice segment during the first quarter of fiscal 2025 were impacted by approximately $3 million due to the temporary manufacturing disruptions in ourHebrew National®business.
Current report
Operating profit in our Grocery & Snacks segment for the first quarter of fiscal 2025 reflected a decrease in gross profits of $13.6 million compared to the first quarter of fiscal 2024. The lower gross profit was driven by the decrease in net sales discussed above, the impacts of input cost inflation, and unfavorable fixed cost leverage, slightly offset by higher productivity and a benefit of $3.3 million related to insurance proceeds received for lost sales from our previous brand recall onArmour Star®. The decrease in gross profits was partially offset by lower SG&A expenses, including a decrease of $2.4 million in advertising and promotion expenses. Operating profit in our Grocery & Snacks segment for the first quarter of fiscal 2025 and 2024 included charges of $4.2 million and $4.8 million, respectively, related to our restructuring plans.
Current report
Operating profit in our Refrigerated & Frozen segment for the first quarter of fiscal 2025 reflected a decrease in gross profits of $32.4 million compared to the first quarter of fiscal 2024. The decrease was driven by the net sales decline discussed above and the impacts of input cost inflation, partially offset by productivity, lower transportation costs, and a gain of $17.0 million from insurance recoveries associated with a previous fire that occurred at one of our manufacturing facilities. In addition, we estimate that gross profits during the first quarter of fiscal 2025 were negatively impacted by approximately $10 million, primarily due to lost profits, abnormal manufacturing variances, and certain inventory write-offs resulting from the temporary manufacturing disruptions in ourHebrew National®business. The decrease in gross profits was partially offset by lower SG&A expenses, including a decrease of $6.1 million in advertising and promotion expenses.
Current report
Operating profit in our International segment for the first quarter of fiscal 2025 reflected a decrease in gross profits of $3.7 million when compared to the first quarter of fiscal 2024. The decrease was driven by the impacts of input cost inflation and unfavorable foreign exchange rates, partially offset by productivity. Operating profit in the first quarter of fiscal 2025 included a $2.3 million loss on the sale of our ownership stake in Agro Tech Foods Limited. Operating profit in the first quarter of fiscal 2024 included net charges of $18.6 million related to our restructuring plans.
Current report
Pension and Postretirement Non-service Income (Expense)
Current report
In the first quarter of fiscal 2025, pension and postretirement non-service income was $3.1 million compared to expense of $0.3 million in the first quarter of fiscal 2024. The first quarter of fiscal 2025 reflected lower interest costs.
Current report
Cash generated from operating activities totaled $268.6 million and $443.5 million in the first quarter of fiscal 2025 and 2024, respectively. The decrease in operating cash flows for the first quarter of fiscal 2025 compared to the first quarter of fiscal 2024 was primarily driven by lower operating profits and changes in working capital, which were negatively impacted by increased accounts receivables and higher cash payments associated with our annual short-term incentive plan partially offset by lower inventory balances.
Current report
offset by net proceeds totaling $76.8 million from the sale of our ownership stake in Agro Tech Foods Limited (“ATFL”). Investing activities in the first quarter of fiscal 2024 consisted primarily of capital expenditures totaling $143.6 million.
Removed paragraphs (24)
Previous report
Fiscal 2024 Third Quarter Results
Previous report
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 report
Items of note impacting comparability for the third quarter of fiscal 2023 included the following:
Previous report
Items of note impacting comparability for the first three quarters of fiscal 2024 included the following:
Previous report
Items of note impacting comparability for the first three quarters of fiscal 2023 included the following:
Previous report
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 report
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 report
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 report
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 report
SG&A expenses for the first three quarters of fiscal 2023 included the following items impacting the comparability of earnings:
Previous report
Operating profit in our Grocery & Snacks segment for the third quarter of fiscal 2024 reflected an increase in gross profits of $44.3 million compared to the third quarter of fiscal 2023. The higher gross profit was driven by the increase in net sales discussed above, productivity, lower transportation costs, and lower inventory write-offs. In addition, we received insurance proceeds related to lost sales from ourArmour Star**® brand recall that occurred in fiscal 2023 and recognized a net benefit of $7.4 million within cost of goods sold in the third quarter of fiscal 2024. These increases were slightly offset by the impacts of input cost inflation and unfavorable fixed cost leverage.
Previous report
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 report
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 report
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 report
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 report
Operating profit in our Foodservice segment for the third quarter of fiscal 2024 reflected an increase in gross profits of $9.6 million compared to the third quarter of fiscal 2023. The increase in gross profit was driven by productivity and lower transportation costs.
Previous report
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 report
Pension and Postretirement Non-service Expense (Income)
Previous report
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 report
During the second quarter of fiscal 2024, we prepaid $250.0 million of the $500.0 million aggregate principal amount outstanding under our unsecured Term Loan (the "Term Loan"). The repayment was funded by operating cash flows and the issuance of commercial paper. The remaining balance matures on August 26, 2025.
Previous report
During the first quarter of fiscal 2024, we issued $500.0 million aggregate principal amount of 5.30% senior notes due October 1, 2026. The net proceeds were used to repay the outstanding $500.0 million aggregate principal amount of our 0.50% senior notes on their maturity date of August 11, 2023.
Previous report
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 report
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 report
Consistent with previous years, we will perform our annual impairment test on our indefinite-lived intangible assets and goodwill in the fourth quarter of fiscal 2024. We recognized impairment charges on several brands, primarily from the Pinnacle acquisition, in the fourth quarter of both fiscal 2023 and 2022. As a result of the impairment charges, these assets were written down to their respective fair values resulting in zero excess fair value over carrying amount. If expectations of future long-term growth rates and margins are not met or if management's future strategy changes on certain brands, there is a heightened risk of future impairment.
Reworded paragraphs (32)
Previous wording
Readers of this report should understand that these forward-looking statements are not guarantees of performance or results. Forward-looking statements provide our current expectations and beliefs concerning future events and are subject to risks, uncertainties, and factors relating to our business and operations, all of which are difficult to predict and could cause our actual results to differ materially from the expectations expressed in or implied by such forward-looking statements. These risks, uncertainties, and factors include, among other things: risks associated with general economic and industry conditions, including inflation, rising interest rates, decreased availability of capital, volatility in financial markets, declining consumer spending rates, recessions, decreased energy availability, increased energy costs (including fuel surcharges), supply chain challenges, labor shortages, and geopolitical conflicts (including the ongoing conflict between Russia and Ukraine); negative impacts caused by public health crises; risks related to our ability to deleverage on currently anticipated timelines, and to continue to access capital on acceptable terms or at all; risks related to the Company's competitive environment, cost structure, and related market conditions; risks related to our ability to execute operating and value creation plans and achieve returns on our investments and targeted operating efficiencies from cost-saving initiatives, and to benefit from trade optimization programs; risks related to the availability and prices of commodities and other supply chain resources, including raw materials, packaging, energy, and transportation, including any negative effects caused by changes in levels of inflation and interest rates, weather conditions, health pandemics or outbreaks of disease, actual or threatened hostilities or war, or other geopolitical uncertainty; risks related to the effectiveness of our hedging activities and ability to respond to volatility in commodities; disruptions or inefficiencies in our supply chain and/or operations; risks related to the ultimate impact of, including reputational harm caused by, any product recalls and product liability or labeling litigation, including litigation related to lead-based paint and pigment and cooking spray; risks related to our ability to respond to changing consumer preferences and the success of our innovation and marketing investments; risks associated with actions by our customers, including changes in distribution and purchasing terms; risks related to the seasonality of our business; risks associated with our co-manufacturing arrangements and other third-party service provider dependencies; risks associated with actions of governments and regulatory bodies that affect our businesses, including the ultimate impact of new or revised regulations or interpretations including to address climate change or implement changes to taxes and tariffs; risks related to the Company's …
Excerpt shortened here; the source contains the full paragraph.
Current wording
Readers of this report should understand that these forward-looking statements are not guarantees of performance or results. Forward-looking statements provide our current expectations and beliefs concerning future events and are subject to risks, uncertainties, and factors relating to our business and operations, all of which are difficult to predict and could cause our actual results to differ materially from the expectations expressed in or implied by such forward-looking statements. These risks, uncertainties, and factors include, among other things: risks associated with general economic and industry conditions, including inflation, reduced consumer confidence and spending, recessions, increased energy costs, supply chain challenges, labor shortages, and geopolitical conflicts; risks related to our ability to deleverage on currently anticipated timelines, and to continue to access capital on acceptable terms or at all; risks related to the Company’s competitive environment, cost structure, and related market conditions; risks related to our ability to execute operating and value creation plans and achieve returns on our investments and targeted operating efficiencies from cost-saving initiatives, and to benefit from trade optimization programs; risks related to the availability and prices of commodities and other supply chain resources, including raw materials, packaging, energy, and transportation, weather conditions, health pandemics or outbreaks of disease, actual or threatened hostilities or war, or other geopolitical uncertainty; risks related to our ability to respond to changing consumer preferences and the success of our innovation and marketing investments; risks associated with actions by our customers, including changes in distribution and purchasing terms; risks related to the effectiveness of our hedging activities and ability to respond to volatility in commodities; disruptions or inefficiencies in our supply chain and/or operations; risks related to the ultimate impact of, including reputational harm caused by, any product recalls and product liability or labeling litigation, including litigation related to lead-based paint and pigment and cooking spray; risks related to the seasonality of our business; risks associated with our co-manufacturing arrangements and other third-party service provider dependencies; risks associated with actions of governments and regulatory bodies that affect our businesses, including the ultimate impact of new or revised regulations or interpretations including to address climate change or implement changes to taxes and tariffs; risks related to the Company’s ability to execute on its strategies or achieve expectations related to environmental, social, and governance matters, including as a result of evolving legal, regulatory, and other standards, processes, and assumptions, the pace of scientific and technological developments, increased costs, the availability of requisite financing, and change…
Excerpt shortened here; the source contains the full paragraph.
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 third 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 26, 2024 and subsequent filings with the SEC. Results for the first quarter of fiscal 2025 are not necessarily indicative of results that may be attained in the future.
Previous wording
Conagra Brands, Inc. (the "Company", "Conagra Brands", "we", "us", or "our"), headquartered in Chicago, is one of North America's leading branded food companies. Guided by an entrepreneurial spirit, the Company combines a rich heritage of making great food with a sharpened focus on innovation. The Company's portfolio is evolving to satisfy people's changing food preferences. Its iconic brands such asBirds Eye®,Duncan Hines®,Healthy Choice®,Marie Callender's®,Reddi-wip®, andSlim Jim®, as well as emerging brands, includingAngie's® BOOMCHICKAPOP®,Duke's®,Earth Balance®,Gardein®, andFrontera®, offer choices for every occasion.
Current wording
Conagra Brands, Inc. (the “Company”, “Conagra Brands”, “we”, “us”, or “our”), headquartered in Chicago, is one of North America’s leading branded food companies. We combine a 100-year history of making quality food with agility and a relentless focus on collaboration and innovation. The Company’s portfolio is continuously evolving to satisfy consumers’ ever-changing food preferences. Conagra’s brands includeBirds Eye®,Duncan Hines®,Healthy Choice®,Marie Callender’s®,Reddi-wip®,Slim Jim®,Angie’s® BOOMCHICKAPOP®, and many more.
Previous 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.
Current wording
International segment, in each case compared to the first quarter of fiscal 2024. The overall decrease in net sales was primarily due to an increase in strategic trade investments and a decrease in volume. Overall gross profit decreased primarily as a result of lower net sales, input cost inflation, and unfavorable operating leverage, partially offset by higher productivity and lower transportation costs. Overall segment operating profit decreased in our Grocery & Snacks, Refrigerated & Frozen, and Foodservice segments, slightly offset by an increase in our International segment. Corporate expenses were higher primarily due to higher incentive compensation expense compared to the first quarter of fiscal 2024. 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 and lower income tax expense, in each case compared to the first quarter of fiscal 2024. Excluding items impacting comparability, our effective tax rate was lower than the first quarter of fiscal 2024.
Previous 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.
Current wording
Diluted earnings per share in the first quarter of fiscal 2025 and 2024 was $0.97 and $0.67, respectively. Diluted earnings per share was affected by higher net income, driven primarily by the release of valuation allowances discussed below, in the first quarter of fiscal 2025 compared to the first quarter of fiscal 2024.
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 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.
Current wording
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 2025. 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 $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.
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 8,“Derivative Financial Instruments”, to the Condensed Consolidated Financial Statements contained in this report. We had $1.3 million of derivative losses in the first quarter of fiscal 2025 and $27.6 million of derivative gains in the first quarter of fiscal 2024, which were included in general corporate expenses and reflected as items impacting comparability.
Previous wording
Other items of note impacting comparability for the third quarter of fiscal 2024 included the following:
Current wording
Other items of note impacting comparability for the first quarter of fiscal 2025 included the following:
Previous 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.
Current wording
Net sales for the first quarter of fiscal 2025 in our Refrigerated & Frozen segment reflected a decrease in price/mix of 5.8% when compared to the first quarter of fiscal 2024, primarily attributable to an increase in strategic trade investments. Volume increased by 0.1% for the first quarter of fiscal 2025 when compared to the first quarter of fiscal 2024. Additionally, we estimate that net sales during the first quarter of fiscal 2025 were impacted by approximately $24 million due to temporary manufacturing disruptions in ourHebrew National®business during the key grilling season.
Previous 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.
Current wording
Net sales for the first quarter of fiscal 2025 in our International segment reflected a 3.4% decrease due to unfavorable foreign exchange rates, a 2.4% increase in price/mix, and a 0.6% increase in volumes, in each case compared to the first quarter of fiscal 2024. The unfavorable foreign exchange rates were primarily due to the devaluation of the Mexican Peso relative to the US dollar, and volume increases were driven by growth in our Global Exports business compared to the first quarter of fiscal 2024.
Previous 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:
Current wording
SG&A expenses totaled $337.7 million for the first quarter of fiscal 2025, an increase of $3.6 million, as compared to the first quarter of fiscal 2024. SG&A expenses for the first quarter of fiscal 2025 reflected the following:
Previous wording
Other changes in expenses compared to the third quarter of fiscal 2023
Current wording
Other changes in expenses compared to the first quarter of fiscal 2024
Previous wording
SG&A expenses for the third quarter of fiscal 2023 included the following items impacting comparability of earnings:
Current wording
SG&A expenses for the first quarter of fiscal 2024 included the following items impacting comparability of earnings:
Previous wording
Segment Operating Profit (Earnings before general corporate expenses, pension and postretirement non-service expense (income), interest expense, net, income taxes, and equity method investment earnings)
Current wording
Segment Operating Profit (Earnings before general corporate expenses, pension and postretirement non-service income (expense), interest expense, net, income taxes, and equity method investment earnings)
Previous 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.
Current wording
Operating profit in our Foodservice segment for the first quarter of fiscal 2025 reflected a decrease in gross profits of $5.2 million compared to the first quarter of fiscal 2024. The decrease in gross profits was driven by the net sales decline discussed above, the impacts of input cost inflation, and unfavorable fixed cost leverage, partially offset by productivity.
Previous 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.
Current wording
Net interest expense was $105.8 million and $106.0 million for the first quarter of fiscal 2025 and 2024, respectively. See Note 5,“Debt and Revolving Credit Facility”, to the Condensed Consolidated Financial Statements contained in this report for further discussion.
Previous 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.
Current wording
In the first quarter of fiscal 2025 and 2024, we recognized an income tax benefit of $138.9 million and income tax expense of $98.3 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 (42.4)% and 23.5% for the first quarter of fiscal 2025 and 2024, respectively. See Note 12,“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$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.
Current wording
Equity method investment earnings were $29.1 million and $35.5 million for the first quarter of fiscal 2025 and 2024, respectively. Ardent Mills earnings for the first quarter of fiscal 2025 continued to reflect slightly lower volume trends as seen throughout the industry.
Previous 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.
Current wording
Diluted earnings per share in the first quarter of fiscal 2025 and 2024 was $0.97 and $0.67, respectively. The increase reflected higher net income in the first quarter of fiscal 2025.
Previous wording
The primary objective of our financing strategy is to maintain a prudent capital structure that provides us flexibility to pursue our growth objectives. We use a combination of equity and short- and long-term debt. We use short-term debt principally to finance ongoing operations, including our seasonal requirements for working capital (accounts receivable, prepaid expenses and other current assets, and inventories, less accounts and other payables, accrued payroll, and other accrued liabilities). We are committed to maintaining solid investment grade credit ratings.
Current wording
The primary objective of our financing strategy is to maintain a prudent capital structure that provides us flexibility to pursue our growth objectives. We use a combination of equity and short- and long-term debt. We use short-term debt principally to finance ongoing operations, including our seasonal requirements for working capital (accounts receivable, prepaid expenses and other current assets, and inventories, less accounts and other payables, accrued payroll, and other accrued liabilities). We strive to maintain solid investment grade credit ratings.
Previous 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.
Current wording
As of August 25, 2024, we had $926.0 million outstanding under our commercial paper program. The highest level of borrowings outstanding during the first quarter of fiscal 2025 was $1.0 billion. We had $586.0 million outstanding under our commercial paper program as of May 26, 2024.
Previous wording
For additional information about our long-term debt balances, refer to Note 4,"Debt and Revolving Credit Facility", to the Condensed Consolidated Financial Statements contained in this report and Note 3,"Long-Term Debt", to the Consolidated Financial Statements contained in the Company's Annual Report on Form 10-K for the fiscal year ended May 28, 2023. The weighted average coupon interest rate of long-term debt obligations outstanding as of February 25, 2024 was approximately 4.8%.
Current wording
For additional information about our long-term debt balances, refer to Note 5,“Debt and Revolving Credit Facility”, to the Condensed Consolidated Financial Statements contained in this report and Note 3,“Long-Term Debt”, to the Consolidated Financial
Previous 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.
Current wording
As of the end of the first quarter of fiscal 2025, 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
Our most restrictive debt agreement (the Revolving Credit Facility) generally requires our ratio of earnings before interest, taxes, depreciation and amortization ("EBITDA") to interest expense not be less than 3.0 to 1.0 and our ratio of funded net debt to EBITDA not to exceed 4.5 to 1.0. Each ratio is to be calculated on a rolling four-quarter basis. As of February 25, 2024, we were in compliance with these financial covenants.
Current wording
Our most restrictive debt agreement (the Revolving Credit Facility) generally requires our ratio of earnings before interest, taxes, depreciation and amortization (“EBITDA”) to interest expense not be less than 3.0 to 1.0 and our ratio of funded net debt to EBITDA not to exceed 4.5 to 1.0. Each ratio is to be calculated on a rolling four-quarter basis. As of August 25, 2024, we were in compliance with all financial covenants.
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 three quarters of fiscal 2024. The Company's total remaining share repurchase authorization as of February 25, 2024 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. During the first quarter of fiscal 2025, we repurchased 2.1 million shares of our common stock under this authorization for an aggregate of $64.0 million. The Company’s total remaining share repurchase authorization as of August 25, 2024 was $852.6 million.
Previous 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.
Current wording
On August 29, 2024, the Company paid a quarterly cash dividend on shares of its common stock of $0.35 per share to stockholders of record as of close of business on August 1, 2024. On October 2, 2024, we announced that our Board had authorized a quarterly dividend of $0.35 per share to be paid on November 27, 2024, to stockholders of record as of close of business on October 31, 2024.
Previous wording
As part of our ongoing operations, we enter into contractual arrangements that obligate us to make future cash payments. These obligations impact our liquidity and capital resource needs. In addition to principal and interest payments on our outstanding long-term debt and notes payable balances, discussed above, our contractual obligations primarily consist of lease payments, income taxes, pension and postretirement benefits, and unconditional purchase obligations. In the second quarter of fiscal 2024, we entered into a contract that contains a lease that has not yet commenced with minimum aggregate payments totaling $81.8 million over a term of 10 years. There were no other material changes to our contractual obligations from those disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended May 28, 2023.
Current wording
As part of our ongoing operations, we enter into contractual arrangements that obligate us to make future cash payments. These obligations impact our liquidity and capital resource needs. In addition to principal and interest payments on our outstanding long-term debt and notes payable balances, discussed above, our contractual obligations primarily consist of lease payments, income taxes, pension and postretirement benefits, and unconditional purchase obligations. There were no material changes to our contractual obligations from those disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended May 26, 2024.
Previous wording
We continue to make investments in our business and operating facilities. Our estimate of capital expenditures for fiscal 2024 is approximately $425 million.
Current wording
We continue to make investments in our business and operating facilities. Our estimate of capital expenditures for fiscal 2025 is approximately $450 million.
Previous 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.
Current wording
During the first quarter of fiscal 2025, we generated $49.7 million of cash, which was the net result of $268.6 million generated from operating activities, $286.3 million used in investing activities, $70.1 million generated from financing activities, and a decrease of $2.7 million due to the effects of changes in foreign currency exchange rates.
Previous 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.
Current wording
Cash used in investing activities totaled $286.3 million and $138.4 million in the first quarter of fiscal 2025 and 2024, respectively. Investing activities in the first quarter of fiscal 2025 consisted primarily of capital expenditures totaling $133.0 million, and the purchases of an existing co-manufacturer and Sweetwood Smoke & Co. for a total of $230.4 million, net of cash acquired, which were partially
Previous 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.
Current wording
Cash generated from financing activities totaled $70.1 million in the first quarter of fiscal 2025 compared to $307.1 million used in financing activities in the first quarter of fiscal 2024. Financing activities in the first quarter of fiscal 2025 principally reflected net short-term borrowing issuances of $336.2 million, partially offset by cash dividends paid of $167.3 million and common stock repurchases of $64.0 million. Financing activities in the first quarter of fiscal 2024 principally reflected repayments of long-term debt of $504.3 million, the issuance of long-term debt totaling $500.0 million, net short-term borrowing repayments of $128.3 million, and cash dividends paid of $157.4 million.
Previous 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.
Current wording
The Company had cash and cash equivalents of $128.7 million at August 25, 2024 and $77.7 million at May 26, 2024, of which $119.7 million at August 25, 2024 and $66.7 million at May 26, 2024 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.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
In the first quarter of fiscal 2025, results reflected a decrease in net sales, with organic (excludes the impact of acquisitions and foreign exchange) decreases in our Grocery & Snacks, Refrigerated & Frozen, and Foodservice segments, offset by an increase in our
Current report — wording carried from elsewhere
Items of note impacting comparability for the first quarter of fiscal 2024 included the following:
Current report — wording carried from elsewhere
Statements contained in the Company’s Annual Report on Form 10-K for the fiscal year ended May 26, 2024. The weighted average coupon interest rate of long-term debt obligations outstanding as of August 25, 2024 was approximately 4.9%.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Other changes in expenses compared to the first three quarters of fiscal 2023