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Act II Popcorn Maker Conagra Brands Q3 Profit Falls As Supply Constraints Bite

Shares of consumer packaged goods company Conagra Brands Inc (NYSE:CAG) traded lower in premarket on Thursday after the third-quarter FY25 earnings.

The company reported a third-quarter sales decline of 6.3% year-on-year to $2.84 billion, missing the analyst consensus estimate of $2.903 billion.

Organic net sales decreased 5.2%, driven by a 2.1% negative impact from price/mix and a 3.1% decrease in volume.

Adjusted EPS of $0.51 missed the consensus estimate of $0.53.

Gross profit declined 17.3% to $710 million and the gross margin contracted 331 basis points to 25%.

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Selling, general, and administrative expense, which includes advertising and promotional expense, increased 14.5% to $444 million in the quarter.

The operating margin contracted 712 basis points to 8.4%.

The operating cash flow for nine months totaled $1.3 billion with a free cash flow of $1 billion. The company held $49.4 million in cash and equivalents as of February 23, 2025.

The company ended the quarter with net debt of $8.1 billion, representing a 5.9% reduction Y/Y.

“Our third quarter unfolded largely as expected since our update in February at CAGNY, with strong consumption trends and share performance reflecting the continued resilience of our brands,” said President and CEO Sean Connolly.

“While shipments lagged consumption largely due to the discrete supply constraints we announced in February, we are making solid progress in restoring inventory and improving customer service levels.”

Outlook Reaffirmed: Conagra sees FY25 organic net sales to decline 2%. The company expects adjusted EPS of approximately $2.35, matching the consensus estimate.

Price Action: CAG shares traded lower by 1.59% at $25.96 in premarket at last check Thursday.

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