first quarter of fiscal year 2027
Filed Sep 30, 2026CONAGRA BRANDS REPORTS FIRST QUARTER RESULTS
Adjusted EPS increased 5.1% and adjusted EBITDA increased 2.4%, but organic net sales decreased 1.1%, adjusted gross margin decreased 62 basis points, and free cash flow was ($127.9) million.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net salesGAAP | $2.60B | – | (1.4)% |
| Organic net salesnon-GAAP | $2.59B | – | (1.1)% |
| Organic net sales volumenon-GAAP | (2.1)% | – | (2.1)% |
| Organic net sales price/mixnon-GAAP | 1.0% | – | 1.0% |
| Gross profitGAAP | $618.7M | – | (3.4)% |
| Adjusted gross profitnon-GAAP | $618.6M | – | (3.9)% |
| Gross marginGAAP | 23.8% | – | (50) bps |
| Adjusted gross marginnon-GAAP | 23.8% | – | (62) bps |
| Selling, general and administrative expensesGAAP | $350.3M | – | 4.4% |
| Adjusted selling, general and administrative expensesnon-GAAP | $320.7M | – | (3.7)% |
| Advertising and promotion expenseGAAP | $60.9M | – | – |
| Operating profitGAAP | $268.4M | – | (22.7)% |
| Adjusted operating profitnon-GAAP | $297.9M | – | (4.1)% |
| Operating profit marginGAAP | 10.3% | – | (285) bps |
| Adjusted operating profit marginnon-GAAP | 11.5% | – | (33) bps |
| Pension and postretirement non-service incomeGAAP | $5.9M | – | (3.8)% |
| Interest expense, netGAAP | $91.8M | – | (2.1)% |
| Equity method investment earningsGAAP | $50.4M | – | 71.8% |
| Income before income taxesGAAP | $232.9M | – | (19.4)% |
| Income tax expenseGAAP | $58.6M | – | (52.9)% |
| Effective tax rateGAAP | 25.2% | – | – |
| Adjusted effective tax ratenon-GAAP | 24.8% | – | – |
| Net incomeGAAP | $174.3M | – | 6.0% |
| Adjusted net incomenon-GAAP | $197.3M | – | 4.3% |
| Diluted EPS from net incomeGAAP | $0.36 | – | 5.9% |
| Adjusted diluted EPS from net incomenon-GAAP | $0.41 | – | 5.1% |
| Diluted weighted average shares outstandingGAAP | 480M | – | 0.1% |
| Adjusted EBITDAnon-GAAP | $451.4M | – | 2.4% |
| Net cash flows from operating activitiesGAAP | −$4.2M | – | N/A |
| Additions to property, plant and equipmentGAAP | −$123.7M | – | (15.7)% |
| Free cash flownon-GAAP | −$127.9M | – | 388.2% |
| Net debtnon-GAAP | $7.39B | – | (2.5)% |
| Net debt to adjusted EBITDAnon-GAAP | 3.99 | – | – |
| Grocery & Snacks operating profitGAAP | $205.2M | – | (21.5)% |
| Grocery & Snacks adjusted operating profitnon-GAAP | $204.9M | – | (7.2)% |
| Refrigerated & Frozen operating profitGAAP | $102.1M | – | (9.6)% |
| Refrigerated & Frozen adjusted operating profitnon-GAAP | $99.6M | – | (13.0)% |
| International operating profitGAAP | $34.4M | – | (7.9)% |
| International adjusted operating profitnon-GAAP | $34.4M | – | (8.6)% |
| Foodservice operating profitGAAP | $30.9M | – | 11.4% |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Grocery & SnacksOrganic net sales decreased 2.0%, driven by a price/mix increase of 3.4% and a volume decrease of 5.4%. | $1.05B | – | (2.6)% |
| Refrigerated & FrozenOrganic net sales decreased 1.6%, driven by a price/mix decrease of 1.5% and a volume decrease of 0.1%. | $1.05B | – | (2.1)% |
| InternationalOrganic net sales increased 0.9%, driven by a price/mix increase of 1.6% and a volume decrease of 0.7%. | $218.1M | – | 2.7% |
| FoodserviceOrganic net sales increased 3.3%, driven by a price/mix increase of 0.8% and a volume increase of 2.5%. Volumes benefited approximately 150 basis points due to timing of customer orders. | $272.9M | – | 3.2% |
fiscal 2027 outlook
- RevenueOrganic net sales change of (3)% to (1)% compared to fiscal 2026
- Tax rateAdjusted effective tax rate of approximately 24%
- NoteAdjusted operating margin between 10.0% and 10.5%
- NoteAdjusted EPS between $1.40 and $1.50
- NoteEquity earnings contribution of approximately $140 million
- NotePension income of approximately $25 million
- NoteInterest expense of approximately $360 million
- NoteCapital expenditures of approximately $550 million
- NoteFree cash flow conversion of greater than 90%
- NoteNet leverage ratio at fiscal year end of approximately 4.0x
Capital returns
- The company paid a dividend of $0.35 per share.
- Cash dividends paid were $(167.5) million compared to $(167.1) million in the prior year period.
- Repurchase of Conagra Brands, Inc. common shares was $(44.0) million compared to $(15.0) million in the prior year period.
What drove it
- Organic net sales decreased 1.1%, with a 1.0% positive impact from price/mix more than offset by a 2.1% volume decrease.
- Higher productivity and approximately $4 million in tariff refunds were more than offset by lower organic net sales, cost of goods sold inflation, and unfavorable operating leverage.
- Adjusted SG&A decreased 3.7%, including a $10 million benefit related to fiscal 2026 incentive compensation.
- Equity method investment earnings increased 71.8% primarily driven by favorable market conditions and effective management through recent volatility in wheat markets for the Ardent Mills joint venture.
- Foodservice volume growth benefited approximately 150 basis points due to timing of customer orders which occurred in the third quarter last year.
Concerns
- Organic net sales decreased 1.1% as volume decreased 2.1%.
- Gross margin decreased 50 basis points and adjusted gross margin decreased 62 basis points.
- Grocery & Snacks and Refrigerated & Frozen both recorded organic net sales declines and lower adjusted operating profit.
- Net cash flows from operating activities were $(4.2) million, driven primarily by lower operating profit and higher litigation payments, net of recoveries.
- The company reaffirmed fiscal 2027 guidance for organic net sales change of (3)% to (1)% compared to fiscal 2026.
What to watch
- Volume performance, which decreased 2.1% on an organic net sales basis in the first quarter.
- Progress toward adjusted operating margin guidance of between 10.0% and 10.5%.
- Cost of goods sold inflation, operating leverage, and advertising and promotional investment.
- Free cash flow conversion guidance of greater than 90% and capital expenditures of approximately $550 million.
- Net leverage ratio guidance at fiscal year end of approximately 4.0x.
Balance sheet and cash flow
- Cash and cash equivalents were $371.6 million as of August 30, 2026, compared to $218.0 million as of May 31, 2026.
- Total Debt was $7,760.1 million as of August 30, 2026, compared to $8,279.8 million as of August 24, 2025.
- Net Debt was $7,388.5 million as of August 30, 2026, compared to $7,581.7 million as of August 24, 2025.
- Net cash flows from operating activities were $(4.2) million compared to $120.6 million in the prior year period.
- Additions to property, plant and equipment were $(123.7) million compared to $(146.8) million in the prior year period.
- Free cash flow was $(127.9) million compared to $(26.2) million in the prior year period.
Analysis
Conagra reported first-quarter fiscal 2027 net sales of $2,595.9 million, down 1.4%, while organic net sales decreased 1.1%. A 1.0% price/mix benefit did not offset a 2.1% volume decrease. Grocery & Snacks and Refrigerated & Frozen recorded organic net sales declines of 2.0% and 1.6%, respectively. International organic net sales increased 0.9%, while Foodservice organic net sales increased 3.3%, with Foodservice volume benefiting approximately 150 basis points from customer-order timing.
Profitability reflected continued cost and volume pressure. Gross profit decreased 3.4% to $618.7 million and gross margin decreased 50 basis points to 23.8%. Adjusted gross margin decreased 62 basis points to 23.8%, as higher productivity and approximately $4 million in tariff refunds were more than offset by lower organic net sales, cost of goods sold inflation, and unfavorable operating leverage. Reported operating profit decreased 22.7% to $268.4 million, including the prior-year gain on divestitures, while adjusted operating profit decreased 4.1% to $297.9 million. Adjusted SG&A decreased 3.7% to $320.7 million, although A&P expense increased to $60.9 million from $52.9 million.
Below operating profit, equity method investment earnings increased 71.8% to $50.4 million and net interest expense decreased 2.1% to $91.8 million. The effective tax rate was 25.2%, compared to 43.1% in the prior-year period, which had been affected by the Chef Boyardee and frozen seafood divestitures. Net income increased 6.0% to $174.3 million and diluted EPS increased 5.9% to $0.36. Adjusted net income increased 4.3% to $197.3 million, adjusted EPS increased 5.1% to $0.41, and adjusted EBITDA increased 2.4% to $451.4 million.
Cash generation weakened during the quarter. Net cash flows from operating activities were $(4.2) million compared with $120.6 million in the prior-year period, and free cash flow was $(127.9) million compared with $(26.2) million. The company cited lower operating profit and higher litigation payments, net of recoveries. It paid $(167.5) million of cash dividends and repurchased $(44.0) million of common shares. Net debt was $7,388.5 million, down from $7,581.7 million as of August 24, 2025, and net debt to adjusted EBITDA was 3.99.
Conagra reaffirmed fiscal 2027 guidance. The outlook calls for organic net sales change of (3)% to (1)% compared to fiscal 2026, adjusted operating margin between 10.0% and 10.5%, and adjusted EPS between $1.40 and $1.50. The unchanged assumptions include approximately $140 million of equity earnings contribution, approximately $25 million of pension income, approximately $360 million of interest expense, approximately $550 million of capital expenditures, free cash flow conversion of greater than 90%, and a fiscal year-end net leverage ratio of approximately 4.0x.
Management, verbatim
We delivered a solid start to fiscal 2027 with top line results largely in line with expectations and profit ahead of expectations amid a challenging operating environment.
John Brase, president and chief executive officer of Conagra Brands
Importantly, we are acting on our previously outlined priorities including restoring margins, increasing investment, reducing complexity, and rebalancing capital allocation, which are translating into measurable progress across the business.
John Brase, president and chief executive officer of Conagra Brands
While there is more work to be done, we remain on track to deliver the year and are reaffirming our fiscal 2027 guidance.
John Brase, president and chief executive officer of Conagra Brands
Not in the filing
stated, not guessed- Previous-release outlook was not provided; therefore, no comparison of reported results with prior guidance is available.
- Guidance for gross margin was not provided.
- Guidance for operating expenses was not provided.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.