-=Conagra (CAG) earnings on Thur 21 March 19 (b/o)

Conagra beats by $0.02, misses on revs; reaffirms FY19 EPS guidance, updates other projections following sale of Wesson

• Reports Q3 (Feb) earnings of $0.51 per share, excluding non-recurring items, $0.02 better than the S&P Capital IQ Consensus of $0.49; revenues rose 35.7% year/year to $2.71 bln vs the $2.75 bln S&P Capital IQ Consensus.
• Gross profit increased 25.6% to $752 million in the quarter. Adjusted gross profit increased 30.5% to $781 million, or 28.9% of net sales. The addition of Pinnacle's gross profit, together with supply chain realized productivity and improved price/mix in the Legacy Conagra business, more than offset higher transportation and input costs as well as the previously-mentioned brand building investments with retailers. Pinnacle's gross margin performance in the quarter was dilutive to the Company's overall gross margin, and the shift from A&P expense to brand building investments with retailers reduced gross margin by approximately 100 basis points.
• Updated FY19 Guidance (Prior guidance included Wesson for the full fiscal year, which was divested in February):
  • Co reaffirms EPS guidance of $2.03-2.08, excluding non-recurring items, vs. $2.05 S&P Capital IQ Consensus.
  • Sees Organic Net Sales Growth of ~1% (Prior 1-2%) [The updated organic net sales growth guidance removes Wesson for the entire fiscal year.]
  • Sees Adj. Gross Margin below prior range of 29.3-29.6%, but Adj. Operating Margin above prior range of 14.9-15.2%
  • Sees FY19 Synergies above prior guidance for $20 mln
  • Sees Pinnacle reported net sales of $1.71-1.73 bln (Prior $1.7-1.75 bln)
  • Sees Pinnacle Adj. Operating Margin near high-end of 14.6-14.9% range
• "The integration of Pinnacle Foods, and the reinvigoration of its innovation pipeline, remain squarely on-track. We are aggressively applying our proven 'Conagra Way' to address the executional challenges in the Birds Eye, Duncan Hines and Wish-Bone businesses. While it will take some time to return these Pinnacle businesses to growth, we are confident that we have identified the issues and have the right action plans in place to improve the performance of these terrific brands. We have tremendous confidence in the long-term value creation potential of Conagra Brands and look forward to providing a comprehensive update at our upcoming Investor Day on April 10."