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$CAG Event Update: ConAgra Foods, Inc will report its 4Q15 results on Tuesday, June 30, 2015. The news release will be issued at approx. 7:30 AM EDT and will host a conference call at 9:30 AM EDT to discuss the results. Following the company’s remarks, the call will include a question-and-answer session with the investment community.
$CAG has been on a buying spree in order to strengthen its position, mainly in the snacks space. During 2Q18, it completed the $250MM acquisition of Angie's Artisan Treats, the maker of Angie's Boom Chicka Pop. The company also entered into an agreement to acquire Sandwich Bros. of Wisconsin business. The deal is expected to close in early FY18.
For FY18, $CAG expects its organic net sales growth to be flat to down 2%. Adj. EPS from continuing operations is expected to be near the high end of the range of $1.84-1.89. Net sales growth is expected to be 100 to 150Bps higher than the organic net sales growth rate due to the impacts of acquisitions and foreign exchange.
$CAG reported 83% jump in its 2Q18 earnings, helped by net sales growth and lower interest expense. Net income grew to $223.5MM, or $0.54 per share, from $122.1MM, or $0.28 per share during 2Q17. Adj. EPS grew 12.2% from $0.49 to $0.55. Net sales rose 4% YoY to $2.17Bil, reflecting continued improvements in domestic retail volume growth.
$CAG posted net cash flow from operating activities of about $142MM in 1Q18, down from $208MM during the same period the prior year. This decrease was mainly due to the increase in inventory from our acquisitions and the launch of new products. The company repurchased approx. 9MM shares at the cost of $300MM during the quarter.
$CAG plans to focus on implementing value over volume strategy more aggressively in international and food service. Acquisition of the Frontera, Duke's, and BIGS brands in 2017 added 170BP to $CAG's 1Q18 net sales growth, however the divestiture of Spicetec and Swank reduced growth by apporx. 370BP.
During 1Q18, $CAG entered into an agreement to acquire Angie's Boomchickapop popcorn. The transaction that is valued at $250MM is expected to generate about $100MM in annual sales. The company expects to close the transaction by end of 2017. However, the FY18 outlook does not include this pending acquisition.
$CAG reported 4.8% drop in its 1Q18 net sales, hurt by weak demand for grocery and snacks products. Net attributable income fell to $152.5MM, or $0.36 per share, from $186.2MM, or $0.42 per share in 1Q17. This decline was due to increased payment made to slot brands like PAM and P.F. Chang's Home Menu businesses. Adj. EPS was $0.46 per share.
$CAG has a trade productivity target of $100MM of savings through the end of 2017 and the company is about two-thirds of its way through this. $CAG expects benefits going forward. The company finished FY17 in the grocery business with about 80BP of improvement in pricing and about 100BP improvement for frozen.
$CAG stated that its renewal rates, which is the percent of annual net sales from prior three-year innovations, were historically in the high single digit range. The company’s goal is to bring this to about 15% and it is making progress in this area.