ConAgra Foods, Inc. (NYSE:CAG) Q4 2019 Earnings Conference Call Transcript
Jun 27, 2019 • 09:30 am ET
Thank you. We will now begin the question-and-answer session. (Operator Instructions) The first question today comes from Andrew Lazar of Barclays. Please go ahead.
Good morning everyone, and thanks for the question.
I guess sort of a two-parter here. Given the top line challenges experienced in fiscal '19, some of the inventory reductions, some of the merchandising and competitive challenges that you noted today that are expected to continue at least in the near term, some elasticity. And I guess the question is why raise the fiscal '20 top line guidance range? And then more broadly with the Pinnacle deal, there is always some concern among investors that maybe the company could well lose some focus in momentum on its core or legacy business as a result. And in light of the 4Q results, I guess how can investors have confidence that -- that that's not the case in terms of what we're seeing play out more recently? Thank you.
Sean M. Connolly
Let me take that in reverse order, Andrew, in terms of this first this notion of distraction. I can appreciate that that's an easy notion to grab on to but it's just not accurate. The issues we faced in Q4 literally had nothing to do with Pinnacle, which has been a highly efficient work stream for us. As I pointed out in my remarks few minutes ago, they were mostly -- the Q4 issue is mostly about macro factors that were not assumed in our forecast. So things like non-economic decisions by competitors, isolated recalls and Ardent Mills is an example. But each of these items, they were not expected, they did add up to the miss you saw in Q4, but they are transitory events that we do not expect to repeat.
And that really is the story. But if I step back, here's how I think about the big picture of the quarter and fiscal '20, in the kind of one thought. If you look at '19 as a whole, my team undoubtedly was a year of remarkable transition for Conagra Brands. We did advance our innovation agenda. We did see continued traction in frozen meals and snacks. And we made a transformative acquisition that did end up requiring more near-term fixes than we had expected. But we wrapped our arms around those very quickly and efficiently, and now we've got that business stabilizing and on track in terms of integration.
Q4 clearly was disappointing, but the fact is, it was largely due to transitory issues. But now we are in a position to play offense and our innovation pipeline is both broad and full. So despite the speed bump, we are clearly still advancing our playbook and that's why, in terms of '20, fiscal '20, we feel very good about the top line drivers we have in place. Our innovation pipeline is the best we've had yet. And as it works its way into the marketplace and really hits its stride in the second half, we're