ConAgra Foods, Inc. (NYSE:CAG) Q4 2020 Earnings Conference Call - Final Transcript

Jun 30, 2020 • 09:30 am ET

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ConAgra Foods, Inc. (NYSE:CAG) Q4 2020 Earnings Conference Call - Final Transcript

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Q & A
Executive
Sean Connolly

they like it. They are also discovering that some of the things that they thought existed actually have changed quite a bit; so, for example, the quality of frozen food.

And as you know, we've spent the last five years dramatically transforming our product. So you put both of those things together and there is clearly an element of pleasant surprise the consumers have when it comes to cooking at home. And given the tremendous value proposition of cooking at home and that we are in a recessionary environment, it's entirely plausible that these dynamics persist for some time, especially with the news changing hourly on COVID and what's happening with positive cases. And we believe that once people try our products, the data supports that we extend a very good chance they will come back again and again and again. So we are investing today in order to maximize long-term value creation potential of this portfolio and really seize any option that there is further upside beyond our current algorithm.

Analyst
Andrew Lazar

Thanks so much.

Operator
Operator

Our next question comes from Ken Goldman with JP Morgan. Please go ahead.

Analyst
Kenneth B. Goldman

Hi, good morning.

Executive
Sean Connolly

Hi Ken.

Executive
David Marberger

Good morning.

Analyst
Kenneth B. Goldman

I think I need to check what was in my smoothie this morning because on slide 31, I thought I saw a unicorn lama wearing sunglasses on a box of Act II that I must be hallucinating.

Executive
David Marberger

You did not. Lamas are hot.

Analyst
Kenneth B. Goldman

Okay. I didn't know that. I knew unicorns were.

Executive
David Marberger

As is Act II. Ken, you probably may not have known that either. Act II is on fire.

Analyst
Kenneth B. Goldman

I didn't know that until I saw your slide. So I appreciate that. A couple of questions from me if I can. And Dave, you may have answered this when you talked about not being clear on the timing of the inventory rebuild. But in your first quarter organic sales guidance, is there any benefit baked in there from an inventory load by retailers or is that sort of what you expect consumption to be as well roughly?

Executive
David Marberger

Yeah. Ken, you saw in Q4, with shifted consumption everywhere except Refrigerated & Frozen, that was really driven by Birds Eye. In this environment, it is difficult to predict exactly when retailers are going to build inventories. And so, as we put our Q1 guidance together, clearly it started with demand. We tried to make some assumptions on will there be additional shipments to build inventory, particularly in frozen. But again, in this environment it's difficult to predict just given the significant demand that's still there.

Analyst
Kenneth B. Goldman

Okay. Yes...

Executive
Sean Connolly

Just to comment on that, Ken, just more broadly. Retailers are at some point going to rebuild inventories I would imagine in all their categories. And if you think of, in the last several years, the focus on on-time and full was the focus we've talked about recently with retailers putting more facings against high velocities. Retailers paid out of stocks. So that is not going to change. And at