ConAgra Foods, Inc. (NYSE:CAG) Q1 2021 Earnings Conference Call - Final Transcript

Oct 01, 2020 • 09:30 am ET


ConAgra Foods, Inc. (NYSE:CAG) Q1 2021 Earnings Conference Call - Final Transcript


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Sean Connolly

annualized basis. And, as I'll discuss more, we also continue to invest in the business.

Performance reflects the great work our team has accomplished during these challenging times. In particular, I want to recognize the thousands of hardworking Conagra team members on the front lines. Your extraordinary efforts in simultaneously keeping employees safe and maximizing our supply have made it possible for us to continue to meet the needs of our communities, customers and consumers, and I couldn't be prouder of them.

Let's get into the business update. As the table on slide 7 shows, our execution in the quarter enabled us to exceed our expectations across the board. We delivered organic net sales growth of 15%, adjusted operating margins of 20.2%, adjusted EPS of $0.70. We ended the quarter with a net leverage ratio of 3.7 times compared to 4.0 times at the end of Q4.

During the first quarter, we continued to drive significant growth in each of our three retail segments. Total Conagra retail sales grew 12.9% year-over-year, driven by double-digit growth in snacks, frozen and stables. Importantly, our higher margin, non-promoted volume contributed significantly to this growth. Not only did we grow at a great rate, we expanded our presence with consumers and gained share. We increased household penetration by 100 basis points and category share by 30 basis points.

Slide 9 demonstrates how our investments in e-commerce over the last several years continued to yield results in the quarter. Strengthening our e-commerce capabilities has been an area of focus for us, and we're seeing the fruits of our labor. Our e-commerce retail sales have recently demonstrated impressive growth and over the past five quarters have consistently outpaced total industry e-commerce growth.

First quarter also saw continued strong innovation momentum. Our steadfast commitment to the Conagra Way playbook has enabled us to consistently exceed our goal of having 15% of total retail sales each year come from products launched within the past three years. And of course, as our overall sales continue to increase, this percentage of sales represents a larger absolute dollar amount.

Even during these challenging times, we remain committed to delivering innovation to our customers and consumers. Our growth is rooted in innovation, and we are driving category performance. Slide 11 highlights two examples in big growth areas: frozen and snacks. Let's take a look at the frozen single serve meals category. As compared to our fiscal '17, this category experienced a $575 million increase in retail sales during the 52-week period ended August 30.

Our innovation in frozen single serve meals over the past three years is unmistakable. We've generated almost 100% of that categories' growth over the same period. We've applied this proven strategy to our snacks portfolio and are seeing similar category driving growth. Slim Jim has consistently gained share and has the top position in dollar sales for meat snack innovation. And to top it all off, our new Slim Jim Savage Stick has the number one velocity in