OMAHA, Neb.--(BUSINESS WIRE)--
Today ConAgra Foods, Inc. (NYSE:CAG) is providing a revised financial
outlook for fiscal 2014. Previously the company had expected diluted EPS
of $2.34-$2.38, adjusted for items impacting comparability; the company
now expects diluted EPS of approximately $2.22- $2.25, adjusted for
items impacting comparability. The revision largely reflects a
longer-than-expected timeframe to restore the Private Brands segment to
planned levels of operating profit. The revision also reflects
weaker-than-expected volumes in the Consumer Foods segment, primarily
for a few key brands, as well as margin pressures in the Commercial
Foods segment driven by customer mix challenges and poorer-than-expected
potato crop quality.
Original plans called for the former Ralcorp assets to contribute
approximately $0.25 to EPS in fiscal 2014, and the company now
estimates that number to be approximately $0.20.
The company had previously expected volumes for the Consumer Foods
segment to decline 1-2% in the second half of fiscal 2014; that
decline is now likely to be 3-4% primarily due to challenges for a few
The company currently targets fiscal 2014 third quarter diluted EPS in
the range of $0.60 and fiscal 2014 fourth quarter diluted EPS in the
range of $0.65, each adjusted for items impacting comparability.
The company’s continual focus on cost reduction throughout the
organization has led to plans for additional administrative cost
efficiency initiatives; the company will share details of those plans
once they have been finalized and approved.
The company now expects operating cash flow to be approximately $1.4
billion in fiscal 2014, down from earlier estimates. The company
continues to expect to repay $1.5 billion of debt by the end of fiscal
2015. This amount excludes the approximate $400 million of cash
proceeds expected to be received in connection with the Ardent Mills
transaction; that amount is also expected to be deployed toward debt
reduction. There is no change to the company’s strong dividend policy
or any long-term capital allocation plans.
Some of the challenges weighing on fiscal 2014 diluted EPS will likely
impact fiscal 2015 diluted EPS growth as well, so the company
currently expects the fiscal 2015 diluted EPS growth rate to be less
than the double-digit target previously communicated. The company will
provide more specific comments about the fiscal 2015 outlook with the
fiscal 2014 year-end release when final plans have been completed.
The company still expects double-digit comparable diluted EPS growth
in fiscal 2016 and 2017 based partly on its rich synergy pipeline
resulting from integrating Ralcorp. Estimates for synergies related to
the Ralcorp acquisition are unchanged at $300 million by the end of
fiscal 2017. For the timeframe after fiscal 2017, estimates for annual
sales growth of 3-4% and annual EPS growth of 7-9%, adjusted for items
impacting comparability, are unchanged.
Gary Rodkin, CEO of ConAgra Foods, commented, “We are intensely focused
on improving our business. It is taking longer than expected to
stabilize the performance of the Private Brands segment, which has been
below plan because of pricing, sales force coverage, and customer
service issues largely resulting from restructuring actions taken before
we bought that business last year. We view these as near-term issues
only, and remain fully confident in our private brands strategy and the
growth opportunities resulting from the recent acquisition of Ralcorp."
Rodkin noted that in the Consumer Foods segment, the company plans to
stabilize the performance of a few key brands in fiscal 2015 by
continuing to optimize promotional and merchandising activities through
a focus on core heavy users. He also noted that the Lamb Weston potato
operations (in the Commercial Foods segment) have experienced continued
margin pressures in connection with an ongoing customer mix shift
resulting from the loss of a major foodservice distribution customer
last summer. The recent potato crop quality is also lower-than-planned,
which is also negatively impacting operating efficiencies and margins.
Performance in that segment is expected to improve in fiscal 2015.
He continued, “These challenges have made forecasting fiscal 2014 very
difficult. While the challenges this year have been unfavorable
surprises for our investors and our team, I want to be clear that
nothing has changed with regard to our conviction about our long-term
potential and EPS growth prospects. We have a rich pipeline of synergies
resulting from last year’s acquisition of Ralcorp. The synergy capture
is on track, and we expect it to play a key role in driving strong
long-term EPS growth.”
Previously the company had expected to complete the formation of Ardent
Mills, a joint venture with Cargill, Incorporated and CHS Inc., in the
first quarter of calendar 2014; due to various reasons, including the
ongoing regulatory review process, the company now expects the
transaction to close in the second quarter of calendar 2014. As
previously communicated, ConAgra Foods will contribute its flour milling
operations and related businesses operated through its ConAgra Mills
division into this venture, and will receive a 44% ownership stake.
ConAgra Foods also expects to receive approximately $400 million in
connection with the closing of the transaction. The company continues to
expect to use these proceeds to accelerate debt repayment.
Because of the revised Ardent Mills closing date, the company’s previous
estimate of $0.03 of EPS dilution in fiscal 2014 related to the
formation of the venture no longer applies; the revised fiscal 2014
diluted EPS guidance of approximately $2.22-$2.25, adjusted for items
impacting comparability, reflects that there will not be any Ardent
Mills-related dilution in fiscal 2014. The company expects Ardent
Mills-related EPS dilution in fiscal 2015, and it will quantify that
impact, along with other financial details related to fiscal 2015, at a
Other Financial Details:
The inability to predict the amount and timing of future items makes a
detailed reconciliation of projections of diluted EPS, adjusted for
items impacting comparability, impracticable.
ConAgra Foods will host a conference call at 10:00 a.m. EST today to
discuss the results. Following the company’s remarks, the call will
include a question-and-answer session with the investment community.
Domestic and international participants may access the conference call
toll-free by dialing 1-888-599-4883 and 1-913-312-1448, respectively. No
confirmation or pass code is needed. This conference call also can be
accessed live on the Internet at http://investor.conagrafoods.com.
A rebroadcast of the conference call will be available after 1 p.m. EST
today. To access the digital replay, a pass code number will be
required. Domestic participants should dial 1-888-203-1112, and
international participants should dial 1-719-457-0820 and enter pass
code 1919312. A rebroadcast also will be available on the company’s
ConAgra Foods, Inc., (NYSE: CAG) is one of North America's largest
packaged food companies with branded and private branded food found in
99 percent of America’s households, as well as a strong commercial foods
business serving restaurants and foodservice operations globally.
Consumers can find recognized brands such as Banquet®, Chef Boyardee®,
Egg Beaters®, Healthy Choice®, Hebrew National®, Hunt's®, Marie
Callender's®, Orville Redenbacher's®, PAM®, Peter Pan®, Reddi-wip®, Slim
Jim®, Snack Pack® and many other ConAgra Foods brands, along with food
sold by ConAgra Foods under private brand labels, in grocery,
convenience, mass merchandise, club and drug stores. Additionally,
ConAgra Foods supplies frozen potato and sweet potato products as well
as other vegetable, spice, bakery and grain products to commercial and
foodservice customers. ConAgra Foods operates ReadySetEat.com, an
interactive recipe website that provides consumers with easy dinner
recipes and more. For more information, please visit us at www.conagrafoods.com.
Note on Forward-looking Statements
This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements are based on management’s current
expectations and are subject to uncertainty and changes in
circumstances. These risks and uncertainties include, among other
things: ConAgra Foods’ ability to realize the synergies and benefits
contemplated by the acquisition of Ralcorp Holdings, Inc., and its
ability to effectively integrate the business of Ralcorp; the timing and
ability to consummate the potential joint venture combining the flour
milling businesses of ConAgra Foods, Cargill, Incorporated, and CHS
Inc., including, satisfying the financing and other closing conditions
as well as the divestiture of flour milling facilities within the
expected timeframe or at all; ConAgra Foods’ ability to realize the
synergies and benefits contemplated by the potential joint venture; the
availability and prices of raw materials, including any negative effects
caused by inflation or adverse weather conditions; the effectiveness of
ConAgra Foods’ product pricing, including any pricing actions and
promotional changes; the ultimate outcome of litigation, including the
lead paint matter; future economic circumstances; industry conditions;
ConAgra Foods’ ability to execute its operating and restructuring plans;
the success of ConAgra Foods’ cost-saving initiatives, innovation, and
marketing investments; the competitive environment and related market
conditions; operating efficiencies; the ultimate impact of any ConAgra
Foods product recalls; access to capital; actions of governments and
regulatory factors affecting ConAgra Foods’ businesses, including the
Patient Protection and Affordable Care Act; the amount and timing of
repurchases of ConAgra Foods’ common stock and debt, if any; and other
risks described in ConAgra Foods’ reports filed with the Securities and
Exchange Commission, including its most recent annual report on Form
10-K and subsequent reports on Forms 10-Q and 8-K. Investors and
security holders are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date they are
made. ConAgra Foods disclaims any obligation to update or revise
statements contained in this press release to reflect future events or
circumstances or otherwise.
ConAgra Foods, Inc.
Vice President, Communication & External Relations
Vice President, Investor Relations
Source: ConAgra Foods, Inc.