Conagra Brands (CAG) Q1 2027 (Q&A) earnings summary

Executive summary

• Q1 FY27 net sales fell 1.4% to $2.60 billion; organic net sales declined 1.1%.

• Adjusted EPS rose 5.1% to $0.41, while diluted EPS increased 5.9% to $0.36.

• FY27 guidance was reaffirmed as brand investment, productivity initiatives, and capital allocation remained strategic priorities.

Financial highlights

• Adjusted gross margin was 23.8%, down 62 bps; adjusted operating margin was 11.5%, down 33 bps.

• Net income rose to $174.3 million from $164.5 million; adjusted net income increased 4.3% to $197 million.

• Adjusted EBITDA increased 2.4% to $451 million; equity method investment earnings rose 71.8% to $50 million, driven by Ardent Mills.

• Free cash flow was $(128) million versus $(26) million in Q1 FY26; operating cash flow was $(4.2) million, affected by litigation payments and lower operating profit.

• Q1 EPS benefited from SG&A timing, lower-than-planned inflation, Ardent Mills, a one-time benefit, and a tariff refund worth close to $0.01 per share.

Outlook and guidance

• FY27 organic net sales guidance is a 1%-3% decline; adjusted operating margin is 10.0%-10.5% and adjusted EPS is $1.40-$1.50.

• Q2 organic sales are projected down 2%; Thanksgiving timing may leave shipments below consumption during the quarter.

• FY27 inflation is expected at 5%-6%, toward the high end; Q2 and Q3 rates are expected above Q1, with Q4 below Q3.

• FY27 operating margin guidance is unchanged; gross margin is expected relatively flat year over year despite higher inflation.

• Pricing assumptions remain two-to-one elasticity overall and one-to-one in Grocery & Snacks, with no competitor pricing follow-through assumed; targeted price increases are planned by end of H1.