Conagra Brands (CAG) Q3 2026 Prepared Remarks earnings summary

Executive summary

• Organic net sales grew 2.4% year-over-year in Q3 FY26, with all segments improving sequentially and strong momentum in Frozen and Snacks, while reported net sales declined 1.9% due to divestitures.

• Net income attributable to shareholders rose 37.7% to $200 million, and reported diluted EPS increased 40% to $0.42, while adjusted EPS fell 23.5% to $0.39 due to lower operating profit and Ardent Mills JV headwinds.

• Free cash flow for the first three quarters was $581 million, down 44.2% year-over-year, but capital allocation remained disciplined with debt reduction and dividend maintenance.

• Significant impairment charges and divestitures, including Chef Boyardee and frozen seafood, impacted year-to-date results.

• Guidance for FY26 was narrowed within the original range, reflecting confidence in execution and innovation pipeline strength.

Financial highlights

• Organic net sales reached $2.8 billion, up 2.4% year-over-year, while reported net sales declined 1.9% to $2.79 billion due to divestitures.

• Adjusted gross margin was 23.7% (down 112 bps), and adjusted operating margin was 10.6% (down 213 bps), both in line with expectations.

• Adjusted EPS was $0.39, down $0.12 from the prior year, mainly due to lower operating profit and reduced equity earnings from Ardent Mills JV.

• Free cash flow conversion estimate increased to approximately 105% for the year.

• Net debt reduced by over $800 million year-over-year to $7.3 billion; net leverage at 3.83x.

Outlook and guidance

• Fiscal 2026 organic net sales expected near the midpoint of the -1% to +1% range.

• Adjusted operating margin projected near the high end of the 11%-11.5% range.

• Adjusted EPS expected at the low end of the $1.70-$1.85 range, primarily due to Ardent Mills JV headwinds.

• Adjusted equity earnings from Ardent Mills revised to approximately $140 million due to lower wheat market prices and volatility.

• Interest expense forecast at $385 million; net leverage ratio expected around 3.85x.