Conagra Brands (CAG) Q3 2026 (Q&A) earnings summary

Executive summary

• Organic net sales grew 2.4% year-over-year in Q3 FY26, led by strong momentum in Frozen and Snacks, while reported net sales declined 1.9% due to divestitures and international weakness.

• Innovation, brand strength, and consumer engagement supported performance, with staples managed for cash and portfolio positioned for health and protein-forward trends.

• Reported diluted EPS increased 40% to $0.42, but adjusted EPS fell 23.5% to $0.39 due to lower gross profit and higher input costs.

• Free cash flow conversion estimate raised to 105%, with net debt reduced by over $800 million year-over-year and disciplined capital allocation.

• Significant impairment charges and restructuring activities impacted year-to-date results, resulting in a net loss.

Financial highlights

• Q3 FY26 organic net sales rose 2.4% to $2.77 billion; reported net sales were $2.79 billion, down 1.9% year-over-year.

• Adjusted gross margin was 23.7%, down 112 bps; adjusted operating margin was 10.6%, down 213 bps year-over-year.

• Adjusted EPS was $0.39, down from $0.51; reported EPS was $0.42, up from $0.30.

• Free cash flow for YTD FY26 was $581 million, down from $1.04 billion prior year; net debt reduced to $7.3 billion.

• Dividend maintained at $0.35 per share; capital expenditures for FY26 expected at $450 million.

Outlook and guidance

• FY26 organic net sales change expected between -1% and +1% versus FY25, with guidance narrowed and margin at high end of 11.0%-11.5%.

• Adjusted EPS expected at the low end of $1.70–$1.85; free cash flow conversion estimate raised to 105%.

• Cost of goods sold inflation expected to remain elevated at ~7% for FY26.

• Net leverage ratio expected at ~3.85x; interest expense forecast at ~$385 million.

• Specific guidance for next year will be provided in three months due to ongoing market volatility.