Conagra Brands, Inc. — FY2024 Form 10-K
Reporting period: Fiscal year ended May 26, 2024 (52 weeks), compared with fiscal 2023 ended May 28, 2023. This is an annual filing, not a standalone 2023 fourth-quarter report. Amounts are in U.S. dollars.
Business context and results
Conagra is a branded food company with Grocery & Snacks, Refrigerated & Frozen, International, and Foodservice segments. Walmart and affiliates represented approximately 28% of consolidated sales in fiscal 2024 and fiscal 2023.
| Metric | FY2024 | FY2023 |
|---|---|---|
| Net sales | $12.051 billion | $12.277 billion |
| Gross profit | $3.333 billion | $3.265 billion |
| Gross margin | 27.7% | 26.6% |
| Net income attributable to Conagra | $347.2 million | $683.6 million |
| Diluted EPS | $0.72 | $1.42 |
| Operating cash flow | $2.016 billion | $995.4 million |
| Capital expenditures | $388.1 million | $362.2 million |
Sales declined 1.8%. Segment sales were Grocery & Snacks $4.959 billion (-0.5%), Refrigerated & Frozen $4.866 billion (-5.6%), International $1.078 billion (+7.6%), and Foodservice $1.148 billion (+1.0%). Reported segment operating profit was $1.175 billion versus $1.464 billion; Refrigerated & Frozen recorded a $92.5 million operating loss, chiefly reflecting impairment charges.
Financial condition and liquidity
- Cash and cash equivalents were $77.7 million at year-end, down from $93.3 million. Current assets were $3.150 billion and current liabilities $3.242 billion.
- Total debt was approximately $8.44 billion, including $586 million of commercial paper; long-term debt carried a weighted-average coupon of approximately 4.9%. The company had no borrowings under its $2.0 billion revolving credit facility and reported compliance with debt covenants.
- Operating cash flow increased by about $1.02 billion, principally due to lower inventory balances, lower receivables, extended vendor payment terms, and higher dividends received from an equity-method investment. Cash used in financing was $1.657 billion, including $1.773 billion of long-term debt repayments and $659.3 million of dividends paid.
- Equity-method investment earnings were $177.6 million, down from $212.0 million. Net interest expense rose 5.1% to $430.5 million.
- The quarterly dividend was $0.35 per share. No shares were repurchased in fiscal 2024; $916.6 million remained under the repurchase authorization.
Material changes and unusual items
- Net income and diluted EPS fell substantially year over year. FY2024 included $956.7 million of goodwill and brand impairment charges ($847.7 million after tax), versus $730.9 million in FY2023. FY2024 also included restructuring charges of $66.6 million, a $36.4 million impairment of a business held for sale, and $34.8 million of legacy legal charges.
- Management cited lower consumption, consumer behavior shifts, and strategic trade investment as the main factors behind the sales decline. Lower transportation costs, productivity, and reduced inventory write-offs supported gross profit; input inflation, lower sales, and unfavorable fixed-cost leverage partly offset those benefits.
- Fiscal 2024 goodwill and indefinite-lived brand impairments totaled $956.7 million. The company identified lower forecasts, higher discount rates, and weaker market multiples among the drivers. The Birds Eye brand and the Sides, Components, Enhancers reporting unit were significant impairment-testing areas.
- Agro Tech Foods was classified as held for sale after an agreement to sell the business; Conagra expects proceeds of approximately $78 million, subject to closing conditions, and recorded a $36.4 million impairment. Completion was expected by calendar year-end 2024.
- After fiscal year-end, Conagra completed the acquisition of a cooking-spray co-manufacturing operation on July 1, 2024, for $46 million initial consideration plus $14 million to satisfy certain existing liabilities, subject to working-capital adjustments.
Outlook, risks, and contingencies
Management expected moderate input-cost inflation and improved supply-chain stability to continue in fiscal 2025. It expects volumes to improve over time, but warns that high inflation and consumer pressure may continue to weigh on volumes. The company forecast a fiscal 2025 effective tax rate of approximately 23%–24%, excluding unusual transactions, and preliminary capital expenditures of approximately $500 million.
Key risks include commodity and labor cost volatility, price elasticity and private-label competition, supply-chain and third-party disruptions, changing consumer preferences, food safety and labeling claims, cybersecurity, climate and weather impacts, and reliance on major customers. The company cautions that its high debt level may constrain flexibility and increase refinancing costs. It reported litigation and environmental matters, including cooking-spray claims and legacy lead-paint proceedings; management did not expect the matters, as accrued, to have a material adverse effect, but acknowledged estimates could change. The company recorded $76.3 million of accruals for litigation matters at year-end. Its financial statements received an unqualified audit opinion, and management and the auditor reported effective internal control over financial reporting.
Important facts for investors to verify
- Whether sales volumes and segment profitability stabilize, particularly in Refrigerated & Frozen and Foodservice, and whether trade investment supports sustainable demand.
- The assumptions behind the $956.7 million impairment charge and the remaining goodwill and brand carrying values, including sensitivity to sales forecasts, margins, discount rates, and royalty rates.
- Debt maturities, refinancing needs, interest costs, and the sustainability of cash flow and the $0.35 quarterly dividend.
- Whether the Agro Tech Foods sale closes on expected terms and how proceeds are used; also assess the economics of the post-year-end cooking-spray manufacturing acquisition.
- Developments in cooking-spray litigation, legacy legal matters, environmental obligations, and the concentration of sales and receivables with Walmart.
- How much of the operating-cash-flow increase reflects repeatable performance versus working-capital timing, including extended supplier payment terms.