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CONAGRA BRANDS INC. (CAG) Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY25 was mixed: revenue fell 4.3% YoY to $2.78B and adjusted EPS declined 8.2% to $0.56 as cost inflation, FX and supply constraints offset productivity; adjusted operating margin was 13.8% . Versus S&P Global consensus, revenue and EPS were slightly below ($2.84B est vs $2.78B actual; $0.58 vs $0.56), while EBITDA tracking depends on definition (SPGI actual $476M* vs company adjusted EBITDA $544M) .*
  • FY26 guidance introduced: organic sales (1)% to +1%, adjusted operating margin ~11.0–11.5%, adjusted EPS $1.70–$1.85; management expects ~4% core inflation plus ~3% tariff-driven COGS inflation (net ~1% mitigations planned), with 53rd week adding ~$0.05 to EPS .
  • Management doubled down on volume-led growth in Frozen and Snacks despite near-term margin pressure; service levels recovered to ~98% in Q4 and productivity is guided “north of 5%” in FY26 including tariff mitigation .
  • Portfolio reshaping and cash discipline continue (Chef Boyardee, Van de Kamp’s/Mrs. Paul’s divested; quarterly dividend maintained at $0.35); net debt reduced to $8.0B, net leverage 3.6x at FY25-end .

What Went Well and What Went Wrong

  • What Went Well
    • Service recovery to ~98% in Q4, positioning Frozen/Snacks for renewed volume programs; strong innovation (e.g., Banquet Mega Chicken Filets) and planned multi-serve expansion underpin strategy .
    • Productivity momentum and mitigation: FY26 plan targets >5% including tariff mitigation; core productivity around 4% vs ~4% delivered in FY25 .
    • Cash generation and balance sheet: FY25 free cash flow was $1.30B; net debt down 4.4% YoY to $8.00B; net leverage 3.6x; dividend maintained at $0.35/share .
  • What Went Wrong
    • Q4 topline/margins pressured: net sales down 4.3% YoY; adjusted gross margin down 184 bps to 25.8%; adjusted operating profit down 10.5% YoY as COGS inflation and operating deleverage outweighed productivity .
    • Segment softness: Refrigerated & Frozen sales -4.4% and adj. OP -10.1%; Foodservice adj. OP -20.8% amid volume declines; International sales -13.8% due to FX/M&A despite +0.8% organic .
    • FY26 outlook embeds sustained inflation/tariff headwinds, driving a reset in adjusted operating margin to ~11–11.5% and lower adjusted EPS ($1.70–$1.85), prioritizing volume over near-term profitability .

Financial Results

MetricQ4 FY24Q2 FY25Q3 FY25Q4 FY25
Revenue ($USD Billions)$2.91 $3.20 $2.84 $2.78
Diluted EPS (GAAP)$(1.18) $0.59 $0.30 $0.53
Adjusted EPS$0.61 $0.70 $0.51 $0.56
Gross Margin % (reported)27.7% 26.5% 25.0% 25.4%
Gross Margin % (adjusted)27.6% 26.4% 24.8% 25.8%
Operating Margin % (reported)(19.1)% 12.6% 8.4% 11.5%
Operating Margin % (adjusted)14.8% 15.3% 12.7% 13.8%
Adjusted EBITDA ($USD Millions)$577.4 $638.9 $513.8 $544.2

Vs. S&P Global consensus – Q4 FY25

MetricConsensusActual
Revenue ($USD Billions)$2.84*$2.78
Adjusted EPS$0.58*$0.56
EBITDA ($USD Millions)$511.5*$476.1* / $544.2 company adjusted
  • Note: S&P Global shows an EBITDA actual of ~$476.1M under its standardized definition; company-reported adjusted EBITDA was $544.2M, highlighting methodology differences . Values with asterisks retrieved from S&P Global.*

Segment performance – Q4 FY25

SegmentNet Sales ($USD Billions)Organic Net Sales YoYAdjusted Operating Profit ($USD Millions)
Grocery & Snacks$1.15 (3.3%) $225.6
Refrigerated & Frozen$1.12 (4.4%) $170.5
International$0.23 +0.8% $35.3
Foodservice$0.28 (4.3%) $31.5

KPIs – Q4 FY25 and FY25 cash metrics

KPIQ4 FY25FY25
A&P Expense ($USD Millions)$62.1 $263.2
Effective Tax Rate (reported / adjusted)12.7% / 22.3% 0.3% / 22.4%
Equity Method Earnings (reported / adjusted, $M)$57.4 / $61.0 $182.4 / $189.6
Dividend per Share (Q4)$0.35 —
Free Cash Flow ($USD Billions)—$1.30
Net Debt ($USD Billions)—$8.00
Net Leverage (Net Debt / Adj. EBITDA)—3.60x

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Organic Net Sales GrowthFY26N/A(1)% to +1% Introduced
Adjusted Operating MarginFY26N/A~11.0% to ~11.5% Introduced
Adjusted EPSFY26N/A$1.70 to $1.85 Introduced
Interest ExpenseFY26N/A~ $400MM Introduced
Equity EarningsFY26N/A~ $200MM Introduced
Adjusted Effective Tax RateFY26N/A~23% Introduced
Pension IncomeFY26N/A~ $25MM Introduced
Capital ExpendituresFY26N/A~ $450MM Introduced
Free Cash Flow ConversionFY26N/A~90% Introduced
Net Leverage RatioFY26N/A~3.85x Introduced
53rd Week EPS ImpactFY26N/A+$0.05 Introduced
Tariff Assumptions (COGS impact)FY26N/A~3% from tariffs (pre-mitigation) Introduced
DividendOngoing$0.35/qtr$0.35/qtr (declared 7/9/25) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 FY25)Current Period (Q4 FY25)Trend
AI/Technology & Process ReengineeringNot explicit in Q2/Q3 releasesInitiating reengineering of core work processes leveraging technology including AI to accelerate growth and lower costs Emerging positive driver
Supply Chain & Service LevelsQ3: supply constraints in frozen chicken/vegetables; inventory rebuild ongoing Service restored to ~98%; investments in chicken plant/capacity; near-term absorption headwinds from co-manufacturing Improving service; near-term cost headwinds
Inflation & TariffsQ2 outlook: inflation closer to 4% FY26: ~4% core + ~3% tariffs; mitigation ~1%; total COGS inflation ~7% Elevated pressure vs. prior
Pricing/ElasticityQ2: volume-led investments; modest price mix drag Targeted pricing in canned (tariff-impacted); elasticity roughly ~minus one in grocery; investing behind Frozen/Snacks Balanced approach; category-specific
Product/InnovationQ3: continued innovation; share gains in select categories Strong innovation momentum; Banquet Mega Chicken Filets outperformed; multi-serve expansion in frozen planned Positive
Portfolio ActionsQ2: guidance updated; continued focus on coreChef Boyardee, Van de Kamp’s/Mrs. Paul’s divested; focus on Frozen/Snacks; further pruning possible Ongoing optimization
Capital Allocation/Dividend—Dividend maintained; deleveraging plan and capex increase for supply chain resiliency Stable dividend; focused deleveraging

Management Commentary

  • “While the second half was impacted by higher than expected inflation, foreign exchange headwinds, and supply constraints, our long-term value creation strategy remains unchanged.”
  • “In fiscal 2026, we expect elevated inflation and macroeconomic uncertainty to persist but remain focused on… investing in our high-potential frozen and snacks domains… enhancing supply chain resiliency… disciplined cost management and focus on cash flow.”
  • On margin path: “We are investing margin this year in the service of volume… We absolutely expect margin expansion going forward, particularly in frozen,” with building blocks including productivity >5%, eventual inflation relief, supply chain repatriation, targeted pricing, and AI-enabled process reengineering .

Q&A Highlights

  • Investment vs. margins: Management prioritized volume recovery in Frozen/Snacks despite a sixth year of above-normal inflation; expects margin expansion post-FY26 via productivity, repatriation, and targeted pricing .
  • Inflation/tariff breakdown: FY26 core COGS inflation ~4% (animal proteins double-digit; corrugated, cocoa, labor, warehousing up); tariffs add ~3% with ~1% mitigations planned .
  • Pricing/elasticity: Company elasticity in grocery near minus one; taking price in tariff-impacted canned categories to protect cash while investing behind growth domains .
  • Dividend/leverage: Plan to maintain dividend while investing and paying down ~$700MM debt in FY26 (proceeds plus discretionary FCF); leverage elevated near term due to profit pressure but targeted deleveraging continues .
  • Productivity/private label: FY26 productivity ~4% core + ~1% tariff mitigation; monitoring private label exposure in tomatoes, whipped topping, cooking spray with agile pricing .

Estimates Context

  • Q4 FY25 vs S&P Global consensus: revenue $2.78B vs $2.84B (miss), adjusted EPS $0.56 vs $0.58 (miss), EBITDA $476M (SPGI actual) vs $511M consensus (miss); company-reported adjusted EBITDA was $544M, reflecting definitional differences . Values with asterisks retrieved from S&P Global.*
  • Forward implications: Given FY26 margin reset and higher cost outlook, Street estimates may drift lower on EPS/margins near term, with potential upward revisions if tariff outcomes ease or productivity/supply-chain benefits exceed plan .

Key Takeaways for Investors

  • Near-term margin reset to fund volume growth; FY26 guide embeds elevated inflation/tariffs with mitigations; expect a stronger margin trajectory in FY27 as productivity, repatriation and pricing accrue .
  • Frozen/Snacks remain the growth engines; service levels back to ~98% and innovation pipeline performing (e.g., Mega Chicken Filets); watch execution on capacity expansions and multi-serve rollout .
  • Mixed Q4 print vs consensus with modest revenue/EPS misses; methodology differences cloud EBITDA comparisons—use consistent definitions when benchmarking .*
  • Cash discipline intact: robust FCF ($1.30B FY25), debt reduction, dividend maintained; FY26 plan includes ~$450MM capex and ~$700MM debt paydown .
  • Tariff path is a swing factor; management assumes significant COGS impact—any regulatory relief or successful mitigation/pricing could drive upside to FY26 margins .
  • Portfolio pruning continues (Chef Boyardee, Van de Kamp’s/Mrs. Paul’s); expect continued tilt toward Frozen/Snacks assets and potential further grocery exits over time .
  • Trading lens: Stock likely most sensitive to signs of elasticity resilience in canned pricing, progress on chicken capacity/service, and updates on inflation/tariff trajectory and AI-enabled productivity ramp .

Footnote: *Values retrieved from S&P Global.

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