Conagra Brands Inc (NYSE: CAG) stock fell over 0.1% (as of 10:53 am GMT-4; Source: Google finance). CAG in the third quarter of FY 20 has reported the adjusted earnings per share of 47 cents, missing the analysts’ estimates for the adjusted earnings per share of 49 cents, according to the FactSet consensus. The company had reported 5.6 percent fall in the adjusted revenue to $2.56 billion in the third quarter of FY 20, missing the analysts’ estimates for revenue of $2.59 billion. The company attributed the decline is due to a number of divestitures, that includes the Wesson business and the private-label peanut butter business. For the third quarter, the organic net sales were down 1.7%. Adjusted gross profit fell 10.5% and adjusted operating profit decreased by 8.9%. Adjusted EBITDA decreased 7.1% in the third quarter.
On the other hand, the company is experiencing “significantly increased demand” for the retail products in the fourth quarter of 2020 as consumers have started filling their pantries for more at-home eating, and now expects to exceed expectations. For the fiscal third-quarter, the company has reported the net income of $204.4 million, down from $242.0 million in corresponding period last year. The shipments and consumption have risen by half even as foodservice demand has fallen.
Moreover, in the quarter, organic net sales for the Grocery & Snacks segment declined 3.6% as it was negatively affected by weather with a warmer than normal winter this year stacked against an abnormally cold prior year. Organic net sales for Refrigerated & Frozen increased 0.3% due to the recent innovation launches.
Conagra now projects fiscal 2020 reported net sales growth to surpass the 10% to 10.5% growth range and adjusted EPS to exceed the guidance which is expected to be in the range of $2.00 to $2.07. The FactSet consensus is for sales of $10.54 billion, implying 10.5% growth, and EPS to be of $2.03.
Meanwhile, during the third quarter, the company has continued to deliver on integration, synergies, and deleveraging. On integration, the company have been converting Legacy Pinnacle plants over to SAP. And through the third quarter, this multi-year process has been progressing on plan. The company has captured $33 million in incremental synergies, increasing the total through the end of Q3 to $145 million and the company has made further progress on reducing the net debt position by paying down $450 million of debt during the third quarter.