Conagra Brands Inc (NYSE: CAG) stock fell 10.3% on December 20th, 2018 (as of 10:16 am GMT-5; Source: Google finance) after the company posted mixed results for the second quarter of FY 19. The company completed the acquisition of Pinnacle Foods Inc. (Pinnacle) on October 26, 2018; these second quarter results include the impact of 31 days of Pinnacle ownership.
CAG in the second quarter of FY 19 has reported the adjusted earnings per share of $67, beating the analysts’ estimates for the adjusted earnings per share of 56 cents. The company had reported the adjusted revenue growth of 9.7 percent to $2.38 billion in the second quarter of FY 19, missing the analysts’ estimates for revenue of $2.41 billion. Organic net sales excluding the sale of the Trenton, Missouri production facility (Trenton), decreased 1.6%. The Company estimates that 220 basis points of the decline in organic net sales growth is attributable to the impact of hurricanes in the prior-year period.
The Refrigerated & Frozen segment continued its momentum in the second quarter, with net sales growth of 1.7% and organic net sales growth of 0.5%. The Legacy Conagra frozen business continued to deliver solid growth behind innovation-driven gains in distribution. Adjusted gross profit increased 7.6% to $704 million or 29.5% of net sales. The addition of Pinnacle’s gross profit, together with supply chain realized productivity and improved pricing in the Legacy Conagra business, more than offset higher transportation and input costs and the previously-mentioned increases in retailer marketing for the Legacy Conagra business.
Pension and postretirement non-service income decreased 44.4%, or $8 million, to $10 million in the quarter, reflecting the previously-disclosed asset mix shift in the Company’s pension plans and the lapping of higher plan fees in the prior-year period.
Second quarter adjusted operating margin for Legacy Conagra was above the previously-provided second quarter guidance range and adjusted operating profit showed strong double-digit growth.
Meanwhile, CAG has signed a definitive agreement with Richardson International to divest the Wesson oil brand. The transaction is subject to customary closing conditions, including the receipt of any applicable regulatory approvals. The company anticipate the transaction to be finalized by the end of the first quarter of calendar year 2019. The agreement includes all assets exclusively related to the Wesson brand, including the facility in Memphis, Tenn. Financial terms were not disclosed