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ConAgra Reports 3Q Net Income of $120 Million, Down From $280.1 Million in 3Q 2012

Date Posted: April 3, 2013

OMAHA, NE—ConAgra Foods, Inc., (NYSE: CAG) one of North America’s leading packaged food companies, reported April 3 results for the fiscal 2013 third quarter ended February 24, 2013.

Full ConAgra Report

Diluted EPS from continuing operations was $0.29 in the fiscal third quarter, down from $0.67 earned in the year-ago period.

Excluding $0.26 per diluted share of net expense in the current quarter, and $0.14 of net benefit in the year-ago period, from items impacting comparability, current quarter EPS of $0.55 was 4% above the comparable $0.53 earned in the year-ago period.

Items impacting comparability in the third quarter of fiscal 2013 and the same period a year ago are summarized toward the end of this release and reconciled for Regulation G purposes starting on page 10.

Gary Rodkin, ConAgra Foods’ chief executive officer, said, “We are pleased with the earlier-than-planned closing of the Ralcorp transaction, sequential improvement in our Consumer Foods volumes, comparable profit growth in both of our core business segments, and the announcement of Ardent Mills, a new proposed joint venture for our milling operations.

"Challenges remain for key areas of our business, but a combination of successful margin improvement initiatives and a more favorable input cost environment is enabling us to significantly increase our brand investment and deliver EPS growth.”

He continued, “Our organization is very focused on the ongoing integration of Ralcorp, which will play a key role in creating shareholder value.

"We reaffirm our expected comparable EPS benefit of $0.05 in fiscal 2013 results and $0.25 in fiscal 2014 results, and are very excited about our earnings potential over the next few years. This is a great time to be a part of ConAgra Foods.”

Consumer Foods Segment

Branded and non-branded food sold in retail and foodservice channels.

The Consumer Foods segment posted sales of $2,303 million and operating profit of $284 million for the third quarter, as reported.

Sales increased 7%, reflecting 7% contribution from acquisitions, 3% favorable price/mix, and a 3% organic volume decline. Sequentially, organic volume improved.

Operating profit of $284 million declined from $331 million in the year-ago period, as reported.

After adjusting for $5 million of net expense in the current period, and $51 million of net benefit in the year-ago period, from items impacting comparability, current-quarter operating profit of $289 million increased 3% over $280 million in the year-ago period.

Marketing investment for the base business (excluding recently completed acquisitions) increased approximately 33%, reflecting the company’s planned commitment to building long-term brand strength and the flexibility afforded by improved margins.

Operating profit growth reflects a combination of favorable price/mix and other margin management initiatives, a more favorable input cost environment, and contribution from acquisitions.

Commercial Foods Segment

Specialty potato, seasonings, blends, flavors, and milled grain products sold to foodservice and commercial channels worldwide.

Sales for the Commercial Foods segment were $1,256 million, 1% above year-ago period amounts. Segment operating profit was $167 million, 11% above year-ago period amounts as reported.

After adjusting for $10 million of net expense from items impacting comparability, comparable year-over-year profit growth was 18%.

The milling operations posted a strong profit increase due to favorable market conditions, good volumes, mix improvement, and excellent productivity.

To a lesser extent, Lamb Weston potato operations also contributed to segment profit growth, as the benefit of price/mix more than offset the impact of a volume decline primarily resulting from softness in key Asian markets.

Ralcorp Acquisition – less than 1 month of contribution

Ralcorp businesses contributed a total of $292 million in sales and $5 million of operating profit in the fiscal third quarter as reported.

After adjusting for $17 million of net expense from items impacting comparability, operating profit was $22 million.

The company currently reports Ralcorp results within two new segments: Ralcorp Food Group and Ralcorp Frozen Bakery Products, listed as such in the segment detail later in this document.

The company continues to expect accretion from the Ralcorp acquisition to be approximately $0.05 per diluted share this fiscal year, excluding items impacting comparability.

Hedging Activities – This language primarily relates to operations other than the company’s milling operations.

Hedge gains and losses are aggregated, and net amounts are reclassified from unallocated Corporate expense to the operating segments when the underlying commodity or foreign currency being hedged is expensed in segment cost of goods sold.

The net of these activities resulted in $27 million of unfavorable impact in the current quarter, and $22 million of favorable impact in the year-ago period. The company identifies these amounts as items impacting comparability.

For more information, call 402-240-5210.

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