Conagra Brands, Inc. Q2 FY2026 earnings call

• Noted delayed shipments materializing in December, easier comparisons in frozen, return to full merchandising and full innovation slate, and pricing in Staples brands.
• Discussed Project Catalyst, a reengineering of core business processes using AI, with excitement about potential and plan to unpack in more detail during 2026.
• Highlighted focus on health and wellness trends in innovation, with emphasis on protein, clean label, and vegetable nutrition in products like Birds Eye Vegetables, Healthy Choice, and protein-focused brands.
• Addressed weather impacts, including hurricane effect on business and cold weather timing affecting seasonal ramp-up of canned food products.
• Talked about repatriation of baked chicken production and investments in Banquet Mega Filets to increase capacity for high-demand chicken products.

No specific detailed breakdown of product segment financial performance with absolute terms and revenue contribution % provided in the transcript. General mentions of frozen, snacks, etc., but no detailed segment-wise financials.

• Expect organic net sales growth in the second half; no formal quarterly guidance.
• Reiterated sales and operating margin, with offsetting factors in the P&L to cover the take-down of Arden.
• Project Catalyst to be unpacked in more detail for investors during 2026.
• Forecast positive organic sales growth in the second half, with momentum seen in the business.

• Volatile environment affecting the guidance range due to difficult-to-predict factors.
• Tariff impacts, particularly on tinplate with no change in levels.
• Absorption headwinds related to inventory reduction impacting operating margins.
• Weather anomalies such as hurricane timing and cold weather timing affecting business timing and performance.

Q: Would you be expecting positive year-over-year organic sales in fiscal 3Q?

A: Sean Connolly said they expect organic net sales growth in the second half, and incorporating the information shared would provide a more accurate balance between Q3 and Q4.

Q: Seeing the same cost of volume as another food company?

A: Sean Connolly stated they have not seen the described cost of volume dynamic, and their plan to invest margin for volume inflection is consistent with expectations based on prior year experience.

Q: Annual outlook, taking down Arden, any offset in P&L?

A: Dave Marberger said operating profit and margin performance is good, core productivity programs are on track, and they feel they can cover the shortfall in Arden and stay in the EPS range.

Q: Details on Project Catalyst?

A: Sean Connolly explained it's reengineering core business processes using AI, with a team dedicated to implementation, and will be unpacked in more detail during 2026.

Q: Consumption trends in frozen and snacks?

A: David Palmer talked about frozen reclaiming market share and snacks like Slim Jim and Fatty growing robustly, with strong marketing plans.

Q: Peers cutting prices, impact on Conagra?

A: Sean Connolly said Conagra didn't roll back price to move volume, volume inflection is efficient, and inflation guidance remains in place.

Q: 3Q operating margins below 2Q, absorption headwind?

A: Dave Marberger said gross margin in Q3 will be similar to Q2, with A&P and SG&A as key drivers of the margin difference.

Q: Risk of less retail inventory?

A: Sean Connolly said promotional volume build unfolds consistently linked to timing factors like Thanksgiving and promotional calendars.

Q: Innovation and health and wellness?

A: Sean Connolly said innovation is improving, focusing on protein, clean label, and vegetable nutrition in products.

Q: EPS outlook, key swing factors?

A: Sean Connolly said the range is wider due to volatile environment, and will update next quarter.

Q: R and F segment trend acceleration?

A: Sean Connolly said good second half in frozen with strong programming, reclaiming market share.

Q: Inflation next year, anomalies?

A: Sean Connolly said inflation will normalize over time, with some tariff and protein/beef factors as offsets.

Q: Portfolio approach, M&A?

A: Sean Connolly said always looking for value creation, recent divestiture of Chef Boyardee with long-term portfolio benefits.

Q: Baked Chicken facility, margin improvement?

A: Dave Marberger said completing the facility is in transition, built into 2026 guidance.

Q: Impairment charge details?

A: Dave Marberger explained impairment due to sustained stock price decline, increasing discount rate for goodwill and brand impairment analysis.