Conagra Brands Boosts Dividend Rate Amid Strong Fiscal Year 2023 Performance
Conagra Brands, Inc., a leading food company, recently reported its fourth-quarter and full-year fiscal year 2023 results. The company showcased positive growth in net sales and adjusted earnings per share, along with several operational achievements. Additionally, Conagra Brands announced a significant increase in its annualized dividend rate, demonstrating confidence in its business strength and commitment to delivering value to its shareholders.
Conagra Brands experienced a 2.2% increase in reported and organic net sales for the fourth quarter, driven by a 9.9% improvement in price/mix. However, the quarter witnessed a 7.7% decrease in volume due to the impact of inflation-driven pricing actions and supply chain disruptions. Gross profit and adjusted gross profit increased by 9.8% and 11.0% respectively, while gross margin and adjusted gross margin improved by 183 and 216 basis points. The company also witnessed a 6% decline in diluted earnings per share (EPS) for the quarter.
Conagra Brands achieved a notable 6.4% increase in net sales and a 6.6% increase in organic net sales for the full fiscal year 2023. Despite a 291 basis point decrease in operating margin, adjusted operating margin saw a 125 basis point improvement. Diluted EPS decreased by 22.8%, while adjusted EPS increased by 17.4%. These results reflected the company's successful execution of its priorities, including inflation-justified pricing, gross margin recovery, and brand strength.
The Board of Directors at Conagra Brands has authorized a 6% increase in the company's annualized dividend rate. This dividend rate adjustment is set to commence with the dividend payable on August 31, 2023. The decision to raise the dividend rate signifies the company's continued confidence in the strength of its business. Shareholders can look forward to enhanced returns as Conagra Brands remains committed to delivering long-term value.
Sean Connolly, the President and CEO of Conagra Brands, expressed his satisfaction with the company's strong performance in fiscal year 2023. He highlighted the successful execution of their priorities, which positioned their brands favorably despite market volatility. Connolly also provided an optimistic outlook for fiscal year 2024, expecting a transition to a more normalized operating environment with reduced inflationary pressures and improved supply chain operations.
Conagra Brands has provided guidance for fiscal year 2024, projecting approximately 1% organic net sales growth compared to fiscal year 2023. The company expects an adjusted operating margin between 16% and 16.5% and adjusted EPS ranging from $2.70 to $2.75. Other key factors in their guidance include a Net Leverage Ratio of approximately 3.4x, capital expenditures of around $500 million, interest expense of about $450 million, an adjusted effective tax rate of approximately 24%, and an estimated contribution of $150 million from their joint venture, Ardent Mills.
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