Conagra Brands, Inc. (NYSE:CAG) Q2 2024 Earnings Call Transcript

Sean Connolly: Yes. Let me try to kind of re-hit what we touched on our prepared remarks for us, I’m not going to comment on Q3. We’re in Q3, so we’ll stick with Q2. We saw clear evidence in Q2 that where we deployed investment to kind of help the consumer with this process of kind of reengaging in the more typical purchase behaviors, we got the response we were looking for. And because that was real empirical evidence that, of course, inspired confidence that if we do more of that in the second half of the year, we will get a similar type of response. But from a planning posture standpoint, we are not banking on major improvement in the macro consumer environment or signing up for a huge consumer response. So one might interpret that as we’ve got the investment in there, but what we’re banking on in return is conservative.

Look, in this current environment, that’s probably not a bad posture to be in because this volume recovery has been more elongated than people expect. But I think that’s that is a fair characterization of kind of what we’re looking at.

Chris Carey: Okay. All right. Perfect. And one just quick follow-up. You mentioned, I believe, earlier in the call that incentive comp was a favorable SG&A item for fiscal Q2. Is there any way to dimensionalize that for the full year with the lower guidance for the year? That’s it for me. Thanks.

Dave Marberger: Yes. We – really almost all of the delta and SG&A in the quarter was driven from incentive comp. So that really drove the delta in the quarter. We do expect SG&A as a percentage of net sales to be higher in the second half. So it will get our SG&A as a percentage of net sales, close to where it was a year ago. So, there’s some timing elements to this, especially with incentive comp, because it can it really can be a timing item relative to where you were in the prior year in your forecast. But as it relates to Q2, it drove all the variance in SG&A.

Chris Carey: And just to clarify, that SG&A is higher in the back half, excluding advertising spending or with…

Dave Marberger: Yes, that’s excluding adjusted SG&A, which we exclude A&P.

Chris Carey: Great. Okay. Thanks, so much.

Operator: This concludes our question-and-answer session. I would like to turn the conference back over to the company for any closing remarks.

Melissa Napier: So it’s Melissa Napier. We thank you again for joining us this morning for the call, and we’re looking forward to seeing everyone at CAGNY next month.

Operator: The conference has now concluded. Thank you for attending today’s presentation and you may now disconnect.