Conagra Brands, Inc. (NYSE:CAG) Q3 2024 Earnings Call Transcript

And that is a very, very meaningful move in terms of the category, I think you’ll be hard-pressed to find a bigger move more broadly in food. What is creating the noise in the R&F segment data is the refrigerated which I don’t have here for you broken out volumes dollars in the absolute which is a function of 2 things that I referenced. One is the rollback in prices because of the deflationary categories there and also the ramp that we had in one of our — in our table spreads business. So that’s really what’s behind that. But the movement in the volume is the basis for the ROI comment that I made and you can see how that movement has come out, it’s been very material.

Rob Dickerson: And then just a quick question on gross margin, very simplistically. Clearly, I hear all your comments in the prepared remarks around productivity efficiencies, [indiscernible] pricing and grocery and snacks all positive. But I’m just curious like what changed relative to coming out of Q2, right, in early January? Because I think the commentary previously for the year was gross margin would probably be similar back half maybe relative to Q2 but now it seems like it will clearly be better in the back half relative to Q2 and that kind of took place over the course of 2 months. So it seems like something changed to the upside? I just like to know what that’s all.

Dave Marberger: Rob. So I think you’d agree that if you look over the last 6 quarters, there’s been a lot of volatility in our supply chain. And so when forecasting gross margin, we want to be — we want to make sure that we’re considering all scenarios around operations. The fact of the matter is, is that if you look at a year ago, we had a lot of — we still had a lot of things going on in supply chain with some recalls and some other challenges that we had that did impact the profitability. So as Sean talked about, our core productivity programs are on track. We’re focused on the projects. We’re executing — so we’re really seeing that benefit. The inflation is still coming in, we’re still investing and you see those as part of margin.

And we still have a headwind from absorption. So because the volumes are down. And importantly, we’re driving inventory down. So our production in our plants has been down and we’re managing that. That’s been a headwind. But we haven’t had any other disruptions like we’ve had the last couple of years in supply chain, given the environment that now we’re able to — we’re really encouraged that we’re able to make — fund the investments we want to fund and execute our productivity programs and drive the gross margins that we’re looking for. So one quarter doesn’t make a year but we’re really encouraged by what we saw this quarter and we’re going to build on it.

Rob Dickerson: All right. Super. Thanks, Dave. Appreciate it.

Operator: This concludes our question-and-answer session. And that concludes the conference call. Thank you for attending today’s presentation. You may now disconnect.