ConAgra Brands, Inc.

Good morning and welcome to the ConAgra Brands second quarter fiscal year 2020 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Brian Carney, Investor Relations. Please go ahead.

Good morning, everyone. Thanks for joining us. I'll remind you that we will be making some forward-looking statements during today's call. While we are making those statements in good faith, we do not have any guarantee about the results that we will achieve. Descriptions of the risk factors are included in the documents we filed with the SEC. Also, we will be discussing some non-GAAP financial measures. References to adjusted items. including organic net sales, refer to measures that exclude items management believes impact the comparability for the period's reference. Please see the earnings release for additional information on our comparability items. The reconciliations of those adjusted measures to the most directly comparable gap measures can be found in either the earnings press release or in the earnings slides, both of which can be found in the investor relations section of our website, conagrabrands.com. Finally, we would make references to total ConAgra brands, as well as legacy ConAgra brands. References to legacy ConAgra brands refer to measures that exclude any income or expenses associated with the acquired Pinnacle Foods business. With that, I'll turn it over to Sean.

Thanks, Brian. Good morning, everyone, and thank you for joining our second quarter fiscal 2020 earnings call. During the second quarter, we made solid progress across our business. We delivered organic net sales growth in each of our reporting segments as we continued to implement the ConAgra Way to profitable growth. All of our key initiatives remained on track through Q2. We maintained strong momentum in our leading frozen and snacks businesses, and grocery benefited from improvement in Hunt's Tomatoes and Chef Boyardee. We continued implementing the ConAgra Way playbook against the Pinnacle portfolio in the quarter, and our focus on execution is working. Our integration and deleveraging programs remained on target through the second quarter, and our synergy capture, which Dave will detail for you today, continued to exceed expectations. Overall, we're pleased with our performance through two quarters, and looking ahead, we remain confident in our expectations for the second half and our ability to deliver our fiscal 2020 guidance, which has been updated primarily to account for the impact of recent portfolio changes. Our agenda this morning is to provide an update on our work on the entire ConAgra business and then provide more detail by segment, starting with total ConAgra. I'll let Dave cover this in more detail, but I want to highlight that our 1.6% organic net sales growth came on the back of 1% volume growth and good price mix performance. Slide 9 demonstrates how the ConAgra playbook is taking hold on the top line across our entire portfolio. As a reminder, we completed our acquisition of Pinnacle on October 26, 2018, partway through Q2 of fiscal 2019. So, for the first time, Pinnacle's results are represented, albeit for less than a full quarter, in our organic results. We delivered organic net sales growth of 1.6% during the quarter, which brings our year-to-date growth to 0.1%. As we've talked about previously, we expect fiscal 2020 to be back half-weighted based on the cadence of the actions we're taking, including our innovation launch schedule. We remain confident that we're on track to meet our fiscal 2020 guidance range of plus 1% to plus 1.5% organic net sales growth. Slide 10 is part of the reason for our confidence in our full-year sales outlook. Innovation takes time to build awareness, trial, and repeat purchases. As you can see on the left, the products we introduced in fiscal year 19 are performing even better in the first half of fiscal 20, as consumers continue to respond well to our on-trend innovation slate. And building on this success, the chart on the right shows that the new products we launched in the first half of this year are already outperforming fiscal 19's new innovation through two quarters. So while we still have exciting innovation to come this year, the maturing of our recent launches will likely do much of the heavy lifting to drive second half growth. In addition to driving top line growth, we remain committed to expanding our margins. As you can see on slide 11, The execution of our playbook has allowed us to expand our adjusted operating margin by 21 basis points in the first half of this year as compared to the same period last year. As I noted at the outset, we're making good progress across all of our integration, synergy, and deleveraging initiatives as highlighted on slide 12. We're very pleased with the execution on our integration efforts, which this quarter included exiting legacy Pinnacle corporate facilities and continuing to convert newly acquired plants to SAP. We also captured an incremental 42 million of cost synergies during the second quarter, bringing total cost synergy realization to 112 million since the closing of our acquisition. As Dave will detail during his remarks, our significant progress has allowed us to increase our synergy target. In addition, we continue to make progress reducing our net debt and we remain on track with our planned deleveraging. Let's turn to the segments. Before we go deeper on the individual businesses, I'm pleased to report that all four of our segments had positive organic net sales growth in the quarter. Now let's take a look at frozen. As indicated on slide 15, the total ConAgra frozen portfolio returned to growth in Q2, even as we continued to execute our value over volume playbook in the legacy pinnacle business. On the right side of this page, we see that the legacy ConAgra frozen portfolio continued to lead our results. The groundwork on the legacy ConAgra frozen brand is now consistently delivering growth on top of growth. As our share performance and our share performance gives us additional confidence in the ongoing success of our frozen business. Looking at frozen meals on slide 16, you can see that we've been securing an increased share of shelf in recent quarters. As a result, we're winning in market and benefiting from an increased share of sales as shown in the chart on the right. We've been gaining this share by actively partnering with our retail customers to drive profitable growth. These gains have come from introducing new innovations as well as increasing facings and velocities on core items. The result has been stronger growth and market share. Within Frozen, Our single-serve meals continued to lead the category through Q2. As shown on slide 17, we've again delivered sustained growth on top of growth. As you would expect, the large brands in our legacy ConAgra frozen portfolio, such as Healthy Choice, Marie Callender's, and Banquet, are furthest along in their growth trajectories. We're excited about what's ahead for these brands. We're also excited about the opportunities for the legacy pinnacle brands, including Evol, Udi's, and Hungryman, where we're getting started implementing the ConAgra way to profitable growth. One of the legacy pinnacle brands that we've prioritized over the last 12 months is Birdseye. And slide 18 is a great example of value over volume in action. As expected, sales and distribution on Birdseye declined as we removed lower performing SKUs from the market. Now, the brand's distribution trend is starting to bend behind new innovation launches. Our work has also led to share gains versus the branded competition. As shown on slide 19, you can see that Birdseye gained 20 basis points of share between the first half of fiscal 19 and the first half of fiscal 20 versus branded competitors, and gained 50 basis points of share over the last quarter a year ago. This is additional evidence that our early efforts are clearly paying off. Another legacy pinnacle brand we've been focused on is Gardein. We've started to expand distribution for Gardein's broad range of offerings. And as a reminder, we've made significant investments in Gardein's manufacturing and production processes to increase capacity. Our new capacity allows us to better meet the demand for on-trend, plant-based protein, including in our food service business, where Gardein saw strong growth in the second quarter. we continue to see great opportunity for this brand going forward. Throughout the balance of fiscal 20, we'll build upon our category-leading position in Frozen with strong innovation. The innovation we launched in the first half of fiscal 20 is just starting to pick up momentum, and we expect it to continue to perform well in the second half of the year. And we're not going to slow down on bird's eye. We're focusing on expanding the brand's presence with on-trend, value-added products, including the vegetable-based carb replacements, as well as new forms like roasted and shredded vegetables, which we launched in the first half of the year. This innovation is expected to have a larger impact in the second half as we continue to build distribution and invest behind consumer trial and repeat. Launching later this year will be another on-trend form, spiralized vegetables. Admittedly, Birdseye was late to the party here, but we're excited about what a proven product like Spiralized can do beginning in the second half of the year. Now I would like to turn to our grocery and snacks segment and start with our leading snacks portfolio. Snacks had another terrific quarter, maintaining its momentum. Slide 23 shows the continued success of this portfolio. Total legacy ConAgra snacks were up 5.2% during the quarter, delivering 10.4% growth on a two-year basis. Our results were led by meat snacks and sweet treats businesses, which delivered growth of 7.8% and 7.3%, respectively. We launched a number of on-trend innovative snacking products within our $2 billion-plus portfolio at NACS in October. We've had great customer reactions to these exceptional new innovations, and we expect them to support our continued momentum in the second half. you'll have a chance to try many of these great new products at Cagney in February. We're also making great progress on our work to reframe Duncan Hines as a sweet treat to unlock significant growing demand spaces. Our strategy includes refreshed packaging, fun and novel flavors, and new shelf-stable and frozen snacking platforms. And as you can see on slide 25, our earliest work focused on the core shelf-stable baking mixes, has begun to result in share gains as the holiday baking season kicked off. We're building on this momentum by introducing more innovation in the second half, including on-trend keto-friendly cakes and co-branded Oreo cake cups. Turning to our grocery portfolio, we're pleased with the improved trends on our key Chef Boyardee and Hunt's Tomato businesses, Both have a leadership role in their respective categories and are of critical importance to consumers. Slide 26 shows the traction these businesses are beginning to see from continued investment and smart promotional support. After responding to marketplace dynamics, both Hunt's and Chef Boyardee made sequential improvements in the quarter. Wishbone is also improving. As we've noted, Wishbone was challenged by several issues, service, quality, and a label change execution issue. As we lap the closing of the Pinnacle transaction and have almost a year of implementing the ConAgraWay playbook against the brand, we've stabilized Wishbone and year-over-year sales growth has moved into positive territory. Slide 28 shows another part of our playbook in action. We're excited to participate in the salad dressings category and believe it's ripe for disruptive innovation. Healthy Choice Power Dressing is a new line of vegetable-based dressings. This exciting new product extension builds on the success of our Power Bowl frozen meals by bringing modern attributes that are relevant to consumers to a large category. We expect these terrific new products to bring the kind of new news that shoppers will welcome. I'll conclude with a few quick remarks about our international and food service segments. The second quarter brought continued strong performance in Canada, as well as distribution gains in Mexico. In food service, recall that in Q1, we made the strategic decision to opt out of a particularly low-margin contract consistent with our value-over-volume strategy. This past quarter, we've seen strong sales, as we predicted, in our snacks business, as well as in the Gardein and Udi's brands. In addition, operating margins improved year over year. Overall, we've made good progress through the first half of the year. We've had success with our innovation slate and expect that to continue in the second half. We remain on track with our plan and confident in our ability to accelerate growth in the second half and deliver our fiscal 2020 guidance. With that, I'll turn it over to Dave.