Conagra Brands : Fiscal 2022 Annual Report

Conagra Brands Annual Report

2022

DEAR FELLOW SHAREHOLDERS

Fiscal 2022 was a year of strong sales growth, innovation, and meaningful progress on our environmental, social, and governance (ESG) goals. It was also a year in which our business contended with multiple waves of unprecedented inflation and supply chain challenges. Once again, I need to acknowledge the tremendous work of all of our employees at Conagra Brands. Their dedication, agility, resilience, and focus on results helped drive the company forward as we navigated through a challenging external environment and continued to execute the Conagra Way.

This focus allowed us to capitalize on continued elevated demand for our products. Our Frozen and Snacks businesses once again benefited from macro trends of people continuing to work (and eat) at home. We see these behavior shifts as permanent, as people will be preparing and eating more meals in their homes than they did pre- pandemic. And that's good news for Conagra Brands.

That's why we kept the innovation machine moving forward. With more consumers looking for delicious, easy-to-prepare meals that offer restaurant quality but at a much lower price point, our Frozen business introduced more than 50 new products. Highlights included Gardein® Ultimate Plant-Based® Chick'n, Banquet® MEGA Pizza, P.F. Chang's Home Menu® Tempura Shrimp and the Zero and Max collections from Healthy Choice®.

Our Snacking and Sweet Treats portfolio was active as well. Duncan Hines® partnered with American icon Dolly Parton to debut the new Dolly's Southern Favorites collection of cake mixes and frostings, while Slim Jim® expanded the popular Slim Jim Savage™ platform with Savage Spicy.

Innovation and relentless execution led to strong fiscal 2022 results in the face of record inflation. We took timely action to combat rising costs, including cost and productivity initiatives, and we implemented inflation-justified pricing actions. While we saw benefit from these actions in fiscal 2022, we expect to see even more benefit in early fiscal 2023.

Fiscal 2022 financial highlights include:

• Net sales increased 3.1% and organic net sales1 increased 3.8%. On a two-year compounded annualized basis2, fiscal 2022 net sales increased 2.1% and organic net sales1 increased 4.4%.
• EPS for fiscal 2022 declined 30.8% to $1.84; adjusted EPS declined 10.6% to $2.36. On a two- year compounded annualized basis 2, fiscal 2022 EPS increased 3.5% and adjusted EPS increased 1.7%.
• Conagra Brands paid $582 million in cash dividends to our shareholders, an increase of more than 22 percent compared to fiscal 2021.

Fiscal 2022 was another year of ESG progress. We published our annual Citizenship Report in March of 2022, and

I hope you will take the time to read the report to learn more about our initiatives in each of our four pillars - Good Food, Responsible Sourcing, Better Planet and Stronger Communities. Here are some brief highlights from each pillar.

Good Food

• Conagra Brands is a proud partner of U.S. Farmers and Ranchers in Action, working across the value chain with farmers, ranchers, food and agriculture stakeholders to co-create sustainable food systems.
• In October 2021, Conagra was named a "pioneer" and the top-ranked U.S. company on sustainable protein research and innovation by The FAIRR Initiative, an investor network that defines material ESG issues in the animal agriculture sector to help inform investment decisions.

Responsible Sourcing

• In fiscal 2021, Conagra's total ingredient buy by volume was approximately 79% plant-based.
• Approximately 93% of Conagra's packaging materials by volume were renewable, recyclable or compostable3, progressing towards our 2025 goal.

Better Planet

• Through our employee-led Sustainable Development
  Awards program, we conserved 64 million gallons of water decreased our carbon footprint by 91,000 metric tons, reduced waste by more than 12,300 tons and minimized material use by 17.6 million pounds.
• This year Conagra honored ten Zero Waste manufacturing facilities for diverting more than
  95% of waste materials from landfills through proper waste separation, recycling, and other innovative waste reduction measures.

Stronger Communities

• We made progress on our ambitious representation and retention goals. At the management level, the number of newly-employed people of color increased by 6%. In addition, we introduced Inclusive Behaviors, providing employees with a common framework
  for fostering unity and effectively working across differences.
• To help alleviate hunger and food insecurity where our employees live and work, we donated 30 million pounds of food to Feeding America and its network of food banks, which is the equivalent of 25 million meals.

As we begin fiscal 2023, I believe Conagra is positioned to leverage the heightened demand for our products to drive long-term value creation for our shareholders. We hosted an Investor Day meeting on July 27, 2022, to discuss the future of the business and share in more detail our financials, as well as plans for our brands, supply chain, marketing, and ESG efforts. I encourage you to listen to the recorded webcast on conagrabrands.com.

On behalf of all of us at Conagra Brands, I thank you for your continued support.

Sincerely,

Sean M. Connolly, President and Chief Executive Officer

1. Organic net sales exclude the impact of foreign exchange and divested businesses.
2. Two-yearcompounded annualized growth is calculated as ([(1+ current year period's growth rate) * (1 + prior year period's growth rate)] ^0.5) -1.
3. Estimates are based, in part, on industry-wide average weights and post-consumer recycled content levels, guided by best practices on environmental footprint accounting.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

• ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended May 29, 2022

or

• TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

to

Commission File No. 1-7275

CONAGRA BRANDS, INC.

(Exact name of registrant as specified in its charter)

Delaware		47-0248710
(State or other jurisdiction of				(I.R.S. Employer
incorporation or organization)				Identification No.)
222 W. Merchandise Mart Plaza, Suite 1300		60654
Chicago, Illinois
(Address of principal executive offices)				(Zip Code)
Registrant's telephone number, including area code [phone]
Securities registered pursuant to section 12(b) of the Act:
Title of each class	Trading Symbol(s)			Name of each exchange on which registered
Common Stock, $5.00 par value			CAG			New York Stock Exchange
Securities registered pursuant to section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes	☑	No	☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.	Yes	☐	No ☑

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.:

Large accelerated filer ☑	Accelerated filer ☐	Non-accelerated filer ☐	Smaller reporting	☐	Emerging growth	☐
			company		company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑

The aggregate market value of the voting common stock of Conagra Brands, Inc. held by non-affiliates on November 26, 2021 (the last business day of the Registrant's most recently completed second fiscal quarter) was approximately $15,158,448,300 based upon the closing sale price on the New York Stock Exchange on such date.

At June 26, 2022, 480,091,813 common shares were outstanding.

Documents Incorporated by Reference

Portions of the Registrant's definitive Proxy Statement for the Registrant's 2022 Annual Meeting of Stockholders (the "2022 Proxy Statement") are incorporated by reference into Part III.

	Table of Contents
PART I		1
Item 1	Business	1
Item 1A	Risk Factors	7
Item 1B	Unresolved Staff Comments	1 9
Item 2	Properties	1 9
Item 3	Legal Proceedings	2 0
Item 4	Mine Safety Disclosures	2 0
PART II		2 1
Item 5	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	2 1
Item 6	[Reserved]	2 1
Item 7	Management's Discussion and Analysis of Financial Condition and Results of Operations	2 2
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	3 7
Item 8	Financial Statements and Supplementary Data	3 9
	Consolidated Statements of Earnings for the Fiscal Years Ended May 2022, 2021, and 2020	3 9
	Consolidated Statements of Comprehensive Income for the Fiscal Years Ended May 2022, 2021, and 2020	4 0
	Consolidated Balance Sheets as of May 29, 2022 and May 30, 2021	4 1
	Consolidated Statements of Common Stockholders' Equity for the Fiscal Years Ended May 2022, 2021, and 2020	4 2
	Consolidated Statements of Cash Flows for the Fiscal Years Ended May 2022, 2021, and 2020	4 3
	Notes to Consolidated Financial Statements	4 4
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	8 6
Item 9A	Controls and Procedures	8 6
Item 9B	Other Information	8 6
Item 9C	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	8 7
PART III		8 8
Item 10	Directors, Executive Officers and Corporate Governance	8 8
Item 11	Executive Compensation	8 8
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	8 8
Item 13	Certain Relationships and Related Transactions, and Director Independence	8 9
Item 14	Principal Accountant Fees and Services	8 9
PART IV		9 0
Item 15	Exhibits and Financial Statement Schedules	9 0
Item 16	Form 10-K Summary	9 5
Signatures		9 6

PART I

This annual report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Actual results, performance, or achievements could differ materially from those projected in the forward-looking statements as a result of a number of risks, uncertainties, and other factors. For a discussion of important factors that could cause our results, performance, or achievements to differ materially from any future results, performance, or achievements expressed or implied by our forward-looking statements, please refer to Item 1A, Risk Factors and Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations below.

ITEM 1. BUSINESS

General Development of Business

Conagra Brands, Inc. (the "Company", "Conagra Brands", "we", "us", or "our"), headquartered in Chicago, is one of North America's leading branded food companies. Guided by an entrepreneurial spirit, the Company combines a rich heritage of making great food with a sharpened focus on innovation. The Company's portfolio is evolving to satisfy people's changing food preferences. Its iconic brands such as Birds Eye®, Duncan Hines®, Healthy Choice®, Marie Callender's®, Reddi-wip®, and Slim Jim®, as well as emerging brands, including Angie's® BOOMCHICKAPOP®, Duke's®, Earth Balance®, Gardein®, and Frontera®, offer choices for every occasion.

We began as a Midwestern flour-milling company and entered other commodity-based businesses throughout our history. We were initially incorporated as a Nebraska corporation in 1919 and reincorporated as a Delaware corporation in 1976. Over time, we transformed into the branded, pure-play consumer packaged goods food company we are today. Growing our food businesses has also been fueled by innovation, organic growth of our brands, and expansion into adjacent categories, including through acquisitions. We are focused on delivering sustainable, profitable growth with strong and improving returns on our invested capital.

On October 26, 2018, we completed our acquisition of Pinnacle Foods Inc. ("Pinnacle"). As a result of the acquisition, Pinnacle became a wholly-owned subsidiary of the Company.

Narrative Description of Business

We compete throughout the food industry and focus on adding value for our customers who operate in the retail food and foodservice channels.

Our operations, including our reporting segments, are described below. Our locations, including manufacturing facilities, within each reporting segment, are described in Item 2, Properties.

Reporting Segments

Our reporting segments are as follows:

Grocery & Snacks

The Grocery & Snacks reporting segment principally includes branded, shelf-stable food products sold in various retail channels in the United States.

Refrigerated & Frozen

The Refrigerated & Frozen reporting segment principally includes branded, temperature-controlled food products sold in various retail channels in the United States.

1