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cash flow

How to Read Conagra Brands’ Earnings Report: Sales, Margins, and Cash Flow

Conagra’s Q1 FY2027 report pairs declining sales volume with positive price/mix, a reported-to-adjusted margin gap, and negative free cash flow. Here’s how to read those figures alongside FY2026 results and management’s outlook.

By TheFinanceBase Team 5 min read

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To read Conagra Brands’ earnings report, separate three things: sales growth and its drivers, reported results versus management’s adjusted measures, and accounting earnings versus cash after capital spending. The latest release, for the 13 weeks ended August 30, 2026, shows reported sales down 1.4%, volume down 2.1%, and negative free cash flow. FY2026 provides important context: impairment charges drove a reported loss even as adjusted EPS remained positive.

Start with the fiscal period and reported results

Before comparing percentages, check which periods they cover. Conagra’s Q1 FY2027 covered the 13 weeks ended August 30, 2026; the company released results on September 30, 2026. Its financial reports page links to releases and filings.

Q1 net sales were $2.6 billion, down 1.4% year over year. Diluted earnings per share (EPS) were $0.36, up 5.9%; adjusted EPS was $0.41, up 5.1%. EPS growth does not by itself establish stronger demand: profit per share can change with margins, expenses, interest, taxes, share count, and unusual charges or gains. The quarter’s weighted-average diluted share count was 480 million. The full Q1 FY2027 release includes the financial statements and reconciliations.

What does organic net sales mean for Conagra?

Reported net sales are the GAAP revenue figure. Conagra’s organic net sales are a company-defined non-GAAP measure that excludes foreign exchange, acquired and divested businesses, and any 53rd week. It helps compare underlying sales across periods with different currency, portfolio, or calendar effects, but it does not replace reported sales.

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Then split organic growth into volume and price/mix. In Q1 FY2027, organic net sales fell 1.1%, combining positive 1.0% price/mix with a 2.1% volume decline. Price/mix is not simply price increases: it combines price and changes in the mix of products and customers. Here, that contribution cushioned the revenue decline while unit volume fell.

Compare the segments, not just the company total

The segments had different combinations of volume and price/mix. Foodservice’s volume growth also had a specific timing benefit, so its result should not be treated as a straightforward recurring trend.

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Q1 FY2027 segment Organic sales change Price/mix Volume Reading note
Grocery & Snacks -2.0% +3.4% -5.4% Positive price/mix partly offset a substantial volume decline.
Refrigerated & Frozen -1.6% -1.5% -0.1% Both price/mix and volume were negative.
International +0.9% +1.6% -0.7% Positive price/mix more than offset lower volume.
Foodservice +3.3% +0.8% +2.5% Volume benefited approximately 150 basis points from customer orders that occurred in Q3 of the prior year.

For an annual comparison, keep the fiscal calendar visible. FY2026 had 53 weeks and FY2025 had 52. Conagra excludes the extra week, along with currency and acquired or divested businesses, when calculating organic sales. In FY2026, reported sales fell 2.9%, while organic sales fell 0.4%; those figures answer different comparison questions. See the FY2026 results release for the company’s definitions and reconciliations.

Why is Conagra’s adjusted margin different from reported margin?

Read profitability in layers: gross margin shows the relationship between sales and cost of goods sold; operating margin also reflects operating expenses. Compare reported and adjusted figures, then inspect what the adjustment removes. Conagra describes adjusted figures as excluding items it considers significant and not indicative of core results. That is the company’s framework, not proof that the excluded items are immaterial or will not recur.

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In Q1 FY2027, gross margin declined 50 basis points to 23.8%; adjusted gross margin declined 62 basis points to 23.8%. Reported operating margin was 10.3%, compared with adjusted operating margin of 11.5%. Conagra cited lower organic sales, cost-of-goods-sold inflation, and unfavorable operating leverage as pressures on gross profit; productivity and about $4 million in tariff refunds partly offset them. The difference between reported and adjusted operating margin makes the release’s reconciliation important.

FY2026 shows how large the gap can become. Reported operating margin was negative 14.4%, while adjusted operating margin was 11.3%. Conagra attributed the reported result primarily to non-cash goodwill and brand impairment charges. Reported diluted loss per share was $4.00, while adjusted EPS was $1.72. Treat adjusted EPS as a companion measure, not a replacement for the reported loss; review the reconciliation and consider the nature and recurrence of excluded items. The FY2026 Form 10-K and annual filing materials provide annual financial statements and accounting details.

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How does Conagra’s earnings compare with its cash flow?

Net income and cash flow differ because the cash-flow statement adjusts for non-cash items and changes in operating assets and liabilities. To see whether earnings translated into cash, start with cash from operating activities, check working-capital movements and other cash timing, then subtract capital expenditures to calculate free cash flow using Conagra’s definition.

In Q1 FY2027, Conagra used $4.2 million in operating cash, compared with $120.6 million generated in Q1 FY2026. The company identified lower operating profit and higher litigation payments, net of recoveries, as the main reasons for the decline. The cash-flow statement also shows movements in inventory, accrued payroll, and litigation accruals, which help explain why cash flow can diverge from earnings in a particular quarter.

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Conagra defines free cash flow as net cash from operating activities less additions to property, plant, and equipment. Q1 FY2027 capital expenditures were $123.7 million, so free cash flow was negative $127.9 million: -$4.2 million – $123.7 million = -$127.9 million. In Q1 FY2026, capital expenditures were $146.8 million and free cash flow was negative $26.2 million. Free cash flow is non-GAAP and depends on this stated calculation; it is not a standardized substitute for operating cash flow.

Use the full-year view to judge cash trends

Quarterly cash flow can be affected by when customers pay, inventory changes, litigation payments, and other timing. The annual figures show whether a quarter’s result sits within a broader movement.

Fiscal year Operating cash flow Capital expenditures Free cash flow Weeks in fiscal year
FY2026 $1,402.1 million $423.4 million $978.7 million 53
FY2025 $1,691.9 million $389.3 million $1,302.6 million 52

Conagra attributed lower FY2026 operating cash flow principally to lower operating profit and the prior-year accelerated receipt of some outstanding receivables, partly offset by favorable inventory management. The extra week in FY2026 is also relevant when interpreting annual comparisons, though Conagra excludes it from organic-sales calculations.

How should you read Conagra’s outlook and debt figures?

Management reaffirmed the following FY2027 guidance in the September 30, 2026 release. These are forward-looking estimates, not reported results or guaranteed outcomes.

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FY2027 management guidance Range or assumption
Organic net sales change -3% to -1%
Adjusted operating margin 10.0%–10.5%
Adjusted EPS $1.40–$1.50
Capital expenditures Approximately $550 million
Free-cash-flow conversion Above 90%
Year-end net leverage Around 4.0x

At Q1 FY2027 quarter-end, net debt was $7.4 billion and net leverage was 3.99x. These are quarter-end figures; the approximately 4.0x net-leverage figure above is management’s FY2027 year-end assumption. Comparing cash generation with debt and capital needs helps frame financial flexibility, but a single quarter’s cash flow should not be treated as a full-year forecast.

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