Good morning. I'm Leah Jordan. I'm the packaged food and food retail analyst here at Goldman, and it is my pleasure to introduce the management team of Conagra Brands. We have Sean Connolly, President and Chief Executive Officer, and David Marberger, Chief Financial Officer. Thank you both for joining us today. For a quick refresher, Conagra is one of the largest packaged food companies in the U.S., with a broad portfolio across frozen, snacks, and shelf-stable products, serving customers across retail, food service, and international markets. It owns popular brands like Marie Callender's, Birds Eye, Healthy Choice, and Slim Jim. With that, I'll get into our chat. I think to start us off, Sean, you have been CEO of Conagra for about 10 years. There's been quite an evolution of the portfolio over that time. How do you view Conagra's portfolio today? What were the key steps along the way that make you feel like it's positioned well for the longer term today? Where do you see opportunities for further refinement from here? All right. Good morning, everybody. Thank you for having us. We're really glad to be here today. Obviously, these are dynamic times, so I'm sure we're going to hit on some topics. In terms of our journey, 10 years ago, things weren't working, and we were a diversified global holding company. We set out to change what the company fundamentally was and really shift the company to become a branded pure play anchored in North America. Over the course of the last eight, nine years, that's exactly the transformation we've done. The way we did that is a combination of investing in the businesses we own to modernize them. If you look across the portfolio of brands that we own today, virtually every brand we have has been dramatically modernized and shows up very differently in the marketplace. We've acquired new businesses that are additive to the portfolio we already had, and we divested businesses that either would create more value on their own, like the Lamb Weston IPO, or other divestitures of businesses that were just drags on our growth and on our margins. That's a transformation that we set out to do. We set out to put some operating margin on the business and build capabilities that would carry us into the future, like innovation. We've done that. Today, what you have is a portfolio that has the vast majority of its organic net sales in our retail business anchored in frozen and permissible snacking. About 2/3 of our portfolio retail sales are in those two categories. That's a big change versus where we were years ago, and that's important because those are growth businesses for us. Frozen is a business that we like to say it's just a temperature state. If you can dream it, we can freeze it, which is very different from the mindset the industry had on frozen 30, 40 years ago. Our snacks business is all about permissibility and healthy snacking. We've been the beneficiary of some of the shifts that you've seen in the snacking industry more recently, and we've built scale in critical categories like meat sticks, which is one of the fastest growing categories in all food. That's just a little bit of color on the transformation we've led, and happy to get into any pieces of that. Okay, great. Yeah, I think that sets us up well today. Before we dig in a little bit more to your brands, we'd love to just take a step back and talk about the consumer, just given the broad range of your portfolio. Obviously, you said it's a dynamic macro environment, but what trends are you seeing across brands that skew lower income versus upper income? Have you noticed any meaningful shifts across channels or eating more at home? Sure. It has been challenging times for the last few years because we had the inflation supercycle where we have seen cumulatively just an epic level of inflation, which then led to inflation-justified pricing in the industry, and that really stretched the consumer. Now what we have got is a whole new level of uncertainty in the last several months that has emerged. When we think about our consumer, we sell to consumers in every aisle in the grocery store. The simple way I think about it is uncertainty leads to conservatism. That is in the consumer. That is in retail customers. It is also in investors. It is fairly predictable. Granted, it's different from what we saw two summers ago, where you saw household savings and things like that, stimulus money coming down, but people were revenge spending, and they were going out and buying Taylor Swift and Beyoncé tickets at any price. That was atypical. What we're seeing now is not atypical. When there is uncertainty, consumers of all income groups tend to be more conservative, and that's what we're seeing right now. It obviously will correlate most closely with lower income consumers who have the least play in their household balance sheets. I would describe the environment we're seeing right now as one of broad-based conservatism across consumers, customers, and even investors. That will persist, I think, until we see green shoots. Every day we wake up and we put on Squawk Box and we see, are there any green shoots emerging today? Today we've got some, and you see the market move around. There's probably some correlation between where the consumer psyche is and even the way we see the market move day to day. That is very helpful. I think as the consumer is being conservative, I think a lot of our conversations sit around promotional activity, and you guys have been doing less than pre-COVID levels. I guess to what risk is there to normalize from there? Why are they more efficient today? Or just how are you thinking about your promotional strategy in the current environment? Yeah, to understand that for our company specifically, you have to go back to pre-10 years ago when we were a company that was a diversified holding company. We were not investing in innovation. We were not investing in brand building. The one tool we had to move volume were deep discount deals. When Dave and I joined the company, we said, that's the end of that era. We have worked very hard to drain the swamp, so to speak, build our brands in a quality way through innovation, and then do merchandising that is high quality, getting our great products in people's mouths because if we can get trial, we're confident we can get repeat purchase. We have invested in quality promotion, particularly in the last year when we declared we have to get back to volume growth because long-term volume declines are not good for anybody. We surgically invested, starting with our frozen single-serve meals business, in quality merchandising and saw tremendous responsiveness. By the time we got to the end of Q2, we were back growing volumes again. If you look at the absolute level of promotion that we have had, it is on par with where we were pre-COVID, below our peers with a depth of discount that is below our peers. We are not big into deep discount merchandising to move volume, but we are not opposed to investing in high-quality trial vehicles in order to get that consumer consumption because we are very confident we can get repeat. Great. That's very helpful. Thank you. I think as we're talking about promotions, maybe at a high level, if you could just comment on the competitive environment that you're seeing today, how you think about your price gaps, and maybe what you're seeing both from private label and smaller brands. If you read everybody's quarterly reports, everybody for the last year has been declaring they want to see better trends on volume. Improving volume trends in the food industry, particularly the near-in-food peers that we have with large center store businesses, you had volume declines kind of peak at that - 7, - 8, which is actually not that bad in the context of cumulative pricing that exceeded 30%. It does not make anybody feel good. We and others said, let's try to get that volume moving back to zero and then into positive territory. We were able to do that because our categories like frozen meals were very responsive to investment because people are hooked on convenience, which our products offer. I would say in general, everybody's been focused on volume. That has led a merchandising level that for the industry was below COVID for a couple of years to get back to COVID levels, but it has not become irrational beyond that. I would say the environment in general is very rational. I think everybody from retailers to manufacturers wants to see the consumer get back to their typical behavior and wants to see volumes get robust again. The phrase that we have all been chasing for a couple of years now is on algo. When are you companies going to get, food companies going to get back on algo? Every time we think we are getting close, a new curveball comes our way. The new one that we have dealt with in the last month or so has been tariffs and obviously the persistent inflation. That's something that I think you'll see companies get more clarity on over the course of the summer. Yes, tariffs has been one of the biggest questions we've had. Maybe we'll just jump there since you opened the door because I know a lot of investors are curious about that. Obviously, it remains a very fluid environment. Obviously, we continue to have update announcements this week, and I know it will continue to evolve. Could you provide more color on how your input costs are exposed? What's the potential impact and any mitigation opportunities you see? Yeah, so we talked about in our third quarter earnings, the two areas that were impacted the most are tin plate and aluminum and the China tariffs. The biggest being tin plate and aluminum. All of our U.S. sales are manufactured at plants we have in the United States, but we can't get all of our materials from the U.S. because there's no supply. Tin plate and aluminum is the biggest one. The tariffs are at 25%. The process we go through, which most companies go through this, you have a task force, which I lead, where we go through with our procurement teams and cross-functional and say, okay, what's the gross exposure from this? Then just go through mitigation. Okay, how much of this can we negotiate with our supplier? We have to split the tariff cost. Are there any alternative supplier arrangements where we can go? In this case, there is not a lot, but we look at anything we can do. We look at our core productivity programs and say, all right, can we accelerate those to offset more of the cost? Depending on where we land, the next lever would be targeted price increases that we would take. We are going through that process now. There is really no more to discuss there. What I would say is to the extent that if you look at China, and we had good news yesterday, obviously, with tariffs coming down, to the extent though that the estimated costs are changing, it makes it very difficult if you ultimately conclude that you want to talk to a customer about a targeted price increase. If the cost is changing, you cannot really have that conversation. It has just resulted in this delay where a lot of companies are kind of waiting to see, okay, we're mitigating, but ultimately, if you can't offset most of the costs, you have to take some pricing. That is where we are. We have our Q4 earnings call in July, and we'll give our guidance for fiscal 2026, and we'll give more color on where we are at that time. That's great. That's very helpful. Thank you. I think sticking with the cost side of things, though, outside of tariffs, you've also noted increasing cost pressure across various commodities of your input costs. I guess what are you seeing in terms of your inflationary input costs today? How much is locked in at this point, and how do you think about your ability to pass through pricing in the current environment? We guided for the end of our fiscal year, which ends May, our inflation is 4%. That's our estimate. That was up from our original expectation of 3%. We have seen an acceleration in inflation versus where we expected it at the beginning of the fiscal year. It's been sticky. Inflation's been sticky. Our basket of goods, we're a little bit more weighted to animal protein, so beef, chicken. As you've seen the last 40 days-45 days, the fresh chicken markets have gone up 30%-40%. We're more spot when it comes to that. We are seeing some of that now, and that will continue, but we'll see where that market goes. We're pretty much locked in at this point for fiscal 2025, but we're in the process now of just forecasting what we think our inflation's going to be before and after tariffs for fiscal 2026. As Sean said, it's extremely dynamic. There's a lot of changes. We have a very agile procurement group, so we're constantly looking at opportunities to try to offset these costs. I think if you step back from it, this is precisely the needle the industry is trying to thread, which is if it's an inflationary environment, and then on top of that, you layer on new tariffs, you've got a responsibility to protect margins. At the same time, investors and management teams have said it's important to have volume growth because keeping the relationship between the consumer and brands is in the best interest of long-term brand strength and the future cash flows of those businesses. The question, I think, is if the environment remains inflationary, if tariffs stick, and there is a cause for inflation-justified pricing, how does that coexist with the notion of surgically investing in merchandising to get volumes back to growth? Because when you take pricing, you trigger a new round of elasticity, and that elasticity, consumers have to adjust to the new pricing. If you do not like the response you see, you'll see manufacturers invest back trade, which basically unwinds some of the pricing. This is one of the challenges that makes it difficult for companies to provide helpful guidance to investors right now. How will the dust settle, and will companies need to take inflation-justified pricing and deal with new elasticity effects? Or is that going to become more manageable, and they can surgically and efficiently invest in some quality merchandising to get volumes back to growth? That is the needle that has to be thread, and that is, I think, why you see, even if you look at the scanner data today, you'll see some companies whose pricing is up materially. Take a look at their volumes, down materially. You'll see other companies that have not taken pricing recently, and their volumes are much stronger. That is the question. For us, we declared a year, year and a half ago that at the end of the day, you have to have that strong relationship with the consumer. Volumes need to be strong. We have also worked very hard to get our margins, operating margins where they are today. That is going to be the challenge for management teams in this current environment. Yeah, absolutely. Great color. Thank you. I wanted to go back to your two main segments, frozen and snacking. Maybe we'll start with frozen. You're the market leader in the category. You spoke about the return to volume growth, and that remains positive there. What trends are you seeing in the segment, and how do you view the long-term opportunity in the category? Do you still think there's any education that needs to happen for the consumer to adopt it? Absolutely. Yes on the last question. If you go back to when I was a little kid, frozen dinners were these things in metal trays and not particularly high quality, and it was almost emergency food. At the end of the day, it is just a temperature state. If you look at other countries, France is a good example. They have built really impressive, super high-quality frozen businesses that basically give you a chef-quality food that is kept in your freezer on call for you, ready when you want it. You do not have to buy it in advance like some of today's meal kits. If you decide to go out to watch Monday Night Football and you do not eat it, you find it three days later and you realize, I've got to throw it out. I've wasted all this money. The notion that frozen food is the highest quality fresh food that you can buy that is flash frozen at the peak of ripeness is a message that we continue to convey in our marketing. As younger consumers who have always been the biggest age cohort of frozen foods come to appreciate that, but also appreciate the tremendous value associated with it because it does not spoil. It stays in your freezer ready until you are. It really becomes the ultimate value proposition for today's shoppers. It is great quality, great nutrition, great convenience, great taste, but most importantly, at a great value. That is a message that we can drive across our entire frozen portfolio. We have become the largest frozen food company in the world. We were not when we started this journey ten years ago. We were not even the largest frozen meals company in the United States. We built that through a combination of organic innovation and acquisition. Even to this day, every year our innovation agenda is more aggressive than the year before. It is all about premium quality, premium wellness, premium convenience at a great value. In an environment where you see macro challenges where people are really becoming discerning, stretching their household balance sheets, one of the trade-offs that we have to deal with most frequently is how much of the consumer dollar gets spent eating away from home versus at home. You tend to see when you have a stressed consumer, there is a trade down first within food service from white tablecloth to fast casual to QSR, then into at-home eating. We tend to be the beneficiaries of that shift because we offer products that are very similar to fast casual, but at a better value proposition. Our innovation agenda is designed to take advantage of that and especially generate trial among younger consumers because we know that once we get trial, we get repeat. We know when those younger consumers age and they get married and then have kids, the per capita consumption per home of frozen food goes up and up and up. If you step back and look at the compound annual growth rate of frozen meals over the last 40 years, it's 4%. It's among the highest growing food categories that you can find. That's only gotten better in the last five to seven years as the quality of the products offered in this temperature state has improved pretty dramatically. That's great color. Thank you. Maybe just switching to snacking. The category broadly across the industry has been pretty soft, but as you noted earlier, your trends have been better than that. Maybe you could talk about the trends that you're seeing and why you think that your portfolio is resonating in the current environment. We made a decision a number of years ago not to be a chip and pretzel company. We do not have a DSD, direct store delivery business. We do not want to compete with those who do. We wanted to—snacks is a vast, vast arena, always has been. It is an $80 billion plus space in the U.S. We have always said we want to compete in spaces that can be delivered through the warehouse, that offer unique benefits, and frankly, permissible snacking. Snacking that not only satisfies your craving, but when you eat it, you feel like you are actually doing something good for yourself. We have focused our business on meat snacks, popcorn, seeds, and things like that. Our businesses have been incredibly growthful and incredibly profitable, and we have industry-leading market shares in all of them. We have kind of bucked the trend that you see more recently, and we even made an acquisition recently of the FATTY, which is our new meat stick, which is anything but a skinny meat stick. It is a quality eating experience that will satisfy your protein need and your hunger. I encourage you to try it. It is even good for breakfast. No, that's great. Obviously, permissible snacking. We've seen the trend. I think other companies are seeing it as well. I mean, we've seen them lean in with innovations. They've been buying up brands too. It does seem that the competitive environment might be increasing for these categories. How do you view your ability to defend share here, especially for categories like meat snacks and popcorn? Let's take meat snacks as an example. If the U.S. salty snack category is $80 billion, just for example, and meat snacks as a category starts tiny and then hits a tipping point and becomes huge, what's the first thing that happens to a category when it goes from being small to being huge? Retailers add more space and more varieties appear. When you think of large categories over the course of our lifetimes that have become massive, like cereal, yogurt, soup, things like that, you see a tremendous amount of variety. You see a tremendous amount of linear footage. That's what happens when categories become big, lots of brands. Meat sticks historically was a very narrow category. We were there with very few other players. Meat sticks now is exploding. The reason it's exploding is because the target audience is no longer just a 17-year-old boy. Now people of all ages, of both genders, are buying meat sticks because it's an unbelievably efficient, portable way to get protein, satisfy your hunger, avoid sugar, avoid carbs. You have this influx of all these consumers that were accounting for this $80 billion space that are now looking at this category with fresh eyes, saying, you know what? I want to play around here, but I want a brand that fits me. When that happens, it's a natural evolution for a category to add additional brands. We want to participate in that, which is why we own more than just Slim Jim in our meat stick portfolio. We own Duke's, which is a shorty sausage. We own FATTY, and we own Penrose, which is a whole nother business that sells in the South. If you ever go into a C-store in the Southeast, you will see our products there. Excellent margin business, high market share too, by the way. That is what you need. You need variety when categories grow, and that is why we have expanded our portfolio to participate in that. That's very helpful. Thank you. Kind of putting a lot of the pieces that we've talked about together, I wanted to go back to the FY 2026 guide. I know we're all looking forward to that next quarter soon enough. We've talked about a number of puts and takes, some around the cost side, obviously the trends in your business on volumes doing well. As we look into next year, what are the high-level puts and takes we should think about, and how do you view your ability to preserve margins? It always starts with volume, right? Sean talked about it. We're investing more to have consistent volume growth is key, right? You get the overhead absorption, which has been a headwind for us in the manufacturing operations. You get productivity, which every company reports on. That is very tied to volume because you get the multiplier effect. It always starts with volume. We talked about in our third quarter call, we've had some supply chain issues that have resulted in us having to go to third-party co-mans to supply both vegetables, which we're doing this quarter, and chicken. We've been very clear about that. Those inflated kind of co-man costs will go through our first quarter of fiscal 2026. That will be a headwind relative to our base costs as we start fiscal 2026. We're very pleased with our productivity. We've been accelerating that. We're shooting for a 4% of cost-to-goods sold target, and we're well on our way there. We would expect that to continue. The other piece is we invested a lot this year in trade merchandising. That has been part of why our gross margins have been down. Now is about all that investment we made, we're assessing it, and I call it optimizing. As we build our plans for next year, what programs, what deals worked, and what didn't. We have a pretty robust trade management system where we can evaluate the effectiveness and ROI of deals. Ones that didn't work, we'll reallocate dollars to ones that do work. We would expect it's not another spike in investment, but it's better ROI on the investment, the big investment we've made to continue to optimize that. The last one is inflation. As I mentioned before, inflation has been sticky for us. It is frustrating. We are doing everything we can to offset it. As I said, we are going to finish this year at 4%. We saw a spike in chicken. We just have to keep grinding through it to see what we can do to offset it. That is really the wild card because if inflation is kind of above that 2%-3%, you do have to look seriously at taking additional price increases. In this environment, it is not ideal, but you have to do it to manage your P&L and your margins. More to come on that one. Yeah, just to add a little bit more color on that, if you go back to our last quarterly earnings call transcript, you'll see a clear outline of kind of what we see as the puts and takes next year. The bottom line is things are still moving around, but we're going to wrap some of these supply things. Some of them on the cost front will creep into next year, but some of them won't repeat. That will be a good guide. We had tremendous momentum with consumers even through early Q3, as we just saw incredible resilience of our frozen business behind investment. We interrupted that and had to pull the merch because of the supply issues. The underlying consumer pull, and frankly, retailer desire to kind of get back on the horse with some of our businesses, especially in the frozen category, where we've driven virtually all the growth for the better part of the last decade, that's going to be a good guide. These are uncertain times. A lot of this macro uncertainty does breed conservatism. One of the things we saw coming out of last quarter is we saw going into Q3, and you've seen this from other manufacturers talk about retailers taking a conservative stance on inventory replenishment. We thought that was going to improve this quarter. It's still more conservative as we see things. Every week, it seems like somebody's coming out. How long is that going to last? Can't last forever because I don't think anybody's sitting on large levels of absolute inventory. If you think about it, if you think there is a strained consumer on the horizon, then maybe you're anticipating velocities will slow, and then maybe you hold a little bit lower inventory. There is an element of conservatism even in the retailer environment right now that we have to continue to monitor. We are not guiding today. We have a little bit of time to kind of see how the dust settles. Any of these short-term things I view as heavily temporary, much as you have seen in the market. It is, again, people erring on the side of caution until they can see the dust settle. I think if we see a few green shoots, I think you will see a rather quick return to normalcy. Can I add one more thing? Oh, absolutely. Free cash flow. Our free cash flow performance has been very strong. We're very focused on it. It's part of our compensation programs. We paid down $500 million in debt in the last 12 months. We will continue to focus on that and expect that to continue as we go into next year. Great. That's very helpful. I think that gave us a lot to think about, and I'll be looking forward to the guide next quarter. I think you kind of opened up the door to my next question on your free cash flow comments. Obviously, you have made great progress reducing your leverage over the last few years. Just how do you think about improvement from here towards that three-time target, and how much can be done by debt paydown versus reacceleration in the business at this point? We always talk about leverage, obviously. It's the net debt and EBITDA. Our focus is on generating free cash flow, paying our dividend, a competitive dividend, and then being able to pay down debt. We've done that. We're going to continue to do that. Our denominator, our EBITDA, has bounced around, our earnings. We've had some volatility in that this year. The leverage ratio has spiked up a little bit. Primarily, it starts with generating free cash flow to continue to pay debt down. That will continue to be the priority. We'll see, obviously, as we give our guidance in July for fiscal 2026, where we land with earnings, and then that'll inform kind of where we are with the leverage ratio. The generating cash flow to pay down debt has worked, and it will continue to be our top priority. Great. That's very helpful. Obviously, the debt paydown, the top priority, but maybe we could just dig into capital allocation a little bit more overall, how you think about your priorities given the solid cash flow that you're focused on, and maybe more detail around M&A and where you see opportunities there. You obviously announced plans to divest Chef Boyardee recently and just how are you thinking about M&A broadly going forward as well? Our playbook hasn't changed. We believe in a balanced approach to capital allocation. It starts with investing in the businesses and modernizing them the way we've done. It includes acquisition. It includes paying a healthy dividend. It includes share buybacks from time to time. We also engage in divestitures as part of the overall portfolio reshaping. The ultimate goal is to continue to drive better growth and better margins on an ongoing basis with the portfolio. As we think about where we stand in any given window, it's kind of like, what is the right thing strategically for the long-term shareholder value creation cash flows of the company, and what is the best option among all the capital allocation options we've got? For the last several years, our primary focus has been on debt paydown. We did a major acquisition. We became the largest frozen player in the world. We've harvested a tremendous amount of synergies out of that acquisition, and we're very pleased with where our market structure stands in the frozen business today. We took on debt to do that. We've been maniacally focused on deleveraging, and that continues until we hit our three-turn target. We've also done other things along the way as well. We continue to pay a healthy dividend. We've periodically bought back shares. There is room for bolt-on acquisitions that make strategic sense. We did buy Fatty within the last year. That's really important. It's important because it's a fast-growing category and we're the market leaders in that category, and it gives us something different and a new variety and an expanding subsegment, as I just explained a few minutes ago. That is part of it as well. Divestitures have always been part of the mix. What I have said historically with divestitures is if something is not a strategic fit for us and it is a drag on our margins or it is a drag on our sales, typically it comes down to does somebody want to own it and pay us a number that is equal or better than the intrinsic value of the business? Because if they do, we are open-minded to it. Obviously, that was the case with the Chef Boyardee divestiture recently. Each of those, you have to look at case by case. We like the idea of continuing to sculpt better growth and better margins for the portfolio through a combination of investing in the business, small bolt-on acquisitions, and then targeted divestitures. If we can pay down material debt in the meantime, that's even better. Great. Thank you. I think we have time for me to sneak one more question in, so I will. I wanted to follow up on something you mentioned. We were talking about the outlook for 2026 around the supply disruption that you had within frozen for a couple of categories over the last year. Obviously, you brought the co-man on and made some improvement there. Just see if you could provide a little bit more detail on where we are in the recovery. Is it still tracking to the August timeframe? Just how do you view your ability to kind of regain all the share in shelf space there? Yeah. It was really two things, right? It was our frozen vegetable business with Birds Eye. That was a demand-driven, just demand spiked. We had to put customers on allocation. We went to a third party to supply. By the end of this quarter that we're in, we'll pretty much be back on track. The one that's going to extend into next year, both from a cost and from a supply perspective, is we have a primary plant that manufactures chicken that goes into a lot of our different meals. We had a disruption at that manufacturing plant. We've gone to a third party to supply various cuts of chicken. We are continuing with a modernization of that facility, which will take us through basically the end of the first quarter. We're building inventories, and we'll continue to do that. By the end of the first quarter, we expect that to be done. It'll drift a little into the second quarter as we kind of transition back. We're on track with everything that we said in Q3. Yeah, as Dave points out, the root cause of the Birds Eye challenge was this incredible surge in demand we had as we began doing some holiday promotions on the business. On the chicken business, there's one element of it that is also tied to incredible demand, which is one of our most successful innovations this year is our new Banquet Mega Chicken Filet. I know you've all been to Chick-fil-A. We basically built a product under Banquet Mega Filet that is a Chick-fil-A equivalent in a bag, and it was one of our fastest-moving new innovations. That has kind of exacerbated the out-of-stock issue we've gotten. We've had to tamp down demand on these products while we build back the supply capability. Underneath it, we were very pleased to see that one of our innovations wildly exceeded our expectations and is really resonating with consumers at home as an incredible value where they can, again, replicate something they can get in the food service world, but in their own kitchen at a better value. Yeah, that's great. Thank you, Sean, David. This is a great chat. Thank you. Thank you. Thanks, everybody. See you.