ConAgra Brands, Inc. ( CAG ) shares are trading slightly lower in the morning session on Thursday.

The company reported second-quarter adjusted earnings per share of 70 cents, beating the analyst consensus estimate of 67 cents.

Quarterly sales of $3.195 billion, beating the street view of $3.149 billion. The results show a 0.4% decrease in net sales, with organic net sales up by 0.3%.

The 0.3% increase in organic net sales was driven by a 0.1% negative impact from price/mix and a 0.4% increase in volume.

Net sales for the Grocery & Snacks segment increased 2.0% to $1.3 billion, reported and organic net sales for the Refrigerated & Frozen segment were flat at $1.3 billion, net sales for the International segment decreased 12.9% to $243 million, and sales for the Foodservice segment decreased 0.9% to $292 million.

The reported operating margin fell to 12.6%, down by 138 basis points, while the adjusted operating margin decreased to 15.3%, a 57 basis point drop.

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“While momentum remains strong, we expect the business to be impacted by two headwinds in the back half including higher than expected inflation and unfavorable foreign exchange rates,” said Sean Connolly, president and chief executive officer of Conagra Brands ( CAG ).

Net interest expense was $108 million in the quarter, a 4.5% decrease compared to the prior year period due to a reduction in total debt.

For the first half of fiscal 2025, the company generated $754 million in operating cash flow. The company ended the quarter with net debt of $8.4 billion.

Outlook: Conagra Brands ( CAG ) has lowered its FY25 adjusted EPS outlook to $2.45 – $2.50 from the previous view of $2.60 – $2.65. The analyst consensus estimate stands at $2.58.

The company projects organic net sales to be near the midpoint of a 1.5% decline to flat growth year-over-year.

Price Action: CAG shares are trading lower by 1.88% to $26.86 at last check Thursday.

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