USA- Ardent Mills, a leading player in the flour milling industry, has rebounded with improved second-quarter earnings, showcasing resilience in the face of weakened volumes. 

The positive financial turnaround was disclosed in a Form 10-Q filed by Conagra Brands, Inc. with the Securities and Exchange Commission on January 4, 2024.

According to the filing, Conagra Brands, which holds a 44% stake in Ardent Mills, reported equity method investment earnings of US$54.3 million for the quarter ended November 26, 2023. 

This figure represents a 10% increase from US$49.3 million in the second quarter of the previous year and more than doubles the US$22.5 million reported in the same period of fiscal 2023.

Year-to-date equity investment earnings for Conagra were US$89.9 million, reflecting a 9% decline from US$98.5 million during the first half of fiscal 2023. 

Despite facing weaker sales, Ardent Mills managed to generate higher earnings, hinting at potential continued softness in US flour milling volumes through the final quarter of 2023.

In a call with investment analysts on January 4, Conagra executives highlighted the strategic significance of their investment in Ardent Mills, positioning it as a counterbalance to challenges faced in their operating business due to consumer frugality. 

The company reported a 9% decrease in operating profit and a 7% decline in adjusted EBITDA, partially offset by increased equity earnings driven by Ardent Mills’ strong operating performance.

David S. Marberger, Executive Vice President and Chief Financial Officer at Conagra, commented, “Ardent Mills joint venture continues to deliver strong operating performance, contributing to offset weaknesses in our operating business.” 

Despite a 12% decrease in earnings per share, Ardent Mills played a crucial role in mitigating overall financial challenges.

Marberger also emphasized the progress made in reducing leverage and enhancing free cash flow. Conagra’s net leverage ratio fell from 3.9 times to 3.55 times during the second quarter of fiscal 2024, indicating successful efforts to manage inventory levels and improve accounts payable.

The positive cash distributions from Ardent Mills, attributed to its robust profit and cash flow performance over recent years, were cited as a contributing factor to Conagra’s impressive free cash flow of US$641 million in the second quarter of fiscal 2024, compared to US$109 million a year earlier.

Conagra remains optimistic about Ardent Mills’ contribution to its bottom line, forecasting a US$170 million contribution to fiscal 2024 results due to its continued strong performance. The financial results underscore the resilience and strategic importance of Ardent Mills within Conagra’s portfolio, despite broader economic challenges.

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