Conagra Brands (CAG) - Get ConAgra Brands Inc. Report jumped more than 17% in trading Thursday to $34 after the company reported second-quarter earnings that topped analysts' expectations and also increased its cost synergy estimate from its acquisition of Pinnacle.
The Chicago-based branded foods company reported second-quarter net sales of $2.83 billion, an 18.3% increase year over year, and earnings of 63 cents a share, topping analysts' revenue estimates of $2.8 billion and earnings of 57 cents.
“We maintained our strong momentum in frozen and snacks. We also made good progress on our large grocery brands, Hunt's and Chef Boyardee, both of which made sequential improvements. We also continued to make very good progress on the Pinnacle integration, and we remain squarely on-track with our plans to improve key Pinnacle brands,” said CEO Sean Connolly.
The company increased its targeted annual cost synergies from its acquisition of Pinnacle to $305 million by the end of fiscal 2022 from its previous estimate of $285 million in savings. The company attributed 19.6% of its net sales increase in the second quarter to the acquisition of Pinnacle.
Meanwhile, the company’s gross profit climbed 17.8% to $798 million in the quarter and it was credited to the addition of Pinnacle’s gross profit and cost synergies.
Conagra completed its acquisition of Pinnacle Foods on Oct. 26 in a $10.9 billion deal, including debt.
“The second-half is when we expect to see the greatest impact from new frozen and snacks innovation, continued smart promotional support in key grocery brands, the ongoing implementation of our Pinnacle action plan, and synergy capture,” Connolly said.