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Item 2. Management’s Discussion and Analysis

2025-12-19 compared with 2025-10-01 · 137 added, 93 removed, 131 unchanged (64% of the section changed)

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The information contained in this report includes forward-looking statements within the meaning of the federal securities laws.

Examples of forward-looking statements include statements regarding our expected future financial performance or position, results of operations, business strategy, plans and objectives of management for future operations, and other statements that are not historical facts.

Examples of forward-looking statements include statements regarding our expected future financial performance or position, results of operations, business strategy, plans and objectives of management for future operations, legal matters, costs and cost savings, impairments, and dividends, as well as other statements that are not historical facts.

You can identify forward-looking statements by their use of forward-looking words, such as “may”, “will”, “anticipate”, “expect”, “believe”, “estimate”, “intend”, “plan”, “should”, “seek”, or comparable terms.

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These risks, uncertainties, and factors include:

risks associated with general economic and industry conditions, including inflation, reduced consumer confidence and spending, declining benefits or increased limitations under government food assistance programs for consumers, rising unemployment, recessions, increased energy costs, supply chain challenges, increased tariffs and taxes, labor cost increases or shortages, currency rate fluctuations, actual or threatened hostilities or war, and or other geopolitical conflicts;

risks associated with general economic and industry conditions, including inflation, reduced consumer confidence and spending, increased tariffs and taxes, declining benefits or increased limitations under government food assistance programs for consumers, rising unemployment, recessions, increased energy costs, supply chain challenges, labor cost increases or shortages, currency rate fluctuations, actual or threatened hostilities or war, and or other geopolitical conflicts;

risks related to the availability and prices of commodities and other supply chain resources, including raw materials, packaging, energy, and transportation, weather conditions, health pandemics or outbreaks of disease, or other geopolitical uncertainty;

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The discussion that follows should be read together with the unaudited Condensed Consolidated Financial Statements and related notes contained in this report and with the financial statements, related notes, and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the fiscal year ended May 25, 2025 and subsequent filings with the SEC.

Results for the first quarter of fiscal 2026 are not necessarily indicative of results that may be attained in the future.

Results for the second quarter of fiscal 2026 are not necessarily indicative of results that may be attained in the future.

EXECUTIVE OVERVIEW

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Conagra’s brands include Birds Eye ® , Duncan Hines ® , Healthy Choice ® , Marie Callender’s ® , Reddi-wip ® , Slim Jim ® , Angie’s ® BOOMCHICKAPOP ® , and many more.

Fiscal 2026 First Quarter Results

In the first quarter of fiscal 2026, results reflected a decrease in net sales, with organic (excludes the impact of acquisitions, divestitures, and foreign exchange) decreases in our Grocery & Snacks and International segments, partially offset by increases in our Refrigerated & Frozen and Foodservice segments, in each case compared to the first quarter of fiscal 2025.

Overall gross profit decreased primarily due to the impacts of lower net sales, input cost inflation, and a reduction in profit from divested businesses, partially offset by productivity.

Excluding items impacting comparability, overall segment operating profit decreased in our Grocery & Snacks, Refrigerated & Frozen, and Foodservice segments, slightly offset by an increase in our International segment compared to the first quarter of fiscal 2025.

Corporate expenses and selling, general and administrative (“SG&A”) expenses were nearly flat compared to the prior year.

We recognized lower interest expense and higher income tax expense, in each case compared to the first quarter of fiscal 2025.

Excluding items impacting comparability, our effective tax rate was higher than the first quarter of fiscal 2025.

Diluted earnings per share in the first quarter of fiscal 2026 and 2025 was $0.34 and $0.97, respectively.

Diluted earnings per share was affected by lower net income in the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025.

Fiscal 2026 Second Quarter Results

In the second quarter of fiscal 2026, results reflected a decrease in net sales, with organic (excludes the impact of divestitures and foreign exchange) decreases in our Grocery & Snacks, Refrigerated & Frozen, and International segments, partially offset by an increase in our Foodservice segment, in each case compared to the second quarter of fiscal 2025.

Overall gross profit decreased primarily due to the impacts of lower organic net sales, input cost inflation, and a reduction in profit from divested businesses, partially offset by productivity.

Overall segment operating profit decreased in all four of our segments compared to the second quarter of fiscal 2025.

Corporate expenses and selling, general and administrative (“SG&A”) expenses were lower compared to the prior year primarily due to items impacting comparability, discussed below.

We recognized lower interest expense, lower equity method investment earnings, and lower income tax expense compared to the second quarter of fiscal 2025.

Excluding items impacting comparability, our effective tax rate was higher than the second quarter of fiscal 2025.

Diluted loss per share in the second quarter of fiscal 2026 was $1.39 and diluted earnings per share in the second quarter of fiscal 2025 were $0.59.

Diluted loss per share was affected by lower net income in the second quarter of fiscal 2026 compared to the second quarter of fiscal 2025.

See “Items Impacting Comparability” below as several items affected the comparability of year-over-year results.

Trends Impacting Our Business

Our industry continues to be impacted by shifting consumer behavior, commodity cost fluctuations, labor cost inflation, input cost inflation, supply chain pressures, exchange rate volatility, and other global macroeconomic challenges.

In the first quarter of fiscal 2026, we saw a modest impact to our financial results due to increased costs resulting from recent changes to trade policies, which we largely mitigated.

In addition, we continued to experience an elevated amount of input cost inflation, which we were able to partially offset through our on-going productivity initiatives.

Our industry continues to be impacted by weak consumer sentiment, commodity cost fluctuations, labor cost inflation, input cost inflation, supply chain pressures, exchange rate volatility, and other global macroeconomic challenges.

In the second quarter of fiscal 2026, we saw an impact to our financial results due to increased costs resulting from changes to trade policies.

In addition, we continued to experience an elevated amount of input cost inflation, which we were able to partially offset through our on-going productivity initiatives and targeted pricing actions.

We expect inflation and tariffs to negatively impact our costs of goods sold in fiscal 2026.

While we continue to expect consumer trends to improve over time, in the near-term, we expect weak consumer sentiment to continue to negatively impact our volumes during fiscal 2026.

While we continue to expect consumer trends to improve over time, we expect weak consumer sentiment to continue to drive value seeking behaviors and negatively impact our volumes during fiscal 2026.

We will continue to evaluate the evolving macroeconomic environment and take action to mitigate negative impacts on our business, consolidated results of operations, and financial condition.

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Segment presentation of gains and losses from derivatives used for economic hedging of anticipated commodity input costs and foreign currency exchange rate risks of anticipated transactions is discussed in further detail in Note 8, “Derivative Financial Instruments” , to the Condensed Consolidated Financial Statements contained in this report.

We had $2.2 million and $1.3 million of derivative losses in the first quarter of fiscal 2026 and 2025, respectively, which were included in general corporate expenses and reflected as items impacting comparability.

Other items of note impacting comparability for the first quarter of fiscal 2026 included the following:

● A net gain of $42.4 million ($20.4 million after-tax loss) associated with the divestiture of our Chef Boyardee ® and frozen fish businesses and

We had $1.4 million of derivative losses and $10.9 million of derivative gains in the second quarter of fiscal 2026 and 2025, respectively, and $3.6 million of derivative losses and $9.6 million of derivative gains in the first half of fiscal 2026 and 2025, respectively, which were included in general corporate expenses and reflected as items impacting comparability.

Other items of note impacting comparability for the second quarter of fiscal 2026 included the following:

● charges totaling $968.3 million ($902.9 million after-tax) related to the impairments of goodwill and certain brand intangible assets,

● a benefit of $35.0 million ($26.5 million after-tax) related to legacy legal matters, and

● charges of $6.7 million ($5.1 million after-tax) related to restructuring activities of the Ardent Mills joint venture.

Items of note impacting comparability for the second quarter of fiscal 2025 included the following:

● charges totaling $79.5 million ($60.4 million after-tax) in connection with our restructuring plans,

Items of note impacting comparability for the first quarter of fiscal 2025 included the following:

● charges of $18.9 million ($14.5 million after-tax) related to the impairments of certain brand intangible assets, and

● an income tax benefit of $14.4 million primarily associated with the recognition of certain unrecognized tax benefits and release of valuation allowances on certain deferred tax assets based upon interactions with the taxing authorities.

Other items of note impacting comparability for the first half of fiscal 2026 included the following:

● charges totaling $968.3 million ($902.9 million after-tax) related to the impairments of goodwill and certain brand intangible assets,

● a net gain of $42.2 million ($20.6 million after-tax loss) associated with the divestiture of our Chef Boyardee ® and frozen fish businesses,

● a net benefit of $37.4 million ($28.3 million after-tax) related to legacy legal matters, and

● charges of $6.7 million ($5.1 million after-tax) related to restructuring activities of the Ardent Mills joint venture.

Items of note impacting comparability for the first half of fiscal 2025 included the following:

● an income tax benefit of $225.8 million primarily associated with the release of valuation allowances on certain deferred tax assets based upon interactions with the taxing authorities,

● a gain of $17.0 million ($12.8 million after-tax) associated with insurance proceeds from the previous fire that occurred at one of our manufacturing facilities,

● charges totaling $4.3 million ($3.2 million after-tax) in connection with our restructuring plans, and

● charges totaling $83.8 million ($63.6 million after-tax) in connection with our restructuring plans,

● charges of $18.9 million ($14.5 million after-tax) related to the impairments of certain brand intangible assets,

● a gain of $17.0 million ($12.8 million after-tax) associated with insurance proceeds from the previous fire that occurred at one of our manufacturing facilities, and

● net charges totaling $3.4 million ($2.6 million after-tax) related to legacy legal matters.

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Thirteen Weeks Ended

Twenty-Six Weeks Ended

Reporting Segment

August 24, 2025

August 25, 2024

November 23, 2025

November 24, 2024

November 23, 2025

November 24, 2024

Grocery & Snacks

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International

Net sales for the first quarter of fiscal 2026 in our Grocery & Snacks segment included a decrease in organic volume of 1.6% when compared to the first quarter of fiscal 2025 driven by continued lower consumption trends which were seen throughout the industry.

Organic price/mix increased by 0.6% for the first quarter of 2026 when compared to the first quarter of 2025.

The first quarter of fiscal 2026 and 2025 included $7.0 million and $110.1 million, respectively, of net sales related to our Chef Boyardee ® business, which was sold in the first quarter of fiscal 2026.

The first quarter of fiscal 2026 included inorganic net sales of $10.6 million associated with the acquisitions of Sweetwood Smoke & Co.

Net sales for the second quarter and first half of fiscal 2026 in our Grocery & Snacks segment included a decrease in organic volume of 2.3% and 1.9%, respectively, when compared to the second quarter and first half of fiscal 2025 driven by changes in retailer inventory

and lower consumption trends that were seen throughout the industry.

Organic price/mix increased by 0.8% and 0.6% for the second quarter and first half of fiscal 2026, respectively, when compared to the second quarter and first half of fiscal 2025.

The second quarter of fiscal 2025 included $93.1 million of net sales related to our Chef Boyardee ® business, which was sold in the first quarter of fiscal 2026.

The first half of fiscal 2026 and 2025 included $7.0 million and $203.2 million, respectively, of net sales related to our Chef Boyardee ® business.

The first half of fiscal 2026 included inorganic net sales of $10.6 million associated with the acquisitions of Sweetwood Smoke & Co.

in August 2024 and a contract manufacturer in July 2024 through the respective one-year anniversary of each acquisition.

Net sales for the first quarter of fiscal 2026 in our Refrigerated & Frozen segment reflected an increase in organic volume of 0.5%, when compared to the first quarter of fiscal 2025.

Organic price/mix decreased by 0.3% for the first quarter of fiscal 2026, when compared to the first quarter of fiscal 2025.

The first quarter of fiscal 2026 and 2025 included $4.9 million and $17.4 million, respectively, of net sales related to our frozen fish business, which was sold in the first quarter of fiscal 2026.

Additionally, we estimate that net sales during the first quarter of fiscal 2025 were impacted by approximately $24 million due to temporary manufacturing disruptions in our Hebrew National ® business during the key grilling season.

Net sales for the first quarter of fiscal 2026 in our International segment reflected a 5.2% decrease in organic volumes, a 1.7% increase in organic price/mix, and a 1.3% decrease due to unfavorable foreign exchange rates, in each case compared to the first quarter of fiscal 2025.

The decrease in volume was driven by lower consumption trends which were seen in our regions.

The unfavorable foreign exchange rates were primarily due to the strength of the US dollar relative to the Mexican Peso in comparison to the first quarter of fiscal 2025.

The first quarter of fiscal 2025 included $23.6 million of net sales related to our ownership stake in Agro Tech Foods Limited (“ATFL”), which was sold in the first quarter of fiscal 2025.

In addition, the first quarter of fiscal 2026 and 2025 included $1.1 million and $13.6 million, respectively, of net sales related to our Chef Boyardee ® business.

Net sales for the first quarter of fiscal 2026 in our Foodservice segment reflected an increase in organic price/mix of 3.8%, when compared to the first quarter of fiscal 2025.

Organic volume decreased by 3.6%, compared to the first quarter of fiscal 2025, reflecting ongoing soft yet stabilizing trends in commercial traffic.

The first quarter of fiscal 2025 included $3.6 million of net sales related to our Chef Boyardee ® and frozen fish businesses.

Additionally, we estimate that net sales in our Foodservice segment during the first quarter of fiscal 2025 were impacted by approximately $3 million due to the temporary manufacturing disruptions in our Hebrew National ® business.

Net sales for the second quarter and first half of fiscal 2026 in our Refrigerated & Frozen segment reflected a decrease in organic volume of 3.0% and 1.5%, respectively, when compared to the second quarter and first half of fiscal 2025, driven by changes in retailer inventory and lower consumption trends.

Organic price/mix decreased by 2.1% and 1.2% for the second quarter and first half of fiscal 2026, respectively, when compared to the second quarter and first half of fiscal 2025.

The second quarter of fiscal 2025 included $19.7 million of net sales related to our frozen fish business, which was sold in the first quarter of fiscal 2026.

The first half of fiscal 2026 and 2025 included $4.9 million and $37.1 million, respectively, related to our frozen fish business.

Additionally, we estimate that net sales during the first half of fiscal 2025 were impacted by approximately $24 million due to temporary manufacturing disruptions in our Hebrew National ® business during the key grilling season.

Net sales for the second quarter of fiscal 2026 in our International segment reflected a 6.4% decrease in organic volumes, a 3.5% increase in organic price/mix, and a 1.6% increase due to favorable foreign exchange rates, in each case compared to the second quarter of fiscal 2025.

Net sales for the first half of fiscal 2026 in our International segment reflected a 5.8% decrease in organic volumes, a 2.6% increase in organic price/mix, and a 0.2% increase due to favorable foreign exchange rates, in each case compared to the first half of fiscal 2025.

The decrease in volume was driven by lower consumption trends in response to inflation-justified pricing actions.

The favorable foreign exchange rates were primarily due to the strength of the US dollar relative to the Mexican Peso in comparison to the second quarter and first half of fiscal 2025.

The first half of fiscal 2025 included $23.6 million of net sales related to our ownership stake in Agro Tech Foods Limited (“ATFL”), which was sold in the first quarter of fiscal 2025.

In addition, the second quarter of fiscal 2025 included $10.1 million of net sales related to our Chef Boyardee ® business.

The first half of fiscal 2026 and 2025 included $1.1 million and $23.7 million of net sales related to our Chef Boyardee ® business.

Net sales for the second quarter and first half of fiscal 2026 in our Foodservice segment reflected an increase in organic price/mix of 4.2% and 4.0%, respectively, when compared to the second quarter and first half of fiscal 2025 primarily due to inflation justified pricing actions.

Organic volume decreased by 4.0% and 3.8% compared to the second quarter and first half of fiscal 2025, respectively, reflecting ongoing soft trends in commercial traffic.

The second quarter and first half of fiscal 2025 included $4.4 million and $8.0 million, respectively, of net sales related to our Chef Boyardee ® and frozen fish businesses.

Additionally, we estimate that net sales in our Foodservice segment during the first half of fiscal 2025 were impacted by approximately $3 million due to the temporary manufacturing disruptions in our Hebrew National ® business.

SG&A Expenses (includes general corporate expenses)

SG&A expenses totaled $335.6 million for the first quarter of fiscal 2026, an increase of $0.2 million, as compared to the first quarter of fiscal 2025.

SG&A expenses for the first quarter of fiscal 2026 reflected the following:

SG&A expenses totaled $325.1 million for the second quarter of fiscal 2026, a decrease of $100.1 million, as compared to the second quarter of fiscal 2025.

SG&A expenses for the second quarter of fiscal 2026 reflected the following:

Items impacting comparability of earnings

● net charges of $3.7 million in connection with our restructuring plans and

● a net benefit of $2.4 million related to legacy legal matters.

Other changes in expenses compared to the first quarter of fiscal 2025

● a benefit of $35.0 million related to legacy legal matter recoveries and

● a net benefit of $2.0 million in connection with our restructuring plans.

Other changes in expenses compared to the second quarter of fiscal 2025

● an increase in salary, wage, and fringe benefit expense of $5.8 million due primarily to employee insurance costs,

● an increase in advertising and promotion expense of $5.0 million, and

● an increase in share-based payment expense of $4.3 million.

SG&A expenses for the second quarter of fiscal 2025 included net charges of $73.3 million in connection with our restructuring plans.

SG&A expenses totaled $660.7 million for the first half of fiscal 2026, a decrease of $99.9 million, as compared to the first half of fiscal 2025.

SG&A expenses for the first half of fiscal 2026 reflected the following:

Items impacting comparability of earnings

● a net benefit of $37.4 million related to legacy legal matter recoveries and

● net charges of $1.7 million in connection with our restructuring plans.

Other changes in expenses compared to the first half of fiscal 2025

● an increase in salary, wage, and fringe benefit expense of $11.0 million due primarily to employee insurance costs,

● an increase in short-term incentive expense of $7.5 million,

● a gain of $5.4 million related to the sale of certain corporate parcels of land,

● an increase in salary, wage, and fringe benefit expense of $5.2 million, and

● an increase in advertising and promotion expense of $7.5 million,

● a decrease in consulting and professional fees of $7.1 million,

SG&A expenses for the first quarter of fiscal 2025 included the following items impacting comparability of earnings:

● charges of $3.4 million related to legacy legal matters and

● a gain of $5.4 million related to the sale of certain corporate parcels of land, and

● a decrease in amortization expense of $5.4 million.

SG&A expenses for the first half of fiscal 2025 included the following items impacting comparability of earnings:

● net charges of $75.5 million in connection with our restructuring plans,

● charges of $3.4 million related to legacy legal matters, and

● charges of $2.0 million associated with consulting fees for certain tax matters.

Segment Operating Profit

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Thirteen Weeks Ended

Twenty-Six Weeks Ended

Reporting Segment

August 24, 2025

August 25, 2024

November 23, 2025

November 24, 2024

November 23, 2025

November 24, 2024

Grocery & Snacks

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International

Segment operating profit in our Grocery & Snacks segment for the first quarter of fiscal 2026 reflected a decrease in gross profits of $27.8 million compared to the first quarter of fiscal 2025.

The decrease in gross profit was driven by the decrease in net sales discussed above, the impacts of input cost inflation, and a reduction in profit associated with the sale of our Chef Boyardee ® business, partially offset by productivity.

In addition, we recognized a benefit of $3.3 million in the first quarter fiscal 2025 related to insurance proceeds for lost sales from our fiscal 2023 brand recall on Armour Star ® .

The decrease in operating profit also included an increase in SG&A expenses primarily related to incentive compensation.

Segment operating profit in our Refrigerated & Frozen segment for the first quarter fiscal 2026 reflected a decrease in gross profits of $42.4 million compared to the first quarter fiscal 2025.

The decrease was driven by the impacts of input cost inflation, unfavorable operating leverage, and a reduction in profit associated with the sale of our frozen fish business, partially offset by productivity.

In addition, we estimate that gross profits during the first quarter of fiscal 2025 were negatively impacted by approximately $10 million, primarily due to lost profits, abnormal manufacturing variances, and certain inventory write-offs resulting from the temporary manufacturing disruptions in our Hebrew National ® business.

Segment operating profit in our International segment for the first quarter of fiscal 2026 reflected a decrease in gross profits of $5.4 million when compared to the first quarter of fiscal 2025.

The decrease was driven by a reduction in profit associated with the sale of our ownership stake in ATFL and the impacts of input cost inflation, partially offset by productivity.

The decrease in gross profits was more than offset by lower SG&A expenses and favorable foreign exchange rates.

Segment operating profit in our Foodservice segment for the first quarter of fiscal 2026 reflected a decrease in gross profits of $6.6 million when compared to the first quarter of fiscal 2025.

The decrease in gross profits was driven by the impacts of input cost inflation, unfavorable operating leverage, and a reduction in profit from divested businesses, partially offset by productivity.

Pension and Postretirement Non-service Income (Expense)

In the first quarter of fiscal 2026 and 2025, pension and postretirement non-service income was $6.1 million and $3.1 million, respectively.

The first quarter of fiscal 2026 reflected lower interest costs as a result of the partial transfer of our U.S.

Segment operating profit in our Grocery & Snacks segment for the second quarter and first half of fiscal 2026 reflected a decrease in gross profits of $68.8 million and $96.6 million, respectively, compared to the second quarter and first half of fiscal 2025.

The decrease in gross profits was driven by the decrease in organic net sales discussed above, the impacts of input cost inflation, and a reduction in profit associated with the sale of our Chef Boyardee ® business, partially offset by productivity.

In addition, we recognized a benefit of $6.4 million and $9.7 million in the second quarter and first half of fiscal 2025, respectively, related to insurance proceeds for lost sales from our fiscal 2023 brand recall on Armour Star ® .

Segment operating profit in our Refrigerated & Frozen segment for the second quarter and first half of fiscal 2026 reflected a decrease in gross profits of $63.8 million and $106.2 million, respectively, compared to the second quarter and first half of fiscal 2025.

The decrease was driven by the decrease in organic net sales discussed above, the impacts of input cost inflation, unfavorable operating leverage, and a reduction in profit associated with the sale of our frozen fish business, partially offset by productivity.

In addition, we estimate that gross profits during the first half of fiscal 2025 were negatively impacted by approximately $10 million, primarily due to lost profits, abnormal manufacturing variances, and certain inventory write-offs resulting from the temporary manufacturing disruptions in our Hebrew National ® business.

The decrease in operating profit for the second quarter and first half of fiscal 2026 included an increase in SG&A expenses, including an increase of $3.2 million and $5.8 million, respectively, in advertising and promotion expenses.

Segment operating profit in our International segment for the second quarter and first half of fiscal 2026 reflected a decrease in gross profits of $7.8 million and $13.2 million, respectively, when compared to the second quarter and first half of fiscal 2025.

The decrease was driven by the decrease in organic net sales discussed above, the impacts of input cost inflation, and a reduction in profit associated with the sale of our ownership stake in ATFL, partially offset by productivity.

The decrease in gross profits was partially offset by lower SG&A expenses and favorable foreign exchange rates in both the second quarter and first half of fiscal 2026.

Segment operating profit in our Foodservice segment for the second quarter and first half of fiscal 2026 reflected a decrease in gross profits of $3.7 million and $10.3 million, respectively, when compared to the second quarter and first half of fiscal 2025.

The decrease in gross profit was driven by the impacts of input cost inflation, unfavorable operating leverage, and a reduction in profit from divested businesses, partially offset by higher organic net sales and productivity.

Pension and Postretirement Non-service Income

In the second quarter and first half of fiscal 2026, pension and postretirement non-service income was $6.1 million and $12.2 million, respectively, compared to $3.1 million and $6.2 million in the second quarter and first half of fiscal 2025, respectively.

The second quarter and first half of fiscal 2026 reflected lower interest costs as a result of the partial transfer of our U.S.

defined benefit pension plan obligation to a third-party insurance provider through the purchase of an annuity contract in the fourth quarter of fiscal 2025.

Interest Expense, Net

Net interest expense was $93.8 million and $105.8 million for the first quarter of fiscal 2026 and 2025, respectively.

Net interest expense was $96.0 million and $108.2 million for the second quarter of fiscal 2026 and 2025, respectively.

Net interest expense was $189.8 million and $214.0 million for the first half of fiscal 2026 and 2025, respectively.

The decrease was driven by an overall reduction of our debt balances.

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Equity Method Investment Earnings

Equity method investment earnings were $29.4 million and $29.1 million for the first quarter of fiscal 2026 and 2025, respectively.

In the first quarter of fiscal 2026 and 2025, we recognized income tax expense of $124.6 million and an income tax benefit of $138.9 million, respectively.

The effective tax rate (calculated as the ratio of income tax expense to pre-tax income, inclusive of equity method investment earnings) was approximately 43.1% and (42.4)% for the first quarter of fiscal 2026 and 2025, respectively.

Equity method investment earnings were $32.2 million and $48.5 million for the second quarter of fiscal 2026 and 2025, respectively.

Equity method investment earnings were $61.6 million and $77.6 million for the first half of fiscal 2026 and 2025, respectively.

Ardent Mills earnings for the second quarter and first half of fiscal 2026 reflected lower commodity trading revenue.

Results for both the second quarter and first half of fiscal 2026 included charges of $6.7 million related to Ardent Mills restructuring activities.

In the second quarter of fiscal 2026 and 2025, we recognized income tax expense of $8.3 million and $61.5 million, respectively.

In the first half of fiscal 2026 and 2025, we recognized income tax expense of $132.9 million and an income tax benefit of $77.4 million, respectively.

The effective tax rate (calculated as the ratio of income tax expense to pre-tax income (loss), inclusive of equity method investment earnings) was approximately (1.3)% and 17.8% for the second quarter of fiscal 2026 and 2025, respectively.

The effective tax rate was approximately (36.3)% and (11.5)% for the first half of fiscal 2026 and 2025, respectively.

See Note 12, “Income Taxes” , to the Condensed Consolidated Financial Statements contained in this report for a discussion on the change in effective tax rates.

Earnings Per Share

Diluted earnings per share in the first quarter of fiscal 2026 and 2025 was $0.34 and $0.97, respectively.

Diluted loss per share in the second quarter and first half of fiscal 2026 was $1.39 and $1.04, respectively.

Diluted earnings per share in the second quarter and first half of fiscal 2025 were $0.59 and $1.57, respectively.

The decrease reflected lower net income.

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Borrowing Facilities and Long-Term Debt

At August 24, 2025, we had a revolving credit facility (the “Revolving Credit Facility”) with a syndicate of financial institutions providing for a maximum aggregate principal amount outstanding at any one time of $2.0 billion (subject to increase to a maximum aggregate principal amount of $2.5 billion with the consent of the lenders).

At November 23, 2025, we had a revolving credit facility (the “Revolving Credit Facility”) with a syndicate of financial institutions providing for a maximum aggregate principal amount outstanding at any one time of $2.0 billion (subject to increase to a maximum aggregate principal amount of $2.5 billion with the consent of the lenders).

The Revolving Credit Facility terminated and replaced our prior revolving credit facility in the first quarter of fiscal 2026.

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We have historically used a credit facility principally as a back-up for our commercial paper program.

As of August 24, 2025, there were no outstanding borrowings under the Revolving Credit Facility.

As of August 24, 2025, we had no outstanding borrowings under our commercial paper program.

The highest level of borrowings outstanding during the first quarter of fiscal 2026 was $445.0 million.

As of November 23, 2025, there were no outstanding borrowings under the Revolving Credit Facility.

As of November 23, 2025, we had $348.0 million outstanding under our commercial paper program.

The highest level of borrowings outstanding during the first half of fiscal 2026 was $642.0 million.

We had $259.0 million outstanding under our commercial paper program as of May 25, 2025.

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The 2024 Term Loan and 2025 Term Loan repayments were also partially funded by the proceeds received in connection with the sale of our Chef Boyardee ® business.

We have $1.0 billion aggregate principal amount of 4.60% senior unsecured notes maturing on November 1, 2025 that we expect to pay using the remaining proceeds from the Senior Notes, cash on hand, and the issuance of commercial paper.

During the second quarter of fiscal 2026, we repaid the entire $1.0 billion aggregate principal amount of 4.60% senior unsecured notes on the maturity date of November 1, 2025, using remaining proceeds from the Senior Notes, cash on hand, and the issuance of commercial paper.

For additional information on our debt transactions, refer to Note 5, “Debt and Revolving Credit Facility” , to the Condensed Consolidated Financial Statements contained in this report and Note 4, “Long-Term Debt” , and Note 5, “Credit Facilities and Borrowings” , to the Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the fiscal year ended May 25, 2025.

The weighted average coupon interest rate of long-term debt obligations outstanding as of August 24, 2025 was approximately 4.9%.

The weighted average coupon interest rate of long-term debt obligations outstanding as of November 23, 2025 was approximately 5.0%.

We expect to maintain or have access to sufficient liquidity to retire or refinance long-term debt at maturity or otherwise, from operating cash flows, our commercial paper program, access to the capital markets, and our Revolving Credit Facility.

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however, any refinancing is subject to market conditions and other factors, including financing options that may be available to us from time to time, and there can be no assurance that we will be able to successfully refinance any debt on commercially acceptable terms at all.

As of the end of the first quarter of fiscal 2026, our senior long-term debt ratings were all investment grade.

As of the end of the second quarter of fiscal 2026, our senior long-term debt ratings were all investment grade.

A significant downgrade in our credit ratings would not affect our ability to borrow amounts under the Revolving Credit Facility, although borrowing costs would increase.

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Each ratio is to be calculated on a rolling four-quarter basis.

As of August 24, 2025, we were in compliance with these financial covenants.

As of November 23, 2025, we were in compliance with these financial covenants.

Equity and Dividends

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During the first quarter of fiscal 2026, we repurchased 0.8 million shares of our common stock under this authorization for an aggregate of $15.0 million.

The Company’s total remaining share repurchase authorization as of August 24, 2025 was $837.6 million.

On August 28, 2025, the Company paid a quarterly cash dividend on shares of its common stock of $0.35 per share to stockholders of record as of close of business on July 30, 2025.

On September 30, 2025, we announced that our Board had authorized a quarterly dividend of $0.35 per share to be paid on November 26, 2025 to stockholders of record as of the close of business on October 30, 2025.

We did not repurchase any shares of common stock during the second quarter of fiscal 2026.

The Company’s total remaining share repurchase authorization as of November 23, 2025 was $837.6 million.

On November 26, 2025, the Company paid a quarterly cash dividend on shares of its common stock of $0.35 per share to stockholders of record as of close of business on October 30, 2025.

On December 18, 2025, we announced that our Board had authorized

a quarterly dividend of $0.35 per share to be paid on February 26, 2026 to stockholders of record as of the close of business on January 27, 2026.

Contractual Obligations

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Our estimate of capital expenditures for fiscal 2026 is approximately $450 million.

During the first quarter of fiscal 2026, we generated $630.1 million of cash, which was the net result of $120.6 million generated from operating activities, $502.0 million generated from investing activities, $7.2 million generated from financing activities, and an increase of $0.3 million due to the effects of changes in foreign currency exchange rates.

Cash generated from operating activities totaled $120.6 million and $268.6 million in the first quarter of fiscal 2026 and 2025, respectively.

The decrease in operating cash flows for the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025 was primarily driven by lower operating profits and higher inventory balances.

During the first half of fiscal 2026, we used $21.4 million of cash, which was the net result of $331.2 million generated from operating activities, $467.2 million generated from investing activities, $819.9 million used in financing activities, and an increase of $0.1 million due to the effects of changes in foreign currency exchange rates.

Cash generated from operating activities totaled $331.2 million and $754.2 million in the first half of fiscal 2026 and 2025, respectively.

The decrease in operating cash flows for the first half of fiscal 2026 compared to the first half of fiscal 2025 was primarily driven by lower operating profits, the accelerated receipt of our outstanding receivables initiated in the second quarter of fiscal 2025, higher inventory balances, and the timing of payments of accounts payable.

The higher inventory balances were largely due to inflationary input costs in addition to rebuilding some inventory due to previous supply chain constraints.

Cash generated from investing activities totaled $502.0 million in the first quarter of fiscal 2026 compared to cash used in investing activities of $286.3 million in the first quarter of fiscal 2025.

Investing activities in the first quarter of fiscal 2026 consisted primarily of proceeds totaling $643.6 million from the sale of our Chef Boyardee ® and frozen fish businesses, which were partially offset by capital expenditures totaling $146.8 million.

Investing activities in the first quarter of fiscal 2025 consisted primarily of capital expenditures totaling $133.0 million and the purchases of an existing contract manufacturer and Sweetwood Smoke & Co.

Cash generated from investing activities totaled $467.2 million in the first half of fiscal 2026 compared to cash used in investing activities of $366.0 million in the first half of fiscal 2025.

Investing activities in the first half of fiscal 2026 consisted primarily of proceeds totaling $648.9 million from the sale of our Chef Boyardee ® and frozen fish businesses, which were partially offset by capital expenditures totaling $218.6 million.

Investing activities in the first half of fiscal 2025 consisted primarily of capital expenditures totaling $215.4 million and the purchases of an existing contract manufacturer and Sweetwood Smoke & Co.

for a total of $230.6 million, net of cash acquired, which were partially offset by net proceeds totaling $76.8 million from the sale of our ownership stake in ATFL.

Cash generated from financing activities totaled $7.2 million and $70.1 million in the first quarter of fiscal 2026 and 2025, respectively.

Financing activities in the first quarter of fiscal 2026 principally reflected the issuance of long-term debt totaling $1.0 billion, net short-term borrowing repayments of $763.2 million, cash dividends paid of $167.1 million, and common stock repurchases of $15.0 million.

Financing activities in the first quarter of fiscal 2025 principally reflected net short-term borrowing issuances of $336.2 million, partially offset by cash dividends paid of $167.3 million and common stock repurchases of $64.0 million.

Cash used in financing activities totaled $819.9 million and $425.2 million in the first half of fiscal 2026 and 2025, respectively.

Financing activities in the first half of fiscal 2026 principally reflected repayments of long-term debt of $1.02 billion, the issuance of long-term debt totaling $1.0 billion, net short-term borrowing repayments of $416.7 million, cash dividends paid of $334.8 million, and common stock repurchases of $15.3 million.

Financing activities in the first half of fiscal 2025 principally reflected repayments of long-term debt of $270.2 million, cash dividends paid of $335.1 million, and common stock repurchases of $64.0 million partially offset by net short-term borrowing issuances of $264.4 million.

Cash Held by International Subsidiaries

The Company had cash and cash equivalents of $698.1 million at August 24, 2025 and $68.0 million at May 25, 2025, of which $38.3 million at August 24, 2025 and $61.6 million at May 25, 2025 was held in foreign countries.

The Company had cash and cash equivalents of $46.6 million at November 23, 2025 and $68.0 million at May 25, 2025, of which $37.0 million at November 23, 2025 and $61.6 million at May 25, 2025 was held in foreign countries.

A deferred tax liability is provided for certain undistributed foreign earnings that are not considered to be indefinitely reinvested or cannot be remitted in a tax-neutral transaction.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis