Good day. And welcome to the Conagra Brands Fourth Quarter Fiscal Year 2019 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Brian Kearney. Please go ahead.

Good morning, everyone. Thanks for joining us. I'll remind you that we will be making some forward-looking statements during today's call. While we are making those statements in good faith, we do not have any guarantee about the results that we will achieve. Descriptions of risk factors are included in the documents we filed with the SEC. Also we will be discussing some non-GAAP financial measures. References to adjusted items, including organic net sales growth, refer to measures that exclude items management believes impact the comparability for the period referenced. Please see the earnings release for additional information on our comparability items. The reconciliations of those adjusted measures to the most directly comparable GAAP measures can be found in either the earnings press release or in the earnings slides, both of which can be found in the Investor Relations section of our website, Conagrabrands.com. Finally, we will be making references to total Conagra Brands as well as Legacy Conagra Brands. References to Legacy Conagra Brands refer to measures that exclude any income or expenses associated with the recently acquired Pinnacle Foods business. With that, I'll turn it over to Sean.

Thanks, Brian. Good morning, everyone, and thanks for joining our fourth quarter fiscal 2019 earnings conference call. We have a lot discuss. So, let’s start with what I want you to take away from today. First, we remain confident that we will deliver long-term value by continuing to implement the Conagra Way to profitable growth. Our unwavering commitment to the Conagra Way will serve both, legacy Conagra and Pinnacle well into the future. Fiscal 2019 was a year of remarkable transition. We did a major deal that required more attention than originally anticipated, but I’m pleased to report that we continue to make progress stabilizing the Pinnacle business. We’ve hit several key integration milestones and our deleveraging initiative is on track. As you saw in our release this morning, our Q4 results were disappointing. This was largely due to discrete issues on a few businesses as a result of non-economic behavior from competitors as well as unfavorable market conditions for our Ardent Mills joint venture. These issues accelerated late in the quarter and we see them as transitory headwinds. Now, I'm going to unpack the drivers of our Q4 performance in a moment, but before I do, I want to comment on the year, because fiscal 2019 -- in fiscal 2019, we took several very important steps, both organic and inorganic to enhance the long-term health of our business. These will help us play offense in fiscal 2020 as we bring to market another robust slate of on-trend innovation. That innovation is also a major factor in reiterating our earnings guidance and increasing our organic growth guidance for fiscal 2020. Dave will provide more guidance information later. I’ll wrap up by sharing some thoughts on our opportunities within plant-based meat-alternatives. Now that we own Gardein, we are very well positioned…

Thank you, Sean, and good morning, everyone. This morning, I’ll walk through Q4 and fiscal year 2019 for both the Legacy Conagra and Pinnacle businesses before we open it up for questions. Slide 42 outlines our performance for the quarter and the full fiscal year. I’ll walk through more detail in a moment but I’ll start here by hitting the key points. Compared to the year-ago period, net sales for the fourth quarter and full fiscal year were up 32.9% and 20.2%, respectively, primarily reflecting the acquisition of Pinnacle Foods. Organic net sales excluding Trenton were down 0.7% for the quarter. While the quarter did not come in as we expected, we believe the issues in the quarter are transitory, as Sean discussed, and do not impact our fiscal year ‘20 guidance or long-term algorithm. Despite the Q4 challenges, we delivered organic net sales growth of 0.3% for the fiscal year, which is above last year's organic growth rate. Adjusted operating profit was up 25.7% in the fourth quarter and up 23.4% for the full year. These increases are primarily driven by the inclusion of Pinnacle's profit. A few points on margins. Our fourth quarter adjusted operating margin was 13.2% and full year was 15.4%, up 40 basis points versus the prior year, and above our guidance range. While adjusted gross margin decreased for the full year, adjusted operating margin increased 40 basis points. This relationship reflects the gross margin impact of our ongoing shift of marketing investments from A&P to above-the-line retailer marketing, as well as leverage at the SG&A line where we have benefited from our commitment to a lean operating environment and Pinnacle synergies. For the quarter, adjusted EBITDA increased 22.2% versus the previous year, while full fiscal year adjusted EBITDA rose 16.7% to approximately $1.9 billion,…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question today comes from Andrew Lazar of Barclays. Please go ahead.

Good morning, everyone, and thanks for the question.

Good morning.

I guess, sort of a two-parter here. Given the top-line challenges experienced in fiscal ‘19, some of the inventory reductions, some of the merchandising and competitive challenges that you noted today that are expected to continue at least in the near term, some elasticity. And I guess, the question is, why raise the fiscal ‘20 top-line guidance range? And then, more broadly, with the Pinnacle deal, there is always some concern among investors that the Company could well lose some focus and momentum on its core or legacy business, as a result. And in light of the 4Q results, I guess how can investors have confidence that that’s not the case in terms of what we’re seeing play out more recently? Thank you.

Let me take that in reverse order, Andrew, in terms of this, first, this notion of distraction. I can appreciate that that’s an easy notion to grab on to but it’s just not accurate. The issues we faced in Q4 literally had nothing to do with Pinnacle, which has been a highly efficient work stream for us. As I pointed out in my remarks a few minutes ago, they were mostly -- the Q4 issue is mostly about macro factors that were not assumed in our forecast, so things like non-economic decision by competitors, isolated recalls and Ardent Mills is an example. But each of these items, they were not expected, they did add up to the miss you saw in Q4, but they are transitory events that we do not expect to repeat, and that really is the story. But, if I step back, here is how I think about the big picture of the quarter and fiscal ‘20 in kind of one thought. If you look at ‘19 as a whole, ‘19 undoubtedly was a year of remarkable transition for Conagra Brands. We did advance our innovation agenda. We did see continued traction in frozen meals and snacks. And we made a transformative acquisition that did end-up requiring more near-term fixes than we had expected. But we wrapped our arms around those very quickly and efficiently. Now, we've got that business stabilizing and on track in terms of integration. Q4 clearly was disappointing, but the fact is, it was largely due to transitory issues. But now, we are in a position to play offense, and our innovation pipeline is both broad and full. So, despite the speed bump, we are clearly still advancing our playbook. And that's why in terms of fiscal ‘20, we feel very good about the top-line drivers we have in place. Our innovation pipeline is the best we’ve had yet and as it works it way in the marketplace, really hits its stride in the second half, we're very confident that we will all like what we see. In terms of raising the high end of the sales guidance for fiscal ‘20, you can think about that as largely recovering the transitory volume losses we experienced at the end of this year, and doesn't hurt that we’re beginning to see some improvement in our scanner data as well. Dave, do you want to build on that?

Yes. So, we haven't changed our estimate of net sales in fiscal ‘20 from where we were previously. So, because we missed Q4 driven by transitory reasons, we expect that business will come back. So, the fiscal ‘19 base is lower, but we're holding our estimate for fiscal ‘20 sales, so the math adds 50 basis points of growth, so we added that to the guidance.

Thanks very much.

Our next question comes from Ken Goldman with JP Morgan. Please go ahead.

Hi. Good morning. It seems that 1H ‘19, the first half will be a little bit worse than what you previously expected. And I'm saying that because you talked about the headwinds in the fourth quarter being late in the quarter. So, I assume they bleed into 1Q ‘20. But, you're maintaining your annual guidance. And I guess the implication is the back half of the year will have to be somewhat better than you initially anticipated or maybe you're thinking about the bottom half of guidance. I just am curious what's better in 2H ‘20, right, the second half, if anything than you initially modeled?

Ken, we’re not going to guide for two quarters, obviously, but you’ve got the shape of the curve right. As we said all along, H2 is going to be a stronger year or stronger half than H1. And obviously, now that Q4 came in light due to transitory issues, we expect recovery of that transitory loss next Q4. In terms of the things like Q4 issues lingering into Q1 and does that mean a worse Q1, I wouldn't think about it that way. We've got a vast portfolio here. Things are always moving around. Some things will come in below what we initially anticipate. We manage a risk and opportunity approach to dealing with that, which means we look for other opportunities that offset things we didn't expect. So, today on the call I talked a little bit about Gardein, we’ve got other things, the snacks obviously in the back half of this year exceeded our expectations. So, we've got a lot of that we feel really good about that probably has some upside to it on the year, and we’ve got some other things like these near-term competitive dynamics that we've got to navigate. We’ve got multiple ways we can do that. But, I think to your point, big picture is, really we haven't changed our cadence on the year. We're expecting our innovation to go into the marketplace in the first half, get its footing and really build momentum in the second half. And then on Pinnacle in particular, as we've talked before, getting those TPDs back that were lost last year, that should really start to kick in as we get to the middle part of the year and the back half of the year. Dave, do you want to add to that?

Yes. I’d just add one thing. And I mentioned in my comments that we are increasing pretty significantly our investment for innovation and that hits in the first half relative to prior years. So that impacts not just profit, but net sales. So, that dynamic flows first half, second half as well.

Thank you, and then follow-up for me. I'm surprised, the competitor you talked about in frozen took some merchandising business from you. Do you have enough visibility from your customers as to when your competitors are going to promote like that, so that your merchandising isn't redundant with theirs? And I guess, the broader question is, isn’t really this one of the risks of shifting marketing to promotions from advertising that you become more reliant on some of the wins of merchandising of what your competitors can do?

No. On that latter piece, the answer is no. Because as we talked before that to the degree we have moved below the line money, it's below the line money that wasn't doing anything. So, when you're moving money away, that’s not doing anything, you're not taking anything away. And instead a lot of the spend as we’ve talked many times, it covers a multitude of tools across a multitude of brands. Here on Marie, we’re talking about one brand, and we're talking about a particular time of year where we count on some high quality merchandising that we got displaced from a very aggressive competitor. And what I would say is that it is very hard to anticipate those things. It is not the first time we have seen this in this industry. In fact, if you know Conagra’s history, we know this move, as well as anybody, it’s called volume over value, and it does happen from time to time. But it is not sustainable, because as we learned, when you put all your human and financial resources into price-based competition, there's very little left in the enterprise to actually study consumer behavior or design new quality innovation, and then market it in a personalized fashion. And what you're left with over time is a weak product line up and a consumer that is trained to buy a deal. And that's not our playbook. From time to time, we will encounter it and we got to deal with it. But that's really not what we're after. We'd rather follow our approach, stay consistently focused on moving the center line of our profitability and our sales north over time, even if we've got to deal with some standard deviation in any given quarter, based on this kind of behavior.

Thank you.

Our next question comes from Bryan Spillane with Bank of America. Please go ahead.

Good morning, everyone. Dave, I guess just wanted to get a little bit more color from you on gross profit, how we should be thinking about gross profits for ‘20. I think, talked a little bit about some investment in above the line in terms of supporting new products. But if you can just give us some sense of COGS inflation for fiscal ‘20, if there's any pricing contemplated to cover inflation, and just some of the other factors that might influence gross margins for 2020?

Yes. Bryan, let me try to unpeel that. So, overall, we have not given specific guidance on gross margin, we gave it on operating margin because of the dynamics. But to your question, generally speaking, inflation, right now there's a lot of moving pieces that the transportation inflation, we saw heavy in the first half of the year and ‘19 is moderated. Although now we're seeing increases in areas like proteins, and then there's obviously some of the weather related inflation that we're dealing with. But as we go into fiscal ‘20, we think given the overall mix of the portfolio and inflation, we're probably going to be close to where we finished this year, 2.7%, 2.8%, something in that area. We expect to continue to deliver on our realized productivity. And we do have pricing actions that we've taken this year that we’ll roll into next year. And then, as inflation comes, and as you saw, we had a lot of inflation related to steel, and we took pricing to deal with that. As 20 develops and we see inflation and if it hits certain brands, we will plan on taking pricing where it’s inflation justified. So, we just have to manage those dynamics as we go. As it relates to the investments, I think, overall for the year, there's definitely going to be more of an increase in the innovation related investment in the first half and in the second half, although we will still have a healthy rate of investment, and year-on-year, it won't be up. So, that will be another kind of benefit to the second half. So, overall, you put all those things together, there's puts and takes that kind of even out over the whole year for gross margin, but it's clearly more investment first half, more benefits second half. And then, there's synergies that come in as well. That's what’s between G&A and cost of goods sold. So, as the year ramps up, the synergies will increase, and that will improve margins as well as we move into the second half.

All right, thanks for that. And just I don't know if I missed it, but did you give guidance on capital spending for the year?

No, we did not, not in our remarks. We gave it on free cash flow. So, overall, free cash flow, we're still estimating approximately $1 billion in free cash flow.

Okay. Thank you.

Our next question comes from Steve Strycula with UBS. Please go ahead.

Hi. Good morning. Sean, just to kind of piggyback on Andrew Lazar’s question, wanted to kind of understand a little bit of the glide path of the organic sales as they get better as we move throughout the year. Given where we started in Q4, should at least out of the gate in Q1, should we be definitionally positive for organic sales, just to kind of help investors understand the trajectory of the business? And then, I've got to follow-up.

Yes. Again, Steve, I don't want to give quarterly guidance here. It's not something that we typically like to do. We were in a position where we had to do it last year. And I didn't like that hack of a lot. I think what I can tell you is that this is kind of a first half, second half story. Obviously, as Dave pointed out, we've got some investments in the first half of the year, obviously that means in Q1 as well, because we've got new items coming in the marketplace that we will invest behind. We also are in the midst of doing some value-over-volume in particular on the Pinnacle business, as we clear the decks for our new innovation. So, in terms of the year, what we said before is that we expect the trend to bend as we move from the first half into the second half without giving kind of quarter-to-quarter, month-to-month specificity on the slopes of those curves. I think, we'd leave it at that in part because as we've said many times with respect to the Pinnacle TPDs, we are trying to accelerate where possible, getting some of these new innovations into the marketplace ahead of a normal plan a grant cadence. And that work as it has been going on, continues, especially when we get in some customers, some of these new innovations in there and can demonstrate that they're working and we've got traction. So, we'll stay flexible on that and continue to kind of update you should we see the trajectory changing. But that's how we see it right now.

Okay. And then, Dave, on the synergy piece, should we still think that about $150 million contribution in fiscal ‘20 is the right number with maybe a third to cogs, two-thirds to SG&A, is that the right way to kind of frame it for this year?

Yes. That’s right, Steve. We had guided to, by the end of fiscal ‘20 will be about 55% of our synergy realized and we’re still $285 million of total synergy, and the split between SG&A and cost of goods sold hasn’t changed.

Okay. So, with that piece, if we’re $50 million coming through cogs, should that be enough for the full year, nothing quarterly but should that give us close to about flat gross margins for the full year?

Here again, I don’t want to give the specific gross margin guidance, but it’s clearly going to be a tailwind for us.

All right. Thank you.

Our next question comes from Jason English with Goldman Sachs. Please go ahead.

Hey. Good morning, folks. Thank you for sliding me in. Sean, I suppose in part you’ve probably conditioned this, to think about your business this way. But looking at the base performance and kind of the cycles you’ve gone through of cleansing the portfolio and entering the rebuild mode with innovation, which is -- what I think we’re really looking for this year, as you mentioned the biggest slate of innovation you had. But, as we look at the total points of distribution and the progression through the year, we came in with growth. And as we mine the data, it looks like we’ve seen accelerating declines on distribution, including the three brands that you’re highlighting, Marie Callender’s, Hunt’s, Chef Boyardee, all seen sort of distribution declines. Can you talk about what’s driving that? Are we sort of in innovation replacement cycle where the innovation is kind of netting out past innovations falling away or have we found sort of another leg of rationalization that may be weighing on performance?

It’s a little bit of everything, Jason. Let me try to break it down for you, give you an example of kind of the diversity of it. So, for example, on Hunt’s we’ve got some restages coming out, which means we’ve got the old products going out, the new products coming in; there’ll be a gap between the two where new product doesn’t scan and that will show up in the short-term window as if the TPDs have gone down, then they come back. That’s a dynamic. But we also have things going on, Marie Callender’s is a good example of it. Slim Jim and Swiss Miss are other good examples where part of our playbook is to actually reduce TPDs and put more facings against high velocity TPDs and drive growth. I’ll point you back to the case study I gave, I think it was last quarter on Slim Jim where we’re doing that pretty aggressively. That’s a piece of it as well. And it’s one of the reasons I point out usually every other quarter that TPDs can be helpful but they can also be a bit misleading at times. You got to look at kind of the total results of the business as well as in particular the velocities, because when we intentionally reduce TPDs, it usually to pick up facings on higher velocity items and it drives overall sales growth. So, that’s what you got going on. I think, just as I look back on this whole year, we build these plans based on certain planning assumptions. And clearly for fiscal ‘19 overall, some things played out differently than we expected when we built the plan. For example, we didn’t plan for a huge tinplate inflation, didn’t plan for this, so we needed to price over the non-economic follow-on behaviors like certain players in some of our categories. We didn’t obviously plan for recalls and co-packer issues. So, it’s been a dynamic environment including some of Pinnacle’s challenges. But all things considered, as we think about fiscal ‘20 and the innovations slate we’ve got, the fact that we’ve got our arms wrapped around Pinnacle pretty well right now, we think we navigated some of these things we didn’t anticipate pretty well. We have posted our second consecutive year of organic growth, which is something that not all can point to in this environment. And as we pointed out earlier, I think that gives us a solid foundation on which to build going forward here, with our best innovation slate yet. So, overall, I'm pretty positive about kind of how things sack up as we move from first half to second half and throughout our strategic planning horizon.

That's helpful. And one more for me. You mentioned the planning assumptions that you start with the beginning of the year. You've suggested that you expect this competitive intensity to abate as you progress through the year. But, as we’ve seen before when companies pursue volume-over-value, it can take years before it ends poorly. So, what gives you confidence that it will abate? And second part to that question, what's the risk to your guidance, if it does not in fact abate?

Well, if you look at our Company as an example, it can take years to abate as a total portfolio, but it usually doesn't take a long time to abate at a category level, because you simply can't afford to sustain it for very long across multiple categories. So, if you're doing that as a portfolio enterprise, it’s just too expensive to do this for too long, especially when you're doing it in the face of inflation, using the tomato example today, just is not an affordable strategy. It just draws too many resources from other part to the P&L to be able to hold it. So, we’ve seen it before. It historically has almost always proven to be transitory and there are some things that we can do from time-to-time that help it to be transitory, if we need to do those things. So, that's how we’ll navigate it.

Okay. Thank you.

Thanks.

Our next question comes from Chris Growe with Stifel. Please go ahead.

Hi. Good morning.

Hey, Chris.

Hi. Just had a question for you, first on this obviously kind of abrupt change in the promotional environment in the quarter. And it's not clear to me yet how you're responding to these challenges. So, it sounds like you're selectively responding. Is that the way to think about? And is that a pressure point on gross margin in the first half of the year, as you selectively respond to these challenges?

Yes. I think what we’re conveying is we're not going to kind of unveil our response on each and every case study. That probably wouldn't be a wise competitive approach doing things like. Principally, we don't want to look at all these things and just say automatically, hey, we think we should respond because these things tend to be transitory in nature, even in the absence of a response from us. But, should somebody want to rent market share and try to sustain it for longer than a narrow window, then we will absolutely consider responding. We will look at each and every -- thankfully, we don't see a lot of these things across the portfolio. We haven't seen this kind of behavior in quite some time now. But it does come up, and we will look at it on a case-by-case basis. And that's probably as much details I’d get into on it.

Okay. And then, just another question in relation to fiscal ‘20. So, I think about some of the unique factors that occurred in fiscal ‘19, I just want to understand which ones get better, don't recur, maybe improve a bit year-over-year. Obviously one that comes to mind is Ardent Mills. Do you expect it to get -- to make up that sort of $0.06 differential this coming year, based on your outlook? Any other unique factors you call out for fiscal ‘20 that help support that rate of EPS growth for the year?

Chris, related to margins, given the volatility of the business, we don't give specific guidance, but generally our planning posture is we're roughly in line for fiscal ‘20 where we landed for fiscal ‘19. So, that's generally how we will plan that. In terms of year-on-year, there are a lot of puts and takes as you go into fiscal ‘20. I think, specific to Q4, clearly we had some manufacturing challenges, I called out specifically 50 basis points of impact on our gross margins in Q4 that were just pure costs of the recall and some write-offs. So, they will not recur in Q4 of next year. So, they are discrete costs. We have synergies that are obviously ramping up, so that's going to be a big benefit. But, we're also investing some of that synergy back in to drive our innovation slate. So, there's going to be a clear increase in our innovation related investment. So, realize productivity, we're coming on that, but we also have inflation, we have quite -- so there's just a lot of puts and takes and balances. But as we went through it all, we planned it, we scenario planned, we came up with our fiscal year ‘20 plan, and that drove our guidance, and we feel good about it.

Okay. Thank you for that.

Our next question comes from Robert Moskow of Credit Suisse. Please go ahead.

Hi. Thanks. The Gardein brand, really good brand, really good products, and you're clearly talking about plans to leverage it further here. Is this an incremental investment beyond what you've already planned for the next few years? And if not, where's it coming from? Are you having to take it from other brands that you had plans to invest behind, particularly in Pinnacle? And then, just a tactical question, I noticed that you’re co-branding Gardein in the frozen category. That tends to be a risky proposition, gets a little confusing for the consumer. Have you thought through the risks of having two brands on one pack? Thanks.

Yes. First of all, Rob, we’ve always, since we acquired it, viewed Gardein as an attractive growth asset. That's why we talked about it at Investor Day, we served it at CAGNY and we spent capital to build the capacity. I think, what's changed, I think we can all acknowledge that it was hard to see the consumer fever pitch, for this space, gathering quite ahead of steam it has done as quickly as it's done. So, the upshot of all of this is that the market opportunity is quite a bit bigger than we're counting on. Does that mean that the investment behind it will be bigger? Potentially so to take advantage of it. But keep in mind, that investment is not a tax on EBIT. Gardein has got pretty good gross margin. So, as we sell more, and if we pick up the kind of tailwinds, we get in a compounding curve over the strategic plan horizon, those sales will generate additional fuel for growth that we will invest back to even accelerate those sales further. So, it's kind of a virtuous cycle here we've got going on Gardein. And overall the additional upside to it just helps us feel that much better about our long-term prospects and our fiscal 2022 outlook. With respect to this kind of partner branding approach, let me just try to explain how we're thinking about Gardein. To the degree we sell kind of a pure blood meat product, so a chicken alternative, a burger alternative, a hotdog alternative, a sausage alternative, that will stand alone as a Gardein brand. But one of the things we have learned over and over and over again at Conagra is that the name of the game is velocity. And velocity is always stronger when it's not…

Okay. Thank you.

Our next question comes from David Driscoll with Citi. Please go ahead.

Great. Thank you. And I appreciate you taking the question, given the hour. This is going to go back over some ground. But I wanted to clear on something. So, your stock is obviously reacting negatively. You’ve upgraded your revenue dying for the next year. Sean, can you just be clear about something? It sounded like problems within the fourth quarter got worse as the quarter progressed. So, you did mention in one of your questions -- one of your responses to a question that Nielsen data was giving you maybe some confidence that things were getting better. So, maybe can you just bridge the gap here? If things were getting worse as it got closer to the end of the fourth quarter, did you have knowledge that the pricing and canned tomatoes has recovered from private label? Do you have confidence that these negative promotional events going on in frozen single-serve meals, has that ended at this point? Is that why you can be so confident to raise the revenue guidance for fiscal ‘20?

David, when you were looking at quarterly results and change versus year a ago, it's not just a function of what's happening right now; it's a function of what happened in the year ago period. Right? So, as an example, if you look at more recent Chef results, you'll see, you'll see better optics than we saw at the end of Q4. And that reflects the fact that there were significant merchandising activities in the end of Q4 a year ago that we didn't get this year; it dropped off. In terms of the drop-off as the quarter unfolded, simply put, we were expecting a fairly strong period 11 and period 12, which are the last two months of our year and at the end of the fourth quarter, and we just didn't get it at the level we discussed, which was the Marie merch, the Chef merch and the private label pricing actions within canned tomatoes, as well as some of these manufacturing challenges that really hit us toward the end of the quarter. So, that's really what it's about. We will have things that will improve in Q1. We'll still be doing things to upgrade the portfolio and do value-over-volume as we move Q1 and Q2 but then we will also be folding in the innovation slate. So, a lot going on this year as we get the Pinnacle business back up and running. But that’s really kind of how it unfolded there in the fourth quarter, particularly in our period 11 and period 12.

If I could do a follow-up, it’s related but a bit separate. But, given the difficulty that you had in the canned operations, I mean it’s pretty disappointing if private label doesn’t raise prices when the cost of the can goes up so much. So, what I hear from your guys at your Analyst Day and today is this amazing amount of new products in very exciting portions of the portfolio, but the can portion just doesn’t feel like it, and then we get this negative hit but private label just not acting well. Why not sell those canned portions of the portfolio so that the residual leftover would really just get to focus on all these exciting new product opportunities that you lay out? I mean, they all sound great but it hurts when you suddenly get these oddball activities going on within the canned portion of the portfolio. How do you think about that how would you respond to that?

Yes. We got -- it’s a fair question, David. We’ve got a number of grocery businesses that we put under this heading, we call reliable contributors, which is basically saying -- that’s what we expect with them. We expect them to contribute reliably in the fullness of time. We have a variety of canned food businesses that have quite frankly been very reliable contributors over the last several years, Hunt’s is a good example of one of those businesses as has Chef. It is quite possible that from time to time for all the reasons we’ve discussed quite a bit today that we can see kind of this non-economic behavior by competition. That will happen from time to time. But, it doesn’t tend to happen often and it does tend to be transitory. So, to label a reliable contributor as no longer reliably contributing is if that the perpetual notion is a bit of an overreaction. But I'm not going to say that we don’t evaluate these kinds of things all the time. I don’t think you’ll find a company in our space that’s been as active as we have over the last five years in reshaping the portfolio. And that includes divesting things that are kind of chronic drag on what we’re trying to accomplish. So, we’re always looking at that. We did more of that this quarter. I just wouldn’t want you to paint -- to label canned foods as not reliably contributing as a perpetual notion when that’s just not been what we experienced. In fact, what we’ve experienced is, historically it’s been a high cash flow business and it’s thrown off a lot of cash, a lot of fuels for growth elsewhere in the portfolio like frozen.

I appreciate the color. Thank you.

Our last question today comes from David Palmer with Evercore ISI. Please go ahead.

Thanks. I can imagine investors are coming out today with the impression that your guidance for fiscal ‘20 is more optimistic than it was in the past or at least eating into a margin safety as you need more things to come together to hit the plan, given what you said about Hunt’s and Chef Boyardee and Marie Callender’s which are likely a negative versus original planning into the first half. If that’s true, I mean, perhaps you could tell us what positive offsets you’re thinking about versus your original thinking for fiscal ‘20 that are keeping that same guidance. And I have a quick follow-up.

I think, again, we’re not sitting here patting ourselves on the back for what I would call a real raise for the ‘20 guidance at the high end of sales; it’s not that. It’s really a recovery of Q4 because the issues we experienced in Q4, we don’t expect to repeat. So, really, we’re just getting back to basically the same place we plan to all along. And underpinning that is an operating plan that is counting on a lot from some very robust innovation that transcends not only our most strategic segments, frozen and snacks and Legacy CAG but also some of the businesses in Pinnacle, which will contribute for part of the year as organic. So, we're counting on continued performance, like we’ve seen on our innovation the last few years, but now we're seeing it on a bigger slate. And we're excited about this Gardein opportunity, which is really not just a '20 opportunity, but that's to tee up the point that that will continue to serve us well and help us navigate other things we're doing as we move through fiscal 2022.

And then, just a follow-up, you talked about Hunt’s canned tomatoes and Chef Boyardee priority after the pricing actions, what's the confidence and the potential timing of a recovery there or perhaps visibility already that that's going to get out of the promotion penalty box? Thanks.

Well, we will get out of it. I'm not going to give you exact timing. These are good businesses. I mean, got unbelievable relative market share on both of those businesses. How we navigate through it, I'm not going to disclose that; it may come a number of different ways, but we'll keep our power dry on that. But, you're talking about two brands here that are number one market share by far in their categories. And as I mentioned earlier, when we get our price gaps right, our merchandising right, we can recover volume rather quickly on these businesses. So, it's just a question of how is that going to unfold and exactly when is that going to hold, we’re not going to get into that detail quite here today.

Thank you.

This concludes our question-and-answer session. I would like to turn the conference back over to Brian Kearney for any closing remarks.

Thank you. So, as a reminder, this call has been recorded and will be archived on the web as detailed in our press release. The Investor Relations team is available for any follow-up discussions that anyone may have. Thank you for your interest in Conagra Brands.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.