CONAGRA BRANDS INC. (CAG) FY 2023 MD&A

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis is intended to provide a summary of significant factors relevant to our financial performance and condition. The discussion and analysis should be read together with our consolidated financial statements and related notes in Item 8, Financial Statements and Supplementary Data. Results for the fiscal year ended May 28, 2023 are not necessarily indicative of results that may be attained in the future.

FORWARD-LOOKING STATEMENTS

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. 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.

Readers of this report should understand that these forward-looking statements are not guarantees of performance or results. Forward-looking statements provide our current expectations and beliefs concerning future events and are subject to risks, uncertainties, and factors relating to our business and operations, all of which are difficult to predict and could cause our actual results to differ materially from the expectations expressed in or implied by such forward-looking statements. These risks, uncertainties, and factors include, among other things: risks associated with general economic and industry conditions, including inflation, rising interest rates, decreased availability of capital, volatility in financial markets, declining consumer spending rates, recessions, decreased energy availability, increased energy costs (including fuel surcharges), supply chain challenges, labor shortages, and geopolitical conflicts (including the ongoing conflict between Russia and Ukraine); negative impacts caused by public health crises; risks related to our ability to deleverage on currently anticipated timelines, and to continue to access capital on acceptable terms or at all; risks related to the Company's competitive environment, cost structure, and related market conditions; risks related to our ability to execute operating and value creation plans and achieve returns on our investments and targeted operating efficiencies from cost-saving initiatives, and to benefit from trade optimization programs; risks related to the availability and prices of commodities and other supply chain resources, including raw materials, packaging, energy, and transportation, including any negative effects caused by changes in levels of inflation and interest rates, weather conditions, health pandemics or outbreaks of disease, actual or threatened hostilities or war, or other geopolitical uncertainty; risks related to the effectiveness of our hedging activities and ability to respond to volatility in commodities;   disruptions or inefficiencies in our supply chain and/or operations; risks related to the ultimate impact of, including reputational harm caused by, any product recalls and product liability or labeling litigation, including litigation related to lead-based paint and pigment and cooking spray;  risks related to our ability to respond to changing consumer preferences and the success of our innovation and marketing investments; risks associated with actions by our customers, including changes in distribution and purchasing terms; risks related to the seasonality of our business; risks associated with our co-manufacturing arrangements and other third-party service provider dependencies; risks associated with actions of governments and regulatory bodies that affect our businesses, including the ultimate impact of new or revised regulations or interpretations including to address climate change or implement changes to taxes and tariffs; risks related to the Company's ability to execute on its strategies or achieve expectations related to environmental, social, and governance matters, including as a result of evolving legal, regulatory, and other standards, processes, and assumptions, the pace of scientific and technological developments, increased costs, the availability of requisite financing, and changes in carbon pricing or carbon taxes; risks related to a material failure in or breach of our or our vendors' information technology systems and other cybersecurity incidents; risks related to our ability to identify, attract, hire, train, retain and develop qualified personnel; risk of increased pension, labor or people-related expenses; risks and uncertainties associated with intangible assets, including any future goodwill or intangible assets impairment charges; risk relating to our ability to protect our intellectual property rights; risks relating to acquisition, divestiture, joint venture or investment activities; the amount and timing of future dividends, which remain subject to Board approval and depend on market and other conditions; and other risks described in our reports filed from time to time with the Securities and Exchange Commission (the "SEC"). We caution readers not to place undue reliance on any forward-looking statements included in this report, which speak only as of the date of this report. We undertake no responsibility to update these statements, except as required by law.

The discussion that follows should be read together with the consolidated financial statements and related notes contained in this report. Results for fiscal 2023 are not necessarily indicative of results that may be attained in the future.

20

Table of Contents

EXECUTIVE OVERVIEW

Conagra Brands, headquartered in Chicago, is one of North America's leading branded food companies. Guided by an entrepreneurial spirit, the Company combines a rich heritage of making great food with a sharpened focus on innovation. The Company's portfolio is evolving to satisfy people's changing food preferences. Its iconic brands such as Birds Eye®, Marie Callender's®, Duncan Hines®, Healthy Choice®, Slim Jim®, and Reddi-wip®, as well as emerging brands, including Angie's® BOOMCHICKAPOP®, Duke's®, Earth Balance®, Gardein®, and Frontera®, offer choices for every occasion.

Fiscal 2023 Results

Fiscal 2023 performance compared to fiscal 2022 reflected an increase in net sales, with organic (excludes the impacts of foreign exchange) increases in all of our operating segments. Overall gross profit increased primarily as a result of higher net sales, productivity, and lower transportation costs, which were partially offset by input cost inflation, unfavorable operating leverage, and elevated supply chain operating costs. Excluding items impacting comparability, overall segment operating profit increased in all of our operating segments. Corporate expenses were higher primarily due to items impacting comparability, as discussed below, in addition to higher share-based payment expense. Selling, general and administrative ("SG&A") expenses were also higher due to items impacting comparability, in addition to higher advertising and promotional expenses. We recognized higher equity method investment earnings, higher interest expense, and lower income tax expense, in each case compared to fiscal 2022. Excluding items impacting comparability, our effective tax rate was slightly higher compared to fiscal 2022.

Diluted earnings per share were $1.42 and $1.84 in fiscal 2023 and 2022, respectively. Diluted earnings per share were affected by lower net income as well as several significant items affecting the comparability of year-over-year results (see "Items Impacting Comparability" below).

Trends Impacting our Business

During fiscal 2022 and continuing into fiscal 2023, our industry has been impacted by supply chain disruptions, commodity cost fluctuations, labor market issues, input cost inflation, and other global macroeconomic challenges. While we continued to experience significant input cost inflation throughout fiscal 2023, our pricing actions and supply chain productivity assisted in a 198-basis point recovery to gross margin. While we are seeing some moderation in input cost inflation, we do expect inflationary pressures to persist into fiscal 2024. However, we anticipate continued supply chain productivity and previously implemented pricing actions to mitigate some of the inflationary pressures. We will continue to evaluate the evolving macroeconomic environment to take action to mitigate the impact on our business, consolidated results of operations, and financial condition.

Items Impacting Comparability

Items of note impacting comparability of results for fiscal 2023 included the following:

21

Table of Contents

Items of note impacting comparability of results for fiscal 2022 included the following:

Segment presentation of gains and losses from derivatives used for economic hedging of anticipated commodity input costs and economic hedging of foreign currency exchange rate risks of anticipated transactions are discussed in the segment review below.

22

Table of Contents

SEGMENT REVIEW

We reflect our results of operations in four reporting segments: Grocery & Snacks, Refrigerated & Frozen, International, and Foodservice.

Grocery & Snacks

The Grocery & Snacks reporting segment principally includes branded, shelf-stable food products sold in various retail channels in the United States.

23

Table of Contents

Refrigerated & Frozen

The Refrigerated & Frozen reporting segment principally includes branded, temperature-controlled food products sold in various retail channels in the United States.

International

The International reporting segment principally includes branded food products, in various temperature states, sold in various retail and foodservice channels outside of the United States.

Foodservice

The Foodservice reporting segment includes branded and customized food products, including meals, entrees, sauces, and a variety of custom-manufactured culinary products that are packaged for sale to restaurants and other foodservice establishments primarily in the United States.

Presentation of Derivative Gains (Losses) from Economic Hedges of Forecasted Cash Flows in Segment Results

Derivatives used to manage commodity price risk and foreign currency risk are not designated for hedge accounting treatment. We believe these derivatives provide economic hedges of certain forecasted transactions. As such, these derivatives are generally recognized at fair market value with realized and unrealized gains and losses recognized in general corporate expenses. The gains and losses are subsequently recognized in the operating results of the reporting segments in the period in which the underlying transaction being economically hedged is included in earnings. In the event that management determines a particular derivative entered into as an economic hedge of a forecasted commodity purchase has ceased to function as an economic hedge, we cease recognizing further gains and losses on such derivatives in corporate expense and begin recognizing such gains and losses within segment operating results, immediately. See Note 19, "Business Segments and Related Information", to the Consolidated Financial Statements contained in this report for further discussion.

Presentation of Information

Below is a detailed discussion and comparison of our results of operations for the fiscal years ended May 28, 2023 and May 29, 2022. For a discussion of changes from the fiscal year ended May 30, 2021 to the fiscal year ended May 29, 2022, refer to Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the fiscal year ended May 29, 2022 (filed July 21, 2022).

Fiscal 2023 compared to Fiscal 2022

Net Sales

Net sales for fiscal 2023 in our Grocery & Snacks segment included an increase in price/mix of 15% compared to fiscal 2022 due to favorability in inflation-driven pricing. Volumes decreased by 9% compared to fiscal 2022. This result was primarily due to the elasticity impact from inflation-driven pricing actions and shortages from supply chain disruptions. In fiscal 2023, we had a product recall primarily related to our Armour Star® brand, which resulted in a $7.8 million reduction to net sales for customer returns and fees in addition to estimated lost sales of approximately $40 million.

24

Table of Contents

Net sales for fiscal 2023 in our Refrigerated & Frozen segment included an increase in price/mix of 13% compared to fiscal 2022 due to favorability in inflation-driven pricing. Volumes decreased by 7% compared to fiscal 2022 primarily due to the elasticity impact from inflation-driven pricing actions and shortages from supply chain disruptions.

Net sales for fiscal 2023 in our International segment reflected a 13% increase in price/mix, an 8% decrease in volumes, and a 2% decrease due to unfavorable foreign exchange rates, in each case compared to fiscal 2022. The increase in price/mix was primarily due to favorability in inflation-driven pricing. The decrease in volumes was driven by the elasticity impact from inflation-driven pricing actions.

Net sales for fiscal 2023 in our Foodservice segment included an increase in price/mix of 16% compared to fiscal 2022, reflecting inflation-driven pricing. Volumes decreased by 3% compared to fiscal 2022. The decrease in volumes was driven by the elasticity impact from inflation-driven pricing actions.

SG&A Expenses (Includes general corporate expenses)

SG&A expenses totaled $2.19 billion for fiscal 2023, an increase of $696.7 million compared to fiscal 2022. SG&A expenses for fiscal 2023 reflected the following:

Items impacting comparability of earnings

Other changes in expenses compared to fiscal 2022

25

Table of Contents

SG&A expenses for fiscal 2022 included the following items impacting the comparability of earnings:

Segment Operating Profit (Earnings before general corporate expenses, pension and postretirement non-service income, interest expense, net, income taxes, and equity method investment earnings)

26

Table of Contents

Operating profit in our Grocery & Snacks segment for fiscal 2023 reflected an increase in gross profits of $154.2 million compared to fiscal 2022. The higher gross profit was driven by the net sales growth discussed above, productivity, and lower transportation costs, partially offset by the impacts of input cost inflation, unfavorable fixed cost leverage, higher inventory reserves, and continued elevated supply chain operating costs. The increase in gross profits was partially offset by higher SG&A expenses, including an increase of $17.3 in advertising and promotion expenses. Operating profit of the Grocery & Snacks segment included certain brand intangible impairment charges of $78.9 million and $90.7 million in fiscal 2023 and 2022, respectively. Fiscal 2023 and 2022 included charges of $0.6 million and $9.4 million, respectively, related to our restructuring plans. Fiscal 2023 included expenses of $3.5 million related to a municipal water break that impacted one of our production facilities. Fiscal 2022 included charges of $26.3 million related to the impairment of businesses previously held for sale. Operating profit for fiscal 2023 in our Grocery & Snacks segment was impacted by $7.8 million in charges related to our product recall, discussed above, in addition to estimated lost profits of approximately $14 million.

Operating profit in our Refrigerated & Frozen segment for fiscal 2023 reflected an increase in gross profits of $257.8 million compared to fiscal 2022. The increase was driven by the net sales growth discussed above, productivity, and lower transportation costs, partially offset by the impacts of input cost inflation, unfavorable fixed cost leverage, and continued elevated supply chain operating costs. The increase in gross profits was partially offset by higher SG&A expenses, including an increase of $26.8 million in advertising and promotion expenses. Operating profit of the Refrigerated & Frozen segment was impacted by charges of $252.6 million and $103.9 million related to the impairment of certain brand intangible assets as part of our annual impairment testing during fiscal 2023 and 2022, respectively. Fiscal 2023 also included charges of $385.7 million related to the goodwill and Birds Eye® brand impairments in connection with certain reporting unit changes within our Refrigerated & Frozen segment. Fiscal 2023 and 2022 included $5.1 million and $14.5 million, respectively, of charges related to our restructuring plans and $15.3 million and $2.8 million, respectively, in charges associated with fires occurring at certain of our manufacturing facilities. Operating profit in fiscal 2023 was also impacted by $4.2 million of incremental transportation costs and inventory write-offs as a result of supply chain disruptions caused by a third-party vendor’s system shutdown in connection with the third party experiencing a cybersecurity incident. Operating profit in fiscal 2022 included $28.9 million of charges related to the impairment of businesses previously held for sale.

Operating profit in our International segment for fiscal 2023 reflected an increase in gross profits of $21.4 compared to fiscal 2022, reflecting the net sales growth discussed above and productivity, partially offset by the impacts of input cost inflation, unfavorable fixed cost leverage, and elevated supply chain operating costs. Operating profit of the International segment was impacted by charges of $13.7 million and $14.4 million related to the impairment of certain brand intangible assets during fiscal 2023 and 2022, respectively.

Operating profit in our Foodservice segment for fiscal 2023 reflected an increase in gross profits of $34.1 million compared to fiscal 2022. The increase in gross profit was driven by the net sales growth discussed above and productivity, partially offset by the impacts of input cost inflation, unfavorable fixed cost leverage, and elevated supply chain operating costs. Operating profit in fiscal 2023 and 2022 included expense of $20.5 million and $14.9 million, respectively, related to the impairment of businesses previously held for sale. In addition, fiscal 2023 and 2022 were impacted by a net benefit of $1.9 million and charges of $7.6 million, respectively, associated with fires occurring at certain of our manufacturing facilities and related insurance recoveries.

Pension and Postretirement Non-service Income

In fiscal 2023, pension and postretirement non-service income was $24.2 million, a decrease of $43.1 million compared to fiscal 2022. Fiscal 2023 reflected higher interest costs.

Interest Expense, Net

In fiscal 2023, net interest expense was $409.6 million, an increase of $29.7 million, or 7.8%, from fiscal 2022. The increase was driven by a higher weighted average interest rate on outstanding debt. See Note 3, "Long-Term Debt", to the Consolidated Financial Statements contained in this report for further discussion.

Income Taxes

Our income tax expense was $218.7 million and $290.5 million in fiscal 2023 and 2022, 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 24% and 25% for fiscal 2023 and 2022, respectively. See Note 13, "Pre-Tax Income and Income Taxes", to the Consolidated Financial Statements contained in this report for a discussion on the change in effective tax rates.

27

Table of Contents

We expect our effective tax rate in fiscal 2024, exclusive of any unusual transactions or tax events, to be approximately 24%.

Equity Method Investment Earnings

We include our share of the earnings of certain affiliates based on our economic ownership interest in the affiliates. Our most significant affiliate is the Ardent Mills joint venture. Our share of earnings from our equity method investment earnings were $212.0 million and $145.3 million for fiscal 2023 and 2022, respectively. Ardent Mills earnings for fiscal 2023 reflected favorable market conditions, including the joint venture’s continued effective management through the recent volatility in the wheat markets.

Earnings Per Share

Diluted earnings per share in fiscal 2023 and 2022 were $1.42 and $1.84, respectively. The decrease in diluted earnings per share reflected lower net income. See "Items Impacting Comparability" above as several significant items affected the comparability of year-over-year results of operations.

LIQUIDITY AND CAPITAL RESOURCES

Sources of Liquidity and Capital

The primary objective of our financing strategy is to maintain a prudent capital structure that provides us flexibility to pursue our growth objectives. We use a combination of equity and short- and long-term debt. We use short-term debt principally to finance ongoing operations, including our seasonal requirements for working capital (accounts receivable, prepaid expenses and other current assets, and inventories, less accounts payable, accrued payroll, and other accrued liabilities). We strive to maintain solid investment grade credit ratings.

Management believes that existing cash balances, cash flows from operations, existing credit facilities, our commercial paper program, and access to capital markets will provide sufficient liquidity to meet our debt obligations, including any repayment of debt or refinancing of debt, working capital needs, planned capital expenditures, other contractual obligations, and payment of anticipated quarterly dividends for at least the next twelve months and the foreseeable future thereafter.

Borrowing Facilities and Long-Term Debt

At May 28, 2023, 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 matures on August 26, 2027 and is unsecured. The Company may request the term of the Revolving Credit Facility be extended for additional one-year or two-year periods from the then-applicable maturity date on an annual basis. We have historically used a credit facility principally as a back-up for our commercial paper program. As of May 28, 2023, there were no outstanding borrowings under the Revolving Credit Facility.

We had $576.0 million outstanding under our commercial paper program as of May 28, 2023, and $180.0 million outstanding as of May 29, 2022. The highest level of borrowings during fiscal 2023 was $718.0 million.

We repaid the remaining outstanding $437.0 million aggregate principal amount of our 3.20% senior notes on their maturity date of January 25, 2023. The repayment was primarily funded by the issuance of commercial paper. We have $500.0 million aggregate principal amount of 0.500% senior notes maturing on August 11, 2023 that we expect to repay with long-term debt and/or cash on hand.

During the first quarter of fiscal 2023, we entered into an unsecured Term Loan Agreement (the "Term Loan Agreement") with a syndicate of financial institutions. The Term Loan Agreement provides for delayed draw term loans to the Company in an aggregate principal amount of up to $500.0 million. The Term Loan Agreement matures on August 26, 2025. During the second quarter of fiscal 2023, we borrowed the full $500.0 million aggregate principal amount available under the Term Loan Agreement. The proceeds were used to repay the full outstanding $250.0 million aggregate principal amount of our 3.25% senior notes on their maturity date of September 15, 2022 as well as to repay outstanding borrowings under our commercial paper program.

28

Table of Contents

Additional information about our long-term debt balances as of May 28, 2023 can be found in Note 3, "Long-Term Debt", to the Consolidated Financial Statements contained in this report. The weighted-average coupon interest rate of the long-term debt obligations outstanding as of May 28, 2023, was approximately 4.6%.

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. We continuously evaluate opportunities to refinance our debt; 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 fiscal 2023, 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. A downgrade of our short-term credit ratings would impact our ability to borrow under our commercial paper program by negatively impacting borrowing costs and causing shorter durations, as well as making access to commercial paper more difficult, or impossible.

Our most restrictive debt agreement (the Revolving Credit Facility) generally requires our ratio of EBITDA to interest expense not be less than 3.0 to 1.0 and our ratio of funded debt to EBITDA not to exceed 4.5 to 1.0. Each ratio is to be calculated on a rolling four-quarter basis. As of May 28, 2023, we were in compliance with all financial covenants.

Equity and Dividends

We repurchase shares of our common stock from time to time after considering market conditions and in accordance with repurchase limits authorized by our Board. Under our current share repurchase authorization, we may repurchase our shares periodically over several years, depending on market conditions and other factors, and may do so in open market purchases or privately negotiated transactions. The share repurchase authorization has no expiration date. During fiscal 2023, we repurchased 4.2 million shares of our common stock under this authorization for an aggregate of $150.0 million. The Company’s total remaining share repurchase authorization as of May 28, 2023, was $916.6 million.

On April 12, 2023, we announced that our Board had authorized a quarterly dividend payment of $0.33 per share, which was paid on June 1, 2023, to stockholders of record as of the close of business on April 28, 2023. Subsequent to our fiscal year end, on July 12, 2023, our Board declared a quarterly dividend of $0.35 per share to be paid on August 31, 2023 to stockholders of record as of the close of business on July 31, 2023, which represents a 6% increase to our annualized dividend rate.

Contractual Obligations

As part of our ongoing operations, we enter into contractual arrangements that obligate us to make future cash payments. These obligations impact our liquidity and capital resource needs. In addition to principal and interest payments on our outstanding long-term debt and notes payable balances, discussed above, our contractual obligations primarily consist of lease payments, income taxes, pension and postretirement benefits, and unconditional purchase obligations.

A summary of our operating and finance lease obligations as of May 28, 2023 can be found in Note 14, "Leases", to the Consolidated Financial Statements contained in this report.

The liability for gross unrecognized tax benefits related to uncertain tax positions was $23.7 million as of May 28, 2023. See Note 13, "Pre-Tax Income and Income Taxes", to the Consolidated Financial Statements contained in this report for information related to income taxes.

As of May 28, 2023, we had an aggregate funded pension asset of $148.3 million and an aggregate unfunded postretirement benefit obligation totaling $49.7 million. We expect to make payments totaling approximately $12.1 million and $7.2 million in fiscal 2024 to fund our pension and postretirement plans, respectively. See Note 17, "Pension and Postretirement Benefits", to the Consolidated Financial Statements and "Critical Accounting Estimates – Employee-Related Benefits" contained in this report for further discussion of our pension obligation and factors that could affect estimates of these obligations.

29

Table of Contents

As of May 28, 2023, our unconditional purchase obligations (i.e., obligations to transfer funds in the future for fixed or minimum quantities of goods or services at fixed or minimum prices, such as "take-or-pay" contracts) totaled approximately $2.58 billion. Approximately $1.72 billion of this balance is due in fiscal 2024. Included in this amount are open purchase orders and other supply agreements totaling approximately $1.45 billion, which are generally settleable in the ordinary course of business in less than one year. Warehousing service agreements totaling approximately $629 million make up a majority of our remaining unconditional purchase obligations with various terms of up to 10 years.

We expect to have sufficient cash flows from the above cited sources to meet the material cash requirements of these contractual obligations as they become settleable in the ordinary course of business.

Capital Expenditures

We continue to make investments in our business and operating facilities. Our preliminary estimate of capital expenditures for fiscal 2024 is approximately $500 million.

Supplier Arrangements

Certain suppliers have access to third-party services that allow them to view our scheduled payments online. These third-party services also allow suppliers to finance advances on our scheduled payments at the sole discretion of the supplier and the third party. Balances remain as obligations to our suppliers as stated in our supplier agreements and are either reflected in accounts payable or in notes payable within our Consolidated Balance Sheets depending on the nature of the arrangement. The associated payments are included in net cash flows from operating activities for those balances reflected in accounts payable, whereas the proceeds and payments associated with short-term borrowings are reflected as financing activities within our Consolidated Statements of Cash Flows. As of May 28, 2023 and May 29, 2022, $355.1 million and $378.3 million, respectively, of our total accounts payable was payable to suppliers who utilize these third-party services. As of May 28, 2023, we also had approximately $62.5 million of short-term borrowings related to these arrangements.

The program commenced at about the same time that we began an initiative to negotiate extended payment terms with our suppliers. A number of factors may impact our future payment terms, including our relative creditworthiness, overall market liquidity, and changes in interest rates and other general economic conditions.

Cash Flows

In fiscal 2023, we generated $10.6 million of cash, which was the net result of $995.4 million generated from operating activities, $354.9 million used in investing activities, $631.6 million used in financing activities, and an increase of $1.7 million due to the effects of changes in foreign currency exchange rates.

Cash generated from operating activities totaled $995.4 million in fiscal 2023, as compared to $1.18 billion generated in fiscal 2022. While we had higher gross profits in fiscal 2023, the decrease in operating cash flows for fiscal 2023 compared to fiscal 2022 was primarily driven by changes in working capital, which were negatively impacted by the timing of payments of accounts payable, higher inventory balances, due in part to input cost inflation, and increased tax and interest payments.

Cash used in investing activities totaled $354.9 million in fiscal 2023 compared to $434.9 million in fiscal 2022. Net cash outflows from investing activities in fiscal 2023 and 2022 consisted primarily of capital expenditures totaling $362.2 million and $464.4 million, respectively.

Cash used in financing activities totaled $631.6 million in fiscal 2023 compared to $738.0 million in fiscal 2022. Financing activities in fiscal 2023 principally reflected repayments of long-term debt of $712.4 million, the issuance of long-term debt totaling $500.0 million, net short-term borrowing issuances of $351.4 million, cash dividends paid of $623.8 million, and common stock repurchases of $150.0 million. Financing activities in fiscal 2022 reflected net proceeds of $499.1 million from the issuance of $500.0 million aggregate principal amount of long-term debt, net short-term borrowing repayments of $523.1 million, cash dividends paid of $581.8 million, and common stock repurchases of $50.0 million.

30

Table of Contents

Cash Held by International Subsidiaries

The Company had cash and cash equivalents of $93.9 million at May 28, 2023, and $83.3 million at May 29, 2022, of which $85.5 million at May 28, 2023, and $74.7 million at May 29, 2022, was held in foreign countries. A deferred tax liability is provided for certain undistributed foreign earnings in fiscal 2023 that are not considered to be indefinitely reinvested or cannot be remitted in a tax-neutral transaction. Other undistributed foreign earnings are invested indefinitely and therefore we have not provided deferred taxes on those earnings.

CRITICAL ACCOUNTING ESTIMATES

The process of preparing financial statements requires the use of estimates on the part of management. The estimates used by management are based on our historical experiences combined with management's understanding of current facts and circumstances. Certain of our accounting estimates are considered critical as they are both important to the portrayal of our financial condition and results and require significant or complex judgment on the part of management. The following is a summary of certain accounting estimates considered critical by management.

Our Audit/Finance Committee has reviewed management's development, selection, and disclosure of the critical accounting estimates.

Marketing Costs—We offer various forms of trade promotions which are mostly recorded as a reduction in revenue. The methodologies for determining these provisions are dependent on local customer pricing and promotional practices, which range from contractually fixed percentage price reductions to provisions based on actual occurrence or performance. Our promotional activities are conducted either through the retail trade or directly with consumers and include activities such as in-store displays and events, feature price discounts, consumer coupons, and loyalty programs. The costs of these activities are recognized as a reduction of revenue at the time the related revenue is recorded, which normally precedes the actual cash expenditure. The recognition of these costs therefore requires management judgment regarding the volume of promotional offers that will be redeemed by either the retail trade or consumer. These estimates are made using various techniques including historical data on performance of similar promotional programs. Differences between estimated expense and actual redemptions are recognized as a change in management estimate in a subsequent period.

We have recognized trade promotion liabilities of $125.7 million as of May 28, 2023. Changes in the assumptions used in estimating the cost of any individual customer marketing program would not result in a material change in our results of operations or cash flows.

Income Taxes—Our income tax expense is based on our income, statutory tax rates, and tax planning opportunities available in the various jurisdictions in which we operate. Tax laws are complex and subject to different interpretations by the taxpayer and respective governmental taxing authorities. Significant judgment is required in determining our income tax expense and in evaluating our tax positions, including evaluating uncertainties. Management reviews tax positions at least quarterly and adjusts the balances as new information becomes available. Deferred income tax assets represent amounts available to reduce income taxes payable on taxable income in future years. Such assets arise because of temporary differences between the tax bases of assets and liabilities and their carrying amounts in our consolidated balance sheets, as well as from net operating loss and tax credit carryforwards. Management evaluates the recoverability of these future tax deductions by assessing the adequacy of future expected taxable income from all sources, including reversal of taxable temporary differences, forecasted operating earnings, and available tax planning strategies. These estimates of future taxable income inherently require significant judgment. Management uses historical experience and short and long-range business forecasts to develop such estimates. Further, we employ various prudent and feasible tax planning strategies to facilitate the recoverability of future deductions. To the extent management does not consider it more likely than not that a deferred tax asset will be recovered, a valuation allowance is established.

Further information on income taxes is provided in Note 13, "Pre-tax Income and Income Taxes", to the Consolidated Financial Statements contained in this report.

31

Table of Contents

Employee-Related Benefits—We incur certain employment-related expenses associated with our pension plans. In order to measure the annual expense associated with these pension benefits, management must make a variety of estimates including, but not limited to, discount rates used to measure the present value of certain liabilities, assumed rates of return on assets set aside to fund these expenses, employee turnover rates, and anticipated mortality rates. The estimates used by management are based on our historical experience as well as current facts and circumstances. We use third-party specialists to assist management in appropriately measuring the expense associated with these pension benefits. Different estimates used by management could result in us recognizing different amounts of expense over different periods of time.

The Company uses a split discount rate (the "spot-rate approach") for the U.S. plans and certain foreign plans. The spot-rate approach applies separate discount rates for each projected benefit payment in the calculation of pension service and interest cost.

We have recognized a pension liability of $101.6 million and $114.9 million as of the end of fiscal 2023 and 2022, respectively. We also have recognized a pension asset of $249.9 million and $277.0 million as of the end of fiscal 2023 and 2022, respectively, as certain individual plans of the Company had a positive funded status.

We recognize cumulative changes in the fair value of pension plan assets and net actuarial gains or losses in excess of 10% of the greater of the fair value of plan assets or the plan's projected benefit obligation ("the corridor") in current period expense annually as of our measurement date, which is our fiscal year-end, or when measurement is required otherwise under accounting principles generally accepted in the United States of America ("U.S. GAAP").

We recognized a pension benefit from Company plans of $13.9 million, $54.4 million, and $38.3 million in fiscal 2023, 2022, and 2021, respectively. Such amounts reflect the year-end write-off of actuarial losses (gains) in excess of 10% of our pension liability of $0.1 million, $(2.9) million, and $0.8 million in fiscal 2023, 2022, and 2021, respectively. This also reflected expected returns on plan assets of $145.9 million, $145.4 million, and $140.0 million in fiscal 2023, 2022, and 2021, respectively. We contributed $12.5 million, $11.5 million, and $27.6 million to our pension plans in fiscal 2023, 2022, and 2021, respectively. We anticipate contributing approximately $12.1 million to our pension plans in fiscal 2024.

One significant assumption for pension plan accounting is the discount rate. We use a spot-rate approach, discussed above. This approach focuses on measuring the service cost and interest cost components of net periodic benefit cost by using individual spot rates derived from a high-quality corporate bond yield curve and matched with separate cash flows for each future year instead of a single weighted-average discount rate approach.

Based on this information, the weighted-average discount rate selected by us for determination of the interest cost component of our pension expense was 4.09% for fiscal 2023, 2.29% for fiscal 2022, and 2.30% for fiscal 2021. The weighted-average discount rate selected by us for determination of the service cost component of our pension expense was 4.74% for fiscal 2023, 3.50% for fiscal 2022, and 3.35% for fiscal 2021. We selected a weighted-average discount rate of 5.64% and 5.44% for determination of service and interest expense, respectively, for fiscal 2024. A 25-basis point increase in our discount rate assumption as of the end of fiscal 2023 would increase our annual pension expense for our pension plans in fiscal 2023 by $2.6 million. A 25-basis point decrease in our discount rate assumption as of the end of fiscal 2023 would decrease our annual pension expense for our pension plans in fiscal 2023 by $2.8 million. For our year-end pension obligation determination, we selected discount rates of 5.50% and 4.48% for fiscal years 2023 and 2022, respectively.

Another significant assumption used to account for our pension plans is the expected long-term rate of return on plan assets. In developing the assumed long-term rate of return on plan assets for determining pension expense, we consider long-term historical returns (arithmetic average) of the plan's investments, the asset allocation among types of investments, estimated long-term returns by investment type from external sources, and the current economic environment. Based on this information, we selected 4.56% for the weighted-average expected long-term rate of return on plan assets for determining our fiscal 2023 pension expense. A 25-basis point increase/decrease in our weighted-average expected long-term rate of return assumption as of the beginning of fiscal 2023 would decrease/increase annual pension expense for our pension plans by $8.0 million. A 25-basis point increase/decrease in our expected long-term rate of return assumption as of the beginning of fiscal 2024 would decrease/increase annual pension expense for our pension plans by $7.1 million. We selected a weighted-average expected rate of return on plan assets of 5.01% to be used to determine our pension expense for fiscal 2024.

32

Table of Contents

Business Combinations, Impairment of Long-Lived Assets (including property, plant and equipment), Identifiable Intangible Assets, and Goodwill—We use the acquisition method in accounting for acquired businesses. Under the acquisition method, our financial statements reflect the operations of an acquired business starting from the closing of the acquisition. The assets acquired and liabilities assumed are recorded at their respective estimated fair values at the date of the acquisition. Any excess of the purchase price over the estimated fair values of the identifiable net assets acquired is recorded as goodwill. Significant judgment is often required in estimating the fair value of assets acquired, particularly intangible assets. As a result, in the case of significant acquisitions we normally obtain the assistance of a third-party valuation specialist in estimating fair values of tangible and intangible assets. The fair value estimates are based on available historical information and on expectations and assumptions about the future, considering the perspective of marketplace participants. While management believes those expectations and assumptions are reasonable, they are inherently uncertain. Unanticipated market or macroeconomic events and circumstances may occur, which could affect the accuracy or validity of the estimates and assumptions.

We reduce the carrying amounts of long-lived assets to their fair values when their carrying amount is determined to not be recoverable. We generally compare undiscounted estimated future cash flows of an asset or asset group to the carrying values of the asset or asset group for property, plant and equipment. If the undiscounted estimated future cash flows exceed the carrying values of the asset or asset group, no impairment is recognized. If the undiscounted estimated future cash flows are less than the carrying values of the asset or asset group, we write-down the asset or assets to their estimated fair values. The estimates of fair value are generally in the form of appraisal, or by discounting estimated future cash flows of the asset or asset group.

Determining the useful lives of intangible assets also requires management judgment. Certain brand intangibles are expected to have indefinite lives based on their history and our plans to continue to support and build the acquired brands, while other acquired intangible assets (e.g., customer relationships) are expected to have determinable useful lives. Our estimates of the useful lives of definite-lived intangible assets are primarily based upon historical experience, the competitive and macroeconomic environment, and our operating plans. The costs of definite-lived intangibles are amortized to expense over their estimated life.

We reduce the carrying amounts of indefinite-lived intangible assets, and goodwill to their fair values when the fair value of such assets is determined to be less than their carrying amounts (i.e., assets are deemed to be impaired). Fair value is typically estimated using a discounted cash flow analysis, which requires us to estimate the future cash flows anticipated to be generated by the particular asset being tested for impairment as well as to select a discount rate to measure the present value of the anticipated cash flows. When determining future cash flow estimates, we consider historical results adjusted to reflect current and anticipated operating conditions. Estimating future cash flows requires significant judgment by management in such areas as future economic conditions, industry-specific conditions, product pricing, and necessary capital expenditures. The use of different assumptions or estimates for future cash flows could produce different impairment amounts (or none at all) for long-lived assets and identifiable intangible assets. For further information on our indefinite-lived intangible assets and goodwill, see Note 1, “Summary of Significant Accounting Policies”, to the Consolidated Financial Statements contained in this report.

As of May 28, 2023, we have goodwill of $11.18 billion, indefinite-lived intangibles of $2.47 billion and definite-lived intangibles of $735.3 million. Historically, we have experienced impairments in brand intangibles and goodwill as a result of declining sales, reductions to our assumed royalty rates due to lower-than-expected profit margins, and other economic conditions such as increases to interest rates. In the first quarter of fiscal 2023, we recorded goodwill impairments of $141.7 million in our Sides, Components, Enhancers reporting unit. The carrying value of goodwill in our Sides, Components, Enhancers reporting unit was approximately $3.3 billion as of our fiscal 2023 annual impairment testing date and was the only reporting unit with 10% or less excess fair value over carrying value as of that date. For our Sides, Components, Enhancers reporting unit, we selected a discount rate of 7.75% and a long-term growth rate that approximated 1%.

In fiscal 2023, 2022, and 2021, we recorded total intangibles impairments of $589.2 million, $209.0 million, and $90.9 million, respectively, primarily related to brands acquired as part of the Pinnacle acquisition that were recorded at fair value in fiscal 2019. We continue to be more susceptible to impairment charges in the future if our long-term sales forecasts, royalty rates, and other assumptions change as a result of lower than expected performance or other economic conditions. We will monitor these assumptions as management continues to achieve gross margin improvement and long-term sales growth. Discount rates, long-term growth rates, and royalty rates used to estimate the fair value of our domestic retail brands with 10% or less excess fair value over carrying amount as of the fiscal 2023 annual impairment test were as follows:

33

Table of Contents

Assumptions used in impairment testing are made at a point in time and require significant judgment; therefore, they are subject to change based upon the facts and circumstances present at each annual impairment test date. Additionally, these assumptions are generally interdependent and do not change in isolation. However, as it is reasonably possible that changes in assumptions could occur, as a sensitivity measure, we have presented the estimated effects of isolated changes in discount rates, long-term growth rates, and royalty rates on the fair value of our reporting unit and brands with 10% or less excess fair value over carrying amount. These estimated changes in fair value are not necessarily representative of the actual impairment that would be recorded in the event of a fair value decline.

If we had changed the assumptions used to estimate the fair value of our reporting unit and brands with 10% or less excess fair value over carrying amount as of the fiscal 2023 annual impairment test, these isolated changes, which are reasonably possible to occur, would have led to the following increase/(decrease) in the aggregate fair value of this reporting unit and certain brands (in millions):

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In September 2022, the Financial Accounting Standards Board issued Accounting Standards Update ("ASU") 2022-04, Supplier Finance Programs (Topic 405-50) - Disclosure of Supplier Finance Program Obligations, to add disclosure requirements related to supplier financing programs under Accounting Standards Codification 405, Liabilities. The guidance requires entities that maintain supplier financing programs to provide information in their financial statements about their use of supplier finance programs and their effect on the entity's working capital, liquidity, and cash flows. Specifically, the amendment requires entities to disclose the key terms of their programs, amounts outstanding, balance sheet presentation, and a roll-forward of amounts outstanding during the annual period. Only the amount outstanding at the end of the period is required to be disclosed in interim periods. The ASU will be effective beginning in the first quarter of fiscal 2024, except for the roll-forward requirement, which is effective in fiscal 2025. Early adoption is permitted. We are reviewing the provisions of this new pronouncement but do not expect this ASU to have a significant impact on our financial statements and related disclosures.