Packaged foods giant ConAgra Foods (NYSE:CAG) recently unveiled fiscal first-quarter earnings, which came in better than expectations. The company is hard at work to engineer a turnaround in some of its key categories, including frozen foods, which have underperformed for several quarters now. The company suffered lower sales and earnings for most of the last fiscal year, which makes it critical that the company gets off to a better start in fiscal 2015.

Here are some important items management discussed during its most recent conference call with analysts.

Cafe Steamers counted on to lead frozen category

As you know, one of our major frozen brands, Healthy Choice, has struggled in single serve frozen meals.
-- Chief Executive Officer Gary Rodkin

ConAgra's consumer foods segment posted a 1% sales decline last quarter, year over year, as its key Healthy Choice brand remained a poor performer. In response, ConAgra management is making the decision to pull some of the brand's slower-moving units. Instead, ConAgra will continue aggressively marketing its Healthy Choice Cafe Steamers line, which has performed consistently strongly since its introduction in 2008 because of its higher margins and higher brand connection with consumers. Based on this, management is counting on better performance from Healthy Choice over the course of the year.

Commercial foods was ConAgra's best-performing segment

We have diversified and strengthened our customer base since last year, so we feel good about the sales potential and our prospects going forward.
-- Rodkin

Of its three major segments, commercial foods was the only one to post a sales increase. Revenue grew 2% year over year, thanks to a 3% increase in volumes. This was because of higher sales in its biggest commercial business, Lamb Weston potatoes. Management is particularly excited about future growth opportunities for Lamb Weston in emerging markets such as China, which should help drive further sales gains in future quarters.

New channels represent a growth opportunity

Our intensified focus on club, dollar and convenient stores is beginning to drive impact.
-- Rodkin

ConAgra has adopted a new strategy of focusing on alternative retail outlets to drive sales growth. This is a wise move, because growth at traditional grocery stores has slowed in recent periods. As a result, the company is going in a new direction, and focusing marketing and distribution efforts toward places like dollar stores and convenience stores, because these outlets are growing at far higher rates than grocery stores.

Last quarter, management noted significant distribution gains in club stores with brands like Reddi-wip, Hunt's, and Bertolli. Also last quarter, ConAgra secured new distribution in dollar stores, and it's counting on future growth in these channels to help it meet expectations.

Balance sheet improvement continues

On capital allocation, as we have previously noted, our capital allocation priority through fiscal year 2015 will be the repayment of debt.
-- Chief Financial Officer John Gehring

ConAgra management maintained its outlook for operating cash flows to reach $1.6 billion-$1.7 billion for the full fiscal year. This would represent 6%-13% growth on a year over year basis. Assuming it hits its target, ConAgra will reserve the greatest portion of cash flow for debt repayment. Management intends to allocate a lot of its cash flow to improving its balance sheet, which is a good move.

In the first quarter, ConAgra paid off about $500 million of long-term debt. By the end of fiscal 2015, management expects to repay approximately $1 billion of debt. Because debt repayment will be the first priority, investors shouldn't expect a dividend increase this fiscal year.

Dividend growth on the shelf until FY 2016

We remain committed to a strong dividend and intend to maintain our current annual dividend rate at $1 per share as we delever.
-- Gehring

As ConAgra works to strengthen its balance sheet, it's not making moves to increase its dividend this fiscal year. With this statement, management is essentially telling shareholders that debt repayment is the No. 1 focus right now. That being said, ConAgra reiterated its commitment to the current $1-per-share dividend, but since the stock already yields a healthy 3%, there's no immediate need to increase the dividend. The takeaway is that once the deleveraging process is complete next year, and ConAgra returns to a stronger financial condition, it will give consideration to a dividend increase.

The bottom line
ConAgra had a poor year in fiscal 2014, but the new fiscal year is looking brighter. The results are yet to be seen, as sales growth remains elusive, but management is excited about stabilization in the company's key categories. Through new products and sales channels, management expects higher operating cash flow this year, which will be utilized primarily to strengthen ConAgra's financial position. These initiatives should all work to increase shareholder value going forward.

Bob Ciura has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.