Delivers better-than-expected first-half
earnings; advances transform and modernize initiative
AUSTIN,
Minn., May 30, 2024 /PRNewswire/ -- Hormel Foods
Corporation (NYSE: HRL), a Fortune 500 global branded food company,
today reported results for the second quarter of fiscal 2024, ended
April 28, 2024. All comparisons are
to the comparable period of fiscal 2023, unless otherwise
noted.
EXECUTIVE SUMMARY — FIRST HALF
- Volume of 2.16 billion lbs., comparable to last year
- Net sales of $5.88 billion,
compared to $5.95 billion
- Operating income of $537 million,
compared to $585 million; adjusted
operating income1 of $571
million
- Operating margin of 9.1%, compared to 9.8% last year; adjusted
operating margin1 of 9.7%
- Earnings before income taxes of $530
million, down 5%; adjusted earnings before income
taxes1 of $564 million, up
1%
- Effective tax rate of 23.0%, compared to 22.4%
- Diluted net earnings per share of $0.74, compared to $0.79; adjusted diluted net earnings per
share1 of $0.79
- Year-to-date cash flow from operations of $640 million, up 55%
EXECUTIVE SUMMARY — SECOND QUARTER
- Volume of 1.06 billion lbs., compared to 1.10 billion lbs.
- Net sales of $2.89 billion,
compared to $2.98 billion
- Operating income of $252 million,
compared to $296 million; adjusted
operating income1 of $276
million
- Operating margin of 8.7%, compared to 9.9% last year; adjusted
operating margin1 of 9.6%
- Earnings before income taxes of $244
million, down 12%; adjusted earnings before income
taxes1 of $268 million,
down 4%
- Effective tax rate of 22.5%, compared to 22.1%
- Diluted net earnings per share of $0.34, compared to $0.40; adjusted diluted net earnings per
share1 of $0.38
- Quarter-to-date cash flow from operations of $236 million, up 13%
EXECUTIVE COMMENTARY AND OUTLOOK
"We delivered a strong first half, with consecutive
quarters of better-than-expected earnings, a significant
improvement in operating cash flows, continued Foodservice
strength, recovery in our International business and stable volumes
across our business," said Jim Snee,
chairman of the board, president and chief executive officer.
"Importantly, we made further progress on our strategic
initiatives, and we remain on track to deliver on our commitments
to improve our business and drive long-term shareholder returns and
growth."
"To reflect our solid first-half performance and our
expectations for continued growth from our Foodservice and
International segments, ongoing improvements across our supply
chain, and further benefits from our transform and modernize
initiative, we are updating our full-year earnings outlook," Snee
said. "Our team remains focused on growing operating income,
driving savings through our transform and modernize initiative, and
capturing incremental value from our investments."
For fiscal year 2024, the Company is:
- Reaffirming its net sales growth outlook of 1% to 3%.
- Updating its expectations for diluted net earnings per share to
$1.45 to $1.55 (previously $1.43 to $1.57) and
its expectations for adjusted diluted net earnings per
share1 to $1.55 to
$1.65* (previously $1.51 to $1.65).
- Including net sales and earnings pressure from a significant
year-over-year decline in whole bird turkey markets, as well as the
estimated impact of an unplanned production interruption at its
Suffolk, Virginia, facility.
- Assuming continued benefits to net earnings from its transform
and modernize initiative.
Fiscal 2024
Outlook
|
Current
|
Previous
|
Net Sales
|
$12.2 - $12.5
billion
|
$12.2 - $12.5
billion
|
Adj. Diluted Net
Earnings per Share*
|
$1.55 -
$1.65
|
$1.51 -
$1.65
|
Effective Tax
Rate
|
22.0 -
23.0%
|
21.0 - 23.0%
|
*Adjusted diluted net
earnings per share1 excludes the estimated impact of
$0.08 per share from nonrecurring costs associated with the
Company's transform and modernize initiative and approximately
$0.02 per share resulting from legal settlements. Please see
discussion of non-GAAP measures and a reconciliation of the
Company's fiscal year 2024 guidance for estimated adjusted diluted
net earnings per share1 at the end of this
release.
|
PROGRESS EXECUTING STRATEGIC PRIORITIES – Q2
HIGHLIGHTS
Drive focus and growth in our Retail business
- We grew volume and sales2 with many products during
the quarter, including Planters® snack
nuts, the SPAM® family of products,
Jennie-O® lean ground turkey,
Applegate® premium sliced lunchmeat and
Herdez® guacamole.
- During the quarter, we grew market share2 across
several flagship brands, including Hormel®
Black Label® bacon,
Planters® snack nuts, the
SPAM® family of products and
Jennie-O® lean ground turkey.
Additionally, during the first half of the year, total points of
distribution increased by mid-single digits3 for our
flagship and rising brands.
- Within the bacon category, we achieved strong volume and sales
gains2 for Hormel® Black
Label® bacon, and double-digit volume and sales
growth for Applegate Naturals®
bacon.4 We also introduced several innovative bacon
items, including Applegate Naturals® fully
cooked Sunday
Bacon® and Hormel®
Black Label® ranch-flavored bacon.
Expand leadership in Foodservice
- We delivered another quarter of broad-based volume and net
sales growth,5 led by Hormel®
Bacon 1™ cooked bacon, our line of premium prepared
proteins, premium pepperoni and Jennie-O®
turkey.
- Two of our most exciting innovation items –
Hormel® Flash 180™ sous vide-style chicken
breast and Hormel® ribbon pepperoni – have
already exceeded our sales projections for fiscal 2024.
- We delivered excellent growth during the quarter in the
convenience channel,5 led by
Planters® flavored cashews and Corn
Nuts® corn kernels.
Aggressively develop our global presence
- Our in-country operations, partnerships and innovation continue
to support growth in key international markets.
- Brazil: Our
Ceratti® branded business grew in the
foodservice and retail channels, led by premium and pre-sliced
chilled meats and charcuterie.5
- China: Our retail
business continued to recover in the second quarter, with
distribution gains of SPAM® singles, the
launch of new Skippy® spreads and further
innovation in our shelf-stable meat snacking portfolio.
- Philippines: Equity in
earnings increased due to an improvement in sales mix, including
growth in the hot dog and premium center-store grocery
categories.5
- South Korea:
Skippy® items delivered significant
growth5 resulting from media investment and expanded
product offerings with key retail partners.
- The iconic Skippy® peanut butter brand
is returning to the Canadian consumer market in the form of five
all-new peanut butter-inspired snack products.
Execute our enterprise entertaining & snacking
vision
- We continued to see strong momentum in our
Planters® snack nuts business, including
volume, sales and share gains for mixed nuts, cashews and
Corn Nuts® corn kernels.2
- We are supporting the Hormel®
pepperoni brand, America's No. 1 pepperoni brand,2 with
a new national advertising campaign, "Boldly Irresistible,"
highlighting its versatility and cravability.
- We introduced several new entertaining and snacking items,
including Planters® salt and vinegar
cashews, Corn Nuts® loaded taco-flavor
corn kernels, and Hormel Gatherings®
summer-themed hard salami and pepperoni tray.
Future-fit our One Supply Chain/Continue to transform &
modernize our Company
- We made further progress against our transform and modernize
initiative, including in the areas of supply chain efficiency and
portfolio optimization:
- Plan: We continued the implementation of a new
end-to-end planning process and are integrating new planning
technology.
- Buy: We continued to realize the benefits from our new
procurement and productivity programs, with further savings
expected across many categories, such as logistics and warehousing,
direct supplies and indirect supplies. Additionally, we are
broadening the scope of our efforts outside the supply chain.
- Make: We completed a major improvement project to expand
capacity for our retail canned portfolio. Additionally, we launched
a project to increase capacity for Hormel®
Bacon 1™ cooked bacon.
- Move: We have implemented analytics across our
refrigerated network to further enhance our service levels.
- Portfolio Optimization: Leveraging our analytics tools
and capabilities, we continued to identify opportunities to enhance
and support margin-profile improvements.
- We celebrated the opening of our new $5
million, 13,000-square-foot childcare center in Austin, Minnesota. This new facility provides
a needed service for our team members and the Austin community and
assists the Company's efforts to recruit working parents in today's
tight labor market.
SEGMENT HIGHLIGHTS – SECOND QUARTER
Retail
- Volume down 5%
- Net sales down 7%
- Segment profit down 14%
Volume growth from the bacon and emerging brands verticals was
more than offset by declines in value-added meats. Net sales
increased for many items, including Hormel® Black
Label® bacon, the SPAM®
family of products, Applegate® natural and
organic meats, Hormel® Square
Table™ entrees and Planters® snack
nuts. These gains were negated by a significant year-over-year
volume and pricing decline for whole-bird turkeys and lower net
sales in the convenient meals and proteins vertical. Segment profit
declined due to lower sales and higher SG&A expenses, which
included increased advertising investments. These factors more than
offset the benefit from lower logistics expenses and supply chain
improvement.
Foodservice
- Volume up 3%
- Net sales up 6%
- Segment profit up 3%
Volume and net sales growth were driven primarily by strength
across the bacon, premium prepared proteins and turkey categories.
Products such as Hormel® Bacon
1™ cooked bacon, Hormel® Fire
Braised™ meats, Austin
Blues® smoked meats, Café
H® globally inspired proteins and Corn
Nuts® corn kernels delivered double-digit net
sales growth. Additionally, branded
Jennie-O® turkey items delivered robust
growth. Segment profit increased due to higher sales and lower
logistics expenses.
International
- Volume down 7%
- Net sales down 7%
- Segment profit up 71%
Double-digit volume and net sales increases for
SPAM® luncheon meat and refrigerated
exports were more than offset by lower commodity export volumes and
lower net sales in China. Segment
profit increased significantly, resulting from favorable costs in
China, growth from our
partnerships in the Philippines,
South Korea and Indonesia, as well as growth in Brazil.
SELECTED FINANCIAL DETAILS – SECOND QUARTER FISCAL
2024
- Advertising investments were $44
million, compared to $35
million last year. The Company expects full-year advertising
expense to increase compared to the prior year.
- The effective tax rate was 22.5%, compared to 22.1% last year.
The Company benefited from the impact of higher federal deductions
last year.
- Capital expenditures were $60
million, compared to $54
million last year. The Company's target for capital
expenditures in fiscal 2024 is $280
million.
- Depreciation and amortization expense was $64 million, compared to $62 million last year. The full-year expense for
fiscal 2024 is expected to be approximately $250 million.
PRESENTATION
A conference call will be webcast at
8 a.m. CT on May 30, 2024.
Access is available at www.hormelfoods.com by clicking on
"Investors." The call will also be available via telephone by
dialing 800-549-8228 (toll-free) or 646-564-2877
(international) and providing the conference ID 77284. An audio
replay is available at www.hormelfoods.com. The webcast replay will
be available at noon CT, May 30,
2024, and will remain on the website for one year.
ABOUT HORMEL FOODS - Inspired People. Inspired
Food.™
Hormel Foods Corporation, based in Austin, Minnesota, is a global branded food
company with over $12 billion in
annual revenue across more than 80 countries worldwide. Its brands
include Planters®, Skippy®,
SPAM®, Hormel® Natural Choice®,
Applegate®, Justin's®,
Wholly®, Hormel® Black Label®,
Columbus®, Jennie-O® and
more than 30 other beloved brands. The Company is a member of the
S&P 500 Index and the S&P 500 Dividend Aristocrats, was
named one of the best companies to work for by U.S. News &
World Report, one of America's most responsible companies by
Newsweek, recognized on Fast Company's list of the 100 Best
Workplaces for Innovators, received a perfect score of 100 on the
2023–24 Corporate Equality Index and has received numerous other
awards and accolades for its corporate responsibility and community
service efforts. The Company lives by its purpose statement —
Inspired People. Inspired Food.™ — to bring some of the
world's most trusted and iconic brands to tables across the globe.
For more information, visit www.hormelfoods.com.
FORWARD-LOOKING STATEMENTS
This news release contains
"forward-looking" information within the meaning of the federal
securities laws. The "forward-looking" information may include
statements concerning the Company's outlook for the future as well
as other statements of beliefs, future plans, strategies, or
anticipated events and similar expressions concerning matters that
are not historical facts. Words or phrases such as "should result,"
"believe," "intend," "plan," "are expected to," "targeted," "will
continue," "will approximate," "is anticipated," "estimate,"
"project," or similar expressions are intended to identify
forward-looking statements. Such statements are subject to certain
risks and uncertainties that could cause actual results to differ
materially from historical earnings and those anticipated or
projected, which factors include, but are not limited to, risks
related to the deterioration of economic conditions; risks
associated with acquisitions, joint ventures, equity investments,
and divestitures; potential disruption of operations, including at
co-manufacturers, suppliers, logistics providers, customers, or
other third-party service providers; failure to realize anticipated
cost savings or operating efficiencies associated with strategic
initiatives; risk of loss of a material contract; the Company's
inability to protect information technology systems against, or
effectively respond to, cyber attacks or security breaches;
deterioration of labor relations, labor availability or increases
to labor costs; general risks of the food industry, including food
contamination; outbreaks of disease among livestock and poultry
flocks; fluctuations in commodity prices and availability of raw
materials and other inputs; fluctuations in market demand for the
Company's products; damage to the Company's reputation or brand
image; climate change, or legal, regulatory, or market measures to
address climate change; risks of litigation; potential sanctions
and compliance costs arising from government regulation; compliance
with stringent environmental regulations and potential
environmental litigation; and risks arising from the Company's
foreign operations. Please refer to the cautionary statements
regarding "Risk Factors" and "Forward-Looking Statements" that
appear in our most recent Annual Report on Form 10-K and Quarterly
reports on Form 10-Q, which can be accessed at www.hormelfoods.com
in the "Investors" section, for additional information. In making
these statements, the Company is not undertaking, and specifically
declines to undertake, any obligation to address or update each or
any factor in future filings or communications regarding the
Company's business or results, and is not undertaking to address
how any of these factors may have caused changes to discussions or
information contained in previous filings or communications. Though
the Company has attempted to list comprehensively these important
cautionary risk factors, the Company wishes to caution investors
and others that other factors may in the future prove to be
important in affecting the Company's business or results of
operations. The Company cautions readers not to place undue
reliance on forward-looking statements, which represent current
views as of the date made.
Note: Due to rounding, numbers presented throughout
this news release may not sum precisely to the totals provided, and
percentages may not precisely reflect the absolute figures.
END NOTES
1 Non-GAAP
measure. See Appendix: Non-GAAP Measures to this news release for
more information.
2 Circana Total US MULO;13 weeks
ended 4/21/2024 vs YAG
3 Circana, POS Custom MA Model, Total
US MULO; 26 weeks ended 4/21/24 vs
YAG
4 SPINS Satori, Total US Natural; 12
weeks ended 4/21/2024 vs YAG
5 Internal data
HORMEL FOODS
CORPORATION
SEGMENT
DATA
In
thousands
Unaudited
|
|
|
|
Quarter
Ended
|
|
|
April 28,
2024
|
|
April 30,
2023
|
|
%
Change
|
Volume
(lbs.)
|
|
|
|
|
|
|
Retail
|
|
724,994
|
|
766,330
|
|
(5.4)
|
Foodservice
|
|
261,832
|
|
254,575
|
|
2.9
|
International
|
|
73,017
|
|
78,659
|
|
(7.2)
|
Total Volume
(lbs.)
|
|
1,059,843
|
|
1,099,563
|
|
(3.6)
|
|
|
|
|
|
|
|
Net
Sales
|
|
|
|
|
|
|
Retail
|
|
$
1,788,556
|
|
$
1,916,243
|
|
(6.7)
|
Foodservice
|
|
932,003
|
|
881,441
|
|
5.7
|
International
|
|
166,794
|
|
179,955
|
|
(7.3)
|
Total Net
Sales
|
|
$
2,887,352
|
|
$
2,977,639
|
|
(3.0)
|
|
|
|
|
|
|
|
Segment
Profit
|
|
|
|
|
|
|
Retail
|
|
$
132,399
|
|
$
153,226
|
|
(13.6)
|
Foodservice
|
|
149,302
|
|
145,399
|
|
2.7
|
International
|
|
23,202
|
|
13,595
|
|
70.7
|
Total Segment
Profit
|
|
304,903
|
|
312,220
|
|
(2.3)
|
Net Unallocated
Expense
|
|
60,694
|
|
33,356
|
|
82.0
|
Noncontrolling
Interest
|
|
(70)
|
|
(24)
|
|
(196.7)
|
Earnings Before
Income Taxes
|
|
$
244,139
|
|
$
278,839
|
|
(12.4)
|
|
|
|
|
|
|
|
HORMEL FOODS
CORPORATION
SEGMENT DATA
In thousands
Unaudited
|
|
|
|
Six Months
Ended
|
|
|
April 28,
2024
|
|
April 30,
2023
|
|
%
Change
|
Volume
(lbs.)
|
|
|
|
|
|
|
Retail
|
|
1,490,406
|
|
1,519,217
|
|
(1.9)
|
Foodservice
|
|
517,839
|
|
491,662
|
|
5.3
|
International
|
|
153,153
|
|
150,896
|
|
1.5
|
Total Volume
(lbs.)
|
|
2,161,397
|
|
2,161,774
|
|
—
|
|
|
|
|
|
|
|
Net
Sales
|
|
|
|
|
|
|
Retail
|
|
$
3,699,827
|
|
$
3,874,040
|
|
(4.5)
|
Foodservice
|
|
1,845,090
|
|
1,716,191
|
|
7.5
|
International
|
|
339,346
|
|
358,400
|
|
(5.3)
|
Total Net
Sales
|
|
$
5,884,263
|
|
$
5,948,632
|
|
(1.1)
|
|
|
|
|
|
|
|
Segment
Profit
|
|
|
|
|
|
|
Retail
|
|
$
281,904
|
|
$
307,903
|
|
(8.4)
|
Foodservice
|
|
299,466
|
|
281,841
|
|
6.3
|
International
|
|
43,234
|
|
33,500
|
|
29.1
|
Total Segment
Profit
|
|
624,603
|
|
623,244
|
|
0.2
|
Net Unallocated
Expense
|
|
94,714
|
|
63,111
|
|
50.1
|
Noncontrolling
Interest
|
|
(204)
|
|
(92)
|
|
(121.4)
|
Earnings Before
Income Taxes
|
|
$
529,685
|
|
$
560,041
|
|
(5.4)
|
|
|
|
|
|
|
|
HORMEL FOODS
CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
In thousands, except per share amounts
Unaudited
|
|
|
|
Quarter
Ended
|
|
Six Months
Ended
|
|
|
April 28,
2024
|
|
April 30,
2023
|
|
April 28,
2024
|
|
April 30,
2023
|
Net Sales
|
|
$ 2,887,352
|
|
$ 2,977,639
|
|
$ 5,884,263
|
|
$ 5,948,632
|
Cost of Products
Sold
|
|
2,383,546
|
|
2,486,220
|
|
4,871,723
|
|
4,961,263
|
Gross
Profit
|
|
503,806
|
|
491,419
|
|
1,012,539
|
|
987,369
|
Selling, General, and
Administrative
|
|
266,668
|
|
212,492
|
|
507,054
|
|
434,548
|
Equity in Earnings of
Affiliates
|
|
15,182
|
|
16,870
|
|
31,273
|
|
32,429
|
Operating
Income
|
|
252,320
|
|
295,798
|
|
536,758
|
|
585,250
|
Interest and
Investment Income
|
|
13,497
|
|
1,365
|
|
32,932
|
|
11,461
|
Interest
Expense
|
|
21,679
|
|
18,323
|
|
40,005
|
|
36,670
|
Earnings Before
Income Taxes
|
|
244,139
|
|
278,839
|
|
529,685
|
|
560,041
|
Provision for Income
Taxes
|
|
54,931
|
|
61,624
|
|
121,749
|
|
125,175
|
Effective Tax
Rate
|
|
22.5 %
|
|
22.1 %
|
|
23.0 %
|
|
22.4 %
|
Net
Earnings
|
|
189,207
|
|
217,215
|
|
407,936
|
|
434,866
|
Less: Net Earnings
(Loss) Attributable to Noncontrolling Interest
|
|
(70)
|
|
(24)
|
|
(204)
|
|
(92)
|
Net Earnings
Attributable to Hormel Foods Corporation
|
|
$
189,278
|
|
$
217,239
|
|
$
408,140
|
|
$
434,958
|
|
|
|
|
|
|
|
|
|
Net Earnings Per
Share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
0.35
|
|
$
0.40
|
|
$
0.75
|
|
$
0.80
|
Diluted
|
|
$
0.34
|
|
$
0.40
|
|
$
0.74
|
|
$
0.79
|
|
|
|
|
|
|
|
|
|
Weighted-average
Shares Outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
547,868
|
|
546,424
|
|
547,444
|
|
546,404
|
Diluted
|
|
548,685
|
|
549,013
|
|
548,303
|
|
549,522
|
|
|
|
|
|
|
|
|
|
Dividends Declared Per
Share
|
|
$ 0.2825
|
|
$ 0.2750
|
|
$ 0.5650
|
|
$ 0.5500
|
|
HORMEL FOODS
CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL POSITION
In thousands
Unaudited
|
|
|
|
April 28,
2024
|
|
October 29,
2023
|
Assets
|
Cash and Cash
Equivalents
|
|
$
1,486,368
|
|
$
736,532
|
Short-term Marketable
Securities
|
|
23,074
|
|
16,664
|
Accounts
Receivable
|
|
731,984
|
|
817,391
|
Inventories
|
|
1,673,500
|
|
1,680,406
|
Prepaid Expenses and
Other Current Assets
|
|
61,592
|
|
46,256
|
Total Current
Assets
|
|
3,976,519
|
|
3,297,249
|
|
|
|
|
|
Goodwill
|
|
4,929,034
|
|
4,928,464
|
Other
Intangibles
|
|
1,748,778
|
|
1,757,171
|
Pension
Assets
|
|
195,530
|
|
204,697
|
Investments in
Affiliates
|
|
710,029
|
|
725,121
|
Other
Assets
|
|
412,359
|
|
370,252
|
Net Property, Plant,
and Equipment
|
|
2,163,124
|
|
2,165,818
|
Total
Assets
|
|
$
14,135,373
|
|
$
13,448,772
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Shareholders' Investment
|
Accounts Payable &
Accrued Expenses
|
|
$
757,733
|
|
$
823,076
|
Accrued Marketing
Expenses
|
|
117,731
|
|
87,452
|
Employee Related
Expenses
|
|
238,709
|
|
263,330
|
Interest and Dividends
Payable
|
|
179,773
|
|
172,178
|
Taxes
Payable
|
|
53,573
|
|
15,212
|
Current Maturities of
Long-term Debt
|
|
957,292
|
|
950,529
|
Total Current
Liabilities
|
|
2,304,811
|
|
2,311,776
|
|
|
|
|
|
Long-term Debt Less
Current Maturities
|
|
2,852,604
|
|
2,358,719
|
Pension and
Post-retirement Benefits
|
|
356,048
|
|
349,268
|
Deferred Income
Taxes
|
|
504,907
|
|
498,106
|
Other Long-term
Liabilities
|
|
220,551
|
|
191,917
|
Accumulated Other
Comprehensive Loss
|
|
(262,325)
|
|
(272,252)
|
Other Shareholders'
Investment
|
|
8,158,778
|
|
8,011,237
|
Total Liabilities
and Shareholders' Investment
|
|
$
14,135,373
|
|
$
13,448,772
|
HORMEL FOODS
CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
In thousands
Unaudited
|
|
|
|
Quarter
Ended
|
|
Six Months
Ended
|
|
|
April 28,
2024
|
|
April 30,
2023
|
|
April 28,
2024
|
|
April 30,
2023
|
Operating
Activities
|
|
|
|
|
|
|
|
|
Net
Earnings
|
|
$
189,207
|
|
$
217,215
|
|
$
407,936
|
|
$
434,866
|
Depreciation and
Amortization
|
|
63,630
|
|
61,740
|
|
127,696
|
|
123,243
|
Decrease (Increase) in
Working Capital
|
|
(36,790)
|
|
(85,487)
|
|
78,611
|
|
(153,051)
|
Other
|
|
20,100
|
|
14,658
|
|
25,883
|
|
6,696
|
Net Cash Provided by
(Used in) Operating Activities
|
|
236,147
|
|
208,126
|
|
640,127
|
|
411,754
|
|
|
|
|
|
|
|
|
|
Investing
Activities
|
|
|
|
|
|
|
|
|
Net Sale (Purchase) of
Securities
|
|
(4,535)
|
|
786
|
|
(5,499)
|
|
(47)
|
Purchases of Property,
Plant, and Equipment
|
|
(59,965)
|
|
(53,529)
|
|
(107,175)
|
|
(90,581)
|
Proceeds from
(Purchases of) Affiliates and Other Investments
|
|
(450)
|
|
(8,792)
|
|
(450)
|
|
(427,407)
|
Other
|
|
388
|
|
1,936
|
|
408
|
|
6,968
|
Net Cash Provided by
(Used in) Investing Activities
|
|
(64,562)
|
|
(59,599)
|
|
(112,716)
|
|
(511,068)
|
|
|
|
|
|
|
|
|
|
Financing
Activities
|
|
|
|
|
|
|
|
|
Proceeds from
Long-term Debt
|
|
497,765
|
|
—
|
|
497,765
|
|
—
|
Repayments of
Long-term Debt and Finance Leases
|
|
(2,270)
|
|
(2,187)
|
|
(4,520)
|
|
(4,376)
|
Dividends Paid on
Common Stock
|
|
(154,741)
|
|
(150,599)
|
|
(305,035)
|
|
(292,616)
|
Share
Repurchase
|
|
—
|
|
(12,303)
|
|
—
|
|
(12,303)
|
Other
|
|
13,683
|
|
(80)
|
|
32,862
|
|
2,555
|
Net Cash Provided by
(Used in) Financing Activities
|
|
354,437
|
|
(165,169)
|
|
221,072
|
|
(306,739)
|
Effect of Exchange
Rate Changes on Cash
|
|
(2,865)
|
|
(2,651)
|
|
1,353
|
|
4,442
|
Increase (Decrease)
in Cash and Cash Equivalents
|
|
523,156
|
|
(19,294)
|
|
749,836
|
|
(401,611)
|
Cash and Cash
Equivalents at Beginning of Year
|
|
963,212
|
|
599,789
|
|
736,532
|
|
982,107
|
Cash and Cash
Equivalents at End of Period
|
|
$ 1,486,368
|
|
$
580,496
|
|
$ 1,486,368
|
|
$
580,496
|
APPENDIX: NON-GAAP MEASURES
This news release includes measures of financial performance
that are not defined by U.S. generally accepted accounting
principles (GAAP). The Company utilizes these non-GAAP measures to
understand and evaluate operating performance on a consistent
basis. These measures may also be used when making decisions
regarding resource allocation and in determining incentive
compensation. The Company believes these non-GAAP measures provide
useful information to investors because they aid analysis and
understanding of the Company's results and business trends relative
to past performance and the Company's competitors. Non-GAAP
measures are not intended to be a substitute for GAAP measures in
analyzing financial performance. These non-GAAP measures are not in
accordance with GAAP and may be different from non-GAAP measures
used by other companies.
Transform and Modernize Initiative
In
the fourth quarter of fiscal 2023, the Company announced a
multi-year transform and modernize initiative. In presenting
non-GAAP measures, the Company adjusts for (i.e., excludes)
expenses for this initiative that are non-recurring, comprised
primarily of project-based external consulting fees and asset
write-offs related to portfolio optimization (i.e., reducing the
complexity and optimizing the assortment of the product portfolio).
The Company believes the non-recurring costs are not reflective of
the Company's ongoing operating cost structure; therefore, the
Company is excluding these discrete costs. The Company does not
adjust for (i.e., does not exclude) certain costs related to the
transform and modernize initiative that are expected to continue
after the project ends, such as software license fees and internal
employee expenses, because those costs are considered ongoing in
nature as a component of normal operating costs.
Pork Antitrust Litigation
Settlements
In the second quarter of fiscal 2024, the
Company agreed to settle with three classes of plaintiffs in the
pork antitrust litigation. These settlement amounts are not
indicative of the Company's core operating performance, do not
reflect expected future operating costs, and may not be meaningful
when comparing the Company's operating performance against that of
prior periods.
The table below shows the calculations to reconcile from the
GAAP measures to the non-GAAP measures. The tax impacts were
calculated using the effective tax rate for the quarter in which
the expenses were incurred.
HORMEL FOODS
CORPORATION
|
|
|
|
|
RECONCILIATION OF
NON-GAAP MEASURES
|
|
|
|
|
Unaudited
|
|
|
|
Quarter
Ended
|
|
Six Months
Ended
|
in thousands, except
per share amounts
|
April 28,
2024
|
|
April 30,
2023
|
|
April 28,
2024
|
|
April 30,
2023
|
Cost of Products Sold
(GAAP)
|
$
2,383,546
|
|
$
2,486,220
|
|
$
4,871,723
|
|
$
4,961,263
|
Transform and Modernize
Initiative(1)
|
(1,823)
|
|
—
|
|
(3,420)
|
|
—
|
Adjusted Cost of
Products Sold (Non-GAAP)
|
$
2,381,723
|
|
$
2,486,220
|
|
$
4,868,303
|
|
$
4,961,263
|
|
|
|
|
|
|
|
|
SG&A
(GAAP)
|
$ 266,668
|
|
$ 212,492
|
|
$ 507,054
|
|
$ 434,548
|
Transform and Modernize
Initiative(2)
|
(10,021)
|
|
—
|
|
(18,736)
|
|
—
|
Pork Antitrust
Litigation Settlements(3)
|
(11,750)
|
|
—
|
|
(11,750)
|
|
—
|
Adjusted SG&A
(Non-GAAP)
|
$ 244,898
|
|
$ 212,492
|
|
$ 476,568
|
|
$ 434,548
|
|
|
|
|
|
|
|
|
Operating Income
(GAAP)
|
$ 252,320
|
|
$ 295,798
|
|
$ 536,758
|
|
$ 585,250
|
Transform and Modernize
Initiative(1)(2)
|
11,843
|
|
—
|
|
22,156
|
|
—
|
Pork Antitrust
Litigation Settlements(3)
|
11,750
|
|
—
|
|
11,750
|
|
—
|
Adjusted Operating
Income (Non-GAAP)
|
$ 275,914
|
|
$ 295,798
|
|
$ 570,665
|
|
$ 585,250
|
|
|
|
|
|
|
|
|
Earnings Before Income
Taxes (GAAP)
|
$ 244,139
|
|
$ 278,839
|
|
$ 529,685
|
|
$ 560,041
|
Transform and Modernize
Initiative(1)(2)
|
11,843
|
|
—
|
|
22,156
|
|
—
|
Pork Antitrust
Litigation Settlements(3)
|
11,750
|
|
—
|
|
11,750
|
|
—
|
Adjusted Earnings
Before Income Taxes (Non-GAAP)
|
$ 267,732
|
|
$ 278,839
|
|
$ 563,591
|
|
$ 560,041
|
|
|
|
|
|
|
|
|
Provision for Income
Taxes (GAAP)
|
$
54,931
|
|
$
61,624
|
|
$ 121,749
|
|
$ 125,175
|
Transform and Modernize
Initiative(1)(2)
|
2,665
|
|
—
|
|
4,985
|
|
—
|
Pork Antitrust
Litigation Settlements(3)
|
2,644
|
|
—
|
|
2,644
|
|
—
|
Adjusted Provision for
Income Taxes (Non-GAAP)
|
$
60,240
|
|
$
61,624
|
|
$ 129,378
|
|
$ 125,175
|
|
|
|
|
|
|
|
|
Net Earnings
Attributable to Hormel Foods Corporation (GAAP)
|
$ 189,278
|
|
$ 217,239
|
|
$ 408,140
|
|
$ 434,958
|
Transform and Modernize
Initiative(1)(2)
|
9,179
|
|
—
|
|
17,171
|
|
—
|
Pork Antitrust
Litigation Settlements(3)
|
9,106
|
|
—
|
|
9,106
|
|
—
|
Adjusted Net Earnings
Attributable to Hormel Foods Corporation (Non-GAAP)
|
$ 207,562
|
|
$ 217,239
|
|
$ 434,418
|
|
$ 434,958
|
|
|
|
|
|
|
|
|
Diluted Net Earnings
Per Share (GAAP)
|
$
0.34
|
|
$
0.40
|
|
$
0.74
|
|
$
0.79
|
Transform and Modernize
Initiative(1)(2)
|
0.02
|
|
—
|
|
0.03
|
|
—
|
Pork Antitrust
Litigation Settlements(3)
|
0.02
|
|
—
|
|
0.02
|
|
—
|
Adjusted Diluted Net
Earnings Per Share (Non-GAAP)
|
$
0.38
|
|
$
0.40
|
|
$
0.79
|
|
$
0.79
|
|
|
|
|
|
|
|
|
SG&A as a Percent
of Net Sales (GAAP)
|
9.2 %
|
|
7.1 %
|
|
8.6 %
|
|
7.3 %
|
Transform and Modernize
Initiative(2)
|
(0.3)
|
|
—
|
|
(0.3)
|
|
—
|
Pork Antitrust
Litigation Settlements(3)
|
(0.4)
|
|
—
|
|
(0.2)
|
|
—
|
Adjusted SG&A as a
Percent of Net Sales (Non-GAAP)
|
8.5 %
|
|
7.1 %
|
|
8.1 %
|
|
7.3 %
|
|
|
|
|
|
|
|
|
Operating Margin
(GAAP)
|
8.7 %
|
|
9.9 %
|
|
9.1 %
|
|
9.8 %
|
Transform and Modernize
Initiative(1)(2)
|
0.4
|
|
—
|
|
0.4
|
|
—
|
Pork Antitrust
Litigation Settlements(3)
|
0.4
|
|
—
|
|
0.2
|
|
—
|
Adjusted Operating
Margin (Non-GAAP)
|
9.6 %
|
|
9.9 %
|
|
9.7 %
|
|
9.8 %
|
|
(1)
Comprised primarily of asset write-offs related to portfolio
optimization.
|
(2)
Comprised primarily of project-based external consulting
fees.
|
(3)
Settlements for pork antitrust litigation.
|
Forward-looking GAAP to Non-GAAP Measures
Our fiscal
2024 outlook for adjusted diluted net earnings per share is a
non-GAAP measure that excludes, or has otherwise been adjusted for,
items impacting comparability, including estimated charges
associated with the transform and modernize initiative.
The table below shows the calculation to reconcile from the
estimated fiscal 2024 GAAP measure to the estimated non-GAAP
adjusted measure.
|
Fiscal 2024
Outlook
|
Diluted Net Earnings
per Share (GAAP)
|
$1.45 -
$1.55
|
Transform and Modernize
Initiative
|
$0.08
|
Pork Antitrust
Litigation Settlements
|
$0.02
|
Adjusted Diluted Net
Earnings per Share (Non-GAAP)
|
$1.55 -
$1.65
|
INVESTOR
CONTACT:
David
Dahlstrom
ir@hormel.com
|
|
MEDIA
CONTACT:
Media
Relations
media@hormel.com
|
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SOURCE Hormel Foods Corporation