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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Hormel Foods Corporation | NYSE:HRL | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.1601 | 0.52% | 31.0401 | 31.05 | 30.65 | 30.66 | 206,331 | 15:28:17 |
Company delivers volume growth across all segments; reaffirms full-year guidance
AUSTIN, Minn., Feb. 29, 2024 /PRNewswire/ -- Hormel Foods Corporation (NYSE: HRL), a Fortune 500 global branded food company, today reported results for the first quarter of fiscal 2024 ending Jan. 28, 2024. All comparisons are to the first quarter of fiscal 2023 unless otherwise noted.
EXECUTIVE SUMMARY — FIRST QUARTER
EXECUTIVE COMMENTARY & OUTLOOK
"We delivered strong results in the first quarter, led by better-than-expected performance in each of our business segments and progress against our transformation and modernization initiative," said Jim Snee, chairman of the board, president and chief executive officer. "We are especially encouraged by broad-based volume growth across our businesses, reflecting the strength of our leading brands, robust demand for our foodservice products and momentum in our Planters® snack nuts business. These results demonstrate our team's meaningful execution against our strategic priorities, the value of our balanced business model and marked improvements in our supply chain."
"We are reaffirming our full-year net sales and earnings expectations," Snee said. "We expect continued growth in Foodservice, improvement in our International business, impacts from pricing and innovation in Retail, and further progress on our transformation and modernization initiative. Our teams remain focused on our strategic priorities and delivering on our commitment to improve our business and drive long-term shareholder returns."
For fiscal year 2024, the Company is:
Fiscal 2024 Outlook | |
Net Sales | $12.2 - $12.5 billion |
Adj. Diluted Net Earnings per Share* | $1.51 - $1.65 |
Effective Tax Rate | 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 transformation and modernization initiative. Please see discussion of non-GAAP financial 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 – Q1 HIGHLIGHTS
Drive focus and growth in our Retail business
Expand leadership in Foodservice
Aggressively develop our global presence
Execute our enterprise entertaining & snacking vision
Future-fit our One Supply Chain/Continue to transform & modernize our Company
SEGMENT HIGHLIGHTS – FIRST QUARTER
Retail
Volume growth for the quarter was driven by the value-added meats, global flavors, emerging brands and bacon verticals. Net sales declined primarily due to lower contract manufacturing volume and lower commodity turkey pricing. Demand was strong for many products, including Skippy® peanut butter, Planters® snack nuts, Wholly® dips, Herdez® salsas and sauces, La Victoria® salsas, Jennie-O® ground turkey, Hormel® Square Table™ entrees and Hormel® pepperoni, which each delivered volume and net sales improvement during the quarter. Segment profit declined, as the benefit from higher sales in our snacking and entertaining vertical and lower logistics expenses was more than offset by the impact from lower commodity turkey pricing and lower equity in earnings from MegaMex Foods.
Foodservice
Volume and net sales growth were broad based across numerous categories, led by Jennie-O® turkey and double-digit gains for products such as Hormel® Bacon 1™ cooked bacon, pepperoni, Austin Blues® smoked meats and Café H® globally inspired proteins. Additionally, the Company's Heritage Premium Meats group drove strong volume and double-digit net sales improvement for the quarter. Segment profit increased primarily due to higher sales and favorable logistics expenses.
International
Higher commodity exports led to volume gains for the quarter. Net sales declined due to lower branded export sales and lower sales in China. Also in China, foodservice results improved as we lapped COVID-related disruption last year. This benefit was more than offset by continued weakness in the retail channel. Segment profit increased due to the inclusion of our investment in Indonesia and significantly higher results from our partnership in the Philippines, which offset the impact from lower branded export demand and lower sales in China.
SELECTED FINANCIAL DETAILS – FIRST QUARTER AND FISCAL 2024
PRESENTATION
A conference call will be webcast at 8 a.m. CST on Feb. 29, 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 01317. An audio replay is available by going to www.hormelfoods.com. The webcast replay will be available at noon CST, Feb. 29, 2024, and will remain on the website for one year.
ABOUT HORMEL FOODS - Inspired People. Inspired Food.™
Hormel Foods Corporation, based in Austin, Minn., 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 COMPARISON OF U.S. GAAP TO NON-GAAP FINANCIAL 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 financial measures provide useful information to investors because they facilitate year-over-year comparison and comparison with peer companies as well as provide additional information about trends in the Company's operations. 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.
In the fourth quarter of fiscal 2023, the Company announced a multi-year transformation and modernization initiative. The strategic investments in this initiative are expected to cease at the end of the investment period, are not expected to recur in the foreseeable future and are not considered representative of the Company's underlying operating performance. The Company does not believe such costs to be reflective of the ongoing operating cost structure; therefore, the Company is excluding certain discrete costs related to the transformation and modernization initiative from the non-GAAP financial measures. Expenses for this initiative are comprised primarily of nonrecurring charges for consulting fees, which are reflected in selling, general, and administrative (SG&A), and charges related to portfolio optimization, which are reflected in Cost of Products Sold. This presentation is consistent with the information the Company's management is using to evaluate performance and allocate resources and facilitates comparison of operating performance across multiple periods.
Adjusted cost of products sold, adjusted SG&A, adjusted operating income, adjusted earnings before income taxes, adjusted net earnings attributable to Hormel Foods Corporation, adjusted diluted net earnings per share, adjusted SG&A as a percent of net sales, and adjusted operating margin exclude certain costs associated with the transformation and modernization initiative. The tax impact was calculated using the effective tax rate for the quarter in which the expense was incurred.
The table below shows the calculations to reconcile from the GAAP measures to the non-GAAP financial measures.
HORMEL FOODS CORPORATION | |||
RECONCILIATION OF NON-GAAP MEASURES | |||
Unaudited | |||
Quarter Ended | |||
in thousands, except per share amounts | January 28, | January 29, | |
Cost of Products Sold (GAAP) | $ 2,488,178 | $ 2,475,043 | |
Transformation and Modernization Initiative | (1,598) | — | |
Adjusted Cost of Products Sold (Non-GAAP) | $ 2,486,580 | $ 2,475,043 | |
SG&A (GAAP) | $ 240,386 | $ 222,056 | |
Transformation and Modernization Initiative | (8,715) | — | |
Adjusted SG&A (Non-GAAP) | $ 231,671 | $ 222,056 | |
Operating Income (GAAP) | $ 284,438 | $ 289,452 | |
Transformation and Modernization Initiative | 10,313 | — | |
Adjusted Operating Income (Non-GAAP) | $ 294,751 | $ 289,452 | |
Earnings Before Income Taxes (GAAP) | $ 285,547 | $ 281,201 | |
Transformation and Modernization Initiative | 10,313 | — | |
Adjusted Earnings Before Income Taxes (Non-GAAP) | $ 295,859 | $ 281,201 | |
Net Earnings Attributable to Hormel Foods Corporation (GAAP) | $ 218,863 | $ 217,719 | |
Transformation and Modernization Initiative | 7,900 | — | |
Adjusted Net Earnings Attributable to Hormel Foods Corporation (Non-GAAP) | $ 226,763 | $ 217,719 | |
Diluted Net Earnings Per Share (GAAP) | $ 0.40 | $ 0.40 | |
Transformation and Modernization Initiative | 0.01 | — | |
Adjusted Diluted Net Earnings Per Share (Non-GAAP) | $ 0.41 | $ 0.40 | |
SG&A as a Percent of Net Sales (GAAP) | 8.0 % | 7.5 % | |
Transformation and Modernization Initiative | (0.3) | — | |
Adjusted SG&A as a Percent of Net Sales (Non-GAAP) | 7.7 % | 7.5 % | |
Operating Margin (GAAP) | 9.5 % | 9.7 % | |
Transformation and Modernization Initiative | 0.3 | — | |
Adjusted Operating Margin (Non-GAAP) | 9.8 % | 9.7 % |
Forward-looking GAAP to Non-GAAP Measures
Our fiscal 2024 outlook for adjusted diluted net earnings per share is a non-GAAP financial measure that excludes, or has otherwise been adjusted for, items impacting comparability, including estimated charges associated with the transformation and modernization 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 | |
Diluted Net Earnings per Share | $1.43 - $1.57 |
Transformation and Modernization Initiative | $0.08 |
Adjusted Diluted Net Earnings per Share | $1.51 - $1.65 |
END NOTES (continued) |
2Circana Total US MULO;13 weeks ended 1/28/2024 vs YAG |
3Circana Total US MULO;12 weeks ended 1/28/2024 vs YAG |
4SPINS;12 weeks ended 1/28/2024 vs YAG |
5Internal data |
6Circana Total US MULO + Convenience; 13 weeks ended 1/28/2024 vs YAG |
7Circana Panel Total US All Outlet; 13 weeks ended 1/28/24 vs YAG |
HORMEL FOODS CORPORATION | ||||||
SEGMENT DATA | ||||||
In thousands | ||||||
Unaudited | ||||||
Quarter Ended | ||||||
January 28, | January 29, | % Change | ||||
Volume (lbs.) | ||||||
Retail | 765,412 | 752,887 | 1.7 | |||
Foodservice | 256,007 | 237,087 | 8.0 | |||
International | 80,135 | 72,237 | 10.9 | |||
Total Volume (lbs.) | 1,101,554 | 1,062,211 | 3.7 | |||
Net Sales | ||||||
Retail | $ 1,911,272 | $ 1,957,797 | (2.4) | |||
Foodservice | 913,087 | 834,750 | 9.4 | |||
International | 172,552 | 178,445 | (3.3) | |||
Total Net Sales | $ 2,996,911 | $ 2,970,992 | 0.9 | |||
Segment Profit | ||||||
Retail | $ 149,505 | $ 154,677 | (3.3) | |||
Foodservice | 150,164 | 136,442 | 10.1 | |||
International | 20,031 | 19,905 | 0.6 | |||
Total Segment Profit | 319,700 | 311,025 | 2.8 | |||
Net Unallocated Expense | 34,020 | 29,755 | 14.3 | |||
Noncontrolling Interest | (134) | (69) | (95.4) | |||
Earnings Before Income Taxes | $ 285,547 | $ 281,201 | 1.5 | |||
HORMEL FOODS CORPORATION | ||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
In thousands, except per share amounts | ||||
Unaudited | ||||
Quarter Ended | ||||
January 28, | January 29, | |||
Net Sales | $ 2,996,911 | $ 2,970,992 | ||
Cost of Products Sold | 2,488,178 | 2,475,043 | ||
Gross Profit | 508,733 | 495,949 | ||
Selling, General, and Administrative | 240,386 | 222,056 | ||
Equity in Earnings of Affiliates | 16,091 | 15,559 | ||
Operating Income | 284,438 | 289,452 | ||
Interest and Investment Income | 19,434 | 10,096 | ||
Interest Expense | 18,326 | 18,347 | ||
Earnings Before Income Taxes | 285,547 | 281,201 | ||
Provision for Income Taxes | 66,818 | 63,551 | ||
Effective Tax Rate | 23.4 % | 22.6 % | ||
Net Earnings | 218,729 | 217,651 | ||
Less: Net Earnings (Loss) Attributable to Noncontrolling Interest | (134) | (69) | ||
Net Earnings Attributable to Hormel Foods Corporation | $ 218,863 | $ 217,719 | ||
Net Earnings Per Share: | ||||
Basic | $ 0.40 | $ 0.40 | ||
Diluted | $ 0.40 | $ 0.40 | ||
Weighted-average Shares Outstanding: | ||||
Basic | 547,020 | 546,384 | ||
Diluted | 547,920 | 550,031 | ||
Dividends Declared Per Share | $ 0.2825 | $ 0.2750 | ||
HORMEL FOODS CORPORATION | ||||
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL POSITION | ||||
In thousands | ||||
Unaudited | ||||
January 28, | October 29, | |||
Assets | ||||
Cash and Cash Equivalents | $ 963,212 | $ 736,532 | ||
Short-term Marketable Securities | 18,712 | 16,664 | ||
Accounts Receivable | 751,048 | 817,391 | ||
Inventories | 1,578,191 | 1,680,406 | ||
Prepaid Expenses and Other Current Assets | 56,001 | 46,256 | ||
Total Current Assets | 3,367,164 | 3,297,249 | ||
Goodwill | 4,931,257 | 4,928,464 | ||
Other Intangibles | 1,753,156 | 1,757,171 | ||
Pension Assets | 200,113 | 204,697 | ||
Investments in Affiliates | 728,146 | 725,121 | ||
Other Assets | 377,623 | 370,252 | ||
Net Property, Plant, and Equipment | 2,155,524 | 2,165,818 | ||
Total Assets | $ 13,512,983 | $ 13,448,772 | ||
Liabilities and Shareholders' Investment | ||||
Accounts Payable | $ 744,116 | $ 823,076 | ||
Accrued Marketing Expenses | 101,928 | 87,452 | ||
Employee Related Expenses | 212,719 | 263,330 | ||
Interest and Dividends Payable | 162,452 | 172,178 | ||
Taxes Payable | 85,533 | 15,212 | ||
Current Maturities of Long-term Debt | 954,031 | 950,529 | ||
Total Current Liabilities | 2,260,779 | 2,311,776 | ||
Long-term Debt Less Current Maturities | 2,357,176 | 2,358,719 | ||
Pension and Post-retirement Benefits | 352,709 | 349,268 | ||
Deferred Income Taxes | 500,581 | 498,106 | ||
Other Long-term Liabilities | 193,172 | 191,917 | ||
Accumulated Other Comprehensive Loss | (250,783) | (272,252) | ||
Other Shareholders' Investment | 8,099,349 | 8,011,237 | ||
Total Liabilities and Shareholders' Investment | $ 13,512,983 | $ 13,448,772 |
HORMEL FOODS CORPORATION | ||||
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS | ||||
In thousands | ||||
Unaudited | ||||
Quarter Ended | ||||
January 28, | January 29, | |||
Operating Activities | ||||
Net Earnings | $ 218,729 | $ 217,651 | ||
Depreciation and Amortization | 64,067 | 61,503 | ||
Decrease (Increase) in Working Capital | 115,402 | (67,564) | ||
Other | 5,783 | (7,962) | ||
Net Cash Provided by (Used in) Operating Activities | 403,980 | 203,629 | ||
Investing Activities | ||||
Net Sale (Purchase) of Securities | (964) | (833) | ||
Purchases of Property, Plant, and Equipment | (47,210) | (37,052) | ||
Proceeds from (Purchases of) Affiliates and Other Investments | — | (418,616) | ||
Other | 20 | 5,032 | ||
Net Cash Provided by (Used in) Investing Activities | (48,154) | (451,469) | ||
Financing Activities | ||||
Repayments of Long-term Debt and Finance Leases | (2,249) | (2,189) | ||
Dividends Paid on Common Stock | (150,294) | (142,017) | ||
Other | 19,178 | 2,635 | ||
Net Cash Provided by (Used in) Financing Activities | (133,365) | (141,570) | ||
Effect of Exchange Rate Changes on Cash | 4,218 | 7,093 | ||
Increase (Decrease) in Cash and Cash Equivalents | 226,680 | (382,318) | ||
Cash and Cash Equivalents at Beginning of Year | 736,532 | 982,107 | ||
Cash and Cash Equivalents at End of Period | $ 963,212 | $ 599,789 |
INVESTOR CONTACT: David Dahlstrom ir@hormel.com | MEDIA CONTACT: Media Relations media@hormel.com |
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SOURCE Hormel Foods Corporation
Copyright 2024 PR Newswire
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