Delivers better-than-expected earnings and
sees growing benefits from transform and modernize
initiative
AUSTIN,
Minn., Sept. 4, 2024 /PRNewswire/ -- Hormel Foods
Corporation (NYSE: HRL), a Fortune 500 global branded food
company, today reported results for the third quarter of fiscal
2024, ended July 28, 2024. All
comparisons are to the comparable period of fiscal 2023, unless
otherwise noted.
EXECUTIVE SUMMARY — THIRD QUARTER
- Volume of 1.02 billion lbs.
- Net sales of $2.90 billion
- Operating income of $237 million;
adjusted operating income1 of $267 million
- Operating margin of 8.2%; adjusted operating margin1
of 9.2%
- Earnings before income taxes of $226
million; adjusted earnings before income taxes1
of $256 million
- Effective tax rate of 21.7%
- Diluted net earnings per share of $0.32; adjusted diluted net earnings per
share1 of $0.37
- Cash flow from operations of $218
million
EXECUTIVE COMMENTARY AND OUTLOOK
"We delivered solid
third-quarter results and another quarter of better-than-expected
earnings," said Jim Snee, chairman of the board, president and
chief executive officer. "Many of our key retail brands are
growing, outperforming their categories and, most importantly,
resonating with our customers and consumers. Our Foodservice
business continued to deliver above-industry growth, highlighting
the importance of our solutions-based portfolio, direct selling
team, and diverse customer and operator base. We again experienced
significant recovery in our International segment, led by our
global brands. Lastly, we continued to realize growing benefits
from our transform and modernize initiative, creating impactful
improvements across our supply chain."
"Our team remains focused on finishing the year strong and
executing on our strategic priorities," said Snee. "In the fourth
quarter, we expect continued momentum across many of our key retail
brands, growth within our Foodservice and International businesses,
improved service levels for the
Planters® snack nuts
business, and further advancements of our transform and modernize
initiative."
For fiscal year 2024, the Company is:
- Updating its net sales range expectations to $11.8 billion to $12.1
billion, reflecting lower-than-expected commodity markets,
production disruptions at its Suffolk,
Virginia, facility, and declines in its contract
manufacturing business.
- Narrowing its expected diluted net earnings per share range to
$1.45 to $1.51 (previously $1.45 to $1.55) and
its adjusted diluted net earnings per share1 range to
$1.57 to $1.63* (previously $1.55 to $1.65).
- Including an updated estimate of $0.06 per share impact related to production
disruptions at its Suffolk,
Virginia, facility. Furthermore, the Company is assessing
the financial impact related to storm damage at its Papillion, Nebraska, facility.
- Assuming continued benefits to net earnings from its transform
and modernize initiative.
Fiscal 2024
Outlook
|
Current
|
Previous
|
Net Sales
|
$11.8 - $12.1
billion
|
$12.2 - $12.5
billion
|
Adj. Diluted Net
Earnings per Share*
|
$1.57 -
$1.63
|
$1.55 -
$1.65
|
Effective Tax
Rate
|
22.0 -
23.0%
|
22.0 - 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
$0.04 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 – Q3
HIGHLIGHTS
Drive focus and growth in our Retail business
- We grew volume and dollar sales2,3 for many products
during the quarter, including Skippy®
peanut butter, Jennie-O® lean ground
turkey, Applegate® natural and organic
meats, Wholly® and
Herdez® guacamole,
Lloyd's® barbecue items and Corn
Nuts® corn kernels.
- Hormel® Black
Label® bacon achieved strong results during the
quarter, growing volume, dollar sales, and household
penetration.2,4
- We introduced SPAM® Korean BBQ
Flavored, our latest flavor innovation in the
SPAM® family of products. This is the
brand's 12th permanent variety and is aimed at loyal
SPAM® fans and the next generation of
consumers.
Expand leadership in Foodservice
- We again delivered a strong quarter of volume and net sales
growth, led in part by Hormel® Bacon
1™ cooked bacon, premium prepared proteins and
Jennie-O® turkey items.
- Premium prepared proteins continue to offer solutions-based
options to our operators. Our newest items —
Hormel® Flash 180™ sous vide-style chicken
breast and Hormel® Fire Braised™ loin back
ribs — both contributed growth this quarter.
- We continued to experience strong customer acceptance for
Hormel® ribbon pepperoni in the quarter,
another example of the innovation that our Foodservice team brings
to the marketplace.
Aggressively develop our global presence
- Innovation continues to be key to our international growth
strategy. We launched new snacking innovation in China during the quarter, supporting our
retail recovery.
- We expanded distribution in the South Korean market through
Skippy® product offerings.
- SPAM® luncheon meat delivered a second
consecutive quarter of double-digit top-line growth5
with strong shipments to Canada,
Southeast Asia and Japan.
Execute our enterprise entertaining & snacking
vision
- We launched the Planters® Nut Duos
Duo-licious advertising campaign and this new product offering is
attracting younger consumers to the snack nuts
category.4
- We grew household penetration4 for
Hormel® pepperoni, America's No. 1
pepperoni brand,2 reflecting its continued relevance to
consumers.
Future-fit our One Supply Chain/Continue to transform &
modernize our Company
- We made further progress across all pillars (Plan, Buy, Make,
Move, and Portfolio Optimization) of our transform and modernize
initiative, notably:
- Plan: We continued the implementation of a new
end-to-end planning process and technology and are improving
inventory management practices.
- Make: We continued to generate improved operational
results in our manufacturing facilities, unlocking production
capacity and generating cost savings across our network.
- We published our 2023 Global Impact Report, a comprehensive
update on our 20 By 30 Challenge. The report demonstrates the
Company's ongoing commitment to corporate responsibility.
SEGMENT HIGHLIGHTS – THIRD QUARTER
Retail
- Volume down 9%
- Net sales down 7%
- Segment profit down 15%
Volume and net sales declined, primarily due to significant
year-over-year volume and pricing declines for whole bird turkeys,
lower sales of Planters® snack nuts
resulting from production disruptions at the Suffolk, Virginia, facility, and lower
center-store and contract manufacturing volumes. Partially
offsetting these declines were net sales growth for many key
brands, including Hormel® Black
Label® bacon,
Applegate® natural and organic meats,
Jennie-O® ground turkey,
Skippy® peanut butter,
Wholly® guacamole,
Herdez® salsas and sauces, and
Hormel® Square Table™ entrees. Segment
profit declined, as the benefit from lower logistics expenses and
savings from the transform and modernize initiative were more than
offset by the impact of lower net sales.
Foodservice
- Volume up 2%
- Net sales up 7%
- Segment profit down 3%
Volume and net sales growth were driven primarily by strong
performance across the turkey, premium prepared proteins,
bacon and pepperoni categories. Notable products such as
Hormel® Fire Braised™ meats,
Hormel® Bacon 1™ cooked
bacon, Café H® globally inspired proteins
and Rosa
Grande® premium pepperoni delivered
strong volume and net sales growth. Growth from branded
Jennie-O® turkey items continue to benefit
top-line results. Segment profit decreased in the current quarter,
as higher sales were more than offset by higher SG&A
expenses.
International
- Volume down 13%
- Net sales down 2%
- Segment profit up 78%
Robust volume and net sales growth for
SPAM® luncheon meat, refrigerated
foodservice exports, and Skippy® peanut
butter exports were more than offset by the difficult comparison in
the prior year to higher export volumes of low-margin commodity
fresh pork and turkey. Segment profit increased significantly in
the current quarter, driven by improved export margins, growth from
our investments in the Philippines
and Indonesia, and favorable costs
in China.
SELECTED FINANCIAL DETAILS – THIRD QUARTER FISCAL
2024
- Advertising investments were $40
million, compared to $43
million last year. The decline is partially due to lower
support for the Planters® brand due to
production disruptions at the Suffolk,
Virginia, facility. The Company expects full-year
advertising expense to increase compared to the prior year.
- The effective tax rate was 21.7%, even with last year. The
effective tax rate for fiscal 2024 is expected to be between 22.0%
and 23.0%.
- Capital expenditures were $65
million, compared to $78
million last year. The Company's target for capital
expenditures in fiscal 2024 is $280
million.
- Depreciation and amortization expense was $64 million, even with last year. The full-year
expense for fiscal 2024 is expected to be approximately
$250 million.
- The third quarter marked the 96th year of
uninterrupted dividends paid to stockholders. The Company returned
approximately $155 million to
stockholders during the quarter.
PRESENTATION
A conference call will be webcast at
8 a.m. CT on Sep. 4, 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 99159.
An audio replay is available at www.hormelfoods.com. The webcast
replay will be available at noon CT,
Sep. 4, 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 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; the risk of disruption of operations, including
at owned facilities, co-manufacturers, suppliers, logistics
providers, customers, or other third-party service providers; risk
related to the remediation of production disruptions at the
Suffolk, Virginia, facility; the
risk that the Company will fail to realize anticipated cost savings
or operating efficiencies associated with strategic initiatives,
including the transform and modernize initiative; risk of loss of a
material contract; risk of the Company's inability to protect
information technology systems against, or effectively respond to,
cyber attacks against it or others with whom it does business,
security breaches or other IT interruptions; deterioration of labor
relations or labor availability or increases to labor costs;
general risks of the food industry, including food contamination or
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; risks related to the Company's ability to respond to
changing consumer preferences and the success of innovation and
marketing investments; damage to the Company's reputation or brand
image; risks associated with 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; risks and uncertainties
associated with intangible assets, including any future goodwill or
intangible assets impairment charges; and risks arising from the
Company's foreign operations, including geopolitical risk, exchange
rate risk, and risks associated with tariffs. 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 7/14/2024 vs YAG.
3 SPINS Satori, Total US Natural; 12
weeks ended 7/14/2024 vs YAG.
4 Circana, Receipt Panel, Total
Omnichannel; 13 weeks ended 7/14/24.
5 Internal data.
HORMEL FOODS CORPORATION
SEGMENT DATA
In thousands
Unaudited
|
|
|
|
Quarter
Ended
|
|
|
July 28,
2024
|
|
July 30,
2023
|
|
%
Change
|
Volume
(lbs.)
|
|
|
|
|
|
|
Retail
|
|
680,214
|
|
748,146
|
|
(9.1)
|
Foodservice
|
|
259,947
|
|
255,822
|
|
1.6
|
International
|
|
78,529
|
|
90,550
|
|
(13.3)
|
Total Volume
(lbs.)
|
|
1,018,690
|
|
1,094,518
|
|
(6.9)
|
|
|
|
|
|
|
|
Net
Sales
|
|
|
|
|
|
|
Retail
|
|
$
1,767,251
|
|
$
1,891,746
|
|
(6.6)
|
Foodservice
|
|
954,021
|
|
890,949
|
|
7.1
|
International
|
|
177,171
|
|
180,605
|
|
(1.9)
|
Total Net
Sales
|
|
$
2,898,443
|
|
$
2,963,299
|
|
(2.2)
|
|
|
|
|
|
|
|
Segment
Profit
|
|
|
|
|
|
|
Retail
|
|
$
127,932
|
|
$
151,128
|
|
(15.3)
|
Foodservice
|
|
142,487
|
|
146,270
|
|
(2.6)
|
International
|
|
21,792
|
|
12,222
|
|
78.3
|
Total Segment
Profit
|
|
292,211
|
|
309,619
|
|
(5.6)
|
Net Unallocated
Expense
|
|
66,526
|
|
101,886
|
|
(34.7)
|
Noncontrolling
Interest
|
|
34
|
|
(108)
|
|
131.5
|
Earnings Before
Income Taxes
|
|
$
225,719
|
|
$
207,626
|
|
8.7
|
HORMEL FOODS CORPORATION
SEGMENT DATA
In thousands
Unaudited
|
|
|
|
Nine Months
Ended
|
|
|
July 28,
2024
|
|
July 30,
2023
|
|
%
Change
|
Volume
(lbs.)
|
|
|
|
|
|
|
Retail
|
|
2,170,621
|
|
2,267,363
|
|
(4.3)
|
Foodservice
|
|
777,785
|
|
747,484
|
|
4.1
|
International
|
|
231,681
|
|
241,445
|
|
(4.0)
|
Total Volume
(lbs.)
|
|
3,180,087
|
|
3,256,292
|
|
(2.3)
|
|
|
|
|
|
|
|
Net
Sales
|
|
|
|
|
|
|
Retail
|
|
$
5,467,078
|
|
$
5,765,786
|
|
(5.2)
|
Foodservice
|
|
2,799,110
|
|
2,607,140
|
|
7.4
|
International
|
|
516,517
|
|
539,005
|
|
(4.2)
|
Total Net
Sales
|
|
$
8,782,706
|
|
$
8,911,930
|
|
(1.5)
|
|
|
|
|
|
|
|
Segment
Profit
|
|
|
|
|
|
|
Retail
|
|
$
409,836
|
|
$
459,031
|
|
(10.7)
|
Foodservice
|
|
441,952
|
|
428,110
|
|
3.2
|
International
|
|
65,026
|
|
45,723
|
|
42.2
|
Total Segment
Profit
|
|
916,814
|
|
932,863
|
|
(1.7)
|
Net Unallocated
Expense
|
|
161,239
|
|
164,997
|
|
(2.3)
|
Noncontrolling
Interest
|
|
(170)
|
|
(200)
|
|
14.9
|
Earnings Before
Income Taxes
|
|
$
755,404
|
|
$
767,666
|
|
(1.6)
|
HORMEL FOODS CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
In thousands, except per share
amounts
Unaudited
|
|
|
|
Quarter
Ended
|
|
Nine Months
Ended
|
|
|
July 28,
2024
|
|
July 30,
2023
|
|
July 28,
2024
|
|
July 30,
2023
|
Net Sales
|
|
$ 2,898,443
|
|
$ 2,963,299
|
|
$ 8,782,706
|
|
$ 8,911,930
|
Cost of Products
Sold
|
|
2,410,075
|
|
2,465,251
|
|
7,281,798
|
|
7,426,514
|
Gross
Profit
|
|
488,369
|
|
498,048
|
|
1,500,908
|
|
1,485,417
|
Selling, General, and
Administrative
|
|
259,653
|
|
291,073
|
|
766,707
|
|
725,621
|
Equity in Earnings of
Affiliates
|
|
7,977
|
|
9,784
|
|
39,250
|
|
42,213
|
Operating
Income
|
|
236,693
|
|
216,759
|
|
773,452
|
|
802,009
|
Interest and
Investment Income
|
|
10,484
|
|
9,239
|
|
43,416
|
|
20,700
|
Interest
Expense
|
|
21,459
|
|
18,372
|
|
61,464
|
|
55,042
|
Earnings Before
Income Taxes
|
|
225,719
|
|
207,626
|
|
755,404
|
|
767,666
|
Provision for Income
Taxes
|
|
48,984
|
|
45,055
|
|
170,733
|
|
170,230
|
Effective Tax
Rate
|
|
21.7 %
|
|
21.7 %
|
|
22.6 %
|
|
22.2 %
|
Net
Earnings
|
|
176,735
|
|
162,571
|
|
584,671
|
|
597,437
|
Less: Net Earnings
(Loss) Attributable
to Noncontrolling Interest
|
|
34
|
|
(108)
|
|
(170)
|
|
(200)
|
Net Earnings
Attributable to Hormel
Foods Corporation
|
|
$
176,701
|
|
$
162,679
|
|
$
584,842
|
|
$
597,637
|
|
|
|
|
|
|
|
|
|
Net Earnings Per
Share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
0.32
|
|
$
0.30
|
|
$
1.07
|
|
$
1.09
|
Diluted
|
|
$
0.32
|
|
$
0.30
|
|
$
1.07
|
|
$
1.09
|
|
|
|
|
|
|
|
|
|
Weighted-average
Shares
Outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
548,685
|
|
546,358
|
|
547,858
|
|
546,389
|
Diluted
|
|
549,266
|
|
548,637
|
|
548,624
|
|
549,227
|
|
|
|
|
|
|
|
|
|
Dividends Declared Per
Share
|
|
$ 0.2825
|
|
$ 0.2750
|
|
$ 0.8475
|
|
$ 0.8250
|
HORMEL FOODS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL
POSITION
In thousands
Unaudited
|
|
|
|
July 28,
2024
|
|
October 29,
2023
|
Assets
|
Cash and Cash
Equivalents
|
|
$
537,476
|
|
$
736,532
|
Short-term Marketable
Securities
|
|
24,454
|
|
16,664
|
Accounts
Receivable
|
|
727,054
|
|
817,391
|
Inventories
|
|
1,649,649
|
|
1,680,406
|
Prepaid Expenses and
Other Current Assets
|
|
58,814
|
|
46,256
|
Total Current
Assets
|
|
2,997,446
|
|
3,297,249
|
|
|
|
|
|
Goodwill
|
|
4,923,731
|
|
4,928,464
|
Other
Intangibles
|
|
1,743,615
|
|
1,757,171
|
Pension
Assets
|
|
190,947
|
|
204,697
|
Investments in
Affiliates
|
|
680,386
|
|
725,121
|
Other
Assets
|
|
409,125
|
|
370,252
|
Net Property, Plant,
and Equipment
|
|
2,168,531
|
|
2,165,818
|
Total
Assets
|
|
$
13,113,781
|
|
$
13,448,772
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Shareholders' Investment
|
Accounts Payable &
Accrued Expenses
|
|
$
749,956
|
|
$
823,076
|
Accrued Marketing
Expenses
|
|
113,012
|
|
87,452
|
Employee-related
Expenses
|
|
248,954
|
|
263,330
|
Interest and Dividends
Payable
|
|
171,079
|
|
172,178
|
Taxes
Payable
|
|
18,513
|
|
15,212
|
Current Maturities of
Long-term Debt
|
|
8,232
|
|
950,529
|
Total Current
Liabilities
|
|
1,309,746
|
|
2,311,776
|
|
|
|
|
|
Long-term Debt Less
Current Maturities
|
|
2,851,621
|
|
2,358,719
|
Pension and
Post-retirement Benefits
|
|
359,083
|
|
349,268
|
Deferred Income
Taxes
|
|
499,098
|
|
498,106
|
Other Long-term
Liabilities
|
|
217,008
|
|
191,917
|
Accumulated Other
Comprehensive Loss
|
|
(314,373)
|
|
(272,252)
|
Other Shareholders'
Investment
|
|
8,191,598
|
|
8,011,237
|
Total Liabilities
and Shareholders' Investment
|
|
$
13,113,781
|
|
$
13,448,772
|
HORMEL FOODS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH
FLOWS
In thousands
Unaudited
|
|
|
|
Quarter
Ended
|
|
Nine Months
Ended
|
|
|
July 28,
2024
|
|
July 30,
2023
|
|
July 28,
2024
|
|
July 30,
2023
|
Operating
Activities
|
|
|
|
|
|
|
|
|
Net
Earnings
|
|
$
176,735
|
|
$
162,571
|
|
$
584,671
|
|
$
597,437
|
Depreciation and
Amortization
|
|
63,658
|
|
64,083
|
|
191,354
|
|
187,326
|
Decrease (Increase) in
Working Capital
|
|
(34,834)
|
|
73,678
|
|
43,777
|
|
(79,372)
|
Other
|
|
12,431
|
|
16,669
|
|
38,315
|
|
23,365
|
Net Cash Provided by
(Used in)
Operating Activities
|
|
217,990
|
|
317,001
|
|
858,117
|
|
728,756
|
|
|
|
|
|
|
|
|
|
Investing
Activities
|
|
|
|
|
|
|
|
|
Net Sale (Purchase) of
Securities
|
|
(607)
|
|
(2)
|
|
(6,106)
|
|
(49)
|
Purchases of Property,
Plant, and
Equipment
|
|
(65,481)
|
|
(77,948)
|
|
(172,656)
|
|
(168,529)
|
Proceeds from
(Purchases of) Affiliates
and Other Investments
|
|
(6,231)
|
|
212
|
|
(6,681)
|
|
(427,195)
|
Other
|
|
8,136
|
|
318
|
|
8,544
|
|
7,285
|
Net Cash Provided by
(Used in)
Investing Activities
|
|
(64,183)
|
|
(77,420)
|
|
(176,899)
|
|
(588,489)
|
|
|
|
|
|
|
|
|
|
Financing
Activities
|
|
|
|
|
|
|
|
|
Proceeds from
Long-term Debt
|
|
—
|
|
1,980
|
|
497,765
|
|
1,980
|
Repayments of
Long-term Debt and
Finance Leases
|
|
(952,277)
|
|
(2,208)
|
|
(956,797)
|
|
(6,584)
|
Dividends Paid on
Common Stock
|
|
(154,943)
|
|
(149,944)
|
|
(459,978)
|
|
(442,560)
|
Share
Repurchase
|
|
—
|
|
—
|
|
—
|
|
(12,303)
|
Other
|
|
6,325
|
|
5,933
|
|
39,187
|
|
8,489
|
Net Cash Provided by
(Used in)
Financing Activities
|
|
(1,100,895)
|
|
(144,238)
|
|
(879,823)
|
|
(450,977)
|
Effect of Exchange
Rate Changes on
Cash
|
|
(1,806)
|
|
(6,715)
|
|
(453)
|
|
(2,273)
|
Increase (Decrease)
in Cash and Cash
Equivalents
|
|
(948,893)
|
|
88,628
|
|
(199,057)
|
|
(312,983)
|
Cash and Cash
Equivalents at Beginning
of Year
|
|
1,486,368
|
|
580,496
|
|
736,532
|
|
982,107
|
Cash and Cash
Equivalents at End of
Period
|
|
$
537,476
|
|
$
669,124
|
|
$
537,476
|
|
$
669,124
|
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 calculated 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 that non-recurring costs associated with the
transform and modernize initiative 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.
Legal Matters
From time to time, the
Company incurs expenses related to discrete legal matters that the
Company believes 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 Company adjusts for
(i.e., excludes) these expenses.
Litigation Settlements
In the second
and third quarters of fiscal 2024, the Company entered into
settlement agreements with certain plaintiffs in its pending
antitrust litigation.
Arbitration Ruling
In the third
quarter of fiscal 2023, the Company received an unexpected,
unfavorable arbitration ruling involving an isolated commercial
dispute with a third party.
The table below shows the calculations to reconcile from the
GAAP measures to the non-GAAP measures presented in this press
release. 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
|
|
Nine Months
Ended
|
In thousands, except
per share amounts
|
July 28,
2024
|
|
July 30,
2023
|
|
July 28,
2024
|
|
July 30,
2023
|
Cost of Products Sold
(GAAP)
|
$ 2,410,075
|
|
$ 2,465,251
|
|
$ 7,281,798
|
|
$ 7,426,514
|
Transform and Modernize
Initiative(1)
|
(1,226)
|
|
—
|
|
(4,646)
|
|
—
|
Adjusted Cost of
Products Sold (Non-GAAP)
|
$ 2,408,848
|
|
$ 2,465,251
|
|
$ 7,277,152
|
|
$ 7,426,514
|
|
|
|
|
|
|
|
|
Gross Profit
(GAAP)
|
$
488,369
|
|
$
498,048
|
|
$ 1,500,908
|
|
$ 1,485,417
|
Transform and Modernize
Initiative(1)
|
1,226
|
|
—
|
|
4,646
|
|
—
|
Adjusted Gross Profit
(Non-GAAP)
|
$
489,595
|
|
$
498,048
|
|
$ 1,505,554
|
|
$ 1,485,417
|
|
|
|
|
|
|
|
|
SG&A
(GAAP)
|
$
259,653
|
|
$
291,073
|
|
$
766,707
|
|
$
725,621
|
Transform and Modernize
Initiative(2)
|
(12,280)
|
|
—
|
|
(31,016)
|
|
—
|
Pork Antitrust
Litigation Settlements
|
—
|
|
—
|
|
(11,750)
|
|
—
|
Red Meat Wages
Antitrust Litigation Settlement
|
(13,500)
|
|
—
|
|
(13,500)
|
|
—
|
Poultry Wages Antitrust
Litigation Settlement
|
(3,500)
|
|
—
|
|
(3,500)
|
|
—
|
Arbitration
Ruling
|
—
|
|
(70,000)
|
|
—
|
|
(70,000)
|
Adjusted SG&A
(Non-GAAP)
|
$
230,373
|
|
$
221,073
|
|
$
706,941
|
|
$
655,621
|
|
|
|
|
|
|
|
|
Operating Income
(GAAP)
|
$
236,693
|
|
$
216,759
|
|
$
773,452
|
|
$
802,009
|
Transform and Modernize
Initiative(1)(2)
|
13,506
|
|
—
|
|
35,663
|
|
—
|
Pork Antitrust
Litigation Settlements
|
—
|
|
—
|
|
11,750
|
|
—
|
Red Meat Wages
Antitrust Litigation Settlement
|
13,500
|
|
—
|
|
13,500
|
|
—
|
Poultry Wages Antitrust
Litigation Settlement
|
3,500
|
|
—
|
|
3,500
|
|
—
|
Arbitration
Ruling
|
—
|
|
70,000
|
|
—
|
|
70,000
|
Adjusted Operating
Income (Non-GAAP)
|
$
267,200
|
|
$
286,759
|
|
$
837,864
|
|
$
872,009
|
|
|
|
|
|
|
|
|
Earnings Before Income
Taxes (GAAP)
|
$
225,719
|
|
$
207,626
|
|
$
755,404
|
|
$
767,666
|
Transform and Modernize
Initiative(1)(2)
|
13,506
|
|
—
|
|
35,663
|
|
—
|
Pork Antitrust
Litigation Settlements
|
—
|
|
—
|
|
11,750
|
|
—
|
Red Meat Wages
Antitrust Litigation Settlement
|
13,500
|
|
—
|
|
13,500
|
|
—
|
Poultry Wages Antitrust
Litigation Settlement
|
3,500
|
|
—
|
|
3,500
|
|
—
|
Arbitration
Ruling
|
—
|
|
70,000
|
|
—
|
|
70,000
|
Adjusted Earnings
Before Income Taxes (Non-
GAAP)
|
$
256,225
|
|
$
277,626
|
|
$
819,816
|
|
$
837,666
|
|
|
|
|
|
|
|
|
Provision for Income
Taxes (GAAP)
|
$ 48,984
|
|
$ 45,055
|
|
$
170,733
|
|
$
170,230
|
Transform and Modernize
Initiative(1)(2)
|
2,931
|
|
—
|
|
8,009
|
|
—
|
Pork Antitrust
Litigation Settlements
|
—
|
|
—
|
|
2,644
|
|
—
|
Red Meat Wages
Antitrust Litigation Settlement
|
2,930
|
|
—
|
|
2,930
|
|
—
|
Poultry Wages Antitrust
Litigation Settlement
|
760
|
|
—
|
|
760
|
|
—
|
Arbitration
Ruling
|
—
|
|
15,190
|
|
—
|
|
15,190
|
Adjusted Provision for
Income Taxes (Non-GAAP)
|
$ 55,603
|
|
$ 60,245
|
|
$
185,074
|
|
$
185,420
|
|
|
|
|
|
|
|
|
Net Earnings
Attributable to Hormel Foods
Corporation (GAAP)
|
$
176,701
|
|
$
162,679
|
|
$
584,842
|
|
$
597,637
|
Transform and Modernize
Initiative(1)(2)
|
10,575
|
|
—
|
|
27,654
|
|
—
|
Pork Antitrust
Litigation Settlements
|
—
|
|
—
|
|
9,106
|
|
—
|
Red Meat Wages
Antitrust Litigation Settlement
|
10,571
|
|
—
|
|
10,571
|
|
—
|
Poultry Wages Antitrust
Litigation Settlement
|
2,741
|
|
—
|
|
2,741
|
|
—
|
Arbitration
Ruling
|
—
|
|
54,810
|
|
—
|
|
54,810
|
Adjusted Net Earnings
Attributable to Hormel
Foods Corporation (Non-GAAP)
|
$
200,588
|
|
$
217,489
|
|
$
634,913
|
|
$
652,447
|
|
|
|
|
|
|
|
|
Diluted Net Earnings
Per Share (GAAP)
|
$
0.32
|
|
$
0.30
|
|
$
1.07
|
|
$
1.09
|
Transform and Modernize
Initiative(1)(2)
|
0.02
|
|
—
|
|
0.05
|
|
—
|
Pork Antitrust
Litigation Settlements
|
—
|
|
—
|
|
0.02
|
|
—
|
Red Meat Wages
Antitrust Litigation Settlement
|
0.02
|
|
—
|
|
0.02
|
|
—
|
Poultry Wages Antitrust
Litigation Settlement
|
—
|
|
—
|
|
—
|
|
—
|
Arbitration
Ruling
|
—
|
|
0.10
|
|
—
|
|
0.10
|
Adjusted Diluted Net
Earnings Per Share (Non-
GAAP)
|
$
0.37
|
|
$
0.40
|
|
$
1.16
|
|
$
1.19
|
|
SG&A as a Percent
of Net Sales (GAAP)
|
9.0 %
|
|
9.8 %
|
|
8.7 %
|
|
8.1 %
|
Transform and Modernize
Initiative(2)
|
(0.4)
|
|
—
|
|
(0.4)
|
|
—
|
Pork Antitrust
Litigation Settlements
|
—
|
|
—
|
|
(0.1)
|
|
—
|
Red Meat Wages
Antitrust Litigation Settlement
|
(0.5)
|
|
—
|
|
(0.2)
|
|
—
|
Poultry Wages Antitrust
Litigation Settlement
|
(0.1)
|
|
—
|
|
—
|
|
—
|
Arbitration
Ruling
|
—
|
|
(2.4)
|
|
—
|
|
(0.8)
|
Adjusted SG&A as a
Percent of Net Sales (Non-
GAAP)
|
7.9 %
|
|
7.5 %
|
|
8.0 %
|
|
7.4 %
|
|
|
|
|
|
|
|
|
Operating Margin
(GAAP)
|
8.2 %
|
|
7.3 %
|
|
8.8 %
|
|
9.0 %
|
Transform and Modernize
Initiative(1)(2)
|
0.5
|
|
—
|
|
0.4
|
|
—
|
Pork Antitrust
Litigation Settlements
|
—
|
|
—
|
|
0.1
|
|
—
|
Red Meat Wages
Antitrust Litigation Settlement
|
0.5
|
|
—
|
|
0.2
|
|
—
|
Poultry Wages Antitrust
Litigation Settlement
|
0.1
|
|
—
|
|
—
|
|
—
|
Arbitration
Ruling
|
—
|
|
2.4
|
|
—
|
|
0.8
|
Adjusted Operating
Margin (Non-GAAP)
|
9.2 %
|
|
9.7 %
|
|
9.5 %
|
|
9.8 %
|
|
|
(1)
|
Comprised primarily of
asset write-offs related to portfolio optimization.
|
(2)
|
Comprised primarily of
project-based external consulting fees.
|
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 and
litigation settlements.
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 -
$1.51
|
Transform and Modernize
Initiative
|
$0.08
|
Litigation
Settlements
|
$0.04
|
Adjusted Diluted Net
Earnings per Share (Non-GAAP)
|
$1.57 -
$1.63
|
INVESTOR
CONTACT:
|
|
MEDIA
CONTACT:
|
|
Jess
Blomberg
|
|
Media
Relations
|
|
ir@hormel.com
|
|
media@hormel.com
|
|
View original content to download
multimedia:https://www.prnewswire.com/news-releases/hormel-foods-reports-third-quarter-fiscal-2024-results-302237403.html
SOURCE Hormel Foods Corporation