HORMEL FOODS REPORTS THIRD QUARTER FISCAL 2024 RESULTS

Rhea-AI Summary

Hormel Foods (NYSE: HRL) reported third quarter fiscal 2024 results, with net sales of $2.90 billion and diluted net earnings per share of $0.32. The company delivered better-than-expected earnings and saw growing benefits from its transform and modernize initiative. Key highlights include:

- Volume of 1.02 billion lbs
- Operating income of $237 million; adjusted operating income of $267 million
- Cash flow from operations of $218 million

Hormel updated its fiscal year 2024 outlook, narrowing the expected diluted net earnings per share range to $1.45 to $1.51 and adjusting the net sales range to $11.8 billion to $12.1 billion. The company continues to focus on executing strategic priorities across its Retail, Foodservice, and International segments.

Positive

• Better-than-expected earnings for Q3 2024
• Growing benefits from transform and modernize initiative
• Strong performance in Foodservice segment with volume up 2% and net sales up 7%
• International segment profit up 78%
• Continued growth in key retail brands like Hormel® Black Label® bacon and Skippy® peanut butter

Negative

• Retail segment volume down 9% and net sales down 7%
• Lowered net sales expectations for FY 2024 from $12.2-$12.5 billion to $11.8-$12.1 billion
• Production disruptions at Suffolk, Virginia facility impacting Planters® snack nuts business
• Declines in contract manufacturing business
• Storm damage at Papillion, Nebraska facility with financial impact yet to be assessed

Financial Analyst

Hormel Foods' Q3 FY2024 results show a mixed performance. While the company delivered better-than-expected earnings, it faces challenges in certain areas:

• Net sales of $2.90 billion, with adjusted operating margin of 9.2%
• Adjusted diluted EPS of $0.37
• Lowered full-year net sales guidance to $11.8-$12.1 billion from $12.2-$12.5 billion
• Narrowed adjusted EPS guidance to $1.57-$1.63 from $1.55-$1.65

The company's transform and modernize initiative is yielding benefits, but production disruptions and commodity market pressures are impacting performance. Investors should monitor the company's ability to navigate these challenges and capitalize on growth in key brands and international markets.

Market Research Analyst

Hormel's Q3 results reveal divergent trends across its segments:

• Retail: 9% volume decline, 7% net sales drop
• Foodservice: 2% volume growth, 7% net sales increase
• International: 13% volume decline, but 2% net sales drop

The company's focus on key retail brands and foodservice solutions is paying off, with growth in products like Hormel® Black Label® bacon and Jennie-O® turkey items. The international segment shows promise, especially with SPAM® luncheon meat's double-digit growth. However, challenges in whole bird turkeys and Planters® snack nuts production need addressing. The company's ability to balance its portfolio and leverage its diverse product range will be important for future growth.

Supply Chain Expert

Hormel's transform and modernize initiative is showing positive results across its supply chain:

• Improved planning processes and inventory management
• Enhanced operational results in manufacturing facilities
• Unlocked production capacity and generated cost savings

However, challenges persist, including production disruptions at the Suffolk, Virginia facility and storm damage at the Papillion, Nebraska facility. The company's ability to overcome these obstacles and continue supply chain improvements will be critical. The 3% decrease in capital expenditures ($65 million vs $78 million last year) raises questions about future investment in supply chain resilience. Investors should monitor how Hormel balances cost savings with necessary infrastructure improvements to support long-term growth and operational efficiency.

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 sales^2,3 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 12^th 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 96^th 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

 

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SOURCE Hormel Foods Corporation

FAQ

What were Hormel Foods' (HRL) Q3 2024 earnings per share?

Hormel Foods reported diluted net earnings per share of $0.32 for Q3 2024, with adjusted diluted net earnings per share of $0.37.

How did Hormel's (HRL) Foodservice segment perform in Q3 2024?

Hormel's Foodservice segment showed strong performance with volume up 2% and net sales up 7% in Q3 2024, driven by growth in turkey, premium prepared proteins, bacon, and pepperoni categories.

What is Hormel Foods' (HRL) updated net sales guidance for fiscal year 2024?

Hormel Foods updated its net sales range expectations for fiscal year 2024 to $11.8 billion to $12.1 billion, down from the previous range of $12.2 billion to $12.5 billion.

How did Hormel's (HRL) International segment perform in Q3 2024?

Hormel's International segment saw a 78% increase in segment profit in Q3 2024, despite a 13% decrease in volume and a 2% decrease in net sales, driven by improved export margins and growth in the Philippines and Indonesia.

What factors affected Hormel Foods' (HRL) Retail segment performance in Q3 2024?

Hormel's Retail segment volume decreased 9% and net sales decreased 7% in Q3 2024, primarily due to declines in whole bird turkeys, lower sales of Planters® snack nuts due to production disruptions, and lower center-store and contract manufacturing volumes.