Group 1 - Hormel Foods' shares have underperformed over the past year, with a loss of 10% [1] - The company faces challenges with rising input costs that are difficult to pass on to customers without affecting sales volumes [1] - The Planters brand, a key product for Hormel, has also been struggling [1]

Core Viewpoint - Hormel Foods Corp reported mixed results in its second-quarter earnings for the 2025 fiscal year, leading to a 2.8% decline in stock price despite being a dividend king [1][2]. Financial Performance - Revenue for the quarter was $2.90 billion, slightly missing the expected $2.92 billion, while adjusted earnings per share (EPS) of 35 cents met expectations [2]. - Year-over-year revenue showed a slight increase, with the previous year's second quarter at $2.89 billion, but EPS decreased by approximately 10% year-over-year [2]. Tariff Impact - Tariff pressures are affecting Hormel, particularly on products like Spam and pre-packaged meals that rely on imported ingredients, leading to mixed sector profits [4][5]. - The company has indicated that the worst may be behind it, maintaining full-year guidance with projected net sales between $12 billion and $12.2 billion and adjusted EPS between $1.58 and $1.68 [6]. Executive Changes - Hormel announced significant changes in its executive ranks, with Scott Aakre retiring as CMO and Jeff Baker stepping into the role of group vice president for retail marketing starting in fiscal 2026 [8][9]. Analyst Sentiment - Despite tariff concerns, analysts have been bullish on HRL stock, with upgrades from three analysts since April 15, including a notable upgrade from BNP Paribas [10]. - The stock is currently trading near 10-year lows, with a forward price-to-earnings (P/E) ratio around 18x, which is a slight discount compared to its historical performance and the consumer staples sector [11].

Financial Performance - The Company reported diluted earnings per share of $0.33 for Q2 FY2025, a decrease of 3% compared to the same period last year[96]. - Net sales for Q2 FY2025 were $2.90 billion, a slight increase of 0.4% year-over-year, with organic net sales growth of 1%[98]. - Total segment profit for Q2 FY2025 decreased by 3%, with declines in the Foodservice and International segments offsetting growth in the Retail segment[96]. - Gross profit for Q2 FY2025 was $484.4 million, representing 16.7% of net sales, down from 17.4% in the prior year[103]. - Earnings before income taxes for the quarter were $230,489, a decrease of 5.6% compared to $244,139 in the prior year[114]. - Adjusted Operating Income (Non-GAAP) for the quarter ended April 27, 2025, was $264,903,000, a decrease of 3.9% compared to $275,914,000 for the same period in 2024[132]. - The adjusted diluted earnings per share (Non-GAAP) for the quarter ended April 27, 2025, was $0.35, compared to $0.38 in the same quarter of 2024[132]. Sales and Segment Performance - Retail segment net sales decreased by 0.3% to $1,783,835 for the quarter, with a volume decline of 6.6%[115]. - Foodservice segment net sales increased by 0.5% to $936,442, with organic net sales growth of 3.6%[117]. - International segment net sales grew by 7.0% to $178,533, driven by strong performance in exports and the China market[120]. - Total segment profit decreased by 2.9% to $296,175 for the quarter, with notable declines in the International segment profit by 20.7%[114]. - The Company expects net sales growth from each of its segments in Q3 FY2025 compared to the prior year[100]. - The company anticipates an increase in Retail segment profit for the third quarter of fiscal 2025, driven by top-line growth[116]. - The Foodservice segment is expected to see profit growth in the third quarter of fiscal 2025, supported by organic top-line growth[119]. - The International segment is projected to increase profit in the third quarter of fiscal 2025, despite ongoing softness in Brazil[122]. Cash Flow and Expenses - Cash flow from operations was $366 million for the first six months of FY2025, a 43% decrease from the prior year, primarily due to an inventory build[101]. - Cash Provided by Operating Activities for the six months ended April 27, 2025, was $365,646,000, compared to $640,127,000 in the same period of 2024[137]. - Cash and Cash Equivalents at the end of the period for the six months ended April 27, 2025, were $669,688,000, down from $1,486,368,000 in the prior year[137]. - Net unallocated expense increased by 7.8% to $65,411 for the quarter, primarily due to reduced interest income[123]. - SG&A expenses for Q2 FY2025 were $251.4 million, a decrease of 5.7% year-over-year, primarily due to lower advertising expenses[105]. - Advertising investments in Q2 FY2025 were $36 million, an 18% decrease compared to the previous year[107]. Capital Expenditures and Dividends - The Company paid cash dividends totaling $314,000,000 during the first six months of fiscal 2025, compared to $305,000,000 in the same period of fiscal 2024[140]. - The Company reported an increase in capital expenditures to $147,000,000 for the first six months of fiscal 2025, up from $107,000,000 in the prior year[140]. - Capital expenditures for fiscal 2025 are estimated to be between $275 million and $300 million, focusing on value-added capacity, infrastructure, and new technology[144]. - The Board of Directors approved an increased annual dividend rate for fiscal 2025, raising it to $1.16 per share from $1.13 per share, marking the 59th consecutive annual dividend increase[143]. Debt and Financial Position - As of April 27, 2025, the Company has $2.9 billion of fixed rate unsecured senior notes due in fiscal years 2027, 2028, 2030, and 2051, with $37 million in interest payments made in the first half of fiscal 2025[145]. - The Company maintains a $750 million unsecured revolving credit facility, which can be increased by an additional $375 million under certain conditions, with no outstanding borrowings as of April 27, 2025[146]. - The Company's long-term debt had a fair value of $2.5 billion as of April 27, 2025, with a 10% decrease in interest rates potentially increasing its value by $68 million[163]. - The Company held $247 million in cash and cash equivalents in its international subsidiaries as of April 27, 2025[148]. - The Company's net asset position in foreign currencies was $1.2 billion as of April 27, 2025, primarily exposed to Chinese yuan, Indonesian rupiah, and Brazilian real[164]. - One customer accounted for more than 10% of net accounts receivable as of April 27, 2025, indicating concentration of credit risk[166]. Commodity and Risk Management - The fair value of the Company's cash flow commodity contracts was $7.8 million as of April 27, 2025, compared to $(5.9) million as of October 27, 2024[162]. - The balance of corporate-owned life insurance policies classified as trading securities totaled $208.6 million as of April 27, 2025[165]. - The Company is authorized to repurchase up to 3,677,494 shares of common stock, with no shares repurchased in the first half of fiscal 2025[149].

Hormel Foods Corporation (HRL) reported second-quarter fiscal 2025 results. The bottom line declined year over year and met the Zacks Consensus Estimate, while the top line improved and missed the same. Hormel Foods posted adjusted earnings of 35 cents per share, which were in line with the Zacks Consensus Estimate. The bottom line decreased from 38 cents reported in the year-ago quarter. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)Net sales of $2,898.8 million increased 0.4% fr ...

Core Insights - Hormel Foods reported $2.9 billion in revenue for the quarter ended April 2025, reflecting a year-over-year increase of 0.4% and matching the Zacks Consensus Estimate, but showing a slight EPS decline from $0.38 to $0.35 [1] - The company did not deliver an EPS surprise, as the consensus EPS estimate was also $0.35 [1] Revenue Performance - Retail net sales were $1.78 billion, slightly above the estimated $1.77 billion, but down 0.3% year-over-year [4] - International net sales reached $178.53 million, exceeding the average estimate of $178.43 million, with a year-over-year increase of 7% [4] - Foodservice net sales were reported at $936.44 million, below the estimated $953.29 million, with a year-over-year increase of 0.5% [4] Segment Profit Analysis - Foodservice segment profit was $140.63 million, lower than the average estimate of $147.62 million [4] - International segment profit was $18.41 million, significantly below the estimated $23.85 million [4] - Retail segment profit was $137.14 million, exceeding the average estimate of $112.33 million [4] Stock Performance - Hormel's shares returned +0.5% over the past month, compared to the S&P 500 composite's +6.7% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market [3]

Hormel Foods (HRL) Q2 2025 Earnings Call May 29, 2025 09:00 AM ET Company Participants Jess Blomberg - Director of IRJim Snee - President and Chief Executive OfficerJacinth Smiley - EVP and CFOPeter Galbo - Director - Equity ResearchJohn Ghingo - Executive Vice President of RetailBenjamin Theurer - Managing DirectorHeather Jones - FounderPooran Sharma - Managing Director Conference Call Participants Michael Lavery - Senior Equity Research AnalystThomas Palmer - Vice President, Senior Equity Research Analyst ...

Financial Data and Key Metrics Changes - The company reported net sales of $2.9 billion for the second quarter, reflecting a 1% organic increase compared to the previous year [25] - Gross profit margin was 16.7%, impacted by higher commodity input costs, partially offset by savings from the Transform and Modernize initiative [26] - Diluted earnings per share were $0.33, with adjusted diluted earnings per share at $0.35, aligning with expectations [28] - The company anticipates full-year net sales growth of 2% to 3% and adjusted diluted earnings per share in the range of $1.58 to $1.68 [19][34] Business Line Data and Key Metrics Changes - The retail segment maintained leadership positions, with notable growth from the Applegate brand and Jennie O lean ground turkey [6][8] - The food service business outperformed the broader industry, with strong volume and net sales growth from branded products [11] - The international business saw double-digit volume and net sales growth, particularly in exports and China [13] Market Data and Key Metrics Changes - The company experienced strong top-line growth in China, driven by customer and distribution expansions [13] - The food service segment is expected to achieve mid-single-digit growth in organic net sales, outperforming industry trends [60] Company Strategy and Development Direction - The company is focused on delivering profitable and predictable growth while navigating a dynamic operating environment [6] - The Transform and Modernize initiative is critical for restoring historical earnings growth and is on track to deliver expected benefits [29] - The company plans to increase advertising investments significantly in the second half of the year to support brand growth [46] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to deliver strong second-half results, supported by a diversified portfolio and strategic initiatives [14][19] - The consumer sentiment is described as strained due to inflation and uncertainty in the macro environment [104] - The company remains committed to long-term growth despite challenges in the operating environment [20][103] Other Important Information - The company announced leadership changes, including the appointment of Kevin Myers to lead supply chain efforts and the retirement of Scott Okri [20][22] - Capital expenditures for fiscal 2025 are expected to be between $275 million and $300 million, focusing on capacity and technology investments [28] Q&A Session Summary Question: Can you help bridge the operating income outlook for the year? - Management highlighted strong positioning for the second half, with positive momentum in the Planters brand and value-added turkey [42][44] Question: What are the expectations for Turkey cadence in the back half? - Management noted a tightening supply in the turkey market but expressed confidence in their position and ability to capture upside during the fresh season [52][55] Question: Can you provide details on T and M savings? - Management confirmed that 66 projects were executed under the Transform and Modernize initiative, focusing on efficiency and logistics [67][70] Question: What products are related to the inventory build for summer demand? - The inventory build is strategically aligned with upcoming summer demands, particularly for Planters and promotional products [73][75] Question: How is the Planters brand expected to perform in the second half? - Management expressed optimism about the Planters brand, expecting continued sequential improvement and positive year-over-year consumption [82][84]

Hormel Foods (HRL) came out with quarterly earnings of $0.35 per share, in line with the Zacks Consensus Estimate. This compares to earnings of $0.38 per share a year ago. These figures are adjusted for non-recurring items.A quarter ago, it was expected that this maker of Spam canned ham, Dinty Moore stew and other foods would post earnings of $0.37 per share when it actually produced earnings of $0.35, delivering a surprise of -5.41%.Over the last four quarters, the company has surpassed consensus EPS esti ...

May 29, 2025 1 Forward-Looking Statements This presentation 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," "targ ...

Financial Performance - Net sales for the second quarter of fiscal 2025 were $5.89 billion, with organic net sales up 1% compared to the prior year[5]. - Operating income was reported at $477 million, with an adjusted operating income of $519 million, resulting in an operating margin of 8.1%[5]. - The company narrowed its fiscal 2025 net sales outlook to between $12.0 billion and $12.2 billion, and diluted earnings per share expectations to $1.49 to $1.59[4][6]. - Net sales for the quarter ended April 27, 2025, were $2,898,810, an increase from $2,887,352 in the same quarter last year, representing a growth of 0.4%[24]. - Total net sales increased by 0.4% to $2,898,810 thousand in Q2 2025 from $2,887,352 thousand in Q2 2024[27]. - The company reported a total net sales of $5.888 billion for the six months ended April 27, 2025, a slight increase of 0.1% from $5.884 billion in the same period last year[39]. Earnings and Margins - Gross profit for the quarter was $484,433, down from $503,806 year-over-year, indicating a decrease of 3.0%[24]. - Operating income for the quarter was $248,352, slightly lower than $252,320 in the previous year, reflecting a decline of 1.9%[24]. - Net earnings attributable to Hormel Foods Corporation for the quarter were $180,017, compared to $189,278 in the same quarter last year, a decrease of 4.7%[24]. - Adjusted net earnings attributable to Hormel Foods Corporation decreased to $192,928 thousand in Q2 2025 from $207,562 thousand in Q2 2024[35]. - Adjusted diluted earnings per share for Q2 2025 were $0.35, down from $0.38 in Q2 2024, reflecting a decrease of 7.9%[36]. - The adjusted operating margin for Q2 2025 was 9.1%, compared to 9.6% in Q2 2024[36]. Tax and Expenses - The effective tax rate for the quarter was 21.9%, with expectations for fiscal 2025 to be between 22.0% and 23.0%[17]. - The effective tax rate for the quarter was 22.0%, a slight improvement from 22.5% in the same quarter last year[24]. - Net unallocated expenses rose by 7.8% to $65,411 thousand in Q2 2025 from $60,694 thousand in Q2 2024[27]. - Earnings before income taxes decreased by 5.6% to $230,489 thousand in Q2 2025 compared to $244,139 thousand in Q2 2024[27]. Cash Flow and Capital Expenditures - Cash and cash equivalents at the end of the period were $669,688, down from $741,881 at the beginning of the year, a decrease of 9.7%[25]. - Capital expenditures for the quarter were $75 million, with a target for fiscal 2025 set between $275 million and $300 million[17]. - Net cash provided by operating activities for the six months ended April 27, 2025, was $365,646, down from $640,127 in the same period last year, a decline of 42.9%[26]. Dividends and Shareholder Returns - The company returned approximately $159 million to stockholders through dividends during the quarter[17]. - Dividends declared per share increased to $0.2900 from $0.2825 in the same quarter last year, representing a growth of 6.0%[24]. Segment Performance - The Applegate brand saw consumption growth outpacing the total edible category, while Jennie-O ground turkey experienced notable retail sales growth[10][11]. - The international segment achieved double-digit volume and net sales growth, particularly in the China market, driven by strong shipments of refrigerated products[13]. - The Planters brand showed sequential improvement in distribution and overall retail sales, reflecting its strength in the marketplace[10]. - Segment profit for Retail increased by 3.6% to $137,135 thousand in Q2 2025, while Foodservice segment profit decreased by 5.8% to $140,633 thousand[27]. - International segment volume grew by 8.9% to 79,518 lbs in Q2 2025, with net sales increasing by 7.0% to $178,533 thousand[27]. - Total segment profit decreased by 2.9% to $296,175 thousand in Q2 2025 compared to $304,903 thousand in Q2 2024[27]. Strategic Initiatives - Hormel Foods expects to see T&M initiative benefits in the range of $100 million to $150 million year over year[6]. - The company initiated a multi-year Transform and Modernize (T&M) initiative to optimize supply chain and portfolio, excluding non-recurring costs from financial performance measures[29]. - The Transform and Modernize initiative is expected to incur estimated charges of $46 million to $52 million in fiscal 2025[42]. - The company sold Mountain Prairie, LLC, resulting in a one-time loss not reflective of ongoing operations[30].