Financial Performance - Diluted earnings per share for Q1 fiscal 2026 was $0.33, a 6% increase compared to the same period last year, while adjusted diluted earnings per share decreased by 3% to $0.34[104] - Net sales for Q1 fiscal 2026 increased by 1.3% to $3,027,317, with organic net sales growth of 2% driven by the Foodservice and International segments[112] - Total segment profit decreased by 1% in Q1 fiscal 2026, with the Retail segment profit declining by 19.3% due to lower sales and higher costs, while Foodservice and International segments saw profit increases of 12.8% and 9.9% respectively[125] - Total net sales for Q1 2026 were $3,027,317,000, reflecting a 1.6% increase from $2,988,813,000 in Q1 2025[146] - Adjusted net earnings attributable to Hormel Foods Corporation were $186,475,000 in Q1 2026, compared to $190,687,000 in Q1 2025[143] Cash Flow and Liquidity - Cash flow from operations for Q1 fiscal 2026 was $349 million, reflecting a 13% increase largely due to a reduction in inventory[112] - Cash provided by operating activities was $349,214,000 in Q1 2026, compared to $309,206,000 in Q1 2025[148] - Cash and cash equivalents at the end of Q1 2026 were $867,906,000, an increase of $197,228,000 from Q1 2025[148] - Cash flows from operating activities were impacted by a $91 million decrease in inventory during the first three months of fiscal 2026, compared to a $56 million decrease in the same period of the prior year[154] Segment Performance - The Foodservice segment reported a 7.3% increase in net sales to $998,227, driven by strong performance in customized solutions and premium prepared proteins[127] - International segment net sales increased by 7.6% to $181,284,000 in Q1 2026 compared to $168,495,000 in Q1 2025[129] - Organic net sales growth of 7.7% was driven by strong performance in multinational businesses and branded exports, particularly SPAM luncheon meat[129] - Organic volume in the Retail segment declined by 5.8% in Q1 fiscal 2026, primarily due to the strategic exit from select non-core private label snack nut items[126] Expenses and Investments - Advertising investments in Q1 fiscal 2026 were $41 million, a decrease of 6% compared to the prior year, with plans to increase full-year advertising expenses[118] - Logistics costs increased due to winter weather disruptions and industry dynamics, contributing to higher expenses in Q1 fiscal 2026[106] - The Company anticipates net sales growth in fiscal 2026, supported by increased brand support and market-based pricing actions, although risks include slowing consumer demand and commodity price fluctuations[113] Corporate Strategy and Outlook - The company commenced a corporate restructuring plan in Q4 2025 to reduce administrative expenses and improve efficiencies[139] - The Transform and Modernize initiative is expected to incur non-recurring costs primarily related to external consulting fees and supply chain optimization[134] - The Company expects to continue optimizing its portfolio through acquisitions and divestitures aligned with its strategic priorities[153] Debt and Dividends - The Company has outstanding debt of $2.9 billion in fixed rate unsecured senior notes, with $25 million in interest payments made during the first three months of fiscal 2026 and an additional $49 million expected[157] - The Company maintains a $750 million unsecured revolving credit facility, which can be increased by $375 million under certain conditions, with no outstanding borrowings as of January 25, 2026[158] - The Company has paid 390 consecutive quarterly dividends since 1928, with a quarterly dividend of $0.2925 per share authorized for the first quarter of fiscal 2026, representing a 1% increase from the prior year[155] Risk and Compliance - The effective tax rate for Q1 fiscal 2026 was 22.4%, up from 21.8% in the prior year, with an expected range of 21.5% to 22.5% for the full fiscal year[121][122] - The Company was in compliance with all covenants in its debt agreements as of January 25, 2026, and expects to maintain compliance in the future[159] - The fair value of the Company's cash flow commodity contracts was $14.9 million as of January 25, 2026, with a hypothetical 10% decrease in market prices potentially impacting future costs by $32.4 million[170] - The Company's net asset position in foreign currencies was $0.8 billion as of January 25, 2026, primarily exposed to Chinese yuan, Indonesian rupiah, and Philippine peso[172] - The balance of corporate-owned life insurance policies classified as trading securities totaled $222.4 million as of January 25, 2026, with a hypothetical 10% decline potentially impacting pre-tax earnings by approximately $10.8 million[173]

U.S. Stock Market - U.S. stocks traded lower, with the S&P 500 falling over 1% on Thursday, closing at 6,872.77, a drop of 1.06% [1] - The Dow Jones Industrial Average decreased by 0.31% to 49,329.99, while the NASDAQ fell by 1.90% to 22,711.05 [1] - Energy shares gained by 1%, while information technology stocks fell by 2.6% [1] Hormel Foods Corp - Hormel Foods Corp reported mixed first-quarter FY26 results, with adjusted earnings per share of 34 cents, surpassing the analyst consensus estimate of 32 cents [2] - However, the company's sales of $3.03 billion fell short of the Street view of $3.07 billion [2] Commodity Market - In commodity news, oil prices increased by 1.2% to $66.21, while gold prices decreased by 0.7% to $5,190.40 [3] - Silver prices fell by 4% to $87.345, and copper prices decreased by 0.7% to $6.0010 [3] European Markets - European shares were mixed, with the eurozone's STOXX 600 falling by 0.05% [4] - Spain's IBEX 35 Index rose by 0.19%, London's FTSE 100 increased by 0.37%, Germany's DAX gained 0.45%, and France's CAC 40 rose by 0.72% [4] Asia Pacific Markets - Asian markets closed mixed, with Japan's Nikkei 225 gaining 0.29% [5] - Hong Kong's Hang Seng index dipped by 1.44%, China's Shanghai Composite fell by 0.01%, and India's BSE Sensex slipped by 0.03% [5] U.S. Economic Indicators - U.S. natural-gas stocks fell by 52 billion cubic feet in the week ended February 20, compared to market expectations of a 36 billion cubic feet draw [6] - U.S. initial jobless claims rose by 4,000 from the previous week to 212,000, compared to market estimates of 215,000 [6]

Core Viewpoint - Hormel Foods Corp reported mixed first-quarter FY26 results, with adjusted earnings per share beating estimates but sales falling short of expectations [1][2]. Earnings Snapshot - Adjusted earnings per share were 34 cents, exceeding the analyst consensus estimate of 32 cents [2]. - Sales totaled $3.03 billion, missing the Street view of $3.07 billion [2]. - Operating income was reported at $244 million, with adjusted operating income at $247 million, resulting in an operating margin of 8% and an adjusted operating margin of 8.2% [2]. - Cash flow from operations for the quarter was $349 million [2]. Inventory and Cash Position - Inventories at quarter-end were valued at $1.6 billion, while cash on hand was $868 million [3]. Segment Performance - Retail volume declined by 6%, and net sales fell by 2%, impacted by the strategic exit from certain non-core private label snack nut items and weaknesses in branded and private label packaged deli items [4]. - Foodservice volume remained flat, but net sales increased by 7%, driven by strong performance in customized solutions, premium prepared proteins, and branded pepperoni [4]. - International volume grew by 1%, with net sales up by 8%, attributed to strong performance in multinational businesses and branded exports, particularly SPAM luncheon meat [5]. Strategic Transactions - The company announced the sale of its whole-bird turkey business to Life-Science Innovations, aligning with its focus on expanding value-added protein offerings [6]. - The sale is expected to close by the end of the second quarter of FY26 [6]. Management Commentary - President John Ghingo stated that these strategic transactions allow the company to focus on high-growth opportunities while reducing exposure to volatile commodity markets [7]. - The Jennie-O branded portfolio remains a key part of the growth strategy, positioning the company to accelerate growth in value-added turkey categories [7]. Outlook - The company reaffirmed its FY26 adjusted earnings guidance of $1.43 to $1.51 per share, compared to the $1.47 projected by analysts [7]. - Sales are forecasted to be between $12.2 billion and $12.5 billion, compared to the analyst estimate of $12.384 billion [8]. - Hormel Foods expects adjusted EPS in the second quarter to remain flat or slightly increase compared to 2025, indicating steady performance amid ongoing market conditions [8].

Core Insights - Hormel Foods Corporation (HRL) reported first-quarter fiscal 2026 results, with net sales increasing year over year but missing the Zacks Consensus Estimate, while adjusted earnings per share (EPS) beat estimates despite a decline from the previous year [1][10]. Financial Performance - Net sales reached $3,027.3 million, a 1.3% increase from $2,988.8 million in the same quarter last year, but fell short of the consensus estimate of $3,061 million. Volumes decreased by 3.9% in the reported quarter [2]. - Adjusted earnings were 34 cents per share, surpassing the Zacks Consensus Estimate of 32 cents, although down from 35 cents in the year-ago quarter [1][10]. - Gross profit was $469.6 million, down from $475.2 million reported in the previous year, while adjusted operating income decreased to $247.4 million from $254 million [3]. Segment Performance - Retail unit net sales decreased by 2.2% year over year to $1,847.8 million, with volumes down 6%, attributed to the exit from non-core private label snack nut items and softness in deli products. Key brands like Jennie-O and Planters saw growth [4]. - Foodservice segment net sales increased by 7.3% to $998.2 million, exceeding the consensus estimate of $982 million, driven by broad-based growth across channels [5]. - International unit net sales rose by 7.6% to $181.3 million, with strong performance in multinational operations and branded exports, particularly SPAM [7]. Financial Health - The company ended the quarter with cash and cash equivalents of $867.9 million and total long-term debt of $2,851 million. Cash flow from operations was $349.2 million [11]. - Hormel Foods returned nearly $160 million to shareholders through dividends in the fiscal first quarter [11]. Future Outlook - Hormel Foods expects fiscal 2026 net sales to be between $12.2 billion and $12.5 billion, with organic net sales growth projected at 1% to 4%. Adjusted EPS is anticipated to be in the range of $1.43 to $1.51, reflecting growth of 4% to 10% [12].

Core Viewpoint - The article emphasizes the investment philosophy focused on identifying mispriced securities through understanding the financial drivers of small cap companies, utilizing a DCF model for valuation [1] Group 1: Investment Philosophy - The investment approach is centered on generating great returns by recognizing mispriced securities [1] - The methodology is flexible, not confined to traditional investment categories like value, dividend, or growth investing [1] - The risk-to-reward ratio is a critical factor in determining a stock's prospects [1]

Core Viewpoint - The article emphasizes the investment philosophy focused on identifying mispriced securities through understanding the financial drivers of companies, often revealed by a DCF model valuation [1]. Group 1: Investment Philosophy - The investment approach is centered on small cap companies across US, Canadian, and European markets [1]. - The methodology allows for flexibility beyond traditional investment categories such as value, dividend, or growth investing, considering all prospects of a stock to assess risk-to-reward [1].

Financial Data and Key Metrics Changes - The company reported organic net sales growth of 2% for the first quarter of fiscal 2026, marking the fifth consecutive quarter of organic net sales growth [5][29] - Adjusted diluted earnings per share (EPS) was $0.34, driven by the strength of the protein-centric portfolio [5][31] - Gross profit was impacted by higher input costs and logistics expenses, with commodity input costs remaining a significant inflationary pressure [29][30] Business Line Data and Key Metrics Changes - The foodservice segment achieved high single-digit organic net sales growth, marking its 10th consecutive quarter of growth, driven by premium prepared proteins and branded pepperoni [12][15] - The international segment also saw strong net sales growth, particularly from multinational businesses and branded exports, led by SPAM luncheon meats [12][16] - The retail segment experienced a decline in organic volume and net sales, primarily due to a strategic exit from non-core private label snack nut items, despite some brands showing dollar sales growth [12][14][56] Market Data and Key Metrics Changes - The company noted that total Hormel dollar sales were up over 2% in the latest 13-week data, indicating that the portfolio continues to resonate with consumers [14] - The retail segment's profitability was pressured by high commodity costs and unexpected increases in logistics expenses [14][30] Company Strategy and Development Direction - The company is focused on strengthening its protein-centric portfolio and has initiated a strategic move to sell its whole bird turkey business to reduce exposure to volatile, commodity-driven businesses [8][9] - The Transform and Modernize initiative is expected to yield financial benefits starting in the second quarter, enhancing operational efficiency and driving long-term value creation [7][21] - The company is committed to innovation and expanding its product offerings, with new products like FLASH 180 Chicken Tenders and Hormel Black Label Oven Ready Bacon [20][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's near and long-term profitable growth opportunities, emphasizing the importance of focusing on core strengths and operational improvements [11][28] - The company expects to deliver another quarter of top-line growth in Q2, with adjusted diluted EPS anticipated to be flat to slightly up compared to the previous year [8][35] - Management acknowledged challenges in the retail segment but remains optimistic about the potential for growth through strategic investments and pricing actions [12][57] Other Important Information - The company reaffirmed its full-year fiscal 2026 guidance, expecting organic net sales growth of 1%-4% and adjusted diluted EPS in the range of $1.43 to $1.51 per share [32][33] - The pending whole bird turkey transaction is expected to have a minimal impact on adjusted financials for fiscal 2026, with most sales already booked [33][34] Q&A Session Summary Question: Can you unpack the Q2 EPS outlook and logistics headwinds? - Management indicated that Q2 adjusted EPS is expected to be flat to slightly up year-over-year, with benefits from retail pricing actions and SG&A improvements [40][42] Question: What is the rationale behind the whole turkey divestiture? - The divestiture aims to sharpen focus on value-added turkey products, which have shown strong growth potential, while reducing exposure to low-margin, volatile businesses [43][47] Question: Can you provide more detail on the retail segment's performance? - The retail segment's net sales were down 2%, primarily due to the exit from private label snack nuts, but branded products showed strong consumer takeaway [55][56] Question: How is the foodservice segment responding to pricing increases? - The foodservice segment achieved 7% organic net sales growth, with pricing adjustments catching up to market movements, helping to recover margins [66][68] Question: What is the outlook for retail margins moving forward? - Management is optimistic about returning to previous margin levels through strategic investments, pricing actions, and focusing on high-margin priority brands [76][77]

Financial Data and Key Metrics Changes - The company reported organic net sales growth of 2% for the first quarter of fiscal 2026, marking the fifth consecutive quarter of organic net sales growth [5][29] - Adjusted diluted earnings per share (EPS) was $0.34, driven by the strength of the protein-centric portfolio [5][31] - Gross profit was impacted by higher input costs and logistics expenses, with commodity input costs remaining a significant headwind [29][30] Business Line Data and Key Metrics Changes - The foodservice segment achieved high single-digit organic net sales growth and marked its 10th consecutive quarter of organic net sales growth, driven by premium prepared proteins and branded pepperoni [5][15] - The international segment also saw strong net sales growth, particularly from multinational businesses and branded exports, with SPAM luncheon meats leading the way [12][16] - The retail segment experienced a decline in organic volume and net sales, primarily due to a strategic exit from non-core private label snack nut items, despite some priority brands showing dollar sales growth [12][14][54] Market Data and Key Metrics Changes - The company noted that the consumer environment remains challenging, with limited retail consumption growth and headwinds in foodservice channels [12] - Despite the challenges, Hormel's total dollar sales were up over 2% in the latest 13-week data, indicating that the portfolio continues to resonate with consumers [14] Company Strategy and Development Direction - Hormel Foods is focusing on its protein-centric portfolio and has initiated a strategic move to sell its whole bird turkey business to reduce exposure to volatile, commodity-driven businesses [8][9] - The company is committed to enhancing collaboration across the organization and executing its Transform and Modernize initiative to drive long-term value creation [7][21] - Hormel is also modernizing its technology and data backbone to improve decision-making and innovation capabilities [22][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's near and long-term profitable growth opportunities, emphasizing the importance of the protein-centric portfolio [11] - The company expects to deliver another quarter of top-line growth and adjusted diluted EPS that is flat to slightly up compared to last year [8][35] - Management acknowledged the challenges posed by high commodity costs and logistics expenses but remains optimistic about achieving reaffirmed guidance for fiscal 2026 [30][36] Other Important Information - The company paid its 390th consecutive quarterly dividend, returning approximately $160 million to stockholders during the quarter [32] - Hormel expects the pending whole bird turkey transaction to have a minimal impact on adjusted financials in fiscal 2026, with the majority of whole bird turkey sales remaining part of reported results [33][34] Q&A Session Summary Question: Could you unpack the outlook for Q2 and segment-level expectations? - Management indicated that Q2 is expected to show sequential improvement in adjusted EPS, benefiting from the completion of retail pricing actions and SG&A actions [39][40] Question: Can you provide details on the rationale behind the whole turkey divestiture? - The divestiture is aimed at reducing exposure to low-margin, volatile businesses and allowing a sharper focus on value-added turkey products, which have shown strong growth [42][46] Question: What are the key factors affecting the retail segment's performance? - The retail segment's decline was attributed to the exit from private label snack nuts, soft consumption in some brands, and the impact of pricing actions on volume [54][72] Question: How is the foodservice segment responding to pricing increases? - The foodservice segment has seen strong top-line growth, with pricing catching up to market movements, which has helped recover margins [66][67]

Financial Data and Key Metrics Changes - The company reported Q1 net sales of just over $3 billion, reflecting a 2% organic net sales increase compared to the prior year, marking the fifth consecutive quarter of organic net sales growth [28] - Adjusted diluted earnings per share (EPS) for the quarter was $0.34, with diluted EPS at $0.33 [30] - Adjusted operating income was $247 million, with an adjusted operating margin of 8.2% [30] Business Line Data and Key Metrics Changes - The foodservice segment achieved 7% organic net sales growth, marking its 10th consecutive quarter of growth, driven by premium prepared proteins and branded pepperoni [12][14] - The international segment also saw strong performance, with net sales growth driven by multinational businesses and branded exports, particularly SPAM [16] - The retail segment experienced a decline in organic volume and net sales, primarily due to a strategic exit from non-core private label snack nut items, despite some priority brands showing dollar sales growth [12][13] Market Data and Key Metrics Changes - The company noted that the retail environment remains challenging, with limited consumption growth and headwinds in foodservice channels as operators and consumers remain cautious [12] - Commodity input costs, particularly for beef and pork, continued to exert pressure, with pork trim costs increasing by 12% compared to the previous year [28] Company Strategy and Development Direction - Hormel Foods is focusing on its protein-centric portfolio and has initiated a strategic move to divest its whole bird turkey business to reduce exposure to volatile, commodity-driven businesses [8][9] - The company is committed to enhancing its value-added protein portfolio and has rolled out seven strategic priorities to guide its operations [17][24] - The Transform and Modernize initiative is aimed at improving operational efficiency and driving long-term value creation [6][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's near and long-term growth opportunities, emphasizing the importance of a strong protein-centric portfolio [11] - The company expects to deliver another quarter of top-line growth in Q2, with adjusted diluted EPS anticipated to be flat to slightly up compared to the previous year [7][34] - Management acknowledged the challenges posed by high commodity costs and logistics expenses but remains optimistic about achieving its reaffirmed guidance for fiscal 2026 [30][34] Other Important Information - Hormel Foods paid its 390th consecutive quarterly dividend, returning approximately $160 million to stockholders during the quarter [31] - The company expects the pending whole bird turkey transaction to have a minimal impact on its adjusted financials for fiscal 2026, with most whole bird turkey sales remaining part of reported results [32] Q&A Session Summary Question: Can you unpack the Q2 EPS outlook and logistics headwinds? - Management indicated that Q2 is expected to show sequential improvement in EPS, benefiting from completed pricing actions and SG&A initiatives, while monitoring logistics costs [38][40] Question: What is the rationale behind the whole turkey divestiture? - The divestiture is aimed at increasing focus on value-added turkey products, which have shown strong growth, while the whole turkey business has been identified as less strategic and more volatile [42][46] Question: Can you provide more detail on the retail segment's performance? - The retail segment's net sales were down 2%, primarily due to the exit from private label snack nuts, but branded products continue to show strong consumer takeaway [52][54] Question: How is the foodservice segment responding to pricing increases? - The foodservice segment has seen strong top-line growth, with pricing catching up to market movements, contributing positively to margins [61][65] Question: What is the outlook for retail profitability and volume growth? - Management believes there are opportunities for growth in the retail segment, focusing on priority brands and modernizing capabilities to drive profitable growth [72][73]

FEBRUARY 26, 2026 FIRST QUARTER FISCAL 2026 FORWARD-LOOKING STATEMENTS This presentation contains forward-looking statements, which are based on the Company's current assumptions and expectations. These statements are typically accompanied by the words "aim," "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "might," "plan," "project," "seek," "target," "will," "would," or similar words or expressions. The principal forward-looking statements in this presentation include statements re ...