Core Insights - The PLANTERS® brand is celebrating the 90th anniversary of the NUTmobile with a new design and a fresh crew of Peanutters, launching a nationwide tour to engage fans and promote their products [1][2]. Company Overview - PLANTERS® was founded in 1906 and has been a leading snacking solution for over a century, offering a wide range of nut products [5]. - The brand is owned by Hormel Foods Corporation, which has an annual revenue of approximately $12 billion and operates in over 80 countries [6]. NUTmobile Details - The new NUTmobile features unique updates such as a peanut door handle, a neon-lit selfie station, and a 360-degree exterior camera [2]. - The tour will include interactive events and photo opportunities for fans [4]. New Peanutters - The new crew consists of three individuals: Aria Conte, Hudson Ritchie, and Adleigh Mayes, each with diverse backgrounds and interests [7].

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Industry Overview - The Zacks Food – Meat Products industry is experiencing strong growth due to increasing consumer demand for high-protein foods and a focus on health and wellness [2][3] - Companies are diversifying product portfolios, boosting production capacity, and investing in innovative plant-based meat alternatives to remain competitive [2][3] Major Trends - There is a significant increase in demand for high-protein diets, driven by health consciousness among consumers, particularly fitness enthusiasts [6] - The popularity of plant-based meat alternatives is rising as consumers seek healthier options with minimal artificial ingredients [7] - Meat companies are implementing strategic expansions through mergers, acquisitions, and capacity enhancements to improve market presence [8][9] Cost Challenges - Rising input costs, including feed, raw materials, transportation, and labor, are straining operations and increasing production expenses [10][11] - Persistent inflation is affecting consumer behavior, leading to more frequent store visits but lower purchase volumes, which may impact sales and profitability [11] Industry Performance - The Zacks Food – Meat Products industry has underperformed the broader Zacks Consumer Staples sector and the S&P 500 over the past year, declining by 7.8% compared to the sector's growth of 3% and the S&P 500's rise of 11.6% [15] - The industry is currently trading at a forward 12-month price-to-earnings (P/E) ratio of 12.50X, significantly lower than the S&P 500's 21.83X and the sector's 17.80X [16] Company Highlights - **Tyson Foods**: A leading player in the protein industry with a diversified multi-protein strategy, strong brand recognition, and a focus on digital transformation [17][18] - **Hormel Foods**: Growth driven by a strong Foodservice segment and innovation in product offerings, with a focus on operational efficiency through its Transform and Modernize initiative [21][22] - **Pilgrim's Pride**: A major producer of chicken and pork products, focusing on sustainable growth through product diversification and strategic investments in capacity and technology [24][25]

Industry Overview - The Zacks Food – Meat Products industry is experiencing strong growth due to increasing consumer demand for high-protein foods and a focus on health and wellness [1] - The industry includes companies that manufacture, process, market, and distribute a wide range of meat products, including chicken, pork, beef, and plant-based meats [3] - Major trends include increased protein demand and the rise of plant-based alternatives, driven by health consciousness and dietary preferences [4] Company Performance - Leading companies like Tyson Foods, Hormel Foods, and Pilgrim's Pride are well-positioned for long-term growth despite challenges such as rising input costs and operational expenses [2] - Tyson Foods has a diversified multi-protein strategy and is leveraging digital transformation to optimize supply chain efficiency [16] - Hormel Foods is focusing on innovation and operational efficiency through its Transform and Modernize initiative [20] - Pilgrim's Pride is enhancing profitability through strategic investments and effective cost management strategies [24] Market Trends and Challenges - The industry is facing significant cost-related challenges, including rising prices for feed, raw materials, and labor, which are impacting profit margins [6] - Consumer behavior is shifting, with shoppers making more frequent store visits but purchasing less per trip due to tighter household budgets [6] - The industry's performance has underperformed the broader Zacks Consumer Staples sector and the S&P 500 over the past year, declining 7.8% compared to the sector's growth of 3% and the S&P 500's rise of 11.6% [10] Valuation Metrics - The industry is currently trading at a forward 12-month price-to-earnings (P/E) ratio of 12.50X, compared to the S&P 500's 21.83X and the sector's 17.80X [13] - Over the past five years, the industry's P/E ratio has ranged from a high of 21.76X to a low of 12.24X, with a median of 16.55X [13] Future Outlook - The Zacks Industry Rank for the Food – Meat Products industry is 93, placing it in the top 38% of over 250 Zacks industries, indicating encouraging near-term prospects [7][8] - Analysts are gaining confidence in the earnings growth potential of the industry, as evidenced by positive earnings estimate revisions [9]

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].

Core Insights - Hormel Foods Corporation reported second-quarter fiscal 2025 results with adjusted earnings of 35 cents per share, matching the Zacks Consensus Estimate, but down from 38 cents in the prior year [1] - Net sales increased by 0.4% year over year to $2,898.8 million, although it missed the consensus estimate of $2,905 million, with volumes declining by 5.7% [1] Financial Performance - Gross profit decreased to $484.4 million from $503.8 million in the year-ago quarter [2] - Adjusted operating income fell to $264.9 million from $275.9 million, with an adjusted operating margin of 9.1%, down from 9.6% [2] Segment Performance - Retail unit net sales decreased by 0.3% year over year to $1,783.8 million, with volumes down 6.6%, primarily due to lower commodity shipments [3] - Foodservice segment net sales increased by 0.5% to $936.4 million, with organic net sales rising by 4%, despite a volume decline of 7.3% [5] - International unit net sales grew by 7% to $178.5 million, with volumes up by 8.9%, driven by strong export performance, particularly in refrigerated products [7] Profitability by Segment - Segment profit for the Retail unit increased by 3.6% due to operational efficiencies and lower expenses [4] - Foodservice segment profit declined by 5.8% due to margin pressures, despite increased net sales [6] - International segment profit decreased by 20.7% due to an unfavorable export customer mix and softness in Brazil [8] Financial Health - Hormel Foods ended the quarter with cash and cash equivalents of $669.7 million and total long-term debt of $2,850.7 million [9] - The company returned nearly $159 million to shareholders via dividends [10] Future Outlook - Hormel Foods expects fiscal 2025 net sales to be between $12 billion and $12.2 billion, with organic net sales growth projected at 2% to 3% [12] - Operating income is anticipated to be between $1,118 million and $1,185 million, while adjusted operating income is expected to range from $1,175 million to $1,248 million [13] - Full-year diluted EPS is projected to be between $1.49 and $1.59, with adjusted EPS expected between $1.58 and $1.68 [14] Stock Performance - HRL stock has risen by 5.9% in the past three months, contrasting with a 1.8% decline in the industry [15]

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]

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 [26] - Gross profit margin was 16.7%, impacted by higher commodity input costs, partially offset by savings from the Transform and Modernize initiative [27] - Diluted earnings per share were $0.33, with adjusted diluted earnings per share at $0.35, aligning with expectations [28] 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, which continues to perform strongly [9][10] - The food service business outperformed the broader industry, with strong volume and net sales growth from branded products [12] - The international segment saw double-digit volume and net sales growth, particularly in exports and China [14] Market Data and Key Metrics Changes - The company anticipates strong second-half growth, particularly from the Turkey portfolio and the Planters brand, with overall net sales growth expected to be between 2% to 3% for the full year [20][34] - The competitive landscape for turkey has tightened, with expectations for share gains as competitors shutter facilities [94] Company Strategy and Development Direction - The company remains committed to delivering profitable and predictable growth, focusing on a diversified portfolio and the Transform and Modernize initiative [21][31] - Increased advertising investments are planned for the second half, particularly for the Planters brand and other key products [46] - The company is strategically positioned to navigate changing consumer preferences and market dynamics [20][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to deliver strong second-half results, supported by positive momentum in key brands and segments [41][42] - The consumer sentiment is described as strained due to inflation and uncertainty in the macro environment, impacting overall demand [107] - The company is focused on managing input cost pressures and leveraging its diversified portfolio to sustain growth [33][34] 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 [22][23] - Capital expenditures for fiscal 2025 are expected to be between $275 million to $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 [40][41] Question: What are the expectations for Turkey in the back half? - Management noted a tightening supply in the turkey market and emphasized the focus on value-added products [52][55] Question: Can you elaborate on the expected margin expansion in the second half? - Management expects margin expansion driven by turkey pricing and strong performance from the Planters brand [60][61] Question: How does the company plan to grow in the food service segment? - Management indicated a strong pipeline of innovation and favorable year-over-year comparisons as key drivers for growth [64][65] Question: What are the savings from the Transform and Modernize initiative? - Management reported executing 66 projects under the initiative, with a focus on improving logistics and inventory management [69][71] Question: What products are related to the inventory build for summer demand? - Management indicated that inventory was built for Planters and promotional products like Spam, while managing commodity input costs [74][76] Question: Is the company still confident in achieving the $250 million operating income growth target by FY 2026? - Management affirmed confidence in the target, emphasizing ongoing initiatives and the benefits of the Transform and Modernize program [105][106] Question: What is the current consumer sentiment? - Management described consumer sentiment as strained due to inflation and uncertainty, impacting overall demand [107]