Hormel Foods(US:HRL)2024-12-05 19:40Customer Concentration - The Company reported that sales to its largest customer, Walmart Inc., accounted for approximately 16% of consolidated gross sales during fiscal 2024[31]. - The top five customers collectively represented about 37% of consolidated gross sales during fiscal 2024[31]. Employee Information - As of October 27, 2024, the Company had approximately 20,000 active employees, with over 90% located in the U.S.[19]. - Approximately 50% of the Company's team members had five or more years of service as of October 27, 2024[22]. Patents and Intellectual Property - The Company holds 22 U.S. patents and eight foreign patents as of October 27, 2024[34]. Sustainability Efforts - The Company has set aspirational goals to improve sustainability efforts, including reducing greenhouse gas emissions and organic waste[30]. Risk Management - The Company utilizes futures, swaps, and options contracts to hedge a portion of its anticipated purchases to manage input cost risks[17]. - The Company is exposed to various forms of market risk, including commodity price risk and foreign currency exchange rate risk[235]. Financial Position - The Company's long-term debt had a fair value of $2.5 billion as of October 27, 2024, down from $2.7 billion as of October 29, 2023[237]. - The net asset position in foreign currencies increased to $1.2 billion as of October 27, 2024, compared to $1.1 billion as of October 29, 2023[238]. - The balance of corporate-owned life insurance policies classified as trading securities totaled $209.7 million as of October 27, 2024, up from $188.2 million as of October 29, 2023[239]. Financial Performance - Net sales for the fiscal year ended October 27, 2024, were $11,920,797, a decrease of 1.57% from $12,110,010 in the previous year[270]. - Gross profit increased to $2,022,138, up 1.5% from $1,999,841 year-over-year[270]. - Operating income slightly decreased to $1,067,932, compared to $1,072,046 in the prior year, reflecting a decline of 0.2%[270]. - Net earnings attributable to Hormel Foods Corporation were $805,038, an increase of 1.9% from $793,572 in the previous year[270]. - Basic and diluted net earnings per share both increased to $1.47, up from $1.45 year-over-year[270]. - Comprehensive income attributable to Hormel Foods Corporation was $813,959, up from $776,881, an increase of 4.8%[272]. Asset Management - Total current assets decreased to $3,246,476 from $3,297,249, a decline of 1.54%[274]. - Total assets slightly decreased to $13,434,729 from $13,448,772, a decline of 0.1%[274]. - Cash and cash equivalents increased to $741,881 from $736,532, a slight increase of 0.5%[274]. Debt Management - Long-term debt increased to $2,850,944 from $2,358,719, reflecting a rise of 20.8%[274]. - The company repaid $959.017 million in long-term debt during the fiscal year ending October 27, 2024[278]. Dividends and Shareholder Returns - The company declared dividends of $1.13 per share for the fiscal year ending October 27, 2024, compared to $1.10 per share in the previous year[276]. Impairment and Asset Valuation - The Company recorded no material impairment charges for long-lived or definite-lived assets in fiscal years 2024, 2023, or 2022[297]. - In fiscal 2023, the Company recorded a $28.4 million intangible asset impairment charge for the Justin's trade name[310]. - The carrying amount of goodwill decreased to $4,923.5 million as of October 27, 2024, from $4,928.5 million as of October 29, 2023, primarily due to the divestiture of Hormel Health Labs[344]. Revenue Recognition - The Company recognizes revenue at the point in time when performance obligations have been satisfied, typically when the ordered product is received or picked up by the customer[320]. Research and Development - Research and development expenses for fiscal years 2024, 2023, and 2022 were $36.1 million, $33.7 million, and $34.7 million, respectively, showing a year-over-year increase in R&D investment[327]. Investment Activities - The Company completed the divestiture of Hormel Health Labs for a preliminary purchase price of $25.0 million, resulting in a pre-tax gain of $3.9 million recognized in the Consolidated Statements of Operations[342]. - The Company acquired a 30% stake in PT Garudafood Putra Putri Jaya Tbk for $425.8 million, enhancing its presence in Southeast Asia[351]. Inventory Management - Total inventories decreased to $1.58 billion as of October 27, 2024, from $1.68 billion a year earlier, a decline of 6.2%[355]. Pension and Retirement Plans - The Company had $1.3 billion in plan assets related to defined benefit pension plans as of October 27, 2024, including $87.3 million in private equity and real estate funds[264]. - The net periodic cost for defined benefit plans was $44,334,000 for the fiscal year ended October 27, 2024, compared to $37,413,000 for the year ended October 29, 2023, reflecting an increase of 18.5%[374]. - The benefit obligation at the end of the year for pension plans was $1,339,726,000 as of October 27, 2024, compared to $1,174,380,000 as of October 29, 2023, showing a rise of 14.1%[375]. Accounting and Reporting - The Company maintained effective internal control over financial reporting as of October 27, 2024, as confirmed by independent auditors[246]. - The consolidated financial statements present fairly the financial position of the Company at October 27, 2024, in conformity with U.S. generally accepted accounting principles[258]. - The audit of the Company's internal control over financial reporting was conducted in accordance with PCAOB standards, resulting in an unqualified opinion[259].