Hormel Foods(US:HRL)2025-02-27 18:41Financial Performance - The Company reported diluted earnings per share of $0.31 for Q1 fiscal 2025, down 23% from the previous year, with adjusted diluted earnings per share at $0.35, a decrease of 14.6%[96]. - Net sales for Q1 fiscal 2025 were $2,988,813, a slight decline of 0.3% compared to $2,996,911 in Q1 fiscal 2024, while organic net sales increased by 0.6%[98]. - Total segment profit decreased by 12.8% to $278,818 in Q1 fiscal 2025, with declines in both Retail and Foodservice segments offsetting growth in the International segment[112]. - Retail segment profit fell by 20.3% to $119,147, impacted by lower sales and higher raw material costs, despite growth from key brands like SPAM and Applegate[113]. - Foodservice segment net sales increased by 1.9% to $930,185, driven by strong performance in premium prepared proteins, although segment profit decreased by 7.6%[115]. - In the first quarter of fiscal 2025, net sales decreased by 2.4% to $168,495,000 compared to $172,552,000 in the same quarter of fiscal 2024[118]. - Volume decreased by 6.9% to 74,569,000 lbs from 80,135,000 lbs year-over-year[118]. - Segment profit increased by 4.1% to $20,845,000, driven by improved export margins and growth in China[118]. - Total net sales for the quarter were $2,988,813,000, a slight decrease of 0.6% compared to $2,996,911,000 in the previous year[133]. - Adjusted diluted earnings per share decreased to $0.35 from $0.41 year-over-year[131]. Cash Flow and Expenses - Year-to-date cash flow from operations was $309 million, a decrease of 23% compared to the prior year[101]. - Cash provided by operating activities was $309,206,000, compared to $403,980,000 in the same quarter of fiscal 2024[135]. - Cash flows from operating activities were significantly impacted by changes in operating assets and liabilities, with accounts receivable decreasing by $57 million in Q1 fiscal 2025 compared to a decrease of $68 million in Q1 fiscal 2024[139]. - SG&A expenses increased by 9.4% to $263,013, primarily due to employee-related expenses and costs associated with the Transform and Modernize initiative[105]. - Net unallocated expense rose significantly to $60,700,000 from $34,020,000, primarily due to losses on the sale of a non-core operation and higher employee-related expenses[121]. - Cash and cash equivalents at the end of the period were $840,398,000, down from $963,212,000 in the prior year[135]. - The Company maintains $234 million of cash and cash equivalents held by international subsidiaries as of January 26, 2025[146]. Dividends and Shareholder Returns - The company paid $155,000,000 in cash dividends during the first quarter of fiscal 2025, an increase from $150,000,000 in the prior year[137]. - 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[141]. - The Company is authorized to repurchase 3,677,494 shares of common stock but did not repurchase any shares during the first three months of fiscal 2025[147]. Future Outlook - The Company anticipates net sales growth from each segment in Q2 fiscal 2025 compared to the prior year[101]. - The company expects International segment profit to decrease in the second quarter of fiscal 2025, with growth in China and Indonesia offset by softness in Brazil[120]. - Capital expenditures for fiscal 2025 are estimated to be between $275 million and $300 million, focusing on value-added capacity, infrastructure, and new technology[142]. - Advertising investments in Q1 were $43 million, a decrease of 2% compared to the previous year, with expectations for an increase in full-year advertising expenses[106]. Debt and Financing - The Company’s outstanding debt as of January 26, 2025, included $2.9 billion of fixed-rate unsecured senior notes, with $25 million in interest payments made during Q1 fiscal 2025 and an additional $49 million expected for the fiscal year[143]. - The Company has a $750 million unsecured revolving credit facility, with the potential to increase by an additional $375 million, which is available for general corporate purposes[144]. Inventory and Sales - The Company reported a decrease in inventory of $56 million in Q1 fiscal 2025, compared to a decrease of $104 million in the same period of the prior year, primarily due to holiday sales and constrained turkey inventories[139]. - Proceeds from the sale of business amounted to $13.6 million in Q1 fiscal 2025 from the sale of equity interest in Mountain Prairie, LLC[139]. - The fair value of the Company's cash flow commodity contracts was $15.5 million as of January 26, 2025, compared to $(5.9) million as of October 27, 2024[161].