Hormel Foods(HRL)2025-05-29 17:21Financial 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].