Hormel Foods(HRL) - 2025 Q3 - Quarterly Results

Financial Performance - Net sales for the third quarter reached $3.03 billion, with organic net sales growth of 6%[7] - Operating income was reported at $240 million, with an adjusted operating income of $254 million, resulting in an operating margin of 7.9%[7] - Diluted earnings per share were $0.33, while adjusted diluted earnings per share were $0.35[7] - The company expects fourth quarter net sales to be between $3.15 billion and $3.25 billion, with an organic net sales growth rate of 1% to 4%[6] - Net sales for the quarter ended July 27, 2025, were $3,032,876, a 4.6% increase from $2,898,443 in the same quarter last year[24] - Gross profit for the quarter was $487,309, slightly down from $488,369 year-over-year[24] - Operating income increased to $239,748, compared to $236,693 in the prior year, reflecting a 1.0% growth[24] - Net earnings attributable to Hormel Foods Corporation were $183,742, up from $176,701, representing a 0.6% increase[24] - Total net sales for the quarter reached $3,032,876, representing a 5.7% increase compared to the previous year, driven by growth in retail and foodservice segments[38] - The fiscal 2025 outlook for adjusted operating income is estimated at $1,054,000,000, revised down from a previous estimate of $1,175,000,000[42] - Diluted earnings per share (GAAP) for fiscal 2025 are projected to be between $1.33 and $1.35, down from the previous range of $1.49 to $1.59[42] - Adjusted diluted earnings per share (Non-GAAP) are projected to be between $1.43 and $1.45, revised from a previous range of $1.58 to $1.68[42] Investments and Expenditures - Hormel's advertising investments increased to $41 million from $40 million year-over-year, with expectations for a decline in the fourth quarter[17] - Capital expenditures for the quarter were $72 million, with a full-year estimate of approximately $300 million[17] - The Transform and Modernize initiative contributed approximately 90 projects that added measurable value and earnings to the enterprise[12] - The Transform and Modernize initiative is expected to incur costs of approximately $61,000,000 in the revised outlook for fiscal 2025[42] Tax and Shareholder Returns - The effective tax rate for the quarter was 22.3%, slightly up from 21.7% the previous year[17] - The effective tax rate for the quarter was 22.3%, slightly higher than 21.7% in the previous year[24] - The company returned approximately $159 million to stockholders through dividends during the quarter[17] - Dividends declared per share increased to $0.2900 from $0.2825, reflecting a growth of 6.0%[24] Segment Performance - The international segment saw strong performance driven by growth in the China market and robust exports of SPAM luncheon meat[15] - Retail segment net sales increased by 5.2% to $1,858,434, while foodservice segment sales rose by 3.5% to $986,976[27] - Retail net sales increased by 1.2% to $5,532,401,000, while foodservice net sales grew by 5.1% to $2,853,603,000[39] - International sales increased by 3.5% to $534,495,000 compared to $516,517,000 in the previous year[39] Operational Adjustments and Future Outlook - In Q4 fiscal 2023, the Company launched a multi-year Transform and Modernize (T&M) initiative, excluding non-recurring expenses related to external consulting and supply chain optimization from its financial performance measures[29] - Future operating performance is expected to benefit from ongoing savings realized through the T&M initiative, which are not adjusted out of the financial measures[29] - The Company incurred a loss on the sale of Mountain Prairie, LLC, which was excluded from adjusted financial measures as it was deemed non-core and non-recurring[30] - The company anticipates that the one-time costs associated with the T&M initiative and the sale of Mountain Prairie, LLC will not recur in the foreseeable future[40] Volume and Asset Changes - Total volume for the nine months ended July 27, 2025, was 3,101,288 lbs, a decrease of 1.0% compared to 3,180,087 lbs for the same period in 2024[39] - Total assets as of July 27, 2025, were $13,496,726, compared to $13,434,729 on October 27, 2024[25] - Cash and cash equivalents decreased to $599,189 from $741,881, indicating a decline of 19.2%[25] - Total segment profit decreased by 3.4% to $282,218, down from $292,211 year-over-year[27] - SG&A expenses as a percentage of net sales were reported at 8.5% for the quarter, with adjustments for the T&M initiative bringing the adjusted figure to 8.1%[36]