Hormel Foods(HRL) - 2025 Q3 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited consolidated financial statements of Hormel Foods Corporation, including statements of operations, comprehensive income, financial position, changes in shareholders' investment, and cash flows, along with detailed notes explaining significant accounting policies, acquisitions, divestitures, goodwill, intangible assets, investments, inventories, derivatives, pension benefits, comprehensive loss, fair value measurements, commitments, contingencies, debt, income taxes, earnings per share, and segment reporting Consolidated Statements of Operations Presents the company's revenues, costs, and net earnings for specified periods Consolidated Statements of Operations (Unaudited): | Metric (in thousands) | Quarter Ended July 27, 2025 | Quarter Ended July 28, 2024 | Nine Months Ended July 27, 2025 | Nine Months Ended July 28, 2024 | | :-------------------- | :-------------------------- | :-------------------------- | :------------------------------ | :------------------------------ | | Net Sales | $3,032,876 | $2,898,443 | $8,920,499 | $8,782,706 | | Gross Profit | $487,309 | $488,369 | $1,446,975 | $1,500,908 | | Operating Income | $239,748 | $236,693 | $716,430 | $773,452 | | Net Earnings Attributable to Hormel Foods Corporation | $183,742 | $176,701 | $534,334 | $584,842 | | Diluted Net Earnings Per Share | $0.33 | $0.32 | $0.97 | $1.07 | Consolidated Statements of Comprehensive Income Details net earnings and other comprehensive income components, such as foreign currency translation adjustments Consolidated Statements of Comprehensive Income (Unaudited): | Metric (in thousands) | Quarter Ended July 27, 2025 | Quarter Ended July 28, 2024 | Nine Months Ended July 27, 2025 | Nine Months Ended July 28, 2024 | | :-------------------- | :-------------------------- | :-------------------------- | :------------------------------ | :------------------------------ | | Net Earnings | $183,696 | $176,735 | $533,968 | $584,671 | | Total Other Comprehensive Income (Loss) | $23,861 | $(52,438) | $(12,075) | $(42,453) | | Comprehensive Income Attributable to Hormel Foods Corporation | $207,337 | $124,653 | $522,660 | $542,720 | Consolidated Statements of Financial Position Outlines the company's assets, liabilities, and shareholders' equity at specific balance sheet dates Consolidated Statements of Financial Position (Unaudited): | Metric (in thousands) | July 27, 2025 | October 27, 2024 | | :-------------------- | :------------ | :--------------- | | Total Current Assets | $3,322,490 | $3,246,476 | | Total Assets | $13,496,726 | $13,434,729 | | Total Current Liabilities | $1,345,531 | $1,399,299 | | Long-term Debt Less Current Maturities | $2,850,165 | $2,850,944 | | Total Shareholders' Investment | $8,093,092 | $8,004,011 | | Total Liabilities and Shareholders' Investment | $13,496,726 | $13,434,729 | Consolidated Statements of Changes in Shareholders' Investment Reports changes in equity components, including net earnings, dividends, and stock-based compensation Changes in Hormel Foods Corporation Shareholders' Investment (Quarter Ended July 27, 2025): | Item | Amount (in thousands) | | :------------------------------------------ | :-------------------- | | Balance at April 27, 2025 | $8,041,941 | | Net Earnings (Loss) | $183,742 | | Other Comprehensive Income (Loss) | $23,861 | | Stock-based Compensation Expense | $4,852 | | Exercise of Stock-based Compensation Awards, Net of Withholding Taxes | $(1,784) | | Declared Dividends – $0.2900 per Share | $(159,475) | | Balance at July 27, 2025 | $8,093,092 | Changes in Hormel Foods Corporation Shareholders' Investment (Nine Months Ended July 27, 2025): | Item | Amount (in thousands) | | :------------------------------------------ | :-------------------- | | Balance at October 27, 2024 | $8,004,011 | | Net Earnings (Loss) | $534,334 | | Other Comprehensive Income (Loss) | $(12,075) | | Stock-based Compensation Expense | $21,387 | | Exercise of Stock-based Compensation Awards, Net of Withholding Taxes | $24,057 | | Declared Dividends – $0.8700 per Share | $(478,257) | | Balance at July 27, 2025 | $8,093,092 | Consolidated Condensed Statements of Cash Flows Summarizes cash inflows and outflows from operating, investing, and financing activities Consolidated Condensed Statements of Cash Flows (Unaudited, Nine Months Ended): | Metric (in thousands) | July 27, 2025 | July 28, 2024 | | :-------------------- | :------------ | :------------ | | Net Cash Provided by (Used in) Operating Activities | $522,345 | $858,117 | | Net Cash Provided by (Used in) Investing Activities | $(204,991) | $(176,899) | | Net Cash Provided by (Used in) Financing Activities | $(455,884) | $(879,823) | | Increase (Decrease) in Cash and Cash Equivalents | $(142,692) | $(199,057) | | Cash and Cash Equivalents at End of Period | $599,189 | $537,476 | Notes to the Consolidated Financial Statements Provides detailed explanations and disclosures supporting the financial statements NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Describes the key accounting principles, estimates, and new pronouncements affecting the financial statements - The unaudited consolidated financial statements are prepared in accordance with U.S. GAAP for interim financial information, with all necessary adjustments included[13] - No material changes in significant accounting policies, estimates, and assumptions were identified compared to the Annual Report on Form 10-K for fiscal year ended October 27, 2024[14] - New accounting pronouncements not yet adopted include ASU 2023-07 Segment Reporting (effective FY2025 Q4), ASU 2023-09 Income Taxes (effective FY2026), and ASU 2024-03/2025-01 Expense Disaggregation Disclosures (effective FY2028)[16][17][18] NOTE B - ACQUISITIONS AND DIVESTITURES Details significant business acquisitions and dispositions, including their financial impact - On October 18, 2024, the Company sold Hormel Health Labs for $24.5 million, resulting in a pre-tax gain of $3.9 million[20] - On November 18, 2024, the Company sold Mountain Prairie, LLC (a non-core sow operation) for $13.6 million, resulting in a pre-tax loss of $11.3 million[21] NOTE C - GOODWILL AND INTANGIBLE ASSETS Provides information on goodwill allocation by segment and the carrying amounts and amortization of intangible assets Goodwill by Segment (in thousands): | Segment | Balance at October 27, 2024 | Foreign Currency Translation | Balance at July 27, 2025 | | :-------- | :-------------------------- | :--------------------------- | :----------------------- | | Retail | $2,916,796 | — | $2,916,796 | | Foodservice | $1,748,355 | — | $1,748,355 | | International | $258,336 | $(269) | $258,067 | | Total | $4,923,487 | $(269) | $4,923,218 | Intangible Assets (in thousands): | Type | Net Carrying Amount (July 27, 2025) | Net Carrying Amount (October 27, 2024) | | :-------------------------- | :---------------------------------- | :----------------------------------- | | Total Definite-lived Intangible Assets | $98,552 | $109,593 | | Total Indefinite-lived Intangible Assets | $1,622,935 | $1,623,112 | | Total Intangible Assets | $1,721,487 | $1,732,705 | Amortization Expense on Intangible Assets (in thousands): | Period | Amortization Expense | | :-------------------- | :------------------- | | Quarter Ended July 27, 2025 | $3,797 | | Quarter Ended July 28, 2024 | $3,968 | | Nine Months Ended July 27, 2025 | $11,215 | | Nine Months Ended July 28, 2024 | $12,409 | NOTE D - INVESTMENTS IN AFFILIATES Reports the company's equity in earnings from unconsolidated affiliates and distributions received Equity in Earnings of Affiliates (in thousands): | Affiliate | Quarter Ended July 27, 2025 | Quarter Ended July 28, 2024 | Nine Months Ended July 27, 2025 | Nine Months Ended July 28, 2024 | | :------------------------ | :-------------------------- | :-------------------------- | :------------------------------ | :------------------------------ | | MegaMex Foods, LLC (50% owned) | $5,755 | $3,066 | $23,531 | $19,444 | | Other Equity Method Investments | $5,398 | $4,912 | $19,083 | $19,806 | | Total | $11,153 | $7,977 | $42,614 | $39,250 | - Distributions received from equity method investees (dividends) were $12.7 million for the quarter ended July 27, 2025, and $38.8 million for the nine months ended July 27, 2025[26] NOTE E - INVENTORIES Breaks down the principal components of inventories, including finished products and raw materials Principal Components of Inventories (in thousands): | Component | July 27, 2025 | October 27, 2024 | | :------------------------ | :------------ | :--------------- | | Finished Products | $1,102,248 | $881,295 | | Raw Materials and Work-in-Process | $443,942 | $427,834 | | Operating Supplies | $142,901 | $147,333 | | Maintenance Materials and Parts | $132,769 | $119,837 | | Total Inventories | $1,821,860 | $1,576,300 | NOTE F - DERIVATIVES AND HEDGING Explains the company's use of derivative instruments to manage commodity price and interest rate risks - The Company uses futures, swaps, and options contracts for cash flow and fair value hedging programs to manage commodity price risk (grain, lean hogs, natural gas, diesel fuel) and interest rate risk[28][29][30] Outstanding Commodity Contracts (in millions): | Commodity | July 27, 2025 | October 27, 2024 | | :---------- | :------------ | :--------------- | | Corn | 27.1 bushels | 29.2 bushels | | Lean Hogs | 183.2 pounds | 175.6 pounds | | Natural Gas | 3.2 MMBtu | 4.2 MMBtu | | Diesel Fuel | 5.7 gallons | 4.0 gallons | - As of July 27, 2025, pre-tax hedging gains in Accumulated Other Comprehensive Loss (AOCL) included $6.2 million on commodity contracts and $10.8 million related to interest rate settled positions[36] NOTE G - PENSION AND OTHER POST-RETIREMENT BENEFITS Details the net periodic costs associated with the company's defined benefit pension and post-retirement plans Net Periodic Cost of Defined Benefit Plans (in thousands): | Component | Quarter Ended July 27, 2025 | Quarter Ended July 28, 2024 | Nine Months Ended July 27, 2025 | Nine Months Ended July 28, 2024 | | :-------------------------- | :-------------------------- | :-------------------------- | :------------------------------ | :------------------------------ | | Pension Benefits | $11,215 | $11,086 | $33,646 | $33,270 | | Post-retirement Benefits | $2,475 | $2,621 | $7,425 | $7,864 | NOTE H - ACCUMULATED OTHER COMPREHENSIVE LOSS Presents the components and changes in accumulated other comprehensive loss, including foreign currency and pension adjustments Components of Accumulated Other Comprehensive Loss (in thousands): | Component | Balance at April 27, 2025 | Change Net of Tax (Q3 FY25) | Balance at July 27, 2025 | | :------------------------ | :------------------------ | :-------------------------- | :----------------------- | | Foreign Currency Translation | $(125,326) | $16,506 | $(108,820) | | Pension & Other Benefits | $(182,417) | $2,523 | $(179,894) | | Derivatives & Hedging | $13,970 | $(1,190) | $12,780 | | Equity Method Investments | $(4,828) | $5,756 | $929 | | Total Accumulated Other Comprehensive Loss | $(298,601) | $23,595 | $(275,006) | NOTE I - FAIR VALUE MEASUREMENTS Categorizes financial assets and liabilities measured at fair value based on input levels and discloses their fair values - The Company categorizes financial assets and liabilities measured at fair value into Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable inputs)[45][46][47] Fair Value Measurements at July 27, 2025 (in thousands): | Item | Total Fair Value | Level 1 | Level 2 | Level 3 | | :-------------------------- | :--------------- | :------ | :------ | :------ | | Assets at Fair Value: | | | | | | Short-term Marketable Securities | $31,480 | $6,640 | $24,840 | — | | Other Trading Securities | $215,026 | — | $215,026| — | | Commodity Derivatives | $14,016 | $13,243 | $774 | — | | Liabilities at Fair Value: | | | | | | Deferred Compensation | $63,024 | — | $63,024 | — | | Commodity Derivatives | $6,101 | $5,343 | $758 | — | - The fair value of long-term debt, utilizing discounted cash flows (Level 2), was $2.5 billion as of July 27, 2025, and October 27, 2024[53] NOTE J - COMMITMENTS AND CONTINGENCIES Discloses information about legal proceedings, antitrust litigations, and other contingent liabilities - The Company is involved in various legal proceedings, including antitrust litigations (Pork, Turkey, Poultry Wages, Red Meat Wages) and tax proceedings in Brazil[56][57][62][63][65][67] - For the Pork Antitrust Litigation, the Company settled with Class Plaintiffs for $11.8 million (paid in FY24) and one Non-Class Direct-Action Plaintiff for $0.2 million (paid in FY25). The U.S. District Court granted summary judgment dismissing the Company from federal litigation in Q2 FY25[58][59][60] - The Company settled the Poultry Wages Antitrust Litigation for $3.5 million and the Red Meat Wages Antitrust Litigation for $13.5 million, both paid in Q2 FY25[64][66] NOTE K - LONG-TERM DEBT AND OTHER BORROWING ARRANGEMENTS Details the company's long-term debt structure, credit facilities, and compliance with debt covenants Long-term Debt (in thousands): | Type | July 27, 2025 | October 27, 2024 | | :------------------------------------------ | :------------ | :--------------- | | Senior Unsecured Notes (3.050% due 2051) | $600,000 | $600,000 | | Senior Unsecured Notes (1.800% due 2030) | $1,000,000 | $1,000,000 | | Senior Unsecured Notes (1.700% due 2028) | $750,000 | $750,000 | | Senior Unsecured Notes (4.800% due 2027) | $500,000 | $500,000 | | Total Debt | $2,856,905 | $2,858,756 | | Less: Current Maturities of Long-term Debt | $6,740 | $7,813 | | Long-term Debt Less Current Maturities | $2,850,165 | $2,850,944 | - The Company entered into a new $750.0 million unsecured revolving credit facility on March 25, 2025, expiring March 25, 2030, with no outstanding borrowings as of July 27, 2025[71][72] - As of July 27, 2025, the Company was in compliance with all debt covenants[73] NOTE L - INCOME TAXES Reports the effective tax rate and provides insights into factors influencing tax expenses and unrecognized tax benefits Effective Tax Rate: | Period | July 27, 2025 | July 28, 2024 | | :-------------------- | :------------ | :------------ | | Quarter Ended | 22.3% | 21.7% | | Nine Months Ended | 22.1% | 22.6% | - The increase in the effective tax rate for the quarter was primarily due to decreased benefits from federal transferable energy credits, partially offset by increased federal deductions and favorable return to provision adjustments[75] - Unrecognized tax benefits, including interest and penalties, totaled $17.5 million as of July 27, 2025, and $17.2 million as of July 28, 2024[76] NOTE M - EARNINGS PER SHARE DATA Presents basic and diluted weighted-average shares outstanding used in earnings per share calculations Weighted-average Shares Outstanding (in thousands): | Metric | Quarter Ended July 27, 2025 | Quarter Ended July 28, 2024 | Nine Months Ended July 27, 2025 | Nine Months Ended July 28, 2024 | | :-------------------------------- | :-------------------------- | :-------------------------- | :------------------------------ | :------------------------------ | | Basic Weighted-average Shares Outstanding | 550,408 | 548,685 | 550,048 | 547,858 | | Diluted Weighted-average Shares Outstanding | 550,723 | 549,266 | 550,396 | 548,624 | NOTE N - SEGMENT REPORTING Provides financial performance data, including net sales and segment profit, for the company's operating segments - The Company reports results in three segments: Retail (U.S. retail market, includes MegaMex Foods), Foodservice (U.S. foodservice, convenience store, commercial customers), and International (international sales and joint ventures)[85][86][87] Net Sales by Segment (in thousands): | Segment | Quarter Ended July 27, 2025 | Quarter Ended July 28, 2024 | Nine Months Ended July 27, 2025 | Nine Months Ended July 28, 2024 | | :---------- | :-------------------------- | :-------------------------- | :------------------------------ | :------------------------------ | | Retail | $1,858,434 | $1,767,251 | $5,532,401 | $5,467,078 | | Foodservice | $986,976 | $954,021 | $2,853,603 | $2,799,110 | | International | $187,466 | $177,171 | $534,495 | $516,517 | | Total Net Sales | $3,032,876 | $2,898,443 | $8,920,499 | $8,782,706 | Segment Profit (in thousands): | Segment | Quarter Ended July 27, 2025 | Quarter Ended July 28, 2024 | Nine Months Ended July 27, 2025 | Nine Months Ended July 28, 2024 | | :---------- | :-------------------------- | :-------------------------- | :------------------------------ | :------------------------------ | | Retail | $122,566 | $127,932 | $378,847 | $409,836 | | Foodservice | $140,711 | $142,487 | $420,170 | $441,952 | | International | $18,941 | $21,792 | $58,193 | $65,026 | | Total Segment Profit | $282,218 | $292,211 | $857,210 | $916,814 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the Company's financial performance, including an overview of results, consolidated and segment-specific performance, related party transactions, and a detailed reconciliation of non-GAAP financial measures. It also discusses liquidity, capital resources, critical accounting estimates, and forward-looking statements Results of Operations Analyzes the company's financial performance, including sales, earnings, and key drivers for the period Overview Summarizes key financial highlights, including diluted EPS, net sales growth, and cash flow from operations - Diluted EPS for Q3 FY25 increased 3% to $0.33, while adjusted diluted EPS decreased 5% to $0.35[93] - Net sales for Q3 FY25 increased 5%, with organic net sales growing 6% across all segments[93] - Cash flow from operations for the first nine months of fiscal 2025 decreased 39% to $522 million, primarily due to a planned inventory build and elevated commodity market prices[98] Consolidated Results Details the company's overall financial performance, including volume, net sales, gross profit, and earnings per share Consolidated Volume, Net Sales, Earnings, and Diluted EPS: | Metric | Q3 FY25 | Q3 FY24 | % Change (Q3) | 9M FY25 | 9M FY24 | % Change (9M) | | :------------------------------------------ | :------ | :------ | :------------ | :------ | :------ | :------------ | | Volume (lbs., in thousands) | 1,046,590 | 1,018,690 | 2.7 | 3,101,288 | 3,180,087 | (2.5) | | Organic Volume (lbs., in thousands) | 1,046,590 | 1,002,183 | 4.4 | 3,101,288 | 3,131,065 | (1.0) | | Net Sales (in thousands) | $3,032,876| $2,898,443| 4.6 | $8,920,499| $8,782,706| 1.6 | | Organic Net Sales (in thousands) | $3,032,876| $2,869,760| 5.7 | $8,920,499| $8,698,914| 2.5 | | Diluted Earnings Per Share | $0.33 | $0.32 | 3.1 | $0.97 | $1.07 | (9.3) | | Adjusted Diluted Earnings Per Share | $0.35 | $0.37 | (5.4) | $1.05 | $1.16 | (9.5) | - Net sales growth in Q3 FY25 was driven by the turkey portfolio, Planters snack nuts, SPAM products, and Foodservice customized solutions. For the first nine months, growth was also supported by Mexican foods and bacon portfolios[96] - Gross profit as a percent of net sales declined in Q3 FY25 (16.1% vs 16.8%) and 9M FY25 (16.2% vs 17.1%), primarily due to higher commodity input costs (pork bellies, beef, nuts), despite savings from the Transform and Modernize (T&M) initiative[99][101] - SG&A decreased 0.4% in Q3 FY25, primarily due to lower prior year legal expenses, but increased 0.8% for 9M FY25 due to higher employee-related expenses, T&M initiative costs, and a loss on sale of a non-core sow operation[103][104] - Equity in earnings of affiliates increased 39.8% in Q3 FY25 and 8.6% in 9M FY25, driven by favorable results from MegaMex Foods, LLC[106] - Interest and investment income increased 54.8% in Q3 FY25 due to favorable rabbi trust performance, but decreased 37.6% in 9M FY25 due to lower average monthly cash balances. Interest expense decreased in both periods due to the lapping of interest rate swap amortization[107] Segment Results Analyzes the financial performance of each operating segment, including net sales and segment profit Segment Performance (in thousands): | Segment | Q3 FY25 Net Sales | Q3 FY24 Net Sales | Q3 % Change | 9M FY25 Net Sales | 9M FY24 Net Sales | 9M % Change | | :---------- | :---------------- | :---------------- | :---------- | :---------------- | :---------------- | :---------- | | Retail | $1,858,434 | $1,767,251 | 5.2 | $5,532,401 | $5,467,078 | 1.2 | | Foodservice | $986,976 | $954,021 | 3.5 | $2,853,603 | $2,799,110 | 1.9 | | International | $187,466 | $177,171 | 5.8 | $534,495 | $516,517 | 3.5 | | Segment Profit: | | | | | | | | Retail | $122,566 | $127,932 | (4.2) | $378,847 | $409,836 | (7.6) | | Foodservice | $140,711 | $142,487 | (1.2) | $420,170 | $441,952 | (4.9) | | International | $18,941 | $21,792 | (13.1) | $58,193 | $65,026 | (10.5) | - Retail segment net sales grew 5.2% in Q3 FY25, driven by turkey, Planters snack nuts, and SPAM products, but segment profit declined 4.2% due to input cost pressures and higher SG&A[113] - Foodservice organic net sales grew 6.7% in Q3 FY25, led by customized solutions and Jennie-O turkey, but segment profit decreased 1.2% due to rising commodity input costs and margin pressures in non-core businesses[115] - International segment net sales grew 5.8% in Q3 FY25, driven by China market growth and SPAM exports, but segment profit declined 13.1% due to competitive pressures in Brazil and lower pork offal margins[117] Related Party Transactions Confirms the absence of material changes in transactions with related parties - There have been no material changes in related party transactions since the Annual Report on Form 10-K for the fiscal year ended October 27, 2024[120] Non-GAAP Measures Reconciles GAAP financial measures to non-GAAP adjustments for a clearer view of underlying business performance - The Company uses non-GAAP measures (organic volume, organic net sales, adjusted SG&A, adjusted EPS) to evaluate operating performance, excluding non-recurring expenses from the Transform and Modernize (T&M) initiative, loss on sale of business, and certain legal matters/settlements[121][122][123][124][125][126] Reconciliation of GAAP to Non-GAAP Measures (in thousands, except per share amounts): | Metric | Q3 FY25 GAAP | Q3 FY25 Non-GAAP | 9M FY25 GAAP | 9M FY25 Non-GAAP | | :------------------------------------------ | :----------- | :--------------- | :----------- | :--------------- | | Cost of Products Sold | $2,545,567 | $2,544,557 | $7,473,524 | $7,469,551 | | SG&A | $258,713 | $245,228 | $773,158 | $720,366 | | Operating Income | $239,748 | $254,244 | $716,430 | $773,196 | | Earnings Before Income Taxes | $236,514 | $251,010 | $685,076 | $741,842 | | Net Earnings Attributable to Hormel Foods Corporation | $183,742 | $195,005 | $534,334 | $578,620 | | Diluted Earnings Per Share | $0.33 | $0.35 | $0.97 | $1.05 | Organic Volume and Net Sales (Non-GAAP, in thousands): | Metric | Q3 FY25 GAAP | Q3 FY24 Organic | Q3 Non-GAAP % Change | 9M FY25 GAAP | 9M FY24 Organic | 9M Non-GAAP % Change | | :------------------------ | :----------- | :-------------- | :------------------- | :----------- | :-------------- | :------------------- | | Total Volume (lbs.) | 1,046,590 | 1,002,183 | 4.4 | 3,101,288 | 3,131,065 | (1.0) | | Total Net Sales | $3,032,876 | $2,869,760 | 5.7 | $8,920,499 | $8,698,914 | 2.5 | Liquidity and Capital Resources Discusses the company's cash flow, capital expenditures, debt, and ability to meet financial obligations Cash Flow Highlights (in thousands, Nine Months Ended): | Metric | July 27, 2025 | July 28, 2024 | | :------------------------------------------ | :------------ | :------------ | | Cash and Cash Equivalents at End of Period | $599,189 | $537,476 | | Cash Provided by (Used in) Operating Activities | $522,345 | $858,117 | | Cash Provided by (Used in) Investing Activities | $(204,991) | $(176,899) | | Cash Provided by (Used in) Financing Activities | $(455,884) | $(879,823) | | Increase (Decrease) in Cash and Cash Equivalents | $(142,692) | $(199,057) | - Cash and cash equivalents decreased by $143 million in the first nine months of fiscal 2025, primarily due to inventory purchases, capital assets, and dividend payments[133] - Operating cash flow decreased due to a $247 million increase in inventory (planned seasonal/promotional build, snack nuts recovery, increased raw material costs) and a $100 million decrease in accounts payable and accrued expenses[136] - Capital expenditures were $219 million in 9M FY25, with major projects including the transition to value-added capacity for Hormel Fire Braised and Applegate products[136] - The Company maintains a $750 million unsecured revolving credit facility with no outstanding borrowings as of July 27, 2025, and was in compliance with all debt covenants[142][143] - The Board approved the 59th consecutive annual dividend increase for fiscal 2025, raising it to $1.16 per share[139] Critical Accounting Estimates States that there are no material changes to the company's critical accounting estimates - There have been no material changes in the Company's Critical Accounting Estimates as disclosed in its Annual Report on Form 10-K for the fiscal year ended October 27, 2024[149] Forward-looking Statements Highlights the presence of forward-looking statements and outlines key risks and uncertainties - The report contains forward-looking statements, identified by words like 'should result,' 'believe,' 'intend,' 'plan,' and 'are expected to,' which are subject to risks and uncertainties[150][151] - Key risk factors include deteriorating economic conditions, risks from acquisitions/divestitures, intangible asset impairment, operational disruptions, failure to realize strategic initiative savings (e.g., T&M), loss of significant contracts, cybersecurity threats, labor issues, food industry risks, commodity price fluctuations, changing consumer preferences, climate change, litigation, and global operational risks[154][155] Item 3. Quantitative and Qualitative Disclosures About Market Risk The Company is exposed to various market risks, including commodity price, interest rate, foreign currency exchange rate, investment, and concentration of credit risks, which it manages through hedging programs or monitoring - The Company uses hedging programs (futures, swaps, options) to manage commodity price risk (grain, lean hogs, natural gas, diesel fuel). A hypothetical 10% decrease in market prices would negatively impact the fair value of cash flow commodity contracts by $26.4 million as of July 27, 2025[157] - Interest rate risk primarily stems from long-term fixed rate debt ($2.5 billion fair value). A hypothetical 10% decrease in interest rates would positively impact fair value by $65.9 million, while a 10% increase would negatively impact it by $61.2 million[158] - Foreign currency exchange rate risk exists with a net asset position of $1.1 billion (primarily Indonesian rupiah, Chinese yuan, Brazilian real), but the Company does not use market risk sensitive instruments to manage this[159] - Investment risk from rabbi trust securities ($215.0 million) is subject to market fluctuations; a 10% decline in non-fixed income investments would negatively impact pre-tax earnings by approximately $10.7 million[160] - Concentration of credit risk exists with one customer accounting for over 10% of net accounts receivable as of July 27, 2025[161] Item 4. Controls and Procedures Management, including the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures, concluding they were effective. The Company is also implementing Oracle Cloud Solutions to enhance internal controls, with no material changes to internal control over financial reporting in Q3 FY25 - The Company's disclosure controls and procedures were deemed effective as of July 27, 2025, providing reasonable assurance for timely and accurate reporting[162][163] - The Company is implementing Oracle Cloud Solutions for better analytics, customer service, and process efficiencies, with ongoing emphasis on maintaining effective internal controls[164] - There were no changes in the Company's internal control over financial reporting during the third quarter of fiscal 2025 that materially affected, or are reasonably likely to materially affect, these controls[165] PART II - OTHER INFORMATION Item 1. Legal Proceedings This section refers to Note J - Commitments and Contingencies for detailed information regarding legal proceedings - Information regarding legal proceedings is available in Note J - Commitments and Contingencies of the Notes to the Consolidated Financial Statements[166] Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended October 27, 2024 - No material changes to the risk factors previously disclosed in Part I, Item 1A. Risk Factors in the Company's Annual Report on Form 10-K for the fiscal year ended October 27, 2024[167] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The Company did not repurchase any equity securities during the quarter ended July 27, 2025, but retains an existing authorization to repurchase 3,677,494 shares of common stock - No issuer purchases of equity securities were made in the quarter ended July 27, 2025[168] - As of July 27, 2025, the Company has an authorization to repurchase 3,677,494 shares of common stock, with no expiration date[168] Item 3. Defaults Upon Senior Securities No defaults upon senior securities were reported during the period - No defaults upon senior securities were reported during the period[169] Item 4. Mine Safety Disclosures No mine safety disclosures are required for the period - No mine safety disclosures are required for the period[170] Item 5. Other Information No director or officer of the Company adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the fiscal quarter ended July 27, 2025 - No director or officer adopted, modified, or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the fiscal quarter ended July 27, 2025[171] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including employment agreements, certifications required by the Sarbanes-Oxley Act, and financial statements formatted in Inline XBRL - Exhibits include employment agreements (10.1, 10.2), certifications under Section 302 and 906 of Sarbanes-Oxley Act (31.1, 31.2, 32.1), and Inline XBRL formatted financial statements (101, 104)[175] SIGNATURES Confirms the official signing of the report by authorized financial officers - The report was signed on August 28, 2025, by Jacinth C. Smiley, Executive Vice President and Chief Financial Officer, and Paul R. Kuehneman, Vice President and Controller[179]