Financial Data and Key Metrics Changes - The company reported net sales of $2.9 billion for the second quarter, reflecting a 1% organic increase compared to the previous year [26] - Gross profit margin was 16.7%, impacted by higher commodity input costs, partially offset by savings from the Transform and Modernize initiative [27] - Diluted earnings per share were $0.33, with adjusted diluted earnings per share at $0.35, aligning with expectations [28] Business Line Data and Key Metrics Changes - The retail segment maintained leadership positions, with notable growth from the Applegate brand and Jennie O lean ground turkey, which continues to perform strongly [9][10] - The food service business outperformed the broader industry, with strong volume and net sales growth from branded products [12] - The international segment saw double-digit volume and net sales growth, particularly in exports and China [14] Market Data and Key Metrics Changes - The company anticipates strong second-half growth, particularly from the Turkey portfolio and the Planters brand, with overall net sales growth expected to be between 2% to 3% for the full year [20][34] - The competitive landscape for turkey has tightened, with expectations for share gains as competitors shutter facilities [94] Company Strategy and Development Direction - The company remains committed to delivering profitable and predictable growth, focusing on a diversified portfolio and the Transform and Modernize initiative [21][31] - Increased advertising investments are planned for the second half, particularly for the Planters brand and other key products [46] - The company is strategically positioned to navigate changing consumer preferences and market dynamics [20][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to deliver strong second-half results, supported by positive momentum in key brands and segments [41][42] - The consumer sentiment is described as strained due to inflation and uncertainty in the macro environment, impacting overall demand [107] - The company is focused on managing input cost pressures and leveraging its diversified portfolio to sustain growth [33][34] Other Important Information - The company announced leadership changes, including the appointment of Kevin Myers to lead supply chain efforts and the retirement of Scott Okri [22][23] - Capital expenditures for fiscal 2025 are expected to be between $275 million to $300 million, focusing on capacity and technology investments [28] Q&A Session Summary Question: Can you help bridge the operating income outlook for the year? - Management highlighted strong positioning for the second half, with positive momentum in the Planters brand and value-added turkey [40][41] Question: What are the expectations for Turkey in the back half? - Management noted a tightening supply in the turkey market and emphasized the focus on value-added products [52][55] Question: Can you elaborate on the expected margin expansion in the second half? - Management expects margin expansion driven by turkey pricing and strong performance from the Planters brand [60][61] Question: How does the company plan to grow in the food service segment? - Management indicated a strong pipeline of innovation and favorable year-over-year comparisons as key drivers for growth [64][65] Question: What are the savings from the Transform and Modernize initiative? - Management reported executing 66 projects under the initiative, with a focus on improving logistics and inventory management [69][71] Question: What products are related to the inventory build for summer demand? - Management indicated that inventory was built for Planters and promotional products like Spam, while managing commodity input costs [74][76] Question: Is the company still confident in achieving the $250 million operating income growth target by FY 2026? - Management affirmed confidence in the target, emphasizing ongoing initiatives and the benefits of the Transform and Modernize program [105][106] Question: What is the current consumer sentiment? - Management described consumer sentiment as strained due to inflation and uncertainty, impacting overall demand [107]

Hormel Foods Corporation (NYSE:HRL) Q1 2025 Earnings Conference Call February 27, 2025 9:30 AM ET Company Participants Jess Blomberg - Director of Investor Relations Jim Snee - President and Chief Executive Officer Jacinth Smiley - Executive Vice President and Chief Financial Officer John Ghingo - Executive Vice President, Retail Segment Conference Call Participants Peter Galbo - Bank of America Ken Goldman - JPMorgan Heather Jones - Heather Jones Research Rupesh Parikh - Oppenheimer Ben Thurber - Barclays ...