Core Insights - Hormel Foods Corp. is a multinational food processing company known for its branded food products, including meat and nut items under various brands [1] Financial Performance - Hormel Foods is set to report its Q4 2025 earnings on December 3, with analysts expecting EPS of $0.39, a decrease from $0.42 in the prior year [2] - Quarterly revenue is anticipated to be $3.22 billion, an increase from $3.14 billion a year earlier [2] - The company reported Q3 2025 earnings with adjusted EPS of $0.35, below the consensus estimate of $0.41, while revenues of $3.03 billion exceeded the consensus of $2.98 billion [3] Future Outlook - For Q4 2025, Hormel Foods expects net sales to range from $3.15 to $3.25 billion and adjusted diluted EPS between $0.38 and $0.40 [5] - The interim CEO indicated that while net sales growth is expected to continue, profit recovery may lag into the next year due to ongoing near-term pressures from commodity inflation [4] Dividend Information - Hormel Foods has a dividend yield of 4.69%, having paid $1.16 per share in dividends over the last 12 months [2] - To generate an income of $100 per month from dividends, an investment of approximately $25,586 is required, based on the current dividend yield [6]

Financial Data and Key Metrics Changes - The company reported a 6% growth in top line revenue, with volume growth across all segments: retail up 5%, foodservice up 7%, and international up 6% [4][6] - Despite the top line growth, the bottom line was negatively impacted by cascading cost pressures that exceeded expectations, leading to a miss in earnings [5][6] Business Line Data and Key Metrics Changes - Retail segment experienced a 5% growth, foodservice segment grew by 7%, and international segment saw a 6% increase, indicating strong performance across all business lines [4] - The company is facing challenges in passing through pricing increases due to delays in implementation, particularly in the retail segment where it takes up to 90 days [12][14] Market Data and Key Metrics Changes - The foodservice industry is experiencing traffic pressure, with consumers not returning to channels like QSRs and convenience stores as expected [39][40] - Retail consumers are trading down to lower-priced alternatives, leading to significant growth in private label products across various categories [40] Company Strategy and Development Direction - The company is focused on modernizing its portfolio and operations through the Transform and Modernize initiative, which aims to yield efficiencies and savings while investing in talent and infrastructure [34][58] - There is an emphasis on strategic pricing actions to manage commodity inflation while maintaining consumer demand and brand strength [14][19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2026, citing sales momentum and the expectation that pricing actions will begin to positively impact the bottom line [71][75] - The consumer sentiment remains low due to inflationary pressures, which is affecting purchasing behavior and overall market dynamics [37][39] Other Important Information - The company is prioritizing capital allocation towards increasing dividends, strategic M&A opportunities, and expanding its global footprint [66][68] - The Transform and Modernize initiative is on track to deliver significant value beyond initial targets, with a focus on improving manufacturing efficiency and optimizing the company's footprint [58][61] Q&A Session Summary Question: What were the key issues in the third quarter and outlook for the fourth quarter? - Management acknowledged that while top line growth was achieved, bottom line performance was hindered by unexpected cost pressures, with a similar outlook anticipated for Q4 [5][6] Question: How is the company addressing pricing challenges in different segments? - The foodservice segment utilizes pass-through pricing, while the retail segment faces longer lag times for pricing adjustments, requiring strategic decisions based on consumer sentiment and brand strength [11][12][14] Question: What is the focus of the new leadership team moving forward? - The interim CEO and President emphasized the importance of strategic focus, operational efficiency, and leveraging the unique portfolio to drive growth [30][31][34] Question: How is the company planning to modernize its operations? - The Transform and Modernize initiative is aimed at improving efficiencies and capabilities across the organization, with ongoing projects expected to yield benefits beyond 2026 [58][61] Question: What are the capital allocation priorities for the company? - The company is focused on increasing dividends, exploring strategic M&A opportunities, and expanding its snacking and foodservice portfolios [66][68]

Financial Data and Key Metrics Changes - The company reported a 6% growth in top line revenue, with volume growth across all segments: retail up 5%, foodservice up 7%, and international up 6% [4] - Despite the top line growth, the bottom line was negatively impacted by escalating cost pressures that exceeded expectations [5] - The company anticipates continued pressure on the bottom line for Q4, with a similar outlook as Q3 [6] Business Line Data and Key Metrics Changes - Retail segment experienced a 5% growth, foodservice segment grew by 7%, and international segment saw a 6% increase [4] - The company is focusing on strategic pricing actions in response to commodity cost pressures, particularly in the foodservice and retail segments [10][14] Market Data and Key Metrics Changes - The foodservice industry is facing traffic pressure, with consumers not visiting channels like QSRs and convenience stores as frequently [36] - Retail consumers are trading down to lower-priced alternatives, leading to significant growth in private label products [37] Company Strategy and Development Direction - The company is focused on modernizing its portfolio and operations through the Transform and Modernize initiative, which aims to yield efficiencies and savings [32][56] - There is an emphasis on strategic pricing actions to manage commodity inflation while maintaining consumer engagement [14][39] - The company aims to leverage its unique protein-centric portfolio to meet evolving consumer demands for convenience and value [30][42] Management's Comments on Operating Environment and Future Outlook - Management noted that consumer sentiment remains low due to inflationary pressures, leading to cautious consumer behavior [35] - The company is optimistic about its ability to drive both top line and bottom line growth by 2026, with ongoing initiatives to improve operational efficiency [6][70] Other Important Information - The company is reviewing its SG&A spending, which has increased significantly without corresponding sales growth, indicating potential areas for cost optimization [25][26] - The Transform and Modernize initiative is expected to deliver benefits beyond the initial three-year target, with a focus on long-term growth [56][58] Q&A Session Summary Question: What are the key focuses for the interim CEO and President moving forward? - The interim CEO emphasized the importance of achieving net sales growth of 2-3% and operating income growth of 5-7%, while also focusing on the building blocks for a successful 2026 [24][25] Question: How is the company addressing pricing challenges in different segments? - The company is implementing strategic pricing actions in both foodservice and retail segments, with a focus on understanding consumer elasticity and brand strength [12][14] Question: What is the current status of the Transform and Modernize initiative? - The initiative is on track, with 90 projects executed in Q3 alone, and is expected to continue delivering value and efficiencies [56][58] Question: What are the capital allocation priorities for the company? - The company prioritizes increasing dividends, strategic M&A opportunities, and expanding its global footprint, while being disciplined in its capital allocation strategy [62][64]

Financial Performance & Outlook - The company narrows its fiscal year 2025 net sales outlook to a range of $12.0 billion to $12.2 billion [31] - The company narrows its fiscal year 2025 operating income outlook to a range of $1.12 billion to $1.19 billion [31] - The company narrows its fiscal year 2025 adjusted operating income outlook to a range of $1.18 billion to $1.25 billion [31] - The company narrows its fiscal year 2025 diluted EPS outlook to a range of $1.49 to $1.59 [31] - The company narrows its fiscal year 2025 adjusted diluted EPS outlook to a range of $1.58 to $1.68 [31] - The company expects organic net sales growth of 2% to 3% for fiscal year 2025 [32] Segment Performance - Retail segment volume decreased by 7% year-over-year in Q2 2025, while net sales were flat and segment profit increased by 4% [18] - Foodservice segment organic net sales increased by 4% year-over-year in Q2 2025, while organic volume decreased by 1% and segment profit decreased by 6% [25] - International segment volume increased by 9% year-over-year in Q2 2025, net sales increased by 7%, and segment profit decreased by 21% [28] Strategic Initiatives - The company anticipates incremental benefits from the Transform & Modernize (T&M) initiative in the range of $100 million to $150 million for fiscal year 2025 [32]

Financial Data and Key Metrics Changes - Net sales for Q1 2025 were $3 billion, reflecting a 1% organic increase compared to the previous year [35] - Gross profit margin was reported at 15.9%, impacted by margin pressures related to the Planters recovery and higher commodity input costs [36][41] - Diluted earnings per share (EPS) for Q1 2025 were $0.31, with adjusted diluted EPS at $0.35 [38] - Operating cash flow was $309 million, with capital expenditures of $72 million focused on value-added capacity [39] Business Line Data and Key Metrics Changes - The food service segment led top-line growth, driven by strong performance in premium prepared proteins, turkey, and breakfast sausage categories [25][35] - Retail segment growth was supported by flagship brands like Spam, Applegate, and Hormel Black Label Bacon, with overall volume and net sales increasing [12][13][35] - The international segment saw growth from branded exports, particularly in China, with a focus on snacking strategies [27][28] Market Data and Key Metrics Changes - The Planters brand experienced significant sequential recovery, contributing to the retail segment's performance [18][35] - The turkey supply chain faced pressures due to bird illnesses, impacting pricing and supply dynamics [71][72] - The demand for ground turkey is increasing, particularly among consumers seeking lean protein options [74][76] Company Strategy and Development Direction - The company is focused on its Transform and Modernize initiative, aiming to generate growth through investments in people, processes, and technology [29][31] - A multi-brand marketing strategy is being implemented to enhance retail presence and drive consumer engagement [20][22] - The company anticipates broad-based growth in food service and continued international expansion, particularly in China [46][47] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving fiscal 2025 goals, citing strong performance in value-added businesses and a recovery in the Planters brand [32][47] - The company expects mid-single-digit growth in food service and high single-digit growth in the international segment for the second quarter [42][46] - Management acknowledged challenges in the turkey supply chain but remains optimistic about long-term growth prospects [44][72] Other Important Information - The company is committed to dividend growth, having paid its 386th consecutive quarterly dividend at an annual rate of $1.16 per share, a 3% increase from the previous year [40] - The upcoming retirement of the Group Vice President of Food Service was noted, with a succession plan in place [24][25] Q&A Session Summary Question: EPS cadence and confidence in ramping EPS in the second half - Management highlighted strong performance in the value-added business and expected favorable year-over-year comparisons in the second half, despite near-term pressures [54][56] Question: Turkey supply chain pressures and pricing acceptance - Management clarified that strategic pricing actions are being taken across the turkey complex, with a focus on value-added products [70][72] Question: Timing of CEO retirement announcement - Management explained that the timing allows for a thorough search for a successor while ensuring continuity in executing the Transform and Modernize initiatives [81][84] Question: Planters brand distribution recovery - Management confirmed that distribution is improving, with inventory levels ramping back up and advertising efforts increasing [145]