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 Data and Key Metrics Changes - The company achieved organic net sales growth of 6% in the third quarter, marking three consecutive quarters of growth [9][34] - Adjusted EPS for the third quarter was $0.35, with cash flow from operations at $157 million, showing a sequential improvement but down compared to the prior year [38][39] - Gross profit remained relatively flat year over year due to higher than expected input costs, with inflationary pressures impacting margins [35][36] Business Line Data and Key Metrics Changes - The Retail segment grew volume and net sales by 5% over last year, driven significantly by the Turkey portfolio [34][35] - The Foodservice segment outperformed the broader industry with 2% organic volume growth and 7% organic net sales growth [35][25] - The International segment saw 8% volume growth and 6% net sales growth, primarily led by the China market [34][28] Market Data and Key Metrics Changes - The company faced significant commodity inflation, with pork bellies up approximately 30% and beef prices remaining near all-time highs [36][30] - The foodservice industry traffic remained soft, impacting overall visits slightly down year over year [24][25] Company Strategy and Development Direction - The company is focused on delivering profitable growth through its Transform and Modernize initiative, which is expected to provide incremental benefits [9][41] - The strategy includes building a consumer-led growth engine powered by protein-centric solutions and modernizing product offerings [16][24] - The company plans to share holistic 2026 guidance in the fourth quarter earnings call, aligning expectations with market dynamics [11][45] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's future despite disappointing bottom-line results, emphasizing the strength of its protein-centric portfolio [31][46] - The company anticipates continued net sales growth in the fourth quarter, although profitability recovery is expected to lag into next year due to ongoing commodity pressures [10][42] - Management acknowledged the need to adjust 2026 targets based on current market conditions and consumer sentiment [44][59] Other Important Information - The company declared and paid its 388th consecutive quarterly dividend, totaling $474 million for the first nine months of fiscal 2025 [39] - Capital expenditures for the quarter were $72 million, with a commitment to invest approximately $300 million for fiscal 2025 [39][40] Q&A Session Summary Question: What has changed in the outlook since the last call? - Management noted that while some expectations were met, the steep rise in commodity markets significantly pressured earnings, alongside disappointing foodservice traffic recovery [54][56] Question: What are the opportunities for shareholder returns? - Management highlighted the company's strong position in innovation and growth across various segments, emphasizing the importance of driving both top and bottom line growth [63][66] Question: How does the long-term growth algorithm apply to 2026? - Management stated that while the long-term growth goals remain, they will provide specific guidance for fiscal 2026 in the upcoming call, considering current market dynamics [71][72] Question: What is the impact of seasonality on commodity costs? - Management acknowledged typical seasonal declines but noted that current markets remain elevated, which may not provide material benefits due to existing inventory levels [74][75] Question: How is pricing being managed in retail? - Management explained that pricing actions are being carefully considered based on commodity costs, consumer response, and brand health, with recent pricing actions expected to benefit in Q4 and 2026 [78][84]

Financial Data and Key Metrics Changes - Organic net sales increased by 6% in the third quarter, reaching $3 billion, with organic volume up 4% [32][34] - Adjusted EPS for the third quarter was $0.35, with cash flow from operations at $157 million [36][38] - Gross profit remained relatively flat year over year due to higher than expected input costs, with inflationary pressures impacting margins [33][34] Business Line Data and Key Metrics Changes - Retail segment saw a 5% increase in volume and net sales, driven by the Turkey portfolio [32][33] - Foodservice segment outperformed the broader industry with 2% organic volume growth and 7% organic net sales growth [32][33] - International business achieved 8% volume growth and 6% net sales growth, primarily from the China market [25][33] Market Data and Key Metrics Changes - Commodity input costs surged unexpectedly, with pork bellies up approximately 30% and beef prices remaining high [34][35] - The foodservice industry faced challenges with traffic remaining soft year over year, impacting overall performance [22][23] Company Strategy and Development Direction - The company is focused on delivering profitable growth through its Transform and Modernize initiative, which is expected to yield incremental benefits [7][39] - A consumer-led growth engine powered by protein-centric solutions is being developed to enhance brand value and market position [14][22] - The company plans to provide holistic guidance for 2026 in the fourth quarter earnings call, aligning with its long-term growth algorithm [9][42] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that the unexpected rise in commodity costs significantly impacted profitability, with expectations for continued pressure into the fourth quarter [8][28] - Confidence remains in the company's future, driven by a strong protein-centric portfolio and ongoing modernization efforts [29][30] - The company is committed to enhancing long-term profitability while navigating current market challenges [45][59] Other Important Information - The Transform and Modernize initiative is not just a cost-saving project but aims to reshape operations and build new capabilities [39][40] - The company declared and paid its 388th consecutive quarterly dividend, totaling $474 million for the first nine months of fiscal 2025 [38] Q&A Session Summary Question: What has changed in the outlook since the last call? - Management noted that while some expectations were met, the significant rise in commodity markets and soft foodservice traffic were unexpected challenges [49][54] Question: What are the growth opportunities for Hormel? - Hormel is positioned well in traditional processed meat categories and healthy protein segments, with a focus on driving top and bottom line growth [62][65] Question: How does the long-term growth algorithm apply to 2026? - The long-term growth algorithm remains a focus, with specific guidance for 2026 to be provided in the next earnings call [70][88] Question: What is the impact of pricing actions on profitability? - Pricing actions are being evaluated, with a focus on balancing consumer response and brand health while navigating commodity pressures [78][82] Question: How is the foodservice segment performing? - The foodservice segment is resilient, with top line growth despite challenges in traffic, and the company is leveraging its direct sales team to drive growth [90][92]