Hormel Foods Corporation : Hormel Foods Reports Record Second Quarter Results
05/23/2012| 06:35am US/Eastern
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Hormel Foods Corporation (NYSE: HRL) today reported its performance for
the fiscal year 2012 second quarter.
All comparisons are to the second quarter or first half of fiscal 2011.
HIGHLIGHTS
Second Quarter
Diluted EPS of $.48, up 20 percent from diluted EPS of $.40
Segment operating profit up 9 percent
Dollar sales of $2 billion, up 3 percent
Volume down 2 percent
Jennie-O Turkey Store operating profit up 50 percent; volume down 2
percent; dollar sales up 7 percent
Refrigerated Foods operating profit down 25 percent; volume down 4
percent; dollar sales down 1 percent
Grocery Products operating profit up 10 percent; volume down 3
percent; dollar sales up 1 percent
Specialty Foods operating profit up 9 percent; volume up 2 percent;
dollar sales up 12 percent
All Other (primarily Hormel Foods International) operating profit up
52 percent; volume up 10 percent; dollar sales up 11 percent
The company reported fiscal 2012 second quarter net earnings of $127.9
million, up 17 percent from net earnings of $109.6 million a year
earlier. For the six months ended April 29, 2012, net earnings were
$256.3 million, down 1 percent from net earnings of $258.4 million the
same period last year. Diluted net earnings per share for the six months
ended April 29, 2012 were $.95, equal to diluted net earnings per share
of $.95 last year.
Sales for the quarter were $2 billion, up 3 percent from fiscal 2011.
For the six months ended April 29, 2012, sales totaled $4.1 billion, up
4 percent from the same period last year.
COMMENTARY
"We are pleased to report record earnings and sales for the second
quarter. This is a good example of our balanced business model in
action, as we were able to increase earnings in four out of five
segments." said Jeffrey M. Ettinger, chairman of the board, president
and chief executive officer, "Sales grew three percent, again with four
of our five segments registering gains."
"Our Jennie-O Turkey Store segment delivered another outstanding
quarter, driven by value-added sales growth. Our International business
also achieved impressive results, led by strong export sales. Both our
Grocery Products and Specialty Foods segments returned to earnings
growth during the quarter. Results of our Refrigerated Foods segment
were significantly pressured by lower pork operating margins," Ettinger
remarked.
"We are particularly encouraged by the continued growth of our Jennie-O
Turkey Storevalue-added sales and our MegaMex Foods joint
venture," Ettinger stated.
SEGMENT OPERATING HIGHLIGHTS - SECOND QUARTER
Grocery Products (13% of Net Sales, 22% of
Total Segment Operating Profit) The Grocery Products
segment operating profit increased 10 percent, aided by lower pork and
beef input costs. Net sales exceeded last year by 1 percent. Strong
results by our SPAM® family of products and our MegaMex Foods
products offset soft sales of our microwave products and DINTY MOORE®
stew.
Refrigerated Foods (51% of Net Sales, 27% of
Total Segment Operating Profit) Refrigerated Foods
segment profit declined 25 percent, due primarily to lower pork
operating margins during the quarter. Net sales for the quarter declined
1 percent, with lower commodity pork sales offsetting strong sales of HORMEL®
NATURAL CHOICE® deli meats, HORMEL® party trays, HORMEL® pepperoni
and DILUSSO®deliproducts. Foodservice
value-added sales also grew during the quarter.
Jennie-O Turkey Store (20% of Net Sales, 35% of
Total Segment Operating Profit) Jennie-O Turkey Store
had another excellent quarter, with segment operating profit up 50
percent from a year ago, driven by value-added sales. Net sales for the
quarter rose 7 percent, led by sales of JENNIE-O TURKEY STORE® retail
tray pack and turkey burgers.
Specialty Foods (11% of Net Sales, 10% of Total
Segment Operating Profit) The Specialty Foods segment
operating profit increased 9 percent, as pricing actions taken earlier
helped offset higher raw material costs. Net sales grew 12 percent, led
by sales of private label canned meats, ingredients, bulk and
nutritional items.
All Other (5% of Net Sales, 6% of Total Segment
Operating Profit) The All Other segment, which consists
primarily of Hormel Foods International, grew segment profit 52 percent,
and grew net sales by 11 percent, driven by stronger exports of fresh
pork and the SPAM® family of products.
General Corporate Expense General
corporate expenses were lower than last year due primarily to lower
pension and insurance costs.
OUTLOOK
"Our second quarter results provide positive momentum heading into the
back half of the year. We believe continued weaker pork operating
margins will be more than offset by stronger results from our other
segments. We expect sales in the center of the store to slowly improve
as we continue our advertising support of our HORMEL® and SPAM®
brands. Taking all of the relevant factors into account, we are
maintaining our full-year earnings guidance range of $1.79 to $1.89 per
share," Ettinger concluded.
DIVIDENDS
Effective May 15, 2012, the Company paid its 335th
consecutive quarterly dividend, at the annual rate of $.60.
CONFERENCE CALL
A conference call will be Webcast at 8:30 a.m. CT (9:30 a.m. ET) on
Wednesday, May 23, 2012. Access is available at http://www.hormelfoods.com.
If you do not have Internet access and want to listen to the call over
the phone, the dial in number is 877-941-0844 and you must provide the
access code of 4535051. An audio replay is available by calling
800-406-7325and entering access code 4535051. The audio replay
will be available beginning at 10:30 a.m. CT on Wednesday, May 23, 2012,
through 11:59 p.m. CT on Wednesday, June 6, 2012. The Webcast replay
will be available at 10:30 a.m. CT, Wednesday, May 23, 2012, and
archived for one year.
About Hormel Foods
Hormel Foods Corporation, based in Austin, Minn., is a multinational
manufacturer and marketer of consumer-branded food and meat products,
many of which are among the best known and trusted in the food industry.
The company leverages its extensive expertise, innovation and high
competencies in pork and turkey processing and marketing to bring
branded, value-added products to the global marketplace. The company is
a member of the Standard & Poor's 500 Index, Dow Jones Sustainability
Indexes, Maplecroft Climate Innovation Indexes, and was named one of
"The 100 Best Corporate Citizens" by Corporate Responsibility Magazine
for the fourth year in a row in 2012. The company enjoys a strong
reputation among consumers, retail grocers, foodservice and industrial
customers for products highly regarded for quality, taste, nutrition,
convenience and value. For more information, visit http://www.hormelfoods.com.
FORWARD-LOOKING STATEMENTS
This news release contains forward-looking information based on
management's current views and assumptions. Actual events may differ
materially. Please refer to the cautionary statement regarding
Forward-Looking Statements and Risk Factors that appear on pages 28-35
in the company's Form 10-Q for the quarter ended January 29, 2012, which
was filed with the SEC on March 9, 2012, and can be accessed at www.hormelfoods.com
under "Investors-SEC Filings."
Segment Data
Fiscal 2012 Second Quarter Segment Operating Results (dollars in
thousands)
SECOND QUARTER - 13 WEEKS ENDED
NET SALES
April 29, 2012
May 1, 2011
% Change
Grocery Products
$
263,993
$
260,273
1.4
Refrigerated Foods
1,031,975
1,040,624
(0.8
)
Jennie-O Turkey Store
391,053
365,953
6.9
Specialty Foods
228,947
205,001
11.7
All Other
96,891
87,190
11.1
Total
$
2,012,859
$
1,959,041
2.7
OPERATING PROFIT
Grocery Products
$
42,858
$
39,048
9.8
Refrigerated Foods
53,009
70,250
(24.5
)
Jennie-O Turkey Store
70,198
46,703
50.3
Specialty Foods
20,859
19,164
8.8
All Other
12,855
8,444
52.2
Total segment operating profit
199,779
183,609
8.8
Net interest and investment expense (income)
945
5,215
(81.9
)
General corporate expense
6,088
11,969
(49.1
)
Noncontrolling interest
1,048
1,123
(6.7
)
Earnings before income taxes
$
193,794
$
167,548
15.7
YEAR TO DATE - 26 WEEKS ENDED
NET SALES
April 29, 2012
May 1, 2011
% Change
Grocery Products
$
533,472
$
537,172
(0.7
)
Refrigerated Foods
2,115,500
2,051,326
3.1
Jennie-O Turkey Store
768,424
730,470
5.2
Specialty Foods
446,971
396,346
12.8
All Other
187,931
165,285
13.7
Total
$
4,052,298
$
3,880,599
4.4
OPERATING PROFIT
Grocery Products
$
86,951
$
87,610
(0.8
)
Refrigerated Foods
106,758
166,384
(35.8
)
Jennie-O Turkey Store
146,960
120,528
21.9
Specialty Foods
37,506
36,442
2.9
All Other
25,326
18,437
37.4
Total segment operating profit
403,501
429,401
(6.0
)
Net interest and investment expense (income)
2,569
11,353
(77.4
)
General corporate expense
14,815
23,221
(36.2
)
Noncontrolling interest
1,986
2,332
(14.8
)
Earnings before income taxes
$
388,103
$
397,159
(2.3
)
HORMEL FOODS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Thirteen Weeks Ended
Twenty-Six Weeks Ended
4-29-2012
5-1-2011
4-29-2012
5-1-2011
Net sales
$
2,012,859
$
1,959,041
$
4,052,298
$
3,880,599
Cost of products sold
1,677,252
1,632,814
3,379,282
3,180,367
GROSS PROFIT:
335,607
326,227
673,016
700,232
Selling, general and administrative
148,684
160,136
301,161
305,297
Equity in earnings of affiliates
7,816
6,672
18,817
13,577
OPERATING INCOME:
194,739
172,763
390,672
408,512
Other income & expenses:
Interest & investment income
2,338
1,972
3,928
2,413
Interest expense
(3,283
)
(7,187
)
(6,497
)
(13,766
)
EARNINGS BEFORE INCOME TAXES:
193,794
167,548
388,103
397,159
Provision for income taxes
64,859
56,846
129,835
136,422
(effective tax rate)
33.47
%
33.93
%
33.45
%
34.35
%
NET EARNINGS
128,935
110,702
258,268
260,737
Less: net earnings attributable to
noncontrolling interest
1,048
1,123
1,986
2,332
NET EARNINGS ATTRIBUTABLE TO
HORMEL FOODS CORPORATION
$
127,887
$
109,579
$
256,282
$
258,405
NET EARNINGS PER SHARE
Basic
$
.49
$
.41
$
.97
$
.97
Diluted
$
.48
$
.40
$
.95
$
.95
WEIGHTED AVG SHARES O/S
Basic
263,610
267,207
263,778
266,868
Diluted
269,061
272,847
269,334
272,293
DIVIDENDS DECLARED
PER SHARE
$
.1500
$
.1275
$
.3000
$
.2550
HORMEL FOODS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
April 29, 2012
October 30, 2011
(in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
524,779
$
463,130
Short-term marketable securities
76,811
76,077
Accounts receivable
439,348
461,110
Inventories
912,672
885,823
Income taxes receivable
16,649
24,423
Deferred income taxes
69,485
69,203
Prepaid expenses
11,986
10,048
Other current assets
8,345
8,417
TOTAL CURRENT ASSETS
2,060,075
1,998,231
INTANGIBLES
758,468
762,930
OTHER ASSETS
587,591
576,140
PROPERTY, PLANT & EQUIPMENT, NET
908,529
907,090
TOTAL ASSETS
$
4,314,663
$
4,244,391
LIABILITIES AND SHAREHOLDERS' INVESTMENT
TOTAL CURRENT LIABILITIES
$
699,968
$
778,186
LONG-TERM DEBT - LESS CURRENT MATURITIES
250,000
250,000
OTHER LONG-TERM LIABILITIES
558,872
556,389
SHAREHOLDERS' INVESTMENT
2,805,823
2,659,816
TOTAL LIAB. & SHAREHOLDERS' INVESTMENT
$
4,314,663
$
4,244,391
HORMEL FOODS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Twenty-Six Weeks Ended
4-29-2012
5-1-2011
(in thousands)
OPERATING ACTIVITIES
Net earnings
$
258,268
$
260,737
Depreciation and amortization of intangibles
59,707
62,281
Increase in working capital
(100,401
)
(35,822
)
Other
(4,543
)
(11,277
)
NET CASH PROVIDED BY OPERATING ACTIVITIES
213,031
275,919
INVESTING ACTIVITIES
Net sale of securities
-
5,000
Acquisitions of businesses/intangibles
(168
)
(7,207
)
Net purchases of property / equipment
(56,414
)
(33,721
)
Decrease in investments, equity in affiliates, and other assets
4,746
3,465
NET CASH USED IN INVESTING ACTIVITIES
(51,836
)
(32,463
)
FINANCING ACTIVITIES
Proceeds from long-term debt, net
-
247,657
Dividends paid on common stock
(73,186
)
(61,925
)
Share repurchase
(42,088
)
(34,718
)
Other
14,662
49,871
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES
(100,612
)
200,885
EFFECT OF EXCHANGE RATE CHANGES ON CASH
1,066
1,518
INCREASE IN CASH AND CASH EQUIVALENTS
61,649
445,859
Cash and cash equivalents at beginning of year
463,130
467,845
CASH AND CASH EQUIVALENTS AT END OF QUARTER
$
524,779
$
913,704
Hormel Foods Corporation Investor Contact: Kevin Jones,
507-437-5248 kcjones@hormel.com or Media
Contact: Julie Craven, 507-437-5345 media@hormel.com
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