EXECUTIVE SUMMARY - FIRST QUARTER
Volume of 1.1 billion lbs., up 4%
Net sales of
Operating income of
Operating margin of 9.5%, compared to 9.7% last year; adjusted operating margin1 of 9.8%
Earnings before income taxes of
Effective tax rate of 23.4%, compared to 22.6%
Diluted net earnings per share of
Cash flow from operations of
EXECUTIVE COMMENTARY & OUTLOOK
'We delivered strong results in the first quarter, led by better-than-expected performance in each of our business segments and progress against our transformation and modernization initiative,' said
'We are reaffirming our full-year net sales and earnings expectations,' Snee said. 'We expect continued growth in Foodservice, improvement in our International business, impacts from pricing and innovation in Retail, and further progress on our transformation and modernization initiative. Our teams remain focused on our strategic priorities and delivering on our commitment to improve our business and drive long-term shareholder returns.'
For fiscal year 2024, the Company is:
Reaffirming its net sales growth outlook of 1% to 3%, which assumes volume growth in key categories, higher brand support and innovation, impacts from incremental pricing actions and its current assumptions for raw material input costs.
Reaffirming its diluted net earnings per share and adjusted diluted net earnings per share1 expectations of
Assuming a modest benefit to net earnings from its transformation and modernization initiative.
FISCAL 2024 OUTLOOK
Net Sales $12.2 -$12.5 billion
Adj. Diluted Net Earnings per Share*$1.51 -$1.65
Effective Tax Rate 21.0 - 23.0%
*Adjusted diluted net earnings per share1 excludes the estimated impact of
PROGRESS EXECUTING STRATEGIC PRIORITIES - Q1 HIGHLIGHTS
Drive focus and growth in our Retail business
We delivered volume and sales growth in the marketplace for Skippy peanut butter, Hormel Square Table entrees, Chi-Chi's salsa, Hormel Natural Choice bacon, Herdez guacamole and Corn Nuts corn kernels.2
We grew retail volume and sales of Jennie-O turkey items during the quarter, including above-category performance in the fresh ground turkey category.3
The Applegate brand drove sales growth in many natural and organic channel categories for the quarter, including in sliced deli meats, breakfast sausage, breaded chicken, bacon and hot dogs.4
Expand leadership in Foodservice
We delivered strong volume and net sales growth, driven by categories such as premium bacon, premium prepared proteins, poultry and snacking.5
We launched three items, including:
Hormel ribbon pepperoni: capitalizing on our leadership position in pizza toppings.
Our Foodservice team was awarded the
Aggressively develop our global presence
We continued to expand export sales of
We expect to launch Skippy peanut butter wafer cones and Skippy peanut butter mini ball snacks in
Execute our enterprise entertaining & snacking vision
Net sales increased during the quarter within the snacking and entertaining vertical in our Retail segment, driven by higher net sales of Planters snack nuts, Corn Nuts corn kernels and Hormel pepperoni.5
We maintained positive volume and dollar share6 momentum in our Planters snack nuts business once again during the first quarter, along with increasing our points of distribution6 and household penetration.7 We are building on this momentum with the planned second quarter launch of Planters
Future-fit our One Supply Chain/Continue to transform & modernize our Company
We made progress against our transformation and modernization initiative, including in the areas of supply chain efficiency and portfolio optimization:
Plan: We are implementing a new end-to-end planning process and are integrating new planning technology.
Buy: We are realizing the benefits from our new procurement and productivity programs, with further savings expected across many categories, such as logistics and warehousing, direct supplies and indirect supplies.
Make: We launched the Hormel Production System to standardize our ways of working across our manufacturing network.
Move: We are taking actions to optimize our refrigerated and ambient distribution networks.
Portfolio Optimization: We have identified approximately 10% of the items in our portfolio to be optimized. Throughout the year, we expect to use our enhanced data and analytics capabilities to identify more opportunities to improve our portfolio.
We formed a data and analytics office, focused on creating easy access to reliable and consistent technology, data and analytics to support our transformation and modernization initiative.
SEGMENT HIGHLIGHTS - FIRST QUARTER
Retail
Volume up 2%
Net sales down 2%
Segment profit down 3%
Volume growth for the quarter was driven by the value-added meats, global flavors, emerging brands and bacon verticals. Net sales declined primarily due to lower contract manufacturing volume and lower commodity turkey pricing. Demand was strong for many products, including Skippy peanut butter, Planters snack nuts, Wholly dips, Herdez salsas and sauces, La Victoria salsas, Jennie-O ground turkey, Hormel Square Table entrees and Hormel pepperoni, which each delivered volume and net sales improvement during the quarter. Segment profit declined, as the benefit from higher sales in our snacking and entertaining vertical and lower logistics expenses was more than offset by the impact from lower commodity turkey pricing and lower equity in earnings from
Foodservice
Volume up 8%
Net sales up 9%
Segment profit up 10%
Volume and net sales growth were broad based across numerous categories, led by Jennie-O turkey and double-digit gains for products such as
International
Volume up 11%
Net sales down 3%
Segment profit up 1%
Higher commodity exports led to volume gains for the quarter. Net sales declined due to lower branded export sales and lower sales in
SELECTED FINANCIAL DETAILS - FIRST QUARTER AND FISCAL 2024
Advertising investments were
The effective tax rate was 23.4%, compared to 22.6% last year. The Company benefited from the impact of certain discrete items and higher federal deductions last year.
Capital expenditures were
Depreciation and amortization expense was
PRESENTATION
A conference call will be webcast at
ABOUT
FORWARD-LOOKING STATEMENTS
This news release contains 'forward-looking' information within the meaning of the federal securities laws. The 'forward-looking' information may include statements concerning the Company's outlook for the future as well as other statements of beliefs, future plans, strategies, or anticipated events and similar expressions concerning matters that are not historical facts. Words or phrases such as 'should result,' 'believe,' 'intend,' 'plan,' 'are expected to,' 'targeted,' 'will continue,' 'will approximate,' 'is anticipated,' 'estimate,' 'project,' or similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those anticipated or projected, which factors include, but are not limited to, risks related to the deterioration of economic conditions; risks associated with acquisitions, joint ventures, equity investments, and divestitures; potential disruption of operations, including at co-manufacturers, suppliers, logistics providers, customers, or other third-party service providers; failure to realize anticipated cost savings or operating efficiencies associated with strategic initiatives; risk of loss of a material contract; the Company's inability to protect information technology systems against, or effectively respond to, cyber attacks or security breaches; deterioration of labor relations, labor availability or increases to labor costs; general risks of the food industry, including food contamination; outbreaks of disease among livestock and poultry flocks; fluctuations in commodity prices and availability of raw materials and other inputs; fluctuations in market demand for the Company's products; damage to the Company's reputation or brand image; climate change, or legal, regulatory, or market measures to address climate change; risks of litigation; potential sanctions and compliance costs arising from government regulation; compliance with stringent environmental regulations and potential environmental litigation; and risks arising from the Company's foreign operations. Please refer to the cautionary statements regarding 'Risk Factors' and 'Forward-Looking Statements' that appear in our most recent Annual Report on Form 10-K and Quarterly reports on Form 10-Q, which can be accessed at www.hormelfoods.com in the 'Investors' section, for additional information. In making these statements, the Company is not undertaking, and specifically declines to undertake, any obligation to address or update each or any factor in future filings or communications regarding the Company's business or results, and is not undertaking to address how any of these factors may have caused changes to discussions or information contained in previous filings or communications. Though the Company has attempted to list comprehensively these important cautionary risk factors, the Company wishes to caution investors and others that other factors may in the future prove to be important in affecting the Company's business or results of operations. The Company cautions readers not to place undue reliance on forward-looking statements, which represent current views as of the date made.
Note: Due to rounding, numbers presented throughout this news release may not sum precisely to the totals provided, and percentages may not precisely reflect the absolute figures.
1 COMPARISON OF
This news release includes measures of financial performance that are not defined by
In the fourth quarter of fiscal 2023, the Company announced a multi-year transformation and modernization initiative. The strategic investments in this initiative are expected to cease at the end of the investment period, are not expected to recur in the foreseeable future and are not considered representative of the Company's underlying operating performance. The Company does not believe such costs to be reflective of the ongoing operating cost structure; therefore, the Company is excluding certain discrete costs related to the transformation and modernization initiative from the non-GAAP financial measures. Expenses for this initiative are comprised primarily of nonrecurring charges for consulting fees, which are reflected in selling, general, and administrative (SG&A), and charges related to portfolio optimization, which are reflected in Cost of Products Sold. This presentation is consistent with the information the Company's management is using to evaluate performance and allocate resources and facilitates comparison of operating performance across multiple periods.
Adjusted cost of products sold, adjusted SG&A, adjusted operating income, adjusted earnings before income taxes, adjusted net earnings attributable to
END NOTES
2Circana Total US MULO;13 weeks ended
3Circana Total US MULO;12 weeks ended
4SPINS;12 weeks ended
5Internal data
6Circana Total US MULO + Convenience; 13 weeks ended
7Circana
(C) 2024 Electronic News Publishing, source