Hormel Foods Reports Fourth Quarter And Full-Year Fiscal 2024 Results

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December 4, 2024

Austin, Minn.

Strength in Value-Added Portfolio and $75 million in Operating Income Benefit from Transform and Modernize Initiative Results in Record Operating Cash Flow

Hormel Foods Corporation (NYSE: HRL), a Fortune 500 global branded food company, today reported fourth quarter and full-year fiscal 2024 results. All comparisons are to the fourth quarter of fiscal 2023 unless otherwise noted.

EXECUTIVE SUMMARY – FISCAL 2024

Net sales of $11.9 billion
Operating income of $1.1 billion; adjusted operating income¹ of $1.1 billion
Operating margin of 9.0%; adjusted operating margin¹ of 9.6%
Earnings before income taxes of $1.0 billion; adjusted earnings before income taxes¹ of $1.1 billion
Effective tax rate of 22.3%
Diluted earnings per share of $1.47; adjusted diluted earnings per share¹ of $1.58
Record cash flow from operations of $1.3 billion

EXECUTIVE SUMMARY – FOURTH QUARTER

Net sales of $3.1 billion
Operating income of $294 million; adjusted operating income¹ of $308 million
Operating margin of 9.4%; adjusted operating margin¹ of 9.8%
Earnings before income taxes of $280 million; adjusted earnings before income taxes¹ of $293 million
Effective tax rate of 21.5%
Diluted earnings per share of $0.40; adjusted diluted earnings per share¹ of $0.42
Cash flow from operations of $409 million

EXECUTIVE COMMENTARY – FISCAL 2024

“Fiscal 2024 demonstrated solid execution of our strategy, the power of our portfolio and the resilience of our team,” said Jim Snee, chairman of the board, president and chief executive officer.

“Across our business segments, we reinvested in our brands, expanded our market presence and introduced innovative solutions to drive impactful results,” Snee said. “In Retail, our flagship and rising brands, such as HORMEL^® BLACK LABEL^®, JENNIE-O^®, SPAM^®, and APPLEGATE^®, delivered strong growth and expanded households². Our Foodservice segment again achieved above-industry growth, highlighting the differentiated value and relevant offerings our dedicated team brings to the industry. As expected, our International results reflect a solid recovery, and we remain well positioned to continue expanding our global presence.”

“The combination of underlying business strength and the capture of $75 million³ in operating income benefit from our Transform and Modernize (T&M) initiative helped to offset a dynamic consumer environment, the steep decline in whole bird turkey commodity markets, and the production disruption at our Suffolk, Virginia, facility,” Snee said.

“We delivered a record year of operating cash flow, enabling us to return a record amount of cash to our shareholders in the form of dividends,” Snee said. “The focus on our value-added portfolio, innovation, and T&M initiative has positioned us well for sustainable growth and enhanced shareholder value.”

FISCAL 2025 OUTLOOK

“As we enter fiscal 2025, we are in a strong position to deliver quality earnings growth, further expand our market presence, and accelerate the impact of our T&M initiative,” Snee said. “We expect each of our three segments to deliver top line growth as we continue to lead on-trend categories, increase brand investments, and drive innovation in the marketplace.”

In fiscal 2025, the Company expects:

Net sales of $11.9 billion to $12.2 billion; organic net sales¹ growth of 1% to 3%
Operating income in the range of $1.13 to $1.23 billion
Adjusted operating income¹ in the range of $1.18 to $1.28 billion
Diluted earnings per share in the range of $1.51 to $1.65
Adjusted diluted earnings per share¹ in the range of $1.58 to $1.72


	Fiscal 2025 Outlook
Net Sales	$11.9 – $12.2 billion
Adj. Operating Income¹	$1.18 to $1.28 billion
Adj. Diluted EPS¹	$1.58 – $1.72
Effective Tax Rate	22.0 – 23.0%

The Company’s fiscal 2025 outlook assumes:

Net sales and earnings impact from lower whole bird turkey commodity markets that are most acute in the first quarter
Net sales and earnings impact from the snack nuts supply disruption will continue in the first quarter with sequential improvement from the PLANTERS^® brand beginning in the second quarter
Estimated incremental benefits from the T&M initiative in the range of $100 million to $150 million

DIVIDENDS

“Returning capital to our shareholders is a top priority,” said Snee. “We recently announced a 3% increase in our dividend, raising the annual rate to $1.16 per share. This marks the 59th consecutive year of annual dividend growth at Hormel Foods.”

Effective Nov. 15, 2024, the Company paid its 385th consecutive quarterly dividend at the annual rate of $1.13 per share.

PROGRESS EXECUTING TRANSFORM AND MODERNIZE

In fiscal 2024, the Company made meaningful progress delivering value through the T&M initiative, generating $75 million³ in operating income benefit. These benefits are embedded within the overall performance of the business, and the Company expects to see continued value in future years.

The Company expects to realize an incremental $100 million to $150 million in benefits from the T&M initiative in fiscal 2025, as the planned expansion of the program accelerates value returned to the organization.

The T&M initiative is focused on transforming the supply chain, minimizing portfolio complexity, investing in data and technology, and enhancing people and processes. The benefits from the T&M initiative are long-term in nature as they provide strategic fuel for growth for the core business.

The T&M initiative is an integral part of achieving the Company’s target to deliver at least $250 million in annualized operating income growth in fiscal 2026⁴.

SEGMENT HIGHLIGHTS – FOURTH QUARTER

Retail

Volume down 6%
Net sales down 4%
Segment profit up 29%; adjusted segment profit¹ up 4%

Year-over-year growth from many branded items, including APPLEGATE^® natural and organic meats, HORMEL^® BLACK LABEL^® bacon, the SPAM^® family of products, JENNIE-O^® ground turkey, and HORMEL^® SQUARE TABLE™ entrees was more than offset by volume and net sales declines driven by the Value Added Meats, Snacking & Entertaining, and Convenient Meals & Proteins verticals. Excluding the impact of last year’s non-cash impairment charge, adjusted segment profit¹ increased due to continued benefits from lower logistics expenses and incremental savings from the T&M initiative.

Foodservice

Volume up 2%
Net sales up 1%
Segment profit down 8%

Volume and net sales growth were driven by strong performance across the premium prepared proteins, salty snacks, turkey, bacon, and pizza toppings categories. Products such as Heritage Premium Meats offerings, HORMEL^® FIRE BRAISED^® meats, branded JENNIE-O^® turkey, PLANTERS^® snack nuts, and CAFE H^® globally inspired proteins delivered top line growth. Segment profit decreased due to lower margins in Heritage Premium Meats, poultry, and pizza toppings, as well as higher selling, general and administrative expenses.

International

Volume down 10%
Net sales up 1%
Segment profit up 184%

Net sales grew due to demand in China and strong branded exports for SPAM^® luncheon meat and SKIPPY^® peanut butter. Considerable volume declines in turkey exports resulted in lower volumes compared to the prior year. Segment profit for the quarter was significantly above the prior year, due to improved export margins, favorable results in China, and growth from our investments in the Philippines and Indonesia.

SELECTED FINANCIAL DETAILS – FISCAL 2024

Income Statement

Operating margin and adjusted operating margin¹ were 9.0% and 9.6%, respectively, compared to 8.9% and 9.8% for the previous year, respectively.
Selling, general and administrative expenses as a percent of net sales, and adjusted selling, general and administrative expenses as a percent of net sales¹ were 8.4% and 7.8%, respectively, compared to 7.8% and 7.1% last year, respectively.
Advertising investments were $163 million, compared to $160 million last year. The Company continues to support its leading brands in the marketplace through strategic investments.
The effective tax rate was 22.3%, compared to 21.8% last year.

Cash Flow Statement

Record cash flow from operations was $1.3 billion.
Dividends paid to shareholders were a record $615 million.
Capital expenditures were $256 million, compared to $270 million last year. During the year, the Company invested in capacity expansions for HORMEL^® FIRE BRAISED^® products, APPLEGATE^® products and the Jiaxing, China, facility. The target for capital expenditures in fiscal 2025 is $275 million to $300 million.
Depreciation and amortization expense was $258 million. The full-year expense for fiscal 2025 is expected to be approximately $265 million.

Balance Sheet

The Company remains in a strong financial position with ample liquidity, a conservative level of debt and consistent cash flows.
Cash on hand increased to $742 million at fiscal year-end, from $737 million at the beginning of the year.
Inventories at fiscal year-end were $1.6 billion, a decrease of $104 million from the beginning of the year.
Total long-term debt, including current maturities, was $2.9 billion at fiscal year-end.

PRESENTATION

A conference call will be webcast at 8 a.m. CT on Dec. 4, 2024. Access is available at www.hormelfoods.com by clicking on “Investors.” The call will also be available via telephone by dialing 800-549-8228 and providing the access code 13364. An audio replay is available at www.hormelfoods.com. The webcast replay will be available at noon CT, Dec. 4, 2024, and will remain on the website for one year.

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END NOTES

¹ Non-GAAP measure. See Appendix: Non-GAAP Measures to this news release for more information.

² Circana, Receipt Panel, Total Omnichannel; 52 weeks ended 10/06/24.

³ Representative of the Buy, Make, and Move T&M initiative pillars.

⁴ Compared to fiscal 2023 adjusted operating income¹.

About Hormel Foods – Inspired People. Inspired Food.™

Hormel Foods Corporation, based in Austin, Minn., is a global branded food company with over $12 billion in annual revenue across more than 80 countries worldwide. Its brands include PLANTERS^®, SKIPPY^®, SPAM^®, HORMEL^® NATURAL CHOICE^®, APPLEGATE^®, JUSTIN’S^®, WHOLLY^®, HORMEL^® BLACK LABEL^®, COLUMBUS^®, JENNIE-O^® and more than 30 other beloved brands. The company is a member of the S&P 500 Index and the S&P 500 Dividend Aristocrats, was named one of the best companies to work for by U.S. News & World Report, one of America’s most responsible companies by Newsweek, recognized by TIME magazine as one of the World’s Best Companies, received a perfect score of 100 on the 2023–24 Corporate Equality Index and has received numerous other awards and accolades for its corporate responsibility and community service efforts. The company lives by its purpose statement — Inspired People. Inspired Food.™ — to bring some of the world’s most trusted and iconic brands to tables across the globe. For more information, visit hormelfoods.com.

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; risks and uncertainties associated with intangible assets, including any future goodwill or intangible assets impairment charges; the risk of disruption of operations, including at owned facilities, co-manufacturers, suppliers, logistics providers, customers, or other third-party service providers; the risk that the Company may fail to realize anticipated cost savings or operating profit improvements associated with strategic initiatives, including the Transform and Modernize initiative; risk of loss of a significant contract or unfavorable changes in the Company’s relationships with significant customers; risk of the Company’s inability to protect information technology systems against, or effectively respond to, cyber attacks, security breaches or other IT interruptions, against or involving the Company’s IT systems or those of others with whom it does business; risk of the Company’s failure to timely replace legacy technologies; deterioration of labor relations or labor availability or increases to labor costs; general risks of the food industry, including those related to food safety, such as costs resulting from food contamination, product recalls, the remediation of food safety events at its facilities, including the production disruption at the Suffolk, Virginia, facility, or 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, including due to private label products and lower-priced alternatives; risks related to the Company’s ability to respond to changing consumer preferences, diets and eating patterns, and the success of innovation and marketing investments; damage to the Company’s reputation or brand image; risks associated with 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, including geopolitical risk, exchange rate risk, legal, tax, and regulatory risk, and risks associated with tariffs. 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.