HORMEL FOODS CORP /DE/ Q4 FY2024 earnings call

• Demonstrated solid execution of strategy, with progress in the Transform and Modernize initiative delivering $75M in operating income benefit. - Retail brands like Hormel Black Label, Jennie-O, etc., had strong growth with consumer-centric innovation. - Foodservice grew net sales 6% above industry. - International segment recovered with growth in branded exports and investments. - Achieved safest year in company history, record operating cash flow of $1.3B, and record dividends returned to shareholders.

Retail: Flagship brands like Hormel Black Label, Jennie-O, SPAM, and Applegate delivered strong growth and expanded households. Foodservice: Net sales grew 6%, well above industry growth, with growth in the convenience channel. International: Saw strong recovery, with increased branded exports for SPAM and Skippy, growth from investments in Philippines and Indonesia, and recovery in China. Absolute figures: Fourth quarter net sales $3.1B, full year net sales $11.9B. Volume: Fourth quarter 1.1 billion pounds, full year 4.3 billion pounds.

Fiscal 2025 outlook: Retail - comparable volume and low-single-digit net sales growth; Foodservice - mid-single-digit volume and net sales growth (excluding Hormel Health Labs divestiture); International - low-single-digit volume and high-single-digit net sales growth. Net sales expected $11.9B-$12.2B, organic net sales growth 1%-3%, adjusted diluted EPS $1.58-$1.72, and $100M-$150M incremental benefits from Transform and Modernize. Expect SG&A expenses to increase, double-digit advertising investments in 2025.

• Storm damage to Papillion, Nebraska facility in Q4 2024 resulted in ~$9M negative impact. - Suffolk production disruption with near-term commercial impacts and higher costs, especially in Q1 2025. - Turkey markets depressed with lower whole bird prices, nut input costs as a drag, and beef costs as a headwind.

Q: Rupesh Parikh asked about FY25 guidance range and if Q1 would be challenged.

A: Jim Snee and Jacinth Smiley discussed growth in key categories, brand support, and strength of Transform and Modernize initiative.

Q: Ken Goldman asked about EBIT growth and conservatism.

A: Jim Snee explained Transform and Modernize is interconnected for growth, and they are appropriate in guiding due to volatility and Planters rebound.

Q: Thomas Palmer asked about SKU rationalization and turkey.

A: Jacinth Smiley and Jim Snee discussed portfolio optimization being embedded in guidance, and turkey market considerations.

Q: Heather Jones asked about SKU rationalization and turkey strategy.

A: Jim Snee and Nathan Annis talked about portfolio optimization and turkey demand-driven business focus.

Q: Max Gumport asked about FY26 T&M goals.

A: Jim Snee and Nathan Annis explained ongoing acceleration of T&M with benefits beyond 2026.

Q: Peter Galbo asked about turkey and grain impacts.

A: Jacinth Smiley and Jim Snee discussed turkey pricing and grain benefits.

Q: Michael Lavery asked about Planters distribution and T&M.

A: John Ghingo and Nathan Annis discussed Planters distribution recovery and T&M project details.

Q: Pooran Sharma asked about Foodservice growth drivers.

A: Jim Snee talked about Foodservice's strong position and growth opportunities.

Q: Rahi Parikh asked about T&M progress vs budget.

A: Jim Snee and Nathan Annis mentioned being on track with acceleration in T&M.