HORMEL FOODS CORP /DE/ Q2 FY2025 earnings call

• Retail focus: Holding leadership positions, Applegate's growth, Convenience Breakfast platform, Jennie-O's performance, Mexican foods portfolio success.
• Foodservice efforts: Resilience despite industry softness, outperformance, innovation.
• International progress: Strong top-line growth, China business performance.
• Leadership changes: Kevin Myers appointed for supply chain, Scott Aakre retiring and joining board, Jeff Baker to lead retail marketing.
• Operational milestones: Closure of dry sausage facility in California, opening of Memphis distribution center, standardization of Hormel production system.

Retail: Applegate brand saw strong sales growth, outpacing the edible category, with the Convenience Breakfast platform and new lightly-breaded chicken products; Jennie-O lean ground Turkey continued high performance; Mexican foods portfolio had success with Herdez salsa, refrigerated guacamole growth, and expanded refrigerated Entrees line; Planters snack nuts exceeded second quarter expectations. Foodservice: Resilient despite industry softness, with branded products like Jennie-O, Hormel Fire Braised meats, and Cafe H having strong volume and net sales growth, outperforming the broader foodservice industry, and showcasing innovations like pizza topping creation and FLASH 180 Sous Vide chicken. International: Delivered strong top-line growth with double-digit volume and net sales growth in exports and robust growth in China; China business performed well with customer and distribution expansions, and launch of Hormel Barbecue Bites.

Full-year net sales growth expected 2%-3%, adjusted diluted EPS range $1.58-$1.68. Second half expectations: Retail low single-digit net sales growth, Foodservice mid-single-digit organic net sales growth, International high single-digit growth. Advertising investments to increase in second half, T&M initiative expected to deliver $100M-$150M incremental benefits. Expect each segment to deliver bottom-line growth in third quarter and second half.

• Dynamic operating environment affecting performance.
• Commodity market fluctuations impacting costs.
• Tariff landscape uncertainties.

Q: Peter Galbo asked about the revised operating income outlook and ramp.

A: Jim Snee and John Ghingo discussed drivers like Planters recovery, Turkey portfolio, Foodservice momentum, and Transform and Modernize (T&M) initiative.

Q: Michael Lavery inquired about second half margins.

A: Jacinth Smiley talked about margin expansion driven by Turkey, Planters, and T&M.

Q: Michael Lavery asked about Foodservice growth.

A: Jim Snee and John Ghingo discussed outperformance, innovation, and plans for Foodservice.

Q: Tom Palmer asked about T&M savings and inventory build.

A: Jacinth Smiley talked about T&M projects, inventory build for summer demand related to Planters and SPAM.

Q: Ben Theurer asked about Planters cadence and shelf space.

A: Jim Snee and John Ghingo discussed Planters recovery, advertising, and innovation.

Q: Heather Jones asked about ground Turkey share gains.

A: Jim Snee and John Ghingo discussed supply tightening, consumer demand for premium and value in ground Turkey.

Q: Heather Jones asked about Retail volumes and stabilization.

A: John Ghingo talked about volume decline factors and future growth in Retail.

Q: Rupesh Parikh asked about Foodservice margins and International shift.

A: Jim Snee and John Ghingo discussed Foodservice margin inflection and resolved International timing issue.