AUSTIN, Minn., May 20, 2021 /PRNewswire/ -- Hormel Foods Corporation (NYSE: HRL), a leading global branded food company, today reported results for the second quarter of fiscal 2021. All comparisons are to the second quarter of fiscal 2020 unless otherwise noted.
EXECUTIVE SUMMARY - SECOND QUARTER
EXECUTIVE COMMENTARY"Once again, our balanced business model has proven to be a winning formula as our team delivered record sales in the first half and is on pace to deliver a second consecutive year of record sales," said Jim Snee, chairman of the board, president and chief executive officer. "We were able to achieve these record results through strong foodservice sales, continued elevated demand in the retail, deli and international channels, and improved supply chain performance."
"We anticipated rapid demand changes in our foodservice business, and our team delivered, with sales exceeding 2019 pre-pandemic levels," Snee said. "The investments we have made over the years to build a world-class foodservice business, including an experienced direct sales force and portfolio of products that solve for customer challenges, give us a competitive advantage as the industry recovery accelerates."
"In addition to foodservice growth, demand in our retail and deli channels remains elevated compared to pre-pandemic levels, especially from brands such as SPAM®, Jennie-O®, Hormel® Gatherings®, Hormel® Black Label®, Applegate®, Columbus®, Herdez® and Wholly®," Snee said. "Finally, our international business has never been stronger, with double-digit growth coming from our China business and branded exports."
"The supply chain progress we have made in a difficult operating environment is impressive, and our production team members deserve credit for our record results," Snee said. "Further, we are now benefiting from strategic actions we took before the pandemic to increase production capacity, especially for the pizza toppings and dry sausage categories."
OUTLOOK"We are increasing our full year sales guidance range and reaffirming our earnings per share guidance range of $1.70 to $1.82 per share, both of which exclude the expected impact of the Planters® snack nuts business," Snee said. "We have a very positive outlook on the foodservice industry and continue to see elevated demand in the retail, deli and international channels. As we enter this inflationary period, we will continue to offset margin pressure with price actions and supply chain improvements. Our experienced management team has a proven ability to navigate and grow our business in volatile market conditions."
Fiscal 2021 Outlook* | |
Net Sales Guidance (in billions) | $10.20 - $10.80 |
Diluted Earnings per Share Guidance | $1.70 - $1.82 |
*Does not include the estimated impact from the pending acquisition of thePlanters® snack nuts business. |
COVID-19 RESPONSE"Team member safety is our top priority, and to date, over 51 percent of our domestic team members have been fully vaccinated, which is well ahead of the country's vaccination rate," Snee said. "We remain focused on continuing to keep our team members safe even as the impact of the pandemic to our business starts to fade."
In the second quarter, the company absorbed approximately $6 million ($19 million Q2 fiscal 2021 year-to-date) in direct incremental supply chain costs primarily related to enhanced safety measures in its production facilities. The company estimates most of the incremental supply chain costs are temporary and will continue to decline as the pandemic subsides.
PLANTERS® ACQUISITION UPDATEIn February 2021, the company entered into a definitive agreement to acquire the Planters® snack nuts business. The company expects to close the transaction in June 2021. See the news release dated Feb. 11, 2021, for additional details.
SEGMENT HIGHLIGHTS – SECOND QUARTER
Refrigerated Foods
Strong sales growth was led by a significant recovery in foodservice, growth from retail and deli brands, and higher commodity sales. Nearly every foodservice category experienced growth, led by pizza toppings and brands such as Fontanini® andHormel® Bacon 1™. Retail and deli growth was driven by numerous brands, including Hormel® Black Label®, Hormel® Gatherings®, Sadlers® andApplegate®. The improvement in segment profit was driven by foodservice growth, increased retail fresh pork profits and lower operational costs.
Grocery Products
Volume and sales declined due to difficult comparisons from extremely high levels of demand last year. Demand for branded retail products remained elevated compared to pre-pandemic levels, led by growth in the quarter from Wholly® guacamole and Herdez® salsas and sauces. Segment profit declined due to lower sales. For reference, the segment delivered exceptional growth in the second quarter of fiscal 2020 due to consumer stock-up during the onset of the pandemic.
Jennie-O Turkey Store
Sales increased due to a recovery in foodservice and higher whole bird shipments. Retail sales declined but remain elevated compared to pre-pandemic levels. Segment profit decreased due to the impact of a dramatic increase in feed costs during the quarter.
International & Other
Sales increased, driven by continued strong results in China and higher sales of branded exports. In China, foodservice sales have fully recovered to pre-pandemic levels. The increase in segment profit was due to growth in China and the Philippines, and higher fresh pork export margins.
CHANNEL HIGHLIGHTS – SECOND QUARTERIn an effort to add an increased level of disclosure and clarity to sales trends compared to the prior year and pre-pandemic levels, net sales have been disaggregated into sales channels. Demand for the company's retail items remained elevated, as exhibited by double-digit growth over fiscal 2019. Foodservice sales exceeded pre-pandemic levels after steep declines last year caused by the effects of the pandemic. Deli channel sales increased due to growth from branded grab-and-go and prepared foods items. International sales increased due to exceptional results in China and growth from branded exports.
Thirteen Weeks Ended | ||||||
April 25, 2021compared toApril 26, 2020 | April 25, 2021compared toApril 28, 2019 | |||||
Net Sales Percent Change (%) | ||||||
U.S. Retail | — | 16 | ||||
U.S. Foodservice | 28 | 1 | ||||
U.S. Deli | 4 | 9 | ||||
International | 11 | 23 | ||||
Total | 8 | 11 | ||||
SELECTED FINANCIAL DETAILSAny forward-looking guidance does not include the estimated impact from the pending acquisition of thePlanters® snack nuts business.
Income Statement
Cash Flow Statement
Balance Sheet
PRESENTATIONA conference call will be webcast at 8 a.m. CDT on Thursday, May 20, 2021. Access is available at www.hormelfoods.com by clicking on "Investors." The call will also be available via telephone by dialing 888-317-6003 and providing the access code 7986531. An audio replay is available by going to www.hormelfoods.com. The webcast replay will be available at noon CDT, Thursday, May 20, 2021, and will remain on the website for one year.
ABOUT HORMEL FOODS - Inspired People. Inspired Food.™Hormel Foods Corporation, based in Austin, Minn., is a global branded food company with over $9 billion in annual revenue across more than 80 countries worldwide. Its brands include SKIPPY®, SPAM®, Hormel® Natural Choice®, Applegate®, Justin's®, Wholly®, Hormel® Black Label®, Columbus® 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 on the "Global 2000 World's Best Employers" list by Forbes magazine for three straight years, is one of Fortune magazine's most admired companies, has appeared on Corporate Responsibility Magazine's "The 100 Best Corporate Citizens" list for 12 years in a row, 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 www.hormelfoods.com.
FORWARD-LOOKING STATEMENTSThis news release contains forward-looking information based on management's current views and assumptions. Actual events may differ materially. Please refer to the cautionary statements regarding "Forward-Looking Statements" and "Risk Factors" that appear on pages 26-32 in the company's Form 10-Q for the fiscal quarter ended Jan. 24, 2021, which can be accessed at hormelfoods.com in the "Investors" section.
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.
HORMEL FOODS CORPORATIONSEGMENT DATAUnauditedIn thousands | |||||||||||
Thirteen Weeks Ended | |||||||||||
April 25, 2021 | April 26, 2020 | % Change | |||||||||
Net Sales | |||||||||||
Grocery Products | $ | 628,232 | $ | 683,250 | (8.1) | ||||||
Refrigerated Foods | 1,453,380 | 1,247,336 | 16.5 | ||||||||
Jennie-O Turkey Store | 351,179 | 343,056 | 2.4 | ||||||||
International & Other | 173,830 | 148,823 | 16.8 | ||||||||
Total | $ | 2,606,621 | $ | 2,422,465 | 7.6 | ||||||
Segment Profit | |||||||||||
Grocery Products | $ | 97,970 | $ | 127,763 | (23.3) | ||||||
Refrigerated Foods | 173,352 | 131,431 | 31.9 | ||||||||
Jennie-O Turkey Store | 12,700 | 27,348 | (53.6) | ||||||||
International & Other | 24,481 | 23,164 | 5.7 | ||||||||
Total Segment Profit | 308,503 | 309,706 | (0.4) | ||||||||
Net Unallocated Expense | 15,904 | 23,098 | (31.1) | ||||||||
Noncontrolling Interest | 21 | (119) | 117.4 | ||||||||
Earnings Before Income Taxes | $ | 292,620 | $ | 286,489 | 2.1 | ||||||
Twenty-Six Weeks Ended | |||||||||||
April 25, 2021 | April 26, 2020 | % Change | |||||||||
Net Sales | |||||||||||
Grocery Products | $ | 1,205,831 | $ | 1,223,876 | (1.5) | ||||||
Refrigerated Foods | 2,820,457 | 2,599,127 | 8.5 | ||||||||
Jennie-O Turkey Store | 684,500 | 673,183 | 1.7 | ||||||||
International & Other | 356,980 | 310,714 | 14.9 | ||||||||
Total | $ | 5,067,768 | $ | 4,806,899 | 5.4 | ||||||
Segment Profit | |||||||||||
Grocery Products | $ | 190,172 | $ | 196,198 | (3.1) | ||||||
Refrigerated Foods | 314,524 | 298,775 | 5.3 | ||||||||
Jennie-O Turkey Store | 39,640 | 65,899 | (39.8) | ||||||||
International & Other | 56,685 | 43,115 | 31.5 | ||||||||
Total Segment Profit | 601,020 | 603,986 | (0.5) | ||||||||
Net Unallocated Expense | 31,451 | 27,297 | 15.2 | ||||||||
Noncontrolling Interest | 133 | (39) | 444.1 | ||||||||
Earnings Before Income Taxes | $ | 569,702 | $ | 576,651 | (1.2) |
HORMEL FOODS CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS Unaudited In thousands, except per share amounts | ||||||||||||||||
Thirteen Weeks Ended | Twenty-Six Weeks Ended | |||||||||||||||
April 25, 2021 | April 26, 2020 | April 25, 2021 | April 26, 2020 | |||||||||||||
Net Sales | $ | 2,606,621 | $ | 2,422,465 | $ | 5,067,768 | $ | 4,806,899 | ||||||||
Cost of Products Sold | 2,130,314 | 1,945,113 | 4,141,291 | 3,861,127 | ||||||||||||
Gross Profit | 476,307 | 477,352 | 926,477 | 945,773 | ||||||||||||
Selling, General and Administrative | 199,966 | 193,912 | 396,346 | 389,433 | ||||||||||||
Equity in Earnings of Affiliates | 13,074 | 10,021 | 27,302 | 17,608 | ||||||||||||
Operating Income | 289,415 | 293,460 | 557,433 | 573,948 | ||||||||||||
Interest and Investment Income (Expense) | 10,992 | (3,474) | 28,284 | 9,777 | ||||||||||||
Interest Expense | (7,788) | (3,497) | (16,015) | (7,074) | ||||||||||||
Earnings Before Income Taxes | 292,620 | 286,489 | 569,702 | 576,651 | ||||||||||||
Provision for Income Taxes | 64,699 | 58,873 | 119,386 | 106,083 | ||||||||||||
Effective Tax Rate | 22.1 | % | 20.6 | % | 21.0 | % | 18.4 | % | ||||||||
Net Earnings | 227,921 | 227,615 | 450,316 | 470,568 | ||||||||||||
Less: Net Earnings (Loss) Attributable to Noncontrolling Interest | 21 | (119) | 133 | (39) | ||||||||||||
Net Earnings Attributable to Hormel Foods Corporation | $ | 227,901 | $ | 227,734 | $ | 450,184 | $ | 470,606 | ||||||||
Net Earnings Per Share | ||||||||||||||||
Basic | $ | 0.42 | $ | 0.42 | $ | 0.83 | $ | 0.88 | ||||||||
Diluted | $ | 0.42 | $ | 0.42 | $ | 0.82 | $ | 0.86 | ||||||||
Weighted-average Shares Outstanding | ||||||||||||||||
Basic | 540,195 | 538,119 | 540,054 | 536,597 | ||||||||||||
Diluted | 547,536 | 546,373 | 547,490 | 545,594 | ||||||||||||
Dividends Declared per Share | $ | 0.2450 | $ | 0.2325 | $ | 0.4900 | $ | 0.4650 |
HORMEL FOODS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION Unaudited In thousands | ||||||||
April 25, 2021 | October 25, 2020 | |||||||
Assets | ||||||||
Cash and Cash Equivalents | $ | 1,484,533 | $ | 1,714,309 | ||||
Short-term Marketable Securities | 17,700 | 17,338 | ||||||
Accounts Receivable | 722,185 | 702,419 | ||||||
Inventories | 1,229,030 | 1,072,762 | ||||||
Income Taxes Receivable | 9,263 | 41,449 | ||||||
Prepaid Expenses | 23,875 | 18,349 | ||||||
Other Current Assets | 27,707 | 12,438 | ||||||
Total Current Assets | 3,514,292 | 3,579,063 | ||||||
Goodwill | 2,614,036 | 2,612,727 | ||||||
Other Intangibles | 1,068,399 | 1,076,285 | ||||||
Pension Assets | 196,473 | 183,232 | ||||||
Investments In and Receivables From Affiliates | 309,256 | 308,372 | ||||||
Other Assets | 289,059 | 250,382 | ||||||
Net Property, Plant and Equipment | 1,897,489 | 1,898,222 | ||||||
Total Assets | $ | 9,889,004 | $ | 9,908,282 | ||||
Liabilities and Shareholders' Investment | ||||||||
Accounts Payable | $ | 577,365 | $ | 644,609 | ||||
Accrued Expenses | 47,196 | 59,136 | ||||||
Accrued Workers Compensation | 28,681 | 25,070 | ||||||
Accrued Marketing Expenses | 118,452 | 108,502 | ||||||
Employee Related Expenses | 226,111 | 252,845 | ||||||
Taxes Payable | 28,940 | 22,480 | ||||||
Interest and Dividends Payable | 139,102 | 132,632 | ||||||
Current Maturities of Long-term Debt | 9,333 | 258,691 | ||||||
Total Current Liabilities | 1,175,179 | 1,503,965 | ||||||
Long-term Debt - Less Current Maturities | 1,040,486 | 1,044,936 | ||||||
Pension and Post-retirement Benefits | 557,400 | 552,878 | ||||||
Other Long-term Liabilities | 172,626 | 157,399 | ||||||
Deferred Income Taxes | 237,461 | 218,779 | ||||||
Accumulated Other Comprehensive Loss | (325,629) | (395,250) | ||||||
Other Shareholders' Investment | 7,031,479 | 6,825,576 | ||||||
Total Liabilities and Shareholders' Investment | $ | 9,889,004 | $ | 9,908,282 |
HORMEL FOODS CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSUnauditedIn thousands | ||||||||||||||||
Thirteen Weeks Ended | Twenty-Six Weeks Ended | |||||||||||||||
April 25, 2021 | April 26, 2020 | April 25, 2021 | April 26, 2020 | |||||||||||||
Operating Activities | ||||||||||||||||
Net Earnings | $ | 227,921 | $ | 227,615 | $ | 450,316 | $ | 470,568 | ||||||||
Depreciation and Amortization | 52,263 | 50,588 | 103,306 | 99,917 | ||||||||||||
Decrease (Increase) in Working Capital | (127,799) | 65,774 | (190,384) | (37,065) | ||||||||||||
Other | 3,189 | 15,895 | (1,979) | 14,870 | ||||||||||||
Net Cash Provided by (Used in) Operating Activities | 155,573 | 359,872 | 361,259 | 548,290 | ||||||||||||
Investing Activities | ||||||||||||||||
Net (Purchase) Sale of Securities | (516) | (1,975) | (722) | (1,991) | ||||||||||||
Acquisitions of Businesses/Intangibles | — | (268,878) | — | (268,878) | ||||||||||||
Purchases of Property and Equipment | (45,182) | (80,352) | (85,544) | (138,563) | ||||||||||||
Proceeds From Sales of Property and Equipment | 193 | 7 | 1,653 | 1,121 | ||||||||||||
Decrease (Increase) in Investments, Equity in Affiliates, and Other Assets | (2,450) | (11,433) | (2,643) | (14,824) | ||||||||||||
Net Cash Provided by (Used in) Investing Activities | (47,955) | (362,631) | (87,256) | (423,135) | ||||||||||||
Financing Activities | ||||||||||||||||
Repayments of Long-term Debt and Finance Leases | (252,194) | (2,050) | (254,360) | (4,069) | ||||||||||||
Dividends Paid on Common Stock | (132,271) | (124,501) | (257,787) | (236,750) | ||||||||||||
Share Repurchase | (816) | (12,360) | (9,653) | (12,360) | ||||||||||||
Other | 11,575 | 28,095 | 13,340 | 64,448 | ||||||||||||
Net Cash Provided by (Used in) Financing Activities | (373,706) | (110,816) | (508,459) | (188,731) | ||||||||||||
Effect of Exchange Rate Changes on Cash | (920) | (4,771) | 4,680 | (3,252) | ||||||||||||
Increase (Decrease) in Cash and Cash Equivalents | (267,008) | (118,346) | (229,776) | (66,828) | ||||||||||||
Cash and Cash Equivalents at Beginning of Year | 1,751,541 | 724,419 | 1,714,309 | 672,901 | ||||||||||||
Cash and Cash Equivalents at End of Quarter | $ | 1,484,533 | $ | 606,073 | $ | 1,484,533 | $ | 606,073 |
INVESTOR CONTACT: Nathan Annis (507) 437-5248 | MEDIA CONTACT: Media Relations (507) 437-5345 |
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SOURCE Hormel Foods Corporation