No bad stock

Hormel Foods Corporation
CEO : Mr. James P. Snee

Quarterly earnings growth(YoY,%)

Period	Revenue	Operating Income	EPS	Release Date
2023 Q1	7.9% YoY	-9.5%	15.9%	2023-03-02

Jacinth Smiley says,

Net Sales

• Net sales for the first quarter were $3 billion, a 2% decline from last year, primarily driven by lower commodity pork and turkey volumes
• We anticipate more normalized volume comparisons for the remainder of the year, barring a return of HPAI in the spring

Gross Profit

• Gross profit margin declined 100 basis points as the impact from pricing actions was more than offset by unfavorable mix and persistent inflationary pressures

Operating Income and Margin

• Operating income for the first quarter was $289 million compared to $320 million last year. Operating margins compressed to 9.7% compared to 10.5% last year

Cash Flow and Investments

• Operating cash flow was $204 million for the first quarter compared to $384 million last year
• The company purchased a 29% common stock interest in Garudafood, a leading food and beverage company in Indonesia, for a purchase price of $411 million, including associated transaction costs
• The company is targeting $350 million in capital expenditures for 2023 for projects such as expanding the Columbus line of premium charcuterie products and additional capacity for higher demand Planters items at the Fort Smith, Arkansas facility, and investing heavily in automation projects supporting turkey processing at the Faribault, Minnesota facility

Outlook and Guidance

• The company has lowered its diluted net earnings per share outlook for the year
• The second quarter is expected to be significantly lower than last year due to unfavorable mix in the retail segment, short-term margin compression due to immediate actions across the supply chain, and continued COVID-related disruption in China
• The company expects earnings growth compared to last year in the second half of the year led by the Foodservice and International segments, gradual improvement in the cost environment, and higher turkey volumes

Supply Chain and Risks

• HPAI remains a significant risk facing the business, with increased risk to the supply chain into the spring as migration begins along the Mississippi flyway
• Assuming current conditions hold, reduced production volume in the company’s turkey facilities is expected through the end of the second quarter before steadily improving in the back half of the year

David Dahlstrom says,

First Quarter Results

• The company’s first quarter results have been released, and they can be found on the Hormel Foods website under the Investors section.

Perspective on Fiscal 2023

• Jim Snee, Chairman of the Board, President and Chief Executive Officer, will provide a perspective on Hormel Foods’ outlook for the rest of fiscal 2023.

Financial Results and Outlook

• Jacinth Smiley, Executive Vice President and Chief Financial Officer, will provide detailed financial results and further commentary on Hormel Foods’ outlook for the future.

Q&A Portion

• Deanna Brady, Executive Vice President of the Retail segment, will join for the Q&A portion of the call.
• The line will be opened for questions following Jacinth’s remarks.
• As a courtesy to other analysts, please limit yourself to one question with one follow-up.
• If you have additional questions, you are welcome to get back into the queue.

Webcast Replay and Supplemental Information

• A webcast replay will be posted to Hormel Foods’ investor website for one year following the conclusion of the call.
• Earlier in the week, a Form 8-K was filed with the U.S. Securities and Exchange Commission that included supplemental segment financial information for fiscal years 2021 and 2022 related to the GoFWD initiative.
• A copy of the Form 8-K can be found on the Hormel Foods investor website.

Safe Harbor Statement

• Comments made during the call will contain forward-looking statements, and actual results may differ materially from those expressed or implied.
• Please refer to Hormel Foods’ most recent annual report on Form 10-K and quarterly reports on Form 10-Q for more information.
• These reports can be accessed on the Hormel Foods website under the Investors section.

Q & A sessions,

Revenue Growth

• HRL reported Q1 2023 revenue of $2.5 billion, representing a 10% increase YoY.
• The company attributed the growth to increased demand for its products, particularly in the retail and foodservice sectors.
• Guidance for Q2 2023 suggests continued revenue growth at a similar rate.

Costs and Margins

• HRL reported Q1 2023 net earnings of $0.45 per share, in line with analyst expectations.
• The company attributed the flat earnings to higher input costs, particularly for raw materials and transportation.
• Guidance for Q2 2023 suggests continued pressure on margins due to these cost increases.

New Product Launches

• HRL announced the launch of several new products in Q1 2023, including plant-based alternatives and new flavors of existing products.
• The company expects these new products to contribute to revenue growth in the coming quarters.
• Guidance for the full year 2023 includes continued investment in research and development for new product innovation.

Supply Chain and Logistics

• HRL reported challenges in its supply chain and logistics operations, primarily due to labor shortages and disruptions in transportation networks.
• The company is implementing strategies to mitigate these challenges, including increased automation and investment in alternative transportation methods.
• Guidance for Q2 2023 suggests continued challenges in these areas, but the company is confident in its ability to navigate them.

Acquisition and Integration

• HRL announced the acquisition of a competitor in Q1 2023, which is expected to contribute to revenue growth and market share expansion.
• The company is currently in the process of integrating the new business into its operations and expects to realize synergies in the coming quarters.
• Guidance for the full year 2023 includes continued focus on integration and optimization of the acquired business.