News Details

AUSTIN, Minn.--(BUSINESS WIRE)-- Hormel Foods Corporation (NYSE:HRL) today reported record performance for the fiscal year 2016 first quarter.

All comparisons are to the first quarter of fiscal 2015. All earnings per share measures have been adjusted to reflect the two-for-one stock split distributed on February 9, 2016.

SUMMARY

• Record diluted earnings per share of $0.43, up 23 percent from non-GAAP¹ adjusted diluted EPS² of $0.35. 2015 GAAP EPS were $0.32.
• Dollar sales of $2.3 billion, down 4 percent; volume down 3 percent.
• Grocery Products operating profit up 26 percent as compared to 2015 non-GAAP¹ adjusted segment operating profit²; volume down 5 percent; dollar sales down 4 percent. Operating profit up 58 percent as compared to 2015 GAAP operating profit.
• Refrigerated Foods operating profit up 65 percent; volume up 5 percent; dollar sales up 2 percent.
• Jennie-O Turkey Store operating profit down 2 percent; volume down 23 percent; dollar sales down 15 percent. Decreases reflect the substantial impact of the avian influenza outbreak, as flocks lost in 2015 created large volume shortfalls in operations and sales.
• Specialty Foods operating profit up 44 percent; volume down 4 percent; dollar sales down 10 percent.
• International & Other operating profit up 1 percent as compared to 2015 non-GAAP¹ adjusted segment operating profit²; volume up 4 percent; dollar sales down 7 percent. Operating profit up 69 percent as compared to 2015 GAAP operating profit.

The company reported fiscal 2016 first quarter record net earnings of $235.1 million, up 25 percent from non-GAAP¹ adjusted net earnings² of $187.3 million last year. 2015 GAAP net earnings were $171.7 million. Diluted earnings per share for the quarter were $0.43, up 23 percent from non-GAAP¹ adjusted diluted earnings per share² of $0.35 last year. 2015 GAAP diluted earnings per share were $0.32. Sales for the quarter were $2.3 billion, down 4 percent from last year.

COMMENTARY

“We are pleased to report a double-digit earnings increase for the quarter, with four of our five segments posting earnings growth,” said Jeffrey M. Ettinger, chairman of the board and chief executive officer. “This marks our eleventh consecutive quarter of achieving record earnings results.”

“Our commitment to investing in the sustained growth of the business is evident in our results. Our business performance continues to be influenced by our company-wide spirit of innovation, increased brand support, prudent capital investment, and portfolio-expanding acquisitions,” commented Ettinger. “While sales were muted this quarter by turkey supply constraints and lower pricing due to declining pork markets, we enjoyed strong performance from many great products across our portfolio, such as HORMEL GATHERINGS^® party trays, APPLEGATE^® natural breakfast sausage, HORMEL^® FIRE BRAISED^TM meats, MUSCLE MILK^®PRO SERIES protein beverages, and WHOLLY GUACAMOLE^®refrigerated dips.”

SEGMENT OPERATING HIGHLIGHTS – FIRST QUARTER

Grocery Products (17% of Net Sales, 17% of Total Segment Operating Profit)
Grocery Products segment profit increased 26 percent over adjusted 2015 results², benefiting from favorable raw material costs and improved plant efficiencies. Segment profit increased 58 percent as compared to 2015 GAAP segment profit. Sales fell 4 percent, with overall softer results partially offset by increased sales of WHOLLY GUACAMOLE^®refrigerated dips and HORMEL^® bacon toppings.

Refrigerated Foods (51% of Net Sales, 45% of Total Segment Operating Profit)
Refrigerated Foods segment profit increased 65 percent driven by higher pork operating margins and strong results in our value added businesses. Dollar sales were up 2 percent with the addition of the Applegate business, growth of retail products including HORMEL^®CURE 81^®bone-in hams and HORMEL^® refrigerated entrees, and increased sales of foodservice products such as OLD SMOKEHOUSE^® bacon and HORMEL^® NATURAL CHOICE^® deli meats.

Jennie-O Turkey Store (16% of Net Sales, 24% of Total Segment Operating Profit)
Jennie-O Turkey Store segment profit declined 2 percent and sales were down 15 percent. The reductions reflect the substantial impact of the avian influenza outbreak that occurred in 2015, as previously lost flocks created significant volume shortfalls in plant operations and sales.

Specialty Foods (10% of Net Sales, 7% of Total Segment Operating Profit)
Specialty Foods delivered a 44 percent segment profit increase. Results reflect favorable input costs and synergies captured within the CytoSport and Century Foods supply chain. Sales decreased 10 percent as increased sales of MUSCLE MILK^® protein products did not fully offset lower sales of sports nutrition contract packaging.

International & Other (6% of Net Sales, 7% of Total Segment Operating Profit)
International & Other posted a segment profit increase of 1 percent over adjusted 2015 results², while sales were down 7 percent. Segment profit increased 69 percent as compared to 2015 GAAP segment profit. Results reflect unfavorable currency rates and softer sales in key markets, which offset SKIPPY^® peanut butter sales gains.

OUTLOOK

“Our strong earnings performance in the first quarter, led by Refrigerated Foods, Grocery Products, and Specialty Foods, along with the positive momentum at Jennie-O Turkey Store, has given us confidence to raise our fiscal 2016 earnings guidance range from $1.43 to $1.48 per share to $1.50 to $1.56 per share,” stated James P. Snee, President and Chief Operating Officer.

“We expect favorable input costs to continue for Refrigerated Foods, Grocery Products, and Specialty Foods, while we look for pork operating margins to moderate as the year progresses,” commented Snee. “Our turkey production is on pace to return to normalized levels by the end of the second quarter, positioning Jennie-O Turkey Store for strong growth in the back half of fiscal 2016 with our on-trend portfolio of JENNIE-O^® turkey products. We expect International to achieve improved results with increased sales of our SKIPPY^®peanut butter and SPAM^® family of products.”

“As part of our efforts to drive revenue growth, we are currently investing in our brands through impactful new advertising campaigns for innovations such as our SKIPPY^® PB BITES, and core items including HORMEL^® pepperoni and MUSCLE MILK^® protein products, ” added Snee.

DIVIDENDS

Effective February 16, 2016, the company paid its 350th consecutive quarterly dividend, at the annual rate of $0.58.

CONFERENCE PRESENTATION

A conference presentation will be webcast live at 9:30 a.m. CT on Tuesday, February 16, 2016. Access is available at www.hormelfoods.com. The webcast replay will be available at 11:30 a.m. CT, Tuesday, February 16, 2016, and will remain on our website for one year.

¹ COMPARISON OF U.S. GAAP TO NON-GAAP FINANCIAL MEASUREMENTS

The non-GAAP adjusted financial measurements are presented to provide investors additional information to facilitate the comparison of past and present operations. The non-GAAP adjusted financial measurements are used for internal purposes to evaluate the results of operations and to measure a component of certain employee incentive plans in fiscal year 2015. Non-GAAP measurements are not intended to be a substitute for U.S. GAAP measurements in analyzing financial performance. These non-GAAP measurements are not in accordance with generally accepted accounting principles and may be different from non-GAAP measures used by other companies.

² ADJUSTED FINANCIAL MEASURES

Adjusted segment operating profit, net earnings, and diluted net earnings per share exclude charges relating to the closure of the Stockton, California, manufacturing facility and the exit from international joint venture businesses in the first quarter of fiscal 2015. The tables below show the calculations to reconcile from the non-GAAP adjusted measures to the GAAP measures.

About Hormel Foods

Hormel Foods Corporation, based in Austin, Minn., is a multinational manufacturer and marketer of consumer-branded food and meat products, many of which are among the best known and trusted in the food industry. Hormel Foods, which leverages its extensive expertise, innovation and high competencies in pork and turkey processing and marketing to bring branded, value-added products to the global marketplace, will celebrate its 125^th anniversary in 2016. The company is a member of the Standard & Poor's (S&P) 500 Index, S&P 500 Dividend Aristocrats, and was named one of “The 100 Best Corporate Citizens” by Corporate Responsibility Magazine for the seventh year in a row. Hormel Foods also received a perfect score on the Human Rights Campaign’s 2016 Corporate Equality Index, was recognized on the 2015 Best for Vets Employers List by Military Times, and was named one of the 2016 40 Best Companies for Leaders by Chief Executive magazine. The company enjoys a strong reputation among consumers, retail grocers, foodservice and industrial customers for products highly regarded for quality, taste, nutrition, convenience and value. For more information, visit http://www.hormelfoods.com.

FORWARD-LOOKING STATEMENTS

This news release contains forward-looking information based on management’s current views and assumptions. Actual events may differ materially. Please refer to the cautionary statement regarding Forward-Looking Statements and Risk Factors that appear on pages 28 - 32 in the company’s annual stockholders’ report for the year ended October 25, 2015, which can be accessed at www.hormelfoods.com under “Investors-SEC Filings.”

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Hormel Foods Corporation
Investor Contact:
Jana Haynes, 507-437-5248
jlhaynes@hormel.com
or
Media Contact:
Wendy Watkins, 507-437-5345
media@hormel.com

Source: Hormel Foods Corporation