News Details

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

All comparisons are to the fourth quarter or full year of fiscal 2015. The fourth quarter and full year of 2016 contains an extra week as compared to the prior year. All earnings per share measures are adjusted to reflect the two-for-one stock split distributed on February 9, 2016.

SUMMARY

Fourth Quarter

• Record diluted earnings per share of $0.45, up 29 percent from 2015 GAAP EPS of $0.35; diluted EPS up 22 percent from non-GAAP¹ adjusted diluted EPS² of $0.37
• Record net earnings of $244 million, up 30 percent from 2015 GAAP net earnings of $187 million; net earnings up 22 percent from non-GAAP¹ adjusted net earnings² of $200 million
• Record dollar sales of $2.6 billion, up 9 percent; volume up 9 percent
• Refrigerated Foods operating profit up 51 percent; volume up 9 percent; dollar sales up 8 percent
• Jennie-O Turkey Store operating profit up 26 percent; volume up 32 percent; dollar sales up 29 percent
• Grocery Products operating profit up 5 percent; volume up 12 percent (sales of JUSTIN’S® products contributed 2 percent to volume growth); dollar sales up 16 percent (sales of JUSTIN’S® products contributed 6 percent to sales growth)
• International & Other operating profit down 16 percent; volume up 11 percent; dollar sales up 2 percent
• Specialty Foods operating profit down 10 percent as compared to 2015 GAAP operating profit; operating profit down 42 percent as compared to 2015 non-GAAP¹ adjusted segment operating profit²; volume down 29 percent ; dollar sales down 20 percent

COMMENTARY

“We had a strong finish to fiscal 2016, achieving record earnings for the fourteenth consecutive quarter,” said Jim Snee, president and chief executive officer. “Three of our five business segments delivered sales, volume, and earnings growth, again demonstrating our balanced business model. Refrigerated Foods and Jennie-O Turkey Store both had excellent quarters with growth coming from value-added, branded products and improved market conditions. Grocery Products enjoyed a strong quarter aided by the inclusion of the JUSTIN’S® specialty nut butter business in addition to strong results from SPAM® luncheon meat and SKIPPY® peanut butter,” Snee said.

“Specialty Foods sales declined, primarily due to the divestiture of Diamond Crystal Brands in May, while sales of MUSCLE MILK® protein products were strong,” mentioned Snee. “Specialty Foods earnings decreased primarily due to increased advertising. Our International segment had a tough quarter as the team continues to work through challenging market conditions in China.”

“Fiscal 2017 will mark the 51^st consecutive year we have increased our dividend, an accomplishment few other companies can claim,” Snee said. “Effective in the new fiscal year the annual dividend will be $0.68 per share, a 17 percent increase.”

SEGMENT OPERATING HIGHLIGHTS – FOURTH QUARTER

Refrigerated Foods (47% of Net Sales, 44% of Total Segment Operating Profit)
Refrigerated Foods segment profit increased 51 percent driven by excellent results in our foodservice and retail channels in addition to lower input costs. Sales grew 8 percent on volume growth of 9 percent aided by foodservice products such as HORMEL® BACON 1^TM fully cooked bacon and HORMEL®pepperoni, and retail products such as APPLEGATE® deli meats, HORMEL®NATURAL CHOICE® meats, and HORMEL GATHERINGS® party trays.

Jennie-O Turkey Store (21% of Net Sales, 24% of Total Segment Operating Profit)
Jennie-O Turkey Store segment profit increased 26 percent and sales increased 29 percent following the recovery from avian influenza in fiscal 2015. Increased earnings reflect improved live production results in addition to strong sales growth from JENNIE-O® branded foodservice products.

Grocery Products (19% of Net Sales, 22% of Total Segment Operating Profit)
Grocery Products sales increased 16 percent on the inclusion of JUSTIN’S® specialty nut butters along with strong sales of SPAM® luncheon meat and SKIPPY® peanut butter. Segment profit increased 5 percent. Grocery Products increased advertising for key products such as SKIPPY® P.B. Bites during the quarter.

International & Other (5% of Net Sales, 5% of Total Segment Operating Profit)

International segment profit decreased 16 percent while sales increased 2 percent. High pork raw material costs and soft retail demand continue to weigh on the China meat business.

Specialty Foods (8% of Net Sales, 5% of Total Segment Operating Profit)
Specialty Foods segment profit decreased 10 percent while sales were down 20 percent, primarily due to the divestiture of Diamond Crystal Brands in May. MUSCLE MILK® branded items posted double-digit sales growth with increases across many product lines including protein powders and ready-to-drink protein beverages.

OUTLOOK

“In fiscal 2017, we expect to generate organic sales growth consistent with our long-term goal of five percent coupled with mid-single-digits earnings growth,” said Snee. “Grocery Products is positioned to deliver an excellent year aided by the inclusion of JUSTIN’S® specialty nut butters and contributions from branded products such as SKIPPY® peanut butter and HERDEZ® salsas. Jennie-O Turkey Store should benefit from favorable grain prices and increasing demand for JENNIE-O® branded products. We anticipate continued low input costs for our value-added products in Refrigerated Foods in addition to positive momentum in both retail and foodservice channels.”

“We expect the International segment to show growth through increased exports and improved results from our China business,” mentioned Snee. “Specialty Foods is expected to show year-over-year sales and earnings growth net of the Diamond Crystal Brands divestiture and will benefit from continued strong results from MUSCLE MILK® protein products.”

“Taking all these factors into account and considering the previous three years of strong double-digit earnings increases, we would have expected our fiscal 2017 earnings guidance range to be $1.71 to $1.77 per share,” commented Snee. “However, after excluding earnings from the Farmer John divestiture of approximately 3 cents per share, we are setting our fiscal 2017 earnings guidance range at $1.68 to $1.74 per share,” Snee said.

DIVIDENDS

Effective November 15, 2016, the company paid its 353^rd consecutive quarterly dividend at the annual rate of $0.58.

CONFERENCE CALL

A conference call will be webcast at 8:30 a.m. CT on Tuesday, November 22, 2016. Access is available at www.hormelfoods.com. The call will also be available via telephone by dialing 877-627-6590 and providing the access code 5999118. An audio replay is available by going to https://jsp.premiereglobal.com/webrsvp and entering the access code 5999118. The webcast replay will be available at 11:30 a.m. CT, Tuesday, November 22, 2016, and will remain on the 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, and charges relating to the goodwill impairment charge associated with the Diamond Crystal Brands business and an adjustment to the contingent consideration accrual for CytoSport in the fourth quarter of fiscal 2015. The tables below show the calculations to reconcile from the non-GAAP adjusted measures to the GAAP measures in both the fourth quarter and full year of fiscal 2015.

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 revenues across 75 countries worldwide. Its brands include SKIPPY®, SPAM®, Hormel® Natural Choice®, Applegate®, Justin’s®, Wholly Guacamole®, Hormel® Black Label® 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 one of “The 100 Best Corporate Citizens” by Corporate Responsibility Magazine for the eighth year in a row, and has received numerous other awards and accolades for its corporate responsibility and community service efforts. In 2016, the company celebrated its 125th anniversary and announced its new vision for the future - Inspired People. Inspired Food.™ - focusing on its legacy of innovation. For more information, visit www.hormelfoods.com and http://2015csr.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 which appear on pages 33 - 40 in the company’s Form 10-Q for the fiscal quarter ended July 24, 2016, which can be accessed at www.hormelfoods.com under “Investors-SEC Filings.”

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Hormel Foods Corporation
Investor Contact:
Nathan Annis, 507-437-5248
ir@hormel.com
or
Media Contact:
Wendy Watkins, 507-437-5345
media@hormel.com

Source: Hormel Foods Corporation