AUSTIN, Minn. (May 30, 2024) – Hormel Foods Corporation (NYSE: HRL), a Fortune 500 global branded food company, today reported results for the second quarter of fiscal 2024, ended April 28, 2024. All comparisons are to the comparable period of fiscal 2023, unless otherwise noted.

•Volume of 2.16 billion lbs., comparable to last year

•Net sales of $5.88 billion, compared to $5.95 billion

•Operating income of $537 million, compared to $585 million; adjusted operating income1 of $571 million

•Operating margin of 9.1%, compared to 9.8% last year; adjusted operating margin1 of 9.7%

•Earnings before income taxes of $530 million, down 5%; adjusted earnings before income taxes1 of $564 million, up 1%

•Effective tax rate of 23.0%, compared to 22.4%

•Diluted net earnings per share of $0.74, compared to $0.79; adjusted diluted net earnings per share1 of $0.79

•Year-to-date cash flow from operations of $640 million, up 55%

•Volume of 1.06 billion lbs., compared to 1.10 billion lbs.

•Net sales of $2.89 billion, compared to $2.98 billion

•Operating income of $252 million, compared to $296 million; adjusted operating income1 of $276 million

•Operating margin of 8.7%, compared to 9.9% last year; adjusted operating margin1 of 9.6%

•Earnings before income taxes of $244 million, down 12%; adjusted earnings before income taxes1 of $268 million, down 4%

•Effective tax rate of 22.5%, compared to 22.1%

•Diluted net earnings per share of $0.34, compared to $0.40; adjusted diluted net earnings per share1 of $0.38

•Quarter-to-date cash flow from operations of $236 million, up 13%

“We delivered a strong first half, with consecutive quarters of better-than-expected earnings, a significant improvement in operating cash flows, continued Foodservice strength, recovery in our International business and stable volumes across our business,” said Jim Snee, chairman of the board, president and chief executive officer. “Importantly, we made further progress on our strategic initiatives, and we remain on track to deliver on our commitments to improve our business and drive long-term shareholder returns and growth.”

“To reflect our solid first-half performance and our expectations for continued growth from our Foodservice and International segments, ongoing improvements across our supply chain, and further benefits from our transform and modernize initiative, we are updating our full-year earnings outlook," Snee said. "Our team remains focused on growing operating income, driving savings through our transform and modernize initiative, and capturing incremental value from our investments.”

For fiscal year 2024, the Company is:

•Reaffirming its net sales growth outlook of 1% to 3%.

•Updating its expectations for diluted net earnings per share to $1.45 to $1.55 (previously $1.43 to $1.57) and its expectations for adjusted diluted net earnings per share1 to $1.55 to $1.65* (previously $1.51 to $1.65).

•Including net sales and earnings pressure from a significant year-over-year decline in whole bird turkey markets, as well as the estimated impact of an unplanned production interruption at its Suffolk, Virginia, facility.

•Assuming continued benefits to net earnings from its transform and modernize initiative.

*Adjusted diluted net earnings per share1 excludes the estimated impact of $0.08 per share from nonrecurring costs associated with the Company's transform and modernize initiative and approximately $0.02 per share resulting from legal settlements. Please see discussion of non-GAAP measures and a reconciliation of the Company's fiscal year 2024 guidance for estimated adjusted diluted net earnings per share1 at the end of this release.

•We grew volume and sales2 with many products during the quarter, including Planters® snack nuts, the SPAM® family of products, Jennie-O® lean ground turkey, Applegate® premium sliced lunchmeat and Herdez® guacamole.

•During the quarter, we grew market share2 across several flagship brands, including Hormel® Black Label® bacon, Planters® snack nuts, the SPAM® family of products and Jennie-O® lean ground turkey. Additionally, during the first half of the year, total points of distribution increased by mid-single digits3 for our flagship and rising brands.

•Within the bacon category, we achieved strong volume and sales gains2 for Hormel® Black Label® bacon, and double-digit volume and sales growth for Applegate Naturals® bacon.4 We also introduced several innovative bacon items, including Applegate Naturals® fully cooked Sunday Bacon® and Hormel® Black Label® ranch-flavored bacon.

•We delivered another quarter of broad-based volume and net sales growth,5 led by Hormel® Bacon 1™ cooked bacon, our line of premium prepared proteins, premium pepperoni and Jennie-O® turkey.

•Two of our most exciting innovation items – Hormel® Flash 180™ sous vide-style chicken breast and Hormel® ribbon pepperoni – have already exceeded our sales projections for fiscal 2024.

•We delivered excellent growth during the quarter in the convenience channel,5 led by Planters® flavored cashews and Corn Nuts® corn kernels.

•Our in-country operations, partnerships and innovation continue to support growth in key international markets.

◦Brazil: Our Ceratti® branded business grew in the foodservice and retail channels, led by premium and pre-sliced chilled meats and charcuterie.5

◦China: Our retail business continued to recover in the second quarter, with distribution gains of SPAM® singles, the launch of new Skippy® spreads and further innovation in our shelf-stable meat snacking portfolio.

◦Philippines: Equity in earnings increased due to an improvement in sales mix, including growth in the hot dog and premium center-store grocery categories.5

◦South Korea: Skippy® items delivered significant growth5 resulting from media investment and expanded product offerings with key retail partners.

•The iconic Skippy® peanut butter brand is returning to the Canadian consumer market in the form of five all-new peanut butter-inspired snack products.

•We continued to see strong momentum in our Planters® snack nuts business, including volume, sales and share gains for mixed nuts, cashews and Corn Nuts® corn kernels.2

•We are supporting the Hormel® pepperoni brand, America's No. 1 pepperoni brand,2 with a new national advertising campaign, "Boldly Irresistible," highlighting its versatility and cravability.

•We introduced several new entertaining and snacking items, including Planters® salt and vinegar cashews, Corn Nuts® loaded taco-flavor corn kernels, and Hormel Gatherings® summer-themed hard salami and pepperoni tray.

•We made further progress against our transform and modernize initiative, including in the areas of supply chain efficiency and portfolio optimization:

◦Plan: We continued the implementation of a new end-to-end planning process and are integrating new planning technology.

◦Buy: We continued to realize the benefits from our new procurement and productivity programs, with further savings expected across many categories, such as logistics and warehousing, direct supplies and indirect supplies. Additionally, we are broadening the scope of our efforts outside the supply chain.

◦Make: We completed a major improvement project to expand capacity for our retail canned portfolio. Additionally, we launched a project to increase capacity for Hormel® Bacon 1™ cooked bacon.

◦Move: We have implemented analytics across our refrigerated network to further enhance our service levels.

◦Portfolio Optimization: Leveraging our analytics tools and capabilities, we continued to identify opportunities to enhance and support margin-profile improvements.

•We celebrated the opening of our new $5 million, 13,000-square-foot childcare center in Austin, Minnesota. This new facility provides a needed service for our team members and the Austin community and assists the Company's efforts to recruit working parents in today’s tight labor market.

•Volume down 5%

•Net sales down 7%

•Segment profit down 14%

Volume growth from the bacon and emerging brands verticals was more than offset by declines in value-added meats. Net sales increased for many items, including Hormel® Black Label® bacon, the SPAM® family of products, Applegate® natural and organic meats, Hormel® Square Table™ entrees and Planters® snack nuts. These gains were negated by a significant year-over-year volume and pricing decline for whole-bird turkeys and lower net sales in the convenient meals and proteins vertical. Segment profit declined due to lower sales and higher SG&A expenses, which included increased advertising investments. These factors more than offset the benefit from lower logistics expenses and supply chain improvement.

Foodservice

•Volume up 3%

•Net sales up 6%

•Segment profit up 3%

Volume and net sales growth were driven primarily by strength across the bacon, premium prepared proteins and turkey categories. Products such as Hormel® Bacon 1™ cooked bacon, Hormel® Fire Braised™ meats, Austin Blues® smoked meats, Café H® globally inspired proteins and Corn Nuts® corn kernels delivered double-digit net sales growth. Additionally, branded Jennie-O® turkey items delivered robust growth. Segment profit increased due to higher sales and lower logistics expenses.

•Volume down 7%

•Net sales down 7%

•Segment profit up 71%

Double-digit volume and net sales increases for SPAM® luncheon meat and refrigerated exports were more than offset by lower commodity export volumes and lower net sales in China. Segment profit increased significantly, resulting from favorable costs in China, growth from our partnerships in the Philippines, South Korea and Indonesia, as well as growth in Brazil.

•Advertising investments were $44 million, compared to $35 million last year. The Company expects full-year advertising expense to increase compared to the prior year.

•The effective tax rate was 22.5%, compared to 22.1% last year. The Company benefited from the impact of higher federal deductions last year.

•Capital expenditures were $60 million, compared to $54 million last year. The Company's target for capital expenditures in fiscal 2024 is $280 million.

•Depreciation and amortization expense was $64 million, compared to $62 million last year. The full-year expense for fiscal 2024 is expected to be approximately $250 million.

A conference call will be webcast at 8 a.m. CT on May 30, 2024. Access is available at www.hormelfoods.com by clicking on "Investors." The call will also be available via telephone by dialing

800-549-8228 (toll-free) or 646-564-2877 (international) and providing the conference ID 77284. An audio replay is available at www.hormelfoods.com. The webcast replay will be available at noon CT, May 30, 2024, and will remain on the website for one year.

ABOUT HORMEL FOODS - Inspired People. Inspired Food.™

Hormel Foods Corporation, based in Austin, Minnesota, is a global branded food company with over $12 billion in annual revenue across more than 80 countries worldwide. Its brands include Planters®, Skippy®, SPAM®, Hormel® Natural Choice®, Applegate®, Justin’s®, Wholly®, Hormel® Black Label®, Columbus®, Jennie-O® 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 best companies to work for by U.S. News & World Report, one of America's most responsible companies by Newsweek, recognized on Fast Company's list of the 100 Best Workplaces for Innovators, received a perfect score of 100 on the 2023–24 Corporate Equality Index 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.

This news release contains “forward-looking” information within the meaning of the federal securities laws. The “forward-looking” information may include statements concerning the Company’s outlook for the future as well as other statements of beliefs, future plans, strategies, or anticipated events and similar expressions concerning matters that are not historical facts. Words or phrases such as “should result,” “believe,” “intend,” “plan,” “are expected to,” “targeted,” “will continue,” “will approximate,” “is anticipated,” “estimate,” “project,” or similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those anticipated or projected, which factors include, but are not limited to, risks related to the deterioration of economic conditions; risks associated with acquisitions, joint ventures, equity investments, and divestitures; potential disruption of operations, including at co-manufacturers, suppliers, logistics providers, customers, or other third-party service providers; failure to realize anticipated cost savings or operating efficiencies associated with strategic initiatives; risk of loss of a material contract; the Company’s inability to protect information technology systems against, or effectively respond to, cyber attacks or security breaches; deterioration of labor relations, labor availability or increases to labor costs; general risks of the food industry, including food contamination; outbreaks of disease among livestock and poultry flocks; fluctuations in commodity prices and availability of raw materials and other inputs; fluctuations in market demand for the Company’s products; damage to the Company’s reputation or brand image; climate change, or legal, regulatory, or market measures to address climate change; risks of litigation; potential sanctions and compliance costs arising from government regulation; compliance with stringent environmental regulations and potential environmental litigation; and risks arising from the Company’s foreign operations. Please refer to the cautionary statements regarding “Risk Factors” and “Forward-Looking Statements” that appear in our most recent Annual Report on Form 10-K and Quarterly reports on Form 10-Q, which can be accessed at www.hormelfoods.com in the “Investors” section, for additional information. In making these statements, the Company is not undertaking, and specifically declines to undertake, any obligation to address or update each or any factor in future filings or communications regarding the Company’s business or results, and is not undertaking to address how any of these factors may have caused changes to discussions or information contained in previous filings or communications.

Though the Company has attempted to list comprehensively these important cautionary risk factors, the Company wishes to caution investors and others that other factors may in the future prove to be important in affecting the Company’s business or results of operations. The Company cautions readers not to place undue reliance on forward-looking statements, which represent current views as of the date made.

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.

1    Non-GAAP measure. See Appendix: Non-GAAP Measures to this news release for more information.

2    Circana Total US MULO;13 weeks ended 4/21/2024 vs YAG

3    Circana, POS Custom MA Model, Total US MULO; 26 weeks ended 4/21/24 vs YAG

4    SPINS Satori, Total US Natural; 12 weeks ended 4/21/2024 vs YAG

5    Internal data

This news release includes measures of financial performance that are not defined by U.S.  generally accepted accounting principles (GAAP). The Company utilizes these non-GAAP measures to understand and evaluate operating performance on a consistent basis. These measures may also be used when making decisions regarding resource allocation and in determining incentive compensation. The Company believes these non-GAAP measures provide useful information to investors because they aid analysis and understanding of the Company’s results and business trends relative to past performance and the Company’s competitors. Non-GAAP measures are not intended to be a substitute for GAAP measures in analyzing financial performance. These non-GAAP measures are not in accordance with GAAP and may be different from non-GAAP measures used by other companies.

In the fourth quarter of fiscal 2023, the Company announced a multi-year transform and modernize initiative. In presenting non-GAAP measures, the Company adjusts for (i.e., excludes) expenses for this initiative that are non-recurring, comprised primarily of project-based external consulting fees and asset write-offs related to portfolio optimization (i.e., reducing the complexity and optimizing the assortment of the product portfolio). The Company believes the non-recurring costs are not reflective of the Company’s ongoing operating cost structure; therefore, the Company is excluding these discrete costs. The Company does not adjust for (i.e., does not exclude) certain costs related to the transform and modernize initiative that are expected to continue after the project ends, such as software license fees and internal employee expenses, because those costs are considered ongoing in nature as a component of normal operating costs.

In the second quarter of fiscal 2024, the Company agreed to settle with three classes of plaintiffs in the pork antitrust litigation. These settlement amounts are not indicative of the Company’s core operating performance, do not reflect expected future operating costs, and may not be meaningful when comparing the Company’s operating performance against that of prior periods.

The table below shows the calculations to reconcile from the GAAP measures to the non-GAAP measures. The tax impacts were calculated using the effective tax rate for the quarter in which the expenses were incurred.

(1)    Comprised primarily of asset write-offs related to portfolio optimization.

(2)    Comprised primarily of project-based external consulting fees.

(3)    Settlements for pork antitrust litigation.

Our fiscal 2024 outlook for adjusted diluted net earnings per share is a non-GAAP measure that excludes, or has otherwise been adjusted for, items impacting comparability, including estimated charges associated with the transform and modernize initiative.

The table below shows the calculation to reconcile from the estimated fiscal 2024 GAAP measure to the estimated non-GAAP adjusted measure.