On May 30, 2024, Hormel Foods Corp (HRL, Financial) released its 8-K filing for the second quarter of fiscal 2024, ended April 28, 2024. The company reported mixed results, with earnings falling short of analyst estimates but showing progress in strategic initiatives.
Company Overview
Historically meat-focused, Hormel Foods broadened its lineup to include other protein offerings and become a branded food company. The firm sells its wares through multiple channels, including U.S. retail (64% of fiscal 2023 sales), U.S. food service (30%), and international (6%). By product, 70% of fiscal 2023 sales were from perishable food and 30% from shelf-stable. Major brands include Hormel, Spam, Jennie-O, Columbus, Applegate, Planters, and Skippy. Many of these hold the number one or two market share in their respective categories.
Performance and Challenges
For the second quarter, Hormel Foods Corp (HRL, Financial) reported net sales of $2.89 billion, a 3% decline from $2.98 billion in the same period last year. The company also saw a decrease in operating income to $252 million from $296 million, and diluted net earnings per share fell to $0.34 from $0.40. These figures fell short of analyst estimates, which projected earnings per share of $0.35 and revenue of $2.97 billion.
The company faced challenges such as a significant year-over-year decline in whole bird turkey markets and an unplanned production interruption at its Suffolk, Virginia, facility. These issues contributed to the lower-than-expected performance.
Financial Achievements
Despite the challenges, Hormel Foods Corp (HRL, Financial) made notable progress in several areas. The company reported a 13% increase in quarter-to-date cash flow from operations, reaching $236 million. Additionally, the effective tax rate was 22.5%, compared to 22.1% last year.
Jim Snee, chairman of the board, president, and chief executive officer, commented,
“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.”
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 | % Change |
|---|---|---|---|
| Net Sales | $2.89 billion | $2.98 billion | -3.0% |
| Operating Income | $252 million | $296 million | -14.9% |
| Diluted EPS | $0.34 | $0.40 | -15.0% |
Balance Sheet and Cash Flow
Hormel Foods Corp (HRL, Financial) reported total assets of $14.14 billion, up from $13.45 billion at the end of fiscal 2023. The company also saw a significant increase in cash and cash equivalents, which rose to $1.49 billion from $736.53 million. Year-to-date cash flow from operations was $640 million, up 55% from the previous year.
Segment Performance
The company's performance varied across its segments:
- Retail: Volume down 5%, net sales down 7%, segment profit down 14%.
- Foodservice: Volume up 3%, net sales up 6%, segment profit up 3%.
- International: Volume down 7%, net sales down 7%, segment profit up 71%.
Outlook and Strategic Initiatives
Hormel Foods Corp (HRL, Financial) updated its full-year earnings outlook, reaffirming its net sales growth outlook of 1% to 3% and adjusting its expectations for diluted net earnings per share to $1.45 to $1.55 (previously $1.43 to $1.57). The company also expects adjusted diluted net earnings per share to be $1.55 to $1.65 (previously $1.51 to $1.65).
The company continues to focus on its strategic initiatives, including its transform and modernize initiative, which aims to improve supply chain efficiency and portfolio optimization.
For more detailed information, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from Hormel Foods Corp for further details.
