HORMEL FOODS CORP DE
For the period ended Jan 26, 2025. Filed Feb 27, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jan 26, 2025 · Filed Feb 27, 2025
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Non-GAAP Measures
(1)Non-GAAP Measures
This filing includes measures of financial performance that are not defined by 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 calculated in accordance with GAAP and may be different from non-GAAP measures used by other companies.
Transform and Modernize (T&M) Initiative
In the fourth quarter of fiscal 2023, the Company announced a multi-year T&M 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 expenses related to supply chain and portfolio optimization (e.g., asset write-offs, severance, or relocation-related costs). The Company believes that non-recurring costs associated with the T&M initiative 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 T&M 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. The Company also does not adjust for savings realized through the T&M initiative as these are considered ongoing in nature and reflective of expected future operating performance.
Loss on Sale of Business
In the first quarter of fiscal 2025, the Company sold Mountain Prairie, LLC, a non-core sow operation, resulting in a loss on the sale. The Company believes the one-time detriment from the sale, including transaction costs, is not reflective of the Company’s ongoing operating cost structure, is not indicative of the Company’s core operating performance, and may not be meaningful when comparing the Company’s operating performance against that of prior periods. Thus, the Company adjusted for (i.e. excluded) the loss.
Legal Matters
From time to time, the Company incurs expenses related to discrete legal matters that the Company believes 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 Company adjusts for (i.e., excludes) these expenses.
Litigation Settlements
In the first quarter of fiscal 2025, the Company entered into a settlement agreement with a plaintiff in a pending antitrust litigation. See Note J - Commitments and Contingencies of the Notes to the Consolidated Financial Statements for additional information.
Organic Volume and Organic Net Sales
The non-GAAP measures of organic volume and organic net sales are presented to provide investors with additional information to facilitate the comparison of past and present operations. Organic volume and organic net sales exclude the impact of the sale of Hormel Health Labs, LLC in the Foodservice segment in the fourth quarter of fiscal 2024.
The tables below show the calculations to reconcile from the GAAP measures to the non-GAAP measures presented in this Quarterly Report on Form 10-Q. The tax impacts were calculated using the effective tax rate for the quarter in which the transactions occurred.
| Quarter Ended | ||
|---|---|---|
| In thousands, except per share amounts | January 26, 2025 | January 28, 2024 |
| Cost of Products Sold (GAAP) | $2,513,581 | $2,488,178 |
| Transform and Modernize Initiative(1) | (186) | (1,598) |
| Adjusted Cost of Products Sold (Non-GAAP) | $2,513,395 | $2,486,580 |
| SG&A (GAAP) | $263,013 | $240,386 |
| Transform and Modernize Initiative(2) | (13,968) | (8,715) |
| Loss on Sale of Business | (11,324) | — |
| Litigation Settlements | (240) | — |
| Adjusted SG&A (Non-GAAP) | $237,481 | $231,671 |
| Operating Income (GAAP) | $228,330 | $284,438 |
| Transform and Modernize Initiative(1)(2) | 14,155 | 10,313 |
| Loss on Sale of Business | 11,324 | — |
| Litigation Settlements | 240 | — |
| Adjusted Operating Income (Non-GAAP) | $254,049 | $294,751 |
| Earnings Before Income Taxes (GAAP) | $218,073 | $285,547 |
| Transform and Modernize Initiative(1)(2) | 14,155 | 10,313 |
| Loss on Sale of Business | 11,324 | — |
| Litigation Settlements | 240 | — |
| Adjusted Earnings Before Income Taxes (Non-GAAP) | $243,791 | $295,859 |
| Provision for Income Taxes (GAAP) | $47,543 | $66,818 |
| Transform and Modernize Initiative(1)(2) | 3,086 | 2,413 |
| Loss on Sale of Business | 2,469 | — |
| Litigation Settlements | 52 | — |
| Adjusted Provision for Income Taxes (Non-GAAP) | $53,149 | $69,231 |
| Net Earnings Attributable to Hormel Foods Corporation (GAAP) | $170,575 | $218,863 |
| Transform and Modernize Initiative(1)(2) | 11,069 | 7,900 |
| Loss on Sale of Business | 8,855 | — |
| Litigation Settlements | 188 | — |
| Adjusted Net Earnings Attributable to Hormel Foods Corporation (Non-GAAP) | $190,687 | $226,763 |
| Quarter Ended | ||
|---|---|---|
| In thousands, except per share amounts | January 26, 2025 | January 28, 2024 |
| Diluted Earnings Per Share (GAAP) | $0.31 | $0.40 |
| Transform and Modernize Initiative(1)(2) | 0.02 | 0.01 |
| Loss on Sale of Business | 0.02 | — |
| Litigation Settlements | — | — |
| Adjusted Diluted Earnings Per Share (Non-GAAP) | $0.35 | $0.41 |
| SG&A as a Percent of Net Sales (GAAP) | 8.8% | 8.0% |
|---|---|---|
| Transform and Modernize Initiative(2) | (0.5) | (0.3) |
| Loss on Sale of Business | (0.4) | — |
| Litigation Settlements | — | — |
| Adjusted SG&A as a Percent of Net Sales (Non-GAAP) | 7.9% | 7.7% |
| Operating Margin (GAAP) | 7.6% | 9.5% |
| Transform and Modernize Initiative(1)(2) | 0.5 | 0.3 |
| Loss on Sale of Business | 0.4 | — |
| Litigation Settlements | — | — |
| Adjusted Operating Margin (Non-GAAP) | 8.5% | 9.8% |
(1) Comprised primarily of asset write-offs and severance expenses related to supply chain and portfolio optimization.
(2) Comprised primarily of project-based external consulting fees.
ORGANIC VOLUME AND ORGANIC NET SALES (NON-GAAP)
| Quarter Ended | |||||
|---|---|---|---|---|---|
| January 26, 2025 · January 28, 2024 | |||||
| In thousands | GAAP | GAAP | Divestiture | Non-GAAP Organic | Non-GAAP% Change |
| Volume (lbs.) | |||||
| Retail | 736,886 | 765,412 | — | 765,412 | (3.7) |
| Foodservice | 243,853 | 256,007 | (15,930) | 240,077 | 1.6 |
| International | 74,569 | 80,135 | — | 80,135 | (6.9) |
| Total Volume (lbs.) | 1,055,308 | 1,101,554 | (15,930) | 1,085,624 | (2.8) |
| Net Sales | |||||
| Retail | $1,890,133 | $1,911,272 | $— | $1,911,272 | (1.1) |
| Foodservice | 930,185 | 913,087 | (26,898) | 886,189 | 5.0 |
| International | 168,495 | 172,552 | — | 172,552 | (2.4) |
| Total Net Sales | $2,988,813 | $2,996,911 | $(26,898) | $2,970,013 | 0.6 |
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.