HORMEL FOODS CORP /DE/

Volume, Net Sales, Earnings, and Diluted Earnings Per Share

Volume and Net Sales

Volume and net sales increased for the third quarter of fiscal 2025 while volume decreased and net sales increased for the first nine months of fiscal 2025 compared to the prior year.

For the third quarter of fiscal 2025, net sales increased in each segment. Net sales growth across the enterprise was driven primarily by the turkey portfolio, Planters® snack nuts, the SPAM® family of products, and the Foodservice customized solutions business.

For the first nine months of fiscal 2025, net sales increased in each segment. Net sales growth for the first nine months of fiscal 2025 was driven primarily by the turkey portfolio, the customized solutions business, the SPAM® family of products, the Mexican foods portfolio, and the bacon portfolio.

For the third quarter of fiscal 2025, volume grew in the Retail and International segments while organic volume grew in the Foodservice segment. For the first nine months of fiscal 2025, organic volume in the Foodservice segment increased compared to the prior year. Volume increased in the International segment and declined in the Retail segment for the first nine months of fiscal 2025.

In the fourth quarter of fiscal 2025, the Company expects net sales growth from each of its segments compared to the prior year.

Cost of Products Sold

Cost of products sold for the third quarter of fiscal 2025 increased, primarily due to increased volume and higher commodity input costs, mainly for pork bellies, beef, and nuts. Cost of products sold for the first nine months of fiscal 2025 increased primarily due to higher commodity input costs, mainly for pork bellies, nuts, and beef.

On a per pound basis, cost of products sold for the third quarter and first nine months of fiscal 2025 increased compared to the prior year.

Gross Profit

For the third quarter and first nine months of fiscal 2025, gross profit as a percent of net sales declined. For the third quarter and first nine months of fiscal 2025, gross profit as a percent of net sales declined for each segment. All segments benefited from savings realized as part of the Company’s T&M initiative in the third quarter and first nine months of fiscal 2025.

For the fourth quarter of fiscal 2025, the Company expects gross profit as a percent of net sales to decrease compared to last year. The Company expects gross profit as a percent of net sales to be comparable for the Retail segment and to decrease for the Foodservice and International segments.

Selling, General, and Administrative (SG&A)

For the third quarter of fiscal 2025, SG&A and SG&A as a percent of net sales decreased, primarily due to the lapping of prior year legal expenses which were partially offset by higher employee-related expenses.

For the first nine months of fiscal 2025, SG&A increased and SG&A as a percent of net sales was comparable to the prior year. Higher employee-related expenses, increased expenses related to the T&M initiative, and the loss on the sale of a non-core sow operation were partially offset by the lapping of prior year legal expenses and lower advertising expense.

Advertising investments in the third quarter of fiscal 2025 were $41 million, an increase of 2 percent compared to the prior year. For the first nine months of fiscal 2025, advertising investments were $121 million, a decrease of 6 percent compared to last year. The Company expects advertising investments to decrease in the fourth quarter of fiscal 2025 compared to the prior year.

Equity in Earnings of Affiliates

Equity in earnings of affiliates for the third quarter of fiscal 2025 increased due to favorable results for MegaMex Foods, LLC, and a modest benefit from international investments. For the first nine months of fiscal 2025, equity in earnings of affiliates increased, primarily due to favorable results for MegaMex Foods, LLC, which were partially offset by the results of international investments.

Interest and Investment Income and Interest Expense

Interest and investment income increased for the third quarter of fiscal 2025, primarily due to favorable rabbi trust performance. Interest and investment income decreased for the first nine months of fiscal 2025, primarily due to lower average monthly cash balances and performance from the rabbi trust. Interest expense decreased in the third quarter and first nine months of fiscal 2025, primarily due to the lapping of interest rate swap amortization.

Effective Tax Rate

The effective tax rate in the third quarter of fiscal 2025 was 22.3% compared to 21.7% for the prior year, primarily due to decreased benefits from the purchase of federal transferable energy credits. For the first nine months of fiscal 2025, the Company benefited from increased federal deductions compared to the prior year. For additional information, refer to Note L - Income Taxes of the Notes to the Consolidated Financial Statements.

The effective tax rate for fiscal 2025 is expected to be approximately 22.0%.