HORMEL FOODS CORP /DE/

The Company is a global manufacturer and marketer of branded food products. The Company’s three reportable segments, Retail, Foodservice, and International, are described in Note N - Segment Reporting in the Notes to the Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

The Company discloses certain measures not defined by United States (U.S.) Generally Accepted Accounting Principles (GAAP), including organic volume, organic net sales, adjusted selling, general and administrative (SG&A) expenses, adjusted SG&A as a percent of net sales, adjusted earnings before income taxes, and adjusted diluted earnings per share. The Company utilizes these non-GAAP measures to understand and evaluate operating performance on a consistent basis. For additional information and reconciliations to the most closely comparable measures calculated in accordance with GAAP, see the "Non-GAAP Measures" section of this Item.

Diluted earnings per share was $0.33 for the third quarter of fiscal 2025, up 3 percent compared to the same period last year. Adjusted diluted earnings per share for the third quarter of fiscal 2025 was $0.35, down 5 percent compared to the same period last year. Significant factors impacting the quarter are listed below. All comparisons are to the same period of the prior year unless otherwise noted.

•Net sales for the third quarter of fiscal 2025 increased 5 percent compared to the prior year. Organic net sales increased 6 percent with growth in each segment.

•Total segment profit for the third quarter of fiscal 2025 decreased 3 percent. Segment profit declined in each segment.

•Retail segment profit declined in the third quarter of fiscal 2025, as robust net sales growth was more than offset by input cost pressures and higher SG&A expenses.

•Foodservice segment profit decreased in the third quarter of fiscal 2025, as meaningful net sales growth was more than offset by the rise in commodity input costs and margin pressures primarily in non-core businesses.

•International segment profit declined in the third quarter of fiscal 2025, as meaningful net sales growth was more than offset by competitive pressures in Brazil and lower pork offal margins.

•Earnings before income taxes for the third quarter of fiscal 2025 increased 5 percent, as the benefits from higher net sales and higher interest and investment income were partially offset by higher input costs. Adjusted earnings before income taxes decreased 2 percent.

•The pre-tax impact of non-recurring expenses related to the Company’s Transform and Modernize (T&M) initiative in the third quarter of fiscal 2025 was $14.5 million, most of which was recorded in SG&A.

•Cash flow from operations was $522 million for the first nine months of fiscal 2025, a 39 percent decrease from the comparable period of the prior year. The decline in cash flow from operations was primarily due to a planned inventory build in the second and third quarters of fiscal 2025 and elevated commodity market prices.

Changes in global trade policies, including recently announced tariffs and retaliatory tariffs, did not directly have a material impact on our results of operations during the third quarter or first nine months of fiscal 2025. The Company continues to monitor and evaluate the impact of proposed and enacted tariffs, including proposed and enacted retaliatory tariffs, and other trade restrictions, as well as our ability to mitigate their impacts.