HORMEL FOODS CORP /DE/

The Company is a global manufacturer and marketer of branded food products and remains focused on driving long-term growth through a balanced business model, a diverse portfolio, and a commitment to creating value for all stakeholders. The Company’s three reportable segments, Retail, Foodservice, and International, are described in Note O - 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 cost of products sold, adjusted selling, general and administrative (SG&A), adjusted SG&A as a percent of net sales, adjusted equity in earnings of affiliates, adjusted operating income, adjusted earnings before income taxes, adjusted provision for income taxes, adjusted net earnings attributable to Hormel Foods Corporation, adjusted diluted earnings per share, and adjusted segment profit. 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 $0.11 for the third quarter of fiscal 2026, down 67 percent compared to the same period last year. Adjusted diluted earnings per share for the third quarter of fiscal 2026 was $0.37, up 6 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 2026 decreased 2 percent. Organic net sales decreased 2 percent with growth from the Foodservice segment offset by declines in the Retail and International segments.

•Total segment profit for the third quarter of fiscal 2026 decreased 17 percent, while adjusted segment profit was flat to the prior year, as growth in the Foodservice segment was offset by declines in the Retail segment. Adjusted segment profit in the International segment was comparable to the prior year.

◦The decrease in Retail segment profit was due to lower sales and higher logistics expenses, which were partially offset by lower SG&A.

◦The increase in Foodservice segment profit was driven primarily by higher sales and improved margins, which were partially offset by higher logistics expenses and higher SG&A.

◦The decrease in International segment profit was significantly impacted by the non-cash impairment of a minority investment in Indonesia.

•Earnings before income taxes decreased 56 percent for the third quarter of fiscal 2026, primarily due to a $56 million loss related to the Brazil divestiture, a $48 million non-cash impairment charge, and a litigation settlement of $38 million. Adjusted earnings before income taxes increased 3 percent, as lower SG&A were partially offset by lower net sales and higher logistics expenses.

•The pre-tax impact of nonrecurring expenses and discrete items in the third quarter of fiscal 2026 was $155 million, including a loss related to the Brazil divestiture, a non-cash impairment of a minority investment in Indonesia, a litigation settlement, and the Company’s Transform and Modernize (T&M) initiative.

Cash flow from operations was $769 million for the first nine months of fiscal 2026, a 47 percent increase primarily reflecting improved inventory management and working capital performance.

Entering the fourth quarter of fiscal 2026, the external environment remains dynamic, with continued volatility associated with macroeconomic and geopolitical conditions. The Company is actively working to mitigate the impact of these conditions. However, continued pressure from the external environment, at a level greater than expected, could have an adverse impact on results of operations.