AUSTIN, Minn., May 25, 2017 /PRNewswire/ -- Hormel Foods
Corporation (NYSE: HRL) today reported results for the second
quarter of fiscal year 2017. All comparisons are to the second
quarter of fiscal year 2016. Results reflect the divestiture of the
Diamond Crystal Brands business, the divestiture of the Farmer John
business, and the acquisition of Justin's, LLC. The impact of these
transactions is excluded in the presentation of the non-GAAP
adjusted measures below.
SUMMARY
Second Quarter
- Diluted earnings per share of $0.39, down 2.5 percent from 2016 EPS of
$0.40
- Net earnings of $211 million,
down 2 percent compared to 2016 net earnings of $215 million
- Sales of $2.2 billion, down 5
percent; Non-GAAP1 adjusted sales2 up 2
percent
- Volume down 11 percent; Non-GAAP1 adjusted
volume2 up 1 percent
- Grocery Products operating profit up 15 percent; volume up 2
percent; Non-GAAP1 adjusted volume2 flat;
sales up 8 percent; Non-GAAP1 adjusted sales2
up 2 percent
- International & Other operating profit up 38 percent;
volume up 17 percent; sales up 19 percent
- Refrigerated Foods operating profit flat; volume down 14
percent; Non-GAAP1 adjusted volume2 up 1
percent; sales down 6 percent; Non-GAAP1 adjusted
sales2 up 5 percent
- Specialty Foods operating profit down 16 percent; volume down
33 percent; Non-GAAP1 adjusted volume2 up 3
percent; sales down 24 percent; Non-GAAP1 adjusted
sales2 flat
- Jennie-O Turkey Store operating profit down 29 percent; volume
down 6 percent; sales down 8 percent
COMMENTARY
"Despite ongoing challenges in the turkey industry, our balanced
model allowed us to deliver earnings within two percent of last
year's results," said Jim Snee,
president and chief executive officer. "Three segments delivered
earnings growth, margin expansion, and adjusted volume and sales
growth this quarter."
"Growth in many of our key brands drove excellent results in the
Grocery Products and International segments. The divestitures of
Farmer John and Diamond Crystal Brands allowed Refrigerated Foods
and Specialty Foods to enhance their operating margins," Snee said.
"Unfavorable market conditions in the turkey industry caused by an
oversupply of turkey continued to pressure Jennie-O Turkey Store
sales and earnings."
SEGMENT OPERATING HIGHLIGHTS – SECOND QUARTER
Grocery Products (20% of Net Sales, 24% of Total Segment
Operating Profit)
Grocery Products sales increased 8 percent
and segment profit increased 15 percent. These results are due to
the addition of JUSTIN'S® specialty nut butters as well as
the strong performance of WHOLLY GUACAMOLE® dips and
SPAM® luncheon meat.
Refrigerated Foods (47% of Net Sales, 40% of Total Segment
Operating Profit)
Refrigerated Foods segment profit was flat
and sales declined 6 percent, primarily related to the divestiture
of the Farmer John business. Retail products such as HORMEL®
BLACK LABEL® bacon and HORMEL® NATURAL CHOICE® meats and
foodservice products such as HORMEL® BACON
1TM fully cooked bacon and
HORMEL® pepperoni posted excellent results this
quarter.
Jennie-O Turkey Store (18% of Net Sales, 20% of Total Segment
Operating Profit)
Jennie-O Turkey Store volume declined 6
percent, sales declined 8 percent, and segment profit declined 29
percent. These decreases are primarily due to lower turkey
commodity prices, pricing pressure from competing proteins, and
increased operating expenses.
Specialty Foods (9% of Net Sales, 10% of Total Segment
Operating Profit)
Specialty Foods sales declined 24 percent
and segment profit declined 16 percent, primarily related to the
divestiture of Diamond Crystal Brands in May
2016 and reduced contract packaging sales.
International & Other (6% of Net Sales, 6% of Total
Segment Operating Profit)
International sales increased 19
percent and segment profit increased 38 percent. Strong exports of
fresh pork and SPAM® luncheon meats contributed to the
growth.
OUTLOOK
"We are maintaining our fiscal 2017 guidance range of
$1.65 to $1.71 per share but expect
the results at Jennie-O Turkey Store to push our full-year earnings
toward the lower end of this range," Snee said. "We expect the
pressure on Jennie-O Turkey Store to continue for the remainder of
the fiscal year given the oversupply in the turkey industry."
"Even in this challenging commodity environment, our team is
working hard to generate earnings growth by providing customers,
consumers, and operators with on-trend, innovative value-added
products," Snee said.
DIVIDENDS
Effective May 15, 2017, the
company paid its 355th consecutive quarterly dividend at
the annual rate of $0.68.
1 COMPARISON OF U.S. GAAP TO NON-GAAP FINANCIAL
MEASUREMENTS
The non-GAAP adjusted financial measurements are presented to
provide investors additional information to facilitate the
comparison of past and present operations. The company believes
these non-GAAP adjusted financial measurements provide useful
information to investors because they are the measurements used to
evaluate performance on a comparable year-over-year basis. Non-GAAP
measurements are not intended to be a substitute for U.S. GAAP
measurements in analyzing financial performance. These non-GAAP
measurements are not in accordance with generally accepted
accounting principles and may be different from non-GAAP measures
used by other companies.
2 ADJUSTED FINANCIAL MEASURES
Adjusted net sales and volume excludes the impact from the
Justin's, LLC acquisition in May
2016, and the divestitures of the Diamond Crystal Brands
business in May 2016, and the Farmer
John business in January 2017. The
tables below show the calculations to reconcile from the non-GAAP
adjusted measures to the GAAP measures in the second quarter and
second quarter year-to-date of fiscal 2016 and fiscal 2017.
2nd
Quarter
|
|
|
|
|
|
|
|
|
Net
Sales
|
|
|
|
|
|
|
|
|
(in
thousands)
|
2017
Net Sales
|
Justin's
Acquisition
|
2017 Non-
GAAP Net
Sales
|
2016
Net Sales
|
DCB
Divestiture
|
Farmer
John
Divestiture
|
2016
Non-GAAP
Net Sales
|
Non-GAAP
% Change
|
Grocery
Products
|
$
432,205
|
$
(21,132)
|
$
411,073
|
$
401,472
|
$
-
|
$
-
|
$
401,472
|
2.4%
|
Refrigerated
Foods
|
1,027,486
|
|
1,027,486
|
1,092,479
|
|
(116,397)
|
976,082
|
5.3%
|
Jennie-O Turkey
Store
|
388,237
|
|
388,237
|
423,540
|
|
|
423,540
|
(8.3%)
|
Specialty
Foods
|
208,214
|
|
208,214
|
272,484
|
(63,996)
|
|
208,488
|
(0.1%)
|
International &
Other
|
131,167
|
|
131,167
|
110,260
|
|
|
110,260
|
19.0%
|
Total Net
Sales
|
$
2,187,309
|
$
(21,132)
|
$
2,166,177
|
$
2,300,235
|
$
(63,996)
|
$
(116,397)
|
$
2,119,842
|
2.2%
|
|
|
|
|
|
|
|
|
|
Tonnage
(lbs.)
|
|
|
|
|
|
(in
thousands)
|
2017
Tonnage
|
Justin's
Acquisition
|
2017 Non-
GAAP
Tonnage
|
2016
Tonnage
|
DCB
Divestiture
|
Farmer
John
Divestiture
|
2016 Non-
GAAP
Tonnage
|
Non-GAAP
% Change
|
Grocery
Products
|
222,451
|
(3,020)
|
219,431
|
218,674
|
|
|
218,674
|
0.3%
|
Refrigerated
Foods
|
515,490
|
|
515,490
|
602,811
|
|
(91,733)
|
511,078
|
0.9%
|
Jennie-O Turkey
Store
|
203,557
|
|
203,557
|
216,764
|
|
|
216,764
|
(6.1%)
|
Specialty
Foods
|
116,432
|
|
116,432
|
174,282
|
(61,002)
|
|
113,280
|
2.8%
|
International &
Other
|
80,312
|
|
80,312
|
68,920
|
|
|
68,920
|
16.5%
|
Total
Tonnage
|
1,138,242
|
(3,020)
|
1,135,222
|
1,281,451
|
(61,002)
|
(91,733)
|
1,128,716
|
0.6%
|
Year to
Date
|
|
|
|
|
|
|
|
|
|
Net
Sales
|
|
|
|
|
|
|
|
|
|
(in
thousands)
|
2017
Net Sales
|
Justin's
Acquisition
|
Farmer John
Divestiture
|
2017
Non-GAAP
Net Sales
|
2016
Net Sales
|
DCB
Divestiture
|
Farmer John
Divestiture
|
2016
Non-GAAP
Net Sales
|
Non-GAAP
% Change
|
Grocery
Products
|
$
849,950
|
$
(34,467)
|
$
-
|
$
815,483
|
$
793,690
|
$
-
|
$
-
|
$
793,690
|
2.7%
|
Refrigerated
Foods
|
2,150,525
|
|
(100,231)
|
2,050,294
|
2,254,600
|
|
(249,297)
|
2,005,303
|
2.2%
|
Jennie-O Turkey
Store
|
809,226
|
|
|
809,226
|
795,606
|
|
|
795,606
|
1.7%
|
Specialty
Foods
|
400,843
|
|
|
400,843
|
510,263
|
(126,913)
|
|
383,350
|
4.6%
|
International &
Other
|
256,992
|
|
|
256,992
|
238,748
|
|
|
238,748
|
7.6%
|
Total Net
Sales
|
$
4,467,536
|
$
(34,467)
|
$
(100,231)
|
$
4,332,838
|
$4,592,907
|
$
(126,913)
|
$
(249,297)
|
$
4,216,697
|
2.8%
|
|
|
|
|
|
|
|
|
|
|
Tonnage
(lbs.)
|
|
|
|
|
|
|
(in
thousands)
|
2017
Tonnage
|
Justin's
Acquisition
|
Farmer John
Divestiture
|
2017
Non-GAAP
Tonnage
|
2016
Tonnage
|
DCB
Divestiture
|
Farmer John
Divestiture
|
2016
Non-GAAP
Tonnage
|
Non-GAAP
% Change
|
Grocery
Products
|
448,414
|
(5,316)
|
|
443,098
|
436,939
|
|
|
436,939
|
1.4%
|
Refrigerated
Foods
|
1,129,915
|
|
(80,454)
|
1,049,461
|
1,238,463
|
|
(192,507)
|
1,045,956
|
0.3%
|
Jennie-O Turkey
Store
|
420,200
|
|
|
420,200
|
395,039
|
|
|
395,039
|
6.4%
|
Specialty
Foods
|
229,261
|
|
|
229,261
|
335,727
|
(122,036)
|
|
213,691
|
7.3%
|
International &
Other
|
155,361
|
|
|
155,361
|
144,438
|
|
|
144,438
|
7.6%
|
Total
Tonnage
|
2,383,151
|
(5,316)
|
(80,454)
|
2,297,381
|
2,550,606
|
(122,036)
|
(192,507)
|
2,236,063
|
2.7%
|
CONFERENCE CALL
A conference call will be webcast at 8:00
a.m. CT on Thursday, May 25,
2017. Access is available at www.hormelfoods.com. The call
will also be available via telephone by dialing 877-681-3367 and
providing the access code 2874950. An audio replay is available by
going to www.hormelfoods.com and clicking on Investors. The
webcast replay will be available at 11:00
a.m. CT, Thursday, May 25,
2017, and will remain on the website for one year.
About Hormel Foods – Inspired People. Inspired Food.™
Hormel Foods Corporation, based in Austin, Minn., is a global branded food
company with over $9 billion in
annual revenues across 75 countries worldwide. Its brands include
SKIPPY®, SPAM®, Hormel® Natural Choice®, Applegate®, Justin's®,
Wholly Guacamole®, Hormel® Black Label® and more than 30 other
beloved brands. The Company is a member of the S&P 500 Index
and the S&P 500 Dividend Aristocrats, was named one of "The 100
Best Corporate Citizens" by Corporate Responsibility Magazine for
the ninth year in a row, and has received numerous other awards and
accolades for its corporate responsibility and community service
efforts. In 2016, the company celebrated its 125th anniversary and
announced its new vision for the future - Inspired People. Inspired
Food.™ - focusing on its legacy of innovation. For more
information, visit www.hormelfoods.com and
http://2015csr.hormelfoods.com/.
FORWARD-LOOKING STATEMENTS
This news release contains forward-looking information based on
management's current views and assumptions. Actual events may
differ materially. Please refer to the cautionary statement
regarding Forward-Looking Statements and Risk Factors which appear
on pages 30 - 37 in the company's Form 10-Q for the quarter ended
January 29, 2017, which can be
accessed at www.hormelfoods.com under "Investors-SEC Filings."
Statements Follow
HORMEL FOODS
CORPORATION
|
SEGMENT
DATA
|
(Unaudited) (In
thousands)
|
|
|
SECOND QUARTER – 13 WEEKS
ENDED
|
|
|
|
|
NET
SALES
|
April 30,
2017
|
April 24,
2016
|
%
Change
|
Grocery
Products
|
$
432,205
|
$ 401,472
|
7.7
|
Refrigerated
Foods
|
1,027,486
|
1,092,479
|
(5.9)
|
Jennie-O Turkey
Store
|
388,237
|
423,540
|
(8.3)
|
Specialty
Foods
|
208,214
|
272,484
|
(23.6)
|
International &
Other
|
131,167
|
110,260
|
19.0
|
Total
|
$ 2,187,309
|
$ 2,300,235
|
(4.9)
|
|
|
|
OPERATING
PROFIT
|
|
|
|
Grocery
Products
|
$
77,487
|
$
67,110
|
15.5
|
Refrigerated
Foods
|
130,194
|
130,002
|
0.1
|
Jennie-O Turkey
Store
|
63,786
|
89,678
|
(28.9)
|
Specialty
Foods
|
30,810
|
36,853
|
(16.4)
|
International &
Other
|
19,617
|
14,244
|
37.7
|
Total
segment operating profit
|
321,894
|
337,887
|
(4.7)
|
Net interest
and investment expense (income)
|
205
|
(380)
|
153.9
|
General
corporate expense
|
5,822
|
14,057
|
(58.6)
|
Less:
Noncontrolling interest
|
(40)
|
(13)
|
(207.7)
|
Earnings before
income taxes
|
$ 315,827
|
$ 324,197
|
(2.6)
|
|
|
|
|
|
|
|
|
|
YEAR TO DATE – 26
WEEKS ENDED
|
|
|
|
|
NET
SALES
|
April 30,
2017
|
April 24,
2016
|
%
Change
|
Grocery
Products
|
$
849,950
|
$
793,690
|
7.1
|
Refrigerated
Foods
|
2,150,525
|
2,254,600
|
(4.6)
|
Jennie-O Turkey
Store
|
809,226
|
795,606
|
1.7
|
Specialty
Foods
|
400,843
|
510,263
|
(21.4)
|
International &
Other
|
256,992
|
238,748
|
7.6
|
Total
|
$ 4,467,536
|
$ 4,592,907
|
(2.7)
|
|
|
|
|
OPERATING
PROFIT
|
|
|
|
Grocery
Products
|
$
143,114
|
$
132,383
|
8.1
|
Refrigerated
Foods
|
304,002
|
296,910
|
2.4
|
Jennie-O Turkey
Store
|
131,966
|
180,981
|
(27.1)
|
Specialty
Foods
|
57,559
|
63,646
|
(9.6)
|
International &
Other
|
45,080
|
38,531
|
17.0
|
Total
segment operating profit
|
681,721
|
712,451
|
(4.3)
|
Net interest
and investment expense (income)
|
782
|
4,990
|
(84.3)
|
General
corporate expense
|
10,443
|
29,189
|
(64.2)
|
Less:
Noncontrolling interest
|
116
|
93
|
24.7
|
Earnings before
income taxes
|
$ 670,612
|
$ 678,365
|
(1.1)
|
|
|
|
|
HORMEL FOODS
CORPORATION
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(Unaudited) (In
thousands, except per share amounts)
|
|
|
|
|
|
Thirteen Weeks
Ended
|
Twenty-Six Weeks
Ended
|
|
April 30,
2017
|
April 24,
2016
|
April 30,
2017
|
April 24,
2016
|
|
|
|
|
|
Net sales
|
$
2,187,309
|
$
2,300,235
|
$
4,467,536
|
$
4,592,907
|
|
|
|
|
|
Cost of products
sold
|
1,700,389
|
1,773,876
|
3,428,336
|
3,508,537
|
|
|
|
|
|
GROSS
PROFIT
|
486,920
|
526,359
|
1,039,200
|
1,084,370
|
|
|
|
|
|
Selling,
general and administrative
|
181,009
|
211,144
|
391,226
|
421,092
|
Goodwill
impairment charge
|
-
|
991
|
-
|
991
|
Equity in
earnings of affiliates
|
10,121
|
9,593
|
23,420
|
21,068
|
|
|
|
|
|
OPERATING
INCOME
|
316,032
|
323,817
|
671,394
|
683,355
|
|
|
|
|
|
Other income &
expenses:
|
|
|
|
|
Interest &
investment income (expense)
|
2,818
|
3,409
|
5,267
|
1,446
|
Interest
expense
|
(3,023)
|
(3,029)
|
(6,049)
|
(6,436)
|
|
|
|
|
|
EARNINGS BEFORE
INCOME TAXES
|
315,827
|
324,197
|
670,612
|
678,365
|
|
|
|
|
|
Provision for income
taxes
|
104,941
|
108,813
|
224,423
|
227,814
|
(effective tax
rate)
|
33.23%
|
33.56%
|
33.47%
|
33.58%
|
|
|
|
|
|
NET
EARNINGS
|
210,886
|
215,384
|
446,189
|
450,551
|
Less: net (loss)
earnings attributable to
noncontrolling
interest
|
(40)
|
(13)
|
116
|
93
|
NET EARNINGS
ATTRIBUTABLE TO
HORMEL FOODS
CORPORATION
|
$ 210,926
|
$ 215,397
|
$ 446,073
|
$ 450,458
|
|
|
|
|
|
NET EARNINGS PER
SHARE
|
|
|
|
|
Basic
|
$
0.40
|
$
0.41
|
$
0.84
|
$
0.85
|
Diluted
|
$
0.39
|
$
0.40
|
$
0.83
|
$
0.83
|
|
|
|
|
|
WEIGHTED AVG.
SHARES OUTSTANDING
|
|
|
|
Basic
|
528,712
|
529,898
|
528,649
|
529,380
|
Diluted
|
539,635
|
543,769
|
539,850
|
543,253
|
|
|
|
|
|
DIVIDENDS
DECLARED
|
|
|
|
|
PER
SHARE
|
$ 0.170
|
$ 0.145
|
$
0.34
|
$
0.29
|
|
|
|
|
|
HORMEL FOODS
CORPORATION
|
CONDENSED
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
|
(Unaudited) (In
thousands)
|
|
|
|
|
April 30,
2017
|
October 30,
2016
|
ASSETS
|
|
|
|
CURRENT
ASSETS
|
|
|
Cash and cash
equivalents
|
$
548,901
|
$
415,143
|
Accounts
receivable
|
525,322
|
591,310
|
Inventories
|
988,408
|
985,683
|
Income taxes
receivable
|
42,026
|
18,282
|
Prepaid
expenses
|
15,892
|
13,775
|
Other current
assets
|
5,242
|
5,719
|
|
|
|
TOTAL CURRENT
ASSETS
|
2,125,791
|
2,029,912
|
|
|
|
DEFERRED INCOME
TAXES
|
-
|
6,223
|
|
|
|
INTANGIBLES
|
2,707,410
|
2,737,755
|
|
|
|
OTHER
ASSETS
|
508,940
|
490,728
|
|
|
|
PROPERTY, PLANT &
EQUIPMENT, NET
|
1,043,566
|
1,105,449
|
|
|
|
TOTAL
ASSETS
|
$ 6,385,707
|
$ 6,370,067
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' INVESTMENT
|
|
CURRENT
LIABILITIES
|
$
824,587
|
$
1,053,196
|
|
|
|
LONG-TERM DEBT – LESS
CURRENT MATURITIES
|
250,000
|
250,000
|
|
|
|
DEFERRED INCOME
TAXES
|
7,520
|
-
|
|
|
|
OTHER LONG-TERM
LIABILITIES
|
617,172
|
615,465
|
|
|
|
SHAREHOLDERS'
INVESTMENT
|
4,686,428
|
4,451,406
|
|
|
|
TOTAL LIAB. & SHAREHOLDERS' INVESTMENT
|
$ 6,385,707
|
$ 6,370,067
|
HORMEL FOODS
CORPORATION
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(Unaudited) (In
thousands)
|
|
|
|
Twenty-Six Weeks
Ended
|
|
April 30,
2017
|
April 24,
2016
|
|
|
OPERATING
ACTIVITIES
|
|
|
Net
earnings
|
$
446,189
|
$
450,551
|
Depreciation
and amortization of intangibles
|
63,328
|
63,908
|
Goodwill
impairment charge
|
-
|
991
|
Increase in
working capital
|
(238,623)
|
(74,829)
|
Other
|
(9,738)
|
(31,486)
|
NET CASH PROVIDED
BY OPERATING ACTIVITIES
|
261,156
|
409,135
|
|
|
|
INVESTING
ACTIVITIES
|
|
|
Proceeds from
sale of business
|
135,944
|
-
|
Net purchases
of property/equipment
|
(75,818)
|
(97,143)
|
Decrease in
investments, equity in affiliates, and other assets
|
2,669
|
12,178
|
NET CASH PROVIDED
BY (USED IN) INVESTING ACTIVITIES
|
62,795
|
(84,965)
|
|
|
|
FINANCING
ACTIVITIES
|
|
|
Principal
payments on short-term debt
|
-
|
(185,000)
|
Dividends paid
on common stock
|
(166,507)
|
(142,878)
|
Share
repurchase
|
(49,583)
|
(6,358)
|
Other
|
29,583
|
44,826
|
NET CASH USED IN
FINANCING ACTIVITIES
|
(186,507)
|
(289,410)
|
Effect of exchange
rate changes on cash
|
(3,686)
|
(2,118)
|
INCREASE IN CASH
AND CASH EQUIVALENTS
|
133,758
|
32,642
|
Cash and cash
equivalents at beginning of year
|
415,143
|
347,239
|
CASH AND CASH
EQUIVALENTS AT END OF QUARTER
|
$ 548,901
|
$ 379,881
|
|
|
|
INVESTOR
CONTACT:
|
MEDIA
CONTACT:
|
Nathan
Annis
|
Wendy
Watkins
|
(507)
437-5248
|
(507)
437-5345
|
ir@hormel.com
|
media@hormel.com
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/hormel-foods-announces-second-quarter-results-and-continued-margin-expansion-300463625.html
SOURCE Hormel Foods Corporation