AUSTIN, Minn., May 20, 2021 /PRNewswire/ -- Hormel Foods
Corporation (NYSE: HRL), a leading global branded food company,
today reported results for the second quarter of fiscal 2021. All
comparisons are to the second quarter of fiscal 2020 unless
otherwise noted.
EXECUTIVE SUMMARY - SECOND QUARTER
- Volume of 1.2 billion lbs., down 3%
- Record net sales of $2.6 billion,
up 8%
- Pretax earnings of $293 million,
up 2%
- Operating margin of 11.1%, compared to 12.1% last year
- Effective tax rate of 22.1%, compared to 20.6% last year
- Diluted earnings per share of $0.42, flat compared to last year
EXECUTIVE COMMENTARY
"Once again, our balanced
business model has proven to be a winning formula as our team
delivered record sales in the first half and is on pace to deliver
a second consecutive year of record sales," said Jim Snee, chairman of the board, president and
chief executive officer. "We were able to achieve these record
results through strong foodservice sales, continued elevated demand
in the retail, deli and international channels, and improved supply
chain performance."
"We anticipated rapid demand changes in our foodservice
business, and our team delivered, with sales exceeding 2019
pre-pandemic levels," Snee said. "The investments we have made over
the years to build a world-class foodservice business, including an
experienced direct sales force and portfolio of products that solve
for customer challenges, give us a competitive advantage as the
industry recovery accelerates."
"In addition to foodservice growth, demand in our retail and
deli channels remains elevated compared to pre-pandemic levels,
especially from brands such as SPAM®,
Jennie-O®, Hormel®
Gatherings®, Hormel® Black
Label®, Applegate®,
Columbus®, Herdez®
and Wholly®," Snee said. "Finally, our
international business has never been stronger, with double-digit
growth coming from our China
business and branded exports."
"The supply chain progress we have made in a difficult operating
environment is impressive, and our production team members deserve
credit for our record results," Snee said. "Further, we are now
benefiting from strategic actions we took before the pandemic to
increase production capacity, especially for the pizza toppings and
dry sausage categories."
OUTLOOK
"We are increasing our full year sales
guidance range and reaffirming our earnings per share guidance
range of $1.70 to $1.82 per share, both of which exclude the
expected impact of the Planters® snack
nuts business," Snee said. "We have a very positive outlook on the
foodservice industry and continue to see elevated demand in the
retail, deli and international channels. As we enter this
inflationary period, we will continue to offset margin pressure
with price actions and supply chain improvements. Our experienced
management team has a proven ability to navigate and grow our
business in volatile market conditions."
|
Fiscal 2021
Outlook*
|
Net Sales Guidance
(in billions)
|
$10.20 -
$10.80
|
Diluted Earnings per
Share Guidance
|
$1.70 -
$1.82
|
*Does not include the
estimated impact from the pending acquisition of the
Planters® snack nuts
business.
|
COVID-19 RESPONSE
"Team member safety is our top
priority, and to date, over 51 percent of our domestic team members
have been fully vaccinated, which is well ahead of the country's
vaccination rate," Snee said. "We remain focused on continuing to
keep our team members safe even as the impact of the pandemic to
our business starts to fade."
In the second quarter, the company absorbed approximately
$6 million ($19 million Q2 fiscal 2021 year-to-date) in
direct incremental supply chain costs primarily related to enhanced
safety measures in its production facilities. The company estimates
most of the incremental supply chain costs are temporary and will
continue to decline as the pandemic subsides.
PLANTERS® ACQUISITION UPDATE
In February 2021, the company entered into a
definitive agreement to acquire the
Planters® snack nuts business. The company
expects to close the transaction in June
2021. See the news release dated Feb.
11, 2021, for additional details.
SEGMENT HIGHLIGHTS – SECOND QUARTER
Refrigerated Foods
- Volume up 3%
- Net sales up 17%
- Segment profit up 32%
Strong sales growth was led by a significant recovery in
foodservice, growth from retail and deli brands, and higher
commodity sales. Nearly every foodservice category experienced
growth, led by pizza toppings and brands such as
Fontanini® and Hormel®
Bacon 1™. Retail and deli growth was driven by
numerous brands, including Hormel® Black
Label®, Hormel®
Gatherings®, Sadlers® and
Applegate®. The improvement in segment
profit was driven by foodservice growth, increased retail fresh
pork profits and lower operational costs.
Grocery Products
- Volume down 14%
- Net sales down 8%
- Segment profit down 23%
Volume and sales declined due to difficult comparisons from
extremely high levels of demand last year. Demand for branded
retail products remained elevated compared to pre-pandemic levels,
led by growth in the quarter from Wholly®
guacamole and Herdez® salsas and sauces.
Segment profit declined due to lower sales. For reference, the
segment delivered exceptional growth in the second quarter of
fiscal 2020 due to consumer stock-up during the onset of the
pandemic.
Jennie-O Turkey Store
- Volume down 3%
- Net sales up 2%
- Segment profit down 54%
Sales increased due to a recovery in foodservice and higher
whole bird shipments. Retail sales declined but remain elevated
compared to pre-pandemic levels. Segment profit decreased due to
the impact of a dramatic increase in feed costs during the
quarter.
International & Other
- Volume flat
- Net sales up 17%
- Segment profit up 6%
Sales increased, driven by continued strong results in
China and higher sales of branded
exports. In China, foodservice
sales have fully recovered to pre-pandemic levels. The increase in
segment profit was due to growth in China and the
Philippines, and higher fresh pork export margins.
CHANNEL HIGHLIGHTS – SECOND QUARTER
In an effort to
add an increased level of disclosure and clarity to sales trends
compared to the prior year and pre-pandemic levels, net sales have
been disaggregated into sales channels. Demand for the company's
retail items remained elevated, as exhibited by double-digit growth
over fiscal 2019. Foodservice sales exceeded pre-pandemic levels
after steep declines last year caused by the effects of the
pandemic. Deli channel sales increased due to growth from branded
grab-and-go and prepared foods items. International sales increased
due to exceptional results in China and growth from branded exports.
|
|
Thirteen Weeks
Ended
|
|
|
April 25,
2021
compared to
April 26, 2020
|
|
April 25,
2021
compared to
April 28, 2019
|
Net Sales Percent
Change (%)
|
|
|
|
|
U.S. Retail
|
|
—
|
|
|
16
|
|
U.S.
Foodservice
|
|
28
|
|
|
1
|
|
U.S. Deli
|
|
4
|
|
|
9
|
|
International
|
|
11
|
|
|
23
|
|
Total
|
|
8
|
|
|
11
|
|
|
|
|
|
|
SELECTED FINANCIAL DETAILS
Any forward-looking
guidance does not include the estimated impact from the pending
acquisition of the Planters® snack
nuts business.
Income Statement
- Selling, general and administrative expenses were up 3%
compared to the prior year, due to higher employee-related
expenses.
- Advertising spend was $31 million
compared to $35 million in the prior
year.
- Interest and investment income increased during the quarter.
Higher investment income partially offset the additional interest
expense from the bond issuance in the prior year.
- Operating margin was 11.1% compared to 12.1% in fiscal 2020.
Higher raw material and feed costs negatively impacted margins
during the quarter.
- The effective tax rate was 22.1% compared to 20.6% last year.
Last year's rate benefited from a large volume of stock option
exercises during the quarter.
Cash Flow Statement
- Cash flow from operations was $156
million, down 57%. The decrease was due to an intentional
increase in inventory to meet elevated demand.
- The company paid its 371st consecutive quarterly dividend on
May 17, 2021, at the annual rate of
$0.98 per share, a 5% increase over
the prior year.
- Capital expenditures in the second quarter were $45 million compared to $80 million last year. The company's target for
capital expenditures in fiscal 2021 is $260
million. Large projects include a pepperoni capacity
expansion in Nebraska, Project
Orion and other projects to support growth of branded
products.
- Share repurchases for the quarter totaled $1 million, representing 18 thousand shares
purchased.
- Depreciation and amortization expense in the second quarter was
$52 million compared to $51 million last year. The full-year expense is
expected to be approximately $210
million.
Balance Sheet
- The pending acquisition of the
Planters® snack nuts
business is expected to be financed through a combination of cash
on hand, short-term debt and long-term debt. The company expects
this acquisition will responsibly leverage its balance sheet
without compromising its disciplined capital allocation
policy.
- Cash on hand decreased to $1.5
billion from $1.7 billion at
the beginning of the year.
- Total debt decreased to $1.0
billion from $1.3 billion at
the beginning of the year as the company repaid its $250 million bond at maturity in April 2021.
- Working capital increased to $2.3
billion from $2.1 billion at
the beginning of the year. The increase is due to an intentional
increase in inventory to meet elevated demand.
PRESENTATION
A conference call will be webcast at
8 a.m. CDT on Thursday, May 20,
2021. Access is available at www.hormelfoods.com by clicking
on "Investors." The call will also be available via telephone
by dialing 888-317-6003 and providing the access code 7986531. An
audio replay is available by going to www.hormelfoods.com. The
webcast replay will be available at noon
CDT, Thursday, May 20, 2021, 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 revenue across more than 80 countries worldwide. Its brands
include SKIPPY®, SPAM®, Hormel®
Natural Choice®, Applegate®,
Justin's®, Wholly®, Hormel® Black
Label®, Columbus® 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 on the "Global
2000 World's Best Employers" list by Forbes magazine for three straight years, is
one of Fortune magazine's most admired companies, has appeared on
Corporate Responsibility Magazine's "The 100 Best Corporate
Citizens" list for 12 years in a row, and has received numerous
other awards and accolades for its corporate responsibility and
community service efforts. The company lives by its purpose
statement - Inspired People. Inspired Food.™ - to bring some
of the world's most trusted and iconic brands to tables across the
globe. For more information, visit www.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 statements regarding "Forward-Looking Statements"
and "Risk Factors" that appear on pages 26-32 in the company's Form
10-Q for the fiscal quarter ended Jan. 24,
2021, which can be accessed at hormelfoods.com in
the "Investors" section.
Note: Due to rounding, numbers presented throughout this
news release may not sum precisely to the totals provided, and
percentages may not precisely reflect the absolute figures.
HORMEL FOODS
CORPORATION SEGMENT DATA Unaudited In
thousands
|
|
|
|
Thirteen Weeks
Ended
|
|
|
April 25,
2021
|
|
April 26,
2020
|
|
%
Change
|
Net
Sales
|
|
|
|
|
|
|
Grocery
Products
|
|
$
|
628,232
|
|
|
$
|
683,250
|
|
|
(8.1)
|
|
Refrigerated
Foods
|
|
1,453,380
|
|
|
1,247,336
|
|
|
16.5
|
|
Jennie-O Turkey
Store
|
|
351,179
|
|
|
343,056
|
|
|
2.4
|
|
International & Other
|
|
173,830
|
|
|
148,823
|
|
|
16.8
|
|
Total
|
|
$
|
2,606,621
|
|
|
$
|
2,422,465
|
|
|
7.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
Profit
|
|
|
|
|
|
|
Grocery
Products
|
|
$
|
97,970
|
|
|
$
|
127,763
|
|
|
(23.3)
|
|
Refrigerated
Foods
|
|
173,352
|
|
|
131,431
|
|
|
31.9
|
|
Jennie-O Turkey
Store
|
|
12,700
|
|
|
27,348
|
|
|
(53.6)
|
|
International & Other
|
|
24,481
|
|
|
23,164
|
|
|
5.7
|
|
Total Segment
Profit
|
|
308,503
|
|
|
309,706
|
|
|
(0.4)
|
|
Net Unallocated
Expense
|
|
15,904
|
|
|
23,098
|
|
|
(31.1)
|
|
Noncontrolling
Interest
|
|
21
|
|
|
(119)
|
|
|
117.4
|
|
Earnings Before
Income Taxes
|
|
$
|
292,620
|
|
|
$
|
286,489
|
|
|
2.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twenty-Six Weeks
Ended
|
|
|
April 25,
2021
|
|
April 26,
2020
|
|
%
Change
|
Net
Sales
|
|
|
|
|
|
|
Grocery
Products
|
|
$
|
1,205,831
|
|
|
$
|
1,223,876
|
|
|
(1.5)
|
|
Refrigerated
Foods
|
|
2,820,457
|
|
|
2,599,127
|
|
|
8.5
|
|
Jennie-O Turkey
Store
|
|
684,500
|
|
|
673,183
|
|
|
1.7
|
|
International & Other
|
|
356,980
|
|
|
310,714
|
|
|
14.9
|
|
Total
|
|
$
|
5,067,768
|
|
|
$
|
4,806,899
|
|
|
5.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
Profit
|
|
|
|
|
|
|
Grocery
Products
|
|
$
|
190,172
|
|
|
$
|
196,198
|
|
|
(3.1)
|
|
Refrigerated
Foods
|
|
314,524
|
|
|
298,775
|
|
|
5.3
|
|
Jennie-O Turkey
Store
|
|
39,640
|
|
|
65,899
|
|
|
(39.8)
|
|
International & Other
|
|
56,685
|
|
|
43,115
|
|
|
31.5
|
|
Total Segment
Profit
|
|
601,020
|
|
|
603,986
|
|
|
(0.5)
|
|
Net Unallocated
Expense
|
|
31,451
|
|
|
27,297
|
|
|
15.2
|
|
Noncontrolling
Interest
|
|
133
|
|
|
(39)
|
|
|
444.1
|
|
Earnings Before
Income Taxes
|
|
$
|
569,702
|
|
|
$
|
576,651
|
|
|
(1.2)
|
|
HORMEL FOODS
CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
In thousands, except per share amounts
|
|
|
|
Thirteen Weeks
Ended
|
|
Twenty-Six Weeks
Ended
|
|
|
April 25,
2021
|
|
April 26,
2020
|
|
April 25,
2021
|
|
April 26,
2020
|
Net Sales
|
|
$
|
2,606,621
|
|
|
$
|
2,422,465
|
|
|
$
|
5,067,768
|
|
|
$
|
4,806,899
|
|
Cost of Products
Sold
|
|
2,130,314
|
|
|
1,945,113
|
|
|
4,141,291
|
|
|
3,861,127
|
|
Gross
Profit
|
|
476,307
|
|
|
477,352
|
|
|
926,477
|
|
|
945,773
|
|
Selling, General and
Administrative
|
|
199,966
|
|
|
193,912
|
|
|
396,346
|
|
|
389,433
|
|
Equity in Earnings of
Affiliates
|
|
13,074
|
|
|
10,021
|
|
|
27,302
|
|
|
17,608
|
|
Operating
Income
|
|
289,415
|
|
|
293,460
|
|
|
557,433
|
|
|
573,948
|
|
Interest and
Investment Income (Expense)
|
|
10,992
|
|
|
(3,474)
|
|
|
28,284
|
|
|
9,777
|
|
Interest
Expense
|
|
(7,788)
|
|
|
(3,497)
|
|
|
(16,015)
|
|
|
(7,074)
|
|
Earnings Before
Income Taxes
|
|
292,620
|
|
|
286,489
|
|
|
569,702
|
|
|
576,651
|
|
Provision for Income
Taxes
|
|
64,699
|
|
|
58,873
|
|
|
119,386
|
|
|
106,083
|
|
Effective Tax
Rate
|
|
22.1
|
%
|
|
20.6
|
%
|
|
21.0
|
%
|
|
18.4
|
%
|
Net
Earnings
|
|
227,921
|
|
|
227,615
|
|
|
450,316
|
|
|
470,568
|
|
Less: Net Earnings
(Loss) Attributable to Noncontrolling Interest
|
|
21
|
|
|
(119)
|
|
|
133
|
|
|
(39)
|
|
Net Earnings
Attributable to Hormel Foods Corporation
|
|
$
|
227,901
|
|
|
$
|
227,734
|
|
|
$
|
450,184
|
|
|
$
|
470,606
|
|
|
|
|
|
|
|
|
|
|
Net Earnings Per
Share
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.42
|
|
|
$
|
0.42
|
|
|
$
|
0.83
|
|
|
$
|
0.88
|
|
Diluted
|
|
$
|
0.42
|
|
|
$
|
0.42
|
|
|
$
|
0.82
|
|
|
$
|
0.86
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
Shares Outstanding
|
|
|
|
|
|
|
Basic
|
|
540,195
|
|
|
538,119
|
|
|
540,054
|
|
|
536,597
|
|
Diluted
|
|
547,536
|
|
|
546,373
|
|
|
547,490
|
|
|
545,594
|
|
|
|
|
|
|
|
|
|
|
Dividends Declared
per Share
|
|
$
|
0.2450
|
|
|
$
|
0.2325
|
|
|
$
|
0.4900
|
|
|
$
|
0.4650
|
|
HORMEL FOODS
CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Unaudited
In thousands
|
|
|
|
April 25,
2021
|
|
October 25,
2020
|
Assets
|
Cash and Cash
Equivalents
|
|
$
|
1,484,533
|
|
|
$
|
1,714,309
|
|
Short-term Marketable
Securities
|
|
17,700
|
|
|
17,338
|
|
Accounts
Receivable
|
|
722,185
|
|
|
702,419
|
|
Inventories
|
|
1,229,030
|
|
|
1,072,762
|
|
Income Taxes
Receivable
|
|
9,263
|
|
|
41,449
|
|
Prepaid
Expenses
|
|
23,875
|
|
|
18,349
|
|
Other Current
Assets
|
|
27,707
|
|
|
12,438
|
|
Total Current
Assets
|
|
3,514,292
|
|
|
3,579,063
|
|
|
|
|
|
|
Goodwill
|
|
2,614,036
|
|
|
2,612,727
|
|
Other
Intangibles
|
|
1,068,399
|
|
|
1,076,285
|
|
Pension
Assets
|
|
196,473
|
|
|
183,232
|
|
Investments In and
Receivables From Affiliates
|
|
309,256
|
|
|
308,372
|
|
Other
Assets
|
|
289,059
|
|
|
250,382
|
|
Net Property, Plant
and Equipment
|
|
1,897,489
|
|
|
1,898,222
|
|
Total
Assets
|
|
$
|
9,889,004
|
|
|
$
|
9,908,282
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Shareholders' Investment
|
Accounts
Payable
|
|
$
|
577,365
|
|
|
$
|
644,609
|
|
Accrued
Expenses
|
|
47,196
|
|
|
59,136
|
|
Accrued Workers
Compensation
|
|
28,681
|
|
|
25,070
|
|
Accrued Marketing
Expenses
|
|
118,452
|
|
|
108,502
|
|
Employee Related
Expenses
|
|
226,111
|
|
|
252,845
|
|
Taxes
Payable
|
|
28,940
|
|
|
22,480
|
|
Interest and Dividends
Payable
|
|
139,102
|
|
|
132,632
|
|
Current Maturities of
Long-term Debt
|
|
9,333
|
|
|
258,691
|
|
Total Current
Liabilities
|
|
1,175,179
|
|
|
1,503,965
|
|
|
|
|
|
|
Long-term Debt - Less
Current Maturities
|
|
1,040,486
|
|
|
1,044,936
|
|
Pension and
Post-retirement Benefits
|
|
557,400
|
|
|
552,878
|
|
Other Long-term
Liabilities
|
|
172,626
|
|
|
157,399
|
|
Deferred Income
Taxes
|
|
237,461
|
|
|
218,779
|
|
Accumulated Other
Comprehensive Loss
|
|
(325,629)
|
|
|
(395,250)
|
|
Other Shareholders'
Investment
|
|
7,031,479
|
|
|
6,825,576
|
|
Total Liabilities
and Shareholders' Investment
|
|
$
|
9,889,004
|
|
|
$
|
9,908,282
|
|
HORMEL FOODS
CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS Unaudited In thousands
|
|
|
Thirteen
Weeks
Ended
|
|
Twenty-Six
Weeks
Ended
|
|
|
April 25,
2021
|
|
April 26,
2020
|
|
April 25,
2021
|
|
April 26,
2020
|
Operating
Activities
|
|
|
|
|
|
|
|
|
Net
Earnings
|
|
$
|
227,921
|
|
|
$
|
227,615
|
|
|
$
|
450,316
|
|
|
$
|
470,568
|
|
Depreciation and
Amortization
|
|
52,263
|
|
|
50,588
|
|
|
103,306
|
|
|
99,917
|
|
Decrease (Increase) in
Working Capital
|
|
(127,799)
|
|
|
65,774
|
|
|
(190,384)
|
|
|
(37,065)
|
|
Other
|
|
3,189
|
|
|
15,895
|
|
|
(1,979)
|
|
|
14,870
|
|
Net Cash Provided
by (Used in) Operating Activities
|
|
155,573
|
|
|
359,872
|
|
|
361,259
|
|
|
548,290
|
|
|
|
|
|
|
|
|
|
|
Investing
Activities
|
|
|
|
|
|
|
|
|
Net (Purchase) Sale of
Securities
|
|
(516)
|
|
|
(1,975)
|
|
|
(722)
|
|
|
(1,991)
|
|
Acquisitions of
Businesses/Intangibles
|
|
—
|
|
|
(268,878)
|
|
|
—
|
|
|
(268,878)
|
|
Purchases of Property
and Equipment
|
|
(45,182)
|
|
|
(80,352)
|
|
|
(85,544)
|
|
|
(138,563)
|
|
Proceeds From Sales of
Property and Equipment
|
|
193
|
|
|
7
|
|
|
1,653
|
|
|
1,121
|
|
Decrease (Increase) in
Investments, Equity in Affiliates, and Other Assets
|
|
(2,450)
|
|
|
(11,433)
|
|
|
(2,643)
|
|
|
(14,824)
|
|
Net Cash Provided
by (Used in) Investing Activities
|
|
(47,955)
|
|
|
(362,631)
|
|
|
(87,256)
|
|
|
(423,135)
|
|
|
|
|
|
|
|
|
|
|
Financing
Activities
|
|
|
|
|
|
|
|
|
Repayments of
Long-term Debt and Finance Leases
|
|
(252,194)
|
|
|
(2,050)
|
|
|
(254,360)
|
|
|
(4,069)
|
|
Dividends Paid on
Common Stock
|
|
(132,271)
|
|
|
(124,501)
|
|
|
(257,787)
|
|
|
(236,750)
|
|
Share
Repurchase
|
|
(816)
|
|
|
(12,360)
|
|
|
(9,653)
|
|
|
(12,360)
|
|
Other
|
|
11,575
|
|
|
28,095
|
|
|
13,340
|
|
|
64,448
|
|
Net Cash Provided
by (Used in) Financing Activities
|
|
(373,706)
|
|
|
(110,816)
|
|
|
(508,459)
|
|
|
(188,731)
|
|
Effect of Exchange
Rate Changes on Cash
|
|
(920)
|
|
|
(4,771)
|
|
|
4,680
|
|
|
(3,252)
|
|
Increase (Decrease)
in Cash and Cash Equivalents
|
|
(267,008)
|
|
|
(118,346)
|
|
|
(229,776)
|
|
|
(66,828)
|
|
Cash and Cash
Equivalents at Beginning of Year
|
|
1,751,541
|
|
|
724,419
|
|
|
1,714,309
|
|
|
672,901
|
|
Cash and Cash
Equivalents at End of Quarter
|
|
$
|
1,484,533
|
|
|
$
|
606,073
|
|
|
$
|
1,484,533
|
|
|
$
|
606,073
|
|
INVESTOR
CONTACT:
Nathan
Annis
(507)
437-5248
ir@hormel.com
|
|
MEDIA
CONTACT:
Media
Relations
(507)
437-5345
media@hormel.com
|
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SOURCE Hormel Foods Corporation