Hormel Foods Reports Second Quarter Fiscal 2025 Results; Company Achieved Solid Top-Line Growth; Positioned for Strong Second Half; Narrows Fiscal 2025 Net Sales and Earnings Outlook

Published: 2025-06-17 05:53:17 ET HRL

Published on 06/17/2025 at 05:53

Austin, Minn. - Hormel Foods Corporation (NYSE: HRL), a Fortune 500 global branded food company, today reported results for the second quarter of fiscal 2025, which ended April 27, 2025. All comparisons are to the comparable period of fiscal 2024, unless otherwise noted.

EXECUTIVE SUMMARY - FIRST HALF

Net sales of $5.89 billion; organic net sales1 up 1%

Operating income of $477 million; adjusted operating income1 of $519 million

Operating margin of 8.1%; adjusted operating margin1 of 8.8%

Earnings before income taxes of $449 million; adjusted earnings before income taxes1 of $491 million

Effective tax rate of 21.9%

Diluted earnings per share of $0.64; adjusted diluted earnings per share1 of $0.70

Cash flow from operations of $366 million

EXECUTIVE SUMMARY - SECOND QUARTER

Net sales of $2.90 billion; organic net sales1 up 1%

Operating income of $248 million; adjusted operating income1 of $265 million

Operating margin of 8.6%; adjusted operating margin1 of 9.1%

Earnings before income taxes of $230 million; adjusted earnings before income taxes1 of $247 million

Effective tax rate of 22.0%

Diluted earnings per share of $0.33; adjusted diluted earnings per share1 of $0.35

Cash flow from operations of $56 million

EXECUTIVE COMMENTARY

'We achieved solid organic top-line growth and delivered second quarter results in line with our expectations,' said Jim Snee, president and chief executive officer. 'We anticipate strong second half growth led by our range of consumer-focused, protein-centric products. Notably, we expect meaningful contributions from our turkey portfolio, continued momentum in the Planters brand, growth from our leading positions in the marketplace and ongoing benefits from our Transform and Modernize (T&M) initiative. In the face of a dynamic environment, we remain confident in our portfolio, our strategy and our team.'

FISCAL 2025 OUTLOOK

For fiscal year 2025, the Company is:

Narrowing its organic net sales1 growth outlook to 2% to 3%

Narrowing its diluted earnings per share expectations to $1.49 to $1.59

Narrowing its adjusted diluted earnings per share1 expectations to $1.58 to $1.68

Reaffirming its outlook of year over year T&M benefits in the range of $100 million to $150 million

PROGRESS EXECUTING STRATEGIC PRIORITIES - Q2 HIGHLIGHTS

Drive focus and growth in our Retail business

The Applegate brand performed well in the second quarter, as consumption growth outpaced the total edible category2 while also gaining households.3 The team's commitment to delivering high-quality products in convenient formats is evident in previous launches like frozen breakfast sandwiches and the newly launched lightly breaded chicken.

The Jennie-O ground turkey business experienced notable retail sales growth relative to last year4 and remains well-positioned to grow in today's environment. As demand for lean, high-protein offerings continues to rise, we believe Jennie-O lean ground turkey will continue to be a preferred choice of consumers and retain its strong category leadership position.

Our Mexican foods portfolio delivered strong year over year growth in the second quarter, driven by double-digit consumption growth in our combined Wholly and Herdez refrigerated guacamole products and continued success in Herdez salsa.4 To further enhance our offerings, the team extended our Herdez refrigerated entrees line with the bold and authentic flavor of al pastor, an exciting, globally-inspired meal solution.

Expand leadership in Foodservice

Our Foodservice team again highlighted its innovative leadership during the quarter, bringing on-trend solutions for operators at the International Pizza Expo. The team showcased the new Fontanini hot honey sliced sausage, providing operators with a trusted offering to deliver the hot honey flavor that consumers are craving.

Our Flash 180 chicken is designed to streamline back-of-the-house operations. During the quarter, it continued to be a game-changing solution for operators, simplifying preparation for the most in-demand menu item - the chicken sandwich.5

Aggressively develop our global presence

Our in-country China business performed well in the quarter, driven by customer and distribution expansion, alongside the introduction of innovative product offerings. The launch of Hormel barbecue bites, for example, demonstrates our team's deep understanding of consumer trends and their ability to create meaningful innovations that address market demands.

Execute our enterprise entertaining & snacking vision

The Planters brand continued to see sequential improvement in both distribution and overall retail sales4 in the quarter. This momentum reflects the brand's strength in the marketplace and growth potential.

We introduced innovative snacking experiences this quarter by launching Corn Nuts partially popped corn kernels - blending the signature crunch of Corn Nuts with the airy texture of popcorn in three flavor-packed varieties. We also expanded our Hormel Gatherings line with a bold and spicy tray, meeting consumer demand for bold flavors and convenient, high-quality entertaining options.

Continue to transform & modernize our Company

We successfully began operations at our new distribution center in the Memphis, Tennessee, metro-area. This strategically located facility allows us to better service our customers with greater speed, meeting the growing demand and expectations for timely deliveries.

As part of our continuous review of assets and cost structure, we announced the closure of a California dry sausage production facility, and the movement of related production to other internal facilities. We believe this network optimization project will allow us to continue to create high-quality products for consumers while controlling costs and best serving our customers.

SEGMENT HIGHLIGHTS - SECOND QUARTER

Net sales flat

Segment profit up 4%

Net sales in the second quarter of fiscal 2025 were comparable to the prior year, as high-single-digit growth from both our Mexican portfolio and value-added turkey products was primarily offset by the impacts of promotional timing. Two-thirds of the Retail segment's volume decline in the quarter was due to lower commodity shipments and contract manufacturing. Flagship and rising brands continued to hold leadership positions in their respective categories in the quarter. Notably, the Planters brand exceeded volume and net sales expectations for the second quarter, while demand for Jennie-O lean ground turkey remained strong. Retail segment profit increased in the second quarter of fiscal 2025, primarily due to benefits from operational efficiencies as part of the T&M initiative and favorable selling, general and administrative expenses.

Foodservice

Volume down 7%; organic volume1 down 1%

Net sales flat; organic net sales1 up 4%

Segment profit down 6%

Organic net sales1 growth was broad-based in the Foodservice segment in the second quarter of fiscal 2025, with notable contributions from the customized solutions business and the turkey portfolio. Branded products such as Jennie-O, Hormel Fire Braised meats and Cafe H globally inspired proteins delivered another quarter of strong volume and net sales growth. Several categories achieved volume growth in the second quarter of fiscal 2025, despite industry softness. Volume growth in these categories was more than offset by the impact of reduced commodity shipments. Segment profit decreased for the second quarter of fiscal 2025 as higher net sales were more than offset by margin pressures, primarily in non-core businesses. The Foodservice segment continued to benefit from an extensive range of solutions-based products, its direct-selling organization and a diverse channel presence during the second quarter.

International

Volume up 9%

Net sales up 7%

Segment profit down 21%

Double-digit volume and net sales growth in exports, and robust growth in the China market drove top-line performance in the International segment in the second quarter of fiscal 2025. Strong shipments within the refrigerated portfolio, primarily of bacon and pepperoni, made the largest contribution to export growth. Our in-country China business continued to benefit from top-line momentum in both the retail and foodservice channels, supported by innovative product launches. International segment profit decreased in the second quarter of fiscal 2025 as meaningful net sales growth was primarily offset by a temporary shift in export customer mix and softness in Brazil.

SELECTED FINANCIAL DETAILS - SECOND QUARTER FISCAL 2025

Advertising investments were $36 million, compared to $44 million last year. The decline was partially due to year over year timing impacts for investments in the Planters brand. In the second half of fiscal 2025, the Company expects advertising investments to significantly increase compared to the prior year.

The effective tax rate was 22.0%, compared to 22.5% last year, primarily due to higher federal deductions in the current year. The effective tax rate for fiscal 2025 is expected to be between 22.0% and 23.0%.

Capital expenditures were $75 million, compared to $60 million last year. The largest projects in the quarter were related to capacity expansions for Hormel Fire Braised products, Applegate products, and investments in data and technology. The Company's target for capital expenditures in fiscal 2025 remains $275 million to $300 million.

Depreciation and amortization expense was $64 million, comparable to last year. The full-year expectation for fiscal 2025 remains unchanged at approximately $265 million.

The Company returned approximately $159 million to stockholders during the quarter through dividends.

PRESENTATION

A conference call will be webcast at 8:00 a.m. CT on May 29, 2025. Access is available at www.hormelfoods.com by clicking on 'Investors.' The call will also be available via telephone by dialing 800-549-8228 (toll-free) or 646-564-2877 (international) and providing the conference ID 97177. An audio replay is available at www.hormelfoods.com. The webcast replay will be available at noon CT, May 29, 2025, and will remain on the website for one year.

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END NOTES

1 Non-GAAP measure. Organic volume and organic net sales exclude the impact of the sale of Hormel Health Labs, LLC in the Foodservice segment in the fourth quarter of fiscal 2024. Adjusted performance measures exclude non-recurring impacts of the Company's Transform and Modernize initiative, loss on sale of business, and legal matters. See Appendix: Non-GAAP Measures to this press release for more information.

2 Data aggregated from NielsenIQ Discover, Total US xAOC, 13 weeks ended 4/26/2025, SPINS Satori, Total US Natural, 12 weeks ended 4/20/2025

3 Circana HH Panel, Total US All Outlets, 52 weeks ended 4/20/2025

4 Circana Total US MULO+; 13 weeks ended 4/20/2025

5 Technomic Ignite Menu data Q1 2025