/ Newsroom / Press Releases

Press Releases

Hormel Foods Reports Second Quarter Results

AUSTIN, Minn. | May 22, 2008

Hormel Foods Corporation (NYSE: HRL) today reported its performance for the fiscal 2008 second quarter.

HIGHLIGHTS

¨      Diluted EPS of $.56, up 14 percent from $.49 per share in 2007

¨      Dollar sales of $1.59 billion increased 6 percent from 2007 (up 4 
       percent excluding acquisitions)

¨      Volume up 5 percent compared to last year (up 3 percent 
        excluding acquisitions)

¨      Operating profit up 10 percent from 2007

¨      Grocery Products operating profit up 6 percent; volume flat; dollar
        sales up 4 percent

¨      Refrigerated Foods operating profit up 26 percent; volume up 4 
       percent (up 1 percent excluding acquisitions); dollar sales up 4 
       percent (up 1 percent excluding acquisitions)

¨      Jennie-O Turkey Store operating profit down 16 percent; volume 
       up 9 percent; dollar sales up 8 percent

¨      Specialty Foods operating profit down 5 percent; volume up 5 
       percent; dollar sales up 8 percent

¨      All Other operating profit up 20 percent; volume up 7 percent; 
       dollar sales up 19 percent

The company reported fiscal 2008 second quarter net earnings of $77.6 million, up 14 percent from earnings of $68.0 million a year earlier. Diluted earnings per share for the quarter were $.56 this year compared to $.49 per share last year. Sales totaled $1.59 billion, up from $1.50 billion in fiscal 2007. For the six months ended April 27, 2008, net earnings were $165.7 million, or $1.20 per diluted share (up 17 percent), compared to $143.3 million a year ago or $1.03 per diluted share. Sales totaled $3.22 billion, up 7 percent, from $3.01 billion in the same period last year.

COMMENTARY

“It was a solid quarter for Hormel Foods. We were able to meet our company objectives for sales and earnings growth in the second quarter amidst a challenging operating environment,” said Jeffrey M. Ettinger, chairman of the board, president and chief executive officer. “Our Refrigerated Foods segment led the way, as lower pork input costs combined with increased sales of value-added products provided a significant increase in earnings. Our Grocery Products segment also delivered higher than expected sales and earnings, aided by strong sales of the SPAM family of products and continued growth of theHORMEL COMPLEATS product line.”

“Jennie-O Turkey Store reported a significant decline in earnings as a result of a continued run-up in grain and fuel costs. The Specialty Foods segment also reported a decline in earnings, as a result of increased input and fuel costs. Our International segment had another excellent quarter, posting double-digit increases in dollar sales and earnings, primarily attributable to strong export sales of the SPAMfamily of products and fresh pork. Overall, our balanced model helped to stabilize earnings for the company even when two of our segments experienced a difficult operating environment.”

SEGMENT OPERATING HIGHLIGHTS – SECOND QUARTER

Grocery Products (15% of Net Sales, 32% of Total Operating Profit)

The Grocery Products segment reported a 6 percent increase in operating profit compared to last year. The SPAM family of products had another strong quarter with higher sales and profits due to improved promotional support, national media efforts and expanded distribution of SPAM Singles. Sales of HORMEL COMPLEATSmicrowave meals, HORMEL chili and DINTY MOORE stew also increased in the quarter. Sales of VALLEY FRESH products were down due to competitive pressures. Sales of ethnic products also declined due to lower volumes of CHI-CHI’S sauces and the rationalization of low margin business.

Refrigerated Foods (52% of Net Sales, 43% of Total Operating Profit)

The Refrigerated Foods segment had a strong quarter with operating profit up 26 percent compared to fiscal 2007. Lower hog input costs compared to last year led to higher margins in both value-added products and fresh pork. Sales and volumes also improved in key retail product lines such as HORMEL NATURAL CHOICE deli meats andHORMEL refrigerated entrees. Volumes in the Foodservice business unit were flat for the quarter. We have been able to offset some lost volumes in the casual dining segment by pursuing other channels. The acquisition of Burke Corporation also positively contributed to the second quarter results.

Jennie-O Turkey Store (18% of Net Sales, 9% of Total Operating Profit)

Operating profit declined 16 percent in the Jennie-O Turkey Store segment in the quarter despite an 8 percent increase in sales. Grain-related costs were $39 million higher compared to fiscal 2007. The increase in corn prices during the second quarter added a new layer of costs that were not fully recovered. Given the current market dynamics, we will be reducing our poult placements in our grow-out facilities by approximately 5%. We will also continue to pursue manufacturing efficiencies, customer and product rationalization, and pricing to improve profitability. Sales of value-added retail products continued to grow during the quarter, led by fresh tray pack, turkey burgers and marinated tenders. This helped offset softer sales of certain other value-added retail products, including pan roasts and turkey franks.

Specialty Foods (12% of Net Sales, 12% of Total Operating Profit)

The Specialty Foods segment reported operating profits down 5 percent compared to fiscal 2007.  Better results at the Century Foods International business unit from higher sales of nutritional jar and ready-to-drink products did not offset declines in the other business units. Profits declined in the Specialty Products business unit due to higher input costs and lower sales volumes of dry sausage. Diamond Crystal Brands was adversely affected by higher input costs and lower volumes.

All Other (3% of Net Sales, 4% of Total Operating Profit)

The All Other segment, which includes the International business unit, had another excellent quarter with operating profits up 20 percent.  Export sales and margins continued to be strong throughout the quarter, particularly for the SPAM family of products and fresh pork. Operating results in our China operations declined due to continued high hog input costs and lower export volumes.

OUTLOOK

“We are reconfirming our fiscal 2008 guidance range of $2.30-$2.40 per share. Although we hope to build on our solid first half results, we anticipate further pressure from increasing grain and energy costs. We also face some uncertainty regarding protein input costs. The strength of our core businesses, the growth of our value-added products and the ability of our people to adapt to changes in the business environment should allow us to meet our goals,” Ettinger said.

DIVIDENDS

Effective May 15, 2008, the Company paid its 319th consecutive quarterly dividend. The annual rate is $.74.

CONFERENCE CALL

A conference call will be Webcast at 9:00 a.m. CT on Thursday, May 22, 2008. Access is available at www.hormelfoods.com. If you do not have Internet access and want to listen to the call over the phone, the dial in number is 800-218-0713. An audio replay is available by calling 800-405-2236 and entering access code 11113993#. The audio replay will be available beginning at 11:00 a.m. CT on Thursday, May. 22, 2008, through 11:59 p.m. CT on Friday, June 6, 2008. The Webcast replay will be available at 11:00 a.m. CT, Thursday, May 22, 2008, and archived for one year.

ABOUT HORMEL FOODS CORPORATION

Hormel Foods Corporation, based in Austin, Minn., is a multinational manufacturer and marketer of consumer-branded food and meat products, many of which are among the best known and trusted in the food industry. The company leverages its extensive expertise, innovation and high competencies in pork and turkey processing and marketing to bring quality, value-added brands to the global marketplace. For each of the past nine years, Hormel Foods has been named one of “The Best Big Companies in America” by Forbesmagazine. The company enjoys a strong reputation among consumers, retail grocers and foodservice customers for products highly regarded for quality, taste, nutrition, convenience and value. 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 statement regarding Forward-Looking Statements and risk factors that appear on pages 24-29 in the Company’s 10Q for the fiscal quarter ended January 27, 2008, which can be accessed at www.hormelfoods.com under “Investors-SEC Filings.”

Statements Follow

                                    #                                  #                                  #

 

Segment Data

Fiscal 2008 Second Quarter Segment Operating Results (in Thousands)

SECOND QUARTER – 13 WEEKS ENDED

NET SALES

April 27, 2008

April 29, 2007

% Change

Grocery Products

$      233,464

$      223,625

4.4

Refrigerated Foods

831,821

796,339

4.5

Jennie-O Turkey Store

291,889

270,044

8.1

Specialty Foods

182,534

169,069

8.0

All Other

    54,376

    45,520

19.5

Total

$   1,594,084

$   1,504,597

5.9

OPERATING PROFIT

Grocery Products

$        41,611

$        39,194

6.2

Refrigerated Foods

55,625

44,187

25.9

Jennie-O Turkey Store

11,708

13,949

(16.1)

Specialty Foods

15,513

16,281

(4.7)

All Other

   5,843

   4,866

20.1

  Total segment operating
  profit

130,300

118,477

10.0

  Net interest and 
  investment income

(3,176)

(4,373)

27.4

  General corporate 
  expense

(5,747)

(5,562)

(3.3)

Income before tax

$      121,377

$      108,542

11.8

YEAR TO DATE – 26 WEEKS ENDED

NET SALES

April 27, 2008

April 29, 2007

% Change

Grocery Products

$      460,879

$      429,841

7.2

Refrigerated Foods

1,689,281

1,594,311

6.0

Jennie-O Turkey Store

583,338

546,658

6.7

Specialty Foods

371,321

346,148

7.3

All Other

    110,430

     91,722

20.4

Total

$   3,215,249

$   3,008,680

6.9

OPERATING PROFIT

Grocery Products

$        77,980

$        72,178

8.0

Refrigerated Foods

118,431

86,129

37.5

Jennie-O Turkey Store

46,512

43,920

5.9

Specialty Foods

33,806

34,323

(1.5)

All Other

   14,868

   11,340

31.1

  Total segment 
  operating  profit

291,597

247,890

17.6

  Net interest and 
  investment income

(14,834)

(8,651)

(71.5)

  General corporate 
  expense

 (16,075)

 (15,189)

(5.8)

Income before tax

$      260,688

$      224,050

16.4

HORMEL FOODS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

Thirteen Weeks Ended

Twenty-Six Weeks Ended

4-27-2008

4-29-2007

4-27-2008

4-29-2007

Net sales

$ 1,594,084

$ 1,504,597

$ 3,215,249 

$ 3,008,680 

Cost of products sold

   1,217,445 

   1,158,711 

   2,436,591 

   2,303,357 

GROSS PROFIT:

376,639 

345,886 

 

778,658 

705,323 

Expenses:

  Selling and
  delivery

210,282 

192,507 

 

418,226 

391,151 

  Administrative 
 & general

     42,625 

     40,433 

 

     88,100 

     82,343 

TOTAL EXPENSES:

252,907 

232,940 

 

506,326 

473,494 

  Equity in 
  earnings of 
  affiliates

       821 

       (31)

 

       3,190 

       872 

OPERATING INCOME:

124,553 

112,915 

 

275,522 

232,701 

Other income & expenses:

 Interest & investment income (loss)

3,253 

2,625 

 

(1,685)

4,705 

 Interest expense

     (6,429)

     (6,998)

 

     (13,149)

     (13,356)

EARNINGS BEFORE

         INCOME TAXES:

121,377 

108,542 

 

260,688 

224,050 

Provision for income taxes

43,816 

40,541 

 

94,946 

80,724 

(effective tax rate)

    36.10%

    37.35%

 

    36.42%

    36.03%

NET EARNINGS

$   77,561 

$   68,001 

$ 165,742 

$ 143,326 

NET EARNINGS PER SHARE

         Basic

$         .57 

$         .49 

$        1.22 

$        1.04 

         Diluted

$         .56 

$         .49 

$        1.20 

$        1.03 

WGHT AVG SHARES OUT

         Basic

135,652 

137,743 

 

135,679 

137,638 

         Diluted

137,620 

139,711 

137,643 

139,639 

DIVIDENDS DECLARED

        PER SHARE

$         .185 

$         .15 

$         .37 

$         .30 

HORMEL FOODS CORPORATION

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

April 27, 2008

October 28, 2007

(In Thousands)

ASSETS

CURRENT ASSETS

  Cash and cash equivalents

$   107,156

$   149,749

  Accounts receivable

351,564

366,621

  Inventories

750,483

646,968

  Federal income taxes

15,686

0

  Deferred income taxes

47,995

52,583

  Prepaid expenses & other current assets

    28,084

      15,804

     TOTAL CURRENT ASSETS

1,300,968

1,231,725

INTANGIBLES

757,882

757,993

OTHER ASSETS

440,839

437,331

PROPERTY, PLANT & EQUIPMENT, NET

 971,459

 966,601

     TOTAL ASSETS

$3,471,148

$3,393,650

 

 

 

LIABILITIES AND SHAREHOLDERS’ INVESTMENT

TOTAL CURRENT LIABILITIES

$   553,115

$   664,777

LONG-TERM DEBT – LESS CURRENT MATURITIES

350,000

350,005

OTHER LONG-TERM LIABILITIES

539,247

494,085

SHAREHOLDERS’ INVESTMENT

 2,028,786

 1,884,783

    TOTAL LIAB. & SHAREHOLDERS’ INVESTMENT

$3,471,148

$3,393,650

HORMEL FOODS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

Twenty-Six Weeks Ended

4-27-2008

4-29-2007

OPERATING ACTIVITIES

(In Thousands)

  Net earnings

$   165,742 

$   143,326 

  Adjustments to reconcile to net cash 
  provided by operating activities:

     Depreciation

57,823 

56,779 

     Amortization of intangibles

6,148 

5,863 

     Equity in earnings of affiliates

(4,587)

(1,466)

     Provision for deferred income taxes

(8,492)

(3,013)

     Loss on property/equipment sales 
     and plant facilities

1,377 

69 

  Changes in operating assets and 
  liabilities net of acquisitions:

     Decrease in accounts receivable

15,057 

24,814 

     Increase in inventories, prepaid 
     expenses, and other current assets

(85,392)

(73,348)

     (Increase) Decrease in pension 
     assets

(398)

4,330 

     Decrease in accounts payable, 
     accrued expenses, and pension and 
     post-retirement benefits

(32,346)

(74,132)

   Other

         243 

         5,564 

NET CASH PROVIDED BY OPERATING ACTIVITIES

115,175 

88,786 

INVESTING ACTIVITIES

  Sale of available-for-sale securities

146,308 

284,850 

  Purchase of available-for-sale securities

 (155,207)

 (298,625)

  Acquisitions of businesses / intangibles

 (3,920)

 (13,618)

  Purchases of property / equipment

(67,941)

(69,961)

  Proceeds from sales of property / 
  equipment

1,604 

2,824 

  Decrease (Increase) in investments, 
  equity in affiliates, and other assets

      12,300 

    (21,134)

NET CASH USED IN INVESTING ACTIVITIES

(66,856)

(115,664)

FINANCING ACTIVITIES

  Proceeds from short-term debt

25,000 

15,000 

  Principal payments on short-term debt

(70,000)

(17,576)

  Principal payments on long-term debt

(54)

(6,304)

  Dividends paid on common stock

(45,469)

(39,881)

  Share repurchase

(21,927)

(11,706)

  Other

     21,538 

       8,858 

NET CASH USED IN FINANCING ACTIVITIES

   (90,912)

   (51,609)

DECREASE IN CASH AND CASH

   EQUIVALENTS

(42,593)

(78,487)

Cash and cash equivalents at beginning of year

    149,749 

    172,485 

CASH AND CASH EQUIVALENTS AT END OF QUARTER

$   107,156 

$    93,998 

 

Topics: Company, Financial

News Topic(Click to refine list of press releases)

Contact Us



Coupons