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Hormel Foods Reports Fourth Quarter and Fiscal 2019 Earnings; Provides Fiscal 2020 Outlook


Austin, Minn.

The company is focused on its 2020 Path Forward to drive long-term sustainable growth.

Hormel Foods Corporation (NYSE: HRL), a leading global branded food company, today reported results for the fourth quarter of fiscal 2019. All comparisons are to the fourth quarter of fiscal 2018 unless otherwise noted. Results reflect the divestiture of the CytoSport business. The impact of this transaction is excluded in the presentation of the non-GAAP measures below.


  • Volume of 4.74 billion lbs., down 1%; organic volume1 flat
  • Net sales of $9.50 billion, down 1%; organic net sales1 up 1%
  • Operating income of $1.20 billion, up 1%
  • Operating margin of 12.6% compared to 12.4% last year
  • Effective tax rate of 19.1% compared to 14.3% last year
  • Diluted earnings per share of $1.80, down 3% from $1.86 last year
  • Cash flow from operations of $923 million, down 26% due to higher working capital


  • Volume of 1.24 billion lbs., down 2%; organic volume1 up 1%
  • Net sales of $2.50 billion, down 1%; organic net sales1 up 2%
  • Operating margin of 12.8% compared to 12.7% last year
  • Effective tax rate of 21.0% compared to 18.7% last year
  • Diluted earnings per share of $0.47, down 2% from $0.48 last year


“In 2020, we expect to grow operating income as we did in 2019 while also growing sales,” said Jim Snee, chairman of the board, president and chief executive officer. “We are excited about our growth prospects in foodservice, retail and deli, led by brands such as SPAM®, Wholly®, Jennie-O®, Hormel® Natural Choice®, Hormel Gatherings® and Applegate®. We are also putting a lot of energy behind our recent innovations in brands such as Herdez®, SKIPPY®, Columbus® and Hormel® Bacon 1™. I am confident we have the right strategy, business model and leadership team to continue delivering long-term sustainable growth.”

The company’s outlook assumes higher protein prices and further volatility related to the impact from African swine fever and global trade uncertainty. The company’s expected fiscal 2020 organic pretax earnings growth rate is in line with the company’s near-term goal of 5-7% organic pretax earnings growth. As a reminder, CytoSport earnings in 2019 contributed 10 cents to earnings per share. The company also expects a higher effective tax rate in fiscal 2020 with a range of 20.5% and 22.5%.

Fiscal 2020 Outlook
Net Sales Guidance (in billions) $9.50 – $10.30
Earnings per Share Guidance $1.69 – $1.83
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“We are excited to announce our plans to build a state-of-the-art dry sausage production facility to give us much-needed capacity for our Columbus® charcuterie products,” Snee said. “The plant will allow us to continue expanding distribution of Columbus® products to the East Coast. Construction is already underway, and we expect the new facility to be operational in early fiscal 2021.”

“We continue to make excellent progress on our Burke pizza toppings plant expansion and plan to start production in the back half of fiscal 2020,” Snee said. “This expansion will provide ample capacity to continue growing our pizza toppings business in the foodservice channel.”


“We announced an 11 percent increase to our annual dividend, making the new dividend $0.93 per share,” Snee said. “This is the 54th consecutive year in which we’ve increased our dividend and the 11th consecutive year in which we have increased the dividend at a double-digit rate, demonstrating again that Hormel Foods is an uncommon company.”

Effective November 15, 2019, the company paid its 365th consecutive quarterly dividend at the annual rate of $0.84 per share.


“Refrigerated Foods has been a strong earnings contributor all year, and this quarter was no different. I am proud of how our value-added businesses helped offset another steep decline in commodity profits,” Snee said. “Grocery Products and Jennie-O Turkey Store posted modest earnings growth while the International results were below our expectations as the team continues to manage through challenges due to African swine fever and global trade uncertainty.”

“We grew organic volume and sales in three of our four segments this quarter,” Snee said. “Our SPAM® family of products and Herdez® authentic salsas and sauces were notable contributors within Grocery Products. Refrigerated Foods delivered strong value-added sales growth with excellent results posted by brands such as Hormel® Bacon 1™, Hormel® Fire Braised™, Hormel® Black Label® and Columbus®. Jennie-O Turkey Store delivered top-line growth led by a double-digit increase in whole bird sales. We made nice gains in lean ground turkey distribution, but we have much more work to do.”


Refrigerated Foods

  • Volume up 1%;
  • Net sales up 4%
  • Segment profit down 3%

Volume and sales increased on strong demand for foodservice items such as Hormel® Bacon 1™ cooked bacon, pizza toppings and Hormel® Fire Braised™ products. Retail sales of Hormel® Black Label® bacon, Applegate® products, Hormel® Natural Choice® products, Hormel Gatherings® party trays and Columbus® branded deli items also contributed to growth. Segment profit declined as record value-added profits did not offset a 46% decline in commodity profits and higher operational expenses.

Grocery Products

  • Volume down 9%; organic volume1 up 2%
  • Net sales down 10%; organic net sales1 up 1%
  • Segment profit up 2%

Volume and sales decreases were related to the divestiture of CytoSport. Organic volume and sales increased due to strong demand for MegaMex items, including Herdez® salsas and sauces, and growth from the SPAM® family of products. The positive performances of these businesses offset lower pricing on SKIPPY® peanut butter spreads and the divestiture of CytoSport. As a reminder, the segment incurred a $17 million non-cash impairment in the fourth quarter of 2018 related to the CytoSport business.

Jennie-O Turkey Store

  • Volume up 5%
  • Net sales up 3%
  • Segment profit up 6%

Volume and sales increased as growth from the whole-bird and commodity businesses more than offset lower retail sales. Jennie-O® lean ground turkey results improved during the quarter compared to the third quarter due to the successful execution of advertising and promotional activities in select markets. Segment profit increased, driven by operational improvements and lower freight expense.

International & Other

  • Volume down 14%; organic volume1 down 13%
  • Net sales down 12%; organic net sales1 down 11%
  • Segment profit down 30%

Volume, sales and profit for the quarter declined significantly, driven by weakness in branded and fresh pork exports and our multinational business in Brazil. Higher pork prices due to African swine fever led to higher input costs in China and Brazil. SPAM® luncheon meat and SKIPPY® peanut butter products continue to show growth in China.


Income Statement

  • Selling, general and administrative expenses decreased by 14%. The reduction was primarily related to the CytoSport divestiture and lower external expenses.
  • Advertising investments were $131 million compared to $152 million last year. The decrease in advertising investment was related primarily to the CytoSport divestiture.
  • Operating margin for the full year was 12.6% compared to 12.4%. Lower gross profit margins were more than offset by lower selling, general and administrative expenses.
  • The effective tax rate was 19.1% compared to 14.3% last year. The lower rate in fiscal 2018 was due to deferred tax remeasurements related to tax reform. The effective tax rate for fiscal 2020 is expected to be between 20.5% and 22.5%.

Cash Flow Statement

  • Cash flow from operations was $923 million, down 26% compared to last year. The decrease was primarily due to higher levels of working capital.
  • Proceeds of $480 million from the divestiture of CytoSport were used during the year to repay the remaining debt associated with the Columbus acquisition and to repurchase a record amount of common stock.
  • Dividends paid to shareholders were $437 million. The company paid its 365th consecutive quarterly dividend at the annual rate of $0.84 per share, a 12% increase over the prior year.
  • Capital expenditures were $294 million. The company’s target for capital expenditures in fiscal 2020 is $360 million. Large projects include the Burke pizza toppings plant expansion, a new dry sausage facility in Nebraska, Project Orion, and many other projects to support growth of branded products.
  • Share repurchases totaled $174 million, representing 4.3 million shares purchased.
  • Depreciation and amortization expense for the full year was $165 million. Depreciation and amortization expense for fiscal 2020 is expected to be approximately $175 million.

Balance Sheet

  • The company is in a strong financial position with a low level of debt and consistent cash flows.
  • Cash on hand increased to $673 million from $459 million at the beginning of the year.
  • Total long-term debt is $250 million compared to $625 million at the beginning of the year.
  • Working capital increased to $1,256 million from $911 million at the beginning of the year, primarily related to higher inventory levels and lower accounts payable.


A conference call will be webcast at 8 a.m. CT on Tuesday, November 26, 2019. Access is available at by clicking on “Investors.” The call will also be available via telephone by dialing 888-220-8451 and providing the access code 1340983. An audio replay will be available by going to The webcast replay will be available at 11 a.m. CT, Tuesday, November 26, 2019, and will remain on the website for one year.

Click here for the full release.

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®, Columbus®, 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 11th 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 and


The non-GAAP adjusted financial measurements of organic net sales and organic volume are presented to provide investors additional information to facilitate the comparison of past and present operations. The company believes these non-GAAP 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.

Organic net sales and organic volume are defined as net sales and volume, excluding the impact of acquisitions and divestitures. Organic net sales and organic volume exclude the impacts of the CytoSport divestiture (April 2019) in the Grocery Products and International & Other segments. The tables below show the calculations to reconcile from the GAAP measures to the non-GAAP adjusted measures in the fourth quarter and year-to-date of fiscal 2019 and fiscal 2018.