Hormel Foods Corporation · NYSE:HRL
Hormel Foods — Investor Day (June 2015)
16 slides from Hormel Foods's investor day presentation, Jun 11, 2015
Slide 1: Jody Feragen, Executive Vice President and Chief Financial Officer
Jody Feragen Executive Vice President and Chief Financial Officer
Slide 2: Financial Performance Goals
Financial Performance Goals 5% Revenue Growth 10% Operating Income Growth $3 Billion by 2016 New Product Development New Products Introduced Since 2000
Slide 3: Sales and EPS Growth
Sales and EPS Growth Exceeding long-term targets Sales EPS In billions + 7% + 12% $10.00 CAGR $2.50 CAGR $8.00 $9.3 $2.00 $2.23 $6.00 $1.50 $6.5 $4.00 $1.00 $1.27 $2.00 $0.50 $0.00 $0.00 2009 2010 2011 2012 2013 2014 2009 2010 2011 2012 2013 2014
Slide 4: Exceeding Long-Term Targets
Exceeding Long-Term Targets Annual Net Sales 3% 7% In millions 4% 2009 Organic/ Acquisition 2014 Innovation
Slide 5: Growth Amidst Volatility: 2015 Outlook
2015 Outlook Growth Amidst Volatility EPS* • Grocery Products and Refrigerated Foods • Input cost deflation + 12% to 17% • Specialty Foods • Improved 2H15 contribution from $2.50 to $2.23 $2.60 CytoSport • International • Growth in China • Jennie-O Turkey Store • Avian Influenza 2014 2015 *2015 EPS
Slide 6: Segment Margin Guidance
Segment Margin Guidance Grocery Products Refrigerated Foods Jennie-O Turkey Store Guidance: 12% to 14% Guidance: 5% to 8% Guidance: 13% to 17% Specialty Foods International & Other Total Company Guidance: 8% to 10% Guidance: 14% to 17% Guidance: 9% to 12%
Slide 7: Cash Flow
Cash Flow Free Cash Flow In millions $588 $462 2009 2010 2011 2012 2013 2014
Slide 8: Priorities for Cash Flow
Priorities for Cash Flow Generating consistent and strong free cash flow 2009-2014 Business Growth Return to Shareholders Organic Strategic Share Dividends Investments Acquisitions Repurchase
Slide 9: Investing for the Future
Investing for the Future Business Growth • #1 and #2 brands Organic Investments Strategic Acquisitions • Platform for innovation • Multicultural appeal * • On-the-go China Plant • Better-for-you • International component • Accretive to growth goals BRAND • NPV analysis BRAND *Expected July 2015 Clos
Slide 10: Applegate acquisition terms
• Purchase price $775 million • $165 million NPV of tax benefit • Total 2015 annual sales are expected to be about $340 million • Hormel Foods expects this acquisition to provide 7-8 cents per share accretion in fiscal 2016 • $10 million est. annual amortization
Slide 11: Balance Sheet Utilization
Balance Sheet Utilization Post Applegate Pro-Forma Hormel Foods Approximately • Maintain Investment Grade Rating • Moody’s Rating – A1 • S&P Rating – A/Stable Approximately Food Peers Average Investment Rating – Baa1
Slide 12: Return to Shareholders
Return to Shareholders Member of S&P 500 Dividend Aristocrats +25% + 19% CAGR $1.00 • Dividend growth $0.80 exceeding EPS growth • Target CPG peer $0.42 average • Opportunistic share repurchase strategy
Slide 13: Return on Invested Capital
Return on Invested Capital Based on 2Q15 data for Hormel Foods and time relative data for peers
Slide 14: Managing for the Long Term
Managing for the Long Term • Solid track record of sales and earnings growth • Culture of innovation • Strong portfolio of well recognized brands • Fiscally conservative • Management depth • Focused on long-term growth objectives
Slide 15: Total Shareholder Return
Total Shareholder Return Comparison of 10-Year Cumulative Return Hormel Foods Corporation S&P 500 $100 invested on 10/30/05 in stock or index – including reinvestment of dividends
Slide 16: Jody Feragen
Jody Feragen Executive Vice President and Chief Financial Officer