Hormel Foods Corporation · NYSE:HRL
Hormel Foods — Q4 2024 Earnings Presentation
43 slides from Hormel Foods's earnings presentation, Dec 4, 2024
Slide 1: Fourth Quarter Fiscal 2024 Supplemental Slides
Fourth Quarter Fiscal 2024 Supplemental Slides
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains “forward-looking” information within the meaning of the federal securities laws. The “forward-looking” information may include statements concerning the Company’s outlook for the future as well as other statements of beliefs, future plans, strate
Slide 3: Today's Speakers
Today’s Speakers Jim Snee Jacinth Smiley Nathan Annis Chairman of the Board, Executive Vice President Vice President, President and CEO and CFO Corporate Development 3
Slide 4: Part 1: Fourth Quarter and Full Fiscal 2024
Part 1: Fourth Quarter and Full Fiscal 2024 Earnings and 2025 Outlook Recap Our Results 4
Slide 5: CEO Remarks
CEO Remarks 5
Slide 6: Fiscal 2024 business highlights
6 Fiscal 2024 business highlights Demonstrated solid strategic execution, the power of the company’s portfolio and the resilience of the team Retail Foodservice International Strong growth for many Strong branded exports for the +6% net sales growth flagship and rising brands¹ SPAM® family of produc
Slide 7: Meaningful innovation driving results
Meaningful innovation driving results Understanding consumer and operator needs to deliver effective solutions Net sales from innovation1 +140bps FY23 FY24 1Based on net sales for new items launched within the previous three years and the projected sales for items scheduled to launch in the next two
Slide 8: Safest year in our company's history
Safest year in our company’s history Driven by team members’ focus on ‘SAFETY FIRST’ culture Total case incident rate* 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 “Aligned with our core value of ‘SAFETY FIRST,' I - want to extend my sincere congratulations to our dedicated team of plant professionals f
Slide 9: Record year of operating cash flow
Record year of operating cash flow Strength of our portfolio, disciplined operation of our business and success of T&M delivers achievement Operating cash flow (in billions) Cash & Mkt Sec. Debt $1.1 $1.1 $1.3 $767M $2.9B $1.0 $1.0 * Net Debt to EBITDA (LTM) EBITDA* $1.3B 1.6x 2020 2021 2022 2023 20
Slide 10: Record shareholder cash return in form of dividends
Record shareholder cash return in form of dividends Announced 59th consecutive increase to our annual dividend* 59 Consecutive Years of Dividend 9% Increases 10 yr CAGR $0.98 $1.04 $1.10 $1.13 $1.16 96+ Years of Dividend $0.93 Payments $0.84 $0.75 Without Interruption $0.68 $0.58 $0.50 Maintain Divi
Slide 11: Confidence in our team, brands and Company
Confidence in our team, brands and Company Momentum of value-added portfolio and Transform & Modernize initiative Overcame significant Strength in Transform & modernize headwinds value-added portfolio initiative on track Dynamic consumer environment #1 or #2 share positions in over Transform & Moder
Slide 12: CFO Remarks
12 CFO Remarks 12
Slide 13: Part 2: Transform and Modernize: Executing Our Evolution
Part 2: Transform and Modernize: Executing Our Evolution 13
Slide 14: Our strategic focus remains clear: Invest, Transform, Grow
O U R S T R AT E G I C F O C U S R E M A I N S C L E A R Deliver long-term shareholder returns & growth through continued investment & transformation Invest Transform Grow in people, data & and modernize processes, net sales, earnings technology portfolios and how we and the impact we and brands cre
Slide 15: Sustainable growth engine for the company
R E G A I N H I S T O R I C A L , P R E D I C TA B L E E A R N I N G S G R O W T H A N D D R I V E L O N G - T E R M VA L U E Sustainable growth engine for the company Drive business growth OPERATING INCOME STRATEGIC GROWTH FROM VALUE TRANSFORM & Quality earnings CURRENT BUSINESS MODERNIZE CAPTURE L
Slide 16: Transform and Modernize: Creating Value
Transform and Modernize: Creating Value 16
Slide 17: Reshaping how we operate and creating new opportunities for growth
TRANSFORM & MODERNIZE Reshaping how we operate and creating new opportunities for growth Supply chain efficiency Transform & Modernize Portfolio pillars Plan Buy Make Move optimization Data & technology Foundational investments People & processes to enable growth 17
Slide 18: We delivered $75M in operating income benefits from Buy, Make & Move
TRANSFORM & MODERNIZE We delivered $75M in operating income benefits from Buy, Make & Move in fiscal 2024 2024 benefits Buy Make Move Value • BUY: Numerous sourcing events to reduce costs; Logistics $$$$ improvement of procurement structure and tools Raw Materials & Supplies $$$ • MAKE: Standardized
Slide 19: 2025: Accelerating operating income benefit
TRANSFORM & MODERNIZE 2025: Accelerating operating income benefit T&M Contribution to Operating Income 2025 expected benefit captured $100- Value $100-$150M $150M Raw Materials & Supplies $$$$ $75M Manufacturing $$ Logistics $$ $75M $75M Fiscal 2024 Actual Fiscal 2025 Estimate 19
Slide 20: Plan & Portfolio Optimization pillars contributing growth
TRANSFORM & MODERNIZE Plan & Portfolio Optimization pillars contributing growth Plan Portfolio optimization Centralized, high-impact Consumer- and operator- end-to-end planning centric, less complex, more transformation profitable mix 20
Slide 21: Investments are enhancing capabilities and unlocking our full potential
F O U N D AT I O N A L I N V E S T M E N T S Investments are enhancing capabilities and unlocking our full potential PEOPLE D ATA • STRATEGIC INSIGHTS for • UPSKILL team members a competitive edge •MORE Projecting • DATA-DRIVEN & Competitive • EMPOWERED decisions ~$250M ANALYTICAL organization built
Slide 22: Powerful flywheel for sustained value creation
TRANSFORM & MODERNIZE Powerful flywheel for sustained value creation Drive business growth Quality earnings Long-term value Predictable growth Fuel for Transform & incremental modernize investments benefits 22
Slide 23: Transform and Modernize: Our Priorities in Action
Transform and Modernize: Our Priorities in Action 23
Slide 24: Thinking differently about how we operate creates compounding value
TRANSFORM AND MODERNIZE IN ACTION Thinking differently about how we operate creates compounding value Past Present Processes • Deep institutional knowledge • Streamlined enterprise-wide processes • Manual operational processes • Intelligent automation & digitization • Siloed • Centralized to leverag
Slide 25: Developing a new framework and tools for procuring goods and services
C AS E S T U D Y BUY Pillar Developing a new framework & tools for procuring goods and services across the entire enterprise Scope Opportunities Adapt How We Operate Extract Value Enterprise-wide Effort New Operating Model New Procurement Sourcing Execution • Enabled by One Supply • Modern, centrali
Slide 26: Sourcing event drives value across the enterprise
C AS E S T U D Y BUY Pillar Sourcing event drives value across the enterprise – one of many different sourcing events The Opportunity Our Focus Value Unlocked Cost and complexity of routine supplies and parts were increasing Substantial • Reduce cost of supplies and parts financial savings • Common
Slide 27: Scaling new ways of working to improve manufacturing performance
C AS E S T U D Y MAKE Pillar Scaling new ways of working to improve our manufacturing performance Increasing Yields Capacity Engagement Standardizing ways of working across Reducing all manufacturing facilities Unnecessary Working Downtime Capital Cost Maturity model to drive accountability for the
Slide 28: Improving capacity to meet future demand
C AS E S T U D Y MAKE Pillar Improving capacity to meet future demand The Opportunity Our Focus Value Unlocked Increased Capacity +18% Hormel® BACON 1TM fully • Improve capacity at Wichita facility cooked bacon demand remains strong with the Hormel Production System Before After Capacity constraints
Slide 29: Enhancing our logistics network and boosting distribution capacity
C AS E S T U D Y MOVE Pillar Enhancing our logistics network and boosting distribution capacity Freight RFP Product Flow Optimization Distribution Capacity Renegotiated enterprise freight Optimized flow of finished goods Opening new Memphis metro- rates to generate immediate inventory to decrease la
Slide 30: Revolutionize our approach to end-to-end planning
C AS E S T U D Y PLAN Pillar Revolutionize our approach to end-to-end planning across the company Today Future Improved • Manual spreadsheets • Centralized activities • Service Level • Legacy technology • Full adoption of • Cost Structure Integrated Business • Numerous different Planning process and
Slide 31: Reshaping our portfolio for better margins and topline growth
Portfolio Optimization Reshaping our portfolio for better margins and topline growth The Opportunity Our Focus Value Unlocked Improved profitability • Rigorous process to evaluate Reduced complexity & manage all items in our portfolio Increased capacity for • Divested non-strategic businesses innova
Slide 32: Continuing to drive value in Fiscal 2025 and 2026
Continuing to drive value in Fiscal 2025 and 2026 Foundational investments in data, technology, people, and process Converging enterprise objectives Increasingly interconnected pillars Positively impacting all aspects of our financials Unlocking our team’s full potential 32
Slide 33: Our commitment: Delivering sustainable long-term growth
Our commitment Delivering sustainable long-term growth 33
Slide 34: Positioned for profitable and predictable growth
D E L I V E R I N G O N S U S TA I N A B L E L O N G - T E R M G R O W T H Positioned for profitable and predictable growth, and sustainable, long-term shareholder value creation Continuous + Improvement Transform & Modernize Operational GoFWD & + • Sustainable value creation Efficiency One Supply C
Slide 35: Strong long-term strategy and portfolio
LONG-TERM ALGORITHIM Strong long-term strategy and portfolio Leading & differentiated brands Net sales Fueled by innovation 2-3% Organic net sales1 growth Organized for long-term growth Operating income Stable financial performance 5-7% Operating income growth Strong corporate citizenship 1Non-GAAP
Slide 36: Q&A
Q&A Jim Snee Jacinth Smiley John Ghingo Nathan Annis Chairman of the Board, Executive Vice President Executive Vice Vice President, President and CEO and CFO President, Retail Corporate Development 36
Slide 37: Additional Information
Jess Blomberg Additional Director of Investor Relations Information jcblomberg@hormel.com 37
Slide 38: Fiscal 2025 Outlook
Fiscal 2025 Outlook Value-Added Growth and Acceleration of Transform and Modernize Initiative Fiscal 2025 Outlook Commentary Net Sales $11.9 - $12.2 billion The Company expects: Operating Income $1.13 - $1.23 billion • Organic net sales1 growth of 1% to 3%, which assumes leading on-trend categories,
Slide 39: Appendix: Non-GAAP Measures
Appendix Non-GAAP Measures 39
Slide 40: Non-GAAP Measures
Non-GAAP APPENDIX Measures Non-GAAP Measures This presentation includes measures of financial performance that are not defined by U.S. generally accepted accounting principles (GAAP). The Company utilizes these non-GAAP measures to understand and evaluate operating performance on a consistent basis.
Slide 41: Non-GAAP Measures (continued)
Non-GAAP APPENDIX Measures Non-GAAP Measures (continued) Gain on Sale of Business In the fourth quarter of fiscal 2024, the Company sold the Hormel Health Labs business, resulting in a gain on the sale. The Company believes the one-time benefit from the sale is not reflective of the Company’s ongoin
Slide 42: Non-GAAP Measures (continued)
Non-GAAP APPENDIX Measures Non-GAAP Measures (continued) The tables below show the calculations to reconcile from the GAAP measures to the non-GAAP measures presented in this presentation: (1) Comprised primarily of asset write-offs related to portfolio optimization. (2) Comprised primarily of proje
Slide 43: Non-GAAP Measures (continued)
Non-GAAP APPENDIX Measures Non-GAAP Measures (continued) Fiscal 2025 Outlook - Organic Net Sales (Non-GAAP) To facilitate the comparison of past and present net sales performance, the Company’s fiscal 2025 outlook for net sales growth has been adjusted to reflect organic net sales. Organic net sales