Hormel Foods Corporation · NYSE:HRL
Hormel Foods — Q2 2022 Earnings Presentation
21 slides from Hormel Foods's earnings presentation, Jun 2, 2022
Slide 1: Supplemental Information Second Quarter Fiscal 2022
SUPPLEMENTAL INFORMATION Second Quarter Fiscal 2022 CELEBRATES 85 YEARS THIS SUMMER 1
Slide 2: Disclaimers
Second Quarter Disclaimers DISCLAIMERS Fiscal 2022 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 a
Slide 3: Continuing to Deliver on Our ESG Commitments
ESG Second Quarter UPDATE Fiscal 2022 Continuing to Deliver on Our ESG Commitments Named One of the Top Corporate Citizens in the U.S. Made Progress Against Our 20 By 30 Challenge On track to match 100% of company’s domestic energy use with renewable sourcing by the end of 2022 Recognized for outsta
Slide 4: Employee Safety - Always a Top Priority
EMPLOYEE Second Quarter SAFETY Fiscal 2022 Employee Safety - Always a Top Priority A long track record of better-than-industry* performance 10.0 Hormel Foods Industry Average 9.0 8.0 Total Case Incident Rate* 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Slide 5: Making Progress on Our 2022 Path Forward
OUR 2022 Second Quarter PATH FORWARD Fiscal 2022 Making Progress on Our 2022 Path Forward Expand leadership Protect and grow Aggressively develop in foodservice our core brands our global presence ▪ U.S. foodservice channel net sales +32% in the ▪ U.S. retail channel net sales +15% in the second ▪ R
Slide 6: Key Messages
KEY Second Quarter MESSAGES Fiscal 2022 Key Messages • We delivered strong top- and bottom-line growth in the second quarter of fiscal 2022. • We made meaningful progress across our supply chain, including improvements in fill rates, inventories and production volumes. • We reaffirmed our full-year
Slide 7: Second Quarter Business Highlights
BUSINESS Second Quarter HIGHLIGHTS Fiscal 2022 Second Quarter Business Highlights • Achieved 6th consecutive quarter of record net sales, with organic net sales* up double digits • Delivered 3rd consecutive quarter of earnings growth and drove sequential margin improvement compared to the first quar
Slide 8: Second Quarter Financial Metrics
FINANCIAL Second Quarter METRICS Fiscal 2022 Second Quarter Financial Metrics We delivered strong top- and bottom-line growth in the second quarter Volume Net Sales Diluted EPS -2% $3.10B $0.48 +19% +14% 1.19B 1.16B $2.61B $0.42 Q2 Q2 2021 FY21 Q2 Q2 2022 FY22 Q2 FY21 2021 Q2 2022 Q2 FY22 Q2 2021 Q2
Slide 9: Second Quarter Diluted EPS
DILUTED Second Quarter EPS BRIDGE Fiscal 2022 Second Quarter Diluted EPS Leveraging our balanced business model to drive growth $0.48 $0.42 Q2 2021 Volume Gross Margin SG&A Equity in Int. and Invest. Interest Tax Q2 2022 Earnings Inc./(Exp.) Expense • Gross margin growth driven by Jennie-O Turkey St
Slide 10: Quarterly Organic Net Sales Growth
ORGANIC SALES Second Quarter GROWTH Fiscal 2022 Quarterly Organic Net Sales* Growth Our brands have responded well to pricing actions 32% ** 14% 13% 10% Q3 2021 Q4 2021 Q1 2022 Q2 2022 *Non-GAAP financial measure. See Appendix to this presentation for more information, including GAAP to non-GAAP rec
Slide 11: Quarterly Operating Margin
OPERATING Second Quarter MARGINS Fiscal 2022 Quarterly Operating Margin Our efforts to mitigate inflationary pressures are working 10.9% 11.1% 10.4% 10.5% 10.8% 7.2% Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 See Q2 2022 earnings release dated 6/2/2022 for additional details 11
Slide 12: Refrigerated Foods
REFRIGERATED Second Quarter FOODS RESULTS Fiscal 2022 Refrigerated Foods Strong foodservice results drive growth Segment Results Business Highlights Q2 • Net sales increased due to strong results from the foodservice Refrigerated Foods YoY Percent Change (%) businesses and many retail products, stra
Slide 13: Grocery Products
GROCERY Second Quarter PRODUCTS RESULTS Fiscal 2022 Grocery Products Top-line growth and Planters® contribution offset by inflationary pressures Segment Results Business Highlights Q2 • Volume and sales increased due to strength across the Grocery Products YoY Percent Change (%) portfolio and from t
Slide 14: Jennie-O Turkey Store
JENNIE-O TURKEY Second Quarter STORE RESULTS Fiscal 2022 Jennie-O Turkey Store Profit improvement due to favorable market conditions, foodservice growth Segment Results Business Highlights Jennie-O Turkey Store Q2 • Net sales for all areas of the business increased, led YoY Percent Change (%) by foo
Slide 15: International & Other
INTERNATIONAL & Second Quarter OTHER RESULTS Fiscal 2022 International & Other Results impacted by restrictions in China and export logistics challenges Segment Results Business Highlights Q2 • Volume and sales declined as a result of current export logistics International & Other YoY Percent Change
Slide 16: Second Quarter Channel Highlights
CHANNEL Second Quarter HIGHLIGHTS Fiscal 2022 Second Quarter Channel Highlights Demand across all the company's U.S. channels remained elevated Second Quarter First Half Net Sales YoY Percent Change (%) YoY Percent Change (%) U.S. Retail +15 +16 U.S. Foodservice +32 +41 International (3) (3) Total +
Slide 17: Continuing to Generate Strong Cash Flows
OPERATING CASH Second Quarter FLOW AND Fiscal 2022 LEVERAGE Continuing to Generate Strong Cash Flows On track to begin deleveraging in the second half of fiscal 2022 Operating Cash Flow Leverage (in millions) (net debt to EBITDA) $577 2.3x $361 1.5x - 2x $193 $156 Fiscal Fiscal 2023 Q2 2021 Q2 2022
Slide 18: Additional Financial Disclosures
ADDITIONAL Second Quarter FINANCIAL Fiscal 2022 DISCLOSURES Additional Financial Disclosures • Advertising spend was $39 million compared to $31 million last year. • Effective tax rate was 18.7% compared to 22.1% last year. Higher stock option exercises provided a benefit to the tax rate for the qua
Slide 19: Fiscal 2022 Outlook
FISCAL 2022 Second Quarter OUTLOOK Fiscal 2022 Fiscal 2022 Outlook Sales guidance reaffirmed and diluted EPS guidance range narrowed Fiscal 2022 Outlook Fiscal 2022 Expectations Previous Updated • Our top-line guidance assumes robust demand for our Net Sales (in billions) $11.7 - $12.5 $11.7 - $12.5
Slide 20: Additional Information
David Dahlstrom Additional Director of Investor Relations Information dwdahlstrom@hormel.com (507) 437-5248 20
Slide 21: Non-GAAP Financial Measures
NON-GAAP Second Quarter Non-GAAP Financial Measures APPENDIX Fiscal 2022 NON-GAAP FINANCIAL MEASURES The non-GAAP adjusted financial measures of organic net sales and organic volume are presented to provide investors with additional information to facilitate the comparison of past and present operat