Hormel Foods Corporation · NYSE:HRL
Hormel Foods — Investor Day (June 2017)
20 slides from Hormel Foods's investor day presentation, Jun 15, 2017
Slide 1: Jim Sheehan, Senior Vice President, Chief Financial Officer
Jim Sheehan 39 Years with Hormel Foods Senior Vice President, Chief Financial Officer Hormel Foods Career History Oct 2016: Senior Vice President and Chief Financial Officer March 2016: Vice President and Chief Accounting Officer 2000: Vice President and Controller 1999: Treasurer, Hormel Foods Corp
Slide 2: Hormel Foods: A Long-Term Growth Story
Hormel Foods A Long-Term Growth Story Jim Sheehan Senior Vice President & Chief Financial Officer
Slide 3: Returning Cash to Shareholders
Returning Cash to SHAREHOLDER RETURN Shareholders Internal Data
Slide 4: Leading Our Peers in 10-Year Total Shareholder Return
Leading Our Peers in 10-Year Total SHAREHOLDER RETURN Shareholder Returns $500 $450 $400 $350 Total Return $300 $250 $200 $150 $100 $50 $0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Total shareholder returns including reinvestment of dividends 4/27/07 – 4/27/17 (Peer set as di
Slide 5: A Strategy That Delivers Strong Cash Flow
A Strategy That Delivers STRATEGY Strong Cash Flow 2012-2016 Internal Data
Slide 6: Our Balanced Model
Our Balanced STRATEGY Model Our Business is Resilient During Various Economic Conditions Protein Packaged Foods Beef, Nuts, Avocados, Pork and Turkey and Tomatoes Retail Foodservice Financially Innovative Conservative Culture Refrigerated Jennie-O Turkey International Grocery Products Specialty Food
Slide 7: A Focus on Margin Expansion
A Focus on STRATEGY Margin Expansion Operating Margins Acquisitions Top Quartile Innovation of Our Product Mix +460bps 13.9% Peer Cost Containment Group 9.3% 2011 2016 2020 Divestitures Actual Actual Goal 2011 – 2016 Internal Data
Slide 8: Transforming Our Margins
Transforming STRATEGY Our Margins Combined Operating Margin ACQUISITIONS DIVESTITURES Mid-Teens Low Single Digits BRAND
Slide 9: $3 Billion Investment In Growth
$3 Billion Investment STRATEGY In Growth Acquisitions Capex $2.2B $800M Internal Data 2012 – 2016
Slide 10: Resulting in Consistently High ROIC
Resulting in Consistently STRATEGY High ROIC 40% 35% Investment Principles 30% • Rigorous Valuation Process 25% • Long-Term Weighted Average 20% Cost of Capital 15% • Post Investment Analysis 10% 5% 0% 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 -5% Factset data based on fiscal 2
Slide 11: Our Financial Strategy
Our Financial Strategy • Strategic cost management • Improving our cash cycle • Optimizing our capital structure
Slide 12: Strategic Cost Management
Strategic Cost Management • Allocate resources to support strategic initiatives and long-term goals • Minimize expense in less mission-critical areas • Enhance our culture of continuous improvement
Slide 13: Corporate-Driven Projects
A Focus on Cost Management FUTURE GROWTH Corporate-Driven Projects Research and Supply Chain Sales and Marketing Development Reformulation Close California Facility Promotion Strategy Move Production Equipment Portfolio Management Overhead Management Advertising Strategy SKU Rationalization
Slide 14: Employee-Driven Projects
A Focus on Cost Management FUTURE GROWTH Employee-Driven Projects • Projects submitted by employees across the organization • 1,000+ projects each year
Slide 15: Improving Our Cash Cycle
Improving FUTURE GROWTH Our Cash Cycle Cash Conversion Cycle • Obtain industry-leading Aggressive accounts payable terms Days 50 Improvement 48 • Aggressively enforce selling terms • Optimize inventory levels 2013 2016 2018 Internal Data
Slide 16: Optimizing the Balance Sheet For Growth
Optimizing the Balance Sheet FUTURE GROWTH For Growth Internal data as of fiscal Q2 2017
Slide 17: Commitment to Returning Cash to Shareholders
Commitment to Returning FUTURE GROWTH Cash to Shareholders Dividends $0.80 $0.70 $0.60 $0.50 $0.40 $0.30 $0.20 $0.10 $0.00 Internal Data
Slide 18: Delivering Returns for our Shareholders
Delivering Returns FUTURE GROWTH for our Shareholders $600 Hormel $500 Foods $400 $442 S&P 500 Pkg $300 Food & Meats $287 $200 S&P 500 $100 $198 $0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 $100 invested on 4/27/07 in stock or index – including reinvestment of dividends
Slide 19: Key Takeaways
FUTURE GROWTH Key Takeaways A Strong Financial Formula for Growth 1. Utilize capital to grow the business 2. Maintain a strong balance sheet 3. Strategic cost management 4. Maintain dividend growth
Slide 20: Hormel Foods: A Long-Term Growth Story
Hormel Foods A Long-Term Growth Story Jim Sheehan Senior Vice President & Chief Financial Officer