Hormel Foods Corporation · NYSE:HRL
Hormel Foods — Investor Day (October 2023)
154 slides from Hormel Foods's investor day presentation, Oct 12, 2023
Slide 1: Welcome to Investor Day
WELCOME TO
Slide 2: Investor Day Introduction
Investor Day Introduction David Dahlstrom Director of IR
Slide 3: Investor Day website
Invest. Transform. Grow. Investor Day website Website: investorday.hormelfoods.com 3
Slide 4: Today's agenda
Invest. Transform. Grow. Today’s agenda 8:30 Introduction – David Dahlstrom 8:35 Invest. Transform. Grow. – Jim Snee & Jacinth Smiley Q&A – Jim Snee & Jacinth Smiley 9:45 Break 10:05 One Retail: Driving Focus and Growth – Deanna Brady Winning with Consumers – Scott Aakre Q&A – Jim Snee, Deanna Brady
Slide 5: 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, strat
Slide 6: Part 1: Invest. Transform. Grow.
Part 1: Invest. Transform. Grow. Executing Our Strategy & Driving Growth
Slide 7: Jim Snee
Jim Snee Chairman of the Board, President and CEO
Slide 8: Key messages you will hear today
Key messages you will hear today We have made significant progress in our evolution to become a stronger, more balanced and less volatile company. Our updated strategic priorities align with our segments and support meaningful earnings growth by fiscal 2026. We are investing for growth to accelerate
Slide 9: Hormel Foods: An uncommon global branded food company
I N V E S T. T R A N S F O R M . G R O W . Hormel Foods: An uncommon global branded food company Executing on our evolution: A stronger, more balanced and less volatile company Our 3-year plan to grow earnings: Bottom-line growth from current business, transformation & modernization, and strategic v
Slide 10: Hormel Foods at a glance
Invest. Transform. Grow. Founded in HRL $12.5B 1891 Fiscal year 2022 LISTED net sales Leader in NYSE 40+ retail categories1 ~$20B 57 Consecutive years of Market the next step in our evolution dividend capitalization as an uncommon global increases branded food company Source: (1) IRI 52 weeks ending
Slide 11: An uncommon global branded food company
Invest. Transform. Grow. H O R M E L F O O D S T O D AY An uncommon global branded food company Retail 65% Foodservice 29% FY ’23 Q3 YTD ® net sales1 D AN BR International 6% Source: (1) See earnings release dated 8/31/2023 11
Slide 12: Building from a position of strength
Invest. Transform. Grow. D E F I N I N G FA C T O R S A S A G L O B A L B R A N D E D F O O D C O M PA N Y Building from a position of strength Leading & Balanced Organized Stable Strong differentiated global for long-term financial corporate brands growth growth performance citizenship Leading posi
Slide 13: Our strategic focus is clear
Invest. Transform. Grow. O U R S T R AT E G I C F O C U S I S C L E A R Deliver long-term shareholder returns & growth through continued investment & transformation Invest Transform Grow in people, processes, and modernize processes, net sales, earnings data & technology, portfolios and how we and t
Slide 14: Today's speakers represent an experienced, world-class leadership team
Invest. Transform. Grow. DEEP BENCH OF EXPERIENCED LEADERSHIP Today’s speakers represent an experienced, world-class leadership team Jim Snee Jacinth Smiley Deanna Brady Scott Aakre Mark Coffey Mark Ourada Chairman of the Board, Executive Vice Executive Vice Group Vice President, Group Vice Presiden
Slide 15: Executing on our commitment to deliver value to our stakeholders
Invest. Transform. Grow. A R E S P O N S I B L E C O R P O R AT E C I T I Z E N Executing on our commitment to deliver value to our stakeholders 15
Slide 16: Recognized for making a difference
Invest. Transform. Grow. A R E S P O N S I B L E C O R P O R AT E C I T I Z E N Recognized for making a difference 16
Slide 17: Hormel Foods: An uncommon global branded food company
I N V E S T. T R A N S F O R M . G R O W . Hormel Foods: An uncommon global branded food company Executing on our evolution: A stronger, more balanced and less volatile company Our 3-year plan to grow earnings: Bottom-line growth from current business, transformation & modernization, and strategic v
Slide 18: Becoming a global branded food company
Invest. Transform. Grow. EXECUTING OUR EVOLUTION Becoming a global branded food company – stronger, more balanced & less volatile Total company operating income $1.31B $1.31B Long-term focus areas: Grow value-added businesses while reducing exposure to volatile commodity profits Improve and further
Slide 19: A stronger, more balanced & less volatile company
Invest. Transform. Grow. EXECUTING OUR EVOLUTION A stronger, more balanced & less volatile company resulting from our strategic actions since 2016 #1 #2 #3 Improved portfolio to Advanced & modernized Organized for long-term, restore profitability capabilities, facilities & systems sustainable growth
Slide 20: Reduced commodity reliance & further balanced our portfolio
Invest. Transform. Grow. A C T I O N # 1 – I M P R O V E D P O R T F O L I O T O R E S T O R E P R O F I TA B I L I T Y Reduced commodity reliance & further balanced our portfolio Value-added vs Net sales by commodity profitability1 key input2 100% Commodity 90% profits 80% 70% 60% Non-meat 50% Pork
Slide 21: Acquired stable, accretive businesses to enhance portfolio
Invest. Transform. Grow. A C T I O N # 1 – I M P R O V E D P O R T F O L I O T O R E S T O R E P R O F I TA B I L I T Y Acquired stable, accretive businesses to enhance portfolio, more than offsetting impact from divestitures Divested dilutive, Acquired stable, non-strategic assets accretive busines
Slide 22: Invested in e-commerce & revenue growth management
Invest. Transform. Grow. AC T I O N # 2 – AD VA N C E D & M O D E R N I Z E D C APA B I L I T I E S , FAC I L I T I E S & S Y S T E M S Invested in e-commerce & revenue growth management – driving omnichannel growth & higher returns Investment Focus Results • Structure, technology and analytics Inve
Slide 23: Supported our growth potential with a step-up in capex
Invest. Transform. Grow. AC T I O N # 2 – AD VA N C E D & M O D E R N I Z E D C APA B I L I T I E S , FAC I L I T I E S & S Y S T E M S Supported our growth potential with a step-up in capex Total company capex spend Spend aligned with priorities: Average Supporting growth and ~$300M innovation for
Slide 24: Integrated Jennie-O Turkey Store business & right-sized pork supply chain
Invest. Transform. Grow. A C T I O N # 3 – O R G A N I Z E D F O R L O N G - T E R M , S U S TA I N A B L E G R O W T H Integrated Jennie-O Turkey Store business & right-sized pork supply chain Investment Focus Results Right-sized • Better align with raw material pork supply needs of value-added Red
Slide 25: Implemented next step in our evolution – the GoFWD initiative
Invest. Transform. Grow. A C T I O N # 3 – O R G A N I Z E D F O R L O N G - T E R M , S U S TA I N A B L E G R O W T H Implemented next step in our evolution – the GoFWD initiative Our GoFWD structure: Retail Foodservice International Defines strategic growth priorities: consumer-centric retail and
Slide 26: Hormel Foods: An uncommon global branded food company
I N V E S T. T R A N S F O R M . G R O W . Hormel Foods: An uncommon global branded food company Executing on our evolution: A strong, more balanced and less volatile company Our 3-year plan to grow earnings: Bottom-line growth from current business, transformation & modernization, and strategic val
Slide 27: Entering the next era of growth
Invest. Transform. Grow. B U I L D I N G O N O U R S T R E N G T H S A S A G L O B A L B R A N D E D F O O D C O M PA N Y Entering the next era of growth Ourfuture Our future Our present Our Ourpast past Accelerating growth Evolution to a global through transformation Refined focus branded food comp
Slide 28: Our path to accelerating profitable growth
Invest. Transform. Grow. A C C E L E R AT I N G P R O F I TA B L E G R O W T H Our path to accelerating profitable growth Goal $250M+ operating income growth by 2026 Enterprise Objectives Operating income growth from current business | Transformation & modernization | Strategic value capture Strateg
Slide 29: Enabled by our long-term strategy & uncommon organizational culture
Invest. Transform. Grow. A C C E L E R AT I N G P R O F I TA B L E G R O W T H – E N A B L E R S Enabled by our long-term strategy & uncommon organizational culture Our Formula for Success Our Cultural Beliefs BUILDING BRANDS INNOVATION ACQUISITIONS BALANCED PORTFOLIO 29
Slide 30: Leading & focused in growing categories
Invest. Transform. Grow. A C C E L E R AT I N G P R O F I TA B L E G R O W T H – E N T E R P R I S E G R O W T H P L AT F O R M S Leading & focused in growing categories – where we have earned the right to win Entertaining & Convenient SPAM® snacking Dry sausage Bacon Mexican proteins family of prod
Slide 31: Our updated strategic priorities align with our segments
Invest. Transform. Grow. A C C E L E R AT I N G P R O F I TA B L E G R O W T H – S T R AT E G I C P R I O R I T I E S Our updated strategic priorities align with our segments & support earnings growth over the next three years Drive focus & growth in our Retail business Segment Expand leadership in
Slide 32: Our updated strategic priorities align with our segments
Invest. Transform. Grow. A C C E L E R AT I N G P R O F I TA B L E G R O W T H – S T R AT E G I C P R I O R I T I E S Our updated strategic priorities align with our segments & support earnings growth over the next three years Drive focus & growth in our Retail business Segment Expand leadership in
Slide 33: Delivering $250M+ in operating income growth by 2026
Invest. Transform. Grow. A C C E L E R AT I N G P R O F I TA B L E G R O W T H – E N T E R P R I S E O B J E C T I V E S Delivering $250M+ in operating income growth by 2026 will require execution against three enterprise objectives STRATEGIC VALUE CAPTURE TRANSFORMATION & OPERATING INCOME MODERNIZA
Slide 34: Restoring sustainable & dependable bottom-line growth
Invest. Transform. Grow. A C C E L E R AT I N G P R O F I TA B L E G R O W T H – E N T E R P R I S E O B J E C T I V E S Restoring sustainable & dependable bottom-line growth from our current business OPERATING INCOME GROWTH FROM CURRENT BUSINESS What gives us confidence? Leading and reputable brand
Slide 35: Driving savings by minimizing complexity & reducing costs
Invest. Transform. Grow. A C C E L E R AT I N G P R O F I TA B L E G R O W T H – E N T E R P R I S E O B J E C T I V E S Driving savings by minimizing complexity & reducing costs TRANSFORMATION & MODERNIZATION What gives us confidence? Savings opportunities are identified, realistic and achievable M
Slide 36: Capturing incremental value from our investments & initiatives
Invest. Transform. Grow. A C C E L E R AT I N G P R O F I TA B L E G R O W T H – E N T E R P R I S E O B J E C T I V E S Capturing incremental value from our investments & initiatives STRATEGIC VALUE CAPTURE Areas of focus: Synergies from recent M&A and Jennie-O Turkey Store transformation Benefits
Slide 37: A realistic & achievable path to deliver on our commitments
Invest. Transform. Grow. A C C E L E R AT I N G P R O F I TA B L E G R O W T H – E N T E R P R I S E O B J E C T I V E S A realistic & achievable path to deliver on our commitments & grow earnings STRATEGIC TRANSFORMATION & OPERATING INCOME VALUE GROWTH FROM CAPTURE MODERNIZATION CURRENT BUSINESS Pr
Slide 38: Deliver projected $250M+ in operating income growth by 2026
Invest. Transform. Grow. A C C E L E R AT I N G G R O W T H – O B J E C T I V E G O A L Deliver projected $250M+ in operating income growth by 2026 Achieving our objective goal: Returns the business to its historical earnings trajectory Provides fuel for incremental investment in branded, value-adde
Slide 39: Section summary
I N V E S T. T R A N S F O R M . G R O W . Section summary In Summary • We are a better company today • We are a stronger company today • We expect because ourstrategic of the 3-year actions plan towe deliver meaningful earnings have taken since 2016. improvement and return our business to its3-year
Slide 40: Jacinth Smiley
Jacinth Smiley Executive Vice President and CFO
Slide 41: Investment strategy: Transformation & modernization
I N V E S T. T R A N S F O R M . G R O W . Investment strategy: Transformation & modernization to enable earnings growth Long-term growth outlook: Investing to achieve 3-year profitability goal and long-term key results Capital allocation: Committed to dividend growth, investment in our business and
Slide 42: Clear investment priorities to deliver $200M+ in operating income growth
Invest. Transform. Grow. T R A N S F O R M AT I O N & M O D E R N I Z AT I O N Clear investment priorities to deliver $200M+ in operating income growth through transformation & modernization TRANSFORMATION & REDUCE COST STRUCTURE MODERNIZATION Supply chain efficiency Portfolio Plan Buy Make Move opt
Slide 43: Investing first in our people & processes
Invest. Transform. Grow. F O U N D AT I O N A L I N V E S T M E N T S – P E O P L E A N D P R O C E S S E S Investing first in our people & processes creates the foundation for successful transformation Foundational investment in people & processes: Close gap between current processes and best-in-cl
Slide 44: Investments in data & technology
Invest. Transform. Grow. F O U N D AT I O N A L I N V E S T M E N T S – D AT A A N D T E C H N O L O G Y Our investments in data & technology will enable process improvement & enhanced capabilities Foundational investment in data & technology: Complete order-to-cash project Improve end-to-end planni
Slide 45: Significant savings from transformational efforts focused on our supply chain
Invest. Transform. Grow. V A L U E D R I V E R S – P L A N , B U Y, M A K E , M O V E Significant savings from transformational efforts focused on our supply chain Workstreams to reduce supply chain REDUCE COST STRUCTURE cost structure: Supply chain efficiency Plan: End-to-end planning evolution dri
Slide 46: Minimizing complexity through portfolio optimization
Invest. Transform. Grow. VA L U E D R I V E R S – P O R T F O L I O O P T I M I Z AT I O N Minimizing complexity & enhancing margin structure through portfolio optimization Elements of portfolio optimization: REDUCE COST STRUCTURE Supply chain efficiency Surge portfolio review: Alignment and executi
Slide 47: Foundational investments to enable growth
Invest. Transform. Grow. B U I L D I N G T H E F O U N D AT I O N Investments in our people, processes, and data & technology are foundational to achieving our transformational goal Data & technology Foundational investments People & processes to enable growth 47
Slide 48: We expect to deliver significant savings by the end of fiscal 2026
Invest. Transform. Grow. DELIVERING OUR GOAL We expect to deliver significant savings by the end of fiscal 2026 REDUCE COST STRUCTURE Transformation & modernization Supply chain efficiency $200M+ in projected operating income growth by 2026 Portfolio Plan Buy Make Move optimization Data & technology
Slide 49: Investment strategy: Transformation & modernization
I N V E S T. T R A N S F O R M . G R O W . Investment strategy: Transformation & modernization to enable earnings growth Long-term growth outlook: Investing to achieve 3-year profitability goal and long-term key results Capital allocation: Committed to dividend growth, investment in our business and
Slide 50: Remaining committed to our long-term key results
Invest. Transform. Grow. L O N G - T E R M K E Y R E S U LT S Remaining committed to our long-term key results Net sales Operating income Innovation 2-3% Organic net sales 5-7% Operating income 15% of net sales growth growth from innovation1 4.2% net sales CAGR2 5.3% operating income CAGR2 13% net s
Slide 51: Projecting a steady & sequential ramp in our earnings trajectory
Invest. Transform. Grow. T I M E L I N E T O P R O F I TA B I L I T Y G O A L Projecting a steady & sequential ramp in our earnings trajectory Projected $250M+ in INVESTING SUSTAINING operating FOR GROWTH GROWTH income growth Investments in people, Initial transformation and modernization Run-rate p
Slide 52: Investment strategy: Transformation & modernization
I N V E S T. T R A N S F O R M . G R O W . Investment strategy: Transformation & modernization to enable earnings growth Long-term growth outlook: Investing to achieve 3-year profitability goal and long-term key results Capital allocation: Committed to dividend growth, investment in our business and
Slide 53: Committed to dividend growth, investing in our business
Invest. Transform. Grow. C A P I T A L A L L O C AT I O N S T R AT E G I E S Committed to dividend growth, investing in our business, & maintaining an investment-grade rating Required Strategic •Increase dividend Opportunistic •Growth capex •Maintenance capex •Share repurchases •Incremental •Mandato
Slide 54: Growing our dividend remains the top priority
Invest. Transform. Grow. COMMITTED TO OUR DIVIDEND Growing our dividend remains the top priority as we allocate capital to drive long-term shareholder returns Annual dividends Long-term commitment to our dividend: ~13% CAGR 57 consecutive years of dividend increases Member of S&P 500 Dividend Aristo
Slide 55: Financial flexibility to support our business
Invest. Transform. Grow. STRONG FINANCIAL POSITION Financial flexibility to support our business Net debt to EBITDA1 (LTM) Cash & mkt sec.2 Debt2 $687M $3.3B Committed to maintaining Investment-grade rating Hormel Foods 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Industry Peers Source: (1) So
Slide 56: In Summary
I N V E S T. T R A N S F O R M . G R O W . In Summary • We are focused on delivering long-term shareholder returns and growth through continued investment and transformation. • We are reaffirming our long-term key results. • Our strong balance sheet supports our capital allocation priorities. 56
Slide 57: Q&A
Q&A Jim Snee Jacinth Smiley Chairman of the Board, Executive Vice President President and CEO and CFO
Slide 58: Break
Break
Slide 59: Part 2: One Retail
Part 2: One Retail Driving Focus & Growth in Our Retail Business
Slide 60: Deanna Brady
Deanna Brady Executive Vice President, Retail
Slide 61: What did you think of the first course?
One Retail What did you think of the first course? 61
Slide 62: One Retail: A powerhouse of leading brands
O N E R E TA I L One Retail: A powerhouse of leading brands, exceptional talent and strong capabilities Brands matter: A balanced, well- positioned and relevant portfolio Clear strategic focus: Winning with consumers and customers, allocating resources to drive profitable growth and improving our ma
Slide 63: An $8B powerhouse of leading brands, talented people & strong capabilities
One Retail O N E R E T A I L T O D AY An $8B powerhouse of leading brands, talented people & strong capabilities Leading retail brands Exceptional talent Strong capabilities # 1 or 2 position in more than 40 categories1 ~650 team members Source: (1) IRI 52 weeks ending 10/30/2022 – MULO; SPINS 52 we
Slide 64: Defined verticals – better aligning our structure with our strategy
One Retail STRUCTURED FOR GROWTH Defined verticals – better aligning our structure with our strategy Retail verticals – approximate percentage of total Retail segment net sales ~25% ~20% ~10% ~10% ~5% ~30% Convenient meals Snacking and Global Emerging Value-added Bacon and proteins entertaining flav
Slide 65: Significant progress implementing GoFWD structure in 2023
One Retail B U I L D I N G T H E F O U N D AT I O N Significant progress implementing GoFWD structure in 2023 Year one GoFWD successes: Integrated seven businesses into one reporting structure Focus, alignment and decision-making within the leadership team One Diligent prioritization of resources, R
Slide 66: One Retail: A powerhouse of leading brands
O N E R E TA I L One Retail: A powerhouse of leading brands, exceptional talent and strong capabilities Brands matter: A balanced, well- positioned and relevant portfolio Clear strategic focus: Winning with consumers and customers, allocating resources to drive profitable growth and improving our ma
Slide 67: Large, balanced & scalable portfolio across the retail footprint
One Retail B R A N D S M AT T E R – R E TA I L S T O R E Large, balanced & scalable portfolio across the retail footprint… Fresh Mexican Wall deli meats Snacking Frozen Deli/ Center prepared foods store Produce Grab & go 67
Slide 68: Broad exposure to industry segments & subsegments
One Retail B R A N D S M AT T E R – R E TA I L C H A N N E L … with broad exposure to industry segments & subsegments Club Grocery & Mass Dollar sales by channel1 E-commerce & Other Source: (1)Circana Total US – All Outlet 52 weeks ending 9/10/2023. 68
Slide 69: Possessing an $8B portfolio of brands
One Retail B R A N D S M AT T E R – S C A L E & S C O P E Possessing an $8B portfolio of brands with balanced exposure across many categories 69
Slide 70: Many of our brands have emerged from the pandemic stronger
One Retail B R A N D S M AT T E R – G R O W T H & R E L E VA N C E Many of our brands have emerged from the pandemic stronger & more relevant with consumers Dollar sales vs 4YA | branded category position1 +70% #1 +51% #1 +61% #1 #1 +53% #1 +51% #1 Meat entrees heat & eat Dry Deli Lunchmeat Party Tr
Slide 71: One Retail: A powerhouse of leading brands
O N E R E TA I L One Retail: A powerhouse of leading brands, exceptional talent and strong capabilities Brands matter: A balanced, well- positioned and relevant portfolio Clear strategic focus: Winning with consumers and customers, allocating resources to drive profitable growth and improving our ma
Slide 72: The retail channel has grown in importance for consumers
One Retail C L E A R S T R AT E G I C F O C U S The retail channel has grown in importance for consumers 86% of more than 600 billion annual eating occasions are sourced from retail The share of retail-sourced occasions remains 2% higher than pre-pandemic Source: The NPD Group/National Eating Trends
Slide 73: Leveraging our strengths & thinking differently about growth
One Retail C L E A R S T R AT E G I C F O C U S Leveraging our strengths & thinking differently about how we drive long-term, profitable growth #1 #1 #2 #3 Winning with consumers Strategic resource Improving our margin and customers allocation structure To accelerate growth in a To drive profitable
Slide 74: Winning with our customers starts by winning with consumers
One Retail S T R AT E G Y # 1 – W I N N I N G W I T H C O N S U M E R S A N D C U S T O M E R S Winning with our customers starts by winning with consumers 74
Slide 75: The current operating environment is increasingly complex & dynamic
One Retail S T R AT E G Y # 1 – W I N N I N G W I T H C O N S U M E R S A N D C U S T O M E R S The current operating environment is increasingly complex & dynamic Economic Demographic Sustaining Holistic Customer uncertainty changes the good well-being market shifts Persistent food The younger Cons
Slide 76: Our portfolio is well positioned to address changing consumer behavior
One Retail S T R AT E G Y # 1 – W I N N I N G W I T H C O N S U M E R S A N D C U S T O M E R S Our portfolio is well positioned to address changing consumer behavior Economic Demographic Sustaining Holistic Customer uncertainty changes the good well-being market shifts 76
Slide 77: A path to growing our $8B powerhouse of brands with our customers
One Retail S T R AT E G Y # 1 – W I N N I N G W I T H C O N S U M E R S A N D C U S T O M E R S A path to growing our $8B powerhouse of brands with our customers Activating leading insights Becoming an indispensable Activating leading Creating an strategic partner insights empowered team Possessing
Slide 78: Translating our strategy into winning – examples from year one of GoFWD
One Retail S T R AT E G Y # 1 – W I N N I N G W I T H C O N S U M E R S A N D C U S T O M E R S Translating our strategy into winning – examples from year one of GoFWD Winning with Winning with data, Winning with innovation analytics & insights distribution Leveraging our Growing the Planters® snack
Slide 79: Segmenting our brands to better drive focus & accelerate growth
One Retail S T R AT E G Y # 2 – S T R AT E G I C R E S O U R C E A L L O C AT I O N Segmenting our brands to better drive focus & accelerate growth Flagship Rising Foundational Large, material, established Small, differentiated Steady growers and poised for growth Aligning resources to our Strategic
Slide 80: Investing in & leading with our flagship brands
One Retail S T R AT E G Y # 2 – S T R AT E G I C R E S O U R C E A L L O C AT I O N Investing in & leading with our flagship brands Flagship brands Resource commitments: Consistent marketing investments Strong, experienced marketing teams Net sales Margin Long-term Heavy R&D investment to contributi
Slide 81: Fueling aggressive growth for our rising brands
One Retail S T R AT E G Y # 2 – S T R AT E G I C R E S O U R C E A L L O C AT I O N Fueling aggressive growth for our rising brands Rising brands Resource commitments: Over-investment in marketing and innovation resources Entrepreneurial talent to Net sales Margin Long-term drive growth contribution
Slide 82: Focusing & leveraging our foundational brands
One Retail S T R AT E G Y # 2 – S T R AT E G I C R E S O U R C E A L L O C AT I O N Focusing & leveraging our foundational brands Foundational brands Resource commitments: Marketing investment to maintain market share Experienced brand Net sales Margin Long-term management teams contribution profile
Slide 83: Improving our margin structure will allow us to better support our leading brands
One Retail S T R AT E G Y # 3 – I M P R O V I N G O U R M A R G I N S T R U C T U R E Improving our margin structure will allow us to better support our leading brands Gross margin % of net sales1 (most recently completed fiscal year) Higher margins support: Increased brand investment Long-term targ
Slide 84: Driving margin expansion through brand stewardship & reducing cost
One Retail S T R AT E G Y # 3 – I M P R O V I N G O U R M A R G I N S T R U C T U R E Driving margin expansion through brand stewardship & by reducing cost & complexity Supply chain Brand stewardship Portfolio optimization improvements SG&A management Enhance relationship Reducing cost and Capturing
Slide 85: Leveraging our capabilities to fuel growth for Planters snack nuts
One Retail S T R AT E G Y # 3 – I M P R O V I N G O U R M A R G I N S T R U C T U R E Leveraging our capabilities to fuel growth for the Planters® snack nuts business Focus areas: Incremental and impactful innovation Higher brand investment and support Optimize assortment Leverage scale to lower cos
Slide 86: Section summary
O N E R E TA I L Section summary In Summary • We are a better company today We are consumer-focused to drive • We expect growth ourour across 3-year plan to businesses deliver meaningful earnings and for our customers. improvement and return our business to its historical We are better earnings allo
Slide 87: Part 2: One Retail – Winning with Consumers
Part 2: One Retail Winning with Consumers
Slide 88: Scott Aakre
Scott Aakre Group Vice President & Chief Marketing Officer, Retail
Slide 89: Our retail branded portfolio reaches 85% of households
One Retail – Winning with Consumers W I N N I N G W I T H C O N S U M E R S T O D AY Our retail branded portfolio reaches 85%1 of households across all generational breaks Generation Z Millennials Gen X Boomers Seniors Source: (1) Circana Scan Panel, Total US All Outlet, 52 weeks ending 8/13/23; bra
Slide 90: Building demand across an ethnically diverse U.S. consumer base
One Retail – Winning with Consumers W I N N I N G W I T H C O N S U M E R S T O D AY We are building demand across an ethnically diverse U.S. consumer base African Asian/Pacific Hispanic White American Islander American Figures denote consumption index 112 365 156 123 108 159 127 109 106 122 127 103
Slide 91: Brand Fuel combines & expands our enterprise capabilities
One Retail – Winning with Consumers W I N N I N G W I T H C O N S U M E R S T O D AY Brand Fuel combines & expands our enterprise capabilities to engage consumers & drive growth Brand Fuel: A center of excellence focused on insights, innovation, data analytics, omni experience and media strategy Sup
Slide 92: Growing an 86-year-old global & iconic brand through Brand Fuel
One Retail – Winning with Consumers W I N N I N G W I T H C O N S U M E R S T O D AY Growing an 86-year-old global & iconic brand through the power of Brand Fuel “Born in America but raised around the world.” John A., Ghanaian – American, FAN SPAM® project 92
Slide 93: Supporting our brands to drive growth & engagement
One Retail – Winning with Consumers W I N N I N G W I T H C O N S U M E R S T O D AY Supporting our brands to drive growth & engagement in the marketplace Advertising investments1 +6% CAGR 2019 2020 2021 2022 2023e Supporting our brands and connecting with consumers Source: (1) Internal data. 93
Slide 94: Renovating & innovating the portfolio
One Retail – Winning with Consumers WINNING WITH CONSUMERS Renovating & innovating the portfolio to remain relevant with the consumer today & tomorrow #1 #2 #3 Global flavors Entertaining Natural & & snacking organic meats 94
Slide 95: Key insight: Mexican cuisine
Key insight Mexican is the top ethnic cuisine in the U.S. with millennials1 both at and away from home 81% of Generation Z consumers seek out spicy flavors2 Source: (1) The NPD Group/CREST®, YE Feb. 2022; (2) Technomic CA Report Nov 2020. 95
Slide 96: Herdez & Wholly offer compelling growth stories
One Retail – Winning with Consumers G L O B A L F L AV O R S – M E X I C A N Herdez® & Wholly ® offer compelling growth stories Expanding beyond the core Dynamic innovation pipeline to increase occasions 96
Slide 97: Leading innovation in Mexican flavors
One Retail – Winning with Consumers G L O B A L F L AV O R S – M E X I C A N Leading innovation in Mexican flavors $184M in innovative items across the portfolio Source: Internal data 97
Slide 98: Using foundational brands & cultural influences to deliver new products
One Retail – Winning with Consumers A C L O S E R L O O K - A L I G N I N G W I T H T O D AY ’ S C O N S U M E R S Using foundational brands & cultural influences to deliver new products & messaging 98
Slide 99: Key insight: Snacking is a growing lifestyle
Key Insight Snacking is a growing lifestyle in the U.S., especially for the younger generations1 3+ snacks per day 18-24 58% 25-34 68% 35-44 60% $69B Snacking & entertaining category sales2 Source: (1) Circana 2023 Snacking Survey; (2) IRI Market Advantage last 52 weeks ending 6/18/2023. 99
Slide 100: Positioned to win with leading brands in entertaining & snacking
One Retail – Winning with Consumers E N T E R TA I N I N G & S N A C K I N G Positioned to win with leading brands in entertaining & snacking Fuel snacking – Highly craveable - Pizza and pizza- Creating a flavorful Convenient, convenient, filling driven by unique related recipes for and adventurous
Slide 101: Using our position in snacking to innovate
One Retail – Winning with Consumers A C L O S E R L O O K - A L I G N I N G W I T H T O D AY ’ S C O N S U M E R S Using our position in snacking to innovate for younger, more diverse consumers Same great taste, Winning with flavor different eating experience 101
Slide 102: Key insight: ESG initiatives
Key insight Consumers are increasingly seeking and supporting brands that are genuinely advancing ESG initiatives Source: Applegate Brand Health Tracker, October 2023. 102
Slide 103: Applegate remains the industry leader in natural & organic meats
One Retail – Winning with Consumers N AT U R A L & O R G A N I C M E AT S Applegate remains the industry leader in natural & organic meats Consumers are making more #1 natural/organic market position2 conscious choices1 Lunchmeat Breakfast sausage Of processed meat buyers: Hot dogs Breaded chicken ~
Slide 104: Well-positioned across taste profiles, lifestyles & eating occasions
One Retail – Winning with Consumers N AT U R A L & O R G A N I C M E AT S Well-positioned across taste profiles, lifestyles & eating occasions Every taste Every lifestyle Every occasion Diet & Breakfast, Sweet sweet eating plans lunch, & dinner Health Snacking & Savory & wellness entertaining Cookin
Slide 105: Section summary
O N E R E TA I L – W I N N I N G W I T H C O N S U M E R S Section summary In Summary • We are a better company today Our portfolio is built for growth and • We expect our 3-year is a competitive plan to advantage. deliver meaningful earnings improvement We are winningand in return the our marketpla
Slide 106: Q&A
Q&A Deanna Brady Scott Aakre Executive Vice Group Vice President & President, Retail Chief Marketing Officer, Retail
Slide 107: Break
Break
Slide 108: Part 3: Foodservice
Part 3: Foodservice Expanding Leadership in Foodservice
Slide 109: Mark Ourada
Mark Ourada Group Vice President, Foodservice
Slide 110: What did you think of the second course?
Foodservice What did you think of the second course? 110
Slide 111: Foodservice section summary
FOODSERVICE Section summary • Delivering innovative solutionstoday A highly We are adifferentiated better companybusiness: and • We above-industry expect ourgrowth 3-year plan to deliver meaningful earnings improvement Clear strategicand return focus: our key Growing business to its historical categ
Slide 112: Delivering high-quality, innovative culinary solutions
Foodservice F O O D S E R V I C E T O D AY Delivering high-quality, innovative culinary solutions with an operator-first mentality Leading foodservice brands Focus categories Differentiated capabilities Bacon Solutions-based portfolio Direct-selling Pizza Toppings model Operator-focused innovation P
Slide 113: Maintaining a highly-differentiated position in the foodservice industry
Foodservice AN INDUSTRY LEADER Maintaining a highly-differentiated position in the foodservice industry Differentiators Benefits Commands a premium price point Branded portfolio in the marketplace Full-solutions Seen as an industry leader and authority in provider bacon, pizza toppings and prepared
Slide 114: Successful execution against GoFWD priorities in fiscal 2023
Foodservice LEVERAGING OUR NEW MODEL Successful execution against GoFWD priorities in fiscal 2023 Year one GoFWD successes: Capitalized on the unique attributes of each business Increased collaboration between businesses Identified synergies and opportunities for “value add” Leveraged customer inter
Slide 115: Leveraging all our capabilities as a leader in the industry
Foodservice STRUCTURED FOR GROWTH Leveraging all our capabilities as a leader in the industry Customized Distributor Branded label Foodservice segment 115
Slide 116: Delivering solutions for industry pain points
Foodservice FOCUSED ON SOLUTIONS By leveraging insights & innovation, we deliver solutions for industry pain points High-quality, Addressing industry versatile products challenges by: Reducing labor Innovative complexity solutions Maximizing customer reach and revenue Authentic Balancing labor needs
Slide 117: Aligning with industry trends, operator shifts & macroeconomic changes
Foodservice A S T R AT E G I C & I N T E N T I O N A L E V O L U T I O N Aligning with industry trends, operator shifts & macroeconomic changes 1990s 2000-2020 2021+ “Foodservice 1.0” “Foodservice 2.0” “Foodservice 3.0” • Foundation • Product innovation • Accelerated innovation Hormel • Structure •
Slide 118: Consistently outpacing industry growth since the early 1990s
Foodservice A TRACK RECORD OF ABOVE -INDUSTRY GROWTH Consistently outpacing industry growth since our inception in the early 1990s YoY % change Hormel Foodservice1 Foodservice industry2 1990 2000 2010 2022 Source: (1) Internal data – YoY net sales change; includes legacy Hormel Foodservice only; (2)
Slide 119: We have sustained our momentum coming out of the pandemic
Foodservice D E L I V E R I N G R E S U LT S We have sustained our momentum coming out of the pandemic Volume Segment profit Segment profit margin ~LSD ~mid- CAGR ~mid- teens% 16.5% teens CAGR 14.8% 13.8% 2021 2022 2023e 2021 2022 2023e 2021 2022 2023e Source: Internal data. 119
Slide 120: Foodservice section summary
FOODSERVICE Section summary • Delivering innovative solutionstoday A highly We are adifferentiated better companybusiness: and • We above-industry expect ourgrowth 3-year plan to deliver meaningful earnings improvement Clear strategicand return focus: our key Growing business to its historical categ
Slide 121: Growing the business in the current environment
Foodservice C L E A R S T R AT E G I C F O C U S Growing the business in the current environment #1 #1 #2 #3 Accelerate growth in Establish digital Expand presence key categories leadership position in c-stores To expand leadership To continue to evolve with To further balance our business positions
Slide 122: Leading & growing in bacon, pizza toppings & premium prepared proteins
Foodservice S T R AT E G Y # 1 – A C C E L E R AT E G R O W T H I N K E Y C AT E G O R I E S Leading & growing in bacon, pizza toppings & premium prepared proteins Pizza Premium Bacon toppings prepared proteins ~HSD% ~DD% ~DD% CAGR CAGR CAGR ~12% ~11% ~12% CAGR CAGR CAGR 2018 2022 2026e 2018 2022 20
Slide 123: Unlocking value through integration of Jennie-O foodservice business
Foodservice S T R AT E G Y # 1 – A C C E L E R AT E G R O W T H I N K E Y C AT E G O R I E S Unlocking value through the integration of the Jennie-O® foodservice business Expected benefits from Jennie-O® integration: Improved mix and margin on street account business across the turkey portfolio K-12
Slide 124: Digital leadership – a key enabler moving forward
Foodservice S T R AT E G Y # 2 – E S TA B L I S H D I G I TA L L E A D E R S H I P P O S I T I O N Digital leadership – a key enabler moving forward Focus areas within digital: Distributor and operator ~75% of operators leverage digital marketing campaigns Targeted distributor analytics digital orde
Slide 125: Convenience store landscape presents an opportunity for growth
Foodservice S T R AT E G Y # 3 – E X PA N D P R E S E N C E I N C - S T O R E S Convenience store landscape presents a compelling & attractive opportunity for growth C-Store reach1 Key categories in c-stores3 150,000+ Prepared Food Salty Snacks Convenience stores1 #1 ~ $900B ~ $300B #1 #1 #5 #5 Insi
Slide 126: Visible across the convenience store format
Foodservice S T R AT E G Y # 3 – E X PA N D P R E S E N C E I N C - S T O R E S Visible across the convenience store format Goals in c-store channel: Grow share across ingredients, snacking and traditional retail Strengthen customer partnerships Solidify position as a thought leader and indispensabl
Slide 127: Foodservice section summary
FOODSERVICE Section summary • Delivering innovative solutionstoday A highly We are adifferentiated better companybusiness: and • We above-industry expect ourgrowth 3-year plan to deliver meaningful earnings improvement Clear strategicand return focus: our key Growing business to its historical categ
Slide 128: Expand our leadership position in foodservice
Foodservice OUR LONG-TERM AMBITION Expand our leadership position in foodservice Our vision Long-term imperatives Continue to outpace industry growth by delivering value-added, differentiated products to the market through the leading sales team in the industry Collaboration Investment Innovation 12
Slide 129: Slide 129
Slide 130: Broadening culinary capabilities to drive operator engagement
Foodservice INVESTMENT Broadening culinary capabilities to drive operator engagement Investing in culinary capabilities: Establishing the Culinary Collective, which centralizes and leverages our culinary teams across the organization Further utilizing our Innovation Center with customers Training ou
Slide 131: Keeping a robust & vibrant pipeline of innovative products
Foodservice I N N O VAT I O N Keeping a robust & vibrant pipeline of innovative products Supplementing pizza Broadening offerings in toppings leadership “speed scratch” 131
Slide 132: In Summary
FOODSERVICE In Summary We continue to deliver high-quality, innovative culinary solutions with an operator-first mentality. We have clear strategic focus and expect continued growth from this business. Expanding our leadership position in the foodservice industry remains our long-term ambition. 132
Slide 133: Part 3: One Supply Chain
Part 3: One Supply Chain Future-fitting our One Supply Chain
Slide 134: Mark Coffey
Mark Coffey Group Vice President, Supply Chain
Slide 135: Long track record of operating an efficient & effective supply chain
One Supply Chain H I S T O R I C A L A P P R O A C H – C O S T C O N TA I N M E N T Long track record of operating an efficient & effective supply chain Historical approach Hold controllable costs to < 1% increase YoY Legacy cost savings programs Continuous improvement mindset Investments in efficie
Slide 136: Pandemic-era focus on supply assurance
One Supply Chain PA N D E M I C - E R A A P P R O A C H – S U P P LY A S S U R A N C E Through the pandemic, we intentionally & successfully focused on “supply assurance” Pandemic-era approach Service our customers Procure supplies at any cost Extend line runs, including weekends and overtime Capaci
Slide 137: Pivoting back toward cost containment
One Supply Chain F U T U R E A P P R O A C H – B A L A N C I N G C O S T W I T H T R A N S F O R M AT I O N A L I N V E S T M E N T S Pivoting back toward “cost containment” & accelerating investment in long-term growth Future approach Future-fitting our One Supply Chain Legacy cost savings programs
Slide 138: A thoughtful & thorough approach
One Supply Chain F U T U R E - F I T T I N G O N E S U P P LY C H A I N A thoughtful & thorough approach Benchmark Identify initiatives Develop an Create a our current state to realize our supply integrated holistic value case supply chain chain vision roadmap for each initiative 138
Slide 139: Solving for changes in demand & a dynamic supply environment
One Supply Chain F U T U R E - F I T T I N G O N E S U P P LY C H A I N Solving for changes in demand & an increasingly dynamic supply environment Fast-evolving …highly turbulent demand… supply headwinds • Ever-changing • Supply assurance consumer & inflation expectations • The fight for talent • In
Slide 140: Focused on investing for growth, minimizing complexity & reducing cost
One Supply Chain F U T U R E - F I T T I N G O N E S U P P LY C H A I N Focused on investing for growth, minimizing complexity & reducing cost Focus areas: Execute portfolio optimization $200M+ in projected operating initiatives Invest in end-to-end income by 2026 supply chain solutions Improve effi
Slide 141: Value case for Plan, Buy, Make & Move
One Supply Chain A C L O S E R L O O K – I M P R O V E E F F I C I E N C Y A C R O S S O U R S U P P LY C H A I N Value case for Plan, Buy, Make & Move Plan Buy Make Move Value $$$ $$$ $$ $ Complexity HIGH Moderate Moderate low Adopt a holistic Pilot, test, and Develop right Assess and approach to e
Slide 142: Illustrative example – a long & complex tail of SKUs
One Supply Chain A C L O S E R L O O K – P O R T F O L I O O P T I M I Z AT I O N Illustrative example – we possess a long & complex “tail of SKUs” ~80% of Break-even gross gross profit profit Key takeaways: Majority of gross profit derived from limited number of SKUs Gross Small portion of portfoli
Slide 143: A comprehensive & transformational plan
One Supply Chain OUR 3-YEAR JOURNEY A comprehensive & transformational plan Fiscal year 2024 2026 Portfolio optimization Plan Reduce cost structure Buy Make Move Foundational investments 143
Slide 144: Section summary
O N E S U P P LY C H A I N Section summary In Summary • We are a better company today We are future-fitting our One • We expect Supply our Chain by3-year plan investing deliver meaningful earnings for to growth, minimizing complexity and reducing improvement and return our cost. business to its hist
Slide 145: Q&A
Q&A Mark Ourada Mark Coffey Group Vice President, Group Vice President, Foodservice Supply Chain
Slide 146: 146
146
Slide 147: Jim Snee
Jim Snee Chairman of the Board, President and CEO
Slide 148: We have a realistic & achievable path to deliver growth
Closing Remarks K E Y T A K E A W A Y S F R O M T O D AY We have a realistic & achievable path to deliver growth Focused on delivering Better allocating our Winning in the long-term shareholder resources to optimize marketplace with returns and growth performance in the insights, analytics and marke
Slide 149: We have a realistic & achievable path to deliver growth
Closing Remarks K E Y T A K E A W A Y S F R O M T O D AY We have a realistic & achievable path to deliver growth Delivering high-quality, Future-fitting our One innovative culinary Supply Chain solutions to foodservice operators Investing for growth, minimizing complexity Focused on expanding and re
Slide 150: Our strategic focus is clear
Closing Remarks. O U R S T R AT E G I C F O C U S I S C L E A R Deliver long-term shareholder returns & growth through continued investment & transformation Invest Transform Grow in people, processes, and modernize processes, net sales, earnings data & technology, portfolios and how we and the impac
Slide 151: A realistic & achievable path to grow operating income $250M+ by 2026
Closing Remarks A C C E L E R AT I N G P R O F I TA B L E G R O W T H – E N T E R P R I S E O B J E C T I V E S A realistic & achievable path to grow operating income $250M+ by 2026 STRATEGIC TRANSFORMATION & OPERATING INCOME VALUE GROWTH FROM CAPTURE MODERNIZATION CURRENT BUSINESS Projecting sustai
Slide 152: Remaining committed to our long-term key results
Closing Remarks L O N G - T E R M K E Y R E S U LT S Remaining committed to our long-term key results Net sales Operating income Innovation 2-3% Organic net sales 5-7% Operating income 15% of net sales growth growth from innovation1 4.2% net sales CAGR2 5.3% operating income CAGR2 13% net sales from
Slide 153: Key messages you heard today
Key messages you heard today We have made significant progress in our evolution to become a stronger, more balanced and less volatile company. Our updated strategic priorities align with our segments and support meaningful earnings growth by fiscal 2026. We are investing for growth to accelerate our
Slide 154: Thanks for attending
THANKS FOR ATTENDING