Hormel Foods Corporation · NYSE:HRL
Hormel Foods — 2018 Barclays Global Consumer Staples Conference
39 slides from Hormel Foods's conference presentation, Sep 5, 2018
Slide 1: Global Consumer Staples Conference 2018
supa SOR an he call ae i ADO 2018 Inspired People. Inspired Food. Global Consumer Staples Conference
Slide 2: Jim Snee, Chairman, President, and CEO
Jim Snee Chairman, President, and CEO
Slide 3: Legal Disclosure
Legal Disclosure This presentation contains forward-looking information based on management’s current views and assumptions. Actual events may differ materially. Please refer to the cautionary statement regarding Forward- Looking Statements and Risk Factors on pages 34-40 in the Company’s Form 10-Q
Slide 4: Includes 2018 declared increase
* *Includes 2018 declared increase
Slide 5: Hormel Foods: A Global Branded Food Company
Hormel Foods: A Global Branded Food Company International 7% U.S. Retail 54% U.S. Deli 9% Net U.S. Foodservice 28% 27% Sales *YTD Q3 Fiscal 2018 Data
Slide 6: Strong, Branded Presence Across the Food Space
Strong, Branded Presence Across the Food Space *IRI 52 weeks ending 8-12-2018 - MULO
Slide 7: Our Formula for Success: A Model for Growth
Our Formula for Success A Model for Growth Building Innovation Acquisitions Balanced Brands Portfolio + + +
Slide 8: Hormel Natural Choice Delivering Accelerated Growth
Hormel Natural Choice ® BUILDING BRANDS ® BRAND Delivering Accelerated Growth Foodservice Core Portfolio New Categories Innovation +8% +6% +33% +7% *IRI Total US MULO 13 weeks ending 7-15-18; 3-yr dollar sales CAGR; Foodservice CAGR from internal sales data, 3-yr.
Slide 9: Hormel Natural Choice Deli Ham
HONEY NO PRESERVATIVES: DELI HAM 100% NATURAL ATER COANE, CONAN LP To 208 OF SUNN Gest * 100% NATURAL bo ertheag at : 100/ TASTY neve THE NATURAL CHOICE @ Minimally Processed, No Artificial Ingredients.
Slide 10: Established Retail Brands Relevant and Growing
Established Retail Brands BUILDING BRANDS Relevant and Growing +5% +5% +3% +2% +2% +1% +1% +1% *IRI Total US MULO ending 7-15-18; 3-yr dollar sales CAGR
Slide 11: Nurturing Our Established Brands
Nurturing Our BUILDING BRANDS Established Brands 89% 46% 79% SHARE SHARE SHARE *IRI Total US MULO ending 7-15-18
Slide 12: Slide 12
Slide 13: Industry-Leading Innovation Firsts
1 st 1 st Industry-Leading, Utilizing Pre-Cooked Canned Meat Innovation Firsts High Pressure Pasteurization for Lunchmeat 1 st “Originate, st Using Don’t Imitate.” 1 Pillow Pack ® Freezer-to-Oven Packaging Turkey Products Technology – George A. Hormel st st 1 st 1 1 Fortified, Perfectly Cooked Cance
Slide 14: Innovation Fueling Growth
Award-Winning, Insights-Driven INNOVATION Innovation Fueling Growth Back-to-Back GMA Awards for Innovation and Creativity Progressive Grocer Editors’ Picks
Slide 15: Nut Butter Innovation Driving Growth
Nut Butter Innovation INNOVATION Driving Growth 30% INCREASE IN POINTS OF DISTRIBUTION *IRI data from January 2013 – June 2018
Slide 16: Slide 16
Slide 17: Foodservice Innovation Delivering Meaningful Growth
Foodservice Innovation INNOVATION Delivering Meaningful Growth Introduced 2013 Introduced 2014 +30% +60% *Internal sales data, 2015-2017 2-yr CAGR 2-yr CAGR
Slide 18: Acquisitions Integrated, on Track and Growing
ACQUISITIONS Acquisitions Integrated, on Track and Growing
Slide 19: The Catalyst for a Unified Deli Organization
The Catalyst for ACQUISITIONS a Unified Deli Organization NATURAL INNOVATIVE TURKEY VALUE-ADDED & ORGANIC CRAFT SOLUTIONS EXPERTS INNOVATOR LEADER MEATS
Slide 20: Balance Across the Portfolio, Growth Across Generations
Balance Across the Portfolio, BALANCED PORTFOLIO Growth Across Generations Millennials Gen X Boomers Matures *Buyer Index, IRI MULO 52 weeks ending 8-12-2018
Slide 21: We Have Grown Earnings 28 Out of 32 Years
We Have Grown Earnings 28 Out of 32 Years 2018 EPS Guidance $1.81 - $1.95 +15% - 24% $2.00 $1.50 $1.00 $0.50 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 *Internal data
Slide 22: Hormel Foods Our Path Forward
Hormel Foods Our Path Forward % Priorities from Investor Day - June 2017 EVOLVING to a broader food company 5 TOP LINE GROWTH % EXPANDING and accelerating foodservice BECOMING a more global food company 10 BOTTOM LINE GROWTH % REDUCING volatility and increasing balance 15 INNOVATION BY 2020 DIVESTIN
Slide 23: Evolving to a Broader Food Company
Evolving to a Broader Food Company Meat Protein Company Broader Food Company Non-Meat Protein + Flavor Enhancers
Slide 24: Expanding and Accelerating Foodservice
Expanding and Accelerating Foodservice
Slide 25: Becoming a More Global Food Company
Becoming a More Global Food Company Recreating the U.S. Model Globally China Capacity Geographic Lbs Expansion 1. #1 or #2 brands Approximately 2. Product mix – shelf-stable & +2x 160M perishable Approximately 3. Channel mix – foodservice & retail 80M At Full Production 4. No vertical integration 20
Slide 26: Reducing Volatility and Increasing Balance
Reducing Volatility and Increasing Balance Protein Packaged Foods Reducing Volatility By: 1. Continuing to shift our mix Retail Foodservice to value-added products Domestic International 2. Minimizing commodity sales 3. Expanding our portfolio of Beef, Nuts, Tomatoes Pork and Turkey raw materials an
Slide 27: Fremont Plant Sale: Right-Sizing Our Pork Supply Chain
Fremont Plant Sale Right-Sizing Our Pork Supply Chain Outside Branded, Purchases Value-Added Products Austin Hogs Plant Harvest Pork Raw Materials Fremont Contractually Plant Commodity Supplied Products Harvest
Slide 28: Modernizing Our Supply Chain
Modernizing Our Supply Chain SIMPLIFY MORE THAN MORE THAN MORE THAN MODERNIZE 30 PRODUCTION BROAD CO-PACKER 10,000 10,000 OPTIMIZE FACILITIES NETWORK SUPPLY ITEMS SKUs RATIONALIZE *Internal data
Slide 29: Investing in Growth in FY 2018
Investing in Growth in FY 2018 EPS +15% to 24% • Managing through industry dynamics $1.81 to • Executing on our strategic $1.57 initiatives $1.95 • Investing in growth Fiscal 2017 2018 Guidance
Slide 30: Our Fiscal 2019 Priorities Are Clear
Our Fiscal 2019 Priorities Are Clear Continue to Grow Execute on Deli Deliver Innovation to Capture Supply Value-Added Brands Growth Strategy Growing Categories Chain Savings
Slide 31: Jim Sheehan, SVP, Chief Financial Officer
Jim Sheehan Senior Vice President, Chief Financial Officer
Slide 32: Delivering Long-Term Shareholders Returns
Delivering Long-Term Shareholders Returns $600 $500 Hormel Foods $400 $430 $300 S&P 500 $227 $200 S&P 500 Pkg Food & Meats $100 $196 $0 *$100 invested on 8/29/08 in stock or index – including reinvestment of dividends
Slide 33: Impact of Fremont Plant Sale
Impact of Fremont Plant Sale Supply Chain Financial • Multi-year supply agreement • $30M in proceeds • Represents 1/3 of harvest volume • $15-$20M expense in FY19 • Avoids major capital expenditure • Expected to close in December 2018
Slide 34: Disciplined and Strategic Capital Allocation
Disciplined and Strategic Capital Allocation INVESTING $5.3B Cash from Operations RETURNING IN THE CASH TO BUSINESS 2013 – 2018 Q3 SHAREHOLDERS CAPEX ACQUISITIONS DIVIDENDS REPURCHASES $1.1B $985 $2,362 $3.6B $0.4B $1.6B *Internal data
Slide 35: Disciplined Investments Deliver High ROIC
Disciplined Investments Deliver High ROIC ROIC 17% % 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 PEERS *Factset data based on fiscal 2013-2017 data for Hormel Foods and time relative data for peers listed in Company 2017 proxy statement.
Slide 36: Strong Financial Position
Strong Financial Cash from Operations Position $1.0B $0.3B 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 *Internal data
Slide 37: Commitment to Returning Cash to Our Shareholders
Commitment to Returning Cash to Our Shareholders Dividends Per Share *Internal data; includes 2018 declared increase
Slide 38: Hormel Foods Our Path Forward
Hormel Foods Our Path Forward 1. Evolving to a broader food company 2. Expanding and accelerating foodservice 3. Becoming a more global food company 4. Reducing volatility and increasing balance 5. Divesting non-strategic assets 6. Modernizing our supply chain
Slide 39: Global Consumer Staples Conference 2018
supa SOR an he call ae i ADO 2018 Inspired People. Inspired Food. Global Consumer Staples Conference
Hormel Foods — 2018 Barclays Global Consumer Staples Conference on 6ix