Hormel Foods Corporation · NYSE:HRL
Hormel Foods — 2015 Barclays Global Consumer Staples Conference
44 slides from Hormel Foods's conference presentation, Sep 10, 2015
Slide 1: Jeff Ettinger, Chairman, President and CEO
Jeff Ettinger Chairman, President and CEO
Slide 2: 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 and risk factors on pages 34-40 in the Company’s Form 10-Q filed September 4, 2015.
Slide 3: From Meat Processor to Packaged Food Company
From Meat Processor to Packaged Food Company George A. Hormel opens a meat packing company in Austin, MN. Late 1891 1930’s: 1976 1999 2014 1928 1941 1993 2012 Geo. A. Hormel & Co. Company executives ring becomes a public the Closing Bell at the company. NYSE to commemorate the 75th anniversary of th
Slide 4: The Wall Street Journal coverage
THE WALL STREET JOURNAL. BUSINESS NEWS Skippy Sales Growth, Lower Pork Costs Help Offset Hormel’s Turkey Troubles Hormel Foods Corp. raised its nut butter and Wholly Guacamole outbreak in the U.S. hit more than $2.57 to $2.63 a share, from a earnings outlook for the year, as _lifted Hormel's grocery
Slide 5: Hormel Foods YTD Q3 2015
Hormel Foods YTD Q3 2015 Net Sales *Segment Profit Change Change Earnings Per Share Grocery Products + 4% + 11% *2015 $1.90 Refrigerated Foods - 6% + 25% 2014 $1.60 Jennie-O Turkey Store + 5% + 15% Specialty Foods + 32% + 23% + 19% International & Other Flat + 4% *Segment Profit Change and 2015 EPS
Slide 6: 2015 Outlook: Growth Amidst Volatility
2015 Outlook Growth Amidst Volatility EPS* + + 15% 12% to to 18% 17% • Grocery Products/Refrigerated Foods • Input cost deflation • Specialty Foods $2.57 $2.50 • CytoSport contribution $2.23 to $2.63 $2.60 • Jennie-O Turkey Store • Avian Influenza • International • Growth in China 2014 2015 *2015 EP
Slide 7: Hormel Foods China Positioned for Growth
Hormel Foods China Positioned for Growth 24% Five year CAGR (2009-2014) 1999 2011/2012 2013/2014 2017
Slide 8: Jiaxing Hormel Foods Co. Ltd.
Jiaxing Hormel Foods Co. Ltd.
Slide 9: Innovation
Innovation The contribution of innovation efforts is a key component of our success IRI Pacesetters Progressive Grocer Picks
Slide 10: Leading Brands
Leading Brands MORE THAN 30 BRANDS HAVE #1 or #2 MARKET SHARE POSITIONS IN THEIR CATEGORY
Slide 11: Supporting Brand Growth
BARCLAYS Supporting Brand Growth a = ef FOR THOSE WAOVARE HUNGRY ~ So ra = SP ruin Fun Fun! a
Slide 12: Keeping the Portfolio Vital
Keeping the Portfolio Vital We have broadened our portfolio with more choices for consumers in key growth areas and leveraging our trusted brands Growth Opportunities Global Multicultural Healthy / Holistic On-the-Go
Slide 13: Recent Brand Investments
Recent Brand Investments BRAND
Slide 14: On-the-go Multicultural
Healthy / Holistic On-the-go Multicultural
Slide 15: On-the-go Global
Healthy / Holistic On-the-go Global
Slide 16: On-the-go
Healthy / Holistic On-the-go
Slide 17: On-the-go
Healthy / Holistic On-the-go
Slide 18: Healthy / Holistic
Healthy / Holistic an BARCLAYS. = Double-digit Qs RETAIL APPLEGATE. GROWTH NATURAL & ORGANIC MEATS #1] EXPANDS ON-POINT BROADENS ORGANIC AND NATURAL breadth ot poten cations wth APPEAL — MARKET SHARES IN CONSUMER CHOICE PROTEIN-BASED 1 younger ang neat consous value-added proteins
Slide 19: Barclays media clip
BARCLAYS ON AIR Eg A woe : The HRL CEO On Cos. Embracing Natural Food #121 0.32 c ORS) 46.12 ¥ 14.47. Fly Leasing (FLY) 15.80 & 0.34 i 5:19p - 0.01 Presbia (LENS) 8.5740.06 Centrus Energy (LEU) 5.0040.66 | Bexicetealiies
Slide 20: Demographic Opportunities
Demographic Opportunities Millenials Gen X Boomers Matures Millenials Gen X Boomers Matures Grocery Products SPAM® Products 68 89 114 141 Hormel® Chili 98 100 104 92 Dinty Moore® Beef Stew 72 85 122 115 Hormel® Mary Kitchen® Hash 77 89 116 116 Hormel® Microwave 84 96 108 113 Meat Products Hormel® En
Slide 21: Meat Products: On-the-go
Healthy / Holistic On-the-go Meat Products PEP IT UP! Gatherings Happen. MAKE THE NATURAL CHOICE
Slide 22: Global Multicultural
~ @ Hoge!) Global Multicultural an BARCLAYS. alt ii
Slide 23: Glenn Leitch
Glenn Leitch Group Vice President; President, Jennie-O Turkey Store
Slide 24: Avian Influenza Impact
Avian Influenza Impact • 2H15 sales guidance • Down 15% YOY • 2H15 margin guidance • 10% to 12% with Q4 modestly above Q3 levels
Slide 25: Avian Influenza Impact
Avian Influenza Impact • Repopulation is on track (as of September 1) • 85% of company farms repopulated • 75% of independent growers that supply us have repopulated • Should be fully repopulated by end of fiscal 2015 • Plants running full schedules by January/February
Slide 26: Brand Leadership
Healthy / Holistic Brand Leadership Jennie-O® has emerged as a clear category leader in turkey and the brand is now found in households nationwide. Total Awareness Household Penetration Jennie-O® Brand Jennie-O® Brand General Population 2014 2009 24% (+0.4pt vs YAGO) Millennials Credited to ongoing
Slide 27: Brand Leadership
Healthy / Holistic Brand Leadership Brand Imagery Total Purchase Intent Jennie-O® Brand Jennie-O® Brand 60% Jennie-O® brand is strongly 50% associated with the following imagery: 40% 30% Is good for a healthy lifestyle 20% Is a brand I would feel good 10% about serving 0% Tastes good 2009 2014
Slide 28: Advertising Impact
Healthy / Holistic Advertising Impact Sleepy Hollow Taco Ride Launch: 2012 Launch: 2014 3-Year Projected Net Sales 2-Year Projected Net Sales CAGR CAGR of Advertised Products of Advertised Products: + 13% + 26%
Slide 29: Driving Ground Turkey Sales Growth
Healthy / Holistic Driving Ground Turkey Sales Growth • Health-conscious millennials are embracing “fresh” and the Jennie-O® brand • Jennie-O® product distribution continues to expand • Ground beef price inflation is enhancing the value proposition
Slide 30: Ground Turkey Share is Growing
Healthy / Holistic Ground Turkey Share is Growing Share of Ground Meats Ground Ground Beef Turkey 13% Pounds 1.9B 264M Sold 10% Retail Value $6.9B $922M 1 Share Point = 21 Million Pounds 2009 2010 2011 2012 2013 2014 Source: Perishables Data
Slide 31: Fresh Ground Turkey Growth vs. Ground Beef
Fresh Ground Turkey Growth vs. Ground Beef + 7% + 6% + 4% + 7% - 3% - 3% - 2% - 2% + 4% + 3% - 3% - 4% + 14% + 9% - 3% - 5% Ground Turkey Volume % CHG IRI 13 Wk End 7-5-15 Perishables Data13 Wk Avg. Price/lb. Ground Beef $4.38 +11.6% Ground Beef Volume % CHG End 6-27-15 Avg. Price/lb. Ground Turkey
Slide 32: Driving Growth: Ground Turkey
Healthy / Holistic Driving Growth: Ground Turkey Total US - Multi Rank Product Outlet (millions) RANK #2 among 1 OSCAR MAYER NATURAL HARDWOOD SMOKED BACON SLICED RFG 16 OZ $227.2 ALL EXACT WEIGHT 2 JENNIE O TURKEY STORE RFG REGULAR TURKEY GROUND 20 OZ $170.3 items in the meat 3 PL FZN REGULAR CHICKE
Slide 33: Driving Growth: Fresh Breakfast Sausage Rolls
Healthy / Holistic Driving Growth: Fresh Breakfast Sausage Rolls Sales in millions Ranked 6th Nationally + 210% CAGR Among all Roll Sausage SKU’s 3 years 2 years 1 year 52 Wks Ending ago ago ago 7-12-15
Slide 34: Driving Growth: Oven Ready
Healthy / Holistic Driving Growth: Oven Ready Sales From Freezer to Oven to Perfect! in millions + 17% CAGR 3 years 2 years 1 year 52 Wks Ending ago ago ago 7-31-15
Slide 35: Driving Growth: Turkey Breast Sticks
Healthy / Holistic On-the-go Driving Growth: Turkey Breast Sticks NEW PRODUCT : All Natural Turkey Breast Sticks • Single-serve packaging • Clean ingredient statement • Portable
Slide 36: Brands in the Space
Healthy / Holistic On-the-go Brands in the Space Serving Size 21 g 56 g 28 g 28 g 28 g 21 g 21 g Calories 25 160 130 50 70 90 70 Total Fat 0.5 g 11 g 10 g 4g 1g 7g 6g Sodium 85 mg 420 mg 350 mg 570 mg 415 mg 135 mg 160 mg Protein 5g 13 g 8g 8g 11 g 5g 5g
Slide 37: 2015 Turkey Takeovers
2015 Turkey Takeovers Student Dining Center Colorado State University, Fort Collins, CO
Slide 38: (Horinel )
(Horinel ) BARCLAYS One Te TURKEY BREAST Turkey Breakfast Sausage Links
Slide 39: Jeff Ettinger, Chairman, President and CEO
Jeff Ettinger Chairman, President and CEO
Slide 40: Balance Sheet Metrics
I ( Hormel ) Foods | BARCLAYS Balance Sheet Metrics Approximately Approximately $350 BSOO MILLION MILLION — CASH — DEBT 15% 93 BILLION DEBT TO EQUITY RATIO
Slide 41: Return to Shareholders
Return to Shareholders Member of S&P 500 Dividend Aristocrats + 25% + 19% CAGR $1.00 $0.80 • Dividend growth exceeding EPS growth $0.42 • Target CPG peer average
Slide 42: Sales and EPS Growth
Sales and EPS Growth GOAL GOAL 5% Revenue Growth 10% Operating Income Growth Sales EPS In billions + 7% + 12% CAGR CAGR $10.00 $2.50 $9.3 $2.23 $8.00 $2.00 $6.00 $6.5 $1.50 $4.00 $1.00 $1.27 $2.00 $0.50 $0.00 $0.00 2009 2010 2011 2012 2013 2014 2009 2010 2011 2012 2013 2014
Slide 43: Total Shareholder Return
Total Shareholder Return Comparison of 5-Year Cumulative Return Hormel Foods Corporation S&P Packaged Foods & Meats S&P 500 $100 invested on 08/10/10 in stock or index – including reinvestment of dividends
Slide 44: Barclays Global Consumer Staples Conference
Choninely g Black Label BARCLAYS GLOBAL CONSUMER STAPLES CONFERENCE = APPLEGATE @ G5. arnebnnse
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