Earnings call transcript Q1 2023

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Operator

Good morning and welcome to the Hormel Foods First Quarter 2023 Earnings Conference Call. All participants will be in a listen only mode. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to David Dahlstrom, Director of Investor Relations. sir. ahead, go Please

David Dahlstrom

Eastern. to of Foods our fiscal the X:XX morning Welcome the results call first before AM around opened quarter XXXX. market the morning. conference Hormel for this Good We released

you If you did under it receive a hormelfoods.com our at Investors can the website copy on the find of not release, section.

Vice give call President the President Officer; and Executive and Jacinth Executive Executive Vice further the The opened of be call. the and Deanna and Deanna today following of results Financial President Jacinth company's will Jim and results our Chairman Snee, on segment. fiscal review is for outlook, our and line Retail remarks. Chief On will a XXXX. on of Board, questions Officer; perspective commentary will for Chief financial Jim the the of the quarter provide Jacinth’s Smiley, portion detailed join Brady, will rest first Q&A

to please As a courtesy yourself up. to with analysts, the limit follow one one other question

If to queue. get you back are welcome you the into additional questions, have

a At to year. replay this of morning's webcast the one investor call, for website will our be in conclusion archive posted

with Additionally, fis XXXX that filed earlier we Form U.S. the GoFWD information a to Commission related this and Securities years Exchange included X-K financial week, segment and supplemental the for XXXX initiative.

website, We have posted investor.hormelfoods.com. investor X-K of the our a copy to Form

get need Safe I statement. to started, we the Before reference Harbor

on hormelfoods.com our accessed which by the forward statements most to made XX-Q, on be those may today be looking comments making. in materially Some under can quarterly at XX-K will be and report annual Please we Investors expressed the actual the section. implied reports Form and from Form of recent differ will or refer results

will now Snee. over turn Jim I to call the

Jim Snee

Thank everyone. Good morning, you, David.

to complete of our immense information I entire time financial new strategic work recast to want team has our model. perspective acknowledge now take is to the from amount transition and our of transition operating this to earlier the release business the GoFWD put in for a structural week, reporting With initiative. the the

time spent blocking positioned get forward. to us how rationale tackling are and been lot first take today. of actions that we past have go We strategic place But had us to over discussing there decade a the and the has have for our where to

up FP&A entities of Over of the and side controls financial we included changes including and duties, And segment. fuel, business course, business and align past across This invested Turkey structure interruption. into business to combining and businesses our foodservice operate the made and the We dedicated team. to we segment six without and Jennie-O administrative excellence, across Retail months, the maintain consolidated new stood the the the segments, a three brand distinct enterprise. new centers organizing verticals, the in six of our the statements, recast business, Store

learned our about have this people, technology processes lot and through a We going transition.

taking work do am organization. have I by all areas, these across the of we While the conversations are that in to place encouraged

delivered many year last areas parts and challenging. generally while our results performed remained operators below in disappointing across of were quarter, And the a price and remains environment From operating many elevated perspective, the during business volume categories. The ahead And consumers from growth portfolio. top-line first of key demand of our between and we expectations. balanced our

refrigerated Square Herdez entrees elevated retail, Hormel Applegate premium products, chili, at our center store demand including Kitchen Mary and Columbus many chicken, see Mexican to continue Hormel breaded hash. Table Black charcuterie, Label bacon, items for and pepperoni, We of

growth Cafe in from Austin sliced Braised, Likewise, quarter, Blues. brands had solutions based strong segment as and such and Bacon items in another our Fire volume H, Foodservice X meats with

sales declined quarter, the X%. For

planned the overall influenza, or there volume be volume avian due results, to volume declines pathogenic and impacts highly continues across HPAI. pork, reminder, our chain turkey in volatility the to net commodity supply a in As given and the sales

the Diluted net for earnings share compared to $X.XX, year. last quarter per was a decline $X.XX

Our volumes segments. supply inefficiencies pressures, across from and chain the results lower business sales of reflect inflationary each impact the persistent

Retail sales to in convenient and declined compared our business Results were benefit results and turning to bacon, the emerging entertaining growth as snacking operating and from costs. and for mix the value-added was improved Net the proteins, from Now, portfolio, segments. than the earnings meats, Segment lower offset verticals actions sales equity in year. global segment by the net more declined offset profit from MegaMex the flavors, pricing and across and last unfavorable meals the brands sales, verticals. lower higher impact higher bacon from in by

have in results Black we demand expect outstanding and made we for delivered in verticals higher where work to bacon also for quarter from the elevated category year. we commodity throughout due benefit one was Label investments, This is relief bellies the a to items. a inventory. The significant show through There the as growth pork quarter cost our

delivered chicken avocado earnings up business for the Similarly, actions inflationary the by deli the led and brands year. brand and excellent to breaded made and whole volume coupled frozen commodity with items. for pressures, that to to pricing revenue on vertical and inputs, global combat sales flavors the quarter. taken led The start Applegate our we've gains equity vertical relief emerging an had MegaMex business The of across growth this

convenient year. meals Square by sales Kitchen Table a Mary another of implemented benefit vertical and from proteins growth, in Hormel addition actions net The and hash, chili, to pricing quarter led entrees last refrigerated achieved we

SPAM for the We will have in capacity second items beginning quarter. new

highest category, provides X-ounce to hiatus. such us and the Maple more category. option introduce assortments, products as in this supporting restore in SPAM In relaunch consumers addition new seeking affordable allows the a after for our capacity flavors excellent X-year selling new a value to item our This

would available support sales and levels Last and the have our was quarter and XXXX. relentlessly it category, fiscal the made making the to into for SKIPPY for team consumers all pressure impacts peanut butter it. when we the for stakeholders, and butter right product inventory our customers last decision and decision lingering needed significantly year. they butter our were when peanut This customers behind we for category peanut deserves knew readily credit growing May, the the

brand robust return and category, for to fill the are remains rates and Demand we and and SKIPPY inventories levels. capacity the working to diligently normalized maximize

by the pepperoni the decline for declined Hormel entertainment for sales snack year-over-year than growth in nuts a the and business. Net snacking was vertical as and brands offset more Columbus

most availability, declines. The final was turkey heavily vertical, impacted to value-added net lower leading sales pork and meats commodity by

premium segment, bacon profit grew in premium quarter. in softness January. and availability. Foodservice pork the the prepared to mix by meats, driven from and decline overall quarter sausage net turkey across categories primarily and breakfast products In the was proteins for volume the into fresh sales our pepperoni, retail, volume sliced increased improved for expectations, the portfolio. mid-December Results reflecting limited below due were and the segment industry for Segment this Like

seen have begin sharp and to we quarter our orders in second are ability this in a the to grow confident rebound year. business However, the

the export SKIPPY a perspective, quarter SPAM quarter. heavily by Finally, strong From had brands. impacted the branded and business International segment by external the led first a our top line factors was during

focus the We also products strategy. in as Brazil foodservice to saw continues improved another its team and on premium of results quarter

material supply year restrictions compared Commodity support as due business. on to diverted limited raw the strategically turkey exports last and volumes we to declined almost turkey XX% to domestic

and Our as in throughout difficult team quarter impact operators. our as of on incredibly customers dramatic policy China the COVID-related effects conditions operating employees, short-term well as the had faced business changes the

share from impact the lower earnings compared per together, Taken and to more turkey a in quarter disruptions China on last year. impact represented the than $X.XX exports

We improvement are business. especially China seeing second foodservice begin in to in quarter the our

growth. China we delivering resume accelerated normalize, business As to conditions expect our

the we snacking stake food a entertaining is strategy. global investment distribution reputable companies expertise international a of the network. growth in market brands, our and During with in purchased ambitions Indonesia. quarter, minority execution of our the and leader strong Garudafood one local supports best-in-class and and a beverage This Garudafood, largest and

Jacinth this details provide enhances We team several will of call. with have and financial the the the later partnering Garudafood been years, investment that the in strategic partnership. for transaction

we for per our net As top are earlier line diluted disclosed expectations outlook our earnings morning, XXXX. we reaffirming this fiscal share and reducing

And line track the in for are Our year. to the remains despite softness on deliver first quarter, we growth healthy. top

segment our for leading and strong growth year, challenges Demand Foodservice impacting the to center expects store for and remainder brands of the The the segment remains coming abate refrigerated the months. favorable. retail near-term over the international anticipate we

challenges by the in how to earnings year, each category. of into pressured persistent we being of chain, across for snack are and expectations balance softness year. inflationary the detail to address the want these I pressures nuts supply inefficiencies the Compared to the plan our heading

progress capacity the our to state discuss that is to year, the over each of note chain. staffing last fill businesses. the year and for and have us categories demand improving term. catch First, to confidence we our I like production expanding has have up It rates our would made in for in allowed of important supply this we supports revenue further most longer and to outlook our This facilities,

and increase Since our optimize performance the efforts return plant elevated fill to with operating to to rates fall, we levels. production, historical inventories have due been

supply has in business. inventory areas. fact, chain higher and clear happened. inefficiencies a seen inventories operating during we this the across And not expected to have in has resulted of in the grow of to We This course normal This costs. continue number

immediate as are reliance reduce We to compression, excess on expected and look warehouses these inefficiencies necessary focusing short-term actions reducing complexity. we to co-packers. inventories to combat are cause on the to they levels restore are margin third-party profitability action taking but normalized These by and selling and

and demand, the caught began levels caused supply years company. we priority in cases by almost the after elevated demand and sooner. said, three up the to inefficiencies to and inventory Simply exceed needed is unprecedented Rectifying our to ability customers, in react consumers our some to chasing operators top of

high. in we environment complex and volatile, pressures high-cost and to remain a Second, operate continue cost

inflationary the Our XX especially be high the retail over pricing lag and continue pressures last have impacted taken businesses, the to disproportionately we inflation. still actions by center in months store,

this in announced mitigate retail certain pricing categories the quarter. we have actions pressure, second help To additional justified effective inflationary in some late of

evaluating further and business pricing the are needs the have of We focused we brands. our remain on as the highly said, long-term of our protecting actions equity but teams

through pressures the savings cost operational initiatives. margin cost stabilize a the believe management can supply combination year, remainder of these chain and actions, For pricing of we we

to slower-than-expected start Third, softness, higher-priced production and shift numerous play are at challenges away after is our year, issues. timing a last business There XXXX. certain category factors including general expectations items, a meeting from Planters in off consumer

immediate line the the base. consumer stabilize action taking challenges, are grow current to the and top address We

Beginning shifting and support consumers. peanut pack This includes increasing in consumption. aimed resources the to drive second are prioritizing quarter, items at sizes promotional we and value-seeking

cashews flavored nuts with several category the to new innovation corn needed and much bringing are We flavors.

ambitions we convenience grow strategy, expanding more to term, to today's investing growth balanced remain gain accelerating We're snack as teams a change brand. pace our to at in relevant for change. we become of This to we we entertainment consumer. distribution the our items to business continue focused the that are the we center for category. and fully We that Long committed the higher And the assortments this the of is capital even what and look for on are brand channel nuts our business Planters and know the to in snacking are trajectory company. of and as store need do as

per X% we per Considering earnings to expect full and growth these X% to net diluted of $X.XX net share. factors, sales of share year $X.XX

this work year, two progress have do last we we of made we cannot of lose the the years. sight the fiscal over rest While to have

XX% larger a company today, significantly are bigger, in We fact.

through products company our the in and sell We balanced consumers are the a reach customers, ways we operators. we more and

capabilities. not have technology, and only have simultaneously the have transformed in made continued we managing we GoFWD a navigating of through our but all volatile and impacts the to initiative and HPAI. And We company, dynamic investments make with of environment this through the capacity

relevant. vibrant remain and brands Our

is positioned for growth. strategies business remain and effective our long-term Our

first financial information At Jacinth I this detailed to to over the to the quarter key our turn on related drivers will and Smiley additional color to call time, discuss outlook.

Jacinth Smiley

Planned Good lower Jim. decrease quarter a net primary first you, Thank turkey the everyone. pork X% drivers Net sales. were $X last and year. in volumes sales decline were morning, of the commodity for billion, to the

the have new We supplies January since pork agreement the fall. comparisons year, of turkey of and in lapped for normalized return a improved anticipate the have HPAI supply as We our more of now the volume remainder spring. barring

more the was Gross declined points mix than quarter last as actions offset $XXX and First gross to million $XXX inflationary profit compared pricing million profit by basis persistent was from impact XXX margin year. pressures. unfavorable

quarter, Of to the increased percent its support For a The sales as brands expenses marginally investments. leading were continued year. of advertising the to game Label the quarter, Mr. with again Advertising holiday last bacon X.X%. through company year's $XX big Peanut. and to front comparable Black during Planters net note, first brand and season SG&A million was the expenses The this we center of Roast over once promoted at

of due for last compared MegaMex year earnings for increased Philippines. improved in the significantly to in affiliates Equity joint results first the and to our venture quarter

fees. Operating quarter Operating driven income unallocated compared for was quarter and margins first X.X% was compared expenses to million. to million in increase by the last the This year. XX.X% employee-related higher outside to year. consulting increased first million $XXX expenses compressed last $XXX Net $X

to moved rate rate for The expected factors to year. The diluted earnings to these for The fiscal is net XX% per the be option XX.X% compared XXXX higher result effective tax tax reflected last exercise stock XX.X% share $X.XX. modestly benefits. higher was year's to all of Last of effective rate XX%. quarter net

cash earnings and flow to million $XXX was million was decline increase in to cash quarter driven last Operating lower compared Turning an year. by for working first the net This flow. capital. $XXX

a price transaction purchased have we The on shareholders a Jim expect and on of using results. the our beverage do We company As associated not transaction XXXX including impact We Indonesia. was in mentioned, a minority $XXX Garudafood, food for interest cash costs. obtained transaction common material XX% to a purchase in hand. a various from funded million, interest stock fiscal leading

are $XXX in million expenditures XXXX. We targeting capital for

newly In line commissioned Planters the the additional at recently Columbus to facility. line, Smith, million] Fort a of charcuterie products addition SPAM for we our [$XX higher product and Arkansas expansion approved premium items capacity for demand

than supporting in processing plant, jobs difficult, the our heavily our the invest retention efforts satisfaction. projects at aiding further employee to turkey Minnesota project more continue XX evidenced also project facility. highly as The repetitive recently Faribault, by We automation completed automates improve to at and

XXXth ended prior in billion quarterly last quarter X% debt, committed February $X.X per We our maintaining rate a year. $X.XX investment-grade an XX remain dividend of increase the We rating. consecutive the unchanged an to first over effective paid with annual year. at share, We from

have share balance of plans outlook As earnings for in Jim detailed, have for we lowered the year net and place our diluted the per XXXX. action fiscal

for in last the cadence expect diluted share of be to lower quarter terms per year, In net we second significantly the year. earnings than

short-term the for expect due across We unfavorable compression to actions margin negatively mix in in immediate chain and quarter. the second the disruption continued retail to affect supply segment, COVID-related our China

not are rate. last of We tax expecting lower also year's a repeat effective

Foodservice of the gradual growth As led expect higher and earnings compared second we to half volumes. look environment last the segments, the by year, improvement the year to International cost in and turkey we

market of see freight. relief raw We as stabilization cost such to and and areas materials are certain in signs beginning even

key composite protein X% to to declined bellies, decrease inventories. XX% This generally the Higher the last declined and cutout fourth the and first and quarter work was results a fourth we lower USDA was will year last year. compared which year. continue driven quarter. on headwind last prices reduce to by to generally as primarily affect quarter inventory compared quarter in compared inputs to the The than anticipated, was As XX% declined during

the We a in quarter year. environment more have materials demand assumed half costs freight first a Similarly, benefit during for the balanced from saw moderated. the lower trucks back raw as of we

to year the to remainder freight of lower We compared last year. rates be for the expect

our as and chain capturing supply on cost teams are taking addition conditions address identifying focused remain opportunities In inventory we to savings levels normalize. inflation, and to actions the

significant business. remains the facing risk HPAI a

last While was into as to domestic the supported chain our Mississippi risk virus is December, the in chain There to increased supplies. supply the continues early case the supply begins along migration impact poultry flyway. spring our

products the the have turkey improving should second conditions month. expected year. our steadily markets volume half supportive end production demand the as have prices breast remains through declined This business favorable steadily over strong. of in in as of of general the be last for current less Assuming hold, our become Turkey is turkey turkey facilities meat back quarter before reduced the

remain headwind feed historically our Additionally, costs business. high for a

Considering our half the availability to meat improve these for factors, the sales turkey and in business, drive back expect of higher year the we feed costs. to volumes impact of higher offsetting market declines

end Supply first $XX segment Additionally, We fiscal significant Chain, a during of rate progress we Turkey made Jennie-O towards achieve operating company's savings XXXX. basis $XX the million integrating One to the on the by Store on quarter. remain track million of a to into run new the fully

quarter, investments GoFWD. One against Supply planned incremental noted, As Chain there last were and

model continue Our allows position financial new investing to and for demands this, business term. us strong long the our

the demanding possible. want that I the the customers, model our once to closing, all of the will I the consumers, work sustainable new organization teams to confident businesses make needs our operators growth. to initiative acknowledge better the align operating In strategic to across long-term GoFWD shareholders of fully and implemented, remain deliver

this At I'll the over the call of portion operator the question-and-answer to for turn the time, call.

Operator

The Instructions] Parikh of comes question Oppenheimer. from [Operator first Rupesh

Rupesh Parikh

we really report out see typically is for the with So what to start for not us, Hormel. today consistent

happened? improve to efforts performance? from the what here And what So key are

Jim Snee

labor, and Good have how back these last and plants that with we obviously, have that impact far been down, and labor. you. didn't chain do morning, We over. are with three The go when was And they've think the turning the that everything COVID we then it when just did that But through we shut over come our with agree were we've used we even supply years. to, We to we're important Rupesh. not word is disappointment, disappointed, it's I expected. remember results

sure. in operating environment are stable for a And so more we

in labor a of capacity context then expectations easy to categories but us think battling to this softness, is and done met of we understand. for will this We -- of avian and which what rates China. improve, but balance know be are to had bit influenza dynamic their talked slower we business period for X good. mentioned And explainable. still But about a continues That's a is continue We year, and our better so the start and is Foodservice to the more our -- across fill Quarter and year. we as Planters, strong about production year, that key get strong environment seeing volatile the stay need that. there, we last

So and because we've our said we since it inventory the to when get expanded to demand We fill to it in think about inefficiencies clear, We support hasn't. network. our needed warehouses the inventory fall, product misalignment we've here inventories. didn't is it's and elevated higher operating inventory And and had our expected. with expected The operating and big and thing we been it a the probably supply of costs across resulted more probably chain rates more wanted than moving we up.

dollars And so quarter. us real the impacted those are that in

our careful dollar huge about is simple be portfolio. doing. other is forward. aligned part our to to versus our those like want may at doing turkey, impacts Mix our when we times And talk be gauge support we'll of we're potential our we we progress to a the in to And thing looking When the rebound in going manner mix. And dollars today inventory a a talking because pounds think markets, we're of amount indicator throughout are it's of say when going inventory how all is we as not as then for we just to about things customer as year, demand us, be key just very the inventory going activity. transparent demand. really, All building you, really promotional in is be with or inventory to that's -- to be

chasing So said to but we and is we demand to that and the probably simple didn't. supply of possible most know we demand, sooner this way we're do caught are, disappointed react three where need we what needed we after years unprecedented almost and

Jacinth Smiley

haven't affecting able Rupesh, important and just that inventory, think quarter it we elevated is to We that this Yes. and in our When right And is benefits delayed. what sitting costs margins us relief have as guidance down. from we should coming that's that's quarter, about mention markets realize showing from now point here see another perspective. recognizing fourth the and of as to been about coming from here, up and we're some been where those, freight also talked really been and this down, rates, we we that delay does just a those delayed it in the well benefiting

Rupesh Parikh

to Great. going I'm question. slip another in

mentioned there? in are think how something they you And key I implemented? I people, about think then comments, technology your What and you So about be prepared learning said quickly can learnings processes. the

Jim Snee

ahead go the need a on I comments. And we've is the significant mean talk were level than set to that not we there's much there But start years those part a I'll Yes. acquisition. it's Planters I company Rupesh. that, of thing first mean couple in and I business. two to growth our just seen think it. things just we're larger of today we That's about ago.

company. that avian becoming haven't forward, We've environment all this acting crazy We we've Everything balanced, move talked continued our terms of current and priorities. in on transforming through while managing to strategic that more influenza. about stopped our navigating

when say our so And that we've a lot about people. learned we

sure we help the that right GoFWD work doing we have people GoFWD we've right will gone with as have We make need the through just to initiative, them our and that.

that as about then maybe some the I'll a technology side, integrated GoFWD there. processes, let Jacinth processes our resourcing, When refresh. businesses, think need we there with well. add as we've are pricing will on about inventory, And and will decisions, talk help that brand color we When

Jacinth Smiley

Yes.

we are I just to this inventory. manage set, probably a knows team a how So from mean, level perspective, short-term

team and that our with to signal, to listening commercial we're is think the supply team what so connecting chain ensuring immediate And in that process when aligned. aligned we're just doing with pre-pandemic the all demand we is our supply S&OE that discipline planning our and about here getting returning term

we're the immediate And so doing that's in what term.

to investment And have Planters, integrating perspective, from JOTS purposeful then systems that now get integrating get Orion. to we're S&OP intentionally we And leverage and that as and able significant our to paused our we were Project a our work end-to-end from continuing those standpoint people done technology was and our planning the made that correctly. and level. us enhance And now a and we be with to to next technology long-term

Operator

The next question comes from Robert Moskow of Credit Suisse.

Robert Moskow

I guess I'm volume where remarks, inventory it what about and you a protein? well building your Is And of lot portfolio? did to underestimate that of you talked it it prepared little Because really confused the is mentioned freezers? your did products Is categories a in as you terms demand. weakness. the Is in really, in up strong the bellies?

of kind were it where you did expecting? what fall So demand And short?

Jim Snee

Yes, we we some did also segments, had softness. say that volume all across

really did lot So We talked off that slower categories brands being Planters about to and had of a we well. start. certainly a

And part a we time softness. talk of of period we did So also our foodservice that's where had it. with about business that

it. part is too, that, so And of

the chain a The what experience is it's about we're bit growth our But it's across balance part will to -- well. less there's the year, is foodservice about mean as concerned for a of supply of little overproduction I that. level really piece the with talking consider

productively, not more been is hard, cases, In efficiently, inventory aligned some built inventory. with as more in and so they've better run we've wanted that running our chain gotten And the that it we've demand. and to supply

I'll on issue overproduction, which on board is And it's chain so a the that's the sales side, or built bit really the supply this across side. little inventory. And say side the product our then across the

Robert Moskow

dig like shortages, enough in to Jim, six nine now think demand. was meet Okay. the And months if the I overproducing? labor little, issue I run ago, effectively plants they're to couldn't can Because a turnover,

Jim Snee

more Exactly. a different while mean that's if that I not is scenarios were -- and Yes. last that more said of, those turning some were we're getting little ago, when goal fill sure and production -- to and that we're make we've rates, people. through been exactly up I back plants people, productively we're have our right, three do getting that we are years, running go getting having they the The everything Rob, now And capacity. then you're we over. people. and people, And over keeping And to we efficiently. that that

plants have in is part of better. gotten problem. out-produced cases, like some and they've our definitely demand, And said, I the So that

Robert Moskow

Okay. for Last Nielsen that's question XX been data, past sales unit at the down. but Planters. X% on last down When certainly I are weeks, Super are XX X%, weeks. been play sales Unit and unit or stronger the look volumes like have and a on the in marketing Bowl The that sales the in down over quarter tracking pickup by you and marketing it big amount. expecting sales Were total the just didn't consistent out?

Jim Snee

of over things it and I'll to Deanna. there, couple Yes, think turn a Rob, I

our the did restating about about term, and bears channel businesses as short on demand deliver lower As just well. with demand We've we mix. And the the maintained one and our seen in distribution. is we've Planters versus certainly some execution, But We've said think is is it we this expectations multiple driving the times, some year shifting it also stable commitments. in that QX.

And so add in And the perspective. to really there. as Deanna, thinking we're now, this we execution going what about are an let I'll term color from some it's short business do you

Deanna Brady

Yes, sure. Thanks, Rob.

were in it. as acquired where we snacking and business And was Just the was perspective knew think business a again, we interested we it, this long-term really us. it is from we this when about for ambition

ambitions center. snacking entertaining, think remain for plant-based about still and C-store, and when So we our those front protein,

challenges, execution we cut the when is prior which priority for from have also to in the look the do we inventory QX, a term, business, short our When top the that was In particular, I team. over owner. base

of some there help head happened QX, as business. and important those been team things that as against. some gate of really that some base the out there in we'll quarter as the some So working well is inherited stabilize into has the will noise recover points that we the And losses we distribution right distribution

team We're front I our really really Planters to has pipeline beyond marketing in exceptional regards they energizing this and where 'XX, team the innovation. innovation with by us R&D is going. was energized week, and and this business 'XX the that of of this and the in both see rest of earlier for

in about both C-store When business as core we see this innovation, you'll well in also innovation as business. the launch talk in our quarter,

really Super for mix that do Bowl. nuts thinking a valuable fun consumers right are was and centered and mentioned them. are about the We peanut we You really Bowl of know ad that Super did really peanuts snacking have on item now, because the

reminding of a well they great the much protein be Planters how peanuts So option. them snacking as and can fun as deliver

that. a XX-second just We'll see commercial. wasn't It

both of see and You'll we into in the activation quarter activate us event, the some year. the leads later the as seasonal the really event after before other launches

and capacity mentioned, The to been from about think that as an we've also not other standpoint. is business investing thing an starved this a was only standpoint, innovation then perspective, from I from and both advertising

well see here channel, online to for capacity, later to in, C-store So we grow year invested as into we've this the for tube us and and channel we'll business, nuts next. which that club come this as to add the need in regards

and with architecture. thinking about will rest again, us I and integrated the really, with but acquired right of do pack the into headed know where work we unlock portfolio, now, week the year, business. really We We there's and with business. know the saw to a the price growth business, business. QX assortment we've also we're Last we're to and allow we're where to have optimization And got just in at Frankly, that we work the confident portfolio. the year. the in what this big teams and we do, It's this executing

Operator

The next from Larson, Partners. Eric question comes Research Seaport

Eric Larson

So just of more couple us volumes. turkey again questions. detail a provide a Can remind little of you the of or just cadence kind bit

volumes. half. your I turkey were us comp to think you QX. then a rebounding difficult the I then the in have for pork with second on start a still year-over-year same basis thing volumes believe in those also do And commodity expecting And

be you volume. of starting on anniversary; sort the would to sort your that some think do adverse pork? anniversary When new I you with comp commodity that should offloaded commodity of have You of contracts, we when the

Jim Snee

Yes.

side, down terms in year XXs, the been the volume, now last turkey another course, half been that months. the outbreak expect and through assumption the the first XX% And and significant come have that So about we've half turkey of back don't events year. we of in on did talking this into rebound the has that numbers high through of have that's all that quarter of AI second like year winter and the volumes expect some with we we to then, the or

the On lapping now pork we just that side, agreement. supply are

balance we comps be normalized. year, of throughout the the the so And will as go more

Eric Larson

to Deanna. Okay. is of follow-up, this comments. seeing and are a and those bit color And that little prepared Can and some give of have maybe us on more products. you quick some then the believe, the mentioned, you was on where in have for you promotional give more us some Can adjustments mentioned elasticities that retail elasticity just a maybe I in you -- you little of your whether may were where some a

Deanna Brady

Yes.

areas price it's has categories some interesting would you've it's rings. elasticity regular their got in on continues shelf where say I bipolar higher change to in the expected. could purchase cycles. and playing elasticities that more the would be seeing we're So be bit acknowledged exactly that a are because in out We've as got categories in where the where very other consumer

declines So ring, has lower meets for to the cooked thinking areas barbecue or shift but a that a a rack there. of seen putting like demand take dinner allows entree having of need the other to, so fully consumer the still a consumer or Obviously, price tub some table. on we've of dinner ribs, of same

price to about different consumer breadth of and valuable now. you meet them they at points those promoting that, important as utilize pulsing sure and we're our right We've that making products advertising need to and sure So states, in our some it's how of areas and that speaks the have and value portfolio. it's we're understand making the our always our products and why exceedingly that of talked products different mentioned, consumers can

Operator

Theurer from comes of question Barclays. next The Ben

Ben Theurer

sales, if margin margins look the time, the had I on we they're we then particular, expand the to foodservice, in retail, one in in at both were foodservice, demand into same drivers, retail Just but because different actually versus saw down equally you it, able somewhat on contraction.

of So for where if well caused retail these foodservice is we saw got you foodservice? pressure? exceeding inventory something also the in same issues exceeding in come the which and back not whole and -- particularly Or under you of demand. into Is magnitude, kind the be to misalignment demand of to this and supply because that margins maybe mix that falls the at just misalignment, kind

Jim Snee

correct. your the mean way at it the are issues of there I Ben, is inventory you think retail but I is Yes, question both, currently in described more. there end

frequently the talked have to we've market. commodity fluid. and The element is you price about is of more of seen the foodservice the the and side about and As closer a foodservice that able some sales, the talked they're pricing on to lot we is, this business, pricing relief

Ben Theurer

Okay. early of and February issues could environment forward of it my normal all in reopening easier et over maybe the with inventory But quickly have December, go being as whole than quarter, follow-up, you know a an we more like March, one China. side consumers on And to the be I have some of mean tough that just fair like the a consumption? in America. signs of particularly particularly on North cases, and Is assume that, you in fix was seen cetera. today, then very fourth

Jim Snee

that, a business we fair back are And seems now the early foodservice China through said or a Ben, we Chinese rebound seen heading way The their a making consumer Again, second has as population out. Yes. or have in that's uptick and nice COVID nice that assessment. quarter. very be seen to

business. seen retail able we've the We're about innovation of foodservice been to that excited up deliver. we've side the really continued So the on

years especially line Singles built well, and really several when that plant SPAM we our business. our other thing, has business The SPAM ago, SPAM we put done in a

so seen is growth. additional exactly take that side investments support how continue China we're we're the some seeing where grow retail thinking to on what point And to that be But on to making your we'll we've about the it. and

Operator

Tom from The next Palmer question JPMorgan. of comes

Tom Palmer

just discussion. to I'm sorry a inventory bit. to the clarify want I belabor something

like remarks, turkey in and the pork it terms So and of produce peanut you're there prepared that sourcing now, right to sounded unable were some butter. enough constraints in

lot I inventory the I can wrong, Planters think for heard this of issue. a but account maybe don't So

understand products better much too products that equation? it inventory types that built is of you've just I to So into hope what up certain pork And of? fall

Jim Snee

Yes.

start Tom, So with I'll that first question.

have for So that pork products don’t said coming we had just would the today. us What we have production. any at have we is it’s sourcing didn't decline normally what we is difficulty

we to sell it. think inventory When of has as we across of think for all inventory not for are turkey we built about are I That’s earlier, as promotion. have that mean it’s we support mean talking -- -- part the it it. portfolio, enough through right. the Today, I about to about some you coming that’s not turkey So is entire been Planter. But described used absolutely is pork decline. business. to don’t. the what the we The I

the have So We into year. think we get SPAM inventories bigger ribs. do throughout promotions of as elevated

elevated inventories some of bits. bacon complete have We

other So perishable it mixed a is items. refrigerated bag,

portfolio. a bag have it's across So we mixed the and the inventory that

one I to pin it or broad-based. is this any yes, And not we're item mean, trying so one category. on

Tom Palmer

mentioned Okay. just you And on the increases retail. maybe price

much Just addressed be just on to particular? magnitude, certain need the how the with is addressed pricing? Any of in that any portfolio the there are being types timing, help and commodity on detail then

Deanna Brady

Yes, This there. thanks. I'll is in Deanna. Tom, jump

year, are through. and of took So pricing flowing those flowing We we still several still through. that's some have wraparound price increases last

price chunk our want leverage X%. portfolio in we we've make about capacity. We've We pricing and mindful added have capacity. to sure volumes, about approach roughly currently we're that able elasticities, thinking the increases, very of is to that that a to taken where Obviously, a

tried we've mindful. And so to be very

taking multiple have increases taken the our we've competitors are for price increments we're really, justified of probably announced. in inflation. And So increases some than smaller

continue in And so are -- mentioned, sit that we're to quarter got that. today. a got categories happening, that already we'll I as other We've evaluating and the and the we've we as ones, monitor few

Operator

The of of next Peter question from Bank America. comes Galbo

Peter Galbo

can captured what so Scanner resegmentation. Maybe in first of set everybody particularly level all, side? helpful the retail, call, data just to just you And help do had have a foodservice retail deck a in IRI. from the question, don't for breakout I the the you business just us just a around new on slide and different of there Is there on the be in think verticals. you question And technical to anything anything percentage I think more at Tuesday. on the disclosed was Nielsen will

Jacinth Smiley

around see… terms foodservice I component, XX%. be in retail on actually would side, mean, will the So of somewhere wouldn't anything And it that be you the then there

Peter Galbo

Sorry, go ahead.

Jim Snee

even provide we're try will more we have industry is vertical Peter, structure do color. same that you the really I kind What to doesn't of foodservice okay. just mean over the because not to that's way. doesn't No, time within -- it think going about it

the the Hormel both business, a the that for going we've to as a integrated and had and we to So example, our quarter how school benefit is JOTS this talked channel good quarter. JOTS K-XX, business like in business, a about really business, be

of I'll provide So we'll roll into continue type to to a but typical just from, color all that it say, up foodservice. will try reporting,

Peter Galbo

side again, just back then And about the inventory a it think Okay. go a in to just to bit and manner. different of to maybe little

to about sales discount through well? do? get to are sell If to you or rightsized, your why have line trying to I going an as more into guess Just it going if channels adjustment you're or thinking you're of inventory to more the be to there more going wasn't selling whatever

retailers, question burden of in about think should of on working them that second they their terms capital, carry you're inventory how capital to have want it thinking as flow. part to more to do? and conversations carry the needs less of for implications about the just cash it asking how with they're then Is And just in we the of is what more your you because working

appreciate as thoughts. of two-part kind question, lot, a a but that's know I So the I

Jim Snee

Yes. question. a good it's really No,

there's no, year. half to so And We of that our turkey off come and back the moved have back we that top expect the guidance. line a in of not uncertainty know

our this foodservice of is The other business. part

softness the of though growth expect a for first even balance quarter, year. we so had for And some the in time of we period the

are So really those drivers. two

And then line. top back come business be we'll challenges our of that deliver believe we that to abating, expect do international to those as able we with some

terms then of And retailers that question, that inventory. more getting part keep second the pressure in from of not we're

As those had that very, we've rates rates. the had Jacinth getting getting to we've It's But where chain said earlier, prevented this years from some supply are business. historically, we challenges know how the fill were. have last over three that two, of but they fill very strong us rates. run obviously to And surely, back we fill slowly those to

to the really able that were pre-pandemic. the expectation. operate we so did That's And we way

Operator

The next Sandler. Piper question comes from Lavery of Michael

Michael Lavery

three a some been more elaborate But kind single mid call have current or time. given what Can you on of maybe capacity these to in the challenges, though back want come just situation? solves everything of out else. digits capacity you those things expansion, as support pain optimizing just of point of expansion down then called focus promotional even out the the some I for also the specifically, when area it's Planters detail you and you one terms to volumes

Jacinth Smiley

the The as Michael. expansion as and club specifically channel. evolution of C-store capacity well snacking Thanks, continued Sure. addressed

as help adding packaging. The consumers want us additional a snack on to we're exceptional singular trend meet when a really tube is demand, as is both in the is which capacity in to well capacity about a today, the particular, So variety. there. think specific That in to purchase club really designed continue with you nut how the

and great of flavors growth that business, where area a summer really other days comes are that of the is is really really talked life. think haven't the we we business really market. portfolio that then in convenience the to core of gem to nut some the about XXX the as And business, coming And that hidden store is

capacity is and adding into for both store now. club leaning right where C-store So we're

Jim Snee

Michael, have which to did be important it's also are was these packaging think bought I some when business. with we going to we some to bottle year then the know, last the knew we that and And investments. new innovation, We knew there things capacity that

that as but seen was a since Deanna to and So just matter It going mentioned, business, what corn was growth we we've really, existing opportunity. the slow an that it X were that we expect saw packaging, as strong it. And don't we really the nuts need down. to of was timing then Day for

Michael Lavery

Or Okay. That's bigger a not helpful. for option And just line about an stake you you could whether we the above Garuda, in do coming there? think to of or ever operations? at did back becomes some have part that point? How

Jim Snee

Yes.

I big think was sale. stake for for that now, owner. the was private was equity That previous it took -- we out the

a size been our right partner entertaining scale need them, about snacking, And So about for strategic again, it know the but global to time. mean, it's the learn and the business, it we with market. and initiatives supports We we've for days, I and presence. still right adding the that was developing us, two early at

for be so to as along, take -- the for us if opportunities we we business us there will certainly bigger to go think a delivers And position.

Operator

Our Adam from of last Sachs. question Goldman comes Samuelson

Adam Samuelson

actually this there that half, turkey see coming to big back HPAI, market. if should normalize about pricing Jennie-O, assuming is starting margin say, to and Commodity already I that I the was So disruptions pricing I breast on continue further talking turkey, uplift would a guess first or think question commodity further you're started no down just to improving and in volumes you resin and but in supply in no the like seem breast balance meat a pretty pricing I business business foodservice outlook could for getting it's now -- is -- your not last full be with year. did retail big the now year? split just this turkey But between it's over visible. clear because I of a down not come profitability pretty big the would it's as update? year so it's headwind know international, and it turkey actually your

Jim Snee

we business for have outlook turkey all. the Yes, changed at not the Adam,

our as meat But continues Turkey position. value-added markets. You're still well. we've lower more cleared right And is birds strong. favorable to that of next as with And what in business. lower. happens if very a this next breast season. breast get feel the is AI, the able and a whole the more is business what, that. we head in opportunities then to market of there's here lot for do holiday we'll to about us, turkey months But have we of that and in the do business demand we've plenty We even bodes well impact holiday like a drive of not the think has know The to season. meat seen yes, will portion know any, And it that strong outlook this gone as meat, still into we'll I all changed more be couple really well the performance fill as

Adam Samuelson

how follow-up, big kind And ask inventory units? a the this business with some segment flow the metric one up you the has on don't disparity, structure of I But going incentive I'm sales guess think if to has the are ways. new some leaders bacon And of two segment it's and than kind have new little Okay. compensation thinking then of of through profit just just structure of of previously There's been that now connectivity tying kind end ownership channels but there's the between the cash on or I and but performance part in struck always lot come I could asset a sales two been also there channels like return structure working net plants not less of before. previously. and versus last of of have whether question or and reporting might about capital a kind one reporting different kind you bit a different

Jim Snee

Yes.

going actually side And we've mentioned, So mean, retail, we've changed. the had I creates -- it's example really through into going in confusion flow hasn't retail. and bacon you of less structure product had And terms the way Adam, now it the Deanna we helpful. centralizes this with If sales and of into the foodservice has really, have. had it overseeing who really anything, the always responsibility that we've same

on we use have elements an return not that because don't to our sure as capital. is. of oversight know compensation. we as any that -- it we're do plans invested of eye that We the have more element to that team time. how make continues important of change to that do We the are the a over into incentive -- rate we've modifier like But keep an feel We proper on account drive improvement to got that take

Jacinth Smiley

business. just clarify structure in how any up the the for actually is to drive the there business at aligned does -- waters are to the results. for in of and outcome very the And just terms transparency driving opposite. the look objectives incentives in or And the of delineation to complete now It a way how in and hasn't just we clear mudded Yes. and GoFWD emphasize, terms results

Operator

conclude We and Ladies for please your and disconnect this gentlemen, for conference call ask you lines. your participation you today. thank does your that

Hormel Foods (HRL) 1 Mar 232023 Q1 Earnings call transcript