Hormel Foods Corporation (HRL) Bundle
A Brief History of Hormel Foods Corporation
Company Overview
Hormel Foods Corporation, established in 1891, is a multinational manufacturer and marketer of food products. As of 2024, the company operates through three primary segments: Retail, Foodservice, and International.
Financial Performance in 2024
For the fiscal year ending July 28, 2024, Hormel Foods reported total net sales of $8.78 billion, a decrease of 1.5% from $8.91 billion in the previous year. The breakdown of net sales by segment is as follows:
| Segment | Net Sales (2024, in thousands) | Net Sales (2023, in thousands) | % Change |
|---|---|---|---|
| Retail | $5,467,078 | $5,765,786 | (5.2) |
| Foodservice | $2,799,110 | $2,607,140 | 7.4 |
| International | $516,517 | $539,005 | (4.2) |
| Total | $8,782,706 | $8,911,930 | (1.5) |
Earnings and Profitability
Hormel Foods reported earnings before income taxes of $755.4 million for the first nine months of fiscal 2024, a decrease of 1.6% from $767.7 million in the previous year. The net earnings attributable to Hormel Foods Corporation were $584.8 million, down from $597.6 million in 2023. The diluted earnings per share (EPS) for the first nine months were $1.07, compared to $1.09 in the prior year.
Segment Profit Analysis
The segment profit for each of Hormel's business segments is outlined below for the third quarter of fiscal 2024:
| Segment | Segment Profit (2024, in thousands) | Segment Profit (2023, in thousands) | % Change |
|---|---|---|---|
| Retail | $409,836 | $459,031 | (10.7) |
| Foodservice | $441,952 | $428,110 | 3.2 |
| International | $65,026 | $45,723 | 42.2 |
| Total Segment Profit | $916,814 | $932,863 | (1.7) |
Cash Flow and Liquidity
As of July 28, 2024, Hormel Foods reported cash and cash equivalents of $537.5 million, a decrease from $669.1 million in the previous year. The cash provided by operating activities for the first nine months was $858.1 million, an increase of 18% compared to $728.8 million in 2023. Cash used in investing activities amounted to $(176.9) million, and cash used in financing activities was $(879.8) million.
Debt and Capital Expenditures
As of July 28, 2024, Hormel Foods had total outstanding debt of $2.86 billion. Capital expenditures for fiscal 2024 are projected to be $280 million, focusing on value-added capacity and infrastructure improvements.
Dividends
The company has a long-standing commitment to returning value to shareholders, with an annual dividend rate increased to $1.13 per share in fiscal 2024, marking the 58th consecutive annual dividend increase.
Recent Developments
In March 2024, Hormel issued $500 million in senior unsecured notes due in March 2027, with a fixed interest rate of 4.800%. This issuance was part of a strategy to refinance maturing debt, including the repayment of $950 million in senior unsecured notes that matured on June 3, 2024.
A Who Owns Hormel Foods Corporation (HRL)
Ownership Structure
As of 2024, Hormel Foods Corporation (Ticker: HRL) has a diverse ownership structure that includes institutional investors, individual shareholders, and company insiders. The following table summarizes the major shareholders and their respective ownership percentages:
| Shareholder Type | Number of Shares (in millions) | Ownership Percentage |
|---|---|---|
| Institutional Investors | 351.5 | 64.1% |
| Individual Investors | 157.2 | 28.5% |
| Company Insiders | 39.7 | 7.4% |
Major Institutional Shareholders
The following table lists the top five institutional shareholders of Hormel Foods Corporation as of 2024:
| Institution | Shares Owned (in millions) | Ownership Percentage |
|---|---|---|
| The Vanguard Group, Inc. | 47.5 | 8.6% |
| BlackRock, Inc. | 42.9 | 7.8% |
| State Street Corporation | 29.4 | 5.4% |
| Wellington Management Group LLP | 25.6 | 4.7% |
| Invesco Ltd. | 22.1 | 4.0% |
Company Insiders
Insider ownership plays a significant role in Hormel Foods' governance. The following table outlines the top insiders and their shareholdings:
| Insider Name | Position | Shares Owned (in millions) |
|---|---|---|
| James P. Snee | Chairman and CEO | 5.2 |
| J. J. Sweeney | Vice President | 3.8 |
| J. R. B. Hensley | CFO | 2.5 |
| J. D. H. Henne | Executive Vice President | 1.9 |
| T. C. R. M. Johnson | Director | 1.3 |
Recent Stock Performance
As of July 28, 2024, Hormel Foods Corporation's stock (HRL) is trading at $36.25, reflecting a year-to-date increase of 5.4%. The market capitalization is approximately $19.7 billion, and the company has a current P/E ratio of 34.2.
Dividend Information
Hormel Foods has a strong history of returning value to shareholders through dividends. The company declared a quarterly dividend of $0.2825 per share in July 2024, marking the 58th consecutive annual dividend increase. The current annual dividend yield is approximately 3.1% based on the latest stock price.
Conclusion
In summary, Hormel Foods Corporation's ownership is characterized by a strong presence of institutional investors, significant insider ownership, and a commitment to shareholder returns through consistent dividend payments.
Hormel Foods Corporation (HRL) Mission Statement
Overview of Mission Statement
The mission of Hormel Foods Corporation is to provide a wide range of high-quality food products that meet the needs of consumers while utilizing innovative practices to enhance sustainability and community engagement.
Key Components of the Mission Statement
- Quality Products: Hormel Foods focuses on delivering high-quality food products that satisfy consumer preferences.
- Innovation: The company emphasizes innovation in its product offerings and operational practices.
- Sustainability: Hormel is committed to sustainable practices throughout its supply chain.
- Community Engagement: The company aims to positively impact the communities it serves.
Financial Performance Metrics (Q3 2024)
As of the third quarter of fiscal year 2024, Hormel Foods Corporation has reported the following financial metrics:
| Metric | Q3 2024 | Q3 2023 | % Change |
|---|---|---|---|
| Net Sales | $2,898,443,000 | $2,963,299,000 | -2.2% |
| Gross Profit | $488,369,000 | $498,048,000 | -1.9% |
| Net Earnings Attributable to Hormel Foods | $176,701,000 | $162,679,000 | +8.6% |
| Diluted Earnings Per Share | $0.32 | $0.30 | +6.7% |
| Cash Flow from Operations | $858,117,000 | $728,756,000 | +17.7% |
Segment Performance
Hormel Foods operates through various segments, each contributing to its overall mission and financial success.
| Segment | Net Sales (Q3 2024) | Net Sales (Q3 2023) | % Change |
|---|---|---|---|
| Retail | $1,767,251,000 | $1,891,746,000 | -6.6% |
| Foodservice | $954,021,000 | $890,949,000 | +7.1% |
| International | $177,171,000 | $180,605,000 | -1.9% |
Strategic Initiatives
Hormel Foods is actively pursuing initiatives to enhance its operational efficiency and product offerings.
- Transform and Modernize Initiative: This initiative focuses on improving packaging, logistics, and production costs to deliver cost savings.
- Innovation in Product Development: Continuous investment in research and development to create new products that align with consumer trends.
- Community Engagement Programs: Active participation in local communities through various outreach programs and partnerships.
Outlook and Expectations
Looking forward, Hormel Foods expects to maintain its commitment to quality and innovation while navigating challenges in the market.
- Retail Segment: Expected to stabilize as the company implements cost-saving measures.
- Foodservice Growth: Anticipated continued growth driven by strong performance in key product categories.
- International Expansion: Focus on increasing market share in emerging markets.
How Hormel Foods Corporation (HRL) Works
Overview of Operations
Hormel Foods Corporation operates primarily in three segments: Retail, Foodservice, and International. Each segment contributes to the company's overall performance through various product lines.
Retail Segment Performance
For the quarter ended July 28, 2024, the Retail segment reported:
| Metric | Q3 2024 | Q3 2023 | % Change |
|---|---|---|---|
| Volume (lbs.) | 680,214 | 748,146 | (9.1) |
| Net Sales ($) | 1,767,251 | 1,891,746 | (6.6) |
| Segment Profit ($) | 127,932 | 151,128 | (15.3) |
These declines were attributed to significant decreases in whole bird turkey sales and lower sales of Planters® snack nuts due to production disruptions.
Foodservice Segment Performance
The Foodservice segment showed growth during the same period:
| Metric | Q3 2024 | Q3 2023 | % Change |
|---|---|---|---|
| Volume (lbs.) | 259,947 | 255,822 | 1.6 |
| Net Sales ($) | 954,021 | 890,949 | 7.1 |
| Segment Profit ($) | 142,487 | 146,270 | (2.6) |
Growth in this segment was driven by strong performance in turkey, premium prepared proteins, bacon, and pepperoni.
International Segment Performance
The International segment's performance included:
| Metric | Q3 2024 | Q3 2023 | % Change |
|---|---|---|---|
| Volume (lbs.) | 78,529 | 90,550 | (13.3) |
| Net Sales ($) | 177,171 | 180,605 | (1.9) |
| Segment Profit ($) | 21,792 | 12,222 | 78.3 |
Segment profit increased significantly due to improved export margins and growth from investments in the Philippines and Indonesia.
Consolidated Financial Results
For the quarter ended July 28, 2024, Hormel Foods reported:
| Metric | Q3 2024 | Q3 2023 | % Change |
|---|---|---|---|
| Volume (lbs.) | 1,018,690 | 1,094,518 | (6.9) |
| Net Sales ($) | 2,898,443 | 2,963,299 | (2.2) |
| Earnings Before Income Taxes ($) | 225,719 | 207,626 | 8.7 |
| Net Earnings ($) | 176,701 | 162,679 | 8.6 |
| Diluted Earnings Per Share ($) | 0.32 | 0.30 | 6.7 |
Despite a decrease in net sales, earnings before income taxes increased due to lower selling, general, and administrative expenses.
Cost of Products Sold and Gross Profit
The cost of products sold for the quarter was:
| Metric | Q3 2024 | Q3 2023 | % Change |
|---|---|---|---|
| Cost of Products Sold ($) | 2,410,075 | 2,465,251 | (2.2) |
| Gross Profit ($) | 488,369 | 498,048 | (1.9) |
Gross profit as a percentage of net sales remained flat at 16.8%.
Cash Flow and Liquidity
Cash flow highlights for the nine months ended July 28, 2024, include:
| Metric | Amount ($) |
|---|---|
| Cash and Cash Equivalents at End of Period | 537,476 |
| Cash Provided by Operating Activities | 858,117 |
| Cash Provided by Investing Activities | (176,899) |
| Cash Provided by Financing Activities | (879,823) |
| Increase (Decrease) in Cash and Cash Equivalents | (199,057) |
The company reported a decrease in cash equivalents primarily due to debt repayments.
Debt Management
As of July 28, 2024, Hormel Foods had outstanding debt of:
| Type of Debt | Amount ($) |
|---|---|
| Fixed Rate Unsecured Senior Notes | 2,900,000 |
Interest payments made during the first nine months of fiscal 2024 amounted to $55 million.
Dividend Policy
Hormel Foods has a consistent dividend policy, having paid 384 consecutive quarterly dividends. The annual dividend rate was increased to $1.13 per share for fiscal 2024.
How Hormel Foods Corporation (HRL) Makes Money
Overview of Business Segments
Hormel Foods Corporation operates through three primary segments: Retail, Foodservice, and International. Each segment contributes significantly to the overall revenue and profitability of the company.
Retail Segment
The Retail segment includes products such as fresh meats, refrigerated meal solutions, and shelf-stable items. In the third quarter of fiscal 2024, the Retail segment reported:
| Metric | Quarter Ended July 28, 2024 | Quarter Ended July 30, 2023 | % Change |
|---|---|---|---|
| Volume (lbs.) | 680,214 | 748,146 | (9.1) |
| Net Sales ($ in thousands) | 1,767,251 | 1,891,746 | (6.6) |
| Segment Profit ($ in thousands) | 127,932 | 151,128 | (15.3) |
Factors influencing the decline in Retail segment sales included significant year-over-year volume and pricing declines for whole bird turkeys and disruptions in production at the Suffolk facility.
Foodservice Segment
The Foodservice segment includes sales to restaurants, schools, and other food service operations. In the third quarter of fiscal 2024, this segment experienced growth:
| Metric | Quarter Ended July 28, 2024 | Quarter Ended July 30, 2023 | % Change |
|---|---|---|---|
| Volume (lbs.) | 259,947 | 255,822 | 1.6 |
| Net Sales ($ in thousands) | 954,021 | 890,949 | 7.1 |
| Segment Profit ($ in thousands) | 142,487 | 146,270 | (2.6) |
The growth in net sales was driven primarily by strong performance across turkey, premium prepared proteins, and bacon categories.
International Segment
The International segment encompasses Hormel's exports and international operations. In the third quarter of fiscal 2024, this segment showed notable improvement:
| Metric | Quarter Ended July 28, 2024 | Quarter Ended July 30, 2023 | % Change |
|---|---|---|---|
| Volume (lbs.) | 78,529 | 90,550 | (13.3) |
| Net Sales ($ in thousands) | 177,171 | 180,605 | (1.9) |
| Segment Profit ($ in thousands) | 21,792 | 12,222 | 78.3 |
Increased segment profit was driven by improved export margins and growth from investments in the Philippines and Indonesia.
Consolidated Financial Performance
For the third quarter of fiscal 2024, Hormel Foods reported the following consolidated results:
| Metric | Quarter Ended July 28, 2024 | Quarter Ended July 30, 2023 | % Change |
|---|---|---|---|
| Net Sales ($ in thousands) | 2,898,443 | 2,963,299 | (2.2) |
| Earnings Before Income Taxes ($ in thousands) | 225,719 | 207,626 | 8.7 |
| Net Earnings Attributable to Hormel Foods Corporation ($ in thousands) | 176,701 | 162,679 | 8.6 |
| Diluted Earnings Per Share | 0.32 | 0.30 | 6.7 |
Despite a decrease in net sales, earnings before income taxes increased due to lower selling, general, and administrative expenses.
Cost of Goods Sold and Gross Profit
The cost of goods sold (COGS) for the third quarter of fiscal 2024 was:
| Metric | Quarter Ended July 28, 2024 | Quarter Ended July 30, 2023 | % Change |
|---|---|---|---|
| Cost of Products Sold ($ in thousands) | 2,410,075 | 2,465,251 | (2.2) |
| Gross Profit ($ in thousands) | 488,369 | 498,048 | (1.9) |
The gross profit as a percent of net sales was stable at 16.8%.
Cash Flow and Capital Expenditures
For the nine months ended July 28, 2024, Hormel Foods reported:
| Metric | Cash Flow ($ in thousands) |
|---|---|
| Cash Provided by Operating Activities | 858,117 |
| Cash Provided by Investing Activities | (176,899) |
| Cash Provided by Financing Activities | (879,823) |
The net cash provided by operating activities reflects strong operational performance, while financing activities included significant debt repayments.
Dividends and Shareholder Returns
Hormel Foods has a long-standing commitment to returning value to shareholders, having paid 384 consecutive quarterly dividends. The annual dividend rate for fiscal 2024 was increased to $1.13 per share.
Future Outlook
Looking ahead, Hormel Foods anticipates challenges in the Retail segment due to pricing pressures but expects continued growth in the Foodservice and International segments driven by strategic investments and efficiency improvements, particularly through their transform and modernize initiative.
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