The operator introduces the Hormel Foods Corporation Fourth Quarter Earnings Conference Call and turns it over to David Dahlstrom, Director of Investor Relations. Jim Snee, Jacinth Smiley, and Deanna Brady will review the company's fiscal 2023 fourth quarter and full year results and provide an outlook for fiscal 2024. A webcast replay will be available after the call. The safe harbor statement is referenced, reminding listeners that some comments may be forward-looking and results may differ from those stated.

The company's most recent annual report and quarterly reports can be accessed on their website. Non-GAAP results are used to provide a better understanding of the company's performance, but should not be considered a substitute for GAAP results. The company had a challenging year but still achieved net sales of over $12 billion, reinvested in their brands, generated strong cash flows, and returned cash to shareholders. They also made progress in their evolution as a global branded food company. As they enter fiscal 2024, there is a sense of urgency to improve their business.

The company has a clear plan to return to its previous level of earnings and has identified three key areas of focus: restoring bottom-line growth, driving savings, and capturing incremental value from investments. The first milestone will be in fiscal 2024, and success will depend on executing the strategy. The company aims to drive focus and growth in the Retail business, expand its leadership in Foodservice, and develop its global presence.

Fiscal year 2023 was challenging for the international business due to various factors, but a recovery is expected in fiscal year 2024. The company plans to focus on its entertaining and snacking vision by leveraging its brands in different channels. The Planters brand has shown promising growth and success, especially with its new flavored cashews line. The company plans to continue this momentum by introducing new innovations and increasing brand investments and promotions. The company also aims to support the growth of its Planters and Corn Nuts brands, as well as the overall category, in the upcoming fiscal year.

The fifth and final step in future-fitting the One Supply Chain is to reduce costs and complexity while investing in long-term growth. This includes converting the Barron, Wisconsin plant into a value-added facility and ceasing turkey harvest operations by 2024. This aligns with the company's goal of building a more demand-oriented and optimized turkey portfolio. The plant will also support growth across the entire organization and integrate the turkey business into the broader company for increased efficiency and growth. The company has also announced plans to transform and modernize the organization to drive growth over the next three years.

The company plans to invest $250 million over the next three years in implementation, personnel, and project costs, with one-third of the investment to be made in fiscal 2024. They expect a modest benefit to net earnings in 2024, with benefits accelerating in 2025 and achieving their target in 2026. The initiative is expected to provide significant residual benefits in fiscal years 2027 and beyond. The company had net sales of $3.2 billion and diluted net earnings per share of $0.36 in the fourth quarter of fiscal 2023. For fiscal 2024, they expect modest volume and net sales growth, supported by higher brand investments and innovation.

The company is expecting higher sales in various retail verticals, as well as in foodservice and international markets. However, they anticipate a decline in their retail segment due to lower whole turkey prices and potential supply issues. This may lead to a decrease in earnings in the first half of the year, particularly in the first quarter.

The company expects modest growth in net sales and earnings for the upcoming year, with a potential benefit from their transformation and modernization initiative. They have outlined their plans for the next three fiscal years, with a focus on investment, growth, and operational improvements. The company remains confident in their strategy and is committed to delivering long-term shareholder returns and growth. They acknowledge the hard work of their team in a challenging year.

The company had a successful year in fiscal 2023, with the second highest net sales in its history and $2 billion in gross profit. They also invested in advertising and saw an increase in equity from affiliates. Operating income and margins were strong, and the tax rate was slightly higher than the previous year. Diluted net earnings per share were $1.45, but adjusted earnings were $1.61 when excluding certain impacts. The company remains committed to dividend growth and investing in its business.

In fiscal 2023, the company had consistent cash flows of over $1 billion and returned a record amount to shareholders in the form of dividends. They also invested in capital projects to support growth and maintain a strong financial position. The company reduced inventory and ended the year with responsible levels to support targeted fill rates and production capacity for future growth.

The company is planning to invest in various areas of the business in fiscal 2024, including end-to-end planning capabilities and upgrading their order-to-cash system. They also anticipate higher pork input costs and lower turkey prices, but expect to offset some of the pricing headwinds with lower feed costs. The reemergence of HPAI is also expected to affect their vertically integrated supply chain.

The company does not expect supply impacts to be as severe as they were in the first half of fiscal 2023. The situation is still uncertain due to the risk of additional cases, but the company is proud of achieving its safest year in history. The CEO acknowledges the hard work of the employees and turns the call over for a question-and-answer session. An analyst asks about the wide range in the company's guidance and the CEO explains that the high-end of the range is dependent on external factors and market conditions.

The speaker believes that their company's portfolio is showing growth, despite the downturn in the turkey business. They have considered various factors in determining their projected range for the future, such as potential volume mix and savings initiatives. They are also monitoring macro issues, such as the China recovery and price elasticities, which could impact their business. Overall, they feel confident in their range and expect growth in retail and foodservice, with a recovery in international business after the first quarter.

The speaker discusses the company's pricing strategies and how they will be more proactive moving forward. They will be leveraging their modernized revenue growth management practices and considering factors such as commodity inputs and long-term growth ambitions when determining pricing. They also mention the importance of considering elasticities and being more targeted and surgical in their reactions. Additionally, they mention the possibility of using trade instead of price to drive growth.

The speaker discusses the current state of consumer demand and the need to carefully consider pricing, promotion, and advertising strategies in light of recent changes in consumer behavior. They also highlight the importance of the company's leading positions in the market and their goal to achieve volume growth in 2024. When asked about the promotional and competitive landscape for the upcoming year, the speaker does not provide a direct answer.

Jim Snee and Deanna Brady discuss the company's promotional activity and how it varies by category. Deanna explains that they are working with customers to ensure the most effective promotions for consumers, customers, and the company. The next question is about net interest expense for the year, and Jacinth Smiley confirms that $950 million is coming due in early June.

The company did not provide guidance on interest numbers, but they are working on paying down debt and have factored in higher interest expenses in their current numbers. The impact of reduced SNAP payments on volumes took longer to be seen, and the company is experiencing different behaviors in different categories. Some premium categories are doing well, while center store items may be affected by reduced SNAP and other macroeconomic issues.

The speaker discusses the company's strategy for restoring growth by connecting with consumers and utilizing promotions and advertising. They acknowledge potential short-term impact but express confidence in navigating the situation. The company is closely monitoring the market and working with customers. The analyst asks about turkey pricing and potential recovery, as well as the company's conservative outlook.

Jim Snee, CEO of the company, discusses the impact of turkey supply and pricing on the business. He mentions that the supply is currently adequate to support the business, but there is uncertainty and volatility due to outbreaks. The company expects a $0.10 headwind from the turkey business in the next three years. Snee also mentions the company's efforts to optimize and right-size the business's portfolio, focusing on demand-driven and value-added products. Analyst Michael Lavery asks about the expected savings level over the next three years, but Snee does not provide a specific number.

The speaker is discussing the $250 million spend and how it will be split between CapEx and operating costs. They mention the One Supply Chain initiative and Project Orion as previous efforts to modernize the company's systems. The current transformation and modernization plan is seen as a continuation and enhancement of previous work. The goal is to finish the job and achieve $250 million in operating profit, with $200 million focused on the supply chain.

The company expects to see growth in its COGS and margin lines, driven by margin expansion, strategic value capture, and the underlying core business. The benefits will continue beyond 2026. In the International segment, the company is confident that the branded export business will pick up after Q1 due to efforts to drive demand, and there is also expected improvement in China's Foodservice and Retail sectors throughout the year.

The speaker discusses three factors that are leading to an optimistic outlook for the company beyond the first quarter, including increased demand for turkey and pork products, a commodity impact on international exports, and ongoing transformation and modernization efforts. They also mention that the company will continue to use a non-GAAP reporting methodology until 2026 to accurately reflect their core performance and track savings from the transformation. The questioner asks about potential opportunities for further growth in the Foodservice sector, which has been a strong contributor to the company's profits.

The company is well-positioned for growth in 2024, with stable and improving industry indicators. They have a portfolio designed to solve for operator challenges and limited labor, and are focused on innovation and value-added capacity in key categories. They have a strong culinary and innovation team, and are leaning towards a food-forward mentality. The company expects CapEx to be in-line with the previous year, with major projects including growth for Planters and a transformation and modernization initiative.

Jim Snee and Jacinth Smiley discuss the company's plans for capital expenditures and corporate expenses for the next year. They mention that the company has available capacity due to previous investments, and will continue to invest in advertising and supporting their brands. Jim Snee thanks everyone for joining the call and expresses confidence in the company's future success.

The speaker thanks the participants for their participation and requests that they disconnect their lines, wishing them a lovely day.

This summary was generated with AI and may contain some inaccuracies.