The operator welcomes listeners to the Hormel Foods Corporation First Quarter Earnings Conference Call and introduces the speakers. They discuss the release of the first quarter results and provide a webcast replay for those who missed the call. The speakers will give a perspective on the rest of fiscal 2024 and provide a Safe Harbor statement regarding forward-looking statements. They also mention the availability of their annual and quarterly reports on their website.

The company uses non-GAAP results to provide investors with a better understanding of their operating performance, but these should not be considered a substitute for GAAP results. The non-GAAP measures adjust for costs related to the company's transformation and modernization initiative. The CEO, Jim Snee, discusses the company's strong first quarter results, driven by volume growth in all segments and improvements in the supply chain. Net sales increased 1% and adjusted operating margin also improved, thanks to higher gross profit and cost management.

The company's diluted net earnings per share remained consistent with last year, but adjusted earnings and cash flow improved due to better management of working capital and increased earnings. The company has a clear plan to achieve earnings growth and improve their business over the next three years, with a focus on three key objectives: restoring operating income growth, driving savings through transformation, and capturing incremental value through investments. The company's first quarter results show progress in each of these areas, with foodservice and convenience store businesses performing well. The company's foodservice segment saw volume and sales growth, as well as increased profit, due to strong relationships, innovative products, and a direct sales team. The company's Planters business also had a solid quarter in the convenience store channel.

The company's snacking and convenience store business saw strong volume and positive takeaway for its Planters and Corn Nuts brands. They expect this business to continue growing in fiscal 2024, with expanded distribution of flavored cashews and innovation in corn nuts. The International business also had a good start to the year, with increased volume and profit. In the Retail segment, leading brands, execution in the marketplace, and recovery in Turkey supported volume growth. Many products, including Skippy peanut butter and Hormel pepperoni, saw strong demand and gained or maintained share in key categories. However, the retail business may face pressure from whole bird turkey dynamics and an uncertain consumer backdrop.

The company is focused on winning with consumers and customers, improving their supply chain, and advancing their transformation and modernization initiatives. They have seen improvements in their supply chain, with lower expenses and higher investment income. Inventory levels have also decreased. The company is making progress in their transformation efforts, including implementing new planning processes and technology, and realizing savings through procurement and productivity programs. They are also standardizing their manufacturing processes across their network.

The company is taking actions to optimize their distribution networks and improve their portfolio. They have identified opportunities for improvement and formed a data and analytics office to support these efforts. The third focus area is capturing value from investments, with strong momentum in their Planters snack nuts business. They have seen positive growth in volume, share, and household penetration, and continue to invest in advertising and innovation. They are launching new products, such as flavored cashews and a new offering called Planters Nut Duos, which they believe will contribute significantly to the Snack Nuts category.

In this paragraph, the company discusses their plans for innovation and growth in their Planters Snack Nuts business, including new varieties of Corn Nuts and a focus on higher ROI promotions and premium nut varieties. They also mention other investments and initiatives that will contribute to their overall growth, such as the Jennie-O Turkey Store transformation and increased capacity and automation. The company reaffirms their full year net sales and earnings expectations, with a focus on volume growth, higher brand support, and targeted retail pricing actions. They also expect broad volume growth in foodservice, led by turkey, pepperoni, and bacon.

The company expects an increase in volume and net sales due to growth in international markets and higher raw material input costs. They are reaffirming their outlook for diluted net earnings per share and adjusted diluted net earnings per share, with growth expected in the back half of the year. The company also expects growth in foodservice and benefits from innovation in retail. They anticipate a decline in earnings in the second quarter due to pressure from their whole bird turkey business, but overall expect net sales growth of 1% to 3% and diluted net earnings per share of $1.43 to $1.57. The company remains focused on their strategic priorities and improving their business for long-term shareholder returns. Jacinth Smiley will provide more details on the financial information and key assumptions in her remarks.

The company had a strong first quarter, with better-than-expected performance in all business segments. There was a 4% growth in volume and a 1% increase in net sales. Gross profit and operating income also increased, while SG&A expenses and the effective tax rate rose. Diluted net earnings per share were $0.40 and adjusted diluted earnings per share were $0.41. The company plans to increase advertising investments and expects a lower effective tax rate for the full year.

The company saw strong performance in the past quarter, with increased volume growth and improved supply chain efficiency. Operating cash flow also increased significantly, and the company paid its quarterly dividend and invested in capital projects. They plan to use a combination of cash and debt to pay off a note due in June and remain within their debt-to-EBITDA goal. The company is also making progress on their transformation and modernization initiative, which is expected to save $200 million by 2026. They are confident in their ability to capture savings from productivity programs targeting various supply categories.

The company is seeing continued benefits from their efforts to lower logistics expenses and improve inventory management and manufacturing processes. They are reaffirming their full-year sales and earnings expectations and are expecting higher pork input costs and stable turkey markets. They have made progress in regaining value-added Turkey distribution and expect this to continue for the rest of the year.

The company's Q1 performance exceeded expectations due to strong volume growth across all segments and positive trends in the retail environment. The CEO expressed gratitude to the team for their hard work and emphasized their confidence in achieving strategic objectives. The call was then opened for a question-and-answer session.

In the first quarter, the company saw growth in retail volumes and a strong performance in foodservice. They also saw improvement in their supply chain and have confidence that the business will continue to move in the right direction. The key risks for the year include the challenges in the turkey market and the overall consumer environment. However, the company is taking steps to support their brands and maintain their shares in the market.

Ken Goldman from JPMorgan asked a question about profit growth in all three segments for the back half of the year. Jim Snee clarified that they do expect profit growth in all segments. Ken also asked about the impact of potential macroeconomic factors on the foodservice industry, and Jim responded that they are monitoring the situation but remain confident in their strong position in the market. He also mentioned the growth of their non-commercial business and the recent acquisition of the Planters brand.

The company feels confident in their position in the restaurant business due to their differentiated portfolio and strong relationships. They are also focused on helping operators reduce costs through their direct selling organization. While they are aware of macro factors, they believe their diversified and balanced business sets them apart. In the retail segment, they are implementing targeted pricing in certain categories, while also investing in their brands through advertising and innovation.

The company has been slow to adjust grocery prices to keep up with beef prices, but has shifted advertising dollars to emphasize the value of their products. They are also adjusting their promotional strategy to maintain consumer interest. The company is facing headwinds in the turkey market, but strong performance in other areas is helping to offset this. The first quarter saw improvement in foodservice and international business, exceeding expectations.

The speaker discusses the expected earnings outlook for the company, noting a decline in the second quarter followed by an increase in the second half of the year. This is due to factors such as continued growth in foodservice and international markets, innovation, and supply chain performance. The speaker also mentions the expectation for the transformation and modernization initiative to accelerate. In regards to whole turkey, the company is currently in the process of contracting and pricing, making it difficult to predict at this point.

The speaker discusses the success of the value-added business in Turkey and the team's efforts to regain lost business in the foodservice channel. They also mention the decline in the market and how it will affect their estimates for the rest of the year. The question then shifts to volume dynamics in retail and the expectations for other key categories in terms of volume growth. The speaker mentions that they saw strong volume growth in flagship and rising brands in the first quarter and have invested in capacity for continued growth in categories such as Bacon and Pepperoni.

The company has had a strong quarter, with growth in their Planters and Skippy brands. They are also seeing success with Jennie-O Turkey, and are working to promote the health benefits of turkey in their products. Under their new structure, they are able to bring their brands together to help consumers with dinner options. They plan to use a combination of cash and new debt issuance to pay off a $950 million bond due later in the year. They may start to see margin benefits from lower raw material costs, but there may be a lag in their ability to procure and secure lower-priced raw materials.

The impact of raw materials on the company's first quarter was expected and did not significantly affect their strong performance. The company plans to increase advertising and focus on flagship and rising brands to support volume growth. They also have a strong innovation pipeline and execution plan in place for the year.

The company is focusing on promotional activity and monitoring its effectiveness in driving growth. They have seen a difference in how promotions are working compared to previous years and are being intentional in getting the right promoted prices. The operator then asks a question about the impact of $0.15 on Jennie-O in the first quarter and the company clarifies that the majority of the impact will be in the second quarter. They also mention an additional $0.05 impact spread out over the rest of the year. The operator then asks a question about foodservice.

The company's first quarter performance was better than expected, despite challenges in January. The foodservice business is expected to continue performing well throughout the year, with strong volume growth in the back half. The company's turkey production has returned to normal levels, accounting for most of the year-on-year volume growth. The company expects foodservice volumes to grow at a mid- to high single-digit rate for the rest of the year.

In paragraph 23 of the article, Jim Snee and Adam Samuelson discuss the growth of Turkey volumes and underlying volumes in value-added businesses. They also mention expected mid-single-digit growth in foodservice volume and a challenging 2023 for International. Snee reaffirms the company's guidance for the year and encourages further discussion with David for clarification on the numbers. He thanks the team for their efforts and acknowledges there is still work to be done for the rest of the year.

The speaker reiterates their confidence in their strategy and expects the business to continue moving in a positive direction until 2024. The conference call is now concluded and participants are asked to disconnect their lines.

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