The paragraph details the introduction of Hormel Foods Corporation's Fourth Quarter Earnings Conference Call, which took place on December 4, 2024. Jess Blomberg, Director of Investor Relations, opened the call, with key company executives, including Jim Snee and Jacinth Smiley, set to review the company's fourth-quarter and full-year results for fiscal 2024, and outlook for 2025. They will also discuss an initiative called "Transform and Modernize." The call allows for a Q&A session, and a replay will be available on their investor website. Additionally, a safe harbor statement was referenced, indicating that some forward-looking statements might differ from actual results.

The paragraph discusses Hormel Foods' achievements and strategies in fiscal 2024, highlighting their successful execution of strategies, robust portfolio, and team resilience. The company navigated a challenging consumer environment by reinvesting in brands, expanding market presence, and introducing innovative solutions, meeting adjusted net earnings expectations. Hormel Foods progressed in their Transform and Modernize initiative, securing a $75 million operating income benefit, which, alongside their financial discipline and strong portfolio, led to record operating cash flow and shareholder dividends. In the Retail sector, they focused on strengthening and prioritizing winning brands and categories.

The paragraph highlights the growth and innovation achievements of flagship brands like Hormel Black Label, Jennie-O, SPAM, and Applegate. Through consumer-centric innovations and increased advertising, these brands have expanded in on-trend categories. The company's Foodservice segment saw a 6% sales growth, driven by solution-based innovation and successful expansion in convenience channels. Internationally, the company boosted branded exports and recovered its business in China with significant growth in the Philippines and Indonesia. The company also achieved a 140 basis point increase in net sales from innovation, emphasizing the importance of understanding consumer needs. Innovation, driven by R&D and brand teams, remains central to the growth strategy. Additionally, fiscal 2024 was the safest year in the company's history, underscoring the commitment to employee safety.

The paragraph highlights the company's achievement of breaking its record for operating cash flow, generating $1.3 billion, and its disciplined capital allocation strategy that enabled record returns to shareholders through dividends. The company announced its 59th consecutive annual dividend increase and successfully delivered earnings guidance despite challenges in fiscal 2024. It leveraged its strong portfolio across various segments and gained $75 million in operating income benefits through its Transform and Modernize initiative. Looking ahead to 2025, the company plans strategic investments in flagship and emerging brands, with a focus on growth in its Retail, Foodservice, and International segments. Its growth mindset supports competitiveness, agility, and capital efficiency, driving continued investment and shareholder returns.

The paragraph highlights the financial performance and expectations for a company, focusing on the fourth quarter and full year results. The company reported a volume of 4.3 billion pounds and net sales of $11.9 billion for the full year, with increased gross margins due to a strong value-added portfolio. SG&A expenses rose primarily because of employee-related costs and a transformative initiative, with further increases expected in fiscal 2025. Advertising investments grew slightly in fiscal 2024, with plans for substantial increases in 2025. Interest and investment income rose, but interest expenses also increased due to higher debt rates. Operating income for fiscal 2024 was $1.1 billion, with an operating margin of 9% and an adjusted margin of 9.6%. The tax rate was 22.3%, with expectations for a slight range decrease in fiscal 2025. Additionally, diluted net earnings per share were $1.47, with an adjusted figure of $1.58.

The paragraph discusses the company's financial performance and strategic priorities for fiscal 2024 and 2025. The company generated record cash flows of $1.3 billion, returned $615 million to shareholders through dividends, and announced a 3% dividend increase for fiscal 2025, marking the 59th consecutive year of increases. Investments of $256 million were made in capital projects focused on growth, with plans to invest between $275 million and $300 million in fiscal 2025. The company ended the year with $2.9 billion in debt and over $765 million in cash, maintaining a healthy net debt to EBITDA ratio. Inventory levels decreased by $104 million, and the company is well-positioned for growth. Additionally, the company faced a $9 million impact from storm damage in Nebraska and addressed production disruptions in Suffolk, with ongoing efforts to improve operations despite anticipated short-term challenges in fiscal 2025.

In the second quarter of fiscal 2025, the Planters brand is expected to regain momentum. Hormel has divested its Hormel Health Labs business from the Foodservice segment, impacting fiscal 2024 results by $108 million in net sales and one cent in adjusted EPS, changes not anticipated to recur. For fiscal 2025, the company forecasts top-line growth across all segments, with specific expectations for Retail, Foodservice, and International segments. They anticipate growth in segment profits, particularly in the latter half of the year. Key assumptions for fiscal 2025 include steady pork costs, high beef and nut costs, depressed turkey markets, and benefits from favorable grain prices. EPS is expected to be negatively impacted by $0.04 to $0.05 in the first quarter due to low turkey prices and a production disruption in Suffolk.

The paragraph discusses Hormel Foods' financial expectations and strategic initiatives. They anticipate net sales between $11.9 billion and $12.2 billion, with organic growth of 1% to 3% and adjusted earnings per share between $1.58 and $1.72. The T&M initiative is expected to bring $100 million to $150 million in benefits. The narrative transitions to a discussion led by Jim Snee, focusing on their Transformation initiative announced in 2023, aimed at modernizing company processes and driving long-term value through investment in people, data, technology, and brands. Significant progress has been made in the first year of this initiative, bolstering confidence in their future growth potential.

The paragraph outlines Hormel Foods' "Transform and Modernize" initiative, emphasizing that it is not solely a cost-saving exercise, but a comprehensive restructuring of the company's operations to foster growth. Strategic investments are being made, organized into five pillars, four of which focus on supply chain efficiency: Plan, Buy, Make, and Move. Each pillar aims to streamline different aspects of operations, from planning and procurement to production and distribution. The fifth pillar is Portfolio Optimization, which seeks to reduce complexity and promote innovation within the company's product offerings. The first year of the initiative has been successful, achieving $75 million in benefits primarily from the Buy, Make, and Move pillars. Further details will be provided by Nathan on each pillar.

The paragraph outlines Hormel Foods' ongoing efforts to enhance its operations, emphasizing significant cost savings through improved logistics, raw materials, and manufacturing efficiencies, with projected operating income benefits in fiscal 2025. The company is also advancing its Plan and Portfolio Optimization initiatives to streamline its product mix, enhance demand planning, and foster a more consumer-centric approach. Hormel is investing $250 million in foundational improvements through 2026, focusing on talent development, data-driven decision-making, and reducing organizational complexity to unleash its full potential and maintain a competitive edge.

The paragraph discusses a company's Transform and Modernize initiative, led by Nathan Annis, aimed at reshaping operations through automation, centralization, and simplification. The initiative focuses on streamlining complex, manually-driven processes into efficient, enterprise-wide systems, centralizing key functions for better scalability, simplifying business operations through strategic segmentation, and standardizing value realization methods. Overall, these efforts aim to create sustained value, leading to profitable and predictable growth.

The paragraph outlines a new procurement strategy under the "Buy" pillar, which is part of a broader effort to transform the organization's supply chain and procurement processes. It highlights the implementation of a new operating model with updated policies, standardized training, and modern procurement systems, including advanced sourcing tools and data analytics. In 2024, the focus was on categories related to cost of goods sold and indirect spending, with plans to target remaining categories in 2025 and fully embed the approach by 2026. A specific example is provided of a successful sourcing project that streamlined vendor relationships and improved inventory management for routine supplies in manufacturing. This strategic change aims to drive consistent productivity growth.

Hormel is improving its procurement and manufacturing processes to achieve financial savings and efficiency through the Hormel Production System (HPS). HPS standardizes operations across facilities to enhance production yields, capacity, and cost-effectiveness, with an initial focus on addressing capacity limitations. A significant success was seen at the Wichita, Kansas facility, where implementing HPS increased production capacity by 18% for Hormel BACON 1, avoiding costly expansions and boosting productivity and team morale. These improvements are being extended to other facilities, enhancing Hormel's manufacturing agility and supporting long-term growth.

The paragraph highlights the company's efforts to enhance its logistics and planning processes through two main initiatives: the Move and Plan pillars. The Move pillar focuses on improving logistics by renegotiating freight rates, lowering costs, and opening a new distribution center in Memphis by late 2025 to enhance inventory management and distribution. The Plan pillar aims to transform end-to-end planning by centralizing activities, adopting integrated business planning, and utilizing data analytics and AI to improve service levels, reduce costs, decrease working capital, and boost team engagement. The overall goal is to create a more efficient and responsive organization. Portfolio Optimization is also discussed as key to improving product margins and driving growth.

The paragraph discusses Hormel Foods' strategic focus on streamlining operations and optimizing their product portfolio by eliminating unprofitable or low-volume items and divesting non-strategic businesses like Hormel Health Labs. In 2024, the company implemented rigorous processes to manage and assess their offerings, aiming to drive sustainable growth by aligning with consumer trends. This initiative includes reinvesting in innovation. Hormel Foods plans to continue this strategy in 2025 and 2026, leveraging data, people, process, and technology to enhance efficiency, competitiveness, and financial performance. The integration of these efforts into the company culture is transforming Hormel Foods into a more responsive organization.

The paragraph highlights the company's dedication to its strategic initiatives like One Supply Chain and Go Forward, which have strengthened its position for continuous improvement, profitable growth, and sustained shareholder value. With a focus on innovation and strong brand portfolio, the company aims for 2% to 3% organic net sales growth and 5% to 7% operating income growth. The organization is efficient and adaptable to meet market demands, with a commitment to corporate citizenship. The leadership acknowledges the contributions of team members. During a Q&A, Rupesh Parikh from Oppenheimer seeks more insight into the FY25 guidance range, particularly the factors affecting it and if Q1 earnings can grow, to which Jim Snee emphasizes growth on both top and bottom lines by 2025.

The paragraph outlines the company's optimistic outlook for growth in 2025, focusing on key retail categories like bacon and Applegate, and the success of their innovation pipeline. The company anticipates continued growth in foodservice and international markets, supported by their value-added turkey business. They plan to increase brand support significantly and make investments in transformation and modernization initiatives. Despite some near-term impacts in Q1, they are confident in achieving growth in both revenue and profits, thanks to the momentum from their strong foundational business and transformative efforts.

The paragraph discusses key factors that could lead to higher performance for the company, such as increased volume, an improved product mix, a better turkey market, and strong results from the Planters brand and the Transform and Modernize (T&M) initiative. Ken Goldman from JPMorgan questions whether there is an element of conservatism in the company's guidance, given expected declines in underlying EBIT growth, excluding T&M. Jim Snee explains that the T&M initiative is integral to business growth and should not be seen as a standalone factor. He describes it as a "flywheel" that generates growth by allowing the company to reinvest in itself, contributing to the anticipated success in 2025.

The paragraph discusses a company's strategic focus on managing recent volatility in certain products, such as turkey, and ensuring careful business planning. It highlights efforts to scale commercial operations for Planters and resolve production issues, emphasizing the importance of advertising and innovation. Ken Goldman asks about the company's goal to achieve $250 million in net operating income improvement from 2023 to 2026, noting a significant increase needed by 2026. Jim Snee confirms they're on track, citing strong brand performance, developing processes and capabilities, and growth in flagship, rising brands, Foodservice, and International sectors.

The paragraph discusses a company's positive outlook on its business growth and future initiatives. Jim Snee and Jacinth Smiley address questions from Thomas Palmer regarding the projected $85 million operating profit growth. They highlight that this growth is supported by $125 million in cost savings and organic sales growth. However, Palmer raises concerns about factors that might limit this growth, such as increased advertising expenses and potential headwinds from turkey-related products. Smiley clarifies that their "Transform and Modernize" initiative focuses not only on cost savings but also on reinvestment for long-term growth. This initiative is expected to benefit the company beyond 2026.

The paragraph discusses a financial outlook for 2025, including expectations that turkey prices will remain low and the company's plans for significant investments in branding, data, technology, and workforce capabilities. It also addresses delays in restarting operations at Suffolk, noting that production issues have largely been resolved, and expresses confidence in resolving all issues by the first quarter of 2025. The speakers highlight the positive momentum and growth in the Planters business, particularly in Retail, and outline plans for its recovery and future steps.

In the first quarter, the company is focused on restocking retailer and company inventories to address gaps from last year's supply disruptions. By the end of the quarter, they aim to fully meet retailer demand for the Planters portfolio. Scanner data shows improving trends as distribution recovers, though full recovery is expected by 2025. The company has temporarily reduced merchandising in November and December to prioritize inventory replenishment, which may cause Q1 data to be inconsistent. In the second quarter, they plan to increase promotions and advertising to regain consumer interest and momentum. Planters is positioned well in the snacking market, offering substantial, fuel-oriented snacks with growth potential.

The paragraph discusses a business strategy focused on driving innovation with flavored cashews and duos product lines to attract new and younger consumers, alongside restoring advertising spend for the Planters brand. Jacinth Smiley mentions an anticipated financial impact in Q1, with an unfavorable impact of $0.04 to $0.05 split between whole bird turkey and Planters. Despite this, Planters is expected to regain momentum in Q2. Heather Jones asks about the sales and volume guidance in light of potential SKU rationalization related to the T&M initiative. Jim Snee confirms that this is factored into their guidance, including the impact of divesting Hormel Health Labs. Nathan Annis adds that portfolio optimization is embedded into the projections for the next year.

The paragraph discusses the strategic approach to product portfolios, particularly focusing on the potential shift in the turkey business to mirror successful strategies used in the pork sector. Heather Jones inquires about reducing commodity exposure in the turkey segment, akin to the value-added focus applied to pork. Jim Snee acknowledges the importance of this strategy, referring back to efforts made in the pork industry that improved operating margins and mentioning past work done on the Jennie-O Turkey Store portfolio, dubbed "Project Tower," to enhance value and reduce volatility.

The paragraph discusses the company's efforts to create a demand-driven business by appropriately sizing its supply side, aiming to reduce volatility. They faced challenges due to a recent Avian Influenza outbreak, which disrupted supply and hindered planned actions. Despite this, they're focused on the value-added business with an emphasis on Lean Ground Turkey and Foodservice integration, which have shown positive results. The company's goal is long-term success while minimizing volatility. Additionally, there is a mention of expected EBIT growth in fiscal year 2026, with a $250 million increase from 2023, leaving about $25 million from the T&M program by then. Heather Jones and Max Gumport are participants in the discussion, with the latter raising questions about future growth projections.

In the paragraph, Jacinth Smiley and Jim Snee are discussing their company's strategy to achieve an expansion in operating income of $250 million by 2026. Smiley clarifies that this target is net of reinvestments and inflation. The company's approach involves interconnected initiatives, known as the "growth flywheel," which include leveraging their portfolio, brands, flagship and rising brands, foodservice, international business recovery, and various T&M initiatives. Snee emphasizes that achieving this goal involves a comprehensive effort beyond individual initiatives.

In the paragraph, Max is discussing the future plans and successes of the organization, expressing optimism about the continuous growth beyond 2026. Nathan Annis elaborates on their strategic initiatives, including advancements in their Buy pillar, implementing modules in their planning system, and optimizing logistics, all of which are poised to deliver long-term benefits. Max thanks them for their insights, and the conversation transitions to Peter Galbo from Bank of America, who expresses a need for clarification regarding a net $250 million figure mentioned in previous discussions.

In the conversation, Peter Galbo confirms with Jim Snee that their financial guidance suggests a $40 million increase in EBIT by 2025 compared to 2023, based on a $200 million savings program. The discussion highlights that achieving the 2026 target requires an additional $210 million. Jim Snee outlines growth strategies, emphasizing strong performance, recovery of the Planters business, and strength in key brands and sectors like Foodservice and International. They also touch upon a $0.025 headwind in the turkey business for the first quarter, with expectations of benefits from lower grain prices.

The paragraph features a discussion about the financial expectations for turkey and grains in 2025. Jacinth Smiley explains that turkey pricing is expected to remain consistent with Q4 levels, with no assumed price increase for the year. Meanwhile, regarding grain, the company has strategically hedged it to minimize volatility and anticipates moderate benefits in 2025. Jim Snee adds that they expect growth in their value-added business and have a conservative outlook on the commodity side, projecting it to be flat to slightly down. The conversation transitions to Michael Lavery's inquiry about initiatives like portfolio optimization and procurement, which appear to overlap with other strategic initiatives such as those described in previous discussions. The dialogue is part of a Q&A session involving financial analysts and company executives.

In this paragraph, Jim Snee and Nathan Annis discuss the timeline and expectations for cost savings initiatives and strategic projects within their company. Jim clarifies that while they have a three-year initiative planned, ending in 2025, the benefits are expected to extend beyond 2026 with an acceleration in that year. Nathan adds that the projects are not only creating value but also enhancing capabilities for long-term business support. Michael Lavery then inquires about distribution issues related to their Planters brand, asking if there are now slotting fees to consider as they work to regain distribution. Nathan clarifies that they previously reported no loss of distribution during a prior call.

The paragraph discusses the recovery efforts for Planters' product distribution following supply shortages that led to shelf gaps, particularly affecting SKUs from Suffolk. John Ghingo explains that more than half of the distribution has been restored without significant investment. He notes that while some distribution requires effort and investment to regain, this is not a major concern in the company's plan. They are confident that existing investments will enable Planters to return to growth by the second quarter. The conversation then shifts to addressing a question from Pooran Sharma's associate, Adam, about the growth drivers in the Foodservice sector. Jim Snee responds by emphasizing that the strategy for Foodservice remains consistent and that the business is robust, with strong volume and sales growth projected for 2024.

The paragraph discusses expectations for strong growth across various categories in 2025, emphasizing a position of strength due to a direct sales team, innovative product solutions, and diversified channels in sectors like commercial, lodging, and convenience stores. Despite macroeconomic challenges, the company believes its unique business model will deliver good results. Pooran Sharma acknowledges this as helpful, and then Rahi Parikh from Barclays asks about the company's end-of-year 2024 guidance and over-delivery in the first year. Jim Snee responds by affirming that they are on track with their expectations.

In the paragraph, the focus is on the organization's momentum and acceleration in their interconnected business, which they describe as a "flywheel" creating value. They feel positive about their accomplishments in 2024 and anticipate further acceleration in 2025 and 2026. Nathan Annis mentions that in fiscal 2024, they focused on initiating various projects, and in fiscal 2025, they have a strong start with larger projects in the pipeline. Jim Snee concludes by expressing pride in the team's achievements and excitement for the future, wishing everyone a safe and happy holiday season.

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