Hormel Foods: Reports Third Quarter 2021 Results

Austin / MN. (hrl) Hormel Foods Corporation, a leading global branded food company, reported results for the third quarter of fiscal 2021. All comparisons are to Q3 of fiscal 2020 unless otherwise noted.

Executive Summary

• Volume of 1.2 billion lbs., up 1 percent; organic volume1 down 2 percent
• Record net sales of USD 2.9 billion, up 20 percent; organic net sales1 up 14 percent
• Net sales growth from all four segments and all four sales channels
• Net sales up 25 percent compared to 2019 pre-pandemic levels
• Operating income of USD 207 million, down 17 percent; adjusted operating income of USD 248 million, down 1 percent
• Operating margin of 7.2 percent, compared to 10.5 percent last year; adjusted operating margin1 of 8.7 percent
• Effective tax rate of 13.3 percent, compared to 21.6 percent last year
• Diluted earnings per share of USD 0.32, down 14 percent compared to last year; adjusted diluted earnings per share1 of USD 0.39, up 5 percent compared to last year

Executive Commentary

«Our team delivered the highest quarterly net sales result in the company’s history, with growth from every segment and all four channels,» said Jim Snee, chairman of the board, president and chief executive officer. «This record performance demonstrates the power of our brands and our team’s ability to successfully integrate the «Planters» business, which is quite an accomplishment, given the difficult operating conditions again this quarter.»

«Our ability to deliver consistent quarter-after-quarter top-line growth during this very dynamic time along with 25 percent sales growth over pre-pandemic levels is directly linked to the tremendous progress we have made in expanding our portfolio to reach consumers when and where they want to eat,» Snee said. «Our investments in retail, deli and e-commerce helped carry us through the initial phases of the pandemic last year as consumers shifted to more at-home eating occasions. Today, our leadership positions in foodservice and snacking have fuelled an acceleration in growth as consumers pivot to spending more time in restaurants, travelling, and hosting gatherings with family and friends. This balance across consumer eating occasions is just one of the many things that make our company uncommon.»

«We saw significant inflationary pressure in almost all areas of our business, including raw materials, packaging, freight, labour and many other inputs during the quarter,» Snee said. «We have implemented pricing actions across virtually every brand, which has been our main lever to offset these inflationary pressures. In addition, our experienced management team is taking numerous other strategic actions to offset cost increases, including optimizing promotional activity, improving product mix and rationalizing less efficient products in our portfolio.»

«We are managing through industry-wide operational challenges, including labor availability, upstream and downstream supply chain disruptions, and highly volatile and inflationary input costs,» Snee said. «I am extremely proud of the way our team is navigating through these complexities while never losing sight of the company’s long-term strategy for growth.»

Outlook

«We expect to deliver record sales again in the fourth quarter, along with improving margins as additional pricing actions go into effect,» Snee said. «The combination of a balanced and diversified portfolio, numerous strategic investments and the addition of the «Planters» brand leaves us very optimistic about our future.»

Fiscal 2021 Outlook(*)
Net Sales Guidance (in billions)	USD	11.0 – 11.2
Diluted Earnings per Share Guidance	USD	1.65 – 1.69
(*)Includes the acquisition of the «Planters» snack nuts business

The company issued its full-year net sales and earnings per share guidance ranges to reflect the full impact of the acquisition of the «Planters» snack nuts business. Additionally, the earnings per share guidance range includes the impact of inflationary pressures on the business, which will not be fully offset this fiscal year.