In a release dated December 4th Hormel Foods (HRL) reported on Q4 and FY 2024 ending October 27th, disappointing on the top line, reporting lower revenue and adjusting guidance only slightly for FY 2025.
For the quarter the company earned a reported (GAAP) $220.2 million on revenue of $3,138 million with a diluted EPS of $0.40. Comparable values for Q4 FY 2023 ending October 29th were net income of $195.9 million on revenue of $3,198 million with a diluted EPS of $0.36.
Compared to Q4 of FY 2023 sales declined by 1.9 percent, gross margin increased from 16.1 percent to 16.6 percent and operating margin was up from 5.3 percent to 5.8 percent for the most recent quarter. Profit margin was unchanged at 7.0 percent for both quarters.
For the FY 2024 the company earned a reported (GAAP) $805.5 million on revenue of $11,921 million with a diluted EPS of $1.47. Comparable values for FY 2023 ending October 29th were net income of $792.9 million on revenue of $12,110 million with a diluted EPS of $1.45.
Effective October 2022, Hormel reorganized their operating divisions into Retail, Food Service and International segments. The Jennie-O Turkey Store Division was integrated among the three operating divisions. Accordingly, releases since Fiscal 2023 do not disclose either volume or cost data for this subsidiary as in previous years. In reviewing the release, there was only indirect comment on the turkey business noting higher volume for lean ground turkey meat through Retail and Jennie-O products in Food Service. The report noted a decline in exports of turkey products, impacting the International segment. There was no reference to the risk of HPAI in either the release or the Analysts’ call. The infection has and is impacting turkey flocks in Minnesota and the Dakotas. In previous analysts’ calls CEO Jim Snee expressed ongoing concern over losses during November and December 2023 and the spring wave in 2024.
Segment performance in both sales and operating profit for the most recent quarter was compared with Q4 FY 2023:-
- Retail Segment volume -6.0%: sales -4.0%: segment profit +2.9%.
- Food Service Segment volume +2.0%: sales +1.0%: segment profit -8.0%.
- International Segment volume -10.0%: sales +1.0%: segment profit +184.0%.
For FY 2025 the company projected net sales of $11,900 to $12,200 million (up $100 million) and an unchanged adjusted full year diluted net earnings per share in the range of $1.58 to $1.72.
In commenting on Q4 results, Jim Snee CEO and Chairman stated, “Fiscal 2024 demonstrated solid execution of our strategy, the power of our portfolio and the resilience of our team “Across our business segments, we reinvested in our brands, expanded our market presence and introduced innovative solutions to drive impactful results,”
Reviewing segment performance Snee noted "In Retail, our flagship and rising brands, such as Hormel® Black Label®, Jennie-O®, SPAM®, and Applegate®, delivered strong growth and expanded households. Our Foodservice segment again achieved above-industry growth, highlighting the differentiated value and relevant offerings our dedicated team brings to the industry. Our International results reflect a solid recovery, and we remain well positioned to continue expanding our global presence.” He added “The combination of underlying business strength and the capture of $75 million in operating income benefit from our Transform and Modernize (T&M) initiative helped to offset a dynamic consumer environment, the steep decline in whole bird turkey commodity markets, and the production disruption at our Suffolk, Virginia, facility."
He concluded, "The focus on our value-added portfolio, innovation, and T&M initiative has positioned us well for sustainable growth and enhanced shareholder value.”
Hormel Foods posted total assets of $13,435 million on October 27th 2024 of which $6,656 million comprised goodwill and intangibles. Long-term debt was $3,061 million against an intraday market capitalization of $18,080 million on December 16th. HRL has traded over the past 52 weeks in a range of $28.51 (an 8-year low) to $36.86 with a 50-day moving average of $31.25. HRL trades with a forward P/E of 19.4. HRL closed at $31.82 on December 3rd pre-release. The share price closed almost unchanged at $31.99 on December 4th post release
The 12-month trailing operating margin is 8.9 percent with a profit margin of 6.5 percent. The Company has returned 5.2 percent on assets and 10.0 percent on equity.