Hormel Foods Corporation

Good morning, ladies and gentlemen, and welcome to the Hormel Foods Corporation first quarter earnings conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call has been recorded on Thursday, February 27, 2025. I would now like to turn the conference over to Jeff Blomberg, Director of Investor Relations. Please go ahead.

Good morning. Welcome to the Hormel Foods conference call for the first quarter of fiscal 2025. We released results this morning before the market opened. If you did not receive a copy of the release, you can find it on our website, HormelFoods.com, under the investor section, along with our supplemental slide materials. On our call today is Jim Snee, President and Chief Executive Officer, Jacinthe Smiley, Executive Vice President and Chief Financial Officer, and John Gingo, Executive Vice President of the Retail segment. Jim and Jacinthe will review the company's fiscal 2025 first quarter results and provide a perspective on the remainder of the year. Then, John will join Jim and Jacinthe for the Q&A portion of the call. The line will be open for questions following the prepared remarks. As a courtesy to the other analysts, please limit yourself to one question with one follow-up. If you have additional questions, you are welcome to get back into the queue. At the conclusion of this morning's call, a webcast replay will be posted to our investors website and archived for one year. Before we get started this morning, I'd like to reference our safe harbor statements. Some of the comments we make today will be forward looking and actual results may differ materially from those expressed in or implied by the statements we will be making. Please refer to our most recent annual report on Form 10-K and quarterly reports on Form 10-Q, which can be accessed at HormelFoods.com under the Investor section. Additionally, please note we will be discussing certain non-GAAP financial measures this morning. Management believes that doing so provides investors with a better understanding of the company's underlying operating performance. The presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Further information about our non-GAAP financial measures, including our comparability items and reconciliations, are detailed in our press release, which can be accessed from our corporate or investor website. I will now turn the call over to Jim Snead.

Thank you, Jess. Good morning, everyone. We achieved solid top line results in the first quarter and made great progress against our key priorities. We are on track to drive growth in the back half of the year and deliver on our 2025 expectations. Our value added portfolio is strong and performing well, evidenced by our top line performance and our leadership positions in the marketplace. We grew organic net sales 1% in the first quarter. which is encouraging given the dynamic consumer environment. Demand for key brands including Spam, Applegate, Genio, Hormel Black Label, Hormel Fire Braised Meat, and Cafe H globally inspired proteins was strong. Our value added portfolio continues to be highly relevant to customers, consumers, and operators. Our teams executed well in the first quarter to deliver these results. And I'd like to highlight a few of the initiatives that contributed to our organic top line growth. In retail, focusing our resources on our flagship and rising brands has proven to be highly effective. We grew overall volume and net sales for these brands led by Spam, Applegate, Natural and Organic Meats, Hormel Black Label Bacon, and Genio Lean Ground Turkey. One of our most iconic brands, Spam, has increased households and attracted younger consumers due to our focused investments. In the first quarter, this included the successful sizzle marketing campaign, on-trend flavors like Korean barbecue, and new avenues of product usage, such as the launch of Spam Musubi, in a national retail chain sushi department. Our investment and focus behind this brand is spotlighting its versatility and potential for continued growth. The success of the Applegate brand in the quarter reflects our continued focus on leaning into our loyal consumers' values and needs. We understand that the Applegate consumer expects high quality great tasting products with simple ingredient statements. This is just one reason the brand is leading the way in their respective categories in the natural channel. We are also using innovation to generate additional growth. Most recently, we launched two new Applegate frozen convenient breakfast platforms with breakfast sandwiches and pancake and sausage sticks. This innovative and consumer-focused approach has fueled growth for the Applegate brand, driving volume and dollar growth across categories. Another flagship brand, Hormel Black Label Bacon, continued to showcase the power of protein meeting indulgence. After a remarkable fiscal 2024 for Hormel Black Label, we are proving that the momentum we are building for the brand is lasting. The team continues to lean into powerful marketing and innovation. And our latest innovation, Hormel Black Label Oven Ready, delivers an easy, convenient, mess-free way to cook bacon. Despite a challenging macro environment, I am encouraged by the volume-led growth from our flagship and rising brands in the first quarter. And we expect our focused efforts to continue delivering results. A key driver of retail's momentum is the recovery of our planters business, our largest flagship brand. The first quarter met our expectations with significant sequential recovery in the marketplace. The team has been taking the right actions to return the brand to top line growth with improved fill rates, distribution gains, and accelerated innovation. During the holiday season, our team introduced five limited time flavors to generate excitement. And these flavors brought a younger and incremental consumer to the snack nuts category. The Planters brand also played a starring role in our Here for the Snacks campaign. Seasonality for many of our retail brands peaks around the big game. Benefiting from the alignment that our Go Forward structure has created, we were organized to implement a scaled multi-brand event integrating planters, Hormel Pepperoni, Hormel Gatherings, Herdez, Holy, and Hormel Chili into a single campaign. This initiative represents a significant shift in how we show up in the retail space. We transitioned from individual brand investments to a comprehensive multi-brand media plan while capitalizing on a strategic partnership with ESPN. The scale of our relevant portfolio changed our interactions with customer partners. For example, we doubled our in-store display counts compared to last year and received numerous accolades from our trusted retailers. Looking ahead for the retail segment, I am confident in our team's ability to build on the momentum we experienced in the first quarter with our flagship and rising brands. The breadth of our portfolio will continue to allow us to navigate the consumer environment. Expect to see innovative solutions addressing convenience and flavor needs launching in the coming months, along with continued advertising support for our key brands to drive profitable top-line growth. Shifting now to our food service segment, I would be remiss if I didn't start by acknowledging the upcoming retirement of Mark Arata, our Group Vice President of Food Service. after an incredible 37-year career with Hormel Foods. Mark has been pivotal in the successful development and evolution of our $3.8 billion food service segment. And I know many of you have enjoyed meeting with Mark over the years. His passion for great food, his care for the team, and his accountability to our customers and company will be greatly missed. We also announced David Weber, a 33-year Hormel Foods team member and current vice president of food service sales will succeed Mark to lead the food service segment. I look forward to many of you meeting David out on the road later this year, and I'm confident you will be energized by his passion for the industry and for our company. The food service segments results have been driven by strong performance across the premium prepared proteins, turkey, premium bacon, and breakfast sausage categories. Products such as branded Genio turkey items, Hormel fire braised meats, and Cafe H globally inspired proteins delivered strong volume and net sales growth in the quarter. Impressively, premium prepared proteins achieved a fifth consecutive quarter of double digit net sales growth. Looking ahead for food service, we expect the team to continue driving growth through our solutions-based portfolio, the knowledge and expertise of our direct selling organization, and our diverse channel and market presence. Turning now to our international segment, The first quarter was marked by several highlights demonstrating how we continue to develop our global presence. Two of our biggest global brands, Spam and Skippy, excelled in the first quarter through branded exports. In China, the team advanced our snacking strategy with the introduction of barbecue bites, further solidifying our presence in the meat snacking category. The BBQ Bites deliver an everyday offering with on-trend flavors and are a welcome alternative to carb-based snacks. We also continue to benefit from our partnership with Garuda Food in the Quarter, driving our snacking efforts into new channels with plans for further expansion into new markets in the future. After a strong recovery by our international segment last year, we continue to expect another year of growth in fiscal 2025. We also made solid progress on our transformation initiative in the first quarter. Our commitment remains to transform and modernize our processes, our portfolio, and the way we create value in order to return the company to its historical earnings trajectory. Let me remind you, that this is not a cost savings initiative, but a program designed to generate growth through investments in our people, processes, data and technology, and our brands. In return, we will generate a continuous growth flywheel that allows top line momentum and bottom line returns. We continue to optimize our portfolio in the quarter. divesting a non-core sow farm operation. This was our last connection to vertically integrated pork, further demonstrating our commitment to reducing commodity exposure and simplifying our portfolio. As we shared in our last call, we expect fiscal 2025 to be a milestone year in our K&M initiative, as we expect to deliver 100 to 150 million in additional benefits. We are off to a great start in 2025 and remain focused on achieving our three-year goal. Before I turn it over to Jacinthe for further details on our results, I want to take a moment to reference my recent retirement announcement. As you saw in the news release, a search is underway for the next leader of our company. I want to emphasize my personal commitment and confidence in our ability to achieve our fiscal 2025 goals. We have started the year on track and it is my firm belief that we have the right strategy in place, the right focused resources, and the best brands, products, and team members to continue to drive long-term sustainable earnings growth. With that, I will turn the call over to Jacinthe to discuss our financial commentary related to the first quarter.