Hormel Foods Reports Fourth Quarter And Fiscal 2020 Earnings
Hormel Foods Corporation, a leading global branded food company, today reported results for the fourth quarter of fiscal 2020. All comparisons are to the fourth quarter of fiscal 2019 unless otherwise noted.
The impact of the Sadler’s Smokehouse acquisition (March 2020) is excluded in the presentation of the fourth quarter of fiscal 2020 non-GAAP measures of organic volume and organic net sales. The impact of the CytoSport divestiture last year is excluded from prior year adjusted diluted earnings per share. Operating free cash flow is also presented as a non-GAAP metric.
EXECUTIVE SUMMARY – FISCAL 2020
Volume of 4.8 billion lbs., up 1 percent; organic volume1 up 2 percent
Net sales of $9.6 billion, up 1 percent; organic net sales1 up 2 percent
Operating income of $1.1 billion, down 8 percent
Operating margin of 11.5 percent compared to 12.6 percent last year
Diluted earnings per share of $1.66, down 8 percent; down 2 percent to adjusted diluted earnings per share1 last year
Cash flow from operations of $1.1 billion, up 22 percent
Operating free cash flow1 of $0.8 billion, up 21 percent
EXECUTIVE SUMMARY – FOURTH QUARTER
Volume of 1.2 billion lbs., down 2 percent; organic volume1 down 3 percent
Net sales of $2.4 billion, down 3 percent; organic net sales1 down 4 percent
Operating margin of 11.4 percent compared to 12.8 percent last year
Effective tax rate of 15.9 percent compared to 21.0 percent last year
Diluted earnings per share of $0.43, down 9 percent from $0.47
EXECUTIVE COMMENTARY”I’m proud of how our team overcame multiple challenges to deliver record sales this year,” said Jim Snee, chairman of the board, president and chief executive officer. “We grew sales in all four segments, which speaks to the strategic balance we have built into our company. In several of our domestic businesses, strong demand for our products exceeded the available supply. From a bottom-line perspective, our experienced leadership team managed through the incremental supply chain costs we incurred related to the pandemic, which was the largest driver of our earnings decline,” Snee said.
“For the quarter, growth in our International segment was incredibly strong, particularly in China, where we drove balanced growth between the retail and foodservice channels. International sales of SPAM® luncheon meat and SKIPPY® peanut butter remained robust,” Snee said. “We continued to see a high level of growth for many retail and deli brands, including Applegate®, Columbus®, Jennie-O®, Hormel® Black Label®, Herdez® and SKIPPY®. Consistent with industry trends, our foodservice business showed declines this past quarter. As a leader in the industry, we will continue to support the distributor and operator community during this difficult time.”
“I am optimistic about generating sales and earnings growth in fiscal 2021. Our One Supply Chain team delivered steady production improvements throughout the quarter, and our production capacity for key product lines is structurally higher as we move into next year. The balance we have across the retail, deli, foodservice and international channels gives us confidence in our ability to perform well in many different economic scenarios,” Snee said.
“This most recent surge of COVID-19 cases in communities does create a level of uncertainty in a number of areas, notably labor availability, customer demand and raw material markets. Our company has adjusted to these conditions and will continue to invest to meet the needs of our team members, customers, consumers and operators.”
For more information, visit the company’s website.