Hormel Foods (HRL)

Nathan Annis Director of Investor Relations
Jim Snee Chairman of the Board, President and Chief Executive Officer
Jim Sheehan Senior Vice President and Chief Financial Officer
Akshay Jagdale Jeffries
Rupesh Parikh Oppenheim
Ken Zaslow Bank of Montréal
Adam Samuelson Goldman Sachs
Farha Aslam Stephens Inc
Heather Jones The Vertical Group
Eric Larson Buckingham Research
Robert Moskow Credit Suisse
Benjamin Theurer Barclays
Call transcript
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Good morning, ladies and gentlemen and thank you for standing by. Welcome to the Hormel Foods’ Second Quarter 2018 Earnings Release Conference Call. At this time, all participants are in a listen-only mode.

As a reminder, this conference is being recorded on Thursday, May 24, 2018. I would now like to turn the conference over to Mr. Investor of Director Annis, Relations. Nathan sir. Please go ahead,

Nathan Annis

X:XX conference Good second the results morning opened Foods’ We morning. to the this around market the Welcome call before Eastern. quarter our for released Hormel AM of XXXX. fiscal

Sheehan, XXXX Board, of review Officer today will provide If can Vice release, Chairman remainder opened be is each Snee will the relating for Senior site www.hormelfoods.com Jim Jim find following outlook. a for questions Jim section. and and Investors the Web for you our quarter, under our Snee, the XXXX. our the a Chief you provide President on Sheehan's The On the and of for receive line quarter, remarks. Executive segment's results financial assumptions Financial did at the outlook will not performance Jim and copy Jim Chief it our President detailed Sheehan and of call Officer. further of to

courtesy to As follow-up. limit one one the to please a with question other analysts, yourself

The and additional audio is be questions, An get number It into today to one back you XX:XX be to Standard welcome posted XXX-XXX-XXXX code Web will beginning year. are queue. AM Central Time. have archived our call is for at of the available the this replay and access you will also dial-in XXXXXXX. If site

need started, get I reference to the statement. we Before Harbor Safe

in our results for XX-Q It forward-looking. to ended or actual refer will XXXX be be more Some through making. implied we site. will Form statements for January may accessed materially can XX of the be from Pages Company's quarter the made comments on details. expressed XX, XX by Web And differ the those in today the Please

volume today, Discussion our non refer note understanding note in these corporate volume. over the and sales second results on the GAAP now and call site. non-GAAP excluding Fontanini. Company's detailed we organic the turn Craft will of release of operating press better investors located net our results Web please a on Jim the performance call to provide of Snee. and sales organic will Ceratti, Company Columbus impact I the Please Meats by as our quarter during Additionally, with acquisition to that non-GAAP to uses information as

Jim Snee

Nathan. you, report pleased everyone. morning. quarter our this morning, Thank Good I to am results on second

XX% our navigated and with this headwinds successfully per quarter team earnings Our record commodity up to through and line expectations. macro share of deliver in $X.XX,

in park The tax record allowed contributed to double-digit continued and model oversupply turkey business environment a balanced us the benefit mitigate industry. dynamic to Our in from results. our increases freight, also reform

X% were decreased increases a Company, of On Second Ceratti, quarter Columbus also increase. Fontanini. record on encouraged trends quarter volume and organic our by our grew, were figures growth and basis, portfolio. the supports the millennials. Meats strategic especially contract were X% we Recent value-added up offset seeing suggest consumption each were Craft while and store, many sales an a X% results Total our also for by driven Company our positive for across household but of we solid penetration by from segment the Turkey manufacturing in data flat. were brands with Many brands momentum, lower are many the CytoSport Jennie-O gains sales business. and sales are The recent across volume acquisitions third-party

Fontanini. Columbus to Meats the both allowed In retail acquisition commodity and environment Craft difficult lower generate XX% in with despite terms grew coupled decline and primarily of a our and value-added freight segment service portfolio a increased segment profit Sales growth. input us X% in performance, strong volume The increase, XX% strength foods of profits. food refrigerated to XX% a of cost on related

been has growth strong Natural Choice in with brand Hormel the marketplace food franchise service retail showed very introduction since in Our XXXX. operators Choice quarter. its gaining this share Natural and The

change towards with few brand evolved has consumer in the preferences the all-natural. years, Over past the

and We This snacks. and to-date quarter, an our expanding have our past product the brand. fully we re-launched The impressive. Natural broadened offerings converted to rev in under pepperoni into meat line category, lunch been handheld Choice the all-natural the while formulation have products results bacon,

to and have quarter our Hormel velocities. how time. service combined Food fire who penetration time Bacon expand and solutions is with household Hormel sales culture Café increased products, drive labor excellent example we operators and and One We continue partner deliver in-store of braised brand meats Choice great of innovative our innovation facing improved challenges. with of as strong this distribution, fully-cooked H to and grown a generated growth Natural bacon, to a all are growth over

We functions have global logistics and supply are in and manufacturing food the successfully our and marketing into of integrated into process sales chain, service division. the Fontanini's integrating our Hormel

we deli and Columbus In underway, in early reorganization meats the refrigerated of and is are businesses Both addition well and into to Columbus track foods on Fontanini expectations. stages integrating meeting Fontanini the the various acquisitions the of the are our craft integration, business.

Our placing in continued our while profitability on international Ready in Jennie-O of X% X%. Lower pricing sales expenses. a well. expectations. improved was in bird quarter. volume the store of results and was improved the XX%, by to us China sales drove declined whole Turkey growth primarily was profit this turkey segment perform gain our our by ground segment to partially sales Organic delivered distributional offset advertising ahead driven continue Jennie-O lean declined lower Oven of earnings as brand acquisition higher sales of China, X% XX%, related momentum, growth China International business to volume growth increase Ceratti. of XX% SPAM and

teams as as we As grocery products our grocery the this beginning results fiscal and foods specialty of merged reminder, products. now a of and report consolidated year,

Hormel product brands gains Wholly in Dinty as center and products quarter, the to single-digit as as portfolio chili and Herdez. by grocery as such and not healthy store able profit CytoSport, segment contract from delivering our The Moore to low from led emerging lower the CytoSport our to in For sales remain The down promotional continued grocery and Guacamole at earnings were due manufacturing facing brands contract vibrant, is and numerous headwinds. Total was CytoSport sales core volumes portfolio offset our our activity well business. growth, rate manufacturing and establish lower SPAM, such decline business increased business.

in Our team each the dynamics various understands the channels. key of

and channel our Our challenges primarily lie in store specialty convenience businesses.

and will us area brand. as are MUSCLE mass the the success food, having to focus work an to drug MILK for which of grow continue We be channel, in we

we segments will marketing the products provide and this to where will is While branding I and not more into expected to business the that CytoSport resources shift be, expect growth. move grocery return

Turning half to second our outlook.

We expect finish in a of our many strong businesses.

momentum our core strong return half the their to continue to products grocery and portfolio growth. second expect in into We

commodity compared For back lap we the Beginning whole annualized of the Jennie-O we earnings Turkey the in businesses declines the next in XXXX. last we store, our still half quarter, to decline added be will value not quarter in will first year. felt until year expect but the bird pressures to last business

exporting see summer first Switch other supply our are ground return and XXXX. the benefits To-date, in of returning Jennie-O the from Our we we for around successful Joshing Turkey businesses. outlook as turkey our in value-added remains this will the fiscal half China. lean growth of capture positive campaign reductions segment store new to been have Signs pork successful and encouraging we our to plant international world. Make the The continue supporting

our potential However, tariffs in offset lower meat export business. export the sales. uncertain on we for sales modestly performance on and are impact margin given impact expecting our China should of the the industry, the pork Favorable business

Our view quarter. has from refrigerated changed of the foods not first

Fontanini offset commodity profits we volatility. Sheehan retail declines expect pork and and will value-added service, food insights our and and of and to We Columbus, the freight our headwinds. in continue industry, see to businesses and where provide into acquisitions the hog view in of Jim

saw increase This lack in surcharges. per-unit in costs, double-digit diesel freight both due of fuel trucks an to the a of quarter, increase and availability we

work have $XX.X $X.XX with in are to an guidance per of XXXX half into Rising customers sales will XXXX. We billion our second mutually billion guidance impact our increases. costs to the solutions of reaffirming share. and our and to continue $X.XX factors continue these all find freight earnings account, to offset to to $X.X Taking these into agreeable of we

in As year. to assumptions to the last turn we think of fourth quarter about quarter financial the a cadence we fiscal the to discuss the see remainder time, the cost for as run-up key Sheehan were I XXXX. call the the dealing with higher information second over slightly half, Jim input we and key At relating in will this

Jim Sheehan

the X% increase billion organic Refrigerated foods million, were our acquisitions, through year. second were compared everyone. earnings X% Thank for up benefited Volume you, increase. was a the compared sales and flat. record sales costs. of last had as benefit growing from as volume Jim. for sales year. the of decreased innovation strategy billion, morning, value-added pounds, $X.X last We and Organic to X% a Net X.X well second input quarter Good quarter declining of $XXX to XX%

profits XX%, cost and long-term less the XX%. fresh the Commodity of were profits Commodity profits. sales the reflect Jim benchmark provision As refrigerated reported, pork profits of commodity were refrigerated to XX% in and the up procure foods foods’ total quarter while hogs. process declined below profits

to X.X% of last administrative and general selling, year. sales advertising, Excluding X.X% expenses compared were

basis. Advertising $XX quarter Excluding expense SG&A to flat compared last acquisitions, dollar was this million on a million year. was $XX

increase We in expect XXXX. by XX% to advertising approximately

employee growth SPAM, Jennie-O expenses increased higher to Choice. advertising healthcare. General related including primarily currently brands, key due expenses, including are corporate SKIPPY, Natural We and

the decrease XX.X%, compared CytoSport quarter. result made our primarily expenses Jennie-O basis remainder last a share. at about will year, of third costs. of The XX,XXX $X.XX XXX represents approximately This margins is As along employees lower Operating in a margins universal with you decline award impact higher the per point freight and year. were think stock to the corporate option to the

lower tax Our rate compared tax to compared to The $XX XX% year. year. XX.X% prior benefit provided million rate effective the was last

tax up narrowed between reform, have The our as cash improve flows we of generated rate for million, we we full is the cash XX.X% operating was and priorities related $XXX XX.X%. year and improved range to have our increase conversion As working at capital earnings of to higher Year-to-date, XX%. our communicated continue cycle. Day Investor to one we tax to be assess

our million XX components last last months, million three compared took for the three as quarter days totaled we to improved. Capital of out expenditures cycle year. the cash For all $XX $XX

million and per annual rate XXXth quarter, marked the in at the be quarterly is food a This We split include financial $XXX investments dividend. long-term of bacon Total in lower upgrades which expansions prices pay between capacity loans, $X.XX were safety. approximately second In other debt at we year, remain $XX the Wichita, of off stock We costs expect $XX.XX in our We quarter fund to and mixed. for numerous were repurchased Hog ongoing million. was to last of expenditures dividends strong plant, Input This share. to position Projects XXXX. in in investments. for employee plant, our an million $XXX the average $XX paid share. Austin to quarter consecutive debt. this price this short-term per the fiscal Melrose X% expansion than and plan capital million we year. the replacement

the for our to in prices low in half communicated we As of prior year. our fiscal single-digit hog is expectation quarters, increases back

to to focus exports domestic industry We compared factors; be export XXXX. X% strong, will on and be demand three continue USDA continue forecast up to supplies, in demand, total and capacity. Exports to hog

carefully. watching and pork pork to clearing Retail the export are we continue current Domestic market We consumption strong. see prices. at very steady, remains demand remain prices

to to year. supplies this X% increase We hog X% expect

to are total believe will cost. in industry value-added We the necessary to hog sourcing for the changes capacity vigilant the our well assessment the we to continue make industry, our pork We masked remain products over at of are possible supplies long-term. lowest and ensure

than externally, prices continue more to procure existing last hog Deli XX% were materials We facilities. lower the X% our offsetting year. raw harvest decrease in

half back volatile XX% last deli prices with year. X% to below fiscal the of levels for XXXX expect in remain year. line We pork were trim prices the but

year. We expect lower than was half. trim markets XXXX X% trim levels to to last and lower back XX% beef be the compared

prices than XXXX beef costs Market beef be lower expect year. levels. for higher last were to We compared to

the low in signs be year. quarter. remains storage is placements recovery We $X.XX single-digit early last pound the back increased industry. compared above half. expect shown starting beef cold levels at of months. quarter. trading at meat decreased around meat beginning per Inventory year-over-year to harvest the to in during $X.XX higher last per in prices XX% below of cost to whole turkey have the recent see of meat pound Breast now Turkey Industry the All a We're currently year. and birds breast turkey breast declines elevated have in the is

in We our are volatility. expect in of we Whole not do market the XX% pricing the back moderate XXXX a than turkey the lower the XXXX. for half expect current projections, year. constant of until bird in increases of first and quarter market change one Regardless is material prices levels, the fiscal prices

The I second the the operator to this manage quarter Rapid short markets turn capacity earnings and demonstrates the continue can for have call time, in our results in adjust shareholders. At term, through changes question-and-answer… to for ability over affect to growing volatility. the our but the will we


Thank you [Operator Instructions].

from question of first We Akshay Jagdale will take Jeffries. now our

line is go open. ahead. Your Please

Unidentified Analyst

turkey. on wanted I for [Lubi] Akshay. on actually is to question ask This

you seems ’XX be the making just for seeing there, Jennie-O on some could since most the quarter. outlook you're seeing encouraging that wondering business, and changed little more if positive. to a So what you fiscal in last exactly out signs the you’re in mentioned bit your it maybe what more elaborate I’m turkey somewhat

you last bit expectations time around. might little a have I think tempered

Jim Snee

difficult Jennie-O the And harvest, reductions. is industry Store they Our talked navigate supply are we business, X% Turkey about signs seeing but are industry to year-to-date. we continuing of down conditions, which

single metric. a we’re seeing meat We are digits, storage The down X%. which placements seeing cold down breast pork is inventories, low good

seeing are the On we birds other XX%. up hand, whole

these back the this positive business. believe year because lean that the through But indicators through that going market, first think thinking bird and the Jennie-O in whole up continue. run that’s ground to to we’re do Ready fairly value-added on for to some still an turkey work to have and this, well-positioned in turkey of our business then the our the XXXX. are of growth inventories in that early those doing And on we into the the half are we going decrease we’re still whole indicators bird XXXX. of of with As we're return course Oven half items, impact But

Unidentified Analyst

could the question cost the And situation. freight then if I on ask

think how the wondering cost of a going to you just could us some last you know been around, look that a you that on, you continue of at that So some mitigate that's pass to freight some I of that starting give I time impact. progress have customers? to were had be to challenge. And are on I’m update if at conversations going. mentioned how extent And your looking those been with some measures Thanks.

Jim Snee

As reminder, a headwind. been has freight is a

days I those agreeable solutions. discussions. minimizing miles, And And to customers a working we’re are our to thinking expect maximizing we’ve many half very second about delivery. few weight, need do We to And a different continue mutually solve ways. find into to it did with about will you how that our you We tell working and in open week the been customers XXXX. talk it

can we’re find course, we are pricing make And are as as that we working those solutions. taking situations to internally we are efficient unable there then where be. sure to mutually well as Of when agreeable we’re

into is half So plethora year XXXX. and that of variable here to But back again working of is that a it be on. we’re to the I things headwind continue think this big it's a going message


Thank you.

We Rupesh question will from now take Parikh Oppenheim. our of next

ahead. please open, line Your is go now

Rupesh Parikh

range. So guys maybe this your at to start a wide range out, as look guidance. guidance still you year, But reaffirm we kept pretty for you

you range? as of what I low versus could range, the the factors was So high-end curious, end at look the that just drive

Jim Snee

in to strong so industry; keep of we know that our it and of where happening appropriate what's range. the we is perspective, we about year, we reason second and foods freight felt to have terms the industry; the still marketplace; half terms poised the think there's the volatility that in a was very in half. From it refrigerated is, in happening the that second volatility volatility pork as of range kept The in what's

Jennie-O Turkey business commodity what bird offset continue expect will industry pressures, and to be whole pricing. value-added going store up we Our against be to declines; oversupply continue to to

happen Our international is we but well. pork, about in a tariffs little potentially our doing quite bit with talked and China business business what in could

number things a I mean what for up our so us there set And business. strong can there's half of out a and that's expecting in that second we're

Rupesh Parikh

And then switching to CytoSport. gears

comments specialty and you So mentioned in prepared of convenience in challenges the the your some channels.

challenges from as that perspective? is improve And those at within are to something was look more is what -- there you the that is competitive performance changing two challenges, the curious category channels? a I or plans So

Jim Snee

the it's issue. third the specialty out are. called C-store signs that's play out our because into a in quarter, we perspective, We recovering are thought C-store back our some we had the in to in still XXXX. In business, to from get still we And first didn't challenges in we distribution the do competitive recall From have channel, of party our really so life work we a that line. know second quarter the where that

online are competitive continue online. have messaging, is that The to structural channel channel that teams on probably through that experience and as sales of going effort right consumer to migrate we We're pricing. more move working on. in have making specialty brand more Our sure our working the less and is something digital our we sales that

grocery going of year, tell we the support. the marketing thing of did And at level that offer so into specialty believe would merge appropriate I products. we and is foods you to branding is, And other the beginning that

comps. that that’s you we But to mostly would the due improve results expect in do half. easy to tell I So back

healthy Our business back sustainable and it really bigger growth for getting is level. a the to concern


you. Thank

of take Montréal. now Ken of our will Zaslow from next We Bank question

ahead. please line is open, Your go

Ken Zaslow

can One on program, where are on is savings give questions. to what you that that? able right capture your synergies, to the is an us question. first two Thank is Just the where update technology now, you. the you cost be That's

Jim Snee

So structure all Glenn already are he Leitch heading our different We that QX, very number on we and around space. He's in looking and utilization, in progress. to a at told that fright, up we area, been supply co-packer had on working a and the four we're progress that in of focus labor making And chain you process broad get network. place. busy our We've months. of Ken, active things, for our consistency, in question operational working is has been had now

are we process still But so and not we’re progress pleased And we are we’re where progress would the in, be and in the structure still I we to need say, of methodology. making. terms with mode, the

Ken Zaslow

that parameters you when will by in impact guys give details, long take don’t us and into the How have that you you before inside you have XXXX? if even will will what will accomplish if when, --

Jim Snee

think into I what we insights we’re have achieving.

So we capturing. what we’re know

is for Cost the process us, for those something work want long reinvested a to numbers, going through it’s savings, I are make not a think is the that in issue had us to bottom that for whether that throughout as still us. is business our told being they we line to very time. are we've you, sure new we’ve

to to take We more are global trying it. just a approach


Thank you.

our next of take now will Adam Goldman from Sachs. question We Samuelson

line is go Your please open, ahead.

Adam Samuelson

still declines. more Is performance the internally? a that the with maybe down around first value-added, some about on just in levels mean between lower organic function I year-on-year. just would especially despite was price mix side some little products get the and your up trying your think am trying my color evolved a commodity to mix there? that And year-on-year more price of of be to harvest and question price declines, pieces guess on refrigerated, volumes I expectation the how the other I sell and deli just pork really

Jim Snee

seeing And we’ve know the we’re value-added changes for said that focus to And for with really commodity going out. still we term play in mean in some our be there's is on profits. time trend that and foods, markets I I growing think noise term some short sales. refrigerated the long

well. much Choice, which X, worried value-added what that's about doing the can strategic and food controlling than slower control, with of Natural acquisition business. new we’re still that of But come Bacon Some is the Columbus, refrigerated announced. capacity online And that's driving story doing our very And has going the we really we’re forward.

business. that with pleased we’re so And

by We driven the did say and was acquisitions. we that growth volume are those

out And that we’re strategies pleased those well. playing as are so

Adam Samuelson

organically And how then mean, where And on between the themselves they about I just think performing? those can you Fontanini. and been talk have acquisitions, we as about were Columbus doing

Jim Snee

I you and integration got process. integration expectations, stages those both growth our service. sales Columbus From piece that integration perspective, both and work running are of for up operations them the are several fiscal next that marketing integration would ahead They’re we’ve showing systems operations the of on And integrated, the and but year-over-year. in tell in the the XXXX. food a Fontanini, starting meeting will different of here then the and weeks. sales we’re be we the is in and a and marketing are process


you. Thank

take next Stephens Inc. from We will Farha our Please Aslam ahead. of go now question

Farha Aslam

on freight, And been ability question the packaging could various have is environment the really pricing mean, your implementing as protect successful of you margins? and parts share first you a terms business. to to in market pricing for commodity? in broader look to current price How cross your us you I question, with of My focused

Jim Snee

to happened business are days. last strong like end in food different feel of to that the we business, and supports as probably the more position. we our take XX our that price service there’re very channel; pricing on a year really business, able are Just food tail side position reminder, a XX retail we retail we think be on day service still the in of the appropriate. ways probably lag; we to when And towards And like in both what

seven faced that it’s were to largest we SKIPPY, pricing hash. If with think were through. get inputs, not six on input easy chili, we of And Guacamole, but we pricing about able cost how you stew, significant our Wholly increases, took in

And it's some as that the we’re up then certainly achievable. but that were stew, that and can out think is hash. it items wrap not you showed I the Wholly, growth So see about plays of we easy talking how second chili, quarter,

appropriate have when that believe we we power So pricing the necessary.

the freight costs. think fact wouldn't of side On at right ways in that I the of the we’re But that the going freight all to say the business, recaptured a we’ve do way is myriad it different it.

Farha Aslam

simply then specific you lower the of Hormel, a or something very And quarter? purposeful that declined contained Is is Could in contract your question. manufacturing? will the for that continue exit a address margin factor current business? Is that be this to

Jim Snee

in what’s contract environment. challenge. tough quarter. competitive And It’s continue about We a all we be contract Well, we think It think see a that environment. to -- our and more manufacturing the we’ve for us. to experienced it’s happening business is for that open manufacturing play this it's And play is of capacity a It is I us. been a not pretty I know strategic it. going

to we up added is Our our capacity number goal. that’s sales, our goal it in of all one value want our and fill with

ebb and impact So quarter-to-quarter do see this has an it it from and flow from we year-to-year. quarter, and

Farha Aslam

a not longer significant factor term? So

Jim Snee

am I sorry?

Farha Aslam

specific significant it’s term, longer a issue? not factor So quarter a

Jim Snee

More time. adding quarter see and we do ebb issue, a flow of specific it over


you. Thank

Group. Jones The question We from will of Vertical now take next Heather our

is line go please Your ahead. open,

Heather Jones

half? I I deli year-on-year, prices was you the to expect say second flattish hear that for did wondering, you year-on-year flat

Jim Sheehan

Heather. correct, That’s

Heather Jones

the up are the general for inventories was you, in had pricing this you and dramatically, deli -- half, year, much last higher not And second this just but year.

all you why are to expecting as curious that? Just

Jim Sheehan

lot year. on It’s lower see average. volatility last average, them year. They of an in than We’ve are prices right the relatively we now and deli a flat last see to

been So at estimate are have this very these markets our again, time. all that's best volatile that

Heather Jones

down. the And I lag. those on wondering, pricing trim environment ability deli consumer of what the on the on sticker retail like me, far given mentioned pass and have you’ve I way your if was been pull you to please What pricing some to success level, be this mention, the and on quarter, you there correct understand, all a I side. and I’m cost you the at tend far retail XX understand, of And the in misunderstanding experiencing day through. place? keep But experiencing pricing some service food and before and way have cost you is out and the given the up so side, back But avocados? with and side, keeping And thus input from

Jim Snee

the on service business, Heather, we you of and food pricing you in service being through, do as would our in side well. business, that. really of the food a I some cost it talk But I some think see pass about tell we believe have we stickiness the

we to that in took many on. volume On pricing And of of side the the of strong we to the those business, able at brands we growth the retail have that on increases seen been price saw hold end we've last year. then also,

the some Wholly we’ve seen chilis, retained Guacamol, pricing nice we have items, and volume has So stew, growth.


Thank you.

We our Buckingham the Research question next will take Eric from the Larson Group. now of

go please ahead. open, is line Your

Eric Larson

business, on again. question the a Just turkey of the side

back and Jennie-O again the saw major think need think -- I negatively reinstated programs. some going your I of last and months up you to your to this off that it we’ve placements? see here fewer that’s And most business on came we recent still gets it what down just is thought the track? maybe need Turkey What supplies of -- second, we do what -- come took advertising lot your we to see that cutting to now year cold pull And -- storage What that Jim for you’ve that again longer just back than of dialed extended is in two out. and in turkey you impact your do --. we’re declined

Jim Sheehan

would things. I of look couple Eric for a

which X% market give number, pull situation, somewhere the now that we healthy of pull in a placements, tell getting a the good you there. indicator. meat, the down we’re in $X.XX talked that's general it’d there. that still level breast up to seeing $X harvest The first quarter. on And the see bird is be X% Breast decline real bird drag about, XX%, I drag becomes now, to if meats, at probably to the whole going would We’re whole were again. is a X% go think as placements a in What’s until right is $X.XX on I market inventory is this pricing us

that certainly we things good the indications are right some see turning direction. So

Jim Snee

focused also with our ground And at deliver. Ready And we lean I you're can Jennie-O We to seeing product. with on turkey successful mean are back the very are results Switch know the going correct. be and portfolio Make campaign. we we've Eric the our that Oven value-added

So things, that what in growth our in half us we’ll all of to have the really is concert, lead XXXX. of first see view

Eric Larson

really did on I it there. particular And improvement lacking this? another guess, player you And was in said like, guess very doing seemed the have again. guess I'm the you And base it's a just mean, know one it just quarter, up, a again. you that then on there Is oddly issue dynamic. I seed just that's that what your just like it issue surprised touched I first I that whole maybe with was out me we're some reverse seemed CytoSport to and quickly I going follow competitive -- already. it --

Jim Snee

decline, we we on saw and aggressive But very saw aggressive one is the be that we we a competitive most the share sales take marketplace. recent in category In mean, to because had saw I growth. itself, the competitor report, activity. very There -- some

great work partner first distribution still quarter we'd And with we got solved did know In you're the like the we so we turned feel get have corner, did but a quarter, mean We've trend. to haven't second maybe yet. And the not we Pepsi, to distribution but our that it line. that continue I right.

are working deck And in the a on over terms lot grocery help messaging, distribution, fronts believe of It's so pricing, and products on all branding. from will the specialty we we of hands long-term. do transition and

Eric Larson

other questions thanks. Thanks know so in the guys. Okay, get queue. I I'll back there’s


you. Thank

of take question now We Credit our Suisse. will next Robert Moskow from

open, Your line ahead. is please go

Robert Moskow

the in math of Wholly wrong, unless you quarter, mentioned But and was stews, on grocery price handful doing down for it questions A here, organically? products Guacamole pricing increases your I'm the the SKIPPY.

Jim Sheehan

it Yes, CytoSport. driven It was, mainly Rob. was by

CytoSport got of specialty now we've which grocery remember, products. consolidation foods, also is the and So

Robert Moskow

that, ex traditional you grocery retail in up like So your think was pricing division? do your

Jim Sheehan

Rob. products I our in say grocery single correct, up was low That's core sales. would digits

Robert Moskow

But sales, pricing okay. In unclear…

Jim Sheehan

yes. Exactly, yes. pricing, And

Robert Moskow

I steel do to some again? through, flow a need you would in sense earnings exposure. do whether to then cost that when you And and my preview. was can more will start some math Can pricing trying you have give us of

Jim Sheehan

steel runs probably goods. X% the business, it to cost our of on For X% impact of our

the for to expect coming We pricing And on this this a looks it’s have balance it’s We impact pricing seen see going not from like at of impact. point, be year. don't to China. product

calendar Our just would in that supply would be basis, The is XXXX. the dependent China. increased we soonest coming a not product increases, see chain from on on regular

Robert Moskow

seed higher And cost a appear different just a -- be your doesn’t ride that would outlook thought question, those costs for raise I start -- though? seed turkey. to in to

Jim Sheehan

some driver seen soybean deal. two through the the cost of XX% And There main and in in second XX% purchases. is because volatile pricing U.S., forward the delayed are in been demand. weather the seed No, derivatives America for hedged higher We’ve XXXX and we South we half between some strong has planting half. so and have higher of

Robert Moskow

last And question. then last versus

this of of that you start back the one competitors April. because cold business protein One And a all? this was again? about impacted right Has in weather thing was year, at a think your and comes month do your slow to talking grilling it season

Jim Snee

impact, that Rob. seen of haven’t kind We

Our mean, our would that segment healthy. to it comes it of be, value-added one might refrigerated I I short-term business then in is back. a impact suspect, be impact and continues foods our there And


you. Thank

question now Benjamin of Barclays. Theurer next will from our take We

please Your ahead. line open, go is

Benjamin Theurer

what question. following you’re ago you’ve year a your you've out up considering Just on mentioned laid quick non-strategic that that Basically assets. priorities. about a And one divesting was that of with

the in got the stage Now, approach sales, at taking performance a that at strategic ongoing potentially degree if challenges that able around? business? on What's on business that dilutive basically I and to the you’ve table sure a to get more your mean, a medium-term something question the just in CytoSport, But going the look certain past. it’s to here. sold to Is considering from at turn take category on the discussion for which you're is under the the in be some not

Jim Snee

great our portfolio still we trend, had challenges? Some on business The Have headwinds we outside to our addition it’s business. and in finest absolutely. a like pork is control and the some control, some

those a appropriate think, businesses our take I healthy and are will still committed from making that make no for sense, good to sure I longer we entire And the a more that portfolio holistic review. strategic we approach, it's action. reviewing mean

a this off our say positive backed is and CytoSPort perspective. portfolio. haven’t on point very we at addition very business, that trend I still But So strategic would great to

Benjamin Theurer

into then actually second have integration more of might And steps? And strategic quarters -- update that coming same modernization? over you next the on term any if goes do for planning focus think supply medium direction the chain on challenges on your outlook that target? arise you on where topic, the the What’s

Jim Snee

a business has efficiencies. amount said, and approach had looking role for there. busy We’ve been chain, been very working going supply a global that probably unit disproportionate across utilization, about Freight, improvement labor for at getting he our as broad of consistency from obviously, they’re initiatives, I down for looking all facilities network with one operational a different got and we co-packer four a we time the as opportunities on. of to months silos different So has Glenn now into the in number a break Leitch of

chain. working again throughout Inventory focus. with and customers. supply the moderate to key He we mitigate also our miles, minimizing work volatility As at management a is on weight is maximizing looking ways

is we to without a to on. across certainly number that things thing he's for one have there are having organization. continue going finding base of chain find found wouldn't us, working they’re And that that the supply and efficiencies So our this

Benjamin Theurer

conversion then -- that optimized of because mentioned so at that. would work cash longer the just obviously important acquisitions So just and focus, went that part basically the be Why, you in up, you’ve you is that get issues, is just in issues? sourcing inventory assets? here. it regards was and yet What you’ve there an you cycles not mentioned -- idea, inventories an Or then to inventories? to with a acquired what to mentioned if because were And some and it’s have just

drove understand the the to from -- increase issues just acquisition what the in aside question? level, So that's the inventory, on basically acquisition asset

Jim Snee

three one the was our the priorities. driver as businesses. taken our that main past acquisition The identified days of We've of cycle. We out of

number with on inventory holding, of we’re of our we've of that progress manage accounts the days advantage our turning receivables our pleased to been making payable So also we’re the and very quicker, taking ability better.

the on progress pleased we've cash made we’re So very improvement in cycle. with the conversion the


The from you Group. Instructions]. a We’ll of take Vertical Heather [Operator Thank Ms. question follow-up now Jones

please open, line Your is go ahead.

Heather Jones

quick Just had question on turkey. a

you and those inventories relatively bird are whole So mentioned heavy.

historically, getting weighing the to the strength in oven see in whole all? had On turkey. what and to AI had they just distortion value piece starting close added there bird what pre-AI Are were all down? Are you’ve to in side, and the close and of the return a of before that that’s piece margins things profitability we you business it’s ground

Jim Snee

the business as So the value-added cycle. continue on is now to I weighing we move you is the down. said. whole is impact really see the to we business bird mean, what it mean, expect through margin I improvement right


you. Thank

now of ahead. go Please up Ken take will from a follow question We Montréal. Bank Zaslow of

Ken Zaslow

the about how little turkey one Can frame outlook you -- And you you questions, the is think last implied guys assumption? on growth and changed be that I you there Is outlook would think your back bit. it? other XXXX discussed the a Two businesses for you or that XXXX? long-term largely anything rate. that guys approaching fair Is in still a quarter your for

Jim Sheehan

we the that the on focus tell and we’re strategic the started making process we always we earnings acquisitions, Ken, like XXXX, still yet. about optimistic about those we've formal we’re think created power investment haven’t you the CapEx through very feel we But strategic that As the imperatives.

and working a grocery continued in as impact the role. of vehicle a products, value-added core and for growth continued refrigerated foods, food play new the sales, deli In we positive foods, strong The growing group, in both will expect retail our going momentum refrigerated For service. value fundamentals grocery we’re to in model and added JOTS in CytoSport our portfolio, the Ready and that to then be GP whole be to to ongoing ground recovery products, continue initiative. lean also. our on turkey, an products going back turkey, get Oven is track

capacity. international China business. very see much-needed that to plant And do I'm So adding The is in The our return in new growth healthy. we business XXXX. still the is optimistic about

well growth. are Our in exports good addition of strong. going branded Brazil very volume is Ceratti The with

forward So we’re as we optimistic business going the into XXXX. head about

Ken Zaslow

about from can there of accretion the accretion contribution but I them? each acquisitions, of And you how be the much would think said in just both remind both you not them. us them? one Can of you XXXX talk from

Jim Sheehan

$X.XX… be We’ve Ceratti in going $X.XX accretive said basically going Columbus was Fontanini -- to be by to XXXX and was

Ken Zaslow

was from… XXXX, nickel thought And it up was a there I

Jim Sheehan

XXXX to haven’t -- yet. anything $X.XX said Ceratti Columbus will accretive and be $X.XX will we really

Ken Zaslow

by accretive reason a wouldn’t region, to that parameter the with? start be there Is nickel a is that fair

Jim Sheehan

be evaluating the will business, accretive. We’re it still

be. We will accretion haven’t final identified what the


you. Thank

a from Credit follow-up Suisse. of We Robert take will question now Moskow

open, is go line Your please ahead.

Robert Moskow

-- much profit Can it how close quarter. operating was in you a profit give sense us refrigerated, it the to added, XX% XX% well? of as So acquisitions to added

Jim Sheehan

Fontanini. obviously, Well, positive on it impact had I a business, both mean, very Columbus the the and

very refrigerated. So still I it an did a without impact have addition. for but -- a positive was it Refrigerated up was mean, them

Robert Moskow

the And last then just one.

that into have supply I But you keeps chain logistics Are commentary popping up. reinvestment think in to the reinvestment in and what as chain lot things of there the that? very word a been for and you dig that efficiencies. this you've your cautious supply finding about expect and consolidation, you need Jim savings labor, is deeper from like mentioned

Jim Snee

lot evaluate think can into our help maintenance clearly, CapEx happening deal with structure need to course we're business distribution investments aligned have continuing supply a an From and that don't to chain -- area supply to us. of be that we're these a going automation of have changes located. for have normal as and do we where of will we acquisitions some the business. our to make to automation think areas really our what's significant come forward, doing be, We needs. are distribution great that with, is, where level. are some coming drive a chains But -- may issue the an we're properly to perspective, I continue And it's the it that that to we're them. as is From just work to sure just is going about value-added see going their is going to our of the our investment see force, perspective, capacity change But future. the with We one labor to


to our are there I appears or this closing speakers like conference now to It at no further time. questions, for back turn you. the would additional Thank any remarks.

Jim Snee

Great. Well, you us thank all for today. joining

as announced, We balance and our ability confident are in to the well our proactively continue year. challenges the as record manage earnings of strategic I'm with our direction, the to and pleased for facing this us priorities

key these and overcome team talented drive our and us for Have We in a will place continue that Memorial have deliver shareholders. weekend. to an to Day experienced safe allow our results challenges, growth


concludes gentlemen. you, call. ladies That and today's Thank

You disconnect. now may