Hormel Foods (HRL)

Nathan Annis Director, Investor Relations
Jim Snee Chairman, President and Chief Executive Officer
Jim Sheehan Executive Vice President and Chief Financial Officer
Tom Palmer JPMorgan
Heather Jones Heather Jones Research
Erica Eiler Oppenheimer
Ken Zaslow Bank of Montreal
Peter Galbo Bank of America
Adam Samuelson Goldman Sachs
Michael Lavery Piper Sandler
Robert Moskow Credit Suisse
Pooran Sharma Stephens, Inc.
Ben Theurer Barclays
Jonathan Feeney Consumer Edge Research
Call transcript
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[Call Starts Abruptly]

Nathan Annis

Good morning. Welcome to the Hormel Foods Conference Call for the Second Quarter of Fiscal 2020. We released our results this morning before the market opened around 6:30 a.m. Eastern.

receive on of hormelfoods.com our Investors not can release, under did section. it find Web you a the copy you the If site at

for commentary company's President regarding Snee, Jim call the Executive Sheehan, the questions COVID-XX current future response of an remarks. performance and Jim review future of is line each overview our Officer. and President for financial Executive the Jim the commentary pandemic, Financial be will On the and in today Vice Jim The Board, will for and quarter. and will and regarding detailed condition Snee and current provide financial Chief Sheehan Jim condition. Sheehan's following open of Chief segment's operating Officer; company's Chairman results provide company's the

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

questions, you the into have welcome If back additional to get queue. you are

call Central to code year. replay It at site audio the access also beginning is of The this archived for (XXX) and and Web will is posted be Time. number Standard will be available XXX-XXXX, An today, our XXXXXXX. a.m. one XX:XX dial-in

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

site. a from and the in addition Some morning. the included Web XX-Q risk actual or ended in for in this accessed X-K in XX, Pages made related XX to be to to be XX Form we files be Those on supplemental Form today differ to making. materially the company's of will quarter COVID-XX our fiscal factor XXXX, the by can will the our pandemic January those statements results comments forward-looking expressed may implied Please refer

located sales, of in performance. results non-GAAP the better adjusted information detailed company and pretax investors our diluted company's is site. per release cash adjusted organic include our share uses Discussion operating These corporate operating Additionally, on Web the provide earnings flow. organic a to press volume, free on measures please earnings, note non-GAAP with non-GAAP understanding

now Jim I call over will to the turn Snee.

Jim Snee

Thanks Nathan. Good morning everyone.

take the up opportunity the express and have manufacturing the appreciation and to off, be to facilities this my to work workers are sincere showing want purposeful should This doing and they appreciation for my they First recognized industry. gratitude. I heroic everyday most in across sincere food essential

to showing healthcare I do, responders also food they with of who commitment of thank whether work stores, first or want are And pick-up. employees big in food delivery grocery workers a the serving and acknowledge safe. restaurant industry for course, the pantries, or a the keeping to their all takeout, curbside you patrons everyday us

especially has in this remotely. our our who Throughout a team keep not priority members pandemic, number position to safe, those to one work been are

leadership have we tirelessly for team all team the measures enhanced including ensure and place, safety in legal, COVID appropriate operations, to control, plant Our members. worked human resources communications, personal quality R&D including have protective equipment

wherever possible, Temperature more high areas, and work speeds, each distancing access to facility wellness on improved COVID-XX providing extensive line common just and and remote reducing social measures of and guidelines new production screenings, revise frequent workstations, of areas touch carpooling, scheduling, throughout reconfiguration testing. opportunities disinfecting

to also about I all in team continually safety this are our employee put facilities. team's in to ways our first. ability we enhance crisis, the public am to and safety find our innovative amazed have Throughout transparent management we been doing with

facilities our an safety communities call our preventative that also program measures, campaign where we and we developed A and awareness at COVID "Keep production of reinforces part measures live the in leading industry work. have As various we Out."

unprecedented quality time. in role food this branded play global we a providing during food company, high As critical a safe,

I'm industry. very this in changing reacted has past weeks in new members our will several some to how the of rapidly and our likely As over and usual not we dynamics proud we time. business the all up be all it been have know, normal team as stepped for

quarterly Before for weeks about really the the I to approach I me. to last tell get a our out you that into want over stand moment results, several take few things a

I were so told this following our makes really of we made team examples for us that and the what company are uncommon.

heard In progressed thousands we to and would beyond of team chain senior of our was production members. team, of we never the into and between As did decision, shift these Balancing we that had not going it right examples jobs team effective many most before. initial but stages could relocate workloads done our to or the changes the supply plants, day, across our the jobs decision. was the done. been we everything cases, be Each plants agreed protect manner can certain leadership pandemic, I where above cost of do the

shareholders. strong and commitment Because cash uncommon Another strategic stable suppliers, of our our our not what time. long-term is example for flows of making during we balance will this neglect to any team members, makes company investments the and uncertain decisions customers sheet, this best

capital because isn't a in now. right needed have additional of slightly some the cases projects completed delayed capacity our have review We comprehensive and project completion

Orion. continue we to One investment performance. that However, will such forward our is move enhance investments many with long-term Project

update go ability Project allowed financial we live and team's keep on to has us June. our made to and Orion the decision have to efficiently on in system effectively Our track remotely work

I know committed our everyone to important is on cutover success. making finance a the team

system live our will we benefits from confident, the system our in from seeing are upgrade HR see as go are we completed January. financial just We

helping areas I us take to also weather storm. want the to key a are minutes few highlight that

First, been been decisions this not years at level. executive or manage five operating we one supply from has an four instrumental supply crisis our chains. we ago, The same three pivot different way were us [ph] helping on, early the quick point made chain could creation in if in made of [one-off] have

us to the quickly grow positioned years capabilities made ecommerce several Second, significant channel. we emerging and in team, in our investments this ago infrastructure

over IRI and the purchases growth are During categories significantly were up our across store and brands perimeter. and category center in outpacing market share both quarter, our many tracked capturing XXX% through

IT to much easier the enterprise entire platform otherwise year to have coordination one transition Finally, would been. our virtual late decision than it made last

While of before transitioning Services serendipitous, seamlessly our pandemic members decision in of lot team thousands IT the credit a our deserves for was Group to week. to transition right than a working less remotely

have that at many including well sales quarter, economic a advantage the perform results our allowed looking different Now is to crisis. for we the balance in the situations, our competitive built us business current into has purposely

sales We Organic with increases four quarter, volume the X% and three record For for delivered an of increased our delivered quarter organic sales. volume and increase of X%. X%. in segments the increased sales X% increase

perspective, retail saw center From a has during total as of channel waves brands. of in the XX% nearly our the retail In unfolded. all quarter, first different pandemic for we our the demand businesses, wave, saw store sales demand we increased tremendous multiple

most assessment, to stocking as consumers initial we progress, Our were the continue double-digit increases. week's but up, see sustained

demand perimeter shelter The store. second across from a enacted of consumer took of were the across shifted perishable to and place restrictions the wave dining products the country in purchasing restaurants place more and

perimeter digit We sales to rates year. last see double over at increase continue

products. of is making an repeat consumers in we've that our as brands. experience and seen about in the proud of new of leading This escalation What is number are branded enjoying a repurchasing demand, purchases our I'm purchasing number our are our important the buyers the particularly increase new and the indicator households using Throughout large buyers brands. products,

and company by total and the available, we perspective, encouraged retail a the private brands. to small also channels outperformed namely I'm that our team's channel. share label, category, From large capture, in brands ability were other open significantly

Our ensure on brands also our shelf. our sales is products are teams capture share the and ability operations a to testament to supply to market and chain ability to force. our direct And

is restaurants, United this dynamic of is One that is seen happening service venues to across and struggle hotels States as survive. food see other service us of It's of affecting could food the close across from a many what pandemic to distributors, estimates of crisis. result the I've industry. heartbreaking thousands restaurants the all

how neighborhood live chose work these restaurant story open are members better entrepreneur behind restaurant. make to unique why closings a restaurateurs of to their and Many and community they and to trying a tragic. each are their these place Every of has

operators' distributor This our and divisions expectations. program our help food offset to partners service to service cost. their efforts. Hormel in a with successful industry. needs doing days We're to our part rebate was the exceeded the accolades a been also food of our closely help for very food program their recently crisis, offered received Within have Food support working Our Service Group

great now. more talked how we've a is and true no finally, force distinct advantage right And sales a our direct about time is that competitive than deal

take to the Our virtual sales and helping curbside class in lines, out with and operators adjust on best pickup been guides front delivery team kits. quickly has

the being to supplier only with a personally in time. restaurateur And this check difficult sometimes during

industry, decline in saw in others we the starting sharp service food late Like March. business in a our

For quarter, our down sales food were enterprise the XX%. service

think and Store foods sold Jennie-O about Turkey you service refrigerated food our it As the business, is through domestic primarily sites.

business segments, outbreak, and of our casual universities XX% schools, and both and approximately midscale lodging, in to such are operator dining, the and Prior service as our represented segments in a key food colleges of sales customers majority healthcare. K-XX

Even timeline third place segment orders though the have see is coming is quarter, we are businesses. to Each each picked service in in recovery And the the shelter different different of restrictions. during service dynamics will food food pandemic. across early experiencing it a our out up starting

pieces. earnings that financial per provide supply mention related more moving investment the losses increase costs per a and want in share chain But Sheehan COVID-XX. earnings details fully Jim perspective, $X.XX; to of do reflect I we $X.XX will to From share our delivered of

shifts The dynamic each higher Namely, operational food was the segment. to demand similar costs. in at high retail quarter service during level from

However, to experience And some I did circumstances. areas. each want highlight unique segment those

very peanut Grocery chili. products, from sales Organic saw with some of sales increased increase the delivering We every and butter growth Hormel including growth and and volume XX% increased nearly XX%. SPAM brand, products X%. strong exceptional increased double-digit SKIPPY family products volume X% organic

during quarter limiting production and and product assortment volume to focus grocery and high items Two our success keys to teams customers product conversations the regarding sales the with frequent was on priority, our marketing availability.

to shelf center need as been. products their important for millions families. know store quality ever consumers or products they've are affordable now are unemployed, who perfectly consumers for With high Americans of We as value our brands stable suited

for CytoSport the mix than products Earnings sales Jennie-O segment food increase. up commodity Strong with and key the the XX% volumes up offset profit and despite in more delivered to Store service. and for double-digit increased whole-bird quarter grocery Turkey drivers retail, XX%, a of Strong sales last XX%. strong divestiture year. of improved a were volumes XX% declines

distribution made pandemic, marketing and position succeed. group sales the progress puts strong Jennie-O them excellent The a which regaining prior in to to

double by the growth. increased Higher sales turkey sales key ground to operational lean drivers digits. Jennie-O quarter, supply the across are and chain the During improvements earnings

International Segment volume X%. food affiliates. branded decreased higher X% China business. offset XX% due income SPAM our exports profits increased and Branded in to sales from margins primarily increased export and increased declines service

pleased businesses to and food path and I'm our retail our now support reopening. on country fully report the are for continues running its plants up operations China to service as

service very prices, are seeing higher to saw food but for China China necessary is offset Our off taking and pork pandemic SKIPPY actions lows during pricing improving we through cost the the in we working retail. refrigerated The SPAM, business strong products the team at increases. demand our are in is and

was sales and Hormel Label and Applegate volume Hormel declined organic down Refrigerated and Columbus by flat natural organic was products led X%. volume organic such was demand as grab-and-go charcuterie Black and increased Sales X%. bacon, products, Retail foods pepperoni. X%

searching fit the marketplace in to Brand a seeing unique acquisition needs been replace can We Smokehouse I've Lloyd's channel. during and also service are barbeque One finalized of like Sadler's in The pivoted Sandler's majority the food which consumers quarter. trend for impressed team that products of in are Smokehouse sales has need the meet by quickly their way production Sadler's we the restaurant that But experience. growing into retail. the is the this perfectly.

to capacity our fact, Sadler's have their at at Lloyd's and for In the been products. demand meet lines retail operating

the Our double-digit business food declines during quarter. service saw

thrive confident very service look food will are handling and products as that operators of we precooked, preparation up, as and our product reduce However, products. lines simplify industry starts to the to featuring open pre-sliced pre-marinated

of can charcuterie were and flavorful between consumers customer see searched experienced Columbus that food We for business these and blend food retailers behind deli grab-and-go to glass service. as unique in a sections the store. prepared like Our retail the Products performed areas other well and the businesses, many to as labor declines redeploy products. closed dynamics

service foods food Sheehan at quarter. experienced lower details down Jim during will and the refrigerated we Earnings to plants more cost provide XX% were production volatility as sales the during paused higher the quarter. regarding input operational the costs team two

forward, look guidance. food by input withdraw service, supply The uncertainty sales in areas, retail and earnings reflects are withdrawing consumer and behavior we year As and chain created our several disruptions. volatility to costs full including we at our and COVID-XX key decision guidance

indicators and in and team is investments these the guide Our months. focused our on coming weeks decisions to

paying attention we consumer portfolio. across close to First, behavior entire our are

We are the watching with as consumer household such buying and repeat retail metrics patterns penetration in channel rates.

place watching and consumers industry. reengage restrictions service how also country and across the We're the from emerge shelter food

and the and industry, we're other K segments addition traffic, universities, reopen. as food education how In to in monitoring XX observing lodging, restaurant through service colleges such

material seeing in we're We're also actively volatility managing through raw the markets.

the assessment across and in of periods hog processing are creating and industry of the Jim mentioned, industry input detailed the costs. in Sheehan operational of I a pause pork facilities dramatic swings will recent provide As start-up

in in demand. I supply necessary we and to along material highest pricing, adjust markets margin compression, as may short-term the raw rapid have but confidence pass changes ability our or expansion the to experience the

we while we disruptions some at safety And a leading challenges Finally, have operational are basis. industry of due daily to our operational experienced implemented through we facilities on strategically measures, managing have COVID-XX.

to chain costs. These operational led supply have incremental disruptions

million to million costs During approximately team weighted we costs of to volumes. $XX by the our million member the are lower to another be the measures enhanced In incremental second bonuses, safety costs and $XX these temporary quarter, primarily $XX to quarter. and third that second expect production half, will related incur increased

to I emphasize want closing, In three points.

First, company for built was our this.

financial and sound this right the thrive management dynamic We have in the to strategy, best business class fundamentals, strength marketplace. in

Second, position. not strong our anything we will do to financial jeopardize

storm of be well-equipped stronger We to because weather and are this will it.

partners was causes. its our best donating to we food safety of supporting beginning inspired has goal perfect with that to meals the on we doing of everything ensuring our of millions America of inspired are Everything food. said related purpose and have do to people, very hunger from to do Third, our this people shelves our and dollars millions is in alignment to customers pandemic, to From right.

markets commentary an At this turn I key financial call relating input regarding Sheehan to information on financial will position. discuss quarter, update time, Jim to the our over the cost provide to and our

Jim Sheehan

Thank you, Jim. Good morning.

$X.X were billion, million up decline record Net sales second a international Jennie-O profit increased sales to products Segment more and turkey Organic grocery for increased X% the to as in offset X%. X% a store quarter. than refrigerated $XXX double-digit growth from foods.

Pretax $XXX million down earnings were XX%.

CytoSport losses gain included the X%. tax rate year's from to XX.X% effective tax investments. pretax earnings rate a This declined benefited adjusted year, CytoSport gain compared significant year. last XX.X% The last on on sale. decrease the Excluding Last was

due was to the Lower year from the million down to were primarily was quarter was sale. increased for last XX%. last per per share expenses quarter general gain and administrative Advertising $XX Earnings year-over-year. CytoSport the share for flat earnings year. X%. $X.XX expenses Adjusted down Selling, the

for unallocated pretax the quarter primarily The the was increase from year. gain investment in lower expenses $XX related to due million $XX million. $XX Net to results and million last CytoSport increased

Operating margins to last were XX.X% compared year. XX.X%

their ensuring Additional professionals to Both the included related and commitment production our production employee safety our safety. and investments COVID-XX bonuses. costs reflect in professional measures import

favorable liquidity advantage provide strategic access are considering take to opportunities. registration COVID-XX. The compared stable year. cash and and rates the our flow ample in cash company opportunities shelf more market, stable continued We to operations free the debt quarter statement near-term impact to the than flows at prior to recently Cash the generate of despite strong doubled flow to of from interest renewed and

rating flow The investments shareholder investment as along company's long-term of strong the risk, sheet cash times grade balance make well with as us and credit allows to and even in return manage to uncertainty. drive strategic

dividend, needs, contributions capital confident our in the including remain capital pension as a the business. we are We we strong fund position to grow expenditures and will

$X.XX XXXth paid May effective consecutive and quarterly annual increase XXXX. at an XX% our over We per rate XX dividend share, of

million the sausage include $XX last to facility quarter We $XX for the compared target the in year were The plant projects a of in topping million new capital million the year. Capital Burke Large dry Project the during the XXXX remainder pizza for expansion, $XXX Sandler's purchase and Orion. company's $XXX on is expenditures million. for of using cash Smokehouse completed quarter expenditures hand.

demand, This stock the XXX,XXX peak service repurchases dynamic plant forces. offset the on significant which protein. experienced and in shares. disruptions impacted to stock shortages. were decline We resulted followed operating Within based by dilution Share $XX period, XX% exercises, At quickly food protein quarter in our quarter million valuation. from representing an internal at capacity. contrasting industry industry X-week below by an in of the May, The option was early creating the was oversupply was in the repurchased

changing and the illustrate are April April X, have the The cutout supply have cost swings increased quarter. composite dynamics in March third hogging commodity volatility, from which into XX Since much as traded of to Likewise, April. USDA and continued as XX% declined the have over prices of X. To and to XX-year values, XX-year that's These the highs lows per DEDV XXXX. hundredweight between by trim bellies XXX% in levels period. beginning both the at since traded same $XX $XXX since demand been

production the the values estimates after most prior and year USDA industry The estimating by in commodity decline in report. capacity. processing X% the near-term hog month's in determined a We recent a hog feel be will supply X% the demand for increase report in

and at operating near depress industry disruptions values commodity capacity capable Alternatively, increase levels, values. values plant Additional and moderate. hog prices hog should of is commodity will the if

pork for demand Worldwide strong. remains

USDA to increase Asia African monitor are expected China, in to Southeastern than XX%. greater fever We and Europe. swine the continue exports to According

In the are and levels we confidence reopen. key as consumer processing two factors, closely near-term, restaurants hog analyzing

multiple both currently models predictive are We analytic using monitor forecast and to factors.

capacity is The the chain profitability by supply open source processing, The contracted quarters. volatility. three margins ways leveraging as lags we between managing market. This actively are sourcing strategy on in industry We and can materials; the cost. pricing expand internal mitigate issues shift to and purchasing designed raw changes could primals contract

industry ability Fundamentals indicates are in recent in quarter, to were pork the the industry but and industry turkey to maintain mixed significantly the near-term, should turkey cold on data in with experienced the had we placements the operations in our improving Consistent the conditions. second the have already declines. levels, declined. This continue meaningful reduce six in weeks Four last at facilities. storage which focused

expect We year. the in last lower second the Management Oracle Capital to implemented Human but year Project to significantly improved the was elevated whole-bird pricing Turkey third for of January. We pricing is quarter. breast remain remainder the in in System Orion successfully pricing compared quarter, of the

advancing with As said Orion team credited Jim remotely we our as with Snee Project minimal is delays. project work

in proceeding the are go-live finance with We June.

team and robotic introduce implementation chain will capacities is in benefiting for already take additional Further we demand Our supply planning. as and XXXX. from such process the XXXX and will In integration. data real-time improved analytics automation enhanced June, place later

At this the for operator of the the to over time, call I'll question-and-answer call. portion turn the


from Palmer Our first Instructions] with [Operator question Tom JPMorgan.

Tom Palmer

some not guys more hog cost quite I wanted on the sound, given on always seen you're purchases. the to costs hog seeing track negotiated detail as pretty ask input substantial right? helpful then, have what kick you I quarter, your some It guess And to closely historically off a side, just side gave in would the results but as you the that your You increases. lean on translates just pork about seeing how bit, and your you're market. prices down

start-off little would pricing profit are costs quarter to here? you a kind the kind from you or and that miss input then those of is bit standpoint, did adjust look to recapture going slower and So a messaging of I

Jim Sheehan

impact going happening. plants ability important plants most and and to uncertainty is as right and those keep going be interruptions had deal will are capacity be the volume the pricing to the great But processing be all, of of running seems the have. First to thing what on to now to there's that the

most can quarter important look that volatility the as the thing that's our at talked So you that create you've about.

thing primals the raw processing don't items. processed other require than items materials in much less is that that's are or expensive industry happening the more The additional

it's today absenteeism in hams hard discrepancy are the boning. My would example the at price now bone hams labor the of plants that to you'd to running for that you'd take Normally, trim, about but XXX. bone items. the those you is them find hams in And now be right two trim the would that's and but $XX, because with do XX% right

now. So diversity of there's a the quite of pricing a right primals the bit in

pricing about As us Western far above hog hogs quarter, contracts. average are range. that hog as about average I Corn the Belt not of was the XX bit far prices that And today, were Corn for at mid-XXs for prices off Belt. were think in XX $XX grain based a western says our thing and was last only The

line And of not out Belt. of us so, is in the seeing Western Corn hog you're pricing what for

We're watching the a the $XXX $XX the second comparison at seeing the and greatly trim. take costs at went you're mean, today look XXX. quarter. to was $XX it's as gets XX% second as as quarter in as I That in high price low and It volatility. input

averaged the You've low XXX at the got the $XX, about XXX. to to $XX week. it's And range just dropped last bellies high that from at

prices watch So if on overall happening to keep helps. that hard said as and plant raw read at the players values. But it's Again, before, costs. we're about a plants to values, both primal Hope moderation industry our what's running in both think really performance. estimate material or primal there'll the capacity, the we be hog the and -- I able

Tom Palmer

were as up. quarters been wanted as your surprised segment ask side, volume on about you internally much has were of just product I'd growth, three the volumes supplied. volumes traditionally, by think, slaughter then the Jennie-O if to that And I to able be move

any purchases how of So then inventory forward? kind and mix versus purchases you're and changes going could thinking talk this quarter, levels, to your slaughter a about you about

Jim Snee

what obviously, mean, quarter really quite has of coming I Yes. off had, of been done because first we've -- we they really ground what to work, with out lean talked move of they've good really had some that pleased in able the -- we're distribution call, turkey. our driven quarter JOTS about had especially on and business across been the to the inventory, entire continued They've through do, that portfolio. coming

whole-birds, that quarter. mix So whether really was have a products a it retail, been it's of them commodities, in put really, good the great position in

In of that quarter regards of to questions, harvest JOTS. of follow-up actual Nathan areas. demand some on Good the you have those and many we'll detail, overall volumes across some really just with for level that, but strong


next to Heather we'll question And our from Jones. go

Heather Jones

Just wondering part you in question. a service food two business. talk refrigerated foods the I guess about when

of proportion demand you a like magnitude us the Just business? wondering second you of you're this see of we question back, QSRs if give sense And pizza is, of seeing. some talk us the of that then, or about could the part the give hotels, what you chains could sense come recovery start institutions the just versus is takeout to like if

Jim Snee

question. the Heather Thanks

we Our we business we food the very strong balanced have really sharp growth quarter. about food mid-March. this We we the a great a XX%. compete, service off channels in of about and talked And was a saw decline think quarter, year some business. as start end And service being down through then through business the where to

chains, really lodging, about K nice balance. casual midscale think you really, through universities, XX, colleges, so And

traditional you to QSR, don't you When business thru about lot available talk you're there. of that business have about about have burger drive chains, think a if if them. locations But probably talking still

call that of a want to have that. if business in bit We channel, quite you it

across to be very going quarter pipeline it consumer is from demand we'll that closely service know spiking is like pick and it's we demand, closely. that watching to The balanced positioned. we're really this the read true have up. ahead, hard weeks but We we to certainly early, third part and we're months the talked starting we so watch at we're Is food model we're or where over some fill so and seeing the as ball. out it And about, sit, not point, well we're feel

We Cafe that's has Austin their in operators for H, positioned talk X, direct dramatically. sales years all about Fire new so out products changed to our able and this Braised, creating we've world well spent get of environment. that pivot front force Blues, and as The Bacon years

And what so happens with and rebounds. watch comfort the to got patron obviously, capacity, magnitude level, we speed of

So uncertainty said But, us when put it's there. food I amazing all an to great position we've a that lots in got of group service know win. done, and

Heather Jones

then, question of, And for the these cheap guidelines, the would issues Hormel, mentioned are to you. plants, advantage your those And and over industry XX give for getting max plants take a think the second in bone Thank you end. us pan guys for to the be is of having of trying you What feasible Jim could for to sense able my with on, utilization is months to Sheehan, or labor you with costs trim? X utilization the one the of if cetera. you next CDC you et do hands

Jim Snee

Heather, our I in facilities, that go thing don't and we one. of I mean, ahead I'll take to think the remember, own the harvest any facilities.

So is think our as it you about business. a different plants, processing

lines, hard distance. we And yes, to do some socially is so areas where it have some

amazing an those putting done or really exceeding enhanced has meeting measures team job and in OSHA CDC and guidelines. Our safety

that's it's of the some have to issue shorter I down. term impact seen that say issue I we've impacting dramatic is some absenteeism, you business as that's that you do those capacity the In lines But and a in plants, short-term the anything on slow have that positive have plants. to more some the really wouldn't and going cases long-term, get more is these mean,

the in And a manage much place through terms process. understanding in so, how we're better of to

has of plants to who to are what's the sit to one testing And up who's has of maintain understanding progressed back through who of today. the happening pandemic additional the this allowed keys really as we've work. and is All come us our running until can positive, really and negative, out is fact that

thing. is think So having see I available really benefit a that great testing we'd continue more our you'll operations. been a to maintain to like widely as And via


from We'll take Oppenheimer. with next question Erica Eiler our

Erica Eiler

Good morning. This is actually questions. Erica Eiler for on Rupesh. taking Thanks our

channel the a what in so provide you're early you the QX. what channel food lately? about color Is talked little and there in you're within service seeing can far You bit here any retail seeing

Jim Snee

the add Sure. the what's we've would retail seen early been households, channel, pleased was continued perimeter crisis, strong time, really strong we've But business in bring as see in and the this dynamic, sustained up over a grocery the We've demand. or just products happened with the of mix. been to in center to store We've consumers the very I loading. both we've there all on velocity, stocking seen the the it new say able of in was that view on pantry into store.

we percentage. that there's repeat know new lot a buyer So and new buyers stronger of

that retail perimeter. business, side and held the has the So up center on store the of of both the

Erica Eiler

been front? channel Okay, into ability and challenges this some Can you due service some talk convert to service, grocery the of your food food this retail in to great. given environment. the the And things you've supply doing unprecedented on just of about, your

Jim Snee

team eased of as on, a was we the products into repack advantage service products. and retail requirements, we team some that, were took move had food with positive our channel. Early I were of there labeling to more to the the Yes. certainly mean, collaborating where our able which We governments opportunities

for were so and had was concerned a demand the just shelf. retailers who great, about then, number retail we maybe product less the wanting available But packaging of

service So we items into packed well. started as food channels retail sell to

some with terms food how of been of all service So service in of meeting demand. bit are helping little it's converting retail, food retailers lines this product retail, we into idea a moving the everything into increased really


Your next question from of Ken Zaslow with Montreal. Bank

Ken Zaslow

think it? financial When what Hormel's the however new and stronger or you weaker frame put work environment when to emerging want do we you and or it? how normal you from same you measures earnings the the is or use, COVID-XX about strength new Well,

Jim Snee

are based just take talking perspective, on question, you It's about thinking out confident industry When the uncertainty it a And it's say and intentionally have about we're tirelessly that out From of important, last the two meet consumer few wherever go. they model we us really the over next that really our Ken. choose about. years great talked built and clearly purposefully what quarters, balanced is this we to you allows you so really to number we've and is plus the because talked emerge, in years. and to the when

the perimeter, And we've of obviously, behavior you the right? the model was deli, service in this we there crisis, food ecommerce business really to they down choose store of store operations we had midst about center, were and so Center so, feel and balanced consumer had good But front forced. center the so and created. perimeter, shutting

we've The other value, able been good versatility entire about thing is that the that to we provide this across way feel really variety and portfolio.

certainly important And value this a in is in so emerges unemployed where evolves big today. going out they And a then, And is are consumer if ever there. now, than again, to term there been. it's that of a not number with more maybe trend shorter way competing Americans we're as we're that the consumer go the the of crisis

This allows it referenced, talked really Jim mean, building become pivot we I either that about and Sheehan us by or buying. competitive balance sheet quickly to that

you bullish some there's we And data I earnings so long-term power but we feel the why think remain would as our really behind support imagine, very and good so on bullish. over

long-term great well, the as the helpful of Ken. opportunities short-term, that's but over well think lots so And hopefully, we're we in positioned

Ken Zaslow

-- guess structure in position, worst service position say guess, or I think you X a in increase if to will and extent cost food basis I do you what to better XXX the loses, what I'm. again, is I'll also debt points? Are part say three the more I'd is, permanent the you I leave did question strategic you there kind mention, potentially are what And of opportunities? four mean? So taking or does it that What there. and on for get

Jim Snee

that consumer meat? that have fresh out organization? does so decline see time. mean We in so a what to question. go, that grocery it's where over Is does again, food permanent great does play behavior. No, Yes. real, I more more going need a is go the I really of mean, is tell But to into to early part terms it our it too And permanent products right? service if

to we'll to obviously, the food matter be what and I think competitively goes, there our have, to I to business we're it. to really is, return goal, where maintain able our because very is it managed. that say on be no mean, capitalize service we trying that is business we obviously know

clearly, we to opportunities. some keeps as dragging this financial of I we know on. talked In mean, crisis the terms about going what's don't what happen short-term of,

able not just advantage well but want our be for sure, of And arise only it. opportunities so positioned quickly business, if to to that existing a) we make we're to take

Jim Sheehan

Ken. morning, Good

it's next some matures one Regarding very interest an rates favorable Hormel right $XXX the of that be Obviously, now, in are that debt do so the will we have within think interest market. we million in year. year, in debt, April there

we interest that decide out that any for be well period time come think passed we time by acquiring. those want go we we that or and we markets this positioned may as where opportunities So to expand us, rates there. advantage on out will of take within period be markets this can favorable Jim building opportunities new those exist to said, if either provide as existing structure whether pivot during to And or of to and that markets


of Our next question from with Peter America. Galbo Bank

Jim Snee

is I'm not caller the if sure there.

Nathan Annis

to move queue. the the in person Operator you next can


please. moment One

Nathan Annis

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Nathan Annis

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Nathan Annis

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Okay. Peter your ahead question. Galbo, please with go

Peter Galbo

hear you Hey, me? guys, can

Jim Snee

we Yes, can.

Peter Galbo

in help of focus different about, three kind sourcing the on that just the guess primals. your of again I thanks ways the in want just for kind thinking to source. of I Jim,

a ago, still million you've around would of and I of about maybe seen think in good that pricing the inflation make given to to annually it's $XXX a number you forgetting kind given a want just sure a years and that I few kind million that's number basis. purchased externally, you moment. $XXX for a

physically supply have say of I a it the secure to ability first well. of up as in of the end all at least follow couple of through May? And product weeks from, April the improve Has kind

Jim Snee


I said, At prices. at and operations in during I bellies the at you movement as level, come $XX. market as to And think XXX prices the back those seeing saw seeing that's what obviously, decline are online those at the they're depth operate this decrease, you're seeing, start this. and to you're plants you're of now understand how

getting service a internal industry. the to The market. demand that how a not place as can our what sources on the that for on of Right the food we're from to it ability items Again, any for find and contracted open sources seen in that's has ham, us you're we're the service products and doing as our but enough operation now, bone lot are, industry, an easy through providing for buying looking are very to decline you're looking you've find food volume you you again, they trim. have if depends source the the

time. a doing this So been it takes we've for long some work, but

those who that helped have skilled Hormel, long have a think operating staff We process. have appreciate I so relationships through with us this highly suppliers and relationships

the have XXX. in online, there high beef industry back have are But as XXX. this operations where that seen XXs been you You've as come as have beef

So something skilled to it's at, be it's you to we're but something able that handle. that have

Peter Galbo

it. Got

quarter? part of of we so in to have retailer see is imply expect a quoted, or going Was may on or the of shipped Okay. speak, the what distribution pipeline maybe consumption some the seems in partners would number any drawdown to your then, to scanner we that seen the that saw second data. that And sales it above should inventory XX%, kind really there just kind you to that question, of you fail, relative to under the retail we third the

Jim Snee

in early center third our but the far so it's is of store and and retail holding both perimeter the up the Again, quarter, strong. business it's

an volume think pretty perspective, we dealing the inventories all inventory are add have with high cleared well inventory and on any from those you're production any of some current that I levels. retailers and items,

and Our IRI categories could of the store. share perimeter really, again a really strong both in data is we still and center of number

comfortable shopping see we've mortar only growth, share, business is, that to click the very as continue collect. we're a business. pleased those pleased growth as is continue get in about where online, And also a it's the really strong part touched ecommerce that virtually. pay-off whether comments investments engine couple ago. with but brick years delivery we consumers not we'll and and So our investments made significant we've And really on seen capturing think or our to We that

in say So store the board retail I strong really Peter. would all across business ecommerce


Samuelson take We'll our Goldman next with Sachs. from Adam question

Adam Samuelson

to of balance question, of incurred the think first the million, guess The most I actually $XX perspective, we to -- those next we clarification. up. fiscal $XX out about kind over help incur, in year, just play to of segment's them comps can the the understand million So, expected $XX where the cost a switching the quarter, costs of have and us how year, fell in just million

Jim Sheehan

came in foods. So cost refrigerated JOTS quarter, most within that and the of second

set higher followed refrigerated early refrigerated do had and interruptions and percentage processing and bit came was priority talked we little by very we it when and negotiation later employee out measures that time that do going we lot a to foods or to of acted to additional saw honest, Our actions then and some safety gear safety a getting foods other protective it some a had be we that didn't taking with a of quickly. the we in

to we So that employees. that our provide could assurance

of Jennie-O we'll in As you on but to operations think the now, going right with grocery about see expect right then a and refrigerated and any both of what refrigerated That's look highest a going as then we now it, at that dynamic. footfall expense, we you're roughly the shift. it volume portion that's grocery uncertainty it to that if foods changing probably foods, products, it's and the go could operations think within forward, but products, I

Jim Snee

member lower bonuses the remember, team that forget just started are don't referenced, we've plant well. at really, as seen that lower of QX. significant majority mean, paid I pauses QX, add-on. the Jim the the we've An volumes, tonnages, end in

right good up are of the and So, plants all our is news running. now

Adam Samuelson

the butter, being you of are grocery business, about surge big but All And as of for consumer gets second question this thinking in and then, sales drawn parts is point reasonably in kind legacy you real-time? that in business at the over candy how anything think sense. is in be pantries makes year That Thank --? little where kind peanut how and you. think you've for might consumed my I had not the retail that you inventory in Or much actually do of surge get that sales this into is down?

Jim Sheehan


up are what new earlier, that about I bit rates, by lot early talked probably a new a buyer think even strong have good. of then, the it companies or was we but good households, velocities new stock seen only not the was the buyers this a again, read, pantry little the I loading, And there's repeat. a repeat but is,

but when well. not some the as clearing you categories obviously I you about big but household perhaps, think chili, or think really those think And so, are when only the seem some Hormel be brands, about SKIPPY, there to SPAM, items brands about our think you retailer,

happens But the want -- business that and what to they repeats, a it's does as and in and the more, to I be as and don't talking eating really, know to maybe in the pleased. far what about lift that bit thinking as there that a consumers how is open to year? so, the as been as brands as operations. and little migrate perhaps really we're And demand much the much they behavior, products starts with pent-up service to and don't that service pantry don't about want about. grocery much the have for want sales food the later we've consumer at mean in up food uncertainty home That's as


Lavery Michael Piper from Sandler. question with next our to go We'll

Michael Lavery

just to understand things up actively of be like I give and But pursuing follow M&A? you question, a debt. can a might strategy Ken's sense with thinking starting your Just on you the capital us how

Jim Snee

our level I from nothing active are. mean, how changed. activity mean I Yes. has we and

is the think lot to in the a the of pause big just I had marketplace what's hit really happening change button. have is organizations

processes number opportunities. it of But is So I was. market think at the to different as continue not as active we a look clearly itself evaluate

very when when we hard I that that it's active process continuing always pick But we're a to mean, really will have. read So, up.

Michael Lavery

instances risks, That's just think going were of with Okay. you a sense a helpful. U.S.? there give do and us you on shortages the outlook, your there if to any any especially can is And be political of what expectations export here are China, there to in pork the

Jim Snee

outlook XX% Well, USDA is. greater to be their what exports than the is is expecting

to on. As ops. still guess in be some an a Political exported able concern pass be But we'll whether we've about I meet had I activity, not. interruption that think or operations, think from States I'll to for there's that I it's United level added demand the pork

Jim Sheehan

technology in tell. Yes. That's but to mean, obviously, a to the really lot seen we've eat. I people space, need hard

that's of really hard kind hard. kind So That's predict. to of


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

Robert Moskow

total indicated tried really do there correlate us doing kind that you what give you better reason your up It as for is it, this, to to easiest looking us to job your was at tracking sounds don't it. would is of touch say, don't division retail grow, grocery number tracking XX% like? division be data, to want helpful very you we may retail of And a our you said it I've is? telling around us to the the be shipments is to that any there want data to for I sales retail on Because tracking you forecast, Jim to to that and any well. thing alone. like so it's don't division you But grocery know exactly IRI the that but we the for guess overestimate forecasting your just try reason

Jim Snee

I meat or of data, is Rob, mean, you general want our position in any all we really have not. I grocery our of don't anything that is guess, data We I I strong. retail businesses. products, don't guess mean, our we're -- about to tell Yes. products, data,

you a follow -- help do more in it So we into predicting, with worthwhile to your just can get me, call little of job we up might detail be me a send so. maybe better

So strong said, I understand, we our way. make like But, same been really sense, business a has we're board. talking the retail broader and across the from sure

Robert Moskow

maybe Well, this up way. follow I'll

You said more our is with your your that that retail shipments than up XX% because data something data consistent hierarchy that? indicate XX%, that would are

Jim Sheehan

channel in -- a if channels kind a to you number. probably think do just some by unmeasured it walkthrough, better would be obviously got nascent get of And channel better there. better again, guys maybe so I you We've

Robert Moskow

pretty margins combined? entirely? would of as that My is facility. possible on have that making other Austin just Okay. hogs up excess actually the I from of facility that the some follow get strong are closed live thought nearby actually get facilities your support actually volume extra result many to too assumptions or from not plants is would a And it's kind other

Jim Sheehan

during facility our quarter, really Well, at the interruptions contracted we all the had few of hogs. harvest

So we relationships that long-term with long-term and are our producers have first contracts obligation with. to the

operate when financially So, we we to to have these it's operate best when decisions harvested on about the plants the plants. Saturday as we take

and of was capacity. far there no that for in service periods down all time so instance the processing extend was at reason would were when you There food demand your

company's with our that at have that going shortcut not way plant the are to long-term we've our producers reasonable very we So relationships we harvest another managed hogs. thoughtful a to


from Your question Ben Stephens, next Inc. Bienvenu with

Pooran Sharma

actually Good Ben. morning everybody. for on This Pooran is

know front. have on company. we've your drop growth the strong of and changes front or and M&A in sell service valuations these marketplace, you have deli the that guys food in willingness Just for to seeing sharp kind greater the the demand driving but the seen? any wanted to remain been said strategy constant given I you follow clearly Are in

Jim Snee

M&A talking you about opportunities? Are

Pooran Sharma

Yes. Correct?

Jim Sheehan

a think pause been ago, in while activity. said I mean, I I a that little there's almost

of to to activity, seen just it's as be consistent, a comment is on and statement because the in we the make really really e-valuation yet. so through, a valuations And position going wouldn't a around we're hard valuations make process really haven't active that but

Pooran Sharma

to that I just you wanted your the maybe moving Okay. performance in Could into was up a strong. international of us in the important help next get quite business, take bit which about on that little and That's and think the just business the just more pieces. couple fair. just quarters dive

Jim Snee


as mean, we think for remain on as soon SPAM basis I demand I to strong. look expect very So we the global out, a

demand export to expect be also for We strong. SKIPPY

continue remained to especially service the with retail SPAM to really space. the China, both business and in in China strong, expect improve, and We ecommerce. food our and In products store SKIPPY refrigerated

build So probably look of as a the continue is difference to expect business from China as the march continual improve we which food that we their to forward biggest service lockdown. that


We'll our Barclays. Ben with from next question Theurer take

Ben Theurer

products Actually have bit XX% in and talking little new retail contribution past, products. the sales wanted long follow-up targets, innovative basically to medium and what term actually on a you a from we've more get been about innovation to from

the more share you lasting channels? repeat did detail rate the a little cards Hormel chili, within the such dynamic just understand different more the and newer recent what understand or be Could innovated that subcategories is great. you on the So retail very running, velocity would SPAM, purchases like well than to as SKIPPY, versus the long brands brands innovation how the and more within established, amongst ones

Jim Snee

impressive I Ben, the want even fleet moved though our innovation all. first really across slowed organization our start part at been the what's down to to working the virtually, with innovation. Yes. And really around hasn't

able job on innovation being virtually work amazing process. an done team's Our the to

we know And report of But we XX% In throughout end the met that fact, course, I it's innovation our track year. it at a we usually number of year. goal. the the

that able the and really, just cuttings terms in entire and innovation work great process, we're done positive but products out having innovations of R&D showcases And are of not being so virtual marketplace, the the only pipeline. get in results to across the being really lots seeing there's virtual them

whether the it's work it, happy I Natural plants, little pepperoni, So innovation name SKIPPY mean, continues. Choice, you

repeat buyer has of rates, again, one SPAM repeats. the terms new of highest In

Black years it's repeat XX rates said, really, really more strong. probably over items for that's been. Bacon, brand relevant I old, mean, it's ever a The Herdez, all than today they so like as And Label

piggybacking earlier just with So, et the store my cetera. performance pleased buyer in repeat, buyers on new again, new of from comments, kind very retail

to business. good in in There's retail just there about a lot feel really the

Ben Theurer

remainder know in of on non-recurring, mean, Okay, and my of million year. And now actually it's of certain I but of the I terms to to for the And recurring perfect. clear million then, most the the $XX to follow XX a $XX very could question. must it million said, social some is the imagine of don't PPE up in you part distancing, of have the it that and mind. maybe be degree bear some you I

could to you term but potential normal be share not you bit outlook, medium little perfectly a more XX if maybe So think once could a costs more things are back would normal? level,

Jim Snee

business those that I reoccurring long think I have, won't we built that things mean, some costs. plants. aren't But expect will those over we don't into that to tonnage mean, Right recurring. member suffering numbers. expect businesses rebound the I we and we right? so long-term, have Right. over team PPE over lower bonuses won't we be to now, the part. going So from the the aren't long-term, and -- be have to We're term, those that

So, to that whether there's separation. in putting it's distance, plants that make face that that shield, up dividers sure the mask,

on to basis. be those going permanent a there And things are

are that of passed to at we're which where more costs be which now so, need along. evaluating And permanent, will right temporary and are those

our at again, all number priority team has costs. is, keep this so, to And been members one safe

which the permanent, the done temporary? really what a is said, then second amazing this As costs We're are And understand is we supply. objective third was all on our then, product negotiating negotiating shelf, work we go costs prices. keep an what in forward in way. process. we've are Jim And to as really weren't So the

Jim Sheehan

costs point are will industry thing in one Jim, of costs, would and out be to that is types of these market going many I participant are the have that costs. the every these

into let's time the the been to to efficiencies time around at have speed The to and have we'll things. these putting line We've look around out, those we other we able efficiency to thing to is, be distancing, build costs and say, have the social more build and as reacting some of model. fires

to to be short-term degree and So absorbed, we're to do that some to expenses were trying to expenses what analyze is have these just

now, do able But And changes the just get certainly we're right with then that. more a process building will we in better have through. be will efficient future, way and as the operate the we we to that to reacting will to go


last our take Jonathan Consumer with from Feeney Research. We'll question Edge

Jonathan Feeney

mix, for But he I when over place, to all on profit the was wondering what a if cups over it's imagine XXXX, they out I'm it's -- purposes to the little products the the possible, and make quantify in expect structural But product the effective just given a all products bit at that. sourcing more within detail if profit on environment, trying and could grew I terms of understand a bit normal the to say you'd know it business you're of of kind is foods. structurally, sourcing more if how environment, me, within or compared because making both products are normal grocery that where the little in possible declined strikes the refrigerated maybe getting comes I to place. a looking

you I question about profitability a that asked very think similar much. Zaslow Ken structural earlier. Thanks

Jim Snee

structure. a Jonathan, that grocery that. SPAM, mean, consider. a in I has on really products The we saw things there's lot obviously, drives margin nice some to growth

the that difficult, talked this Jim other see as makes within quarter. volatility you is about The part it really that

again, is food so piece, get of a difficult. The service dealing service. we're food to different number that still and normalized to parts And through

are terms you'll also -- margin, of in to barbecue higher that pre-sliced, know, elements you pre-marinated, be commodity precooked, to businesses. some, going got that of We've are going ribs have

remember that markets. as So, as I over long-term. a moved we sure about components the also volatile in make mean, talked pricing on well, very the processes, very there's two be certain taken is way. the that's the we'll products And thing to We've said, bacon pricing And consider. is we'll Jim and to already efficiencies but fulfill really such adjusted

and Some we're like products CPG monitoring those more are markets.

to the which passed And along supply going then, have understand what around your as chain conversation had just to temporary, have to so are long-term. be we your costs, permanent, we what over the

and will working be So, the That to it lot is ahead. of parts. on continue question a over a difficult months there's moving

Jim Sheehan

So our look our the to service I Hormel think going way move that's a user to to be as to seems that one and is operators. going we into clearly add to about value and that's opportunity and a Bacon that's more And X at the those be there'll those of for And the think we to when it to opportunity. to products products, food expand margins both especially margins industry a around our service think offer in we to shift other happen have food touch so win-win convenient where side, less some nice on the operator products. you their desire offer,


any additional remarks? for closing time, this At or

Jim Snee

team behalf with listening today thank being at On difficulties. patient you I Well, here want our in of for thank Foods, Hormel the and to technical you.

an company an Now XXX-year history. is incredible uncommon this with

you XXX an those we will weekend and weather during storms for healthy. made all this because many Day weathered please have wish we and were safe stay Memorial and years storm enjoyable this. of I We


for This concludes participation. call your thank today's you

now disconnect. may You