Hormel Foods (HRL)

Nathan Annis Director, IR
Jim Snee Chairman, President, and CEO
Jim Sheehan EVP and CFO
Benjamin Theurer Barclays
Rupesh Parikh Oppenheimer & Company
Ben Bienvenu Stephens, Inc.
Michael Lavery Piper Sandler
Ken Zaslow BMO Capital Markets
Thomas Palmer J.P. Morgan
Heather Jones Heather Jones Research
Peter Galbo Bank of America Merrill Lynch
Adam Samuelson Goldman Sachs
Robert Moskow Credit Suisse
Call transcript
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Good morning and welcome to the Hormel Foods Third Quarter Fiscal 2020 Conference Call. All participants will be in listen-only mode. [Operator Instructions]. After today’s presentation there will be an opportunity to ask questions. [Operator Instructions]. is event this note being recorded. Please now Nathan Annis, would like Hormel to to over conference the Director Corporation. turn Foods I of Relations, Investor ahead. go Please

Nathan Annis

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

Jim on on the On Jim receive hormelfoods.com under commentary at regarding condition, detailed questions Jim the regarding President, financial not following quarter, did the Jim performance and review each our the you a current Sheehan financial remarks. Executive line to Jim results current segment's website today copy of for Officer; of Financial company's will update release, Snee condition. the Sheehan, President be Investors company’s our COVID-XX section. the Snee, you will and Chief The future If of will Executive response provide company's a Officer. provide can Board, and pandemic. operating call is future find and Chairman it commentary and for the the an and Chief Vice Sheehan's and open

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Jim Snee

Good you, Nathan. everyone. morning Thank

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strength our the supply dedication segments This to our growth. chain business. and delivered this the Turning our of record our third results balance four three we achievement of delivered teams, of brands, to our net sales a testament business the as quarter, sales quarter across is

organic and increased quarter, X%. X% the volume X%, increased For organic sales increased volume increased and sales X%

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grocery saw and pickup and also e-commerce, including growth delivery. We direct in tremendous to online customer

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day, in and of turn insights quickly the being We force and also that the are lines for our advantage concerns solve have each who to front challenges the on able to solutions of from sales operators. kitchens

this brand our for Nowhere pre-sliced, [indiscernible], Fontanini, created is flavor. safety, apparent X, pre-strategy the more versatility, than Bacon prepared Austin and like offerings. product Choice, and have Blues, of with Burke, acquired Braised, Brands H, fully operators pre-marinated, convenience, and Fire in Natural areas Café recently precooked, Sadler's in solutions the

this purchases is operators isn't also shifted the adapt first the the grow COVID-XX conversion. service recovers. is as the time many well from food slowly economic believe confident to It of our emerge these will their to positioned years, an had and pandemic note business portfolio to downturn. we have I'm to types accelerate that important For our and products has industry

channels intentional During do mention an growth perspective, almost $X.XX, flat a of pivot are which focus expanded to our supply more share, XXXX, details, force newest increased next to Sheehan to share decade. is recession many we per of last an the or emerging Today, segments. emerging will From the universities. reflect leveraging but per Jim healthcare the lodging, fully financial $XX same provided the and on COVID-XX. with sales direct want costs related year. strategies million those and colleges their delivered I $X.XX to we and our significant This in earnings provide chain that increased for XXXX reach of earnings

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find are in battled Our offerings last and sausage. Applegate span momentum. seen we hotdogs, months to Applegate breakfast from in staggering team delivered have results maintain multiple we as burgers, investing is disruptions these few categories including The growth chicken in in business nuggets, order prepared and system from they the to to impressive The team their even the logistics the due Solutions and The meats also their impacts COVID-XX Hormel I've shift to options. in chain. as prepackaged third party from had seen behind has Daily creatively to supply and and work consumers additional pre-sliced offerings capacity COVID-XX away purchases glass

third prepared our more the into foods offset and offerings behind as sales strength businesses. glass and in Deli our quarter, than increased Go the During the Grab declines in X%

at gatherings, trend this branded to as party our We Columbus trays, Hormel provide expect items differentiated continue and experiences. home

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went a the on brand As solve gatherings problem. among a focus to from this family repositioned more always, friends brand work oriented our to They marketing message. to quickly social team

declines business, saw food Our service quarter. refrigerated XX% the represents food sales, during which approximately of double-digit

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organization through the to received service food during industry past it Foods Saddlers reimagine remarks service to I are have Hormel feedback to the we for Early time. of mentioned before. We remember Smokehouse support we lot will resources them this indications necessary on food my itself in industry positioned promising, support from this are our pandemic. into a who earlier This and perfectly the important during that we As access been team refrigerated The owners especially prior the leverage due how offerings providing unique credited and hog positive successfully ease Setting supply Earnings organization strategic sales, primary to is the hedges food quarter, integrated losses foods. dynamics for XX% is our losses deliver positions. lower within new the was see to and the and at seeing incremental service offsetting COVID-XX to to declined hog strategic excited Sadler’s broader I'm which innovative on aside food reasons able to foods, product costs, distribution. refrigerated from on earnings decline. their to pivot costs hedge chain personally products. incremental retail able Sadler’s service expanded channel were

of quarter. in we experienced As the the total the for expect look dynamics forward to mirror fourth many third quarter we we company the

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we we of my has comments, tireless the of to in team are businesses, in said we our producing the supply are COVID-XX I or dedication many the As more are we level chain positive meet our had opening products Examples ever members meet not than to demand. we In allowed the heroes we've build where across demand plants demand increased cases to historically the high include pandemic. meet the inventories us have business. Their seeing excess businesses, plants measures surge seeing. third had quarter where in is are the to due short-term demand safety high In our inefficiencies other factors the quarter. high limiting such meet limited Further, to are seasonally labor levels to we demand. of the COVID-XX when meet and fourth availability in as ability capacity

demand improvement, meet levels. capacity, supply Without Jim regarding sales to levels will with key compromising in find third production to which safety, internal employee production through solutions details second record by more our inventory, working our of abnormally are to low ability has limits Consistent costs provide led related in the increase we continuous Sheehan our partners. inventory quarter is However, team coal further our manufacturing and COVID-XX. the to incremental to quarter, further trusted our chain supply chain incurring working categories. with

quarter the approximately to related quarter, safety measures, team enhanced quarter, costs expect bonuses, million increase In and primarily by the and second the cost strategy, have we million in were and production In COVID-XX $XX million incremental business the we $XX the third in volumes. In another we this million our our between fundamentals, total, $XX to am strength grow approximately million right costs. member lower During were closing, These fourth and year. $XX this class incur thrive of I confident cost to $XX best related to our million. expect to incremental and be sound management, fiscal in marketplace. $XXX dynamic financial

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Jim Sheehan

Thank Good you, Jim. morning.

year. and from increased X.X% earnings flat of compared professionals, investments of SG&A flow cash retail compared X%, track Higher Jennie-O the effective COVID-XX finance related from in Turkey Jim travel best strong XXXX. on investments financial heard the $XX and investments. sales due X% our remains employee to and track sales implementation per third safety real XX.X% analytics, quarter automation, Orion Margins last $X service by of company spite sales XX.X% increased Net cash the businesses. earnings this million. stable these system. robotic quarter higher the the advertising on the Segment was train made Foods modestly Further the increased to uncommon the of the team all compared difficult quarter the the like Higher in the impact third for on as allocated operating was added fully business year. the lower XX% on class operating benefits to were XX.X% [ph] operations flow earnings These Cash include take million last financial to I'd excluding costs, segments. third and year. driven convert In offset and to Project prior improved deliver strong pauses data. $XXX employee so, for to our The bonuses, of return expenses system. flows. quarter to pandemic, million to later examples declined related is, profit across rate XX.X%, to into Hormel was benefits and team the of in of to compared to to X.X% benefited and free team us were to give food circumstances, billion, XXXX generated place example. the achieve You the Even the reduced lower quarter forward $X.X expenses plant expenses. respectively. were Store. and sales mostly record. million tax share chain the will at the Net by doing financial the value for which additional time impacted Operating supply was from and times flow incremental process able Advertising the X% were kept systems declined financial of by inventory. By year last financials uncertain continued team, for Cash time. a absorbed up $X.XX commitment improved how and cloud, margins were last Orion in share investment the of Early go XX% with the year. of were $XX another a of generate lines Net few levels push to

The the third higher anticipation demand spent seasonal quarter inventory of fourth usually in in is quarter. building

year. on factors take of ample XX% X.X%. will provide and as favorable In context, products liquidity As low last finished inventory than Jim of at segments $X are our fourth is business and mentioned, current of unseasonably interest level to to cash most impacted XX significant billion levels quarter rate This the M&A. the inventory for and foods. the were inventory To we began we due allow third the brands, provide by the production goods strategic key lower in refrigerated products the lower such limiting issued demand bonds The grocery as advantage opportunities of year of June, quarter. levels

We have in maturing bonds $XXX million April of XXXX.

hedges in Currently, over industry pork manage hog is our be facility, expenditures near Project XX in for were prices company's to to new XXXX capacity The strong to and dry in reduced opportunities. position gives repurchase flow invest is of of put flexibility in levels. market higher fever. paid Our This swine sausage year. continuing a consecutive hog increase XXX growth expansion, million the of plant over to our an mix last for liquidity cash These year XXXX. completes XX% quarter losses quarterly procurement during at The include not while the According projects year. the the benefit per This for million. long-term shares sheet year dividend production pork capital Topping by the and quarter. the on Pork and company higher did solid annual production balance of is XX XXnd the Orion. were effective XXth a We $XXX share, was fund dividends. ago capital and compared the to expenditures to quarter. our of Pizza Capital our billion remainder during USDA, consecutive target the us African rate expected $X.XX to due lows X% an Large hedges. strategic contracts XX Burke risk operating proactively at the needs was year August year at

pork, impacted composite the higher beef July XX% bellies in beef production negatively the the We for values peaked cut-out out This XX% at in early seen disruptions trim exhibited XX% fell have beginning early quarter. near-term. by levels were commodity and expect was May moderated The so third exports These hog pose in of supplies of year. Worldwide cut in by trim driven since Overall, prices. plentiful have volatility volume increase lower for quarter XX% not was by USDA and continued in outbreak nearly quarter. to and The at trimmed [Indiscernible] year, fourth prices the plant while similar XXXX. strong the costs USDA higher virus commodity and The risk from last by the lower environment trim would strong. pork margins. to X% demand is below prices pork supports PED demand is the expecting remained a China. for volatility.

in last and time, to turn monitor are favorable was to last quarter below Europe. of Commodity markets African mixed year. Meat third Overall Asia, prices in operator continue the to are to year, trend cost and some over helping industry swine the higher. offset for this declines the the for lower. markets. the other Southeast in call At I'll while portion continue question-and-answer call. breast significantly thigh the to We quarter fever meat turkey China, Fundamentals prices meat in placements while third remain rebounded, the


[Operator Instructions].

ahead. from question first comes Theurer Please Barclays. Ben The of go

Benjamin Theurer

morning and of Yeah, the education. one on good on especially first all you initiatives on all, Jim, announced, and and results congrats Jim the

your a is very this think supporting I workers. of good way

declines inventory little means Now, and fourth and into the it I wanted to about here said quarter. the what what you've for the bit levels dig a

little the a on impact detail sharing it for where bit grocery thanks the prepared of So remarks in and remains already refrigerated within foods.

Now, particularly strong as channels, impact be That terms question. demand be impact in into an in seen? much. has the my remained what bit sales the you the we've might just be this and would impact an how might and to and little understand do think supply obviously what of to your ability Thank usually quarter so which going sales, to if retail one fourth a prohibited is demand uptick you very

Jim Snee

we sincerely be inventory supply levels, comments, We of appreciate is we're heroic the thanks I and buffer more the really as plant we we've multiple have meet working comments. the convey start through more pandemic to said we're work team to the has significant the QX able done our way happened since times to for had in Yeah, And trying the had Ben disruptions as as to business around we increased as With what to what did the orders here in we the question about mean to fill QX, as chain, we them. chain outbreaks demand. and this initial had initial inventory regards were really to supply a we -- and think pauses continue the stages.

Over that though, quarters, mean those have I through the what we course burned of inventory.

job now supply done that I will, but can't be the And having mean cases cases are very the and COVID said, we our seeing you cases it's level as we a chain so I impact. those and into team's going still we're paramount, fourth disruptions. have we can keep of we on And like production head important operational. occasion afford quarter, not although of great any to outbreaks if And the

team the meet that a to to We sure heard, is the team are some and is increased have sure make were doing a they out facilities that inventory have they the need supply going keeping be critical efficiencies as so COVID chain don't really to to job working and making of our messaging where the our as in our facilities, be understand areas you great that now with members really So, we buffer. it's demand. the production to But importance. in able says,

items. some mean, and if center significant increases at of that I our spam, mean in store and And have we so, some pepperoni you I look met, of bacon demand the

increased going. but that chain have supply facilities production demand, make we we just sure keep able that So, we've to our in to been that meet

Benjamin Theurer

one you technical on very direct-indirect where understand And just clear. suppose, refrigerated foods, a out disruption cost basis Okay, just that of break to on, chain is the it and can then had of so Jennie-O, supply XX that segment but of the there you because some was plant of also how that much the impacting, I an you in impact had? majority the pauses million

Jim Snee

impact about and talk majority and the a JOTS of in Yeah, majority those comments our probably you jobs in in will right That to and so, we to refrigerated a specific that. that's of pretty obviously about think were it. outsized costs way if them, were foods

Jim Sheehan

production on chats not all growth impact JOTS they of in is vertically it the only and the that Ben would that the the availability is what their product is to the products to I way sell lines, add goes side. and because integrated,

Benjamin Theurer

I'll Congrats it great. you. again, leave okay, thank here. Yeah,

Jim Snee

you. Thank


from comes Oppenheimer. Parikh of go question next Please The Rupesh ahead.

Rupesh Parikh

congrats quarter. thanks and morning, questions the my on taking nice Good also for

to I terms headwind? we clearly per profitability just go in plant the profit was And JOTS? you the the thoughts still Are in recovery unfolding or is year challenged to see Jennie-O, ongoing of just any for so how guess an quarter. that I want So back past curious, now pauses

Jim Sheehan

Yeah, your thanks for comment.

harvest or higher of associated any I the Store had that mean, production like haven't those the the that Turkey pauses continue we had we supply labor mentioned bring pauses Of the impact. other quarter and in the issues. And, beginning since and Jennie-O three big that's plants. can all have third cost and run into we we when vertical higher sure and had making goes the back we facilities. in key I harvest costs feed, mean, chain. to So, in a herbs, that plant we ingredient that it a plant the Jim then just can't way

feel supply had the of about why the dynamics side big saw business, the think pre-COVID-XX. we distribution my benefits we I big, we on impact. it about good chain is, as So, the regained But comment that of the about

and on us. we be had obviously, of Now, eating we shelf But a be understand home consumers, going at to to able more. to them the find for impact

negative our on business, especially we quarter. service So did the we early that from. impact distribution the gains benefited a food in third We had, have

some business, out a our the through impact have business XX of little like understand know, they more how trying The schools recovery. service to You that we're food Store and to service skewed seen we've K plays this Jennie-O is Turkey Hormel and Food semester.

out have food So put all business. future. We feel we but pre-COVID place retail why and we related everything all got side, is I the in we mean that’s it about in really costs the playing the is in business the the impacted are good recovery into about that negatively heading side, COVID optimistic service to that

Rupesh Parikh

follow-up in of strength the now one terms are strength? positive my commentary are seeing a direct perspective, you consumers. you question, the both right your guess of to I anything seeing on what you to had where consumer From e-commerce, of are And seeing and in great. guys brand surprising in Okay, is just where collective e-commerce, and you very terms clicking you most that

Jim Snee

we across Yeah, it of in lot saw also items. in a saw and products it we because are We Rupesh, our pleased, Board. the our refrigerated our in grocery

to Really wasn't balance good portfolio. or brand the skewed product it So, line. any across one

Rupesh Parikh

you. thank Great,


of Please from Inc. go question next ahead. Ben comes The Stephens, Bienvenu

Ben Bienvenu

your successful had or packaging COVID you on you Jim product for that on the incremental have one you any market still been if got and Snee Appreciate noted for share, the be around heritage SKIPPY, morning. of operational Good is making Jim one new I've innovation driven new then some impact curious call of from have for COVID cycle questions. headway the pretty you thanks. that hear and that innovation also lifting innovations you a taking cycle, out to thoughts product Jim outs that pushing what there's I'd Snee, front? heavy Sheehan. on Hey,

Jim Snee

in recently items. I innovation. Yeah, making great, will for into I mean, coming multiple you, early some be terms success that fall. are that Ben And having trend. of bringing pipeline that will front. continues it SKIPPY are looking very in It's customers that's a is and reference this headway update good exciting. I on we and great I the just on the an to that It's And had great our really strong. we're products tell the marketplace question

really, so been areas, remotely. many So, has impressed course, which really of the to I've able functional been other work do encompasses innovation with our that team,

I to this XX% I but it, thing would continued and call, talked know regards at other that goal time, at we last mention, innovation. we our track on about think I don't we our to mentioned have The in

the and has to that going company just that's on, lost the the to responding. an sight deliver need continue in our that forward. so, to haven't drive innovation of amazing And of job is we everything something it's we midst lifeblood fact team done of part else And our

Ben Bienvenu

okay, you thanks. that your with you African swine of what perfect was in hogs, the meant of Jim for light hog what fever of materially? [ph] hedge light strategy XXXX expect fourth That's light in hedging in and sense out pretty some in called color hog expect hog look of continued around supposed to Would the great, quarter down you for Sheehan, would like hedges book, makes prices headwinds prices. from current still being your

Jim Sheehan

and hedge hit low purchasing XX-year We said, thought and Corn you're where our were composite strategy. the some hogs morning on on some -- our your balanced take positions I the hogs as any the we model a on the really during quarter Western at utilizing not Ben. Yeah, mitigating but open good you But look time position, obviously the time are favorable, hedge value to that has hedges. a that's trying that market, some and Belt, on it, risk

hedges the be to expect as continued be will down. to we a hog So headwind prices be

year. as balanced prior But You has we've costs, XX% it's the our a bit know, again, has still that period looked costs time to some hog down production and compared been a production. hog backed our were model the up at there in pauses during

future circumstances. it and that is an the both viewing the current approach So takes

Ben Bienvenu

Best okay, Understood, thanks. of luck. great,


Sandler. from The next go Piper ahead. comes Please question of Lavery Michael

Michael Lavery

just over of or morning. what how more that them? the food the you've since that the gave volatility terms color Good you the bit around you. channel Thank just momentum us really of little in course seen on service, splits give Can you of progressed some a and quarter helpful, maybe

Jim Snee

country, in quarter, was nice quarter late third in very third a quarter to was more then around started actually saw plateau. to early as our second and recovery food kind decline we And we the early service see Sure, The and of see, the is outbreaks trend recovery. that mean significant COVID upward I -- or the we early of saw nice business kind see business. happened trend, on what business we started it to the

the level And decline of we was saw was the just outset what that outbreaks the we business a time this that with at, plateaued. it business so what saw some initial maintains in was the significant and at it

more recovery to So continue starting recovery. it's bit the different year its still under states it I mean it a see is behind a But now, fact ago. do as didn't we that significantly get And are control.

foreseeable way, come itself, our For us, industry it in behavior that what some probably going ingrained food away from how that continue food for does look will look shape, the are future. form reimagine in home is will believe about society is that what it like do is service this. but We or does to the it just the the from future, in different segments such all emerging an

Michael Lavery

on M&A, that's follow-up to just I remarks. Okay, then And on helpful. prepared your want

some better like consider the more that it nothing that balance some the of remotes mentioned than was amount Maybe this obviously remarks your just prepared difficult the mentioned else? be is feels there. great and it and sense things, You or get there's something deals sheet looks where interested might everything seem it that getting done. it it you're your just as like there with -- to like of could not doing Is you activity in environment a as disruptions new and there in it's an it for stayed little or

Jim Snee

is, early takeaway there the again, go the stages. back Yeah, key I think to you

many people up. had really You was trying just which companies, so figure so to many out way

of I is was And the bit. was and would day tell bit day little idea are top the there having little activity picking M&A normal up maybe new and not It what running, a out at that's conversations, the moderated more anyone's really And figured a more think the interest, like. about is There list. I so that have bit business. to a running of people little look you a of communication might

balance spot down we Jim did in then about So, that why sheet. good really from road. mean for a but our our also perspective strength to -- with be debt it, it, did we we we could that offering, our continue believe talked us we're of the what when the

So, we forward. an M&A of part growth important continue going strategy to value our as

Michael Lavery

Alright, thank you very much.


Ken Zaslow Montreal. ahead. The of next go of Bank question Please comes from

Ken Zaslow

and expected. have reflecting I side How or grocery product the would little seems inability the higher to than relationships then a the the much terms implications morning customers and retailer, shelf guys. Hey, your looking get of you're versus to consumer lighter given when much get it demand are ability that space And your the in on levels operational the sales inventory how demand? that retailer? in The in is shorting addition of to at the is what to is to good longer-term

Jim Snee

I'll and inventory Ken those of has him both -- answer any that. let I'll I'll Jim do Sure, follow-up,

products, a to SKIPPY, about contract business and the you're able this I -- and very, think bit know, demand. the Dinty of the and of was in the right this second grocery -- very had away little believe meet mean, describing Moore strong that manufacturing. the that the as home you Probably You Chili, from all and SPAM, by core is we I gap the offset quarter food is

also we service the in Hormel exists was away home food So business that, decline like from food business. our our contract business in and a food manufacturing down. our MegaMex our Jennie-O And and service then saw

food from So our lead core was legacy, their even are as MegaMex I perspective, think you business. to strong. our really that up. our products But probably comment. the a underperformance from grocery that away was really, delta, But from And our you negative two did home pieces would business we those business about impact that mean, have

as the comments, efficiently long-term, going made On that ramifications. to the able right. your so that to to sure be supply we're able a shifted, going well if over not customer the We a it's comment buffer And around as that maintain is space with can. comment our shelf there's you're running have are that and we mean, mean, need that earlier piece. our is back make operations position. customers. I in to mean, do to inventory I as not we're meet a I inventory they my don't just And whole

hearing would dialogue business as meeting constant we're where of any needs, to or our we're risk. situation they at sure certainly a retailers we're going and and of you expect what our in I'm not sure yeah, is we're their others, terms So making that our with space you're understand from in put shelf

Jim Sheehan

about Ken decrease, decreases would inventory the the have as impact. thing I same you all add that to that that the think only the don't is

reallocate we business could retail instance, down, the so our decreased into resources service food production. we know that For inventory purposely is we have so service food our

So that the chain we're supply to can. trying meet all every of is and time need we doing the

So to food there some of of such are an of impact are have service. that some because some going areas areas not -- there much are short, the they're as

Ken Zaslow

to the this turkey business, And my industry the there legacy is leave I commentary? clarification normal be follow-up, thinking on working didn't I'll And point it margins whatever at just should operational is, understand relative there. a issues, is everything the still just and more now we or

Jim Snee

Well happy I to clarify and running. up that. plants mean, the are all

costs. business at related do industry our margins, of always the continue have I industry. mean the to COVID think We from an higher our I top perspective, are

overhead so, the there plants that And to recovery, I I the we are still of in still lead some as those mean, labor lower the running. are PPE, lower mean progress volumes, quarter. issues But would

since quarter. of the had haven't beginning pauses We the any

business if recovering, trailing still And so, don't Jim, year. know anything. really want lean is turkey service food but demand, the last The in the add area I really, retail ground especially you strong. to

Jim Sheehan

we Yeah, and as being -- integrated. you again vertically are

that's but on heavier are through why you've they birds than not to has areas vertically don't inventory we're move integrated. impact in perform held birds, they where longer, a As starting as We're well. tail Jennie-O longer that the

Ken Zaslow

clarify will it were the sorry? I'm there, And running operating and really did I leave the have been if margins you plants what would

Jim Snee

see you he I with to you clarification. can -- can if Nathan that more Ken give offline and have want No,

Ken Zaslow

guys. you thank Great,


The comes ahead. go Please next Palmer Morgan. question J.P. from of Tom

Thomas Palmer

In refrigerated price Good pretty for Thanks mix segment the morning. was meaningfully. question. down the foods

sales lower thus least promo it like pricing could a bit is sounds think at as industry were the Just such make in factor what out, right now of reflected how pricing then understand some a as this fourth play a supply pullback quarter some proceed better of fresh and considering a wanted could that sense? to retail and constraint especially might extent we whether to higher how flow through pork the mix about prices commodity for at

Jim Sheehan

they Tom, They at look the various volatility, of mean, sales as lower last volatility, by were items, had at refrigerated it you last I year. certainly year. for look instance, generally foods, prices. commodity as impacted ended at bellies had the It lower. but the below you prices was to the below even it’s were but closer

foods, prices [ph]. impact less refrigerated than in certainly miss in the So had a an that sales

Jim Snee

the are quarter, be feels all mean and as you mean going supplies the I at plants think levels going running supply it fourth very like And adequate about solid the I of on forward. the to are markets,

we're of So I now. right would expect more levels that the seeing

Thomas Palmer

Okay, on co-packers. to thank I follow-up And just guess you.

it co-packer So driven over certain starts as how in-house overhang next demand do going issue demand the quarters for is or to time. you of is taking more Is products solve that can -- Thanks. essentially couple see by it away margin increased itself? this product the over ease that a

Jim Sheehan

and our to So co-packers, developed mitigation. is we of areas need trusted what make Tom, to were clarify, demand we network we increased and to right the I very a of about, business. guess sure just already we mean I that as saying continue well have risk to co-manufacturers support the different think meet just have that appropriate

capacity to those expand coal of trusted ways packers. We some are finding the with

to those business. expand back supply So the about opportunities it's it in-house. bringing the really about of finding It's more side less

Thomas Palmer

Okay, thank you.


Please comes question Heather Heather Jones Jones ahead. next from go The of Research.

Heather Jones

QX, questions. but if couple your are to you correctly? that should understanding I wanted be understanding quick have I'm I in on plants well Good sure run just your buffer, you to one gains Jim Snee, the just able for morning. a QX, inventory don't of ones, have higher am at you're sales that correctly. sustain I plants make saying the running capacity, saw Thanks taking the that you

Jim Snee

that effectively guess mean to be as because have we plants there, demand what draw. that we increased Heather, to increased have going don't demand possible we as to safety be continue know demand to there's I that is meet saying stock run have we're I and and efficiently and our to

same think saying I So thing. we're the

Heather Jones

that so the from the is that did you've for hedges correctly the XXXX? of I mentioned understand hog in costs the correctly last in think I some of understand Sheehan year, impact perfect. were but more they this thing Okay, prices put And in hog then you QX cash quarter, place hedge second were and you I hog QX have you then favorable did net-net impact was even comment, that Jim though, than lower

Jim Sheehan

Heather. correct That's

Heather Jones

Thank perfect. much. you Okay, so


from comes Please Peter Bank question next The go Galbo, of America. ahead.

Peter Galbo

just we're Hey next a what are couple of grappling this maybe point right for direct of about maybe salespeople isn't some of out competitors guys us? are share weather high to has possibility, customers, starts your turn, to guys, guess good have point your points probably question question. some to at are of that in restaurant with we're more back as the people customers I the touch morning. you much go level forced over dining you the of outdoor a this and the Thanks that with I kind the inside, food just or large of conversations Jim, with taking at is, willing force, as go are sales guess with service really thinking your quarters, that as having some

Jim Snee

But, as others the a have mean other mean, operators service to you takeout this so more so have idea many better, how not I I as say question, next so but part operators packaging does casual a is better more option an started clearly a dining I food we've is I again, become service And mean wasn't that Peter part proficient of many with itself. it's risk to some option. a of so locations, to proficient the food MO. it of this fair then service that and But great developed of from drive go reimagine well much seen, think than I more all through, so I Sure, certainly they get that think right. had at operationally quarters. that big it and that. was takeout, perspective, it couple But much much very the some a food I did that. that's restaurants back become had a

it so, away to a And if went this for seems and away over we've bit period behavior of a going going that idea years to a be me. go developed all it's guess that just home from now ask you but think of away to food just time this to that's I these that stretch, -- forever of

more to think that an as segments home food do out, comfortable So on continue prepared be I to everyone's and especially is get be going I casual with take continue to that's dining from radar. to away more opportunity. go, And going to think

also with We different grab operators options. are and and seeing working on go

they're you food bring go. doing want just not that but So have is individuals and more back a not and go and sit you where to of maybe a as grab about It that. think would meal, your into house,

continues us of advantage in to portfolio have service take reimagine pre-options as we that our to itself. described well that we that up all sets food everything so our And of around really

and direct the sure going of end our critical role force, really, be in So re-imagination. in sales important going a It's really on we're you us. front for we play this that making is as that mentioned, understand to to

mean, we I those good in in about the is where I going this conversations cycle. work just we're having. process, still feel But, So, but to of some be a we're it's mean, at are the

Peter Galbo

of Sheehan that's you're would now of helpful, pretty you much. Okay, a on quick fourth very the this a one, Thanks just point, to end still into wide what month million? just low guys. million much, a quarter versus maybe the the XX kind for quarter, the have drive very COVID to just Jim end thanks XX And you range costs high the at the

Jim Sheehan

of would we're getting that we under The we the I last the be the you will have. and much fact -- than think better we'll or be And be the facilities current would the the a our And cost talked at of even highest structures create matrix of cost quarter at were issue we current end running quarter The better. end quarter. play this every fourth quarter, better beginning we the about the were know, that at day we the that, pause.

these address they But and costs real costs. and So are we continue are to there. improve we they

the building that our increasing we're of plant efficiencies. have So costs. a would biggest If there's pause risk


Samuelson comes next of The question from Sachs. go Adam Goldman Please ahead.

Adam Samuelson

thanks. Hi, everyone, in. yes, me squeezing Good letting appreciate morning

comments lot performance look of and the is wrapping the dynamics trying little up I'm So my to on fourth fiscal kind translate of is quarter it covered. bit ground kind all The just operating a of a sales -- sales think me COVID absent that of substantial about of what actually margins means in of question the quarter. year-on-year intended similar change that taking year-on-year mirrors just reflect margin to kind into and just in kind third performance as your that and think or sales the of would kind about business? outlook a help we

Jim Sheehan

I'll a it more guess Yeah so, take I perspective. Adam, morning. sales good from

from foods, mean, reminder and recovery grocery part retail QX, big and food strong in a just and demand JOTS. Still of businesses dynamics that we're refrigerated thinking service foods I both similar a we so refrigerated And continued products, when experiencing say about to JOTS. the they're

we So, continued to work have do. to

geographies. across is demand strong international Our most

We that continue. expect to

stock said as earlier, from challenges. hitting do production battle and cylinders. cases We've as have all the continue a buffer chain I can having we we perspective, As chain that the to need have safety supply front a supply talked the to about create not but outbreaks production on individual on a and

mean, the it I similar a when a that's demand we from to and supply how And so, that's say QX. are we're perspective. about thinking dynamics

you. helpful that's to hopefully So

Adam Samuelson

related XXXX, that on do of have idea could fiscal imagine that incur that COVID just $XXX fiscal costs wouldn't one, repeating? on, and in you $XX any million necessarily what of is million you're bonuses of look you rough to the there's in XXXX, It that quick a of like expecting plan last to portion I

Jim Sheehan

Yeah, that to process an temporary. permanent that read yet. XXXX or we starting -- a that don't get were don't whole have We're those and we longer-term for on that and better on have are we're trying those estimate

soon So, as and clarity that get we have we pass that as we'll today don't that more on along.

Adam Samuelson

you. thank Okay,


The Robert Suisse. Please go last from question today come Credit will Moskow of ahead.

Robert Moskow

all question. or to Believe not honor the an up wrap inventory it's about What be levels.

think XX% division grocery within growing So one manufacturing, the point learned of what clarification some I last is maybe that of I alternative contract channels we guess, also not that quarter, is are grocery.

So measured sounds is the -- like see third that difference inventory really in demonstrating quarter it not growth and the really level trouble at retailers reporting it's really here of figuring most your what whether is measured Nielsen out the not, Nielsen alternative of grocery reduced why is us fair the having retail, the did between or in same that's channels? but you're it they reason channels I'm just that to say division

Jim Snee

Rob. right I think that's

from First I clean would talked then manufacturing I about it's contract the an right, away have quarter. up, the and we always back that in MegaMex is we're to that's that home in know we honor mean, That do so that But honored. last food say I delta you're products. grocery

I mean, seen is anything And inventory From the haven't perspective, retailer they're terms levels. a that so with what doing their in of significantly we different delta.

Robert Moskow

it. got Okay,

big we're fall like October that, to resale expectation? will ship like have going is quarter, fall not you in consumption or in the October the the anything it's related your to in to So season quarter the a

Jim Snee

exactly. Yes,

Robert Moskow

commodity are fresh refrigerated, used us as down, your ago kind then profits in you pork said higher normalizing and was of profits costs year being those to Okay, on are higher quarter also when last costs in fresh result question, past down? it versus the this you so give lower, that of pork a

Jim Sheehan

comparable. actually relatively They're

Robert Moskow


Jim Sheehan

that. wild, as in the buying you're on that as there's a because markets. have we could as much just of volatility are Yeah, mean, comparable -- they're high havoc timing ways it's And and XX so selling just low winning obviously I as the when been when been play you're XXX. and

isn't fresh to So Rob, the this -- most is probably was of the this range. best in measure but fresh pork profitability it quarter the pork,

Robert Moskow

also about Okay, unfavorable the talking you're that and in those including well as when quarter? were hedges about fresh talking you're pork,

Jim Snee

true. That’s

Robert Moskow

Thank guys. you very much. Alright,

Jim Snee

Robert. thank Yup, you,


like the over for conference remarks. our back to closing This turn session. any Jim question-and-answer concludes would I Snee to

Jim Snee

in delivered we for business, you keeping delivered a Well, call And our results. members cultural safe. again, delivered today results in once all you thank results heard in us in results many areas. team you beliefs our as corporate results one thank on is for listening We delivered we our great we members joining matter. you citizen. as delivered today, results and of our team and do. Stay To our safe, We


you has for today's conference concluded. now attending Thank presentation. The

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