Hormel Foods (HRL)

Nathan Annis Director of IR
Jim Snee Chairman, President, and CEO
Jim Sheehan Executive Vice President and CFO
Ben Bienvenu Stephens
Erica Eiler Oppenheimer
Ken Zaslow Bank of Montreal
Eric Larson Seaport Global
Peter Galbo Bank of America
Tom Palmer JPMorgan
Robert Moskow Credit Suisse
Michael Lavery Piper Sandler
Ben Theurer Barclays
Sarah Davis Goldman Sachs
Ken Zaslow Bank of Montreal
Call transcript
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Good morning, and welcome to the Hormel Foods First Quarter 2021 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunities to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Nathan Annis. ahead. go Please

Nathan Annis

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

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

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

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

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

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Jim Snee

Good everyone. Nathan. morning, you, Thank

the continue focus. our true of of in call United gratitude professionals in be earnings an express we witnessing the pandemic, States. and my I plant COVID-XX want one-year On their to our this As They cases mark of the our to increase the were time. last energy we approach for dedication, during to company November, heroes continued

our Our has safe, we on health available vaccine keep the to stay home pandemic our the who those members or first to as members, team widely pay awareness program priority. were team from symptoms had keep and still the number ill best-in-class were We becomes of be one more on have a safety OUT! COVID and educating continue campaign team to paid. through we'll allow priority employees top and and to the preventative very and been members our the our measures focused KEEP been offer COVID our our evolves to As work to among

paid in fiscal unconditional we financial million security. further our $XX team bonuses members Additionally, provide to to XXXX in

number Our quarter. second communities. head to spread of cases decline, program drastically we our into team gives we've minimizing decreased. Recently, program resulted increased of the in has on been optimism as encouraged pay COVID our and workplaces in the COVID see us our members the This and

acquire the are agreement announce into to definitive last We entry pleased a Thursday. the to business Planters

company. be of many and our nut the leading Planters acquisition the will at to an excellent Hormel, addition have We snack brands business

from Sriracha, company, all give SKIPPY, and a strategic Fontanini, we've fit. AppleGate, Planters past to continues acquisitions, the is XX ability of high-margin The high The in as a food our our global Justin's, Sadler's business. our performances numerous perfect are Over of meat-centric this MegaMex, the level made Planters us Columbus the meeting of business a commodity-oriented, The grow years, further evolution us company. iconic, objectives. successfully branded of and operate addition which Wholly, confidence of away strategic integrate, acquisition branded, moving

our give high will biggest As and one brands, it of we a level focus of attention.

gives competency success unlocking business. both leverage how our consumer the drive right grow another as We to Planters of to to power such force improve brand joining our spot Planters increases iconic opportunities know, our further in business and key brands, as is manage us numerous Columbus, more is brand Hormel expands Planters the and immediate There in core we than from will our to brand. Planters in to and stores. are and be priority, existing we jar. Planters the perfectly and snacking The Gatherings, snacking portfolios Our insights know and opportunities and for and peanuts entire is know center a our our innovation areas to stewardship complements, Integration growth drive Wholly sweet growth. sales are high simply distribution also convenience improve into and sales store there in a key Herdez. enhances scale direct like business, brands

platforms. Project for the Chain us integrate to priority and Supply Another into Orion One our is business

for focus give and We There's love acquisition, grow. and this to for the the Planters this so to about close, excited needs transaction I'm integration and can begin it the lot expect the business a attention to synergies from Planters we for to business. our business existing

to our turning quarter. Now first

to chain X% reason million tax expense. pre-tax COVID-XX higher incremental for due earnings billion. with primary an Incremental to XXXX. growth, Net diluted and related X% of earnings. in Our a million were supply chain four decline share sales earnings hasn't All accomplished to and sales that line achievement record costs $X.X $XX since a top delivered the supply costs team primarily strong $XX segments been generated per growth, increasing declined

chain quarters, supply between partners. strategic combination in new capacity the this leveraging efficiencies, our to quarter increased prior and through We continue consumer production strike balance chain's demand. improving we a a we seeing further that meet to are demand bringing As of ability supply and levels our on

this We the steady throughout year. continue to expect improvement

and been we have critical progress across We a continue make to portfolio. of the successful will in categories, number

we business Label, Lloyd's, Hormel encouraging Black entrees was AppleGate, to the increasing including as delivered well, Fully all turkey retail retail on Pepperoni, the Jennie-O Cooked Every Lean extremely saw major bacon growth and from distribution Jennie-O back continued made Our with oven-ready Hormel such the category, sales strong paying Jennie-O customer off. Most SPAM, marinated for to continues and very growth. Ground, the have Chili, The Hormel brand items, Brands XX% perform burgers, with gaining sales brand. grew. quarter. Justin's SKIPPY, consumers, Hormel and efforts are we meats resonate

a share categories in it We momentum XX and online in a and high to grew several IRI. to as level according grocery Our be almost have the last continues direct-to-consumer. key e-commerce bright spot business delivery doubled weeks of pickup, in

this Columbus provide X% led growth grab-and-go for products business. Charcuterie with Our items. quarter. will deli this Columbus-branded this from the quarter, The opening products, of which channel Omaha exceptional in sales way much-needed plant produces our increased new capacity

While the sliced the the clear compete generated in deli, segment in, this team in deli Columbus brand deli behind-the-glass including was every they us meats. grab-and-go, our leader growth and fresh for foods, quarter prepared

impacts brand group industry. last as year the due foodservice our sales volume team's also season ability of keep relevant. positive business Our continued even in the this on to over declined We fewer this the recovery despite Party holiday Tray of pandemic a to saw signs gatherings, compared quarter, the to the and testament grew to business XX%

to segments our pizzerias, see convenience We as such business QSRs continue in stores. strength within and important

distributors with excellent sales they both direct progress areas secured Our high-growth also distribution as made ghost kitchens as new to such and force pivoting commissaries and operators.

in across Turning of our and to Products very X%. Grocery this including ability We increases a of Compleats top-line increase our SKIPPY, to to business brands, and of X% the increases implemented strength Herdez, volume price results impressive We segments. SPAM, many our categories. demonstrating saw once delivered this which again Hormel quarter, sales SKIPPY for led our quarter. price

the our We with recent innovative encouraged Squeeze, SKIPPY performance are new of including SKIPPY and SKIPPY No items, protein spreads. with Sugar added also

as strong CHI-CHI'S such was venture earnings by Herdez, retail as joint La MegaMex with by equity growth our brands performance had this and and quarter increasing Wholly, led XX%. well, Victoria. This Our a

higher and X%. volume In Refrigerated addition XX% results, the driven segment increased increase mix. MegaMex and X%, favorable Foods profit by sales was to declined sales the in a

momentum continue gains I such and breaded across frozen both and category by to value-added be foodservice share business business. had momentum we hotdogs. categories year-over-year the to see chicken, our Applegate teams growth core overcame as our in with deliver breakfast business. growth Applegate and deli the bacon for fueled about are declines quarter, building Our in a optimistic sausage, retail particularly strong

in excellent Pepperoni delivered results and also foodservice We in retail. business both Hormel our

plan retain simultaneously in to leaning brand Hormel during continue Our teams lower chain in supply by on due Pepperoni and by segment X%, Refrigerated we Jennie-O strong which by to also the category Omaha. Crisp exceptionally buying. start-up foodservice onetime expenses innovation. We our and significant gained N' new COVID-XX. Foods a due ensure the plant We foodservice increased overcame new focusing we efforts our the to significant and advertising volume our bird households whole commodity related impacted commodity. expenses decline Cup XX% pandemic to into and declined for optimize profit core maintain products the initial to and in saw sales, retail profitability sales, Profitability X%. was in to decreased sales declines our increased

we with growth coming double almost Our compete. category digits retail which grew quarter, from business in this every

taken increases volumes our double to positive quarter. increased across price effective strong by a to late second Whole season. very be have We the bird due those expect in and portfolio holiday digits

to in sales continued had segment expenses and weakness cost XX%. significantly impacted by but Lower business earnings. foodservice Grain declined Our modest during to supply were the business increased Turkey profitability. the a COVID-XX higher was K-XX foodservice to the Jennie-O and key and lower quarter foodservice chain in addition profit college university only the lower related drivers Store industry. increased prices effect pandemic, on freight

higher primary the the to affect of We grain quarters. prices expect coming impact

short volume pricing to was and increased action, our China. drivers earnings Sales higher costs. strong we and and XX%, again, in corn performance In our X%. China retail profit to taken meal all soybean manage about of segment business. additional key were in decreased increased the sales Once prospects and International the addition business growth Beef have to SPAM, long-term and SKIPPY and XX%. actions We led foodservice very by China. positive remain Jerky

also quarters, continue Korea We like Europe of exports branded growth. prior to brands Philippines, the for our SKIPPY SPAM. Similar levels show in and affiliated high strong businesses saw and South to

the delivering earnings of about balance I the optimistic to am growth. Looking increasingly year, sales and

As guidance at full for share. $X.XX year to such, are the $X.XX fiscal per we establishing XXXX

foodservice the of three are performance; key we there and As Planters. performance drivers range to supply Similar dynamics, include believe the our recovery retail a not in quarters, chain. and acquisition the of impact to guidance industry long-term does reminder, the this near-term the our of prior

and and retail, their need teams respective maintain international Our categories. deli to momentum outperform their

very brands first to new new those purchases Our repeat, of depth brands during repeat purchasing or buyers and is almost times, the rates brands two multiple incredibly repeat continue remain positive strong. all making our households, gain with for consumers The more our our quarter.

to brands whole, our a gains household As Columbus and Herdez, over Victoria increasing continue make like with household penetration La by penetration brands XX%.

about confident we gain foodservice For optimistic ability recovery. in to our the during are channel, share and foodservice the recovery a

to pandemic, time item. own operators the to to products food menu touch unique labor, flexibility looking preserving their have all for minimize preparation, while the and simplify During been a their save add

smoked Fire in continues Braised businesses meet with like The our Hormel and positive. direct Hormel we foodservice barbecue sales force Bacon are trends Our authentic seeing their to meats, X. are Sadler's needs recent products

able favorite restrictions, eased their dining patrons restaurants. states as been and to allowing to react quickly cities demand increased have to We have to return

to capacity the have a from week-over-week absenteeism, meet business, We as excellent are and We demand also continued all new we encouraging positive supply increasing noncommercial of levels K-XX the chain. levels The a our capacity pandemic universities high our improvements, of recover to we vaccine such customers. on signs progress in are colleges are outlook. anticipate healthcare and reasons Steady subsides. our lower and as most schools, seeing made rollout

on with constructed hit Omaha, and in on team both production our during time the projects pizza milestones sausage which expansion and major amazing supplying pandemic. this Burke. Both the facility dry new at toppings budget, opening opening of two quarter; primarily were Our of is considering projects our were the truly Nebraska;

and plant location, labor improved. Our availability our situation labor in on have almost made teams has every progress

and level team's quarter in for trend We widely vaccine remain our deliver the year. this relating commentary give to members. this the financial position our expect financial guidance that information the cost continue confident becomes team second the ability to time, discuss our to call regarding update into We of have an into and coming At and now beyond a to as sales visibility to Jim and the I quarters available input over on quarter, our earnings markets. will our turn key Sheehan higher provide

Jim Sheehan

excluding Jim. $X.XX last Thank the direct share the COVID-related On was first were facilities were X%. $XX morning. earnings of network. an Good pre-tax the and COVID earnings share logistics to the year. our $XX quarter run expenses Record compared you, reflected volumes for per have million first first approximately increase improved slightly would $XX $XX quarter spend increased. per Earnings driven the the efficiencies started was primary of in This $X.X advertising decline driver sales to basis, expenses for an in to billion, quarterly quarter $XX to X.X% to COVID our after-tax compared or prior million quarter higher the expenses, $X.XX $X.XX results incremental pre-tax SG&A million X%. of Total COVID-related Absent was prior year. compared rate year. tax through have of and Advertising expense. down million. million by production from last was costs sales, higher for declining

tax Operating related brands, XX.X% impact to lower included leading decline fees. Label were XX.X% and expenses Black Unallocated driven SPAM, invest Jennie-O. Hormel quarter earnings. expenses continued expenses Pepperoni, was continue our The related compensation, the deal including to for and year. last SKIPPY, foodservice in the and COVID by compared deferred to We settlement from margins

quarter year's rate large Last by was the of in XX.X% exercised the tax options XX.X%. of stock rate affected for effective was the Our volume quarter.

manufacturing improvements Cash $XXX with inventory quarter acquisition, gradually to of million operations the labor continue to from use a Even year the we sales, the capacity strategic XX.X%. due Planters from availability, X% tax be record full during impact the operations, Excluding throughout the expansions in increased expect increase. to XX% improve was quarter, rate internal between levels and and partners.

to We throughout domestically is to pressure both and for continue expect on risk inventories inflationary There expense quarter. second the build internationally. freight a

$X.XX, the we expect February rate offset higher We However, of quarterly at year. XXXth improved annual paid some of factors a an XX dividend freight the our X% consecutive over efficiency prior to effective costs. increase

of to opened and the financially company was facility portfolio $XXX EBITDA tax price During of underway acquire as billion announced multiple This transaction pizza also in our quarter, The pepperoni were million structured to million. was effective topping shares capacity. XXXX the The Capital we for agreement $XX an and in asset new is purchase the Work The included Nut $XXX the for quarter. definitive the the $X purchase price benefit. Planters effective adjusted expenditures acquisition $X.XX billion. XXX,XXX for an million a XX.X purchase $X.XX times. the target million. is on Snack sausage of Last repurchased company's the expansion expand capital attractive. We in Burke expenditures Thursday, dry is Omaha. XXXX

multiple historically by valuation to the leading profitability advantage with the the our us take increase low margins XX%, leverage secure to sheet. a accretive our industry approach of brand disciplined company balance average, at improve below a and portfolio sales Our rates, allowed responsibly of

to expect debt. and cash of finance the We on with transaction long-term short-term and a hand combination

months XX be expect debt will X.X% able and significantly the at be to able to in deleverage the funds We months. to to borrow approximately XX

are capital We to strong very The our investment-grade X.X focused by with allows flows on from our are maintain a along times Planters business allocation cash XXXX rating. a targeting strategy. leverage existing long-term and retaining us

prioritize the and quarter, continued first for In efficiencies, currently the form and to compared labor Hog grain With availability Industry in at XXXX, of we driving have to volatility are back to hog the cash prices cost the market anticipate expected is growth. to of production which annual to the USDA to high hog during foodservice the returning levels, projecting higher increase increase. in led levels to conditions. X%. half industry balance pork historically market continue will production the improve recovery an less of We balanced year, the operating in shareholders dividend weights XXXX.

balanced of supported complies hog Our The will Recently, supply in strong we mix line prices. first the higher with seen risk manage in strength USDA quarter. and for have the contracts by was last year demand the during pork and us help cutout the of pork domestically cutout, internationally.

the We continues continue ASF and pork Asia to and monitor demand China, export risk a in in Southeast ASF be to Europe. industry.

in areas modern could the be agricultural practices. We managed successfully disease have with seen

demand coming foodservice Store. drought generate feed impact planting strong grain. the expected factor are watching be conditions quarter The of America. strength Strong to higher back Chinese negatively expect for America during closely the prices, buying, We Pork for for combination Beef by balanced are procurement and last season be near through prices in and higher competitive to in and and to formulas. growth. as second We approach of Jennie-O the improves. to our expected in decline higher belly South is are Like a the We advantage. are The prices prices brands the costs in less continue than industry manage processing watching continue volatile remain demand trim to a XXXX. anticipate with half pork global conditions markets to weather the and which derivatives South volatility freight XXXX year. availability industry, demand, lower pork expected to Turkey be plants driven and are labor primary grain trim in and fundamentals adjusting we spot intentions term of we

announced Additionally, to our across products all have pricing action profitability. protect we Jennie-O

turkey the ago hold levels, for remain in thigh Egg Fundamentals storage industry are change. industry depressed. will meat prices conditions levels as breast recently, Because actions foodservice additional for and breast while improve. and cold meat the take remain year commodity placements expected is to prepared been sets, below which to outlook are mixed. as is declining a breast industry placements pricing lead Poult to likely foodservice of have meat, key lower the supply. recovers, We

the are business. implementation the for plans Planters We finalizing

closing have by At call the turn call. of the operator chain year functions The question-and-answer We for the the within implemented one portion will time, and to I'll this and the fully the date. HR closing. integrated payroll of finance over be supply will


question Please And Instructions] Ben the Stephens. go first [Operator come Bienvenu ahead. will from with

Ben Bienvenu

called you if to grain out want for want start question. pressures I to focus first related could, my we in And the to there, comments - I Jennie-O. cost

You about think you're able extent offset talked what wondering, you pricing. how higher or from severe meaningful, costs talk around to your for that you the the about increases, pricing of how the that to be could meaningful actions market prices? And you? as prices? And is I'm think about the the to are be expected higher higher to receptivity

Jim Snee

team that Thanks, I priority working the pricing of they've high that strong support. last we forward. rationale this lot going really, a tell have what's underlying while a not done, Ben. in Obviously, terms they're or through. you so month of the Store Jennie-O But the of there's success in Obviously, terms the is implement And to supports been grain Turkey been market for would very getting happened - in entirely over, pricing.

the difficult the know Jennie-O demand What as So has the for the there. to team Store And a see Turkey we've we idea we of job exceptional do elasticity go been something pandemic. retail is to with given forward, that is pricing has products. continued measure done nice

that remain the can very balance the the for we business on success have of year. So optimistic this

Jim Sheehan

of of some type Corn up meal soybean was while Cornmeal give type So about Ben, some up to XX%. is Nuts XX%, just you scope. up about scope. you

have at the significant of hedged we lower a ability position. half markets. less than have the price a our than current corn formula. we It's change the Now to And

the as to the a can you will more meal-based soybean from So of cost. That formula imagine, portion corn. formula a of we're moving away offset

probably we've increases. to six along with and price positions And taken. talked about a six increases, So of that risk the mitigate these positions Jim around the these approaches the taken - took we more feed approach than months the very really there's effective multiple we've shifting ago. on formula

Ben Bienvenu

you. the the investments several Okay. supply a question Thank years. That's number you've And related very helpful. made over to last second of My is obviously, chain.

with starting freight would Jim You've chain you gotten Sheehan, made you any headwinds supply of some - cost you through to supply cost the of of might here capacity - stood up freight quarter. on equation in about fixed a cost offset made chain higher get be afford that absorption, mature benefit in first improvements. And talk you to as this be few expect to capacity of the you relative comments these some terms Orion, that that by you expansions the helpful. Can enhancements some the that some inflation you see, expansion the

Jim Snee

that and Yes. we've But battled on year and freight a we're ship been challenged Project been Ben, how let is we've and chain of start trucks. costs, supply of I'll early to finish have our inefficiencies Jim has I'll one last in go - with Orion. terms that we able things number ahead is the this had over the of how year with

opportunity so of some that, freight typically had optimize we costs And and the higher to haven't loads because our like had we've do.

freight see good to a seen optimized to of a in up able And pretty to be expectations some significant have pick higher we supply while offset more rates that trucks costs. there are a chain increase, and to as manner. fill able we for continues those will we're us portion So our freight opportunity momentum

with be there's So yes, opportunity some that internal again, us offset a good really efficiencies. for inflation. we be there'll some think But flip to freight to going

Jim Sheehan

us this benefit your that's I'll a Project Orion little in area. about second and Ben, portion your talk bit how of question, will

all costs. purchasing where how are under manage our one costs to into giving we across insight businesses and given platform, the done all, from aspect, purchasing visibility platform. a visibility can from coming that's under all And we the great have those having costs one - us of of First as the

some to that freight, business do we're can can levels across and analysis on running actually how benefits are load load as we improve on we organizations. able provide is where thing what to freight our levels, significant our other The our

a as it what period those forward a significant to through. of we as hitting levers pull we're of we costs. manage our actual it's understand benefit very bit and what is providing go costs inflation can And timely going So probably are a to


next The question be with Please from will Oppenheimer. Parikh Rupesh ahead. go

Erica Eiler

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

first, hoping lastly, the in I So I and follow Planters wanted maybe margins last just Planters us quickly categories dynamics And to on was up made then could the commodity. actually give you week's acquisition. gross reference into some there. Kraft more private-label as insight also Planters a to

So about terms a its categories being of how in commodity? think do you

Jim Snee

and I'll Erica. morning, one. that take Good Yes. go ahead I'll

think the board, there's items different average private really seeing just putting when label just that. we for categories, how those job, store seeing private brand, the the the the percentage talked our about they label, process. top label. When And those think can mentioned. range team what board. when we're risks, can And they're center And not label, same XX%. again, that's subcategories. but is of existing is about phenomenal right other the you business, I plan the face a we in identifying we of at last was an across private range across about now, that private together mean own across shares did we as we Planters our thing about do that our list offset week I were the action diligence due And the the

label not the So a a new at being of risk, idea a a all. to competitor, threat, private us

was We've margin business So then to down times. little gross total that also giving about talked in too well we Products it's And we without Grocery margins of I what - brands. But terms lower From above multiple week and say probably are obviously, specifics, our had our we're they're the prepared a a other to think of that gross to manage profitability. accordingly. manage last perspective, how many company know our average, the in above thing, just they're average. terms said category, Planters' safe

about commodities think is pricing we all brands. to when and our of so similar elasticities, brand very large price this And other and

a us. not would not We know new this one. to see it. to again, how So commodity commodity a far business perspective, when this is a know our all go up, to And And commodity from so we things from when you is yes, those our business roll perspective, business. not manage say, I business. we

hopefully, that's So helpful.

Erica Eiler

Yes. very talk gears Grocery just just growth? would mean really you more lapping bit these can and I No, facing about about quarters. again, maybe little switching thinking that's here helpful. obviously And to in a of you're comparisons then couple challenging Products. next some the Can your confidence this you're Any helpful? puts laps, think, how with takes regards you share I be to

Jim Snee


of the the the Products. Grocery in our business. and we But takes entire significant portfolio of saw run-up balance that in know second collapse year. saw also for think I foodservice lot We across puts there's significant going the to the of the be we a quarter,

we our absolute then demand meeting and in in from having we were getting - we so chain the are our customers. the recall, And talked you QX, difficulties supply and if that about

give of for lot a and there's three quarters. take So remaining the

our that business out allowing it’s achieve chain. of with and impact obviously our the business that this. and and think going to results the As we this the we units also all not us the optimism, optimism chain the business we've discount fuels And supply seeking their my reviewed laid of are to goal do and how is flow supply

much So run they our so business. difference made its - in really a better

increasingly guidance So the all those of things together Eric has really what about the year. business optimistic and for has reinstate our the become allowed us to balance


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

Ken Zaslow

Which the constraints? associated explore to talk capacity of And capacity scope cost of that side kind are won't with do then it, you Wanted capacity which was about products with constraint bit. now? what think in up were a that and be little products take capacity Can you that? And ones not on you the of, the what future? constraint the

Jim Snee

part. And I'll the numbers let first the Well, I'll Ken. CFO part take take the

biggest You we in about talked grocery really constraints we was products know QX in in saw, our and the our this that business.

business at that one time saw that knew we that's would the know, Hash. and constrained. capacity You helped a our general really we Chilly, online our business. spam spam expansion had call in that Stew, that capacity few come and the process we capacity But We was canning was of, were one, we in which

is over we we identified not the co-packer most balance but still where opportunities. of year. the expect And know we're - one that demand, You we to that in improve continue recently expect to

I has about pepperoni QX really speed. that new and pepperoni foodservice our think a opportunity that retail to we just done to did that we both that's the in business. us up and was getting talk that And afforded expand had line

you capacity the know, know, are optimism we to - far the future, as less of is we constrained. you So, part look

You customer happened. were know, do that - clearly to got QX, We've Jim meet to we're we not from in do, to I But perspective. think going demand. needed as out we a don't of we said I everything know woods. that the knew that and cost we

Jim Sheehan

Sure. Ken. Good morning,

Ken Zaslow

morning. Good

Jim Sheehan

supply tremendously The XXXX was, chain of last impacted half as said, challenges. by Jim

some about idle weeks financial seen a the trends So few should we have foodservice. say, And as it last, is first in the we very We've from foodservice. talk interesting area at that let's standpoint, in look we on capacity foodservice.

no have foodservice filling we problem need. that So

foodservice and business. category is that for opportunity So us is any unrestrained growth great a the in

it's than to and was supply a we that safe tremendous much But anymore. year. The QX existing Products QX, going the are QX availability crippled by to think of it's better really category, to is it say were In we're continue last challenges improve. about we chain had. talked So labor confident Grocery not that I

so grow year. the foodservice. in Products of how to And allow going growth the that very be we're Grocery business. of actually talked additional in there, pepperoni that's some online Refrigerated nice we've half business and to that's in significant back we pepperoni seeing recovering have Foods, us had very pepperoni and in some the able And to Jim come the the about job doing constraints a capacity

we've and that during XXXX our constraint that we that helped haven't other opportunity in talked us a product time the is very significant produce of an we in the even found about XXXX. difficult think a things So have one of in efficiencies this some the time I of how lot hard period. constraint, to underestimate operations that in impact much it's have had And

actually Now it, be efficiency to increase and efficiencies and operations. as we'll issues take those able we drive issues throughout cost the

Ken Zaslow

there, Can fear not how and capacity. to how this add, I'll to and us give I you XXXX actually to really just I appreciate we leave might think it. that year some - underestimate I of could XXXX? it And but the dimension

Jim Snee

ability Well, seen growth we some be that I you've would important improvements. see think some in you if as fill full categories, our the There that demand. could

think, - growth about we back half good talked I chain. on in as I strictly I've think the in see Products, Grocery of the in supply XXXX - is Products based where benchmark, a improvements Grocery in

Jim Sheehan

Yes. dynamics. channel point And I just would at mean, this that's the Ken, the are factor really add, I other unknown

as demand. home people and foodservice that Jim - out, retail from so, our meet able eat as are and mentioned, capacity ready, perhaps is away looking as willing to to And get

as be think see into to half even that's we I part XXXX important an back more of get foodservice story we recovery continue. going of to and as XXXX So our the


Eric go And question Larson will next be Seaport Global. the with from Please ahead.

Eric Larson

taking for question. Thanks everyone. Thanks the

Jim you. Sheehan, So for quick question

financing rates for about the talked Planters. You

the just clarification, transaction? use to that debt going that incremental that borrow? the X.X% on for and the going finance to is the you're of debt Just it percentage is blended rate Or cash to you're between

Jim Sheehan

It's out of we'll X.XX% retiring rate. including that $X $XXX has that June for a in And the took instance, of blended April rate million a worth last be billion debt in the debt, of year. I

rates, level about think the be in current interest interest rate that we'll you replacing and high reasonably with some retiring rate. interest interest much if lower So debt it

Eric Larson

little time this - I of bit current rationalize Will that for industry, - has industry significantly. And We recover maybe with my the we second stronger thought, Jim, lower like, a Turkey - the have come oversupply the out pretty back you while. would structurally more? pandemic markets Snee. pandemic, that the seen been impacted foodservice a end supplied industry? Mr. And just the Will long the in obviously a for has pretty haven't potentially, a industry ago. maybe question the is supply significant of

Jim Snee

and I good of of our able you the the that want is work the do. mean, on success, that I pandemic, in the I if had. some wouldn't of attributed ground into our lean we before a don't feel had on we've that Eric, focus right we've that might team pandemic on, Yes. From lot achieve. effort the competitors believe perspective, really to directly I hit, distribution leading what about know. And growing the to some retail was to side comment the expanded then, back to But distribution done, the stumbles, go turkey, the strategic we

In like, meat. of used meat a the in terms of foodservice lot is look clearly, industry. mean, I breast Turkey inventories what breast

collapse, business, there What And strength has we entire that seen increase continued are the some had in the recent so across impact. that have business. foodservice a is implications industry. Jennie-O And retail to obviously, dramatic our in

about a And positive lot so our forward. Turkey with there's Store we to be Jennie-O believe, heading business that

Jim Sheehan

is down that item the But We've be, at where would decreases looking this that, and time placements egg the fundamentals months the and indication business been in down long that for placements that's the best of others industry seen pork pork XX%. reminding going. in January, Eric, a would in now. add I X% for several were placements probably we've are

of from industry indication where standpoint. that's going strong the a think a I capacity is


Please ahead. Peter from next be question of our go And Galbo Bank with will America.

Peter Galbo

question. two-parter. you maybe inflation. of gave a for And my the ask taking about the a Jim, it's pork Thanks around first bit color wanted just I question, to

appear whether and it fair you just that's, to any more U.S. thinking how internally. side pork of going ASF bit A, about consumer the or just if versus want around The when to or would like the that shipment of lot speculative first being, out seeing of XXXX tangible it I a part be not it guess, there be was but now a more more, see that inflation this the there was least ability you're feel maybe get pricing at I bacon, guess, statement seemed that I insights make to to on you're pepperoni Turkey, around a from more around pork And elasticity in that then on time behavior is your confident changes you're items? seeing B, your team those would consumer mentioned in anything on types consumer you of

Jim Sheehan

Well, in Peter, I first recovery is issue, the think going part on of this the foodservice. to depend is

in - take They now. been the right one mid-X.XX X.XX you bellies range. are running have up if bellies, the So

I is in an going that demand that, think is the an indication there that's there up. that is that some recovery foodservice, expectation pick to

levels. for run the - to prices mid-X.XXs, range, year's in year We is somewhere these which above in that full expect the these last

seeing, and One that of labor taken have in now, probably to not you're markets. things the to you're some the component Trim are that markets going the a that's XXs other is there's boning. think certain the still pressure off that though, of do I right fact enough of

a labor facilities, issue. just labor prices going are into That's down. these returns those As to go

as going are we going the to go by volatile to recovery. think be impacted And foodservice demand bellies is we the - So be have through.

Jim Snee

Turkey year, about SKIPPY. business our in price very pricing and taken to bacon Already Yes. really we this pricing We deli as ability on Store And We've Columbus, our Peter, price. has pricing. total talked Jennie-O confident taken remain the we've I mean, had well.

ability the price. very the what's happening business, confident feel follow see obviously we factors and in as inflationary So in to we our

Peter Galbo

make trust, clarifying there both. unlocked. an rebuild on was - that up inventory One, or the I a Okay. on quite Thank that investment just any to there retail quarter the some here. rabbi helpful. capacity sure, very quick was then And Grocery just just acceleration, wanted of like And - right? that bit. Products, guess in inventory was questions was first That's I number? income, two But just you the

the So model. very maybe it we something of rest we think much. XQ Just the for and reverse? about do in how put in the that have Does year? Thanks to

Jim Snee

and there would demand. I Peter, just Yes. hasn't rebuild. based on our to say demand seeing I ability retailer really we're say no, fill that been that And inventory that the any

then it strong so think it - opportunity But going speaks as still to at to that we are And demand. consumer have the pipeline point, I to well. the also very obviously, the fill fact do there's some

Jim Sheehan

line, interest much up compensation And expense that's gain thanks our our the that which have income. so interest coming that in gain interest Any deferred at the on offsets the our program. for from look an That's if you unallocated this backs rabbi in up is expense, trust, expense. we question that quarter corporate

an unallocated expense each of spots net offset I've seen different So interest appear and there. when the gain that two comp but is statements, the the income, you financial in at They deferred incurred the at they additional theirs look on I the in offset other.

So offset increase the there investment Does on no all? in at above-the-line benefit It's EPS the is line. that an income. help of you basis in unallocated

Peter Galbo

about just pretty number volatile from going it I we forward, does. as can it No, that guess quarter-to-quarter. be think Yes.

it? so best And guess what's to about way just think I the

Jim Snee

the way in and interest are best in because unallocated. The offset gain about accrue or results by Sure. losses has on company's to income think corporate impact it it gains whatever no losses is,

So P&L. no it has impact on my


comes question next from ahead. Palmer go Tom Please the with And JPMorgan.

Tom Palmer

on to just side. I ask the wanted First, CapEx

$XX think, by outlook, million morning. I cut You your this

that to what pushed CapEx Planters? XXXX? Just reduction? up this the Is or curious were free there drove Are halted into other for maybe projects some specific

Jim Sheehan

It's and gone that a into one - and Yes. we've is it big expense later to fall next expect project Tom. great question, And the year, we year. it's that back in majority the pushed ahead of

It's It's delay project a a complete. not need cancellation. capital. just a for not it's in a will that we additional So still

Tom Palmer

that what disclose project is? you Can

Jim Sheehan


been hasn't announced that approved. It haven't yet. We

Tom Palmer

year. and ago, outlook And quarter be X% have then Sheehan, outlook a for should full Jim as EBIT we're thinking seeing input margin inflation as side, is Okay. pricing then instituted costs understood year? the just versus margin the I pricing. quarter an being you make being Do maybe just quarter timing how the toughest about the sure I of updated think Jennie-O And second that we during wanted that the an maybe now? Should given you cost on to about this mentioned that we quarter,

Jim Sheehan


right, when be to to biggest Tom, wait Jennie-O the second there's know, as on, the ramp-up cost. effective. is absorb period bring exactly a period and you for pricing that the quarter be that they challenge But as going pricing You're for a you

that but as will impact as previously far in we talked margins have will significantly, it QX, Jennie-O. will but impact have minor impact slightly not for expectations So an a and my about it what on


The Moskow will come from with next Robert Please go ahead. Suisse. question Credit

Robert Moskow

mentioned you're think a you restaurant just foodservice Jim, and in more of mathematically, there's the International give expect COVID response to Jim year? that's you pricing secondly, what a throughout trends should give And last and you was for? little us on do specifics to - pricing you rates? more And lot the type mentioned questions. some you as I And then think of seeing quarter. declining pricing what is in weeks, the during Can we that from? pepperoni division of that that change the of couple level that Can over interesting a few one of A demand color being them.

Jim Snee

that I we mean, seeing where Yes. Rob, fast-casual mentioned, it I'll is we're in perspective, restaurants, traditional ahead your more strength business. go mean, QSRs, from start. I a the foodservice and pizzerias

first We But of quarter second improve of the a best of weeks in terms pandemic since pickup we've towards in travel the continue haven't venues quarter, the as hotels. some really our some seen began. end the of business the seen into to the

of It also began. had we second end have the been before early business. some seen probably would increased October, So November wave

now it's real, to pepperoni forward. been really we ongoing to sustain believe are business know that this that new going that and has So then going trends we we're the the And not to throughout an be down. and able up was Any slowed line because expectations. we capacity-driven, the that for slowdown meeting have those which us that speed, new just never area and is really we're our pandemic

Jim Sheehan

Rob. Good morning,

an China. It's result our operations business improvement in There in both exports, more our it pork. our business. and - in area within of and better branded this a Regarding isn't certainly pricing. results Brazil profitability hasn't it's our International improved, business, a of that and in not fresh is broad-based our It's

but in no aspects mix, really improved in So International. it's here. - the is business internationally driver of all an This isn't it's broad-based I just a improvement pricing mean

Jim Snee

International And strong business year, to Rob. we our balance remain of the for the expect

Robert Moskow

sales am if Okay. was XX%. reading I International, up were wrong? But I in but down this maybe volume I could, thought

driver? a it is mix So

Jim Snee

That's a issue. mix

Robert Moskow

Okay. What's Is the driving the positive? mix SKIPPY it SPAM drives mix? and

Jim Snee

I high it's is mean, that branded internationally mix. a - that Yes, products demand Yes. the the are driving better that have


question with go the is And ahead. next from Michael Lavery Sandler. Piper Please

Michael Lavery

Refrigerated make I trajectory Foods understand to some margins. sure for I and of want just the the

get before You've been puts called already Or are and the come lowest the half? and might worse second it between out of mentioned those have margins some maybe here? since What's some know the takes should that it we the upswing I - it of now into through. from But you some the Does expect the gets better? benefits of are half and an we looks like headwinds, catalysts around clear. or should second XQ XXXX.

Jim Snee

Refrigerated the Yes. for strength recovery. in obviously, the I Foods, are the positive mean, foodservice

we Refrigerated expect very continue hardest path a costs. if the on gets also impact. positive hit will so in COVID And - with we're to the that on, Foods be

hopefully balance be Foods the or to impact year the costs COVID mitigate see we will continue positive of as well. that Refrigerated as on so And over - a have

Michael Lavery

Sadler's are weather some we've production? affected. maybe risk there in moment, seen things some the - And maybe you know but maybe cattle, watchouts about second maybe just what doesn't quarter-to-date seen, to color the can reports impact is seem on a on follow-up And you've it Thanks. hogs any of Okay. also just any like give? like but any sort or I

So you're update just think maybe kind watching what on of any now.

Jim Snee

not to Yes. We impacted. made some of a week for are difficult all natural I gas. mean, for of was a other the decisions prices lot week spot this And then spike locations increase. thing mitigate large in our is We a obviously, saw people. the quick

the a So, that's really any have Michael, longer-term short-term broad-based, impact, is to and the on business. impact going nothing of


Please The Theurer be will next ahead. Ben with Barclays. question go from

Ben Theurer

and Jim morning Jim. Good

X.X quick ones. Just

still benefit you the first elaborate from could inorganic, all, right, growth Sadler. organic of versus how because was first did if on remember So, a little I quarter bit

give in releases, earnings couldn't this to but points You in found data one. used it past those I

So, how like underlying Sadler's, was performance the just the to dynamic understand without here?

Jim Snee

Well, volume and large without up not Sandler's - it's but Sadler's business, sales is Sadler's. obviously, without a still

are organic an our basis, on So, up. sales

Ben Theurer

on then just the up And international commentary around following the quickly piece.

you've on mentioned side. as some think the headwinds earlier well I freight of the

markets the good But serve you're on just international market business, just needs context. what the product understand your just comes to international been there recent and seeing freight because delivery what side a to most as in clearly, to And obviously, has So well. quarters. the the be when those surprisingly of International understand freight to are it on to expectations

Jim Snee

for difficult mean, really is that part, I secure the containers Yes. making that Ben, the most business. sure just we

that's the our we I of team. so mean been And single-digits. overall about freight, low we about talk focus that's When talked International. inclusive really of

per of thinking total we're So view that's about company our how freight.


ahead. Sachs. The next question will be from Samuelson Adam with Goldman Please go

Sarah Davis

Davis for is Sarah This on Adam.

Just so on about for I growth side, question me. a the around the implying of sales year-over-year. kind guidance guess, ranges, between quick and X% thinking the X%

can you high it. Appreciate provide, end about range low world you super anything of gets versus guess, helpful. I the would to us state just what be the think of So the helping

Jim Snee

foodservice for impact of to softness in I But might channels. It's some offsetting any Yes. significant is our aren't the you one it the an picks mean, key I have great going as is be that a to driver long Sarah. question, another. downturns of for really going mean, really as believe it's there us the balance expect as the year. to up, business we

that think to part play see large growth. a some our provide the also or going Products Refrigerated so, businesses, whether we recovery expect And still range. is actually our fall we to Foods in I Grocery what retail do looks But where it's business, like, retail in

and said, it's that It's thing going do with is scale is recover. going We rate So big to think The on what believe outlook. a impact biggest to I going happens the happens to the as I at for foodservice. us improve. really which that have


Montreal. Zaslow Please go next is Bank Ken the ahead. from of a follow-up And with question

Ken Zaslow

environment? ahead parts; increase, it the it the the taking is, the covering the increase in sort any price increase? volume Two is I from when follow-up. pre-buying Or anticipatory? was is of current one appreciate of you're And Jennie-O it pricing

Jim Snee

then current none environment. Yes. No, been performance the that it. Yes, of the by Ken. great have And questions, at to cover is Jennie-O no, would pricing


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

Jim Snee

want of morning. I thank us all to for this you joining

lot all there discussed, across parts of momentum a of is we As our business.

have We our know to to and we there need. right that and the Stay also right warm is safe. year. deliver again But the work do Thanks the that us. portfolio to results know guidance deliver we for we this sales also people, stay joining earnings


you, The conference for you now has thank And sir. presentation. today's attending Thank concluded.

disconnect. now may You