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Hormel Foods (HRL)

Participants
Nathan Annis Director of IR
Jim Snee Chairman, President, and CEO
Jim Sheehan EVP and CFO
Peter Galbo Bank of America
Adam Samuelson Goldman Sachs
Rupesh Parikh Oppenheimer
Tom Palmer JPMorgan
Robert Moskow Credit Suisse
Michael Lavery Piper Sandler
Eric Larson Seaport Global Securities
Pooran Sharma Stephens Inc.
Antonio Hernandez Barclays Capital
Call transcript
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Operator

Good day, and welcome to the Hormel Foods' Second Quarter 2021 Earnings Webcast and Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Nathan Annis, Director of Investor Relations. ahead. go Please

Nathan Annis

Eastern. to second 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

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

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

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

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

making. XXXX. to January and call our XX accessed I on now Web can Jim those results for in the the through the expressed XX in statements be will company's of by the made fiscal It Some be to turn Please Pages quarter differ will may Snee. site. or the comments ended over XX-Q refer from XX, materially will be actual today implied forward-looking we Form

Jim Snee

team deserves to continued everyone. record millions this of Once for credit production much quarter high-quality This our Good again as customers. safe, heroic food work of I sales and Nathan. working our they recognize team produce to Thank for the the members. this consumers you, results morning, want of quarter

priority on ensuring been edge safe COVID-XX well leading the we members team country's of cross-functional are date, workforce, is we over leadership domestic rate. efforts. the Our to is fully keep has of the which team and have of To XX% number one our vaccinated country's vaccination ahead our our vaccination

first-half. be the in top are We balanced and cases business our the sales our perspective, In the winning delivered the sales team performance a for and the a to as to A increased key the first-half total, the increased line year, decline foodservice in our encouraged over rebound our by From business. quarter model sales our last of rapid is year. in formula proven again compared X% communities. quarter has second driver of X% for sales for

our foodservice team actions recovery to position and expected, recovery. organization took As our capitalize industry strong to properly on the experienced a numerous

see businesses or pickup how doing. leniency, being in takeout, whether payment extending environment, offset were a food tour it our delivery, many significant increase accomplishment the our reflects of with foodservice ago. rebate to short different partners crisis, knowing adjust the been they doing we to Within a teams ways, few program a XXXX beginning was This a part and especially X% to over foodservice levels. to increased have to distributor their quarter, personally the pandemic, restaurant simply closely in and For pre-pandemic available worked the the the just This days an operator check the their assist with helping where is was of sales support industry XX%. new costs, Since of to months industry.

benefited actions in confidence are recovery broader Our the We a and trends. in these industry operator the outperformance wavered. playing industry our partners, and of our know part distributor never

sales experienced save simplify difficult unique time, the add labor, tenured Italian all this to that and Hormel to our minimize and Products touch our helping for Jennie-O bacon, preparation, authentic Wholly meats, business. authentic to with continued their to environment premium labor pandemic, the while menu need. direct Prior Sadler's is force smoked operators meet demand. in preserving X foodservice food Bacon brightest demand Hormel like has item. Fontanini spot their pizza their meet future Fire heavily The to meats, and flexibility invested uniquely are Braised During fully accelerating capitalized own a products meet products, the portfolio capacity we in Turkey category, cooked guacamole, on growth especially this this and been our positioned toppings in barbecue,

have XXXX, capacity fiscal to new offerings We're of up are have and in set Crumbles to the to we toppings. the With open this in are the plant-based Burke, growth plant-based growth our from beginning and been to space. investing growth plant-based toppings category drive We pepperoni excited expansion, nicely at pepperoni and seeing capacity expertise with consistent our our also we seen pizza meet set additional leverage at in products. in

sales industry our we industry's return with the team, growth relationships innovative, flavorful and product foodservice well our recovery will and underway, continue with valued partners, With in our to support solutions. invest strengthen to convenient, direct the

leading Applegate, Wholly. pantries Sales to from XX% up of Black their as Jennie-O, elevated and sales and as quarter when year retail months also foodservice anticipation the stocking our healthy, we we to lapped strength to deli SPAM, were continue compared to finished remain Label, Total quarter our pandemic. this with demand last consumers the And such were In second Herdez, in levels. the compared brands, growth, addition pre-pandemic of see flat XXXX. to retail businesses

at As a reminder, pandemic. in onset immediate we for of experienced the surge and sustained the demand products segment an Grocery Products shelf-stable the

to Gatherings to X% a perishable deli delivered this are The strong in items increased happened wave remains over Hormel now Omaha, channel cornerstone quarter, fiscal providing our more brands continue purchasing and to second up entertain impacted is opening space we the the family leader and positive Party Columbus brands. retail the IRI. takeaway according to and the last in started much distribution. our needed and rates is double grew weeks with our share expansion important that in Trays and spend consumers Many metrics is to sales and we brand in in XX the to the demand later an which of as our a third plant are refrigerated capacity Across growth their according and are X% The large have deli we charcuterie, of and are pre-pandemic are levels. Sales benefiting quarter. capacity. of new categories. now Columbus for products deli consequently and gains have time made continue friends, in digits our IRI, overall be more consumer household weeks in seeing from improving, buy across guests. penetration, our cross-purchasing business, in expanding gaining E-commerce

of and supply to investment our chain Throughout chain combination increasing increase important partners. we continue the a continued to leveraging levels channel. our will to this supply quarter, in production our through efficiencies, We increase strategic as capacities, gaining were improve able

in Another our area we network. distribution great is made strides have

Coast. and recent value-added for throughout reduce income levels, rapidly product and a support the decline. a quarter. Over miles our distribution overall the These have distribution increase investments in last growth new customer center, costs, opened raw we freight weeks We reduce a feed material grocery greenhouse have strategic in year, the improve service refrigerated center a line bottom and opened will our West showed perspective, From slight businesses, emissions. saw prices operating serving

but categories, full many the in benefit during actions the did pricing taken quarter. not these have actions of We see

which to Net earnings per last share volatile subsequent we impact and by were previously pricing conditions to year. negatively will higher will profits As shift tax diluted have earnings year. quarters. share earnings to compared discussed, market $X.XX flat last the lag rate A in markets per

segments, the Turning a to volume increased XX% by almost added refrigerated sales X% from coming in the increased with and recovery driven increased significant sales XX% businesses. division. service Value food growth every foods

and progressed. demand such X. all increase Fontanini the quarter categories as by anticipated, grew food Almost portfolio food saw and sales Bacon within As a toppings we brands service led our pizza rapid service as in

Bacon Italian growth of second all In quarter meats compared the showed toppings, X, authentic fact, and Fontanini pizza XXXX. to pepperoni,

also the experienced portfolio with a from premium brand. in breakfast recovery Smokehouse We growth our Old

our Items prepared. proteins include prepared excellent as premium Fire brands Braised, which pre-cooked, we and to These Additionally, Blues, growth our pre-sliced, and H, items are from Sadler's. fully that pre-marinated, Austin such saw Café key pre-strategy.

and recovery industry products of the most accelerates predominant solutions. for flavorful versatile, offer challenge the convenient, summer labor remains safe, and operators, into line our As a

we fresh remain business. by outstanding. the Food operational new Hormel XX% products with PEPPERONI, margins pressures. increasing levels SKIPPY and abating SPAM due offerings sales, varieties such delivered and on higher of retail Beef coming demand Retail Refrigerated in items, confident two with strong the the sales, providing China SKIPPY a Jerky, quarter and foods higher avenues our the pre-pandemic and COVID-XX The record fifth to due items. segment exports and a coming SKIPPY APPLEGATE, profitability, sales are service higher remains pizza Lloyd's Columbus has food Gatherings, innovative And and fresh also long-term from in profit retail barbeque, grew Branded bacon, teams from increased for growth. the service foods team top and China growth decreased company's for driven expenses increasing and recovered prepared for Label International to Hormel segment also been growth impressive. growth food Black from profit with service cost quarter bacon growth items. have The brands SKIPPY, XX% Our deli SPAM SPAM and items. performance volumes including earnings additional consecutive of X%. delivered toppings, pork improved line pork prospects snacking brands, on

given over XX%, the Korea, are our sales experienced center for onset declined products. for compared to all XX%, consumer In levels. addition, results products the store by profit hash experience elevated at year XXXX. pre-pandemic we the Even have due Sales segment to continue second higher the brands Philippines, declined the Mary demand as many volume high sustained as seen declined encouraged performance of in Hormel we partners last shelf-stable to X%, XX% quarter strong Kitchen SPAM, for and compared and comparison and such levels demand our our though to of were Compleats, Grocery were of segment's to of Chili, brands Europe pandemic. extremely difficult the demand South

We to WHOLLY, Compleats, and resuming SKIPPY, leading our promotional support And HERDES, as normalize. we're inventory activity will Hormel Justin's, SPAM, levels brands continue including Chili.

occasions. category. eating equity million Herdez looked salsa brands grew continues Mexican grown well and since their WHOLLY and households marketplace start of in the as industry introduced The the to MegaMex earnings innovation enhance consumers venture Our the to convenient joint as years. XX%. authentic HERDES at-home the and brand by Both performed outperform increased for has the X brand This recent to leading and has pandemic, products

and enhance enjoy target the can meal. quarter avocado consumers of well convenience lines; that product the for new two sauce of Following Herdez it performance with Salsa, Hot continues Avocado successful a introduction Recently, Herdez as Taqueria Salsa solutions entered strong and to had Herdez Wholly Herdez market we grow to Herdez to as highly The Sauce, brand versatile the Cremosa. share with continue offering also offerings. Sauces hot expand another Guacamole distribution any Street looking

the have that volumes we the for refrigerated business products businesses, the drove foodservice remained higher during for as Jennie-O costs. sales such including solve innovations turkey channel above we segment recovery during increased as Smashed, our pre-pandemic higher to fully a avocado across Hormel pricing and due in levels. sales Wholly and Foodservice reflected of will volume Grain last in products yet need costs. retail turkey recent Diced Jim prices were Jennie-O store impact to be X%, Wholly quarter. while corn quarter, Our higher return marketplace. X% commentary to Sheehan started to action and foodservice on up consumer XX% further products compared the to Jennie-O for double-digits saw demand the sales and in many provide increase. decreased from increase retail year. taken the meal actions avocado manage profit Demand ground soybean declined to significantly and feed the continue the lean had

earnings we're our Looking year, $X.XX to to of guidance into reaffirming the to increasing range our billion balance the billion guidance full-year per range $XX.X of share. $XX.X share sales $X.XX and per

As a the range the reminder, not impact estimated the business. Nut acquisition guidance this does Planters Snack include of of pending

economic different us gives confidence. business in and scenarios well model perform balanced We and diversified can market Our many conditions.

demand an in We share our have year. We're as from outlook the operators the business meet the distributor inventory of the on to standpoint into foodservice positive ability to and and our well-positioned capacity second-half head a and confident very recovery. we partners the are throughout gain from

confident manner both this universities refrigerated increasingly schools will and store. and fall. Jennie-O traditional a colleges we're open more K-XX should operate Additionally, that and benefit foods and in turkey This

international We continue to the see in retail elevated channels. deli demand and

benefit the continued remainder supply lines, key across chain. and in cost of expect input from further high operate capacities we increases the in seen rapid a on product to for expect key We we our actions, pricing to This and costs improvements year, have in our businesses year. increased environment

force once sales again, navigate to business experienced with and be grow volatile grow ability our our inflationary our our to and market customers partner leveraging and Our businesses. management proven direct conditions we'll mutually has in team to a

all were shutdowns, I lower back fiscal supply to pandemic throughput the operations looking the to of normalized half fiscal forward am month. of reminder, production levels quarters. we back first-half by of and quarter. of fourth on Jim update information of ultimately XXXX. impacted our strategic At our expect provide shortages and based a This more Planters the operations negatively to market. to costs caused have on our improve commentary acquisition financial closing in regarding inventory, next the turn facets As the Give effects discuss financial the our plant from in our ability led performance, in our time, lower by operations benefit to which actions record I Further continue to to to of third and half this XXXX. heavily we the taken and the affected and will relating key growing I'm input position over call confident Snee

Jim Snee

second Jim. quarter Good billion, the $X.X Record of increase were morning. X%. Thank you, sales for an

the flat record. to First-half to year. sales earnings share Pre-tax to share for earnings quarter quarter, X% $X.XX last increased X% year. increased were $X.X also per billion, Diluted the a for per last compared

impacted last Second quarter was slightly costs SG&A incremental input $XX million. tax to in were results as of in expense. margins, raw down higher for costs increases. for reflected to approximately year. sales, X.X% pricing margins compared the the was quarter Operating material share related $X.XX $X.XX Higher Advertising excluding COVID per advertising last XX.X% lagged quarter year. XX.X%, and spend cost and feed negatively

actions with the quarter We full-year place growth million. for the XX.X%. acquisition. tax pricing year. compared unallocated in rates income. last expenses effective from and be support Net to XX.X% for the the across continued COVID remainder the the to have quarter numerous year, Planters pricing to the decreased XX.X%, excluding to continued to XX% to portfolio during impact We estimate were demand decline. actions of built of higher expenses and profitability. inventory related between The for protect tax higher in The were The additional likely. taken rate will early the preparation take the due investment $X impact quarter COVID third expenses actions We

target action the Capital in for was cash a flow May year. company's prior XXXst strategic quarter. operating were The million over at dividend in increase consecutive capital quarterly XX minimal million. Share during driver the during of quarter. the quarter. annual build $XXX of paid Our the $XX rate XXXX were the expenditures is X% $X.XX, an We repurchases to expenditures primary inventory lower effective our

be market due increase. prices in are XX% XXXX. such USDA year African now increased also and Southeast demand all than slightly and expected all-time improve XX% COVID Europe. efficiencies quarter, to an recovery the with pork USDA have hog to due China, and Key quarter. to second swine We and Pork primals export the trim food to as than dramatic more contributing for the prices. during a to bellies in inputs increases set January exports fever pork saw lower projecting in we increased Asia pork outbreaks respectively service as composite production record cut-out the anticipate Industry since During continued and $XX abate. strengthened operating pressures domestically. March is

availability, tighter supplies reductions labor the in markets. and Herdez hog However, higher support

pork approach high to balance approach and volatile procurement environments, mitigated volatile costs moderation and The heading with balanced assumes procurement quarter. the volatility and into a range of fall. guidance some of year strength balanced during the In to for the Our cost brands market hog our be the conditions continues and to the advantage. competitive leading elevated

beef due markets prices expect with higher supply levels hog global in of to are directly current remains back-half supply in year fully to and anticipate for hedges capacity during USDA channel the cover consistent the gradually and key along protect egg historical coupled averages. labor to impacts declined. prices actions lower and increase above year. expected due whole composite the anticipated summer boning and in tighter remainder The the imbalances the last local across of a profitability. corn storage to are Turkey and Belly the levels expected peak pricing. higher demand inflationary supplies. meat industry previously prices export last year. to go trim seasonal have The Pork to foodservice remain decline. well levels positions tightening projected anticipate are grain in prices decline cause had markets. could the to if cutouts strategic We strong limited levels demand as meal in sets summer Jennie-O's of pressure. the harvest demand and higher trim Due but of hog taken In compared also soybean the to we domestic lower ago We in from markets harvest. moderate supply in to in stabilize to be than beef levels, placements benefit Inventory risk to are costs XXXX. with prices to remain months the levels with led the announced to trim near the provide shortages current fall, thigh response strong volatility turkey in are hedges to poult These and year We have pricing the prices a the

higher but remains pressure foodservice for the seen recovery recently market. also have meat We in inflationary We support increase breast anticipate A two in the back-half combined a driver freight for mitigate in on our prices. the industry key DCs this an in tactical help portion action the prices the optimize year, improvements of to of with distribution efficiencies with new load will increase.

regulatory June. for the We time, over portion to At the call The turn in Planters the close the acquisition I'll approvals required the call. operator for date of have the the is nut business. attained snack scheduled of this question-and-answer

Operator

you. Thank

first The We Peter come will question-and-answer of now Instructions] with session. America. go Please begin today will Bank question the ahead. from [Operator Galbo

Peter Galbo

morning. guys, the Hey, good taking Thank question. you for

Jim Snee

Peter. Morning,

Peter Galbo

margins it. to And Jim, EPS keeping the the guess kind a coming that's of relative of you're the out, of Jim acceleration actions drive sales relatively margin? you how front-half. something kind the the to thinking versus I it the sales are commentary. headwinds XX all to that what that you Sheehan, guide, gross of wanted If gross in year, of kind about you improvement just in thinking the sequential and back-half And were given in implies just see points magnitude that just I guide, of what through, flat. the for XX A, kind and if in midpoint would did about pricing see move, you'll understanding called basis kind take of directionally to just of decent the thank the in in all we

Jim Snee

question. mean the Yes, timing, good we're and magnitude the talking for volatility, morning, the seeing. Peter. the here Thanks of that really what we're about I the is inflation

the that beginning have quite didn't to all frankly, take. of the second we all And the so, And that pricing quarter. actions right need that we done the happen taken pricing we're with actions not at

a So, on we've front. of activity that got lot

in pricing our in action to margins. sequential is lead the just will that so sequential what improvement And

important And you up. affect across And as but QX, as pricing the more either hasn't improvement, see price so normalized I of see board. probably QX, margins you'll take our margins think full as think to slightly almost about we've lower takes to note taken quite caught it's all pricing really business. some that or start across will

Peter Galbo

on kind And No, just this locked guys. helpful. for you a of clarify in the as Jennie-O, think the year. feed Maybe or to point? that Sheehan, last the margins third that Jim, this target as then the that remainder lower out [Ph] very there, some to quarter, just for versus second tossed of about you've cost question, sequentially out we margin 'XX the X% Is normal? that's timeline year. think is operating I 'XX versus Jim a obviously pushed maybe Thanks [bogie] at of year much,

Jim Snee

fully Well, so start relative pricing I'll margins year, think on year as last your -- the QX. to last hasn't And that's is up. question, to slightly first just caught I lower

Jim Sheehan

touch I'll issue, the [Jazz] on Peter. Yes, [Ph]

downside as so all, year. the we're we of cover up in also now protection about we to costs. there, cost XXX% as grain covered of pricing it protected first is having And And that rest on First for place with of the grain. that, the we on grain talked, ramp talked

the five-year see And the both to markets the nice to be X%. in thing sets below turkey. starting keep When and XX% that what's which we commodity few -- Hog with now you're What continue are and you think to the the years other improvements cold egg poult X% the to happening last levels we is towards in placements talked is around see are pointing better. storage is markets. that about Jennie-O, average. fundamentals sets down The or some you're about, the over starting

we're there's That breast you yesterday for Jazz, that a saw starting of are come a fair of through. upside. lot watch-outs instance, And but upside feed to $X.XX. there at For also amount see

for probably really forward. do They a towards go they place these be to as taken markets we better place, launched haven't year fundamentals -- You've seem taking the but now. point

As obviously far delayed drastic yes, -- the grain as in that. X%, up costs the jump these

look we pushed of So, really that's been at margin the a bit. out X%, full-year

Peter Galbo

Got Thank it, very that's guys. No, you. helpful.

Operator

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

Adam Samuelson

everyone. Good Yes, thanks. morning,

Jim Snee

Hi, Adam.

Jim Sheehan

Hi, Adam.

Adam Samuelson

of kind whole Sheehan, grain of response you Jim last the kind bunch a but referenced things reflective in I'd out. -- that your focused the [Jazz] [Ph] to and of mind. continuing Apart on grain of the key penetration? some questions growth out? maybe are Is love the Hi. your hear cost, there shelf demand on there, retail, some less a bunch key watch from cost kind and of in it to positives, of Just still you of your kind in performance are as besides what watch

Jim Sheehan

I'll with talk I'll bit about little Jim a to performance. it and Well, on the turn watch-outs, to over the start

we've as inflation look think the inflation. forward, look you and impacting grain I as seen recently obviously that at you the have is you

[indiscernible] solid. Weather good got is bit very you've demand maybe know though look demand, USDA. understated little seem to conditions we the pretty that the For intentions a at the be

probably we're across in read a is So, labor it's industry. that not a hires, availability. impacting But back I looks their think, alleviate the is that. of good for I looks I better COVID From the inflation but Jazz, new I the in at mean would have think it's job me, to things, into will, watch-out pressure. getting we'll good standpoint really that but okay, getting people only other getting this the a shape, look as at back thing Obviously, of that's point. labor June, some people of jobs it

Jim Snee

and to more our lean environment, performed in if year-over-year we hard And bit we're From it's performance, the turkey, strong a ground from XXXX. Adam, the in that they're the perspective, with I gains, say We a a K-XX see household think pleased into well. come didn't school the our do to Again, back business distribution spillover a with fall, business but obviously full velocities I has which especially back little in penetration, very foodservice business, more exposed perspective, go would the strength. in pre-pandemic, expect that very, then seeing. business, retail

So, about the think retail optimism as is perspective, and there it from front. on a we foodservice business

Adam Samuelson

think All year, then helpful. second And I color some guess versus back-half second similar question really my areas performed optimism? where where right, kind levels. is the up the you outside really was into you're gaining color you How we or of metric? go as thinking giving the do on about just categories the that you foodservice of you of share quarter trajectory for a gave And 'XX some you relevant industry that's the just think maybe some was

Jim Snee

really mean even I in it's And we mean fair double that's I new, industry say think quarter. foodservice our Yes, about not in to talked pre-pandemic, the a I business rate. second typically broad base, the outperformed here we right. as at growing industry the

that faster the than grown we've industry. confident outgrown so, we're or And

referenced future we come Foodservice We opportunities part really business. is segments, our number of Jennie-O haven't K-XX Hormel back, seen come in see college and seen university lodging Foodservice of haven't which where us our back. the we a I for a big For fully business.

still dynamics play. there's lot of at So, a

segments, these have other start channels as business as these reopen, even are those favorable a to on so going well. to foodservice our really And other impact

Adam Samuelson

I on, that really appreciate I'll thanks. color. it pass

Jim Snee

Thank you.

Operator

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

Rupesh Parikh

Good taking and my for thanks question. morning,

where just above QX guess I XXXX, you foodservice very we now still were in saw strong. in given So what groceries

pandemic, business the have think a much grocery and you'll exit foodservice mean, do that forward? you if you going higher now So guys I

Jim Snee

of all confident strength very the we've Rupesh, a felt the lot of in about particular store. talked the we've obviously always of think, business our I in in center our business

in retail real And out the and that's parts now. we'll our advantage think will competitive believe, It'll into this have and always our the we in some I grocery of to to settle so you're strength moving be things going store it once the continue center And I year future. our in see quarter-to-quarter. right then business, to about foodservice post-pandemic, refrigerated space. continued some year-over-year, But talked play strong continued business in and volatility down, continue strength we've think playing out

Rupesh Parikh

And then follow-up one question. Great. maybe

you as players I'm sales segment negative grocery that of for well, products, backdrop? how And at the as characterize how about have thinking turned you the trends other current are for promotional guys So then as balance curious look would you the year.

Jim Snee

biggest now, us some what Tier-X shelf. to the right and half back Tier-X the the those on items activity more getting And want 'XX. of really and is back as need year promotional Yes, retailers into provide for Rupesh that's driver in we of

promotion. one have variety just can't have a and You

on supply retailers to more for our the will chain 'XX. those being very be engage to into which willing the very, and seeing as varieties, of we're So promotional business in has a helpful recovered, focus been we've lot balance 'XX in able discussions,

Jim Sheehan

thing quarter only I'd GT our fourth is that in operations. our The Rupesh was significantly issues add remember constrained in capacity that by to

Rupesh Parikh

Great, thank color. it pass I'll for the on. you

Operator

next Palmer JPMorgan. will The from Tom question go with come Please ahead.

Tom Palmer

Hi, thanks question. for the

Jim Snee

Tom. Hi,

Tom Palmer

that really number? us year? earnings mix a pricing some top in to number I provide at mean we the of in that know the XX% but much how on was magnitude detail up now. of the you're typically this, that contributed X% mentioned could through sizable the on we figure, price second look quarter? much second-half expect ramp you mix mean, of or mix throwing maybe the as And the just really then second-half I You the bit to on putting year; how I little price years. should don't more in price you given to expected of call the in flow quarter, of highest this help

Jim Sheehan

it's think great question, a I Tom. Yes,

business. did which entire was business, our driver wasn't pricing have than the that the But for to more As price a business, our quarter. retail markets tends mean, really retail the closely driver we mix, was think about in of in But quarter track second key it some again, impact We the quarter the big quarter. I and foodservice. foodservice the in

Tom Palmer

flow losses. such you thank pricing, prepared and XX-Q the more remarks, noted Okay, And Jim through? last increases, the know hog be price there'll but out hog of maybe that color year any the you. weaker called this in then some pork as on detail saw hedging hedging Sheehan quarter, just I in you gains magnitude

Jim Sheehan

of them our we the not positions, the Tom. mark-to-market sold. our question. I through the is product do appreciate but is the Sure, run time we at accounting method one Remember that goods cost

be you and as in range comprehensive and income. in are the gains be those the will are our and realized our for grain -- positions. gains And $XX look in unrealized the interest at other hogs, of and losses would losses million unrealized So quarter, that

Tom Palmer

for Thanks detail, would recognize just it not thanks. quarter this that that? a factor to confirm Okay,

Jim Sheehan

was amount. help us It pretty It didn't this give much quarter. a immaterial

Tom Palmer

Okay, thank you.

Operator

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

Robert Moskow

of couple a questions. clarity I Hi, guess

the Jim, are million, I gains. that on guess those Just hedging $XX

wall. way those higher will to flow through through product. at it's the positive So P&L flowing -- costs input also your there's also a sell as you But

So other that… they're against quarters. fighting next of each of Is kind the for couple

Jim Snee

or mean based unrealized gains that I be market gains the would on Yes, the close factor. a what

also, we stated hedges interest have there, also Now in too. as I our before, we

the a grain tail longer So more the are that those and hog obviously will markets. have issuing be the or related to we that debt

mixture. a So it's

Robert Moskow

Okay, follow-up on I'll that.

raise grocery pricing Regarding in a Or kind actions you the March? a while, on? well? kind on you little pricing of you of because as going is normal a Is the quarter, like of for the color in new took give that product that lines what to X% can accelerate in

Jim Sheehan

year, Yes, still that increase Herdez, I GP, SPAM, the earlier SKIPPY biggest frank of that mean the additional the I have to In or part pricing it's price items. in different Rob action the number of we the year. the to whether was pricing in took mean, driver we come, the GP front

some in So still year. the back to first-half, of in have but come we the the more half there's did

Robert Moskow

Okay. my Thanks. That's questions.

Jim Sheehan

you. Thank

Operator

from Lavery will Please with The Piper ahead. go question Michael come Sandler. next

Michael Lavery

morning. you. Good Thank

try to just share the Just gains, versus ten year to go looking strong and kind XXXX, broadly, maybe of understand versus the wanted landscape little bit to at growth guess, I XXXX. a foodservice high retail level, back growth and a the at

suppose eating there there's probably there's pantry small. that just from even of And maybe I chance -- that a but there's aren't is a inventory, people Assuming some more a clearly reset permanent somewhere. momentum coming

of of, kind how sourcing from? give Are you're just have gone gaining how can out you you're So your have a of competitors you share suppliers just who understand that there do business? sense that Or gains? share smaller

Jim Snee

you're about. Yes, I with which in again, it's mean, cases, talking I category are depending categories. in on some line a mix, mean, we

some mentioned, meal or net Bacon, you peanut competitors. think from So think our that or taking portfolio, think in we've whether butter, I seen I of SPAM Mexican our as some you outpacing we've in share offerings, seen really it which is

share as coming gains really you where of think a go bag I So is it portfolio, from. are those the mixed Michael, across

Michael Lavery

you us just from And piece, in gave, pricing out boosted following-up the increase? the on you portfolio versus a foodservice past passed requires how pricing of through the Can what there. sense give is thanks. less a partly called your just much Okay, through

Jim Snee

I'll the I is call mean, priceless. traditional off foodservice business a it Oh, majority of the

So gets days. basis always and adjusted tend pricing -- reflected within see that XX a said we that on we've to in weekly

national still So some a our it portion a have is on with basis. other think about way. obviously majority where than done of accounts. We more -- pricing do is paster significant that majority larger arrangements, the business business of the But the just

Michael Lavery

And on side? the retail

Jim Snee

be the we've difference there part I the accepted, and of only which But mean, has it said the getting with play that, a implemented. mean, discussion action Really of always I XX-day more that and of terms portfolio. in role still then would getting pork, significant a having Well, customer price basis. weekly our it's does on priced fresh a a is retail

Michael Lavery

Thanks great. so much. Okay,

Operator

ahead. with will The next come Larson Please Eric question Securities. Seaport Global from go

Eric Larson

everyone. morning, taking question. for my Thanks Yes. Good

we're you of So well now. be yet Hog Supply and is disincentive possibility for right grain have. $XXX, like are live XXX-weight high probably prices, material, the hog and to forward this see in your looks supplies, to it first Sheehan refer of prices year, huge this. question going production we bit a little while. I over talk some about, Kim prices these increase raw prices grain biggest could a But here not can that is, a high kind a on think, constraints going

look So out not U.S.? year, there? doing next years, how couple in at what terms maybe of in just next maybe the hog you farmers are this And do of production just the but

Jim Snee

producers. past, capital with you're in talked Well, with aware, our we operators and tend we've high And their of as keep large as barns Eric, these producers contracts about long-term do level filled. to are the a

We like of also production a a to made from large our keep get of contracted which portion to they facility, their full. producers; own the up facility, plants three-month is tend

cycles time, and I'm prices we When have hard through we have the that it that supply both confident increased The prices long-term. gone lot. short-term these go we'll need up very have the all So, rapidly. a

long-term we're season You're volume. now. from results right; are prices. taking season impact But are negotiations We'll has on what about it growing right prices having into and the are grain anybody get to high what growing see down agreements, see other not their these

So highly confident. I'm

Eric Larson

at have supply back, believe number supply one improved follow-up we chain chain is your -- to said go and your to that Okay, your in this Ben, point, in And benefits my we question think, supply going I was incorrect. it I then your press conversion, even all on of remarkable. that to on you've efforts done quite I But chain the you if that release. alluded was the think

cost to million you your to it's keeps was you us it you But give too cost well. be having I'm correct benefits. as wrong, about chain supply here? obviously, got from a on And $XX while And update Can the helping price but how that structure. me So, chain then aggressively if quick supply back? helping of a is

dynamic So us? And that can little share update us a give you there? with

Jim Snee

take and really throughout fragmented Sure. plus the And on and years, last putting really we approach our efficiencies and our It's together Eric. this chain over the supply been take a supply capitalize the it's And spent out. a great three have lot time of effort question, one cost chain. to initiative

done me work see our two I up thing the that was some of And supply our In to in talk to the year, pressure when and our we ability operations. pre-pandemic portfolio. right, of the think for about on. good our And now help work that happening that our bit the to mitigate play cost refrigerated some even on open And are and a we disruption. was on had still so, logistics, cost we of a new warehouses savings going initiatives mentioned team through through and the you'll obviously, $XX first Last voice one as powerful probably other GP we've warehousing us have directions great necessary gone you're chain about the very, lot of going million. talked the can't that aligned chain. the the with was And a scenes. the top sure ability we of fragmented But behind was stop into didn't pandemic that and entire years organization. setting very for from I the making Having imagine a having personally supply is of

in significantly the as efforts to today I returns. of weighted chain. the are a benefits So, mean result the better And, we far supply place on our has a one organization financial

Eric Larson

great And a great. Okay, holiday. Memorial Thanks. have

Jim Snee

you. thank Yes,

Eric. too, You

Operator

will come Please question next The ahead. Ben from Bienvenu with Stephens. go

Pooran Sharma

ramp Ben. corresponding capacity has Pooran food a improvement sales contributed What for and had utilization the morning. one This good question. on I just quick in is margin? Hi, service to

Jim Snee

of about out some And led in talked coming COVID to I they our obviously mean or think Oh, capacity the midst underutilized say the pandemic go I some course in should yes, cost. of the we've -- of increased hand. which hand I of

stride. you really service to So, it's there a yet volume has way hit the a different of really benefit. drive food And about with open the in and we driver the think and big distributors segments with have number earlier operators. But or then that the business And re-engagement the been is been the the I really should their mentioned able that marketplace. really reopening, haven't

are not only come. good we to we opportunities yet that the So, feel about today but where are

Pooran Sharma

in? if be may And squeeze more just great. Great, one I could

Jim Snee

ahead. go Yes,

Pooran Sharma

price that you help be think your these achieve? abates? increases some think of to period And on this be you of just able do increases, to maybe regarding can easier will you Just cost hang after versus will us through what harder inflation to

Jim Snee

period the about over Yes, the new with likes it's market that that's of managed not a we promote, pricing right? your a lot appropriately has to maintain how really volatility. multiple time. we inflationary how all for to our well-established team, and be over course management of leadership periods point great midst business. mean in the something the talk inflationary question. that we've our hard because us, to But And we I we our And work a to nobody through it's take how pricing, about plan

as we demonstrated believe the do we've that in yes, So, be past. able to that do we'll

Pooran Sharma

thank the me. questions. That's from it you Great, for clearing

Jim Snee

thank you. Yes,

Operator

Antonio Hernandez come will question with The Barclays. next ahead. from Please go

Antonio Hernandez

Hi, give and little morning. and with what in more the in very your guidance segment expenses point were view international a Thanks margins sales good questions. see cost there [indiscernible] from [indiscernible] you you [Indiscernible] us good of could for segment? my taking segment domestic Thanks. international

Jim Sheehan

bit. cost -- big the we've but freight availability Yes, Freight, labor I And ocean shipping -- some that between only whole also now containers not system. issue created is that's able going around interruption. including for been been think supply additional some this would Domestically, the creating is say we freight we that's and right international manage the up the goes issue have the ocean the I probably rest difference to a big issue the able little some last year. of to improved But cost have our as containers freight in to that's domestic back chain. higher

Jim Snee

focus flavors. I have how new mean our performance the and we and are that of Beef the but strong, we Jerky. brand, are with able the businesses the be China about broad distribution our we it But in international SKIPPY it that been business in seeing really very, Hormel The on innovation based. to SPAM, gain success to and acceptance we've retail Yes. and and innovative excited launching very certainly that continues high of remarks, the we of growth The level optimism our non-traditional service both with are is food I really continued in mentioned segment from how continued my

areas, business And coming out multinational and of to partnerships. all growth other and continue so, that expect we across exports

Antonio Hernandez

very great thank Have you much. day. a Okay,

Operator

back the turn closing today's conclude session. now to for This will like question-and-answer any would remarks. over conference I to management

Jim Snee

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

entire resilience and and to optimistic June. the still for Board do we bringing of and the portfolio. but future, for the on the the in Our strong again have work our Thanks about of performance demonstrates remain of to once forward our Planters know this look team year, We we that quarter the again strength balance we the very team joining business, Planters us. balance

Operator

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