Hormel Foods Corporation (NYSE: HRL), a multinational marketer of consumer-branded food and meat products, today announced record sales and earnings for the quarter ended April 28, 2001.
Sales for the quarter were $1,018,406,000 versus $879,023,000 in the year-ago period, an increase of 16 percent. Tonnage volume for the second quarter increased 10 percent.
Net earnings for the fiscal second quarter were $38,894,000, or $.28 per share, compared to $36,254,000, or $.26 per share, for the same period last year. In spite of the expense related to a three-week labor strike in Rochelle, Ill., earnings met the First Call analysts’ consensus estimate.
For the six months ended April 28, sales totaled $1,965,899,000, up from $1,782,936,000 in the prior-year six-month period. Earnings were $80,426,000, or $.58 per share, for the six months, versus $80,102,000, or $.56 per share, for the same year-ago period.
“Overall, sales for the second quarter were up, even before factoring in the newly acquired volume from The Turkey Store,” said Joel W. Johnson, chairman of the board, president and chief executive officer. “It was a busy quarter for Hormel Foods. We completed two acquisitions — The Turkey Store and Diamond Crystal Brands Nutritional Products — and continued our intense focus on promoting our branded products across all segments, which we are doing with much success. Branded, value-added products continue to outpace the other lines within our overall portfolio. Clearly, we have the right strategies in place.”
Refrigerated Foods, which includes Meat Products and Foodservice, was one of the top performing business channels for the quarter.
Meat Products, which serves retail outlets including grocery stores and large discount chains, saw solid tonnage volume growth of 6 percent over the same quarter last year. Always Tender fresh pork had an excellent quarter with record sales. Results were also driven by an especially strong Easter holiday ham season and growth in the company’s pre-packaged processed meats like Black Label bacon, Hormel pepperoni and deli products. The fully cooked entree and flavored meat product lines continue to appeal to time-pressed consumers and are performing very well. Hormel Foods also experienced significant deli business expansion with major retailers.
Foodservice, which serves restaurants and other away-from-home venues, had sales tonnage slightly above last year. The softening U.S. economy, with reduced personal and business related travel, appears to have slowed Hormel Foods’ growth in this important business channel. However, margins improved and several product lines posted exceptional results. Austin Blues BBQ, which was introduced just over a year ago, saw a 75 percent gain in tonnage volume from first quarter 2001. Bread Ready sliced meats showed solid results and Always Tender pork products continued as a strong category, with double-digit increases over the same period last year. Old Smokehouse bacon, Applewood smoked bacon and Fast ‘N Easy precooked breakfast meats also experienced double-digit gains, reinforcing our brand-driven, value-added strategies.
Grocery Products business, which includes well-known brands such as SPAM luncheon meat, Hormel chili and Kid’s Kitchen microwave meals, posted sales dollars for the quarter 1 percent ahead of last year. Tonnage volume was down 3 percent. Despite slowed growth in the quarter, Hormel Foods continues as the leading marketer of canned meats and prepared foods. The company’s new SPAM oven roasted turkey, introduced in August 2000, was embraced by consumers and has already achieved a 13.5 percent dollar share of the entire canned luncheon meat category. It has also emerged as the number two selling item in the category. Carapelli olive oil continues to make progress in market share gains that position it as the number three brand.
During the quarter, Hormel Foods launched a number of Herdez products as part of the company’s authentic Mexican strategy, and expanded distribution of Herdez and other products in the ethnic line to more retailers throughout the country.
A major highlight of the quarter was the closing of The Turkey Store acquisition that, together with Jennie-O Foods, creates the largest turkey marketer in the world, and gives Hormel Foods an 18.5 percent share of the U.S. turkey market. The integration of this business has gone very well. For the quarter, post-acquisition sales tonnage is up 36 percent and sales dollars are up 50 percent. With the different brand strengths coming together, Jennie-O Turkey Store has one of the best portfolios of value-added turkey products in the industry.
In line with consumers’ demand for ease and convenience, Jennie-O Turkey Store continues its efforts to make turkey an everyday meal occasion and has introduced new products like Thanksgiving Tonight premium boneless turkey breasts, as well as a line of marinated breast items.
While Hormel Foods International experienced strong tonnage volume for the quarter, up 45 percent from the prior-year quarter, results were dampened by international raw material costs and a strong dollar.
Key performers for the quarter included Hormel pizza toppings, Hormel pre-cooked bacon, SPAM luncheon meat and Hormel chili. Stagg chili is seeing double-digit growth in the United Kingdom, Canada and Australia compared to the prior-year quarter.
Hormel HealthLabs, serving hospitals, nursing homes and other health facilities, experienced 20 percent growth for the quarter in tonnage. Because Hormel Foods closed on the acquisition of the assets of Diamond Crystal Brand Nutritional Products (DCBNP) on April 27, the company did not experience any impact from the acquisition in the second quarter. DCBNP’s extensive product lines and experienced sales staff are now integrated into the Hormel HealthLabs offering, and the newly expanded segment is positioned as second in market share with favorable growth prospects in the institutional health care market.
About Hormel Foods Corporation
Hormel Foods Corporation, based in Austin, Minn., is a multinational manufacturer and marketer of consumer-branded food and meat products, many of which are among the best known and trusted in the food industry. The company enjoys a strong reputation among consumers, retail grocers, foodservice and industrial consumers for products regarded for quality, taste, nutrition, convenience and value. (Items listed in bold throughout this release represent trademarks owned or licensed by Hormel Foods Corporation or its subsidiaries.)
This press release contains forward-looking information based on management’s current views and assumptions. Actual events may differ. Please refer to the Cautionary Statement Relevant to Forward-Looking Statements and Information that appears on Exhibit 99 of the company’s Annual Report on Form 10-K for the fiscal year ended October 28, 2000, which can be accessed at http://www.hormel.com
HORMEL FOODS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(In thousands, except per share amounts – unaudited)
Thirteen Weeks Ended Twenty-Six Weeks Ended
April 28, 2001 April 29, 2000 April 28, 2001 April 29, 2000
Net Sales $1,018,406 $879,023 $1,965,899 $1,782,936
Income Tax 61,026 56,644 126,173 125,190
22,132 20,390 45,747 45,088
Net Earnings 38,894 36,254 80,426 80,102
Earnings Per Share $0.28 $0.26 $0.58 $0.56
CONSOLIDATED CONDENSED BALANCE SHEET
(In thousands – unaudited)
April 28, April 29,
Current Assets $726,553 $724,269
Property, Plant and Equipment, Net 695,912 521,951
Other 629,025 385,660
Total Assets $2,051,490 $1,631,880
Current Liabilities 378,669 330,954
Long-term Debt 457,928 175,233
Other Long-term Liabilities 273,753 269,377
Equity 941,140 856,316
Total Liabilities $2,051,490 $1,631,880