With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

Industries included in the sector are beverages, food consumer products, and food production.

Fortune Sector Leaders: Food, Beverages, and Tobacco

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The 26th edition of the list shows how much esteem Big Tech giants command among other business leaders.

World's Most Admired Companies

The 25th Fortune World’s Most Admired Companies list suggests that tech giants’ peers respect them as much as ever.

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

This year’s Fortune 500 marks the 68th running of the list.

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-317-Hormel Foods

The company that gave the world Spam is a major processor and distributor of meat and other food products, with its goods sold in more than 80 countries under brand names like Skippy, Applegate, Natural Choice, and Black Label. Hormel managed to produce a 1.2% growth in sales in 2020 and moved up 20 spots in the 500 rankings this year.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-337-Hormel-Foods

The food company based in Austin, Minn., has a portfolio of brands that includes Spam, Skippy, and Dinty Moore.

This year's Fortune 500 marks the 65th running of the list.

This year's Fortune 500 marks the 64th running of the list.

This year's Fortune 500 marks the 63rd running of the list.

This year's Fortune 500 marks the 62nd running of the list.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

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Hormel Foods, established in 1891, is a global company that produces, processes, and distributes food brands. Its portfolio includes fresh and frozen produce as well as pantry staples. With stores in more than 80 countries, Hormel’s companies include SPAM, Planters snacks, and turkey specialists Jennie-O. Between 2000 and 2013, Hormel rapidly acquired some of its most notable names including peanut butter maker Skippy and organic meat producer Applegate Farms.

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Hormel Foods (HRL): Company Profile, Stock Price, News, Rankings

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Hormel Foods

hormel foods

Good morning, ladies and gentlemen, and welcome to the Hormel Foods Corporation First Quarter Earnings Conference Call. At this time, all lines are in listen only mode. Following the presentation, we will conduct a question and answer session. This call is being recorded on Thursday, 02/27/2025. I would now like to turn the conference over to Jeff Blomberg, Director of Investor Relations.

Good morning. Welcome to the Hormel Foods conference call for the first quarter of fiscal twenty twenty five. We released results this morning before the market opened. If you did not receive a copy of the release, you can find it on our website, warmelfoods.com, under the Investors section, along with our supplemental slide materials. On our call today is Jim Snee, President and Chief Executive Officer Jacint Smiley, Executive Vice President and Chief Financial Officer and John Gingell, Executive Vice President of the Retail segment.

Jim and Jacint will review the company's fiscal twenty twenty five first quarter results and provide a perspective on the remainder of the year. Then John will join Jim and Jacinthe for the Q and A portion of the call. The line will be open for questions following the prepared remarks. As a courtesy to the other analysts, please limit yourself to one question with one follow-up. If you have additional questions, you are welcome

to get back into the queue. At the conclusion

of this morning's call, a webcast replay will be posted to our Investors website and archived for one year. Before we get started this morning, I'd like to reference our Safe Harbor statements. Some of the comments we make today will be forward looking and actual results may differ materially from those expressed in or implied by the statements we will be making. Please refer to our most recent annual report on Form 10 ks and quarterly reports on Form 10 Q, which can be accessed at hormelfoods.com under the Investors section. Additionally, please note we will be discussing certain non GAAP financial measures this morning.

Management believes that doing so provides investors with a better understanding of the company's underlying operating performance. The presentation of this information is not intended to

substitute for the financial information isolation or as a substitute for the financial information presented in accordance with GAAP. Further information about our non GAAP financial measures, including our comparability items and reconciliations are detailed in our press release, which can be accessed from our corporate or investor website. I will now turn the call over to Jim Snee.

Thank you, Jess. Good morning, everyone. We achieved solid top line results in the first quarter and made great progress against our key priorities. We are on track to drive growth in the back half of the year and deliver on our 2025 expectations. Our value added portfolio is strong and performing well, evidenced by our top line performance and our leadership positions in the marketplace.

We grew organic net sales 1% in the first quarter, which is encouraging given the dynamic consumer environment. Demand for key brands including SPAM, Applegate, Jennie O, Hormel Black Label, Hormel Fire Braised Meats and Cafe H globally inspired proteins was strong. Our value added portfolio continues to be highly relevant to customers, consumers and operators. Our teams executed well in the first quarter to deliver these results, And I'd like to highlight a few of the initiatives that contributed to our organic top line growth. In retail, focusing our resources on our flagship and rising brands has proven to be highly effective.

We grew overall volume and net sales for these brands led by SPAM, Applegate Natural and Organic Meats, Hormel Black Label Bacon and Jennie O lean ground turkey. One of our most iconic brands, SPAM, has increased households and attracted younger consumers due to our focused investments. In the first quarter, this included the successful Sizzle marketing campaign, on trend flavors like Korean barbecue and new avenues of product usage such as the launch of Spam Musubi in a national retail chain Sushi department. Our investment and focus behind this brand is spotlighting its versatility and potential for continued growth. The success of the Applegate brand in the quarter reflects our continued focus on leaning into our loyal consumers' values and needs.

We understand that the Applegate consumer expects high quality, great tasting products with simple ingredient statements. This is just one reason the brand is leading the way in their respective categories in the natural channel. We are also using innovation to generate additional growth. Most recently, we launched two new Applegate frozen convenient breakfast platforms with breakfast sandwiches and pancake and sausage sticks. This innovative and consumer focused approach has fueled growth for the Applegate brand, driving volume and dollar growth across categories.

Another flagship brand, Hormel Black Label Bacon, continued to showcase the power of protein meeting indulgence. After a remarkable fiscal twenty twenty four for Hormel Black Label, we are proving that the momentum we are building for the brand is lasting. The team continues to lean into powerful marketing and innovation, and our latest innovation, CoreML Black Label Oven Ready, delivers an easy, convenient, mess free way to cook bacon. Despite a challenging macro environment, I am encouraged by the volume led growth from our flagship and rising brands in the first quarter, and we expect our focused efforts to continue delivering results. A key driver of retail's momentum is the recovery of our planters business, our largest flagship brand.

The first quarter met our expectations with significant sequential recovery in the marketplace. The team has been taking the right actions to return the brand to top line growth with improved fill rates, distribution gains and accelerated innovation. During the holiday season, our team introduced five limited time flavors to generate excitement, and these flavors brought a younger and incremental consumer to the snack nuts category. The Planters brand also played a starring role in our Here for the Snacks campaign. Seasonality for many of our retail brands peaks around the big game.

Benefiting from the alignment that our go forward structure has created, we were organized to implement a scaled multi brand event, integrating Planters, Hormel Pepperoni, Hormel Gatherings, Herdaz, Ole and Hormel Chili into a single campaign. This initiative represents a significant shift in how we show up in the retail space. We transitioned from individual brand investments to a comprehensive multi brand media plan, while capitalizing on a strategic partnership with ESPN. The scale of our relevant portfolio changed our interactions with customer partners. For example, we doubled our in store display counts compared to last year and received numerous accolades from our trusted retailers.

Looking ahead for the Retail segment, I am confident in our team's ability to build on the momentum we experienced in the first quarter with our flagship and rising brands. The breadth of our portfolio will continue to allow us to navigate the consumer environment. Expect to see innovative solutions addressing convenience and flavor needs launching in the coming months, along with continued advertising support for our key brands to drive profitable top line growth. Shifting now to our Foodservice segment, I would be remiss if I didn't start by acknowledging the upcoming retirement of Mark Arata, our Group Vice President of Foodservice, after an incredible thirty seven year career with Hormel Foods. Mark has been pivotal in the successful development and evolution of our $3,800,000,000 food service segment, and I know many of you have enjoyed meeting with Mark over the years.

His passion for great food, his care for the team, and his accountability to our customers and company will be greatly missed. We also announced David Weber, a thirty three year Hormel Foods team member and current Vice President of Foodservice Sales will succeed Mark to lead the Foodservice segment. I look forward to many of you meeting David out on the road later this year, and I'm confident you will be energized by his passion for the industry and for our company. The Foodservice segment's results have been driven by strong performance across the premium prepared proteins, turkey, premium bacon and breakfast sausage categories. Products such as branded Jennie O turkey items, Hormel fire braised meats and Cafe H globally inspired proteins delivered strong volume and net sales growth in the quarter.

Impressively, premium prepared proteins achieved a fifth consecutive quarter of double digit net sales growth. Looking ahead for foodservice, we expect the team to continue driving growth through our solutions based portfolio, the knowledge and expertise of our direct selling organization and our diverse channel and market presence. Turning now to our International segment. The first quarter was marked by several highlights demonstrating how we continue to develop our global presence. Two of our biggest global brands, SPAM and Skippy, excelled in the first quarter through branded exports.

In China, the team advanced our snacking strategy with the introduction of Barbecue Bites, further solidifying our presence in the meat snacking category. The Barbecue Bites deliver an everyday offering with on trend flavors and are a welcome alternative to carb based snacks. We also continued to benefit from our partnership with Garuda Food in the quarter, driving our snacking efforts into new channels with plans for further expansion into new markets in the future. After a strong recovery by our international segment last year, we continue to expect another year of growth in fiscal twenty twenty five. We also made solid progress on our transformation initiative in the first quarter.

Our commitment remains to transform and modernize our processes, our portfolio and the way we create value in order to return the company to its historical earnings trajectory. Let me remind you that this is not a cost savings initiative, but a program designed to generate growth through investments in our people, processes, data and technology and our brands. In return, we will generate a continuous growth flywheel that allows top line momentum and bottom line returns. We continue to optimize our portfolio in the quarter, divesting a non core sow farm operation. This was our last connection to vertically integrated pork, further demonstrating our commitment to reducing commodity exposure and simplifying our portfolio.

As we shared in our last call, we expect fiscal twenty twenty five to be a milestone year in our T and M initiative as we expect to deliver 100,000,000 to $150,000,000 in additional benefits. We are off to a great start in 2025 and remain focused on achieving our three year goal. Before I turn it over to Jacinthe for further details on our results, I want to take a moment to reference my recent retirement announcement. As you saw in the news release, a search is underway for the next leader of our company. I want to emphasize my personal commitment and confidence in our ability to achieve our fiscal twenty twenty five goals.

We have started the year on track and it is my firm belief that we have the right strategy in place, the right focused resources and the best brands, products and team members to continue to drive long term sustainable earnings growth. With that, I will turn the call over to Jasinthe to discuss our financial commentary related to the first quarter and details on our outlook.

Thank you, Jim, and good morning, everyone. As Jim noted, we achieved solid top line results in the first quarter and made great progress on our strategic priorities. Net sales for the quarter were $3,000,000,000 a 1% organic increase over last year. Foodservice led our top line growth primarily driven by strong performance across many of our premium categories. The Retail segment benefited from growth in our value added portfolio and the International segment saw growth from their China business and exports.

Our gross profit margin was 15.9%. Value added growth was more than offset by year over year margin pressures related to the planters recovery, higher commodity input costs, namely pork, beef and nuts and the supply chain impacts of bird illnesses. For the first quarter, adjusted SG and A expenses increased 2.5% mainly due to employee related expenses. We continue to invest in our leading brands. We spent $43,000,000 in advertising expenses during the first quarter and as Jim noted, we plan to increase brand support to drive growth for fiscal twenty twenty five.

Interest and investment income for the first quarter decreased primarily due to lower performance from the Rabbi Trust. The effective tax rate was 21.8%, which is favorable compared to the prior year due to the purchase of federal transferable energy credits. We reported diluted earnings per share of $0.31 for the first quarter of fiscal twenty twenty five and adjusted diluted earnings per share of $0.35 Turning now to cash flow. Operating cash flow was $3.00 $9,000,000 for the first quarter. We invested $72,000,000 of capital expenditures and our largest spend was for value added capacity unlocks.

We continue to estimate capital expenditures for fiscal twenty twenty five to be $275,000,000 to $300,000,000 with a focus on capacity, infrastructure investments and new technology. We are committed to dividend growth and remain a proud dividend aristocrat. We paid our three hundred and eighty sixth consecutive quarterly dividend during the quarter at an annual rate of $1.16 per share, a 3% increase over last year. We ended the first quarter with 2,900,000,000 in debt and remain at the low end of our stated net debt to EBITDA target. Our overall value added portfolio performed well in the marketplace and exceeded our expectations.

The planter's recovery is on track and the brand delivered as expected in the quarter. As anticipated, we experienced negative impacts from lower year over year over year over Turkey markets and lower investment income. Additionally, we faced incremental headwinds as we navigated the supply chain impact of bird diseases and the commodity market input costs, which were significantly higher year over year and above our expectations. Taken together, our first quarter earnings were in line with our expectations. Looking ahead to the second quarter, for retail, we expect net sales to be comparable to the prior year.

In foodservice, we expect mid single digit growth in organic net sales. We expect strong top line performance for the international segment resulting in high single digit growth. We expect growth in our value added portfolio and benefits from our TNM initiative to be partially offset by lower investment income and higher investment in people, data, technology and brand support. Additionally, we are pleased with our significant market recovery in the planters business. However, we will have a difficult year over year comparison in the second quarter given the strong brand performance in the prior year.

We are also monitoring pressures in the Turkish supply chain as we navigate bird diseases impacting poultry and will take appropriate actions to preserve profitability. Overall, for the second quarter, we expect our bottom line to be comparable to the first quarter and below prior year. Shifting now to our second half guidance, we expect to significantly benefit from the recovery of our Planters brand. Value added Turkey is assumed to be a tailwind in the second half and we are confident in our supply position. We anticipate broad based growth in the foodservice segment and continued growth in China in the international segment.

Continued investments in our brands and the transform and modernize initiative will drive value. For the full year, we are reaffirming our organic net sales growth outlook of 1% to 3% and adjusted diluted net earnings per share expectations of $1.58 to $1.72 We remain confident in our outlook for bottom line growth from each segment in the second half of the year and remain committed to delivering long term value through strategic execution, including continued success from our transform and modernize initiative. To conclude our remarks, we are pleased with our strong top line results this quarter, reflecting the strength in our value added portfolio and leadership position in the marketplace. As we look ahead, we are confident in our execution of our strategic priorities, including our transform and modernize initiative. Our solid financial foundation and strategic focus position us well to achieve our targets and continue delivering sustainable growth.

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

you. Your first question comes from Peter Galbel with Bank of America. Your line is now open.

Hey, good morning guys. Thanks for the questions. Jim, Jacinthe, just wanted to unpack the EPS cadence a bit more. Obviously, the first quarter, I think you said was in line, but maybe came in a couple of pennies below where we had been talking about last quarter. I think you were looking for $0.04 to $0.05 headwind from planters in Turkey in the first quarter.

Maybe it seems like that came in a bit more. And then the flattening out kind of of the 2Q EPS at a similar rate to 1Q would imply that you're pushing, I don't know, $0.05 ish of EPS into the back half of the year and it's a pretty steep ramp as you get there. So just curious, Kyle, what gives you confidence that you can actually effectively ramp the EPS to the level it needs to be in the back half of the year and some of the building blocks to help us get there?

Sure. Good morning, Peter. Thanks for the question. You know, as as we deconstruct really what we've been saying over the the last year, I think it's important for us to have that conversation again and really demonstrate why we're well positioned for a strong second half. And probably the best way to think about it is to what hasn't changed from what we've been talking about and then what has changed.

And so what what hasn't changed is the fact that our value added business in retail continues to perform well. The planters recovery, the planters performance is on track. And again, just as a reminder, we'll have a strong second half with favorable year over year comps, broad based growth in food service. And again, we expect favorable year over year comps in the second half after a strong recovery in 'twenty four, steady strong growth in international. Right?

Those are the things that haven't changed and have remained consistent. The part that has changed from what we talked about in q four is the fact that we've experienced some pressures and especially in the near term on our Turkey supply chain. And so as we're thinking about that for the balance of the year, you know, we've had to take some strategic pricing actions that are in place. And although we won't recognize the benefit of that in q two, so we'll have the pressure but not the benefit in q two, which is why we've guided you so prescriptively in that quarter, but we will get the benefit in q three and q four. And so when we when we think about that back half of the year, it's a very achievable second half.

We understand that it's strong, but there's not a lot that's changed from what we told you and we've taken the right actions on the Turkey complex.

And, Peter, to provide just a little bit more color in terms of order of magnitude for the second half, Obviously, as you mentioned, we expect PlanGrid to be a big contributor to the bottom line growth. And next is T and M. That initiative continues to deliver strongly. We're off to a strong start. We expect the second half to be even stronger and the rest of the value added portfolio continues to grow.

So that will deliver growth in the second half as well. So the bottom line is overall, our value added business is strong as we have said and we expect growth from every segment of the business in the second half which is what gives us our confidence in our guide.

Got it. Thanks for all of that. Very clear. And Jim, I just was hoping maybe you could elaborate a bit more on the CEO search process, the succession planning. I think historically, Hormel, we've thought of as kind of growing people internally and promoting from within has I think been the history.

But just curious if there's any difference in the thinking this time around with the board on being more aggressive in an external search? Thanks very

Yeah. Thanks for that question, Peter. You know, I think it's important, you know, you hear all the time, right, the most important responsibility of the board is to make sure they they select the right CEO for for the job. And, you know, as I think about my time and tenure in the role, you know, I've had the chance to really build the next wave of company leaders.

When we think about everything that we've got done and that we've had to navigate, I mean, it's pretty impressive and I'm really proud of of the work that we've done. And then building this next wave of company leaders and having many of them in place is what really sets that comp sets our company up for the future. And I believe that the next leader can help finish some of the work that we've started thinking about the T and M initiatives and also be formative in the years that that follow. And so, you know, the search committee is hard at work, just like you said, giving good consideration to both internal and external candidates, which is absolutely the right thing to do. Right?

You wanna have that rigor and make sure that you've properly surveyed the the landscape. And it's more important for them to get it right than it is for them to go fast. And so, I am very confident that whether it's internal or external, we're gonna find the right person to lead the company into the future. And then also until that transition takes place, I'm not going anywhere. I'm focused on the business.

I'm engaged with the team. Right? And we're driving to deliver our twenty twenty five goals. And even beyond that, you know, as needed, I'm available and will be a strategic advisor to the to the organization. So we're we're in a really good place with everything that we've done and have yet to come, but really appreciate the question.

Your next question comes from Ken Goldman with JPMorgan. Your line is now open.

Hi. Thank you. On the pressures in the near term on the Turkey supply chain that you referenced, could you maybe elaborate a little bit on what those pressures are? What exactly you're feeling? And given that whole bird Turkey prices, as far as we can tell, haven't really moved, how comfortable are you in taking pricing and having your customers accept this pricing willingly in light of the underlying commodity maybe not having moved so much, if that's the right way to think about it?

Yes. Ken, thanks for that question. And the way we described it is strategic pricing actions across the entire Turkey complex. And so we wanna make sure that we make the distinction that this is a fundamentally different conversation than we had last year. You know, last year, we were talking about pure commodity markets, commodity items like Holberg and we are positioned very differently.

And so we are thinking about the complex, but a big part of that complex is the value added business that we have in Turkey, both in retail and in food service. And so when we think about really the the two factors that are driving these actions, there's some turkey illness in the supply chain that's providing some pressure to and having supply chain impacts. But then the other side is just there are a number of underlying turkey categories or commodities that are at all time highs. And so, you know, when we think about those markets relative to value added pricing, that's what we know how to do and that's how we know how to manage a business. And obviously, John will have a big impact in terms of that value added complex.

So maybe John, you want to add a little more color?

Yes. Thank you and thanks Ken for the question. So just to expand on that comment a little bit that this is, this year is different from a turkey perspective. I mean, last year we were talking about commodity whole birds.

Now we are talking about value added turkey. And a significant consumer opportunity with that value added turkey complex. And if you look at poultry, and in particular ground turkey, it's very aligned with consumer needs. So consumers continue to seek lean sources of protein. Poultry is a great choice.

As just one example of where we see the appeal of poultry is among the GLP-one community. So it's very early days on GLP-one, still a lot to learn about the impacts of GLP-one, but some of the early research we are seeing shows that in addition to fresh fruit or weight management products, poultry and fish are among the highest growth categories experiencing increased consumption for GL those on GLP-one. So, you know, and then you look at it from a lifestyle and usage perspective, ground turkey is a very versatile option for consumers. It plugs in very well for everyday life, different food experiences. So with the number one brand nationally in Jennie O and ground turkey, we're in a great position to capitalize on that growing consumer market.

And in fact, if you look at the first quarter of the year, Jennie O was up 6% in volume and that was, that's scanner data, consumption data, but that's within a growing category. So demand has been very strong for some time and the trends underneath that rising demand we believe are longer term in nature. So we really like that plot from a consumer perspective as well.

Great. That's helpful. Thank you. And as a follow-up, and to build on Peter's question, Jim, I think first of all, congrats on your coming retirement. I would be curious for a little more color and some of the questions we're getting from investors I'd like to pass on.

First of all, was there any consideration to waiting on the announcement until a successor was found? Just given that I think some interpreted the move as a little more sudden and unexpected to the Board. Maybe that's wrong. I'd love to hear your thoughts on that. And then is now really the ideal time is the other question I get just given the transformation and modernization program, especially how much of that growth really needs to come next year to have someone new in the seat.

Is that the ideal situation for the company? So I know there's never a perfect time, but just wanted to get some of your added thoughts on that if I could.

Yeah. Thanks, Ken. And first, thanks for the congratulations. I appreciate that. You know, and absolutely, the questions you're asking are the questions I've been getting for, what, six weeks now.

And I think there's a couple of things at play here. And I'll go back to what I said. Right? The most important job of the board is to make sure that they pick the right CEO. And so the way we're going at it this time, which I think is very responsible in terms of surveying the internal and external landscape, if you're gonna go and look at the external landscape, it's hard to tell somebody you're gonna recruit them to be CEO when there's a CEO in the chair who hasn't announced a retirement.

So I think that in and of itself is a really important consideration in the process. And so, you know, could could you have waited? I suppose. But it would have put more pressure on the process. And I I just don't think that's fair to the organization.

I think the way that we announced it and said, hey, you know, Jim's gonna be here through the end of the year. Jim's gonna be a strategic advisor as needed. And I think that's really important to the second part of your question. To say, these are big initiatives that are started under my watch with, I mean, the entire team committed to these transform and modernize initiatives. So it's not Jim Snee who's executing against the transform and modernize initiative every single day.

It's the incredible team that we have that has bought in, they see the need and they believe in the opportunity. So that work that work is underway and that work continues. And as we've said, it really turns into this powerful growth flywheel over time becoming even more powerful. The last part I would say, Ken, and and this is another thing that that deserves strong consideration. If I wait till the end of transform and modernize and somebody and I say I'm done, I'm retiring, and now the next person has to come in and then say, oh, what's next?

That's not fair to that person. So I think this allows us to continue the execution of TNM that's already underway. It gives the next person appropriate time to really think about and and formalize or put together their plan for the future, right, rather than having to have that on them in day one. And so I I think the timing actually makes a lot of sense. Yes.

It's maybe a little bit different than we've done in the past, but I also think we're a different organization than we've been in the past. And some of the things that we've undertaken are different than we've take undertaken in the past really set us up for the future. So long winded answer, but hopefully as you start to put all those puzzle pieces together, you see how it really does make sense for the organization.

Your next question comes from Heather Jones with Heather Jones Research. Your line is now open.

Thanks for the question. I wanted to follow-up on, firstly, so I estimate that you guys have lost something north of 5% of your supply and all, but in the dark meat complex has moved considerably. But the lighter meat pricing has started to move and the pricing commentary on whole birds has definitely gotten more constructive as shortages start to take effect in the marketplace. So, just wondering when you're framing your full year outlook, are you assuming any benefit from the more positive commentary that we're hearing on whole bird pricing? Or are you only assuming a benefit from passing through higher pricing on the value added portion?

Good morning, Heather. Thanks for the question. So our assumptions on whole birds have not changed in our in our plan. So that's consistent. And so the change that we're referencing here relates to the rest of the Turkey complex and the pressure that we're seeing on the rest of that Turkey supply chain.

And when we talk about pricing action, it's specific to that. And so that's what's changed in our assumptions as we look at what we guided before and where we're coming off Q1 and when we think about the back the back half tailwind is really specific to the rest of the Turkey complex.

Okay. Thank you for that. And then my follow-up is when you take your guide and just back into rough math on the EBIT side, to get to the 26 number implied at your twenty three Analyst Day, I mean, it implies somewhere between 15% to almost 25% EBIT growth and 26%. And just wondering if, one, talk to your comfort level on that and two, what would drive that kind of growth because I mean, that's a pretty substantial growth number, you know, for any packaged food company. So, just would be curious to hear your thoughts on that.

Yes. Thanks, Heather. And I think, again, consistent with the commentary and discussion that we had on our Q4 call, which was really our T and M update, As we laid out, we do believe that we're still on track to deliver that 2026 number. And as I just mentioned to Ken, right, this T and M work is creating this powerful growth flywheel that's only going to accelerate as we continue, to move along. And so it is a combination of underlying growth in our business and I think we've kind of laid that out in terms of value added business retail, food service, international, reasons to believe there.

And then when you supplement that with the power of T and M and how that's going to to escalate over time, you know, that that's what gives us confidence. So we're we're not gonna get into the the specifics. Obviously, we'll we'll continue to give you updates as as we progress. But it's those two things and that has not changed from from our perspective in in Q4 of last year.

Your next question comes from Rupesh Parikh with Oppenheimer. Your line is now open.

Good morning. Thanks for taking my question. And Jim, also congrats on your retirement.

a question just on margins. So obviously gross margins are down in Q1. Just want to get a sense of how you guys are thinking out the interplay between gross margin and SGUnited for Q2 and then for the balance of the year?

Good morning, Rupesh. So when we think about our margins for Q2, we are we signaled that we expect it to be right comparable to Q1. You know, we will see margin we will see margin pressure coming off of our Q1 going into Q2. Our top line for sure is going to continue to be strong but our margins will be pressured by, the Turkey supply as we we talked about. We expect planters to continue to to recover but we don't see that full recovery until we get into the into the back half of the year.

And so quarter over quarter, we will see a comparable Q1, to Q2 relative to Q1, really driven by Turkey and not.

Then I Rupesh, I think it just said a different way. We're going to have gross margins that are down versus last year, but we do expect sequential improvement from Q1 to Q2. And as Jesin said, where those pressure points are really driven by Turkey market dynamics in the second quarter. But again, I think as we're thinking about not just the second quarter, back half of the year and beyond, the portfolio is really well positioned to drive growth and ultimately exceed historical margin levels.

Okay, great. And then maybe just one follow-up question, question for John. You've been now at the company for a few quarters. So I just want to get a sense from your perspective how the business has performed versus expectations and whether you see any new opportunities at this juncture?

That's great, Rupesh. Thank you for that opportunity. Yes, I have excuse me, I've been back almost six months now. And I've been touching on three themes. So I guess I'll touch on each one of those quickly here.

First, it's been great to see the transformation happening in the company. Now that was well underway when I walked back in the door. We talk about our transformation and modernization work externally. But as a returning employee, it has been striking to see from inside the company just how many important changes we are making to refresh and update and modernize the company. Now some of that I would say is things that are low hanging fruit or would be more typical in the industry.

But some of it is truly work that is going to help us leapfrog with better technology, better data, better processes. And across the board, it's been great to see how our people have been able to elevate their work, improve their decision making through that transformation. So that was kind of one big observation. Second, it has been extremely encouraging to see the progress we're already making on the retail business. So the unified approach Jim mentioned earlier to One Retail is clearly beginning to work.

If you look at the strong consumption momentum on our flagship and rising brands that we saw in the first quarter of the year to the stronger capabilities and bigger customer relationships we're able to build, to our first ever scale program. Jim mentioned the Here for the Snacks program in the first quarter. There's plenty of evidence and momentum that retail is on the right path. So that's kind of the second key point I would make. And then the third is I think to what you were asking around the opportunity I see.

And it really comes down to our unique portfolio that we have with Hormel. So we have a very diverse and compelling roster of leading brands and a lot of that is anchored around protein. So, you know, if you think about protein, it is a wonderful place to be anchored in the food industry from a long term perspective. On top of that, our capabilities to bring convenience, taste, relevant innovation to that portfolio of proteins is extremely powerful. So for me, the next step is bringing that journey on a very strong consumer focus and lens to that opportunity.

And I think we have the ability to really set ourselves apart. If you look at everything from substantial nourishing snacks, which are in very high demand to convenient food forward satisfying meals based around protein all throughout the day, we have a lot of opportunity. So bringing that strong consumer dimension, I call it our third dimension, will really push us forward and help propel us. So yes, I guess in summary for your question, extremely encouraged with the progress I've seen to date, but even more excited about the future.

Great. Thank you for all the color and best of luck.

Your next question comes from Ben Theurer with Barclays. Your line is now open.

Hormel Foods (HRL) Q1 2025 Earnings Call Transcript

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