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 Third Quarter Earnings Conference Call. At this time, all lines are in a listen only mode. Following the presentation, we will conduct a question and answer session. This call is being recorded on Thursday, 08/28/2025. I would now like to turn the conference over to Jeff Baumburg, Director of Investor Relations. Please go ahead.

Good morning. Welcome to the Hormel Foods conference call for the 2025. 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, hormelfoods.com, under the Investors section, along with supplemental slide materials. On our call today is Jeff Ettinger, Interim Chief Executive Officer John Gingo, President and Jacinth Smiley, Executive Vice President and Chief Financial Officer.

Jeff, John and Jacinth will review the company's fiscal twenty twenty five third quarter results and provide a perspective on the remainder of the year. We will conclude with 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 the Investors section of our 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 on our website 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 be considered in 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 on our website. I will now turn the call over to Jeff Ettinger.

Thank you, Jess. Good morning, everyone, and thank you for joining us. Having been in my current role for just over a month, I am committed to building upon the strong foundation in place, rooted in an impressive portfolio of products, iconic brands and a great culture. Since returning to the company, I have been immersed in working with our leadership team and gaining a deeper understanding of our operations and strategic priorities. It is clear to see our robust solutions based portfolio and the protein centric nature of our offerings work well in today's consumer landscape.

Further, a major focus of mine has been learning about the Transform and Modernize initiative, its current trajectory, the key projects underway and how the work is progressing. I've been impressed to see the solid and demonstrable benefits of the program, not just financially, but through building capabilities for the future. Our mission is clear, deliver profitable growth. And if we turn to this quarter's results, we are halfway there having delivered organic net sales growth for three consecutive quarters. Building upon modest gains in the first and second quarters, we achieved an impressive organic net sales increase of 6% in the third quarter.

What is equally notable is that this growth was broad based driven by all three of our segments. It is clearly disappointing that our top line results did not translate into the bottom line growth we expected. The unanticipated surges in commodity input costs that affected our industry absorbed not only the margin delivery from our top line growth, but also our incremental benefits from our T and M initiative. Regarding the fourth quarter, we expect continued net sales growth supported by our leading positions in the marketplace. To address commodity inflation, we are taking targeted pricing actions.

We expect profit recovery, however, to lag into next year with the near term pressures we experienced in the third quarter persisting through the fourth quarter. John will share more information on the progress being made in each of our segments and Jacinth will go into greater detail on the third quarter performance and our guidance for the remainder of the year. But before I turn the call over to them, I wanted to align on expectations regarding what you can anticipate from us today and moving forward. In line with what the team has stated previously, we plan to share holistic 2026 guidance on our fourth quarter earnings call, including the specifics around our expectations for the T and M initiative. What we will provide today is commentary related to our high level vision for 2026, which Jacinth and I will cover later in today's call.

Beyond the words you hear from us today, I want you all to leave with the absolute confidence that driving sustainable growth both on the top line and the bottom line is our top priority. I am confident in the capabilities of our team and the opportunities ahead for our company. I look forward to reengaging with this investment community over the next year. Ahead of John's remarks, I'd like to extend my congratulations on his recent appointment as the eleventh President of Hormel Foods. This marks a pivotal moment for our company as John brings a fresh and energizing approach to leadership, one that is already resonating across the organization.

His ability to balance strategic clarity with a collaborative people first approach is exactly what we need as we continue to evolve and grow. I look forward to partnering with him, and I'm confident we will make meaningful progress in advancing our mission over the coming year. And with that, I will turn the call over to John.

Thank you, Jeff. I want to take a moment to congratulate you and welcome you back to the company. Many of you know Jeff already as a purpose driven leader with a proven track record of successfully leading this company. In just a short time since his return, I've been impressed with his clarity of vision, the conviction with which he leads and the mentorship he's extended to me personally. He brings renewed energy and focus, and I'm excited to partner with him as we move forward.

Further, I also want to take a moment to congratulate Jim Snee on his well deserved retirement and thank him for all he has done for our company and for me personally. Jim was a transformative leader. He had a culture first mentality and recognized the opportunity for greater potential for our company. He launched our journey of transformation, and I look forward to carrying that torch forward. With that, let's jump in.

In today's consumer landscape, there is a lot to be considered. Consumers are cautious yet resilient. They have shown a willingness to spend when products and experiences meet their needs, but rising costs are forcing consumers to make trade offs. That said, we believe the powerful combination of our protein focused portfolio, leading positions across multiple channels and capabilities related to innovation, renovation, customer partnership and strategic brand investment position us well to maintain the top line momentum that we've built over the last three quarters. Take our retail segment, for example, where our vision is focused, deliberate and is now in motion.

We are building a consumer led growth engine powered by protein centric solutions that deliver meaningful value to customers and consumers. By modernizing our products to deliver category leading differentiation, innovating bigger and bolder and taking a disciplined approach to investment and execution, our retail team is building strong brands. And I'm pleased with how these efforts are translating into results. In the third quarter, our flagship and rising brands delivered 3% dollar consumption growth. And taking a closer look at those results, I am particularly encouraged by the volume led momentum across many of these brands.

In fact, many of our category leading brands showed impressive consumer volume demand in the third quarter, including brands like Holy Guacamole, SPAM, Black Label Bacon, Herrdez, Hormel Pepperoni and Applegate to name a few. Each of these brands leveraged a personalized take on our common playbook. They started from a position of strength with consumers, benefited from our ongoing renovation and innovation work, which is focused on staying ahead of evolving consumer preferences, and many received targeted marketing support to drive both relevance and measurable returns. Digging into one of these brands a bit further, the SPAM brand shows just how impactful our approach can be. Our ongoing modernization strategy for the SPAM brand delivered another strong quarter with year over year volume and net sales growth.

We leveraged the brand's iconic equity by partnering with customers on impactful summer promotions and launching a limited time offer designed to drive both volume and net sales growth, all reinforcing the Spam brand's relevance in the marketplace. Another great example of the impact of brand modernization is the launch of the Hormel Pepperoni brand renovation work. This 110 year old brand is the number one retail pepperoni brand, and we would like to keep it that way for another century. Our team initiated a thoughtful renovation project on the brand, and we recently unveiled a refreshed package design. This update is more than cosmetic.

It's an investment with customers to bring excitement to this important category and to signal to consumers that Hormel Pepperoni is evolving with their tastes and expectations. The launch is supported by our new campaign, Boldly Irresistible, and we expect this renovation to drive stronger purchase intent, accelerate velocities and reinforce brand loyalty. I also want to spend a minute on our Jennie O ground turkey business, which offers a clear illustration of how a strong brand that is well aligned with evolving consumer preferences for lean, affordable protein wins in the marketplace. As we said previously, we needed to take inflation based pricing, which went into effect late Q2. Because of the strength of this brand, we were able to successfully navigate elasticities and capture dollar share and net sales growth.

Before I conclude my comments for the Retail segment, I want to give an update on the performance of our planters business. I am pleased to report that by the end of the quarter, scanner data was now reflecting year over year growth in distribution, household penetration and dollar sales. With the foundation restored, the team is back on the offense, reengaging consumers with innovations like nut duos and flavored cashews, while also launching a limited time bar nuts variety to spark excitement around summer snacking. With the capacity in place to fulfill demand and accelerating sales momentum as we enter Q4, I am encouraged by the top line recovery of the planters business. Profitability, on the other hand, is being impacted by mix and inflation.

We are actively working on drivers to balance the evolving needs of consumers and drive profitability. Looking ahead for retail, we expect that our brand building playbook will enable continued strong top line performance in the fourth quarter. However, we remain cautious on segment profitability. The ramp up of commodity markets in the third quarter has created margin pressure that will continue through the fourth quarter. As Jeff shared, we are taking targeted pricing action to help offset these pressures, which will go into effect throughout the fourth quarter and early in the 2026.

Our focus for retail is to build a consumer led growth engine powered by protein centric solutions that deliver meaningful value to customers and consumers. Let's now shift to our Foodservice segment. Our operators are facing a challenging environment. Industry wide traffic has remained soft with overall visits slightly down year over year. Casual dining has showed relative resilience in recent months, but the broader foodservice industry continues to face headwinds from inflation and shifting consumer behavior.

The dynamics of this environment, particularly the impact of commodity pressures in the third quarter, led to margin compression for our business. But we believe that the pass through nature of costs for much of our foodservice portfolio will allow us to recover profitability over time. As a result, we believe that underlying volume health continues to be a good measure of success for the segment. And here, our team delivered strong results in the quarter. Once again, organic volume and net sales growth for the Foodservice segment outpaced broader industry results in the third quarter.

Our growth was broad based, showcasing our great solutions based portfolio and the power of our direct selling organization. While you've heard us highlight this team often, I did want to take a moment to congratulate both the retail and foodservice selling teams for being recognized for the twenty fourth consecutive year by Selling Power as one of the best companies to sell for. For foodservice, this is certainly a testament to the value the team delivers to their customers and operators. As I said, volume net sales growth came from many of our foodservice brands in the third quarter. Planter snack nuts, the Jennie O Turkey portfolio and Hormel premium pepperoni all delivered significant growth.

For a bit of insight, in a highly competitive category like pepperoni, we delivered 20% year over year volume growth for Hormel premium pepperoni. These results highlight the team's understanding of our customers' and operators' needs and the quality and value of our portfolio. A recovery in industry traffic would certainly create a more favorable operating environment for our foodservice business, but we are not waiting for an industry recovery to return this powerful portfolio to the segment profit growth that we know it can deliver. Closing out the segments in international, net sales growth in the third quarter was driven by our thriving China business. Overall, the China market is rebounding, and we grew our in country business across both foodservice and retail channels this quarter.

This performance leaves me encouraged about the opportunities ahead for our proven in country model. Another contributor to my optimism on China is its success as an innovation engine, which is helping to build our snacking portfolio. Meat snacking innovation out of China delivered solid performance in the quarter, and the team strategically launched Skippy cones into a new channel further accelerating its distribution growth globally. Beyond China, international's exports in the third quarter also delivered positive top line results led largely by our global SPAM brand exports. Profitability was down year over year, mainly due to our Brazil business, which remained under significant pressure in the quarter.

The operating environment in Brazil continues to be challenged by competitive pricing dynamics. Our international team remains focused on expanding our global brands and portfolio with the same mission of returning to profitable growth. Turning back to our performance overall in the third quarter. While our top line results were impressive, the bottom line results were disappointing. The commodity inflationary pressures we felt were significantly greater than anticipated.

But to be clear, I remain confident about our future. First, we have a terrific portfolio. Being a leader in protein solutions is valuable in today's consumer landscape. Consumer demand for protein is an enduring trend and showing no signs of slowing down. Our portfolio is positioned for achievable growth.

Second, we are actively evolving to stay ahead of a dynamic and competitive marketplace. Transform and modernize is enabling us to unlock the full value of our portfolio. This initiative is building long lasting capabilities, future fitting our supply chain and further developing our processes, data and talent. Said differently, this is truly helping us modernize as a company. And third, we have a great team.

As I recently shared internally, I believe in a we mindset, because while no single person has all the answers, I firmly believe that together we do. I am energized by the opportunity to lead this talented team as we unlock the full potential of our impressive portfolio and company. With that, I will now turn the call over to Jacinta to provide details on our financial performance, our fourth quarter outlook and commentary leading into fiscal twenty twenty six.

Thank you, John, and good morning, everyone. We are pleased with the top line growth we delivered in the third quarter. All three segments showed its unique strength and the top line results emphasize the power of our globally diverse portfolio, leading brands and team. Organic net sales in the third quarter were $3,000,000,000 a 6% increase over last year with organic volume up 4%. Our Retail segment grew volume and net sales 5% over last year with five of our six retail pillars reporting top line growth above a year ago.

Volume growth was significantly supported by the Turkey portfolio, both in whole birds and value added lean ground Turkey. Excluding Turkey, retail volumes also grew in total. Our foodservice business once again outperformed the broader industry with broad based top line gains of 2% organic volume growth and 7% organic net sales growth. Our international business delivered strong top line results with 8% volume growth and 6% net sales growth led by our thriving China business. Gross profit was relatively flat year over year as the positive impact from top line growth was offset by higher than expected input costs.

Inflationary headwinds pressured margins. However, these were partially mitigated by savings from our Transform and Modernize initiative, which delivered in line with our quarterly expectations. As we noted during our second quarter call, we anticipated upward pressure on input costs, driven by pork, beef and nut market. However, during the third quarter, markets worsened significantly beyond our projections. To illustrate the order of magnitude of these external markets, as compared to last year, pork bellies were up approximately 30%.

The pork cutout was up about 10% and pork trim was up 20%. Beef also remained a persistent inflationary headwind industry wide and near all time high. Collectively, we experienced approximately 400 basis points of raw material cost inflation in the third quarter alone, representing a notable increase relative to last year. As we have previously discussed, when commodity markets rise sharply, there is a delay between the impact of pricing actions and the resulting improvement of profitability. For the third quarter, adjusted SG and A increased 6%, primarily driven by employee related expenses.

Advertising investments were also higher for the quarter as we continued to strategically invest in our brands to support long term brand health. Equity in earnings for the third quarter increased due to favorable results for MegaMex Foods and a modest benefit from our international investments. Interest and investment income increased due to performance from the Rabbi Trust. Overall, adjusted EPS for the third quarter was $0.35 Cash flow from operations was $157,000,000 for the quarter, a sequential improvement from the second quarter, but remains down compared to the prior year as we intentionally built additional seasonal inventory. Elevated commodity markets also impacted our higher inventory balances.

Capital expenditures were $72,000,000 during the quarter with our largest investments directed towards capacity enhancements and new technology initiatives. We remain committed to strategic reinvestments and expect to deploy approximately $300,000,000 in capital expenditures for fiscal twenty twenty five. I remain confident in our ability to generate strong sustainable cash flows over the long term, which supports our continued execution of a disciplined and balanced capital allocation strategy. As a proud dividend aristocrat, dividends paid to shareholders in the third quarter were $159,000,000 totaling $474,000,000 for the first nine months of fiscal twenty twenty five. We also declared and paid our three and eighty eighth consecutive quarterly dividend.

We ended the quarter with our net debt leverage ratio well within our target range of 1.5 times to two times, reflecting our balance sheet discipline and financial flexibility. The Transform and Modernize initiative continued to perform well and met our expectations for the quarter, delivering incremental benefits to the bottom line. The team has executed impactful work to drive value, which totaled approximately 90 projects in the third quarter. As we have shared, this initiative is more than just a cost savings project. It is about the way we do business across the enterprise, building new capabilities and reshaping how we operate while creating a new path for growth.

An especially noteworthy project this quarter involved optimizing our manufacturing footprint. We announced the partial closure of one facility and the reallocation of production volume across our broader network aimed at enhancing operational efficiency and long term scalability. With a robust backlog of projects and confidence in our ability to deliver meaningful results, we are reaffirming our expected range of 100,000,000 to $150,000,000 of incremental benefits in fiscal year twenty twenty five and believe we will finish the year near the high end of our T and M range. Shifting to the remainder of 2025, there are some considerations to keep in mind as we close the year. We continue to expect the top line growth in the fourth quarter, and we expect our Turkey portfolio, the Planters brand and our leading positions in the marketplace to continue to be a strong growth driver.

For profitability, we have announced inflation based pricing actions related to the third quarter markets, which we expect to partially benefit the fourth quarter and carry into the 2026. As the fourth quarter has begun, counter to our expectations, commodity markets have remained elevated across a variety of inputs. With that, we're assessing additional pricing actions. Our tariff estimate remains unchanged at a $01 to $02 EPS headwind for fiscal year twenty twenty five. Altogether, we expect fourth quarter adjusted EPS to be in the range of $0.38 to $0.40 reflecting a prudent outlook amid ongoing industry dynamics.

As we look ahead to fiscal twenty twenty six, we are approaching the time line for delivering on the long term financial goals we outlined at our twenty twenty three Investor Day. Over the past two years, we have numerous achievements to be proud of, especially within our Transform and Modernize initiative, where we have extracted value and invested in developing processes, talent and capabilities that will help propel us into the future. However, the growth goals we previously set for 2026 were based on certain assumptions that have not been realized. Among those assumptions were expectations of a more stable input cost environment, stronger consumer sentiment and earnings growth in the second half of fiscal twenty twenty five. That being said, as Jeff and John have mentioned, we are aligned and focused on returning to profitable growth.

We are in the early days of our annual planning process. And while we are not providing fiscal twenty twenty six guidance today, our belief is that our long term growth algorithm is a better metric to use when considering our go forward results. As we look ahead, we expect the top line to benefit from pricing actions, growth across our brands and product mix improvements. On the bottom line, we expect continued meaningful benefits from our Transform and Modernize initiative, benefits from the manufacturing footprint decisions we have made this year and possible cost reductions related to SG and A spend, which has outpaced growth in recent years, we will provide our holistic 2026 guidance on our fourth quarter earnings call. Before we transition to Q and A, I want to leave you with a clear message.

We are not just navigating the present, we are building a better company for the future. My confidence in our future is grounded in the strength of our robust protein centric portfolio, the resilience of our team and the long term capabilities we are building to drive sustainable growth. At the same time, we recognize that our bottom line performance did not reflect the potential of our business this quarter. We are committed to driving growth and enhancing long term profitability. Our balance sheet is strong and we believe our top line growth is sustainable.

We remain focused on delivering lasting value for our shareholders through consistent top line and bottom line performance aligned with our long term growth algorithm. With that, I will turn the call over to the operator to begin our Q and A portion of the call.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Your first question comes from Ben Theurer with Barclays. Your line is now open.

Yes. Good morning, Jeff, John, Jazin. Well, Jeff, first of all, welcome back, I guess. And John, congrats on the new role. First question really is, as we look back, call it three months ago when you did the call for the second quarter, you really sounded very confident as to the outlook for the second half.

And there was a lot of like data points you gave out to kind of like believe things are going into the right direction. So really within the last three months and then particularly as you kind of like look into the next three months, what has changed so much versus, call it, late May, early June, when the last time was when you updated the market? What has driven this revision?

Yes. Obviously a very fair question. Thank you, Ben and good morning. So I'll start off by kind of bringing us back to the expectations we had three months ago. And clearly, had confidence entering the second half and we had that for good reason.

If you kind of looked at our growth targets in the back half, we had four critical drivers of performance and what we were expecting. One was we had mentioned that we had landed or announced significant pricing on our value added turkey business at the end of the second quarter that would take hold in the third quarter. Two, we were expecting improved foodservice industry traffic in the back half of the year, which is important for our company and for our business. Three, we knew the sequential recovery of planters was going well. And when we hit the back half of the year, we were going to be lapping the supply disruption.

And so we saw the clear opportunity on planters. And then four, our transform and modernize initiative was on track and we had significant expectations for the back half on T and M. So those were kind of the four building blocks of what would set our expectations for the back half. As the third quarter unfolded, a few of those things went well and actually continued to meet our expectations and come to fruition. So the Turkey pricing, for example, our Turkey business has been strong, on track with our expectations.

We landed the pricing. We've delivered strong growth on our value added Turkey business and we have recovered the profitability we needed to. We also have seen in the third quarter broad based top line growth across the portfolio. That was a check. And our T and M delivery actually has remained on track.

In fact, we expect to finish the year toward the top end of the range we've been providing on T and M. So all three of those things were in line with our expectations. What we didn't expect and what changed dramatically the first one, there are three things, but the first one is the most significant, which was the steep run up in commodity markets. And that has very much pressured our earnings. That run up in commodity markets was both sudden and it was major as it occurred across inputs that are major for our business.

That was sort of the first and biggest factor. But there were two other elements that were important that unfolded. Foodservice traffic did not recover the way we expected it to. The industry remained soft, traffic still declining. And then the third one is planters recovery is very much on track from a top line perspective.

We're very, very pleased with how that is going, but the profit recovery has lagged somewhat. Profit on planters did grow in the third quarter, but not at the same rate as the top line has grown in that recovery. So when you look at those three factors, they were kind of the new news in the third quarter. We also adjusted our expectations based on those same factors for the fourth quarter because we see them persisting through the fourth quarter. And while we're encouraged by the momentum on the top line, we are obviously aligned on the urgency for driving profitable growth, and we have both made adjustments to our near term plan.

But also just to reiterate, we do remain confident in our future and our team overall. And I think Jacinth, you may want to add some more detail.

Yes, certainly. Good morning, Ben. And we are certainly disappointed in terms of where we are from a profitability standpoint. And as John touched on, the major change that happened here is relating to commodity markets and just the significant run up that happened in the middle of the third quarter as we went in. And then when we think about what we have done to respond to that, we have announced pricing relating to the impact for the third quarter.

However, given where markets remain, we have we are continuing to evaluate additional pricing actions. So that has really informed how we're thinking about the rest of the year. And also as we think about 2026 because we expect the fourth quarter to continue to be pressured by these significant market pressures and then just the consumer sentiments where it sits at the moment. So in our mind, right, we are in a spot where we need to be responsible with how we rebase our 2026 target. Overall, we recognize the second half did not meet our expectations.

We understand the disappointment this brings. And as Jeff mentioned, we remain firmly committed to driving sustainable growth and enhancing long term profitability. And what really do matters in this time that's so dynamic is how respond. And the team is responding and staying focused on executing with discipline, investing in our strengths and positioning ourselves for the future.

Okay. Got it. And then my follow-up is really I would describe it more as a strategic question. So Jeff, for you, obviously, you've been at the company and then you kind of like went on and came back just a few months ago, first on the Board and then now more recently as Interim CEO. So as you kind of come with fresh eyes, fresh thoughts, as you look at the business, what are you seeing?

How feel do about the company? How do you feel about the different business segments? And where do you think Hommel offers the greatest opportunities from a shareholder return perspective as you take on your role over the next coming months?

Yes. Thanks for the question, Ben. As I look at it coming back after a number of years, I believe Hormel is still in enviable position to grow from. I mean, you look at sort of the traditional processed meat categories, we are the innovation leader in bacon and pepperoni in both the retail and foodservice segments. We're a leader in more healthy new age proteins with portfolios such as Jennie O and Applegate.

We're a leader in protein solutions for the foodservice industry with Caffe H and Fire Braise and Flash 180, which I had a chance to see at the restaurant show when I joined the Board. We have two great global brands in SPAM and Skippy plus a growing business in China on the international front. And we're strong in certain non meat protein areas such as Planters and Skippy and our Mexican portfolio and our partnership with MegaMex. Frankly, we intend to be able to expand on this sort of strategic side down at your conference next week, the Barclays Back to School Conference. And so we'll give you more details on kind of what we're excited about there.

Now to answer sort of the second part of your question, the very first day John and I assume these new roles, we had a town hall with our team and we really talked to the team about, hey, what does winning look like frankly in this industry or frankly to me almost in any business? And it's all about growing your top line and your bottom line. Growth in your top line shows that your products are connecting with consumers and customers. And I'm encouraged that in this recent quarter we delivered on just that. We're kind of halfway there in that regard.

But you also have to grow the bottom line. You have to grow the bottom line to show that you're actually getting paid for all the hard work you're doing in a total system basis. And you also need to do it because it serves the interest of our shareholders who we understand have other options in terms of their investments and so growth is imperative. So that's our focus is going to be consistently driving top and bottom line growth.

Your next question comes from Tom Palmer with JPMorgan. Your line is now open.

Good morning. Thanks for the question. And congratulations, Jeff, on your return and John, on your recent promotion. In your prepared remarks, you noted that your long term growth algorithm is a better metric to use for forward earnings. I just want to make sure I understood to what extent this applies to 2026 because given some of the cost headwinds this year and also what seems to be emerging tailwinds from areas like Turkey, planters and the TNM program, I think there was some hope that next year could be more of an above algorithm type here?

Happy to take the question, Tom. This is Jeff. I personally have always found it important to have clear and measurable goals for the team. And indeed, Hormel Foods has communicated its current goals of 2% to 3% growth in net sales and 5% to 7% growth in operating income for the past several years. We think these are aggressive but reasonable goals in today's food industry environment.

And I personally agree that these are the appropriate goals for our general future expectations. We want the team to focus in the long term on hitting these on both the top and bottom line frankly. I'd like to see quarter after quarter. But these are not intended as our fiscal twenty twenty six guidance that will come on the Q4 call when we weigh all the considerations including some that you mentioned in your question.

Okay, understood. And then look, traditionally, there is some degree of seasonality in import costs. I think during the third quarter, it's not totally unusual to see some seasonal increase and then some easing as we look at the fourth quarter. To what extent is this seasonal decline embedded in your outlook? If it were to occur, would that be as expected or that could be an incremental tailwind?

And then I guess just kind of thinking through the comment about strategically building inventory in the quarter, maybe what areas were built? Because I'm a little curious why when commodities are so elevated that strategic decision was made.

Good morning, Tom. So if I start with your first question, so you're a little cheeky there. You got three questions in, but so that first part of your question around the commodity markets and seasonality, yes, it typically indeed there is seasonality and it starts to come down in the fourth. I mean, as we sit here today, right, markets are still elevated above the five year average. And that's what's really informing where we sit in the guide that we're giving for Q4.

That being said, even when markets if market starts to come down, given the fact that we have built inventory that we are not going to necessarily see positive impacts from that because we already have inventory in place. And so when we think about where we're guiding, right, we are expecting again the seasonality to be there, but the markets again staying elevated and we are not expecting that to have any material impact. And when we think about the inventories from an inventory standpoint, we did build inventory for back to school. We also which is mainly around Skippy, then another piece around our center store as we're trying to get our fill rate to where they need to be to service our customers. And then in general, given the significant inflation that also has impacted the balance that you will see on our balance sheet from an inventory perspective.

Thank you for addressing the multi part question. Thanks.

Your next question comes from Leah Jordan with Goldman Sachs. Your line is now open.

Good morning. Thank you for taking my question. I wanted to ask about pricing in retail. You took pricing for value added turkey in the quarter, but pricing overall wasn't really a driver for the top line. So what's the offsetting pressure you're seeing there?

And just how are you thinking about your ability to pass through more pricing given the targeted actions you're planning over the next couple of quarters? What are you planning in terms of elasticity? And just on those pricing actions, how much of the portfolio will be impacted in the fourth quarter, versus 2026?

Yes. Thank you for the question, Leah. This is John. I'll tackle pricing and I'll pull back a little bit too just to talk about pricing in general because the markets are dynamic and obviously pricing is a critical topic. So, and I will get into retail, but I'll just start by kind of grounding in foodservice as well since that's a big important part of our business.

So from an overall perspective, when we talk about our foodservice pricing, generally the vast majority of the pricing passes through based on movements in commodity markets whether those movements are up or down. Now there's typically a timing lag. And so in a period of escalating markets, there tends to be some compression and then that margin gets restored on the way back down. So that's kind of the foodservice aspect. From a retail perspective, to your point, there are two very fundamental differences with pricing when it comes to retail.

First, the lag time tends to be longer. When we do announce pricing actions to our retailers, there's a longer lag to actually get the pricing implemented. And the second fundamental difference is we need to be very measured with the decisions on if we do or don't take prices up and by how much we take them up when we do. In that retail case, we're triangulating across three different fundamental variables to guide those decisions. So one is commodity markets and COGS.

Obviously, we want to maintain and improve profitability, but we also have to balance two other variables. Anticipated consumer response, is critical. And so we know the consumer environment right now is challenging. The consumer is strained, for a variety of reasons. And then third variable is brand health and our support behind our brands to withstand pricing, right?

That's the third piece. So when you talk about elasticity, you're really talking about those second two elements, consumer response and the particular brand and category in the support plan behind the brand of how do we measure and estimate what will be the elasticity impact. So to come back to the point about Turkey, we mentioned in the last call that we were seeing an increase across our supply chain and costs on Turkey. And we said we had announced pricing in Q2 that we had to implement in Q3. And I bring it up as an example because we were able to kind of triangulate around those variables and successfully implement that pricing in the third quarter.

Our Jennie O Turkey business right now, ground turkey business is up 13% in the latest thirteen weeks, so through Q3. The category continues to be up as well. We have recovered the margin we needed to. And the reason we're able to do that is because of the strong product quality, the brand investments we've made, overall execution behind the business, we've been able to get through that pricing successfully. So now to come back to kind of the here and now, we have recently announced targeted pricing actions across other parts of our portfolio based on the escalation we've seen in the markets that Jacinth referred to.

So we will begin to see the benefits of that pricing in the latter part of Q4 and really into 2026. And as we continue to see these persistently elevated markets, we are evaluating additional targeted pricing actions as warranted. However, what I will say is we will continue to be thoughtful and measured to make sure the consumer can withstand additional pricing, that the pricing is constructive for their respective categories and that our brands are well supported through communications, quality and innovation to best mitigate those elasticity impacts. What I feel good about is that this measured approach has allowed us to keep our consumption increasing. So if you look at our overall consumption results in retail, over 3% growth on our flagship and rising brands, 1.5% growth for total Hormel.

We want to make sure we stay vibrant and growing with the consumer.

Your next question comes from Michael Lavery with Piper Sandler. Your line is now open.

Thank you. Good morning. I wanted to just come back to how to think about some of what's ahead. And I appreciate you don't want to give fiscal twenty twenty six guidance, but you had set out a three year plan one years point ago that you haven't explicitly updated. So how should we think about just your latest thinking on the T and M savings and the net EBIT growth that you've put a bit of a stake in the ground for?

Obviously, that would suggest some amount of kind of guidelines for where twenty six should land unless it's changed. Is that under review?

Good morning, Michael. So as we mentioned in prepared remarks, we'll certainly give a robust update on our Q4 call. That being said, right, when we had our Investor Day, there were certain assumptions that we had at that time. And so those targets were grounded in those assumptions. There has been changes certainly, as we have seen the last couple of years unfold, some of which we're talking about here today, right?

This significant rise in commodity market was not what we anticipated at that time in addition to the fact that we expected and anticipated a really strong second half in 2025. The consumer is also pressured. That was not contemplated in addition to what John mentioned before as well in terms of the planters that cover while it's recovering on the top line, the profitability is certainly lagging. So those are some of those key assumptions that's different than when we really talked about our projections for 2026. And again, we will give you further updates as we talk about it in Q4.

Okay. That's helpful. And just a follow-up on some of the pricing thinking and maybe slightly in two parts. One is just we've covered a little more on the retail side, but you had mentioned some noncore pressure in foodservice. Maybe if sorry if I missed it, but could you specify some of what that was?

And then on the pricing in response to the commodity pressure, you've mentioned that there's some under consideration. I know we're getting closer to the end of the year. What's in guidance in terms of is any new pricing actions really primarily affecting fiscal twenty twenty six? Or could there be a little bit of upside still left in the rest of the year to go?

Yes. So what I would to answer the second part of your question first, additional pricing actions at this point would largely impact 2026, really wouldn't have a material impact on Q4. In terms of foodservice, just to take a step back on foodservice a bit. The foodservice business for us does remain quite resilient and we're pleased with the top line growth and net sales growth. It's broad based across numerous categories.

We've seen organic volume growth being driven by several categories. So we feel very good about that. To come to the question about margin, so we are we mentioned non core business. The point that we had mentioned earlier this year, the divestiture of Hormel Health Labs is the point we were making there around some of the margin coming out due to that divestiture. Foodservice, we feel very good about our plot and our ability to continue to drive growth despite a challenging industry.

The traffic is down. If you look at it, we're growing the business, we're leveraging our direct sales team, we're leveraging our portfolio value added solutions. We have our diversified sales channel mix, right? We're going to continue to drive on those things. And on top of that, we're going to continue to navigate the headwinds.

One of those, when you look at our foodservice business is convenience stores. So the convenience store channel also comes up into our foodservice business. Convenience stores have been very soft from a traffic perspective. And so that does have some impact on mix and profitability as well.

Your next question comes from Peter Galbo with Bank of America. Your line is now open.

Hey guys, good morning. Thanks for taking the question. John, know there's been a lot of discussion around kind of the pricing dynamic on the go forward. But I guess just if I'm reading your comments or understanding your comments correctly, it does seem like the price cost lag has a potential negative price net of cost impact at least through the first quarter. And then based on what Jacinth was saying to the extent markets have remained in an unfavorable position relative to your expectations that that could linger really through the first half.

So I just I'm hoping to get a little bit more color in terms of when you think you kind of get back to parity from a price versus cost perspective or maybe said another way when you actually get caught up if kind of the current dynamic holds into the end of the year?

Yes. So what I would say is where we have the pass through pricing in place across our portfolio, it is a matter of timing and we will get caught up and we'll ride that up and down, but there will be lag. We tend to fare better when the markets are coming down, and it's a little bit tougher when they are going up, right. On the parts of the business where we are announcing list price changes in retail, it is a little bit different, right? So as we mentioned, we took a round of pricing actions that we already announced.

Hormel Foods (HRL) Q3 2025 Earnings Call Transcript

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