Form 8-K HORMEL FOODS CORP /DE/ For: May 18

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

 

Washington, D. C. 20549

 

 

 

FORM 8-K

 

 

 

CURRENT REPORT

 

 

Pursuant to Section 13 or 15 (d) of

the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported)   May 18, 2016

 

HORMEL FOODS CORPORATION

 

(Exact name of registrant as specified in its charter)

 

 

 

 

 

 

1 Hormel Place

Austin, MN  55912

(Address of Principal Executive Office)

 

Registrant’s telephone number, including area code:  (507) 437-5611

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

[  ]      Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

[  ]      Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

[  ]      Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

[  ]      Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Section 2 – FINANCIAL INFORMATION

 

Item 2.02 Results of Operations and Financial Condition

 

On May 18, 2016, the Company issued an earnings release announcing its financial results for the second quarter ended April 24, 2016.  A copy of the earnings release is furnished as Exhibit 99 to this Form 8-K and is incorporated herein by reference.

 

 

Section 9 – FINANCIAL STATEMENTS AND EXHIBITS

 

Item 9.01 Financial Statements and Exhibits

 

(d)    Exhibits furnished pursuant to Item 2.02

 

99       Earnings release issued May 18, 2016

 

 

 

SIGNATURES

 

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

	HORMEL FOODS CORPORATION
	(Registrant)
Dated: May 18, 2016	By	/s/J. H. FERAGEN
		J. H. FERAGEN
		Executive Vice President
		and Chief Financial Officer

 

Dated: May 18, 2016	By	/s/J. N. SHEEHAN
		J. N. SHEEHAN
		Vice President and Controller

 

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Exhibit 99

 

INVESTOR CONTACT:	MEDIA CONTACT:
Nathan Annis	Wendy Watkins
(507) 437-5248	(507) 437-5345
[email protected]	[email protected]

 

HORMEL FOODS ACHIEVES RECORD SECOND QUARTER RESULTS AND RAISES FISCAL 2016 GUIDANCE

 

AUSTIN, Minn. (May 18, 2016) – Hormel Foods Corporation (NYSE: HRL) today reported record performance for the fiscal year 2016 second quarter.

 

All comparisons are to the second quarter of fiscal 2015.  All earnings per share measures have been adjusted to reflect the two-for-one stock split distributed on February 9, 2016.

 

SUMMARY

 

·                 Record diluted earnings per share of $0.40, up 21 percent from $0.33 per share.

·                 Dollar sales of $2.3 billion, up 1 percent; volume down 1 percent.

¨            Grocery Products operating profit up 21 percent; volume down 1 percent; dollar sales up 1 percent.

·                 Refrigerated Foods operating profit up 13 percent; volume up 3 percent; dollar sales up 7 percent.

·                 Jennie-O Turkey Store operating profit up 20 percent; volume down 5 percent; dollar sales down 4 percent.

·                 Specialty Foods operating profit up 74 percent; volume down 2 percent; dollar sales down 5 percent.

·                 International & Other operating profit down 33 percent; volume down 13 percent; dollar sales down 17 percent.

 

The company reported fiscal 2016 second quarter record net earnings of $215.4 million, up 20 percent from net earnings of $180.2 million last year.  Diluted earnings per share for the quarter were $0.40, up 21 percent from $0.33 last year.  Sales for the quarter were $2.3 billion, up 1 percent from last year.

 

COMMENTARY

 

“Hormel Foods delivered strong results this quarter, our twelfth consecutive quarter of record earnings, with four of five segments achieving double-digit increases in operating profits,” said Jeffrey M. Ettinger, chairman of the board and chief executive officer. “Excellent results in Refrigerated Foods and Grocery Products were driven by favorable pork operating margins and solid growth posted by value-added products such as HORMEL® NATURAL CHOICE® meats, HORMEL® pepperoni, HORMEL GATHERINGS® party trays, SKIPPY® peanut butter, HORMEL® chili and WHOLLY GUACAMOLE® dips.  Specialty Foods has significantly enhanced its margin delivery through efficiency gains and increased branded sales, and continues to focus on innovation, highlighted by the recent launch of MUSCLE MILK® protein smoothies.  Specialty Foods also finalized the sale of Diamond Crystal Brands in May,” commented Ettinger.  “Jennie-O Turkey Store generated an impressive earnings performance despite lingering effects of turkey supply constraints, while International was challenged by weak exports and high pork costs in China.”

 

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SEGMENT OPERATING HIGHLIGHTS – SECOND QUARTER

 

Grocery Products (17% of Net Sales, 20% of Total Segment Operating Profit)

Grocery Products segment profit increased 21 percent on favorable raw material costs and improved plant efficiencies.  Sales increased 1 percent with growth from SKIPPY® peanut butter and HORMEL® chili offsetting decreases in our chunk meats business.

 

Refrigerated Foods (48% of Net Sales, 38% of Total Segment Operating Profit)

Segment profit for Refrigerated Foods increased 13 percent driven by strong pork operating margins, the addition of the Applegate business, and growth in many of our value-added products.  Including Applegate, sales were up 7 percent led by foodservice sales of OLD SMOKEHOUSE® bacon and HORMEL® FIRE BRAISED™ meats and increased retail sales of HORMEL® NATURAL CHOICE® meats and HORMEL® pepperoni.

 

Jennie-O Turkey Store (18% of Net Sales, 27% of Total Segment Operating Profit)

Jennie-O Turkey Store segment profit increased 20 percent on improved product mix and favorable input costs.  Sales decreased 4 percent reflecting volume shortfalls from the impact of highly pathogenic avian influenza in fiscal 2015.

 

Specialty Foods (12% of Net Sales, 11% of Total Segment Operating Profit)

Specialty Foods delivered a 74 percent increase in segment profit.  Results were driven by lower input costs, a favorable comparison to the plant closure in the prior year, and operational synergies captured within the CytoSport and Century Foods supply chain.  Dollar sales decreased 5 percent as increased sales of MUSCLE MILK® protein products were not able to offset reduced contract packaging sales.

 

International & Other (5% of Net Sales, 4% of Total Segment Operating Profit)

International segment profit declined 33 percent and sales declined 17 percent.  Results were impacted by high pork input costs in China and soft demand for our U.S. export products.

 

 

OUTLOOK

 

“We are raising our fiscal 2016 earnings guidance range from $1.50 to $1.56 per share to $1.56 to $1.60 per share based on strong second quarter results and continued expectations for growth in the back half of the year,” stated James P. Snee, president and chief operating officer.

 

“We look for Refrigerated Foods and Grocery Products to continue driving earnings increases through growth in value-added products combined with favorable input costs,” stated Snee.  “Jennie-O Turkey Store is well-positioned to drive sales and earnings growth as turkey production has returned to normalized levels.”

 

“Specialty Foods will continue to deliver increased sales of MUSCLE MILK® protein products but may not show year-over-year increases in segment sales and earnings as a result of the divestiture of Diamond Crystal Brands,” added Snee. “We expect International to return to growth in the back half of fiscal 2016 led by export sales of our SPAM® family of products and SKIPPY® peanut butter.”

 

“Today we announced that we have entered into a definitive agreement to acquire Justin’s, LLC, owner of the JUSTIN’S® brand and a pioneer in nut butter-based snacking,” stated Snee.  “We

 

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are excited to work together with the Justin’s team to bring these great natural and organic products to even more consumers, leveraging key Hormel Foods resources to drive continued innovation and growth to this on-trend category.”

 

DIVIDENDS

 

Effective May 16, 2016, the company paid its 351st consecutive quarterly dividend, at the annual rate of $0.58.

 

CONFERENCE CALL

 

A conference call will be webcast at 7:00 a.m. CT on Wednesday, May 18, 2016. Access is available at www.hormelfoods.com. The call will also be available via telephone by dialing 800-346-0976 and providing the access code 2194984. An audio replay is available by going to https://jsp.premiereglobal.com/webrsvp and entering the access code 2194984. The webcast replay will be available at 10:00 a.m. CT, Wednesday, May 18, 2016, and will remain on our website for one year.

 

About Hormel Foods

 

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. Hormel Foods, which leverages its extensive expertise, innovation and high competencies in pork and turkey processing and marketing to bring branded, value-added products to the global marketplace, will celebrate its 125th anniversary in 2016. The company is a member of the Standard & Poor’s (S&P) 500 Index, S&P 500 Dividend Aristocrats, and was named one of “The 100 Best Corporate Citizens” by Corporate Responsibility Magazine for the eighth year in a row. Hormel Foods also received a perfect score on the 2016 Human Rights Campaign Foundation’s Corporate Equality Index, was recognized on the 2016 Best for Vets Employers List by Military Times, and was named one of the 2016 Best Companies for Leaders by Chief Executive magazine. The company enjoys a strong reputation among consumers, retail grocers, foodservice and industrial customers for products highly regarded for quality, taste, nutrition, convenience and value. For more information, visit http://www.hormelfoods.com and http://2014csr.hormelfoods.com/.

 

 

FORWARD-LOOKING STATEMENTS

 

This news release contains forward-looking information based on management’s current views and assumptions. Actual events may differ materially. Please refer to the cautionary statement regarding Forward-Looking Statements and Risk Factors that appear on pages 30 - 35 in the company’s Form 10-Q for the fiscal quarter ended January 24, 2016, which can be accessed at www.hormelfoods.com under “Investors-SEC Filings.”

 

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Segment Data

 

Fiscal 2016 Second Quarter Segment Operating Results (dollars in thousands)

 

		SECOND QUARTER – 13 WEEKS ENDED
NET SALES		April 24, 2016				April 26, 2015				% Change
Grocery Products			$	401,472			$	397,265			1.1
Refrigerated Foods				1,092,479				1,022,511			6.8
Jennie-O Turkey Store				423,540				438,912			(3.5)
Specialty Foods				272,484				287,424			(5.2)
International & Other				110,260				133,233			(17.2)
Total			$	2,300,235			$	2,279,345			0.9
OPERATING PROFIT
Grocery Products				$ 67,110			$	55,327			21.3
Refrigerated Foods				130,002				114,837			13.2
Jennie-O Turkey Store				89,678				74,596			20.2
Specialty Foods				36,853				21,144			74.3
International & Other				14,244				21,383			(33.4)
Total segment operating profit				337,887				287,287			17.6
Net interest and investment (income) expense				(380)				1,966			(119.3)
General corporate expense				14,057				9,824			43.1
Noncontrolling interest				(13)				234			(105.6)
Earnings before income taxes			$	324,197			$	275,731			17.6

 

 

		YEAR TO DATE – 26 WEEKS ENDED
NET SALES		April 24, 2016				April 26, 2015				% Change
Grocery Products			$	793,690			$	807,016			(1.7)
Refrigerated Foods				2,254,600				2,166,726			4.1
Jennie-O Turkey Store				795,606				878,931			(9.5)
Specialty Foods				510,263				550,698			(7.3)
International & Other				238,748				271,047			(11.9)
Total			$	4,592,907			$	4,674,418			(1.7)
OPERATING PROFIT
Grocery Products			$	132,383			$	96,702			36.9
Refrigerated Foods				296,910				215,989			37.5
Jennie-O Turkey Store				180,981				167,616			8.0
Specialty Foods				63,646				39,720			60.2
International & Other				38,531				35,767			7.7
Total segment operating profit				712,451				555,794			28.2
Net interest and investment expense (income)				4,990				3,895			28.1
General corporate expense				29,189				13,077			123.2
Noncontrolling interest				93				946			(90.2)
Earnings before income taxes			$	678,365			$	539,768			25.7

 

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HORMEL FOODS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited) (In thousands, except per share amounts)

 

 

		Thirteen Weeks Ended								Twenty-Six Weeks Ended
		April 24, 2016				April 26, 2015*				April 24, 2016				April 26, 2015*
Net sales			$	2,300,235			$	2,279,345			$	4,592,907			$	4,674,418
Cost of products sold				1,773,876				1,819,789				3,508,537				3,770,257
GROSS PROFIT				526,359				459,556				1,084,370				904,161
Selling, general and administrative				211,144				189,733				421,092				370,032
Goodwill impairment charge				991				-				991				-
Equity in earnings of affiliates				9,593				7,874				21,068				9,534
OPERATING INCOME				323,817				277,697				683,355				543,663
Other income & expenses:
Interest & investment income (expense)				3,409				1,117				1,446				2,266
Interest expense				(3,029)				(3,083)				(6,436)				(6,161)
EARNINGS BEFORE INCOME TAXES				324,197				275,731				678,365				539,768
Provision for income taxes				108,813				95,296				227,814				186,903
(effective tax rate)				33.56%				34.56%				33.58%				34.63%
NET EARNINGS				215,384				180,435				450,551				352,865
Less: net (loss) earnings attributable to noncontrolling interest				(13)				234				93				946
NET EARNINGS ATTRIBUTABLE TO HORMEL FOODS CORPORATION			$	215,397			$	180,201			$	450,458			$	351,919
NET EARNINGS PER SHARE
Basic			$	0.41			$	0.34			$	0.85			$	0.67
Diluted			$	0.40			$	0.33			$	0.83			$	0.65
WEIGHTED AVG. SHARES OUTSTANDING
Basic				529,898				528,056				529,380				527,704
Diluted				543,769				540,888				543,253				540,505
DIVIDENDS DECLARED PER SHARE			$	0.145			$	0.125			$	0.29			$	0.25

 

 

* Shares and per share figures have been restated to give effect to the two-for-one stock split distributed on February 9, 2016.

 

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HORMEL FOODS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(In thousands)

 

 

		April 24, 2016					October 25, 2015
		(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents			$		379,881			$	347,239
Accounts receivable			548,497					605,689
Inventories			1,027,440					993,265
Income taxes receivable			-					6,132
Deferred income taxes			-					86,902
Prepaid expenses			13,908					14,383
Other current assets			5,356					9,422
TOTAL CURRENT ASSETS			1,975,082					2,063,032
DEFERRED INCOME TAXES			23,164					-
INTANGIBLES			2,521,500					2,526,703
OTHER ASSETS			541,669					538,357
PROPERTY, PLANT & EQUIPMENT, NET			1,048,930					1,011,739
TOTAL ASSETS			$		6,110,345			$	6,139,831
LIABILITIES AND SHAREHOLDERS’ INVESTMENT
CURRENT LIABILITIES
Short-term debt				$	-			$	185,000
Current liabilities excluding debt					937,384				1,029,025
TOTAL CURRENT LIABILITIES					937,384				1,214,025
LONG-TERM DEBT – LESS CURRENT MATURITIES				250,000				250,000
OTHER LONG-TERM LIABILITIES				613,322				674,413
SHAREHOLDERS’ INVESTMENT				4,309,639				4,001,393
TOTAL LIAB. & SHAREHOLDERS’ INVESTMENT				$	6,110,345			$	6,139,831

 

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HORMEL FOODS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited) (In thousands)

 

		Twenty-Six Weeks Ended
		April 24, 2016				April 26, 2015
OPERATING ACTIVITIES
Net earnings			$	450,551			$	352,865
Depreciation and amortization of intangibles			63,908				65,727
Goodwill impairment charge			991				-
(Increase) decrease in working capital			(74,829)				17,477
Other			(31,486)				9,668
NET CASH PROVIDED BY OPERATING ACTIVITIES			409,135				445,737
INVESTING ACTIVITIES
Net purchases of property/equipment			(97,143)				(43,934)
Decrease in investments, equity in affiliates, and other assets			12,178				5,379
NET CASH USED IN INVESTING ACTIVITIES			(84,965)				(38,555)
FINANCING ACTIVITIES
Principal payments on short-term debt			(185,000)				-
Dividends paid on common stock			(142,878)				(118,715)
Share repurchase			(6,358)				-
Other			44,826				3,476
NET CASH USED IN FINANCING ACTIVITIES			(289,410)				(115,239)
Effect of exchange rate changes on cash			(2,118)				(1,722)
INCREASE IN CASH AND CASH EQUIVALENTS			32,642				290,221
Cash and cash equivalents at beginning of year			347,239				334,174
CASH AND CASH EQUIVALENTS AT END OF QUARTER			$	379,881			$	624,395

 

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