AUSTIN, Minn., May 25, 2017 /PRNewswire/ -- Hormel Foods Corporation (NYSE: HRL) today reported results for the second quarter of fiscal year 2017. All comparisons are to the second quarter of fiscal year 2016. Results reflect the divestiture of the Diamond Crystal Brands business, the divestiture of the Farmer John business, and the acquisition of Justin's, LLC. The impact of these transactions is excluded in the presentation of the non-GAAP adjusted measures below.

SUMMARY

Second Quarter

• Diluted earnings per share of $0.39, down 2.5 percent from 2016 EPS of $0.40
• Net earnings of $211 million, down 2 percent compared to 2016 net earnings of $215 million
• Sales of $2.2 billion, down 5 percent; Non-GAAP1 adjusted sales2 up 2 percent
• Volume down 11 percent; Non-GAAP1 adjusted volume2 up 1 percent
• Grocery Products operating profit up 15 percent; volume up 2 percent; Non-GAAP1 adjusted volume2 flat; sales up 8 percent; Non-GAAP1 adjusted sales2 up 2 percent
• International & Other operating profit up 38 percent; volume up 17 percent; sales up 19 percent
• Refrigerated Foods operating profit flat; volume down 14 percent; Non-GAAP1 adjusted volume2 up 1 percent; sales down 6 percent; Non-GAAP1 adjusted sales2 up 5 percent
• Specialty Foods operating profit down 16 percent; volume down 33 percent; Non-GAAP1 adjusted volume2 up 3 percent; sales down 24 percent; Non-GAAP1 adjusted sales2 flat
• Jennie-O Turkey Store operating profit down 29 percent; volume down 6 percent; sales down 8 percent

COMMENTARY

"Despite ongoing challenges in the turkey industry, our balanced model allowed us to deliver earnings within two percent of last year's results," said Jim Snee, president and chief executive officer. "Three segments delivered earnings growth, margin expansion, and adjusted volume and sales growth this quarter."

"Growth in many of our key brands drove excellent results in the Grocery Products and International segments. The divestitures of Farmer John and Diamond Crystal Brands allowed Refrigerated Foods and Specialty Foods to enhance their operating margins," Snee said. "Unfavorable market conditions in the turkey industry caused by an oversupply of turkey continued to pressure Jennie-O Turkey Store sales and earnings."

SEGMENT OPERATING HIGHLIGHTS – SECOND QUARTER

Grocery Products (20% of Net Sales, 24% of Total Segment Operating Profit)Grocery Products sales increased 8 percent and segment profit increased 15 percent. These results are due to the addition of JUSTIN'S® specialty nut butters as well as the strong performance of WHOLLY GUACAMOLE® dips and SPAM® luncheon meat.

Refrigerated Foods (47% of Net Sales, 40% of Total Segment Operating Profit)Refrigerated Foods segment profit was flat and sales declined 6 percent, primarily related to the divestiture of the Farmer John business. Retail products such as HORMEL® BLACK LABEL® bacon and HORMEL® NATURAL CHOICE® meats and foodservice products such as HORMEL® BACON 1TM fully cooked bacon and HORMEL® pepperoni posted excellent results this quarter.

Jennie-O Turkey Store (18% of Net Sales, 20% of Total Segment Operating Profit)Jennie-O Turkey Store volume declined 6 percent, sales declined 8 percent, and segment profit declined 29 percent. These decreases are primarily due to lower turkey commodity prices, pricing pressure from competing proteins, and increased operating expenses.

Specialty Foods (9% of Net Sales, 10% of Total Segment Operating Profit)Specialty Foods sales declined 24 percent and segment profit declined 16 percent, primarily related to the divestiture of Diamond Crystal Brands in May 2016 and reduced contract packaging sales.

International & Other (6% of Net Sales, 6% of Total Segment Operating Profit)International sales increased 19 percent and segment profit increased 38 percent. Strong exports of fresh pork and SPAM® luncheon meats contributed to the growth.

OUTLOOK

"We are maintaining our fiscal 2017 guidance range of $1.65 to $1.71 per share but expect the results at Jennie-O Turkey Store to push our full-year earnings toward the lower end of this range," Snee said. "We expect the pressure on Jennie-O Turkey Store to continue for the remainder of the fiscal year given the oversupply in the turkey industry."

"Even in this challenging commodity environment, our team is working hard to generate earnings growth by providing customers, consumers, and operators with on-trend, innovative value-added products," Snee said.

DIVIDENDS

Effective May 15, 2017, the company paid its 355th consecutive quarterly dividend at the annual rate of $0.68.

1 COMPARISON OF U.S. GAAP TO NON-GAAP FINANCIAL MEASUREMENTS

The non-GAAP adjusted financial measurements are presented to provide investors additional information to facilitate the comparison of past and present operations. The company believes these non-GAAP adjusted financial measurements provide useful information to investors because they are the measurements used to evaluate performance on a comparable year-over-year basis. Non-GAAP measurements are not intended to be a substitute for U.S. GAAP measurements in analyzing financial performance. These non-GAAP measurements are not in accordance with generally accepted accounting principles and may be different from non-GAAP measures used by other companies.

2 ADJUSTED FINANCIAL MEASURES

Adjusted net sales and volume excludes the impact from the Justin's, LLC acquisition in May 2016, and the divestitures of the Diamond Crystal Brands business in May 2016, and the Farmer John business in January 2017. The tables below show the calculations to reconcile from the non-GAAP adjusted measures to the GAAP measures in the second quarter and second quarter year-to-date of fiscal 2016 and fiscal 2017.

CONFERENCE CALL

A conference call will be webcast at 8:00 a.m. CT on Thursday, May 25, 2017. Access is available at www.hormelfoods.com. The call will also be available via telephone by dialing 877-681-3367 and providing the access code 2874950. An audio replay is available by going to www.hormelfoods.com and clicking on Investors. The webcast replay will be available at 11:00 a.m. CT, Thursday, May 25, 2017, and will remain on the website for one year.

About Hormel Foods – Inspired People. Inspired Food.™

Hormel Foods Corporation, based in Austin, Minn., is a global branded food company with over $9 billion in annual revenues across 75 countries worldwide. Its brands include SKIPPY®, SPAM®, Hormel® Natural Choice®, Applegate®, Justin's®, Wholly Guacamole®, Hormel® Black Label® and more than 30 other beloved brands. The Company is a member of the S&P 500 Index and the S&P 500 Dividend Aristocrats, was named one of "The 100 Best Corporate Citizens" by Corporate Responsibility Magazine for the ninth year in a row, and has received numerous other awards and accolades for its corporate responsibility and community service efforts. In 2016, the company celebrated its 125th anniversary and announced its new vision for the future - Inspired People. Inspired Food.™ - focusing on its legacy of innovation. For more information, visit www.hormelfoods.com and http://2015csr.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 which appear on pages 30 - 37 in the company's Form 10-Q for the quarter ended January 29, 2017, which can be accessed at www.hormelfoods.com under "Investors-SEC Filings."

Statements Follow

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SOURCE Hormel Foods Corporation