Hormel Foods Corporation

05/28/2026 | Press release | Distributed by Public on 05/28/2026 12:16

Quarterly Report for Quarter Ending April 26, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Overview
The Company is a global manufacturer and marketer of branded food products and remains focused on driving long-term growth through a balanced business model, a diverse portfolio, and a commitment to creating value for all stakeholders. The Company's three reportable segments, Retail, Foodservice, and International, are described in Note Q - Segment Reporting in the Notes to the Consolidated Financial Statements in this Quarterly Report on Form 10-Q.
The Company discloses certain measures not defined by United States (U.S.) Generally Accepted Accounting Principles (GAAP), including organic volume, organic net sales, adjusted selling, general and administrative (SG&A), adjusted SG&A as a percent of net sales, adjusted earnings before income taxes, and adjusted diluted earnings per share. The Company utilizes these non-GAAP measures to understand and evaluate operating performance on a consistent basis. For additional information and reconciliations to the most closely comparable measures calculated in accordance with GAAP, see the "Non-GAAP Measures" section of this Item.
Diluted earnings per share was $0.29 for the second quarter of fiscal 2026, down 12 percent compared to the same period last year. Adjusted diluted earnings per share for the second quarter of fiscal 2026 was $0.40, up 14 percent compared to the same period last year. Significant factors impacting the quarter are listed below. All comparisons are to the same period of the prior year unless otherwise noted.
•Net sales for the second quarter of fiscal 2026 increased 3 percent. Organic net sales increased 3 percent with growth across the Foodservice, International, and Retail segments.
•Total segment profit for the second quarter of fiscal 2026 increased 13 percent. Segment profit increased in the Retail, Foodservice, and International segments.
◦The increase in Retail segment profit was due to higher net sales, improved performance across the turkey manufacturing network, and lower SG&A. These benefits were partially offset by inflationary pressures in the logistics network.
◦The increase in Foodservice segment profit was driven primarily by net sales performance, which benefited from market-based pricing actions and modest volume growth. Segment profit also benefited from improved performance across the turkey manufacturing network.
◦The increase in International segment profit was primarily due to strong export performance and growth in China.
•Earnings before income taxes for the second quarter of fiscal 2026 decreased 11 percent, which was negatively impacted by the $61 million loss on the sale of the whole-bird turkey business. Adjusted earnings before income taxes increased 14 percent, as higher net sales and improved performance across the turkey manufacturing network were partially offset by higher logistics expenses.
•The pre-tax impact of non-recurring expenses related to the loss on the sale of the whole-bird turkey business and the Company's Transform and Modernize (T&M) initiative in the second quarter of fiscal 2026 were $77 million, which was primarily recorded in SG&A.
Cash flow from operations was $528 million for the first six months of fiscal 2026, a 44 percent increase primarily due to the impact of an inventory build in the second quarter of fiscal 2025.
Entering the second half of fiscal 2026, the external environment remains dynamic, with continued volatility associated with macroeconomic and geopolitical conditions. The Company is actively working to mitigate the impact of these conditions. However, continued pressure from the external environment, at a level greater than expected, could have an adverse impact on results of operations.
Consolidated Results
Volume, Net Sales, Earnings, and Diluted Earnings Per Share
Quarter Ended Six Months Ended
In thousands, except per share amounts
April 26, 2026 April 27, 2025 %
Change 		April 26, 2026 April 27, 2025 %
Change
Volume (lbs.) 987,852 999,390 (1.2) 2,001,616 2,054,698 (2.6)
Organic Volume (lbs.)
987,852 995,400 (0.8) 2,001,616 2,049,205 (2.3)
Net Sales $ 2,972,600 $ 2,898,810 2.5 $ 5,999,917 $ 5,887,623 1.9
Organic Net Sales
2,972,600 2,877,957 3.3 5,999,917 5,858,235 2.4
Net Earnings Attributable to Hormel Foods Corporation
157,474 180,017 (12.5) 339,274 350,592 (3.2)
Diluted Earnings Per Share 0.29 0.33 (12.1) 0.62 0.64 (3.1)
Adjusted Diluted Earnings Per Share
0.40 0.35 14.3 0.74 0.70 5.7
Volume and Net Sales
Net Sales increased and volume decreased for the second quarter and first six months of fiscal 2026 compared to the prior year.
For the second quarter of fiscal 2026, each segment contributed to organic net sales growth. Strong enterprise performance across the turkey portfolio, Foodservice customized solutions business, contract manufacturing, the pepperoni portfolio, and Applegate® products were key drivers of organic net sales growth.
For the second quarter of fiscal 2026, organic volume increased marginally in the International and Foodservice segments and declined in the Retail segment, primarily driven by the strategic exit from select non-core private label snack nut items.
For the first six months of fiscal 2026, net sales growth in the Foodservice and International segments offset declines in the Retail segment. Strong enterprise performance across the turkey portfolio, Foodservice customized solutions business, premium prepared proteins, the pepperoni portfolio, and contract manufacturing were key drivers of organic net sales growth. For the first six months of fiscal 2026, volume grew in the Foodservice and International segments and declined in the Retail segment.
In fiscal 2026, the Company expects net sales growth, which assumes growth across a broad range of categories, increased brand support, and market-based pricing actions. Risks to this outlook include slowing consumer demand and commodity price fluctuations.
Cost of Products Sold
Quarter Ended Six Months Ended
In thousands
April 26, 2026 April 27, 2025 %
Change 		April 26, 2026 April 27, 2025
%
Change
Cost of Products Sold $ 2,454,093 $ 2,414,377 1.6 $ 5,011,835 $ 4,927,957 1.7
Cost of products sold increased for the second quarter and first six months of fiscal 2026. Higher commodity input costs and higher logistics expenses were partially offset by improved performance in the turkey manufacturing network.
On a per pound basis, cost of products sold for the second quarter and first six months of fiscal 2026 increased compared to the prior year.
Gross Profit
Quarter Ended Six Months Ended
In thousands
April 26, 2026 April 27, 2025 %
Change 		April 26, 2026 April 27, 2025
%
Change
Gross Profit $ 518,507 $ 484,433 7.0 $ 988,082 $ 959,666 3.0
Percent of Net Sales 17.4 % 16.7 % 16.5 % 16.3 %
For the second quarter and first six months of fiscal 2026, gross profit as a percent of net sales increased. Gross profit as a percent of net sales increased for the Retail, Foodservice, and International segments compared to the prior year.
Selling, General, and Administrative (SG&A)
Quarter Ended Six Months Ended
In thousands
April 26, 2026 April 27, 2025 %
Change 		April 26, 2026 April 27, 2025
%
Change
SG&A $ 318,624 $ 251,432 26.7 $ 560,322 $ 514,445 8.9
Percent of Net Sales 10.7 % 8.7 % 9.3 % 8.7 %
Adjusted SG&A
$ 243,416 $ 237,657 2.4 $ 481,828 $ 475,138 1.4
Adjusted Percent of Net Sales
8.2 % 8.2 % 8.0 % 8.1 %
For the second quarter of fiscal 2026, SG&A and SG&A as a percent of net sales increased, driven primarily by the loss on the sale of the whole-bird turkey business. Adjusted SG&A increased, driven primarily by increased expenses related to legal matters. Adjusted SG&A as a percent of net sales was flat to the prior year.
For the first six months of fiscal 2026, SG&A and SG&A as a percent of net sales increased, due to the loss on the sale of the whole-bird turkey business, partially offset by the gain on the sale of Justin's, LLC and lapping the loss on the sale of a non-core sow operation. Adjusted SG&A increased, driven primarily by increased expenses related to legal matters. Adjusted SG&A as a percent of net sales was comparable to the prior year.
Advertising investments in the second quarter of fiscal 2026 were $34 million, a decrease of 7 percent compared to the prior year. Advertising investments in the first six months of fiscal 2026 were $75 million, down 6 percent compared to the prior year. The declines were partially due to the timing of advertising campaigns. In fiscal 2026, the Company intends to increase advertising expense as it continues to invest in its priority brands.
Equity in Earnings of Affiliates
Quarter Ended Six Months Ended
In thousands April 26, 2026 April 27, 2025 %
Change 		April 26, 2026 April 27, 2025 %
Change
Equity in Earnings of Affiliates $ 17,229 $ 15,350 12.2 $ 33,049 $ 31,461 5.0
Equity in earnings of affiliates for the second quarter and first six months of fiscal 2026 increased driven by the results of MegaMex Foods, LLC.
Interest Income, Interest Expense, and Other Income (Expense), Net
Quarter Ended Six Months Ended
In thousands April 26, 2026 April 27, 2025 %
Change 		April 26, 2026 April 27, 2025 %
Change
Interest Income
$ 6,479 $ 6,176 4.9 $ 13,007 $ 13,719 (5.2)
Interest Expense 19,822 19,516 1.6 39,550 38,977 1.5
Other Income (Expense), Net
2,294 (4,523) 150.7 6,109 (2,862) 313.5
Interest income increased in the second quarter as higher average cash balances more than offset the impact of declining interest rates. For the first six months of fiscal 2026, interest income decreased, as lower interest rates more than offset the benefit of modestly higher cash balances. Other income increased in the second quarter and first six months of fiscal 2026, primarily driven by the investment gains within the rabbi trust.
Effective Tax Rate
Quarter Ended Six Months Ended
April 26, 2026 April 27, 2025 April 26, 2026 April 27, 2025
Effective Tax Rate 23.6 % 22.0 % 23.0 % 21.9 %
The effective tax rate in the second quarter of fiscal 2026 was 23.6% compared to 22.0% for the prior year, primarily due to the impact of the whole-bird turkey transaction in the second quarter of fiscal 2026. For additional information, refer to Note O - Income Taxes of the Notes to the Consolidated Financial Statements.
The effective tax rate for fiscal 2026 is expected to be between 21.5 and 22.5 percent.
Segment Results
Net sales and segment profit for each of the Company's reportable segments are set forth below. The Company does not allocate deferred compensation, non-recurring expenses associated with the T&M initiative, corporate restructuring plan costs, gains or losses on the sale of businesses, and interest and other income and expense to its segments when measuring performance. The Company also retains various other income and expenses at the corporate level. Equity in earnings of affiliates is included in segment profit; however, earnings attributable to the Company's corporate venturing investments and noncontrolling interests are excluded. These items are included below as Net Unallocated Expense and Noncontrolling Interest when reconciling to Earnings Before Income Taxes.
The Company is an integrated enterprise, characterized by substantial intersegment cooperation, cost allocations, and sharing of assets. Therefore, the Company does not represent that these segments, if operated independently, would report the profit and other financial information shown below.
Quarter Ended Six Months Ended
In thousands
April 26, 2026 April 27, 2025 % Change April 26, 2026 April 27, 2025 % Change
Net Sales
Retail $ 1,789,665 $ 1,783,835 0.3 $ 3,637,471 $ 3,673,968 (1.0)
Foodservice 996,711 936,442 6.4 1,994,937 1,866,627 6.9
International 186,225 178,533 4.3 367,509 347,028 5.9
Total Net Sales
$ 2,972,600 $ 2,898,810 2.5 $ 5,999,917 $ 5,887,623 1.9
Segment Profit
Retail $ 155,640 $ 137,135 13.5 $ 251,829 $ 256,281 (1.7)
Foodservice 155,784 140,633 10.8 312,325 279,459 11.8
International 22,135 18,407 20.3 45,046 39,252 14.8
Total Segment Profit
333,559 296,175 12.6 609,200 574,992 5.9
Net Unallocated Expense
127,400 65,411 94.8 168,698 126,111 33.8
Noncontrolling Interest
(96) (275) 65.2 (127) (320) 60.3
Earnings Before Income Taxes
$ 206,063 $ 230,489 (10.6) $ 440,375 $ 448,561 (1.8)
Retail
Quarter Ended Six Months Ended
In thousands
April 26, 2026 April 27, 2025 %
Change 		April 26, 2026 April 27, 2025
%
Change
Volume (lbs.) 663,009 677,277 (2.1) 1,356,893 1,414,162 (4.0)
Organic Volume (lbs.)
663,009 673,625 (1.6) 1,356,893 1,409,097 (3.7)
Net Sales $ 1,789,665 $ 1,783,835 0.3 $ 3,637,471 $ 3,673,968 (1.0)
Organic Net Sales
1,789,665 1,765,281 1.4 3,637,471 3,647,493 (0.3)
Segment Profit 155,640 137,135 13.5 251,829 256,281 (1.7)
Organic net sales grew in the second quarter of fiscal 2026, as strong performance in Jennie-O® ground turkey was partially offset by the strategic exit from select non-core private label snack nut items. Other priority brands such as Applegate® natural and organic meats, Hormel® Black Label® bacon, the Herdez® portfolio, and Hormel Gatherings® party trays contributed to net sales growth in the quarter. For the first six months of fiscal 2026, organic net sales was comparable to prior year, as strong performance in Jennie-O® ground turkey was offset by the strategic exit from select non-core private label snack nut items.
Retail segment profit increased in the second quarter of fiscal 2026 as higher net sales, improved performance across the turkey manufacturing network, and lower SG&A were partially offset by inflationary pressures in the logistics network. Segment profit decreased in the first six months of fiscal 2026 due to lower sales and higher logistics expenses which were partially offset by improved performance across the turkey manufacturing network and favorable SG&A.
Foodservice
Quarter Ended Six Months Ended
In thousands
April 26, 2026 April 27, 2025 %
Change 		April 26, 2026 April 27, 2025
%
Change
Volume (lbs.) 244,307 242,595 0.7 488,726 486,449 0.5
Organic Volume (lbs.)
244,307 242,293 0.8 488,726 486,070 0.5
Net Sales $ 996,711 $ 936,442 6.4 $ 1,994,937 $ 1,866,627 6.9
Organic Net Sales
996,711 934,704 6.6 1,994,937 1,864,383 7.0
Segment Profit 155,784 140,633 10.8 312,325 279,459 11.8
Organic net sales growth in the Foodservice segment was broad-based in the second quarter and first six months of fiscal 2026. Organic volume also increased in both periods. Net sales growth for the second quarter and first six months of fiscal 2026 was primarily driven by the customized solutions business, branded pepperoni, and premium prepared proteins. For the first six months of fiscal 2026, notable branded products, including Austin Blues® smoked meats, Hormel® Natural Choice® meats, Fontanini® Italian meats, and Jennie-O® turkey, delivered strong net sales results.
Segment profit increased for the second quarter and first six months of fiscal 2026, primarily driven by net sales performance, which benefited from market-based pricing actions and modest volume growth, despite a challenging operating environment. Segment profit also benefited from improved performance across the turkey manufacturing network.
The Foodservice segment continued to benefit from an extensive range of solutions-based products, its direct-selling organization, and a diverse channel presence during the second quarter and first six months of fiscal 2026.
International
Quarter Ended Six Months Ended
In thousands
April 26, 2026 April 27, 2025 %
Change 		April 26, 2026 April 27, 2025
%
Change
Volume (lbs.) 80,536 79,518 1.3 155,997 154,087 1.2
Organic Volume (lbs.) 80,536 79,482 1.3 155,997 154,038 1.3
Net Sales $ 186,225 $ 178,533 4.3 $ 367,509 $ 347,028 5.9
Organic Net Sales 186,225 177,972 4.6 367,509 346,358 6.1
Segment Profit 22,135 18,407 20.3 45,046 39,252 14.8
For the International segment, organic volume and organic net sales grew in the second quarter and first six months of fiscal 2026. Organic net sales growth was driven by strong results from SPAM® luncheon meat exports and the China business.
International segment profit increased in the second quarter and the first six months of fiscal 2026, primarily due to strong export performance and growth in China.
Unallocated Income and Expense
Quarter Ended Six Months Ended
In thousands
April 26, 2026 April 27, 2025 April 26, 2026 April 27, 2025
Net Unallocated Expense $ 127,400 $ 65,411 $ 168,698 $ 126,111
Noncontrolling Interest (96) (275) (127) (320)
For the second quarter of fiscal 2026, net unallocated expense increased primarily due to the loss on the sale of the whole-bird turkey business. For the first six months of fiscal 2026, net unallocated expense increased as the loss on the sale of the whole-bird turkey business, expenses associated with the corporate restructuring plan, and expenses for a consulting agreement with a former executive (Consulting Agreement). These expenses were partially offset by the gain on the sale of the controlling equity interest in Justin's, LLC and lapping the loss on the sale of a non-core sow operation in fiscal 2025.
Related Party Transactions
There has been no material change in the information regarding Related Party Transactions as disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended October 26, 2025.
Non-GAAP Measures
This report includes measures of financial performance that are not defined by GAAP. The Company utilizes these non-GAAP measures to understand and evaluate operating performance on a consistent basis. These measures may also be used when making decisions regarding resource allocation and in determining incentive compensation. The Company believes these non-GAAP measures provide useful information to investors because they aid analysis and understanding of the Company's results and business trends relative to past performance and the Company's competitors. Non-GAAP measures are not intended to be a substitute for GAAP measures in analyzing financial performance. These non-GAAP measures are not calculated in accordance with GAAP and may be different from non-GAAP measures used by other companies.
Transform and Modernize (T&M) Initiative
In the fourth quarter of fiscal 2023, the Company announced a multi-year T&M initiative. In presenting non-GAAP measures, the Company adjusts for (i.e., excludes) expenses for this initiative that are non-recurring, which are primarily project-based external consulting fees and expenses related to supply chain and portfolio optimization (e.g., asset write-offs, severance, or relocation-related costs). The Company believes that non-recurring costs associated with the T&M initiative are not reflective of the Company's ongoing operating cost structure; therefore, the Company is excluding these discrete costs. The Company does not adjust for (i.e., does not exclude) certain costs related to the T&M initiative that are expected to continue after the project ends, such as software license fees and internal employee expenses, because those costs are considered ongoing in nature as a component of normal operating costs. The Company also does not adjust for savings realized through the T&M initiative as these are considered ongoing in nature and reflective of expected future operating performance.
Gain or Loss on Sale of Business
In the second quarter of fiscal 2026, the Company completed the sale of its whole-bird turkey business, resulting in a loss on the sale. In the first quarter of fiscal 2026, the Company sold 51% of its equity interest in Justin's, LLC, resulting in a gain on the sale. In the first quarter of fiscal 2025, the Company sold Mountain Prairie, LLC, a non-core sow operation, resulting in a loss on the sale. The Company believes the one-time impacts from these sales are not reflective of the Company's ongoing operating cost structure, are not indicative of the Company's core operating performance, and are not meaningful when comparing the Company's operating performance against that of prior periods. Thus, the Company has adjusted for (i.e., excluded) these impacts.
Legal Matters
From time to time, the Company receives proceeds or incurs expenses related to discrete legal matters that the Company believes are not indicative of the Company's core operating performance, do not reflect expected future operating income or costs, and are not meaningful when comparing the Company's operating performance against that of prior periods. The Company adjusts for (i.e., excludes) these impacts.
Litigation Settlements
In fiscal 2025, the Company entered into a settlement agreement with certain plaintiffs in an antitrust lawsuit. See Note K - Commitments and Contingencies of the Notes to the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the fiscal year ended October 26, 2025, for additional information.
Corporate Restructuring Plan
In the fourth quarter of fiscal 2025, the Company commenced a corporate restructuring plan, the focus of which is to reduce administrative expenses, improve efficiencies, and align the workforce to the Company's future needs, while enabling continued investment in the Company's growth. The costs incurred to execute the corporate restructuring plan and the charges incurred under the program are primarily related to severance and employee benefit costs. Because the Company believes certain charges incurred under the corporate restructuring plan do not reflect future operating costs and are not meaningful when comparing the Company's operating performance against that of prior periods, the Company adjusts for (i.e., excludes) these impacts. See Note R - Restructuring of the Notes to the Consolidated Financial Statements for additional information.
Consulting Agreement
On October 27, 2025, the Company entered into an agreement with its former Chief Executive Officer (CEO), pursuant to which the former CEO is expected to provide consulting services to the Company until April 2027. Consulting costs related to the agreement include cash and share-based compensation, which were primarily recognized in the first quarter of fiscal 2026. The Company believes non-recurring costs associated with the Consulting Agreement are not reflective of the
Company's ongoing operating cost structure, are not indicative of the Company's core operating performance, and are not meaningful when comparing the Company's operating performance against that of prior periods; therefore, the Company is excluding these discrete costs.
The tables below show the calculations to reconcile from the GAAP measures to the non-GAAP measures presented in this Quarterly Report on Form 10-Q. The tax provision expense or benefit of each of the pre-tax items excluded from the Company's GAAP results was computed based on the facts and tax implications associated with each item.
Quarter Ended Six Months Ended
In thousands, except per share amounts April 26, 2026 April 27, 2025 April 26, 2026 April 27, 2025
Cost of Products Sold (GAAP) $ 2,454,093 $ 2,414,377 $ 5,011,835 $ 4,927,957
Transform and Modernize Initiative(1)
(1,393) (2,777) (1,774) (2,963)
Adjusted Cost of Products Sold (Non-GAAP) $ 2,452,701 $ 2,411,600 $ 5,010,061 $ 4,924,994
SG&A (GAAP) $ 318,624 $ 251,432 $ 560,322 $ 514,445
Transform and Modernize Initiative(2)
(14,113) (13,775) (24,656) (27,743)
Gain (Loss) on Sale of Business (61,040) - (37,532) (11,324)
Corporate Restructuring Plan (55) - (8,531) -
Consulting Agreement - - (7,775) -
Litigation Settlements - - - (240)
Adjusted SG&A (Non-GAAP) $ 243,416 $ 237,657 $ 481,828 $ 475,138
Operating Income (GAAP) $ 217,112 $ 248,352 $ 460,809 $ 476,682
Transform and Modernize Initiative(1)(2)
15,506 16,552 26,430 30,706
(Gain) Loss on Sale of Business 61,040 - 37,532 11,324
Corporate Restructuring Plan 55 - 8,531 -
Consulting Agreement - - 7,775 -
Litigation Settlements - - - 240
Adjusted Operating Income (Non-GAAP) $ 293,713 $ 264,903 $ 541,077 $ 518,952
Earnings Before Income Taxes (GAAP) $ 206,063 $ 230,489 $ 440,375 $ 448,561
Transform and Modernize Initiative(1)(2)
15,506 16,552 26,430 30,706
(Gain) Loss on Sale of Business 61,040 - 37,532 11,324
Corporate Restructuring Plan 55 - 8,531 -
Consulting Agreement - - 7,775 -
Litigation Settlements - - - 240
Adjusted Earnings Before Income Taxes (Non-GAAP) $ 282,664 $ 247,040 $ 520,643 $ 490,831
Provision for Income Taxes (GAAP) $ 48,685 $ 50,747 $ 101,227 $ 98,289
Transform and Modernize Initiative(1)(2)
3,799 3,641 6,475 6,727
(Gain) Loss on Sale of Business 9,982 - 4,223 2,469
Corporate Restructuring Plan 13 - 2,090 -
Consulting Agreement - - - -
Litigation Settlements - - - 52
Adjusted Provision for Income Taxes (Non-GAAP) $ 62,480 $ 54,388 $ 114,016 $ 107,537
Net Earnings Attributable to Hormel Foods Corporation (GAAP) $ 157,474 $ 180,017 $ 339,274 $ 350,592
Transform and Modernize Initiative(1)(2)
11,707 12,910 19,955 23,979
(Gain) Loss on Sale of Business 51,058 - 33,309 8,855
Corporate Restructuring Plan 41 - 6,441 -
Consulting Agreement - - 7,775 -
Litigation Settlements - - - 188
Adjusted Net Earnings Attributable to Hormel Foods Corporation (Non-GAAP) $ 220,280 $ 192,928 $ 406,754 $ 383,615
Quarter Ended Six Months Ended
In thousands, except per share amounts April 26, 2026 April 27, 2025 April 26, 2026 April 27, 2025
Diluted Earnings Per Share (GAAP)
$ 0.29 $ 0.33 $ 0.62 $ 0.64
Transform and Modernize Initiative(1)(2)
0.02 0.02 0.04 0.04
(Gain) Loss on Sale of Business 0.09 - 0.06 0.02
Corporate Restructuring Plan - - 0.01 -
Consulting Agreement - - 0.01 -
Litigation Settlements - - - -
Adjusted Diluted Earnings Per Share (Non-GAAP)
$ 0.40 $ 0.35 $ 0.74 $ 0.70
Quarter Ended Six Months Ended
April 26, 2026 April 27, 2025 April 26, 2026 April 27, 2025
SG&A as a Percent of Net Sales (GAAP) 10.7 % 8.7 % 9.3 % 8.7 %
Transform and Modernize Initiative(2)
(0.5) (0.5) (0.4) (0.5)
Gain (Loss) on Sale of Business (2.1) - (0.6) (0.2)
Corporate Restructuring Plan - - (0.1) -
Consulting Agreement - - (0.1) -
Litigation Settlements - - - -
Adjusted SG&A as a Percent of Net Sales (Non-GAAP) 8.2 % 8.2 % 8.0 % 8.1 %
(1) Comprised primarily of asset write-offs and severance related to supply chain and portfolio optimization.
(2) Comprised primarily of project-based external consulting fees.
ORGANIC VOLUME AND ORGANIC NET SALES (NON-GAAP)
The non-GAAP measures of organic volume and organic net sales are presented to provide investors with additional information to facilitate the comparison of past and present operations. Organic volume and organic net sales exclude the impact of the sale of the Company's controlling equity interest in Justin's, LLC in the first quarter of fiscal 2026.
Quarter Ended
April 26, 2026 April 27, 2025
In thousands GAAP GAAP
Divestiture
Non-GAAP Organic
Non-GAAP
% Change
Volume (lbs.)
Retail 663,009 677,277 (3,652) 673,625 (1.6)
Foodservice 244,307 242,595 (302) 242,293 0.8
International 80,536 79,518 (36) 79,482 1.3
Total Volume (lbs.) 987,852 999,390 (3,990) 995,400 (0.8)
Net Sales
Retail $ 1,789,665 $ 1,783,835 $ (18,554) $ 1,765,281 1.4
Foodservice 996,711 936,442 (1,738) 934,704 6.6
International 186,225 178,533 (561) 177,972 4.6
Total Net Sales $ 2,972,600 $ 2,898,810 $ (20,853) $ 2,877,957 3.3
Six Months Ended
April 26, 2026 April 27, 2025
In thousands GAAP GAAP
Divestiture
Non-GAAP Organic
Non-GAAP
% Change
Volume (lbs.)
Retail 1,356,893 1,414,162 (5,065) 1,409,097 (3.7)
Foodservice 488,726 486,449 (379) 486,070 0.5
International 155,997 154,087 (49) 154,038 1.3
Total Volume (lbs.) 2,001,616 2,054,698 (5,493) 2,049,205 (2.3)
Net Sales
Retail $ 3,637,471 $ 3,673,968 $ (26,474) $ 3,647,493 (0.3)
Foodservice 1,994,937 1,866,627 (2,244) 1,864,383 7.0
International 367,509 347,028 (670) 346,358 6.1
Total Net Sales $ 5,999,917 $ 5,887,623 $ (29,389) $ 5,858,235 2.4
LIQUIDITY AND CAPITAL RESOURCES
When assessing its liquidity and capital resources, the Company evaluates cash and cash equivalents, short-term and long-term investments, income from operations, and borrowing capacity.
Cash Flow Highlights
Six Months Ended
In thousands
April 26, 2026 April 27, 2025
Cash and Cash Equivalents at End of Period
$ 826,750 $ 669,688
Cash Provided by (Used in) Operating Activities 528,153 365,646
Cash Provided by (Used in) Investing Activities (50,742) (138,668)
Cash Provided by (Used in) Financing Activities (325,416) (292,629)
Increase (Decrease) in Cash and Cash Equivalents 156,072 (72,193)
Cash and cash equivalents increased $156 million during the first six months of fiscal 2026. Cash provided by operating activities was sufficient to cover dividend payments and capital expenditures. The Company also benefited from proceeds from the sale of businesses. During the first six months of fiscal 2025, cash and cash equivalents decreased $72 million as the Company utilized cash on hand to make additional purchases of inventory, capital assets, and energy tax credits as well as fund regular dividend payments. Additional details related to significant drivers of cash flows are provided below.
Cash Provided by (Used in) Operating Activities
•Cash flows from operating activities were impacted by changes in operating assets and liabilities.
-Accounts payable and accrued expenses decreased $59 million and $77 million during the first six months of fiscal 2026 and fiscal 2025, respectively. These decreases were driven by annual incentive payments and livestock and feed deferral payments, which were partially offset by higher marketing accruals. The decrease in fiscal 2026 was also due to the general timing of invoice payments and the decrease in fiscal 2025 also reflected legal settlements.
-Inventory increased $23 million during the first six months of fiscal 2026 compared to an increase of $156 million in the comparable period of the prior year. The increase in inventory during fiscal 2026 was driven by summer and promotional inventory build as well as higher feed and fuel costs impacting raw materials. These increases were partially offset by lower bacon and ham inventory levels. The increase in inventory during fiscal 2025 was driven by intentional seasonal and promotional inventory build, as well as softer sales.
-Accounts receivable decreased $64 million and $71 million during the first six months of fiscal 2026 and fiscal 2025, respectively, primarily due to lower sales compared to the fourth quarter of each respective prior year.
Cash Provided by (Used in) Investing Activities
•Capital expenditures were $151 million and $147 million during the first six months of fiscal 2026 and fiscal 2025, respectively. The largest projects during fiscal 2026 were related to investments in data and technology and capacity expansion at the ambient meat snack facility in Jiaxing, China. Significant projects during fiscal 2025 included the transition from harvest to value-added capacity at the Company's facility in Barron, Wisconsin and investments in data and technology.
•Proceeds from the sale of business were $100 million during the first six months of fiscal 2026 resulting from the sale of the Company's controlling equity interest in Justin's, LLC and whole-bird turkey business. During the first six months of fiscal
2025 proceeds from the sale of business were $13 million primarily from the sale of the Company's equity interest in Mountain Prairie, LLC.
Cash Provided by (Used in) Financing Activities
•Cash dividends paid to the Company's shareholders totaled $320 million during the first six months of fiscal 2026, compared to $314 million in the comparable period of fiscal 2025.
Sources and Uses of Cash
The Company believes its business model, with diversification across raw material inputs, channels, and categories, provides stability in ever-changing economic environments. The Company maintains a disciplined capital allocation strategy and uses a waterfall approach, which focuses first on core uses of cash, such as capital expenditures to maintain facilities, dividend returns to investors, mandatory debt repayments, and fulfillment of pension obligations. Next, the Company looks to strategic items in support of growth initiatives, such as other capital projects, acquisitions, additional dividend increases, and working capital investments. Finally, the Company evaluates opportunistic uses, including incremental debt repayment and share repurchases.
The Company believes its anticipated income from operations, cash on hand, borrowing capacity under the current unsecured revolving credit facility, and access to capital markets will be adequate to meet all short-term and long-term commitments. The Company expects to continue optimizing its portfolio through acquisitions and divestitures that align with its strategic priorities. The Company maintains multiple liquidity sources, including its ability to issue debt, which supports strategic investments and acquisitions.
Dividend Payments
The Company remains committed to providing returns to investors through cash dividends on its common stock. The Company has paid 391 consecutive quarterly dividends since becoming a public company in 1928. On March 23, 2026, the Board of Directors authorized a quarterly dividend for the second quarter of fiscal 2026, of $0.2925 per share, a 1% increase from the prior year.
Capital Expenditures
Capital expenditures are allocated to required maintenance and growth opportunities based on the needs of the business. Capital expenditures supporting growth opportunities in fiscal 2026 are expected to focus on projects related to infrastructure, new data and technology, and equipment upgrades. Capital expenditures for fiscal 2026 are estimated to be $260 million to $290 million.
Debt
As of April 26, 2026, the Company's outstanding debt included an aggregate of $2.9 billion of fixed rate unsecured senior notes due in fiscal 2027, 2028, 2030, and 2051 with interest payable semi-annually. During the first six months of fiscal 2026, the Company made $37 million of interest payments, and the Company expects to make an additional $37 million of interest payments in fiscal 2026 on these notes. In the second quarter of fiscal 2026, $500 million of the notes was reclassified as Current Maturities of Long-term Debt on the Consolidated Condensed Statements of Financial Position as it is payable
within one year. See Note N - Long-term Debt and Other Borrowing Arrangements of the Notes to the Consolidated Financial Statements for additional information.
Borrowing Capacity
As a source of short-term financing, the Company maintains a $750 million unsecured revolving credit facility. The maximum commitment under this credit facility may be further increased by $375 million upon the satisfaction of certain conditions. Extensions of credit under the facility may be applied by the Company to refinance existing indebtedness and for working capital and other general corporate purposes, including acquisition funding, and may be made in the form of revolving loans, swing line loans, and letters of credit. The lending commitments under the facility are scheduled to expire on March 25, 2030, at which time the Company will be required to pay in full all obligations then outstanding. As of April 26, 2026, the Company had no outstanding borrowings under this facility.
Debt Covenants
The Company's debt agreements contain customary terms and conditions including representations, warranties, and covenants. These debt covenants limit the ability of the Company to, among other things, incur debt for borrowed money secured by certain liens, or engage in certain sale and leaseback transactions, and the covenants require the Company to maintain certain consolidated financial ratios. As of April 26, 2026, the Company was in compliance with all covenants in its debt agreements and expects to maintain compliance in the future.
Cash Held by International Subsidiaries
As of April 26, 2026, the Company's international subsidiaries held $224 million of cash and cash equivalents. During the first quarter of fiscal 2026, the Company repatriated $21 million in cash from international subsidiaries with a one-time distribution.
The Company maintains all undistributed earnings as permanently reinvested. The Company evaluates the balance and uses of cash held internationally based on the needs of the business.
Share Repurchases
The Company is authorized to repurchase 3,677,494 shares of common stock as part of an existing plan approved by the Company's Board of Directors. Under the share repurchase authorization, the Company may repurchase shares periodically, depending on market conditions and other factors, and may do so in open market purchases or privately negotiated transactions. The share repurchase authorization has no expiration date. The Company did not repurchase any shares of stock during the first six months of fiscal 2026. The Company continues to evaluate share repurchases as part of its capital allocation strategy.
Commitments
There have been no material changes to the information regarding the Company's future contractual financial obligations previously disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended October 26, 2025.
TRADEMARKS
References to the Company's brands or products in italics within this report represent valuable trademarks owned or licensed by Hormel Foods, LLC or other subsidiaries of Hormel Foods Corporation.
CRITICAL ACCOUNTING ESTIMATES
Management's discussion and analysis of financial condition and results of operations is based upon the Company's consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires the Company to make estimates, judgments, and assumptions that can have a meaningful effect on the reporting of consolidated financial statements. The significant accounting policies used in preparing these consolidated financial statements are consistent with those described in Note A - Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements in the Form 10-K.
Critical accounting estimates are defined as those reflective of significant judgments, estimates, and uncertainties, which may result in materially different results under different assumptions and conditions. There have been no material changes in the Company's Critical Accounting Estimates as disclosed in its Annual Report on Form 10-K for the fiscal year ended October 26, 2025.
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements, which are based on the Company's current assumptions and expectations. These statements are typically accompanied by the words "aim," "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "might," "plan," "project," "seek," "target," "will," "would," or similar words or expressions. The principal forward-looking statements in this report include statements regarding the Company's: future financial and operational performance, fiscal 2026 outlook, expectations regarding commodity markets and raw material costs, intentions regarding future dividends, expectations regarding the Company's strategic initiatives, including the T&M initiative and the Company's recent corporate restructuring plan, expectations for the adequacy of and costs associated with the Company's sources of liquidity, expected compliance with debt covenants, expectations regarding its contractual obligations and liabilities, expectations regarding the impact of new accounting pronouncements, expected contributions and payments related to its pension plan, expectations regarding the return on plan assets, expectations regarding the timing and recognition of compensation expenses, and expectations regarding the outcome of, and adequacy of its reserves for, claims, litigation, and the resolution of tax matters.
All such forward-looking statements are intended to enjoy the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, as amended. Although the Company believes there is a reasonable basis for the forward-looking statements, its actual results could be materially different. The most important factors that could cause the Company's actual results to differ from its forward-looking statements include, but are not limited to, risks related to the deterioration of economic conditions; risks related to acquisitions, joint ventures, equity investments, and divestitures; risks and uncertainties associated with intangible assets, including any future goodwill or intangible assets impairment charges; the risk of disruption of operations; the risk that the Company may fail to realize anticipated cost savings or operating profit improvements associated with strategic initiatives, including the T&M initiative and the Company's recent corporate restructuring plan; risk of unfavorable changes in the Company's relationships with third parties; risk of the Company's inability to protect information technology (IT) systems against, or effectively respond to, cyberattacks, security breaches or other IT interruptions; labor relations and labor availability risks; food safety risks; fluctuations in commodity prices and availability of raw materials and other inputs; fluctuations in market demand for the Company's products; risks related to the Company's ability
to respond to changing consumer preferences; damage to the Company's reputation or brand image; risks of litigation; risks associated with government regulation; risks related to trade policies, export and import controls, and tariffs; and the other risks and uncertainties described in Item 1A - Risk Factors of the Company's Annual Report on Form 10-K for the fiscal year ended October 26, 2025. Though the Company has attempted to list comprehensively these important cautionary risk factors, the Company cautions that other factors may in the future prove to be important in affecting the Company's business or results of operations. Forward-looking statements speak only as of the date they are made, and the Company does not undertake any obligation to update any forward-looking statement except as otherwise required by law.
Hormel Foods Corporation published this content on May 28, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on May 28, 2026 at 18:16 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]