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What changed in Hormel Foods's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Hormel Foods's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+313 added−330 removedSource: 10-K (2024-12-05) vs 10-K (2023-12-06)

Top changes in Hormel Foods's 2024 10-K

313 paragraphs added · 330 removed · 215 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

38 edited+7 added−8 removed11 unchanged
Biggest changeForward-looking statements are inherently at risk to changes in the national and worldwide economic environment, which could include, among other things, risks related to the deterioration of economic conditions; risks associated with acquisitions, joint ventures, equity investments, and divestitures; potential disruption of operations, including at co-manufacturers, suppliers, logistics providers, customers, or other third-party service providers; failure to realize anticipated cost savings or operating efficiencies associated with strategic initiatives; risk of loss of a material contract; the Company’s inability to protect information technology systems against, or effectively respond to, cyber attacks or security breaches; deterioration of labor relations, labor availability or increases to labor costs; general risks of the food industry, including food contamination; outbreaks of disease among livestock and poultry flocks; fluctuations in commodity prices and availability of raw materials and other inputs; fluctuations in market demand for the Company’s products; damage to the Company's reputation or brand image; climate change, or legal, regulatory, or market measures to address climate change; risks of litigation; potential sanctions and compliance costs arising from government regulation; compliance with stringent environmental regulations and potential environmental litigation; and risks arising from the Company’s foreign operations.
Biggest changeThe risks and uncertainties that could cause actual results to differ from those anticipated or projected include, among other things, risks related to the deterioration of economic conditions; risks associated with 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, including at owned facilities, co-manufacturers, suppliers, logistics providers, customers, or other third-party service providers; the risk that the Company may fail to realize anticipated cost savings or operating profit improvements associated with strategic initiatives, including the Transform and Modernize initiative; risk of loss of a significant contract or unfavorable changes in the Company’s relationships with significant customers; risk of the Company’s inability to protect information technology systems against, or effectively respond to, cyber attacks, security breaches or other IT interruptions, against or involving the Company’s IT systems or those of others with whom it does business; risk of the Company’s failure to timely replace legacy technologies; deterioration of labor relations or labor availability or increases to labor costs; general risks of the food industry, including those related to food safety, such as costs resulting from food contamination, product recalls, the remediation of food safety events at its facilities, including the production disruption at the Suffolk, Virginia, facility, or outbreaks of disease among livestock and poultry flocks; fluctuations in commodity prices and availability of raw materials and other inputs; fluctuations in market demand for the Company’s products, including due to private label products and lower-priced alternatives; risks related to the Company’s ability to respond to changing consumer preferences, diets and eating patterns, and the success of innovation and marketing investments; damage to the Company’s reputation or brand image; risks associated with climate change, or legal, regulatory, or market measures to address climate change; risks of litigation; potential sanctions and compliance costs arising from government regulation; compliance with stringent environmental regulations and potential environmental litigation; and risks arising from the Company’s foreign operations, including geopolitical risk, exchange rate risk, legal, tax, and regulatory risk, and risks associated with tariffs.
Competition The production and sale of meat and food products in the U.S. and internationally is highly competitive. The Company competes with manufacturers of pork and turkey products as well as national and regional producers of other meat and protein sources, such as beef, chicken, fish, nuts, and plant-based proteins.
Competition The production and sale of meat and food products in the U.S. and internationally is highly competitive. The Company primarily competes with manufacturers of pork and turkey products as well as national and regional producers of other meat and protein sources, such as beef, chicken, fish, nuts, and plant-based proteins.
These reports are accessible under the caption, “Investors – Filings & Reports – SEC Filings” on the Company’s website and are available as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission (SEC). These filings are also available on the SEC's website at www.sec.gov .
These reports are accessible under the caption, “Investors – Financials – SEC Filings” on the Company’s website and are available as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission (SEC). These filings are also available on the SEC’s website at www.sec.gov .
Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those anticipated or projected.
Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results and those anticipated or projected.
PEANUT, NATURAL CHOICE, NUT-RITION, OLD SMOKEHOUSE, OVEN READY, PILLOW PACK, PLANTERS, ROSA GRANDE, SADLER'S SMOKEHOUSE, SKIPPY, SPAM, SPECIAL RECIPE, THICK & EASY, VALLEY FRESH, and WHOLLY. The Company’s patents expire after a term that is typically 20 years from the date of filing, with earlier expiration possible based on the Company’s decision whether to pay required maintenance fees.
PEANUT, NATURAL CHOICE, NUT-RITION, OLD SMOKEHOUSE, OVEN READY, PILLOW PACK, PLANTERS, ROSA GRANDE, SADLER’S SMOKEHOUSE, SKIPPY, SPAM, SQUARE TABLE, SPECIAL RECIPE, VALLEY FRESH, and WHOLLY. The Company’s patents expire after a term that is typically 20 years from the date of filing, with earlier expiration possible based on the Company’s decision whether to pay required maintenance fees.
In addition to the health care benefits package, the Company’s Inspired Health program aims to cultivate and maintain a culture of health and wellness that is focused on encouraging and empowering team members to make healthy lifestyle choices through awareness, prevention, and positive health behavior 4 Table of Contents changes.
In addition to the health care benefits package, the Company’s Inspired Health program aims to cultivate and maintain a culture of health and wellness that is focused on encouraging and empowering team members to make healthy lifestyle choices through awareness, prevention, and positive health behavior changes.
Production costs from raising turkeys are subject to fluctuations in grain prices and fuel costs. To manage these risks, the Company uses futures, swaps, and options contracts to hedge a portion of its anticipated purchases. The Company also purchases raw materials from various suppliers.
Production costs from raising turkeys are subject to fluctuations in grain prices and fuel costs. To manage input cost risks, the Company uses futures, swaps, and options contracts to hedge a portion of its anticipated purchases. The Company also purchases raw materials from various suppliers.
Governmental Regulation and Environmental Matters The Company’s operations are subject to regulation by various governmental agencies which oversee areas such as food safety, workforce immigration, environmental laws, animal welfare, tax regulations, and the processing, packaging, storage, distribution, advertising, and labeling of the Company’s products.
Governmental Regulation and Environmental Matters The Company’s operations are subject to regulation by various governmental agencies which oversee areas such as food safety, workforce mobility, environmental laws, animal welfare, financial and tax regulations, and the processing, packaging, storage, distribution, advertising, and labeling of the Company’s products.
Inspired Food.™ Today, the Company is a global branded food company bringing some of the most trusted and iconic brands to tables across the globe with over $12 billion in annual revenue in more than 80 countries. The Company has continually expanded its product portfolio through organic growth and acquisitions.
Inspired Food.™ The Company has continually expanded its product portfolio through organic growth and acquisitions. Today, the Company is a global branded food company bringing some of the most trusted and iconic brands to tables across the globe with approximately $12 billion in annual revenue generated from more than 80 countries.
Products and Distribution The Company develops, processes, and distributes a wide array of food products in a variety of markets and manufactures its products through various processing facilities and trusted co-manufacturers. The Company’s products primarily consist of meat, nuts, and other food products sold across multiple distribution channels, such as U.S. Retail, U.S. Foodservice, and International.
Products and Distribution The Company develops, processes, and distributes a wide array of food products in a variety of markets and manufactures its products through various processing facilities and trusted co-manufacturers. The Company’s products primarily consist of meat, nuts, and other food products sold across multiple distribution channels, such as United States (U.S.) retail, U.S. foodservice, and internationally.
Some of the more significant owned or licensed trademarks used by the Company or its affiliates are: HORMEL, ALWAYS TENDER, APPLEGATE, AUSTIN BLUES, BACON 1, BLACK LABEL, BREAD READY, BURKE, CAFÉ H, CERATTI, CHI-CHI’S, COLUMBUS, COMPLEATS, CORN NUTS, CURE 81, DAN’S PRIZE, DI LUSSO, DINTY MOORE, DON MIGUEL, DOÑA MARIA, EMBASA, FAST ‘N EASY, FIRE BRAISED, FONTANINI, HAPPY LITTLE PLANTS, HERDEZ, HORMEL GATHERINGS, HORMEL SQUARE TABLE, HORMEL VITAL CUISINE, HOUSE OF TSANG, JENNIE-O, JUSTIN’S, LA VICTORIA, LAYOUT, LLOYD’S, MARY KITCHEN, MR.
Some of the more significant owned or licensed trademarks used by the Company or its affiliates are: HORMEL, ALWAYS TENDER, APPLEGATE, AUSTIN BLUES, BACON 1, BLACK LABEL, BREAD READY, BURKE, CAFÉ H, CERATTI, CHI-CHI’S, COLUMBUS, COMPLEATS, CORN NUTS, CURE 81, DAN’S PRIZE, DI LUSSO, DINTY MOORE, DON MIGUEL, DOÑA MARIA, EMBASA, FAST ‘N EASY, FIRE BRAISED, FONTANINI, HERDEZ, HORMEL GATHERINGS, HOUSE OF TSANG, JENNIE-O, JUSTIN’S, LA VICTORIA, LAYOUT, LLOYD’S, MARY KITCHEN, MR.
The Company started as a processor of meat and food products and continues in this line of business with emphasis on the manufacturing and distribution of branded, value-added consumer items rather than commodity fresh meat products. The Company builds on its founder's legacy of innovation, quality, and integrity with focus on its purpose statement — Inspired People.
The Company started as a processor of meat and food products and continues in this line of business with emphasis on the manufacturing and distribution of branded, value-added consumer items. The Company builds on its founder’s legacy of innovation, quality, and integrity with focus on its purpose statement — Inspired People.
The Company currently operates with the following three operating and reportable segments: Retail, Foodservice, and International. Retail The Retail segment consists primarily of the processing, marketing, and sale of food products sold predominantly in the retail market. This segment also includes the results from the Company’s MegaMex Foods, LLC joint venture.
Description of Business Segments The Company currently operates with the following three operating and reportable segments: Retail, Foodservice, and International. Retail The Retail segment consists primarily of the processing, marketing, and sale of food products sold predominantly in the retail market in the United States. This segment also includes the results from the Company’s MegaMex Foods, LLC joint venture.
The Private Securities Litigation Reform Act of 1995 (the Reform Act) provides a "safe harbor" for forward-looking statements to encourage companies to provide prospective information. The Company is filing this cautionary statement in connection with the Reform Act.
The Private Securities Litigation Reform Act of 1995 (the Reform Act) provides a “safe harbor” for forward-looking statements to encourage companies to provide prospective information. The Company is filing this cautionary statement in connection with the Reform Act.
Foodservice The Foodservice segment consists primarily of the processing, marketing, and sale of food and nutritional products for foodservice, convenience store, and commercial customers. International The International segment processes, markets, and sells Company products internationally. This segment also includes the results from the Company’s international joint ventures, equity method investments, and royalty arrangements.
Foodservice The Foodservice segment consists primarily of the processing, marketing, and sale of food products for foodservice, convenience store, and commercial customers located in the United States. International The International segment processes, markets, and sells Company products internationally. This segment also includes the results from the Company’s international joint ventures, international equity method investments, and international royalty arrangements.
The Company offers a competitive compensation package and a multitude of benefits, including medical, life and disability insurance, contributory and non-contributory retirement savings plans, free post-secondary tuition and tuition reimbursement programs, and two years of tuition-free community and technical college for U.S. employees’ dependent children.
The Company offers competitive compensation packages to its employees and provides a multitude of benefits, including medical, life and disability insurance, contributory and non-contributory retirement savings plans, free post-secondary tuition and tuition reimbursement programs, and two years of tuition-free community and technical college for U.S. employees’ dependent children.
The Company utilizes supply contracts and forward buying strategies to ensure an adequate supply and mitigate price fluctuations. Human Capital The Company’s employees are the driving force behind innovation, improvement, and success. As of October 29, 2023, the Company had approximately 20,000 active employees, with over 90 percent located within the U.S.
The Company utilizes supply contracts and forward buying strategies in its effort to ensure an adequate supply and mitigate price fluctuations. Human Capital The Company’s employees are the driving force behind innovation, improvement, and success. As of October 27, 2024, the Company had approximately 20,000 active employees, with over 90 percent located within the U.S.
Walmart is a customer for the Company's Retail and International segments. The Company’s top five customers collectively represent approximately 36 percent of consolidated gross sales less returns and allowances. The loss of one or more of the top customers in any of the reportable segments could have a material adverse effect upon such segment’s financial results.
Walmart is a customer for the Company’s Retail and International segments. The Company’s top five customers collectively represented approximately 37 percent of consolidated gross sales less returns and allowances during fiscal 2024. The loss of one or more of the top customers in any of the reportable segments could have a material adverse effect upon such segment’s financial results.
The Company believes it is in compliance with current laws and regulations and does not expect continued compliance to have a material impact on capital expenditures, earnings, or competitive position.
The Company believes it is in compliance with current laws and regulations and does not expect continued compliance to have a material impact on its capital expenditures, earnings, or 4 Table of Contents competitive position.
The documents are available in print, free of charge, to any stockholder who requests them. 5 Table of Contents FORWARD-LOOKING STATEMENTS This report contains “forward-looking” information within the meaning of the federal securities laws.
The documents are available in print, free of charge, to any shareholder who requests them. FORWARD-LOOKING STATEMENTS This report contains “forward-looking” information within the meaning of the federal securities laws.
In addition, the Company's greenhouse gas reduction targets were validated by the Science Based Targets initiative in 2023. Significant Customers The Company serves many customers throughout the world across various sales channels. Sales to the Company’s largest customer, Walmart Inc. (Walmart), accounted for approximately 15 percent of consolidated gross sales less returns and allowances during fiscal 2023.
The Company’s greenhouse gas emissions reduction targets were validated by the Science Based Targets initiative. Significant Customers The Company serves many customers throughout the world across various sales channels. Sales to the Company’s largest customer, Walmart Inc. and its subsidiaries (Walmart), accounted for approximately 16 percent of consolidated gross sales less returns and allowances during fiscal 2024.
Domestically, the Company sells its products in all 50 states. The Company’s products are sold through its sales personnel, who operate in assigned territories or in dedicated teams serving major customers and who are coordinated from sales offices predominately located in major U.S. cities. The Company also utilizes independent brokers and distributors. Products are primarily distributed by common carrier.
The Company sells its products in all 50 U.S. states. The Company’s products are sold through its sales personnel, who operate in assigned territories or in dedicated teams serving major customers and who are coordinated from sales offices predominately located in major U.S. cities.
In addition to compliance with environmental laws and regulations, the Company sets goals to further improve its sustainability efforts and reduce its environmental impact. These goals are outlined in the Company’s 20 by 30 Challenge and include matching energy with renewable sourcing, reducing organic waste and greenhouse gas emissions, supporting regenerative agriculture, focusing on packaging sustainability, and reducing food waste.
In addition to compliance with environmental laws and regulations, the Company has set aspirational goals to further improve its sustainability efforts and reduce its environmental impact. These goals are outlined in the Company’s 20 by 30 Challenge and address topics such as renewable sourcing, reducing organic waste and greenhouse gas emissions, supporting regenerative agriculture, packaging sustainability, and reducing food waste.
To grow and maintain market position, the Company focuses on meeting consumer preferences, delivering product innovation, and maintaining long-term and lasting relationships with industry partners. Patents and Trademarks There are numerous patents and trademarks important to the Company’s business. The Company holds 23 U.S. and eight foreign patents.
To grow and maintain its competitive position, the Company focuses on meeting consumer preferences, delivering product innovation, and maintaining long-term and lasting relationships with industry partners. Patents and Trademarks There are numerous patents and trademarks important to the Company’s business. As of October 27, 2024, the Company held 22 U.S. and eight foreign patents.
The Company has a global presence within several major international markets, including Australia, Brazil, Canada, China, England, Indonesia, Japan, Mexico, the Philippines, Singapore, and South Korea. Distribution of export sales to customers is by common carrier, while the China and Brazil operations own and operate their own delivery systems.
The Company has a global presence within several major international markets, including Australia, Brazil, Canada, China, England, Indonesia, Japan, Mexico, the Philippines, Singapore, and South Korea. Distribution of export sales to customers is by third party carriers, while the China and Brazil operations also rely on company-owned and operated delivery systems.
Approximately 20 percent of employees are covered by collective bargaining agreements. Talent Acquisition, Development, and Retention Hormel’s team members are the cornerstone of the Company and of the fulfillment of its purpose — Inspired People. Inspired Food.™ The Company places great importance on the growth, development, and engagement of its team members.
Talent Acquisition, Development, and Retention Hormel’s team members are the cornerstone of the Company and of the fulfillment of its purpose — Inspired People. Inspired Food.™ The Company places great importance on the growth, development, and engagement of its team members.
Prior period results for fiscal 2022 and 2021 have been recast to reflect the new reportable segments. Net sales to unaffiliated customers, segment profit, and certain other financial information by segment are reported in Note P - Segment Reporting of the Notes to the Consolidated Financial Statements and in Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Net sales to unaffiliated customers, segment profit, and certain other financial information by segment are reported in Note P - Segment Reporting of the Notes to the Consolidated Financial Statements and in Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Raw Materials The Company concentrates on the marketing and sale of branded, value-added food products. The principal raw materials used by the Company include pork, turkey, beef, chicken, and nuts.
Raw Materials The Company concentrates on the marketing and sale of branded, value-added food products. The principal raw materials used by the Company include pork, turkey, beef, chicken, and nuts. The Company takes what it believes is a balanced approach to sourcing its raw materials.
The Company conducts safety training for all team members and completes approximately 1,000 safety assessments each month. The Company recognizes that team members perform best when they are healthy, and that optimal performance is necessary for the Company to achieve its key results.
The Company recognizes that team members perform best when they are healthy, and that optimal performance is necessary for the Company to achieve its key results.
When used in the Company’s Annual Report to Stockholders, other filings by the Company with the SEC, the Company's press releases, and oral statements made by the Company's representatives, the words or phrases "should result," "believe," "intend," "plan," "are expected to," "targeted," "will continue," "will approximate," "is anticipated," "estimate," "project," or similar expressions are intended to identify forward-looking statements within the meaning of the Reform Act.
When used in the Company’s Annual Report to Stockholders, other filings by the Company with the SEC, the Company’s press releases, and oral statements made by the Company’s representatives, the words or phrases “should result,” “believe,” “intend,” “plan,” “are expected to,” “targeted,” “will continue,” “will approximate,” “is anticipated,” “estimate,” “project,” or 5 Table of Contents similar expressions are intended to identify forward-looking statements within the meaning of the Reform Act.
The Company takes a balanced approach to sourcing pork raw materials, including hogs purchased for the Austin, Minnesota processing facility, long-term supply agreements for pork, and spot market purchases of pork. The majority of the turkeys needed to meet raw material requirements are raised by the Company.
To meet its needs for pork raw materials, the Company purchases hogs for the Austin, Minnesota processing facility, enters into long-term supply agreements for pork, and supplements this with spot market purchases of pork. 3 Table of Contents The majority of the turkeys needed to meet raw material requirements are raised by the Company.
The Company has licensed companies to manufacture various products internationally on a royalty basis, with the primary licensees being Danish Crown UK 3 Table of Contents Ltd., and CJ CheilJedang Corporation. The Company also has minority positions in food companies in the Philippines (The Purefoods-Hormel Company, Inc., 40 percent holding) and Indonesia (Garudafood, 30 percent holding).
The Company has licensed companies to manufacture various products internationally on a royalty basis. The Company also has minority positions in food companies in the Philippines (The Purefoods-Hormel Company, Inc., 40 percent holding) and Indonesia (PT Garudafood Putra Putri Jaya Tbk (Garudafood), approximately 30 percent holding).
Though the Company has attempted to list comprehensively these important cautionary risk factors, the Company wishes to caution investors and others that other factors may in the future prove to be important in affecting the Company’s business or results of operations.
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. The Company cautions readers not to place undue reliance on forward-looking statements, which represent current views as of the date made.
The Company believes investing in the education, training, and development of employees contributes to the overall success of the business. The Company provides learning opportunities for employees through various training courses, including instructor-led internal and external programs and on-the-job training.
The Company provides learning opportunities for employees through various training courses, including instructor-led internal and external programs and on-the-job training. The Company considers the tenure of its team members to be an important indicator of overall performance and is proud of its tenure figures.
All operating segments compete on the basis of price, product quality and attributes, brand identification, breadth of product line, and customer service. Through effective marketing and strong quality assurance programs, the Company’s strategy is to provide high quality products that possess strong brand recognition, which support higher value perceptions with customers.
Through effective marketing, a dedicated network of direct and indirect sales personnel, and robust quality assurance programs, the Company’s strategy is to provide high quality products that possess strong brand recognition supported by reliable customer service, to support a higher value proposition for customers.
Safety, Health, and Wellness The Company’s dedicated corporate safety department develops and administers company-wide policies to ensure the safety of each employee and compliance with Occupational Safety and Health Administration standards. The corporate safety department also conducts regular audits of production facilities to ensure compliance with Company safety policies.
These employee-driven groups play a critical role in the Company’s efforts to create an inclusive environment and provide professional development and mentorship opportunities. Safety, Health, and Wellness The Company’s dedicated corporate safety department develops and administers company-wide policies to ensure the safety of each employee and compliance with Occupational Safety and Health Administration standards and comparable global requirements internationally.
The Company considers the tenure of its team members to be an important indicator of overall performance and is proud of its tenure figures. As of October 29, 2023, approximately 50 percent of the Company's team members had five or more years of service, and the 34-person officer team had an average of 25 years of service.
As of October 27, 2024, approximately 50 percent of the Company’s team members had five or more years of service, and the 37-person officer team had an average of 23 years of service. Creating an Inclusive Environment The Company welcomes the diversity, unique skills, thoughts, and experiences of its team members, customers, and consumers.
The Company’s salaried employees are made up of approximately 35 percent female and over 20 percent underrepresented minorities. By fostering an inclusive culture, the Company enables every member of the workforce to leverage unique talents and high performance standards to drive innovation and success.
By fostering an inclusive culture, the Company enables every member of the workforce to leverage unique talents and high-performance standards to drive innovation and success. The Company has twelve employee resource groups (ERGs) that support the Company’s mission to create a workplace where all people feel welcomed, respected, and valued.
Removed
In fiscal 2021, the Company acquired the Planters ® snack nuts business, expanding the Company's presence in the growing snacking space. Refer to Note B - Acquisitions and Divestitures of the Notes to the Consolidated Financial Statements for additional information.
Added
The sales team is also responsible for the product portfolio of MegaMex Foods, LLC (MegaMex Foods), a U.S. based Mexican food company, of which the Company owns a minority interest. Additionally, the Company utilizes independent brokers and distributors. Products are primarily distributed by common carrier.
Removed
During fiscal 2023, the Company purchased a 30% common stock interest in PT Garudafood Putra Putri Jaya Tbk (Garudafood), a food and beverage company in Indonesia, expanding the Company's presence in Southeast Asia and supporting global execution in the snacking and entertaining category.
Added
Approximately 20 percent of employees are covered by collective bargaining agreements. Contracts at two of the Company's facilities, covering approximately 300 employees, expire in the next fiscal year. The Company believes it has good relations with its workforce.
Removed
Refer to Note D - Investments in Affiliates of the Notes to the Consolidated Financial Statements for additional information. Description of Business Segments Effective in fiscal 2023, the Company transitioned to a new strategic operating model, which aligns its businesses to be more agile, consumer and customer focused, and market driven.
Added
In fiscal 2024, the Company provided financial support for a new, third-party operated childcare center in Austin, Minnesota, providing a needed service for team members and the Austin community. The Company believes investing in the education, training, and development of employees contributes to the overall success of the business.
Removed
Diversity, Equity, and Inclusion The Company welcomes the diversity of all team members, customers, and consumers, and encourages the integration of their unique skills, thoughts, experiences, and identities. The Company’s workforce is made up of approximately 40 percent female and approximately 60 percent underrepresented minorities.
Added
As of October 27, 2024, the Company’s U.S. workforce for majority-owned operations was made up of approximately 40 percent female and approximately 60 percent underrepresented minorities. The Company’s U.S. salaried employees for majority-owned operations as of October 27, 2024 was made up of approximately 35 percent female and approximately 25 percent underrepresented minorities.
Removed
Executives of the Company are held accountable for creating an inclusive, diverse workplace through their annual incentive plan, which includes a component focused on overall belonging scores and the representation of female and underrepresented minorities in salaried positions.
Added
The corporate safety department also conducts regular audits of Company-owned production facilities to ensure compliance with Company safety policies. The Company conducts safety training for all team members and, during fiscal 2024, completed approximately 1,200 safety assessments each month.
Removed
The Company supports twelve employee resource groups (ERGs) that support the Company’s mission to create a workplace where all people feel welcomed, respected, and valued. These employee-driven groups play a critical role in diversity, equity, and inclusion efforts and provide professional development and mentorship opportunities.
Added
All operating segments compete on the basis of price, product quality and attributes, brand identification, breadth of product line, and customer service.
Removed
In making these statements, the Company is not undertaking, and specifically declines to undertake, any obligation to address or update each or any factor in future filings or communications regarding the Company’s business or results, and is not undertaking to address how any of these factors may have caused changes to discussions or information contained in previous filings or communications.
Added
Forward-looking statements are inherently at risk to changes in the Company’s business as well as the national and worldwide economic environment.
Removed
The Company cautions readers not to place undue reliance on forward-looking statements, which represent current views as of the date made.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

53 edited+29 added−11 removed15 unchanged
Biggest changeThe Company is subject to disruption of operations at co-manufacturers, suppliers, logistics providers, customers, or other third-party service providers. ▪ Disruption of operations at co‑manufacturers, suppliers, or logistics providers have and may continue to impact the Company’s product and input supplies as well as the ability to distribute products. 7 Table of Contents ▪ Disruptions related to significant customers or sales channels has and could continue to result in a reduction in sales or change in the mix of products sold. ▪ Disruption in services from partners such as third-party service providers used to support various business functions such as benefit plan administration, payroll processing, information technology and cloud computing services could have an adverse effect on the Company's business.
Biggest changeDisruption in services from third-party service providers used to support business functions such as benefit plan administration, payroll processing, information technology (IT) and cloud computing services could have a negative impact on the Company’s business. The Company may not realize the anticipated cost savings or operating profit improvements associated with strategic initiatives, including its Transform and Modernize initiative.
Additionally, if a highly pathogenic human disease outbreak developed, such as COVID-19, it may negatively impact the global economy, demand for Company products, the supply chain, the Company's co-manufacturers, and/or the Company’s workforce availability including leadership, and the Company’s financial results could suffer.
If a highly pathogenic human disease outbreak developed, such as COVID-19, it may negatively impact the global economy, demand for Company products, the supply chain, the Company’s co-manufacturers, and/or the Company’s workforce availability including leadership, and the Company’s financial results could suffer.
The Company’s past and present business operations and ownership and operation of real property are subject to stringent federal, state, and local environmental laws and regulations pertaining to the discharge of materials into the environment and the handling and disposition of wastes (including solid and hazardous wastes) or otherwise relating to protection of the environment.
The Company’s past and present business operations and the Company’s ownership and operation of real property are subject to stringent international, federal, state, and local environmental laws and regulations pertaining to the discharge of materials into the environment and the handling and disposition of wastes (including solid and hazardous wastes) or otherwise relating to protection of the environment.
Volatility in financial markets and the deterioration of national and global economic conditions could impact the Company’s operations as follows: ▪ The financial stability of the Company's customers and suppliers may be compromised, which could result in challenges in collecting accounts receivable or non-performance by suppliers. ▪ Unfavorable economic conditions may lead customers and consumers to delay or reduce purchases of the Company's products. 6 Table of Contents ▪ Customer demand for products may not materialize to levels required to achieve the Company's anticipated financial results or may decline as distributors and retailers seek to reduce inventory positions if there is an economic downturn or economic uncertainty in key markets. ▪ The value of the Company's investments in debt and equity securities may decline, including most significantly the trading securities held as part of a rabbi trust to fund supplemental executive retirement plans and deferred income plans and the Company’s assets held in pension plans. ▪ Future volatility or disruption in the capital and credit markets could impair the Company's liquidity or increase costs of borrowing. ▪ The Company may be required to redirect cash flow from operations or explore alternative strategies, such as disposing of assets, to fulfill the payment of principal and interest on its indebtedness.
Volatility in financial markets and the deterioration of national and global economic conditions could impact the Company’s operations as follows: ▪ The financial stability of the Company’s customers and suppliers may be compromised, which could result in challenges in collecting accounts receivable or non-performance by suppliers. ▪ Unfavorable economic conditions may lead customers and consumers to delay or reduce purchases of the Company’s products. ▪ Customer demand for products may not materialize to levels required to achieve the Company’s anticipated financial results or may decline as distributors and retailers seek to reduce inventory positions if there is an economic downturn or economic uncertainty in key markets. ▪ The value of the Company’s investments in debt and equity securities may decline, including, most significantly, assets held in pension plans and the trading securities held as part of a rabbi trust to fund supplemental executive retirement plans and deferred compensation plans. 6 Table of Contents ▪ Future volatility or disruption in the capital and credit markets could impair the Company’s liquidity or increase costs of borrowing. ▪ The Company may be required to redirect cash flow provided by operations or explore alternative strategies, such as disposing of assets, to fulfill the payment of principal and interest on its indebtedness.
During fiscal 2023, an impairment was indicated for the Justin's ® trade name, resulting in an impairment charge of $28.4 million and the Company recorded a $7.0 million impairment charge related to a corporate venturing investment to recognize a decline in fair value not believed to be temporary.
During fiscal 2023, an impairment was indicated for the Justin’s ® trade name, resulting in an impairment charge of $28.4 million. In addition, during fiscal 2023, the Company recorded a $7.0 million impairment charge related to a corporate venturing investment to recognize a decline in fair value not believed to be temporary.
The Company’s foreign operations are subject to the risks described above, as well as risks related to fluctuations in currency values, foreign currency exchange controls, compliance with foreign laws, compliance with applicable U.S. laws, including the Foreign Corrupt Practices Act, and other economic or political uncertainties.
The Company’s foreign operations are subject to the risks described above, as well as risks related to fluctuations in currency values, foreign currency exchange controls, compliance with foreign regulations and tax laws, compliance with applicable U.S. laws, including the Foreign Corrupt Practices Act, and other economic or political uncertainties.
Compliance with these laws and regulations, as well as any modifications, is material to the Company’s business. Some of the Company’s facilities have been in operation for many years and, over time, the Company and other prior operators of these facilities may have generated and disposed of wastes that now may be considered hazardous.
Compliance with these laws and regulations, as well as any modifications, is material to the Company’s business. Some of the Company’s facilities have been in operation for many years and, over time, the Company and other prior operators of these facilities may have generated and disposed of wastes that 11 Table of Contents now may be considered hazardous.
If such climate change has a negative impact on agricultural productivity, the Company may have decreased availability or less favorable pricing for the raw materials necessary for its operations. Climate change may also cause decreased availability or less favorable pricing for water, which could have an adverse effect on the Company’s operations and supply chain.
If such climate change has a negative impact on agricultural productivity, the Company may have decreased availability of, or less favorable pricing for, the raw materials necessary for its operations. Climate change may also cause decreased availability of, or less favorable pricing for, water, which could have an adverse effect on the Company’s financial results, operations, and supply chain.
The projects, including modernizing the order-to-cash process, are expected to improve the efficiency and effectiveness of certain financial and business transaction processes and the underlying systems environment. Multiple phases of these projects have already been implemented and additional phases are expected to be implemented in the upcoming years.
The projects, including updating the Company’s order-to-cash process, are expected to improve the efficiency and effectiveness of certain financial and business transaction processes and the underlying systems environment. Multiple phases of these projects have already been implemented and additional phases are expected to be implemented in the upcoming years.
Neither litigation trends nor the outcomes of litigation can be predicted with certainty and adverse litigation trends and outcomes could negatively affect the Company’s financial results. 10 Table of Contents Government regulation, present and future, exposes the Company to potential sanctions and compliance costs that could adversely affect the Company’s business.
Neither litigation trends nor the outcomes of litigation can be predicted with certainty and adverse litigation trends and outcomes could negatively affect the Company’s financial results. Government regulation, present and future, exposes the Company to potential sanctions and compliance costs that could adversely affect the Company’s business.
The Company takes a balanced approach to sourcing pork raw materials, including hogs purchased for the Austin, Minnesota processing facility, long-term supply agreements for pork, and spot market purchases of pork. This approach ensures a more stable supply of raw materials while minimizing extreme fluctuations in costs over the long-term.
The Company takes a balanced approach to sourcing pork raw materials, including hogs purchased for the Austin, Minnesota processing facility, long-term supply agreements for pork, and spot market purchases of pork. This approach is designed to ensure a more stable supply of raw materials while minimizing extreme fluctuations in costs over the long-term.
The Company’s results of operations and financial condition are largely dependent upon the cost and supply of pork, poultry, beef, feed grains, and nuts as well as supplies, energy and other inputs and the selling prices for many of the Company's products, which are determined by constantly changing market forces of supply and demand.
The Company’s results of operations and financial condition are largely dependent upon the cost and supply of pork, poultry, beef, feed grains, nuts, energy, and other inputs, as well as the selling prices for many of the Company’s products, which are determined by dynamic market forces of supply and demand.
The Company’s reputation and brands have been in the past and could in the future be adversely impacted by a number of factors, including unfavorable consumer perception related to events or rumors, adverse publicity, and negative information disseminated through social and digital media. Failure to maintain, extend, and expand the Company’s reputation or brand image could adversely impact operating results.
The reputation of the Company and its brands have been in the past, and could in the future be, adversely impacted by a number of factors, including unfavorable events or rumors, adverse publicity, and negative information disseminated through social and digital media. Failure to maintain, extend, and expand the Company’s reputation or brand image could adversely impact operating results.
Although the Company has programs in place related to business continuity, disaster recovery, and information security initiatives to maintain the confidentiality, integrity, and availability of systems, business applications, and customer information, the Company may not be able to anticipate or implement effective preventive measures against all potential cybersecurity threats, especially because the techniques used change frequently and because attacks can originate from a wide variety of sources, both domestic and foreign.
Although the Company has programs in place related to business continuity, disaster recovery, and information security initiatives to maintain the confidentiality, integrity, and availability of systems, business applications, and customer information, the Company may not be able to anticipate or implement effective preventive measures against all potential IT interruptions or cybersecurity threats, especially because, in connection with cybersecurity threats the techniques used change frequently and 8 Table of Contents because attacks can originate from a wide variety of sources, both domestic and foreign.
Potential risks associated with these transactions include the inability to consummate a transaction timely or on favorable terms, diversion of management's attention from other business concerns, loss of key employees and customers of current or acquired companies, inability to integrate or divest operations successfully, assumption of unknown liabilities, disputes with buyers, sellers, or partners, inability to obtain favorable financing terms, impairment charges if purchase assumptions are not achieved, and the inherent risks in entering markets or lines of business in which the Company has limited or no prior experience.
Potential risks associated with these transactions include the inability to consummate a transaction timely or on favorable terms, diversion of management’s attention from other business concerns, loss of key employees and customers of current or acquired companies, inability to integrate or divest operations successfully, assumption of unknown liabilities, disputes with buyers, sellers, or partners, inability to obtain favorable financing terms, and the inherent risks in entering markets or lines of business in which the Company has limited or no prior experience.
The outbreak of such diseases could adversely affect the Company’s supply of raw materials, increase the cost of production, reduce utilization of the Company’s harvest facilities, and reduce operating margins.
The outbreak of such diseases could adversely affect the Company’s supply of raw materials, increase the cost of production, reduce utilization of the Company’s harvest facilities, and reduce earnings.
The Company has no operations in Russia or Ukraine, yet it has experienced inflated fuel costs and supply chain shortages and delays due to the impact of the military conflict on the global economy.
The Company has no manufacturing operations in Russia, Ukraine, or the Middle East, yet it has experienced inflated fuel costs and supply chain shortages and delays due to the impact of the military conflicts on the global economy.
Strategic initiatives are implemented to achieve a profitable cost structure, operate efficiently, better serve customers, and optimize cash flow. These initiatives may focus on opportunities to improve the procurement, manufacturing, and logistics within the Company’s supply chain as well as general and administrative processes.
The Company implements strategic initiatives to achieve a profitable cost structure, operate more profitably, better serve customers, and optimize cash flow. These initiatives may focus on opportunities to improve the procurement, manufacturing, and logistics within the Company’s supply chain as well as general and administrative processes.
The food products manufacturing industry is subject to the risks posed by: ▪ food spoilage; ▪ food contamination caused by disease-producing organisms or pathogens, such as Listeria monocytogenes , Salmonella , and pathogenic E coli .; ▪ food allergens; ▪ nutritional and health-related concerns; ▪ federal, state, and local food processing controls; ▪ consumer product liability claims; ▪ product tampering; and ▪ the possible unavailability and/or expense of liability insurance.
The food products manufacturing industry is subject to the risks posed by a number of factors, including: ▪ food contamination caused by disease-producing organisms or pathogens, such as Listeria monocytogenes , Salmonella , and pathogenic E coli .; ▪ mislabeling, including with respect to food allergens; ▪ food spoilage; ▪ claims of false or deceptive advertising; ▪ nutritional and health-related concerns; ▪ federal, state, and local food processing controls; ▪ consumer product liability claims; ▪ product tampering; and ▪ the possible unavailability and/or expense of liability insurance.
In addition, the Company increasingly relies upon third-party service providers for a variety of business functions, including cloud-based services. Cyber incidents are occurring more frequently across U.S. industries and are being made by groups and individuals with a wide range of motives and expertise.
IT systems are an important part of the Company’s business operations. The Company also increasingly relies upon third-party service providers for a variety of business functions, including cloud-based services. Cyber incidents are occurring more frequently across U.S. industries and are being made by groups and individuals with a wide range of motives and expertise.
These implementations are a major undertaking from a financial, management, and personnel perspective and may prove to be more difficult, costly, or time consuming than expected, and there can be no assurance that these projects will be beneficial to the extent anticipated. Deterioration of labor relations, labor availability or increases in labor costs could harm the Company’s business.
These implementations are a major undertaking from a financial, management, and personnel perspective and may prove to be more difficult, costly, or time consuming than expected, and there can be no assurance that these projects will be beneficial to the extent anticipated.
The Company is involved on an ongoing basis in litigation arising in the ordinary course of business. Trends in litigation may include class actions involving employees, consumers, competitors, suppliers, shareholders, or others, and claims relating to product liability, contract disputes, antitrust regulations, intellectual property, advertising, labeling, wage and hour laws, employment practices or environmental matters.
Trends in litigation may include class actions involving employees, consumers, competitors, suppliers, shareholders, or others, and claims relating to product liability, contract disputes, antitrust regulations, intellectual property, advertising, labeling, wage and hour laws, employment practices or environmental matters.
A failure or delay in implementing the improvements associated with these strategic initiatives could adversely impact the Company’s results, ability to meet its long-term growth expectations, and ability to fund future initiatives. The Company began an enterprise transformation and modernization initiative in the second half of fiscal 2023 to provide cost savings and operating efficiencies by fiscal 2026.
A failure or delay in implementing the improvements associated with these strategic initiatives could adversely impact the Company’s results, ability to meet its long-term growth expectations, and ability to fund future initiatives. The Company began its Transform and Modernize initiative in the second half of fiscal 2023 with a goal of contributing meaningful operating profit growth through fiscal 2026.
If this conflict, or others such as the Israel-Hamas war, escalates further, it could result in, among other things, additional supply chain disruptions, rising prices for oil and other commodities, volatility in capital markets and foreign exchange rates, rising interest rates, or heightened cybersecurity risks, any of which may adversely affect the Company's business.
If these conflicts or others arise or escalate further, the Company could, among other things, face additional supply chain disruptions, rising prices for oil and other commodities, volatility in capital markets and foreign exchange rates, rising interest rates, or heightened cybersecurity risks, any of which may adversely affect the Company’s business.
The Company's ability to achieve these goals is subject to numerous factors and conditions, many of which are outside of its control. Examples include, among others, evolving regulatory requirements, disclosure frameworks, and methodologies for reporting data.
The Company’s ability to achieve its greenhouse gas emissions goals, and its other environmentally focused goals set forth in its 20 by 30 Challenge, is subject to numerous factors and conditions, many of which are outside of its control. Examples include, among others, evolving regulatory requirements, disclosure frameworks, and methodologies for reporting data.
The Company has made several acquisitions, joint ventures, equity investments, and divestitures in recent years, including the acquisition of the Planters ® snack nuts business in fiscal 2021 and purchase of a minority interest in Garudafood in fiscal 2023.
The Company has made several acquisitions, joint ventures, equity investments, and divestitures in recent years, including the purchase of a minority interest in Garudafood in fiscal 2023 and the divestiture of Hormel Health Labs, LLC in fiscal 2024.
The Company's level of indebtedness increased significantly to fund the purchase of the Planters ® snack nuts business and may continue to increase to fund future acquisitions, joint ventures, or equity investments. Higher levels of debt may, among other things, impact the Company's liquidity and increase the Company's exposure to negative fluctuations in interest rates.
The Company’s level of indebtedness may increase to fund future acquisitions, joint ventures, or equity investments. Higher levels of debt may, among other things, impact the Company’s liquidity or credit rating and increase the Company’s exposure to negative fluctuations in interest rates. Any of these risks could impact the Company’s financial results and business reputation.
Continued high-profile data security incidents at other companies evidence an external environment that is becoming increasingly hostile. From time to time, the Company has experienced, and may experience in the future, breaches of its security measures due to human error, malfeasance, insider threats, system errors or vulnerabilities or other irregularities, none of which have been material to date.
From time to time, the Company has experienced, and may experience in the future, breaches of security measures due to human error, malfeasance, insider threats, system errors or vulnerabilities or other irregularities, none of which have been material to date.
Demand for the Company’s products is also affected by competitors’ promotional spending, the effectiveness of the Company’s advertising and marketing programs, and consumer perceptions. Failure to identify and react to changes in food trends such as sustainability of product sources and animal welfare could lead to, among other things, reduced demand for the Company’s brands and products.
Demand for the Company’s products is also affected by competitors’ promotional spending, the effectiveness of the Company’s advertising and marketing programs, and consumer perceptions, including those related to food trends such as sustainability of product sources and animal welfare.
A significant increase in labor costs or a deterioration of labor relations at any of the Company’s facilities or co-manufacturing facilities resulting in work slowdowns or stoppages could harm the Company’s financial results.
A significant increase in labor costs or a deterioration of labor relations at any of the Company’s owned facilities or co-manufacturing facilities resulting in work slowdowns or stoppages could harm the Company’s financial results. Labor and skilled labor availability challenges could continue to have an adverse effect on the Company’s business.
Additionally, the Company is subject to new or modified laws, regulations, and accounting standards. The Company’s failure or inability to comply with such requirements could subject the Company to civil remedies, including fines, injunctions, recalls or seizures, as well as potential criminal sanctions. A federal district court ruling has had a negative impact on harvest capacity and labor costs.
Additionally, the Company is subject to new or modified laws, regulations, and accounting standards. The Company’s failure or inability to comply with such requirements could subject the Company to civil remedies, including fines, injunctions, recalls or seizures, as well as potential criminal sanctions. The Company is subject to stringent environmental regulations and potentially subject to environmental litigation, proceedings, and investigations.
Disruptions of third-party providers have had and may continue to have an adverse effect on the Company's financial results. Actions taken to mitigate the impact of any potential disruption, including increasing inventory in anticipation of a potential production or supply interruption, may adversely affect the Company’s financial results.
Actions taken to mitigate the impact of any potential disruption, including increasing inventory in anticipation of a potential production or supply interruption, may adversely affect the Company’s financial results. Additionally, labor-related challenges have caused disruptions for many of these providers and may continue to impact the Company’s ability to receive inputs or distribute products.
In addition, natural disasters and extreme weather, including those caused by climate change, could cause disruptions in the Company’s operations and supply chain. The increasing concern over climate change may also result in greater local, state, federal, and foreign legal requirements, including requirements to limit greenhouse gas emissions or conserve water usage.
The increasing concern over climate change may also result in greater local, state, federal, and foreign legal requirements, including requirements to limit greenhouse gas emissions or conserve water usage. If such requirements are enacted, the Company could experience significant cost increases in its operations and supply chain.
Volatile fluctuations in market conditions could cause these instruments to become ineffective, which could require any gains or losses associated with these instruments to be reported in the Company’s earnings each period.
The Company manages its exposure to commodity prices through hedging programs that utilize hedge accounting, where qualified, for financial reporting purposes. Volatile fluctuations in market conditions could cause these instruments to become ineffective, which could require any gains or losses associated with these instruments to be reported in the Company’s earnings each period.
The Company’s manufacturing facilities and products are subject to ongoing inspection by federal, state and local authorities. Claims or enforcement proceedings could be brought against the Company in the future. The availability of government inspectors due to a government furlough could also cause disruption to the Company’s manufacturing facilities.
If line speeds are required to be slowed, harvest capacity and costs may be negatively impacted. The Company’s manufacturing facilities and products are also subject to ongoing inspection by federal, state, and local authorities. The loss of the availability of government inspectors due to a government furlough could cause disruption to the Company’s manufacturing facilities.
Acquisitions, joint ventures, or equity investments outside the U.S. may also present unique challenges and increase the Company's exposure to the risks associated with foreign operations. Any or all of these risks could impact the Company’s financial results and business reputation.
Additionally, partners may make business decisions that are inconsistent with the Company’s goals, block or delay necessary decisions, or experience financial difficulties of their own. Acquisitions, joint ventures, or equity investments outside the U.S. may also present unique challenges and increase the Company’s exposure to the risks associated with foreign operations.
The Company attempts to manage some of its short-term exposure to fluctuations in feed prices by forward buying, using futures contracts, and pursuing pricing advances.
The Company attempts to manage some of its short-term exposure to fluctuations in feed prices by forward buying, using futures contracts, and pursuing pricing advances. However, these strategies may not be adequate to overcome sustained increases in market prices due to alternate uses for feed grains or other changes in these market conditions.
Due to the nature of these arrangements, joint ventures and equity investments involve further risks, including the possibility that the Company is unable to execute business strategies and manage operations given limitations of the Company's control. Additionally, partners may become bankrupt, make business decisions that are inconsistent with the Company's goals, or block or delay necessary decisions.
There is also the risk of post-acquisition impairment charges if purchase assumptions are not achieved. Due to the nature of joint ventures and equity investments, these arrangements involve further risks, including the possibility that the Company is unable to execute business strategies and manage operations given limitations of the Company’s control.
International trade barriers and other restrictions or disruptions could result in decreased foreign demand and increased domestic supply of proteins, thereby potentially lowering prices. The Company occasionally utilizes in-country production to limit this exposure. Market demand for the Company’s products may fluctuate.
The supplies of natural and organic proteins may impact the Company’s ability to ensure a continuing supply of these products. To mitigate this risk, the Company partners with multiple long-term suppliers. International trade barriers and other restrictions or disruptions could result in decreased foreign demand and increased domestic supply of proteins, thereby potentially lowering prices.
The Company faces competition from producers of alternative meats and protein sources, including pork, beef, turkey, chicken, fish, nuts, nut butters, whey, and plant-based proteins. The factors on which the Company competes include: ▪ price; ▪ product quality and attributes; ▪ brand identification; ▪ breadth of product line; and ▪ customer service.
The Company faces competition from a variety of sources, including other national brands, private label producers, and producers of alternative meats and protein sources, including pork, beef, turkey, chicken, fish, nuts, nut butters, whey, and plant-based proteins.
However, these strategies may not be adequate to overcome sustained increases in market prices due to alternate uses for feed grains or other changes in these market conditions. 9 Table of Contents The Company may be subject to decreased availability or less favorable pricing for nuts, tomatoes, avocados, or other produce if poor growing conditions have a negative effect on agricultural productivity.
The Company may be subject to decreased availability or less favorable pricing for nuts, tomatoes, avocados, or other produce if poor growing conditions have a negative effect on agricultural productivity. Reductions in crop size or quality due to unfavorable growing conditions may have an adverse effect on the Company’s results.
There can be no assurance given, however, that these plans will be effective in eliminating the negative effects of any such diseases on the Company’s operating results. Fluctuations in commodity prices and availability of raw materials and other inputs could harm the Company’s earnings.
The Company has developed business continuity plans for various disease scenarios and will continue to update these plans, as necessary. There can be no assurance given, however, that these plans will be effective in eliminating the negative effects of any such diseases on the Company’s operating results.
These instruments may limit the Company’s ability to benefit from market gains if commodity prices and/or interest rates become more favorable than those secured under the Company’s hedging programs. The Company's goodwill and indefinite-lived intangible assets are initially recorded at fair value and are not amortized, but are reviewed for impairment annually or more frequently if impairment indicators arise.
These instruments may limit the Company’s ability to benefit from market gains if commodity prices become more favorable than those secured under the Company’s hedging programs.
The Company’s operations are subject to extensive regulation by the U.S. Department of Homeland Security, the U.S. Department of Agriculture, the U.S. Food and Drug Administration, federal and state taxing authorities and other federal, state, and local authorities which oversee workforce immigration, taxation, animal welfare, food safety, and the processing, packaging, storage, distribution, advertising, and labeling of the Company’s products.
Department of Homeland Security, international, federal, and state taxing authorities and other international, federal, state, and local authorities, including those that oversee workforce mobility, taxation, animal welfare, food safety, and the processing, packaging, storage, distribution, advertising, and labeling of the Company’s products. Claims or enforcement proceedings could be brought against the Company in the future.
If this initiative does not achieve the expected financial impact or is not completed in a timely manner, the Company’s financial results and ability to meet its long-term growth expectations could be adversely impacted. The Company is subject to the loss of a material contract. The Company is a party to several supply, distribution, contract packaging and other material contracts.
If this initiative does not achieve the expected financial impact in the aggregate or on the expected timeline, the Company’s financial results and ability to meet its long-term growth expectations could be adversely impacted. In addition, the Company is in the midst of multi-year data and technology transformation projects to achieve better analytics, customer service, process efficiencies, and upgrade technologies.
The Company is continuing to monitor the situation and will take the appropriate actions to protect the health of the turkeys across the supply chain. The Company has developed business continuity plans for various disease scenarios and will continue to update these plans as necessary.
The impact of HPAI has reduced and the Company believes it will continue to reduce production volume in the Company’s turkey facilities. The Company is continuing to monitor the situation and will take appropriate actions to protect the health of the turkeys across the supply chain.
In recent years, the outbreak of ASF has impacted hog herds in China, Asia, Europe, and the Caribbean. If an outbreak of ASF were to occur in the U.S., the Company's supply of hogs and pork could be materially impacted.
If an outbreak of ASF were to occur in the U.S., the Company’s supply of hogs and pork could be materially impacted. 9 Table of Contents HPAI was detected within the Company’s turkey supply chain during fiscal 2024 and the first quarter of fiscal 2025. HPAI could continue to be detected in the future.
Failure to accomplish goals set by the Company related to climate change or meet expectations of various Company stakeholders may cause decreased demand for the Company’s products and have an adverse effect on results of operations. Legal and Regulatory Risks The Company’s operations are subject to the general risks of litigation.
The Company’s inability to accomplish its goals related to greenhouse gas emissions reductions, or with respect to other environmental matters set forth in the 20 by 30 Challenge may disappoint stakeholders, cause decreased demand for the Company’s products, and have an adverse effect on the Company’s results of operations.
Cybersecurity risk is increasingly difficult to identify and quantify and cannot be fully mitigated because of the rapidly evolving nature of the threats, targets, and consequences. In addition, the Company is in the midst of multi-year data and technology transformation projects to achieve better analytics, customer service, and process efficiencies.
Cybersecurity risk cannot be fully mitigated because of the rapidly evolving nature of the threats, targets, and consequences.
Labor and skilled labor availability challenges could continue to have an adverse effect on the Company's business. 8 Table of Contents Industry Risks The Company’s operations are subject to the general risks of the food industry.
Industry Risks The Company’s operations are subject to the general risks of the food industry.
The Company may be unable to compete successfully on any or all of these factors in the future. Damage to the Company’s reputation or brand image can adversely affect its business. Maintaining and continually enhancing the perception of the Company’s reputation and brands is critical to business success.
Maintaining and enhancing the perception of the reputation of the Company and its key brands is critical to business success.
If one or more of these risks were to materialize, the Company’s brand and business reputation could be negatively impacted. In addition, revenues could decrease, costs of doing business could increase, and the Company’s operating results could be adversely affected. Outbreaks of disease among livestock and poultry flocks could harm the Company’s revenues and operating margins.
Outbreaks of disease among livestock and poultry flocks could harm the Company’s revenues and operating margins.
If such requirements are enacted, the Company could experience significant cost increases in its operations and supply chain. The Company has developed and publicly announced goals to reduce its impact on the environment such as the 20 by 30 Challenge and the recently announced validation of its greenhouse gas reduction targets by the Science Based Targets initiative.
The Company has developed, publicly announced, and had validated through the Science Based Targets initiative, goals to reduce its greenhouse gas emissions.
Removed
In addition, the effects of the ongoing conflict could heighten many of the other risk factors included in Item 1A. The Company utilizes hedging programs to manage its exposure to various market risks, such as commodity prices and interest rates, which qualify for hedge accounting for financial reporting purposes.
Added
Risks and uncertainties associated with intangible assets, including any future goodwill or intangible asset impairment charges, may negatively impact the Company. The Company’s goodwill and indefinite-lived intangible assets are initially recorded at fair value and are not amortized but are reviewed for impairment annually or more frequently if impairment indicators arise.
Removed
During fiscal 2023, an impairment was indicated for the Justin's ® trade name, resulting in an impairment charge of $28.4 million.
Added
Fiscal 2024 net sales for Planters ® snack nuts were negatively impacted by production disruptions at the Suffolk, Virginia, facility. The Company believes these impacts are short term in nature (less than one year) and projects sales to recover to historical levels shortly after supply normalizes.
Removed
Additionally, labor-related challenges have caused disruptions for many of these providers and may continue to impact the Company's ability to receive inputs or distribute products. The Company may not realize the anticipated cost savings or operating efficiencies associated with strategic initiatives. The Company operates in the highly competitive food industry and is subject to volatile cost inputs.
Added
Should the impact last longer, or be more severe than currently anticipated, it is likely the Company would have to recognize an impairment charge on this trade name, which is currently valued at $675 million. 7 Table of Contents The Company is subject to the risk of disruption of operations, including at owned facilities, co-manufacturers, suppliers, logistics providers, customers, or other third-party service providers.
Removed
The loss of a material contract or failure to obtain new material contracts could adversely affect the Company’s financial results. The Company may be adversely impacted if the Company is unable to protect information technology systems against, or effectively respond to, cyber attacks or security breaches. Information technology systems are an important part of the Company’s business operations.
Added
The Company’s ability, and the ability of the Company’s co‑manufacturers, suppliers, and logistics providers to manufacture, supply and distribute the Company’s products is critical to the Company’s success.
Removed
Remote work arrangements may bring additional information technology and data security risks.
Added
A significant disruption in the operation of the Company’s manufacturing, supply, or distribution capabilities, whether Company-owned or supported by third parties, could have a negative impact on the Company’s ability to operate its business.
Removed
As of October 29, 2023, the Company employed approximately 20,000 people worldwide, of which approximately 20 percent were represented by labor unions, principally the United Food and Commercial Workers Union. Union contracts at two of the Company's manufacturing facilities, covering approximately 250 employees, will expire during fiscal 2024.
Added
The Company relies on its customers to sell its products to ultimate consumers. Disruptions related to significant customers or sales channels could result in a reduction in sales or a change in the mix of products sold. The Company also relies on a variety of third-party service providers to support its operations.
Removed
HPAI was detected within the Company's turkey supply chain during the fourth quarter of fiscal 2023 and first quarter of fiscal 2024. The impact of HPAI has reduced and will continue to reduce production volume in the Company's turkey facilities into fiscal 2024.
Added
The Company is subject to risk of the loss of a significant contract or unfavorable changes in the Company’s relationships with significant customers. The Company is a party to several supply, distribution, contract packaging and other significant contracts. The loss of a significant contract or failure to obtain new significant contracts could adversely affect the Company’s financial results.
Removed
Reductions in crop size or quality due to unfavorable growing conditions may have an adverse effect on the Company’s results. The supplies of natural and organic proteins may impact the Company’s ability to ensure a continuing supply of these products. To mitigate this risk, the Company partners with multiple long-term suppliers.
Added
Sales to the Company's largest customer, Walmart, accounted for approximately 16 percent of consolidated gross sales less returns and allowances during fiscal 2024. Walmart is a customer for the Company’s Retail and International segments. The Company’s top five customers collectively represented approximately 37 percent of consolidated gross sales less returns and allowances during fiscal 2024.
Removed
Harvest facilities the Company uses are negotiating to resolve the situation and expect to reach a solution, but harvest capacity and labor costs may continue to be negatively impacted until a solution is reached. There can be no assurance a solution will be reached, in which case the negative impacts of the ruling would continue.
Added
The loss of one or more of the top customers in any of the reportable segments could have a material adverse effect upon such segment’s financial results. The Company may be adversely impacted if the Company is affected by cybersecurity attacks, security breaches, or other IT interruptions, involving its own systems or those with whom it does business.
Removed
The Company is subject to stringent environmental regulations and potentially subject to environmental litigation, proceedings, and investigations.
Added
In addition, high-profile data security incidents and IT interruptions at other companies, including companies with whom the Company does business, evidence an external environment that is becoming increasingly challenging.
Removed
UNRESOLVED STAFF COMMENTS None. 11 Table of Contents
Added
In addition, from time to time the Company has experienced disruptions to its operations due to IT interruptions at third parties with whom it does business. To date, none of these have been material.
Added
If the Company experiences a loss or significant disruption in its operations due to a cybersecurity event or other IT interruption, the Company may suffer reputational, competitive, and business harm and may be exposed to legal liability, which may adversely affect the Company’s results of operations. The Company may be adversely affected if it fails to timely replace legacy technologies.
Added
The Company has been evolving its IT infrastructure but continues to rely on a variety of legacy technologies across its business. The Company is investing significant funds to update its IT infrastructure.
Added
If the Company fails to timely complete this work, the risk of an adverse cybersecurity incident may increase, if, for example, vendors fail to continue to provide security updates.
Added
Reliance on legacy technology for an extended period may also increase the Company’s IT maintenance expense and risk of system downtime, as well as slow the Company’s adoption of more innovative technologies or ability to benefit from more sophisticated data analytics. Deterioration of labor relations, labor availability or increases in labor costs could harm the Company’s business.
Added
The Company periodically renegotiates its collective bargaining agreements as such agreements expire. New or increased unionization efforts at a facility or failure to successfully negotiate with existing unions could lead to disruptions in the Company's supply chain, increases in operating costs, and constraints on operating flexibility.

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Item 2. Properties

Properties — owned and leased real estate

4 edited+1 added−0 removed0 unchanged
Biggest changeArea (1) Square feet, in thousands Production Facilities Warehouse/Distribution Centers Administration/Sales/Research Offices Total Leased Owned Arizona — — 2 2 2 — Arkansas 589 — 9 598 9 589 California 323 428 54 805 656 149 Colorado 829 — 10 839 10 829 Florida — — 5 5 5 — Georgia 259 — — 259 — 259 Illinois 738 — 22 760 22 738 Iowa 1,482 658 3 2,143 283 1,860 Kansas 312 — 3 315 3 312 Massachusetts — — 4 4 4 — Michigan — — 3 3 3 — Minnesota 3,761 219 554 4,534 89 4,445 Nebraska 845 — — 845 — 845 New Jersey — — 29 29 29 — North Carolina — — 3 3 3 — Ohio — 453 8 461 322 139 Pennsylvania 13 348 9 370 357 13 Texas 285 — 2 287 2 285 Utah — 209 — 209 209 — Virginia 625 — — 625 — 625 Washington — — 2 2 2 — Wisconsin 1,227 102 3 1,332 107 1,225 Total Domestic 11,288 2,417 725 14,430 2,117 12,313 Australia — — 2 2 2 — Brazil 440 — 3 443 440 3 China 842 33 26 901 2 899 Total International 1,282 33 31 1,346 444 902 Total Square Feet 12,570 2,450 756 15,776 2,561 13,215 (1) Turkey growout facilities are excluded. 12 Table of Contents
Biggest changeThe facilities outside the U.S. serve the International segment. 13 Table of Contents Area (1) Square feet, in thousands Production Facilities Warehouse/Distribution Centers Administration/Sales/Research Offices Total Leased Owned Arizona — — 2 2 2 — Arkansas 589 250 11 850 261 589 California 352 427 27 806 673 133 Colorado 829 — 10 839 4 835 Florida — — 5 5 5 — Georgia 259 — — 259 — 259 Illinois 738 — 22 760 22 738 Iowa 1,484 659 3 2,146 427 1,719 Kansas 312 — 3 315 3 312 Massachusetts — — 4 4 4 — Michigan — — 3 3 3 — Minnesota 3,692 289 581 4,562 127 4,435 Nebraska 845 — — 845 — 845 New Jersey — — 26 26 26 — North Carolina — — 3 3 3 — Ohio — 453 8 461 322 139 Pennsylvania — 348 9 357 357 — Texas 506 — 5 511 3 508 Utah — 209 — 209 209 — Virginia 625 — — 625 — 625 Washington — — 2 2 2 — Wisconsin 1,225 104 6 1,335 197 1,138 Total Domestic 11,456 2,739 730 14,925 2,650 12,275 Australia — — 2 2 2 — Brazil 440 — 3 443 440 3 China 695 52 88 835 2 833 Total International 1,135 52 93 1,280 444 836 Total Square Feet 12,591 2,791 823 16,205 3,094 13,111 (1) Turkey growout facilities are excluded.
Item 2. PROPERTIES The Company's global headquarters are located in Austin, Minnesota. The Company has various processing plants, warehouses and operational facilities, mainly located in the U.S. The Company maintains a national sales force through strategic placement of sales offices across the U.S. Properties are also maintained internationally to support global processing and sales.
Item 2. PROPERTIES The Company’s global headquarters is located in Austin, Minnesota. The Company has various processing plants, warehouses, and operational facilities, mainly located in the U.S. The Company maintains a national sales force through strategic placement of sales offices across the U.S. Properties are also maintained internationally to support global processing and sales.
A majority of the Company's property is owned. Leased property is used as needed for production, distribution, and sales. The Company believes its operating facilities are well maintained and suitable for current production volumes. The Company regularly engages in construction and other capital improvement projects with a focus on value-added capacity projects and automation.
The majority of the Company’s property is owned. Leased property is used as needed for production, distribution, and sales. The Company believes its operating facilities are well maintained and suitable for current use.
Many of the Company's domestic properties are utilized by more than one segment and utilization of these facilities can change over time. Therefore, it is impracticable to disclose them by segment. The facilities outside the U.S. serve the International segment.
The Company regularly engages in construction and other capital improvement projects with a focus on value-added capacity projects and automation, as well as projects to support regulatory requirements, maintenance needs, and cost-reduction opportunities. Many of the Company’s domestic properties are utilized by more than one segment and utilization of these facilities can change over time.
Added
Therefore, it is impracticable to disclose them by segment.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

4 edited+4 added−2 removed0 unchanged
Biggest changeKuehneman 52 Vice President and Controller 02/18/22 to Present Assistant Controller 01/04/21 to 02/17/22 Vice President and CFO (Jennie-O Turkey Store) 05/30/16 to 01/03/21 No family relationship exists among the executive officers. Executive officers are designated annually by the Board of Directors at the first meeting following the Annual Meeting of Stockholders.
Biggest changeMyers, Ph.D. 59 Senior Vice President, Research and Development and Quality Control 03/2015 to Present Paul R. Kuehneman 53 Vice President and Controller 02/2022 to Present Assistant Controller 01/2021 to 02/2022 Vice President and CFO, Jennie-O Turkey Store, Inc. (subsidiary of registrant) 05/2016 to 01/2021 No family relationship exists among the executive officers. PART II
Item 4. MINE SAFETY DISCLOSURES Not applicable. Information About Executive Officers CURRENT OFFICE AND PREVIOUS NAME AGE FIVE YEARS EXPERIENCE DATES James P. Snee 56 Chairman of the Board, President and Chief Executive Officer 11/20/17 to Present Jacinth C.
Item 4. MINE SAFETY DISCLOSURES Not applicable. 14 Table of Contents Information About Executive Officers The following table provides information regarding the executive officers of the Company as of December 5, 2024: CURRENT OFFICE AND PREVIOUS NAME AGE FIVE YEARS EXPERIENCE DATES James P. Snee 57 Chairman of the Board, President and Chief Executive Officer 11/2017 to Present Jacinth C.
Losness-Larson 58 Senior Vice President (Human Resources) 10/31/22 to Present Director of Human Resources 10/29/18 to 10/30/22 Pierre M. Lilly 52 Senior Vice President and Chief Compliance Officer 10/26/20 to Present Director of Internal Audit 05/30/16 to 10/25/20 Kevin L. Myers, Ph.D. 58 Senior Vice President (Research and Development, Quality Control) 03/30/15 to Present Paul R.
(beverages and convenient foods) 03/2019 to 10/2020 Katherine M. Losness-Larson 59 Senior Vice President, Human Resources 10/2022 to Present Director of Human Resources 10/2018 to 10/2022 Pierre M. Lilly 53 Senior Vice President and Chief Compliance Officer 10/2020 to Present Director of Internal Audit 05/2016 to 10/2020 Kevin L.
Coffey 61 Group Vice President (Supply Chain) 04/26/21 to Present Senior Vice President (Supply Chain and Manufacturing) 03/28/17 to 04/25/21 Swen Neufeldt 50 Group Vice President (Hormel Foods International Corporation) 06/29/20 to Present Vice President (Meat Products) 10/31/16 to 06/28/20 Mark J. Ourada 58 Group Vice President (Foodservice) 03/05/18 to Present Katherine M.
Ourada 59 Group Vice President, Foodservice 03/2018 to Present Swen Neufeldt 51 Group Vice President, Hormel Foods International Corporation 06/2020 to Present Vice President, Meat Products 10/2016 to 06/2020 Steve J. Lykken 54 Group Vice President, Supply Chain 02/2024 to Present Group Vice President, Jennie-O Turkey Store 03/2021 to 02/2024 Senior Vice President/President, Jennie-O Turkey Store, Inc.
Removed
Smiley 55 Executive Vice President and Chief Financial Officer 01/01/22 to Present Group Vice President (Corporate Strategy) 04/05/21 to 12/31/21 Vice President and Chief Accounting Officer, LyondellBasell 04/01/18 to 04/04/21 Deanna T. Brady 58 Executive Vice President (Retail) 10/31/22 to Present Executive Vice President (Refrigerated Foods) 10/28/19 to 10/30/22 Group Vice President/President Consumer Product Sales 10/26/15 to 10/27/19 Mark A.
Added
Smiley 56 Executive Vice President and Chief Financial Officer 01/2022 to Present Group Vice President, Corporate Strategy 04/2021 to 12/2021 Vice President and Chief Accounting Officer, LyondellBasell Industries Holdings B.V. (chemicals) 04/2018 to 04/2021 John F.
Removed
Vacancies may be filled and additional officers elected at any time. The Company's Chief Executive Officer has the authority to appoint and remove Vice Presidents (other than Executive Vice Presidents, Group Vice Presidents, and Senior Vice Presidents). 13 Table of Contents PART II
Added
Ghingo 52 Executive Vice President, Retail 10/2024 to Present Group Vice President, Retail 09/2024 to 10/2024 Chief Executive Officer, Whisps Acquisition Corporation (cheese and snack foods) 01/2022 to 08/2024 President, Applegate Farms, LLC (subsidiary of registrant) 04/2018 to 01/2022 Mark J.
Added
(subsidiary of registrant) 12/2017 to 03/2021 Colleen R. Batcheler 50 Senior Vice President, External Affairs, and General Counsel 06/2024 to Present Executive Vice President, General Counsel and Secretary, Hertz Global Holdings, Inc. (vehicle rental) 05/2022 to 04/2024 Executive Vice President, General Counsel and Corporate Secretary, Conagra Brands, Inc.
Added
(consumer packaged foods) 09/2009 to 04/2022 Mary Katherine Clark 45 Senior Vice President and Chief Communications Officer 03/2024 to Present Vice President of Communications, Mattress Firm Holding Corp. (retailer of mattresses and related products) 10/2022 to 02/2024 Senior Director of Communications, Mattress Firm Holding Corp. 10/2020 to 10/2022 Director of Communications, PepsiCo, Inc.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+0 added−0 removed1 unchanged
Biggest changeHolders There are approximately 10,000 record stockholders and 270,000 stockholders whose shares are held in street name by brokerage firms and financial institutions. There were no issuer purchases of equity securities in the quarter ended October 29, 2023.
Biggest changeHolders As of November 27, 2024, there were approximately 9,000 record holders of the Company’s common stock and approximately 242,000 holders whose shares were held in street name by brokerage firms and financial institutions. Issuer Purchases of Equity Securities There were no issuer purchases of equity securities in the quarter ended October 27, 2024.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Hormel Foods Corporation’s common stock is traded on the New York Stock Exchange under the symbol HRL. The CUSIP number is 440452100.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Hormel Foods Corporation’s common stock is traded on the New York Stock Exchange under the symbol HRL.
Shareholder Return Performance Graph The following graph shows a comparison of cumulative total shareholder return, calculated on a dividend-reinvested basis, for the Company, the S&P 500 Index, and the S&P 500 Packaged Foods & Meats Index for the five years ended October 29, 2023.
Shareholder Return Performance Graph The following graph shows a comparison of cumulative total shareholder return, calculated on a dividend-reinvested basis, for the Company, the S&P 500 Index, and the S&P 500 Packaged Foods & Meats Index for the five years ended October 27, 2024.
As part of the stock split resolution, the number of shares remaining to be repurchased was adjusted proportionately. The maximum number of shares that may yet be purchased under the repurchase plans or programs as of October 29, 2023 is 3,677,494. Dividends The Company has paid dividends for 381 consecutive quarters.
As part of the stock split resolution, the number of shares remaining to be repurchased was adjusted proportionately. 15 Table of Contents The maximum number of shares that may yet be purchased under the repurchase plans or programs as of October 27, 2024 is 3,677,494. Dividends The Company has paid dividends for 385 consecutive quarters.
The graph assumes $100 was invested in each as of the market close on October 29, 2018. Note that historic stock price performance is not necessarily indicative of future stock price performance. 14 Table of Contents Item 6. RESERVED
The graph assumes $100 was invested in each as of the market close on October 28, 2019. Note that historic stock price performance is not necessarily indicative of future stock price performance. Item 6. RESERVED
The annual dividend rate for fiscal 2024 will increase to $1.13 per share, representing the 58th consecutive annual dividend increase. The Company is dedicated to returning excess cash flow to shareholders through dividend payments.
On November 25, 2024, the Board of Directors authorized an increase to the annual dividend rate for fiscal 2025 to $1.16 per share, representing the 59th consecutive annual dividend increase. The Company is dedicated to returning cash to shareholders through dividend payments.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

100 edited+57 added−94 removed8 unchanged
Biggest changeADJUSTED SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES AS A PERCENT OF NET SALES (NON-GAAP) AND ADJUSTED DILUTED NET EARNINGS PER SHARE (NON-GAAP) Fourth Quarter Ended October 29, 2023 October 30, 2022 In thousands, except per share amounts GAAP Non-GAAP Adjustments Non-GAAP Reported GAAP Non-GAAP % Change Net Sales $ 3,198,079 $ — $ 3,198,079 $ 3,283,475 (2.6) Cost of Products Sold 2,683,655 (944) 2,682,711 2,717,058 (1.3) Gross Profit 514,425 944 515,368 566,417 (9.0) Selling, General, and Administrative 216,546 (6,726) 209,820 206,487 1.6 Equity in Earnings of Affiliates 541 6,985 7,526 7,234 4.0 Goodwill and Intangible Impairment 28,383 (28,383) — — — Operating Income 270,037 43,038 313,074 367,164 (14.7) Interest and Investment Income (5,872) — (5,872) 7,933 (174.0) Interest Expense 18,360 — 18,360 17,602 4.3 Earnings Before Income Taxes 245,805 43,038 288,843 357,495 (19.2) Provision for Income Taxes 50,322 8,822 59,145 77,484 (23.7) Net Earnings 195,483 34,216 229,698 280,011 (18.0) Less: Net Earnings (Loss) Attributable to Noncontrolling Interest (452) — (452) 128 (454.6) Net Earnings Attributable to Hormel Foods Corporation $ 195,935 $ 34,216 $ 230,150 $ 279,883 (17.8) Diluted Net Earnings Per Share $ 0.36 $ 0.06 $ 0.42 $ 0.51 (17.2) Selling, General, and Administrative Expenses as a Percent of Net Sales 6.8 % 6.6 % 6.3 % Fiscal Year Ended October 29, 2023 October 30, 2022 In thousands, except per share amounts GAAP Non-GAAP Adjustments Non-GAAP Reported GAAP Non-GAAP % Change Net Sales $ 12,110,010 $ — $ 12,110,010 $ 12,458,806 (2.8) Cost of Products Sold 10,110,169 (944) 10,109,225 10,294,120 (1.8) Gross Profit 1,999,841 944 2,000,785 2,164,686 (7.6) Selling, General, and Administrative 942,167 (76,726) 865,441 879,265 (1.6) Equity in Earnings of Affiliates 42,754 6,985 49,739 27,185 83.0 Goodwill and Intangible Impairment 28,383 (28,383) — — — Operating Income 1,072,046 113,038 1,185,083 1,312,607 (9.7) Interest and Investment Income 14,828 — 14,828 28,012 (47.1) Interest Expense 73,402 — 73,402 62,515 17.4 Earnings Before Income Taxes 1,013,472 113,038 1,126,509 1,278,103 (11.9) Provision for Income Taxes 220,552 24,012 244,565 277,877 (12.0) Net Earnings 792,920 89,026 881,945 1,000,226 (11.8) Less: Net Earnings (Loss) Attributable to Noncontrolling Interest (653) — (653) 239 (372.7) Net Earnings Attributable to Hormel Foods Corporation $ 793,572 $ 89,026 $ 882,597 $ 999,987 (11.7) Diluted Net Earnings Per Share $ 1.45 $ 0.16 $ 1.61 $ 1.82 (11.4) Selling, General, and Administrative Expenses as a Percent of Net Sales 7.8 % 7.1 % 7.1 % 22 Table of Contents ADJUSTED SEGMENT PROFIT (NON-GAAP) Fourth Quarter Ended October 29, 2023 October 30, 2022 In thousands GAAP Non-GAAP Adjustments Non-GAAP Reported GAAP Non-GAAP % Change Segment Profit Retail $ 118,660 $ 28,383 $ 147,043 $ 198,852 (26.1) Foodservice 167,571 — 167,571 148,203 13.1 International 9,511 — 9,511 28,810 (67.0) Total Segment Profit 295,743 28,383 324,126 375,865 (13.8) Net Unallocated Expense 49,485 (14,655) 34,830 18,498 88.3 Noncontrolling Interest (452) — (452) 128 (454.6) Earnings Before Income Taxes $ 245,805 $ 43,038 $ 288,843 $ 357,495 (19.2) Fiscal Year Ended October 29, 2023 October 30, 2022 In thousands GAAP Non-GAAP Adjustments Non-GAAP Reported GAAP Non-GAAP % Change Segment Profit Retail $ 577,690 $ 28,383 $ 606,073 $ 721,832 (16.0) Foodservice 595,682 — 595,682 547,686 8.8 International 55,234 — 55,234 107,642 (48.7) Total Segment Profit 1,228,606 28,383 1,256,989 1,377,161 (8.7) Net Unallocated Expense 214,482 (84,655) 129,827 99,297 30.7 Noncontrolling Interest (653) — (653) 239 (373.1) Earnings Before Income Taxes $ 1,013,472 $ 113,038 $ 1,126,510 $ 1,278,103 (11.9) ADJUSTED DILUTED NET EARNINGS PER SHARE OUTLOOK (NON-GAAP) Fiscal Year 2024 Outlook 2023 Results Diluted Net Earnings per Share $1.43 - $1.57 $1.45 Arbitration Ruling — $0.10 Impairment Charges — $0.05 Transformation and Modernization Initiative $0.08 $0.01 Adjusted Diluted Net Earnings per Share $1.51 - $1.65 $1.61 EBIT AND EBITDA (NON-GAAP) Fiscal Year Ended In thousands October 29, 2023 October 30, 2022 EBIT: Net Earnings Attributable to Hormel Foods Corporation $ 793,572 $ 999,987 Plus: Income Tax Expense 220,552 277,877 Plus: Interest Expense 73,402 62,515 Less: Interest and Investment Income 14,828 28,012 EBIT $ 1,072,698 $ 1,312,367 EBITDA: EBIT per above 1,072,698 1,312,367 Plus: Depreciation and Amortization 253,311 235,885 EBITDA $ 1,326,009 $ 1,548,252 23 Table of Contents FISCAL YEARS 2022 AND 2021 CONSOLIDATED RESULTS A detailed review of fiscal 2022 performance compared to fiscal 2021 is provided due to the change in reportable segments which occurred in the first quarter of fiscal 2023.
Biggest changeFourth Quarter Ended Fiscal Year Ended in thousands, except per share amounts October 27, 2024 October 29, 2023 October 27, 2024 October 29, 2023 Cost of Products Sold (GAAP) $ 2,616,861 $ 2,683,655 $ 9,898,659 $ 10,110,169 Transform and Modernize Initiative (1) (910) (944) (5,557) (944) Adjusted Cost of Products Sold (Non-GAAP) $ 2,615,950 $ 2,682,711 $ 9,893,102 $ 10,109,225 Gross Profit (GAAP) $ 521,230 $ 514,425 $ 2,022,138 $ 1,999,841 Transform and Modernize Initiative (1) 910 944 5,557 944 Adjusted Gross Profit (Non-GAAP) $ 522,140 $ 515,368 $ 2,027,695 $ 2,000,785 SG&A (GAAP) $ 238,587 $ 216,546 $ 1,005,294 $ 942,167 Transform and Modernize Initiative (2) (16,440) (8,397) (47,456) (8,397) Pork Antitrust Litigation Settlements — — (11,750) — Red Meat Wages Antitrust Litigation Settlement — — (13,500) — Poultry Wages Antitrust Litigation Settlement — — (3,500) — Gain on Sale of Business 3,922 — 3,922 — Arbitration Ruling — 1,671 — (68,329) Adjusted SG&A (Non-GAAP) $ 226,069 $ 209,820 $ 933,010 $ 865,441 Equity in Earnings of Affiliates (GAAP) $ 11,838 $ 541 $ 51,088 $ 42,754 Impairment Charges — 6,985 — 6,985 Adjusted Equity in Earnings of Affiliates (Non-GAAP) $ 11,838 $ 7,526 $ 51,088 $ 49,739 Goodwill and Intangible Impairment (GAAP) $ — $ 28,383 $ — $ 28,383 Impairment Charges — (28,383) — (28,383) Adjusted Goodwill and Intangible Impairment (Non-GAAP) $ — $ — $ — $ — Operating Income (GAAP) $ 294,481 $ 270,037 $ 1,067,932 $ 1,072,046 Transform and Modernize Initiative (1)(2) 17,350 9,340 53,013 9,340 Pork Antitrust Litigation Settlements — — 11,750 — Red Meat Wages Antitrust Litigation Settlement — — 13,500 — Poultry Wages Antitrust Litigation Settlement — — 3,500 — Gain on Sale of Business (3,922) — (3,922) — Arbitration Ruling — (1,671) — 68,329 Impairment Charges — 35,368 — 35,368 Adjusted Operating Income (Non-GAAP) $ 307,909 $ 313,074 $ 1,145,773 $ 1,185,083 23 Table of Contents Fourth Quarter Ended Fiscal Year Ended in thousands, except per share amounts October 27, 2024 October 29, 2023 October 27, 2024 October 29, 2023 Earnings Before Income Taxes (GAAP) $ 280,030 $ 245,805 $ 1,035,434 $ 1,013,472 Transform and Modernize Initiative (1)(2) 17,350 9,340 53,013 9,340 Pork Antitrust Litigation Settlements — — 11,750 — Red Meat Wages Antitrust Litigation Settlement — — 13,500 — Poultry Wages Antitrust Litigation Settlement — — 3,500 — Gain on Sale of Business (3,922) — (3,922) — Arbitration Ruling — (1,671) — 68,329 Impairment Charges — 35,368 — 35,368 Adjusted Earnings Before Income Taxes (Non-GAAP) $ 293,459 $ 288,843 $ 1,113,275 $ 1,126,509 Provision for Income Taxes (GAAP) $ 60,070 $ 50,322 $ 230,803 $ 220,552 Transform and Modernize Initiative (1)(2) 3,730 1,915 11,739 1,915 Pork Antitrust Litigation Settlements — — 2,644 — Red Meat Wages Antitrust Litigation Settlement — — 2,930 — Poultry Wages Antitrust Litigation Settlement — — 760 — Gain on Sale of Business (843) — (843) — Arbitration Ruling — (343) — 14,847 Impairment Charges — 7,250 — 7,250 Adjusted Provision for Income Taxes (Non-GAAP) $ 62,957 $ 59,145 $ 248,031 $ 244,565 Net Earnings Attributable to Hormel Foods Corporation (GAAP) $ 220,196 $ 195,935 $ 805,038 $ 793,572 Transform and Modernize Initiative (1)(2) 13,620 7,426 41,274 7,426 Pork Antitrust Litigation Settlements — — 9,106 — Red Meat Wages Antitrust Litigation Settlement — — 10,571 — Poultry Wages Antitrust Litigation Settlement — — 2,741 — Gain on Sale of Business (3,078) — (3,078) — Arbitration Ruling — (1,328) — 53,482 Impairment Charges — 28,118 — 28,118 Adjusted Net Earnings Attributable to Hormel Foods Corporation (Non-GAAP) $ 230,738 $ 230,150 $ 865,650 $ 882,597 Diluted Earnings Per Share (GAAP) $ 0.40 $ 0.36 $ 1.47 $ 1.45 Transform and Modernize Initiative (1)(2) 0.02 0.01 0.08 0.01 Pork Antitrust Litigation Settlements — — 0.02 — Red Meat Wages Antitrust Litigation Settlement — — 0.02 — Poultry Wages Antitrust Litigation Settlement — — — — Gain on Sale of Business (0.01) — (0.01) — Arbitration Ruling — — — 0.10 Impairment Charges — 0.05 — 0.05 Adjusted Diluted Earnings Per Share (Non-GAAP) $ 0.42 $ 0.42 $ 1.58 $ 1.61 Fourth Quarter Ended Fiscal Year Ended in thousands, except per share amounts October 27, 2024 October 29, 2023 October 27, 2024 October 29, 2023 SG&A as a Percent of Net Sales (GAAP) 7.6 % 6.8 % 8.4 % 7.8 % Transform and Modernize Initiative (2) (0.5) (0.3) (0.4) (0.1) Pork Antitrust Litigation Settlements — — (0.1) — Red Meat Wages Antitrust Litigation Settlement — — (0.1) — Poultry Wages Antitrust Litigation Settlement — — — — Gain on Sale of Business 0.1 — — — Arbitration Ruling — 0.1 — (0.6) Adjusted SG&A as a Percent of Net Sales (Non-GAAP) 7.2 % 6.6 % 7.8 % 7.1 % (1) Comprised primarily of asset write-offs related to portfolio optimization.
Next, the Company looks to strategic items in support of growth initiatives such as capital projects, acquisitions, additional dividend increases, and working capital investments. Finally, the Company evaluates opportunistic uses including incremental debt repayment and share repurchases.
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 credit facility, and access to capital markets will be adequate to meet all short-term and long-term commitments. The Company continues to look for opportunities to make investments and acquisitions that align with its strategic priorities.
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 continues to look for opportunities to make investments and acquisitions that align with its strategic priorities.
Estimating the fair value of goodwill reporting units using the discounted cash flow model requires management to make assumptions and projections of future cash flows, revenues, earnings, discount rates, long-term growth rates, and other factors. Sensitivity of Estimate to Change: The assumptions used to assess impairment consider historical trends, macroeconomic conditions, and projections consistent with the Company’s operating strategy.
Estimating the fair value of goodwill reporting units using the discounted cash flow model requires management to make assumptions and projections of future cash flows, revenues, earnings, discount rates, long-term growth rates, and other factors. 29 Table of Contents Sensitivity of Estimate to Change: The assumptions used to assess impairment consider historical trends, macroeconomic conditions, and projections consistent with the Company’s operating strategy.
The preparation of these financial statements requires the Company to make estimates, judgments, and assumptions that can 31 Table of Contents have a meaningful effect on the reporting of consolidated financial statements. See Note A - Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements for additional information.
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. See Note A - Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements for additional information.
See Note F - Derivatives and Hedging and Note J - Commitments and Contingencies of the Notes to the Consolidated Financial Statements for additional information. (2) As of October 29, 2023, the Company’s outstanding debt included unsecured senior notes due in fiscal 2024, 2028, 2030, and 2051.
See Note F - Derivatives and Hedging and Note J - Commitments and Contingencies of the Notes to the Consolidated Financial Statements for additional information. (2) As of October 27, 2024, the Company’s outstanding debt included unsecured senior notes due in fiscal 2027, 2028, 2030, and 2051.
The Company maintains a disciplined capital allocation strategy by applying a waterfall approach, which focuses first on required uses of cash such as capital expenditures to maintain facilities, dividend returns to investors, mandatory debt repayments, and pension obligations.
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.
The Company's strategic investments in the transformation and modernization initiative are expected to cease at the end of the investment period, are not expected to recur in the foreseeable future, and are not considered representative of the Company's underlying operating performance.
The Company’s strategic investments in the T&M initiative are expected to cease at the end of the investment period, are not expected to recur in the foreseeable future, and are not considered representative of the Company’s underlying operating performance.
The Company uses third-party specialists to assist in the determination of these estimates and the calculation of certain employee benefit expenses and the outstanding obligation. 33 Table of Contents Benefit plan assets are stated at fair value.
The Company uses third-party specialists to assist in the determination of these estimates and the calculation of certain employee benefit expenses and the outstanding obligation. Benefit plan assets are reported at fair value.
Due to the lack of readily available market prices, private equity investments are valued by models using a combination of available market data and unobservable inputs that consider earnings multiples, discounted cash flows, and other qualitative and quantitative factors.
Due to the lack of readily available market prices, fund managers value private equity investments using models that include a combination of available market data and unobservable inputs that consider earnings multiples, discounted cash flows, and other qualitative and quantitative factors.
Lease payments exclude $31.2 million of legally binding minimum lease payments for leases signed but not yet commenced. (5) Includes obligations related to infrastructure improvements supporting various manufacturing facilities and a media advertising agreement. Off Balance Sheet Arrangements As of October 29, 2023, the Company had $48.6 million of standby letters of credit issued on its behalf.
Lease payments exclude $36.0 million of legally binding minimum lease payments for leases signed but not yet commenced. (5) Includes obligations related to infrastructure improvements supporting various manufacturing facilities and a media advertising agreement. Off Balance Sheet Arrangements As of October 27, 2024, the Company had $49.3 million of standby letters of credit issued on its behalf.
From a bottom-line perspective, diluted net earnings per share are expected to be $1.43 to $1.57 and adjusted diluted net earnings per share (1) are expected to be $1.51 to $1.65.
From a bottom-line perspective, diluted earnings per share are expected to be $1.51 to $1.65 and adjusted diluted earnings per share (1) are expected to be $1.58 to $1.72.
The largest projects for fiscal 2023 included a new production line for the SPAM ® family of products in Dubuque, Iowa, initial phases of the transition from harvest to value-added capacity in Barron, Wisconsin, wastewater infrastructure in Austin, Minnesota, and pepperoni capacity in Omaha, Nebraska.
Significant projects for fiscal 2023 included investments in a new production line for the SPAM ® family of products in Dubuque, Iowa, the initial phases of the transition from harvest to value-added capacity in Barron, Wisconsin, wastewater infrastructure in Austin, Minnesota, and pepperoni capacity in Omaha, Nebraska. ▪ In fiscal 2023, the Company purchased a minority interest in Garudafood for $426 million.
The standby letters of credit are primarily related to the Company’s self-insured workers compensation programs. This amount includes revocable standby letters of credit totaling $2.7 million for obligations of an affiliated party that may arise under workers compensation claims. Letters of credit are not reflected on the Consolidated Statements of Financial Position.
The standby letters of credit are primarily related to the Company’s self-insured workers' compensation programs. This amount includes revocable standby letters of credit totaling $2.7 million for obligations of an affiliated party that may arise under workers' compensation claims.
Debt As of October 29, 2023, the Company’s outstanding debt included $3.3 billion of fixed rate unsecured senior notes due in fiscal 2024, 2028, 2030, and 2051 with interest payable semi-annually. During fiscal 2023, the Company made $55 million of interest payments and expects to make $55 million of interest payments in fiscal 2024 on these notes.
Debt As of October 27, 2024, the Company’s outstanding debt included $2.9 billion of fixed rate unsecured senior notes due in fiscal 2027, 2028, 2030, and 2051 with interest payable semi-annually. During fiscal 2024, the Company made $69 million of interest payments and the Company expects to make $73 million of interest payments in fiscal 2025 on these notes.
A one-percentage-point change in these rates would have the following effects: One-Percentage-Point Benefit Cost Benefit Obligation In millions Increase Decrease Increase Decrease Pension Benefits Discount Rate $ (11.0) $ 13.0 $ (108.5) $ 129.7 Expected Long-term Rate of Return on Plan Assets (11.5) 11.5 — — Rate of Future Compensation Increase 1.7 (1.5) 1.0 (1.3) Interest Crediting Rate 4.3 (3.6) 11.6 (10.2) Post-retirement Benefits Discount Rate $ (0.2) $ 0.3 $ (12.4) $ 14.3 Health Care Cost Trend Rate 1.0 (0.9) 14.3 (12.6) As of October 29, 2023, the Company had $79.4 million and $638.4 million of private equity and NAV investments, respectively.
A one-percentage-point change in these rates would have the following effects: One-Percentage-Point Benefit Cost Benefit Obligation In millions Increase Decrease Increase Decrease Pension Benefits Discount Rate $ (13.2) $ 15.8 $ (133.5) $ 162.4 Expected Long-term Rate of Return on Plan Assets (12.9) 12.9 — — Rate of Future Compensation Increase 3.1 (2.7) 4.3 (3.7) Interest Crediting Rate 5.6 (4.7) 16.8 (14.2) Post-retirement Benefits Discount Rate $ (0.2) $ (0.9) $ (13.8) $ 16.0 Health Care Cost Trend Rate 0.9 (0.8) 15.8 (13.9) As of October 27, 2024, the Company had $87.3 million of private equity and real estate funds and $724.5 million of investments carried at NAV.
These debt covenants limit the ability of the Company to, among other things, incur debt for borrowed money secured by certain liens, engage in certain sale and leaseback transactions, and require maintenance of certain consolidated leverage ratios. As of October 29, 2023, the Company was in compliance with all covenants and expects to maintain compliance in the future.
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 leverage ratios.
In fiscal 2024, the Company expects sales growth, which assumes benefits from modestly higher volumes, growth in key categories, higher brand support and innovation, incremental pricing actions, and the current assumptions for raw material costs. Risks to this outlook include slowing consumer demand and greater-than-expected pricing headwinds in the turkey business.
In fiscal 2025, the Company expects net sales growth, which assumes benefits from modestly higher volumes, growth in key categories and markets, higher brand support and innovation, market-based pricing actions, and the current assumptions for raw material costs. Risks to this outlook include slowing consumer demand and market price fluctuations.
Selling, General, and Administrative (SG&A) Fourth Quarter Ended Fiscal Year Ended In thousands October 29, 2023 October 30, 2022 % Change October 29, 2023 October 30, 2022 % Change SG&A $ 216,546 $ 206,487 4.9 $ 942,167 $ 879,265 7.2 Percent of Net Sales 6.8 % 6.3 % 7.8 % 7.1 % Adjusted Percent of Net Sales (1) 6.6 % 6.3 % 7.1 % 7.1 % (1) See the "Non-GAAP Financial Measures" section below for a description of the Company's use of measures not defined by U.S. generally accepted accounting principles (GAAP).
Selling, General, and Administrative (SG&A) Fourth Quarter Ended Fiscal Year Ended In thousands October 27, 2024 October 29, 2023 % Change October 27, 2024 October 29, 2023 % Change SG&A $ 238,587 $ 216,546 10.2 $ 1,005,294 $ 942,167 6.7 Percent of Net Sales 7.6 % 6.8 % 8.4 % 7.8 % Adjusted Percent of Net Sales (1) 7.2 % 6.6 % 7.8 % 7.1 % (1) See the "Non-GAAP Measures" section below for a description of the Company’s use of measures not defined by U.S.
Risks to this outlook include a softening of foodservice industry demand, lower-than-expected raw material input costs (negatively impacting net sales), and higher-than-expected operating costs.
Risks to this outlook include a softening of foodservice industry demand, lower-than-expected raw material markets which through market-based pricing can negatively impact net sales, and higher-than-expected operating costs.
For the year ended October 29, 2023, the Company had $1.2 billion and $186.2 million in pension benefit obligation and post-retirement benefit obligation, respectively. For fiscal 2024, the Company expects pension benefit costs of $44.3 million and post-retirement benefit costs of $10.5 million.
For the year ended October 27, 2024, the Company had $1.3 billion and $191.6 million in pension benefit obligation and post-retirement benefit obligation, respectively. For fiscal 2025, the Company expects pension benefit costs of $44.9 million and post-retirement benefit costs of $9.9 million.
MegaMex Foods results were negatively impacted by inflationary pressures, including significantly higher costs for avocados. The Company accounts for its majority-owned operations under the consolidation method. Investments in which the Company owns a minority interest, and for which there are no other indicators of control, are accounted for under the equity or cost method.
The Company accounts for its majority-owned operations under the consolidation method. Investments in which the Company owns a minority interest, and for which there are no other indicators of control, are accounted for under the equity or cost method.
Cost of Products Sold Fourth Quarter Ended Fiscal Year Ended October 29, October 30, October 29, October 30, In thousands 2023 2022 % Change 2023 2022 % Change Cost of Products Sold $ 2,683,655 $ 2,717,058 (1.2) $ 10,110,169 $ 10,294,120 (1.8) Cost of products sold for the fourth quarter and full year of fiscal 2023 decreased due to lower sales.
Cost of Products Sold Fourth Quarter Ended Fiscal Year Ended October 27, October 29, October 27, October 29, In thousands 2024 2023 % Change 2024 2023 % Change Cost of Products Sold $ 2,616,861 $ 2,683,655 (2.5) $ 9,898,659 $ 10,110,169 (2.1) Cost of products sold for the fourth quarter and full year of fiscal 2024 decreased due to lower sales.
Net sales growth of 1 percent to 3 percent is expected and assumes volume growth in key categories, higher brand support and innovation, a benefit from incremental pricing actions, and the current assumptions for raw material input costs.
Organic net sales (1) growth of 1 percent to 3 percent is expected in fiscal 2025, which assumes benefits from modestly higher volumes, growth in key categories and markets, higher brand support and innovation, market-based pricing actions, and the current assumptions for raw material costs.
Capital expenditures supporting growth opportunities in fiscal 2024 are expected to focus on projects related to value-added capacity, infrastructure, and new technology. Capital expenditures for fiscal 2024 are estimated to be $280 million.
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 2025 are expected to focus on projects related to value-added capacity, infrastructure, and new technology. Capital expenditures for fiscal 2025 are estimated to be $275 million to $300 million.
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.
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. The Company believes the following are its critical accounting estimates: Trade Promotions Description: The Company promotes products through consumer incentives and trade promotions.
Changes in enacted tax rates are reflected in the tax provision as they occur. Judgments and Uncertainties: The Company computes its provision for income taxes based on the statutory tax rates and tax planning opportunities available to it in the various jurisdictions in which it operates.
Judgments and Uncertainties: The Company computes its provision for income taxes based on the statutory tax rates and tax planning opportunities available to it in the various jurisdictions in which it operates. Judgment is required in evaluating the Company’s tax positions and determining its annual tax provision.
The Foodservice segment consists primarily of the processing, marketing, and sale of food and nutritional products for foodservice, convenience store, and commercial customers. The International segment processes, markets, and sells Company products internationally. This segment also includes the results from the Company’s international joint ventures, equity method investments, and royalty arrangements.
This segment also includes the results from the Company’s MegaMex Foods, LLC joint venture. 17 Table of Contents The Foodservice segment consists primarily of the processing, marketing, and sale of food products for foodservice, convenience store, and commercial customers located in the United States. The International segment processes, markets, and sells Company products internationally.
These investments, along with receivables from other affiliates, are included on the Consolidated Statements of Financial Position as Investments in Affiliates.
These investments, including balances due to or from affiliates, are included on the Consolidated Statements of Financial Position as Investments in Affiliates.
In fiscal 2024, the Company expects gross profit as a percent of net sales to be comparable to fiscal 2023. Incremental cost inflation and unfavorable sales mix pose the largest risks to this outlook.
Compared to fiscal 2023, gross profit as a percent of net sales increased for the Retail and International segments and decreased for the Foodservice segment. In fiscal 2025, the Company expects gross profit as a percent of net sales to increase compared to the prior year. Incremental cost inflation and unfavorable sales mix pose the largest risks to this outlook.
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 U.S. generally accepted accounting principles.
Letters of credit are not reflected on the Consolidated Statements of Financial Position. 28 Table of Contents 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.
Therefore, the Company does not represent that these segments, if operated independently, would report the profit and other financial information shown below. Additional segment financial information can be found in Note P - Segment Reporting of the Notes to the Consolidated Financial Statements.
Therefore, the Company does not represent that these segments, if operated independently, would report the profit and other financial information shown below.
FISCAL YEARS 2023 AND 2022 CONSOLIDATED RESULTS Net Earnings and Diluted Earnings Per Share Fourth Quarter Ended Fiscal Year Ended In thousands, except per share amounts October 29, 2023 October 30, 2022 % Change October 29, 2023 October 30, 2022 % Change Net Earnings $ 195,935 $ 279,883 (30.0) $ 793,572 $ 999,987 (20.6) Diluted Earnings Per Share 0.36 0.51 (29.4) 1.45 1.82 (20.3) Adjusted Diluted Earnings Per Share (1) 0.42 0.51 (17.2) 1.61 1.82 (11.4) (1) See the "Non-GAAP Financial Measures" section below for a description of the Company's use of measures not defined by U.S. generally accepted accounting principles (GAAP).
CONSOLIDATED RESULTS Net Earnings and Diluted Earnings Per Share Fourth Quarter Ended Fiscal Year Ended In thousands, except per share amounts October 27, 2024 October 29, 2023 % Change October 27, 2024 October 29, 2023 % Change Net Earnings Attributable to Hormel Foods Corporation $ 220,196 $ 195,935 12.4 $ 805,038 $ 793,572 1.4 Diluted Earnings Per Share 0.40 0.36 11.1 1.47 1.45 1.4 Adjusted Diluted Earnings Per Share (1) 0.42 0.42 — 1.58 1.61 (1.9) (1) See the "Non-GAAP Measures" section below for a description of the Company’s use of measures not defined by U.S.
The level of customer performance and the historical spend rate versus contracted rates are estimates used to determine these liabilities. Income Taxes Description: The Company records income taxes in accordance with the liability method of accounting. Deferred taxes are recognized for the estimated taxes ultimately payable or recoverable based on enacted tax law.
Income Taxes Description: The Company records income taxes in accordance with the liability method of accounting. Deferred taxes are recognized for the estimated taxes ultimately payable or recoverable based on enacted tax law. Changes in enacted tax rates are reflected in the tax provision as they occur.
See Note G - Pension and Other Post-Retirement Benefits of the Notes to the Consolidated Financial Statements for additional information.
Variances larger than specified thresholds are investigated further to verify the reported values are reasonable. See Note G - Pension and Other Post-Retirement Benefits of the Notes to the Consolidated Financial Statements for additional information. 30 Table of Contents
Research and development continues to be a vital part of the Company's strategy to grow existing brands and expand into new branded items.
In fiscal 2025, the Company intends to continue investing in its leading brands and for full year advertising expense to increase compared to the prior year. Research and development continues to be a vital part of the Company’s strategy to grow existing brands and expand into new branded items.
The Company believes these non-GAAP financial measures provide useful information to investors because they are the measures used to evaluate performance on a comparable year-over-year basis. Non-GAAP measures are not intended to be a substitute for U.S. GAAP measures in analyzing financial performance.
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.
Fiscal 2024 Outlook (2) : The Company continues to navigate through a dynamic operating environment characterized by slowing consumer demand, inflationary pressures, and headwinds in its turkey business.
Fiscal 2025 Outlook (2) : The Company continues to navigate through a dynamic consumer and operating environment.
Cash Provided by (Used in) Financing Activities ▪ Cash dividends paid to the Company’s shareholders are an ongoing financing activity for the Company with payments totaling $593 million in fiscal 2023 and $558 million in fiscal 2022.
The Company issued senior unsecured notes with an aggregate principal amount of $500 million due March 2027. ▪ Cash dividends paid to the Company’s shareholders are an ongoing financing activity for the Company with payments totaling $615 million in fiscal 2024 and $593 million in fiscal 2023.
Segment profit growth from all three segments is expected in the back half of the year as these pressures abate and as benefits from the transformation and modernization initiative are realized. Major risks to the outlook include incremental inflationary pressures, significantly lower turkey markets than expected, and the impact of deteriorating macroeconomic conditions on the Company's customers, consumers, and operators.
Segment profit growth from all three segments is expected in the back half of the year. Major risks to the outlook include incremental inflationary pressures and the impact of deteriorating macroeconomic conditions on the Company’s customers, consumers, and operators. The Company remains in a strong financial position due to its consistent cash flow, liquidity, and solid balance sheet.
Volume and Net Sales Fourth Quarter Ended Fiscal Year Ended In thousands October 29, 2023 October 30, 2022 % Change October 29, 2023 October 30, 2022 % Change Volume (lbs.) 1,155,445 1,160,490 (0.4) 4,411,738 4,604,169 (4.2) Net Sales $ 3,198,079 $ 3,283,475 (2.6) $ 12,110,010 $ 12,458,806 (2.8) Volume for the fourth quarter of fiscal 2023 was comparable with last year, as higher turkey volumes in each segment were offset by lower Retail volumes in the convenient meals and proteins and the snacking and entertaining verticals.
Volume and Net Sales Fourth Quarter Ended Fiscal Year Ended In thousands October 27, 2024 October 29, 2023 % Change October 27, 2024 October 29, 2023 % Change Volume (lbs.) 1,108,203 1,155,445 (4.1) 4,288,290 4,411,738 (2.8) Net Sales $ 3,138,091 $ 3,198,079 (1.9) $ 11,920,797 $ 12,110,010 (1.6) Volume for the fourth quarter and full year of fiscal 2024 declined, as higher volume in the Foodservice segment was more than offset by lower volume in the Retail segment, primarily in the Convenient Meals & Proteins and the Value-Added Meats verticals.
The increase in fiscal 2022 of $15 million is primarily due to the timing of payments. – Accounts payable and accrued expenses decreased $141 million in fiscal 2023 related to the timing of payments and lower promotional and incentive compensation expenses. In fiscal 2022, accounts payable and accrued expenses decreased $15 million related to the timing of payments.
In fiscal 2023, accounts payable and accrued expenses decreased $141 million related to the timing of payments and lower promotional and incentive compensation expenses. Cash Provided by (Used in) Investing Activities ▪ Capital expenditures were $256 million and $270 million in fiscal 2024 and 2023, respectively.
For fiscal 2024, the Company expects a modest benefit to net earnings from its transformation and modernization initiative. 15 Table of Contents A detailed review of the Company's fiscal 2023 performance compared to fiscal 2022 appears in the following section.
Consistent with the plan outlined at its 2023 investor day, the Company expects fiscal 2025 to be a year of acceleration in its T&M initiative. For fiscal 2025, the Company expects a benefit to net earnings from its T&M initiative. A review of the Company’s fiscal 2024 performance compared to fiscal 2023 appears in the following section.
For the fourth quarter of fiscal 2023, volume and net sales growth from the value-added meats, emerging brands and bacon verticals was more than offset by declines in the convenient meals and proteins and the snacking and entertaining verticals.
For the fourth quarter of fiscal 2024, growth from many branded items, including Applegate ® natural and organic meats, Hormel ® Black Label ® bacon, the SPAM ® family of products, Jennie-O ® ground turkey, and Hormel ® Square Table™ entrees was more than offset by volume and net sales declines driven by the Value Added Meats, Snacking & Entertaining, and Convenient Meals & Proteins verticals.
The dividend rate was $1.10 per share in fiscal 2023 compared to $1.04 per share in fiscal 2022. ▪ During fiscal 2023, the Company repurchased 310,000 shares for $12 million. Sources and Uses of Cash The Company's balanced business model, with diversification across raw material inputs, channels, and categories, provides stability in ever changing economic environments.
Sources and Uses of Cash The Company believes its balanced business model, with diversification across raw material inputs, channels, and categories, provides stability in ever-changing economic environments.
Commitments The following table shows a schedule of the Company's material cash commitments as of October 29, 2023: In millions Payments Due by Periods Total Less than 1 year 1-3 years 3-5 years More than 5 years Purchase Commitments (1) $ 2,763 $ 1,229 $ 1,178 $ 298 $ 59 Debt Repayments (2) 3,300 950 — 750 1,600 Interest Payments on Long-term Debt (2) 708 55 98 98 457 Pension & Other Post-retirement Benefit Payments (3) 1,138 104 217 227 590 Lease Obligations (4) 194 41 69 47 36 Other Commitments (5) 110 51 59 — — (1) The Company commits to purchase quantities of livestock, grain, and other raw materials to ensure a steady supply of production inputs.
Commitments The Company’s material cash commitments as of October 27, 2024 are as follows: In millions Payments Due by Periods Total Less than 1 year 1-3 years 3-5 years More than 5 years Purchase Commitments (1) $ 2,597 $ 1,235 $ 940 $ 246 $ 177 Debt Repayments (2) 2,850 — 500 750 1,600 Interest Payments on Long-term Debt (2) 713 73 134 85 421 Pension & Other Post-retirement Benefit Payments (3) 1,172 107 224 233 609 Lease Obligations (4) 205 46 71 45 43 Other Commitments (5) 69 45 24 — — (1) The Company commits to purchase quantities of livestock, grain, and other raw materials to ensure a steady supply of production inputs.
The $28 million decrease in fiscal 2022 is largely due to timing of collections. – In fiscal 2023, inventory decreased $36 million as a result of strategic inventory management efforts implemented to address elevated inventory levels.
The $36 million decrease in fiscal 2023 was a result of strategic inventory management efforts implemented to address elevated inventory levels. – Prepaid expenses and other assets decreased $13 million in fiscal 2024 compared to an increase of $69 million in fiscal 2023.
Sensitivity of Estimate to Change: The liability relating to these agreements is based on a review of the outstanding contracts on which performance has taken place but which the promotional payments relating to such contracts remain unpaid as of the end of the fiscal year.
Sensitivity of Estimate to Change: The liability relating to these promotional activities is based on a review of the outstanding contracts for which performance has taken place but which remain unpaid. As of October 27, 2024 and October 29, 2023, the Company's accrued trade promotion liabilities were $81.8 million and $64.1 million, respectively.
The Company's ability to leverage its balance sheet through the issuance of debt provides the flexibility to pursue strategic opportunities which may require additional funding. Dividend Payments The Company remains committed to providing returns to investors through cash dividends. The Company has paid 381 consecutive quarterly dividends since becoming a public company in 1928.
The Company has multiple sources of liquidity to complete such investments and acquisitions. For example, the Company’s historic ability to leverage its balance sheet through the issuance of debt has provided the flexibility to pursue strategic opportunities. Dividend Payments The Company remains committed to providing returns to investors through cash dividends.
The Company recognizes a tax position in its financial statements when it is more likely than not the position will be sustained upon examination, based on its technical merits. The position is then measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement.
The position is then measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. A change in judgment related to the expected ultimate resolution of uncertain tax positions will be recognized in earnings in the quarter of such change.
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. During fiscal 2023, the Company repurchased 310,000 shares for $12 million. The Company continues to evaluate share repurchases as part of its capital allocation strategy.
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.
The Company provides earnings before interest and taxes (EBIT) and earnings before interest, taxes, depreciation, and amortization (EBITDA) because these measures are useful to management and investors as indicators of operating strength relative to prior years and are commonly used to benchmark the Company’s performance.
Fiscal 2025 Outlook Diluted Earnings per Share (GAAP) $ 1.51 - $ 1.65 Transform and Modernize Initiative 0.07 - 0.07 Adjusted Diluted Earnings per Share (Non-GAAP) $ 1.58 - $ 1.72 Supplemental Financial Measures (Non-GAAP) EBIT and EBITDA (Non-GAAP) The Company provides earnings before interest and taxes (EBIT) and earnings before interest, taxes, depreciation, and amortization (EBITDA) because it believes these measures are useful to management and investors as indicators of operating performance net of non-operating income and expenses, and because they are commonly used to benchmark the Company’s performance.
Judgment is required in evaluating the Company’s tax positions and determining its annual tax provision. Sensitivity of Estimate to Change: While the Company considers all of its tax positions fully supportable, the Company is occasionally challenged by various tax authorities regarding the amount of taxes due.
Sensitivity of Estimate to Change: While the Company considers all of its tax positions fully supportable, the Company is occasionally challenged by various tax authorities regarding the amount of taxes due. The Company recognizes a tax position in its financial statements when it is more likely than not the position will be sustained upon examination, based on its technical merits.
These valuations are subject to judgments and assumptions of the funds which may prove to be incorrect, resulting in risks of incorrect valuation of these investments. The Company seeks to mitigate these risks by evaluating the appropriateness of the funds’ judgments and assumptions by reviewing the financial data included in the funds’ financial statements.
These valuations are subject to judgments and assumptions of the funds which may prove to be incorrect, resulting in risks of incorrect valuation of these investments. The Company seeks to mitigate these risks by performing various procedures, such as comparing the expected returns based on appropriate benchmarks to reported market values and performing price tests on certain underlying investments.
International segment profit declined due to lower sales in China and lower turkey commodity sales. The Company again reinvested into the business through capital expenditures and returned a record amount of cash to shareholders in the form of dividends.
The Company made meaningful progress on the initiative, which is expected to deliver long-term value to the organization. The Company again reinvested into the business through capital expenditures and returned a record amount of cash to shareholders in the form of dividends.
Funds drawn from this facility may be used by the Company to refinance existing debt, for working capital or other general corporate purposes, and for funding acquisitions. The lending commitments under the facility are scheduled to expire on May 6, 2026, at which time the Company will be required to pay in full all obligations then outstanding.
The lending commitments under the facility are scheduled to expire on May 6, 2026, at which time the Company will be required to pay in full all obligations then outstanding. As of October 27, 2024, the Company had no outstanding borrowings from this facility. Debt Covenants The Company’s debt agreements contain customary terms and conditions including representations, warranties, and covenants.
Interest and investment income decreased for the full year of fiscal 2023 due to higher pension costs, partially offset by increased interest income and improved performance on the rabbi trust. Interest expense increased in fiscal 2023 due to the impact of an interest rate swap.
Interest and investment income increased for the full year of fiscal 2024 due to favorable rabbi trust performance as well as higher cash balances and interest rates. Interest expense increased in fiscal 2024 due to higher interest rates on debt issued during the year.
The fiscal 2022 effective tax rate included a benefit for stock option exercises. For additional information, refer to Note N - Income Taxes of the Notes to the Consolidated Financial Statements.
The fiscal 2023 effective tax rate included a benefit related to the deduction for foreign-derived intangible income that did not repeat in fiscal 2024. For additional information, refer to Note N - Income Taxes of the Notes to the Consolidated Financial Statements. The Company expects the effective tax rate in fiscal 2025 to be between 22 and 23 percent.
In fiscal 2023, $950 million of the notes was reclassified as Current Maturities of Long-term Debt on the Consolidated Statements of Financial Position. See Note L - Long-Term Debt and Other Borrowing Arrangements of the Notes to the Consolidated Financial Statements for additional information.
See Note L - Long-term Debt and Other Borrowing Arrangements of the Notes to the Consolidated Financial Statements for additional information. 27 Table of Contents Borrowing Capacity As a source of short-term financing, the Company maintains a $750 million unsecured revolving credit facility.
Effective Tax Rate Fourth Quarter Ended Fiscal Year Ended October 29, October 30, October 29, October 30, 2023 2022 2023 2022 Effective Tax Rate 20.5 % 21.7 % 21.8 % 21.7 % The effective tax rate for fiscal 2023 reflects a benefit related to the deduction for foreign-derived intangible income.
Effective Tax Rate Fourth Quarter Ended Fiscal Year Ended October 27, October 29, October 27, October 29, 2024 2023 2024 2023 Effective Tax Rate 21.5 % 20.5 % 22.3 % 21.8 % The effective tax rate for fiscal 2024 included a benefit from the purchase of federal energy tax credits.
Cash Flow Highlights Fiscal Year Ended In millions October 29, 2023 October 30, 2022 Cash and Cash Equivalents $ 737 $ 982 Cash Provided By (Used in) Operating Activities 1,048 1,135 Cash Provided by (Used in) Investing Activities (690) (258) Cash Provided by (Used in) Financing Activities (600) (487) Cash and cash equivalents decreased in fiscal 2023.
Cash Flow Highlights Fiscal Year Ended In millions October 27, 2024 October 29, 2023 Cash and Cash Equivalents at End of Period $ 742 $ 737 Cash Provided by (Used in) Operating Activities 1,267 1,048 Cash Provided by (Used in) Investing Activities (237) (690) Cash Provided by (Used in) Financing Activities (1,030) (600) Increase (Decrease) in Cash and Cash Equivalents 5 (246) Cash and cash equivalents was comparable to the prior year, increasing $5 million during fiscal 2024.
In addition to these drivers, net unallocated expense for fiscal 2023 increased as a result of an adverse arbitration ruling totaling $68.3 million. (1) Non-GAAP Financial Measures This filing includes measures of financial performance that are not defined by U.S. GAAP. The Company utilizes these non-GAAP measures to understand and evaluate operating performance on a consistent basis.
(1) NON-GAAP MEASURES This filing 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 annual dividend for 2024 will be $1.13 per share, representing an increase of 3 percent and marking the 58th consecutive year of dividend increases. During fiscal 2023, the Company purchased a 30% common stock interest in Garudafood, a food and beverage company in Indonesia.
The annual dividend for 2025 will be $1.16 per share, representing an increase of 3 percent and marking the 59th consecutive year of dividend increases. Returning cash to shareholders in the form of dividends remains a top priority for the Company.
For full year fiscal 2023, the increase in SG&A expenses and SG&A expenses as a percent of net sales is attributed to an adverse arbitration ruling totaling $68.3 million. Adjusted SG&A expenses as a percent of net sales (1) for fiscal 2023 were comparable to the prior year.
For full year fiscal 2024, the increase in SG&A expenses and SG&A expenses as a percent of net sales is attributed to higher employee-related expenses, higher consulting fees related to the Company’s T&M initiative, and antitrust settlements, partially offset by the lapping of an unfavorable arbitration ruling in the prior year.
SG&A expenses for the fourth quarter of fiscal 2023 increased as higher professional service expense related to the Company's transformation and modernization initiative and higher advertising expense were partially offset by lower employee-related expenses.
GAAP. SG&A expenses for the fourth quarter of fiscal 2024 increased due to higher employee-related expenses and higher consulting fees related to the Company’s T&M initiative.
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.
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.
Goodwill and Other Indefinite-Lived Intangibles Description: Other indefinite-lived intangible assets primarily include trade names obtained through business acquisitions which are originally recorded at their estimated fair values at the date of acquisition. Goodwill is the residual after allocating the purchase price to net assets acquired and is allocated across the Company’s reporting units: Retail, Foodservice, and International.
As of October 27, 2024, the Company had $20.1 million of unrecognized tax benefits, including estimated interest and penalties, recorded in Other Long-term Liabilities. Goodwill and Other Indefinite-Lived Intangibles Description: Other indefinite-lived intangible assets primarily include trade names obtained through business acquisitions which are originally recorded at their estimated fair values at the date of acquisition.
See Note A - Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements for additional details regarding the Company’s procedures. Judgments and Uncertainties: Determining whether impairment indicators exist and estimating the fair value of the Company’s goodwill reporting units and intangible assets for impairment testing requires significant judgment.
If the carrying value of the reporting unit or indefinite-lived intangible asset exceeds the estimated fair value, it is considered impaired which requires a reduction to earnings. See Note A - Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements for additional details regarding the Company’s procedures.
Indefinite-lived trade names are evaluated for impairment using an income approach utilizing the relief from royalty method. Significant assumptions include royalty rate, annual projected revenue, discount rate, and estimated long-term growth rate.
Significant assumptions include royalty rate, annual projected revenue, discount rate, and estimated long-term growth rate.
Changes in these estimates can have a significant impact on the assessment of fair value which could result in material impairment losses. As a result of organizational changes in the first quarter of fiscal 2023, the Company conducted an assessment of its operating segments and reporting units. Based on this analysis, goodwill was reallocated using the relative fair value approach.
Changes in these estimates can have a significant impact on the assessment of fair value which could result in material impairment losses. During the fourth quarter of fiscal 2024, the Company performed a qualitative assessment to evaluate its goodwill and indefinite-lived intangible assets for impairment. No impairment charges were recorded as a result of the testing.
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Executive Overview Fiscal 2023: The Company achieved its second consecutive year of net sales in excess of $12 billion in fiscal 2023.
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Executive Overview Fiscal 2024: The Company believes fiscal 2024 demonstrated the solid execution of its strategy, the power of its portfolio and the resilience of its team.
The non-GAAP financial 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 impacts of the acquisition of the Planters ® snack nuts business (June 2021) in the Retail, Foodservice, and International segments.
Organic Net Sales The non-GAAP adjusted financial measurement of organic net sales provides investors with additional information to facilitate the comparison of past and present operations. Organic net sales excludes the impact of the sale of the Hormel Health Labs business in the Foodservice segment in fiscal 2024.
The Company transitioned to a new operating model in the first quarter of fiscal 2023 and now reports its results in the following three reportable segments: The Retail segment consists primarily of the processing, marketing, and sale of food products sold predominantly in the retail market. This segment also includes the results from the Company’s MegaMex Foods, LLC joint venture.
Results of Operations OVERVIEW The Company is a processor of branded and unbranded food products for retail, foodservice, and commercial customers. The Company reports its results in the following three reportable segments: The Retail segment consists primarily of the processing, marketing, and sale of food products sold predominantly in the retail market in the United States.
Goodwill and indefinite-lived intangible assets are not amortized but tested annually for impairment, or more frequently if impairment indicators arise. If the carrying value of these assets exceeds the estimated fair value, the asset is considered impaired which requires a reduction to earnings.
Goodwill is the residual after allocating the purchase price to net assets acquired and is allocated across the Company’s reporting units: Retail, Foodservice, and International. Goodwill and indefinite-lived intangible assets are not amortized but tested annually for impairment, or more frequently if impairment indicators arise.
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, generally by mutual agreement of the lenders and 30 Table of Contents the Company, subject to certain customary conditions.
The maximum commitment under this credit facility may be further increased by $375 million, generally by mutual agreement of the lenders and the Company, subject to certain customary conditions. Funds drawn from this facility may be used by the Company for general corporate purposes, which may include repaying existing debt, funding acquisitions, and for working capital or other general purposes.
The composition of this line item as of October 29, 2023, was as follows: In thousands Investments in Affiliates U.S. $ 214,019 Foreign 511,103 Total $ 725,121 Goodwill and Intangible Impairment An impairment charge related to the Justin's ® trade name of $28.4 million was recorded in the fourth quarter of fiscal 2023.
The composition of this line item as of October 27, 2024, was as follows: In thousands Investments in Affiliates U.S. $ 188,389 Foreign 531,092 Total $ 719,481 Goodwill and Intangible Impairment An impairment charge related to the Justin’s ® trade name of $28.4 million was recorded in the fourth quarter of fiscal 2023. 19 Table of Contents Interest and Investment Income and Interest Expense Fourth Quarter Ended Fiscal Year Ended October 27, October 29, October 27, October 29, In thousands 2024 2023 % Change 2024 2023 % Change Interest and Investment Income $ 4,980 $ (5,872) 184.8 $ 48,396 $ 14,828 226.4 Interest Expense 19,430 18,360 5.8 80,894 73,402 10.2 Interest and investment income increased in the fourth quarter of fiscal 2024 primarily due to favorable rabbi trust performance.
For the fourth quarter, segment profit increased due to the contribution from higher volumes and improved mix. Segment profit increased during fiscal 2023 due to improved mix across the portfolio. In fiscal 2024, the Company anticipates higher volume, net sales and segment profit from its Foodservice segment compared to the prior year.
In fiscal 2025, the Company anticipates year-over-year growth for volume, net sales, and segment profit from its Foodservice segment after removing the impacts from the Hormel Health Labs divestiture in the fourth quarter of fiscal 2024.
Risks to this outlook include continued softness in China and commodity headwinds impacting the export business. 20 Table of Contents Unallocated Income and Expense The Company does not allocate deferred compensation, investment income, interest expense, or interest income to its segments when measuring performance. The Company also retains various other income and unallocated expenses at the corporate level.
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, investment income, interest expense, or interest income to its segments when measuring performance. The Company also retains various other income and expenses at the corporate level.
Segment profit declined for the fourth quarter due to lower sales, unfavorable mix and increased brand investments. Additionally, a non-cash impairment charge of $28.4 million was recorded in the fourth quarter associated with the Justin's ® trade name.
These declines were partially offset by the benefit from lower logistics expenses and savings from the T&M initiative. Additionally, a non-cash impairment charge of $28.4 million was recorded in the fourth quarter of fiscal 2023 associated with the Justin’s ® trade name. In fiscal 2025, the Company expects modest net sales growth and comparable volumes for its Retail segment.
Fourth Quarter Ended Fiscal Year Ended October 29, October 30, October 29, October 30, In thousands 2023 2022 2023 2022 Net Unallocated Expense $ 49,485 $ 18,498 $ 214,482 $ 99,297 Noncontrolling Interest (452) 128 (653) 239 For the fourth quarter of fiscal 2023, net unallocated expense increased as a result of higher pension costs, higher professional service expenses related to the Company's transformation and modernization initiative, and from the impairment of a corporate venturing investment.
Unallocated Income and Expense Fourth Quarter Ended Fiscal Year Ended October 27, October 29, October 27, October 29, In thousands 2024 2023 2024 2023 Net Unallocated Expense $ 54,064 $ 49,485 $ 215,304 $ 214,482 Noncontrolling Interest (236) (452) (407) (653) For the fourth quarter of fiscal 2024, net unallocated expense increased as higher employee-related expenses and expenses related to the Company’s T&M initiative were partially offset by favorable rabbi trust performance and a gain on the divestiture of Hormel Health Labs.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeItem 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company is exposed to various forms of market risk as a part of its ongoing business practices. The Company utilizes derivative instruments to mitigate earnings fluctuations due to market volatility. Commodity Price Risk: The Company is subject to commodity price risk primarily through grain, lean hog, and natural gas markets.
Biggest changeItem 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company is exposed to various forms of market risk as a part of its ongoing business practices including commodity price risk, interest rate risk, foreign currency exchange rate risk, and investment risk, among others.
Interest Rate Risk : The Company is subject to interest rate risk primarily from changes in fair value of long-term fixed rate debt. As of October 29, 2023, the Company’s long-term debt had a fair value of $2.7 billion compared to $2.7 billion as of October 30, 2022.
Interest Rate Risk : The Company is subject to interest rate risk primarily from changes in fair value of long-term fixed rate debt. As of October 27, 2024, the Company’s long-term debt had a fair value of $2.5 billion compared to $2.7 billion as of October 29, 2023.
A 10 percent increase would have negatively impacted the long-term debt by $77.5 million. Foreign Currency Exchange Rate Risk: The fair values of certain assets are subject to fluctuations in foreign currency exchange rates.
A 10 percent increase would have negatively impacted the long-term debt by $68.9 million. Foreign Currency Exchange Rate Risk: The fair values of certain of the Company’s assets are subject to fluctuations in foreign currency exchange rates.
A 10 percent decrease in the market price would have negatively impacted the fair value of the Company's cash flow commodity contracts as of October 29, 2023, by $26.3 million, which in turn would lower the Company's future cost on purchased commodities by a similar amount.
A 10 percent decrease in the market price would have negatively impacted the fair value of the Company’s cash flow commodity contracts as of October 27, 2024, by $26.7 million, which in turn would lower the Company’s future cost on purchased commodities by a similar amount.
The Company's net asset position in foreign currencies as of October 29, 2023, was $1.1 billion, compared to $652.4 million as of October 30, 2022, with most of the exposure existing in Indonesian rupiah, Chinese yuan, and Brazilian real. The Company currently does not use market risk sensitive instruments to manage this risk.
The Company’s net asset position in foreign currencies as of October 27, 2024, was $1.2 billion, compared to $1.1 billion as of October 29, 2023, with most of the exposure existing in Chinese yuan, Indonesian rupiah and Brazilian real. The Company currently does not use market risk sensitive instruments to manage this risk.
The fair value of the Company’s cash flow commodity contracts as of October 29, 2023, was $17.1 million compared to $21.6 million as of October 30, 2022. The Company measures its market risk exposure on its cash flow commodity contracts using a sensitivity analysis, which considers a hypothetical 10 percent change in the market prices.
The fair value of the Company’s cash flow commodity contracts as of October 27, 2024, was $(5.9) million compared to $(17.1) million as of October 29, 2023. The Company measures its market risk exposure on its cash flow commodity contracts using a sensitivity analysis, which considers a hypothetical 10 percent change in the market prices.
The Company measures its market risk exposure of long-term fixed rate debt using a sensitivity analysis, which considers a 10 percent change in interest rates. A 10 percent decrease in interest rates would have positively impacted the fair value of the Company’s long-term debt as of October 29, 2023, by $83.6 million.
The Company measures its market risk exposure of long-term fixed rate debt using a sensitivity analysis, which considers a 10 percent change in interest rates. A 10 percent decrease in interest rates would have positively impacted the fair value of the Company’s long-term debt as of October 27, 2024, by $73.8 million.
Investment Risk: The Company has corporate-owned life insurance policies classified as trading securities as part of a rabbi trust to fund certain supplemental executive retirement plans and deferred income plans. As of October 29, 2023, the balance of 34 Table of Contents these securities totaled $188.2 million compared to $186.2 million as of October 30, 2022.
Investment Risk: The Company has corporate-owned life insurance policies classified as trading securities as part of a rabbi trust to fund certain supplemental executive retirement plans and deferred income plans. As of October 27, 2024, the balance of these securities totaled $209.7 million compared to $188.2 million as of October 29, 2023.
A 10 percent decline in the value of the investments not held in fixed income funds would have negatively impacted the Company’s pretax earnings by approximately $7.8 million, while a 10 percent increase in value would have a positive impact of the same amount.
A 10 percent decline in the value of the investments not held in fixed income funds would have negatively impacted the Company’s pre-tax earnings by approximately $10.0 million, while a 10 percent increase in value would have a positive impact of the same amount. 31 Table of Contents
To reduce these exposures and offset the fluctuations caused by changes in market conditions, the Company employs hedging programs. These programs utilize futures, swaps, and options contracts and are accounted for as cash flow hedges.
Commodity Price Risk: The Company is subject to commodity price risk through grain, lean hog, natural gas, and diesel fuel markets. To reduce these exposures and offset the fluctuations caused by changes in market conditions, the Company employs hedging programs. These programs utilize futures, swaps, and options contracts and are accounted for as cash flow hedges.

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