Hormel Foods Corp. (NYSE: HRL), a leading global branded food company, reported results for the first quarter of fiscal 2021. Here are Hormel’s first-quarter highlights:
- Volume of 1.2 billion lbs., down 1%.
- Record net sales of $2.5 billion, up 3%.
- Pretax earnings of $277 million, down 5%.
- Operating margin of 10.9%, compared to 11.8% last year.
- Effective tax rate of 19.7%, compared to 16.3% last year.
- Diluted earnings per share of $0.41, down 9% compared to last year.
- Cash flow from operations of $206 million, up 9%.
- Operating free cash flow1 of $165 million, up 27%.
“We delivered record sales as all four segments generated top-line growth,” said chairman, president and chief executive Jim Snee. “Brands such as Spam, Skippy, Hormel Black Label, Applegate, Columbus and Jennie all delivered exceptional growth. A key reason for our success was a result of the work of our ‘one supply chain’ team members. They improved production efficiencies, integrated new capacity and leveraged strategic partnerships to increase production without compromising employee or food safety.”
“We were very excited to announce the definitive agreement to acquire the Planters…,” Snee said. “The Planters business adds another iconic brand to our portfolio while meaningfully increasing our presence in the snacking space. The Planters business also complements our existing snacking portfolio primarily focused on social snacking occasions with products such as Hormel Gatherings party trays, Herdez salsas and sauces, Wholly guacamole and Columbus charcuterie.”
The company will acquire the business for an effective purchase price of $2.79 billion. The transaction provides a tax benefit valued at $560 million equating to a purchase price of $3.35 billion in cash.
Q1 channel highlights
The ongoing COVID-19 pandemic and subsequent changes in consumer behavior continued to drive higher and sustained retail sales in each of the Hormel’s channel segments. Deli channel sales increased on strong demand during the holidays for branded grab-and-go items. However, foodservice net sales were impacted by regional shutdowns during the quarter and remained below year-ago levels. International sales increased due to growth from branded exports and an accelerating recovery in China.
- U.S. retail net sales up 13%.
- U.S. deli net sales up 7%.
- U.S. foodservice net sales down 17%.
- International net sales up 9%.
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