Hormel's Mixed Quarter: Sales Up, 9-Month Profit Down

TL;DR

**Hormel's nine-month profit dip despite sales growth is a red flag; expect continued margin pressure and a cautious outlook.**

AI Summary

Hormel Foods Corporation reported mixed financial results for the quarter and nine months ended July 27, 2025. Quarterly net sales increased by 4.6% to $3.03 billion from $2.90 billion in the prior year, while net earnings attributable to Hormel Foods Corporation rose by 4.0% to $183.7 million from $176.7 million. However, for the nine-month period, net sales saw a modest increase of 1.6% to $8.92 billion from $8.78 billion, but net earnings attributable to Hormel Foods Corporation decreased by 8.7% to $534.3 million from $584.8 million. This decline was primarily driven by a decrease in gross profit for the nine months, falling to $1.45 billion from $1.50 billion. The company divested Hormel Health Labs for $24.5 million, resulting in a $3.9 million pre-tax gain, and a non-core sow operation, Mountain Prairie, LLC, for $13.6 million, incurring an $11.3 million pre-tax loss. Cash and cash equivalents decreased by $142.7 million to $599.2 million for the nine months, compared to a $199.1 million decrease in the prior year, indicating continued cash outflow. The company also declared a quarterly dividend of $0.2900 per share, up from $0.2825 in the prior year.

Why It Matters

Hormel's mixed results signal a challenging environment for food producers, with increased sales but declining nine-month profitability. This could impact investor confidence, especially given the competitive landscape in the consumer packaged goods sector. Employees might face pressure for efficiency as the company navigates cost challenges, while customers could see price adjustments or product portfolio shifts. The broader market will watch how Hormel, a bellwether in the food industry, manages rising costs and maintains margins, potentially influencing strategies for competitors like Tyson Foods and Conagra Brands.

Risk Assessment

Risk Level: medium — The nine-month net earnings attributable to Hormel Foods Corporation decreased by 8.7% from $584.8 million to $534.3 million, indicating a significant decline in profitability over a longer period. Additionally, cash and cash equivalents decreased by $142.7 million for the nine months ended July 27, 2025, suggesting ongoing cash burn, although less severe than the $199.1 million decrease in the prior year.

Analyst Insight

Investors should closely monitor Hormel's upcoming earnings calls for detailed explanations on margin compression and strategies to improve nine-month profitability. Consider holding existing positions but deferring new investments until there's clear evidence of sustained earnings recovery and positive cash flow trends.

Financial Highlights

revenue

$8.92B

net Income

$534.3M

eps

$0.97

cash Position

$599.2M

revenue Growth

+1.6%

Revenue Breakdown

Key Numbers

• $3.03B — Quarterly Net Sales (Increased by 4.6% from $2.90 billion year-over-year)
• $183.7M — Quarterly Net Earnings Attributable to Hormel Foods Corporation (Increased by 4.0% from $176.7 million year-over-year)
• $8.92B — Nine-Month Net Sales (Increased by 1.6% from $8.78 billion year-over-year)
• $534.3M — Nine-Month Net Earnings Attributable to Hormel Foods Corporation (Decreased by 8.7% from $584.8 million year-over-year)
• $1.45B — Nine-Month Gross Profit (Decreased from $1.50 billion year-over-year)
• $599.2M — Cash and Cash Equivalents (Decreased by $142.7 million for the nine months)
• $0.2900 — Quarterly Dividend Per Share (Increased from $0.2825 in the prior year)
• $24.5M — Proceeds from sale of Hormel Health Labs (Resulted in a $3.9 million pre-tax gain)
• $13.6M — Proceeds from sale of Mountain Prairie, LLC (Resulted in an $11.3 million pre-tax loss)

Key Players & Entities

• Hormel Foods Corporation (company) — registrant
• Hormel Health Labs, LLC (company) — divested entity
• Mountain Prairie, LLC (company) — divested entity
• MegaMex Foods, LLC (company) — affiliate
• PT Garudafood Putra Putri Jaya Tbk (company) — equity method investment
• Lyons Health Labs Holdco, LLC (company) — acquirer of Hormel Health Labs
• Chaparral Ranches, LLC (company) — acquirer of Mountain Prairie, LLC
• FASB (regulator) — issued accounting standards

FAQ

Risk Factors

• Commodity Price Volatility [medium — market]: Fluctuations in the cost of raw materials such as grain, meat, and dairy can significantly impact the cost of products sold. For the nine months ended July 27, 2025, cost of products sold was $7.47 billion, an increase from $7.28 billion in the prior year, indicating potential pressure from commodity costs.
• Supply Chain Disruptions [medium — operational]: Disruptions in the supply chain, including transportation and logistics, can affect the ability to produce and deliver products. The company's ability to manage these risks is crucial for maintaining sales and profitability.
• Food Safety and Regulatory Compliance [high — regulatory]: Adherence to stringent food safety regulations and evolving government policies is critical. Non-compliance can lead to recalls, fines, and reputational damage, impacting sales and operations.
• Consumer Preferences and Demand Shifts [medium — market]: Changes in consumer tastes, dietary trends, and demand for specific product categories can affect sales volumes. The company's success depends on its ability to adapt its product portfolio to meet these evolving preferences.
• Interest Rate Fluctuations [low — financial]: Changes in interest rates can affect the cost of borrowing and investment income. For the nine months ended July 27, 2025, interest expense was $58.4 million, and interest income was $27.1 million, showing sensitivity to rate changes.
• Integration of Acquisitions and Divestitures [medium — operational]: The company engages in acquisitions and divestitures, such as the sale of Hormel Health Labs for $24.5 million and Mountain Prairie, LLC for $13.6 million. Successful integration or divestiture is key to realizing strategic goals and avoiding financial losses.

Industry Context

The food processing industry is characterized by intense competition, reliance on commodity prices, and evolving consumer preferences. Companies like Hormel operate in a dynamic environment where innovation, supply chain efficiency, and brand loyalty are critical for success. Trends towards healthier options, plant-based alternatives, and convenience foods continue to shape market demand.

Regulatory Implications

Hormel Foods operates under strict food safety regulations (e.g., FDA, USDA) and environmental standards. Compliance is paramount to avoid penalties, product recalls, and reputational damage. Changes in trade policies or labeling requirements could also impact operations and profitability.

What Investors Should Do

1. Monitor Gross Profit Margins
2. Analyze Cash Flow Trends
3. Evaluate Segment Performance
4. Assess Impact of Divestitures

Key Dates

• 2025-07-27: Quarter and Nine Months Ended — Reporting period for the financial results, showing mixed performance with increased quarterly sales and earnings but decreased nine-month earnings.
• 2024-07-28: Prior Year Quarter and Nine Months Ended — Benchmark for year-over-year comparison of financial performance.
• 2025-10-27: Fiscal Year End — Previous fiscal year-end, used for balance sheet comparisons.

Glossary

Noncontrolling Interest

Represents the portion of equity interest in a subsidiary that is not attributable to the parent company. It's the ownership stake held by outside shareholders. (The statements show net earnings and comprehensive income attributable to both the parent company and noncontrolling interests, impacting the reported earnings per share for Hormel Foods Corporation.)

Equity in Earnings of Affiliates

The portion of an investee company's net income that is recognized by the investor when the investor has significant influence but not control over the investee. (This line item contributes to Hormel's operating income, indicating income generated from investments in associated companies.)

Other Comprehensive Income (Loss)

Includes gains and losses that are not reported in net income but are recorded directly in equity. Examples include foreign currency translation adjustments and pension adjustments. (This section shows significant fluctuations, particularly foreign currency translation losses of $38.4 million for the nine months ended July 27, 2025, impacting the overall comprehensive income.)

Goodwill

An intangible asset that arises when a company acquires another company for a price greater than the fair value of its net identifiable assets. (Goodwill represents a significant portion of Hormel's assets ($4.92 billion), reflecting past acquisitions and the premium paid for them.)

Diluted Earnings Per Share (EPS)

A measure of profitability that divides net income by the total number of diluted shares outstanding. It accounts for all potential dilutive common shares, such as stock options and convertible securities. (Diluted EPS for the nine months ended July 27, 2025, was $0.97, down from $1.07 in the prior year, reflecting the decrease in net earnings.)

Year-Over-Year Comparison

Compared to the prior year, Hormel Foods Corporation reported a 4.6% increase in quarterly net sales to $3.03 billion and a 4.0% increase in quarterly net earnings to $183.7 million. However, for the nine-month period, net sales saw a more modest 1.6% increase to $8.92 billion, while net earnings attributable to Hormel Foods Corporation declined by 8.7% to $534.3 million, primarily due to a decrease in gross profit. Cash and cash equivalents also saw a larger outflow of $142.7 million in the current nine-month period compared to $199.1 million in the prior year, indicating a continued trend of cash reduction.

Key Financial Figures

• $0.01465 — ange on which registered Common Stock $0.01465 par value HRL New York Stock Exchange
• $0.01 — ue 549,998,433 Common Stock Nonvoting $0.01 par value 0 Table of Contents TABLE

Filing Documents

• hrl-20250727.htm (10-Q) — 1538KB
• hrlq32025ex101jeffettinger.htm (EX-10.1) — 62KB
• hrlq32025ex102johnghingoem.htm (EX-10.2) — 84KB
• hrlq32025ex311ceosoxcertif.htm (EX-31.1) — 10KB
• hrlq32025ex312cfosoxcertif.htm (EX-31.2) — 11KB
• hrlq32025ex321.htm (EX-32) — 6KB
• hrl-20250727_g1.jpg (GRAPHIC) — 7KB
• 0000048465-25-000044.txt ( ) — 8121KB
• hrl-20250727.xsd (EX-101.SCH) — 44KB
• hrl-20250727_cal.xml (EX-101.CAL) — 86KB
• hrl-20250727_def.xml (EX-101.DEF) — 297KB
• hrl-20250727_lab.xml (EX-101.LAB) — 630KB
• hrl-20250727_pre.xml (EX-101.PRE) — 458KB
• hrl-20250727_htm.xml (XML) — 1209KB

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION 3 Item 1.

Financial Statements

Financial Statements 3 Consolidated Statements of Operations 3 Consolidated Statements of Comprehensive Income 4 Consolidated Statements of Financial Position 5 Consolidated Statements of Changes in Shareholders ' Investment 6 Consolidated Condensed Statements of Cash Flows 8 Notes to the Consolidated Financial Statements 9 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 21 Results of Operations 21 Overview 21 Consolidated Results 22 Segment Results 24 Related Party Transactions 27 Non-GAAP Measures 27 Liquidity and Capital Resources 30 Critical Accounting Estimates 32

Forward-looking Statements

Forward-looking Statements 32 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 33 Item 4.

Controls and Procedures

Controls and Procedures 33

- OTHER INFORMATION

PART II - OTHER INFORMATION 34 Item 1.

Legal Proceedings

Legal Proceedings 34 Item 1A.

Risk Factors

Risk Factors 34 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 34 Item 3. Defaults Upon Senior Securities 34 Item 4. Mine Safety Disclosures 34 Item 5. Other Information 34 Item 6. Exhibits 35

SIGNATURES

SIGNATURES 36 2 Table of Contents

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION

FINANCIAL STATEMENTS

Item 1. FINANCIAL STATEMENTS HORMEL FOODS CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS Unaudited Quarter Ended Nine Months Ended In thousands, except per share amounts July 27, 2025 July 28, 2024 July 27, 2025 July 28, 2024 Net Sales $ 3,032,876 $ 2,898,443 $ 8,920,499 $ 8,782,706 Cost of Products Sold 2,545,567 2,410,075 7,473,524 7,281,798 Gross Profit 487,309 488,369 1,446,975 1,500,908 Selling, General, and Administrative 258,713 259,653 773,158 766,707 Equity in Earnings of Affiliates 11,153 7,977 42,614 39,250 Operating Income 239,748 236,693 716,430 773,452 Interest and Investment Income 16,227 10,484 27,084 43,416 Interest Expense 19,461 21,459 58,438 61,464 Earnings Before Income Taxes 236,514 225,719 685,076 755,404 Provision for Income Taxes 52,818 48,984 151,107 170,733 Net Earnings 183,696 176,735 533,968 584,671 Less: Net Earnings (Loss) Attributable to Noncontrolling Interest ( 46 ) 34 ( 366 ) ( 170 ) Net Earnings Attributable to Hormel Foods Corporation $ 183,742 $ 176,701 $ 534,334 $ 584,842 Net Earnings Per Share Basic $ 0.33 $ 0.32 $ 0.97 $ 1.07 Diluted $ 0.33 $ 0.32 $ 0.97 $ 1.07 Weighted-average Shares Outstanding Basic 550,408 548,685 550,048 547,858 Diluted 550,723 549,266 550,396 548,624 See Notes to the Consolidated Financial Statements 3 Table of Contents HORMEL FOODS CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Unaudited Quarter Ended Nine Months Ended In thousands July 27, 2025 July 28, 2024 July 27, 2025 July 28, 2024 Net Earnings $ 183,696 $ 176,735 $ 533,968 $ 584,671 Other Comprehensive Income (Loss), Net of Tax: Foreign Currency Translation 16,772 ( 29,075 ) ( 38,427 ) ( 36,931 ) Pension and Other Benefits 2,523 2,008 7,431 6,205 Derivatives and Hedging ( 1,190 ) ( 18,601 ) 10,788 ( 1,397 ) Equity Method Investments 5,756 ( 6,770 ) 8,132 ( 10,330 ) Total Other Comprehensive Income (Loss) 23,861 ( 52,438 ) ( 12,075 ) ( 42,453 ) Comprehensive Income 207,557 124,

View Full Filing

View this 10-Q filing on SEC EDGAR