Hormel Foods Corp (HRL) Q1 2021 Earnings Call Transcript

HRL Earnings Call - Final Transcript



February 18, 2021牋牋?


Hormel Foods Corp (NYSE: HRL) Q1 2021 earnings call dated Feb. 18, 2021


Corporate Participants:


Nathan Annis ?Investor Relations


Jim Snee ?Chairman of the Board, President and Chief Executive Officer


Jim Sheehan ?Executive Vice President and Chief Financial Officer




Ben Bienvenu ?Stephens ?Analyst


Erica Eiler ?Oppenheimer ?Analyst


Ken Zaslow ?BMO Capital Markets ?Analyst


Eric Larson ?Seaport Global ?Analyst


Peter Galbo ?Bank of America Merrill Lynch ?Analyst


Tom Palmer ?JP Morgan ?Analyst


Robert Moskow ?Credit Suisse ?Analyst


Michael Lavery ?Piper Sandler ?Analyst


Ben Theurer ?Barclays ?Analyst


Sarah Davis ?Goldman Sachs ?Analyst






Good morning and welcome to the Hormel Foods First Quarter 2021 Earnings Conference Call. [Operator Instructions] After today抯 presentation, there will be an opportunity to ask questions. [Operator Instructions]


I would now like to turn the conference over to Nathan Annis. Please go ahead.


Nathan Annis ?Investor Relations


Good morning. Welcome to the Hormel Foods conference call for the first quarter of fiscal 2021. We released our results this morning before the market opened around 6:30 AM Eastern. If you did not receive a copy of the release, you can find it on our website at hormelfoods.com under the Investors section.


On our call today is Jim Snee, Chairman of the Board, President and Chief Executive Officer; and Jim Sheehan, Executive Vice President and Chief Financial Officer. Jim Snee will provide a review of the Company抯 current and future operating conditions, commentary regarding each segment抯 performance for the quarter and update on the impact to the company of the COVID-19 pandemic and a perspective on the balance of fiscal 2021. Jim Sheehan will provide detailed financial results and commentary regarding the Company抯 current and future financial condition. The line will be opened for questions following Jim Sheehan抯 remarks.


As a courtesy to the other analysts, please limit yourself to one question with one follow-up. If you have additional questions, you are welcome to get back into the queue. An audio replay of this call will be available beginning at noon today, Central Standard Time. The dial-in number is 877-344-7529 and the access code is 10152030. It will also be posted on our website and archived for one year.


Before we get started, I need to reference the Safe Harbor statement. Some of the comments made today will be forward-looking and actual results may differ materially from those expressed in or implied by the statements we will be making. Please refer to Pages five through nine in the Company抯 Form 10-K for the fiscal quarter ended October 25th, 2020. It can be accessed on our website.


I will now turn the call over to Jim Snee.


Jim Snee ?Chairman of the Board, President and Chief Executive Officer


Thank you, Nathan. Good morning, everyone. As we approach the one-year mark of the pandemic, I want to express my gratitude to our plant professionals for their continued dedication, energy and focus. They continue to be the true heroes of our company during this time.


On our last earnings call in November, we were witnessing an increase of COVID-19 cases in the United States. Our number one priority has been to keep our team members safe, and we have been very focused on our best-in-class preventative measures and on educating our employees through our awareness campaign keep COVID out. As the pandemic evolves and the vaccine becomes more widely available to our team members, we抣l continue to keep the health and safety of our team members as the top priority. We were among the first to offer a COVID pay program to allow those who are ill or had symptoms to stay home from work and still be paid.


Additionally, we paid $11 million in fiscal 2020 and unconditional bonuses to our team members to provide further financial security. Our program has resulted in minimizing the spread of COVID in our workplaces and our communities. Recently, we have been encouraged to see cases decline and the number of team members on our COVID pay program drastically decrease. This gives us increased optimism as we head into the second quarter. We were pleased to announce the entry into a definitive agreement to acquire the Planters business last Thursday. We have many leading brands that Hormel and the acquisition of the Planters snack nut business will be an excellent addition to our Company.


Over the past 10-years, we have made numerous acquisition, all of which are meeting our strategic objectives. The performances of MegaMex, Wholly, SKIPPY, Applegate, Justin抯, Ceratti, Fontanini, Columbus and Sadlers give us a high level of confidence in our ability to successfully integrate, operate and grow the Planters business. The acquisition of Planters is the perfect strategic fit. The addition of this iconic brand in high-margin business continues our evolution as a global branded food company, moving us further away from a commodity-oriented meat-centric company. As one of our biggest brands, we will give it a high level of focus and attention. Our core competency and brand stewardship will be key to our success and unlocking the power of the Planters brands. We know how to manage brands and Planters is right in our sweet spot as we know Planters is more than simply peanuts in the jar.


Planters also perfectly complements, enhances and expands our existing snacking business. Joining brands like Hormel Gatherings, Columbus, Wholly and Herdez. There are numerous opportunities to leverage the consumer insights from both portfolios to drive further innovation and improve growth for our entire snacking business. The Planters business gives us another iconic brand to grow and increases our scale in key areas such as center store and convenience stores. Integration into our direct sales force is a high priority and we know there are immediate opportunities to improve distribution and drive sales growth.


Another priority for us is to integrate the business into our One Supply Chain and Project Orion platforms. We expect synergies from this integration for the Planters business and for our existing business. There is a lot to love about this acquisition and I抦 excited for the transaction to close, so we can begin to give the Planters business the attention and focus it needs to grow.


Now turning to our first quarter...