Pooran Sanoo

Pooran Sanoo asked for an update on the percentage of Hormel Foods' profits that are commodity-driven, recalling it was about 10% at the 2023 Investor Day, and how recent moves like the Mountain Prairie sale and whole bird divestiture impact the balance between value-add and commodity profits. He also inquired if the sale of the whole bird business would change Jennie-O's procurement strategy, particularly regarding dark meat for ground turkey.

Answer

Interim CFO Paul Kuehneman stated that Hormel Foods does not specifically track the exact percentage of commodity-driven profits but confirmed it has decreased since 2023 due to the Mountain Prairie Farms sale, whole bird divestiture, and Project Tower initiatives. He suggested the IR team could provide more detail. Interim CEO Jeffrey M. Ettinger confirmed that the whole bird sale would not significantly alter Jennie-O's procurement strategy, as the company retains its tom complex and continues to supplement production with raw material purchases, with only a minor change involving dark meat from LSI hens.

Pooran Sanoo inquired if the sale of the whole bird business, including breasts, would alter Jennie-O's procurement strategy, especially given its historical role as a buyer of dark meat for ground turkey products.

Answer

Interim CEO Jeffrey M. Ettinger confirmed that the sale does not change Jennie-O's procurement strategy, as the tom complex and the practice of supplementing production with purchased raw materials will continue. He noted a minor change where Hormel could obtain a small amount of dark meat products from LSI's hen boning operation. Interim CFO Paul Kuehneman clarified that bone-in breast from hens is a finished good, not raw material for value-added products from tom turkey.