Executive Summary

Q1 FY25 net sales were $2.99B (flat YoY), GAAP EPS $0.31 and adjusted EPS $0.35; operating margin compressed to 7.6% (8.5% adjusted) on turkey supply chain pressures and higher pork/beef/nut input costs, partially offset by value-added strength and sequential recovery in Planters .
Management reaffirmed FY25 organic net sales growth of 1–3% and adjusted EPS of $1.58–$1.72; GAAP EPS range trimmed by $0.02 to $1.49–$1.63 solely for the loss on sale of a non-core sow operation .
Foodservice delivered organic net sales growth (+5%) with premium prepared proteins’ fifth straight quarter of double-digit growth; Retail softness tied to snack nuts supply disruption and unfavorable whole bird turkey dynamics; International grew profit on China/export strength despite Brazil softness .
Setup for 2H: company expects Planters recovery, value-added turkey pricing actions, Foodservice momentum, and T&M benefits ($100–$150M in FY25) to drive a back-half earnings ramp; Q2 EPS guided “comparable” to Q1 and below prior year due to timing of turkey pricing benefits and tough Planters compare .

What Went Well and What Went Wrong

What Went Well

Value-added franchise resilience: flagship/rising brands (SPAM, Applegate, Hormel Black Label, Jennie-O) gained share/grew volume; Foodservice organic net sales +5% and premium prepared proteins posted a fifth consecutive quarter of double-digit growth .
Planters sequential recovery: “significant, sequential market recovery” in Q1 with improving fill rates and distribution; brand to contribute more in 2H as comparisons ease .
International profit growth: segment profit +4% YoY on improved export margins and China growth, despite Brazil softness and lower commodity turkey exports .

What Went Wrong

Margin pressure: gross margin impacted by higher pork, beef, nut inputs and bird illnesses; GAAP operating margin fell to 7.6% (from 9.5% YoY), adjusted to 8.5% (from 9.8%) .
Retail headwinds: net sales -1% and segment profit -20% YoY, primarily from snack nuts disruption and unfavorable whole turkey dynamics despite benefits from T&M and brand strength .
Turkey supply chain pressures: management enacted “strategic pricing actions” across the value-added turkey complex; Q2 will bear pressure without full benefit, with improvements expected in Q3–Q4 .

Financial Results

Quarterly trend (oldest → newest)

Metric	Q3 FY2024	Q4 FY2024	Q1 FY2025
Net Sales ($B)	$2.90	$3.14	$2.99
Operating Margin (GAAP)	8.2%	9.4%	7.6%
Operating Margin (Adj.)	9.2%	9.8%	8.5%
Diluted EPS (GAAP)	$0.32	$0.40	$0.31
Diluted EPS (Adj.)	$0.37	$0.42	$0.35
Cash from Operations ($M)	$218	$409	$309

Q1 FY2025 vs Q1 FY2024 (YoY)

Metric	Q1 FY2024	Q1 FY2025
Net Sales ($B)	$3.00	$2.99
Operating Income ($M)	$284.4	$228.3
Operating Margin (GAAP)	9.5%	7.6%
Diluted EPS (GAAP)	$0.40	$0.31
Diluted EPS (Adj.)	$0.41	$0.35
Effective Tax Rate	23.4%	21.8%
Advertising Expense ($M)	$44	$43

Segment net sales (oldest → newest)

Segment Net Sales ($M)	Q3 FY2024	Q4 FY2024	Q1 FY2025
Retail	$1,767.3	$1,907.1	$1,890.1
Foodservice	$954.0	$1,046.0	$930.2
International	$177.2	$185.0	$168.5
Total	$2,898.4	$3,138.1	$2,988.8

Segment profit (oldest → newest)

Segment Profit ($M)	Q3 FY2024	Q4 FY2024	Q1 FY2025
Retail	$127.9	$152.9	$119.1
Foodservice	$142.5	$154.3	$138.8
International	$21.8	$27.1	$20.8
Total Segment Profit	$292.2	$334.3	$278.8

KPIs and cash/returns

KPI	Q4 FY2024	Q1 FY2025
Advertising Expense ($M)	$—	$43
Capital Expenditures ($M)	$83.8 (Q4)	$72.2
Depreciation & Amortization ($M)	$66.4 (Q4)	$65.9
Cash & Equivalents ($M)	$741.9	$840.4
Long-term Debt ($M)	$2,850.9	$2,850.2
Dividends Paid ($M)	$154.98 (Q4)	$154.98
Dividend/Share (declared)	$0.283 (Q4)	$0.290 (declared)

Non-GAAP adjustments in Q1: T&M costs (+$0.02 EPS), loss on sale of business (+$0.02 EPS), litigation settlements (immaterial to EPS), lifting adjusted EPS to $0.35 .

Guidance Changes

Metric	Period	Previous Guidance (Dec 4, 2024)	Current Guidance (Feb 27, 2025)	Change
Net Sales	FY2025	$11.9–$12.2B	$11.9–$12.2B	Maintained
Diluted EPS (GAAP)	FY2025	$1.51–$1.65	$1.49–$1.63	Lowered $0.02 (loss on sale)
Adjusted Diluted EPS (Non-GAAP)	FY2025	$1.58–$1.72	$1.58–$1.72	Maintained
Adjusted Operating Income	FY2025	$1.175–$1.275B	$1.175–$1.275B	Maintained
T&M Benefits	FY2025	+$100–$150M	+$100–$150M	Reaffirmed
Effective Tax Rate	FY2025	22–23%	22–23%	Reaffirmed
Dividend (quarterly)	2025	$0.29/share implied by $1.16 annual	$0.29/share declared Mar 24, 2025	Maintained run-rate

Earnings Call Themes & Trends

Topic	Q3 FY2024	Q4 FY2024	Q1 FY2025	Trend
Planters recovery	Production issues weighed; improving service; new flavor innovation; sequential improvement expected	FY25 outlook assumed Q1 pressure then recovery	“Significant, sequential market recovery” in Q1; distribution/ads ramp; tough Q2 compare; stronger 2H	Improving; 2H catalyst
Turkey dynamics	Whole-bird markets depressed; weigh on Retail	FY25: whole-bird pressure most acute in Q1	Value-added turkey supply chain pressures; strategic pricing actions; benefit from Q3	Near-term headwind, 2H tailwind
T&M (Transform & Modernize)	Growing benefits; supply chain improvements	$75M FY24 OI benefit; +$100–$150M planned in FY25	On track; FY25 remains $100–$150M; broader growth flywheel	Building benefits
Foodservice momentum	Above-industry growth; premium prepared proteins strong	Expect segment growth in FY25	Organic net sales +5%; fifth straight quarter of double-digit premium prepared proteins	Sustained strength
International	Recovery on SPAM/SKIPPY exports; China improving	Well positioned for expansion	China distribution/innovation gains; profit +4% despite Brazil softness	Mixed but improving
Pricing/mix & elasticity	Year-ago pricing lapped by Q2; center store dynamics	FY25 price/mix tailwinds assumed	Strong price/mix; Planters/mix accretive; turkey pricing in 2H	Neutral to positive
Capital deployment	Dividend aristocrat; cash flow record	3% increase to $1.16 annual	$0.29/share quarterly dividend declared 3/24/25	Consistent returns
Leadership	—	—	CEO succession in process; continuity emphasized	Managed transition

Management Commentary

“We achieved solid top-line results... Our value-added portfolio is strong and performing well... SPAM, Applegate, Hormel Black Label, and Jennie-O grew volume while gaining share” .
“We are pleased with the significant, sequential market recovery the Planters business delivered in the first quarter and expect continued improvements... first quarter was pressured as we continued to recover from the snack nuts supply disruption and lapped... turkey market compression” .
“Our gross profit margin was 15.9%. Value-added growth was more than offset by... higher commodity input costs... and the supply chain impacts of bird illnesses” .
“We expect... second quarter [bottom line] to be comparable to the first quarter and below prior year” .
On turkey: “Strategic pricing actions across the entire turkey complex... we won’t recognize the benefit in Q2... we will get the benefit in Q3 and Q4” .

Q&A Highlights

EPS cadence/back half ramp: Q2 bottom line comparable to Q1; back half driven by Planters recovery, T&M benefits, value-added portfolio; turkey pricing actions to benefit 2H .
Turkey supply/pricing: Pressures tied to illnesses and underlying categories at all-time highs; pricing actions across value-added turkey; whole-bird assumptions unchanged .
Planters distribution and spend: Suffolk fully recovered; inventories healthy; distribution recovering as resets occur; stepped-up advertising/promotions and innovation to ramp in 2H .
Margins: Gross margins down YoY but expected sequential improvement Q1→Q2; pressure concentrated in turkey and nuts .
T&M trajectory and 2026 ambition: On track; FY25 benefits $100–$150M; program viewed as growth flywheel; confidence in 2026 targets reiterated .

Estimates Context

S&P Global consensus estimates for Q1 FY2025 revenue and EPS were not available at the time of this analysis due to data access limits, so we cannot quantify beats/misses versus Street. Management indicated Q1 earnings were “in line with our expectations,” with Q2 guided comparable to Q1 and below prior year, and a stronger back half driven by Planters recovery, T&M, and value-added turkey pricing actions .

Key Takeaways for Investors

Near-term margin pressure, but 2H setup constructive: value-added turkey pricing benefits will largely accrue in Q3–Q4; Planters comparisons ease and distribution rebuild should aid mix .
Foodservice remains an engine: sustained organic growth and premium prepared proteins momentum provide a diversified earnings pillar amid Retail normalization .
T&M program underpinning multi-year earnings: $100–$150M FY25 benefits reaffirmed; operational and portfolio optimization tailwinds continue to build .
Retail focus working ex-snack nuts: flagship/rising brands gaining share; ad spend to step up through FY25 to support growth .
International showing leverage: export margins and China innovation/distribution offset Brazil softness; opportunity to compound as macro stabilizes .
Guidance intact on core metrics: adjusted EPS and sales maintained; GAAP EPS range reset solely for non-core divestiture loss, lowering controversy on underlying trend .
Dividend consistency supports total return: $0.29 quarterly declared; strong cash generation and balance sheet provide flexibility .

Appendix: Additional Data Points

Cash from operations: $309M in Q1; capex $72M focused on value-added capacity; targeted FY25 capex $275–$300M .
Segment organic trends: Foodservice organic net sales +5%, organic volume +2%; total organic net sales +0.6% after adjusting for HHL divestiture .
Non-GAAP reconciliation (Q1): Adjusted operating income $254.0M vs $228.3M GAAP; adjustments include T&M ($14.2M), loss on sale of business ($11.3M), litigation ($0.24M) .

Sources: Q1 FY2025 8‑K/Press Release and exhibits ; Q1 FY2025 earnings press release ; Q1 FY2025 earnings call transcript ; Q4 FY2024 press release ; Q3 FY2024 press release ; Dividend declaration (Mar 24, 2025) .

HORMEL FOODS CORP /DE/ (HRL)·Q1 2025 Earnings Summary