**Operating Cash Flow was notably lower in Q1 2023 due to a combination of factors. The key reasons include a **decline in net earnings**—from **$239,710 thousand** in Q1 2022 to **$217,651 thousand** in Q1 2023—which directly reduced the cash generated from operations. Additionally, there were **adverse changes in working capital**. Specifically, **Accounts Payable and Accrued Expenses** saw a larger decrease (a reduction of **$171,368 thousand** in Q1 2023 compared to **$85,554 thousand** in Q1 2022), driven by annual incentive payments and adjustments for feed and livestock deferral payments. Although **Accounts Receivable** also decreased, the magnitude was less than in the previous period, further contributing to the lower operating cash flow. Other non-cash adjustments, such as changes in prepaid expenses and other operating assets and liabilities, also played a role in the overall reduction in cash flow from operations.  **[0000048465-23-000012_hormelearningsreleaseq12023.htm:6]** **[0000048465-23-000014_hrl-20230129.htm:6]** **[0000048465-23-000014_hrl-20230129.htm:28]** 

Why was Operating Cash Flow so low in Q1 2023?

The significant jump in Q3 2023 operating cash flow was primarily driven by **favorable working capital adjustments**—notably, a **decrease in accounts receivable** and a substantially **smaller increase in inventory** compared to Q3 2022—along with **lower accounts payable and accrued expenses** due to payment timing and incentive distributions, all contributing to an **improvement in cash flow from operations** by 70% over the prior year.  **[0000048465-23-000071_hormelearningsreleaseq32023.htm:9]** **[0000048465-23-000074_hrl-20230730.htm:37]** **[HRL_3327824_5]** 

What drove the significant jump in Operating Cash Flow in Q3 2023?

Hormel Foods Corporation's dramatic shift in inventory levels in Q4 2023 was driven by **aggressive efforts to reduce inventory**. The company focused on **achieving a days sales in inventory target of less than 60 days**, which resulted in a sequential reduction in both finished goods and total inventory dollars. Additionally, these measures contributed to an overall reduction that saw inventories finishing the year at **$1.7 billion**, down by **$36 million** from the beginning of the year.  **[0000048465-24-000011_hrl-20240128.htm:6]** **[HRL_3368371_6]** 

What factors contributed to the dramatic shift in inventory levels in Q4 2023?

The decline in cash and cash equivalents in FY 2023 was primarily driven by several factors. **Investing activities** had a major impact, as the company made a significant **$426 million** investment to acquire a minority interest in Garudafood, contributing to a much larger net cash outflow of **$689.5 million** compared to **$258.0 million** in FY 2022. Additionally, **operating activities** generated slightly less cash (**$1,047.8 million** vs. **$1,135.0 million** in FY 2022) due to changes in working capital, such as a **$141 million** decrease in accounts payable and accrued expenses. **Financing activities** also played a role, with higher dividend payments (**$593 million** in FY 2023 compared to **$558 million** in FY 2022) and share repurchases totaling **$12 million**, which increased the net cash used to **$600.1 million**. Finally, the effect of exchange rate changes slightly reduced cash by **$3.8 million** in FY 2023 versus a **$21.7 million** negative impact in FY 2022.  **[0000048465-23-000083_hrl-20231029.htm:48]** **[0000048465-23-000083_hrl-20231029.htm:66]** **[0000048465-23-000074_hrl-20230730.htm:37]** 

Why did cash and cash equivalents decline in FY 2023?

9d9ed726ead399abe76ca1a67cb01d67ca21c88ba373aa9f72c26fad4ad4ddf0

The high **Cash and Cash Equivalents** in Q2 2024 is primarily due to the issuance of senior unsecured notes totaling **$500 million** and improved cash flows from operating activities. Additionally, the financing activities shifted from net cash used to net cash provided, and there was a reduction in cash used for investing activities, all of which contributed to the significantly higher cash balance.  **[0000048465-24-000032_hrl-20240428.htm:37]** **[0000048465-24-000032_hrl-20240428.htm:36]** 

Why is Cash and Cash Equivalents so high in Q2 2024?

Hormel Foods’ cash and cash equivalents were significantly lower in Q3 2024, ending at **$537,476 thousand**. This decrease resulted primarily from substantial outflows in financing and investing activities that outweighed the positive cash flow from operations. In Q3 2024, the company repaid **$950,000 thousand** in senior unsecured notes, paid **$459,978 thousand** in dividends, and incurred **$172,656 thousand** in capital expenditures, which together contributed to the lower cash balance despite operating cash inflows of **$858,117 thousand**.  **[0000048465-24-000041_hrl-20240728.htm:4]** **[0000048465-24-000041_hrl-20240728.htm:39]** **[0000048465-24-000041_hrl-20240728.htm:7]** 

Why is Cash and Cash Equivalents so low in Q3 2024?

The surge in **Total Assets** in Q2 2024 was primarily driven by a **significant increase in Cash and Cash Equivalents**, which rose from **$736,532 thousand** to **$1,486,368 thousand** due to proceeds from long-term debt and strong operating cash flow. Additionally, **Accounts Receivable decreased** (from **$817,391 thousand** to **$731,984 thousand**), and there were notable increases in **Prepaid Expenses and Other Current Assets** as well as in **Other Assets**, along with a slight increase in Goodwill—all contributing to the overall rise in Total Assets.  **[0000048465-24-000029_hormelearningsreleaseq22024.htm:6]** **[0000048465-24-000032_hrl-20240428.htm:36]** 

What factors drove the surge in Total Assets in Q2 2024?

The **Current Maturities of Long-term Debt** are so low in **Q3 2024** because Hormel Foods Corporation repaid the **$950 million aggregate principal amount of 0.650% senior unsecured notes due June 2024**, which led to a dramatic reduction in the balance from **$950,529 thousand** in the previous period to **$8,232 thousand** in Q3 2024.  **[0000048465-24-000041_hrl-20240728.htm:23]** **[0000048465-24-000051_hrl-20241027.htm:96]** **[0000048465-24-000032_hrl-20240428.htm:21]** 

Why are Current Maturities of Long-term Debt so low in Q3 2024?

16fa780981572b404b886593278631c79cc1963419dae6dfde1e95dc74ec8193

The **Selling, General, and Administrative (SG&A)** expenses in **Q2 2024** were significantly higher at **$266,668 thousand** due primarily to **higher employee-related and external expenses** driven by Hormel Foods Corporation's **transform and modernize initiative**, additional costs from **pork antitrust litigation settlements**, and a **27% increase in advertising investments** reaching **$44 million**.  **[0000048465-24-000032_hrl-20240428.htm:3]** **[0000048465-24-000032_hrl-20240428.htm:29]** 

Why were SG&A expenses so high in Q2 2024?

The sharp increase in Equity in Earnings of Affiliates in Q4 2024 was driven primarily by **growth in international segment investments** (with improved performance from the company’s minority interests in **Indonesia** and the **Philippines**) and the **lapping of a prior-year impairment charge** related to a corporate venturing investment. These positive factors were partially offset by **weaker results from MegaMex Foods, LLC**, a 50% equity method investment.  **[0000048465-24-000051_hrl-20241027.htm:35]** **[20241204CG71467:8]** **[0000048465-24-000051_hrl-20241027.htm:75]** 

What drove the sharp increase in Equity in Earnings of Affiliates in Q4 2024?

The **Interest and Investment Income** increase in Q1 2024 was primarily driven by **improved performance from the rabbi trust** and **higher interest income**, which was attributed to **favorable market interest rates** and a **higher cash balance**.  **[0000048465-24-000011_hrl-20240128.htm:26]** 

What factors contributed to the jump in Interest and Investment Income in Q1 2024?

Hormel Foods’ **Basic EPS dropped to 0.35 in Q2 2024** due to several factors. The company experienced a **3% decline in net sales**—from **$2.98 billion** in Q2 2023 to **$2.89 billion** in Q2 2024—primarily driven by lower volume and sales in the Retail and International segments.  **[0000048465-24-000032_hrl-20240428.htm:28]** **[0000048465-24-000029_hormelearningsreleaseq22024.htm:0]**  Additionally, **higher SG&A expenses** (including increased advertising investments in the Retail segment) and significant **pre-tax charges of $23.6 million** related to its transform and modernize initiative and pork antitrust litigation settlements put further pressure on earnings.  **[0000048465-24-000032_hrl-20240428.htm:28]**  Moreover, an **unplanned production interruption** at the Planters facility and challenges in the whole bird turkey market compounded these issues.  **[0000048465-24-000032_hrl-20240428.htm:28]** **[HRL_3391177_7]** 

Why did Basic EPS drop to 0.35 in Q2 2024?

The increase in Q2 2024 was primarily caused by a **recent debt issuance** that resulted in higher interest expense, which grew **18.3%** compared to Q2 2023, reaching **$21,679 thousand**.  **[0000048465-24-000032_hrl-20240428.htm:30]** **[0000048465-24-000032_hrl-20240428.htm:3]** 

What caused the increase in Interest Expense in Q2 2024?

64477263183d71d74cd2bf70a5391e4b18c439d0d9fe412ff6f6c5daaeec2dcc

Cash and Cash Equivalents (USD, thousands)

Short-term Marketable Securities (USD, thousands)

Accounts Receivable (Net) (USD, thousands)

Inventories (USD, thousands)

Taxes Receivable (USD, thousands)

Prepaid Expenses and Other Current Assets (USD, thousands)

Total Current Assets (USD, thousands)

Goodwill (USD, thousands)

Other Intangibles (USD, thousands)

Pension Assets (USD, thousands)

Investments in Affiliates (USD, thousands)

Other Assets (USD, thousands)

Net Property, Plant & Equipment (USD, thousands)

Total Assets (USD, thousands)

Accounts Payable and Accrued Expenses (USD, thousands)

Accrued Marketing Expenses (USD, thousands)

Employee-related Expenses (USD, thousands)

Interest and Dividends Payable (USD, thousands)

Taxes Payable (USD, thousands)

Current Maturities of Long-term Debt (USD, thousands)

Total Current Liabilities (USD, thousands)

Long-term Debt Less Current Maturities (USD, thousands)

Pension and Post-retirement Benefits (USD, thousands)

Deferred Income Taxes (USD, thousands)

Other Long-term Liabilities (USD, thousands)

Accumulated Other Comprehensive Loss (USD, thousands)

Noncontrolling Interest (USD, thousands)

Total Liabilities and Shareholders’ Investment (USD, thousands)

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Net Sales (USD, thousands)

Cost of Products Sold (USD, thousands)

Gross Profit (USD, thousands)

Selling, General, and Administrative Expenses (USD, thousands)

Equity in Earnings of Affiliates (USD, thousands)

Operating Income (USD, thousands)

Interest and Investment Income (USD, thousands)

Interest Expense (USD, thousands)

Earnings Before Income Taxes (USD, thousands)

Provision for Income Taxes (USD, thousands)

Net Earnings (USD, thousands)

Net Earnings (Loss) Attributable to Noncontrolling Interest (USD, thousands)

Net Earnings Attributable to Hormel Foods Corporation (USD, thousands)

Basic Net Earnings per Share (USD)

Diluted Net Earnings per Share (USD)

Weighted-average Basic Shares Outstanding (thousands)

Weighted-average Diluted Shares Outstanding (thousands)

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Depreciation and Amortization (USD, thousands)

Net Cash Provided by (Used in) Operating Activities (USD, thousands)

Net (Purchase) Sale of Securities (USD, thousands)

Purchases of Property, Plant, and Equipment (USD, thousands)

Proceeds from (Purchases of) Affiliates and Other Investments (USD, thousands)

Net Cash Provided by (Used in) Investing Activities (USD, thousands)

Proceeds from Long-term Debt (USD, thousands)

Repayments of Long-term Debt and Finance Leases (USD, thousands)

Dividends Paid on Common Stock (USD, thousands)

Net Cash Provided by (Used in) Financing Activities (USD, thousands)

Effect of Exchange Rate Changes on Cash (USD, thousands)

Increase (Decrease) in Cash and Cash Equivalents (USD, thousands)

Cash and Cash Equivalents at Beginning of Year (USD, thousands)

Cash and Cash Equivalents at End of Year (USD, thousands)

279b14ba09b71b2d04e26894171026a0b9a8a6cd831ceaa839f356177e9fc414

Adjustments for Non-Cash Items (USD, thousands)

Stock-Based Compensation (USD, thousands)

Changes in Working Capital (USD, thousands)

Capital Expenditures (CapEx) (USD, thousands)

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9da847466ab9d286d4ddcecd2b09102ba680188cb858efdf7de426d1d1658c18

Total Volume (Consolidated) (thousands of lbs.)

Volume for the Retail Segment (thousands of lbs.)

Volume for the Foodservice Segment (thousands of lbs.)

Volume for the International Segment (thousands of lbs.)

Organic Net Sales (thousands of USD)

51ddbec01cd4ff139a444b22a9d1044e389ecb176dee9b13f5261872873ad1d0

U.S.

- U.S. Retail

- U.S. Foodservice

- U.S. Deli

Foreign

Total Net Sales

- International

Total Revenue

673b22a38e5fb3f19c1d7e55df30a82755d90b492bd777cd14e48f174cb6ed64

fd891c6a44f0595c51f78b514536bb6a0fd3011a94e7e59bd15fb618cf2f3ae3

HORMEL FOODS CORP /DE/ (HRL)

Financials