Hormel Foods reports third quarter earnings and raises full year earnings guidance
Hormel Foods Corp. reported record performance for the fiscal year 2015 third quarter. On a GAAP basis, the company reported fiscal 2015 third quarter net earnings of $146.9 million, up 6 percent from net earnings of $138.0 million a year earlier. Diluted earnings per share for the quarter were $0.54 this year compared to $0.51 per share last year. The company reported record volume sales, which were up 3 percent.
Excluding Applegate transaction costs, the company reported fiscal 2015 third quarter non-GAAP net earnings of $152.5, up 11 percent from net earnings of $138.0 million a year earlier. Non-GAAP diluted earnings per share for the quarter were $0.56, up 10 percent compared to $0.51 per share last year.
Sales for the quarter were $2.2 billion, down 4 percent from the same period in fiscal 2014.
"Our balanced business model prevailed once again this quarter, as we were able to overcome the significant challenge of avian influenza in our Jennie-O Turkey Store segment to deliver record earnings and volume sales,” said Jeffrey M. Ettinger, chairman of the board, president and chief executive officer. “Grocery Products drove earnings growth with favorable input costs and increased sales of HORMEL chili and SKIPPY peanut butter. Specialty Foods also delivered excellent results, as the team continues to increase sales of MUSCLE MILK protein nutrition products, and improve the cost structure and synergies between our CytoSport and Century Foods businesses. Revenues were down for the quarter, impacted by lower pricing due to declining pork markets affecting our Refrigerated Foods and International segments, and the loss of sales related to avian influenza in the Jennie-O Turkey Store segment.
“I am pleased to welcome the Applegate team to Hormel Foods now that we finalized the acquisition in mid-July,” commented Ettinger. “Together we will expand our offerings in the high-growth natural and organic meat category, allowing us to reach even more consumers with the APPLEGATE brand.”
Segment profit for Refrigerated Foods increased 9 percent, including transaction costs associated with the Applegate acquisition completed on July 13, 2015. Dollar sales were down 11 percent this quarter on 2 percent higher volume, reflecting lower pricing compared to last year’s record high pork markets. Sales growth of value-added items were led by retail sales of HORMEL pepperoni and HORMEL GATHERINGS party trays and foodservice sales of HORMEL NATURAL CHOICE deli meats andHORMEL FIRE BRAISED meats.
Jennie-O Turkey Store segment profits declined 45 percent and sales were down 12 percent reflecting the substantial impact of the avian influenza outbreak earlier this year, as previously lost flocks created considerable volume shortfalls in plant operations and sales.
“Looking forward to the fourth quarter, we expect a strong finish to the year from our Specialty Foods segment with the fast-paced growth and improved cost structure of our MUSCLE MILK protein nutrition products,” remarked Ettinger. “While Jennie-O Turkey Store will continue to show year-over-year declines due to the impact of avian influenza, we are pleased with our team’s ability to navigate this difficult challenge. Our International segment will face headwinds in the pork export markets over the near term. We look for Refrigerated Foods and Grocery Products to continue to drive earnings increases with input cost tailwinds and growth in key value-added products.”
“We are raising our 2015 non-GAAP earnings guidance range to $2.57 to $2.63 per share, up from our previously stated non-GAAP guidance range of $2.50 to $2.60 per share. The updated guidance represents a 15 to 18 percent earnings increase over a record performance in fiscal 2014,” stated Ettinger.
Source: Hormel Foods Corp.