Hormel

Hormel raised prices to boost margins and said the hikes are “by and large to stay”

Hormel CEO: “The other thing to remember in all of this that we’ve talked about many times is our Grocery Products pricing is very sticky and so the pricing that we’ve taken and that we’re in the midst of executing the additional price increase, that pricing will will by and large to stay.” “Jim Snee — Chairman of the Board, President, Chief Executive Officer: Eric, I mean, it really is more of a timing issue. So you think about where we are right now in Q1. And so we have priced to those uncommon markets that you described. And I think we have-we will watch the market and see what happens. And if the — if the commodity markets become volatile again, we’ll be prepared to react if we need to. The other thing to remember in all of this that we’ve talked about many times is our Grocery Products pricing is very sticky and so the pricing that we’ve taken and that we’re in the midst of executing the additional price increase, that pricing will will by and large to stay.” (Hormel Foods Corporation Q4 2021 Earnings Call, 12/9/2021)

Hormel CEO: “Compared to pre-pandemic levels in 2019, all channels grew by over 25%, driven by strong demand and pricing action in almost every category. It’s all time record performance was led by further acceleration in our foodservice businesses.”“Jim Snee — Chairman of the Board, President, Chief Executive Officer: Sales increased 43% and organic sales increased 32%. Volume increased 14% and organic volume increased 8%. We grew sales in every segment and every channel for the quarter. Compared to pre-pandemic levels in 2019, all channels grew by over 25%, driven by strong demand and pricing action in almost every category. It’s all time record performance was led by further acceleration in our foodservice businesses. Our foodservice teams across the organization posted 72% sales growth for the quarter, 33% higher than pre-pandemic levels. This followed second quarter growth of 28% and third quarter growth 45%. ” (Hormel Foods Corporation Q4 2021 Earnings Call, 12/9/2021)

Hormel CEO: “we expected margins to improve as pricing actions took effect. Indeed, margins improve sequentially in all four segments.” “Jim Snee — Chairman of the Board, President, Chief Executive Officer: From a bottom line perspective, fourth quarter earnings were a record $0.51 per share, a 19% increase compared to 2020, an acceleration in our top line results and the addition of the Planters business led to the earnings growth. As we said in the third quarter, we expected margins to improve as pricing actions took effect. Indeed, margins improve sequentially in all four segments. Pricing actions, improved promotional effectiveness and a more profitable mix, all contributed to the improvement. We started to see relief in key raw materials in the fourth quarter compared to prior quarters. However, labor rates, freight, supplies and raw material costs remain above year-ago levels and in the case of freight, increased further. ” (Hormel Foods Corporation Q4 2021 Earnings Call, 12/9/2021)

Hormel Executive: “We anticipate growth from all four segments, driven by continued elevated demand for our products, the impact from our pricing actions…” “Jacinth Smiley — Group Vice President of Corporate Strategy: As Jim mentioned, allow me to share a bit more commentary regarding key drivers to our fiscal 2022 outlook. Building on the momentum we established during the second half of the year and the strategic investments we have made throughout the pandemic, we expect to generate sales and earnings growth in fiscal 2022 above the long-term goals we announced at our Investor update in October. We anticipate growth from all four segments, driven by continued elevated demand for our products, the impact from our pricing actions, improve production throughput, new capacity for key categories such as pizza toppings and dry sausage, and the full-year contribution of the Planters business. We also expect operating margins to show improvement throughout the year similar to the dynamic, we experienced in the fourth quarter.” (Hormel Foods Corporation Q4 2021 Earnings Call, 12/9/2021)

Hormel CEO: “The demand has held up really well across the entire portfolio. And really where we are in our pricing journey, we’ve got another round of pricing in our Grocery Products portfolio that is in the midst of being implemented, executed right now.” “Jim Snee — Chairman of the Board, President, Chief Executive Officer: Yeah, good morning, Rupesh. We’ve not seen the elasticity that we typically would have seen pre-pandemic. The demand has held up really well across the entire portfolio. And really where we are in our pricing journey, we’ve got another round of pricing in our Grocery Products portfolio that is in the midst of being implemented, executed right now. On the Refrigerated side, that’s a pricing model that ebbs and flows and so we’ve seen some relief in commodity markets. We’re watching it closely. But at this point in time, don’t have any additional pricing scheduled for that part of our business. But in Grocery Products, we do have — have another round that’s getting implemented right now.” (Hormel Foods Corporation Q4 2021 Earnings Call, 12/9/2021)

Hormel CFO: “I think we’ve done a great job with our pricing. I think it’s been very effective.”“Jim Sheehan — Executive Vice President, Chief Financial Officer: Yeah, Eric, the term you used volatility is the keyword. The volatility, as we’ve talked before can move earnings between quarters depending on the timing. But if you take out the spikes and you just look at the trends of the increased costs that we’ve been faced with over the last last year, we’ve done a remarkable job of price feed into that — into those rising markets and the demand for our products really have it failed. So I think we’ve done a great job with our pricing. I think it’s been very effective. We will have times that volatility will help you and hurts you at times, but you really have to look at this as a long-term trend. And over the long-term trend, it really shows that the value of Hormel products are accepted by the consumer and that we are able to price effectively into the marketplace. So I think it’s been a great success. ” (Hormel Foods Corporation Q4 2021 Earnings Call, 12/9/2021)

Hormel CEO: “We feel really good as Jim said about the pricing that we’ve taken so far, and we’re always ready to take additional pricing actions as the market conditions warrant.” “Jim Snee — Chairman of the Board, President, Chief Executive Officer: Yeah, So, Eric, I think couple of things there. We feel really good as Jim said about the pricing that we’ve taken so far, and we’re always ready to take additional pricing actions as the market conditions warrant. Through all of this, we still have to be very aware of consumer retention, right. We want to make sure that we’re not losing consumers through all of this. But in terms of the pricing that I described earlier, really think about it as a second quarter on a fact that it’s being, again timing varies, but it’s — think about it from the second quarter on or the GDP portfolio. ” (Hormel Foods Corporation Q4 2021 Earnings Call, 12/9/2021)

Hormel CEO: “the pricing here is key. So our ability to get the pricing through when we did was very, very important.” “Jim Snee — Chairman of the Board, President, Chief Executive Officer: Yeah, I mean, what you’re describing, Michael, is exactly right. I mean, we’ll get the benefit of some of the raw material declines that we’ve seen. But the pricing here is key. So our ability to get the pricing through when we did was very, very important. I think we’ve demonstrated a track record of being able to expand margins on the other side of this — these market declines, which we expect to be able to do again. So it is — it’s a combination of both of those things.” (Hormel Foods Corporation Q4 2021 Earnings Call, 12/9/2021)