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    HRL
    Earnings call· Apr 2026(Q2 FY26)

    HORMEL FOODS CORP /DE/ Q2 FY26 earnings call HRL

    May 28, 2026 Source

    Executive summary

    Hormel Foods Q2 FY26 – Strong Performance Drives Double-Digit Adjusted Earnings Growth

    Hormel Foods delivered a strong second quarter, marked by consistent top-line momentum and significant bottom-line improvement, exceeding original expectations. The company reaffirmed its full-year organic net sales and adjusted EPS guidance, trending towards the upper half of the earnings range despite anticipated Q3 cost pressures from elevated fuel, commodity markets, and inventory rebalancing. This performance reflects the strength of its protein-centric portfolio and disciplined execution.

    Highlights

    5

    • Achieved sixth consecutive quarter of organic net sales growth, up 3%.

    • Delivered impressive double-digit adjusted earnings growth, with adjusted EPS up 14% to $0.40.

    • Gross margin expanded to 17.4%, up 70 basis points year-over-year.

    • Foodservice segment organic net sales grew 7%, marking its 11th consecutive quarter of growth, with segment profit up 11%.

    • International segment organic net sales grew 5% with segment profit up 20%.

    Concerns

    5

    • Anticipates Q3 adjusted earnings to be more in line with prior year due to near-term cost pressures.

    • Higher logistics expenses and increased fuel prices continued to be a year-over-year headwind.

    • Pork and beef markets remained elevated relative to historical levels, with potential volatility in the second half.

    • Targeted actions to rebalance certain ambient inventory levels are expected to cause near-term cost pressure in Q3 due to lower plant utilization.

    • Effective tax rate is trending towards the higher end of the guidance range.

    Guidance & targets

    12
    CategoryTargetConfidence
    Full-year net sales
    $12.2 billion to $12.5 billion
    high materiality
    High
    Full-year adjusted earnings per share
    $1.43 to $1.51
    high materiality
    High
    Full-year adjusted earnings per share trend
    trending towards the upper half of our earnings range
    high materiality
    Medium
    Q3 adjusted earnings
    more in line with the prior year
    medium materiality
    High
    Retail organic net sales growth
    flat to low single-digit growth
    medium materiality
    High
    Foodservice organic net sales growth
    mid-single-digit growth
    medium materiality
    High
    International organic net sales growth
    high single-digit growth
    medium materiality
    High
    Whole-bird turkey business divestiture impact on FY26 net sales
    $50 million reduction
    medium materiality
    High
    Whole-bird turkey business divestiture impact on FY26 adjusted earnings
    minimal impact
    low materiality
    High
    Effective tax rate
    trending towards the higher end of our range
    low materiality
    High
    Q4 bottom line
    double-digit increase
    medium materiality
    High
    Pork bellies market outlook
    relatively flat year-on-year with fiscal '25
    medium materiality
    Medium

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Foodservice
    Outstanding quarter with broad-based strength across the portfolio, including Hormel Natural Choice, Austin Blues, Jennie-O, and Fontanini. Profitability improved due to market-based pricing and cost benefits in the supply chain, leading to gross margin expansion. Leadership in pizza toppings (pepperoni) with new Calabrian chili pizza toppings launched.
    Organic net sales growth: 7%Segment profit increase: 11%Consecutive quarters of organic net sales growth: 11th
    		—7%—11% increase
    International
    Very good quarter with momentum across key markets and brands. China remained a driver, supported by strong demand and a localized strategy. The branded export business, led by the SPAM brand, also performed well.
    Organic net sales growth: 5%Segment profit growth: 20%
    		—5%—20% growth
    Retail
    Performed ahead of expectations. Strong performance in value-added poultry (Jennie-O, Applegate) and the Herdez brand. The second wave of pricing actions was fully reflected on shelf, with elasticities tracking largely in line with expectations. Opportunities remain in some areas like Planters and SKIPPY.
    Organic net sales growth: 1%Segment profit growth: 13%Jennie-O ground turkey dollar sales growth: double-digitJennie-O ground turkey dollar share growth: based on latest 13-week Circana data ending April 19Total retail dollar consumption growth: over 1%Priority brands dollar consumption growth: 3%
    		—1%—13% growth

    Operational metrics

    16
    Adjusted earnings per share
    $0.40up 14% vs prior year
    Q2 FY26

    Excluding onetime items, underlying performance was strong.

    Gross profit
    up 7%vs last year
    Q2 FY26

    More than offset discrete cost pressures through top line growth, market-based pricing actions, favorable mix and ongoing productivity improvements.

    Gross margin
    17.4%up 70 basis points
    Q2 FY26

    Reflecting strong execution across the business.

    Equity in earnings
    increased 12%vs prior year
    Q2 FY26

    Mainly driven by year-over-year growth from our MegaMex joint venture.

    Adjusted SG&A
    up 2%vs prior year
    Q2 FY26

    Reflecting good cost discipline.

    Adjusted operating margin
    expanded 80 basis pointsYoY
    Q2 FY26
    Capital expenditures
    $82 million
    Q2 FY26

    Invested in data and technology and infrastructure to support long-term growth.

    Dividends returned to stockholders
    $161 million
    Q2 FY26

    Fully aligned with our capital allocation framework.

    Cash on hand
    $827 millionup $156 million since end of FY25
    Q2 FY26 end

    Gives flexibility to continue investing in the business while returning capital to shareholders.

    Consecutive quarterly dividend payouts
    391st
    Q2 FY26

    Company remains committed to the dividend.

    Organic net sales growth
    3%vs prior year
    Q2 FY26

    Marking our sixth consecutive quarter of organic growth.

    Retail dollar consumption growth
    over 1%
    Q2 FY26

    Driven by 3% dollar consumption growth in priority brands.

    Retail priority brands dollar consumption growth
    3%
    Q2 FY26
    SG&A reductions
    on track
    FY26

    Meaningful benefits from this work, freeing up capacity for growth objectives and covering SG&A headwinds.

    Marketing expenses
    lessvs last year
    Q2 FY26

    Primarily driven by a shift of timing of events in international business. Full year expected to be higher year-over-year.

    Inventory rebalancing
    targeted actions
    Q3 FY26

    Expected to cause near-term cost pressure due to lower plant utilization, but supports a more efficient operating model.

    Industry KPIs

    8
    MetricValueDetails
    Gross margin17.4%%
    Brand platform growthdouble-digit dollar sales growth
    Organic net revenue growth3%%
    Emerging market revenue growthdriver
    Inventory phasing cost effectsnear-term cost pressure
    Volume mix vs pricing decomposition—
    Adjusted EPS operating income guidance$1.43 to $1.51USD
    Elasticity consumer response commentarylargely in line with expectations

    Product announcements

    1
    ProductTypeDetails
    Calabrian chili pizza toppingslaunch

    Deals & partnerships

    1
    Whole-bird turkey business buyerdivestiture

    Divestiture of the whole-bird turkey business, reinforcing focus on higher value, less volatile branded offerings. Recorded a loss on the transaction reflected in SG&A.

    Risks & headwinds

    8
    Near-term cost pressuresQ3 FY26

    Q3 adjusted earnings more in line with prior year

    Mitigation: Fully reflected in full year outlook; underlying business strength remains.

    Higher logistics expensesQ2 FY26 and Q3 FY26

    year-over-year headwind

    Mitigation: Improved execution in Q2 to better navigate environment and manage costs; plans in place to continue mitigating headwinds.

    Increased fuel pricesQ2 FY26 and Q3 FY26 (full quarter impact)

    added incremental pressure

    Mitigation: Partially offset by execution improvements; embedded in guidance.

    Pork and beef market volatilitySecond half FY26

    remained elevated relative to historical levels

    Mitigation: Guidance range appropriately reflects potential volatility; outlook assumes pork prices closer to last year's levels in H2.

    Inventory rebalancing costsPrimarily Q3 FY26

    near-term cost pressure due to lower plant utilization

    Mitigation: Targeted actions for certain ambient inventory levels to support a more efficient operating model going forward.

    Effective tax rate trending higherFY26

    trending towards the higher end of our range

    Mitigation: Embedded in full year guidance.

    Structural pressure in certain retail businesses (Planters)Ongoing

    not performing as well

    Mitigation: Enhancing promotions, developing new pack size strategies, increasing digital investment and e-commerce efforts.

    Softer consumption in SKIPPYH1 FY26

    softer first half of the year

    Mitigation: Decision to pull first half promotions after Little Rock fire; now fully back in business with significant improvement in recent consumption data.

    Q&A highlights

    6

    Why reaffirm guidance despite back-half concerns, and what's the Q3 cadence?

    Management is confident in the reaffirmed guidance, trending towards the upper half of the EPS range, due to strong business momentum. Q3 will be flat year-over-year due to higher fuel costs, elevated commodity markets, and inventory rebalancing, but Q4 is expected to rebound.

    “We do believe we are trending to the upper half of the range at this point. Our ability to connect with consumers and operators, coupled with solid management of our business does indeed make us even more confident that we can deliver on our year plan and our algorithm growth.”

    asked by Leah Jordan · answered by Jeffrey Ettinger

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Portfolio Positioning

    Hormel's protein-centric portfolio and balanced retail/foodservice presence enabled consistent top-line growth despite a dynamic external environment. The company's focus on value-added offerings and strategic pricing actions contributed to strong performance across segments. This positioning helps meet diverse consumer and operator needs, translating into marketplace success.

    02

    Operational Excellence and Supply Chain

    Meaningful improvements in manufacturing performance, particularly in vertically integrated turkey operations, and better navigation of logistics challenges, despite higher fuel costs, were key drivers of margin expansion and segment profit growth. The company also appointed Don Monk as its first Chief Technology Officer to strengthen digital capabilities, aiming for greater speed, agility, and impact across the business.

    03

    Retail Segment Focus Areas

    While overall retail organic net sales grew 1% with 13% segment profit growth, the company is addressing structural pressures in certain brands. Planters underperformed due to consumer trade-down from more expensive nuts like cashews, prompting enhanced promotions and digital investment. SKIPPY's softer first half, caused by a prior fire and promotional timing, is now showing significant consumption improvement in Q3.

    04

    International Growth and Localization

    The International segment saw strong organic net sales growth of 5% and 20% segment profit growth, driven by momentum in key markets like China and the continued success of the SPAM brand in branded exports. A localized strategy and disciplined resource investment are key to continued opportunities and growth in these markets.

    05

    Capital Allocation and Financial Strength

    The company generated $179 million in operating cash flow and returned $161 million to stockholders through dividends, maintaining a strong financial position with $827 million cash on hand, up $156 million since the end of FY25. The divestiture of the whole-bird turkey business reinforces focus on higher-value, less volatile branded offerings, with a minimal impact on full-year adjusted earnings.

    06

    Integrated Business Planning and Inventory Management

    Proactive steps are being taken to rebalance certain ambient inventory levels, primarily in Q3, which will lead to temporary lower plant utilization but supports a more efficient operating model going forward⏳. This adjustment is a clear example of how enhanced integrated business planning is driving more forward-looking decisions and improving operational efficiency.

    AI-generated summary of the company’s earnings call. Not investment advice.