Thu, May 29, 5:22 PM (14 days ago)
**Hormel Foods Corporation (HRL) Q2 2025 Financial Summary** **Financial Health and Performance:** - **Revenue:** Q2 2025 revenue was $2.9 billion, a slight increase of 0.4% compared to Q2 2024. For the first half of 2025, revenue was $5.9 billion, a marginal increase of 0.1%. - **Profit Margins:** Gross profit margin decreased to 16.7% in Q2 2025 from 17.4% in Q2 2024. Operating income margin was 8.6% in Q2 2025, down from 8.7% in Q2 2024. - **Net Income:** Net income attributable to Hormel Foods Corporation was $180.0 million in Q2 2025, a decrease of 4.9% compared to $189.3 million in Q2 2024. For the first half of 2025, net income was $350.6 million, down 14.1% from $408.1 million in the same period last year. - **Earnings Per Share (EPS):** Diluted EPS was $0.33 in Q2 2025, down 2.9% from $0.34 in Q2 2024. For the first half of 2025, diluted EPS was $0.64, down 13.5% from $0.74 in the same period last year. **Cash Flow:** - **Operating Cash Flow:** Cash provided by operating activities was $365.6 million for the first half of 2025, a decrease of 43% from $640.1 million in the same period last year. This decline was primarily due to an inventory build in Q2 2025. - **Investing Cash Flow:** Cash used in investing activities was $138.7 million for the first half of 2025, compared to $112.7 million in the same period last year. - **Financing Cash Flow:** Cash used in financing activities was $292.6 million for the first half of 2025, compared to $221.1 million provided by financing activities in the same period last year. **Segment Performance:** - **Retail:** Segment profit increased by 3.6% in Q2 2025 due to operational efficiencies and favorable SG&A expenses. However, for the first half of 2025, segment profit decreased by 9.1% due to lower net sales and higher raw material costs. - **Foodservice:** Segment profit decreased by 5.8% in Q2 2025 and by 6.7% for the first half of 2025 due to margin pressures, primarily in non-core businesses. - **International:** Segment profit declined by 20.7% in Q2 2025 and by 9.2% for the first half of 2025 due to a shift in export customer mix and softness in Brazil. **Trends and Uncertainties:** - **Transform and Modernize (T&M) Initiative:** The company is undergoing a multi-year T&M initiative to improve operational efficiencies. Non-recurring expenses related to this initiative were $16.6 million in Q2 2025. - **Tariffs and Trade Policies:** Changes in global trade policies, including tariffs and retaliatory tariffs, did not have a material impact on results during Q2 2025. However, the company continues to monitor and evaluate these impacts. - **Future Operations:** The company expects net sales growth from each of its segments in Q3 2025. Gross profit as a percent of net sales is expected to increase for the Retail segment, to be comparable for the Foodservice segment, and to decrease for the International segment. **Future Outlook:** - **Dividends:** The company remains committed to providing returns to investors through cash dividends. The Board of Directors approved an increased annual dividend rate for fiscal 2025, raising it to $1.16 per share from $1.13 per share. - **Capital Expenditures:** Capital expenditures for fiscal 2025 are estimated to be $275 million to $300 million, focusing on value-added capacity, infrastructure, and new technology. - **Debt:** As of April 27, 2025, the company’s outstanding debt included $2.9 billion of fixed-rate unsecured senior notes due in fiscal 2027, 2028, 2030, and 2051. The company expects to make an additional $37 million of interest payments during fiscal 2025 on these notes.