Hormel Foods Corp.: Q2 FY2026 earnings call

What management said about Q2 FY2026, from the documents filed with the SEC on 28 May 2026: press release. Guidance figures: 2 lowered, 6 kept. The quarter’s numbers.

Read the filing

Key takeaways

• Sixth straight quarter of organic growth: Management said the company achieved its sixth consecutive quarter of organic top-line growth, with expanded gross margins and double-digit growth in adjusted earnings. Source
• Sales grew 2.5%; GAAP EPS fell: Net sales were $2.97 billion, up 2.5%, with organic net sales up 3%. Diluted EPS was $0.29 against $0.33; adjusted diluted EPS was $0.40 against $0.35. Source
• Turkey loss reduced GAAP income: The loss on the turkey business, including transaction costs, is included in GAAP results and excluded from adjusted results. GAAP pretax earnings were $206 million. Source
• Foodservice organic sales up 7%: Organic net sales rose 7%, the 11th consecutive quarter of growth for the segment; segment profit rose 11%, helped by improved turkey manufacturing network performance. Source
• Retail profit up despite exit: Retail organic net sales rose 1% and segment profit rose 13%. Jennie-O ground turkey growth was partly offset by the exit from select non-core private label snack nut items. Source
• Turkey business sale completed: The whole-bird turkey business was sold in the quarter. Management described the sale as a shift toward value-added protein and away from commodity-driven businesses. Source

“We achieved our sixth consecutive quarter of organic top-line growth, expanded gross margins, and attained double-digit growth in adjusted earnings.”

Jeff Ettinger, interim chief executive officer

Guidance

What changed from last quarter

• Guidance lowered: GAAP operating income guidance was lowered to $0.96 billion to $1.02 billion from $1.02 billion to $1.08 billion, reflecting the turkey business loss. Source
• Guidance lowered: GAAP diluted EPS guidance was lowered to $1.28 to $1.37 from $1.37 to $1.46. Source
• Guidance kept: Net sales, organic net sales growth, adjusted operating income and adjusted diluted EPS guidance were reaffirmed. Source
• New: The previously announced sale of the whole-bird turkey business was completed in the second quarter, compared with a pending sale in the prior release. Source
• New: Beginning in fiscal 2027, the turkey divestiture will be excluded from year-over-year comparisons in non-GAAP organic volume and organic net sales. Source

Results and growth drivers

• Sixth straight quarter of organic growth: Management said the company achieved its sixth consecutive quarter of organic top-line growth, with expanded gross margins and double-digit growth in adjusted earnings. Source
• Sales grew 2.5%; GAAP EPS fell: Net sales were $2.97 billion, up 2.5%, with organic net sales up 3%. Diluted EPS was $0.29 against $0.33; adjusted diluted EPS was $0.40 against $0.35. Source
• Operating margin down, adjusted margin up: Operating margin was 7.3% against 8.6%, and adjusted operating margin was 9.9% against 9.1%. Operating income was $217 million against $248 million. Source
• Turkey loss reduced GAAP income: The loss on the turkey business, including transaction costs, is included in GAAP results and excluded from adjusted results. GAAP pretax earnings were $206 million. Source

Segments and regions

• Every segment grew sales and profit: Management said each segment delivered net sales and segment profit growth in the quarter; total segment profit rose 12.6% to $334 million. Source
• Foodservice organic sales up 7%: Organic net sales rose 7%, the 11th consecutive quarter of growth for the segment; segment profit rose 11%, helped by improved turkey manufacturing network performance. Source
• Retail profit up despite exit: Retail organic net sales rose 1% and segment profit rose 13%. Jennie-O ground turkey growth was partly offset by the exit from select non-core private label snack nut items. Source
• International profit up 20%: International organic net sales rose 5% and segment profit rose 20%, on SPAM luncheon meat exports and growth in the China business. Source

“This was an excellent quarter and gives us even greater confidence in our ability to deliver our full-year outlook.”

Jeff Ettinger, interim chief executive officer

Demand and volumes

• Retail volume fell 2%: Retail volume and organic volume each fell 2%. Retail net sales were flat, and organic net sales rose 1%. Source
• Foodservice and International volume up 1%: Foodservice volume and organic volume each rose 1%. International volume and organic volume also rose 1% in the quarter. Source
• Pricing drove Foodservice profit: Management attributed Foodservice segment profit growth mainly to net sales from market-based pricing actions and modest volume growth, despite a challenging operating environment. Source

Costs, margins and pricing

• SG&A rose as share of sales: SG&A was 10.7% of net sales against 8.7%. The turkey business loss of $61 million is included in SG&A; adjusted SG&A was 8.2% in both periods. Source
• Advertising spend slightly lower: Advertising investment was $34 million in the quarter, compared with $36 million a year earlier. Source
• Depreciation rose; tax rate higher: Depreciation and amortization was $69 million against $64 million. The effective tax rate was 23.6% against 22.0%. Source

“Each segment delivered both net sales and segment profit growth in the second quarter, reflecting broad-based strength across the business and the impact of our strategy.”

John Ghingo, president

Capital, cash and shareholder returns

• Operating cash flow and capital spending: Operating cash flow was $179 million. Capital expenditures were $82 million against $75 million, with the largest projects in data, technology and infrastructure. Source
• Dividends returned $161 million: The company returned $161 million to stockholders through dividends in the quarter. Dividends declared were $0.2925 per share against $0.2900. Source
• Cash on hand rose to $827 million: Cash on hand was $827 million at quarter end. Inventories were $1.8 billion, comparable to the end of fiscal 2025. Source
• Liquidity described as ample: Management described ample liquidity and a conservative level of debt. Current maturities of long-term debt were $505 million at quarter end. Source

Portfolio shaping and strategy

• Turkey business sale completed: The whole-bird turkey business was sold in the quarter. Management described the sale as a shift toward value-added protein and away from commodity-driven businesses. Source
• Justin's stake sold in first quarter: The company sold 51% of its Justin's, LLC equity interest in the first quarter, producing a gain of $23.5 million that is excluded from adjusted results. Source
• Transform and Modernize costs continue: Transform and Modernize adjustments were $15.5 million in the quarter. Management expects $43.0 million to $49.0 million of adjustments for fiscal 2026. Source

People and leadership

• Restructuring charges mainly severance: Corporate restructuring costs are primarily severance and employee benefit costs, aimed at reducing administrative expenses and aligning the workforce. Source
• Former CEO consulting through April 2027: The former CEO is expected to provide consulting services to the company until April 2027, with costs primarily recognized in the first quarter. Source
• Teams executing across organization: John Ghingo, president, said the company's teams are executing at a high level across the organization. Source

Coming up, as management said on 28 May 2026

• Organic metrics exclude turkey from fiscal 2027: Beginning in fiscal 2027, the turkey divestiture will be excluded from year-over-year comparisons in non-GAAP organic volume and organic net sales. Source

Risks management discussed

• Operational: Retail segment profit gains were partly offset by inflationary pressures in the logistics network. Source
• External: Management cited a challenging operating environment for Foodservice, even as pricing actions and volume growth supported segment profit. Source
• Demand: Retail volume and organic volume each fell 2% in the quarter. Source
• Operational: Management said the turkey sale reduces exposure to volatile, commodity-driven businesses. Source

Earlier plans management reported on

• Met: The prior release expected the sale to close by the end of the second quarter; this release says the sale was completed in the second quarter. Source
• Not stated: Management said it continues to expect the approximately $50 million net sales reduction from the turkey transaction. Source

Other quarters

• Q3 FY2026 earnings call
• Q1 FY2026 earnings call
• Q4 FY2025 results
• Q3 FY2025 results

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.