Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company is a global manufacturer and marketer of branded food products and remains focused on driving long-term growth through a balanced business model, a diverse portfolio, and a commitment to creating value for all stakeholders. The Company reports its results in the following three reportable segments: Retail, Foodservice, and International.
A review of the Company’s fiscal 2025 performance compared to fiscal 2024 appears in the following section. A review of fiscal 2024 performance compared to fiscal 2023 is set forth in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended October 27, 2024, under the caption "Management’s Discussion and Analysis of Financial Condition and Results of Operations," which is incorporated herein by reference.
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The Company discloses certain measures not defined by U.S. Generally Accepted Accounting Principles (GAAP), including organic volume, organic net sales, adjusted selling, general and administrative (SG&A), adjusted SG&A as a percent of net sales, adjusted operating income, adjusted net earnings, adjusted diluted earnings per share, and adjusted segment profit. The Company utilizes these non-GAAP measures to understand and evaluate operating performance on a consistent basis. For additional information and reconciliations to the most closely comparable measures calculated in accordance with GAAP, see the "Non-GAAP Measures" section of this Item. All forward-looking comparisons for fiscal 2026 are comparing fiscal 2025 GAAP figures to projected fiscal 2026 GAAP figures, unless otherwise noted.
Results of Operations
OVERVIEW
Fiscal 2025: The Company believes fiscal 2025 was a challenging year, as strong net sales performance did not translate into net earnings growth. Net sales totaled $12.1 billion, an increase of 2 percent compared to the prior year. Growth was driven by all three segments, and the Company delivered four consecutive quarters of net sales gains.
In fiscal 2025, the Company experienced persistent input cost inflation, primarily related to commodity markets, which significantly pressured earnings. Pork belly, beef, and nut input costs caused the most earnings pressure during the year.
The Company continued to support its strategic programs during fiscal 2025, including its multi-year Transform and Modernize (T&M) initiative. The Company made meaningful progress on the initiative, which is expected to deliver long-term value to the organization. The Company also recognized expenses associated with a corporate restructuring plan designed to reduce administrative expenses, improve efficiencies, and align its workforce to the Company’s future needs, while enabling continued investment in the Company’s growth.
SG&A decreased in fiscal 2025 primarily due to the lapping of antitrust settlements incurred in the prior year, lower advertising spend, and proceeds from a legal settlement. Adjusted SG&A as a percent of net sales was comparable to the prior year.
Operating income decreased 33 percent compared to the prior year, as earnings were significantly impacted by non-cash impairment charges recorded in the International and Retail segments. Adjusted operating income decreased 11 percent.
Net earnings decreased 41 percent compared to the prior year due to the above factors and a higher effective tax rate primarily driven by impairment charges. Adjusted net earnings declined 13 percent. Diluted earnings per share and adjusted diluted earnings per share for fiscal 2025 were $0.87 and $1.37, respectively, compared to $1.47 and $1.58 in the prior year.
Capital expenditures in fiscal 2025 were $311 million, including investments in capacity expansions for Hormel ® Fire Braised™ and Applegate ® products, data and technology, people and animal safety, and the Jiaxing, China, facility. The Company continues to prioritize investments in growth, innovation, cost savings, automation, and maintenance.
Dividends paid to shareholders were a record $633 million.
Changes in global trade policies, including tariffs and retaliatory tariffs, had a minor impact on the Company’s results of operations during fiscal 2025. The Company continues to monitor and evaluate the impact of proposed and enacted tariffs, including proposed and enacted retaliatory tariffs, and other trade restrictions, as well as its ability to mitigate their impacts.
Fiscal 2026 Outlook: The Company continues to navigate through a dynamic consumer and operating environment. Organic net sales growth of 1 percent to 4 percent is expected in fiscal 2026, which the Company anticipates being driven by growth across a broad range of categories, increased brand support and innovation, market-based pricing actions, and the Company’s current assumptions for raw material costs. From a bottom-line perspective, segment profit growth from all three segments is expected in fiscal 2026. Diluted earnings per share are expected to be $1.29 to $1.39 and adjusted diluted earnings per share are expected to be $1.43 to $1.51. Earnings are expected to decline in the first quarter of the year, followed by growth in each of the remaining three quarters. Major risks to the outlook include incremental inflationary pressures and the impact of deteriorating macroeconomic conditions on the Company’s customers, consumers, and operators.
The Company remains in a strong financial position due to its operating cash flow, liquidity, and solid balance sheet. The Company plans to continue to support the business through increased marketing and advertising investments for its leading brands. Further, continued capital expenditure investments are expected, including investments in data and technology and value-added capacity expansions.
The implied annualized dividend rate for 2026 is $1.17 per share, representing an increase of 1 percent and marking the 60th consecutive year of dividend increases. Returning cash to shareholders in the form of dividends remains a top priority for the Company.
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CONSOLIDATED RESULTS
Volume, Net Sales, Net Earnings (Loss) and Diluted Earnings (Loss) Per Share
Fourth Quarter Ended
Fiscal Year Ended
In thousands, except per share amounts
October 26, 2025
October 27, 2024
% Change
October 26, 2025
October 27, 2024
% Change
Volume (lbs.)
Organic Volume (lbs.)
Net Sales
Organic Net Sales
Net Earnings (Loss) Attributable to Hormel Foods Corporation
Diluted Earnings (Loss) Per Share
Adjusted Diluted Earnings Per Share
Net sales increased for the fourth quarter and full year of fiscal 2025 while volume declined over both periods.
For the fourth quarter of fiscal 2025, net sales growth across the Retail and Foodservice segments offset declines in the International segment. Net sales growth across the enterprise was driven primarily by the Jennie-O ® turkey portfolio, Foodservice customized solutions business, Planters ® snack nuts, Applegate ® natural and organic meats, and premium prepared proteins, and the SPAM ® family of products.
For the full year fiscal 2025, net sales increased in each segment. Net sales growth for the full year was driven primarily by the Jennie-O ® turkey portfolio, the SPAM ® family of products, Foodservice customized solutions business, Planters ® snack nuts, Applegate ® natural and organic meats, the bacon portfolio, and the Mexican foods portfolio.
For the fourth quarter of fiscal 2025, volume in the Retail segment was comparable to the prior year and declined in the International segment. For the fourth quarter of fiscal 2025, organic volume increased in the Foodservice segment. For the full year of fiscal 2025, organic volume in the Foodservice segment increased compared to the prior year. Volume declined in the Retail segment and was comparable to the prior year in the International segment for the full year of fiscal 2025.
In fiscal 2026, the Company expects net sales growth, which assumes growth across a broad range of categories, increased brand support and innovation, and market-based pricing actions. Risks to this outlook include slowing consumer demand and commodity price fluctuations.
Cost of Products Sold
Fourth Quarter Ended
Fiscal Year Ended
In thousands
October 26, 2025
October 27, 2024
% Change
October 26, 2025
October 27, 2024
% Change
Cost of Products Sold
Cost of products sold for the fourth quarter and full year of fiscal 2025 increased due to higher commodity input costs, mainly for pork bellies, beef, and nuts.
In fiscal 2026, the Company expects raw material costs for beef and nuts to remain above historical averages. Pork costs are anticipated to be lower than fiscal 2025 levels; however, they are expected to remain elevated compared to long-term averages. Inflationary pressures on employee-related, packaging, and production expenses are expected to persist at normalized levels. The Company’s T&M initiative is projected to continue delivering cost savings in fiscal 2026, with a focus on procurement of ingredients and supplies, production-related costs, and logistics.
Gross Profit
Fourth Quarter Ended
Fiscal Year Ended
In thousands
October 26, 2025
October 27, 2024
% Change
October 26, 2025
October 27, 2024
% Change
Gross Profit
Percent of Net Sales
Gross profit as a percentage of net sales decreased in both the fourth quarter and full year of fiscal 2025 compared to the prior year. Each segment experienced a decline in gross profit as a percentage of net sales versus fiscal 2024. All segments benefited from cost savings generated through the Company’s T&M initiative, which were more than offset by inflationary pressures.
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In fiscal 2026, the Company expects gross profit as a percent of net sales to increase compared to the prior year. Incremental cost inflation and unfavorable sales mix pose the largest risks to this outlook.
Selling, General, and Administrative (SG&A)
Fourth Quarter Ended
Fiscal Year Ended
In thousands
October 26, 2025
October 27, 2024
% Change
October 26, 2025
October 27, 2024
% Change
Adjusted SG&A
Percent of Net Sales
Adjusted Percent of Net Sales
SG&A for the fourth quarter of fiscal 2025 decreased due to proceeds from a legal settlement and lower advertising expenses. Adjusted SG&A for the fourth quarter of fiscal 2025 decreased due to lower advertising expenses.
For full year fiscal 2025, SG&A decreased, primarily due to the lapping of antitrust settlements incurred in fiscal 2024, lower advertising spend, and proceeds from a legal settlement recognized in fiscal 2025. These benefits were partially offset by a loss on a non-core sow operation, higher employee-related expenses, and higher external expenses. Adjusted SG&A increased compared to the prior year, as the reduction in advertising spend was more than offset by higher employee-related expenses and higher external expenses.
Advertising investments in fiscal 2025 were $148 million, representing a 9 percent decrease compared to fiscal 2024.
In fiscal 2026, the Company intends to continue investing in its leading brands and for full year advertising expense to increase compared to the prior year.
Equity in Earnings of Affiliates
Fourth Quarter Ended
Fiscal Year Ended
In thousands
October 26, 2025
October 27, 2024
% Change
October 26, 2025
October 27, 2024
% Change
Equity in Earnings of Affiliates
Equity in earnings of affiliates decreased for the fourth quarter and full year of fiscal 2025 as growth for MegaMex Foods was more than offset by a $164 million non-cash impairment charge related to a minority investment in Indonesia.
Goodwill and Intangible Impairment
During the fourth quarter of fiscal 2025, the Company recognized $71 million of intangible asset impairments related to the Planters ® trade name, a private label customer relationship, and the Chi-Chi's ® trade name, all recorded within the Retail segment.
Interest Income, Interest Expense, and Other Income (Expense), Net
Fourth Quarter Ended
Fiscal Year Ended
In thousands
October 26, 2025
October 27, 2024
% Change
October 26, 2025
October 27, 2024
% Change
Interest Income
Interest Expense
Other Income (Expense), Net
Interest income declined in both the fourth quarter and full year of fiscal 2025, primarily as a result of lower average cash balances. Interest expense was comparable during the fourth quarter and decreased for the full year of fiscal 2025. Other expense increased in the fourth quarter of fiscal 2025, primarily due to costs related to the Company's recently announced corporate restructuring plan. For the full year of fiscal 2025, other expense increased due to one-time costs related to the corporate restructuring plan and lower rabbi performance, which were partially offset by lower on-going pension costs.
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Effective Tax Rate
Fourth Quarter Ended
Fiscal Year Ended
October 26, 2025
October 27, 2024
October 26, 2025
October 27, 2024
Effective Tax Rate
The effective tax rate for fiscal 2025 reflected a detriment related to the non-cash impairment charges on a minority investment recorded in the fourth quarter. The fiscal 2024 effective tax rate included a benefit from the purchase of federal energy tax credits. For additional information, refer to Note O - Income Taxes of the Notes to the Consolidated Financial Statements.
The Company expects the effective tax rate in fiscal 2026 to be between 21.5 and 22.5 percent.
SEGMENT RESULTS
Net sales and segment profit for each of the Company’s reportable segments are set forth below. The Company does not allocate deferred compensation, non-recurring expenses associated with the T&M initiative, corporate restructuring plan costs, and interest and other income and expense to its segments when measuring performance. The Company also retains various other income and expenses at the corporate level. Equity in earnings of affiliates is included in segment profit; however, earnings attributable to the Company’s corporate venturing investments and noncontrolling interests are excluded. These items are included below as Net Unallocated Expense and Noncontrolling Interest when reconciling to Earnings Before Income Taxes.
The Company is an integrated enterprise, characterized by substantial intersegment cooperation, cost allocations, and sharing of assets. Therefore, the Company does not represent that these segments, if operated independently, would report the profit and other financial information shown below.
Fourth Quarter Ended
Fiscal Year Ended
In thousands
October 26, 2025
October 27, 2024
% Change
October 26, 2025
October 27, 2024
% Change
Net Sales
Retail
Foodservice
International
Total Net Sales
Segment Profit (Loss)
Retail
Foodservice
International
Total Segment Profit (Loss)
Net Unallocated Expense
Noncontrolling Interest
Earnings (Loss) Before Income Taxes
Retail
Fourth Quarter Ended
Fiscal Year Ended
In thousands
October 26, 2025
October 27, 2024
% Change
October 26, 2025
October 27, 2024
% Change
Volume (lbs.)
Net Sales
Segment Profit
Adjusted Segment Profit
Volume results and net sales growth in the Retail segment in the fourth quarter of fiscal 2025 were driven by the turkey portfolio, Planters ® snack nuts, and Applegate ® products. These gains were partially offset by the strategic decision to discontinue certain offerings of private label snack nuts. Full year fiscal 2025 volume declined, primarily due to contract manufacturing. Full year fiscal 2025 net sales growth was driven by the turkey portfolio, Applegate ® products, the Mexican foods portfolio, and the SPAM ® family of products.
Retail segment profit declined in the fourth quarter and the full year of fiscal 2025, primarily due to non-cash impairment charges. Adjusted segment profit declined for the fourth quarter and full year of fiscal 2025, as net sales growth was more than offset by input cost pressures, mainly due to elevated commodity markets.
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In fiscal 2026, the Company expects modest net sales growth for its Retail segment. Net sales growth is expected to come from a broad range of categories, higher brand support, and market-based pricing actions. Retail segment profit is expected to grow compared to the prior year. Risks to this outlook include slowing consumer demand, unfavorable sales mix, and higher-than-expected operating costs.
Foodservice
Fourth Quarter Ended
Fiscal Year Ended
In thousands
October 26, 2025
October 27, 2024
% Change
October 26, 2025
October 27, 2024
% Change
Volume (lbs.)
Organic Volume (lbs.)
Net Sales
Organic Net Sales
Segment Profit
Organic net sales growth continued to be broad-based in the Foodservice segment in the fourth quarter of fiscal 2025, with significant contributions from the customized solutions business, branded bacon offerings, branded pepperoni, premium prepared proteins, and the Jennie-O ® turkey portfolio, while organic volume was flat. Full year fiscal 2025 organic volume and organic net sales increased due to growth across many categories, with significant contributions from the customized solutions business, Jennie-O ® turkey portfolio, premium prepared proteins, and branded bacon offerings.
Segment profit declined for the fourth quarter of fiscal 2025, as strong net sales growth was more than offset by impacts from a chicken-product recall and the rise in input costs, mainly due to elevated commodity markets. Segment profit declined for the full year of fiscal 2025 as net sales growth was more than offset by the rise in input costs and margin pressures from non-core businesses. The Foodservice segment continued to benefit from an extensive range of solutions-based products, its direct-selling organization, and a diverse channel presence during fiscal 2025.
In fiscal 2026, the Company anticipates year-over-year growth for volume, net sales, and segment profit in its Foodservice segment. Risks to this outlook include a softening of foodservice industry demand, lower-than-expected raw material markets which through market-based pricing can negatively impact net sales, and higher-than-expected operating costs.
International
Fourth Quarter Ended
Fiscal Year Ended
In thousands
October 26, 2025
October 27, 2024
% Change
October 26, 2025
October 27, 2024
% Change
Volume (lbs.)
Net Sales
Segment Profit (Loss)
Adjusted Segment Profit
For the International segment, volume and net sales growth for SPAM ® luncheon meat and the refrigerated portfolio was more than offset by declines in fresh pork exports and competitive pressures in Brazil in the fourth quarter of fiscal 2025. The China market continued to contribute volume and net sales growth in the fourth quarter. Full year fiscal 2025 volume and net sales growth in the China market, the SPAM ® family of products, and the Planters ® brand was partially offset by volume and net sales declines due to competitive pressures in Brazil.
Segment profit for the fourth quarter and full year was significantly impacted by the non-cash impairment of a minority investment in Indonesia. Adjusted segment profit declined in the fourth quarter and full year of fiscal 2025, primarily due to commodity input cost pressures and softness in Brazil.
In fiscal 2026, the Company anticipates year-over-year growth for volume, net sales, and segment profit from its International segment. Risks to this outlook include macroeconomic conditions in multinational markets, cost inflation, and global trade dynamics.
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Unallocated Income and Expense
Fourth Quarter Ended
Fiscal Year Ended
In thousands
October 26, 2025
October 27, 2024
October 26, 2025
October 27, 2024
Net Unallocated Expense
Noncontrolling Interest
For the fourth quarter of fiscal 2025, net unallocated expense increased due to corporate restructuring plan expenses, higher external expenses, and the lapping of the gain on sale of Hormel Health Labs, LLC (Hormel Health Labs) in the prior year. These factors were partially offset by proceeds from a legal settlement.
In addition to the fourth quarter impacts, for fiscal 2025, net unallocated expense increased due to lower interest income, the loss on the sale of a non-core sow operation, and higher expenses related to the T&M initiative. These factors were partially offset by the lapping of prior year legal expenses.
NON-GAAP MEASURES
This report includes measures of financial performance that are not defined by GAAP. The Company utilizes these non-GAAP measures to understand and evaluate operating performance on a consistent basis. These measures may also be used when making decisions regarding resource allocation and in determining incentive compensation. The Company believes these non-GAAP measures provide useful information to investors because they aid analysis and understanding of the Company’s results and business trends relative to past performance and the Company’s competitors. Non-GAAP measures are not intended to be a substitute for GAAP measures in analyzing financial performance. These non-GAAP measures are not calculated in accordance with GAAP and may be different from non-GAAP measures used by other companies.
Transform and Modernize (T&M) Initiative
In the fourth quarter of fiscal 2023, the Company announced a multi-year T&M initiative. In presenting non-GAAP measures, the Company adjusts for (i.e., excludes) expenses for this initiative that are non-recurring, which are primarily project-based external consulting fees and expenses related to supply chain and portfolio optimization (e.g., asset write-offs, severance, or relocation-related costs). The Company believes that non-recurring costs associated with the T&M initiative are not reflective of the Company’s ongoing operating cost structure; therefore, the Company is excluding these discrete costs. The Company does not adjust for (i.e., does not exclude) certain costs related to the T&M initiative that are expected to continue after the project ends, such as software license fees and internal employee expenses, because those costs are considered ongoing in nature as a component of normal operating costs. The Company also does not adjust for savings realized through the T&M initiative as these are considered ongoing in nature and reflective of expected future operating performance.
Gain (Loss) on Sale of Business
In the first quarter of fiscal 2025, the Company sold Mountain Prairie, LLC, a non-core sow operation, resulting in a loss on the sale. In the fourth quarter of fiscal 2024, the Company sold the Hormel Health Labs business, resulting in a gain on the sale. The Company believes the one-time benefit or detriment from these sales, including transaction costs, are not reflective of the Company’s ongoing operating cost structure, are not indicative of the Company’s core operating performance, and are not meaningful when comparing the Company’s operating performance against that of prior periods. Thus, the Company has adjusted for (i.e. excluded) these impacts.
Legal Matters
From time to time, the Company receives proceeds or incurs expenses related to discrete legal matters that the Company believes are not indicative of the Company’s core operating performance, do not reflect expected future operating income or costs, and are not meaningful when comparing the Company’s operating performance against that of prior periods. The Company adjusts for (i.e., excludes) these impacts.
Litigation Settlements
In fiscal 2025 and 2024, the Company entered into settlement agreements with certain plaintiffs in pending antitrust litigation. In the fourth quarter of fiscal 2025, the Company received proceeds in settlement of a separate legal matter. See Note K - Commitments and Contingencies of the Notes to the Consolidated Financial Statements for additional information.
Corporate Restructuring Plan
In the fourth quarter of fiscal 2025, the Company commenced a corporate restructuring plan, the focus of which is to reduce administrative expenses, improve efficiencies, and align the workforce to the Company’s future needs, while enabling continued investment in the Company’s growth. The costs incurred to execute the corporate restructuring plan and the charges incurred under the program are primarily related to severance and employee benefit costs. Because the Company believes the charges incurred under the corporate restructuring plan do not reflect future operating costs and are not meaningful when comparing the Company's operating performance against that of prior periods, the Company adjusts for
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(i.e., excludes) these impacts. See Note R - Restructuring of the Notes to the Consolidated Financial Statements for additional information.
Impairments
In the fourth quarter of fiscal 2025, the Company recorded non-cash impairment charges related to certain intangible assets and an equity method investment. See Note C - Goodwill and Intangible Assets and Note D - Investments in Affiliates of the Notes to the Consolidated Financial Statements for additional information. The Company believes these charges are not indicative of the Company’s core operating performance, do not reflect expected future operating income or costs, and are not meaningful when comparing the Company’s operating performance against that of prior periods. The Company adjusts for (i.e., excludes) these impacts.
The tables below show the calculations to reconcile from the GAAP measures to the non-GAAP measures presented in this Annual Report on Form 10-K. The tax provision expense or benefit of each of the pre-tax items excluded from the Company's GAAP results was computed based on the facts and tax implications associated with each item.
Fourth Quarter Ended
Fiscal Year Ended
in thousands, except per share amounts
October 26, 2025
October 27, 2024
October 26, 2025
October 27, 2024
Cost of Products Sold (GAAP)
Transform and Modernize Initiative (1)
Adjusted Cost of Products Sold (Non-GAAP)
Gross Profit (GAAP)
Transform and Modernize Initiative (1)
Adjusted Gross Profit (Non-GAAP)
SG&A (GAAP)
Transform and Modernize Initiative (2)
Gain (Loss) on Sale of Business
Corporate Restructuring Plan
Litigation Settlements
Adjusted SG&A (Non-GAAP)
Equity in Earnings of Affiliates (GAAP)
Impairment Charges
Adjusted Equity in Earnings of Affiliates (Non-GAAP)
Goodwill and Intangible Impairment (GAAP)
Impairment Charges
Adjusted Goodwill and Intangible Impairment (Non-GAAP)
Operating Income (GAAP)
Impairment Charges
Transform and Modernize Initiative (1)(2)
(Gain) Loss on Sale of Business
Corporate Restructuring Plan
Litigation Settlements
Adjusted Operating Income (Non-GAAP)
Other Income (Expense), Net (GAAP)
Corporate Restructuring Plan
Adjusted Other Income (Expense), Net (Non-GAAP)
Earnings (Loss) Before Income Taxes (GAAP)
Impairment Charges
Transform and Modernize Initiative (1)(2)
Corporate Restructuring Plan
(Gain) Loss on Sale of Business
Litigation Settlements
Adjusted Earnings (Loss) Before Income Taxes (Non-GAAP)
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Fourth Quarter Ended
Fiscal Year Ended
in thousands, except per share amounts
October 26, 2025
October 27, 2024
October 26, 2025
October 27, 2024
Provision for Income Taxes (GAAP)
Impairment Charges
Transform and Modernize Initiative (1)(2)
Corporate Restructuring Plan
(Gain) Loss on Sale of Business
Litigation Settlements
Adjusted Provision for Income Taxes (Non-GAAP)
Net Earnings (Loss) Attributable to Hormel Foods Corporation (GAAP)
Impairment Charges
Transform and Modernize Initiative (1)(2)
Corporate Restructuring Plan
(Gain) Loss on Sale of Business
Litigation Settlements
Adjusted Net Earnings (Loss) Attributable to Hormel Foods Corporation (Non-GAAP)
Diluted Earnings (Loss) Per Share (GAAP)
Impairment Charges
Transform and Modernize Initiative (1)(2)
Corporate Restructuring Plan
(Gain) Loss on Sale of Business
Litigation Settlements
Adjusted Diluted Earnings (Loss) Per Share (Non-GAAP)
Fourth Quarter Ended
Fiscal Year Ended
in thousands, except per share amounts
October 26, 2025
October 27, 2024
October 26, 2025
October 27, 2024
SG&A as a Percent of Net Sales (GAAP)
Transform and Modernize Initiative (2)
Corporate Restructuring Plan
Gain (Loss) on Sale of Business
Litigation Settlements
Adjusted SG&A as a Percent of Net Sales (Non-GAAP)
(1) Comprised primarily of asset write-offs, equipment relocation expenses, and severance related to supply chain and portfolio optimization.
(2) Comprised primarily of project-based external consulting fees.
Organic Volume and Organic Net Sales (Non-GAAP)
The non-GAAP measures of organic volume and organic net sales are presented to provide investors with additional information to facilitate the comparison of past and present operations. Organic volume and organic net sales exclude the impact of the sale of Hormel Health Labs in the Foodservice segment in the fourth quarter of fiscal 2024.
Fourth Quarter Ended
October 26, 2025
October 27, 2024
In thousands
GAAP
GAAP
Divestiture
Non-GAAP Organic
Non-GAAP
% Change
Volume (lbs.)
Retail
Foodservice
International
Total Volume (lbs.)
Net Sales
Retail
Foodservice
International
Total Net Sales
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Fiscal Year Ended
October 26, 2025
October 27, 2024
In thousands
GAAP
GAAP
Divestiture
Non-GAAP Organic
Non-GAAP
% Change
Volume (lbs.)
Retail
Foodservice
International
Total Volume (lbs.)
Net Sales
Retail
Foodservice
International
Total Net Sales
Adjusted Segment Profit (Non-GAAP)
Fourth Quarter Ended
October 26, 2025
October 27, 2024
In thousands
GAAP
Non-GAAP Adjustments (1)
Non-GAAP
GAAP
Non-GAAP Adjustments (2)
Non-GAAP
Segment Profit (Loss)
Retail
Foodservice
International
Total Segment Profit (Loss)
Net Unallocated Expense
Noncontrolling Interest
Earnings (Loss) Before Income Taxes
(1) Retail and International segment profit (loss) adjustments in the fourth quarter of fiscal 2025 were due to non-cash impairment charges. Net Unallocated Expense adjustments were comprised of non-recurring T&M initiative costs, corporate restructuring plan charges, and a favorable litigation settlement.
(2) Net Unallocated Expense adjustments in the fourth quarter of fiscal 2024 were comprised of non-recurring T&M initiative costs and the gain on the sale of Hormel Health Labs.
Fiscal Year Ended
October 26, 2025
October 27, 2024
In thousands
GAAP
Non-GAAP Adjustments (1)
Non-GAAP
GAAP
Non-GAAP Adjustments (2)
Non-GAAP
Segment Profit (Loss)
Retail
Foodservice
International
Total Segment Profit (Loss)
Net Unallocated Expense
Noncontrolling Interest
Earnings Before Income Taxes
(1) Retail and International segment profit (loss) adjustments in fiscal 2025 were due to non-cash impairment charges. Net Unallocated Expense adjustments in fiscal 2025 were comprised of non-recurring T&M initiative costs, corporate restructuring plan charges, the loss on sale of Mountain Prairie, LLC, and litigation settlements.
(2) Net Unallocated Expense adjustments in fiscal 2024 were comprised of non-recurring T&M initiative costs, litigation settlements, and the gain on the sale of Hormel Health Labs.
Forward-looking GAAP to Non-GAAP Measures
Below shows the calculations to reconcile from the estimated fiscal 2026 GAAP measures to the corresponding estimated adjusted non-GAAP measures.
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Fiscal 2026 Outlook - Adjusted Diluted Earnings per Share (Non-GAAP)
The non-GAAP measure of adjusted diluted earnings per share excludes estimated charges associated with the T&M initiative, corporate restructuring plan, and other estimated non-recurring items. The Company’s strategic investments in the T&M initiative are expected to cease at the end of the investment period. T&M charges, corporate restructuring plan expenses, and other estimated non-recurring items are not expected to recur in the foreseeable future and are not considered representative of the Company’s underlying operating performance.
In fiscal 2026, the Company expects:
• Diluted earnings per share (GAAP) in the range of $1.29 to $1.39
• Adjustments for the T&M initiative of $0.06 to $0.07
• Adjustments for corporate restructuring plan-related charges of $0.01
• Adjustments related to other (1) non-recurring items of $0.05 to $0.06
Resulting in an adjusted diluted earnings per share range (non-GAAP) of $1.43 to $1.51.
(1) Includes estimated one-time consulting expenses related to a former executive officer and estimated non-recurring impacts related to the anticipated sale of the Justin’s ® branded business.
Supplemental Financial Measures (Non-GAAP)
EBIT and EBITDA (Non-GAAP)
The Company provides earnings before interest and taxes (EBIT) and earnings before interest, taxes, depreciation, and amortization (EBITDA) because it believes these measures are useful to management and investors as indicators of operating performance net of non-operating income and expenses, and because they are commonly used to benchmark the Company’s performance.
Fiscal Year Ended
In thousands
October 26, 2025
October 27, 2024
EBIT (Non-GAAP):
Net Earnings Attributable to Hormel Foods Corporation
Plus: Income Tax Expense
Plus: Interest Expense
Less: Interest Income
Less: Other Income (Expense), Net
EBIT (Non-GAAP)
EBITDA (Non-GAAP):
EBIT per above
Plus: Depreciation and Amortization
EBITDA (Non-GAAP)
LIQUIDITY AND CAPITAL RESOURCES
When assessing its liquidity and capital resources, the Company evaluates cash and cash equivalents, short-term and long-term investments, income from operations, and borrowing capacity.
Cash Flow Highlights
Fiscal Year Ended
In millions
October 26, 2025
October 27, 2024
Cash and Cash Equivalents at End of Period
Cash Provided by (Used in) Operating Activities
Cash Provided by (Used in) Investing Activities
Cash Provided by (Used in) Financing Activities
Increase (Decrease) in Cash and Cash Equivalents
Cash and cash equivalents decreased $71 million during fiscal 2025 due to higher costs and elevated inventory levels. Cash provided by operating activities along with existing cash on hand was sufficient to cover dividend payments and capital expenditures during fiscal 2025. The Company repaid a portion of long-term debt by using existing cash on hand and the proceeds from new long-term debt issued in fiscal 2024. Additional details related to significant drivers of cash flows are provided below.
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Cash Provided by (Used in) Operating Activities
• Cash flows from operating activities were impacted by changes in operating assets and liabilities and lower net earnings.
– In fiscal 2025, inventory increased $172 million primarily due to higher raw material costs, strategic inventory build for certain categories, and recovery of snack nuts inventory levels following the production disruptions at the Suffolk, Virginia manufacturing facility. The $95 million decrease in fiscal 2024 was due to a better alignment of product levels with customer demand as well as less turkey and associated feed supplies.
– In fiscal 2025, accounts receivable decreased $33 million due to the timing of sales and estimated impact from the chicken product recall. In fiscal 2024, accounts receivable was comparable to the prior year, decreasing $2 million.
– Accounts payable and accrued expenses decreased $69 million in fiscal 2025 primarily due to the payment of legal settlements and the timing of payments which was partially offset by feed and livestock payment deferrals. In fiscal 2024, accounts payable and accrued expenses decreased $27 million related to the timing of payments which was partially offset by higher employee-related and promotional expenses.
Cash Provided by (Used in) Investing Activities
• Capital expenditures were $311 million and $256 million in fiscal 2025 and 2024, respectively. Significant projects ongoing during fiscal 2025 and fiscal 2024 were for capacity expansions in Barron, Wisconsin and at the Jiaxing, China facility. Additional projects during fiscal 2025 included manufacturing equipment upgrades in Willmar, Minnesota and investments in data and technology.
• Proceeds from the sale of business were $13 million during fiscal 2025, primarily from the sale of the Company’s equity interest in Mountain Prairie, LLC. In fiscal 2024, the Company received $25 million from the sale of Hormel Health Labs.
Cash Provided by (Used in) Financing Activities
• Cash dividends paid to the Company’s shareholders are an ongoing financing activity for the Company with payments totaling $633 million in fiscal 2025 and $615 million in fiscal 2024. The annualized dividend rate was $1.16 per share in fiscal 2025, compared to $1.13 per share in fiscal 2024.
• The Company paid $950 million of its senior unsecured notes upon maturity on June 3, 2024.
• Proceeds from the issuance of long-term debt were $498 million in fiscal 2024, resulting from the Company's issuance of senior unsecured notes with an aggregate principal amount of $500 million.
Sources and Uses of Cash
The Company believes its balanced business model, with diversification across raw material inputs, channels, and categories, provides stability in ever-changing economic environments. The Company maintains a disciplined capital allocation strategy and uses a waterfall approach, which focuses first on core uses of cash, such as capital expenditures to maintain facilities, dividend returns to investors, mandatory debt repayments, and fulfillment of pension obligations. Next, the Company looks to strategic items in support of growth initiatives, such as other capital projects, acquisitions, additional dividend increases, and working capital investments. Finally, the Company evaluates opportunistic uses, including incremental debt repayment and share repurchases.
The Company believes its anticipated income from operations, cash on hand, borrowing capacity under the current unsecured revolving credit facility, and access to capital markets will be adequate to meet all short-term and long-term commitments. The Company continues to look for opportunities to make investments and acquisitions that align with its strategic priorities. The Company maintains multiple liquidity sources, including its ability to issue debt, which supports strategic investments and acquisitions.
Dividend Payments
The Company remains committed to providing returns to investors through cash dividends on its common stock. The Company has paid 389 consecutive quarterly dividends since becoming a public company in 1928. On November 24, 2025, the Board of Directors authorized a quarterly dividend for the first quarter of fiscal 2026 of $0.2925 per share, a 1% increase from the prior year.
Capital Expenditures
Capital expenditures are allocated to required maintenance and growth opportunities based on the needs of the business. Capital expenditures supporting growth opportunities in fiscal 2026 are expected to focus on projects related to infrastructure, new data and technology, and equipment upgrades. Capital expenditures for fiscal 2026 are estimated to be $260 million to $290 million.
Debt
As of October 26, 2025, the Company’s outstanding debt included $2.9 billion of fixed rate unsecured senior notes due in fiscal 2027, 2028, 2030, and 2051 with interest payable semi-annually. During fiscal 2025, the Company made $73 million of interest payments, and the Company expects to make $73 million of interest payments in fiscal 2026 on these notes. See Note M - Long-term Debt and Other Borrowing Arrangements of the Notes to the Consolidated Financial Statements for additional information.
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Borrowing Capacity
As a source of short-term financing, the Company maintains a $750 million unsecured revolving credit facility. The maximum commitment under this credit facility may be further increased by $375 million upon the satisfaction of certain conditions. Extensions of credit under the facility may be applied by the Company to refinance existing indebtedness and for working capital and other general corporate purposes, including acquisition funding, and may be made in the form of revolving loans, swing line loans, and letters of credit. The lending commitments under the facility are scheduled to expire on March 25, 2030, at which time the Company will be required to pay in full all obligations then outstanding. As of October 26, 2025, the Company had no outstanding borrowings under this facility.
Debt Covenants
The Company’s debt agreements contain customary terms and conditions including representations, warranties, and covenants. These debt covenants limit the ability of the Company to, among other things, incur debt for borrowed money secured by certain liens, or engage in certain sale and leaseback transactions, and the covenants require the Company to maintain certain consolidated financial ratios. As of October 26, 2025, the Company was in compliance with all covenants in its debt agreements and expects to maintain compliance in the future.
Cash Held by International Subsidiaries
As of October 26, 2025, the Company’s international subsidiaries held $218 million of cash and cash equivalents. During the third quarter of fiscal 2025, the Company repatriated $44 million in cash from an international subsidiary and recognized foreign withholding taxes on the one-time distribution. The Company maintains all undistributed earnings as permanently reinvested. The Company evaluates the balance and uses of cash held internationally based on the needs of the business.
Share Repurchases
The Company is authorized to repurchase 3,677,494 shares of common stock as part of an existing plan approved by the Company’s Board of Directors. Under the share repurchase authorization, the Company may repurchase shares periodically, depending on market conditions and other factors, and may do so in open market purchases or privately negotiated transactions. The share repurchase authorization has no expiration date. The Company did not repurchase any shares of stock during fiscal 2025. The Company continues to evaluate share repurchases as part of its capital allocation strategy.
Contractual Obligations
The Company’s material cash commitments as of October 26, 2025, are as follows:
In millions
Payments Due by Periods
Total
Less than 1 year
1-3 years
3-5 years
More than 5 years
Purchase Commitments (1)
Debt Repayments (2)
Interest Payments on Long-term Debt (2)
Pension & Other Postretirement Benefit Payments (3)
Lease Obligations (4)
Other Commitments (5)
(1) The Company commits to purchase quantities of livestock, grain, and other raw materials to ensure a steady supply of production inputs. The Company uses hedging programs to manage price risk associated with a portion of the future grain and hog commitments. The purchase commitments listed above do not reflect the impact of the hedging instruments that manage the risk of fluctuating commodity markets. See Note G - Derivatives and Hedging and Note K - Commitments and Contingencies of the Notes to the Consolidated Financial Statements for additional information.
(2) As of October 26, 2025, the Company’s outstanding debt included unsecured senior notes due in fiscal 2027, 2028, 2030, and 2051. The Company is required by certain covenants in its debt agreements to maintain specified levels of financial ratios and financial position. See Note M - Long-term Debt and Other Borrowing Arrangements of the Notes to the Consolidated Financial Statements for additional information.
(3) Represents pension and other postretirement benefit payments related to the Company’s unfunded defined benefit plans. Benefit payments reflect expectations for the next ten years as estimates are not readily available beyond that point. See Note H - Pension and Other Postretirement Benefits of the Notes to the Consolidated Financial Statements for additional information.
(4) See Note L - Leases of the Notes to the Consolidated Financial Statements for additional detail. Lease payments exclude $6 million of legally binding minimum lease payments for leases signed but not yet commenced.
(5) Includes obligations related to infrastructure improvements supporting various manufacturing facilities, a media advertising agreement, and the construction and lease of an aircraft. Other Commitments excludes $38 million for a 20-year infrastructure improvement agreement entered into subsequent to the end of the fiscal year.
Off Balance Sheet Arrangements
As of October 26, 2025, the Company had $48 million of standby letters of credit issued on its behalf. The standby letters of credit are primarily related to the Company’s self-insured workers' compensation programs. This amount includes revocable standby letters of credit totaling $3 million for obligations of an affiliated party that may arise under workers' compensation claims. Letters of credit are not reflected on the Consolidated Statements of Financial Position.
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During fiscal 2025, the Company entered into a purchase agreement related to the construction and lease of a corporate aircraft. As part of the agreement, a third party will make progress payments to the supplier on the Company's behalf. In exchange, the Company expects to enter into a lease arrangement with the third party once the aircraft is delivered. Progress payments made by the third party are subject to reimbursement through a promissory obligation. As of October 26, 2025, $11.5 million of the approximately $28.7 million commitment has been financed by the third party. The Company expects to take possession of the aircraft in fiscal 2027.
CRITICAL ACCOUNTING ESTIMATES
Management’s discussion and analysis of financial condition and results of operations is based upon the Company’s consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires the Company to make estimates, judgments, and assumptions that can have a meaningful effect on the reporting of consolidated financial statements. See Note A - Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements for additional information.
Critical accounting estimates are defined as those reflective of significant judgments, estimates and uncertainties, which may result in materially different results under different assumptions and conditions. The Company believes the following are its critical accounting estimates:
Trade Promotions
Description: The Company promotes products through consumer incentives and trade promotions. These promotional programs include, but are not limited to, discounts, slotting fees, coupons, rebates, and in-store display incentives. Customer trade promotion and consumer incentive activities are recorded as a reduction to revenue and a corresponding accrued liability based on amounts estimated as variable consideration.
Judgments and Uncertainties: The Company estimates variable consideration associated with promotional programs using the expected value method to determine the total expected consideration. Estimating variable consideration requires judgment and is based largely on an assessment of anticipated performance informed by historical experience, expected participation, and current market trends.
Sensitivity of Estimate to Change: The liability relating to these promotional activities is based on a review of the outstanding contracts for which performance has taken place, but which remain unpaid. As of October 26, 2025, the Company had trade promotion liabilities of $85.9 million recorded in Accrued Marketing Expenses.
Income Taxes
Description: The Company records income taxes in accordance with the liability method of accounting. Deferred taxes are recognized for the estimated taxes ultimately payable or recoverable based on enacted tax law. Changes in enacted tax rates are reflected in the tax provision as they occur.
Judgments and Uncertainties: The Company computes its provision for income taxes based on the statutory tax rates and tax planning opportunities available to it in the various jurisdictions in which it operates. Judgment is required in evaluating the Company’s tax positions and determining its annual tax provision.
Sensitivity of Estimate to Change: While the Company considers all of its tax positions fully supportable, the Company is occasionally challenged by various tax authorities regarding the amount of taxes due. The Company recognizes a tax position in its financial statements when it is more likely than not the position will be sustained upon examination, based on its technical merits. The position is then measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. A change in judgment related to the expected ultimate resolution of uncertain tax positions will be recognized in earnings in the quarter of such change. As of October 26, 2025, the Company had $20.2 million of unrecognized tax benefits, including estimated interest and penalties, recorded in Other Long-term Liabilities.
Goodwill and Other Indefinite-Lived Intangibles
Description: Other indefinite-lived intangible assets primarily include trade names obtained through business acquisitions which are originally recorded at their estimated fair values at the date of acquisition. Goodwill is the residual after allocating the purchase price to net assets acquired and is allocated across the Company’s reporting units: Retail, Foodservice, and International. Goodwill and indefinite-lived intangible assets are not amortized but tested annually for impairment, or more frequently if impairment indicators arise. If the carrying value of the reporting unit or indefinite-lived intangible asset exceeds the estimated fair value, it is considered impaired which requires a reduction to earnings. See Note A - Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements for additional details regarding the Company’s procedures.
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Judgments and Uncertainties: Determining whether impairment indicators exist and estimating the fair value of the Company’s goodwill reporting units and indefinite-lived intangible assets for impairment testing requires significant judgment. Indefinite-lived trade names are evaluated for impairment using an income approach utilizing the relief from royalty method. Significant assumptions include royalty rate, annual projected revenue, discount rate, and estimated long-term growth rate. Estimating the fair value of goodwill reporting units using the discounted cash flow model requires management to make assumptions and projections of future cash flows, revenues, earnings, discount rates, long-term growth rates, and other factors. While sensitivity analysis may be provided for individual assumptions, such analysis may not reflect the combined effect of changes simultaneously impacting multiple assumptions.
Sensitivity of Estimate to Change: The assumptions used to assess impairment consider historical trends, macroeconomic conditions, and projections consistent with the Company’s operating strategy. Changes in these estimates can have a significant impact on the assessment of fair value which could result in material impairment losses. Goodwill reporting units and indefinite-lived intangible assets with less than a 20 percent excess of estimated fair value over carrying amount are considered at heightened risk of impairment.
During the fourth quarter of fiscal 2025, the Company elected to perform a quantitative assessment of goodwill . No goodwill impairment charges were recorded as a result of the testing. The estimated fair value for the Retail and Foodservice reporting units exceeded the calculated carrying value by more than 20 percent. The International reporting unit, with a goodwill carrying value of $258.9 million as of October 26, 2025, was identified as being at heightened risk of impairment. A 10 percent decline in projected cash flow or 100 basis-point increase in the discount rate for any reporting unit would not result in a material impairment.
During the fourth quarter of fiscal 2025, the Company also elected to perform quantitative impairment testing for indefinite-lived intangible assets. As a result of this testing, impairments were recorded on the Planters ® and Chi-Chi's ® trade names for $59.1 million and $2.9 million, respectively. Additionally, the Justin's ® trade name was identified as being at heightened risk of impairment. Fair value estimates used in impairment testing for the Justin's ® trade name assumed continued use and did not incorporate potential changes in ownership structure (see Note B - Acquisitions and Divestitures of the Notes to the Consolidated Financial Statements). After the fiscal 2025 quantitative assessments, the carrying value of indefinite-lived intangible assets at heightened risk for impairment, including the assets impaired, totaled $683.3 million. For indefinite-lived intangible assets not at heightened risk of impairment, a 10 percent decline in forecasted revenue or 100 basis-point increase in the discount rate would not result in a material impairment.
Pension and Other Postretirement Benefits
Description: The Company sponsors several defined benefit pension and postretirement health care benefit plans and recognizes the associated expenses, assets, and liabilities.
Judgments and Uncertainties: In accounting for these employment costs and the associated benefit obligations, management must make a variety of assumptions and estimates including mortality rates, discount rates, compensation increases, expected return on plan assets, health care cost trend rates, and interest crediting rates. The Company considers historical data as well as current facts and circumstances when determining these estimates. Expected long-term rate of return on plan assets is based on fair value, composition of the asset portfolio, historical long-term rates of return, and estimates of future performance. Mortality and discount rates used are based on actuarial tables elected at each fiscal year-end. The Company uses third-party specialists to assist in the determination of these estimates and the calculation of certain employee benefit expenses and the outstanding obligation.
Benefit plan assets are reported at fair value. Due to the lack of readily available market prices, fund managers value private equity investments using models that include a combination of available market data and unobservable inputs that consider earnings multiples, discounted cash flows, and other qualitative and quantitative factors. Other benefit plan investments are measured at net asset value (NAV) per share of the fund’s underlying investments as a practical expedient.
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Sensitivity of Estimate to Change: The assumed discount rate, expected long-term rate of return on plan assets, rate of future compensation increase, interest crediting rate, and the health care cost trend rate have a significant impact on the amounts reported for the benefit plans. For the year ended October 26, 2025, the Company had $1.4 billion and $172.6 million in pension benefit obligation and postretirement benefit obligation, respectively. For fiscal 2026, the Company expects pension benefit costs of $32.3 million and postretirement benefit costs of $7.7 million. A one-percentage-point change in these rates would have the following effects:
One-Percentage-Point
Benefit Cost
Benefit Obligation
In millions
Increase
Decrease
Increase
Decrease
Pension Benefits
Discount Rate
Expected Long-term Rate of Return on Plan Assets
Rate of Future Compensation Increase
Interest Crediting Rate
Postretirement Benefits
Discount Rate
Health Care Cost Trend Rate
As of October 26, 2025, the Company had $82.3 million of private equity and real estate funds and $685.8 million of investments carried at NAV. These valuations are subject to judgments and assumptions of the funds which may prove to be incorrect, resulting in risks of incorrect valuation of these investments. The Company seeks to mitigate these risks by performing various procedures, such as comparing the expected returns based on appropriate benchmarks to reported market values and performing price tests on certain underlying investments. Additionally, a look back comparison of values from audited financial statements to unaudited statements and roll forward calculations of known cash activity are completed to obtain further assurance of reporting accuracy. These procedures cover a majority of the value held in the private equity and NAV investments for each investment type. Variances larger than specified thresholds are investigated further to verify the reported values are reasonable.
See Note H - Pension and Other Postretirement Benefits of the Notes to the Consolidated Financial Statements for additional information.
