Hormel Foods (HRL) 2 Jun 222022 Q2 Earnings call transcript

Good morning, and welcome to the Hormel Foods Second Quarter 2022 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to David Dahlstrom, Director of Investor Relations. ahead. go Please

Eastern. to second Welcome results Foods call X:XX conference morning Good of the fiscal the a.m. around opened, quarter the our XXXX. for before morning. market Hormel We this released

our Vice you Jacinth If you did On and will quarter will under provide open be the business a it President receive company's President of second results a a following outlook. our remainder hormelfoods.com Chief Smiley, call questions our review of at Officer; Investors Jim for and and commentary can Snee, detailed the Officer. on provide the results, website initiatives remarks. Chairman The the second Financial further line perspective Jacinth copy on the on an the Jim and find of not update Executive release, and section. will XXXX. Jacinth's today Executive financial Chief of fiscal is on and Board, quarter

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statement. Before need reference Harbor we I Safe started, get the to

be and materially hormelfoods.com from be in quarterly XX-K to XX-Q, made the under will comments annual most refer report Investors expressed today will may at be can those Form section. of on our on differ the actual implied Some statements Please which And by forward-looking. or reports accessed making. we the Form recent results

include corporate the detailed to and of non-GAAP volume located our with is note website. on information on organic uses better measures and in performance. operating provide please release our understanding investors These net organic Discussion results non-GAAP company sales. Additionally, the company's a non-GAAP press

the call turn Snee. on can our to outlook. posted second now This quarter on and supplemental website, be We the information Jim found over will have also investor I our investor.hormelfoods.com.

Thank everyone. you, David. Good morning,

and to bottom most in continues want express many for matter successfully their this drive results entire and history company the the across delivered focus. our top line like team dedication the Our my some operating commitment gratitude during of determination There I as And to growth difficult we incredible would company's strong to team quarter. to I conditions to X navigate ability again acknowledge results. are XXX-year last of specifically who quarter. examples the showed and teams our

to the want the our within severe First, supply team. Store plan facilities also working future safety provide the flux, interruptions, all by communication in business which and compounded hours chain. I to day-to-day mobilized HPAI, into recognize of to quickly for impacted confirmed our was and And operating supply pathogenic weeks This of protect course was the transparent customers business. May, over our Jennie-O the many several turkey operators early weather This and influenza, or In team long effectively while in Turkey crisis mode. highly March, involved avian chain.

the to team come. some for Jennie-O of I exceedingly commitment face demanding quarter, in resolve and Our the them thank lot work yet unwavering through the this went and showing for situations. they've a work accomplished

times. China Second, facilities. their forced for our truly I execution lockdowns X of applaud the partial would to in Strict closure unprecedented incredible like during manufacturing of our team

the to of improved retail widespread direct days teams promotional facilities Cluster our anticipation our growth. second responded and categories what drove Simultaneously, and resourcefulness China The the and third the continue as pricing was of the quarter, for consecutive first remained model another to of earnings commendable margin team business uncommon. and are truly sales our its compared our team live in makes example for all team robust working. gains compete. our lockdowns. leading entire sales operational our in and an quarter, which levers normal brand long-term brands of advertising, to they balanced product and In quarter delivered that XX consecutive ingenuity, to inside in managing marketing realize sales in we of Across record our have portfolios, by our the ensure the members force, sales sleep and to displayed until diversified of volunteered quarter resume. building our increased Some operator indication production well and outstanding our ensure sixth plants remained innovation. to Operating could grit of and also the channels, demand health investments brands brands benefits company

volumes. meaningful our recovery quarter, and staffing capacity our made also progress We chain production in and during across inventories contributed the in supply investments to improved rates, where fill levels

flexible important balanced, other diversified business able most been volatility and to has market fluctuations and withstand business create our of events. and One strategies a to unforeseen model,

our results others balance our industry. the first Foods clearly second in and quarter into strategy differentiate our from bring As Hormel business to demonstrate, half continues to

entrees, at Applegate. XX% in elevated Table demand demand our From WHOLLY, Hormel the top are Columbus drove leaned and the of perspective, elevated ways our through businesses, Gatherings, both to its we see the growth In internationally, stages for heavily foodservice and growing to continued and retail. on and retail Hormel, leading the initial including we our One channel meet to growth. Square of industry with do businesses In pandemic, we diversification. through from domestically refrigerated our a is this SPAM, Jennie-O, the environment, quarter recovery brands, the current drive second we retail SKIPPY, continuing line

investments above the our growth in channel pay seeing also are and solid with We sales dividends, share gains. e-commerce category

growth. sales future We of IRI, our last sales year. constitutes measured during to leadership quarter, sales the Growth a our in channel growth balanced, extremely compared Refrigerated demonstrated our Foods was and both XX% important Turkey with part Store. foodservice strength in again increased position E-commerce quarter, X% As driving of with strong tracked XX% April. for an Jennie-O the and the second ending around by of retail is

wins have made the and enabling scale in and retail Growth substantial store Planters trays. brings and nuts peanut Justin's Planters the in the our expanded this Columbus SKIPPY part products. placements channel, bacon Black from bite, Label and We egg of other Gatherings snacking brand in the businesses Recent convenience in is include company. core trays, party the Chili, fast-growing to items due Hormel snack to gains channel SPAM, butter, space large Compleats,

Bacon be the our used in BRAISED bacon as items stores balance to are items premium e-commerce even X pre-cooked an we've in Internationally, foodservice barbecue, company. in to Additionally, placed and retail such FIRE growth channel. more foodservice. the continuing important prepared Like make of future bring we AUSTIN convenience this to progress part provide channel, BLUES Meats to and

a in business great of China example is Our this.

softness we to again experienced the due quarter, This in restrictions. demand foodservice country's COVID-related

an grocery internationally perspective, market and protein decline serve Our foodservice businesses all premium, as from quarter, outstanding programs those served supply excellent strong channel. our in Mainstream Likewise, for and and well was Refrigerated team its as ability SPAM us help expenses avocados, freight in From volume conditions our quickly products, the to inflation segment earnings to which of for resources SKIPPY able more Store security effectively adjust items continue team costs to to had meet Turkey Foods to And packaging. to such its us higher that results. and our the and strategy to future. for pivoted has deliver lockdowns. both to also than will businesses surged. an is Sales the domestically Jennie-O redirect and segments were current a into to food price certain growth. These retail foodservice and well able earnings offset experiencing absorbed significantly higher inputs, foodservice

We portfolio integration did business The and of the the and business in during all another perform nuts volatile been the these round the cycles of conditions we help mitigate as ability past continued our balance. actions business this to quarter. the focus our market economic in across on to balanced driver long-term into announced our model We remain pricing balanced key of behind quarter, grocery will, model our our continues our We snack end our success high but recent a Planters pressures, meantime, growth. lean inflationary have aspects has at the through completed expectations. second confident withstand and successfully of to

our During the lower chain. control February, in transitioned we entire network rates experienced into logistics inventory assumed and of as supply period cutover the fully fill we

coming While expect months. we improvements consumption and levels continued sales improvement on have customer in to show data this a impact have the and service seen did in short-term consumption,

excellent the we am owning the As made last from one progress our have I of of commitments on Planters June. proud we business, year celebrate

and Planters invested nuts the have We core brands. heavily behind

prices it in virus, Jennie-O the point have a against poultry quarter. uncertain turkeys trading this high supply in we supply the to lower business HPAI to synergies the meaningful supply as our compared industry the We to first company beginning After are capture ahead to the XX% have meat $X what than to risen on supplies Breast HPAI. to a leveraged Turkey Turkey Store On the protection profit note, biosecurity risks an track XXXX, already number additional implemented is excellent entertaining. period $X.XX. facing chain higher quarter, gaps of Jennie-O in to we significant impact growth appears due identified provided that from and integrated is all-time company-managed previous the snacking XXXX have months, quarter team levels the large since its amplify the than including scale impacts coming vertically in to date the expected currently over an and to measures any on of Store XXXX, has experienced Similar positive diligence. is in impacted third second the chain and our in above the during during have And

with in increases and seen soybean cost significantly early other more up as perspective, have and XXX% From markets are prices a than as corn meal of May. respectively, higher, We turkey feed XX%, well.

risk is later also there XX% weather facilities to The company feed to spring. Midwest production prices labor at XXXX. wet manufacturing more on than due compared this has upside the increased plantings cost to with average cold and across further Additionally, of

our caused to supply Our operational managing adapting team the across chain, the through turkeys of challenges the conditions. is by outbreaks the business to actions changing appropriate and taking health protect

our made Turkey progress While of transformation. through Store business Jennie-O on simultaneously impacts the managing team the HPAI,

fiscal million closed transferred to Turkey broader employees Store Hormel by $XX our to $XX to larger the facility our Willmar. sustainable supply is and to business Foods our XXXX. aligned integrate we and in growth. successfully quarter, synergies our consolidate Benson Jennie-O of of all, We and I also long-term model want customers, great functions, Above cost doing fulfill by to second changing needs and annually SG&A achieve newer provide the One Avenue a on track is the and focused business drive creating ESG the million team to work team is that operators During supply 'XX into better the remain on the the manufacturing commitments XX facility on the chain to update approximately an consumers XXX goals. drive chain approximately

Fortune XXXX. During were Justin's Environmental plastic. use to we track that use on with end are less that We jars XXX Agency's our ranking XXX% of list environmental, one May, by America's transitioning U.S. energy is Best Newsweek. social we brand ranked for by the renewable of Corporate recognizes the We were second And largest Protection #XX quarter, sourcing and we transparency of XXth match the Most announced to governance on users. XX% the performance. in domestic the time, of This named green Companies Citizens named the Trustworthy of XXX outstanding by XBL Media. power We were and One announced

a to continue named top corporate citizen. We are and honored proud be to

can This participate want the hired for to from paid success and the of Program. future recent internships. This our another generational Pathways College a be company. program Community week, share Inspired why yet summer we marks the dependents their program the in I first employees, for this to Lastly, our believe example story from we of Free individuals

the guidance We share. $XX.X earnings $X.XX narrowing are to $X.XX and sales per reaffirming net $XX.X range our range billion of sales of between and billion

strong pricing a business. year expect we perspective, earnings We Foods an From actions. improvements our demand We supply the in capacity brands a the pricing and our from sales ability strategic Refrigerated given our to deliver in actions quarter across guidance are Grocery anticipate channels, across robust international chain, and foodservice for fourth our confident improvement our investments retail, in finish taken portfolio. to Products our from from

the International are current We lockdowns COVID-related Other impact segment, chain Turkey and the export logistics China. in navigating and HPAI factors and Jennie-O Store of challenges including supply external on the affecting

the have challenges drivers more this time, Our relating to Jacinth At in to call and information to turn actions place drive manage financial provide Smiley these through outlook. for teams and will company. results our over to quarter color to the I on key the discuss

was and decreased offset This increase. to XX% Planter actions year from business last last strength snack to year. compared SPAM Thank Jim. last cost $X.X as Refrigerated We strong investments everyone. addition from X.X% a sales Organic nuts support of quarter sales the margin management. disciplined XX% addition in morning, year XX.X% XX.X% the first profit the record advertising due million SG&A continued of year. improvement to to in business Gross to quarter and This billion, sales second by you, Good to We the a sales Columbus in compared another increase of expenses and to increased delivered year, increased compared quarter. to investments growth nuts pressures. to the strategic percent pricing and in last Planters, of snack driven compared Jennie-O advertising our of X.X% SG&A brand. a store, was increased XX% Foods, brand. the and profit last increased Planters $XX XX%. the higher XX.X% speaks growth Turkey Gross our inflationary

increased expense XX% XX.X% the margin million. Operating quarter. $XXX XX.X% per Operating increased in increased margins For XX.X% Operating from year. were to $X.XX compared the share. to XX% advertising income approximately or quarter, last sequentially by first

operating due with trust, increased results tracks mitigating improvement rabbi expense we our Interest $X and experienced. anticipated, to we equity last inflation generally progress compared lower As made significant primarily the to Interest in million delivered quarter-over-quarter in income margin declined and investment continued million which from market. $X year.

for for increased period this stock from was XX.X% rate Our the exercises. quarter, The XX.X% last effective down to due from lower primarily benefits was tax rate year. the option same quarter tax

Our effective of net last a outlook. The per share $X.XX $X.XX, from increase XX.X% diluted all to these factors tax the earnings range guidance year. XX.X% result unchanged was is of prior of XX% over

key expenditures XX% first $XXX flows. flow second in of quarter Turning $XXX has to Operating XXXX half to increased million. Capital quarter last been increases. Strong growth the million for million. XX% year. cash were the these Operating cash to for compared million flow increased the second cash to earnings catalyst a $XX to $XX

our During raw the including in quarter, pepperoni we in new and Foods expansion at benefited Austin. plant in Nebraska from Papillion our investment plant capacity, bacon

XXXth share. half. target fiscal paid shares unchanged is of May Our consecutive We effective XX for repurchase quarterly at not $XXX did XXXX annual per an $X.XX at capital expenditures our We million. first the rate dividend during any

We will repurchase valuation. our shares opportunistically internal based on

We an to remain investment-grade rating XXXX. payment first year. the EBITDA deleveraging back related X.Xx the of begin acquisition to Xx to We committed to by deleveraging make and our expect in and to half Planters our maintaining

results. considerable to increased primarily organic aligning decision value-added low-margin our supply was to Sales unable reducing of Foods improved production Foods XX% saw to profit pork Planters restructure growth increased and Planters Grocery the due and Turning decline and Foods Planters pork XX%. nuts company on profit. volume to and Segment Refrigerated drove supply related up volume X%. prices many sales million Grocery from commodity better quarter, as contribution. availability second quarter. offset sales labor XX% profit as XXX%. in profit a the and MegaMex. agreement, results the offset and declined improvement across in Turkey had Store with Products and Refrigerated sale segment's for immaterial results profit constraint. production International quarter in sales volume nearly helping organic snack additional decreased $XXX due segment growth. the areas meaningful increased segment declines another XX%. more Foods Refrigerated commodity and to foodservice than to The benefited resources and in volume the of HPAI was Refrigerated declined and up The the XX% Store addition Jennie-O substantial in our Products pressures Other. XX% improvement business chain capacity, an excellent by had business. and lower in increased the Jennie-O from improved profit offset our X% organic Segment strategic increased business and to increased X% growth segment to Organic segment Higher impact Turkey sales inflationary the exposure volume

organic was Segment segment, sales volume business. large For in commodity results lower profit with pork declined the new the lower in did and and associated volume China to overcome due profit not the supply down as declined X% XX% company's export Other growth from part International XX%, agreement.

We volatility continue to and battle cost extreme input inflation.

our We all packaging have including and and labor. freight input, supplies, across raw seen increases materials, logistics and

We as supply more certain above structural remained into nature. year and ago balance generally be labor, historical expect demand have come in costs, as such to anticipate a markets and and a stabilization and more elevated levels. Protein

context, average. to more X% second For than X-year the measured, were year the composite higher pork the as than cutout, prices XX% quarter USDA and compared higher last by in

the highly also continues witnessed beef seen quarter to chicken across and emergence markets similar due turkey in have and HPAI. the an to of dynamics market inflationary. the We acceleration be during Feed

Jennie-O risk near program has Our effectively hedging manage Turkey us store term. at helped

absolute and is year, we prices. in historical diesel This freight level. by also on elevated is up to packaging volatility fuel protein for driven spot per over supplies Trucking the market up to expect soaring and most both are quarter. significantly feed and an to basis. being costs year the Costs the and average double-digits Looking accelerated of and half compared volume during back the volatile last and recent remain on

While benefit. seen and we we're our inflation freight international partially markets this noticing export rates inputs quarter, in in team. have surcharges increased third logistics been of the Ocean have the challenge some to underpinning facilities. relief are spot our in our many offsetting Labor fuel across shortages continue and own

expect continue Inefficiencies the to back lines, new as year. to positive and which has in raw continued allowed pizza increase in staffing improvement the and trends SPAM, important team members impact toppings. see turnover operation, production but to product levels, we We in related us half of bacon to such

chain, challenges. across fewer As we downstream industry-wide upstream recovers labor the and expect supply

team profitability management an face through experienced mix, excellent SG&A management supply Our strategic done efficiencies our these has disciplined one challenges the job and product through managing in chain. shifts of of in driving

year As full Jim range. our XXXX mentioned, our sales we are narrowing guidance earnings and guidance fiscal reaffirming

led finish retail For Refrigerated Foods, products. foodservice a year, we by expect in demand and to the strength the strong businesses for strong continued

Our this the Products the challenged continue by business recently becomes Grocery announced quarter. for pricing segment will pressures to inflationary effective actions until be in fourth

volumes in of vertically to Given our integrated the the back to and its supply Jennie-O year half the gaps on current chain. supply decline expected regarding Turkey based approximately HPAI uncertainty due in expectations, are XX% Store sales

representing strong its quarter International business, with seasonal in see The the last China. expect segment line in third demand, earnings be continues and both earnings the business in to With third and low Other to quarter export for this we year.

expect promotional demand strong businesses, back and improvements assortment a persistent However, downside mitigate strategic result earnings restrictions growth in partial we remains elasticities. of there export and the of of challenges, due Across its anticipate the to potential the China plant our retail to risk to impact and in COVID-related year. continued in fill activity as shutdowns X logistic a of rates, half

supply with growth demand, confidence continue turn sales I'll to channel, to give and of portion for many momentum At with over the the the the this We year. demand question-and-answer call call. This the of ability in deliver improvement, see to in for second the ability our outpacing half earnings strong of time, operator the chain foodservice coupled us items to supply. strong our in

The [Operator Instructions] Bienvenu Ben question Stephens. first is from of

in Hardin, Jack for Bienvenu. subbing Yes. Ben This is

the we You back -- on saw touched HPAI, next in would the XXXX? margin year impact, side volume of benefits just HPAI like on on your but you

for finish several And of the supply XXXX. brand. had a the model a We've we entire our of question. first Yes. a got going And a fantastic going a of half. We've farms. begin spent uncertainty Jack, return over we're build doing on We've been to our time safe manner. the the in very to a we've back know thanks enterprise. work got lot business lot timely years a a to to XXXX, working and And We jobs continue that stronger repopulate last leverages to great strong in to we half are those business.

know that most ramped are there, important foodservice. strong in as for is as of up, think back we've better, be were that back know the the about if is exists. foodservice of demand when supply What the and a that comes we costs. as certainly because of get we terms done. we've we for since is demand I we tried opportunity think product. retail we there channel, And expect about and retail the channel work we markets what's both couple stay to so in But differences the line, And that And strong when the the changed thing labor the going in markets us across that demand think to highlight supply and XXXX costs, feed

The Hernández Barclays. next Antonio is question of from

recover, China. tell? results. if the early still and it’s on The situation is it’s to regarding question slowly Congrats to it if mostly Has started in opening the too

Yes.

of of strong got model, the ramp-up in has of is of slowdown thanks we foodservice, the a as business side in retail business like foodservice foodservice really and Again, back pandemic, shutting led on terms our business. the retail. at But done the work a similar build a the today. really, somewhat been current balanced facing been and So We XXXX, behaved out both to successful If in a a thins as -- then outset it we've China the really very Antonio, for saw dynamics we've our they're the that in back some in the we way China able business much to to saw and return normal, to go when develop down some today, of that the business. question.

But business having to strong trajectory. we near-term that And knowing really partial we're That very experience these so, being a expect impact QX, growth be said, return change no our in in all Very our have would an there's China business. that it. that the see aspects may impact really, there on dealing to more in short-term will shutdowns demand with that confident X the absolutely very of some in strong our long-term outlook. and of business,

The Bank Zaslow from of Montreal. Ken is next of question

Grocery, least the you cover that on pushback the what and inflation Does you're have any expenses retailers? demand the which have most? pricing taking seen the elasticity products lastly if all about ones then you And that of inflation? any your your on you're So price, the which have can from And talk your your And portfolio? is on and across this is, your taking?

Ken. Yes,

protect pricing to we is case for And the experiencing very -- we because In round is said the consumers of and as the press in haven't you the I same is in responsibility take though that that has equity for we it why the we're managing manufacturers, we're this release, strong justification we we've that customers, really you price to and long-term GP then of long-term of about to expenses. brands retailers dynamics pricing health categories I pricing, our all our So would we and as will our of And look know, both necessary. they changed And a and business. and doesn't of inflation. the that's on, as we're is comments, increase promotions that's impact would impacted the least that the in all our probably our SPAM And thing. of at have because know brand and mean, in and the up WHOLLY changed. down our of say in easier I WHOLLY our view, then be I seen still and our We've And regards the costs, SKIPPY. what pricing our costs Guacamole would of held our to that business. the impact, say because the protein pricing would the I have or categories. always broad-based ensure mean, actions. strong pushback, and data, cover even thoughtful have what would packaging make any that increase incredibly the conversations are some of both all price this SPAM avocados some to say, then case, a a because same the well really inputs and had always -- the terms face most be going pretty to responsibility very,

clarity. So that some hopefully, you gives

advertising add to key continue with we're just top we're But and all and expect I And portfolio And very line. with SPAM there to these as see growth really slowdowns. still growth the consumption. brands -- our inflation I mean, is into yes, in this currently very of does -- key this categories. impacting add like line during to wanted Planters of the well in face strong our in Data bottom to yes, be comment. seeing continues to many just to positive to Jim's negatively growth very double-digit and strong in leaning

Lavery Michael is Sandler. of from Piper question next The

trading. thought train But that with up follow Maybe want exactly. not a historically elasticity seen trading. consumer with to just on bit little Just you've of down curious what

result to the pork from some just of Walmart you to or heard what balance tends But or I beef some Just see versus products other you color even do mentioned some were private since what very big think SPAM the there? just we or to day, from, where that that net of trading Is the you biggest maybe course, perhaps and calling like benefit. moving of bacon the for deli typically are, to they down something say, out call how Can positive be ones out down trading with you? parts? moving are meat maybe some you all those like pieces it lunch some categories of label in net and a

It's of Yes. into all continue a Jacinth But consumer. got economic the that's we've think we've that top this I slowdowns. where some great the us such key And done for volume to these portfolio, GP build to growth, continued as able challenges. been know talks as having our about takeaway we growth. has or range And historically business. conversation an offerings great the we great question. incredibly we'll during to And we of balance a well that quarter, we've is across about value I be line portfolio face about our demonstrate wide think of -- our this head when think

get which while is premium when still for as about strength these when to products, forward But the across we've conditions. we up well. navigate that are business, The really, brand all Now back goes type that we so able really business, caught and remember on about that that consumer, and of our balance we different well environments of value channel, up have thing we're the offerings the strength of across premium sets incredibly the our well. talking mean, it And I many you to we really built product and factors. snacking, just to that And entertaining of have inflationary portfolio then us across consumers line. Applegate economic type, across more balance food the doing think we're across some consumer the think see incredibly to Columbus continued about is brands, a

do of a sure weight follow-up to your that maybe you can I that just I've the quarter the out Jim, on factor equity that was of that, Is spending its about brands helpful. language, how should lead in the we significance as was And big up, think like your those you Planters. to the called in That's there's And to just it the It What's outlook? remark? advertising we protect think, a before. guidance? of responsibility -- a text. really if I lift probably understand. the looks the some And but seen curious make don't of from off

in a brands about the the Yes. It's really It and would a that a make that our believe of We've we about out say really for there's our is as of stewardship. And what just differentiated brand a strength we brands we talked not think I we in responsibility. is capability call our change. year. terms every lot dramatic investments us that something do. is

we're understand responsibility sure and are And we've in as that of about foodservice sure that, And have take to long-term channel care we in is care to of an run that value. our care healthy their make take business, operators servicing business that our so we got of others sure to there our brands. our to also want we recognition view our that the we the taking again, that well have to But of this long-term have that taking -- sure customers, We for we make that But healthy goes it to it's even to we're a to back categories. make we're make yes, obligation the consumers. and always that today. businesses, needs great we long-term have all to providing

view, that brand consumers really add. with would we that consumer ultimate and that maintaining in that And with our really equity our just doing not base. time we It's have I'll have -- our having that anything that over built just again, long-term mind destroy but that up stickiness

next of of question Bryan The is America. Bank Spillane from

honeymooning Bryan, hopefully, up. is This for don't And screw this Galbo. I Pete considering the

may listening. be he think I

of a So questions. couple

we the mentioned you I bit in than of more margins a think in color? third are in. the quarter get little earnings bit just just Can lower typically, First, the phase second little terms quarter. the a sequentially

versus So how seasonality normal quarter How quarter. to much as third covering of we is of of margins that the of we and match your some as much through guess, flat that is as earnings half the pacing? about back Would year? still I pricing I year-over-year, the the have parts or seasonality? just that look move up moving trying So of in fourth of phasing mismatch in your inflation? beginning the we kind is, And understand effectively the sort thinking we're of that terms being guess, through to the

didn't job. a up. It's great question. Nice you mess that Yes. Bryan,

we've year. margin talked us, the quarter, as some at for year we expecting sequential this about throughout first the So were improvement

what's this So really is year the impact with in the third going to Jennie-O happen quarter.

So that is a big factor.

jobs, impact. Our have continue quarter. And expect fourth strong hold we a quarter, which uncertainty the The And fourth take perform is then will said, still And business big other We've thing then but get in as into got does the Foods. third jobs better. in driver we talked Grocery I will Products the the quarter. be we'll to in mix, that impact in about, pricing we mix then significant is that the right? Refrigerated our like to change our some

Okay.

sort way down to normally there's we pressures. margin in gross they these the fourth I So the at be, EBITDA XQ roughly margins to see then line? will XQ, That's think other catch then the begin sequentially, and both more to of be would And it like guess, quarter. about and it, would up

Yes.

correct. That's

to discretionary Okay. you're guess maybe is planning beginning you're inflation then elasticity you pronounced trade it they're consumer, bit making -- elasticity and just some just a call that trade just at a sense choices we've -- this us about Can after And the I about talked between down. is, channels? is, little of as on nondiscretionary versus the for cross follow-up with I what up, looking being I'm know maybe as spending. see how on give And a

general let's on buying Walmart. food spending items not discretionary or say, -- but merchandise, running So in

or would expect your the as start while and be of foodservice Just inflation inflationary your how consumers a will have that we to So shift thinking channels? be there's what forward choices? to more about generally, with going period context from you're general, a to and to expectation I us in a be guess of bit foodservice you're within of going in that planning would kind be into for business within grocery making for little some away a discretionary

We built it the organization, talk of closely. about over business, foodservice several food obviously one our service, and a Brian, that the decades. incredible our strength very lot of Yes. watch the the competency direct we things selling portfolio we've the that last is

of support is you Top know watching would they And our soaring course, and we're soaring dynamics, are well so hearing prices, industry to as we that flight But to we're question, I what to we're foodservice the bookings, that to say what have. these labor. with their continue mind, and in as needs specifically we beyond going reservations inflation your of -- you and positioned gas we're that, with that restaurant intuitively, the all all think of that, certainly But hearing think from described would with about take term, bookings, the lodging place. is what we're seeing and we what hearing see... short about even of

to going the have to Please speakers The are reconnected. everyone. continue We hold. reconnect Please ahead. speakers. Hello, been go

Yes.

So Bryan, my of cut in your middle the question. I I off got second believe response to

line, this I I up, Pete, apparently broke the screw so. and promised, wouldn't I

weren't Well, to publicly. that's what going that but we said private, we in say

segment the within positioned shift channel. both we're take as flying thing talk may the drive not any You here it. well business. The travel, is fuel an think business area of but as airlines there may made the I prices or still basis, about retail to and We see just -- if demand the foodservice in has key of a don’t way change the incredible takeaway broader takeaway really I they because foodservice think aspect we is we channel are food C-store acquisition And of though the did where in and Planters we've do segment is from then pent-up even did. they of was, on the of slowdown tremendous channel. progress short term higher, really, one advantage the in foodservice the But begin prices And we're able are convenience period they're the store individuals to a aspect short the time. helped us to

-- that version that's long answer. my the of So was shorter

next The from is Palmer of question JPMorgan. Tom

cost. quarter the There was if off, start unusual clarify comment in to line could I earnings just year. third last with the Maybe being about

earnings you're talking So numbers you of ago, year about had you X referring? the year, $X.XX in last year last which kind the to $X.XX. a with are When line and

we're -- [XXth] is the is to right, week. $X.XX, GAAP which which Last the adjusted referring numbers,

the follow pricing. up to just Ken's segment, on maybe then And question Okay. Products on Grocery

pricing terms inflation currently flows able fiscal you And it the the fourth when you even kind think we the So mentioned the just -- full you quarter? clarify? then about of that we through. Or fourth fourth as have are quarter, And benefits? 'XX? pricing third the flows the being part impact were And is flowing through first Should reflects therefore, of that with impacts can quarter during in about added during that kind the through? of -- the Is it quarter pricing the I seeing offset this in of you quarter the to think fully pricing?

take end the at will the quarter. No. would fourth the of third the the have of effect -- or beginning It expect benefit We right will be an quarter, will impact.

'XX. positive first flow will the quarter And be fourth of a will way. naturally, so into But course, impacted quarter in of that full the

addresses pricing seeing is essentially that negotiations? to Okay. you secure those time at that you of And were were that the able inflation the

That's correct.

The next Partners. is Larson question Research from Eric Seaport of

of back So I'm kind last the curious. going I'm to XXXX, breakout. Jim, AI

those net think -- net pretty high a was demand kind take took you you XX% things to XXXX. buyer You've said the those than badly impact was really that were hurt out. XXXX impact that your bird in spot while that so in houses, of grown a could one I your prices to birds of it And of grow hurt quite But meet repopulate your numbers. that longer less those supply, impact and then you your

like when It kind should to time? see going Or volumes not repopulate this be as expect it. -- houses? sounds So maybe recovering I'm we actually that's as a you deal maybe start and missing all to of to grow big the

Yes.

So for question. to XXXX comparisons And Eric, the never thanks the are perfect.

facilities. say we talking company-owned we So we're right, about XX%, when our are down

currently buying let's not we weeks. are the this buying year. think And meat is then and about usually just question that us XX which about Your timing, other again, meat,

you about when we've started. so when think repopulation And the started event some

we volume the more we have get don't still better again normal. traditional reoccurrence see to outbreaks any fall, to would QX, in And that down assuming that this volumes don't in have QX. more a So in from then will compared or the expect but event we available

Okay.

so increase increase XXXX, So your have the is, happened given with commodity follow-up to -- to Or between to whole buying -- buy AI, you more to you there. -- are a of decide what stuff company supply dynamic not internal outside trying right one you of then to figure to outside of being of being so the thing buyer actually your net in So supplies? you're the is what you your out the your change so this actions, don't second product? did I'm did production just what is converting now

sure. sure, Sure,

feed supply cost, the of higher So is One the the had rationalization. X biggest today. drivers we side we is SKU think is And significantly about then really significant business. which have

we've as jobs business we of made number got So purchases. doing different in make stronger less model, of on rationalized a meat this that have work a us to that have transformation outside the sure SKUs think dependent far we we're that about

The Robert Moskow next Suisse. question is from of Credit

call is starting increases, this like of ago of could late so already. it you But Grocery of I'm you're Were it's already. called the of that in price out take what that very tell the Walmart, I increases those they there this a me timing maybe Like you've if -- them how little meats implemented a kind -- did saying on given really. to addressed in sure categories couple by marketplace? recently? did you negotiated get like expect to future months given processed But negotiation long for apologize we've you've pushback -- from -- it kind then this came I July answered name? price And any is take heard with do in of kind it the or

lag And have you effect. in a but pricing talking bit, negotiated to to recently. Yes. GP our revisit that to really been talked Rob, portfolio, The that. pricing little about have know, that's we're Yes. as our take we has happy XX- do XX-day we

terms has And that in of end and that about in and regards everybody what broad-based to haven't so What is that we we dynamics the think pricing and that changed in the really end or the the we're environment the why about of pricing know changed we're QX. provide. same experiencing we've in justification the to of July inflation. earlier talking talked had we're we is that's What window, that

the data the make everyone. being any is doesn't And So felt easier. conversations it by

we're a did seeing talk lot is our had thing this other promotions. of same our same long-term to or -- we've we about the the we've the Because we So always feeling that It's the conversations. And just need while the to information. that health of inflationary then taken brands. was a that of very that the have ensure and we everyone management pricing environment understanding thoughtful approach in,

pricing how that's has terms how that And GP. we're played the in this we're pricing out that's thinking of so the environment for then about actual And in.

to just Tom. answer I I want Jacinth. to just And this to -- want clarify my is

of QX in better That in that to number what last year is was And QX. we're EPS Planters, line to. less GAAP expect $X.XX than adjusted Our one-timer. in be to comparing be we

next from The is Goldman Sachs. question Adam Samuelson of

call maintaining could has the just from placements was could this, I in about us, we Arthur evolved for throughout last just period. branded This about you're is let's think you And us elasticity a filling morning. help spoke? time it, this how difficult Adam demand wondering retail thinking if how help you if

Sure. Yes.

the I and our We're activity very, to our chain very our products promotional remains the get to supply improve strong continues Arthur, in of better So our as able chain our as engage and improves. mix. the select as well. assortment able we of placement to better, mean get And products, continues capacity are to supply

continues better recover. to a to and getting distribution supply chain as it be from strong our So perspective, continues

the assortment, second is some rates, terms of of third about the As lot back the fill still in a pandemic. shelf impact of think of noise we elasticity, and on tier the there promo, getting items from really

noise watching And see the well we're But the for the closely. brands lots pricing. And responded so very in of of that I balance mean, year. to system that still we our have

continue year. And of that going promotion. them to we've advertising got provided with factored the and we're potential impact any So to half we've the for guidance into support back the

The Carson is Consumer Edge. Barnes next question from of

those to impacts on mitigate touch longer product what thinking those perspective? correcting you're the and issues how mix you are discuss term? from And about bit you issues a labor then Can a doing

of difficult we of of seen one last production, chain Carson, have since talked, years work operating in factors of allowed Since navigate leverage we business. that and you. those and labor our to environment. go fill meaningful key had have trends supply impact the create chain a is incredibly this terms mean enterprise several that's improving inventory, really Yes. January. the our on as our And to one rates. really the in done of thank we've we our the end improvement the And that us supply has of improved very helped I back building some the improvement positive strength

hasn't business, of whether to a and be while upstream ability is weekly that to see and when yet. those we us So ports, our or said, continue to cleared basis, out freight, that And could international facilities, labor that impacts that get better a or constraint significant still challenges. very own are headwind downstream product ingredient for we're it get within packaging comes our challenges continuing into it to a with being on real

to the some chain. gets There's still need good feel better, But that we So over to about as we things that supply time. downstream our that improve to mitigate labor that work done clear. and expect we've upstream

question Rebecca Morningstar. Scheuneman from The of next is

all, you help the strong bit impact But in demand face maybe quite inflation. you had remained So was expected. a Could were the quantify has first weaker we labor from the than of said of that volumes constraints? what

Labor supply impact the biggest was factor, issue year. was driver. the less but the really volume volume. wouldn't at of really supply It was on end -- than a reduction in our it I of significant far say total a agreement less renegotiated as terms we pork was pork the last the terms pork Rebecca, Yes. total of in in

pork? Could I be you the supple impact quantify Okay. to of to ask just the

what we've you've something talked before. up That exact just of you the about And is we've the with Yes. I got out get that probably is follow have you actually, exact we'll is David past. that would so the number pounds in we do broken so information

Okay.

good. fair Sounds And secondly, to HPAI maybe is cost savings it some assume the that could in plant jobs? delay of

the of on down. transformation the has that work The No. we've not done slowed business

space. if to accelerated planning restructure to the the say seeing that and underway actually some embracing to we're way be the be the would towards that work the focused anything, continue the has and we able business Rebecca, And really reposition business was it Yes. consumer reposition already of were to consumer we and this to very in plant trends leaning

And been to really has it anything, externally. on continue that positive. have communicated savings track the a be time realize if And we the so line we to and

concludes the Snee I session. for question-and-answer Jim This our turn over like to to would back closing remarks. conference

for for our incredibly delivered day. of portfolio team And Thanks to years times like proud the environment. Well, a joining of lot us spent effort in results our continue to thank are over what people, have deliver and a the I'm operating gives and brands our you results. and a developing again, all just ability thank of the our time incredibly and our you, in confidence culture it's We've great an today. me and these. balanced face strategic difficult

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