Hormel Foods (HRL)
Q3 2012 Earnings Call
August 23, 2012 9:30 am ET
Kevin C. Jones - Director of Investor Relations
Jeffrey M. Ettinger - Chairman, Chief Executive Officer and President
Jody H. Feragen - Chief Financial Officer, Executive Vice President and Director
Farha Aslam - Stephens Inc., Research Division
Diane Geissler - Credit Agricole Securities (USA) Inc., Research Division
Akshay S. Jagdale - KeyBanc Capital Markets Inc., Research Division
Mark E. Williams - Janney Montgomery Scott LLC, Research Division
Timothy S. Ramey - D.A. Davidson & Co., Research Division
Christine McCracken - Cleveland Research Company
Kenneth B. Zaslow - BMO Capital Markets U.S.
Ann H. Gurkin - Davenport & Company, LLC, Research Division
Previous Statements by HRL
» Hormel Foods Management Discusses Q2 2012 Results - Earnings Call Transcript
» Hormel Foods' CEO Discusses Q1 2012 Results - Earnings Call Transcript
» Hormel Foods' CEO Discusses Q4 2011 Results - Earnings Call Transcript
Good day, ladies and gentlemen, thank you for standing by. Welcome to the Hormel Foods Third Quarter Earnings Conference Call. [Operator Instructions] This conference is being recorded today, August 23, 2012. I would now like to turn the conference over to Kevin Jones. Please go ahead.
Kevin C. Jones
Thank you. Good morning, everyone. Welcome to the Hormel Foods Conference Call for the Third Quarter of Fiscal 2012. We released our results this morning before the market opened around 6:30 a.m. Eastern Time. If you did not receive a copy of the release, you can find it on our website at www.hormelfoods.com under the Investors section.
On our call today is Jeff Ettinger, Chairman of the Board, President and Chief Executive Officer; and Jody Feragen, Executive Vice President and Chief Financial Officer. Jeff will provide a review of the operating results for the quarter, then Jody will provide detailed financial results for the quarter. The line will be open for questions following Jody's remarks. [Operator Instructions] An audio replay of this call will be available beginning at 10:30 a.m. Central Time today, August 23, 2012. The dial-in number is (800) 406-7325 and the access code is 4556709. It will also be posted to our website and archived for 1 year.
Before we get started with the results of the quarter, I need to reference the Safe Harbor statement. Some of the comments made today will be forward-looking and are made under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those expressed in or implied by the statements we will be making. Among the factors that may affect the operating results of the company are fluctuations in the cost and availability of raw materials and market conditions for finished products. Please refer to the cautionary statements and risk factors on Pages 30 to 36 in the company's 10-Q for the quarter ended April 29, 2012, which was filed with the SEC on June 8, 2012, for more details. It can be accessed on our website. Now I'll turn the call over to Jeff.
Jeffrey M. Ettinger
Thank you, Kevin. Good morning, everyone. We are pleased to report record earnings and sales for the third quarter. Earnings for the quarter were $0.41 per share, up 14% from earnings of $0.36 a share a year ago. All 5 segments registered gains in segment profit. Total dollar sales topped $2 billion, an increase of 5% over a year ago on solid volume growth of 4%. I will now take you through each segment.
Our Grocery Products team delivered an operating profit increase of 32% and a dollar sales increase of 21% for the third quarter. You may recall that we began including Don Miguel sales in our Grocery Product segment results this past quarter. Sales for Grocery Products grew 3% excluding Don Miguel in the quarter. Among the contributors to sales growth in this segment were our SPAM family of products, Hormel Compleats microwave meals and our MegaMex portfolio.
For the SPAM family of products, our advertising campaign featuring Sir Can-A-Lot and the publicity around the 75th anniversary has contributed to the nice sales increase. We were pleased to see growth by our Hormel Compleats microwave meals in Q3. We are in the process of introducing additional new Compleats meals that feature cheesy pasta. We also introduced some other new microwavable items in the quarter, including SPAM meals and Hormel sandwich makers. These new items have performed well in limited markets so far.
Sales of our Mexican food products continue to grow, led by Wholly Guacamole Dip and by salsas and tortillas under both the Herdez and CHI-CHI'S brands.
Segment operating profit for our Refrigerated Foods group increased by 7%, with higher sales of our value-added products were able to offset lower pork operating margins. Sales were flat overall, but value-added sales continued to grow.
On the retail side, we enjoyed strong sales of Hormel Natural Choice Deli Meats, Hormel party trays, Hormel bacon and Hormel Pepperoni. Foodservice sales were also higher, led by sales of branded products such as Hormel Natural Choice Deli Meats, Hormel premium hams and premium bacon.
The Jennie-O Turkey Store segment had another solid quarter, with segment operating profit up 12% and sales up 7%. Continued growth in sales of value-added products and an improved product mix more than offset higher grain prices and lower commodity meat prices during Q3. Sales of our Jennie-O Turkey Store retail tray pack fresh turkey and our turkey burgers are still on the rise. We will be building up on last year's highly successful Make The Switch advertising campaign with a new TV commercial this fall, this time featuring turkey bacon and sausage. Stronger sales of whole birds also aided results this quarter for Jennie-O.