Hormel Foods delivered a solid fourth quarter that capped a year of notable transformation and operating cash-flow leadership. Q4 revenue was $3.139 billion with a gross margin of 16.6% and an operating margin of 9.38%, resulting in GAAP net income of $220.2 million and GAAP EPS of $0.40 for the period. For the full year, Hormel reported net sales of $11.9 billion, gross margin of 17.0%, and operating margin of 9.0% (adjusted at 9.6%), underscoring a quality, value-added portfolio resilient to macro dynamics. Management attributed the year to strong execution across Retail, Foodservice and International segments and highlighted the Transform and Modernize (T&M) initiative as a core driver of earnings quality and cash-flow strength. The company announced $75 million of operating income benefits in year one of T&M, with projected annualized run-rate benefits of $100–$150 million in 2025, expanding the company’s growth flywheel as it reinvests in brands, capabilities and capacity.
Key 2024 outcomes include record operating cash flow of $1.3 billion and a post-dividend-culture milestone: a 59th consecutive increase to the annual dividend, now $1.16 per share for fiscal 2025. Hormel also divested Hormel Health Labs, streamlining the portfolio and focusing on core, higher-margin offerings. Looking ahead, Hormel framed 2025 guidance of net sales in a $11.9–$12.2 billion band, organic net sales growth of 1–3%, and adjusted EPS of $1.58–$1.72, incorporating anticipated near-term headwinds (e.g., Planters investment, whole-bird turkey dynamics) and profit leverage from the T&M program. The long-term growth algorithm remains 2–3% organic net sales growth and 5–7% operating income growth, supported by a broadened brand portfolio and ongoing portfolio optimization.
Overall investment thesis: HRL is positioned to translate T&M-driven efficiency into durable growth that should improve capital efficiency, maintain dividend leadership, and progressively de-risk commodity exposures through a more value-added mix and stronger category leadership.”