CRITICAL ACCOUNTING POLICIES

There have been no material changes in the Company's Critical Accounting Policies as disclosed in its Annual Report on Form 10-K for the fiscal year ended October 27, 2019.



RESULTS OF OPERATIONS

Overview

The Company is a global manufacturer and marketer of branded food products. It
operates in four reportable segments as described in Note N - Segment Reporting
in the Notes to Consolidated Financial Statements in this Quarterly Report on
Form 10-Q.

The Company reported net earnings per diluted share of $0.45 for the first quarter of fiscal 2020, compared to $0.44 per diluted share in the first quarter of fiscal 2019. Significant factors impacting the quarter were:

• Pretax earnings declined, driven primarily by the divestiture of CytoSport

last year. Net earnings increased as a lower effective tax rate for the

quarter and profit growth from Refrigerated Foods and Jennie-O Turkey

Store more than offset the impact of the CytoSport divestiture and lower

earnings in the Grocery Products and International & Other segments.

Refrigerated Foods segment profit increased primarily due to improved


       commodity profits while higher raw material costs pressured the
       value-added businesses.


•      Grocery Products profit was negatively impacted by the divestiture of
       CytoSport, higher raw material costs, lower contract manufacturing
       profits, and decreased volumes.

Jennie-O Turkey Store segment profit increased due to higher commodity

profits and operational improvements.

• International & Other profit declined, driven by significantly higher pork


       raw material costs for the Company's businesses in Brazil, China, and
       other Asian countries such as South Korea and the Philippines.

• Subsequent to the end of the quarter, the Company announced a definitive


       agreement to acquire Sadler's Smokehouse for $270.0 million. The
       transaction closed on March 2, 2020.


Consolidated Results

Volume, Net Sales, Earnings, and Diluted Earnings per Share


                                                             Three Months 

Ended


                                                                                             %
(in thousands, except per share amounts)   January 26, 2020       January 27, 2019        Change
Volume (lbs.)                                     1,186,987              1,196,893            (0.8 )
Organic Volume (1)                                1,186,987              1,161,059             2.2
Net Sales                                $        2,384,434     $        2,360,355             1.0
Organic Net Sales (1)                             2,384,434              2,295,201             3.9
Net Earnings                                        242,872                241,425             0.6
Diluted Earnings per Share                             0.45                   0.44             2.3



(1)The non-GAAP adjusted financial measurements are presented to provide
investors additional information to facilitate the comparison of past and
present operations.  The Company believes these non-GAAP financial measurements
provide useful information to investors because they are measurements used to
evaluate performance on a comparable year-over-year basis.  These non-GAAP
measurements are not in accordance with accounting principles generally accepted
in the United States (GAAP) nor intended to be a substitute for GAAP
measurements in analyzing financial performance.  These non-GAAP measurements
may be different from measures used by other companies.

Organic net sales and organic volume are defined as net sales and volume,
excluding the impact of acquisitions and divestitures.  Organic net sales and
organic volume exclude the impacts of the CytoSport divestiture (April 2019)
in the Grocery Products and International & Other segments. The tables below
show the calculations to reconcile from the GAAP measures to the non-GAAP
adjusted measures in the first quarter of fiscal 2019.


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Reconciliation of Non-GAAP Measures



                                                             First Quarter
                              Fiscal 2020                        Fiscal 2019
                                                                                    Organic         Organic
(in thousands)               Reported GAAP       Reported GAAP    Divestitures     (Non-GAAP)      % Change
Volume (lbs.)
Grocery Products                   292,919             338,743         (34,807 )      303,936          (3.6 )
Refrigerated Foods                 605,608             589,356               -        589,356           2.8
Jennie-O Turkey Store              197,200             182,159               -        182,159           8.3
International & Other               91,260              86,635          (1,027 )       85,608           6.6
  Total Volume                   1,186,987           1,196,893         (35,834 )    1,161,059           2.2

Net Sales
Grocery Products           $       540,626     $       606,825   $     (63,172 ) $    543,653          (0.6 )
Refrigerated Foods               1,351,790           1,278,747               -      1,278,747           5.7
Jennie-O Turkey Store              330,128             321,234               -        321,234           2.8
International & Other              161,890             153,549          (1,982 )      151,567           6.8
  Total Net Sales          $     2,384,434     $     2,360,355   $     (65,154 ) $  2,295,201           3.9



The increase in net sales for the first quarter of fiscal 2020 was primarily
related to higher sales of commodity items in Refrigerated Foods and Jennie-O
Turkey Store along with strong growth from brands such as Hormel® Black Label®
bacon, Hormel® Gatherings® party trays, Hormel® Cure 81® ham, and Applegate®.
These increases more than offset the impact from the CytoSport divestiture.

Cost of Products Sold


                                   Three Months Ended
                                             January 27,      %

(in thousands) January 26, 2020 2019 Change Cost of Products Sold $ 1,916,014 $ 1,872,021 2.4

Cost of products sold for the first quarter of fiscal 2020 increased, driven by higher pork and beef raw material costs.



Gross Profit
                                     Three Months Ended
                                              January 27,        %
(in thousands)           January 26, 2020         2019        Change
Gross Profit            $        468,421     $    488,334      (4.1 )
Percentage of Net Sales             19.6 %           20.7 %



Gross profit as a percentage of net sales declined for the first quarter. Higher
pork and beef raw material costs impacted the Refrigerated Foods, Grocery
Products, and International & Other segments. Grocery Products was further
impacted by a weaker sales mix due to the divestiture of CytoSport and lower
Skippy® peanut butter pricing. International & Other saw pork costs for its
multinational and affiliated businesses increase significantly over the first
quarter of fiscal 2019 due to supply shortages caused by African swine fever.
Jennie-O Turkey Store declined on lower retail and foodservice sales.

Looking ahead to the second quarter of fiscal 2020, the Company expects the
value-added businesses in Refrigerated Foods and continued improvement at
Jennie-O Turkey Store to help offset declines in the International & Other and
Grocery Products segments. The divestiture of the CytoSport business and lower
Skippy® peanut butter pricing will continue to impact Grocery Products in the
second quarter.


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Selling, General and Administrative (SG&A)


                                     Three Months Ended
                                              January 27,       %
(in thousands)           January 26, 2020         2019        Change
SG&A                    $        195,521     $    193,544        1.0
Percentage of Net Sales              8.2 %            8.2 %


For the first quarter of fiscal 2020, SG&A expenses increased primarily due to a one-time benefit from a legal settlement in fiscal 2019.



Due to the CytoSport divestiture, advertising investments in the first quarter
declined. Advertising investments for the full year are expected to be in line
with the prior year.

Equity in Earnings of Affiliates


                                                 Three Months Ended
                                                                                %
(in thousands)                    January 26, 2020      January 27, 2019     Change
Equity in Earnings of Affiliates $            7,588    $           11,458   

(33.8 )

Equity in earnings of affiliates for the first quarter of fiscal 2020 was lower as the Company's international affiliates were impacted by higher pork raw material costs due to African swine fever.

Effective Tax Rate


                             Three Months Ended
                    January 26, 2020     January 27, 2019
Effective Tax Rate          16.3 %                 21.3 %



The effective tax rate in fiscal 2020 was impacted by a large volume of stock
option exercises during the first quarter. The Company still expects a full-year
effective tax rate between 20.5 and 22.5 percent for fiscal 2020. For further
information, refer to Note I - Income Taxes.


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Segment Results



Net sales and operating profits for each of the Company's reportable segments
are set forth below.  The Company is an integrated enterprise, characterized by
substantial intersegment cooperation, cost allocations, and sharing of assets.
Therefore, the Company does not represent these segments, if operated
independently, would report the operating profit and other financial information
shown below.
                                              Three Months Ended
(in thousands)                January 26, 2020      January 27, 2019     % Change
Net Sales
Grocery Products             $          540,626    $          606,825      (10.9 )
Refrigerated Foods                    1,351,790             1,278,747        5.7
Jennie-O Turkey Store                   330,128               321,234        2.8
International & Other                   161,890               153,549        5.4
Total                        $        2,384,434    $        2,360,355        1.0

Segment Profit
Grocery Products             $           68,435    $           95,297      (28.2 )
Refrigerated Foods                      167,343               162,593        2.9
Jennie-O Turkey Store                    38,551                37,904        1.7
International & Other                    19,952                24,978      (20.1 )
Total Segment Profit                    294,280               320,772       (8.3 )
Net Unallocated Expense                   4,199                13,891      (69.8 )
Noncontrolling Interest                      81                    94     

(13.8 ) Earnings Before Income Taxes $ 290,162 $ 306,975 (5.5 )






Grocery Products
                          Three Months Ended
                January 26,      January 27,        %
(in thousands)      2020             2019        Change
Volume (lbs.)        292,919          338,743    (13.5 )
Net Sales      $     540,626    $     606,825    (10.9 )
Segment Profit        68,435           95,297    (28.2 )



Net sales for the first quarter of fiscal 2020 decreased due to the CytoSport
divestiture and lower Skippy® peanut butter sales. These declines more than
offset growth from the SPAM® family of products, Justin's® branded items,
Wholly® guacamole dips, and Herdez® salsas and sauces.

For the first quarter, segment profit declined primarily due to the divestiture
of CytoSport, higher raw material costs, lower contract manufacturing profits,
and decreased volumes. Grocery Products also benefited from a legal settlement
in fiscal 2019.

The Company anticipates lower volume and sales in the second quarter due to the
divestiture of CytoSport and lower prices on Skippy® peanut butter products.
Segment profit is also expected to decline, primarily due to the impact from the
divestiture of CytoSport.

Refrigerated Foods


                         Three Months Ended
(in thousands)  January 26,     January 27,      %
                   2020            2019        Change
Volume (lbs.)       605,608         589,356       2.8
Net Sales      $  1,351,790    $  1,278,747       5.7
Segment Profit      167,343         162,593       2.9




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First quarter volume and net sales increases were led by strong demand for
value-added products and higher commodity sales. Branded sales growth was led by
Hormel® Black Label® bacon and Hormel® Cure 81® ham in retail, Hormel® pizza
toppings and Fontanini® items in foodservice, and Hormel® Gatherings® party
trays in deli. Applegate® branded items in retail and foodservice also
contributed to sales growth.

Refrigerated Foods segment profit increased as higher raw material costs across the value-added businesses were more than offset by increased commodity profits.



Looking ahead to the second quarter, Refrigerated Foods is expected to grow
volume, sales, and segment profit due to strong demand for value-added products.
The impact of African swine fever and the outbreak of coronavirus in China could
create market volatility which presents risk to input costs.

Jennie-O Turkey Store


                          Three Months Ended
                January 26,      January 27,       %
(in thousands)      2020             2019        Change
Volume (lbs.)        197,200          182,159       8.3
Net Sales      $     330,128    $     321,234       2.8
Segment Profit        38,551           37,904       1.7


For the first quarter, sales increased due to higher commodity and whole-bird volume and pricing. Jennie-O® lean ground tray pack volume increased as incremental distribution was regained during the quarter.

Segment profit for the first quarter increased due to higher commodity profits and operational improvements.

Jennie-O Turkey Store anticipates increased volume, sales, and earnings in the
second quarter compared to last year driven by higher prices of commodity items
and significant improvements in operations.

International & Other


                          Three Months Ended
                January 26,      January 27,        %
(in thousands)      2020             2019        Change
Volume (lbs.)         91,260           86,635      5.3
Net Sales      $     161,890    $     153,549      5.4
Segment Profit        19,952           24,978    (20.1 )


Volume and sales for the first quarter increased, driven by higher fresh pork export volume and strong demand in China.



Segment profit for the quarter decreased due to significantly higher pork raw
material costs for our businesses in Brazil, China, and other Asian countries
such as South Korea and the Philippines.

Due to the recent outbreak of coronavirus, International & Other anticipates a
difficult second quarter. The impact for the remainder of the year is currently
unknown as it will depend on how swiftly the outbreak is contained, the sales
pipeline is refilled, and plants return to full capacity.

Unallocated Income and Expenses



The Company does not allocate investment income, interest expense, or interest
income to its segments when measuring performance.  The Company also retains
various other income and unallocated expenses at the corporate level.  Equity in
earnings of affiliates is included in segment profit; however, earnings
attributable to the Company's noncontrolling interests are excluded. These items
are included in the segment table for the purpose of reconciling segment results
to earnings before income taxes.
                                        Three Months Ended
                                   January 26,      January 27,
(in thousands)                        2020              2019

Net Unallocated Expense $ 4,199 $ 13,891 Noncontrolling Interest Earnings 81

                   94




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Net unallocated expense declined for the first quarter of fiscal 2020 driven by
higher investment income. Expenses incurred in fiscal 2019 associated with the
sale of the Fremont plant offset the benefit from a legal settlement last year.


Related Party Transactions

There has been no material change in the information regarding Related Party
Transactions as disclosed in the Company's Annual Report on Form 10-K for the
fiscal year ended October 27, 2019.

LIQUIDITY AND CAPITAL RESOURCES



Cash and cash equivalents were $724.4 million at the end of the first quarter of
fiscal 2020 compared to $512.7 million at the end of the comparable fiscal 2019
period.

Cash provided by operating activities was $188.4 million in the first three
months of fiscal 2020 compared to $187.4 million in the same period of fiscal
2019.  Cash flows from operating activities continue to provide the Company with
its principal source of liquidity.  The Company does not anticipate a
significant risk to cash flows from this source in the foreseeable future
because the Company operates in a relatively stable industry and has strong
brands across many product lines.

Cash used in investing activities was $60.5 million in the first three months of
fiscal 2020 compared to $1.7 million in the same period of fiscal 2019.  Capital
expenditures in the first three months of fiscal 2020 increased to $58.2 million
from $39.4 million in the comparable period of fiscal 2019.  The Company
currently estimates its fiscal 2020 capital expenditures to be approximately
$360.0 million.  Key projects for the full year include an expansion of the
Company's Burke Corporation pizza-toppings facility in Nevada, Iowa; a new dry
sausage production facility in Nebraska; Project Orion; and other projects to
support growth of branded products. Fiscal 2019 included $30.6 million of
proceeds from the sale of the Fremont, Nebraska, production facility.

Cash used in financing activities was $77.9 million in the first three months of
fiscal 2020 compared to $128.9 million in the same period of fiscal 2019. The
Company repurchased no shares of common stock in the first three months of
fiscal 2020 compared to $44.8 million repurchased during the same period of the
prior year.  For additional information pertaining to the Company's share
repurchase plans or programs, see Part II, Item 2 - Unregistered Sales of Equity
Securities and Use of Proceeds.

Cash dividends paid to the Company's shareholders continue to be an ongoing
financing activity for the Company.  Dividends paid in the first three months of
fiscal 2020 were $112.2 million compared to $100.1 million in the comparable
period of fiscal 2019.  For fiscal 2020, the annual dividend rate was increased
to $0.93 per share, representing the 54th consecutive annual dividend increase.
The Company has paid dividends for 366 consecutive quarters and expects to
continue doing so.

The Company is required by certain covenants in its debt agreements to maintain
specified levels of financial ratios and financial position.  At the end of the
first quarter of fiscal 2020, the Company was in compliance with all of these
debt covenants.

The Company is dedicated to returning excess cash flow to shareholders through dividend payments. Growing the business through innovation and evaluating opportunities for strategic acquisitions remain a focus for the Company. Reinvestments in the business to ensure employee and food safety are a top priority for the Company. Capital spending to enhance and expand current operations will also be a significant cash outflow for fiscal 2020.

Contractual Obligations and Commercial Commitments



The Company records income taxes in accordance with the provisions of ASC 740,
Income Taxes. The Company is unable to determine its contractual obligations by
year related to this pronouncement, as the ultimate amount or timing of
settlement of its reserves for income taxes cannot be reasonably estimated. The
total liability for unrecognized tax benefits, including interest and penalties,
at January 26, 2020, was $23.3 million.

There have been no other material changes to the information regarding the Company's future contractual financial obligations previously disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended October 27, 2019.

Off-Balance Sheet Arrangements



As of January 26, 2020, and October 27, 2019, the Company had $45.3 million and
$44.8 million, respectively, 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 $2.7 million
as of January 26, 2020, and October 27, 2019, of revocable standby letters of
credit for obligations of an affiliated party that may arise under workers
compensation claims.  Letters of credit are not reflected in the Company's
Consolidated Statements of Financial Position.


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Trademarks



References to the Company's brands or products in italics within this report
represent valuable trademarks owned or licensed by Hormel Foods, LLC or other
subsidiaries of Hormel Foods Corporation.

FORWARD-LOOKING STATEMENTS

This report contains "forward-looking" information within the meaning of the federal securities laws. The "forward-looking" information may include statements concerning the Company's outlook for the future as well as other statements of beliefs, future plans, strategies, or anticipated events and similar expressions concerning matters that are not historical facts.



The Private Securities Litigation Reform Act of 1995 (the Reform Act) provides a
"safe harbor" for forward-looking statements to encourage companies to provide
prospective information. The Company is filing this cautionary statement in
connection with the Reform Act.  When used in this Quarterly Report on
Form 10-Q, the Company's Annual Report to Stockholders, other filings by the
Company with the Securities and Exchange Commission (the Commission), the
Company's press releases, and oral statements made by the Company's
representatives, the words or phrases "should result," "believe," "intend,"
"plan," "are expected to," "targeted," "will continue," "will approximate," "is
anticipated," "estimate," "project," or similar expressions are intended to
identify forward-looking statements within the meaning of the Reform Act.  Such
statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from historical earnings and those
anticipated or projected.

In connection with the "safe harbor" provisions of the Reform Act, the Company
is identifying risk factors that could affect financial performance and cause
the Company's actual results to differ materially from opinions or statements
expressed with respect to future periods.  The discussion of risk factors in
Part II, Item 1A of this Quarterly Report on Form 10-Q contains certain
cautionary statements regarding the Company's business, which should be
considered by investors and others.  Such risk factors should be considered in
conjunction with any discussions of operations or results by the Company or its
representatives, including any forward-looking discussion, as well as comments
contained in press releases, presentations to securities analysts or investors,
or other communications by the Company.

In making these statements, the Company is not undertaking, and specifically
declines to undertake, any obligation to address or update each or any factor in
future filings or communications regarding the Company's business or results,
and is not undertaking to address how any of these factors may have caused
changes to discussions or information contained in previous filings or
communications. Though the Company has attempted to list comprehensively these
important cautionary risk factors, the Company wishes to caution investors and
others that other factors may in the future prove to be important in affecting
the Company's business or results of operations.

The Company cautions readers not to place undue reliance on forward-looking
statements, which represent current views as of the date made.  Forward-looking
statements are inherently at risk to any changes in the national and worldwide
economic environment, which could include, among other things, economic
conditions, political developments, currency exchange rates, interest and
inflation rates, accounting standards, taxes, and laws and regulations affecting
the Company and its markets.

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