Hormel Foods Corp HRL
Q1 2012 Earnings Call Transcript

Transcript Call Date 02/23/2012

Operator: Good morning, ladies and gentlemen and thank you for standing by. Welcome to the Hormel Foods' First Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. I would like to remind everyone that this conference call is being recorded today, February 23, at 8.30 Central Standard Time.

I will now turn the conference over to Mr. Kevin Jones, Director of Investor Relations. Please go ahead.

Kevin C. Jones - Director, IR: Good morning, everyone. Welcome to the Hormel Foods conference call for the first 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, 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.

An audio replay of this call will be available beginning at 10.30 a.m. Central Time today, February 23, 2012. The dial-in number is 1-800-406-7325, and the access code is 4509484. It will also be posted to our website and archived for one 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 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 pages 27 through 30 in the Company's Annual Report for the fiscal year ended October 30, 2011, for more details. It can be accessed on our website.

In order to assure that everyone has opportunity to ask the questions, please restrict yourself to one question and one follow-up.

Now, I'll turn the call over to Jeff.

Jeffrey M. Ettinger - Chairman, President and CEO: Good morning, everyone. We announced first quarter earnings this morning a $0.48 per share, down 13% from year ago. During the quarter, we experienced weak pork operating margins and soft sales in the center of the store.

Nonetheless, our current pro forma represents the second best quarter in our company's history. In terms of the top line, we generated a sales increase of 6%, with gains in four out of our five business segments.

Although total volumes declined 2%, the majority of the decline was due to a planned reduction in harvest levels at our Jennie-O Turkey Store segment. As you may recall from our November conference call, we had anticipated a challenging start to 2012.

Though our overall results were not surprising, how we got there wasn't exactly as we had planned. Our Jennie-O Turkey Store segment performed better than we expected and international turned into good quarter, while our refrigerated foods, grocery products and specialty food segments did not perform as well as we had anticipated.

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