What changed in this filing

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Item 1. Business

2023-12-06 compared with 2022-12-06 · 33 added, 38 removed, 109 unchanged (39% of the section changed)

General Development of Business

Hormel Foods Corporation, a Delaware corporation (collectively, the "Company", "we," "us,", "our"), was founded by George A.

Hormel Foods Corporation, a Delaware corporation (collectively, the "Company", "we," "us," and "our"), was founded by George A.

Hormel in 1891 in Austin, Minnesota, as Geo.

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In fiscal 2021, the Company acquired the Planters ® snack nuts business, expanding the Company's presence in the growing snacking space.

Refer to Note B - Acquisitions and Divestitures for additional information.

Refer to Note B - Acquisitions and Divestitures of the Notes to the Consolidated Financial Statements for additional information.

During fiscal 2023, the Company purchased a 30% common stock interest in PT Garudafood Putra Putri Jaya Tbk (Garudafood), a food and beverage company in Indonesia, expanding the Company's presence in Southeast Asia and supporting global execution in the snacking and entertaining category.

Refer to Note D - Investments in Affiliates of the Notes to the Consolidated Financial Statements for additional information.

Description of Business

The Company manages and reports its operating results in the following four segments:

Grocery Products, Refrigerated Foods, Jennie-O Turkey Store, and International & Other.

Net sales to unaffiliated customers, segment profit, and the presentation of certain other financial information by segment are reported in Note P - Segment Reporting of the Notes to Consolidated Financial Statements and in the Management's Discussion and Analysis of Financial Condition and Results of Operations.

Grocery Products:

The Grocery Products segment primarily consists of the processing, marketing, and sale of shelf-stable food products sold predominantly in the retail market, along with the sale of nutritional and private label shelf-stable products to retail, foodservice, and industrial customers.

This segment also includes the results from the Company’s MegaMex Foods, LLC (MegaMex) joint venture.

Refrigerated Foods:

The Refrigerated Foods segment includes the processing, marketing, and sale of branded and unbranded pork, beef, and poultry products for retail, foodservice, deli, convenience store, and commercial customers.

Jennie-O Turkey Store:

The Jennie-O Turkey Store segment primarily consists of the processing, marketing, and sale of branded and unbranded turkey products for retail, foodservice, and commercial customers.

International & Other:

The International & Other segment includes Hormel Foods International, which manufactures, markets, and sells Company products internationally.

This segment also includes the results from the Company’s international royalty arrangements and other joint ventures.

During the fourth quarter of fiscal 2022, the Company announced a new strategic operating model, which aligns its businesses to be more agile, consumer and customer focused, and market driven.

Effective in fiscal 2023, the Company will transition to this new model with the following three operating and reportable segments:

Effective in fiscal 2023, the Company transitioned to a new strategic operating model, which aligns its businesses to be more agile, consumer and customer focused, and market driven.

The Company currently operates with the following three operating and reportable segments:

Retail, Foodservice, and International.

Prior period results will be reclassified to reflect these new reportable segments.

The Retail segment consists primarily of the processing, marketing, and sale of food products sold predominantly in the retail market.

This segment also includes the results from the Company’s MegaMex Foods, LLC joint venture.

The Foodservice segment consists primarily of the processing, marketing, and sale of food and nutritional products for foodservice, convenience store, and commercial customers.

International

The International segment processes, markets, and sells Company products internationally.

This segment also includes the results from the Company’s international joint ventures, equity method investments, and royalty arrangements.

Prior period results for fiscal 2022 and 2021 have been recast to reflect the new reportable segments.

Net sales to unaffiliated customers, segment profit, and certain other financial information by segment are reported in Note P - Segment Reporting of the Notes to the Consolidated Financial Statements and in Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Products and Distribution

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Products are primarily distributed by common carrier.

Internationally, the Company markets its products through Hormel Foods International Corporation (HFIC), a wholly-owned subsidiary.

HFIC has a global presence within several major international markets, including Australia, Brazil, Canada, China, England, Japan, Mexico, Micronesia, the Philippines, Singapore, and South Korea.

The Company has a global presence within several major international markets, including Australia, Brazil, Canada, China, England, Indonesia, Japan, Mexico, the Philippines, Singapore, and South Korea.

Distribution of export sales to customers is by common carrier, while the China and Brazil operations own and operate their own delivery systems.

The Company, through HFIC, has licensed companies to manufacture various products internationally on a royalty basis, with the primary licensees

being Danish Crown UK Ltd., and CJ CheilJedang Corporation.

HFIC also has a minority position in a food company in the Philippines (The Purefoods-Hormel Company, Inc., 40 percent holding).

The Company has licensed companies to manufacture various products internationally on a royalty basis, with the primary licensees being Danish Crown UK

Ltd., and CJ CheilJedang Corporation.

The Company also has minority positions in food companies in the Philippines (The Purefoods-Hormel Company, Inc., 40 percent holding) and Indonesia (Garudafood, 30 percent holding).

Raw Materials

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The Company also purchases raw materials from various suppliers.

As the Company shifts its focus toward a more value-added portfolio, it has become increasingly dependent on these suppliers to meet its raw material needs.

As the Company has shifted its focus toward a more value-added portfolio, it has become increasingly dependent on these suppliers to meet its raw material needs.

Certain raw materials, such as cashews, are sourced internationally, which may cause additional risks to pricing and availability.

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The Company’s employees are the driving force behind innovation, improvement, and success.

As of October 30, 2022, the Company had more than 20,000 active employees, with over 90 percent located within the U.S.

As of October 29, 2023, the Company had approximately 20,000 active employees, with over 90 percent located within the U.S.

Approximately 20 percent of employees are covered by collective bargaining agreements.

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Inspired Food.™ The Company places great importance on the growth, development, and engagement of its team members.

The Company offers a competitive compensation package and a multitude of benefits, including medical, life and disability insurance, contributory and non-contributory retirement savings plans, tuition reimbursement, and two years of tuition-free community and technical college for U.S.

The Company offers a competitive compensation package and a multitude of benefits, including medical, life and disability insurance, contributory and non-contributory retirement savings plans, free post-secondary tuition and tuition reimbursement programs, and two years of tuition-free community and technical college for U.S.

employees’ dependent children.

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As of October 29, 2023, approximately 50 percent of the Company's team members had five or more years of service, and the 34-person officer team had an average of 25 years of service.

During fiscal 2022, the Company faced productivity challenges related to high turnover and the need to train new team members at its manufacturing facilities.

Overall, the turnover rate was 11 percent for salaried team members and 44 percent for hourly team members.

The Company is focused on onboarding and training new team members and creating a best-in-class experience throughout the organization.

Diversity, Equity, and Inclusion

The Company welcomes the diversity of all team members, customers, and consumers, and encourages the integration of their unique skills, thoughts, experiences, and identities.

The Company’s workforce is made up of approximately 40 percent female and over 55 percent underrepresented minorities.

The Company’s salaried employees are made up of over 30 percent female and approximately 20 percent underrepresented minorities.

The Company’s workforce is made up of approximately 40 percent female and approximately 60 percent underrepresented minorities.

The Company’s salaried employees are made up of approximately 35 percent female and over 20 percent underrepresented minorities.

By fostering an inclusive culture, the Company enables every member of the workforce to leverage unique talents and high performance standards to drive innovation and success.

Executives of the Company are held accountable for creating an inclusive, diverse workplace through their annual incentive plan, which includes a component focused on overall belonging scores and the representation of female and underrepresented minorities in salaried positions.

The Company supports eleven employee resource groups (ERGs) that support the Company’s mission to create a workplace where all people feel welcomed, respected, and valued.

The Company supports twelve employee resource groups (ERGs) that support the Company’s mission to create a workplace where all people feel welcomed, respected, and valued.

These employee-driven groups play a critical role in diversity, equity, and inclusion efforts and provide professional development and mentorship opportunities.

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The Company recognizes that team members perform best when they are healthy, and that optimal performance is necessary for the Company to achieve its key results.

In addition to the health care benefits package, the Company’s Inspired Health program aims to cultivate and maintain a culture of health and wellness that is focused on encouraging and empowering team members to make healthy lifestyle choices through awareness, prevention, and positive health behavior changes.

This program includes biometric screenings, on-site fitness centers and fitness center discounts, an online health university with robust information and resources, a tobacco cessation program, wellness challenges, and confidential health and wellness support.

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These goals are outlined in the Company’s 20 by 30 Challenge and include matching energy with renewable sourcing, reducing organic waste and greenhouse gas emissions, supporting regenerative agriculture, focusing on packaging sustainability, and reducing food waste.

In addition, the Company's greenhouse gas reduction targets were validated by the Science Based Targets initiative in 2023.

Significant Customers

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(Walmart), accounted for approximately 15 percent of consolidated gross sales less returns and allowances during fiscal 2023.

Walmart is a customer in all four reportable segments.

Walmart is a customer for the Company's Retail and International segments.

The Company’s top five customers collectively represent approximately 36 percent of consolidated gross sales less returns and allowances.

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Through effective marketing and strong quality assurance programs, the Company’s strategy is to provide high quality products that possess strong brand recognition, which support higher value perceptions with customers.

To grow and maintain market position, the Company focuses on meeting consumer preferences, delivering product innovation, and maintaining long-term and lasting relationships with industry partners.

Patents and Trademarks

1 unchanged sentence

The Company holds 23 U.S.

and seven foreign patents.

and eight foreign patents.

Most of the trademarks the Company uses are registered in the U.S.

1 unchanged sentence

Some of the more significant owned or licensed trademarks used by the Company or its affiliates are:

HORMEL, ALWAYS TENDER, APPLEGATE, AUSTIN BLUES, BACON 1, BLACK LABEL, BREAD READY, BURKE, CAFÉ H, CERATTI, CHI-CHI’S, COLUMBUS, COMPLEATS, CORN NUTS, CURE 81, DAN’S PRIZE, DI LUSSO, DINTY MOORE, DON MIGUEL, DOÑA MARIA, EMBASA, FAST ‘N EASY, FIRE BRAISED, FONTANINI, HAPPY LITTLE PLANTS, HERDEZ, HORMEL GATHERINGS, HORMEL VITAL CUISINE, HOUSE OF TSANG, JENNIE-O, JUSTIN’S, LA VICTORIA, LAYOUT, LLOYD’S, MARY KITCHEN, NATURAL CHOICE, NUT-RITION, OLD SMOKEHOUSE, OVEN READY, PILLOW PACK, PLANTERS, ROSA GRANDE, SADLER'S SMOKEHOUSE, SKIPPY, SPAM, SPECIAL RECIPE, THICK & EASY, VALLEY FRESH, and WHOLLY.

HORMEL, ALWAYS TENDER, APPLEGATE, AUSTIN BLUES, BACON 1, BLACK LABEL, BREAD READY, BURKE, CAFÉ H, CERATTI, CHI-CHI’S, COLUMBUS, COMPLEATS, CORN NUTS, CURE 81, DAN’S PRIZE, DI LUSSO, DINTY MOORE, DON MIGUEL, DOÑA MARIA, EMBASA, FAST ‘N EASY, FIRE BRAISED, FONTANINI, HAPPY LITTLE PLANTS, HERDEZ, HORMEL GATHERINGS, HORMEL SQUARE TABLE, HORMEL VITAL CUISINE, HOUSE OF TSANG, JENNIE-O, JUSTIN’S, LA VICTORIA, LAYOUT, LLOYD’S, MARY KITCHEN, MR.

PEANUT, NATURAL CHOICE, NUT-RITION, OLD SMOKEHOUSE, OVEN READY, PILLOW PACK, PLANTERS, ROSA GRANDE, SADLER'S SMOKEHOUSE, SKIPPY, SPAM, SPECIAL RECIPE, THICK & EASY, VALLEY FRESH, and WHOLLY.

The Company’s patents expire after a term that is typically 20 years from the date of filing, with earlier expiration possible based on the Company’s decision whether to pay required maintenance fees.

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Forward-looking statements are inherently at risk to changes in the national and worldwide economic environment, which could include, among other things, risks related to the deterioration of economic conditions;

the COVID-19 pandemic;

risks associated with acquisitions and divestitures;

risks associated with acquisitions, joint ventures, equity investments, and divestitures;

potential disruption of operations, including at co-manufacturers, suppliers, logistics providers, customers, or other third-party service providers;

failure to realize anticipated cost savings or operating efficiencies associated with strategic initiatives;

risk of loss of a material contract;

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business