Item 2. Management’s Discussion and Analysis
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Overview
The Company is a global manufacturer and marketer of branded food products. The Company’s three reportable segments are described in Note M - Segment Reporting in the Notes to the Consolidated Financial Statements in this Quarterly Report on Form 10-Q.
The Company reported diluted net earnings per share of $0.40 for the first quarter of fiscal 2024, flat compared to last year. Adjusted diluted net earnings per share (1) was $0.41. Significant factors impacting the quarter were:
• Net sales for the first quarter increased 1 percent. The benefit from higher volumes in each segment and strong results in Foodservice more than offset lower sales in the Retail and International segments.
• Segment profit for the first quarter increased 3 percent, driven primarily by improved results in the Foodservice segment.
• Earnings before income taxes for the first quarter increased 2 percent, as the benefit from higher net sales, lower logistics expenses, and higher interest and investment income more than offset higher selling, general, and administrative expenses. Adjusted earnings before income taxes (1) , excluding the impact of expenses related to the Company's transformation and modernization initiative, increased 5 percent compared to last year.
• Foodservice segment profit increased primarily due to higher sales and favorable logistics expenses.
• International segment profit increased due to the inclusion of our investment in Indonesia and significantly higher results from our partnership in the Philippines, which more than offset the impact from lower branded export demand and lower sales in China.
• Retail segment profit declined, as the benefit from higher sales in the snacking and entertaining vertical and lower logistics expenses was more than offset by the impact from lower commodity turkey pricing and lower equity in earnings from MegaMex Foods, LLC (MegaMex Foods).
• Year-to-date cash flow from operations was $404 million, up 98 percent compared to the prior year.
Consolidated Results
Volume, Net Sales, Earnings, and Diluted Earnings Per Share
Quarter Ended
In thousands, except per share amounts
January 28, 2024 January 29, 2023 %
Change
Volume (lbs.) 1,101,554 1,062,211 3.7
Net Sales $ 2,996,911 $ 2,970,992 0.9
Earnings Before Income Taxes 285,547 281,201 1.5
Net Earnings Attributable to Hormel Foods Corporation 218,863 217,719 0.5
Diluted Earnings Per Share 0.40 0.40 —
Adjusted Diluted Earnings Per Share (1)
0.41 0.40 2.5
(1) See the “Non-GAAP Financial Measures” section below for a description of the Company's use of measures not defined by United States Generally Accepted Accounting Principles (GAAP).
Net Sales
Net sales for the first quarter increased, led by the benefit from higher volumes in each segment and strong growth in Foodservice, more than offsetting lower sales in the Retail and International segments.
In Retail, net sales increased in the global flavors and snacking and entertaining verticals, and declined in the value-added meats, convenient meals and proteins, and bacon verticals. Demand was strong for many products, including Skippy ® peanut
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butter, Planters ® snack nuts, Wholly ® dips, Herdez ® salsas and sauces, La Victoria ® salsas, Jennie-O ® ground turkey, Hormel ® Square Table™ entrees and Hormel ® pepperoni, which each delivered volume and net sales improvement during the quarter. Foodservice net sales growth was broad-based, led by the Heritage Premium meats business and growth from Hormel ® Bacon 1™ precooked bacon, premium prepared proteins, Jennie-O ® branded turkey items, and pepperoni. International net sales declined due to lower branded export sales and lower sales in China.
Cost of Products Sold
Quarter Ended
In thousands
January 28, 2024 January 29, 2023 %
Change
Cost of Products Sold $ 2,488,178 $ 2,475,043 0.5
Total cost of products sold for the first quarter of fiscal 2024 increased due primarily to higher sales. On a per pound basis, cost of products sold decreased 3 percent, consistent with the Company's assumption for cost moderation in fiscal 2024.
Costs are expected to continue to moderate relative to the high levels of inflation the business has absorbed since the beginning of fiscal 2021. Raw material input costs for pork, beef, and feed are anticipated to remain volatile and above historical levels. The Company expects its transformation and modernization initiative to deliver cost savings throughout fiscal 2024, targeting packaging, logistics, and production costs.
Gross Profit
Quarter Ended
In thousands
January 28, 2024 January 29, 2023 %
Change
Gross Profit $ 508,733 $ 495,949 2.6
Percent of Net Sales 17.0 % 16.7 %
Gross profit as a percent of net sales for the first quarter of fiscal 2024 increased due to improvement in the Foodservice and Retail segments, more than offsetting a decline in International. Both the Foodservice and Retail segments benefited from lower logistics expenses on a volume basis. Lower logistics expenses are due to lower industrywide freight rates and savings realized as part of our transformation and modernization initiative.
Looking ahead to the second quarter of fiscal 2024, the Company expects gross profit as a percent of net sales to be comparable to last year. The Company expects gross profit as a percent of net sales to increase for the International segment but decline for the Retail and Foodservice segments.
Selling, General, and Administrative (SG&A)
Quarter Ended
In thousands
January 28, 2024 January 29, 2023 %
Change
SG&A $ 240,386 $ 222,056 8.3
Percent of Net Sales 8.0 % 7.5 %
Adjusted SG&A (1)
$ 231,671 $ 222,056 4.3
Adjusted Percent of Net Sales (1)
7.7 % 7.5 %
(1) See the “Non-GAAP Financial Measures” section below for a description of the Company's use of measures not defined by GAAP.
For the first quarter of fiscal 2024, SG&A and SG&A as a percent of net sales increased. This was due to higher employee and external expenses, driven in part by the Company's transformation and modernization initiative. Adjusted SG&A as a percent of net sales (1) increased marginally compared to last year.
Advertising investments in the first quarter were $44 million, a decrease of 5 percent compared to last year. The Company expects full-year advertising expense to increase compared to the prior year.
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Equity in Earnings of Affiliates
Quarter Ended
In thousands
January 28, 2024 January 29, 2023 %
Change
Equity in Earnings of Affiliates $ 16,091 $ 15,559 3.4
Equity in earnings of affiliates for the first quarter of fiscal 2024 increased due to the inclusion of our investment in Indonesia and significantly higher results from our partnership in the Philippines, offsetting lower results for MegaMex Foods.
Interest and Investment Income and Interest Expense
Quarter Ended
In thousands January 28, 2024 January 29, 2023 %
Change
Interest and Investment Income $ 19,434 $ 10,096 92.5
Interest Expense 18,326 18,347 (0.1)
Interest and investment income for the first quarter of fiscal 2024 increased primarily due to improved performance from the rabbi trust and higher interest income.
Effective Tax Rate
Quarter Ended
January 28, 2024 January 29, 2023
Effective Tax Rate 23.4 % 22.6 %
The higher effective tax rate in the first quarter of fiscal 2024 is primarily due to the impact of certain discrete items and higher federal deductions last year. The effective tax rate for fiscal 2024 is expected to be between 21.0% and 23.0%. For further information, refer to Note K - Income Taxes of the Notes to the Consolidated Financial Statements.
Segment Results
Net sales and segment profit for each of the Company’s reportable segments are set forth below. The Company does not allocate deferred compensation, expenses associated with the transformation and modernization initiative, investment income, interest expense, or interest income to its segments when measuring performance. The Company also retains various other income and expenses at the corporate level. Equity in Earnings of Affiliates is included in segment profit; however, earnings attributable to the Company’s corporate venturing investments and noncontrolling interests are excluded. These items are included below as Net Unallocated Expense and Noncontrolling Interest when reconciling to Earnings Before Income Taxes.
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The Company is an integrated enterprise, characterized by substantial intersegment cooperation, cost allocations, and sharing of assets. Therefore, the Company does not represent that these segments, if operated independently, would report the profit and other financial information shown below.
Quarter Ended
In thousands
January 28, 2024 January 29, 2023 % Change
Net Sales
Retail $ 1,911,272 $ 1,957,797 (2.4)
Foodservice 913,087 834,750 9.4
International 172,552 178,445 (3.3)
Total $ 2,996,911 $ 2,970,992 0.9
Segment Profit
Retail $ 149,505 $ 154,677 (3.3)
Foodservice 150,164 136,442 10.1
International 20,031 19,905 0.6
Total Segment Profit
319,700 311,025 2.8
Net Unallocated Expense
34,020 29,755 14.3
Noncontrolling Interest
(134) (69) (95.4)
Earnings Before Income Taxes
$ 285,547 $ 281,201 1.5
Retail
Quarter Ended
In thousands
January 28, 2024 January 29, 2023 %
Change
Volume (lbs.) 765,412 752,887 1.7
Net Sales $ 1,911,272 $ 1,957,797 (2.4)
Segment Profit 149,505 154,677 (3.3)
For the first quarter of fiscal 2024, volume growth was driven by the value-added meats, global flavors, emerging brands and bacon verticals. Net sales declined primarily due to lower contract manufacturing volume and lower commodity turkey pricing. Demand was strong for many products, including Skippy ® peanut butter, Planters ® snack nuts, Wholly ® dips, Herdez ® salsas and sauces, La Victoria ® salsas, Jennie-O ® ground turkey, Hormel ® Square Table™ entrees and Hormel ® pepperoni, which each delivered volume and net sales improvement during the quarter.
Segment profit declined, as the benefit from higher sales in the snacking and entertaining vertical and lower logistics expenses was more than offset by the impact from lower commodity turkey pricing and lower equity in earnings from MegaMex Foods.
Looking to the second quarter of fiscal 2024, the Retail segment expects lower segment profit compared to last year. Segment profit is expected to be pressured by lower pricing in whole bird turkey markets and higher SG&A. Risks to this outlook include a further slowing in consumer demand, a higher-than-expected impact from elasticities as a result of pricing actions, and greater-than-expected pricing headwinds in the whole bird turkey business.
Foodservice
Quarter Ended
In thousands
January 28, 2024 January 29, 2023 %
Change
Volume (lbs.) 256,007 237,087 8.0
Net Sales $ 913,087 $ 834,750 9.4
Segment Profit 150,164 136,442 10.1
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Volume and net sales growth for the first quarter of fiscal 2024 was broad-based and across numerous categories, led by Jennie-O ® turkey and double-digit gains for products such as Hormel ® Bacon 1™ cooked bacon, pepperoni, Austin Blues ® smoked meats and Café H ® globally inspired proteins. Additionally, the Company's Heritage Premium Meats group drove strong volume and double-digit net sales improvement for the quarter.
Segment profit increased primarily due to higher sales and favorable logistics expenses.
For the second quarter, the Foodservice segment expects higher segment profit compared to the prior year. Continued volume growth is expected to be offset by lower margins and higher SG&A compared to last year. Risks to this outlook include a softening of foodservice industry demand and higher-than-expected operating costs.
International
Quarter Ended
In thousands
January 28, 2024 January 29, 2023 %
Change
Volume (lbs.) 80,135 72,237 10.9
Net Sales $ 172,552 $ 178,445 (3.3)
Segment Profit 20,031 19,905 0.6
During the first quarter of fiscal 2024, higher commodity exports led to volume gains compared to last year. Net sales declined due to lower branded export sales and lower sales in China. Also in China, foodservice results improved as we lapped COVID-related disruption last year. This benefit was more than offset by continued weakness in the retail channel.
Segment profit increased for the quarter due to the inclusion of our investment in Indonesia and significantly higher results from our partnership in the Philippines, which offset the impact from lower branded export demand and lower sales in China.
In the second quarter of fiscal 2024, the International segment anticipates segment profit to increase significantly compared to last year. This recovery is expected to be driven by improvement across the business, including from its branded exports, partnership in the Philippines, and multinational business in Brazil. The Company also expects a benefit from the inclusion of its investment in Indonesia. Risks to this outlook include continued softness in China and commodity headwinds impacting the export business.
Unallocated Income and Expense
Quarter Ended
In thousands
January 28, 2024 January 29, 2023
Net Unallocated Expense $ 34,020 $ 29,755
Noncontrolling Interest (134) (69)
For the first quarter of fiscal 2024, net unallocated expense increased driven by transformation and modernization initiative costs and higher employee-related expenses, partially offset by favorable rabbi trust performance and higher interest income.
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 29, 2023.
(1) Non-GAAP Financial Measures
This filing includes measures of financial performance that are not defined by GAAP. The Company utilizes these non-GAAP measures to understand and evaluate operating performance on a consistent basis. These measures may also be used when making decisions regarding resource allocation and in determining incentive compensation. The Company believes these non-GAAP financial measures provide useful information to investors because they facilitate year-over-year comparison and comparison with peer companies as well as provide additional information about trends in the Company’s operations. Non-GAAP measures are not intended to be a substitute for GAAP measures in analyzing financial performance. These non-GAAP
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measures are not in accordance with generally accepted accounting principles and may be different from non-GAAP measures used by other companies.
In the fourth quarter of fiscal 2023, the Company announced a multi-year transformation and modernization initiative. The strategic investments in this initiative are expected to cease at the end of the investment period, are not expected to recur in the foreseeable future and are not considered representative of the Company's underlying operating performance. The Company does not believe such costs to be reflective of the ongoing operating cost structure; therefore, the Company is excluding certain discrete costs related to the transformation and modernization initiative from the non-GAAP financial measures. Expenses for this initiative are comprised primarily of non-recurring charges for consulting fees, which are reflected in SG&A, and charges related to portfolio optimization, which are reflected in Cost of Products Sold. This presentation is consistent with the information the Company’s management is using to evaluate performance and allocate resources and facilitates comparison of operating performance across multiple periods.
Adjusted cost of products sold, adjusted SG&A, adjusted operating income, adjusted earnings before income taxes, adjusted net earnings attributable to Hormel Foods Corporation, adjusted diluted net earnings per share, adjusted SG&A as a percent of net sales, and adjusted operating margin exclude certain costs associated with the transformation and modernization initiative. The tax impact was calculated using the effective tax rate for the quarter in which the expense was incurred.
The table below shows the calculations to reconcile from the GAAP measures to the non-GAAP financial measures.
Quarter Ended
In thousands, except per share amounts
January 28, 2024 January 29, 2023
Cost of Products Sold (GAAP) $ 2,488,178 $ 2,475,043
Transformation and Modernization Initiative (1,598) —
Adjusted Cost of Products Sold (Non-GAAP) $ 2,486,580 $ 2,475,043
SG&A (GAAP)
$ 240,386 $ 222,056
Transformation and Modernization Initiative (8,715) —
Adjusted SG&A (Non-GAAP)
$ 231,671 $ 222,056
Operating Income (GAAP) $ 284,438 $ 289,452
Transformation and Modernization Initiative 10,313 —
Adjusted Operating Income (Non-GAAP) $ 294,751 $ 289,452
Earnings Before Income Taxes (GAAP) $ 285,547 $ 281,201
Transformation and Modernization Initiative 10,313 —
Adjusted Earnings Before Income Taxes (Non-GAAP)
$ 295,859 $ 281,201
Net Earnings Attributable to Hormel Foods Corporation (GAAP)
$ 218,863 $ 217,719
Transformation and Modernization Initiative 7,900 —
Adjusted Net Earnings Attributable to Hormel Foods Corporation (Non-GAAP)
$ 226,763 $ 217,719
Diluted Net Earnings Per Share (GAAP)
$ 0.40 $ 0.40
Transformation and Modernization Initiative 0.01 —
Adjusted Diluted Net Earnings Per Share (Non-GAAP)
$ 0.41 $ 0.40
SG&A as a Percent of Net Sales (GAAP)
8.0 % 7.5 %
Transformation and Modernization Initiative (0.3) —
Adjusted SG&A as a Percent of Net Sales (Non-GAAP)
7.7 % 7.5 %
Operating Margin (GAAP)
9.5 % 9.7 %
Transformation and Modernization Initiative 0.3 —
Adjusted Operating Margin (Non-GAAP)
9.8 % 9.7 %
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LIQUIDITY AND CAPITAL RESOURCES
When assessing liquidity and capital resources, the Company evaluates cash and cash equivalents, short-term and long-term investments, income from operations, and borrowing capacity.
Cash Flow Highlights
Quarter Ended
In thousands
January 28, 2024 January 29, 2023
Cash and Cash Equivalents $ 963,212 $ 599,789
Cash Provided by (Used in) Operating Activities 403,980 203,629
Cash Provided by (Used in) Investing Activities (48,154) (451,469)
Cash Provided by (Used in) Financing Activities (133,365) (141,570)
Increase (Decrease) in Cash and Cash Equivalents 226,680 (382,318)
Cash and cash equivalents increased $227 million for the first quarter of fiscal 2024, as cash from operating activities was sufficient to cover dividend payments and capital expenditures. The purchase of a minority interest in PT Garudafood Putra Putri Jaya Tbk (Garudafood) was the primary driver of the decline in cash and cash equivalents in the prior year. Additional details related to significant drivers of cash flows are provided below.
Cash Provided by (Used in) Operating Activities
• Cash flows from operating activities were largely impacted by changes in operating assets and liabilities.
– Inventory decreased $104 million for the first quarter of fiscal 2024 compared to an increase of $12 million in the prior year. The decrease in inventory during fiscal 2024 was due to improvement in the Company's supply chain and the negative impact of Highly Pathogenic Avian Influenza on turkey operations. The increase in inventory during fiscal 2023 was due to production outpacing sales.
– Accounts receivable decreased $68 million and $80 million during the first quarter of fiscal 2024 and fiscal 2023, respectively primarily due to lower sales.
– Accounts payable and accrued expenses decreased $132 million and $171 million in the first quarter of fiscal 2024 and fiscal 2023, respectively, due to annual incentive payments, feed and livestock deferral payments, and general timing of payments.
Cash Provided by (Used in) Investing Activities
• Capital expenditures were $47 million and $37 million in the first quarter of fiscal 2024, and fiscal 2023, respectively. The largest spend in the first quarter of fiscal 2024 was for the transition from harvest to value-added capacity at our facility in Barron, Wisconsin and wastewater infrastructure to support our operations in Austin, Minnesota. The largest spend in the first quarter of fiscal 2023 was related to capacity expansion for pepperoni and the SPAM ® family of products.
• During the first quarter of fiscal 2023, the Company purchased a minority interest in Garudafood for $411 million.
Cash Provided by (Used in) Financing Activities
• Cash dividends paid to the Company’s shareholders are an ongoing financing activity for the Company with payments totaling $150 million during the first quarter of fiscal 2024, compared to $142 million in the first quarter of fiscal 2023.
• Proceeds from the exercise of stock options were $19 million in the first quarter of fiscal 2024, compared to $3 million in the first quarter of fiscal 2023. The increase in proceeds was due to more options exercised during fiscal 2024 compared to fiscal 2023.
Sources and Uses of Cash
The Company’s balanced business model, with diversification across raw material inputs, channels, and categories, provides stability in ever-changing economic environments. The Company maintains a disciplined capital allocation strategy by applying a waterfall approach, which focuses first on required uses of cash, such as capital expenditures to maintain facilities, dividend returns to investors, mandatory debt repayments, and pension obligations. Next, the Company looks to strategic items in support of growth initiatives, such as capital projects, acquisitions, additional dividend increases, and working capital investments. Finally, the Company evaluates opportunistic uses, including incremental debt repayment and share repurchases.
The Company believes its anticipated income from operations, cash on hand, borrowing capacity under the current credit facility, and access to capital markets will be adequate to meet all short-term and long-term commitments. The Company continues to look for opportunities to make investments and acquisitions that align with its strategic priorities. The Company's ability to leverage its balance sheet through the issuance of debt provides the flexibility to pursue strategic opportunities which may require additional funding.
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Dividend Payments
The Company remains committed to providing returns to investors through cash dividends. The Company has paid 382 consecutive quarterly dividends since becoming a public company in 1928. The annual dividend rate for fiscal 2024 increased to $1.13 per share, representing the 58th consecutive annual dividend increase.
Capital Expenditures
Capital expenditures are first allocated to required maintenance and then growth opportunities based on the needs of the business. Capital expenditures supporting growth opportunities in fiscal 2024 are expected to focus on projects related to value-added capacity, infrastructure, and new technology. Capital expenditures for fiscal 2024 are estimated to be $280 million.
Debt
As of January 28, 2024, the Company’s outstanding debt included $3.3 billion of fixed rate unsecured senior notes due in fiscal 2024, 2028, 2030, and 2051 with interest payable semi-annually. During the first quarter of fiscal 2024, the Company made $28 million of interest payments and expects to make an additional $28 million of interest payments during fiscal 2024 on these notes. On January 30, 2024, the Company's Board of Directors approved up to $500 million of new long-term financing which is intended, along with cash on hand, to pay the $950 million notes due June 2024 upon maturity. See Note J - Long-Term Debt and Other Borrowing Arrangements of the Notes to the Consolidated Financial Statements for additional information.
Borrowing Capacity
As a source of short-term financing, the Company maintains a $750 million unsecured revolving credit facility. The maximum commitment under this credit facility may be further increased by $375 million, generally by mutual agreement of the lenders and the Company, subject to certain customary conditions. Funds drawn from this facility may be used by the Company to refinance existing debt, for working capital or other general corporate purposes, and for funding acquisitions. The lending commitments under the facility are scheduled to expire on May 6, 2026, at which time the Company will be required to pay in full all obligations then outstanding. As of January 28, 2024, the Company had no outstanding draws from this facility.
Debt Covenants
The Company’s debt and credit agreements contain customary terms and conditions including representations, warranties, and covenants. These debt covenants limit the ability of the Company to, among other things, incur debt for borrowed money secured by certain liens, engage in certain sale and leaseback transactions, and require maintenance of certain consolidated leverage ratios. As of January 28, 2024, the Company was in compliance with all covenants and expects to maintain compliance in the future.
Cash Held by International Subsidiaries
As of January 28, 2024, the Company had $190 million of cash and cash equivalents held by international subsidiaries. The Company maintains all undistributed earnings as permanently reinvested. The Company evaluates the balance and uses of cash held internationally based on the needs of the business.
Share Repurchases
The Company is authorized to repurchase 3,677,494 shares of common stock as part of an existing plan approved by the Company’s Board of Directors. During the first quarter of fiscal 2024, the Company did not repurchase any shares of stock. The Company continues to evaluate share repurchases as part of its capital allocation strategy.
Commitments
There have been no 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 29, 2023.
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.
CRITICAL ACCOUNTING ESTIMATES
Management's discussion and analysis of financial condition and results of operations is based upon the Company's consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires the Company to make estimates, judgments, and assumptions that can have a meaningful effect on the reporting of consolidated financial statements. The significant accounting policies used in preparing these Consolidated Financial Statements are consistent with those described in Note A - Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements in the Form 10-K.
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Critical accounting estimates are defined as those reflective of significant judgments, estimates, and uncertainties, which may result in materially different results under different assumptions and conditions. There have been no material changes in the Company’s Critical Accounting Estimates as disclosed in its Annual Report on Form 10-K for the fiscal year ended October 29, 2023.
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 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 discussions of risk factors in the Company's most recent Annual Report on Form 10-K and in Part II, Item 1A of this Quarterly Report on Form 10-Q contain 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 changes in the national and worldwide economic environment, which could include, among other things, risks related to the deterioration of economic conditions; 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; the Company’s inability to protect information technology systems against, or effectively respond to, cyber attacks or security breaches; deterioration of labor relations, labor availability or increases to labor costs; general risks of the food industry, including food contamination; outbreaks of disease among livestock and poultry flocks; fluctuations in commodity prices and availability of raw materials and other inputs; fluctuations in market demand for the Company’s products; damage to the Company’s reputation or brand image; climate change, or legal, regulatory, or market measures to address climate change; risks of litigation; potential sanctions and compliance costs arising from government regulation; compliance with stringent environmental regulations and potential environmental litigation; and risks arising from the Company’s foreign operations.