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Item 2. Management’s Discussion and Analysis

2026-02-26 compared with 2025-08-28 · 198 added, 227 removed, 199 unchanged (68% of the section changed)

1 unchanged sentence

RESULTS OF OPERATIONS

The Company is a global manufacturer and marketer of branded food products.

The Company’s three reportable segments, Retail, Foodservice, and International, are described in Note N - Segment Reporting in the Notes to the Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

The Company discloses certain measures not defined by United States (U.S.) Generally Accepted Accounting Principles (GAAP), including organic volume, organic net sales, adjusted selling, general and administrative (SG&A) expenses, adjusted SG&A as a percent of net sales, adjusted earnings before income taxes, and adjusted diluted earnings per share.

The Company is a global manufacturer and marketer of branded food products and remains focused on driving long-term growth through a balanced business model, a diverse portfolio, and a commitment to creating value for all stakeholders.

The Company’s three reportable segments, Retail, Foodservice, and International, are described in Note O - Segment Reporting in the Notes to the Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

The Company discloses certain measures not defined by United States (U.S.) Generally Accepted Accounting Principles (GAAP), including organic volume, organic net sales, adjusted selling, general and administrative (SG&A), adjusted SG&A as a percent of net sales, adjusted earnings before income taxes, and adjusted diluted earnings per share.

The Company utilizes these non-GAAP measures to understand and evaluate operating performance on a consistent basis.

For additional information and reconciliations to the most closely comparable measures calculated in accordance with GAAP, see the "Non-GAAP Measures" section of this Item.

Diluted earnings per share was $0.33 for the third quarter of fiscal 2025, up 3 percent compared to the same period last year.

Adjusted diluted earnings per share for the third quarter of fiscal 2025 was $0.35, down 5 percent compared to the same period last year.

Diluted earnings per share was $0.33 for the first quarter of fiscal 2026, up 6 percent compared to the same period last year.

Adjusted diluted earnings per share for the first quarter of fiscal 2026 was $0.34, down 3 percent compared to the same period last year.

Significant factors impacting the quarter are listed below.

All comparisons are to the same period of the prior year unless otherwise noted.

• Net sales for the third quarter of fiscal 2025 increased 5 percent compared to the prior year.

Organic net sales increased 6 percent with growth in each segment.

• Total segment profit for the third quarter of fiscal 2025 decreased 3 percent.

Segment profit declined in each segment.

• Retail segment profit declined in the third quarter of fiscal 2025, as robust net sales growth was more than offset by input cost pressures and higher SG&A expenses.

• Foodservice segment profit decreased in the third quarter of fiscal 2025, as meaningful net sales growth was more than offset by the rise in commodity input costs and margin pressures primarily in non-core businesses.

• International segment profit declined in the third quarter of fiscal 2025, as meaningful net sales growth was more than offset by competitive pressures in Brazil and lower pork offal margins.

• Earnings before income taxes for the third quarter of fiscal 2025 increased 5 percent, as the benefits from higher net sales and higher interest and investment income were partially offset by higher input costs.

• Net sales for the first quarter of fiscal 2026 increased 1 percent.

Organic net sales increased 2 percent with growth from the Foodservice and International segments and lower organic net sales from the Retail segment.

• Total segment profit for the first quarter of fiscal 2026 decreased 1 percent.

Segment profit increased in both Foodservice and International and was more than offset by the decline in the Retail segment.

◦ Retail segment profit declined in the first quarter of fiscal 2026, due to lower sales, higher raw material input costs, and higher logistics expenses.

◦ Foodservice segment profit increased in the first quarter of fiscal 2026, driven primarily by the benefit from pricing actions.

◦ International segment profit increased in the first quarter of fiscal 2026, as lower export margins were offset by lower SG&A and growth in China.

• Earnings before income taxes for the first quarter of fiscal 2026 increased 7 percent, as the benefits from higher net sales and the $23.5 million gain on the sale of our controlling equity interest in Justin's, LLC were partially offset by higher cost of products sold.

Adjusted earnings before income taxes decreased 2 percent.

• The pre-tax impact of non-recurring expenses related to the Company’s Transform and Modernize (T&M) initiative in the third quarter of fiscal 2025 was $14.5 million, most of which was recorded in SG&A.

• Cash flow from operations was $522 million for the first nine months of fiscal 2025, a 39 percent decrease from the comparable period of the prior year.

The decline in cash flow from operations was primarily due to a planned inventory build in the second and third quarters of fiscal 2025 and elevated commodity market prices.

Changes in global trade policies, including recently announced tariffs and retaliatory tariffs, did not directly have a material impact on our results of operations during the third quarter or first nine months of fiscal 2025.

The Company continues to monitor and evaluate the impact of proposed and enacted tariffs, including proposed and enacted retaliatory tariffs, and other trade restrictions, as well as our ability to mitigate their impacts.

• The pre-tax impact of non-recurring expenses related to the Company’s Transform and Modernize (T&M) initiative, corporate restructuring plan, and a consulting agreement with a former executive (Consulting Agreement) in the first quarter of fiscal 2026 were $27.2 million, which was primarily recorded in SG&A.

• Cash flow from operations was $349 million for the first quarter of fiscal 2026, a 13 percent increase largely due to a reduction in inventory.

During the first quarter of fiscal 2026, the Company observed increased logistics costs amid a tightening of available freight capacity, largely driven by winter weather disruptions and industry dynamics.

Such cost pressures contributed to higher expenses in the first quarter of fiscal 2026.

If logistics costs continue to rise or remain elevated, such conditions could increase the Company’s expenses and have an adverse impact on the Company’s results of operations.

The Company will continue to monitor these conditions and evaluate any potential impact on future periods.

Changes in global trade policies, including tariffs and retaliatory tariffs, had a minor impact on the Company's results of operations during the first quarter of fiscal 2026.

Consolidated Results

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

Quarter Ended Nine Months Ended

Quarter Ended

In thousands, except per share amounts

July 27, 2025 July 28, 2024 %

Change July 27, 2025 July 28, 2024 %

January 25, 2026 January 26, 2025 %

Volume (lbs.) 1,013,764 1,055,308 (3.9)

4 unchanged sentences

3,027,317 2,980,277 1.6

Earnings Before Income Taxes 236,514 225,719 4.8 685,076 755,404 (9.3)

Net Earnings Attributable to Hormel Foods Corporation

4 unchanged sentences

Volume and Net Sales

Volume and net sales increased for the third quarter of fiscal 2025 while volume decreased and net sales increased for the first nine months of fiscal 2025 compared to the prior year.

For the third quarter of fiscal 2025, net sales increased in each segment.

Net sales growth across the enterprise was driven primarily by the turkey portfolio, Planters ® snack nuts, the SPAM ® family of products, and the Foodservice customized solutions business.

For the first nine months of fiscal 2025, net sales increased in each segment.

Net sales growth for the first nine months of fiscal 2025 was driven primarily by the turkey portfolio, the customized solutions business, the SPAM ® family of products, the Mexican foods portfolio, and the bacon portfolio.

For the third quarter of fiscal 2025, volume grew in the Retail and International segments while organic volume grew in the Foodservice segment.

For the first nine months of fiscal 2025, organic volume in the Foodservice segment increased compared to the prior year.

Volume increased in the International segment and declined in the Retail segment for the first nine months of fiscal 2025.

In the fourth quarter of fiscal 2025, the Company expects net sales growth from each of its segments compared to the prior year.

Net Sales increased for the first quarter of fiscal 2026 while volume decreased compared to the prior year.

For the first quarter of fiscal 2026, organic net sales growth across the enterprise were led by the Foodservice and International segments offset by declines in the Retail segment.

Strong performance in our multinational businesses and our Foodservice customized solutions business, partially offset by the strategic exit from select non-core private label snack nut items, were the key drivers of net sales growth.

For the first quarter of fiscal 2026, organic volume increased marginally in the International segment, was comparable to the prior year in the Foodservice segment, and declined in the Retail segment, primarily driven by the strategic exit from select non-core private label snack nut items.

In fiscal 2026, the Company expects net sales growth, which assumes growth across a broad range of categories, increased brand support, and market-based pricing actions.

Risks to this outlook include slowing consumer demand and commodity price fluctuations.

Cost of Products Sold

Quarter Ended Nine Months Ended

July 27, 2025 July 28, 2024 %

Change July 27, 2025 July 28, 2024 %

Quarter Ended

January 25, 2026 January 26, 2025 %

Cost of Products Sold $ 2,557,742 $ 2,513,581 1.8

Cost of products sold for the third quarter of fiscal 2025 increased, primarily due to increased volume and higher commodity input costs, mainly for pork bellies, beef, and nuts.

Cost of products sold for the first nine months of fiscal 2025 increased primarily due to higher commodity input costs, mainly for pork bellies, nuts, and beef.

On a per pound basis, cost of products sold for the third quarter and first nine months of fiscal 2025 increased compared to the prior year.

Quarter Ended Nine Months Ended

July 27, 2025 July 28, 2024 %

Change July 27, 2025 July 28, 2024 %

Cost of products sold for the first quarter of fiscal 2026 increased, primarily due to higher logistics expenses and higher commodity input costs, mainly for beef, pork trim, and nuts.

On a per pound basis, cost of products sold for the first quarter of fiscal 2026 increased compared to the prior year.

Quarter Ended

January 25, 2026 January 26, 2025 %

Gross Profit $ 469,575 $ 475,232 (1.2)

Percent of Net Sales 15.5 % 15.9 %

For the third quarter and first nine months of fiscal 2025, gross profit as a percent of net sales declined.

For the third quarter and first nine months of fiscal 2025, gross profit as a percent of net sales declined for each segment.

All segments benefited from savings realized as part of the Company’s T&M initiative in the third quarter and first nine months of fiscal 2025.

For the fourth quarter of fiscal 2025, the Company expects gross profit as a percent of net sales to decrease compared to last year.

The Company expects gross profit as a percent of net sales to be comparable for the Retail segment and to decrease for the Foodservice and International segments.

For the first quarter of fiscal 2026, gross profit as a percent of net sales declined as gross profit improvement from the Foodservice segment was more than offset by declines in Retail and International.

All segments benefited from market-based pricing actions and savings generated through the Company’s T&M initiative, which were offset by inflationary pressures.

Selling, General, and Administrative (SG&A)

Quarter Ended Nine Months Ended

July 27, 2025 July 28, 2024 %

Change July 27, 2025 July 28, 2024 %

Quarter Ended

January 25, 2026 January 26, 2025 %

SG&A $ 241,698 $ 263,013 (8.1)

3 unchanged sentences

Adjusted Percent of Net Sales

8.1 % 7.9 % 8.1 % 8.0 %

For the third quarter of fiscal 2025, SG&A and SG&A as a percent of net sales decreased, primarily due to the lapping of prior year legal expenses which were partially offset by higher employee-related expenses.

For the first nine months of fiscal 2025, SG&A increased and SG&A as a percent of net sales was comparable to the prior year.

Higher employee-related expenses, increased expenses related to the T&M initiative, and the loss on the sale of a non-core sow operation were partially offset by the lapping of prior year legal expenses and lower advertising expense.

Advertising investments in the third quarter of fiscal 2025 were $41 million, an increase of 2 percent compared to the prior year.

For the first nine months of fiscal 2025, advertising investments were $121 million, a decrease of 6 percent compared to last year.

The Company expects advertising investments to decrease in the fourth quarter of fiscal 2025 compared to the prior year.

For the first quarter of fiscal 2026, SG&A and SG&A as a percent of net sales decreased.

The gain on the sale of the controlling equity interest in Justin’s, LLC and the lapping of a loss on the sale of a non-core sow operation in fiscal 2025 were partially offset by expenses associated with the corporate restructuring plan and Consulting Agreement.

Adjusted SG&A was comparable to the prior year, as a reduction in marketing and advertising was offset by higher employee-related and legal expenses.

Advertising investments in the first quarter of fiscal 2026 were $41 million, a decrease of 6 percent compared to the prior year.

In fiscal 2026, the Company intends to continue investing in its priority brands and for the full-year advertising expense to increase compared to the prior year.

Equity in Earnings of Affiliates

Quarter Ended Nine Months Ended

In thousands July 27, 2025 July 28, 2024 %

Change July 27, 2025 July 28, 2024 %

Quarter Ended

In thousands January 25, 2026 January 26, 2025 %

Equity in Earnings of Affiliates $ 15,820 $ 16,111 (1.8)

Equity in earnings of affiliates for the third quarter of fiscal 2025 increased due to favorable results for MegaMex Foods, LLC, and a modest benefit from international investments.

For the first nine months of fiscal 2025, equity in earnings of affiliates increased, primarily due to favorable results for MegaMex Foods, LLC, which were partially offset by the results of international investments.

Interest and Investment Income and Interest Expense

Quarter Ended Nine Months Ended

In thousands July 27, 2025 July 28, 2024 %

Change July 27, 2025 July 28, 2024 %

Interest and Investment Income $ 16,227 $ 10,484 54.8 $ 27,084 $ 43,416 (37.6)

Equity in earnings of affiliates for the first quarter of fiscal 2026 decreased due to the results of MegaMex Foods, LLC, which were partially offset by favorable results from international investments.

Interest Income, Interest Expense, and Other Income (Expense), Net

Quarter Ended

In thousands January 25, 2026 January 26, 2025 %

Interest Income

$ 6,528 $ 7,543 (13.5)

Interest Expense 19,728 19,462 1.4

Interest and investment income increased for the third quarter of fiscal 2025, primarily due to favorable rabbi trust performance.

Interest and investment income decreased for the first nine months of fiscal 2025, primarily due to lower average monthly cash balances and performance from the rabbi trust.

Interest expense decreased in the third quarter and first nine months of fiscal 2025, primarily due to the lapping of interest rate swap amortization.

Other Income (Expense), Net

3,815 1,661 129.6

Interest income declined in the first quarter of fiscal 2026, primarily due to lower interest rates.

Interest expense marginally increased in the first quarter.

Other income increased in the first quarter of fiscal 2026, primarily attributable to lower pension costs.

Effective Tax Rate

Quarter Ended Nine Months Ended

July 27, 2025 July 28, 2024 July 27, 2025 July 28, 2024

Quarter Ended

January 25, 2026 January 26, 2025

Effective Tax Rate 22.4 % 21.8 %

The effective tax rate in the third quarter of fiscal 2025 was 22.3% compared to 21.7% for the prior year, primarily due to decreased benefits from the purchase of federal transferable energy credits.

For the first nine months of fiscal 2025, the Company benefited from increased federal deductions compared to the prior year.

For additional information, refer to Note L - Income Taxes of the Notes to the Consolidated Financial Statements.

The effective tax rate for fiscal 2025 is expected to be approximately 22.0%.

The effective tax rate in the first quarter of fiscal 2026 was 22.4% compared to 21.8% for the prior year, primarily due to an increase in stock option expirations in the first quarter of fiscal 2026.

For additional information, refer to Note M - Income Taxes of the Notes to the Consolidated Financial Statements.

The effective tax rate for fiscal 2026 is expected to be between 21.5 and 22.5 percent.

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, non-recurring expenses associated with the T&M initiative, gains or losses on the sale of businesses, investment income, interest expense, or interest income to its segments when measuring performance.

The Company does not allocate deferred compensation, non-recurring expenses associated with the T&M initiative, corporate restructuring plan costs, gains or losses on the sale of businesses, and interest and other income and expense to its segments when measuring performance.

The Company also retains various other income and expenses at the corporate level.

4 unchanged sentences

Therefore, the Company does not represent that these segments, if operated independently, would report the profit and other financial information shown below.

Quarter Ended Nine Months Ended

July 27, 2025 July 28, 2024 % Change July 27, 2025 July 28, 2024 % Change

Quarter Ended

January 25, 2026 January 26, 2025 % Change

Retail $ 1,847,806 $ 1,890,133 (2.2)

15 unchanged sentences

$ 234,312 $ 218,073 7.4

Quarter Ended Nine Months Ended

July 27, 2025 July 28, 2024 %

Change July 27, 2025 July 28, 2024 %

Quarter Ended

January 25, 2026 January 26, 2025 %

Volume (lbs.) 693,884 736,886 (5.8)

Organic Volume (lbs.)

693,884 735,472 (5.7)

Net Sales $ 1,847,806 $ 1,890,133 (2.2)

Organic Net Sales

1,847,806 1,882,212 (1.8)

Segment Profit 96,190 119,147 (19.3)

Net sales growth was wide ranging in the Retail segment in the third quarter of fiscal 2025.

Meaningful volume and net sales contributions came from the turkey portfolio, Planters ® snack nuts, and the SPAM ® family of products.

Other brands which grew volume and net sales in the quarter include Wholly ® guacamole, Hormel ® Black Label ® bacon, Hormel ® chili, and Gatherings ® party trays.

For the first nine months of fiscal 2025, net sales growth for the Retail segment was led by the turkey portfolio, the SPAM ® family of products, and the Mexican foods portfolio.

Retail segment profit declined in the third quarter of fiscal 2025, as robust net sales growth was more than offset by input cost pressures and higher SG&A expenses.

For the first nine months of fiscal 2025, segment profit decreased as net sales growth was more than offset by higher input costs.

For the fourth quarter of fiscal 2025, Retail segment profit is anticipated to be comparable to the prior year, as the benefit from net sales growth is expected to be offset by higher input costs.

Quarter Ended Nine Months Ended

July 27, 2025 July 28, 2024 %

Change July 27, 2025 July 28, 2024 %

Organic volume and organic net sales declined in the first quarter of fiscal 2026 compared to the prior year.

Organic volume and organic net sales performance was significantly impacted by the strategic exit from select non-core private label snack nut items and declines in branded and private label packaged deli items.

Key priority brands delivered year-over-year net sales growth, including Jennie-O ® ground turkey and Planters ® snack nuts.

Retail segment profit declined in the first quarter of fiscal 2026, due to lower sales, higher raw material input costs, and higher logistics expenses.

Quarter Ended

January 25, 2026 January 26, 2025 %

Volume (lbs.) 244,419 243,853 0.2

5 unchanged sentences

Segment Profit 156,541 138,826 12.8

Organic volume and organic net sales growth were broad-based in the Foodservice segment in the third quarter of fiscal 2025, with significant contributions from the customized solutions business, Planters ® snack nuts and the Jennie-O ® turkey portfolio.

Other branded products, such as Hormel ® pepperoni, Hormel ® Fire Braised™ meats, and Café H ® globally inspired proteins, delivered strong volume and net sales growth.

For the first nine months of fiscal 2025, organic net sales growth in the Foodservice segment was led by the customized solutions business, the Jennie-O ® turkey portfolio, and premium prepared proteins.

Organic volume increased compared to the prior year period.

Segment profit decreased for the third quarter of fiscal 2025 as meaningful net sales growth was more than offset by the rise in commodity input costs and margin pressures, primarily in non-core businesses.

For the first nine months of fiscal 2025, segment profit declined, as net sales growth was more than offset by margin pressures, primarily in non-core businesses.

The Foodservice segment continued to benefit from an extensive range of solutions-based products, its direct-selling organization and a diverse channel presence during the third quarter and first nine months of fiscal 2025.

For the fourth quarter of fiscal 2025, the Company expects Foodservice segment profit to decrease compared to the prior year, as organic net sales growth is expected to be more than offset by margin pressures, primarily in non-core businesses.

Organic net sales growth was broad-based in the Foodservice segment in the first quarter of fiscal 2026, primarily driven by strong performance across the customized solutions business, premium prepared proteins, and branded pepperoni, while organic volume was flat.

Notable products such as Austin Blues ® smoked meats, Hormel ® Fire Braised ® meats, and Hormel ® Natural Choice ® meats delivered strong volume and net sales growth.

Segment profit increased for the first quarter of fiscal 2026, primarily driven by the benefit of pricing actions, which remain aligned with market dynamics.

The Foodservice segment continued to benefit from an extensive range of solutions-based products, its direct-selling organization, and a diverse channel presence during the first quarter of fiscal 2026.

International

Quarter Ended Nine Months Ended

July 27, 2025 July 28, 2024 %

Change July 27, 2025 July 28, 2024 %

Quarter Ended

January 25, 2026 January 26, 2025 %

Volume (lbs.) 75,461 74,569 1.2

Organic Volume (lbs.) 75,461 74,556 1.2

Net Sales $ 181,284 $ 168,495 7.6

Organic Net Sales 181,284 168,386 7.7

Segment Profit 22,910 20,845 9.9

Strong volume and net sales performance in the International segment was driven by growth across the China market and robust exports of SPAM ® luncheon meat in the third quarter and first nine months of fiscal 2025.

International segment profit decreased in the third quarter of fiscal 2025 as meaningful net sales growth was more than offset by competitive pressures in Brazil and lower pork offal margins.

For the first nine months of fiscal 2025, segment profit declined, as net sales growth was more than offset by softness in Brazil.

In the fourth quarter of fiscal 2025, the Company expects International segment profit to decrease compared to the prior year, primarily due to higher input costs and continued softness in Brazil.

For the International segment, organic volume and organic net sales grew in the first quarter of fiscal 2026.

Organic net sales growth was driven by strong performance in our multinational businesses and branded exports, led by SPAM ® luncheon meat.

International segment profit increased in the first quarter of fiscal 2026 largely due to lower SG&A and growth in China, which were partially offset by lower export margins.

Unallocated Income and Expense

Quarter Ended Nine Months Ended

July 27, 2025 July 28, 2024 July 27, 2025 July 28, 2024

Quarter Ended

January 25, 2026 January 26, 2025

Net Unallocated Expense $ 41,298 $ 60,700

Noncontrolling Interest (32) (45)

For the third quarter of fiscal 2025, net unallocated expense decreased, primarily due to the lapping of prior year legal expenses.

Net unallocated expense increased for the first nine months of fiscal 2025, primarily due to reduced interest income, the loss on the sale of a non-core sow operation, rabbi trust performance, and higher expenses related to the T&M initiative.

These factors were partially offset by the lapping of prior year legal expenses.

For the first quarter of fiscal 2026, net unallocated expense decreased due to the gain on the sale of the controlling equity interest in Justin’s, LLC, and lapping a loss on the sale of a non-core sow operation in fiscal 2025.

These factors were partially offset by expenses associated with the corporate restructuring plan and Consulting Agreement.

Related Party Transactions

1 unchanged sentence

Non-GAAP Measures

This filing includes measures of financial performance that are not defined by GAAP.

This report 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.

10 unchanged sentences

The Company also does not adjust for savings realized through the T&M initiative as these are considered ongoing in nature and reflective of expected future operating performance.

Loss on Sale of Business

Gain or Loss on Sale of Business

In the first quarter of fiscal 2026, the Company sold 51% of its equity interest in Justin's, LLC, resulting in a gain on the sale.

In the first quarter of fiscal 2025, the Company sold Mountain Prairie, LLC, a non-core sow operation, resulting in a loss on the sale.

The Company believes the one-time detriment from the sale, including transaction costs, is not reflective of the Company’s ongoing operating cost structure, is not indicative of the Company’s core operating performance, and is not meaningful when comparing the Company’s operating performance against that of prior periods.

Thus, the Company has adjusted for (i.e.

excluded) the loss.

The Company believes the one-time impacts from these sales are not reflective of the Company’s ongoing operating cost structure, are not indicative of the Company’s core operating performance, and are not meaningful when comparing the Company’s operating performance against that of prior periods.

Thus, the Company has adjusted for (i.e., excluded) these impacts.

Legal Matters

From time to time, the Company incurs expenses related to discrete legal matters that the Company believes are not indicative of the Company’s core operating performance, do not reflect expected future operating costs, and are not meaningful when comparing the Company’s operating performance against that of prior periods.

The Company adjusts for (i.e., excludes) these expenses.

From time to time, the Company receives proceeds or incurs expenses related to discrete legal matters that the Company believes are not indicative of the Company’s core operating performance, do not reflect expected future operating income or costs, and are not meaningful when comparing the Company’s operating performance against that of prior periods.

The Company adjusts for (i.e., excludes) these impacts.

Litigation Settlements

In fiscal 2025 and 2024, the Company entered into settlement agreements with certain plaintiffs in its pending antitrust litigation.

See Note J - Commitments and Contingencies of the Notes to the Consolidated Financial Statements for additional information.

Organic Volume and Organic Net Sales

The non-GAAP measures of organic volume and organic net sales are presented to provide investors with additional information to facilitate the comparison of past and present operations.

Organic volume and organic net sales exclude the impact of the sale of Hormel Health Labs, LLC in the Foodservice segment in the fourth quarter of fiscal 2024.

In fiscal 2025, the Company entered into a settlement agreement with a plaintiff in a pending antitrust litigation.

See Note K - Commitments and Contingencies of the Notes to the Consolidated Financial Statements for additional information.

Corporate Restructuring Plan

In the fourth quarter of fiscal 2025, the Company commenced a corporate restructuring plan, the focus of which is to reduce administrative expenses, improve efficiencies, and align the workforce to the Company’s future needs, while enabling

continued investment in the Company’s growth.

The costs incurred to execute the corporate restructuring plan and the charges incurred under the program are primarily related to severance and employee benefit costs.

Because the Company believes the charges incurred under the corporate restructuring plan do not reflect future operating costs and are not meaningful when comparing the Company's operating performance against that of prior periods, the Company adjusts for (i.e., excludes) these impacts.

See Note P - Restructuring of the Notes to the Consolidated Financial Statements for additional information.

Consulting Agreement

On October 27, 2025, the Company entered into an agreement with its former Chief Executive Officer (CEO), pursuant to which the former CEO is expected to provide consulting services to the Company until April 2027.

Consulting costs related to the agreement include cash and share-based compensation, which were primarily recognized in the first quarter of fiscal 2026.

The Company believes non-recurring costs associated with the Consulting Agreement are not reflective of the Company’s ongoing operating cost structure, are not indicative of the Company’s core operating performance, and are not meaningful when comparing the Company’s operating performance against that of prior periods;

therefore, the Company is excluding these discrete costs.

The tables below show the calculations to reconcile from the GAAP measures to the non-GAAP measures presented in this Quarterly Report on Form 10-Q.

The tax impacts were calculated using the effective tax rate for the quarter in which the transactions occurred.

Quarter Ended Nine Months Ended

In thousands, except per share amounts July 27, 2025 July 28, 2024 July 27, 2025 July 28, 2024

The tax provision expense or benefit of each of the pre-tax items excluded from the Company's GAAP results was computed based on the facts and tax implications associated with each item.

Quarter Ended

In thousands, except per share amounts January 25, 2026 January 26, 2025

Cost of Products Sold (GAAP) $ 2,557,742 $ 2,513,581

Transform and Modernize Initiative (1)

(1,010) (1,226) (3,973) (4,646)

Adjusted Cost of Products Sold (Non-GAAP) $ 2,557,360 $ 2,513,395

2 unchanged sentences

(10,543) (13,968)

Loss on Sale of Business — — (11,324) —

Gain (Loss) on Sale of Business 23,508 (11,324)

Corporate Restructuring Plan (8,476) —

Consulting Agreement (7,775) —

Litigation Settlements — (240)

3 unchanged sentences

10,925 14,155

Loss on Sale of Business — — 11,324 —

(Gain) Loss on Sale of Business (23,508) 11,324

Corporate Restructuring Plan 8,476 —

Consulting Agreement 7,775 —

Litigation Settlements — 240

3 unchanged sentences

10,925 14,155

Loss on Sale of Business — — 11,324 —

(Gain) Loss on Sale of Business (23,508) 11,324

Corporate Restructuring Plan 8,476 —

Consulting Agreement 7,775 —

Litigation Settlements — 240

2 unchanged sentences

Transform and Modernize Initiative (1)(2)

3,233 2,931 9,960 8,009

Loss on Sale of Business — — 2,469 —

(Gain) Loss on Sale of Business (5,760) 2,469

Corporate Restructuring Plan 2,077 —

Consulting Agreement — —

Litigation Settlements — 52

Adjusted Provision for Income Taxes (Non-GAAP) $ 51,536 $ 53,149

Quarter Ended

In thousands, except per share amounts January 25, 2026 January 26, 2025

Net Earnings Attributable to Hormel Foods Corporation (GAAP) $ 181,801 $ 170,575

Transform and Modernize Initiative (1)(2)

11,263 10,575 35,242 27,654

Loss on Sale of Business — — 8,855 —

(Gain) Loss on Sale of Business (17,749) 8,855

Corporate Restructuring Plan 6,400 —

Consulting Agreement 7,775 —

Litigation Settlements — 188

3 unchanged sentences

Transform and Modernize Initiative (1)(2)

0.02 0.02 0.06 0.05

Loss on Sale of Business — — 0.02 —

(Gain) Loss on Sale of Business (0.03) 0.02

Corporate Restructuring Plan 0.01 —

Consulting Agreement 0.01 —

Litigation Settlements — —

1 unchanged sentence

$ 0.34 $ 0.35

Quarter Ended Nine Months Ended

July 27, 2025 July 28, 2024 July 27, 2025 July 28, 2024

Quarter Ended

January 25, 2026 January 26, 2025

SG&A as a Percent of Net Sales (GAAP) 8.0 % 8.8 %

Transform and Modernize Initiative (2)

(0.4) (0.4) (0.5) (0.4)

Loss on Sale of Business — — (0.1) —

Gain (Loss) on Sale of Business 0.8 (0.4)

Corporate Restructuring Plan (0.3) —

Consulting Agreement (0.3) —

Litigation Settlements — —

Adjusted SG&A as a Percent of Net Sales (Non-GAAP) 7.9 % 7.9 %

Operating Margin (GAAP) 7.9 % 8.2 % 8.0 % 8.8 %

Transform and Modernize Initiative (1)(2)

0.5 0.5 0.5 0.4

Loss on Sale of Business — — 0.1 —

Litigation Settlements — 0.6 — 0.3

Adjusted Operating Margin (Non-GAAP) 8.4 % 9.2 % 8.7 % 9.5 %

(1) Comprised primarily of equipment relocation expenses, severance, and asset write-offs related to supply chain and portfolio optimization.

(1) Comprised primarily of asset write-offs and severance related to supply chain and portfolio optimization.

(2) Comprised primarily of project-based external consulting fees.

ORGANIC VOLUME AND ORGANIC NET SALES (NON-GAAP)

The non-GAAP measures of organic volume and organic net sales are presented to provide investors with additional information to facilitate the comparison of past and present operations.

Organic volume and organic net sales exclude the impact of the sale of the Company's controlling equity interest in Justin's, LLC in the first quarter of fiscal 2026.

Quarter Ended

July 27, 2025 July 28, 2024

In thousands GAAP GAAP Divestiture

Non-GAAP Organic

Volume (lbs.)

Retail 712,912 680,214 — 680,214 4.8

Foodservice 248,540 259,947 (16,507) 243,440 2.1

International 85,138 78,529 — 78,529 8.4

Total Volume (lbs.) 1,046,590 1,018,690 (16,507) 1,002,183 4.4

Retail $ 1,858,434 $ 1,767,251 $ — $ 1,767,251 5.2

Foodservice 986,976 954,021 (28,683) 925,338 6.7

International 187,466 177,171 — 177,171 5.8

Total Net Sales $ 3,032,876 $ 2,898,443 $ (28,683) $ 2,869,760 5.7

Nine Months Ended

July 27, 2025 July 28, 2024

January 25, 2026 January 26, 2025

In thousands GAAP GAAP Divestiture

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Cash Flow Highlights

Nine Months Ended

July 27, 2025 July 28, 2024

Quarter Ended

January 25, 2026 January 26, 2025

Cash and Cash Equivalents at End of Period

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Increase (Decrease) in Cash and Cash Equivalents 197,228 98,516

Cash and cash equivalents decreased $143 million during the first nine months of fiscal 2025 as the Company utilized cash on hand to make additional purchases of inventory and capital assets as well as fund dividend payments.

During the first nine months of fiscal 2024, cash and cash equivalents decreased $199 million primarily as a result of the Company repaying a portion of long-term debt by using existing cash on hand, partially offset by proceeds received from issuing debt.

Cash provided by operating activities was sufficient to cover dividend payments and capital expenditures during the first nine months of fiscal 2024.

Cash and cash equivalents increased $197 million and $99 million during the first three months of fiscal 2026 and fiscal 2025, respectively.

Cash provided by operating activities was sufficient to cover dividend payments and capital expenditures in both years.

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 impacted by changes in operating assets and liabilities and lower net earnings.

– Inventory increased $247 million during the first nine months of fiscal 2025 compared to a decrease of $31 million in the comparable period of the prior year.

The increase in inventory during fiscal 2025 was driven by intentional seasonal and promotional inventory build, recovery of snack nuts inventory levels following the production disruptions at the Suffolk, Virginia manufacturing facility, and increased raw material costs.

The decrease in inventory during fiscal 2024 was due to benefits in supply chain processes associated with the Company's T&M initiative as well as the impact of production disruptions at the Suffolk, Virginia manufacturing facility.

These reduced levels of inventory were partially offset by higher levels of turkey on hand in fiscal 2024.

– Accounts payable and accrued expenses decreased $100 million and $95 million during the first nine months of fiscal 2025 and fiscal 2024, respectively.

The decrease during fiscal 2025 was driven by the general timing of payments, annual incentive payments, and legal settlements.

The decrease during fiscal 2024 was due to the general timing of payments, feed and livestock deferral payments, and annual incentive payments, which were partially offset by higher accruals for marketing and legal expenses.

– Accounts receivable decreased $54 million and $89 million during the first nine months of fiscal 2025 and fiscal 2024, respectively, primarily due to lower sales compared to the fourth quarter of each respective prior year.

• Cash flows from operating activities were impacted by changes in operating assets and liabilities.

– Inventory decreased $91 million during the first three months of fiscal 2026 compared to a decrease of $56 million in the comparable period of the prior year.

The decrease in inventory during fiscal 2026 was driven by holiday sales and lower raw material markets compared to the end of fiscal 2025.

The decrease in inventory during fiscal 2025 was primarily driven by holiday sales and constrained turkey inventories.

– Accounts receivable decreased $91 million and $57 million during the first three months of fiscal 2026 and fiscal 2025, respectively, primarily due to lower sales compared to the fourth quarter of each respective prior year.

– Net income taxes payable benefited from the receipt of a $38 million federal income tax refund in fiscal 2026.

– Accounts payable and accrued expenses decreased $97 million and $56 million during the first three months of fiscal 2026 and fiscal 2025, respectively.

These decreases were driven by annual incentive payments and livestock and feed deferral payments, which were partially offset by higher marketing accruals.

The decrease in fiscal 2026 was also due to the general timing of invoice payments.

Cash Provided by (Used in) Investing Activities

• Capital expenditures were $219 million and $173 million during the first nine months of fiscal 2025 and fiscal 2024, respectively.

The largest project during both years was for the transition from harvest to value-added capacity for Hormel ® Fire Braised ® products and Applegate ® products at the Company's facility in Barron, Wisconsin.

Other significant projects included investments in data and technology during fiscal 2025 and investment in wastewater infrastructure to support operations in Austin, Minnesota during fiscal 2024.

• Proceeds from the sale of business were $13.1 million during the first nine months of fiscal 2025, primarily from the sale of the Company’s equity interest in Mountain Prairie, LLC.

• Capital expenditures were $69 million and $72 million during the first three months of fiscal 2026 and fiscal 2025, respectively.

The largest projects during fiscal 2026 were related to capacity expansion at the ambient meat snack facility in Jiaxing, China, and investments in data and technology.

Significant projects during fiscal 2025 included the transition from harvest to value-added capacity for Hormel ® Fire Braised ® products and Applegate ® products at the Company's facility in Barron, Wisconsin, and equipment upgrades for chili production in Beloit, Wisconsin.

• Proceeds from the sale of business were $79 million during the first three months of fiscal 2026, from the sale of the Company’s controlling equity interest in Justin's, LLC, and were $14 million in the first three months of fiscal 2025, primarily from the sale of the Company's equity interest in Mountain Prairie, LLC.

Cash Provided by (Used in) Financing Activities

• Cash dividends paid to the Company’s shareholders totaled $474 million during the first nine months of fiscal 2025, compared to $460 million in the comparable period of fiscal 2024.

• Proceeds from the exercise of stock options were $24 million in the first nine months of fiscal 2025, compared to $34 million in the first nine months of fiscal 2024.

• The Company paid $950 million of its senior unsecured notes upon maturity on June 3, 2024.

• Proceeds from the issuance of long-term debt were $498 million in fiscal 2024, due to the Company's issuance of senior unsecured notes with an aggregate principal amount of $500 million.

• Cash dividends paid to the Company’s shareholders totaled $160 million during the first three months of fiscal 2026, compared to $155 million in the comparable period of fiscal 2025.

Sources and Uses of Cash

The Company believes its 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 and uses a waterfall approach, which focuses first on core uses of cash, such as capital expenditures to maintain facilities, dividend

returns to investors, mandatory debt repayments, and fulfillment of pension obligations.

The Company believes its 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 and uses a waterfall approach, which focuses first on core uses of cash, such as capital expenditures to maintain facilities, dividend returns to investors, mandatory debt repayments, and fulfillment of pension obligations.

Next, the Company looks to strategic items in support of growth initiatives, such as other capital projects, acquisitions, additional dividend increases, and working capital investments.

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The Company believes its anticipated income from operations, cash on hand, borrowing capacity under the current unsecured revolving 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 has multiple sources of liquidity to complete such investments and acquisitions.

For example, the Company’s historic ability to leverage its balance sheet through the issuance of debt has provided the flexibility to pursue strategic opportunities.

The Company expects to continue optimizing its portfolio through acquisitions and divestitures that align with its strategic priorities.

The Company maintains multiple liquidity sources, including its ability to issue debt, which supports strategic investments and acquisitions.

Dividend Payments

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The Company has paid 390 consecutive quarterly dividends since becoming a public company in 1928.

The Board of Directors approved an increased annual dividend rate for fiscal 2025, raising it to $1.16 per share from $1.13 per share, representing the 59th consecutive annual dividend increase.

On November 24, 2025, the Board of Directors authorized a quarterly dividend for the first quarter of fiscal 2026, of $0.2925 per share, a 1% increase from the prior year.

Capital Expenditures

Capital expenditures are allocated to required maintenance and growth opportunities based on the needs of the business.

Capital expenditures supporting growth opportunities in fiscal 2025 are expected to focus on projects related to value-added capacity, infrastructure, and new technology.

Capital expenditures for fiscal 2025 are estimated to be approximately $300 million.

As of July 27, 2025, the Company’s outstanding debt included $2.9 billion of fixed rate unsecured senior notes due in fiscal 2027, 2028, 2030, and 2051 with interest payable semi-annually.

During the first nine months of fiscal 2025, the Company made $61 million of interest payments and the Company expects to make an additional $12 million of interest payments during fiscal 2025 on these notes.

See Note K - Long-term Debt and Other Borrowing Arrangements of the Notes to the Consolidated Financial Statements for additional information.

Capital expenditures supporting growth opportunities in fiscal 2026 are expected to focus on projects related to infrastructure, new data and technology, and equipment upgrades.

Capital expenditures for fiscal 2026 are estimated to be $260 million to $290 million.

As of January 25, 2026, the Company’s outstanding debt included an aggregate of $2.9 billion of fixed rate unsecured senior notes due in fiscal 2027, 2028, 2030, and 2051 with interest payable semi-annually.

During the first three months of fiscal 2026, the Company made $25 million of interest payments and the Company expects to make an additional $49 million of interest payments in fiscal 2026 on these notes.

See Note L - Long-term Debt and Other Borrowing Arrangements of the Notes to the Consolidated Financial Statements for additional information.

Borrowing Capacity

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The lending commitments under the facility are scheduled to expire on March 25, 2030, at which time the Company will be required to pay in full all obligations then outstanding.

As of July 27, 2025, the Company had no outstanding borrowings from this facility.

As of January 25, 2026, the Company had no outstanding borrowings under this facility.

Debt Covenants

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These debt covenants limit the ability of the Company to, among other things, incur debt for borrowed money secured by certain liens, or engage in certain sale and leaseback transactions, and the covenants require the Company to maintain certain consolidated financial ratios.

As of July 27, 2025, the Company was in compliance with all covenants in its debt agreements and expects to maintain compliance in the future.

As of January 25, 2026, the Company was in compliance with all covenants in its debt agreements and expects to maintain compliance in the future.

Cash Held by International Subsidiaries

As of July 27, 2025, the Company’s international subsidiaries held $185 million of cash and cash equivalents.

During the third quarter of fiscal 2025, the Company repatriated $44 million in cash from an international subsidiary and recognized foreign withholding taxes on the one-time distribution.

As of January 25, 2026, the Company’s international subsidiaries held $214 million of cash and cash equivalents.

During the first quarter of fiscal 2026, the Company repatriated $21 million in cash from international subsidiaries with a one-time distribution.

The Company maintains all undistributed earnings as permanently reinvested.

4 unchanged sentences

The share repurchase authorization has no expiration date.

The Company did not repurchase any shares of stock during the first nine months of fiscal 2025.

The Company did not repurchase any shares of stock during the first three months of fiscal 2026.

The Company continues to evaluate share repurchases as part of its capital allocation strategy.

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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 results 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 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 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.

Though the Company has attempted to list comprehensively these important cautionary risk factors, the Company cautions 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 Company’s business as well as the national and worldwide economic environment.

The risks and uncertainties that could cause actual results to differ from those anticipated or projected include, among other things, risks related to the deterioration of economic conditions;

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

This report contains forward-looking statements, which are based on the Company's current assumptions and expectations.

These statements are typically accompanied by the words "aim," "anticipate," "believe," "could," “estimate,” "expect," “intend,” "may," "might," “plan,” “project,” "seek," “target,” "will," "would," or similar words or expressions.

The principal forward-looking statements in this report include statements regarding the Company's:

future financial and operational performance, fiscal 2026 outlook, expectations regarding commodity markets and raw material costs, intentions regarding future dividends, expectations regarding the Company's strategic initiatives, including the Transform and Modernize initiative and the Company's recent corporate restructuring plan, expectations for the adequacy of and costs associated with the Company's sources of liquidity, expected compliance with debt covenants, expectations regarding its contractual obligations and liabilities, expectations regarding the impact of new accounting pronouncements, expected contributions and payments related to its pension plan, expectations regarding the return on plan assets, expectations regarding the timing and recognition of compensation expenses, and expectations regarding the outcome of, and adequacy of its reserves for, claims, litigation, and the resolution of tax matters.

All such forward-looking statements are intended to enjoy the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, as amended.

Although the Company believes there is a reasonable basis for the forward-looking statements, its actual results could be materially different.

The most important factors that could cause the Company's actual results to differ from its forward-looking statements include, but are not limited to, risks related to the deterioration of economic conditions;

risks related to acquisitions, joint ventures, equity investments, and divestitures;

risks and uncertainties associated with intangible assets, including any future goodwill or intangible assets impairment charges;

the risk of disruption of operations, including at owned facilities, co-manufacturers, suppliers, logistics providers, customers, or other third-party service providers;

the risk that the Company may fail to realize anticipated cost savings or operating profit improvements associated with strategic initiatives, including the Transform and Modernize initiative;

risk of loss of a significant contract or unfavorable changes in the Company’s relationships with significant customers;

risk of the Company’s inability to protect information technology (IT) systems against, or effectively respond to, cyber attacks, security breaches or other IT interruptions, against or involving the Company’s IT systems or those of others with whom it does business;

risk of the Company’s failure to timely replace legacy technologies;

deterioration of labor relations or labor availability or increases to labor costs;

general risks of the food industry, including those related to food safety, such as costs resulting from food contamination, product recalls, the remediation of food safety events at its facilities,

including the production disruption at the Suffolk, Virginia, facility, food-specific laws or regulations, or outbreaks of disease among livestock and poultry flocks;

the risk of disruption of operations;

the risk that the Company may fail to realize anticipated cost savings or operating profit improvements associated with strategic initiatives, including the Transform and Modernize initiative and the Company's recent corporate restructuring plan;

risk of unfavorable changes in the Company's relationships with third parties;

risk of the Company's inability to protect information technology (IT) systems against, or effectively respond to, cyberattacks, security breaches or other IT interruptions;

labor relations and labor availability risks;

food safety risks;

fluctuations in commodity prices and availability of raw materials and other inputs;

fluctuations in market demand for the Company’s products, including due to private label products and lower-priced alternatives;

risks related to the Company’s ability to respond to changing consumer preferences, diets and eating patterns, and the success of innovation and marketing investments;

fluctuations in market demand for the Company's products;

risks related to the Company's ability to respond to changing consumer preferences;

damage to the Company's reputation or brand image;

risks associated with 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 fact that the Company operates globally, with product manufactured and sold in foreign markets and a variety of inputs sourced from around the world, these risks including geopolitical risk, exchange rate risk, legal, tax, and regulatory risk, and risks associated with trade policies, export and import controls, and tariffs.

risks associated with government regulation;

risks related to trade policies, export and import controls, and tariffs;

and the other risks and uncertainties described in Item 1A – Risk Factors of the Company’s Annual Report on Form 10-K for the fiscal year ended October 26, 2025.

Forward-looking statements speak only as of the date they are made, and the Company does not undertake any obligation to update any forward-looking statement except as otherwise required by law.

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-Q

Item 2. Management’s Discussion and Analysis