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Item 2. Management’s Discussion and Analysis

2026-05-28 compared with 2026-02-26 · 166 added, 117 removed, 280 unchanged (50% of the section changed)

2 unchanged sentences

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’s three reportable segments, Retail, Foodservice, and International, are described in Note Q - 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.

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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 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.

Diluted earnings per share was $0.29 for the second quarter of fiscal 2026, down 12 percent compared to the same period last year.

Adjusted diluted earnings per share for the second quarter of fiscal 2026 was $0.40, up 14 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 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, 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.

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 its ability to mitigate their impacts.

• Net sales for the second quarter of fiscal 2026 increased 3 percent.

Organic net sales increased 3 percent with growth across the Foodservice, International, and Retail segments.

• Total segment profit for the second quarter of fiscal 2026 increased 13 percent.

Segment profit increased in the Retail, Foodservice, and International segments.

◦ The increase in Retail segment profit was due to higher net sales, improved performance across the turkey manufacturing network, and lower SG&A.

These benefits were partially offset by inflationary pressures in the logistics network.

◦ The increase in Foodservice segment profit was driven primarily by net sales performance, which benefited from market-based pricing actions and modest volume growth.

Segment profit also benefited from improved performance across the turkey manufacturing network.

◦ The increase in International segment profit was primarily due to strong export performance and growth in China.

• Earnings before income taxes for the second quarter of fiscal 2026 decreased 11 percent, which was negatively impacted by the $61 million loss on the sale of the whole-bird turkey business.

Adjusted earnings before income taxes increased 14 percent, as higher net sales and improved performance across the turkey manufacturing network were partially offset by higher logistics expenses.

• The pre-tax impact of non-recurring expenses related to the loss on the sale of the whole-bird turkey business and the Company’s Transform and Modernize (T&M) initiative in the second quarter of fiscal 2026 were $77 million, which was primarily recorded in SG&A.

Cash flow from operations was $528 million for the first six months of fiscal 2026, a 44 percent increase primarily due to the impact of an inventory build in the second quarter of fiscal 2025.

Entering the second half of fiscal 2026, the external environment remains dynamic, with continued volatility associated with macroeconomic and geopolitical conditions.

The Company is actively working to mitigate the impact of these conditions.

However, continued pressure from the external environment, at a level greater than expected, could have an adverse impact on results of operations.

Consolidated Results

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

Quarter Ended

Quarter Ended Six Months Ended

In thousands, except per share amounts

January 25, 2026 January 26, 2025 %

April 26, 2026 April 27, 2025 %

Change April 26, 2026 April 27, 2025 %

Volume (lbs.) 987,852 999,390 (1.2) 2,001,616 2,054,698 (2.6)

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Volume and Net Sales

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.

Net Sales increased and volume decreased for the second quarter and first six months of fiscal 2026 compared to the prior year.

For the second quarter of fiscal 2026, each segment contributed to organic net sales growth.

Strong enterprise performance across the turkey portfolio, Foodservice customized solutions business, contract manufacturing, the pepperoni portfolio, and Applegate ® products were key drivers of organic net sales growth.

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

For the first six months of fiscal 2026, net sales growth in the Foodservice and International segments offset declines in the Retail segment.

Strong enterprise performance across the turkey portfolio, Foodservice customized solutions business, premium prepared proteins, the pepperoni portfolio, and contract manufacturing were key drivers of organic net sales growth.

For the first six months of fiscal 2026, volume grew in the Foodservice and International segments and declined in the Retail segment.

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.

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Cost of Products Sold

Quarter Ended

January 25, 2026 January 26, 2025 %

Quarter Ended Six Months Ended

April 26, 2026 April 27, 2025 %

Change April 26, 2026 April 27, 2025 %

Cost of Products Sold $ 2,454,093 $ 2,414,377 1.6 $ 5,011,835 $ 4,927,957 1.7

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 %

Cost of products sold increased for the second quarter and first six months of fiscal 2026.

Higher commodity input costs and higher logistics expenses were partially offset by improved performance in the turkey manufacturing network.

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

Quarter Ended Six Months Ended

April 26, 2026 April 27, 2025 %

Change April 26, 2026 April 27, 2025 %

Gross Profit $ 518,507 $ 484,433 7.0 $ 988,082 $ 959,666 3.0

Percent of Net Sales 17.4 % 16.7 % 16.5 % 16.3 %

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.

For the second quarter and first six months of fiscal 2026, gross profit as a percent of net sales increased.

Gross profit as a percent of net sales increased for the Retail, Foodservice, and International segments compared to the prior year.

Selling, General, and Administrative (SG&A)

Quarter Ended

January 25, 2026 January 26, 2025 %

Quarter Ended Six Months Ended

April 26, 2026 April 27, 2025 %

Change April 26, 2026 April 27, 2025 %

SG&A $ 318,624 $ 251,432 26.7 $ 560,322 $ 514,445 8.9

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Adjusted Percent of Net Sales

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.

8.2 % 8.2 % 8.0 % 8.1 %

For the second quarter of fiscal 2026, SG&A and SG&A as a percent of net sales increased, driven primarily by the loss on the sale of the whole-bird turkey business.

Adjusted SG&A increased, driven primarily by increased expenses related to legal matters.

Adjusted SG&A as a percent of net sales was flat to the prior year.

For the first six months of fiscal 2026, SG&A and SG&A as a percent of net sales increased, due to the loss on the sale of the whole-bird turkey business, partially offset by the gain on the sale of Justin's, LLC and lapping the loss on the sale of a non-core sow operation.

Adjusted SG&A increased, driven primarily by increased expenses related to legal matters.

Adjusted SG&A as a percent of net sales was comparable to the prior year.

Advertising investments in the second quarter of fiscal 2026 were $34 million, a decrease of 7 percent compared to the prior year.

Advertising investments in the first six months of fiscal 2026 were $75 million, down 6 percent compared to the prior year.

The declines were partially due to the timing of advertising campaigns.

In fiscal 2026, the Company intends to increase advertising expense as it continues to invest in its priority brands.

Equity in Earnings of Affiliates

Quarter Ended

In thousands January 25, 2026 January 26, 2025 %

Quarter Ended Six Months Ended

In thousands April 26, 2026 April 27, 2025 %

Change April 26, 2026 April 27, 2025 %

Equity in Earnings of Affiliates $ 17,229 $ 15,350 12.2 $ 33,049 $ 31,461 5.0

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.

Equity in earnings of affiliates for the second quarter and first six months of fiscal 2026 increased driven by the results of MegaMex Foods, LLC.

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

Quarter Ended

In thousands January 25, 2026 January 26, 2025 %

Quarter Ended Six Months Ended

In thousands April 26, 2026 April 27, 2025 %

Change April 26, 2026 April 27, 2025 %

Interest Income

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2,294 (4,523) 150.7 6,109 (2,862) 313.5

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.

Interest income increased in the second quarter as higher average cash balances more than offset the impact of declining interest rates.

For the first six months of fiscal 2026, interest income decreased, as lower interest rates more than offset the benefit of modestly higher cash balances.

Other income increased in the second quarter and first six months of fiscal 2026, primarily driven by the investment gains within the rabbi trust.

Effective Tax Rate

Quarter Ended

January 25, 2026 January 26, 2025

Quarter Ended Six Months Ended

April 26, 2026 April 27, 2025 April 26, 2026 April 27, 2025

Effective Tax Rate 23.6 % 22.0 % 23.0 % 21.9 %

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 in the second quarter of fiscal 2026 was 23.6% compared to 22.0% for the prior year, primarily due to the impact of the whole-bird turkey transaction in the second quarter of fiscal 2026.

For additional information, refer to Note O - 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.

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

Quarter Ended

January 25, 2026 January 26, 2025 % Change

Quarter Ended Six Months Ended

April 26, 2026 April 27, 2025 % Change April 26, 2026 April 27, 2025 % Change

Retail $ 1,789,665 $ 1,783,835 0.3 $ 3,637,471 $ 3,673,968 (1.0)

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$ 206,063 $ 230,489 (10.6) $ 440,375 $ 448,561 (1.8)

Quarter Ended

January 25, 2026 January 26, 2025 %

Quarter Ended Six Months Ended

April 26, 2026 April 27, 2025 %

Change April 26, 2026 April 27, 2025 %

Volume (lbs.) 663,009 677,277 (2.1) 1,356,893 1,414,162 (4.0)

5 unchanged sentences

Segment Profit 155,640 137,135 13.5 251,829 256,281 (1.7)

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 %

Organic net sales grew in the second quarter of fiscal 2026, as strong performance in Jennie-O ® ground turkey was partially offset by the strategic exit from select non-core private label snack nut items.

Other priority brands such as Applegate ® natural and organic meats, Hormel ® Black Label ® bacon, the Herdez ® portfolio, and Hormel Gatherings ® party trays contributed to net sales growth in the quarter.

For the first six months of fiscal 2026, organic net sales was comparable to prior year, as strong performance in Jennie-O ® ground turkey was offset by the strategic exit from select non-core private label snack nut items.

Retail segment profit increased in the second quarter of fiscal 2026 as higher net sales, improved performance across the turkey manufacturing network, and lower SG&A were partially offset by inflationary pressures in the logistics network.

Segment profit decreased in the first six months of fiscal 2026 due to lower sales and higher logistics expenses which were partially offset by improved performance across the turkey manufacturing network and favorable SG&A.

Quarter Ended Six Months Ended

April 26, 2026 April 27, 2025 %

Change April 26, 2026 April 27, 2025 %

Volume (lbs.) 244,307 242,595 0.7 488,726 486,449 0.5

5 unchanged sentences

Segment Profit 155,784 140,633 10.8 312,325 279,459 11.8

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.

Organic net sales growth in the Foodservice segment was broad-based in the second quarter and first six months of fiscal 2026.

Organic volume also increased in both periods.

Net sales growth for the second quarter and first six months of fiscal 2026 was primarily driven by the customized solutions business, branded pepperoni, and premium prepared proteins.

For the first six months of fiscal 2026, notable branded products, including Austin Blues ® smoked meats, Hormel ® Natural Choice ® meats, Fontanini ® Italian meats, and Jennie-O ® turkey, delivered strong net sales results.

Segment profit increased for the second quarter and first six months of fiscal 2026, primarily driven by net sales performance, which benefited from market-based pricing actions and modest volume growth, despite a challenging operating environment.

Segment profit also benefited from improved performance across the turkey manufacturing network.

International

Quarter Ended

January 25, 2026 January 26, 2025 %

Quarter Ended Six Months Ended

April 26, 2026 April 27, 2025 %

Change April 26, 2026 April 27, 2025 %

Volume (lbs.) 80,536 79,518 1.3 155,997 154,087 1.2

3 unchanged sentences

Segment Profit 22,135 18,407 20.3 45,046 39,252 14.8

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.

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

Organic net sales growth was driven by strong results from SPAM ® luncheon meat exports and the China business.

International segment profit increased in the second quarter and the first six months of fiscal 2026, primarily due to strong export performance and growth in China.

Unallocated Income and Expense

Quarter Ended

January 25, 2026 January 26, 2025

Quarter Ended Six Months Ended

April 26, 2026 April 27, 2025 April 26, 2026 April 27, 2025

Net Unallocated Expense $ 127,400 $ 65,411 $ 168,698 $ 126,111

Noncontrolling Interest (96) (275) (127) (320)

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.

For the second quarter of fiscal 2026, net unallocated expense increased primarily due to the loss on the sale of the whole-bird turkey business.

For the first six months of fiscal 2026, net unallocated expense increased as the loss on the sale of the whole-bird turkey business, expenses associated with the corporate restructuring plan, and expenses for a consulting agreement with a former executive (Consulting Agreement).

These expenses were partially offset by the gain on the sale of the controlling equity interest in Justin’s, LLC and lapping the loss on the sale of a non-core sow operation in fiscal 2025.

Related Party Transactions

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Gain or Loss on Sale of Business

In the second quarter of fiscal 2026, the Company completed the sale of its whole-bird turkey business, resulting in a loss on the sale.

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.

6 unchanged sentences

Litigation Settlements

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.

In fiscal 2025, the Company entered into a settlement agreement with certain plaintiffs in an antitrust lawsuit.

See Note K - Commitments and Contingencies of the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended October 26, 2025, 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.

Because the Company believes certain 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 R - Restructuring of the Notes to the Consolidated Financial Statements for additional information.

Consulting Agreement

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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;

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.

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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

Quarter Ended Six Months Ended

In thousands, except per share amounts April 26, 2026 April 27, 2025 April 26, 2026 April 27, 2025

Cost of Products Sold (GAAP) $ 2,454,093 $ 2,414,377 $ 5,011,835 $ 4,927,957

Transform and Modernize Initiative (1)

(1,393) (2,777) (1,774) (2,963)

Adjusted Cost of Products Sold (Non-GAAP) $ 2,452,701 $ 2,411,600 $ 5,010,061 $ 4,924,994

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Transform and Modernize Initiative (1)(2)

3,799 3,641 6,475 6,727

(Gain) Loss on Sale of Business 9,982 — 4,223 2,469

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Adjusted Provision for Income Taxes (Non-GAAP) $ 62,480 $ 54,388 $ 114,016 $ 107,537

Quarter Ended

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

Net Earnings Attributable to Hormel Foods Corporation (GAAP) $ 157,474 $ 180,017 $ 339,274 $ 350,592

Transform and Modernize Initiative (1)(2)

11,707 12,910 19,955 23,979

(Gain) Loss on Sale of Business 51,058 — 33,309 8,855

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Adjusted Net Earnings Attributable to Hormel Foods Corporation (Non-GAAP) $ 220,280 $ 192,928 $ 406,754 $ 383,615

Quarter Ended Six Months Ended

In thousands, except per share amounts April 26, 2026 April 27, 2025 April 26, 2026 April 27, 2025

Diluted Earnings Per Share (GAAP)

1 unchanged sentence

Transform and Modernize Initiative (1)(2)

0.02 0.02 0.04 0.04

(Gain) Loss on Sale of Business 0.09 — 0.06 0.02

4 unchanged sentences

$ 0.40 $ 0.35 $ 0.74 $ 0.70

Quarter Ended

January 25, 2026 January 26, 2025

Quarter Ended Six Months Ended

April 26, 2026 April 27, 2025 April 26, 2026 April 27, 2025

SG&A as a Percent of Net Sales (GAAP) 10.7 % 8.7 % 9.3 % 8.7 %

Transform and Modernize Initiative (2)

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

Gain (Loss) on Sale of Business (2.1) — (0.6) (0.2)

9 unchanged sentences

Quarter Ended

January 25, 2026 January 26, 2025

April 26, 2026 April 27, 2025

In thousands GAAP GAAP Divestiture

9 unchanged sentences

Total Net Sales $ 2,972,600 $ 2,898,810 $ (20,853) $ 2,877,957 3.3

Six Months Ended

April 26, 2026 April 27, 2025

In thousands GAAP GAAP Divestiture

Non-GAAP Organic

Volume (lbs.)

Retail 1,356,893 1,414,162 (5,065) 1,409,097 (3.7)

Foodservice 488,726 486,449 (379) 486,070 0.5

International 155,997 154,087 (49) 154,038 1.3

Total Volume (lbs.) 2,001,616 2,054,698 (5,493) 2,049,205 (2.3)

Retail $ 3,637,471 $ 3,673,968 $ (26,474) $ 3,647,493 (0.3)

Foodservice 1,994,937 1,866,627 (2,244) 1,864,383 7.0

International 367,509 347,028 (670) 346,358 6.1

Total Net Sales $ 5,999,917 $ 5,887,623 $ (29,389) $ 5,858,235 2.4

LIQUIDITY AND CAPITAL RESOURCES

1 unchanged sentence

Cash Flow Highlights

Quarter Ended

January 25, 2026 January 26, 2025

Six Months Ended

April 26, 2026 April 27, 2025

Cash and Cash Equivalents at End of Period

4 unchanged sentences

Increase (Decrease) in Cash and Cash Equivalents 156,072 (72,193)

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.

Cash and cash equivalents increased $156 million during the first six months of fiscal 2026.

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

The Company also benefited from proceeds from the sale of businesses.

During the first six months of fiscal 2025, cash and cash equivalents decreased $72 million as the Company utilized cash on hand to make additional purchases of inventory, capital assets, and energy tax credits as well as fund regular dividend payments.

Additional details related to significant drivers of cash flows are provided below.

1 unchanged sentence

• 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.

– Accounts payable and accrued expenses decreased $59 million and $77 million during the first six 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.

The decrease in fiscal 2026 was also due to the general timing of invoice payments and the decrease in fiscal 2025 also reflected legal settlements.

– Inventory increased $23 million during the first six months of fiscal 2026 compared to an increase of $156 million in the comparable period of the prior year.

The increase in inventory during fiscal 2026 was driven by summer and promotional inventory build as well as higher feed and fuel costs impacting raw materials.

These increases were partially offset by lower bacon and ham inventory levels.

The increase in inventory during fiscal 2025 was driven by intentional seasonal and promotional inventory build, as well as softer sales.

– Accounts receivable decreased $64 million and $71 million during the first six months of fiscal 2026 and fiscal 2025, respectively, primarily due to lower sales compared to the fourth quarter of each respective prior year.

Cash Provided by (Used in) Investing Activities

• 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.

• Capital expenditures were $151 million and $147 million during the first six months of fiscal 2026 and fiscal 2025, respectively.

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

Significant projects during fiscal 2025 included the transition from harvest to value-added capacity at the Company's facility in Barron, Wisconsin and investments in data and technology.

• Proceeds from the sale of business were $100 million during the first six months of fiscal 2026 resulting from the sale of the Company’s controlling equity interest in Justin's, LLC and whole-bird turkey business.

During the first six months of fiscal

2025 proceeds from the sale of business were $13 million 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 $160 million during the first three months of fiscal 2026, compared to $155 million in the comparable period of fiscal 2025.

• Cash dividends paid to the Company’s shareholders totaled $320 million during the first six months of fiscal 2026, compared to $314 million in the comparable period of fiscal 2025.

Sources and Uses of Cash

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The Company has paid 391 consecutive quarterly dividends since becoming a public company in 1928.

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.

On March 23, 2026, the Board of Directors authorized a quarterly dividend for the second quarter of fiscal 2026, of $0.2925 per share, a 1% increase from the prior year.

Capital Expenditures

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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.

As of April 26, 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 six months of fiscal 2026, the Company made $37 million of interest payments, and the Company expects to make an additional $37 million of interest payments in fiscal 2026 on these notes.

In the second quarter of fiscal 2026, $500 million of the notes was reclassified as Current Maturities of Long-term Debt on the Consolidated Condensed Statements of Financial Position as it is payable

within one year.

See Note N - 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 January 25, 2026, the Company had no outstanding borrowings under this facility.

As of April 26, 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 January 25, 2026, the Company was in compliance with all covenants in its debt agreements and expects to maintain compliance in the future.

As of April 26, 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 January 25, 2026, the Company’s international subsidiaries held $214 million of cash and cash equivalents.

As of April 26, 2026, the Company’s international subsidiaries held $224 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.

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The share repurchase authorization has no expiration date.

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

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

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

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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.

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 T&M 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.

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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;

the risk that the Company may fail to realize anticipated cost savings or operating profit improvements associated with strategic initiatives, including the T&M initiative and the Company's recent corporate restructuring plan;

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

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fluctuations in market demand for the Company's products;

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

risks related to the Company's ability

to respond to changing consumer preferences;

damage to the Company's reputation or brand image;

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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-Q

Item 2. Management’s Discussion and Analysis