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Item 2. Management’s Discussion and Analysis

2026-08-27 compared with 2026-05-28 · 207 added, 166 removed, 280 unchanged (57% of the section changed)

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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 Q - 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 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 cost of products sold, adjusted selling, general and administrative (SG&A), adjusted SG&A as a percent of net sales, adjusted equity in earnings of affiliates, adjusted operating income, adjusted earnings before income taxes, adjusted provision for income taxes, adjusted net earnings attributable to Hormel Foods Corporation, adjusted diluted earnings per share, and adjusted segment profit.

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 $0.29 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.

Diluted earnings per share was $0.11 for the third quarter of fiscal 2026, down 67 percent compared to the same period last year.

Adjusted diluted earnings per share for the third quarter of fiscal 2026 was $0.37, up 6 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 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.

• Net sales for the third quarter of fiscal 2026 decreased 2 percent.

Organic net sales decreased 2 percent with growth from the Foodservice segment offset by declines in the Retail and International segments.

• Total segment profit for the third quarter of fiscal 2026 decreased 17 percent, while adjusted segment profit was flat to the prior year, as growth in the Foodservice segment was offset by declines in the Retail segment.

Adjusted segment profit in the International segment was comparable to the prior year.

◦ The decrease in Retail segment profit was due to lower sales and higher logistics expenses, which were partially offset by lower SG&A.

◦ The increase in Foodservice segment profit was driven primarily by higher sales and improved margins, which were partially offset by higher logistics expenses and higher SG&A.

◦ The decrease in International segment profit was significantly impacted by the non-cash impairment of a minority investment in Indonesia.

• Earnings before income taxes decreased 56 percent for the third quarter of fiscal 2026, primarily due to a $56 million loss related to the Brazil divestiture, a $48 million non-cash impairment charge, and a litigation settlement of $38 million.

Adjusted earnings before income taxes increased 3 percent, as lower SG&A were partially offset by lower net sales and higher logistics expenses.

• The pre-tax impact of nonrecurring expenses and discrete items in the third quarter of fiscal 2026 was $155 million, including a loss related to the Brazil divestiture, a non-cash impairment of a minority investment in Indonesia, a litigation settlement, and the Company’s Transform and Modernize (T&M) initiative.

Cash flow from operations was $769 million for the first nine months of fiscal 2026, a 47 percent increase primarily reflecting improved inventory management and working capital performance.

Entering the fourth quarter 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.

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

Quarter Ended Six Months Ended

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In thousands, except per share amounts

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Change April 26, 2026 April 27, 2025 %

July 26, 2026 July 27, 2025 % Change July 26, 2026 July 27, 2025 % Change

Volume (lbs.) 969,078 1,046,590 (7.4) 2,970,695 3,101,288 (4.2)

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Volume and Net Sales

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.

Volume and net sales decreased for the third quarter of fiscal 2026, while volume decreased and net sales increased for the first nine months of fiscal 2026.

For the third quarter of fiscal 2026, net sales increased in the Foodservice segment, while net sales declined in the Retail and International segments.

The enterprise organic net sales decline was driven by weaker performance in commodity turkey, the bacon portfolio, and the strategic exit from select non-core private label snack nuts items, which more than offset strong growth in premium prepared proteins, the Jennie-O ® turkey portfolio, contract manufacturing, and pizza toppings.

For the third quarter of fiscal 2026, volume decreased for all three segments, primarily driven by the commodity turkey portfolio.

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

Strong enterprise performance across the Jennie-O ® turkey portfolio, premium prepared proteins, and the Foodservice customized solutions business were key drivers of organic net sales growth.

For the first nine months of fiscal 2026, volume declined in all three segments, driven primarily by the commodity turkey portfolio and 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.

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Cost of Products Sold

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Change April 26, 2026 April 27, 2025 %

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Cost of Products Sold $ 2,489,818 $ 2,545,567 (2.2) $ 7,501,653 $ 7,473,524 0.4

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.

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Cost of products sold decreased for the third quarter of fiscal 2026.

Lower volume and favorable pork input costs were partially offset by higher beef input costs and higher logistics expenses.

Cost of products sold increased for the first nine months of fiscal 2026, as lower volume, higher beef input costs, and higher logistics expenses were partially offset by favorable pork input costs.

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

Quarter Ended Nine Months Ended

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Gross Profit $ 471,515 $ 487,309 (3.2) $ 1,459,597 $ 1,446,975 0.9

Percent of Net Sales 15.9 % 16.1 % 16.3 % 16.2 %

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.

For the third quarter of fiscal 2026, gross profit as a percent of net sales decreased.

For the first nine months of fiscal 2026, gross profit as a percent of net sales increased.

Gross profit as a percent of net sales increased for the Foodservice segment and decreased for the Retail and International segments in the third quarter and first nine months of fiscal 2026 compared to the prior year.

Selling, General, and Administrative (SG&A)

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SG&A $ 323,501 $ 258,713 25.0 $ 883,822 $ 773,158 14.3

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7.3 % 8.1 % 7.8 % 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.

For the third quarter of fiscal 2026, SG&A and SG&A as a percent of net sales increased, driven primarily by a loss related to the Brazil divestiture and a litigation settlement.

Adjusted SG&A and adjusted SG&A as a percent of net sales decreased, driven primarily by lower employee-related expenses and a reduction in marketing and advertising.

For the first nine months 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, a loss related to the Brazil divestiture, and a litigation settlement, which were partially offset by the gain on the sale of Justin's, LLC.

Adjusted SG&A and adjusted SG&A as a percent of net sales decreased, driven primarily by a reduction in marketing and advertising.

Advertising investments in the third quarter of fiscal 2026 were $34 million, a decrease of 18 percent compared to the prior year, partially due to the timing of advertising campaigns.

Advertising investments in the first nine months of fiscal 2026 were $108 million, down 10 percent compared to the prior year.

In fiscal 2026, the Company expects advertising investments to be comparable to the prior year, as it continues to support its priority brands.

Equity in Earnings of Affiliates

Quarter Ended Six Months Ended

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Change April 26, 2026 April 27, 2025 %

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July 26, 2026 July 27, 2025 % Change

Equity in Earnings of Affiliates $ (37,110) $ 11,153 (432.7) $ (4,061) $ 42,614 (109.5)

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.

Equity in earnings of affiliates for the third quarter and first nine months of fiscal 2026 decreased, primarily driven by a $48 million non-cash impairment charge related to a minority investment in Indonesia.

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

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Change April 26, 2026 April 27, 2025 %

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Interest Income

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5,227 11,350 (53.9) 11,336 8,488 33.6

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.

Interest income increased in the third quarter and the first nine months of fiscal 2026, as higher cash balances more than offset the impact of declining interest rates.

For the third quarter and the first nine months of fiscal 2026, interest expense was marginally higher compared to the prior year.

Other income decreased in the third quarter of fiscal 2026, primarily due to the

performance of the rabbi trust.

For the first nine months of fiscal 2026, other income increased primarily due to lower pension costs.

Effective Tax Rate

Quarter Ended Six Months Ended

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Effective Tax Rate 42.3 % 22.3 % 26.7 % 22.1 %

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.

The effective tax rate in the third quarter of fiscal 2026 was 42.3% compared to 22.3% for the same period in the prior year, primarily due to the impact of the Brazil divestiture and the non-cash impairment charge related to a minority investment in Indonesia.

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

Segment Results

Net sales and segment profit for each of the Company’s reportable segments are set forth below.

The Company does not allocate deferred compensation, 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.

Intersegment sales are excluded from the reported results and are not considered in management's assessment of segment performance.

Segment profit excludes unallocated general corporate expenses, deferred compensation, nonrecurring expenses associated with the Transform and Modernize initiative, corporate restructuring plan costs, gains and losses on divestitures, and interest and other income and expense.

Equity in Earnings of Affiliates is included in segment profit;

however, earnings attributable to the Company’s corporate venturing investments and noncontrolling interests are excluded.

These items are included below as Net Unallocated Expense and Noncontrolling Interest when reconciling to Earnings Before Income Taxes.

These excluded items are presented below as Net Unallocated Expense and Noncontrolling Interest in the reconciliation to Earnings Before Income Taxes.

The Company is an integrated enterprise, characterized by substantial intersegment cooperation, cost allocations, and sharing of assets.

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

Quarter Ended Six Months Ended

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Quarter Ended Nine Months Ended

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Retail $ 1,779,434 $ 1,858,434 (4.3) $ 5,416,905 $ 5,532,401 (2.1)

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$ 103,157 $ 236,514 (56.4) $ 543,531 $ 685,076 (20.7)

Quarter Ended Six Months Ended

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Change April 26, 2026 April 27, 2025 %

Quarter Ended Nine Months Ended

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Volume (lbs.) 648,340 712,912 (9.1) 2,005,233 2,127,075 (5.7)

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Segment Profit 118,073 122,566 (3.7) 369,902 378,847 (2.4)

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.

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Change April 26, 2026 April 27, 2025 %

Organic net sales decreased in the third quarter of fiscal 2026, as declines in commodity turkey and private label snack nuts were partially offset by strong performance in value-added turkey offerings, contract manufacturing, and Planters ® snack nuts.

Additional priority brands that delivered solid growth during the quarter included the SPAM ® family of products , Applegate ® natural and organic meats, and Hormel ® chili.

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

Retail segment profit decreased in the third quarter and first nine months of fiscal 2026, as lower net sales and higher logistics expenses were partially offset by lower SG&A.

Quarter Ended Nine Months Ended

July 26, 2026 July 27, 2025 % Change

Volume (lbs.) 244,830 248,540 (1.5) 733,557 734,988 (0.2)

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Segment Profit 144,475 140,711 2.7 456,800 420,170 8.7

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.

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 second quarter and first six months of fiscal 2026.

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

Organic volume decreased in the third quarter and was comparable in the first nine months.

Net sales growth for the third quarter was primarily driven by premium prepared proteins, branded pepperoni, and Jennie-O ® turkey.

Net sales growth for the first nine months of fiscal 2026 was primarily driven by premium prepared proteins, the customized solutions business, branded pepperoni, and Jennie-O ® turkey.

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

Segment profit increased for the third quarter and first nine months of fiscal 2026, as higher net sales and favorable pork input costs were partially offset by higher logistics and SG&A.

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 2026.

International

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Change April 26, 2026 April 27, 2025 %

Quarter Ended Nine Months Ended

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Volume (lbs.) 75,908 85,138 (10.8) 231,905 239,225 (3.1)

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Organic Net Sales 178,740 186,947 (4.4) 546,249 533,305 2.4

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 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.

Segment Profit (Loss) (29,233) 18,941 (254.3) 15,812 58,193 (72.8)

Adjusted Segment Profit 18,985 18,941 0.2 64,031 58,193 10.0

For the International segment, organic volume and organic net sales declined in the third quarter of fiscal 2026 as the recognition of certain SPAM ® export sales was adversely impacted due to a legal-entity transition.

In the first nine months of fiscal 2026, organic volume declined and organic net sales grew.

Organic net sales growth was driven by strong performance in multinational businesses, partially offset by the recognition of certain SPAM ® export sales which was adversely impacted due to a legal-entity transition.

Segment profit for the third quarter and first nine months of fiscal 2026 was significantly impacted by the non-cash impairment of a minority investment in Indonesia.

Adjusted segment profit in the third quarter of fiscal 2026 was comparable to the prior year, as minority investment results were offset by performance in Brazil.

Adjusted segment profit grew in the first nine months of fiscal 2026, primarily due to growth in China and minority investment performance.

Unallocated Income and Expense

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In thousands July 26, 2026 July 27, 2025 July 26, 2026 July 27, 2025

Net Unallocated Expense $ 130,104 $ 45,658 $ 298,802 $ 171,769

Noncontrolling Interest (55) (46) (182) (366)

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).

For the third quarter of fiscal 2026, net unallocated expense increased primarily due to a loss related to the Brazil divestiture and a litigation settlement.

For the first nine months of fiscal 2026, net unallocated expense increased primarily due to the loss on the sale of the whole-bird turkey business, a loss related to the Brazil divestiture, a litigation settlement, 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.

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In the fourth quarter of fiscal 2023, the Company announced a multi-year T&M initiative.

In presenting non-GAAP measures, the Company adjusts for (i.e., excludes) expenses for this initiative that are non-recurring, which are primarily project-based external consulting fees and expenses related to supply chain and portfolio optimization (e.g., asset write-offs, severance, or relocation-related costs).

The Company believes that non-recurring costs associated with the T&M initiative are not reflective of the Company’s ongoing operating cost structure;

In presenting non-GAAP measures, the Company adjusts for (i.e., excludes) expenses for this initiative that are nonrecurring, which are primarily project-based external consulting fees and expenses related to supply chain and portfolio optimization (e.g., asset write-offs, severance, or relocation-related costs).

The Company believes that nonrecurring costs associated with the T&M initiative are not reflective of the Company’s ongoing operating cost structure;

therefore, the Company is excluding these discrete costs.

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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.

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.

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 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.

Gain or Loss on Divestitures

As part of its ongoing portfolio management activities, the Company may periodically divest certain businesses to better align its portfolio with its strategic objectives and long-term growth strategy.

The Company believes the one-time impacts from these transactions, including transaction costs, 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.

Transactions affecting comparability include the Brazil transaction, the whole-bird turkey transaction, the Justin's, LLC transaction, and the Mountain Prairie, LLC divestiture.

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

Consulting Agreement

On October 27, 2025, the Company entered into the Consulting 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 Consulting Agreement include cash and share-based compensation, which were primarily recognized in the first quarter of fiscal 2026.

The Company believes nonrecurring 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.

Legal Matters

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Litigation Settlements

In the third quarter of fiscal 2026, the Company executed 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 this filing 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

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.

See Note R - 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.

In the third quarter of fiscal 2026, the Company recorded a non-cash impairment charge related to a minority investment in Indonesia.

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

The Company believes these charges 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.

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

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 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 Six Months Ended

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

Quarter Ended Nine Months Ended

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

Cost of Products Sold (GAAP) $ 2,489,818 $ 2,545,567 $ 7,501,653 $ 7,473,524

5 unchanged sentences

(11,792) (13,485) (36,448) (41,228)

Gain (Loss) on Sale of Business (61,040) — (37,532) (11,324)

Gain (Loss) on Divestitures (57,379) — (94,911) (11,324)

Corporate Restructuring Plan 26 — (8,505) —

2 unchanged sentences

Adjusted SG&A (Non-GAAP) $ 216,856 $ 245,228 $ 698,684 $ 720,366

Equity in Earnings of Affiliates (GAAP) $ (37,110) $ 11,153 $ (4,061) $ 42,614

48,218 — 48,218 —

Adjusted Equity in Earnings of Affiliates (Non-GAAP) $ 11,109 $ 11,153 $ 44,157 $ 42,614

Quarter Ended Nine Months Ended

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

Operating Income (GAAP) $ 110,904 $ 239,748 $ 571,713 $ 716,430

1 unchanged sentence

12,239 14,496 38,669 45,202

(Gain) Loss on Sale of Business 61,040 — 37,532 11,324

(Gain) Loss on Divestitures 57,379 — 94,911 11,324

Corporate Restructuring Plan (26) — 8,505 —

1 unchanged sentence

Litigation Settlements 37,500 — 37,500 240

48,218 — 48,218 —

Adjusted Operating Income (Non-GAAP) $ 266,215 $ 254,244 $ 807,292 $ 773,196

2 unchanged sentences

12,239 14,496 38,669 45,202

(Gain) Loss on Sale of Business 61,040 — 37,532 11,324

(Gain) Loss on Divestitures 57,379 — 94,911 11,324

Corporate Restructuring Plan (26) — 8,505 —

1 unchanged sentence

Litigation Settlements 37,500 — 37,500 240

48,218 — 48,218 —

Adjusted Earnings Before Income Taxes (Non-GAAP) $ 258,467 $ 251,010 $ 779,110 $ 741,842

2 unchanged sentences

2,999 3,233 9,474 9,960

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

(Gain) Loss on Divestitures 303 — 4,525 2,469

Corporate Restructuring Plan (6) — 2,084 —

5 unchanged sentences

9,241 11,263 29,195 35,242

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

(Gain) Loss on Divestitures 57,076 — 90,386 8,855

Corporate Restructuring Plan (20) — 6,421 —

1 unchanged sentence

Litigation Settlements 28,313 — 28,313 188

48,218 — 48,218 —

Adjusted Net Earnings Attributable to Hormel Foods Corporation (Non-GAAP) $ 202,402 $ 195,005 $ 609,156 $ 578,620

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)

2 unchanged sentences

0.02 0.02 0.05 0.06

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

(Gain) Loss on Divestitures 0.10 — 0.16 0.02

Corporate Restructuring Plan — — 0.01 —

1 unchanged sentence

Litigation Settlements 0.05 — 0.05 —

0.09 — 0.09 —

Adjusted Diluted Earnings Per Share (Non-GAAP)

$ 0.37 $ 0.35 $ 1.11 $ 1.05

Quarter Ended Six Months Ended

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

Quarter Ended Nine Months Ended

July 26, 2026 July 27, 2025 July 26, 2026 July 27, 2025

SG&A as a Percent of Net Sales (GAAP) 10.9 % 8.5 % 9.9 % 8.7 %

1 unchanged sentence

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

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

Gain (Loss) on Divestitures (1.9) — (1.1) (0.1)

Corporate Restructuring Plan — — (0.1) —

2 unchanged sentences

Adjusted SG&A as a Percent of Net Sales (Non-GAAP) 7.3 % 8.1 % 7.8 % 8.1 %

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

(1) Comprised primarily of costs related to supply chain and portfolio optimization.

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

Adjusted Segment Profit (Non-GAAP)

Quarter Ended

July 26, 2026 July 27, 2025

In thousands GAAP Non-GAAP Adjustments (1)

Non-GAAP GAAP Non-GAAP Adjustments (2)

Segment Profit (Loss)

Retail $ 118,073 $ — $ 118,073 $ 122,566 $ — $ 122,566

Foodservice 144,475 — 144,475 140,711 — 140,711

International (29,233) 48,218 18,985 18,941 — 18,941

Total Segment Profit (Loss) 233,316 48,218 281,534 282,218 — 282,218

Net Unallocated Expense 130,104 (107,092) 23,012 45,658 (14,496) 31,162

Noncontrolling Interest (55) — (55) (46) — (46)

Earnings Before Income Taxes $ 103,157 $ 155,310 $ 258,467 $ 236,514 $ 14,496 $ 251,010

(1) International segment profit (loss) adjustments in the third quarter of fiscal 2026 were due to a non-cash impairment charge.

Net Unallocated Expense adjustments were comprised of gain (loss) on divestitures, an unfavorable litigation settlement, nonrecurring T&M initiative costs, and corporate restructuring plan charges.

(2) Net Unallocated Expense adjustments in the third quarter of fiscal 2025 were comprised of nonrecurring T&M initiative costs.

Nine Months Ended

July 26, 2026 July 27, 2025

In thousands GAAP Non-GAAP Adjustments (1)

Non-GAAP GAAP Non-GAAP Adjustments (2)

Segment Profit (Loss)

Retail $ 369,902 $ — $ 369,902 $ 378,847 $ — $ 378,847

Foodservice 456,800 — 456,800 420,170 — 420,170

International 15,812 48,218 64,031 58,193 — 58,193

Total Segment Profit (Loss) 842,515 48,218 890,734 857,210 — 857,210

Net Unallocated Expense 298,802 (187,360) 111,442 171,769 (56,766) 115,003

Noncontrolling Interest (182) — (182) (366) — (366)

Earnings Before Income Taxes $ 543,531 $ 235,578 $ 779,110 $ 685,076 $ 56,766 $ 741,842

(1) International segment profit (loss) adjustments in the first nine months of fiscal 2026 were due to a non-cash impairment charge.

Net Unallocated Expense adjustments were comprised of gain (loss) on divestitures, nonrecurring T&M initiative costs, an unfavorable litigation settlement, corporate restructuring plan charges, and Consulting Agreement costs.

(2) Net Unallocated Expense adjustments in the first nine months of fiscal 2025 were comprised of nonrecurring T&M initiative costs, the loss on the divestiture of Mountain Prairie, LLC, and an unfavorable litigation settlement.

ORGANIC VOLUME AND ORGANIC NET SALES (NON-GAAP)

2 unchanged sentences

Quarter Ended

April 26, 2026 April 27, 2025

July 26, 2026 July 27, 2025

In thousands GAAP GAAP Divestiture

9 unchanged sentences

Total Net Sales $ 2,961,333 $ 3,032,876 $ (21,427) $ 3,011,449 (1.7)

Six Months Ended

April 26, 2026 April 27, 2025

Nine Months Ended

July 26, 2026 July 27, 2025

In thousands GAAP GAAP Divestiture

12 unchanged sentences

Cash Flow Highlights

Six Months Ended

April 26, 2026 April 27, 2025

Nine Months Ended

July 26, 2026 July 27, 2025

Cash and Cash Equivalents at End of Period

3 unchanged sentences

Cash Provided by (Used in) Financing Activities (488,435) (455,884)

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

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

Increase (Decrease) in Cash, Cash Equivalents, and Cash Held for Sale 173,417 (142,692)

Cash, cash equivalents, and cash held for sale increased $173 million during the first nine 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.

During the first nine months of fiscal 2025, cash and cash equivalents decreased $143

million as the Company utilized cash on hand to make additional purchases of inventory and capital assets 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.

– 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 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.

– Inventory increased $81 million during the first nine months of fiscal 2026 compared to an increase of $247 million in the comparable period of the prior year.

The increase in inventory during fiscal 2026 was driven by recovery in the turkey supply chain following the impacts of Highly Pathogenic Avian Influenza in the previous year, as well as higher input costs.

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.

– Accounts payable and accrued expenses decreased $37 million and $100 million during the first nine months of fiscal 2026 and fiscal 2025, respectively.

These decreases were driven by general timing of invoice payments, livestock and feed deferral payments, and annual incentive payments.

The decrease in fiscal 2026 was partially offset by higher legal and marketing accruals while the decrease in fiscal 2025 also included legal settlements.

– Accounts receivable decreased $86 million and $52 million during the first nine 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 $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.

• Capital expenditures were $219 million and $219 million during the first nine months of fiscal 2026 and fiscal 2025, respectively.

The largest projects during fiscal 2026 were related to investment in wastewater infrastructure to support operations in Austin, Minnesota and investments in data and technology.

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.

• Proceeds from the sale of business were $97 million during the first nine 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 nine 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 $320 million during the first six months of fiscal 2026, compared to $314 million in the comparable period of fiscal 2025.

• Cash dividends paid to the Company’s shareholders totaled $481 million during the first nine months of fiscal 2026, compared to $474 million in the comparable period of fiscal 2025.

Sources and Uses of Cash

9 unchanged sentences

The Company has paid 392 consecutive quarterly dividends since becoming a public company in 1928.

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.

On May 18, 2026, the Board of Directors authorized a quarterly dividend for the third quarter of fiscal 2026, of $0.2925 per share, a 1% increase from the prior year.

Capital Expenditures

2 unchanged sentences

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

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.

As of July 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 nine months of fiscal 2026, the Company made $61 million of interest payments, and the Company expects to make an additional $12 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.

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

Borrowing Capacity

3 unchanged sentences

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 April 26, 2026, the Company had no outstanding borrowings under this facility.

As of July 26, 2026, the Company had no outstanding borrowings under this facility.

Debt Covenants

1 unchanged sentence

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

As of July 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 April 26, 2026, the Company’s international subsidiaries held $224 million of cash and cash equivalents.

As of July 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.

The Company maintains all undistributed earnings as permanently reinvested.

The Company evaluates the balance and uses of cash held internationally based on the needs of the business.

The Company evaluates the amount of cash held by its international subsidiaries based on liquidity requirements and costs associated with repatriation.

Share Repurchases

2 unchanged sentences

The share repurchase authorization has no expiration date.

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

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

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

25 unchanged sentences

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;

6 unchanged sentences

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