Hormel Foods (HRL) Q3 2026 earnings summary

Executive summary

• Adjusted earnings per share grew 6% year-over-year to $0.37, despite a 2% decline in organic net sales, driven by Foodservice strength and select retail brands, while significant nonrecurring charges impacted GAAP results.

• Foodservice delivered its 12th consecutive quarter of organic net sales growth, outperforming industry trends, with premium prepared proteins and branded pepperoni as strong contributors.

• Retail faced volume and net sales declines due to divestitures, pricing elasticity, and commodity-based pricing, but key brands like JENNIE-O, Applegate, Planters, and SPAM showed growth.

• International segment was impacted by the Brazil divestiture, a non-cash impairment in Indonesia, and a legal entity transition affecting SPAM export sales.

• Cash flow from operations rose 47% to $769 million for the first nine months, driven by improved inventory and working capital.

Financial highlights

• Q3 2026 net sales were $2.96 billion, down 2.4% year-over-year; gross profit was $471.5 million with a gross margin of 15.9%.

• Adjusted operating income was $266 million, with an adjusted operating margin of 9%.

• Adjusted diluted EPS was $0.37, up 6% year-over-year; GAAP diluted EPS was $0.11, down 67%.

• Operating cash flow for the quarter was $241 million, up 54% year-over-year; cash on hand at quarter end was $840 million.

• Inventories increased to $1.8 billion, up $54 million from fiscal 2025.

Outlook and guidance

• Fiscal 2026 net sales expected between $12.1 billion and $12.2 billion, with organic net sales growth of 1% to 2%.

• Adjusted operating income guidance raised to $1.08–$1.12 billion, up 6% to 10% year-over-year.

• Adjusted diluted EPS guidance raised and narrowed to $1.45–$1.51, up 6% to 10% year-over-year.

• GAAP diluted EPS guidance updated to $1.06–$1.12, reflecting impacts from divestitures, impairments, and litigation.

• Management remains optimistic for 2027, citing strong Foodservice momentum, favorable pork input costs, and a 53rd week, but expects continued consumer and logistics pressures.