Hormel Foods Corporation (NYSE:HRL) Q4 2022 Earnings Call Transcript

Jacinth Smiley: Good morning, Tom. So our capital allocation policy and approach will remain — it still remains the same. And so, yes, I mean, we’re happy that we continue to generate very strong cash flow, and we will continue to deploy it strategically as it relates to paying down the debt. We still believe that is not the best use of our cash today. Our first payment doesn’t come due until 2024. And so again, we’ll continue to be strategic. We’re continuing to look at opportunities from an M&A perspective and aligning those with our six strategic priorities. And so that is really how we’ll think about deploying our funds, paying our dividends, continuing to remain a dividend aristocrat. That’s very important to us. And in terms of the cadence of how we deploy the funds, as I talked about, that still remains consistent with our strategic approach for deploying our cash.

Jim Snee: And from an M&A perspective, Tom, we are still very interested in international opportunities. We believe that we can continue to leverage what we’ve built in Asia Pacific, China. We’ve talked a lot about snacking and entertaining as we built out the SKIPPY portfolio, the Planters portfolio, also the work that we’ve done in Brazil. So international certainly remains a key area for us as we’re thinking about the acquisition front.

Tom Palmer: Right. Thank you.

Jim Snee: Yes.

Operator: Thank you. And our next question comes from Rupesh Parikh with Oppenheimer. Please go ahead.

Rupesh Parikh: Good morning. And thanks for taking my question. So I wanted to just go back to top-line growth of 1% to 3% growth. I was just curious if you can just again walk through the key puts and takes there. At least to me, it seems a little lighter than we thought going into this year.

Jim Snee: Good morning, Rupesh. I think there are — just like you described, lots of puts and takes. We do know that we’re going to have some positive impact from pricing. We expect strong growth, foodservice and international. We are bringing more capacity online in 2023. But then we also know that we’ve got elasticities that will be somewhat of an offset. But as we’ve already talked about, really the biggest wildcard in terms of the top-line for next year is jobs. And so knowing that we’re dealing with this unprecedented fall event and it’s already pushed back what we expect to be a more normalized level by a quarter. We have to wait and see what happens in the spring time. And so, really, that’s the biggest unknown as we think about our sales outlook in 2023.

Rupesh Parikh: Okay, great. That’s helpful color. And then, just on the US consumer. Obviously, you guys are seeing great strength in your Grocery Products business and you’re seeing strength of foodservice. So just curious how you think about the consumer just based on your vantage points in both channels.

Jim Snee: As we’re thinking about 2023, it’s continued strength. The brands are doing well. All of the scan data for the most recent 13 weeks are showing really positive dollar sales growth. As you said, the foodservice business just continues to do really, really well, not only finding new opportunities, but they’re also doing a really nice job of taking share.

Rupesh Parikh: Great. Thank you.

Operator: And our next question today comes from Michael Lavery with Piper Sandler. Please, go ahead.

Michael Lavery: Thank you. Good morning.