Hormel Foods HRL · USD

Segment ReportingSegment Results: The Company develops, processes, and distributes a wide array of food products in a variety of markets. The Company reports its results in the following three segments: Retail, Foodservice, and International.The Retail segment consists primarily of the processing, marketing, and sale of food products sold predominantly in retail channels, including grocery stores, mass merchandisers, club stores, natural food chains, drug, dollar and discount chains, and e-commerce providers in the U.S. This segment also includes the results from the Company’s MegaMex Foods joint venture.The Foodservice segment consists primarily of the processing, marketing, and sale of food products to distributors and operators across a wide range of providers of food away from home, including restaurants, hospitality, healthcare, K-12, college and universities, and convenience stores in the U.S.The International segment processes, markets, and sells the Company's products through retail and foodservice channels internationally. This segment also includes the results from the Company’s international joint ventures, equity method investments, and royalty arrangements, as well as operations in China and Brazil.The results of each segment are regularly provided to the Company's Interim Chief Executive Officer, who is the chief operating decision maker (CODM). The CODM primarily uses net sales and segment profit to compare results to the prior year, annual operating plan, and periodic forecasts when evaluating segment performance and allocating resources. The accounting policies of the segments are generally the same as those presented in Note A - Summary of Significant Accounting Policies. Intersegment sales are eliminated in consolidation and are not reviewed when evaluating segment performance. Segment profit also excludes unallocated general corporate expenses, deferred compensation, non-recurring expenses associated with the Transform and Modernize initiative, corporate restructuring plan costs, 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.Segment results, including the significant expense categories regularly provided to the CODM, are provided below. Certain portions of these expenses are retained at the corporate level and are presented in Net Unallocated Expense.

Commitments and ContingenciesPurchase Commitments: To ensure a steady supply of hogs and turkeys and keep the cost of products stable, the Company has entered into contracts with producers for the purchase of hogs and turkeys at formula-based prices over periods up to 10 years and seven years, respectively. The Company has also entered into grow-out contracts with independent farmers to raise turkeys for the Company for periods up to 24 years. Under these arrangements, the Company owns the livestock, feed, and other supplies while the independent farmers provide facilities and labor. In addition, the Company has contracted for the purchase of corn, soybean meal, feed ingredients, and other raw materials from independent suppliers for periods up to two years.As of October 26, 2025, the Company is committed to make purchases under these contracts, assuming current price levels, for future fiscal years as follows:In thousands2026$1,229,259 2027854,304 2028553,565 2029324,840 2030241,015 Later Years560,870 Total$3,763,854 Purchases under these contracts for fiscal 2025, 2024, and 2023 were $1.3 billion, $1.3 billion, and $1.4 billion, respectively.Other Commitments and Guarantees: The Company has commitments of approximately $18.0 million related to infrastructure improvements supporting various manufacturing facilities and $4.7 million for a media advertising agreement as of October 26, 2025. The Company has future commitments totaling $28.7 million for a corporate aircraft to be delivered in mid-2027. Subsequent to the end of the fiscal year, the Company entered into a 20-year infrastructure improvement agreement for $38.1 million.As of October 26, 2025, the Company has $47.6 million of standby letters of credit issued on its behalf. The standby letters of credit are primarily related to the Company’s self-insured workers' compensation programs. This amount includes revocable standby letters of credit totaling $3.4 million for obligations of an affiliated party that may arise under workers' compensation claims. Letters of credit are not reflected on the Consolidated Statements of Financial Position.Legal Proceedings: The Company is a party to various legal proceedings related to the ongoing operation of its business, including claims both by and against the Company.

Long-term Debt and Other Borrowing ArrangementsLong-term Debt consists of: In thousandsOctober 26, 2025October 27, 2024Senior Unsecured Notes with Interest at 3.050% Interest Due Semi-annually through June 2051 Maturity Date$600,000 $600,000 Senior Unsecured Notes with Interest at 1.800% Interest Due Semi-annually through June 2030 Maturity Date1,000,000 1,000,000 Senior Unsecured Notes with Interest at 1.700% Interest Due Semi-annually through June 2028 Maturity Date750,000 750,000 Senior Unsecured Notes with Interest at 4.800%Interest Due Semi-annually through March 2027 Maturity Date500,000 500,000 Unamortized Discount on Senior Notes(5,848)(6,687)Unamortized Debt Issuance Costs(12,775)(15,628)Finance Lease Liabilities23,122 27,541 Other Financing Arrangements2,924 3,530 Total Debt2,857,424 2,858,756 Less: Current Maturities of Long-term Debt6,646 7,813 Long-term Debt Less Current Maturities$2,850,778 $2,850,944 Senior Unsecured Notes: On March 8, 2024, the Company issued senior notes in an aggregate principal amount of $500.0 million due March 2027. The notes bear interest at a fixed rate of 4.800% per annum. Interest accrues on the notes from March 8, 2024, and is payable semi-annually in arrears on March 30 and September 30 of each year, commencing September 30, 2024. The notes may be redeemed in whole or in part at any time at the applicable redemption prices. If a change of control triggering event occurs, the Company must offer to purchase the notes at a purchase price equal to 101% of their principal amount, plus accrued and unpaid interest, if any, to the date of purchase.On June 3, 2021, the Company issued $750.0 million aggregate principal amount of its 1.700% notes due June 2028 (2028 Notes) and $600.0 million aggregate principal amount of its 3.050% notes due June 2051 (2051 Notes). The notes may be redeemed in whole or in part at any time at the applicable redemption price. Interest accrues per annum at the stated rates and is paid semi-annually in arrears on June 3 and December 3 of each year, commencing December 3, 2021. Interest rate risk was hedged utilizing interest rate locks on the 2028 Notes and 2051 Notes. The Company lifted the hedges in conjunction with the issuance of these notes. See Note G - Derivatives and Hedging for additional information.

Income TaxesThe components of the Provision for Income Taxes are as follows: Fiscal Year EndedIn thousandsOctober 26, 2025October 27, 2024October 29, 2023CurrentU.S. Federal$97,519 $110,928 $161,016 State17,618 17,002 20,166 Foreign17,675 15,203 7,576 Total Current132,812 143,133 188,758 DeferredU.S. Federal46,851 74,461 23,221 State7,658 14,868 8,602 Foreign(1,637)(1,659)(29)Total Deferred52,872 87,670 31,794 Total Provision for Income Taxes$185,684 $230,803 $220,552 Deferred Income Taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the deferred income tax liabilities and assets are as follows: In thousandsOctober 26, 2025October 27, 2024Deferred Tax Liabilities Goodwill and Intangible Assets$(618,099)$(556,263)Tax over Book Depreciation and Basis Differences(204,612)(211,554)Other, Net(32,828)(39,618)Deferred Tax AssetsPension and Other Postretirement Benefits43,434 50,078 Employee-related Liabilities70,803 70,339 Marketing and Promotional Accruals6,473 9,833 Inventory8,445 6,853 Other, Net70,165 84,733 Net Deferred Tax (Liabilities) Assets$(656,219)$(585,599)Reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows: Fiscal Year Ended October 26, 2025October 27, 2024October 29, 2023U.S. Statutory Rate21.0 %21.0 %21.0 %State Taxes on Income, Net of Federal Tax Benefit3.6 2.6 2.5 Impairment on Equity Method Investment5.2 — — Foreign-derived Intangible Income Deduction(0.2)— (1.3)All Other, Net(1.6)(1.3)(0.4)Effective Tax Rate28.0 %22.3 %21.8 %As of October 26, 2025, the Company had $335.7 million of undistributed earnings from non-U.S. subsidiaries. The Company maintains all earnings as permanently reinvested. Accordingly, no additional income taxes have been provided for withholding tax, state tax, or other taxes.Total income taxes paid during fiscal 2025, 2024, and 2023 were $183.5 million, $186.4 million, and $205.0 million, respectively. Fiscal 2025 and 2024 included amounts paid for the purchase of federal transferable energy credits.

Stock-based CompensationThe Company issues stock options, restricted stock units, restricted shares, and deferred stock units as part of its stock incentive plans for employees and nonemployee directors. Stock-based compensation expense for fiscal 2025, 2024, and 2023, was $25.6 million, $23.2 million, and $24.1 million, respectively. As of October 26, 2025, there was $23.2 million of total unrecognized compensation expense from stock-based compensation arrangements granted under the plans. This compensation is expected to be recognized over a weighted-average period of approximately 1.6 years. During fiscal 2025, 2024, and 2023, cash received from stock option exercises was $22.1 million, $40.7 million, and $12.0 million, respectively. Shares issued for option exercises, restricted stock units, restricted shares, and deferred stock units may be either authorized but unissued shares or shares of treasury stock. The number of shares available for future grants was 5.3 million at October 26, 2025, 8.2 million at October 27, 2024, and 10.1 million at October 29, 2023.Stock Options: The Company’s policy is to grant options with the exercise price equal to the market price of the common stock on the date of grant. Options typically vest over four years and expire ten years after the date of the grant.A reconciliation of the number of options outstanding and exercisable as of October 26, 2025, is: Shares(in thousands)Weighted-averageExercise PriceWeighted-averageRemaining ContractualTerm (Years)AggregateIntrinsic Value(in thousands)Stock Options Outstanding at October 27, 202415,994 $38.43 Granted2,737 31.39 Exercised(1,081)26.08 Forfeited (70)35.67 Expired(271)38.82 Stock Options Outstanding at October 26, 202517,308 $38.10 4.6$— Stock Options Exercisable at October 26, 202512,554 $39.80 3.0$— The weighted-average grant date fair value of stock options granted and the total intrinsic value of options exercised are: Fiscal Year EndedIn thousands, except per share amountsOctober 26, 2025October 27, 2024October 29, 2023Weighted-average Grant Date Fair Value$6.15 $5.95 $10.06 Intrinsic Value of Exercised Options4,764 16,259 6,350 The fair value of each option award is calculated on the date of grant using the Black-Scholes valuation model utilizing the following weighted-average assumptions: Fiscal Year Ended October 26, 2025October 27, 2024October 29, 2023Risk-free Interest Rate4.3 %4.1 %3.5 %Dividend Yield3.7 %3.6 %2.4 %Stock Price Volatility22.5 %21.5 %21.

LeasesThe Company has operating leases for warehouses, manufacturing facilities, office space, transportation equipment, as well as miscellaneous real estate and equipment contracts. Finance leases primarily include turkey growing facilities and an aircraft. The Company’s lessor portfolio consists primarily of immaterial operating leases of farmland to third parties.Lease information included on the Consolidated Statements of Financial Position are: In thousandsLocation on Consolidated Statements of Financial PositionOctober 26, 2025October 27, 2024Right-of-Use AssetsOperatingOther Assets$163,351 $147,698 FinanceProperty, Plant, and Equipment, Net25,589 30,484 Total Right-of-Use Assets$188,940 $178,183 Lease LiabilitiesCurrentOperatingAccrued Expenses$34,723 $32,068 FinanceCurrent Maturities of Long-term Debt6,095 7,383 Long-termOperatingOther Long-term Liabilities133,263 121,286 FinanceLong-term Debt Less Current Maturities17,027 20,158 Total Lease Liabilities$191,109 $180,894 Lease expenses are:Fiscal Year EndedIn thousandsOctober 26, 2025October 27, 2024October 29, 2023Operating Lease Cost (1)$46,355 $42,200 $34,209 Finance Lease CostAmortization of Right-of-Use Assets7,872 7,562 7,594 Interest on Lease Liabilities799 1,042 1,361 Variable Lease Cost (2)357,051 390,032 511,906 Total Lease Cost$412,077 $440,836 $555,070 (1) Includes short-term lease costs, which are immaterial.(2) ASC 842 - Leases requires disclosure of payments related to agreements with an embedded lease that are not otherwise reflected on the Consolidated Statements of Financial Position. The Company’s variable lease costs primarily include inventory-related expenses, such as materials, labor, and overhead from manufacturing and service agreements that contain embedded leases. Variability of these costs is determined based on usage or output and may vary for other reasons such as changes in material prices. The weighted-average remaining lease term and discount rate for lease liabilities included on the Consolidated Statements of Financial Position are:October 26, 2025October 27, 2024Weighted-average Remaining Lease TermOperating Leases6.5 years6.1 yearsFinance Leases3.6 years4.4 yearsWeighted-average Discount RateOperating Leases4.43 %4.43 %Finance Leases3.33 %3.

Acquisitions and DivestituresDivestitures: On October 18, 2024, the Company sold its equity interests in Hormel Health Labs, LLC (Hormel Health Labs) and related assets to Lyons Health Labs Holdco, LLC for $24.5 million. The divestiture resulted in a pre-tax gain of $3.9 million, net of transaction costs, which was recognized in Selling, General, and Administrative. Results of operations for Hormel Health Labs were reflected within the Foodservice segment through the date of divestiture.On November 18, 2024, the Company sold its equity interests in a non-core sow operation, Mountain Prairie, LLC, and related assets to Chaparral Ranches, LLC for $13.6 million. The divestiture resulted in a pre-tax loss of $11.3 million, including transaction costs, which was recognized in Selling, General, and Administrative. Results of operations for Mountain Prairie, LLC were primarily reflected within the Retail segment through the date of divestiture.Subsequent to the end of the fiscal year, the Company announced a definitive agreement to sell a 51% controlling position in the Justin’s® business to Forward Consumer Partners, LLC based on a preliminary enterprise value of $125 million. The transaction is subject to customary closing conditions and is expected to be completed during the first quarter of fiscal 2026.

As a global organization, the Company’s information systems are subject to various risks, including, but not limited to risks associated with ransomware, system disruption, data theft, unauthorized access to information, and misuse of data. To identify, address, and mitigate these risks, the Company has developed and maintains a cybersecurity program. The Company’s cybersecurity program is informed by the National Institute of Standards and Technology (NIST) Cybersecurity Framework and the Company’s Enterprise Risk Management (ERM) process and relies on internal and external expertise.Integration with ERM ProcessesThe Company maintains an ERM program with a governance structure that is designed to identify, assess, prioritize, and mitigate risks across the organization. The ERM Executive Committee, comprised of the Company’s senior leadership team, has the ultimate responsibility for managing the identification of the key risks facing the Company and meets regularly to discuss the Company’s approach to mitigating those risks. Through the ERM process, cybersecurity has been identified as an important risk facing the Company. As a result, the cybersecurity program is an important component of the Company’s ERM processes. In addition to discussing the cybersecurity program at ERM Executive Committee meetings, members of the ERM Executive Committee participate in the cybersecurity incident response process. This process includes a governance model and procedures for identifying, categorizing, containing, and responding to cybersecurity incidents. As a component of the cybersecurity incident response process, the Company periodically conducts attack simulations and exercises and has used third parties to support this work. The Company also maintains business continuity and disaster recovery plans to prepare for potential technology disruptions and to better position the Company to recover from any cybersecurity incident. The Company’s Disclosure Committee also includes members of the ERM Executive Committee, helping to ensure timely analysis of potential disclosure obligations relating to cybersecurity events.Cybersecurity Program ComponentsThe Company’s cybersecurity program includes a focus on governance, processes, technology, and people.