Q3 FY2026
Filed Aug 26, 2026Hormel Foods Reports Third Quarter Fiscal 2026 Results; Raises and Narrows Adjusted EPS Outlook Following Solid Third Quarter and Strong Year-to-Date Performance
Adjusted operating income increased to $266 million from $254 million and adjusted diluted EPS increased to $0.37 from $0.35, led by Foodservice growth and lower adjusted SG&A as a percent of sales. GAAP results were materially reduced by the Brazil divestiture loss, Indonesia minority-investment impairment and litigation settlement, while consolidated sales, volume and Retail and International results declined.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net salesGAAP | $2.96 billion | – | down 2% |
| Organic net salesnon-GAAP | down 2% | – | down 2% |
| Total volumeother | 969,078 lbs. | – | (7.4)% |
| Organic volumenon-GAAP | down 7.1% | – | down 7.1% |
| Gross profitGAAP | $471,515 thousand | – | – |
| Cost of products soldGAAP | $2,489,818 thousand | – | – |
| Adjusted cost of products soldnon-GAAP | $2,489,371 thousand | – | – |
| Selling, general, and administrative expensesGAAP | $323,501 thousand | – | – |
| SG&A as a percent of net salesGAAP | 10.9% | – | – |
| Adjusted SG&A as a percent of net salesnon-GAAP | 7.3% | – | – |
| Advertising investmentsother | $34 million | – | – |
| Operating incomeGAAP | $111 million | – | – |
| Adjusted operating incomenon-GAAP | $266 million | – | – |
| Operating marginGAAP | 3.7% | – | – |
| Adjusted operating marginnon-GAAP | 9.0% | – | – |
| Earnings before income taxesGAAP | $103 million | – | (56.4)% |
| Adjusted earnings before income taxesnon-GAAP | $258 million | – | – |
| Net earnings attributable to Hormel Foods CorporationGAAP | $59,573 thousand | – | – |
| Adjusted net earnings attributable to Hormel Foods Corporationnon-GAAP | $202,402 thousand | – | – |
| Diluted earnings per shareGAAP | $0.11 | – | – |
| Adjusted diluted earnings per sharenon-GAAP | $0.37 | – | – |
| Effective tax rateGAAP | 42.3% | – | – |
| Cash flow from operationsGAAP | $241 million | – | an increase of 54% |
| Capital expendituresother | $68 million | – | – |
| Depreciation and amortization expenseGAAP | $66 million | – | – |
| Nine-month net salesGAAP | $8,961,250 thousand | – | 0.5% |
| Nine-month adjusted operating incomenon-GAAP | $807,292 thousand | – | – |
| Nine-month adjusted diluted earnings per sharenon-GAAP | $1.11 | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| RetailDeclines in commodity turkey and private label snack nuts were partially offset by value-added turkey offerings, contract manufacturing, Planters snack nuts, SPAM products, Applegate meats and Hormel chili. | $1,779,434 thousand | – | (4.3)%; organic net sales down 3% |
| FoodserviceBroad-based growth was led by premium prepared proteins, branded pepperoni and Jennie-O turkey, with contributions from Austin Blues smoked meats, Hormel Natural Choice meats and Hormel Fire Braised meats. | $1,003,158 thousand | – | 1.6%; organic net sales up 2% |
| InternationalBranded export demand remained resilient, but recognition of certain SPAM export sales was adversely affected by a one-time legal-entity transition. | $178,740 thousand | – | (4.7)%; organic net sales down 4% |
Fiscal 2026 outlook
- Revenue$12.1 billion to $12.2 billion
- NoteOrganic net sales growth of 1% to 2% (non-GAAP)
- NoteOperating income of $0.83 billion to $0.87 billion (GAAP)
- NoteAdjusted operating income of $1.08 billion to $1.12 billion (non-GAAP), reflecting growth of 6% to 10%
- NoteDiluted earnings per share of $1.06 to $1.12 (GAAP)
- NoteAdjusted diluted earnings per share of $1.45 to $1.51 (non-GAAP), reflecting growth of 6% to 10%
- NoteThe detailed adjusted operating income reconciliation gives a range of $1,075 million to $1,115 million.
- NoteThe outlook includes estimated impacts from the Brazil divestiture, a non-cash impairment charge related to a minority investment in Indonesia, and a litigation settlement.
Capital returns
- The Company returned $161 million to stockholders during the quarter through dividends.
- Dividends declared per share were $0.2925, compared to $0.2900 in the prior year.
- Dividends paid on common stock were $160,963 thousand, compared to $159,467 thousand in the prior year.
What drove it
- Foodservice delivered its 12th consecutive quarter of organic net sales growth, despite lower commodity-based pricing in portions of the portfolio.
- Foodservice segment profit increased 3% as higher net sales and favorable pork input costs more than offset higher logistics and SG&A expenses.
- Retail priority-brand growth included the SPAM family of products, Applegate natural and organic meats, Hormel chili and Planters snack nuts.
- Adjusted operating margin increased to 9.0% from 8.4%, while adjusted SG&A as a percent of net sales declined to 7.3% from 8.1%.
- Cash flow from operations increased 54% compared to the prior year.
Concerns
- Consolidated net sales declined 2%, organic net sales declined 2%, and total volume declined 7.4%.
- Retail net sales declined 4%, volume declined 9%, and segment profit declined 4%; higher logistics expenses were a partial offset to lower SG&A expenses.
- International net sales declined 5%, volume declined 11%, and GAAP segment profit declined 254% due to a non-cash impairment charge.
- GAAP operating income fell to $111 million from $239,748 thousand, and GAAP diluted EPS fell to $0.11 from $0.33.
- Significant discrete pre-tax items were a $56 million Brazil-divestiture loss, a $48 million non-cash Indonesia impairment charge and a $38 million litigation settlement.
- The effective tax rate increased to 42.3% from 22.3% and was significantly affected by one-time items.
- The updated fiscal 2026 net-sales range of $12.1 billion to $12.2 billion is below the previously presented range of $12.2 billion to $12.5 billion.
What to watch
- Execution following the completed sale of the Brazil operations and the effect of the divestiture on fiscal 2026 guidance.
- Whether Foodservice can continue broad-based organic net-sales growth following its 12th consecutive growth quarter.
- Retail volume trends, commodity turkey and private-label snack-nut demand, logistics expenses and priority-brand performance.
- International export-sales recognition after the one-time legal-entity transition and performance of minority investments.
- Delivery against the raised adjusted diluted EPS outlook of $1.45 to $1.51 and adjusted operating income outlook of $1.08 billion to $1.12 billion.
Balance sheet and cash flow
- Cash and cash equivalents were $839,639 thousand at July 26, 2026, compared to $670,679 thousand at October 26, 2025.
- Cash on hand, excluding assets held for sale, was $840 million at quarter end, an increase of $169 million from the end of fiscal 2025.
- Short-term marketable securities were $28,807 thousand, compared to $32,909 thousand at October 26, 2025.
- Inventories were $1.8 billion at quarter end, an increase of $54 million from the end of fiscal 2025.
- Current maturities of long-term debt were $505,634 thousand, compared to $6,646 thousand at October 26, 2025.
- Long-term debt less current maturities was $2,349,489 thousand, compared to $2,850,778 thousand at October 26, 2025.
- Quarterly net cash provided by operating activities was $240,599 thousand, compared to $156,698 thousand in the prior year.
- Quarterly purchases of property, plant, and equipment were $68,163 thousand, compared to $72,194 thousand in the prior year.
- Free cash flow was not reported.
Analysis
Hormel reported a quarter with weaker reported sales and volume but improved adjusted profitability. Net sales were $2.96 billion, down 2%, and organic net sales also declined 2%, while total volume fell 7.4%. Adjusted operating income increased to $266 million from $254 million, adjusted operating margin rose to 9.0% from 8.4%, and adjusted diluted EPS rose to $0.37 from $0.35. The lower adjusted SG&A ratio of 7.3%, versus 8.1% a year earlier, was an important contributor to the adjusted profit improvement.
Foodservice was the principal growth engine. Its net sales rose 2% on an organic basis and segment profit increased 3%, marking the segment's 12th consecutive quarter of organic net-sales growth. Premium prepared proteins, branded pepperoni and Jennie-O turkey were key contributors, and favorable pork input costs supported profit despite higher logistics and SG&A expenses. Retail was softer, with organic net sales down 3%, volume down 9% and segment profit down 4%, although value-added turkey, contract manufacturing, Planters, SPAM, Applegate and Hormel chili provided offsets.
GAAP earnings were sharply affected by discrete items. Operating income was $111 million and diluted EPS was $0.11, compared with $239,748 thousand and $0.33, respectively, in the prior year. The company identified a $56 million loss related to the Brazil divestiture, a $48 million non-cash impairment charge related to a minority investment in Indonesia and a $38 million litigation settlement. International GAAP segment profit fell 254%, while adjusted segment profit was flat, underscoring that the impairment drove the reported deterioration. The effective tax rate was 42.3%, compared with 22.3% last year, and management said it was significantly impacted by one-time items.
Cash generation improved, with cash flow from operations of $241 million, an increase of 54% compared with the prior year. Capital expenditures were $68 million, primarily for infrastructure enhancements and data and technology investments, while the company returned $161 million through dividends. Cash on hand excluding assets held for sale was $840 million, up $169 million from fiscal year-end, and inventories were $1.8 billion, up $54 million.
The full-year outlook raises and narrows adjusted diluted EPS to $1.45 to $1.51 from the previously presented $1.43 to $1.51 range, and raises adjusted operating income to $1.08 billion to $1.12 billion. At the same time, net-sales guidance was reduced to $12.1 billion to $12.2 billion from $12.2 billion to $12.5 billion, with organic net-sales growth now expected at 1% to 2% rather than 1% to 4%. The guide points to continued adjusted earnings growth despite lower sales expectations and includes the effects of the Brazil divestiture, the Indonesia impairment and the litigation settlement. No sequential quarterly comparisons were reported.
Management, verbatim
We delivered solid third quarter results, growing our adjusted earnings and continuing to advance our fiscal 2026 objectives.
Jeff Ettinger, interim chief executive officer
With our strong year-to-date performance and continued opportunities ahead, we are raising and narrowing our adjusted earnings outlook for fiscal 2026 and remain confident in delivering adjusted earnings growth for the year consistent with, or above, our long-term algorithm.
Jeff Ettinger, interim chief executive officer
While net sales declined, the results reflected the impacts of portfolio-shaping actions, lower commodity-based pricing in portions of the business and a consumer environment that remains under pressure.
John Ghingo, president and chief executive officer-elect
Not in the filing
stated, not guessed- Previous quarterly release outlook section was not provided; therefore, no reported actual-versus-prior-guidance comparisons are included.
- Free cash flow was not reported.
- Share repurchases were not reported.
- Forward gross-margin guidance was not reported.
- Forward operating-expense guidance was not reported.
- Forward tax-rate guidance was not reported.
- Sequential quarterly comparisons were not reported.
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.