Q4 2023 Hormel Foods Corp Earnings Call

Speaker 1: Following the presentation, we will conduct a question-and-answer session.

We will conduct a question and answer session.

Speaker 1: If at any time during this call you require immediate assistance, please press star 0 for the operator. This call is being recorded on Wednesday, November 29, 2023.

At any time during this call you were quite immediate assistance. Please press star zero for the operator. This call is being recorded on Wednesday November 29th to any Chinese fee.

Speaker 1: I would now like to turn the conference over to David Dahlstrom, Director of Investor Relations.

I would now like to turn the conference over to David <unk> Director of Investor Relations. Please go ahead Sir.

Speaker 2: Good morning. Welcome to the Hormel Foods conference call for the fourth quarter of fiscal 2023. We released results this morning before the market opened around 630am Eastern Time. If you did not receive a copy of the release, you can find it on our website, Hormel Foods.com under the investor section.

Good morning, welcome to the Hormel Foods conference call for the fourth quarter of fiscal 2023.

We released results. This morning before the market opened around 630, a M eastern time.

Did not receive a copy of the release you can find it on our website Hormel foods dot com under the investors section.

Speaker 2: On our call today is Jim Snead, Chairman of the Board, President and Chief Executive Officer. Jacinta Smiley, Executive Vice President and Chief Financial Officer. And Deanna Brady, Executive Vice President of the Retail Side.

On our call today is Jim Snee, Chairman of the Board President and Chief Executive Officer, Justin Smiley Executive Vice President and Chief Financial Officer, and Diana Brady Executive Vice President of the retail segment.

Speaker 2: Jim will review the company's Fiscal 2023-4th Corp. and four-year results and provide a perspective on our outward for Fiscal 2024. Just since we've unprovided detailed financial results and further commentary on our outlook, the annual joint Jim and just since for the Q&A portion of the call.

Jim will review the company's fiscal 2023 fourth quarter and full year results and provide a perspective on our outlook for fiscal 2024, just central then provide detailed financial results and further commentary on our outlook Deanna will join Jim and just sent for the Q&A portion of the call.

Speaker 2: The line will be open for questions following just since remarks as a courtesy to the other analysts. Please limit yourself to 1 question with 1 follow up. If you have additional questions, you are welcome to get back into the queue.

The line will be opened for questions. Following just since remarks as a courtesy to the other analysts. Please limit yourself to one question with one follow up if you have additional questions you're welcome to get back into the queue.

Speaker 2: At the conclusion of this morning's call, a webcast replay will be posted to our investor website and archive for one year. Before we get started this morning, I need to reference the safe harbor statement. Some of the comments made today will be forward looking, and actual results may differ materially from those expressed in or implied by the statements we will be making.

At the conclusion of this morning's call a webcast replay will be posted to our investor website and archived for one year.

Before we get started this morning I need to reference the safe Harbor statement. Some of the comments made today will be forward looking and actual results may differ materially from those expressed in or implied by the statements we will be making.

Speaker 2: Please refer to our most recent annual report on Form 10K and quarterly reports on Form 10Q, which can be accessed at formalfoods.com under the Investors' Fection. Additionally, please note the company uses non-GAF results to provide investors with a better understanding of the company's operating performance.

Please refer to our most recent annual report on Form 10-K, and quarterly reports on Form 10-Q, which can be accessed at Hormel foods dot com under the investors section.

Additionally, please note the company uses non-GAAP results to provide investors with a better understanding of the company's operating performance. The presentation of this information is not intended to be considered in isolation or as a substitute for financial information presented in accordance with GAAP non-GAAP figures adjust for the impact of an adverse arbitration.

Speaker 2: The presentation of this information is not intended to be considered an isolation or the substitute for financial information presented in accordance with doubt.

Speaker 2: Non-Gap figures adjust for the impact of an adverse arbitration ruling, non-cash and payment charges, and costs associated with the company's transformation and modernization initiative.

[noise] ruling noncash impairment charges and costs associated with the company's transformation and modernization initiatives.

Speaker 2: These non-get measures include adjusted operating income, adjusted operating margin, adjusted selling general and administrative expenses as a percent of sales, adjusted diluted net earnings per share, and net debt to E-P.

non-GAAP measures include adjusted operating income adjusted operating margin adjusted selling general and administrative expenses as a percent of sales adjusted diluted net earnings per share and net debt to EBITDA.

Speaker 2: Discussion on non-gap information and reconciliation to the gap results are detailed in our press release and earning supplement Which can be accessed from our corporate or investor website. I will now turn the call over to Jim Sneat.

Discussion on non-GAAP information and reconciliations to the GAAP results are detailed in our press release and earnings supplement which can be accessed from our corporate or Investor website, I will now turn the call over to Jim Snee.

Thank you David good morning, everyone.

Speaker 3: Fiscal 2023 was a challenging year for the organization as we navigated an environment that remained volatile, complex, and high cost.

Fiscal 2023 was a challenging year for the organization as we navigated an environment that remained volatile comps.

Flex and high cost.

Speaker 3: Regardless, our results did not meet our expectations.

Our results did not meet our expectations.

Speaker 3: We still achieved our second consecutive year of net sales in excess of $12 billion.

We still achieved our second consecutive year of net sales in excess of $12 billion.

Speaker 3: Continue to reinvest in the growth of our leading brand.

Continue to reinvest in the growth of our leading brands.

Speaker 3: throw strong operating cash flows of $1 billion. Return a record amount of cash to our shareholders in the form of dividends and achieve the safest year in our company's history.

Drove strong operating cash flows of $1 billion returned a record amount of cash to our shareholders in the form of dividends.

And achieve the safest year in our company's history.

Speaker 3: We also made further progress on our evolution as a global branded food company, including the implementation of our Go Forward operating model and the integration of Genio Teri.

We also made further progress on our evolution as a global branded food company and.

Including the implementation of our go forward operating model.

And the integration of Jennie O Turkey store.

Speaker 3: As we turn the page to fiscal 2024, there is urgency across the organization to improve our business.

Okay.

As we turn the page to fiscal 2024, there is urgency across the organization to improve our business.

Speaker 3: And as we outlined at our recent investor day, we have identified a clear, realistic, and achievable path to return the business to its historical earnings trajectory. Our phone...

And as we outlined at our recent Investor day, we have identified a clear realistic and achievable path to return that business to its historical earnings trajectory.

Our focus going forward is clear.

Speaker 3: First, restore sustainable and dependable bottom line growth from our current business.

First restore sustainable and dependable bottom line growth from our current business.

Speaker 3: Second, drive savings by minimizing complexity and reducing costs. And third, capture incremental value from our invest.

Second drive savings by minimizing complexity, and reducing costs and third capture incremental value from our investments.

Speaker 3: Our first milestone will be our performance in fiscal 2024, which is expected to be an investment year for the company.

Our first milestone will be our performance in fiscal 2024, which.

Which is expected to be an investment year for the company.

Speaker 3: As with any year, success will be predicated on how we execute against our strategy.

As with any year success will be predicated on how we execute against our strategy.

Speaker 3: First, we must drive focus and growth in our retail business.

First we must drive focus and growth in our retail business.

Speaker 3: are nearly $8 billion powerhouse of leading brands, talented people, and strong capability.

Nearly $8 billion powerhouse of leading brands talented people and strong capabilities.

Speaker 3: Our retail team has made tremendous progress implementing the Go Forward structure, which involved combining seven retail businesses and standing up our brand fuel center of X.

Our retail team has made tremendous progress implementing the go forward structure.

Which involves combining seven retail businesses.

And standing up our brand if you will a center of excellence.

Speaker 3: Importantly, the retail team now operates with a single vision and clear strategic focus.

Importantly, the retail team now operates with a single vision and clear strategic focus.

Speaker 3: We expect this team to win with our consumers and our customers.

We expect this team to win with our consumers and our customers.

Speaker 3: Better allocate our resources to drive profitable growth and improve the margin structure of the business.

Allocate our resources to drive profitable growth.

And improve the margin structure of the business.

Speaker 3: Second, we must continue to expand our leadership position in food service.

Second we must continue to expand our leadership position in foodservice.

Speaker 3: This business has emerged from the pandemic stronger. And again, delivered excellent results in fiscal 2023.

This business has emerged from the pandemic stronger and again delivered excellent results in fiscal 2023.

Speaker 3: In fiscal 2024, we expect continued growth in food service.

In fiscal 2024, we expect continued growth in foodservice.

Speaker 3: We are confident that we can accelerate growth in the key categories of bacon, pepperoni, prepared proteins, and turkey.

We are confident that we can accelerate growth in the key categories of Bacon pepperoni prepared proteins and Turkey.

Speaker 3: Also, we can establish a digital leadership position in the industry and expand our presence in the Seed Store channel.

Also we can establish a digital leadership position in the industry and expand our presence in the C store channel.

Speaker 3: Third, we must aggressively develop our global presence, which starts with reigniting growth in our international business.

Third we must aggressively develop our global presence, which starts with reigniting growth in our international business.

Speaker 3: Fiscal 2023 was a particularly challenging year for our international business through the softness in China, wheat commodity markets, and higher than expected elasticity on our branded export business.

Fiscal 2023 was a particularly challenging year for our international business due to softness in China.

Weak commodity markets and higher than expected elasticities on our branded export business.

Speaker 3: While results in the first quarter of fiscal 2024 are assumed to remain challenged, we anticipate a steady recovery beginning in the second quarter.

While results in the first quarter of fiscal 2024 are assumed to remain challenged we anticipate a steady recovery beginning in the second quarter.

Speaker 3: In fiscal 2024, we expect to benefit from more normalized shipments of spam to the Philippines.

In fiscal 2024, we expect to benefit from more normalized shipments of spam to the Philippines.

Speaker 3: and easing of headwinds in our commodity businesses and recovery in China.

And easing of headwinds in our commodity businesses and recovery in China.

Speaker 3: As the near-term headwinds abate, we anticipate this business to resume delivering accelerated growth.

As the near term headwinds abate.

Anticipate this business to resume delivering accelerated growth.

Speaker 3: Fourth, we must execute our enterprise-wide entertaining and snacking vision by unlocking the power of our brands across the channels where we compete.

Fourth we must execute our enterprise wide entertaining and snacking vision.

Unlocking the power of our brands across the channels, where we compete.

Speaker 3: We are positioned to win in this on-trend category with brands such as planters, corn nuts, corn-nuts, corn-melt pepperoni, Columbus, and corn-melt gather.

We are positioned to win in this on trend category with brands, such as planters corn nuts, Hormel, Pepperoni, Columbus and Hormel gatherings.

Speaker 3: We have been pleased with the momentum we have built in the back half of the year for the planters bit.

We have been pleased with the momentum we have built in the back half of the year for the planters business.

Speaker 3: Data for the latest quarter shows accelerating dollar and unit sales.

Data for the latest quarter shows accelerating dollar and unit sales. In addition to share household penetration and distribution gains.

Speaker 3: in addition to share household penetration and distribution gains. Much of this momentum is...

Much of this momentum is being driven by innovation.

Speaker 3: Our new flavored cashews line is meeting or exceeding expectations in the marketplace.

Our new flavored cashews line is meeting or exceeding expectations in the marketplace over indexing with millennial consumers.

Speaker 3: over indexing with millennial consumers, growing household penetration, and introducing new consumers to the categories.

<unk> household penetration.

And introducing new consumers to the category.

Speaker 3: capitalize on this success. We are launching another flavored cashew variety in fiscal 2024 in addition to a slate of new to market innovation.

To capitalize on the success, we are launching another flavored cashew variety in fiscal 2024. In addition to a slate of new to market innovations.

Speaker 3: We have aggressive plans to keep the momentum going for our planter snack nuts business in fiscal 2024, led by further innovation, new distribution, brand investments, and effective promotional sub.

We have aggressive plans to keep the momentum going for our plant our snack nut business in fiscal 2024 led by further innovation, new distribution brand investments and effective promotional support.

Speaker 3: We continue to do our part as the category leader to support the planters and corn nuts brands to drive growth for our business, the category, and for our customers.

We continue to do our part as the category leader to support the planters and corn nuts brands to drive growth for our business the category and for our customers.

Speaker 3: Fifth, we must future fit our one supply chain, which means reducing costs and minimizing complexity while investing in long-term growth.

Fifth we must future fit our one supply chain, which means reducing cost and minimizing complexity, while investing in long term growth.

Speaker 3: We recently announced that we are converting the Baron Wisconsin plant, which currently operates turkey harvest and value added production lines into a value added facility to support growth across our broader portfolio.

We recently announced that we are converting the Barron, Wisconsin plant, which currently operates Turkey harvest and value added production lines.

<unk> value added facility to support growth across our broader portfolio.

Speaker 3: Harvest operations are expected to cease during the second quarter of fiscal 2024.

Harvest operations are expected to cease during the second quarter of fiscal 2024.

Speaker 3: These actions at the Baron facility are consistent with the goals we laid out in late 2021 when we first announced transformational efforts at Genio turkeys.

These actions at the Barron facility are consistent with the goals we laid out in late 2021, when we first announced transformational efforts at Jennie O Turkey store.

Speaker 3: We are committed to building a more demand-oriented and optimized Turkey portfolio that is better aligned to the changing needs of our customers, consumers, and operators.

We are committed to building a more demand oriented and optimized Turkey portfolio that is better aligned to the changing needs of our customers consumers and operators.

Speaker 3: The actions that the Baron plant further right size our turkey supply chain supporting consistent top line growth improved profitability and decreased exposure to commodity volatility.

Actions at the Barron plant further right size, our Turkey supply chain supporting consistent topline growth.

<unk> profitability and decreased exposure to commodity volatility.

Speaker 3: We are also committed to optimizing the Genio Turkey store assistance.

We are also committed to optimizing the Jennie O Turkey store system <unk>.

Speaker 3: including freeing up plant space to support growth across the broader Hormel Foods portfolio.

Including freeing up plant space to support growth across the broader Hormel foods portfolio.

Speaker 3: The Baron Plant is expected to support high demand and high growth product lines across all areas of the organization. Lastly, we are committed to integrating the turkey business into the broader organization to drive efficiencies and growth.

The Barron plant is expected to support high demand and high growth product lines across all areas of the organization.

Lastly, we are committed to integrating the Turkey business into the broader organization to drive efficiencies and growth.

Speaker 3: Our retail, food service, and international statements have been directly supporting the turkey business for a year. And we anticipate this continued collaboration to drive long-term growth for the Genio brand and across our entire turkey portfolio.

Retail foodservice and international segments have been directly supporting the Turkey business for a year.

And we anticipate this continued collaboration to drive long term growth for the Jennie O brand and across our entire Turkey portfolio.

Speaker 3: And finally, we must transform and modernize our company, which is a critical piece to our projected growth over the next three years.

Finally, we must transform and modernize our company, which is a critical piece to our projected growth over the next three years.

Speaker 3: At our recent investor day, we detailed our plans to transform and modernize the organization.

At our recent Investor day, we detailed our plans to transform and modernize the organization.

Speaker 3: Over the next three years, we expect to invest approximately $250 million in implementation, personnel, and project costs.

Over the next three years, we expect to invest approximately $250 million and implementation personnel and project costs, including investments in capital expenditures and technology.

Speaker 3: including investments in capital expenditures and technology.

Speaker 3: We expect around one-third of this investment to be made in fiscal 2024, resulting in a modest benefit to net earnings for the year.

We expect around one third of this investment to be made in fiscal 2024, resulting in a modest benefit to net earnings for the year.

Speaker 3: Looking to the out years, we are targeting $200 million plus in operating income growth by fiscal 2026 from the transformation and modernization initiative across the supply chain and portfolio optimization.

Looking to the out years, we are targeting $200 million plus and operating income growth by fiscal 2026 from the transformation and modernization initiative across the supply chain and portfolio optimization.

Speaker 3: To be clear, we expect a modest benefit to net earnings in 2024, which has been factored into our out...

To be clear.

We expect a modest benefit to net earnings in 2024.

Which has been factored into our outlook.

Speaker 3: We expect benefits to accelerate in fiscal 2025.

We expect benefits to accelerate in fiscal 2025.

Speaker 3: We expect to achieve our target in fiscal 2026.

We expect to achieve our target in fiscal 2026.

Speaker 3: And we expect this initiative to provide significant residual benefit in fiscal years 2027 and beyond.

And we expect this initiative to provide significant residual benefit in fiscal years 2027 and beyond.

Speaker 3: Through transformational work, we expect to build significant capabilities for the future. This is truly exciting work for the-

Truly transformational work, we expect to build significant capabilities for the future.

This is truly exciting work for the organization.

Speaker 3: Before I provide further color on our fiscal 2024 outlook, I want to briefly detail how we finished fiscal 2023.

Before I provide further color on our fiscal 2024 outlook I wanted to briefly detail how we finished fiscal 2023.

Speaker 3: Net sales for the fourth quarter worth $3.2 billion.

Net sales for the fourth quarter were $3 2 billion and diluted net earnings per share were <unk> 36 cents.

Speaker 3: and deluded net earnings per share worth 36 cents.

Speaker 3: excluding the impact of non-cash impairments and investments in transformation and modernization, adjusted deluded net earnings per share were 42 cents.

Excluding the impact of noncash impairments and investments in transformation and modernization adjusted diluted net earnings per share were <unk> 42 sets.

Speaker 3: As expected, our food service segment finished a year strong. While the risks we identified heading into the quarter, including pricing, headwinds in Turkey, lower retail volumes, and continued pressures in our international business, negatively impacted results.

As expected our foodservice segment finished the year strong.

While the risks, we identify heading into the quarter, including pricing headwinds in Turkey, lower retail volumes and continued pressures in our international business negatively impacted results.

Speaker 3: These results were in line with the low end of our revenue and adjusted deluded net earnings per share expectation.

These results were in line with the low end of our revenue and adjusted diluted net earnings per share expectations.

Speaker 3: Turning to our outlook for fiscal 2024, we expect to drive modest volume and net sales growth for the full year.

Turning to our outlook for fiscal 2024, we expect to drive modest volume and net sales growth for the full year desk.

Speaker 3: This growth is expected to come from our key categories supported by higher brand investments and innovation.

This growth is expected to come from our key categories supported by higher brand investments and innovation.

Speaker 3: In retail, we expect higher net sales across many of our verticals, including bacon, convenient meals, and proteins, global flavors, emerging brands, and snacking and entertains.

In retail, we expect higher net sales across many of our verticals, including Bacon convenient meals and proteins global flavors emerging brands and snacking and entertaining.

Speaker 3: We have embedded in our outlook, targeted pricing actions, a step up in innovation, and higher brand support to drive volume and improve mix.

We have embedded in our outlook targeted pricing actions.

Step up in innovation and higher brand support to drive volume and improved mix.

Speaker 3: In food service, we are anticipating broad volume growth led by turkey, pepperoni, and bait.

In foodservice, we are anticipating broad volume growth led by Turkey, Pepperoni and Bacon.

Speaker 3: In addition to higher volumes, net sales are expected to benefit from higher raw material input.

In addition to higher volumes net sales are expected to benefit from higher raw material input markets.

Speaker 3: In our international business, we expect net sales increases to be driven by the branded export business led by spam and skipping. An improvement in both the retail and food service channels in China.

In our international business, we expect net sales increases to be driven by the branded export business led by spam and Skippy and improvement in both the retail and foodservice channels in China.

Speaker 3: From a bottom line perspective, we expect growth from the food service and international businesses and expect it to climb in our retail sector.

From a bottom line perspective, we expect growth from the foodservice and international businesses.

Expected decline in our retail segment.

Speaker 3: While the retail segment is expected to benefit from sales growth and improved mix.

While the retail segment is expected to benefit from sales growth and improved mix. We do not anticipate this growth to overcome the significant headwind from the rapid decline in the commodity whole Turkey market.

Speaker 3: We do not anticipate this growth to overcome the significant headwind from the rapid decline in the commodity whole turkey market.

For context whole, Turkey prices began calendar year 2023 at all time highs and have since fallen below the five year average.

Speaker 3: whole turkey prices began calendar year 2023 at all time highs and have since fallen below the five year ever

Speaker 3: We are closely monitoring cell through of whole turkeys this holiday season, as well as any potential supply impacts from HPAI, which has again affected

We are closely monitoring sell through of whole turkeys. This holiday season, as well as any potential supply impacts from HPE AI.

Which has again affected blocks this fall.

Speaker 3: These are very unusual market dynamics, which has added additional risk and uncertainty to our outlook.

These are very unusual market dynamics, which has added additional risk and uncertainty to our outlook.

Speaker 3: Given these factors in Turkey, we have included in our outlook, meaningfully lower market pricing on our high volume, whole Turkey business.

Given these factors in Turkey, we have included in our outlook meaningfully lower market pricing on our high volume whole Turkey business.

Speaker 3: Similar to the dynamics we experienced in the fourth quarter, we expect earnings to decline in the first half of a year due to the impact from lower turkey markets, lower volumes in the retail segment, and continued softness in our China business.

Similar to the dynamics, we experienced in the fourth quarter, we expect earnings to decline in the first half of the year due to the impact from lower Turkey markets lower volumes in the retail segment.

Continued softness in our China business.

Speaker 3: We expect these pressures to have the greatest impact in the first quarter.

We expect these pressures to have the greatest impact in the first quarter.

Speaker 3: Taking all these factors into account, we expect net sales growth of 1 to 3%.

Taking all these factors into account, we expect net sales growth of 1% to 3%.

Speaker 3: diluted net earnings per share to be $1.43 to $1.57.

Diluted net earnings per share to be $1 43 to $1 57.

Speaker 3: and adjusted deluded net earnings per share to be $1.51 to $1.65.

And adjusted diluted net earnings per share to be $1 51 to $1 65.

Speaker 3: And we expect a modest benefit to net earnings from our transformation and modernization initiatives.

And we expect a modest benefit to net earnings from our transformation and modernization initiatives.

Speaker 3: As I alluded to earlier, we have embarked on an initiative to return the business to its historical earnings trajectory and deliver on the commitment we made at our investors.

As I alluded to earlier, we have embarked on an initiative to return the business to its historical earnings trajectory and deliver on the commitment we made at our Investor day.

Speaker 3: to reiterate the key elements of this initiative. In fiscal 2024, we expect a year of investment, which assumes

To reiterate the key elements of this initiative.

In fiscal 2024, we expect a year of investment which assumes.

Speaker 3: Underline growth across many parts of our current business.

Underlying growth across many parts of our current business.

Speaker 3: Offset by a significant headwind from turk.

Offsetting by a significant headwind from Turkey.

Speaker 3: Higher salaries and normalized employee related expense.

Higher salaries and normalized employee related expenses.

Speaker 3: the impact from our new labor agreement and higher support for our leading brand.

Impact from our new labor agreement and higher support for our leading brands.

Speaker 3: It also assumes investments into our transformation and modernization initiative, resulting in a modest benefit to the year.

It also assumes investments into our transformation and modernization initiative, resulting in a modest benefit to the year.

Speaker 3: and it assumes capturing incremental value from planters, our turkey business integration, go forward, and the investments we've made in additional capacity.

And it assumes capturing incremental value from planters, our Turkey business integration Gulf forward and the investments we've made in additional capacity.

Speaker 3: In fiscal 2025, we expect to accelerate growth, which assumes strength from the underlying business, significant benefits from supply chain savings, and portfolio optimization, and further strategic value cuts.

In fiscal 2025, we expect to accelerate growth, which assumes strength from the underlying business significant benefits from supply chain savings and portfolio optimization and further strategic value capture.

Speaker 3: In fiscal 2026, we expect to deliver at least $250 million in operating income growth. As we begin 2024, we remain focused on our strategic priorities, executing our transformation and modernization initiative, fueling our innovation pipeline, and exiting the year with momentum in our business sake.

In fiscal 2026, we expect to deliver at least $250 million and operating income growth as we begin 2024, we remain focused on our strategic priorities executing our transformation and modernization initiative.

Our innovation pipeline and exiting the year with momentum in our business segments.

Speaker 3: I remain confident that we have the right brands, strategy, people, and culture to deliver on our commitment to improve our business and drive long-term shareholder returns and growth.

<unk> confident that we have the right brands strategy people and culture to deliver on our commitment to improve our business and drive long term shareholder returns and growth.

Speaker 3: In closing, I want to recognize all the hard work carried out by our team and what was the challenging year.

And in closing I want to recognize all the hard work carried out by our team in what was a challenging year waste.

Speaker 3: We successfully completed a very large reorganization, made progress addressing near-term challenges facing the business, and accelerated the transformational work that will better position the company for future success.

We successfully completed a very large reorganization made progress addressing near term challenges facing the business and accelerated the transformational work that will better position the company for future success.

Speaker 3: At this time, I will turn the call over to Jacen Smiley to discuss detailed financial information related to fiscal 2023 and added color on key drivers to our outlook. Thank you, Jim.

At this time I will turn the call over to <unk> to discuss detailed financial information related to fiscal 2023 and added color on key drivers to our outlook.

Thank you Jim good morning, everyone.

Speaker 4: Full-year net sales were $12.1 billion. The second highest net sales achievement in our history.

Full year net sales were $12 1 billion.

The second highest net sales achievement in our history.

Speaker 4: We also deliver $2 billion in gross profit for the year.

We also delivered $2 billion in gross profit for the year.

Speaker 4: Full year, selling general and administrative expenses increased compared to last year, primarily due to an adverse arbitration ruling.

Full year, selling general and administrative expenses increased compared to last year, primarily due to an adverse arbitration ruling.

Speaker 4: On an adjusted basis, selling general and administrative expenses as a percent of net sales finished comparable to the prior year at 7.1%.

On an adjusted basis, selling general and administrative expenses as a percent of net sales finished comparable to the prior year at seven 1%.

Speaker 4: Advertising investments for the fiscal 2020-23 year were $160 million compared to $157 million last year.

Advertising investment for the fiscal 'twenty to 'twenty three year $160 million.

Compared to $157 million.

Last year.

Speaker 4: We have planned another increase in advertising investments in fiscal 2024 as we continue to support our leading brands in the marketplace.

We have planned another increase in advertising investment in fiscal 'twenty to 'twenty four as we continued to support our leading brands in the marketplace.

Speaker 4: For fiscal 2023, equity in earnings of affiliates increased due to significantly higher results from Magamax food.

For fiscal 'twenty to 'twenty three equity in earnings of affiliates increased due to significantly higher results from Mega Max Foods.

Speaker 4: Operating income for fiscal 2023 was 1.1 billion dollars and adjusted operating income was 1.2 billion dollars.

Operating income for fiscal 2023 was $1 1 billion and adjusted operating income was $1 2 billion.

Speaker 4: operating margin and adjusted operating margins were 8.9% and 9.8% respectively.

Operating margin and adjusted operating margins were eight 9% and nine 8% respectively.

Speaker 4: The tax rate for fiscal 2023 was 21.8% marginally higher than last year.

The tax rate for fiscal 2023 was 21, 8%.

Marginally higher than last year.

Speaker 4: The effective rate for fiscal 2020-24 is expected to be 21-23%.

The effective rate for fiscal 'twenty to 'twenty four is expected to be 21% to 23%.

Speaker 4: For the full year, diluted net earnings per share were $1.45.

For the full year.

Diluted net earnings per share were $1 45.

Speaker 4: excluding the impacts of an adverse arbitration ruling, non-cash impairments, and investments in our transformation and monetization initiative. Adjusted diluted net earnings per share were $1.61.

Excluding the impact of an adverse arbitration ruling noncash impairment and the investment in our transformation and monetization initiative.

Adjusted diluted net earnings per share were dollar and 61.

Speaker 4: We remain committed to dividend growth, investing in our business, and maintaining an investment greater rating.

We remain committed to dividend growth investing in our business and.

<unk> an investment grade rating.

Speaker 4: Our consistent cash flows of more than $1 billion in fiscal 2023 and a disciplined financial strategy directly support these commitments.

Our consistent cash flows of more than $1 billion in fiscal 2023, and a disciplined financial strategy directly support these commitments.

Speaker 4: In fiscal 2023, we returned a record $593 million to our shareholders in the form of dividends, including payment of our 381st consecutive quarterly dividend effective November 15th.

In fiscal 'twenty to 'twenty, three we returned a record $593 million to our shareholders in the form of dividends, including payment of our 380 <unk> consecutive quarterly dividend effective November 15th.

Speaker 4: We also recently announced an increase in the annual dividend of 3% to $1.13 per share for fiscal 2024.

We also recently announced an increase in the annual dividend of 3% to $1 13 per share for fiscal 'twenty 'twenty four.

Speaker 4: This year will be a remarkable 58th consecutive year of dividend increase.

This year will be a remarkable 58 consecutive year of dividend increases.

Speaker 4: We invested $270 million in capital projects during fiscal 2023, supporting growth for spam, and for retail and food service pepperoni.

We invested $270 million in capital projects during fiscal 2023 supporting growth for spam and for retail and foodservice pepperoni.

Speaker 4: We are investing $280 million in capital projects for fiscal 2024, which includes investments in our barren facility, investment supporting our transformation and modernization initiative, and to support high demand planters' eyes.

We are investing $208 million in capital projects for fiscal 'twenty to 'twenty, four which includes investments in our Barron facility.

Westman supporting our transformation and modernization initiatives.

To support high demand planters items.

Speaker 4: While 2023 was a challenging year for the company.

While 20% to 23 was a challenging year for the company.

Speaker 4: Our strong financial position allowed us to continue sharing our successes, which included recognizing our team members for the 8-5th consecutive year through our annual profit sharing program.

Our strong financial position allowed us to continue sharing our successes.

<unk> included recognizing our team members for the 85th consecutive year through our annual profit sharing program.

Speaker 4: We ended the year with $3.3 billion of debt and over $750 million in cash and short-term security.

We ended the year with $3 $3 billion of debt and over $750 million in cash and short term securities.

Speaker 4: We remain in line with our stated goal of 1.5 to 2 times net debt to EBITDA.

We remain in line with our stated goal of one five to two times net debt to EBITDA.

Before turning to our outlook.

Speaker 4: I would like to highlight the progress we made during the year reducing inventory.

I would like to highlight the progress we made during the year reducing inventory.

Speaker 4: As we committed to earlier in the year, we achieved our days sales in inventory target of less than 60 days for the quarter and drove a sequential reduction in dollars of both finished goods and total inventory.

As we committed to earlier in the year, we achieved our days sales in inventory target of less than 60 days for the quarter.

And drove a sequential reduction in dollars of both finished goods and total inventory.

Speaker 4: Inventor has finished the year at $1.7 billion, a decrease of $36 million from the beginning of the year.

Inventories finished the year at $1 $7 billion.

A decrease of $36 million from the beginning of the year.

Speaker 4: We enter fiscal 2024 with responsible levels of inventory to support and achieve our targeted and it's still rate with ample production capacity to grow the businesses.

We enter fiscal 'twenty to 'twenty, four with responsible levels of inventory to support and achieve our targeted fill rates with ample production capacity to grow their businesses.

Speaker 4: While Jim covered many of the puts and takes embedded in Orfisco 2020 for outlook, I want to provide additional color around our investments in the business and assumptions on key raw material marks.

While Jim covered many of the puts and takes embedded in our fiscal 'twenty to 'twenty four outlook I want to provide additional color around our investments in the business and assumptions on key raw material market.

Speaker 4: We are investing for growth in fiscal 2020-24. Specifically, we will be investing in and to end planning capabilities.

We are investing for growth in fiscal 'twenty to 'twenty four specifically, we will be investing in.

And to and planning capabilities.

Speaker 4: infrastructure and software to further our data and analytics capabilities.

Infrastructure and software to further our data and analytics capabilities.

Speaker 4: a modernization of our order to cash system.

The modernization of our order to cash system.

Speaker 4: and incremental headcount to support the plan by make and move work streams across our supply chain.

And incremental head count to support the plan buy make and move work streams across our supply chain.

Speaker 4: We anticipate about one-third of the total investment to be recorded in fiscal 2024.

We anticipate about one third of the total investment to be recorded in fiscal 2024.

Speaker 4: About 8 cents EPS is expected to be one time with the rest capitalized or included in the ongoing cross-structure of the DIVS.

<unk> EPS is expected to be one time with the rest capitalize or included in the ongoing cost structure of the business.

Speaker 4: Chifting to the cost environment, our fiscal 2024 outlook assumes port input cost to be higher than last year and to remain above the five-year average.

Shifting to the cost environment.

Our fiscal 'twenty to 'twenty four outlook assumes pork input cost to be higher than last year and to remain above the five year average.

Speaker 4: The USDA is projecting modestly higher production and higher exports in 2024.

The USDA is projecting modestly higher production and higher exports in 2024.

Speaker 4: Additionally, cold storage levels for pork have trended lower year over year and compared to these historical averages which we expect to be supportive of pork marks.

Additionally, cold storage levels for pork have trended lower year over year and compared to these historical averages, which we expect to be supportive of pork markets.

Speaker 4: Of note, these costs are expected to continue to be a headwind in fiscal 2024 as the industry cycles through lower supplies.

Also note beef costs are expected to continue to be a headwind in fiscal 'twenty to 'twenty four.

As the industry cycles through lower supplies.

Speaker 4: Turkey sales and volumes continued to recover in the fourth quarter as we grew Turkey volumes in each of our segments.

Turkey sales and volumes continue to recover in the fourth quarter as we grew the Turkey volumes in each of our segments.

Speaker 4: The investments behind our value added turkey portfolio and lean ground business are working with ground volume and dollar sales outpacing the category for the latest four and 13 week period.

The investments behind our value added Turkey portfolio and lean ground business are working.

With ground volume and dollar sales outpacing the category for the latest four and 13 week periods.

Speaker 4: Turkey markets continue to move lower during the fourth quarter pressuring prices across our channel.

Turkey market continued to move lower during the fourth quarter pressuring prices across our channels.

Speaker 4: We have assumed prices will remain depressed in our fiscal 2020 for outlook.

We have assumed prices will remain depressed in our fiscal 'twenty to 'twenty four outlook.

Speaker 4: We do expect to partially offset these pricing headwinds with lower feed costs.

We do expect to partially offset these pricing headwinds with lower feed costs.

Speaker 4: HPAI has reemerged again this fall, creating another unusual event affecting our vertically integrated supply chain.

HPE AI has reemerged again this fall, creating another unusual event affecting our vertically integrated supply chain.

Speaker 4: At the present time, we do not expect supply impacts to the degree we experienced in the first half of fiscal 2023.

At the present time, we do not expect supply impacts to the degree we experienced in the first half of fiscal 2023.

Speaker 4: The situation remains fluid and the risk of additional cases creates a heightened level of uncertainty in the outlook of our Turkey business.

The situation remains fluid and the risk of additional cases creates a heightened level of uncertainty in the outlook of our Turkey business.

Speaker 4: In closing, I too want to recognize the dedication and hard work of our 20,000 employees across our great company.

In closing.

I too want to recognize the dedication and hard work of our 22000 employees across our great company.

Speaker 4: In so many ways, our team rose to the challenges thrown at them while continuing to deliver safe and trusted products to our customers, consumers, and operators.

In so many ways our team rose to the challenges thrown at them, while continuing to deliver safe and trusted products to our customers consumers and operators.

Speaker 4: As Jim noted, I am proud to confirm that we officially achieved our safest year in the history of the company, a testament to all team members who uphold our safety first culture and keep it at the forefront of our business.

As Jim noted I am proud to confirm that we officially achieved our safest year in the history of the company.

A testament to all team members, who uphold our safety first culture and keep it at the forefront of our business.

Speaker 4: This is a key part of the continued success of the company. One that can never...

This is a key part of the continued success of the company.

One that can never be taken lightly.

Speaker 4: At this time, I'll turn the call over to the operator for the question and answer portion of the call.

At this time I will turn the call over to the operator for the question and answer portion of the call.

Speaker 1: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number one on your touchstone phone. You will hear a speech on prompt acknowledging your request. Should you wish to decline from the polling process, please press star followed by the number two.

Thank you ladies and gentlemen, you will now begin the question and answer session.

Have a question. Please press star followed by the number one on your Touchtone phone you, obviously, Tom pronged acknowledging your request should you wish to declines on the polling process. Please press star followed by the number too.

Speaker 1: Also, you would like to remind our analysts to limit yourselves to one question and one follow-up.

Also we would like to remind our analysts to limit yourself to one question and one follow up.

Speaker 1: We have our first question coming from the line of Adam Samuel Spen from Goldman Sachs. Please go ahead.

We have our first question coming from the line of Adam Samuelson from Goldman Sachs. Please go ahead.

Yes. Thank you good morning, everyone.

Good morning, Adam.

Speaker 5: Hi, morning. So Jim, there's a tremendous amount of detail in the outlook. I was hoping first to, you could help maybe just frame a little bit more clearly kind of the high and low end of the guidance range, which is quite wide and quite wide relative to the cell that look, which is just fairly narrow. So help us first maybe understand.

Hi, good morning.

Jim.

There's a tremendous amount of detail.

The outlook.

I was hoping first you.

If you could help maybe just frame a little bit more clearly kind of the high and low end of the guidance range, which is which is quite wide.

Quite wide relative to the sales outlook, which is.

Fairly narrow so help us first maybe Arctic I understand kind of what.

Speaker 5: happens in the market, in the business, in the external environment that gets to the high end of the range relative to the low end of the range, who could be a pretty meaningful step down in operating earnings relative to what you did in just gold 23. Maybe it's hard.

It happens in the market and the business in the external environment that gets to the high end of the range.

Relative to the low end of the range, which would be a pretty meaningful step down in operating earnings relative to what you did in <unk>.

23, maybe to start.

Great Yeah, Thanks, Adam I think.

Yeah.

Speaker 3: The best place to start is to remember that, I mean, our underlying portfolio here is showing growth.

The best place to start is to remember that our underlying portfolio here is showing growth and as we called out in the remarks.

Speaker 3: And as we called out in the remark.

Speaker 3: There is a significant downturn in the turkey business, especially in retail. With the biggest impact we expect in Q1 and Q4.

There is a significant downturn in the Turkey business, especially in retail.

With the biggest impact we expect in Q1 and Q4.

Speaker 3: You know, more specifically to your question about how we think about the range. The range is consistent with what we've had in the past.

More specifically to your question about how we think about the range. The range is consistent with what we've had in the past.

Speaker 3: And we take into account all of our traditional assumptions.

And when you take into account all of our traditional assumptions, but as we think about what could move us higher.

Speaker 3: But as we think about, you know, what could move us higher, you know, better than expected volume, mix. A Roded

Better than expected volume mix, depending on what does happen with the Turkey market. We've got this fall outbreak that just continues to escalate that can certainly have.

Speaker 3: depending on what does happen with the turkey market. We've got this fall outbreak that just continues to escalate. That can certainly have an impact going forward. The other part is, as we think about the work that's underway already for some of our savings initiatives, our ability to over-deliver there.

An impact going forward. The other part is as we think about the work that's underway already.

Some of our savings initiatives, our ability to over deliver there.

Speaker 3: on the flip side, you know, the same holds true on turkey markets, right? If we continue to see some of those declines, that would take us to the other side. And then I think the part that we're all watching very closely is what's happening with some of the macro issues.

On the flipside the.

The same holds true on Turkey markets right is if we continue to see some of those declines that would take us to the other side and then I think the part that we're all watching very closely is what's happening with some of the macro issues in.

Speaker 3: you know, in our business specifically, you know,

In our business specifically.

Speaker 3: What's going to happen in our international business, the China recovery?

What's going to happen in our international business with China recovery.

Speaker 3: when we think about pricey lastisities in retail. How do those impact the business for 2024?

When we think about price elasticity and retail how does those how do those impact the business for the for 2024 and so those are the things that we're thinking about and watching but.

Speaker 3: I mean, so those are the things that we're thinking about in watching.

Speaker 3: But, you know, again, when we roll this business up, you know, we feel like we're in a good place that we've built in.

Again, when we when we roll this business up we feel like we're in a good place that we've built in.

Speaker 3: the right amount of risk when we think about the turkey business, the right amount of growth in the underlying portfolio.

The right amount of risk when we think about the Turkey business the right amount of growth in the underlying portfolio, which from a retail perspective absent, Turkey, we're seeing growth across across almost all of the retail verticals.

Speaker 3: which from a retail perspective absent turkey we're seeing growth across almost all of the retail verticals.

Speaker 3: Food service will continue its strong performance, and we do expect international to start to recover after Q1. So hopefully that gives you a little bit more clarity on that range.

Foodservice will continue its strong performance and we do expect international to start to recover after after Q1. So hopefully that gives you a little bit more clarity on that that range.

Speaker 5: That's helpful. And then maybe just touching on the price you'll ask to see the point because think incremental pricing actions are going to prove to be increasingly uncommon in the food space moving into 2024. So any additional color or description and where those are magint to or they already in place in the market and just to confirm that.

That's helpful. And then maybe just touching on the price elasticity point because.

Incremental pricing actions are.

Group to be increasingly uncommon in the food space moving into 2024, so any additional color description.

Where those are in magnitude or are they already in place in the market.

And just to confirm that.

Speaker 5: excluding turkey you think your retail volumes are growing?

Excluding Turkey, you think your retail volumes are growing in fiscal 2004.

Speaker 3: Yes, the last question, yes, our retail volumes, X Turkey, will grow in 2024. And I'm going to let, you know, Deanna, who lives in breeze that retail pricing element, I'll let her provide some additional color.

Yes.

Last question, Yes, our retail volumes ex Turkey will grow in 2024, and I'm going to let you know.

Deanna, who lives and breathes that retail pricing element I'll, let her provide some additional color.

Thanks, Good morning.

Speaker 6: As we think about pricing, you know, we've had a lot of pricing over the last two years. A lot of that pricing has been reactive and as we sit here today, we are in a position to be thinking about it proactively. First of all, we'll be leveraging our modernized Reb New Growth Management practices and really taking a robust look at our flagship and our rising brands, which are designed to drive higher growth. We're investing in those brands for growth.

As we think about pricing.

<unk> had a lot of pricing over the last two years a lot of that pricing has been reactive and as we sit here today, we are in a position to be thinking about it proactively.

First of all we'll be leveraging our modernized revenue growth management practices and really taking a robust look at our flagship and our rising brands, which are designed to drive higher growth, we're investing in those brands for growth.

Speaker 6: And as we think about those brands in their position in the category, we'll be thinking about the COGS and whether the commodity inputs to those areas are suggesting an increase. We'll also be thinking about what is our long-term ambition and what are the needs?

And as we think about those brands in their position in the category, we will be thinking about the cogs and whether whether the commodity inputs to those areas are suggesting an increase will also be thinking about what is our long term ambition and what are the needs.

Speaker 6: for us to be able to invest into these brands to continue to grow. And so some of that will require some consideration in regards to pricing so that we can have additional dollars for trade as well as advertising and innovation.

For us to be able to invest entities brands to continue to grow and so some of that will require.

Some consideration in regards to pricing so that we can have.

Additional dollars per trade as well as advertising and innovation.

Speaker 6: As we think about elasticities, elasticities in our mind and what we're seeing are back to the pre-COVID levels. And so it's important that we take those elasticities very seriously because they are moving and moving pretty quickly.

As we think about elasticity.

<unk> in our mind and what we're seeing are back to the pre.

Covid levels and so it's important that we take those elasticities very seriously because they are moving and moving pretty quickly.

Speaker 6: The other factors that we're thinking about is our position in the category. And definitely at this point will be more targeted and surgical about our reaction.

The other factors that were thinking about is our position in the category and definitely at this point will be more targeted and surgical about our reaction and then my final thing is which.

Speaker 6: And then my final thing is, you know, what doesn't have to be price as well. There's obviously trade. And trade, you know, prior to COVID, again, was pretty, there's a lot of categories that are pretty enulasitic. And so there are dollars to be considered from a trade perspective that we can redirect those dollars.

Does it have to be priced as well there is obviously trade.

And trade.

Prior to Covid again was was pretty there is a lot of categories that are pretty inelastic and so there are dollars to be considered.

From a trade perspective that we can redirect those dollars.

Speaker 6: into other tactics that will enable us to grow the business. Thanks.

The other tactics that will enable us to grow the business. Thanks.

Okay I appreciate all that color I'll pass it on thanks.

Hi, guys.

And Mr.

Speaker 1: We're not receiving any response from Mr. Gobble's line. We're moving over to the next session. Our next session comes from the line of Roupage Parix from Openheimer.

Barnett.

Receiving under this line from Mr. <unk> line, we're moving over to the next question.

Next question comes from the line of Paul <unk> from Oppenheimer.

Speaker 5: Good morning, thanks for taking my question. So Jim, I just want to go back to your comments on you talked about flowing consumer demand. So just more color on what changes you're seeing consumer behavior away with.

Good morning, Thanks for taking my question. So Jim I just want to go back to your comments on you talked about slowing consumer demand. So just more color on what changes youre seeing consumer behavior lately.

Speaker 3: Yeah, I mean, RAPESH, I think the EOS difficulties that, you know, Deanna's talking about, you know, we know that we're back to pre-

Yes, I mean refresh I think.

Pos to cities that Diana's talking about.

Know that were back to pre 2019 levels. So we have to be thoughtful about how we're what levers and how we're pulling them. When we think about pricing when we think about promotion when we think about advertising.

Speaker 3: 2019 levels, so we have to be thoughtful about what levers and how we're pulling them. When we think about pricing, when we think about promotion, when we think about advertising.

Speaker 3: making sure that we are connecting with that consumer to drive the demand.

Making sure that we are connecting with that consumer to drive the demand, but we also understand the amount of pricing that's gone into our haste categories over the last couple of years and it's been very very significant then.

Speaker 3: But I mean, we also understand the amount of pricing that's gone into all these categories over the last couple of years. And it's been very, very significant. And I don't believe that consumers have fully digested all of the pricing that has still come through. So I think it's a work in process.

I don't believe that consumers have fully digested all of the pricing that is still come through so.

I think it's a work in process.

Speaker 3: to Diana's point about our positions in the category. That's really, really important as we think about those number one and number two positions that we hold.

To <unk> point about our positions in the category, that's really really important as we think about those number one and number two positions that we hold but through all of it I think again the key takeaway here is this underlying portfolio ex Turkey and.

Speaker 3: But through all of it, I think again, the key takeaway here is this underlying portfolio X Turkey, you know, in retail, especially, is planned to show volume growth in 2024.

In retail, especially as planned to show volume growth in 2024.

Speaker 7: Okay, great. And then maybe just one fall, one fall of question. So as you look at, you know, if you look at the environment for the coming year, how do you think about the promotional backdrop and competitive backdrop? Like how do you think that evolves from here?

Okay, Great and then maybe just one follow up one follow up question. So as you look at if you look at the environment for the for the coming year, how you think about the promotional backdrop and competitive backdrop, but how do you think that evolves from here.

Speaker 3: Yeah, you know, Rupesh, I am gonna let Diana maybe elaborate on that a little more, you know, consistent with what she said the first time. So why don't you go ahead, Diana.

Yes.

I am going to let Diana maybe or elaborate on that a little more consistent with what you said the first time. So once you go ahead Diana.

Speaker 6: Good morning, Ripech. Thanks, Jim. You know, it's really category by category. We've got areas with a business that I'll say are somewhat consistent with where the promotional activity has been. We have other areas and other categories where it is increased.

Good morning, <unk>. Thanks, Jim.

It's really category by category, we've got areas of the business that I'll say are somewhat consistent with where the promotional activity has been we have other areas in other categories, where it has increased.

Speaker 6: So think of lunch meat, think of chicken poultry areas working more aggressive pricing and promotion activity, which is a little counterintuitive.

So think of lunchmeat think of chicken poultry areas, we're seeing more aggressive.

Pricing and promotion activity, which is a little counterintuitive.

Speaker 6: You know, when we think about it holistically though, from a promotional standpoint, there's an opportunity to reset promotions to ensure that we're have the most effective promotions.

When we think about it holistically, though.

From a promotional standpoint, there's an opportunity to reset promotions to ensure that we're have the most effective promotion promotions for the consumer for the customer and for our brands and business and so that's really the evolution of our revenue growth management and our pricing teams working hand in hand with our <unk>.

Speaker 6: for the consumer, for the customer, and for our brands and business. And so that's really the evolution of our revenue growth management and our pricing teams working hand-to-hand with our customers and customer teams is really ensuring that we have the best and most productive promotions out there. Is that really what's gonna be impactful to helping drive the business for growth and not just continue to dissolve base business?

Customers and customer teams is really ensuring that we have the best and most productive promotions out there.

That's really what's going to be impactful to helping drive the business for growth and not just continue to dissolve based business.

Speaker 6: and lower the category both in volume and dollars.

And lower the category.

And volume in dollars.

Thank you. Thank you I'll pass it along.

Speaker 1: Thank you. We have our next question coming from the line of Peter Galbo from Bank of America. Please go ahead, son. Hey, guys.

Thank you we have our next question coming from the line of Peter Galbo from Bank of America. Please go ahead Sir.

Hey, guys. Good morning can you hear me okay.

Yes, we can hear you Peter.

Speaker 7: Great, thanks. Maybe just one quick one clarification. Did you give a net interest expense guide at all on the quarter or I'm sorry for the year? I think you have a bond that's going to come do in June that'll maybe be repiled. So maybe if you can just elaborate on that.

Great. Thanks, maybe just one quick one clarification just did you give a net interest expense guide at all on the quarter I'm sorry for the year.

I think you have a bond if its going to come due in June that will need to maybe be refined. So maybe if you could just elaborate on that.

Speaker 4: Good morning, Peter. So, yes, we do have...

Yes, good morning, Peter.

Yes, we do have debt that's coming due we have $950 million coming due you here.

Speaker 4: That that's coming due. We have nine hundred and fifty million coming due here early June . We did not give guidance on the interest numbers. We certainly are working through and looking at options to to to pay down that debt. We haven't landed in a in a in a spot yet. What I can tell you though, we we've definitely baked in higher interest expense and in the numbers that we have guided to here.

Early June we did not give guidance on.

The interest numbers, we certainly are working through and looking at options to.

To pay down that debt, we haven't landed in the in our in our spot.

Spot yet what I can tell you, though we have definitely baked in higher interest expense in the numbers that we have guided to here for the year.

Speaker 8: Okay, got it. That's helpful. And then...

Okay got it that's helpful and then just maybe Jim.

Speaker 9: Maybe Jim, you know, in the conversation around elasticity, I guess what's been more notable is just the impact from kind of the reduced snap payments, maybe took a bit more time to start impacting volumes than others expected. Can you just talk about what you're seeing, you know, real time, you know, you know, I would think at least some exposure there, but what kind of the snap impact has been, and then maybe when you think, you know, it starts to get better or even modestly flipped to a tailwind. Thanks very much.

Conversation around elasticity I guess, what's been more notable.

It is just the impact from kind of the reduced snap payments, maybe took a bit more time to start impacting volumes then that others expected can you just talk about what youre seeing real time.

I would think at least some exposure there, but what kind of the snap impact in standard than maybe when you think it starts to get better or even modestly flip to a tailwind thanks very much.

Speaker 3: Yeah, great. Thanks, Peter. I mean, I think the macro discussion has been filled with a lot of different information. When we think about some of the economic uncertainties that are showing up in these elasticities, we have talked about the reduction in SNAP. Obviously, we're talking about interest rates being as rates go up that's taking more people's money.

Yes, great. Thanks, Peter I mean, I think the macro discussion has been been filled with a lot of different information one.

When we think about some of the economic uncertainties that are showing up Dan.

And these elasticity.

We have talked about.

The reduction in snap, obviously were talking about interest rates being high and as our as rates go up that's taking more people's money is money.

Speaker 3: money student loan mortgages, which all of that can lead to a depleted or lower position. So what's interesting for us is, again, as we go through this category by category, we're seeing different behavior in these different categories.

Student loan mortgages.

Which all of that can lead to a depleted or a lower position and so what's interesting for us is I think.

Again as we go through this category by category, we're seeing different behavior in these different categories and so we have some premium categories continued to do very well to your point I think in the short term some of the center store items have been pressured in there.

Speaker 3: And so, you know, we have some premium categories that continue to do very well. To your point, I think in the short term, some of the center store items have been pressured and there could be a link back to some of the reduced SNAP or other the macroeconomic issues.

Could be a link back to.

To some of the reduced snap or other the macroeconomic issues.

Speaker 3: You know, I think again, to Deanna's point, you know, our job is to be able to restore that growth. And how do we do that by connecting with the consumer, reminding them of the value of our portfolio, and making sure that we're pulling the right levers.

Again to Diana's point.

Our job is to be able to to restore that growth and how do we do that by connecting with the consumer reminding them of the value of our portfolio.

And making sure that we're pulling the right levers.

Speaker 3: whether it's promotion or advertising. Those are the things that we do. And so we appreciate and understand that there might be some short-term impact, but we also know that we know how to navigate through this situation. And then I would, I don't know, Dianna, if there's anything that you would want to add to that conversation.

Whether it's promotion or advertising those are the things that we that we do and so we we appreciate and understand that there might be some short term impact, but we also know that we know how to navigate through this this situation and I would I don't know Dan. If there was anything that you would want to add to that.

<unk>.

Speaker 6: The only thing I would add is it's very fluid. We're watching it all very closely.

The only thing I would add is it's very fluid we're watching it.

All very closely.

I was talking to Jim and just since yesterday and I commented that I didn't use to keep such a close eye on the four week turns but in this environment for weeks actually are signaling things.

Speaker 6: turns, but in this environment, four weeks actually are signaling things. An example is the last four weeks in our convenient meals in protein category showed an improvement over what we saw in the fourth quarter in some of those areas where we felt that there was pullback from the consumer. And so we're keeping a close watch really on all our categories, our consumer, and working closely with our customers to navigate the macro environment that the consumer's facing. Thanks.

An example is the last four weeks in our convenient meals and protein category showed an improvement over what we saw in the fourth quarter.

And some of those areas, where we felt that there was pull back from the consumer and so we're.

Keeping.

Close watch really on on all of our categories are consumer and working closely with our customers to navigate.

Speaker 6: the macro environment that the consumer is facing. Thanks.

The macro environment that the consumer spacing. Thanks.

Okay.

Thank you.

Speaker 1: We have our next question coming from the line of Michael Leverie from Piper Sandler. Please go ahead.

Thank you we have our next question coming from the line of Michael Lavery from Piper Sandler. Please go ahead.

Yes.

Thank you good morning.

Speaker 10: I just wanted to touch on Turkey again. It's obviously unusual, seasonally, to have some of the pricing pressure that you're seeing.

Just wanted to touch on Turkey again.

Obviously unusual seasonally to have some some of the pricing pressure that youre seeing.

Speaker 10: But it seems maybe even a little bit more unexpected coupled with the

It seems maybe even a little bit more unexpected coupled with the.

Speaker 10: the resurgence in the avian flu. I guess what does it take for pricing to recover? And then you had mentioned how you've been factoring in the price pressure in your outlook. I guess maybe can you give us any sense?

The resurgence in.

The avian flu I guess, what does it take for pricing to recover.

And then.

You had mentioned how you've been factoring in the price pressure in your outlook I guess, maybe can you give us any sense of where our conservatism is there or if pricing were to improve how much of an impact that could have.

Speaker 10: of what conservatism is there or a pricing war to improve how much of an impact that could have, it might be just to try to put it in.

Maybe just to try to put it in some context.

Speaker 3: Yeah, I think, you know, Michael, the question you're asking, you know, about what's it going to take? I think the turkey supply situation is in a unique situation right now because we had supply coming back.

Yeah, I think Michael the question you're asking.

About what's it going to take.

I think the Turkey supply situation is is in a unique situation right now because we had supply coming back.

And obviously as supply was coming back there was a lot of work being done to restore the demand side of the business and I don't think those are yet perfectly aligned so I do believe from a supply side as we sit here today.

Speaker 3: And I don't think those were yet perfectly aligned. So I do believe from a supply side, as we sit here today, the supply is adequate to support the business.

The supply is adequate to support the business.

Speaker 3: You know, now how long does it support the business? How long do some of these outbreaks last? I think that those are the uncertainties and the volatility that we talk about in this outlook. And so as we do think about what we've built in to our outlook, you know, we expect the Turkey headwind across the enterprise to be about 10 cents.

Now how long does it support the business how long do some of these outbreaks last I think that's those are those are the uncertainties on the volatility that we talk about.

And this outlook and so as we do think about what we've built in to our outlook, we expect the Turkey headwind across the enterprise to be about 10 cents.

Speaker 3: And big part of that is it's a high volume business when we think about the whole turkey business. Again, you go from all time high to dropping below a five year average. And where does it go from here? And so as we sit and as we sat and work through it, that was our estimate in terms of the impact of the business.

And big part of that is it's a high volume business. When we think about the whole Turkey business again, you go from all time high to dropping below a five year average and where does it go from here and so as we sit and as we sat and work through it.

That was that was our estimate in terms of the impact of the business now I think the other part of this to remember is our job is to continue to set this business up for success and so we continue to talk about right sizing and all.

Speaker 3: Now, I think the other part of this, part to remember is, you know, our job is to continue to set this business up for success.

Speaker 3: And so we continue to talk about right sizing and optimizing this business's portfolio so that it does become more demand-driven, more value added. And think about lean ground turkey, the work that we're doing on the food service side of the business work in the K through 12 channels. So, I mean, all of that factors into our outlook as we're thinking about that in 2024.

<unk>. This this business this portfolio so that it does become more demand driven more value added.

About lean ground, Turkey. The work that we're doing on the foodservice side of the business work in the K K through 12 channel.

I mean, all of that factors into into our outlook as we're thinking about that in 2024.

Speaker 10: Okay, that's really helpful color. And just to follow up on the, you know, kind of three year plan and I guess two parts of it. So apologies if I might have missed this, but did you quantify what the expected savings level is over the three years? And then of the 250 million spend you called out, can you give a split of what would be cat X versus operating?

Okay, that's really helpful color.

Just a follow up on the <unk>.

For the three year plan.

I guess two parts of it so I apologize if I might've missed this but did you quantify what the expected savings level is over three years, and then of the $250 million you spend you called out.

Can you give a split of what would be capex versus operating.

Speaker 3: Yeah, so the last question, Michael, probably have David follow up on the split for you. He can have those conversations.

Yes.

Last question, Michael will probably have.

David follow up on the on the split for you and he can he can have those conversations.

Speaker 3: You know, I do want to just take a step back here, you know, and just review the work that we've been doing and the path that we've been on and why this is so important to us.

I do want to just take a step back here and just review of the work that we've been doing in the past that we've been on and why this is so important to US. We go back to the one supply chain initiative back in 2018 that was more structural to provide consistency in one look across.

Speaker 3: You know, we go back to the one supply chain initiative back in 2018. You know, that was more structural to provide consistency in one look across the entire enterprise.

The entire enterprise and we followed that up with project Orion, which was to update modernize our foundational ERP system across our support areas HR finance and accounting and we wanted to get to supply chain, which clearly we never got to because of Covid.

Speaker 3: We followed that up with Project Orion, which was to update modernize our foundational ERP system across our support areas, HR, finance, and accounting. And we wanted to get to supply chain, which clearly we never got to because of COVID.

Speaker 3: And so as now we're talking about this transformation and modernization, in a lot of ways, it's a continuation of really finishing the work that we've started. And so the order to cash and to end planning, those things were always in scope. But as we've progressed, what we've really been able to do is enhance.

And so now we're talking about this transformation and modernization.

And a lot of ways its a continuation of really finishing the work that we've started.

And so the order to cash end to end planning those things, we're always in scope, but as we've progressed, what we've really been able to do is enhance the work that we wanted to and so think portfolio optimization is something that initially wasn't in scope for us so that is an enhancement.

Speaker 3: the work that we want to do. And so think portfolio optimization is something that initially wasn't in scope for us. So that is an enhancement. And so think portfolio optimization is something that we want to do.

Speaker 3: And so it is a continuation in some ways. It's an enhancement and it's an acceleration. So we've been doing a lot of this work.

And so it is a continuation in some ways, it's an enhancement and its an acceleration. So we've been we've been doing a lot of this work and our goal now is to finish the job and just since I guess, so any of the financial numbers that you want to add yes, certainly.

Speaker 4: And our goal now is to finish the job and just

Speaker 4: So to add to what Jim has just stated here, we laid out a plan that gets us to $250 million over the three years in operating. So to add to what Jim has just stated here, we laid out a plan that gets us to $250 million over the three years in operating.

So two to add to what Jim has just stated here, we laid out a plan that gets us to two.

$250 million over the three years in operating profit.

Speaker 4: And so the way we are thinking about that there is 200 million

And so the way we are thinking about that there is 200 million squarely focused on the supply chain component, which is around the plan by may move pieces of the work streams that we're working through and that will show up in a couple of different places.

Speaker 4: It's really focused on the supply chain component.

Speaker 4: which is around the plan by make, move pieces of the works frames that we're working through. And that will show up in a couple of different places. You know, pieces may show up in our in in in cogs and other piece may definitely will show up through the and ultimately through the margin line, but really driving margin expansion for the business and getting us back.

As you know pieces May show up in our in comps and other piece me definitely will show up through the and ultimately through the margin line, but really driving margin expansion for the business and getting us back to our margin profile and growth rate for the <unk>.

Speaker 4: or margin profile and growth rate for the company. Then there's another 25 million off that is around the strategic value capture of the business and then more than 25 million or so is then the underlying core business that will grow over that period of time. So all in all, over $255 million.

Companies then there is another 25 million of that that is around the that strategic value capture of the business and then.

More than $25 million or so is then the underlying core business that will grow over that period of time. So all in all total over 25 $250 million of expansion.

Speaker 4: of expansion from our

Ed.

Speaker 4: operating margin perspective and it doesn't stop and we have that going on to 2026 is how we've messaged it but what we should think about is that it is doesn't just stop there that the benefits will carry on beyond 2020.

Operating margin perspective, and it doesn't stop and we have that going out to 2026, and how we've messaged it but what we should think about is that it is doesn't just stop there that the benefits will carry on beyond 'twenty 'twenty six.

Speaker 1: We have our next question coming from the line of Ben, the Anvenu from Stephen's Inc. Please go ahead.

We have our next question coming from the line of.

Ben <unk> from Stephens, Inc. Please go ahead.

Speaker 11: Yeah, thanks very much. I want to ask about the international segment. You talked about the weakness being more pronounced in the first quarter and then that you expected to get better after that. Just curious about your assumptions that go into your confidence level around that business improving beyond the first quarter.

Yes, thanks very much.

Wanted to ask about the international segment, you talked about the weakness being more pronounced in the first quarter and then that you expect it to get better after that just curious about your assumptions that go into your confidence level around that business improving beyond the first quarter.

Speaker 3: Yeah, thanks Ben. There's a couple of things that play there that have us confident beyond Q1.

Yes. Thanks, Thanks spend there so there's a couple of things at play there that have us confident beyond Q1.

Speaker 3: You know, the first thing is when we talk about some of the impact of the pricey elasticity on our branded business. And we've done a lot of work to, again, pull the right levers to drive demand. And we've been able to have a positive impact.

The first thing is when we talk about some of the impact of the price elasticity is on our branded business and we've done a lot of work to again pull the right levers to drive demand.

We've been able to have a positive impact and so we do believe that we will see the branded export business pick up.

Speaker 3: We do believe that we'll see the branded export business pick up beyond Q1.

On to Q1.

Speaker 3: and that'll carry us through the balance of the year.

And that will carry us through the balance of the year. The second part is this improvement in our business in China and so you know it's early in 2024, but we are seeing some moderate improvement across foodservice and retail.

Speaker 3: The second part is the improvement in our business in China.

Speaker 3: And so, you know, it's early in 2024, but we are seeing some moderate improvement across food service and retail, but, you know, we're expecting that to accelerate as we move throughout the year.

But we're expecting that to accelerate as we as we move throughout the year.

Speaker 3: And then, you know, the third thing really is, you know, there was a commodity impact international this year. And so as we continue to build demand on Turkey and other pork items elsewhere, that's less that international will be exporting.

And then the third thing really is out there.

Was the commodity impact to international this year and so as we continue to build demand.

Turkey.

And other park items elsewhere, that's less that international will be will be exporting.

Speaker 3: at lower margins so we we expect to see that improvement also as we progress throughout the year. So really those

At lower margins. So we we will.

We'll expect to see that improvement also as we progress throughout the year. So really those three factors are what are leading to us to have that optimistic outlook beyond Q1.

Speaker 3: pre-factors are what are leading to us to have that optimistic outlook beyond Q1.

Speaker 11: Great, thanks very much. My second question is related to FY25. You carved out the, in quantify, the eight cents of non-recurring costs in 2024. Would you expect to be back to Gap Guidance and FY25?

Okay, great. Thanks, very much my second question is related to FY 'twenty five.

<unk> carved out the <unk> quantified the eighth of nonrecurring costs in 2024 would you expect to be back to GAAP guidance in FY 'twenty five.

Speaker 4: Good morning. So the short answer to that is no. So over the period where we're executing the transformation modernization, which we have at the moment, bookend until 2026, we will be in the non-gap.

Good morning.

So the.

The short answer to that is is no. So over this period, where we're.

Executing the transformation modernization.

Which we have at the moment.

Bookend until 2026th we will be in the non-GAAP reporting.

Speaker 4: reporting methodology during that period of time, primarily to just really give good visibility to the underlying core performance off our business and so that there is no confusion there, and then to be able to bucketize the savings that's being driven by the transformation modernization.

Methodology during that period of time.

Primarily to just really give good visibility to the underlying core performance of our business and so that there is no confusion, there and then to be able to <unk> the savings that's being driven by the transformation modernization.

Speaker 1: Thank you. We have our next question come from the line of Ben Asura from Barclays. Please go ahead.

Thank you we have our next question comes from the line of Dan <unk> from Barclays. Please go ahead.

Speaker 12: Yep, good morning Jim, Jizzin and Yan. Thanks for taking my question. The first one's on food service, actually, and just to understand,

Hi, Good morning, Jim and Dan Thanks for taking my question.

The first one is on foodservice actually and just to understand.

Speaker 12: How you can potentially further accelerate this business given the strengths you have.

How you can potentially further accelerate this business given the strength you had throughout the year and again in the quarter.

Speaker 12: throughout the year and again in the quarter. It's becoming a really important piece of the equation representing almost 50% of this year's profit. So just wanted to understand what are like the opportunities you're seeing within food service to really keep that growth momentum into 2024 as it

Becoming a really important piece of the equation, representing almost 50% of this year's profit. So just wanted to understand what are like the opportunities youre seeing within foodservice to really keep that growth momentum into 2024 as it helps offsetting some of the pressure on the.

Speaker 12: helps offsetting some of the pressure on the retail channels. That would be my first question.

Retail channels that would be my first question.

Speaker 3: Yeah, great. Good morning, Ben. You know, the biggest thing is we had it a 24 for food service. You know, a lot of the industry indicators are really stable. And in some cases, improving.

Yeah, great good morning, Ben.

The biggest thing as we head into 'twenty four for foodservice.

A lot of the industry indicators are really stable.

And in some cases, improving and so we think that for US obviously allows us to continue to run our business. The way, we always have because it's well positioned and I know, it's a bit repetitive, but when we talk about the portfolio that we've designed.

Speaker 3: And so we think that for us obviously allows us to continue to run our business the way we always have because it's well positioned and I know it's a bit repetitive but when we talk about the portfolio that we've designed to solve for operator challenges and limited labor that continues to be in our wheelhouse and in our sweet spot.

Solve for operator challenge is unlimited labor.

That continues to be in our wheelhouse and in our sweet spot, but then also thinking about innovation.

Speaker 3: But then also thinking about innovation. You know, in our investor day, we've talked about the innovation that the team is working on and introducing to the marketplace.

In our Investor day, we talked about the innovation that the team is working on and introducing to the marketplace continuing to find different categories to make a difference for those operators.

Speaker 3: Continuing to find different categories to make a difference for those operators.

Other thing is.

Speaker 3: You know, we've talked about the value added capacity that we have in key categories.

We've talked about the value added capacity that we have in key categories, such as Bacon Pizza Toppings, and Turkey and then this continued evolution of the work that they're doing in C stores with the addition of planters and a more retail focused portfolio there.

Speaker 3: such as bacon, pizza toppings, and turkey. And then this continued evolution of the work that they're doing in the Seasource with the addition of planters and a more retail focused portfolio there.

Speaker 3: You know, and all of that's complemented by leaning into a world class culinary team, innovation team, and really this food forward mentality, if you will. So, you know, again, when you think about all the different pieces that can impact food service.

And all of that is complemented by leaning into our world class culinary team innovation team and really this this food forward mentality. If you will so again when you when you think about all the different pieces that can impact foodservice.

Speaker 3: It really does remain well-positioned for growth in fiscal year 2024.

It really does remain well positioned for growth in fiscal year 2024.

Speaker 12: Perfect, thank you very much, Jim. And then quick follow up for Chazin on the guidance. Can you give us or share your expectations as it relates to one, CapEx and two, just corporate expense in fiscal 24, how we should think about these two items?

Okay perfect. Thank you very much Jim and then a quick follow up for Jason on the guidance can you give us a share us your expectations as it relates to one capex and two just corporate expense in fiscal 'twenty for how we should think about these two items.

Speaker 4: Yeah, the morning. So from a capex perspective, capex will be in line with with prior year and we're expecting it to be to be around the $280 million mark, you know, with some critical projects, including.

Yes.

Good morning, so from a capex perspective, capex will be in line with with prior year and were expecting it to be to be around the $280 million.

Mark.

With them some critical projects, including.

Growth.

Speaker 3: for planters or transformation modernization initiative that we are undertaking would be some of the core tenons of the major projects that will undertake for 2024. And then I would just, I just interrupt it, Ben, I think we did talk about this in our investor day, is that we've got, as I just mentioned for food service, available capacity. So some of the CAPEX investments that we've been making over the last.

For planters our transformation modernization initiatives that we're undertaking will be some of the core tenants of the major projects that we will undertake for 2024.

And I would just I would just sit or update band and I think we did talk about this in our Investor day.

Is that we've got as I just mentioned for foodservice available capacity. So some of the Capex investments that we've been making over the last.

Speaker 3: several years we won't have to make this year. And so while the dollar amount remains the same the mix of projects and there will be will be different.

Several years, we won't have to make this year.

And so while the dollar amount remains the same the mix of projects and there will be will be different.

Speaker 4: No, that's exactly right. And I think as we think about how we are...

No that's exactly right.

I think as we think about how we are spending those dollars I know year over year and I've gotten the question before in terms of the expectation that we will spend more and to Jim's point, because we have made such an investment over the past few years, we do have that capacity and now.

Speaker 4: spending those dollars, I know year over year, and I've gotten a question before in terms of the expectation that we'll spend more and to Jim's point, because we have made such an investment over the past few years, we do have that capacity, and now those assets that are currently working for us.

How are those assets that are currently working for us from a corporate expense perspective, I mean that will be a little bit that would be increase definitely year over year.

Speaker 4: from a corporate expense perspective. I mean, that will be a little bit, you know, that the increase definitely year over year. When we think about the labor agreement that we just entered into, we're continuing to invest as well in our people. So that will increase our S-GNA and then from just over

When we think about the labor agreement that we just entered into we're continuing to invest as well in our in our people.

So that will increase our SG&A.

And then from.

Just overall benefits and compensation also takes us up year over year.

Speaker 3: benefits and compensation also takes a sub year over year. And the work that we're going to do to support our brands when we think about advertising and continuing to, continuing to support the brands in the marketplace that remains high, high priority.

And the work that we're going to do to support our brand spend when we think about advertising and continuing to.

Continuing to support the brands in the marketplace that remains high high priority for us.

Speaker 1: Thank you. This concludes our Q&A session. I'd now like to turn the call back over to Mr. Jim Smith for final closing comments.

Thank you. This concludes our Q&A session I would now like to turn the call back over to Mr. Jim Snee for final closing comments.

Speaker 3: Yes, thank you, and I want to thank all of you for joining us today. And while 2023 didn't play out quite like we had planned, there were a lot of great accomplishments that will set this company up for future success.

Yes, Thank you and I want to thank all of you for joining us today.

And while 2023 didn't play out quite like we had planned.

There were a lot of great accomplishments that will set this company up for future success.

Speaker 3: I remain confident we have the right strategy, brands, people, and culture to deliver growth well into the

I remain confident we have the right strategy brands people and culture to deliver growth well into the future.

Thank you for joining us today and I Hope you all have a happy holiday season.

Speaker 1: Ladies and gentlemen, this concludes your conference calls for today. We thank you for participating and ask that you please disconnect your lines. Have a lovely day.

Ladies and gentlemen, this concludes your conference call for today, we thank you for participating and ask that you. Please disconnect your lines have a lovely day.

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