Hormel Foods Corporation (NYSE:HRL) Q3 2020 Earnings Conference Call - Final Transcript

Aug 25, 2020 • 10:00 am ET


Hormel Foods Corporation (NYSE:HRL) Q3 2020 Earnings Conference Call - Final Transcript


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Q & A

We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Ben Theurer of Barclays. Please go ahead.

Ben Theurer

Yeah, good morning, Jim and Jim. First of all, congrats on the results and on all the initiatives you announced, especially one on education. I think this is -- this is a very good way of supporting your workers. Now, wanted to dig a little bit into what you've said about the inventory levels, and the decline here and what it means for the forth quarter. So thanks for sharing a little bit of detail already in the prepared remarks on the impact where it's mainly is, within Grocery and Refrigerated Foods. Now, how do you think this is going to impact your ability to supply of a demand into the fourth quarter which usually, obviously has an impact and an uptick in sales? So just to understand a little bit, what might be prohibited in terms of sales and what might be the impact if demand remains a strong in the -- particularly retail channels as we've seen? That would be my one question. Thank you very much.

Jim Snee

Ben, thanks for the comments. We sincerely appreciate them. In regards to the business, question around inventory levels, I mean, really, as we've said multiple times in the comments, our -- the supply chain team, since the start of this pandemic has done heroic work to meet the increased demand. And really what we're trying to convey here is as we think about what happened in Q2, Q3, as we had more, have the initial outbreaks and we had plant pauses and more significant disruptions to the supply chain, we did have inventory as a buffer. And we're able to continue to fill orders as we were working our way through the initial stages.

Over the course of those quarters, so I mean, we burned through that inventory. And so now as we head into the fourth quarter, I mean, it's going to be very important paramount, if you will, that we keep our supply chain operational. And I just said, the team has done a great job, but we can't afford any disruptions. And although we're not seeing the level of outbreaks of COVID cases, I mean, we are still having cases on occasion, and those cases can have production impact. So the team is doing a great job as you heard, keeping COVID out of our facilities, working with team members in the facilities to make sure they understand the importance. But really, it's the messaging that says, we were able to have inventory as a buffer, we really in some areas don't have that now. And so making sure that our supply chain and our production efficiencies are where they need to be, is going to be critical to meet the increased demand.

And so, I mean, if you look at some of the demand that we have met, I mean, significant increases in pepperoni, in bacon, in