荷美爾 (HRL) 2003 Q1 法說會逐字稿

Welcome to the Hormel Foods first quarter Earnings Release Conference Call.

At this time, all participants are in a listen-only mode.

Following today's presentation, instructions will be given for the question and answer session.

If anyone needs assistance at any time during the conference, press the star followed by the zero for an operator.

As a reminder, today's conference is being recorded, Thursday, February 20, 2003.

Now I'd like to turn the conference over to Fred Halvin, Director of Investor Relations.

Go ahead, sir.

Good morning, everyone.

I'd like to welcome you to the Hormel Foods conference call for the first quarter of fiscal year 2003.

We released our results this morning before the market opened around 7:30 a.m. central time.

If you didn't receive a copy of the release, you can find it on our website at www.hormel.com.

Leading our call today is Mike McCoy, Executive Vice President and Chief Financial Officer.

Mike will provide both the overview of the company's first quarter performance as well as detailed financial results.

He will then provide the outlet for the second quarter and give you an opportunity to ask questions.

We intend this call for the communication with our analysts and shareholders.

The media should refrain from asking questions at this time.

First, the Safe Harbor staple.

Some of the comments made today will be forward-looking, and are made under the Private Security Litigation Reform Act of 1995.

Actual results may differ and the factors that may cause this are identified on page 26 of the company's annual report to shareholders for year-ending October 26, 2002.

Now I turn the call over to Mike.

Thank you, Fred and good morning, everyone.

As we noted in our press release this morning, EPS for the first quarter was 34 cents versus 36 cents last year.

This was below the guidance range of 35 to 43 cents we provided in November.

Included in the 34 cents are two nonoperating events.

Expenses relating to the closing of our Marshall, Minnesota Jennie-O Turkey store plant amounted to a 1 cent per share charge.

And a vitamin anti-trust settlement benefited earnings by 3 cents.

This resulted in a 2 cent net gain for the quarter.

The protein markets continued to be challenging in the first quarter and our performance clearly reflected this.

As we saw beginning in the second quarter of last year, the protein over supply put pressure on Turkey prices and lowered hog prices below our procurement contract floor price.

We are not satisfied with these results but point out that our diversified portfolio of packaged food products helped partially offset the challenges in the protein business.

Most of the packaged foods are part of the grocery products business segments which had a very strong quarter.

During the first quarter, our refrigerated foods business segment continued to contend with the protein over supply but its performance was helped by strong results from the food service operation and margin contributions from the value-added items in the meat products unit.

Lower commodity poultry prices also pressured profits at Jennie-O Turkey store.

But this impact was somewhat moderated by the ongoing expansion of value-added products under the Jennie-O Turkey store brand.

Earnings for the fiscal 2000 first quarter totaled $46.9 million versus $50.4 million a year ago.

First quarter dollar sales were $1 billion, up 4% from last year.

Sales growth was constrained by lower protein prices, but this effect was partially offset by contributions from value-added package food and continued growth in the food service business.

Volume for the first quarter was 865.2 million pounds up 5% from fiscal 2002.

This reflected stronger demand for our branded value-added products.

Now I'll turn to the profit and loss in business and balance sheet comparisons for the first quarter.

Selling and delivery expenses were 11.8% for this year compared to 11.3% last year.

A combination of things caused this increase.

As we have previously mentioned in these calls, our change of product mix to more value-added products will drive higher selling and delivery costs.

We are also experiencing higher freight costs from fuel surcharges.

Marketing investments in the first quarter equaled $28.1 million or 2.8% of sales compared with $27.5 million or 2.8% of sales last year.

Even though we faced a difficult quarter, we have maintained our investment in marketing support.

Administrative and general expense was 2.8% of sales for the first quarter compared with 2.3% last year.

This increase is largely due to higher pension and medical insurance costs.

Hormel Foods continues to observe conservative financial management and reporting policies.

These provide a sound function in difficult times.

Our debt to capital ratio for the first quarter was 27% while EBITDA to interest coverage was 12.8 times.

Interest expense for the first quarter was $7 million compared to $8.3 million last year.

The lower interest expense is due to less debt this year versus last year and we have not benefited from the lower interest rates because most of our debt is at a fixed rate.

Depreciation and amortization for the quarter amounted to $20.5 million versus $20.7 million a year ago.

EBITDA for the first quarter totaled $96.7 million compared with $105.2 million last year.

Our effective tax rate in the first quarter was 37 -- 34.7% versus 36.5% in fiscal 2002.

The decrease is due to permanent differences between tax and financial income and the settlement of a federal income tax audit.

The effective rate for the remainder of the year is expected to be approximately 35.25%.

Capital expenditures for the quarter totaled $13.4 million versus $11.1 million last year.

We estimate that our capital expenditures for this year will total approximately $80 million.

The basic weighted average number of shares outstanding for the first quarter was 138.4 million.

The diluted weighted average number of shares outstanding for the quarter was 139.7 million.

During the quarter, we repurchased 114,000 shares of common stocks at a cost of $2.6 million.

We have now begun purchasing shares from the 10 million share repurchase plan authorized in the fourth quarter of last year.

During the first quarter, we processed 1.89 million hogs compared to 1.95 million last year or a 3% decrease.

With the closing of the Rochelle, Il plant, we expect our slaughter will be down about 17% for the next three quarters compared to last year.

This now better aligns our raw material requirements for branded products.

Our refrigerated foods and Jennie-O Turkey store business continues to be significantly affected by the oversupply and low prices within the protein markets.

At the fourth quarter conference, we projected live hog prices would average $31 in the first quarter per 100 weight.

We actually saw an average base price of $30 per live 100 weight which was below our contract price.

This compares with an average live price of 36.25 in the same period last year.

During the first quarter, hog contract losses amounted to $46 million versus a loss of $18 million last year.

This $28 million pretax swing resulted in a negative earnings impact of 13 cents per share.

Now I'd like to turn to the successes and challenges in our businesses.

Grocery products enjoyed a very strong first quarter.

Sales were up 6% to $194 million.

Operating profit increased 27% to $45 million.

Volume grew 1% from the fiscal 2002 first quarter.

This segment benefited from lower raw material costs, pricing stability, market share gains and successful new products getting real traction at retail.

The grocery products segment has built significant brands over the years that deliver premium pricing power.

We continue to see this segment building market share in a stronger portfolio of products.

Results at refrigerated foods reflected the challenges in the markets overall.

Sales declined 1% to $507 million.

Volume actually rose 2% in spite of the discontinuation of slaughter operations at the Rochelle, Il plant.

We are converting this plant for the processing, as you know, of additional value-added products.

Volume gains were widespread across branded products, including fresh pork, premium dinner hams, fully cooked entrees, flavored meats and bacon.

New volume records were set per premium dinnered hams and our case ready volume was up over 30% for the quarter.

Market share positions were strong in the first quarter for key meat products, brands, included record positions for bacon and fully cooked entrees and solid increases for pepperoni and Hormel party trays in the prepackaged deli category.

Branded volume within the food service business increased 7% as we continued to make progress on our growth initiatives for this channel.

We saw strong first quarter double digit gains for Always Tender pork products, Old Smokehouse and Country brand bacon, Austin Blues presmoked ribs and the recently-launched Cafe H brand which brings bolder flavors to the food service channel.

Refrigerated foods first quarter operating profit declined 57% to $11 million.

This reflected the fact that contract prices for hogs continued to exceed open market prices.

This -- this effect was partially offset by the higher profitability of branded products in the sales mix.

As you saw in the news release, we have begun reporting performance in five business segments.

The newest segment is called specialty foods and it includes three businesses.

The recently-acquired Diamond Crystal brands business, the Hormel health labs operation, which used to be included as part of the refrigerated foods segment, and the specialty products unit, which used to report through the grocery products segment.

First quarter sales increased 49% or 4% excluding the Diamond Crystal brands, and volumes rose 49% or 7% excluding Diamond Crystal brands.

The Hormel health labs unit grew sales in five of six product groups and specialty products business added distribution for its flavored pork stock or frozen pork stock and private label canned and dessert items.

Diamond Crystal brands reported continued strength in its condiment business and approved share in the blended products market.

First quarter operating profit for the specialty foods business unit improved 9%, primarily due to the addition of Diamond Crystal brands.

Jennie-O Turkey store posted good sales gains considering that the underlying values for whole birds, breast meat and dark meat were significantly below normal market levels throughout the first quarter.

Sales grew 7% to $216 million in the first quarter.

Sales of products introduced within the past two years continued to build with particularly strong contributions from Marinated Tenders, Still Easy, which is the fully cooked entrees and premium deli products such as home style pan, premium roast and flavored chicken.

Retail sales at Jennie-O Turkey store corn dogs and frozen burgers also were strong while deli sales overall were soft.

Volume grew 7% in the first quarter, reflecting gains in both food service and retail channels.

First quarter operating profit was up -- was $18 million, up 2% from the same period a year ago reflecting the impact of lower poultry markets and more value-added products in the sales mix.

As I mentioned earlier, the net effect of two other items increased Jennie-O Turkey stores first quarter operating profit by approximately $4 million, equal to 2 cents a share.

Plant closing costs reduced operating profits by $2 million or 1 cent a share, while a credit from the vitamin settlement added almost $6 million or 3 cents a share.

Sales from all -- from the all other business segment were down 2% to $53 million.

Operating profit totaled $5.2 million compared with $6.1 million a year ago.

Volume for the first quarter declined 5% reflecting the impact of worldwide protein over supply.

Clearly, this was a disappointing quarter for us.

The branded products achieved decent traction in the marketplace and margins certainly benefit when raw material costs are low, but the protein commodity markets proved to be weaker than we had anticipated and the resulting losses from the above market contract pork payments still overwhelmed the progress that we made with the branded products.

That said, we still believe that our best avenue for better performance is to continue to pursue our key growth strategies.

They are: Continue to grow bigger and stronger brands, add more value to our products, build high potential businesses, continue to expand in the food service business and exercise financial discipline.

Now for a quick recap.

Margin contributions from branded value-added products helped to offset the negative impacts on performance from several market forces.

Operating profit was up 27% in our grocery products segment with volume up 1% from the fiscal 2002 first quarter.

Refrigerated foods continued to battle the protein over supply issue, but branded product growth within the meat products and food service businesses helped to moderate this impact.

Brand strength or share of market continued to improve for many key brands, including Hormel bacon and Always Tender fully cooked entrees.

Consumption of Hormel pepperoni and party trays also were very strong.

As I said earlier, case-ready volume was up over 30% in the quarter.

The food service business continued its recovery with 7% growth in distribution of branded products.

Jennie-O Turkey store continues to grow with dollar sales rising 7% as sales strengthen for newer brands such as Marinated Tenders and So Easy fully cooked entrees.

Now our thoughts on the future.

Despite the tough first quarter, we remain cautiously optimistic about our prospects for fiscal 2003.

We expect the unfavorable market conditions to remain an issue through at least the next quarter.

But we still -- we still anticipate in the quarter gradually improving market conditions.

Which we should see in better light in the second half of the year.

Our second quarter plans anticipate an average life hog price of $38 a 100 weight with targets of 45 and 43 in the third and fourth quarter respectively.

Hormel Foods' aggressive development of value-added consumer and food service products will grow our -- will drive our growth as the economy strengthens.

As we noted earlier, we're experiencing higher expenses for pension and medical benefits.

Bills for - Hormel Foods continues to enjoy sound, financial strength and considerable flexibility to support the business and enhance shareholder value through share repurchases as appropriate.

Taking into account the plans each of our business units has in place, we're issuing earnings guidance of 22 to 28 cents for the second quarter.

We remain focused on the following strategies to increase shareholder value in fiscal 2003 and beyond.

We will continue increasing our presence in the fast-growing ethnic foods, food service, case-ready and deli businesses.

We will continue to innovate with on-trend value-added products.

We will continue to support our brands robustly.

We will continue to expand our pork proficiencies to other proteins.

Building scale and global markets and providing outstanding customer service.

And last, but certainly not least, continue to lead in food safety.

And now I'll open up to questions.

Operator, please?

Thank you, Sir.

Ladies and gentlemen, if you would like to ask a question, press the star followed by the 1.

If you would like to decline from the polling process, please press the star, followed by the 2.

You will hear a three-tone prompt acknowledging your selection.

The questions will be polled in the order they are received.

If you're using speaker equipment, we do ask that you please lift the handsets before pressing the numbers.

One moment, please, for our first question.

Our first question comes from Jonathan Feeney, please state your company affiliation followed by your question.

Good morning.

John with SunTrust RH.

I wanted to ask, clearly we've seen a nice recovery in live hog prices here, and, you know, the -- the high inventory and kind of supply backup is probably weighing on pricing.

You know, any -- what will the signposts -- I know there's not a lot you can do about that situation, but what will the signposts be that that business is turning around, pricing is restored and it can stop hiding some of the great progress you guys are making on the branded side?

I think what you're asking is what is the approximate break-even point on our contracts?

And -- and we would say that that's in the $38 range at present corn prices and soy prices.

Okay.

And just as a follow-up to that, I guess in terms of the, you know, the commodity pork pricing environment, which I understand you've reduced substantially as a part of your mix.

On a sequential basis, is the price of commodity pork under performing or tracking the price of live hogs?

As it has in the past?

I would say it has -- it is, and it continues to.

Hmm...

Okay, thank you very much.

Thank you, sir.

Our next question comes from David Nelson.

Please state your company affiliation and question.

Good morning, CSFB.

Good morning.

Mike, could you walk us through a couple of questions, first, on the Turkey outlook, maybe weighing, you know, the positives of your value-added against the overall excess meat supply situation, you know, for the balance of the year.

And then second of all, any comments regarding any progress on precept at this point?

Well, let me answer the last question first, David.

Uh-huh.

As far as precept, I think it's safe to say we have not announced any customers signing on with that -- with the beef program, as you know, but we are in the final stages of talks with a couple of major retailers and I would anticipate some time in this quarter that we would have some very positive news for the market.

Great.

You look at -- you look at the Jennie-O business and what -- and what is really affecting the turkey business is the price of breast meat.

The breast meat, obviously, as you know is a major component of profitability of any turkey operation and we're looking and we have seen here, breast meat prices at six-year lows in terms of where they're at.

And I think that has -- that's probably a reason for -- that is probably the oversupply, number one, but also is -- as turkeys are growing bigger, they have -- they bring more breast meat to market and that's has some impact.

And that's clearly having a negative impact at present on Jennie-O.

But, you look at -- if you look at -- and look at people like Erner Berry, et cetera, they're forecasting that these prices are going to increase as we work through the year, but right now, we've been faced with some tough pressure in that regard.

Okay.

Great, thank you.

Uh-huh.

Thank you, sir.

Our next question comes from Eric Larson, please state your company affiliation followed by your question.

Good morning, everyone.

Piper Jaffray.

Mike, a couple of quick questions.

First, what percentage of your total hogs supplies came outside of your contracts in the quarter?

We're about 90% now contracted with the closing of Rochelle.

And is it -- would you expect that to -- will that percentage remain there, then, now with Rochelle being gone for the rest of the year?

That is correct.

Okay.

And one other -- could you talk -- your tax rate -- could you talk a little bit more about your-- you said you had some settlement of some -- of some tax audits.

What specifically was that?

We settled the three -- we go through -- we get audited every year, Eric.

We settled '97 through '99 tax years and as a result of that, in the quarter, because you -- under GAAP you have to recognize these things in the quarter that, resulted in -- in a reduction in our -- in our effective tax rate for the quarter because of those settlements and differences, as I said, in permanent differences against timing differences.

And -- but that's an anomaly, for the year, we're going to be at a rate higher than that and would expect for the entire year to be up 35.25.

Okay.

Thank you.

For the remainder of the year.

Thanks.

Thank you, sir.

Our next question comes from John McMillin.

Please state your company affiliation, followed by your question.

Well, I think it's Prudential.

I'm out at this conference and a lot of things are changing.

Mike, how are you?

I'm good, how are you?

I guess I'm okay.

I will wait until I get back to New York!

I didn't hear all of this, but 22 to 28 is a wide enough range to kind of drive a truck through.

Are you comfortable with the mid-point, what are the key determinents?

Just why the ride range?

Well, the range, you've beat me up for the last two quarters on the wide range.

We've narrowed the wide range, John, a little bit.

I guess it wasn't wide enough.

Wasn't wide enough!

But there is a couple of things, honestly.

I think, you know, if we continue -- if we continue to see improvements in hog prices that we're beginning to see so that our -- so that we come in at better or slightly better than what we have projected for live costs, et cetera, where we can get some, you know, see a little light at the end of the tunnel there, you know, business, knock on wood, is strong in all categories and I think if we can get some relief on the contract situation, I think that we could be more towards the high side than the low side.

Gotcha.

Okay.

And did you -- did you change -- I was kind of in and out here in terms of -- did you alter your full-year earnings guidance?

No.

What is your full-year --

But we have not given you full-year guidance.

That's what I thought.

But I think with coming in less than where the Street was on consensus here, obviously will have some impact for the rest of the year.

But as we've continued to tell you, you know, we're -- the second -- the third and the fourth quarter, you know, I think if you believe everything that you see and what everybody is, I think -- what I see coming out of your conference out there, I think everybody is saying basically the same thing that, everybody thinks the market conditions are going to improve in the third and fourth quarters.

And -- and so it would -- that said another way it might -- am I comfortable with where you're at for the third and fourth quarter?

Yes.

Okay.

And just can we just go back through this quarter one more time because I haven't seen the press release and I apologize if you have done this all again you reported 34 cents, the tax rate, the lower tax rate, the one-time tax rate added what per share?

Like a penny or two?

Oh, no, not even that much.

So it wouldn't even be a penny.

No.

And then the vitamin settlement added three cents and then basically charges offset that three cents?

No, there was a -- the net when you get all said and done, you're about -- you're 2 cents better with the offset on the charges.

In other words, we got 3 cents on the vitamin.

We had charges of a penny.

So, net gain of 2 cents in the quarter.

So, the real operating number is 32 cents.

From an operating standpoint, that's correct.

And even the 32 cents benefited a little bit from a lower tax rate.

Yeah, but it would be...

Yeah.

In rounding would probably take care of it.

Okay.

Thanks a lot.

Sorry to make you go through that again.

No problem.

Thank you, sir.

Our next question comes from George Askew, please state your company affiliation followed by your question.

Yes, hi, it's Legg Mason.

You mentioned a little bit of strength on the branded food service side.

Could you sort of back up and give us your view of what you're seeing going on in food service in the current market?

Well I can -- you know, the only thing I can do George is tell you where we're seeing.

As I said in my comments, our food service business in the first quarter was up 7%.

I would tell you honestly I think based on what I read and what I see, is that's probably a percentage increase greater than what the industry is experiencing.

But, I mean, our numbers are our numbers and we see that and based on what we're seeing looking out and what we experienced so far in this first three weeks of this new quarter, our business in food service continues to be strong.

Okay.

Good.

On the grocery product side, you mentioned -- you referenced new products.

Can you give us some examples there?

Well, the biggest one is the Hormel Classic Bakes that we talked about in the fourth quarter last year, that we introduced to the market.

Right.

And those are doing very well competing against Betty Crocker and some other well-known names in the case, but they continue to do very well.

Okay.

Good.

And then lastly, on the acquisition front and share buybacks, is there any shift in sort of preference of where to go there?

Are you still actively looking at acquisitions and with your new segment reporting structure, should we look for you to, you know, target acquisitions in specific sectors -- you know, new segments there?

Well, I mean, I think as I said last quarter when asked the question, we're continuing to look at options.

And from my standpoint, clearly a -- an acquisition is preferable in most cases if it can be accretive to repurchasing your shares.

And -- but if we can't find appropriate acquisitions and have, you know, and have cash available, then we're going to repurchase.

And we -- I think that's all about I can say on the subject.

Okay.

Fair enough.

Thank you.

Thank you, sir.

Ladies and gentlemen, if there are additional questions at this time, please press the star followed by the 1.

If you're using speaker equipment, you will need to lift the handset before pressing the numbers.

One moment for our next question.

Our next question comes from Steve Ab, please state your company affiliation followed by your question.

Hi, Total Asset Management.

I'm sorry, we're not familiar with this precept that you spoke about.

Could you describe it to us?

And what would be the magnitude of the contracts you're talking about?

Precept foods is a joint venture that we announced last year between Hormel Foods and Cargill, Excel division of Cargill, which was formed with the express purpose of selling marinated beef products in the retail case under the Hormel brand.

And as we work to bring customer -- and the question that came up was had we got a major retailer on board under that program and at this point, we have not.

And , you know, as we develop this, you know, we will report to the market when we get a customer on board, et cetera.

But a this point, we do not have a customer, so, really there is nothing to talk about.

All right.

I'm looking at the report that you sent.

I -- could you please repeat -- what are the shares outstanding, the average shares outstanding for the quarter and the end of the quarter?

Hang on one second.

I don't see it in here.

The basic weighted average number of shares outstanding in the first quarter was 138.4 million shares.

The diluted weighted average number of shares outstanding for the quarter was 139.7 million.

Uh-huh.

Was that approximately the same amount at the end of the quarter, too?

Yes.

One more question.

I know you sort of have a unique contract arrangements with your hog suppliers, based on the price of corn, I think it's related to.

Correct.

And in prior years that was a good arrangement, but for the last year or two years it has not been a good arrangement.

Has any thought been given to changing that arrangement?

Well, because they're contracts and the contracts have very specific terms, it is very difficult to change the contract until the contract matures.

As a result, we can't -- we can't really do anything until such time as those contracts mature.

But how -- well, when do they mature on the average?

We'll start -- we're going to start seeing contracts mature the end of this year and into 2004 and 5.

Uh-huh.

Thank you very much.

Okay.

Thank you, sir.

Our next question is a follow-up question from David Nelson with First Boston, please go ahead.

Hi, I'm thinking about country of origin labeling.

Do you have the opportunity require in those contracts that the pigs be born in the USA?

We have the ability, David, to require certain genetics and certain types of hogs, I am not sure and I would ask Fred to follow up with you, I'm not sure if those contracts specify that they have to be born in the USA.

I'm not sure on that.

Well, if -- if not, what would you -- I guess thinking about country of origin labeling going forward, how do you -- well, one, do you think it will come to pass?

And two, how would you manage if it did?

Well, you know, it's -- if the country of origin is going to place a huge burden on both producers and packagers.

Right.

And we're going to have to deal with, you know, we're going to have to deal with the issue, whatever the outcome is.

I think that there is now enough ground swell coming from producers, once they figured out what this means and really from our -- from a processor point of view, you know, we're going have to rely on the producers to tell us the information.

Right.

And have to rely on their integrity and everything else.

So, you know, we're going to have to look at maybe changing somewhat of our procurement policies to make sure that we're going to require from our producers that they give us a third party verified documentation of where they purchased the animals.

And probably are going to have to force them sign some type of legal document or affidavit stating that every load that they deliver to us, stating what the origin of that load is.

I mean I don't think there's going to be any choice.

But even if they provided that verification and the hogs came from, you know, one load came from Canada and 20 loads came from Minnesota, segregating that one load would present challenges.

Yes it will.

Absolutely will.

All right.

Well thank you very much.

Okay.

Thank you.

Our next question comes from Farha Aslam.

Please state your company affiliation followed by your question.

Hi, good morning, Merrill Lynch.

Good morning.

Mike, you had noted that benefits and pension costs were up in the quarter.

Could you just give us some detail on the magnitude of that and what you expect for the rest of the year?

Well, we took in -- and dropped our -- as we talked about last quarter, we reduced our expected long-term rate of return on our pension funds from 9.5 to 8.6.

That impact is going to be on an annual basis about $15 million in addition to that, as everyone is, we've continued to see increases in our medical costs and really you -- the differential that you see in our expenses, I think it's around $4 or $5 million, in our general and corporate expenses, you're going to continue to see that differential all year.

As a result of that.

And that pension impact, do you think it's going to be just for this year or is it going to be for the next two or three years?

Well, that's a $64,000 question!

I would anticipate that based on what I see today, that we're going to probably be faced again next year with a decision of what we're going to do with our expected long-term rate of return.

Is 8.6 too high?

Probably.

We'll probably have to take and move it down some more.

Which will then have some impact again next year.

Right.

Thank you very much.

Okay.

Thank you.

Our next question is a follow-up question from George Askew with Legg Mason.

Go ahead with your question.

Yes, hi.

You mentioned in response to an earlier question, your break even on hog contracts is $38 given current commodity prices and you also said your assumption for the second quarter is $38 for live hog.

How -- you know, within your 22 to 28-cent guidance, what are you assuming with regard to, you know, hog procurement losses, if any?

Hang on a second.

We have -- we're looking at if -- right now with the projection on corn and soy prices, George, we're going to look at the second quarter at the low end of our range, hog losses being about $15 million.

Okay.

Good.

Thank you.

Ladies and gentlemen, if there are additional questions, please press the star followed by the 1.

If you are using speaker equipment, you will need to lift the handset before pressing the numbers.

One moment, please.

Management, at this time, we have no further questions, please continue with any further statement.

Well, as always, we appreciate everyone's questions and their indulgence in listening to this conference call and have a good day.

Thank you, management.

Ladies and gentlemen, this will conclude the Hormel Foods teleconference presentation.

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