Hi, please find your seats. We’d like to welcome Hormel back to CAGNY for the last presentation of the day. Please join me in thanking the company for sponsoring a tasting of new products right outside this room following this presentation. Hormel has been busy today having just reported earnings this morning and thank you very much for coming. Hormel is a 125 year old company with $9 billion of sales in branded foods and meat products. Hormel has been acquisitive in growing into a broader food company and continues to invest in faster growing channels. We have today Jim Snee, Chairman, President and CEO and Jim Sheehan, SVP and CFO. While this is Jim Snee’s second time presenting at CAGNY. This will be his first time presenting as Chairman, President and CEO. Now let's kick it off. Jim Snee?

Great. Well, thanks, Janet, and thanks to all of you for sharing the end of your day with us. Jim Sheehan and I are truly pleased to be in sunny Florida, because about six hours from now we are going to have a much different environment after we get back home to Minnesota. It’s a pleasure to be here to share our first quarter results, update you on our progress against several key initiatives and provide more detail on the next growth engine for Hormel Foods. As you would expect, we will be sharing some forward-looking statements that may differ from actual results and you can see a detailed list of risk factors in our recently filed Annual Report which is available on our website. It was a primer for those of you who may not be as familiar with our business; Hormel Foods is a $9.2 billion company with approximate market cap of $18 billion. And we are ranked number 8 as one of the top corporate citizens and we take a lot of pride in that ranking as we believe that’s a true testament to our inspired team of over 20,000 people. We have been around now for 126 years and we’ve got a very long track record of success on a number of different fronts. We have been able to deliver earnings growth 28 out of the last 32 years and we’ve been able to increase our dividend every year for the last 52 years including double-digit increases over the last nine years. And our business operates in four distinct reporting segments, the largest of which is Refrigerated Foods and represents approximately 50% of our sales. And think about the business being one-third refrigerated retail, one-third food service and the remaining one-third being fresh pork and some…

Thank you, Jim, and good afternoon. I’ll start by identifying a few key factors impacting our Q1 results and the remainder of the year. I will provide insight into each of these factors including our outlook. In the turkey industry, pulp placements and cold storage inventories are key indicators of market conditions. The chart on the left shows pulp placements. As you can see, pulp placements have fluctuated, but we are not seeing sustained decreases. As the chart on the right indicates, inventory levels remain above last year. The continued high cold storage inventories that oppress markets and pulp placement metrics have tampered our expectation for turkey for the remainder of the year. At the pork industry, we continue to focus on exports and domestic demand, as well as the balance between production capacity and hog supply. Export demand remains robust. Domestically, pork continues to clear the market at favorable prices. As we expected, hog prices were volatile in the first quarter. We expect continued short-term volatility to occur as additional production comes online. The hog supply increased 3% last year and we expect an additional increase of 3% to 4% in 2018. As shown on the chart, cold storage inventories are returning to normalized levels. We feel the additional capacity is impacting inventory levels and will eventually provide us with additional sources of raw material. We also feel inventories returning to normalized levels will decrease the volatility in the markets. Our analysis supports that under the existing market conditions, our current harvest level provides the company with favorable raw material cost. We are closely watching the fundamentals. We have the flexibility to adjust our source of raw materials based on long-term changes in market conditions. Key markets were generally aligned with expectations for the quarter, but the continued short-term…

Well, great. Thanks, Jim, great update on a very complex but beneficial topics. The third key message and final part of our presentation this afternoon is focused on our company’s next growth engine and that our newly created Deli division. And make no mistake about it, Hormel is poised to win in the Deli. It’s the right category to be in with the right portfolio of product offerings and strong brands including the newly acquired Columbus Craft Meats brand. The growth of the Deli is far outpacing other parts of the retail outlet. And in fact, it’s outpacing total food by over four times. And not only is that Deli growing at a faster rate of other parts of the store, it’s growing its footprint as more and more space continues to be allocated to this very important part of any retailer’s business. And this Deli business is made up of four key areas. The first of which is behind the glass and this is what we all remember as the Deli, right, either whole pieces of meat, sliced to your preference or more recently, a wide array of already sliced product and I will tell you, the rumors about the demise of behind the glass are a bit presumptuous as you can see, this remains a sizable and growing segment with premium brands fueling this growth. The next segment is Grab and Go. And Grab and Go is where you will find typically pre-packaged meats, pre-packaged cheeses or perhaps a combination of the two. Next, prepared foods, this is no longer about just macaroni and cheese and mashed potatoes. As consumers continue to have less and less time, they are now including this area of the store in their consideration set for on-the-go food and retailers are looking for…

[Operator Instructions]

Just wondering if you could give a little more color, you touched on this a little bit, but with the tax reform savings, it looks like if you take the midpoint of the prior tax rate range and new one that’s maybe you have a $0.33 lift, does that seem about right? And could you give us a sense of how it breaks down in broad strokes at least some of the discretionary items versus maybe some freight headwinds. And then, a little bit related to that, could you just touch on what some of your options are for how you are thinking about offsets on the freight side, is it just pricing, is there some flexibility and how you think about that and what kind of trajectory should we expect on how that might play out?

I’m sorry, I missed the last part.

Just in terms of the freight pressure, what are some of your ways to handle that and how long would it take to see some of those come through?

Okay, great. So, I think the first part in terms of the gap perhaps that you are talking about for the tax benefit. As you think about it, probably the best way we’d say that about half of that could be allocated to the headwinds at Jennie O Turkey Store and freight. And then, the other half really would be allocated to some of the additional investments that we described. I think the one thing that we want to be clear about, we said it in our presentation, but I think it’s a very important piece in this idea of taking and invest and grow approach versus a protect and defend approach. I mean, we are making some investments this year that we would not have otherwise made. And so, it’s giving us an opportunity to do that. But that’s really how you should think about probably the – perhaps the gap. On the freight side, we talked about having this co-operational collaboration with our customers, so that we can reach mutually agreed upon solutions that are sustainable. We know there is school of thought out there that says, it’s all going through to the consumer. We believe that we can work with our customers, whether it’s how we're filling trucks, the routes that we're doing, the number of shipments that we can work hard to potentially offset that. Those conversations are taking place right now, but I mean, we don’t have a timeline for when that’s going to happen and the other part of it is, I mean, we are not opposed to passing along those freight cost, but before we get there, we certainly want to have those conversations to see if there is another way to reach a more sustainable solution.

Thank you.

Yes.

Rupesh.

Thanks for taking my question. So, on the Jennie O segment, I was wondering how you guys were thinking about the outlook for the balance of the year for Jennie O and then, if you look, I guess, post this year, when do you expect to return to potentially positive trends within that segment?

Do you have the breakdown, Nathan? The breakdown when it'd be more positive for the back half of the year, when it will become positive.

I will follow-up on that.

Yes, Nathan will follow-up on, but I think for us, obviously this recovery has been slower than we expected. We have taken a pretty aggressive approach in how we were forecasting the whole bird market and it’s been below even what we expected and so that’s really been the key driver for the balance of the year and we are seeing some moderation in value-added pieces of business and now we’ve got to work through this whole bird piece. Jim’s charts did a great job of identifying really the still continued volatility in pulp placements. We haven’t seen the sustained declines and then also really still the elevated cold storage supply and we said those are really the two key variables that are going to get us out sooner than faster.

Ken.

Two questions. With the investments, the recovery in turkey and cost savings, when will you return to your growth algorithm? And what would prevent you from achieving that in 2019? My second question is, can you frame the magnitude of savings in terms of order of magnitude, where we are seeing it from? Those are my two questions.

Yes, so, I mean, I think, as we think about 2019, obviously, it’s early in the process, but the way we are thinking about it is we would expect recovery with Jennie O Turkey Store. We really like what we’ve done with the Refrigerated Foods portfolio with the addition of Fontanini for Food Service, but we described to you today as the growth – the next growth engine for Columbus. Our International business is going to continue to move right along. We feel good about what’s happening in China, the addition of Ceratti. And Grocery Products, quite frankly is rock solid right now, so that core legacy portfolio, those pockets of growth are doing well. We saw improved performance from Muscle Milk. And so, I mean, we believe that that growth algorithm is still a very achievable number and from a cost perspective, I mean, a lot of what we’ve been doing is what Jim described as strategic cost management.

I think one of the things to look at is the integration of the supply chain. If you think about running four separate supply chains that will go into one supply chain. If you think about everything from logistics, and warehousing and manufacturing, so that manufacturing plants become more available to the broad line of products. That probably provides us with the largest amount of opportunity for savings. We will pick up the smaller savings along the way. I think the integration of Deli will provide great savings and synergies. Again, as you take three or four different groups that are trying to do things separately and you bring them into one. We see net savings by being very centralized in the back office and I think as we put that into the supply chain, you are going to see some big benefits.

Would be able to frame the number? Are we talking about $100 million, $200 million or $300 million, what are we talking about?

We are working on that right now the big issue is, is everybody has their own ideas about savings and very honestly, if I would have taken everybody’s savings number that they originally gave me, they’ll probably couple billion dollars, because everybody thinks they're going to save a lot of money. So we are going through and we are really drilling down on those. So, what’s going to get to the bottom-line? Our example that we view – you can have purchasing come in and say, we’ve saved 5% on those packaging, but have cost in other packaging have gone up, we are coming back and saying now you’ve held your packaging cost. The other thing is, how much we retain is a big issue for us. You can come up with a savings number, but the less you retain it, delivered to the bottom-line, it’s really not that – not benefiting the shareholders. So we are working hard to come up with a number. We are getting much closer.

Akshay.

Thanks. So the question, I just wanted to ask somewhat of a follow-up to what Ken was talking about, but over the long-terms, I am just really looking for your perspective here, because your – this year is unusual from a growth perspective right, if you take out the tax positive impact, which is going to be one – I don’t know, thirty as you said, this is going to be thirty of earnings might be down, right. So, it’s – you are making a strategic investment, right, in terms of brand building and other capabilities, it seems like a great move long-term, but how do you delineate between sort of commodity moves that are sort of transitory that you might be dealing with on turkey and on pork versus sort of the strength of your brands and portfolio long-term. So why do you have confidence is really the question, why do you have confidence that you are going to get good long-term returns on these investments when you in a sort of “transition year”?

Yes, I mean, I think, specifically if you want to talk about turkey, I mean, we are probably the only company in the turkey space that really is advertising and supporting the brand and promoting the category. And we know that that’s important to us, because we don’t want to be – if we are not doing that, we run the risk of becoming just a commoditized company. And so, we believe that communicating the benefit of the brand and the value-added products is incredibly important, and so we are going to be back out in front. Several years ago, we ran to make the switch campaign. We did it again two years ago. Last year, as we got into the heat of the battle, we made some different decisions in terms of reallocating funds. We don’t think it’s a wise move to be off there or away from consumers for more than one year. So we are going to make sure that investment is front and center this year. And I mean, we have that mentality across all of our brands. We’ve got 35 brands that are number one or number two and when we start talking about these pockets of growth that we have identified and we’ve been able to capitalize on, a lot of it is because we are great brand builders. We are great innovators and so, we need to be able to continue to support that over the long-term.

And I think with that, we’ll move the rest of the Q&A to the breakout. Please join me again in thanking Hormel for the Columbus tasting. And just as a reminder, please take all of your personal belongings as it’s going to be lost and it will be in the office if you do leave anything.