Good morning, ladies and gentlemen. And welcome to the Hormel Foods Corporation Third Quarter Earnings Conference Call. At this time, lines are in listen-only mode. If at any time during this call you require immediate assistance, please press 0. This call is being recorded on Thursday, 08/28/2025. I would now like to turn the conference over to Jess Blomberg, Director of Investor Relations. Please go ahead.

Good morning. Welcome to the Hormel Foods conference call for 2025. We released results this morning before the market opened. If you did not receive a copy of the release, you can find it on our website hormelfoods.com, under the investor section, along with supplemental slide materials. On our call today is Jeff Ettinger, interim chief executive officer, John Ghingo, president, and Jacinth Smiley, executive vice president and chief financial officer. Jeff, John, and Jacinth will review the company's fiscal 2025 third quarter results and provide a perspective on the remainder of the year. We will conclude with the Q&A portion of the call. The line will be open for questions following the prepared remarks. As a courtesy to the other analysts, please limit yourself to one question with one follow-up. If you have additional questions, you are welcome to get back into the queue. At the conclusion of this morning's call, a webcast replay will be posted to the Investors section of our website and archived for one year. Before we get started this morning, I'd like to reference our safe harbor statements. Some of the comments we make today will be forward-looking, and actual results may differ materially from those expressed in or implied by the statements we will be making. Please refer to our most recent annual report on Form 10-K and quarterly reports on Form 10-Q, which can be accessed on our website under the Investors section. Additionally, please note we will be discussing certain non-GAAP financial measures this morning. Management believes that doing so provides a better understanding of the company's underlying operating performance. The presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Further information about our non-GAAP financial measures, including our comparability items, and reconciliations are detailed in our press release which can be accessed on our website. I will now turn the call over to Jeff Ettinger.

Thank you, Jess. Good morning, everyone, and thank you for joining us. Having been in my current role for just over a month, I am committed to building upon the strong foundation in place, rooted in an impressive portfolio of products, iconic brands, and a great culture. Since returning to the company, I have been immersed in working with our leadership team and gaining a deeper understanding of our operations and strategic priorities. It is clear to see our robust solutions-based portfolio and the protein-centric nature of our offerings work well in today's consumer landscape. Further, a major focus of mine has been learning about the transform and modernize initiative, its current trajectory, the key projects underway, and how the work is progressing. I've been impressed to see the solid and demonstrable benefits of the program, not just financially, but through building capabilities for the future. Our mission is clear: deliver profitable growth. And if we turn to this quarter's results, we are halfway there having delivered organic net sales growth for three consecutive quarters. Building upon modest gains in the first and second quarters, we achieved an impressive organic net sales increase of 6% in the third quarter. What is equally notable is that this growth was broad-based, driven by all three of our segments. It is clearly disappointing that our top-line results did not translate into the bottom-line growth we expected. The unanticipated surges in commodity input costs that affected our absorbed not only the margin delivery from our top-line growth but also our incremental benefits from our T and M initiative. Regarding the fourth quarter, we expect continued net sales growth supported by our leading positions in the marketplace. To address commodity inflation, we are taking targeted pricing actions. We expect profit recovery, however, to lag into…

Thank you, Jeff. I want to take a moment to congratulate you and welcome you back to the company. Many of you know Jeff already as a purpose-driven leader with a proven track record of successfully leading this company. In just a short time since his return, I've been impressed with his clarity of vision, the conviction with which he leads, and the mentorship he's extended to me personally. He brings renewed energy and focus, and I'm excited to partner with him as we move forward. Further, I also want to take a moment to congratulate Jim Snee on his well-deserved retirement and thank him for all he has done for our company and for me personally. Jim was a transformative leader. He had a culture-first mentality and recognized the opportunity for greater potential for our company. He launched our journey of transformation, and I look forward to carrying that torch forward. With that, let's jump in. In today's consumer landscape, there's a lot to be considered. Consumers are cautious, yet resilient. They have shown a willingness to spend when products and experiences meet their needs. But rising costs are forcing consumers to make trade-offs. That said, we believe the powerful combination of our protein-focused portfolio, leading positions across multiple channels, and capabilities related to innovation, renovation, customer partnership, and strategic brand investment position us well to maintain the top-line momentum that we've built over the last three quarters. Take our retail segment, for example. Where our vision is focused, deliberate, and is now in motion. We are building a consumer-led growth engine powered by protein-centric solutions that deliver meaningful value to customers and consumers. By modernizing our products to deliver category-leading differentiation, innovating bigger and bolder, and taking a disciplined approach to investment and execution, our retail team is…

Thank you, John. And good morning, everyone. We are pleased with the top-line growth we delivered in the third quarter. All three segments showed its unique strength, and the top-line results emphasize the power of our globally diverse portfolio, leading brands, and team. Organic net sales in the third quarter were $3 billion, a 6% increase over last year, with organic volume up 4%. Our retail segment grew volume and net sales 5% over last year, with five of our six retail pillars reporting top-line growth above a year ago. Volume growth was significantly supported by the Turkey portfolio, both in whole birds and value-added lean ground turkey. Excluding turkey, retail volumes also grew in total. Our food service business once again outperformed the broader industry, with broad-based top-line gains of 2% organic volume growth and 7% organic net sales growth. Our international business delivered strong top-line results with 8% volume growth and 6% net sales growth, led by our thriving China business. Gross profit was relatively flat year-over-year as the positive impact from top-line growth was offset by higher-than-expected input costs. Inflationary headwinds pressured margins, however, these were partially mitigated by savings from our transform and modernize initiative, which delivered in line with our quarterly expectations. As we noted during our second quarter call, we anticipated upward pressure on input costs driven by pork, beef, and nut markets. However, during the third quarter, markets worsened significantly beyond our projections. To illustrate the order of magnitude of these external markets, as compared to last year, pork bellies were up approximately 30%. The pork cutout was up about 10%, and pork trim was up 20%. Beef also remained a persistent inflationary headwind industry-wide and near all-time high. Collectively, we experienced approximately 400 basis points of raw material cost inflation in the…

You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star, followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. Your first question comes from Ben Theurer with Barclays. Your line is now open.

Yeah. Good morning, Jeff, John, Jacinth. Well, Jeff, first of all, welcome back, I guess. And, John, congrats on the new role. First question really is as we look back, call it, three months ago when you did the call for the second quarter, you really sounded very confident as to the outlook for the second half. And there was a lot of, like, data points you gave out to kind of, like, believe things are going into the right direction. So, really, within the last three months and particularly as you kind of, like, look into the next three months, what has changed so much versus, call it, late May, early June when the last time was when you updated the market? What has driven this revision?

Yeah. Obviously, a very fair question. Thank you, Ben, and good morning. So I'll start off by kind of bringing us back to, you know, the expectations we had three months ago. And, clearly, we had confidence entering the second half, and we had that for good reason. You kind of looked at our growth targets in the back half, we had four critical drivers of performance and what we were expecting. One was we had mentioned that we had landed or announced significant pricing on our value-added turkey business at the end of the second quarter that would take hold in the third quarter. Two, we were expecting improved foodservice industry traffic in the back half of the year, which, you know, is important for our company and for our business. Three, we knew the sequential recovery of Planters was going well. And when we hit the back half of the year, we were gonna be lapping the supply disruption, and so we saw the clear, you know, opportunity on Planters. And then four, our transform and modernize initiative was on track. And we had, you know, significant expectations for the back half on T and M. So those were kind of the four building blocks of what set our expectations for the back half. As the third quarter unfolded, a few of those things, you know, went well and actually continued to, you know, meet our expectations and come to fruition. So the Turkey pricing, for example, our Turkey business has been strong, on track with our expectations. We landed the pricing. We've delivered strong growth on our value-added Turkey business, and we have recovered the profitability we needed to. We also have seen in the third quarter broad-based top-line growth across the portfolio. So that was a…

Yeah. Certainly. Good morning, Ben. And, you know, we are certainly disappointed in terms of where we are from a profitability standpoint. And as John touched on, the major change that happened here is relating to commodity markets and just the significant run-up that happened in the middle of the third quarter as we went in. And then when we, you know, think about what we have done to respond to that, we have announced pricing relating to the impact for the third quarter. However, given where markets remain, we have we're continuing to evaluate additional pricing actions. So that has really informed how we're thinking about the rest of the year. And also as we think about 2026 because we expect the fourth quarter to continue to be pressured by these significant market pressures. And then just the consumer sentiments where it sits at the moment. So in our mind, right, we are in a spot where we need to be responsible with how we rebase our 2026 target. You know, overall, we recognize the second half did not meet our expectations. We understand the disappointment this brings, and as Jeff mentioned, we remain firmly committed to driving sustainable growth and enhancing long-term profitability. And what really matters in this time that's so dynamic is how we respond, and the team is responding and staying focused on executing with discipline, investing in our strengths, and positioning ourselves for the future.

Yep. Got it. And then my follow-up is really I would describe it more as a strategic question. So, Jeff, for you, obviously, you've been at the company and then you kind of, like, went on and came back just a few months ago, first on the board, and then now more recently as interim CEO. So as you kind of come with fresh eyes, with fresh thoughts, you look at the business, what are you seeing? How do you feel about the company? How do you feel about the different business segments? And where do you think Hormel offers the greatest opportunities from a shareholder return perspective as you take on your role over the next coming months?

Yeah. Thanks for the question, Ben. You know, as I look at it coming back after a number of years, I believe Hormel is still in an enviable position to grow from. I mean, you look at sort of the traditional processed meat categories. We are the innovation leader in bacon and pepperoni in both the retail and food service segments. We're a leader in more healthy new age proteins with portfolios such as Jennie-O and Applegate. We're a leader in protein solutions for the food service with Café H and Firebrace and Flash 180, which I had a chance to see at the restaurant show when I did join the board. We have two great global brands in SPAM and Skippy, plus a growing business in China on the international front, and we're strong in certain non-meat protein areas such as Planters and Skippy and our Mexican portfolio in our partnership with MegaMex. Frankly, we intend to be able to expand on this sort of strategic side down at your conference next week, the Barclays Back to School Conference. And so we'll give you more details on kind of what we're excited about there. Now to answer sort of the second part of your question, you know, the very first day John and I assumed these new roles, we had a town hall with our team. And we really talked to the team about, hey, what does winning look like, frankly, in this industry or, frankly, to me, almost in any business? And it's all about growing your top line and your bottom line. Growth in your top line shows that your products are connecting with consumers and customers. And I'm encouraged that in this recent quarter, we delivered on just that. So we're kind of halfway there in that regard. But you also have to grow the bottom line. You have to grow the bottom line to show that you're actually getting paid for all the hard work you're doing in a total system basis. And you also need to do it because it serves the interest of our shareholders, who we understand have other options in terms of their investments. And so growth is imperative. So that's our focus. It's going to be consistently driving top and bottom line growth.

Thank you very much.

Your next question comes from Tom Palmer with JPMorgan. Your line is now open.

Good morning. Thanks for the question. And congratulations, Jeff, on your return and, John, on your recent promotion. In your prepared remarks, you noted that your long-term growth algorithm is a better metric to use for forward earnings. I just want to make sure I understood to what extent this applies to 2026. Because given some of the cost headwinds this year and also what seems to be emerging tailwinds from areas like Turkey, Planters, and the T and M program, I think there was some hope that next year could be more of an above-algorithm type year.

Happy to take the question, Tom. This is Jeff. I personally have always found it important to have clear and goals for the team, and indeed Hormel Foods has communicated its current goals of 2 to 3% growth in net sales and 5 to 7% growth in operating income for the past several years. We think these are aggressive but reasonable goals in today's food industry environment. And I personally agree that these are the appropriate goals for our general future expectations. We want the team to focus in the long term on hitting these on both the top and bottom line, frankly. I'd like to see quarter after quarter. But these are not intended as our fiscal 2026 guidance. That will come on the Q4 call when we weigh all the considerations, including those you mentioned in your question.

Okay. Understood. Thank you. And then, look, traditionally, there is some degree of seasonality in import costs. I think during the third quarter, it's not totally unusual to see some seasonal increase and then some easing as we look at the fourth quarter. To what extent is this seasonal decline embedded in your outlook if it were to occur? Would that be as expected, or could that be an incremental tailwind? And then, I guess, just kind of thinking through the comment about strategically building inventory in the quarter, maybe what areas were built? Because I'm a little curious why, when commodities are so elevated, that strategic decision was made.

Good morning, Tom. So if I start with your first question, so you're a little cheeky there. You got three questions in, but so that first part of your question around the commodity markets and seasonality, yes, typically, indeed, there is seasonality, and it starts to come down in the fourth. I mean, as we sit here today, right, markets are still elevated above the five-year average. And that's what's really informing where we sit in the guide that we're giving for Q4. That being said, even when markets if market starts to come down, given the fact that we have built inventory, we are not gonna necessarily see positive impacts from that because we already have inventory in place. And so when we think about where we're guiding, right, we are expecting again the seasonality to be there, the market's, again, staying elevated, and we are not expecting that to have any material impact. And when we think about the inventories from an inventory standpoint, we did build inventory for back to school. We also built, which is mainly around Skippy, then another piece around our center store as we're trying to get our fill rate to where they need to be to service our customers. And then in general, given the significant inflation, that also has impacted the balance that you will see on our balance sheet from an inventory perspective.

Thank you for addressing the multi-part question. Thanks.

Your next question comes from Leah Jordan with Goldman Sachs. Your line is now open.

Good morning. Thank you for taking my question. I wanted to ask about pricing in retail. You took pricing for value-added Turkey in the quarter, but pricing overall wasn't really a driver for the top line. So what's the offsetting pressure you're seeing there? And just how are you thinking about your ability to pass through more pricing given the targeted actions you're planning over the next couple of quarters? What are you planning in terms of elasticity? And just on those pricing actions, how much of the portfolio will be impacted in the fourth quarter versus '26?

Yes. Thank you for the question, Leah. This is John. I'll tackle pricing, and I'll pull back a little bit too just to talk about pricing in general because the market is dynamic. Obviously, pricing is a critical topic. So, and I will get into retail, but I'll start by kind of grounding in food service as well since that's a big important part of our business. So from an overall perspective, when we talk about our food service pricing generally, the vast majority of the pricing passes through based on movements in commodity markets, whether those movements are up or down. Now there's typically a timing lag. And so in a period of escalating markets, there tends to be some compression. And then that margin gets restored on the way back down. So that's kind of the food service aspect. From a retail perspective, to your point, there are two very fundamental differences with pricing when it comes to retail. First, the lag time tends to be longer. When we do announce pricing actions to our retailers, there's a longer lag time to get the pricing implemented. And the second fundamental difference is we need to be very measured with the decisions on if we do or don't take prices up and by how much we take them up when we do. In that retail case, we're triangulating across three different fundamental variables to guide those decisions. So one is commodity markets and COGS. Obviously, we want to maintain and improve profitability. But we also have to balance two other variables. Anticipated consumer response is critical. And so we know the consumer environment right now is challenging. The consumer is strained for a variety of reasons. And then the third variable is brand health. And our support behind our…

Very helpful. Thank you.

Your next question comes from Michael Lavery with Piper Sandler. Your line is now open.

Thank you. Good morning. I wanted to just come back to how to think about some of what's ahead, and I appreciate you don't want to give fiscal 2026 guidance, but you had set out a three-year plan a year and a half ago that you explicitly updated. So how should we think about just your latest thinking on the P and M savings and the net EBIT growth that you've put a bit of a stake in the ground for? Obviously, that would suggest some amount of kind of guidelines for where '26 should land unless it's changed. Is that under review?

Good morning, Michael. So as we mentioned in our prepared remarks, we'll certainly give a robust update on our Q4 call. That being said, right, when we had our investor day, there were certain assumptions that we had at that time. And so those targets were grounded in those assumptions. There have been changes certainly, as we have seen the last couple of years unfold. Some of which we're talking about here today. Right? This significant rise in commodity market was not what we anticipated at that time. In addition to the fact that we expected and anticipated a really strong second half in 2025. The consumer is also pressured. That was not contemplated in addition to what John mentioned before as well in terms of the Planters recovery. While it's recovering on top line, the profitability is certainly lagging. So those are some of those key assumptions. That's different than when we really talked about our projections for 2026. And, again, we will give you further updates as we talk about it in Q4.

Okay. That's helpful. And just a follow-up on some of the pricing thinking and maybe slightly in two parts. One is just we've covered a little more on the retail side, but you had mentioned some noncore pressure in foodservice. Maybe if sorry if I missed it, could you specify some of what that was? And then on the pricing in response to the commodity pressure, you've mentioned that there's some under consideration. I know we're getting closer to the end of the year. What's in guidance in terms of is any new pricing actions really primarily affecting fiscal '26? Or would there be a little bit of upside still left in the rest of the year to go?

Yeah. So what I would to answer the second part of your question first, you know, additional pricing at this point would largely impact 2026. It really wouldn't have a material impact on Q4. In terms of foodservice, just to take a step back on foodservice a bit, the food service business, you know, for us does remain quite resilient. And, you know, we're pleased with the top-line growth and net sales growth. It's broad-based across numerous categories. You've seen organic volume growth being driven by several categories. So we feel very good about that. You know, to come to the question about margin, so we are you know, we mentioned noncore business. The point that we had mentioned earlier this year, the divestiture of Hormel Health Labs is the point we were making there around some of the margin coming out due to that divestiture. You know, food service, we feel very good about our plot and our ability to continue to drive growth despite a challenging industry. You know, the traffic is down. If you look at it, you know, we're growing the business. We're leveraging our direct sales team. We're leveraging our portfolio value-added solutions. We have our diversified sales channel mix. Right? We're gonna continue to drive on those things. And, you know, on top of that, we're gonna continue to navigate the headwinds. One of those, when you look at our food service business, is convenience stores. So the convenience store channel also comes up into our food service business. Convenience stores have been very soft from a traffic perspective. And so that does have some impact on mix and profitability as well.

Okay. Very helpful color. Thanks.

Your next question comes from Peter Galbo with Bank of America. Your line is now open.

Hey, guys. Good morning. Thanks for taking the question. John, I know there's been a lot of discussion around kind of the pricing dynamic on the go forward. But I guess just if I'm reading your comments, or understanding your comments correctly, it does seem like the price-cost lag has a potential negative price net of cost impact, at least through the first quarter. And then based on what Jacinth was saying, to the extent markets have remained in an unfavorable position relative to your expectations, that could linger really through the first half. So I just I'm hoping to get a little bit more color in terms of when you think you kind of get back to parity from a price versus cost perspective? Or maybe said another way, when you actually get caught up if kind of the current dynamic holds into, you know, into the end of the year.

Yeah. So what I would say is, you know, where we have the pass-through pricing in place across our portfolio, you know, it is a matter of timing. We will get caught up, and we'll ride that up and down, but there will be lag. We tend to fare better when the markets are coming down. And it's a little bit tougher when they are going up. Right? On the parts of the business where we are announcing list price changes in retail, it is a little bit different. Right? So as we took a round of pricing actions that we already announced, we're evaluating potentially additional pricing actions as warranted and needed. If you take a step back to the comment I made a few minutes ago, we will price where we need to from a commodity perspective, but we are gonna balance that. I mean, we are also focused on making sure our brands and categories stay healthy. You know, long-term growth, attracting consumers through this kind of cycle, of what is really low consumer sentiment, high consumer strain, as well as these very elevated markets, we just need to be measured and thoughtful. Disciplined around those decisions. So we will continue to evaluate it. It's dynamic, obviously. Where we need to leverage trade promotion as another variable in that mix to balance things for the consumer and profitability, we can do that as well.

Yeah. I'll just quickly add and just remind you as well that we certainly are able to navigate volatility. What's harder for us to do is navigate a really sharp run-up in market. Because it takes longer for us to then be able to impact our profitability in a positive way with that sharp run-up because of some of the lag time that John just mentioned.

Okay. Got it. And Jeff, you know, zooming back out, obviously, being the kind of second go-around with the company, but I guess this is not the first time that heightened inventory levels have become a question mark for Hormel. We went through this issue for, I know, a different reason a couple of years ago. But just I'm getting a lot of questions on kind of why take the inventory up to the levels that they are at kind of the peak of the commodity cycle. And on top of that, just as you come back in, like, is the visibility just on cost and on, you know, just various cuts? Like, is there a problem there from a system standpoint? It just seems like again, going back to when you guided, I know that the cuts moved, but the drastic nature of kind of the miss relative to your expectations would suggest maybe there's just a visibility problem, and I'd love to get your thoughts there as you've stepped back in. Thanks very much.

I appreciate the question, Peter, and definitely look forward to meeting you in the coming months. It really probably John would be a little more appropriate to answer it because, you know, five weeks in and have been tackling a lot of areas. But what you know, past decisions on where we put inventory weren't one of them that I'm as familiar with.

Yeah. No. Maybe I'll jump in first there. So just to clarify, we do not have an inventory problem. So the inventory build and the inventory balance that you see there was intentional. So we had intentional builds to be able to supply our customers. And what I mentioned before is the inventory balance may appear elevated because of the commodity piece and the input cost. One. And then there are other areas where we built intentionally because we need that from a demand perspective from our customers and in some cases where our fill rates were lower, right, the inventory was lower, so we needed to get our fill rates up to be able to get our service levels up. So, again, not an inventory problem.

Your next question comes from Pooran Sharma with Stephens. Your line is now open.

Thanks for the question. Just maybe want to get your perspective as obviously a big buyer of kind of pork cuts, and, you know, just being active in the hog market, it just seems like production has been pretty lackluster, especially over the past several weeks. And that's that seems like a bit more severe than what we would have thought just by looking at the June hogs and pigs report. And, you know, we're seeing continued reduction in the breeding herd with partial offsets and efficiency. You know, based on kind of what you've been hearing, how do you think about supply prospects for the hog industry or, you know, looking out to the intermediate term?

Good morning. So just a reminder that we do have long-term supply agreements. And so, right, with those contracts, we feel good about our ability to get supply in line with our consumer or customer demands and filling our customers.

I guess I'd just interject. I mean, pork producers are clearly in a very profitable mode right now, which I mean, in the long run, that's gonna be more in supply. That may not be coming in the next couple of months, but

Got it. No. I think that makes sense. And you know, high prices and high prices, low and low prices. I guess my follow-up, maybe we could shift to Turkey. And you guys talked about this a little bit on the last call. You know, industry supply tightening, potential capacity reductions, are you beginning to see any sort of potential market share gains or margin benefits materialize just from that dynamic itself? Or is the situation still largely the same as it was last quarter?

Yeah. Thank you for the question. This is John. I'll talk about Turkey a little bit. So, you know, when we talked about our ground Turkey business last quarter, we talked about some of those dynamics around the industry. We talked about escalating costs in the supply chain. Well, ground turkey in particular has continued to perform very, very well. Demand is strong. And if you look at what's underneath that, we believe it's enduring drivers of demand. So consumer interest in lean protein, and poultry is very strong. There are a number of different food tribes who are gravitating toward lean protein, and poultry is a great choice. And ground turkey, in particular, has a that is super helpful for consumers just to plug into their daily needs of different meals and meal occasions. So demand on the ground turkey side remains very strong. To your question about market share, so we are outpacing the category in terms of our branded growth significantly. We're growing double digits. We're outpacing category growth. We are gaining market share. We do have the number one brand. We love our position around ground turkey. We're gonna continue to drive that. So I think, you know, whereas, you know, last quarter, we were sort of in this mode of needing to recoup margin and take pricing. You know, we had to take that pricing. It was driven by inflation. Clearly, the dynamics around that, but we really like how our brand has fared and how the category has fared through this third quarter.

Great. Thank you for the color.

Your next question comes from Rupesh Parikh with Oppenheimer. Your line is now open.

Good morning. This is actually Erica Eilah on for Rupesh. Thanks for taking our questions. So I wanted to go back to profitability here and maybe big. You've talked about the business in terms of the financial algorithm over time. But if we look at the business and if you go back a few years, this was a double-digit operating margin business. So I guess my question is, do you still view this as a double-digit margin business over time?

Thanks for the question, Erica. This is Jeff. I guess I'm gonna defer on a specific number in terms of the margin, but I do want to talk about what we see as encouraging signs for the bottom line going forward. I mean, clearly, we have sales momentum. We're already growing earlier in the year, had a very solid quarter with 6% growth this time. The team will be actively focused on finding opportunities to enhance mix, to attain better margin results as well. We've talked about pricing. We've talked about how we took pricing already, and that the benefit of that will, you know, kind of start coming in Q4 and definitely will be emerging by Q1. We've talked about T and M, the current projects, and we'll have, as we said, give you an update on that on the next call. Jacinth mentioned in her earlier comments about the manufacturing changes, and sometimes it's, you know, like, one of them got announced Q2, the one about the 100-year-old plant related to our Columbus business. But, I mean, in talking to our operations manager, I mean, a couple of those lines are just moving in now. I mean, there's a trailing benefit sometimes with some of these moves. We just announced a move, for example, in our Atlanta plant where we're going to be running bacon elsewhere in the supply chain system. But, again, that doesn't happen in just a week. That takes a little time to materialize. And then we talked about SG&A. This quarter, SG&A was up 6%. And, ultimately, we want to get into a position where the growth of SG&A is not outpacing sales. It has done that over the last couple of years, and so we are looking at possible cost reductions in that area as well.

And just to double click, Erica, to Jeff's comment around mix, just to add a little bit more color there. So I look at it in two ways. At the enterprise level, our food service business has very strong margins, and so our ability to continue to invest and drive disproportionate growth in our foodservice segment is critical. We have a consistent track record of driving growth in that business. Obviously, when the industry is healthier, we'll be able to drive even more growth behind that business. So that's kind of focus one at the enterprise level. And then when you drop into retail, the focus there is to continue to drive our flagship and rising brands, which tend to have our higher margins and our advantaged businesses. And so, you know, we distort our investment to flagship and rising. We deprioritize and even exit at times noncore less strategic businesses in retail. And you could see that play out in the numbers this past quarter. Where our flagship and rising brands grew over 3% in consumption, our total Hormel plot was up a point and a half in consumption. Right? So they are driving the growth for retail. So obviously, we were impacted by commodity markets in the quarter, but strategically, from a mix perspective, that's how we think about it at the enterprise level.

Okay. No. I appreciate all that color. And then just my just on top line. So strong organic sales growth this quarter. Are you expecting solid growth again in Q4? So do you believe you're on a path to more sustainable organic sales growth going forward? Just curious if you're confident that we're at a sustainable inflection here.

Yeah. I mean, we are confident in strategies to drive top-line growth around the business. We absolutely are. If you kind of look across the segments, we think we have an advantaged model in food service with our direct selling force, with our value-added innovative solutions for operators. And we're gonna continue to drive that. And to the extent that the industry picks up and gets healthier, we should be able to drive more growth behind food service. We also feel really good about our branded portfolio in retail. And our ability to market and connect better with consumers on solutions for those branded businesses, the value-added branded businesses in retail. So our flagship and rising brands have been putting up consistent consumption growth, and we're gonna continue to focus on that. So we do feel good about our plot, you know, and our confidence in driving top line into the future.

Great. Thank you.

Ladies and gentlemen, as a reminder, your next question comes from Thomas Henry with Heather Jones Research. Your line is now open.

Good morning. Thanks for taking the question. Coming back to Turkey, will you experience any benefit from elevated breast meat pricing this year? Or would that be all in '26? And then in addition, could you provide a rough split on the benefit from whole bird pricing expected in '25 versus '26? Thank you.

Yeah. So on whole birds, you know, they are slightly better, you know, than what we had expected from our original outlook. But most of that upside is gonna be in next year around the fresh season, around Thanksgiving. And we don't have, you know, any guidance around breast meat right now.

Got it. Thanks for the call.

There are no further questions at this time. I will now turn the call over to Jeff Ettinger for closing remarks.

I want to thank everybody on the call for your thoughtful questions and engagement today. We understand the mission. It's clear. We need to build on our top-line momentum and urgently return to bottom-line growth so that we can deliver long-term sustainable value. As I said, I look forward to meeting with you over the course of the year. Thank you.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.