Hormel Foods (HRL) Risk Factor Changes

The Company’s operations are subject to the general risks of litigation.

The Company’s foreign operations pose additional risks to the Company’s business.

The Company is subject to stringent environmental regulations and may be subject to environmental litigation, proceedings, and investigations.

The Company’s manufacturing facilities and products are also subject to ongoing inspection by federal, state, and local authorities.

Government regulation, present and future, exposes the Company to potential sanctions and compliance costs that could adversely affect the Company’s business.

The Company faces risks related to its ability to respond to changing consumer preferences, diets and eating patterns, including through its innovation and marketing investments.

The Company may be subject to decreased availability or less favorable pricing for nuts, tomatoes, avocados, or other produce if poor growing conditions have a negative effect on agricultural productivity.

▪food contamination caused by disease-producing organisms or pathogens, such as Listeria monocytogenes, Salmonella, and pathogenic E coli., including contamination caused by the introduction of pathogens as a result o…

The Company periodically renegotiates its collective bargaining agreements as such agreements expire.

The Company is subject to the risk of unfavorable changes in the Company’s relationships with significant customers, suppliers, distributors, and other third parties.

In addition, the Company is in the midst of multi-year data and technology transformation projects to achieve better analytics, customer service, and process efficiencies and to upgrade technologies.

The Company also relies on a variety of third-party service providers to support its operations.

The Company relies on its customers to sell its products to ultimate consumers.

The Company is subject to the risk of disruption of operations, including at owned facilities, co-manufacturers, suppliers, logistics providers, customers, or other third-party service providers.

Risks and uncertainties associated with intangible assets, including any future goodwill or intangible asset impairment charges, may negatively impact the Company.

Any of these outcomes could adversely impact the Company's reputation, results of operations, and financial condition.

The Company’s operations are subject to the risks associated with acquisitions, joint ventures, equity investments, and divestitures.

▪Volatile fluctuations in market conditions could cause the Company's hedging instruments for its exposure to commodity prices to become ineffective, which could require any gains or losses associated with these instr…

Any of these or other changes in national and global economic conditions could adversely impact the Company’s results of operations and financial condition, including as follows:

Deterioration of economic conditions could harm the Company’s business.

now may be considered hazardous.

Additionally, the Company is subject to new or modified laws, regulations, and accounting standards.

The Company has developed, publicly announced, and had validated through the Science Based Targets initiative, goals to reduce its greenhouse gas emissions.

The increasing concern over climate change may also result in greater local, state, federal, and foreign legal requirements, including requirements to limit greenhouse gas emissions or conserve water usage.

Climate change, or legal, regulatory or market measures to address climate change, could have an adverse impact on the Company’s business and results of operations.

Damage to the Company’s reputation or brand image can adversely affect its business.

The supplies of natural and organic proteins may impact the Company’s ability to ensure a continuing supply of these products.

The Company has developed business continuity plans for various disease scenarios and will continue to update these plans, as necessary.

HPAI was detected within the Company’s turkey supply chain during fiscal 2024 and the first quarter of fiscal 2025.

In recent years, outbreaks of ASF have impacted hog herds in China, Asia, Europe, and the Caribbean.

Outbreaks of disease among livestock and poultry flocks could harm the Company’s revenues and operating margins.

During the third quarter of fiscal 2024, the Company voluntarily recalled a limited number of Planters® products due to the potential for contamination of the product with Listeria monocytogenes.

If one or more of these risks were to materialize, the Company could incur significant costs, loss of sales, regulatory action, or litigation as well as negative impacts to its brand and business reputation.

The pathogens that may cause food contamination are found generally in livestock and in the environment and thus may be present in the Company’s products.

The Company’s operations are subject to the general risks of the food industry.

Deterioration of labor relations, labor availability or increases in labor costs could harm the Company’s business.

The Company may be adversely affected if it fails to timely replace legacy technologies.

If the Company experiences a loss or significant disruption in its operations due to a cybersecurity event or other IT interruption, the Company may suffer reputational, competitive, and business harm and may be expos…

because attacks can originate from a wide variety of sources, both domestic and foreign.

Although the Company has programs in place related to business continuity, disaster recovery, and information security initiatives to maintain the confidentiality, integrity, and availability of systems, business appl…

The Company may be adversely impacted if the Company is affected by cybersecurity attacks, security breaches, or other IT interruptions, involving its own systems or those with whom it does business.

The Company is subject to risk of the loss of a significant contract or unfavorable changes in the Company’s relationships with significant customers.

Fiscal 2024 net sales for Planters® snack nuts were negatively impacted by production disruptions at the Suffolk, Virginia, facility.

If a highly pathogenic human disease outbreak developed, such as COVID-19, it may negatively impact the global economy, demand for Company products, the supply chain, the Company’s co-manufacturers, and/or the Company…

The Company has no manufacturing operations in Russia, Ukraine, or the Middle East, yet it has experienced inflated fuel costs and supply chain shortages and delays due to the impact of the military conflicts on the g…

reducing customer and consumer demand for the Company's products, limiting workforce availability for the Company, its suppliers, and its customers, and resulting in litigation, investigations, and regulatory proceedi…

There have been, and may continue to be, changes in the legal or regulatory environment (including as a result of executive orders) affecting many areas related to the Company's business, including raw material costs…

Litigation and other legal proceedings may adversely affect the Company's reputation, results of operations, and financial condition.

The potential impacts of a changing climate could have an adverse impact on the Company’s results of operations and financial condition.

cause them to reduce or stop purchasing the Company's products, which could adversely affect the Company's results of operations.

Reputational harm can also occur indirectly through companies and others with whom the Company does business or who sell the Company's products.

The Company previously established, and may continue to establish, various goals and initiatives regarding environmental, social, and governance matters, including with respect to sustainability.

Damage to the Company’s reputation or brand image could adversely affect its business.

For certain products and product categories there has been, and the Company expects there to continue to be, a consumer shift towards more generic, lower-priced, or other value offerings, including private label produ…

Any fluctuations in commodity prices or the availability of raw materials and other inputs necessary for the Company's business could adversely affect the Company's results of operations and financial condition.

Any of these outcomes could adversely affect the Company's results of operations and financial condition.

The impact of a changing climate may also increase disease risks due to changes in weather or migratory patterns, which may result in certain types of diseases occurring more frequently or with more intense effects.

Outbreaks of disease among livestock and poultry flocks could harm the Company’s revenues and operating margins.

The Company may face litigation, investigations, and regulatory proceedings and be subject to liability if any of these risks materialize, including if consumption of any of the Company's products causes injury, illne…

▪food contamination caused by operational errors by suppliers, co-manufacturers, or in Company-owned facilities;

The Company’s operations are subject to food safety and other risks inherent to the food industry.

If the Company fails to achieve its projected results or otherwise fails to meet market expectations regarding its financial performance, the price and volatility of its stock could be adversely affected.

Deterioration of labor relations, labor availability or increases in labor costs could harm the Company’s business.

A significant disruption to the Company's IT systems and the Company's failure to adequately maintain and update those systems could adversely affect the Company's operations.

parties with whom it does business have experienced information security, cybersecurity, and data privacy incidents.

The Company and third parties with whom it does business face attempts by others to gain unauthorized access to, sabotage, take control of, and corrupt, its or their IT systems and data.

The Company may be adversely impacted if the Company is affected by cybersecurity attacks or other security breaches.

The Company relies on suppliers, distributors, and other third parties to source key inputs, deliver products to customers, and support its operations.

Furthermore, in the fourth quarter of fiscal 2025, the Company commenced a corporate restructuring plan, the focus of which is to reduce administrative expenses, improve efficiencies, and align the workforce to the Co…

information technology (IT), and cloud computing services could adversely affect the Company's business, results of operations, and financial condition.

During the Company’s fiscal 2025 quantitative impairment testing, the International reporting unit with a goodwill balance of $258.9 million was identified as having modest fair value in excess of its carrying amount…

▪Fuel and transportation costs may become inflated and there may be supply chain shortages and delays, as has occurred in recent years.

▪The imposition of tariffs, quotas, trade barriers, or other restrictions could increase the cost of key inputs or reduce their availability.