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The Hillshire Brands (HSH)
Q1 2014 Earnings Call
October 31, 2013 10:30 am ET
Melissa Napier - Senior Vice President of Investor Relations
Previous Statements by HSH
» Hillshire Brands Co. Discusses Q1 2014 Results (Webcast)
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» Hillshire Brands Management Discusses Q4 2013 Results - Earnings Call Transcript
Maria Henry - Chief Financial Officer and Executive Vice President
Robert Moskow - Crédit Suisse AG, Research Division
Andrew Lazar - Barclays Capital, Research Division
John J. Baumgartner - Wells Fargo Securities, LLC, Research Division
Varun Gokarn - Goldman Sachs Group Inc., Research Division
Kenneth Goldman - JP Morgan Chase & Co, Research Division
Kenneth B. Zaslow - BMO Capital Markets U.S.
Lubi Kutua - KeyBanc Capital Markets Inc., Research Division
Kenneth Perkins - Morningstar Inc., Research Division
Timothy S. Ramey - D.A. Davidson & Co., Research Division
Good morning and welcome to the First Quarter Fiscal '14 Earnings Conference Call for Hillshire Brands. [Operator Instructions] This call is being recorded. If you have any objections, please disconnect at this time.
I would now like to turn the call over to Melissa Napier, Treasurer and Senior Vice President of Investor Relations for Hillshire Brands. Thank you. Melissa, you may begin.
Thanks, Sue. Good morning, everyone. Our results were released at 6:30 a.m. Central Time this morning. Our earnings release and the slides that we'll be reviewing today are posted on our website under the Investor Relations section. We expect to file our 10-Q later today. Sean Connolly, our CEO; and Maria Henry, our CFO, will provide their perspectives on the performance of the business during the quarter and discuss our outlook for the remainder of fiscal 2014. We'll take your questions after management's prepared remarks conclude. [Operator Instructions]
I'd now like to refer you to the forward-looking statement displayed and remind you that during today's call, we may make forward-looking statements about future operations, financial performance and business conditions. Actual results may differ from those expressed or implied in these statements. Explanations of non-GAAP financial measures that we also may refer to are included in our release. Sean?
Sean M. Connolly
Thanks, Melissa. Good morning, everyone, and thanks for joining us. Before we get in to our first quarter performance, as I always do, I want to take a minute to touch upon the big picture at Hillshire Brands, meaning our core beliefs around how we'll create maximum value for our shareholders over the long run.
Hillshire Brands is a focused food company with category-leading iconic brands. We are committed to delivering both growth and profitability and to do so sustainably. Accordingly, we believe in a very consistent and disciplined approach to brand building and innovation across our core brands.
But we also believe in improving cost efficiency in order to fuel our growth agenda. We've been relentless in this regard, and we will continue to be that way because at Hillshire, cost efficiency is not a project, it is a mindset.
We are now one quarter into the second year of our plan to build a leading food company, and we feel very good about the path we're on to create a sustainable winner for both our shareholders and our employees.
Now let's jump into Q1 and our outlook for the year. I'm pleased to report solid performance in the first quarter of fiscal 2014 as we successfully navigated a challenging macro environment. Our brand building and innovation investments continued to track well, and our core brands became stronger.
We'll cover lunchmeat in a moment, but the headline is our merchandising programs achieved the desired effect. We continue to make progress on our challenged businesses, and we'll further those efforts in the quarters ahead.
On the input cost front, clearly, we've experienced much higher inflation than we originally anticipated and therefore, are taking additional pricing actions. We'll cover that fully in a few minutes.
We still expect to finish fiscal 2014 in a position of solid growth, fueled in part by the strong innovation slate we have set for the second half. Finally, our previously stated full year guidance remains unchanged at this time.
As you know, we're committed to delivering growth momentum in the back half of the year, and Q1 was important in terms of laying the foundation for that momentum. We expanded distribution on innovations we launched late last year. You see several of those items on the left side of this slide.
We also continue to support our brands with strong MAP investment, including robust advertising programs on Jimmy Dean and Ball Park. We recently activated a strong new slate of marketing programs on Hillshire Farm, and we continue to expand our unique Aidells in-store sampling capability.
The bottom line is these programs are having an impact. What you see on this slide is multi-outlet sales performance from the retail scanner data. And not only do you see solid growth year-to-date versus the prior year, but you also see momentum on key businesses in the last month, particularly the Hillshire Farm franchise as our lunchmeat merchandising and new smoked sausage advertising kicked in.
I want to be clear, however, that you should not get ahead of yourselves in terms of extrapolating these trends. That's because we now know we will need to take more pricing than originally envisioned due to inflation, and clearly, that will dampen sales trends. Nevertheless, we like what we see.
Now you just saw the strong recent performance on Hillshire Farm lunchmeat on the previous slide. Here's a different look at the business that I think you'll find helpful.