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The Hillshire Brands (HSH)
Q2 2014 Earnings Call
January 30, 2014 10:30 am ET
Melissa Napier - Senior Vice President of Investor Relations
Previous Statements by HSH
» Q2 2014 The Hillshire Brands Company Earnings Conference call (Webcast)
» The Hillshire Brands Management Discusses Q1 2014 Results - Earnings Call Transcript
» Hillshire Brands Co. Discusses Q1 2014 Results (Webcast)
Maria Henry - Chief Financial Officer and Executive Vice President
Kenneth Goldman - JP Morgan Chase & Co, Research Division
Alexia Howard - Sanford C. Bernstein & Co., LLC., Research Division
Andrew Lazar - Barclays Capital, Research Division
Kenneth B. Zaslow - BMO Capital Markets U.S.
Lubi Kutua - KeyBanc Capital Markets Inc., Research Division
John J. Baumgartner - Wells Fargo Securities, LLC, Research Division
Robert Moskow - Crédit Suisse AG, Research Division
Varun Gokarn - Goldman Sachs Group Inc., Research Division
Good morning, and welcome to the Second Quarter Fiscal '14 Earnings Conference Call for Hillshire Brands. [Operator Instructions] This call is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the call over to Melissa Napier, Treasurer and Vice President of Investor Relations for Hillshire Brands. Thank you, Melissa. You may begin.
Thanks, Candy. Good morning, everyone. Welcome to our fiscal 2014 second quarter earnings call.
Our results were released at 6:30 a.m. Central Time this morning. Our 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 back half of the fiscal year. We will 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 and our actual results may differ from those expressed or implied in these statements. Explanations of non-GAAP financial measures that we may also refer to are included in our release.
I'll now turn the call over to Sean.
Sean M. Connolly
Thanks, Melissa. Good morning, everyone, and thanks for joining us. Before we get into our second quarter performance, as I often do, I want to take a minute and touch upon the big picture at Hillshire Brands with a quick overview of our core beliefs around how we will create strong value for our shareholders over the long run.
Hillshire Brands is a growth-oriented food company with market-leading iconic brands. And when we talk about growth, we're talking about both sales and profitability and to do so sustainably. Accordingly, we believe in a very consistent and disciplined approach to brand building and innovation across our portfolio. We also believe in improving cost efficiency in order to fuel our growth agenda. We've been unwavering in this regard, and we will continue to be that way.
As a management team that is building on new culture, we're constantly working to ensure that cost efficiency is a mindset and not a program. We are now more than halfway through the second year of our plan to build an agile, consistently performing food company, and we feel very confident about the path we're on to create a winner for our share owners, employees and other stakeholders.
Now let's jump into Q2 and our outlook for the year. I'm pleased to report strong results in the second quarter of fiscal 2014 as both sales and EPS grew at rates higher than we'd previously expected. To do this, we had to effectively manage through a much more challenging input cost environment than we originally envisioned, and we will continue to have to navigate this dynamic throughout the second half of the fiscal year.
Our actions will include the launch of our most exciting innovation slate yet and backing it with increased marketing support. When you add it all up, we now expect full year EPS to come in near the high end of the previously provided range.
As you know, we're committed to building momentum on our brands as we move through the back half of the fiscal year. The first half of this year was important in terms of laying the foundation for that momentum. We expanded distribution on innovations we launched late in fiscal 2013. We also introduced additional new products into the market, and you see several of them on the left side of this slide.
And we continue to support our brands with solid MAP investment, including robust advertising programs on Jimmy Dean and Ball Park. We also recently reactivated advertising on Hillshire Farm lunchmeat, which comes on the heels of a very successful period of trade merchandising that grew household penetration an impressive 2 points. And finally, we continue to expand our unique Aidells in-store sampling capability with a particular focus on the new gourmet chicken meatballs that are performing very well.
The bottom line is these programs continue to have an impact, and what you see on this slide is multi-outlet sales results from the retailers' scanner data. Overall, you see very solid performance in the quarter, with Jimmy Dean and Aidells continuing to lead the way. We're also beginning to see trend improvement on challenged businesses like State Fair and Sara Lee Desserts, which is encouraging.
As I did last quarter, though, I want to remind you that as we take pricing to help offset inflation, some of these trends may be pressured in the months ahead. Nevertheless, we clearly like what we see.