Hormel Foods Acquires Sadler’s Smokehouse Business
Hormel Foods Corporation, a leading global branded food company, announced on Thursday that it will acquire Texas-based Sadler’s Smokehouse. Sadler’s Smokehouse is a family-owned business specializing in premium and authentic pit-smoked meats for retail and foodservice customers. For the past 20 years, Hormel Foods has been a customer of Sadler’s Smokehouse, a company release said.
“Sadler’s Smokehouse is a great company with an impressive history, talented team and an outstanding portfolio of on-trend products that resonate with consumers, customers and operators,” said Jim Snee, chairman of the board, president and chief executive officer at Hormel Foods, in the release. “This is a very strategic acquisition for our foodservice business and it gives us another successful brand to expand into the retail and deli channels.”
Sadler’s Smokehouse will continue to operate in Henderson, Texas, and will report into the Refrigerated Foods segment. The transaction, structured as an asset sale, is expected to close in March 2020, the release said.
"Authentic barbeque is on trend and continues to show excellent growth on restaurant menus across the nation. This acquisition perfectly aligns with our strategic initiative of strengthening our position in foodservice and gives us another highly differentiated branded product line, similar to what we have with Burke pizza toppings and Fontanini Italian meats and sausages. We also see a unique opportunity to further extend the Sadler's product line into the retail and deli channels. We are excited to welcome the Sadler's Smokehouse team members to the Hormel Foods family and look forward to their contributions."
The acquisition is expected to be neutral to slightly negative to fiscal 2020 earnings, as the company plans to make immediate investments into the business and production facility, Hormel said in a release. Annual sales, excluding transfers to Hormel Foods, are approximately $140 million. The purchase price is $270 million, and the company plans to fund the acquisition with cash on hand.
Hormel Reports First Quarter Results
In addition to announcing the acquisition of Sadler’s Smokehouse, Hormel Foods reported results for the first quarter of fiscal 2020 on Thursday.
"The Refrigerated Foods business model performed as anticipated, given the volatile commodity market conditions. Growth was driven by another strong quarter from our foodservice team and higher commodity profits," Jim Snee, chairman of the board, president and chief executive officer, said in the release. "Volatile pork and beef trim prices also impacted profitability across many product lines in Grocery Products."
The company reported net sales of $2.4 billion, up 1%, and volume of 1.2 billion lbs., down 1%. Pre-tax earnings of $290 million were reported, down 5% primarily due to the divestiture of CytoSport, the release said. An operating margin of 11.8% was shared, compared to 13.0% last year. Year-to-date cash flow from operations was reported at $188 million, up 1%. Fiscal 2020 earnings guidance reaffirmed at $1.69 to $1.83 per share.
More from Farm Journal's PORK:
Hormel Removes Ractopamine from its Hog Supply
Washington Watch: “Impossible Pork” Needs to Play by the Rules
