# Dear fellow shareholders

_Source: `DeepSeekOCR_Ardian_pruned_1k/consumer-defensive-packaged-foods/NYSE_HRL_2022/NYSE_HRL_2022.mmd` · pages 1-7_

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Dear fellow shareholders:

At Hormel Foods, we believe that food inspires and is at the center of everything we do. For the last 131 years, it has been the inspiration driving what we do best: making great food that nourishes, feeds and brings family and friends together.

## Business Dynamics and Outlook

In fiscal 2022, we continued our efforts to protect and grow our core brands, amplify our presence in snacking and entertaining, diversify our portfolio with ethnic and Food Forward offerings, lead in the foodservice industry, expand internationally and transform our company.

We again delivered on our promise of making great food, achieving record company sales. Demand for our products in the marketplace remained robust, and for the first time in the company's history, sales eclipsed $12 billion. Consumers and operators have continued to engage with our brands due to the value, convenience and versatility they provide, further supporting our strategy of building a balanced portfolio with both premium and value offerings.

Net sales for U.S. retail products grew 7% during the year, led by brands such as Planters \( ^{®} \) , SPAM \( ^{®} \) , SKIPPY \( ^{®} \) , Applegate \( ^{®} \) , Columbus \( ^{®} \) , Hormel Gatherings \( ^{®} \) , WHOLLY \( ^{®} \) , Hormel \( ^{®} \)  Natural Choice \( ^{®} \) , Dinty Moore \( ^{®} \) , Hormel \( ^{®} \)  Square Table \( ^{™} \)  and Mary Kitchen \( ^{®} \) . Of note, the SPAM \( ^{®} \)  family of products achieved its eighth consecutive year of record growth. Our teams remain focused on the long-term needs of the business as well as protecting the equity of our leading brands.

Six strategic priorities: Accelerating our evolution as an Uncommon Global Branded Food Company

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Protect & grow our core brands

Keeping our brands relevant and strong

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Amplify scale in snacking & entertaining

Combining the power of our brands to complement and expand our presence

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Enhance growth of our ethnic & Food Forward portfolios

Evolving our portfolio to meet the changing needs of consumers

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Likewise, demand for our U.S. foodservice products was very strong, exceeding pre-pandemic levels and growing sales 20% compared to last year. Operators again turned to our items to help solve for labor pressures and diversify menu offerings. We drove excellent growth in this critically important channel, highlighted by brands such as Hormel \( ^{®} \)  Bacon 1 \( ^{™} \) , Austin Blues \( ^{®} \) , Hormel \( ^{®} \)  Fire Braised \( ^{™} \)  and Café H \( ^{®} \) . Our foodservice portfolio and direct-selling organization are key differentiators and growth catalysts for the company.

In another year of highly volatile and difficult operating conditions, our team delivered the second most profitable year in the company's history and significant earnings growth compared to fiscal 2021, benefiting from the addition of the Planters \( ^{®} \)  brand and strong contributions from the Jennie-O Turkey Store and Refrigerated Foods segments. This required strong execution and the tireless work of all our teams, as together, we overcame broad-based inflationary pressures, supply chain disruptions, the impacts from highly pathogenic avian influenza and numerous headwinds in our international business.

Our evolution as an uncommon global branded food company continued in fiscal 2022. We made considerable progress on our transformational efforts at Jennie-O Turkey Store and successfully integrated our largest acquisition to-date, the Planters \( ^{®} \)  snack nuts business. We are also extremely excited about the next step in our evolution – our Go Forward (GoFWD) initiative.

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Jim Snee
Chairman of the Board, President and Chief Executive Officer

As we look ahead, we expect to deliver sales and earnings growth in fiscal 2023 despite an operating environment that remains volatile, complex and high-cost. We believe we will continue to benefit from our balanced business model, which is not heavily dependent on any one channel, protein, input or product category. Our long-term strategy to meet consumers where they want to eat, with a broad portfolio of trusted brands and products, will continue to set our business apart, helping to drive growth for our customers and operators.

## Capital Management

We again generated more than $1 billion in cash from operations, allowing us to invest in future growth and return cash to shareholders.

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## Expand leadership in Foodservice

Leveraging our expertise and partnerships as an industry leader

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## Aggressively develop our global presence

Bringing meaningful scale to select global markets

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## Continue to transform our company

Supporting our businesses with best-in-class processes, innovation and technology

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We invested $279 million in capital projects in 2022, including capacity expansions for key product lines such as bacon and pepperoni. Our investments in the business over the last three years have provided us a runway for growth in many on-trend categories such as pizza toppings, charcuterie and bacon, and we look forward to additional capacity opening in the first half of fiscal 2023 for our SPAM \( ^{®} \)  family of products. We recently announced another large expansion to our operations in China, which will support our ambitions to aggressively develop our global presence.

We returned a record amount of cash to our shareholders in the form of dividends in 2022 and maintained our distinction as a Dividend Aristocrat. We paid over $550 million in dividends and announced an increase to the dividend for fiscal 2023. The new annualized rate of $1.10 per share marks our 57th consecutive year of dividend increases.

## Our Food Journey \( ^{™} \)  & 20 By 30 Challenge \( ^{®} \) 

Last year, as part of Our Food Journey \( ^{™} \) , we announced a set of 20 qualitative and quantitative goals to achieve by the end of 2030 to make the world a better place — our 20 By 30 Challenge.

We made significant progress on these goals in fiscal 2022, including:

• Committing to the advancement of our antibiotic stewardship efforts and piloting an antibiotic use measurement and reporting system.

• Matching 100% of our domestic energy use in fiscal 2022 with renewable sourcing.

• Remaining on track to have an approved science-based target for the reduction of greenhouse gas (GHG) emissions by 2023.

• Becoming a major sponsor of an up to 50,000-acre regenerative-agriculture pilot project in central and southeast Minnesota.

• Providing support to over 150 students — including many first-generation college students — as part of our groundbreaking college degree program, Inspired Pathways.

• Announcing our commitment to create a food-secure-community program in Austin, Minn., with the additional goal of sharing the blueprint and findings globally. As a result of these efforts and many more, we continued to receive accolades for our corporate and social responsibility. We were named for the first time one of America's most trusted companies and for the third year in a row one of America's most responsible companies by Newsweek, recognized as one of the world's top female-friendly companies by Forbes, named one of the 100 best corporate citizens by 3BL Media, ranked No. 57 on the U.S. Environmental Protection Agency's Fortune 500 \( ^{®} \)  list of the largest green power users from the Green Power Partnership and ranked for the first time in the Investor's Business Daily annual report of the 100 best ESG companies. We also received several Impact Awards from Progressive Grocer for our educational support and food-security programs.

We believe food has the power to inspire, change lives, lift up communities and bring people together. Through food, we are making a difference.

## Senior Leadership Changes

In addition to the many new appointments and management changes effective with the GoFWD initiative, fiscal 2022 was another year marked with leadership retirements and advancements.

In November 2021, after a 20-year career with Hormel Foods, Luis Marconi, group vice president of Grocery Products, announced his retirement. Luis helped create an organization focused on marketing and brand building, and he notably played a key role as the founding leader of MegaMex Foods. Jeff Frank succeeded Luis as group vice president, Grocery Products.

## Company recognition

Hormel Foods is consistently recognized for our commitment to consumers, team members and the communities where we live and work.

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## GoFWD

The GoFWD initiative better aligns our structure with our proven strategy to create the Hormel Foods of the future.

Also in November 2021, Wendy Watkins was promoted to the newly created role of senior vice president and chief communications officer. Paul Kuehneman advanced to vice president and controller in February 2022.

Also in February, Fred Halvin, vice president of corporate development, announced his retirement after a 37-year career with the company. Fred was a key leader for all our transformational acquisitions over the past decade and was instrumental in our journey to become a global branded food company. Nathan Annis advanced to vice president of corporate development following Fred's retirement.

Gary Jamison, vice president and treasurer, announced his retirement from the company in June. Over his 34-year career, Gary held many roles and recently led the implementation of the company's Project Orion systems and the financing for the acquisition of the Planters \( ^{®} \)  snack nuts business. With Gary's retirement, Florence Makope joined the company as vice president and treasurer.

And in October, Katie Larson was appointed senior vice president of human resources, and Scott Aakre was appointed senior vice president of Brand Fuel, the company's newest center of excellence focused on consumer insights and innovation.

## GoFWD

GoFWD, simply said, aligns our structure with our strategy and is a continuation of our evolution to become a better, more agile and more balanced global branded food company. Continuing to evolve our company is necessary, especially as consumer preferences change and unprecedented business conditions persist.
A successful transition to the new strategic operating model is dependent on strong leadership, and I have full confidence in the ability of our experienced management team to deliver on this commitment.

In September, to commemorate the importance of food to our company, we unveiled The Inspired People Plaza at our global headquarters in Austin, Minn., our home since 1891. The centerpiece of this new community space is a 25-foot-tall sculpture – "Big Fork" – clad with 20,000 forks representing each member of our global workforce. This work of art is dedicated to the inspired people who are behind the food we make and the brands we represent. The people who showed up during COVID-19 and were true heroes throughout the pandemic. The people who so proudly produce the brands and products that are found all over the world and trusted and loved by so many.

To me, this fork serves as a daily reminder that what we do as an uncommon global branded food company matters, that people count on us and the food we produce, and that there is tremendous power and inspiration in food. Producing food responsibly and safely is an awesome responsibility. One that inspires us to be a thought leader and a change-maker in all aspects of the food industry.

We remain extremely well-positioned to deliver long-term growth and industry-leading shareholder returns while supporting our global team members and the communities that we call home. As we embark on the next chapter in our evolution, I can assure you that we will continue to leverage the power of food to benefit our shareholders, customers, consumers, team members and society as we build upon our success in 2023 and beyond.

To our team members: THANK YOU for everything you do.

To our shareholders: THANK YOU for your continued trust and support.

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James P. Snee
Chairman of the Board, President
and Chief Executive Officer