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BMG’s organic revenue fell 4.4% YoY in H1 2025, as EBITDA margin jumped; underlying streaming revenue up high single-digits


BMG saw its revenue decline by 7.8% YoY to EUR €424 million (USD $507m) in the first half of 2025, down from €459 million in H1 2024.

That’s according to new interim figures from BMG and its parent Bertelsmann, published today (August 28).

However, the music firm says its “underlying music streaming revenue demonstrated high single-digit growth“.

In its mid-year report, Bertelsmann attributed BMG’s revenue fall to “declining revenues in the publishing and label business and portfolio changes resulting from the sale of [BMG’s] live business”.

In its own press release, BMG added: “The [revenue] decline primarily reflects the disposal of non-core businesses, including the divestment of live.”

On an organic basis – excluding the impact of acquisitions, disposals and currency effects – BMG’s revenue fell by 4.4% YoY in H1 2025.

Bertelsmann commented that this dip in organic revenues “partly reflects BMG’s strategic scaling back of lower-margin activities to focus more on digital revenue sources and long-term profitability“.

Despite the revenue decline, BMG’s operating EBITDA adjusted remained stable at €122 million ($146m), matching the €122 million recorded in H1 2024.

Significantly, that meant BMG recorded a strong EBITDA margin of 28.7% in the first half of 2025, up from 26.5% in H1 2024.

BMG CEO Thomas Coesfeld said: “Our results for the first half of 2025 demonstrate the effectiveness and strength of our BMG Next business model: disciplined, digital-first, and built for long-term value for all stakeholders.

“Our strategy is rooted in what we do best – music publishing and recorded music – while continuously building new capabilities to enhance our service.

“Our results for the first half of 2025 demonstrate the effectiveness and strength of our BMG Next business model: disciplined, digital-first, and built for long-term value for all stakeholders.”

Thomas Coesfeld, BMG

“Innovation and technology are the engines driving how we work and how we support our artists and songwriters. We’re building a future-forward music company, uniquely positioned at the intersection of creativity and technology.”

In the full year of 2024, BMG generated EUR €963 million (USD $1.04bn) in annual revenues, up 6.4% YoY or up 8.1% YoY on an organic basis.



Just over 51% of BMG’s €424 million revenues in the H1 2025 period were generated in the United States, with an additional 10.9% in the United Kingdom.

Revenues from Germany contributed 8.0% of the firm’s global total.

BMG generated EUR €31 million in nations outside of Europe/UK and the United States (including LATAM, MENA, and APAC), representing 7.3% of its worldwide turnover in the period.


Source: Bertelsmann interim 2025 report

Catalog acquisitions and artist signings

BMG completed 17 catalog acquisitions during the first six months of 2025, which it said were carried out in line with Bertelsmann’s “Bertelsmann Boost” strategy.

Bertlesmann said those 17 deals brought BMG’s total investment in music rights catalogs since 2021 to around EUR €1.2 billion.

Judging by figures released by the German company earlier this year, this implies that BMG spent around €100 million on catalog buys in H1 2025.



The company also made significant new signings and contract extensions in the first half of the year.

In recorded music, these included OneRepublic, Olly Murs, Evanescence, (G)i-dle, Joyce Wrice, Fredrik, and Jessi.

In BMG’s music publishing business, new signings and extensions included Gareth, James Arthur, Tom Walker, Steven Wilson, Juicy Bae, Sabotage, Robert Harvey, Alok, and Michael Schulte.


Label and publishing standouts

In its label business, BMG enjoyed success in H1 2025 with new releases from Blake Shelton, Jelly Roll, Jason Aldean, Wiz Khalifa, Billy Idol and Fantasy.

BMG artist Lainey Wilson won four Country Music Awards and secured the title of “Entertainer of the Year” for the second year in a row.

Three BMG catalog tracks achieved significant streaming milestones during the period. Haddaway’s “What Is Love,” LP’s “Lost on You” and Rick Astley’s “Never Gonna Give You Up” were each streamed over a billion times on Spotify, earning them induction into the Billions Club.

In the publishing business, successful releases included music by Ghost, Pashanim, CMAT, Lewis Capaldi, FKA twigs, and Pulp.

BMG songwriters also contributed significantly to major global hit singles. The company’s writers co-wrote “Die With A Smile” (co-written by Bruno Mars and D’Mile), “APT.” (co-written by Bruno Mars) and “luther” (co-written by roselilah and Kamasi Washington).

At the Grammy Awards, BMG songwriter The-Dream won a Grammy for “Album of the Year” for his co-production of Beyoncé’s global chart-topping album Cowboy Carter, while BMG songwriter Bruno Mars won the award for “Best Pop Duo/Group Performance” alongside Lady Gaga for “Die With a Smile.”


 structural changes and brand refresh

During the first half of the year, BMG combined its sync and production music teams into a unified “Sync+” structure that provides what Bertelsmann calls “a comprehensive solution for repertoire licensing”.

This move was made in line with the firm’s BMG Next strategy.

BMG also expanded its direct licensing agreements with DSPs in H1. The firm says it additionally “advanced [our] direct-to-digital efforts to deliver measurable benefits such as improved access to listening data and audience insights, and enhanced on-platform marketing capabilities”.

Also under the BMG Next banner, the firm says it’s now leaning on GenAI to support marketing content creation, streamline workflows, and enable “more consistent” marketing across its catalog.

BMG has struck strategic partnerships with Google Cloud and OpenAI, among others, to enhance its internal tech stack.

Also in H1, BMG unveiled what it described as “a comprehensive brand refresh, marking a significant milestone in its evolution as a modern music company”.


EUR to USD conversions in this report have been made at the average rate for the period according to the European Central Bank

Music Business Worldwide

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Hormel (HRL) Q3 2025 Earnings Call Transcript


Image source: The Motley Fool.

DATE

Thursday, Aug. 28, 2025 at 9 a.m. ET

CALL PARTICIPANTS

Interim Chief Executive Officer — Jeff Ettinger

President — John Ghingo

Executive Vice President and Chief Financial Officer — Jacinth Smiley

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RISKS

Hormel Foods(HRL -13.47%) reported, through Jacinth Smiley, that gross profit was “relatively flat year-over-year, as the positive impact from top-line growth was offset by higher-than-expected input costs” in fiscal Q3 2025 (ended July 27, 2025), emphasizing continued margin pressure.

John Ghingo stated, “The ramp-up of commodity markets in fiscal Q3 has created margin pressure that will continue through fiscal Q4,” indicating persistent earnings headwinds.

Adjusted EPS guidance for fiscal Q4 is $0.38 to $0.40, with management noting this “reflecting a prudent outlook amid ongoing industry dynamics,” highlighting ongoing profitability challenges.

Foodservice industry traffic “remained soft, with overall visits slightly down year-over-year” in fiscal Q3, and recovery did not materialize as expected, negatively impacting potential profit improvement in this segment.

TAKEAWAYS

Organic net sales— $3 billion in organic net sales in fiscal Q3, representing a 6% overall increase, driven by broad-based contributions from all three segments.

Organic volume— 4% organic volume growth in fiscal Q3, with retail segment volume and net sales each up 5%, and foodservice organic volume up 2% year-over-year.

International segment— 8% organic volume growth and 6% organic net sales growth in fiscal Q3, primarily led by China, though profitability was down year-over-year due to continued challenges in Brazil.

Commodity input inflation— Pork bellies up approximately 30%, pork cutout up 10%, and pork trim up 20% year-over-year, with total raw material cost inflation of about 400 basis points in fiscal Q3.

Margin compression— Higher input costs offset gross profit gains in fiscal Q3, as inflationary pressures were only partially mitigated by savings from the transform and modernize (T and M) initiative.

Transform and modernize initiative— Delivered in line with quarterly expectations, achieving incremental bottom-line benefits from approximately 90 projects in fiscal Q3; management expects to finish near the high end of the $100 million to $150 million benefit range for fiscal 2025.

Advertising spend— Adjusted SG&A increased 6% in fiscal Q3, primarily due to higher employee-related expenses and increased investment in advertising to support long-term brand health.

Adjusted EPS— Adjusted EPS for the third quarter was $0.35. Guidance for fiscal Q4 is set at $0.38 to $0.40 adjusted EPS.

Cash flow from operations— $150 million cash flow from operations in fiscal Q3, sequentially higher than the second quarter but lower than the prior year due to intentional seasonal inventory builds and elevated commodity markets.

Capital expenditures— $72 million in capital expenditures in fiscal Q3, with a full-year expectation of approximately $300 million for fiscal 2025, focused on capacity and technology.

Dividend commitment— $159 million paid in dividends in fiscal Q3, totaling $474 million for the first nine months of fiscal 2025; this marked the 388th consecutive quarterly dividend payment.

Debt leverage— Net debt leverage ratio was well within the 1.5x-2x target in fiscal Q3, indicating continued financial flexibility.

Inventory— Intentional inventory build was mainly for back-to-school products (notably Skippy), and to support center store fill rates; elevated inventory reflects both strategic build and higher input costs in fiscal Q3.

Retail brand performance— Flagship and emerging retail brands achieved 3% dollar consumption growth in fiscal Q3, driven by volume gains and targeted marketing support.

Jennie-O ground turkey— 13% increase in ground turkey business volume, outpacing the category and gaining market share following inflation-based pricing actions in fiscal Q3.

Planters brand— Year-over-year, distribution, household penetration, and dollar sales returned to growth in fiscal Q3, with product innovation (e.g., Nut Duos, flavored cashews) supporting the recovery. Profitability still lags top-line improvement in fiscal Q3.

Foodservice segment— Outperformed broader industry top-line results with broad-based net sales gains and 20% year-over-year volume growth in Hormel premium pepperoni in fiscal Q3; traffic remained soft, particularly in convenience stores.

International expansion— Growth in China’s in-country business across retail and foodservice channels contributed to segment gains in fiscal Q3, while meat snacking innovation and Skippy cones expanded global distribution.

Pricing actions— Targeted inflation-based pricing was implemented in fiscal Q3 (notably in turkey), with additional pricing under evaluation; the impact is expected to be partially felt in fiscal Q4 and more substantially in fiscal 2026.

Footprint optimization— Partial closure of a manufacturing facility and reallocation of volume were announced during fiscal Q3, aimed at operational efficiency, with longer-term benefits expected from recent and upcoming network changes.

2026 guidance— Management reaffirmed its long-term growth algorithm of 2%-3% net sales and 5%-7% operating income growth (not intended as specific fiscal 2026 guidance), but acknowledged “the growth goals we previously set for 2026 were based on certain assumptions that have not been realized,” and will provide updated guidance on the fiscal Q4 call.

SUMMARY

Management disclosed that top-line momentum continued in fiscal Q3 but did not translate into expected bottom-line gains, primarily due to input cost inflation and margin lag from pricing timing. Severe commodity increases—especially across pork and beef—pressured results in fiscal Q3, despite ongoing savings from operational initiatives. Intentional inventory builds, and higher SG&A, including advertising, contributed to lower cash flows in fiscal Q3, yet the company’s capital structure and dividend policy remain intact. Segment results revealed continued category leadership, especially in turkey and branded nuts, though profit recovery in certain areas remains incomplete.

Jeff Ettinger stated, “we plan to share holistic 2026 guidance on our fourth quarter earnings call,” indicating that forward-looking targets remain under review due to unresolved headwinds.

Jacinth Smiley explained that additional pricing actions in response to commodity inflation “will begin to show benefits in the latter part of [fiscal] Q4 and really into [fiscal] 2026,” highlighting the expected lag in margin recovery.

Transform and modernize initiative benefits approached the high end of guidance, with approximately 90 projects executed in fiscal Q3, and continued operational redesign underway.

Wholesale improvements in the foodservice and international segments were driven by targeted innovation and channel execution, though international profit was pressured by Brazil’s competitive market in fiscal Q3.

Consumer sentiment and channel traffic trends present ongoing challenges for near-term profitability, underscoring management’s focus on balancing pricing, brand health, and disciplined capital allocation.

INDUSTRY GLOSSARY

Transform and Modernize (T and M) Initiative: Strategic companywide operational efficiency and modernization program, aimed at cost savings, capability building, and margin improvement through targeted projects.

Flagship and Rising Brands: Hormel Foods’ category-leading branded products prioritized for investment due to their share and growth profile.

Pork Cutout: Benchmark price index representing the total market value of a standard hog carcass based on the sum of each primal cut’s market price.

Rabbi Trust: Legal entity securing deferred compensation for employees, with gains/losses from its investment performance occasionally impacting reported investment income.

Basis Points: One-hundredth of a percentage point, used here to quantify raw material inflation versus prior-year comparables.

SG&A: Selling, general, and administrative expenses, as referenced in management’s discussion of cost trends and investment strategy.

Full Conference Call Transcript

Jeff Ettinger, interim chief executive officer, John Ghingo, president, and Jacinth Smiley, executive vice president and chief financial officer. Jeff, John, and Jacinth will review the company’s fiscal 2025 third quarter results and provide a perspective on the remainder of the year. We will conclude with the Q&A portion of the call. The line will be open for questions following the prepared remarks. As a courtesy to the other analysts, please limit yourself to one question with one follow-up. If you have additional questions, you are welcome to get back into the queue. At the conclusion of this morning’s call, a webcast replay will be posted to the Investors section of our website and archived for one year.

Before we get started this morning, I’d like to reference our safe harbor statements. Some of the comments we make today will be forward-looking, and actual results may differ materially from those expressed in or implied by the statements we will be making. Please refer to our most recent annual report on Form 10-K and quarterly reports on Form 10-Q, which can be accessed on our website under the Investors section. Additionally, please note we will be discussing certain non-GAAP financial measures this morning. Management believes that doing so provides a better understanding of the company’s underlying operating performance.

The presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Further information about our non-GAAP financial measures, including our comparability items, and reconciliations are detailed in our press release which can be accessed on our website. I will now turn the call over to Jeff Ettinger.

Jeff Ettinger: Thank you, Jess. Good morning, everyone, and thank you for joining us. Having been in my current role for just over a month, I am committed to building upon the strong foundation in place. Rooted in an impressive portfolio of products, iconic brands, and a great culture. Since returning to the company, I have been immersed in working with our leadership team, and gaining a deeper understanding of our operations and strategic priorities. It is clear to see our robust solutions-based portfolio and the protein-centric nature of our offerings work well in today’s consumer landscape. Further, a major focus of mine has been learning about the transform and modernize initiative.

Its current trajectory, the key projects underway, and how the work is progressing. I’ve been impressed to see the solid and demonstrable benefits of the program. Not just financially, but through building capabilities for the future. Our mission is clear. Deliver profitable growth, and if we turn to this quarter’s results, we are halfway there having delivered organic net sales growth for three consecutive quarters. Building upon modest gains in the first and second quarters, we achieved an impressive organic net sales increase of 6% in the third quarter. What is equally notable is that this growth was broad-based, driven by all three of our segments.

It is clearly disappointing that our top line results did not translate into the bottom line growth we expected. The unanticipated surges in commodity input costs that affected our absorbed not only the margin delivery from our top line growth, but also our incremental benefits from our T and M initiative. Regarding the fourth quarter, we expect continued net sales growth supported by our leading positions in the marketplace. To address commodity inflation, we are taking targeted pricing actions. We expect profit recovery, however, to lag into next year. With the near-term pressures we experienced in the third quarter persisting through the fourth quarter. John will share more information on the progress being made in each of our segments.

And Jacinth will go into greater detail on the third quarter performance and our guidance for the remainder of the year. But before I turn the call over to them, I wanted to align on regarding what you can anticipate from us today and moving forward. In line with what the team has stated previously, we plan to share holistic 2026 guidance on our fourth quarter earnings call. Including the specifics around our expectations for the T and M initiative. What we will provide today is commentary related to our high-level vision for 2026, which Jacinth and I will cover later in today’s call.

Beyond the words you hear from us today, I want you all to leave with the absolute confidence that driving sustainable growth both on the top line and the bottom line, is our top priority. I am confident in the capabilities of our team and the opportunities ahead for our company. I look forward to reengaging with this investment community over the next year. Ahead of John’s remarks, I’d like to extend my congratulations on his recent appointment as the eleventh president of Hormel Foods. This marks a pivotal moment for our company as John brings a fresh and energizing approach to leadership. One that is already resonating across the organization.

His ability to balance strategic clarity with a collaborative people-first approach is exactly what we need as we continue to evolve and grow. I look forward to partnering with him, and I’m confident we will make meaningful progress in advancing our mission over the coming year. And with that, I will turn the call over to John.

John Ghingo: Thank you, Jeff. I want to take a moment to congratulate you and welcome you back to the company. Many of you know Jeff already as a purpose-driven leader with a proven track record of successfully leading this company. In just a short time since his return, I’ve been impressed with his clarity of vision, the conviction with which he leads, and the mentorship he’s extended to me personally. He brings renewed energy and focus, and I’m excited to partner with him as we move forward. Further, I also want to take a moment to congratulate Jim Snee on his well-deserved retirement and thank him for all he has done for our company and for me personally.

Jim was a transformative leader. He had a culture-first mentality and recognized the opportunity for greater potential for our company. He launched our journey of transformation, and I look forward to carrying that torch forward. With that, let’s jump in. In today’s consumer landscape, there’s a lot to be considered. Consumers are cautious, yet resilient. They have shown a willingness to spend when products and experiences meet their needs. But rising costs are forcing consumers to make trade-offs.

That said, we believe the powerful combination of our protein-focused portfolio, leading positions across multiple channels, and capabilities related to innovation, renovation, customer partnership, and strategic brand investment position us well to maintain the top line momentum that we’ve built over the last three quarters. Take our retail segment, for example. Where our vision is focused, deliberate, and is now in motion. We are building a consumer-led growth engine powered by protein-centric solutions that deliver meaningful value to customers and consumers. By modernizing our products to deliver category-leading differentiation, innovating bigger and bolder, and taking a disciplined approach to investment and execution, our retail team is building strong brands. And I’m pleased with how these efforts are translating into results.

In the third quarter, our flagship and rising brands delivered 3% dollar consumption growth. And taking a closer look at those results, I am particularly encouraged by the volume-led momentum across many of these brands. In fact, many of our category-leading brands showed impressive consumer volume demand in the third quarter, including brands like Holy Guacamole, Spam, Black Label Bacon, Herdez, Hormel Pepperoni, and Applegate to name a few. Each of these brands leveraged a personalized take on our common playbook.

They started from a position of strength with consumers, benefited from our ongoing renovation and innovation work, which is focused on staying ahead of evolving consumer preferences and many received targeted marketing support to drive both relevance and measurable returns. Digging into one of these brands a bit further, the SPAM brand, shows just how impactful our approach can be. Our ongoing modernization strategy for the SPAM brand another strong quarter. With year-over-year volume and net sales growth, we leveraged the brand’s iconic equity by partnering with customers, on impactful summer promotions and launching a limited-time offer designed to drive both volume and net sales growth. All reinforcing the Spam brand’s relevance in the marketplace.

Another great example of the impact of brand modernization is the launch of the Hormel Pepperoni brand renovation work. This one hundred and ten-year-old brand is the number one retail pepperoni brand and we would like to keep it that way for another century. Our team initiated a thoughtful renovation project on the brand we recently unveiled a refreshed package design. This update is more than cosmetic. It’s an investment with customers to bring excitement to this important category and to signal to consumers that Hormel Pepperoni is evolving with their taste and expectations. The launch is supported by our new campaign, boldly irresistible, and we expect this renovation to drive stronger purchase intent, accelerate velocities, and reinforce brand loyalty.

I also want to spend a minute on our Jennie O ground turkey business, which offers a clear illustration of how a strong brand that is well aligned with evolving consumer preferences for lean, affordable protein wins in the marketplace. As we said previously, we needed to take inflation-based pricing went into effect late Q2. Because of the strength of this brand, we were able to successfully navigate elasticities and capture dollar share and net sales growth. Before I conclude my comments for the retail segment, I want to give an update on the performance of our Planters business.

I am pleased to report that by the end of the quarter, scanner data was now reflecting year-over-year growth in distribution, household penetration, and dollar sales. With the foundation restored, the team is back on the offense. Reengaging consumers with innovations like nut duos, and flavored cashews, while also launching a limited-time bar nuts variety to spark excitement around summer snacking. With the capacity in place to fulfill demand, accelerating sales momentum as we enter Q4, I am encouraged by the top line recovery of the Planters business. Profitability, on the other hand, is being impacted by mix and inflation. We are actively working on drivers to balance the evolving needs of consumers and drive profitability.

Looking ahead for retail, we expect that our brand-building playbook will enable continued strong top line performance in the fourth quarter, however, we remain cautious on segment profitability. The ramp-up of commodity markets in the third quarter has created margin pressure that will continue through the fourth quarter. As Jeff shared, we are taking targeted pricing action to help offset these pressures, which will go into effect throughout the fourth quarter and early in 2026. Our focus for retail is to build a consumer-led growth engine powered by protein-centric solutions that deliver meaningful value to customers and consumers. Let’s now shift to our food service segment. Our operators are facing a challenging environment.

Industry-wide traffic has remained soft, with overall visits slightly down year-over-year. Casual dining has shown relative resilience in recent months, but the broader food service industry continues to face headwinds from inflation and shifting consumer behavior. The dynamics of this environment particularly the impact of commodity pressures in the third quarter, led to margin compression for our business. But we believe that the pass-through nature of cost for much of our foodservice portfolio will allow us to recover profitability over time. As a result, we believe that underlying volume health continues to be a good measure of success for the segment and here, our team delivered strong results in the quarter.

Once again, organic volume and net sales growth the Foodservice segment outpaced broader industry results in the third quarter. Our growth was broad-based, showcasing our great solutions-based portfolio, and the power of our direct selling organization. While you’ve heard us highlight this team often, I did want to take a moment to congratulate both the retail and food service selling teams for being recognized for the twenty-fourth consecutive year by Selling Power as one of the best companies to sell for. For food service, this is certainly a testament to the value the team delivers to their customers and operators. As I said, volume and net sales growth came from many of our food brands in the third quarter.

Planters snack nuts, the Jennie O Turkey portfolio, and Hormel premium pepperoni, all delivered significant growth. For a bit of insight in a highly competitive category like pepperoni, we delivered 20% year-over-year volume growth for Hormel premium pepperoni. These results highlight the team’s understanding of our customers’ and operators’ needs and the quality and value of our portfolio. A recovery in industry traffic would certainly create a more favorable operating environment for our foodservice business. But we are not waiting for an industry recovery to return this powerful portfolio to the segment profit growth that we know it can deliver. Closing out the segments in international, net sales growth in the third quarter was driven by our thriving China business.

Overall, the China market is rebounding and we grew our in-country business across both foodservice and retail channels this quarter. This performance leaves me encouraged about the opportunities ahead for our proven in-country model. Another contributor to my optimism on China is its success as an innovation engine, which is helping to build our snacking portfolio. Meat snacking innovation out of China delivered solid performance in the quarter, and the team strategically launched Skippy cones into a new channel further accelerating its distribution growth globally. Beyond China, international’s exports in the third quarter also delivered positive top line results led largely by our global SPAM brand exports.

Profitability was down year-over-year mainly due to our Brazil business, which remained under significant pressure in the quarter, the operating environment in Brazil continues to be challenged by competitive pricing dynamics. Our international team remains focused on expanding our global brands and portfolio with the same mission of returning to profitable growth. Turning back to our performance overall in the third quarter, while our top line results were impressive, the bottom line results were disappointing. The commodity inflationary pressures we felt were significantly greater than anticipated. But to be clear, I remain confident about our future. First, we have a terrific portfolio. Being a leader in protein solutions is valuable in today’s consumer landscape.

Consumer demand for protein is an enduring trend and showing no signs of slowing down. Our portfolio is positioned for achievable growth. Second, we are actively evolving to stay ahead of a dynamic and competitive marketplace. Transform and modernize is enabling us to unlock the full value of our portfolio. This initiative is building long-lasting capabilities, future-fitting our supply chain, and further developing our processes, data, and talent. Said differently, this is truly helping us modernize as a company. And third, we have a great team. As I recently shared internally, I believe in a we mindset. Because while no single person has all the answers, I firmly believe that together, we do.

I am energized by the opportunity to lead this talented team as we unlock the full potential of our impressive portfolio and company. With that, I will now turn the call over to Jacinth to provide details on our financial performance, our fourth quarter outlook, and commentary leading into fiscal 2026.

Jacinth Smiley: Thank you, John. And good morning, everyone. We are pleased with the top line growth we delivered in the third quarter. All three segments showed its unique strength and the top line results emphasize the power of our globally diverse portfolio leading brands, and team. Organic net sales in the third quarter were $3 billion, a 6% increase over last year with organic volume up 4%. Our retail segment grew volume and net sales 5% over last year, with five of our six retail pillars reporting top line growth above a year ago. Volume growth was significantly supported by the Turkey portfolio both in whole birds and value-added lean ground turkey. Excluding turkey, retail volumes also grew in total.

Our food service business once again outperformed the broader industry. With broad-based top line gains of 2% organic volume growth and 7% organic net sales growth. Our international business delivered strong top line results with 8% volume growth and 6% net sales growth led by our thriving China business. Gross profit was relatively flat year-over-year as the positive impact from top line growth was offset by higher-than-expected input costs. Inflationary headwinds pressured margins, however, these were partially mitigated by savings from our transform and modernize initiative, which delivered in line with our quarterly expectations. As we noted during our second quarter call, we anticipated upward pressure on input costs. Driven by pork, beef, and nut market.

However, during the third quarter, markets worsened significantly beyond our projections. To illustrate the order of magnitude of these external markets, as compared to last year, pork bellies were up approximately 30%. The pork cutout was up about 10%, and pork trim was up 20%. Beef also remained a persistent inflationary headwind industry-wide and near all-time high. Collectively, we experienced approximately 400 basis points of raw material cost inflation in the third quarter alone, representing a notable increase relative to last year. As we have previously discussed, when commodity markets rise sharply, there is a delay between the impact of pricing actions and the resulting improvement of profitability.

For the third quarter, adjusted SG&A increased 6% primarily driven by employee-related expenses. Advertising investments were also higher for the quarter. As we continued to strategically invest in our brand. To support long-term brand health. Equity in earnings for the third quarter increased due to favorable results for MegaMex Foods, and a modest benefit from our international investments. Interest and investment income increased due to performance from the rabbi trust. Overall, adjusted EPS for the third quarter was $0.35. Cash flow from operations was $150 million for the quarter. A sequential improvement from the second quarter but remains down compared to the prior year as we intentionally built additional seasonal inventory. Elevated commodity markets also impacted our higher inventory balances.

Capital expenditures were $72 million during the quarter, with our largest investments directed towards capacity enhancement and new technology initiatives. We remain committed to strategic reinvestment and expect to deploy approximately $300 million in capital expenditures for fiscal 2025. I remain confident in our ability to generate strong, sustainable cash flows over the long term which supports our continued execution of a disciplined and balanced capital allocation strategy. As a proud dividend aristocrat, dividends paid to shareholders in the third quarter were $159 million totaling $474 million for the first nine months of fiscal 2025. We also declared and paid our three hundred and eighty-eighth consecutive quarterly dividend.

We ended the quarter with our net debt leverage ratio well within our target range of one and a half to two times reflecting our balance sheet discipline and financial flexibility. The transform and modernize initiative continued to perform well. And met our expectations for the quarter. Delivering incremental benefits to the bottom line. The team has executed impactful work to drive value which totaled approximately 90 projects in the third quarter. As we have shared, this initiative is more than just a cost savings project. It is about the way we do business across the enterprise. Building new capabilities and reshaping how we operate. While creating a new path for growth.

An especially noteworthy project this quarter involved optimizing our manufacturing footprint. We announced the partial closure of one facility and the reallocation of production volume across our broader network. Aimed at enhancing operational efficiency and long-term scalability. With a robust backlog of projects, and confidence in our ability to deliver meaningful results, we are reaffirming our expected range of $100 to $150 million of incremental benefits in fiscal year 2025 and believe we will finish the year near the high end of our T and M range. Shifting to the remainder of 2025, there are some considerations to keep in mind as we close the year.

We continue to expect the top line growth in the fourth quarter and we expect our Turkey portfolio, the Planters brand, and our leading positions in the marketplace to continue to be a strong growth driver. For profitability, we have announced inflation-based pricing actions related to the third quarter market which we expect to partially benefit the fourth quarter. And carry into 2026. As the fourth quarter has begun, counter to our expectations, commodity markets have remained elevated across a variety of inputs, with that, we’re assessing additional pricing actions. Our tariff estimate remains unchanged at a $0.01 to $0.02 EPS headwind for fiscal year 2025.

Altogether, we expect fourth quarter adjusted EPS to be in the range of $0.38 to $0.40 reflecting a prudent outlook amid ongoing industry dynamics. As we look ahead to fiscal 2026, we are approaching the timeline for delivering on the long-term financial goals we outlined at our 2023 Investor Day. Over the past two years, we have numerous achievements to be proud of. Especially within our transform and modernize initiative where we have extracted value and invested in developing processes, talent, and capabilities that will help propel us into the future. However, the growth goals we previously set for 2026 were based on certain assumptions that have not been realized.

Among those assumptions were expectations of a more stable input cost environment, stronger consumer sentiment, and earnings growth in 2025. That being said, as Jeff and John have mentioned, we are aligned and focused on returning to profitable growth. We are in the early days of our annual planning process. And while we are not providing fiscal 2026 guidance today, our belief is that our long-term growth algorithm is a better metric to use when considering our go-forward results. As we look ahead, we expect the top line to benefit from pricing actions, growth across our brands, and product mix improvements.

On the bottom line, we expect continued meaningful benefits from our transform and modernize initiative, benefits from the manufacturing footprint decisions we have made this year, and possible cost reductions related to SG&A spend which has outpaced growth in recent years. We will provide our holistic 2026 guidance on our fourth quarter earnings call. Before we transition to Q&A, I want to leave you with a clear message. We are not just navigating the present, we are building a better company for the future. My confidence in our future is grounded in the strength of our robust protein-centric portfolio, the resilience of our team, and the long-term capabilities we are building to drive sustainable growth.

At the same time, we recognize that our bottom line performance did not reflect the potential of our business this quarter. We are committed to driving growth and enhancing long-term profitability. Our balance sheet is strong, and we believe our top line growth is sustainable. We remain focused on delivering lasting value for our shareholders. Through consistent top line and bottom line performance aligned with our long-term growth algorithm. With that, I will turn the call over to the operator to begin our Q&A portion of the call.

Operator: You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star, followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. Your first question comes from Ben Theurer with Barclays. Your line is now open.

Ben Theurer: Yeah. Good morning, Jeff. John, Jacinth. Well, Jeff, first of all, welcome back, I guess. And, John, congrats on the new role. First question really is as we look back call it, three months ago when you did the call for the second quarter, you really sounded very confident as to the outlook for the second half. And there was a lot of, like, data points you gave out to kind of, like, believe things are going into the right direction.

So, really, within the last three months and particularly as you kind of, like, look into the next three months, what has changed so much versus call it, late May, early June when the last time was when you updated the market? What has driven this revision?

John Ghingo: Yeah. Obviously, a very fair question. Thank you, Ben, and good morning. So I’ll start off by kinda bringing us back to, you know, the expectations we had three months ago. And, clearly, we had confidence entering the second half, and we had that for good reason. You kinda looked at our growth targets in the back half, we had four critical drivers of performance and what we were expecting. One was we had mentioned that we had landed or announced significant pricing on our value-added turkey business at the end of the second quarter that would take hold in the third quarter.

Two, we were expecting improved foodservice industry traffic in the back half of the year, which, you know, is important for our company and for our business. Three, we knew the sequential recovery of planters was going well. And when we hit the back half of the year, we were gonna be lapping the supply disruption, and so we saw the clear, you know, opportunity on planters. And then four, our transform and modernize initiative was on track. And we had, you know, significant expectations for the back half on T and M. So those were kind of the four building blocks of what set our expectations for the back half.

As the third quarter unfolded, a few of those things, you know, went well and actually continued to, you know, meet our expectations and come to fruition. So the Turkey pricing, for example, our Turkey business has been strong. On track with our expectations. We landed the pricing. We’ve delivered strong growth. On our value-added Turkey business, and we have recovered the profitability we needed to. We also have seen in the third quarter broad-based top line growth across the portfolio. So that was a check. And our T and M delivery actually has remained on track. In fact, we expect to finish the year toward the top end of the range we’ve been providing on T and M.

So all three of those things were in line with our expectations. What we didn’t expect and would change dramatically, the first one, there are three things, but the first one is the most which was the steep run-up in commodity markets. And that has very much pressured our earnings. That run-up in commodity markets was both sudden and it was major. As it occurred across inputs that are major for our business. That was sort of the first and biggest factor, but there were two other elements that were important that unfolded. Foodservice traffic did not recover the way we expected it to. The industry remained soft. Traffic still declining.

And then the third one, is Planters Recovery, is very much on track from a top line perspective. We’re very, very pleased with how that is going. But the profit recovery has lagged somewhat. Profit on planters did grow in the third quarter, but not at the same rate as the top line had that’s has grown in that recovery. So when you look at those three factors, they were kind of the new news in the third quarter. We also adjusted our expectations based on those same factors for the fourth quarter. Because we see them persisting through the fourth quarter.

And while we’re encouraged by the momentum on the top line, we are obviously aligned on the urgency for driving profitable growth and we have both made adjustments to our near-term plan. But, also, you know, just to reiterate, we do remain confident in our future and our team overall. I think, Jacinth, you may wanna add some more detail.

Jacinth Smiley: Yeah. Certainly. Good morning, Ben. And, you know, we are certainly disappointed in terms of where we are from a profitability standpoint. And as John touched on, the major change that happened here is relating to commodity markets and just the significant run-up that happened in the middle of the third quarter as we went in. And then when we, you know, think about what we have done to respond to that, we have announced pricing relating to the impact for the third quarter. However, given where markets remain, we have we’re continuing to evaluate additional pricing actions. So that has really informed how we’re thinking about the rest of the year.

And also as we think about 2026 because we expect the fourth quarter to continue to be pressured by these significant market pressures. And then just the consumer sentiments where it sits at the moment. So in our mind, right, we are in a spot where we need to be responsible with how we rebase our 2026 target. You know, overall, we recognize the second half did not meet our expectations. We understand the disappointment this brings, and as Jeff mentioned, we remain firmly committed to driving sustainable growth and enhancing long-term profitability.

And what really do matters in this time that’s so dynamic is how we respond and the team is responding and staying focused on executing with discipline, investing in our strengths, and positioning ourselves for the future.

Ben Theurer: Yep. Got it. And then my follow-up is really I would I would describe it more as a strategic question. So, Jeff, for you, obviously, you’ve been at the company and then you kind of, like, went on and came back just a few months ago, first on the board, and then now more recently as interim CEO. So as you kind of come with fresh eyes, with fresh thoughts, you look at the business, what are you seeing? How do you how do you feel about the company? How do you feel about the different business segments?

And where do you think Hormel offers the greatest opportunities from a shareholder return perspective as you take on your role over the next coming months?

Jeff Ettinger: Yeah. Thanks for the question, Ben. You know, as I look at it coming back after a number of years, I believe Hormel is still in an enviable position to grow from. I mean, you look at sort of the traditional processed meat categories. We are the innovation leader in bacon and pepperoni in both the retail and food service segments. We’re a leader in more healthy new age proteins with portfolios such as Jennie O and Applegate. We’re a leader in protein solutions for the food service with Caffe H and Firebrace and Flash one eighty, which I had a chance to see at the restaurant show when I did join the board.

We have two great global brands in SPAM and Skippy. Plus a growing business in China on the international front, and we’re strong in certain non-meat protein areas such as Planters and Skippy and our Mexican portfolio in our partnership with MegaMex. Frankly, we intend to be able to expand on this sort of strategic side down at your conference next week, the Barclays Back to School Conference. And so we’ll we’ll give you more details on kinda what we’re excited about there. Now to answer sort of the second part of your question, you know, the very first day John and I assume these new roles we had a town hall with our team.

And we really talked to the team about, hey. You know, what does winning look like, frankly, in this industry or, frankly, to me, almost in any business? And it’s all about growing your top line and your bottom line. Growth in your top line shows that your products are connecting with consumers and customers. And I’m encouraged that in this recent quarter, we delivered on just that. So we’re kinda halfway there in that regard. But you also have to grow the bottom line. You have to grow the bottom line to show that you’re actually getting paid for all the hard work you’re doing in a total system basis.

And you also need to do it because it serves the interest of our shareholders. Who we understand have other options in terms of their investments. And so growth is imperative. So that’s our focus. Is gonna be consistently driving top and bottom line growth.

Ben Theurer: Thank you very much.

Operator: Your next question comes from Tom Palmer with JPMorgan. Your line is now open.

Tom Palmer: Good morning. Thanks for the question. And congratulations, Jeff, on your return and, John, on your recent promotion. In your prepared remarks, you noted that your long-term growth algorithm is a better metric to use for forward earnings. I just wanna make sure I understood to what extent this applies to 2026. Because given some of the cost headwinds this year and also what seems to be emerging tailwinds from areas like Turkey, planters, and the TNM program. I think there was some hope that next year, could be more of an above algorithm type year.

Jeff Ettinger: Happy to take the question, Tom. This is Jeff. I personally have always found it important to have clear and goals for the team and indeed Hormel Foods has communicated its current goals of two to 3% growth in net sales and five to 7% growth in operating income for the past several years. We think these are aggressive but reasonable goals in today’s food industry environment. And I personally agree that these are the appropriate goals for our general future expectations. We want the team to focus in the long term on hitting these on both the top and bottom line, frankly. I’d like to see quarter after quarter. But these are not intended as our fiscal 2026 guidance.

That will come on the Q4 call when we weigh all the considerations, including that you mentioned in your question.

Tom Palmer: Okay. Understood. Thank you. And then, look, traditionally, there is some degree of seasonality and import costs. I think during the third quarter, it’s not totally unusual to see some seasonal increase. And then some easing as we look at the fourth quarter. To what extent is this seasonal decline embedded in your outlook if it were to occur? Would that be as expected, or that could be an incremental tailwind? And then, I guess, just kinda thinking through the comment about strategically building inventory in the quarter, maybe what areas were built? Because I’m I’m a little curious why when commodities are so elevated, that strategic decision was made.

Jacinth Smiley: Good morning, Tom. So if I start with your first question, so you’re a little cheeky there. You got three questions in, but so that first part of your question around the commodity markets and seasonality, yes. It typically, indeed, there is seasonality, and it starts to come down in the fourth. I mean, as we sit here today, right, markets are still elevated above the five-year average. And that’s what’s really informing where we sit in the guide that we’re giving for Q4.

That being said, even when markets if market starts to come down, given the fact that we have built inventory that we are not gonna necessarily see positive impacts from that because we already have inventory in place. And so when we think about where we’re guiding, right, we are expecting again the seasonality to be there, the market’s, again, staying elevated, and we are not expecting that to have any material impact. And when we think about the inventories from an inventory standpoint, we did build inventory for back to school. We also built which is mainly around Skippy.

Then another piece around our center store as we’re trying to get our fill rate to where they need to be to service our customers. And then in general, given the significant inflation that also has impacted the balance that you will see on our balance sheet from an inventory perspective.

Tom Palmer: Thank you for addressing the multi-part question. Thanks.

Operator: Your next question comes from Leah Jordan with Goldman Sachs. Your line is now open.

Leah Jordan: Good morning. Thank you for taking my question. I wanted to ask about pricing in retail. You took pricing for value-added Turkey in the quarter, but pricing overall wasn’t really a driver for the top line. So what’s the offsetting pressure you’re seeing there? And just how are you thinking about your ability to pass through more pricing given the targeted actions you’re planning over the next couple of quarters? What are you planning in terms of elasticity? And just on those pricing actions, how much of the portfolio will be impacted in the fourth quarter versus ’26?

John Ghingo: Yes. Thank you for the question, Leah. This is John. I’ll tackle pricing, and I’ll pull back a little bit too just to talk about pricing in general because the market is dynamic. Obviously, pricing is a critical topic. So, and I will get into retail, but I’ll start by kinda grounding in food service as well since that’s a big important part of our business. So from an overall perspective, when we talk about our food service pricing generally, the vast majority of the pricing passes through based on movements in commodity markets, whether those movements are up or down. Now there’s typically a timing lag.

And so in a period of escalating markets, there tends to be some compression. And then that margin gets restored on the way back down. So that’s kind of the food service aspect. From a retail perspective, to your point, there are two very fundamental differences with pricing when it comes to retail. First, the lag time tends to be longer. When we do announce pricing actions to our retailers, there’s a longer lag type get the pricing implemented. And the second fundamental difference is we need to be very measured with the decisions on if we do or don’t take prices up and by how much we take them up when we do.

In that retail case, we’re triangulating across three different fundamental variables, to guide those decisions. So one is commodity markets and COGS. Obviously, we wanna maintain and improve profitability. But we also have to balance two other variables. Anticipated consumer response is critical. And so we know the consumer environment right now is challenging. The consumer is strained. For a variety of reasons. And then the third variable is brand health. And our support behind our brands to withstand pricing. Right? That’s the third piece.

So when you talk about elasticity, you’re really talking about those second two elements, consumer response and the particular brand and category in the support plan behind the brand of how do we measure and estimate what will be the elasticity impact. So to come back to the point about Turkey, you know, we mentioned in the last call that we were seeing an increase across our supply chain and costs on Turkey. And we said we had announced pricing in Q2 that we had to implement in Q3. And I bring it up as an example because we were able to kind of triangulate around those variables and successfully implement that pricing in the third quarter.

Our Jennie of Turkey business right now, ground Turkey business is up 13%. The category continues to be up as well. In the latest thirteen weeks, so through Q3. We have recovered the margin we needed to. And the reason we’re able to do that is because of the strong product quality, the brand investments we’ve made, overall execution behind the business, we’ve been able to get through that pricing successfully. So now to come back to kind of the here and now, we have recently announced targeted pricing actions across other parts of our portfolio based on the escalation we’ve seen in the markets that Jacinth referred to.

So we will begin to see the benefits of that pricing in the latter part of Q4 and really into 2026. And as we continue to see these persistently elevated markets, we are evaluating additional targeted pricing actions as warranted. However, you know, what I will say is we will continue to be thoughtful and measured. To make sure the consumer can withstand additional pricing that the pricing is constructive for the respective categories, and that our brands are well supported through communications, quality, and innovation to best mitigate those elasticity impacts. What I feel good about is that this measured approach has allowed us to keep our consumption increasing.

So if you look at our overall consumption results in retail, over 3% growth on our flagship and rising brands, one and a half percent growth for total Hormel, we wanna make sure we stay vibrant and growing with the consumer.

Leah Jordan: Very helpful. Thank you.

Operator: Your next question comes from Michael Lavery with Piper Sandler. Your line is now open.

Michael Lavery: Thank you. Good morning. I wanted to just come back to how to think about some of what’s ahead, and I appreciate you don’t wanna give fiscal 2026 guidance, but you had set out a three-year plan a year and a half ago. That you explicitly updated. So how should we think about just your latest thinking on the P and M savings and the net EBIT growth that you’ve put a bit of a stake in the ground for? Obviously, that would suggest some amount of kind of guidelines for where ’26 should land unless it’s changed. Is that under review?

Jacinth Smiley: Good morning, Michael. So as we mentioned in our prepared remarks, we’ll certainly give a robust update, on our Q4 call. That being said, right, when we had our investor day, there were certain assumptions that we had at that time. And so those targets were grounded in those assumptions. There have been changes certainly, as we have seen the last couple of years unfold. Some of which we’re talking about here today. Right? This significant rise in commodity market, was not what we anticipated at that time. In addition to the fact that we expected and anticipated a really strong second half in 2025. The consumer is also pressured.

That was not contemplated in addition to what John mentioned before as well in terms of the planters that cover while it’s recovering on top line, the profitability is certainly lagging. So those are some of the those key assumptions. That’s different than when we really talked about our projections for 2026. And, again, we will give you further updates as we talk about it in Q4.

Michael Lavery: Okay. That’s helpful. And just a follow-up on some of the pricing thinking and maybe slightly in two parts. One is just we’ve covered a little more on the retail side, but you had mentioned some noncore pressure in foodservice. Maybe if sorry if I missed it, could you specify some of what that was? And then on the pricing in response to the commodity pressure, you’ve mentioned that there’s some under consideration. I know we’re getting closer to the end of the year. What’s in guidance in terms of is any new pricing actions really primarily affecting fiscal ‘twenty six? Or there be a little bit of upside still left in the rest of the year to go?

John Ghingo: Yeah. So what I would to answer the second part of your question first, you know, additional pricing at this point would largely impact 2026? I really wouldn’t have a material impact on Q4. In terms of foodservice, just to take a step back on foodservice a bit, the food service business, you know, for us does remain quite resilient. And, you know, we’re pleased with the top line growth and net sales growth. It’s broad-based. Across numerous categories. You’ve seen organic volume growth being driven by several categories. So we feel very good about that. You know, to come to the question about margin, so we are you know, we mentioned noncore business.

The point that we had mentioned earlier this year, the divestiture of Hormel Health Labs is the point we were making there around some of the margin coming out due to that divestiture. You know, food service, we feel very good about our plot and our ability to continue to drive growth despite a challenging industry. You know, the traffic is down. If you look at it, you know, we’re growing the business. We’re leveraging our direct sales team. We’re leveraging our portfolio value-added solutions. We have our diversified sales channel mix. Right? We’re gonna continue to drive on those things. And, you know, on top of that, we’re gonna continue to navigate the headwinds.

One of those, when you look at our food service business, is convenience stores. So the convenience store channel. Also comes up into our food service business. Convenience stores have been very soft from a traffic perspective. And so that does have some impact on mix and profitability as well.

Michael Lavery: Okay. Very helpful color. Thanks.

Operator: Your next question comes from Peter Galbo with Bank of America. Your line is now open.

Peter Galbo: Hey, guys. Good morning. Thanks for taking the question. John, I know there’s been a lot of discussion around kinda the pricing dynamic on the go forward. But I guess just if I’m reading your comments, or understanding your comments correctly, it does seem like the price cost lag has a potential negative price net of cost impact, at least through the first quarter. And then based on what Jacinth was saying, to the extent markets have remained in an unfavorable position relative to your expectations, that could linger really through the first half.

So I just I’m hoping to get a little bit more color in terms of when you think you kinda get back to parity from a price versus cost perspective? Or maybe said another way, when you actually get caught up if kinda the current dynamic holds into, you know, into the end of the year.

John Ghingo: Yeah. So what I would say is, you know, where we have the pass-through pricing in place across our portfolio, you know, it is a matter of timing. We will get caught up, and we’ll ride that up and down, but there will be lag. We tend to fare better when the are coming down. And it’s a little bit tougher when they are going up. Right? On the parts of the business where we are announcing list price changes in retail, it is a little bit different. Right? So as we took a round of pricing actions that we already announced. We’re evaluating potentially additional pricing actions as warranted and needed.

If you if you, you know, take a step back to the comment I made a few minutes ago, we will price where we need to from a commodity perspective, but we are gonna balance that. I mean, we are also focused on making sure our brands and categories stay healthy. You know, long-term growth, attracting consumers through this kind of cycle, of what is really low consumer sentiment, high consumer strain, as well as these very elevated markets, we just need to be measured and thoughtful. Disciplined around those decisions. So will continue to evaluate it. It’s dynamic, obviously.

Where we need to leverage, trade promotion as another variable in that mix to balance things for the consumer and profitability, we can do that as well.

Jacinth Smiley: Yeah. I’ll just quickly add and just remind you as well that we certainly are able to navigate, right, volatility what’s harder for us to do is navigate a really sharp runner. In market. Because it takes longer for us to then be able to impact our profitability in a positive way with that Schwab run up because of some of the lag time that John just mentioned.

Peter Galbo: Okay. Got it. And Jeff, you know, zooming back out, obviously, being the kind of second go around with the company, but I guess this is not the first time that, heightened inventory levels have become a question mark for Hormel, we went through this issue for, I know, a different reason a couple of years ago. But just I’m getting a lot of questions on kind of why take the inventory up to the levels that they are at kind of the peak of commodity cycle. And on top of that, just as you come back in, like, is the visibility just on cost and on, you know, just various cuts?

Like, has it is there a problem there from a from a system standpoint? It just seems like again, going back to when you guided, I know that it know, the cuts moved, but the drastic nature of kind of the miss relative to your expectations would suggest maybe there’s just a visibility problem and I’d love to get your thoughts there as you’ve stepped back in. Thanks very much.

Jeff Ettinger: I appreciate the question, Peter, and definitely look forward to meeting you in the coming months. It really probably John would be a little more appropriate to answer it because you know, five weeks in and have been tackling a lot of areas. But what you know, past decisions on where we put inventory weren’t one of them that I’m as familiar with.

Jacinth Smiley: Yeah. No. Maybe I’ll jump in first there. So just to clarify, we do not have an inventory problem. So the inventory build and the inventory balance that you see there, was intentional. So we had intentional bills to be able to supply our con our customers. And what I mentioned before is you the inventory balance may appear elevated because of the commodity piece and the input cost. One. And then there are other areas where we built intentionally because we need that from a demand perspective from our customers and in some cases where our fill rates were lower, right, the inventory was lower, so we needed to get our fill rates up.

To be able to get our service levels up. So, again, not an inventory problem.

Operator: Your next question comes from Pooran Sharma with Stephens. Your line is now open.

Pooran Sharma: Thanks for the question. Just maybe wanna get your perspective as obviously a big buyer of kind of pork cuts, and, you know, just being active in the hog market, it just seems like production has been pretty lackluster, especially over the past several weeks. And that’s that’s that seems like a bit more severe than what we would have thought just by looking at the June hogs and pigs report. And, you know, we’re seeing continued reduction in the breeding herd with partial offsets and efficiency. You know, based on kinda what you’ve been hearing how do you think about supply prospects for the hog industry or, you know, looking out to the intermediate term?

Jacinth Smiley: Good morning. So just a reminder that we do have long-term supply agreements. And so, right, with those contracts, we feel good about our ability to get supply in line with our consumer or customer demands and filling our customers.

Jeff Ettinger: I guess I’d just interject. I mean, pork producers are clearly in a very profitable mode right now, which I mean, in the long run, that’s gonna be more in supply. That may not be coming in the next couple months, but

Pooran Sharma: Got it. No. I think that makes sense. And I you know, high prices and high prices, low and low prices. I guess my follow-up, maybe we could shift to Turkey. And you guys talked about this a little bit on the last call. You know, industry supply tightening, potential capacity reductions, are you beginning to see any sort of potential market share gains or margin benefits materialize just from that dynamic itself? Or is the situation still largely the same? As it was last quarter?

John Ghingo: Yeah. Thank you for the question. This is John. I’ll talk about Turkey a little bit. So you know, when we when we talked about our ground Turkey business last quarter, we talked about some of those dynamics around the industry. We talked about escalating costs in the supply chain. We’ll Ground turkey in particular has continued to perform very, very well. Demand is strong. And if you look at what’s underneath that, we believe it’s enduring drivers of demand. So consumer interest in lean protein, and poultry is very strong. There are a number of different food tribes who are gravitating toward lean protein, and poultry is a great choice.

And ground turkey, in particular, has a that is super helpful for consumers just to plug into their daily needs of different meals and meal occasions. So demand on the ground turkey side remains very strong. To your question, about market share, so we are outpacing the category in terms of our branded growth significantly. We’re growing double digits. We’re outpacing category growth. We are gaining market share. We do have the number one brand. We love our position around ground turkey. We’re gonna continue to drive that. So I think, you know, whereas, you know, last quarter, we were sort of in this mode of needing to recoup margin and take pricing.

You know, we had to take that pricing. It was driven by inflation. Clearly, the dynamics around that but we really like how our brand is fared and how the category is fared through this third quarter.

Pooran Sharma: Great. Thank you for the color.

Operator: Your next question comes from Rupesh Parikh with Oppenheimer. Your line is now open.

Erica Eilah: Good morning. This is actually Erica Eilah on for Rupesh. Thanks for taking our questions. So I wanted to go back to profitability here and maybe big you’ve talked about the business in terms of the financial algorithm over time. But if we look at the business and if you go back a few years, this was a double-digit operating margin business. So I guess my question is, do you still view this as a double-digit margin business over time?

Jeff Ettinger: Thanks for the question, Erica. This is Jeff. I guess I’m gonna defer on a specific number in terms of the margin, but I do wanna talk about what we see as encouraging signs for bottom line going forward. I mean, clearly, we have sales momentum. We’re already growing earlier in the year, had a very solid quarter with 6% growth this time. The team will be actively focused on finding opportunities to enhance mix, to attain better margin results as well. We’ve talked about pricing. We’ve talked about how took pricing already, and that the benefit of that will, you know, kinda start coming in Q4 and definitely will be emerging by Q1.

We’ve talked about T and M, the current projects, and we’ll have as we said, give you an update on that on the next call. Jacinth mentioned in her earlier comments about the manufacturing changes, and sometimes it’s you know, like, one of them got announced Q2, the one about the 100-year-old plant related to our Columbus business. But, I mean, in talking to our operations manager, I mean, a couple of those lines are just moving in now. I mean, there’s a trailing benefit sometimes with some of these moves. We just announced a move, for example, in our Atlanta plant where we’re going to be running bacon elsewhere in the supply chain system.

But, again, that doesn’t happen in just a week. That takes a little time to materialize. And then we talked about SG&A. This quarter, SG&A was up 6%. And, ultimately, we wanna get into a position where the growth of SG&A is not outpacing sales. It has done that over the last couple of years, and so we are looking at possible cost reductions in that area as well.

John Ghingo: And just to double click, Erica, to Jeff’s comment around mix, just to add a little bit more color there. So I look at it in two ways. At the enterprise level, our food service business has very strong margins, and so our ability to continue to invest and drive disproportionate growth in our foodservice segment is critical. We have a consistent track record of driving growth in that business. Obviously, when the industry is healthier, we’ll be able to drive even more growth behind that business. So that’s kind of focus one at the enterprise level.

And then when you drop into retail, the focus there is to continue to drive our flagship and rising brands, which tend to have our higher margins and our advantaged businesses. And so, you know, we distort our investment to flagship and rising. We deprioritize. And even exit at times noncore less strategic businesses in retail. And you could see that play out in the numbers this past quarter. Where our flagship and rising brands grew over 3% in consumption, our total Hormel plot was up a point and a half in consumption. Right? So they are driving the growth for retail.

So obviously, we were impacted by commodity markets in the quarter, but strategically, from a mix perspective, that’s how we think about it at the enterprise level.

Erica Eilah: Okay. No. I appreciate all that color. And then just my just on top line. So strong organic sales growth this quarter. Are you expecting solid growth again in Q4. So do you believe you’re on a path to more sustainable organic sales growth going forward? Just curious if you’re confident that we’re at a sustainable inflection here.

John Ghingo: Yeah. I mean, we are confident in strategies to drive top line growth around the business. We absolutely are. If you kind of look across the segments, we think we have an advantaged model in food service with our direct selling force, with our value-added innovative solutions for operators. And we’re gonna continue to drive that. And to the extent that the industry picks up and gets healthier, we should be able to drive more growth behind food service. We also feel really good about our branded portfolio in retail. And our ability to market and connect better with consumers on solutions for those branded businesses, the value-added branded businesses in retail.

So our flagship and rising brands have been putting up consistent consumption growth, and we’re gonna continue to focus on that. So we do feel good about our plot, and our confidence in driving top line into the future.

Erica Eilah: Great. Thank you.

Operator: Ladies and gentlemen, as a reminder, your next question comes from Thomas Henry with Heather Jones Research. Your line is now open.

Thomas Henry: Good morning. Thanks for taking the question. Coming back to Turkey, will you experience any benefit from elevated breast meat pricing this year? Or would that be all in ’26? And then in addition, could you provide a rough split on the benefit from whole bird pricing expected in ’25 versus ’26? Thank you.

John Ghingo: Yeah. So on whole birds, you know, they are slightly better, you know, than what we had expected from our original outlook. But most of that upside is gonna be in next year around the fresh season, around Thanksgiving. And we don’t have, you know, any guidance around on breast meat right now.

Thomas Henry: Got it. Thanks for the call.

Operator: There are no further questions at this time. I will now turn the call over to Jeff Ettinger for closing remarks.

Jeff Ettinger: I want to thank everybody on the call for your thoughtful questions and engagement today. We understand the mission. It’s clear. We need to build on our top line momentum, and urgently return to bottom line growth. So that we can deliver long-term sustainable value. As I said, I look forward to meeting with you over the course of the year. Thank you.

Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.

The Fed Rate Cuts Will Only Make ARMs and HELOCs Cheaper


The Federal Reserve rate cuts that are now projected as soon as next month will likely only lower short-term rates.

That means those who are seeking a cheaper home equity line of credit (HELOC) or an adjustable-rate mortgage (ARM) may benefit.

While those who only feel comfortable in a long-term fixed-rate mortgage may see little to no relief.

This all has to do with the fact that the federal funds rate, which the Fed actually controls, is a short-term rate.

Conversely, they have no direct control over long-term rates, which are driven instead by underlying economic data.

Can a Friendly Fed Actually Lower Mortgage Rates?

Lately, we’ve seen the Trump administration make unconventional moves to create a new-look, friendlier Fed.

By friendlier, I mean more accommodative than the present one, currently helmed by Chair Jerome Powell.

Both President Trump and FHFA director Bill Pulte have been outspoken about ousting Powell, namely because he hasn’t cut rates as quickly as they desired.

Ironically, he cited a lack of uncertainty regarding things like tariffs, which the administration themselves implemented.

The most recent move to shift the dynamic of the Fed was the so-called “firing” of Fed Governor Lisa Cook for alleged mortgage fraud.

She has been accused of marking two properties as her primary residence in short succession.

In general, it’s easier to qualify for a mortgage on a primary residence, and mortgage rates are also lower if you’re primary home versus a second home or investment property.

The removal of Powell and Cook could usher in a more accommodating Federal Reserve that is more willing to lower the federal funds rate, even if not necessarily warranted.

But even if that happened, it might not translate to lower mortgage rates. As noted, the federal funds rate is a short-term, overnight rate banks charge one another when one is in need of cash.

Conversely, the most common mortgage in America is the 30-year fixed, which is anything but an overnight rate.

It’s a 360-month rate, though because mortgages often aren’t held to term, and are usually kept for just 10 years or so, they correlate better with 10-year Treasury bond yields.

The only difference is because they’re mortgages and not guaranteed government bonds, there is a mortgage rate spread that investors require to take on prepayment and credit risk.

Anyway, the point here is the Fed can only control short-term rates and most mortgages aren’t that.

This means there’s zero guarantee the 30-year fixed goes lower in the event the Fed decides to lower rates aggressively.

And in fact, 10-year bond yields could go up if the Fed monetary policy isn’t warranted. You need the underlying data, such as inflation and unemployment, to support a dovish Fed.

Without that data, the Fed will only be able to control the short end of the curve.

A New Look Fed Could Reduce Rates on ARMs and HELOCs

Now let’s talk about what the Fed could impact. If it follows through on lowering the federal funds rate, HELOCs will be directly impacted.

HELOCs are tied to the prime rate, which moves in lockstep with the FFR. So if the Fed cuts 25 bps, your HELOC rate goes down 0.25%.

They cut 50 bps, your HELOC rate drops by 0.50%. And so on and so forth. If they do this aggressively, HELOCs might get really popular as they get cheaper.

Of course, they can adjust higher as well when the Fed hikes, so if this scheme is short-lived, HELOC rates could shoot higher again.

The same goes for adjustable-rate mortgages, which are tied to mortgage indexes like SOFR, which stands for Secured Overnight Financing Rate.

If the Fed is cutting aggressively, rates on ARMs could become a lot more attractive as they do.

At the moment, ARMs aren’t priced much lower at most lenders relative to FRMs, but that could change if this new-look Fed thing happens.

By the way, if you want a cheaper ARM today, check out a local credit union as they tend to pass along bigger discounts than the banks and nonbank lenders.

What’s really interesting is if the Fed goes against the grain, aka the underlying economic data, we could see a much wider gulf between short-term and long-term interest rates.

A scenario where the 30-year fixed is still relatively expensive, while ARMs and HELOCs drift a lot lower.

That would make them more appealing to borrowers, though it arguably introduces more risk into the financial system if more homeowners have floating rates.

It’s one thing I worry about if the Fed loses its independence and objectivity.

Colin Robertson
Latest posts by Colin Robertson (see all)

How To Use Employer Tuition Reimbursement To Pay For College


Key Points

  • Hundreds of major U.S. employers (from Starbucks to Amazon) offer tuition reimbursement, often covering thousands of dollars per year.
  • Navigating these benefits requires careful planning: employees must understand eligibility rules, tax treatment, and program limits.
  • Tuition reimbursement can reduce or eliminate the need for student loans.

As the cost of college continues to rise, more students and families are turning to employer tuition reimbursement programs as a way to fund education without debt. These programs, offered by companies ranging from fast-food chains to tech giants, provide employees with financial support for accredited degree programs, professional certifications, and even graduate degrees like getting your MBA.

For workers, the appeal is straightforward: earn a paycheck while receiving substantial help with tuition. For employers, tuition assistance programs are a recruitment and retention tool in a competitive labor market.

The average annual benefit is about $5,200, with some companies covering 100 percent of tuition. Starbucks, Walmart, and Papa John’s reimburse all eligible tuition at partner universities. Others, like Microsoft and Goldman Sachs, provide up to $10,000 per year.

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How Tuition Reimbursement Programs Work

Most tuition reimbursement plans follow a similar structure: employees pay for classes upfront, then receive reimbursement after successful completion, often requiring a minimum grade. Some companies, such as Walmart and Disney, now cover costs upfront, reducing the financial strain on workers.

There’s also a new trend where some employers will provide full tuition at partner colleges and universities – such as Starbucks offering 100% coverage through Arizona State University’s online program. 

Eligibility varies. Some employers extend benefits to part-time workers, while others require full-time status or a minimum length of service. Reimbursement amounts may also differ based on whether an employee is pursuing an undergraduate degree, graduate degree, or job-related certification.

The Internal Revenue Service allows employers to provide up to $5,250 per year in tuition reimbursement as a tax-free benefit (similar to the $5,250 in tax-free student loan repayment assistance threshold which combines with this). Amounts above that threshold may be treated as taxable income, so employees need to track how much they receive in a calendar year.

It’s also important to realize that tuition reimbursement is a separate benefit from student loan assistance, though they overlap. Tuition reimbursement is to pay for college, student loan repayment assistance is for employees who already have student loans.

Strategies To Maximize The Tuition Benefits

For workers hoping to avoid student loans, maximizing tuition reimbursement requires careful planning:

  1. Choose the Right Employer: Not all jobs come with tuition reimbursement, but many entry-level positions do. A part-time job at Starbucks or Walmart could pay for an entire degree.
  2. Understand the Fine Print: Some programs require pre-approval from managers, restrict eligible schools, or limit reimbursement to job-related degrees. Employees should read the rules carefully to avoid surprises.
  3. Time Your Courses: Align coursework with reimbursement limits. If a company offers $5,250 annually, spreading classes across multiple years can ensure full coverage.
  4. Stack Benefits: Combine employer tuition reimbursement with scholarships, federal Pell Grants, or state aid. This reduces the chance of needing loans at all.
  5. Avoid Dropping Classes: Most companies only reimburse after successful completion. Failing or withdrawing from a course could leave the employee responsible for full tuition.

Student loan debt now exceeds $1.6 trillion in the United States, and the average borrower leaves school with more than $37,000 in loans. For those working at companies with great tuition reimbursement programs, much of that debt can be avoided.

Consider a Starbucks employee completing a four-year online degree at Arizona State University. With full tuition covered by the company, the worker can graduate without borrowing. Similarly, employees at Walmart or Papa John’s can pursue higher education at little or no cost, provided they remain with the company and meet program requirements.

These programs are not without challenges. Many require balancing work and school, and reimbursement caps may not cover all expenses at more expensive universities. Still, for motivated students, tuition reimbursement offers a path to a degree without the burden of loans.

Companies Offering Tuition Reimbursement Programs

The list of companies with tuition reimbursement programs is long and diverse, spanning industries from retail to finance to healthcare. We compiled this list of major companies using public data from July 2025:

Employer

Benefit

Adobe

Up to $10,000 per Year

Amazon

Up to 100% through Career Choice

Anthem

Up to $5,000 per Year

Apple

Up to $5,250 per Year

Articulate

Up to $5,250 per Year

Autodesk

Up to $5,250 per Year

AT&T

Up to $5,250 per Year

Bank of America

Up to $7,500 per Year

Baxter

Up to $5,250 per Year

Best Buy

Up to 100% through Degrees@Work

Blue Shield

Up to $5,250 per Year

Boeing

Unlimited, but Must Be STEM-Related

BP

Up to 90% for Approved Courses

Capital One

Up to $5,250 per Year

CarMax

Up to $5,250 per Year

Carvana

Up to $5,250 per Year

Chevron

Up to $5,000 per Year

Chick-Fil-A

Tuition Discounts And Scholarships

Chipotle

Up to $5,250 per Year And Grants

Chili’s

25% of your Tuition Costs

Cigna

Up to $5,250 per Year

Comcast

Up to $5,250 per Year

Course Hero

Up to $3,500 per Year

CVS Health

Up to $3,000 per Year

Deloitte 

100% of Eligible Graduate Degree

Disney

Up to $5,250 per Year

Eileen Fisher

100% of Job-Related Certificates and Degrees

Elevance Health

Up to $5,000 per Year

Experian

Up to $5,250 per Year

FedEx

100% of the cost at Utah Valley University

Fidelity

90% of Tuition up to $10,000 Annually

Ford

Up to $6,000 per Year

Gap

Up to $5,000 per Year

Geico

Up to $5,250 per Year

Genetech

Up to $10,000 per Year

Google

Up to $2,500 per Year

Goldman Sachs

Up to $10,000 per Year

Herschend Enterprises

100% of Tuition and Fees

Home Depot

50% of Tuition up to $6,000 Annually

Hubspot

Up to $5,250 per Year

Humana

Up to $5,000 per Year

iHerb

Up to $5,250 per Year

Intel

100% Paid at Intel University or $50,000 Lifetime

Intuit

Up to $5,250 per Year

JetBlue

100% via JetBlue Scholars

J.M. Smuckers

Up to $5,700 per Year for Undergrad, or $7,750 per Year for MBA

JPMorgan Chase

100% via Guild Partnership, or $5,250 Annually for Undergrad, $7,500 for MBA

Kaiser Permanente

Up to $3,000 per Year

KFC

Up to $20,000 through KFC Foundation

Kroger

$3,500 per Year up to $21,000 Lifetime

Lam Research

Up to $15,000 Per Year

LiveRamp

100% if Related to your Position

Lowe’s

100% via Guild Partnership

Lockheed Martin

100% of Job-Related Certificates and Degrees

Marco’s Pizza

Up to $5,250 per Year

McDonald’s

Up to $5,250 per Year

Meijer

$4,000 to $10,000 Scholarships

Microsoft

Up to $10,000 per Year

Nelnet

Up to $5,250 per Year

Novartis

Up to $5,250 per Year

Nuance

Up to $5,250 per Year

Nvidia

100% of Job-Related Certificates and Degrees

Oracle

Up to $5,250 per Year

Papa John’s

100% of Job-Related Certificates and Degrees

Paramount

Up to $10,000 per Year

Pareto Intelligence

70% of Job-Related Certificates and Degrees

PayPal

Up to $5,250 per Year

PEAK6

Up to $8,000 per Year

Pepsico

Up to $5,250 for Undergrad and $8,000 for Grad Students per Year

Peloton

Up to $5,250 per Year

Pilot Company

Up to $18,000 Lifetime

Pizza Hut

51% Discount at Excelsior College

Pluralsight

Up to $3,000 per Year

Proctor & Gamble

80% of Tuition up to $40,000 Lifetime

Publix

$3,200 per Year and up to $12,800 Lifetime

Qualcomm

Up to $5,250 per Year

Raytheon

Up to $5,250 per Year

ServiceNow

Up to $5,250 per Year

Spectrum

100% of Tuition at Partner Schools

Starbucks

100% of Tuition at ASU Online

Stryker

Up to $15,000 per Year

T-Mobile

Up to $5,250 per Year

Taco Bell

Up to $5,250 per Year Plus Scholarships

Target

Up to $5,250 per Year

TicketMaster

Up to $3,000 for Undergrad and $5,000 for Grad Programs per Year

Tinder

Up to $1,500 per Year

UPS

Up to $5,250 per Year with a $25,000 Lifetime Max

Verizon

Up to $8,000 per Year

Verifi

Up to $5,250 per Year

Vertafore

Up to $5,250 per Year

Walmart

100% Tuition at Partner Schools

Waste Management

100% Tuition at Partner Schools

Wells Fargo

Up to $5,000 per Year Plus Scholarships

Whirlpool

Up to $5,250 per Year

Key Takeaways

Employer tuition reimbursement is one of the most underutilized education and employment benefits in the U.S.

By carefully selecting employers, understanding program rules, and combining benefits with other forms of financial aid, students can significantly reduce or eliminate the need for student loans. In an era of rising college costs and uncertain loan forgiveness policies, these programs represent a practical way forward.

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The post How To Use Employer Tuition Reimbursement To Pay For College appeared first on The College Investor.

The Quit Rate Crash: Why Workers Are Staying Put


Dean Drobot / Shutterstock.com

Advertising Disclosure: When you buy something by clicking links within this article, we may earn a small commission, but it never affects the products or services we recommend. For the past six months, something unusual has been happening with wages that America has not seen since the darkest days of the Great Recession. CNBC reports that workers who stay put in their jobs are now seeing…

Building Your Organization’s Next Generation of Leaders


August 27, 2025

When Target announced in August 2025 that COO Michael Fiddelke would assume the company’s top spot in early 2026, attention quickly turned to his remarkable journey with the retail giant. Over two decades at Target, Fiddelke climbed from finance intern to the C-suite.  



making sense of financed emissions – Bank Underground


Lewis Holden

Over 95% of banks’ emissions are ‘financed emissions’. These are indirect emissions from households and businesses who banks lend to or invest in (banks’ asset exposures). Banks disclose these in line with regulations designed to help markets understand their exposure to climate-related risks and their impact on the climate. But emissions disclosures vary drastically between different banks with similar business models. Data quality and availability is cited as the key reason for this. In this post, I demonstrate that variations in financed emissions estimates are explained by the extent of banking activities and asset exposures rather than data quality and availability. For example, whether estimates capture a subset of loan exposures or wider banking activities such as bond underwriting.

Comparing financed emissions between banks can be challenging because financed emissions scale with asset exposures. In Table A, I summarise financed emissions from a subsample of globally systemically important banks (G-SIBs) disclosures. For comparability, G-SIBs in Table A are of similar size.


Table A: G-SIB financed emissions

G-SIB Financed emissions (MtCO2e)
A 4
B 19
C 46
D 115

Sources: G-SIBs’ climate-related disclosures and annual reports for financial years ending 2024.


How can these G-SIBs, which all operate globally with similar business models and asset exposures, report financed emissions an order of magnitude different from one another? Data quality is usually cited as the key impediment to accuracy and comparability. For instance, emissions disclosures mention ‘data quality’ or ‘data gap’ an average of 10 times. But is data really the core challenge?

The data argument goes like this. Households and businesses which banks lend to and invest in must disclose emissions before banks can aggregate these to calculate financed emissions. But the majority of banks’ asset exposures are households, consumers and unlisted corporates that do not disclose their emissions. Because disclosure requirements only apply to large, listed corporates. Large, listed corporates predominantly access finance via capital markets rather than loans. Therefore, banks need to estimate the emissions of the households and businesses who make up their asset exposures in order to calculate financed emissions.

Is data quality and availability the source of variation?

I compare three different financed emissions estimates for a sample of UK banks:

  1. Reported in banks’ climate disclosures.
  2. My estimation model, with proxy emissions data supplied by data provider A.
  3. My estimation model, with proxy emissions data supplied by data provider B.

The data providers I use are MSCI and LSEG. The estimate relating to each provider has been anonymised. Broadly, my estimates capture banks’ corporate and mortgage loan exposures, as recommended by the Partnership for Carbon Accounting Financials (PCAF). PCAF is the industry standard guidance for measuring financed emissions. Other exposures, such as consumer finance, and other banking activities, such as bond underwriting, are excluded.

In the absence of granular loan level data, my estimation model assumes banks’ borrowers can be proxied by an average. For example, loans to the UK transport sector are proxied by the mean carbon intensity for UK transport firms which disclose emissions data. This model has been developed by Bank staff and was applied in The Bank of England’s climate-related financial disclosure 2025.


Chart 1: Financed emissions disclosed by UK banks and estimated from my model

Sources: Banks’ climate-related disclosures and annual reports, MSCI and LSEG.


Despite the range of emissions data sources, proxies and aggregation methods, estimates fall within a range of around 10%. This implies the choice of emissions proxy data, and how estimation models aggregate this data, has a limited impact on aggregated financed emissions estimates.

Differences in financed emissions at the individual counterparty level may be more divergent. For example, the European Central Bank demonstrated that banks estimate a wide range of emissions for the same counterparty. My analysis does not dispute this. It simply demonstrates that when aggregated, financed emission estimates naturally converge towards the mean.

If data quality and availability don’t drive variations, what does?

The key driver of variance in financed emissions estimates is simply extent of business activities and asset exposures which banks estimate emissions for. I describe this as the ‘boundary’ of the estimate.

In Chart 1, I deliberately selected a subset of banks’ emissions reported on the basis of the same boundary as my model. This controlled for the boundary effect and isolated the effect of data quality and availability.

However, banks do not consistently disclose financed emissions on the basis of the same boundary. I identify three broad categories of boundary against which emissions can be estimated:

  1. Minimal boundary – an estimate for a subset of loan exposures. Often those deemed high climate risk, such as to oil and gas companies.
  2. PCAF boundary – an estimate covering most loan exposures. Excludes some loans with unknown use of proceeds, such as consumer finance.
  3. All activities boundary – an estimate for all activities banks undertake and all asset exposures. In addition to loans, this may include ‘facilitated emissions’ – eg from bond underwriting, as well as assets managed on behalf of clients and not owned by the bank.

In Chart 2, instead of comparing estimates on the basis of the same ‘PCAF’ boundary, I deliberately compare financed emissions estimates across boundaries for the same sample of UK banks as in Chart 1. As I have already determined that data quality and availability has limited impact in Chart 1, this comparison isolates the extent to which the boundary impacts estimates.


Chart 2: Impact of boundary on UK banks’ financed emissions estimates

Sources: Banks’ climate-related disclosures and annual reports, MSCI and LSEG.


Expanding the boundary from ‘Minimal to ‘PCAF’ (A) increases the financed emissions estimate by almost 50%. This is because the ‘PCA’ boundary captures the majority of loan book emissions, while ‘Minimal’ boundary only captures emissions associated with a subset of high climate risk loans. This increase is material because while ‘high climate risk’ loans are banks’ most carbon intensive, they represent a relatively small proportion of total loans. This is particularly the case for UK banks whose largest exposures are residential mortgages.

Expanding the boundary from ‘PCAF’ to All activities’ (B) increases the financed emissions estimate by almost another 50%. This is because the ‘All activities’ boundary captures emissions associated with the broadest range of banking activities, including assets under management. This effect is driven by the largest banks who undertake asset management and capital markets activities. The effect is more limited for banks which do not undertake these activities.

Interpreting emissions metrics across boundaries

Despite the variation in estimates of financed emissions across boundaries, there is no boundary which is superior. Instead, which boundary to rely on should depend on the use case.

In Table B, I propose a simple framework for how emissions metrics with different boundaries can proxy for two use cases – measuring climate-related financial risks and climate impact. ‘Financial risks’ means, for example, higher expected credit losses on loans. ‘Climate impact’ means banks’ contribution to climate change, such as the financing of carbon intensive activities.


Table B: Insights framework for financed emissions estimates

Financial risk proxy Climate impact proxy
Minimal boundary Limited insights Limited insights
PCAF boundary Most complete proxy Direct impacts only
All activities boundary Poorly correlated Most complete proxy

‘Minimal’ boundary estimates provide limited insights into banks’ financial risk exposure and impact. This is because they only capture a subset of banks’ activities.

‘PCAF’ boundary estimates are the most complete proxy for assessing banks’ exposure to climate financial risks. Loan exposures are the primary transmission channel through which financial risks will arise. This has been demonstrated in supervisory stress tests such as the 2021 Climate Biennial Exploratory Scenario. While other banking activities such as underwriting and asset management could expose banks to reputational and legal risks, the transmission of these risks into financial impacts is indirect.

‘All activities’ boundary estimates are the most complete proxy for climate impact. Banks’ impacts on climate change are not limited to direct loans and investments. The ‘PCAF’ boundary does not capture indirect impacts. For example, in managing investments in fossil fuel intensive companies, banks facilitate activity which will contribute to carbon emissions and subsequently climate impacts.

Conclusion

Differences in financed emissions estimates are caused by differences in the estimate boundary, not data quality. Transparency regarding estimate boundaries is therefore essential for interpretation of financed emissions metrics. No estimate boundary is best, with each offering insights into different use cases. The ‘PCAF’ boundary best proxies for banks’ exposure to financial risk, while the ‘All activities’ boundary best proxies for banks’ climate impact. The PCAF boundary should therefore be used by central banks in understanding climate financial risks, as well as in their own financial operations. Nonetheless, all emissions-based metrics are ultimately proxies. For financial risk purposes, they should be supplemented with more sophisticated tools such as scenario analysis.


Lewis Holden works in the Bank’s Financial Risk Management Division.

If you want to get in touch, please email us at bankunderground@bankofengland.co.uk or leave a comment below.

Comments will only appear once approved by a moderator, and are only published where a full name is supplied. Bank Underground is a blog for Bank of England staff to share views that challenge – or support – prevailing policy orthodoxies. The views expressed here are those of the authors, and are not necessarily those of the Bank of England, or its policy committees.

Amazon: Get 40% Off Using 1 Discover Point (Max $30 Discount)


Update 8/27/25: Deal is back, valid through 9/19/2025. 

Update 7/4/25: More people targeted, some for 40% off.

Update 6/18/25: Available again. This time $10 off $75+ or 30% off (max $30). Valid through 7/25/25.

The Offer

Direct link to offer | Here’s another link (affiliate link here and below)

Amazon is offering a discount when you use at least 1 Discover Cashback Bonus point at checkout:

  • Get 30% off your Amazon purchase when you use at least 1 Discover Cashback Bonus point at checkout. Max $15 in discounts.
  • There are other versions as well, such as $10 off $75.

See a full list of cards you can link to Amazon at this link. You’ll also see there all cards you’ve already linked.

The Fine Print

  • Amazon.com reserves the rights to cancel or modify this offer at any time.
  • Offer is available by invitation only, is non-transferable, is not redeemable for cash, and may not be resold.
  • Offer only applies to products sold by Amazon.com or Amazon.com Services LLC (look for “sold by Amazon.com” or “sold by Amazon.com Services LLC ” on the product detail page). Products sold by third-party sellers or other Amazon entities will not qualify for this offer, even if “fulfilled by Amazon.com” or “Prime Eligible”.
  • Offer does not apply to purchase of digital content.
  • Limit one promotion discount per Amazon.com account.
  • Offer may not be combined with other offers.
  • Shipping charges may apply to discounted promotional items.
  • If any of the products related to your original order are returned, subject to Amazon’s refund policy, you will receive a refund of the amount charged to your card first, followed by Cashback Bonus.

Deal History

  • Update 4/14/25: More people targeted.
  • Update 3/31/25: More targeted.
  • Update 2/26/25: More people targeted.
  • Update 1/27/25: Deal is back until 6/13/2025
  • Update 12/30/24: More people targeted.
  • Update 11/20/24: More people targeted.
  • Update 10/8/24: Back again through 1/10/25. This stacks well with the Discover 5% Q4 category of Amazon.
  • Update 8/11/24: Deal is back. For a lot of us it’s $10 off $75; others are getting 40% off (up to $40) or 30% off (up to $30). Valid through 9/27/24. I’m seeing both my accounts with Discover cards as eligible for this offer. (ht  reader teri)
  • Update 6/24/24: Available again until 7/26/2024.  Some people are getting 40%/$50 savings while most are getting $10 off $75.
  • Update 4/20/24: Available again through 6/14/24
  • Update 1/13/24: Available again.
  • Update 12/26/23: More people targeted.
  • Update 10/4/23: More people targeted. Valid through 12/31/23.
  • Update 8/5/23: More people eligible. Some are seeing even 40% back, up to $30.
  • Update 6/21/23: Offer  available again for 30% back, up to $30. There are other versions as  well. Valid until July 13th.
  • Update 6/6/23: Offer is back through 6/15/23
  • Update 3/30/23: More people targeted. Offer valid until 6/2/2023.
  • Update 3/13/23: More people targeted.
  • Update 1/22/23: Deal is back for 30% off, up to $15 savings. Valid until 6/2/2023. 
  • Update 12/18/22: More people targeted. There are now 30%/$30 and 40%/$40 versions available as well.
  • Update 10/30/22: This has extended through 12/31/22
  • Update 8/18/22: More targeted now, some are seeing $10 off $100, some $10 off $50, some 30% off up to $15.
  • Update 8/8/22: Some people are seeing $10 off $50 now.
  • Update 7/14/22: More targeted, currently valid through July 21, 2022
  • Update 6/7/22: More people targeted.
  • Update 5/2/22: There’s a new version at the same link for $30 off when spending $80. More people targeted now as well. (ht ChannelZ28) There’s another version as well for 40% off, up to $40 total discount.
  • Update 3/23/22: More people targeted.
  • Update 3/20/22: More people targeted.
  • Update 1/28/22: Offer has been renewed at the same link below. Valid through 5/31/22. This time it’s either 40% off (max $20 discount) or 30% off (max $15 discount) or $10 off $50. (hat tip to reader bankbonus)
  • Update 12/09/21: More people targeted.
  • Update 6/15/21: Deal has been extended until July 15, 2021. Again check for the 30/40% deal first.
  • Update 6/8/21: More people targeted, see if you’re targeted for the 30/40% deal first.
  • Update 5/11/21: More targeted. Some people are eligible for $10 off $50. Valid for 6/30/2021
  • Update 4/27/21: More targeted.
  • Update 2/17/21: More targeted. Hat tip to reader Sunny who got 40% off with a $20 max.
  • Update 2/7/21: Available again and more people targeted. Seems to be a $10 off $50 deal as well.

Our Verdict

It seems like lately you’re not eligible for this deal if you’ve done the same points deal within the last 12 months. Still worth checking to see if you are targeted or not and obviously a great deal if you are. This deal works on third party gift cards, but not Amazon or Visa gift cards. Samples gift cards available on Amazon:

  • Link to all physical gift cards on Amazon (scroll down to find the third party cards)
  • Link to all electronic gift cards on Amazon (scroll down to find the third party cards)
  • Visa gift card (digital or physical)
  • Safeway
  • Albertson’s
  • Best Buy (physical)
  • Netflix
  • Gamestop
  • Uber
  • Lyft
  • Airbnb
  • Hotels.com
  • Southwest
  • Starbucks
  • Chipotle
  • Nordstrom
  • Lowe’s