Core Viewpoint - Smithfield Foods, Inc. has announced a quarterly dividend payment of $0.25 per share, reflecting the company's commitment to returning value to shareholders [1] Company Overview - Smithfield Foods, Inc. is a leading American food company specializing in packaged meats and fresh pork products, with a diverse brand portfolio and strong relationships with U.S. farmers and customers [2]

I rate Smithfield Foods (NASDAQ: SFD ) with a buy rating. I believe the company is taking the necessary steps to increase its profitability in the upcoming years. The company aims to increase its revenues fromDaniel Mellado is an economist from Carabobo University with a Master's Degree in Statistics from Simon Bolivar University, both obtained in Venezuela.Daniel worked analyzing the agricultural commodity market and the financial investment portfolio for an agribusiness group. Then, he managed two teams, ...

Core Viewpoint - Smithfield Foods, Inc. will release its financial results for Q2 of fiscal 2025 on August 12, 2025, before market open, followed by a conference call to discuss the results [1] Group 1: Financial Results Announcement - The financial results for the second quarter of fiscal 2025 will be released before market open on August 12, 2025 [1] - A conference call is scheduled for 9:00 a.m. Eastern Time to discuss the financial results [1] - A live audio webcast of the conference call will be available online [1] Group 2: Conference Call Replay - A recorded replay of the conference call will be available approximately three hours after the call concludes [2] - The replay can be accessed online and via telephone with a specific pin number [2] - The replay will be available until August 19, 2025 [2] Group 3: Company Overview - Smithfield Foods, Inc. is a leading American food company specializing in packaged meats and fresh pork products [3] - The company has a diverse brand portfolio and strong relationships with U.S. farmers and customers [3] - Smithfield Foods aims to responsibly meet the global demand for quality protein [3]

Investment Rating - The report indicates a solid total food sales growth of +2.8%/+3.2% year-over-year for the latest 4 weeks and 12 weeks, aligning with the long-term trend of low single-digit growth [1][6]. Core Insights - Total food sales growth is primarily driven by pricing, although there is a noted decline in volumes across most packaged food categories, with HSY being an exception due to pricing support [1][9]. - All companies within the coverage have lost market share in their top categories, indicating competitive pressures [1][10]. Department & Category Detail - Total food sales increased by +2.8% year-over-year in the latest 4 weeks, with private label products leading in most categories [2]. - Total equivalent (EQ) units decreased by -0.5% year-over-year, with branded products slightly outperforming private label products [2][5]. - Yogurt and packaged coffee showed the highest sales growth at +13.5% and +13.4% year-over-year, respectively, with private label sales growth strongest in snack/variety packs, meal combos, and packaged coffee [5][7]. Company Performance - CAG reported a sales decline of -1% year-over-year, driven by lower prices, while volumes remained flat [9]. - GIS experienced a -2% year-over-year sales decline, attributed to lower volumes [10]. - HSY saw a sales increase of +5% year-over-year, supported by higher prices and volumes [11]. - K reported a -3% year-over-year sales decline, primarily due to lower volumes [12]. - KHC's sales declined by -4% year-over-year, with lower volumes impacting performance [13]. - MDLZ reported a -1% year-over-year sales decline, driven by lower prices [14]. - SFD experienced a -1% year-over-year sales decline, although packaged lunchmeat showed strong growth [15].

Company Overview - Farmland, founded in 1959, is dedicated to delivering high-quality, flavorful meats and has a strong commitment to quality and craftsmanship [5] - The brand is part of Smithfield Foods, a leading American food company known for its packaged meats and fresh pork products [6] New Product Launch - Farmland has introduced a new Premium Ground Pork line with two flavor varieties: Original and Taco Style, designed for versatility in various dishes [2] - The company also launched Julienne Turkey, which is fully cooked and sliced, aimed at enhancing salads, wraps, and casseroles [3] Brand Commitment - The new campaign emphasizes the brand's mission of providing the best quality food, reaffirmed by the slogan "Our Best for Your Best" [4] - Farmland's products are now available at select retailers, reflecting the brand's ongoing commitment to quality since its inception [4]

Smithfield Foods (NASDAQ: SFD ) is a producer and processor of pork, and is the largest producer of pork-based products in the world . Domestically, SFD has a top market share in several prepared food categories, such asBuildingBenjamins is a free stock picking and market commentary investment newsletter. Building Benjamins is the DBA (doing businesses as) publishing entity for Tradition Investment Management, LLC, a registered investment adviser. Benjamin Halliburton, our founder, also founded Tradition Ca ...

Core Insights - Seeking Alpha welcomes a new contributing analyst, Abdul-Rahman Bhery, who is encouraged to share investment ideas and insights [1] Group 1 - The new analyst has a strong background in equity research and investment analysis, holding certifications such as FMVA and FPWMP, which enhance skills in financial statement analysis and valuation modeling [2] - The analyst has participated in the CFA Research Challenge, gaining practical experience in equity analysis and industry research [2] - The focus of the analyst's research is primarily on the U.S. equity market, particularly in the consumer staples sector, which is viewed as offering resilient long-term investment opportunities [2] Group 2 - The analyst has experience preparing investment reports across various sectors, including healthcare, consumer staples, and industrials, which has improved the ability to evaluate companies across diverse industries [2] - The analyst holds a degree in Finance from Alexandria University, graduating in 2024 with a CGPA of 3.6, indicating a solid academic foundation in finance [2]

Financial Performance - Sales for the three months ended March 30, 2025, were $3,771 million, an increase of 9.5% compared to $3,444 million for the same period in 2024[8] - Gross profit for the same period was $510 million, up 40.9% from $362 million year-over-year[8] - Net income from continuing operations attributable to Smithfield was $224 million, representing a 96.5% increase from $114 million in the prior year[8] - Comprehensive income attributable to Smithfield for the three months ended March 30, 2025, was $267 million, compared to $105 million for the same period in 2024[9] - Operating profit for the consolidated entity was $321 million for Q1 2025, compared to $163 million in Q1 2024, marking a significant increase of approximately 96.3%[35] - Other comprehensive income for the three months ended March 30, 2025, was $43 million, compared to a loss of $24 million for the same period in 2024[99] Assets and Equity - Total assets as of March 30, 2025, were $11,146 million, a slight increase from $11,054 million at the end of 2024[12] - Total shareholders' equity increased to $6,225 million as of March 30, 2025, compared to $5,834 million at the end of 2024[12] - Cash and cash equivalents at the end of the period were $928 million, down from $943 million at the end of 2024[12] - Accounts receivable increased to $680 million as of March 30, 2025, from $494 million as of December 29, 2024, indicating a rise of 37.6%[57] - Total inventories decreased slightly to $2,385 million as of March 30, 2025, from $2,412 million as of December 29, 2024[59] Cash Flow and Capital Expenditures - The company reported net cash flows used in operating activities of continuing operations of $(166) million for the three months ended March 30, 2025[14] - Capital expenditures for the same period were $79 million, compared to $92 million in the prior year[14] - The company completed its IPO on January 29, 2025, issuing 26,086,958 shares at $20.00 per share, raising net proceeds of $236 million[92] Segment Performance - The Packaged Meats segment generated sales of $2,024 million in Q1 2025, compared to $1,999 million in Q1 2024, reflecting a year-over-year increase of about 1.3%[35] - The Fresh Pork segment reported sales of $2,033 million in Q1 2025, up from $1,938 million in Q1 2024, indicating a growth of approximately 4.9%[35] - The Hog Production segment reported sales of $932 million in Q1 2025, compared to $706 million in Q1 2024, representing an increase of approximately 32%[35] - The Packaged Meats segment's operating profit was $266 million in Q1 2025, compared to $286 million in Q1 2024, showing a decline of about 7%[35] - The Fresh Pork segment's operating profit was $82 million in Q1 2025, down from $110 million in Q1 2024, showing a decrease of 25.5%[35] Strategic Initiatives - The company completed the acquisition of a dry sausage production facility for $38 million on July 30, 2024, to enhance its value-added packaged meats business[45] - The carve-out and distribution of European operations to WH Group was completed on August 26, 2024, marking a strategic shift in geographical focus[39] - The company will supply approximately 3.2 million hogs annually to Murphy Family Farms as part of its restructuring strategy[52] Derivative Instruments and Hedging - As of March 30, 2025, the total fair value of derivative instruments was $47 million, an increase from $15 million on December 29, 2024[63] - The notional volume of open derivative instruments designated in cash flow hedging relationships included 722,379,000 pounds of lean hogs and 37,180,000 bushels of corn[68] - For the three months ended March 30, 2025, the total derivative loss recognized in sales was $2 million, compared to a loss of $12 million for the same period in 2024[74] - The company recognized pre-tax gains of $45 million on commodity contracts in other comprehensive income for the three months ended March 30, 2025[68] Legal and Contingent Liabilities - The company reported contingent liabilities of $141 million related to litigation matters[122] - The company made aggregate payments of $194 million to settle class claims in antitrust price-fixing litigation[124] - The company intends to vigorously defend against ongoing antitrust litigation claims, including those related to wage-fixing violations[127]

Financial Performance - Smithfield Foods reported net sales of $3.8 billion for the first quarter of fiscal 2025, an increase of $327 million or 9.5% compared to the same period in 2024[4]. - Operating profit reached $321 million, up $158 million or 97% year-over-year, with an operating margin of 8.5%, compared to 4.7% in Q1 2024[4][6]. - Adjusted operating profit was $326 million, reflecting an increase of $150 million or 86% from the first quarter of 2024, with an adjusted operating margin of 8.6%[4][6]. - The Hog Production segment saw a significant increase in sales, rising by $226 million or 32.0% to $932 million compared to Q1 2024[5]. - Packaged Meats operating profit was $266 million, with an operating profit margin of 13.1%[4][6]. - Sales for the three months ended March 30, 2025, increased to $3,771 million, up from $3,444 million for the same period in 2024, representing a growth of 9.5%[23]. - Net income from continuing operations attributable to Smithfield for the three months ended March 30, 2025, was $224 million, compared to $114 million for the same period in 2024, reflecting a 96.5% increase[29]. - Adjusted EBITDA from continuing operations for the three months ended March 30, 2025, was $396 million, compared to $261 million for the same period in 2024, indicating a growth of 51.8%[32]. - The net income margin from continuing operations improved to 6.0% for the three months ended March 30, 2025, compared to 3.3% for the same period in 2024[32]. - Net income from continuing operations increased to $912 million for the twelve months ended March 30, 2025, compared to $798 million for the previous year, representing a growth of 14.3%[35]. - Adjusted EBITDA from continuing operations rose to $1,514 million, up from $1,379 million, reflecting an increase of 9.8% year-over-year[35]. Financial Position - The company maintains a strong financial position with $3,230 million in available liquidity, including $928 million in cash and cash equivalents[7]. - The net debt to Adjusted EBITDA ratio stands at 0.7x as of March 30, 2025, indicating a solid leverage position[7]. - Total current assets increased to $4,334 million as of March 30, 2025, from $4,202 million as of December 29, 2024, marking a rise of 3.1%[25]. - Total liabilities decreased to $4,921 million as of March 30, 2025, from $4,934 million as of December 29, 2024, showing a reduction of 0.3%[25]. - Cash and cash equivalents at the end of the period were $928 million, down from $943 million at the beginning of the period, a decrease of 1.6%[27]. - The ratio of total debt and finance lease obligations to net income from continuing operations improved to 2.2x, down from 2.5x[35]. - The ratio of net debt to adjusted EBITDA from continuing operations decreased to 0.7x, compared to 0.8x in the prior year[35]. Future Projections - Smithfield anticipates total company sales to increase in the low-to-mid-single-digit percent range compared to fiscal year 2024[13]. - The company projects adjusted operating profit for the Packaged Meats segment to be between $1,050 million to $1,150 million for fiscal 2025[13]. - An annual dividend rate of $1.00 per share is expected for fiscal 2025, with quarterly dividends of $0.25 per share[8]. Operational Changes - The company undertook a workforce reduction initiative, resulting in a total severance cost of approximately $9 million[29]. - The company reported a reduction in workforce resulting in a cost saving of $9 million during the quarter[38]. - The company incurred $6 million in insurance recoveries, impacting the overall financial results positively[38]. - The Hog Production Reform initiative contributed an additional $1 million to the operating profit for the quarter[38]. - The company is focusing on market expansion and new product development to drive future growth[36].

Financial Data and Key Metrics Changes - The company reported consolidated sales of $14.1 billion in 2024, a decrease of 3% compared to the prior year, primarily due to lower fresh pork harvest levels and lower external grain sales [23] - Adjusted operating profit for 2024 was over $1 billion with an adjusted operating margin of 7.2%, compared to $258 million and 1.8% in 2023 [10][24] - Adjusted net income from continuing operations attributable to the company was $714 million in 2024, up from $132 million in the prior year, with adjusted EPS rising to $1.88 from $0.35 [24][25] Business Line Data and Key Metrics Changes - The packaged meats segment achieved an adjusted operating profit of $1.1 billion, a 6% increase year-over-year, with margins expanding by 70 basis points to 13.6% [26] - Fresh pork segment adjusted operating profit increased by 93% to $105 million, driven by cost savings and strong demand for U.S. pork [29] - The hog production segment reported an adjusted operating loss of $152 million, significantly improved from a loss of $756 million in 2023 [33] Market Data and Key Metrics Changes - The U.S. value-added packaged meats market represents a $46 billion opportunity, with the company holding the number two branded market position by volume across 25 key categories [7][8] - The average sales price in the packaged meats segment increased by 3.1%, which offset a 2.5% decline in volume [26] - Fresh pork segment sales increased by 0.5% to $7.9 billion, with an average sales price increase of 5.4% [30] Company Strategy and Development Direction - The company aims to continue expanding packaged meats operating profit through product mix improvements, volume growth, and innovation [14][40] - A focus on reducing hog production to approximately 30% of the needs of the Fresh Pork segment is part of the strategy to lower exposure to commodity market risk [12][20] - The company is also exploring opportunistic mergers and acquisitions in North America to support growth [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver continued operating profit expansion in 2025, despite a cautious consumer spending environment and rising input costs [14][40] - The hog production segment is expected to return to profitability in 2025, with improvements in cost structures and market conditions [33][54] - Management highlighted the importance of operational efficiencies and cost savings initiatives to mitigate inflationary pressures [21][67] Other Important Information - The company declared a quarterly dividend of $0.25 per share, reinforcing its commitment to return value to shareholders [9][39] - The net debt to adjusted EBITDA ratio improved to 0.8 times, down from 2.2 times at the end of 2023, indicating a strong balance sheet [14][37] Q&A Session Summary Question: Sales guidance for the year and volume relative to price expectations - Management indicated that top line growth is expected in the low to mid single-digit range, driven by modest volume growth and market appreciation [49] Question: Improvements in industry profitability for hog production - Management noted significant improvements in cost structures and a return to profitability in the hog production segment is anticipated for 2025 [51][54] Question: Volume drivers for packaged meats and fresh pork - Management highlighted the importance of brand positioning and product mix optimization as key drivers for growth in packaged meats [62] Question: Impact of global trade environment on customer behavior - Management acknowledged some minimal disruptions due to tariffs but emphasized their preparedness and flexibility in navigating these challenges [70][72] Question: Seasonal strength in hog production - Management confirmed that the first quarter is expected to perform significantly better than the previous year, despite traditional seasonality [81] Question: Hog supply and production expansion - Management indicated that the industry is currently balanced, with no immediate appetite for significant production expansion despite improved profitability [84][86] Question: Consumer behavior shifts and trade spending - Management observed some shifts in consumer behavior but emphasized their strong brand portfolio's ability to capture market share across different economic conditions [102][106]