Summary of Smithfield Foods FY Conference Call Company Overview - **Company**: Smithfield Foods (NasdaqGS:SFD) - **Annual Sales**: Over $15 billion [2] - **Key Segment**: Packaged meats business generating over $1 billion in segment profit [3] Financial Performance - **Sales for Trailing 12 Months**: $15.3 billion [3] - **Adjusted EBITDA**: $1.6 billion [3] - **Packaged Meats Segment Sales**: $8.7 billion, representing 57% of total sales [4] - **Adjusted Segment Profit Margin**: 12.7% [4] - **Liquidity**: $3.1 billion with a net debt to Adjusted EBITDA ratio of 0.8 times [5] - **Record Adjusted Operating Profit**: Achieved each quarter of 2025 despite challenging market conditions [5] Market Position and Growth Opportunities - **U.S. Value-Added Packaged Meats Market**: Approximately $46 billion [4] - **Market Share**: Number-two ranked across 25 categories with a 93% ACV and 81% repurchase rate [4] - **Growth Rate**: Packaged meats business grew at 6% through the first nine months of 2025 [6] - **Future Outlook**: Strong outlook for 2026 with expectations of continued volume and share growth through innovation [10] Vertical Integration Advantage - **Hog Production**: Producing about 11.5 million head, supplying 80% of raw materials for packaged meats [15] - **Cost Structure**: Best-in-class operations across the vertically integrated network, reducing raw material costs [16] Innovation and Product Development - **Product Categories**: Focus on expanding in categories like packaged lunch meat, where Smithfield holds a 9% market share [19] - **New Product Lines**: Introduction of Prime Fresh Slice Deli for convenience and double-digit growth in dry sausage category [22][23] - **Food Service Innovations**: Emphasis on pre-cooked products to reduce labor costs and meet consumer needs [25] Competitive Environment and Pricing Strategy - **Promotional Strategy**: Focus on brand strategy rather than deep discounting, resulting in flat to growing market share [28][29] - **Pricing Power**: Ability to maintain pricing despite inflationary pressures, with a strategy to renegotiate contracts with private label customers [33] Future Strategic Direction - **Protein Strategy**: Maintaining an 80% pork and 20% beef split, with potential for opportunistic expansion in non-pork proteins [30] - **M&A Strategy**: Focus on bolt-on acquisitions to fill capacity gaps, particularly in the dry sausage category and potential expansion in Mexico [41][44] Ownership Structure - **Current Ownership**: WH Group remains a long-term shareholder post-IPO, with local management running day-to-day operations [47] Key Takeaways - **Operational Excellence**: Continued focus on cost savings and efficiency to offset inflation [35] - **Market Misunderstanding**: The market may underestimate Smithfield's ability to deliver results despite macroeconomic challenges [54]

Core Insights - Smithfield Foods, Inc. reported strong financial results for the third quarter of fiscal 2025, achieving record operating profit despite challenging market conditions [4][5][7]. Financial Highlights - For the third quarter, net sales reached $3.7 billion, reflecting a 12.4% increase compared to the same period in 2024 [7]. - Operating profit was $310 million, with an operating margin of 8.3% [7]. - Packaged Meats segment generated an operating profit of $226 million, with an operating profit margin of 10.8% [7]. - For the first nine months of fiscal 2025, net sales totaled $11.3 billion, up 10.9% from the previous year [7]. Segment Performance - Packaged Meats sales increased by 9.1% to $2.09 billion in the third quarter [6]. - Fresh Pork sales rose by 12.0% to $2.185 billion [6]. - Hog Production segment sales grew by 10.1% to $813 million [6]. - Total segment sales for the third quarter amounted to $5.22 billion, a 10.5% increase year-over-year [6]. CEO Commentary - The CEO emphasized the company's disciplined execution of strategies, which led to sales growth and record operating profit [4]. - The company benefited from vertical integration, with higher profits in the Hog Production segment offsetting raw material cost challenges [5]. Financial Position - As of September 28, 2025, the company had $3.069 billion in available liquidity, including $773 million in cash [10]. - The net debt to adjusted EBITDA ratio was reported at 0.8x [10]. Dividend Information - The company paid dividends of $0.25 per share in April, May, and August 2025, with an anticipated annual dividend rate of $1.00 per share for fiscal year 2025 [12]. Fiscal Year 2025 Outlook - The company raised its full-year adjusted operating profit outlook to between $1.225 billion and $1.325 billion [16]. - Adjusted operating profit for the Packaged Meats segment is now projected to be between $1.060 billion and $1.110 billion [16].

Core Insights - Smithfield Foods, Inc. reported strong financial results for the second quarter of fiscal 2025, demonstrating resilience in a dynamic macroeconomic environment [4][5] - The company raised its full-year adjusted operating profit outlook due to solid performance in the first half and an improved outlook for the Hog Production segment [5] Financial Highlights for Q2 Fiscal 2025 - Consolidated sales reached $3.786 billion, an increase of 11.0% compared to the same period in 2024 [6] - Operating profit was $260 million, with an adjusted operating profit of $298 million, resulting in operating margins of 6.9% and 7.9% respectively [6] - Packaged Meats segment sales were $2.079 billion, up 6.9%, while Fresh Pork sales increased by 5.0% to $2.080 billion [5][6] Financial Highlights for First Half Fiscal 2025 - Total net sales for the first half were $7.558 billion, a 10.2% increase from the first half of 2024 [7] - Operating profit for the first six months was $582 million, with an adjusted operating profit of $624 million, leading to operating margins of 7.7% and 8.3% respectively [6][7] - Packaged Meats operating profit was $567 million, down 7.9% from the previous year, while Fresh Pork operating profit decreased by 30.4% to $117 million [8] Financial Position - As of June 29, 2025, the company had $3.225 billion in available liquidity, including $928 million in cash and cash equivalents [9] - The net debt to adjusted EBITDA ratio was 0.7x, indicating a strong financial position [9] Dividend Update - The company paid dividends of $0.25 per share on April 22 and May 29, 2025, and announced another dividend of $0.25 per share to be paid on August 28, 2025 [11] - The anticipated annual dividend rate for fiscal 2025 is $1.00 per share, subject to the Board's discretion [11] FY 2025 Outlook - The company reaffirmed its total sales growth outlook in the low-to-mid-single-digit percent range compared to fiscal year 2024 [16] - Adjusted operating profit for the Packaged Meats segment is expected to be between $1.050 billion to $1.150 billion, while the Fresh Pork segment is projected to be between $150 million to $250 million [16]