Financial Data and Key Metrics Changes - The company reported a record second quarter adjusted operating profit of $298 million, up 20% from $248 million in 2024, with an adjusted operating profit margin of 7.9%, improved from 7.3% in 2024 [5][30] - Consolidated sales for the second quarter were $3.8 billion, representing an 11% increase or $374 million compared to the prior year [30] - Adjusted net income from continuing operations was a record $217 million compared to $192 million in 2024, with adjusted EPS at $0.55 per share compared to $0.51 per share in 2024 [30] Business Segment Data and Key Metrics Changes - The packaged meat segment delivered an adjusted operating profit of $296 million with a margin of 14.2%, despite higher raw material costs, and sales increased by 6.9% year over year [7][31] - The fresh pork segment reported an adjusted operating profit of $30 million, up from $17 million in 2024, with a margin of 1.4% [8][32] - The hog production segment achieved an adjusted operating profit of $22 million, compared to a loss of $10 million in 2024, driven by improved market conditions [9][33] Market Data and Key Metrics Changes - The company noted a 4.5% increase in sales volume for packaged meats, with a 2.3% increase in average selling price driven by higher market prices for pork [31] - Fresh pork segment sales increased by 5% year over year, primarily due to a 3.3% increase in average selling price and a 1.7% increase in volume [33] - Hog production segment sales increased by 8.4% year over year, despite a 24% reduction in the number of hogs produced [34] Company Strategy and Development Direction - The company has five strategic growth priorities: increasing profits in packaged meats, growing fresh pork profits, achieving a best-in-class cost structure in hog production, optimizing operations, and evaluating M&A opportunities [11][12] - The focus is on enhancing product mix, volume growth, and innovation in the packaged meat segment, which represents 55% of consolidated sales [12][14] - The company aims to maximize product value across channels in the fresh pork segment and optimize operations in hog production to improve profitability [22][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating a dynamic consumer spending and geopolitical environment, raising the full-year outlook for adjusted operating profit [10][11] - The company anticipates total sales growth in the low to mid-single-digit percent range compared to fiscal 2024, with adjusted operating profit expectations for packaged meats and fresh pork remaining stable [37] - Management highlighted the importance of delivering value and convenience to consumers, particularly in the packaged meats segment, amidst cautious consumer spending [12][18] Other Important Information - The company has a strong balance sheet with a net debt to adjusted EBITDA ratio of 0.7 times and liquidity of $3.2 billion [35] - Capital expenditures for the first half were $158 million, with over 50% allocated to projects driving top and bottom line growth [36] - The company plans to pay a quarterly dividend of $0.25 per share, expecting to maintain a total annual dividend of $1 per share [36] Q&A Session Summary Question: Insights on consumer shift within brands and private label trends - Management noted that while there is an increase in private label share growth, the company's private label business provides a competitive advantage due to high-quality offerings [46][47] Question: Visibility on hog prices and profitability between hog production and fresh pork - Management indicated confidence in hog production profitability, supported by favorable market conditions and operational improvements [49][50] Question: Confidence in packaged meats profitability amidst rising raw material costs - Management emphasized efficiency improvements and a diversified product portfolio as key factors in maintaining profitability despite rising costs [56][58] Question: Dynamics around hog production hedging and mark to market impacts - Management clarified that mark to market adjustments impacted second quarter results but overall business performance remains strong, supporting the raised outlook [64][66] Question: Expectations for volume performance in packaged meats in the second half - Management expressed confidence in volume growth driven by product innovation and strong foodservice sales, with expectations for continued momentum [75][76]

Financial Data and Key Metrics Changes - The company reported a record second quarter adjusted operating profit of $298 million, up 20% from $248 million in 2024, with an adjusted operating profit margin of 7.9%, improved from 7.3% in 2024 [5][28] - Consolidated sales for the second quarter were $3.8 billion, representing an 11% increase or $374 million compared to the prior year [28] - Adjusted net income from continuing operations was a record $217 million compared to $192 million in 2024, with adjusted EPS at $0.55 per share compared to $0.51 per share in 2024 [28] Business Segment Data and Key Metrics Changes - The packaged meat segment delivered an adjusted operating profit of $296 million with a margin of 14.2%, despite higher raw material costs, and sales increased by 6.9% to $2.1 billion [29] - The fresh pork segment reported an adjusted operating profit of $30 million, up from $17 million in 2024, with a margin of 1.4% [30] - The hog production segment achieved an adjusted operating profit of $22 million, compared to a loss of $10 million in 2024, with sales increasing by 8.4% to $840 million [31][32] Market Data and Key Metrics Changes - The company noted a 4.5% increase in sales volume for packaged meats, driven by a favorable product mix and a later Easter holiday [29] - Fresh pork segment sales increased by 5% year over year, primarily due to a 3.3% increase in average selling price and a 1.7% increase in volume [31] - The hog production segment's sales increase was attributed to higher external grain and feed sales and the sale of commercial hog inventories [32] Company Strategy and Development Direction - The company has five strategic growth priorities: increasing profits in packaged meats, growing fresh pork profitability, achieving a best-in-class cost structure in hog production, optimizing operations, and evaluating synergistic M&A opportunities [11] - The focus remains on enhancing product mix, volume growth, and innovation in the packaged meat segment, which represents 55% of consolidated sales [12][14] - The company aims to maximize product value across channels in the fresh pork segment and optimize operations to deliver efficiencies [21][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating a dynamic consumer spending and geopolitical environment, raising the full-year outlook for adjusted operating profit primarily due to improved hog production segment performance [10][11] - The company anticipates total sales growth in the low to mid-single-digit percent range compared to fiscal 2024, with adjusted operating profit expectations for packaged meats and fresh pork remaining stable [36][37] - Management highlighted the importance of delivering value and convenience to consumers, particularly in the packaged meats segment, amidst cautious consumer spending [12][13] Other Important Information - The company has a strong balance sheet with a net debt to adjusted EBITDA ratio of 0.7 times and liquidity of $3.2 billion [34] - Capital expenditures for the first half were $158 million, with over 50% allocated to projects driving growth [35] - The company paid quarterly dividends of $0.25 per share and expects to maintain a $1 per share annual dividend [35] Q&A Session Summary Question: Insights on consumer shifts within packaged meats and private label trends - Management noted that while there is an increase in private label share growth, their private label business provides a competitive advantage due to high-quality offerings [46][47] Question: Visibility on hog prices and their impact on profitability - Management indicated confidence in hog prices supported by market dynamics and improvements in hog production operations [49][50] Question: Confidence in packaged meats profitability amidst rising raw material costs - Management emphasized efficiency improvements and a strong product portfolio that allows them to mitigate raw material cost impacts [56][58] Question: Dynamics around hog production hedging and mark-to-market impacts - Management clarified that mark-to-market adjustments impacted second quarter results but overall business performance remains strong, leading to an increased full-year outlook [63] Question: Expectations for volume performance in packaged meats - Management expressed confidence in volume growth driven by product innovation and strong foodservice sales [72][73] Question: Competitive environment for packaged meats and promotional activity - Management highlighted a focus on quality over quantity in promotional strategies, leading to improved profit margins [80][81]

Financial Performance - Smithfield achieved a record second quarter adjusted operating profit of $298 million, a 20% year-over-year increase [25, 81] - The adjusted operating profit margin was 7.9%, up 60 basis points year-over-year [25, 81] - Adjusted net income reached $217 million, up 12.8% compared to the previous year [81] - Adjusted earnings per share (EPS) increased by 7.8% to $0.55 [81] Segment Performance - The Packaged Meats segment delivered $296 million in adjusted operating profit with a 14.2% adjusted operating margin [25] - The Fresh Pork segment saw a 74.4% increase in adjusted operating profit [97] - Hog Production segment sales increased by 8.4% [102] Strategic Initiatives - The company is focused on increasing profits in the Packaged Meats segment through enhanced product mix and volume growth [28] - Smithfield is optimizing operations to offset inflation by delivering operating efficiencies in manufacturing, supply chain, distribution, procurement, and SG&A [28] - The company is evaluating synergistic M&A opportunities across North America [27] Capital Allocation - Smithfield is returning value to shareholders through quarterly dividends of $0.25 per share and an anticipated annual dividend of $1.00 per share [25] - The company's capital allocation strategy includes driving growth through product innovation and marketing, reinvesting in the business to improve automation and operating efficiencies, and opportunistic M&A [107] Financial Position - The ratio of net debt to adjusted EBITDA is 0.7x [131]

Core Viewpoint - Smithfield Foods, Inc. reported strong financial results for the second quarter of fiscal 2025, demonstrating resilience and agility in a dynamic macroeconomic environment, with an increase in sales and profitability across its segments [4][5]. Financial Highlights - **Second Quarter Fiscal 2025**: - Net sales reached $3.8 billion, an increase of 11.0% compared to the second quarter of 2024 [6]. - Operating profit was $260 million, with an adjusted operating profit of $298 million [6]. - Packaged Meats segment sales were $2.079 billion, up 6.9% year-over-year [5]. - Fresh Pork segment sales increased to $2.080 billion, a 5.0% rise [5]. - Hog Production segment sales grew by 8.4% to $840 million [5]. - **First Six Months Fiscal 2025**: - Total net sales amounted to $7.6 billion, reflecting a 10.2% increase from the first half of 2024 [6]. - Operating profit for the first half was $582 million, with an adjusted operating profit of $624 million [6]. - Packaged Meats operating profit was $567 million, down 7.9% from the previous year [8]. - Fresh Pork operating profit decreased by 30.4% to $117 million [8]. - Hog Production segment saw a significant increase in profitability, with adjusted operating profit rising to between $0 million to $100 million for the year [16]. CEO Perspective - The CEO highlighted the company's strong performance and improved outlook for the Hog Production segment, emphasizing the ability to invest in growth strategies and generate long-term shareholder value [4][5]. Financial Position - As of June 29, 2025, Smithfield had $3.225 billion in available liquidity, including $928 million in cash and cash equivalents [10]. - The company ended the second quarter with a net debt to adjusted EBITDA ratio of 0.7x [10]. Dividend Update - The company announced a quarterly dividend of $0.25 per share, maintaining an annual dividend rate of $1.00 per share for fiscal 2025 [12]. FY 2025 Outlook - Smithfield raised its full-year adjusted operating profit outlook, reaffirming total company sales to increase in the low-to-mid-single-digit percent range compared to fiscal year 2024 [16]. - The company also reaffirmed capital expenditures between $400 million to $500 million for the year [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]

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]

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]