Core Insights - Smithfield Foods reported a record year for profit and cash generation in 2025, with adjusted operating profit reaching $1.3 billion, a 30% increase from the previous year, and an adjusted operating margin expanding to 8.6% from 7.2% in 2024 [5][6] Hog Production - Adjusted operating profit for hog production was $176 million, the highest since 2014, driven by improved commodity markets and operational optimization [1] - Sales increased by 13% to $3.4 billion, despite a 23% reduction in hogs produced, attributed to a rationalization strategy [1] Fresh Pork - Adjusted operating profit for fresh pork was $209 million in 2025, despite a $135 million decline in the industry market spread [2] - Sales reached $8.3 billion, up 6%, primarily due to a 5.8% increase in average selling price with roughly flat volume [2] Packaged Meats - Fiscal 2025 sales for packaged meats were $8.8 billion, a 5.3% increase, supported by a 5.6% rise in average selling price [3] - The segment achieved profitability despite $525 million in raw material cost increases [3] Financial Performance - Fourth-quarter adjusted operating profit was $402 million, with adjusted net income from continuing operations at $329 million, the second highest on record [4] - Full-year adjusted net income was $1.0 billion, with adjusted diluted EPS of $2.55, a 36% increase from 2024 [4] Capital Allocation - The company paid $1 per share in dividends in 2025 and anticipates annual dividends of $1.25 per share in 2026 [8] - Year-end net debt to adjusted EBITDA was 0.3x, with liquidity of $3.8 billion [9] M&A Activity - Smithfield entered an agreement to acquire Nathan's Famous for $102 per share, which is expected to be immediately accretive [11] - The acquisition is seen as a way to secure a core national brand and create growth opportunities [11] Future Investments - A planned investment of up to $1.3 billion over three years for a new processing facility in Sioux Falls is underway, expected to provide significant efficiency gains [12] - Groundbreaking is anticipated in the first half of 2027, with operations starting by the end of 2028 [12] 2026 Outlook - Management guided for low-single-digit sales growth in 2026, with adjusted operating profit ranges provided for different segments [13][17] - Strong protein demand is expected to support growth, with pork positioned as a value option compared to beef [14] Operational Improvements - The company is accelerating technology deployment, including AI and robotic process automation [16] - In 2025, the company produced 11.1 million hogs, down from 14.6 million in 2024, reflecting a rightsizing strategy [16]

Financial Data and Key Metrics Changes - For Q1 fiscal year 2026, total revenues reached $1.35 billion, an increase of 18.5% year-over-year, with consolidated comp sales up 18.8% [16] - Adjusted diluted EPS for the quarter was $1.93, up from $0.95 last year [16] - Restaurant operating margin improved to 16.2%, a 270 basis points increase year-over-year, primarily driven by sales leverage [17] - Adjusted EBITDA for the first quarter was approximately $172.4 million, a 54.4% increase from the prior year [19] Business Line Data and Key Metrics Changes - Chili's reported same-store sales growth of 21.4%, driven by a 13.1% increase in traffic, a 4.3% positive mix, and a 4% price increase [16] - Maggiano's experienced a decline in comp sales of -6.4% for the quarter [17] Market Data and Key Metrics Changes - Chili's outperformed the casual dining industry by 1,650 basis points in same-store sales growth [5] - The customer base for Chili's is growing across all income levels, with the fastest growth seen in households earning under $60,000 [9] Company Strategy and Development Direction - The company is focusing on stabilizing and improving Maggiano's through the "Back to Maggiano's" strategy, which emphasizes classic recipes, improved service, and guest-facing repairs [12][14] - Chili's is ramping up its reimage program and expects to complete four remodel pilot restaurants by the end of the quarter [20] - The company aims to return to positive net new unit growth for Chili's and stabilize Maggiano's performance [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to maintain strong sales growth despite economic uncertainties and anticipated higher commodity inflation [22] - The first quarter is expected to be the strongest year-over-year, with more moderate gains anticipated in subsequent quarters [23] - Management remains focused on long-term growth and strategic investments, despite challenges in the macroeconomic environment [24] Other Important Information - The company repurchased $92 million of common stock under its share repurchase program [20] - The adjusted tax rate for the quarter increased to 18.5%, driven by higher sales [19] Q&A Session Summary Question: How does Chili's plan to leverage tokenized consumer data to enhance engagement? - Management plans to track monthly cohorts of new guests to understand their repeat visitation and the impact of menu initiatives on guest frequency [26][28] Question: How is the value platform performing against expectations? - The value platform is performing well, with significant lifts observed from recent advertising campaigns, particularly the $10.99 burger deal [30][31] Question: What insights can be shared regarding younger consumers? - Younger consumers are returning as frequently as other guests, and marketing efforts are focused on maintaining relevance with this demographic [39][40] Question: What is the status of the food renovation journey? - The company is progressing with food renovations, including a chicken sandwich platform and plans to bring back the old skillet queso due to customer demand [42][43] Question: How is the North of Six initiative progressing? - The initiative is yielding positive results, with improvements in scheduling and operational efficiency being implemented across the system [71][74] Question: What are the expectations for Maggiano's turnaround compared to Chili's? - The turnaround for Maggiano's is expected to be slower due to its smaller size and less national marketing presence, but management is optimistic about stabilizing and growing the brand [80][83]

Financial Data and Key Metrics Changes - For Q1 fiscal year 2026, total revenues reached $1.35 billion, marking an 18.5% increase year-over-year, with consolidated comp sales up 18.8% [14][16] - Adjusted diluted EPS for the quarter was $1.93, a significant rise from $0.95 in the previous year [14] - Restaurant operating margin improved to 16.2%, reflecting a 270 basis points increase year-over-year, primarily driven by sales leverage [16][18] Business Line Data and Key Metrics Changes - Chili's reported same-store sales growth of 21.4%, driven by a 13.1% increase in traffic, a 4.3% positive mix, and a 4% price increase [15][16] - Maggiano's experienced a decline in comp sales of -6.4%, with a focus on stabilizing and improving the brand through the "Back to Maggiano's" strategy [16][19] Market Data and Key Metrics Changes - Chili's has outperformed the casual dining industry by 1,650 basis points in same-store sales growth [4] - The customer base for Chili's is growing across all income levels, particularly among households earning under $60,000, indicating a shift in market dynamics [8][9] Company Strategy and Development Direction - The company is ramping up its reimage program for Chili's, with four remodel pilot restaurants expected to be completed by the end of the quarter [6][19] - The "Back to Maggiano's" plan focuses on improving service levels, restoring classic recipes, and enhancing guest experience [12][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining strong sales growth despite anticipated challenges such as higher commodity inflation and economic uncertainty [20][21] - The company expects Q2 to be strong but anticipates that same-store sales will normalize to mid-single-digit growth for the remainder of the fiscal year [21][22] Other Important Information - The company repurchased $92 million of common stock under its share repurchase program, reflecting a disciplined capital allocation strategy [19] - The adjusted tax rate for the quarter increased to 18.5%, driven by accelerated sales growth [18] Q&A Session Summary Question: How does Chili's plan to leverage tokenized consumer data to enhance engagement? - Management indicated that they are learning to use tokenized data to track guest frequency and understand the impact of menu initiatives on customer retention [23][24] Question: What is the performance of the value platform? - The value platform is performing well, with the $10.99 message driving significant market share for Chili's [25][26] Question: What is the outlook for younger consumers? - Management noted that younger consumers are returning as frequently as other guests, and marketing efforts are focused on maintaining relevance with this demographic [30][31] Question: What is the status of the menu renovation? - The company is progressing with menu renovations, including a chicken sandwich platform and plans to bring back the old skillet queso due to customer demand [34][35] Question: How is the North of Six initiative progressing? - The initiative is ongoing, with improvements in scheduling and equipment being implemented to enhance restaurant performance [59][61] Question: What is the impact of commodity inflation on margins? - Management indicated that commodity inflation may lead to flat to slightly positive margins, with ongoing adjustments to pricing strategies [47][49]