Smithfield Foods (SFD) Q1 2026 Earnings Transcript

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DATE

Tuesday, April 28, 2026 at 9 a.m. ET

CALL PARTICIPANTS

• President and Chief Executive Officer — Shane Smith
• Chief Financial Officer — Mark Hall
• President, Packaged Meats — Steven J. France
• President, North America Pork — Donovan Owens
• Vice President, Investor Relations — Julie MacMedan

TAKEAWAYS

• Record adjusted operating profit -- $339 million, up 4%, with a margin of 8.9%, driven primarily by Packaged Meats results and strict cost management.
• Packaged Meats segment -- Operating profit reached $275 million (up 4%) on $2.1 billion sales (up 6%), with volume increasing 3.5% and average sales price rising 2.6%; operating margin was 12.8%, down 30 basis points due to holiday ham mix and higher input costs.
• Packaged Meats market share -- Unit share in key focus areas rose with cooked dinner sausage volume up 9% (unit share +0.8 points) and dry sausage up 10% (unit share +1.1); Prime Fresh volume grew 26% with an 18% increase in points of distribution.
• Fresh Pork segment -- Operating profit was $78 million (margin 3.9%, down vs. prior year), with sales at $2 billion (down 1%), as volume declined 2.6% mainly from winter storm disruptions and reduced China export volumes; average sales price increased 1.5%.
• Hog Production segment -- Operating profit was $4 million, up from $1 million, reflecting higher hog prices, lower feed costs, and efficiency gains; sales declined 17% due to last year's $155 million one-time sale to joint ventures.
• Other segment -- Operating profit fell $3 million to $12 million, as bioscience losses offset Mexico profit increases.
• Corporate expenses -- Down $3 million, or 11%, versus last year, attributed to ongoing continuous improvement programs.
• Liquidity and leverage -- Liquidity at quarter-end was $3.7 billion, including $1.4 billion in cash; leverage ratio stood at 0.4x adjusted EBITDA.
• Adjusted net income and EPS -- Adjusted net income reached $251 million (up 11%); adjusted diluted EPS was $0.64 (up 10%).
• Capital expenditures -- $88 million, up from $79 million, with over half directed at growth and cost-reduction projects.
• Dividend -- Quarterly dividend paid was $0.255 per share; 2026 annual dividend target is $1.25 per share, pending board approval.
• Marketing investment -- Advertising and promotion spend rose 23%, supporting national brands and value-added product launches.
• Foodservice channel -- First quarter sales up 4% for Packaged Meats (volume +1%), and Fresh Pork foodservice sales up 27%.
• Guidance -- Management reaffirmed full-year outlook, maintaining Packaged Meats operating profit range of $1.1 billion–$1.2 billion and continued cost mitigation efforts against input inflation and freight volatility.
• M&A activity -- Acquisition timeline for Nathan’s Famous brand pushed to later in 2026 due to CFIUS review process delays related to government shutdown.

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RISKS

• Mark Hall stated, "higher-than-expected input inflation versus last year, most notably for Packaged Meats in beef and turkey," and ongoing "pressure in supply chain costs," especially diesel and resin-based packaging, are impacting margins.
• Fresh Pork volumes declined due to "temporary winter storm disruptions" and lower China export sales resulting from tariff disruption that began April 2025.
• Other segment profit decreased by $3 million, attributed to losses in bioscience partially offset by increased results in Mexico.

SUMMARY

Smithfield Foods (NASDAQ:SFD) delivered record quarterly adjusted operating profit, highlighting the strength of its Packaged Meats business as both volume and unit share increased in high-margin categories despite market volatility. While Fresh Pork experienced volume and profit headwinds from weather disruptions and export declines, domestic retail growth in value-added pork and foodservice channel sales offset some pressures. Management emphasized the success of its mix and innovation strategies, a robust new product pipeline, and targeted marketing investment, with confidence in deploying levers to mitigate input and transportation inflation throughout the year. The ongoing delay in closing the Nathan’s Famous brand acquisition, paired with cautious consumer and geopolitical conditions, underscores a measured, risk-aware approach to growth. Liquidity and leverage remain well within company policy thresholds, supporting continued investment and dividend payments.

• First quarter operating cash flow saw a net outflow of $665 million due to seasonality, with trailing twelve-month cash flows surpassing $1.1 billion.
• Hog Production improved profit to $4 million, but results were down sequentially from the prior quarter, in line with seasonal trends.
• Approximately 40% of Packaged Meats retail sales came from private label, providing flexibility as consumers shift price tier preferences.
• Smithfield Foods is on track to internally supply about 30% of Fresh Pork needs, aiming for optimal cost-risk balance and earnings durability.
• Leadership referenced increased incidence of PRRS and PEDV, with USDA now projecting pork production growth at 1.4%, revised down from 2.5%.
• Volume growth in lunch meat reached 11.1%, outperforming an industry decline of 6.5%, resulting in a one-point share increase.
• Optimization initiatives reduced transport miles by one million in 2025 over 2024, with a further one million in reductions projected for 2026.
• Capital projects included major plant automation and a forthcoming Sioux Falls facility, described as the company’s largest and most efficient combined plant pending final approvals.

INDUSTRY GLOSSARY

• PRRS: Porcine Reproductive and Respiratory Syndrome, a viral disease affecting hog health and production efficiency.
• PEDV: Porcine Epidemic Diarrhea Virus, a contagious disease impacting piglet mortality and production.
• Cutout: The calculated value of a hog carcass based on the amalgamated market prices of wholesale pork primal cuts, used as a benchmark for product pricing.
• CFIUS: Committee on Foreign Investment in the United States, a federal body reviewing foreign acquisitions for national security concerns.
• AR monetization: Practice of accelerating cash flow by selling or pledging accounts receivable for immediate liquidity.

Full Conference Call Transcript

Julie MacMedan: Thank you, Operator, and good morning, everyone. Welcome to Smithfield Foods, Inc.’s first quarter 2026 earnings call. Earlier this morning, we announced our results. A copy of the release, along with today’s presentation, is available on our Investor Relations website. Today’s presentation contains projections and other forward-looking statements that are being provided pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all comments reflecting our expectations, assumptions, or beliefs about future events or performance that do not relate solely to historical periods. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections.

These risks and uncertainties include, but are not limited to, the factors identified in the release, in our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, and our other filings with the Securities and Exchange Commission. The company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Please refer to our legal disclaimer on Slide 2 of the presentation for additional information. Today’s presentation will also include certain non-GAAP measures including, but not limited to, adjusted operating profit and margin, adjusted net income, adjusted earnings per share, and adjusted EBITDA.

For a reconciliation of these and other non-GAAP measures to the corresponding GAAP measures, please refer to our earnings press release and our slide presentation on our website. Finally, all references to retail volume and market share are based on Circana ViQ/Total US MULO+ data. With me this morning are Shane Smith, President and CEO; Mark Hall, CFO; Steven J. France, President of Packaged Meats; and Donovan Owens, President of North America Pork. With that, I will now turn the discussion over to Shane. Shane?

Shane Smith: Thank you, Julie. Good morning, everyone. I am pleased to report record first quarter adjusted operating profit of $339 million and an adjusted operating profit margin of 8.9%. Our outstanding results reflect disciplined execution of our long-term strategies, particularly in packaged meats, reinforcing the benefits of our vertically integrated model in a dynamic operating environment. Looking at profit by segment, Packaged Meats delivered operating profit of $275 million, up 4% versus 2025. Packaged Meats sales of $2.1 billion increased by 6% compared to 2025. This was driven by volume growth of 3.5%, primarily reflecting the earlier Easter holiday. Excluding the impact of the earlier Easter timing, our volume was still up 1.3%.

We also saw a 2.6% increase in average sales price, related to higher raw material market prices and disciplined pricing across our brand portfolio. We reported Packaged Meats segment operating profit margin of 12.8%, which was down modestly from last year, driven primarily by the earlier Easter increasing the mix of holiday hams, higher raw material input costs, and continued consumer caution in the quarter. Fresh Pork reported operating profit of $78 million with an operating profit margin of 3.9%, which was down slightly versus 2025. We saw lower production volume in our East Coast operations due to temporary winter storm disruptions, as well as lower gross margin as China export volumes decreased year over year.

As a reminder, the tariff disruption was introduced in April 2025, impacting the year-over-year comparison in the first quarter. Our Hog Production segment delivered operating profit of $4 million, up from $1 million in 2025, driven by improved commodity dynamics, including higher selling price and lower feed cost, and improved operating efficiency on our retained farms. This marked the fifth consecutive quarter of production segment profitability and underscores the ongoing benefits from our transformational strategy. We have reduced the number of internally produced hogs, closed and exited underperforming farms and geographies, and successfully lowered our cost structure through improved genetics, herd health, procurement, and nutrition savings. Finally, our culture of continuous improvement drove meaningful cost savings during the first quarter.

In addition to efficiencies within our segments, corporate expenses were down 11% versus last year. In short, we delivered record first quarter profit led by strong Packaged Meats segment performance and solid execution across the organization. Our financial position continues to be rock solid. We ended the quarter with liquidity of $3.7 billion and leverage of just 0.4 times, providing significant flexibility to support our growth strategies and deliver shareholder value over the long term. Now turning to our outlook for fiscal 2026, we continue to navigate a challenging external environment with the Middle East conflict adding another layer of macro volatility. For us, that flows through higher freight, packaging, and agricultural input costs.

Our experienced team is managing through this the same way we have in past cycles: pricing and mix, disciplined spending, productivity initiatives, hedging, and contract and procurement actions. The U.S. consumer continues to be cautious and we are focused on delivering value and nutrition for families. As households make every dollar count, our portfolio of trusted brands provides affordable protein solutions without compromising on quality. Protein continues to resonate with consumers given its nutritional benefits and versatility, and within the protein complex, pork remains competitively positioned. Core Smithfield Foods, Inc. categories—lunch meat, bacon, sausage, and hot dogs—offer accessible everyday protein options that align well with current value-oriented purchasing behavior.

Against this backdrop, we believe staying focused on our five key strategies will help us grow sales and profitability in 2026 and over the long term. First, in Packaged Meats, we plan to continue to grow operating profit through ongoing product mix improvements, volume growth, and innovation. Improving product mix remains a core margin expansion strategy. We are increasing the mix of higher-margin value-added product categories and expanding unit velocity while reducing volume of lower-margin commodity-type product categories. A great example of this is converting large holiday hams into products like our Prime Fresh lunch meat, which increases units and purchasing occasions while expanding margins.

Coming out of 2025, we saw strong momentum in these value-added categories and that carried over into 2026. During the first quarter, we grew units and market share in our four higher-margin focus areas. For example, we grew units sold of cooked dinner sausage by 9% in the quarter, gaining 0.8 points of unit share growth, and dry sausage by 10%, gaining 1.1 points of unit share growth. We expect these higher-margin categories to continue to deliver strong unit growth throughout 2026. We are capitalizing on the significant opportunity to drive volume growth and gain share across our portfolio. We participate in 25 key packaged meat subcategories at retail, 10 of which are valued over $1 billion.

We are focused on driving volume growth through increased distribution and disciplined brand investment. During the first quarter, we increased branded volume share for the 25 categories in total by 1.6% and gained branded volume share of 0.4 points. A key contributor to growth was increased points of distribution, which were up a strong 5.5% versus last year. We also continue to invest in marketing and trade promotion for our brands. One of the top-performing categories was packaged lunch meat, which grew volume by 11.1% while the industry was down 6.5%. This led to a more than one point increase in our packaged lunch meat volume share. Smithfield Prime Fresh is one of our most important packaged lunch meat brands.

We grew Prime Fresh volume by 26% with an 18% increase in points of distribution in the first quarter. Looking ahead, we see continued white-space opportunities to grow volume and increase market share in our top 25 categories. As part of our broader growth strategy, and in addition to trade promotions, we are increasing investment in television and digital advertising to build awareness and support the long-term growth of our national brands—Smithfield, Eckrich, and Nathan’s Famous. We are also growing volume by delivering what consumers want. A key competitive advantage for Smithfield Foods, Inc. is our ability to offer a broad portfolio of quality branded products that spans multiple categories and price points.

This portfolio strategy allows us to retain consumers within our brands as they trade up and down the value spectrum. Additionally, roughly 40% of our Packaged Meats retail sales are private label, which allows us to capture sales if consumers trade out of brands and into private label. Overall, the combination of branded and private label offerings enables us to forge multiyear strategic partnerships with our customers, supporting volume growth across our portfolio. That brings us to product innovation. We focus on introducing new flavors, convenient and easily prepared meals, and package sizes that range from snack sizes to family-value offerings. Our new product pipeline for 2026 is robust, with launches scheduled throughout the year.

For example, in the first quarter, product innovation drove 12% year-over-year volume growth in Armour dry sausage, and more than 22% volume growth in Curly’s refrigerated barbecue meats, supported by new snacking formats and globally inspired flavors. Our latest introduction in April was a new Smithfield premium pork bratwurst lineup featuring three bold flavors, including a limited-time Pabst Blue Ribbon beer brat. We look forward to sharing more new product innovations throughout the year. We have talked a lot about retail, but foodservice is also an important channel for Packaged Meats, representing roughly 30% of sales. During the first quarter, we increased foodservice channel sales by 4% with volume up 1%.

Foodservice customers view us as a scaled, trusted provider of high-quality products that can deliver value-added solutions, saving time and money. Innovation is a key advantage for us in the foodservice channel, as evidenced by the introduction of 12 new limited-time offers in the first quarter alone. Even as food-away-from-home inflation remains elevated, our scale, innovation, and value-added solutions are resonating with operators focused on driving traffic and margin. Moving to our second core growth strategy, growing Fresh Pork profitability, we are focused on maximizing the net realizable value across channels and continuing to improve operating efficiencies.

We are executing our strategies to increase Fresh Pork operating profit in 2026 as follows: growing volume in the retail channel, emphasizing higher-margin value-added case-ready and marinated offerings; expanding adjacent channel opportunities such as pharmaceuticals and pet food; increasing automation and driving plant efficiency, yield optimization, and supply chain savings; and optimizing harvest levels across our network, all while remaining agile in export markets. During the first quarter, we grew sales in the retail channel by 3% with a 6% increase in sales of value-added case-ready and marinated items.

We are driving growth in value-added pork through innovation, like our February launch of Smithfield Half Loin Filets featuring several bold flavors while also delivering convenient package sizes for today’s smaller households. In April, we launched our new Smithfield Meal Ready Cups platform. These sliced, marinated, premium pork cuts deliver globally inspired flavors in minutes and are perfect for today’s consumers who want convenience without compromising taste. In short, our new value-added offerings are helping drive mix and margin improvements by meeting the strong demand for nutritious protein at a great value relative to beef and by expanding pork’s relevance across multiple cuisines and usage occasions.

Like our Packaged Meats segment, our Fresh Pork segment is also focused on driving growth in the foodservice channel, and we can leverage synergies across these two segments to optimize our go-to-market strategy. During the first quarter, we grew Fresh Pork foodservice channel sales by 27%. This reflects increased sales of value-added categories as well as strong sales of ribs, which are a great alternative to more expensive beef. From an adjacent channel standpoint, we are seeing continued interest in the pharmaceutical and pet food channels, and we are capitalizing on that interest.

Across our Fresh Pork segment, our team has been nimble, employing a next-best-sales strategy, maximizing net realizable value, and seizing the opportunity of the relative value of pork. Now to our strategy to optimize hog production. We continue to progress toward a best-in-class cost structure in hog production and have made great strides. During 2026, we delivered improved operating efficiency on our retained farms. That, coupled with favorable hog and feed markets, helped increase operating profits to $4 million from $1 million a year ago. Going forward, our team remains dedicated to realizing additional efficiencies. Over the medium term, we continue to progress toward our goal of producing approximately 30% of Fresh Pork’s needs internally.

We believe this will provide an optimal balance of assured supply and cost risk management and will continue to improve earnings durability across the whole company. Across the company, we drive a culture of continuous improvement. We have a no-stone-left-unturned approach each year, looking for new ways to improve operating efficiency and reduce costs. We expect efficiency savings to again contribute to enhanced profitability in 2026. In our Packaged Meats and Fresh Pork processing plants, we see further opportunities to employ automation and improve processes to increase yields and drive efficiency.

For example, we continue to optimize our network by moving dry sausage production from smaller and older East Coast plants to our most technologically advanced and efficient facilities, such as Nashville. Our new Sioux Falls processing plant will be the most modern, efficient, and largest combined Fresh Pork and Packaged Meats processing plant in our network. We look forward to sharing more information once we have secured final approvals. Across the organization, we are deploying technology to improve efficiency, lower cost, and redeploy talent to higher-value activities. And our continued investment in improving supply chain operations is helping us navigate some of the near-term inflation in transportation costs. Finally, we continue to evaluate opportunistic M&A to support our growth strategies.

In January, we entered into an agreement to acquire one of our top national Packaged Meats brands, Nathan’s Famous. Our anticipated timeline to close the transaction is now in 2026 due to the impact of the partial government shutdown on statutory deadlines for the CFIUS review process. Successfully closing the acquisition will secure our rights to the brand for the long term and we are looking forward to maximizing Nathan’s Famous brand growth across the retail and foodservice channels. We will remain disciplined in evaluating additional complementary and synergistic M&A opportunities to bolster our organic growth. In summary, we delivered record first quarter results led by strength in Packaged Meats, and consistent execution across our vertically integrated model.

By continuing to execute our five core growth strategies, we are successfully navigating a dynamic consumer and geopolitical environment to drive growth in 2026 and over the long term. With that, I will turn it over to Mark to review our financials in more detail.

Mark Hall: Thank you, Shane, and good morning to everyone joining the call. As Shane stated, we are off to a strong start in 2026, building on a record year in 2025, and our strong balance sheet and cash flow give us the financial flexibility to invest in growth, pay a competitive dividend, and ultimately create value for our shareholders. Turning to the details of our first quarter results, starting with the consolidated results, and then a review of our performance by segment. Consolidated sales in the first quarter were $3.8 billion, which was a 1% increase compared to the prior year.

The increase was primarily driven by higher Packaged Meats and Mexico sales, driven by strong volume growth, which more than offset a $155 million headwind from nonrecurring hog production sales to our joint venture partners in the prior year. Excluding these one-time sales, consolidated sales increased 5% versus a year ago. We delivered record adjusted operating profit of $339 million, which was up 4% compared to adjusted operating profit of $326 million in the first quarter 2025. Adjusted operating profit margin expanded by 30 basis points to 8.9% from 8.6% last year. First quarter 2026 adjusted net income was also a record $251 million, up 11% from $227 million in 2025.

Adjusted diluted EPS of $0.64 per share increased 10% compared to $0.58 per share in 2025. Next, our first quarter segment results. Our Packaged Meats segment delivered first quarter operating profit of $275 million, up $9 million from last year, and operating profit margin of 12.8%. This was down 30 basis points from last year, driven primarily by the earlier Easter this year, which increased the mix of holiday hams, as well as higher raw material input costs and continued consumer caution during the quarter. First quarter Packaged Meats sales of $2.1 billion increased by 6% compared to 2025.

Sales were driven by volume growth of 3.5%, reflecting the earlier Easter holiday, combined with a 2.6% increase in average sales price related to higher raw material market prices and disciplined pricing across our brand portfolio. Excluding seasonal holiday ham sales, Packaged Meats grew volume 1.3%, underscoring our ability to win in a challenging consumer spending environment. Turning to Fresh Pork, for 2026 we delivered operating profit of $78 million and an operating profit margin of 3.9%. This was down slightly from $82 million and 4% in 2025.

In the first quarter, the industry market spread was favorable, up 7% versus 2025, with the CME lean hog price up 0.6% year over year and a 1.1% increase in the USDA cutout. However, the favorable market spread was offset by lower production volume due to temporary winter storm disruptions in our East Coast operations, as well as lower gross margins driven by lower China export volumes year over year. We were able to partially offset these headwinds with our next-best-sales strategy, including more higher-margin value-added sales in the U.S. retail channel. Fresh Pork segment sales of $2 billion decreased 1% year over year.

This was driven by volume down 2.6% due to the factors I mentioned, which was somewhat offset by an average sales price increase of 1.5%. Our average sales price increase was above the increase in the USDA cutout, reflecting the benefits of our next-best-sales strategy. Next, in Hog Production, we are pleased to report $4 million of profit for 2026, up from $1 million in 2025. This is down sequentially from the fourth quarter of last year but in line with seasonal norms for hog production. Improved Hog Production segment profitability was driven by improved commodity dynamics, including higher selling prices and lower feed costs, and improved operating efficiency on our retained farms.

First quarter 2026 Hog Production segment sales of $769 million decreased by 17% year over year, primarily reflecting the one-time initial sale of inventory to our external joint ventures last year in the amount of $155 million. While the average selling price for hogs increased 1%, we saw a 4%, or 125 thousand head, decrease in the number of hogs marketed. Taking a look at our Other segment, which includes our Mexico and bioscience operations, operating profit of $12 million was down $3 million versus the prior year due primarily to softer sales and related losses in bioscience that were partially offset by increases in Mexico.

Our corporate expenses came in $3 million, or 11%, below the prior year, reflecting ongoing continuous improvement efforts. And that brings me to our strong balance sheet and financial position. At the end of the first quarter, our net debt to adjusted EBITDA ratio was 0.4 times, well below our policy of less than 2x. Our liquidity at quarter end was $3.7 billion, including $1.4 billion in cash and cash equivalents. This is well above our policy threshold of $1 billion, despite the first quarter historically being a high working capital period. Due to seasonality, operating cash flows in 2026 were a net outflow of $665 million, compared to an outflow of $166 million last year.

For the trailing twelve months, cash flows exceeded $1.1 billion. Capital expenditures in the quarter were $88 million compared to $79 million in 2025. More than 50% of our planned capital investments this year are to fund projects that will drive both top- and bottom-line growth. This consists primarily of various plant expansions, automation, and improvement projects, as we continue to lower our manufacturing cost structure and better utilize labor. On April 21, we paid a quarterly dividend of $0.255 per share, reinforcing our commitment to return value to shareholders. We expect to pay $1.25 per share in annual dividends this year, subject to the Board’s discretion.

As we look to the remainder of 2026, we feel very good about the momentum we are carrying forward from a record 2025 and a strong start to 2026. Our teams are executing with discipline and urgency, and we see clear opportunities to build on that performance as the year progresses. We are reaffirming the guidance we provided on March 24, balancing our current view of demand and the macroeconomic challenges stemming from the conflict in the Middle East. There are clearly moving pieces, but our strategies are proven, our team is resilient, and we have demonstrated time and again that we can navigate challenging market conditions.

To do that, we will stay focused on what we can control: operational discipline, strong commercial execution, and rigorous cost management. We are proactively managing inflation and volatility across energy, freight, packaging, and other key inputs. And importantly, we have multiple levers we can pull in the near term, including price and mix, disciplined spending, productivity initiatives, hedging, and contract and procurement actions to protect performance and keep us agile. Looking beyond the near term, our long-term value creation algorithm remains intact, and our strong balance sheet and liquidity position give us meaningful flexibility. We will continue to prioritize investments that advance our strategy and we will keep returning value to shareholders in line with our capital allocation framework.

Taken together, we are confident in our ability to navigate uncertainty, protect margins, and deliver profit growth through the remainder of 2026. Now, I will ask the Operator to open the call for Q&A. Operator, thank you.

Operator: We will now begin the question-and-answer session. If you are using a speakerphone, please pick up your handset before pressing the keys. If you would like to withdraw your question, please signal to the Operator. To assemble our roster, the first question comes from Peter Thomas Galbo with Bank of America. Please go ahead.

Peter Thomas Galbo: Hey, guys, good morning. Thanks for taking the question. To begin, Mark, I know you do not like to give quarterly guidance, but obviously, you had a nice first quarter. You reiterated the guide today. Maybe you can just help us a little bit with some of the phasing elements over the remainder of the year—anything to be mindful of as we move into Q2 and over the balance of the year?

Mark Hall: Yes. Hey, good morning, Peter, and thanks for the question. As I said at the outset, we feel very good about the momentum that we are carrying forward from a record 2025 and a strong start to 2026. So it is all about execution, and we see a number of opportunities to build on the performance as the year progresses. Looking specifically at the second quarter, the macro environment and the consumer remain pressured, but we expect to deliver solid second quarter results. If you look at the segments individually, for Packaged Meats we are looking for performance to be broadly similar to the first quarter from an underlying standpoint.

Year over year, the comparison is tougher as the holiday ham timing benefited the first quarter of this year, so that pull-forward reduces the second quarter year-over-year profit cadence. On the cost side, we are seeing higher-than-expected input inflation versus last year, most notably for Packaged Meats in beef and turkey, and that pressure in supply chain costs that Shane talked about—freight and packaging are areas of focus, with diesel volatility really pressuring transportation costs and a lagging effect in resin-based packaging. We are actively mitigating that through price and mix, productivity and yield gains, and cost savings. Separately on Packaged Meats, we are going to continue to invest in brand and marketing.

Year over year, we will be up in brand marketing. It is a targeted, ROI-driven approach because it supports our value-added strategy and our long-term share in these competitive categories. So the package mix continues to be resilient, and again we reaffirm the outlook for the full year based on the performance that we are seeing. In terms of Fresh Pork, we continue to see strong execution, although we are managing a volatile cost and market environment.

Seasonally, the second and third quarters are typically softer than the first and fourth quarters for Fresh Pork profitability, but even with those dynamics and cost pressures, we still expect Fresh Pork to be modestly up year over year, supported by continued strength in our domestic value-added business. In terms of Hog Production, seasonally Hog Production is strongest in the second and third quarters, and we are looking for a strong second quarter driven by favorable market fundamentals—higher hog prices and comparatively moderate grain costs—along with the improvements we have made in our cost structure on the retained farms.

Overall, we expect to deliver a solid second quarter and full-year results, and we have a number of levers we can pull to manage volatility as the year progresses.

Peter Thomas Galbo: Great. Thanks so much, Mark. I will pass it on.

Operator: The next question comes from the line of Leah Dianne Jordan with Goldman Sachs.

Leah Dianne Jordan: Thank you. Good morning. Just following up on that discussion, can you comment on the competitive environment you are seeing for Packaged Meats? How are you thinking about pricing and promotions as we go through the year, given the consumer remains value-focused? And how much does being vertically integrated impact your ability to remain competitive within Packaged Meats as well?

Steven J. France: Hi, Leah. I will start out by taking that question. First, a few comments on Q1 and then I will get into promotional strategy. Our brands are performing well. In Q1, our branded business was up 1.6% versus last year, compared to the industry which was down 0.2%. Demand has been steady, coming from consumers who choose us because they know the high quality and consistency they get every time they buy our product. We are not trying to manufacture volume through heavy promotions. We have stayed focused on evolving our business away from lower-value commodity items and putting more emphasis on value-added products—Prime Fresh, Any’tizers-style favorites, Eckrich smoked sausage—some of the items Shane mentioned in his opening comments.

That shift did not happen overnight, but it has been very consistent and continues to show up in our results. When we think about promotional strategies, we are focused on quality merchandising—really going after quality versus unprofitable quantity. We do see some competitors increasing promoted volume through reduced price points, but that is typically short-lived and does not support the long-term health of a brand. We continue to see improvement with our promoted volume sold as feature and display, which is the most impactful promotional vehicle. In Q1, quality merchandising was up 2.3 points, and our promoted volume was up 2.5 points.

On private label, from the industry standpoint, we are seeing increases in certain categories as retailers invest in their brands. However, in Q1, private label volume for the industry declined in 13 categories versus last year. Our branded volume was up 1.6%, surpassing industry private label which was up 1% in Q1, and our own private label business remains very healthy with volume up over 5% in Q1. That provides a key competitive advantage since many retailer partners are upscaling their private label offerings.

Our participation in both branded and private label helps us attract and retain consumers as they move up and down the value spectrum, and we can manage promotional strategies across both branded and private label with our retail partners. We saw share and volume increases on both the branded and private label sides in Q1.

Shane Smith: And Leah, I think your last question was about vertical integration. I cannot overemphasize the importance of the vertically integrated model now that it is working correctly. Over the past few quarters, we have recorded record profit after record profit while not relying on any single segment. That shows the model is working well. In volatile environments, we often see profit migration across segments. The model provides consistency in cash flows and earnings. We still are a little overweight in internal hog production, and we have a goal to get down to 30%, which we are working on now.

When you look at the hogs that feed into our Fresh Pork business and then the Fresh Pork raw material that feeds into the Packaged Meats business, the way the model is working today is a clear advantage.

Leah Dianne Jordan: That was great color. Thank you.

Operator: The next question comes from Megan Christine Alexander with Morgan Stanley. Please go ahead.

Megan Christine Alexander: Hi, good morning. Thanks so much. Continuing on Packaged Meats and following up on some of Mark’s commentary to Peter’s question earlier—if we are looking for similar performance in Packaged Meats in the second quarter, it puts a bit more weight on the second half for the embedded profit improvement in the Packaged Meats outlook. We will start to lap some of the higher raw material costs from last year, which should be helpful on margins, but at the same time, some of the newer cost pressures related to the Middle East could build into the second half.

Has anything changed versus a month ago as it relates to your confidence level and where Packaged Meats could fall within the guidance range you outlined?

Mark Hall: You are spot on regarding the near-term impacts. There will be a bit of a lag and some pressure in the second quarter, which is why our Q2 commentary is what it is. But the mitigation efforts and the levers we are able to pull should return us to the growth trajectory we are looking for in the second half. We have strong volume growth as Steve pointed out, and with the cost containment plans we have, we feel very good about the second half for Packaged Meats.

Steven J. France: Megan, at a high level, nothing has changed in how we feel about the long-term outlook of our Packaged Meats business. Near term, the consumer environment remains somewhat challenging. Households are cautious with spending, and we continue to see value-seeking behavior across grocery and the foodservice channel. On costs, we do expect improvement versus last year in raw materials, but we are not assuming a return to historical norms. In Q1, raw material costs were higher than last year by $94 million, which was a significant increase. While some raw material costs are moving in the right direction, the backdrop remains challenging—especially in beef and turkey. Our brands had a solid Q1, growing volume and share.

We plan to continue driving growth and to support new items at retail and partnerships in foodservice. We are increasing A&P; in Q1, that spend was up 23% year over year. Recent CPI data showed a meaningful move in energy, which matters for us due to diesel and resins for packaging. Given the backdrop and geopolitical uncertainty, we are planning with appropriate conservatism around packaging and distribution costs. Despite those headwinds, we feel good about our positioning. Our portfolio is strong, and our meaningful private label business gives us the ability to serve customers and consumers across all price points, keeping shoppers within our portfolio as they move up and down the value spectrum.

Considering Easter’s shift from Q2 last year into Q1 this year, we expect Q2 and Q1 to look very similar from an overall profit standpoint. Based on cost mitigations and our levers, we are maintaining the outlook for the rest of the year within the $1.1 billion to $1.2 billion range for Packaged Meats operating profit.

Megan Christine Alexander: Super helpful—thank you. And a follow-up on transportation: you talked about near-term inflation in transportation costs—diesel and freight in particular. Our understanding is you own some of your own fleet. Can you give more color on your direct exposure to diesel and freight, how the contracts work, and what to watch over the next couple of months as this dynamic situation progresses?

Shane Smith: Yes, Megan. Diesel cost is the biggest near-term impact for us. We use a variety of methods: our own company fleet, outside carriers, dedicated fleet, and we have been expanding intermodal. We actually started transportation network optimization back in 2024. We took about 1 million miles off the road in 2025 versus 2024, and we have line of sight to another 1 million miles off the road in 2026 compared to 2025. That was not reactionary—network optimization is embedded in our DNA. We have done lane consolidation, added intermodal, evaluated diesel hedging where we can, and we are driving fewer miles.

Coupled with volume growth and cost reductions, we feel we are in a relatively good position for the remainder of the year. In the medium term, resin-based packaging is a focus, where we have procurement strategies and value engineering underway. Longer term, it will come down to corn and agricultural inputs and how that hits our production operations later in the year, where we have hedging strategies in place. Taken together, we feel confident in our ability to execute against our guidance this year.

Megan Christine Alexander: Great. Thank you.

Mark Hall: Thank you.

Operator: The next question comes from the line of Benjamin M. Theurer with Barclays.

Benjamin M. Theurer: Good morning, and thanks for taking my question. Following up on the outlook for grain costs and how it flows through hog production, and potentially the need to invest more in working capital—within your hedging strategies and a bit of the uptick in feed cost, how should we think about managing that cost and what it potentially does to cash from operations and working capital?

Shane Smith: Yes, Ben. You can look at the futures strip for corn and soybean meal to see how they may move throughout the year. For us, as we have discussed before, we have initiatives in feed and grain procurement—using alternative ingredients, bakery byproducts, and leveraging grain elevators across the country to get grain to our hog operations at competitive rates. It also goes back to overall hog production optimization—removing inefficient farms and underperforming geographies, and ensuring KPIs like livability and pigs weaned per sow per year are at levels that help us absorb changes. Put that together and it supports our confidence in the Hog Production guidance for the year.

Mark Hall: From a cash flow perspective, 2025 cash flows exceeded $1 billion—the second highest in our history—and would have been by far the highest excluding the repayment of our $230 million AR monetization. The business continues to have strong cash flow generation, attributable to the changes we have made, the reform in Hog Production, and the stability of cash flow from Packaged Meats. The first quarter is seasonally a cash outflow period for us, and the 2026 outflows were about $65 million lower than the prior year, primarily reflecting the earlier Easter this year. Even with a potential grain cost run-up later in the year, we feel very good about cash flow generation.

Operator: The next question comes from the line of Heather Lynn Jones with Heather Jones Research. Please go ahead.

Heather Lynn Jones: Good morning. Thanks for the question. Related to the Packaged Meats raw material outlook, what is your confidence level that pork inputs will be lower year-on-year? There have been reports of disease in the industry but also some underlying expansion. How much visibility do you have, and has your confidence in year-on-year relief changed since a month or so ago?

Steven J. France: Thank you, Heather. For Packaged Meats, our biggest cost concerns are not on the pork side. We have good visibility there. The more challenging areas are beef and poultry, which are sizable inputs for products like Nathan’s beef hot dogs, beef smoked sausage, and certain lunch meats. We are mitigating via contracts and supplier partnerships. On the pork side, I will pass it to Shane.

Shane Smith: Yes, Heather. On disease, we are hearing the same as you regarding higher incidence across the industry. University of Minnesota reports show higher incidence of both PRRS and PEDV. The USDA recently called for 2026 pork production to be up about 1.4%, down from about 2.5% in their previous report. It is hard at this time of year to have clear visibility, but we are seeing the same signals you referenced.

Heather Lynn Jones: Thank you. And a follow-up on the ASF outbreak in Spain: we have not seen a big pickup in U.S. exports benefiting from that, while Brazil exports have increased. How are you thinking about the outlook for the rest of the year and any help the U.S. might get?

Donovan Owens: Thanks, Heather. You are right—there has been disruption with ASF in Europe, but thus far it has largely been a non-event in terms of incremental demand for U.S. pork. Brazil is participating in that market and helping fill the need, and other regions are seeing expected pickups in capacity and supply serving primarily Asia. At this point, it is not materially impacting the U.S. pork market.

Heather Lynn Jones: Okay. Thank you so much.

Operator: The next question comes from the line of Max Andrew Gumport with BNP Paribas. Please go ahead.

Max Andrew Gumport: Hey, thanks for the question. With rising inflation, can you discuss your view on U.S. consumer sentiment, how that fits into your outlook for the year, and whether you have factored any changes versus a month ago?

Mark Hall: Thanks, Max. Protein remains a core part of the basket, and we manage our portfolio to offer value across price points. Our brand and marketing investments are targeted and ROI-driven to support loyalty and mix and our value-added strategy. Pork continues to be a strong value proposition across proteins. At this point, we are not seeing a change that would require a material reset of our demand assumptions, but we are watching behavior closely. Our portfolio serves consumers across tiers—from mainstream to premium—and we can adjust mix as households trade within categories. Based on prior geopolitical-driven inflation, the duration and breadth of any supply chain impact matters more than short-term spot moves. We are planning for volatility and staying agile.

Max Andrew Gumport: As a follow-up, on the various forms of inflation—beef, turkey, freight, diesel, resin—did your outlook for 2026 cost inflation go up since last month, and are you reaffirming the guide by leveraging mitigants?

Mark Hall: We have a number of levers we can pull. Operationally, we are managing exposure the same way we do in any volatile input environment—disciplined pricing and mix, hedging where appropriate, procurement timing and contract management, and ongoing productivity and cost savings initiatives. Net-net, this adds near-term input and logistics cost uncertainty, but it does not change how we run the business. We feel good about our mitigation strategies and our outlook for the year.

Operator: The next question comes from the line of Saumya Jain with UBS. Please go ahead.

Saumya Jain: Hey, good morning. Thanks for squeezing me in. How sustainable is the current outperformance in Packaged Meats versus Fresh Pork? Are you seeing more structural share gains or cyclical trade-down behavior?

Shane Smith: Is your question about trade-down between Packaged Meats and Fresh Pork?

Saumya Jain: Yes.

Steven J. France: I would say, in total, we do not see trade-down between fresh and packaged; they are typically different purchase occasions, and many consumers buy both. Regarding growth, what we are seeing is sustained. In Q1, our branded performance was solid, and our private label business also grew, both outperforming the industry. There is strong collaboration between packaged and fresh. For example, marinated is a great fresh category for us, and we coordinate sales efforts—if we run a family ad on packaged items, we incorporate value-added fresh items like marinated strips in the same ad. Fresh is benefiting from packaged strength. Donovan?

Donovan Owens: Thanks, Steve. Our most important piece of the Fresh Pork strategy is to continue to grow our value-added footprint within domestic retail. We are leveraging strong brand recognition from our Packaged Meats portfolio to grow share in marinated and case-ready pork. A few stats: in Q1, marinated pork volume was up 3.2% while the industry was down 3.8%. Our case-ready pork volume was up high single digits year over year. As Shane mentioned earlier, we also grew foodservice sales by 27%. It is not a trade-off; we are leveraging both segments so a shopper can pick up Smithfield brand fresh pork along with Smithfield bacon—that is our strategy.

Saumya Jain: Got it. Thank you. And how are you seeing retailers push for future private label penetration, and how would that affect your pricing power long term?

Steven J. France: Private label is very important for retailers across retail and foodservice. They are exploring categories with growth and also more premium private label offerings. We see that as a benefit because of our capabilities to produce high-quality private label products at scale. Private label does not work in every category—Q1 industry private label volume declined in 13 categories year over year. Where it does work, we participate successfully while also supporting our brands. We have shown the ability to drive success in both branded and private label in the same categories.

Shane Smith: Thanks to everyone who joined our call today. We are off to a great start in 2026. We believe we are well positioned to deliver long-term growth and increased value for our shareholders. We look forward to updating you on our progress following our Q2 results.

Julie MacMedan: Thank you.

Operator: Thank you. The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect. Thank you.

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