Smithfield Foods Inc.

04/28/2026 | Press release | Distributed by Public on 04/28/2026 06:01

Quarterly Report for Quarter Ending March 29, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the condensed consolidated financial statements and accompanying notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q and the Annual Report on Form 10-K filed for the fiscal year ended December 28, 2025. The information reflects all normal recurring adjustments, which we believe are necessary to present fairly the financial position and results of operations for all periods included. Totals and percentages may be affected by rounding. Certain prior period amounts have been reclassified to conform to the current period presentation.
Overview
Smithfield Foods, Inc., together with its subsidiaries ("Smithfield," "the Company," "we," "us" or "our") is an American food company that employs approximately 32,000 people in the United States ("U.S.") and 2,500 people in Mexico. We boast a portfolio of high-quality, iconic brands, such as Smithfield®, Eckrich® and Nathan's Famous®, among many others. We are an indirect, majority-owned subsidiary of Hong Kong-based WH Group Limited ("WH Group").
Our elected fiscal year is the 52-week or 53-week period which ends on the Sunday nearest to December 31. Each of the first quarters of fiscal years 2026 and 2025, which ended on March 29, 2026 and March 30, 2025, respectively, consisted of 13 weeks.
We conduct our operations through three reportable segments: Packaged Meats, Fresh Pork and Hog Production. We also conduct operations through two other operating segments, Mexico and Bioscience, which are aggregated and reported as "Other."
Packaged Meats Segment
The Packaged Meats segment consists of our U.S. operations that process fresh meat into a wide variety of packaged meats products, including bacon, sausage, hot dogs, deli and lunch meats, dry sausage products (such as pepperoni and genoa salami), ham products, ready-to-eat products and prepared foods (such as pre-cooked entrees, bacon and sausage). Approximately 80% of the Packaged Meats segment's raw materials are sourced from our Fresh Pork segment. We market our domestic packaged meats products under a strategic set of core brands, which include: Smithfield, Eckrich, Nathan's Famous, Farmland, Armour, Farmer John, Kretschmar, Krakus, John Morrell, Cook's, Gwaltney, Carando, Margherita, Curly's and Smithfield Culinary. We also sell a sizeable portion of our packaged meats products as private label products. The majority of the Packaged Meats segment's products are sold to retail and foodservice customers in the U.S.
Fresh Pork Segment
The Fresh Pork segment consists of our U.S. operations that process live hogs into a wide variety of primal, sub-primal and offal products, such as bellies, butts, hams, loins, picnics and ribs. The Fresh Pork segment sources approximately 40% of its raw materials from our Hog Production segment, with the remainder from farmers with whom we partner across the U.S. Approximately one-third of our fresh pork products, including the majority of hams, bellies and trimmings, is transferred to our Packaged Meats segment. Externally, we sell our fresh pork products to domestic retail, foodservice and industrial customers, as well as to export markets, including, among others, Mexico, China, Japan, South Korea and Canada.
Hog Production Segment
The Hog Production segment consists of our hog production operations in the U.S., which produce and raise our hogs on numerous Company-owned farms and farms that are owned and operated by contract farmers. Nearly all of the hogs produced by this segment are processed by our Fresh Pork segment. The Hog Production segment also sells livestock feed and grains and provides transportation and other ancillary services to external customers. In fiscal year 2025 and the first quarter of fiscal year 2026, approximately 60% of the Hog Production segment's cost of goods sold was from animal feed, which is derived primarily from corn and soybean meal.
Key Factors and Recent Developments Affecting Our Results of Operations and Financial Condition
Our operating results and financial condition have been and/or may be impacted in the future by several key factors and recent developments.
Growth Strategies
The strategic initiatives we are executing across our segments are complemented and enabled by our strong balance sheet and ongoing operational investments, positioning us for future growth. We have several strategic initiatives to grow our business, reduce costs and enhance our profitability and margins. A comprehensive discussion of our growth strategies is provided in Part II, Item 1. Business-Our Growth Strategies in our Annual Report on Form 10-K for the fiscal year ended December 28, 2025.
Sales Drivers
We are focused on driving profitable growth through our Packaged Meats segment. Within the Packaged Meats segment, the primary factors impacting sales of our brands are household penetration, consumption levels, price point and product offerings. As a result, we have pursued strategies that we believe best align our products with consumer trends and behavior. We have shifted our portfolio towards a higher mix of value-added and margin accretive products while leveraging the breadth of our offerings to further penetrate across dayparts. We look to increase brand awareness and encourage consumer adoption of our products through product and packaging innovation and effective and appealing marketing strategies while maintaining our promise to consumers to offer high-quality products for every budget. We have also expanded to new categories and grown distribution of under-indexed brands in under-penetrated locations. In addition, we seek to increase sales in packaged meats products by driving volumes of our private label and foodservice products, by expanding our customer relationships and by offering quality selections across the value chain.
The U.S. packaged meats market is supported by long-term secular tailwinds, including consumer demand for high-protein diets, high-quality nutrition, product versatility and convenience. We expect these tailwinds to continue to drive increases in overall meat consumption. Nevertheless, changes in market trends and consumer preferences could adversely affect our results of operations.
In our Fresh Pork segment, the primary drivers of external sales are the consistent level of global pork consumption, our ability to maximize the value of each hog and our ability to leverage our different end markets including retail, foodservice, industrial and export channels. Through ongoing product innovation, we seek to appeal to ever-changing consumer preferences, including demand for convenience and smaller portion sizes as well as expanded interests in new and varied flavors. We also seek to increase the value of raw materials through whole-hog utilization and by appealing to differentiated, global tastes and preferences. We leverage multiple sales channels to optimize profitability, including value-added retail, export markets, industrial, pharmaceutical and pet foods.
Cost Factors
Our cost as a percentage of sales varies based on fluctuations of raw material prices, as well as manufacturing, distribution and marketing costs. Raw materials are the largest component of our total cost of goods sold, with feed ingredients and hogs accounting for the majority share. The prices of feed ingredients, hogs and pork fluctuate based on market dynamics which can affect our margins. In addition, our operating costs are affected by fuel prices, which also fluctuate based on market dynamics. We enter into hedging transactions for commodities such as feed ingredients, hogs and fuel when we determine conditions are appropriate to mitigate the inherent price risks. While this hedging may limit our ability to participate in gains from favorable commodity fluctuations, it also reduces the risk of loss from adverse changes in raw material prices.
We continue to optimize the size of our hog production operations and procure a greater mix of hogs from independent suppliers with market-based supply agreements in order to supply our Fresh Pork segment. We have reduced the size of our internal hog production from a peak of 17.6 million head in 2019 to 11.1 million head in 2025, which represents approximately 40% of the hogs processed by our Fresh Pork segment. We continue to explore opportunities to reduce internal production over the medium term.
We are pursuing best-in-class manufacturing principles in our plants by employing automation to redeploy labor to higher value tasks, increasing yields and driving efficiency by reducing complexity. In our logistics and distribution network, we actively manage transportation and warehousing costs by evaluating transportation carrier mix, optimizing transportation routes, maximizing utilization of our cold storage and trucking assets, improving supply and demand planning and optimizing inventory levels.
Our results of operations will continue to depend on our ability to (1) manage raw material cost movements through optimizing our hog production operations, hedging, forward purchasing, strategic sourcing negotiations and passing inflationary cost increases to customers, (2) operate our manufacturing and logistics footprint efficiently and competitively and (3) continue to attract and retain customers and consumers through effective sales and marketing spend.
Initial Public Offering
On January 29, 2025, we completed our initial public offering ("IPO") of 26,086,958 shares of common stock, representing 7% of the total outstanding shares, at a price of $20.00 per share. We issued 13,043,479 shares of common stock bringing the total number of outstanding shares to 393,112,711. The remaining 13,043,479 shares of common stock were sold by WH Group, through its indirect wholly owned subsidiary SFDS UK Holdings Limited, our only shareholder at the time. We received net proceeds from the IPO of $236 million after deducting underwriting discounts, commissions and fees. As a result of the IPO, our common stock is listed on the Nasdaq Global Select Market under the ticker "SFD."
Tariffs
We export our products to over 30 countries, including China. Those exports primarily consist of fresh pork products. For the quarter ended March 29, 2026, our export sales into China accounted for approximately 2% of our total sales. As of March 29, 2026, products we export to China faced tariffs that ranged from 25% to 47%, with most products subject to 47% tariff rates.
Trade relations between the U.S. and China are fluid. China previously had proposed imposing tariff rates on our products ranging from 140% to 172%, but implementation of those increased rates have been repeatedly paused. It is impossible for us to predict whether tariff rates imposed on our products by China will increase, decrease or stay the same, or whether China will ban imports from the U.S. altogether, and we will adjust our sales strategy accordingly.
Geopolitical Conflicts and Market Volatility
Recent hostilities and geopolitical tensions in multiple regions, including the Middle East, Ukraine, and parts of Central and South America, have contributed to increased volatility in global oil, energy, commodity and transportation markets. Ongoing sanctions, export controls, and other governmental actions associated with these conflicts have impacted and may continue to impact the price and availability of oil and other key inputs. Energy prices directly influence freight, logistics and certain raw material costs across our supply chain, which have increased and may continue to increase our operating costs. In addition, these conditions have disrupted trade flows and contributed to broader macroeconomic uncertainty, which could impact demand for our products. The duration and overall impact of these conflicts remain uncertain. We will continue to monitor developments and take measures to minimize the impact on our operations.
Litigation
Like other participants in our industry, we are subject to various laws and regulations administered by federal, state and other government entities, including the U.S. Environmental Protection Agency and corresponding state agencies, as well as the U.S. Department of Agriculture ("USDA"), the Grain Inspection, Packers and Stockyard Administration, the U.S. Food and Drug Administration, the U.S. Occupational Safety and Health Administration, the Commodity and Futures Trading Commission and similar agencies in foreign countries.
We, from time-to-time, receive notices and inquiries from regulatory authorities and others asserting that we are not in compliance with such laws and regulations. In some instances, litigation ensues. In addition, individuals may initiate litigation against us.
As of March 29, 2026 and December 28, 2025, we had contingent liabilities totaling $149 million in accrued expenses and other current liabilities on the condensed consolidated balance sheets related to litigation matters. We did not record any significant charges for litigation matters in the three months ended March 29, 2026 and March 30, 2025. These matters will not affect our profits or losses in future periods unless our accruals prove to be insufficient or excessive. It is reasonably possible that a change in our estimates may occur in the near term and that our accruals could be insufficient. We are unable to estimate the amount of possible loss in excess of our accruals, which could be material.
For further information related to our litigation matters, refer to "Note 15: Regulation and Contingencies" to the condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Sioux Falls Plant Construction
On February 16, 2026, we announced that we had initiated the approval process to construct a new state-of-the-art combined fresh pork and packaged meats processing facility in Sioux Falls, South Dakota. The proposed facility would replace our existing 117-year-old plant currently located in Sioux Falls, South Dakota. Our preliminary estimate of the proposed investment is up to $1.3 billion over the next three years. This investment is contingent on approval by the Company's board of directors as well as permitting and other regulatory approvals. If approved, construction is anticipated to begin in the first half of 2027 with production estimated to commence by the end of 2028. Additionally, if the project moves forward, we plan to accelerate depreciation and may incur other incremental costs related to closing the existing plant, which are currently under evaluation.
Nathan's Famous Pending Acquisition
On January 20, 2026, we entered into an agreement to acquire all of the issued and outstanding shares of Nathan's Famous Inc. ("Nathan's") for $102.00 per share in cash. The acquisition is expected to be funded using cash on hand. Since March 2014, we have held an exclusive license to manufacture, distribute, market and sell "Nathan's Famous" branded hot dogs, sausages, corned beef and certain other ancillary products through retail outlets in the U.S. and Canada and Sam's Clubs in Mexico. The license is scheduled to expire in March 2032. Completion of the transaction remains contingent upon meeting several conditions specified in the merger agreement. These include securing approval from the holders of a majority of Nathan's outstanding common stock, obtaining clearance from the Committee on Foreign Investment in the United States ("CFIUS"), and fulfilling other standard closing requirements. However, given the impact of the partial government shutdown on statutory deadlines for CFIUS's review process, our anticipated closing timeline has shifted, and we now expect the transaction to close in the second half of 2026.
Restructuring and Optimization
Springfield, Massachusetts Facility
On February 6, 2026, we announced our decision to exit our leased Springfield, Massachusetts dry sausage production facility by the end of August 2026 and consolidate production across our network, including at our recently acquired Nashville, Tennessee facility. The decision to close the Springfield facility is part of the Company's ongoing efforts to optimize its manufacturing footprint and improve operational and cost efficiencies. In the first quarter of 2026, we recognized $2 million in accelerated depreciation and employee termination benefits in cost of sales in the condensed consolidated statement of income. We expect to recognize additional charges associated with the exit of the facility totaling approximately $8 million over the second and third quarters of fiscal year 2026.
Administrative Process Optimization
In the fourth quarter of 2025, we commenced an initiative to modernize and optimize certain of our administrative and transactional processes. As part of this initiative, we will employ new and advanced technologies, including artificial intelligence and robotic process automation, that will allow us to drive significant improvements in operational efficiency and productivity. As a result of this initiative, we recognized $1 million in restructuring costs in selling, general and administrative expenses ("SG&A") in the condensed consolidated statement of income in the first quarter of fiscal year 2026 and anticipate additional one-time restructuring costs totaling approximately $10 million for the remainder of fiscal year 2026.
Workforce Reduction
In the first quarter of 2025, we implemented a reduction in workforce initiative to streamline our operations and reduce operating expenses. We eliminated certain corporate and plant positions and recognized employee termination benefit costs totaling $9 million in the condensed consolidated statement of income in the first quarter of 2025 with $6 million classified in SG&A and $2 million classified in cost of sales.
Hog Production Reform
Beginning in 2023, we undertook a number of actions to optimize the size of our Hog Production segment's operations and improve its cost structure, including ceasing certain farm operations, terminating certain agreements with underperforming contract farmers and reducing the size of our hog production business ("Hog Production Reform").
In the fourth quarter of fiscal year 2024, we contributed $3 million in cash in exchange for a 25% minority interest in a North Carolina-based hog production company, Murphy Family Farms LLC ("Murphy Family Farms"). In the first quarter of 2025 we contributed $450,000 in cash in exchange for a 9% minority interest in another North Carolina-based hog production company, VisionAg Hog Production, LLC ("VisionAg"). As part of the formation of these entities we collectively sold approximately 178,000 sows and related inventories located on Company-owned and contract farms in North Carolina to Murphy Family Farms and VisionAg. We subsequently sold the commercial hog inventories associated with such sows to Murphy Family Farms and VisionAg. Murphy Family Farms and VisionAg are now hog suppliers to us and supply approximately 3.9 million hogs annually. We supply animal feed and other supplies and provide certain support services to Murphy Family Farms and VisionAg.
Results of Operations
Consolidated Results
Three Months Ended
March 29, 2026 March 30, 2025 $ Change % Change
(in millions)
Sales $ 3,800 $ 3,771 $ 29 0.8 %
Cost of sales 3,289 3,262 28 0.8 %
Gross profit 511 510 2 0.4 %
Selling, general and administrative expenses 180 197 (17) (8.6) %
Operating gains (1) (9) 8 (84.9) %
Operating profit 333 321 11 3.4 %
Interest expense, net 8 11 (3) (28.6) %
Non-operating losses 1 6 (5) (79.8) %
Income before income taxes 323 304 19 6.4 %
Income tax expense 72 72 - 0.3 %
Loss from equity method investments 2 5 (3) (63.0) %
Net income 249 227 22 9.9 %
Net income attributable to noncontrolling interests 4 4 - 1.6 %
Net income attributable to Smithfield $ 246 $ 224 $ 22 10.0 %
Operating Profit (Loss) and Operating Profit Margin by Segment
Three Months Ended
March 29, 2026 March 30, 2025 Change % Change
(in millions, except percentages and basis points)
Operating profit:
Packaged Meats $ 275 $ 266 $ 9 3.6 %
Fresh Pork 78 82 (4) (4.3) %
Hog Production 4 1 3 282.6 %
Other 12 14 (3) (18.4) %
Corporate expenses (26) (29) 3 11.0 %
Unallocated (1)
(10) (12) 2 13.2 %
Operating profit $ 333 $ 321 $ 11 3.4 %
Operating profit margin:
Packaged Meats 12.8 % 13.1 % (32) bps
Fresh Pork 3.9 % 4.0 % (13) bps
Hog Production 0.5 % 0.1 % 41 bps
Other 6.7 % 13.7 % (700) bps
Consolidated 8.7 % 8.5 % 22 bps
________________
(1) We do not allocate certain items to our operating segments such as litigation charges, exit and disposal costs, insurance recoveries, gains and losses on the sale of property, plant and equipment and other assets, accelerated depreciation, and employee termination benefits, among others.
Results of Operations Analysis
The following discussion provides an analysis of our results of operations for the first quarter of 2026 compared to the first quarter of 2025.
Sales
Three Months Ended
March 29, 2026 March 30, 2025 $ Change % Change
(in millions)
Sales by segment:
Packaged Meats $ 2,149 $ 2,024 $ 125 6.2 %
Fresh Pork 2,012 2,033 (21) (1.1) %
Hog Production 769 932 (163) (17.5) %
Other 174 104 70 66.9 %
Total segment sales 5,103 5,093 10 0.2 %
Inter-segment sales eliminations:
Fresh Pork
(784) (787) 3 (0.4) %
Hog Production
(519) (535) 16 (3.1) %
Total inter-segment sales eliminations (1,303) (1,322) 19 (1.5) %
Consolidated sales $ 3,800 $ 3,771 $ 29 0.8 %
Packaged Meats. Segment sales increased by $125 million, or 6.2%, primarily attributable to a 3.5% increase in sales volume and a 2.6% increase in our average sales price. The increase in volume was primarily attributable to higher holiday ham sales due to the timing of Easter, which occurred earlier in 2026 as compared to 2025. The
increase in average sales price was primarily due to higher raw material costs, which translated into higher sales prices of our packaged meats products.
Fresh Pork. Segment sales decreased by $21 million, or 1.1%, primarily attributable to a 2.6% decrease in sales volume partially offset by a 1.5% increase in our average sales price. The decrease in volume was primarily driven by a 2.1% decline in the number of hogs harvested. The increase in our average sales price is directionally aligned with the 1.1% increase in the fresh pork cut-out values reported by the USDA, which averaged $0.96 per pound in the first quarter of 2026, primarily due to continued strong demand for pork despite a slight increase in U.S. pork production.
Hog Production. Segment sales decreased by $163 million, or 17.5%, primarily due to the one-time sale of commercial hog inventories in the first quarter of 2025 in connection with the formation of Murphy Family Farms and VisionAg. The number of market hogs sold decreased by 125,000, or 4.2%, year-over-year primarily due to the formation of these entities. These decreases were partially offset by:
•A 0.9% increase in our average market hog sales price, inclusive of the effects of hedging, driven by a higher lean hog price index published by the Chicago Mercantile Exchange ("CME").
•A $7 million increase in other sales to Murphy Family Farms and VisionAg.
Other. Segment sales increased by $70 million, or 66.9%, due to a 63.5% increase in volume and a $24 million increase from the favorable impact of foreign currency translation, partially offset by a 9.9% decrease in the average sales price in our Mexico operations. Sales volume increased due to higher production driven by improved capacity utilization and higher sales of our Fresh Pork segment products through our Mexico operations. The decrease in average sales price was largely driven by lower market prices for fresh pork and live hogs in Mexico.
Inter-segment Eliminations
•Hog Production. The decrease in inter-segment sales by our Hog Production segment was attributable to our strategic initiative to optimize our hog production operations, which reduced the number of hogs produced by our Hog Production segment.
Cost of Sales
Three Months Ended
March 29, 2026 March 30, 2025 $ Change % Change
(in millions)
Packaged Meats
$ 1,781 $ 1,665 $ 116 7.0 %
Fresh Pork
1,895 1,906 (12) (0.6) %
Hog Production
755 919 (164) (17.8) %
Other
156 84 72 85.7 %
Unallocated
5 9 (4) (46.2) %
Inter-segment eliminations (1,303) (1,322) 19 (1.5) %
Cost of sales $ 3,289 $ 3,262 $ 28 0.8 %
Packaged Meats. Cost of sales in our Packaged Meats segment increased by $116 million, or 7.0%, driven primarily by a $94 million increase in raw material costs and higher sales volume attributable to the timing of the Easter holiday. Additionally, manufacturing and distribution costs increased by $22 million due in part to the increase in sales volume.
Fresh Pork. Cost of sales in our Fresh Pork segment decreased by $12 million, or 0.6%, driven primarily by a $17 million decrease in raw material costs, partially offset by a $5 million increase in manufacturing and distribution
costs. The decrease in raw material costs was driven by lower sales volume, partially offset by higher market prices for live hogs.
Hog Production. Cost of sales in our Hog Production segment decreased by $164 million, or 17.8%, primarily due the one-time sale of commercial hog inventories to Murphy Family Farms and VisionAg in the first quarter of 2025. Additionally, raw material costs decreased by $21 million largely attributable to the reduction in the size of our hog production operations.
Other. Cost of sales in our Other segment increased by $72 million, or 85.7%, driven primarily by a $53 million increase in raw material costs and a $14 million increase in manufacturing and distribution costs in our Mexico operations, mainly attributable to the increase in sales volume and the impact of foreign currency translation.
Selling, General and Administrative Expenses
Three Months Ended
March 29, 2026 March 30, 2025 $ Change % Change
(in millions)
Packaged Meats
$ 92 $ 93 $ (1) (0.6) %
Fresh Pork
39 46 (6) (14.0) %
Hog Production
10 12 (2) (17.0) %
Other
6 6 - 6.3 %
Corporate expenses
26 29 (3) (11.0) %
Unallocated 7 12 (5) (43.1) %
Selling, general and administrative expenses $ 180 $ 197 $ (17) (8.6) %
SG&A decreased by $17 million, or 8.6%, driven by a continued focus on cost reduction and disciplined spending, partially offset by a $4 million increase in marketing and advertising expense. Additionally, the first quarter of 2025 included a $6 million charge for employee termination benefits associated with a workforce reduction initiative, which was not allocated to our business segments.
Operating Gains
The following table provides details of operating gains.
Three Months Ended
March 29, 2026 March 30, 2025
(in millions)
Gain on disposal of assets $ (1) $ (2)
Insurance recoveries (1)
- (6)
Other operating gains - (1)
Operating gains $ (1) $ (9)
________________
(1)Consists of a gain recognized in connection with a settlement of an insurance claim associated with property damage.
Non-Operating Losses
The following table provides details of non-operating (gains) losses.
Three Months Ended
March 29, 2026 March 30, 2025
(in millions)
Loss on assets held in rabbi trusts (1)
$ 3 $ 2
Net pension and postretirement benefits cost (2)
- 4
Other non-operating gains (2) -
Non-operating losses $ 1 $ 6
________________
(1)Assets held in rabbi trusts are used to fund nonqualified defined benefit pension and deferred compensation plans.
(2)Includes the components of net pension and postretirement benefits cost other than service cost, which is included in operating profit. These components consist of interest cost, expected return on plan assets, amortization of actuarial gains/losses and prior service costs/credits, and curtailment gains.
Income Tax Expense
Income tax expense remained consistent while our effective tax rate decreased to 22.2% for the first quarter of 2026 compared to 23.6% for the first quarter 2025. The decrease was primarily driven by changes in interest accruals for unrecognized tax benefits.
Liquidity and Capital Resources
Our sources of liquidity include cash and cash equivalents on hand together with availability under our committed revolving credit facilities. As of March 29, 2026, we had $3,683 million of available liquidity consisting of $1,386 million in cash and cash equivalents and $2,298 million of availability under our committed credit facilities. We believe that our current liquidity position is strong and that our cash flows from operations and availability under our credit facilities will be sufficient to meet our working capital needs and financial obligations and commitments for at least the next twelve months.
Credit Facilities
March 29, 2026
Facility Capacity Borrowing
Base
Adjustment 		Outstanding
Borrowings 		Commercial
Paper
Borrowings 		Outstanding
Letters of
Credit 		Amount
Available
(in millions)
Senior Revolving Credit Facility $ 2,100 $ - $ - $ - $ - $ 2,100
Securitization Facility 225 - - - (27) 198
Total credit facilities $ 2,325 $ - $ - $ - $ (27) $ 2,298
Senior Unsecured Revolving Credit Facility
We maintain a $2,100 million senior unsecured revolving credit facility ("Senior Revolving Credit Facility"), which matures in February 2030 with the option to extend the maturity date for up to two one-year periods, subject to obtaining the lenders' consent and satisfaction of certain other conditions. The Senior Revolving Credit Facility bears interest at the Secured Overnight Financing Rate plus a margin ranging from 0.875% to 1.50% per annum, or, at our election, at a base rate plus a margin ranging from 0.00% to 0.50% per annum, in each case depending on our senior unsecured debt ratings. The Senior Revolving Credit Facility also contains financial maintenance covenants requiring us to maintain a maximum total consolidated leverage ratio (ratio of consolidated funded debt to consolidated capitalization, each as defined in the Senior Revolving Credit Facility) of 0.50 to 1.00 (which we may elect to increase to 0.55 to 1.00 with respect to any fiscal quarter in which a material acquisition is consummated and the immediately following three consecutive fiscal quarters, subject to certain restrictions) and a minimum interest
coverage ratio (ratio of earnings before interest, taxes, depreciation and amortization ("EBITDA") to consolidated interest expense, each as defined in the Senior Revolving Credit Facility) of 3.50 to 1.00.
Our Senior Revolving Credit Facility contains customary covenants, including, but not limited to, restrictions on our ability and that of our subsidiaries to merge and consolidate with other companies, incur indebtedness, grant liens or security interests on assets subject to their security interest, or enter into transactions with affiliates, each subject to certain exceptions as set forth therein. We are currently in compliance with the covenants under our Senior Revolving Credit Facility.
Accounts Receivable Securitization Facility
We maintain a $225 million accounts receivable securitization facility ("Securitization Facility"), which matures in November 2027. As part of the Securitization Facility, certain accounts receivable of our major domestic meat processing subsidiaries are sold to a wholly-owned "bankruptcy remote" special purpose vehicle ("SPV"). The SPV pledges all such accounts receivable as security for loans made and letters of credit issued by participating lenders under the Securitization Facility. The SPV is included in our condensed consolidated financial statements and therefore the accounts receivable owned by it are included in our condensed consolidated balance sheets. However, the accounts receivable owned by the SPV are separate and distinct from our other assets and are not available to our other creditors should we become insolvent. As of March 29, 2026, the SPV held $694 million of accounts receivable. We must maintain certain ratios related to the collection of our receivables as a condition of the Securitization Facility agreement. As of March 29, 2026, we had $27 million in letters of credit issued under the Securitization Facility. None of the letters of credit were drawn upon.
Cash Flows From Operating Activities
Three Months Ended
March 29, 2026 March 30, 2025
(in millions)
Cash flows from operating activities:
Net income $ 249 $ 227
Adjustments to reconcile net income to net cash flows used in operating activities:
Depreciation and amortization 83 83
Change in accounts receivable (50) (204)
Change in inventories (15) 33
Change in prepaid expenses and other current assets 31 28
Change in accounts payable (344) (318)
Change in accrued expenses and other current liabilities (11) (80)
Other (8) 64
Net cash flows used in operating activities $ (65) $ (166)
The decrease in net cash flows used in operating activities year-over-year was primarily driven by changes in working capital and higher earnings. The following describes the significant changes in working capital:
•Accounts receivable. Accounts receivable increased in the first quarter of 2026 primarily driven by the timing of the Easter holiday. Sales to Murphy Family Farms and VisionAg also contributed to the increases in both time periods with a larger impact in the first quarter of 2025 related to the one-time sales of commercial hog inventories in connection with the formation of these entities.
•Inventories. Both periods reflect higher meat inventories and lower hog and feed inventories. Meat inventories increased in each period primarily due to a seasonal build in advance of the summer grilling season. Additionally, meat inventories were higher at the end of the first quarter of 2025 due to the later timing of the Easter holiday. Hog inventories declined in both periods as a result of Hog Production
Reform, with a more pronounced impact in the first quarter of 2025. Feed inventories decreased in both periods due to the normal consumption of grain purchased during the prior-year harvest.
•Accounts payable. Accounts payable decreased in both periods mainly due to the seasonal deferral of payments for hog and grain purchases made in the fourth quarter each year. Payments to certain farmers for these purchases are deferred until the first quarter of the following year.
•Accrued expenses and other current liabilities. Accrued expenses and other current liabilities decrease seasonally in the first quarter each year due to payout of variable compensation earned in prior years. The decrease in both periods was partially offset by increases in current income taxes payable. The year-over-year change is attributable to a lower variable compensation payout and a larger increase to income taxes payable in the first quarter of 2026.
•Other. The change in both periods is primarily attributable to derivative gains and losses that are deferred in accumulated other comprehensive loss and subsequently reclassified into earnings as the underlying transactions affect earnings.
Cash Flows From Investing Activities
Three Months Ended
March 29, 2026 March 30, 2025
(in millions)
Cash flows from investing activities:
Capital expenditures $ (88) $ (79)
Net expenditures from breeding stock transactions (6) (7)
Cash receipts on notes receivable 14 1
Net cash flows used in investing activities $ (80) $ (85)
The following items explain the significant investing activities:
•Capital expenditures. Capital expenditures for both periods consisted primarily of various plant automation and improvement projects.
•Cash receipts on notes receivable. Cash receipts on notes receivable consists of cash received primarily related to sales of breeding stock and related assets to Murphy Family Farms and VisionAg, which we financed through interest bearing notes.
Cash Flows From Financing Activities
Three Months Ended
March 29, 2026 March 30, 2025
(in millions)
Cash flows from financing activities:
Net proceeds from issuance of common stock $ - $ 236
Other (5) -
Net cash flows from (used in) financing activities $ (5) $ 236
The following items explain the significant financing activities:
•Net proceeds from issuance of common stock. In the first quarter of 2025, we received net proceeds from our IPO of $236 million after deducting underwriting discounts, commissions and fees.
Other Anticipated or Potential Cash Requirements
Capital Expenditures
The Company remains in a strong financial position due to its robust cash flows, liquidity, and solid balance sheet. We plan to continue to support the business in 2026 through capital expenditures in the range of $350 million to $450 million, inclusive of profit improvement projects, such as packaged meats capacity expansion and automation, as well as repairs and maintenance.
If approved by our board of directors and completed on the expected schedule, we estimate that our investment in a new fresh pork and packaged meats processing facility in Sioux Falls, South Dakota will be up to $1.3 billion over the next three years.
Nathan's Famous
We expect to pay approximately $450 to $500 million for our pending acquisition of Nathan's, including transaction costs and the payoff of assumed debt. The transaction is expected to close during the second half of 2026, subject to obtaining regulatory approvals and other customary closing conditions.
Dividends
Returning cash to shareholders in the form of dividends is also a top priority for the Company. On March 23, 2026, our Board declared a quarterly cash dividend of $0.3125 per share of common stock, which was paid on April 21, 2026, to shareholders of record on April 7, 2026. We anticipate the remaining quarterly dividends in fiscal year 2026 will be unchanged, resulting in an annual dividend rate in fiscal year 2026 of $1.25 per share. The declaration of dividends is subject to the discretion of our Board and depends on various factors, including our net income, financial condition, cash requirements, business prospects, and other factors that our Board deems relevant to its analysis and decision making.
Altosano Redeemable Noncontrolling Interest
The noncontrolling interest ("NCI") holders in Granjas Carroll de Mexico, S. de R.L. de C.V., (commonly known as "Altosano") currently have the right to exercise a put option that would obligate us to redeem 40% of their interest. After December 31, 2027 the NCI holders in Altosano have the right to exercise a put option for the remainder of their interest. The redemption value for the NCI is fair value. As of March 29, 2026, the value of the NCI on our condensed consolidated balance sheet was $311 million.
Contingent Losses
The condensed consolidated financial statements reflect accruals for contingent losses associated with various claims. Legal expenses incurred in our and our subsidiaries' defense of these claims and any payments made to plaintiffs through unfavorable verdicts or otherwise could negatively impact our cash flows and our liquidity position. For more information on contingencies, refer to "Note 15: Regulation and Contingencies" to the condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Risk Management Activities
We are exposed to market risks primarily from changes in commodity prices, and to a lesser degree, interest rates and foreign exchange rates. To mitigate these risks, we utilize derivative instruments to hedge our exposure to changing prices and rates, as more fully described in Part I, Item 3 "Quantitative and Qualitative Disclosures About Market Risk" and "Note 8: Derivative Financial Instruments" to the condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Our liquidity position may be positively or negatively affected by changes in the value of our derivative portfolio. When the value of our open derivative contracts decreases, we may be required to post margin deposits with our brokers and counterparties to cover a portion of the decrease. Conversely, when the value of our open derivative contracts increases, our brokers may be required to deliver margin deposits to us for a portion of the increase. Over
the past twelve quarters, the maximum amount of margin deposits held by our brokers and counterparties at any given time was $121 million.
The effects, positive or negative, on liquidity resulting from our risk management activities historically have tended to be mitigated by offsetting changes in cash prices in our core business. For example, in a period of rising grain prices, gains resulting from long grain derivative positions would generally be offset by higher cash prices paid to farmers and other suppliers in spot markets. These offsetting changes do not always occur, however, in the same amounts or in the same period, with lag times of as much as twelve months.
Non-GAAP Measures
In arriving at our presentation of non-GAAP financial measures, we exclude items that have an impact on our income statement that, in the judgment of our management, are items that, either as a result of their nature or size, could, were they not identified, potentially cause investors to extrapolate future performance from an improper base. While not all inclusive, examples of these items include:
•loss contingencies, due to the difficulty in predicting future events, their timing and size;
•transactions or events that are not part of our core business activities or are unusual in their nature (whether gains or losses); and
•the tax effects of the foregoing items.
Adjusted Net Income Attributable to Smithfield and Adjusted Net Income per Diluted Common Share Attributable to Smithfield
The following table provides a reconciliation of net income attributable to Smithfield to adjusted net income attributable to Smithfield. Adjusted net income attributable to Smithfield and adjusted net income per diluted common share attributable to Smithfield are non-GAAP measures. We believe these non-GAAP measures are useful for investors because they exclude the effects of items that are unusual in nature, infrequent in occurrence or otherwise stem from strategic decisions to restructure our operations. Although we believe these non-GAAP measures provide a better comparison of our year-over-year performance and are frequently used by investors and securities analysts in their evaluations of companies, they have limitations as analytical tools. As such, adjusted net income attributable to Smithfield and adjusted net income per diluted common share attributable to Smithfield are not intended to be alternatives to net income, net income per diluted common share or any other performance measures derived in accordance with GAAP and should not be used by investors or other users of our financial statements in isolation for formulating decisions as they exclude a number of important cash and non-cash charges.
Three Months Ended
Affected income statement
account
March 29, 2026 March 30, 2025
(in millions, except per share data)
Net income attributable to Smithfield $ 246 $ 224
Incremental costs from destruction of property (1)
3 -
Cost of sales
Plant closures 2 1 Cost of sales
Reduction in workforce and optimization (2)
1 6 SG&A
Reduction in workforce and optimization (2)
- 2 Cost of sales
Hog Production Reform - 2
Cost of sales
Hog Production Reform - (1) Operating gains
Insurance recoveries (3)
- (6) Operating gains
Income tax effect of non-GAAP adjustments (4)
(2) (1) Income tax expense
Adjusted net income attributable to Smithfield $ 251 $ 227
Net income attributable to Smithfield per diluted common share $ 0.62 $ 0.57
Adjusted net income attributable to Smithfield per diluted common share $ 0.64 $ 0.58
________________
(1)Consists of incremental costs from the destruction of property in connection with a fire at a sow farm in Laverne, Oklahoma.
(2)Consists of severance and restructuring costs associated with workforce reduction and administrative process optimization initiatives. Total severance costs round up to $9 million for the first quarter of 2025.
(3)Consists of a gain recognized in connection with the settlement of an insurance claim associated with property damage.
(4)Represents the tax effects of the non-GAAP adjustments based on a statutory tax rate of 25.7%.
EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin
The following table provides a reconciliation of net income to earnings before interest, taxes, depreciation and amortization ("EBITDA") and adjusted EBITDA. EBITDA, adjusted EBITDA and adjusted EBITDA margin are non-GAAP measures. We believe EBITDA is a useful measure to our stakeholders because it excludes the effects of financing and investing activities by eliminating interest and depreciation costs to provide a comparable year-over-year analysis. We believe adjusted EBITDA is a useful measure as it excludes the effect of non-operating gains and losses and other items that are unusual in nature, infrequent in occurrence or otherwise stem from strategic decisions to restructure our operations. We believe adjusted EBITDA margin is a useful measure as it evaluates overall operating performance, ability to pursue and service possible debt opportunities and possible future investment opportunities. We believe these non-GAAP measures provide a more comparable year-over-year analysis. Although these non-GAAP measures are frequently used by investors and securities analysts in their evaluations of companies, they have limitations as analytical tools. As such, EBITDA, adjusted EBITDA and adjusted EBITDA margin are not intended to be alternatives to net income or any other performance measures derived in accordance with GAAP and should not be used by investors or other users of our financial statements in isolation for formulating decisions as they exclude a number of important cash and non-cash charges.
Three Months Ended Twelve Months Ended Affected Income Statement Account
March 29, 2026 March 30, 2025 March 29, 2026 December 28, 2025
(in millions, except percentages)
Net income $ 249 $ 227 $ 1,021 $ 998
Interest expense, net 8 11 37 41
Income tax expense 72 72 283 283
Depreciation and amortization
83 83 332 332
EBITDA $ 413 $ 393 $ 1,674 $ 1,654
Litigation charges - - 73 73 SG&A
Reduction in workforce and optimization (1)
1 6 4 9 SG&A
Reduction in workforce and optimization (1)
- 2 - 2 Cost of sales
Office closures (2)
- - 4 4 SG&A
Incremental costs from destruction of property (3)
3 - 3 - Cost of sales
Plant closures (4)
1 1 1 1 Cost of sales
Hog Production Reform (5)
- 1 2 3 Cost of sales
Hog Production Reform (6)
- (1) (3) (4) Operating gains
Employee retention tax credits (7)
- - (10) (10) Cost of sales
Insurance recoveries (8)
- (6) (30) (36) Operating gains
Company-owned life insurance gain (9)
- - (17) (17) Non-operating gains
Adjusted EBITDA $ 417 $ 396 $ 1,699 $ 1,677
Net income margin 6.6 % 6.0 % 6.6 % 6.4 %
Adjusted EBITDA margin 11.0 % 10.5 % 10.9 % 10.8 %
________________
(1)Consists of severance and restructuring costs associated with workforce reduction and administrative process optimization initiatives. Total severance costs round up to $9 million and $12 million for the first quarter of 2025 and fiscal year 2025, respectively.
(2)Consists of severance costs associated with the planned closure of our satellite offices in Lisle, Illinois and Kansas City, Missouri.
(3)Consists of incremental costs from the destruction of property in connection with a fire at a sow farm in Laverne, Oklahoma.
(4)Excludes accelerated depreciation charges as such amounts are included in the depreciation and amortization line in this table.
(5)Consists of contract termination costs, loss on asset disposals, employee termination benefits and other exit costs associated with our Hog Production Reform initiative. Excludes accelerated depreciation charges as such amounts are included in the depreciation and amortization line in this table.
(6)Fiscal year 2025 and twelve months ended March 29, 2025 includes a $3 million gain on the sale of certain of our hog farms in Missouri.
(7)Represents the recognition of employee retention tax credits received under the Coronavirus Aid, Relief, and Economic Security Act.
(8)Consists of gains recognized in connection with settlements of insurance claims associated with past litigation and property damage.
(9)Consists of a gain recognized in the third quarter of 2025 for a one-time benefit on company-owned life insurance policies.
Net Debt and Ratio of Net Debt to Adjusted EBITDA
The following table provides a reconciliation of total debt and finance lease obligations to net debt, the ratio of total debt and finance lease obligations to net income, and the ratio of net debt to adjusted EBITDA. Net debt and the ratio of net debt to adjusted EBITDA are non-GAAP measures. We believe net debt is a useful measure as it helps to give investors a clear understanding of our financial position. Net debt is also used to calculate certain leverage ratios. We believe the ratio of net debt to adjusted EBITDA is a useful measure as it monitors the sustainability of our debt levels and our ability to take on additional debt against adjusted EBITDA, which is used as an operating
performance measure. We believe these non-GAAP measures provide a more comparable year-over-year analysis. Although net debt and the ratio of net debt to adjusted EBITDA are frequently used by investors and securities analysts in their evaluations of companies, these non-GAAP measures have limitations as analytical tools. As such, net debt and the ratio of net debt to adjusted EBITDA are not intended to be alternatives to total debt and finance lease obligations and the ratio of total debt and finance lease obligations to net income or any other performance measures derived in accordance with GAAP and should not be used by investors or other users of our financial statements in isolation for formulating decisions as they exclude a number of important cash and non-cash charges.
Twelve Months Ended
March 29,
2026 		December 28,
2025
(in millions, except ratios)
Current portion of long-term debt and finance lease obligations $ 602 $ 3
Long-term debt and finance lease obligations 1,401 2,000
Total debt and finance lease obligations $ 2,003 $ 2,003
Cash and cash equivalents (1,386) (1,539)
Net debt $ 618 $ 464
Net income $ 1,021 $ 998
Adjusted EBITDA $ 1,699 $ 1,677
Ratio of total debt and finance lease obligations to net income 2.0x 2.0x
Ratio of net debt to adjusted EBITDA 0.4x 0.3x
Adjusted Operating Profit and Adjusted Operating Profit Margin
The following table provides a reconciliation of operating profit to adjusted operating profit. Adjusted operating profit and adjusted operating profit margin are non-GAAP measures. We believe these non-GAAP measures are useful to investors because they provide a better understanding of underlying operating results and trends of established, ongoing operations of our segments, excluding the impact of items that are unusual in nature, infrequent in occurrence or otherwise stem from strategic decisions to restructure our operations. These non-GAAP measures are not intended to be alternatives to operating profit, operating profit margin or any other performance measures derived in accordance with GAAP and should not be used by investors or other users of our financial statements in isolation for formulating decisions as they exclude a number of important cash and non-cash charges.
Three Months Ended
March 29, 2026 March 30, 2025
(in millions, except percentages)
Operating profit $ 333
$
321
Incremental costs from destruction of property (1)
3 -
Plant closures 2 1
Reduction in workforce and optimization (2)
1 9
Hog Production Reform - 1
Insurance recoveries (3)
- (6)
Adjusted operating profit $ 339 $ 326
Operating profit margin 8.7 % 8.5 %
Adjusted operating profit margin 8.9 % 8.6 %
________________
(1)Consists of incremental costs from the destruction of property in connection with a fire at a sow farm in Laverne, Oklahoma.
(2)Consists of severance and restructuring costs associated with workforce reduction and administrative process optimization initiatives.
(3)Consists of a gain recognized in connection with the settlement of an insurance claim associated with property damage.
Critical Accounting Estimates
The preparation of condensed consolidated financial statements requires us to make estimates and assumptions. These estimates and assumptions are based on our judgment, experience and understanding of the current facts and circumstances. Actual results could differ from those estimates. Certain of our accounting estimates are considered critical as they are both important to the representation of our financial condition and results of operations and require significant or complex judgment on the part of management.
A summary of certain accounting policies and estimates that we consider to be critical are described in Part II, Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended December 28, 2025. There have been no material changes to our critical accounting estimates disclosed in our Annual Report on Form 10-K for the fiscal year ended December 28, 2025.
Recently Issued Accounting Pronouncements
For a description of recently issues accounting pronouncements, refer to "Note 1: Summary of Significant Accounting Policies" to the condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q and our other publicly available documents contain forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995 about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future financial condition, future operations, projected costs, prospects, plans, objectives of management, and expected market growth, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words, such as "may," "might," "will," "shall," "should," "expects," "plans," "anticipates," "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential," "goal," "objective," "seeks," "likely" or "continue" or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans, or intentions.
Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:
•our ability to capture synergies between our Packaged Meats and Fresh Pork segments;
•our ability to execute on our strategy to optimize the size of our hog production operations;
•our ability to anticipate and meet consumer trends and interests through product innovation;
•the size of our addressable markets, market share and market trends, including our ability to drive organic growth in our business through our Packaged Meats and Fresh Pork segments;
•anticipated trends, developments and challenges in our industry, business and the highly competitive markets in which we operate;
•our ability to mitigate higher input costs through productivity improvements in our operations (including analytics and task automation), various procurement strategies and the use of derivative instruments;
•our dependence on third-party suppliers and our ability to mitigate any disruption or inefficiency in our supply chain and/or operations;
•our expectations regarding our hog production transformation strategy and our ability to achieve segment production targets;
•fluctuations in our quarterly results of operations due to the seasonal nature of our business;
•our ability to attract and retain employees and maintain our corporate culture;
•our ability to prevent cyberattacks, other cyber-incidents, security breaches or other disruptions of our information technology systems;
•our ability to defend litigation brought against us successfully and the sufficiency of our accruals for related contingent losses;
•compliance with laws and regulations, including environmental, cybersecurity and tax laws and regulations, that currently apply or may become applicable to our business both in the U.S. and Mexico and our expectations regarding various laws and restrictions that relate to our business;
•risks arising from the Company's global operations, including geopolitical risk, exchange rate risk, legal, tax, and regulatory risk, and risks associated with trade policies, export and import controls, and tariffs;
•our ability to execute on acquisitions, joint ventures and divestitures, including our pending acquisition of Nathan's Famous, which remains subject to regulatory approval and other customary closing conditions;
•legal, regulatory, or market measures to address climate change and our ability to achieve our climate-related goals and strategies;
•future investments in our business, our anticipated capital expenditures and our estimates regarding our capital requirements;
•the sufficiency of our cash and cash equivalents and the availability of our committed credit facilities to meet our liquidity needs;
•our ability to achieve our financial and operational targets;
•our ability to maintain our investment grade ratings;
•our expectations regarding expenses, such as stock-based compensation expenses;
•fluctuations in the values of our open derivative contracts and pension obligations and related assets;
•impairment in the carrying value of our goodwill or intangible assets;
•our ability to achieve or maintain our targeted Ratio of Net Debt to Adjusted EBITDA and minimum liquidity levels; and
•our dividend policy and our ability to pay dividends.
We cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur at all. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors, including those described in the section titled "Risk Factors" and elsewhere in this Quarterly Report on Form 10-Q. Moreover, new risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q.
The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this
Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law.
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