Smithfield Foods Inc.
10/27/2026 | Press release | Distributed by Public on 10/27/2026 06:01
Quarterly Report for Quarter Ending September 27, 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 31,000 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 third quarters of fiscal years 2026 and 2025, which ended on September 27, 2026 and September 28, 2025, respectively, consisted of 13 weeks. Each of the first nine months of fiscal years 2026 and 2025 consisted of 39 weeks.
We conduct our operations through three reportable segments: Packaged Meats, Fresh Pork and Hog Production. We also conduct operations through our Mexico and Bioscience operating segments, 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 bacon, sausage and pre-cooked entrées). 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.
Approximately 60% of the Hog Production segment's cost of goods sold is 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 global demand for pork, 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. During the first nine months of 2026, our export sales into China accounted for approximately 2% of our total sales. As of September 27, 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 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 September 27, 2026 and December 28, 2025, we had contingent liabilities related to litigation matters totaling $159 million and $149 million, respectively, classified in accrued expenses and other current liabilities on the condensed consolidated balance sheets. During the third quarter and first nine months of 2026, we recorded litigation-related charges of $13 million. During the first nine months of 2025, we recorded litigation-related charges of $80 million, with no charges recorded during the third quarter of 2025. These charges were recorded in selling, general and administrative expenses ("SG&A") in the condensed consolidated statements of income. 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. Additionally, 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 further information related to our litigation matters, refer to "Note 19: Regulation and Contingencies" to the condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
One Big Beautiful Bill
On July 4, 2025, the Tax Relief for American Families and Workers Act of 2025 (commonly known as the "One Big Beautiful Bill" or "OBBB") was signed into law. This comprehensive legislation made several significant changes to federal tax law, including:
•Permanently reinstating 100% bonus depreciation and adding 100% bonus deprecation for real property placed in service after January 19, 2025 and used in production activity
•Permanently reinstating the immediate expensing of research and development ("R&D") in the U.S for years 2022 and beyond
•Permanently restoring the earnings before interest, taxes, depreciation and amortization ("EBITDA")-based limitations for interest deduction under the IRS Tax Code.
In the third quarter of 2025, following the enactment of the OBBB, we reclassified approximately $77 million of deferred tax assets related to R&D capitalization to prepaid expenses and other current assets.
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, which would replace our existing 117-year-old facility. Our preliminary estimate of the proposed investment is up to $1.3 billion. 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.
We also entered into separate agreements in the first quarter of 2026 to purchase land for the proposed Sioux Falls facility and sell our existing facility, each for $37 million. The land purchase for the new site closed on July 1, 2026. The purchase agreement includes a provision granting us the right to unwind the transaction if construction of the
proposed Sioux Falls facility does not commence by October 1, 2027. The sale of the existing Sioux Falls facility is contingent upon transitioning operations to the proposed facility.
Nathan's Famous, Inc. Acquisition
On October 26, 2026, we acquired Nathan's Famous, Inc. ("Nathan's") for $441 million, including $18 million in transaction costs. Additionally, we assumed debt totaling $47 million (approximately $10 million net of cash acquired), which we repaid subsequent to the acquisition. The acquisition was funded using cash on hand.
Substantially all of the fair value of the gross assets acquired is concentrated in the Nathan's Famous trade name. Therefore, the transaction will be accounted for as an asset acquisition in the fourth quarter of fiscal year 2026. As of the date of issuance of these condensed consolidated financial statements, the accounting for the acquisition, including the allocation of the purchase price to the acquired assets and assumed liabilities, has not been completed.
From March 2014 until the acquisition date, we 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 was scheduled to expire in March 2032.
Restructuring and Optimization
Springfield, Massachusetts Facility
In October 2026, we exited our leased Springfield, Massachusetts dry sausage production facility and consolidated production across our network, including at our Nashville, Tennessee facility. The decision to close the Springfield facility was part of the Company's ongoing efforts to optimize its manufacturing footprint and improve operational and cost efficiencies. During the third quarter and first nine months of 2026, we recognized $5 million and $11 million, respectively, in accelerated depreciation and amortization, employee termination benefits and other exit costs in cost of sales in the condensed consolidated statement of income. The lease terminates in March 2027 and we expect to recognize an additional $2 million in exit costs through the termination date.
Elizabeth, New Jersey Facility
On June 30, 2025, we exited our leased Elizabeth, New Jersey facility, a small specialty dry sausage production facility, and consolidated production across our network. Costs associated with closing the plant primarily include equipment that we disposed of prior to the end of the asset's useful life. The charges associated with the closing were not material.
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, during the third quarter and first nine months of 2026, we recognized $3 million and $8 million, respectively, in restructuring costs in SG&A in the condensed consolidated statement of income and anticipate additional one-time restructuring costs totaling approximately $3 million in the fourth quarter of fiscal year 2026.
Office Closures
In the second quarter of 2025, we announced a plan to close our satellite offices in Lisle, Illinois and Kansas City, Missouri and move work performed at those locations to our headquarters in Smithfield, Virginia. As a result, we estimated and accrued $4 million of employee termination benefit costs in SG&A in the condensed consolidated statement of income in the second quarter of 2025 for personnel who are not expected to relocate. Subsequent office closure costs were not material.
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.
On October 16, 2026, we entered into agreements with VisionAg Hog Production, LLC ("VisionAg") pursuant to which we will sell approximately 40,000 sows and the associated commercial hog inventories located on certain Company-owned and contract farms in North Carolina to VisionAg, and assign certain contract grower agreements to VisionAg. The sale of sows will be financed through an interest-bearing note over a 30-month period. We also entered into a ten-year master lease agreement to lease the associated company-owned hog production facilities to a contract grower for VisionAg. These leases provide for annual base rent of approximately $1 million and include the option to purchase the leased properties during the lease term at predetermined prices. In addition, the parties amended existing supply, transportation, genetic material, and other commercial agreements to support the transition of the operations. We continue to maintain commercial relationships with VisionAg under these amended agreements, including a long-term market hog supply agreement. As a result of these agreements, we expect to produce approximately nine hundred thousand fewer hogs per year, which will be supplied by VisionAg
Following this transaction, Murphy Family Farms and VisionAg will supply us with approximately 4.8 million hogs annually. We continue to 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 | Nine Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||
| September 27, 2026 | September 28, 2025 | $ Change | % Change | September 27, 2026 | September 28, 2025 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||
| (in millions) | (in millions) | ||||||||||||||||||||||||||||||||||||||||||||||
| Sales | $ | 3,437 | $ | 3,747 | $ | (310) | (8.3) | % | $ | 10,937 | $ | 11,304 | $ | (367) | (3.2) | % | |||||||||||||||||||||||||||||||
| Cost of sales | 3,124 | 3,268 | (144) | (4.4) | % | 9,634 | 9,817 | (183) | (1.9) | % | |||||||||||||||||||||||||||||||||||||
| Gross profit | 313 | 479 | (166) | (34.6) | % | 1,303 | 1,487 | (184) | (12.4) | % | |||||||||||||||||||||||||||||||||||||
| Selling, general and administrative expenses | 193 | 178 | 16 | 8.8 | % | 564 | 643 | (79) | (12.3) | % | |||||||||||||||||||||||||||||||||||||
| Operating gains | (7) | (9) | 2 | (22.3) | % | (11) | (48) | 37 | (76.9) | % | |||||||||||||||||||||||||||||||||||||
| Operating profit | 127 | 310 | (184) | (59.1) | % | 750 | 892 | (142) | (16.0) | % | |||||||||||||||||||||||||||||||||||||
| Interest expense, net | 6 | 11 | (5) | (47.1) | % | 22 | 33 | (11) | (33.3) | % | |||||||||||||||||||||||||||||||||||||
| Non-operating (gains) losses | 1 | (19) | 20 | NM | (15) | (17) | 2 | (11.8) | % | ||||||||||||||||||||||||||||||||||||||
| Income before income taxes | 120 | 318 | (198) | (62.3) | % | 743 | 876 | (133) | (15.2) | % | |||||||||||||||||||||||||||||||||||||
| Income tax expense | 30 | 71 | (41) | (57.9) | % | 165 | 205 | (39) | (19.3) | % | |||||||||||||||||||||||||||||||||||||
| (Income) loss from equity method investments | - | (4) | 4 | (96.4) | % | (2) | 4 | (6) | NM | ||||||||||||||||||||||||||||||||||||||
| Net income | 91 | 252 | (161) | (64.1) | % | 579 | 667 | (88) | (13.2) | % | |||||||||||||||||||||||||||||||||||||
| Net income attributable to noncontrolling interests | 1 | 4 | (3) | (72.7) | % | 6 | 7 | (2) | (23.7) | % | |||||||||||||||||||||||||||||||||||||
| Net income attributable to Smithfield | $ | 89 | $ | 248 | $ | (159) | (63.9) | % | $ | 574 | $ | 660 | $ | (86) | (13.1) | % | |||||||||||||||||||||||||||||||
Operating Profit (Loss) and Operating Profit Margin by Segment
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||
| September 27, 2026 | September 28, 2025 | Change | % Change | September 27, 2026 | September 28, 2025 | Change | % Change | ||||||||||||||||||||||||||||||||||||||||
| (in millions, except percentages and basis points) | (in millions, except percentages and basis points) | ||||||||||||||||||||||||||||||||||||||||||||||
| Operating profit (loss): | |||||||||||||||||||||||||||||||||||||||||||||||
| Packaged Meats | $ | 230 | $ | 226 | $ | 4 | 1.9 | % | $ | 770 | $ | 792 | $ | (23) | (2.8) | % | |||||||||||||||||||||||||||||||
| Fresh Pork | (89) | 10 | (100) | NM | 3 | 127 | (124) | (97.6) | % | ||||||||||||||||||||||||||||||||||||||
| Hog Production | 34 | 89 | (55) | (61.3) | % | 103 | 112 | (9) | (8.2) | % | |||||||||||||||||||||||||||||||||||||
| Other | (5) | 10 | (15) | NM | 4 | 32 | (27) | (85.8) | % | ||||||||||||||||||||||||||||||||||||||
| Corporate expenses | (25) | (24) | (2) | (6.6) | % | (78) | (79) | 1 | 0.8 | % | |||||||||||||||||||||||||||||||||||||
|
Unallocated (1)
|
(18) | (1) | (17) | NM | (52) | (92) | 40 | 43.2 | % | ||||||||||||||||||||||||||||||||||||||
| Operating profit | $ | 127 | $ | 310 | $ | (184) | (59.1) | % | $ | 750 | $ | 892 | $ | (142) | (16.0) | % | |||||||||||||||||||||||||||||||
| Operating profit (loss) margin: | |||||||||||||||||||||||||||||||||||||||||||||||
| Packaged Meats | 11.6 | % | 10.8 | % | 80 | bps | 12.5 | % | 12.8 | % | (28) | bps | |||||||||||||||||||||||||||||||||||
| Fresh Pork | (4.9) | % | 0.5 | % | (539) | bps | 0.1 | % | 2.0 | % | (197) | bps | |||||||||||||||||||||||||||||||||||
| Hog Production | 5.0 | % | 10.9 | % | (596) | bps | 4.6 | % | 4.3 | % | 27 | bps | |||||||||||||||||||||||||||||||||||
| Other | (3.3) | % | 7.7 | % | (1,100) | bps | 0.9 | % | 8.9 | % | (796) | bps | |||||||||||||||||||||||||||||||||||
| Consolidated | 3.7 | % | 8.3 | % | (459) | bps | 6.9 | % | 7.9 | % | (104) | 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 third quarter of 2026 compared to the third quarter of 2025 and for the first nine months of 2026 compared to the first nine months of 2025.
Sales
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||
| September 27, 2026 | September 28, 2025 | $ Change | % Change | September 27, 2026 | September 28, 2025 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||
| (in millions) | (in millions) | ||||||||||||||||||||||||||||||||||||||||||||||
| Sales by segment: | |||||||||||||||||||||||||||||||||||||||||||||||
| Packaged Meats | $ | 1,982 | $ | 2,090 | $ | (108) | (5.2) | % | $ | 6,154 | $ | 6,193 | $ | (39) | (0.6) | % | |||||||||||||||||||||||||||||||
| Fresh Pork | 1,814 | 2,185 | (371) | (17.0) | % | 5,834 | 6,299 | (465) | (7.4) | % | |||||||||||||||||||||||||||||||||||||
| Hog Production | 691 | 813 | (122) | (15.0) | % | 2,232 | 2,585 | (353) | (13.7) | % | |||||||||||||||||||||||||||||||||||||
| Other | 151 | 131 | 20 | 15.2 | % | 478 | 355 | 123 | 34.5 | % | |||||||||||||||||||||||||||||||||||||
| Total segment sales | 4,639 | 5,220 | (581) | (11.1) | % | 14,698 | 15,433 | (735) | (4.8) | % | |||||||||||||||||||||||||||||||||||||
|
Inter-segment sales eliminations:
|
|||||||||||||||||||||||||||||||||||||||||||||||
| Packaged Meats | (1) | - | (1) | NM | (1) | - | (1) | NM | |||||||||||||||||||||||||||||||||||||||
|
Fresh Pork
|
(707) | (910) | 204 | (22.4) | % | (2,235) | (2,507) | 272 | (10.9) | % | |||||||||||||||||||||||||||||||||||||
|
Hog Production
|
(494) | (562) | 68 | (12.2) | % | (1,524) | (1,621) | 97 | (6.0) | % | |||||||||||||||||||||||||||||||||||||
| Total inter-segment sales eliminations | (1,202) | (1,473) | 271 | (18.4) | % | (3,761) | (4,129) | 368 | (8.9) | % | |||||||||||||||||||||||||||||||||||||
| Consolidated sales | $ | 3,437 | $ | 3,747 | $ | (310) | (8.3) | % | $ | 10,937 | $ | 11,304 | $ | (367) | (3.2) | % | |||||||||||||||||||||||||||||||
Third Quarter - 2026 vs. 2025
Packaged Meats. Segment sales decreased by $108 million, or 5.2%, primarily attributable to a 5.3% decrease in our average sales price, which was largely driven by lower raw material costs, which translated into lower sales prices of our packaged meats products. Sales volume increased slightly year-over-year.
Fresh Pork. Segment sales decreased by $371 million, or 17.0%, driven by an 11.4% decrease in our average sales price and a 6.3% decrease in sales volume due to softer domestic consumer demand and a global oversupply of pork. The decrease in our average sales price outperformed the 15.3% decrease in the fresh pork cut-out values reported by the USDA, which averaged $0.97 per pound in the third quarter of 2026.
Hog Production. Segment sales decreased by $122 million, or 15.0%, driven by the following factors, which more than offset an approximately 40,000, or 1.3%, increase in the number of market hogs sold:
•A 5.2% decrease in our average market hog sales price, inclusive of the effects of hedging, driven by a 14.5% decrease, year-over-year, in the lean hog price index published by the Chicago Mercantile Exchange ("CME").
•A decrease of approximately $74 million in sales to Murphy Family Farms and VisionAg, primarily driven by the initial sale of commercial hog inventories in the prior year in connection with the formation of these entities.
•A decrease of approximately $12 million in grain sales to other third parties.
•An $11 million decrease in breeding stock sales.
Other. Segment sales increased by $20 million, or 15.2%, primarily due to a 29.2% increase in volume and an $11 million increase from the impact of foreign currency translation, partially offset by a 23.0% decrease in average sales price associated with our Mexico operations. The increase in sales volume was due to higher sales of our Fresh
Pork segment products through our Mexico operations and improved capacity utilization. The decrease in average sales price was largely driven by lower market prices for fresh pork and live hogs in Mexico.
Inter-segment Eliminations
•Fresh Pork. The decrease in inter-segment sales by our Fresh Pork segment was primarily attributable to lower market values for fresh pork components sold to our Packaged Meats segment.
•Hog Production. The decrease in inter-segment sales by our Hog Production segment was primarily attributable to lower live hog market prices.
First Nine Months - 2026 vs. 2025
Packaged Meats. Segment sales decreased by $39 million, or 0.6%, attributable to a 0.6% decrease in sales volume. The average sales price remained consistent year-over-year.
Fresh Pork. Segment sales decreased by $465 million, or 7.4%, driven by a 3.9% decrease in our average sales price and a 3.6% decrease in sales volume due to softer domestic consumer demand and a global oversupply of pork. The decrease in our average sales price outperformed the 7.0% decrease in the fresh pork cut-out values reported by the USDA, which averaged $0.97 per pound in the first nine months of 2026.
Hog Production. Segment sales decreased by $353 million, or 13.7%, driven by the following factors:
•A decrease of approximately $312 million in sales to Murphy Family Farms and VisionAg, primarily driven by the initial sale of commercial hog inventories in the prior year in connection with the formation of these entities.
•A decrease of approximately $25 million in grain sales to other third parties.
•A decrease in the number of market hogs sold of 110,000, or 1.3%, primarily due to the formation of Murphy Family Farms and VisionAg.
•A $16 million decrease in breeding stock sales.
These decreases were partially offset by a 1.5% increase in our average market hog sales price, inclusive of the effects of hedging, while the lean hog price index published by the CME decreased 6.3% year-over-year.
Other. Segment sales increased by $123 million, or 34.5%, primarily due to a 41.2% increase in volume and a $51 million increase from the impact of foreign currency translation, partially offset by an 18.1% decrease in average sales price associated with our Mexico operations. Sales volume increased due to higher sales of our Fresh Pork segment products through our Mexico operations and improved capacity utilization. The decrease in average sales price was largely driven by lower market prices for fresh pork and live hogs in Mexico.
Inter-segment Eliminations
•Fresh Pork. The decrease in inter-segment sales by our Fresh Pork segment was primarily attributable to lower market values for fresh pork components sold to our Packaged Meats segment, partially offset by an increase in sales volume to our Mexico operations.
•Hog Production. The decrease in inter-segment sales by our Hog Production segment was primarily attributable to lower live hog market prices.
Cost of Sales
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||
| September 27, 2026 | September 28, 2025 | $ Change | % Change | September 27, 2026 | September 28, 2025 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||
| (in millions) | (in millions) | ||||||||||||||||||||||||||||||||||||||||||||||
|
Packaged Meats
|
$ | 1,653 | $ | 1,770 | $ | (118) | (6.6) | % | $ | 5,100 | $ | 5,126 | $ | (26) | (0.5) | % | |||||||||||||||||||||||||||||||
|
Fresh Pork
|
1,867 | 2,135 | (269) | (12.6) | % | 5,715 | 6,046 | (332) | (5.5) | % | |||||||||||||||||||||||||||||||||||||
|
Hog Production
|
649 | 714 | (66) | (9.2) | % | 2,101 | 2,442 | (340) | (13.9) | % | |||||||||||||||||||||||||||||||||||||
|
Other
|
150 | 116 | 34 | 29.6 | % | 455 | 307 | 148 | 48.4 | % | |||||||||||||||||||||||||||||||||||||
| Unallocated | 7 | 5 | 3 | 53.9 | % | 24 | 25 | - | (1.3) | % | |||||||||||||||||||||||||||||||||||||
| Inter-segment eliminations | (1,202) | (1,473) | 271 | (18.4) | % | (3,761) | (4,129) | 368 | (8.9) | % | |||||||||||||||||||||||||||||||||||||
| Cost of sales | $ | 3,124 | $ | 3,268 | $ | (144) | (4.4) | % | $ | 9,634 | $ | 9,817 | $ | (183) | (1.9) | % | |||||||||||||||||||||||||||||||
Third Quarter - 2026 vs. 2025
Packaged Meats. Cost of sales in our Packaged Meats segment decreased by $118 million, or 6.6%, driven primarily by a $143 million decrease in raw material costs resulting from a decline in raw material market prices. This decrease was partially offset by a $26 million increase in manufacturing and distribution costs primarily driven by higher fuel and freight costs and other inflationary pressures.
Fresh Pork. Cost of sales in our Fresh Pork segment decreased by $269 million, or 12.6%, driven primarily by a $275 million decrease in raw material costs resulting from lower market prices for live hogs and lower sales volume, partially offset by a $7 million increase in manufacturing costs.
Hog Production. Cost of sales in our Hog Production segment decreased by $66 million, or 9.2%, primarily due to the following factors:
•A decrease of approximately $37 million in cost of goods sold to Murphy Family Farms and VisionAg, primarily driven by the initial sale of commercial hog inventories in the prior year in connection with the formation of these entities.
•A decrease of approximately $15 million in raw material and operating costs.
•A decrease of approximately $11 million in cost of grain sold to other third parties.
•A $2 million decrease in the cost of breeding stock sales.
Other. Cost of sales in our Other segment increased by $34 million, or 29.6%, driven primarily by the following factors:
•A $17 million increase in raw material costs in our Mexico operations, primarily attributable the increase in sales volume.
•A $10 million unfavorable impact from foreign currency translation.
•A $4 million increase in manufacturing and distribution costs in our Mexico operations, primarily attributable to the increase in sales volume.
First Nine Months - 2026 vs. 2025
Packaged Meats. Cost of sales in our Packaged Meats segment decreased by $26 million, or 0.5%, driven by a $95 million decrease in raw material cost primarily attributable to lower raw material market prices, which more than offset the following factors:
•A $63 million increase in manufacturing and distribution costs primarily driven by higher fuel and freight costs and other inflationary pressures.
•The impact of $5 million in employee retention tax credits recognized in the second quarter of 2025.
Fresh Pork. Cost of sales in our Fresh Pork segment decreased by $332 million, or 5.5%, primarily due to a $351 million decrease in raw material costs driven by lower market prices for live hogs and lower sales volumes, which more than offset the following factors:
•A $17 million increase in manufacturing costs driven by inflationary pressures, partially offset by the decrease in sales volume.
•The impact of $5 million in employee retention tax credits recognized in the second quarter of 2025.
Hog Production. Cost of sales in our Hog Production segment decreased by $340 million, or 13.9%, primarily due to the following factors:
•A decrease of approximately $284 million in cost of goods sold to Murphy Family Farms and VisionAg, primarily driven by the initial sale of commercial hog inventories in the prior year in connection with the formation of these entities.
•A decrease of approximately $24 million in cost of grain sold to other third parties.
•A decrease of approximately $21 million in raw material and operating costs due in part to the decrease in market hog volume.
•An $11 million decrease in the cost of breeding stock sales.
Other. Cost of sales in our Other segments increased by $148 million, or 48.4%, driven primarily by the following factors:
•A $74 million increase in raw material costs in our Mexico operations, primarily attributable to the increase in sales volume.
•A $47 million unfavorable impact from foreign currency translation.
•A $17 million increase in manufacturing and distribution costs in our Mexico operations, primarily attributable to the increase in sales volume.
•An $11 million increase in costs in our Bioscience operations.
Selling, General and Administrative Expenses
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||
| September 27, 2026 | September 28, 2025 | $ Change | % Change | September 27, 2026 | September 28, 2025 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||
| (in millions) | (in millions) | ||||||||||||||||||||||||||||||||||||||||||||||
|
Packaged Meats
|
$ | 100 | $ | 95 | $ | 6 | 5.9 | % | $ | 284 | $ | 275 | $ | 10 | 3.5 | % | |||||||||||||||||||||||||||||||
|
Fresh Pork
|
37 | 40 | (3) | (7.2) | % | 116 | 125 | (9) | (7.3) | % | |||||||||||||||||||||||||||||||||||||
|
Hog Production
|
8 | 10 | (2) | (18.3) | % | 27 | 31 | (4) | (12.1) | % | |||||||||||||||||||||||||||||||||||||
|
Other
|
6 | 5 | 1 | 14.0 | % | 19 | 17 | 2 | 9.3 | % | |||||||||||||||||||||||||||||||||||||
|
Corporate expenses
|
25 | 24 | 2 | 6.6 | % | 78 | 79 | (1) | (0.8) | % | |||||||||||||||||||||||||||||||||||||
| Unallocated | 17 | 5 | 12 | 248.0 | % | 39 | 116 | (77) | (66.1) | % | |||||||||||||||||||||||||||||||||||||
| Selling, general and administrative expenses | $ | 193 | $ | 178 | $ | 16 | 8.8 | % | $ | 564 | $ | 643 | $ | (79) | (12.3) | % | |||||||||||||||||||||||||||||||
Third Quarter - 2026 vs. 2025
SG&A increased by $16 million, or 8.8%, driven primarily by the following factors, which were partially offset by a $14 million decrease in variable compensation accruals driven by lower earnings:
•Litigation-related charges totaling $13 million were recorded in the third quarter of 2026, which were not allocated to our operating segments.
•A $9 million increase in marketing and advertising expenses primarily recognized in the Packaged Meats segment.
•A $3 million increase in stock-based compensation.
First Nine Months - 2026 vs. 2025
SG&A decreased by $79 million, or 12.3%, driven primarily by the following factors:
•Litigation-related charges totaling $13 million were recorded in the first nine months of 2026 compared to $80 million in the first nine months of 2025, which were not allocated to our operating segments.
•A $15 million decrease in variable compensation accruals driven by lower earnings.
•A $7 million reduction in foreign exchange losses, which are not allocated to our operating segments.
•A $5 million reduction in losses on the sale of receivables due to the termination of the Monetization Facility (as defined below under Liquidity and Capital Resources-Credit Facilities), which are not allocated to our operating segments.
•A $5 million reduction in Pension Benefit Guaranty Corporation fees, which are not allocated to our operating segments.
•Continued focus on cost reduction and disciplined spending across the entire business.
These decreases were partially offset by the following factors:
•A $17 million increase in marketing and advertising expenses primarily recognized in the Packaged Meats segment.
•A $7 million increase in stock-based compensation.
Operating Gains
The following table provides details of operating gains.
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 27, 2026 | September 28, 2025 | September 27, 2026 | September 28, 2025 | ||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
|
Gains on disposal of assets (1)
|
$ | (7) | $ | (1) | $ | (9) | $ | (4) | |||||||||||||||
|
Insurance recoveries (2)
|
- | (2) | - | (37) | |||||||||||||||||||
|
Other operating gains (3)
|
(1) | (6) | (2) | (7) | |||||||||||||||||||
| Operating gains | $ | (7) | $ | (9) | $ | (11) | $ | (48) | |||||||||||||||
________________
(1)The third quarter and first nine months of 2026 include gains recognized in connection with the lease of hog production farms to contract growers for Murphy Family Farms, which were accounted for as sales-type leases. Upon commencement of the leases, the underlying farm assets were derecognized from property, plant and equipment, and the resulting gains were recognized.
(2)The first nine months of 2025 includes a gain related to the settlement of a claim against an insurance carrier for losses incurred in connection with past litigation and a gain recognized in the first quarter of 2025 in connection with a settlement of an insurance claim associated with property damage.
(3)The third quarter and first nine months of 2025 include a $6 million gain related to the settlement of a commercial dispute.
Non-Operating (Gains) Losses
The following table provides details of non-operating (gains) losses.
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 27, 2026 | September 28, 2025 | September 27, 2026 | September 28, 2025 | ||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
|
(Gains) losses on assets held in rabbi trusts (1)
|
$ | 3 | $ | (23) | $ | (10) | $ | (29) | |||||||||||||||
|
Net pension and postretirement benefits cost (2)
|
- | 4 | 1 | 13 | |||||||||||||||||||
| Other non-operating gains | (2) | - | (6) | - | |||||||||||||||||||
| Non-operating (gains) losses | $ | 1 | $ | (19) | $ | (15) | $ | (17) | |||||||||||||||
________________
(1)Assets held in rabbi trusts are used to fund nonqualified defined benefit pension and deferred compensation plans. The third quarter and first nine months of 2025 include a $17 million gain for a one-time benefit on company-owned life insurance policies.
(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.
Interest Expense, Net
Interest expense, net decreased by $5 million, or 47.1%, and $11 million, or 33.3%, for the third quarter and first nine months of 2026, respectively, due to higher levels of cash and cash equivalents earning interest in the current year.
Income Tax Expense
Income tax expense decreased year-over-year by $41 million, or 57.9%, for the third quarter and $39 million, or 19.3%, for the first nine months primarily due to lower earnings year-over-year. Our effective tax rate increased to 24.8% for the third quarter of 2026 from 22.2% for the same period in 2025 primarily due to tax settlements recognized in the third quarter of 2026, partially offset by a favorable adjustment resulting from the completion of our prior-year tax return. Our effective tax rate decreased to 22.2% for the first nine months of 2026 from 23.4% for the first nine months of 2025, primarily due to changes in the amount of deductible compensation for certain officers and the favorable adjustment resulting from the completion of our prior-year tax return recognized in the third
quarter of 2026.
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 September 27, 2026, we had $3,481 million of available liquidity consisting of $1,178 million in cash and cash equivalents and $2,303 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
| September 27, 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 | - | - | - | (22) | 203 | ||||||||||||||||||||||||||||||||
| Total credit facilities | $ | 2,325 | $ | - | $ | - | $ | - | $ | (22) | $ | 2,303 | ||||||||||||||||||||||||||
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 September 27, 2026, the SPV held $604 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 September 27, 2026, we had $22 million in letters of credit issued under the Securitization Facility. None of the letters of credit were drawn upon.
Monetization Facility
On July 22, 2025, we terminated an uncommitted $250 million accounts receivable monetization facility ("Monetization Facility") and paid $232 million to participating banks to reacquire the outstanding balance of accounts receivable previously sold under the facility. The Monetization Facility was originally established to provide us with additional liquidity and working capital flexibility. In light of our liquidity position and internal capital resources as of July 22, 2025, we determined that the Monetization Facility was no longer cost-effective or necessary. There were no early termination penalties or other material exit costs incurred in connection with the termination of the Monetization Facility.
Debt Refinancing
On October 14, 2026, we entered into a $600 million senior unsecured delayed draw term loan facility ("Term Loan"). The Term Loan bears interest at a variable rate based on the Secured Overnight Financing Rate ("SOFR") plus an applicable margin and matures three years from the funding date, which will occur prior to December 23, 2026. The Term Loan's financial covenants are consistent with our existing Senior Revolving Credit Facility. We will use the proceeds from the Term Loan to repurchase the outstanding $600 million aggregate principal amount of our senior unsecured notes due February 2027. In connection with entering into the Term Loan, we incurred approximately $1 million of debt issuance costs, which will be amortized into interest expense over the three-year term of the Term Loan upon funding the loan.
Cash Flows From Operating Activities
| Nine Months Ended | |||||||||||
| September 27, 2026 | September 28, 2025 | ||||||||||
| (in millions) | |||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | 579 | $ | 667 | |||||||
| Adjustments to reconcile net income to net cash flows from operating activities: | |||||||||||
| Depreciation and amortization | 255 | 248 | |||||||||
| Change in accounts receivable | 6 | (490) | |||||||||
| Change in inventories | (193) | (34) | |||||||||
| Change in prepaid expenses and other current assets | (60) | (36) | |||||||||
| Change in accounts payable | (208) | (172) | |||||||||
| Change in accrued expenses and other current liabilities | 9 | (62) | |||||||||
| Other | (23) | - | |||||||||
| Net cash flows from operating activities | $ | 365 | $ | 121 | |||||||
•Accounts receivable. Accounts receivable increased in the first nine months of 2025 primarily driven by the termination of our Monetization Facility in July 2025 and the initial sale of inventories to Murphy Family Farms and VisionAg.
•Inventories. Inventories increased in both periods, primarily due to higher meat inventories resulting from a seasonal build-up ahead of the holiday season, with the increase being more significant in the prior year. These increases were partially offset by lower feed inventories in both periods, reflecting the normal consumption of grain purchased during the prior-year harvest. The year-over-year change was primarily driven by lower hog inventories in 2025 following the sale of commercial hog inventories to Murphy Family Farms and VisionAg.
•Prepaid expenses and other current assets. Prepaid expenses and other current assets increased in both periods primarily due to higher income tax receivables with a larger increase in the current year. Income tax receivables increased in the current year primarily due to adjustments related to the completion of the prior-year federal tax return and lower current-year earnings, whereas the increase in the comparable prior-year period was primarily attributable to the impact of the One Big Beautiful Bill. The year-over-year change was also affected by fluctuations in derivative-related balances. In both periods, these increases were partially offset by decreases in prepaid deposits associated with advance grain purchases for our Mexico operations.
•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. These deferred payments were higher in the first nine months of 2026 compared to the first nine months of 2025.
•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 year-over-year variance was mainly attributable to decreases in trade accruals, obligations to banks in connection with the Monetization Facility and other payroll-related accruals.
Cash Flows From Investing Activities
| Nine Months Ended | |||||||||||
| September 27, 2026 | September 28, 2025 | ||||||||||
| (in millions) | |||||||||||
| Cash flows from investing activities: | |||||||||||
| Capital expenditures | $ | (281) | $ | (246) | |||||||
| Investments in debt securities | (85) | - | |||||||||
| Net expenditures from breeding stock transactions | (24) | (9) | |||||||||
| Investments in partnerships and other assets | (1) | (10) | |||||||||
| Cash receipts on notes receivable | 39 | 14 | |||||||||
| Other | 11 | 12 | |||||||||
| Net cash flows used in investing activities | $ | (342) | $ | (239) | |||||||
The following items explain the significant investing activities:
•Capital expenditures. Capital expenditures for both periods consisted primarily of various plant automation and improvement projects. The first nine months of 2026 also includes $37 million for the purchase of land for our proposed Sioux Falls facility.
•Investments in debt securities. Investments in debt securities consists of cash paid for U.S. Treasury bills.
•Investments in partnerships and other assets. Investments in partnerships and other assets includes capital contributions totaling $7 million to a biogas joint venture in the first nine months of 2025.
•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
| Nine Months Ended | |||||||||||
| September 27, 2026 | September 28, 2025 | ||||||||||
| (in millions) | |||||||||||
| Cash flows from financing activities: | |||||||||||
| Payment of dividends | $ | (384) | $ | (297) | |||||||
| Net proceeds from issuance of common stock | - | 236 | |||||||||
| Other | (1) | (3) | |||||||||
| Net cash flows used in financing activities | $ | (386) | $ | (64) | |||||||
The following items explain the significant financing activities:
•Payment of dividends. We paid $15 million and $1 million of dividends to the noncontrolling interest holder of our consolidated subsidiary, Granjas Carroll de Mexico, S. de R.L. de C.V., (commonly known as "Altosano") in the first nine months of 2026 and 2025, respectively, and the remainder was paid to our shareholders.
•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. Capital expenditures are expected to range from $350 million to $375 million in 2026, inclusive of profit improvement projects, such as packaged meats capacity expansion and automation, as well as repairs and maintenance, but exclusive of investments in our proposed processing facility in Sioux Falls.
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 construction period.
Dividends
On April 21, 2026, May 28, 2026 and August 27, 2026, we paid dividends of $0.3125 per share to shareholders. We anticipate a remaining quarterly dividend for fiscal year 2026 of $0.3125 per share, resulting in an annual dividend rate 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 September 27, 2026, the value of the NCI on our condensed consolidated balance sheet was $272 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 19: 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 10: 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 | Nine Months Ended |
Affected Income Statement Account |
|||||||||||||||||||||||||||
| September 27, 2026 | September 28, 2025 | September 27, 2026 | September 28, 2025 | ||||||||||||||||||||||||||
| (in millions, except per share data) | |||||||||||||||||||||||||||||
| Net income attributable to Smithfield | $ | 89 | $ | 248 | $ | 574 | $ | 660 | |||||||||||||||||||||
| Litigation charges | 12 | - | 12 | 73 | SG&A | ||||||||||||||||||||||||
|
Plant closures (1)
|
5 | - | 11 | 2 | Cost of sales | ||||||||||||||||||||||||
|
Reduction in workforce and optimization (2)
|
3 | - | 8 | 6 | SG&A | ||||||||||||||||||||||||
|
Reduction in workforce and optimization (2)
|
- | - | - | 2 | Cost of sales | ||||||||||||||||||||||||
|
Incremental costs from destruction of property (3)
|
1 | - | 4 | - | Cost of sales | ||||||||||||||||||||||||
|
Office closures (4)
|
1 | - | 2 | 4 | SG&A | ||||||||||||||||||||||||
|
Hog Production Reform (5)
|
- | 1 | - | 3 | Cost of sales | ||||||||||||||||||||||||
|
Hog Production Reform (6)
|
(4) | - | (5) | (1) | Operating gains | ||||||||||||||||||||||||
|
Employee retention tax credits (7)
|
- | - | - | (10) | Cost of sales | ||||||||||||||||||||||||
|
Insurance recoveries (8)
|
- | (2) | - | (36) | Operating gains | ||||||||||||||||||||||||
|
Company-owned life insurance gain (9)
|
- | (17) | - | (17) | Non-operating gains | ||||||||||||||||||||||||
| Other | 1 | - | 2 | - | SG&A | ||||||||||||||||||||||||
|
Income tax effect of non-GAAP adjustments (10)
|
(5) | - | (9) | (11) | Income tax expense | ||||||||||||||||||||||||
| Adjusted net income attributable to Smithfield | $ | 103 | $ | 230 | $ | 599 | $ | 674 | |||||||||||||||||||||
| Net income attributable to Smithfield per diluted common share | $ | 0.23 | $ | 0.63 | $ | 1.45 | $ | 1.68 | |||||||||||||||||||||
| Adjusted net income attributable to Smithfield per diluted common share | $ | 0.26 | $ | 0.58 | $ | 1.52 | $ | 1.72 | |||||||||||||||||||||
________________
(1)Consists primarily of accelerated depreciation and amortization charges, retention and severance costs and other incremental costs associated with our decision to exit our leased Springfield, Massachusetts dry sausage production facility.
(2)Consists of employee termination benefits and restructuring costs associated with workforce reduction and administrative process optimization initiatives. Total severance costs round up to $9 million for the first nine months of 2025.
(3)Consists primarily of incremental costs from the destruction of property in connection with a fire at a sow farm in Laverne, Oklahoma.
(4)Consists of employee termination benefit costs and other closure costs associated with the planned closure of our satellite offices in Lisle, Illinois and Kansas City, Missouri.
(5)Consists of contract termination costs, loss on asset disposals, employee termination benefits, accelerated depreciation charges and other exit costs associated with our Hog Production Reform initiative.
(6)Consists of gains recognized in connection with the lease of hog production farms to contract growers for Murphy Family Farms.
(7)Represents the recognition of employee retention tax credits received under the Coronavirus Aid, Relief, and Economic Security ("CARES") 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.
(10)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 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 | Nine Months Ended | Twelve Months Ended | Affected Income Statement Account | ||||||||||||||||||||||||||||||||||||||
| September 27, 2026 | September 28, 2025 | September 27, 2026 | September 28, 2025 | September 27, 2026 | December 28, 2025 | ||||||||||||||||||||||||||||||||||||
| (in millions, except percentages) | |||||||||||||||||||||||||||||||||||||||||
| Net income | $ | 91 | $ | 252 | $ | 579 | $ | 667 | $ | 910 | $ | 998 | |||||||||||||||||||||||||||||
| Interest expense, net | 6 | 11 | 22 | 33 | 30 | 41 | |||||||||||||||||||||||||||||||||||
| Income tax expense | 30 | 71 | 165 | 205 | 243 | 283 | |||||||||||||||||||||||||||||||||||
|
Depreciation and amortization
|
86 | 82 | 255 | 248 | 339 | 332 | |||||||||||||||||||||||||||||||||||
| EBITDA | $ | 212 | $ | 416 | $ | 1,021 | $ | 1,152 | $ | 1,523 | $ | 1,654 | |||||||||||||||||||||||||||||
| Litigation charges | 12 | - | 12 | 73 | 12 | 73 | SG&A | ||||||||||||||||||||||||||||||||||
|
Reduction in workforce and optimization (1)
|
3 | - | 8 | 6 | 11 | 9 | SG&A | ||||||||||||||||||||||||||||||||||
|
Reduction in workforce and optimization (1)
|
- | - | - | 2 | - | 2 | Cost of sales | ||||||||||||||||||||||||||||||||||
|
Incremental costs from destruction of property (2)
|
1 | - | 4 | - | 4 | - | Cost of sales | ||||||||||||||||||||||||||||||||||
|
Plant closures (3)
|
2 | - | 3 | 1 | 3 | 1 | Cost of sales | ||||||||||||||||||||||||||||||||||
|
Office closures (4)
|
1 | - | 2 | 4 | 2 | 4 | SG&A | ||||||||||||||||||||||||||||||||||
|
Hog Production Reform (5)
|
- | 1 | - | 2 | 1 | 3 | Cost of sales | ||||||||||||||||||||||||||||||||||
|
Hog Production Reform (6)
|
(4) | - | (5) | (1) | (8) | (4) | Operating gains | ||||||||||||||||||||||||||||||||||
|
Employee retention tax credits (7)
|
- | - | - | (10) | - | (10) | Cost of sales | ||||||||||||||||||||||||||||||||||
|
Insurance recoveries (8)
|
- | (2) | - | (36) | - | (36) | Operating gains | ||||||||||||||||||||||||||||||||||
|
Company-owned life insurance gain (9)
|
- | (17) | - | (17) | - | (17) | Non-operating gains | ||||||||||||||||||||||||||||||||||
| Other | 1 | - | 2 | - | 2 | - | SG&A | ||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 227 | $ | 398 | $ | 1,047 | $ | 1,175 | $ | 1,549 | $ | 1,677 | |||||||||||||||||||||||||||||
| Net income margin | 2.6 | % | 6.7 | % | 5.3 | % | 5.9 | % | 6.0 | % | 6.4 | % | |||||||||||||||||||||||||||||
| Adjusted EBITDA margin | 6.6 | % | 10.6 | % | 9.6 | % | 10.4 | % | 10.2 | % | 10.8 | % | |||||||||||||||||||||||||||||
________________
(1)Consists of employee termination benefits 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 nine months ended September 28, 2025 and fiscal year 2025, respectively.
(2)Consists primarily of incremental costs from the destruction of property in connection with a fire at a sow farm in Laverne, Oklahoma.
(3)Consists primarily of retention and severance costs and other incremental costs associated with our decision to exit our leased Springfield, Massachusetts dry sausage production facility. Excludes accelerated depreciation and amortization charges as such amounts are included in the depreciation and amortization line in this table.
(4)Consists of employee termination benefit costs and other closure costs associated with the planned closure of our satellite offices in Lisle, Illinois and Kansas City, Missouri.
(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)The third quarter and first nine months of 2026 consist of gains recognized in connection with the lease of hog production farms to contract growers for Murphy Family Farms. Fiscal year 2025 and twelve months ended September 27, 2026 include 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 CARES 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 | |||||||||||
|
September 27, 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 | 1,402 | 2,000 | |||||||||
| Total debt and finance lease obligations | 2,004 | 2,003 | |||||||||
| Cash and cash equivalents | (1,178) | (1,539) | |||||||||
| Net debt | $ | 827 | $ | 464 | |||||||
| Net income | $ | 910 | $ | 998 | |||||||
| Adjusted EBITDA | $ | 1,549 | $ | 1,677 | |||||||
| Ratio of total debt and finance lease obligations to net income | 2.2x | 2.0x | |||||||||
| Ratio of net debt to adjusted EBITDA | 0.5x | 0.3x | |||||||||
Adjusted Operating Profit and Adjusted Operating Profit Margin
The following tables provide 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 September 27, 2026 |
Packaged Meats |
Fresh Pork |
Hog Production |
Other (1)
|
Corporate (2)
|
Unallocated (3)
|
Consolidated | ||||||||||||||||||||||||||||||||||
|
(in millions, except percentages)
|
|||||||||||||||||||||||||||||||||||||||||
| Operating profit (loss) | $ | 230 | $ | (89) | $ | 34 | $ | (5) | $ | (25) | $ | (18) | $ | 127 | |||||||||||||||||||||||||||
| Litigation charges | - | - | - | - | - | 12 | 12 | ||||||||||||||||||||||||||||||||||
|
Plant closures (4)
|
- | - | - | - | - | 5 | 5 | ||||||||||||||||||||||||||||||||||
|
Reduction in workforce and optimization (5)
|
- | - | - | - | - | 3 | 3 | ||||||||||||||||||||||||||||||||||
| Incremental costs from destruction of property | - | - | - | - | - | 1 | 1 | ||||||||||||||||||||||||||||||||||
| Office closures | - | - | - | - | - | 1 | 1 | ||||||||||||||||||||||||||||||||||
|
Hog Production Reform (6)
|
- | - | - | - | - | (4) | (4) | ||||||||||||||||||||||||||||||||||
| Other | - | - | - | - | - | 1 | 1 | ||||||||||||||||||||||||||||||||||
| Adjusted operating profit (loss) | $ | 230 | $ | (89) | $ | 34 | $ | (5) | $ | (25) | $ | - | $ | 145 | |||||||||||||||||||||||||||
| Operating profit (loss) margin | 11.6 | % | (4.9) | % | 5.0 | % | (3.3) | % | NM | NM | 3.7 | % | |||||||||||||||||||||||||||||
| Adjusted operating profit (loss) margin | 11.6 | % | (4.9) | % | 5.0 | % | (3.3) | % | NM | NM | 4.2 | % | |||||||||||||||||||||||||||||
|
Three Months Ended September 28, 2025 |
Packaged Meats |
Fresh Pork |
Hog Production |
Other (1)
|
Corporate (2)
|
Unallocated (3)
|
Consolidated | ||||||||||||||||||||||||||||||||||
|
(in millions, except percentages)
|
|||||||||||||||||||||||||||||||||||||||||
| Operating profit (loss) | $ | 226 | $ | 10 | $ | 89 | $ | 10 | $ | (24) | $ | (1) | $ | 310 | |||||||||||||||||||||||||||
| Hog Production Reform | - | - | - | - | - | 1 | 1 | ||||||||||||||||||||||||||||||||||
| Insurance recoveries | - | - | - | - | - | (2) | (2) | ||||||||||||||||||||||||||||||||||
| Adjusted operating profit (loss) | $ | 226 | $ | 10 | $ | 89 | $ | 10 | $ | (24) | $ | (1) | $ | 310 | |||||||||||||||||||||||||||
| Operating profit margin | 10.8 | % | 0.5 | % | 10.9 | % | 7.7 | % | NM | NM | 8.3 | % | |||||||||||||||||||||||||||||
| Adjusted operating profit margin | 10.8 | % | 0.5 | % | 10.9 | % | 7.7 | % | NM | NM | 8.3 | % | |||||||||||||||||||||||||||||
_______________________________________________
(1)Consists of our Mexico and Bioscience operations.
(2)Represents general corporate expenses for management and administration of the business.
(3)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.
(4)Consists primarily of accelerated depreciation and amortization charges, retention and severance costs and other incremental costs associated with our decision to exit our leased Springfield, Massachusetts dry sausage production facility.
(5)Consists of employee termination benefits and restructuring costs associated with workforce reduction and administrative process optimization initiatives.
(6)Consists of gains recognized in connection with the lease of hog production farms to contract growers for Murphy Family Farms.
|
Nine Months Ended September 27, 2026 |
Packaged Meats |
Fresh Pork |
Hog Production |
Other (1)
|
Corporate (2)
|
Unallocated (3)
|
Consolidated | ||||||||||||||||||||||||||||||||||
|
(in millions, except percentages)
|
|||||||||||||||||||||||||||||||||||||||||
| Operating profit (loss) | $ | 770 | $ | 3 | $ | 103 | $ | 4 | $ | (78) | $ | (52) | $ | 750 | |||||||||||||||||||||||||||
| Litigation charges | - | - | - | - | - | 12 | 12 | ||||||||||||||||||||||||||||||||||
|
Plant closures (4)
|
- | - | - | - | - | 11 | 11 | ||||||||||||||||||||||||||||||||||
|
Reduction in workforce and optimization (5)
|
- | - | - | - | - | 8 | 8 | ||||||||||||||||||||||||||||||||||
|
Incremental costs from destruction of property (6)
|
- | - | - | - | - | 4 | 4 | ||||||||||||||||||||||||||||||||||
| Office closures | - | - | - | - | - | 2 | 2 | ||||||||||||||||||||||||||||||||||
|
Hog Production Reform (7)
|
- | - | - | - | - | (5) | (5) | ||||||||||||||||||||||||||||||||||
| Other | - | - | - | - | - | 2 | 2 | ||||||||||||||||||||||||||||||||||
| Adjusted operating profit (loss) | $ | 770 | $ | 3 | $ | 103 | $ | 4 | $ | (78) | $ | (19) | $ | 783 | |||||||||||||||||||||||||||
| Operating profit margin | 12.5 | % | 0.1 | % | 4.6 | % | 0.9 | % | NM | NM | 6.9 | % | |||||||||||||||||||||||||||||
| Adjusted operating profit margin | 12.5 | % | 0.1 | % | 4.6 | % | 0.9 | % | NM | NM | 7.2 | % | |||||||||||||||||||||||||||||
|
Nine Months Ended
September 28, 2025 |
Packaged Meats
|
Fresh Pork
|
Hog
Production
|
Other (1)
|
Corporate (2)
|
Unallocated (3)
|
Consolidated
|
||||||||||||||||||||||||||||||||||
|
(in millions, except percentages)
|
|||||||||||||||||||||||||||||||||||||||||
| Operating profit (loss) | $ | 792 | $ | 127 | $ | 112 | $ | 32 | $ | (79) | $ | (92) | $ | 892 | |||||||||||||||||||||||||||
| Litigation charges | - | - | - | - | - | 73 | 73 | ||||||||||||||||||||||||||||||||||
|
Reduction in workforce and optimization (5)
|
- | - | - | - | - | 9 | 9 | ||||||||||||||||||||||||||||||||||
|
Office closures (8)
|
- | - | - | - | - | 4 | 4 | ||||||||||||||||||||||||||||||||||
| Plant closures | - | - | - | - | - | 2 | 2 | ||||||||||||||||||||||||||||||||||
| Hog Production Reform | - | - | - | - | - | 2 | 2 | ||||||||||||||||||||||||||||||||||
|
Employee retention tax credits (9)
|
(5) | (5) | - | - | - | - | (10) | ||||||||||||||||||||||||||||||||||
|
Insurance recoveries (10)
|
- | - | - | - | - | (36) | (36) | ||||||||||||||||||||||||||||||||||
| Adjusted operating profit (loss) | $ | 787 | $ | 122 | $ | 112 | $ | 32 | $ | (79) | $ | (40) | $ | 934 | |||||||||||||||||||||||||||
| Operating profit margin | 12.8 | % | 2.0 | % | 4.3 | % | 8.9 | % | NM | NM | 7.9 | % | |||||||||||||||||||||||||||||
| Adjusted operating profit margin | 12.7 | % | 1.9 | % | 4.3 | % | 8.9 | % | NM | NM | 8.3 | % | |||||||||||||||||||||||||||||
_______________________________________________
(1)Consists of our Mexico and Bioscience operations.
(2)Represents general corporate expenses for management and administration of the business.
(3)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.
(4)Consists primarily of accelerated depreciation and amortization charges, retention and severance costs and other incremental costs associated with our decision to exit our leased Springfield, Massachusetts dry sausage production facility.
(5)Consists of employee termination benefits and restructuring costs associated with workforce reduction and administrative process optimization initiatives.
(6)Consists primarily of incremental costs from the destruction of property in connection with a fire at a sow farm in Laverne, Oklahoma.
(7)Consists of gains recognized in connection with the lease of hog production farms to contract growers for Murphy Family Farms.
(8)Consists of employee termination benefit costs and other closure costs associated with the planned closure of our satellite offices in Lisle, Illinois and Kansas City, Missouri.
(9)Represents the recognition of employee retention tax credits received under the CARES Act.
(10)Consists of gains recognized in connection with settlements of insurance claims associated with past litigation and 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 issued 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;
•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.
Smithfield Foods Inc. published this content on October 27, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on October 27, 2026 at 12:09 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]