SMITHFIELD FOODS INC Q1 FY2025 earnings call

• Solid start to fiscal 2025 with first quarter adjusted operating profit of $326 million and 8.6% margin, up 86% from Q1 2024. • Packaged Meats focused on increasing higher margin products like lunch meats and dry sausage, with double-digit volume growth in Q1. • Fresh Pork optimizing operations, leveraging multiple sales channels and innovation. • Hog Production rebounded due to improved market conditions and cost structure optimization. • Company drives culture of continuous improvement, with efficiency savings and evaluation of M&A for growth.

Packaged Meats segment delivered adjusted operating profit of $266 million with a 13.1% adjusted operating profit margin. First quarter sales were $2 billion, up 1.2% from Q1 2024. Fresh Pork segment reported adjusted operating profit of $82 million with a 4% margin. Sales were $2 billion, up 4.9% year-over-year. Hog Production segment had adjusted operating profit of over $1 million, a turnaround from a $174 million loss in Q1 2024. Sales were $932 million, up 32% year-over-year.

• Reaffirmed fiscal 2025 outlook: total company sales expected to grow in low to mid single-digit percent range. • Packaged Meats adjusted operating profit expected in $1.05 billion to $1.15 billion range. • Fresh Pork adjusted operating profit expected between $150 million to $250 million. • Hog Production adjusted operating profit expected to range from a loss of $50 million to a profit of $50 million. • Total company adjusted operating profit expected in $1.1 billion to $1.3 billion range. • CapEx anticipated between $400 million and $500 million. • Effective tax rate expected between 23% and 25%.

• Tariffs and geopolitical uncertainties impacting fresh pork exports. • Consumer trading down potentially compressing margins. • Volatility in raw material costs affecting profitability.

Q: Megan Clapp asked about tariffs, especially China's impact and how it's included in the outlook.

A: Shane and Donovan discussed China's previous importance, China representing ~3% of revenue, and other levers in fresh pork to navigate.

Q: Ben Theurer inquired about initial expectations vs actuals and CapEx for packaged meats.

A: Mark mentioned later Easter, raw material costs, and Steve talked about CapEx focus on high margin categories.

Q: Leah Jordan asked about packaged meats volume by month and consumer trading down.

A: Steve discussed Easter volume shift, raw material price mitigation, and benefits of brand portfolio.

Q: Thomas Palmer asked about hog production outlook and packaged meats profitability.

A: Shane and Mark talked about Q2/Q3 strength, margin compression, and formula pricing.

Q: Yasmine Deswandhy asked about fresh pork spread compression.

A: Mark and Donovan discussed seasonality, cost structure, and efficiency gains.

Q: Heather Jones asked about hog production genetics and industry health.

A: Shane and Donovan talked about genetic impacts, health challenges, and industry balance.