SMITHFIELD FOODS INC Q4 FY2025 earnings call

2025 was an outstanding year with solid execution, record profits, expanded margins, and increased cash flow. Set foundation for multi-year growth. Returned to U.S. equity markets via IPO in Jan 2025. Named Donovan Owens President of North America Pork. Package Meats delivered strong results despite challenges. Fresh Pork demonstrated strong execution. Hog Production achieved highest profit since 2014. Continuous improvement and productivity initiatives delivered cost savings. Announced acquisition of Nathan's Famous for $102 per share. Initiated $1.3 billion investment over 3 years to build new processing facility in Sioux Falls, SD. Five strategic priorities: increase package meats profit, grow fresh pork profit, optimize hog production, drive operating efficiencies, evaluate synergistic M&A.

Consolidated: Adjusted operating profit increased 30% to $1.3 billion, with profit margin expanding to 8.6% from 7.2% in 2024. Package Meats: Delivered fourth consecutive year of operating profit above $1 billion, second highest profit year despite higher raw material costs; fiscal 2025 adjusted operating profit $1.1 billion, margin 12.4%; sales $8.8 billion, up 5.3%. Fresh Pork: Adjusted operating profit $209 million in 2025, despite $135 million year-over-year decline in industry market spread; sales $8.3 billion, up 6% year over year. Hog Production: Generated $176 million in adjusted operating profit, highest since 2014; sales $3.4 billion, up 13% year over year. Other segment (Mexico and bioscience): Adjusted operating profit $45 million, increased $10 million compared to 2024.

Fiscal 2026 outlook: Anticipate total company sales to be up low single digits. Package meats adjusted operating profit range $1.1 billion to $1.2 billion. Fresh pork adjusted operating profit range $200 million to $260 million. Hog production adjusted operating profit range $150 million to $200 million. Total company adjusted operating profit range $1.325 billion to $1.475 billion. Targeted capital spend 2026 $350 million to $450 million. Expect continued margin expansion driven by strategies; raw material costs expected to be slightly lower than 2025 but monitoring herd health and geopolitical environment.

Potential headwinds include cautious consumer spending environment and dynamic geopolitical environment, especially impact on fuel costs, corn prices, and petroleum-derived supplies used; duration of conflict in Iran could affect business.

Q: Megan Klopp asked about package meats outlook, top line growth, and margins.

A: Low single-digit revenue growth includes non-repeating inventory sales; raw material costs still elevated but company better positioned with brand portfolio; monitoring consumer spending and geopolitical risks.

Q: Ben Thur asked about fresh pork business, seasonality, risks, and opportunities; and capacity expansion project.

A: Fresh pork team executed well in 2025; 2026 focus on case-ready, marinated offerings, and branded fresh pork; capacity expansion in Sioux Falls with groundbreaking in first half 2027.

Q: Lee Jordan asked about package meats margin cadence and feed costs.

A: Focus on quality merchandising; feed costs monitored with hedging strategies.

Q: Heather Jones asked about packaged meats volume increase and hog production outlook.

A: Volume increase includes extra week but growth in other quarters too; hog production guidance accounts for industry factors.

Q: Chris Downey asked about Nathan's acquisition accretion.

A: Limited to share details until deal closes; transaction expected to be immediately accretive.

Q: Max Comfort asked about Sioux Falls investment benefits and first quarter outlook.

A: Sioux Falls investment to bring efficiency gains; first quarter expected to be solid.

Q: Samaya Jane asked about CapEx spend and hot dogs market share.

A: CapEx split between growth and maintenance; Nathan's brand growing volume share despite category declines