• Adjusted Operating Profit: $326 million, an 86% increase from $176 million in Q1 2024.
• Adjusted Operating Profit Margin: 8.6%, up from 5.1% in Q1 2024.
• Consolidated Sales: $3.8 billion, a 9.5% increase year-over-year.
• Adjusted Net Income: $227 million, compared to $123 million in Q1 2024.
• Adjusted EPS: $0.58 per share, up from $0.32 per share in Q1 2024.
• Packaged Meats Segment Operating Profit: $266 million with a 13.1% margin.
• Fresh Pork Segment Operating Profit: $82 million with a 4% margin.
• Hog Production Segment Profit: $1 million, a turnaround from a $174 million loss in Q1 2024.
• Net Debt to Adjusted EBITDA Ratio: 0.7 times.
• Liquidity: $3.2 billion, including $928 million in cash and cash equivalents.
• Capital Expenditures: $79 million, down from $92 million in Q1 2024.
• Dividend: $0.25 per share, with an expected annual dividend of $1 per share.

• Warning! GuruFocus has detected 5 Warning Signs with SFD.

Release Date: April 29, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Smithfield Foods Inc (NASDAQ:SFD) reported a record first quarter with an adjusted operating profit of $326 million, marking an 86% increase from the previous year.
• The Packaged Meats segment delivered an impressive adjusted operating profit margin of 13.1%, driven by increased sales of higher-margin products like packaged lunch meats and dry sausage.
• The Hog Production segment achieved a significant turnaround, reporting a profit of over $1 million compared to a loss of $174 million in the first quarter of 2024.
• Smithfield Foods Inc (NASDAQ:SFD) maintained a strong balance sheet with a net debt to adjusted EBITDA ratio of 0.7 times, providing financial flexibility for growth strategies.
• The company continues to prioritize innovation and product mix improvements, particularly in the Packaged Meats segment, with a focus on higher-margin categories such as lunch meats and dry sausage.

Negative Points

• The Fresh Pork segment experienced a decline in operating profit due to a compressed industry market spread, with hog prices rising faster than USDA cutout values.
• Higher raw material input costs, particularly for bellies and trim, posed challenges for the Packaged Meats segment, impacting profit margins.
• The company faces ongoing tariff risks, particularly with China, which could affect export demand and overall revenue.
• Consumer trading down to less expensive alternatives and private labels could impact branded product sales and profit margins.
• The Hog Production segment remains cautious due to potential revenue volatility from tariffs and seasonal market fluctuations.

Q & A Highlights

Q: Can you expand on how the current tariff situation, particularly with China, is affecting your export demand and outlook? A: Shane Smith, President and CEO, explained that while China is a significant market, representing about 3% of Smithfield's revenue, the company has developed alternative strategies and markets to mitigate the impact of the 145% tariff. Donovan Owens, President of Fresh Pork, added that Smithfield is leveraging its diverse export markets and focusing on domestic sales to offset the loss of Chinese demand.

Q: What is your current view on industry hog supply and demand for the remainder of 2025, and how is the tariff environment impacting your outlook? A: Shane Smith noted that the tariff impact was primarily on revenue, causing volatility in hog production prices. However, the market has since stabilized. He mentioned that the industry appears balanced with no significant expansion plans, and Smithfield expects strong performance in Q2 and Q3, with a return to normal seasonality in Q4.

Q: How did the first quarter results compare to your initial expectations, and what were the surprises across different segments? A: Mark Hall, CFO, stated that the initial caution was due to the later Easter holiday and higher raw material costs. Despite these challenges, Smithfield's diverse product portfolio allowed them to meet consumer needs across various price points, leading to better-than-expected results.

Q: Can you provide more detail on your strategy for growing the Packaged Meats segment, particularly in the lunch meats category? A: Steve France, President of Packaged Meats, highlighted the focus on innovation and consumer targeting in the lunch meat category. Smithfield is investing in capacity expansion and product development to capture market share, with Prime Fresh being the fastest-growing brand in the segment.

Q: How are you managing the competitive environment and promotional activities within the Packaged Meats segment? A: Steve France explained that Smithfield focuses on long-term consumer acceptance rather than short-term promotional gains. The company leverages its strong brand portfolio to offer products across multiple categories and price points, allowing them to capture sales even as consumers trade down.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.