Smithfield Foods Inc.

10/28/2025 | Press release | Distributed by Public on 10/28/2025 06:02

Quarterly Report for Quarter Ending September 28, 2025 (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 29, 2024. The information reflects all normal recurring adjustments, which we believe are necessary to present fairly the financial position and results of operations for all periods included. Totals and percentages may be affected by rounding. Certain prior period amounts have been reclassified to conform to the current period presentation.
Overview
Smithfield Foods, Inc., together with its subsidiaries ("Smithfield," "the Company," "we," "us" or "our") is an American food company that employs approximately 32,000 people in the United States ("U.S.") and 2,500 people in Mexico. We boast a portfolio of high-quality, iconic brands, such as Smithfield®, Eckrich® and Nathan's Famous®, among many others. We are an indirect, majority-owned subsidiary of Hong Kong-based WH Group Limited ("WH Group").
We conduct our operations through three reportable segments: Packaged Meats, Fresh Pork, and Hog Production. We also conduct operations through two other operating segments, Mexico and Bioscience, which are aggregated and reported as "Other."
Packaged Meats Segment
The Packaged Meats segment consists of our U.S. operations that process fresh meat into a wide variety of packaged meats products, including bacon, sausage, hot dogs, deli and lunch meats, dry sausage products (such as pepperoni and genoa salami), ham products, ready-to-eat products and prepared foods (such as pre-cooked entrees, bacon and sausage). Approximately 80% of the Packaged Meats segment's raw materials are sourced from our Fresh Pork segment. We market our domestic packaged meats products under a strategic set of core brands, which include: Smithfield, Eckrich, Nathan's Famous, Farmland, Armour, Farmer John, Kretschmar, Krakus, John Morrell, Cook's, Gwaltney, Carando, Margherita, Curly's and Smithfield Culinary. We also sell a sizeable portion of our packaged meats products as private label products. The majority of the Packaged Meats segment's products are sold to retail and foodservice customers in the U.S.
Fresh Pork Segment
The Fresh Pork segment consists of our U.S. operations that process live hogs into a wide variety of primal, sub-primal and offal products, such as bellies, butts, hams, loins, picnics and ribs. In fiscal year 2024, the Fresh Pork segment sourced approximately half of its raw materials from our Hog Production segment and half from third-party farmers with whom we partner across the U.S. In fiscal year 2025, we expect that approximately 40% of the hogs processed by the Fresh Pork segment will be sourced from the Hog Production segment as a result of our new partnerships in Murphy Family Farms and VisionAg, which are described under "Recent Developments-Hog Production Reform" below. 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, China, Mexico, 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 third-party contract farmers. Nearly all of the hogs produced by this segment are processed by our Fresh Pork segment. The Hog Production segment also sells grains and feed to external customers. In fiscal year 2024 and through the third quarter of 2025, approximately 60% of the Hog Production segment's cost of goods sold was from animal feed, which is derived primarily from corn and soybean meal.
Our elected fiscal year is the 52-week or 53-week period which ends on the Sunday nearest to December 31. Unless otherwise noted, all references to the third quarter of 2025 and the three months ended September 28, 2025 are to the 13-week period ended September 28, 2025. All references to the third quarter of 2024 and the three months ended September 29, 2024 are to the 13-week period ended September 29, 2024. Each of the nine months ended September 28, 2025 and September 29, 2024 consisted of 39-weeks.
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. These include:
•driving growth in our Packaged Meats segment;
•further enhancing the profitability of our Fresh Pork segment;
•continuing to invest in innovation;
•optimizing operational and supply chain efficiencies; and
•executing synergistic and complementary mergers and acquisitions.
Key Factors and Recent Developments Affecting Our Results of Operations and Financial Condition
The following are key factors and recent developments that have influenced our results of operations in the past and/or may influence our results in the future.
Sales Drivers
We are focused on driving profitable growth through our Packaged Meats segment. Within the Packaged Meats segment, the primary factors impacting sales of our brands are household penetration, consumption levels, price point and product offerings. As a result, we have pursued strategies that we believe best align our products with consumer trends and behavior. We have shifted our portfolio towards a higher mix of value-added and margin accretive products while leveraging the breadth of our offerings to further penetrate across dayparts. We look to increase brand awareness and encourage consumer adoption of our products through product and packaging innovation and effective and appealing marketing strategies while maintaining our promise to consumers to offer high-quality products for every budget. We have also expanded to new categories and grown distribution of under-indexed brands in under-penetrated locations. In addition, we seek to increase sales in packaged meats products by driving volumes of our private label and foodservice products, by expanding our customer relationships and by offering quality selections across the value chain.
The U.S. packaged meats market is supported by long-term secular tailwinds, including consumer demand for high-protein diets, high-quality nutrition, product versatility and convenience. We expect these tailwinds to continue to drive increases in overall meat consumption. Nevertheless, changes in market trends and consumer preferences could adversely affect our results of operations.
In our Fresh Pork segment, the primary drivers of external sales are the consistent level of global pork consumption, our ability to maximize the value of each hog and our ability to leverage our different end markets including retail, foodservice, industrial and export channels. Through ongoing product innovation, we seek to appeal to ever-changing consumer preferences, including demand for convenience and smaller portion sizes as well as expanded interests in new and varied flavors. We also seek to capitalize on export markets as an outlet for increasing the value of raw materials through whole-hog utilization and by appealing to differentiated, global tastes and preferences.
Cost Factors
Our cost as a percentage of sales varies based on fluctuations of raw materials 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. We enter into hedging transactions for these commodities 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 14.6 million head in 2024, and we continue to explore opportunities for reduced internal production. We expect to produce under 11.5 million head in 2025, which would represent approximately 40% of the hogs processed by our Fresh Pork segment.
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 have reduced transportation and warehousing costs by improving transportation carrier mix, 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.
Tariffs
We export our products to over 30 countries, including China. Those exports primarily consist of fresh pork products. For the first nine months of 2025, our export sales into China accounted for approximately 2% of our total sales. As of September 28, 2025, products we export to China faced tariffs that ranged from 25% to 57%, with most products subject to 57% 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 was paused until November 10, 2025. 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.
Litigation
Like other participants in our industry, we are subject to various laws and regulations administered by federal, state and other government entities, including the U.S. Environmental Protection Agency and corresponding state agencies, as well as the U.S. Department of Agriculture ("USDA"), the Grain Inspection, Packers and Stockyard Administration, the U.S. Food and Drug Administration, the U.S. Occupational Safety and Health Administration, the Commodity and Futures Trading Commission and similar agencies in foreign countries.
We, from time-to-time, receive notices and inquiries from regulatory authorities and others asserting that we are not in compliance with such laws and regulations. In some instances, litigation ensues. In addition, individuals may initiate litigation against us.
As of September 28, 2025 and December 29, 2024, we had contingent liabilities totaling $153 million and $141 million, respectively, in accrued expenses and other current liabilities on the condensed consolidated balance sheets related to litigation matters. Charges totaling $80 million were recorded in the nine months ended September 28, 2025 and are included in SG&A in the condensed consolidated statements of income. None of these charges were recorded in the third quarter of 2025. We did not record any significant charges for litigation matters in the three and nine months ended September 29, 2024. 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, in the second quarter of 2025, we settled a claim against an insurance carrier and received $29 million in proceeds for the recovery of losses we incurred in connection with past litigation. As a result, we recognized a $29 million gain on the insurance recovery in the second quarter of 2025. The gain was recognized in operating gains in the condensed consolidated statement of income and we classified the proceeds in operating activities in the condensed consolidated statement of cash flows in the second quarter of 2025.
For further information related to our litigation matters, refer to "Note 21: 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 certain 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, the Company reclassified approximately $77 million of deferred tax assets related to R&D capitalization to current taxes receivable.
Employee Retention Tax Credits
In the second quarters of 2025 and 2024, we recognized $10 million and $87 million, respectively, of employee retention tax credits, substantially all in cost of sales in the condensed consolidated statements of income. For more information, see "Note 7: Employee Retention Tax Credits" to the condensed consolidated financial statements included in Part 1, Item 1 of this Quarterly Report on Form 10-Q.
Elizabeth, New Jersey Facility Closure
On June 30, 2025, we closed our leased Elizabeth, New Jersey 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. This facility was accounted for in the Packaged Meats segment.
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 selling, general and administrative expenses ("SG&A") in the condensed consolidated statement of income in the second quarter of 2025 for personnel who are not expected to relocate.
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.
Initial Public Offering
On January 29, 2025, we completed our initial public offering ("IPO") of 26,086,958 shares of common stock, which represents 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 ("SFDS UK"), our only shareholder at the time. WH Group granted the underwriters a 30-day option to purchase up to 3,913,042 additional shares of our common stock. On February 20, 2025, the underwriters partially exercised such option and purchased 2,506,936 additional shares of common stock from WH Group. 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."
In connection with the IPO, we granted to our directors and certain of our employees and certain directors and employees of WH Group: (1) options to purchase 9,822,467 shares with an exercise price equal to the IPO price and an aggregate grant date fair value of $30 million and (2) 1,527,000 restricted stock units ("RSUs") with an aggregate grant date fair value of $31 million. The options and substantially all RSUs vest over a five year period, with 20% vesting each year. We recognized compensation expense totaling $2 million and $6 million associated with these equity instruments during the three and nine months ended September 28, 2025. Unrecognized compensation expense totaled $39 million as of September 28, 2025, which is expected to be recognized on a straight-line basis over the remaining vesting period of 4.3 years.
Secondary Offering
In the third quarter of 2025, WH Group, through its indirect wholly owned subsidiary SFDS UK, sold another 22,461,452 shares of our common stock in a secondary offering. The sale did not affect the number of shares outstanding, nor did we receive any proceeds from the sale of stock by WH Group. Following this offering, WH Group owns approximately 87.0% of our shares of common stock.
Altoona, Iowa Facility Closure
On August 30, 2024, we closed our Altoona, Iowa ham boning facility and consolidated production volume into other locations to improve manufacturing efficiencies. Costs associated with closing the plant primarily include operating lease assets and equipment that we disposed of prior to the expiration of the lease term or end of the asset's useful life. The charges associated with the closing were not material. Altoona was accounted for in the Fresh Pork segment.
European Carve-Out
On August 26, 2024, we completed a carve-out and transfer of our European operations to WH Group. As a result, we derecognized the assets and liabilities of our former European operations through equity. No gain or loss was recognized on the transaction. The historical results of operations, assets and liabilities, and cash flows of the European operations have been condensed and reported as discontinued operations in the condensed consolidated financial statements for all periods presented.
Dry Sausage Facility Acquisition
On July 30, 2024, we acquired a dry sausage production facility located in Nashville, Tennessee from Cargill Meat Solutions Corporation for $38 million. The acquisition is part of our strategy to grow our value-added packaged
meats business and serve the growing demand for high-quality pepperoni, salami, charcuterie and other dry sausage products.
Hog Production Reform
Beginning in 2023, we have taken 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 became a member of a North Carolina-based company, Murphy Family Farms LLC ("Murphy Family Farms"), by contributing $3 million in cash in exchange for a 25% minority interest. We additionally sold approximately 150,000 sows and related inventories located on Company-owned and contract farms in North Carolina to Murphy Family Farms. Subsequent to the end of fiscal year 2024, on December 30, 2024, we sold the commercial hog inventories associated with such sows to Murphy Family Farms. Murphy Family Farms is now a hog supplier to us and supplies approximately 3.2 million hogs annually. We supply animal feed and other supplies and provide certain support services to Murphy Family Farms.
On February 24, 2025, we became a member of a North Carolina-based company, VisionAg Hog Production, LLC ("VisionAg"), by contributing $450,000 in cash in exchange for a 9% minority interest. We additionally sold approximately 28,000 sows and the associated commercial hog inventories located on certain Company-owned and contract farms in North Carolina to VisionAg. VisionAg is now a hog supplier to us and supplies approximately 600,000 hogs annually. In addition, we supply animal feed and provide certain support services to VisionAg.
In the nine months ended September 29, 2024, we recognized charges totaling $13 million associated with Hog Production Reform in cost of sales in the condensed consolidated statements of income. Amounts recognized for all other periods presented were not material.
Results of Operations
Consolidated Results of Continuing Operations
Three Months Ended Nine Months Ended
September 28, 2025 September 29, 2024 $ Change % Change September 28, 2025 September 29, 2024 $ Change % Change
(in millions) (in millions)
Sales $ 3,747 $ 3,334 $ 412 12.4 % $ 11,304 $ 10,190 $ 1,114 10.9 %
Cost of sales 3,268 2,859 409 14.3 % 9,817 8,826 991 11.2 %
Gross profit 479 476 4 0.8 % 1,487 1,364 123 9.0 %
Selling, general and administrative expenses 178 200 (22) (11.1) % 643 594 50 8.4 %
Operating gains (9) (10) - (5.1) % (48) (12) (36) 293.4 %
Operating profit 310 285 25 8.9 % 892 783 109 13.9 %
Interest expense, net 11 17 (6) (35.9) % 33 52 (19) (36.7) %
Non-operating gains (19) (7) (11) 154.5 % (17) (13) (3) 25.4 %
Income from continuing operations before income taxes 318 276 43 15.5 % 876 745 131 17.7 %
Income tax expense 71 69 2 2.6 % 205 165 39 23.8 %
Loss (income) from equity method investments (4) (3) (2) 69.9 % 4 (1) 6 NM
Net income from continuing operations 252 209 43 20.5 % 667 581 87 14.9 %
Net income from continuing operations attributable to noncontrolling interests 4 7 (3) (44.2) % 7 9 (1) (14.7) %
Net income from continuing operations attributable to Smithfield $ 248 $ 202 $ 46 22.7 % $ 660 $ 572 $ 88 15.4 %
Operating Profit by Segment
Three Months Ended Nine Months Ended
September 28, 2025 September 29, 2024 $ Change % Change September 28, 2025 September 29, 2024 $ Change % Change
(in millions) (in millions)
Packaged Meats
$ 226 $ 239 $ (14) (5.7) % $ 792 $ 855 $ (62) (7.3) %
Fresh Pork
10 28 (18) (63.8) % 127 196 (69) (35.1) %
Hog Production
89 40 48 119.8 % 112 (136) 248 NM
Other
10 20 (10) (49.6) % 32 18 13 72.2 %
Corporate expenses (24) (28) 4 15.2 % (79) (92) 13 14.1 %
Unallocated (1) (15) 14 95.0 % (92) (59) (33) (56.6) %
Operating profit $ 310 $ 285 $ 25 8.9 % $ 892 $ 783 $ 109 13.9 %
Results of Operations Analysis
The following discussion provides an analysis of our results of operations for the third quarter of 2025 compared to the third quarter of 2024 and for the first nine months of 2025 compared to the first nine months of 2024.
Sales
Three Months Ended Nine Months Ended
September 28, 2025 September 29, 2024 $ Change % Change September 28, 2025 September 29, 2024 $ Change % Change
(in millions) (in millions)
Sales by segment:
Packaged Meats $ 2,090 $ 1,917 $ 174 9.1 % $ 6,193 $ 5,861 $ 332 5.7 %
Fresh Pork 2,185 1,951 234 12.0 % 6,299 5,871 428 7.3 %
Hog Production 813 738 75 10.1 % 2,585 2,220 365 16.5 %
Other 131 117 14 12.1 % 355 350 6 1.7 %
Total segment sales 5,220 4,723 496 10.5 % 15,433 14,301 1,132 7.9 %
Inter-segment sales eliminations:
Fresh Pork
(910) (756) (154) 20.4 % (2,507) (2,236) (272) 12.1 %
Hog Production
(562) (632) 70 (11.1) % (1,621) (1,874) 254 (13.5) %
Other
- - - NM (1) - - 26.9 %
Total inter-segment sales eliminations (1,473) (1,389) (84) 6.0 % (4,129) (4,111) (18) 0.4 %
Consolidated sales $ 3,747 $ 3,334 $ 412 12.4 % $ 11,304 $ 10,190 $ 1,114 10.9 %
Third Quarter-2025 vs. 2024
Packaged Meats.Segment sales increased by $174 million, or 9.1%, primarily attributable to a 9.2% increase in our average sales price. The increase in average sales price was primarily due to higher raw material costs, which translated into higher sales prices of our packaged meats products. Sales volume remained consistent year-over-year.
Fresh Pork.Segment sales increased by $234 million, or 12.0%, primarily attributable to a 12.0% increase in our average sales price. The increase in the average sales price was driven by lower U.S. pork production coupled with continued strong demand for pork. Fresh pork cut-out values reported by the USDA averaged $1.14 per pound in the third quarter of 2025, up 16.9% from the same period a year ago. Lower prices for certain pork by-products, which are not included in the USDA cut-out values, driven by reduced exports to China, resulted in a smaller increase in our average sales price relative to the USDA. Sales volume remained consistent year-over-year.
Hog Production.Segment sales increased by $75 million, or 10.1%, primarily due to the following factors, which more than offset an approximately 850,000, or 25%, decrease in the number of market hogs sold due to our Hog Production Reform initiative:
•A $120 million increase in grain and feed sales primarily attributable to our feed supply agreements with Murphy Family Farms and VisionAg.
•Other sales to Murphy Family Farms and VisionAg totaling $69 million in the second quarter of 2025, consisting primarily of the sale of commercial hog inventories and transportation services.
•A 7.7% increase in our average market hog sales price, inclusive of the effects of hedging, driven by a higher lean hog price index published by the Chicago Mercantile Exchange ("CME").
Other.Segment sales increased by $14 million, or 12.1%, due to a 12.9% increase in average sales price and a 9.2% increase in volume in our Mexico operations. These increases reflect the implementation of a new strategy, under which our Mexico operations began importing ham and other fresh pork products primarily from our Fresh Pork segment for resale to customers in Mexico, which supports growth in Mexico's fresh pork sales. The increase was partially offset by lower sales in our Bioscience operations.
Inter-segment Eliminations
•Fresh Pork.The increase in inter-segment sales by our Fresh Pork segment was attributable to higher market values for fresh pork components sold to our Packaged Meats segment, partially offset by a 3.1% decrease in sales volume.
•Hog Production.The decrease in inter-segment sales by our Hog Production segment was attributable to our strategic initiative to optimize our hog production operations, which reduced the number of hogs produced by our Hog Production segment.
First Nine Months-2025 vs. 2024
Packaged Meats.Segment sales increased by $332 million, or 5.7%, as a result of a 5.8% increase in average sales price. The increase in average sales price was primarily due to higher raw material costs, which translated into higher sales prices of our packaged meats products. Sales volume remained consistent year-over-year.
Fresh Pork.Segment sales increased by $428 million, or 7.3%, primarily attributable to a 6.7% increase in our average sales price and a 0.6% increase in sales volume. The increase in the average sales price is directionally aligned with the 8.7% increase in the cut-out values reported by the USDA, which averaged $1.04 per pound in the first nine months of 2025, primarily due to lower U.S. pork production coupled with continued strong demand for pork.
Hog Production.Segment sales increased by $365 million, or 16.5%, primarily due to the following factors, which more than offset an approximately 2.5 million, or 23%, decrease in the number of market hogs sold due to our Hog Production Reform initiative:
•Sales of commercial hog inventories, transportation services and other ancillary goods and services to Murphy Family Farms and VisionAg totaling $340 million in the first nine months of 2025.
•A $309 million increase in grain and feed sales primarily attributable to our feed supply agreements with Murphy Family Farms and VisionAg.
•A 7.9% increase in our average market hog sales price, inclusive of the effects of hedging, driven by an increase in the lean hog price index published by the CME.
Inter-segment Eliminations
•Fresh Pork.The increase in inter-segment sales by our Fresh Pork segment was attributable to higher market values for fresh pork components sold to our Packaged Meats segment, partially offset by a 2.8% decrease in sales volume.
•Hog Production.The decrease in inter-segment sales by our Hog Production segment was attributable to our strategic initiative to optimize our hog production operations, which reduced the number of hogs produced by our Hog Production segment, partially offset by an increase in the average sales price.
Cost of Sales
Three Months Ended Nine Months Ended
September 28, 2025 September 29, 2024 $ Change % Change September 28, 2025 September 29, 2024 $ Change % Change
(in millions) (in millions)
Packaged Meats
$ 1,770 $ 1,578 $ 193 12.2 % $ 5,126 $ 4,717 $ 410 8.7 %
Fresh Pork
2,135 1,878 257 13.7 % 6,046 5,538 509 9.2 %
Hog Production
714 685 29 4.2 % 2,442 2,319 122 5.3 %
Other
116 92 24 26.2 % 307 314 (8) (2.4) %
Unallocated
5 15 (10) (67.9) % 25 49 (25) (50.1) %
Inter-segment eliminations (1,473) (1,389) (84) 6.0 % (4,129) (4,111) (18) 0.4 %
Cost of sales $ 3,268 $ 2,859 $ 409 14.3 % $ 9,817 $ 8,826 $ 991 11.2 %
Third Quarter-2025 vs. 2024
Packaged Meats.Cost of sales in our Packaged Meats segment increased by $193 million, or 12.2%, driven primarily by a $203 million increase in raw material costs attributable to the effect of higher fresh pork market prices, which more than offset lower manufacturing, freight and cold storage costs.
Fresh Pork.Cost of sales in our Fresh Pork segment increased by $257 million, or 13.7%, driven primarily by a $262 million increase in raw material costs attributable to higher market prices for hogs, which more than offset lower freight costs.
Hog Production.Cost of sales in our Hog Production segment increased by $29 million, or 4.2%, due to:
•A $121 million increase in the cost of grain and feed sales primarily attributable to our feed supply agreements with Murphy Family Farms and VisionAg.
•Costs associated with sales of other goods and services to Murphy Family Farms and VisionAg totaling $46 million in the third quarter of 2025, consisting primarily of hog inventories and transportation services.
These increases were partially offset by a $93 million decrease in raw material costs, a $27 million decrease in operating costs and a $19 million decrease in the cost of breeding stock sales, largely attributable to the reduction in the size of our hog production operations.
Other.Cost of sales in our Other segments increased by $24 million, or 26.2%, driven primarily by the following factors:
•A $21 million increase in raw material costs in our Mexico operations reflects the implementation of a new strategy, under which our Mexico operations began importing ham and other fresh pork products primarily from our Fresh Pork segment for resale to customers in Mexico, which supports growth in Mexico's fresh pork sales.
•A $5 million charge recognized in the third quarter of 2025 to write down inventories in our Bioscience operations to their estimated net realizable values.
First Nine Months-2025 vs. 2024
Packaged Meats.Cost of sales in our Packaged Meats segment increased by $410 million, or 8.7%, driven primarily by the following factors, which more than offset lower freight and cold storage costs:
•A $404 million increase in raw material costs attributable to the effect of higher fresh pork market prices.
•A $32 million decrease in employee retention tax credits.
Fresh Pork.Cost of sales in our Fresh Pork segment increased by $509 million, or 9.2%, driven primarily by the following factors, which more than offset lower freight and cold storage costs:
•A $530 million increase in raw material costs attributable to higher market prices for hogs and higher sales volume.
•A $35 million decrease in employee retention tax credits.
Hog Production.Cost of sales in our Hog Production segment increased by $122 million, or 5.3%, due to:
•A $308 million increase in the cost of grain and feed sales primarily attributable to our feed supply agreements with Murphy Family Farms and VisionAg.
•The sale of commercial hog inventories, transportation services and other ancillary goods and services to Murphy Family Farms and VisionAg, which increased cost of sales by $306 million in the first nine months of 2025.
•An $8 million decrease in employee retention tax credits.
These increases were partially offset by a $319 million decrease in raw material costs, a $132 million decrease in operating costs and a $48 million decrease in the cost of breeding stock sales, largely attributable to the reduction in the size of our hog production operations.
Selling, General and Administrative Expenses
Three Months Ended Nine Months Ended
September 28, 2025 September 29, 2024 $ Change % Change September 28, 2025 September 29, 2024 $ Change % Change
(in millions) (in millions)
Packaged Meats
$ 95 $ 100 $ (6) (5.5) % $ 275 $ 289 $ (15) (5.1) %
Fresh Pork
40 46 (6) (12.3) % 125 137 (12) (8.7) %
Hog Production
10 12 (3) (22.7) % 31 36 (5) (13.3) %
Other
5 5 - 0.3 % 17 17 - 0.5 %
Corporate expenses
24 28 (4) (15.2) % 79 92 (13) (14.0) %
Unallocated 5 9 (4) (45.3) % 116 22 94 NM
Selling, general and administrative expenses $ 178 $ 200 $ (22) (11.1) % $ 643 $ 594 $ 50 8.4 %
Third Quarter-2025 vs. 2024
SG&A decreased by $22 million, or 11.1%, primarily due to various broad-based expense saving measures, including our workforce reduction initiative.
First Nine Months-2025 vs. 2024
SG&A increased by $50 million, or 8.4%, primarily due to the following factors, which more than offset various broad-based expense savings, including those attributable to our workforce reduction initiative:
•An $80 million increase in litigation charges for the first nine months of 2025, which were not allocated to our operating segments.
•Accruals for employee termination benefits totaling $11 million for the first nine months of 2025 related to our workforce reduction initiative and the decision to close our satellite offices in Lisle, Illinois and Kansas City, Missouri. These charges were not allocated to our operating segments.
Operating Gains
The following table provides details of operating gains.
Three Months Ended Nine Months Ended
September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024
(in millions)
Insurance recoveries (1)
$ (2) $ (3) $ (37) $ (4)
Gain on disposal of assets (1) (5) (4) (5)
Other operating gains (2)
(6) (2) (7) (3)
Operating gains $ (9) $ (10) $ (48) $ (12)
________________
(1)Consists of gains recognized in connection with settlements of insurance claims associated with property damage. Also includes settlements of insurance claims in the second quarter of 2025 and the second and third quarters of 2024 for losses incurred in connection with past litigation.
(2)Includes a $6 million gain recognized in the third quarter of 2025 related to the settlement of a commercial dispute.
Interest Expense, Net
Interest expense, net decreased by $6 million, or 35.9%, and $19 million, or 36.7%, for the third quarter and first nine months of 2025, respectively, due to higher levels of cash and cash equivalents earning interest in the current year.
Non-Operating Gains
The following table provides details of non-operating gains.
Three Months Ended Nine Months Ended
September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024
(in millions)
Gain on nonqualified retirement plan assets (1)
$ (23) $ (9) $ (29) $ (18)
Net pension and postretirement benefits cost (2)
4 2 13 5
Other non-operating gains - - - (1)
Non-operating gains $ (19) $ (7) $ (17) $ (13)
________________
(1)Includes a $17 million gain recognized in the third quarter of 2025 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.
Income Tax Expense
Income tax expense increased year-over-year by $2 million, or 2.6%, for the third quarter and $39 million, or 23.8%, for the first nine months primarily due to higher earnings year-over-year. Our effective tax rate attributable to continuing operations decreased to 22.2% for the third quarter of 2025 compared to 25.0% for the third quarter of 2024. The decrease was primarily driven by a non-taxable gain recognized in the third quarter of 2025 for the death
benefit on company-owned life insurance policies. Our effective tax rate attributable to continuing operations increased to 23.4% for the first nine months of 2025 compared to 22.2% for the first nine months of 2024. The increase was primarily attributable to the deductibility of certain officer compensation.
Loss (Income) from Equity Method Investments
For the first nine months of 2025, results from our equity method investments declined to a loss of $4 million, compared to income of $1 million in the prior-year period primarily due to losses incurred by Murphy Family Farms.
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 28, 2025, we had $3,069 million of available liquidity consisting of $773 million in cash and cash equivalents and $2,297 million of availability under our committed credit facilities. Availability under our committed credit facilities is reduced by the principal amount of any outstanding commercial paper. 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 28, 2025
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 - - - (28) 197
Total credit facilities $ 2,325 $ - $ - $ - $ (28) $ 2,297
Senior Unsecured Revolving Credit Facility
In February 2025, we refinanced our $2,100 million senior unsecured revolving credit facility ("Senior Revolving Credit Facility"), extending the maturity date from May 21, 2027 to February 12, 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 capacity remains at $2,100 million. As part of the new agreement, there are no longer any subsidiary guarantors under the Senior Revolving Credit Facility which also released the subsidiary guarantors from our Senior Unsecured Notes. 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 not otherwise sold pursuant to the Monetization Facility (as defined below) 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 28, 2025, the SPV held $632 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 28, 2025, we had $28 million in letters of credit issued under the Securitization Facility. None of the letters of credit were drawn upon.
Monetization Facility
In addition to the Securitization Facility, until July 22, 2025, we maintained an uncommitted $250 million accounts receivable monetization facility ("Monetization Facility"). At Smithfield's election and subject to the purchasing banks' approval, certain accounts receivable were sold by the SPV to purchasing banks, so long as the uncollected outstanding amount of accounts receivable sold pursuant to the Monetization Facility did not exceed $250 million in the aggregate at any time, among other limitations. In the event of a sale, the purchasing banks assumed all credit risk related to the receivables while we maintained risk associated with customer disputes. We accounted for the sale of receivables to a purchasing bank by derecognizing the receivables from our condensed consolidated balance sheet upon transfer of control to the purchasing bank, and recognized a discount on the sale in SG&A in the condensed consolidated statement of income. The proceeds from the sale of receivables are included in net cash flows from operating activities in the condensed consolidated statement of cash flows. On behalf of the purchasing banks, we serviced all receivables sold under the Monetization Facility.
In the first quarter of 2023, we sold $227 million of accounts receivable at a discount and received proceeds totaling $225 million. We reinvested $24 million and $793 million of cash collections from customers in the revolving sale of accounts receivable to purchasing banks in the third quarter of 2025 and 2024, respectively, and $2,085 million and $2,836 million in the first nine months of 2025 and 2024, respectively. We recognized charges totaling $3 million in the third quarter of 2024 and $5 million and $10 million in the first nine months of 2025 and 2024, respectively, attributable to the discount on the sale of accounts receivable in SG&A in the condensed consolidated statements of income. The charges for the third quarter of 2025 were not material.
On July 22, 2025, we terminated the 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.
Cash Flows From Operating Activities of Continuing Operations
Nine Months Ended
September 28, 2025 September 29, 2024
(in millions)
Cash flows from operating activities:
Net income $ 667 $ 760
Less: Net income from discontinued operations - (179)
Net income from continuing operations $ 667 $ 581
Adjustments to reconcile net income from continuing operations to net cash flows from operating activities of continuing operations:
Depreciation and amortization 248 253
Change in accounts receivable (490) 17
Change in inventories (34) (102)
Change in prepaid expenses and other current assets (36) (37)
Change in accounts payable (172) (214)
Change in accrued expenses and other current liabilities (62) (279)
Other - 14
Net cash flows from operating activities of continuing operations $ 121 $ 233
The decrease in net cash flows from operating activities of continuing operations year-over-year was primarily driven by changes in working capital, partially offset by higher earnings. The following describes the significant changes in working capital:
•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 sale of commercial hog inventories and feed to Murphy Family Farms and VisionAg.
•Inventories. Inventories increased in both periods driven by increases in meat inventories largely due to a seasonal build-up in preparation for the holiday season. These increases were partially offset by lower hog inventory volumes, reflecting the impact of the Hog Production Reform. The effect was more pronounced in 2025 due to the sale of commercial hog inventories to Murphy Family Farms and VisionAg. Additionally, feed inventories declined in both periods as a result of the routine consumption of grain purchased during the prior-year harvest. However, exceptionally strong harvest yields in 2025 moderated the rate of decline compared to the same period in the prior year.
•Accounts payable. Accounts payable decreased in both periods mainly due to the seasonal deferral of payments for hog and grain purchases made in the fourth quarter each year. Payments to certain farmers for these purchases are deferred until the first quarter of the following year.
•Accrued expenses and other current liabilities.Accrued expenses and other current liabilities typically decline in the first quarter of each year due to the payment of variable compensation earned in the prior year. The year-over-year variance was mainly attributable to changes in accruals related to litigation matters, open hedging positions, and obligations to banks participating in the Monetization Facility. Additionally, the decrease in accrued expenses and other current liabilities in the first nine months of 2024 reflects the payout of contract termination and other exit costs attributable to our Hog Production Reform activities.
Cash Flows From Investing Activities of Continuing Operations
Nine Months Ended
September 28, 2025 September 29, 2024
(in millions)
Cash flows from investing activities:
Capital expenditures $ (246) $ (268)
Investments in partnerships and other assets (10) (5)
Net expenditures from breeding stock transactions (9) (42)
Proceeds from sale of property, plant and equipment and other assets 6 8
Insurance proceeds 7 2
Cash receipts on notes receivable 14 -
Net cash flows used in investing activities of continuing operations $ (239) $ (305)
The following items explain the significant investing activities:
•Capital expenditures. Capital expenditures for both periods consisted primarily of various plant automation and improvement projects.
•Investments in partnerships and other assets. Investments in partnerships and other assets includes capital contributions totaling $7 million and $5 million to a biogas joint venture in the first nine months of 2025 and 2024, respectively.
•Cash receipts on notes receivable. Cash receipts on notes receivable consists of cash received primarily related to sales of assets to Murphy Family Farms and VisionAg.
Cash Flows From Financing Activities of Continuing Operations
Nine Months Ended
September 28, 2025 September 29, 2024
(in millions)
Cash flows from financing activities:
Payment of dividends $ (297) $ (270)
Principal payments on long-term debt and finance lease obligations (1) (20)
Repayments to Securitization Facility - (14)
Proceeds from Securitization Facility - 14
Net repayments to revolving credit facilities - (1)
Net proceeds from issuance of common stock 236 -
Other (2) 1
Net cash flows used in financing activities of continuing operations $ (64) $ (290)
The following items explain the significant financing activities:
•Payment of dividends. In both periods, $1 million of dividends was paid to the noncontrolling interest holder of our consolidated subsidiary, Granjas Carroll de Mexico, S. de R.L. de C.V., (commonly known as "Altosano"), 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. We plan to continue to support the business in 2025 through capital expenditures in the range of $350 million to $400 million, inclusive of profit improvement projects, such as packaged meats capacity expansion and automation, as well as repairs and maintenance.
Dividends
On April 22, 2025, May 29, 2025 and August 28, 2025, we paid dividends of $0.25 per share to our shareholders. We anticipate remaining quarterly dividends for fiscal year 2025 will be $0.25 per share, resulting in an annual dividend rate for fiscal year 2025 of $1.00 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.
Monarch Sale Notice
On January 16, 2025, TPG Rise Climate ("TPG"), one of the other two equal joint venture partners in Monarch Bio Energy, LLC ("Monarch"), delivered a sale notice under the joint venture agreement, pursuant to which Monarch must pursue a sale of the joint venture. In the event that a sale of Monarch is not consummated before January 17, 2026, TPG may require that Monarch purchase TPG's ownership interests in Monarch.
Altosano Redeemable Noncontrolling Interest
The noncontrolling interest ("NCI") holders in 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 28, 2025, the value of the NCI on our condensed consolidated balance sheet was $257 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 21: Regulation and Contingencies" to the condensed consolidated financial statements includedin 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 "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.
Guarantees
In June 2025, Monarch refinanced its debt, repaying a debt facility of up to $61 million that Smithfield and certain other joint ventures partners in Monarch had joint and severally guaranteed. Smithfield was released from the guaranty and no longer provides a guaranty of Monarch's debt.
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 from Continuing Operations Attributable to Smithfield and Adjusted Net Income from Continuing Operations per Common Share Attributable to Smithfield
The following table provides a reconciliation of net income from continuing operations attributable to Smithfield to adjusted net income from continuing operations attributable to Smithfield. Adjusted net income from continuing operations attributable to Smithfield and adjusted net income from continuing operations per 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 from continuing operations attributable to Smithfield and adjusted net income from continuing operations per common share attributable to Smithfield are not intended to be alternatives to net income from continuing operations, net income from continuing operations per 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 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024
(in millions, except per share data)
Net income from continuing operations attributable to Smithfield $ 248 $ 202 $ 660 $ 572
Litigation charges - - 73 - SG&A
Reduction in workforce (1)
- - 6 - SG&A
Reduction in workforce (1)
- - 2 - Cost of sales
Office closures (2)
- - 4 - SG&A
Hog Production Reform (3)
1 3 3 13
Cost of sales
Hog Production Reform - - (1) - Operating gains
Plant closure - - 2 - Cost of sales
Incremental costs from destruction of property - - - 4
Cost of sales
Employee retention tax credits (4)
- - (10) (86)
Cost of sales
Employee retention tax credits (4)
- - - (1)
SG&A
Insurance recoveries (5)
(2) (3) (36) (4) Operating gains
Company-owned life insurance gain (6)
(17) - (17) - Non-operating gains
Income tax effect of non-GAAP adjustments (7)
- - (11) 19 Income tax expense
Adjusted net income from continuing operations attributable to Smithfield $ 230 $ 203 $ 674 $ 518
Net income from continuing operations attributable to Smithfield per diluted common share $ 0.63 $ 0.53 $ 1.68 $ 1.51
Adjusted net income from continuing operations attributable to Smithfield per diluted common share $ 0.58 $ 0.53 $ 1.72 $ 1.36
________________
(1)Consists of severance costs associated with a workforce reduction initiative. Total severance costs round up to $9 million.
(2)Consists of severance costs associated with the planned closure of our satellite offices in Lisle, Illinois and Kansas City, Missouri.
(3)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.
(4)Represents the recognition of employee retention tax credits received under the Coronavirus Aid, Relief, and Economic Security ("CARES") Act.
(5)Consists of gains recognized in connection with settlements of insurance claims associated with property damage. Also includes settlements of insurance claims in the second quarter of 2025 and the second and third quarters of 2024 for losses incurred in connection with past litigation.
(6)Consists of a gain recognized in the third quarter of 2025 for a one-time benefit on company-owned life insurance policies.
(7)Represents the tax effects of the non-GAAP adjustments based on a statutory tax rate of 25.7%.
EBITDA from Continuing Operations, Adjusted EBITDA from Continuing Operations and Adjusted EBITDA Margin from Continuing Operations
The following table provides a reconciliation of net income from continuing operations to EBITDA from continuing operations and adjusted EBITDA from continuing operations. EBITDA from continuing operations, adjusted EBITDA from continuing operations and adjusted EBITDA margin from continuing operations are non-GAAP measures. We believe EBITDA from continuing operations 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 from continuing operations is a useful measure as it excludes the effect of discontinued operations, 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 from continuing operations 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 from continuing operations, adjusted EBITDA from continuing operations and adjusted EBITDA margin from continuing operations are not intended to be alternatives to net income from continuing operations 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 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024 September 28, 2025 December 29, 2024
(in millions, except percentages)
Net income from continuing operations $ 252 $ 209 $ 667 $ 581 $ 884 $ 798
Interest expense, net 11 17 33 52 47 66
Income tax expense 71 69 205 165 310 271
Depreciation and amortization
82 88 248 253 335 339
EBITDA from continuing operations $ 416 $ 382 $ 1,152 $ 1,050 $ 1,576 $ 1,474
Litigation charges - - 73 - 73 - SG&A
Reduction in workforce (1)
- - 6 - 6 - SG&A
Reduction in workforce (1)
- - 2 - 2 - Cost of sales
Office closures (2)
- - 4 - 4 - SG&A
Plant closure (3)
- - 1 - 1 - Cost of sales
Hog Production Reform (4)
1 3 2 12 19 29
Cost of sales
Hog Production Reform (5)
- - (1) - (39) (38) Operating gains
Incremental costs from destruction of property - - - 4 - 4
Cost of sales
Employee retention tax credits (6)
- - (10) (86) (10) (86) Cost of sales
Employee retention tax credits (6)
- - - (1) - (1) SG&A
Insurance recoveries (7)
(2) (3) (36) (4) (36) (4) Operating gains
Company-owned life insurance gain (8)
(17) - (17) - (17) - Non-operating gains
Adjusted EBITDA from continuing operations $ 398 $ 383 $ 1,175 $ 976 $ 1,577 $ 1,379
Net income margin from continuing operations 6.7 % 6.3 % 5.9 % 5.7 % 5.8 % 5.6 %
Adjusted EBITDA margin from continuing operations 10.6 % 11.5 % 10.4 % 9.6 % 10.3 % 9.7 %
________________
(1)Consists of severance costs associated with a workforce reduction initiative. Total severance costs round up to $9 million.
(2)Consists of severance costs associated with the planned closure of our satellite offices in Lisle, Illinois and Kansas City, Missouri.
(3)Excludes accelerated depreciation charges as such amounts are included in the depreciation and amortization line in this table.
(4)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.
(5)Includes a $32 million gain on the sale of our Utah hog farms and a $6 million gain on the sale of breeding stock to Murphy Family Farms in the fourth quarter of 2024.
(6)Represents the recognition of employee retention tax credits received under the CARES Act.
(7)Consists of gains recognized in connection with settlements of insurance claims associated with property damage. Also includes settlements of insurance claims in the second quarter of 2025 and the second and third quarters of 2024 for losses incurred in connection with past litigation.
(8)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 from Continuing Operations
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 from continuing operations, and the ratio of net debt to adjusted EBITDA from continuing operations. Net debt and the ratio of net debt to adjusted EBITDA from continuing operations 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 from continuing operations is a useful measure as it monitors the sustainability of our debt levels and our ability to take on additional debt against adjusted EBITDA from continuing operations, 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 from continuing operations 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 from continuing operations 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 from continuing operations 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 28,
2025 		December 29, 2024
(in millions, except ratios)
Current portion of long-term debt and capital lease $ 3 $ 3
Long-term debt and finance lease obligations 2,001 1,999
Total debt and finance lease obligations $ 2,004 $ 2,002
Cash and cash equivalents (773) (943)
Net debt $ 1,231 $ 1,059
Net income from continuing operations $ 884 $ 798
Adjusted EBITDA from continuing operations $ 1,577 $ 1,379
Ratio of total debt and finance lease obligations to net income from continuing operations 2.3x 2.5x
Ratio of net debt to adjusted EBITDA from continuing operations 0.8x 0.8x
Adjusted Operating Profit and Adjusted Operating Profit Margin
The following table provides a reconciliation of operating profit to adjusted operating profit. Adjusted operating profit and adjusted operating profit margin are non-GAAP measures. We believe these non-GAAP measures are useful to investors because they provide a better understanding of underlying operating results and trends of established, ongoing operations of our segments, excluding the impact of items that are unusual in nature, infrequent in occurrence or otherwise stem from strategic decisions to restructure our operations. These non-GAAP measures are not intended to be alternatives to operating profit, operating profit margin or any other performance measures
derived in accordance with GAAP and should not be used by investors or other users of our financial statements in isolation for formulating decisions as they exclude a number of important cash and non-cash charges.
Three Months Ended
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 (loss) margin 10.8 % 0.5 % 10.9 % 7.7 % NM NM 8.3 %
Adjusted operating profit (loss) margin 10.8 % 0.5 % 10.9 % 7.7 % NM NM 8.3 %
Three Months Ended
September 29, 2024 		Packaged Meats Fresh Pork Hog Production
Other (1)
Corporate (2)
Unallocated (3)
Consolidated
(in millions, except percentages)
Operating profit (loss) $ 239 $ 28 $ 40 $ 20 $ (28) $ (15) $ 285
Hog Production Reform (4)
- - - - - 3 3
Insurance recoveries (5)
- - - - - (3) (3)
Adjusted operating profit (loss) $ 239 $ 28 $ 40 $ 20 $ (28) $ (14) $ 286
Operating profit (loss) margin 12.5 % 1.4 % 5.5 % 17.1 % NM NM 8.5 %
Adjusted operating profit (loss) margin 12.5 % 1.4 % 5.5 % 17.1 % NM NM 8.6 %
________________
(1)Includes our Mexico and Bioscience operations.
(2)Represents general corporate expenses for management and administration of the business.
(3)Includes certain costs of sales, SG&A and operating gains that we do not allocate to our segments.
(4)Consists of loss on asset disposals, accelerated depreciation charges and other exit costs associated with our Hog Production Reform initiative.
(5)Consists of a gain recognized in the third quarter of 2024 for the settlement of a claim with an insurance carrier to recover losses incurred in connection with past litigation.
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 (4)
- - - - - 9 9
Office closures (5)
- - - - - 4 4
Plant closure - - - - - 2 2
Hog Production Reform - - - - - 2 2
Employee retention tax credits (6)
(5) (5) - - - - (10)
Insurance recoveries (7)
- - - - - (36) (36)
Adjusted operating profit (loss) $ 787 $ 122 $ 112 $ 32 $ (79) $ (40) $ 934
Operating profit (loss) margin 12.8 % 2.0 % 4.3 % 8.9 % NM NM 7.9 %
Adjusted operating profit (loss) margin 12.7 % 1.9 % 4.3 % 8.9 % NM NM 8.3 %
Nine Months Ended September 29, 2024 Packaged Meats Fresh Pork Hog Production
Other (1)
Corporate (2)
Unallocated (3)
Consolidated
(in millions, except percentages)
Operating profit (loss) $ 855 $ 196 $ (136) $ 18 $ (92) $ (59) $ 783
Hog Production Reform (8)
- - - - - 13 13
Incremental costs from destruction of property - - - - - 4 4
Insurance recoveries (7)
- - - - - (4) (4)
Employee retention tax credits (6)
(38) (41) (8) - - - (87)
Adjusted operating profit (loss) $ 816 $ 155 $ (143) $ 18 $ (92) $ (45) $ 710
Operating profit (loss) margin 14.6 % 3.3 % (6.1) % 5.3 % NM NM 7.7 %
Adjusted operating profit (loss) margin 13.9 % 2.6 % (6.5) % 5.3 % NM NM 7.0 %
________________
(1)Includes our Mexico and Bioscience operations.
(2)Represents general corporate expenses for management and administration of the business.
(3)Includes certain costs of sales, SG&A and operating gains that we do not allocate to our segments.
(4)Consists of severance costs associated with a workforce reduction initiative.
(5)Consists of severance costs associated with the planned closure of our satellite offices in Lisle, Illinois and Kansas City, Missouri.
(6)Represents the recognition of employee retention tax credits received under the CARES Act.
(7)Consists of gains recognized in connection with settlements of insurance claims associated with property damage. Also includes settlements of insurance claims in the second quarter of 2025 and the second and third quarters of 2024 for losses incurred in connection with past litigation.
(8)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.
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 29, 2024. 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 29, 2024.
Recently Issued Accounting Pronouncements
For a description of recently issues accounting pronouncements, refer to "Note 1: Summary of Significant Accounting Policies" to the condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q and our other publicly available documents contain forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995 about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future financial condition, future operations, projected costs, prospects, plans, objectives of management, and expected market growth, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words, such as "may," "might," "will," "shall," "should," "expects," "plans," "anticipates," "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential," "goal," "objective," "seeks," "likely" or "continue" or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans, or intentions.
Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:
•our ability to capture synergies between our Packaged Meats and Fresh Pork segments;
•our ability to execute on our strategy to optimize the size of our hog production operations;
•our ability to anticipate and meet consumer trends and interests through product innovation;
•the size of our addressable markets, market share and market trends, including our ability to drive organic growth in our business through our Packaged Meats and Fresh Pork segments;
•anticipated trends, developments and challenges in our industry, business and the highly competitive markets in which we operate;
•our ability to mitigate higher input costs through productivity improvements in our operations (including analytics and task automation), various procurement strategies and the use of derivative instruments;
•our dependence on third-party suppliers and our ability to mitigate any disruption or inefficiency in our supply chain and/or operations;
•our expectations regarding our hog production transformation strategy and our ability to achieve segment production targets;
•fluctuations in our quarterly results of operations due to the seasonal nature of our business;
•our ability to attract and retain employees and maintain our corporate culture;
•our ability to prevent cyberattacks, other cyber-incidents, security breaches or other disruptions of our information technology systems;
•our ability to defend litigation brought against us successfully and the sufficiency of our accruals for related contingent losses;
•compliance with laws and regulations, including environmental, cybersecurity and tax laws and regulations, that currently apply or may become applicable to our business both in the United States 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 28, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on October 28, 2025 at 12:03 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]