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SMITHFIELD FOODS INC (SFD)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered broad-based profitability with net sales of $3.77B (+9.5% YoY) and operating profit of $321M (+97% YoY); adjusted operating profit was $326M (+86% YoY) and adjusted margin expanded 350 bps to 8.6% .
  • EPS beat Street: diluted EPS $0.57 and adjusted diluted EPS $0.58 vs S&P Global consensus $0.47 and EBITDA $396M vs $337M; revenue $3.77B vs $3.62B consensus. Sequentially, adjusted OP increased vs Q4, while reported OP was flat amid Easter timing and higher inputs . Q1 consensus data marked with * and sourced from S&P Global.
  • Guidance reaffirmed for FY25: total sales up low-to-mid single digits; adjusted OP $1.1B–$1.3B; segment ranges unchanged; tax rate 23–25%; CapEx $400–$500M; dividend path of $1.00/sh for 2025 maintained .
  • Key catalysts: sharp rebound in Hog Production (from $(174)M) to breakeven; Packaged Meats mix shift to higher-margin lunch meat/dry sausage; Fresh Pork agility to offset tighter spreads and tariff disruptions .
  • Balance sheet remained strong: liquidity $3.23B, cash $928M, net debt/Adj EBITDA 0.7x TTM, supporting growth and returns .

What Went Well and What Went Wrong

  • What Went Well

    • Hog Production turnaround to ~$1M adjusted OP vs $(174)M prior year, driven by improved markets and cost structure on retained farms; management expects strength into Q2–Q3 per futures curve .
    • Packaged Meats posted robust adjusted OP ($266M) and 13.1% margin despite higher bellies/trim; mix shift into lunch meat and dry sausage with double-digit volume gains in Q1 .
    • Strong liquidity and disciplined cost actions (automation, SG&A) underpinning margin expansion and dividend execution ($0.25/sh paid on Apr 22) .
    • Quote: “Our results were truly a reflection of strategy execution across segments and the strength of our vertically integrated model.” — Shane Smith .

  • What Went Wrong

    • Fresh Pork margins compressed YoY as CME lean hog +14% outpaced USDA cutout +6%; OP fell to $82M (4.0% margin) vs $110M (5.7% margin) in Q1’24 .
    • Packaged Meats volumes down ~4.2% YoY in Q1 from later Easter and cautious consumer; raw materials up (bellies +15%, trim +30% YoY), implying timing lag in formula pricing .
    • Tariffs: China (~145%) not viable near-term; management pivoting to 30+ export markets and next-best sales strategy; Q&A framed outlook risk but embedded within FY25 Fresh Pork guide .

Financial Results

  • Consolidated performance vs prior year and prior quarter
MetricQ1 2024 (oldest)Q4 2024Q1 2025 (newest)
Revenue ($USD Billions)$3.44 $3.95 $3.77
Operating Profit ($USD Millions)$163 $335 $321
Adjusted Operating Profit ($USD Millions)$176 $315 $326
Operating Margin (%)4.7% 8.5% 8.5%
Adjusted Operating Margin (%)5.1% 8.0% 8.6%
Diluted EPS (Cont. Ops) ($)$0.30 $0.56 $0.57
Adjusted Diluted EPS (Cont. Ops) ($)$0.32 $0.52 $0.58
  • Segment breakdown (sales and operating profit)
SegmentQ1 2024 Sales ($MM)Q1 2025 Sales ($MM)YoYQ1 2024 OP ($MM)Q1 2025 OP ($MM)YoY
Packaged Meats$1,999 $2,024 +1.2% $286 $266 (7.0%)
Fresh Pork$1,938 $2,033 +4.9% $110 $82 (25.7%)
Hog Production$706 $932 +32.0% $(174) $1 NM
Other$114 $104 (8.6%) $(8) $14 NM
  • KPIs and balance sheet/cash flow
KPIQ4 2024Q1 2025
Liquidity ($MM)$3,245 $3,230
Cash & Equivalents ($MM)$943 $928
Net Debt ($MM)$1,059 $1,075
Net Debt / Adj EBITDA (TTM) (x)0.8x 0.7x
CapEx ($MM, quarter)$— (see FY)$79
Cash from Ops ($MM, quarter)$(—) (see FY)$(166)
Dividend per share (quarter)$0.25 declared for Apr 22 $0.25 paid Apr 22
  • Non-GAAP reconciliation highlights (Q1 2025): workforce reduction (severance ~$9M), Hog Production Reform items, plant closure costs, insurance recoveries, tax effects (25.7%) .

Guidance Changes

MetricPeriodPrevious Guidance (Mar 25, 2025)Current Guidance (Apr 29, 2025)Change
Total Company Sales GrowthFY 2025Low-to-mid single digits vs FY24 Reaffirmed low-to-mid single digits Maintained
Adjusted Operating Profit (Total)FY 2025$1,100–$1,300MM Reaffirmed $1,100–$1,300MM Maintained
Packaged Meats Adj OPFY 2025$1,050–$1,150MM Reaffirmed $1,050–$1,150MM Maintained
Fresh Pork Adj OPFY 2025$150–$250MM Reaffirmed $150–$250MM Maintained
Hog Production Adj OPFY 2025$(50)–$50MM Reaffirmed $(50)–$50MM Maintained
CapExFY 2025$400–$500MM Reaffirmed $400–$500MM Maintained
Effective Tax RateFY 202523%–25% Reaffirmed 23%–25% Maintained
DividendFY 2025Expect $1.00/sh (quarterly $0.25) Expect $1.00/sh; $0.25 paid Apr 22 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024 and FY 2024)Current Period (Q1 2025)Trend
Packaged Meats mix shift (lunch meat, dry sausage, quarter hams)Priority to expand mix; 10-year margin gains; added dry sausage capacity; Prime Fresh focus Double-digit volume growth in lunch meat & dry sausage; 13.1% margin despite input inflation Improving
Consumer/pricing and private labelPortfolio across price points; private label as advantage Cautious consumer; formula pricing in private label mitigates costs; private label elevated with retailers Stable/Supportive
Fresh Pork spreads and tariffs2024 spread favorable; tariff environment fluid; flexibility across channels Spread compressed; pivot away from China (145% tariff), sell into 30+ markets; guide incorporates tariff risk Challenged but managed
Hog Production reform and profitabilityReduce owned hogs to ~11.5M (2025), medium-term ~30% of Fresh Pork needs; cost initiatives (genetics, health, feed) Profit rebounded; futures indicate strong Q2/Q3; genetics nearing completion; some herd health trade-offs Improving
Operational efficiencies/automationMulti-year automation, SKU simplification, cost down across manufacturing/distribution/SG&A Continued cost savings; headcount reductions in Q1; CapEx >50% for ROI projects Improving
Export strategy and channel mixMaximize value via multiple channels; pet food/treats, pharma Next-best sales strategy; resumed shipments to China later; agile flex of production Mixed, agile

Management Commentary

  • “We delivered first quarter adjusted operating profit of $326 million and adjusted operating profit margin of 8.6%… our strong improvement reflects more favorable market conditions in Hog Production as well as solid execution on our strategies.” — Shane Smith .
  • “Packaged Meats… adjusted operating profit of $266 million… margin of 13.1%, even as we navigated higher raw material input costs and a later Easter this year.” — Shane Smith .
  • “Industry market spread was compressed… CME lean hog price +14% YoY while USDA cutout +6%… we partially offset with cost savings in manufacturing and distribution.” — Mark Hall (Fresh Pork) .
  • “China at 145% is not a viable market at the moment… we have 30 other export markets… we’ve fully integrated this into our 2025 outlook.” — Donovan Owens .
  • “We expect packaged meats volume to be up about 1% year-over-year… innovation pipeline and private label capabilities support growth.” — Steven France .

Q&A Highlights

  • Tariffs/China: Management quantified China at ~3% of revenue, confirmed current tariffs make it non-viable; pivot strategy to other markets and channels embedded in guidance .
  • Hog Production trajectory: Q1 profitability seen as strong; futures suggest strength in Q2–Q3 with normal seasonality in Q4; caution due to tariff-induced revenue volatility; guidance maintained .
  • Packaged Meats cadence: Expect sequential improvement into Q2 as Easter volumes shift; margin compression vs last year given elevated inputs and formula pricing lag .
  • Fresh Pork 2Q outlook: Seasonal spread compression expected; offset by efficiency gains and value-added mix (case-ready, marinated) and promotional timing shift due to later Easter .
  • Promotion and private label: Emphasis on quality merchandising and feature/display over discount-driven volume; private label upscaling benefits Smithfield’s capabilities .

Estimates Context

  • Q1 2025 vs Wall Street consensus (S&P Global):
MetricConsensusActual
Revenue ($USD Billions)$3.62*$3.77
EBITDA ($USD Millions)$337*$393 (EBITDA) / $396 (Adj EBITDA)
Diluted EPS (Cont. Ops) ($)$0.47*$0.57
Adjusted Diluted EPS ($)—$0.58
# of EPS Estimates6*—
# of Revenue Estimates4*—

Values marked with * retrieved from S&P Global.

  • Implications: Clear beat on revenue, EBITDA, and EPS; beats driven by Hog Production rebound and disciplined cost execution amid higher input costs. Estimate revisions for Hog Production and Packaged Meats margins likely bias upward for full year ranges .

Key Takeaways for Investors

  • Mix-led and efficiency-driven margin expansion continues in Packaged Meats; resilience shown despite input inflation and seasonal timing effects .
  • Fresh Pork profitability is agile but sensitive to spreads and tariffs; management’s multi-channel “next-best sales” strategy mitigates risk, embedded in guidance .
  • Hog Production has structurally improved (genetics, cost reductions, resizing), with near-term tailwinds from futures curves; watch seasonality into Q4 .
  • FY25 guidance reiterated with strong balance sheet flexibility (net debt/Adj EBITDA 0.7x TTM) enabling continued CapEx (>50% ROI projects) and $1/sh dividend .
  • Non-GAAP adjustments were modest in Q1; adjusted EPS of $0.58 represents underlying strength; monitor legal/insurance one-offs highlighted in Q2 press release framework .
  • Near-term trading: Positive estimate-beat setup and guidance reaffirmation are supportive; tariff headlines and raw material volatility remain key swing factors in Fresh Pork margins .
  • Medium-term: Continued portfolio premiumization, private label scaling, and automation initiatives support durable margin profile; Hog Production resizing lowers commodity exposure and earnings volatility .