Smithfield Foods Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Megan Clapp - Morgan Stanley - Analyst : Hey. Good morning, Shane and Mark. Thanks so much. I guess we could just start maybe with tariffs. Obviously, a very dynamic situation. You said the guide addresses tariff risks. Wondering if you could just expand on that. Are you including the 145% China tariff rate as it stands today and what exactly does that mean in terms of how you're thinking about your own export demand? I ask because some of the third-party data we've seen would suggest some pretty meaningful reductions in exports to China recently, so just wondered if you could provide a little bit more detail on maybe what you're seeing specifically if that's different than the industry and what's included in your outlook. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 29, 2025 / 1:00PM, SFD.OQ - Q1 2025 Smithfield Foods Inc Earnings Call

Question: Megan Clapp - Morgan Stanley - Analyst : Thanks. That's really helpful. A lot of detail there. Maybe a follow up somewhat related, just on Hog Production. Maybe you can talk about your current view, I guess two-part question, part A, your current view on industry hog supply and demand as we think about the remainder of '25 and whether that's -- how the tariff environment's impacting that outlook relative to a month ago. And as it relates to your own hog production outlook, you had some strong performance in in 1Q and the curve would continue to suggest that profitability should remain pretty strong in 2Q and 3Q. So any updated views there as it relates to the tariff environment, how that's impacting your own hog production assumptions would be helpful.

Question: Megan Clapp - Morgan Stanley - Analyst : Great. Thanks, Shane.

Question: Ben Theurer - Barclays - Analyst : Hey. Good morning, Shane, Mark, congrats on the, on a good result for 1Q. Two quick ones. So first, when we look at the results for the first quarter, and I know we just spoke about four weeks ago on your fourth quarter results. Back then it felt like you were a little bit more cautious on the first quarter. So just wanted to understand if you could maybe break down what your initial expectations were for q! and how it then ultimately turned out in the first quarter. What were the upside surprises within the different segments? That would be my first question, and I have a quick follow up. Thank you.

Question: Ben Theurer - Barclays - Analyst : Okay, got it. And then second, if we just come back maybe to the Packaged Meats business which obviously you've flagged it in your prepared remarks but wanted to dig a little bit deeper into some of the initiatives you're doing on the Lunch Meats side where you see the largest opportunities. What portion maybe of CapEx or of focus of growth investments are you planning for the next couple of years to really drive that position of yours up in the packaged lunch meat, which seems a great opportunity as to further grow the Packaged Meats business. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 29, 2025 / 1:00PM, SFD.OQ - Q1 2025 Smithfield Foods Inc Earnings Call

Question: Ben Theurer - Barclays - Analyst : Got it. Thanks, Steve.

Question: Leah Jordan - Goldman Sachs - Analyst : Good morning. Thank you for taking my question. I just wanted to stick with Packaged Meats a little bit, seeing if you could provide more detail on how the volumes trended by month throughout the quarter, just so we can isolate the impact of Easter. And just how you were thinking about the balance of volumes and price in that segment as we go throughout the year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 29, 2025 / 1:00PM, SFD.OQ - Q1 2025 Smithfield Foods Inc Earnings Call

Question: Leah Jordan - Goldman Sachs - Analyst : Thank you. That's all really helpful color. Just kind of in a related follow up, speaking about the consumer trading down, I know you have a range of price points across your brands. Just what are you seeing in the competitive environment within package meets, maybe how did promotional activity track versus your expectations in the quarter and just how are you thinking about the promotion environment as we go through the year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 29, 2025 / 1:00PM, SFD.OQ - Q1 2025 Smithfield Foods Inc Earnings Call

Question: Leah Jordan - Goldman Sachs - Analyst : Great. Thank you.

Question: Thomas Palmer - Citi - Analyst : Good morning and thanks for the questions. I wanted to I guess first just ask on the Hog Production outlook. The first quarter was fractionally profitable in a seasonally weak quarter. And then your messaging when answering one of Megan's questions about 2Q and 3Q seemed pretty positive. So I guess was there a at least the contemplation in terms of boosting the Hog Production outlook or at least raising the low end of the outlook because it does seem like the next couple of quarters should be positive at least.

Question: Thomas Palmer - Citi - Analyst : Okay. Thanks for that. And then I just had a follow up on the second quarter. You've noted some of the discreet headwinds that that maybe are a little more isolated to 1Q in terms of Easter and some of the raw material factors. I guess as we're thinking about Package Meats, especially any help on kind of how you're thinking about the flow through of profitability. I mean, I would assume sequential improvement is expected in the second quarter, but any help, I guess is we're thinking about last year in terms of puts and takes?

Question: Thomas Palmer - Citi - Analyst : Yeah, sorry about that. Yeah, just on the Packaged Meat segment, you noted some of the puts and takes, it sounds like the weight on 1Q maybe and then become a benefit in the second quarter. So it did seem like the message was sequential improvement, wondering how that might compare

Question: Thomas Palmer - Citi - Analyst : Okay. Thanks for that.

Question: Yasmine Deswandhy - Bank of America - Analyst : Hey, guys. Thank you so much for the question. So I just had a similar question that Tom asked, but on Fresh pork instead. So quarter to date, we've been seeing some continued compression and implied spreads in Fresh Pork processing. So how should we think about that impacting 2Q profits for Fresh Pork?

Question: Yasmine Deswandhy - Bank of America - Analyst : Okay, great. Thank you so much, guys.

Question: Heather Jones - Heather Jones Research - Analyst : Good morning. Thanks for the question. I want to start on the Hog Production side and on the genetics piece. I was just wondering if -- it's a two-part question. First, wondering if you could just qualitatively give us a sense of how much of those benefits have you already realized versus how much is still in the [com] And then I would presumably the benefits are related to [sow] productivity, but I was just wondering if there are any offsets that we need to be aware of with that genetics change.

Question: Heather Jones - Heather Jones Research - Analyst : Thank you for that. And then just talking about industry health and all, I mean, numbers, process volumes have just significantly lagged expectations early part of this year and my understanding a lot of this based on industry challenges with disease and all. I was just wondering what your thoughts are on that as far as how quickly that'll be resolved. And -- or do you expect that to be a challenge for the industry for much of '25? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 29, 2025 / 1:00PM, SFD.OQ - Q1 2025 Smithfield Foods Inc Earnings Call

Question: Heather Jones - Heather Jones Research - Analyst : Wonderful. Thank you so much. I appreciate it.