Smithfield Foods, Inc.

Good day and welcome to the Smithfield Foods 1st Quarter 2026 Financial Results Conference Call. All participant lines will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by 0. After today's presentation, there will be an opportunity to ask a question. To ask a question, you may press star then 1 on your touchtone phone. To withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to Judy McMitten, Vice President, Investor Relations. Please go ahead.

Thank you, Operator, and good morning, everyone. Welcome to Smithfield's first quarter 2026 earnings call. Earlier this morning, we announced our results. A copy of the release, along with today's presentation, is available on our Investor Relations website. Today's presentation contains projections and other forward-looking statements that are being provided pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all comments reflecting our expectations, assumptions, or beliefs about future events or performance that do not relate solely to historical periods. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. These risks and uncertainties include but are not limited to the factors identified in the release, in our annual report on Form 10-K, our quarterly reports on Form 10-Q, and our other filings with the Securities and Exchange Commission. The company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Please refer to our legal disclaimer on slide two of the presentation for additional information. Today's presentation will also include certain non-GAAP measures, including but not limited to adjusted operating profit and margin, adjusted net income, adjusted earnings per share, and adjusted EBITDA. For reconciliation of these and other non-GAAP measures to the corresponding GAAP measures, please refer to our earnings press release and our slide presentation on our website. Finally, all references to retail volume and market share are based on Serpano NuloPlus data. With me this morning are Shane Smith, President and CEO, Mark Hall, CFO, Steve France, President of PackageMeets, and Jonathan Owens, President of North America Pork. With that, I will now turn the discussion over to Shane. Shane?

Thank you, Julie. Good morning, everyone. I am pleased to report record first quarter adjusted operating profit of $339 million and adjusted operating profit margin of 8.9%. Our outstanding results reflect disciplined execution of our long-term strategies, particularly in package meets, reinforcing the benefits in our vertically integrated model in a dynamic operating environment. Looking at profit by segment, package meets delivered operating profit of $275 million, up 4% versus the first quarter of 2025. Packaging meat sales of $2.1 billion increased by 6% compared to the first quarter of 2025. This was driven by volume growth of 3.5%, primarily reflecting the earlier Easter holiday. Excluding the impact of the earlier Easter timing, our volume was still up 1.3%. We also saw a 2.6% increase in average sales price related to higher raw material market prices, and disciplined pricing across our brand portfolio. We reported package-meat segment operating profit margin of 12.8%, which was down modestly from last year, driven primarily by the earlier Easter increase in the mix of holiday hams, higher raw material input costs, and continued consumer caution in the quarter. Freshport reported operating profit of $78 million, with an operating profit margin of 3.9%, which was down slightly versus the first quarter of 2025. We saw lower production volume in our East Coast operations due to temporary winter storm disruptions, as well as lower gross margin as China export volumes decreased year-over-year. As a reminder, the tariff disruption was introduced in April of 2025, impacting the year-over-year comparison in the first quarter. Our production segment delivered operating profit of $4 million, up from $1 million in the first quarter of 2025, driven by improved commodity dynamics, including higher selling prices and lower feed costs, and improved operating efficiency on our retained farms. This marked the fifth consecutive quarter of our production segment profitability and underscores the ongoing benefits from our transformational strategy. We have reduced the number of internally produced hogs, closed and exited underperforming farms and geographies, and successfully lowered our call structure through improved genetics, herd health, and procurement and nutrition savings. Finally, our culture of continuous improvement drove meaningful call savings during the first quarter. In addition to efficiencies within our segments, corporate expenses were down 11% versus last year. In short, we delivered record first quarter profit led by strong package meets segment performance and solid execution across the organization. Our financial position continues to be rock solid. We ended the quarter with liquidity of 3.7 billion and leverage of just 0.4 times, providing significant flexibility to support our growth strategies and deliver shareholder value over the long term. Now turning to our outlook for fiscal 2026. We continue to navigate a challenging external environment with the Middle East conflict adding another layer of macro volatility. For us, that flows through higher freight, packaging, and agricultural input cost. Our experienced team is managing through this the same way we have in past cycles, pricing and mix, discipline spending, productivity initiatives, hedging, and contract and procurement actions. The U.S. consumer continues to be cautious, and we are focused on delivering value and nutrition for families. As households make every dollar count, our portfolio of trusted brands provides affordable protein solutions without compromising on quality. Protein continues to resonate with consumers, given its nutritional benefits and versatility, and within the protein complex, Port remains competitively positioned. Core Smithfield categories, including lunch meat, bacon, sausage, and hot dogs, offer accessible, everyday protein options that align well with current value-oriented purchasing behavior. Against this backdrop, we believe staying focused on our five key strategies will help us grow sales and profitability in 2026 and over the long term. First, in packaged meats. We plan to continue to grow operating profit through ongoing product mix improvements volume growth, and innovation. Improving product mix remains a core margin expansion strategy. We are increasing the mix of higher margin value-added product categories and expanding unit velocity while reducing volume of lower margin commodity type product categories. A great example of this is converting large holiday hams into products like our prime fresh lunch meat. which increases units and purchasing occasions while expanding margins. Coming out of 2025, we saw strong momentum in these value-added categories, and that carried over into the first quarter of 2026. During the first quarter, we grew units and market share in our four higher-margin focus areas. For example, we grew units sold of cooked dinner sausage by 9% in the quarter, gaining 0.8 points of unit share growth, and dry sausage by 10%. gaining 1.1 points of unit share growth. We expect these higher margin categories to continue to deliver strong unit growth throughout 2026. We are capitalizing on the significant opportunity to drive volume growth and gain share across our portfolio. We participate in 25 key package meet subcategories of retail, 10 of which are valued over $1 billion. We are focused on driving volume growth through increased distribution, and discipline brand investment. During the first quarter, we increased branded volume share for the 25 categories in total by 1.6% and gained branded volume share growth of 0.4 points. A key contributor to growth was increased points of distribution, which was up a strong 5.5% versus last year. We also continue to invest in marketing and trade promotion for our brands. One of the top performing categories was packaged lunch meat, which grew volume by 11.1%, while the industry was down 6.5%. This led to a more than one point increase in our packaged lunch meat volume share. Smithfield Prime Fresh is one of our most important packaged lunch meat brands. We grew Prime Fresh volume by 26%, with an 18% increase in points of distribution in the first quarter. Looking ahead, we see continued white space opportunities to grow volume and increase market share in our top 25 categories. As part of our broader growth strategy, and in addition to trade promotions, we are increasing investment in television and digital advertising to build awareness and support the long-term growth of our national brands, Smithfield, Eckridge, and Nathan's Famous. We are also growing volume by delivering what consumers want. A key competitive advantage for Smithfield is our ability to offer a broad portfolio of quality branded products that spans multiple categories and price points. This portfolio strategy allows us to retain consumers within our brands as they trade up and down the value spectrum. Additionally, roughly 40% of our package meets retail sales are private label, which allows us to capture sales if consumers trade out of brands and into private labels. Overall, the combination of branded and private label offerings enables us to forge multi-year strategic partnerships with our customers, supporting volume growth across our portfolio. That brings us to product innovation. We focus on introducing new flavors, convenient and easily prepared meals, and package sizes that range from snack sizes to family value offerings. Our new product pipeline for 2026 is robust. with launches scheduled throughout the year. For example, in the first quarter, product innovation drove 12% year-over-year volume growth in Armored Dry Sausage and more than 22% volume growth in Curly's Refrigerated Barbecue Meats, supported by new snacking formats and globally inspired flavors. Our latest introduction in April was a new Smithfield Premium Pork Bratwurst lineup featuring three bold flavors, including the limited-time Pabst Blue Ribbon Beer Brat. We look forward to sharing more new product innovations throughout the year. We've talked a lot about retail, but food service is also an important channel for packaged meats, representing roughly 30% of sales. During the first quarter, we increased food service channel sales by 4%, with volume up 1%. Food service customers view us as a scaled, trusted provider of high-quality products, that can deliver value-added solutions, saving time and money. Innovation is a key advantage for us in the food service channel, as evidenced by the introduction of 12 new limited-time offers in the first quarter alone. Even as food away from home inflation remains elevated, our scale, innovation, and value-added solutions are resonating with operators focused on driving traffic and margins. Moving to our second core growth strategy, growing fresh pork profitability. We are focused on maximizing the net realizable value across channels and continuing to improve operating efficiencies. We were executing our strategies to increase fresh pork operating profit in 2026 as follows. Growing volume in the retail channel, emphasizing higher margin value-added case-ready and marinated offerings. expanding adjacent channel opportunities such as pharmaceuticals and pet food, increasing automation and driving plant efficiency, yield optimization and supply chain savings, and optimizing harvest levels across our network, all while remaining agile in export markets. During the first quarter, we grew sales in the retail channel by 3%, with a 6% increase in sales of value-added, case-ready, and marinated items. We are driving growth and value-added pork through innovation, like our February launch of Smithfield half-loin fillets, featuring several bold flavors while also delivering convenient package size for today's smaller households. In April, we launched our new Smithfield meal-ready cuts platform. These sliced, marinated, and premium pork cuts deliver globally-inspired flavors in minutes and are perfect for today's consumers who want convenience without compromising taste. In short, our new value-added offerings are helping drive mix and margin improvements by meeting the strong demand for nutritious protein at a great value relative to beef and by expanding pork's relevance across multiple cuisines and usage occasions. Like our packaged meat segment, our fresh pork segment is also focused on driving growth in the food service channel, and we can leverage synergies across these two segments to optimize our go-to-market strategy. During the first quarter, we grew fresh pork food service channel sales by 27%. This reflects increased sales of value-added categories as well as strong sales of ribs, which are a great alternative to more expensive beef. From an adjacent channel standpoint, we are seeing continued interest in the pharmaceutical and pet food channels, and we are capitalizing on that interest. Across our fresh pork segment, our team has been nimble employing a next best-sell strategy, maximizing net realizable value, and seizing the opportunity of the relative value of pork. Now to our strategy to optimize hog production. We continue to progress toward a best-in-class cost structure in hog production and have made great strides. During the first quarter of 2026, we delivered improved operating efficiency on our retained farms. That, coupled with favorable hog and feed markets, helped increase operating profit to $4 million from $1 million a year ago. Going forward, our team remains dedicated to realizing additional efficiencies. Over the medium term, we continue to progress toward our goal of producing approximately 30% of FreshPool's needs internally. We believe this will provide an optimal balance of assured supply and cost risk management and will continue to improve earnings durability across the cycle. Across the whole company, we drive a culture of continuous improvement. We have a no stone left unturned approach each year looking for new ways to improve operating efficiency and reduce costs. We expect efficiency savings to again contribute to an enhanced profitability in 2026. In our packaged meats and fresh pork processing plants, we see further opportunities to employ automation and improve processes to increase yields and drive efficiency. For example, we continue to optimize our network by moving dry sausage production from smaller and older East Coast plants to our most technologically advanced and efficient facilities, such as Nashville. Our new Sioux Falls processing plant will be the most modern efficient, and largest combined fresh pork and packaged meats processing plant in our network. We look forward to sharing more information once we have secured final approvals. Across the organization, we are deploying technology to improve efficiency, lower cost, and redeploy talent to higher value activities. And our continued investment in improving supply chain operations is helping us navigate some of the near-term inflation and transportation costs. Finally, we continue to evaluate opportunistic M&A to support our growth strategies. In January, we entered into an agreement to acquire one of our top national package meats brands, Nathan's Famous. Our anticipated timeline to close the transaction is now in the second half of 2026, due to the impact of the partial government shutdown on statutory deadlines for the CFIUS review process. Successfully closing the acquisition will secure our rights to the brand for the long term, and we are looking forward to maximizing Nathan's famous brand growth across the retail and food service channels. We will remain disciplined in evaluating additional complementary and synergistic M&A opportunities to bolster our organic growth. In summary, we delivered record first-board results led by strength in packaged meats, and consistent execution across our vertically integrated model. By continuing to execute our five forward growth strategies, we are successfully navigating a dynamic consumer and geopolitical environment to drive growth in 2026 and over the long term. With that, I will turn it over to Mark to review our financials in more detail.