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Image source: The Motley Fool. Tuesday, Aug. 11, 2026, at 9 a.m. ET Vice President of Investor Relations-Julie MacMedan President and Chief Executive Officer-Shane Smith Chief Financial Officer-Mark Hall President of Packaged Meats-Steve France President of North America Pork-Donovan Owens Operator: Good day, and welcome to the Smithfield Foods Second Quarter 2026 Earnings Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Julie MacMedan, Vice President of Investor Relations. Please go ahead. Julie MacMedan: Thank you, operator, and good morning, everyone. Welcome to Smithfield's Second 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 2 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 a 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 Circana MULO+ data. With me this morning are Shane Smith, President and CEO; Mark Hall, CFO; Steve France, President of Packaged Meats; and Donovan Owens, President of North America Pork. I will now turn the discussion over to Shane. Shane? Shane Smith: Thank you, Julie. Good morning, everyone. I want to start my remarks today by emphasizing the strength of our performance and the resilience of our business. In a cautious consumer and volatile commodity environment, our team delivered record second quarter adjusted operating profit of $300 million, and we expanded adjusted operating profit margin to 8.1% from 7.9%. Through the first half, we set a record for adjusted operating profit of $638 million, up 2% from the prior year. This is a tremendous accomplishment and a clear reflection of the strength, focus and execution of our teams. I attribute the ability to execute our long-term strategies on 2 key strengths: 1, the advantage of our vertically integrated model; and 2, the longevity of experience and cohesiveness of our talented team, resulting in disciplined execution. Our vertically integrated model is built on our packaged meats, providing brands, innovation and resilience through pricing diversity, fresh pork creating value by turning every pound into its highest and best use domestically and globally and hog production, which establishes the foundation through an assured supply of quality raw material and cost control that no nonintegrated peer can match. Smithfield is celebrating its 90th anniversary this year. Our company was built through acquisitions and organic growth and has succeeded by executing our proven strategies despite hard-fought challenges. Coincidentally, the people on this call today, Mark, Steve, Donovan and I have 90 years of combined experience, and we are supported by teams who execute with urgency and discipline every day. No matter what the challenge or disruption in the macroeconomic environment, it is embedded in the culture of Smithfield and the DNA of our people to always look for ways to drive efficiency, optimize our business and execute with discipline and urgency. Looking at each segment for the second quarter, packaged meats delivered strong adjusted operating profit margin of 13.1%. We defended our market share in a difficult retail environment. We delivered meaningful volume share gains in our largest product categories, outperformed category trends in both brick-and-mortar and eCommerce, expanded distribution and continue to see strong results from our mix shift strategies. Fresh pork operating profit reflected significant industry gross market spread compression versus the second quarter of 2025. Importantly, our team continued to create value by growing sales in our higher-margin value-added retail, pharmaceutical and pet food channels. Hog production delivered higher operating profit driven by higher hog selling prices as well as savings and improved operating efficiency on our retained farms. This marked the sixth consecutive quarter of Hog Production segment profitability and underscores the ongoing benefits from our transformational strategy. In summary, we delivered record second quarter and first half adjusted operating profit despite a challenging macroeconomic environment. Our record results continue to bolster our already rock-solid financial position. Having a healthy balance sheet has long been a priority for Smithfield because it insulates us from the challenging market conditions and gives us significant flexibility to support our growth strategies and deliver shareholder value over the long term. Our first half results demonstrate the strength of our team, the resilience of our model and the durability of our strategy. Consumers continue to face pressure from persistent inflation across a variety of household spending categories. As a result, value-seeking behaviors have remained elevated, contributing to softer demand trends. As we look to the remainder of 2026, we're focused on managing through a consumer spending environment that continues to pressure volumes across the industry while using our brand strength, portfolio breadth and execution capabilities to keep winning with consumers. We are also navigating softer meat and hog markets in our upstream businesses with the benefit of our integrated model, disciplined risk management and continued focus on operational efficiency. On the cost side, we are expecting continued volatility and inflationary inputs such as fuel and freight throughout 2026. Based on what we know today, we believe it is appropriate to update our 2026 outlook to reflect the current macroeconomic backdrop while continuing to invest in the strategies that position Smithfield for long-term growth. Mark will share more detail of our outlook by segment during his remarks. I'll spend the rest of my remarks talking about our strategies to win in the second half and over the long term. First, our strategies and competitive advantages remain the same. In packaged meats, we will improve profitability through mix, volume growth and innovation, leveraging our branded and private label pricing portfolio. In fresh pork, we will maximize the net realizable value of every hog across channels at a best-in-class cost structure. In hog production, we will achieve best-in-class cost structure through genetic transformation, herd health improvements and procurement and nutrition savings. In operations, we will drive efficiencies across manufacturing, supply chain, distribution, procurement and SG&A. And in M&A, we will continue to evaluate synergistic opportunities. In packaged meats, we gained volume share in 5 of our $1 billion-plus categories, cooked dinner sausage, dry sausage, hot dogs, packaged lunch meat and smoked ham. A key contributor to our volume share growth in the second quarter was winning during grilling season. We won with new innovative flavors like Smithfield PBR Brats, Nathan's Grass-Fed hot dogs, and Eckrich and Deli flavor dinner sausages. During the second quarter, our Eckrich brand, which markets popular grilling items such as dinner sausages, grew households by 1.7% and gained 0.7 points of volume share, reflecting strong advertising support and new flavor innovation. We continue to improve our mix of higher-margin, higher velocity items. For example, instead of just reaching one household with a large spiral ham during the holidays, we are converting that single ham and dine-in occasion into the equivalent of up to 14 everyday products with higher profitability, increasing frequency, velocity and profitability. For example, with packaged lunch meat, we are bringing consumers back to the category through premium quality offerings that elevate the traditional lunch meat experience. By delivering differentiated products that meet consumers' growing expectations for quality and freshness, we are helping drive traffic back to a high-volume area of the store while creating a compelling trade-up opportunity. This is a win for both retailers and consumers, and it is fueling growth while expanding our distribution footprint. A key contributor to this momentum is our Prime Fresh brand. In the second quarter, Prime Fresh volume increased 18.4%, supported by a 24.3% increase in our points of distribution. Beyond expanding distribution, we are increasing our presence within stores by adding new SKUs, including our Prime Fresh Pepperoni & Salami. In addition to Prime Fresh, we offer branded packaged lunch meat across the value spectrum, starting with value brands like Gwaltney, Armour and John Morrell to mainstream brands, Smithfield, Eckrich, Farmer John and Krakus, delivering more affordable options for consumers. As a result, during the second quarter, we grew branded packaged lunch meat volume by 9.5% and gained 1.1 points of volume share. And we have a strong private label business should customers choose that option. Innovation and how we bring products to market is where our brand strategy is evolving most. I want to spend a moment here because it speaks to how we are building the next generation of Smithfield consumers. On May 1, Nathan's Famous successfully expanded its iconic 100% beef portfolio with the launch of Nathan's Grass Fed beef hot dogs, bringing a compelling premium offering to the category. Nathan's Grass Fed hot dogs finished the quarter as the #1 grass-fed hot dog in the country, already above 40% ACV, a very strong distribution build for a new item and still expanding. More than half of younger consumers now follow a high-protein diet, and they are demanding cleaner, premium sourced options. Grass-fed sits directly on that trend. It's a premium protein-forward product built for today's consumer. Our go-to-market strategy for Nathan's Grass Fed is different than in the past. To reach that younger consumer, we are allocating brand dollars toward digital platforms rather than toward traditional media alone. Including a social media activation featuring 4 of the Savannah Bananas players, our Nathan's Grass Fed launch campaign generated nearly 2 billion earned media impressions, demonstrating Nathan's ability to generate outsized attention and amplify marketing investment. This is representative of a broader shift in how we build brands, lead with entertainment and organic engagement to earn attention, then convert that attention into trial, velocity and share, and it is working. We grew Gen Z dollars 15.2% over the last 52 weeks. We are quite deliberately building the consumer franchise of the next decade, not just defending the shelf today. This marketing investment to support the launch of Nathan's Grass Fed hot dogs is part of our overall increased investment behind our brands this year. And I want to be explicit about that investment because it is central to our second half story. We are increasing advertising and promotion spend this year, and we are weighting it toward the second half. This is a deliberate shift toward long-term brand building alongside near-term traffic-driving activity. In a market where consumers are scrutinizing every dollar, relevance is what earns the branded purchase over private label and relevance is what we are buying. For the Smithfield brand, since the launch of our We Speak Pork campaign late last year, we have seen under 40 consumer base grow by 3% versus the prior year. We have also grown household penetration with younger millennials by 0.4 points and with Gen X under 55 by 1.3 points. As part of our promotional strategy, we are stepping up our investment in eCommerce to help consumers more easily discover our products as they shop online. Today's grocery shopper moves seamlessly between online discovery and the physical shelf, and the brand that wins the digital shelf increasingly wins the carts. Our efforts are generating return. During the second quarter, we grew our eCommerce volume share in 22 of our 25 categories, increasing our total eCommerce volume by 21.7% and outpacing the industry. The point to take away is digital discovery drives trial, trial drives velocity and velocity earns us distribution, which is why our points of distribution were up 6.2% this quarter compared to the second quarter of 2025. That is the engine, and we are investing to accelerate it in the second half with more omni-channel promotion and advertising behind our national brands, Smithfield, Eckrich and Nathan's Famous. Foodservice is also an important channel for packaged meats at roughly 30% of our sales. Our commitment to quality, innovation and versatility positions us as a leader in food service. For example, during the first half, we helped our customers drive traffic with the introduction of 31 new limited time offers. Several of these have been added to permanent menus. Like grocery, foodservice consumer spending has been challenged this year, but we outperformed the category with first half foodservice channel sales increasing by 1%. As we look at the second half, we feel good about our packaged meats momentum and our market strategies. We are increasing distribution. We are growing eCommerce share. We are launching new premium items and our marketing programs are working. Moving on to our second core growth strategy, growing fresh pork profitability. We are focused on maximizing the net realizable value of each hog across channels and continuing to improve operating efficiencies and optimize our harvest. This strategy served us well during the second quarter. In the face of difficult market conditions with unfavorable industry market spread compression year-over-year, we were able to offset more than half of that headwind through better sales margins, driven by maximizing the net realizable value across channels and through continued operating efficiencies in our plants. During the second quarter, we grew value-added case-ready and marinated volume by 4%. Contributing to that growth was our April launch of Smithfield Meal Ready Cuts, which are sliced, marinated and premium pork cuts that deliver globally inspired flavor in minutes. Foodservice was another bright spot for fresh pork. During the second quarter, we grew fresh pork foodservice channel sales by 12% and volumes by 8% with strong sale of ribs, which are a great alternative to more expensive beef. Our fresh pork team also executed our next best sell strategy with strong sales to the higher-margin pharmaceutical, pet food and export channels. Looking forward, we remain focused on growing higher-margin value-added case-ready and marinated offerings, meeting strong demand for nutritious protein at a great value relative to beef and expanding pork's relevance across multiple cuisines and usage occasions. The team continues to drive automation, yield optimization, SG&A and supply chain savings toward a best-in-class cost structure. Now to our strategy to optimize hog production. Second quarter 2026 hog production profit of $64 million marked a $42 million increase from a year ago due to favorable hog sales prices and continued operating discipline. As we look to the second half, we are pleased with our team's execution on operating at a best-in-class cost structure. Our segment results will be largely driven by market prices for hogs. Over the medium term, we continue to progress toward our goal of producing approximately 30% of our fresh pork 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. In today's challenging environment, it's never been more important to have a culture of continuous improvement. Across the organization, we are securing yield improvement and operational and supply chain savings that are helping us offset some of the inflationary headwinds impacting our business. We are deploying technology to improve efficiency, lower cost and redeploy talent to higher-value activities. Our continued investment in improving supply chain operations and simplifying our transportation strategy is helping us navigate some of the near-term inflation in transportation costs. And we are investing in our future with our new Sioux Falls processing plant. This plant will be the most modern, efficient and largest combined fresh pork and packaged meats processing plant in our network. While final approval is still pending, we are taking the necessary steps to prepare for the new build. Finally, we continue to evaluate opportunistic M&A to support our growth strategies. We continue to anticipate closing the Nathan's Famous transaction in the second half of 2026, subject to CFIUS review and other customary closing conditions. 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 retail and foodservice. As I noted earlier, our strong financial position provides us the flexibility to support our growth strategies. In summary, we delivered record second quarter and first half results despite a challenging environment. Our performance demonstrates the strength and resilience of our vertically integrated model and disciplined execution across our organization. While persistent inflationary pressures continue to influence consumer demand and input costs, we are approaching the balance of the year with discipline, confidence and a clear plan. We remain focused on executing our strategies, driving operational efficiencies, investing in our brands and delivering long-term value for shareholders. Supported by our strong balance sheet, we believe we are well positioned to navigate the current environment and drive growth over the long term. With that, I will turn it over to Mark to review our financials in more detail and walk you through our second half outlook. Mark Hall: Thanks, Shane, and good morning to everyone joining the call. I want to reiterate Shane's comments about the disciplined execution by our experienced team that drove record second quarter and first half adjusted operating profit. Our balance sheet is strong, and we're generating solid cash flow. That gives us the flexibility to manage through today's environment, invest in organic growth, M&A and return value to shareholders. Turning now to our second quarter results. Consolidated sales in the second quarter were $3.7 billion, which was a 2.3% decrease compared to the prior year. However, excluding nonrecurring sales to establish the Hog Production joint ventures last year, total company sales would have been essentially flat versus a year ago. We delivered adjusted operating profit of $300 million, which set a new second quarter record. Adjusted operating profit margin expanded by 20 basis points to 8.1% from 7.9% last year. Adjusted net income was also a record $245 million, up 13% from $217 million in the second quarter of 2025. Adjusted diluted EPS of $0.62 per share increased 13% compared to $0.55 per share in the second quarter of 2025. Next, looking at our second quarter segment results, starting with Packaged Meats. Packaged meat sales of $2 billion decreased by 2.7%. Volumes were down 5.5%, primarily reflecting the earlier Easter timing this year and were partially offset by a 2.9% increase in the average sales price. For the first 6 months of 2026, despite the challenging external environment, packaged meats volumes were down just 1%. Our Packaged Meats segment delivered operating profit of $265 million, which was down $31 million from adjusted operating profit last year. Our operating profit margin was strong at 13.1%, but was down 110 basis points versus the prior year. We are able to more than offset higher raw material costs through pricing and mix. However, our margins were unfavorably impacted by higher freight and diesel costs as well as our increased investment in marketing, which is an important strategic driver for our brands over the long term. Switching to Fresh Pork, segment sales of $2 billion decreased 3.5% year-over-year. This was driven by volume down 2% on fewer hogs processed as well as lower average sales prices of 1.5%, which compared favorably to the 5.3% decline in the USDA cutout as a result of our next best sales strategy. Fresh Pork delivered operating profit of $14 million at a 0.7% margin. This was down from adjusted operating profit of $30 million and an adjusted operating profit margin of 1.4% in the second quarter of 2025. The year-over-year decline was primarily driven by $37 million of industry market spread compression. We offset $21 million of that pressure through our next best sales strategy and continued operating efficiencies. Looking at Hog Production, segment sales of $772 million decreased 8.2% year-over-year. Excluding the onetime initial sale of inventory to our Hog Production joint ventures last year, sales would have increased due to a 9% increase in the average selling price for hogs, inclusive of the effects of hedging. Hog production delivered operating profit of $64 million, up from $22 million last year, driven by higher hog selling prices, savings on our nutritional plan and improved operating efficiency on our retained farms. Taking these segment results together, the broader point is that we continue to generate strong earnings and cash flow while maintaining a very healthy financial position. At the end of the second quarter, our net debt to adjusted EBITDA ratio was 0.4x, well below our policy of less than 2x. We also ended the quarter with very strong liquidity of $3.6 billion, including $1.4 billion in cash and cash equivalents, comfortably above our $1 billion policy threshold. We generated $204 million of operating cash flow in the first half, nearly double the $108 million generated in the same period last year. On a trailing 12-month basis, operating cash flow exceeded $1.1 billion, underscoring the strong cash conversion of the business. That cash generation gives us the flexibility to continue funding our growth priorities, invest behind the business and return capital to shareholders while maintaining a strong financial position. Capital expenditures were $165 million in the first half compared to $158 million in the same period last year, with more than half of our planned capital investments focused on projects designed to support both top and bottom line growth. At the same time, we continue to return value to shareholders. We recently declared our third dividend this year and subject to the Board's discretion, we expect to pay $1.25 per share in annual dividends. As Shane said, we delivered a record first half, supported by strong execution, a resilient business model and a very healthy financial position. At the same time, the external environment has become more challenging as we look across the balance of the year. That is why we're updating our 2026 outlook primarily to reflect softer commodity market assumptions, especially in hog production and to a lesser extent, fresh pork. In packaged meats, we're also planning around a cautious consumer and continued inflationary pressure on both demand and input costs. Given those dynamics, we believe it's prudent to moderate our outlook across each of our 3 main segments. But importantly, this is not a change in how we view the strength of our brands, our strategy or the long-term trajectory of the business. We know how to manage through this environment, and we have a clear plan. In packaged meats, our brands, including Smithfield, Eckrich and Nathan's continue to connect consumers. We'll build on that momentum in the second half by increasing brand advertising and omni-channel marketing, continuing to innovate, expanding distribution and using our strong private label position to meet the needs of today's value-seeking shopper. Across fresh pork, hog production and our corporate functions, we'll stay focused on what we can control, driving efficiency, managing costs and executing with discipline. Turning now to the directional cadence for the third and fourth quarters. For the third quarter, which historically is our softest from a profit standpoint, we're planning with discipline around the persistent external factors I just mentioned while continuing to execute the initiatives that are gaining traction across the business. Importantly, even with a more challenging commodity backdrop, we expect packaged meats to remain highly profitable and continue to be the primary earnings engine of the company. We expect third quarter packaged meats adjusted operating profit to be up slightly year-over-year, but that increase will be more than offset by lower fresh pork and hog production profitability due to softer markets. This will result in third quarter profitability down sequentially from the second quarter. We do, however, expect to deliver solid year-over-year growth in our seasonally strong fourth quarter, led by growth in packaged meats. Packaged meats adjusted operating profit growth will be driven by 4 specific factors: first, increasing benefits from expanded distribution at retail into our seasonally largest quarter. Second, the velocity impact of our stepped-up second half marketing behind eCommerce as well as Nathan's, Eckrich and Smithfield. Third, continued mix shift into higher-margin, higher velocity items; and fourth, a benefit from the 53rd week. For fresh pork, we anticipate continued pressure from the industry gross market spread in the third quarter, but we expect a strong fourth quarter growth driven by seasonal profitability rotation to fresh pork from hog production and continued execution on our next best sale and cost optimization strategies. For hog production, based on lower hog prices, we now expect a sequential deceleration from the second quarter to the third quarter. We also anticipate a return to more seasonal norms in the fourth quarter with an expected loss for this segment. Putting that together, our updated full year 2026 adjusted operating profit outlook is as follows: total company adjusted operating profit is now expected to be in the range of $1.225 billion to $1.375 billion. Packaged meats is now expected to be in the range of $1.075 billion to $1.15 billion. Fresh pork is now expected to be in the range of $180 million to $240 million, and hog production is now expected to be in the range of $75 million to $125 million. Importantly, this outlook does not change how we view the strength of our brands, the direction of our strategy or the long-term earnings power of the business. We're also updating our total company sales outlook to roughly flat versus our prior expectation of low single-digit growth, reflecting the more cautious consumer spending environment. At the same time, we have a clear action plan. We're focused on execution, operational excellence, supply chain discipline and cost control across the company, emerging from this environment stronger, more efficient and even more relevant to consumers. Looking beyond the near term, we remain confident in our long-term value creation algorithm. Our strong balance sheet, liquidity and cash flow give us the flexibility to keep investing behind our strategy, strengthen the business and return value to shareholders in line with our capital allocation framework. Taken together, we're confident in our ability to execute through the current environment, protect margins and deliver on our updated outlook for 2026 while continuing to build momentum for the long term. Now I'll ask the operator to open the call for Q&A. Operator? Operator: [Operator Instructions] The first question comes from Leah Jordan with Goldman Sachs. Leah Jordan: Maybe I'll just start out on the top line, given the lower sales outlook and the comments around softer demand trends. Just seeing if you could provide more detail on how we should think about price versus volume as top line drivers for both packaged meats and fresh pork in the back half? And then really just tying into that, just more color on what you're seeing on the demand side. I know you have a range of price points across your portfolio. So what are you seeing in terms of trade in and out across your brands? Shane Smith: Leah, thanks for the question. Steve, do you want to take that one? Steven France: Sure. And again, thank you for the question. So first of all, I'll start out really talking about the consumer. So I would say that what we're seeing is really pretty consistent with what you're hearing across the broader food industry. So as you know, the consumer is still showing some pressure. Obviously, gas prices have moved up again and household budgets certainly remain tight and lower income consumers, of course, are being very intentional about how they spend their money. I would say, frankly, even higher income households are acting a little bit more carefully than they did a few years ago, which is a change that we're dealing with this year. But the reality is consumers haven't stopped buying food. And even though they've become a lot more selective, obviously, they're looking for value and they're looking for versatility. But for us, that's actually where we feel pretty good about our position. The key part is protein remains a priority for not only the families, and our job is to make sure that we're giving consumers options that really fit that budget. So whether it's branded or value or private label, and you've heard us talk about that team several times, our job is to make sure we have the right product to fit that consumer need. We've also been very focused on leaning into innovation that delivers on value, especially in today's environment. So when you think about some of the new products that we've recently introduced, so you think about the Armour LunchMakers items. So we introduced the loaded nachos. We also have a zoo animal chicken nuggets. Those are all good examples because the key about those products is they're on trend, they're fun, but they're also affordable solutions for families, which is really the key part. So when you think about that line of products that we have within LunchMakers, the key difference is that we're offering a product at roughly half and again, half the average price point of the broader category. And to me, that's a very compelling value proposition, certainly in today's environment. So at the end, I'd say, as you know, consumers are certainly cautious but the key part is they're still spending money and they're still buying protein, which is key for our business. And they're still looking for convenient meal solutions, which is a big focus, not only of some of the current items we've rolled out, but also some of the future innovation that we're going to be bringing really to the market. And I would say that we're winning with the consumer. And that's why if you look at some of the category data, we've increased percent of households buying our products in 11 of our brands. So it's not that we're just winning 1 or 2 brands or 1 or 2 categories. That's 11 of our brands' were increasing the household penetration. So the reality is we feel that we're well positioned long term because of the breadth of our portfolio. And again, it's not just one category or one brand that's winning. We see that across the board. Leah Jordan: Okay. That's helpful. And then following up to Mark's comments in the prepared remarks around packaged meats profitability. And it sounds like we'll get a little bit of recovery here in the third quarter and even more in the fourth quarter. And I know you highlighted a bunch of drivers there. But maybe just some more detail around the puts and takes as we move through the year. I understand freight will be higher, but maybe some more detail around some of the other input costs in that segment as well and the timing of flow-through given inventory turns there? Mark Hall: Yes. Leah, I would say relative to the call down that we had in guidance for packaged meats, it's really reflective of what we had in the first half in terms of the input costs. So we faced elevated input costs relative to raw materials, fuel, freight and resin-based packaging. And there's a little bit of spillover of that into the second half. So those factors along with our investment in our brands really drove segment profit in the first half down by almost $30 million. So -- it takes time for pricing and other mitigation efforts for us to catch up. So as we talked about, we're looking for a strong second half in packaged meats and particularly in the fourth quarter. I think raw materials, particularly in pork, should be an expected tailwind in the second half. We're going to continue to invest in our brands and expect that we'll continue to see elevated fuel, freight and packaging costs, but we're going to continue with our mitigation strategies. So we expect that volume, price and mix improvements will be strong. And as I mentioned, Q3 is seasonally the low watermark for packaged meats profitability, but we expect a really solid fourth quarter and year-over-year improvements in packaged meats profitability and margins. Operator: The next question comes from Peter Galbo with Bank of America. Peter Galbo: Mark, if I could pick up on that, please, on packaged meats. I think the call down is somewhere between $35 million and $40 million at the midpoint. And I think the first half kind of came in, I don't know, more or less in line from a profit standpoint with your expectations. And so I'm just -- I'm trying to reconcile, again, if pork is going to be a tailwind in the second half, just given what we can see in the cutout, I know you have all the other spend items. But like what's the tailwind on pork, I guess, in dollar terms for the back half relative to the inflation and the marketing spend? Because again, it's -- I think it's really hard to reconcile where the $40 million-ish call down in the back half would be given what we can kind of see in the third-party data. So just any helping pieces on the bridge there would be appreciated. Mark Hall: Yes. Peter, I would say if you look year-over-year in the first half with packaged meats, we were down roughly $30 million. So we started off the year a little bit "behind the eight ball" in terms of catching up on the higher input costs. Again, it takes time for the pricing actions to take effect, whether it's raw materials or what we're seeing in the transportation arena. So that kind of shifted that profit profile increase into the second half of the year. And again, the third quarter is typically the softest for packaged meats, but we're expecting to have solid performance in the fourth quarter with some of those tailwinds that you mentioned in terms of the raw material side of the business, but we're going to continue to be chasing to a certain extent, the higher transportation costs that are across the industry. So on balance, that's really the reason for the call down. I can throw it over to Steve for... Peter Galbo: Sorry, go ahead, Steve. Sorry, I didn't mean to interrupt. Steven France: Yes. So Peter, again, thank you for the question. And I'll just add to what Mark is saying is, I mean, to me, we're looking for a very strong back half of the year, and Mark has kind of walked through the quarters between Q3 and Q4. And I think what's important to think about is that at a really high level, we feel good about where the business is coming out after the first half. It certainly has been an easy environment. Obviously, I already walked through what we're seeing from the consumer and how they're dealing with some of these cost pressures, but also some of the additional cost pressures from a supply chain standpoint that Mark was referencing. I would say the biggest thing to really think about for the back half of this year is distribution. So we expanded our points of distribution by that 6.2% during the quarter, and that's really broad-based again. So it's not just one brand or one category. It's broad-based across our categories. And when you think about some of the items that we've highlighted several times, so Prime Fresh, we continue to grow that business and grow that distribution. So that's because of some of the innovation that we have. So it's growing the base business that we have, but the innovation on Prime Fresh, it's new items that we brought to the category and also new packaging options that will be coming out. And then the other key one is you think about some of the consumers that we're reaching out to with some of the new consumers and some of the new products like the Nathan's Grass Fed that Shane was talking about, that product came to market in May. And in a very short amount of time, that became the #1 grass-fed beef hot dog in the whole category. And then, of course, dry sausage continues to be a big item for us. So really, when you think about your question for the back half, we are well positioned for the back half. And I would say a lot of that is tied to the distribution that we picked up because if you think about Q2, we picked up this volume in Q2. So even though we saw a little bit of the benefit of the new distribution in Q2, where we really start to see that is going to be in the back half of the year, and that's why we're confident in what we're looking at for the back half of the year. Peter Galbo: Okay. Mark, on hog production, I think you gave some color just on the cadence for the back half of the year. Again, I think in some of the data, it would suggest, again, July was probably looked similar and 3Q maybe is a little bit of a step down. But on the whole, it seems OK. Maybe you can just talk a little bit about just how you're hedged for the rest of the year on hog production. And then anything you can do just kind of to put some guardrails around the magnitude of the loss we might expect in Q4, again, given it's seasonal, but just kind of how negative we could potentially think about that being? Mark Hall: Yes. So again, the reduction is really driven by commodity pricing assumptions rather than anything operationally related within hog production. Last year, hog production benefited from unusually strong prices in the third and fourth quarter. And taking a look at the current lean hog futures curve implies prices that are going to be 3% to 8% below 2025 levels. And actually, the fourth quarter right now is about 13% below the prior year. So again, if you take a look at the -- just the basic crush model based on the USDA or excuse me, the CME and the Iowa State model, you're looking at losses of about $20 ahead in the fourth quarter. And again, we'll continue to outperform that. But directionally, we're returning to more of those seasonal norms that we've seen with losses in the first quarter and in the fourth quarter. But I would say, operationally, we're very pleased with the performance on our farms, and we've generated 6 consecutive profitable quarters, and we continue to improve herd health feed conversion and overall cost structure. So we're happy with how the farms are performing on the underlying basis. Operator: The next question comes from Ryan Lavin with Barclays. Ryan Lavin: This is Ryan on for Ben today. So first, going back to packaged meats a little bit and digging a little bit more into pricing, the big emphasis is the softer consumer. So how are you as a team feeling about pricing and potentially leading into more trade downs, potentially trying to really balance of keeping market share while also trying to price out some of your inputs as those price increases come online? And then a quick follow-up after that. Steven France: Sure. This is Steve. So I'll take a stab at that question. So when we look at the competitive environment today, I would say the biggest change versus a year ago is that most of the industry has actually become less promotional. So what we're seeing is fewer features, fewer displays and really less aggressive activity across many of the categories where we compete. What's also become clear to us is that consumers are not responding to discounts alone. So promotional velocity has softened across much of the industry, which tells us spending more trade dollars and running deeper deals really is not just -- it's really not the answer. So we do think that, that really plays into our strength. So rather than chasing volume through incremental discounting, we've remained focused on quality merchandising. So strong innovation and brand support. So when you think about quality merchandising, that's where we believe is the most effective way to really connect with consumers in store. More importantly, I think retailers are responding. And I say that because, as I mentioned when I was talking to Peter, that they're responding because we picked up new distribution. So they see that our brands and the promotional strategy and the support, the marketing support that we're putting behind our brands is working. And that's why we're being rewarded with additional distribution. And I would say that distribution that we're gaining, it's not because of lower pricing. It's really being earned through the innovation and also the investments that we're making. Obviously, we talked about the Nathan's and the Grass Fed and Prime Fresh. But we also have some of our core brands and established brands like Eckrich, where we're not only gaining on our base business that we have, but we've also added innovation to the Eckrich brand that we're picking up new distribution. So I would say the second half, our confidence is really -- it really comes less from promotional environment, and it's more about the fact that we've already put the growth drivers in place. So we have more distribution, more shelf presence, stronger marketing and innovation that continues to gain traction with both consumers and retailers. So when we look at that promotional environment, we feel that we're in a really good place with the brands that we have and the new distribution that we've picked up. Ryan Lavin: That's good color. And then a quick follow-up on hog production. Is there any risk that all the headwinds you talked about with the softer commodity pricing and the input cost changes farmer decisions across the space and shifts the supply demand balance? Shane Smith: Yes, Ryan, I think when you look at hog production, I think it's always important to start with what's happening out there, right? So you look at the July USDA updated its pork forecast, to be up 1.4%. Now that's down from the 2.5% that they had previously reported. Then you look at things like the breeding herd down 1.2%, the farrowing intentions down 2%. And then you couple that with things that we see, for example, industry slaughter being down over the last several weeks and the cash market staying strong. So you couple those things together, and it points to what could be a hold in the production or in the supply of hogs coming to market, which would lead to higher prices in the third and fourth quarter. As Mark said, when we look at our guidance and our ranges, we use the futures market as kind of that foundational piece to come up with those. But I do believe personally, as we think about those things, there is some upside that could come into the third and fourth quarters. Operator: The next question comes from Thomas Henry with Heather Jones Research. Unknown Analyst: This is Thomas on for Henry. Could you speak to any potential drivers of the weakness in hams? We've been seeing down 20 or so percent in the just past 2 weeks or so, perhaps hearing some labor issues there. Shane Smith: Yes. Donovan, do you want to talk to the home markets? Donovan Owens: Yes. Thomas, thanks. We have seen a value deflation in the ham recently. I think there's a lot of rumors out in the industry. You just mentioned one of them. We certainly don't have any labor issues within our company. So we're fully converting. I think there might be a couple of things in the industry in the Midwest that could be driving it, but it would be pure speculation. So I think the foundation of what you need to look at is really Mexico is going to drive our valuation on hams in the U.S. Demand is very good in Mexico, but I think worldwide, there's a demand deflation, if you will, or there's increased supply that's causing some issues with the ham market in general. It's allowing Mexico to pick up some hams on the world stage a little bit cheaper than last year where we had the ham market at in the U.S. So albeit demand, I think, is very strong. Yes, we're seeing a little bit of deflation, but I do think that, that will rebound here as we continue toward the holidays. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to President and CEO, Shane Smith, for closing remarks. Shane Smith: Thank you, and thanks to everyone who joined the call today. Our experienced team is executing our strategies that position us well to navigate a dynamic external environment. We're making disciplined investments to support our long-term growth and increase our value for our shareholders over time. And we look forward to updating you on our progress following the third quarter results. Thank you all for joining. Operator: Thank you. The conference has now concluded. Thank you for attending today's, presentation. You may now disconnect. Before you buy stock in Smithfield Foods, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Smithfield Foods wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $419,408!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,348,694!* That performance is why people listen. With a track record of beating the S&P 500 by nearly 5x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 19, 2026. 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Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Achieved record Q2 adjusted operating profit of $300 million by leveraging a vertically integrated model to offset industry-wide market spread compression. Packaged meats performance was driven by a deliberate mix shift toward higher-margin, high-velocity items, such as converting single holiday hams into multiple everyday products. Defended retail market share through innovation in grilling and lunch meat categories, specifically targeting younger Gen Z and Millennial consumers via digital-first marketing. Hog production profitability marked its sixth consecutive positive quarter, benefiting from genetic transformation, herd health improvements, and a best-in-class cost structure. Fresh pork margins were supported by a 'next best sell' strategy, redirecting volume to higher-margin pharmaceutical, pet food, and export channels. Operational discipline and supply chain optimization helped mitigate persistent inflationary headwinds in fuel, freight, and resin-based packaging costs. Updated 2026 guidance reflects a more cautious consumer environment and softer commodity market assumptions for hog production and fresh pork. Management expects a seasonally soft Q3 followed by a strong Q4, driven by expanded retail distribution and the velocity impact of stepped-up marketing investments. Strategic focus remains on achieving a 30% internal hog production target to balance assured supply with long-term cost risk management. The company anticipates closing the Nathan's Famous acquisition in the second half of 2026, securing long-term brand rights and growth potential. Capital allocation will prioritize the new Sioux Falls processing plant, intended to be the most modern and efficient facility in the company's network. Persistent inflation in transportation and fuel costs remains a primary headwind, requiring ongoing pricing actions and supply chain mitigation. Industry-wide gross market spread compression in fresh pork continues to pressure margins, though partially offset by value-added retail growth. Consumer behavior shows elevated 'value-seeking' trends, leading to softer industry-wide demand and increased scrutiny of branded versus private label purchases. The 2026 outlook includes a benefit from a 53rd week in the fiscal calendar, which is expected to support Q4 volume and profit comparisons. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management noted that even higher-income households are acting more carefully, but protein remains a priority for families. The company is winning by offering a 'value spectrum' from premium brands like Nathan's Grass Fed to affordable options like Armour LunchMakers, which are priced at roughly half the category average. Q2 margins were impacted by a lag in pricing actions catching up to higher raw material and transportation costs. Management expects a strong Q4 as new distribution gains in Q2 begin to contribute fully to volume and seasonal tailwinds in pork raw materials emerge. The updated guidance uses the lean hog futures curve, which implies Q4 prices approximately 13% below the prior year. While a seasonal loss is expected in Q4, management believes there is potential upside if industry slaughter continues to trend lower than USDA forecasts. Management explicitly denied any labor issues within Smithfield, attributing ham price deflation to global supply dynamics and Mexican demand shifts. They expect ham markets to rebound as the industry moves closer to the holiday season.

Interested in Smithfield Foods, Inc.? Here are five stocks we like better. Record profitability: Smithfield reported second-quarter adjusted operating profit of $300 million, up 2% year over year, while adjusted EPS increased to $0.62 from $0.55. Packaged meats and hog production helped offset weaker consumer demand and higher costs. Mixed segment performance: Packaged meats sales and volumes declined, pressuring segment profit, while hog production profit nearly tripled to $64 million. Fresh pork profit fell to $14 million as industry market spreads compressed. Lowered 2026 outlook: Smithfield now expects full-year adjusted operating profit of $1.225 billion to $1.375 billion and roughly flat sales, citing cautious consumers, elevated freight, fuel and packaging costs, and weaker commodity expectations. The company maintained a strong balance sheet with net debt at just 0.4 times adjusted EBITDA. 5 High-Yield Stocks With Analyst Support and Room to Run Smithfield Foods (NASDAQ:SFD) reported record second-quarter adjusted operating profit as its packaged meats and hog production businesses helped offset pressure from softer consumer demand, commodity volatility and higher transportation costs. For the second quarter of 2026, the company posted adjusted operating profit of $300 million, with adjusted operating margin rising to 8.1% from 7.9% a year earlier. Adjusted net income increased 13% to $245 million, while adjusted diluted earnings per share rose to $0.62 from $0.55. → SoundHound AI Sends a Loud Signal After Its Q2 Earnings Beat 3 Quiet Outperformers Boosting Dividends as Markets Retreat President and CEO Shane Smith said the results reflected the company’s vertically integrated operating model, spanning packaged meats, fresh pork and hog production. Through the first half, adjusted operating profit reached a record $638 million, up 2% year over year. “In a cautious consumer and volatile commodity environment, our team delivered record second quarter adjusted operating profit,” Smith said. → 3 Dividend Champion Utilities for a Market That Can't Sit Still Smithfield Foods Roasts Q4 Estimates: Is a $30 Price Handle Near? Consolidated second-quarter sales totaled $3.7 billion, down 2.3% from the prior year. Chief Financial Officer Mark Hall said sales would have been essentially flat excluding non-recurring sales associated with the establishment of hog production joint ventures in the previous year. Packaged meats sales declined 2.7% to $2 billion. Segment volumes fell 5.5%, which Hall attributed primarily to the earlier timing of Easter, while average selling prices rose 2.9%. For the first six months of 2026, packaged meats volumes were down 1%. → Is Wingstop's Growth Story Losing Steam? Packaged meats operating profit was $265 million, down $31 million from adjusted operating profit a year earlier, while margin declined 110 basis points to 13.1%. Hall said pricing and mix more than offset higher raw-material costs, but elevated freight and diesel expenses and increased marketing investment weighed on profitability. Smithfield said it gained volume share in five product categories with more than $1 billion in sales: cooked dinner sausage, dry sausage, hot dogs, packaged lunch meat and smoked ham. The company highlighted a 9.5% increase in branded packaged lunch meat volume and a 1.1-point gain in volume share during the quarter. Its Smithfield Prime Fresh lunch meat brand recorded an 18.4% volume increase, supported by a 24.3% increase in points of distribution. The company also said its Nathan’s Famous Grass-Fed Beef Franks, launched May 1, finished the quarter as the nation’s top grass-fed hot dog and had reached more than 40% all-commodity volume distribution. Smith said the company is increasing advertising and promotional spending this year, with a greater share of the investment planned for the second half. Smithfield’s e-commerce volume rose 21.7% during the quarter, and the company reported e-commerce volume-share growth in 22 of its 25 categories. Total points of distribution increased 6.2% from the second quarter of 2025. Fresh pork sales fell 3.5% to $2 billion, reflecting a 2% volume decline from fewer hogs processed and a 1.5% decline in average selling prices. Hall said the sales-price decline compared favorably with a 5.3% drop in the USDA cutout, citing the company’s “next best sales” strategy. The fresh pork segment generated operating profit of $14 million, down from adjusted operating profit of $30 million in the prior-year quarter. Margin declined to 0.7% from 1.4%. Hall said industry market-spread compression reduced fresh pork profitability by $37 million year over year. Smithfield offset $21 million of that pressure through higher-margin sales channels and operating efficiencies. The company reported 4% growth in value-added case-ready and marinated fresh pork volume, including support from its April launch of Smithfield Meal Ready Cuts. Fresh pork food-service sales increased 12% and volumes rose 8%, aided by rib sales. Smithfield also cited higher-margin sales to pharmaceutical, pet food and export channels. Hog production operating profit increased to $64 million from $22 million a year earlier. Segment sales declined 8.2% to $772 million, though Hall said sales would have risen excluding the prior-year joint-venture inventory sale. Average hog selling prices, including hedging effects, rose 9%. Smithfield attributed the profit increase to higher hog selling prices, nutritional-plan savings and improved operating efficiency on retained farms. The quarter marked the sixth consecutive profitable quarter for the hog production segment. Despite its record first-half profit, Smithfield lowered its 2026 outlook to account for cautious consumer spending, continued inflation in freight, fuel and packaging, and weaker expected commodity markets in hog production and, to a lesser extent, fresh pork. Total company adjusted operating profit is now expected to range from $1.225 billion to $1.375 billion. Packaged meats adjusted operating profit is expected to range from $1.075 billion to $1.15 billion. Fresh pork adjusted operating profit is projected at $180 million to $240 million. Hog production adjusted operating profit is forecast at $75 million to $125 million. Total sales are expected to be roughly flat for the year, compared with the company’s previous forecast for low-single-digit growth. Hall said Smithfield expects packaged meats adjusted operating profit to rise slightly year over year in the third quarter, though lower fresh pork and hog production earnings are expected to result in sequentially lower overall profitability from the second quarter. The company expects year-over-year growth in the seasonally stronger fourth quarter, led by packaged meats. For hog production, President of North America Pork Donovan Owens said current lean hog futures imply prices 3% to 8% below 2025 levels in the second half, with fourth-quarter prices about 13% below the prior year. He said the segment is expected to return to more typical seasonal patterns, including a projected fourth-quarter loss. Still, Owens said industry indicators, including lower breeding-herd and farrowing-intention figures, could point to a gap in hog supply later in the year that could support prices. Smithfield ended the second quarter with net debt of 0.4 times adjusted EBITDA, below its policy target of less than two times. Liquidity totaled $3.6 billion, including $1.4 billion of cash and cash equivalents. Operating cash flow was $204 million in the first half, nearly double the $108 million generated in the same period a year earlier. Capital expenditures totaled $165 million, and Hall said the company expects annual dividends of $1.25 per share, subject to board discretion. The company is preparing for a proposed Sioux Falls processing plant, which Smith said would be its largest combined fresh pork and packaged meats facility and its most modern and efficient plant. Final approval for the project remains pending. Smithfield also said it continues to anticipate closing its acquisition of Nathan’s Famous in the second half of 2026, subject to review by the Committee on Foreign Investment in the United States and customary closing conditions. Smithfield Foods, Inc (NASDAQ: SFD) is one of the world's largest pork processors and hog producers. Founded in 1936 in Smithfield, Virginia, the company has grown from a regional ham producer into a fully integrated food company offering a broad range of fresh pork, value-added meats and prepared foods. Its product portfolio includes bacon, ham, sausage, ribs and deli meats marketed under well-known brands such as Smithfield®, Nathan's Famous® and Eckrich®. Smithfield operates a network of hog production facilities, processing plants and distribution centers across the United States, Europe and Latin America. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Smithfield Foods Q2 Earnings Call Highlights" was originally published by MarketBeat. 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Record First Half Operating Profit Reflects Resilient Business Model; Disciplined Execution Strong Balance Sheet and Cash Flows Provide Financial Flexibility Updated FY 2026 Outlook to Reflect External Macro Environment SMITHFIELD, Va., Aug. 11, 2026 (GLOBE NEWSWIRE) -- Smithfield Foods, Inc. (Nasdaq: SFD), an American food company and an industry leader in value-added packaged meats and fresh pork, today reported results for its fiscal 2026 second quarter ended June 28, 2026. Second Quarter Fiscal 2026 Financial Highlights Net sales of $3.7 billion, down 2.3% from the second quarter of 2025, with the year-over-year decline primarily due to non-recurring sales to our Hog Production joint ventures in the second quarter of 2025 as well as the earlier Easter holiday this year Operating profit of $290 million, up 11.6% from the second quarter of 2025; record second quarter adjusted operating profit(1) of $300 million, up slightly from the second quarter of 2025 Operating profit margin of 7.8%, compared to 6.9% in the second quarter of 2025; Adjusted operating profit margin(1) of 8.1%, compared to 7.9% in the second quarter of 2025 Packaged Meats operating profit of $265 million, compared to operating profit of $301 million and adjusted operating profit(1) of $296 million in the second quarter of 2025 Packaged Meats operating profit margin of 13.1%, compared to operating profit margin of 14.5% and adjusted operating profit margin(1) of 14.2% in the second quarter of 2025 Net income(2) of $238 million, up 26.6% from the second quarter of 2025; Adjusted net income(1)(2) of $245 million, up 13.2% from the second quarter of 2025 Diluted and adjusted diluted earnings(1)(2) of $0.60 and $0.62 per share, respectively; compared to $0.48 and $0.55 per share, respectively, in the second quarter of 2025 First Six Months Fiscal 2026 Financial Highlights Net sales of $7.5 billion, down 0.8% from the first half of 2025, with the year-over-year decline primarily due to non-recurring sales to our Hog Production joint ventures in the first half of 2025 Operating profit of $623 million, up 7.1% from the first half of 2025; Record first half adjusted operating profit(1) of $638 million, up 2.3% from the first half of 2025 Operating profit margin of 8.3%, compared to 7.7% in the first half of 2025; Adjusted operating profit margin(1) of 8.5%, compared to 8.3% in the first half of 2025 Packaged Meats operating profit of $540 million, compared to operating profit of $567 million and adjusted operating profit(1) of $562 million the first half of 2025 Packaged Meats operating profit margin of 12.9%, compared to operating profit margin of 13.8% and adjusted operating profit margin(1) of 13.7% in the first half of 2025 Net income(2) of $484 million, up 17.6% from the first half of 2025; Adjusted net income(1)(2) of $496 million, up 11.8% from the first half of 2025 Diluted and adjusted diluted earnings(1)(2) of $1.23 and $1.25 per share, respectively; compared to $1.05 and $1.13 per share, respectively, in the first half of 2025 Net cash flows from operating activities of $204 million for the first half of 2026 increased $96 million from the first half of 2025 ________________________(1)   A non-GAAP measure. Please see the table in the Non-GAAP Financial Measures section for a reconciliation to the most comparable GAAP measure.(2)   Refers to net income attributable to Smithfield, adjusted net income attributable to Smithfield and adjusted net income attributable to Smithfield per diluted common share. CEO Perspective “We delivered record first half operating and adjusted operating profit despite a challenging external environment, demonstrating the strength of our vertically integrated business model, the power of our brands and our team’s disciplined execution,” said Smithfield President and CEO Shane Smith. “Our results reflect solid performance across the business, continued market share gains in key branded categories and strong operating cash flow generation.” Smith added, “While our updated outlook reflects ongoing macroeconomic pressures, these external factors do not change our strategic priorities or our confidence in the business. Supported by a strong balance sheet, substantial liquidity and a clear action plan, we remain focused on driving operational efficiencies, investing in our brands and creating long-term shareholder value.” Review of Financial Results Results of Operations Sales Operating Profit (Loss) and Operating Profit (Loss) Margin by Segment ________________(1)   We do not allocate certain items to our operating segments such as litigation charges, exit and disposal costs, insurance recoveries, gains and losses on the sale of property, plant and equipment and other assets, accelerated depreciation, and employee termination benefits, among others. Financial Position As of June 28, 2026, we had $3,648 million of available liquidity consisting of $1,350 million in cash and cash equivalents and $2,298 million of availability under our committed credit facilities. We ended the quarter with a ratio of net debt to adjusted EBITDA(1) on a trailing twelve months basis of 0.4x._____________________(1)   A non-GAAP measure. Please see the table in the Non-GAAP Financial Measures section for a reconciliation to the most comparable GAAP measure. Dividend Update On July 30, 2026, our Board declared a quarterly cash dividend of $0.3125 per share of common stock, which will be paid on August 27, 2026, to shareholders of record as of August 13, 2026. We anticipate the remaining quarterly dividends in fiscal year 2026 will be unchanged, resulting in an annual dividend rate of $1.25 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. FY 2026 Outlook As we look to the remainder of 2026, our revised outlook takes into account current macroeconomic challenges including cautious consumer spending and higher input costs. While our team delivered record first half results and has a clear action plan to manage through this environment, we believe it is prudent to update our fiscal 2026 adjusted operating profit outlook to reflect these macroeconomic headwinds. The Company is updating its financial outlook as follows: Total Company sales to be roughly flat compared to fiscal year 2025 (previously up low-single-digits). Packaged Meats segment adjusted operating profit of between $1,075 million to $1,150 million (previously $1,100 million to $1,200 million). Fresh Pork segment adjusted operating profit of between $180 million to $240 million (previously $200 million to $260 million). Hog Production segment adjusted operating profit of between $75 million to $125 million (previously $150 million to $200 million). Total Company adjusted operating profit of between $1,225 million to $1,375 million (previously $1,325 million to $1,475 million). Capital expenditures of between $350 million to $450 million. Capital expenditures include investments in profit improvement projects as well as projects for maintenance and repair (unchanged). An effective tax rate of between 22.5% and 24.5% (unchanged). The Company’s outlook for 2026 includes 53 weeks of results. The outlook excludes the impact of the proposed Nathan’s Famous acquisition and investment in the new processing facility in Sioux Falls, South Dakota. Conference Call Information A conference call to discuss the fiscal second quarter financial results is scheduled for today, August 11, 2026, at 9:00 a.m. Eastern Time. A live audio webcast of the conference call, together with related materials, will be available online at investors.smithfieldfoods.com or by dialing 844-539-3338 (international callers please dial 412-652-1269). A recorded replay of the conference call is expected to be available approximately three hours after the conclusion of the call and can be accessed both online at investors.smithfieldfoods.com and by dialing 855-669-9658 (international callers please dial 412-317-0088). The pin number to access the telephone replay is 4970032. The replay will be available until August 18, 2026. For more information, please visit investors.smithfieldfoods.com. About Smithfield Foods Smithfield Foods, Inc. (Nasdaq: SFD) is an American food company with a leading position in packaged meats and fresh pork products. With a diverse brand portfolio and strong relationships with U.S. farmers and customers, we responsibly meet demand for quality protein around the world. For more information, please visit investors.smithfieldfoods.com Non-GAAP Financial Measures This press release includes certain financial information that is not presented in accordance with generally accepted accounting principles in the United States (“GAAP”), including (1) adjusted net income attributable to Smithfield, (2) adjusted net income per diluted common share attributable to Smithfield, (3) EBITDA, (4) adjusted EBITDA, (5) adjusted EBITDA margin, (6) adjusted operating profit, (7) adjusted operating profit margin, (8) net debt and (9) ratio of net debt to adjusted EBITDA. We refer to these measures as “non-GAAP” financial measures. (1) Adjusted net income attributable to Smithfield is defined as net income, excluding the effects of transactions or events that are not part of our core business activities or are unusual in nature (whether gains or losses) and the tax effects of the foregoing items. We believe that adjusted net income attributable to Smithfield is a useful measure because it excludes the effects of items that are unusual in nature, infrequent in occurrence or otherwise stem from strategic decisions to restructure our operations. (2) Adjusted net income per diluted common share attributable to Smithfield is defined as adjusted net income attributable to Smithfield divided by diluted weighted average shares outstanding. (3) EBITDA is defined as earnings before interest, taxes, depreciation and amortization. We believe that EBITDA is a useful measure because it excludes the effects of financing and investing activities by eliminating interest and depreciation costs to provide a comparable year-over-year analysis. (4) Adjusted EBITDA is defined as EBITDA further adjusted for the effects of items that are unusual in nature, infrequent in occurrence or otherwise stem from strategic decisions to restructure our operations. We believe that adjusted EBITDA is a useful measure because it excludes the effects of items that are unusual in nature, infrequent in occurrence or otherwise stem from strategic decisions to restructure our operations. (5) Adjusted EBITDA margin is defined as adjusted EBITDA divided by total sales. We believe that adjusted EBITDA margin is a useful measure because it evaluates overall operating performance, ability to pursue and service possible debt opportunities and possible future investment opportunities. (6) Adjusted operating profit is defined as operating profit, excluding the effects of items that are unusual in nature, infrequent in occurrence or otherwise stem from strategic decisions to restructure our operations. (7) Adjusted operating profit margin is adjusted operating profit expressed as a percentage of sales. We believe that adjusted net income per diluted common share attributable to Smithfield, adjusted operating profit and adjusted operating profit margin provide a better understanding of underlying operating results and trends of established, ongoing operations of our business. (8) Net debt is defined as long-term debt and finance lease obligations, including the current portion, minus cash and cash equivalents. We believe that net debt is a useful measure because it helps to give investors a clear understanding of our financial position and is also used to calculate certain leverage ratios. (9) Ratio of net debt to adjusted EBITDA is defined as net debt divided by adjusted EBITDA. We believe that ratio of net debt to adjusted EBITDA is a useful measure because it monitors the sustainability of our debt levels and our ability to take on additional debt against adjusted EBITDA, which is used as an operating performance measure. Although these non-GAAP measures are frequently used by investors and securities analysts in their evaluations of companies in industries similar to ours, these non-GAAP measures have limitations as analytical tools, are not measurements of our performance under GAAP and should not be considered as alternatives to operating profit, net income 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 such non-GAAP measures exclude a number of important cash and non-cash charges. You should be aware that our presentation of these and other non-GAAP financial measures in this press release may not be comparable to similarly titled measures used by other companies. A reconciliation of each of these non-GAAP measures to its most directly comparable financial measure calculated in accordance with GAAP is provided in this release. The Company’s outlook for fiscal year 2026 includes adjusted operating profit and adjusted segment operating profit. The Company is not able to reconcile its fiscal year 2026 projected adjusted results to its fiscal year 2026 projected GAAP results because certain information necessary to calculate such measures on a GAAP basis is unavailable or dependent on the timing of future events outside of our control. Therefore, because of the uncertainty and variability of the nature of and the amount of any potential applicable future adjustments, which could be significant, the Company is unable to provide a reconciliation for these forward-looking non-GAAP measures without unreasonable effort. Forward-Looking Statements This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this press release, 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,” “will,” “shall,” “should,” “expects,” “plans,” “anticipates,” “intends,” “projects,” “contemplates,” “believes,” or “estimates” or other similar terms or expressions that concern our expectations, strategy, plans, or intentions. Specific forward-looking statements in this press release include our financial outlook for 2026, our ability to drive growth over the long term, our ability to complete the acquisition of Nathan’s Famous, and the anticipated dividend payments of $1.25 per share in 2026. We have based the forward-looking statements contained in this press release primarily on our current expectations, estimates, forecasts and projections about future events and trends that we believe may affect our business, results of operations, financial condition and prospects. Although we believe that we have a reasonable basis for each forward-looking statement contained in this press release, the results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements. We undertake no duty to update any statement made in this press release in light of new information or future events. The forward-looking statements contained in this press release are subject to substantial risks and uncertainties that could affect our current expectations and our actual results, including, among others: (1) the cyclical nature of our operations and fluctuations in commodity prices; (2) our dependence on third- party suppliers; (3) our ability to execute on our strategy to optimize the size of our hog production operations; (4) our ability to navigate geopolitical risks including increased tariffs on our exports, (5) our ability to mitigate higher input costs through productivity improvements in our operations, procurement strategies and the use of derivative instruments; (6) our ability to compete successfully in the food industry; (7) our ability to anticipate and meet consumer trends and interests through product innovation; (8) compliance with laws and regulations, including environmental, cybersecurity and tax laws and regulations in the United States and Mexico; (9) our ability to defend litigation brought against us and the sufficiency of our accruals for related contingent losses; (10) our ability to prevent cyberattacks, security breaches or other disruptions of our information technology systems; (11) future investments in our business, our anticipated capital expenditures and our estimates regarding our capital requirements; (12) our dividend policy and our ability to pay dividends; and (13) our status as a “controlled company” and any resulting potential conflicts of interest. A detailed discussion of these factors and other risks that affect our business is contained in our SEC filings, including our reports on Form 10-K and Form 10-Q, particularly under the heading “Risk Factors.” Copies of these filings are available online from the SEC or by contacting Smithfield’s Investor Relations Department at [email protected] or by clicking on SEC Filings on the Smithfield Investor Relations website at investors.smithfieldfoods.com. Investor Contact: Julie MacMedan Email: [email protected] Media Contact: Ray Atkinson Email: [email protected]: 757.576.1383 (Financial Tables Follow) Non-GAAP Financial Measures Adjusted Net Income Attributable to Smithfield and Adjusted Net Income per Diluted Common Share Attributable to Smithfield The following table provides a reconciliation of net income attributable to Smithfield to adjusted net income attributable to Smithfield. _______________(1)   Consists primarily of accelerated depreciation charges, retention and severance costs and other incremental costs associated with our decision to exit our leased Springfield, Massachusetts dry sausage production facility.(2)   Consists of employee termination benefits and restructuring costs associated with workforce reduction and administrative process optimization initiatives. Total severance costs round up to $9 million for the first half of 2025.(3)   Consists of incremental costs from the destruction of property in connection with a fire at a sow farm in Laverne, Oklahoma.(4)   Consists of employee termination benefit costs and other closure costs associated with the planned closure of our satellite offices in Lisle, Illinois and Kansas City, Missouri.(5)   Represents the recognition of employee retention tax credits received under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act.(6)   Consists of gains recognized in connection with settlements of insurance claims associated with past litigation and property damage.(7)   Represents the tax effects of the non-GAAP adjustments based on a statutory tax rate of 25.7%. EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin The following table provides a reconciliation of net income to EBITDA and adjusted EBITDA. _______________(1)   Consists of employee termination benefits and restructuring costs associated with workforce reduction and administrative process optimization initiatives. Total severance costs round up to $9 million and $12 million for the first half of 2025 and fiscal year 2025, respectively.(2)   Consists of incremental costs from the destruction of property in connection with a fire at a sow farm in Laverne, Oklahoma.(3)   Excludes accelerated depreciation charges as such amounts are included in the depreciation and amortization line in this table.(4)   Consists of employee termination benefit costs and other closure costs associated with the planned closure of our satellite offices in Lisle, Illinois and Kansas City, Missouri.(5)   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.(6)   Fiscal year 2025 and twelve months ended June 28, 2026 include a $3 million gain on the sale of certain of our hog farms in Missouri.(7)   Represents the recognition of employee retention tax credits received under the CARES Act. (8)   Consists of gains recognized in connection with settlements of insurance claims associated with past litigation and property damage. (9)   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 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, and the ratio of net debt to adjusted EBITDA. Adjusted Operating Profit and Adjusted Operating Profit Margin The following tables provide a reconciliation of operating profit to adjusted operating profit. ____________(1)   Consists of our Mexico and Bioscience operations.(2)   Represents general corporate expenses for management and administration of the business.(3)   We do not allocate certain items to our operating segments such as litigation charges, exit and disposal costs, insurance recoveries, gains and losses on the sale of property, plant and equipment and other assets, accelerated depreciation, and employee termination benefits, among others.(4)   Consists of employee termination benefits and restructuring costs associated with workforce reduction and administrative process optimization initiatives.(5)   Consists primarily of accelerated depreciation charges, retention and severance costs and other incremental costs associated with our decision to exit our leased Springfield, Massachusetts dry sausage production facility.(6)   Consists of employee termination benefit costs and other closure costs associated with the planned closure of our satellite offices in Lisle, Illinois and Kansas City, Missouri.(7)   Represents the recognition of employee retention tax credits received under the CARES Act. (8)   Consists of a gain recognized for the settlement of an insurance claim associated with past litigation. ________________________(1)   Consists of our Mexico and Bioscience operations.(2)   Represents general corporate expenses for management and administration of the business.(3)   We do not allocate certain items to our operating segments such as litigation charges, exit and disposal costs, insurance recoveries, gains and losses on the sale of property, plant and equipment and other assets, accelerated depreciation, and employee termination benefits, among others.(4)   Consists primarily of accelerated depreciation charges, retention and severance costs and other incremental costs associated with our decision to exit our leased Springfield, Massachusetts dry sausage production facility.(5)   Consists of employee termination benefits and restructuring costs associated with workforce reduction and administrative process optimization initiatives.(6)   Consists of incremental costs from the destruction of property in connection with a fire at a sow farm in Laverne, Oklahoma.(7)   Consists of employee termination benefit costs and other closure costs associated with the planned closure of our satellite offices in Lisle, Illinois and Kansas City, Missouri.(8)   Represents the recognition of employee retention tax credits received under the CARES Act. (9)   Consists of gains recognized in connection with settlements of insurance claims associated with past litigation and property damage.

This article first appeared on GuruFocus. Revenue: Consolidated sales in Q2 2026 were $3.7 billion, a 2.3% decrease year-over-year. Adjusted Operating Profit: Record Q2 adjusted operating profit of $300 million, with margin expanding to 8.1% from 7.9%. Adjusted Net Income: Record $245 million, up 13% from $217 million in Q2 2025. Adjusted Diluted EPS: $0.62 per share, up 13% from $0.55 in Q2 2025. Packaged Meats Segment: Sales of $2 billion (down 2.7%), operating profit of $265 million (down $31 million), and operating profit margin of 13.1% (down 110 basis points). Fresh Pork Segment: Sales of $2 billion (down 3.5%), operating profit of $14 million at a 0.7% margin, down from $30 million and 1.4% margin in Q2 2025. Hog Production Segment: Sales of $772 million (down 8.2%), operating profit of $64 million, up from $22 million last year. Operating Cash Flow: $204 million in the first half, nearly double the $108 million generated in the same period last year. Capital Expenditures: $165 million in the first half, compared to $158 million in the same period last year. Net Debt to Adjusted EBITDA: 0.4 times at the end of Q2, well below the policy of less than 2 times. Liquidity: $3.6 billion, including $1.4 billion in cash and cash equivalents. Full-Year 2026 Adjusted Operating Profit Outlook: Total company expected in the range of $1.225 billion to $1.375 billion; Packaged Meats $1.075 billion to $1.15 billion; Fresh Pork $180 million to $240 million; Hog Production $75 million to $125 million. Warning! GuruFocus has detected 2 Warning Sign with SFD. Is SFD fairly valued? Test your thesis with our free DCF calculator. Release Date: August 11, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Record second-quarter adjusted operating profit of $300 million and first-half record of $638 million, up 2% year-over-year. Strong Packaged Meats performance with a 13.1% adjusted operating profit margin, gaining volume share in five $1 billion-plus categories. Hog Production delivered its sixth consecutive quarter of profitability, with operating profit up $42 million year-over-year due to higher hog prices and operational efficiencies. Robust balance sheet with net debt to adjusted EBITDA of 0.4 times and liquidity of $3.6 billion, supporting growth investments and shareholder returns. Successful innovation and marketing, such as Nathan's Grass-Fed Hot Dogs becoming the #1 grass-fed hot dog and e-commerce volume growth of 21.7%. Updated 2026 outlook lowered across all segments due to softer commodity markets, particularly in Hog Production and Fresh Pork. Packaged Meats volumes declined 5.5% in Q2, impacted by earlier Easter timing and a cautious consumer environment. Fresh Pork operating profit fell to $14 million from $30 million year-over-year, driven by $37 million in industry market spread compression. Persistent inflationary pressures on fuel, freight, and packaging costs are expected to continue, impacting margins. Hog Production faces a sequential deceleration in Q3 and an expected loss in Q4 due to lower hog prices, with futures indicating prices 3% to 8% below 2025 levels. Q: Can you provide more detail on how to think about price versus volume as top-line drivers for Packaged Meats and Fresh Pork in the back half, and what you are seeing on the demand side regarding trade in and out across your brands? A: Steve France, President of Packaged Meats, noted that the consumer is still under pressure from higher gas prices and tight household budgets, with even higher-income households acting more carefully. However, consumers are still buying protein and seeking convenient meal solutions. Smithfield is winning by offering options across the value spectrum, from branded to private label, and by leaning into innovation that delivers value, such as new Armour LunchMakers items priced at roughly half the category average. He highlighted that the company increased household penetration in 11 of its brands, demonstrating broad-based success. Q: Can you provide more detail on the puts and takes for Packaged Meats profitability as we move through the year, including input costs and the timing of flow-through? A: CFO Mark Hall explained that the guidance reduction for Packaged Meats reflects elevated input costs in the first half, including raw materials, fuel, freight, and resin-based packaging, which took time for pricing actions to catch up. He expects raw material costs, particularly pork, to be a tailwind in the second half, but elevated fuel, freight, and packaging costs will persist. The company expects strong volume, price, and mix improvements, with Q3 being the seasonal low point and a solid Q4 with year-over-year improvements in profitability and margins. Q: Can you help reconcile the Packaged Meats guidance reduction with the expected pork tailwind in the second half, and provide a bridge on the back-half profit drivers? A: Mark Hall reiterated that the first-half profit decline of roughly $30 million was due to higher input costs, shifting profit recovery into the second half. Steve France added that the company is confident in a strong back half, driven by a 6.2% increase in points of distribution, which is broad-based across categories. He highlighted growth in Prime Fresh and the successful launch of Nathan's Grass-Fed Hot Dogs, which became the #1 grass-fed hot dog quickly. The new distribution gained in Q2 will have a more significant impact on volumes in the back half of the year. Q: Can you discuss how you are hedged for the rest of the year on Hog Production and provide guardrails on the magnitude of the expected loss in Q4? A: Mark Hall stated that the reduction in Hog Production guidance is driven by commodity pricing assumptions, not operational issues. The current lean hog futures curve implies prices 3% to 8% below 2025 levels, with Q4 about 13% below the prior year. Based on the basic crush model, losses of about $20 per head are expected in Q4, though the company expects to outperform that. He noted that operationally, the farms are performing well, with six consecutive profitable quarters and continued improvements in herd health and feed conversion. Q: How are you feeling about pricing and the potential for trade-downs, and how are you balancing market share with pricing out inputs? A: Steve France explained that the competitive environment has become less promotional, with fewer features and displays across the industry. Consumers are not responding to discounts alone, so the company is focusing on quality merchandising, strong innovation, and brand support rather than chasing volume through incremental discounting. This strategy is resonating with retailers, who are rewarding Smithfield with additional distribution. The distribution gains are being earned through innovation and investment, not lower pricing, which supports confidence in the second half. Q: Is there any risk that softer commodity pricing and input cost changes could shift the supply-demand balance in Hog Production? A: CEO Shane Smith noted that the July USDA forecast for hog production is up 1.4%, down from a previous 2.5% estimate, with the breeding herd down 1.2% and farrowing intentions down 2%. Industry slaughter has been down in recent weeks while the cash market remains strong, pointing to a potential hole in supply that could lead to higher prices in Q3 and Q4. While guidance is based on the futures curve, he believes there is potential upside in the second half. Q: Can you speak to the potential drivers of the recent weakness in the ham market, which has been down about 20%? A: Donovan Owens, President of North American Pork, stated that Smithfield has no labor issues and is fully converting. He attributed the ham value deflation to increased global supply, which is allowing Mexico to source hams cheaper on the world stage than last year. While demand from Mexico remains very good, the worldwide supply dynamics are causing some deflation. He expects the ham market to rebound as the holiday season approaches. Q: Can you provide more color on the updated 2026 outlook and the directional cadence for Q3 and Q4 profitability? A: Mark Hall provided the updated full-year 2026 adjusted operating profit outlook: total company between $1.225 billion and $1.375 billion; Packaged Meats between $1.075 billion and $1.15 billion; Fresh Pork between $180 million and $240 million; and Hog Production between $75 million and $125 million. He expects Q3 profitability to be down sequentially from Q2, with Packaged Meats up slightly year-over-year but offset by lower Fresh Pork and Hog Production. Q4 is expected to deliver solid year-over-year growth, led by Packaged Meats, driven by expanded distribution, stepped-up marketing, mix shift, and the benefit of the 53rd week. For the complete transcript of the earnings call, please refer to the full earnings call transcript.