SMITHFIELD FOODS INC

Previous wording

Smithfield Foods, Inc., together with its subsidiaries (“Smithfield,” “the Company,” “we,” “us” or “our”) is an American food company that employs approximately 34,000 people in the United States (“U.S”). and 2,500 people in Mexico. We boast a portfolio of high-quality, iconic brands, such as Smithfield®, Eckrich® and Nathan’s Famous®, among many others. We are an indirect, majority owned subsidiary of Hong Kong-based WH Group Limited (“WH Group”).

Current wording

Smithfield Foods, Inc., together with its subsidiaries (“Smithfield,” “the Company,” “we,” “us” or “our”) is an American food company that employs approximately 32,000 people in the United States (“U.S”). and 2,500 people in Mexico. We boast a portfolio of high-quality, iconic brands, such as Smithfield®, Eckrich® and Nathan’s Famous®, among many others. We are an indirect, majority-owned subsidiary of Hong Kong-based WH Group Limited (“WH Group”).

Previous wording

The Hog Production segment consists of our hog production operations in the U.S., which produce and raise our hogs on numerous company-owned farms and farms that are owned and operated by third-party contract farmers. Nearly all of the hogs produced by this segment are processed by our Fresh Pork segment. The Hog Production segment also sells grains and feed to external customers. In fiscal year 2024 and the first quarter of fiscal year 2025, approximately 60% of the Hog Production segment’s cost of goods sold was from animal feed, which is derived primarily from corn and soybean meal.

Current wording

The Hog Production segment consists of our hog production operations in the U.S., which produce and raise our hogs on numerous Company-owned farms and farms that are owned and operated by third-party contract farmers. Nearly all of the hogs produced by this segment are processed by our Fresh Pork segment. The Hog Production segment also sells grains and feed to external customers. In fiscal year 2024 and through the second quarter of 2025, approximately 60% of the Hog Production segment’s cost of goods sold was from animal feed, which is derived primarily from corn and soybean meal.

Previous wording

Our fiscal year is the 52-week or 53-week period which ends on the Sunday nearest to December 31. Unless otherwise noted, all references to the first quarter of 2025 and the three months ended March 30, 2025 are to the 13-week period ended March 30, 2025. All references to the first quarter of 2024 and the three months ended March 31, 2024 are to the 13-week period ended March 31, 2024.

Current wording

Our elected fiscal year is the 52-week or 53-week period which ends on the Sunday nearest to December 31. Unless otherwise noted, all references to the second quarter of 2025 and the three months ended June 29, 2025 are to the 13-week period ended June 29, 2025. All references to the second quarter of 2024 and the three months ended June 30, 2024 are to the 13-week period ended June 30, 2024. Each of the six months ended June 29, 2025 and June 30, 2024 consisted of 26-weeks.

Previous wording

Key Factors Affecting Our Results of Operations and Financial Condition

Current wording

Key Factors and Recent Developments Affecting Our Results of Operations and Financial Condition

Previous wording

The following are key factors that have influenced our results of operations in the past and may influence our results in the future.

Current wording

The following are key factors and recent developments that have influenced our results of operations in the past and/or may influence our results in the future.

Previous wording

We are focused on driving profitable growth through our Packaged Meats segment. Within the Packaged Meats segment, the primary factors impacting sales of our brands are household penetration, consumption levels, price point and product offerings. As a result, we have pursued strategies that we believe best align our products with consumer trends and behavior. We have shifted our portfolio towards a higher mix of value-added and margin accretive products while leveraging the breadth of our offerings to further penetrate across dayparts. We look to increase brand awareness and encourage consumer adoption of our products through product and packaging innovation and effective and appealing marketing strategies while maintaining our promise to consumers to offer high-quality products for every budget. We have also expanded to new categories and grown distribution of under-indexed brands in under-penetrated locations. In addition to the prior initiatives, we also seek to increase sales in packaged meats products by driving volumes of our private label and foodservice products, by expanding our customer relationships and by offering quality selections across the value chain.

Current wording

We are focused on driving profitable growth through our Packaged Meats segment. Within the Packaged Meats segment, the primary factors impacting sales of our brands are household penetration, consumption levels, price point and product offerings. As a result, we have pursued strategies that we believe best align our products with consumer trends and behavior. We have shifted our portfolio towards a higher mix of value-added and margin accretive products while leveraging the breadth of our offerings to further penetrate across dayparts. We look to increase brand awareness and encourage consumer adoption of our products through product and packaging innovation and effective and appealing marketing strategies while maintaining our promise to consumers to offer high-quality products for every budget. We have also expanded to new categories and grown distribution of under-indexed brands in under-penetrated locations. In addition, we seek to increase sales in packaged meats products by driving volumes of our private label and foodservice products, by expanding our customer relationships and by offering quality selections across the value chain.

Previous wording

We export our products to over 30 countries, including China. Those exports primarily consist of fresh pork products. For the quarter ended March 30, 2025, our export sales into China accounted for approximately 3% of our total sales. As of April 29, 2025, products we export to China face tariffs that range from 140% to 172%, with most products subject to 172% tariff rates. Trade relations between the U.S. and China are fluid, and it is impossible for us to predict whether tariff rates imposed on our products by China will increase, decrease or stay the same, or whether China will ban imports from the U.S. altogether. Current tariff rates imposed on our products by China could cause us to reduce or even cease selling our products into China.

Current wording

Trade relations between the U.S. and China are fluid. China previously had proposed imposing tariff rates on our products ranging from 140% to 172%, but implementation of those increased rates was paused until November 10, 2025. It is impossible for us to predict whether tariff rates imposed on our products by China will increase, decrease or stay the same, or whether China will ban imports from the U.S. altogether, and we will adjust our sales strategy accordingly.

Previous wording

Like other participants in our industry, we are subject to various laws and regulations administered by federal, state and other government entities, including the U.S. Environmental Protection Agency and corresponding state agencies, as well as the Grain Inspection, Packers and Stockyard Administration, the USDA, the U.S. Occupational Safety and Health Administration, the Commodity Futures Trading Commission and similar agencies in foreign countries. We, from time to time, receive notices and inquiries from regulatory authorities and others asserting that we are not in compliance with such laws and regulations. In some instances, litigation ensues. In addition, individuals may initiate litigation against us.

Current wording

Like other participants in our industry, we are subject to various laws and regulations administered by federal, state and other government entities, including the U.S. Environmental Protection Agency and corresponding state agencies, as well as the U.S. Department of Agriculture (“USDA”), the Grain Inspection, Packers and Stockyard Administration, the U.S. Food and Drug Administration, the U.S. Occupational Safety and Health Administration, the Commodity and Futures Trading Commission and similar agencies in foreign countries.

Previous wording

In connection with the IPO, we granted to our directors and certain of our employees and certain directors and employees of WH Group: (1) options to purchase 9,822,467 shares with an exercise price equal to the IPO price and an aggregate grant date fair value of $30 million and (2) 1,527,000 restricted stock units (“RSUs”) with an aggregate grant date fair value of $31 million. The options and substantially all RSUs vest over a five year period, with 20% vesting each year. We recognized compensation expense totaling $2 million associated with these equity instruments in the first quarter of 2025. Unrecognized compensation expense totaled $45 million as of March 30, 2025, which is expected to be recognized on a straight-line basis over the remaining vesting period of 4.8 years.

Current wording

In connection with the IPO, we granted to our directors and certain of our employees and certain directors and employees of WH Group: (1) options to purchase 9,822,467 shares with an exercise price equal to the IPO price and an aggregate grant date fair value of $30 million and (2) 1,527,000 restricted stock units (“RSUs”) with an aggregate grant date fair value of $31 million. The options and substantially all RSUs vest over a five year period, with 20% vesting each year. We recognized compensation expense totaling $2 million and $4 million associated with these equity instruments during the three and six months ended June 29, 2025. Unrecognized compensation expense totaled $42 million as of June 29, 2025, which is expected to be recognized on a straight-line basis over the remaining vesting period of 4.6 years.

Previous wording

On August 26, 2024, we completed a carve-out and transfer of our European operations to WH Group. As a result, we derecognized the assets and liabilities of our former European operations through equity. No gain or loss was recognized on the transaction. The historical results of operations, assets and liabilities, and cash flows of the European operations have been condensed and reported as discontinued operations in the consolidated financial statements for all periods presented.

Current wording

On August 26, 2024, we completed a carve-out and transfer of our European operations to WH Group. As a result, we derecognized the assets and liabilities of our former European operations through equity. No gain or loss was recognized on the transaction. The historical results of operations, assets and liabilities, and cash flows of the European operations have been condensed and reported as discontinued operations in the condensed consolidated financial statements for all periods presented.

Previous wording

In the fourth quarter of fiscal year 2024, we became a member of a North Carolina-based company, Murphy Family Farms LLC (“Murphy Family Farms”), by contributing $3 million in cash in exchange for a 25% minority interest. We additionally sold approximately 150,000 sows and related inventories located on company-owned and contract farms in North Carolina to Murphy Family Farms. Subsequent to the end of fiscal year 2024, on December 30, 2024, we sold the commercial hog inventories associated with such sows to Murphy Family Farms. Murphy Family Farms is now a hog supplier to us and will supply approximately 3.2 million hogs annually. We will supply animal feed and other supplies and provide certain support services to Murphy Family Farms.

Current wording

In the fourth quarter of fiscal year 2024, we became a member of a North Carolina-based company, Murphy Family Farms LLC (“Murphy Family Farms”), by contributing $3 million in cash in exchange for a 25% minority interest. We additionally sold approximately 150,000 sows and related inventories located on Company-owned and contract farms in North Carolina to Murphy Family Farms. Subsequent to the end of fiscal year 2024, on December 30, 2024, we sold the commercial hog inventories associated with such sows to Murphy Family Farms. Murphy Family Farms is now a hog supplier to us and supplies approximately 3.2 million hogs annually. We supply animal feed and other supplies and provide certain support services to Murphy Family Farms.

Previous wording

On February 24, 2025, we became a member of a North Carolina-based company, VisionAg Hog Production, LLC (“VisionAg”), by contributing $450,000 in cash in exchange for a 9% minority interest. We additionally sold approximately 28,000 sows and the associated commercial hog inventories located on certain company-owned and contract farms in North Carolina to VisionAg. VisionAg is now a hog supplier to us and will supply approximately 600,000 hogs annually. In addition, we will supply animal feed and provide certain support services to VisionAg.

Current wording

On February 24, 2025, we became a member of a North Carolina-based company, VisionAg Hog Production, LLC (“VisionAg”), by contributing $450,000 in cash in exchange for a 9% minority interest. We additionally sold approximately 28,000 sows and the associated commercial hog inventories located on certain Company-owned and contract farms in North Carolina to VisionAg. VisionAg is now a hog supplier to us and supplies approximately 600,000 hogs annually. In addition, we supply animal feed and provide certain support services to VisionAg.

Previous wording

In the first quarters of 2025 and 2024, we recognized charges totaling $1 million and $10 million, respectively, associated with Hog Production Reform in cost of sales in the condensed consolidated statements of income.

Current wording

In the six months ended June 30, 2024, we recognized charges totaling $10 million associated with Hog Production Reform in cost of sales in the condensed consolidated statements of income. Amounts recognized for all other periods presented were not material.

Previous wording

The following discussion provides an analysis of our results of operations for the first quarter of 2025 compared to the first quarter of 2024.

Current wording

The following discussion provides an analysis of our results of operations for the second quarter of 2025 compared to the second quarter of 2024 and for the first six months of 2025 compared to the first six months of 2024.

Previous wording

Packaged Meats. Segment sales increased by $24 million, or 1.2%, as a 5.7% increase in average sales price more than offset a 4.2% decrease in sales volume. The increase in average sales price was primarily due to higher raw material costs, which translated into higher sales prices of our packaged meats products, and a favorable shift in product mix. The decrease in volume was primarily attributable to lower holiday ham sales due to the timing of Easter, which occurred later in 2025 as compared to 2024.

Current wording

Packaged Meats. Segment sales increased by $134 million, or 6.9%, as a result of a 4.5% increase in sales volume and a 2.3% increase in average sales price. The increase in volume was primarily attributable to higher holiday ham sales due to the timing of Easter, which occurred later in 2025 as compared to 2024. The increase in average sales price was primarily due to higher raw material costs, which translated into higher sales prices of our packaged meats products, partially offset by an unfavorable shift in product mix attributable to the timing of the Easter holiday year-over-year.

Previous wording

Hog Production. Segment sales increased by $226 million, or 32.0%, primarily due to the following factors, which more than offset an approximately 800,000, or 21%, decrease in the number of market hogs sold due to our strategic initiative to optimize the size of our hog production operations and reduce the number of hogs we produce.

Current wording

Hog Production. Segment sales increased by $65 million, or 8.4%, primarily due to the following factors, which more than offset an approximately 850,000, or 24%, decrease in the number of market hogs sold due to our strategic initiative to optimize the size of our hog production operations and reduce the number of hogs we produce.

Previous wording

•A $73 million increase in grain and feed sales primarily attributable to our feed supply agreements in connection with our investments in Murphy Family Farms and VisionAg.

Current wording

•A $116 million increase in grain and feed sales primarily attributable to our feed supply agreements with Murphy Family Farms and VisionAg.

Previous wording

•Fresh Pork. The increase in inter-segment sales by our Fresh Pork segment was primarily attributable to higher market values for fresh pork components sold to our Packaged Meats segment.

Current wording

•Fresh Pork. The increase in inter-segment sales by our Fresh Pork segment was attributable to higher market values for fresh pork components sold to our Packaged Meats segment, partially offset by a 1.9% decrease in sales volume.

Previous wording

Fresh Pork. Segment sales increased by $95 million, or 4.9%, primarily attributable to a 4.8% increase in our average sales price. The increase in average sales price is reflective of lower pork supply and steady demand. In the first quarter of 2025, fresh pork cut-out values reported by the U.S. Department of Agriculture (“USDA”) averaged $0.95 per pound, up 5.9% from the same period last year. Sales volume was consistent year-over-year.

Current wording

Fresh Pork. Segment sales increased by $194 million, or 5.0%, primarily attributable to a 4.1% increase in our average sales price and a 0.9% increase in sales volume. The increase in the average sales price is reflective of a 4.5% increase in the cut-out values reported by the USDA, which averaged $0.99 per pound in the first half of 2025, primarily due to an increased demand for pork.

Previous wording

•An increase in our average market hog sales price primarily attributable to a 14.1% increase in the lean hog price index published by the Chicago Mercantile Exchange.

Current wording

•An increase in our average market hog sales price year-over-year, inclusive of the effects of hedging, of 8.2% primarily attributable to an 8.7% increase in the lean hog price index published by the CME.

Previous wording

Packaged Meats. Cost of sales in our Packaged Meats segment increased by $44 million, or 2.7%, driven primarily by an increase in raw material costs attributable to the net effect of higher fresh pork market prices and lower sales volume.

Current wording

•A $146 million increase in raw material costs attributable to the effects of higher fresh pork market prices and higher sales volume.

Previous wording

Hog Production. Cost of sales in our Hog Production segment increased by $52 million, or 6.0%, primarily due to $147 million in costs attributable to the commercial hog inventories sold to Murphy Family Farms and VisionAg, which were partially offset by the following factors:

Current wording

Hog Production. Cost of sales in our Hog Production segment increased by $42 million, or 5.5%, due to:

Previous wording

•A $31 million decrease in operating costs largely attributable to our strategic initiative to optimize the size of our Hog Production operations.

Current wording

These increases were partially offset by a $103 million decrease in raw material costs, a $70 million decrease in operating costs and a $16 million decrease in the cost of breeding stock sales, largely attributable to the reduction in the size of our hog production operations.

Previous wording

Other. Cost of sales in our Other segments decreased by $32 million, or 27.4%, driven primarily by the following factors:

Current wording

Other. Cost of sales in our Other segments decreased by $32 million, or 14.2%, driven primarily by the following factors:

Previous wording

•A $6 million decrease in raw material costs in our Bioscience operations due primarily to lower sales volume.

Current wording

•A $13 million decrease in raw material costs in our Bioscience operations due primarily to lower sales volume.

Previous wording

•A $9 million decrease in manufacturing and distribution costs in our Mexico operations due in part to lower sales volume.

Current wording

•A $13 million decrease in manufacturing and distribution costs in our Mexico operations due in part to lower sales volume.

Previous wording

•A $15 million decrease in raw material costs in our Mexico operations primarily attributable to lower sales volume and lower market prices for feed ingredients.

Current wording

•A $4 million decrease in raw material costs in our Mexico operations primarily attributable to lower sales volume partially offset by higher market prices for feed ingredients.

Previous wording

Interest expense, net decreased by $4 million, or 27.2%, due to higher levels of cash and cash equivalents earning interest in the first quarter of 2025 as compared to the same period a year ago, while interest rates on borrowings were largely fixed.

Current wording

Interest expense, net decreased by $9 million, or 45.0%, and $13 million, or 37.1%, for the second quarter and first six months of 2025, respectively, due to higher levels of cash and cash equivalents earning interest in the current year.

Previous wording

Our sources of liquidity include cash and cash equivalents on hand together with availability under our committed revolving credit facilities. As of March 30, 2025, we had $3,230 million of available liquidity consisting of $928 million in cash and cash equivalents and $2,303 million of availability under our committed credit facilities. Availability under our committed credit facilities is reduced by the principal amount of our outstanding commercial paper. We believe that our current liquidity position is strong and that our cash flows from operations and availability under our credit facilities will be sufficient to meet our working capital needs and financial obligations and commitments for at least the next twelve months.

Current wording

Our sources of liquidity include cash and cash equivalents on hand together with availability under our committed revolving credit facilities. As of June 29, 2025, we had $3,225 million of available liquidity consisting of $928 million in cash and cash equivalents and $2,297 million of availability under our committed credit facilities. Availability under our committed credit facilities is reduced by the principal amount of any outstanding commercial paper. We believe that our current liquidity position is strong and that our cash flows from operations and availability under our credit facilities will be sufficient to meet our working capital needs and financial obligations and commitments for at least the next twelve months.

Previous wording

Our Senior Revolving Credit Facility contains customary covenants, including, but not limited to, restrictions on our ability and that of our subsidiaries to merge and consolidate with other companies, incur indebtedness, grant liens or security interests on assets subject to their security interest, make acquisitions, loans, advances or investments, pay dividends, sell or otherwise transfer assets, optionally prepay or modify terms of any junior indebtedness or enter into transactions with affiliates, each subject to certain exceptions as set forth therein. We are currently in compliance with the covenants under our Senior Revolving Credit Facility.

Current wording

Our Senior Revolving Credit Facility contains customary covenants, including, but not limited to, restrictions on our ability and that of our subsidiaries to merge and consolidate with other companies, incur indebtedness, grant liens or security interests on assets subject to their security interest, or enter into transactions with affiliates, each subject to certain exceptions as set forth therein. We are currently in compliance with the covenants under our Senior Revolving Credit Facility.

Previous wording

We maintain a $225 million accounts receivable securitization facility (“Securitization Facility”), which matures in November 2027. As part of the Securitization Facility, certain accounts receivable of our major domestic meat processing subsidiaries are sold to a wholly owned “bankruptcy remote” special purpose vehicle (“SPV”). The SPV pledges all such accounts receivable not otherwise sold pursuant to the Monetization Facility (as defined below) as security for loans made, and letters of credit issued, by participating lenders under the Securitization Facility. The SPV is included in our condensed consolidated financial statements and therefore the accounts receivable owned by it are included in our condensed consolidated balance sheets. However, the accounts receivable owned by the SPV are separate and distinct from our other assets and are not available to our other creditors should we become insolvent. As of March 30, 2025, the SPV held $432 million of accounts receivable. We must maintain certain ratios related to the collection of our receivables as a condition of the Securitization Facility agreement. As of March 30, 2025, we had $22 million in letters of credit issued under the Securitization Facility. None of the letters of credit were drawn upon.

Current wording

We maintain a $225 million accounts receivable securitization facility (“Securitization Facility”), which matures in November 2027. As part of the Securitization Facility, certain accounts receivable of our major domestic meat processing subsidiaries are sold to a wholly-owned “bankruptcy remote” special purpose vehicle (“SPV”). The SPV pledges all such accounts receivable not otherwise sold pursuant to the Monetization Facility (as defined below) as security for loans made, and letters of credit issued, by participating lenders under the Securitization Facility. The SPV is included in our condensed consolidated financial statements and therefore the accounts receivable owned by it are included in our condensed consolidated balance sheets. However, the accounts receivable owned by the SPV are separate and distinct from our other assets and are not available to our other creditors should we become insolvent. As of June 29, 2025, the SPV held $410 million of accounts receivable. We must maintain certain ratios related to the collection of our receivables as a condition of the Securitization Facility agreement. As of June 29, 2025, we had $28 million in letters of credit issued under the Securitization Facility. None of the letters of credit were drawn upon.

Previous wording

In addition to the Securitization Facility, we maintain an uncommitted $250 million accounts receivable monetization facility (“Monetization Facility”). At Smithfield’s election and subject to the purchasing banks’ approval, certain accounts receivable may be sold by the SPV to purchasing banks, so long as the uncollected outstanding amount of accounts receivable sold pursuant to the Monetization Facility does not exceed $250 million in the aggregate at any time, among other limitations. In the event of a sale, the purchasing banks assume all credit risk related to the receivables while we maintain risk associated with customer disputes. We account for the sale of receivables to a purchasing bank by derecognizing the receivables from our condensed consolidated balance sheet upon transfer of control to the purchasing bank, and recognizing a discount on the sale in SG&A in the condensed consolidated statement of income. The proceeds from the sale of receivables are included in net cash flows from operating activities in the condensed consolidated statement of cash flows. On behalf of the purchasing banks, we continue to service all receivables sold under the Monetization Facility. As of March 30, 2025, the uncollected balance of receivables that had been sold to purchasing banks was $240 million. We had no servicing asset or liability outstanding as of March 30, 2025.

Current wording

In addition to the Securitization Facility, until July 22, 2025, we maintained an uncommitted $250 million accounts receivable monetization facility (“Monetization Facility”). At Smithfield’s election and subject to the purchasing banks’ approval, certain accounts receivable were sold by the SPV to purchasing banks, so long as the uncollected outstanding amount of accounts receivable sold pursuant to the Monetization Facility did not exceed $250 million in the aggregate at any time, among other limitations. In the event of a sale, the purchasing banks assumed all credit risk related to the receivables while we maintained risk associated with customer disputes. We accounted for the sale of receivables to a purchasing bank by derecognizing the receivables from our condensed consolidated balance sheet upon transfer of control to the purchasing bank, and recognized a discount on the sale in SG&A in the condensed consolidated statement of income. The proceeds from the sale of receivables are included in net cash flows from operating activities in the condensed consolidated statement of cash flows. On behalf of the purchasing banks, we serviced all receivables sold under the Monetization Facility. As of June 29, 2025, the uncollected balance of receivables that had been sold to purchasing banks was $232 million. We had no servicing asset or liability outstanding as of June 29, 2025.

Previous wording

In the first quarter of 2023, we sold $227 million of accounts receivable at a discount and received proceeds totaling $225 million. We reinvested $785 million and $821 million of cash collections from customers in the revolving sale of accounts receivable to purchasing banks in the three months ended March 30, 2025 and March 31, 2024, respectively. We recognized charges totaling $3 million and $3 million in first quarters of 2025 and 2024, respectively, attributable to the discount on the sale of accounts receivable in SG&A in the condensed consolidated statement of income.

Current wording

In the first quarter of 2023, we sold $227 million of accounts receivable at a discount and received proceeds totaling $225 million. We reinvested $803 million and $774 million of cash collections from customers in the revolving sale of accounts receivable to purchasing banks in the three months ended June 29, 2025 and June 30, 2024, respectively and $1,829 million and $1,814 million in the six months ended June 29, 2025 and June 30, 2024, respectively. We recognized charges totaling $3 million and $4 million in the second quarters of 2025 and 2024, respectively, and $6 million and $7 million in the first six months of 2025 and 2024, respectively, attributable to the discount on the sale of accounts receivable in SG&A in the condensed consolidated statement of income.

Previous wording

The decrease in net cash flows used in operating activities of continuing operations year-over-year was primarily driven by higher earnings, partially offset by adverse changes in working capital. The following describes the significant changes in working capital:

Current wording

The increase in net cash flows from operating activities of continuing operations year-over-year was primarily driven by changes in working capital, deferred taxes and accumulated other comprehensive income associated with hedging activity, as well as higher earnings. The following describes the significant changes in working capital:

Previous wording

•Accounts receivable. Accounts receivable increased in the first quarter of 2025 primarily due to the sale of commercial hog inventories and feed to Murphy Family Farms and VisionAg.

Current wording

•Accounts receivable. Accounts receivable increased in the first six months of 2025 primarily due to the sale of commercial hog inventories and feed to Murphy Family Farms and VisionAg.

Previous wording

•Inventories. Inventories decreased in both periods primarily due to lower inventory volumes attributable to Hog Production Reform. The decrease in the first quarter of 2025 was partially offset by increases in meat inventories largely due to the timing of the Easter holiday in 2025 relative to 2024.

Current wording

•Inventories. Inventories decreased in both periods due to lower inventory volumes attributable to Hog Production Reform with a larger impact in the first six months of 2025 due to the sale of commercial hog inventories to Murphy Family Farms and VisionAg. Additionally, feed inventories decreased in both periods primarily due to the routine consumption of grain purchased during the prior-year harvest. The decreases in both periods were partially offset by increases in meat inventories largely due to the normal seasonal build-up for the summer and holidays.

Previous wording

•Accounts payable. Accounts payable decreased in both periods mainly due to the seasonal deferral of payments for hog and grain purchases made in the fourth quarter each year. Payments to certain farmers for these purchases are deferred until the first quarter each year.

Current wording

•Accounts payable. Accounts payable decreased in both periods mainly due to the seasonal deferral of payments for hog and grain purchases made in the fourth quarter each year. Payments to certain farmers for these purchases are deferred until the first quarter of the following year.

Previous wording

•Accrued expenses and other current liabilities. Accrued expenses and other current liabilities decrease seasonally in the first quarter each year due to payout of variable compensation earned in prior years. The decrease in both years was partially offset by increases in current income taxes payable. Additionally, the decrease in accrued expenses and other current liabilities in the first quarter of 2024 reflects the payout of contract termination and other exit costs attributable to our Hog Production Reform activities.

Current wording

•Accrued expenses and other current liabilities. Accrued expenses and other current liabilities decrease seasonally in the first quarter each year due to payout of variable compensation earned in the prior year. The fluctuation year-over-year was primarily attributable to changes in our accruals for litigation matters and amounts due to participating banks in connection with the monetization facility. Additionally, the decrease in accrued expenses and other current liabilities in the first six months of 2024 reflects the payout of contract termination and other exit costs attributable to our Hog Production Reform activities.

Previous wording

•Capital expenditures. Capital expenditures for both periods consisted primarily of various plant expansion, automation and improvement projects.

Current wording

•Capital expenditures. Capital expenditures for both periods consisted primarily of various plant automation and improvement projects.

Previous wording

Returning cash to shareholders in the form of dividends is a top priority for the Company. On March 24, 2025, our Board declared a quarterly cash dividend of $0.25 per share of common stock, which was paid on April 22, 2025, to shareholders of record on April 10, 2025. 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.

Current wording

On April 22, 2025 and May 29, 2025, we paid dividends of $0.25 per share to shareholders. On July 31, 2025, we announced a quarterly dividend of $0.25 per share to be paid to shareholders on August 28, 2025. We anticipate the remaining quarterly dividend for fiscal 2025 will be $0.25 per share, resulting in an annual dividend rate for fiscal 2025 of $1.00 per share. The declaration of dividends is subject to the discretion of our Board and depends on various factors, including our net income, financial condition, cash requirements, business prospects, and other factors that our Board deems relevant to its analysis and decision making.