SMITHFIELD FOODS INC

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 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.

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 third 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 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.

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 third quarter of 2025 and the three months ended September 28, 2025 are to the 13-week period ended September 28, 2025. All references to the third quarter of 2024 and the three months ended September 29, 2024 are to the 13-week period ended September 29, 2024. Each of the nine months ended September 28, 2025 and September 29, 2024 consisted of 39-weeks.

Previous wording

We continue to optimize the size of our hog production operations and procure a greater mix of hogs from independent suppliers with market-based supply agreements in order to supply our Fresh Pork segment. We have reduced the size of our internal hog production from a peak of 17.6 million head in 2019 to 14.6 million head in 2024, and we continue to explore opportunities for reduced internal production. We expect to produce approximately 11.5 million head in 2025, which would represent approximately 40% of the hogs processed by our Fresh Pork segment.

Current wording

We continue to optimize the size of our hog production operations and procure a greater mix of hogs from independent suppliers with market-based supply agreements in order to supply our Fresh Pork segment. We have reduced the size of our internal hog production from a peak of 17.6 million head in 2019 to 14.6 million head in 2024, and we continue to explore opportunities for reduced internal production. We expect to produce under 11.5 million head in 2025, which would represent approximately 40% of the hogs processed by our Fresh Pork segment.

Previous wording

We export our products to over 30 countries, including China. Those exports primarily consist of fresh pork products. For the first six months of 2025, our export sales into China accounted for approximately 2% of our total sales. As of June 29, 2025, products we export to China faced tariffs that ranged from 25% to 57%, with most products subject to 57% tariff rates.

Current wording

We export our products to over 30 countries, including China. Those exports primarily consist of fresh pork products. For the first nine months of 2025, our export sales into China accounted for approximately 2% of our total sales. As of September 28, 2025, products we export to China faced tariffs that ranged from 25% to 57%, with most products subject to 57% tariff rates.

Previous wording

As of June 29, 2025 and December 29, 2024, we had contingent liabilities totaling $194 million and $141 million, respectively, in accrued expenses and other current liabilities on the condensed consolidated balance sheets related to litigation matters. We recorded charges of $80 million in the three and six months ended June 29, 2025 for litigation matters in SG&A in the condensed consolidated statements of income. We did not record any significant charges for litigation matters in the three and six months ended June 30, 2024. These matters will not affect our profits or losses in future periods unless our accruals prove to be insufficient or excessive. It is reasonably possible that a change in our estimates may occur in the near term and that our accruals could be insufficient. We are unable to estimate the amount of possible loss in excess of our accruals, which could be material.

Current wording

As of September 28, 2025 and December 29, 2024, we had contingent liabilities totaling $153 million and $141 million, respectively, in accrued expenses and other current liabilities on the condensed consolidated balance sheets related to litigation matters. Charges totaling $80 million were recorded in the nine months ended September 28, 2025 and are included in SG&A in the condensed consolidated statements of income. None of these charges were recorded in the third quarter of 2025. We did not record any significant charges for litigation matters in the three and nine months ended September 29, 2024. These matters will not affect our profits or losses in future periods unless our accruals prove to be insufficient or excessive. It is reasonably possible that a change in our estimates may occur in the near term and that our accruals could be insufficient. We are unable to estimate the amount of possible loss in excess of our accruals, which could be material.

Previous wording

On July 4, 2025, the Tax Relief for American Families and Workers Act of 2025 (commonly referred to as the “One Big Beautiful Bill,” or “OBBB”) was signed into law. This comprehensive legislation made several significant changes to federal tax law, including:

Current wording

On July 4, 2025, the Tax Relief for American Families and Workers Act of 2025 (commonly known as the “One Big Beautiful Bill” or “OBBB”) was signed into law. This comprehensive legislation made several significant changes to federal tax law, including:

Previous wording

On January 29, 2025, we completed our initial public offering (“IPO”) of 26,086,958 shares of common stock, which represents 7% of the total outstanding shares, at a price of $20.00 per share. We issued 13,043,479 shares of common stock bringing the total number of outstanding shares to 393,112,711. The remaining 13,043,479 shares of common stock were sold by our existing shareholder. Our existing shareholder granted the underwriters a 30-day option to purchase up to 3,913,042 additional shares of our common stock. On February 20, 2025, the underwriters partially exercised such option and purchased 2,506,936 additional shares of common stock from our existing shareholder. We received net proceeds from the IPO of $236 million after deducting underwriting discounts, commissions and fees. As a result of the IPO, our common stock is listed on the Nasdaq Global Select Market under the ticker “SFD.”

Current wording

On January 29, 2025, we completed our initial public offering (“IPO”) of 26,086,958 shares of common stock, which represents 7% of the total outstanding shares, at a price of $20.00 per share. We issued 13,043,479 shares of common stock bringing the total number of outstanding shares to 393,112,711. The remaining 13,043,479 shares of common stock were sold by WH Group, through its indirect wholly owned subsidiary SFDS UK Holdings Limited (“SFDS UK”), our only shareholder at the time. WH Group granted the underwriters a 30-day option to purchase up to 3,913,042 additional shares of our common stock. On February 20, 2025, the underwriters partially exercised such option and purchased 2,506,936 additional shares of common stock from WH Group. We received net proceeds from the IPO of $236 million after deducting underwriting discounts, commissions and fees. As a result of the IPO, our common stock is listed on the Nasdaq Global Select Market under the ticker “SFD.”

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 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.

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 $6 million associated with these equity instruments during the three and nine months ended September 28, 2025. Unrecognized compensation expense totaled $39 million as of September 28, 2025, which is expected to be recognized on a straight-line basis over the remaining vesting period of 4.3 years.

Previous 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.

Current wording

In the nine months ended September 29, 2024, we recognized charges totaling $13 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 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.

Current wording

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

Previous 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.

Current wording

Packaged Meats. Segment sales increased by $174 million, or 9.1%, primarily attributable to a 9.2% increase in our average sales price. 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. Sales volume remained consistent year-over-year.

Previous 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.

Current wording

Hog Production. Segment sales increased by $75 million, or 10.1%, primarily due to the following factors, which more than offset an approximately 850,000, or 25%, decrease in the number of market hogs sold due to our Hog Production Reform initiative:

Previous wording

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

Current wording

•A $120 million increase in grain and feed sales primarily attributable to our feed supply agreements with Murphy Family Farms and VisionAg.

Previous wording

•Other sales to Murphy Family Farms and VisionAg totaling $103 million in the second quarter of 2025, consisting primarily of the sale of commercial hog inventories and transportation services.

Current wording

•Other sales to Murphy Family Farms and VisionAg totaling $69 million in the second quarter of 2025, consisting primarily of the sale of commercial hog inventories and transportation services.

Previous wording

Our average market hog sales price remained consistent year-over-year, inclusive of the effects of hedging as compared to a 4.1% increase in the lean hog price index published by the Chicago Mercantile Exchange (“CME”).

Current wording

•A 7.7% increase in our average market hog sales price, inclusive of the effects of hedging, driven by a higher lean hog price index published by the Chicago Mercantile Exchange (“CME”).

Previous 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.

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 3.1% decrease in sales volume.

Previous wording

Packaged Meats. Segment sales increased by $159 million, or 4.0%, as a result of a 4.1% increase in average sales price. 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. Sales volume remained consistent year-over-year.

Current wording

Packaged Meats. Segment sales increased by $332 million, or 5.7%, as a result of a 5.8% increase in average sales price. 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. Sales volume remained consistent year-over-year.

Previous wording

Fresh Pork. Segment sales increased by $99 million, or 5.0%, primarily attributable to a 3.3% increase in our average sales price and a 1.7% increase in sales volume. The increase in the average sales price is consistent with a 3.3% increase in the cut-out values reported by the USDA, which averaged $1.03 per pound in the second quarter of 2025, primarily due to an increased demand for pork.

Current wording

Fresh Pork. Segment sales increased by $428 million, or 7.3%, primarily attributable to a 6.7% increase in our average sales price and a 0.6% increase in sales volume. The increase in the average sales price is directionally aligned with the 8.7% increase in the cut-out values reported by the USDA, which averaged $1.04 per pound in the first nine months of 2025, primarily due to lower U.S. pork production coupled with continued strong demand for pork.

Previous wording

Hog Production. Segment sales increased by $291 million, or 19.6%, primarily due to the following factors, which more than offset an approximately 1.6 million, or 22%, 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 $365 million, or 16.5%, primarily due to the following factors, which more than offset an approximately 2.5 million, or 23%, decrease in the number of market hogs sold due to our Hog Production Reform initiative:

Previous wording

•Sales of commercial hog inventories, transportation services and other ancillary goods and services to Murphy Family Farms and VisionAg totaled $271 million in the first six months of 2025.

Current wording

•Sales of commercial hog inventories, transportation services and other ancillary goods and services to Murphy Family Farms and VisionAg totaling $340 million in the first nine months of 2025.

Previous wording

•A $189 million increase in grain and feed sales primarily attributable to our feed supply agreements with Murphy Family Farms and VisionAg.

Current wording

•A $309 million increase in grain and feed sales primarily attributable to our feed supply agreements with Murphy Family Farms and VisionAg.

Previous 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.

Current wording

•A 7.9% increase in our average market hog sales price, inclusive of the effects of hedging, driven by an increase in the lean hog price index published by the CME.

Previous 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 2.7% decrease in sales volume.

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 2.8% decrease in sales volume.

Previous wording

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

Current wording

Packaged Meats. Cost of sales in our Packaged Meats segment increased by $193 million, or 12.2%, driven primarily by a $203 million increase in raw material costs attributable to the effect of higher fresh pork market prices, which more than offset lower manufacturing, freight and cold storage costs.

Previous wording

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

Current wording

Hog Production. Cost of sales in our Hog Production segment increased by $29 million, or 4.2%, due to:

Previous wording

•A $115 increase in the cost of grain and feed sales primarily attributable to our feed supply agreements with Murphy Family Farms and VisionAg.

Current wording

•A $121 million increase in the cost of grain and feed sales primarily attributable to our feed supply agreements with Murphy Family Farms and VisionAg.

Previous wording

•Costs associated with sales of other goods and services to Murphy Family Farms and VisionAg totaling $108 million in the second quarter of 2025, consisting primarily of commercial hog inventories and transportation services.

Current wording

•Costs associated with sales of other goods and services to Murphy Family Farms and VisionAg totaling $46 million in the third quarter of 2025, consisting primarily of hog inventories and transportation services.

Previous 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.

Current wording

These increases were partially offset by a $93 million decrease in raw material costs, a $27 million decrease in operating costs and a $19 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 14.2%, driven primarily by the following factors:

Current wording

Other. Cost of sales in our Other segments increased by $24 million, or 26.2%, driven primarily by the following factors:

Previous wording

Packaged Meats. Cost of sales in our Packaged Meats segment increased by $217 million, or 6.9%, driven primarily by the following factors, which more than offset manufacturing and distribution cost savings:

Current wording

Packaged Meats. Cost of sales in our Packaged Meats segment increased by $410 million, or 8.7%, driven primarily by the following factors, which more than offset lower freight and cold storage costs:

Previous wording

•A $200 million increase in raw material costs attributable to the effect of higher fresh pork market prices.

Current wording

•A $404 million increase in raw material costs attributable to the effect of higher fresh pork market prices.

Previous wording

Fresh Pork. Cost of sales in our Fresh Pork segment increased by $127 million, or 6.8%, driven primarily by the following factors, which more than offset manufacturing and distribution cost savings:

Current wording

Fresh Pork. Cost of sales in our Fresh Pork segment increased by $509 million, or 9.2%, driven primarily by the following factors, which more than offset lower freight and cold storage costs:

Previous wording

•A $108 million increase in raw material costs attributable to higher market prices for hogs and higher sales volume.

Current wording

•A $530 million increase in raw material costs attributable to higher market prices for hogs and higher sales volume.

Previous wording

Hog Production. Cost of sales in our Hog Production segment increased by $93 million, or 5.7%, due to:

Current wording

Hog Production. Cost of sales in our Hog Production segment increased by $122 million, or 5.3%, due to:

Previous wording

•A $187 increase in the cost of grain and feed sales primarily attributable to our feed supply agreements with Murphy Family Farms and VisionAg.

Current wording

•A $308 million increase in the cost of grain and feed sales primarily attributable to our feed supply agreements with Murphy Family Farms and VisionAg.

Previous wording

•The sale of commercial hog inventories, transportation services and other ancillary goods and services to Murphy Family Farms and VisionAg, which increased cost of sales by $260 million in the first six months of 2025.

Current wording

•The sale of commercial hog inventories, transportation services and other ancillary goods and services to Murphy Family Farms and VisionAg, which increased cost of sales by $306 million in the first nine months of 2025.

Previous wording

These increases were partially offset by a $227 million decrease in raw material costs, a $105 million decrease in operating costs and a $29 million decrease in the cost of breeding stock sales, largely attributable to the reduction in the size of our hog production operations.

Current wording

These increases were partially offset by a $319 million decrease in raw material costs, a $132 million decrease in operating costs and a $48 million decrease in the cost of breeding stock sales, largely attributable to the reduction in the size of our hog production operations.

Previous wording

SG&A increased by $74 million, or 38.1%, and $72 million, or 18.3%, for the second quarter and first six months of 2025, respectively, primarily due to the following factors, which more than offset various expense savings, including those attributable to our workforce reduction initiative:

Current wording

SG&A increased by $50 million, or 8.4%, primarily due to the following factors, which more than offset various broad-based expense savings, including those attributable to our workforce reduction initiative:

Previous wording

•An increase in the accrual for litigation charges totaling $80 million. These charges were not allocated to our operating segments.

Current wording

•An $80 million increase in litigation charges for the first nine months of 2025, which were not allocated to our operating segments.

Previous wording

•Accruals for employee termination benefits totaling $10 million for the first six months of 2025 resulting from our reduction in workforce initiative and decision to close our corporate offices in Lisle, Illinois and Kansas City, Missouri. These charges were not allocated to our operating segments.

Current wording

•Accruals for employee termination benefits totaling $11 million for the first nine months of 2025 related to our workforce reduction initiative and the decision to close our satellite offices in Lisle, Illinois and Kansas City, Missouri. These charges were not allocated to our operating segments.