Smithfield Foods, Inc. Common Stock 2026 Q2 Earnings Call
Review the key takeaways and the transcript of this earnings call.
- Smithfield Foods reported record second quarter 2026 adjusted operating profit of $300 million, up from prior periods, with an expanded adjusted operating profit margin of 8.1% compared to 7.9% last year.
- First half 2026 adjusted operating profit set a record at $638 million, a 2% increase from the prior year.
- Consolidated sales in Q2 2026 were $3.7 billion, a 2.3% decrease year over year, but flat excluding non-recurring sales from last year.
- Packaged meats segment sales were $2 billion, down 2.7%, with volumes down 5.5% due to earlier Easter timing, partially offset by a 2.9% price increase.
- Packaged meats operating profit was $265 million, down $31 million year over year, with a margin of 13.1%, down 110 basis points, impacted by higher freight, diesel costs, and increased marketing investment.
- Fresh pork segment sales were $2 billion, down 3.5%, with volumes down 2% and average sales prices down 1.5%, but outperforming USDA cutout declines.
- Fresh pork operating profit was $14 million at 0.7% margin, down from $30 million and 1.4% margin last year, driven by $37 million market spread compression partially offset by $21 million from sales strategy and efficiencies.
- Hog production segment sales were $772 million, down 8.2%, but excluding prior year one-time sales, sales increased due to a 9% increase in average hog selling price.
- Hog production operating profit was $64 million, up from $22 million last year, due to higher hog prices, nutritional savings, and improved efficiency.
- Net debt to adjusted EBITDA ratio was 0.4 times at quarter end, with liquidity of $3.6 billion including $1.4 billion cash, well above policy thresholds.
- Operating cash flow in first half 2026 was $204 million, nearly double prior year, with trailing 12-month operating cash flow exceeding $1.1 billion.
- Capital expenditures were $165 million in first half 2026, focused on growth projects.
- Smithfield declared its third dividend of 2026 and expects to pay $1.25 per share in annual dividends subject to board discretion.
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Transcript
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Good day, and welcome to the Smithfield Foods second quarter 2026 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. 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. 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? Thank you, Julie. Good morning, everyone.
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