SMITHFIELD FOODS INC 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis should be read in conjunction with the condensed consolidated financial statements and accompanying notes included in Part I, Item 1 of this Quarterly Repo rt on Form 10-Q and the Annual Report on Form 10-K filed for the fiscal year ended December 29, 2024. The information reflects all normal recurring adjustments, which we believe are necessary to present fairly the financial position and results of operations for all periods included. Totals and percentages may be affected by rounding. Certain prior period amounts have been reclassified to conform to the current period presentation. Overview 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”). We conduct our operations through three reportable segments: Packaged Meats, Fresh Pork, and Hog Production. We also conduct operations through two other operating segments, Mexico and Bioscience, which are aggregated and reported as “Other.” Packaged Meats Segment The Packaged Meats segment consists of our U.S. operations that process fresh meat into a wide variety of packaged meats products, including bacon, sausage, hot dogs, deli and lunch meats, dry sausage products (such as pepperoni and genoa salami), ham products, ready-to-eat products and prepared foods (such as pre-cooked entrees, bacon and sausage). Approximately 80% of the Packaged Meats segment’s raw materials are sourced from our Fresh Pork segment. We market our domestic packaged meats products under a strategic set of core brands, which include: Smithfield, Eckrich, Nathan’s Famous, Farmland, Armour, Farmer John, Kretschmar, Krakus, John Morrell, Cook’s, Gwaltney, Carando, Margherita, Curly’s and Smithfield Culinary. We also sell a sizeable portion of our packaged meats products as private label products. The majority of the Packaged Meats segment’s products are sold to retail and foodservice customers in the U.S. Fresh Pork Segment The Fresh Pork segment consists of our U.S. operations that process live hogs into a wide variety of primal, sub-primal and offal products, such as bellies, butts, hams, loins, picnics and ribs. In fiscal year 2024, the Fresh Pork segment sourced approximately half of its raw materials from our Hog Production segment and half from third-party farmers with whom we partner across the U.S. In fiscal year 2025, we expect that approximately 40% of the hogs processed by the Fresh Pork segment will be sourced from the Hog Production segment as a result of our new partnerships in Murphy Family Farms and VisionAg, which are described under “Recent Developments—Hog Production Reform” below. Approximately one-third of our fresh pork products, including the majority of hams, bellies and trimmings, is transferred to our Packaged Meats segment. Externally, we sell our fresh pork products to domestic retail, foodservice and industrial customers, as well as to export markets, including, among others, China, Mexico, Japan, South Korea and Canada. Hog Production Segment 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. 28 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. Growth Strategies The strategic initiatives we are executing across our segments are complemented and enabled by our strong balance sheet and ongoing operational investments, positioning us for future growth. We have several strategic initiatives to grow our business, reduce costs and enhance our profitability and margins. These include: • driving growth in our Packaged Meats segment; • further enhancing the profitability of our Fresh Pork segment; • continuing to invest in innovation; • optimizing operational and supply chain efficiencies; and • executing synergistic and complementary mergers and acquisitions. Key Factors Affecting Our Results of Operations and Financial Condition The following are key factors that have influenced our results of operations in the past and may influence our results in the future. Sales Drivers 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. The U.S. packaged meats market is supported by long-term secular tailwinds, including consumer demand for high-protein diets, high-quality nutrition, product versatility and convenience. We expect these tailwinds to continue to drive increases in overall meat consumption. Nevertheless, changes in market trends and consumer preferences could adversely affect our results of operations. In our Fresh Pork segment, the primary drivers of external sales are the consistent level of global pork consumption, our ability to maximize the value of each hog and our ability to leverage our different end markets including retail, foodservice, industrial and export channels. Through ongoing product innovation, we seek to appeal to ever-changing consumer preferences, including demand for convenience and smaller portion sizes as well as expanded interests in new and varied flavors. We also seek to capitalize on export markets as an outlet for increasing the value of raw materials through whole-hog utilization and by appealing to differentiated, global tastes and preferences. Cost Factors Our cost as a percentage of sales varies based on fluctuations of raw materials prices, as well as manufacturing, distribution and marketing costs. Raw materials are the largest component of our total cost of goods sold, with feed ingredients and hogs accounting for the majority share. The prices of feed ingredients, hogs and pork fluctuate based 29 on market dynamics which can affect our margins. We enter into hedging transactions for these commodities when we determine conditions are appropriate to mitigate the inherent price risks. While this hedging may limit our ability to participate in gains from favorable commodity fluctuations, it also reduces the risk of loss from adverse changes in raw material prices. 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. We are pursuing best-in-class manufacturing principles in our plants by employing automation to redeploy labor to higher value tasks, increasing yields and driving efficiency by reducing complexity. In our logistics and distribution network, we have reduced transportation and warehousing costs by improving transportation carrier mix, maximizing utilization of our cold storage and trucking assets, improving supply and demand planning and optimizing inventory levels. Our results of operations will continue to depend on our ability to (1) manage raw material cost movements through optimizing our hog production operations, hedging, forward purchasing, strategic sourcing negotiations and passing inflationary cost increases to customers, (2) operate our manufacturing and logistics footprint efficiently and competitively and (3) continue to attract and retain customers and consumers through effective sales and marketing spend. Tariffs 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. On April 10, 2025, the U.S. indicated that tariff rates would be increased on countries other than China that fail to enter into bilateral trade deals with the U.S. We are unable to predict whether the U.S. will enter into bilateral trade agreements with any other country, whether the U.S. will impose additional tariffs on other countries or whether those other countries will retaliate with tariffs that apply to the products we export. Recent Developments The following events and transactions have had, and/or will have, an impact on our results of operations and/or financial condition: Workforce Reduction In the first quarter of 2025, we implemented a reduction in workforce initiative to streamline our operations and reduce operating expenses. We eliminated certain corporate and plant positions and recognized employee termination benefit costs totaling $9 million in the condensed consolidated statement of income in the first quarter of 2025 with $6 million classified in SG&A and $2 million classified in cost of sales. Initial Public Offering 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 30 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.” 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. Altoona, Iowa Facility Closure On August 30, 2024, we closed our Altoona, Iowa ham boning facility and consolidated production volume into other locations to improve manufacturing efficiencies. Costs associated with closing the plant primarily include operating lease assets and equipment that we disposed of prior to the expiration of the lease term or end of the asset’s useful life. The charges associated with the closing were not material. Altoona was accounted for in the Fresh Pork segment. European Carve-Out 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. Dry Sausage Facility Acquisition On July 30, 2024, we acquired a dry sausage production facility located in Nashville, Tennessee from Cargill Meat Solutions Corporation for $38 million. The acquisition is part of our strategy to grow our value-added packaged meats business and serve the growing demand for high-quality pepperoni, salami, charcuterie and other dry sausage products. 31 Hog Production Reform Beginning in 2023, we have taken a number of actions to optimize the size of our Hog Production segment’s operations and improve its cost structure, including ceasing certain farm operations, terminating certain agreements with underperforming contract farmers and reducing the size of our hog production business (“Hog Production Reform”). 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. 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. 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. Results of Operations Consolidated Results of Continuing Operations Three Months Ended March 30, 2025 March 31, 2024 $ Change % Change (in millions) Sales $ 3,771 $ 3,444 $ 327 9.5 % Cost of sales 3,262 3,083 179 5.8 % Gross profit 510 362 148 40.9 % Selling, general and administrative expenses 197 199 (2) (0.9) % Operating gains (9) (1) (8) NM Operating profit 321 163 158 96.7 % Interest expense, net 11 16 (4) (27.2) % Non-operating (gains) losses 6 (4) 11 NM Income from continuing operations before income taxes 304 152 151 99.5 % Income tax expense 72 39 33 84.6 % Loss from equity method investments 5 1 4 NM Net income from continuing operations 227 112 115 101.8 % Net income (loss) from continuing operations attributable to noncontrolling interests 4 (2) 5 NM Net income from continuing operations attributable to Smithfield $ 224 $ 114 $ 110 96.1 % 32 Operating Profit by Segment Three Months Ended March 30, 2025 March 31, 2024 $ Change % Change (in millions) Packaged Meats $ 266 $ 286 $ (20) (7.0) % Fresh Pork 82 110 (28) (25.7) % Hog Production 1 (174) 175 NM Other 14 (8) 23 NM Corporate expenses (29) (32) 3 9.3 % Unallocated (12) (18) 6 32.7 % Operating profit $ 321 $ 163 $ 158 96.7 % We recently removed income from equity method investments from the measure of segment profit reviewed by our Chief Operating Decision Maker. Accordingly, the historical segment results presented herein have been retrospectively adjusted to remove income from equity method investments. Results of Operations Analysis The following discussion provides an analysis of our results of operations for the first quarter of 2025 compared to the first quarter of 2024. Sales Three Months Ended March 30, 2025 March 31, 2024 $ Change % Change (in millions) Sales by segment: Packaged Meats $ 2,024 $ 1,999 $ 24 1.2 % Fresh Pork 2,033 1,938 95 4.9 % Hog Production 932 706 226 32.0 % Other 104 114 (10) (8.6) % Total segment sales 5,093 4,758 335 7.1 % Inter-segment sales eliminations: Fresh Pork (787) (735) (52) 7.1 % Hog Production (535) (578) 43 (7.5) % Total inter-segment sales eliminations (1,322) (1,314) (9) 0.7 % Consolidated sales $ 3,771 $ 3,444 $ 327 9.5 % 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. 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 33 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. 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. • The sale of commercial hog inventories to Murphy Family Farms and VisionAg, which accounted for approximately $155 million in sales in the first quarter of 2025. • 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. • 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. Other. Segment sales decreased by $10 million, or 8.6%, primarily attributable to our Mexico operations, which experienced a 14.1% decline in volume partially offset by an 8.6% increase in average sales price. Inter-segment Eliminations • 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. • Hog Production. The decrease in inter-segment sales by our Hog Production segment was attributable to our strategic initiative to optimize our hog production operations, which reduced the number of hogs produced by our Hog Production segment, partially offset by an increase in the average sales price. Cost of Sales Three Months Ended March 30, 2025 March 31, 2024 $ Change % Change (in millions) Packaged Meats $ 1,665 $ 1,621 $ 44 2.7 % Fresh Pork 1,906 1,782 125 7.0 % Hog Production 919 868 52 6.0 % Other 84 116 (32) (27.4) % Unallocated 9 10 (1) (12.6) % Inter-segment eliminations (1,322) (1,314) (9) 0.7 % Cost of sales $ 3,262 $ 3,083 $ 179 5.8 % 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. Fresh Pork. Cost of sales in our Fresh Pork segment increased by $125 million, or 7.0%, driven primarily by a $160 million increase in raw material attributable to higher market prices for hogs. Manufacturing and distribution costs decreased by $36 million due to lower freight rates and cost improvement initiatives, including the closure of our Altoona, IA facility. 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: • A $52 million decrease in raw material costs primarily attributable to lower prices for feed ingredients, including the effects of hedging. 34 • A $31 million decrease in operating costs largely attributable to our strategic initiative to optimize the size of our Hog Production operations. Other. Cost of sales in our Other segments decreased by $32 million, or 27.4%, driven primarily by the following factors: • 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. • A $9 million decrease in manufacturing and distribution costs in our Mexico operations due in part to lower sales volume. • A $6 million decrease in raw material costs in our Bioscience operations due primarily to lower sales volume. Selling, General and Administrative Expenses Three Months Ended March 30, 2025 March 31, 2024 $ Change % Change (in millions) Packaged Meats $ 93 $ 92 $ — 0.3 % Fresh Pork 46 47 (1) (2.7) % Hog Production 12 12 (1) (6.1) % Other 6 7 (1) (11.6) % Unallocated 12 9 4 41.5 % Corporate expenses 29 32 (3) (9.3) % Selling, general and administrative expenses $ 197 $ 199 $ (2) (0.9) % Selling, general and administrative expenses (“SG&A”) decreased by $2 million, or 0.9%, primarily as a result of cost savings initiatives, which were partially offset by a $6 million increase in accruals for employee termination benefits. Operating Gains Operating gains consists of the following items: Three Months Ended March 30, 2025 March 31, 2024 (in millions) Insurance recoveries (1) $ (6) $ — Gain on disposal of assets (2) — Other operating gains (1) (1) Total operating gains $ (9) $ (1) ________________ (1) Represents a gain from an insurance recovery in connection with a fire at our Tar Heel, North Carolina rendering facility that occurred in 2021. Interest Expense, Net 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. 35 Non-operating Gains Non-operating gains consisted of the following items: Three Months Ended March 30, 2025 March 31, 2024 (in millions) Net pension and postretirement benefits cost (1) $ 4 $ 2 (Gain) loss on nonqualified retirement plan assets 2 (6) Non operating (gains) losses $ 6 $ (4) ________________ (1) Includes the components of net pension and postretirement benefits cost other than service cost, which is included in operating profit. These components consist of interest cost, expected return on plan assets, amortization of actuarial gains/losses and prior service costs/credits, and curtailment gains. Income Tax Expense Income tax expense increased by $33 million, or 84.6%, primarily due to higher year-over-year earnings. Our effective tax rate attributable to continuing operations for the three months ended March 30, 2025 was 23.6%, compared to 25.5%, for the corresponding period a year ago. Loss from Equity Method Investments Loss from equity method investments increased to $5 million in the first quarter of 2025 from $1 million in the corresponding period a year ago. The increase in loss was primarily attributable to our biogas joint ventures. Liquidity and Capital Resources 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. Credit Facilities March 30, 2025 Facility Capacity Borrowing Base Adjustment Outstanding Borrowings Commercial Paper Borrowings Outstanding Letters of Credit Amount Available (in millions) Senior Revolving Credit Facility $ 2,100 $ — $ — $ — $ — — $ 2,100 Securitization Facility 225 — — — (22) 203 Total credit facilities $ 2,325 $ — $ — $ — $ (22) $ 2,303 Senior Unsecured Revolving Credit Facility In February 2025, we refinanced our $2,100 million senior unsecured revolving credit facility (“Senior Revolving Credit Facility”) extending the maturity date from May 21, 2027 to February 12, 2030, with the option to extend the maturity date for up to two one-year periods, subject to obtaining the lenders’ consent and satisfaction of certain other conditions. The Senior Revolving Credit Facility capacity remains at $2,100 million. As part of the new agreement, there are no longer any subsidiary guarantors under the Senior Revolving Credit Facility which also released the subsidiary guarantors from our Senior Unsecured Notes. The Senior Revolving Credit Facility bears 36 interest at the Secured Overnight Financing Rate plus a margin ranging from 0.875% to 1.50% per annum, or, at our election, at a base rate plus a margin ranging from 0.00% to 0.50% per annum, in each case depending on our senior unsecured debt ratings. The Senior Revolving Credit Facility also contains financial maintenance covenants requiring us to maintain a maximum total consolidated leverage ratio (ratio of consolidated funded debt to consolidated capitalization, each as defined in the Senior Revolving Credit Facility) of 0.50 to 1.00 (which we may elect to increase to 0.55 to 1.00 with respect to any fiscal quarter in which a material acquisition is consummated and the immediately following three consecutive fiscal quarters, subject to certain restrictions) and a minimum interest coverage ratio (“ratio of earnings before interest, taxes, depreciation and amortization (“EBITDA”) to consolidated interest expense, each as defined in the Senior Revolving Credit Facility”) of 3.50 to 1.00. 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. Securitization Facility 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. Monetization Facility 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. 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. 37 Cash Flows From Operating Activities of Continuing Operations Three Months Ended March 30, 2025 March 31, 2024 (in millions) Cash flows from operating activities: Net income $ 227 $ 154 Less: Net income from discontinued operations — (42) Net income from continuing operations $ 227 $ 112 Adjustments to reconcile net income from continuing operations to net cash flows used in operating activities of continuing operations: Depreciation and amortization 83 82 Change in accounts receivable (204) 7 Change in inventories 33 116 Change in prepaid expenses and other current assets 28 25 Change in accounts payable (318) (387) Change in accrued expenses and other current liabilities (80) (120) Other 64 (54) Net cash flows used in operating activities of continuing operations $ (166) $ (219) 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: • 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. • 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. • 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. • 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. Cash Flows From Investing Activities of Continuing Operations 38 Three Months Ended March 30, 2025 March 31, 2024 (in millions) Cash flows from investing activities: Capital expenditures $ (79) $ (92) Net expenditures from breeding stock transactions (7) (25) Other 1 (3) Net cash flows used in investing activities of continuing operations $ (85) $ (119) The following items explain the significant investing activities: • Capital expenditures. Capital expenditures for both periods consisted primarily of various plant expansion, automation and improvement projects. Cash Flows From Financing Activities of Continuing Operations Three Months Ended March 30, 2025 March 31, 2024 (in millions) Cash flows from financing activities: Net proceeds from issuance of common stock $ 236 $ — Payment of dividends — (88) Principal payments on long-term debt and finance lease obligations — (19) Other — (2) Net cash flows from (used in) financing activities of continuing operations $ 236 $ (109) The following items explain certain significant financing activities: • Net proceeds from the issuance of common stock. In the first quarter of 2025, we received net proceeds from the issuance of common stock of $236 million after deducting underwriting discounts, commissions and fees. Other Anticipated or Potential Cash Requirements Capital Expenditures The Company remains in a strong financial position due to its robust cash flows, liquidity, and solid balance sheet. We plan to continue to support the business in 2025 through capital expenditures in the range of $400 million to $500 million, inclusive of profit improvement projects, such as packaged meats capacity expansion and automation, as well as repairs and maintenance. Dividends 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. Monarch Sale Notice On January 16, 2025, TPG Rise Climate (“TPG”), one of the other two equal joint venture partners in Monarch Bio Energy, LLC (“Monarch”), delivered a sale notice under the joint venture agreement, pursuant to which Monarch 39 must pursue a sale of the joint venture. In the event that a sale of Monarch is not consummated before January 17, 2026, TPG may require that Monarch purchase TPG’s ownership interests in Monarch. Altosano Redeemable Noncontrolling Interest The noncontrolling interest (“NCI”) holders in Granjas Carroll de Mexico, S. de R.L. de C.V., (“Altosano”) currently have the right to exercise a put option that would obligate us to redeem 40% of their interest. After December 31, 2027 the NCI holders in Altosano have the right to exercise a put option for the remainder of their interest. The redemption value for the NCI is fair value. As of March 30, 2025, the value of the NCI on our condensed consolidated balance sheet was $243 million. Contingent Losses 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. The condensed consolidated financial statements reflect accruals for contingent losses associated with various claims. 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. Additionally, legal expenses incurred in our and our subsidiaries’ defense of these claims and any payments made to plaintiffs through unfavorable verdicts or otherwise could negatively impact our cash flows and our liquidity position. For more information on contingencies, refer to “Note 18: Regulation and Contingencies” to the condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q . Risk Management Activities We are exposed to market risks primarily from changes in commodity prices, and to a lesser degree, interest rates and foreign exchange rates. To mitigate these risks, we utilize derivative instruments to hedge our exposure to changing prices and rates, as more fully described in “Quantitative and Qualitative Disclosures About Market Risk” and “Note 9: Derivative Financial Instruments” to the condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. Our liquidity position may be positively or negatively affected by changes in the value of our derivative portfolio. When the value of our open derivative contracts decreases, we may be required to post margin deposits with our brokers and counterparties to cover a portion of the decrease. Conversely, when the value of our open derivative contracts increases, our brokers may be required to deliver margin deposits to us for a portion of the increase. Over the past two fiscal years, the maximum amount of margin deposits held by our brokers and counterparties at any given time was $97 million. The effects, positive or negative, on liquidity resulting from our risk management activities historically have tended to be mitigated by offsetting changes in cash prices in our core business. For example, in a period of rising grain prices, gains resulting from long grain derivative positions would generally be offset by higher cash prices paid to farmers and other suppliers in spot markets. These offsetting changes do not always occur, however, in the same amounts or in the same period, with lag times of as much as twelve months. Guarantees We and certain other joint venture partners in Monarch joint and severally guarantee Monarch’s debt, interest and fees, as more fully described in “Note 12: Guarantees” to the condensed consolidated financial statements included 40 in Part I, Item 1 of this Quarterly Report on Form 10-Q . As of March 30, 2025, the maximum amount of loans that could be outstanding under Monarch’s debt agreements was $61 million and the loans mature in June 2025. Monarch’s outstanding debt was $56 million as of March 30, 2025 The guarantee involves elements of performance and credit risk and is not included in the condensed consolidated balance sheets. We could become liable in connection with Monarch’s obligation depending on the ability of Monarch to perform on its obligation. If we consider it probable that we will become responsible for the obligation, we would record the liability on our condensed consolidated balance sheet. Non-GAAP Measures In arriving at our presentation of non-GAAP financial measures, we exclude items that have an impact on our income statement that, in the judgment of our management, are items that, either as a result of their nature or size, could, were they not identified, potentially cause investors to extrapolate future performance from an improper base. While not all inclusive, examples of these items include: • loss contingencies, due to the difficulty in predicting future events, their timing and size; • transactions or events that are not part of our core business activities or are unusual in their nature (whether gains or losses); and • the tax effects of the foregoing items. Adjusted Net Income from Continuing Operations Attributable to Smithfield and Adjusted Net Income from Continuing Operations per Common Share Attributable to Smithfield The following table provides a reconciliation of net income from continuing operations attributable to Smithfield to adjusted net income from continuing operations attributable to Smithfield. Adjusted net income from continuing operations attributable to Smithfield and adjusted net income from continuing operations per common share attributable to Smithfield are non-GAAP measures. We believe these non-GAAP measures are useful for investors because they exclude the effects of items that are unusual in nature, infrequent in occurrence or otherwise stem from strategic decisions to restructure our operations. Although we believe these non-GAAP measures provide a better comparison of our year-over-year performance and are frequently used by investors and securities analysts in their evaluations of companies, they have limitations as analytical tools. As such, adjusted net income from continuing operations attributable to Smithfield and adjusted net income from continuing operations per common share attributable to Smithfield are not intended to be alternatives to net income from continuing operations, net income from continuing operations per common share 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 they exclude a number of important cash and non-cash charges. 41 Three Months Ended March 30, 2025 March 31, 2024 Affected income statement account (in millions, except per share data) Net income from continuing operations attributable to Smithfield 224 114 Reduction in workforce (1) 6 — SG&A Reduction in workforce (1) 2 — Cost of sales Hog Production Reform (2) 2 10 Cost of sales Hog Production Reform (1) — Operating gains Plant closure 1 — Cost of sales Insurance recoveries (3) (6) — Operating gains Incremental costs from the destruction of property — 3 Cost of sales Income tax effect of non-GAAP adjustments (4) (1) (3) Income tax expense Adjusted net income from continuing operations attributable to Smithfield $ 227 $ 123 Net income from continuing operations attributable to Smithfield per diluted common share $ 0.57 $ 0.30 Adjusted net income from continuing operations attributable to Smithfield per diluted common share $ 0.58 $ 0.32 ________________ (1) Consists of severance costs associated with a workforce reduction initiative. Total severance costs round up to $9 million. (2) Consists of contract termination costs and accelerated depreciation charges associated with certain farm closures in connection with our Hog Production Reform initiative. (3) Represents a gain from an insurance recovery in connection with a fire at our Tar Heel, North Carolina rendering facility that occurred in 2021. (4) Represents the tax effects of the non-GAAP adjustments based on a statutory tax rate of 25.7%. EBITDA from Continuing Operations, Adjusted EBITDA from Continuing Operations and Adjusted EBITDA Margin from Continuing Operations The following table provides a reconciliation of net income from continuing operations to EBITDA from continuing operations and adjusted EBITDA from continuing operations. EBITDA from continuing operations, adjusted EBITDA from continuing operations and adjusted EBITDA margin from continuing operations are non-GAAP measures. We believe EBITDA from continuing operations is a useful measure to our stakeholders because it excludes the effects of financing and investing activities by eliminating interest and depreciation costs to provide a comparable year-over-year analysis. We believe adjusted EBITDA from continuing operations is a useful measure as it excludes the effect of discontinued operations, non-operating gains and losses, and other items that are unusual in nature, infrequent in occurrence or otherwise stem from strategic decisions to restructure our operations. We believe adjusted EBITDA margin from continuing operations is a useful measure as it evaluates overall operating performance, ability to pursue and service possible debt opportunities and possible future investment opportunities. We believe these non-GAAP measures provide a more comparable year-over-year analysis. Although these non-GAAP measures are frequently used by investors and securities analysts in their evaluations of companies, they have limitations as analytical tools. As such, EBITDA from continuing operations, adjusted EBITDA from continuing operations and adjusted EBITDA margin from continuing operations are not intended to be alternatives to net income from continuing operations 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 they exclude a number of important cash and non-cash charges. 42 Three Months Ended Twelve Months Ended March 30, 2025 March 31, 2024 December 29, 2024 March 30, 2025 Affected Income Statement Account (in millions, except percentages) Net income from continuing operations $ 227 $ 112 $ 798 $ 912 Interest expense, net 11 16 66 61 Income tax expense 72 39 271 303 Depreciation and amortization 83 82 339 340 EBITDA from continuing operations $ 393 $ 249 $ 1,474 $ 1,618 Reduction in workforce 6 — — 6 SG&A Reduction in workforce 2 — — 2 Cost of sales Plant closure 1 — — 1 Cost of sales Hog Production Reform (1) (2) 1 10 29 20 Cost of sales Hog Production Reform (3) (1) — (38) (39) Operating gains Insurance recoveries (6) — (4) (10) Operating gains Incremental costs from destruction of property — 3 4 2 Cost of sales Employee retention tax credits (4) — — (86) (86) Cost of sales Employee retention tax credits (4) — — (1) (1) SG&A Adjusted EBITDA from continuing operations $ 396 $ 261 $ 1,379 $ 1,514 Net income margin from continuing operations 6.0 % 3.3 % 5.6 % 6.3 % Adjusted EBITDA margin from continuing operations 10.5 % 7.6 % 9.7 % 10.5 % ________________ (1) The twelve months ended December 29, 2024 consisted primarily of contract termination and other farm closure costs and other costs and losses associated with our Hog Production Reform initiative. (2) Excludes accelerated depreciation charges of $1 million and $2 million for the three months ended March 30, 2025 and the twelve months ended December 29, 2024, respectively, as such charges are included in the depreciation and amortization line in this table. (3) Fiscal year 2024 included a $32 million gain on the sale of our Utah hog farms and a $6 million gain on the sale of breeding stock to Murphy Family Farms. (4) Represents the recognition of employee retention tax credits received under the Coronavirus Aid, Relief, and Economic Security Act. Net Debt and Ratio of Net Debt to Adjusted EBITDA from Continuing Operations 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 from continuing operations, and the ratio of net debt to adjusted EBITDA from continuing operations. Net debt and the ratio of net debt to adjusted EBITDA from continuing operations are non-GAAP measures. We believe net debt is a useful measure as it helps to give investors a clear understanding of our financial position. Net debt is also used to calculate certain leverage ratios. We believe the ratio of net debt to adjusted EBITDA from continuing operations is a useful measure as it monitors the sustainability of our debt levels and our ability to take on additional debt against adjusted EBITDA from continuing operations, which is used as an operating performance measure. We believe these non-GAAP measures provide a more comparable year-over-year analysis. Although net debt and the ratio of net debt to adjusted EBITDA from continuing operations are frequently used by investors and securities analysts in their evaluations of companies, these non-GAAP measures have limitations as analytical tools. As such, net debt and the ratio of net debt to adjusted EBITDA from continuing operations are not intended to be alternatives to total debt and finance lease obligations and the ratio of total debt and finance lease obligations to net income from continuing operations or any other performance measures derived in accordance with GAAP and should not be used by investors or other users of our 43 financial statements in isolation for formulating decisions as they exclude a number of important cash and non-cash charges. Twelve Months Ended March 30, 2025 December 29, 2024 (in millions, except ratios) Current portion of long-term debt and capital lease $ 3 $ 3 Long-term debt and finance lease obligations 2,000 1,999 Total debt and finance lease obligations 2,003 2,002 Cash and cash equivalents (928) (943) Net debt $ 1,075 $ 1,059 Net income from continuing operations $ 912 $ 798 Adjusted EBITDA from continuing operations 1,514 1,379 Ratio of total debt and finance lease obligations to net income from continuing operations 2.2x 2.5x Ratio of net debt to adjusted EBITDA from continuing operations 0.7x 0.8x Adjusted Operating Profit and Adjusted Operating Profit Margin The following table provides a reconciliation of operating profit to adjusted operating profit. Adjusted operating profit and adjusted operating profit margin are non-GAAP measures. We believe these non-GAAP measures are useful to investors because they provide a better understanding of underlying operating results and trends of established, ongoing operations of our segments, excluding the impact of items that are unusual in nature, infrequent in occurrence or otherwise stem from strategic decisions to restructure our operations. These non-GAAP measures are not intended to be alternatives to operating profit, operating profit margin 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 they exclude a number of important cash and non-cash charges. Three Months Ended March 30, 2025 Packaged Meats Fresh Pork Hog Production Other (1) Corporate (2) Unallocated (3) Consolidated (in millions, except percentages) Operating profit (loss) $ 266 $ 82 $ 1 $ 14 $ (29) $ (12) $ 321 Reduction in workforce — — — — — 9 9 Plant closure — — — — — 1 1 Hog Production Reform — — — — — 1 1 Insurance recoveries — — — — — (6) (6) Adjusted operating profit (loss) $ 266 $ 82 $ 1 $ 14 $ (29) $ (8) $ 326 Operating profit (loss) margin 13.1 % 4.0 % 0.1 % 13.7 % NM NM 8.5 % Adjusted operating profit (loss) margin 13.1 % 4.0 % 0.1 % 13.7 % NM NM 8.6 % 44 Three Months Ended March 31, 2024 Packaged Meats Fresh Pork Hog Production Other (1) Corporate (2) Unallocated (3) Consolidated (in millions, except percentages) Operating profit (loss) $ 286 $ 110 $ (174) $ (8) $ (32) $ (18) $ 163 Hog Production Reform — — — — — 10 10 Incremental costs from destruction of property — — — — — 3 3 Adjusted operating profit (loss) $ 286 $ 110 $ (174) $ (8) $ (32) $ (6) $ 176 Operating profit (loss) margin 14.3 % 5.7 % (24.6) % (7.3) % NM NM 4.7 % Adjusted operating profit (loss) margin 14.3 % 5.7 % (24.6) % (7.3) % NM NM 5.1 % ________________ (1) Includes our Mexico and Bioscience operations. (2) Represents general corporate expenses for management and administration of the business. (3) Includes certain costs of sales, SG&A and operating gains that we do not allocate to our segments. Critical Accounting Estimates The preparation of condensed consolidated financial statements requires us to make estimates and assumptions. These estimates and assumptions are based on our judgment, experience and understanding of the current facts and circumstances. Actual results could differ from those estimates. Certain of our accounting estimates are considered critical as they are both important to the representation of our financial condition and results of operations and require significant or complex judgment on the part of management. A summary of certain accounting policies and estimates that we consider to be critical are described in Part II, Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended December 29, 2024. There have been no material changes to our critical accounting estimates disclosed in our Annual Report on Form 10-K for the fiscal year ended December 29, 2024. Recently Issued Accounting Pronouncements For a description of recently issues accounting pronouncements, refer to “Note 1: Summary of Significant Accounting Policies” to the condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q and our other publicly available documents contain forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995 about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, 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,” “might,” “will,” “shall,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” “goal,” “objective,” “seeks,” “likely” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans, or intentions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about: • our ability to capture synergies between our Packaged Meats and Fresh Pork segments; 45 • our ability to execute on our strategy to optimize the size of our hog production operations; • our ability to anticipate and meet consumer trends and interests through product innovation; • the size of our addressable markets, market share and market trends, including our ability to drive organic growth in our business through our Packaged Meats and Fresh Pork segments; • anticipated trends, developments and challenges in our industry, business and the highly competitive markets in which we operate; • our ability to mitigate higher input costs through productivity improvements in our operations (including analytics and task automation), various procurement strategies and the use of derivative instruments; • our dependence on third-party suppliers and our ability to mitigate any disruption or inefficiency in our supply chain and/or operations; • our expectations regarding our hog production transformation strategy and our ability to achieve segment production targets; • fluctuations in our quarterly results of operations due to the seasonal nature of our business; • our ability to attract and retain employees and maintain our corporate culture; • our ability to prevent cyberattacks, other cyber-incidents, security breaches or other disruptions of our information technology systems; • our ability to defend litigation brought against us successfully and the sufficiency of our accruals for related contingent losses; • compliance with laws and regulations, including environmental, cybersecurity and tax laws and regulations, that currently apply or may become applicable to our business both in the United States and Mexico and our expectations regarding various laws and restrictions that relate to our business; • our ability to capitalize on export markets; • our ability to execute on acquisitions, joint ventures and divestitures; • legal, regulatory, or market measures to address climate change and our ability to achieve our climate-related goals and strategies; • future investments in our business, our anticipated capital expenditures and our estimates regarding our capital requirements; • the sufficiency of our cash and cash equivalents and the availability of our committed credit facilities to meet our liquidity needs; • our ability to achieve our financial and operational targets; • our ability to maintain our investment grade ratings; • our expectations regarding expenses, such as stock-based compensation expenses; • fluctuations in the values of our open derivative contracts and pension obligations and related assets; • impairment in the carrying value of our goodwill or intangible assets; • our ability to achieve or maintain our targeted Ratio of Net Debt to Adjusted EBITDA and minimum liquidity levels; and 46 • our dividend policy and our ability to pay dividends. We cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur at all. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors, including those described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, new risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law.