SMITHFIELD FOODS INC 10-Q

ITEM 1. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA SMITHFIELD FOODS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in millions, except share data and per share data, and unaudited) Three Months Ended March 29, 2026 March 30, 2025 Sales $ 3,800 $ 3,771 Cost of sales 3,289 3,262 Gross profit 511 510 Selling, general and administrative expenses 180 197 Operating gains ( 1 ) ( 9 ) Operating profit 333 321 Interest expense, net 8 11 Non-operating losses 1 6 Income before income taxes 323 304 Income tax expense 72 72 Loss from equity method investments 2 5 Net income 249 227 Net income attributable to noncontrolling interests 4 4 Net income attributable to Smithfield $ 246 $ 224 Net income per common share attributable to Smithfield: Basic $ 0.63 $ 0.57 Diluted 0.62 0.57 Weighted-average shares outstanding: Basic 393,285,796 388,812,663 Diluted 394,670,922 389,064,212 See Notes to Condensed Consolidated Financial Statements 3 SMITHFIELD FOODS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in millions and unaudited) Three Months Ended March 29, 2026 March 30, 2025 Net income $ 249 $ 227 Other comprehensive income (loss), net of tax: Foreign currency translation ( 8 ) ( 1 ) Pension accounting 4 3 Hedge accounting ( 10 ) 41 Total other comprehensive income (loss) ( 14 ) 43 Comprehensive income 236 270 Comprehensive income attributable to noncontrolling interests 1 3 Comprehensive income attributable to Smithfield $ 235 $ 267 See Notes to Condensed Consolidated Financial Statements 4 SMITHFIELD FOODS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in millions, except share data, and unaudited) March 29, 2026 December 28, 2025 ASSETS Current assets: Cash and cash equivalents $ 1,386 $ 1,539 Accounts receivable, net 1,066 1,023 Inventories, net 2,348 2,328 Prepaid expenses and other current assets 232 276 Total current assets 5,031 5,166 Property, plant and equipment, net 3,205 3,226 Goodwill 1,622 1,623 Intangible assets, net 1,258 1,260 Operating lease assets 380 387 Equity method investments 209 209 Other assets 297 306 Total assets $ 12,002 $ 12,177 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 489 $ 856 Current portion of long-term debt and finance lease obligations 602 3 Current portion of operating lease obligations 73 71 Accrued expenses and other current liabilities 922 811 Total current liabilities 2,086 1,741 Long-term debt and finance lease obligations 1,401 2,000 Long-term operating lease obligations 313 322 Deferred income taxes, net 638 658 Net long-term pension obligation 209 207 Other liabilities 180 185 Redeemable noncontrolling interests 311 264 Commitments and contingencies (Note 15) Equity: Shareholders’ equity: Preferred stock, no par value; 100,000,000 shares authorized; no shares issued and outstanding — — Common stock, no par value; 5,000,000,000 shares authorized; 393,477,263 shares issued and outstanding as of March 29, 2026 and 393,112,711 shares issued and outstanding as of December 28, 2025 — — Additional paid-in capital 3,292 3,338 Retained earnings 3,897 3,776 Accumulated other comprehensive loss ( 325 ) ( 314 ) Total shareholders’ equity 6,864 6,801 Total liabilities and equity $ 12,002 $ 12,177 See Notes to Condensed Consolidated Financial Statements 5 SMITHFIELD FOODS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions and unaudited) Three Months Ended March 29, 2026 March 30, 2025 Cash flows from operating activities: Net income $ 249 $ 227 Adjustments to reconcile net income to net cash flows used in operating activities: Depreciation and amortization 83 83 Changes in operating and other assets and liabilities, net ( 390 ) ( 541 ) Other ( 8 ) 64 Net cash flows used in operating activities ( 65 ) ( 166 ) Cash flows from investing activities: Capital expenditures ( 88 ) ( 79 ) Net expenditures from breeding stock transactions ( 6 ) ( 7 ) Cash receipts on notes receivable 14 1 Net cash flows used in investing activities ( 80 ) ( 85 ) Cash flows from financing activities: Net proceeds from issuance of common stock — 236 Other ( 5 ) — Net cash flows from (used in) financing activities ( 5 ) 236 Effect of foreign exchange rate changes on cash ( 4 ) — Net change in cash, cash equivalents and restricted cash ( 154 ) ( 15 ) Cash, cash equivalents and restricted cash at beginning of period 1,539 943 Cash, cash equivalents and restricted cash at end of period $ 1,386 $ 928 See Notes to Condensed Consolidated Financial Statements 6 SMITHFIELD FOODS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (in millions, except share data, and unaudited) Three Months Ended March 29, 2026 Shares of Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Total Shareholders’ Equity Balance, December 28, 2025 393,112,711 $ 3,338 $ 3,776 $ ( 314 ) $ 6,801 Stock compensation expense — 3 — — 3 Settlement of restricted stock units 544,464 1 ( 1 ) — — Withholding tax on settlement of restricted stock units ( 179,912 ) ( 4 ) — — ( 4 ) Adjustment to redeemable noncontrolling interests — ( 46 ) — — ( 46 ) Dividends declared ($ 0.3125 per share) — — ( 123 ) — ( 123 ) Comprehensive income: Net income attributable to Smithfield — — 246 — 246 Other comprehensive loss, net of tax — — — ( 11 ) ( 11 ) Balance, March 29, 2026 393,477,263 $ 3,292 $ 3,897 0 $ ( 325 ) $ 6,864 Three Months Ended March 30, 2025 Shares of Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Total Shareholders’ Equity Balance, December 29, 2024 380,069,232 $ 3,102 $ 3,184 $ ( 452 ) $ 5,834 Issuance of common stock 13,043,479 236 — — 236 Stock compensation expense — 2 — — 2 Adjustment to redeemable noncontrolling interests — ( 15 ) — — ( 15 ) Dividends declared ($ 0.2500 per share) — — ( 99 ) — ( 99 ) Comprehensive income: Net income attributable to Smithfield — — 224 — 224 Other comprehensive income, net of tax — — — 43 43 Balance, March 30, 2025 393,112,711 $ 3,325 $ 3,308 $ ( 408 ) $ 6,225 See Notes to Condensed Consolidated Financial Statements 7 SMITHFIELD FOODS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Smithfield Foods, Inc., together with its subsidiaries (“Smithfield,” “the Company,” “we,” “us” or “our”) produces a wide variety of fresh pork and packaged meats products primarily in the United States (“U.S.”) and markets them both domestically and internationally. We operate in a cyclical industry and our results are significantly affected by fluctuations in commodity prices for meat, livestock (primarily hogs) and grains. We are an indirect, majority-owned subsidiary of Hong Kong-based WH Group Limited (“WH Group”). These statements and notes should be read in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K filed for the fiscal year ended December 28, 2025, which include a comprehensive description of our significant accounting policies and other information that is not included herein. Seasonality Sales, profitability and cash flow generation and use are impacted on a quarterly basis by the seasonal nature of our business. Our sales and profitability are generally higher in the fourth quarter due to the Thanksgiving and Christmas holidays. In addition, the timing of the Easter holiday can affect the comparability of our first and second quarters on both a quarter-to-quarter and year-over-year basis. We typically build inventories of certain products in anticipation of seasonal demand fluctuations, as periods of higher sales for hams occur during major holidays, while sales of ribs, smoked sausages and hot dogs are generally higher during the summer months. Hog prices also exhibit seasonal patterns, tending to rise as hog supplies decrease during the summer and decline as supplies increase during the fall and winter. These fluctuations are driven by lower farrowing performance during the winter and slower animal growth rates during the summer, which can impact our cost structure and profitability throughout the year. Our cash use is highest in the first quarter, primarily due to working capital needs related to payments to certain suppliers that are typically deferred in the fourth quarter. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”), which require us to make estimates and use assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. It is possible that actual results could differ materially from those estimates. 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. Our elected fiscal year is the 52-week or 53-week period which ends on the Sunday nearest to December 31. Each of the first quarters of fiscal years 2026 and 2025, which ended on March 29, 2026 and March 30, 2025, respectively, consisted of 13 weeks. Principles of Consolidation The condensed consolidated financial statements include the accounts of all wholly-owned subsidiaries, as well as majority-owned subsidiaries and other entities for which we have a controlling financial interest. All intercompany transactions and accounts have been eliminated. 8 We evaluate contractual, equity and other variable interests in entities that may be deemed variable interest entities (“VIE”). We consolidate a VIE if we determine that we are the VIE’s primary beneficiary. A VIE’s primary beneficiary has both (1) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (2) the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. Cash and Cash Equivalents We maintain a cash management structure with one of our banking institutions that incorporates a master netting arrangement. This structure utilizes concentration accounts, automated sweep mechanisms and zero‑balance disbursement accounts to fund disbursements, such as payroll and accounts payable. All accounts under this structure are netted and presented in either cash and cash equivalents or accounts payable on the condensed consolidated balance sheet depending on whether the net balance is positive or in an overdraft position. As of March 29, 2026 and December 28, 2025, the net overdraft balances were $ 32 million and $ 29 million, respectively, which were presented in accounts payable on the condensed consolidated balance sheets. Recently Issued Accounting Pronouncements New Accounting Pronouncements Recently Adopted In July 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-05 Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets , which simplifies the estimation of credit losses on current accounts receivable and contract assets arising from transactions accounted for under ASC 606. The update was adopted and applied to assets within its scope in this Quarterly Report on Form 10-Q on a prospective basis. The standard did not impact our financial position, results of operations or cash flows. New Accounting Pronouncements Not Yet Adopted In November 2024, the FASB issued ASU 2024-03 Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses . The new guidance is intended to provide investors with more disaggregated information about certain line items presented in the consolidated statement of income. The update is effective for our annual report on Form 10-K for fiscal year 2027, with early adoption permitted. The new disclosures are required to be applied prospectively with an option for retrospective application. The standard will not impact our financial position, results of operations or cash flows. In May 2025, the FASB issued ASU 2025-03 Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity , which aims to improve consistency in identifying the accounting acquirer in business combinations involving VIEs. The update is effective for our annual report on Form 10-K for fiscal year 2027, with early adoption permitted. Once adopted, this update will be applied prospectively to transactions within the scope of the guidance. In September 2025, the FASB issued ASU 2025-06 Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40) , which streamlines the capitalization guidance for internal-use software and supersedes prior guidance on website development costs. The update is effective for fiscal year 2028, including interim periods within that fiscal year, with early adoption permitted. Once adopted, this update will be applied prospectively to software development projects initiated after adoption. In September 2025, the FASB issued ASU 2025-07 Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606) , which clarifies the scope of derivative accounting and provides guidance on share-based noncash consideration in revenue contracts. The update is effective for fiscal year 2027, including interim periods within that fiscal year, with early adoption permitted. Once adopted, this update will be applied prospectively to contracts within the scope of the guidance. We do not expect the adoption of this standard to have a material impact on our financial position, results of operations or cash flows. 9 In November 2025, the FASB issued ASU 2025‑09 Hedge Accounting Improvements , which enhances guidance related to hedge accounting, including provisions for component hedging. The update is effective for fiscal year 2027, including interim periods within that fiscal year, with early adoption permitted. Upon adoption, the update will be applied prospectively to open hedging relationships and to new hedges within the scope of the guidance. We do not expect the adoption of this standard to have a material impact on our financial position, results of operations or cash flows. In December 2025, the FASB issued ASU 2025‑10 Accounting for Government Grants , which provides authoritative guidance on the recognition, measurement, and disclosure of government grants. The update is effective for fiscal year 2029, including interim periods within that fiscal year, with early adoption permitted. We do not expect the adoption of this standard to have a material impact on our financial position, results of operations, or cash flows. In December 2025, the FASB issued ASU 2025‑11 Interim Reporting (Topic 270): Narrow-Scope Improvements , which clarifies interim reporting requirements and enhances consistency in disclosures. The update is effective for fiscal year 2028, including interim periods within that fiscal year, with early adoption permitted. We do not expect the adoption of this standard to have a material impact on our financial position, results of operations, or cash flows, as the amendments primarily clarify existing guidance. In December 2025, the FASB issued ASU 2025‑12 Codification Improvements , which makes 33 incremental improvements to GAAP across a broad range of topics intended to address technical corrections, unintended application of the accounting standards codification, clarifications and other minor improvements. This update is effective for fiscal year 2027, including interim periods within that fiscal year, with early adoption permitted. We do not expect the adoption of this update to have a material impact on our financial position, results of operations, or cash flows. NOTE 2: REPORTABLE SEGMENTS Our reportable segments are determined on the basis of our organizational structure and information that is regularly reviewed by our Chief Operating Decision Maker (“CODM”) for the purpose of assessing the performance of the operating segments of our business and making operating and resource allocation decisions. Our CODM is our Chief Executive Officer. Our CODM reviews assets at a consolidated level; not by reportable segment. Therefore, we do not disclose assets by reportable segment. Additionally, while segments are managed separately, our manufacturing and distribution activities are often integrated to optimize cost efficiencies, resulting in jointly utilized assets, including fixed assets, that are not tracked at the segment level. Depreciation and amortization associated with these shared assets are generally allocated to reportable segments. The measure of segment profit reviewed by our CODM is operating profit. Our CODM uses operating profit to assess segment performance, compensate employees and allocate capital, personnel and other resources to each segment. 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 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. 10 Fresh Pork 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. The Fresh Pork segment sources approximately 40 % of its raw materials from our Hog Production segment, w ith the remainder from farmers with whom we partner across the U.S. 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, Mexico, China, Japan, South Korea and Canada. Hog Production 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 contract farmers. Nearly all of the hogs produced by this segment are processed by our Fresh Pork segment. The Hog Production segment also sells livestock feed and grains and provides transportation and other ancillary services to external customers. The following tables provide certain financial information by reportable segment with a reconciliation to the consolidated totals. Three Months Ended March 29, 2026 Packaged Meats Fresh Pork Hog Production Other (1) Corporate (2) Unallocated (3) Intersegment Consolidated (in millions) Sales $ 2,149 $ 2,012 $ 769 $ 174 $ — $ — $ ( 1,303 ) $ 3,800 Cost of sales 1,781 1,895 755 156 — 5 ( 1,303 ) 3,289 Selling, general and administrative expenses 92 39 10 6 26 7 — 180 Operating gains — — — — — ( 1 ) — ( 1 ) Operating profit (loss) 275 78 4 12 ( 26 ) ( 10 ) — 333 Interest expense, net 8 8 Non-operating losses 1 1 Income before income taxes $ 323 Other segment data: Depreciation and amortization $ 33 $ 27 $ 13 $ 7 $ — $ 2 $ — $ 83 Capital expenditures 45 33 8 1 2 — — 88 11 Three Months Ended March 30, 2025 Packaged Meats Fresh Pork Hog Production Other (1) Corporate (2) Unallocated (3) Intersegment Consolidated (in millions) Sales $ 2,024 $ 2,033 $ 932 $ 104 $ — $ — $ ( 1,322 ) $ 3,771 Cost of sales 1,665 1,906 919 84 — 9 ( 1,322 ) 3,262 Selling, general and administrative expenses 93 46 12 6 29 12 — 197 Operating gains — — — — — ( 9 ) — ( 9 ) Operating profit (loss) 266 82 1 14 ( 29 ) ( 12 ) — 321 Interest expense, net 11 11 Non-operating losses 6 6 Income before income taxes $ 304 Other segment data: Depreciation and amortization $ 32 $ 27 $ 15 $ 6 $ — $ 2 $ — $ 83 Capital expenditures 40 24 11 2 3 — — 79 ________________ (1) Includes our Mexico and Bioscience operations. Our Mexico operations raise hogs and produce pork products that are sold primarily to customers in Mexico. Our Bioscience operations use raw materials from hogs that we harvest to manufacture heparin products, including an active pharmaceutical ingredient that mitigates the risk of blood clots. (2) Represents general corporate expenses for management and administration of the business. (3) We do not allocate certain items to our operating segments such as litigation charges, exit and disposal costs, insurance recoveries, gains and losses on the sale of property, plant and equipment and other assets, accelerated depreciation, and employee termination benefits, among others. The following tables disaggregate our sales to customers by reportable segment and by major distribution channel. Three Months Ended March 29, 2026 Retail (1) Foodservice (2) Exports (3) Industrial (4) Other / Unallocated (5) Total External Sales (6) Intersegment Consolidated (in millions) Packaged Meats $ 1,390 $ 618 $ 30 $ 111 $ ( 1 ) $ 2,149 $ — $ 2,149 Fresh Pork 498 75 399 255 — 1,228 784 2,012 Hog Production — — — — 250 250 519 769 Other (7) — — — — 174 174 — 174 Intersegment — — — — — — ( 1,303 ) ( 1,303 ) Total $ 1,889 $ 693 $ 429 $ 366 $ 423 $ 3,800 $ — $ 3,800 Three Months Ended March 30, 2025 Retail (1) Foodservice (2) Exports (3) Industrial (4) Other / Unallocated (5) Total External Sales (6) Intersegment Consolidated (in millions) Packaged Meats $ 1,284 $ 597 $ 31 $ 110 $ 2 $ 2,024 $ — $ 2,024 Fresh Pork 483 59 435 266 3 1,246 787 2,033 Hog Production — — — — 397 397 535 932 Other (7) — — — — 104 104 — 104 Intersegment — — — — — — ( 1,322 ) ( 1,322 ) Total $ 1,767 $ 657 $ 466 $ 376 $ 505 $ 3,771 $ — $ 3,771 ________________ (1) Includes national and regional retailers in the U.S. such as grocery supermarket chains, independent grocers and club stores. 12 (2) Includes foodservice distributors, fast food and other restaurant operators, hotel chains and other institutional customers in the U.S. (3) Includes exports from the U.S. to international retailers and wholesale distributors primarily in North America, Asia, Latin America and other emerging markets. (4) Includes sales to industrial customers who use our raw materials in their finished goods production, including prepared meals, pharmaceutical production and pet food. (5) Includes sales of grain, oilseeds, feed, breeding stock and market hogs, among others, in addition to external sales from our Mexico and Bioscience operations. (6) Includes external sales from our Mexico operations of $ 169 million and $ 99 million for the three months ended March 29, 2026 and March 30, 2025, respectively. All other external sales are sourced from our U.S. operations. (7) Includes our Mexico and Bioscience operations. NOTE 3: PENDING ACQUISITION Nathan’s Famous On January 20, 2026, we entered into an agreement to acquire all of the issued and outstanding shares of Nathan’s Famous Inc. (“Nathan’s”) for $ 102.00 per share in cash. The acquisition is expected to be funded using cash on hand. Since March 2014, we have held an exclusive license to manufacture, distribute, market and sell “Nathan’s Famous” branded hot dogs, sausages, corned beef and certain other ancillary products through retail outlets in the U.S. and Canada and Sam’s Clubs in Mexico. The license is scheduled to expire in March 2032. Completion of the transaction remains contingent upon meeting several conditions specified in the merger agreement. These include securing approval from the holders of a majority of Nathan’s outstanding common stock, obtaining clearance from the Committee on Foreign Investment in the United States (“CFIUS”), and fulfilling other standard closing requirements. However, given the impact of the partial government shutdown on statutory deadlines for CFIUS’s review process, our anticipated closing timeline has shifted, and we now expect the transaction to close in the second half of 2026. NOTE 4: OPERATING GAINS AND NON-OPERATING LOSSES The following table provides details of operating (gains) and non-operating (gains) losses. Three Months Ended March 29, 2026 March 30, 2025 (in millions) Operating gains: Gain on disposal of assets $ ( 1 ) $ ( 2 ) Insurance recoveries (1) — ( 6 ) Other operating gains — ( 1 ) Operating gains $ ( 1 ) $ ( 9 ) Non-operating losses: Loss on assets held in rabbi trusts (2) $ 3 $ 2 Net pension and postretirement benefits cost (3) — 4 Other non-operating gains ( 2 ) — Non-operating losses $ 1 $ 6 ________________ (1) Consists of a gain recognized in connection with a settlement of an insurance claim associated with property damage. See “Note 15: Regulation and Contingencies” for further discussion. (2) Assets held in rabbi trusts are used to fund nonqualified defined benefit pension and deferred compensation plans. (3) 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. 13 NOTE 5: RESTRUCTURING AND OPTIMIZATION Springfield, Massachusetts Facility On February 6, 2026, we announced our decision to exit our leased Springfield, Massachusetts dry sausage production facility by the end of August 2026 and consolidate production across our network, including at our recently acquired Nashville, Tennessee facility. The decision to close the Springfield facility is part of the Company’s ongoing efforts to optimize its manufacturing footprint and improve operational and cost efficiencies. In the first quarter of 2026, we recognized $ 2 million in accelerated depreciation and employee termination benefits in cost of sales in the condensed consolidated statement of income. We expect to recognize additional charges associated with the exit of the facility totaling approximately $ 8 million over the second and third quarters of fiscal year 2026. Administrative Process Optimization In the fourth quarter of 2025, we commenced an initiative to modernize and optimize certain of our administrative and transactional processes. As part of this initiative, we will employ new and advanced technologies, including artificial intelligence and robotic process automation, that will allow us to drive significant improvements in operational efficiency and productivity. As a result of this initiative, we recognized $ 1 million in restructuring costs in selling, general and administrative expenses (“SG&A”) in the condensed consolidated statement of income in the first quarter of fiscal year 2026 and anticipate additional one-time restructuring costs totaling approximately $ 10 million for the remainder of fiscal year 2026. 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. NOTE 6: ACCOUNTS RECEIVABLE Accounts receivable, net is comprised of both receivables from contracts with customers and other receivables. Our receivables from contracts with customers totaled $ 1,021 million and $ 963 million as of March 29, 2026 and December 28, 2025, respectively. We monitor the credit risk associated with our accounts receivable and establish an allowance for credit losses expected to be incurred over the life of the receivable, which is recorded net of this allowance. We calculate this allowance based on our history of write-offs, future economic conditions, level of past due accounts, the financial health of our customers and historical experience. Our allowance for credit losses was not material for the periods presented. 14 NOTE 7: INVENTORIES Inventories, net consist of the following: March 29, 2026 December 28, 2025 (in millions) Fresh and packaged meats $ 1,203 $ 1,114 Livestock 702 715 Grains 178 241 Maintenance parts 130 125 Manufacturing supplies 123 118 Other 11 15 Inventories, net $ 2,348 $ 2,328 NOTE 8: DERIVATIVE FINANCIAL INSTRUMENTS Our pork production operations use various raw materials, primarily live hogs, corn, soybean meal and wheat, which are actively traded on commodity exchanges. We also use fuel and other energy commodities in our operations. We hedge these commodities when we determine conditions are appropriate to mitigate price risk. 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 attempt to closely match the commodity contract terms with the hedged item. We also periodically enter into interest rate swaps to hedge exposure to changes in interest rates on certain financial instruments and foreign exchange forward contracts to hedge certain exposures to fluctuating foreign currency rates. We record all derivatives as either assets or liabilities at fair value on the balance sheet, with the exception of contracts that qualify for the normal purchase and normal sale scope exception, which are expected to result in physical delivery. Accounting for changes in the fair value of a derivative depends on whether it qualifies and has been designated as part of a hedging relationship. For derivatives that qualify and have been designated as hedging instruments for accounting purposes, changes in fair value have no net impact on earnings, to the extent the derivative is considered perfectly effective in achieving offsetting changes in fair value attributable to the risk being hedged, until the hedged item is recognized in earnings (commonly referred to as the “hedge accounting” method). For derivatives that do not qualify or are not designated as hedging instruments for accounting purposes, changes in fair value are recorded in current period earnings (commonly referred to as the “mark-to-market” method). We may elect either method of accounting for our derivative portfolio, assuming all the necessary requirements are met. We have, in the past, availed ourselves of either acceptable method and expect to do so in the future. We believe all of our derivative instruments represent economic hedges against changes in prices and rates, regardless of their designation for accounting purposes. When cash flow hedge accounting is applied, derivative gains or losses are recognized as a component of other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transactions affect earnings. The initial fair value of hedge components excluded from the assessment of effectiveness is recognized in earnings on a straight-line basis over the life of the hedging instrument and is presented in the same income statement line item as the hedged item. Any difference between the change in fair value of the hedge components excluded from the assessment of effectiveness and the amounts recognized in earnings is recorded as a component of other comprehensive income (loss). When fair value hedge accounting is applied, derivative gains and losses are recognized in earnings concurrently with the change in fair value of the hedged item attributable to the risk being hedged. A portion of our derivatives are exchange traded futures contracts held with brokers, subject to netting arrangements that are enforceable during the ordinary course of business. Additionally, we have a portfolio of over-the-counter derivatives that are held by counterparties under netting arrangements found in typical master netting agreements. 15 These agreements legally allow for net settlement in the event of bankruptcy. We offset the fair values of derivative assets and liabilities, along with the related cash collateral, that are executed with the same counterparty under these arrangements in the condensed consolidated balance sheets. Changes in commodity prices could have a significant impact on cash deposit requirements under our broker and counterparty agreements. Additionally, certain of our derivative contracts contain credit risk-related contingent features, which would require us to post additional cash collateral to cover net losses on open derivative instruments if our credit rating were sufficiently downgraded. As of March 29, 2026, the net liability position of our open derivative instruments subject to credit risk-related contingent features was not material. The size and mix of our derivative portfolio vary from time to time based upon our analysis of current and future market conditions. The following table presents the fair values of our open derivative financial instruments on a gross basis. Assets Liabilities March 29, 2026 December 28, 2025 March 29, 2026 December 28, 2025 (in millions) Derivatives using the “hedge accounting” method: Commodity contracts $ 22 $ 26 $ 17 $ 2 Derivatives using the “mark-to-market” method: Commodity contracts 2 2 7 1 Foreign exchange contracts 1 — — — Total fair value of derivative instruments $ 24 $ 28 $ 24 $ 3 The following tables reconcile the gross amounts of derivative assets and liabilities to the net amounts presented in our condensed consolidated balance sheets and the related effects of cash collateral under netting arrangements that provide a legal right of offset of assets and liabilities. March 29, 2026 Gross Amount of Derivative Assets/ Liabilities Netting of Derivative Assets/ Liabilities Net Derivative Assets/Liabilities Netting of Derivative and Cash Collateral Net Amount Presented in the Condensed Consolidated Balance Sheet (1) (in millions) Assets: Commodity contracts $ 24 $ ( 21 ) $ 3 $ 18 $ 21 Foreign exchange contracts 1 — 1 — 1 Total $ 24 $ ( 21 ) $ 3 $ 18 $ 22 Liabilities: Commodity contracts $ 24 $ ( 21 ) $ 3 $ — $ 3 ________________ (1) Net derivative assets are recorded in prepaid expenses and other current assets. Net derivative liabilities are recorded in accrued expenses and other current liabilities. These balances include $ 19 million of cash collateral paid to and held by our brokers, $ 18 million of which represents initial margin. 16 December 28, 2025 Gross Amount of Derivative Assets/ Liabilities Netting of Derivative Assets/ Liabilities Net Derivative Assets/Liabilities Netting of Derivative and Cash Collateral Net Amount Presented in the Condensed Consolidated Balance Sheet (1) (in millions) Assets: Commodity contracts $ 28 $ ( 3 ) $ 25 $ 3 $ 28 Liabilities: Commodity contracts $ 3 $ ( 3 ) $ — $ — $ — ________________ (1) Net derivative assets are recorded in prepaid expenses and other current assets and include $ 7 million of cash collateral paid to and held by our brokers, which represents the initial margin, and $ 4 million of cash collateral paid to and held by us. Net derivative liabilities are recorded in accrued expenses and other current liabilities. Hedge Accounting Method Cash Flow Hedges We enter into derivative instruments, such as futures, swaps and options contracts, to manage our exposure to the variability in expected future cash flows attributable to commodity price risk associated with the forecasted sale of fresh pork and the forecasted purchase of grains, hogs, and energy. In addition, we enter into interest rate swaps to manage our exposure to changes in interest rates associated with our variable interest rate debt and the forecasted issuance of fixed rate debt. Lastly, we enter into foreign exchange contracts to manage our exposure to the variability in expected future cash flows attributable to changes in foreign exchange rates associated with the forecasted purchase or sale of assets denominated in foreign currencies. As of March 29, 2026, substantially all of our commodity-related cash flow hedges were for transactions forecasted through August 2026. As of March 29, 2026, the notional volumes associated with open derivative instruments designated in cash flow hedging relationships were as follows: Volume Metric Lean hogs 829,406,000 Pounds Corn 25,375,000 Bushels Soybean meal 198,000 Tons Natural Gas 800,000 Million BTU Diesel 756,000 Gallons The following table presents the effects on our condensed consolidated financial statements of pre-tax gains and losses on derivative instruments designated in cash flow hedging relationships for the periods indicated: Gains (Losses) Recognized in Other Comprehensive Income (Loss) on Derivative Gains (Losses) Reclassified from Accumulated Other Comprehensive Loss into Earnings Three Months Ended Three Months Ended March 29, 2026 March 30, 2025 March 29, 2026 March 30, 2025 (in millions) Commodity contracts $ ( 9 ) $ 45 $ 4 $ ( 10 ) Deferred losses on closed derivative contracts included in accumulated other comprehensive loss as of March 29, 2026 and March 30, 2025 were not material. We are unable to estimate the amount of deferred gains or losses 17 related to open derivative contracts to be reclassified into earnings within the next twelve months as their values are subject to change. Fair Value Hedges We enter into derivative instruments (primarily futures contracts) that are designed to hedge changes in the fair value of firm commitments to buy grains and hogs. As of March 29, 2026, the notional volumes associated with open derivative instruments designated in fair value hedging relationships were as follows: Volume Metric Lean hogs 107,000,000 Pounds Corn 8,135,000 Bushels Soybeans 1,040,000 Bushels The carrying values of hedged firm commitments designated in fair value hedge relationships as of March 29, 2026 and December 28, 2025 were not material. When the underlying inventories are acquired, the hedge relationship is discontinued and the fair value hedge adjustment is reclassified to inventories. The amount of fair value hedge gains remaining in inventories for which hedge accounting has been discontinued were not material as of March 29, 2026 and December 28, 2025. Mark-to-Market Method As of March 29, 2026, the notional volumes associated with open derivative instruments using the “mark-to-market” method were as follows: Volume Metric Commodity contracts: Lean hogs 32,310,000 Pounds Corn 11,505,000 Bushels Soybean meal 221,000 Tons Soybeans 2,700,000 Bushels Natural gas 94,000 Million BTU Diesel 84,000 Gallons Foreign currency contracts 30,875,778 U.S. Dollars 18 Derivative Impact on the Condensed Consolidated Statements of Income The following table presents the effect of derivatives on the condensed consolidated statements of income for the periods indicated. Three Months Ended March 29, 2026 March 30, 2025 (in millions) Sales: Cash flow hedging — commodity contracts $ ( 2 ) $ ( 9 ) Mark-to-market — commodity contracts ( 4 ) 7 Total derivative loss recognized in sales ( 5 ) ( 2 ) Cost of sales: Cash flow hedging — commodity contracts 6 ( 2 ) Fair value hedging — commodity contracts: Change in fair value of derivatives ( 6 ) 2 Change in fair value of related hedged items 6 ( 1 ) Gain (loss) on closed derivatives (1) ( 1 ) 1 Mark-to-market — commodity contracts ( 4 ) 4 Total derivative gain recognized in cost of sales — 4 Total derivative gain (loss) $ ( 5 ) $ 2 ________________ (1) Represents the amount of fair value hedge adjustment applied to the carrying amount of hedged assets that is recognized in cost of sales as the underlying hedged assets are relieved from inventories and charged to cost of sales. NOTE 9: EQUITY METHOD INVESTMENTS In the fourth quarter of fiscal year 2024, we contributed $ 3 million in cash in exchange for a 25 % minority interest in a North Carolina-based hog production company, Murphy Family Farms LLC (“Murphy Family Farms”). In the first quarter of 2025 we contributed $ 450,000 in cash in exchange for a 9 % minority interest in another North Carolina-based hog production company, VisionAg Hog Production, LLC (“VisionAg”). As part of the formation of these entities we collectively sold approximately 178,000 sows and related inventories located on Company-owned and contract farms in North Carolina to Murphy Family Farms and VisionAg. We subsequently sold the commercial hog inventories associated with such sows to Murphy Family Farms and VisionAg. Murphy Family Farms and VisionAg are now hog suppliers to us and supply approximately 3.9 million hogs annually. We supply animal feed and other supplies and provide certain support services to Murphy Family Farms and VisionAg. We account for Murphy Family Farms and VisionAg under the equity method of accounting as we have the ability to exercise significant influence over operating and financial policies through our ownership interest and representation on the boards of directors, respectively. 19 NOTE 10: PENSION AND OTHER RETIREMENT PLANS The following table presents the components of the net periodic pension cost for the periods indicated. Three Months Ended March 29, 2026 March 30, 2025 (in millions) Interest cost $ 25 $ 25 Amortization 5 5 Service cost 3 3 Expected return on plan assets ( 29 ) ( 26 ) Net periodic pension cost $ 3 $ 7 The components of net periodic pension cost other than service cost, which is included in operating profit, are included in non-operating losses in the condensed consolidated statements of income. NOTE 11: REDEEMABLE NONCONTROLLING INTERESTS Certain noncontrolling interest holders have the right to exercise a put option that would obligate us to redeem a portion or all of their interest. These noncontrolling interests are classified as redeemable noncontrolling interests outside of equity on our condensed consolidated balance sheets. At the end of each period we adjust the value of redeemable noncontrolling interests, if necessary, to the redemption value (as defined in the subsidiary’s operating agreement) through additional paid-in capital. The following table presents the changes in redeemable noncontrolling interests for the periods presented. Three Months Ended March 29, 2026 March 30, 2025 (in millions) Beginning balance $ 264 $ 225 Adjustment to redemption value (1) 46 15 Attribution of net income 4 4 Attribution of other comprehensive loss, net of tax ( 3 ) ( 1 ) Ending balance $ 311 $ 243 _______________ (1) See “Note 14: Fair Value Measurements” for further discussion. NOTE 12: EQUITY Initial Public Offering On January 29, 2025, we completed our initial public offering (“IPO”) of 26,086,958 shares of common stock, representing 7 % of the total outstanding shares at the time, at a price of $ 20.00 per share. We issued 13,043,479 shares of common stock. 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. We received net proceeds from the IPO of $ 236 million after deducting underwriting discounts, commissions and fees. Stock-Based Compensation In connection with our IPO, we adopted the Smithfield Foods, Inc. Omnibus Incentive Plan, under which we may grant equity-based incentives to eligible employees, non-employees and consultants. As of March 29, 2026, there were 6,114,892 shares available for grant under this plan. 20 In the first quarter of 2025, we granted to certain of our directors and employees and certain directors and employees of WH Group options to purchase 9,822,467 shares of common stock at $ 20.00 per share and 1,527,000 restricted stock units (“RSUs”). The stock options and substantially all RSUs vest over a five-year period, with 20 % vesting each year. In the first quarter of 2026, we granted options to certain of our employees to purchase 2,128,291 shares of our common stock at $ 24.25 per share and 799,212 RSUs. The stock options and RSUs vest over a three-year period, with one third vesting immediately on the grant date and one third vesting on each of the first and second anniversaries of the grant date. We recognized stock-based compensation expense totaling $ 3 million and $ 2 million in the first quarters of 2026 and 2025, respectively. Unrecognized compensation expense totaled $ 60 million as of March 29, 2026, which is expected to be recognized on a straight-line basis over the weighted average remaining vesting period of 3.1 years. No compensation expense was recognized for stock options and RSUs granted to directors and employees of WH Group. Such awards are accounted for as dividends upon settlement of the shares based on the grant-date fair value. Accumulated Other Comprehensive Loss The following tables present the beginning and ending balances of accumulated other comprehensive income (loss) by component. Three Months Ended March 29, 2026 Foreign Currency Translation Pension Accounting Hedge Accounting Accumulated Other Comprehensive Loss (in millions) Balance, December 28, 2025 $ 42 $ ( 369 ) $ 13 $ ( 314 ) Other comprehensive income (loss), net of tax ( 5 ) 4 ( 10 ) ( 11 ) Balance, March 29, 2026 $ 37 $ ( 365 ) $ 3 $ ( 325 ) Three Months Ended March 30, 2025 Foreign Currency Translation Pension Accounting Hedge Accounting Accumulated Other Comprehensive Loss (in millions) Balance, December 29, 2024 $ ( 8 ) $ ( 418 ) $ ( 26 ) $ ( 452 ) Other comprehensive income (loss), net of tax ( 1 ) 3 41 43 Balance, March 30, 2025 $ ( 9 ) $ ( 414 ) $ 15 $ ( 408 ) 21 Other Comprehensive Income (Loss) The following table presents the details of other comprehensive income (loss). Three Months Ended March 29, 2026 March 30, 2025 Before Tax Tax After Tax Before Tax Tax After Tax (in millions) Foreign currency translation: Translation losses (1) $ ( 8 ) $ — $ ( 8 ) $ ( 1 ) $ — $ ( 1 ) Retirement benefits: Amortization of actuarial losses and prior service credits reclassified to non-operating losses 5 ( 1 ) 4 4 ( 1 ) 3 Derivatives: Gains (losses) arising during the period ( 9 ) 2 ( 7 ) 45 ( 11 ) 33 Losses reclassified to sales 2 — 1 9 ( 2 ) 6 (Gains) losses reclassified to cost of sales ( 6 ) 2 ( 4 ) 2 — 1 Total other comprehensive income (loss) $ ( 16 ) $ 2 $ ( 14 ) $ 58 $ ( 15 ) $ 43 Other comprehensive loss attributable to noncontrolling interest ( 3 ) — ( 3 ) — — — Other comprehensive income (loss) attributable to Smithfield $ ( 14 ) $ 2 $ ( 11 ) $ 59 $ ( 15 ) $ 43 ________________ (1) We consider the earnings in our non-U.S. subsidiaries to be indefinitely reinvested, and accordingly, record no deferred income taxes on such amounts. The three months ended March 29, 2026 included $ 3 million of translation losses attributable to noncontrolling interests, which are included in redeemable noncontrolling interests on the condensed consolidated balance sheet. NOTE 13: EARNINGS PER SHARE The computation of basic earnings per share (“EPS”) is based on the weighted-average shares of common stock outstanding during the period. Diluted EPS adjusts basic EPS for the dilutive effect of stock options and RSUs. The incremental shares from stock options and RSUs are computed using the treasury stock method. There were no adjustments to the numerator in the computations of earnings per share for the periods presented. The following table provides the weighted-average shares used in the denominator for those computations. Three Months Ended March 29, 2026 March 30, 2025 Basic weighted-average shares outstanding 393,285,796 388,812,663 Add: Dilutive effect of stock options and RSUs 1,385,125 251,549 Diluted weighted-average shares outstanding (1) 394,670,922 389,064,212 __________________ (1) We excluded 467,756 and 5,275,901 stock options from the computation of diluted weighted-average shares outstanding for the three months ended March 29, 2026 and March 30, 2025 , respectively, because their effect would have been anti-dilutive. 22 NOTE 14: FAIR VALUE MEASUREMENTS Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We are required to consider and reflect the assumptions of market participants in fair value calculations. These factors include nonperformance risk (the risk that an obligation will not be fulfilled) and credit risk, both of the reporting entity (for liabilities) and of the counterparty (for assets). We use, as appropriate, a market approach (generally, data from market transactions), an income approach (generally, present value techniques), and/or a cost approach (generally, replacement cost) to measure the fair value of an asset or liability. These valuation approaches incorporate inputs, such as observable, independent market data, that we believe are predicated on the assumptions market participants would use to price an asset or liability. These inputs may incorporate, as applicable, certain risks such as nonperformance risk, which includes credit risk. The FASB has established a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. The fair value hierarchy gives the highest priority to quoted market prices (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of inputs used to measure fair value are as follows: • Level 1 —Quoted prices in active markets for identical assets or liabilities accessible by the reporting entity. • Level 2 —Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. • Level 3 —Unobservable for an asset or liability. Unobservable inputs should only be used to the extent observable inputs are not available. We have classified assets and liabilities measured at fair value based on the lowest level of input that is significant to the fair value measurement. For the periods presented, we had no transfers of assets or liabilities between levels within the fair value hierarchy. The timing of any such transfers would be determined at the end of each reporting period. 23 Assets and Liabilities Measured at Fair Value on a Recurring Basis The following tables set forth, by level within the fair value hierarchy, our financial assets and liabilities that were measured at fair value on a recurring basis. March 29, 2026 December 28, 2025 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total (in millions) Assets: Derivatives: Commodity derivative contracts $ 20 $ 3 $ 1 $ 24 $ 26 $ 2 $ — $ 28 Foreign exchange contracts — 1 — 1 — — Exchange traded funds (1) 134 — — 134 135 — — 135 Mutual funds (1) (2) 73 — — 78 71 — — 78 TPG Rise Climate, L.P. investment fund (2) (3) — — — 20 — — — 22 Total $ 226 $ 3 $ 1 $ 257 $ 232 $ 2 $ — $ 263 Liabilities: Commodity derivative contracts $ 19 $ 5 $ — $ 24 $ 3 $ — $ — $ 3 __________________ (1) Exchange traded funds and mutual funds are held in rabbi trusts to fund nonqualified defined benefit pension and deferred compensation plans. These assets are restricted to satisfy our liabilities for these plans and are subject to the claims of our general creditors in the event of insolvency. These trusts are VIEs and are included in our condensed consolidated financial statements. These assets are classified in other assets on the condensed consolidated balance sheets except for the amount of participant distributions scheduled to occur within twelve months of the balance sheet dates, which are classified in prepaid expenses and other current assets. (2) Funds that are not publicly traded are estimated at fair value using the net asset value (“NAV”) per share of the investment as a practical expedient and are not categorized in the fair value hierarchy. Therefore, the sum of the values categorized in the fair value hierarchy above do not agree to the total. (3) The TPG Rise Climate, L.P. investment fund (“TPG fund”) is classified in other assets on the condensed consolidated balance sheets. Our unfunded commitment to the TPG fund was $ 7 million and $ 5 million as of March 29, 2026 and December 28, 2025, respectively. The TPG fund returns capital through periodic distributions, which are made at the discretion of the fund. The TPG fund has a termination date of December 31, 2034 with no redemption rights prior to termination, and any remaining capital is returned at the end of the term through asset sales or final distributions. The following are descriptions of the valuation methodologies and key inputs used to measure financial assets and liabilities recorded at fair value on a recurring basis: • Derivatives— Derivatives classified within Level 1 are valued using quoted market prices. In some cases where quoted market prices are not available, we value the derivatives using market-based pricing models that utilize the net present value of estimated future cash flows to calculate fair value, in which case the measurements are classified within Level 2. These valuation models make use of market-based observable inputs, including exchange traded prices and rates, yield curves, credit curves and measures of volatility. Level 3 derivatives are valued based on diesel fuel prices and use both observable and unobservable inputs. There is a lack of price transparency with respect to forward prices for diesel fuel. Such unobservable inputs are significant to the diesel fuel derivative contract valuation methodology. • Exchange-traded funds (“ETFs”)— ETFs consist of publicly traded investment funds that are valued using quoted market prices on active exchanges and are categorized in Level 1 within the fair value hierarchy. • Mutual funds— Mutual funds consist of publicly traded funds and other institutional funds that are not publicly traded. Publicly traded mutual funds are measured at fair value using quoted market prices and are 24 categorized in Level 1 within the fair value hierarchy. Institutional funds that are not publicly traded and estimated using the NAV per share of the investment as a practical expedient. • TPG fund —The TPG fund is not publicly traded and does not have a readily determinable fair value. Fair value is estimated using the NAV of the investment as a practical expedient. The NAV is based on the fair value of the underlying assets owned by the fund, minus its liabilities, then multiplied by the percentage ownership of the fund. Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis Certain assets and liabilities are measured at fair value on a nonrecurring basis after initial recognition; that is, the assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances, for example, when there is evidence of impairment. For the three months ended March 29, 2026 and March 30, 2025, we had no significant assets or liabilities that were measured and recorded at fair value on a nonrecurring basis after initial recognition. Redeemable Noncontrolling Interest The redemption value for the noncontrolling interest in Granjas Carroll de Mexico, S. de R.L. de C.V., (commonly known as “Altosano”) is fair value. We estimate the redemption value of Altosano using an income and a market approach. Under the income approach, fair value is estimated by discounting projected cash flows. Under the market approach, the fair value is estimated by reference to guideline companies that are reasonably comparable based on the valuation multiples of earnings before interest, taxes, depreciation and amortization (“EBITDA”). The significant unobservable inputs used in the determination of the fair value have an inherent measurement uncertainty that if changed could result in higher or lower fair value measurements as of the reporting date. T he following table provides the significant unobservable level 3 inputs used in the valuation. Unobservable Inputs March 29, 2026 December 28, 2025 Weighted-average cost of capital 10 % 10 % Growth rate 3 % 3 % EBITDA multiple 9.25 x 8.75 x Control premium 25 % 25 % Other Financial Instruments We determine the fair value of fixed-rate debt using Level 2 inputs based on quoted market prices. The carrying amount of all other debt approximates fair value as those instruments are based on variable interest rates. The following table presents the fair value and carrying value of total debt. March 29, 2026 December 28, 2025 Fair Value Carrying Value Fair Value Carrying Value (in millions) Total debt $ 1,889 $ 1,987 $ 1,909 $ 1,986 The carrying amounts of cash and cash equivalents, accounts receivable, notes payable and accounts payable approximate their fair values because of the relatively short-term maturity of these instruments. Concentrations of Credit Risk Our financial instruments exposed to concentrations of credit risk consist primarily of cash and cash equivalents, accounts and notes receivable and derivatives. We may be exposed to losses in the event of nonperformance by our banks, customers, brokers or other counterparties. 25 We have significant concentrations of credit risk associated with our cash and cash equivalents. However, our cash and cash equivalents are held by numerous major financial institutions that maintain certain minimum investment grade credit ratings. Concentrations of credit risk with respect to accounts and notes receivable are limited due to our large number of customers. We perform periodic credit evaluations of our customers’ financial condition and generally do not require collateral. As of March 29, 2026, we had accounts and notes receivable from Murphy Family Farms and VisionAg totaling $ 232 million and $ 45 million, respectively. A portion of these balances are secured by the breeding stock and inventories owned by Murphy Family Farms and VisionAg. We have agreements to purchase approximately 3.2 million and 650,000 market hogs annually from Murphy Family Farms and VisionAg, respectively, which further mitigates our exposure to potential credit risk. Additionally, as of March 29, 2026, 12.8 % of our accounts receivable balance was due from Walmart Inc., including its subsidiary Sam’s West, Inc. No other single customer or customer group represented 10% or greater of our accounts receivable. Our derivative counterparties primarily consist of financial institutions that are investment grade. A portion of our financial instruments are exchange traded derivative contracts held with brokers and counterparties with whom we maintain margin accounts that are settled on a daily basis, thereby limiting our credit exposure to non-exchange traded derivatives. Determination of the credit quality of our counterparties is based upon a number of factors, including credit ratings and our evaluation of their financial condition. As of March 29, 2026, our gross credit exposure on non-exchange traded derivative contracts was not material. NOTE 15: REGULATION AND CONTINGENCIES 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, 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. 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. As of March 29, 2026 and December 28, 2025, we had contingent liabilities totaling $ 149 million in accrued expenses and other current liabilities on the condensed consolidated balance sheets related to litigation matters, including those described below. We did not record any significant charges for litigation matters in the three months ended March 29, 2026 and March 30, 2025. 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. Antitrust Price-Fixing Litigation The Company has been named as one of 16 defendants in a series of class actions filed in 2018 in the U.S. District Court for the District of Minnesota alleging antitrust violations in the pork industry. The class cases were filed by three different groups of plaintiffs. In all of these cases, the plaintiffs alleged that starting in 2009 and continuing through at least June of 2018, the defendant pork producers agreed to reduce the supply of hogs in the U.S. in order to raise the price of hogs and all pork products. The plaintiffs in all of these cases also challenged the defendant pork producers’ use of benchmarking reports from defendant Agri Stats, Inc., alleging that the reports allowed the pork producers to share proprietary information and monitor each producer’s compliance with the supposed agreement to reduce supply. We made payments of $ 75 million, $ 42 million and $ 77 million in fiscal years 2023, 2022 and 2021, respectively, to settle all class claims. 26 In addition to the class actions, the Company has been named as a defendant in similar antitrust lawsuits and related claims brought by a number of individual parties who opted out of the classes. The plaintiffs in the non-class cases assert the same or similar antitrust claims as the plaintiffs in the class actions. The Company has entered into negotiations with many of these claimants and has settled certain of these cases. Currently, 14 of these cases are pending against the Company. The Attorneys General for the states of New Mexico and Alaska and the Commonwealth of Puerto Rico have filed similar complaints on behalf of their respective states, territories, agencies and citizens. The Company has settled all of these cases. In July 2025, the Company received a civil investigative demand from the Attorney General for the state of Washington seeking information related to this antitrust litigation. The Company intends to vigorously defend against the remaining claims. Antitrust Wage-Fixing Litigation On November 11, 2022, Smithfield Foods, Inc. and our wholly-owned subsidiary, Smithfield Packaged Meats Corp., were named as two of the numerous defendants in a purported class action complaint filed in the U.S. District Court for the District of Colorado alleging wage-fixing violations in the red meat industry. The plaintiffs allege that the defendants, most of whom operate beef or pork processing plants, conspired to suppress wages paid to plant workers in the U.S. in violation of the antitrust laws. The plaintiffs sought damages on behalf of all employees of defendants and their subsidiaries from January 1, 2014, to the present. The plaintiffs also sought treble damages and attorneys’ fees. The defendants filed motions to dismiss the complaint, which were largely denied by the court on September 27, 2023. The plaintiffs subsequently amended their complaint adding additional defendants, including our wholly-owned subsidiary, Murphy-Brown of Missouri, LLC (which has been dismissed voluntarily), and expanding the class period back to 2000. On April 5, 2024, the non-settled defendants moved to dismiss the amended complaint. On March 26, 2025, the court granted in part defendants’ motion to dismiss the amended complaint and held that certain of plaintiffs’ new allegations are barred by the statute of limitations. We filed our answers to the amended complaint on May 9, 2025. The parties have commenced discovery and all defendants other than the Smithfield defendants have now settled. We intend to vigorously defend against these claims. Insurance Claims We maintain comprehensive general liability and property insurance, including business interruption insurance, with loss limits that we believe provide substantial and broad coverage for potential losses. In the first quarter of 2025, we settled an insurance claim and received proceeds of $ 6 million in connection with a fire that occurred at our Tar Heel, North Carolina rendering facility in 2021. We classified $ 4 million of the proceeds in investing activities in the condensed consolidated statement of cash flows with the remainder in operating activities. The $ 6 million gain was recognized in operating gains in the condensed consolidated statement of income in the first quarter of 2025. 27