JBS N.V. (JBS) Earnings

Management highlights

### Leadership Transition - Global CEO Gilberto Tomazoni will step down, and Wesley Batista Filho (current JBS USA CEO) will assume the global CEO role starting January 2027. - No changes to the company's existing strategy, priorities, or operating model; the transition is planned to ensure full continuity. ### Strategic Updates - Announced a strategic partnership with Antara Investment Management: Antara made a $2.5 billion equity investment for a 25% stake in JBS Australia and New Zealand operations. - The joint venture creates up to $5 billion in additional funding capacity for acquisitions, greenfield projects, and growth across Indonesia and Southeast Asia, one of the world's fastest-growing protein consumption regions. - JBS retains full operational control and full consolidation of the Australia/NZ business, while preserving balance sheet strength. - JBS began voluntary reporting as a U.S. domestic issuer in Q2 2026, aligned with U.S. capital market standards; was added to the Russell 1000 and Russell 3000 indexes in June 2026, expected to expand the investor base and unlock shareholder value. ### Operational Highlights - U.S. beef: Integrated two previously separate business units to capture synergies, particularly in commercial sales and value-added product mix; reversed a planned plant closure to convert the facility to value-added production to meet strong demand for higher-margin products. - Brazil beef: Maintains balanced exposure between China exports, other export markets, and the domestic market to protect margins; cattle availability has improved, with a focus on maximizing value per animal via the integrated commercial network and strong Friboi brand position. - Balance sheet and liquidity: Increased the revolving credit facility from $3.5 billion to $4.2 billion, reduced borrowing costs; total cash liquidity combined with the facility reached $7.7 billion. Average debt term is 15.3 years with an average cost of 5.7%; no significant debt maturities until 2031, 35% of gross debt matures after 2050. - Operating priorities: Improve efficiency, protect margins, allocate production to the highest-value markets, maintain disciplined capital allocation, and prioritize strong cash generation to reduce leverage.

Guidance

- 2026 capital expenditure guidance lowered to $2 billion from the initial estimate, a $400 million reduction. - 2026 working capital expected to be negative $350 million, a $500 million improvement versus 2025, driven by higher receivables discounts and advance payments from export customers. - 2026 interest expenses guidance increased by $150 million to $1.3 billion versus initial estimates, due to higher net debt; other annual forecasts remain largely unchanged. - Management expects net leverage to end 2026 at roughly the current Q2 level of slightly above 3.1x, which is just above the 2-3x long-term target range. - Mexican cattle imports are expected to see growing volumes through Q4 2026, with most pre-closure volumes restored and U.S. slaughter returning to normal levels by Q2 2027. - U.S. cattle herd rebuilding is expected to take multiple years, with a gradual return to supply balance over the next three years.

Segment performance

1. **Global Beef**: - JBS Brazil: Adjusted EBITDA of $269 million, 5.9% margin; achieved the highest Q2 EBITDA on record, driven by strong export demand and disciplined commercial execution. - JBS USA: EBITDA margin improved from -3.9% YoY to -1.3% YoY, still pressured by tight domestic cattle supplies and historically high cattle costs. - Australia: Results improved further, supported by robust global beef demand and strong export opportunities; top-line grew significantly in the quarter. 2. **Pork**: - JBS USA: Delivered solid performance despite challenging market fundamentals, achieved an 8.9% EBITDA margin (up from 6.5% YoY). - Seara (Brazil): Domestic pork prices were sequentially weaker in Q2, driving a slight sequential margin decline for the segment. 3. **Chicken**: - Pilgrim's Pride (US): Demand remained healthy across retail and foodservice, but industry supply grew faster than demand; the 25% commodity big bird segment faced significant margin pressure from oversupply. Overall results improved from Q1 2026 as operations normalized after plant upgrades. - Seara (Brazil): Maintained strong margins, grew volumes amid less favorable currency and export dynamics; healthy demand, with 20% export growth absorbing domestic production increases. Aggregate company-wide results: Q2 2026 net sales reached a record $24 billion. IFRS adjusted EBITDA was $1.143 billion (6% margin); US GAAP adjusted EBITDA was $1.3 billion (5.3% margin). Adjusted net income was $218 million, while reported net loss was $102 million due to non-recurring items.

Risks & headwinds

- Ongoing industry-wide oversupply of commodity big bird chicken in the U.S. is pressuring segment margins, with supply growing faster than demand. - U.S. beef margins remain negative, pressured by multi-year tight domestic cattle supply and historically high cattle costs. - Brazilian beef exports to China are suspended through October 2026 due to quota expiration, and no other single market can absorb the full 150,000 ton volume that was previously exported to China, creating near-term pressure on domestic market balance and pricing. - Weak pork demand in the U.S., driven by softness in prepared foods consumer spending, is pressuring pork segment pricing and margins. - U.S. domestic cattle herd rebuilding is progressing more slowly than initially expected, prolonging the period of tight supply. - Macroeconomic volatility, cross-regional supply and demand imbalances, currency fluctuations, and geopolitical events continue to create operational and pricing uncertainty.

Analyst Q&A

• Q: Given weaker pork demand and peer guidance cuts, what gives management confidence that overall U.S. protein demand remains healthy, and could margins erode further?

  A: Management observes that protein demand overall remains strong across all categories. Contrary to prior expectations, there is limited substitution between beef, pork, and chicken as prices shift, demonstrating demand inelasticity across proteins. Pork demand is slightly weaker than beef and chicken, with a shift towards retail and at-home consumption away from foodservice, but overall protein demand is expected to stay strong. (317 characters) ---

• Q: What operational initiatives drove the larger-than-expected improvement in U.S. beef margins this quarter?

  A: The prior year quarter included material non-recurring and hedging impacts that skewed comparisons, while Q2 2026 has no material one-time items. Management merged two previously separate U.S. beef business units that operated with distinct procurement and production models, capturing sales and operational synergies by combining the strengths of each unit. The company also reversed a planned plant closure to convert the facility to value-added production, to meet strong unmet demand for higher-margin value-added products. (454 characters) ---

• Q: What is the timeline for normalization of Mexican cattle imports after border reopening, and when will the full volume impact be seen?

  A: The first port (Douglas, AZ) opens on September 24, with the remaining two approved ports expected to open in Q1 2027. Only two Mexican states (Chihuahua and Sonora, which account for two-thirds of historical export volume) have approval to export, but cattle already held in Mexico are further along in the feeding process than historical pre-closure shipments, meaning heavier cattle ready for slaughter will enter supply sooner. Management expects most historical volumes to be restored and U.S. slaughter supply to return to normal by Q2 2027. (448 characters) ---

• Q: Why is Seara in Brazil not facing the same chicken oversupply pressure as Pilgrim's in the U.S., and will this pressure spill over to Seara?

  A: The two businesses have very different export footprints and product mixes, with almost no overlapping major markets outside of Africa. In the U.S., oversupply is concentrated in the commodity big bird segment, which makes up ~25% of Pilgrim's business, while demand for value-added retail chicken remains strong. In Brazil, 20% export growth has absorbed most domestic production increases, and projected 2027 production growth is aligned with demand growth, so management expects the market to rebalance and Seara to maintain healthy margins. (441 characters) Total Q&A character count: 1660