PILGRIMS PRIDE CORP Q3 FY2024 earnings call

• Q3 2024 results showed benefit from strategic execution, diversified portfolio capturing commodity market upsides, key customer partnerships driving demand. - US: Big Bird improved due to production efficiencies, lower input costs; Case Ready grew with key customers; Small Bird saw growth in deli and QSRs; Prepared Foods grew via innovation. - Europe: Margins improved from manufacturing, network restructuring, and optimized structure; diversification efforts gained traction. - Mexico: Experienced Q3 seasonality and hurricane disruptions but grew with key customers. - Supply: US chicken production grew 2.7% y/y; industry layer flock declined, but hatchery utilization at record levels. - Feed: Input prices stable, but global grain market risks exist. - Consumer: Confidence improved, branded products grew faster than category averages; poultry and chilled meals outpaced retail growth. - Innovation: Launched over 280 new products, received industry awards. - Sustainability: Decreased Scope 1 and 2 emissions by 17% since 2019, used over 14% renewable electricity, certified 100% of facilities to GFSI standards.

For the third quarter of 2024, net revenues were $4.6 billion, a 5.2% increase over Q3 2023. Adjusted EBITDA was $660 million vs $324 million in Q3 2023. In the US: Big Bird benefited from production efficiencies, lower input costs; Case Ready grew with key customers; Small Bird saw growth in deli and QSRs; Prepared Foods grew via innovation. Europe: Adjusted EBITDA was $112 million vs $80.4 million in Q3 2023, with margins improved from manufacturing, network restructuring. Mexico: Experienced revenue decline due to seasonality and hurricanes, but grew with key customers in retail and foodservice. US net revenues grew ~12% y/y, Europe flat, Mexico down y/y. US adjusted EBITDA margin was 18% in Q3 2024 vs 7% in Q3 2023; Europe was 8.6% vs 6.1%; Mexico was 9.7% vs 12.4%.

• Estimated full-year CapEx spend to be ~$475 million. - Focus on growth opportunities with key customers, investing in protein conversion capacity, expanding US Prepared Foods capacity, and organic growth in Mexico. - Anticipated additional $14 million pension settlement charge in Q4, with cash outlay <$1 million. - Disciplined capital allocation approach, prudent cash management.

• Hurricane impacts on partner growers in US, with rebuild taking 9-12 months. - Hatchability challenges and mortality issues affecting production. - Geopolitical risks, including China trade restrictions. - Feed market risks from South American weather, China imports, and exchange rate changes.

Q: Discuss Europe's margin improvement and go-forward outlook?

A: Fabio Sandri said it's a combination of consumer confidence increase, cost pass-through to retailers, foodservice growth, and manufacturing network reorganization. Sees 8.5%-9% margins as sustainable.

Q: US price realization and Small Bird pricing?

A: Fabio Sandri noted Small Bird pricing benefited from deli growth (volumes up ~6% y/y) and key customer growth, with demand shifting from foodservice to retail deli.

Q: Hurricane Helene impact on US operations?

A: Fabio Sandri said facilities had minor damage, but partner growers were severely impacted; production rebalanced, with rebuild of grow-out base taking 9-12 months.

Q: Industry production trends and hatchability?

A: Fabio Sandri discussed challenges with new genetic breed, slow hatchability improvement, and seasonality impacts, with mortality still an issue.

Q: Mexico seasonality and outlook?

A: Fabio Sandri said Q3 is typically weaker for Mexico due to seasonality and production shifts, but economy is growing and demand expected to rebound; adjusted EBITDA margin 9.7% in Q3 2024.