Pilgrim's Pride Corporation Q2 FY2025 earnings call

• In the U.S., the diversified Fresh portfolio benefited from favorable commodity cutout values, and Prepared Foods saw net sales increase 20% compared to last year. Just Bare achieved over 10% market share in Retail. • Europe's business drove margin expansion through manufacturing cost efficiencies and product mix optimization, with sales growth outpacing the grocery channel. • Mexico had strong results with net sales growth in Fresh and Prepared, and the company announced a $400 million investment in a new U.S. Prepared Foods plant in Walker County, Georgia.

For the second quarter of 2025, U.S. net revenues were $2.82 billion, a nearly 6% increase from the same period last year, with adjusted EBITDA of $482.7 million. Europe's adjusted EBITDA was $111.8 million in Q2 2025 compared to $96.2 million last year. Mexico generated $92.3 million in adjusted EBITDA in Q2 2025, down from $115.1 million last year, facing FX headwinds and bird disease challenges.

• Anticipate total CapEx spending in 2025 to be slightly less than the original estimate of $750 million, likely closer to $650 million to $700 million. • The $400 million investment in Georgia's Prepared Foods plant will have spending in the range of $50 million to $70 million in 2024, $250 million to $300 million in 2025, and residual in 2027. • Mexico's capacity expansion projects are on schedule, and once at full capacity, the Mexican business is estimated to increase net sales by approximately 20% from current levels.

• High path avian influenza outbreaks could lead to trading restrictions and impact exports. • Fluctuations in currency exchange rates, especially in Mexico, can affect profitability. • Labor market changes, such as visa revocations and potential labor inflation, can impact operations.

Q: Congrats on another very strong quarter. Just following up on some of your closing comments right now, Matt, in terms of like the CapEx outlay and so on. So just wanted to clarify, the investment in Georgia that you've announced last week. So how should we think about the spend of the $400 million?

A: Sure. Thanks, Ben. I think when you think about that $400 million that we announced last week, I think this year kind of in that $50 million to $70 million range next year, sort of that $250 million to $300 million with residual in 2027. It's always -- timing can fluctuate a little bit. The vast majority of the spend will be in 2026 because we anticipate this becoming up and running in the first half of 2027. So I'd give you that as my kind of basics. And then I don't know, Fabio, you want to talk about the chicken side of it?

Q: I wanted to ask another U.S. chicken supply chain question. We've seen pullets placed are down year-over-year 3 of the last 4 months, and that comes on the heels of what was an extended period of pretty consistent increases. So is there something changing there? Or what is driving the reversal? Maybe you can kind of talk through what the dynamics are at play there?

A: Yes. Thank you, Andrew. Yes, like I mentioned, on the on the structure of the industry. And you're right on the on pullet placements. I think what the industry is trying to have is a more productive flock. I think the hatchability issue has been very impactful. If you look at the hatcher utilization, we had the highest level ever. And I think we're probably past the capacity. I think all the hatcheries are operating more days than they should, reducing a little bit of maintenance. So if you have eggs that will not hatch or a lower productive layer, you're in trouble because you're compromising the bottleneck, which is the hatchery. So that's why the industry is trying to get a more productive and younger layer flock. And it's all from there in terms of the capacity of the industry to increase production.