Pilgrim's Pride Corporation Q1 FY2026 earnings call

• Navigated volatile commodity markets, protecting downside with stable portfolio parts.
• Drove progress in growth investments, strengthening differentiated product portfolio.
• In U.S., demand for retail trade pack and fresh prepared foods strong, but sales and profitability affected by lower commodity values and plant downtime.
• Europe's diversified portfolio had steady sales and margins, with poultry and meals resonating with consumers.
• Mexico fresh sales steady, breaded sales up double digits, but margins compressed by excess production and imports. Progress on expansion projects.
• Sustainability efforts: Surpassed 2025 reduction targets against scope one and two emissions intensity.
• U.S. supply: USDA reported ready-to-cook production increase, egg sets and chick placements grew. Expect chicken production to increase 2% in 2026.
• Feed inputs: Corn pricing consistent, soy appreciated but global markets well supplied, wheat global stock well supplied with geopolitical risks.

For the first quarter of 2026, net revenues were $4.53 billion. U.S. net revenues were $2.64 billion, with adjusted EBITDA of $185.5 million and a margin of 7.0% compared to 14.3% a year ago. Europe's adjusted EBITDA was $105.8 million, a 6.3% increase from last year, with a margin of 7.8%. Mexico generated $16.8 million in adjusted EBITDA, with a margin of 3.1% versus 8.4% a year ago. U.S. prepared foods retail sales of Just Bear increased nearly 40% compared to last year. Mexico fresh branded offerings sales increased double digits, and prepared foods sales grew, but margins were compressed due to excess production and imports.

• Full-year effective tax rate expected to approximate 25%.
• Liquidity position very strong with nearly $1.75 billion in total cash and available credit at end of quarter.
• Net debt totaled $2.55 billion, leverage ratio 1.25 times last 12 months adjusted EBITDA, below target. Full-year net interest expense expected between $105 and $115 million after $250 million tender offer.
• Full-year CapEx estimate approximately $900 to $950 million, with $235 million spent in first quarter.
• USDA expects chicken production to increase 2% in 2026, with Q2 growth expected at 2.5% and more muted growth in Q3 and Q4.

• Impact of weather-related events causing unplanned downtime and reducing service levels.
• Volatility in commodity markets affecting sales and margins.
• Geopolitical risks affecting wheat futures and global trade movements.
• Competition from private label products in Europe affecting branded portfolio volumes.
• Uncertainty in consumer sentiment and its impact on demand for different protein categories.

Q: Ben Thurer with Barclays asked about financial impact of downtime and weather in U.S. business and outlook for second quarter.

A: Fabio Sandri discussed multi-faceted impact of downtime and storms, hard to quantify overall impact, and USDA's growth expectations for Q2, Q3, Q4.

Q: Peter Galbu with Bank of America asked for quantification of downtime and outlook on Russellville conversion.

A: Fabio Sandri said hard to quantify overall impact, Russellville conversion is for stable margins and key customer growth.

Q: Andrew Strelczyk with BMO Capital Markets asked about bird vaccination impact and freight exposure.

A: Fabio Sandri said vaccination against high-path AI not beneficial, and freight costs are pass-through or managed.

Q: Puran Sharma with defense asked about Russellville conversion details and JustBear growth drivers.

A: Fabio Sandri discussed stable margins of Russellville conversion and JustBear's growth from distribution, velocity, and innovation.

Q: Leah Jordan with Goldman Sachs asked about consumer behavior across regions.

A: Fabio Sandri discussed shift from food service to retail, strong chicken demand in Mexico despite other protein availability, and similar trends in U.S. and Europe.

Q: Tiago Duarte with PDG Practical asked about CAPEX timing and incremental capacity.

A: Matt Galvinoni discussed CapEx timing and mix of projects to support prepared foods growth.

Q: Heather Jones with Heather Jones Research asked about chicken demand vs price gap and Russellville conversion impact.

A: Fabio Sandri discussed elasticity issues and minimal ongoing impact of Russellville conversion.

Q: Priya Urigupta with Barclays asked about European competitive dynamics and debt profile.

A: Fabio Sandri discussed competitive dynamics in Europe and thought process on debt tender offer and debt profile.