Summary of Pilgrim's Pride Q2 2026 Earnings Call

1Key Financial Results and Metrics

Net Revenues: $4.63 billion, down from $4.76 billion year-over-year.

Adjusted EBITDA: $360 million, with a margin of 7.8%, significantly lower than $686.9 million and 14.4% in Q2 2025.

U.S. Performance: Revenues of $2.65 billion (down from $2.82 billion), with adjusted EBITDA of $231.5 million (down from $482.7 million). U.S. adjusted EBITDA margin fell to 8.7% from 17.1% year-over-year.

Europe: Adjusted EBITDA of $105.8 million, down from $111.8 million last year, with margins at 7.6%.

Mexico: Adjusted EBITDA of $22.6 million, down from $92.3 million last year, with margins at 3.9%.

2Strategic Updates and Business Highlights

Growth in Chicken Demand: Firm demand across all regions, particularly in retail and foodservice, with notable growth in prepared foods, especially the Just Bare brand, which saw over 30% retail growth.

Operational Improvements: Completion of plant upgrades led to improved operational efficiency and steady volumes to key customers.

Sustainability Initiatives: Continued focus on environmental, social, and governance (ESG) matters, with recognition for workplace satisfaction across regions.

Investment in Infrastructure: Ongoing investments in plant conversions and expansions, including a new prepared foods plant in Walker County, Georgia, and enhancements in Ellijay, Georgia.

3Forward Guidance and Outlook

Production Expectations: USDA anticipates a 2.5% increase in chicken supply for the second half of 2026, aligning with strong demand.

CapEx Guidance: Full-year CapEx expected to be around $900 million, with a focus on completed projects in the first half and ongoing investments in growth initiatives.

Market Dynamics: Anticipation of seasonal production cuts in the fall, which could stabilize pricing and margins.

4Challenges and Points of Concern

Margin Compression: Significant decline in adjusted EBITDA margins across all segments, particularly in the U.S. due to a 27% decrease in jumbo cutout value.

Legal Settlements: Incurrence of $136 million in legal settlement expenses impacting GAAP results.

Competitive Pressures: Increased competition from imported pork in the U.K. and private label offerings in Europe affecting margins.

Volatility in Mexico: Despite strong demand, the market remains volatile with fluctuating supply dynamics and competitive pricing pressures from pork imports.

5Notable Q&A Insights

Supply Dynamics: Increased supply in Q2 was driven by better livability and higher production, but expectations for Q3 and Q4 suggest moderation in growth.

Demand Trends: Retail demand remains strong, with consumers prioritizing chicken as a value option amidst inflation. Foodservice is seeing mixed traffic trends, but promotional activities are expected to drive chicken demand.

Pork Business in Europe: The pork segment is under pressure due to increased imports and competition, with no immediate recovery expected in exports to China.

Prepared Foods Strategy: The company aims to reduce volatility through growth in prepared foods, which are less exposed to commodity price fluctuations. Overall, Pilgrim's Pride is navigating a challenging environment with declining margins and increased competition but remains focused on growth through strategic investments and operational improvements.