Summary of Pilgrim's Pride Q1 2026 Earnings Call

1Key Financial Results and Metrics

Net Revenues: $4.53 billion, up from $4.46 billion year-over-year.

Adjusted EBITDA: $308.1 million, a decline from $533.2 million in Q1 2025, resulting in an adjusted EBITDA margin of 6.8% compared to 12.0% last year.

U.S. Performance: Net revenues decreased to $2.64 billion from $2.74 billion, with adjusted EBITDA dropping to $185.5 million from $392.5 million.

Europe: Adjusted EBITDA rose to $105.8 million from $99.5 million, reflecting stable sales and margins.

Mexico: Adjusted EBITDA fell to $16.8 million from $41.2 million, impacted by excess supply and import pressures.

CapEx: $235 million spent in the quarter, with a full-year estimate of $900 million to $950 million.

2Strategic Updates and Business Highlights

Portfolio Diversification: Continued investment in differentiated products to stabilize margins and support customer growth.

Prepared Foods Growth: Notable increase in retail sales of Just BARE, up nearly 40% year-over-year, driven by distribution and velocity improvements.

Operational Enhancements: Ongoing projects to improve production mix and efficiency, including the conversion of the Russellville facility to case-ready products.

Sustainability Initiatives: Surpassed 2025 reduction targets for Scope 1 and 2 emissions intensity.

3Forward Guidance and Outlook

Production Growth: USDA forecasts a 2% increase in chicken production for 2026, with expectations for Q2 growth around 2.5%.

Consumer Trends: Anticipated continued demand for chicken due to its affordability, with a shift from foodservice to retail.

Market Positioning: Chicken remains competitive against other proteins, particularly in terms of pricing.

4Bad News, Challenges, or Points of Concern

Margin Compression: Significant decline in margins due to lower commodity prices, particularly in the jumbo cutout and deli markets.

Weather Impacts: Unplanned downtime and operational disruptions due to winter storms, affecting production and service levels.

Competitive Pressures: Increased competition from private label products in Europe, particularly affecting branded offerings like Richmond.

Legal and Operational Costs: Higher SG&A expenses driven by legal settlements and defense costs.

5Notable Q&A Insights

Impact of Downtime: Management acknowledged significant financial impacts from operational downtime due to both planned upgrades and weather-related disruptions, though quantifying these impacts remains challenging.

Consumer Behavior: Noted a shift in consumer purchasing patterns, with more emphasis on value-oriented options amid inflationary pressures.

SNAP Changes: Potential inclusion of hot rotisserie chicken in SNAP eligibility could provide a boost to the Small Bird category.

Freight Costs: While there are pressures on freight costs, over 70% of sales include freight as a pass-through cost, mitigating direct impacts on margins. Overall, Pilgrim's Pride is navigating a challenging environment with declining margins and operational disruptions while focusing on strategic growth initiatives and maintaining a strong market position in the poultry sector.