JBS Q1 Earnings Call Highlights

Key Points

• JBS posted record Q1 sales of $22 billion, but profitability weakened as adjusted EBITDA fell to $1.1 billion under IFRS and net income came in at $222 million. Management said the quarter was pressured by volatile markets, seasonality, operational disruption and trade shifts.
• U.S. beef was the biggest drag on results, with the segment generating negative EBITDA of $230 million amid tight cattle supply and higher costs. Executives said 2026 is likely to be tougher than 2025 for U.S. beef, though they expect supply relief if the Mexico feeder cattle border reopens.
• Diversified operations and investment plans helped offset some weakness, with strong margins in Seara, Brazil and Australia, while Pilgrim’s and U.S. beef faced challenges. JBS also boosted capex on prepared foods and other projects, and said it will voluntarily begin SEC 10-K, 10-Q and 8-K filings next quarter.

JBS NYSE: JBS reported record first-quarter sales but lower profitability as executives said the global protein company faced difficult market conditions in U.S. beef, seasonal pressures, operational adjustments and shifting trade flows.

Global CEO Gilberto Tomazoni said the first quarter of 2026 was “a challenging period” shaped by market volatility, seasonality, operational disruption and changes in global trade. He said JBS remained focused on “operational excellence, cost discipline, agility, and long-term value creation.”

Global CFO Guilherme Cavalcanti said net sales reached a first-quarter record of $22 billion. Adjusted EBITDA under IFRS totaled $1.1 billion, representing a 5.2% margin, while adjusted EBITDA under U.S. GAAP was $960 million, with a 4.2% margin. Net income was $222 million, or $0.21 per share. Excluding non-recurring items, adjusted net income was $241 million, or $0.23 per share.

U.S. Beef Remains the Main Pressure Point

Tomazoni said the North American beef business remained under significant pressure due to constrained cattle supply and higher costs. The segment posted EBITDA of negative $230 million, with a margin of negative 2.3%.

The company is making organizational changes across its U.S. beef platform, combining fed beef, regional beef and case-ready operations into a more unified structure. Tomazoni said the move is intended to reduce duplication, improve coordination and strengthen decision-making during a difficult phase of the cattle cycle.

Wesley Batista Filho, CEO of JBS USA, said there were no meaningful extraordinary impacts from hedging or the Greeley strike in the first quarter. He described January and February margins as “probably one of the most challenging periods we’ve ever seen in history.”

Batista said 2026 is expected to be more challenging than 2025 for U.S. beef. In response to analyst questions, he said the industry is unlikely to vertically integrate meaningfully into cow-calf operations because that business requires specialized knowledge and substantial land resources.

He also said reopening the Mexican border to feeder cattle would be “the most important thing” that could provide short-term supply relief for U.S. beef, while noting the timing depends on U.S. government assurances related to keeping screwworm out of the country.

Diversification Helps Offset Beef Weakness

Executives repeatedly emphasized JBS’s diversified platform across proteins and geographies. Seara delivered a 15.5% EBITDA margin, supported by export demand, innovation and growth in value-added products, though Tomazoni said currency movements pressured comparisons with the prior quarter.

JBS Brazil reported a 4.5% EBITDA margin, which Tomazoni described as the second-highest first-quarter margin in its history. He said Friboi saw solid demand in both domestic and export markets. He also said the China trade environment required adjustments in global flows, but JBS responded by managing volumes and developing alternative markets such as the United States, Mexico and Indonesia.

In Australia, JBS posted a 7.1% margin. Tomazoni said operating fundamentals remained positive, particularly in Queensland, where cattle conditions were the best the company has seen in three years. He attributed the year-over-year margin contraction primarily to foreign exchange movements rather than weaker operations.

Pilgrim’s had a softer quarter in the United States, affected by seasonality and planned plant adjustments. Tomazoni said the company had to adapt some plants to changing U.S. demand, including stronger domestic demand for dark meat. He said those adjustments have been completed and improvement trends are already visible.

Cash Flow Weighed Down by CapEx and Working Capital

Free cash flow was negative $1.5 billion in the first quarter, compared with cash consumption of $970 million a year earlier. Cavalcanti said the decline reflected weaker EBITDA, higher capital expenditures and a working capital impact from livestock supplier payment deferrals.

Capital expenditures totaled $566 million, more than double the prior-year period, driven mainly by $390 million in expansion CapEx. Cavalcanti highlighted projects including Pilgrim’s Prepared Foods in Marshall County, a fully cooked bacon and sausage facility in Ankeny, Iowa, a fresh sausage plant in Perry, Iowa, modernization of beef processing plants in Cactus, Texas, and Greeley, Colorado, biodiesel investments in Brazil, a chicken plant in Paraguay and the Oman acquisition.

Executives said JBS is prioritizing value-added and prepared foods investments because those categories generally have more stable demand and higher margins than cyclical commodity protein businesses. Tomazoni said the company does not have a specific target for prepared foods as a share of the portfolio but wants to increase its weight over time.

Leverage Rises, But Debt Profile Extends

JBS ended the quarter with leverage of 2.77 times net debt to EBITDA, within its long-term target range of 2 times to 3 times. Cavalcanti said the company could move closer to the upper end of that range in the second quarter, but expects stronger free cash flow generation in the second half of the year.

The company issued $2.5 billion of bonds and completed a $1.45 billion tender offer during the quarter. Cavalcanti said the actions extended average debt maturity to 15.6 years and brought the average cost of debt to 5.7%. He said JBS has no significant debt maturities until 2031 and has $3.4 billion in revolving credit lines plus $3.5 billion in available cash.

Cavalcanti estimated the company’s free cash flow breakeven EBITDA for the year at $5.7 billion to $6 billion, citing uncertainty around working capital, grains, energy and fertilizer costs. He said JBS could use tools such as receivables discounting or supplier finance if needed, but those are not used recurrently because they carry costs.

Company Plans Voluntary SEC Filings

JBS also announced that beginning next quarter it will voluntarily file Forms 10-K, 10-Q and 8-K with the SEC, prepared under IFRS and supplemented in earnings releases with certain U.S. GAAP indicators.

Cavalcanti said the move is intended to broaden eligibility for key benchmark indexes, including the S&P Composite 1500 family. He said JBS already meets criteria for potential Russell index inclusion and noted that passive funds account for about 40% of the company’s free float, compared with roughly 60% for the sector.

Looking ahead, Tomazoni said global protein fundamentals remain strong, with constrained beef supply in key markets, solid poultry demand and continued relevance for JBS brands. He said the start of the U.S. barbecue season typically supports stronger protein consumption, but emphasized that the company’s priorities remain execution, efficiency, cash generation and disciplined capital allocation.

About JBS NYSE: JBS

JBS SA is a global leader in the production and processing of meat products, with a focus on beef, pork and poultry. Headquartered in São Paulo, Brazil, the company operates through an extensive network of owned facilities and partnerships that span the Americas, Europe and the Asia-Pacific region. JBS supplies fresh, frozen and value-added protein solutions for retail, foodservice and industrial customers, and is active across the entire supply chain—from livestock procurement and feed production to slaughtering, processing, packaging and distribution.

Founded in 1953 by José Batista Sobrinho in Anápolis, Goiás, JBS began as a small slaughterhouse and expanded rapidly through strategic acquisitions and organic growth.

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