Pilgrim's Pride Q1 Earnings Call Highlights

Key Points

• Pilgrim's Pride reported Q1 2026 net revenues of $4.53 billion and adjusted EBITDA of $308.1 million, with adjusted EBITDA margin falling to 6.8% from 12.0% a year earlier as weaker commodity values, plant-upgrade downtime and winter-weather disruptions weighed on results.
• Management is shifting toward higher-margin prepared foods and Case Ready initiatives — including a Russellville conversion and a new Georgia prepared foods plant — with the Just Bare brand delivering ~40% retail sales growth and surpassing $1 billion over five years.
• Balance-sheet and capital deployment remain intact: liquidity was nearly $1.75 billion, net debt was $2.55 billion (1.25x leverage), full-year CapEx guidance is roughly $900–950 million, and net interest expense is expected to be $105–115 million.

Pilgrim's Pride NASDAQ: PPC reported first-quarter 2026 net revenues of $4.53 billion and adjusted EBITDA of $308.1 million, as the poultry producer navigated weaker commodity market conditions and absorbed costs tied to plant upgrades and winter weather disruptions. Adjusted EBITDA margin fell to 6.8% from 12.0% a year earlier, reflecting pressure in the U.S. business and margin compression in Mexico, partially offset by steadier results in Europe.

Quarterly results show lower margins amid commodity weakness and operational disruptions

President and CEO Fabio Sandri said the company generated $4.5 billion in net revenues with adjusted EBITDA of $308 million. Sandri said results were shaped by volatility in commodity segments, while the company leaned on “the most stable parts of our portfolio” and continued investing to expand higher-margin, more differentiated products.

CFO Matt Galvanoni said U.S. adjusted EBITDA margin was 7.0% versus 14.3% in the prior-year quarter, with declines driven by “significant reduction in the jumbo cutout value,” lower deli pricing for small birds, winter storms in the Southeast, bird health issues, and planned downtime tied to growth projects. U.S. net revenues declined 3.9% year over year to $2.64 billion, and adjusted EBITDA fell to $185.5 million from $392.5 million.

In Europe, adjusted EBITDA increased 6.3% to $105.8 million and margin was 7.8% versus 8.1% a year ago. Galvanoni said the business benefited from strength in poultry and meals as well as “structural reorganization,” including support-function integration and manufacturing optimization.

Mexico posted adjusted EBITDA of $16.8 million versus $41.2 million a year ago, with margin of 3.1% compared to 8.4%. Galvanoni said profitability improved sequentially versus the fourth quarter as supply-demand fundamentals “marginally” improved by the end of the quarter, though Sandri emphasized the quarter remained pressured by elevated live commodity supply and import competition.

U.S. demand trends held up, but pricing and downtime weighed on profitability

Sandri said U.S. demand from key retail customers for trade-pack offerings remained strong in fresh, while prepared foods grew through retail and food service expansions. However, he said sales and profitability fell as jumbo commodity cutout values and daily small bird values were “significantly lower than last year.” He also cited planned downtime from plant upgrades, plus interruptions from February winter storms.

On the call, analysts pressed management to quantify the financial impact of downtime and weather disruptions. Sandri described several cost layers tied to portfolio changes: pre-shutdown overstaffing, labor and training costs during ramp-up, and one to two weeks of shutdown time at certain plants. Regarding winter storms, he said the company halted operations for one to three days in impacted areas to keep employees safe, and that stoppages affected live operations by changing bird sizes and requiring Saturday processing or overtime.

Sandri said quantifying the total impact is difficult because some of the largest effects occur when birds miss target specifications and are “downgraded” into commodity sales rather than higher-priced customer programs. When asked again to provide at least a minimum downtime estimate, Sandri reiterated it was “significant,” but did not provide a discrete figure. He added he did not expect meaningful lingering effects from the network changes, aside from continued ramp-up at Russellville.

Supply outlook points to elevated near-term production, easing later in the year

Sandri reviewed USDA data showing ready-to-cook chicken production increased 3.4% year over year in the quarter, driven by higher headcounts, improved live performance, and heavier average weights. Egg sets rose 1.1% and chick placements increased 1.7% versus the prior year.

Looking ahead, Sandri said USDA expects chicken production to increase 2% for 2026, “primarily driven by growth during the first half of the year.” In Q&A, he said Q1 production growth came in above expectations and was concentrated in March, with March growth “close to 5%-6%,” which he said weighed more heavily on commodity segments. For Q2, Sandri said USDA is expecting growth “on the range of 2.5%,” while growth in the second half is expected to moderate to below 1% year over year.

Sandri also said USDA anticipates minor increases in beef supplies and limited pork growth, and expects net protein availability to rise 1.6% compared to last year when combined with additional chicken supply.

Prepared foods growth, Case Ready expansion, and brand momentum

Management repeatedly highlighted portfolio investments aimed at reducing volatility and lifting margins through mix improvements and prepared foods expansion. Sandri said Pilgrim’s implemented plant layout changes and equipment improvements across Big Bird facilities to increase dark meat deboning and portioning capabilities, bringing work in-house that had previously been outsourced. These changes resulted in planned downtime and mobilization expenses, along with training-related ramp-up time.

In Case Ready, Sandri said sales and volume grew as trade-pack retail offerings outperformed the category. He noted that in early April the company completed the conversion of its Russellville facility from Big Bird to retail production to support a key customer’s growth. Asked about margin expectations, Sandri said retail is “double-digit margins” and “much more resilient and stable than the Big Bird,” and he framed the conversion as both a growth enabler for key customers and a step toward more stable earnings.

Prepared foods results were a bright spot in the quarter. Sandri said the segment delivered the highest retail volume in any quarter, and that the Just Bare brand continued to lead growth in the frozen fully cooked category. Galvanoni said Just Bare retail sales increased nearly 40% versus last year. Sandri added that Just Bare recently surpassed a $1 billion threshold over the last five years and said growth has been driven by both distribution gains and strong velocity, which he described as a key sales tool with retailers. He also pointed to innovation, including the launch of a roasted product line under the Just Bare portfolio.

Sandri said construction of a new prepared foods facility in Walker County, Georgia remains on schedule, and that the company is using co-packers to meet demand in the interim. Galvanoni said the new plant is not planned to go online until “the end of the first half of next year.”

Regional demand and market dynamics: Europe, Mexico, exports, and consumer behavior

In Europe, Sandri said the company’s diversified portfolio maintained steady sales and margins as consumers gravitated toward value and convenience, benefiting poultry and fresh and frozen meals. He said promotional activity and a shift toward private label pressured the Richmond branded business, while Rollover grew faster than its category following marketing investments. In response to a question about European competition, Sandri attributed private-label pressure in sausages to “very cheap imported pork meat” from Germany and Spain, which he linked to reduced European pork exports to China.

In Mexico, Sandri said fresh sales were steady and breaded sales rose double digits, while prepared foods continued to grow in retail and quick-service restaurants. He attributed margin compression to excess live commodity production and persistent imports, while noting projects to diversify the company’s fresh footprint and expand prepared foods remain on track. In Q&A, he said demand in Mexico remained strong and that profitability was more affected by increased availability of chicken—“north of 10%” quarter over quarter—along with competitive availability of other proteins.

On exports, Sandri said shipments to Gulf Coast countries in the Middle East were suspended at the end of February due to military conflict. He said strong U.S. domestic demand for dark meat and robust exports to Mexico helped mitigate the disruption, and that the company had not seen material changes in dark meat values. He also said the company expects some international markets to reopen as Highly Pathogenic Avian Influenza occurrences have slowed and previously restricted zones have been lifted, while emphasizing continued vigilance on biosecurity.

Sandri discussed consumer behavior trends across regions, saying inflation and higher food-away-from-home costs are contributing to a shift toward eating at home and retail purchasing, with consumers making more trips and buying smaller baskets. He said chicken has maintained a “compelling value advantage” compared with other proteins, citing steady boneless, skinless breast pricing and what he called record spreads versus ground beef.

On costs and capital allocation, Galvanoni said SG&A increased year over year due to legal settlements and defense costs, incentive compensation true-ups, and unfavorable foreign exchange impacts in Mexico and Europe. The company’s effective tax rate was 23% for the quarter, and Galvanoni reiterated expectations for a roughly 25% full-year effective tax rate.

Galvanoni said liquidity totaled nearly $1.75 billion at quarter-end, with net debt of $2.55 billion and a leverage ratio of 1.25x trailing 12-month adjusted EBITDA, below the company’s 2x-3x target. Net interest expense was $31 million in the quarter. Following a $250 million tender offer for 2033 notes completed in April, he said full-year net interest expense is expected to be between $105 million and $115 million. Capital spending totaled $235 million in the quarter, and management maintained its full-year CapEx estimate of approximately $900 million to $950 million, with sustaining CapEx typically around $400 million.

In closing remarks, Sandri said the company remains focused on operational investments to “strengthen our portfolio, ultimately creating a higher return and reducing risk,” while emphasizing safety, quality, service, and sustainability. He also said Pilgrim’s has surpassed its 2025 Scope 1 and 2 emissions intensity reduction targets tied to its sustainability-linked bonds, attributing the result to investments and operational improvements.

About Pilgrim's Pride NASDAQ: PPC

Pilgrim's Pride Corporation is a leading poultry producer in the United States and Mexico and a wholly owned subsidiary of JBS SA Headquartered in Greeley, Colorado, and Pittsburg, Texas, the company specializes in the production, processing and distribution of fresh, frozen and value-added chicken products. Pilgrim's Pride serves a diverse customer base that includes retail grocery chains, foodservice distributors and restaurant operators across North America and in select international markets.

The company's vertically integrated operations encompass breeding, hatching, feed milling, processing plants and cold storage facilities.

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