Pilgrim's Pride NASDAQ: PPC reported second-quarter 2026 net revenue of $4.63 billion and adjusted EBITDA of $360 million, as higher chicken supply and lower commodity pricing weighed on results despite continued demand growth in retail and foodservice channels.
Adjusted EBITDA margin was 7.8%, down from 14.4% a year earlier. Revenue declined from $4.76 billion in the prior-year quarter, while adjusted EBITDA fell from $686.9 million.
President and CEO Fabio Sandri said chicken remained an affordable protein option for consumers facing inflation and elevated energy prices. However, a 4.5% year-over-year increase in U.S. ready-to-cook chicken production during the quarter exceeded demand growth and led to counterseasonal declines in commodity chicken cutout values.
U.S. margins pressured by commodity pricing
Pilgrim's Pride's U.S. business generated $2.65 billion in revenue, compared with $2.82 billion a year earlier. Adjusted EBITDA in the segment totaled $231.5 million, down from $482.7 million, and the adjusted EBITDA margin declined to 8.7% from 17.1%.
Chief Financial Officer Matt Galvanoni said the U.S. margin decline was primarily driven by a 27% decrease in the jumbo cutout value. Still, U.S. margins improved sequentially as plant upgrades were completed and live operations improved following significant downtime in the first quarter.
Sandri said the U.S. industry benefited from improved bird livability during the second quarter, contributing more than one percentage point of the increase in supply. The company expects production growth to moderate in the second half as the impact from improved livability fades and warmer weather affects bird growth. The USDA expects supply to increase about 2.5% in the third and fourth quarters, according to Sandri.
He also said seasonal production cuts are typical during the late summer and fall, when chicken demand is generally softer around Thanksgiving and other seasonal events. Pilgrim's Pride said it will continue to align production with demand from key customers.
Demand trends remained favorable, according to management. The company cited growth in chicken volumes in both retail and foodservice, with quick-service restaurants and non-commercial foodservice channels showing particular strength. Sandri said chicken menu penetration continued to rise as restaurants used the protein in promotional offerings designed to attract traffic.
Prepared foods and branded products gain share
Pilgrim's Pride said its U.S. prepared-foods volumes increased nearly 14% from a year earlier. Retail sales of its Just Bare brand rose more than 30%, or roughly six times the frozen fully cooked category average, management said. Just Bare reached nearly 15% market share and became the second-largest brand in frozen fully cooked chicken, according to the company.
The company has been investing to supply more prepared-foods production internally, including adding dark-meat deboning and portioning equipment at big-bird plants. Sandri said internal transfers to prepared foods are based on market prices, while the broader portfolio benefits from growing branded and value-added products that can help offset volatility in commodity markets.
Pilgrim's Pride completed its conversion of the Russellville plant to a case-ready operation during the quarter. It also announced investments in Ellijay, Georgia, to expand small-bird production and deboning capacity to support demand for boneless chicken, sandwiches and tenders. The company's Walker County, Georgia, prepared-foods facility remains on track for commissioning in the second half of 2027.
Europe stable, Mexico faces higher protein supply
In Europe, adjusted EBITDA was $105.8 million, compared with $111.8 million a year ago, while the adjusted EBITDA margin was 7.6%, down from 8.2%. Management said poultry and meal offerings performed well as consumers sought affordable and convenient food options.
European pork margins were pressured by increased pork imports into the U.K., higher costs associated with the Middle East conflict and weaker foodservice traffic. Sandri said lower European exports to China had contributed to additional pork supply from countries including Spain and Denmark entering the U.K. market. He said herd reductions elsewhere in Europe could eventually support pricing.
Mexico generated adjusted EBITDA of $22.6 million, down from $92.3 million in the prior-year period, with margin declining to 3.9% from 16.3%. The company said unusually favorable growing conditions increased chicken supply, while expanded domestic egg production and pork imports added to overall protein availability.
Despite those pressures, Sandri said Mexican demand remained strong enough to absorb the added supply. Pilgrim's Pride reported that retail-branded fresh-product volumes in Mexico increased more than 30%, while Just Bare volumes rose more than two-and-a-half times from a year earlier.
Legal costs, debt reduction and capital spending
On a GAAP basis, Pilgrim's Pride recorded $136 million in legal settlement expenses, mainly related to settlements with certain parties in ongoing broiler litigation. The company also recorded a $26 million charge primarily associated with an asset impairment tied to the planned shutdown of its Chattanooga harvesting facility.
During the quarter, Pilgrim's Pride completed a $250 million tender offer for its 2033 bonds. Net debt was below $2.5 billion at quarter-end, with leverage at 1.43 times last-12-month adjusted EBITDA. The company reported nearly $1.6 billion of cash and available credit.
Capital expenditures totaled $230 million in the second quarter, bringing year-to-date spending to $465 million. Galvanoni reaffirmed full-year capital expenditure expectations of about $900 million and said the company expects full-year net interest expense, excluding the impact of early debt extinguishment, to be approximately $115 million to $120 million.
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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