Pilgrim's Pride Q3 Earnings Call Highlights

Key Points

• Third-quarter results weakened significantly: Adjusted EBITDA fell to $316.3 million from $633.1 million a year earlier, while revenue declined to $4.65 billion. Lower U.S. commodity chicken prices, higher grain costs and oversupply pressured margins despite steady demand.
• Prepared foods remained a growth area: Volumes rose more than 15%, retail-branded offerings grew over 20%, and profitability nearly doubled year over year. The company is expanding capacity, with its Walker County, Georgia, facility expected to begin commissioning in the second half of 2027.
• Pilgrim’s Pride maintains financial flexibility: The company ended the quarter with more than $2.1 billion in cash and available credit and leverage of 1.76 times adjusted EBITDA. Full-year capital spending is expected to total approximately $875 million, while management anticipates slower chicken-production growth in 2027.

Pilgrim's Pride NASDAQ: PPC reported third-quarter 2026 adjusted EBITDA of $316.3 million, down from $633.1 million a year earlier, as lower U.S. commodity chicken prices, higher grain costs and uneven market conditions weighed on results. Adjusted EBITDA margin declined to 6.8% from 13.3% in the prior-year period.

Net revenue totaled $4.65 billion for the quarter ended Sept. 27, compared with $4.76 billion a year earlier. President and Chief Executive Officer Fabio Sandri said chicken's affordability continued to support consumer demand across the company's markets, while Pilgrim's Pride continued investing in higher-value products, prepared foods capacity and operational improvements.

U.S. pricing pressure offsets steady chicken demand

Sandri said U.S. chicken volumes remained consistent with the prior year despite what he described as near-record volumes in the previous two years. However, supply increased faster than demand across retail and food service, creating uneven market fundamentals.

The USDA reported U.S. ready-to-cook chicken production rose 2.2% from the prior-year period during the quarter. Pilgrim's Pride said freezer inventories nevertheless declined 5% year over year, while boneless breast inventories fell nearly 8%.

Chicken retail volume, including fresh and frozen products, increased 1.4% from a year earlier, according to the company. Boneless breast volume rose more than 2%, while boneless dark meat volume grew nearly 10%. Food-service chicken volumes increased 0.8%, with growth concentrated in quick-service restaurants and convenience channels as lower-income consumers sought value.

Chief Financial Officer Matt Galvanoni said U.S. revenue declined 5.5% year over year, reflecting lower commodity pricing and the impact of supplying more internally produced chicken to the company's prepared foods operations following investments completed earlier this year.

U.S. adjusted EBITDA was $185.2 million, compared with $479.1 million in the third quarter of 2025, while segment adjusted EBITDA margin fell to 6.9% from 16.9%. Improved yields and live-production performance partly offset lower chicken pricing and higher grain costs, Galvanoni said.

Prepared foods growth and capacity investments continue

Prepared foods was a relative bright spot, with volumes increasing more than 15% from a year earlier. Pilgrim's Pride's retail-branded offerings grew more than 20%, while the Just Bare brand gained more than 300 basis points of retail dollar share in the frozen fully cooked category, Sandri said.

The company also cited strong early acceptance for its Flamin' Hot Chicken offering, which was launched in select retail and food-service locations. Sandri said Pilgrim's Pride secured additional customer commitments for the product across channels.

Construction of the company's prepared foods facility in Walker County, Georgia, remained on schedule, with commissioning expected early in the second half of 2027. Pilgrim's Pride also completed an expansion in Ellijay, Georgia, intended to support customer growth in small boneless chicken products.

Galvanoni said prepared foods profitability nearly doubled from the third quarter of 2025, supported by volume growth and the company's investments in the business.

Europe and Mexico face distinct market challenges

European adjusted EBITDA totaled €102 million, down from €110.4 million a year earlier, while the segment's adjusted EBITDA margin was 7.4%, compared with 7.9% in the prior-year quarter. Revenue in Europe declined 1% year over year.

The European business benefited from poultry and meals performance, according to Galvanoni, but those gains were partly offset by pressure on pork margins. The company cited increased pork imports into the U.K., production costs associated with the Middle East conflict and weaker food-service traffic.

Sandri said the company's meals lineup produced double-digit sales and volume growth through targeted promotions. Its Fridge Raiders and Rollover brands also increased volume. In contrast, Richmond sausage growth was challenged by promotional activity in premium private-label products and low imported-meat prices.

Pilgrim's Pride expects to complete its acquisition of Walkers Deli & Sausage Company in early 2027. Sandri said the transaction would support integration of the company's high-welfare pork value chain into the premium sausage segment.

Mexico revenue increased 13% year over year, driven by higher sales volumes, partly offset by lower market prices. Adjusted EBITDA in the country fell to $29.1 million from $43.7 million, and margin declined to 4.9% from 8.2%.

The company said Mexico's fresh retail-branded offerings grew more than 40% in volume, while Just Bare volume more than doubled. Still, comparable results were affected by favorable bird-growing conditions that increased live-market supply, as well as broad availability of competing proteins at low prices.

Liquidity, capital spending and outlook

Pilgrim's Pride completed a €500 million bond offering in September and ended the quarter with more than $2.1 billion of total cash and available credit. Net debt was less than $2.5 billion, and leverage was 1.76 times last-12-month adjusted EBITDA, below the company's stated target range of two to three times.

• Third-quarter capital expenditures totaled $217 million, up $35 million from a year earlier.
• The company expects full-year capital spending of about $875 million.
• Pilgrim's Pride expects a full-year effective tax rate of approximately 26%.
• Excluding a year-to-date loss on debt extinguishment, the company expects full-year net interest expense of approximately $130 million.

Sandri said Pilgrim's Pride will continue to focus on promotional support, consumer-led innovation, efficiency initiatives and investments intended to reduce portfolio volatility. The company also pointed to USDA forecasts for slower chicken-production growth in 2027, with chicken output expected to increase 1.2% after an estimated 3.3% rise in 2026.

About Pilgrim's Pride (NASDAQ:PPC)

Pilgrim's Pride Corporation is a food company that produces, processes and distributes poultry and prepared foods. Its product portfolio includes fresh, frozen and ready-to-eat chicken products, as well as foodservice, retail and convenience offerings sold under brands such as Pilgrim's, Just Bare, Gold'n Plump and Del Dia.

Founded in 1946, the company has grown from a regional poultry business into an international food producer. Pilgrim's Pride serves grocery retailers, restaurants, foodservice distributors and other commercial customers across the United States, Mexico and the United Kingdom and Europe.

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