What JBS (JBS) Said on Its Q3 Earnings Call

Key Points

• JBS reported $23 billion in Q3 sales and $1.2 billion in adjusted EBITDA, but net income was $164 million and free cash flow was negative $167 million; net leverage ended at 3.54 times.
• U.S. beef returned to positive adjusted earnings, and management expects sequential improvement in Q4. By contrast, poultry margins faced pressure and global pork oversupply is expected to keep U.S. pork conditions difficult into at least the first half of 2027.
• JBS expects to cut 2027 capital spending by about $500 million from its planned 2026 level of $2.1 billion as it prioritizes deleveraging. Management outlined a possible path to leverage below three times in 2027, while announcing planned acquisitions of Flora and Canal Rural.

JBS NYSE: JBS reported $23 billion in third-quarter sales as its U.S. beef business returned to positive adjusted earnings, but pressure on poultry margins and a global pork oversupply weighed on results. Executives said they expect an improvement in several businesses in the fourth quarter and are targeting lower capital spending next year.

Adjusted earnings before interest, taxes, depreciation and amortization under International Financial Reporting Standards totaled $1.2 billion, for a 5.2% margin, Global CFO Guilherme Cavalcanti said. Net income was $164 million, or $0.15 per share. Free cash flow was negative $167 million, while net leverage ended the quarter at 3.54 times.

Global CEO Gilberto Tomazoni said changing trade flows, poultry margin pressure and excess pork supply affected the quarter. He also pointed to progress in U.S. beef and said adjustments in Brazil had positioned the company for a stronger finish to the year.

U.S. Beef Improves as Pork Weakens

JBS USA CEO Wesley Batista Filho said the U.S. beef business returned to positive adjusted EBITDA under U.S. accounting standards after two challenging years. He attributed the improvement to market conditions and operational changes, including the consolidation of the company’s fed beef, regional beef and case-ready units under one management structure.

Batista Filho said the fourth quarter had started strongly enough for management to expect a sequential improvement, though December could still bring surprises. For 2027, he said the market could operate at low-single-digit margins, with operational efficiencies and sales synergies potentially adding around or more than two percentage points.

The reopening of the U.S. border to Mexican cattle imports has helped improve supply, Batista Filho said. Based on current crossing volumes, he estimated imports at an annualized rate of about 1 million head. Cattle supplies remain tight, but he said imported animals and a better balance in processing capacity support a more constructive outlook.

U.S. pork conditions moved in the opposite direction. Higher global supply and weaker demand pressured prices and margins, and Batista Filho expects conditions to remain difficult through at least the first half of 2027. He said a reduction in global production could support a better second half, although the timing and extent of any recovery remain uncertain.

Brazilian Businesses Look to Fourth-Quarter Recovery

Tomazoni said Brazilian beef business Friboi redirected volumes to other export markets and expanded domestic sales after exports to China fell sharply. He said demand improved in October as customers secured volumes under China’s 2027 quota. Production for that market began in the second half of September, with the related sales expected to benefit fourth-quarter results.

At Seara, higher costs and a difficult Brazilian commercial environment affected the quarter, Tomazoni said. He expects a sequential margin improvement in the fourth quarter, citing a stronger U.S. dollar against the Brazilian real, global chicken demand, seasonal demand in Brazil and sales from inventories built in Europe ahead of trade restrictions.

Tomazoni also said the impact of potential Philippine pork import restrictions remained unclear. The effect would depend in part on whether the measures concern import licenses or shipments, he said.

Flora Deal and Capital Spending Plans

Cavalcanti said JBS had announced an agreement to acquire all of Flora, a Brazilian home and personal care business, at an enterprise value of $442 million. The equity consideration will be paid in JBS treasury Class A shares. Management expects the acquisition to provide access to new sales channels, create operating synergies and help monetize accumulated tax credits.

Batista Filho said Flora could help JBS expand its nutrition and supplements business, including its collagen-based Genu-in platform. Cavalcanti said the company also announced the acquisition of Canal Rural for an enterprise value of $16 million, to be paid in treasury shares.

JBS is still preparing its 2027 budget but expects to reduce capital spending by about $500 million from the $2.1 billion planned for 2026, Cavalcanti said. The company intends to finish projects already underway while postponing some that have not started; it could revisit those plans if conditions improve.

Cavalcanti said management expects leverage to end 2026 around its current level, as fourth-quarter cash generation offsets pressure from lower trailing earnings. For 2027, he described a scenario in which a U.S. beef turnaround, an anticipated Australian equity sale and EBITDA of $5.5 billion to $6 billion could bring leverage below three times. He characterized the cash-flow discussions as exercises rather than guidance.

The CFO said JBS is focused on deleveraging and does not see near-term cash-funded acquisitions beyond potentially very small deals. Larger transactions would generally require sellers to accept JBS shares, he said.

About JBS (NYSE:JBS)

JBS S.A. is a global food company focused on processing beef, pork, poultry and lamb. Its products include fresh and frozen meat, prepared and packaged foods, and value-added food products sold under brands such as Swift, Pilgrim's and Seara. The company also produces ingredients and other products from animal byproducts, including leather and collagen. Founded in 1953 in Anápolis, Brazil, JBS has grown into an international business with operations across the Americas, Europe, Australia and other markets.

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