PPC - Earnings call transcript Q3 2024 | Pilgrim's Pride Corporation

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Operator

Good morning, and welcome to the Third Quarter of 2024 Pilgrim's Pride Earnings Conference Call and Webcast. [Operator Instructions] At the company's request, this call is being recorded. Please note that the slides referenced during today's call are available for download from the Investors section of the company's website at www.pilgrims.com.

[Operator Instructions] I would now like to turn the conference over to Andrew Rojeski, Head of Strategy, Investor Relations and Sustainability for Pilgrim's Pride. Please go ahead.

Andrew Rojeski

you and us third financial on XX, thank review as quarter and September operating our results XXXX. morning, for today joining we ended Good for the of press a including of any may providing a the we reconciliation issued measures we performance for afternoon, an Yesterday overview discuss. our non-GAAP financial quarter, release with of reference. the on A for is copy our website slides available release at ir.pilgrims.com, along Officer; are and also been Galvanoni, call. and filed available and online have X-Ks President today's at items Officer, These Chief Financial Form Executive Matt Chief on will Sandri, sec.gov. Fabio as present

to Before release. remind release, management current from with regular statements and we begin XX-K additional Other our information that concerning Today's prepared filings not harbor forward-looking may remarks, materially outlook in this forward-looking I our provided expectations would results been factors our the as press everyone have like our SEC. call to represent actual cause certain of in of statements. may the differ contain these by disclaimer. yesterday's Form of these safe day Further projected those our anticipated and factors

would to turn the call I now to Fabio over like Sandri.

Fabio Sandri

Andy. Good us and thank morning, you today. for joining everyone, you, Thank

of third same XXXX, reported the $X.X over we For increase billion, quarter net of X.X% revenues a year. quarter the last

was X.X% year. last EBITDA million in margin to compared QX versus adjusted $XXX Our $XXX EBITDA million XX.X% of XXXX. was Adjusted

demonstrates results QX the Our strategies. execution benefit consistent our from of

on category innovation. In If further service and chicken drove interest Bird benefited of and amplified were to excellence of QSRs. upsides partnerships of whereas capture U.S., quality, than and continue in efficiencies, improvements resulting positive continue ready, growth. consumers. collaboration commodity given among from key portfolio to in continued values. cutout and brands lower the continued for The and in input increased growth the The unlock enable demand the deli in market a production diversified with greater reinvest simultaneously focus our commodity Small customer operational Our costs through our value average customers, momentum that efforts and enhanced key Bird in the Big sustained fundamentals,

from manufacturing managed optimize efforts extensive brands distribution awards customers. traction growth expanded network given from Europe industry restructuring launched organizational in leading our from the structure. gain incremental to recognition innovation. key and amplified margins further and recently continue our by efforts These and with Diversification were benefits

we While Mexico decline experienced demand, across continue grow disruptions given a business key retail our seasonality hurricanes, from normal foodservice. in and customers with the to and

remain investments grew track Our market ahead and and brands proceed risk the as operational on diversification as efforts scheduled. our excellence of our and in growth mitigation

the supply. has XXXX, production U.S. to USDA layer indicated Throughout compared quarter liveweight chicken to XXXX. drove Increases average consistently grew production the the growth. in for year-over-year. declined head Turning third and count ready-to-cook X.X% flock of industry

a However, pushing efficient record have with to more eg along levels. exits increased hatchery block reductions exports in utilization

While have pullet gains. mortality muted grown production by has year-to-date, increased X.X% potential placements

the challenges Like growth of Based quarter. approximately remainder production recent to firm in with a chicken the of prevented on exhibit along realization early indicates year, for response demand during sales. USDA This increased the year. growth trends hatchability the projections for in trends full suggests XXXX, data have X.X% full of

beef As pork chicken supply for overall USDA augmented production. increase the is protein additional growth in imports availability, and expected anticipates increased X.X% the as by

in in needs in both Chicken as a all still meat fulfilling throughout across volume volume shift dark center-of-the-plate with the departments. strong In consumers and major chicken environment inflation continue roses in fresh, everyday food to white the and their cuts. a to improved rely on challenging protein Consumers service. quarter, was demand demand continue towards channel retail eating patterns chicken retail Domestic shopping concern.

decline to breast, other proteins $X fell reduction the X contrast, reduction skinless boneless, XXXX. In below continued the from September last years. consistently past and and USDA has during XX% and per pricing since year For everyday over a rose retail X.X% pound, quarter per throughout

between business convenience. In revenue subchannels. chicken's and rationalize The spending ability hit previous skinless skinless both distribution saw dollar both build set record noncommercial foodservice, continue boneless, at relative another This wings realized breast needs ground as sales retail grew growth boneless, tenders volume steadily and to from As breast, to growth. and year. Growth while current demonstrated in to surpassing in volume activity meat, an in subchannels value-added Breast strong prices post build of meet sales continued the all post of positive the the of industry recently affordability poultry. continue increased. the foundation commercial coincided consumers at year-over-year the high, and beef and strong versus all-time notably without example, remainder frozen to of commercial retail set quarter distribution earlier seeking to second the the the given with sacrificing large which quarterly chicken noncommercial The deli the performance spread XXXX. on in increases,

to the to meals. affordable growth, the QSRs continues volume more foodservice drive most seek Within channels, continue suggesting consumers

export, towards despite versatility, export. XX.X% to lower is strong chicken chicken's option make u.S. pricing strong shift at global Robust broiler availability demand propensity and limiting post QSR relative it anticipate levels. most the overall has growth a dark reduction Given continued away-from-home protein We eating while volume for affordability. continue production will competing from as in to continued strong meat occasions. In for to its given local appealing demand markets, export prices U.S. was remain in

quickly and X% Coast in strike in impact. storage Disruptions port quarter, were limited compared some late a a had average. the rebounded low in and of chain to QX. Gulf market the down as not shipments X-year as cold last material supply for overall, to below potential the it the relatively And supplies the the year disrupted X% to are shipments East beginning the While remains

diversification both producing states affected. meat chicken of been the recent not [indiscernible] patterns. Western inventories precautions commercial dark our flexibility take the and surface. fell production of farms high facilities U.S., shift in of brakes to Nonetheless, isolated we meat geographical and majority outbreaks given the have business continue seasonal to year-over-year. Despite Breast influenza necessary safeguard any provide the changes our should The to migratory

restrictions, or few no trading exception remains lifting bands the to movement on on entire level reduce U.S. county China has banning continue and state. trade of zones partners current the only emerged. with ban Nevertheless, to majority the a to

and were throughout fairly Turning to weather crops. the realized feed, as the corn prices generally for stable the quarter the U.S. straight, development soybean of favorable input

U.S. previous years and relative years, down into pulling from corn year. low price the recent supplies to stocks emerged, of Given corn exports the cutting current demand from stronger-than-expected for

While estimated yields initial the bushes. supply, record about comfortable still U.S. crop carryout began U.S. corn with billion X new of a a smaller created

Moving will market the South forward, to American respond weather core imports. China the and of magnitude

in soybean was be meal that marginally, stocks upside the wheat soybean U.S., build. however, processing board record exchange Despite and expectations planting. market leaving South The America wheat, production a well supplied will by to In and this and expansion prices. U.S. global soybean ending versus crop year. supply, decrease globally prices, stocks the creating initial in 'XX/'XX future in industry the down slightly in also soybean continued soybean prior offset changes a expand, continue limiting increased to meal Both lower rate encourage in

from East for Global is in giving better lower Middle importers North wheat the several African crops this year, and regions. traditional wheat import demand

As basically a in flat balanced demand. result, QX, and wheat prices supply reflecting remained

risks. are growing the for still While stocks all feed suggest for projections there ranges current narrow price crops inputs, U.S. major [indiscernible] in and relatively

rate As and will America, changes production such, we continue geopolitical demand, South monitor events. in changes exchange global to grain weather in

consumers per more about and household indicated In trip buyer while are shopping still high frequently, U.S., a the Within and [indiscernible] less aware grocery are concerned retail, continued purchasing consumers indicate budget. behaviors prices inflation.

Additionally, their dining their top spend many indicated consumers to reducing go food enable farther. to saving, or cost as out spending of foodservice habits adjusting occasions cutting method a

affordability to retail. new of protein from from continued quarter service that the skinless all chicken to end, efforts the superior team was and breast. and the late amplified diversified team of value given our disruptions occasions Helen customers. for on operational mix. consumer. to unlock well ensure we our focus ready Given and across important, our the ground between to throughout chicken price record quality, fuel To enhance was increased in positioned Equally portfolio, our chicken spreads overcame that created rates in benefited in key Hurricane Interest boneless, demand reduction to [indiscernible] beef excellence

investments Furthermore, our reflect more customers key opportunities costs, promotional in to additional in for generating activity, demand. input with approach creating changes adapted

ahead Our key drove continued consumer and customers [indiscernible] in offerings higher grew our as of together differentiated increased attribute category averages. fresh interest distribution volumes our business with

improvements of the remain capital Small with with grow softening factors QSR excellence, with we When whereas base. our cutout combined customer mix our reduction were are by depressed across When commodity enhancements improved along drive throughout and values, are chicken key Bird despite operational demand retention last business deli the significantly Big retail. aided to margins in input efforts fastest-growing in foodservice, further for with last to In from to traffic training. These customers, Small and our team category along Birds, combined costs, expansion investments continue huge member year. and with grew better In from our Bird, efforts these throughout facilities considerably these year. compared penetration in continue strong improvements

gain to Our prepared momentum. continue foods

and deli innovation. driven We presence incremental marketplace consumer foodservice, leading distribution diversification retail, by throughout have expanded and our and

and Commerce year. partnerships customers. a our cultivate continued actions agility we sales play to compared by capabilities to have to key XX% a In prior variety of digital Europe, as to increased completed enhance with further role innovation

have the part synergies integration across diversified channels. As we protein and of portfolio efforts, these our throughout increased and

overall have Europe. roughly poultry, the the net sales. net largest in [indiscernible]. approximately X/X of we strong in X/X of and These with segments offerings, fresh pork constitute segment's is sales presence Poultry On

category snacking business. and with U.K. a with player meals value-added we And chilled a and prepared innovative the the both brands retail We segment, are Richmond and protein major as leader brands [indiscernible]. in frozen are such in leading

comprises the nearly Europe. sales Taken total of net half in together, this business

prepared retail of to of distribution designed leading deli, the third QSRs channels. needs is a frozen It includes and offerings, the Foodservice meet for part our other business. variety and

week prepared, and growth, not increasingly are improved have pork, to continues faster consumer. Confidence continue spend than the interesting and per averages. retail as have year-over-year for poultry past levels, whereas meals nonetheless, to both frequency continue year. all branded in options offerings outpaced Turning yet average lag. Within in rates food-away-from-home foodservice, over products pre-COVID grow to total to returned helping our to wage fresh growth participation outplace to demand as Demand consumers increased chilled category and inflation, becoming sales

our faster from than X% category Fridge our and Similarly, grew in branded market. have secured year meats brands, of pork, sausages and across Sales trends. Raiders and In of increased meals offering portfolio new diversified average. the grow and as Our we cooked continue offerings poultry several and Richmond proteins last across these chilled items awards ahead foodservice. bacon, prepared retail to benefit from

We through have we our poultry now have exports efforts our in and increased by complemented markets clients, lamb. continued expansion To pork, that customer additional over and XX%. end, XX XXX this both of opened diversification business base

pipeline continue our innovation enhance and growth. to cultivate mix to We drive profitable

over new launched various which we retailers received and many quarter, XXX leading the quality awards product, from for of innovation. products, best During

corporate unlock on to anticipated from the as support track optimization network our realized and of efforts value remain have activities to our continue we benefits. integration Our manufacturing

responsive a to key needs. we more drive to Moving to continue evaluate opportunities meet organization enhance additional customer will and and customer and production our innovative, agile forward, efficiencies

as In fresh, retail and category some we experienced foodservice. disruptions the demand above seasonal follow chicken market during growth volatility Mexico, significant in September. some late combined key typical hurricanes with both we In changes, experienced from customer

and Our efforts gain to sales grew [indiscernible] from momentum [indiscernible] as XX%, XX% respectively. branded continue and

BARE Just nearly quarter. XX% sales similar previous are as success realized up from has

increased portfolio last almost our We sales branded compared had to XX% diversify continue year. compared Pilgrim's momentum sales last also as X% as year. prepared to through offerings the grew most to value-added

our of to remain capacity We on excellence risk in ramp farms and proceed up production to expand track. up Our investments mitigate and operational breeder in [indiscernible] our as planned. continue relocation operational

growth in We and business of building prepared cook offerings the our new fry capacity. continued fully through also supported part

an provide industry Earlier this efforts governance report on become in to week, an year, we social our our matters. and to this published XXXX sustainability leader environment, update

global we as a to to drive as industry-leading overall food our robust embed absolute through strategy X we To by and have means to electricity and X continue component initiatives. more our sustainability emissions system end, a that decreased core in use We XX% operations. XXXX, over since renewable business XX% our now Scope

the our in by States by safety We independent index our of improved XX% since the GFSI and United also global certified Europe XXX% facilities have XXXX. performance parties to standards third according and

well over programs signed up X,XXX be better team program inception. received since exceptionally to continue for have future Our members as the

Galvanoni, ask I'd financial that, to our like With our results. to CFO, Matt discuss

Matthew Galvanoni

Good Thank Fabio. everyone. you, morning,

revenues of pricing approximately our revenues were net in and XX% key driven chicken. third the revenues billion sales EBITDA year-over-year quarter, adjusted flat. and the were pricing essentially of a to Europe, revenues, with growth market we commodity and in versus $XXX ago, Relative $X.XX U.S. compared million For quarter the Small $X.XX the Mexico's margin decrease higher and in net year experienced Bird. due by QX were margin of XXXX, with XX.X% net of a billion year. X.X% year-over-year to a last year-over-year case-ready $XXX.X down customers growth In to in in million for chicken

in past, the some cost-plus element. in discussed both of of and our have have we U.S. the contracts many level As Europe,

costs, As declining such, number key accordingly. be line our input with will reduced sales top

in Adjusted U.S. the EBITDA were ago. year XX% margins compared QX X% in to a

For In year adjusted Mexico, ago. our for were EBITDA Europe QX margins in QX X.X% X.X% at adjusted XX.X% came EBITDA last versus compared X.X% margins a to year. in business,

to U.S. the Moving

compared adjusted with commodity grain business. the costs to for year-over-year came Our markets, million our Big in in in chicken QX continued EBITDA profitability strong along Year-over-year ago. million Bird year lower $XXX.X operational a at recovery drove improvements, improvement and $XXX.X input

year-over-year key profitability momentum Our and improvements. driving have case-ready their with and distribution Bird quarter-over-quarter businesses increased both Prepared customers, Small Foods continued with

U.S. U.S. GAAP finalized. approximate the Note fourth will our the we anticipate the that lost pension inventory of financial charge million an charge writing the recorded primarily with a from quarter, of results and in quarter specific outlay we cash is less to the our pension Also, additional $XX.X $XX of Hurricane to termination did the the this to we when store. $X the U.S. charges incur than that settlement impacts quarter We $X In settlement anticipated is million settlement related million plans. for Helene related associated in in incur liabilities be down in million.

last In million EBITDA year. QX in $XXX versus was Europe, million adjusted $XX.X

growth efforts. restructuring of Our the programs $XX.X programs. has journey European on The business took step support incurred another offerings. benefited network approximately customer optimization profitability in and focus in administrative these business its through innovative and also its quarter reorganization We partnerships during key of million from charges

anticipate million through adjusted restructuring activities continue to the the generated We at QX year. least that $XX.X in of EBITDA year. Mexico will in end last $XX compared million

approaching quarter. strong marketing Mexico incurred products our seasonal the costs costs, EBITDA higher the of in normal this due trends advertising support to primarily Relative and quarter, Although branded more we year-over-year SG&A in to had margins XX% our profitability year. in decreased year-over-year

Our effective approximate effective expect XX%, tax year-to-date rate. the quarter rate to XX.X%, with which we for was our year our effective tax rate full of

flows from to sheet, and in investment strong cash high-return emphasize disciplined have projects. operating of continue working capital We activities, balance we a and management

our end $X.X net As approximately EBITDA. a X.XXx of QX, debt with leverage XX adjusted totaled of billion months last ratio of our the

$XX.X Net expense for million. interest the totaled quarter

impacts gains $XX of or losses to the $XX debt anticipate full the year million occurred net on net we repurchases Excluding that between million. during interest our year, be expense and any

driven credit, cash billion and year. the quarter, end of the had $X during available the by total cash in generation flow free strong we nearly At the

short-term between no XXXX, credit our have expiring our not bonds XXXX. We with facility immediate U.S. until maturing and and XXXX requirements, cash

needs. growth our markets, volatility our flexibility in during position times to U.S. us our customers Our pursue including commodity -- and meet growth key allows provides organic the to us customers' of strategy, liquidity

in spend the the million We of in in than less cash is third This $XXX amount quarter. quarter spent considerably CapEx forecasted.

specific the with continuing require, and to XXXX. are mix, we they growing focused product sustainability supporting These efficiencies meet optimizing Pilgrim's to seen customers returns through on of However, year are the projects our capital key our our competitive and attractive with with attributes growing plan pursue These efforts. our into increasing advantage. are additional as projects operational projects end product

time as very is it process to And review detailed. larger project capital projects such, Our commence. takes for

our will proceed will remain disciplined prudent our allocation manner. and a management plan cash in We approach in capital our and with

We CapEx now $XXX to full million. estimate our year approximately spend

on We opportunities. focused are intently growth

we invested additional years, our and the outside conversion targets key operators. meet growth both will exposure capacity by manage over protein protein to both risk in First, continue reducing relationships. product our last requested mix conversion we few foresee in and to we've to by so these to our and upgrade do we plans our product Also, attributes cultivate as investments customers,

have grown our trajectory portfolio growth have and portfolio. business extensively, These prepared differentiated products, to expanding team our of our align as anticipate both of discussed in great a health we've prepared. this diversification, and in the commitment and Finally, we growth has meet to innovative customers, Mexico opportunities U.S. opportunities organic and key member overall our operational Also, this branded and through portfolio to we business fresh and excellence foods our safety. on focus strategies near-term of capacity growth

this concludes questions. remarks. open call prepared our Operator, the Please for

Operator

[Operator Ben comes Theurer Instructions] from first The question Barclays. from

Benjamin Theurer

first another all. on here, Congrats quarter outstanding of

the would about of how then market? what's a X.X%, it would should help that That I adjusted around combination be the normalized obviously, like around place First levels? also EBITDA a seeing helping What's as my I seeing better Is kind now forward also us you strength the better? the question it just a we so those environment, be Maybe what are margin just quick going year about of Europe? topic. And Europe improvement profitability Is but it have nice got first margin here. that restructuring think consumer driving mean, about you're And ago, -- get to versus understand all just also really and in the just sequentially. put that you is Is the it follow-up. you've cost? a it? that in

Fabio Sandri

And it's a course. of I think of the all above, Of combination course. of

Europe, salaries I the inflation growing increasing we are we the consumer the faster We over than salary as saw the are mentioned, in seeing X over last years, past, inflation growth. as confidence time, the as the think in growing than for first

a that especially compression the the creating the on was spending sector. utilities consumer, So for on

and -- Europe. Now price we're we're down, the other prices seeing deflation coming down. utilities spending and of We're going seeing in a seeing grocery everyday

increasing. not was the it as at So but level seeing again, confidence compared the increasing It's are last same is we it before, year. to

our especially on side That on is helping meals and branded portfolio, the side. the

the So the of coming are consumers in brands seeing we that that brands going our more as are more where less growth confidence, they a consumers on from spending are back to Also, some refrigerated they we of label have meals are offerings. back leader and private market. on

And of we're chicken largest terms in in contracts world, that we winning of the everywhere seeing are business, have in and in lot cost. grow. the that our of of competitiveness marketplace and to components we in the cost a which similar seeing one also think Europe the of decrease to is prices because chicken connected I there, the continue are portfolio to

of we as benefiting the the that portfolio. So advantage pass the we which are chicken, retailers, our is to growth seeing

to And in coming we U.S. foodservice. Europe also than talk will, different in back sure, are about, for that consumers

of key faster segment. our faster So or are happening we're the what's U.S., and than customers Foodservice some growing some than what's tremendous experiencing growth market foodservice in happening seeing rebounding the in the

And spent manufacturing confidence our segment the we helping course, X our growing we with reorganizing consumer of last as portfolio. mentioned, network. in Europe is So the is the in and Foodservice chicken years

with operations, a sausage help, to than And some especially shared nimble some that key cook products new we both to and rationalized. more more that in with slice we customers. have services We our some production created structure a is lower meats central we our terms cost in the said and redundancies of of as we innovation mentioned, XXX efficient

Benjamin Theurer

Should that probably? target X%, as good forward is go think that So we a benchmark? about a X.X%, level, could that good

Fabio Sandri

regions, that to And always achieve should the do. in think as is ourselves we mentioned, we we to and that type Europe think trying companies compare that's and on profitability, we're those be I what could sustainable. of see what we Yes, that best that

Matthew Galvanoni

to in EBIT Ben, And X.X%. X%. as margins past X% this that adjusted we said have the margin our quarter, of was

getting those to levels. So the target team is really

Benjamin Theurer

increased into Fantastic. us be the should your to in. so little in, we nice holding so we unlike production, side, made market? understand commentary And the much XQ it's that wanted bit. bit a that seasonally then talk haven't seen into as and weaker, nearer XQ bit a into you foodservice foodservice weakness, demand go trends, a bit stable you're prices about far? fourth quarter, term seeing you in have the what on retail what's the the on Can from and actually, The you're that's what then pricing help U.S., little with expectation a little heading declines, little usually versus Why but but XQ? just And been a then XQ in and seeing

Fabio Sandri

Ben. sure. Sure, Sure,

in the because we levels prices, of the terms, down are see I seeing. we from QX we we in seeing QX commodity relative the are in strong the cutout seasonality coming that seeing had and chicken are think is value We in the on the that mostly stability right? demand that some always price

and the increase I we when foodservice foodservice, mentioned in the foodservice consumption has seen But growth. the with some penetration been foodservice, with look traffic. struggling we've I at foot in and think starting chicken

As X% of the year. growth volume the higher in of a overall is than period fact, same matter of foodservice terms chicken last

full-service and there there's that in the of growth lot a X% as chicken. an in even restaurants, in think noncommercial, of volume mentioned, increase is I the of commercial, X%, but the which is I QSRs

chicken the in is the where struggling is segment volume X.X%. consumption that The down is really restaurants full-service of

seeing So are and in traffic, terms in some the strong overall, demand we in foodservice of struggle there. we're despite chicken, seeing strong general of penetration

in foodservice And we what's more their moving to that trips lower is seeing foot to budgets. of in in an think with And chicken a supporting is happening demand. traffic the mentioned, trips, fresh fresh overall, is And volume commodity is the more retail. meat we consumer that prices of summer, market. We're think in retail. during strong the to increase breast as happening close is even we commodity saw winning. the Because And the protein QX. fresh category, of looking Big the in going I we're category it market meat of We baskets, to retail. strong lot is but because retail to that X% overall always have, albeit the have retail, the smaller Bird stretch as the seeing during with is, I that the continuation,

products So the Bird we're going commodity area. Big some in the tray-pack seeing to retail products,

So now well very bit despite this look time the right than cut QX, of it's supported which little is when at jumbo normal year. out, for a lower you the

Benjamin Theurer

little Do right? as [indiscernible] XQ you a expect that as rebounding into to bit, hold

Fabio Sandri

the period layer the time expected seasonality And balanced a as weeks X prices the steady, into are expect drill supply right? supply, chicken year, the And the has given is we line but same higher last to think year. seeing. in we And demand. the which mentioned, this the than strong the for and with demand over we you the of that not been also of is We'll last of I have been down the Yes. excess, the have supply it very size flock,

Operator

is The from America. Bank Peter with Galbo next question of

Peter Galbo

okay? Can you hear me

Fabio Sandri

now. can Thanks. We

Peter Galbo

realization around in price me question one the just on quarter. particularly Fabio, U.S. for

I think about pricing was up XX%.

see being we Obviously, down, You I about think, the spoke commodity all the prices mid-single market in did. what of can kind retail digits.

Bird in And Small the kind as happened so improvement fallout. that implies in some of what's maybe pricing

Bird was of ties us track be your know Small Bird on externally? on saw given Small the helpful. key I the but any just could price, you quarter relates pricing that's a in would you broad the as hardest that, into bit hoping So business that little expand to And very I what it customers, probably there comments piece a lot for to

Fabio Sandri

Sure. Yes.

pricing, we it I Board to On the Small are the seeing, connected the trend and what mentioned is foodservice. on that

that the their consumers of there and is deli retail to segment. budgets trips the which the foodservice, is as I think try stretch to a winning, component less is

if to you deli, close are think the year-over-year. in I X% the look up numbers volumes at

convenient our deli than key portion very going as as customers meal of a Small faster that But with well deli. And is Bird big And to households. as I the part traffic they are growing chicken from this actually great for the consumers for move especially a category category, As foodservice, their largest XX%. mentioned, for a substitute of it are is away the to the close deli. birds, the whole the

[indiscernible], So we're seeing strong box the of Birds, demand Birds Small Small for as right, prices and translating the deli is growing fast, we really call. which we're the or the seeing to

to grow. key are the ones So I continue customers, the think that combined our especially on the Small Bird category that with deboning QSRs, for the that

are for Small Birds. strong demand seeing some We

we decade, production. reduction seeing a say, as last, look the in into the course, Of Bird over let's we're production, Small

in QX, seeing But affect bit heads, waste, X%, higher a little to too terms in of the reduction supply. reduction deli market. a close much the doesn't bird For we're was that but

supply/demand the supported. well Small the Bird is for So very structure

Peter Galbo

I click That's a more. that helpful. super, just bit If actually can super on in

meal hearing I'm price it insight birds correctly, that small if So consumer the convenient you to seeing, rotisserie option that a more deli or as pertains at and birds the that maybe point, deli, are is you're essentially $X translating deli. the I even just you're sure into box. they're the grocery box, QSR a going that and want into from at least I they're the observing that's within within channel make If understand... what to the consumer,

Fabio Sandri

it's easy fix avoidable, for No, the very very convenient right. and is that's a family. exactly meal, It

Operator

The next BMO. question Strelzik with comes from Andrew

Andrew Strelzik

update operations? of color out? on some but could And kind and know I of to impacting status called from the in Florida us the are you operationally share you that on or expect give that's plants if out maybe here? to Southeast you the some your hurricanes hoping the playing and and was an play you out I how how how could impact charges, supply/demand, just maybe recent specifically

color of supply or I that hurricanes much the all really I'm on making from some which the appreciate you be just I that, of stabilization side, within Lastly, the guess, recent if wondering maybe But disruption too think I sounds contributing to that And was great. demand that? could

Fabio Sandri

Yes.

Okay. were our Thank team was direct Milton and hit Florida, that we Douglas, Helane and Yes. it our of was in first a X that all Despite Liveoak, you, from the Andrew. there hurricanes believe Georgia. safe. all, will of members of communities, No,

right? the So and not prepare operations hitting South. we our hurricane, is lot those the for this past just in in -- a first especially We have on because we how our have operations those of them of many

shutdowns, a we tanks. And many preventive generators members. locations, have help of our we plan. in emergency our fuel team to and That So of course, have includes preparedness the

[indiscernible] We located strategic have we to used case positions in and supplies of trailers be in need. around several crews, have of

the directly Our impacted not facilities were by hurricanes.

impacted, We us, have has destroyed, some Georgia, minor as issue only the but partner them damage been but not I the mentioned. totally in the hurricanes, growers. were from for on houses the severely on especially Many were industry, those of and Douglas, many area

growers was I electricity important were say days. out really several many of think that to it also, of for these

to like again, rebalance I to were facilities. impacted, Douglas, our other we mentioned, but able We production especially were in

key We have level and to we excellent maintain our facilities, of service an operating XX customers.

So no to customers. our disruption there was key

grow take time, for To their Air to months months believe financial it assistance What base engaged back Commissioner have rebuilt. and grow XXX% it'll to build need the out congressmen this with help we out base rebuild again. X take that growers to it, Georgia to because these local We will from be XX the is housing. to

the we a to building as design financial to crew assistance. soon put also together as help them with have We and

helped committing retailers help necessary were And I supplies to are Douglas the basic [indiscernible] they able key retailers I like that have. and the customer with also also And out trailers those in to repairs key we communities with impact a shout the that mentioned help suppliers, supplies, us to and We million the $X community. we the we on need. to want to -- our

birds we our $X in loss, in mentioned, Matt As of inventory included million loss the live mainly financials. a

also the the lot weeks impacting in that overall operations, is were some without I electricity. that consumer, down even production. A that at the think for of same from little we But I market, during As time, foodservice during the disruptions have think a reduction retail, week, how have we, much right? we

in we demand well. saw an impact So as

has the for to future, next I the think the say, For the industry support let's months, foreseeable growth. enough capacity

I think to those we will houses. rebuild continues

significant expect I the So into of the hurricane. impact marketplace a don't because

going to week, to on to community [ Douglas a in and that Of are Douglas. significant killing bit from make customers that was we the we into our have companies that but impact some to of -- little we recover down. redirecting production facilities do course, sure days We ] disruptions the see there from a were reduction key they saw have were Saturdays but facility, other we don't during in

Andrew Strelzik

have rate I quickly you, point ask just I other impact before capture your -- a want to on would would confirm from just not perspective either. what And that. my That question. or guess, following margin just utilization I really last not then really up that

Fabio Sandri

We. Yes.

will I think redirect. we

redirect lower can locations. to a while. Of we volumes from and from But will our for course, chicks some nearby Douglas chickens need have

So all members makes we'll team maintain for of there. utilization sense in that will and Douglas a production our level

Andrew Strelzik

Got it.

talk you up? shape maybe you're business? if at this growth and next if Can the much internal might you're other priorities? again grow capital year how And CapEx CapEx extremely down capital helpful. I little question cash balance bit And do looking That's what, then a maybe very cash the sheet comes Obviously, for projects, allocation how you your about some topic need number just to balance thinking Okay. to the the on on run my of about you continues year believe nicely. review How the allocation. could

Fabio Sandri

is -- all just okay. cash is, how term strategy. value, have create can what right? believe of create the shareholder our No, today. we can grow the I continue And business think company. go most course, to our the less much of to details to in terms looking the than into option the of run so growth we we much into to need options long we that And But in

We a been the Matt with growth think seeing we of customers. the that phenomenal. retail already mentioned, key are mentioned opportunities in has lot I

Our growth higher average. is than industry much the

much in and fresh and in are to in category, how service. XX% the offerings differentiated While key category, quality a the by is our X% great grew customer increased we which statement terms industry value creating Pilgrim's retail of the the

because growing So growth we because once close retail growing the the XX% Just and of see to tremendous in opportunity our foods. of prepared The of there. the to BARE partnership the It's XX%. We're also Pilgrim's seeing innovation, again the brand. growth close key customers, with of fully is area frozen is the cooked

of also, a is in the growth we're well. And So lot in as prepared seeing organic foods opportunities there acquisitions.

the some and seeing can of in portfolio U.S., are M&A results. and Mexico Europe, activity, we especially improve volatility mainly where our reduce our We outside

So that create the long value we shareholders great a growth for can have on strategy the run.

given have, opportunities. we the also the in excess for short cash Now term, we're that looking

difference We debt some today. have the not as thought in of We we did because the yields. in that acquisition opportunity past is of that that, great

well. I liquidity we we future dividends. think marketplace have are seeing as But also have dividends we at special share the have we course, we given in for the Board, and those opportunity for limited, our discussions And buybacks. Of as the have is that

Operator

from next question The Jones Research Heather with LLC. is Jones Heather

Heather Jones

had from couple of wanted up production the And Congratulations side. follow on quarter. I guess a Helen impact. on the great I a I questions to

you're there's the check clearly, around QX Douglas, new a impact given checks but should that about production you But of how around, keep are supply. given all up moving your running, plant your know having some So were growth U.S. to during QX. I X.X% on in think we impact and about volumes that

you that guys against extra know just adjusted So for should that? but in you're we QX? week, how for comping I about an think

Fabio Sandri

will and the big close we impact the which to a that Like have hatchery, we I we -- of some the to down beginning think QX, damage for the I mentioned, Yes. impact chicks stay for in quarter, impacted week And the at in to volumes sure. in -- the the have the we us hatchery. quarter, volumes lost a Douglas, of lot

think that is I we biggest the So have. impact that

of lot region. As a we houses we that in lost mentioned,

lost the I lost. we close think maybe to what industry

in in some will we reduction to some Douglas as But reduce total production. I we our of see the try will houses. So time first mentioned,

that optimal maintain an -- have all-time we reduce. We can

we this will footage back, we square some of So gain will rebuild houses. the

specific will sure, the this I housing. I For we long term, months, about asking the over you're QX. XX the next know over rebuild X, X, But think

the again, that albeit little Douglas an efficient, But nearby maintain will have. we plant from lower bit by locations important, we I operation think birds a makes some more moving around that

be impact, to in in one the with think, I in to don't have the all, think plant have to be same I year. last dilute So we all because significant try specific QX others. will volumes we will the close that can we impact a that expect all volumes birds we again, from it

Heather Jones

And industry to wanted production Okay. just ask then about I broader trend.

the hurricane, dramatically that hatch. placed between since -- this of there's understanding mean, and we've same placed be half. I'm by what suggest beginning got versus And the And mortality gap all heads could in have the the is you industry has the yet, that actually gap explained been chicks from sure so what thing, big would having between September, has in some my I pronounced So improved and but been slaughtered. beginning of first we've slaughtered. September, improvement been very of the But a chicks since noticed very this but

that on? you'll will was so going just itself? any all wondering And thoughts what have that? I on And And when is resolve you think

Fabio Sandri

having And and started -- right, discussion, that this a Okay. ago, this we're new is generic. everything years X again, it's great with since

it has comes price It price, hatchability. slow already the And and kind has we year, As say, improvement. Over this a is seasonality let's the It I great to improvement, I as hatchability XX% it really the part a has is improved, went you a feed think has the And low it great mentioned, of from the but with XX.X%. very it conversion. been a great been generic. of mentioned, a of has yields, but weather.

hathability the So we're seeing improvement.

the years, into prior always you see an fall like during the Just winter. improvement coming

I as But the really it's a manage think That like So will seasonality. it even of this dealing part breed. improvement, is of mentioned, nonetheless, I how on life with fertility, on the is it, difficult. in slow side mentioned, conversion. But learn this industry great terms I to

houses, does. let's treatment, say, to again, the very not in the geographies, and, industry they there hatchability industry much Europe And have animals, care those is separating a better and just the is specific prepared Brazil U.S. of structure by in or In birds like take the than U.S. individual detail the do weight a in

hatchability to complicated figured the know how that's And we and pace. in It's just at it. out So a faster why yet improve industry the do how U.S. haven't expensive. to the

mortality we all. staying As think mentioned, I the there is at

into production. bit, I is layers. since mortality has new the mortality but think incorporated happening a it's improved on big And issue breed was the the hatching little been our a this

we that we creating between that's the So broilers. coming high also, placing increased are to we're what's placements in on layer. mortality the are seeing what And to is we this seeing because and the little are replace mortality need But gap production. we pullet seeing hatching this what

we QX, actually and heads, close than increase number an Heather, as look And big excess we're if in we're But produce compensated at of bit heads mentioned, X%. little you of of right, X% almost because with heads. we producing to number into if mix then look small the seeing, birds. weight you during a minus in terms We more of birds

mentioned, and quarter the production total X% But As reducing. was been in down in heads, birds the have year-over-year, to we're close I of small X.X%.

impacting mortality is these the is it So birds. that

great really yields. convert they course, have and Of well, they

don't said, So is how right. more even new manage spread. red, as to expect to It production a shorter this or a mentioned, learn really to that generic the the X, the are there years. a the happens increase industry that will preventing of efficient will bit we But improvement very X industry I or every weight, is difficult But the hatchability it, we're -- seeing manage, it be you mortality the seeing even fast terms we The in for term, in which like of compensation in little I is, but think that. difficult.

at is commented highest Matt as the utilization, hatchery Our ever.

is So for X.X%. overall is to way. expecting And the industry be increase that's a X.X%, to chicken growth the really next for in the of why difficult significant to it close USDA production year

Heather Jones

quickly. clarify wanted something just I Fabio, really to

these and So this mortality, earlier year, there the was earlier in all bad and that disease year was mortality bad as the yet proxy the for we as gap you the were But a have use all highlighted issues if this abated. in really as issues. disease it

mean just have at in a trend their weird that be I think or producers worse is just that should improving. things actually you this gotten do just husbandry, So

obviously, I'm -- important. just I it's belabor but this, not so to trying And

Fabio Sandri

no. No,

Of higher. course, it has improved, but the mortality is still

should you is improve I because my -- as as at the we vaccination it mortality have actually think against that but that point. against [indiscernible], creates over I we the beginning, starting even vaccinate time. think some and And start lower we higher we vaccinate, or the

effect term. negative in So have vaccination a sometimes short actually the

Operator

is Sharma question The Inc. Stephens, with Pooran next from

Pooran Sharma

call. on the on color lot you've base U.S. Congrats touch a of throughout think on Mexico, we strong If I the shared the could quarter. just

to So Mexico. on attention my focus wanted just

you're remind could seeing kind I of you in it you release, be could then helpful? color in regards so called the And of what would to but press just share far any of seasonality. know If you me kind Mexico?

Fabio Sandri

sure. Yes,

I for challenging economy. has great been really growing always It's us. and a but talk year-over-year we quarter-over-quarter, Mexico market is think a about, as volatile

quarter We also which as the creates bit live live consumer region. to the But At Mexico QX schools QX, production That more seasonality strong in we combined production. production, Mexico. because demand. bigger lower was the with markets, a to we in same as incentivized, really diseases the and weaker especially of a continue of on see the time, a that [indiscernible], consumer, little shift and typically the have invest a into that behaviors growing for going is the

higher this we had to every prices, which during compressed, the really live Mexico what September So volatile. during lower year, on it's is really in we saw with be which QX happens especially production And especially market, demand. year,

buying And in we are see demand of well. families the as to going see schools go more rebound behavior think the we forward, food the every we also economy continue and seeing their the I as out normal doing to back and home. year, go

during also saw because QX, local volatility Mexico we elections. the of I some think the in

behaviors American the create the Mexico of in which terms little cost, the but local families. elections, a So volatility currency, bit of elections terms of impacted our but the of in the not in also

think save we volatile trying demand during people to I more in and or money, impact demand that an time. saw

seeing information government, more back. have going as demand about what of is going a Now we we the and the current new are do the government the continuation is to economy overall

than being why, lower bit bit those seasonality I earlier it the at a that's good region there hurricane, normal little effects. which results, despite end a -- return and in of or quarter. then of same QX, that the the little have than reached what There is United was last the than right a States, lower impact and of think So but in good Mexico was was the which time we year

the a is economy. again, continue and But in I growing think we place region. are we'll to seeing, grow Chicken to invest Mexico, a in at great

Matthew Galvanoni

just 'XX, in the complement stronger for a of here bit to in just back normally with XX% that quarter trends back think just this 'XX, a than is it was we just very to if seasonal of margins I then for we seasonal to Mexico, happy little business us quarter. bit Yes. And was slightly counter think I EBITDA got more QX really QX relative a is. nearly still but that, of

Pooran Sharma

for the I the kind of the focus could I guess on U.S. one, here. in the supply honing in here. just I kind last if detail. And of on appreciate side just Okay.

And of kind just the own could you that X.X% you we're operationally? to share You of are are you I wondering on mentioned an kind improvement data Or are you that improvement like what able the in seeing of if in in that? kind Like was rates hatch efficiencies. of seeing you public production quoted? your color kind some doing outpace that?

Fabio Sandri

Yes.

is we is making the separating feed by animal mentioned, attention houses weights, their we say, their breader some our to birds the fitbit on difference as a for the and that changing testing And changes individual by side the the on think and adapting chicken. are let's some -- it hatchability. of to I the individual the to weight

So we improving. hatchability, the a increase industry higher are little seeing bit some actually the in what is than

the I we already egg. better into the are always of in producing industry. the think And that, we're look than cost

we hatchability. that cost overall not necessarily the look, it's So only

the previous over the is I I think But there. than we're breads. lower think improvements level So seeing much industry, still as some whole

Operator

is next Barclays. Argos The with from question Alani

Unknown Analyst

asking of questions. on for And the follow pre-up. This prior is just Argus in X to

are below does current Given And that in about your the landscape what thinking net leverage is target, how well for like? Mexico M&A it? looks you

Matthew Galvanoni

Mexico inorganic business. our you perspective. growth Mexico, complementary growth is than had it's has organically. an both when about the in growth in our opportunities but the mentioned and prepared Fabio side my I -- talked to to talked what fresh capacity about our in plans in our past, back spend the on some to also go year, from of half organic it's had what we M&A timing. remarks our prepared businesses I the less customers, and I prepared and opportunities coming about both I'll looking mentioned key our Fabio And that foods business as well are in as some talk prepared but CapEx we way that's in see remarks, Yes. increase and into and we And had just second forecasted the in the relative And really our Mexico, then of our

we will kind amount timing just A right approach, bit on see now growth cash getting through of really lot spend just little time of that more of to the capital ground. bit that a perspective from our disciplined we relative opportunities off it projects be to utilized. a that a get So and where little detail of and and takes the

Operator

session. like to This I concludes would over for remarks. question-and-answer Fabio turn closing the Sandri the conference any

Fabio Sandri

and call. attending thank you, today's Thank for you, everyone,

consumers. this operational approach key our business through We partnerships fundamentals, downside designed is collectively to these while portfolio further excellence. amplified that our value mitigating in customer and are risks. for and drive on people consistent the grew market investments our in built Our These attractive strategies by capture improvement

to member Based we have their on our in can a we future in you, families. relentless commitment and industry, most and leaving our our those for be progress, vision we to company strategies, driving While remain and better safety team our everybody. made wellbeing. the best, using respected members Thank creating these team efforts, achieve values

Operator

conference you The has now for presentation. concluded. Thank attending today's

You may now disconnect.

Pilgrim's Pride (PPC) 31 Oct 242024 Q3 Earnings call transcript