Priya Ohri-Gupta

Priya Ohri-Gupta asked about the expected consistency of operating cash flow (pre-working capital) for 2026, key trends influencing working capital's contribution to cash from operations, and a directional breakdown of the $1.3 billion long-term investment plan for Mexico through 2030.

Answer

CFO Matt Galvanoni indicated general consistency in operating cash flow for 2026, while noting that working capital in 2025 was impacted by strategic inventory increases and higher AR, expecting a more flattish inventory impact and stable grain prices for 2026. CEO Fabio Sandri detailed the $1.3 billion Mexico investment as a long-term vision through 2030, targeting regional growth, prepared food capacity expansion, and reducing import dependency.

Priya Ohri-Gupta asked about the expected consistency of Pilgrim's Pride's operating cash flow before working capital changes for 2026, given its historical stability around $1.6 billion. She also inquired about the anticipated trends for working capital's contribution to cash from operations and sought a directional understanding of the $1.3 billion investment planned for Mexico through 2030, specifically for the 2026-2030 period.

Answer

CFO Matthew Galvanoni stated he doesn't foresee a major change in operating cash flow, despite increased CapEx. He clarified that while 2024 benefited from grain cost decreases, 2025 saw purposeful inventory increases and AR headwinds; he expects a more flattish grain environment and no repeat of negative inventory trends for 2026. CEO Fabio Sandri explained the $1.3 billion Mexico investment is a long-term vision for regional growth and prepared food expansion, including grower investments, aiming to reduce Mexico's meat import needs by 35%.

Priya Ohri-Gupta asked for an explanation of the sizable working capital use in the first quarter and the outlook for the full year. She also inquired about the rationale behind the company's open market bond purchases during the quarter.

Answer

CFO Matt Galvanoni explained that Q1 is typically a period of working capital use due to factors like incentive payouts, and that the prior year was an anomaly. He expects the trend to reverse over the remainder of the year. He described the bond repurchases as an opportunistic use of capital, noting the company expects to generate significant cash and is considering all allocation options.

Priya Ohri-Gupta asked about the 2025 outlook for working capital's contribution to free cash flow, given input cost volatility. She also inquired about the potential business impact of proposed tariffs, particularly with Mexico.

Answer

CFO Matthew Galvanoni stated that after a significant working capital benefit in 2024, he anticipates a more 'flattish' impact in 2025, not a major drag but not the same level of uplift. CEO Fabio Sandri expressed doubt about major tariff disruptions with Mexico, citing Mexico's concern for food inflation, but noted that Pilgrim's large in-country operation provides a natural hedge against potential trade policy changes.

Priya Ohri-Gupta asked for details on the refinancing expectations for the 2026 debt maturity and whether the deleveraging path in calendar 2026 would be driven primarily by improving EBITDA or if it relies on the Wella stake sale.

Answer

CFO Laurent Mercier confirmed that the 2026 refinancing will be consistent with the existing secured structure. He explained that deleveraging will continue through operational cash generation as EBITDA returns to growth, and that the Wella stake divestiture is being actively worked on to "help and support" the acceleration of this process.

Priya Ohri-Gupta inquired about the refinancing expectations for the 2026 debt maturity, specifically its structure, and asked whether the deleveraging path in calendar 2026 will be driven more by EBITDA improvement or the Wella stake sale.

Answer

CFO Laurent Mercier confirmed that the refinancing of the 2026 maturity will be consistent with the current secured structure. He explained that the deleveraging agenda will be driven by a combination of factors: disciplined working capital management in H1, followed by EBITDA growth in H2 (calendar 2026), with the divestiture of the Wella stake intended to help accelerate the process.

Priya Ohri-Gupta from Barclays followed up on the prepared foods strategy, asking if recent investments reduce the need for acquisitions. She also inquired about the timeline for the U.S. beef cycle bottom, the company's target cash balance, and the status of updating the bond ticker.

Answer

Wesley Batista Filho, CEO of JBS Foods USA, stated that acquisitions are always based on opportunities and difficult to forecast. He projected the beef cycle bottom to last for the next 3-4 quarters. Global CFO Guilherme Cavalcanti confirmed the current cash balance is more than sufficient and explained the process for updating the bond ticker and shelf registration.

Priya Ohri-Gupta of Barclays inquired about the drivers of weaker-than-normal working capital in Q2 and whether it would reverse in the second half. She also asked for the quarter's capital expenditure figure.

Answer

CFO Emmanuel Babeau explained that the H1 cash flow was primarily impacted by two large payments totaling over $1 billion: a duty payment in Germany and a final Job Act payment in the U.S. He does not expect other special working capital impacts for the year. He did not provide a quarterly CapEx figure, reiterating the full-year forecast of $1.6 billion.

Priya Ohri-Gupta asked about the reason for the modest reduction in the company's full-year deleveraging target and inquired about plans to potentially refinance 2025 debt maturities ahead of schedule.

Answer

Chief Financial Officer Emmanuel Babeau attributed the slight change in the deleveraging guidance to the impact of a stronger Euro on the company's debt valuation. He confirmed that the company is actively considering its options and may be active in the refinancing market in the coming months to address future maturities, but did not provide specific plans.

Asked if the company's full-year EBITDA could still be flat year-over-year given U.S. Beef headwinds, inquired about debt reduction plans for the rest of the year, and questioned consumer demand trends on the retail side heading into grilling season.

Answer

The company clarified that a previously mentioned EBITDA number was a breakeven calculation, not guidance, and it's too early to forecast for the year. For debt, the company will generate cash but also pay dividends, expecting to end the year within its target leverage range of 2x-3x. On the consumer side, demand for all proteins is strong, with a trend of consumers moving from foodservice to retail driven by value rather than specific promotions.

Sought clarification on recent debt management activities, the potential for further debt reduction in 2025, and current consumer demand trends in the foodservice channel for various proteins.

Answer

The company confirmed approximately $2 billion in new debt issuance and $2 billion in repayments year-to-date, with a potential for another $480 million in bond calls depending on cash flow. Further debt reduction plans are not set, as Q1 is seasonally a cash-use period. In foodservice, JBS is experiencing strong growth and gaining market share, despite reports of broader market softness.