PILGRIMS PRIDE CORP (PPC)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 delivered solid growth and margin expansion: Net sales $4.46B (+2.3% Y/Y), operating income $404.5M (9.1% margin), Adjusted EBITDA $533.2M (12.0% margin), and GAAP EPS $1.24; Adjusted EPS $1.31 .
• Versus S&P Global consensus, revenue was a small beat while EPS was a slight miss: Revenue $4.463B vs $4.446B*; Adjusted EPS $1.31 vs $1.34* (mix headwinds and higher SG&A from legal and incentive costs) .
• U.S. performance was strong (Case Ready and Small Bird outpaced category; Big Bird benefitted from elevated commodity values), Europe reached an 8.1% adj. EBITDA margin, and Mexico grew Key Customer volumes but faced FX headwinds .
• Capital allocation remains a catalyst: PPC paid a $6.30/sh (~$1.5B) special dividend on Apr 17 and exited Q1 with 1.1x net leverage (pro forma for dividend); management guided FY’25 capex to ~ $750M and net interest expense to $110–$120M .

What Went Well and What Went Wrong

• What Went Well
  • U.S. franchise execution: strong Case Ready and Small Bird growth with Key Customers; Big Bird margins improved on favorable cutout values and better operations .
  • Europe margin milestone: adj. EBITDA margin reached 8.1% on optimization, mix, and branded growth (Richmond, Fridge Raiders) .
  • Prepared Foods momentum and digital: U.S. Prepared Foods net sales grew >20% Y/Y; digitally-enabled sales +35% Y/Y; Just Bare sustained category-leading velocity in fully cooked retail .
• What Went Wrong
  • Mexico volatility/FX: Mexico EBITDA down Y/Y on FX (~$8.5M headwind) and live-market volatility; sequential improved vs Q4 .
  • Wings weakness: softer bone-in wing prices vs last year/five-year average as traffic shifts from foodservice to retail; expect seasonal normalization with promotional activity .
  • SG&A pressures: Q1 SG&A higher Y/Y from legal settlement/defense and higher incentive compensation; ~$10M weather headwind in the Southeast early in Q1 .

Financial Results

Consolidated results (oldest → newest):

Q1 2025 actuals vs S&P Global consensus:

Segment/geography breakdown:

Selected KPIs (Q1 2025 context):

Guidance Changes

Note: PPC does not provide formal revenue/EPS guidance; commentary focused on capex, interest, and tax parameters .

Earnings Call Themes & Trends

Management Commentary

• “We continued to cultivate Key Customer partnerships through differentiated offerings and a diversified portfolio in each of our geographies, reinforcing our foundation for profitable growth.” — Fabio Sandri, CEO .
• “Adjusted EBITDA margins in Q1 were 14.3% in the U.S., 8.1% in Europe, and 8.4% in Mexico.” — Matt Galvanoni, CFO .
• “We anticipate our full year effective tax rate to approximate 25%… our full year net interest expense to be between $110 million and $120 million.” — CFO .
• “Wings… significantly lower than last year and lower than the five-year average… expect the price of wings to go back into the normal seasonality.” — CEO .
• “We will continue to invest… we spent $98 million of CapEx during the quarter and… our full year CapEx estimate remains at approximately $750 million.” — CFO .

Q&A Highlights

• Capex cadence and scope: Capex to ramp as large projects move through site selection, permitting, and engineering; FY’25 guide remains ~ $750M; disciplined allocation .
• Market dynamics: Consumer trade-down to retail supports breast and boneless dark meat; QSR promotions aiding foodservice chicken; wings softer but expected to normalize seasonally .
• Europe sustainability of margins: Integration benefits realized; shifting to growth via innovation; consumer environment in Europe improving as wages outpace inflation .
• Mexico outlook: Long-term growth via fresh and prepared; near-term volatility from live market and FX; sequential improvement vs Q4; keep in mind tough Q2’24 comp and FX drag .
• Working capital and debt: Q1 working capital seasonally negative; opportunistic bond repurchases; expect WC to normalize over the year .

Estimates Context

• Q1 2025 vs S&P Global consensus: Revenue beat by ~$17M ($4.463B vs $4.446B*), Adjusted EPS slight miss ($1.31 vs $1.34*). Mix shift toward retail and higher SG&A (legal, incentives) likely weighed modestly on EPS .
• Forward estimate implications: Raised FY’25 capex (~$750M) and higher net interest ($110–$120M) may pressure free cash flow vs prior expectations, while U.S. margins and Europe’s 8.1% adj. EBITDA margin support EPS resilience .

Consensus estimates and surprise calculations marked with * are from S&P Global.

Key Takeaways for Investors

• Portfolio resilience: Balanced exposure (commodity + value-added) is delivering 12% adj. EBITDA margins despite wings softness and Mexico FX headwinds .
• U.S. growth engine: Key Customer wins in Case Ready/Small Bird and Prepared Foods (>20% Y/Y) remain core drivers; Just Bare retains category leadership .
• Europe turning the corner: Structural actions and brand momentum underpin 8.1% adj. EBITDA margin with room to improve .
• Capital deployment: $6.30/sh special dividend executed; leverage still conservative (~1.1x); large capex for prepared capacity and protein conversion elevates medium-term growth but near-term capex/interest upticks temper FCF .
• Watch items: Hatchability/mortality constraints (industry-wide), wings price trajectory, Mexico FX/live-market volatility, and any trade/tariff developments impacting dark meat exports .
• Near-term trading: Revenue beat/EPs slight miss setup with stronger U.S./Europe margins and robust demand narrative; catalysts include sustained breast/dark meat strength, wings normalization, and Prepared Foods updates.

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Appendix: Additional Detail Tables

Q1 2025 Income Statement (select items):

Q1 2025 Segment profitability (Adjusted EBITDA):