Executive Summary

PPC delivered another solid quarter: revenue $4.76B (+4.3% YoY), GAAP EPS $1.49, Adjusted EPS $1.70, and Adjusted EBITDA $686.9M (14.4% margin) . Versus S&P Global consensus, revenue beat by ~$0.13B and EPS (adjusted) exceeded by ~$0.12; Q1 saw mixed results (EPS slight miss; revenue beat), while Q4 2024 was EPS beat/revenue miss*.
U.S. strength and EU margin expansion offset Mexico headwinds (FX and disease); U.S. adjusted operating margin rose to 14.7%, EU to 5.4%, while Mexico fell to 15.4% from 18.3% last year . Management cited legal settlements ($58M) in GAAP results and higher commodity chicken input costs pressuring Prepared Foods profitability .
Capital allocation/capex updated: Board declared a $2.10/share (~$500M) special dividend; 2025 capex now “slightly less than $750M,” at $650–$700M; net interest expense guided to $115–$125M; tax rate ~25% . A $400M prepared foods plant in GA is expected to lift U.S. prepared sales by 40% at full capacity (1H’27) .
Key near-term stock catalysts: special dividend timing, Prepared Foods expansion trajectory (Walker County spend cadence), and commodity cut-out/hatchability dynamics that influence U.S. margins and estimate revisions .

What Went Well and What Went Wrong

What Went Well

U.S. business and branded Prepared Foods momentum: “Prepared continued to realize significant growth as net sales increased by 20%… Just Bare recently achieved over 10% market share… Pilgrim’s received… People Magazine’s 2025 Food Award for Best Chicken Nugget” . U.S. net revenue rose to $2.82B and adjusted EBITDA to $482.7M .
EU margin expansion from efficiency and mix: Europe adjusted EBITDA margin improved to 8.2% in Q2 (7.4% last year), driven by “integration of support functions and manufacturing optimization programs” and key customer partnerships . Adjusted operating margin reached 5.4% (vs 4.7% LY) .
Capital returns and liquidity: Board approved a special dividend of $2.10/share (~$500M), with net leverage still ~1.15x post-payout and ample liquidity; bonds mature 2031–2034 and credit facility runs to 2028 .

What Went Wrong

Mexico faced FX and disease headwinds: Q2 Mexico adjusted EBITDA fell to $92.3M (from $115.1M LY) amid a 13% YoY FX drag and “bird disease challenges,” though margins remained >16% . Adjusted operating margin declined to 15.4% from 18.3% YoY .
GAAP headwind from legal settlements: $58.5M of litigation settlements weighed on GAAP operating income; management is addressing ongoing matters (Broiler litigation) .
Prepared Foods profitability pressure: Despite strong sales growth, “higher commodity chicken input costs were the headwind to prepared foods profitability,” tempering margin flow-through . In deli, “reduction in the growth of rotisserie birds… impacting prices” vs 2024 .

Financial Results

Headline Results and Margins

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($B)	$4.37	$4.46	$4.76
GAAP EPS ($)	$0.99	$1.24	$1.49
Adjusted EPS ($)	$1.35	$1.31	$1.70
GAAP Operating Margin (%)	7.0%	9.1%	10.8%
Adjusted EBITDA ($M)	$525.7	$533.2	$686.9
Adjusted EBITDA Margin (%)	12.0%	12.0%	14.4%

Consensus vs. Actual (S&P Global)

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue Estimate ($B)	$4.68*	$4.446*	$4.63*
Revenue Actual ($B)	$4.37	$4.46	$4.76
Surprise	Miss ~$0.31B*	Beat ~$0.01B*	Beat ~$0.13B*
EPS Estimate ($)	$1.155*	$1.34*	$1.578*
EPS Actual ($, adjusted)	$1.35	$1.31	$1.70
Surprise	Beat ~$0.20*	Miss ~$0.03*	Beat ~$0.12*

*Values retrieved from S&P Global.

Segment Net Sales (Geography)

($M)	Q4 2024	Q1 2025	Q2 2025
U.S. Net Sales	2,613.2	2,743.2	2,820.4
Europe Net Sales	1,259.2	1,231.5	1,371.3
Mexico Net Sales	499.6	488.3	565.7
Total	4,372.1	4,463.0	4,757.4

Segment Profitability (Adjusted Operating Margin)

(%)	Q4 2024	Q1 2025	Q2 2025
U.S.	11.5%	11.9%	14.7%
Europe	6.4%	5.3%	5.4%
Mexico	6.4%	7.5%	15.4%

Key Line Items (GAAP and Non-GAAP)

Metric ($M unless noted)	Q4 2024	Q1 2025	Q2 2025
Net Revenue	4,372.0	4,463.0	4,757.4
Gross Profit	553.3	554.9	715.3
SG&A	235.3	133.8	199.5
Operating Income	306.7	404.5	512.3
Net Interest (expense, net)	22.8	16.8	31.5
Net Income	235.8	296.3	356.0
Diluted EPS ($)	0.99	1.24	1.49
Adjusted EBITDA	525.7	533.2	686.9
Adjusted EBITDA Margin (%)	12.0%	12.0%	14.4%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Capex	FY 2025	≈$750M (Q1 call)	$650–$700M (Q2 call)	Lowered
Net Interest Expense	FY 2025	$110–$120M (Q1 call)	$115–$125M (Q2 call)	Raised
Effective Tax Rate	FY 2025	≈25% (Q1 call)	≈25% (Q2 call)	Maintained
Special Dividend	2025	$1.5B paid Apr 17 (prior)	$2.10/share (~$500M) payable Sep 3; record Aug 20	New payout
Walker County Plant Spend	2025–27	N/A	~$50–$70M in 2025; $250–$300M in 2026; remainder 2027	New detail
Prepared Foods Capacity Impact	1H 2027	N/A	U.S. prepared sales +40% at full capacity	New target
Mexico/Merida, Veracruz & Prepared	1H 2026	On schedule (Q1)	Remain on schedule (Q2)	Maintained
Russellville Conversion	Q1 2026	In progress (Q1)	On track for Q1 2026	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024, Q1 2025)	Current Period (Q2 2025)	Trend
Prepared Foods/Brands	Q4: strong branded growth and plans to expand capacity ; Q1: Prepared +20% YoY; e‑commerce +35%	Prepared net sales +20% YoY; Just Bare >10% share; new $400M GA plant; +40% U.S. prepared sales at full capacity	Accelerating
Supply/Hatchability	Q4: industry growth constrained by hatchability; USDA +1.4% 2025 ; Q1: hatchability at record lows; live ops challenges	Hatchability below 2024; supply growth led by weight; USDA ~1.5% 2025	Persistent constraint
U.S. Cutout/Commodity	Q4: strong cutout values ; Q1: cutouts solid; wings softer	Jumbo cutout favorable; tenders strong; wings late recovery; BSB volatility	Constructive
Mexico Volatility/FX	Q4: stronger margins, balanced supply ; Q1: 8.4% adj EBITDA margin; FX headwind	16%+ margins but 13% YoY FX drag; disease impacts; projects on track	Mixed
Capital Allocation	Q4: Capex $450–$500M baseline, growth options ; Q1: FY25 capex ≈$750M; interest $110–$120M	FY25 capex $650–$700M; special dividend $2.10; interest $115–$125M	Capital return + capex refined
Labor/Visas	—	Overstaffed to 105% to mitigate humanitarian visa revocations; staffing stable	Proactive mgmt
Tariffs/Trade	Q4: evolving AI restrictions, partner protocols ; Q1: limited tariff impact expected	Tariff risk monitored; no significant disruptions beyond China to date	Stable

Management Commentary

“Prepared continued to realize significant growth as net sales increased by 20%… Just Bare recently achieved over 10% market share… Pilgrim’s… Best Chicken Nugget for our cheesy jalapeño offering.” – CEO Fabio Sandri .
“With the strength of our liquidity positions, the Pilgrim's Board… declared a special dividend of $2.10 per share… we estimate the U.S. prepared foods business will increase its net sales by over 40%… upon reaching full capacity at this new plant.” – CFO Matt Galvanoni .
“Adjusted EBITDA margins in Q2 were 17.1% in the U.S… 8.2% in Europe… Mexico… greater than 16%, even though facing year-over-year FX headwinds of 13% and bird disease challenges.” – CFO .
“We were… 105% staffed… to prepare for… impacts in the labor market [from visa revocations]… we’ve been able to fully staff our plants.” – CEO .
“USDA estimates growth of 1.5% in 2025, suggesting sufficient supply to meet strong chicken demand… [beef declines support chicken].” – CEO .

Q&A Highlights

Capex cadence and Walker County spend: 2025 ~$50–$70M, 2026 $250–$300M, residual 2027; first-half 2027 start-up; plant supports NAE/veg-fed Just Bare growth .
Mexico profitability bridge: 13% YoY FX headwind and disease weighed on Q2; Q3 FX impact expected “on par” with LY; live market volatility persists; expansions add ~20% net sales at full utilization .
Capital allocation/interest: Special dividend reduces cash; net interest guided to $115–$125M; opportunistic bond repurchases remain a tool .
Labor dynamics: Overstaffing mitigated potential disruptions from humanitarian visa changes; wage inflation manageable; plants fully staffed .
Supply/demand balance: Industry bottleneck at hatcheries; supply growth via weights (big bird); retail and QSR demand supportive into 2H .

Estimates Context

Q2 2025: Revenue $4.757B vs $4.629B est (beat ~$0.13B); Adjusted EPS $1.70 vs $1.58 est (beat ~$0.12) .
Q1 2025: Revenue $4.463B vs $4.446B est (beat ~$0.02B); Adjusted EPS $1.31 vs $1.34 est (miss ~$0.03) .
Q4 2024: Revenue $4.372B vs $4.680B est (miss ~$0.31B); Adjusted EPS $1.35 vs $1.16 est (beat ~$0.20) .
*Values retrieved from S&P Global.

Implications: Momentum in U.S./EU and the special dividend likely support upward revisions to FY25 adjusted EPS and capital return frameworks; Mexico FX/volatility and legal settlement cadence are watch items for GAAP. Prepared Foods capacity expansion underpins medium-term mix and margin upgrades .

Key Takeaways for Investors

U.S. outperformance and EU execution drove a clean beat on revenue and adjusted EPS; GAAP optics were affected by $58M legal settlements that do not recur in adjusted figures .
Prepared Foods is a structural growth and margin driver: +20% YoY in Q2 and a $400M plant adds 40% sales at maturity; expect mixed shift and reduced volatility over time .
Mexico remains profitable but volatile; FX and live-market dynamics can swing quarterly results despite solid demand; expansions (1H’26) target +20% sales, dampening volatility longer term .
2025 capex trimmed to $650–$700M with clear spend cadence; net interest slightly higher on lower cash post-dividends; tax rate ~25% .
Near-term trading lens: Cutout values, hatchability/supply trends, and wings recovery are key to Q3/Q4 margin trajectory in U.S.; Prepared Foods momentum and special dividend timing are stock catalysts .
Medium-term thesis: Diversification (brands, prepared, geographies) plus operational excellence supports double-digit U.S. fresh margins through cycles and EU margin uplift; incremental prepared capacity should re-rate earnings quality .
Monitor legal settlement run-rate and any tariff/AI-related trade shifts—management sees limited disruption beyond China so far; liquidity and maturities provide flexibility .

PILGRIMS PRIDE CORP (PPC)·Q2 2025 Earnings Summary