• Q4 2024 Net Revenue: $4.4 billion.
• Q4 2024 Adjusted EBITDA: $526 million.
• Q4 2024 Adjusted EBITDA Margin: 12%.
• Fiscal Year 2024 Net Revenue: $17.9 billion.
• Fiscal Year 2024 Adjusted EBITDA: $2.2 billion.
• Fiscal Year 2024 Adjusted EBITDA Margin: 12.4%.
• US Q4 2024 Adjusted EBITDA: $371.6 million.
• US Q4 2024 Adjusted EBITDA Margin: 14.2%.
• Europe Q4 2024 Adjusted EBITDA: $117.1 million.
• Mexico Q4 2024 Adjusted EBITDA: $36.9 million.
• Net Debt: Approximately $1.15 billion.
• Liquidity Position: Approximately $3.1 billion in total cash and available credit.
• CapEx for 2024: $476 million.
• Projected CapEx for 2025: Between $450 and $500 million.

• Warning! GuruFocus has detected 4 Warning Sign with PPC.

Release Date: February 13, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Pilgrims Pride Corp (NASDAQ:PPC) reported strong financial performance for Q4 2024 with net revenues of $4.4 billion and an adjusted EBITDA of $526 million, reflecting a 12% margin.
• The company's diversified portfolio strategy has been effective, with improved performance in the US fresh portfolio, particularly in the Big Bird, Case Ready, and Small Bird segments.
• Prepared foods sales showed growth compared to the previous year, driven by increased interest in brand offerings in both retail and food service.
• In Europe, margins expanded due to optimization of the manufacturing network and integration of support activities.
• Mexico experienced stronger performance with increased commodity market prices and growth in branded offerings, contributing to a diversified portfolio.

Negative Points

• US export volume was lower year-over-year, impacting overall sales despite stable domestic demand.
• The company faced challenges with hatchability and mortality rates, which limited production growth.
• Weather disruptions, including storms and cold weather, affected production and operational efficiency in certain regions.
• The Douglas complex was impacted by a storm, leading to operational challenges and the need to buy birds from outside sources.
• There is ongoing uncertainty regarding potential tariffs and their impact on trade, particularly with Mexico, which could affect future operations.

Q & A Highlights

Q: Can you explain the strong market dynamics in Q4 and expectations for Q1, particularly regarding the big bird segment? A: Fabio Sandri, CEO, explained that Q4 saw strong chicken demand due to its affordability and menu penetration in food service. Despite some weather disruptions, demand in retail and food service increased, with stable production in the big bird category. This led to stable prices, and Q1 is seeing rising prices in the commodity category.

Q: Why did US profitability come in below expectations, and how did grain-based contracts affect this? A: Fabio Sandri noted that while the US portfolio includes commodity markets, two-thirds are more stable segments like small birds and case-ready operations. These segments are less volatile due to grain-based pricing contracts. Operational excellence initiatives improved performance, but prepared foods offset some commodity cycle impacts.

Q: What drove the counter-seasonal improvement in Mexico, and what are the margin expectations for 2025? A: Fabio Sandri highlighted strong chicken demand in Mexico, driven by high US commodity prices and domestic market demand. The live market in Mexico is volatile, but the company is diversifying its portfolio with prepared foods and branded fresh offerings. Margins are expected to remain stable and in double digits.

Q: How should we think about US breast prices over the summer, given current supply and demand dynamics? A: Fabio Sandri expects strong demand for chicken, particularly during the summer, with prices reacting accordingly. Despite a 1.4% supply increase, overall protein availability is low, supporting strong retail demand for chicken products.

Q: Can you discuss the impact of potential tariffs on the business, particularly with Mexico? A: Fabio Sandri stated that while there is uncertainty about tariffs, Mexico is a key trading partner, importing 24% of US chicken exports. The company doesn't expect significant trade disruptions, as Mexico is concerned about food inflation. Pilgrim's Pride's operations in Mexico provide a hedge against potential trade issues.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.