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Pilgrim's Pride (PPC) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q1 FY26)· Apr 30, 2026

Source: earnings call transcript

Executive summary

Pilgrim's Pride Q1 FY26 — Navigating Volatility with Strategic Investments

Pilgrim's Pride navigated a volatile Q1 FY26, marked by significant market fluctuations in commodity segments and strategic investments in its portfolio. The company focused on strengthening its differentiated products and supporting key customer growth, particularly in prepared foods and retail. Despite headwinds from weather events and commodity market pressures, the company's diversified portfolio and operational excellence initiatives helped maintain resilience, with a strong balance sheet supporting future growth ambitions.

Highlights

5

  • Net revenues of $4.53 billion, up from $4.46 billion in Q1 FY25.

  • Europe adjusted EBITDA margins remained steady at 7.8% despite changing consumer confidence.

  • U.S. Prepared Foods, led by Just BARE, saw retail sales increase nearly 40% year-over-year.

  • Mexico Fresh sales increased double digits, with Just BARE volume up over 80%.

  • Surpassed 2025 reduction targets for Scope 1 and 2 emissions intensity.

Concerns

5

  • Adjusted EBITDA margin declined to 6.8% from 12.0% in Q1 FY25.

  • U.S. adjusted EBITDA decreased to $185.5 million from $392.5 million in Q1 FY25.

  • Mexico adjusted EBITDA declined to $16.8 million from $41.2 million in Q1 FY25.

  • Margins impacted by planned downtime for upgrades and winter storms in February.

  • Small bird deli values remained below the 5-year average, impacting sales and profitability.

Guidance & targets

CategoryTargetConfidence
Full-year CapEx
$900M to $950M
high materiality
High
Full-year Effective Tax Rate
approximate 25%
medium materiality
High
Full-year Net Interest Expense
$105M to $115M
medium materiality
High
Chicken Production Growth (USDA forecast)
2%
high materiality
Medium
Chicken Production Growth (USDA forecast)
2.5%
high materiality
Medium
Chicken Production Growth (USDA forecast)
below 1%
high materiality
Medium

Segment performance

SegmentRevenueYoYQoQMargin
U.S.
Net revenues decreased year-over-year. Adjusted EBITDA margins declined significantly due to reduced jumbo cutout value, lower small bird deli sales prices, winter storm impacts, bird health issues, and plant downtime from growth projects. Prepared Foods business showed robust growth, with Just BARE retail sales up nearly 40%.
Adjusted EBITDA: $185.5M
$2.64B-3.9%—7.0%
Europe
Adjusted EBITDA margins remained steady compared to last year. The business benefited from strength in poultry and meals, along with structural reorganization, integration of support functions, and manufacturing optimization programs. Volumes were challenged in branded portfolio due to private label competition.
Adjusted EBITDA: $105.8MAdjusted EBITDA YoY growth: 6.3%
———7.8%
Mexico
Adjusted EBITDA margins decreased significantly year-over-year but improved sequentially from Q4 FY25. Margins were compressed by excess production in the live commodity market and increased imports. Fresh branded offerings, including Just BARE, saw double-digit sales increases.
Adjusted EBITDA: $16.8M
———3.1%

Capital programs

Russellville Facility Conversion completed

Benefit:Conversion from big bird to retail to support key customer growth

Completed conversion of the Russellville facility to support a retail key customer, enhancing production efficiencies and supporting growth in higher attribute offerings.

New Prepared Foods Plant underway

Benefit:Support strong demand for prepared foods products

Construction of the new facility in Walker County, Georgia, remains on schedule to support further growth in Prepared Foods.

Big Bird Plant Enhancements underway

Benefit:Increase dark meat deboning and portioning capabilities, improve product mix, support Prepared Foods growth

Implemented plant layout changes, equipment improvements, and operations across many Big Bird locations to enhance capabilities and production efficiencies. These investments incurred planned downtime and additional expenses.

Risks & headwinds

Volatile Commodity Markets Q1 FY26

Jumbo commodity cutout and daily small bird values significantly lower than last year; Mexico margins compressed by excess production and increased imports.

Mitigation:Protecting downside with stable portfolio parts; projects to diversify footprint and increase presence in prepared foods; operational excellence and cost discipline.

Planned Downtime and Project Mobilization Costs Q1 FY26

Impacted margins and reduced fresh sales/profitability in U.S.

Mitigation:Investments are strategic to improve mix, enhance margins, and support key customer growth; overstaffing before shutdowns and ramp-up costs are part of the process.

Winter Storms February Q1 FY26

Impacted margins and reduced fresh sales/profitability in U.S.; plant closures for 1-3 days; changes in bird sizes leading to downgrades.

Mitigation:No specific mitigation mentioned beyond ensuring team safety and managing operational adjustments.

Consumer Sentiment and Inflation Q1 FY26 and ongoing

Consumer sentiment declined to a 3-month low; consumers seeking value-oriented offerings; shift from foodservice to retail.

Mitigation:Chicken's relative affordability positions it well; focus on convenient and affordable meal solutions (e.g., frozen prepared products, rotisserie chicken).

Geopolitical Risks and Export Disruptions Q1 FY26 and ongoing

Middle East vessels suspended to Gulf Coast countries due to military conflict; futures appreciated from relatively low levels due to geopolitical risks (wheat).

Mitigation:Strong domestic demand for dark meat and robust exports to Mexico mitigated disruption; leveraging geographical footprint and cooperating with governments to ensure international customer needs are met.

Private Label Competition (Europe) Q1 FY26 and ongoing

Impacted volumes in branded portfolio (Richmond) as consumers shifted to cheaper private label offerings, especially in sausage category.

Mitigation:Working with innovation, gaining distribution, and increasing promotional activity to regain volumes.

What to watch in Q2 FY26

Chicken Production Growth

Q2 FY26
Current 3.4% in Q1 FY26
Target 2.5% in Q2 FY26

Why it matters

Monitoring USDA's forecast for Q2 chicken production growth is crucial to assess supply-side pressures and potential market volatility, impacting pricing and margins.

USDA is expecting growth in the range of 2.5% for Q2.

Find out whether PPC delivers this. Inve re-checks your case every morning.

Q&A highlights

Can you quantify the financial impact of planned downtime for upgrades and the winter storms on Q1 U.S. business results, distinguishing between transition costs and one-time weather impacts?

Fabio explained that planned downtime involved overstaffing before shutdowns and ramp-up costs for training, while winter storms caused plant closures and impacted live operations by changing bird sizes, leading to downgrades to commodity sales. He noted that a significant portion of the impact is hard to quantify due to these multifaced effects, especially the downgrading of birds.

“It's interesting to mention that -- and we have on the prepared remarks, on the very strong January that we have. And when you look at every week, I think there was also an overstocking or pantry loading on those regions on retail to prepare for the storm. And that's why we have a weaker-than-expected February as people start consuming what they have loaded in their freezes during January.”

asked by Ben Theurer · answered by Fabio Sandri

2 min read 6 chapters

Detailed narrative

U.S. Market Dynamics and Strategic Investments

U.S. demand for key customer retail trade pack remained strong in fresh and prepared foods grew. However, sales and profitability were impacted by significantly lower jumbo commodity cutout and daily small bird values. Margins also suffered from planned downtime for upgrades and winter storms. The company is making significant headway in projects to reduce volatility, enhance margins, and drive sales of its differentiated portfolio, including plant layout changes and equipment improvements in Big Bird operations to increase dark meat deboning and portioning capabilities.

European Performance and Consumer Trends

Europe's diversified portfolio maintained steady sales and margins compared to last year, driven by changing consumer preferences towards value offerings in poultry and fresh/frozen meals. Back-office integration and network optimization efforts continue to improve productivity. While poultry and meal offerings resonated, bacon and sausage categories declined due to intensified promotional activity and a shift to private label offerings, particularly impacting the Richmond brand.

Mexico Market Conditions and Expansion

Mexico Fresh sales remained steady, and breaded sales increased double digits. However, margins were compressed by excess production in the live commodity market and increased imports. The company's projects to diversify its footprint in fresh to different regions and increase its presence in prepared foods remain on track, aiming to unlock additional sales growth and diversify profitability. Despite volatility, the company expects supply and demand to balance in the growing Mexican economy.

Protein Supply Outlook and Consumer Sentiment

USDA expects chicken production to increase 2% for 2026, primarily in the first half, driven by increased headcount, improved live performance, and higher average live weights. Minor increases are anticipated in beef and limited growth in pork, leading to a 1.6% rise in net protein availability. U.S. consumer sentiment declined to a 3-month low due to inflation and higher energy prices, driving demand for value-oriented offerings like chicken, which maintains a compelling value advantage over other proteins.

Just BARE Growth and Prepared Foods Expansion

The Prepared Foods segment saw accelerated growth, achieving its highest retail volume in any quarter. Just BARE led this growth, with retail sales rising nearly 40% year-over-year due to increased distribution and improved velocity. The construction of a new prepared foods facility in Walker County, Georgia, remains on schedule to support strong demand, with co-packers currently supplementing production. The brand recently surpassed $1 billion in sales over the last five years.

Sustainability Achievements and Operational Excellence

Pilgrim's Pride has surpassed its 2025 reduction targets for Scope 1 and 2 emissions intensity, set at its sustainable linked bonds. This achievement reflects the team's focus on leveraging sustainability for operational efficiency. The company continues to drive operational excellence, proactively managing cost headwinds in freight, packaging, and other key inputs through productivity initiatives and procurement actions, while maintaining disciplined capital allocation.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.