Core Insights - Pilgrim's Pride Corporation (PPC) reported a strong first-quarter 2025 performance with an adjusted EBITDA margin of 12%, an increase of 350 basis points from the previous year, primarily driven by the U.S. business where the margin rose to 14.3% from 9.4% [1][8] - The margin improvement was supported by strong performance in Prepared Foods and Case Ready segments, as well as favorable market pricing for Big Bird [1][8] Financial Performance - The adjusted EBITDA margin of 12% reflects significant operational execution aligned with favorable market conditions [4] - The U.S. business's adjusted EBITDA margin increased to 14.3%, indicating robust performance in key product areas [1][8] - Mexico's operations faced $8.5 million in foreign exchange headwinds, contributing to quarterly volatility [3][8] Market Conditions - The sustainability of the margin increase is questioned due to potential challenges such as live production volatility, hatchability concerns, and overall foodservice softness [2][4] - Quick service restaurant volumes remain strong, but foodservice traffic is under pressure across the industry [2] Regional Performance - Europe achieved an 8.1% margin, indicating progress from ongoing structural reorganization efforts, including support function integration and manufacturing optimization [3][8] - Key initiatives in Europe have enhanced performance, supported by continued product innovation [3] Valuation Metrics - Pilgrim's Pride currently trades at a forward 12-month P/E ratio of 8.78, which is below the industry average of 12.11 and the sector average of 17.31, positioning the stock at a modest discount [9]

Financial Data and Key Metrics Changes - For Q4 2024, net revenues were $4.4 billion with adjusted EBITDA of $536 million and an adjusted EBITDA margin of 12% [5][34] - For the fiscal year 2024, net revenues were $17.9 billion with adjusted EBITDA of $2.2 billion, translating into an adjusted EBITDA margin of 12.4% [8][34] - Adjusted EBITDA in the U.S. for Q4 was $371.6 million with adjusted EBITDA margins at 14.2% [35] - The U.S. business maintained momentum with net revenues of $10.63 billion and adjusted EBITDA of $1.56 billion, achieving a 14.7% margin [39] Business Line Data and Key Metrics Changes - The U.S. Fresh portfolio improved, with Big Bird expanding margins due to strong commodity cutout values and operational excellence [6] - Prepared Foods sales grew due to increased interest in brand offerings in retail and food service [6][25] - In Europe, margins expanded through optimization of the manufacturing network, with stable sales in retail [7][40] - Mexico's adjusted EBITDA for Q4 was $36.9 million, significantly up from $6.8 million last year, with an 11.8% adjusted EBITDA margin [41] Market Data and Key Metrics Changes - U.S. chicken production is projected to increase by 2.5% compared to Q4 2023, with production growth driven by increased headcount [10] - The USDA indicated that overall protein availability is expected to grow by only 1.2%, with a significant decline in beef availability, supporting demand for chicken [12] - Fresh proteins in retail benefited as the cost of eating out increased, leading to strong consumer demand for chicken [13] Company Strategy and Development Direction - The company is focused on a diversified portfolio to capture market upside and meet consumer demand [5] - Continued investment in operational excellence and innovation is prioritized to drive profitable growth [29][45] - The company aims to expand its capacity in the U.S. Prepared Foods business to meet growth trajectories [45] Management's Comments on Operating Environment and Future Outlook - Management noted strong demand for chicken in both retail and food service, driven by its affordability [54] - The company expects continued strong demand for chicken products, particularly during the summer [82] - Management acknowledged challenges in hatchability and livability but is optimistic about improving management practices over time [104] Other Important Information - The company reported $476 million in CapEx for the year, with plans to spend between $450 million and $500 million in 2025 [44] - The company has a strong liquidity position with approximately $3.1 billion in total cash and available credit [43] Q&A Session Summary Question: Market dynamics in Q4 and early Q1 - Management highlighted strong demand for chicken due to its affordability and menu penetration in food service, despite some production challenges [54][55] Question: Capital allocation and CapEx guidance - Management indicated that the CapEx guidance of $450 million to $500 million is focused on sustaining operations and smaller growth projects, with further discussions expected at the Investor Day [58][59] Question: U.S. margins and grain pricing - Management explained that their diversified portfolio allows them to capture upside while protecting against downside volatility, with operational excellence initiatives contributing to improved performance [62] Question: Mexico's market dynamics - Management expressed confidence in Mexico's growing economy and continued investment, noting that demand for chicken products remains strong [72][76] Question: Impact of weather disruptions - Management acknowledged that weather events can disrupt operations but emphasized their geographic diversification helps mitigate significant impacts [110]