Pilgrim’s Pride Corp ((PPC)) has held its Q1 earnings call. Read on for the main highlights of the call.
Pilgrim’s Pride Corp’s recent earnings call conveyed a positive sentiment, highlighting robust growth in revenue and EBITDA, alongside market expansion in the U.S., Europe, and Mexico. Despite these achievements, the company acknowledged ongoing challenges in export markets, production efficiency, and SG&A costs.
Increased Revenue and EBITDA
The company reported net revenues of $4.5 billion for Q1 2025, marking a 2.3% increase over the same quarter last year. Adjusted EBITDA saw a significant rise, reaching $533 million, which is a 62% increase compared to Q1 2024. This growth underscores Pilgrim’s Pride’s strong financial performance in the early part of the year.
Expansion in Prepared Foods
Prepared foods experienced substantial growth, exceeding 20% compared to the previous year. This was driven by increased distribution across retail and food services, with sales of Just BARE and Pilgrim’s brands collectively rising over 50%. This expansion highlights the company’s successful strategy in diversifying its product offerings.
Strong U.S. Market Performance
The U.S. market demonstrated robust performance, with sales and adjusted EBITDA both increasing compared to the prior year. U.S. net revenues reached $2.74 billion, a 6.2% increase from last year, reflecting the company’s solid foothold in its home market.
European Business Growth
In Europe, adjusted EBITDA margins improved to 8.1% from 6.4% last year, thanks to integration and optimization efforts. This improvement indicates successful strategies in enhancing operational efficiencies and market integration.
Expansion in Mexico
Sales to key customers in Mexico increased by 11%, with the branded portfolio growing by 15% in Fresh and 9% in Prepared categories. Despite currency challenges, the Mexican market showed resilience and growth potential.
Challenges in Export Markets
The company faced challenges in export markets due to winter weather port disruptions, potential port strikes, and increased domestic demand for dark meat, which reduced export volumes. The ongoing transition in the relationship with China also affected exports.
Mortality and Hatchability Issues
Broiler production continues to face challenges with increased mortality and reduced hatchability, necessitating record high hatcher utilization. These issues highlight the operational challenges in maintaining production efficiency.
Mexico Currency Impact
The exchange rate increase between the peso and the dollar negatively impacted Mexico’s costs, resulting in an $8.5 million foreign exchange impact. This currency fluctuation poses a financial challenge for the company’s Mexican operations.
SG&A Costs
SG&A costs were higher year-over-year, primarily due to increased legal settlement and defense costs, as well as higher incentive compensation costs. These rising expenses indicate areas where the company needs to manage costs more effectively.
Forward-Looking Guidance
Looking ahead, Pilgrim’s Pride aims to continue its strategic growth with planned investments in expanding production capacity and enhancing product offerings. The company maintains strong liquidity, with over $1.6 billion in total cash and available credit, positioning it well for future opportunities. Despite a slight decline in adjusted EBITDA margins in Mexico due to currency impacts, the company showed sequential improvement and remains focused on operational efficiencies.
In summary, Pilgrim’s Pride Corp’s earnings call reflected a generally positive outlook, with notable growth in revenue and EBITDA, and successful market expansions in key regions. While challenges persist, particularly in export markets and production efficiency, the company’s strategic focus on growth and operational improvements positions it well for future success.