Pilgrim's Pride (PPC) 26 Feb 242023 Q4 Earnings call transcript

Good morning, everyone, and welcome to the Fourth Quarter and Fiscal Year 2023 Pilgrim's Pride Earnings Conference Call and Webcast.

[Operator Instructions]

At the company's request, this call is being recorded.

Please note that the slides referenced during today's call are available for download from the Investors section of the company's website at www.pilgrims.com.

After today's presentation, there will be an opportunity to ask questions.

would Head turn and of for I to floor Net-Zero time, Pilgrim's. Rojeski, Andrew Strategy, this like the to over Programs At Investor Relations

including review joining and an fourth discuss. the overview reconciliation release non-GAAP performance morning, fiscal a December financial today you we morning, on and and for for of measures ended and XXXX. Good as results our thank quarter the we any the providing XX, may our year for issued operating financial press year, us of quarter we This a

A at online as available copy of the Form These release for filed is are available and at on sec.gov. ir.pilgrims.com, our with items website X-Ks been along have also reference. slides

Financial present Fabio call. Officer, today's Sandri, and Galvanoni, will Executive President on Chief Officer; and Chief Matt

begin outlook not would certain as may current call remind prepared like disclaimer. safe our to SEC. and we projected contain of differ our our additional day our factors morning's this XX-K I cause release, represent been Further to and with harbor that remarks, statements. filings provided materially actual concerning have release. of information press everyone Other of results anticipated these forward-looking those factors in Today's the expectations forward-looking in Form from statements Before this may regular the by management these

I would Fabio now like to turn to the call Sandri. over

thank joining today. us and for morning, you you, everyone, Good Thank Andy.

billion. We EBITDA EBITDA For the adjusted margin $X.X fourth quarter reported had X.X%. of of XXXX, $XXX revenues our was million, we of and adjusted net

results. excellence to diversification, of strategies stable portfolio operational customer the key focus effectiveness continued QX more and demonstrated our performance Our create of

with production Big Bird. excellence in portfolio improved, U.S. given The in customers with key operational case-ready enhanced and efficiencies growth

increasing operational manufacturing efforts the to our continued from geographical offerings throughout the U.K. of retail to growth and presence network, to the further progress foodservice. strength to customers given of through and the foods in increased portfolio diversification, business profitable diversification continue of branded through impact excellence continued branded growth through efforts and our In of offerings. Our our add European key our gain momentum drive prepared our value

business the weakening supply fundamentals, as to grow existing customers to portfolio by As diversify through and both quarter the in was continue brands and service. offerings food our Mexico, efforts to our new trade key flourish we for and the within but grew continue customers that and across retail with demand alike, impacted

to remain expand Our live investments cultivate operations track. capacity redundancy efforts on in operational in excellence and

EBITDA market on of pursuit focus year, our EBITDA was fiscal U.S. margins elevated we to adjusted strategies of first control, faced the controlling in input operational the the they relentless X%. the what For year, execution net but half $X were billion. Adjusted leadership mindset can our of maintain excellence. our billion, $XX.X of with depressed revenues conditions and costs and

As increasingly profitable capture positioned to the conditions upside year, accelerate the evolve throughout further well our growth. business and became

we're the While not markets. X-year pricing to through dynamic fully change much averages, still past has navigating recovered year.

long-term the half above growth cold there average. first production the substantial storage XXXX, of was and In inventories

increases result, was materialize. chicken supply demand domestic a typically As values fully ample in not spring and in chicken by did offset the not experienced commodity

retail patterns. align and chicks the QX historical year, exits throughout in overall of trigging elevated When environments, later given placement demand price with led chicken the balanced food sets market movements markets production placed pricing seasonal cost depressed and with and the historical QX. and year, throughout paired As progress to and and more patterns in service we sell, slowdown growth

line in the seasonal X-year levels weights. despite and to at with Starting the QX on driven reduced hatchability production of cuts was throughout slightly and with by exits live As fewer year. to line a for relative U.S. in to ready-to higher similar saw Exits XXXX, year, average chicken supply, last X.X% QX decreased basis X-year in year-over-year heads trend we average. QX XXXX continue last

Taken together, [indiscernible] placements slated for production in reducing year-over-year, QX declined headcount.

by to historical year also with and quarter, pricing X-year Market placements returned supplying throughout even average more indicated production production seasonally declined QX data, levels. sets, As the XX and volumes. elevated

XX, broiler a is increase to supply of imports, expected in QX beef declined X in with slight U.S. yearly of production an as balance of in a coupled less X%. on XXXX, X.X%. calendar pork second significant While XXXX a fewer availability half of increase and the implying expected smaller expected of quarters expected the be lower. as par outlook in XXXX a resulting growth, USDA moderate the This in with slight is X.X% USDA chicken QX beef the suggests production to with by decline increase protein of in cattle increase net production than to outlook drive is X.X% year higher for herd of reduction suggests Even followed

retail was white volume all U.S. from year-over-year chicken fall with quarter growth. retail experienced Fresh as differs but side experienced volume in with meat market as On trend X.X% demand this consistent slow the previous compared to flat levels This was positive categories. XXXX. XXXX, QX in the breast overall grew higher meat large for relatively to

cuts. an significantly affordable especially has in for demand The mostly white the QX positioned meat more great increased to as year, by dark well offerings, in volume remains was Starting other increase proteins. a meat new alternative and white impacted meat

value-added its dollar chicken, the segments provided across Chicken unit a center well Deli in frozen while categories add solid whole customers to ] as fresh for The as fared frozen the in value value-added incremental we bent and of the the [ increases, plate stable. segment, decline. daily than smaller volume posted growth. chicken continue continued other to quarter store chicken the much is which on commodity Nevertheless, and

Encouraging noncommercial continued to in subchannels. operators and signs year lower most growth increased trend rates, with experienced quarter, the Similar prior its commodity of levels. larger XXXX. its subchannel volume and to maintained within of volume to a taxes quarter The buy throughout realized [indiscernible] incremental of substantial food both year. and channel, to distribution chicken had compared volume volume QX higher continues serve service both across remain channel the trend price last The increase which and sales relative added base growth value-added the of to of

exports. disruptions Global chicken products in demand strong East. disruptions the fourth Turning has other been a favored global to transit. as the for have the and of backfill throughout delay U.S. movement the These Middle cost higher produce given quarter, proteins in

high suppliers addition, [indiscernible] are providing Southeast Asia opportunities additional some tightening. avian and the are local In countries as influenza U.S.

with partners have adjusted a U.S., of trade most trading possible. prior as As in dynamics avian restrictions the as our as influenza relatively for quarters minimize their impacts [indiscernible] to are consistent much

multiple Our across enable markets, manufacturing States access service facilities and given and to our production several continues of diversification control zones. states United the to across network also

trade As low to impacted been has dark is by freezer export majority there for China, movement chicken of an evolution mature Since increased no has by on driven to and there relative existing business The also by effect agreements. been as inventories [indiscernible]. remain meat standards. has the to broilers adherence season market been historical U.S. limited paws, on consumers

tight, a result, support providing further market. levels stock As overall the relatively remain overall for

eased production, U.S. adjustment at Recently, Brazil to have lie a prices current 'XX,'XX has forecast corn Corn as confirmed the for the ending a record and weather Argentina new USDA yield in by XX.X important as some improved. grain. we crop With feed to supply [indiscernible]. significantly. Turning couldn't picture to the have combined ahead, for stocks build global periods billion forecasted record

more higher. forecast Like yields corn, ending stocks U.S. soybeans XX% which saw a moved recent adjustment to

metric key in tons million the metric been to has production movement year's last Argentina's record currently USDA's to of soy in Brazil tons. XX American tons, from forecast is year's with with million production forecasted production South XX recent metric line to tons million million last XXX metric price XXX draft. rebound

demand. South America compete to continued with export US destination global price to is its

prices expansions a outlook in meal have reduction, On Argentina's record as well. QX rebound role crush production top a site fallen soybean of global is crush U.S. price playing as XXXX. the industry yielded soy soybean of in in meal

in soy fats are and and oils pressure renewable from feed Soybean meal U.S. oil facing substitute prices channels. as as is as also oil fuel under well food competition

In U.S., moved tighter. are to year-over-year are prices a the harvest Nonetheless, XXXX production picture, forecasted and global grain the global slightly the well. lower for be down given generally have acres wheat is as different In picture. wheat lower ending stocks feed

the U.S. business. to Turning

of strategies key the never inflation the execution our lingering diversification excellence customer has the of throughout on and focus operational improvements quarter. consistent profitability partnership, commodity in segments and market Our despite sustainable fundamentals

from the industry. of ahead strong and demand customers, activity grow given through retail. to increased enhanced continued distribution promotional key business case-ready Our

optimization, mix drive differentiated operations effectiveness. operation to of in quarter and portfolio. Big momentum These offerings quarter-over-quarter through the business we to throughout improvements costs. continues continue as gain continues to our further its and improve improvements differentiating combination efforts production beyond, a added of Bird attributes Our labor higher live

invest further automation in and Moving to and new forward, we training continue will drive improvements efficiencies. line in to

Small successful expansion by key operational start-up strengthening for customers bird with giving completing to our our and improve reinforcing and further excellence, aided from foundation retail volumes profitable growth. product. relationship our continues key profitability, and robust demand Performance and QSRs. both customers was of Athens deli our and

diversify improved. strong Prepared as further posted to Our as profitability Foods portfolio products, efforts volumes our another value-added momentum and gain through to yet quarter continued

doubled last repeat customer [indiscernible] brands influenced through promotional last to activity. compared and key year. service as and year, in compared it offerings a continues to marketplace well targeted than the exceptionally branded Food XX% increase Our remains received were key business. Just and growth more branded BARE to our grew relationships driver also Digital traction and sales collectively

our further to distribution growth. key service in retail be of innovation Moving our expanding food continued forward, will portfolio existing through driving diversifying

Our and a the net years people U.S. facilities. few suitable staffing have levels investments turnover resulted over in past reduced throughout our in

improvements, our initiatives significant plant. we to able portion sustained our were throughout of capture operational a the Given excellence

traded other has and as and segment signs U.K. the for real increase. into Europe, consumer and wage inflation have Shoppers of increasingly to shown pork sausage As has Lam reasoning improved categories. also relative chicken, steadily

proteins, was across on those to portfolio strengths. well business positioned our capture diversified our Given

and customers so key better throughout retail, average. the the than than others Within grew trade offerings faster category our

received be portfolio XX% sales the compared as rollover have year particularly especially increased the respectively. full successful throughout and over well sales XX% branded grew have continued customers by XX%, XXXX. brands to net Our and to been over Richmond

through diversify in may further become prospects a confident overall even outlook, attractive. recently increasingly became consumers to more innovation As brand launched economic the

occasions can stable remained Our favor our retail increase business strong at-home presence. consumers as food their service even relatively eating but

aspects to continue enhanced all throughout We'll given our our continue operations. supporting quarter management the and speed our diversified alternatives further profitable on efforts, relationship Based further simplify with key we increase growth. to those portfolio. drive our to will customers explore and our market, to office operational during drive end, and business. We growth To aspirations that excellence of streamlined back we

experienced consistent exports, In business throughout demand last imports fundamentals and lower exchange improved positive achieved and during quarter the compared rates. Mexico, execution from to quarter, year team the through increased supply weakened profitability the margins strategies. the our of and Nonetheless,

Our our efforts to been the the by close for presence since start efforts and up volume customers XX% has initial beginning as results XXXX. nearly Also, of throughout increased the nearly key the by to doubled has BARE quarter Favoritos diversify recently fresh compared through continue retail to is strengthen year. our quarter. Xx brands. were promising. to of Similarly, from since launched the and Just Unique the is Taste grew very double These offering digits portfolio to XX% amplified QX throughout further with our

expand to construction Our in remain we of XXXX. efforts expected [indiscernible] with March of in have operational to capacity track on production excellence hatchery completed schedule, and Merida our begin our as on

also redundancy schedule progressing relocation operations To first the to during through this over of enhance farms date, project finished as live XX% is half of anticipate year. our on efforts the of we Our planned. and have completion breeder

progress. business make and updated our management our Our innovative teams identify processing XXXX, our energy Throughout to to throughout sustainability efficiency techniques. through equipment ways efforts drive improve continue to

As a result, all gas regions improved natural usage intensity. their electrical and

of recently make the for America's one recognized our for the Newsweek greatest efforts, places [indiscernible] place and America's to social greatest one diversity. as women We of for as progress continue

community higher member We for invest Pilgrim's more XXXX. well-being continue education that Strong through better our approved XXX throughout members has team in Hometown in also their team more program than tuition-free date. than children our and program, which in investments to And have to XXX projects Futures enrolled

organic growth. our continue also We

South on our Georgia time construction Our in investments remains is of expectations. expansion our a goals in planned. facility to Performance met key or our and has customer growth and on Athens anticipate as and operational scheduled protein conversion March. completed as target excellence production date Similarly, has surpassed our was progressing start-up support quality and achieved service to as

sufficient additional investment diversify our profitable customers, our beyond. secured comment Matt, selected important, with you creates if levels financial this ensure results. portfolio already operational creating throughout business Equally in growth and key that, and With business. can rent service have XXXX We further to our on

Thank you, Fabio. Good morning, everyone.

revenues loss the of margin $XX.X $X.XX year a million in of ago. EBITDA the million million net in XXXX, and a income margin net GAAP were in quarter compared For reported QX of X.X% a billion $XXX to fourth $X.XX we $XXX X.X% of quarter, with In versus versus a $XXX.X GAAP net last adjusted billion year. of XXXX. million

versus margin and 'XX, X.X% billion in XXXX, a EBITDA million, with versus margin in year billion at of X.X%. revenues fiscal $XXX.X billion achieved a margins adjusted $X.XX $X.XX X.X% year for $XXX.X EBITDA For billion adjusted the We $XXX.X in year. fiscal $XX.X in million to net of QX U.S. this came net were Adjusted compared $XX.X last income with XXXX. EBITDA at GAAP and million

case-ready bird year-over-year by big the business. businesses business levels. further Our increase U.S. in These achieved second key along improvements half rose profitability the distribution. historical were to the year, our results in partnerships profitability commodity businesses. customer increases of pricing more quarterly with market improvement the small significantly driving in to seasonal utilize bird both Also as back and throughout the operational improved

Foods Our food of sales product growth momentum its both customers. business with retail and Prepared continued service branded

the with that our storm impacted of the Louisiana $XX Texas in in million associated recorded approximately proceeds XXXX. operations February in winter Finally, and insurance we quarter,

of impact during were incentive charges proceeds in However, by year-over-year increase the these and actuarial-related other quarter. offset a true-up compensation the

revenues $XX.XX fiscal net For $XX.XX margin the billion $XXX.X With a margin X.X% XX.X% a in last billion EBITDA $X.XX adjusted U.S. versus in and to fiscal our compared year. were million billion year, of XXXX.

XXXX the EBITDA the adjusted in in versus the improvement XXXX. XXXX, portfolio million to in quarterly delivered half proved post record the half results. business second consecutive a U.S. U.K., resilience and of its in adjusted of first seventh In out commodity $XX.X of was European Coming pricing depressed The in Europe, face million QX market financial in $XXX.X solid EBITDA. recovering

was EBITDA $XXX.X in the For versus million full year, adjusted Europe's $XXX.X XXXX. million

additional consolidation plant to will These changes partner foundation half key us During our the first more recognized Europe year, excellence, and restructuring approximately charges pursuit the back cost office efficiently announced program restructuring and customers organization programs year number in streamlining during allow We further the a the with operational of the closures, of management restructuring the in region. anticipate $XX including million for in progresses. the of and the structure. support of further savings charges provide year

seasonally EBITDA adjusted The last challenged. in adjusted considering adjusted million made to $X.X was made X.X% year. than full margin year, better When the quarter $XX.X EBITDA X.X% QX million million in Mexico $XXX.X in Mexico margin. compared fourth year's or losing last an EBITDA

full well was the year, considering However, balanced. the dynamic supply-demand

operations in team job the did excellent in live an country. challenging environment Mexican continually managing Our

fourth SG&A reduced the quarter year, by were quarter. the our approximately costs costs decreased primarily legal in and Europe. to prior year-over-year higher U.K., the recorded compensation Overall, lower achieved GAAP by Our than cost partially incentive X%. was reductions and U.S. These in in defense offset SG&A efficiencies due

end $XX approximately the XXXX million insurance QX up December in plant incurred up in South with received spending which Also plant protein of expansion, the of construction we the by the This Kentucky QX and the in cover. rebuild Hatchery year scheduled Mayfield, in Athens, which following proceeds year, this conversion Georgia finished XXXX. associated year million to significant CapEx. to during CapEx included start $XXX Georgia we in We with of with started tornado the the

for that members spending We and operational ROCE ensure our will and our further will tailor operation address the automation competitive projects key solidify programs. needs strong team advantages We continue optimize capital strengthen to safety plans mix partnerships our in our our to to improve commitment prioritize our with to invest of efficiencies product customer to our through key customers. reiterate

spending $XXX in million $XXX anticipating XXXX. We are CapEx in and between million

As we may spending our conditions outlook aspirations. accommodate growth our to revise evolve,

in However, we disciplined will our remain allocation. capital

strong sheet. We balance have a

cash from and investment in high-return disciplined to will activities, working We emphasize capital management continue operating flows of projects.

we very the the position strong. approximately cash year, $X.X total Our liquidity remains fiscal At had of billion end in available credit. and

no XXXX. XXXX have facility short-term not requirements bonds XXXX We immediate our credit until with cash and our between U.S. maturing expiring and

with end needs. year, during customers' organic including was meet flexibility position volatility of the Net the million. fiscal further to billion, and for in opportunities. X in to $XXX growth provides approximately middle EBITDA. U.S. year net range last liquidity $X.X interest us leverage XX the At targeted right our us Xx. X.Xx a growth Which of Our of to leverage debt commodity times explore expense ratio approximately was markets our our allows ratio is the adjusted of of months the the approximately

approximately extinguishment this quarter. XXXX of notes the include our expense be costs However, million $XXX our early associated XXXX with does $XXX interest in to between net $XX the We anticipate million fourth million. and during purchase

routine in our the was tax of impact amplified, mix Our pretax effective tax items income full earnings, jurisdictions. to Due FX on year changes adjustments in of rates including rate XX.X%. discrete were the multi-jurisdictional certain

expect XX% effective tax rate did more not our XXXX. As and normalized in XX%, levels such, follow which we of for between

Operator, remarks. align our focus to we of look call operational concludes open this and questions. customers, will approach profitably the excellence commitment a prepared diversification, to continue strategies follow as company will safety. member and portfolio We the to Please allocation key investment with health to overall on disciplined to for continue grow capital and our team priorities

Our Ben first time, gentlemen, today's comes Instructions] this question-and-answer session. from Barclays. Theurer today at question begin from and [Operator we'll Ladies

Yes. Fabio, Matt.

all, of XXXX. on strong First finish Two quick very questions. congrats a in

So first more probably one, for Fabio.

know we these one. it to just coming more XXXX, up, prepared availability you've chicken is, should into still and the as be look being the talked relates but it in there favorable be remarks As should those pork prices then I about tighter,

the we has think production you role order just maybe also are side the about fleet So as supply. to the that leveraging your What cost supply doing within down. in your grow and come that fact within U.S.,

question. specific my we should And a have how That would I 'XX supply versus about think Pilgrim's first then situation So 'XX? into quick follow-up. be

Thank Sure. Ben. you,

As conjunction of with a ban, been customers. at we've key in our portfolio I the strategy organic look over we our year. growth growing have we And think last

As increase an more we the the volume need from ahead of example, as our industry us. key customers in from demand

our was The of in I grain, supply overall, the pricing for customers. is think for and be that focus on which a should our during benefit because part our our not started Athens -- QX change key customers. that to for whole of project key growth will us industry of

We have a portfolio. well-diversified

and tray We and it are between birds, small to expect balanced and bird continue pack big well we that. prepared foods,

my to we obviously, European cost results plus we've cost then in unnecessary of right profitability and the delivery for those that the like the relates just results kind it the stand over like question, Brexit that recovering because very that. fourth and in you the second quarter. say the And XXXX, pandemic had already we remember more like from seen plus as input you run just in should the issues assume have trajectory rate you And pressure would what's Europe. grain a you now Perfect. where strong the had you When all [ in the was given Okay. ] past, in

European to question. 'XX? think profitability in would about how second my That So be

for once you were XXXX European difficult XXXX Thank and again. Ben. business. our Sure, Yes, very

thought bottom we ingredients, customers European saw cost most with XXXX, XXXX, benefits pricing. some expected was our as what line in massive through utilities, the were costing packaging, during seeing a grain mentioned, we our some our to between based only But disconnection we're we As inflation those our packaging, in contracts driven, coming and contracts of stay XXXX. especially it but and like driven. All costs, other of was We the ingredients, We -- everything. all renegotiated we're labor, region, fixed. saw the

I think that the also simplify business. plants combined we have businesses integrated Europe. that, we and all with in our We

and example, very just a diversified have pork We portfolio as the have there, land we an business. fresh

have We poultry business.

have meals We business. the

very business. a robust have We branded

food We business. service have business also a prepared and a

the as our we're with are And we a So retail we that And Europe. consumer the inflation that key to seeing and confidence offerings. region. customers we gaining benefit are he that Europe many also capturing is there in as see easing, going is in serve more segments to the in branded growth and the back

and our a As restructure the see those to we far as are now, we region benefits we right the the to expected structure the we and future, as from lean benefiting bottom network as whole. our see strengthening coming of line,

Our next from comes Stephens Bienvenu from Ben Inc. question

like Congratulations. on pick I'd up off Europe segment. the where to left Ben

asked As you relates the question it is underway? that should to maybe should the the initiatives in give ended to business? earnings seasonality X% operating Because any self-help off the under margins. then this which he consideration profitability notwithstanding you business, just what the And all baseline quarter-to-quarter we model of in year reiterating of we have

X%. started year at the You

quarter went You've sequentially the made up margins fantastic progress during every year. and

Do stabilize some possibilities baseline? continue? Help new there? of we that trajectory the and vastly off think does So about us

mentioned, seasonality the as your Of point, Thank portfolio. there bit well course. a Yes, very we in is have for Europe. diversified a question. you of To I little

be HAM festivities, the than with to are have branded quarter business. growing and the business faster strong a sausage in I in tends the our think a industry. we business QX and the strong Nonetheless, year-end in

offerings, think both retail QX. the do with key customers, fresh, we're And seeing and we that's strong I in of service. food a differentiated in to what beginning in to prepared partnership our want creating

deflationary QX period. bit inflationary is there a high was very little seeing a a impacted year still by of Of last the seasonality period. And course, we're now

growth bit on to a revenues, to seasonality the there seasonality bit year, line. all So QX expect Again, in a as is continuing strong year robust full QX. strong we what took expect expected compared year, we But in with in but year-over-year expect of XXXX. XXXX to our benefits so with a excellence operational we little not continue as we be initiatives of that into last is reduction come we to the little for QX, bottom but the during a

thinking all weather should Okay. Very persist of be we sequencing Thinking strong commodity any move good. year? fourth mindful as of we operational U.S. this It through or about the that the the we of? should seen about with business, improve we fundamentals profitability the We've part quarter. associated disruptions though results have did quarter into weather saw early early as And first you February that January, XXXX. hiccups be that in the looks in in XXXX. How should

Yes. Thank you.

at we have As U.S. mentioned, very we I well-diversified our a look portfolio. as business,

the able and are business bar upside downside with business. pack -- in to market foods capture prepared We more the and stable, tray the small and a commodity protect the

and As to in supply are demand, tailwinds especially cost, seeing the think I we terms terms looking grain. of the in on of drivers some

South production year. reduction is As the provide $XXX U.S. during million and some mentioned, there in I close us in cost which will in to XXXX record America,

growth very based on all we're pricing QX, you and demand line not lot the for we during go cost our plus based if on the course, initiatives. chicken. into But supply, strong muted we're at look as the of some Of supply have will seeing or expecting market that a bottom of

and a the between chicken think and mentioned, activity promotional beef value the by I strong chicken seeing As increase levels, are spread great is consumers. the pork we're in record and for retailers. to close we The a

doing right every less really trip drive the traffic happening it's stores. at great the that and shoppers you important And a they buying traffic trips to and we're in the retailer is chicken retail for that do. what's drive way If now, look seeing more to for

in promotional segment. from activity and the So demand, key an that we're customers increase on seeing our especially the in increase

consumer the traffic spending bit home. little some chicken we we're at food On that a penetration the in lower what more an offerings. the is seeing are service, of seeing But increase and

starting seeing food and we're service both strong year. So the of demand, the in retail

is growth which grilling or the little close QX for for increase an as expecting in mentioned a of availability with season. the total expected Now for And is QX, ] of protein the well, X% supply the reduction -- as are I X.X%. year of a to the a expecting seasonality And in as of the terms be USDA expected of [ X.X% we line the is then bit of really with U.S. prices. and slight in net progresses, of muted QX beef to

the So year for drivers everything on line are in XXXX. in a strong for chicken

And then the in far and QX, to the from your minor in so relatively on relative to disruptions disruptions storms the question earlier weather had we've quarter.

So nothing that was very impactful overall.

comes question next Our from Andrew Strelzik BMO. from

fourth margin. the demand feed was And the costs average. Obviously, constructive are if is the the average just you the I the average below on I or the U.S. said X-year on margin quarter, your X-year think backdrop. in in U.S. prior cutout of X% of line And operating outlook. north about just up the margin about well follow wanted with to heading X-year question in

XXXX as could So X-year kind that of above average it imply margins kind anything within that well. seems north U.S. picture? there that to thinking solidly of that of just correctly? be about Am Is that missing X% I'm I

Andrew. Great, No.

portfolio, goes before. it think the back as to I mentioned I

have well-balanced portfolio. We a

of we the bird partnership, pricing business on XXXX. volatility are the or as the and we continue grow and only those XXXX back and demonstrated and margin portfolio more to the small commodity XXXX, grain business the driven, trade our a I cost offset over The driven partially think great cost bird. to impacts big and we have

stable cost more of commodity on go through some benefits especially again the of expect the segments, lower other our we segments. will on margins. bottom line, grain But So the the

the years, fare to downside. year we with protect whatever competition, We upside we And one To the is as us the above we the or the will the can always to that want normal be capture. always mentioned, say allow and operator. market will we capture last perform to the best want

And second look makes sense. this and I And question you that the hatchability. That on the straight my has at basically is on slide, down year. hatchability slide that gone good provided if data

Some of Can the that, going bit a from on about you hatchability X-year little most what's I outside, perspective. recently maybe but guess, is we're a seasonal, probably now talk just average.

I in think supposed we materialized. were of remind, increases kind and hasn't I see if steadily really to that

And growth you the that hatchability production limitations going how for so about the and are forward on for creates chicken 'XX. thinking industry in

been a over years, we've topic breeding, the we their That to started, X think issue change Yes. last that as to been the right? Sure, the primary we breeds the changed improve X meat. discussing as has companies quality Andrew. breeders impacted has mentioned, hatchability and the the improve grid in of yields issue woody quality reaction and hatchability. the We on years from with to breast the the the the and was change started that primary reduce several issue. the that ago breast And to their I

right, to the challenge impact The that's our production from that life as the bit XX% to of as that I That on in the little on ag we what a better And on side, saw, breed a on and breed creates close XX% performs well level. to it XX% industry. think of the a change conversion to the hedge.

course, are us. breeder management improved we the hatchability of the Of that has And especially think for I improving our side.

the still challenges we that resumed new used hatchability hatchability it's the still than the the there management right be and on XX%. that But overall male, especially new XXs, level on this But breed. issue mail have a weight some I on breed the the prior are to of maybe company now. of better of with the will We think an average a are

So expect get better. that the as to throughout go years, we we

the for the see months years have pullet that we bit as volume once or increase a should think -- next than expecting reaction breather the I another impacting the little the that, it younger number to a we in bit little productive. is little year-over-year, the the through in going And of is the or the breeding of we counter bottleneck higher an that As which with a issue more the of that trying be coming of poses, that's the but breeders again. we is and increase that's a order number industry age, bit was improve have, hatchability hatchability to expect we placements, the why the expectations of age and flock flock that to industry as

I And if Okay. could here. squeeze one one in just quick

cash On balance. sheet the the and balance

talked you pretty balance the we maybe a strength in the But than about thought. robust. cash coming otherwise is balance little higher is the CapEx So of your had sheet,

you you the that I leveraging And are generally thinking how when kind projects, optionality are some allocating set, you balance, what's opportunity thinking growth. about winding think talked Your But for cash about are down. How about guess about attractive? speaking, of you the cash.

Matt. it's the Andrew, Thanks question. for

executing, of in probably kind it the more growth in bit that a I key couple that is growth focus this us either our further and gave and really this I from main with a did going key cash process we've on for on little really And opportunities -- that, why we really customers. caveat our cash organic think had of my at mentioned some that to broader, that executed I a with where I bigger we're of of could when see time. is put change -- have I customers, CapEx. of production And it a other our range, remarks, think or tightness projects We've times that's with which that's prepared been providing that growth. that organic

to So any you to . we're be going something executing seeing I forward. if other want think don't color we've very XX on the been and to know, that Fab, go I more of year to as that? months, add we last over that's well

No. it And again, how look create enter. value We've we into always the shareholders. for can

We have our to food will I one, and an on initiatives, to in think But when either our terms grow of us our portfolio have accretive or in point, is we to us growth key it customers. we brands help regions a improving acquisition, targets offerings. with our or lot in do Matt's think, growing in acquisition will prepared we of it's

comes of Our from next Peter Bank America. from question Galbo

just P&L was in the deflation Just you feed and you equation. of talked the part costs. hoping on for the obviously, we've about, me. other could a Fabio, Matt Matt, U.S. an cost couple I questions update seen us feed in costs of maybe give

and either deflation just inflation So 'XX labor expecting blended a conversion, of and for or COGS kind the U.S. you're what then maybe rate for

Yes.

think being which least staffed, is Bob of remarks, fully Peter, getting great. were point directionally, his at prepared the I you we mentioned I to think relative as to labor, in

shall just say, -- 'XX per increases early of and think person basis, come relative a in market high to course, of more when not about you little our 'XX as 'XX, does, becoming then and kind were, they of that we stable is be that. in part as will the So

our some cost But in a but are in about we think to see huge drivers, will be what chunk excellent. perspective, seen not check we're labor main nature, of tailwinds, we that's causing we've of seeing increase, change. is COGS and cost which that things is the ingredients think any the driver the of extraordinary that the a But nothing of grain the and past. should when from I which levels So I relatively is level that other other key seeing

talk action And the every the those to year efficiencies capture this created gaps we as all looking revenues that or part improvements we We million plans the Every think the overall because opportunities operation the to mix. at $XXX mentioned. I expect call that at as improving about operational million And excellence, we COGS single our yields. We throughout gaps do every plant we $XXX opening looking part in year, in the year, can talk operational that started then we operational talk capturing in close about I we excellence from capture. network. cost, we is about it all reducing and effectiveness. in

Matt can packaging that and counter. little somewhat grain non-impactful. inflation is we that in bit utilities ingredients Of there course, is of of terms a said, But as

that to all the exercise sum So all total P&L. the all that's an improve and we from operations expecting add year-over-year, our always and our plants, way we are up we the do through at bottom operations and up

SG&A year, in That's I X% front, helpful. 'XX. the it's the Matt, And down obviously for just, you Got about it. mentioned think on then

rough to rate growth either either trying get SG&A dollar Just sense range. 'XX a a or on in

I million to quarter, if $XXX a been use. range fair think a between you've $XXX that's million, still

Yes. I think No, it's good. That's range. a decent

the think the legal think of moving anticipate don't costs. increase versus some Peter, get levels. I up what I in we'll we ourselves really XXXX kind XXXX back also in year, us normalized this would and we'll more more compensation level of have we about 'XX from incentive hopefully, will way see back Certainly, XXXX a cost stable of to kind this, believe, up for business. kind about if more thinking you think thinking I But of reasonable true a a it. a about that level is a certainly I did XXXX because to defense significant decrease it, -- somewhat of of of being XXXX is of between in U.S. 'XX think

the office Europe. the consolidation I total the SG&A, in mean think of back also from benefiting I we're

exchange of bit rate little a well. is there as Although there impact

comes Adam Goldman question And from our from next Sachs. Samuelson

the alluded the challenging cycle, market, as into the fourth second trends quarter. which point. on where impacted the we that have overall first given Can of that of more seen the normal you that look years have is high you think to short sit question, the typically, So in supply-demand kind Mexico. Obviously, Mexico that you prior second the would -- business off And the a I quarter here anything you quarter talk as today? I guess first seasonal about would nature is October, just is cadence normal there

the Adam. Yes, was better a sure. weaker Yes. although in expected than prior you, Thank bit QX, little Mexico than year.

cheap that, an QX. And market. really and from live is United during industry from the that very increase short Brazil I I combined how QX during production coming also cycle think the I think we in And on and the with pressure, mentioned, imports the put some overall States in major the drivers know, market especially volatile. were bird as

QX, from As Mexico improvement right We very those now. year-over-year. be we saw We're volatile quarter-over-quarter, an but very consistent already mentioned, we always and the levels. strong improvement seeing can started as

right still weaker has year bit than expected. the we're a little now. think the But I we seeing started improvements

we strengthening the export going the As there. pricing see the which in will in U.S., prevent

to And really already I be think are to production flowing right -- strong. of United improvement now. in also seeing expect a the there's an work States we I from mentioned, market but And we as Mexico. market lot the QX

lot brand. where in this just business your is And the historically, can we if the more on Prepared a and U.S. be contributor? Can Are about U.S. follow-up And capacity as a a unit? just point challenging helpful. business or that maybe know prepared talk capital getting of piece business there's And incremental profitability more a point that BARE growth of to the That's needs at Okay. scale? was if you there in in because material so, now a prepared earnings thought been of I Just the the a about I Foods on

that's the a foods the protect capture And I role market think And can portfolio downside. strategy, our upside play Sure. the exactly a there. the to significant in right? I prepared and that am have

the that As bird want We we that a big have volatility the can with business prepared an stable market. . to exposure from to commodity. inputs in counter cheaper benefit the more have

our As XXXX move XXXX strong brand. and saw we along, that on growth

we what lower not are but customers not think profits, also it's resonated consumers. only we're but are strong driving from only helping benefiting And commodity traffic. because product prices, are really seeing capturing differentiated that's we a upsides I key driving demand. And with that our that were also we

of squeeze and a expect commodity of to As a more proving stable. that we on see market margins we a reduction be the we business. Again, bit on it see the can little

be we to expect XXXX, seeing But and we XXXX. that don't different that are double-digit in business profitability in in

the in talk [indiscernible] the business capacity, with key especially BARE our where XXX% and with cooked we As relaunch about for growth, also are fully brand with we reaching during the the growth and you correct, a the QX. customers, brand we do are Just

. gentlemen, and Ohri-Gupta ladies our from And Priya Barclays. comes next question from

think there little talk maybe this potentially bit to can free with not -- we about working sorry, to flow the the capital a you scope or cash that as some year a we release be capital, green side. working Andy, start your you're -- for for benefit about on of seeing one just Is just even with composition?

get taking, seeing fourth we've My low yes. we're quarter. capital some seeing I especially grain going. It be itself to is is something bit able are we definitely great that to where of going initial four should such. also think forward, reaction let is, But we're inventory through bit as that a here with of kind benefits corn, that time starting that working where areas seen these But see fully that hit take as I as that Priya. kind mean of the to the direction in little and we in is a may

and down, lot think overall capital. I frozen on Priya, we've of and inventories has in especially especially inventory, terms whole going also the reduction working our helped the inventories, of a dark in for market our pushing meat also been in we're category. the industry the And help seeing the that

That's helpful.

you I questions little guidance. more when cash position outlined guys So sort on it one sort a your bit prior cash. an enviable the already of maybe your and in flow that to of the you've follow-on of comes as existing CapEx generation, guess, building put of a

that inorganic a that's cash organic comfortable to to potentially able us versus bit aggressively high projects you scope on? looking of be of talk balance increase those the cash about think more how we would opportunities? a would through be some maybe building, As you And sitting

the do way. when Fabio we paying relative our of on a of acquisition inorganic on price be the completely it's to type but acquisition that to company, want and look, grow we're type had we about talk mentioned for inorganic And that prudent sure any strategy want to I versus and think very side, you any to make we fair right organic,

as those we at relative I opportunities it's types the very as one word excluding got right certainly cash we the not there. to to side key to some capital with price. growth. be that it be for not to organic customers. again prudent opportunities be the it not the organic any out more we to for before. but not of relates limit a going inorganic, I've some don't we're got do have that's how investments. list, reason #X at think that, So right to a that our on on to we Relative opportunities are on fit but We've needs -- the thing going something us look grow something -- that But can are we're go. to to use there's there buyback, that is as high is type of we If would consider mentioned have you'll

be with ladies that, gentlemen, back over would turn session. question-and-answer concluding we'll to and And like today's the for to I closing floor . Fabio any remarks.

Thank call. everyone, you, for our attending Yes.

efforts to XXXX. key profitable excellence. maintain performance these And diversification of operational volatile despite partnerships, our mindset our ability values, commitment conditions we and with strategies we Our on focus to elevated a drive circumstances. and our combined market exceptionally portfolio and throughout demonstrated faced leadership team growth were customer Nonetheless,

to an service along Moving forward, being as sustainability. to attention our unwavering to commitment team quality, with well along we unyielding drive an with safety strategies, member and will continue

company future and you, and respected Given everyone. becoming efforts, better our a and to most cultivate we our progress team achieve continue aspiration in of XXXX Thank our can the and for best members beyond.

attending today's We call. thank gentlemen, and presentation. today's ladies conference And that concludes you for

disconnect now your may You lines.