Pilgrims Pride Corp: Form 10-Q for the period ended Sep 27, 2026

Executive Summary

Overview

Pilgrim’s Pride Corporation (referred to herein as “Pilgrim’s,” “PPC,” “the Company,” “we,” “us,” “our,” or similar terms) is one of the largest chicken producers in the world, with operations in the United States (“U.S.”), the United Kingdom (“U.K.”), Mexico, France, Puerto Rico, the Netherlands and the Republic of Ireland. We reported net income attributable to Pilgrim’s of $232.4 million, or $0.97 per diluted common share, and income before tax totaling $313.9 million, for the nine months ended September 27, 2026. These operating results included net sales of $13.8 billion, gross profit of $1.0 billion and $684.2 million of cash provided by operating activities. We generated a consolidated operating margin of 3.0%. For the nine months ended September 27, 2026, we generated EBITDA and Adjusted EBITDA of $786.2 million and $984.4 million, respectively. A reconciliation of net income to EBITDA and Adjusted EBITDA is included below.

Global Economic Conditions

Our business continues to be subject to global inflationary pressures and broader economic uncertainty. In the U.S., inflation moderated compared to periods of elevated inflation experienced in recent years; however, labor, energy and other operating costs remain subject to market volatility. Consumer demand generally remained resilient during the third quarter of 2026, although ongoing uncertainty related to geopolitical developments, trade policies and broader economic conditions may continue to impact inflation trends and purchasing behavior.

In Europe, inflation continued to moderate during the third quarter of 2026 but remained affected by energy market volatility and broader economic conditions. Economic growth remained subdued in certain markets, and consumer spending patterns continued to reflect the effects of inflationary pressures experienced in recent periods. While inflationary conditions have improved compared to prior periods, geopolitical developments and fluctuations in energy markets continue to create uncertainty within the region.

In Mexico, inflation trends generally remained stable during the third quarter of 2026, although certain categories, including services, continued to experience inflationary pressures. Economic activity remained influenced by domestic demand, trade conditions and broader macroeconomic factors. Foreign currency exchange rates, including fluctuations in the Mexican peso relative to the U.S. dollar, may continue to impact the translation of our operating results and the competitiveness of our operations.

Geopolitical conflicts, including ongoing tensions in the Middle East and the conflict between Russia and Ukraine, continue to contribute to volatility in global commodity, energy and transportation markets. These events have resulted in and may continue to result in, disruptions to trade flows, supply chains and freight networks, as well as increased costs for certain inputs and services. While such conditions did not have a material impact on our costs during the current reporting period, prolonged or expanded hostilities could adversely affect our business, results of operations and financial condition in future periods.

We are monitoring changes in tariffs and trade policies in the U.S. and other countries where we operate and conduct business. Changes to these policies may impact our export sales and international operations. Our U.S. business is primarily characterized by inputs sourced domestically and products sold domestically, with export sales from the U.S. representing less than 5% of our total net sales. While the impact of trade policy changes remains uncertain and continues to evolve, we do not currently anticipate a material impact on our results of operations. We will continue to monitor potential impacts and take mitigation actions, as appropriate.

We generally respond to ongoing challenges in global economic conditions through discussions with customers to help mitigate the impact of extraordinary costs we experience. We also continue to focus on operational initiatives aimed at delivering labor efficiencies, improved agricultural performance and enhanced yields.

Our business continues to be affected by global economic conditions, including inflationary pressures, geopolitical developments, foreign currency fluctuations, trade policy changes and overall consumer demand trends. Inflation in the U.S., Europe and Mexico moderated compared to elevated levels experienced in recent periods; however, labor, energy and other operating costs remain subject to market volatility. Additionally, changes in interest rates, foreign exchange rates and broader economic conditions may continue to impact consumer spending patterns and operating costs in the markets in which we operate.

Announced Walkers Acquisition

On August 14, 2026, Pilgrim’s Europe agreed to acquire Walkers Deli & Sausage Company (Walkers) from Samworth Brothers, subject to approval by the Competition and Markets Authority (“CMA”) and employee consultation requirements in the U.K.. Walkers is a U.K. based producer of premium pork products operating four production facilities in Leicester and employing approximately 1,150 team members.

The proposed acquisition aligns with Pilgrim’s Europe strategy to expand its presence in the U.K. pork market and increase its participation in value-added product categories. The transaction is currently expected to close early in 2027, and therefore had no impact on the Company’s results of operations, financial position, or cash flows for the period presented.

Unsolicited Offer from JBS to Purchase Outstanding Shares of PPC Common Stock

On August 18, 2026, JBS submitted to the Company’s board of directors (the “Board”) a proposal to acquire the outstanding shares of the Company not already owned by JBS or its subsidiaries. JBS’s offer proposes this acquisition at a fixed exchange ratio of 2.086 JBS Class A common shares for each share of our common stock, based on the JBS and Company closing share prices on August 18, 2026 of $13.66 and $28.49, respectively (the “Proposed Transaction”). The Board has established a special committee of independent directors (the “Special Committee”) to review and evaluate the proposal. The Board will not approve the Proposed Transaction without the favorable recommendation of the Special Committee. No assurance can be given regarding whether any transaction will be entered into, approved by our Board and/or stockholders, or completed.

Raw Materials and Pricing

Our U.S. and Mexico segments use corn and soybean meal as the main ingredients for feed production, while our Europe segment uses wheat, soybean meal and barley as the main ingredients for feed production. The following table reflects the highest and lowest prices reached on nearby futures for one bushel of corn, one ton of soybean meal, and one metric ton of wheat during the current and previous years:

(a) We obtain corn and soybean meal prices from the Chicago Board of Trade, and we obtain wheat prices from the London International Financial Futures and Options Exchange.

Market prices for most chicken products during the three months ended September 27, 2026, were below both prior-year levels and the five-year historical average. Boneless skinless breast prices declined during the quarter but remained relatively stable overall, with prices unchanged for several weeks during the period. Supply remained elevated, supported by higher bird counts, particularly within the 6.26-7.75 lb weight category. Eggs set and chick placements continued to exceed prior-year levels, although growth moderated compared to previous quarters. However, live weights were below prior-year levels, partially offsetting overall production growth. As a result, industry ready-to-cook chicken production increased 2.2% year over year, although growth was slower than in the preceding two quarters.

The third quarter of 2026 reflected continued consumer demand for chicken across both retail and foodservice channels. Amid ongoing economic pressures, including elevated fuel and food prices, inflation outpacing income growth, and subdued consumer sentiment, demand patterns became increasingly bifurcated, with value-oriented consumers remaining focused on affordability while higher-income consumers continued to support demand for premium offerings.

This dynamic had varying effects on chicken demand across categories, though overall volume growth remained positive in both retail and foodservice channels. Retail chicken volume increased 1.4% year over year, with all major retail categories posting positive volume growth. Within fresh chicken, increased promotional activity by retailers drove solid volume gains in boneless skinless breast meat and boneless dark meat products, continuing a trend observed in recent quarters. These gains were partially offset by softer performance in other fresh chicken categories, including bone-in dark meat and wings.

Individually quick frozen chicken continued to deliver strong volume growth, supported by more favorable pricing relative to other chicken categories. In contrast, deli and frozen prepared chicken products experienced modest price increases while maintaining positive volume growth. Frozen Prepared growth is being driven by nuggets, chunks, and popcorn chicken, offsetting declines in tenders and wings. Overall, demand remained favorable across chicken categories, supported by consumers’ continued focus on value, convenience, and product quality.

In foodservice, demand trends reflected the increasingly bifurcated consumer environment. Traffic trends varied by channel, with quick-service restaurants experiencing softer traffic levels as lower-income consumers moderated discretionary spending, while full-service restaurants benefited from continued spending by higher-income consumers. Despite these dynamics, chicken volume remained positive across most foodservice subcategories, although growth moderated compared to prior periods. Full-service restaurants were the only major subcategory to experience volume declines. Continued expansion of chicken-focused menu offerings and restaurant units across foodservice channels supported overall demand for chicken.

Export volumes increased 0.7% year over year from January through August, as geopolitical tensions and elevated energy costs continued to affect global trade flows. Chicken cold storage inventories were 5.0% below prior-year levels and 4.7% below the five-year average, reflecting healthy inventory levels despite increased industry production during the quarter. Breast meat inventories ended September 7.8% below prior-year levels, while dark meat inventories also declined, primarily due to lower leg quarter and drumstick inventories. These trends reflected continued export demand and balanced inventory conditions across the market. In contrast, thigh inventories increased as prices weakened in July before stabilizing over the remainder of the quarter.

Despite a more challenging macroeconomic environment, demand for chicken remained generally stable during the quarter. However, increased industry supply continued to pressure market prices.

While the latest World Agricultural Supply and Demand Estimates outlook has not yet incorporated the final third quarter chicken production numbers, the weaker-than-expected quarter may temper full-year production growth expectation. Pullet placements in August and September were generally in line with prior-year levels after exceeding prior-year levels for most of the year. Production growth is expected to continue moderating as producers adjust production levels to align with recent strong growing conditions resulting in lower mortality rates. Chicken demand is expected to remain favorable, supported by promotional activity and the relative value proposition of chicken compared to competing proteins. Beef supplies remain constrained, while pork production is expected to remain relatively stable, positioning chicken favorably within the protein complex.

Looking ahead, the timing and pace of supply and demand rebalancing are expected to be the primary factors influencing market conditions through year end and into 2027. Consumer spending patterns and broader macroeconomic conditions will continue to play an important role in determining the timing and extent of this rebalancing.

Reportable Segments

We operate in three reportable segments: U.S., Europe, and Mexico. We measure segment profit as operating income. Certain corporate expenses are allocated to the Mexico and Europe reportable segments based upon various apportionment methods for specific expenditures incurred related thereto with the remaining amounts allocated to the U.S. For additional information, see “Note 16. Reportable Segments” of our Condensed Consolidated Financial Statements included in this quarterly report.

Results of Operations

Three Months Ended September 27, 2026 Compared to the Three Months Ended September 28, 2025

Net sales. Net sales generated in the three months ended September 27, 2026 decreased $106.1 million, or 2.2%, from net sales generated in the three months ended September 28, 2025. The following table provides net sales information:

(In thousands, except percent data)

Factors impacting the year-over-year change in net sales for the three months ended September 27, 2026, by reportable segment are as follows:

• U.S. net sales decreased $156.5 million, or 5.5%, driven by the following factors:
• Decrease in sales price per pound, reducing net sales by $56.0 million, or 2.0%
• This decrease was driven primarily by unfavorable market pricing conditions with current year market pricing below historical averages
• Decrease in sales volume of $100.5 million, or 3.5%
• The decrease was primarily attributable to lower domestic sales volumes due to increased intercompany transfers to Prepared Foods and the impacts of the conversion of Russellville to a Case Ready plant from a Big Bird plant, which was partially offset by increased export volumes
• Europe net sales decreased $18.5 million, or 1.3%, driven by the following factors:
• Decrease in sales volume, reducing net sales by $19.5 million, or 1.4%
• The decrease was driven by lower domestic and export volumes compared to the prior year period
• Unfavorable impact of foreign currency translation of $5.5 million, or 0.4%
• This impact was driven by a depreciation of the British pound against the U.S. dollar
• Partially offset by increase in sales price per pound, increasing net sales by $6.5 million, or 0.5%
• The increase was primarily attributable to improved pricing across domestic and export channels
• Mexico net sales increased $68.8 million, or 13.0%, driven by the following factors:
• Favorable impact of foreign currency translation of $44.4 million, or 8.4%
• This impact was driven by a strengthening of the Mexican peso against the U.S. dollar
• Increase in sales volume of $45.2 million, or 8.5%
• Volume increase was driven by market demand and favorable growing conditions, with growth in live chicken and processed chicken products
• Partially offset by a decrease in sales price per pound of $20.8 million, or 3.9%
• This decrease was driven by a decrease in commodity chicken pricing due to greatly improved year-over-year growing conditions resulting in lower mortality rates

Gross profit and cost of sales. Gross profit decreased by $325.7 million, or 49.4%, from $659.4 million generated in the three months ended September 28, 2025 to $333.7 million generated in the three months ended September 27, 2026. The following tables provide information regarding gross profit and cost of sales information:

(In thousands, except percent data)

32

(In thousands, except percent data)

(In thousands, except percent data)

Factors impacting the year-over-year change in cost of sales for the three months ended September 27, 2026, by reportable segment are as follows:

• U.S. cost of sales increased $143.7 million, or 6.1%, driven by the following factors:
• Increase in cost per pound sold of $227.0 million, or 9.6%
• This increase was driven primarily by an increase in live operations costs, grain costs, grower pay, depreciation, utilities, and other operating costs; partially offset by insurance income recoveries associated with losses from a hurricane
• Decrease in sales volume of $83.3 million, or 3.5%
• Europe cost of sales decreased $9.5 million, or 0.7%, driven by the following factors:
• Decrease in sales volume of $17.8 million, or 1.4%
• The decrease was primarily driven by lower domestic and export volumes, resulting in lower production and operating costs
• Favorable impact of foreign currency translation of $5.1 million, or 0.4%
• This impact was driven by the depreciation of the British pound against the U.S. dollar
• Partially offset by an increase in cost per pound sold of $13.4 million, or 1.1%
• The increase was primarily driven by higher operating costs, including increased input and utility costs, third-party services, and other operating expenses, reflecting continued inflationary pressures
• Mexico cost of sales increased $85.4 million, or 18.0%, driven by the following factors:
• Unfavorable impact of foreign currency translation of $41.6 million, or 8.7%
• This impact was driven by a strengthening of the Mexican peso against the U.S. dollar
• Increase in sales volume of $40.6 million, or 8.5%
• This increase was driven by market requirements in product mix
• Slight increase in cost per pound sold of $3.2 million, or 0.8%

Operating income and SG&A expense. Operating income decreased by $301.1 million, or 61.1%, from income of $492.6 million generated in the three months ended September 28, 2025 to income of $191.5 million generated in the three months ended September 27, 2026. The following tables provide information regarding operating income and selling, general and administrative (“SG&A”) expense:

(In thousands, except percent data)

(In thousands, except percent data)

Factors impacting SG&A year-over-year changes for the three months ended September 27, 2026 by reportable segment are as follows:

• U.S. SG&A decreased $21.8 million, or 22.0%, driven primarily by a reduction in litigation settlement costs
• Europe SG&A decreased $1.2 million, or 2.4%, driven by decreases in incentive compensation expense and marketing costs
• Mexico SG&A increased $0.1 million, or 0.9%, driven by unfavorable impact of foreign currency translation

(In thousands, except percent data)

Factors impacting the year-over-year change in net interest expense are as follows:

• Interest expense increased primarily due to a decrease in interest income earned on lower average cash balances, partially offset by a decrease in interest expense on outstanding borrowings.

(In thousands, except percent data)

34

Factors impacting the year-over-year change in income tax expense are as follows:

• A decrease in profit before income taxes

Nine Months Ended September 27, 2026 Compared to the Nine Months Ended September 28, 2025

Net sales. Net sales generated in the nine months ended September 27, 2026 decreased $167.6 million, or 1.2%, from net sales generated in the nine months ended September 28, 2025. The following table provides net sales information:

(In thousands, except percent data)

Factors impacting net sales year-over-year changes by reportable segment are as follows:

• U.S. net sales decreased $435.4 million, or 5.2%, driven by the following factors:
• Decrease in sales price per pound, reducing net sales by $368.3 million, or 4.4%
• This decrease was driven primarily by unfavorable market pricing conditions with current year market pricing below historical averages
• Decrease in sales volume, reducing net sales by $67.1 million, or 0.8%
• The decrease was primarily attributable to lower domestic sales volumes due to increased intercompany transfers to Prepared Foods and the impacts of the conversion of Russellville to a Case Ready plant from a Big Bird plant, which was partially offset by increased export volumes
• Europe net sales increased $120.1 million, or 3.0%, driven by the following factors:
• Increase in sales price per pound of $27.7 million, or 0.7%
• This increase was primarily attributable to improved pricing across domestic and export channels
• Favorable impact of foreign currency translation of $95.8 million, or 2.4%
• This impact was driven by a strengthening of the British pound against the U.S. dollar
• Partially offset by a decrease in sales volume of $3.4 million, or 0.1%
• The decrease was driven by lower domestic and export volumes compared to the prior year period
• Mexico net sales increased $147.7 million, or 9.3% driven by the following factors:
• Increase in sales volume of $196.8 million, or 12.4%
• Volume growth was driven by strong market demand and favorable growing conditions, with growth in live chicken and processed chicken products
• Favorable impact of foreign currency translation of $187.1 million, or 11.8%
• This impact was driven by a strengthening of the Mexican peso against the U.S. dollar
• Partially offset by a decrease in sales price per pound of $236.2 million, or 14.9%
• This decrease was driven by a decrease in commodity chicken pricing resulting from more favorable industry supply conditions compared to the prior-year period

Gross profit and cost of sales. Gross profit decreased by $0.9 billion from $1.9 billion generated in the nine months ended September 28, 2025 to $1.0 billion generated in the nine months ended September 27, 2026. The following tables provide information regarding gross profit and cost of sales information:

(In thousands, except percent data)

(In thousands, except percent data)

(In thousands, except percent data)

Factors impacting cost of sales year-over-year changes by reportable segment are as follows:

• U.S. cost of sales increased $348.1 million, or 4.9%, driven by the following factors:
• Increase in cost per pound sold of $404.3 million, or 5.7%
• This increase was driven primarily by an increase in live operations costs, grain costs, grower pay, depreciation, utilities, and other operating costs
• Decrease in sales volume of $56.2 million, or 0.8%
• The decrease was primarily attributable to lower domestic sales volumes due to increased intercompany transfers to Prepared Foods and the impacts of the conversion of Russellville to a Case Ready plant from a Big Bird plant, which was partially offset by increased export volumes
• Europe cost of sales increased $138.3 million, or 3.8%, driven by the following factors:
• Unfavorable impact of foreign currency translation of $86.6 million, or 2.4%
• This impact was driven by a strengthening of the British pound against the U.S. dollar
• An increase in cost per pound sold of $54.7 million, or 1.5%
• This increase was driven by higher input costs, such as labor and utilities
• Partially offset by a decrease in sales volume of $3.0 million, or 0.1%
• Mexico cost of sales increased $256.6 million, or 18.6% driven by the following factors:
• Unfavorable impact of foreign currency translation of $176.4 million, or 12.8%
• This impact was driven by a strengthening of the Mexican peso against the U.S. dollar
• Increase in sales volume of $171.0 million, or 12.4%
• This increase was driven primarily by an increase in demand for fresh products
• Partially offset by a decrease in cost per pound sold of $90.8 million, or 6.6%
• This decrease was driven by a decrease in commodity ingredients costs, such as corn and soy

Operating income and SG&A expense. Operating income decreased by $1.0 billion, or 70.2%, from $1.4 billion generated in the nine months ended September 28, 2025 to $420.0 million generated in the nine months ended September 27, 2026. The following tables provide information regarding operating income and selling, general and administrative (“SG&A”) expense:

(In thousands, except percent data)

(In thousands, except percent data)

Factors impacting SG&A year-over-year changes by reportable segment are as follows:

• U.S. SG&A increased $92.8 million, or 30.7%, driven by an increase in litigation settlement expense and legal defense costs
• Europe SG&A decreased $7.5 million, or 5.0%, driven by decreases in incentive compensation expense and marketing costs, while also partially offset by the unfavorable impact foreign currency translation
• Mexico SG&A increased $3.9 million, or 8.6%, driven by the unfavorable impact of foreign currency translation

(In thousands, except percent data)

Factors impacting restructuring activities charges are as follows:

• Europe restructuring activities charges of $11.5 million for the nine months ended September 27, 2026 were incurred primarily as a result of severance related to back office consolidation

(In thousands, except percent data)

Factors impacting the year-over-year change in net interest expense are as follows:

• Interest expense increased primarily due to the loss on early extinguishment of debt of $16.3 million primarily driven by the tender offer on the Senior Notes due 2033, and lower year-over-year interest income due to a decrease in average cash balances

(In thousands, except percent data)

Factors impacting the year-over-year change in income tax expense are as follows:

• A decrease in profit before income taxes

Liquidity and Capital Resources

The following table presents our available sources of liquidity as of September 27, 2026:

(In millions)

(a) Availability under the U.S. Credit Facility may also be reduced by outstanding standby letters of credit.

On March 30, 2026, the Company commenced a tender offer pursuant to which it offered to acquire up to $250.0 million aggregate principal amount of its 6.250% Senior Notes due 2033. On April 14, 2026, the early settlement date, the Company exercised the purchase of $250.0 million aggregate principal amount at a price of $1,056.90 per $1,000.00 principal amount and a total cost of $264.2 million.

On June 26, 2026, Pilgrim’s Europe entered into a new £150.0 million multicurrency revolving credit facility that matures in June 2031. Concurrently, Pilgrim’s Europe terminated its previously existing revolving credit facility dated June 24, 2022. The new facility may be used for general corporate purposes, working capital requirements and permitted acquisitions. Borrowings bear interest at applicable reference rates plus a leverage-based margin.

On September 23, 2026, the Company completed a sale of €500.0 million aggregate principal amount of its 4.75% unsecured, unregistered senior notes due 2034. The proceeds of which will be used for general corporate purposes, including to fund the consideration in connection with the acquisition of Walkers Deli & Sausage Company, and to pay related costs and expenses. The issuance price of this offering was 99.866%, which created gross proceeds of €499.3 million before transaction costs. The €0.7 million discount will be amortized over the remaining life of the notes. The notes bear interest at a rate of 4.75% per annum from the date of issuance until maturity, payable annually in January, commencing January 23, 2027.

We expect cash flows from operations, combined with availability under our credit facilities, to provide sufficient liquidity to fund current obligations, the pending Walkers acquisition, projected working capital requirements, maturities of long-term debt and capital spending for at least the next twelve months.

Historical Flow of Funds

(In millions)

Net Noncash Expenses

Items necessary to reconcile from net income to cash flow provided by operating activities included net noncash expenses of $452.9 million for the nine months ended September 27, 2026. Net noncash expense items included depreciation and amortization of $365.0 million, asset impairment of $22.3 million, deferred income tax expense of $21.6 million, stock-based compensation costs of $17.0 million, loss on early extinguishment of debt of $16.3 million, losses on property disposals of $5.2 million, loan cost amortization of $3.8 million, and accretion of discounts related to Senior Notes of $1.7 million.

Items necessary to reconcile from net income to cash flow provided by operating activities included net noncash expenses of $329.8 million for the nine months ended September 28, 2025. Net noncash expense items included depreciation and amortization of $334.4 million, deferred income tax benefit of $34.0 million, stock-based compensation costs of $19.6 million, loan cost amortization of $3.7 million, losses on property disposals of $2.9 million, accretion of discounts related to Senior Notes of $1.8 million, asset impairment of $0.8 million, and loss on early extinguishment of debt of $0.6 million. Other net noncash items were immaterial.

Changes in Operating Assets and Liabilities

The change in trade accounts and other receivables represented a $154.6 million source of cash related to operating activities for the nine months ended September 27, 2026. This change primarily resulted from the sale of trade receivables. The change in trade accounts and other receivables represented a $84.7 million use of cash related to operating activities for the nine months ended September 28, 2025. This change resulted primarily from an increase in sales from more favorable market pricing.

The change in inventories represented a $64.6 million use of cash related to operating activities for the nine months ended September 27, 2026. This change resulted primarily from increased live inventory balances due to increased grain costs. The change in inventories represented a $138.9 million use of cash related to operating activities for the nine months ended September 28, 2025. This change resulted primarily from building inventories to meet increased demand and in anticipation of fourth quarter seasonal demand.

The change in prepaid expenses and other current assets represented a $54.9 million use of cash related to operating activities for the nine months ended September 27, 2026. This change resulted primarily from an increase in derivative assets, prepaid property insurance, prepaid indirect taxes in our Mexico and Europe reportable segments and prepaid grower housing incentives. The change in prepaid expenses and other current assets represented a $34.6 million use of cash related to operating activities for the nine months ended September 28, 2025. This change resulted primarily from an increase in prepaid indirect taxes in our Mexico and Europe reportable segments, prepaid property insurance, and an increase in prepaid grower housing incentives.

The change in accounts payable, accrued expenses and other current liabilities represented a $16.4 million source of cash related to operating activities for the nine months ended September 27, 2026. This change resulted primarily from an increase in trade payables, an increase in litigation settlement accruals and an increase in accrued payroll, partially offset by payment of incentive compensation accrued for in 2025. The change in accounts payable, accrued expenses and other current liabilities represented a $42.4 million use of cash related to operating activities for the nine months ended September 28, 2025.

This change resulted primarily from the payment of incentive compensation accrued for in 2024 and payments of litigation settlements, partially offset by an increase in the days payables outstanding, and increases in accrued payroll and insurance expenses.

The change in income taxes, which includes income taxes receivable, income taxes payable, deferred tax assets, deferred tax liabilities, reserves for uncertain tax positions, and the tax components within accumulated other comprehensive loss, represented a $27.2 million use and $95.8 million source of cash for the nine months ended September 27, 2026 and September 28, 2025, respectively.

(In millions)

Capital expenditures were incurred primarily for growth projects, such as a new prepared foods facility in Walker County, GA and the conversion of a commodity plant to a plant supporting our U.S. retail customers, and to improve operational efficiencies for the nine months ended September 27, 2026. Capital expenditures were incurred primarily for growth projects, such as the conversion of a commodity plant to a plant supporting our U.S. retail customers, system enhancement projects, and to improve operational efficiencies for the nine months ended September 28, 2025.

Purchase of acquired business during the nine months ended September 27, 2026, is from the equity purchase in Europe of Hermitage AI Ltd. from Hermitage Group. For more details, refer to "Note 6. Goodwill and Intangible Assets."

(In millions)

Proceeds from the revolving line of credit and long-term borrowings during the nine months ended September 27, 2026, are related to the issuance of 4.75% Euro Senior Notes due 2034 and borrowings on the revolving U.S. and Mexico lines of credit. Payments on revolving line of credit, long-term borrowings and finance lease obligations during the nine months ended September 27, 2026, are primarily related to the repurchase of the 6.25% Senior Notes due 2033 and its 3.50% Senior Notes due 2032 as well as revolving line of credit and finance lease payments. Payments on early extinguishment of debt during the nine months ended September 27, 2026, are related to fees paid during the repurchase of its 6.25% Senior Notes due 2033. Payments of capitalized loan costs during the nine months ended September 27, 2026, are related to fees paid during the issuance of its 4.75% Euro Senior Notes due 2034.

Payments for dividends during the nine months ended September 28, 2025 are related to the special cash dividends that were paid in April and September 2025. Payments on revolving line of credit, long-term borrowings and finance lease obligations and payments on early extinguishment of debt during the nine months ended September 28, 2025, are primarily related to open market repurchases of outstanding senior notes. The repurchase of noncontrolling interest represents cash paid in exchange for equity of a subsidiary that was previously owned by a noncontrolling interest partner.

Long-Term Debt and Other Borrowing Arrangements

Our long-term debt and other borrowing arrangements consist of senior notes, revolving credit facilities and other term loan agreements. For a description, refer to “Note 11. Debt.”

Reconciliation of Net Income to EBITDA and Adjusted EBITDA

“EBITDA” is defined as the sum of net income plus interest, taxes, depreciation and amortization. “Adjusted EBITDA” is calculated by adding to EBITDA certain items of expense and deducting from EBITDA certain items of income that we believe are not indicative of our ongoing operating performance consisting of: (1) costs related to litigation settlements, (2) restructuring activities losses, (3) asset impairment, (4) net loss attributable to noncontrolling interests, and (5) foreign currency transaction gains. EBITDA is presented because it is used by us and we believe it is frequently used by securities analysts, investors and other interested parties, in addition to and not in lieu of results prepared in conformity with U.S. GAAP, to compare the performance of companies. We believe investors would be interested in our Adjusted EBITDA because this is how our management analyzes EBITDA applicable to continuing operations. We also believe that Adjusted EBITDA, in combination with our financial results calculated in accordance with U.S. GAAP, provides investors with additional perspective regarding the impact of certain significant items on EBITDA and facilitates a more direct comparison of our performance with our competitors. EBITDA and Adjusted EBITDA are not measurements of financial performance under U.S. GAAP. EBITDA and Adjusted EBITDA have limitations as analytical tools and should not be considered in isolation or as substitutes for an analysis of our results as reported under U.S. GAAP. Some of the limitations of these measures are:

• They do not reflect our cash expenditures, future requirements for capital expenditures or contractual commitments;
• They do not reflect changes in, or cash requirements for, our working capital needs;
• They do not reflect the significant interest expense or the cash requirements necessary to service interest or principal payments on our debt;
• Although depreciation and amortization are noncash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements;
• They are not adjusted for all noncash income or expense items that are reflected in our statements of cash flows;
• EBITDA does not reflect the impact of earnings or charges attributable to noncontrolling interests;
• They do not reflect the impact of earnings or charges resulting from matters we consider to not be indicative of our ongoing operations; and
• They do not reflect limitations on or costs related to transferring earnings from our subsidiaries to us.

In addition, other companies in our industry may calculate these measures differently than we do, limiting their usefulness as a comparative measure. Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as an alternative to net income as indicators of our operating performance or any other measures of performance derived in accordance with U.S. GAAP. You should compensate for these limitations by relying primarily on our U.S. GAAP results and using EBITDA and Adjusted EBITDA only on a supplemental basis.

(In thousands)

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Market Risk-Sensitive Instruments and Positions

The risk inherent in our market risk-sensitive instruments and positions is primarily the potential loss arising from adverse changes in commodity prices, foreign currency exchange rates, interest rates and the credit quality of available-for-sale securities as discussed below. The sensitivity analyses presented do not consider the effects that such adverse changes may have on overall economic activity, nor do they consider additional actions our management may take to mitigate our exposure to such changes. Actual results may differ from those described below.

Commodity Prices

We purchase certain commodities, primarily corn, soybean meal, soybean oil, and wheat, for use as ingredients in the feed we either sell commercially or consume in our live operations. As a result, our earnings are affected by changes in the price and availability of such feed ingredients. We attempt to minimize our exposure to the changing price and availability of such feed ingredients by using various techniques, including, but not limited to, (1) executing purchase agreements with suppliers for future physical delivery of feed ingredients at established prices and (2) purchasing or selling derivative financial instruments such as futures and options.

For this sensitivity analysis, market risk is estimated as a hypothetical 10% increase in the weighted-average cost of our primary feed ingredients as of the periods presented. The impact of this fluctuation, if realized, could be mitigated by related commodity hedging activity. However, fluctuations greater than 10% could occur.

(In thousands)

(a) Based on our feed consumption, a 10% increase in the price of our feed ingredient purchases would have increased cost of sales for the three months ended September 27, 2026.

(b) A 10% increase in ending feed ingredient prices would have increased inventories as of September 27, 2026.

(In thousands)

(a) We purchase commodity derivative financial instruments, specifically exchange-traded futures and options, in an attempt to mitigate price risk related to our anticipated consumption of commodity inputs for the next 12 months. A 10% increase in corn, soybean meal, soybean oil and wheat prices would have resulted in a change in the fair value of our net commodity derivative position, as of September 27, 2026.

Interest Rates

Fixed-rate debt. Market risk for fixed-rate debt is estimated as the potential decrease in fair value resulting from a hypothetical increase in interest rates of 10%. Using a discounted cash flow analysis, a hypothetical 10% increase in interest rates would have decreased the fair value of our fixed-rate debt by $79.9 million as of September 27, 2026.

Foreign Currency

Mexico Foreign Investments

We are exposed to foreign exchange-related variability of investments and earnings from our Mexican subsidiaries. Foreign currency market risk is the possibility that our financial results or financial position could be better or worse than planned because of changes in foreign currency exchange rates. For this sensitivity analysis, market risk is estimated as a hypothetical 10% change in exchange rates used to convert Mexican peso to U.S. dollars, and the effect of this change on our Mexican foreign investments.

Net Assets. As of September 27, 2026, our Mexican subsidiaries that are denominated in Mexican peso had net assets of $748.6 million. A 10% weakening in Mexican peso against the U.S. dollar exchange rate would cause a decrease in the net assets of our Mexican subsidiaries by $68.1 million. A 10% strengthening in the Mexican peso against the U.S dollar exchange rate would cause an increase in the net assets of our Mexican subsidiaries of $83.2 million.

We are also exposed to the effect of potential currency exchange rate fluctuations to the extent that amounts are repatriated from Mexico to the U.S. The Mexican peso exchange rate can directly and indirectly impact our financial condition and results of operations.

Europe Foreign Investments

We are exposed to foreign exchange-related variability of investments and earnings from our Europe subsidiaries. Foreign currency market risk is the possibility that our financial results or financial position could be better or worse than planned because of changes in foreign currency exchange rates. For this sensitivity analysis, market risk is estimated as a hypothetical 10% change in exchange rates used to convert British pound and euro to U.S. dollars, and the effect of this change on our Europe foreign investments.

Net Assets. As of September 27, 2026, our Europe subsidiaries that are denominated in British pounds had net assets of $960.9 million. A 10% weakening in British pound against the U.S. dollar exchange rate would cause a decrease in the net assets of our Europe subsidiaries by $87.4 million. A 10% strengthening in the British pound against the U.S dollar exchange rate would cause an increase in the net assets of our Europe subsidiaries of $106.8 million.

Cash flow hedging transactions. We periodically enter into foreign currency forward contracts, which are designated and qualify as cash flow hedges, to hedge foreign currency risk on a portion of sales generated and purchases made by our Europe reportable segment. A 10% weakening or strengthening of the U.S. dollar against the British pound and U.S. dollar against the euro would result in immaterial changes in the fair values of these derivative instruments. No assurance can be given as to how future movements in currency rates could affect our future financial condition or results of operations.

Quality of Investments

Certain retirement plans that we sponsor invest in a variety of financial instruments. We have analyzed our portfolios of investments, and to the best of our knowledge, none of our investments, including money market funds units, commercial paper and municipal securities, have been downgraded, and neither we nor any fund in which we participate hold significant amounts of structured investment vehicles, auction rate securities, collateralized debt obligations, credit derivatives, hedge funds investments, fund of funds investments or perpetual preferred securities. Certain postretirement funds in which we participate hold significant amounts of mortgage-backed securities. However, none of the mortgages collateralizing these securities are considered subprime.

Impact of Inflation

The U.S., Mexico, and most of Europe continue to be impacted by inflationary pressures. None of the locations in which we operate are experiencing hyperinflation. We have responded to these inflationary challenges by continuing negotiations with customers to recoup the extraordinary costs we have experienced. We also continue to focus on operational initiatives that aim to deliver labor efficiencies, better agricultural performance and improved yields.

Forward Looking Statements

Certain written and oral statements made by our Company and subsidiaries of our Company may constitute “forward-looking statements” as defined under the Private Securities Litigation Reform Act of 1995. This includes statements made herein, in our other filings with the SEC, in press releases, and in certain other oral and written presentations. Statements of our intentions, beliefs, expectations or predictions for the future, denoted by the words “anticipate,” “believe,” “estimate,” “expect,” “project,” “plan,” “imply,” “intend,” “should,” “foresee” and similar expressions, are forward-looking statements that reflect our current views about future events and are subject to risks, uncertainties and assumptions. Such risks, uncertainties and assumptions include the following:

• Matters affecting the chicken and pork industries generally, including fluctuations in the commodity prices of feed ingredients, pigs and chicken;
• Our ability to maintain contracts that are critical to our operations;
• Our ability to retain management and other key individuals;
• Outbreaks of avian influenza or other diseases, either in our own flock or elsewhere, affecting our ability to conduct our operations and/or demand for our poultry products;
• Contamination of our products, which has previously and can in the future lead to product liability claims (for which insurance coverage is expensive, limited and potentially inadequate) and product recalls;
• Media campaigns related to food production, regulatory and customer focus on sustainability, and recent increased focus and attention by the U.S. government on market dynamics;
• Changes in laws or regulations affecting our operations or the application or enforcement thereof, including those relating to climate change, immigration and anti-corruption;
• Competitive factors, inflation and pricing pressures, customer consolidation or the loss of one or more of our largest customers;
• Inability to consummate, or effectively integrate, any acquisition or to realize the associated anticipated cost savings and operating synergies;
• Currency exchange rate fluctuations, developments relating to tariffs and other international trade actions, trade barriers, exchange controls, expropriation and other risks associated with foreign segments;
• Restrictions imposed by, and as a result of, Pilgrim’s leverage;
• Disruptions in international markets, energy supply routes, and other distribution channels for various reasons, including, but not limited to, the ongoing Russia-Ukraine war or wars in the Middle East;
• The impact of cyber-attacks, natural disasters, power losses, unauthorized access, telecommunication failures, and other problems on our information systems;
• Our ability to maintain favorable labor relations with our employees and our compliance with labor laws;
• Extreme weather or natural disasters;
• The impact of uncertainties in litigation; and
• Other risks described herein and under “Part II—Item 1A—Risk Factors,” as well as under “Part I—Item 1A—Risk Factors” in our 2025 Annual Report.

Actual results could differ materially from those projected in these forward-looking statements as a result of these factors, among others, many of which are beyond our control.

The Company’s forward-looking statements speak only as of the date of this report or as of the date they are made. In making these statements, we are not undertaking, and specifically decline to undertake, any obligation to address or update each or any factor in future filings or communications regarding our business or results, and we are not undertaking to address how any of these factors may have caused changes to information contained in previous filings or communications. Although we have attempted to list comprehensively these important cautionary risk factors, we must caution investors and others that other factors may in the future prove to be important and affect our business or results of operations.

Disclosure Controls and Procedures

Under Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), “disclosure controls and procedures” means controls and other procedures that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

As of September 27, 2026, the Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on that evaluation and subject to the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded that, as of September 27, 2026, the Company’s disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that information we are required to disclose in our reports filed with the SEC is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

The Company’s management, including the Chief Executive Officer and Chief Financial Officer, identified no change in the Company’s internal control over financial reporting that occurred during the three months ended September 27, 2026 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

For a discussion of our potential risks and uncertainties, please see “Part I—Item 1A—Risk Factors” and “Part II—Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2025 Annual Report and “Part I—Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations” herein, in each case as updated by the Company’s periodic filings with the SEC. There have been no material changes to the risk factors previously disclosed in our 2025 Annual Report, except as disclosed below.

We have received an unsolicited proposal from our majority stockholder to acquire the shares of our common stock it does not already own. The outcome of this proposal is uncertain, may result in significant costs, and may impact the trading price and volatility of our common stock.

On August 18, 2026, our Board received an unsolicited proposal from our majority stockholder JBS (which currently beneficially owns, through its indirect wholly-owned subsidiaries, approximately 82.1% of our outstanding common stock), to acquire all outstanding shares of our common stock not already owned by JBS or its subsidiaries. For more information on the Proposed Transaction, see “Part I—Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Unsolicited Offer from JBS to Purchase Outstanding Shares of PPC Common Stock.” There can be no assurance as to whether any agreement relating to the Proposed Transaction or any similar or other transaction will be reached, or that the Proposed Transaction or any similar or other transaction will be pursued, approved by our Board and/or stockholders, or consummated, or as to its terms. The Proposed Transaction is an expression of interest only and may be withdrawn or modified at any time. The Special Committee may decline to recommend or may terminate its consideration of the Proposed Transaction, or any transaction, at any time, and any transaction remains subject to numerous factors, including market conditions, industry trends, regulatory developments, and litigation. While the Special Committee’s evaluations are underway, the primary focus of the Company’s executive management team will continue to be the effective management of the Company. We may also need to expend monetary costs, as well as the time and attention of our Board and management, in connection with the evaluation of, and response to, the Proposed Transaction. The outcome of the Proposed Transaction may contribute to fluctuations in the trading price, the market’s perception of our prospects, and trading volume of our common stock and/or subject us to litigation.