Earnings call transcript: JBS Q2 2025 earnings beat EPS forecast, stock dips

JBS NV reported its second-quarter earnings for 2025, showcasing a strong performance with earnings per share (EPS) of $0.50, surpassing the forecasted $0.39 by 28.17%. Despite this earnings beat, the company’s revenue fell short of expectations, coming in at $20.64 billion compared to the anticipated $21.47 billion. Following the earnings release, JBS’s stock declined by 3.26% to $14.04 in premarket trading, reflecting mixed investor sentiment. According to InvestingPro analysis, the stock appears undervalued at current levels, with analysts maintaining a strong buy consensus and a potential upside of 42% based on their target prices.

Key Takeaways

• JBS’s EPS exceeded expectations by 28.17%.
• Revenue missed forecasts, impacting investor confidence.
• Stock price fell by 3.26% in premarket trading.
• Strong performance in prepared foods and Australian operations.
• Ongoing investments in facilities and product innovation.

Company Performance

JBS demonstrated robust performance in Q2 2025, achieving record net sales of $21 billion, marking a 9% increase year-over-year. The company’s adjusted EBITDA stood at $1.8 billion, with an 8.4% margin. This growth is attributed to strategic investments in product innovation and expansion of its prepared foods portfolio, which is expected to yield double-digit margins.

Financial Highlights

• Revenue: $21 billion, up 9% year-over-year
• Earnings per share: $0.50, exceeding the $0.39 forecast
• Net profit: $528 million
• Return on equity: 25.7%
• Return on invested capital: 17%

Earnings vs. Forecast

JBS’s actual EPS of $0.50 surpassed the forecast of $0.39, representing a significant surprise of 28.17%. However, the revenue of $20.64 billion fell short of the expected $21.47 billion, resulting in a negative surprise of 3.87%. This mixed outcome reflects the company’s ongoing challenges in certain segments, despite strong overall performance.

Market Reaction

Following the earnings announcement, JBS’s stock price dropped by 3.26% in premarket trading to $14.04. This decline reflects investor concerns over the revenue shortfall, despite the EPS beat. The stock remains within its 52-week range, with a high of $15.12 and a low of $12.83.

Outlook & Guidance

Looking ahead, JBS is optimistic about the future, with expectations of normalized pork margins from Q3 2025 and gradual improvement in the beef cycle by 2027-2028. The company continues to invest in prepared foods and value-added products, targeting two-digit margins in its Australian business. JBS maintains a financial discipline with a leverage target below 2.5x. Trading at a P/E ratio of 15.32 and supported by $6.61 billion in EBITDA, the company shows strong fundamentals. Get deeper insights into JBS’s valuation and growth potential with a detailed Pro Research Report, available exclusively on InvestingPro, along with 1,400+ other comprehensive company analyses.

Executive Commentary

"We see a clear path to long-term value creation, anchored in operational excellence, diversification, innovation, value-added products, and strong brands," stated Gilberto Tomazoni, Global CEO. Wesley Bacistofilio, CEO of JBS USA, highlighted, "We think that the markets and categories we’re investing in should have higher double-digit margins around 15%."

Risks and Challenges

• Unfavorable cattle cycle pressures US beef business.
• Trade restrictions temporarily affecting pork operations.
• Avian flu impacting Ceara operations.
• Global economic uncertainties influencing protein demand.
• Potential supply chain disruptions affecting production.

Q&A

During the earnings call, analysts inquired about the impact of Brazilian beef tariffs on the US market and the company’s hedging strategies. Other questions focused on the avian flu’s effect on Ceara operations, the growth strategy for prepared foods, and the dynamics of the beef and pork markets.

Full transcript - JBS NV (JBS) Q2 2025:

Conference Moderator, JBS: Good morning, and welcome to JBS Second Quarter of twenty twenty five Results Conference Call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will be given at that time. As a reminder, this conference is being recorded. Any statements eventually made during this conference call in connection with the company business outlook, projections, operating and financial targets and potential growth should be understood as merely forecasts based on the company’s management expectations in relation to the future of JBS.

Such expectations are highly dependent on market conditions, on Brazil’s overall economic performance and on industry and international market behavior and, therefore, are subject to change. Our present with us today, Gilberto Tomazoni, Global CEO of JPS Guilherme Cavalcanti, Global CFO of JPS Wesley Bacistofilio, CEO of JBS USA and Christiani Assis, Investor Relations Director. Now I’ll turn the conference over to Gilberto Tomazoni, Global CEO of JBS. Mr. Tomazoni, you may begin your presentation.

Gilberto Tomazoni, Global CEO, JBS: Good morning, everyone. Thank you for joining us today for our earnings call. The 2025 market, the beginning of a new phase for JBS. We with the launch of our shares on the New York Stock Exchange, we completed our dual listing. This is a strategical milestone that enhance our global visibility, broaden our investor base and reinforce JBS position as one of the world’s leading food company.

I want to emphasize that this starts a new chapter of our trajectory. We see a clear path to long term value creation, anchored in operational excellence, diversification, innovation, value added product and strong brands. It’s worth highlighting that over the coming years, we will keep investing consistently to expand our platform and position the company to meet the growth global demand for protein. We truly believe and well JBS is well positioned for the future. We are delivering our long term strategy with discipline and consistency, and that give us confidence in the path ahead.

At the same time, we will stay fully committed to our mission of returning value to our shareholders, evidenced by $200,000,000 in dividends we paid this quarter as well as today announcement of $400,000,000 share repurchasing program. Let’s take a closer look at some strategic movement we have made this year. During the 2025, we have made several important investment in The United States. In May, we disclosed a plan to build a new fresh sausage facility in Iowa, totaling USD 135,000,000. This came in additional to 200,000,000 allocated to upgrading our beef plants in Texas and Colorado and $400,000,000 for a new prepared food facility that Pilgrim is building in Georgia.

Yesterday, we also announced an effort of 100,000,000 investment to acquire and expand our U. Facility, which will be transformed in the largest ready to eat bacon and sausage plant in our U. S. Operation. I want to stress here that all these projects are designed to support the growth of JBS Prepared Food portfolio, helping us to meet the growth demand for customers and consumers for these products.

Even amid a challenged macroeconomic environment and with ongoing pressure in some business units, our second quarter performance once again reflected the resilience of our diversified global platform. Net sales were record, reached US21 billion dollars a 9% increase year over year. Adjusted EBITDA was $800,000,000 and with a margin of 8.5%. Poultry operation once again stood out of a key highlight. Pilgrim’s achieved the highest EBITDA in its history, supported by lower grain cost and resilient U.

S. Demand. Results also reflect continuous growth in the prepared food portfolio, a strong relationship with the key customers and a solid performance across fresh and grazed red segment in U. S. Mexico and Europe delivered a strong result as well.

I do like to particularly highlight that Ceara delivered another quarter of consistent results. Despite the outbreak of avian influence in Brazil, the business reached EBITDA margin of 18.1%, driven by disciplined commercial strategy, product mix management and a strong focus on innovation. The results highlights the robustness of our biosecurity protocols and the maturity of Brazilian sanitary system. It is important to note that the swift and technical response in Brazil sanitary authorities, together with a strict intrusive wide control, ensured that only one isolate case was confirmed in the country at the commercial farms. In The United States, our beef business continued to face a pressure from an unfavorable cattle cycle as the spread between the livestock cost and beef price narrowed.

The pork business was affected on a short term basis by the trade restriction, and we expect the performance to return to normal level over the next few quarters. Diversification remained one of our greatest strength. In Brazil, FreeBoy delivered strong results, driven by a new export approval and productivity gains. In Australia, we continue to benefit a favorable livestock cycle with export growth and operational improvements contributing to another quarter of consistent performance. We also reaffirmed our commitment to financial discipline.

The quarter end with a net leverage 2.27x, in line with our long term target in reflecting the strength of our capital structure and our financial management. With a strong, more balanced and more innovative global platform, JBS is well prepared for the next phase of global opportunities. I want to conclude by saying that we remain confident in our teaming and ability to create long term value. Thank you again for joining us today. I will now turn the call over to Guilherme, who will walk through the financial results in more details.

Guilherme, please go ahead.

Guilherme Cavalcanti, Global CFO, JBS: Thank you, Tomazoni. Let’s now move on to the operational and financial highlights of the 2025, starting on Slide 13, please. Net revenue for the second quarter twenty twenty five reached a record of $21,000,000,000 Adjusted EBITDA totaled $1,800,000,000 which represents a margin of 8.4% in the quarter, while adjusted operating income was $1,200,000,000 with a margin of 5.7%. Net profit was $528,000,000 in the quarter and earnings per share was $0.48 per share. Excluding the nonrecurring item, adjusted net income would be $583,000,000 and the EPS would be $0.53 Finally, the return on equity was 25.7% and the return on invested capital was 17%.

Although the difference in the EBITDA between the second quarter twenty twenty four and the second quarter twenty twenty five was only $141,000,000 the free cash flow difference reached approximately $1,100,000,000 due to the mainly following factors. The difference in EBITDA as mentioned above, dollars 104,000,000 of higher capital expenditures, dollars $242,000,000 increase in finished good inventories in The U. S, driven by higher prices. This cash is expected to return to the operating results over the coming quarters as sales are made. Dollars $250,000,000 due to livestock hedging, future purchase from suppliers such as feed lots at fixed prices are hedged through future contracts, exposing us to the spot price and thus matching with the meat sales.

Due to the sharp rise in the cattle and hog prices, there was a negative cash impact on operating results due to the hedge. This cash is expected to return in the following quarter as the physical purchases are settled. Dollars 122,000,000 increase in legal settlements, dollars $257,000,000 in higher tax payments mainly due to the improved results from PPC and Australia in recent quarters, a $51,000,000 impact on Sierra’s chicken inventory caused by the market closure due to a single six, it should return to around $4,500,000,000 based on the follow estimated breakdowns, which may change over time due to the variables beyond our control. Can I go to it? Yes.

So capital expenditures of $2,000,000,000 in 2025 and $2,000,000,000 in 2026, which already included maintenance CapEx. Working capital of $900,000,000 in 2025 and $250,000,000 in 2026. The additional $650,000,000 in 2025 compared to 2026 is due to the inventory and hedging tax explained earlier. Legal settlements of $300,000,000 in 2025 and assuming zero in 2026. Biological assets of $650,000,000 in 2025 and the same amount for 2026 interest expenses of $1,150,000,000 in 2025 and $1,100,000,000 in 2026 leasing expenses of $500,000,000 in 2025 and repeating in 2026.

Moving on to Slide 16 to discuss our debt position and leverage. In June, we accessed the bond market to refinance our short term and 2027 and 2028 and 2030 maturities. Strong investor demand allowed us to upsize the issuance to $3,500,000,000 while achieving a record low spreads for issuers with our credit ratings, which includes a $1,000,000,000 forty year tranche. In addition, Sierra issued approximately $160,000,000 in local debentures. We used $3,000,000,000 to efficiently retire debt, clearing nearly all maturities through 02/1931.

As a result, our average maturity extended from eleven to fifteen years, while the average cost increased by just 25 basis points to 5.6%. We kept the 2029 bond outstanding given its low 3% coupon along with the 2031 bond at three point seven five percent and two 2,032 notes with coupons of 3.6253%. From the $3,500,000,000 raised, dollars 500,000,000 was retained as excess cash. Leverage increased to 2.27 times in the second quarter twenty twenty five, primarily due to 141,000,000 decline in last twelve months EBITDA and the payment of $1,500,000,000 in dividends. Interest coverage remained stable at 7.7 times compared to the previous quarter.

With leverage at the lower end of our comfort range, stable interest coverage in line with recent quarters, no significant debt amortization in the coming years and the strong cash position, we announced a share buyback program of up to $400,000,000 We believe this represents an efficient use of excess cash given the current valuation multiples relative to our global peers. The repurchase programs may be implemented through open market purchase, private negotiated transactions or under Rule 10b5-one of the Exchange Act. Even with the share buyback program, we expect to end the year with leverage below 2.5 times and interest coverage consistent with the 2024 levels at 7.4 times. Our $3,400,000,000 in revolving credit lines and available cash of $3,000,000,000 combined with expected cash generation in the second half provide a robust financial position to continue pursuing value creation opportunities to our shareholders. I’ll now briefly go through the business units.

Starting with Seattle on Slide 20, during the second quarter twenty five, in the first half of the quarter, we saw a favorable commercial environment, both in the domestic and export markets. However, in mid May, Brazil reported its first case of Asian flu in a commercial flock. The country was officially declared free of the disease again in June, but some key export markets remain temporarily closed, which affected commercial performance. Even with the temporary headwinds caused by the outbreak, Sierra achieved an adjusted EBITDA margin of 18.1% in the quarter, reflecting our strong focus, agility and discipline in pursuing operational and commercial excellence. Moving on to Slide 21.

In 2025, JBS Brazil recorded net revenue of 20% higher than in the second quarter twenty twenty four, driven by strong demand in both international and domestic markets, which partially offset the sharp increase in cattle prices. As a result, the EBITDA margin reached 6.4% in the quarter. Moving on to the Slide 22 and now speaking in dollars and under U. S. GAAP, JBS Beef North America net revenue in the second quarter grew 14% year over year, driven by strong demand and that growth cut out values to record levels in The U.

S. However, profitability continues to be pressured by the challenging cattle cycle, which has also capitalized cattle prices at record highs as well as by the additional headwinds related to global trade and animal health concerns in Mexico. On Slide 23, we have JBS Australia. In the annual comparison, the 20% revenue growth was primarily driven by higher volumes of beef exports. The EBITDA margin reached 12.7% and increasing 50 basis points compared to the same period last year, reflecting greater variability of animals for slaughter and gains in operational efficiency.

Turning now to JBS USA Pork, net revenues for the quarter decreased by 5% year over year. The pork business was affected on a short term basis by trade restrictions, but the expected performance to return to normal levels over the next few quarters. Pilgrim’s Pride, as highlighted on July 25, reported a 4% increase in net revenue in the quarter. In the 2019, Pilgrim’s delivered record adjusted EBITDA of 87,000,000 In addition to our favorable commercial environment across its key markets, the strong performance reflects the successful execution of its strategy, including the strengthening partnership with the customers’ expansion of value added and branded products, innovation and efficiency gains. With that in mind, I would like to open for a Q and A session.

Conference Moderator, JBS: Thank you. The floor is now open for questions from investors and analysts. If you have questions, please click raise hand at this time. If at any point your question is answered, you can remove yourself from the queue by clicking at lower hand. Questions will be taken in the order that they are received.

Please hold while we poll for questions. The first question comes from Lucas Ferreira with JPMorgan. Go ahead.

Lucas Ferreira, Analyst, JPMorgan: Hi, Guillermo Amazoni and everybody. Thanks for the space for questions. Guillermo, if you sorry, I think your line broke a little bit in the beginning of the presentation. So I just wanted to explore with you a little better your scenario for the free cash flow breakeven this year and next year. Just wanted to understand especially if you already have any views on the CapEx given the projects the company is announcing for processed foods.

And if I may also a quick follow-up on the effect of the hedges. Just wondering if you can explain a little better how much of that $250,000,000 you mentioned is returning to the EBITDA in the following quarters. If you can explain a little better that would be great. Thank you.

Guilherme Cavalcanti, Global CFO, JBS: Mhmm.

Participant: Hello. Excuse me. You can’t hear you.

Guilherme Cavalcanti, Global CFO, JBS: Okay. So can can you hear me now? Yes. Okay. So, Lucas, basically, I’m gonna repeat the numbers that was cut.

So capital expenditures, $2,000,000,000 for twenty twenty five and two billion dollars for 2026, already including the expansions announced. Of course, 2026, we still have to budget. And in beginning of next year, we will give update on that. Working capital, 900,000,000 for this year and $250,000,000 for 2026. This additional $6,000,000 in 2025 compared to the next year is due to the inventory and hedging package that I will explain again.

Legal settlements of $300,000,000 this year and assuming zero next year. Biological assets of $650,000,000 this year and the same amount for next year. Interest expenses of $1,150,000,000 this year and $1,000,000,000 next year. And leasing expenses of $500,000,000 in both years. So basically, that’s how we get to the $5,500,000,000 free cash flow breakeven for 2025 and $4,500,000,000 for 2026.

Now the hedging explanation, basically, we purchased cattle and hogs, for example, for sometimes one year from now at a at a price fix it because sometimes the feed lots needs to have a better predicament of their flows to invest in grains and buy the cattle. So and then we sell futures to be on the spot. So, basically, we buy cattle in the future for a fixed price, and we sell futures to be spot and and then meet with the sales price of the meat in the future. So basically, this cash flow tends to return as we the physical purchases are settled and thus and the meat are sold. And of course, it all depends on the market at the coming quarters, but that’s how it works.

And the thing is, given that the cattle price raised very fast recently, we had this impact on the hedging that on the derivatives and on the margin that we have to deposit, the cash margin we have to deposit. But again, as the cattle price also comes back and we freed, also the cash margins tends to really we release it.

Gilberto Tomazoni, Global CEO, JBS: I just need to

Guilherme Cavalcanti, Global CFO, JBS: It’s clear, Lucas.

Conference Moderator, JBS: Mr. Ferreira, you are with your microphone unmuted muted. Okay. Thank you. The next question comes from Ben Thruer with Barclays.

Please go ahead.

Ben Thruer, Analyst, Barclays: Yeah. Hi. Good morning. Can you guys hear me?

Guilherme Cavalcanti, Global CFO, JBS: Yes. We can hear.

Ben Thruer, Analyst, Barclays: Okay. Audio, not in our favor today. So two quick ones. So number one, obviously, business in Australia was really strong this quarter and kind of like surprised on the upside. So I was wondering if you can help us understand or maybe give a little bit more detail amongst the different categories in Australia, what a, drove the significant top line expansion, but on top of it also that margin expansion.

Where was that coming from? Like which subcategory? And then I have a quick follow-up on the free cash flow. Ben,

Gilberto Tomazoni, Global CEO, JBS: our results in Australia come for we increased volume, domestic and and external, and we are able to increase price as well. And it was the strong performance came from beef for beef. And the other business, they are quite quite in the same level of what were last quarter. Even on the exception of the salmon business, that was a bit lower because of the disease we had, and we had less amount volume of salmon to sell. But this, consider the size of our salmon business is not relevant in the whole consider all all of our business in Australia.

We can sell to you that the results improved results was in the Carol, and we are seeing continuous for this year.

Ben Thruer, Analyst, Barclays: Okay. That’s that’s very clear. And then one for Guy. Just to be clear on what we’ve talked about it, following up with Luca’s question, the the free cash flow. As a starting point, like, from a breakeven perspective, we should still use the IFRS EBITDA, correct?

Guilherme Cavalcanti, Global CFO, JBS: Correct. I’m talking only in the IFRS EBITDA.

Ben Thruer, Analyst, Barclays: Okay. Just wanted to clarify that. Perfect. Thank you very much, and congrats. I’ll pass it on.

Thank

Guilherme Cavalcanti, Global CFO, JBS: you, Beth.

Conference Moderator, JBS: The next question comes from Enrique Brustolin with Bradesco.

Enrique Brustolin, Analyst, Bradesco: I have two that I would like to explore in U. S. Beef mainly. We saw these big sequential margin deterioration, right, which was also typically below some of what was reported already by peers. So I would like to understand a little bit more in the quarter specifically what’s behind it.

If there were some components that could be seen as one off given the how your operations are structured with the vertical integration on some of the byproducts and that we could see some improvement in the coming quarters. So that’s the first one. And the second also on USB is based on the experience you already have on that market and navigating previous cycles lows. What do you believe will be needed to bring margins back to breakeven levels? And I know this is not an easy one, but I mean if you think it will mostly depend on cattle supplies coming back to growth once again or there are things that could happen before that capacity adjustments, even the trade barriers being improved that could bring margins back to those levels sooner than the cattle availability growth?

Those would be the two. Thank you.

Wesley Bacistofilio, CEO of JBS USA, JBS: Good morning, Hikip. So a few comments. So on our performance during the quarter, it was very challenging quarter for sure. And one of the things that makes it very challenging and and is is when the market has an ex you know, a a huge increase in in volatility and price like we had just to put in perspective. Right?

So five year cattle at the end the the the last quarter of last year was at around $190 per hundredweight, and we went up to, you know, $2.30, $2.38. And actually, during the second quarter, was around $2.25. And when those swings are really huge like that, sometimes you’ll see some some some some some gaps in the some challenges in the in the quarter. That’s basically positioning, and and and and that’s a short term impact. It’s a relevant impact, but it’s a short term impact.

Actually, we we just did a a picture of our of our beef plants and and, you know, all the work that we’ve been doing from an operational perspective. We’re very confident with the work that the plants are doing. And when in terms of efficiencies, in terms of yields, they’re actually improving versus the previous quarters. And so we don’t think that there is any anything regarding operations. I think it’s much more to do with positioning and especially when you have an explosive market like what we had in the last quarter.

When it comes to where we see from a cycle perspective, and like you said, adjustment in capacity and and versus cow herd reviewed. Obviously, we talk a lot a lot about cow herd reviewed because that’s what’s you know, what we know in the market, what we see, what we have data. You know? And we are confident that we are fully into herd reviewed. You know, we one of the the two information that’s very very relevant is cow’s lottery is down again this year.

And if you look, you know, it’s been compounding about 10% to 15% decrease in cow cows year after year, so that’s a good sign. We’re seeing less heifers as percentage of feeder cattle versus previous previous periods. Those things are encouraging. Obviously, when they start happening, they do a they they take a double hit. Right?

You already have less cattle. Now you have less heifers coming to market because they’re being retained, which is good news long term, but short term, it’s it it makes it more challenging. You know, talking about capacity adjustments, I can obviously just talk about our own business. I can talk about the market because I I wouldn’t be able to answer that. But I you know, we we are we are comfortable with with our current capacity capacity, and and we don’t see any any changes coming from that end on our side.

Enrique Brustolin, Analyst, Bradesco: That’s clear, Wesley. Thanks very much.

Conference Moderator, JBS: The next question comes from Andrew Strelzik with Bank of Montreal. Please go ahead.

Andrew Strelzik, Analyst, Bank of Montreal: Can you hear me now?

Conference Moderator, JBS: Yes.

Andrew Strelzik, Analyst, Bank of Montreal: Okay. Great. Good morning. Thanks for taking the questions. My first one, can you talk about the outlook for Brazil beef?

With The U. S. Tariffs, how is that impacting the operating environment and the supply demand balance there? And how should that play out in margins over the balance of the year?

Gilberto Tomazoni, Global CEO, JBS: Andrew, thank you for the question. When you look for just I’ll make a comment first by the impact of the tariff, and then I’ll take about the outlook about the business. The tariffs were recently impairment. There is which no impact in the quarter. When you look globally, the impact of JBS overall will be immaterial.

If you look just for FreeBoy in Brazil, as a whole, Deepak is not relevant. But some specific plants that exported more to US maybe but this is the the good news for our global platform that allow to production to be redirected and in fact to be very mitigated. I think this is one of the moment that the value of the platform is make more strong. If we look for but if we talk about the future, say, look, too early to estimate the real impact. And this and it will depend how the global market will be rebalancing because the system is interconnected.

Maybe some countries will be substituted Brazilian product, Australia and other countries. Even beside of that, some of US product is sparkling today could remain in the market. And we put if make that Brazil will be replaced that volume that was directed to The U. S. That’s for us, it’s not we are not seeing today this really strong impact.

It’s too early to say the impact to quantify the impact. About the outlook, if you see that FreeBoy, they show a strong growth in volume and even in price, domestic and export. We lost a little bit in terms of gross margins, but we gained more than that. We compensate with a higher volume that we see that for the next quarter, our beef operation in Brazil continues deliver good results.

Andrew Strelzik, Analyst, Bank of Montreal: K. That was very helpful color on that. And then I wanted to also ask on The US prepared foods strategy and and you you listed, you know, a number of investments that you’ve made there. How much will that increase your US prepared foods volumes when I take all of those projects together? And as you think about continuing to build out that strategy, are you comfortable going, with internal projects and smaller acquisitions kind of one by one?

Or or, I guess, how are you thinking about the aspirations in in in achieving the aspirations in US prepared foods?

Wesley Bacistofilio, CEO of JBS USA, JBS: Hi, Andrew. So on the on the prepared food side, on the on on our chicken, the the plant that we announced in work account, it’s a significant increase. It’s it’s it’s gonna be, you know, almost it’s almost going to to to to double our our our capacity on that. But on the on the the other side, on the pork side, on the sausage and and cooked sausage, it would probably be a 20%. I’m I’m I’m I’m throwing you know, I can probably get more precise numbers afterwards and send that your way, but it will be a significant increase on on both sides.

Maybe an average of 25, 30% increase of our total capacity of on on volumes in The US. But we certainly can send you some some more precise numbers afterwards. The the you know, our approach to this is is pretty simple. We are the on on how we’re investing and how where we’re deciding to grow. We’re really starting off going by where we’re seeing the demand in the market and where we’re seeing that the market has a a need for for products.

So, you know, we we have grown a lot our our prepared food side on the on chicken, and we are and it’s and it’s, you know, today, we actually we need more capacity to continue to grow. That’s our bottleneck for for growth in this market is actually production capacity. It’s much more production capacity than actually being able to sell. And on the pork side of prepared foods, we’ve been working a lot with customers and the demand for these products that we’re we’re starting to make are are pretty large, and we we are we’re we’re deciding to go there. We will obviously always look at assets for acquisitions, and and, obviously, there is a lot of things that go into play if there is actually something out in the market for an acquisition or if there is or if there isn’t or and and if there is, if the assets are something that we we think are are are good assets for the long term.

In in this in this three cases, we’ve we’ve decided that that the best thing to do was to to build a plant, modern plants that are gonna be, you know, completely completely new and and ready for the next ten, fifteen, twenty years. So that’s that’s what we decided. We’re we’re very excited about these three plants, and we think they’re gonna among the the best plants in in in the country.

Andrew Strelzik, Analyst, Bank of Montreal: Great. Thank you very much.

Conference Moderator, JBS: The next question comes from Guilherme Gutia with BTG. Please go ahead.

Participant: Hi, guys. Good morning. So just wanna discuss a bit here about the chicken business. So maybe starting with Sierra. Just if you guys could give us a bit more color on how the even full outbreak impacted the company results.

Maybe break down a bit how how was the second segment profitability and how the outbreak impacted it. And also on chicken, but on a different topic, just wanna discuss a little bit more here about the supply and demand scenario. So where I discussed here in previous opportunities about how the lower hatchability and higher mortality rates are impacting the soup are impacting the supply of the chicken supply. But, like, what do you guys expect ahead? Like, until when do you guys believe the supply constraints can delay the cycle from turning?

So that’s it. Thank you.

Gilberto Tomazoni, Global CEO, JBS: Hi, Gilere. Thank you for the question. I will be very pragmatic with the answer here to you. When the outbreak happened in Brazil and all practically 100% of the market to export to Brazil closed it. And we say that the impact that moment in June, that was in June, the impact of our EBITDA in June was around 5%, not just in chicken, as a as a the company as a whole, Sierra.

And now now we some of the markets we opened remain closed to important markets that Europe and China. We see that the government and the Minister of Agriculture is working to reopen market. I saw in the media yesterday that President Lula discussed it with President Xi Jinping about the issue. I’m so confident that may be reopened very close these two markets. And because there is no technical reason to be closed because all of the technical things was answered, a question that the market made, and OMSA was declared Brazil free.

That is we are so confident that it will be reopened in the coming coming weeks. But the fact that today is closed and the impact for these two markets is and the impact is in the profitability of Sahara, that will be around two percentage points or 1.5%, say, point 52% points. That is the impact we have now with this. To see I think this with this, I hope we answer your question the first question. The second question, the outlook of the chicken business.

We saw a strong demand for chicken globally, all of the markets in Brazil, in U. S, Europe, Mexico, all of the markets, we see strong demand because May in U. S, the consumer have changed substitute beef from chicken. And we see all the international market, their demand. Brazil is we had the problem, but the market that opened, we export.

There is strong demand from the volume. The all the things that you have mentioned before about genetic, about mortality, about productivity not changed so far. And we are remain confident from the outlook for this year for chicken.

Participant: Very clear. Thank you very much.

Conference Moderator, JBS: The next question comes from Barclays.

Priya, Analyst, Barclays: Hi. Thank you so much for taking my question. Making sure you guys can hear me okay.

Guilherme Cavalcanti, Global CFO, JBS: Yes. We can hear you, Priya.

Priya, Analyst, Barclays: Okay. Perfect. Wesley, I’d love to just follow-up on the comments that you were making around the prepared foods business. You know, you did highlight that the company does, consistently look at acquisitions as well, as it considers or how to approach growing out capacity. Based on some of these investments that you guys have been talking about, should we assume that the need for acquisitions might be lower in the near future in the prepared side of the business?

Or is there still scope to look at inorganic growth?

Wesley Bacistofilio, CEO of JBS USA, JBS: I appreciate. It’s difficult to forecast what’s gonna be the the the the future, right, on this because these are these are all based on opportunities. Right? Acquisitions are always based on opportunities. So obviously, like always, like we’ve always done in in our history, we’re gonna look at at anything that comes up, but it’s difficult to forecast if it’s gonna be more one or more the other.

We’re obviously, we when we’re gonna do when we want to grow a business, we we look at at at both. I I it will be difficult for me to project for you what’s gonna be the future in this.

Priya, Analyst, Barclays: That’s that’s helpful. So it’s it’s just more of an ongoing thing. With regards to the beef cycle, you know, it’s it’s I would say, sort of getting to this point of heifer retention has been a lot a little bit more elongated than we’ve seen in the past. What’s your perspective on sort of how long it could take us, to really start to see the bottom on profitability? So sort of how are you thinking about, you know, getting back to breakeven in the beef segment, and then starting to to see growth?

Wesley Bacistofilio, CEO of JBS USA, JBS: Yeah. I think this I think this this year and the beginning of next year are gonna be the the the the the the bottom side of the cycle. And then from there, it’s it’s gonna be a gradual increase. Somewhere ’27, beginning ’28, it’s gonna be it’s gonna be gradual. It’s not gonna be overnight, right, that you’re gonna see a a complete change in in in in the business.

It’s gonna be gradual. But I think the worst part of the cycle is gonna be right here for the next maybe three, four quarters. And then from there, we’re gonna see this this change and and and and gradually improve.

Priya, Analyst, Barclays: Okay. That’s helpful. And, Guillermo, can you remind us again how you think about your ongoing cash balance? You know, we’re just shy of about 3,000,000,000 at this point. If we include some of the margin cash in there, is that the right level for the near term, or would you like to have a little bit more of a cushion there around where you maintain cash?

Guilherme Cavalcanti, Global CFO, JBS: Hi, Priya. No. I think this is more than enough. I think given the company’s cash conversion cycle today, a cash of $2,000,000,000 worldwide is more than enough for the operation. So it’s we we are comfort with the current levels.

And that’s what the one of the reasons that we announced the share buyback programs because, as you know, we paid $3,000,000,000 in debt, and there would be other debts that we have up to 2,032. They all have coupons lower than 375%. So it was not efficient to buy the debt with excess cash. So we announced the share buyback program, but we still have cash above what we need to our conversion cash conversion cycle to to operate.

Priya, Analyst, Barclays: Great. And then just one last administrative question. Where are you guys in terms of updating the bond ticker now that the equity listing has been completed and then putting the shelf in place? Thank you.

Guilherme Cavalcanti, Global CFO, JBS: Okay. So first, on the the ticker of b z, we are talking it’s it’s out of our control. We’re talking to Bloomberg for a while now to take the b z out of the ticker. We keep following on on that. And the shelf registration, we need first, we’ll finish all the exchange offer to make all the the remaining $144.08 bonds registered.

And then we need the first to register offer for for them to to one year late to to be a week c, and I have to a shelf registration. So we first need to do an issuance of that inequity for them registered. So then to ask for the shop registration and we see. So I I think maybe this we we need a new issuance, which currently we don’t envision given that we just again, as we talked about, we have more more than enough cash. We have no maturities in the near term.

So I I don’t see we coming to the market anytime soon.

Priya, Analyst, Barclays: Great. Thank you so much.

Conference Moderator, JBS: The next question comes from Gustavo Triano with Itau BBA. Please go ahead.

Gilberto Tomazoni, Global CEO, JBS0: Hello, everyone. Can you guys hear me?

Guilherme Cavalcanti, Global CFO, JBS: Yes, Gustavo. We can hear you.

Gilberto Tomazoni, Global CEO, JBS0: Thanks, Guy. So, actually, my my question is is on US pork. And earlier in the call, you you guys mentioned that margin should recover in the next few quarters. So I just wanted to have more more granularity on this topic. Maybe the reasons behind the margin compression in US GAAP in this quarter and why do you believe they are improving in in the remainder of the year?

And if possible, if we could explore a little bit more, like, the pace of this recovery and when do you expect these margins to to reach your, I’d say, recurring level going forward? And if we could discuss maybe the margin performance in the integrated part of the business compared with the nonintegrated part of the business, if that’s a fair comparison to do for this quarter, if there are a different margin performance between those two operations in there?

Wesley Bacistofilio, CEO of JBS USA, JBS: Gustavo, good morning. So the The US pork performance this quarter was a lot of a lot of it was because of some of the trade disruptions we had with product going to China. And and there were that for that period of time, there was 100 and some percent tariff, and we had products coming back, products that we had to reshuffle, and and that created a disruption that that we did not expect. We expect that as of the third quarter of of of twenty twenty five, we’re right now, we’re we’re we’re back to normal in margins. So that’s not that’s not something that we’re we’re overly concerned about, you know, being a a gradual recovery.

We think it’s an immediate recovery. It’s just that it was more of a a one off in the in the second quarter. We we actually are quite quite optimistic about margins in the in the in the pork business. We’ve grown our live production. Like you’re saying, you’re asking about the integrated supply with in the last five to ten years, we’ve grown that.

And when we see grain cost grain prices being at a relatively low level based on history and on the other side, you see potential for the cutout of pork to become you know, when there’s low availability of of beef and high prices of beef, that’s a good pork becomes a very good option. So you you should you could see a little bit of strength there be because of that. We’re we’re actually quite optimistic about pork margins in The US going forward.

Gilberto Tomazoni, Global CEO, JBS0: That’s super clear. Thank you very much.

Conference Moderator, JBS: The next question comes from Leonardo Alencar with XP. Please go ahead.

Guilherme Cavalcanti, Global CFO, JBS: Hi. Good morning. I hope you can hear me. So Yes. We can hear you.

Just speak a little louder, please, Leonardo.

Gilberto Tomazoni, Global CEO, JBS1: Okay. Thank you. So good morning to Mazzonika, and Wesley. Thank you for taking my question. I would like to go a little different regarding the USP.

I understand this. I heard the buildings is ongoing and that you’re expecting that to to change the scenario for at least three, four quarters ahead. But we need to consider the other factors in place, the issue with the cattle import from Mexico that is not really happening right now and also the impact of the tariffs beef Brazil restricting part of of trimmings of of beef, lean beef. If you could just go a little deeper on the discussion about the the cycle in US and if you could expect this average wave of care to continue to increase or even even decreasing maybe. Just to understand this, how this is going to play in the future because this was a a very strong change of of metrics, we could say, the the average weight for the cattle, and that increased probably the the the production of of feather meat, let’s call it.

So this was one one of my questions. And the other one would be a follow-up regarding SADA. I understand that the the issue with China, we are expecting this restriction to drop in the foreseeable future. But then what’s your read on China, on the market and China demand in China? Since they already they are they are not importing meat from Brazil for a while now and demand is probably still good, but then I wanted to hear that from you if stocks are decreasing in China right now.

So if you could expect China to resume imports to a previous level we were seeing before the restrictions of if or there’s room for improvement on that. So that’s my questions. You.

Wesley Bacistofilio, CEO of JBS USA, JBS: Morning, Leon. So you bring in a few good points. This Mexico situation is obviously quite relevant. In the short term, there is about 1,000,000 head, 1,000,001,200,000 head of feeder cattle that comes to The U. S.

And they’re fed in The U. S. So as of November, with the border got shut and beginning of this year, it opened. There was enough got shut shut down again. And, you know, we we we have been following this situation quite closely.

And what what we we realized is that, you know, the the Mexican government is is is doing a lot of work to to make sure that that situation is is is is handled and and working with the US government to to to figure out a way to to reopen and and continue flow of cattle. We we think that this is going to be it’s very relevant in the in the medium term, in the short term, but we don’t think that necessarily would impact the the long term of the cycle of the herd rebuild. So I would I would disconnect those things. Though it’s a very important point that you bring up, and and it it does create an impact in the in the in The US, especially in the South Of The US, which, you know, it’s it’s where a lot of that cattle stays. The when it when it comes to to to to imports and obviously, you know, lean trim is is something that The US has export imported for a long time.

We we we blend that. You know, the the market blends it with a fat trim and and and make a ground beef. So when when you lose a source like Brazil, it’s significant. What the impact of that, it’s still relatively early to see because there is inventory in The U. S.

There was inventory coming to The U. S. So we haven’t seen a 100% of what this is gonna look like. But certainly, meat meat domestic meat or meat that is imported, that’s lean is going to to to appreciating value and and gonna have a higher value. And we’ll see what that’s going to that’s exactly how big the impact is going to be when that Brazilian inventory of meat in The US kind of gets used and we we we will see less flow of Brazil Brazilian beef coming in.

So it’s it’s too early to to to tell exactly how how how big is gonna be the impact.

Gilberto Tomazoni, Global CEO, JBS1: Okay. Thank you. What about China chicken salad?

Gilberto Tomazoni, Global CEO, JBS: Leonardo, related to chicken Sierra, I think we we I don’t know what’s clear before, but the but the impact of the avian flu when we had the month that had the outbreak was really a strong impact, was around five percent in the result of CR. Now after release of markets, the impact is around 1.5% percentage of EBITDA. And we are really confident with the future of our of this business because demand is strong, domestic and export. And not just in Brazil, we see all of the markets. We see in US with PUBE has released the results, and I think it was Fabio has mentioned that the strong demand in US is not different in Mexico, is not different in Europe.

We see and when you look for the supply, we the same restriction we had before. We have discussed it about genetic, about mortality, all of the issue remain, may increase a little bit more the number of bullets. But when you look for the demand, the increase in number in in the percentage of the number of bullets did not mix really the difference to impact the results. We remain very positive with the the the chicken business for this year.

Gilberto Tomazoni, Global CEO, JBS1: Okay. Thank you very much for the details.

Conference Moderator, JBS: The next question comes from John Baumgartner with Mizuho. Please go ahead. Mister Baumgartner, your microphone is muted on your side.

Gilberto Tomazoni, Global CEO, JBS2: Hello. Can you hear me now?

Conference Moderator, JBS: Yes. Thank you.

Gilberto Tomazoni, Global CEO, JBS2: Thank you. So just yeah. First question for me. Following up on US prepared foods and your

Conference Moderator, JBS: Excuse me, ladies and gentlemen. It seems that mister Baumgartner has disconnected his line. I’ll be moving to the next question. Okay? The next question comes from Renata Cabral with Citi.

Please go ahead.

Gilberto Tomazoni, Global CEO, JBS3: Hi, everyone. Thank you so much for taking my question. My first one will be on the Brazilian beef cycle, actually. Initial expectations was that maybe this year, ’25 towards 2026, would have the change in cycle in Brazil. We had cattle prices, with a lot of volatility naturally because the recent trade tensions.

So my question is the previous expectations remains regarding the the cattle cycle in Brazil. If you could discuss a little bit would be really helpful? And my second question is on disclosures. Now that you are reporting under U. S.

GAAP, it’s much easier for us to compare your numbers with, U. S. Peers. And given your recent investment in announced investments in prepared foods, would you be able to share even a rough sense of range of prepared foods represents your business today? Or looking ahead, do you see room to provide more details over time to help us to to have a better comparison on this front?

Thank you so much.

Guilherme Cavalcanti, Global CFO, JBS: Beautiful. Okay. So I will start with the second question. So basically, we have the first of all, the thing is our business segments has to be how we manage the company. So that’s why we don’t have a prepared foods as a business segment because we have prepared foods in Europe, in US, in PPC, in Brazil, so on.

So that’s the reason. But, of course, we can try to make managerial numbers for how much should be prepared foods. But then comes a question on what the what what is the threshold? What’s the device? What is prepared or not?

So let’s say, if we get what is really processed, I would guess that a 15% currently would be a good estimate. But, of course, if you include, example, brands, case readies, or just brands that you put in the Natura meet, we can go up to 50% if you put brands on the value added side. So that’s something in between that. And, course, we will always try to to continue to improve our disclosures. And, again, as we grow and then we’ll try to to have this number developing to a more to a better disclosure.

Gilberto Tomazoni, Global CEO, JBS: I think it’s related to Renata, related to beef cycle in Brazil. We are very optimistic with the cycle in Brazil. And and and I believe that is Brazilian like, the Brazilian sector is is in a is in a transformation because when we Brazil is increasing the feedlot, that feedlot, it make possible to have increased reduce the age of the animals to go to the to go to process plants. To have genetic improvements, you have more feedlot because the DDG now is available because of ethanol, corn ethanol. And this is kind of a change in the in the livestock sector that will be enhance the production.

Producers are make a good margin today. They because if you look for the quarter, the price of the beef increased 20% and the price of livestock increased 40%. It means that this is a good moment for the producers. There is a lot of incentives to to to to raise animals. And the and the possibility for increased productivity is huge in Brazil.

Brazil has a half of the earth of US, and we produce the same amount of of of of meat with U. S. That if you look this, it’s a huge opportunity for improvement. And today, with the conditions we see in the market that already mentioned, we are positive for this year and the next year from the livestock in Brazil.

Gilberto Tomazoni, Global CEO, JBS3: The

Conference Moderator, JBS: next question comes from Mr. John Baumgartner with Mizuho. Go ahead.

Gilberto Tomazoni, Global CEO, JBS2: Good morning. Thanks for the question. Can you hear me?

Guilherme Cavalcanti, Global CFO, JBS: Yes. Good morning.

Gilberto Tomazoni, Global CEO, JBS2: Thank you. Just wanted to follow-up on U. S. Prepared foods and your comments there, Wesley. You’re making the investments in chicken and bacon and sausage and some of these Italian meats.

And you mentioned responding to market demand. I’m curious, are there any particular white spaces in terms of species or product format that you still see as incremental opportunities for you at maybe more in beef or other types of pork? And then as you develop the portfolio, how do you anticipate the marketing to evolve? Are there opportunities for partnerships like you’re doing with Netflix and Sierra in Brazil?

Wesley Bacistofilio, CEO of JBS USA, JBS: John, so we are we we we see that the the where we’re investing, where we have announced so far is where we’re really seeing the the demand is, like like we mentioned, the sausage, the the cooked sausage that a lot of just to explain what that is, it’s a lot of that is is what would go into what would see in pizza toppings, in in salads, and so it’s prepared bacon and cooked bacon and sausage. So we’re seeing a lot of demand there. That’s where we’ve built. We’re we’re very confident about that. You know, as we see other opportunities, we might might communicate, but we so far, that’s that’s where we see the opportunities and where we invested.

On the on the Pilgrim side, we’ve done a fantastic job here in The US with branding our products and, you know, great success story with Just Bare and, you know, achieved pretty large market share in pretty short time short short time and a lot of distribution. And it’s a brand that’s continued to grow very much and do a good job. And there is a huge opportunity for us to do that on the pork side, on the on the red meat side of of of prepared foods. And and we we haven’t done much of that, but that’s something that’s, for sure part of our plans and part of what we see as a potential for this prepared foods business in The U. S.

Gilberto Tomazoni, Global CEO, JBS2: Thanks, Wesley. And then coming back to U. S. Beef and what the market is seeing in terms of resilient demand despite weaker foodservice traffic, the broader economic challenges facing consumers. I’m curious your thoughts on that demand resilience.

Are you seeing something different in terms of how consumers interact with beef during this cycle? Is it the broader protein movement that’s driving consumers to prioritize spending on beef more so than past inflationary cycles? Any observations you have on demand resilience there would be great.

Wesley Bacistofilio, CEO of JBS USA, JBS: Yeah. I think it’s you know, there there is a one comparison that’s that’s very, very illustrative of what how resilient beef demand is. You know, we’ve always compared chicken breasts chicken breasts with pork loin and ground beef as, you know, excess accessible, affordable sources of protein. And we always compare those those items as items that, you know, the consumer kind kind of jumps back and forth. And we obviously seen with the short supply of cattle and and and all of that, we’ve seen the ground beef gap of price of ground beef versus those two other sources of protein really open the gap.

But you mentioned, right, food service is lower. But on the retail side, we’ve seen and actually, the overall side, we’ve seen demand for ground beef to be pretty strong and people choosing to still consume ground beef even with the the the this delta, this gapping this this larger gapping price between pork and chicken. You know, consumers are still really, really going after going after beef.

Gilberto Tomazoni, Global CEO, JBS2: I think there is

Wesley Bacistofilio, CEO of JBS USA, JBS: a few things. I think, yes, there are those trends of people eating more protein, but that benefits all of the categories. People, you know, prioritizing protein, all of that is is very important. But I think actually the the the what we’re really you know, I think it’s a testament to is the quality of of US beef and how The US consumer trusts it and really likes it. And even, you know, at a at a premium versus other proteins, they’re they’re still really looking forward to consume it and and seek it.

So, obviously, it’s it’s the this price being so so so much different in pork and chickens to more to do with the cattle cycle than anything, but the the the consumer is responding to that and and still choosing to consume U. Beef because of its quality and and how much they trust the product. That’s what that’s what we think.

Gilberto Tomazoni, Global CEO, JBS2: Thanks, Wesley.

Conference Moderator, JBS: The next question comes from Ricardo Alves with Morgan Stanley. Please go ahead.

Gilberto Tomazoni, Global CEO, JBS4: Hey, everybody. Good morning. Thanks for call. I have three questions, two for Guilherme. Guilherme, on working capital, I believe you mentioned $900,000,000

So that would imply something like $600,000,000 of cash relief into the second half. I just wanted to confirm that level of magnitude at least. And if that’s correct, if you could break it down in terms of how much of that would come from inventories? Or if you can just give some more granularity in terms of, working capital relief into the second half and the magnitude? That’s the first question.

The second one, also to you, Guilherme, I may. JBS has been paying a lot of dividends over the past few years, and I think that this year was not different. And now you have the buyback announcement, which is obviously appreciated. What is your current mindset on the distribution side? Are you sticking to that idea of returning something like $1,000,000,000 per year?

Because it it actually seems that you’re running well above those targets. So just wanted to to get the latest, on your your latest thoughts on the distribution side. My my last question, to you, Wesley, would be I thought it was very interesting the comment you made on pork that the sequential recovery would be immediate. I think that that’s the expression you used as opposed to gradual. When you look at the beef performance this quarter, do you think that there are elements to the performance of the second quarter that you could also have an immediate sequential recovery?

I know that you also made it clear on The U. S. Beef side that you’re going to have three or four quarters of very tough profitability, which is a view that we tend to share. But on a sequential basis, this minus 4%, are there elements, are there factors that you believe you can overcome really fast to improve to, I don’t know, maybe closer to low single digit negative margins? Those are my questions.

Thank you so much.

Guilherme Cavalcanti, Global CFO, JBS: Hey. Hi, Ricardo. So basically, for this year, I think the best estimation in terms of cash generation for for the second half is that what I mentioned that the free cash flow breakeven for this year at $5,500,000,000. So get whatever is your EBITDA estimation for the whole year, minus $5.5 and then takes out 25% effective tax rate. That should give you a good estimation of how much cash we will generate.

And you’re right. We will be releasing cash in the second half as all every year we we we do. And it comes from a decrease in inventories. And the postpone in the last quarter, we always have around at least $400,000,000 of postponement of livestock payments that releases working capital in the fourth quarter. So that that I think that can that the math of the cash flow breakeven that I mentioned can give you a good estimation of what we are expecting to generate for the whole year and, course, consequently, in the second half.

So in terms of the dividends, if you look at how much we’ve been we paid in dividends since 02/2020, we are exactly $1,000,000,000 $975,000,000 average, in fact. So we paid in 2020 around the $800,000,000. 02/2021, another $800,000,000, a $109,100,000,000 dollars, so on. And 02/2023, we paid 450, but we promised there the listing that we paid this year. So if we consider that the listing dividend that we paid in June was really promised in 2023 and get back this number.

So you’ll see that we’ve been paying or the average of the last five years is exactly around a billion dollars. That that’s as I mentioned. And that’s why we the excess cash, we just turned it on into share buybacks as we did in the past in 02/2021. For example, we used the excess cash for for share buybacks. So I think it doesn’t change going forward.

I think we continue with the mindset of paying around $1,000,000,000 in dividends every year. And of course, depends on the m and a opportunity. So the of course, this year, we could increase to share buybacks given there was no relevant m and a on the this year. So I think it didn’t change. So a billion dollars of of dividends.

We continue to think about the billion dollars of growth CapEx going forward. And again and also having free cash flow for m and a. If there’s no m and a, we can improve the distribution on a buyback, for example.

Wesley Bacistofilio, CEO of JBS USA, JBS: Ricardo, so on the Go ahead.

Guilherme Cavalcanti, Global CFO, JBS: Okay. Go ahead.

Wesley Bacistofilio, CEO of JBS USA, JBS: Go ahead, Leslie. Ricardo, on the beef side, we we we think that our internal performance, again, we’re we’re gonna I think we’re gonna perform better in the third quarter than we did in the second quarter. And part of that is because the things that we we can improve are not are much more on the on the on the mid margin side, on the on the on the buy and sell side versus operations. So we think that that can be a a quick a a quicker improvement in performance. Having said that, it’s a lot more difficult for you to project what you know, and and to try to predict the beef market today than the pork market.

Because the pork market is a lot more stable today versus the the beef market, and the and it’s it’s really tough right now to to to have a a really long term perspective of of exactly what the market itself is gonna do on beef. But we think on our own performance, we could have a much better quarter on the third quarter versus the second quarter on the things that depend on us.

Gilberto Tomazoni, Global CEO, JBS4: Thank you so much, Wesley. Thanks, Guilherme.

Conference Moderator, JBS: The next question comes from Ricardo Bollacci with Safra. Please go ahead.

Gilberto Tomazoni, Global CEO, JBS5: Hi, good morning everyone and thanks for the opportunity. I have a follow-up question on prepared foods. Wesley already gave some nice colors, but I wanted to explore the opportunity in terms of sustainable margin improvement that the ongoing projects could provide for the company. Any estimate of what the incremental normalized margin could be when these projects mature in the future? That’s the first question.

And the second one, I think it goes to Guilherme regarding the shareholder base since the dual listing, how do you see it evolving? Are you seeing already U. S. Investors gaining traction? Are you already starting to access fund managers that maybe you previously couldn’t?

Any color on how that is evolving would be great as well. Thank you, guys.

Wesley Bacistofilio, CEO of JBS USA, JBS: Ricardo, good morning. So we think that the markets that the products that we’re investing and the categories that we’re investing are categories that should have higher double digit margins around 15% is our expectation. And so we should we should bring the average of our of our EBITDA up.

Gilberto Tomazoni, Global CEO, JBS: Ricardo, our expectation in all of the project of prepare and the ROI will be around 20%. Great.

Guilherme Cavalcanti, Global CFO, JBS: I I agree. So in terms of shareholder base, so first of all, I think since we listed New York Stock Exchange, our average trading daily volume more than doubled when we compare to the last year. And our IR team is re receiving a lot of reverse inquiries of new investors, new US investors that is starting to make to study the story of JBS. We increased already our investor, the the foreign investor base. And especially on the conferences that we have, for example, we have in September conferences already scheduled, the number of meetings with JBS increased at least 60%.

So we have full day schedules in conference. So I I think we people are starting to get the story, making their models. So and we’ll be doing also all these semester non euro shows in Boston, New York, Los Angeles, San Francisco, Chicago, Toronto, so on and forth until the end of the year. So to try to to get also Nashville to get these new investors. And at the same time, again, as I mentioned before, we start checking the boxes to get to the index given that today 54% of the assets under management are passive.

This September, we will have, for example, a FTSE index will release their rebalancing. So we will have a vision where we’re to be, for example, in the Russell next year. So most likely, June next year will be in the Russell. And again, trying to check the boxes and doing developments like we did in terms of releasing numbers in U. S.

Comparison to be able to be eligible to the most index that we can be.

Gilberto Tomazoni, Global CEO, JBS5: That’s great, guys. You very much.

Conference Moderator, JBS: The next question comes from Guilherme Pagliaris with Santander. Please go ahead.

Gilberto Tomazoni, Global CEO, JBS6: Good morning, everyone. Thank you for taking the question. Just a quick view here on the table ag industry. You guys, of course, had the investment on Lunchequera. I’d like to hear your thoughts now that you are closer to the business, your prospects.

And if you could also read a bit how this is playing out in The U. S, whether there are opportunities there. We saw the very strong prices of eggs in Brazil also being a player on the exports during Q2. So if you could share a bit your thoughts around that business, what it means for growth in the next couple of years for the company, I would appreciate that.

Gilberto Tomazoni, Global CEO, JBS: Jeremy, thank you for the question. We when we announced in our joint when we bought 50% of Manteguera, and we have mentioned that it’s a new a new wave of growth. We are increased our diversification of our platform. And we and we want to do with the eggs what we have done with chicken and pork and beef to be one of the leader of the global leader of the category. This is the strategy.

We cannot mention one other strategy because this will be responsible for Manticera and not for us to to say that what will be acquisition or something like. All all can see, it’s our priority for growth, both in Brazil and US in term in the ag sector.

Gilberto Tomazoni, Global CEO, JBS6: Amazonia, could you share a bit your thoughts about the growth of this category? Because it seems that when I look in terms of production in Brazil, it has been outpacing other proteins as well. So what is your thought going forward for the industry as a whole?

Gilberto Tomazoni, Global CEO, JBS: I think it’s very positive, Guilherme, because I think it’s we have mentioned in other calls that the consumers, now they are get the preference for protein, protein become more healthy. And they it is a new trend. And when you look for the types of protein, we see that the eggs is more affordable among the older other proteins that are available in the market. Means that eggs keep growing, and eggs become very, very healthy. And and I think it’s to there is an opportunity to create brands in in eggs as well.

And multi care is start to do that already with the epi eggs and multi care and some other brands they are developing. This is the strategy. We see that this category will be grow, and we can enter in the value add hags product as well. We are so excited with the grow of this category. And because of that, we made this investment, and we consider this category one of the category where we make difference in terms of growing the future.

Gilberto Tomazoni, Global CEO, JBS6: Thank you, Tomaszoni.

Conference Moderator, JBS: The next question comes from Igor Gedges with Genial. Please go ahead.

Gilberto Tomazoni, Global CEO, JBS7: Good morning, everyone. Thank you for taking my questions. Can you hear me?

Guilherme Cavalcanti, Global CFO, JBS: We can hear. Good morning.

Gilberto Tomazoni, Global CEO, JBS7: Question is about U. S. Pork unit. You exceed our expectations in terms of margins, mainly due to the resilience of domestic pork consumption in The U. S.

But beyond that, you mentioned the expansion of high value added products, which partially offset the negative pressure on pork or fowl prices, redirect to pet food and animal feeding industry due to trade with China. In other words, as we understand it, the margin could have been even better if you realize price had behaved normally. I would like to understand if there is an expectation to resume normal shipments of pork or fall to China and restore the realized price in second half? Thank you once again.

Wesley Bacistofilio, CEO of JBS USA, JBS: Hey, Igor. Good morning. The trade with China after you know, the the trade truce has been kind of in place here and and postponed has has has already resumed to to China, and it’s and it’s normal as of right now.

Gilberto Tomazoni, Global CEO, JBS7: So in the next quarter, we can maybe see the realized price of pork U. S. Going up in

Wesley Bacistofilio, CEO of JBS USA, JBS: We should see normalized margins from the third quarter forward. Thank The

Conference Moderator, JBS: question comes from Isabella Simonato with Bank of America. Please go ahead.

Gilberto Tomazoni, Global CEO, JBS8: Thank you. Hi, everyone. Thank you for the call. Just a quick question on U. S.

Pork, and most related to accounting actually. We saw a a big difference, right, in the IFRS margin and US GAAP, which happened in the past, and and you guys put a a footnote explaining a little bit of the accounting. But I think our perception, right, is that you you took a hit when you think about The US GAAP margin in the end of the quarter because of lower cutout prices, right, while hog prices moved up during the quarter. So back to the discussion, right, of margin improvement in q three. Can we assume that the the the margin, right, for the average of the quarter was actually a little bit higher than those 6.5%.

And or if you can break down what was the the accounting impact regarding biological assets and mark to market of inventories, I think that will help to to clarify a little bit of the the hit on profitability. Thank you.

Wesley Bacistofilio, CEO of JBS USA, JBS: Zabel, good morning. We we, look. We we we manage our the the business here on a day to day on on a US GAAP basis. So we don’t we don’t manage, you know, the the the in The US, we manage it in in in US GAAP. So we don’t we don’t we don’t follow this on a, you you know, IFRS margins on a day to day basis.

When I mentioned the the improvement in in margin next next next quarter and and and and normalizing, going back to normal from where where we we expect these margins to look like it’s it’s on on a US GAAP basis, and it it doesn’t have really a lot to do with US GAAP IFRS differences.

Gilberto Tomazoni, Global CEO, JBS8: I got it. Thank you.

Conference Moderator, JBS: The next question comes from Puran Sharma with Stephens. Please go ahead.

Gilberto Tomazoni, Global CEO, JBS9: Good morning. Thanks for the question here. Just wanted to parse into Australia a little bit more. I think you mentioned before, you know, the other businesses were running, you know, about the same as as the prior quarter, maybe except for for the salmon business. But the strong performance came from beef.

It sounds like there’s, you know, continued favorability in terms of the cattle cycle. So I I was just wondering, you know, as you look out, I think you said you you you see room for continued improvement for the year. And I was wondering if if that you meant that on a sequential basis. Like, when I look at EBITDA margins, do they sequentially improve from from these strong levels? Or were you thinking more on kind of a year over year basis?

Gilberto Tomazoni, Global CEO, JBS: Thank you for the question, Punit. We see that the margin of the Australia business will be two digit. And the coming quarters, we see favorable livestock availability. We see that improving our results on the salmon business. And we the other businesses, they are very stable.

Pork is performing very well, and prepared food is is doing well. And see that our 50% of our business in Australia is beef, and we see these these results will be in above above above two digits. Above no. It would be two digits. Sorry for that.

It’s two digit, and we we are very we remain confident because we are talking require the other quarters that the cattle are available, but there is or rain too much rain. They are not able to to to catch the the cattle in the farms. And now the environment condition is much better, and we are normalized our operations. We are working and our plants are full, and we are we are remain confident of this business.

Gilberto Tomazoni, Global CEO, JBS9: Great. I appreciate that. And just as a follow-up and wanted to to hone in further on the beat on The US and Brazil tariff situation. It sounds like JBS Brazil can find some offsets. You guys mentioned your your global platform, and and, you know, so I think you could you could find some offsets if if you see some weakness there.

But I just wanted to ask about The US chicken business, pilgrim’s pride. Typically, four q is a period where you see seasonal weakness for chicken. And I think this year, we’re seeing just a little bit of incremental supply growth when it comes to egg set. But I’m just I’m trying to think about the Brazilian kind of beef situation. Do you think this bodes positively for PPC?

And if so, can you help us kind of think about how much how much room for improvement there can be from a potential lower beef supply because of Brazilian tariffs?

Gilberto Tomazoni, Global CEO, JBS: I I think it’s there is too early to to to estimate the real impact now because we see that the volume from Brazil, that Brazil not export to US, maybe we replace from the other markets, from Australia and from other countries. And as I mentioned before, some beside of that, some of The US product today are exported, could be remained in the domestic market. The end, I think, is The US market will be supplied from the one side, from the other side. And this will be open the opportunity for Brazil because this is a this is a interconnected system. There is no more production of beef globally.

If some countries, they they directed its sales to US, they will be open opportunity for the market that they live. And I think it’s we need to to wait for this rebalance situation that we can more estimate what will be the impact of that. Related to chicken, we you are right. There is a little bit increase in terms of the egg set. But when you when you see the the demand, I think it’s the exact we talk about 2%.

It’s it is and the and the demand for for protein is is much higher than this. And we not see any any reason to be to to not to be in according to this normal cycle of the business.

Gilberto Tomazoni, Global CEO, JBS9: Great. Thank you for the color.

Conference Moderator, JBS: Thank you, everyone. Ladies and gentlemen, there are being no further questions. I would like to pass the floor to Mr. Gilberto Tomazoni.

Gilberto Tomazoni, Global CEO, JBS: I would like to once again thank you, everyone, for joining this earnings call. As of this quarter, market our listing in ICE, we reaffirm our focus on grow and deliver value to shareholders as well our confidence on the strength of our diversified platform, both in terms of geographic and protein. Year after year, it has proven to be the right strategy and excellent tool to protect company for cycles, supply chain disruption, or geopolitical impacts. I would likewise to to take this opportunity to thanks all JBS team members. Our company is truly powered by people who will share a common mission and are focused on delivering better results for every day.

Thank you, Heather. Thank you all.

Conference Moderator, JBS: This is the end of the conference call held by GBS. Thank you very much for your participation, and have a nice day.

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