Quarterly Report for Quarter Ending March 28, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion should be read in conjunction with our financial statements and related notes and other financial information appearing elsewhere in this report.

Disclosure Regarding Forward-Looking Statements

This report contains "forward-looking statements," which are subject to a number of risks and uncertainties, many of which are beyond our control. Forward-looking statements are typically identified by the words "believe", "expect", "anticipate", "intend", "estimate", and similar expressions. Actual results could differ materially from those contemplated by these forward-looking statements as a result of many factors, including economic conditions generally and in our principal markets, the availability and prices of live cattle and commodities, food safety, livestock disease, including the identification of cattle with bovine spongiform encephalopathy (BSE), competitive practices and consolidation in the cattle production and processing industries, actions of domestic or foreign governments (including the imposition or potential imposition of tariffs), the impact of international conflicts, hedging risk, changes in interest rates and foreign currency exchange rates, consumer demand and preferences, the cost of compliance with environmental and health laws, loss of key customers, loss of key employees, labor relations, and consolidation among our customers.

In light of these risks and uncertainties, there can be no assurance that the results and events contemplated by the forward-looking information contained in this report will in fact transpire. Readers are cautioned not to place undue reliance on these forward-looking statements. We do not undertake any obligation to update or revise any forward-looking statements. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these factors. Please review Part II. Item 1A. Risk Factors, included in this report, for other important factors that could cause actual results to differ materially from those in any such forward-looking statements.

Products and Production

USPB provides an integrated cattle production, processing and marketing system for the benefit of its members and associates. As the basis of that system, USPB's Class A members have a guaranteed right plus an obligation (on a one head per Class A unit per delivery year basis) to deliver cattle to USPB, pursuant to the Uniform Cattle Delivery and Marketing Agreement. USPB facilitates the delivery of cattle to NBP for processing and subsequent product distribution and marketing. Shortly after the cattle are processed, cattle suppliers receive, at no extra charge, individual animal carcass data previously considered proprietary by many processors. This carcass data assists producers in refining production methodologies, thereby improving the product quality and subsequently enhancing the return to the producer.

We believe the primary advantage of USPB's ownership in NBP is USPB's ability to provide NBP with a consistent supply of quality beef from a known source, allowing NBP to target higher margin value-added markets. Consumers have historically demonstrated their willingness and desire to buy branded products that offer better value in other consumer product markets, with the Certified Angus Beef^® product line being an example in the beef industry.

Investment in National Beef Packing Company, LLC

NBP processes and sells a comprehensive line of fresh beef, case-ready products, and beef by-products for domestic and international markets. The largest share of NBP's revenue is generated from the sale of boxed beef and beef by-products.

NBP has two beef slaughter and processing facilities located in southwest Kansas and a third located in central Iowa. In addition, NBP operates a leather tannery, three case-ready manufacturing facilities, a fresh and frozen hamburger manufacturing facility and a transportation and logistics company that provides refrigerated and livestock transportation across the U.S.

NBP's profitability typically fluctuates seasonally as well as cyclically, based on the availability of fed cattle and the demand for beef and beef by-products. Its profitability is dependent, in large part, on the spread between its cost for live cattle, the primary raw material for its business, and the value received from selling boxed beef and other products coupled with its overall volume. NBP operates in a large and fast-moving commodity market and does not have much influence over the price it pays for cattle or the selling price it receives for the products it produces. The NBP financial information provided herein has been provided to us by NBP. We have not independently verified the information.

NBP's revenues in the thirteen-weeks ended March 28, 2026, increased approximately 6.9% in comparison to the thirteen-weeks ended March 29, 2025, primarily due to increased revenue per head. NBP's cost of sales increased by approximately 6.9% for the thirteen-weeks ended March 28, 2026, as compared to the thirteen-weeks ended March 29, 2025, primarily due to increased cattle costs. For the thirteen-weeks ended March 28, 2026, NBP had a net loss of $43.1 million compared to a net loss of $67.1 million for the thirteen-weeks ended March 29, 2025. Improvement per unit beef processing margin was the key driver of the increase in overall profitability in the 2026 period, as compared to the 2025 period.

On June 10, 2019, USPB and NBP entered into the First Amended and Restated Cattle Purchase and Sale Agreement ("A&R Agreement") with USPB. The terms and conditions of the A&R Agreement are substantially the same as those of the Cattle Purchase and Sale Agreement dated December 30, 2011. Per the terms and conditions of the A&R Agreement, NBP is required to purchase through USPB from its owners and associates, and USPB is required to sell and deliver from its owners and associates to NBP, a base amount of 735,385 (subject to adjustment) head of cattle per year with prices based on those published by the U.S. Department of Agriculture, subject to adjustments for cattle performance. NBP obtained approximately 27% and 25% of its cattle requirements under this agreement during the thirteen-weeks ended March 28, 2026 and March 29, 2025, respectively.

USPB Results of Operations

Thirteen-weeks ended March 28, 2026 compared to thirteen-weeks ended March 29, 2025

Net Sales. There were no net sales in the thirteen-weeks ended March 28, 2026 and thirteen-weeks ended March 29, 2025.

Cost of Sales. There were no cost of sales in the thirteen-weeks ended March 28, 2026 and thirteen-weeks ended March 29, 2025.

Selling, General and Administrative Expenses. Selling, general and administrative expenses were approximately $0.8 million and $1.0 million for the thirteen-weeks ended March 28, 2026 and March 29, 2025, respectively.

Operating Loss. Operating loss was approximately $0.8 million and $1.0 million for the thirteen-weeks ended March 28, 2026 and March 29, 2025, respectively.

Equity in Net Loss of National Beef Packing Company, LLC. Equity in NBP net loss was $6.6 million for the thirteen-weeks ended March 28, 2026 compared to $10.3 million for the thirteen-weeks ended March 29, 2025. USPB carries its 15.0729% investment in NBP under the equity method of accounting.

Interest Income. Interest income was $0.3 million for the thirteen-weeks ended March 28, 2026 compared to approximately $0.6 million for the thirteen-weeks ended March 29, 2025.

Other, net. Other income was $0.2 million for the thirteen-weeks ended March 28, 2026 compared to other income of less than $0.1 million for the thirteen-weeks ended March 29, 2025, respectively. The income in both periods was primarily delivery right lease income.

Net loss. Net loss was $7.0 million for the thirteen-weeks ended March 28, 2026 compared to $10.6 million thirteen-weeks ended March 29, 2025, respectively.

Liquidity and Capital Resources

As of March 28, 2026, we had net working capital (the excess of current assets over current liabilities) of approximately $35.3 million, which included cash and cash equivalents of $12.4 million. As of December 27, 2025, we had net working capital of approximately $36.2 million, which included cash and cash equivalents of $14.1 million. Our primary sources of liquidity for the first quarter of fiscal year 2026 and fiscal year 2025 were cash and available borrowings under our Credit Agreement with CoBank.

As of March 28, 2026, USPB had no long-term debt outstanding. We had a $1.0 million revolving term credit commitment with CoBank, all of which was available.

On July 24, 2025, USPB and CoBank entered into an Amendment (the "Amendment") to the A&R Note (as defined below). The Amendment provides for an increase in the amount of the commitment under the A&R Note by an aggregate amount not exceeding $30,000,000. There were no borrowings under the facility as of March 28, 2026.

USPB was in compliance with the financial covenant under its Credit Agreement as of March 28, 2026.

We believe our cash will be sufficient to support our cash needs for the foreseeable future.

Operating Activities

Net cash used in operating activities in the thirteen-weeks ended March 28, 2026 was approximately $1.5 million compared to approximately $1.0 million in the thirteen-weeks ended March 29, 2025. The $0.5 million change was primarily due to the change in accrued compensation and benefits.

Investing Activities

Net cash used in investing activities was approximately $0.2 million in the thirteen-weeks ended March 28, 2026 compared to $9.8 million in the thirteen-weeks ended March 29, 2025. The change was due to fewer investments in certificates of deposit and treasury securities in the current period.

Financing Activities

Net cash used in financing activities was $0.0 million in the thirteen-weeks ended March 28, 2026 compared to $0.0 million in the thirteen-weeks ended March 29, 2025.

Credit Agreement

On June 24, 2025, USPB and CoBank entered into the Amended and Restated Revolving Term Promissory Note (the "A&R Note"), which amended and restated the Amended and Restated Revolving Term Promissory Note, dated July 13, 2020, issued by the Company to CoBank, which had a scheduled maturity of June 30, 2025.

The A&R Note provides for a $1.0 million revolving term commitment. That commitment carries a term of five years, maturing on June 30, 2030. Amounts outstanding under the A&R Note bear interest at 2.6% plus the higher of 0.00% and Daily Simply SOFR (as defined in the A&R Note).

USPB may request that the amount of the revolving loan commitment be increased by an aggregate amount of up to $30.0 million. Any requested increase must be for at least $5.0 million and advancing such amount will be at the discretion of CoBank.