Pilgrim's Pride Corporation
02/12/2026 | Press release | Distributed by Public on 02/12/2026 06:29
Annual Report for Fiscal Year Ending December 28, 2025 (Form 10-K)
Management's Discussion and Analysis of Financial Condition and Results of Operations
Executive Summary
Overview
We are one of the largest protein companies in the world, and as a vertically integrated company, we are able to control nearly every phase of the production process, which helps us manage food safety and quality, control margins, and improve customer service. This gives us the opportunity to continue to create growth and development opportunities, further increasing our position as a leading domestic and global protein company.
We reported net income attributable to Pilgrim's Pride Corporation of $1.1 billion, or $4.54 per diluted common share, and profit before tax totaling $1.5 billion, for 2025. These operating results included gross profit of $2.4 billion and generated $1.4 billion of cash from operations. We generated consolidated operating margins of 8.7% with operating margins of 10.7%, 5.1%, and 7.9% in our U.S., Europe, and Mexico reportable segments, respectively. During 2025, we generated EBITDA and Adjusted EBITDA of $2.1 billion and $2.3 billion, respectively. A reconciliation of net income to EBITDA and Adjusted EBITDA is included later in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in this annual report.
We operate on the basis of a 52/53-week fiscal year that ends on the Sunday falling on or before December 31. Any reference we make to a particular year applies to our fiscal year and not the calendar year. Fiscal years 2025 and 2024 were both 52-week fiscal years.
Global Economic Conditions
Our business is subject to global inflationary trends. U.S. consumer price index inflation rose 2.7% in the twelve months ended December 2025. The fluctuations were driven by policy changes, supply chain dynamics, and consumer spending behavior. U.K. consumer price index inflation rose 3.6% in the twelve months ended December 2025, driven by increases in alcohol and tobacco and transportation costs, as well as smaller increases in food and restaurant prices. The E.U. region saw a slight decrease in the year-over-year inflation rate to 2.0% for the twelve months ended December 2025, primarily driven by decreased energy prices, offset by rising food prices. The Russia-Ukraine war's impact on the global feed ingredient and energy markets continues to be less pronounced than during the initial onset of the war, but there remain many risks and uncertainties that may impact global markets. Mexico consumer price index inflation declined to 3.7% in the twelve months ended December 2025 partially driven by decreases in fresh agricultural prices and energy, partially offset by increases in services, such as restaurants and food services, as well as, prepared food prices and food, beverages, and tobacco prices.
The British pound strengthened against the U.S. dollar during 2025. The Mexican peso weakened against the U.S. dollar during 2025, but future trends will be impacted by economic uncertainties in Mexico and with their primary trading partners, such as the U.S.
We are monitoring changes in tariffs and trade policies both in the U.S. and throughout other countries where we operate and do business. Changes to these policies may impact our export sales and international operations. Our U.S. business is primarily characterized with inputs being made in country and our products being sold in country, demonstrated by our export sales from the U.S. accounting for less than 3% of our total net sales. The impact of trade policy changes is uncertain and evolving; however, we do not anticipate material impacts to our results of operations. We will continue to monitor potential impacts and take mitigation actions as necessary.
We generally respond to these challenges in global economic conditions through discussions with customers to mitigate the impact of extraordinary costs we experience. We also continue to focus on operational initiatives that aim to deliver labor efficiencies, better agricultural performance and improved yields.
Raw Materials and Input Costs
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.
During 2025, the global prices of corn, soybean, and wheat decreased modestly relative to 2024 prices, reflecting an increase in production and elevated stocks. Demand for these grains increased in 2025 compared to 2024 levels, however supply outpaced demand resulting in slightly lower prices and higher ending stocks.
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Corn(a)
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Soybean Meal(a)
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Wheat(a)
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| Highest Price | Lowest Price | Highest Price | Lowest Price | Highest Price | Lowest Price | ||||||||||||||||||||||||||||||
| (In whole dollars) | (In whole pounds sterling) | ||||||||||||||||||||||||||||||||||
| 2025 | |||||||||||||||||||||||||||||||||||
| Fourth Quarter | 4.51 | 4.11 | 330.8 | 264.7 | 166.8 | 155.2 | |||||||||||||||||||||||||||||
| Third Quarter | 4.32 | 3.72 | 297.2 | 260.7 | 180.0 | 136.5 | |||||||||||||||||||||||||||||
| Second Quarter | 4.90 | 4.10 | 299.6 | 270.9 | 173.6 | 138.2 | |||||||||||||||||||||||||||||
| First Quarter | 5.02 | 4.36 | 315.8 | 285.9 | 185.6 | 165.0 | |||||||||||||||||||||||||||||
| 2024 | |||||||||||||||||||||||||||||||||||
| Fourth Quarter | 4.54 | 4.01 | 350.0 | 279.5 | 190.5 | 174.0 | |||||||||||||||||||||||||||||
| Third Quarter | 4.18 | 3.62 | 387.0 | 303.4 | 196.9 | 168.7 | |||||||||||||||||||||||||||||
| Second Quarter | 4.65 | 3.97 | 386.5 | 328.3 | 202.8 | 165.1 | |||||||||||||||||||||||||||||
| First Quarter | 4.67 | 4.00 | 381.2 | 327.8 | 184.5 | 153.7 | |||||||||||||||||||||||||||||
(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.
During 2025, U.S. commodity market prices for chicken products moderated slightly compared to elevated levels in 2024, reflecting a combination of factors, such as increased broiler production, improved supply chain stability, and normalization of consumer demand following inflation-driven protein substitution in prior periods. The USDA's January 2026 World Agriculture Supply and Demand Estimate ("WASDE") report indicates broiler production growth in 2025, supported by increased placements and improved feed conversion ratios, which increased available supply relative to demand. The incremental supply reduced pricing pressure seen in 2024, when supply was tighter and feed costs were slightly elevated.
U.S. commodity market prices throughout 2026 will be impacted by the evolution of foodservice, retail, and export meat demand, influenced by factors such as government regulation, spread of avian influenza cases both domestically and abroad, evolution of the general economy, and overall protein supply.
During 2025, the U.K. chicken market prices remained elevated compared to 2024 levels, yet stable, reflecting a balance between strong domestic consumption, increased domestic production, and easing input cost pressures. Supply increased in 2025 due to higher average live weights and higher slaughter numbers, but pricing remained firm due to increased labor costs and animal welfare costs. Through customer contracts and additional negotiations, we have offset the majority of these cost increases. Partially offsetting the labor and animal welfare costs was an easing of feed costs in 2025 relative to 2024. Due to increased competition with the U.K. egg market, there continues to be an increase in costs to retain growers. We continue to focus on managing costs, including labor and yield efficiencies, agricultural performance and increasing operational efficiencies through investments in capital projects.
Commodity prices for chicken in Mexico in 2025 averaged above prior-year prices, driven by strong consumer demand and the viability of chicken as the most affordable animal protein option. While Mexico's poultry production increased in 2025 relative to 2024 levels, demand outpaced supply. Feed costs decreased in 2025 relative to 2024, but these cost savings were partially offset by increases in supply chain and labor costs.
U.K. market prices for pork products in 2025 remained elevated relative to historical averages, continuing an upward trend from 2022, despite higher production volumes and easing of market pressures from EU price movements. Production increases in 2025 were driven by heavier carcass weights and higher slaughter numbers, while breeding herd constraints and increased exports limited oversupply in the U.K.
U.K. prices for prepared foods have increased due to inflationary pressures. We continue to focus on partnering with our Key Customers and increasing operational efficiency.
Sustainability
We believe sustainability involves continuously improving social responsibility, economic viability, and environmental stewardship. We are committed to helping society meet the global challenge of feeding a growing population in a responsible manner.
Environmental Stewardship. We are focused on improving the efficiency of our operations and supporting producers to reduce our environmental footprint. In support of this initiative, in April 2021, we issued $1.0 billion of sustainability-linked bonds, which require us to reduce our Scope 1 and Scope 2 global greenhouse gas emissions intensity of 17.7% by 2025 and by
30.0% by 2030 from our 2019 baseline. To that end, we have invested in a variety of equipment, implemented operating procedures, and enhanced reporting systems to identify opportunities and drive further emission reduction opportunities.
Social Responsibility. Safety of our team members is a core value at Pilgrim's. The physical health and mental well-being of our workforce continues to be a top priority for our business. As such, we implemented hundreds of safety measures within our facilities and continue to evolve our operations as needed. To support the communities where our team members live and work, we have committed $20 million in funding for local projects focused on alleviating food insecurity and strengthening long-term community infrastructure through our Hometown Strong initiative. To date, we have approved over $15 million for these areas. We also continue to build on Hometown Strong through our Better Futures program, which provides team members and their dependents in tuition free, higher education program, to improve their skills and career opportunities. The program has been exceptionally well received, as we have over 2,200 participants since its inception. Finally, ensuring the well-being of animals under our care is an uncompromising commitment at Pilgrim's. We continually strive to improve our welfare efforts through the use of new technologies and the implementation of standards that meet and exceed regulatory requirements and industry guidelines.
Governance. To cultivate discipline and drive accountability for sustainability-related matters, we use our annual budgeting process to establish strategies, plans, and risk mitigation tactics. This process is further reinforced by a series of key performance indicators to evaluate and monitor progress. These performance indicators are linked to compensation for both senior executives and plant-level personnel. As part of our business management processes, progress against these metrics is reviewed at least monthly and evaluated by external agencies to assess progress relative to industry peers. In addition, the Board of Directors formed a Sustainability Committee to provide oversight and counsel on strategies, policies, and investments to reduce the impact of climate change. The Sustainability Committee meets on a quarterly basis to monitor progress, provide feedback, and evaluate the impact of trends.
Reportable Segments
We operate in three reportable segments: the 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 20. Reportable Segments" of our Consolidated Financial Statements included in this annual report.
Results of Operations
2025 Compared to 2024
Net sales.Net sales for 2025 increased $0.6 billion, or 3.5%, from $17.9 billion generated in 2024 to $18.5 billion generated in 2025. The following table provides additional information regarding net sales:
| Change from 2024 | Impact on Change from 2024 | |||||||||||||||||||||||||||||||
| Sources of net sales | 2025 | Amount | Percent | Sales Volume | Sales Prices | Foreign Currency Translation Impact | ||||||||||||||||||||||||||
| (In thousands, except percent data) | ||||||||||||||||||||||||||||||||
| U.S. | $ | 10,998,732 | $ | 368,803 | 3.5 | % | 3.4 | % | 0.1 | % | - | % | ||||||||||||||||||||
| Europe | 5,378,865 | 242,118 | 4.7 | % | 2.5 | % | (0.9) | % | 3.1 | % | ||||||||||||||||||||||
| Mexico | 2,119,956 | 8,341 | 0.4 | % | 2.2 | % | 3.3 | % | (5.1) | % | ||||||||||||||||||||||
| Total net sales | $ | 18,497,553 | $ | 619,262 | 3.5 | % | ||||||||||||||||||||||||||
U.S. Reportable Segment. U.S. net sales generated in 2025 increased $368.8 million, or 3.5%, from U.S. net sales generated in 2024 primarily because of an increase in sales volume of $365.2 million, or 3.4 percentage points, and a slight increase in net sales per pound of $3.6 million, or 0.1 percentage points. The increase in sales volume was primarily driven by increased demand for fresh products.
Europe Reportable Segment. Europe sales generated in 2025 increased $242.1 million, or 4.7%, from sales generated in 2024 primarily from a favorable impact of foreign currency translation and an increase in sales volume of $160.1 million, or 3.1 percentage points, and $130.3 million, or 2.5 percentage points, respectively. These increases were partially offset by a decrease in net sales per pound of $48.3 million, or 0.9 percentage points. The favorable impact of foreign currency translation was the result of a 3% strengthening of the British pound against the U.S. dollar. The increase in sales volume was primarily driven by increased domestic demand for fresh products.
Mexico Reportable Segment. Mexico sales generated in 2025 increased $8.3 million, or 0.4%, from sales generated in 2024 primarily from an increase in net sales per pound and an increase in sales volume of $68.7 million, or 3.3 percentage points, and $46.1 million, or 2.2 percentage points, respectively. These increases in net sales were partially offset by a decrease due to the unfavorable impact of foreign currency translation of $106.5 million, or 5.1 percentage points. The increases in net sales per pound and sales volume were driven by improved product mix and increased commodity chicken prices. Sales volumes increased across all sales channels, except live chicken which slightly decreased. The unfavorable impact of foreign currency translation was due to a 5% weakening of the Mexican peso against the U.S. dollar.
Gross profit.Gross profit increased by $45.4 million, or 2.0%, from $2.31 billion generated in 2024 to $2.36 billion generated in 2025. The following tables provide gross profit information:
| Change from 2024 | Percent of Net Sales | |||||||||||||||||||||||||||||||
| Components of gross profit | 2025 | Amount | Percent | 2025 | 2024 | |||||||||||||||||||||||||||
| (In thousands, except percent data) | ||||||||||||||||||||||||||||||||
| Net sales | $ | 18,497,553 | $ | 619,262 | 3.5 | % | 100.0 | % | 100.0 | % | ||||||||||||||||||||||
| Cost of sales | 16,139,410 | 573,886 | 3.7 | % | 87.3 | % | 87.1 | % | ||||||||||||||||||||||||
| Gross profit | $ | 2,358,143 | $ | 45,376 | 2.0 | % | 12.7 | % | 12.9 | % | ||||||||||||||||||||||
| Sources of gross profit | 2025 | Change from 2024 | ||||||||||||||||||
| Amount | Percent | |||||||||||||||||||
| (In thousands, except percent data) | ||||||||||||||||||||
| U.S. | $ | 1,634,099 | $ | 70,007 | 4.5 | % | ||||||||||||||
| Europe | 492,760 | 31,093 | 6.7 | % | ||||||||||||||||
| Mexico | 231,284 | (55,724) | (19.4) | % | ||||||||||||||||
| Total gross profit | $ | 2,358,143 | $ | 45,376 | 2.0 | % | ||||||||||||||
| Sources of cost of sales | 2025 | Change from 2024 | ||||||||||||||||||
| Amount | Percent | |||||||||||||||||||
| (In thousands, except percent data) | ||||||||||||||||||||
| U.S. | $ | 9,364,633 | $ | 298,796 | 3.3 | % | ||||||||||||||
| Europe | 4,886,105 | 211,025 | 4.5 | % | ||||||||||||||||
| Mexico | 1,888,672 | 64,065 | 3.5 | % | ||||||||||||||||
| Total cost of sales | $ | 16,139,410 | $ | 573,886 | 3.7 | % | ||||||||||||||
U.S. Reportable Segment. Cost of sales incurred by our U.S. operations in 2025 increased $298.8 million, or 3.3%, from cost of sales incurred by our U.S. operations in 2024. Cost of sales increased primarily due to an increase in sales volume of $311.5 million, or 3.4 percentage points, partially offset by a slight decrease in cost per pound sold of $12.7 million, or 0.1 percentage points. The increase in sales volume was primarily driven by increased demand of fresh products. The decrease in cost per pound sold was driven by a reduction in feed ingredients, such as corn and soy, costs in our live operations. The reduction in live operations costs was partially offset by increases in labor, incentive compensation, and grower costs.
Europe Reportable Segment. Cost of sales incurred by the Europe operations during 2025 increased $211.0 million, or 4.5%, from cost of sales incurred by the Europe operations during 2024 primarily due to the impact of foreign currency translation and an increase in sales volume of $143.5 million, or 3.1 percentage points, and $118.6 million, or 2.5 percentage points, respectively. These increases were partially offset by a decrease in cost per pound sold of $51.2 million, or 1.1 percentage points. The increase in sales volume was partially offset by the unfavorable impact of foreign currency translation of $140.1 million, or 2.9 percentage points. The decrease in cost per pound was driven by decreased feed ingredients, labor, utilities and other operating costs and from production efficiencies as a result of our restructuring initiatives.
Mexico Reportable Segment. Cost of sales incurred by the Mexico operations during 2025 increased $64.1 million, or 3.5%, from cost of sales incurred by the Mexico operations during 2024 primarily because of an increase in cost per pound sold and an increase in sales volume of $119.2 million, or 6.4 percentage points, and $39.8 million, or 2.2 percentage points, respectively. These increases were partially offset by the favorable impact of foreign currency translation of $94.9 million, or 5.1 percentage points. The increase in sales volume was driven by market requirements and product mix and the increase in cost per pound sold was driven by a shift in mix to higher value products, such as prepared foods. The favorable impact of foreign currency translation was due to a 5% weakening of the Mexican peso against the U.S. dollar.
Operating income.Operating income increased $107.5 million, or 7.1%, from $1.5 billion generated for 2024 to $1.6 billion generated for 2025. The following tables provide operating income information:
| Change from 2024 | Percent of Net Sales | |||||||||||||||||||||||||||||||
| Components of operating income | 2025 | Amount | Percent | 2025 | 2024 | |||||||||||||||||||||||||||
| (In thousands, except percent data) | ||||||||||||||||||||||||||||||||
| Gross profit | $ | 2,358,143 | $ | 45,376 | 2.0 | % | 12.7 | % | 12.9 | % | ||||||||||||||||||||||
| SG&A expenses | 713,250 | (60) | - | % | 3.9 | % | 4.0 | % | ||||||||||||||||||||||||
| Restructuring activities | 31,354 | (62,034) | (66.4) | % | 0.2 | % | 0.5 | % | ||||||||||||||||||||||||
| Operating income | $ | 1,613,539 | $ | 107,470 | 7.1 | % | 8.7 | % | 8.4 | % | ||||||||||||||||||||||
| Change from 2024 | ||||||||||||||||||||
| Sources of operating income | 2025 | Amount | Percent | |||||||||||||||||
| (In thousands, except percent data) | ||||||||||||||||||||
| U.S. | $ | 1,173,404 | $ | 60,403 | 5.4 | % | ||||||||||||||
| Europe | 272,397 | 102,704 | 60.5 | % | ||||||||||||||||
| Mexico | 167,738 | (55,637) | (24.9) | % | ||||||||||||||||
| Total operating income | $ | 1,613,539 | $ | 107,470 | 7.1 | % | ||||||||||||||
| Sources of SG&A expenses (defined below) | 2025 | Change from 2024 | ||||||||||||||||||
| Amount | Percent | |||||||||||||||||||
| (In thousands, except percent data) | ||||||||||||||||||||
| U.S. | $ | 460,695 | $ | 9,604 | 2.1 | % | ||||||||||||||
| Europe | 189,009 | (9,577) | (4.8) | % | ||||||||||||||||
| Mexico | 63,546 | (87) | (0.1) | % | ||||||||||||||||
| Total SG&A expense | $ | 713,250 | $ | (60) | - | % | ||||||||||||||
| Sources of restructuring activities charges | 2025 | Change from 2024 | ||||||||||||||||||
| Amount | Percent | |||||||||||||||||||
| (In thousands, except percent data) | ||||||||||||||||||||
| Europe | $ | 31,354 | $ | (62,034) | (66.4) | % | ||||||||||||||
(a)Our Consolidated Financial Statements include the accounts of our company and our majority owned subsidiaries. We eliminate all significant affiliate accounts and transactions upon consolidation.
U.S. Reportable Segment.Selling, general and administrative ("SG&A") expense incurred by the U.S. operations during 2025 increased $9.6 million, or 2.1%, from SG&A expense incurred by the U.S. operations during 2024 primarily from increases in incentive compensation costs, marketing costs, and professional fees, such as legal defense costs, partially offset by a decrease in litigation settlement costs.
Europe Reportable Segment. SG&A expense incurred by the Europe operations during 2025 decreased $9.6 million, or 4.8%, from SG&A expense incurred by the Europe operations during 2024 primarily due to decreased labor and employee-related costs as a result of the restructuring initiatives consolidating backoffice support. The decreased labor costs were partially offset by an increase from the unfavorable impact of foreign currency translation.
Mexico Reportable Segment. SG&A expense incurred by the Mexico operations during 2025 decreased $0.1 million, or 0.1%, from SG&A expense incurred by the Mexico operations during 2024. SG&A expense decreased primarily from the favorable impact of foreign currency translation due to the weakening of the Mexican peso against the U.S. dollar, partially offset by increased wages and employee profit share costs.
Net interest expense. Consolidated interest expense increased 24.6% to $110.3 million in 2025 from $88.5 million in 2024. The increase in net interest expense resulted primarily from a decrease in interest income earned on lower cash balances, an increase from early extinguishment of debt from a gain recognized in the prior year, partially offset by a decrease in interest expense on outstanding borrowings due to debt repurchases reducing the outstanding borrowings. As a percent of net sales, net interest expense in 2025 and 2024 was 0.6% and 0.5%, respectively.
Income taxes.Our consolidated income tax expense in 2025 was $418.8 million, compared to income tax expense of $325.0 million in 2024. The increase in income tax expense in 2025 resulted primarily from an increase in pre-tax income and higher state income tax expense recognized during 2025.
2024 Compared to 2023
For discussion of 2024 results of operations in comparison to 2023 results of operations, see Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II of the 2024 Annual Report on Form 10-K filed on February 13, 2025.
Liquidity and Capital Resources
Our principal sources of liquidity are cash generated from operations, funds from borrowings, and existing cash on hand. The following table presents our available sources of liquidity as of December 28, 2025:
| Sources of Liquidity |
Facility Amount |
Amount Outstanding |
Available | |||||||||||||||||
| (In millions) | ||||||||||||||||||||
| Cash and cash equivalents | $ | - | $ | - | $ | 640.2 | ||||||||||||||
| Borrowing arrangements: | ||||||||||||||||||||
|
U.S. Credit Facility(a)
|
850.0 | - | 846.0 | |||||||||||||||||
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Mexico BBVA Credit Facility(b)
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71.2 | - | 71.2 | |||||||||||||||||
|
Mexico Bajio Credit Facility(c)
|
83.8 | - | 83.8 | |||||||||||||||||
|
Europe Credit Facility(d)
|
202.5 | - | 202.5 | |||||||||||||||||
(a)Availability under the U.S. Credit Facility is also reduced by our outstanding standby letters of credit. Standby letters of credit outstanding at December 28, 2025 totaled $4.0 million.
(b)As of December 28, 2025, the U.S. dollar-equivalent of the amount available under the Mexico BBVA Credit Facility was $71.2 million ($1.3 billion Mexican pesos).
(c)As of December 28, 2025, the U.S. dollar-equivalent of the amount available under the Mexico Bajio Credit Facility was $83.8 million ($1.5 billion Mexican pesos).
(d)As of December 28, 2025, the U.S. dollar-equivalent of the amount available under the Europe Credit Facility was $202.5 million (£150.0 million).
On March 13, 2025, the Company declared a special dividend of $6.30 per share, to stockholders of record as of April 3, 2025. On April 17, 2025, the Company paid that special dividend from retained earnings of approximately $1.5 billion. The Company used cash on hand to fund the special cash dividend.
On July 30, 2025, the Company declared a special dividend of $2.10 per share, to stockholders of record as of August 20, 2025. The Company paid that special dividend from retained earnings of approximately $500.0 million on September 3, 2025. The Company used cash on hand to fund the special cash dividend.
On October 30, 2025, we entered into an unsecured credit agreement (the "Mexico Bajio Credit Facility") with Banco del Bajio as lender. The loan commitment under the Mexico Bajio Credit Facility is Mex$1.5 billion and can be borrowed on a revolving basis. Outstanding borrowings under the Mexico Bajio Credit Facility accrue interest at a rate equal to TIIE plus 1.41%. The Mexico Bajio Credit Facility will be used for general corporate and working capital purposes. The Mexico Bajio Credit Facility will mature on October 30, 2028.
On December 18, 2025, we extended an unsecured credit agreement (the "Mexico BBVA Credit Facility") with BBVA as lender. The loan commitment under the Mexico BBVA Credit Facility is Mex$1.3 billion and can be borrowed on a revolving basis. Outstanding borrowings under the Mexico BBVA Credit Facility accrue interest at a rate equal to TIIE plus 1.35%. The Mexico BBVA Credit Facility will be used for general corporate and working capital purposes. The Mexico BBVA Credit Facility will mature on December 18, 2030.
We expect cash flows from operations, combined with availability under our credit facilities, to provide sufficient liquidity to fund current obligations, projected working capital requirements, maturities of long-term debt and capital spending for at least the next twelve months.
Historical Flow of Funds
| Year Ended | ||||||||||||||
| Cash Flows from Operating Activities | December 28, 2025 | December 29, 2024 | ||||||||||||
| (In millions) | ||||||||||||||
| Net income | $ | 1,083.3 | $ | 1,087.2 | ||||||||||
| Net noncash expenses | 507.8 | 480.0 | ||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||
| Trade accounts and other receivables | (113.1) | 88.3 | ||||||||||||
| Inventories | (193.5) | 134.5 | ||||||||||||
| Prepaid expenses and other current assets | (44.5) | (33.3) | ||||||||||||
| Accounts payable and accrued expenses | 155.8 | 126.7 | ||||||||||||
| Income taxes | 35.4 | 109.4 | ||||||||||||
| Long-term pension and other postretirement obligations | (1.9) | 26.1 | ||||||||||||
| Other operating assets and liabilities | (57.6) | (28.8) | ||||||||||||
| Cash provided by operating activities | $ | 1,371.7 | $ | 1,990.1 | ||||||||||
Net Noncash Expenses
Items necessary to reconcile from net income to cash flow provided by operating activities included net noncash expenses of $507.8 million for the year ended December 28, 2025. Net noncash expense items included $456.2 million of depreciation and amortization, stock-based compensation expense of $29.4 million, deferred income tax expense of $10.0 million, loan cost amortization of $4.9 million, a $3.9 million loss on property disposals, accretion of bond discount of $2.4 million, loss on early extinguishment of debt recognized as a component of interest expense of $0.6 million, and asset impairment of $0.5 million.
Items necessary to reconcile from net income to cash flow provided by operating activities included net noncash expenses of $480.0 million for the year ended December 29, 2024. Net noncash expense items included $433.6 million of depreciation and amortization, deferred income tax expense of $4.8 million, asset impairment of $28.6 million, stock-based compensation expense of $14.9 million, gain on early extinguishment of debt recognized as a component of interest expense of $11.2 million, loan cost amortization of $5.0 million, accretion of bond discount of $2.5 million, and a $1.8 million gain on property disposals.
Changes in Operating Assets and Liabilities
The change in trade accounts and other receivables, including accounts receivable from related parties, represented a $113.1 million use of cash in 2025. The change in cash was primarily due to an increase in sales volume. The change in trade accounts and other receivables, including accounts receivable from related parties, represented an $88.3 million source of cash in 2024. The change in cash was primarily due to the timing of customer payments, and collections of insurance proceeds.
The change in inventories represented a $193.5 million use of cash in 2025. The change in cash resulted from an increase in our finished goods inventories to meet increased demand. The change in inventories represented a $134.5 million source of cash in 2024. The change in cash resulted from a decrease in our finished goods inventories and lower input costs included in inventory values.
The change in prepaid expenses and other current assets represented a $44.5 million use of cash in 2025. This change resulted primarily from an increase in prepaid indirect taxes in our Mexico and Europe reportable segments, and an increase in prepaid grower housing incentives. The change in prepaid expenses and other current assets represented a $33.3 million use of cash in 2024. This change resulted primarily from a net increase in the commodity derivatives assets from favorable fair value positions, an increase from short-term available-for-sale investments, and the impact of foreign currency translation.
Accounts payable and accrued expenses, including accounts payable to related parties, represented a $155.8 million source of cash in 2025. This change resulted primarily from the increases in litigation settlement and payroll accruals. Accounts payable and accrued expenses, including accounts payable to related parties, represented a $126.7 million source of cash in 2024. This change resulted primarily from increases in litigation settlement and incentive compensation accruals.
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 $35.4 million source of cash in 2025. This change resulted primarily from the timing of estimated tax payments. 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 $109.4 million source of cash in 2024. This change resulted primarily from the timing of estimated tax payments and higher profitability in 2024 which increased our income tax payables and reduced income tax receivable.
| Year Ended | ||||||||||||||
| Cash Flows from Investing Activities | December 28, 2025 | December 29, 2024 | ||||||||||||
| (In millions) | ||||||||||||||
| Acquisitions of property, plant and equipment | $ | (711.1) | $ | (476.2) | ||||||||||
| Proceeds from property disposals | 5.6 | 15.4 | ||||||||||||
| Cash used in investing activities | $ | (705.5) | $ | (460.8) | ||||||||||
Capital expenditures were incurred primarily for growth projects, projects to improve operational efficiencies, portfolio enhancement projects, such as the conversion of a commodity plant to a plant supporting our U.S. retail customers, and projects to reduce costs during the year ended December 28, 2025. Proceeds from property disposals were primarily for a feed mill in the U.S., breeder farm equipment in Mexico, and other miscellaneous equipment.
| Year Ended | ||||||||||||||
| Cash Flows from Financing Activities | December 28, 2025 | December 29, 2024 | ||||||||||||
| (In millions) | ||||||||||||||
| Payments for dividends | $ | (1,994.3) | $ | - | ||||||||||
| Payments on revolving line of credit, long-term borrowings, and finance lease obligations | (115.2) | (152.1) | ||||||||||||
| Payments on early extinguishment of debt | (2.1) | (0.2) | ||||||||||||
| Purchase of noncontrolling interest | (1.3) | - | ||||||||||||
| Proceeds from contribution of capital under Tax Sharing Agreement with JBS USA Holdings | - | 1.4 | ||||||||||||
| Cash used in financing activities | $ | (2,113.0) | $ | (150.9) | ||||||||||
Payments for dividends during 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 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.
Payments on revolving line of credit, long-term borrowings and finance lease obligations during 2024 are primarily related to open market repurchases of outstanding senior notes. The proceeds from contribution of capital under the Tax Sharing Agreement with JBS USA Holdings during 2024 were an allocation made during tax year 2023 for payment of historical tax adjustments. Payments on early extinguishment of debt during 2024 are transaction fees related to the bond repurchases.
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 Part II, Item 8, Notes to Consolidated Financial Statements, "Note 13. Debt."
Capital Expenditures
We anticipate spending between $900 million and $950 million on the acquisition of property, plant and equipment in 2026. Capital expenditures will primarily be incurred to grow our operations, to improve efficiencies, to reduce costs, and to sustain our operations. We expect to fund these capital expenditures with cash flow from operations and cash on hand.
Contractual Obligations
In addition to our debt commitments at December 28, 2025, we had other commitments and contractual obligations that require us to make specified payments in the future. The following table summarizes the total amounts due as of December 28, 2025, under all debt agreements, commitments and other contractual obligations. The table indicates the years in which payments are due under the contractual obligations.
| Payments Due By Period | ||||||||||||||||||||||||||||||||
|
Contractual Obligations
|
Total |
Less than One Year |
One to Three Years |
Three to Five Years |
Greater than Five Years |
|||||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||||||||
|
Long-term debt(a)
|
$ | 3,137,442 | $ | 339 | $ | 731 | $ | 809 | $ | 3,135,563 | ||||||||||||||||||||||
|
Interest(b)
|
1,133,834 | 158,399 | 316,746 | 316,668 | 342,021 | |||||||||||||||||||||||||||
| Finance leases | 1,440 | 617 | 823 | - | - | |||||||||||||||||||||||||||
| Operating leases | 299,230 | 78,436 | 104,084 | 54,862 | 61,848 | |||||||||||||||||||||||||||
| Derivative liabilities | 8,072 | 8,072 | - | - | - | |||||||||||||||||||||||||||
|
Purchase obligations(c)
|
777,760 | 483,703 | 283,347 | 3,293 | 7,417 | |||||||||||||||||||||||||||
| Total | $ | 5,357,778 | $ | 729,566 | $ | 705,731 | $ | 375,632 | $ | 3,546,849 | ||||||||||||||||||||||
(a)Long-term debt is presented at face value and excludes $4.0 million in letters of credit outstanding related to normal business transactions. Long-term debt includes the Live Oak CHP Project PACE Loan. For a description, refer to Part II, Item 8, Notes to Consolidated Financial Statements, "Note 13. Debt."
(b)Interest expense in the table above assumes the continuation of interest rates and outstanding borrowings as of December 28, 2025.
(c)Includes agreements to purchase goods or services that are enforceable and legally binding on us and that specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum, or variable price provisions; and the approximate timing of the transaction.
We expect cash flows from operations, combined with availability under the U.S., Mexico, and Europe Credit Facilities to provide sufficient liquidity to fund current obligations, projected working capital requirements, maturities of long-term debt and capital spending for at least the next twelve months.
Pillar II Tax Initiative
Global Minimum Tax
The Organization for Economic Co-operation and Development ("OECD") is an international organization composed of 38 member countries that work together to establish international standards and develop solutions for various social, economic, and environmental challenges. These solutions range from improving economic performance and job creation to promoting quality education and combating international tax evasion.
Regarding the fight against tax evasion, the Base Erosion and Profit Shifting ("BEPS") project was launched in 2013 as a collaboration between the G20 (a group of the world's 20 largest economies) and the OECD. The project aims to implement 15 measures to combat tax avoidance, enhance the consistency of international tax rules, and ensure a more transparent global tax environment. It seeks to prevent the misuse of tax regulations that result in the erosion of the tax base, particularly through profit shifting to jurisdictions with more favorable or no taxation.
Pillar II is part of one of the OECD's most recent initiatives, known as BEPS 2.0, which aims to address tax challenges arising from evolving business models in a globalized economy. The goal of Pillar II is to establish a global minimum tax system for multinational enterprises ("MNEs") with annual consolidated revenue exceeding EUR 750 million. This additional taxation seeks to balance the global allocation of corporate income taxes and ensure that multinational groups pay a minimum effective tax rate of 15% per jurisdiction where they operate.
Starting in the 2024 calendar year, the Pillar II rules came into effect in several jurisdictions, impacting multinational companies operating in these markets. However, during the first three years of implementation, transitional rules (Safe Harbor) have been introduced to simplify the calculation of the effective tax rate per jurisdiction, facilitating the adaptation of multinational groups to the new requirements. As the Group operates in multiple jurisdictions where the global minimum tax is effective, including France, Ireland, Luxembourg, Malta, the Netherlands, and the United Kingdom, the Company carried out the assessment procedures to analyze the potential impacts arising from these regulations. Based on the analyses conducted to date, no material tax exposure has been identified as a result of the application of this tax.
Recent Accounting Pronouncements
Refer to Part II, Item 8, Notes to Consolidated Financial Statements, "Note 1. Business and Summary of Significant Accounting Policies."
Critical Accounting Policies and Estimates
General. Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us
to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses. We continually evaluate our estimates, including those related to revenue recognition, inventory, goodwill and other intangible assets, litigation and income taxes. We base our estimates on historical experience and on various other assumptions, which are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our financial statements.
Revenue Recognition.The vast majority of our revenue is derived from contracts which are based upon a customer ordering our products. While there may be master agreements, the contract is only established when the customer's order is accepted by us. We account for a contract, which may be verbal or written, when it is approved and committed by both parties, the rights of the parties are identified along with payment terms, the contract has commercial substance and collectability is probable.
We evaluate the transaction for distinct performance obligations, which are the sale of our products to customers. Since our products are commodity market-priced, the sales price is representative of the observable, standalone selling price. Each performance obligation is recognized based upon a pattern of recognition that reflects the transfer of control to the customer at a point in time, which is upon destination (customer location or port of destination) and depicts the transfer of control and recognition of revenue. There are instances of customer pick-up at our facilities, in which case control transfers to the customer at that point and we recognize revenue. Our performance obligations are typically fulfilled within days to weeks of the acceptance of the order.
We make judgments regarding the nature, amount, timing, and uncertainty of revenue and cash flows arising from revenue and cash flows with customers. Determination of a contract requires evaluation and judgment along with the estimation of the total contract value and if any of the contract value is constrained. Due to the nature of our business, there is minimal variable consideration, as the contract is established at the acceptance of the order from the customer. When applicable, variable consideration is estimated at contract inception and updated on a regular basis until the contract is completed. Allocating the transaction price to a specific performance obligation based upon the relative standalone selling prices includes estimating the standalone selling prices including discounts and variable consideration.
Inventories.Live chicken and pig inventories are stated at the lower of cost or net realizable value and breeder hen, breeder sow, and boar inventories at the lower of cost, less accumulated amortization, or net realizable value. The costs associated with breeder hen inventories are accumulated up to the production stage and amortized over their productive lives using the unit-of-production method. The costs associated with breeder sow inventories are accumulated up to the production stage and amortized on a straight-line basis over their productive lives to the estimated residual cull value. The costs associated with finished poultry products, finished pork products, feed, eggs and other inventories are stated at the lower of cost or net realizable value. Inventory within a production facility typically transfers from one stage of production to another at a standard cost, at which point it accumulates additional cost directly incurred with the production of inventory, including overhead. The standard cost at which each type of inventory transfers is set by management to reflect the actual costs incurred in the prior steps. We monitor and adjust standard costs throughout the year to ensure that standard costs reasonably reflect the actual average cost of the inventory produced.
We allocate meat costs between our various finished chicken products based on a by-product costing technique that reduces the cost of the whole bird by estimated yields and amounts to be recovered for certain by-product parts. This primarily includes leg quarters, wings, tenders and offal, which are carried in inventory at the estimated recovery amounts, with the remaining amount being reflected as our breast meat cost. We allocate meat costs between our various finished pork products based on a by-product costing technique that allocates the cost of the whole pig into the primal cuts by estimated yields and amounts to be recovered for certain by-product parts. This primarily includes legs, shoulders, bellies, offal and fifth quarter parts, which are carried in inventory at the estimated recoverable amounts, with the remaining amount being reflected as our loin meat cost.
For our prepared foods inventories, raw materials, and packaging materials are valued at the lower of weighted average cost and net realizable value, work in progress is valued at the latest production cost (raw materials, packaging), finished goods are valued at the lower of the latest actual monthly production cost (raw materials, packaging and direct labor) and attributable overheads and net realizable value, and engineering spares and consumables are valued at cost with an appropriate provision for obsolete engineering spares consistent with historical practice.
Generally, we perform an evaluation of whether any lower of cost or net realizable value adjustments are required at the country level based on a number of factors, including: (1) pools of related inventory, (2) product continuation or
discontinuation, (3) estimated market selling prices and (4) expected distribution channels. If actual market conditions or other factors are less favorable than those projected by management, additional inventory adjustments may be required. We also record valuation adjustments, when necessary, for estimated obsolescence at or equal to the difference between the cost of inventory and the estimated market value based upon known conditions affecting inventory obsolescence, including significantly aged products, discontinued product lines, or damaged or obsolete products.
Goodwill and Other Intangibles, net. Goodwill represents the excess of the aggregate purchase price over the fair value of the net identifiable assets acquired in a business combination. Identified intangible assets represent trade names and customer relationships arising from acquisitions that are recorded at fair value as of the date acquired less accumulated amortization, if any. We use various market valuation techniques to determine the fair value of our identified intangible assets.
Goodwill is not amortized but is tested for impairment on an annual basis in the fourth quarter of each fiscal year or more frequently if impairment indicators arise. For goodwill, an impairment loss is recognized for any excess of the carrying amount of a reporting unit's goodwill over the implied fair value of that goodwill. Management first reviews relevant qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50 percent), that the fair value of a reporting unit is less than the unit's carrying amount (including goodwill). If management determines it is more likely than not that the carrying amount of a reporting unit goodwill might be impaired, a quantitative impairment test is performed. Management has the option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the quantitative impairment test. Management would be able to resume performing the qualitative assessment in any subsequent period. When performing quantitative impairment tests, we estimate the fair value of our reporting units with material goodwill carrying amounts using an income approach (discounted cash flow method). We develop projections for cash flows over a 5-year period based on assumptions about revenue growth and margin changes using internally-developed economic projections and industry data obtained from government authorities such as the U.S. Department of Agriculture and other sources. We also make terminal value assumptions about revenue growth and margin changes for periods beyond the projection period. We utilize margin assumptions based on operating performance expectations, margins historically realized in the reporting units' industries, and general macroeconomic trends. We utilize the weighted average cost of capital as a proxy for the discount rate. We consider reporting units that have 20% or less excess fair value over carrying amount to have a heightened risk of future goodwill impairment.
In 2023, we experienced (1) an increase in long-term treasury rates that management determined could negatively affect discount rates and (2) continued inflationary pressures impacting primarily our Moy Park and Pilgrim's Food Masters reporting units that management determined could negatively affect our margins. Both discount rates and margins are used in estimating the fair value of the reporting units. Therefore, management elected to bypass qualitative assessments and performed quantitative goodwill impairment tests for the Moy Park, Pilgrim's Food Masters, Pilgrim's Mexico, and Pilgrim's U.S. reporting units as of December 31, 2023. Our Pilgrim's U.K. reporting unit reported goodwill of $2.3 million at December 31, 2023. This amount was considered immaterial to warrant quantitative goodwill impairment testing. Based on the outcome of the quantitative tests, management determined that no goodwill impairment existed in the Moy Park, Pilgrim's Food Masters, Pilgrim's Mexico, or Pilgrim's U.S. reporting units as of December 31, 2023.
On July 1, 2024, the Company effectively completed a reorganization within its Europe reportable segment. The previous reporting units were Moy Park, Pilgrim's UK, and Pilgrim's Food Masters. The new reporting units were Fresh Pork/Lamb, Fresh Poultry, Food Service, Meals, and Brands & Snacking. As a result of this reorganization, the Company reassigned assets and liabilities to the applicable reporting units and allocated goodwill using the relative net assets approach. The Company then performed an interim impairment test on the reporting units on both a pre- and post-reorganization basis. There was no impairment recognized as a result of these tests.
On July 28, 2025, the Company modified its previous reorganization within its Europe reportable segment. The previous reporting units were Fresh Pork/Lamb, Fresh Poultry, Food Service, Meals, and Brands & Snacking. The new 2025 reorganization resulted in one plant moving from Fresh Pork/Lamb into Fresh Poultry and combining Meals and Brands & Snacking into one reporting unit called Added Value. The resulting reporting units of this reorganization are Fresh Pork/Lamb, Fresh Poultry, Food Service, and Added Value. As a result of this reorganization, the Company reassigned assets and liabilities to the applicable reporting units and allocated goodwill using the relative net assets approach which is consistent with the reallocation method using in the prior year's reorganization. The Company then assessed if the reorganization was a triggering event that required an interim impairment test. This resulted in an interim impairment test being performed on the Fresh Pork/Lamb reporting unit on both a pre- and post-reorganization basis. There was no impairment recognized as a result of this test.
As of December 28, 2025, the Company assessed qualitative factors to determine if it was necessary to perform quantitative impairment tests related to the carrying amounts of its goodwill. Based on these assessments, the Company determined that it was not necessary to perform quantitative impairment tests related to the carrying amount of its goodwill at that date.
Other intangible assets with indefinite lives are not amortized but are tested for impairment on an annual basis in the fourth quarter of each fiscal year or more frequently if impairment indicators arise. An impairment loss is recognized if the carrying amount of an indefinite-life intangible asset exceeds the estimated fair value of that intangible asset. Management first reviews relevant qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50%) that an intangible asset is impaired. If management determines there is an indication that the carrying amount of the intangible asset might be impaired, a quantitative impairment test is performed. Management has the option to bypass the qualitative assessment for any indefinite-life intangible asset in any period and proceed directly to performing the quantitative impairment test.
The fair value of our indefinite-life intangible assets is calculated principally using a relief-from-royalty valuation approach, which uses significant unobservable inputs as defined by the fair value hierarchy, and is believed to reflect market participant views which would exist in an exit transaction. Under this valuation approach, we make estimates and assumptions about brand sales growth, royalty rates and discount rates based on specific brand sales projections, general economic projections, anticipated future cash flows and marketplace data. We consider indefinite-life intangible assets that have 20% or less excess fair value over carrying amount to have a heightened risk of future impairment.
In 2023, we experienced an increase in long-term treasury rates that management determined could negatively affect discount rates, which are used in estimating the fair value of the reporting units. Therefore, management elected to bypass qualitative assessments for all indefinite-life intangible assets and performed quantitative impairment tests. Based on the outcome of the quantitative tests, management determined that no material impairment existed as of December 28, 2025.
The Company additionally assessed if the July 1, 2024 Pilgrim's Europe reorganization indicated that any carrying amounts of its non-goodwill intangible assets might not be recoverable. The reorganization did not result in any change in business use for any of the intangible assets and therefore, the Company determined no indicators were present that required us to test the recoverability of the asset group-level carrying amounts of its Europe intangible assets at that date.
The Company additionally assessed if the July 28, 2025 modification to the Pilgrim's Europe reorganization indicated that any carrying amounts of its non-goodwill intangible assets might not be recoverable. The reorganization did not result in any change in business use for any of the intangible assets and therefore, the Company determined no indicators were present that required us to test the recoverability of the asset group-level carrying amounts of its Europe intangible assets at that date.
As of December 28, 2025, the Company assessed qualitative factors to determine if it was necessary to perform quantitative impairment tests related to the carrying amounts of its intangible assets not subject to amortization. Based on these assessments, the Company determined that it was not necessary to perform quantitative impairment tests related to the carrying amount of its intangible assets not subject to amortization at that date.
Identifiable intangible assets with definite lives, such as customer relationships and trade names that we expect to use for a limited amount of time, are amortized over their estimated useful lives on a straight-line basis. The useful lives range from 15 to 20 years for trade names and three to 18 years for customer relationships. Identified intangible assets with definite lives are tested for recoverability whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Management assessed if events or changes in circumstances indicated that the aggregate carrying amount of its identified intangible assets with definite lives might not be recoverable and determined that there were no impairment indicators during the years ended December 28, 2025 and December 29, 2024.
Litigation and Contingent Liabilities.We are subject to lawsuits, investigations and other claims related to employment, environmental, product, and other matters. We are required to assess the likelihood of any adverse judgments or outcomes, as well as potential ranges of probable losses, to these matters. We estimate the amount of reserves required for these contingencies when losses are determined to be probable and after considerable analysis of each individual issue. We expense legal costs related to such loss contingencies as they are incurred. With respect to our environmental remediation obligations, the accrual for environmental remediation liabilities is measured on an undiscounted basis. These reserves may change in the future due to changes in our assumptions, the effectiveness of strategies, or other factors beyond our control.
Income Taxes.We follow provisions under the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 740, Income Taxes, with regard to members of a group that file a consolidated tax return but issue separate financial statements. We file certain state unitary returns with JBS USA Food Company Holdings. Our income tax expense is computed using the separate return method. The provision for income taxes has been determined using the asset and liability approach of accounting for income taxes. For the unitary states, we have an obligation to make tax payments to JBS USA Food Company Holdings for our share of the unitary taxable income, which is included in taxes payable in our Consolidated Balance Sheets. Under this approach, deferred income taxes reflect the net tax effect of temporary differences between the book and tax bases of recorded assets and liabilities, net operating losses and tax credit carry forwards. The amount of deferred tax on these temporary differences is determined using the tax rates expected to apply to the period when the asset is realized or the liability is settled, as applicable, based on the tax rates and laws in the respective tax
jurisdiction enacted as of the balance sheet date. We recognize potential interest and penalties related to income tax positions as a part of the income tax provision.
Defined Benefit Pension and Other Postretirement Plans. We sponsor two qualified defined benefit pension plans, two nonqualified defined benefit retirement plans, and one defined benefit postretirement life insurance plan. Some of these plans are administered by a board of trustees made up of management within the participating companies and representatives from associated labor groups while others are administered by an investment committee made up of management from the participating company. We use independent third-party actuaries to assist in determining our pension obligations and net periodic benefit cost. We, along with the actuaries, review assumptions including estimates of the present value of projected future pension payments to participants. We accumulate and amortize the impact of actuarial gains and losses over future periods.
Our defined benefit pension and other postretirement plans contain uncertainties because it requires management to make assumptions and apply judgments. The key assumptions made in developing key estimates include discount rates, expected returns on plan assets, retirement rates, and mortality. These assumptions can have a material impact on the funded status and the net periodic benefit cost. The discount rates reflect yields on high-quality corporate bonds as of the measurement date and were compared to the effective discount rate determined by discounting plan cash flows using the 12/26/2025 Empower Above Mean Curve. All other assumptions reflect estimates of future experience and considering relevant historical information, such as credible plan experience, from representative populations and relevant plan characteristics. The mortality assumption reflects experience from representative populations, based on the Pri-2012 Private Retirement Plans Mortality Table Report issued by the Society of Actuaries ("SOA") in October 2019 and the Mortality Improvement Scale MP-2021 Report issued by the SOA in October 2021. It is reasonable to expect that changes in external factors will result in changes to the assumptions noted above that are used to measure pension obligations and net periodic benefit cost in future periods.
During 2024, we terminated our Pilgrim's Pride Pension Plan for Legacy Gold Kist ("LGK Plan") and our Pilgrim's Pride Retirement Plan for Union Employees ("Union Plan"). The termination included settling all outstanding obligations through a combination of lump-sum payouts to participants who elected to receive one and through a purchase of annuities for the participants who did not elect a lump-sum payout. In order to fund the lump-sum payments and purchases of nonparticipating annuity contracts, all invested assets within each of the two plans were liquidated. The remaining assets within the two plans at the end of 2024 represented an excess of the liquidated assets over the amount of outstanding obligations at time of termination. These assets were split between an amount transferred to our qualifying 401(k) retirement plan and an amount reverted to the Company less applicable excise taxes in Q1 2025.
We evaluated the termination of our LGK and Union Plans to confirm if this transaction met the definition of a settlement as defined under ASC Topic 715 Compensation-Retirement Benefits, which defines a settlement as "a transaction that is an irrevocable action, relieves the employer (or the plan) of primary responsibility for a pension or postretirement obligation, and eliminates significant risks related to the obligation and the assets used to effect the settlement." The termination of our LGK and Union Plans was an irrevocable action that relieved us from the pension obligations through the payment of lump-sum payouts and nonparticipating annuity purchases using the liquidated assets of the plans. Additionally, through the termination and settlement of all obligations, we eliminated the significant risks associated with maintaining the obligations and assets. Through this analysis, it was determined we met the criteria of a full settlement of the pension obligations, we applied settlement accounting which required us to recognize the net loss remaining in accumulated other comprehensive loss at the time of settlement as a net loss in Miscellaneous, neton the Statement of Income for the year ended December 29, 2024.
Business Combination Accounting. We allocate the consideration of an acquired business to its identifiable assets and liabilities based on estimated fair values. The excess of the consideration over the amount allocated to the assets and liabilities, if any, is recorded to goodwill. We use all available information to estimate fair values. We use various models to determine the value of assets acquired and liabilities assumed such as net realizable value to value inventory, cost method and market approach to value property, relief-from-royalty and multi-period excess earnings to value intangibles and discounted cash flow to value goodwill. We typically engage third-party valuation specialists to assist in the fair value determination of tangible long-lived assets and intangible assets other than goodwill. The fair value of acquired inventories is typically determined by extending physical counts of the inventories taken at or near the acquisition date to market pricing in effect for such inventories at or near the acquisition date. The carrying values of acquired receivables and accounts payable have historically approximated their fair values as of the business combination date. As necessary, we may engage third-party specialists to assist in the estimation of fair value for certain liabilities. We adjust the preliminary acquisition accounting, as necessary, typically up to one year after the acquisition closing date for those items that existed at the acquisition date and were provisionally accounted for at that time, as we obtain more information regarding asset valuations and liabilities assumed.
Our acquisition accounting methodology contains uncertainties because it requires management to make assumptions and to apply judgment to estimate the fair value of acquired assets and liabilities. Management estimates the fair value of assets and liabilities based upon quoted market prices, the carrying value of the acquired assets and widely accepted valuation
techniques, including discounted cash flows and market multiple analyses. Unanticipated events or circumstances may occur which could affect the accuracy of our fair value estimates, including changes in assumptions regarding industry economic factors and business strategies. If actual results are materially different than the assumptions used to determine fair value of the assets and liabilities acquired through a business combination, it is possible that adjustments to the carrying values of such assets and liabilities will have an impact on our net earnings.
Reconciliation of Net Income to EBITDA, Adjusted EBITDA and Adjusted Net Income
"EBITDA" is defined as the sum of net income (loss) 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) foreign currency transaction losses (gains), (2) costs related to litigation settlements, (3) restructuring activities losses, (4) loss on settlement of pension from plan termination, (5) inventory write-down as a result of hurricane, and (6) net income attributable to noncontrolling interest. "Adjusted Net Income" is calculated by adding to Net Income certain items of expense and deducting from Net Income certain items of income that we believe are not indicative of our ongoing performance consisting of: items (1) through (6) above and (7) gain on early extinguishment of debt. 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.
| Reconciliation of Adjusted EBITDA | ||||||||||||||
| (Unaudited) | ||||||||||||||
| Year Ended | ||||||||||||||
| December 28, 2025 | December 29, 2024 | |||||||||||||
| Net income | $ | 1,083,344 | $ | 1,087,223 | ||||||||||
| Add: | ||||||||||||||
| Interest expense, net | 110,270 | 88,509 | ||||||||||||
| Income tax expense | 418,794 | 325,046 | ||||||||||||
| Depreciation and amortization | 456,157 | 433,622 | ||||||||||||
| EBITDA | 2,068,565 | 1,934,400 | ||||||||||||
| Add: | ||||||||||||||
| Foreign currency transaction losses (gains) | 6,777 | (10,025) | ||||||||||||
| Litigation settlements expense | 162,659 | 167,228 | ||||||||||||
| Restructuring activities losses | 31,354 | 93,388 | ||||||||||||
| Loss on settlement of pension from plan termination | - | 21,649 | ||||||||||||
| Inventory write-down as a result of hurricane | - | 8,075 | ||||||||||||
| Minus: | ||||||||||||||
| Net income attributable to noncontrolling interest | 985 | 785 | ||||||||||||
| Adjusted EBITDA | $ | 2,268,370 | $ | 2,213,930 | ||||||||||
| Reconciliation of Adjusted Net Income | |||||||||||
| (Unaudited) | |||||||||||
| Year Ended | |||||||||||
|
December 28, 2025 |
December 29, 2024 |
||||||||||
|
Net income attributable to Pilgrim's
|
$ | 1,082,359 | $ | 1,086,438 | |||||||
| Add: | |||||||||||
| Foreign currency transaction losses (gains) | 6,777 | (10,025) | |||||||||
| Litigation settlements | 162,659 | 167,228 | |||||||||
| Restructuring activities losses | 31,354 | 93,388 | |||||||||
| Loss on settlement of pension from plan termination | - | 21,649 | |||||||||
| Inventory write-down as a result of hurricane | - | 8,075 | |||||||||
|
Gain on early extinguishment of debt recognized as a component of interest expense(a)
|
- | (11,211) | |||||||||
| Adjusted net income attributable to Pilgrim's before tax impact of adjustments | 1,283,149 | 1,355,542 | |||||||||
|
Net tax benefit of adjustments(b)
|
(49,288) | (66,057) | |||||||||
|
Adjusted net income attributable to Pilgrim's
|
$ | 1,233,861 | $ | 1,289,485 | |||||||
| Weighted average diluted shares of common stock outstanding | 238,449 | 237,800 | |||||||||
|
Adjusted net income attributable to Pilgrim's per common diluted share
|
$ | 5.17 | $ | 5.42 | |||||||
(a)The gain on early extinguishment of debt recognized as a component of interest expense in 2024 was due to the bond repurchases.
(b)Net tax impact of adjustments represents the tax impact of all adjustments shown above.
Pilgrim's Pride Corporation published this content on February 12, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on February 12, 2026 at 12:29 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]