Annual Report for Fiscal Year Ending December 27, 2025 (Form 10-K)

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. In addition to historical information, the following discussion and other parts of this report contain forward-looking information that involves risks and uncertainties. Our actual results could differ materially from those anticipated by such forward-looking information due to the factors discussed under Item 1A, Risk Factors, Disclosure Regarding Forward-Looking Statements and elsewhere in this report.

Overview

USPB was formed as a closed marketing cooperative on July 1, 1996. Its mission is to increase the quality of beef and long-term profitability of cattle producers by creating a fully integrated producer-owned beef processing system that is a global supplier of high quality, value-added beef products responsive to consumer desires. USPB operates an integrated cattle processing and beef marketing enterprise where consumer and processor demands and requirements are implemented through changes in genetics, feeding, and management. USPB's unitholders benefit from its supplier alliance with NBP through (i) premiums received in excess of cash market prices for higher quality cattle, (ii) allocations of profits and potential distributions, (iii) potential unit price appreciation, and (iv) information that permits unitholders to make informed production decisions.

Effective August 29, 2004, the cooperative restructured into a limited liability company (LLC) under Delaware law (the Conversion). The business of USPB, the cooperative, is being continued in the LLC form of business organization.

As USPB filed a registration statement with the Securities and Exchange Commission (SEC) in connection with its 2004 Conversion from the cooperative form of business organization to an LLC structure, USPB is subject to the informational requirements of the Securities Exchange Act of 1934 (Exchange Act), although USPB is not required to be registered under the Exchange Act. Accordingly, USPB files periodic reports and other information with the. Such reports and other information may be obtained by visiting the Public Reference Room of the SEC at 100 F Street, N.E., Washington, D.C. 20549 or by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet site (www.sec.gov) that contains reports and information statements and other information regarding USPB and other issuers that file electronically.

On December 30, 2011, USPB sold the majority of its membership interests in NBP to Leucadia National Corporation. Following the sale, USPB owned 15.0729% of NBP's membership interests.

On November 29, 2019, Jefferies (formerly "Leucadia National Corporation") sold its remaining ownership interest in NBP to a combination of NBM US Holdings, Inc., a Delaware corporation owned by Marfrig Global Foods S.A.; NBPCo Holdings, LLC; and TMK Holdings, LLC. USPB elected to not participate in the acquisition and, as a result, USPB's ownership interest in NBP remained at 15.0729%.

USPB's investment in NBP is accounted for using the equity method of accounting as the Company has the ability to exercise significant influence but does not have financial or operational control. NBP's financial statements and footnotes are attached to USPB's 10-K. As a result of its investment in NBP, substantially all of USPB's income comes from its proportionate share of NBP's net income.

Products and Production

USPB provides an integrated cattle production, processing and marketing system for the benefit of its unitholders and associates. As the basis of that system, USPB's Class A unitholders 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 (see Cattle Delivery Arrangements). 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.

NBP is one of the largest beef processing companies in the U.S., accounting for approximately 14% of fed cattle slaughter in the U.S. NBP processes and markets fresh and chilled boxed beef, ground beef, beef by-products, consumer-ready beef and pork, and wet blue leather for domestic and international markets. Based in Kansas City, Missouri, NBP had approximately 10,000 employees at December 27, 2025 and generated total revenues of $13.8 billion in 2025.

The largest part of NBP's revenue is generated from the sale of boxed beef and beef by-products. NBP also generates revenues from value-added production of consumer-ready products. In addition, NBP operates one of the largest hide tanning facilities in the world, selling wet blue leather to tanners that produce finished leather for the automotive, luxury goods, apparel and furniture industries. Other streams of revenue include sales of portioned beef and other products directly to consumers through internet, direct mail and direct response television by its subsidiary, Kansas City Steak Company, LLC, and service revenues generated by National Carriers, Inc., a wholly-owned subsidiary that transports livestock and refrigerated products for NBP and a variety of other customers. NBP's profitability typically fluctuates seasonally as well as cyclically, based on the availability of fed cattle and demand for its products.

Critical Accounting Policies and Estimates

The following discussion and analysis of financial condition and results of operations are based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On an ongoing basis, management evaluates and revises its estimates based on historical experience and other assumptions we believe are reasonable under the circumstances. Actual results may differ from those estimates. Changes in our estimates could materially affect our results of operations and financial condition for any particular period. We believe USPB's most critical accounting policy is as follows:

Accounting for Investment in NBP. On December 30, 2011, USPB sold the majority of its ownership interest in NBP to Leucadia National Corporation. On that date, USPB's investment in NBP was measured at fair value and has since been carried under the equity method of accounting. Operating losses, economic and industry events, and a variety of other factors may result in a decrease in the value of the investment, which is other than temporary. Such potential other than temporary decreases in value would cause the Company to record an impairment charge, which may have an impact on the trading values of USPB's Class A and Class B units.

Results of Operations

The following table presents the statements of operations data for USPB for the periods indicated:

		52 weeks ended				52 weeks ended				52 weeks ended
		December 27, 2025				December 28, 2024				December 30, 2023
Net sales		$	-			$	-			$	-
Costs and expenses:
Cost of sales			-				-				-
Selling, general, and administrative expenses			3,399				3,268				3,525
Depreciation and amortization			14				13				20
Total costs and expenses			3,413				3,281				3,545
Operating loss			(3,413	)			(3,281	)			(3,545	)
Other income:
Interest income			2,185				3,001				3,238
Dividend income			7				-				-
Interest expense			-				-				(1	)
Equity in net (loss) income of National Beef Packing Company, LLC			(19,768	)			6,784				41,171
Other, net			1,167				1,010				713
Total other income (loss)			(16,409	)			10,795				45,121
Net income (loss)		$	(19,822	)		$	7,514			$	41,576
Income (loss) per unit:
Basic and diluted
Class A units		$	(2.70	)		$	1.02			$	5.65
Class B units		$	(23.62	)		$	8.95			$	49.54
Outstanding weighted-average Class A and Class B units:
Basic and diluted
Class A units			735,385				735,385				735,385
Class B units			755,385				755,385				755,385

Fiscal Year Ended December 27, 2025 compared to December 28, 2024

Net Sales. There were no sales during the fifty-two week period ended December 27, 2025 and the fifty-two week period ended December 28, 2024.

Cost of Sales. There were no cost of sales during the fifty-two week period ended December 27, 2025 and the fifty-two week period ended December 28, 2024.

Selling, General and Administrative Expenses. Selling, general and administrative expenses were approximately $3.4 million for the fifty-two week period ended December 27, 2025, compared to approximately $3.3 million for the fifty-two week period ended December 28, 2024, an increase of approximately $0.1 million. The increase is primarily due to an increase in salaries.

Operating Loss. Operating loss was approximately $3.4 million for the fifty-two week period ended December 27, 2025 compared to approximately $3.3 million for the fifty-two week period ended December 28, 2024, an increase of approximately $0.1 million. The increase was primarily due to an increase in salaries discussed above in Selling, General and Administrative Expenses.

Interest Income. Interest income was $2.2 million during the fifty-two week period ended December 27, 2025 and $3.0 million in the fifty-two week period ended December 28, 2024, a decrease of approximately $0.8 million. The decrease was due to lower cash balances.

Equity in Net Income (Loss) of National Beef Packing Company, LLC. Equity in NBP net loss was $19.8 million for the fifty-two week period ended December 27, 2025 compared to net income of $6.8 million for the fifty-two week period ended December 28, 2024, a decrease of approximately $26.6 million. The combined effects of lower gross margins per head and higher costs led to lower profitability in 2025 as compared to 2024. USPB carries its 15.0729% investment in NBP under the equity method of accounting.

Other, net. Other income was $1.2 million for the fifty-two week period ended December 27, 2025 compared to $1.0 million for the fifty-two week period ended December 28, 2024. Other, net is primarily due to delivery right lease income on company-owned delivery rights.

Income Tax Expense. USPB is structured as an LLC and is therefore not subject to income taxes at the company level. See Note 2. "Basis of Presentation and Accounting Policies" in USPB's consolidated financial statements included in Item 8. "Financial Statements and Supplementary Data" for further information.

Net (Income) Loss. Net loss for the fifty-two week period ended December 27, 2025 was approximately $19.8 million compared to the net income of approximately $7.5 million for the fifty-two week period ended December 28, 2024, a decrease of approximately $27.3 million. The decrease was due to lower gross margins per head and higher costs at NBP.

Fiscal Year Ended December 28, 2024 compared to December 30, 2023

Net Sales. There were no sales during the fifty-two week period ended December 28, 2024 and the fifty-two week period ended December 30, 2023.

Cost of Sales. There were no cost of sales during the fifty-two week period ended December 28, 2024 and the fifty-two week period ended December 30, 2023.

Selling, General and Administrative Expenses. Selling, general and administrative expenses were approximately $3.3 million for the fifty-two week period ended December 28, 2024 compared to approximately $3.5 million for the fifty-two week period ended December 30, 2023, a decrease of approximately $0.2 million. The decrease is primarily due to lower bonus expense, which decreased primarily as a result of lower net income.

Operating Loss. Operating loss was approximately $3.3 million for the fifty-two week period ended December 28, 2024 compared to approximately $3.5 million for the fifty-two week period ended December 30, 2023, a decrease of approximately $.0.2 million. The decrease was due to the decrease in Selling, General and Administrative Expenses discussed above.

Interest Income. Interest income was $3.0 million during the fifty-two week period ended December 28, 2024 and $3.2 million in the fifty-two week period ended December 31, 2023, a decrease of approximately $0.2 million. The decrease was due to lower interest rates.

Equity in Net Income (Loss) of National Beef Packing Company, LLC. Equity in NBP income was $6.8 million for the fifty-two week period ended December 28, 2024 compared to $41.2 million for the fifty-two week period ended December 30, 2023, a decrease of approximately $34.4 million. The combined effects of lower gross margins per head and higher costs led to lower profitability in 2024 as compared to 2023. USPB carries its 15.0729% investment in NBP under the equity method of accounting.

Other, net. Other income was $1.0 million for the fifty-two week period ended December 28, 2024 compared to $0.7 million for the fifty-two week period ended December 30, 2023. Other, net is primarily due to delivery right lease income on company-owned delivery rights.

Income Tax Expense. USPB is structured as an LLC and is therefore not subject to income taxes at the company level. See Note 2. "Basis of Presentation and Accounting Policies" in USPB's consolidated financial statements included in Item 8. "Financial Statements and Supplementary Data".

Net Income. Net income for the fifty-two week period ended December 28, 2024 was approximately $7.5 million compared to approximately $41.6 million for the fifty-two weeks ended December 30, 2023, a decrease of approximately $34.1 million. The decrease was due to substantially lower net income at NBP.

Liquidity and Capital Resources

As of December 27, 2025, we had net working capital (the excess of current assets over current liabilities) of approximately $36.2 million, which included cash and cash equivalents of $14.1 million. As of December 28, 2024, we had net working capital of approximately $67.5 million, which included cash and cash equivalents of $39.0 million. Our primary sources of liquidity for fiscal years 2025 and 2024 were cash, and available borrowings under the Credit Agreement, Amended and Restated Revolving Term Promissory and Affirmation of Pledge Agreement with CoBank, ACB (CoBank) described below under "CoBank Debt." Our principal use of cash is working capital.

USPB's material contractual obligations include non-compete payments to be made to its Chief Executive Officer when he retires and payments for leased office space, the present value of which are approximately $0.4 million and $0.2 million, respectively.

CoBank Debt

On June 24, 2025, USPB and CoBank entered into an Amended and Restated Revolving Term Promissory Note (the "A&R Note"). The A&R Note amended and restated the Amended and Restated Revolving Term Promissory Note, dated July 13, 2020, issued by USPB to CoBank, which had a scheduled maturity of June 30, 2025. The A&R Note was issued under that certain Credit Agreement, dated July 13, 2020, between USPB and CoBank and is secured by an Affirmation of Pledge Agreement, dated July 13, 2020, providing CoBank with a first-priority security interest in USPB's membership interests in, and distributions from, NBP.

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).

On July 24, 2025, USPB and CoBank entered into an Amendment to the A&R Note (the "Amendment"). 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 December 27, 2025.

USPB was in compliance with the financial covenant under its Credit Agreement as of December 27, 2025.

Cash Flows

		52 weeks ended				52 weeks ended				52 weeks ended
		December 27, 2025				December 28, 2024				December 30, 2023
Net cash (used in) provided by:		(thousands of dollars)
Operating activities		$	(489	)		$	754			$	54,142
Investing activities			(24,657	)			(10,224	)			(20,009	)
Financing activities			190				(10,003	)			(73,384	)
Net decrease in cash and cash equivalents		$	(24,956	)		$	(19,473	)		$	(39,251	)

Operating Activities

Net cash used in operating activities was $0.5 million in fiscal year 2025 as compared to net cash provided by operating activities of $0.8 million in fiscal year 2024. The $1.2 million decrease was primarily due to losses and changes in working capital in the current period.

Net cash provided by operating activities was $0.8 million in fiscal year 2024 as compared to $54.1 million in fiscal year 2023. The $53.3 million decrease was primarily due to decreased distributions received from NBP that were classified as a distribution from operating activities.

Investing Activities

Net cash used in investing activities was approximately $24.7 million in fiscal year 2025 compared to $10.2 in fiscal year 2024. The change was primarily due to the purchase of an additional 130.4415 units of membership interests of NBP for approximately $30.1 million and changes in investments of certificate of deposits and treasury securities in 2025. For more information on the purchase of membership interest units in NBP, see Note 2. "Basis of Presentation and Accounting Policies" in USPB's consolidated financial statements included in Item 8. "Financial Statements and Supplementary Data".

Net cash used in investing activities was $10.2 million in fiscal year 2024 compared to $20.0 million in fiscal year 2023. The change was due to an investment in certificates of deposit at U.S. Bank in 2024.

Financing Activities

Net cash provided by financing activities was $0.2 million in fiscal year 2025 as compared to net cash used of $10.0 million in fiscal year 2024. The $10.2 million increase was due to not paying distributions to members in fiscal year 2025.

Net cash used in financing activities was $10.0 million in fiscal year 2024 as compared to $73.4 million in fiscal year 2023. The $63.4 million decrease was due to a decrease in distributions to members in fiscal year 2024, compared to fiscal year 2023.

USPB believes cash, cash flows from operating activities, and available borrowings under the Credit Agreement will be sufficient to support its working capital and cash flow requirements.

Off-Balance Sheet Arrangements

As of December 27, 2025 and December 28, 2024, we did not have any material off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

Inflation

We believe our results of operations are not materially affected by moderate changes in the inflation rate. Inflation and changing prices did not have a material effect on our operations in fiscal years 2025 and 2024. Severe increases in inflation, however, could affect the global and U.S. economies and could have an adverse effect on our business, financial condition and results of operations.

Seasonality and Fluctuations in Operating Results

The Company's operating results are influenced by seasonal factors in the beef industry. These factors affect the price NBP pays for livestock as well as the ultimate price at which NBP sells its products. The seasonal demand for beef products is highest in the summer and spring months as weather patterns permit more outdoor activities and there is an increased demand for higher value items that are grilled, such as steaks. Both live cattle prices and boxed beef prices tend to be at seasonal highs during the summer and fall. Because of higher consumption, more favorable growing conditions and the housing of animals in feedlots for the winter months, there are generally more cattle available in the summer and fall.