Earnings Call Transcript - JBS Q4 2025

Operator, Operator

Good morning, and welcome to JBS Fourth Quarter and the Year of 2025 Results Conference Call. As a reminder, this conference is being recorded. Any statements made during this conference call in connection with the company's business outlook, projections, operating and financial targets and potential growth should be understood as forward-looking statements based on the company's management expectations in relation to the future of JBS. Such expectations are highly dependent on industry and market conditions, and therefore, are subject to change. Present with us today, Gilberto Tomazoni, Global CEO of JBS; Guilherme Cavalcanti, Global CFO of JBS; Wesley Batista Filho, CEO of JBS USA; and Christiane Assis, Investor Relations Director. Now I'll turn the conference over to Gilberto Tomazoni, Global CEO of JBS. Mr. Tomazoni, you may begin your presentation.

Gilberto Tomazoni, Global CEO

Good morning, everyone. Thank you for joining us today. We closed 2025 with a consistent performance and our continued progress in building a stronger, more efficient company. In the fourth quarter, we recorded revenue of $23 billion with an EBITDA margin of 17.4%. For the full year, revenue reached $86 billion, a company record, with a consolidated EBITDA margin of 7.9%. This scale and the diversity of our multi-protein and multi-geography platform remain our greatest strength, allowing JBS to navigate industry cycles or any disruption while capturing structural growth in protein demand. In both the fourth quarter and the full year, JBS delivered record sales with positive consolidated results, reflecting the resiliency of our global platform. Net income totaled $415 million in the quarter and $2 billion for the year, representing year-over-year growth of 15%, with earnings per share of $1.89 for the year. Free cash flow was $990 million in the quarter and $400 million for the year. Return on equity reached 25%, and return on invested capital was 17%. Our leverage ratio at the end of the fourth quarter was 2.39x, in line with our long-term target. We also maintained a very strong debt profile with an average debt maturity of approximately 15 years and an average cost of debt of around 5.7%. No significant maturities in the short term. These strong results reflect our consistent performance in a year marked by a challenging environment in some global protein markets. In the United States, the cattle cycle remains under pressure with limited supply and high cost. This is expected to continue in the coming quarters. Despite this environment in the U.S. beef sector, our global results remained positive reflecting the resilience of our diversified platforms. Australia was one of the highlights of the year, with strong EBITDA growth and margin expansion as well as top-line growth of 30% year-over-year in the fourth quarter. Our Australian business benefited from the current imbalance between global supply and demand of beef, combined with strong execution and solid profitability, reinforcing the role of the region in balancing our global results. In Brazil, the beef business is operating within historical margin ranges supported by strong export and steady domestic demand. The fourth quarter was particularly strong with top-line sales growing 26% year-over-year. At the same time, livestock productivity continued to improve. The country recorded the highest beef processing volume in its history at around 42 million heads. This reflects total gains in production and reinforces Brazil's growing role in global supply. In this context, Friboi delivered solid results with growth in both export and domestic sales volumes and increases in key international markets, including Mexico, Europe and the United States. The business also strengthened its presence in Brazil; programs such as Friboi+ continue to deepen client relationships and support growth in the domestic market. At Seara, we continue to advance our strategy by strengthening brands and expanding high value-added products. In recent years, Seara has expanded its portfolio, entered new categories and strengthened connections with consumers. The business is now in a strong moment in brand perception supported by innovation, execution and a more differentiated product mix. In the United States, our chicken business continued to benefit from strong demand in both retail and food service. Pilgrim's delivered volume growth above the industry average in segments such as case-ready and small bird. The big bird segment also improved performance through better yields, mix and cost efficiency. Brand diversification continues to progress and Just Bare surpassed $1 billion in retail sales, reflecting the strength of our brand strategy and the significant opportunity we see to capture further growth across our modern high-value prepared foods portfolio. In U.S. pork, performance remained stable and the business closed the year with solid margins, supported by disciplined operations and balanced supply and demand. Also, in 2025, we completed the dual-listed process, a milestone in the company's history, and became an NYSE-listed company and strengthened our capital markets position. Since then, we have seen a clear improvement in how the market values the company. Our multiple expanded reflecting greater visibility and investor confidence, although we still trade at a discount to our global peers. Liquidity has increased significantly with average trading volume up approximately 3x compared to prior listing levels. At the same time, our shareholder base has become more global and diversified. U.S.-based investors now represent nearly 70% of the company's free float. Overall, this change reinforced our position in global capital markets and supports the next phase of growth. Global protein consumption continues to grow, supported by demographics, health awareness and demand for balanced diets. JBS is well positioned to meet this demand across markets and channels. Our structure remains clear. We will continue to strengthen our brands, expand our value-added portfolio and develop solutions that make protein more accessible and more convenient in everyday life. Thank you again for joining us today. And now I will turn the call over to Guilherme, who will walk through our financial results in more detail.

Guilherme Cavalcanti, Global CFO

Thank you, Tomazoni. I will go through the operational and financial highlights of the fourth quarter and fiscal year 2025. Net sales reached a record $23 billion in the quarter and $86 billion in 2025. Adjusted EBITDA in IFRS totaled $1.7 billion, which represents a margin of 7.4% in the quarter and $6.8 billion in 2025 with a margin of 7.9%. Adjusted EBITDA in U.S. GAAP totaled $1.5 billion, representing a margin of 6.5% in the quarter and $5.8 billion in 2025 with a margin of 6.7%. Adjusted operating income was $1.1 billion with a margin of 4.7% in IFRS and 4.8% in U.S. GAAP in the fourth quarter. In 2025, adjusted operating income was $4.5 billion in IFRS with a margin of 5.2% and $4.4 billion in U.S. GAAP with a margin of 5.1%. Net income was $415 million in the quarter and earnings per share of $0.39 in the quarter. For the year, net income was $2 billion and earnings per share of $1.89. Excluding nonrecurring items, adjusted net income would be $500 million and earnings per share of $0.47 in the quarter and for 2025, $2.2 billion with earnings per share of $2.10. Finally, return on equity was 25% and return on invested capital was 17%. Free cash flow in fourth quarter 2025 reached $990 million compared to $906 million in the fourth quarter of 2024. The main positive drivers were related to deferred livestock payments, particularly in the U.S., and inventories, reflecting strong revenue growth during the period. Despite $850 million in working capital consumption in 2025, the cash conversion cycle remained resilient and in line with prior year's levels. For the full year, free cash flow totaled $400 million. When we revisited the free cash flow breakeven IFRS EBITDA exercise for 2025, the initial estimated EBITDA to reach breakeven was around $6 billion. However, considering actual results, the EBITDA breakeven would be approximately $300 million lower. The main difference came from working capital, mainly reflecting the deferred livestock effect and a decrease in inventories. On the other hand, CapEx came in about $100 million above estimates as we executed $1.1 billion in expansion CapEx during the period. We also saw a higher number of biological assets, largely driven by increasing livestock volumes and prices, while remaining items came in broadly in line with our estimates. Finally, the higher cash tax paid in 2025 were mainly related to tax payments associated with the results of 2024. For 2026 and for the purpose of the EBITDA cash flow breakeven exercise, we can assume capital expenditures of $2.4 billion of which $1.3 billion is for expansion and $1.1 billion is for maintenance; interest expenses of $1.15 billion; leasing expenses of $500 million in a consolidated effective tax rate of 25%. Just to highlight, it is still too early to estimate the variation in working capital and biological assets as there are many factors beyond our control such as grain and livestock prices. However, if you consider the same amount of working capital consumption and biological assets as in 2025, EBITDA cash flow breakeven would be $5.7 billion, in line with 2025 numbers mentioned above. On Page 24, we present our historical free cash flow breakdown to help analysts forecast. Our leverage ended the year at 2.39x, in line with our long-term target of keeping net debt to EBITDA between 2 and 3x. In 2025, we also strengthened our balance sheet by extending our debt maturity profile, reaching an average debt term of approximately 15 years and an average cost of 5.7%. We have no significant debt maturities until 2031. The coupons of our debt are below treasury until and including 2032 maturities with 32% of our gross debt maturing beyond 2052 and approximately 90% of total debt is at fixed rates. It's worth mentioning that despite an 8% increase in net debt in the last 3 years, net financial expenses remained at roughly $1.1 billion per year. Our $3.5 billion in revolving credit lines and $4.8 billion in available cash provide us flexibility to continue executing our expansion CapEx, value-creation projects and shareholder returns while maintaining a healthy and robust balance sheet. For this reason, and given our strong cash position and leverage, we announced last night the payment of $1 per share in dividends to be paid on June 17. With that in mind, I would like to turn the call to the operator for the question-and-answer session.

Operator, Operator

We will now begin the question-and-answer session. We have our first question from Lucas Ferreira with JPMorgan. Mr. Ferreira, you may go ahead.

Lucas Ferreira, Analyst, JPMorgan

I have two questions. The first one: can you give us an update on the business environment for Pilgrim's, especially in the U.S.? There were some renovation works at the Russellville plant — wondering if those are completed, if operations remain fine, and if this could be an issue at all for the quarter. Also, any update you see in the market regarding supply? It seems that we are in an environment of a bit more supply than the first quarter of last year. How robust is the market and how balanced is the market today? The second question is on the U.S. beef operations. We saw a pretty steep recovery in beef spreads over the last few weeks. To what do you attribute this? Obviously demand remains strong, but there have been some capacity rationalizations in the industry. Any updates on the Greeley situation would also be welcome with regards to how that impacts your business and how you see the market for U.S. beef for now?

Gilberto Tomazoni, Global CEO

Lucas, thank you for your question. I'll start by talking about Pilgrim's and after that Wesley will give us the perspective on U.S. beef. As you mentioned, we completed the transformation of three Pilgrim's plants. One was converted from big bird production to case-ready because we have strong demand in retail, and this strategy will support retail growth for chicken. The other two plants were adapted to produce the raw material for our prepared foods business. Previously, we sold breast meat to the market because we were not able to deliver the appropriate cuts that our prepared foods required. Now we invested in machines and we no longer need to sell and rebuy raw material; we deliver directly to our prepared foods business. This allows us to capture the margin that previously went to third parties, maintain better quality and be able to react quickly in case of increasing demand. Regarding supply and demand: demand for chicken in the U.S. is not just domestic — it's global and very high across all channels. If you consider chicken placements at the beginning of the year, they grew around 3% and prices for chicken breast increased, which shows a balance between supply and demand because placements grew and prices rose. The USDA forecast for this year is 2% growth in chicken supply. If placements grow 3% and market prices increase, we can anticipate that, if the USDA forecast of 2% holds, it will be a very good year for Pilgrim's. There are two components: the verticalization of our raw material production, which gives us more margin in prepared foods; and the growth of our prepared foods business. Just Bare has strong demand, and we are investing in new factories. We see that this year will be a good year for Pilgrim's.

Wesley Mendonça Filho, CEO, JBS USA

Lucas, the fourth quarter was a pretty good quarter given the market conditions on the beef side. It's common knowledge that the beginning of the first quarter has been really tough — probably the most challenging we've seen in this industry in a very long time. I don't recall another time with such negative spreads for January and February. Current data shows March is looking markedly better than January and February, but we'll see how it develops. One of the things that has happened with very low cattle availability and low processing volumes is that the market has become more volatile than we're used to. You see big fluctuations in cutout values and cattle prices; this is an effect of low volumes. Small changes in volume have big impacts and increase volatility. Regarding a strike, it's difficult to forecast. We have a very good deal in front of the local union. We actually just did a national deal with 14 other locals in red meat — a historic union-company deal. We have a variable pension plan; it's the first time in a long time the industry has introduced a pension-type benefit like this for team members. It's one of the most innovative deals in the industry for some time. We hope this gets resolved as soon as possible.

Operator, Operator

We have our next question from Gustavo Troyano with Itaú. Mr. Troyano, you may go ahead.

Gustavo Troyano, Analyst, Itaú

My first question is on Seara and the chicken supply in Brazil. Discussions on supply should always be relative to demand, which seems quite strong. Can you share updated thoughts on the balance between chicken supply in Brazil and what to expect moving into the second quarter of 2026? Are you expecting chicken supply increases to outpace demand in a way that could compress profitability? Second, back to U.S. beef: would you say the current balance between slaughter capacity in the U.S., demand and cattle availability will imply capacity adjustments going forward from other players or even from you? What could you say on further capacity adjustments given current cattle availability constraints?

Gilberto Tomazoni, Global CEO

Thank you, Gustavo. I'll address chicken in Brazil and then Wesley will add comments on U.S. beef. For chicken in Brazil, the balance between supply and demand is not entirely clear. On one hand, we have strong and growing international demand and new cases of avian influenza in several competitor countries, which could boost demand for Brazilian chicken. On the other hand, chick placements were up 2% to 3% through February, which is a reasonable limit for growth in Brazil. There is news that breeder flock size has increased. It's difficult to predict how production will unfold and whether it will exceed market demand. However, the industry has many tools to manage this: exporting more fertile eggs, reducing the average age of breeder stock, reducing bird weights, among others. So far the market looks balanced and international demand is strong. In our case, we are focused on strengthening our export leadership and enhancing our value-add mix in domestic market. That's our strategy. We are well-positioned internationally and domestically, and we continue to innovate in product presentation to consumers.

Wesley Mendonça Filho, CEO, JBS USA

Gustavo, on U.S. beef and capacity adjustments: it's difficult to predict what competitors will do. There was more capacity in the U.S. a few years ago — four years ago the industry processed about 33 million head; now we're around 27 million. That data itself shows there is excess capacity relative to current processing. But it's very difficult for me to comment on what other companies will do.

Operator, Operator

Our next question comes from Lucas Mussi with Morgan Stanley. Mr. Mussi, you may go ahead.

Lucas Mussi, Analyst, Morgan Stanley

First, related to Brazil beef and Australia: could you talk about how you're thinking about the export environment in the context of Brazil and Australia eventually reaching the limit of the export quota to China? How are you thinking about how volumes are going to behave, perhaps in the second half of this year? What are your options and potential impacts to the business divisions? Second, Guilherme, can you share more details on the derivatives line on your P&L that went a bit lower this quarter? And on working capital expectations for the year: looking at where commodity futures are today for grains for livestock, would you assess working capital to be a little below 2025, in line with 2025, or higher?

Gilberto Tomazoni, Global CEO

Lucas, Australia and Brazil are different scenarios. In Australia we are not seeing a major challenge related to a quota limit to China because Australia has very strong demand across Japan, Korea, other Asian markets, the U.S. and Europe. Australia can manage volumes across these markets, so we're not worried there. In Brazil it may be more complicated. Friboi is confident it can deliver results in 2026 in line with last year. Global demand for protein, especially beef, remains high. China's quota situation could end by midyear, but it's unclear how China will manage volume restrictions; some countries may not use their full quotas. We cannot speculate precisely. Friboi has developed new international sales channels and invested heavily in value-added combined with customer service. An example is Friboi+, a program that deepens retailer engagement; recent data showed a store with Friboi+ had 40% higher overall sales versus a comparable store. Retailers need to improve in-store protein offerings given consumer trends like GLP-1 and health-driven demand, and our program fits well with that. I believe in the second half of the year, when feedlot supply in Brazil adjusts and coincides with the end of the China quota, cattle prices will likely be affected. We are confident in delivering results in line with last year.

Guilherme Cavalcanti, Global CFO

On the derivatives line: the movement relates to derivatives that are not operational hedges. Recent volatility in currencies and commodity prices made this number higher despite our limited VaR for those types of derivatives. On the working capital side, so far we've only seen the first quarter. First quarter 2026 had slightly lower working capital consumption than the first quarter of 2025 despite a $200 million higher impact from deferred livestock. It's too early to call the full-year outcome, but based on the first quarter we had a slightly lower working capital consumption overall, which does not necessarily mean lower cash consumption given other operational factors.

Operator, Operator

Our next question comes from Thiago Duarte at BTG. Mr. Duarte, you may go ahead.

Thiago Duarte, Analyst, BTG

Two follow-ups: first on U.S. beef — Wesley mentioned a strong quarter considering the circumstances, but what justifies that performance? A quarter-over-quarter margin rebound is not typical given seasonality in Q4 and industry cutout spread. You mentioned higher volatility may have something to do with it, but could you elaborate what justified the particularly good quarter? Second, on Seara: Tomazoni spoke about chicken demand and protein demand in general. My sense is the very good margin at Seara in the quarter was driven by fresh chicken exports rather than domestic prepared foods. Is that understanding accurate in terms of natural chicken margins versus prepared food margins for Seara in the quarter?

Wesley Mendonça Filho, CEO, JBS USA

Thiago, when the market is more volatile in cattle prices and cutout values, it's possible that quarter-to-quarter you position yourself better or worse depending on forward selling and procurement. Given the intense volatility in this period, positioning effects can make a quarter look particularly good or particularly bad. There were no significant hedges or derivatives impacting this; it's more a function of positioning and market volatility. We think the best way to assess performance is over the longer term rather than one quarter, as a single quarter can be misleading given recent volatility. We're satisfied with how we're operating overall; we've made a lot of progress in plant operations, sales strategy and procurement compared to a few years ago.

Gilberto Tomazoni, Global CEO

Thiago, on Seara: if you compare margins, yes, international commodity chicken margins were higher than prepared foods margins in the domestic market in that quarter. However, we have been improving margins in prepared foods through better price management to capture brand value in domestic markets. This is a continuous process: we are strengthening brand perception and improving price realization in domestic channels. So while international chicken margins were higher that quarter, prepared foods margins are improving and remain a priority.

Operator, Operator

Our next question comes from Isabella Simonato with Bank of America. Ms. Simonato, you may go ahead.

Isabella Simonato, Analyst, Bank of America

First, on working capital for the quarter: you mentioned deferred livestock payments as well as inventories. Can you give more details on inventory performance versus where you were expecting when you guided in Q3 for the remainder of the year? What changed and how could that be postponed or translate into 2026 performance? Second, on Seara: can you comment on Brazilian consumer behavior at the beginning of the year? Is there room to increase prices and have volumes picked up? Retailers were running with lower inventories at the end of 2025 — any significant change in behavior in early 2026? Finally, could you give a brief overview of your grain inventories and how you're seeing feed costs for the remainder of the year?

Guilherme Cavalcanti, Global CFO

On the working capital cycle: every fourth quarter we typically decrease inventories and review them in the first quarter. The same happens with deferred livestock payments. Between 2024 and 2025 and into 2026 we postponed $600 million in livestock payments this year; last year we postponed $400 million. So there was a $200 million better impact in the fourth quarter that will be a $200 million worse impact in the first quarter of 2026. On inventories, we are seeing the same level of inventory rebuild as in prior years.

Gilberto Tomazoni, Global CEO

Isabella, on Brazilian consumer behavior and Seara: the year started weak in January but recovered. Our sales are now higher than last year for prepared foods, with a different mix: value-added and innovative products are growing much faster than traditional, lower-value products. Innovative items — high-protein products, air-fryer items, clean-label products — are growing strongly. Overall we're growing despite some challenges in certain chains. Regarding costs and grains: corn shows an upward trend — we expect higher costs in 2026 due to reduced global stocks, solid demand, higher crude prices that boost ethanol margins, fertilizer cost and availability issues, and U.S. acreage risks given soybean ratios and second crop risks in Brazil. Soybean meal prices are more stable; crush margins remain positive which implies supply. We need to monitor U.S. acreage and biofuel policy; our outlook for soybean meal is relatively stable for now. Feed costs are a major component — feed represents around 50% to 60% of chicken costs — and will materially impact profitability.

Operator, Operator

Our next question comes from Henrique Brustolin with Bradesco. Mr. Brustolin, you may go ahead.

Henrique Brustolin, Analyst, Bradesco

First, on U.S. beef: could you comment on Mexico cattle imports, which have been shut for a while? Reopening could be relevant amid higher U.S. prices. How relevant could reopening be in shaping the outlook for 2026? Second, on Seara: Seara has been through a large investment cycle over past years. How have those investments ramped up and what do you expect for volume growth into 2026 as you complete the ramp of some plants?

Wesley Mendonça Filho, CEO, JBS USA

Henrique, it's difficult to say when Mexico will reopen. It's meaningful — around 1.2 to 1.5 million head per year, which is more than the size of a double-shift plant. It's important especially for the southern U.S. USDA and Mexican authorities are working to keep disease outside the U.S., but I cannot forecast timing. If it reopens this year it would be very relevant to the short-term supply-demand equation, but there's no reliable indicator on timing now.

Gilberto Tomazoni, Global CEO

Henrique, on Seara investments: all investments will be completed this year. The additional capacity will be around 10% to 13%, depending on mix (some capacity is higher value and lower volume), so you can consider roughly 10% to 13% capacity growth.

Operator, Operator

Our next question comes from Benjamin Theurer with Barclays. Mr. Theurer, you may go ahead.

Benjamin Theurer, Analyst, Barclays

Following up on CapEx: I think you said about $1.4 billion for expansion. I know Pilgrim's has part of that and shares some projects. Could you remind us of other projects currently underway related to capacity expansion aside from Seara? And as a follow-up: what is your current willingness to pursue growth through M&A, given recent activity in the food sector?

Guilherme Cavalcanti, Global CFO

Ben, the Pilgrim's expansions are focused on prepared foods parts, rendering facilities, and a pork sausage plant in Iowa. Other projects we announced include the Oman project, a plant in Paraguay, Cactus, Texas initiatives, and beef-side investments — all phased across years and reflected in 2026 CapEx. On M&A, we're always evaluating opportunities globally, but currently there are no acquisitions we are pursuing keenly. That's why we've increased organic expansion CapEx and are returning capital to shareholders. Given our interest expenses remain near $1.1 billion, we are comfortable with this capital allocation approach.

Operator, Operator

Our next question comes from Thiago Bortoluci with Goldman Sachs. Mr. Bortoluci, you may go ahead.

Thiago Bortoluci, Analyst, Goldman Sachs

Two questions: first on volumes — you've been vocal about strong momentum for global protein. Over recent quarters volumes and top line have surprised to the upside. Could you share which business unit segments and destinations are contributing most to growth and which regions make you most excited for 2026? Any comments on opportunities in Africa? Second, regarding the conflict in the Middle East: what has been the impact so far on seaborne freight and truck freight in Brazil, and if sustained, how could it impact profitability and how do you plan to pass this along?

Gilberto Tomazoni, Global CEO

Thiago, on volumes overall: demand is strong across Europe, Asia (excluding some movements in China), the Middle East, and the U.S. Friboi increased red meat sales in Europe, and Seara increased volumes in Europe. European beef demand is partly due to reduced local production. Australia and Brazil are supplying more to those markets. In Asia (excluding China), chicken demand is growing; we are increasing volumes to traditional markets like Japan and Korea. In the Middle East demand remains strong; logistics routes have adapted (e.g., different ports and internal trucking), and we opened a new factory in Jeddah and announced investments in Oman because demand is solid. In Brazil domestic demand for protein is also high; Brazil recorded historic processing volumes. Overall, we see structural growth in global protein demand due to demographics, health habits, GLP-1 influences and other factors. On regions to watch: Brazil has a large long-term opportunity given productivity improvements; the U.S. has good opportunities particularly in chicken and pork; Australia is exciting on pork and beef; Europe offers opportunities in chicken and value-added; and Middle East demand is strong, where we are investing regionally. Regarding your freight question: flows to markets have not stopped. Marine agents have included extra risk premiums in contracts due to navigating riskier regions, and some destinations required changes in ports and additional trucking, which increases costs. So far these costs have been borne by the market and we haven't seen a material impact on our results. In Brazil, we did see increases in diesel prices which raise freight costs; if crude prices remain elevated, packaging and fertilizer costs could rise and affect feed and corn costs. It's too early to predict the long-term impact; much depends on how the conflict evolves.

Operator, Operator

Next we have Benjamin Mayhew from Bank of Montreal. Mr. Mayhew, you may go ahead.

Benjamin Mayhew, Analyst, BMO

Starting at a high level, looking at 2026 versus 2025 across global segments, where do you see pockets of improved market fundamentals and where might fundamentals be less strong throughout the year?

Gilberto Tomazoni, Global CEO

Ben, we see opportunities across most business units through our methodology of mapping gaps and closing execution gaps. Brazil has significant long-term opportunity in red meat and productivity improvements. The country is competitive on grain costs and improving genetics and feedlot development which supports growth. The U.S. offers opportunity in chicken and pork where operations are competitive and well-managed; Pilgrim's performance is strong and Just Bare continues to grow. Australia presents exciting opportunities in pork and beef; we are investing in farms and improving productivity. Our salmon business in Tasmania is expanding more than 50% capacity. Europe is an opportunity for chicken and value-added where demand is growing. Overall, it's hard to single out one region — we see structural opportunities globally across proteins due to consumer trends and our global platform advantage.

Wesley Mendonça Filho, CEO, JBS USA

Ben, on herd rebuild: we are seeing herd retention more actively in the U.S. and Canada and signs in dairy that impact overall supply. USDA data shows heifer retention is occurring but at a slower pace than expected. Beef cow slaughter for the full year 2025 was 2.3 million head compared to 3.9 million in 2022 — almost half — which indicates that producers have retained more females for breeding. This is encouraging for future supply, though still lower than we would wish.

Operator, Operator

Our next question comes from Ricardo Boiati with Safra. Mr. Boiati, you may go ahead.

Ricardo Boiati, Analyst, Safra

Two questions. First to Wesley: you expressed a strong positive outlook for the U.S. beef industry — from a rancher's perspective, what are the drivers for the industry and are there any risks such as labor or succession that could prevent more robust expansion? Second, looking at the current market environment and increased volatility, does this imply an even more conservative approach to the balance sheet, despite the strong position you have demonstrated?

Wesley Mendonça Filho, CEO, JBS USA

Ricardo, succession and labor are relevant issues, as is interest rates which affect the cost of carrying livestock during herd rebuild. But the fundamental attributes of the U.S. — natural resources, culture, infrastructure, and the capabilities of American ranchers — remain very strong. We remain optimistic medium to long term. The U.S. should be able to supply its domestic market and be an important exporter over time. Those structural strengths outweigh the near-term risks.

Guilherme Cavalcanti, Global CFO

On the balance sheet, it's worth emphasizing not just net debt absolute value but how we manage interest expense. Over the last three years net debt increased 8% while financial expenses stayed around $1.1 billion. We extended maturities and locked attractive rates: no significant maturities in the next five years. We ended the quarter with $4.8 billion of cash, about $1.5 billion higher than our minimum cash given the cash conversion cycle. Given this flexibility, we don't need to be more conservative in our initiatives at this time.

Operator, Operator

Our next question comes from Igor Guedes with Genial. Mr. Guedes, you may go ahead.

Igor Guedes, Analyst, Genial

I have two questions on Seara. First, we saw resumption of shipments to China after months of suspension due to avian flu last year. How did the resumption go for you? Resumption happened around November — should we expect an even stronger quarter in terms of volume, or was the benefit already captured in Q4? Second, breaking down the margin improvement: to what extent was it driven by volume growth, price improvements (premiums paid for cuts such as chicken feet), or fixed-cost dilution?

Gilberto Tomazoni, Global CEO

Igor, the resumption of shipments to China helped profitability significantly because China is a strong market for wings and chicken feet, where prices are higher than other markets. The reopening occurred around October/November and we captured benefits into Q4 and into the first quarter. Regarding drivers of margin improvement: higher prices in China for wings and feet helped, volume recovery helped, and fixed-cost dilution contributed as well, but feed cost is a major offset. Feed represents roughly 50% to 60% of chicken cost, so while volume and price recovery help, feed cost increases materially affect profitability and cannot be fully offset by volume alone.

Operator, Operator

Our next question comes from Priya Ohri-Gupta with Barclays. Ms. Ohri-Gupta, you may go ahead.

Priya Ohri-Gupta, Analyst, Barclays

Two quick questions. First, on capital allocation: you've announced $1 per share dividend to be paid in June, which matches the prior guidance of roughly $1 billion to shareholders — should we think of this as the dividend for the year, or could there be room to increase with a second payment later in the year? Second, relatedly, how should we think about share repurchases? You did about $600 million in 2025 — is there scope to continue repurchases?

Guilherme Cavalcanti, Global CFO

Priya, we currently plan to stick with the $1 billion per year return via dividends as long as our leverage targets allow. That is what we plan to pay this year. Any additional share repurchases would depend on excess cash generation in upcoming quarters; it's contingent on cash flow generation and leverage.

Priya Ohri-Gupta, Analyst, Barclays

Follow-up: some bonds are callable later this year and into early next year. Is there scope for liability management to address those, or is the rate backdrop such that you would not call them?

Guilherme Cavalcanti, Global CFO

The callable bonds tend to have very low coupons, below treasury, so it's not worth calling them. However, there may be opportunities for liability management to target the '33 and '34 bonds which carry higher coupons. We could consider refinancing or extending those maturities at better rates.

Operator, Operator

Our next question comes from John Baumgartner with Mizuho. Mr. Baumgartner, you may go ahead.

John Baumgartner, Analyst, Mizuho

Two questions on North America. First, on the value-add side: you've focused on value-add through CapEx and occasionally M&A. You tested Wendy's burgers last summer — what did you learn from that test market and how do you view licensing third-party brands as an approach to bring value-add brands in-house versus acquiring or building brands? Second, on eggs: given current egg prices and industry conditions, do you see opportunities to acquire assets in eggs, considering producer capitalization?

Wesley Mendonça Filho, CEO, JBS USA

John, we evaluate all options. Recently greenfield projects have made more sense given valuations and costs; sometimes building new plants is preferable to buying older assets. Partnerships and licensing are options we consider, but building brands can be done profitably via organic investment and greenfield and has proven successful for us — for instance Just Bare reached $1 billion in retail sales without hurting profitability in the ramp. Regarding eggs and potential acquisitions, it depends on asset prices; we always look for accretive opportunities but there is no specific acquisition plan at this time.

Operator, Operator

Our next question comes from Thiago Bortoluci with Goldman Sachs. Mr. Bortoluci, you may go ahead. (Note: Duplicate question handled earlier.) There being no further questions on the list, I will pass the floor back to Mr. Gilberto Tomazoni.

Gilberto Tomazoni, Global CEO

I would like to thank everyone for joining us today and all JBS team members for their dedication and commitment to deliver the results. Let me close with three key points. First, we delivered record revenue of $86 billion and 13% growth year-over-year, reflecting the strength and consistency of our global platform. Second, we continue to operate with strong capital discipline with return on equity at 25% and return on invested capital at 17%. Third, earnings per share, EPS, reached $1.89, up 15% year-over-year, growing faster than net income and reinforcing our focus on shareholder value. As we look ahead, we will continue to focus on execution, efficiency and disciplined capital allocation. That is what allowed us to deliver consistent results and build long-term value. Thank you.

Operator, Operator

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

Lucas Mussi, Analyst, Morgan Stanley

Thank you.

Unknown Analyst, Analyst (connection issues / Heather Jones)

Are you able to hear me now?

Guilherme Palhares, Analyst, Santander

Over the last couple of years, one of the main points of JBS's investment thesis has been geographic diversification. You report businesses individually for Australia, Brazil and the U.S. Could you share what portion of beef sold in the U.S. comes from JBS and how much of the beef sold in the U.S. is being imported from Brazil and Australia? In other words, how does your geographic diversification support food security and maintaining supply when cycles are adverse? Second, on table eggs: you entered the business and have a minority stake; what's your impression after a year and how big is the opportunity?

Wesley Mendonça Filho, CEO, JBS USA

Guilherme, having access to imports from Australia and Brazil is valuable during periods of U.S. shortages. Volumes from Brazil and Australia are significant and can supplement U.S. supply when needed. However, the U.S. is a very efficient and competitive beef producer, and in the long run it should not need to rely on imports to satisfy domestic demand. Short-term imports are useful to meet demand during transitory shortages.

Gilberto Tomazoni, Global CEO

On table eggs, we entered the segment because eggs are an affordable source of protein. We acquired operations in the U.S. and are building farms in Brazil; we're working with Mantiqueira which has the know-how to accelerate our entry. We are excited about the business and see it as an area for growth.

Pooran Sharma, Analyst, Stephens

On U.S. pork: we've heard concerns that disease impacts could be similar or worse than last year. What have you been hearing about hog disease pressure in the U.S. and would you expect that to weigh on margins in 2026?

Wesley Mendonça Filho, CEO, JBS USA

Pooran, disease could impact margins, but the effect depends on timing and extent. Short-term, a reduced supply from disease could actually improve margins. We do everything to avoid disease and its spread, but the potential impact is mixed and timing-sensitive.

Pooran Sharma, Analyst, Stephens

On the NYSE listing and index inclusion: you mentioned liquidity and multiple improvements; any update on potential inclusion in passive indices and the timing?

Guilherme Cavalcanti, Global CFO

On the multiple side, our forward EV/EBITDA is higher than before the listing, though we still trade at a discount to peers. According to recent research, and based on our revenue and assets breakdown disclosures, we should be eligible for Russell inclusion next June, which could bring around 14 million shares of demand from passive funds; this is out of our control but is the current expectation. In the longer term, we plan to start filing 10-Ks and 10-Qs to be eligible for the S&P family; likely we would pursue S&P mid-cap inclusion next year and aim for S&P 500 eligibility when market cap thresholds are met, though that's subject to index committee decisions. Our average daily trading volume is 3x higher than before the listing; Brazilian investors now represent about 10% of free float while U.S. investors are about 70%.

Ricardo Boiati, Analyst, Safra

Follow-up on balance sheet conservatism: given increased volatility, is there any change in conservatism even though leverage and debt profile are strong?

Guilherme Cavalcanti, Global CFO

We manage cash carefully. Despite higher net debt, interest expenses were stable. With no significant maturities in the next five years, sizable cash balances and revolving facilities, we have flexibility and therefore no need to be excessively conservative at present.

Leonardo Alencar, Analyst, XP Investimentos

On U.S. beef demand resilience: we've seen strong beef prices. Is it feasible to expect higher prices over next few months? There was a change in choice/select spreads — any signal there? Also, the proposed split-up deal in the U.S. government — is that noise or a potential concern? Finally, if you split your U.S. revenue into value-added and commodity, would you expect 2026 performance for value-added to be better than commodity?

Wesley Mendonça Filho, CEO, JBS USA

Demand remains strong for beef and ground beef in particular. There is some substitution to other proteins but beef demand is resilient. The labor or regulatory changes are monitored with customers, but they're not a primary concern right now. Regarding value-added versus commodity: we prioritize increasing value-added because of higher and more stable margins — it's a strategic focus and we expect value-added to be a growth driver. On the proposed split-up, it appears to lack broad support and is not currently a major concern for us.

Guilherme Palhares, Analyst, Santander

Follow-up on table eggs: you are populating farms in the U.S. and Brazil; how do you expect to scale and what is the go-to-market?

Gilberto Tomazoni, Global CEO

We acquired farms in the U.S. and are populating them; in Brazil we are building with Mantiqueira which accelerates our entry due to their know-how. We expect to scale through integrated farming operations and commercial distribution channels.