Good morning, and welcome to the Fourth Quarter and Fiscal Year 2024 Pilgrim's Pride Earnings Conference Call and Webcast. At the company's request, this call is being recorded. Please note that the slides referenced during today's call are available for download from the Investors section of the company's website at www.pilgrims.com. I would now like to turn the conference over to Andrew Rojeski, Head of Strategy, Investor Relations and Sustainability for Pilgrim's Pride.

Good morning, and thank you for joining us today as we review our operating and financial results for the fourth quarter and fiscal year ended December 29, 2024. Yesterday afternoon, we issued a press release providing an overview of our financial performance for the quarter and the year, including a reconciliation of any non-GAAP measures we may disclose. A copy of the release is available on our website at ir.pilgrims.com, along with slides for reference. These items have also been filed as Form 8-Ks and are available online at sec.gov. Fabio Sandri, President and Chief Executive Officer; and Matt Galvanoni, Chief Financial Officer, will present on today's call. Before we begin our prepared remarks, I would like to remind everyone of our safe harbor disclaimer. Today's call may contain certain forward-looking statements that represent our outlook and current expectations as of the day of this release. Other additional factors not anticipated by management may cause actual results to differ materially from those projected in these forward-looking statements. Further information concerning these factors has been provided in yesterday's press release, our Form 10-K and our regular filings with the SEC. I would now like to turn the call over to Fabio Sandri.

Thank you, Andy. Good morning, everyone, and thank you for joining us today. I look forward to reviewing our Q4 and full year 2024 results today with you, and invite everyone for our upcoming Investor Day on March 14 for a more detailed view on our long-term vision, strategy and method. For the fourth quarter of 2024, we reported net revenues of $4.4 billion, along with adjusted EBITDA of $526 million and adjusted EBITDA margin of 12%. Our Q4 performance reflects the execution of our strategies of a diversified portfolio that can capture market upsides while offering differentiated products that respond to consumer demand, combined with our relentless pursuit of operational excellence. Our U.S. Fresh portfolio improved compared to last year as Big Bird expanded margins through a combination of strong, stable commodity cutout values, progress in operational excellence and an enhanced product mix. Case Ready and Small Bird also drove profitable growth to improve performance and production efficiencies and increased key customer demand in retail, QSR and deli. Prepared Foods grew sales compared to last year as interest strengthened for our brand offerings in retail and foodservice, further diversifying our portfolio. In Europe, margins expanded given continued optimization of our manufacturing network and integration of support activities, including our back office. Overall, sales remained stable in retail as consumers increasingly migrated across our diversified portfolio into poultry and chilled meals and branded offerings. Foodservice grew double digits from a combination of additional distribution and increased traffic for away-from-home eating occasions. Mexico experienced a stronger Q4 as commodity market pricing increased throughout the quarter. In both Fresh and Prepared, sales to key customers continue to grow from the prior year. Similarly, momentum for our branded offerings increased throughout the marketplace, further diversifying our portfolio. For the fiscal year 2024, net revenues were $17.9 billion with adjusted EBITDA of $2.2 billion, translating into an adjusted EBITDA margin of 12.4%. Throughout 2024, the U.S. experienced improved chicken demand, lower grain costs and positive commodity cutout values. When these factors were combined with key customer growth and progress in operational excellence, profitability improved compared to the prior year. Our Europe business undertook a variety of steps to improve our manufacturing network, simplify our structure and drive innovation. Based on these efforts, we're strengthening our marketplace presence and expanded margins. In Mexico, commodity sales benefited from reduced input costs and balanced supply-demand that generated more stable pricing. These factors were further amplified by growth with our key customers and increased interest in our branded offerings among consumers, improving margins compared to last year. Turning to supply in the U.S., USDA indicated ready-to-cook production for the U.S. chicken grew by 2.5% compared to the fourth quarter of 2023. Increases in headcount accounted for the production growth as average live weights were comparable to last year. Throughout 2024, the industry layer flock consistently declined year-over-year. However, sustained efficiencies, improvements in the flock, coupled with reductions in exports of eggs triggered an increase in egg sales, resulting in record hatchery utilization. Similar to earlier in the year, hatchability continues to be challenged even with the benefit from seasonality based on USDA data. As a result, industry rates still trail the prior year, limiting realization of Ukraine impact. As hatchability continues to lag historical averages, USDA data also suggests the industry has placed additional access to offset productivity challenges. Improved feed conversion, yields and live weights also further mitigate those issues. The USDA's most recent production report indicated that ready-to-cook production increased by 1.3% for the year, driven by significant growth in the second half. For 2025, the FDA is projecting growth of 1.4%, with increases in egg sets and placements partially compensated by continuing challenges in hatchability and mortality. The USDA also reports overall protein availability is projected to grow only by 1.2% with a significant decline in overall beef availability, leading to a supportive demand environment for chicken. As for the demand in the U.S., fresh proteins in retail benefited as the cost of eating out increased more rapidly than eating at home. Boneless/skinless breast pricing at retail remains very competitive, significantly lower than 2 years ago and stable compared to the prior year, while dark meat continues to increase in domestic demand. While the entire fresh meat department experienced sales growth during the quarter, chicken's significant pricing advantage compared to other proteins continues to enable growth and satisfy strong consumer demand for a healthy center-of-the-plate option. The remainder of chicken at retail continued to build on the strong foundation set earlier in the year. Growth in both the deli and frozen value-added demonstrates chicken's ability to meet the needs of consumers seeking to rationalize spending without sacrificing convenience. In foodservice, dollar and volume sales both grew in commercial and noncommercial distribution subchannels. Both were specifically bolstered by strong demand for value-added products. Volume and dollar growth also indicate a continued transition from full-service restaurants to QSRs, suggesting consumers are favoring a relatively less expensive away-from-home option to stretch their dollars further. U.S. export volume was lower year-over-year, while pricing remained at positive levels. Domestic demand for dark meat in the U.S. continues to be the key for increased values and limited export availability. At the end of Q4, overall inventory declined as cold storage inventory dropped by 1% month-over-month and was 8% lower compared to last year. Both breast meat and dark meat once again fell year-over-year. We still anticipate export demand to remain strong despite some redirection of trade flows triggered by multiple high-path AI outbreaks in the Eastern and Southeastern United States. Most U.S. soybean partners other than China, the U.K. and Ireland have reduced levels to zones and counties. As such, the geographic diversity of our production locations in the U.S. continues to provide flexibility to transition production should breaks occur. In addition, Taiwan has recently established a release procedure to follow if disruptions emerge, which further mitigates the impact of potential bans. Turning to feed. Corn appreciated moderately in Q4 as strong U.S. yields somewhat mitigated price gains from healthy corn export demand. In contrast, soybean meal fell as new soybean meal processing capacity increased supply for Mexican consumption. Taken together, overall feed costs slightly declined. The U.S. lowered the final yields for the 2024 corn and soybeans in their January crop report. Even with those changes, both corn and soy realized improved yields. Nonetheless, corn stocks in the U.S. and globally are expected to contract versus the prior year. Given this contraction, the likely trading range and market volatility for corn is expected to increase during the first half of 2025. The limited demand from China for corn and the potential for strong growth in U.S. corn acreage versus last year has currently limited upside so far. In contrast, soybean stocks are expected to grow in both the U.S. and globally compared to last year as Brazil's increased production is expected to more than offset crop losses from dryness in Argentina. As such, soybean meal is anticipated to be well-supplied across the globe. In wheat, global stocks are expected to decline slightly compared to last year. Nonetheless, winter wheat planting in the fall of 2024 throughout the U.S. and Europe, better-than-expected harvest in Australia and Argentina and increased acreage in the U.K. may improve availability and pricing for next year. Moving forward, we'll continue to monitor changes in global grain demand, planting and development of the second crop in Brazil and U.S. planting intentions and conditions moving forward. Turning to the U.S. Our diversified portfolio across both sizes benefited from elevated demand compared to seasonal trends. As such, commodity cutout values were notably higher than the average of the past 5 years. Furthermore, input costs fell slightly throughout the quarter as declines in soybean meal more than offset an increase in corn. Given this environment, profitability in our Big Bird business improved significantly compared to last year. Our progress in operational excellence to improve yields, mix and labor productivity further amplified our performance. In Case Ready, retail demand remained strong as consumers increasingly sought chicken given its relative affordability. Growth with our key customers continued to accelerate as our sales increased significantly above the category average. When these factors are combined with a continued focus on quality and service, Case Ready's profitability improved considerably compared to last year. Case Ready also continues to cultivate its competitive advantage through differentiated offerings and operational capability. To that end, during the quarter, we converted one of our locations to air chill technology in partnership with a key customer. As a result, we consolidated our leadership in this differentiated category and reinforced our key customer relationships. Given these recent investments, along with our leadership in the organic and the natural chicken categories, Case Ready continues to enhance its competitive advantage through higher attribute differentiated offerings. Additional growth opportunities continue to emerge as we help our key customers to differentiate and generate robust demand from consumers. Small Bird also benefited from further demand in QSRs and deli as our key customers continue to increase their marketplace presence. When combined with our advances in operational excellence, our profitability grew substantially compared to Q4 of 2023. Our diversification through Prepared Foods continued its momentum. In the fourth quarter, our sales to key customers significantly outpaced the category average. Brands continue to play an instrumental role as the share of Just BARE has increased by over 200 basis points compared to last year. In addition, the recent relaunch of Pilgrim's gained traction with continued consumer affinity given its high quality and through increased distribution. Similarly, our food service business continues to grow through additional distribution and increased velocity through our portfolios. In Europe, we continue to improve our business through integration of our support functions and optimization of our manufacturing network. Through this effort, we've consistently driven margin expansion while cultivating a more nimble, customer-focused organization to scale profitable growth in 2025 and beyond. During the quarter, the environment became increasingly attractive as consumer sentiment improved as wage growth continued to surpass inflation. As such, our poultry and chilled meals business benefited from category growth in both value and volume in grocery. Our branded portfolio realized similar gains given its growth throughout the quarter, led by Fridge Raiders and Rollover as each grew faster than the category. We continue to leverage the Richmond consumer affiliation and expand its portfolio. It recently received Grocer's Best New Product Award for its roast chicken sausage. Our foodservice business also experienced similar success as net sales increased double digits. Innovation remains a priority to drive profitable growth. To that end, we strengthened our partnership with key customers through innovation with a series of investments in line extensions, new products and packaging updates. When combined with our working brand, we have launched and renewed a significant portion of our portfolio of products with several launches in this fourth quarter. Our efforts continue to be remarkably well received by customers as innovation now accounts for over 6% of our net sales. Our efforts in sustainability have also generated commercial benefits with key customers. During the quarter, we were recently awarded incremental business given our animal welfare standards. We will continue to explore opportunities throughout the trade based on our differentiated performance and standards. Turning to Mexico. Margins increased from better supply-demand fundamentals and continued execution of our strategy. In the live bird market, commodity values increased throughout the quarter and overall grain costs fell slightly compared to Q3 of 2024. Key customer relationships strengthened as retail fresh volumes grew in the high single digits. Traditional chains saw volume rise over 15%. The momentum in our fresh branded offerings continued as volumes grew nearly 10% compared to the same quarter last year. We continue to diversify our portfolio with value-added offerings given the growth in our Prepared Food business. Our key customer volumes continue to grow in both retail and foodservice, and our innovation pipeline has been well received through the trade. Efforts to reduce operational risk in live operations and extend our production capacity remain on track. Our ramp-up for production in Merida is proceeding as planned, and our relocation of the breeder farms remains on track. We recently brought online additional production in Prepared Foods in our Porvenir plant as we continue to explore opportunities for expansion. We also continue our journey in sustainability. To that end, we've driven a reduction in our Scope One and Two emissions intensity across all regions. In addition, we continue to explore solutions with leading industry partners that leverage our operational capabilities. As such, we've collaborated with GreenGasUSA to transform our biogas into renewable natural gas at our Santa facility. Based on this effort, we can reduce emissions while further supporting the renewable energy market. Moving forward, we continue to drive efforts to further reduce our emissions footprint. With that, I would like to ask our CFO, Matt Galvanoni, to discuss our financial results.

Good morning, everyone. As I review our financial performance, please note that our fourth quarter 2023 and fiscal year 2023 periods were 14-week and 53-week periods, respectively, which will impact the period-over-period comparison. For the fourth quarter of 2024, net revenues were $4.37 billion versus $4.53 billion a year ago, with adjusted EBITDA of $525.7 million and a margin of 12% compared to $309.5 million and a 6.8% margin in Q4 last year. For fiscal year 2024, net revenues were $17.9 billion versus $17.4 billion in fiscal 2023, with adjusted EBITDA of $2.21 billion and a 12.4% margin compared to $1.03 billion and a 6% margin last year. Adjusted EBITDA in the U.S. for Q4 came in at $371.6 million, with adjusted EBITDA margins at 14.2%. Our Big Bird business profitability significantly improved year-over-year as commodity market pricing improved, grain costs were lower and the business achieved further operational improvement. Also driving the improvement in the quarterly U.S. results were increases in profitability in both our Case Ready and Small Bird businesses. These businesses continue to deliver high-quality and strong customer service, allowing us the opportunity to increase distribution with our key customers. Our Prepared Foods business continued its momentum of branded product sales growth with both retail and foodservice customers. During the quarter, within our U.S. GAAP earnings, we recorded $95 million in litigation-related settlement charges. Also, in the quarter, we finalized the U.S. pension plan termination program that commenced earlier in the year and recorded $10.9 million of pension settlement charges. This pension obligation termination is now fully complete. For the fiscal year, our U.S. net revenues were $10.63 billion versus $10.03 billion in fiscal 2023, with adjusted EBITDA of $1.56 billion and a 14.7% margin compared to $531.5 million and a 5.3% margin last year. The U.S. business maintained its momentum throughout the year with increased sales volumes and delivering operating efficiencies with the backdrop of supportive commodity markets and lower grain costs. In Europe, adjusted EBITDA in Q4 was $117.1 million versus $102.5 million in 2023, a 14.2% increase. For the full year, Europe's adjusted EBITDA improved by 28.3% to $407 million in 2024 from $317 million in 2023. Europe drove improved profitability through further operational excellence, including plant closures, consolidation of support functions and streamlining the overall management organization structure. We recognized approximately $93 million of restructuring charges during the year. While we continue to pursue efficiency measures, we anticipate the vast majority of the charges for these programs are behind us. Mexico generated $36.9 million in adjusted EBITDA in Q4 compared to $6.8 million last year. When considering the full year, Mexico generated $248.5 million in adjusted EBITDA or an 11.8% adjusted EBITDA margin, bettering last year's 8.7% margin. Throughout the year, supply-demand fundamentals were well-balanced in Mexico. Our GAAP SG&A expenses in the fourth quarter and for the full year were higher than prior periods, primarily due to increased legal settlement expenses and higher incentive compensation costs, partially offset by cost efficiencies primarily achieved in Europe. Net interest expense for the year was approximately $100 million, excluding the gain on the realized debt purchases we completed earlier in the year. Currently, we forecast 2024 net interest expense to be between $65 million and $75 million. Our full year effective tax rate was 23.0%. We recorded a discrete tax planning item in the fourth quarter, which lowered our full year effective tax rate from our pace through the first three quarters of the year. For 2025, we anticipate our effective tax rate to approximate 25%. We have a strong balance sheet, and we will continue to emphasize cash flows from operating activities, management of working capital and disciplined investment in high-return projects. As of the end of the year, our net debt totaled approximately $1.15 billion with a leverage ratio of approximately 0.5 times our last 12 months adjusted EBITDA. Our liquidity position remains very strong. And at the end of the fiscal year, we had approximately $3.1 billion in total cash and available credit. We have no short-term immediate cash requirements with our bonds maturing between 2031 and 2034 and our U.S. credit facilities not expiring until 2028. Our liquidity position allows us to explore further growth opportunities, including organic growth to meet our key customers' needs. We finished the year spending $476 million of CapEx. This included the conclusion of the construction of the protein conversion plant in South Georgia and other growth projects to support differentiating product attributes for our key customers. We will continue to prioritize our capital spending plans to ensure the safety of our team members, optimize our product mix and strengthen our partnerships with key customers. Currently, we forecast spending between $450 million and $500 million in CapEx in 2025, primarily to sustain our operations and for other more routine growth projects. We are intently focused on growth opportunities. First, over the last few years, we have invested in our plants to meet both growth targets and product attributes requested by our key customers, and we will continue to do so as we cultivate these relationships. Also, we foresee investments in additional protein conversion capacity to both upgrade our product mix and manage risk by reducing our exposure to outside protein conversion operators. Finally, as we've discussed extensively, our U.S. Prepared Foods business has grown our branded portfolio through innovative and differentiated products, and we anticipate expanding our capacity to meet the growth trajectory of this portfolio. Finally, we have a great business in Mexico and have organic growth opportunities in both Fresh and Prepared. These near-term growth opportunities align with our overall strategies of portfolio diversification, focus on key customers, operational excellence and our commitment to team member health and safety. Please note, we may revise CapEx spending estimates to accommodate our growth aspirations. We will continue to follow our disciplined approach to capital allocation as we look to profitably grow the company and continue to align investment priorities with these overall strategies. We are looking forward to our Investor Day on March 14 to share with you our strategic outlook, more detailed views on these growth opportunities and further commentary on our capital allocation philosophy. Operator, this concludes our prepared remarks. Please open the call for questions.

Today's first question comes from Ben Theurer with Barclays. Please go ahead.

Good morning, and thanks for taking my question. Fabio, congrats on the results. Yes. So, to start off, maybe just talk a little bit about the market dynamics, what happened in the fourth quarter and as we're moving into the first quarter. Clearly, Q4 was very strong. I mean it feels like there was still a little bit disruption from the hurricanes late September, early October, coupled with AI. So maybe help us understand a little bit what's been driving these very strong cutout values, particularly on the Big Bird side as you think about it throughout the fourth quarter, but also what you're showing early stage in January still being very elevated. So that would be my first question. And second question, that would be more for Matt in regards to the capital allocation on the guidance for the CapEx of $450 million to $500 million. It kind of feels a little low of what you can do given the $2 billion in cash that you have available versus what tends to be long-term average more like $500 million. So, anything that you can share maybe in terms of the thoughts around dividends or any other way of cash return, just given where the leverage is? Thank you very much.

Sure. Thank you, Ben. You're right. There is always some seasonality in the chicken business. Typically, Q4 is the weaker quarter in the year due to the seasonality of consumption because of Thanksgiving and Christmas. However, what we saw this year was a very strong demand for chicken. I think that is because of the relative affordability of chicken and some of the menu penetration in foodservice. In Q4 and throughout the year, we saw an increase in demand in retail and foodservice for chicken. In retail, most notably, we saw on the frozen food category and the fresh category and also on the deli. These three categories led the demand in retail. In foodservice, despite a reduction in traffic that especially affected full-service restaurants, the QSRs continued to grow the demand for chicken because of chicken promotions and the menu penetration we've been seeing. So both retail and foodservice increased during Q4 year-over-year. At the same time, what we saw during Q4, due to some of the storms and bad weather along with ongoing problems with hatchability, production was up close to 1.4%, but the Big Bird category, which is more commoditized, was actually flat. So, we saw an increase in demand while production in the commodity category remained flat, sustaining prices at stable levels. Now in Q1, we typically see a rebound in the demand for chicken, and prices go up almost every day in the commodity category.

And Ben, this is Matt. Thanks. That's a completely fair question relative to where our cash position sits today and our overall leverage. I think I go back to what I mentioned in the prepared remarks that right now, we're guiding at $450 million to $500 million on sustaining CapEx plus more routine or smaller growth projects. As I mentioned before and in the prepared remarks, we are really looking at growth opportunities, organic growth opportunities to partner with our key customers to increase our protein conversion. Our Prepared business needs to expand its capacity, and I think we'll be able to talk more about that at the Investor Day in about a month, and we really look forward to discussing that and our overall capital allocation philosophy at that time.

The next question comes from Peter Galbo with Bank of America. Please go ahead.

Good morning. Thank you for the question. Maybe to pick up just on Ben's question around the U.S., Fabio, I think a little bit of the pressure this morning is probably that the U.S. even seasonally still came in a bit below expectations relative to the Street. So just trying to get a layer deeper on the underlying. I know that you have some contracts that are more grain-based. So, we don't have the details of the 10-K yet, but was there more of a pass-through element just in pricing on grain that maybe hit you in the fourth quarter more so than anticipated? Just any additional color maybe by subchannel would be helpful as we think about Q4 relative to your own expectations and relative to where the street was.

Sure, I think we've always talked about our portfolio. We have exposure to the commodity markets through our Big Bird operations, but that is one-third of our portfolio. The other two-thirds are in our Small Birds and Case Ready operations, which tend to be much more stable. That's why we are able to capture upside when the market is strong while protecting the downside. And I think that's what makes our bottom line less volatile. We've been able to improve in every single category due to our operational excellence initiatives. So, there is a lot of operational excellence that contributed to our bottom line. For the year, we improved by more than $100 million in operational improvements. Also, in Prepared Foods, we've been growing our brands through distribution, which also serves as an offset to the commodity cycle as many of the raw materials for this Prepared Foods division are commodity meats. So, even though Q4 was not as strong as it could have been, when looking at year-over-year performance, there was a significant improvement.

Great. And, Matt, maybe just a couple of quick ones modeling-wise for '25. I think you said net interest expense of $65 million to $75 million. I just wanted to make sure that I heard that correctly. And then just the two others, if you could help us with D&A and then just how you're thinking about SG&A expense as well.

From an SG&A perspective, I would estimate us to be around $130 million to $135 million per quarter. This should give you a solid range in relation to depreciation and amortization at about $440 million annually. As for the net interest expense, that's based on the current guidance for capital expenditures of $450 million to $500 million, using that as a baseline to evaluate cash generation throughout the year and cash usage, considering our estimates for interest income as well.

The next question is from Andrew Strelzik with BMO. Please go ahead.

My first one, I wanted to ask about Mexico. I just wanted to better understand what drove the counter-seasonal kind of improvement in cattle values that you talked about and how to think about given that margins in Mexico into 2025 or through 2025? I assume that first quarter margins are probably going to be up year-over-year, but just trying to better understand what's going on in Mexico and how to think about the outlook there.

Sure. We're really happy with the margins we have in Mexico. It's a growing economy, and we continue to invest there. We just started a new complex in the Merida region, diversifying our geographic position in Mexico and capturing growth opportunities. Mexico can be very volatile quarter-over-quarter, but looking at the yearly numbers, we typically see more stability and solid double digits in terms of EBIT. We believe in Mexico's economy and continue to invest there. What we saw this year was strong demand for chicken products. With the high prices of commodities in the United States, especially leg quarters and breast meat, we saw more demand in the domestic market in Mexico. The live market is highly volatile, featuring many small competitors that can appear or disappear quickly based on profitability. We've improved our presence in that space, continuously growing while maintaining stability in our operations. We faced some disease challenges this year, impacting live production and creating additional volatility. We don't know yet if that will continue into 2025, but we follow very strong biosecurity measures. Chicken remains an affordable protein for Mexican families, and we will continue to invest there.

Yes. And Andrew, it's Matt. When we look back at Q1 of last year, Mexico's adjusted EBITDA margins were 9.2%, a solid start to the year. That is something to consider as we think about Q1 2025, given we are lapping those margins.

Got it. Okay. That's clear, and that's helpful. My other question is going back to the U.S. side. If I think back to the summer, U.S. margins were excellent, but breast prices were basically around the 5-year average level. Now we're coming into this year with above-average seasonal prices. So I guess I'm trying to think about, given the way you're talking about supply and demand, the right way to think about breast prices over the summer. Do you think the setup here is to get to above-normal prices or hold above-normal prices as we get into the summer? Or is the setup more similar to last year, especially in the context of feed costs, which have gone up a little bit?

Yes. I think demand for breast meat continues to be really strong. Last year, we saw prices close to the 5-year average. However, the 5-year averages have been impacted due to the very high prices during 2022. I expect demand to continue being strong. Recent USDA projections suggest demand in the first half may grow close to 1.4%, driven by egg sets and chick placements, with overall protein availability expected to grow only by 1%, influenced by beef herd declines. Given the pricing delta, retail boneless breast prices compared to ground beef are at record highs. So, there is strong retail demand for chicken products, especially during the summer, which will likely drive commodity pricing up accordingly.

The next question comes from Heather Jones with Heather Jones Research. Please go ahead.

Good morning. Congratulations on the quarter. I wanted to ask for a clarification because, Fabio, some of your prepared comments, I had difficulty understanding. Specifically on bird flu, you mentioned some of the U.S. export partners that have changed protocols. I know Mexico does that. But could you repeat which countries have switched to county-level protocols?

Yes. The biggest reduction in exports from the U.S. has been to Southeast Asia, especially Taiwan. They're changing their protocols to take action at more local levels, which is a significant shift this year. High-path AI has been a big issue for the turkey and ag industries. We implement strict biosecurity protocols, and our diverse production footprint helps mitigate the impact of high-path AI. We are seeing robust demand for American products due to affordability and competitiveness compared to all other proteins. This demand supports pricing and availability despite export limitations on leg quarters.

Okay. Thank you for that clarification. Regarding U.S. Big Bird, I understand there were disruptions due to the Douglas complex being down. Can you discuss how significant that impact was during the quarter?

Yes, thank you for the question. The storm that affected the Douglas complex was devastating. We helped the community and invested $1 million in the rebuilding efforts. We lost significant housing in that region. We've been building back up our operations and have increased production at other locations. While Douglas was more impacted than others, we were still able to operate the complex efficiently. The losses from Douglas did not yield a material impact on the quarter. We expect to ramp up production to normal levels by Q3 or Q4 as building housing takes time. The commitment from our growers and authorities has helped us in this process.

The next question comes from Pooran Sharma with Stephens. Please go ahead.

Thank you, and congrats on the quarter. I wanted to focus on hatchability and livability. It looks like trends still look challenged for production. Could you provide an update on any potential fixes and timelines?

Certainly. We’ve been dealing with hatchability issues since we introduced a new breed. This breed has improved yield and conversion numbers but is difficult to manage on the live side, producing fewer eggs with lower hatch rates. In 2025, we're starting with a lower hatchability forecast than in 2024, which was already a record low. The management of these birds requires the development of individual care protocols, which we are implementing. However, organizational changes take time, so there's no quick fix for hatchability. We expect improvements with time as we adjust our management practices and enhance biosecurity.

Thanks for the update on hatchability. I also wanted to inquire about production impacts from the recent Arctic weather. How should we anticipate those factors for Q1 in light of the recent colder temperatures?

The weather can be challenging for us. We've had significant cold events recently, even seeing snow in Florida. However, I don’t foresee these temporary situations significantly impacting our productivity or production long-term. We often face such events, and thanks to our geographic diversification, we've been able to maintain our service levels to key customers without major disruptions to our bottom line.

The next question comes from Priya Ohri-Gupta with Barclays. Please go ahead.

Good morning and thank you, and congrats on the quarter. Matt, I was wondering if we could start with you on the free cash flow performance. As we look to '25, could you walk us through how working capital could contribute to cash flow going forward?

When you think about our cash flows for '24, our working capital contributions were significant. We saw over $300 million in working capital benefits last year. This year, I don't anticipate having that type of uplift, but I also don't predict a significant drag. The agricultural market has shifted, and working capital impacts will more or less remain stable rather than showing major benefits like last year.

Thank you. Fabio, could you touch on the potential impact of tariffs that are being considered, both globally and with regards to Mexico?

There’s still a lot of uncertainty about whether tariffs will be implemented, and if they are, their potential impact on trade. Mexico is our largest trading partner, with about 24% of U.S. exports going there. I don’t anticipate significant reductions in that trade as Mexico remains concerned about food inflation. Chicken from the U.S. is a critical and competitive source for them, with over 70% of their chicken imports coming from the U.S. While we have significant northbound trade relations, there's a hedge through our Mexican operation, allowing us to weather trade disruptions effectively. Corn trade is also of concern; however, as an important staple in Mexico's economy, I don’t expect disruptions there either.

Thank you. This concludes our question-and-answer session. I would like to turn the conference over to Mr. Sandri for any closing remarks.

Thank you, everyone, for attending today's call. 2024 was a very successful year. I'd like to thank our team members for demonstrating a leadership mindset, driving our values and elevating our performance throughout the year. Following our strategies, we captured the upside from enhanced market conditions, grew our presence with key customers, further diversified our portfolio, and improved production efficiency through operational excellence. As a result, we collectively established new financial and operational milestones for our business. Nonetheless, our vision is to be the best and most respected company in our industry, creating a better future for our team members and their families, and that remains the same. To that end, I look forward to accelerating our work throughout 2025 and beyond. Thank you, everyone.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.