Q3 2024 JBS SA and JBS USA Holdings Inc Earnings Call
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Good morning, and welcome.
Yes.
Yes.
Right.
'twenty 'twenty four results conference call.
At this time all purchased.
And as you think he mode later, we'll conduct a question and answer session.
At that time.
As a reminder, this conference is being recorded.
Any statements.
During this conference call in connection with the company business outlook projection.
Operator.
Targets and potential growth should be understood as management forecast based on the company's management's expectations in relation to the future of jbs.
Expectation I'd highly depend on market conditions on Brazil's overall, economic performance and an industry and international market behavior and therefore.
Speaker Change: Jack should change.
Speaker Change: Our present with us today, <unk> Tomo Bunny global CEO of Jbs.
Speaker Change: A couple of countries global CFO of Jbs.
But she is the failure CEO of Jbs, USA and Chris Genesis Investor Relations Director now I will turn the conference over to Tricia <unk> Global CEO of Jbs.
Speaker Change: Mr. <unk> you may begin your presentation.
Tricia: Good morning, everyone.
Tricia: Thank you for your participation in our results teleconference.
The third quarter results for 2024, reaffirm our positive outlook for the year highlighting once again the.
Tricia: And stress of Jbs global multi protein platform.
Tricia: Quality of our team and our focus on operational excellence.
Tricia: Net revenue was a record.
Tricia: $19 9 billion U S dollar.
Tricia: During this period.
Tricia: DDA reached $2 2 billion West dollar with a consolidated margin of 10, 8%.
Mark and a nearly 5% point increase compared to the same quarter in 2023.
Tricia: The result is clarkston allow all swap out that the company will distribute dividends is on <unk>.
Tricia: 1025.
Approximately 17 cents per share.
Tricia: Totally.
Tricia: <unk> hundred 82 U S dollars million U S dollar.
Tricia: Last October approximately 815 million U S dollar and dividends that were distributed.
Tricia: Our board embark operation in Brazil, and the United States, where farmers above expectation, especially <unk>, which closed at the acquired and reached a record breaking 21% margin.
Strong global demand favorable grain cost.
Tricia: In our agility.
And then as you brought it in market needs alongside our focus on high value products brands and innovation.
Tricia: Complement the result of already implemented.
Matt: I saw improvements in efficiency productivity and commercial in a yes, Matt.
Speaker Change: <unk> reported a solid solid 16 nine margin percent margin this quarter.
Driven by robust demand, primarily in Europe U S and Mexico.
Speaker Change: Operational improvements and portfolio diversification and value added products and brand also distribute these are results.
Along with partnership Custer.
Speaker Change: Customers aimed at delivering value to consumers.
The business performance also reflects our focus on quality service and innovation.
All our U S business posted.
Speaker Change: 12, 1% margin.
Speaker Change: And by higher sales, both in U S and international.
Speaker Change: Along with impressive growth in value added products and strong gains across agriculture performance metrics.
Speaker Change: Yeah.
Speaker Change: I would like to emphasize once more that jbs.
Speaker Change: <unk> geography, multi protein in Florida farm <unk>.
Speaker Change: Mitch induced resilient aimed at market challenge.
Speaker Change: While U S operation are still feeling the effects of scheduled cycle.
Speaker Change: ABS, Brazil posted one of the best performers.
Speaker Change: 11, 6% margin driven by the beef segment.
Speaker Change: Yes.
Speaker Change: Hi, export volume three boy results reflect.
Speaker Change: Our suite of excellent increase in domestic demand the opening of new markets and improvement in the product mix with a focus on value added products branding and customer service.
Speaker Change: Australia.
Speaker Change: Gene is to capture the benefit of cattle cycle with a nine 8% margin in the third quarter, despite rising livestock prices.
Speaker Change: The outlook of the business remain favorable in the coming quarters.
Speaker Change: We are focused and.
Speaker Change: And grow.
Diversification innovation value added products and strong brand.
Speaker Change: Recently, we announced an investment to extent Hugh agricultural solvent.
Speaker Change: Adoption in Australia.
In Jeddah, Saudi Arabia, we aren't finished yet youll see at a facility that will be valuable local value added chicken product capacity in the region.
Speaker Change: Yes.
Speaker Change: I would like to emphasize that our Q performance Q3 per farmers under Scott is stretch all our financial management.
Speaker Change: <unk> dropped to 215 times in U S. Dollar net debt was reduce it by 1 billion U S dollar.
Increasing to $13 7 billion U S dollar.
Speaker Change: Perfect.
Speaker Change: 693 million U S dollar.
Speaker Change: With our global footprint and the expertise of our team ongoing innovation and commitment and operational excellence.
Speaker Change: MBS is private to continue delivering value to our customers consumers and stakeholders alike.
Speaker Change: With the <unk>.
Speaker Change: <unk> I want to emphasize.
Speaker Change: That our robustness of this quarter is not out of line.
Speaker Change: As we will see that the cumulative results on the last six years.
Speaker Change: <unk> generated an average annual return to shareholders.
Speaker Change: Approximately 20% the U S dollar.
Speaker Change: And our free cash flow of $14 4 billion U S. Dod before expansion Capex.
Speaker Change: Delivering both gross and then.
Speaker Change: During this period seven.
Speaker Change: Billion was invested in organic growth.
Speaker Change: And M&A.
Speaker Change: $6 5 billion was distributed in dividends and share buybacks.
Speaker Change: Thank you again.
Speaker Change: Participation in this.
Gilead: <unk> calls and now I will pass the floor to Gilead.
Gilead: <unk> will detail our numbers Gilead please.
Gilead: Yes.
Thank you so much.
Gilead: Let's now move to the operational and financial highlights.
Gilead: Quarter of 2000, and thank you for starting on Slide 12. Please.
Gilead: Net revenue of the third quarter was a record totally $20 billion.
Gilead: Adjusted EBITDA totaled $2 $2 billion and represents a margin of 10, 8% in the water.
Gilead: Net profit was $693 million in the boardroom.
And excluding non recurring items adjusted net income would be.
Gilead: $730 million.
Gilead: Considering another quarter of strong results I would like to highlight that last night, we released the new assumptions of the company's guidance for the year of 2024.
Gilead: Therefore, our new numbers consider a net revenue of $77 billion and.
Gilead: Adjusted EBITDA between six 9 billion.
Gilead: Seven $1 billion, which implies an EBITDA margin between nine and nine 3% for the year.
Gilead: Yeah.
Gilead: Moving onto the next slide operational cash flow in the quarter was $1 9 billion.
Free cash flow for the quarter was $1 billion in.
Gilead: An increase of 65% year on year year to date free cash flow generation was $1 4 billion.
Gilead: Strong generation as displayed by the improvement in the results of all of our business units, except for GBS, North America, which is facing a challenging moment in the cattle cycle.
Gilead: Capex in the quarter was approximately $321 million, 60% of each was maintenance capex.
All of them.
Gilead: 18% lower than the third quarter 2019.
Gilead: And this is in line with our estimate for the year of $1 $3 billion.
Gilead: Moving to the slide 15 net debt at the end of the third quarter of 2024.
Gilead: Was $13 7 billion a.
Gilead: A $1 billion reduction compared to the previous quarter, reflecting the strong free cash flow generation in the period.
Gilead: During the quarter, we carried out two important movements for the company. The first of these is the repurchase of $722 million of local debentures of class I believe I read.
Business receivables certificate issued by the company in addition to reducing gross debt. This repurchase excludes all remaining financial progress of the company's debt. Therefore currently 100% of GBS that does not have financial covenants.
Gilead: The second was the first issue of Crs local debentures cut us.
Gilead: In October <unk> $276 million in three.
Gilead: <unk> three tranches of 510 and 20 years.
Gilead: The 10, and 20 year issues, having the lowest spread over.
Gilead: The treasury.
Gilead: Over the NTN b.
Gilead: With just the Brazilian treasury yields.
Gilead: Leveraging dollars came down.
In just one quarter from 277 times ending in the third quarter at 215 times.
Gilead: The reduction happened due to the expression of the EBITDA and the reduction of the debt the cash generation.
Gilead: For the year end.
Gilead: Merely as an exercise without considering our leverage guidance.
Gilead: If we consider the third quarter 2020 for net debt of $13 $7 million and simply divided by the average EBITDA of our guidance of $7 billion.
Gilead: Our leverage would reach below two times by year end.
Gilead: Okay.
Gilead: Over the past six years, we have maintained a balanced approach to growth and returns to shareholders.
Gilead: $4 5 billion.
Gilead: The organic growth Capex $3 3 billion in acquisitions, $4 1 billion in dividends and $2 8 billion share buybacks. It is important to mention that this entire amount was funded by the company's free cash flow generation.
Gilead: This stronger free cash flow generation, despite our largest business in terms of net revenue. The GBS North America is still facing a challenging scenario shows the robustness of our unique platform.
Gilead: We are optimistic that our geographic and multi protein diversification, we will continue to provide growth and returns for our shareholders.
Gilead: In October we paid an interim dividend in the amount of $812 million equivalent to 37 per share.
We also announced last night in additional payments of dividend in the amount of $382 million equivalent to <unk> 70 per share.
Gilead: Both sitting in FX of $5 81 per dollar.
Gilead: Yes.
Gilead: These.
Gilead: Dividends will be paid in January 15th 2002.
Gilead: 25.
Gilead: Considering the two distributions, which totaled $1 $2 billion the.
The dividend yield as of today is approximately eight 5%.
Gilead: Additionally, we reopened our share buyback program, which Ken by up to 113 million shares.
Gilead: I will now briefly go through the business units.
Gilead: I think we had Seattle on July 16, net revenue growth was 5% year on year, while profitability grew by a significant 15, five percentage points, reaching 21% EBITDA margin.
Gilead: These numbers are the result of a better commercial and operational execution strong global demand and the expansion of our value added portfolio. Seattle continues with its strategy of waning consumer preference through product quality innovation execution and the strengthening of the brand achieving growth.
Gilead: Penetration and repurchase rates.
Moving now to slide 17, Jbs, Brazil record net revenue, 10% higher than the third question 33, driven by higher volumes sold mainly in the international market.
Gilead: This result is attributed to the strong global demand. In addition to the favorable livestock cycle quite a period, resulting in greater availability of animals far as luck. Therefore.
Gilead: Therefore, the EBITDA margin reached 11, 6% an increase of eight two percentage points in the annual comparison.
Gilead: Moving to slide 18, and now from now on you're speaking in U S. GAAP.
<unk> North America net revenue grew 6% year on year as a result of the strong demand for beef in the period profitability continues to be pressured by the challenging ghetto cycle, which has kept the price of life at high levels.
On July 19, we have Jbs, Australia.
In the quarter revenue growth of 30% year over year is the result of both higher volumes sold and prices the improvement in profitability in the annual comparison reflects the increasing operational efficiencies and despite the favorable livestock cycle the price of Australian Gatto. Our main business grew 25% in the yearly comparison.
Gilead: <unk>.
Gilead: Turning now to Jbs USA pork net revenue for the quarter grew 1% compared to the third quarter 2033 in the domestic market. The increasing net revenue is a result of higher sales volumes driven by strong seasonal demand.
Gilead: Consumption has also been favored by the average price of beef, which remains at high levels.
Gilead: Progress profitability was positively impacted by lower green costs ongoing efforts to expand the value added portfolio and consistent commercial and operational and logistics.
Gilead: Execution.
Brian: Give us Brian as highlighted on slide 21 record as an increase in net revenue of 5% in the third quarter 2000 vintage bar compared to the third quarter 2023.
Brian: Throughout the quarter. The company has continued to focus on operational excellence portfolio diversification and strengthening partnerships with key customers aiming to add even more value to the customer the focus on quality.
Brian: Improving the level of service and innovation is reflecting the strong results of the park.
Brian: At this time I would like to open up for a question and answer session.
Brian: Yes.
Speaker Change: Ladies and gentlemen, we will now begin the question and answer session. If you have a question. Please press the button raise your hand and wait for the operator.
Speaker Change: At any time, you would like to remove yourself from the questioning Kim Please press the button Hi, Zack.
Speaker Change: And our first question comes from Priya <unk> Gupta with Barclays. Please go ahead.
Speaker Change: Hello, and thank you so much further questions.
Speaker Change: First of all Gila.
Speaker Change: Well first of all congratulations on the solid quarter.
Speaker Change: Our call earlier. This morning, I think you talked a little bit about where you hope to manage your net leverage on an ongoing basis within that two to three times target.
Speaker Change: And how you think about that with regards to maybe.
Speaker Change: Requesting.
Speaker Change: Our ratings upgrade could you just remind us sort of what your ultimate ratings target is for the company and what you hope to achieve maybe over the mid term.
Speaker Change: Where we should see leverage migrate to over the next year and what the key drivers will be.
Speaker Change: And how we should think about sort of timing of upgrades within that that's my first question and then I have a follow up thank you.
bria: Thank you bria, yes.
Our our policy states that we should be between two and three times net debt to EBITDA.
bria: Which is a level that.
bria: We think we can keep investment grades.
bria: Given our free cash flow.
bria: Generation, we've been able to stay in this range.
bria: Despite we invest in inorganic growth.
bria: <unk> and and also dividends.
bria: So this year as I mentioned in my speech.
bria: We may end up.
bria: Low two times net debt to EBITDA.
bria: So.
bria: I think if we maintain at around two times.
I think we can stock being considered for Everglades, just bear in mind that we still have one notch downgrade for governance.
bria: Which.
bria: Working and we expect at some point.
These one notch down for governance.
bria: They came out and then we could go to Triple B flat.
bria: And in the face of ratings upgrades.
bria: It will depend mainly on <unk>.
Opportunistic acquisitions that we never know.
bria: If you do a peer or not.
bria: So the timing can be maybe delayed the Penguin acquisition.
Our target I think again, our target is to be.
bria: Two or three times referred to between to be between two and two five times I think it can be is at two five times.
bria: Doing growing.
Growing the company and returning capital to shareholders.
bria: And I think the target.
bria: At the levels of people will be flat for example, we maximize the firm value from an equity perspective.
The Triple B plus.
bria: It's an interesting targets to be.
bria: Pursued because then you can access.
bria: Yes.
bria: Our program of commercial paper at much lower levels and much deeper.
bria: We intend to start.
bria: Our first commercial paper program.
bria: This year may be steel.
bria: But of course, the new smaller amounts distribute best in the market and as we can and as we have a ratings upgrade in the future.
bria: We might be getting a deeper access of these markets.
bria: It is also worth mentioning that the as we grow as the company grows.
It's easier to continue.
bria: Return compensation return money to shareholders and grow and keeping the leverage given the size of the company.
Right.
bria: I mean is it six years ago again, we almost double our EBITDA that we had six years ago and we have the same level of net debt.
bria: So that's so.
bria: So as we are growing increasing our EBITDA.
I think naturally on.
On the long term, we should be going on a path of ratings up a great given the size of it.
But I mean is that a.
bria: I walked it in company before that sometimes you get to a size of EBITDA that even difficult for you to find targets are spending an amount of money that <unk>.
bria: <unk> leverage too high.
bria: For example, today with <unk> our guidance is that we have $7 billion.
bria: EBITDA for this year, that's our guidance.
bria: Midpoint of our guidance, so we need to increase our leveraging one times I need to spend $7 billion without bringing any EBITDA.
bria: To the denominator. So that's what I mean by the size of the company, helping on the ratings upgrade and Thats. In fact is one of the metrics are.
bria: One of the rating agencies is size.
Speaker Change: It's clear.
Yes, that's that's very helpful.
Speaker Change: Mechanically youre not leverage did improve because of the higher cash balance should we expect gross debt to come down in the fourth quarter and then secondly.
Just given the.
Speaker Change: The higher use of working capital this year.
Speaker Change: As we think about cash flow generation in fourth quarter versus fourth quarter of 2003.
Speaker Change: Should we still expect cash flow from operations to be higher which has been the trend this year or more in line.
Speaker Change: Thank you Brad So basically if you look on our press release on page seven we already do a pro forma where we show that.
Speaker Change: We use our cash balance to pay dividend.
Speaker Change: And.
Speaker Change: We also made any strengths.
Speaker Change: A local debenture, we still have excess cash.
But because we have we took the opportunity to also to issue local debentures and having.
Speaker Change: Being opportunistic.
Speaker Change: <unk> in market, but we still could have a potential to decrease more frankly, but we paid less in the last quarter, we paid $700 million $772 million of a local debenture into issued only.
<unk> hundred 61 so.
Speaker Change: Yes.
Speaker Change: <unk> already reduced the gross debt.
Speaker Change: The thing is with that.
Speaker Change: We would be paying that would be efficient.
Speaker Change: If you look at our bonds.
Speaker Change: Trading very efficiently.
Speaker Change: At good rates, but then.
Speaker Change: Let's see what are what is the continuing.
Speaker Change: <unk> of our cash generation.
Speaker Change: You see that as an opportunity to continue to pay.
Gross debt.
Speaker Change: Could be a possibility for the fourthquarter.
Speaker Change: I have mentioned in the beginning of the year.
Speaker Change: Our.
Speaker Change: EBITDA of breakeven, which means what what is the EBITDA that that would be have zero free cash flow was $3 5 billion.
Speaker Change: With choice was comprised of $1 $1 billion of net interest expenses $1 $3 billion of capital expenditures $500 million of leasing and a $650 million of working capital consumption because of the biological assets.
Speaker Change: Just basically feeding the breeders.
Speaker Change: This calculation proven valid so if you get our guidance for EBITDA midpoint of $7 billion.
Speaker Change: And we decreased 435, which is would be our breakeven.
Speaker Change: EBITDA.
Speaker Change: Take out, 25%, which is our average effective tax rates.
Speaker Change: We would reach around $2 $6 billion.
Speaker Change: Our free cash flow for this year, which makes sense given the fourth quarter is generally a.
Speaker Change: Part of strong free cash flow this number could fireeye.
Speaker Change: Randy on I can't unwind, some leverage some balance sheet leverage that I'd.
Speaker Change: Last year when I was in our leverage was higher so we can keep leverage under control. So I may.
Speaker Change: Use the part of these guests also to unwind.
Speaker Change: Some leverage.
Some vendor finance for example.
Speaker Change: Drew will mean lower interest expenses for next year.
Speaker Change: Okay. That's helpful. And then my final question would just be around.
How you're thinking about the listing process in the U S and any updates you could give us there. Thank you.
Speaker Change: Yes.
Speaker Change: Basically.
As you know we are currently on a process of exchange offer of the bonds of the $2 5 billion bought bonds we issued in.
Speaker Change: In 2023, so we need to finalize this process.
Speaker Change: Which is expected to finalize by the end of November.
Speaker Change: Once we finalize these exchange offer Dan will resume.
Speaker Change: The filings for the equity or the listing so I would say so then we will start.
Speaker Change: We restart the process of back and forth with SEC.
Speaker Change: The other listing it's worth mentioning that our 20 assets, it's already proven by the FCC and the exchange offer also VFR of exchange of the debt was a prove it. So now we will resume the process of.
Speaker Change: Of getting the approval the registration for also <unk>, which is the exchange of the shares.
Speaker Change: Yeah.
Thank you.
Speaker Change: Thank you Pierre.
Speaker Change: Yeah.
Speaker Change: Yes.
Speaker Change: Our next question comes from Ryan Levine with Barclays. Please go ahead.
Ryan Levine: Hey, this is Ryan filling in for Ben today, Congrats on the results. So two quick ones, starting with Brazil beef.
Ryan Levine: About the recent increase the significant increase of Brazilian cattle pricing, how do you see that impacting results into the fourth quarter in 2025, especially in context of the export market and then second very quickly quickly with USD do you think there is any room for margin and profitability improvement even before a turnaround in the cattle cycle, which I think you are.
Ryan Levine: <unk> talked about this morning could potentially be in the second half of 2025.
Speaker Change: Hi, Ryan.
Speaker Change: <unk>.
Speaker Change: Understood about beef in Brazil, and then gradually it runs at about between U S and beef in Brazil demand drive of the result was the price of cattle the price of gas drop it and these include the margin of course.
Speaker Change: Jbs take this advantage.
Speaker Change: Because a very well positioned in terms of branding and distribution but.
Speaker Change: The main driver was the price of the <unk>, we see now the price of the Carol they dropped too much and now.
Speaker Change: Go up too much I see some time some opportunities for connection, but if you make if you make the assumption we see that the margin up three boys for the future.
Speaker Change: Back to the historical results.
Speaker Change: Hey, Brian So on USP <unk> <unk>.
Speaker Change: Currently we see between a $1 5 million or 2%.
Speaker Change: <unk>, we've improved a lot in the.
Speaker Change: In the last year this would take us to a more operational excellence.
Speaker Change: <unk>.
Speaker Change: We are writing outperforming according to historical but there is two other one 5% to 2%.
Speaker Change: Space to improve regardless of market.
Speaker Change: And what I meant.
Speaker Change: On the earlier earlier cobalt second half of 'twenty five what I meant there is whereas where I thought that I think that Ah.
Speaker Change: Heard reviewed is going to really start picking up north when we're going to see more supply of coke.
Speaker Change: Okay perfect. Thanks, Thanks for the color and congrats on the results again.
Speaker Change: Our next question comes from Ben <unk> with BMO. Please go ahead.
Speaker Change: Hey, guys. Thanks for the question and congratulations on the strong result.
Speaker Change: I guess I'll start with the implied fourth quarter guidance I know you just touched on.
Speaker Change: Brazil beef business.
Speaker Change: Just if you can walk us through briefly.
<unk>.
Speaker Change: Kind of what you're expecting by segment in the fourth quarter.
Speaker Change: Chart there thanks.
Speaker Change: Yeah.
Speaker Change: Hi.
Speaker Change: We don't break out guidance by segment.
Speaker Change: And then also by water.
Speaker Change: Okay, that's fair.
Speaker Change: So in terms of the U S. Pork business you guys have been.
Speaker Change: Outperforming.
Consistently the industry and I'm just wondering if you can talk us through how you're doing that.
Speaker Change: And.
Speaker Change: That momentum.
Speaker Change: Keep up into into 25. Thanks.
Speaker Change: Yes, Ben.
Speaker Change: Good morning.
Speaker Change: Eurosport a reuse pork division has been outperforming the market for a while here now and they've been performing pretty well.
Speaker Change: There is one thing, but those are few things that really help us get there our plants our assets are really good.
Speaker Change: Out of our five port facilities in the U S. Four of them are large double shift plants that are very well invested.
Speaker Change: And Theyre, just very very efficient, but does not only only.
Speaker Change: This is a team that has been operating very well on the buy make and sell off the business.
Speaker Change: Very well for a long time so.
Speaker Change: We do see this there's at least our performance.
Difficult to talk about.
Speaker Change: Comparison to market, but our performance we see this business continuing to transform performance like we've seen.
Into next year, we do not see a reason for any reason for that to change the other thing to that.
Speaker Change: Relevant we have inside of this business you have the prepared foods part of our business.
Speaker Change: Which operates in the in the in the mid double digit levels.
Speaker Change: Mid to low double digits level.
Speaker Change: So more to high above the average of what we have here, but brings that average a little bit higher and that that business has also been performing really well.
Speaker Change: We have two new plants that are pretty.
Speaker Change: Pretty much done with their ramping up.
Speaker Change: And it's a business that also has.
Speaker Change: Especially in the next couple of years really really improved performance.
Speaker Change: For me.
Speaker Change: Bringing the average of the segment.
Speaker Change: The average develop this business here.
Speaker Change: The bulk of this is not the bulk of the performance of the bulk of the of the performance of the pork Division is the pork business.
Speaker Change: This prepared foods as well.
Speaker Change: Secondary.
As to why.
Speaker Change: They've been performing solo versus market.
Speaker Change: Thanks, and if I could just squeeze in one more the Sierra result in Q3 was.
Speaker Change: Was stellar.
Speaker Change: How do you think about the sustainability of these margin levels.
Speaker Change: And what are some of the key drivers.
Speaker Change: That youre seeing in the business that are allowing it to perform at such a high level and I'll leave it there. Thank you.
Ben: Ben we are if you look part of the page.
Speaker Change: Let's see the number of the page.
Speaker Change: Page five of the presentation page five of the presentation.
Speaker Change: Yes.
Speaker Change: <unk>.
Speaker Change: Year by year.
Speaker Change: Volatility of oil.
Speaker Change: By our business units and the average.
Speaker Change: Sorry, and the average of our margin.
Speaker Change: You can see that.
Speaker Change: We are constantly increase our margin and that was up average because we are investing in value added and brand when they say value add it is not just value added based on.
Speaker Change: One.
Speaker Change: Professor product no.
Speaker Change: Alright.
Speaker Change: Rob cuts.
These marinades or a different package share or more.
Speaker Change: Brett This is to the consumer and brand we start to invest in Seattle brand in Brazil than we buy we buy business in U as we buy these things in Europe, you by seasons in that.
Speaker Change: And we are keeping invest in value added and brands and then USC to trends.
Speaker Change: Last year was.
Wasn't outlined it.
Speaker Change: Cost of we added four jobs after the pandemic.
And that was.
Ah.
Speaker Change: Yes.
Speaker Change: This continued in terms of supply and demand, but then we are back you can see this year, we are back on debt and the trend you can see us keep investing in that and then for us is to grow margins.
Speaker Change: And.
Speaker Change: This graphic is proof that we are able to do that and this is our focus.
Our next question comes from Carla Casella of Jpmorgan. Please go ahead.
Okay can you hear me now.
Speaker Change: Yes.
Great sorry about that just one follow up on the U S listing question.
Speaker Change: If you do list in the U S.
Speaker Change: Does that change the way you think about dividends and capital allocation.
Speaker Change: Alright, that's it.
Speaker Change: Hi, Carter.
Speaker Change: It has a slightly change because.
When we are listed in Brazil.
Speaker Change: The corporate law in Brazil.
Speaker Change: <unk> requires that you paid 25% minimum dividends on net profit.
Speaker Change: So.
Speaker Change: So basically the corporate law gives you a dividend policy.
Speaker Change: When we move to a U S listing.
Speaker Change: You don't have any.
Speaker Change: Any mandatory dividends, so Germany companies.
Speaker Change: Builds and the states some dividend policy.
Speaker Change: In their political internal policies are.
Speaker Change: Our show to the market so.
Speaker Change: So then for example.
Speaker Change: And when you are electricity company, our telecommunications you can see a lot of progressive dividends things like that we are in a cyclical business. So generally when you are in a cyclical business is.
Speaker Change: It is not prudent to promise.
Speaker Change: Progressive dividends or anything like that but you can have some guidance in terms of cash of cash flow generation or something.
Speaker Change: Linkage to the free cash flow generation and try to keep the dividends.
Speaker Change: As the more stabilized possible. So far example, Tyson.
Speaker Change: Around 600 just.
Speaker Change: To $700 million of dividends per year, mostly constant for the last.
Speaker Change: Seven years Hormel has around $500 million in dividends in the last seven years AVM has around $800 million to $900 million boom.
Speaker Change: <unk> has around $400 million, so you'd like to keep.
Speaker Change: Some dividend.
Speaker Change: Try to.
Speaker Change: To make it as.
Speaker Change: As constant as possible, so youll have a minimum dividend yields for.
Speaker Change: Pension funds to allocate.
Speaker Change: We've got some special funds they need some cash to pay.
Speaker Change: Their clients, so that's more or less so daily moving to <unk> I will not have these minimum.
Payout ratio that the Brazilian corporate law requires and then I will.
Speaker Change: Put something in capital location link to the free cash flow I would say practically speaking if you look at the last six years, we generated $14 billion of cash free cash flow before expansion capex.
Speaker Change: How we use this money.
Speaker Change: We spend.
Speaker Change: Bob.
Speaker Change: $4 $5 billion in expansion Capex of $3 3 billion.
Speaker Change: In M&A three.
Speaker Change: $3 8 billion in dividends not including the next one and $2 8 billion in share repurchase. So it was a balanced approach of our free cash flow.
<unk> return of short term to shareholders and.
Growth.
Speaker Change: So again, if you look at our guidance.
Speaker Change: If you think that we could do with the $7 billion EBITDA, we could be generating $2 5 billion.
Speaker Change: Free cash flow.
Speaker Change: We could that half and half with the historically, that's more or less.
Speaker Change: Would be doing going forward that of course, this will depend on opportunistic acquisitions that allocation because in the long term. We have we intend to have these balanced approach between <unk> and <unk>.
Speaker Change: Being able to deliver growth and value for our shareholders.
Speaker Change: That's super helpful. I Love all the detail.
Speaker Change: Just a quick question with the change in the U S regime here.
Speaker Change: We see a tariff or trade wars can you just give us some color how that impacted the business back in 2018 19, when there was a little bit more trade disruption.
Speaker Change: Carla the business continued to perform pretty well and although the microgrid some short term disruption, but the U S.
Speaker Change: No.
Speaker Change: If not the most among the most competitive protein producers.
Speaker Change: In the World. So look obviously, we're watching and see what the effect of any change in regulation.
Speaker Change: <unk>.
Speaker Change: Commerce between countries, but at this point, we're not we're not super concerned about about what's going to.
Speaker Change: If that's going to create a huge disruption.
Export flow.
Speaker Change: Maybe just one for now.
Speaker Change: That's great and then just one last one it's kind of a follow up I was going to ask about margins a lot of your businesses, they're operating at kind of record margins and.
Speaker Change: It's very helpful. It sounds ciara and on pork can you just turn to beef as well on the USB side.
Speaker Change: Seem to be narrowing the gap to them.
Speaker Change: Maher Frag and are there structural changes in that where you think ultimately you could have better margins in them over time or how should we think about the beef margins in North America.
Speaker Change: And the stockpile improvements you've made the cost cuts you've made.
Speaker Change: Yes.
Speaker Change: We're performing.
Very very much in line with what our history, our history versus peers was probably for either performed better than peers for a long time. So we obviously were.
Speaker Change: We look forward.
Speaker Change: To the best job, we can here.
Speaker Change: Potentially obviously, it's difficult to say right because it doesn't depend only on hard numbers.
Speaker Change: We have improved a lot our business there is two things.
Speaker Change: Improving performance.
Speaker Change: But performance is close to neutral you do another one.
152% that I mentioned now take the business to excellent it wouldn't be just to be at the Haynesville, we already there.
Speaker Change: And we're working hard to get there.
Speaker Change: Okay.
Okay, that's great and that's the one and two that's all excluding cycle improvement.
Speaker Change: That's 100% dependent on us regardless looking at.
With the market.
Speaker Change: Great. Thank you so much.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: Ladies and gentlemen, there being no further questions now I would like to pass the floor to <unk> for his final remarks. Please go ahead.
I want to thank everyone again for <unk>.
And here I am.
Speaker Change: Also want to emphasize that having a global but the pharmacy is not enough you must operate well.
Speaker Change: I extend my gratitude to all our 270000 team members and finally I want to reiterate that the strength of.
Speaker Change: This result is not an outlier.
Speaker Change: Over the past 60 of Jbs has generated an average annual return for the shareholders of approximately 20% in U S. Dollar.
Speaker Change: Thank you.
This is the end of the conference call held by Jbs. Thank you very much for your participation and have a nice day.
Speaker Change: Goodbye.