Q2 2025 JBS SA Earnings Call

Speaker #2: Good morning and welcome to JBS's second quarter of 2025 results conference call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time.

Conference Operator: Good morning and welcome to JBS S.A.'s second quarter of 2025 results conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. As a reminder, this conference is being recorded. Any statements eventually made during this conference call in connection with the company business outlook, projections, operating and financial targets, and potential growth should be understood as merely forecasts based on the company's management expectations in relation to the future of JBS S.A. Such expectations are highly dependent on market conditions, on Brazil's overall economic performance, and on industry and international market behavior, and therefore are subject to change. Present with us today are: Gilberto Tomazoni, Global CEO of JBS S.A.; Guilherme Cavalcanti, Global CFO of JBS S.A.; Wesley Batista Filho, CEO of JBS USA; and Cristiane Assis, Investor Relations Director.

Speaker #2: As a reminder, this conference is being recorded. Any statements eventually made during this conference call in connection with the company business outlook, projections, operating and financial targets, and potential growth should be understood as merely forecasts.

Speaker #2: Based on the company's management expectations in relation to the future of JBS, such expectations are highly dependent on market conditions, on Brazil's overall economic performance, and on industry and international market behavior; therefore, they are subject to change.

Speaker #2: Our present with us today: Gilberto Tomazoni, Global CEO of JBS; Guilherme Cavalcanti, Global CFO of JBS; Wesley Batista Filho, CEO of JBS USA; and Cristiane Assis, Investor Relations Director.

Speaker #2: Now, I'll turn the conference over to Gilberto Tomazoni, Global CEO of JBS. Mr. Tomazoni, you may begin your presentation.

Conference Operator: Now, I'll turn the conference over to Gilberto Tomazoni, Global CEO of JBS S.A. Mr. Tomazoni, you may begin your presentation.

Speaker #3: Good morning, everyone. Thank you for joining. Today, for our earnings call, we will discuss the second quarter of 2025 market, marking the beginning of a new phase for JBS.

Gilberto Tomazoni: Good morning, everyone. Thank you for joining us today for our earnings call. The second quarter of 2025 marks the beginning of a new phase for JBS S.A. With the launch of our shares on the New York Stock Exchange, we completed our dual listing. This is a strategic milestone that enhances our global visibility, broadens our investor base, and reinforces JBS S.A.'s position as one of the world's leading food companies. I want to emphasize that this starts a new chapter of our trajectory. We see a clear path to long-term value creation, anchored in operational excellence, diversification, innovation, value-added products, and strong brands. It is worth highlighting that over the coming years, we will keep investing consistently to expand our platform and position the company to meet the growing global demand for protein. We truly believe in JBS S.A.'s well-positioned for the future.

Speaker #3: We, with the launch of our shares on the New York Stock Exchange, completed our dual listing. This is a strategic milestone that enhances our global visibility and broadens our investor base and reinforces JBS's position as one of the world's leading food companies.

Speaker #3: I want to emphasize that this starts a new chapter of our trajectory. We see a clear path to long-term value creation, anchored in operational excellence, diversification, innovation, value-added products, and strong brands.

Speaker #3: It's worth highlighting that over the coming years, we will keep investing consistently to expand our platform and position the company to meet the global demand for protein.

Speaker #3: We truly believe in JBS's well-positioning for the future. We are delivering our long-term strategy with discipline and consistency, and that gives us confidence in the path ahead.

Gilberto Tomazoni: We are delivering our long-term strategy with discipline and consistency, and that gives us confidence in the path ahead. At the same time, we will stay fully committed to our mission of returning value to our shareholders. Evidenced by $1.2 billion in dividends we paid this quarter, as well as today's announcement of a $400 million share repurchase program. Let's take a closer look at some strategic movements we have made this year. During the first half of 2025, we have made several important investments in the United States. In May, we disclosed a plan to build a new fresh processing facility in Iowa, totaling $135 million. This came in addition to $200 million allocated to upgrading our beef plants in Texas and Colorado, and $400 million for a new prepared food facility that Pilgrim's Pride is building in Georgia.

Speaker #3: At the same time, we will stay fully committed to our mission of returning value to our shareholders. Evidenced ed by $1.2 billion in dividends we paid this quarter, as well as today's announcement of $400 million shares repurchasing program.

Speaker #3: Let's take a closer look at some strategic movements we have made this year. During the first half of 2025, we have made several important investments in the United States.

Speaker #3: In May, we disclosed a plan to build a new fresh process facility in Iowa, totaling $135 million. This came in addition to $200 million allocated to upgrading our beef plants in Texas and Colorado.

Speaker #3: And $400 million for a new prepared food facility that Pilgrim's Building in Georgia. Pilgrim's Building in Georgia. Yesterday, we also announced an $100 million investment to acquire and expand Iowa facility which will be transformative in the largest ready-to-eat bacon and sausage plant in Iowa's operation.

Gilberto Tomazoni: Yesterday, we also announced a $100 million investment to acquire and expand an Iowa facility, which will be transformed into the largest ready-to-eat bacon and sausage plant in our U.S. operation. I want to stress here that all these projects are designed to support the growth of JBS S.A.'s prepared food portfolio, helping us to meet the growing demand for customers and consumers for these products. Even amid a challenging macroeconomic environment and with ongoing pressure in some business units, our second quarter's performance once again reflects the resilience of our diversified global platform. Net sales were record, reaching $21 billion, a 9% increase year over year. Adjusted EBITDA was $1.8 billion, with a margin of 8.4%. Poultry operations once again stood out as a key highlight. Pilgrim's Pride achieved the highest EBITDA in its history, supported by lower grain costs and resilient U.S. demand.

Speaker #3: I want to stress here that all these projects are designed to support the growth of JBS's prepared food portfolio. Helping us to meet the growth demand for customers and consumers for these products.

Speaker #3: Even amid a challenging macroeconomic environment and with ongoing pressure in some business units, our second quarter performance once again reflected the resilience of our diversified global platform.

Speaker #3: Net sales were record, reaching $21 billion and 9% increase year over year. Adjusted BDAR was $1.8 billion and with a margin of 8.5%. Poultry operations once again stood out as a key highlight.

Speaker #3: Pilgrim's achieved the highest BDAR in its history, supported by lower grain costs and resilient resilient US demand. Results also reflect continuous growth in the prepared food portfolio, strong relationship with the key customers, and a solid performance across fresh and cage-ready segments in the US.

Gilberto Tomazoni: Results also reflect continuous growth in the prepared food portfolio, a strong relationship with key customers, and a solid performance across fresh and ready-to-cook segments in the U.S. Mexico and Europe delivered strong results as well. I would like to particularly highlight that Seara delivered another quarter of consistent results. Despite the outbreak of avian influenza in Brazil, the business reached an EBITDA margin of 18.1%, driven by disciplined commercial strategy, product mix management, and a strong focus on innovation. The results highlight the robustness of our biosecurity protocols and the maturity of Brazilian sanitary systems. It is important to note that the swift and technical response from Brazil's sanitary authorities, together with the strict industry-wide control, ensured that only one isolated case was confirmed in the country at the commercial farms.

Speaker #3: Mexico and Europe delivered strong results as well. I'd like to particularly highlight that Sierra delivered another quarter of a consistent result. Despite the outbreak of avian influenza in Brazil, the business reached a BDAR margin of $18.1%, driven by disciplined commercial strategy, product mix management, and a strong focus on innovation.

Speaker #3: The results highlight the robustness of our biosecurity protocols and the maturity of Brazilian sanitary systems. It is important to note that Swift, in technical response in Brazil's sanitary authorities, together with the strict industry-wide control, ensured that only one isolated case was confirmed in the country at a commercial farm.

Speaker #3: In the United States, our beef business continued to face a pressure from an unfathomable cattle cycle. As the spread between livestock costs and beef price narrowed, the pork business was affected on a short-term basis by the trade restrictions and we expected performance to return to normal levels over the next few quarters.

Gilberto Tomazoni: In the United States, our beef business continued to face pressure from an unfavorable cattle cycle, as the spread between livestock costs and beef prices narrowed. The pork business was affected on a short-term basis by the trade restrictions, and we expect the performance to return to a normal level over the next few quarters. Diversification remains one of our greatest strengths. In Brazil, Friboi delivered strong results, driven by a new export approval and productivity gains. In Australia, we continue to benefit from a favorable livestock cycle, with export growth and operational improvements contributing to another quarter of consistent performance. We also reaffirmed our commitment to financial discipline. The quarter ended with a net leverage of 2.27 times, in line with our long-term target and reflecting the strength of our capital structure and our financial management. With a strong, more balanced, and more innovative global platform, JBS S.A.

Speaker #3: Diversification remained one of our greatest strengths. In Brazil, pre-boy delivered strong results, driven by a new export approval and productivity gains. In Australia, we continue to benefit a favorable livestock cycle with export growth and operational improvements, contributing to another quarter of consistent performance.

Speaker #3: We also reaffirmed our commitment to financial discipline, the quarter-end with a net leverage of $2.27 times. In line with our long-term targets and reflecting the strength of our capital structure and our financial management.

Speaker #3: With a strong more balanced and more innovative global platform, JBS is well prepared for the next phase of global opportunities. I want to conclude by saying that we will remain confident in our teaming and ability to create long-term value.

Gilberto Tomazoni: is well prepared for the next phase of global opportunities. I want to conclude by saying that we remain confident in our team and ability to create long-term value. Thank you again for joining us today. I will now turn the call over to Guilherme, who will walk through the financial results in more detail. Guilherme, please go ahead.

Speaker #3: Thank you again for joining us today. I will now turn the call over to Guilherme Cavalcanti, who will be walking through the financial results in more detail.

Speaker #3: Guilherme, please go ahead.

Speaker #4: Thank you, Tomazoni. Let's now move on to the operational and financial highlights of the second quarter of 2025, starting on July 13, please. Net revenue for the second quarter of 2025 reached a record of $21 billion.

Guilherme Cavalcanti: Thank you, Tomazoni. Let us now move on to the operational and financial highlights of the second quarter of 2025. Starting on slide 13, please. Net revenue for the second quarter of 2025 reached a record of $21 billion. Adjusted EBITDA totaled $1.8 billion, which represents a margin of 8.4% in the quarter, while adjusted operating income was $1.2 billion, with a margin of 5.7%. Net profit was $528 million in the quarter, and earnings per share was $0.48 per share. Excluding the non-recurring items, adjusted net income would be $583 million, and the EPS would be $0.53. Finally, the return on equity was 25.7%, and the return on invested capital was 17%.

Speaker #4: Adjusted BDAR totaled $1.8 billion, which represents a margin of 8.4% in the quarter, while adjusted operating income was $1.2 billion, with a margin of 5.7%.

Speaker #4: Net profit was $528 million in the quarter, and earnings per share was $0.48 per share. Excluding the non-recurring items, adjusted net income would be $583 million and the EPS would be $0.53.

Speaker #4: Finally, the return on equity was 25.7%, and the return on invested capital was 17%. Although the difference in the BDAR between the second quarter of 2024 and the second quarter of 2025 was only $141 million, the free cash flow difference reached approximately $1.1 billion due to the following factors.

Guilherme Cavalcanti: Although the difference in EBITDA between the second quarter of 2024 and the second quarter of 2025 was only $141 million, the free cash flow difference reached approximately $1.1 billion due to the following main factors: the difference in EBITDA, as mentioned above, $104 million of higher capital expenditures, $242 million increase in finished goods inventories in the U.S., driven by higher prices. This cash is expected to return to the operating results over the coming quarters as sales are made. $250 million due to livestock hedging. Future purchases from suppliers such as Feedlots at fixed prices are hedged through future contracts, exposing us to the spot price and thus matching with the meat sales. Due to the sharp rise in the cattle and hog prices, there was a negative cash impact on operating results due to the hedge.

Speaker #4: The difference in the BDAR, as mentioned above, 104 million dollars of higher capital expenditures, 242 million dollars increase in finished goods inventories in the US, driven by higher prices.

Speaker #4: This cash is expected to return to the operating results over the coming quarters as sales are made. $250 million due to livestock hedging, future purchase from suppliers such as Feedlotts at fixed prices are hedged through future contracts, exposing us to the export price and thus matching with the mid-sales.

Speaker #4: Due to the sharp rise in the cattle and hog prices, there was a negative cash impact on operating results due to the hedge. This cash is expected to return in the following quarter as the physical purchases are settled.

Guilherme Cavalcanti: This cash is expected to return in the following quarters as the physical purchases are settled. A $122 million increase in legal settlements, $257 million in higher tax payments, mainly due to the improved results from Pilgrim's Pride and JBS Australia in recent quarters, a $51 million impact on Seara's chicken inventory caused by the market closure due to a single. It should return to around $4.5 billion based on the following estimated breakdowns, which may change over time due to the variables beyond our control. Can I continue?

Speaker #4: $122 million increase in legal settlements, $257 million in higher tax payments, mainly due to the improved results from PPC and Australia in recent quarters.

Speaker #4: A $51 million impact on Sierra's chicken inventory was caused by the market closure in 1996. It should return to around $4.5 billion based on the follow-up estimated breakdowns, which may change over time due to variables beyond our control.

Speaker #4: Can I continue?

Speaker #2: Yeah.

Conference Operator: Yeah.

Speaker #4: So So capital expenditures of $2 billion in 2025 and $2 billion in 2026 which already included maintenance capex. Working capital of $900 million in 2025 and $250 million in 2026.

Guilherme Cavalcanti: Capital expenditures of $2 billion in 2025 and $2 billion in 2026, which already included maintenance capital. Working capital of $900 million in 2025 and $260 million in 2026. The additional $650 million in 2025 compared to 2026 is due to the inventory and hedging impacts explained earlier. Legal settlements of $300 million in 2025 and assuming zero in 2026. Biological assets of $650 million in 2025 and the same amount for 2026. Interest expenses of $1.15 billion in 2025 and $1.1 billion in 2026. Leasing expenses of $500 million in 2025 and repeating in 2026. Moving on to slide 16 to discuss our debt position and leverage. In June, we extracted the bond market to refinance our short-term in 2027, 2028, and 2030 maturities.

Speaker #4: The additional $650 million in 2025 compared to 2026 is due to the inventory and hedging tax explained earlier. Legal settlements of $300 million in 2025 and assuming zero in 2026.

Speaker #4: Biological assets of $650 million in 2025 and the staying amount for 2026. Interest expenses of $1.15 billion in 2025 and $1.1 billion in 2026.

Speaker #4: Leasing expenses of $500 million in 2025 and repeating in 2026. Moving on to slide 16, to discuss our net position and leverage. In June, we accessed the bull market to refinance our short-term and 2027 and 2028 and 2030 maturities.

Speaker #4: Strong investor demand allowed us to upsize the issuance to $3.5 billion while achieving a record low spreads for issuers with our credit ratings, which includes a $1 billion 40-year crunch.

Guilherme Cavalcanti: Strong investor demand allowed us to upsize the issuance to $3.5 billion while achieving record low spreads for issuers with our credit rating, which includes a $1 billion 40-year term. In addition, Seara issued approximately $160 million in local debentures. We used $3 billion to extensively retire debt, clearing nearly all maturities through 2021. As a result, our average maturity extended from 11 to 15 years, while the average cost increased by just 25 basis points to 5.6%. We kept the 2029 bond outstanding, given its low 3% coupon, along with the 2021 bond at 3.75% and two 2022 note rate coupons of 3.625% and 3%. From the $3.5 billion raised, $500 million was retained as excess cash. Leverage increased to 2.27 times in the second quarter of 2025, primarily due to a $141 million decline in last 12 months EBITDA and the payment of $1.5 billion in dividends.

Speaker #4: In addition, Sierra issued approximately $160 million in local debentures. We used a $3 billion to efficiently retire debt, clearing nearly all maturities through 2031.

Speaker #4: As a result, our average maturity extended from 11 to 15 years, while the average cost increased by just 25 basis points to 5.6%. We kept the 2029 bond outstanding given its low 3% coupon, along with the 2031 bond at 3.75%, and through 2032 no 3 coupons of 3.625, and 3%.

Speaker #4: From the $3.5 billion raised, $500 million was retained as excess cash. Leverage increased to 2.27 times in the second quarter of 2025, primarily due to $141 million decline in livestock monthly BDAR and the payment of $1.5 billion in dividends.

Speaker #4: Interest coverage remained stable at 7.7 times compared to the previous quarter. With leverage at the lower end of our comfort range, a stable interest coverage in line with recent quarters no significant debt amortization in the coming years and a strong cash position, we announced a share buyback program of up to $400 million.

Guilherme Cavalcanti: Interest coverage remained stable at 7.7% compared to the previous quarter. With leverage at the lower end of our comfort range, stable interest coverage in line with recent quarters, no significant debt amortization in the coming years, and a strong cash position, we announced a share buyback program of up to $400 million. We believe this represents an efficient use of excess cash, given the current valuation of moat goods relative to our global peers. The repurchase programs may be implemented through open market purchase, private negotiated transactions, or under Rule 10b5-1 of the Exchange Act. Even with the share buyback program, we expect to end the year with leverage below 2.5 times and interest coverage consistent with the end of 2024 levels at 7.4 times.

Speaker #4: We believe this represents an efficient use of excess cash given the current valuation multiples relative to our global peers. The repurchase programs may be implemented through open market purchase, private negotiated transactions, or under Rule 10(b)(5)(1) of the Exchange Act.

Speaker #4: Even with the share buyback program, we expect to end the year with leverage below 2.5 times and interest coverage consistent with the end of 2024, levels at 7.4 times.

Speaker #4: Our 3.4 billion in revolving credit lines and available cash of $3 billion combined is expected cash generation in the second half, provides a robust financial position to continue to continue pursuing value creation opportunities to our shareholders.

Guilherme Cavalcanti: Our $3.4 billion in revolving credit lines and available cash of $3 billion, combined with expected cash generation in the second half, provide a robust financial position to continue pursuing value creation opportunities to our shareholders. I will now briefly go through the business units. Starting with Seara on slide 20, during the second quarter of 2025, in the first half of the quarter, we saw a favorable commercial environment both in the domestic and export markets. However, in mid-May, Brazil reported its first case of avian influenza in a commercial flock. The country was officially declared free of the disease again in June, but some key export markets remained temporarily closed, which affected commercial performance. Even with the temporary headwinds caused by the outbreak, Seara achieved an adjusted EBITDA margin of 18.1% in the quarter, reflecting our strong focus, agility, and discipline in pursuing operational and commercial excellence.

Speaker #4: I now briefly go through the business units. Starting with Sierra on slide 20, during the second quarter, 25, in the first half of the quarter, we saw a favorable commercial environment both in the domestic and export markets.

Speaker #4: However, in mid-May, Brazil reported its first case of Asian flu in a commercial flock. The country was officially declared free of the disease again in June, but some key export markets remained temporarily closed, which affected commercial performance.

Speaker #4: Even with the temporary headwinds caused by the outbreak, Sierra achieved an adjusted BDAR margin of 18.1% in the quarter, reflecting our strong focus, agility, and discipline in pursuing operational and commercial excellence.

Speaker #4: Moving on to slide 21, in the second quarter of 2025, JBS Brazil recorded net revenue that was 20% higher than in the second quarter of 2024.

Guilherme Cavalcanti: Moving on to slide 21, in the second quarter of 2025, JBS Brazil recorded net revenue of 20% higher than in the second quarter of 2024, driven by strong demand in both international and domestic markets, which partially offset the sharp increase in cattle prices. As a result, the EBITDA margin reached 6.4% in the quarter. Moving on to slide 22, and now speaking in dollars and under U.S. GAAP, JBS USA North America net revenue in the second quarter grew 14% year over year, driven by strong demand and that growth cut out values to record levels in the U.S. However, profitability continues to be pressured by the challenging cattle cycle, which has also kept livestock cattle prices at record highs, as well as by the additional headwinds related to global trade and animal health concerns in Mexico. On slide 23, we have JBS Australia.

Speaker #4: Driven by strong demand in both international and domestic markets, which partially offset the sharp increase in cattle prices. As a result, the BDAR margin reached 6.4% in the quarter.

Speaker #4: Moving on to slide 22, and now speaking in dollars and under US gas, JBS Beef North America net revenue in the second quarter grew 14% year over year, driven by strong demand. That growth cut out barriers to record levels in the US.

Speaker #4: However, profitability continues to be pressured by the challenging cattle cycle, which has also capitalized cattle prices at record highs. Additionally, there are headwinds related to global trade and animal health concerns in Mexico.

Speaker #4: On the slide 23, we have JBS Australia. In the annual comparison, the 20% revenue growth was primarily driven by higher volumes of beef exports.

Guilherme Cavalcanti: In the annual comparison, the 20% revenue growth was primarily driven by higher volumes of beef exports. The EBITDA margin reached 12.7% and increased 50 basis points compared to the same period last year, reflecting greater availability of animals for slaughter and gains in operational efficiency. Turning now to JBS USA, pork net revenues for the quarter decreased by 5% year over year. The pork business was affected on a short-term basis by trade restrictions, but we expect the performance to return to normal levels over the next few quarters. Pilgrim's Pride, as highlighted on slide 25, reported a 4% increase in net revenue in the quarter. In the second quarter of 2025, Pilgrim's delivered a record adjusted EBITDA of $687 million.

Speaker #4: The BDAR margin reached 12.7% and increased in 50 basis points compared to the same period last year, reflecting great availability of animals for slaughter and gains in operational efficiency.

Speaker #4: Turning now to JBS USA pork, net revenues for the quarter decreased by 5% year over year. The pork business was affected on a short-term basis by trade restrictions, but the expected performance to return to normal levels over the next few quarters.

Speaker #4: Pilgrim's pride as highlighted on July 25 reported a 4% increase in net revenue in the quarter. In the second quarter of 2025, Pilgrim's delivered record-adjusted BDAR of $687 million.

Speaker #4: In addition to a favorable commercial environment across its key markets, the strong performance reflects the successful execution of its strategy, including the strengthening partnership with the customers' expansion of value-added and branded products innovation and efficiency gains.

Guilherme Cavalcanti: In addition to a favorable commercial environment across its key markets, the strong performance reflects the successful execution of its strategy, including the strengthening partnership with the customers, expansion of value-added and branded products, innovation, and efficiency gains. With that in mind, I would like to open for a Q&A session.

Speaker #4: With that in mind, I would like to open for a Q&A session.

Speaker #2: Thank you. The floor is now open for for questions from investors and analysts. If you have a question, please click raise hand at this time.

Cristiane Assis: Thank you. The floor is now open for questions from investors and analysts. If you have questions, please click raise hand at this time. If at any point your question is answered, you can remove yourself from the queue by clicking at lower hand. Questions will be taken in the order that they are received. Please hold while we poll for questions. The first question comes from Lucas Ferreira with JP Morgan. Please go ahead.

Speaker #2: If at any point your question is answered, you can remove yourself from the queue by clicking the lower hand. Questions will be taken in the order that they are received.

Speaker #2: Please hold while we poll for questions. The first question comes from Lucas Pereira with JP Morgan. Please go ahead.

Speaker #5: Hi, Guilherme and Tomazoni, and everybody, thanks for the space for questions. Guilherme, if you, sorry, I think your line broke a little bit in the beginning of the presentation, so I just wanted to explore it with you a little better.

Analyst: Hi, Guilherme and Tomazoni and everybody. Thanks for the space for questions. Guilherme, I think your line broke a little bit in the beginning of the presentation. So I just wanted to explore with you a little better your scenario for the free cash flow breakeven this year and next year. I just wanted to understand, especially if you already have any views on the CapEx, given the projects the company is announcing for prepared foods. If I may, also a quick follow-up on the effect of the hedges. I am just wondering if you can explain a little better how much of that $250 million you mentioned is returning to the EBITDA in the following quarters. If you can explain a little better, that would be great. Thank you.

Speaker #5: Your scenario for the free cash flow break even this year and next year, I just wanted to understand, especially if you already have any views on the capex, given the projects, the company, is announcing for processed foods.

Speaker #5: And if I may ask a quick follow-up on the effect of the hedges, I'm just wondering if you can explain a little better how much of that $250 million you mentioned is returning to the BDAR in the following quarters.

Speaker #5: If you could explain a little better, that would be great. Thank you. Mm-hmm. Vis-à-vis the other analysis. Thanks. I missed something.

Analyst: Avisa para a operadora.

Analyst: Avisa para a operadora.

Guilherme Cavalcanti: Você avisa, Guilherme.

Speaker #5: Can we go on?

Analyst: Estão vendo agora?

Guilherme Cavalcanti: Hello, excuse me. You can't hear you.

Speaker #6: Hello, excuse me. You can't hear you.

Speaker #5: Okay, so can you hear me now?

Analyst: Okay, so.

Guilherme Cavalcanti: Can you hear me now?

Speaker #6: Yes.

Analyst: Yes.

Speaker #5: Okay. So Lucas, basically I'm going to repeat the numbers that was cut. So capex expenditures $2 billion for 2025, and $2 billion for 2026, already including the expansions announced.

Guilherme Cavalcanti: Okay. Lucas, basically, I am going to repeat the numbers that were cut. Capital expenditures, $2 billion for 2025 and $2 billion for 2026, already including the expansions announced. Of course, 2026, we still have to budget. In the beginning of next year, we will give an update on that. Working capital, $900 million for this year and $250 million for 2026. This additional $6 million in 2025 compared to the next year is due to the inventory and hedging packages that I will explain again. Legal settlements of $300 million this year and assuming zero next year. Biological assets of $650 million this year and the same amount for next year. Interest expenses of $1.15 billion this year and $1 billion next year. Leasing expenses of $500 million in both years.

Speaker #5: Of course, 2026 is still something we have to budget for. In the beginning of next year, we will provide updates on that. Working capital is $900 million for this year and $250 million for 2026.

Speaker #5: These additional $6 million in 2025 compared to the next year is due to the inventory and hedging practices that I will explain again. Legal settlements of $300 million this year, assuming zero next year.

Speaker #5: Biological assets of $650 million this year and the same amount for next year. Interest expenses of $1.15 billion this year and $1 billion next year.

Speaker #5: And leasing expenses of $500 million in both years. So basically, that's how we get to the $5.5 billion free cash flow break even for 2025 and $4.5 billion for 2026.

Guilherme Cavalcanti: Basically, that is how we get to the $5.5 billion free cash flow breakeven for 2025 and $4.5 billion for 2026. Now, the hedging explanation, basically, we purchase cattle and hogs, for example, for sometimes one year from now at a price fixed because sometimes the feedlot needs to have a better predicament of their flows to invest in grains and buy the cattle. Then we sell futures to be on the spot. Basically, we buy cattle in the future for a fixed price and we sell futures to be spot and then meet with the sales price of the meat in the future. Basically, this cash flow tends to return as the physical purchases are settled and the meat are sold. Of course, this all depends on the market at the coming quarters, but that is how it works.

Speaker #5: Now, the hedging explanation: basically, we purchased cattle and hogs, for example, for sometimes one year from now, at a fixed price. Because sometimes the feedlots need to have a better prediction of their flows to invest in grains and buy the cattle. So then, we sell futures to be on the spot.

Speaker #5: So basically, we buy cattle, in the future for a fixed price, and we sell futures to be spot and then meet with the sales price of the meat in the future.

Speaker #5: So basically, this cash flow tends to return as we the physical purchases are settled and the meats are sold. And of course, this all depends on the market.

Speaker #5: At the coming quarters, but that's how it works. And the thing is, given that the cattle price raised very fast, recently, we had this impact on the hedging that on the derivatives and on the margin that we have to deposit, the cash margin we have to deposit.

Guilherme Cavalcanti: The thing is, given that the cattle price raised very fast recently, we had this impact on the hedging, on the derivatives, and on the margin that we have to deposit, the cash margin we have to deposit. Again, as the cattle price also comes back and we freeze, also the cash margin tends to be released.

Speaker #5: But again, as the cattle price also comes back and we also the cash margin tends to be released. It's clear, Lucas?

Cristiane Assis: Mr. Ferreira, you are with your microphone unmuted. Muted. Okay. Thank you. The next question comes from Van Thurer with Barclays. Please go ahead.

Speaker #2: Mr. Mr. Pereira, you are with your microphone unmuted. Muted. Okay, thank you. The next question comes from Van Thurer with Barclays. Please go ahead.

Speaker #5: Yeah, hi. Good morning. Can you guys hear me?

Analyst: Hi. Good morning. Can you guys hear me?

Speaker #4: Yes, we can hear.

Analyst: Yes, we can hear.

Speaker #5: Okay. Audio, not in our favor today. So two quick ones. So number one, obviously, your business in Australia, which really strong this quarter, and kind of like surprised on the upside.

Analyst: Okay. Audio is not in our favor today. Two quick ones. Number one, obviously, your business in JBS Australia was really strong this quarter and surprised on the upside. I was wondering if you can help us understand or maybe give a little bit more detail amongst the different categories in JBS Australia, what drove the significant top-line expansion, but on top of it, also that margin expansion. Where was that coming from? Which subcategory? I will have a quick follow-up on the free cash flow. Thank you.

Speaker #5: So, I was wondering if you can help us understand or maybe give a little bit more detail amongst the different categories in Australia what drove the significant top-line expansion, but on top of it also that margin expansion.

Speaker #5: Where was that coming from? Like, e, which subcategory? And then I have a quick follow-up on the free cash flow. Thank you.

Speaker #4: Ben, our results in Australia confirm we increased volume, domestic and external, and we are able to increase price as well. And it was the strong performance came from beef.

Gilberto Tomazoni: I bet, Ben, our results in Australia confirmed we increased volume, domestic and external, and we were able to increase price as well. The strong performance came from beef. The other business, they are quite at the same level of what were last quarter, even on the exception of the salmon business that was a bit lower because of the disease we had, and we had less amount and volume of fish to sell. Considering the size of our fish business is not relevant in all, consider all of our business in Australia, we can tell you that the improved results were in the cattle. We are seeing continuous for this year.

Speaker #4: From beef. And the other business, they are quite in the same level of what were last quarter. Even on exception of the salmon business, that was a bit lower because of the disease we had, and we had less amount volume of salmon to sell.

Speaker #4: But this considers the size of our salmon business, which is not relevant in the context of all of our business in Australia. We can sell to you that results improved; results were seen in the cattle.

Speaker #4: And we are still continuous for this year.

Speaker #5: Okay, that's very clear. And then one for Guy, just to be clear on what we've talked about it following up with Lucas' question, the free cash flow.

Analyst: Okay. That's very clear. Then one for Guilherme Cavalcanti, just to be clear on what we've talked about at the following up with Lucas's question, the free cash flow. As a starting point, from a breakeven perspective, we should still use the IFRS EBITDA, correct?

Speaker #5: As a starting point, like from a break-even perspective, we should still use the IFRS EBITDA, A, correct?

Speaker #4: Correct. I'm talking all in IFRS EBITDA.

Gilberto Tomazoni: Correct. I am talking only in IFRS EBITDA.

Speaker #5: Okay, just wanted to clarify that. Perfect. Thank you very much, and congrats I'll pass it on.

Analyst: Okay. Just wanted to clarify that. Perfect. Thank you very much, and congrats. I will pass it on.

Speaker #4: Thank you, Ben.

Analyst: Thank you.

Speaker #2: The next question comes from Enrique Brustolín with Bradesco. Please go ahead.

Cristiane Assis: The next question comes from Enrique Brustolin with Bradesco. Please go ahead.

Speaker #5: Good morning, Tomazoni, Guilherme Westley, and Chris. Thank you for taking my questions. I have two that I would like to explore in U.S. beef, mainly.

Analyst: Good morning, Gilberto Tomazoni, Guilherme, Wesley, and Cristiane. Thank you for taking my questions. I have two that I would like to explore in U.S. beef mainly. We saw this big sequential margin deterioration, which was also typically below some of what was reported already by peers. I would like to understand a little bit more in the quarter specifically what is behind it, if there were some components that could be seen as one-off given how your operations are structured with the vertical integration on some of the byproducts, and that we could see some improvement in the coming quarters. That is the first one. The second also in U.S. beef is based on the experience you already have on that market and navigating previous cycles' lows. What do you believe will be needed to bring margins back to breakeven levels?

Speaker #5: We saw this big sequential margin deterioration, right? Which was also typically below some of what was reported already by peers. So I would like to understand a little bit more about the quarter specifically—what's behind it, if there were some components that could be seen as one-off, given how your operations are structured with the vertical integration on some of the by-products.

Speaker #5: And that we could see some improvement in the coming quarters. So that's the first one. And the second, also in US beef, is based on the experience you already have on that market and navigating previous cycles, lows, what do you believe will be needed to bring margins back to break-even levels?

Speaker #5: And I know this is not an easy one, but I mean, if you think, it will mostly depend on cattle supplies coming back to growth once again.

Analyst: I know this is not an easy one, but if you think it will mostly depend on cattle supplies coming back to growth once again, or there are things that could happen before that, capacity adjustments, even the trade barriers being improved that could bring margins back to those levels sooner than the cattle availability growth. Those would be the two. Thank you.

Speaker #5: Or there are things that could happen before that, capacity adjustments, even the trade barriers being improved. That could bring margins back to those levels sooner than the cattle availability growth.

Speaker #5: Those would be the two. Thank you.

Speaker #4: Good morning, Enrique. So, a few comments. On our performance during the quarter, it was a very challenging quarter for sure. One of the things that makes it very challenging is when the market has a huge increase in volatility and price.

Wesley Batista Filho: Good morning, Enrique. A few comments on our performance during the quarter. It was a very challenging quarter for sure. One of the things that makes it very challenging is when the market has a huge increase in volatility and price like we had. Just to put it in perspective, five-year cattle at the end of the last quarter of last year was at around $190 per 100 weight, and we went up to $230, $238. Actually, during the second quarter, it was around $225. When those swings are really huge like that, sometimes you see some gaps and some challenges in the quarter. That is basically positioning, and that is a short-term impact. It is a relevant impact, but it is a short-term impact. Actually, we just did a picture of our beef plants and all the work that we've been doing from an operational perspective.

Speaker #4: Like we had just to put in perspective, right? So five-year cattle at the end of the last quarter of last year was at around $190 per hundredweight, and we went up to $230-$238. Actually, during the second quarter, it was around $225.

Speaker #4: And when those swings are really huge like that, sometimes you see some gaps in the some challenges in the quarter that's basically positioning and that's a short-term impact.

Speaker #4: It's a relevant impact, but it's a short-term impact. Actually, we just did a big tour of our beef plants and all the work that we've been doing from an operational perspective, we're very confident with the work that the plants are doing and when in terms of efficiencies, in terms of use, they're actually improving versus the previous quarters.

Wesley Batista Filho: We're very confident with the work that the plants are doing. In terms of efficiencies, in terms of use, they're actually improving versus the previous quarters. We do not think that there is anything regarding operations. I think it is much more to do with positioning, especially when you have an explosive market like what we had in the last quarter. When it comes to where we see from a cycle perspective, and you like you said, adjustment in capacity versus cow herd rebuild. Obviously, we talk a lot about cow herd rebuild because that is what we know in the market, what we see, what we have data. We are confident that we are fully into herd rebuild. One of the two information that is very, very relevant is cow slaughter is down again this year.

Speaker #4: And so we don't think that there is anything regarding operations. I think it's much more to do with positioning and especially when you have an explosive market like what we had in the last quarter.

Speaker #4: When it comes to where we see from a cycle perspective, and like you said, adjustment in capacity and versus cow herd, reviewed. Obviously, we talk a lot about cow herd reviewed because that's what's what we know in the market, what we see, what we have data.

Speaker #4: And we are confident that we are fully into herd review. One of the two pieces of information that is very, very relevant is that cow slaughter is down again this year. If you look, it's been compounding with about a 10% to 15% decrease in cow kills year after year.

Wesley Batista Filho: If you look, it's been compounding about 10% to 15% decrease in cow kills year after year. That is a good sign. We're seeing less heifers as a percentage of feeder cattle versus previous periods. Those things are encouraging. Obviously, when they start happening, they take a double hit. You already have less cattle. Now you have less heifers coming to market because they're being retained, which is good news long term, but short term, it makes it more challenging. Talking about capacity adjustments, I can obviously just talk about our own business. I can't talk about the market because I wouldn't be able to answer that. We are comfortable with our current capacity, and we do not see any changes coming from that end on our side.

Speaker #4: So that's a good sign. We're seeing less heifers as percentage of feeder cattle versus previous periods. So those things are encouraging. Obviously, when they start happening, they do they take a double hit, right?

Speaker #4: You already have less cattle. Now you have less heifers. Coming to market because they're being retained, which is good news long term, but short term, it makes it more challenging.

Speaker #4: Talking about capacity adjustments, I can obviously just talk about our own business. I can talk about the market because I wouldn't be able to answer that.

Speaker #4: But we're comfortable with our current capacity and we don't see any changes coming from that end on our side.

Speaker #5: That's clear, Wesley. Thanks very much.

Analyst: is clear, Wesley. Thanks very much.

Speaker #2: The next question comes from Andrew Strzelzyk with Bank of Montreal. Please go ahead.

Cristiane Assis: The next question comes from Andrew Struzic with Bank of Montreal. Please go ahead.

Speaker #5: Can you hear me now?

Analyst: Can you hear me now?

Speaker #2: Yes.

Cristiane Assis: Yes.

Speaker #5: Okay, great. Good morning. Thanks for taking the questions. My first one, can you talk about the outlook for Brazil beef? With the US tariffs, how is that impacting the operating environment and the supply-demand balance there?

Analyst: Okay. Great. Good morning. Thanks for taking the questions. My first one, can you talk about the outlook for Brazil beef? With the U.S. tariffs, how is that impacting the operating environment and the supply-demand balance there, and how should that play out in margins over the balance of the year?

Speaker #5: And how should that play out in margins over the balance of the year?

Speaker #4: Hi, Andrew. Thank you for the question. When you look for just America comment first by the impact of the tariff, and then I'll talk about the outlook about the business.

Gilberto Tomazoni: Hi, Andrew. Thank you for the question. When you look for, just to make a comment first by the impact of the tariff, then I will talk about how to look about the business. The tariffs were recently implemented, which had no impact in the quarter. When you look globally, the impact of JBS S.A. overall would be immaterial. If you look just for Friboi in Brazil, as a whole, the impact is not relevant, but some specific plants that exported more to the U.S. may be. This is the good things for our global platform that allow production to be redirected and impact to be very mitigated. I think this is one of the moments that the value of the platform is making more strong. If you look for, but if you talk about the future, it is too early to estimate the real impact.

Speaker #4: The tariffs were recently impairment that is which no impact in the quarter. When you look globally, the impact of JBS overall will be immaterial.

Speaker #4: If you look just for free beef in Brazil as a whole, the impact is not relevant. But some specific plants that exported more to the U.S. may be, but this is the good thing for our global platform that allows production to be redirected and impact to be very mitigated.

Speaker #4: I think this is one of the moments that the value of the platform is making more strong. If you look for but if you talk about the future, too early to estimate the real impact.

Speaker #4: And it will depend on how the global market will be rebalancing because the system is interconnected. Maybe some countries will be substituting Brazilian products: Australia and other countries.

Gilberto Tomazoni: It will depend how the global market will be rebalancing because the system is interconnected. Maybe some countries will be substituting Brazilian products, Australia, and in other countries. Even besides that, some of the U.S. products spotlight today could remain in the market. We put if made that Brazil will be replaced that volume that was redirected to the U.S. That for us, it is not, we are not seeing today this really strong impact. It is too early to say the impact, to quantify the impact. About the outlook, if you see that the Friboi, they show a strong growth in strong growing volume and even in price, domestic and export. We lost a little bit in terms of gross margins, but we gained more than that. We compensate with the higher bond.

Speaker #4: Even beside that, some U.S. products exported today could remain in the market. And we put if made that Brazil will be replaced at the moment that was directed to the U.S.

Speaker #4: That for us, it's not we are not seeing today this really strong impact. It's too early to say the impact is to quantify the impact.

Speaker #4: About the outlook, if you see that free boy they show a strong growth in strong growing volume, and even in price. Domestic and export, we lost a little bit in terms of gross margins, but we gained more than that.

Speaker #4: We compensate with the higher one that we see that for the next quarter, our beef operation in Brazil continues to deliver a good result.

Gilberto Tomazoni: We see that for the next quarter, our beef operation in Brazil continues to deliver a good result.

Speaker #5: Okay, that was very helpful color on that. And then I wanted to also ask on the US prepared foods, strategy, and you listed a number of investments that you've made there.

Analyst: Okay. That was a very helpful color on that. I wanted to also ask on the U.S. prepared foods strategy, and you listed a number of investments that you've made there. How much will that increase your U.S. prepared foods volumes when I take all of those projects together? As you think about continuing to build out that strategy, are you comfortable going with internal projects and smaller acquisitions kind of one by one? Or I guess, how are you thinking about the aspirations in achieving the aspirations in U.S. prepared foods?

Speaker #5: How much will that increase your US prepared foods volumes when I take all of those projects together? And as you think about continuing to build out that strategy, are you comfortable going with internal projects and smaller acquisitions kind of one by one, or I guess how are you thinking about the aspirations in achieving the aspirations in US prepared foods?

Speaker #4: Hi, Andrew. So on the prepared food side, on our chicken, the plant that we announced in work account, it's a significant increase. It's going to be almost going to double our capacity on that.

Wesley Batista Filho: Not, Andrew. So, on the prepared food side, on our chicken, the plant that we announced in Walker County, it is a significant increase. It is going to be, you know, almost going to double our capacity on that. But on the other side, on the pork side, on the sausage and cooked sausage, it would probably be a 20%. I am throwing, you know, I can probably get more precise numbers afterwards and send that your way, but it would be a significant increase on both sides. Maybe an average of 25% to 30% increase of our total capacity on volumes in the U.S. But we certainly can send you some more precise numbers afterwards. Our approach to this is pretty simple.

Speaker #4: But on the other side, on the pork side, on the sausage and cooked sausage, it would probably be a 20%. I'm throwing, I can probably get more precise numbers afterwards and send that your way, but it would be a significant increase on both sides.

Speaker #4: Maybe an average of 25, 30% increase of our total capacity on volumes in the US. But we certainly can send you some more precise numbers afterwards.

Speaker #4: Our approach to this is pretty simple. We are on how we're investing and where we're deciding to grow. We're really starting off going by where we're seeing the demand in the market and where we're seeing that the market has a need for products.

Wesley Batista Filho: We are, on how we are investing and where we are deciding to grow, we are really starting off going by where we are seeing the demand in the market and where we are seeing that the market has a need for products. So, you know, we have grown a lot on our prepared food side on the chicken, and we are, and it is, you know, today we actually, we need more capacity to continue to grow. That is our bottleneck for growth in this market, is actually production capacity. It is much more production capacity than actually being able to sell. On the pork side of prepared foods, we have been working a lot with customers, and the demand for these products that we are starting to make are pretty large, and we are deciding to go there.

Speaker #4: So we have grown a lot our prepared food side on chicken, and we are and it's today we actually we need more capacity to continue to grow.

Speaker #4: That's our bottleneck for growth. In this market is actually production capacity. It's much more production capacity than actually being able to sell. And on the pork side of prepared foods, we've been working a lot with customers and the demand for these products that we're starting to make are pretty large.

Speaker #4: And we're deciding to go there. We'll obviously always look at assets for acquisitions and obviously there is a lot of things that are going to place.

Wesley Batista Filho: We will obviously always look at assets for acquisitions, and obviously, there are a lot of things that are going to play. If there is actually something out in the market for an acquisition, or if there is, or if there is not, and if there is, if the assets are something that we think are good assets for the long term. In these three cases, we have decided that the best thing to do was to build a plant, modern plants that are going to be, you know, completely new and ready for the next 10, 15, 20 years. So that is what we decided. We are very excited about these three plants, and we think they are going to be among the best plants in the country.

Speaker #4: There is actually something out in the market for an acquisition or if there is or if there isn't. And if there is, if the assets are something that we think are good assets for the long term.

Speaker #4: In these three cases, we've decided that the best thing to do was to build a plant. Modern plants that are going to be completely new and ready for the next 10, 15, 20 years.

Speaker #4: So that's what we decided that we're very excited about these three plants and we think they're going to be among the best plants in the country.

Speaker #5: Great. Thank you very much.

Analyst: Great. Thank you very much.

Speaker #2: The next question comes from Guilherme Gutilla with BTG. Please go ahead.

Cristiane Assis: The next question comes from Guilherme Cavalcanti with BTG. Please go ahead.

Speaker #6: Hi, guys. Good morning. I just want to discuss a bit here about the chicken business. So maybe starting with Sierra, could you give us a bit more color on how the Asian food outbreak impacted the company’s results?

Analyst: Hi, guys. Good morning. I just want to discuss a bit here about the chicken business. Maybe starting with Seara, just if you guys could give us a bit more color on how the avian influenza outbreak impacted the company results. Maybe break down a bit how was the segment profitability and how the outbreak impacted it. Also on chicken, but on a different topic, I just want to discuss a little bit more here about the supply and demand scenario. We already discussed here in previous opportunities about how the lower hatchability and higher mortality rates are impacting the chicken supply. What do you guys expect ahead? Until when do you guys believe the supply constraints can delay this cycle from turning? That's it. Thank you.

Speaker #6: Maybe break down a bit how was the second segment profitability and how the outbreak impacted it. And also on chicken, but on a different topic, I just want to discuss a little bit more here about the supply and demand.

Speaker #6: So, very much discussed here in previous opportunities about how the lower hedgeability and higher mortality rates are impacting the supply of the chicken supply.

Speaker #6: But what do you guys expect ahead? Until when do you believe the supply constraints can delay this cycle from turning? So that's it.

Speaker #6: Thank you.

Speaker #4: Hi, Guilherme. Thank you for the question. I will be very pragmatic in the answer to you. When the outbreak happened in Brazil, and all practically 100% of the market to export to Brazil closed it.

Gilberto Tomazoni: Hi, Guilherme. Thank you for the question. I will be very pragmatic in the answer to you. When the outbreak happened in Brazil and practically 100% of the market to export to Brazil closed, we said that the impact at that moment in June, that was in June, the impact of our EBITDA in June was around 5%. Not just in chicken, as a company as a whole, Seara. Now some of the markets reopened, but important markets like Europe and China remained closed. We see that the government and the Ministry of Agriculture are working to reopen the market. I saw in the media yesterday that President Lula discussed it with President Xi Jinping about the issue. I am so confident that these two markets may reopen very soon because there is no technical reason to be closed.

Speaker #4: And we say that the impact that moment in June, if that was in June, the impact of how EBITDA in June was around 5%.

Speaker #4: Not just in chicken, but as a company as a whole, Sierra. And now, as some of the markets reopen, others remain closed to important markets like Europe and China. We see that the government and the Minister of Agriculture are working to reopen those markets.

Speaker #4: I saw in the media yesterday that President Lula discussed the issue with President Xi Jinping. I'm so confident that we may reopen these two markets very soon.

Speaker #4: And because there is no technical reason to be closed, since all of the technical questions were answered, a question that the market raised, and it was declared Brazil free. We are so confident that we will be reopened in the coming weeks.

Gilberto Tomazoni: All of the technical questions that the market made were answered, and OMSA declared Brazil free. We are so confident that it will be reopened in the coming weeks. The fact that today it is closed, the impact for these two markets on the profitability of Seara will be around 2 percentage points or 1.5, say 1.5 to 2 percentage points. That is the impact we have now with this. I hope we answered your first question. The second question will be the outlook of the chicken business. We saw a strong demand for chicken globally. All of the markets in Brazil, in the U.S., in Europe, Mexico, all of the markets see strong demand because in the U.S., the consumer has substituted beef for chicken, and we see all the international markets very demanding.

Speaker #4: But the fact that today is closed and the impact for these two markets is in the impact is in the profitability of Sierra, that will be around 2% points or 1.5, say 1.5, 2% points.

Speaker #4: That is the impact we have now. With this. To see I think this with this I hope you will answer your question of the first question.

Speaker #4: The second question will be the outlook of the chicken business. We saw a strong demand for chicken globally. All of the markets in Brazil, in the US, in Europe, Mexico, all of the markets we see strong demand.

Speaker #4: Because May in the US, the consumer change substitute beef from chicken and we see all the international markets very demand. Brazil is we had the problem, but the market that opened, we export, there is strong demand from the volume.

Gilberto Tomazoni: Brazil, we had a problem, but the market that opened we export, there is strong demand from the volume. All the things that you have mentioned before about genetics, about mortality, about productivity, are not changing so far, and we are remaining confident about the outlook for this year for chicken.

Speaker #4: The other things that you have mentioned before about genetic, about mortality, about productivity, not changing. So far. And we are remain confident from the outlook for this year for chicken.

Speaker #5: Very clear. Thank you very much.

Analyst: Very clear. Thank you very much.

Speaker #2: The next question comes from Priya Ori Gupta with Barclays. Please go ahead.

Cristiane Assis: The next question comes from Priya Ori Gupta with Barclays. Please go ahead.

Speaker #7: Hi, thank you so much for taking my question. Making sure you guys can hear me okay?

Analyst: Thank you so much for taking my question. Making sure you guys can hear me okay.

Speaker #5: Yes, we can hear, Priya.

Analyst: Yes, we can hear you, Priya.

Speaker #7: Okay, perfect. Wesley, I'd love to just follow up on the comments that you were making around the prepared foods business. You know, you did highlight that the company does consistently look at acquisitions as well.

Analyst: Okay. Perfect. Wesley, I would love to just follow up on the comments that you were making around the prepared foods business. You did highlight that the company does consistently look at acquisitions as well as it considers how to approach growing out capacity. Based on some of these investments that you guys have been talking about, should we assume that the need for acquisitions might be lower in the near future in the prepared side of the business, or is there still scope to look at inorganic growth?

Speaker #7: As we consider how to approach growing our capacity, based on some of the investments that you guys have been talking about, should we assume that the need for acquisitions might be lower in the near future in the prepared side of the business?

Speaker #7: Or is there still scope to look at inorganic growth?

Speaker #4: Hi, Priya. It's difficult to forecast what's going to be the future, right, on this because these are all based on opportunities, right? Acquisitions are always based on opportunities.

Wesley Batista Filho: Hi, Priya. It is difficult to forecast what is going to be the future, right, on this because these are all based on opportunities, right? Acquisitions are always based on opportunities. So obviously, like always, like we have always done in our history, we are going to look at anything that comes up, but it is difficult to forecast if it is going to be more one or more the other. We are obviously, when we are going to do, when we want to grow a business, we look at both. So it will be difficult for me to project for you what is going to be the future of this.

Speaker #4: So obviously, like always, like we've always done in our history, we're going to look at anything that comes up. But it's difficult to forecast if it's going to be more one or more the other.

Speaker #4: We're obviously when we're going to do when we want to grow a business, we look at both. So it will be difficult for me to project for you.

Speaker #4: What's going to be the future in this?

Speaker #7: That's helpful. So it's just more of an ongoing thing. With regards to the beef cycle you know it's I would say sort of getting to this point of heifer retention has been a little bit more elongated than we've seen in the past.

Analyst: That's helpful. So it's just more of an ongoing thing. With regards to the beef cycle, you know, I would say, sort of getting to this point of heifer retention has been a little bit more elongated than we've seen in the past. What's your perspective on sort of how long it could take us to really start to see the bottom on profitability? So how are you thinking about, you know, getting back to break even in the beef segment and then starting to see growth?

Speaker #7: What's your perspective on sort of how long it could take us to really start to see the bottom on profitability? So sort of how are you thinking about you know getting back to break even in the beef segment and then starting to see growth?

Speaker #4: Yeah, I think this year and the beginning of next year are going to be the bottom side of the cycle. And then from there, it’s going to be a gradual increase.

Wesley Batista Filho: I think this year and the beginning of next year are going to be the bottom side of the cycle. From there, it is going to be a gradual increase. Somewhere end of 2027, beginning 2028, it is going to be gradual. It is not going to be overnight that you are going to see a complete change in the business. It is going to be gradual. I think the worst part of the cycle is going to be right here for the next maybe three, four quarters. From there, we are going to see this change and gradually improve.

Speaker #4: Somewhere at the end of '27, beginning of '28, it's going to be gradual. It's not going to be overnight, right? You're not going to see a complete change in the business.

Speaker #4: It's going to be gradual, but I think the worst part of the cycle is going to be right here for the next maybe three, four quarters.

Speaker #4: And then, from there, we're going to see this change and gradually improve.

Speaker #7: Okay, that's helpful. And Guilherme, can you remind us again how you think about your ongoing cash balance? We're just shy of about $3 billion at this point if we include some of the margin cash in there.

Analyst: Okay. That's helpful. Guilherme, can you remind us again how you think about your ongoing cash balance? We're just shy of about $3 billion at this point if we include some of the margin cash in there. Is that the right level for the near term, or would you like to have a little bit more of a cushion there around where you maintain cash?

Speaker #7: Is that the right level for the near term? Or would you like to have a little bit more of a cushion there around where you maintain cash?

Speaker #4: Hi, Priya. No, I think this is more than enough. I think given the company's cash conversion cycle today, cash of $2 billion worldwide is more than enough for the operation.

Gilberto Tomazoni: Hi, Priya. I think this is more than enough. I think given the company's cash conversion cycle today, a cash of $2 billion worldwide is more than enough for the operations. So we are comforted with the current levels. That is one of the reasons that we announced the share buyback programs because, as you know, we paid $3 billion in debt, and the other debts that we have up to 2032, they all have coupons lower than 3.75%. So it was not efficient to buy the debts with excess cash. We announced the share buyback program, but we still have cash above what we need to our cash conversion cycle to operate.

Speaker #4: So we are comfortable with the current levels, and that's one of the reasons that we announced the share buyback programs. Because, as you know, we paid $3 billion in debt, and the other debts that we have up to 2032 all have coupons lower than 3.75%.

Speaker #4: So it was not efficient to buy the debt with excess cash. So we announced the share buyback program. But we still have cash above what we need to our conversion cash conversion cycle to operate.

Speaker #7: Great. And then just one last administrative question. Where are you guys in terms of updating the bond ticker now that the equity listing has been completed and then putting the shelf in place?

Analyst: Great. Then, just one last administrative question. Where are you guys in terms of updating the bond ticker now that the equity listing has been completed and then putting the shelf in place? Thank you.

Speaker #7: Thank you.

Speaker #4: Okay, so first on the ticker of BZ, we're talking it's out of our control. We're talking to Bloomberg for a while now to take the BZ out of the ticker.

Gilberto Tomazoni: First, on the ticker of BZ, we are talking, it is out of our control. We have been talking to Bloomberg for a while now to take the BZ out of the ticker. We will keep following on that. The shelf registration, we need first, we will finish all the exchange offer to make all the remaining 144A bonds registered. Then we need the first register offer for then to one year to be a WICC and I have to shelf registration. We first need to do an issuance of that in equity for then registered, so then to ask for the shelf registration and WICC. I think maybe we need a new issuance, which currently we do not envision, given that we just, as we talked about, we have more than enough cash. We have no maturities in the near term.

Speaker #4: We'll keep following on that. And the shelf registration, we need first we'll finish all the exchange offer to make all the remaining 144-day bonds registered.

Speaker #4: And then we need the first to register offer for then to one year to be a week C. And I have to shelf registration.

Speaker #4: So we first need to do an insurance of that inequity for then registered. So then to ask for the shelf registration in week C.

Speaker #4: So, I think maybe we need a new insurance, which currently we don't envision. Given that, just as we talked about, we have more than enough cash.

Speaker #4: We have no maturities in the near term, so I don't see us coming to the market anytime soon.

Gilberto Tomazoni: I do not see we coming to the market anytime soon.

Speaker #7: Great. Thank you so much.

Analyst: Great. Thank you so much.

Speaker #2: The next question comes from Gustavo Traiano with Itaú BVA. Please go ahead.

Cristiane Assis: The next question comes from Gustavo Triano with Itaú BBA. Please go ahead.

Speaker #8: Hello, everyone. Can you guys hear me?

Analyst: Hello, everyone. Can you guys hear me?

Speaker #4: Yes, Gustavo, we can hear you.

Wesley Batista Filho: Yes, Gustavo, we can hear you.

Speaker #8: Thanks, Guy. So, actually, my question is on U.S. pork. Earlier in the call, you guys mentioned that margins should recover in the next few quarters.

Analyst: Thanks, Guy. My question is on U.S. pork. Earlier in the call, you guys mentioned that margins should recover in the next few quarters. I just wanted to have more granularity on this topic, maybe the reasons behind the margin compression in U.S. GAAP in this quarter and why you believe they are improving in the remainder of the year. If possible, if we could explore a little bit more the pace of this recovery and when you expect these margins to reach your, I would say, recurring level going forward. If we could discuss maybe the margin performance in the integrated part of the business compared with the non-integrated part of the business, if that's a fair comparison to do for this quarter, if there are different margin performance between those two operations in there. Thank you very much, Guy.

Speaker #8: So I just wanted to have more granularity on this topic. Maybe the reasons behind the margin compression in U.S. GAAP in this quarter and why do you believe they are improving for the remainder of the year.

Speaker #8: And if possible, if we could explore a little bit more like the pace of this recovery and when do you expect these margins to reach your, I would say, recovering level going forward.

Speaker #8: And if we could discuss maybe the margin performance in the integrated part of the business compared with the non-integrated part of the business, if that's a fair comparison to do for this quarter. If there are different margin performances between those two operations in there.

Speaker #8: Thank you very much, Guy.

Speaker #4: Gustavo, good morning. So the US pork performance this quarter was a lot of it was because of some of the trade disruptions we had with product going to China and there were that for that period of time, there was 107% tariff and we had products coming back, products that we had to reshuffle.

Wesley Batista Filho: Gustavo, good morning. The U.S. pork performance this quarter was a lot of it was because of some of the trade disruptions we had with product going to China. There was for that period of time, there was 100 and some percent tariff, and we had products coming back, products that we had to reshuffle. That created a disruption that we did not expect. We expect that as of the third quarter of 2025, right now, we are back to normal in margins. That is not something that we are overly concerned about, being a gradual recovery. We think it is an immediate recovery. It was just more of a one-off in the second quarter. We actually are quite optimistic about margins in the pork business. We have grown our live production. Like you are saying, you are asking about integrated supply in the last 5 to 10 years.

Speaker #4: And that created a disruption that we did not expect. We expect that as of the third quarter of 2025, we're right now we're back to normal.

Speaker #4: In margin, so that's not something that we're overly concerned about being a gradual recovery. We think it's an immediate recovery. It's just it was more of a one-off in the second quarter.

Speaker #4: We're actually quite optimistic about margins in the pork business. We've grown our live production, like you're saying, you're asking about integrated supply. In the last five, 10 years, we've grown that.

Wesley Batista Filho: We have grown that. When we see grain cost, grain prices being at a relatively low level based on history. On the other side, you see a potential for the cutout of pork to become, when there is low availability of beef and high prices of beef, that is a big pork becomes a very good option. You could see a little bit of strength there because of that. We are actually quite optimistic about pork margins in the U.S. going forward.

Speaker #4: And you know when we see grain costs, grain prices being at a relatively low level based on history and you know on the other side, you see a potential for the cutout of pork to become you know when there is low availability of beef and high prices of beef, that's a pork becomes a very good option.

Speaker #4: So, you should see a little bit of strength there because of that. We're actually quite optimistic about pork margins in the U.S. going forward.

Speaker #8: That's super clear. Thank you very much.

Analyst: That's super clear. Thank you very much.

Speaker #2: The next question comes from Leonardo Alencar with XP. Please go ahead.

Cristiane Assis: The next question comes from Leonardo Alencar with XP. Please go ahead.

Speaker #8: Hi, good morning. I hope you can hear me. So.

Analyst: Hi, good morning. I hope you can hear me.

Speaker #4: Yes, we can hear you.

Gilberto Tomazoni: Yes, we can hear you. Just speak a little louder, please, Leonardo.

Speaker #8: Just to speak a little louder, please, Leonardo. Okay, thank you. So good morning, Tomazoni, Cavalcanti, Chris, and Wesley. Thank you for taking my question.

Analyst: Okay. Thank you. Good morning, Gilberto Tomazoni, Guilherme Cavalcanti, Cristiane Assis, and Wesley Batista Filho. Thank you for taking my question. I would like to go a little deeper regarding the U.S. beef. I understand this herd rebuilding is ongoing and that you are expecting that to change the scenario for at least three, four quarters ahead. We need to consider the other factors in place, the issue with the cattle import from Mexico that is not really happening right now, and also the impact of the trade tariffs if Brazil restricted the import of trimmings of beef, lean beef.

Speaker #8: I would like to go a little different regarding the U.S. beef. I understand this, and I heard the building there's an ongoing, and that you're expecting that to change the scenario for at least three, four quarters ahead.

Speaker #8: But we need to consider the other factors in place, the issue with the cattle import from Mexico that is not really happening right now.

Speaker #8: And also the impact of the tariffs with Brazil restricting the import of trimmings of beef, lean beef. If you could just go a little deeper on the discussion about the cycle in the U.S. and if you could expect this average weight of cattle to continue to increase or even decrease maybe, just to understand how this is going to play in the future because this was a very strong change of metrics, we could say, the average weight of the cattle.

Analyst: If you could just go a little deeper on the discussion about the cycle in the U.S., and if you could expect this average weight of cattle to continue to increase or even decrease, maybe, and just to understand how this is going to play in the future because this was a very strong change of metrics, we could say, the average weight of the cattle, and that increased probably the production of fatter meat, let's call it. This was one of my questions. My other question would be a follow-up regarding Seara. I understand that the issue with China, and we are expecting these restrictions to drop in the foreseeable future. What's your read on the market in China, demand in China? Since they are not importing meat from Brazil for a while now, and demand is probably too good.

Speaker #8: And that increase probably promotes the production of fatter meat, let's call it. So, this was one of my questions. And the other one would be a follow-up regarding Sierra.

Speaker #8: I understand that there is an issue with China, and we are expecting this restriction to drop in the foreseeable future. But then, what's your read on China, on the market demand in China?

Speaker #8: Since they already are not importing meat from Brazil for a while now, and demand is probably still good, I wanted to hear that from you: Are stocks decreasing in China right now?

Analyst: I wanted to hear that from you if stocks are decreasing in China right now. If you could expect China to resume imports to a previous level we were seeing before the restrictions, or if there's room for improvement on that. Those are my questions. Thank you.

Speaker #8: So, do you expect China to resume imports to the previous levels we were seeing before the restrictions, or is there room for improvement on that?

Speaker #8: So that's my questions. Thank you.

Speaker #4: Good morning, Leonardo. You bring up a few good points. The situation in Mexico is obviously quite relevant. In the short term, there are about $1 million head, $1.2 million head of feeder cattle that come to the U.S. and are fed in the U.S.

Wesley Batista Filho: Morning, Leonardo. We are bringing in a few good points. This Mexico situation is obviously quite relevant. In the short term, there is about 1 million head, 1.2 million head of feeder cattle that come to the U.S., and they are fed in the U.S. As of November last year, the border got shut, and the beginning of this year, it opened. It got shut down again. We have been following this situation quite closely. What we realized is that the Mexican government is doing a lot of work to make sure that that situation is handled and working with the U.S. government to figure out a way to reopen and continue the flow of cattle.

Speaker #4: So you know, as of November last year, the border got shut down, and at the beginning of this year, it opened. It has not got shut down again.

Speaker #4: And you know we have been following the situation quite closely. What we realized is that the Mexican government is doing a lot of work to make sure that the situation is handled.

Speaker #4: And we are working with the U.S. government to figure out a way to reopen and continue the flow of cattle. We think that this is going to be very relevant in the medium term. In the short term,

Wesley Batista Filho: We think that this is going to be very relevant in the medium term, in the short term, but we do not think that necessarily would impact the long term of the cycle of the herd rebuild. I would disconnect those things, though it is a very important point that you bring up. It does create an impact in the U.S., especially in the south of the U.S., which is where a lot of that cattle stays. When it comes to imports, lean trim is something that the U.S. has imported for a long time. We blend that, the market blends it with a fat trim and make a ground beef. When you lose a source like Brazil, it is significant. The impact of that, it is still relatively early to see because there is inventory in the U.S. There was inventory coming to the U.S.

Speaker #4: But we don't think that necessarily would impact the long term of the cycle of the herd review. So I would disconnect those things. Though it's a very important point that you bring up.

Speaker #4: And it does create an impact in the U.S., especially in the South of the U.S., which, you know, is where a lot of that cattle stays.

Speaker #4: When it comes to imports, and obviously, you know lean trim is something that the U.S. has imported for a long time. We blend that, you know, the market blends it with fat trim and makes a ground beef.

Speaker #4: So when you lose a source like Brazil, it's significant. What you know the impact of that, it's still relatively early to see because there is inventory.

Speaker #4: In the U.S., there was inventory coming to the U.S. So we haven't seen 100% of what this is going to look like. But certainly, domestic meat or meat that is imported that's lean is going to appreciate in value and have a higher value.

Wesley Batista Filho: We have not seen 100% of what this is going to look like, but certainly, meat, domestic meat or meat that is imported that is lean is going to appreciate in value and going to have a higher value. We will see what that is going to, that is exactly how big the impact is going to be when that Brazilian inventory of meat in the U.S. kind of gets used. We will see less flow of Brazilian beef coming in. It is too early to tell exactly how big is going to be the impact.

Speaker #4: And we'll see what that's going to be; that's exactly how big the impact is going to be when that Brazilian inventory of meat in the U.S. kind of gets used. We will see less flow of Brazilian beef coming in.

Speaker #4: So it's too early to tell exactly how big the impact is going to be.

Speaker #8: Okay. Thank you. What about China, chicken, and Sierra?

Analyst: Great. Thank you. What about China and chicken and Seara?

Speaker #4: Yeah, Leonardo. Related to chicken Sierra, I think we, I don't know what's clear before, but the impact of the event flow when we had the amount that had the outbreak was really a strong impact.

Gilberto Tomazoni: Leonardo, related to chicken and Seara, I think I do not know what was clear before, but the impact of the avian influenza when we had the month that had the outbreak was really a strong impact, it was around 5% in the result of Seara. Now, after release of markets, the impact is around 1.5% of the EBITDA. We are really confident with the future of this business because demand is strong, domestic and export. Not just in Brazil, we see all of the markets. We see the U.S. with Pilgrim's Pride releasing the results. I think it was Fabio who mentioned that the strong demand in the U.S. is not different in Mexico, it is not different in Europe. We see, and when you look for the supply, we had the same restriction we had before. We had discussed about genetics, about mortality.

Speaker #4: It was around 5% in the result of Sierra. Now, after the release of markets, the impact is around 1.5% of the EBITDA. We are really confident about the future of this business because demand is strong.

Speaker #4: Domestic and export. And not just in Brazil; we see all of the markets. We see in the U.S., we deal with the results. I think it was Fabio who mentioned that the strong demand in the U.S. is not different in Mexico, and it is not different in Europe.

Speaker #4: We see, and when you look for the supply, we disable restrictions. We had, before, discussed it about genetics, about mortality. All of the issues remain.

Gilberto Tomazoni: All of the issues remain. It may increase a little bit more the number of bullets, but when you look for the demand, the.

Speaker #4: We may increase the number of toilets a little bit more. However, when we look at the demand, the increase in the percentage of the number of toilets did not really make a difference in impacting the results.

Cristiane Assis: Increase in the percentage of the number of bullets did not make really the difference to impact the result. We remain very positive with the chicken business for this year.

Speaker #4: We remain very positive about the chicken business for this year.

Speaker #8: Okay. Thank you very much for the details.

Conference Operator: Okay. Thank you very much for the details.

Speaker #2: The next question comes from John Baumgartner with Mizuho. Please go ahead. Mr. Baumgartner, your microphone is muted on your side.

Gilberto Tomazoni: The next question comes from John Baumgartner with Mizuho. Please go ahead. Mr. Baumgartner, your microphone is muted on your side.

Speaker #5: Hello, can you hear me now?

Conference Operator: Can you hear me now?

Speaker #2: Yes, thank you.

Gilberto Tomazoni: Yes, thank you.

Conference Operator: Okay. There you go. Just, yeah, first question for me. Thanks for the opportunity. Following up on U.S. prepared foods and your.

Gilberto Tomazoni: Excuse me, ladies and gentlemen. It seems that Mr. Baumgartner has disconnected his line. I will be moving to the next question, okay? The next question comes from Renata Cabral with City. Please go ahead.

Guilherme Cavalcanti: Hi, everyone. Thank you so much for taking my question. My first one will be on the Brazilian beef cycle, actually. The initial expectations were that maybe this year, 2025, towards 2026, would have the change in cycle in Brazil. We had cattle prices with a lot of volatility naturally because of the recent trade tensions. My question is, the previous expectations remained regarding the cattle cycle in Brazil. If you could discuss a little bit, it would be really helpful. My second question is on disclosures. Now that you are reporting under US GAAP, it is much easier for us to compare your numbers with U.S. peers. Given your recent investment in announced investments in prepared foods, would you be able to share even a rough sense of range of prepared foods represents in your business today?

Guilherme Cavalcanti: Looking ahead, do you see room to provide more details over time to help us to have a better comparison on this front? Thank you so much.

Cristiane Assis: I will start with the second question. Basically, first of all, the thing is our business segment has to be how we manage the company. That is why we do not have prepared foods as a business segment because we have prepared foods in Europe, in the U.S., in TBC, in Brazil, and so on. That is the reason. We can try to make managerial numbers for how much should be prepared foods. Then comes the question on what is the threshold, what is the device, what is prepared or not. Let us say if we get what is really processed, I would guess that 15% currently would be a good estimate. If you include, for example, brands, case rallies, or just brands that you put in the nature of meat, we can go up to 50% if you put brands on the value-added side.

Cristiane Assis: That is something in between that. We will always try to continue to improve our disclosures. As we grow, we will try to have this number developing to a better disclosure.

Analyst: I think it is related to Renata, related to beef cycle in Brazil. We are very optimistic with the cycle in Brazil. I believe that the Brazilian sector is in a transformation because when Brazil is increasing the feedlot, that feedlot, it makes it possible to have increased, reduced the age of the animal to go to prosecco plants, to have genetic improvements. You have a more feedlot because the DDG now is available because of ethanol, corn ethanol. This is a kind of change in the livestock sector that will enhance the production. Producers make a good margin today because if you look for the quarter, the price of the beef increased 20% and the price of livestock increased 40%. It means that these are good moments for the producers. There are a lot of incentives to raise animals. The possibility for increased productivity is huge in Brazil.

Analyst: Brazil has half of the earth of the U.S. We produce the same amount of meat with the U.S. If you look at this, it is a huge opportunity for improvement. Today, with the conditions we see in the market that I already mentioned, we are positive for this year and the next year for the livestock in Brazil.

And we produce the same amount of, of, of of, of meat with us. That, if you look this, it's a huge opportunity for improvement. And today with the conditions, uh, where we see in the market that I already mentioned, we are positive for this year. And the next year for the livestock, in Brazil,

Guilherme Cavalcanti: Thank you so much, Gilberto Tomazoni and Guilherme Cavalcanti. That was helpful.

Thank you so much; that was helpful.

Gilberto Tomazoni: The next question comes from Mr. John Baumgartner with Mizuho. Please go ahead.

The next question comes from Mr. John Baumgartner with mizuho, please go ahead.

Conference Operator: Good morning. Thanks for the question. Can you hear me?

Good morning. Thanks for the question. Can you hear me?

Gilberto Tomazoni: Yes.

Cristiane Assis: Good morning.

Conference Operator: Thank you. Just wanted to follow up on U.S. prepared foods and your comments there, Wesley. You are making the investments in chicken and bacon and sausage and some of these Italian meats, and you mentioned responding to market demand. I am curious, are there any particular white spaces in terms of species or product format that you still see as incremental opportunities for you, maybe more in beef or other types of pork? As you develop the portfolio, how do you anticipate the marketing to evolve? Are there opportunities for partnerships like you are doing with Netflix and Seara in Brazil?

Yes, yeah. Good morning. Thank you. Um, just wanted to follow up on us prepared foods and your comments there. Wesley, you're, you're making the investments in chicken and bacon and sausage and some of these Italian meats and you mentioned responding to market demand. I'm curious are there any particular white spaces in terms of species or product format that you still see as incremental opportunities for you at maybe more in B for other types of pork? And then as you develop the portfolio, how do you anticipate the marketing to evolve are there opportunities for Partnerships like you're doing with Netflix and Ciara in Brazil?

Cristiane Assis: John, so we see that where we're investing, where we have announced so far is where we're really seeing the demand is, like we mentioned, the sausage, the cooked sausage that a lot of, just to explain what that is, it's a lot of that is what would go into what we've seen, pizza toppings and salads. So it's prepared bacon and cooked bacon and sausage. So we're seeing a lot of demand there. That's where we've built. We're very confident about that. As we see other opportunities, we might communicate. So far, that's where we see the opportunities and where we invested. On the Pilgrim's Pride side, we've done a fantastic job here in the U.S. with branding our product. You know, great success story with Just BARE and achieved pretty large market share in a pretty short time and a lot of distribution.

John. So we are, we, we, we, we see that the, the, where we're investing, where we have announced so far, is where we really seeing the, the demand is, like, like we mentioned the sausage, the, the cooked sausage that a lot of just to explain what that is. It's a lot of that is, is what would go into what would seem pizza toppings, and, and salads. And so it's prepared bacon and cooked the bacon and sausage. So, uh, we're seeing a lot of them in there, that's where we build. We're, we're very confident about that. Um,

Cristiane Assis: It's a brand that's continued to grow very much and do a good job. There is a huge opportunity for us to do that on the pork side, on the red meat side of prepared foods. We haven't done much of that, but that's something that's for sure part of our plans and part of what we see as a potential for this prepared foods business in the U.S.

You know, as we see other um, uh, opportunities. We might might communicate but we so far. That's that's where we see the opportunities and where we invested, um, on the, on the pilgrim side, we've done a fantastic job here in the US, uh, with branding our products. And, you know, great success stories, we just bare and, you know, achieve pretty large market share in pretty short, short short time and a lot of distribution. And as a brand that's continued to grow very much and do a good job. And there is a huge opportunity for us to do that.

Conference Operator: Thanks, Wesley. Then, coming back to U.S. beef and what the market is seeing in terms of resilient demand despite weaker food service traffic, the broader economic challenges facing consumers, I am curious your thoughts on that demand resilience. Are you seeing something different in terms of how consumers interact with beef during this cycle? Is it the broader protein movement that is driving consumers to prioritize spending on beef more so than past inflationary cycles? Any observations you have on demand resilience there would be great.

On the pork side on, on the red meat, side of the of, of, of prepared foods and, and we, we haven't done much of that, but that's something that's for sure. Part of a, our plans and part of, uh, what what we see, as a potential for this prepared foods business, uh, in the US,

Cristiane Assis: I think it's, you know, there is one comparison that's very, very illustrative of how resilient beef demand is. We've always compared chicken breasts with pork loin and ground beef as, you know, accessible, affordable sources of protein. We always compare those items as items that, you know, the consumer kind of jumps back and forth. We've obviously seen with the short supply of cattle and all of that, we've seen the ground beef gap of price of ground beef versus those two other sources of protein really open the gap. You mentioned, right, food services is lower. But on the retail side, we've seen, and actually on the overall side, we've seen demand for ground beef to continue to be pretty strong and people choosing to still consume ground beef, even with this delta, this gapping, this larger gapping price between pork and chicken.

Thanks, Leslie. And then, you know, coming back to U.S. beef and what the market's seeing in terms of resilient demand, despite weaker food service traffic and the broader economic challenges facing consumers. I'm curious about your thoughts on that demand resilience. Are you seeing something different in terms of how consumers interact with beef during the cycle? Is it the broader protein movement that's driving consumers to prioritize spending on beef more so than past inflationary cycles? Any observations you have on demand resilience would be great.

Cristiane Assis: Consumers are still really, really going after beef. I think there are a few things. I think, yes, there are those trends of people eating more protein, but that benefits all of the categories. People, you know, prioritizing protein, all of that is very important. But I think actually what really, you know, I think it's a testament to is the quality of U.S. beef and how the U.S. consumer trusts it and really likes it. Even, you know, at a premium versus other proteins, they're still really looking forward to consuming it and seeking it. Obviously, this price being so, so, so much different than pork and chicken is more to do with the cattle cycle than anything. But the consumer is responding to that and still choosing to consume U.S. beef because of its quality and how much they trust the product. That's what we think.

Believe, even with the the this Delta, this gaping this, this larger gaping price between pork and chicken. You know, consumers are still really, really going after going after beef. I think there is a few things. I think. Yes, there are those trends of people eating more protein but that's benefits. Uh, all of the categories. Uh, people.

Conference Operator: Thanks, Wesley.

Uh, you know, prioritizing protein. All of that is is very important. But I think actually the the the what what really, you know, I think it's a testament to is the quality of, of us beef and how the US consumer trust is and really likes it. And even, you know, at a, at a premium versus other proteins, they're they're still really looking forward to consume it and, and and, and, and, and seek it. So, um, obviously it's it's, it's this price being so so, so much different in pork and chickens to more to do with the cattle cycle than anything. But the the the consumers responding to that and and, and still choosing to consume us beef because of its quality and and how much they trust the product, that's what, that's what we think.

Thanks Lesley.

Gilberto Tomazoni: The next question comes from Ricardo Alves with Morgan Stanley. Please go ahead.

The next question comes from Hikaru Alvis with Morgan Stanley. Please go ahead.

Conference Operator: Hey, everybody. Good morning. Thanks for the call. I have three questions, two for Guilherme. Guilherme, on working capital, I believe you mentioned $900 million of consumption this year, right? That would imply something like $600 million of cash relief into the second half. I just wanted to confirm that level of magnitude at least. If that is correct, if you could break it down in terms of how much of that would come from inventories or if you can just give some more granularity in terms of working capital relief into the second half and the magnitude. That is the first question. The second one, also to you, Guilherme, if I may, JBS S.A. has been paying a lot of dividends over the past few years, and I think that this year was not different. Now you have the buyback announcement, which is obviously appreciated.

Hey everybody. Uh good morning. Thanks for the thanks for the call. Uh I have 3 questions uh 2 for galleri on working capital. I I believe you mentioned. 900 million of consumption this year, right? So that would imply, something like 6, 0, 0,

Of cash relief into the second half. I just wanted to confirm that level of magnitude at least. And if that's correct, um, if you could break it down in terms of how much of that would come from inventories, or if you can just give some more granularity in terms of working capital relief into the second half. Um, and the magnitudes, that's the first question. The second one, uh, also to you, Germy, if I met the...

JBS has been paying a lot of dividends over the past few years, and I think that this year was not different. Now you have the buyback announcement, which is obviously appreciated.

Conference Operator: What is your current mindset on the distribution side? Are you sticking to that idea of returning something like $1 billion per year? Because it actually seems that you are running well above those targets. I just wanted to get the latest on your thoughts on the distribution side. My last question to you, Wesley, would be, I thought it was very interesting the comment you made on pork, that the sequential recovery would be immediate. I think that that is the expression you used as opposed to gradual. When you look at the beef performance this quarter, do you think that there are elements to the performance of the second quarter that you could also have an immediate sequential recovery? I know that you also made it clear on the U.S.

Um, what is your current mindset on the distribution side? Are you sticking to that idea of returning, something like 1 billion dollars, uh, uh, per year?

Because it it actually seems that you're running well above those targets. So just wanted to to get the latest, uh, on your

um, your latest thoughts on the distribution side, my, my last question uh, to you Wesley

I thought it was very interesting in the comment you made on pork, that the sequential recovery would be immediate. I think that’s the expression you used, as opposed to gradual.

Conference Operator: beef side that you are going to have three or four quarters of very tough profitability, which is a view that we tend to share. On a sequential basis, this minus 4%, are there elements, are there factors that you believe you can overcome really fast to improve to, I do not know, maybe closer to low single-digit negative margins? Those are my questions. Thank you so much.

When you look at the beef performance this quarter, do you think that there are elements to the performance of the second quarter that you could also have a an immediate sequential uh recovery? I I know that, you know you also made it clear on the US beef side that you're going to have through your 4 quarters of very tough profitability, which is a a view that we uh, we tend to share. But on a sequential basis, this minus 4% are there elements, are there factors that you believe, you can overcome really fast to to improve to. I don't know maybe closer to low single digit, uh, negative margins.

Those are my questions. Thank you so much.

Cristiane Assis: Okay. Hi, Ricardo. So basically for this year, I think the best estimation in terms of cash generation for the second half is that, I mentioned that the free cash flow break-even for this year is $5.5 billion. So guess whatever is your estimation for the whole year, minus 5.5, and then take out 25% effective tax rate. That should give you a good estimation of how much cash we will generate. And you are right, we will be releasing cash in the second half as every year we do. It comes from decreasing inventories and the postponement. In the last quarter, we always have around at least $400 million of postponement of livestock payments that releases working capital in the fourth quarter.

Okay. Hi go. So, basically, for this year, uh, I think the best, uh, estimation, uh, in terms of cash generation for for the second half, uh, is that, uh, what I mentioned that the free cash flow break even for this year at 5.5 billion dollars. So, guess whatever. It's your the estimation for the whole year, uh, minus 5.5 and then uh takes out 25% effect effective tax rate

That should give you a good estimation of how much cash we will generate, and your right will be releasing uh cash in the second half as all every year. We we we do, uh, and it comes from

Cristiane Assis: So I think that the math of the cash flow break-even that I mentioned can give you a good estimation of what we are expecting to generate the whole year and, of course, consequently in the second half. So in terms of the dividends, if you look at how much we paid in dividends since 2020, we are exactly $1 billion, $975 million average, in fact. So we paid in 2020 around $800 million, 2021, another $800 million, and $900 million, so on. In 2023, we paid $450, but we promised there the least thing that we paid this year. So if we consider that the least thing dividend that we paid in June was really promised in 2023 and get back this number, so we will see that we have been paying on the average of the last five years is exactly around $1 billion, as I mentioned.

Cristiane Assis: That is why the excess cash, we just turned it on into share buybacks, as we did in the past. In 2021, for example, we used the excess cash for share buybacks. So it does not change. Going forward, I think we continue with the mindset of paying around $1 billion in dividends every year. Of course, it depends on the M&A opportunity. So of course, this year, we could increase to share buybacks given there was no relevant M&A this year. So I think it did not change. So $1 billion of dividends, we continue to think about $1 billion of growth CAPEX going forward. Also having free cash flow for M&A. If there is no M&A, we can improve the distribution on a buyback, for example.

Uh so we paid uh in 2020 around the 800 million dollars 2021, another 800 million, and 800 900 million dollars. Uh, so I want in 2023 uh we paid 450 but we promised there uh, the listing that we paid this year. So if we consider that the listing dividend, uh, that we paid in June was really promised in 2023 and get back this number. So we see that, uh, we've been paying on the average of The Last 5 Years is exactly around a billion dollars, uh, that that's, uh, as I mentioned and that's why we the excess cash, we just turned it on, uh, into share BuyBacks as we did in the past. In 2021, for example, we use the excess cash, uh, for for a share BuyBacks so I think it doesn't change, go going forward. Uh, I think we continue with the mindset of paying around a billion dollars in dividends every

year.

Uh, and

so far depends on the Mna opportunities. So of course, this year, uh, we could increase to share BuyBacks, given there was no relevant m&a, uh, uh, uh, on this year. So I think it didn't change. So a billion dollars, uh,

Of uh, of dividends uh, we continue to think about the billion dollars of growth capex. Going forward. Uh and again and also having few cash flow for m&a. If there's no m&a, we can improve, uh, the distribution uh, on a buyback, uh, for example.

Analyst: Ricardo, so on the. Sorry, go ahead.

Cristiane Assis: Go ahead, Wesley.

Analyst: Ricardo, on the beef side, we think that our internal performance, again, we are going to, I think we are going to perform better in the third quarter than we did in the second quarter. Part of that is because the things that we can improve are not, are much more on the meat margin side, on the buy and sell side versus operations. We think that that can be a quicker improvement in performance. Having said that, it is a lot more difficult for you to project what, you know, and to try to predict the beef market today than the pork market because the pork market is a lot more stable today versus the beef market. It is really tough right now to have a really long-term perspective of exactly what the market itself is going to do on beef.

Because so on the sorry, go ahead. Okay, go ahead, go ahead badly. So regarding on the beef side we we we think that our internal performance

Again we're we're going to I think we're going to perform better in the third quarter than we did in the second quarter. And part of that is because the things that we we can improve are not uh are much more on the on the on the mid margin side on the on the on the buy and sell side versus operations. So we think that that can be a quick um uh um a quicker uh Improvement in performance. Having said that it's a lot more difficult for you to project what uh, you know, and and to try to predict

uh,

Analyst: But we think on our own performance, we could have a much better quarter in the third quarter versus the second quarter on the things that depend on us.

the beef market today than the pork Market because the pork Market is a lot more stable today versus the the beef market and the and it's, it's really tough right now to to, to have a, a really long-term perspective of of of exactly what the market itself is going to do on beef. But we think on our own performance, we could have a much better quarter on the third quarter versus the second quarter on the things that depend on us.

Conference Operator: Thank you so much, Wesley. Thanks, Guilherme.

Thank you so much, Wesley. Thanks. Uh, dear me.

Gilberto Tomazoni: The next question comes from Ricardo Boiaci with Safra. Please go ahead.

The next question comes from.

Please go ahead.

Conference Operator: Hi, good morning, everyone. Thanks for the opportunity. I have a follow-up question on prepared foods. Wesley already gave some nice colors, but I wanted to explore the opportunity in terms of sustainable margin improvement that the ongoing projects could provide for the company. Any estimate of what the incremental normalized margin could be when these projects mature in the future? That is the first question. The second one, I think it goes to Guilherme regarding the shareholder base. Since the dual listing, how do you see it evolving? Are you seeing already U.S. investors gaining traction? Are you already starting to access fund managers that maybe you previously couldn't? Any color on how that is evolving would be great as well. Thank you, guys.

Hi, good morning, everyone, and thanks for the opportunity. Um, I have a follow-up question, on prepared foods. Uh, Wesley already gave some nice Scholars, uh, but I wanted to explore the opportunity in terms of sustainable margin Improvement. Uh, that the uh, ongoing project could provide for the company. Uh, any estimate of what the incremental, uh, normalized margin could be when these projects, uh, mature, uh, in the future. Uh, that that's the first question. Uh, and the second 1, I think it goes to G, um, regarding, uh, the the shareholder base. Uh, since the, um, dual listing, uh, how do you see it evolving? Um, see, are you seeing already us investors gaining traction. Uh, are you already starting to access fund managers that maybe you previously couldn't uh, any color on on how that is evolving. Would be great as well. Thank you guys. Uh,

Cristiane Assis: Ricardo, good morning. We think that the markets, the products that we're investing in, and the categories that we're investing in are categories that should have higher double-digit margins, around 15% is our expectation. It should bring the average of our EBITDA.

Regarded with Marty. So we we think that, you know, the the markets that the products that we're investing in the in the, in the categories are investing our categories that uh, should have higher double digit margins around, 15% as our expectation. And so we should it should bring the average of our of our

Analyst: Ricardo, our expectation in all of the projects was prepared, and the ROI will be around 20%.

Uh, uh, Ricardo, our expectation in all of the project of Prepare and the right will be around 20%.

Cristiane Assis: Great. I agree with that. In terms of shareholder base, first of all, I think since we listed on the New York Stock Exchange, our average daily trading volume more than doubled when we compare it to last year. Our IR team is receiving a lot of reverse inquiries from new investors, new U.S. investors that are starting to study the story of JBS S.A. We have already increased our foreign investor base. Especially at the conferences that we have, for example, we have conferences already scheduled in September. The number of meetings with JBS S.A. increased by 60%. We have full-day schedules in conference. I think people are starting to get the story, making their models.

Cristiane Assis: We will also be doing all this semester non-dual road shows in Boston, New York, Los Angeles, San Francisco, Chicago, Toronto, and so on and so on until the end of the year, to try to get Nashville to get these new investors. At the same time, as I mentioned before, we started checking the boxes to get to the index, given that today 54% of the assets under management are passive. This September, for example, the FTSE index will release their rebalancing. We will have a vision where we are going to be, for example, in the Russell next year. Most likely, June next year, we will be in the Russell. Again, we are trying to check the boxes and doing developments like we did in terms of releasing numbers in U.S. comparison to be able to be eligible for the most indexes that we can be.

Is it already, uh, our investor, uh, the the foreign investor base. Um, and especially on the conferences that we have, for example, we have in September, uh, conferences already scheduled, uh, the number of meetings, uh, with JBS increasingly 60%. So we have full day schedules in conference. So, I think we people are starting to get the story making their models. Uh, so and we'll be doing. Also, uh, all these semester known Duro shows, uh, in Boston, New York, Los Angeles, San Francisco, Chicago Toronto so on, for until the end of the year. So to try to, to get also Nashville, uh, to get this new investors. And at the same time, again, as I mentioned before, uh, we start checking the boxes to get, uh, to the index given that today 54% of the Assets in the management are passive and this September, we will have, for example, a foodie, uh,

Index, uh, we will, uh, release their rebalancing. So, we will have a vision, uh, where we going to be, for example, in the Russell next year. So, most likely June next year will be in the Russell. Uh, and again, trying to check the boxes, uh, and doing uh, developments like we did, uh, in terms of releasing numbers, in US comparison, uh, to be able to be eligible to the most indexed that uh we we can be

Analyst: That's great, guys. Thank you very much.

That's great, guys. Uh, thank you very much.

Gilberto Tomazoni: The next question comes from Guilherme Cavalcanti with Santander. Please go ahead.

The next question comes from Gilead.

Analyst: Good morning, everyone. Thank you for taking the question. Just a quick view here on the table ag industry. You guys, of course, had the investment on Manchiketa. I would like to hear your thoughts now that you are closer to the business, your prospects. If you could also read a bit how this is playing out in the U.S., whether there are opportunities there. We saw the very strong prices of eggs in Brazil also being a player on the exports during Q2. If you could share a bit your thoughts around that business, what it means for growth in the next couple of years for the company, I would appreciate that.

Good morning, everyone. Thank you for taking the question. Um, just a quick view here on the table egg industry. You guys, of course, uh,

Had the investment on Mica. I'd like to hear thoughts now, uh, that, uh, you are closer to the business, your prospects. Uh, and uh, if you could also read a bit how this is paying out in the US, whether there are opportunities. There we saw the, the very strong prices of eggs. In Brazil, also being a player on the exports during Q2. So if you could share a bit, your thoughts around that business, uh, what it means for growth, in the, in the next couple, uh, of years for, for the, for the company. And I would appreciate that.

Analyst: Guilherme, thank you for the question. When we announced our joint, when we bought 50% of Manchiketa, we mentioned that it is a new wave of growth. We increased our identification of our platform. We want to do with the egg what we have done with chicken, pork, and beef to be one of the global leaders of the category. This is the strategy. We cannot mention one or other strategy because this will be responsible for Manchiketa and not for us to say what will be acquisition or something like. All I can say, it is our priority for growth, both in Brazil and the U.S. in the egg sector.

Um, give me. Thank you for the question. Uh, we we when we announced in our our uh,

uh,

Joint. But when we bought 50% of my gear and we are mentioned, that is a new, uh, is a new wave of growth. We are increase our diversification of our platform and uh, and uh, we want to do with the

H what we have done with chicken and pork and beef to be 1 of the leader of the global leader of the category. This is the strategy. Uh, we cannot make sure 1 other strategy because this will be responsible for Romantic Era, uh, not for us to, to to say that what will be acquisition on something like of how. I can see it's our priority for growth both in Brazil and Us in in the egg sector.

Analyst: Tomazoni, could you share a bit your thoughts about the growth of this category? It seems that when we look in terms of production in Brazil, it has been outpacing other proteins. So what is your thought going forward for the industry as a whole?

Analyst: I think it is very positive, Guilherme, because I think we have mentioned in other calls that the consumers now get a preference for protein. Proteins become more healthy, and it is a new trend. When you look for the types of protein, we see that the eggs are more affordable among all other proteins that are available in the market. It means that eggs keep growing and eggs become very healthy. I think it is an opportunity to create brands in eggs as well. Manchiketa is a start to do that already with Epy Eggs and Manchiketa and some other brands they are developing. This is the strategy. We see that this category will be growing and we can enter in the value-add eggs product as well. We are so excited with the growth of this category.

Could you share a bit, uh, your thoughts about the growth of this category? Because it seems that when we look in terms of production, in Brazil, it has been outpacing other proteins as well. So, what is your thought going forward for for the industry as a whole

I think it's very positive Gillian is because I think it's uh uh we have mentioned in other calls that the consumers now, they are get the preference for protein protein, become more healthy and they not, uh, it is a new trend. And they, and when you look for the types of protein, we see that the eggs is more affordable among the older

Analyst: Because of that, we made this investment and we consider this category one of the categories where we make a difference in terms of growing in the future.

Other proteins that are available in the market means that eggs. Keep growing and eggs become very, very healthy and, uh, and I think is to a little opportunity to create brands in in hags as well. And Monty is the start to do that already with the epx and Monty care. And some other brands, they are developing, this is the strategy. We see that this category will be grow and we can enter in the value, add hags products as well. We are so excited with the growth of this category is because of that we made this investment and we considered this category 1 of the category. We are really make difference in terms of growing the future.

Analyst: Thank you, Gilberto Tomazoni.

Thank you.

Gilberto Tomazoni: The next question comes from Igor Gadjis with Genial. Please go ahead.

Question comes from ego gadgets with genial, please go ahead.

Analyst: Good morning, everyone. Thank you for taking my questions. Can you hear me?

Good morning everyone. Uh, thank you for taking my questions. Can you hear me?

Analyst: Yes, we can hear.

Conference Operator: Good morning.

Yes, we can hear good morning.

Analyst: My question is about the U.S. pork unit. You exceed our expectations in terms of margins, mainly due to the resilience of domestic pork consumption in the U.S. Beyond that, you mentioned the expansion of high value-added products, which partially offset the negative pressure on pork or fowl prices, redirected to pet food and animal feed industry due to trade restrictions with China. In other words, as we understand it, the margin could have been even better if realized price had behaved normally. I would like to understand if there is an expectation to resume normal shipments of pork or fowl to China and restore the realized price in the second half. Thank you once again.

uh my questions about uh US Park unit, uh you can see our expectations in terms of margins uh

Mainly due to the resilience of domestic Park consumption in the US but beyond that you mentioned the the expansion of high value added products which partially offset, the negative pressure on Park. Oh file prices uh, redirect to pet food and animal feed industry, due to trade rest.

With China, in other words uh as we understand it, the margin could have been even better if you realize price had behaved. Normally, I would like to understand that if you, there is an expectation to resume, uh, normal shipments of Poco fall, uh, to China and restore the realized price in second half. Uh, thank you once again.

Cristiane Assis: Igor, good morning. The trade with China after the trade truce has been kind of in place here and postponed has already resumed to China and it is normal as of right now.

Igor that uh good morning the the the trade with with with with China after the the the the you know, the the trade. Um a truce has been kind of a in place here and and postpone has has has already resumed too.

To China, and it's normal as of right now.

Analyst: So, in the next quarter, we can maybe see the realized price of pork U.S. going up?

Cristiane Assis: We see normalized margins from the third quarter forward.

So uh in the next quarter we we can uh maybe uh see the realized price of fork us going up.

Analyst: Okay. Thank you very much.

In your normalized margins from the third quarter forward.

Cristiane Assis: That's the expectation.

Analyst: Okay. Thank you very much.

Okay, thank you very much.

Yeah. Okay. Thank you very much.

Gilberto Tomazoni: The next question comes from Isabella Simonato with Bank of America. Please go ahead.

The next question comes from Isabella, Simon.

America, please go ahead.

Analyst: Thank you. Hi, everyone. Thank you for the call. Just a quick question on U.S. pork, most related to accounting, actually. We saw a big difference, right, in the IFRS margin and U.S. GAAP, which happened in the past. You guys put a footnote explaining a little bit of the accounting. I think our perception, right, is that you took a hit when you think about the U.S. GAAP margin at the end of the quarter because of lower cut-out prices, right, while hog prices moved up during the quarter. So back to the discussion, right, of margin improvement in Q3, can we assume that the margin, right, for the average of the quarter was actually a little bit higher than those 6.5%?

Thank you. Hi everyone, thank you for the call. Just a, a quick question on us pork, um, and most related to accounting actually. Uh, we saw a big difference right in the IFRS margin and us. Gaap, which happened in the past. And, and you guys put a a footnote explaining a little bit of the accounting. But, um,

I think our perception right? Is that you, you took a hit when you think about the US gaap margin in the end of the quarter, because of lower cut out prices, right while, hog prices moved up during the quarter. So, uh, I I back to the discussion, right of margin Improvement into 3, can we assume that the the, the the margin right? For the average of the quarter was actually a little bit higher than those.

6.5%. And, um,

Analyst: If you can break down what was the accounting impact regarding biological assets and mark-to-market of inventories, I think that will help to clarify a little bit of the hit on profitability. Thank you.

Or if you can break down what was the the counting impact regarding biological assets and Mark to Market of inventories? I think that will help to to clarify a little bit of the the heat on profitability. Thank you.

Cristiane Assis: Isabella, good morning. We, we, look, we manage the business here on a day-to-day on a US GAAP basis. We do not manage, you know, in the U.S., we manage it in US GAAP. So we do not follow this on a, you know, IFRS margins on a day-to-day basis. When I mentioned the improvement in margin next quarter and normalizing, going back to normal from where we expected margins to look like, it is on a US GAAP basis, and it does not have really a lot to do with US GAAP IFRS differences.

Good morning. We we look we we we manage our the, the business here, on a day to be on, on a US gaap basis. So we don't, we don't manage. You know, the, the, the in the US we manage it in, in, in us gaap. So we don't, we don't, we don't follow this on a, you know, ifs margins on a day-to-day basis. When I mentioned the the Improvement in in margin next.

Next, um, next quarter and and and and normalizing going back to normal from where, where we we expect as margins to look like it's it's on on a US, gaap basis. And it, it doesn't have really a lot to do with um uh uh, Us gaap by FS differences.

Analyst: I got it. Thank you.

I got it. Thank you.

Gilberto Tomazoni: The next question comes from Purun Sharma with Stevens. Please go ahead.

The next question comes from Puran Sharma with Stevens. Please go ahead.

Guilherme Cavalcanti: Good morning. Thanks for the question here. Just wanted to parse into Australia a little bit more. I think you mentioned before, you know, the other businesses were running about the same as the prior quarter, maybe except for the fish business. But the strong performance came from beef. It sounds like there is, you know, continued favorability in terms of the cattle cycle. So I was just wondering, you know, as you look out, I think you said you see room for continued improvement for the year. And I was wondering if that you meant that on a sequential basis. When I look at EBITDA margins, do they sequentially improve from these strong levels, or were you thinking more on kind of a year-over-year basis?

Good morning. Uh, thanks for the question here. Um,

Just wanted to, uh, parse into Australia a little bit more. I think you mentioned before.

But I think you said you, you you see room for continued um, uh, Improvement for the year. And, um, I was wondering if if that will you meant that on a sequential basis? Like, when I look at IBA margins, do they sequentially improved from from these strong levels or or were you thinking more on kind of a year-over-year, uh, basis?

Analyst: Thank you for the question, Purun. We see that the margin of the JBS Australia business will be two-digit. In the coming quarters, we see payable livestock availability. We see that we are improving our results on the salmon business. The other businesses, they are very stable. Pork is performing very well, and prepared food is doing well. We see that 50% of our business in JBS Australia is beef. We see these results will be above two digits. Above, no, it will be two digits, sorry for that. It is two digits. We remain confident because we are talking the other quarters that the cattle are available, but there is too much rain. They are not able to catch the cattle in the farms. Now the environmental condition is much better, and we are normalizing our operations. We are working and our plants are full.

Thank you for the question. Uh, we uh, we see that the margin of the Australia business will be 2 digit and uh, and the, the common quarters, we see, uh, favorable, uh, livestock availability, we see that improving our results on on the, on the salmon business and we the other businesses that they are very stable, uh, Park is performed very well and prepare food is doing is is is doing well and see that, uh,

Our 50% of our business in Australia. Uh, is this and, uh, we see this, uh, this results will be in above above the above, uh, 2 digits. Uh, but no, it was a bit too digit. Sorry for that. It's 2 digits. And, uh, we, we are very, we remain The Confident because we are talking the, uh, the other part is that

Analyst: We remain confident of this business.

The cattle are available but there is all rain too much rain. They are not able to to, to catch the the, the cattle in the farms. And now the the environment condition is much better and we are normalized. Our operations, we are working and our plants full. And we are we are remain confident of this business.

Analyst: Great. I appreciate that. Just as a follow-up, I wanted to hone in further on the U.S. and Brazil tariff situation. It sounds like JBS Brazil can find some offsets. You guys mentioned your global platform. I think you could find some offsets if you see some weakness there. I just wanted to ask about the U.S. chicken business, Pilgrim's Pride. Typically, Q4 is a period where you see seasonal weakness for chicken. I think this year we're seeing just a little bit of incremental supply growth when it comes to egg set. I am trying to think about the Brazilian beef situation. Do you think this bodes positively for PPC? If so, can you help us kind of think about how much room for improvement there can be from a potential lower beef supply because of Brazilian tariffs?

Great, great, appreciate that. And uh, just as a follow up.

and um, wanted to to

Hone in further on the B on the US and Brazil tariff situation. It sounds like JBS Brazil can find. Some offsets, you guys mentioned your your Global PA platform and and um you know, so I think you could you could find some offsets if if you see some weakness there. Um, but I just wanted to ask about the US chicken business, pil Pilgrims Pride typically, 4q is a period where you see seasonal weakness for chicken. And I think this year, we're seeing just a little bit of incremental Supply growth when it comes to egg set. But I'm just I'm trying to think about the Brazilian kind of beef situation. Do you think this bod's positively for PPC? And if so um can you help us? Kind of, think about how much uh how much room for improvement. There can be

From a potential lower beef supply because of Brazilian tariffs.

Analyst: I think it is too early to estimate the real impact now because we see that the volume from Brazil that Brazil does not export to the U.S., maybe we replace from the other markets, from Australia and from other countries. As I mentioned before, some besides that, some of the U.S. products today are exported could be remaining in the domestic market. The end, I think, is the U.S. market will be supplying from the one side, from the other side. This will be open the opportunity for Brazil because this is an interconnected system. There is no more production of beef globally. If some countries directed its sales to the U.S., there will be open opportunities for the market that they leave. I think we need to wait for this rebalance situation that we can more estimate what will be the impact of that.

I I think is there is uh, too early to to, to estimate the real impact now because uh, we see that the volume from Brazil uh that Brazil not export to us. Maybe we replace from the other markets uh from Australia and from other countries. And uh, as I mentioned before, uh, uh

Some.

Decide of that, some of the US products uh today are exported could be remaining in in domestic Market. The end I think is the US market will be Supply from the 1 from the other side.

Analyst: Related to chicken, you are right. There is a little bit increase in terms of egg set. When you see the demand, I think the egg set we talk about, 1% to 2%, and the demand for protein is much higher than this. We do not see any reason to not be in accordance to this normal cycle of the business.

And this will be opened the opportunity for Brazil because this is a, this is a interconnected system that is no more production of beef globally. If some countries, uh, the they, they, they directed his sales to us. They will be open opportunity for the market that they leave. And I think is, uh, we need to, to wait for this rebalance, uh, situation that we can more estimate, what will be the impact of that?

To not be in accordance with this normal cycle of the business.

Analyst: Great. Thank you for the caller.

Great, thank you for the call.

Gilberto Tomazoni: Thank you, everyone. Ladies and gentlemen, there being no further questions, I would like to pass the floor to Mr. Gilberto Tomazoni.

Thank you, everyone, ladies and gentlemen. There being no further questions, I would like to pass the floor to Mr. Roberto Tom Amazon.

Analyst: I would like to once again thank you, everyone, for joining this call. As of this quarter, JBS S.A. reaffirm our focus on growth and deliver value to shareholders, as well as our confidence on the strength of our diversified platform, both in terms of geographic and protein. Year after year, it's proven to be the right strategy and excellent tool to protect companies from cycles, supply chain disruptions, or geopolitical impacts. I would like also to take this opportunity to thank all JBS S.A. team members. Our company is truly powered by people who share a common mission and are focused on delivering better results every day. Thank you, everyone. Thank you all.

I would like to once again. Thank you everyone for joining this. Call as a this quarter Market our listing in in ice, we reaffirm our focus on growth and deliver value to shareholders as well our confidence and the threat of our Diversified platform. Both in terms of geographic protein here after year, it's proven to be the right strategy and excellent tool to protect company for Cycles supply chain disruption or geopolitical impacts.

I would like to take this opportunity to thank all JBS team members. Our company is truly powered by people who share a common mission and our focus on delivering better results every day. Thank you. Thank you all.

Gilberto Tomazoni: This is the end of the conference call held by JBS S.A. Thank you very much for your participation and have a nice day. Goodbye.

This is the end of the.

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