Q1 2026 Jbs NV Earnings Call

May 13, 2026

Speaker #2: Good morning and welcome to JBS's first quarter of 2026 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.

Operator 2: Good morning and welcome to JBS's Q1 2026 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. 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. Such expectations are highly dependent on the industry and market conditions and therefore are subject to change. Are present with us today, Gilberto Tomazoni, Global CEO of JBS, Guilherme Cavalcanti, Global CFO of JBS, Wesley Batista Filho, CEO of JBS USA, and Christiane Assis, Investor Relations Director. Now, I'll turn the conference over to Gilberto Tomazoni, Global CEO of JBS.

Operator: Good morning and welcome to JBS's Q1 2026 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. 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. Such expectations are highly dependent on the industry and market conditions and therefore are subject to change. Are present with us today, Gilberto Tomazoni, Global CEO of JBS, Guilherme Cavalcanti, Global CFO of JBS, Wesley Batista Filho, CEO of JBS USA, and Christiane Assis, Investor Relations Director. Now, I'll turn the conference over to Gilberto Tomazoni, Global CEO of JBS.

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 based on the company's management expectations in relation to the future of JBS.

Speaker #2: Such expectations are highly dependent on the industry and marketing conditions, and therefore are subject to change. Present with us today are Gilberto Tomazoni, Global CEO of JBS; Guilherme Cavalcanti, Global CFO of JBS; Wesley Batista Fillo, CEO of JBS USA; and Christiane Aziz, 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.

Operator 2: Mr. Tomazoni, you may begin your presentation.

Operator: Mr. Tomazoni, you may begin your presentation.

Speaker #3: Good morning, everyone. Thank you for joining us today. The first quarter of 2026 was a challenging period for JBS, shaped by market volatility, seasonality, operational disruption, and change in a global trading flow.

Gilberto Tomazoni: Good morning, everyone. Thank you for joining us today. The Q1 2026 was a challenging period for JBS, shaped by market volatility, seasonality, operational disruption, and change in our global trade flows. This is consistent with what we have been signaling. We understand the nature of our business and the cycles we operate in, and we manage the company with that in mind. In the environment, we remain focused on what we can control: operational excellence, cost discipline, agility, and long-term value creation. JBS delivered net sales growth of 11%, reaching $21 billion, and is a record for a Q1. Net income was $2,221 million and EBITDA total approximately $1.1 billion with a margin of 5.2%.

Speaker #3: This is consistent with what we have been we understand the nature of our business and the cycles we operate in, and we manage the company with that in mind.

Speaker #3: In the environment, we remain focused on what we can control. Operational excellence, cost discipline, agility, and long-term value creation. JBS delivered net growth sales growth of 11%, reaching 21 billion dollars US dollars, and record a first is a record for a first quarter.

Speaker #3: Net income was 221 million US dollars, and EBITDA total approximately 1.1 billion US dollars, with a margin of 5.2%. Leverage increased to 2.77 times.

Gilberto Tomazoni: Leverage increased to 2.77 times, reflecting pressure on earnings and cash generation while we continue to strengthen our liability profile, extending average debt maturity to approximately 15.6 years. From an operation perspective, the quarter reflected both the challenge of the cycle and the resilience of our platform. In Beef North America, the environment remained very difficult. EBITDA was -$230 million, with margin at -2.3%, impacted by constrained cattle supply and higher costs. During the quarter, we advanced organizational and operational adjustment across our US beef platform, focused on rationalizing and resourcing and simplifying our structure in more challenging phase of the cattle cycle. As business has evolved, several areas were already operating in increased and integrated way.

Speaker #3: Reflecting pressure on earnings and cash generation. While we continue to strengthen our liability profile, extending average debt maturity to approximately 15.6 years. From an operational perspective, the quarter reflected both the challenge of the cycle and the resilience of our platform.

Speaker #3: In BIF North America, the environment remained very difficult. EBITDA was negative to 110 million US dollars. With margin at 2.3% negative, impacted by constrained cattle supply and higher costs.

Speaker #3: During the quarter, we advanced organizational and operational adjustment across our US BIF platform. Focused on rationaling, researching, and simplifying our structure in more challenging phase of the cattle cycle.

Speaker #3: At the business at business as evolved, several areas were already operating, and increasing integrated way. Building on that, we brought together FedBeef, the three business units: FedBeef, Regional Beef, and Case Ready, into a more unified structure.

Gilberto Tomazoni: Building on that, we brought together the three business units, Fed Beef, Regional Beef, and Case Ready into a more unified structure. This is a natural step. It reduce duplication, improve coordination, and allow us to leverage our scales and talent more efficiently while strengthening decision-making and position the business to improve its performance over time. These actions are part of a broader effort driving efficiency across the company. Our focus is to extract more value from existing assets, improve productivity, and enhance execution through technology, automation, and data. At Friboi and Pilgrim's, we have been developing, piloting artificial intelligence initiatives for over a year to support better decision-making, commercial execution, and operational efficiency. We are now scaling this capability globally.

Speaker #3: This is a natural step. It reduced duplication, improved coordination, and allowed us to leverage our scale and talent more efficiently, while strengthening decision-making and positioning the business to improve its performance over time.

Speaker #3: These actions are part of a broader effort driving efficiency across the company. Our focus is to extract more value from existing assets, improve productivity, and enhance execution through technology, automation, and data.

Speaker #3: At Freeboy and Pilgrims, we have been developing a piloting artificial intelligence initiatives for over a year to support better decision-making, commercial execution, and operational efficiency.

Speaker #3: And we are now scaling these capabilities globally. At Seara, we continue to advance automation and process improvement to increase productivity, improve product quality, and support expansion of higher value-added categories.

Gilberto Tomazoni: At Seara, we continue to advance automation and process improvement to increase productivity, improve product quality, and support expansion of higher value-added categories. This reflect our approach to the cycle. We act early, focus on what we control, and position the business for a stronger performance ahead. This quarter once again highlighted the importance of our diversified platform. Despite the headwinds, our business helped balance the consolidation performance. Seara delivered an EBITDA margin of 15.5%, supported by strong export demand, innovation, and growth in value-added products despite currency pressure and cost inflation. The outlook for poultry in Brazil remained positive, supported by balancing supply-demand, including adjustment in breeder placement and continuous demand growth.

Speaker #3: This reflects our approach to the cycle. We act early, focus on what we control, and position the business for a stronger performance ahead. This quarter, once again, highlighted the importance of our diversified platform.

Speaker #3: Despite the headwinds, our business helped balance and consolidation performance. Seara delivered an EBITDA margin of 15.5%, supported by strong export demand, innovation, and growth in value-added products.

Speaker #3: Despite currency pressure and cost inflation. The outlook for poultry in Brazil remained positive. Supported by a balancing supply-demand and including adjustment and breeder placement and continuous demand growth.

Speaker #3: JBS Brazil reported an EBITDA margin of 4.5%, a second higher first quarter margin in its history. Supported by a disciplined commercial execution and favorable demand.

Gilberto Tomazoni: JBS Brazil reported an EBITDA margin of 4.5%, a second to highest Q1 margin in its history, supported by a disciplined commercial execution and favorable demand. Friboi also delivered a strong top-line performance with a solid demand, both domestic and in exports. The China safeguards created an adjustment in the global trade flow during the quarter, but our team responded quickly, managed volume within the quota structure, and developed alternative markets such as United States, Mexico, Indonesia, preserving value and expanding our commercial footprint. In Australia, margin reached 7.1% under pressure, and operational fundamentals remain positive. In Queensland, cattle conditions are the best we have seen in the last 3 years, reinforcing our positive outlook for the business. In the United States, Pilgrim's had a softer quarter impacted by seasonality and planned plant adjustment.

Speaker #3: Freeboy also delivered a strong top-line performance with a solid demand both domestic and in exports. The channel safeguard created adjustment in the global trading flow during the quarter.

Speaker #3: But our team responded quickly, managed volume within the quarter structure, and developed alternative markets such as United States, Mexico, Indonesia, preserving value, and expanding our commercial footprint.

Speaker #3: In Australia, margin reached 7.1%, an operational fundamental remained positive, and Queensland, cattle conditions, are the best we have seen in the last three years, reinforcing our positive outlook for the business.

Speaker #3: In the United States, Pilgrims has a softer quarter. Impacted by seasonality and planet-plan adjustment. These actions were necessary to improve efficiency, enhance productivity mix, and better align our footprint with demand.

Gilberto Tomazoni: These actions were necessary to improve efficiency, enhance productivity mix, and better align our footprint with demand. The adjustment have been completed, and we have already seen improvement trends. US pork remains stable, with the sign of gradual improvement supported by more balanced supply and demand dynamics. Cash flow in the quarter was also impacted for growth CapEx, with investment focused on efficiency, especially in value-added products and in strengthening our global footprint, truly aligning with our long-term value creation. Looking ahead, the fundamental of our global protein remains strong. Beef supply continues to be constrained in key markets, poultry demand remains solid, and our brands continue to gain relevance with the consumers. Seasonality, we are playing an important role. The start of barbecue season in the United States, typically support a stronger consumption across protein and improve the industrial conditions to coming quarters.

Speaker #3: The adjustment has been completed and we have already seen improvement trends. US Pork remained stable with a sign of gradual improvement supported by more balanced supply and demand dynamics.

Speaker #3: Cash flow in the quarter was also impacted for growth CAPEX with investment focused on efficiency. Inspection in value-added products and strengthening our global footprint.

Speaker #3: Truly aligning with our long-term value creation. Looking ahead, the fundamental of a global protein remains strong. Beef supply continues to be constrained in key markets, poultry demand remains solid, and our brands continue to gain relevance with consumers.

Speaker #3: Seasonality, we are very important law. The start of barbecue season in the United States typically supports a stronger consumption across protein and improved industrial conditions to come in quarters.

Speaker #3: At the same time, we all remain disciplined. Our priorities are clear. Operational excellence, exceed control on cash generation, we also remain focused on strengthening the company's long-term position in a global capital market, including creating the conditions for further expanding our participation in relevant equity indices over time.

Gilberto Tomazoni: At the same time, we will remain disciplined. Our priorities are clear. Operational excellence, strict control on cash generation. We also remain focused on enhancing the company's long-term position in a global capital market, including creating the conditions for further expand our participation in relevant equity indices over time. We continue to review costs, optimize resources, and improve productivity across the business. We understand the cycle. We operate with discipline, and we are taking the right action to navigate the current environment while strengthening the companies for the future. Thank you. I will now turn the call over to Guilherme, who will be through the financial results in more details. Guilherme, please.

Speaker #3: We continue to review costs, optimize research, and improve productivity across the business. We understand the cycle. We operate with discipline. And we are taking the right action to navigate the current environment while strengthening the company for the future.

Speaker #3: Thank you. I will now turn the call over to Guilherme, who will be through the financial results in more details. Guilherme, please.

Speaker #4: Thank you, Tomazoni. Love that. Let's now move on to the operational and financial highlights of the first quarter 2026. Net sales reached a record of 22 billion dollars for a first quarter.

Guilherme Cavalcanti: Thank you, Tomazoni. Let's now move onto the operational and financial highlights of Q1 2026. Net sales reached a record of $22 billion for a Q1. Adjusted EBITDA in the IFRS totaled $1.1 billion, which represents a margin of 5.2% in the quarter. Adjusted EBITDA in US GAAP totaled $960 million, which represents a margin of 4.2% in the quarter. Adjusted operating income was $560 million with a margin of 2.4% in IFRS and $444 million in US GAAP with a margin of 2.5%. Net income was $222 million in the quarter and an earnings per share of $0.21.

Speaker #4: Adjusted EBITDA under IFRS totaled $1.1 billion, which represents a margin of 5.2% in the quarter. Adjusted EBITDA under US GAAP totaled $916 million, which represents a margin of 4.2% in the quarter.

Speaker #4: Adjusted operating income was 516 million dollars with a margin of 2.4% in IFRS, and 444 million dollars in US GAAP with a margin of 2.5%.

Speaker #4: Net income was 222 million dollars in the quarter, and the earnings per share of 21 cents. Excluding the non-recurring items, adjusted net income would be 241 million dollars, and the earnings per share of 23 cents per share in the quarter.

Guilherme Cavalcanti: Excluding the non-recurring items, adjusted net income would be $241 million and an earnings per share of $0.23 per share in the quarter. Finally, the return on equity was 22% and return on invested capital was 15%. Free cash flow in Q1 2026 was -$1.5 billion compared to a cash consumption of $970 million in Q1 2025. In addition to the seasonal cash consumption that typically occurs in Q1, the main drivers of a higher cash burn compared to the same period last year were a decline in adjusted EBITDA of approximately $400 million, reflecting the weaker operating results.

Speaker #4: Finally, the return on equity was 22%, and return on invested capital was 15%. Free cash flow in the first quarter 2026 was negative at 1.5 billion dollars compared to a cash consumption of 917 million dollars in the first quarter 2025.

Speaker #4: In addition to the seasonal cash consumption that typically occurs in the first quarter, the main drivers of a higher cash burn compared to the same period last year were a decline in adjusted EBITDA of approximately $400 million, reflecting the weaker operating results.

Speaker #4: An increase in capital expenditures, which more than doubled compared to the first quarter 2025, totaling 566 million dollars, driven primarily by expansion CAPEX of 319 million dollars compared to a 79 million dollars in the first quarter 2025.

Guilherme Cavalcanti: An increase in capital expenditures, which more than doubled compared to Q1 2025, totaling $566 million, driven primarily by expansion CapEx of $390 million compared to $79 million in Q1 2025. An additional of $252 million working capital impact resulting from the higher livestock suppliers payment deferral, as previously flagged in our last earnings call. It is worth noting that if we execute the same level of livestock deferral in Q4 2026, this impact will be offset on the free cash flow for the full year. Notably, working capital consumption was already below the same period last year.

Speaker #4: In addition, of 252 million dollars working capital impact resulting from the higher livestock suppliers payment deferral, as previously flagged in our last earnings call, it is worth noting that if we execute the same level of livestock deferral in the fourth quarter 2026, this impact will be offset on the free cash flow for the full year.

Speaker #4: Notably, working capital consumption was already below the same period last year. Because excluding the additional 252 million dollars in deferred livestock payments, working capital would have been approximately 23% better compared to the first quarter 2025.

Guilherme Cavalcanti: Excluding the additional $252 million in deferred livestock payments, working capital would have been approximately 23% better compared to Q1 2025. In Q1, we also strengthened our balance sheet with the issuance of $2.5 billion in bonds in the market and a tender offer of $1.45 billion. This allowed us to extend our debt maturity profile, reaching an average debt term of 15.6 years and an average cost of 5.7%. We have no significant debt maturities until 2031. Our leverage ended the year at 2.77x, in line with our long-term target of keeping net debt to be between 2x and 3x.

Speaker #4: In the first quarter, we also strengthened our balance sheet with the issuance of 2.5 billion dollars in bonds in the market and the tender offer of 1.45 billion dollars.

Speaker #4: This allowed us to extend our debt maturity profile, reaching an average debt term of 15.6 years and an average cost of 5.7%. We have no significant debt maturities until 2031.

Speaker #4: Our leverage ended the year at 2.77 times, in line with our long-term target of keeping net debt to be that between two and three times.

Speaker #4: Our 3.4 billion dollars in revolving credit lines and 3.5 billion dollars in available cash provide us with the flexibility to continue executing our expansion CAPEX, value creation projects, and shareholder returns while maintaining a health and robust balance sheet.

Guilherme Cavalcanti: Our $3.4 billion in revolving credit lines and $3.5 billion in available cash provide us with the flexibility to continue executing our expansion CapEx, value creation projects, and shareholder returns while maintaining a healthy and robust balance sheet. Last night, we also announced that beginning next quarter, we will voluntarily file forms 10-K, 10-Q, and 8-K with the SEC, prepared under IFRS and supplemented on the earnings release by certain indicators reported under US GAAP. This initiative is expected to broaden our eligibility for key benchmark indexes, such as S&P Composite 1500 family. With that in mind, I would like to open up for the question and answer session.

Speaker #4: Last night, we also announced that beginning next quarter, we will voluntarily file forms 10-K, 10-Q, and 8-K with the SEC, prepared under IFRS and supplemented on the earnings release by certain indicators reported under US GAAP.

Speaker #4: This initiative is expected to broaden our eligibility for key benchmark indexes, such as S&P Composite 1500 family. With that in mind, I would like to open up for the question and answer session.

Operator 2: Thank you. The floor is now open for questions from investors and analysts. If you have a question, please click the Raise Hand at this time. If at any point your question is answered, you can remove yourself from the queue by clicking the lower hand, and questions will be answered in the order they are received. Ladies and gentlemen, the first question comes from Isabella Simonato from Bank of America. Mrs. Simonato, you may go ahead.

Operator: Thank you. The floor is now open for questions from investors and analysts. If you have a question, please click the Raise Hand at this time. If at any point your question is answered, you can remove yourself from the queue by clicking the lower hand, and questions will be answered in the order they are received. Ladies and gentlemen, the first question comes from Isabella Simonato from Bank of America. Mrs. Simonato, you may go ahead.

Speaker #1: Thank you. The floor is now open for questions from investors and analysts. If you have a question, please click the 'raise hand' at this time.

Speaker #1: If at any point your question is answered, you can remove yourself from the queue by clicking the lower hand. Questions will be answered in the order they are received.

Speaker #1: Ladies and gentlemen, the first question comes from Isabela Cimanado from Bank of America. Mrs. Cimanado, you may go ahead.

Speaker #5: Thank you. Good morning, Tomazoni. Guilherme, Chris, thank you for the time. I have a couple of questions. First, Guilherme, if I may ask you for that break-even EBITDA exercise you do every quarter, that's really helpful.

Isabella Simonato: Thank you. Good morning, Tomazoni, Guilherme, Chris. Thank you for the time. I have a couple of questions. First, Guilherme, if I may ask you for that break-even EBITDA exercise you do every quarter. That's really helpful. If you could just walk through that, we really appreciate. Also to the point of cash, right? Your leverage is pretty close to 3 times, right? I know that's not how rating agencies look at that. If you look to the EBITDA US GAAP, right, is even higher than that. I was wondering, you mentioned before, right, a CapEx of $2.4 billion for this year and $1.3 of expansion, if that continues to be the goal, right?

Speaker #5: If you could just walk through that. We really appreciate it. And also to the point of cash, right? And your leverage is pretty close to three times, right?

Speaker #5: I know that's now not how rating agencies look at that, but if you look to the EBITDA US GAAP, right, it's even higher than that.

Speaker #5: So I was wondering you mentioned before, right, a CAPEX of 2.4 billion dollars for this year, and 1.3 of expansion. If that continues to be the goal, right, or if you are reviewing that, not only for this year, but going forward, what type of levers you have, right, to bring leverage down, assuming you don't have a big jump, right, in your EBITDA?

Isabella Simonato: If you are reviewing that not only for this year but going forward, what type of levers you have, right, to bring leverage down, assuming you don't have a big jump, right, in your EBITDA, for the next 18 to 24 months. That would be my first point. Now also, about the US Beef business, right? I think we have been discussing that for a while now about how the cycle apparently has changed right, or is being different than the previous down cycles. There's a matter of really how the cattle herd can be rebuilt at this point as the sector goes through generational transitions and issues. I mean, do you see the business model changing going forward?

Speaker #5: For the next 18 to 24 months. So that would be my first point. And also, about the USD business, right? I think we have been discussing that for a while now, about how the cycle apparently has been changed, right, or it's been different than the previous down cycles.

Speaker #5: And there's a matter of really how the cattle herd can be rebuilt at this point as the sector goes through generational transitions and issues.

Speaker #5: I mean, do you see the business model changing going forward? I mean, any type of vertical integration that would make sense on the cattle part for you to be supportive of the cattle herd growth over time?

Isabella Simonato: I mean, any type of vertical integration that would make sense on the cattle part for you to be supportive of the cattle herd growth over time? That would be my second point. Thank you.

Speaker #5: That would be my second point. Thank you.

Speaker #1: Hi, Isabela. So on the first question, I think it's early or it's still reviewing our estimates. And again, there's a lot of variables that's not in our control.

Guilherme Cavalcanti: Hi, Isabella. On the first question, I think it's early. We're still re-reviewing our estimates. Again, there's a lot of variables that's not in our control. I would say that for this year, the break-even EBITDA, the cash flow break-even EBITDA will be anything between $5.7 and $6 billion. That's our better estimation at the moment. In terms of cash usage, you're right, the leverage reached 2.77. We bear in mind that our long-term target is to be between 2 and 3 times. Being in this range, we think we keep investment grade. Above 3 times, we enter on the attention zone, where we are aware when we start reviewing things like you mentioned, capital expenditures, dividends and so on.

Speaker #1: But I would say that for this year, the break-even EBITDA—the cash flow break-even EBITDA—will be anything between $5.7 and $6 billion.

Speaker #1: That's our better estimation. In terms of cash usage, you're right. The leverage reached 2.77. So we bear in mind that our long-term target is to be between two and three times.

Speaker #1: We being in this range, we think we keep investment grades. Above three times, we enter on the attention zone, where when we start to revealing things like you mentioned, capital expenditures, dividends, and so on.

Guilherme Cavalcanti: Our dividend limit is at 3.75. I think it's worth mentioning that, in 2023, our leverage reached 4.84 in Q3, and we kept investment grade because of the cyclicality nature of our business. Because in 2024, the leverage came down without any effort to 1.89. In fact, in 2024, I even unwind the discount receivables. In 2024, we would be printing a $2.8 billion free cash flow, but I used $500 million to unwind discount receivables, so I printed $2.3 billion free cash flow. That's the kind of leverage that we have to use.

Speaker #1: Our dividend limit is at 375. And I think it's worth mentioning that in 2023, our leverage reached 4.84 in the third quarter. And we kept investment grade because of this cyclicality nature of our business.

Speaker #1: In 2024, the leverage came down without any effort to 1.89. In fact, in 2024, I even unwind the discount receivables. So 2024, we use we would be printing at 2.8 billion dollars free cash flow.

Speaker #1: But I use it 500 million dollars to unwind discount receivables. So I printed 2.3 billion dollars free cash flow. So that's the kind of leverage that the leverage that we have to use because we are not we are not we don't use this leverage recurrently.

Guilherme Cavalcanti: We don't use these levers, recurrently. Exactly to be able to use whenever we need. For example, I could increase my discount receivables again for anything from $500 million to 1 billion in discount receivables that I unwinded in 2024 when the cash flow was robust. I can also increase my supplier vendor finance because we have space for that. But these all have costs, you know, so we use only if needed. That's how we will be managing leverage. Q2 we may be closer to our upper range limit on the long-term target. Bear in mind that H2 there's always a strong free cash flow generation.

Speaker #1: Exactly to be able to use whenever we need. So for example, I could increase my discount receivables again for anything from 500 to a billion dollars in discount receivables.

Speaker #1: That I unwinded in 2024 when the cash flow was robust. I can also increase my supplier vendor finance because we have space for that.

Speaker #1: But these all have costs. So we use only if needed. So that's how we will be managing leverage. So second quarter, we may be closer to our up range limit on the long-term target.

Speaker #1: But bear in mind that the second semester, there's always a strong free cash flow generation. So we expect to end up the year in our target zone of between two and three times.

Guilherme Cavalcanti: We expect to end up the year in our target zone of between 2 and 3x net debt to EBITDA. As long as we keep inside this range, we've been managing to keep the billion-dollar dividends that we already announced, and around more than $1 billion in growth CapEx. If you look at since 2019, we did an average of expansion CapEx of almost $1 billion with an almost $1 billion average dividend as well. I think being in this range, I think we can keep this pace of growth CapEx and dividends, but we will always be monitoring according to our leverage, which is our main variable for capital allocation decisions.

Speaker #1: And that EBITDA. And as long as we keep inside this range, we've been dividends that we already announced and around the one more than a billion dollars in growth CAPEX.

Speaker #1: If you look at since 2019, we did an average of expansion CAPEX of almost a billion dollars with an almost a billion dollars average dividends as well.

Speaker #1: So I think being in this range, I think we can keep this space of growth CAPEX and dividends. But we will always be monitoring according to our leverage, which is our main variable for capital allocation decisions.

Speaker #5: Isabela, good morning. So obviously, this herd rebuild and the cycle of the US business is taking longer than we all wish for. But for the industry to have any integration, especially on the cow-calf side of the business, is just not realistic.

Wesley Batista Filho: Isabella, good morning. Obviously this herd rebuild in the cycle of the US business is taking longer than we all wish for. For the industry to have any integration on the especially on the cow-calf side of the business is just not realistic for a few reasons. It's very specialized and the people that do it have very special knowledge that's very different than what we do. Other than that, the especially on the cow-calf side of this supply chain, it's very expensive, right? Expensive not as in price. I mean, it's expensive.

Speaker #5: For a few reasons. It's very, very specialized. And the people that do it have very special knowledge that's very different than what we do.

Speaker #5: And other than that, the especially on the cow-calf side of this supply chain, it's very expensive, right? Expensive, not as in price. I mean, it's expensive.

Wesley Batista Filho: You need a lot of land. You need to manage a lot of land to be able to have a significant amount of livestock. That's not our business. We're not looking into that.

Speaker #5: It has a lot of you need a lot of land and you need to manage a lot of land to be able to have a significant amount of livestock.

Wesley Batista Filho: You need a lot of land. You need to manage a lot of land to be able to have a significant amount of livestock. That's not our business. We're not looking into that.

Speaker #5: And that's not our business, so we're not looking into that.

Speaker #6: Super helpful. Thank you.

Tiago Bortoluci: Super helpful. Thank you.

Isabella Simonato: Super helpful. Thank you.

Speaker #1: Thank you, ladies and gentlemen. The next question comes from Enrique Bristolen with Verdesco. You may go ahead, Mr. Bristolen.

Operator 2: Thank you. Ladies and gentlemen, the next question comes from Henrique Brustolin with Bradesco. You may go ahead, Mr. Brustolin.

Operator: Thank you. Ladies and gentlemen, the next question comes from Henrique Brustolin with Bradesco. You may go ahead, Mr. Brustolin.

Speaker #7: Hello. Good morning, everyone. Thank you for taking my questions. I have two also on US beef. The first is to understand a little bit more the profitability of delivering the quarter.

Henrique Brustolin: Hello. Good morning, everyone. Thank you for taking my questions. I have two also on US Beef. The first is to understand, you know, a little bit more the profitability you delivered in the quarter. We know it's a seasonally weak quarter. Evolving into the barbecue season, right? We continue to see spreads that seem to be pressured as they were.

Speaker #7: We know it's a seasonally weak quarter. Evolving into the barbecue season, right? We continue to see spreads that seem to be pressured as they were—.

Speaker #1: Enrique, maybe can you repeat the question? We lost half of the question. Can you repeat, please?

Wesley Batista Filho: Henrique, maybe can you repeat the question? We lost half of the question. Can you repeat, please?

Henrique Brustolin: Sorry. Sure. The first one is if there was anything extraordinary in Q1 US beef margins such as hedges or even the impact from the Greeley strike. The second is how you see margins evolving into the barbecue season. Spreads appear to be pressured back to the levels they were in the beginning of the year. You know, how you see this favorable seasonality playing out under the current environment.

Speaker #7: Sorry. Sure. The first one is if there was anything extraordinary in Q1 US beef margins, such as hedges or even the impact from the Greeley strike, and the second is how you see margins evolving into the barbecue season.

Speaker #7: Spreads appear to be pressured back to the levels they were in the beginning of the year. So how you see these favorable seasonality playing out under the current environment.

Speaker #5: So, no, there wasn't anything extraordinary from a hedge perspective or even the whole strike situation. It didn't have a meaningful impact on our quarterly results.

Wesley Batista Filho: No, there wasn't anything extraordinary from a hedge perspective or even the whole strike situation didn't have a meaningful impact on our quarterly results. Nothing to do with that. It was simply margins, especially in January and February, were for sure very, very challenging and probably one of the most challenging periods we've ever seen in history. Talking about the next quarters, you know, we expect obviously to be better than what we had in Q1. For sure 2026 will be a more challenging year than 2025.

Speaker #5: So nothing to do with that. It was simply margins, especially in January and February, were for sure very, very challenging and probably one of the most challenging periods we've ever seen in history.

Speaker #5: So, talking about the next quarters, we expect, obviously, to be better than what we had in Q1. But for sure, 2026 will be a more challenging year than 2025.

Speaker #7: That's clear, Wesley. Thank you very much.

Henrique Brustolin: That's clear, Wesley. Thank you very much.

Speaker #1: Thank you. Our next question comes from Benjamin Thurier with Barclays. Mr. Thurier, you may go ahead.

Operator 2: Thank you. Our next question comes from Benjamin Theurer with Barclays. Mr. Theurer, you may go ahead.

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

Speaker #8: Hey, good morning, Tomazoni Ghee. e. Just two very quick ones. So first, can we talk a little bit about Australia and some of the cost headwinds, what you're seeing on the Australian cattle cycle maybe, and if there was something in particular in the first quarter that drove a little over 300 basis points of margin contraction?

Benjamin Theurer: Good morning, Tomazoni, Guy. Two very quick ones. First, can we talk a little bit about Australia and some of the cost headwinds, what you're seeing on the Australian cattle cycle maybe, and if there was something in particular in Q1 that drove the little over 300 basis points in the margin contraction. Then second, if you could share a few thoughts as it relates to the cattle price in Brazil. It's been very erratic and volatile. Any background, any interpretation of what we should think about going forward for the Brazilian cattle price, that would be helpful. Thank you very much.

Speaker #8: And then second, if you could share a few thoughts as it relates to the cattle price in Brazil. It's been very erratic and volatile.

Speaker #8: So any background, any interpretation as what we should think about going forward for the Brazilian cattle price, that would be helpful. Thank you very much.

Speaker #5: Hi, Ben. Thank you for your question. Related to Australia, only the operation was very strong. We had a good quarter in terms of volume and sales.

Gilberto Tomazoni: Hi, Ben. Thank you for your question. Related to Australia, the operation was very strong. We had a good quarter in term of volume and sales. All the impact when you compare to the last Q, last year, the Q1 last year, was FX. Was around 15% the valuation of the Aussie. This is the only impact of the business. The business remains strong in Queensland that where we have 40% of the cattle herd. The conditions the environment conditions for pasture is the best we have seen in the last 3 years. We remain very positive with the Australia business.

Speaker #5: And the impact when you compare to the last quarter, last year, the first quarter last year, was FX, was around 15%. The devaluation, valuation of the Aussie.

Speaker #5: And this is the only impact of the business. The business remained strong in Queensland that when we have 40% of the cattle herds, the conditions the environment conditions for pasture, the best we have seen in the last three years and then we remain very positive with the Australian business.

Gilberto Tomazoni: About the volatility in Brazil, it's cattle, it's normal because, as you know, Brazil is focusing to accomplish the quota in China quota. All of the players in the market try to produce as much as they can in order to able to reach a share of the quota. It is normal. The price, the price of the cattle increase, but you saw in the last last two weeks, the price start to go down.

Speaker #5: About the volatility in Brazil, it's normal because, as you know, Brazil is focusing to accomplish the quota in China, and all of the players in the market are trying to produce as much as they can.

Speaker #5: In order to be able to reach a share of the quota, it is normal. The price of the cattle increased, but you saw in the last two weeks, the price started to go down.

Speaker #5: And we see that if the quota will be achieved, we believe that at the end of June, the volume should be go down and the price of the cattle should be down as well.

Gilberto Tomazoni: We see that if the quota will be achieved, we believe it at the end of June, the volume should go down and the price of the cattle should be down as well in a way to accommodate that to where Brazil will be putting an additional 100 thousand tons per month. This is normally that what we see in the situation that we less cattle will be harvested and the price of the cattle will be down. I think it's a part of the we see it as normal.

Speaker #5: In a way, to accommodate that, to where Brazil will be put in an additional 100,000 tons per month. This is normally that what we see in the situation that we last cattle will be harvest.

Speaker #5: And the price of the cattle will be down. I think it's a part of the—we are seeing it as normal.

Speaker #1: Okay, perfect. Thank you very much.

Benjamin Theurer: Okay, perfect. Thank you very much.

Operator 2: Thank you. Now, Guilherme Guttilla from BTG would like to ask a question. You may go ahead, Mr. Guttilla.

Operator: Thank you. Now, Guilherme Guttilla from BTG would like to ask a question. You may go ahead, Mr. Guttilla.

Speaker #8: me good to you from BTG would like to ask you a question? You may go ahead, Mr. Gutila.

Speaker #1: Hi, Tomazoni. Guilherme Wesley here. Good morning. So, we have two questions here also. The first one is regarding Seattle. I just want to discuss a little bit more about the margin of the company.

Guilherme Guttilla: Hi, Tomazoni, Guilherme and Wesley. Good morning. We have two questions here also. The first one is regarding Seara. Just want to discuss a little bit more about the margin of the company. Margins stayed at quite strong levels, but they declined sequentially. If you could provide us a bit more information on what drove the sequential decline, if it was more related to the pork business, to the chicken, or maybe something else, like any color you can provide us would be very helpful. If I may just do a quick follow-up also in the US beef. There was some new reports like pointing to the postponing of the measure, but there was also the possibility of lower US beef import tariffs.

Speaker #1: So margins stayed at quite strong levels, but they declined sequentially. So if you could provide us a bit more information on what drove the sequential decline, if it was more related to the pork business, to the chicken, or maybe something else like any quality, you can provide us would be very helpful.

Speaker #1: And if I may just do a quick follow-up also in the US beef, there was some new reports like pointing to the postponing of the measure, but there was also the possibility of lower US beef import tariffs.

Speaker #1: So how are you guys seeing this for the US beef segment and also for JBS Brazil and Australia that you're also benefiting kind of from this?

Guilherme Guttilla: How are you guys seeing this for the US beef segment and also for JBS Brazil and JBS Australia that should also benefit kind of from this? Thank you.

Speaker #1: Thank you.

Speaker #5: Guilherme, related to Seattle, Seattle increased its sales volume both domestically and for export. Demand for all of the products remained very strong. The only explanation is the FX.

Gilberto Tomazoni: Guilherme, related to Seara increases its sales volume, both domestic and export. Demand for all of the products remain very strong. The only explanation is the FX. If you take the FX, compared to the last quarters, you see the effects, the impact will be around 10%. This is more than justify all of the business is very strong. We are very confident with the results of Seara in the coming quarters.

Speaker #5: If you take the FX that compared to the last quarter, the quarters, you see the FX, the impact will be around 10%. And this is more than justify all of these.

Speaker #5: The business is very strong. We are very confident with the results of Seattle and the common quarters.

Speaker #8: And on the US beef, Guilherme, so if tariffs are lowered, I actually see this as and there is a more bigger income of Australian and Brazilian beef and from other geographies as well.

Wesley Batista Filho: On the US beef, Guilherme, you know, if tariffs are lowered, I actually see this as, and there is a more, a bigger income of Australian and Brazilian beef and from other geographies as well. I see this as mostly, in a lot of, in a big sense, very complementary. The US has really gone into a production system that prioritizes prime and choice and heavier cattle. Today, just the percentage of select cattle that we see is a lot smaller than what we used to have. It is basically a very, very small minority of cattle nowadays is ungraded or low-graded cattle.

Speaker #8: I see this as, mostly in a lot of— in a big sense, very complementary. The US has really gone into a production system that prioritizes Prime and Choice and heavier cattle.

Speaker #8: And today, just the percentage of select cattle that we see is a lot smaller than what we use it to have is basically a very, very small minority of cattle nowadays is ungraded or low-graded cattle.

Speaker #8: So I think that increase in imports potentially increase in imports could complement that production that we're doing a lot less of. And I actually think that when the byproduct of having this priority of higher marble, more premium beef that we're production system that we have in the US is that we have a lot of fat trim as part of our as part of our production.

Wesley Batista Filho: I think, you know, that increase in imports, potential increase in imports could, you know, complement that production that we're doing a lot less of. I actually think that, you know, when the byproduct of having this priority of higher marbled, more premium beef that we're a production system that we have in the US, is that we have a lot of fat trim as part of our production. Actually, you could almost argue it's one of the main primals, one of the main products that comes out of cattle is fat trim. The only reason why our fat trim is valued so high and it has such a good value is because we have available lean.

Speaker #8: Actually, you could almost argue it's one of the main primals one of the main products that comes out of cattle is fat trim. And the only reason why our fat trim is valued so high and it has such a good value is because we have available lean.

Speaker #8: And if we don't have that available lean, we actually could see our fed cutout actually reduce, and the price of that well-marbled beef actually have to be higher because we don't have the credit for that fat trim.

Wesley Batista Filho: If we don't have available, that available lean, we actually could see our fed cutout actually reduce and the price of that, you know, well-marbled beef actually have to be higher because we don't have the credit for that, for that fat trim. My point is, you know, in some cuts, yes, it would probably be in a way competitive, you know, with domestic production. I would say that the majority of what potentially would come in would actually be pretty complementary and not what we're targeting to produce in the US right now.

Speaker #8: So my point is in some cuts, yes, you would probably be in a way competitive with domestic production. But I would say that the majority of what potentially would come in would actually be pretty complementary.

Speaker #8: And not what we're targeting to produce in the US right now. Very clear. Thank you.

Guilherme Guttilla: Very clear. Thank you.

Speaker #1: Thank you. And our next question comes from John Botgartner from Mizuho. You may go ahead, Mr. Botgartner.

Operator 2: Thank you. Our next question comes from John Baumgartner from Mizuho. You may go ahead, Mr. Baumgartner.

Operator: Thank you. Our next question comes from John Baumgartner from Mizuho. You may go ahead, Mr. Baumgartner.

Speaker #9: Hi. This is Isabella on for John. Thank you for taking our question. So could you please discuss the next step that JBS plans to take in terms of increasing its presence in value-added meat?

[Analyst] (Mizuho): Hi, this is Isabella on for John. Thank you for taking our question. Could you please discuss the next step that JBS plans to take in terms of increasing its presence in value-added meat? Is there still more to do on the M&A front to secure assets? Does JBS have the necessary brands and assets right now for, you know, the next steps in its growth? In terms of going to market, should we expect a strategy similar with the partnership between Seara and Netflix in Brazil, or is there a different approach that you plan to take? Thank you.

Speaker #9: Is there still more to do on DMNA front to secure assets and does JBS have the necessary brands and assets right now for the next steps in its growth?

Speaker #9: And in terms of going to market, should we expect a strategy similar with the partnership between Sierra and Netflix in Brazil, or is there a different approach that you plan to take?

Speaker #9: Thank you.

Gilberto Tomazoni: Isabella, in terms of M&A, it's part of our routine to look all the time the opportunities for M&A for growth. This moment, we are focused on cash generation and to press out excellence. This is the focus of the company now.

Speaker #5: Isabella, in terms of M&A, it's we are it's part of our routine to look all the times the opportunities for M&A for growth. But this moment, we are focused on cash generation.

Speaker #5: And to excellence and this is the focus of the company now.

Speaker #9: Okay. Thanks.

[Analyst] (Mizuho): Okay, thanks.

Speaker #1: Thank you. And our next question comes from Laura Herrada from Santander. Mrs. Herrada, you may go ahead. Mrs. Herrada, if you're trying to speak, you might be on mute.

Operator 2: Thank you. Our next question comes from Laura Hirata from Santander. Mrs. Hirata, you may go ahead. Mrs. Hirata, if you are trying to speak, you might be on mute.

Operator: Thank you. Our next question comes from Laura Hirata from Santander. Mrs. Hirata, you may go ahead. Mrs. Hirata, if you are trying to speak, you might be on mute.

Laura Hirata: Hi. Good morning. Can you hear me? Good morning, everyone. Thanks for taking my questions. Actually, I have two from my end. First, on Seara. The export scenario appears to have become somewhat more challenging in key markets as a result of disruptions in the Middle East, while we also saw the European Union considering banning protein exports from Brazil. It would be very helpful to understand how Seara adjusted its commercial strategy in response to that environment, both in terms of logistics and also in terms of pricing. If I may add, you announced, you're gonna start publishing 10-Q and 10-K filings, which we see as positive in terms of eligibility for US indexes. In this sense, what are your expectations for JBS's next steps towards being included in those indexes?

Speaker #10: Hi. Good morning. Can you hear me?

Speaker #9: So, good morning, everyone. Thanks for taking my question. Actually, I have two from my end. First, on Seattle: the export narrow appears to have become somewhat more challenging in key markets as a result of disruptions in the Middle East.

Speaker #9: While we also saw the European Union considering banning protein exports from Brazil, so it would be very helpful to understand how Seattle adjusted its commercial strategy in response to that environment, both in terms of logistics and also in terms of pricing.

Speaker #9: And if I may add, you announced you're going to start publishing 10Q and 10K fillings which we see as positive in terms of eligibility for US indexes.

Speaker #9: In this sense, what are your expectations for JBS's next steps towards being included in those indexes? And I was wondering if you could share with us some thoughts on the accounting standards that this broader discussion could potentially bring.

Laura Hirata: I was wondering if you could share with us some thoughts on the accounting standards that this broader discussion could potentially bring. That is all from my end. Thank you.

Speaker #9: That's also my end. Thank you.

Speaker #5: Alora, I will start to answer the question about Seattle that you have made. And Guilherme will be answering you about the 10Q, 10K we are published.

Gilberto Tomazoni: Laura, I will start to answer the question about Seara that you have made, and Guilherme will be answering you about this, the 10-Q, 10-K we are publishing. First, you asked about the Middle East war and how this impact the business. I will tell you this is the neutral impact because we have an input of cost additional, because you need to skip some port, and you need to use trucks for internal transportation to reach the customers. Demand in terms of volume is remain the same, remain strong, as it was before. The extra cost is bearing by the market. It means that we can say it is neutral, this war in the business so far.

Speaker #5: First, you asked about the Middle East war and how this impacts the business. I will tell you this is the neutral impact because we have input of cost additional because you need to skip some part and you need to use trucks for internal transportation to reach the customers.

Speaker #5: But demand in terms of volume is remained the same, remaining strong. As it was before, and the extra cost is bearing by the market means that we can say this is neutral, this war in the business so far.

Gilberto Tomazoni: Related to the European that you mentioned, it's very new. I know that Brazil will provide the necessary clarification to the European Union regarding to the technical guidance related to the subject. For our side, we see Brazil is fully compliant with European Union requirements. The other thing is important to clarify, import point that is part have been not been suspended. I think we have a period of clarifications, and this has not impacted the business so far. We are very confident Brazil will be fine. We'll be reaching agreement with the European Union. For our side, we continue to monitor the matter.

Speaker #5: Related to the European that you mentioned, it's very new. I know that Brazil will provide the necessary clarification to the European Union regarding to the technical guidance related to the subject.

Speaker #5: And for our side, we see Brazil is fully compliant with European Union requirements. And the other thing is important to clarify import point that export have not been suspended.

Speaker #5: I think we have a period of clarifications, and this is not impacting the business so far. And we are very confident Brazil will be fine, will be reaching an agreement with the European Union.

Speaker #5: And for our side, we continue to monitor the matter.

Speaker #1: Hi. Regarding indices, it's worth mentioning that today only around 40% of our free float is for comes from passive funds, which in this sector generates this number is 60%.

Guilherme Cavalcanti: Hi. Regarding indices, it's worth mentioning that today only around 40% of our free float is it comes from passive funds, which in this sector generally this number is 60%. The reason is that is because we are not on the main indices yet. However, we think we already have the necessary criteria for the Russell. We entered last year, last September, in the FTSE US as a US company. So, now May/June, we have rebalancing of Russell. It's not in our control, but there's chances that we enter into Russell, creating demand for the shares.

Speaker #1: And the reason is that is because we are not on the main indexes yet. However, we already have we think we already have the necessary criteria for the Russell.

Speaker #1: We entered last year, last September, in the FTSE US as a US company. So now, May, June, we have rebalancing of Russell. It's not in our control, but there's chances that we enter in the Russell, creating demand for the shares.

Guilherme Cavalcanti: Now, having more than 50% of our sales in US, and if we do 10-Ks and 10-Qs, and in June we will complete 1 year of having our primary listing in US, this makes us eligible to the S&P family. That's the perspective in terms of the index. In terms of accounting standards, we are Netherlands incorporated, so the IFRS is the accounting standard for that. But in our press release, we put all the relevant information in US GAAP, so you can compare, and also the bridge from IFRS to US GAAP.

Speaker #1: And now having more than 50% of our sales in the US. And if we do 10Ks and 10Qs and in June, we'll complete one year of list of having our primary listing in the US, this makes us eligible to the S&P family.

Speaker #1: So that's the perspective in terms of the index. In terms of accounting standards, we are Netherlands incorporated, so the IFRS is the accounting standard for that.

Speaker #1: But in our press release, we put all the relevant information in US GAAP. So you can compare and also the breach from IFRS to US GAAP.

Guilherme Cavalcanti: With that, we think we can reach U.S. investors that are used to U.S. GAAP, and we have the comparability, and reach also European investors and Latin American investors that are used to IFRS.

Speaker #1: So with that, we think we can reach US investors that are used to US GAAP and they have the comparability and reach also European investors and Latin American investors that are used to IFRS.

Laura Hirata: That's super clear. Thank you, guys.

Speaker #10: That's super clear. Thank you, guys.

Operator 2: Our next question comes from Leonardo Alencar with XP Investimentos. You may go ahead, Mr. Alencar.

Speaker #1: Any questions from Leonardo Alonzar with XP Investmentals? You may go ahead, Mr. Alonzar.

Operator: Our next question comes from Leonardo Alencar with XP Investimentos. You may go ahead, Mr. Alencar.

Speaker #8: Good morning, Tomazoni, Capital Country Resident. Thank you for taking my questions. I would like to discuss a little bit more about USPs as you mentioned that the strike in the first quarter wasn't really impactful for the results.

Leonardo Alencar: Morning to you, Tomazoni, capital country relating to you for taking my questions. I would like to discuss a little bit more about US Beef. As you mentioned that the strike in Q1 wasn't really impactful for the results. Would you say that without the strikes, situation would be a little worse for Q1 or not? Even if there's any lingering effects for the Q2 from this strike? Another thing that I would like to understand from your side that we've been discussing this for the last few quarters, but just to get an update regarding the Mexican border, if you're expecting that to open anytime soon, if you think that would change the supply side in the short term could be the wind for this Q2, maybe for the H2.

Speaker #8: Would you say that without the strike situation would be a little worse for the first quarter or not? Or even if there's any lingering effects for the Q2 from the side that we've been discussing this for the last few quarters, but just to get an update regarding the Mexican border if you're expecting that to open in time soon, if you think that would change the supply side in the short term, could be a wind for this second quarter, maybe for the second semester.

Speaker #8: So two questions for USPs. And just one thing about Seattle. You mentioned Tomazoni regarding the exports, Middle East. I agree with that. But then looking on the domestic side, we've been seeing some erratic performance from prices between Natura or Fresh and processed goods.

Leonardo Alencar: Two questions for you, SP. Just one thing about Seara. You mentioned some of them regarding the exports Middle East, and I agree with that. Looking on the domestic side, we've been seeing some erratic performance from prices between Natura or fresh and processed goods. It looks like in the beginning of the year, we saw some strength from the processed side, and now we're seeing some transitioning to more to the Natura. Just to get an understanding here, what you're seeing if there's demand is softening or if it's just a short-term pickup, let's say. Just to get a better view from Seara on the domestic market as well. Thank you.

Speaker #8: It looks like, in the beginning of the year, we saw some strength from the processed side. And now we are seeing some transition more into the natura, so just to get an understanding here of what you're seeing—if the demand is softening, or if it's just a short-term pickup, let's say.

Speaker #8: So, just to get a better view from Seattle on the domestic market as well. Thank you.

Speaker #5: Leonardo, just on the good morning. Just on the strike situation, we were able to redirect volumes to other plants. So we didn't lose volume because of this strike.

Wesley Batista Filho: Leonardo, good morning. Just on this strike situation. You know, we were able to redirect volumes in other plants, so we didn't lose, you know, volume because of this strike. There were maybe, you know, costs here and there that were extraordinary, but nothing significant enough to justify, you know, doing any adjustment or anything like that that's relevant to the market. We decided to just leave it as is with the result because it wasn't significant. Mexico, border opening for feeder cattle, absolutely, no question, is the most important thing that could ever happen in the short term to get, you know, to get some sort of relief on the supply side on beef in the US.

Speaker #5: There were maybe costs here and there that were extraordinary, but nothing significant enough to justify doing any adjustment or anything like that that's relevant to the market.

Speaker #5: So we decided to just leave it as is with the result because it wasn't significant. Mexico, border opening for feeder cattle, absolutely no question.

Speaker #5: It's the most important thing that could ever happen in the short term to get this to get some sort of relief on the supply side on beef in the US.

Speaker #5: Obviously, the USDA has been super as always very responsible in making sure that that's done whenever they feel the situation or they have assurance that the situation from the Mexico side is exactly how they want so that they keep screw arm outside of the US.

Wesley Batista Filho: Obviously, the USDA has, you know, has been super, as always, very responsible in making sure that that's done whenever they feel the situation or they, you know, they have assurance that the situation from the Mexico side is exactly how they want, so that they keep screwworm outside of the US. Having said that, you know, whenever that, you know, the US, whenever and if that ever happens with the US government feeling that, you know, that is the right time, absolutely would be the most significant thing that could happen to normalize supply in this industry in the short term.

Speaker #5: But having said that, whenever that the US whenever and if that ever happens with the US government feeling that that is the right time, absolutely would be the most significant thing that could happen to normalize supply in this industry in the short term.

Gilberto Tomazoni: Leonardo, related to your question about chicken in Brazil, chicken in Brazil, we start the year, beginning of the year, it is I think in January, was a little bit soft in this quarter. February and March started recovering. I think is the market demand in Brazil very strong, and the demand in the export is strong. We, that time, with the last quarter, we discussed that the statistics show that Brazil will be grow high volume because of the genetic will be higher. In that moment I saw that I said that we're not seeing the market, but at the very statistical.

Speaker #1: And Leonardo, related to your question about chicken in Brazil, chicken in Brazil, we start the year beginning of the year I think January was a little bit softening.

Speaker #1: And this quarter, but then February and March, that recovery, I think is the market demand in Brazil very strong. And the demand in the export is strong.

Speaker #1: That time with the last quarter, we discussed that the statistic show that Brazil will be grow high volume because of the genetic will be higher.

Speaker #1: And at that moment, I saw that I said that we're not seeing the we're not seeing the market, but I don't know if statistical, but in reality, statistical was some mistake that the association that republished the numbers and correct the information that the market will be grow around 10%.

Gilberto Tomazoni: The reality statistical was some mistake that the association that republish the numbers and correct the information that the market will be grow around 10%. We are talking more about 4%. 4% is very, it is, I think it's balanced with the demand. We have a standard demand and the normal growth in domestic market.

Speaker #1: You're talking more about 4%. It's 4% is very it's I think it's balanced with the demand we have external demand in the normal grow in domestic market.

Speaker #8: Okay. I think Wesley. And Tomazoni, just to be clear, you said this improvement, but then it's mostly in Natura or processed, or both?

Leonardo Alencar: Okay. Thank you. Tomas, just to be clear, you said there's improvement, but then it's mostly in natura or processed or both?

Speaker #5: No. Processed, we are the market is we can say stable. The market is not grow, but we are you say you are flat, but we sell more value added.

Gilberto Tomazoni: No. Processed, we are, the market is, we can say stable. The market is not grow, but we are, you say we are flat. We sell more value-added, more premium products than the low, the more commodity product. The demand, if you saw the demand in January, was weak. They recover in the March. We made a very good sales that we are still confident that it's a combination of our strategy to distribute in domestic market, different channels, and different category of product. We are able to manage this situation. For chicken, it's very strong, the demand.

Speaker #5: More premium products than the low, more commodity product. But the demand, if you saw the demand in January, was weak. But they recovered.

Speaker #5: And in March, we made a very good sales that we are confident that this is a combination of our strategy to distribute in domestic market different channels, different category of product.

Speaker #5: We are able to manage this situation. But for chicken, it's very strong the demand. For processed product, it's strong in the premium. It's soft in the more commodity.

Gilberto Tomazoni: For processed product is strong in the premium and soft in the more commodity.

Speaker #8: That's clear. Thank you. Thank you.

Leonardo Alencar: That is clear. Thank you. Thank you.

Speaker #1: Thank you. And our next question comes from Heather Jones, from Heather Jones. You may go ahead, Ms. Jones. Hi, Ms. Jones, if you're trying to speak, you may be on mute.

Operator 2: Thank you. Our next question comes from Heather Jones. From Heather Jones. You may go ahead, Mr. Jones. Mr. Jones, if you're trying to speak, you may be on mute.

Operator: Thank you. Our next question comes from Heather Jones. From Heather Jones. You may go ahead, Mr. Jones. Mr. Jones, if you're trying to speak, you may be on mute.

Speaker #9: Hi. Are you able to hear me now? Thank you. My question is on North American beef. And just due to a variety of factors, including drought, it just seems like the herd rebuilt is getting pushed out and likely to be much more slow and meagre than expected.

Heather Jones: Hi. Are you able to hear me now?

Operator 2: There you go.

Operator: There you go.

Gilberto Tomazoni: We're good.

Heather Jones: Thank you. Just due to a variety of factors, including drought, it just seems like the herd rebuild is getting pushed out and is likely to be much more slow and meager than expected. Like you mentioned, the border reopening. It just seems like even if everything goes right from here, we're looking at, like, late 2028 before any significant increase in cattle availability. It would seem additional industry rationalizations required. I was just wondering, when do you see that happening? Wondering if JBS has considered rationalizing some capacity, maybe one of your smaller facilities. Just hoping you could help me how to think through that. Thank you.

Speaker #9: And then like you mentioned, the border reopening. So it just seems like even if everything goes right from here, we're looking at late 28 before any significant increase in cattle availability.

Speaker #9: So it would seem additional industry rationalizations required. And so I was just wondering when do you see that happening and wondering if JBS is considered rationalizing some capacity, maybe one of your small facilities to just hoping you could help me how to think through that.

Speaker #9: Thank you.

Speaker #5: So Heather, you're right. Especially with this drought, it's going to delay the herd rebuild. I don't think we further liquidate but it's probably going to delay the herd rebuild here.

Wesley Batista Filho: Heather, you're right. Especially with this drought, it's going to delay the herd rebuild. It's I don't think it will further liquidate, but it's probably going to delay the herd rebuild here. Look, we're not really focused on that right now, with this, you know, talking about plant rationalization and all of that. We're focused just on making our business better with the things that we can control given the footprint we have. That's not something that we're looking at the moment. It's very difficult for me to speculate on anything else, right? Because, anyway, it wouldn't be, you know, appropriate for me to speculate on other players in the market.

Speaker #5: Look, we're not really focused on that right now. With this talking about plant rationalization and all of that, so we're focused just on making our business better.

Speaker #5: With the things that we can control, given the footprint we have. So that's not something that we're looking at the moment. And it's very difficult for me to speculate on anything else because anyway, it wouldn't be right.

Speaker #5: It wouldn't be appropriate for me to speculate on other players in the market. But we're not looking at that right now.

Wesley Batista Filho: We're not looking at that right now.

Speaker #1: Okay. Thank you. Our next question comes from Ricardo Alves from Morgan and Stanley. You may go ahead, Mr. Alves.

Operator 2: Okay, thank you. Our next question comes from Ricardo Alves from Morgan Stanley. You may go ahead, Mr. Alves.

Operator: Okay, thank you. Our next question comes from Ricardo Alves from Morgan Stanley. You may go ahead, Mr. Alves.

Ricardo Alves: Thanks, everybody. Good morning. Thanks for the call. One question for Wesley, one for Guilherme. First on US beef, Wesley, please. As we think about the grilling season, protein inventories are down big time in the US. Red meat is down, chicken is down. When you look at beef purchases to be delivered in June, July, also down big time, 15% or so. How do you feel about channel inventory today when you're thinking about retailers and food service as we head into the grilling season? These data points, I think that my point is that these data points would indicate to us that there's a lot of upside to cattle prices in the very near term. I wanted to see if you have that view.

Speaker #10: Thanks, everybody. Good morning. Thanks for the call. One question for Wesley, one for Guilherme. First on US beef, Wesley, please, as we think about the grilling season, protein inventories are down big time in the US, red meat is down, chicken is down.

Speaker #10: And when you look at beef purchases to be delivered in June, July, also down big time—15% or so. How do you feel about channel inventory today when you're thinking about retailers and food service as we head into the grilling season?

Speaker #10: These data points—I think that my point is that these data points would indicate to us that there's a lot of upside to cut-out prices in the very near term.

Speaker #10: I wanted to see if you have that view. Or, on the flip side, maybe it could also indicate that demand is expected to be softer, I guess.

Ricardo Alves: On the flip side, maybe it could also indicate that demand is expected to be softer, I guess. I don't know. I don't think that that's the case, but it is a possibility. I just wanted to hear from you, what you get from retailers and food service, you know, in your conversations on ground. I think that that would be helpful for the very short term on the cutouts. That's my first question. Second question, really a quick one, to Guilherme. Pretty significant CapEx expansion that we've been discussing for the past couple of months, and we saw that taking place in the Q1. Could you detail a little bit more?

Speaker #10: I don't know. I don't think that's the case, but it is a possibility. So I just wanted to hear from you what you get from retailers and food service in your conversations on the ground.

Speaker #10: I think that that would be helpful for the very short term on the cutouts. That's my first question. The second question, really quick one to Guilherme, the pretty significant CapEx expansion that we've been discussing for the past couple of months.

Speaker #10: And we saw that taking place in the first quarter. Could you detail a little bit more? I know that maybe you cannot quantify by division, but at least the main projects that you're working on for the rest of this year, just so that we have a better idea of what's going on in your US pork division, even projects that you're doing on US beef, PPC, and so forth.

Ricardo Alves: I know that maybe you cannot quantify by division, but at least, you know, the main projects that you're working on for the rest of this year, just so that we have a better idea of, you know, what's going on in your US pork division, even projects that you're doing on US beef, PPC and so forth. I think that would be helpful as well. Just a reminder of the CapEx expansion. Thanks, everybody.

Speaker #10: I think that that would be helpful as well. Just a reminder of the CapEx expansion. Thanks, everybody.

Wesley Batista Filho: Ricardo, on beef, you know, cutouts is already, you know, started the year already compared to the same time last year, 15% higher than on the whole quarter than compared to the period, same period of time. The reason is, you know, lower volume and demand continues to be strong. You know, you have a constant demand and a shorter supply. You know, it's, price tends to go up when that happens. You know, looking forward, I would expect, it's difficult to You know, we have to wait and see how that's gonna impact demand, this potentially higher prices. Supply is tighter, so we'll see what happens there.

Speaker #5: Ricardo, on beef, cutout is already started the year already compared to the same time last year, much higher than 15% higher than on the whole quarter than compared to the same period of time.

Speaker #5: And the reason is lower volume, and demand continues to be strong. So you have a constant demand and a shorter supply. Price tends to go up when that happens.

Speaker #5: So looking forward, I would expect it's difficult; we have to wait and see, and see how that's going to impact demand. This potentially means higher prices.

Speaker #5: But supply is tighter. So we'll see what happens there. But we'll probably see demand continue to stay strong. And we know the supply is kind of short.

Wesley Batista Filho: We'll probably see, demand stay, continue to stay strong, and we know the supply is kinda short. There is a potential for it, but we have to wait and see.

Speaker #5: So there is a potential for but we have to wait and see.

Speaker #1: Hi, Ricardo. So the main projects continue to be ones on the outset. So the pure ones prepared foods facility in Walker County. The ACNE Iowa fully cooked bacon and sausage facility.

Guilherme Cavalcanti: Hi, Paulo. The main projects continues to be one analysis. The Pilgrim's prepared foods facility in Marshall County, the Akron, Iowa, fully cooked bacon and sausage facility, the Perry, Iowa, fresh sausage plants, Cactus, Texas, and Greeley, Colorado, modernization of the beef processing plants. We have investments in Brazil, in BioTech Foods, in the Paraguay chicken plant, and also the Oman acquisition. Bear in mind that the Oman acquisition will not be a cash effort. Given that it will all be financed with the local banks there.

Speaker #1: The Perry, Iowa fresh sausage plant. Cactus, Texas and Greeley, Colorado modernization of the beef processing plant. Then we have investments in Brazil in biodiesel and in the Paraguay chicken plant.

Speaker #1: And also the Oman acquisition. Bear in mind that the Oman acquisition will not be a cash effort. Given that it will all be financed with the local banks there.

Operator 2: Our next question comes from Lucas Ferreira with JP Morgan. You may go ahead, Mr. Ferreira.

Speaker #1: And our next question comes from Lucas Ferreira with JP Morgan. You may go ahead, Mr. Ferreira.

Operator: Our next question comes from Lucas Ferreira with JP Morgan. You may go ahead, Mr. Ferreira.

Speaker #11: Hi, everyone. Thanks for taking my questions. Two follow-ups. One is on Australia. It seems like you guys have a sort of a constructive view there on the quality of pastures and the business.

Lucas Ferreira: Hi, everyone. Thanks for taking my questions. 2 follow-ups. 1 is on Australia. It seems like you guys have a constructive view there on the quality of pastures in the business. I just wanted to understand potentially the trend for margins there once at least if you look at Australian dollar remains even stronger than the levels we've been seeing in Q1. Cattle prices seems to be stable, but with the MLA outlook of some reduction in slaughtering this year, right? With the changing cycle.

Speaker #11: I just wanted to understand potentially the trend for margins there. Once at least if you look at the Australian dollar remains even a bit stronger than the levels we've been seeing in the first quarter, and cattle prices seem to be sort of a stable but with the MLA outlook of some reduction in slaughtering, this year, right, with the changing cycle.

Speaker #11: So I don't know, in the regions you guys operate, all the other businesses in Australia, how to think about margins going from here. If it's also some seasonal effects that should help lifting the margins.

Lucas Ferreira: I don't know in the regions you guys operate and all the other, you know, businesses in Australia, how to think about margins going from here, if it's also some seasonal effects that should help of lifting the margins going forward. And number two is still on the US beef. Wesley, just so I understand your comment, you mentioned that you expect 2026 to be more challenged than 2025. Last year, you had a -1.5% margin. Should we expect a weaker margin this year, given your comments? And then Tukki was particularly weak last year, right? With a -3.9% margin. Again, remember the issues with the hedging, et cetera.

Speaker #11: Going forward. And number two is on still on the US beef. Wesley, just so I understand your comment, you mentioned that you expect a 2026 to be more challenged than '25.

Speaker #11: Last year, you had a 1.5% negative margin. Should we expect a weaker margin this year given your comments? And then to keep us particularly weak last year, right, with a minus 3.9 margin.

Speaker #11: Again, remember that the issues with the hedging, etc. So should this sort of a weakness more skew towards the second half, or how should we think about the evolution of the business from here?

Lucas Ferreira: Should this sort of weakness skewed towards the H2 or how to think about also the evolution of the business from here? Thank you.

Speaker #11: Thank you.

Speaker #1: Lucas, thank you for your question. Related to Australia, I think where we operate we are very positive in terms of the volume that will be harvest this year.

Gilberto Tomazoni: Lucas, thank you for your question. Related to Australia, I think, where we operate, we are very positive in terms of the volume that will be harvested this year. I think we'll be not different than last year. Some periods of the year I think will be higher. I mentioned the beginning in one of the answer that we are Queensland that where we are main operation, that the climate condition is very positive. I think it's the best in the last 3 years. This is this show us that there will be a good supplier. You talk about supplier. You talk about demand.

Speaker #1: I think we will be not different than the last year. Some period of the year, I think, will be higher. I mentioned the beginning in one of the answers that we have Queensland that where we are main operation that the climate condition is very positive.

Speaker #1: I think it's the best in the last three years that and this is show us that will be a the common months will be a good supplier.

Speaker #1: And talk about supplier. Then you talk about demand. Demand is very, very strong from and I think it's not just in the US, but all of the premium markets that Australia sell that Japan, Korea, and other ones.

Gilberto Tomazoni: Demand is very, very strong from. I think it's not just in US, but all of the premium markets that Australia sell, that Japan, Korea, and other ones. Australia is very well-positioned for catch this benefit from this demand, the growth demand, global protein, and growth demand. See, look, we are positive where we operate, that will be a great year for this JBS Australia.

Speaker #1: Japan is very Australia is very well positioned for catch this benefit from this demand, the growth demand, global protein and growth demand. See, look, we are positive where we operate that will be a great year for this JBS Australia.

Speaker #5: Lucas, so I'm going to say this without giving any guidance, but you could expect this year versus last year. I'm talking marketing general to be one and a half percentage point worse than last year.

Wesley Batista Filho: Lucas, I'm gonna say this without giving any guidance, but, you know, you could expect this year versus last year, I'm talking market in general to be 1 and a half percentage points worse than last year. About 1% I think is fair. Obviously, we have our internal dynamics, right? How our operations are. Like you said, last year we had some hedging impact in a specific quarter. Overall, you could expect the market to be 1 to 1 and a half percentage points worse than last year.

Speaker #5: About 1%, I think it's fair. Obviously, then we have our internal dynamics, right? How our operations are. And like you said, last year we had some hedging impact in a specific quarter.

Speaker #5: But overall, you could expect the market to be 1 to 1 and a half percentage point worse than last year.

Speaker #1: Perfect. Thank you very much, everyone.

Lucas Ferreira: Perfect. Thank you very much, everyone.

Speaker #2: Thank you. And next, Jack Harden from Stevens would like to ask you a question. You may go ahead, Mr. Harden.

Operator 2: Thank you. Next, Jack Hardin from Stephens would like to ask a question. You may go ahead, Mr. Hardin.

Operator: Thank you. Next, Jack Hardin from Stephens would like to ask a question. You may go ahead, Mr. Hardin.

Speaker #12: Yes. Hi, this is Jack Harden on for Perron Sharma. Thanks for the question. For US chicken, consumer demand remains strong, partly supported by tight beef supplies.

Jack Hardin: Yes. Hi, this is Jack Hardin on for Pranav Sharma. Thanks for the question. For US Chicken, consumer demand remains strong, partly supported by tight beef supply, but broiler processing margins remain below mid-cycle levels. How do you assess the current supply-demand balance in chicken? Do today's margin levels suggest the industry needs to moderate production growth? Thanks.

Speaker #12: But broiler processing margins remain below mid-cycle levels. How do you assess the current supply-demand balance in chicken? And do today's margin levels suggest the industry needs to moderate production growth?

Speaker #12: Thanks.

Gilberto Tomazoni: Stephens, we see very balance in the chicken demand in US. We had in the beginning of the year that the big bird was a little bit very challenged, but the price of breast recovered during the quarter. We see that demand is strong in value added and prepared. We are very strong demand. All of the business, all of the other category that Pilgrim's sell in domestic market in the US, all of them are positive. When you look for the side in the supply, we see better balance supply/demand. We are positive with our business in Pilgrim's business.

Speaker #1: We see very balanced in the chicken demand in the US. We had in the beginning of the year that the big bird was a little bit very challenged.

Speaker #1: But the price of breast recovering during the quarter we see that demand is strong. And value added and prepare, we are very strong demand.

Speaker #1: And all of the business, all of the other category that Puglis sell in domestic market in the US, it's all of them are positive.

Speaker #1: And when you look for the side in the supply, we see better balanced supply-demand. We are positive with our business in Puglis business.

Speaker #2: And our next question comes from Thiago Portucci from Goldman Sachs. You may go ahead, Mr. Bartolucci.

Operator 2: Our next question comes from Tiago Bortoluci from Goldman Sachs. You may go ahead, Mr. Bortoluci.

Operator: Our next question comes from Thiago Bortoluci from Goldman Sachs. You may go ahead, Mr. Bortoluci.

Speaker #13: Hey, guys. Good morning, everyone. As always, a pleasure to talk to you. Thanks for the Q&A. I think the question goes to Thomas Zoni.

Tiago Bortoluci: Hey, guys. Good morning, everyone. It's always a pleasure to talk to you. Thanks for the Q&A. I think the question goes to Tomazoni, this is just to try to gain perspective beyond the quarter on the benefits from diversification and portfolio. Tomazoni, this was a very rare quarter where we saw very strong demand. Actually, you mentioned in three business units, record high sales for a Q1. At the same time, virtually all the business units delivered lower margins versus last year. I think the exception was Brazil beef, which, you know, one could argue that this quarter, particularly diversification didn't quite help you. I think my question for you is, once you think about the year and the build-up, you mentioned the grilling season in the US, obviously the year-end brings seasonality also to Brazil.

Thiago Bortoluci: Hey, guys. Good morning, everyone. It's always a pleasure to talk to you. Thanks for the Q&A. I think the question goes to Tomazoni, this is just to try to gain perspective beyond the quarter on the benefits from diversification and portfolio. Tomazoni, this was a very rare quarter where we saw very strong demand. Actually, you mentioned in three business units, record high sales for a Q1. At the same time, virtually all the business units delivered lower margins versus last year. I think the exception was Brazil beef, which, you know, one could argue that this quarter, particularly diversification didn't quite help you. I think my question for you is, once you think about the year and the build-up, you mentioned the grilling season in the US, obviously the year-end brings seasonality also to Brazil.

Speaker #13: And this is just to try to gain perspective beyond the quarter on the benefits from diversification and portfolio. Thomas Zoni, this was a very rare quarter where we saw very strong demand actually.

Speaker #13: You mentioned in three business units record high sales for our first quarter. But at the same time, virtually all the business units delivered lower margins versus last year.

Speaker #13: I think the exception was Brazil beef, which one could argue that this quarter particularly diversification didn't quite help you. I think my question for you is, once you think about the year and the buildup you mentioned, the grilling season in the US, obviously, the year-end brings seasonality also to Brazil.

Speaker #13: Where are the opportunities where you think margins could show some clearer sequential improvements? Where are the main risks? And how would you expect diversification to help you going forward?

Tiago Bortoluci: Where are the opportunities where you think margins could show some clearer sequential improvements? Where are the main risks, and how would you expect diversification to help you going forward? Thank you very much.

Thiago Bortoluci: Where are the opportunities where you think margins could show some clearer sequential improvements? Where are the main risks, and how would you expect diversification to help you going forward? Thank you very much.

Speaker #13: Thank you very much.

Speaker #1: Okay, Thiago. Good question, Thiago. I'm very positive with diversification because when you look at our results this quarter, if you compare to the last quarter, the difference is around $400 million, and we can explain this difference with two business units.

Gilberto Tomazoni: Okay, Tiago. Good question, Tiago. I'm very positive with diversification because when you look for our results this quarter, if you compare to the last quarter, the difference is around $400 million. Correct. We can explain this difference with two business unit. First, in US, Beef US. I think is the results of the Beef US was impact around 50% of the difference of our EBITDA. Wesley Batista Filho have explaining about that. I think we reached the bottom of the results. I think is we made some. We are, we see that the coming quarter, we cannot say they will be improved a lot, but I think will be better than was this quarter.

Gilberto Tomazoni: Okay, Thiago. Good question, Thiago. I'm very positive with diversification because when you look for our results this quarter, if you compare to the last quarter, the difference is around $400 million. Correct. We can explain this difference with two business unit. First, in US, Beef US. I think is the results of the Beef US was impact around 50% of the difference of our EBITDA. Wesley Batista Filho have explaining about that. I think we reached the bottom of the results. I think is we made some. We are, we see that the coming quarter, we cannot say they will be improved a lot, but I think will be better than was this quarter.

Speaker #1: First, in the US, beef US. I think it's the results of the beef US was impact around 50% of the difference of our EBITDA.

Speaker #1: And Wesley, I feel you have explained about that. And I think we reached the bottom of the results. I think we made some—we are, we see that the coming quarter, we cannot say they will improve a lot, but I think it will be better than it was this quarter.

Gilberto Tomazoni: The market condition didn't change, but I think we are more balanced, and we made some adjustment in our structure that I think will help us to navigate even inside of the company with low cost of operation, more synergy, and outside synergy in terms of commission. I think this is one of the things that give us more confidence about that the results will be better than was this quarter. If you can add anything, Wesley.

Speaker #1: The market condition didn't change. But I think we are more balanced. And we made some adjustment in our structure that I think will be help us to navigate even inside of the company with the low cost of operation, more synergy.

Speaker #1: And outside, synergy in terms of commercial. I think this is one of the things that give us more confidence about the results will be better than it was this quarter.

Speaker #1: If you can add it, Wesley.

Speaker #5: Oh, I was just going to add, Thiago, that I think a good way to think about diversification is always more so than comparing every time to the always on the comp versus last year.

Wesley Batista Filho: Oh, just gonna add, Tiago, that I, you know, I think a good way to think about diversification is always, you know, more so than comparing every time to you know, always on the comp versus last year, is to look just at the absolute number, right? You have Pork USA and Seara with double-digit margins. You have Australia, even though this quarter was a lower quarter than the way it has been, it's still in a very positive high single digit. right when you have the US, Beef US at the low cycle. If you went back 5 years ago, you'd probably see all of the other businesses at a lower margin and beef higher.

Wesley Batista Filho: Oh, just gonna add, Thiago, that I, you know, I think a good way to think about diversification is always, you know, more so than comparing every time to you know, always on the comp versus last year, is to look just at the absolute number, right? You have Pork USA and Seara with double-digit margins. You have Australia, even though this quarter was a lower quarter than the way it has been, it's still in a very positive high single digit. right when you have the US, Beef US at the low cycle. If you went back 5 years ago, you'd probably see all of the other businesses at a lower margin and beef higher.

Speaker #5: If you look just at the absolute number, right, you have Pork USA and Seattle with double-digit margins. You have Australia, even though this quarter was a lower quarter than what it has been.

Speaker #5: It's still in a very positive high single-digit right when you have the US beef US at the low cycle. If you went back five years ago, you'd probably see all of the other businesses at a lower margin in beef higher.

Speaker #5: And I think the other way to look at this diversification as working even in this quarter is when you compare our portfolio of businesses with any one of our peers, right?

Wesley Batista Filho: I think the other way to look at the diversification as, you know, working even in this quarter, is when you compare our portfolio of businesses with any one of our peers, right? In each one of them could be that they are in a singularly in a market, and that market is really good or really bad. Our portfolio of businesses is always gonna give a more stable kind of result versus our peers, just based on the uniqueness of our diversification. I think, you know, I would say that even in this quarter that was a weaker quarter, the diversification thesis that we have is actually pretty evident, in my opinion.

Speaker #5: And each one of them could be that they are in a singularly in a market, and that market is really good or really bad.

Speaker #5: But our businesses are always going to have our portfolio of business is always going to give a more stable kind of result versus our peers just based on the uniqueness of our diversification.

Speaker #5: So I think I would say that even in this quarter that was a weaker quarter, the diversification thesis that we have is actually pretty evident.

Speaker #5: In my opinion.

Speaker #1: And just to finish my point of view that we started, that's 50% to us—beef in the US. The other 50% was Poultry. And Poultry needs to adapt its portfolio to the market demand.

Gilberto Tomazoni: Just to end, finish my point of view that we start, that 50% was beef in US. The other 50 was Pilgrim's. Pilgrim's need to adapt its portfolio to the market demand. We, before, US was just focused to export, they use the breast, the white meat, and export the dark meat. That is part of leg quarters. The market changes. There is a demand in domestic market now in US for dark meat, Pilgrim's need to adapt its layout of the 3 factories in order to be able to supply the demand of the market. We stop for 2 weeks, 3 plants. This was affected the results, and the climate conditions affect as well.

Speaker #1: We, before, in the US, were just focused on exporting the breast, the white meat, and exporting the dark meat—that is, leg quarters. But the market changes.

Speaker #1: That is a demand in domestic market now in the US for dark meat. And Puglis need to adapt its layout of the three factories in order to be able to supply the demand of the market.

Speaker #1: Then we stop for two weeks, three plants. Then this was affected the results. And the climate condition has affected as well. Then these two things explain the difference in terms of the results compared to the last year.

Gilberto Tomazoni: These two things explain the difference in terms of the results compared to the last year. $400 million, that $200 million in the Pilgrim's and around $200 million in the Beef. That is one thing about that. The other thing is, you mentioned that the other business not deliver the results, but that was the FX. FX was affect Seara, and FX was affect Australia. If you want to explain the business, is that FX, Seara and Australia, and the Pilgrim's, as I explained, and Beef in US. Well, this is one thing about the results. The other thing, if you talk about diversification, of course, if you have just the Beef in US, we have a really tough situation.

Speaker #1: 400 million, that 200 million in the Puglis and around 200 million in the beef. That is one thing about that. The other thing is, you mentioned that the other business not deliver the results.

Speaker #1: But that was the effects was affect Seattle. And effects was affect Australia. This is if you want to explain the business is that effects Seattle and Australia and the Puglis that I explained and beef in the US.

Speaker #1: But this is one thing about the results. The other thing, if you talk about diversification, of course, if you have just the beef in the US, we have a really tough situation.

Speaker #1: But as we have managed different business and different geography, we are able to compensate. If you compare just a single company, one business, that will be a huge difference.

Gilberto Tomazoni: As we have managed different business in different geography, we are able to compensate. If you compare just a single company with one business, that will be a huge difference. Of course, the diversification is working. I believe that this difference in terms of cycle is normal of our business. We need to be able and to focus and manage the business. When we have the low level, we need to be better than the other competition. With the high level, we be better than the competition. This is the part, this is the game.

Speaker #1: Of course, the diversification is working. And I believe that this difference in terms of cycle is normal in our business. You need to be able and to focus and manage the business in when you have the low level, we need to be better than the other competition.

Speaker #1: With the high level, we'll be better than the competition. This is the part. This is the game.

Speaker #3: Very true. Thank you very much, Thomas and Wesley.

Tiago Bortoluci: Very true. Thank you very much, Tomazoni and Wesley.

Thiago Bortoluci: Very true. Thank you very much, Tomazoni and Wesley.

Speaker #4: If you—and our next question comes from Renata Cabrão at Citi. You may go ahead. This is Cabrão.

Operator 2: Thank you. Our next question comes from Renata Cabral at Citi. You may go ahead, Mrs. Cabral.

Operator: Thank you. Our next question comes from Renata Cabral at Citi. You may go ahead, Mrs. Cabral.

Speaker #6: All right. Thank you so much for today's space for questions. My first one, it's a follow-up related to the last one. Diversification, but in the end of GLP-1 adoption, it was already mentioned by companies' management that the adoption of GLP-1, it's a structural shift towards high-protein diet.

Renata Cabral: All right. Thank you so much for this space for questions. My first one, it's a follow-up related to the last one, diversification, but in the angle of GLP-1 adoption. It was already mentioned by company's management that the adoption of GLP-1, it's a structural shift towards hyperpalate diet, of course, particularly in the US, as the adoption is higher right now due to costs. Could you please calibrate to us how tangible this trend is already in your day-to-day business? Are you seeing measurable change in the consumer behavior already. For instance, it was stated the different perceptions of the consumers for PPC.

Speaker #6: Of course, particularly in the US. As the adoption is higher right now, due to costs. So could you please calibrate to us how tangible this trend is already in your day-to-day business?

Speaker #6: Are you seeing measurable change in the consumer behavior already? For instance, it was seated the different perceptions of the consumers for PPC, so in terms of innovation, GLP-1 is something that you think about when you are elaborating a new product and mix in terms of smaller portion or anything different.

Renata Cabral: In terms of innovation, GLP-1 is something that you think about when you are elaborating a new product, in terms of a smaller portion or anything different. This focus to in the US, but even for Brazil, are you seeing already this trend or you think the contribution can come in the future? Since you are investing in expansion for Seara, do you have this in mind in terms of the future products that you are gonna release on those investments? This is my first question. The second one is related to grain prices that has been positive for the company for a while. Right now there's the discussions on the potential risks on the El Niño and fertilizers costs.

Speaker #6: And this focus in the US, but even for Brazil, are you seeing already this trend or you think the contribution can come in the future?

Speaker #6: And since you are investing in expansion for Seattle, of the future products that you are going to release on those investments? So this is my first question.

Speaker #6: The second one is related to grain prices. That has been positive for the company for a while. Right now, there's the discussions on the potential risks on the El Niño and the fertilizers costs.

Speaker #6: So if you can share your outlook for 2026, '27, it would be great as well. Thank you so much.

Renata Cabral: If you can share your outlook for 2026, 2027, it would be great as well. Thank you so much.

Speaker #1: Thank you for your question. When you talk about GLP-1, I think GLP-1 is one of the factors that is affecting the global consumption of protein.

Gilberto Tomazoni: Thank you for your question. When you talk about GLP-1, I think GLP-1 is one of the factors that is affecting the global consumption of protein. When we are saying here that it's strong demand for protein, it's globally in all of the market. This is affected by, of course, as you mentioned, GLP-1. GLP-1 I think is not the most important issue. I think this is the perception and not just perception, but the knowledge that protein is very important for to have the even in the new generation or in the older generations. Because if you want to have longer life, you need to eat more protein.

Speaker #1: When you look for when you say when we are saying here that it's strong demand for protein, it's globally. And all of the market.

Speaker #1: And this is affected by, of course, as you mentioned, GLP-1. But GLP-1, I think, is not the most important issue. I think it's the this is the perception and the and not just perception, but the knowledge that protein is very important for to have even in the even in the new generation or the whole the older generations.

Speaker #1: Because if you want to have longer life, you need to eat more protein. If you want to have muscle, in the beginning, you need to add to eat protein.

Gilberto Tomazoni: If you want to have muscle in the beginning, you need to add to eat protein. That protein become very important for all of the generations. The second, the regulatory. If you saw that the US FDA change the pyramid. They invert the pyramid because that they put that you need to have more protein in order to have more health. To eat more protein is healthier, and this is globally. There is about this, the new technology about medicine that is because you want to lose weight, and if you lose weight, you need to eat more protein in order not to lose muscle, just lose fat. This is, it's not in one country. I think this is globally. We see this will be continuous, high protein, the consumption.

Speaker #1: That protein become very important for all of the generations. The second, the regulatory, that you saw that the US FDA changed the parameter. They invert the parameter because that they put that you need to have more protein in order to have more health.

Speaker #1: Then to eat more protein, it's healthier. And this is globally. And then there is about this new technology about medicine that is because you want to lose weight.

Speaker #1: And if you lose weight, you need to eat more protein in order not to lose muscle, just lose fat. And this is it's not in one country.

Speaker #1: I think this is globally. We see that will be continuous. High protein, the consumption. And we are it's not new. In order now, what we see the new now, all the companies try to adapt the portfolio to have more protein.

Gilberto Tomazoni: It's not new that in order now what we see the new now, all the companies try to adapt the portfolio to have more protein. Even that the companies that work in a high carbohydrate product, now they want to adapt for more protein. If you look our core is focused on protein, that we don't need to adapt our core. We need this to accelerate what we have done so far. We are, for example, we are launch high protein line of products in Seara and other parts of the world. We are work in innovation in order to facilitate how the people eat protein.

Speaker #1: Even that the company that work in high carbonate product now, they want to adapt for more protein. But this but if you look our core, our core is focused on protein.

Speaker #1: That we don't need to adapt our core. We need this to accelerate what we have done so far. We are, for example, we have launched a high protein line of products in Seattle and other parts of the world.

Speaker #1: And we are and we are work and innovation in order to facilitate how the people eat protein. For example, use our fry for simply fry simplify the lives to if you want to cook at home.

Gilberto Tomazoni: For example, use our Friboi for simplify the life to if you want to cook at home. You will see that the people cook more at home. If I say you, we have the right portfolio for the right trend, and we not see this as a trend. We see this as structural, the eat more protein. We are investing that in all of the innovation in order to facilitate that, to. The second question, I understood that you ask about grain, about the cost of the of course of the nutrition of the animal.

Speaker #1: And you see that people cook more at home. And if I say you we have the right portfolio for the right trend. And we not see is a tendency.

Speaker #1: We see that it is structural. Eat more protein. And we are investing as in all of the innovation in order to facilitate that. To and the second question, I understood that you asked about grain, about the cost of the about, of course, of the nutrition of the animal.

Speaker #1: Look, if you look for I say you, despite a global inventories being that comfortable level, there is significant volatility in the market. And I think it's a lot of uncertainty regarding to the weather conditions.

Gilberto Tomazoni: Look, if you look for this, despite a global inventories being at a comfortable level, there is significant volatility in the market. I think is a lot of uncertainty regarding to the weather conditions and the fertilizer cost. If you look for corn, globally, demand remain very strong, helping support the market even with the recent pressure in the grain price. I think is the tendency is to increase the price because of the weather, because of the of the fertilizers.

Speaker #1: And the fertilizer cost. If you look for corn, globally, demand remain very strong. Apple support the market even with the recent pressure in the grain price.

Speaker #1: I think it's the tendency is to increase the price. Because of the weather, because of the fertilizers. But in terms of what we impact of our company, I can say you that we believe that we are well positioned.

Gilberto Tomazoni: In terms of what is impact of our company, I can tell you that we believe that we are well-positioned from a risk management perspective. While the crop conditions have improved, we remain prepared for the potential volatility, including the possible reduction in the Brazilian safrinha crops.

Speaker #1: From a risk management perspective, while the crop condition have improved, we remain prepared for the potential volatility included the possible reduction in the Brazilian Safrinha crops.

Speaker #5: Thank you so much, Tomazoni. Super clear. Thanks for sharing your thoughts on GLP-1 as well. Very complete answer. Thank you.

Renata Cabral: Thank you so much, Tomazoni. Super clear. Thanks for sharing your thoughts on GLP-1 as well. Very complete answer. Thank you.

Speaker #1: Thank you. And our next question comes from Ricardo Boyatachi with Safra. You may go ahead, Mr. Boyatachi.

Operator 2: Thank you. Our next question comes from Ricardo Boiati, with Safra. You may go ahead, Mr. Boiati.

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

Ricardo Boiati: Hi. Good morning, everyone. Wesley, a couple of follow-ups here regarding North America. The first one, besides the tariffs discussions this week, right, there were some reports about the potential deregulation in the cattle industry. In your view, what can be really done to incentivize ranchers to raise more cattle sustainably, I mean, in the longer term? What is the likelihood of any potential policy change happening this year in that regard? The second point here on the overall protein demand in North America. This summer, we have the FIFA World Cup happening in North America, right? Can we expect here any meaningful impact coming from that event specifically in North America, maybe a stronger than usual barbecue season or something like that?

Speaker #6: Hi. Good morning, everyone. Wesley, a couple of follow-ups here. Regarding North America, the first one, besides the tariffs discussions this week right, there were some reports about the potential deregulation in the cattle industry.

Speaker #6: So in your view, what can be really done to incentivize ranchers to raise more cattle? Sustainably. I mean, in the longer term. And what is the likelihood of any potential policy change happening this year in that regard?

Speaker #6: The second point here, on the overall protein demand, in North America, this summer, we have the FIFA World Cup happening in North America, right?

Speaker #6: So can we expect here any meaningful impact coming from that event, specifically in North America, maybe a stronger than usual barbecue season or something like that?

Ricardo Boiati: Lastly, on prepared foods, this is a more broad question for the company. We see many CapEx initiatives to build or expand capacity in prepared foods. My question is if you can quantify a little more how fast prepared foods are growing within JBS portfolio. Do you have any particular long-term target for this category to represent in your overall portfolio in the long term? Thank you, guys.

Speaker #6: And lastly, on prepared foods, this is a more broad question for the company. We see many CAPEX initiatives to build or expand capacity in prepared foods.

Speaker #6: So my question is, if you can quantify a little more how fast prepared foods are growing within JBS portfolio, and do you have any particular long-term target for this category to represent in your overall portfolio in the long term?

Speaker #6: Thank you, guys.

Speaker #1: Good morning. So on the deregulation, for sure. I mean, as we see cow-calf producers and ranchers in general trying to rebuild herd and deciding to rebuild herd, regulation and over-regulation can't be an obstacle in anything the government does to help.

Wesley Batista Filho: Good morning. On the deregulation for sure, I mean, as we, you know, see cow-calf producers and ranchers in general trying to rebuild herd and deciding to rebuild herd, regulation and over-regulation can be, you know, an obstacle. Anything the government does to help the ranchers is very helpful and for sure it's important. On the protein side, demand is pretty strong overall. You know, how impactful the FIFA World Cup be, I don't know. I think it's helpful.

Speaker #1: The ranchers is very helpful. And for sure, it's important. On the protein side, demand is pretty strong. Overall, how impactful would the FIFA World Cup be?

Speaker #1: I don't know. I think it's helpful. It's not negative. But I think it might be relevant in a few days, or in the next few months.

Wesley Batista Filho: It's not negative, but I, you know, there is, I think it might be relevant in a few days of the next few months. I don't think it moves the needle enough to say that this substantially structurally changes how we're gonna see the overall summer and spring here for this demand.

Speaker #1: But I don't think it moves the needle enough to say that this substantially, structurally changes how we're going to see the overall summer and spring here for this demand.

Gilberto Tomazoni: What about our strategy for value added? We don't have a specific target for value added. We want to increase the share of prepared food in our portfolio. Why we want to do that? Because when we talk now a lot about cycle, where is the low part of the cycle or high part of the cycle. Prepared, there is practically no cycle. That the demand normally is very stable and with higher margin. Because of that, we prioritize our investment in the prepared food and brands. We are investing in brands, and we are investing in the line of prepared food. If you saw that investment we have, Guilherme just mentioned before, the investment in US about sauces.

Speaker #6: In what about our strategy for value added? We don't have a specific target for value added. We want to increase the share of prepared food in our portfolio.

Speaker #6: And why we want to do that? Because when we talk now a lot about cycle, where is the low part of the cycle, where high part of the cycle.

Speaker #6: Prepared there is practically no cycle. The demand normally is very stable. And with higher margin. And because of that, we are prioritize our investment in the prepared and prepared food and brands.

Speaker #6: We are investing in brands, and we are investing in the line of prepared foods. And, if you saw that investment, as Guilherme just mentioned before, the investment in the US about sauces.

Speaker #6: It's breakfast sauces. It's value added. Pilgrim's value added from breaded plants. And you saw in Brazil, some investment on Seattle was the focus on that.

Gilberto Tomazoni: It's breakfast sausage. It's value added. Pureed beans are value added from breaded plant-based. You saw in Brazil some investment on case ready was focused on that. We are prioritize investment in value added. This is the fact. We are not have a specific target on that.

Speaker #6: We are prioritizing investment in value added. This is the fact. We are not have a specific target on that. That's clear. Thank you very much, guys.

Ricardo Boiati: That's clear. Thank you very much, guys.

Speaker #1: Thank you. And our next question comes from Priya Orhi Gupta with Barclays. You may go ahead, Ms. Gupta.

Operator 2: Thank you. Our next question comes from Priya Parekh-Gupta with Barclays. You may go ahead, Ms. Gupta.

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

Priya Parekh-Gupta: Great. Thank you so much for taking the questions. Guilherme, can we talk a little bit about how we should think about net leverage trending through the end of the year? I think earlier, you know, a couple months ago at CAGNY in particular, we had talked about scope for net leverage to be below two and a half times this year, and it sounds like it could be ending the year sort of in the upper range of that two and a half to three times area. I just want to make sure that we're thinking about that correctly. As part of that, you highlighted sort of the new issuance and tender that you did recently. However, it does look like you tendered less than you issued.

Priya Ohri-Gupta: Great. Thank you so much for taking the questions. Guilherme, can we talk a little bit about how we should think about net leverage trending through the end of the year? I think earlier, you know, a couple months ago at CAGNY in particular, we had talked about scope for net leverage to be below two and a half times this year, and it sounds like it could be ending the year sort of in the upper range of that two and a half to three times area. I just want to make sure that we're thinking about that correctly. As part of that, you highlighted sort of the new issuance and tender that you did recently. However, it does look like you tendered less than you issued.

Speaker #4: Great. Thank you so much for taking the questions. Guilherme, can we talk a little bit about how we should think about net leverage, trending through the end of the year?

Speaker #4: I think earlier, a couple of months ago at Cagney in particular, we had talked about scope for net leverage to be below two and a half times this year.

Speaker #4: And it sounds like it could be ending the year sort of in the upper range of that two and a half to three times area.

Speaker #4: I just want to make sure that we're thinking about that correctly. And as part of that, you highlighted sort of the new issuance and tender that you did recently.

Speaker #4: However, it does look like you tendered less than you issued. Should we expect some of that incremental amount to get deployed to debt reduction later this year, or just kept on the balance sheet?

Priya Parekh-Gupta: Should we expect some of that incremental amount to get deployed to debt reduction later this year or just kept on the balance sheet? The second question I had was just on the free cash flow breakeven. You talked about it being $5.7 to 6 billion now. Last quarter, you had said it would be $5.7 billion. If you could just walk us through what's driving the higher end of that range now, that would be helpful. Thank you.

Priya Ohri-Gupta: Should we expect some of that incremental amount to get deployed to debt reduction later this year or just kept on the balance sheet? The second question I had was just on the free cash flow breakeven. You talked about it being $5.7 to 6 billion now. Last quarter, you had said it would be $5.7 billion. If you could just walk us through what's driving the higher end of that range now, that would be helpful. Thank you.

Speaker #4: And then the second question I had was just on the free cash flow break even. You talked about it being 5.7 to 6 billion now.

Speaker #4: Last quarter, you had said it would be 5.7. So if you could just walk us through what's driving the higher end of that range now, that would be helpful.

Speaker #4: Thank you.

Speaker #1: Hi, Priya. So from the net leverage perspective, you're right. I think the perspective to end this year is more likely to be between two and a half and three times.

Wesley Batista Filho: Hi, Priya. From a net leverage perspective, you're right. I think the perspective to end this year, more likely to be between 2.5x and 3x, given, again, the weaker results we had in Q1.

Guilherme Cavalcanti: Hi, Priya. From a net leverage perspective, you're right. I think the perspective to end this year, more likely to be between 2.5x and 3x, given, again, the weaker results we had in Q1.

Speaker #1: Given, again, the weaker results. We had in the first quarter. In terms of the tender, we did bear in mind we have a billion dollars in dividends to be paid in June.

Guilherme Cavalcanti: In terms of the tender, we did bear in mind we have $1 billion in dividends to be paid in June, but our cash position is still at $3.5 billion, which is around at least $500 to 600 million above our minimum cash, given our cash conversion cycle and the different geographies that we are around the world. We have space to buy bonds with this excess cash. This decision will probably be done in the second semester, when is the period where our cash generation is stronger. In terms of the free cash flow breakeven, is just an estimate. I think the accounts that we have continue to be on a $5.7 billion.

Speaker #1: But our cash position is still at three and a half billion dollars, which is around at least $500 to $600 million above our minimum cash, given our cash conversion cycle.

Speaker #1: And the different geographies that we are around the world. So we have space to buy bonds with this excess cash. But this decision will probably be done in the second semester when is the period where our cash generation is stronger.

Speaker #1: In terms of the free cash flow break even, it's just an estimate. I think the accounts that we have continue should be on a 5.7 billion dollars.

Speaker #1: Working capital in the first quarter was better than the first quarter last year. But going forward, I just gave this range. Because there's a lot of moving things like energy prices, that could impact grains with how much will be this impact basically on fertilizers and energy in the grain prices.

Guilherme Cavalcanti: Working capital in Q1 was better than Q1 last year. Going forward, I just gave this range because there's a lot of moving things like energy prices that could impact grains. We don't know how much will be this impact basically on fertilizers and energy in the grain prices. That could move working capital if prices go up. That's why I gave the range from 5.7 to 6 because on the uncertainties that we have given all the volatility in the markets.

Speaker #1: That could move working capital if prices go up. So that's why I gave the range from 5.7 to 6. Because only the uncertainties that we have given all the volatility in the markets.

Speaker #4: Great. Thank you. And just a quick follow-up. If you do think about looking at further debt pay down, should we expect you to use a similar approach to what you did in the beginning of the year?

Priya Parekh-Gupta: Great. Thank you. Just a quick follow-up. If you do think about, looking at further that pay down, should we expect you to use a similar approach to what you did in the beginning of the year? Or could you take other considerations into account, sort of thinking through interest expense reduction versus maturity management and absolute debt reduction? Thank you.

Priya Ohri-Gupta: Great. Thank you. Just a quick follow-up. If you do think about, looking at further that pay down, should we expect you to use a similar approach to what you did in the beginning of the year? Or could you take other considerations into account, sort of thinking through interest expense reduction versus maturity management and absolute debt reduction? Thank you.

Speaker #4: Or could you take other considerations into account to sort of think through interest expense reduction versus maturity management and absolute debt reduction? Thank you.

Speaker #1: Yes. The approach will be absolutely the same. Given that all my debt including the 2.9 billion dollars maturing in 2032, all the coupons are below treasury.

Guilherme Cavalcanti: Yes. The approach will be absolutely the same, given that all my debt, including the $2.9 billion maturing in 2032, all the coupons are below Treasury, so it's not worth it to pay any of those debts. Any repurchase would be on 34, 33, 35 spots. The 34, for example, is the highest coupon, which we still have $300 million outstanding. That could be a possible target. Yeah.

Speaker #1: So it's not worth it to pay any of those debts. So any repurchase would be on '34, '33, '35 spots. The '34, for example, is the highest coupon which we still have 300 million dollars outstanding.

Speaker #1: That could be a possible target.

Speaker #4: Thank you. Very clear.

Priya Parekh-Gupta: Thank you. Very clear.

Priya Ohri-Gupta: Thank you. Very clear.

Speaker #1: Thank you. And our next question comes from Matthias Enfield with UBS. You may go ahead, Mr. Enfield.

Operator 2: Thank you. Our next question comes from Mateus Engfeld with UBS. You may go ahead, Mr. Engfeld.

Operator: Thank you. Our next question comes from Matheus Enfeldt with UBS. You may go ahead, Mr. Engfeld.

Mateus Engfeld: Hi, all. Morning. Thank you for your time. My first question on the beef demand in Brazil. We're still seeing it quite resilient in spite of prices. I'm just trying to get a sense if you're getting pushback from retailers, or pushback on the margin on demand growth and/or demand reduction, and what's the size or scale that we could expect for demand down in Brazil, in US beef as a result of higher prices. My second question is on sort of a longer-term view around production. We're seeing quite a lot of restrictions to trade flows, be it co-quotas or sanitary barriers for exports.

Matheus Enfeldt: Hi, all. Morning. Thank you for your time. My first question on the beef demand in Brazil. We're still seeing it quite resilient in spite of prices. I'm just trying to get a sense if you're getting pushback from retailers, or pushback on the margin on demand growth and/or demand reduction, and what's the size or scale that we could expect for demand down in Brazil, in US beef as a result of higher prices. My second question is on sort of a longer-term view around production. We're seeing quite a lot of restrictions to trade flows, be it co-quotas or sanitary barriers for exports.

Speaker #5: Hi. Good morning. Thank you for your time. My first question is on beef demand in Brazil. We're still seeing it quite resilient despite the prices.

Speaker #5: So I'm just trying to get a sense if you're getting pushback from retailers. Or pushback on the margin on demand growth. Or demand reduction and what's the size or scale that we could expect for demand down in Brazil in US beef as a result of higher prices.

Speaker #5: And then my second question is on sort of a longer-term view around production. We're seeing quite a lot of restrictions to trade flows be it quotas or sanitary barriers for exports.

Speaker #5: I know the company is planning to diversify. But whether there are some additional regions that could become focused for investment in the mid-term such as rest of Latam or more investments in Europe, that could help circumvent those sanitary and trade flow restrictions in general.

Mateus Engfeld: I know the company's planning to diversify, but whether there are some additional regions that could become focus for investment in the midterm, such as rest of LatAm or more investments in Europe that could help circumvent those sanitary and trade flow restrictions in general, and how you're incorporating that into the longer-term investment decisions that the company is taking. Those are the two questions. Thank you.

Matheus Enfeldt: I know the company's planning to diversify, but whether there are some additional regions that could become focus for investment in the midterm, such as rest of LatAm or more investments in Europe that could help circumvent those sanitary and trade flow restrictions in general, and how you're incorporating that into the longer-term investment decisions that the company is taking. Those are the two questions. Thank you.

Speaker #5: And how you're incorporating that into the longer-term investment decisions that the company is taking. Those are the two questions. Thank you.

Gilberto Tomazoni: If understood well, you ask for about the demand, for, beef in Brazil and beef in US.

Speaker #1: If understood well, you asked about the demand. For beef in Brazil and beef in US.

Gilberto Tomazoni: If understood well, you ask for about the demand, for, beef in Brazil and beef in US.

Speaker #5: Yeah. Yeah. Both that.

Mateus Engfeld: Yeah. Yeah, both that.

Matheus Enfeldt: Yeah. Yeah, both that.

Guilherme Cavalcanti: Well, look, we in Brazil, even that we had the higher price of cattle and the higher price of meat, the demand in Brazil remained stronger for beef and for all of the proteins. We talk about JBS. Now with, I think it's with the end of the quotas of China, may the price of cattle will be decreased, and I think it will be more favorable to sell in domestic market. It is important that we have developed a category management 2.0, say that we call Açougue Reserva. It's in Brazil, that we manage inside of the store of our customers the butcher area. This show that the store, they have our model.

Speaker #1: Well, look. In Brazil, even though we had the higher price of cattle and the higher price of meat, the demand in Brazil remains strong.

Speaker #1: For beef and for all of the proteins. And we talk about JBS. We and now we I think is with the end of the quotas of China.

Speaker #1: May the price of cattle will be decreased. And I think it will be more favorable to sell in domestic markets. It is important that we have developed a category management.

Speaker #1: 2.0, say that we call a sogi reserve. It's in Brazil. That we manage inside of the store of our customers the budget area. And this show that the store they have our model they sell not just more meat, but they sell more for all of the stores.

Gilberto Tomazoni: They sell not just more meat, but they sell more for all of the stores. This project is get a strong reception from our customers. Because of that, I see that even now with this situation that after the quota of China end, I think is we are very well structured, even in Brazil, even in US, to manage the volume for our business Friboi. I think it's in US where to comment a little bit about the demand, but I think Demand continues strong, Mateus, is, you know, we think all the things already mentioned before.

Speaker #1: And this project is getting a strong reception from our customers. And because of that, I see that even now, with this situation that after the quota of China ended, we are—I think we are very well structured.

Speaker #1: Even in Brazil, even in the US, to manage the volume for our business, Free Boy. I think it's in the US where to comment a little bit about the demand.

Speaker #1: But I think.

Speaker #6: The demand continues strong, Matthias, is we think all the things already mentioned before on just the overall protein trend and people understanding more about nutrition prioritizing protein.

Wesley Batista Filho: On just the overall pro-protein trend and, and people understanding more about nutrition, prioritizing protein, we've seen that. Just the overall preference also for protein, and especially beef has been pretty strong. That's how we see the demand in the US.

Speaker #6: We've seen that. And just the overall preference also for protein and especially beef has been pretty strong. So that's how we see the demand in the US.

Gilberto Tomazoni: I think this is related to the first, the question first we answered about the demand of pro-protein and GLP-1 and other factor that is booster all of the consumption, protein consumption globally. I think if Matheus, if I'm right, your question about the investment, the future station of our investment, is it correct?

Speaker #1: I think this is related to the first the question first we answered about the demand of protein, GLP-1 and the other factor that is booster all of the consumption protein consumption globally.

Speaker #1: I think if Matthias, if I'm right, your question about the investment, the future inspection of our investment. Is it correct?

Speaker #5: Yeah. How you're considering restrictions to trade flows with quotas and sanitary barriers into your investment process and investment decision for the mid-long term. Thank you.

Mateus Engfeld: Yeah. How you're considering restrictions to trade flows with quotas and sanitary barriers into your investment process and investment decision for the mid long term? Thank you.

Matheus Enfeldt: Yeah. How you're considering restrictions to trade flows with quotas and sanitary barriers into your investment process and investment decision for the mid long term? Thank you.

Speaker #1: Well, I think we are very well positioned where we produce and where we sell our product. I think we built this global platform. And you look for we are produce where is the most competitive way to produce.

Gilberto Tomazoni: Well, I think is we are very well-positioned in where we produce and where we sell our product. I think is we built this global platform, we are produced where is the most competitive way to produce, and we are present to sell where the market demand is. I think is in terms of balance, we are well-balanced. Of course, now our focus now for this year is to cash generation. We are not looking for to a new project in our portfolio. We start with the project in Paraguay, we start the project in Oman. I think now we need to develop this project in the greenfield that we are working on. No any new project in our pipeline now.

Speaker #1: And we are present to sell where is the market demand is. Then I think it's in terms of balance, we are well balanced. Of course, now our focus now for this year is to cash generation.

Speaker #1: We are not looking for to a new project in our portfolio. We just start with the project. And Paraguay, we start the project in Oman.

Speaker #1: I think now we need to develop this project in the greenfield that we are working on. There are no new projects in our pipeline now.

Speaker #5: Awesome. Super clear. Thank you.

Mateus Engfeld: Awesome. Super, super clear. Thank you.

Matheus Enfeldt: Awesome. Super, super clear. Thank you.

Speaker #1: Thank you. And our next question comes from Igor Guilherme with GNL. You may go ahead, Mr. Guilherme.

Operator 2: Thank you. Our next question comes from Igor Guedes with Genial. You can go ahead, Mr. Guedes.

Operator: Thank you. Our next question comes from Igor Guedes with Genial. You can go ahead, Mr. Guedes.

Speaker #7: Can you hear me?

Igor Guedes: Can you hear me?

Speaker #1: Yes.

Operator 2: Yes.

Operator: Yes.

Speaker #7: Okay. Thank you very much. For the opportunity. The first question is about CapEx. We observed CapEx essentially doubling year over year. And it came slightly higher than we expected reflecting an acceleration across the platform.

Igor Guedes: Okay. Thank you very much for the opportunity. The first question is about CapEx. We observed CapEx essentially doubling year over year. It came slightly higher than expected, reflecting an acceleration across the platform, but mainly related to renovation projects stemming from the downtime at PPC with capacity expansion initiatives. It would be interesting to understand if you can share with us how the capacity expansion is progressing from a numerical standpoint, how much of increase you expect to achieve based on what production levels, and whether we can expect CapEx to normalize as early as Q2.

Speaker #7: But mainly related to renovation projects, stemming from the downtime at PPC. With capacity expansion initiatives. It would be interesting to understand if you can share with us how the capacity expansion is progressing from a numerical standpoint.

Speaker #7: How much of increase you expect to achieve based on what production levels? And whether we can expect CapEx to normalize as early as second quarter?

Igor Guedes: My second question, I would like to get your perspective on what might happen in H2 regarding the filling of China's quotas. As you have already mentioned, it's possible that cattle prices will fall in Brazil, given the quota is being front-loaded faster than initially expected, which could reduce the number of slaughters in H2, leaving more cattle on hand and lowering price per arroba. My question is more focused on the cattle side of the domestic market. Do you think it's possible that with the reduction in exports, part of the volume will be directed to the domestic market and with more meat supply here, the cattle price might face downward pressure?

Speaker #7: In my second question, I would like to get your perspective on what might happen in the second half of the year regarding the filling of China's quotas.

Speaker #7: As you have already mentioned, it's possible that cattle prices will fall in Brazil given the quota is being thrown to loaded faster than initially expected.

Speaker #7: Which could reduce the number of slaughters in the second half of the year, leaving more cattle on hand and lowering price per arroba. But my question is more focused on the cutout side of the domestic market.

Speaker #7: Do you think it's possible that with the reduction in exports, part of the volume will be directed to the domestic markets? And with more meat supply here, the cut out price might face downward pressure.

Speaker #7: I would like to take your view on this variable going forward. Thank you very much.

Igor Guedes: I would like to take your view on this variable going forward. Thank you very much.

Speaker #1: Now, look, we have when you talk about the CapEx, we are put one billion, one billion dollars in CapEx for expansions. They grow CapEx as we call.

Gilberto Tomazoni: Now, look, we have, when you talk about the CapEx, we have put $1 billion in capital for expansions. The grow CapEx, as we call, grow CapEx. This is, we are not disclosing one by one, but because many business unit in the different types of the CapEx, it will be different. It is difficult to explain volume because one is number of chicken, the other is a volume of well-prepared food. To put together will be difficult to explain, that we are not disclosing. The CapEx is, as you mentioned, if you compare for the last years, is higher because we are seeing the strong demand.

Speaker #1: Grow CapEx. And this is we are not disclosure one by one, but because many business units in different types of different types of the CapEx, it will be different it's difficult to explain volume because one is the number of chicken, the other is a volume of well prepared food and to put together will be difficult to explain.

Speaker #1: That we are not disclosed then. But the CapEx is, as you mentioned, if you compare for the last years, is higher because we are seeing the strong demand.

Speaker #1: But we are not seeing now any moment that we need to reveal the CapEx, because we are seeing the cash generation for the second semester of the year will be strong.

Gilberto Tomazoni: We are not seeing now any moment that we need to review the CapEx because we are see the cash generation for the H2 of the year will be strong. This is something we can see in the future. Because it's capital expenditure, we can postpone, we can give more time to do. We are not looking now because we are not see that is necessary for now on. Could be in the future, is something that we can take a look. The other thing about the Brazilian situation, about the market situation about beef. We see that the end of quota of China, the number of cattle will be harvest for the imports will be down.

Speaker #1: But this is something we can see in the future. If you because it's CapEx of expansion, we can postpone, we can give more time to do.

Speaker #1: But we are not looking now because we are not seeing that it's necessary for now. But could be. In the future, it's something that we can take a look.

Speaker #1: The other thing about the Brazilian situation, about the market situation with beef. We see that with the end of the quota with China, the number of cattle that will be harvested for the English market will be down.

Gilberto Tomazoni: Should be down because we need to accommodate this 120,000 tons per month for beef. We need to find a market for that. The imports will be reduced, the number of the, number of cattle will be harvest. And if you reduce the number of cattle will be harvest, combined with more availability of cattle for feedlot, we believe that the price of cattle will be down as well. Means that cattle could be down because more volume domestic, but the price of beef will be down as well. I see that the spread between the both price, the cattle and the live cattle, will be remain. Or, depends in our case could be hence that we have value-added product.

Speaker #1: Should be down because we need to accommodate this I mentioned 120,000 tons per month for beef. We need to find a market for that.

Speaker #1: Then the English will be reduced the number of the number of cattle will be harvest. And if you reduce the number of cattle will be harvest.

Speaker #1: Combined with more availability of current for feedlot, we believe that the price of cattle will be down as well. This means that cut out could be down because of more volume domestic.

Speaker #1: But the price of beef will be down as well. Then I see that the spread between the both price the cut out and the live cattle will be remain or depends in our case could be enhanced that we have value added product.

Speaker #1: When you talk value added product not with processed product is value added raw products. That I mentioned you better representation, better way to serve the customer in different cuts of beef.

Gilberto Tomazoni: When you talk value-added product, not with processed product, it's value-added raw products that I mentioned you better representation, better way to serve the customer in different cuts of beef. If you look for our side, I think is we are very well structured in Brazil and outside to Brazil to take the advantage, the impact of this end of the quotas of China.

Speaker #1: That if you look for our side I think is we are very well structured in Brazil and outside to Brazil to take the advantage the impact of this end of the quarters of China.

Speaker #5: Okay. Super clear. Thank you very much.

Igor Guedes: Okay. Super clear. Thank you very much.

Speaker #1: Ladies and gentlemen, is there being no further questions? I would like to pass the floor to Mr. Gilberto Tomazoni.

Operator 2: Ladies and gentlemen, there being no further questions, I would like to pass the floor to Mr. Gilberto Tomazoni.

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

Speaker #8: I would like to thank you everyone for joining us today. And all JBS team members for their dedication. And you look ahead we have not changed our focus.

Gilberto Tomazoni: I would like to thank you everyone for joining us today and all JBS team members for their dedication. You look ahead, we have not changed our focus, execution, efficiency and discipline, capital allocation, and cash generation. That is what allows us to deliver consistent results and build a long-term value creation. Thank you.

Speaker #8: Execution. Efficiency. And disciplined capital allocation and cash generation. That is what allow us to deliver a consistent result and build a long-term value creation.

Speaker #8: Thank you.

Speaker #1: This is the end of the conference call held by JBS. Thank you very much for your participation and have a nice day.

Operator 2: This is the end of the conference call held by JBS. Thank you very much for your participation, and have a nice day.

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

Operator 2: Goodbye.