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Item 7. Management’s Discussion and Analysis

2025-02-13 compared with 2024-02-27 · 205 added, 257 removed, 369 unchanged (56% of the section changed)

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Executive Summary

We are one of the largest protein companies in the world, and as a vertically integrated company, we are able to control every phase of the production process, which helps us manage food safety and quality, control margins and improve customer service.

We are one of the largest protein companies in the world, and as a vertically integrated company, we are able to control nearly every phase of the production process, which helps us manage food safety and quality, control margins and improve customer service.

This gives us the opportunity to continue to create growth and development opportunities, further increasing our position as a leading domestic and global protein company.

We reported net income attributable to Pilgrim’s Pride Corporation of $322.3 million, or $1.36 per diluted common share, and profit before tax totaling $365.2 million, for 2023.

These operating results included gross profit of $1.1 billion and generated $677.9 million of cash from operations.

We generated consolidated operating margins of 3.0% with operating margins of 2.4%, 2.5%, and 7.3% in our U.S., U.K.

and Europe, and Mexico reportable segments, respectively.

During 2023, we generated EBITDA and Adjusted EBITDA of $951.7 million and $1,034.2 million, respectively.

We reported net income attributable to Pilgrim’s Pride Corporation of $1.1 billion, or $4.57 per diluted common share, and profit before tax totaling $1.4 billion, for 2024.

These operating results included gross profit of $2.3 billion and generated $2.0 billion of cash from operations.

We generated consolidated operating margins of 8.4% with operating margins of 10.5%, 3.3%, and 10.6% in our U.S., Europe, and Mexico reportable segments, respectively.

During 2024, we generated EBITDA and Adjusted EBITDA of $1.9 billion and $2.2 billion, respectively.

A reconciliation of net income to EBITDA and Adjusted EBITDA is included later in “Item 7.

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Any reference we make to a particular year applies to our fiscal year and not the calendar year.

Fiscal 2023 was a 53-week accounting cycle and 2022 was a 52-week accounting cycle.

Fiscal year 2024 was a 52-week fiscal year and fiscal year 2023 was a 53-week fiscal year.

Global Economic Conditions

During 2023, we continued to experience challenges from inflation in commodity, labor and other operating costs across all our businesses.

The impact on the global feed ingredient and energy markets due to the Russia-Ukraine war have lessened due to increased production in other areas in the global supply chain as discussed below.

Despite inflationary headwinds and subdued consumer demand throughout the U.K.

and E.U., we have and will continue to invest in our people, implement supply chain solutions, and conduct customer negotiations for cost recovery.

Mexico remains a volatile market given inflationary pressures, an evolving global protein industry, and overall business seasonality.

During 2024, global inflation levels declined, but remained above historical averages.

region saw a continued decrease in inflation rate and flat demand, leading to cost recovery for our business and stabilizing prices for customers, though labor costs continue to be a challenge for our Europe operations.

We have and will continue to invest in our people and implement supply chain solutions to mitigate global economic impacts in our Europe operations.

The Russia-Ukraine war's impact on the global feed ingredient and energy markets is currently less pronounced though there remain many risks and uncertainties that may impact global markets.

In Mexico, inflation remains high and the peso weakened further against the U.S.

dollar in the fourth quarter of 2024.

Mexico remains a relatively volatile market given overall business seasonality.

We have responded to these challenges by continuing negotiations with customers to mitigate the impact of extraordinary costs we have experienced.

We also continue to focus on operational initiatives that aim to deliver labor efficiencies, better agricultural performance and improved yields.

Russia-Ukraine War Impacts

The Russia-Ukraine war began in February 2022.

The impact of the ongoing war and sanctions has not been limited to businesses that operate in Russia and Ukraine and has negatively impacted and will likely continue to negatively impact other global economic markets including where we operate.

The impacts have included and may continue to include, but are not limited to, higher prices for commodities, such as food products, ingredients and energy products, increasing inflation in some countries, and disrupted trade and supply chains.

The conflict has disrupted shipments of grains, vegetable oils, fertilizer and energy products.

The impact on the agriculture markets falls into two main categories:

(1) the effect on Ukrainian crop production, as the region is key in global grain production;

and (2) the duration of the disruption in trade flows.

Safety and financing concerns in the region are restricting export execution, which is in turn forcing grain and oil demand to find alternative supply.

In the fourth quarter of 2023, the global supply chains have become less sensitive to the conflict in Ukraine as grain production in other global areas had record high seasons alleviating much of the global supply constraints that existed after the initial outbreak of the war.

Ukraine supply constraints from Russia’s mid-2023 suspension of the Black Sea Grain Initiative and other impacts from the war have only minimally impacted grain exports from Ukraine and the global supply of grains due to the increased production from other areas.

government and other governments in jurisdictions in which we operate have imposed sanctions and export controls against Russia, Belarus and interests therein and threatened additional sanctions and controls.

The impact of these measures, now and in the future, along with further escalation of the conflict could adversely affect our business, supply chain or customers.

Raw Materials and Input Costs

and Mexico segments use corn and soybean meal as the main ingredients for feed production, while our U.K.

and Europe segment uses wheat, soybean meal and barley as the main ingredients for feed production.

During 2023, the global price of corn and wheat, measured at U.S.

dollars per metric ton, both decreased about 30% per the International Monetary Fund as reported by the St.

and Mexico segments use corn and soybean meal as the main ingredients for feed production, while our Europe segment uses wheat, soybean meal and barley as the main ingredients for feed production.

During 2024, the global price of corn, measured at U.S.

dollars per metric ton, maintained lower prices at an average of about 30% below prior year prices, per the International Monetary Fund as reported by the St.

Louis Fed research center.

experienced dryer weather during the spring of 2023 that threatened corn supply, but the corn crop for the 2023/2024 growing season is confirmed to be at record production levels as prices trended down towards the end of 2023.

Favorable weather conditions in Brazil during 2023 positively impacted global corn supply, while Argentina saw a severe drought which restricted their crop production for the year.

Soybean prices began 2023 at higher levels, but came down during the second quarter and have remained stable throughout the remainder of the year.

Towards the end of 2024, corn prices ticked upwards and ended the year about 4% lower than the prior year.

Global wheat prices at the end of 2024 were about 14% lower than the prior year ending prices.

Good growing conditions and lower demand led to the decrease in corn prices, while wheat prices fluctuated more throughout 2024.

Soybean prices were lower than 2023 due to better growing conditions and lower demand.

Soybean Meal (a)

Highest Price Lowest Price Highest Price Lowest Price Highest Price Lowest Price

(In whole dollars) (In whole pounds sterling)

Fourth Quarter 4.54 4.01 350.0 279.5 190.5 174.0

Third Quarter 4.18 3.62 387.0 303.4 196.9 168.7

Second Quarter 4.65 3.97 386.5 328.3 202.8 165.1

First Quarter 4.67 4.00 381.2 327.8 184.5 153.7

Fourth Quarter 5.05 4.50 473.6 363.2 193.9 182.0

Third Quarter 6.37 4.61 464.7 388.2 216.0 170.8

Second Quarter 6.78 5.55 465.7 389.7 204.8 165.5

First Quarter 6.85 6.19 513.0 438.3 239.0 191.0

(a) We obtain corn and soybean meal prices from the Chicago Board of Trade, and we obtain wheat prices from the London International Financial Futures and Options Exchange.

During 2024, U.S.

commodity market prices for chicken products trended in line with seasonal norms throughout the first half of the year, but at levels at or below the five-year historical average, before rebounding in the third quarter and trending in line with the historical average for the remainder of the year.

During the first half of 2023, industry production growth paired with higher levels of cold storage supply led to increased broiler availability.

Additionally, although domestic demand grew in the first half, the increased demand pressure did not offset the incremental increase in supply keeping prices at our around seasonally expected levels despite a higher cost basis, which significantly impacted profitability in the commodity market-driven portion of our U.S.

As a result, the U.S.

chicken industry began reducing egg sets and chick placements as compared to prior year volumes beginning late in the second quarter and continued to be reduced throughout the second half of 2023.

The reduction in broiler production coincided with improved volume demand in both the foodservice and retail channels, enabling the industry to reduce cold storage inventories and reduce the impact of year-end seasonal inventory increases.

The rebalancing of supply and demand drove positive price fluctuations as U.S.

chicken market prices returned to the historical five-year average levels late into the third quarter of 2023 and followed expected seasonal pricing trends through the remainder of the year.

commodity market prices for chicken products trended in line with historical averages to begin the year, but saw stronger seasonal increases in mid-first quarter as industry production declined relative to the prior year levels and domestic demand growth absorbed produced volumes and eroded cold storage inventories.

Supply rebounded with growth in the second quarter, however, hatchability and broiler mortality headwinds inhibited more substantial production increases.

Although broiler production grew, robust retail and foodservice demand growth absorbed production at a rate sufficient to maintain market prices above the five-year historical average throughout the remainder of 2024.

commodity market prices throughout 2025 will be impacted by the evolution of foodservice, retail, and export meat demand, influenced by factors such as government regulation, spread of Avian influenza cases both domestically and abroad, evolution of the general economy, and overall protein supply.

During 2024, the U.K.

chicken market saw an increase in labor costs due to the national living wages change in April 2024.

Through our current customer contracting models and additional negotiations we have offset the majority of these cost increases.

Our utilities and feed ingredient costs continued to decrease throughout 2023 from the beginning of the year.

Through customer contracts and additional negotiations, we have offset the majority of these cost increases.

Due to increased competition with the U.K.

egg market, there has been an increase in costs to retain growers, while feed costs have decreased throughout the year.

We continue to focus on managing costs, including labor and yield efficiencies, agricultural performance and increasing operational efficiencies through investments in capital projects.

Commodity prices for chicken in Mexico ended 2023 below prior-year prices despite incremental increases throughout the year.

Mexico grain prices were also below prior year levels.

market prices for pork products have followed an upward trend from 2022 but fell slightly during the fourth quarter of 2023, reflecting pig shortages from a 20% reduction of the English sow herd during 2022.

pig producers downsized their sow herds during 2023 by about 5% due to various factors.

Due to increased market pricing and stabilization of feed prices, U.K.

pig farming became profitable in the second quarter of 2023 and remained profitable in the second half of 2023.

prices for prepared foods have remained at elevated levels from inflationary pressure, primarily from increased pork prices.

Commodity prices for chicken in Mexico ended 2024 above prior-year prices despite incremental decreases throughout the second half of the year.

Mexico grain prices decreased from prior year levels.

market prices for pork products have followed an upward trend from 2022, albeit at a slower rate throughout 2024.

During the year, the U.K.

market price for a pig has fallen slowly in line with a general reduction in input prices as well as market pressure from Europe.

pig farming became profitable in the second quarter of 2023 and has remained profitable since.

prices for prepared foods have increased from inflationary pressures.

We continue to focus on partnering with our Key Customers and increasing operational efficiency.

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Environmental Stewardship .

We were the first major meat and poultry company in the world to set a net zero greenhouse gas emissions target by 2040, demonstrating our leadership and dedication to improving the efficiency of our operations and supporting producers to reduce our environmental footprint.

In support of this initiative, in April 2021, we issued $1.0 billion of sustainability-linked bonds, which require us to reduce our Scope 1 and 2 global greenhouse gas emissions intensity by 30% by 2030.

We are focused on improving the efficiency of our operations and supporting producers to reduce our environmental footprint.

In support of this initiative in April 2021, we issued $1.0 billion of sustainability-linked bonds, which require us to reduce our Scope 1 and 2 global greenhouse gas emissions intensity of 17.7% by 2025 and by 30.0% by 2030 from our 2019 baseline.

Social Responsibility .

Safety of our team members is a condition at Pilgrim’s.

The health of our workforce was our top priority throughout the COVID-19 pandemic, and we implemented hundreds of safety measures within our facilities, constantly

evolving our operations as needed.

To support the communities where our team members live and work, we invested more than $20 million in local projects focused on alleviating food insecurity, strengthening long-term community infrastructure and well-being, and aiding COVID-19 emergency response and relief efforts through our Hometown Strong initiative.

The physical health and mental well-being of our workforce continues to be a top priority for our business.

As such, we implemented hundreds of safety measures within our facilities and constantly evolve our operations as needed.

To support the communities where our team members live and work, we have committed $20 million in funding for local projects focused on alleviating food insecurity and strengthening

long-term community infrastructure through our Hometown Strong initiative.

To date, we have approved over $15 million for these areas.

We also continue to build on Hometown Strong through our Better Futures program, which provides team member and their dependents in tuition free, higher education program, to improve their skills and career opportunities.

The program has been exceptionally well received as we have over 2,100 participants since inception.

Finally, ensuring the well-being of animals under our care is an uncompromising commitment at Pilgrim’s.

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In addition, the Board of Directors formed a Sustainability Committee to provide oversight and counsel on strategies, policies, and investments to reduce the impact of climate change.

The Sustainability Committee meets on a quarterly basis to monitor progress, provide feedback, and evaluate impact of trends.

Reportable Segments

We operate in three reportable segments:

the U.S., the U.K.

and Europe, and Mexico.

the U.S., Europe, and Mexico.

We measure segment profit as operating income.

Certain corporate expenses are allocated to the Mexico and U.K.

and Europe reportable segments based upon various apportionment methods for specific expenditures incurred related thereto with the remaining amounts allocated to the U.S.

Certain corporate expenses are allocated to the Mexico and Europe reportable segments based upon various apportionment methods for specific expenditures incurred related thereto with the remaining amounts allocated to the U.S.

For additional information, see “Note 20.

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2024 Compared to 2023

Net sales for 2023 decreased $106.2 million, or 0.6%, from $17.5 billion generated in 2022 to $17.4 billion generated in 2023.

A significant factor in each of the year-over-year comparisons below in is that our fiscal year 2023 was 53-weeks whereas our fiscal year 2024 was 52-weeks.

Net sales for 2024 increased $516.1 million, or 3.0%, from $17.4 billion generated in 2023 to $17.9 billion generated in 2024.

The following table provides additional information regarding net sales:

Change from 2022

Sources of net sales 2023 Amount Percent

Change from 2023 Impact on Change from 2023

Sources of net sales 2024 Amount Percent Sales Volume Sales Prices Foreign Currency Translation Impact

(In thousands, except percent data)

$ 10,629,929 $ 602,187 6.0 % (1.4) % 7.4 % — %

and Europe 5,203,322 328,584 6.7 %

Europe 5,136,747 (66,575) (1.3) % (0.9) % (3.1) % 2.7 %

Mexico 2,111,615 (19,538) (0.9) % 0.1 % 1.8 % (2.8) %

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Reportable Segment.

net sales generated in 2023 decreased $720.6 million, or 6.7%, from U.S.

net sales generated in 2022 primarily because of a decrease in net sales per pound, contributing $1.2 billion, or 10.9 percentage points, to the decrease in net sales.

This decrease in net sales per pound was partially offset by an increase in sales volume of $453.3 million, or 4.2 percentage points.

The decrease in net sales per pound was driven by lower commodity market pricing for fresh chicken products as compared to prior year.

The increase in sales volume was driven primarily by an increase in pounds sold in our fresh products divisions.

and Europe Reportable Segment.

and Europe sales generated in 2023 increased $328.6 million, or 6.7%, from sales generated in 2022 primarily from an increase in net sales per pound and the favorable impact of foreign currency translation of $397.3 million, or 8.2 percentage points, and $33.5 million, or 0.7 percentage points, respectively.

The increase in net sales per pound was driven by price increases necessary to recover increased feed ingredients, labor, utilities and other operating costs.

The increases in net sales per pound and favorable impact of foreign currency translation were partially offset by a decrease in sales volume of $102.3 million, or 2.1 percentage points.

net sales generated in 2024 increased $602.2 million, or 6.0%, from U.S.

net sales generated in 2023 primarily because of an increase in net sales per pound, contributing $739.0 million, or 7.4 percentage points, to the increase in net sales.

This increase in net sales per pound was partially offset by a decrease in sales volume of $136.8 million, or 1.4 percentage points, due to one less week in 2024.

The increase in net sales per pound was primarily driven by higher commodity market pricing for fresh chicken products as compared to prior year across all major cuts.

Europe Reportable Segment.

Europe sales generated in 2024 decreased $66.6 million, or 1.3%, from sales generated in 2023 primarily from a decrease in net sales per pound due to the pass-through of lower input costs and a decrease in sales volume of $163.0 million, or 3.1 percentage points, and $48.4 million, or 0.9 percentage points, respectively.

These decreases were partially offset by the favorable impact of foreign currency translation of $144.8 million, or 2.7 percentage points.

Mexico Reportable Segment.

Mexico sales generated in 2023 increased $285.9 million, or 15.5%, from sales generated in 2022 primarily because of the favorable impact of foreign currency remeasurement and an increase in sales volume, partially offset by a decrease in net sales price per pound.

The favorable impact of foreign currency remeasurement and increase in sales volume contributed $249.0 million, or 13.5 percentage points, and $86.2 million, or 4.7 percentage points, respectively, to the increase in net sales.

The favorable impact of foreign currency remeasurement was due to a strengthening of the Mexican peso against the U.S.

The sales volume across all lines of business increased during 2023 due to market demand.

Partially offsetting these increases in net sales was a decrease in net sales price per pound of $49.3 million, or 2.7 percentage points.

Mexico sales generated in 2024 decreased $19.5 million, or 0.9%, from sales generated in 2023 primarily because of the unfavorable impact of foreign currency translation of $62.0 million, or 2.8 percentage points, partially offset by an increase in net sales per pound and an increase in sales volume of $39.3 million, or 1.8 percentage points, and $3.2 million, or 0.1 percentage points, respectively.

The unfavorable impact of foreign currency translation was due to a weakening of the Mexican peso against the U.S.

The increases in net sales per pound and sales volume were driven by

improved product mix and increased commodity chicken prices.

Sales volumes increased across all sales channel, except live chicken which slightly decreased.

Gross profit.

Gross profit decreased by $693.4 million, or 38.3%, from $1.8 billion generated in 2022 to $1.1 billion generated in 2023.

Gross profit increased by $1.2 billion, or 106.8%, from $1.1 billion generated in 2023 to $2.3 billion generated in 2024.

The following tables provide gross profit information:

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$ 1,564,092 $ 1,041,608 199.4 %

and Europe 374,699 134,027 55.7 %

Europe 461,667 86,968 23.2 %

Mexico 287,008 65,576 29.6 %

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$ 9,065,837 $ (439,421) (4.6) %

and Europe 4,828,623 194,557 4.2 %

Europe 4,675,080 (153,543) (3.2) %

Mexico 1,824,607 (85,114) (4.5) %

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Cost of sales incurred by our U.S.

operations in 2023 increased $192.8 million, or 2.1%, from cost of sales incurred by our U.S.

operations in 2024 decreased $439.4 million, or 4.6%, from cost of sales incurred by our U.S.

operations in 2023.

Cost of sales increased primarily because of increased sales volume of $392.9 million, or 4.2 percentage points, partially offset by a decrease in cost per pound sold of $203.9 million, or 2.2 percentage points.

The increase in our sales volume was primarily driven by our fresh products divisions.

Other factors affecting U.S.

cost of sales were individually immaterial.

and Europe Reportable Segment.

Cost of sales incurred by the U.K.

and Europe operations during 2023 increased $194.6 million, or 4.2%, from cost of sales incurred by the U.K.

and Europe operations during 2022 primarily because of increases in cost per pound sold and the unfavorable impact of foreign currency translation of $257.6 million, or 5.6 percentage points, and $31.1 million, or 0.7 percentage points, respectively.

The increase in cost per pound was driven by increased feed ingredients, labor, utilities and other operating costs.

Partially offsetting these increases was the impact of a decrease in sales volume of $94.1 million, or 2.1 percentage points.

Other factors affecting cost of sales were individually immaterial.

Cost of sales decreased primarily due to decreased cost per pound sold and sales volume of $309.8 million, or 3.3 percentage points, and $129.6 million, or 1.3 percentage points, respectively.

The decrease in cost per pound sold was driven by a reduction in feed ingredients, such as corn and soy, costs in our live operations.

The reduction in live operations costs was partially offset by an increase in labor, incentive compensation, and insurance costs.

Europe Reportable Segment.

Cost of sales incurred by the Europe operations during 2024 decreased $153.5 million, or 3.2%, from cost of sales incurred by the Europe operations during 2023 primarily due to decreases in cost per pound sold and sales volume of $248.7 million, or 5.2 percentage points, and $44.9 million, or 0.9 percentage points, respectively.

These decreases were partially offset by the unfavorable impact of foreign currency translation of $140.1 million, or 2.9 percentage points.

The decrease in cost per pound was driven by decreased feed ingredients, labor, utilities and other operating costs and from production efficiencies as a result of our restructuring initiatives.

Mexico Reportable Segment.

Cost of sales incurred by the Mexico operations during 2023 increased $199.6 million, or 11.7%, from cost of sales incurred by the Mexico operations during 2022 primarily because of the unfavorable impact of foreign currency remeasurement and an increase in sales volume which contributed $223.1 million, or 13.0 percentage points, and $79.9 million, or 4.7 percentage points, to the increase in cost of sales, respectively.

The unfavorable impact of foreign currency remeasurement was due to a strengthening of the Mexican peso against the U.S.

The sales volume across all lines of business increased during 2023 due to market demand.

Partially offsetting these increases in cost of sales was a decrease in the cost per pound sold of $103.4 million, or 6.0 percentage points.

Other factors affecting cost of sales were individually immaterial.

Cost of sales incurred by the Mexico operations during 2024 decreased $85.1 million, or 4.5%, from cost of sales incurred by the Mexico operations during 2023 primarily because of the favorable impact of foreign currency remeasurement and a decrease in cost per pound sold of $53.6 million, or 2.8 percentage points, and $34.3 million, or 1.8 percentage points, respectively.

These decreases in cost of sales were partially offset by an increase in sales volume of $2.8 million, or 0.1 percentage points.

The favorable impact of foreign currency remeasurement was due to a weakening of the Mexican peso against the U.S.

The decrease in cost per pound sold was driven by a reduction in commodity ingredients costs, partially offset by an increase in employee profit sharing costs due to higher profitability in 2024.

Operating income.

Operating income decreased $654.3 million, or 55.6%, from $1,176.6 million generated for 2022 to $522.3 million generated for 2023.

Operating income increased $983.8 million, or 188.4%, from $522.3 million generated for 2023 to $1,506.1 million generated for 2024.

The following tables provide operating income information:

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$ 1,113,001 $ 874,107 365.9 %

and Europe 128,151 129,085 NM (b)

Europe 169,693 41,542 32.4 %

Mexico 223,375 67,920 43.7 %

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$ 451,091 $ 167,501 59.1 %

and Europe 202,203 (8,937) (4.2) %

Europe 198,586 (3,617) (1.8) %

Mexico 63,633 (2,344) (3.6) %

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(In thousands, except percent data)

and Europe $ 44,345 $ 13,879 45.6 %

Europe $ 93,388 $ 49,043 110.6 %

(a) Our Consolidated Financial Statements include the accounts of our company and our majority owned subsidiaries.

We eliminate all significant affiliate accounts and transactions upon consolidation.

(b) This Y/Y change is designated not meaningful (or “NM”).

Reportable Segment.

Selling, general and administrative (“SG&A”) expense incurred by the U.S.

operations during 2023 decreased $58.3 million, or 17.0%, from SG&A expense incurred by the U.S.

operations during 2022 primarily from decreases in legal defense costs, incentive compensation costs, and employee relation costs.

Other factors affecting SG&A expense were individually immaterial.

and Europe Reportable Segment.

SG&A expense incurred by the U.K.

and Europe operations during 2023 decreased $8.9 million, or 4.2%, from SG&A expense incurred by the U.K.

and Europe operations during 2022 primarily due to decreased labor and employee-related costs, decreased advertising costs, and the unfavorable impact of foreign currency translation.

Other factors affecting SG&A expense were individually immaterial.

operations during 2024 increased $167.5 million, or 59.1%, from SG&A expense incurred by the U.S.

operations during 2023 primarily from increases in litigation settlement costs and incentive compensation costs.

Europe Reportable Segment.

SG&A expense incurred by the Europe operations during 2024 decreased $3.6 million, or 1.8%, from SG&A expense incurred by the Europe operations during 2023 primarily due to decreased labor and employee-related costs.

Mexico Reportable Segment.

SG&A expense incurred by the Mexico operations during 2023 increased $14.3 million, or 27.6%, from SG&A expense incurred by the Mexico operations during 2022.

SG&A expense increased primarily from increased payroll and employee-related costs due to labor reform law changes and the unfavorable impact of foreign currency remeasurement.

Other factors affecting SG&A expense were individually immaterial.

Interest expense .

Consolidated interest expense increased 16.0% to $166.6 million in 2023 from $143.6 million in 2022, primarily from an increase of $34.3 million in interest expense on outstanding borrowings and a loss on early extinguishment of debt recognized as a component of interest expense of $20.7 million, partially offset by an increase in interest income of $26.6 million.

As a percent of net sales, interest expense in 2023 and 2022 was 1.0% and 0.8%, respectively.

SG&A expense incurred by the Mexico operations during 2024 decreased $2.3 million, or 3.6%, from SG&A expense incurred by the Mexico operations during 2023.

SG&A expense decreased primarily from the favorable impact of foreign currency translation due to the weakening of the Mexican peso against the U.S.

dollar, partially offset by increased wages and employee profit share costs.

Net interest expense .

Consolidated interest expense decreased 46.9% to $88.5 million in 2024 from $166.6 million in 2023.

The decrease in net interest expense resulted primarily from an increase in interest income earned on higher cash balances, a decrease from early extinguishment of debt, and a decrease in interest expense on outstanding borrowings due to decreased borrowings.

The decrease in net interest expense from early extinguishment of debt is due to gross realized gains of $13.8 million recognized on the repurchases of $164.3 million of outstanding principal senior notes during 2024 compared to a loss on early extinguishment of debt of $20.7 million recognized on the repayment of senior notes during 2023.

As a percent of net sales, net interest expense in 2024 and 2023 was 0.5% and 1.0%, respectively.

Income taxes.

Our consolidated income tax expense in 2024 was $325.0 million, compared to income tax expense of $42.9 million in 2023.

The decrease in income tax expense in 2023 resulted from a decrease in pre-tax income during 2023.

The increase in income tax expense in 2024 resulted primarily from an increase in pre-tax income during 2024.

2023 Compared to 2022

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Borrowing arrangements:

Revolving Syndicated Facility (a)

Credit Facility (a)

850.0 — 825.8

Mexico BBVA Credit Facility (b)

and Europe Revolver Facility (c)

Mexico Credit Facility (b)

Europe Credit Facility (c)

188.6 — 188.6

(a) Availability under the U.S.

Revolving Syndicated Facility is also reduced by our outstanding standby letters of credit.

Credit Facility is also reduced by our outstanding standby letters of credit.

Standby letters of credit outstanding at December 29, 2024 totaled $24.2 million.

(b) As of December 29, 2024, the U.S.

dollar-equivalent of the amount available under the Mexico BBVA Credit Facility was $65.4 million ($1.1 billion Mexican pesos).

dollar-equivalent of the amount available under the Mexico Credit Facility was $54.6 million ($1.1 billion Mexican pesos).

dollar-equivalent of the amount available under the U.K.

and Europe Revolver Facility was $191.1 million (£150.0 million).

On October 12, 2023, we completed a sale of $500.0 million aggregate principal amount of unsecured, registered, senior notes due 2034 (“Senior Notes due 2034”).

The issuance price of this offering to the public was 98.041%, which created gross proceeds of $490.2 million before transaction costs.

We used the net proceeds from the offering of the Senior Notes due 2034, together with cash on hand, to purchase for cash the Senior Notes due 2027 through a tender offer and subsequent redemption of remaining outstanding notes.

As of October 12, 2023, $812.8 million principal amount of the Senior Notes due 2027 had been validly tendered and purchased by us.

The remaining outstanding Senior Notes due 2027 were purchased by us on October 16, 2023.

On April 19, 2023, we completed a sale of $1.0 billion aggregate principal amount of its 6.25% unsecured, registered senior notes due 2033 (“Senior Notes due 2033”).

We used the net proceeds to repay the term loans and the outstanding balance under the 2021 U.S.

Credit Facility.

The issuance price of this offering to the public was 99.312%, which created gross proceeds of $993.1 million before transaction costs.

On October 4, 2023, we entered into a Revolving Syndicated Facility Agreement with CoBank, ACB as administrative agent (the “RCF”).

This facility replaced the Fifth Amended and Restated U.S.

Credit Facility that was executed in 2021.

The RCF increased our availability under the revolving loan commitment from $800.0 million to $850.0 million and extended the maturity date from August 2026 to October 2028.

On August 15, 2023, we entered into an unsecured credit agreement (the “Mexico BBVA Credit Facility”) with BBVA México as lender.

The loan commitment under the Mexico BBVA Credit Facility is Mex$1.1 billion and can be borrowed on a revolving basis.

Outstanding borrowings under the Mexico BBVA Credit Facility accrue interest at a rate equal to TIIE plus 1.35%.

The Mexico BBVA Credit Facility will be used for general corporate and working capital purposes.

The Mexico BBVA Credit Facility will mature on August 15, 2026.

dollar-equivalent of the amount available under the Europe Credit Facility was $188.6 million (£150.0 million).

On May 1, 2024, the Pilgrim’s Board of Directors approved a bond repurchase program which authorizes the Company to repurchase up to $200.0 million to buy back our outstanding senior notes.

Under the program, we have repurchased $144.3 million of outstanding principal of the Senior Notes Due 2031 and $20.0 million of the outstanding principal of the Senior Notes due 2033 for an aggregate of $164.3 million.

We expect cash flows from operations, combined with availability under our credit facilities, to provide sufficient liquidity to fund current obligations, projected working capital requirements, maturities of long-term debt and capital spending for at least the next twelve months.

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Items necessary to reconcile from net income to cash flow provided by operating activities included net noncash expenses of $480.0 million for the year ended December 29, 2024.

Net noncash expense items included $419.9 million of depreciation and amortization, loss on early extinguishment of debt recognized as a component of interest expense of $20.7 million, loan cost amortization of $7.4 million, stock-based compensation expense of $7.2 million, deferred income tax expense of $6.7 million, asset impairment of $4.0 million, and accretion of bond discount of $2.3 million.

Partially offsetting the net noncash expenses was an $6.1 million gain on property disposals.

Other items affecting net noncash expenses were individually immaterial.

Net noncash expense items included $433.6 million of depreciation and amortization, deferred income tax expense of $4.8 million, asset impairment of $28.6 million, stock-based compensation expense of $14.9 million, gain on early extinguishment of debt recognized as a component of interest expense of

$11.2 million, loan cost amortization of $5.0 million, accretion of bond discount of $2.5 million, and a $1.8 million gain on property disposals.

Items necessary to reconcile from net income to cash flow provided by operating activities included net noncash expenses of $462.4 million for the year ended December 31, 2023.

Net noncash expense items included $403.1 million of depreciation and amortization, $21.3 million of deferred income tax expense, $7.0 million of stock-based compensation expense, loan cost amortization of $4.8 million, asset impairment of $3.6 million and accretion of bond discount of $1.7 million.

Partially offsetting the net noncash expenses was an $6.1 million gain on property disposals.

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Changes in Operating Assets and Liabilities

The change in trade accounts and other receivables, including accounts receivable from related parties, represented a $19.0 million use of cash in 2023.

The change in cash was primarily due to the timing of customer payments.

The change in trade accounts and other receivables, including accounts receivable from related parties, represented a $88.3 million source of cash in 2024.

The change in cash was primarily due to the timing of customer payments and collections of insurance proceeds.

The change in trade accounts and other receivables, including accounts receivable from related parties, represented a $19.0 million use of cash in 2023.

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The change in inventories represented a $134.5 million source of cash in 2024.

The change in cash resulted from a decrease in our finished goods inventories and lower input costs included in inventory values.

The change in inventories represented a $12.6 million source of cash in 2023.

The change in cash resulted from an decrease in our raw materials and work-in-process inventory values.

The change in inventories represented a $472.2 million use of cash in 2022.

The change in cash resulted from an increase in our raw materials and work-in-process inventory values due to higher input costs.

The change in prepaid expenses and other current assets represented a $33.3 million use of cash in 2024.

This change resulted primarily from a net increase in the commodity derivatives assets from favorable fair value positions, an increase from short-term available-for-sale investments, and the impact of foreign currency translation.

The change in prepaid expenses and other current assets represented a $17.8 million source of cash in 2023.

This change resulted primarily from a net decrease in the commodity derivatives assets.

The change in prepaid expenses and other current assets represented a $18.3 million source of cash in 2022.

This change resulted primarily from a net decrease in value-added tax receivables and prepaid property insurance.

Accounts payable and accrued expenses, including accounts payable to related parties, represented a $126.7 million source of cash in 2024.

This change resulted primarily from increases in litigation settlement and incentive compensation accruals.

Accounts payable and accrued expenses, including accounts payable to related parties, represented a $68.7 million use of cash in 2023.

This change resulted primarily from the timing of payments.

Accounts payable and accrued expenses, including accounts payable to related parties, represented a $263.3 million source of cash in 2022.

This change resulted primarily from the timing of payments as well as increased prices for feed ingredients, transportation and packaging materials.

The change in income taxes, which includes income taxes receivables, income taxes payable, deferred tax assets, deferred tax liabilities, reserves for uncertain tax positions and the tax components within accumulated other comprehensive

loss, represented a $8.9 million use of cash in 2023.

This change resulted primarily from the timing of estimated tax payments and lower profitability in 2023.

The change in income taxes, which includes income taxes receivable, income taxes payable, deferred tax assets, deferred tax liabilities, reserves for uncertain tax positions and the tax components within accumulated other comprehensive loss, represented a $109.4 million source of cash in 2024.

This change resulted primarily from the timing of estimated tax payments and higher profitability in 2024 which increased our income tax payables and reduced income tax receivable.

This change resulted primarily from the timing of estimated tax payments and higher profitability in 2022.

This change resulted primarily from the timing of estimated tax payments and lower profitability in 2023.

Cash Flows from Investing Activities December 29, 2024 December 31, 2023

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Proceeds from property disposals 15.4 19.8

Purchase of acquired businesses, net of cash acquired — (9.7)

Cash used in investing activities $ (460.8) $ (503.4)

Capital expenditures were incurred for growth projects, such as the Athens, GA expansion and the South Georgia protein conversion plant, and to improve operational efficiencies, system enhancement projects, and to reduce costs for the years ended December 31, 2023 and December 25, 2022.

Proceeds from insurance recoveries reflects cash received on property insurance recoveries related to the Mayfield, Kentucky tornado that occurred in December 2021.

Capital expenditures during the two years were incurred for growth projects, such as the Athens, GA expansion and the South Georgia protein conversion plant, and to improve operational efficiencies, information technology system enhancement projects, and to reduce costs for the years ended December 29, 2024 and December 31, 2023.

Proceeds from property disposals were primarily for the sale of a farm in Mexico and other miscellaneous equipment.

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Payment on early extinguishment of debt (0.2) (13.8)

Distribution of equity under Tax Sharing Agreement between JBS USA Food Company Holdings and Pilgrim’s Pride Corporation (1.6) (2.0)

Purchase of common stock under share repurchase program — (199.6)

Proceeds from contribution (payment of distribution) of capital under Tax Sharing Agreement with JBS USA Holdings 1.4 (1.6)

Cash provided by (used in) financing activities $ (150.9) $ 116.7

Proceeds from revolving line of credit and long-term borrowings are primarily from the offerings of our 2033 and 2034 Senior Notes, as well as borrowings on our 2021 U.S.

Credit Facility and our U.K.

and Europe Revolver Facility.

Payments on revolving line of credit, long-term borrowings, and finance lease obligations are primarily due to the paydown of our term loans and revolving notes on our 2021 U.S.

Credit Facility, the completed tender offer of our 2027 Senior Notes, and repayment of borrowings on our U.K.

and Europe Revolver Facility.

The payment of capitalized loan costs relates to the offering of 2033 and 2034 Senior Notes and the execution of the U.S.

Revolving Syndicated credit facility in 2023.

The payment on early extinguishment of debt primarily relates to the tender-offer payment of the 2027 Senior Notes.

The distribution of equity under the Tax Sharing Agreement is the 2022 distribution of equity that was paid in the first quarter of 2023.

Payments on revolving line of credit, long-term borrowings and finance lease obligations during 2024 are primarily related to open market repurchases of outstanding senior notes.

The proceeds from contribution of capital under the Tax Sharing Agreement with JBS USA Holdings during 2024 were an allocation made during tax year 2023 for payment of historical tax adjustments.

Payments on early extinguishment of debt during 2024 are transaction fees related to the bond repurchases.

Proceeds from revolving line of credit, long-term borrowings and finance lease obligations during 2023 are primarily from the offerings of our 2033 and 2034 Senior Notes as well as borrowings on our U.S.

and Europe Credit Facilities.

Payments on revolving line of credit, long-term borrowings, and finance lease obligations during 2023 are primarily due to the paydown of our term loans and revolving notes on our 2021 U.S.

Credit Facility, the completed tender offer of our 2027 Senior Notes, and repayment of borrowings on our Europe Credit Facility.

The payment of capitalized loan costs during 2023 relates to the offerings of our 2033 and 2034 Senior Notes and the execution of our 2023 U.S.

Credit Facility.

The payment on early extinguishment of debt during 2023 primarily relates to the tender-offer payment of our 2027 Senior Notes.

The distribution of equity under the Tax Sharing Agreement during 2023 is the 2022 distribution of equity that was paid in the first quarter of 2023.

Long-Term Debt and Other Borrowing Arrangements

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For a description, refer to Part II, Item 8, Notes to Consolidated Financial Statements, “Note 13.

Obligor Group Summarized Financial Information

All of the senior unsecured registered notes (collectively, the “Pilgrim’s Senior Notes”) issued by Pilgrim’s Pride Corporation prior to December 31, 2023 are fully and unconditionally guaranteed by Pilgrim’s Pride Corporation of West Virginia Inc., JFC LLC, Gold’n Plump Farms LLC and Gold’n Plump Poultry LLC (the “Subsidiary Guarantors”).

See “Note 13.

Debt” of our Consolidated Financial Statements included in this annual report for additional descriptions of these guarantees.

The following tables present summarized financial information for Pilgrim’s Pride Corporation parent company only (as issuer of the Pilgrim’s Senior Notes) and the Subsidiary Guarantors (together, the “Obligor Group”), on a combined basis after the elimination of all intercompany balances and transactions between Pilgrim’s Pride Corporation parent company only and the Subsidiary Guarantors and investments in any non-obligated subsidiary.

Summarized Balance Sheets December 31, 2023 December 25, 2022

(In millions)

Current assets $ 2,106 $ 1,983

Current assets due from non-obligated subsidiaries (a)

Current assets due from related parties (b)

Noncurrent assets 2,063 1,945

Current liabilities 1,384 1,402

Current liabilities due to non-obligated subsidiaries (a)

Current liabilities due to related parties (b)

Noncurrent liabilities 3,578 3,459

(a) Represents receivables and short-term lending due from and payables and short-term lending due to non-obligated subsidiaries.

(b) Represents receivables due from and payables due to JBS affiliates.

Summarized Income Statements Year Ended December 31, 2023

(In millions)

Net sales $ 10,104

Gross profit (a)

Operating income 293

Net income 49

Net income attributable to Obligor Group 49

(a) For the year ended December 31, 2023, the Obligor Group recognized $195.0 million of net sales to the non-obligated subsidiaries and no purchases from the non-obligated subsidiaries.

Capital Expenditures

We anticipate spending between $450 million and $500 million on the acquisition of property, plant and equipment in 2025.

Capital expenditures will primarily be incurred to grow our operations, improve efficiencies, to reduce costs, and for system enhancement projects.

We expect to fund these capital expenditures with cash flow from operations.

Capital expenditures will primarily be incurred to grow our operations, improve efficiencies, to reduce costs, and for information technology system enhancement projects.

We expect to fund these capital expenditures with cash flow from operations and cash on hand.

Contractual Obligations

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(a) Long-term debt is presented at face value and excludes $ 24.2 million in letters of credit outstanding related to normal business transactions.

Long-term debt includes the Live Oak CHP Project PACE Loan.

For a description, refer to Part II, Item 8, Notes to Consolidated Financial Statements, “Note 13.

(b) Interest expense in the table above assumes the continuation of interest rates and outstanding borrowings as of December 29, 2024.

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and the approximate timing of the transaction.

W e expect cash flows from operations, combined with availability under the U.S.

Revolving Syndicated Facility, the Mexico BBVA Credit Facility and the U.K.

and Europe Revolver Facility to provide sufficient liquidity to fund current obligations, projected working capital requirements, maturities of long-term debt and capital spending for at least the next twelve months.

W e expect cash flows from operations, combined with availability under the U.S., Mexico, and Europe Credit Facilities to provide sufficient liquidity to fund current obligations, projected working capital requirements, maturities of long-term debt and capital spending for at least the next twelve months.

Pillar II Tax Initiative

The Organization for Economic Cooperation and Development (“OECD”) is an international organization made up of 38 member countries that work on establishing international standards seeking solutions to a series of social, economic, and environmental challenges, from improving economic performance, creating jobs to promoting solid education and combating international tax avoidance.

Regarding the fight against tax avoidance, the Base Erosion Profit Shifting (“BEPS”) project was created in 2013, which is an initiative of the G20 (Group of twenty countries with the largest economies) together with the OECD, aimed at implementing 15 measures to combat tax avoidance, improve the coherence of international tax rules, and ensure a more transparent tax environment on the international stage and to avoid the abuse of tax norms that result in erosion of the tax base, mainly through profit shifting to destinations with more favorable taxation or no taxation.

Pillar II is part of one of OECD's most recent initiatives, known as BEPS 2.0, is intended to address tax issues related to changes in business models in a globalized environment.

The goal of Pillar II is to create a global minimum taxation system for multinational companies with an annual global turnover exceeding EUR 750 million, aiming to implement a balance in the global income tax collection of these companies, which may consist of additional taxation for economic groups.

In short, this additional taxation aims to ensure the payment of a minimum effective global rate of 15%, per jurisdiction, where the multinational group operates.

Starting in 2024, Pillar II rules come into effect in various countries, impacting several multinationals and their subsidiaries groups operating in these jurisdictions.

During the initial three years, transition rules (Safe Harbor) simplify the calculations of the effective rate per jurisdiction, enabling adaptation to the affected multinational groups.

Although the implementation of Pillar II offers uncertainties in the US legal system, the Company and its subsidiaries are monitoring the potential impacts that this new rule may bring to the Group.

During 2023, the Company conducted Safe Harbor analysis using 2022 financial data for the jurisdictions where the Company operates.

The results of this preliminary analysis indicate that some countries within the Group may be subject to the additional payment of income tax under the rules of Pillar II.

However, the percentage of additional payment cannot be accurately estimated as of the time the issuance of these Financial Statements, particularly due to the fact that the impact of Pillar 2 will be based on 2024 results, which cannot yet be known.

Global Minimum Tax

The Organization for Economic Co-operation and Development (“OECD”) is an international organization composed of 38 member countries that work together to establish international standards and develop solutions for various social, economic, and environmental challenges.

These solutions range from improving economic performance and job creation to promoting quality education and combating international tax evasion.

Regarding the fight against tax evasion, the Base Erosion and Profit Shifting (“BEPS”) project was launched in 2013 as a collaboration between the G20 (a group of the world's 20 largest economies) and the OECD.

The project aims to implement 15 measures to combat tax avoidance, enhance the consistency of international tax rules, and ensure a more transparent global tax environment.

It seeks to prevent the misuse of tax regulations that result in the erosion of the tax base, particularly through profit shifting to jurisdictions with more favorable or no taxation.

Pillar II is part of one of the OECD’s most recent initiatives, known as BEPS 2.0, which aims to address tax challenges arising from evolving business models in a globalized economy.

The goal of Pillar II is to establish a global minimum tax system for multinational enterprises (“MNEs”) with annual consolidated revenue exceeding €750 million.

This additional taxation seeks to balance the global allocation of corporate income taxes and ensure that multinational groups pay a minimum effective tax rate of 15% per jurisdiction where they operate.

Starting in the 2024 calendar year, the Pillar II rules came into effect in several jurisdictions, impacting multinational companies operating in these markets.

However, during the first three years of implementation, transitional rules (Safe Harbor) have been introduced to simplify the calculation of the effective tax rate per jurisdiction, facilitating the adaptation of multinational groups to the new requirements.

As the Group operates in multiple countries that have adopted the global minimum tax as of 2024—including France, Ireland, Luxembourg, Malta, the Netherlands, and the U.K.—the Company has been closely monitoring the potential impacts of these new regulations and, to date, does not anticipate significant material exposure to this tax.

Recent Accounting Pronouncements

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While there may be master agreements, the contract is only established when the customer’s order is accepted by us.

We account for a contract, which may be verbal or written, when it is approved and committed by both parties, the rights of the parties are identified along with payment terms, the contract has commercial substance and collectability is probable.

We account for a contract, which may be verbal or written, when it is approved and committed by both parties,

the rights of the parties are identified along with payment terms, the contract has commercial substance and collectability is probable.

We evaluate the transaction for distinct performance obligations, which are the sale of our products to customers.

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Goodwill is not amortized but is tested for impairment on an annual basis in the fourth quarter of each fiscal year or more frequently if impairment indicators arise.

For goodwill, an impairment loss is recognized for any excess of the carrying amount of a reporting unit’s goodwill over the implied fair value of that goodwill.

For goodwill, an impairment loss is recognized for any excess of the carrying

amount of a reporting unit’s goodwill over the implied fair value of that goodwill.

Management first reviews relevant qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50 percent), that the fair value of a reporting unit is less than the unit’s carrying amount (including goodwill).

If management determines it is more

likely than not that the carrying amount of a reporting unit goodwill might be impaired, a quantitative impairment test is performed.

If management determines it is more likely than not that the carrying amount of a reporting unit goodwill might be impaired, a quantitative impairment test is performed.

Management has the option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the quantitative impairment test.

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We consider reporting units that have 20% or less excess fair value over carrying amount to have a heightened risk of future goodwill impairment.

In 2022 and 2021, we reviewed relevant qualitative factors and determined that no indicators of goodwill impairment existed for our Moy Park, Pilgrim’s Food Masters, Pilgrim’s Mexico, and Pilgrim’s U.S.

In 2022, we reviewed relevant qualitative factors and determined that no indicators of goodwill impairment existed for our Moy Park, Pilgrim’s Food Masters, Pilgrim’s Mexico, and Pilgrim’s U.S.

reporting units.

Our Pilgrim’s U.K.

reporting unit reported goodwill of $2.1 million and $1.8 million at December 25, 2022 and December 26, 2021, respectively.

reporting unit reported goodwill of $2.1 million at December 25, 2022.

These amounts were considered immaterial to warrant quantitative goodwill impairment testing.

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This amount was considered immaterial to warrant quantitative goodwill impairment testing.

Our Moy Park reporting unit had goodwill of $784.8 million at December 31, 2023.

In estimating the reporting unit’s fair value, we generally assumed revenue growth would normalize to slightly below the weighted average long-term inflation rate for the countries in which the reporting unit operates.

We also assumed margins in future years would increase through the projection period as the reporting unit continues to remove costs from operations through rationalization projects then normalize in the long-term as we believe this is consistent with market participant views in an exit transaction.

The current year results are not indicative of future market participant expectations in an exit transaction primarily due to current challenging market conditions associated with continued inflationary pressures in the countries in which the Moy Park reporting unit operates.

Based on the outcome of the quantitative test, management determined that no goodwill impairment existed in the Moy Park reporting unit as of December 31, 2023;

however, the Moy Park reporting unit does have a heightened risk of future goodwill impairment as the excess fair value over carrying amount of the reporting unit was less than 20%.

An increase in the discount rate of 25-50 basis points or a reduction in estimated long-term margins by 75-100 basis points across all future projected years, with all other assumptions unchanged, would have caused the carrying value of this reporting unit to exceed its fair value, which may have resulted in material goodwill impairment loss.

Our Pilgrim’s Food Masters, Pilgrim’s Mexico and Pilgrim’s U.S.

reporting units had goodwill of $329.4 million, $127.8 million and $41.9 million, respectively, at December 31, 2023.

In estimating the reporting units’ fair value, we generally assumed revenue growth would normalize to the approximate weighted average long-term inflation rate for the U.K., Ireland, Mexico and the U.S., respectively.

We also assumed margins in future years would normalize over time as we believe this is consistent with market participant views in an exit transaction.

The current year results, as well as the first year of projected results, are not indicative of future market participant expectations in an exit transaction as product price increases have lagged behind increased input costs that resulted from inflationary pressures experienced in the U.K., Ireland, Mexico and the U.S.

during 2022 and early 2023.

Based on the outcome of the quantitative tests, management determined that no goodwill impairment existed in the Pilgrim’s Food Masters, Pilgrim’s Mexico, or Pilgrim’s U.S.

reporting units as of December 31, 2023, and the reporting units do not have a heightened risk of future goodwill impairment as the excess fair value over carrying amount of each reporting unit exceeded 20%.

Based on the outcome of the quantitative tests, management determined that no goodwill impairment existed in the Moy Park, Pilgrim’s Food Masters, Pilgrim’s Mexico, or Pilgrim’s U.S.

reporting units as of December 31, 2023.

On July 1, 2024, the Company effectively completed a reorganization within its Europe reportable segment.

The previous reporting units were Moy Park, Pilgrim's UK, and Pilgrim's Food Masters.

The new reporting units are Fresh Pork/Lamb, Fresh Poultry, Food Service, Meals, and Brands & Snacking.

As a result of this reorganization, the Company reassigned assets and liabilities to the applicable reporting units and allocated goodwill using the relative net assets approach.

The Company then performed an interim impairment test on the reporting units on both a pre- and post-reorganization basis.

There was no impairment recognized as a result of these tests.

As of December 29, 2024, the Company assessed qualitative factors to determine if it was necessary to perform quantitative impairment tests related to the carrying amounts of its goodwill.

Based on these assessments, the Company determined that it was not necessary to perform quantitative impairment tests related to the carrying amount of its goodwill at that date.

Other intangible assets with indefinite lives are not amortized but are tested for impairment on an annual basis in the fourth quarter of each fiscal year or more frequently if impairment indicators arise.

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We consider indefinite-life intangible assets that have 20% or less excess fair value over carrying amount to have a heightened risk of future impairment.

Our 2022 and 2021 indefinite-life intangible assets impairment analyses did not result in an impairment charge.

Our 2022 indefinite-life intangible assets impairment analyses did not result in an impairment charge.

In 2023, we experienced an increase in long-term treasury rates that management determined could negatively affect discount rates, which are used in estimating the fair value of the reporting units.

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Based on the outcome of the quantitative tests, management determined that no material impairment existed as of December 29, 2024.

The estimated fair values of two indefinite-life intangible assets did not exceed their carrying amounts by more than 20% at December 31, 2023.

One brand reported in the U.K.

and Europe reportable segment had a carrying amount of $36.1 million at December 31, 2023.

For this brand, a hypothetical increase in the discount rate of approximately 25-50 basis points, with all other assumptions unchanged, would have caused the carrying amount of this brand to exceed its fair value, which may have resulted in impairment loss.

A hypothetical decrease in the royalty rate of this brand of approximately 25-50 basis points, with all other assumptions unchanged, would have caused the carrying amount of this brand to exceed its fair value, which may have resulted in impairment loss.

One brand reported in the Mexico reportable segment had a carrying amount of $0.8 million at December 31, 2023.

Potential future full impairment of its carrying amount would not be considered a material impairment loss.

We generally assumed brand revenue growth rates in future years would normalize over time as we believe this is consistent with market participant views in an exit transaction.

The current year results are not indicative of future market participant expectations in an exit transaction primarily due to the expected temporary impacts of continued inflationary pressures and volatile market conditions.

We do not currently consider any of our other indefinite-life intangible assets, which had aggregate carrying amount of $543.5 million at December 31, 2023 to be at heightened risk of future impairment.

The Company additionally assessed if the Pilgrim’s Europe reorganization indicated that any carrying amounts of its non-goodwill intangible assets might not be recoverable.

The reorganization did not result in any change in business use for any of the intangible assets and therefore, the Company determined no indicators were present that required us to test the recoverability of the asset group-level carrying amounts of its Europe intangible assets at that date.

As of December 29, 2024, the Company assessed qualitative factors to determine if it was necessary to perform quantitative impairment tests related to the carrying amounts of its intangible assets not subject to amortization.

Based on these assessments, the Company determined that it was not necessary to perform quantitative impairment tests related to the carrying amount of its intangible assets not subject to amortization at that date.

Identifiable intangible assets with definite lives, such as customer relationships and trade names that we expect to use for a limited amount of time, are amortized over their estimated useful lives on a straight-line basis.

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We sponsor four qualified defined benefit pension plans, two nonqualified defined benefit retirement plans, and one defined benefit postretirement life insurance plan.

Some of these plans are administered by a board of trustees made up of management within the participating companies and representatives

from associated labor groups while others are administered by an investment committee made up of management from the participating company.

Some of these plans are administered by a board of trustees made up of management within the participating companies and representatives from associated labor groups while others are administered by an investment committee made up of management from the participating company.

We use independent third-party actuaries to assist in determining our pension obligations and net periodic benefit cost.

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All other assumptions reflect estimates of future experience and considering relevant historical information, such as credible plan experience, from representative populations and relevant plan characteristics.

The mortality assumption reflects experience from representative populations, based on the Pri-2012 Private Retirement Plans Mortality Table Report issued by the Society of Actuaries (“SOA”) in October 2019 and the Mortality Improvement Scale MP-2021 Report issued by the SOA in October 2021.

The mortality

assumption reflects experience from representative populations, based on the Pri-2012 Private Retirement Plans Mortality Table Report issued by the Society of Actuaries (“SOA”) in October 2019 and the Mortality Improvement Scale MP-2021 Report issued by the SOA in October 2021.

It is reasonable to expect that changes in external factors will result in changes to the assumptions noted above that are used to measure pension obligations and net periodic benefit cost in future periods.

During 2024, we terminated our Pilgrim’s Pride Pension Plan for Legacy Gold Kist (“LGK Plan”) and our Pilgrim’s Pride Retirement Plan for Union Employees (“Union Plan”).

The termination included settling all outstanding obligations through a combination of lump-sum payouts to participants who elected to receive one and through a purchase of annuities for the participants who did not elect a lump-sum payout.

In order to fund the lump-sum payments and purchases of nonparticipating annuity contracts, all invested assets within each of the two plans was liquidated.

The remaining assets within the two plans at the end of the year represents an excess of the liquidated assets over the amount of outstanding obligations at time of termination.

These assets will be split between an amount transferred to our qualifying 401(k) retirement plan and an amount reverted to the Company less applicable excise taxes in Q1 2025.

We evaluated the termination of our LGK and Union Plans to confirm if this transaction met the definition of a settlement as defined under ASC Topic 715 Compensation—Retirement Benefits , which defines a settlement as “a transaction that is an irrevocable action, relieves the employer (or the plan) of primary responsibility for a pension or postretirement obligation, and eliminates significant risks related to the obligation and the assets used to effect the settlement.” The termination of our LGK and Union Plans was an irrevocable action that relieved us from the pension obligations through the payment of lump-sum payouts and nonparticipating annuity purchases using the liquidated assets of the plans.

Additionally, through the termination and settlement of all obligations, we eliminated the significant risks associated with maintaining the obligations and assets.

Through this analysis, it was determined we met the criteria of a full settlement of the pension obligations, we applied settlement accounting which required us to recognize the net loss remaining in accumulated other comprehensive loss at the time of settlement as a net loss in Miscellaneous, net on the Statement of Income for the year ended December 29, 2024.

Business Combination Accounting .

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“Adjusted EBITDA” is calculated by adding to EBITDA certain items of expense and deducting from EBITDA certain items of income that we believe are not indicative of our ongoing operating performance consisting of:

(1) foreign currency transaction losses (gains), (2) transaction costs related to business acquisitions, (3) costs related to litigation settlements, (4) restructuring activities losses, (5) property insurance recoveries, and (6) net income attributable to noncontrolling interest.

(1) foreign currency transaction losses (gains), (2) costs related to litigation settlements, (3) restructuring activities losses, (4) loss on settlement of pension from plan termination, (5) inventory write-down as a result of hurricane, and (6) net income attributable to noncontrolling interest.

EBITDA is presented because it is used by us and we believe it is frequently used by securities analysts, investors and other interested parties, in addition to and not in lieu of results prepared in conformity with U.S.

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GAAP results and using EBITDA and Adjusted EBITDA only on a supplemental basis.

(Unaudited) Year Ended

Reconciliation of Adjusted EBITDA

December 29, 2024 December 31, 2023

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EBITDA 1,934,400 951,743

Foreign currency transaction losses 20,570 30,817

Transaction costs related to acquisitions — 948

Foreign currency transaction losses (gains) (10,025) 20,570

Litigation settlements expense 167,228 39,400

Restructuring activities losses 93,388 44,345

Loss on settlement of pension from plan termination 21,649 —

Inventory write-down as a result of hurricane 8,075 —

Property insurance recoveries — 21,124

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$ 1,086,438 $ 321,574

Foreign currency transaction losses 20,570 30,817

Restructuring activities losses 44,345 30,466

Transaction costs related to acquisitions — 948

Foreign currency transaction losses (gains) (10,025) 20,570

Litigation settlements 167,228 39,400

Loss on early extinguishment of debt recognized as a component of interest expense (a)

Restructuring activities losses 93,388 44,345

Loss on settlement of pension from plan termination 21,649 —

Inventory write-down as a result of hurricane 8,075 —

Loss (gain) on early extinguishment of debt recognized as a component of interest expense (a)

(11,211) 20,694

Property insurance recoveries — 21,124

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$ 5.42 $ 1.69

(a) The loss on early extinguishment of debt recognized as a component of interest expense was due to the repurchase of the Senior Notes due 2027.

(a) The gain on early extinguishment of debt recognized as a component of interest expense in 2024 was due to the bond repurchases.

The loss on early extinguishment of debt recognized as a component of interest expense in 2023 was due to the repurchase of the Senior Notes due 2027.

(b) Net tax impact of adjustments represents the tax impact of all adjustments shown above.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis