Pilgrim's Pride Corporation

Good morning, everyone, and welcome to the fourth quarter and fiscal year 2023 Pilgrim's Pride Earnings Conference call and webcast. All participants will be in a listen-only mode. Should you need assistance, please send to a conference specialist by pressing the star key followed by zero. At the company's request, this call is being recorded. Please note that the slides referenced during today's call are available for download from the investor section of the company's website at www.pilgrim.com. programs.com. After today's presentation, there will be an opportunity to ask questions. At this time, I'd like to turn the floor over to Andrew Rogeski, Head of Strategy, Investor Relations, and Net Zero Programs for Pilgrims.

Good morning, and thank you for joining us today as we review our operating and financial results for the fourth quarter and fiscal year ended on December 31st, 2023. This morning, we issued a press release providing an overview of our financial performance for the quarter and the year, including a reconciliation of any non-GAAP measures we may discuss. A copy of the release is available on our website at ir.pilgrims.com, along with slides for reference. These items have also been filed as Form 8Ks and are available online at sec.gov. Fabio Sandri, President and Chief Executive Officer, and Matt Galvinoni, Chief Financial Officer, will present on today's call. Before we begin our prepared remarks, I would like to remind everyone of our safe harbor disclaimer. Today's call may contain certain forward-looking statements that represent our outlook and current expectations as of the day of this release. Other additional factors not anticipated by management may cause actual results to differ materially from those projected in these forward-looking statements. Further information concerning these factors have been provided in this morning's press release of Form 10-K and regular filings with the SEC. I would now like to turn the call over to Fabio Sandri.

Thank you, Andy. Good morning, everyone, and thank you for joining us today. For the fourth quarter of 2023, we reported net revenues of $4.5 billion. We had adjusted EBITDA of $310 million, and our adjusted EBITDA margin was 6.8%. Our Q4 performance demonstrated the continued effectiveness of our strategies of portfolio diversification, key customer focus, and operational excellence to create more stable results. The U.S. portfolio improved, giving growth with key customers in case-ready and enhanced production efficiencies with operational excellence in Big Bird. Our efforts to further add value to our portfolio through the prepared foods continue to gain momentum, given the growth of our branded offerings through retail and increased presence in food service. In our geographical diversification, the U.K. and European business continue to drive profitable growth from the impact of operational excellence efforts throughout our manufacturing network, increasing strength of key customers, and diversification through continued progress of our branded offerings. As for Mexico, the business in the quarter was impacted by weakened supply and demand fundamentals, but our efforts to diversify our portfolio through brands continue to flourish, as both new and existing offerings grew within the trade and customers alike, and we continue to grow with key customers across retail and food service. Our investments in operational excellence efforts to expand capacity and cultivate redundancy in live operation remain on track. For the fiscal year, net revenues were $17.4 billion. Adjusted EBITDA was $1 billion, with adjusted EBITDA margins of 6%. The U.S. faces depressed market conditions and elevated input costs in the first half of the year, but we maintain our leadership mindset and focus on controlling what we can control, the execution of our strategies to our relentless pursuit of operational excellence. As conditions evolved throughout the year, our business became increasingly well-positioned to capture the upside and further accelerate profitable growth. While pricing has not fully recovered to five-year averages, we're still navigating dynamic markets. Much changed through the past year. In the first half of 2023, there was substantial production growth and cold storage inventories above the long-term average. As a result, ample chicken supply was not fully offset by domestic demand, and increases in commodity chicken values typically experienced in the spring did not materialize. As we progressed throughout the year, given depressed market pricing and elevated cost environments, egg sets and chicks place fell, triggering more historical seasonal sets and placement patterns. When paired with growth in retail and food service demand later in the year, The overall slowdown of chicken production led to balanced markets and price movements aligned with historical patterns throughout Q3 and Q4. As for U.S. chicken supply, Q4 ready-to-cook production decreased 2.1% relative to last year, driven by fewer heads, despite slightly higher live weights. Starting in Q3 of 2023, we saw reduced egg sets on a year-over-year basis, and seasonal cuts at levels in line with the five-year average. Exits continue to trend in line with the five-year average throughout Q4 2023, and hatchability was similar to last year. Taken together, net-cheek placements later for production in Q4 declined year over year, reducing headcount. As indicated by sets, placements, and production data, supply in Q4 returned to more historical levels. Market pricing also declined seasonally, and trend near five-year average throughout the quarter, even with elevated production costs. While supply declined in the second half of calendar 2023, USDA broader production outlook suggests Q1 of 2024 to be on par with Q1 of 2023, followed by three-quarters of moderate growth, resulting in a yearly slight increase of 0.8%. This slight increase in chicken is coupled with a significant decline in beef production expected in 2024, as the USDA outlook suggests a 2.9 reduction for the balance of the year, as a smaller herd is expected to drive fewer cattle slaughter. Even with an expected increase in pork production of 2.20% and higher beef imports, U.S. implying net protein availability is expected to increase less than 1%. On the demand side for 2023, The U.S. retail market experienced positive pull in all categories. Fresh chicken was consistent with this overall trend as volume was 1.1 higher, but relatively flat in Q4 as white meat volume grew slow to levels compared to 2022. This differs from previous quarter where retail breast meat experienced large year-over-year growth. The white meat volume in Q4 was mostly impacted by an increase in dark meat offerings, especially more affordable cut. Starting the new year, demand for white meat has increased significantly and remains well-positioned as a great alternative to other proteins. Chicken, across other categories in the store, fare well in the quarter, as daily posted solid dollar and unit increases, while frozen value-added chicken continue to add incremental volume growth. The frozen commodity segment, which is much smaller than the value-added fresh and daily segments for chicken, continues its decline. Nevertheless, on the whole chicken, We provide its value to customers as a center of the template staple. The food service distribution channel continued its trend of higher volume sales with lower price levels. Similar to last quarter, chicken experienced volume growth in both value-added and commodity types across most subchannels. Encouraging signs of volume growth remain within the channel as chicken continues to serve a larger base of operators relative to prior year and realize increased buy rate. both of which had added to substantial increases compared to Q4 of 2022. The non-commercial subchannel maintained its trend, adding incremental volume throughout the quarter and the year. Turning to exports, global demand for chicken has been strong throughout the fourth quarter, given the global higher cost of other proteins and production movement disruptions in the Middle East. These disruptions have favored the U.S., as it backed few products delaying transit. In addition, Hypat, Avian Influenza, and some Southeast Asia countries are providing the U.S. additional opportunity as local supplies are tightening. As for Hypat, Avian Influenza, and U.S., the dynamics are relatively consistent with prior quarters, as most of our trading partners have adjusted their trade restrictions to minimize impacts as much as possible. Our manufacturing network across the United States also continues to enable access and service to multiple markets given our diversification of production facilities across several states and control zones. As for China, there has been limited movement on adherence to existing trade agreements. Since the majority of business is driven by chicken paws, there has been no material effect on broiler meat. The export market has also been impacted by an increased evolution by U.S. consumers to dark meat, as freezer inventories remain low relative to historical and season standards. As a result, overall stock levels remain relatively tight, providing further support for the overall market. Turning to feed grains, corn prices have eased as the supply picture in the U.S. has improved. A recently yield adjustment by USDA confirmed the 23-24 crop as a new record at 15.3 billion bushels. While some important weather periods lie ahead, With current forecasts for Brazil and Argentina to have a combined record production, global ending stocks for corn are forecasted to build significantly. Like corn, soybeans saw a recent adjustment to U.S. yields, which more moved forecast ending stocks 19% higher. South American soy production has been the key to recent price movement, with Argentina's production forecasted to rebound to 50 million metric tons from 25 million metric tons in last year's drought. USDA's Brazil forecast is currently 156 million metric tons, in line with last year's record production of 162 million metric tons. South America is continuing to price its global destination to compete with U.S. export demand. On top of soybean price reduction, soybean meal prices have fallen, as U.S. crush industry expansions yielded a record crush in Q4 of 2023. Argentina's rebound in soy production is playing a role in the global soy meal outlook as well. Soybean meal oil prices are also under pressure, as U.S. soy oil is facing competition from substitute fats and oils in food and feed, as well as renewable fuel channels. In a slightly different picture, wheat production is down year over year, and global ending stocks are forecasted to be tighter. In the U.S., Wheat acres for the 2024 harvest are lower as well. Nonetheless, prices have generally moved lower given the global feed-growing picture. Turning to the U.S. business, our consistent focus on execution of our strategies of key customer partnership, diversification, and operational excellence has sustained our profitability improvements despite uneven market fundamentals in the commodity segments and lingering inflation throughout the quarter. Our case-ready business continued to grow ahead of the industry given strong demand from key customers, enhanced promotional activity, and increased distribution through retail. Our offerings of differentiated higher attributes continues to gain momentum as we add the business throughout the quarter and beyond, further differentiating our portfolio. Big Bird continues to improve its operations through a combination of mixed optimization, live operation improvements, and labor effectiveness. These efforts continue to drive quarter-over-quarter improvements in production costs. Moving forward, we'll continue to invest in training and automation to drive further improvements in use and line efficiency. Small Bird continues to improve both volumes and profitability, giving robust demand from key customers and retail daily and QSRs. Performance was further aided by successful completing and startup of our Athens expansion project, strengthening our relationship with key customers and our operational excellence. reinforcing our foundation for profitable growth. Our efforts to further diversify our portfolio through value-added products continue to gain momentum, as Prepare Foods posted yet another strong quarter as volumes and profitability improved. Our branded offerings were exceptionally well-received as just there, and the Pilgrims brands collectively grew 59% compared to last year. Digital influence sales more than doubled, compared to last year, and it remains a key driver in our branded growth and repeat business. Food service also continues to increase marketplace traction through key customer relationships and targeted promotional activity. Moving forward, expanded distribution of our existing innovation through retail and further diversifying our portfolio in food service will be key to driving continued growth. Our investments in people over the past few years have resulted in a suitable net staffing and reduced turnover levels throughout our U.S. facilities. Even our sustained improvements, we were able to capture a significant portion of operational excellence initiatives throughout the plans. As for the U.K. and Europe, consumer sentiment has been steadily improved as inflation has shown signs of easing and real wage increase. Shockers? have also increasingly traded into chicken, pork sausage, and lamb relative to other categories. Given our diversified portfolio across proteins, our business was well positioned to capture those trends. Within retail, key customers grew faster than others throughout the trade and our offerings sold better than the category averages. Our branded portfolio continued to be particularly successful as net sales grew over 10% compared to the full year 2022. Richmond and rollover brands have been especially well received by customers. Throughout the sales have increased over 17% and 31% respectively. As consumers became increasingly confident in the overall economic outlook, prospects to further diversify through a recently launched brand innovation may become even more attractive. Our food service business remains relatively stable, even as consumers increase their at-home eating occasions, what can favor our strong retail presence. We continue to drive operational excellence throughout all aspects of our business. To that end, we streamline our management and back office, supporting during the quarter, giving our growth aspirations and diversified portfolio. Based on those efforts, we will increase our speed to market, enhance relationship with key customers, and further simplify our operations. We'll continue to explore alternatives to further drive profitable growth. In Mexico, throughout the quarter, the business experience weakened its supply and demand fundamentals from increased exports, imports, and lower exchange rates. Nonetheless, the team achieved positive margins during the quarter and improved profitability compared to last year through consistent execution of our strategies. Our presence with key customers continued to strengthen as volume increased double digits throughout the quarter. These efforts were further amplified by our efforts to diversify our portfolio through brands. Favoritos grew by 40% compared to Q3 and is nearly four times since the beginning of the year. Similarly, Unique Taste is up close to 20% for the quarter and has nearly doubled since the start of 2023. Also, the initial results from our recently launched Just Bear Fresh offering throughout retail has been very prominent. Our operational excellence efforts to expand our capacity remain on track, as we have completed construction of our hatchery and seed mill in Merida on schedule, with production expected to begin in March of 2024. Our efforts to enhance redundancy in live operations through relocation of our breeder farms is also progressing as planned. To date, we have finished over 60% of the project and anticipate on-schedule completion during the first half of this year. Our efforts to drive sustainability throughout our business continue to make progress. Throughout 2023, our teams identified innovative ways to improve our energy efficiency through updated processing and equipment management techniques. As a result, all regions improved their electrical and natural gas usage intensity. We continue to make progress for our social efforts, as Newsweek recently recognized Pilgrims as one of the America's greatest places for women and one of the America's greatest places for diversity. We also continue to invest in team member well-being through our Better Futures program, in which more than 490 Pilgrims team members and their children have enrolled in tuition-free higher education throughout 2023, and our Hometown Strong program that has approved more than 150 community projects for investments to date. We also continue our organic growth Our investments to support our key customer growth remained on target as our Athens expansion was completed on time and as planned. Performance to date has met our operational excellence goals, and production has achieved or surpassed quality and service expectations. Similarly, construction of our protein conversion facility in South Georgia is progressing as scheduled and anticipates a startup in March. We have already secured additional business with selected key customers, creating profitable growth in 2024 and beyond. Equally important, this investment further diversifies our portfolio and creates operational redundancy to ensure sufficient service level throughout our business. With that, Matt, if you can comment on our financial results.