JBS N.V.

Good morning and welcome to JBS second quarter of 2026 results conference call. At this time, all participants are in listen-only mode. Following management's remarks, we will open the floor to a question-and-answer session, and instructions on how to participate will be provided at that time. Please note that to ensure all analysts have an opportunity to ask a question, we kindly request that each analyst limit themselves to just one question. 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 JVS. Such expectations are highly dependent on the industry and market conditions and therefore are subject to change. Our president with us today, Gilberto Tomazoni, Global CEO of JVS, Guilherme Cavalcanti, Global CFO of JBS, Wesley Batista Fidio, CEO of JBS USA, and Christiana Seas, Investor Relations Director. Now I'll turn the conference over to Gilberto Tomazoni. Mr. Tomazoni, you may begin your presentation.

is on leading the business and ensuring a smooth transition. We have been planning this succession carefully from a position of stress and nothing changed in our strategy, our priorities, or the way we operate. This decision reflects the strength of the company we have built. Over the past several years, we have transformed JBS in many ways. Building a more diversified, more global, and more resilient business. Our dual listing was a defining milestone in that journey, positioning the company for its next phase on value creation. With a strategy clear and a strong leadership team in place, I believe this is the right moment for JBS to begin in the next chapter of Underweight Leadership. Turning to our results, the second quarter once again demonstrated the resilience of our global operating model in an environment that remains complex and volatile. Supply and demand dynamics vary across geographies and proteins. While currency movements take disruption in geopolitical events under far more complexity. Against this backdrop, our priorities are clear. Improving efficiency, protecting margin, and assessing commercial performance, allocation production to the markets where we create the most value. Adjusted net income was 218 million U.S. dollars. Adjusted EBITDA, totaled 1.143 billion U.S. dollars under IFRS, with a margin of 6%, and 1.3 billion U.S. dollars under U.S. GAAP, with a 5.3% margin. Compared to the first quarter, profitability already showed an improvement in the majority of our business units. Net income was significantly affected by not recurring items. While important to understand, these items do not change how we assess the business. Our focus is on operating performance, cash generation, and Balance Sheets Discipline. Performance improved across several businesses during the quarter, although important parts of our portfolio still operate in a challenging environment. While USB continues to operate in a challenging environment, we have reorganized our operating structure and are very confident as a result of those I will leave the discussion to the business to ask who will provide more details on the quarter and our outlook for beef and pork in North America. In Australia, results improve further, supported by robust global demand for beef and attractive export opportunities. Before moving on, I would like to comment briefly on the strategic partnership we announced last Friday with Danantara Investment Management. The transaction includes a US$2.5 billion equity investment by Danantara in exchange for a 25% stake in our Australia and New Zealand operations. Together, the additional Funding capacity expected through the joint venture. This gives us access to up to US$5 billion to fund acquisition, greenfield projects and other growth opportunities across Indonesia and Southeast Asia. This creates a well-capitalized platform to accelerate our expansion in one of the fastest-growing Protein consumption region in the world. While preserving the strength of GBS balance sheets and reinforcing Australia as a strategic hub within our global operations. Importantly, does not change how we manage the business. Our Australia-New Zealand operations remain fully consolidated under the same leadership and operating model. With that, let's turn to our operation reforms. Global beef fundamentally remains constructive, although conditions vary considerably across markets. Supply is limited in several regions. Demand remains resilient, and our global footprint allows us to direct products to the market where returns are the strongest. JVF Brazil delivered a strong quarter, driven by export demand and disciplined commercial execution. Under IFRS, adjusted EBITDA totalled to $169 million, with a margin of 5.9%. Even with elevated CAO price, JVF reported its highest EBITDA for a second quarter. A CAO Availability has improved in Brazil. Our focus has been on maximizing the value of every animal through our integrated commercial network. China remains an important destination. A recent shift in trade flow reinforced the importance of maintaining balanced exposure across export and domestic markets. By balancing volumes across China, other markets Export markets and the domestic market, we protect margins and maximize value per animal. Our domestic business is another important competitive advantage. Through the Friboi brand and a long-standing customer relationship, we work alongside retailers and categories partners, helping them to grow value across the beef categories. During the quarter, our barbecue portfolio performed particularly well. We have expanded commercial initiatives with major retailers across Brazil. In chicken, both Fluvis Pride and Seara delivered solid results, although market dynamics evolved differently across regions. At PPC, demand remained healthy across retail and food service. Although industry supply expanded faster than demand, even so, results improved from the first quarter as operating conditions normalized. Plans of upgrades were completed and expended assets continued to mature. At CR, margins remained strong despite a tougher year-over-year comparison. Unless a favorable... Sorry... led several accuracy environments in changing export market dynamics. The business grew volumes, reflecting improvements in operating, quality, and commercial execution. We see further opportunities to improve mix, distribution, and execution in domestic markets, while converting volume growth into sustainable profitability. Our priorities for the second half are clear, execution and cash generation. We expect an average increase during the quarter and reducing the remaining priorities. We are focused on strong cash generation, disciplined work in capital management, and a prudent capital allocation. The environment remains dynamic, but our priorities are unchanging. We are focused on execution, regeneration, and disciplinary capital allocation. With a diversified portfolio, strong market position, and experienced teams around the world, we believe we are well positioned to create value through the cycle. Thank you, and I will turn now the call over to Wes.

Amazoni, thank you for everything you've done for JBS over the past 15 years, and congratulations on the leadership you have shown. You have lived our values every day, challenged our teams to keep raising the bar, and helped us deliver stronger results. We've worked together for more than a decade, and I've learned a lot from working alongside you, and I'm very grateful for the trust and partnership we've built over the past years, which will help ensure a smooth transition and continuity in our strategy and priorities. My focus remains the same, operational excellence, Discipline Capital Location, Customer Service, and creating long-term value across our diversified global platform. We'll continue to live our values, strengthen our culture, and build on the tremendous work you've done over the past eight years. We'll keep evolving, growing, and making JBS an even stronger company for the future. With that, let me turn to our U.S. operations. The second quarter reflected resilient protein consumption in the United States, Despite a challenging environment for the beef industry, where tight cattle supplies and historically high cattle costs continue to pressure margins, even so, U.S. beef delivered a quarter of solid improvement. Our beef EBITDA margin improved from a negative 3.9% in the second quarter of last year to a negative 1.3% this year, reflecting an important step forward despite the ongoing challenges of the cattle cycle. Over the past several quarters, we have improved plant performance, optimized our operating footprint, strengthened our commercial capabilities, and increased productivity across our plants. Many of the operational initiatives we've been working on are already translating into better results, and the announced capacity optimization will continue to contribute progressively as they are fully implemented. At the same time, we are beginning to see early signs that industry fundamentals are moving in the right direction. The gradual reopening of the Mexican border and the first indications of herd rebuilding reinforce our confidence that supply and demand are heading towards a healthier balance over time. The reopening of the Mexican border is particularly important. The expected reopening of the three ports of entry should restore most of the historical flow of cattle from Mexico into the United States. Cattle from Mexico have represented about 5% of U.S. water, so restoring that flow is very meaningful for the industry. We also expect many of the first cattle crossing the border to be heavier than what they used to be prior to the border closure. That should allow them to reach water weight much sooner than normal. Assuming the ports reopen as expected, we believe we'll continue to see an increasing demand Cattle available for slaughter during the first quarter of 2027, with slaughter volumes returning to a more normal level by the second quarter. Turning to pork. Market fundamentals proved more challenging during this quarter. Even so, our pork business delivered another quarter of solid performance. The down margin reached 8.9% compared to 6.5% a year ago. Our pork business once again demonstrated its ability to compete at the highest level. We'll continue focusing on operational excellence, customer service, disciplined capital allocation, and continuous improvement. Those are the levers we control, and they position us to create greater value over the long term as cattle supplies recover. I'll now turn the call over to Guilherme.

Thank you, Tomazoni and Wesley. Before we move on to the quarter's operating results, I would like to highlight that, starting in the second quarter, we voluntarily began We believe this initiative represents a significant step in our strategy of alignment with the U.S. capital markets and may span our eligibility for inclusion in a more ample group of stock indices. In this regard, I would like to highlight JDS inclusion in the Russell 1000 and Russell 3000 indices in June. This inclusion, as well as the potential for inclusion in additional indices going forward, is key to expanding our investor base, increasing liquidity, enhancing global visibility, and unlocking value to shareholders. Let's now move on to the operational and financial highlights of the second quarter of 2026. Net sales reached a record of $24 billion for the second quarter. Adjusted EBITDA in IFRS totaled $1.4 billion, which represents a margin of 6% for the port. Adjusted EBITDA in US GAAP totaled $1.3 billion, which represents a margin of 5.3% for the port. Adjusted operating income was $790 million, with a margin of 3.3% in IFRS, and $866 billion in US GAAP, with a margin of 3.6. The quarter's net loss was $102 million, with a negative EPS of 10 cents. In addition to the year-over-year decline in operating results, it also reported $319 million increase in net financial expenses. The main drivers were $172 million in premiums, interest, and costs related to the tender offer for the Bond and Vecra Brazilian Local Venture, of which $147 million had a cash impact. It's worth remembering that this reflects the liability management we carried out in the first quarter in which we issued $2.5 billion in bonds at a more attractive rate and longer tenors. Market to market of derivatives, net of exchange rate variation of $53 million. Monetary restatement and high interest expenses related to increasing debt which together amounted of approximately $120 million. Additionally, the net loss was also impacted by the final calculation of the bargaining price gain of the acquisition of Montiqueir Alimentos with no cash impact, totaling $81 million, and antitrust settlements, totaling $133 million. Excluding the non-recurring items adjusted, That income was $218 million, and the earnings per share was worth $0.20 for the quarter. Free cash flow. Free cash flow in the second quarter of 2026 improved by $155 billion year over year, reaching a positive of $130 million, compared to a cash consumption of $55 million in the second quarter of 2025. This improvement was mainly driven by working capital, particularly the accounts receivable line, reflecting higher receivable discounts and larger advance payments from Chinese customers related to JBS Brazil's exports. The accounts payable line also increased, mainly driven by higher cattle prices and increased the lotter volumes, particularly in Brazil. This improvement was partially offset by a decline in adjusted EBITDA of $324 million, Thank you very much. Total capex expenditures increased by $163 million, of which $159 million was expansion capex. Finally, we had lower tax payments year-over-year of $135 million. Not considering guidance, but simply updating the cash flow break given the exercise for this year, we expect $5.1 billion in 2026 to even buy. Capital expenditure of $2 billion in 2026, $400 million reduction versus the initial estimate. Working capital expectation of negative $350 million of working capital in 2026, a $500 million improvement versus last year, driven by high receivable discounts and destination previously. Legal settlements. of $100 million already realized in 2036. Biological assets of $850 million flat versus 2025. Interest expenses of $1.3 billion and increase of $150 million versus the initial estimates due to higher net debt. Living expenses flat at $500 million in 2026 and effective tax rate estimated at 25%. We continue to strengthen our liquidity position. In August, we announced an increase in our revolving credit line from $3.5 billion to $4.2 billion, while reducing the owing cost of this line. Our cash liquidity, combined with the revolving credit facility, totaled approximately $7.7 billion. Our average debt term reached 15.3 years and an average cost of 5.7%. As we anticipated in our last conference call, due to the $1 billion dividend payment in June and the typical cash consumption of the first half of the year, our net leverage ended up the quarter at 3.1 times. It's likely above our long-term target of keeping net debt at the top between two and three times. It's important to highlight that we have no significant debt maturities for the next five years until 2031. and up to 2032, all the coupons are below the current treasury rates and 35% of our gross debt is beyond 2050. With that in mind, I would like to open up for the question and answer session.

The floor is now open for questions from investors and analysts. As previously mentioned, we kindly request that each analyst limit themselves to just one question. Any questions, please press the raise hand button. Thank you. Ladies and gentlemen, our first question comes from Tiago Bortolucci with Goldman Sachs. Mr. Bortolucci, you may go ahead.

Yes, hi. Thank you. Good morning, everyone. Good morning, Tiago. My question, thank you, Wesley. I can start on what has been a remarkable job, not just in JBS, but also in the animal protein industry. And also wishing you, Wesley, continued success on your extended responsibilities in a chair that I think is sensitive not only to your investors, but also for the country, right? We'll be looking forward to keeping up with the conversation. My question is on how you're seeing, Wesley, the state of the U.S. demand, right? Throughout your press release, When I look to the beef cutout, it seems it has reached somehow of a ceiling, not necessarily following the seasonality. And this is the reason for my question, right? What gives you comfort that demand remains healthy, and why should we think that spreads can't erode more prominently going forward? This is the question.

Thank you. Good morning. So we still think that demand is very strong. What we have seen, and we can tell this by everything we look on protein trends in general, there is plenty of data in the market about that, and we can see that when we talk to N.V. Pork demand a little bit weaker than chicken and beef. Beef demand is very strong. And I actually think that, again, I keep on saying, you know, a few years ago, I cut out about $300. I would have thought it was going to be a very tough, you know, we would have a tough time achieving that. And we've reached way above that, almost into the $400. So, look, I think demand is super strong. What we are seeing is... Where the consumer is consuming that protein changing and going more into retail, more eating at home than away from home and food service, that's something we've seen. But again, for the time being, as we see the marketplace right now, we think the protein demand will continue to be strong.

That's helpful. Thank you very much.

Thank you, and our next question comes from Mr. Ricardo Alves with Morgan Stanley. Mr. Alves, you may go ahead.

Hello, everybody. Tomazoni, Guilherme, Wesley. Congrats to both of you. Tomazoni on the great tenure, for sure, and Wesley on the CEO appointment. Looking forward to continuing the interaction. This is great news for everybody. I have another one on the U.S., but specifically on the business side, the question that we asked the last time, you know, the spreads indicated much of your second quarter versus the first quarter, but your numbers obviously showed actually a pretty significant improvement. So I wanted to explore more of that. I remember, Wesley, during the JBS day, You know, you spent quite some time talking about the in-house initiatives that you guys were looking at to improve the beef margins. So, I'm just wondering if there are more details that you can provide there, you know, some of the initiatives that may have already kicked in and helped the quarter. And if you can, you know, specifically say what you're doing differently that would be helpful. Or even if, you know, there are a couple of issues in the first quarter that were not present. If we're able to quantify that, that would be helpful, just so that we have a better base now to model the U.S. beef going forward. But it does seem like there has been a significant deal risking of a division that some people were really concerned about. Thank you very much.

Good morning. So, first, when we look at the comp, obviously, last year, the same quarter we were comparing last year, was a quarter where we had Some extraordinaries. It was a tough quarter and had some other impacts like hedging that kind of mixed the number a little bit. And that's the second quarter of 2026 does not have anything that's very material. There's only minor things and so nothing related to hedging or anything like that.

So the comparison is something to keep in mind.

But when you just compare... The second quarter to the first quarter, and just the business in general, it was relatively solid performance given the market conditions. So, look, we used it to run our business in two different business units. And the reason for that is when we acquired Swift and afterwards the Packerland acquisition, Packerland focused on a completely different type of cattle, different types of size of plants, different kind of cattle procurement. So we used it to run those two business units very separate. And the market has changed quite a lot. And actually that separation didn't make sense anymore. So we went ahead and put those two business units together and run nowadays the business unit as one. And look, there is on both sides of the business there is strength that one had and the other one didn't have. And we think that there is going to be a lot of synergies there. And a lot of them are You know, on the sales side, we've done a lot of work over the past three, four years in terms of yields. There is always a little bit more, but most of the plants that I presented in New York was not related to yields. It was related to being able to sell more ground beef, sell more value-added ground beef, sell more value-added items. You might have seen that we actually had announced the plant closure of Solderton, but now we have reversed and decided to run that as a value-added facility. Just shows the size of the demand that we have actually for value-added items and that we can continue to supply. So a lot of that's going to be in terms of sales that we're going to get most of that difference. I actually had a breakdown there on the presentation that talked about that, but we are seeing that and we are very confident. Actually, after we've done this integration, we're even more confident. The last thing I'll say is most of that capture has not been seen yet, and we are just beginning. So we've performed this result that we have here. We are just getting started on that 3% improvement plan that we think we have.

That's very clear. Thanks, Wesley.

And our next question comes from Leonardo Alansar with XP Inventimentos. Mr. Alansar, you may go ahead.

Good morning, everyone. Thanks for taking my question. I want to congratulate you for your move and also for you, Wesley. I've been enjoying discussing USB-free fuel a lot. And sticking with that point, Wesley, just to understand it better. So Mexican border is open now, but It's expected for those few cattle to arrive by the end of the month, right? And it's just one port open. I wanted to hear from you, both from the volume that's expected, the pace of this volume growing. You said already that you're expecting even heavier cattle to come from Mexico. But if we talk about the pace of imports and connect that information with capacity utilization, would you say this opening is already... For any changes in strategies, would you say, talking about this historical level of 1.5, 2 million heads per year, would you expect that number to happen by the end of this year, only 2077? or at least the volume will be enough for us to expect a higher capacity utilization. Just understand how you've seen the pace of impact from the Mexican border opening that just happened. Or if it's more like since it opened, there's a ceiling for the cattle prices and there's already helping margins, but then no direct, not real impact yet. Just to get your ideas on that.

Thank you. Good morning. So, yeah, obviously we are We're forecasting the market and there's a lot of things that we don't know. But what we know is the first port is going to open is here on the 24th. That's the port of Douglas, Douglas, Arizona. You know, that port by itself could probably handle 300, 400,000 habits. Just an estimate. It's difficult to predict. Something around 300, 400 is. So a third of what the usual... Thank you very much. had capacity of, you know, flow capacity. So those three ports should be able to handle a big part, if not 100% of the normalization of the border. Again, these are all estimates that we have, right? We're looking at historical numbers and looking at numbers provided in the public, for the public. So, you know, I think it's going to be possible within those three ports. It's those three ports opening to have a big part of what Mexico uses to trade Only two states, Mexican states, got approval to export to the U.S., Ochoa and Sonora. Those two states are the biggest states. Both of them are over two-thirds of the Mexican flow of cattle to the U.S. The other thing that I would mention is, yes, we have information from the market that, obviously, that cattle used to come very young to the U.S. and get backgrounded in the U.S., Once the border shut, and especially after two years of the border shutdown, that cattle had to be backgrounded somewhere else, and it was backgrounded in Mexico. So there is cattle that's in the process of being backgrounded, or cattle that's backgrounded and just waiting to go to feedlot and to get finished in Mexico. So obviously there will be a part of feedlots in the U.S. actually buying that cattle and actually having that flow happen, but we don't see any reason why that wouldn't happen. We also think that there is You know, because the 1.2 million head of cattle that came were just the calf crop that was destined to the U.S. On top of that, there is the cattle that's being cut. So we think that the cattle that's available is bigger than the traditional 1.2. So on one hand, you only have two states, so about two-thirds of the cattle being able to come to the U.S. On the other hand, you probably have a little bit of a bigger number of cattle in further phases of the cattle feeding and cattle Thank you very much. And our next question comes from Brujan Sharma with Stevens.

Mr. Sharma, you may go ahead.

Hey, good morning. Thanks for the question. And Tomazoni, congrats on a successful tenure here. And Wesley, congrats to you on the new role and really looking forward to continuing to work together here. I really wanted to get your thoughts on On U.S. Beef, and I know everybody's asking about Mexican border flow, so maybe I'll ask. Just updated thoughts on heifer retention, and can you maybe give us your thoughts, any updated thoughts on the timeline for fed cattle supplies to be rebuilt? Was the... What you saw in the report, was that a surprise, just given all the commentary with drought concerns regarding heifer retention in the U.S.? Good morning.

So, yeah, we obviously think that heifer retention in U.S. cattle, you know, herd review is more timid than we expected and than all that we wished for to get back to a more balanced Thank you very much. is that, you know, for us to wait for cattle herd reveal that takes a little bit longer with another one, you know, million head, million point five head, whatever that, you know, ends up coming from Ecto is a much more different situation than without that. So it gives us a lot more, you know, a lot more balance and a lot more, you know, structure for us to see and wait this cattle reveal without the margins that we have seen in 2025, 2026. I think it probably brings us more to a little bit, it all goes according to plan, right? And all the ports open. We should go back to an equilibrium more like what we saw in 2024, maybe 2023, depending on the amount of cattle that comes. So I think it brings us a lot more, and it gives us more patience to see what's going to happen. Weather is a big deal. Weather is a big deal for sure, and we will have to see what comes out of that. One part of the number that doesn't get shown for them that I think is relevant, and it and we have anecdotally heard that, you know, it seems pretty promising, is the heifer retention and just cattle review that we're seeing in Canada. We don't see obviously in those reports, but it's very relevant because it's an open, you know, it's a market that, you know, U.S. cattle goes to Canada, Canadian cattle goes to the U.S., so that's a big deal. And look, I think we should see, you know, over the next years, a couple of years, three years, starting to see much stronger review of But again, it's a very different situation having the Mexican cattle and waiting for a more longer term herd rebuild in the U.S. The other thing that I'll just mention, not to take this too long here, but when you look at, you know, there's two things that you need to look at, right? Hyper retention, but also the amount of cows that get processed to slaughter, right? And that number has been going down very fast as well, so If you look at the number compared to 2026 or 2022, we're processing half of the beef cows that we were processing in 2022. So I think that's relevant as well.

Okay. Thank you for the call.

Thank you. And our next question comes from Henrique Bustolan with Prodesco BBI. Mr. Bustolan, you may go ahead.

Hello, everyone. Thank you for taking my questions. And Tomazoni, Wesley, congratulations on the transition and wishing you both all the best. My question is on Seara. We see another strong quarter, right, but margins weakening relative to Q1. So I'd just like to hear a little more if you could qualify where the sequential margin drop came from, if we're mostly talking about export markets or the domestic market. and what are the main, you know, trends you are seeing for both of these going into the second half of the year. Thank you very much.

Thank you, Ricardo, for your question. Thank you for your words. Seattle, let's say, you're still, if you compare the partner with below, but it's still a healthy margin, right? 14%, 15% is really a healthy margin for this business, is what we look for for this business. When you compare quarter to quarter, there is some difference. The main difference is the pork. Pork price in domestic market was below. Some of the market ticket was below, the other would be higher. But look, in reality was... Many change across the one category to the other category, but if I make a summary, we are weaker in the domestic market.

Thank you very much, Tomazoni. And our next question comes from Benjamin Thurer with Barclays. Mr. Thurer, you may go ahead.

Yeah, good morning, and I'll just follow suit with those wishes to you, Tomazoni, and Wesley, putting forward working more with you together. Just coming back to the U.S., and we haven't talked much about the pork business, so if you could maybe explain us a little bit more what you're seeing within the pork. You've highlighted that you expected it to kind of like gain a little bit of these like replacement dynamics, but it hasn't turned out to be the case. So the demand picture for pork, so let me just talk a little bit what you're seeing, what are the differences across the different cutouts, and what's been a little bit of a headwind, if you want to call it this way. Not major, just a little bit obviously in terms of profitability in pork as we look into where it is, where it stands right now, slightly below what and usually the target is for you guys chosen to the very high end of the seasonal budget. Thank you.

Dan, good morning. So pork has had a weaker demand than chicken and beef for sure. And look, I think the biggest thing is, you know, first of all, if you look at just the volume process by the industry, it's kind of stable and the cutout is lower. So that just tells you that. Thank you for joining us. You know, it's a quarter, so I wouldn't say that that's a long-term trend that we should expect for the coming, you know, quarters and years. But that's something just to keep in mind that we've seen a little bit more weakness coming from processors that we sell through and just in our prepared foods business in general, a little bit weaker demand than usual. All right.

Thank you very much.

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

Hi. Good morning, everybody. So, first of all, congrats to Tomazoni on the tenure and Leslie for the new position. So, very well deserved. My question is on the U.S. poultry industry, which clearly is suffering from low spreads, especially on the commodity part of the business. So my question to you guys is where you guys think we are in this cycle? So if you already see some sort of capacity reduction and production cuts in the industry, or when do you guys think we should see that happening, especially on, like I said, on the most commoditized part of the business, especially in the big bird? So that's my question. Thank you very much.

Thank you, Lucas. In Q2, chicken supply grew 4.5% in the U.S. It was above expectations, above expectations of the industry, because the growth was driven by the higher egg sets and chicken placement, but the most significant was the Better bird survival rates compared with last year. When respiratory disease and low pest adding influence increases the mortality. Means that the industry taken historical rates of the survival rates and based on that places the chicken for this year. and how the rate was better, we had more chickens. What do we expect from? We expect that the Indus will be a church in the coming months. It ought to be. If you look for historical, Indus is very disciplined in terms of to manage the supply demand of this business.

Thanks Tomazoni.

And our next question comes from Tiago Duarte with BTG. Mr. Duarte, you may go ahead.

Yeah, hello, guys. Good morning, everybody. Tomazoni Wesley, safe for me. Congrats on the transition and good luck to you both. Yeah, so I'll stick to the chicken business, but in a different way. It's interesting to see how Pilgrims has been suffering from this higher supply of chicken and translating into lower chicken prices and hence into lower margins. And while Seara doesn't seem to be suffering from from the same phenomenon and you guys mentioned in the press release strong export markets and the middle eastern market in particular sustaining good profitability and the chicken exports out of brazil so my question to you is how you see those two moving parts unfolding in the coming months and quarters whether do you see Thiago, thank you for the question and

I think you mentioned that as compared to Pilgrim and Venciara, they are really different. Even both of them export, but they export different types of products. They compete in very few markets, really in Africa, with La Coates. Otherwise, there is no competition in that. And for and Seara Export are very important. For people, it is less important. That show, this comes from this a little bit, the explanation about what is different. In U.S., people have a diversified portfolio. I think you had the opportunity to hear from Fabio. But what is so pretty in the U.S. is the category of big birds. This is a commodity, that the product that we sell for processors. We increase too much the volume, and the demand is not enough to meet the supply. And because of this, this is... And Puris has a part, 25% of the business, and around 25% of the business is commodities. and this part of the video is over. Even before we transformed to factories and from Big Bird to Crazy Red, because Crazy Red demand is strong, as I mentioned when they talk about the U.S. market for beef, consumers eat more at home. And then because of that, the demand in retail for chicken increased. But, of course, As we have a balanced portfolio, we suffer with the commodity. And we see that this, I mentioned in the question that I answered before, if you look for the historical, normally the industry, they have a very disciplined supply in the U.S. for this last, I think, many years. And this we are expecting because the Additional supply we have in the market, it was because, mainly because of the historic, we planned to park the survival rates of chicken lower than was in the fact, in the past, because of that oversupply. When you go to Brazil, we see now that the less numbers of of the Brazilian Association, that the production grew 5.6%. I think this, but export increased 20%. Means that because of that, the availability in domestic market was 3.1. In export market, sorry, in export market, Demand remains healthy, even at price below previous levels. We believe that when you look ahead, it's difficult to predict or forecast what we have. I think just the number of associations means that they forecast for 2000 to 2027, the production will grow 2.8%. and the export will be go through, the availability will be 2.7%. If that numbers is the normal numbers that the market could be upset because it's normal growth of the market. It's the same. We see that today we have the level of placement of chicken is higher, but we see that The demand for export in Brazil is high, and I believe that it will be possible to compensate, not all of them, but industry should be normal if you look for the prices. Again, the story, you see that industry normally rebalance when we have this balance in the market. We see this quarter, the next, the coming quarter, We will be, I think we are confident in terms of what marketing, what we will be able to do in Seara. And see, it's something that we are not managed, something that we not control. We focus in our key water control, we control the mix, we control the price, we control the diversification of chains, and what we are doing.

Thank you so much, Tomazoni. Our next question comes from Mrs. Isabella Simetone with Bank of America. Mrs. Simetone, you may go ahead.

Thank you. Good morning, everyone. My colleagues, congratulations to Amazonia. It's been a pleasure interacting with you in the last years. And Wesley, congratulations as well. We wish you all the best. in the years ahead. And my question is on Australia, right? I think we saw a very important growth in top line, right? Which you mentioned about JBS Brazil, how China quota impacted exports. But I wanted to understand if we can assume this is the same reason why Australia's top line has been so strong this quarter. And on top of that, How can we think performance ahead, not only in terms of revenues, but in terms of maybe the impact on the profitability of this division? Thank you.

Isabela, Australia is, we see that we are very excited with the With the business in Australia, we are in the middle of the cycle. We see two, three years very positive for our Australia business. And all of the business in Australia performs well. When you look for the Australian results below the comparison of the same period last year, Many because of the currency, but business. And because of the climate, we have very, we dry a lot in Australia, and we are not able to bring the cow to the plants, and because of the volume, we are able to produce more, and this is what we are seeing in the next quarter. And As you saw that with this joint venture we have done, we did an entire, we recreate a platform for growing Australia and Indonesia and South Africa. Australia is really well, Asia, sorry, Asia. And Australia is very well positioned, it's close to this market. And we have a strong team and look, we are bullish on Australia.

Thank you, Tomazoni.

Thank you. And our next question comes from Heather Jones. You may go ahead, Mrs. Jones. Mrs. Jones, if you are speaking, you may be muted. As a way to get connected with Mr. Jones, the next question comes from Gustavo Tiano from Itao. Mr. Tiano, you may go ahead.

Hello, everyone. Thanks for taking my question. And congrats, Wesley, on your new position at the company. And best of luck to you both and Tomazoni in Europe. A new role starting next year. And my question actually relates to free cash flow going forward. And a couple of months ago in the JDS Day presentation, it was mentioned that CapEx for 2026 should be slightly lower than previously stated in other conference calls, reaching something close to $2 billion. But my question is what to expect for 2027? And if you understand that the current cycle conditions at this point, especially with the Mexican border reopening, enables a re-acceleration of the expansion tactics agenda for next year, and if the JV in Australia changes your appetite towards accelerating the consolidated investment level going forward since this new variable was added into the equation last week. Thank you very much.

Thank you, Gustavo. So, beginning with the drug venture... That's a way for us to continue with our agenda of growth and accelerate this agenda in that region of the world without putting more pressure on the balance sheet. So bear in mind that Danantara is to put $800 million in first place and then adding up to $2.5 billion in equity. And then after that, we start to raise that. So Basically, there will be no pressure in terms of free cash flow from the investments in that region, given this capital structure that was designed. Now, coming back to JDS's consolidated free cash flow, remember that last year we had a working capital consumption of $850 million, mainly due to increasing prices. which continue to happen this year. We see that this second quarter we had record revenues of $24 billion, so increasing prices, increasing revenues, drags working capital. However, we had anticipation of Chinese, and we have receivables discounts. So with that, that's why we are forecasting that this year the working capital consumption will be $500 million better. For next year, again, we should, because of the U.S. beef, and if we don't have any inflationary pressure, we should be a good year for in terms of using working cattle. But of course, that all depends on grain prices, cattle prices, and fed-out prices. With all the other lines already in line, I think... and just interest expenses also in line with what we've been presenting. So this all depends now on each one estimates of the data to plug into this equation.

Thanks. That was clear.

Thank you. And for the next question, we will go back to Mrs. Heather Jones from Heather Jones. You may go ahead with the questions, Mrs. Jones.

Good morning. Thank you for the questions. and my congratulations to Tomazoni and Wesley as well. My question is for Wesley on U.S. beef. So in 24, Douglas represented about 15% of imports from Mexico. So I was just wondering if there's been some expansion there that would allow for greater flows to that port. And if Mexico cattle flows return to levels approximately two-thirds of where they were prior to the closing, Is that factor alone enough to return JBS's U.S. beef EBITDA levels to break even? Thank you.

Heather, good morning. So, yeah, for sure, it wasn't as much as what I'm predicting, but obviously there were many options, right?

There were options all over Texas. All of the options were open.

So, obviously, if you have just Douglas opening, it's going to be more than if you have Douglas and plus

Five more ports, or I don't know how many there were back then.

So we expect, obviously, especially for a while, it's going to be the only port that's going to be more than usual. And the way that we are looking at that volume, it's pretty simple. We look at the volume, how we estimate. We're basically looking at what was a high volume day back then before, you know, what was a very high day for Douglas, how much could Douglas handle, and we're just multiplying that and

and trying to estimate how much that means in a year. So that's how we're getting that number.

Look, it's obviously, we're dealing with a lot of assumptions here and things that we're going to know pretty soon if they're going to come up, you know, turn out to be as expected or not. And we're going to know pretty soon, actually, how this all is going to look like. But we think that, you know, with another, let's say just another median head of cattle in the balance here, If we're right now at around 1, you know, between 2 and 1% negative, we should be closer to a break-even. I don't know if it's going to be enough for us to be at a break-even or above break-even. I'm pretty sure that a medium head makes a big difference. It's the size of a two-shift plant, right? So it's a big deal. So we think that it's going to be much better. How much, if it's going to be above or right below the break-even, I'm not quite sure yet. It's going to be much better than where we are right now. That's what I mean. That's what I think.

Wonderful. Thank you so much.

Thank you.

Thank you. And our next question comes from Mateus Enfield with UBS. Mrs. Enfield, you may go ahead with your question.

Hi. Morning. Thank you for the time and also wish both Tomazoni and Westlake success in the new positions. On my question, I know you touched a bit on this for SEATA. But when I get a sense of the demand landscape in Brazil, retailers are quite negative on the outlook for the second half of 26 and early 2027. So my question is how you're seeing that if you're already seeing some impact on demand weakness throughout the operations there, some shift from beef to pork to chicken to eggs, and what's your perception around that and the risk on margins if we do see Thank you for the question, Matheus.

I think we have not seen so far weak demand for our products. We see strong demand for all of the products. The price of pork is a little bit The present, because the supply, the demand is higher than, sorry, the supply is higher than demand, but for chicken, the chicken and the value added, our value added business, the demand is strong. It's normal, it's normal, we are not seeing the present. We don't see that people will be downgrade in terms of one product to the other. We see that protein now is on the top of the priority for all of the population. Many reasons, you know, that many reasons of protein become very strong globally, in Brazil even. And this GLP-1 in Brazil is spent a lot now with the... New brands come to the market of this GLP-1. I believe the accessibility of them will be higher. And we are so positive on that. Of course, we see that we have today, when you look for the market, as I mentioned, I answered Tiago before, that there is a higher production of volume of chicken and And I think the English should do the balance there. Even the domestic export of chickens is very high and the demand, global demand is high for chickens. But I think it will be revealed the level of the chicken place in Brazil. And about the margins, look, we're not given forecast of that, but you can see that the We have a strong vein of efficiency inside of the company, innovations and new mix, and we are confident that Ciara will continue to deliver good margin.

Perfect, thank you. And our next question comes from Renata Cabral with Citi. Mrs. Cabral, you may go ahead.

Thanks for taking my question. Good morning, everyone. Congratulations to Wesley for the appointment. Wishing you every success in the role. And Tomazoni, congratulations on the extraordinary run as a global CEO. So my question is, I'm going to shift to Brazil first. The company had a strong quarter with record second quarter and EBITDA growth. And exports were clearly an important part of that performance, particularly because of the purchase of China. And now we have July export data for the industry. So my question for you is, if you could help us to understand whether what you have seen so far in terms of exports volumes for the company and pricing is broadly in line with your expectations for this environment and looking through the reminder of the year, the second half, How should we think about China's demands and the ability to redirect the volumes to other markets?

Thank you, Renata.

I'll give you an overview about the beef in Brazil because it's a very complex environment now with the China quotas. Because based on the Current Expectations Brazil should resume production for China in October, with shipment restarting in November. And given the normal transit times, the commercial impact of those shipments will be reflected primarily in 2027.

As always, we continue to measure our commercial strategy dynamically.

Optimization, production allocation across export market to maximize in order to maximize development. But there isn't market that can accommodate the volume of 150,000 tons that China was exporting. This period that would be restart China and now we have this volume. The harvest of the animal has fallen 20%. In the first month. But the price of the life animal did not fall. And it should be fall because the animal is in the field. And I believe that the farmers have prepared for the end of the court. And the cattle, as I mentioned before, are there. And the price should fall and then we'll re-equilibrate the cut-out and the margin in this business because, of course, Brazil will be with this without the quota of China and probably with the European quota, European restrictions. I believe that we need to reduce the number of cattle harvested in Brazil. For this period, we don't have the coat of China. When the coat of China restarts again in October, that will be different. But so far, until October, we see that the price of cattle should fall, because the number of cattle harvested will fall. And I think Tripoi has unique conditions because we have brand, we have category management with the retails. I think when you combine the category management and the brand that we have, Thank you so much. Thank you.

Our next question comes from Guilherme Pelérez with Santander. Mr. Pelérez, you may go ahead with your question.

Good morning, Wesley, Tomazoni, Guilherme. Thank you for taking my question. Again, as everyone mentioned, congrats on the move, Wesley and Tomazoni. You'll be truly missed as one of the key executives on the protein space, and not only for GBS, but for the entire sector as a great voice. Defending the Sector Globally Now, right, so you have been all over the place in any divisions. And you get a company now that is a company listed in the U.S., a global player, which in the last couple of years changed a bit the strategy from M&A and integration as it was in the past towards more of an organic growth value added. So I want to take your thoughts, having experience in all divisions so far, Seeing every operation, what do you think lies ahead for the organization? What is the agenda that you will try to pursue? What will be the JBS of Wesley Fidu from now on?

Guilherme, thanks for the question. You know, the good thing about a transition that's internal, like what we're doing, is that there is a lot of continuity, right? You know, when you get a new CEO that comes from a market, from the market, or that's not on the day-to-day of the operations, and the guy's new, and, you know, they have to come up with something completely new and something completely different sometimes, right, just to, you know, maybe mark, you know, kind of what direction that they think is relevant, and that's exactly not the case, right? I mean, Tomazoni and I have been working together for the past 10 years, so a lot of what has been done within JBS for the past For the past decade here, in a lot of ways, I've had the privilege to be part of that team that was doing that, and I was alongside Tomazoni all the time here doing that. So you should not at all see JBS have a big change in the strategy and the way we do things. Again, because we are just one team, and we've been working together for all of that time, so there is a lot of alignment. in terms of leadership and in this transition here. The other thing, too, I would not at all consider a JBS of whether a JBS, you know, a JBS has 280,000 team members and a very, very strong leadership team that's, I think it's, you know, maybe I'm biased, but I think it's the best in the industry. So, I, you know, I think that that's something else that I'll just mention. Now, in terms of where we're going to go, you know, for sure we... We have a lot of new avenues of growth that have been opened in the last few years that need to continue to mature and need to continue to evolve. We just announced last week about this Holden Antara deal and all of the potential that we have in Southeast Asia. That's a market population of 700. If you consider the Asian block plus Oceania, Australia, New Zealand, right? Or New Zealand as well. You're talking about 750 million people. So it's a huge market that we trade a little bit but not very, very much that opens a whole new avenue of growth for us. Australia is a huge platform for us to get started in that huge competitive advantage for us to grow in that area of the world. We have the project in Oman that... Continues to grow our business in the Middle East. And, obviously, I'm talking about new geographies, but even in our traditional geographies, like the U.S., and continuing to evolve our agenda on brands, like what we're doing just there. In Brazil, a lot of the growth that we've done in Seara has been matured, but there's still some to go, and there's a lot for us to get done there. Our business in the UK is a business that gets talked relatively little about, but it's a great business, you know, about $5 billion business within programs that, you know, $5 billion that we don't talk quite as often. But anyway, we're going to continue to grow on the avenues that we have been growing, and you'll see a lot of continuity and alignment going forward. Well, thank you for your question, Guilherme.

Thanks, Wesley.

Thank you, and our next question comes from Ricardo Boiadi with Safra. You may go ahead, Mr. Boiadi. Mr. Boiadi, it's possible you may be on mute if you're trying to speak.

Hi. Good morning, everyone. I'd like to join the crowd here on the compliments. Tomazoni, congrats on a job well done. Thank you for the interactions during these years. It's been a pleasure and hope to keep in touch. And Wesley, congrats on the new role. Truly a well-deserved step and wish you all the best on the new position. My question is on Australia. I'd like to continue this conversation, Wesley, about the potential of Australia as a production platform. Obviously, you are relevant there, but in terms of GBS's global platform, it's not that relevant. So, in the scope of the partnership with Tenantara, when you look at the country's potential there in terms of grain production, land availability, and so on, How big an opportunity Australia could be, especially for the production of chicken in the future? I mean, logistics-wise, it seems to be very competitive, right, to have Australia as a production platform in chicken. So, how do you think about this and how is this being considered in the scope of the deal with Tenantara? Thank you.

Thank you, Ricardo, for the question. I think it's important to discuss a bit what is the long-term strategy of this partnership. It's to expand our investment capacity in Southeast Asia. And when we preserve our operating model and give us a financial discipline in full operating control, The priority in these first two years is to invest in the regions for Indonesia. Indonesia is the focus. And the main focus of us with this partnership is these first two years in Indonesia. Then, after that, we can invest in Australia or the other places in South Asia. But you mentioned that in Australia we are a very diversified platform, just we missed chicken. Of course, chicken is something that we have all the time considered the opportunity to enter this sector, but we didn't find the right conditions that we believe that it's appropriate for us to go in. That's but still open as an opportunity we don't have a pipeline of investment or acquisition to announce but in reality we are looking for opportunity that could be M&A or Greenfield and with a focus in Indonesia now and Why we are so confident? Because of the size of the market. We're talking about 604 million population in this area. And we cannot go along. It is something that is safe. And the way that we have organized this deal with creating conditions that we have, we are not, we are not, stress our balance sheet. And I think it was we have access to additional capital. It's not changing our investment discipline. At the same time, we can't catch the opportunity that this growth market, that growth consumption of proteins. I think it is and we have a strong team there. We didn't Change Business, and GBF made full responsibility for the management of the platform, and we will retain full operational control. I think this was a perfect movement in the strategic area for the increase in consumption of protein.

That's great, Tomazoni. Thank you very much.

Our next question comes from Carla Casella with J.P. Morgan. You may go ahead, Mrs. Casella. Mrs. Casella, if you are speaking, you may be on mute. Moving to our next question comes from Priya Ori Gupta with Barclays. This is Ori Gupta. You may go ahead with your question.

Hi, good morning. This is Teresa on for Priya. Thank you for taking our questions. And congrats to Tomazoni and Wesley on the transition to your new roles. We're really looking forward to work with you and wish you both the best. So our question is, will we continue to expect that net leverage will end the year at or below three times and in support of this, how should we think about the potential for any debt repayment over the rest of the year? Thank you.

Hi, thanks, Teresa. Yeah, bear in mind that on the last of month rail, we are replacing very strong, especially from the chicken U.S., if it does of last year, to a more normalized margins for chicken U.S. this year. So this is statistical effect. tends to pressure the leverage. However, second half of the year is where we generate the bulk of our free cash flow. So one thing probably tends to balance the other. So we're thinking that we'll be finishing the year in the levels more or less the same as we got in the second quarter, slightly above three times. And as we generate free cash flow, and even if they have no that matured in the short term. And because all of the coupons up to 2032 are below treasury, the efficient debt to be repurchased, I would say probably the 34, which have a 6.75 coupon, you still have $300 million outstanding there, and some 33s or 35s. But let's see how the second half behaves, and then Thank you.

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

Before we close, I want to just thank all of you for your kind words and Congratulations today for me on behalf of Wesley. I also thank you for the attention, respect, and support you have shown me over these past eight years. Our interaction has always been very productive. Your questions, your perspectives, even your challenges have helped us improve the way we communicate, sharpen our focus, and become a better company. I have learned a great deal from all of you. And of course, I want to thank our entire team around the world. Everything we have accomplished over these years has been a team effort, and I'm very proud of what we have built together. We still have a few important goals ahead of us, and my focus remains fully on leading JDS to deliver strong results and working closely with UASIS to ensure a smooth transition to successful transition. Thank you again for your trust, for your engagement in your partnership over all these years. Thank you.

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