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What changed in PILGRIMS PRIDE CORP's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of PILGRIMS PRIDE CORP's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+320 added−332 removedSource: 10-K (2025-02-13) vs 10-K (2024-02-27)

Top changes in PILGRIMS PRIDE CORP's 2024 10-K

320 paragraphs added · 332 removed · 248 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeThese products are sold either refrigerated or frozen and may be fully cooked, partially cooked or raw. In addition, these products may be breaded and/or marinated. Our prepared products include processed sausages, bacon, slow cooked, smoked meat, gammon joints, ready-to-cook variety of meat products, pre-packed meats, sandwich and deli counter meats, pulled pork balls, meatballs and coated foods.
Biggest changeOur prepared products include processed sausages, bacon, slow cooked, smoked meat, gammon joints, ready-to-cook variety of meat products, pre-packed meats, sandwich and deli counter meats, pulled pork balls, meatballs and coated foods. In 2024, our prepared foods products sales accounted for 10.3%, 65.8%, and 10.4% of our total U.S., Europe, and Mexico chicken and pork sales, respectively. Exported Products Overview.
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. Our plants are strategically located to ensure that customers timely receive fresh products.
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. Our plants are strategically located to ensure that customers timely receive fresh products.
Regulation and Environmental Matters The chicken, pork and prepared foods industries are subject to government regulation, particularly in the health, workplace safety and environmental areas, including provisions relating to the discharge of materials into the environment, treatment and disposal of agricultural and food processing wastes, the use and maintenance of refrigeration systems, ammonia-based chillers, noise, odor and dust management, the operation of mechanized processing equipment and other operations, storm water, air emissions, treatment, storage and disposal of wastes, handling of hazardous substances and remediation of contaminated soil, surface water and groundwater, by the Centers for Disease Control, the United States Department of Agriculture (“USDA”), the Food and Drug Administration (“FDA”), the Environmental Protection Agency (“EPA”), the Occupational Safety and Health Administration and state and local regulatory authorities in the U.S. and by similar 3 Table of Contents governmental agencies in the U.K., the Republic of Ireland, continental Europe and Mexico.
Regulation and Environmental Matters The chicken, pork and prepared foods industries are subject to government regulation, particularly in the health, workplace safety and environmental areas, including provisions relating to the discharge of materials into the environment, treatment and disposal of agricultural and food processing wastes, the use and maintenance of refrigeration systems, ammonia-based chillers, noise, odor and dust management, the operation of mechanized processing equipment and other operations, storm water, air emissions, treatment, storage and disposal of wastes, handling of hazardous substances and remediation of contaminated soil, surface water and groundwater, by the Centers for Disease Control, the United States Department of Agriculture (“USDA”), the Food and Drug Administration (“FDA”), the Environmental Protection Agency (“EPA”), the Occupational Safety and Health Administration and state and local regulatory authorities in the U.S. and by similar governmental agencies in the U.K., the Republic of Ireland, continental Europe and Mexico.
Our fresh products consist of refrigerated whole or cut-up chicken, frozen whole chickens, breast fillets, mini breast fillets and prepackaged case-ready chicken, and in the U.K., primary pork cuts, added value pork and pork ribs.
Our fresh products consist of refrigerated whole or cut-up chicken, frozen whole chickens, breast fillets, mini breast fillets and prepackaged case-ready chicken, and in the U.K., primary pork cuts, added value pork, pork ribs and lamb products.
We actively seek to identify and address consumer preferences by using sophisticated qualitative and quantitative consumer research techniques in key geographic markets to discover and validate new product ideas, packaging designs and methods.
We actively seek to identify and address consumer preferences by using qualitative and quantitative consumer research techniques in key geographic markets to discover and validate new product ideas, packaging designs and methods.
We respect our team members’ rights of association, including by joining labor unions and collective bargaining. Approximately 35.2% of our workforce are covered by a collective bargaining agreement. For additional information, see “Item 1A. Risk Factors - Our performance depends on favorable labor relations with our employees and our compliance with labor laws.
We respect our team members’ rights of association, including by joining labor unions and collective bargaining. Approximately 35.4% of our workforce are covered by a collective bargaining agreement. For additional information, see “Item 1A. Risk Factors - Our performance depends on favorable labor relations with our employees and our compliance with labor laws.
Information about our Executive Officers Name Age Background and Experience Dates Fabio Sandri 52 President and Chief Executive Officer September 2020 to Present Matthew Galvanoni 51 Chief Financial Officer March 2021 to Present Fabio Sandri was named the Chief Executive Officer in September 2020 and previously served as our Chief Financial Officer from June 2011 to March 2021.
Information about our Executive Officers Name Age Background and Experience Dates Fabio Sandri 53 President and Chief Executive Officer September 2020 to Present Matthew Galvanoni 52 Chief Financial Officer March 2021 to Present Fabio Sandri was named the Chief Executive Officer in September 2020 and previously served as our Chief Financial Officer from June 2011 to March 2021.
Net Sales for Primary Product Lines and Markets The following table sets forth, for the periods beginning with 2021, net sales attributable to each of our primary product lines and markets served with those products. We based the table on our internal sales reports and their classification of product types.
Net Sales for Primary Product Lines and Markets The following table sets forth, for the periods beginning with 2022, net sales attributable to each of our primary product lines and markets served with those products. We based the table on our internal sales reports and their classification of product types.
We attempt to mitigate the impact of price 2 Table of Contents volatility on our profitability by decreasing the amount of our products that are sold under longer term fixed-price contracts, broadening our product portfolio and expanding the variety of contracts within our book of business. To also manage this risk, we purchase derivative financial instruments.
We attempt to mitigate the impact of price volatility on our profitability by decreasing the amount of our products that are sold under longer term fixed-price contracts, broadening our product portfolio and expanding the variety of contracts within our book of business. To also manage this risk, we purchase derivative financial instruments.
Our case-ready chicken includes various combinations of freshly refrigerated, whole chickens, chicken parts in trays, bags or other consumer packs labeled and priced ready for the retail grocer’s fresh meat counter. Additionally, we are an 1 Table of Contents important player in the live chicken market in Mexico.
Our case-ready chicken includes various combinations of freshly refrigerated, whole chickens, chicken parts in trays, bags or other consumer packs labeled and priced ready for the retail grocer’s fresh meat counter. Additionally, we are an important player in the live chicken market in Mexico.
The Company has long-standing relationships with its sources of grain and other feed ingredients and expects to have an adequate supply for its present needs. Live chicks . The Company’s chicken operations purchase one-day old chicks from a few major breeders.
The Company has long-standing relationships with its sources of grain and other feed ingredients and expects to have an adequate supply for its present needs. 2 Table of Contents Live chicks . The Company’s chicken operations purchase one-day old chicks from a few major breeders.
We operate on the basis of a 52/53-week fiscal year ending on the Sunday falling on or before December 31. Any reference we make to a particular year (for example 2023) in the notes to these Consolidated Financial Statements applies to our fiscal year and not the calendar year. Fiscal year 2023 was a 53-week fiscal year.
We operate on the basis of a 52/53-week fiscal year ending on the Sunday falling on or before December 31. Any reference we make to a particular year (for example 2024) in the notes to these Consolidated Financial Statements applies to our fiscal year and not the calendar year.
JBS S.A., through its indirect wholly-owned subsidiaries (together, “JBS”), beneficially owns 82.54% of our outstanding common stock. We market our balanced portfolio of fresh, prepared and value-added meat products to a diverse set of customers across the U.S., the U.K. and Europe, Mexico and in over 115 other countries.
JBS S.A., through its indirect wholly-owned subsidiaries (together, “JBS”), beneficially owns 82.42% of our outstanding common stock. We market our balanced portfolio of fresh, prepared and value-added meat products to a diverse set of customers across the U.S., the U.K. and Europe, Mexico and in over 120 other countries.
Live pigs sourced from independent farmers make up approximately 65.8% of the total number of pigs processed by the Company each year. Although we generally expect adequate supply of live pigs in the U.K., there may be periods of imbalance in supply and demand. Trademarks We own registered trademarks which are used in connection with our business.
Live pigs sourced from independent farmers make up approximately 68.4% of the total number of pigs processed by the Company each year. Although we generally expect adequate supply of live pigs in the U.K., there may be periods of imbalance in supply and demand. Trademarks We own registered trademarks which are used in connection with our business.
The Company’s pork operations in the U.K. maintain a pig production base that makes up approximately 34.2% of the total number of pigs processed by the Company each year. Additionally, the Company’s pork operations procure live pigs for slaughter within a few days of purchase from numerous independent farmers throughout the U.K.
The Company’s pork operations in the U.K. maintain a pig production base that makes up approximately 31.6% of the total number of pigs processed by the Company each year. Additionally, the Company’s pork operations procure live pigs for slaughter within a few days of purchase from numerous independent farmers throughout the U.K.
Prior to his appointment to the Company, Mr. Galvanoni served as Vice President, Finance, of Ingredion Incorporated, a leading global ingredients solution company, since 2016. Mr. Galvanoni joined Ingredion in 2012, serving in the role of Global Corporate Controller and Chief Accounting Officer, where he managed the company’s accounting-related and external financial reporting responsibilities. Mr.
Galvanoni served as Vice President, Finance, of Ingredion Incorporated, a leading global ingredients solution company, since 2016. Mr. Galvanoni joined Ingredion in 2012, serving in the role of Global Corporate Controller and Chief Accounting Officer, where he managed the company’s accounting-related and external financial reporting responsibilities. Mr.
Some of the more significant owned or licensed trademarks used by the Company or its affiliates are Pilgrim’s®, Just BARE®, Gold’n Pump®, Gold Kist®, Country Pride®, Pierce Chicken®, Pilgrim’s® Mexico, Savoro, To-Ricos, Del Dia®, Moy Park, O’Kane, Richmond, Fridge Raiders and Denny.
Some of the more significant owned or licensed trademarks used by the Company or its affiliates include Pilgrim’s®, Just Bare®, Gold’n Plump®, Gold Kist®, Country Pride®, Pierce Chicken®, Pilgrim’s® Mexico, Savoro, To-Ricos®, Del Dia®, Moy Park, O’Kane, Richmond, Fridge Raiders and Denny.
Many of our pork sites are additionally certified by farm-to-fork traceability schemes including Royal Society for the Prevention of Cruelty to Animals Assured, Soil Association, Organic Farmers and Growers and Assured Food Standards. Human Capital Resources As of December 31, 2023, we employed over 61,200 persons. Our success is largely dependent on the skills, experience and efforts of our employees.
Many of our pork sites are additionally certified by farm-to-fork traceability schemes including Royal Society for the Prevention of Cruelty to Animals Assured, Soil Association, Organic Farmers and Growers and Assured Food Standards. Human Capital Resources As of December 29, 2024, we employed over 61,600 persons. Our success is largely dependent on the skills, experience and efforts of our employees.
Our food processing facilities and feed mills in the U.K., continental Europe and Mexico are subject to on-site examination, inspection and regulation by government agencies that perform functions similar to those performed by the USDA and FDA.
Our food processing facilities and feed mills in the U.K., continental Europe and Mexico are subject to 3 Table of Contents on-site examination, inspection and regulation by government agencies that perform functions similar to those performed by the USDA and FDA.
Although poultry and pork are relatively inexpensive in comparison with other meats, we compete indirectly with the producers of other meats and fish, since changes in the relative prices of these foods may alter consumer buying patterns.
Although poultry and pork are often relatively inexpensive in comparison with other meats, we also compete indirectly with the producers of other meats and fish, since changes in the relative prices of these foods can alter consumer buying patterns.
We believe our efforts to achieve and maintain brand awareness and loyalty help to achieve greater price premiums than would otherwise be the case in certain markets and support and expand our product distribution.
We believe our efforts to achieve and maintain brand awareness and loyalty could support achievement of greater price premiums than would otherwise be the case in certain markets and support and expand our product distribution.
Better Futures, which we launched in 2021, is the largest privately funded free community college program in rural America, offering free community college to our team members and their dependents. So far, over 1,634 team members or dependents have signed up and 390 have started their selected academic pathway. Employee Relations.
Better Futures, which we launched in 2021, is the largest privately funded free community college program in rural America, offering free community college to our team members and their dependents. So far, over 2,126 team members or dependents have signed up and 705 have started their selected academic pathway. Employee Relations.
In 2023, our export product sales accounted for 5.3% and 9.1% of our total U.S. and U.K. and Europe product sales, respectively. Market Overview. Our foodservice market principally consists of chain restaurants, food processors, broad-line distributors and certain other institutions. Our retail market consists primarily of grocery store chains, wholesale clubs and other retail distributors.
In 2024, our export product sales accounted for 4.4% and 9.3% of our total U.S. and Europe product sales, respectively. Market Overview. Our foodservice market principally consists of chain restaurants, food processors, broad-line distributors and certain other institutions. Our retail market consists primarily of grocery store chains, wholesale clubs and other retail distributors.
Key Customers Our two largest customers, which operate in the U.S., together accounted for approximately 13.2% and 12.8% of our consolidated net sales in 2023 and 2022, respectively. No single customer accounted for ten percent or more of our consolidated net sales in either 2023 or 2022.
Key Customers Our two largest customers, which operate in the U.S., together accounted for approximately 16.6% and 13.2% of our consolidated net sales in 2024 and 2023, respectively. No single customer accounted for ten percent or more of our consolidated net sales in either 2024 or 2023.
He earned his Master’s of Business Administration degree in 2001 from the Wharton School at the 5 Table of Contents University of Pennsylvania and a degree in electrical engineering in 1993 from Escola Politécnica da Universidade de São Paulo. Matthew Galvanoni was named the Chief Financial Officer in February 2021, effective March 2021.
He earned his Master’s of Business Administration degree in 2001 from the Wharton School at the University of Pennsylvania and a degree in electrical engineering in 1993 from Escola Politécnica da Universidade de São Paulo. Matthew Galvanoni was named the Chief Financial Officer in February 2021, effective March 2021. Prior to his appointment to the Company, Mr.
We believe that being a vertically integrated chicken company and having a fully integrated supply chain in the pork business provides us with long-term cost and quality advantages over non-vertically integrated and other processors. We utilize numerous advertising and marketing techniques to develop and strengthen trade and consumer awareness and increase brand loyalty for consumer products.
We believe that being a vertically integrated chicken company and having a fully integrated supply chain in the pork business may provide long-term cost and quality advantages over non-vertically integrated and other processors. We utilize various advertising and marketing techniques to develop and strengthen trade and consumer awareness and enhance brand loyalty for consumer products.
With our global network of approximately 4,800 growers, 34 feed mills, 47 hatcheries, 39 processing plants, 30 prepared foods cook plants, 27 distribution centers, ten protein conversion facilities and five pet food plants, we believe we are well-positioned to supply the growing demand for our products.
With our global network of approximately 4,500 growers, 35 feed mills, 49 hatcheries, 39 processing plants, 30 prepared foods cook plants, 29 distribution centers, 12 protein conversion facilities and five pet food plants, we believe we are well-positioned to supply the growing demand for our products.
The Company utilizes various raw materials in its operations, including corn, soybean meal and wheat, along with various other ingredients from which the Company produces its own formulated feeds. In 2023, corn, soybean meal and wheat accounted for approximately 43.9%, 38.1% and 4.1% of our feed costs, respectively.
The Company utilizes various raw materials in its operations, including corn, soybean meal and wheat, along with various other ingredients from which the Company produces its own formulated feeds. In 2024, corn, soybean meal and wheat accounted for approximately 42.2%, 38.0% and 5.0% of our feed costs, respectively.
We have found that recognizing our employees’ efforts through training for continued advancement strengthens their performance and helps with our goals to achieve business results. Our employees completed over 332,000 training hours during 2023 and over 326,000 training hours during 2022. Community Support .
We have found that recognizing our employees’ efforts through training for continued advancement strengthens their performance and helps with our goals to achieve business results. Our employees completed over 1,394,426 training hours during 2024 and over 332,000 training hours during 2023. 4 Table of Contents Community Support .
Reportable Segments We operate in three reportable segments: U.S., U.K. and Europe, and Mexico. We produce or purchase for resale chicken products through our operations in the U.S., the U.K. and continental Europe, and Mexico and pork products through our operations in the U.K.
Fiscal year 2024 was a 52-week fiscal year and fiscal year 2023 was a 53-week fiscal year. Reportable Segments We operate in three reportable segments: U.S., Europe, and Mexico. We produce or purchase for resale chicken products through our operations in the U.S., the U.K. and continental Europe, and Mexico and pork products through our operations in the U.K.
In 2023, our fresh product sales accounted for 80.8%, 20.7%, and 84.3% of our total U.S., U.K. and Europe, and Mexico product sales, respectively. Prepared Products Overview. Our prepared products include portion-controlled breast fillets, tenderloins and strips, delicatessen products, salads, formed nuggets and patties and bone-in chicken parts.
In 2024, our fresh product sales accounted for 82.1%, 22.9%, and 84.2% of our total U.S., Europe, and Mexico product sales, respectively. Prepared Products Overview. Our prepared products include portion-controlled breast fillets, tenderloins and strips, delicatessen products, salads, formed nuggets and patties and bone-in chicken parts.
The trademarks are important to the overall marketing and branding of our products. All major trademarks in our business are registered. In part, our success can be attributed to the existence and continued protection of these trademarks. As long as the Company continues to use its trademarks, they are renewed indefinitely.
The trademarks are important to the overall marketing and branding of our products. A significant portion of our trademarks in our business are registered. In part, our success is partially dependent on the existence and continued protection of these trademarks. As long as the Company continues to use its trademarks, they may be renewed indefinitely.
These audits include auditing the physical state of the plant, policies, safety culture and our occupational health clinics. • Our efforts in 2023 have resulted in year-over-year reductions in severe injuries and days away restricted or transferred of 25% and 8%, respectively. Diversity and Inclusion.
These audits include auditing the physical state of the plant, policies, safety culture and our occupational health clinics. • Our efforts in 2024 have resulted in year-over-year reductions in severe injuries of 37%. Anti-discrimination.
Years Ended December 31, 2023 December 25, 2022 December 26, 2021 (In thousands) U.S. reportable segment: Fresh products $ 8,105,269 $ 8,624,421 $ 7,264,448 Prepared foods 978,423 1,107,734 898,614 Export 533,205 552,823 459,371 Other products 410,846 463,372 491,446 Total U.S. reportable segment 10,027,743 10,748,350 9,113,879 U.K. and Europe reportable segment: Fresh products 1,074,900 908,882 1,151,330 Prepared foods 3,525,359 3,104,347 2,214,180 Export 472,656 712,685 458,588 Other products 130,406 148,824 109,964 Total U.K. and Europe reportable segment 5,203,321 4,874,738 3,934,062 Mexico reportable segment: Fresh products 1,796,670 1,587,809 1,515,453 Prepared foods 212,651 167,589 128,208 Other products 121,832 89,891 85,856 Total Mexico reportable segment 2,131,153 1,845,289 1,729,517 Total net sales $ 17,362,217 $ 17,468,377 $ 14,777,458 Raw Materials Grains .
Years Ended December 29, 2024 December 31, 2023 December 25, 2022 (In thousands) U.S. reportable segment: Fresh products $ 8,731,905 $ 8,105,269 $ 8,624,421 Prepared foods 1,094,818 978,423 1,107,734 Export 468,553 533,205 552,823 Other products 334,653 410,846 463,372 Total U.S. reportable segment 10,629,929 10,027,743 10,748,350 Europe reportable segment: Fresh products 1,178,459 1,074,900 908,882 Prepared foods 3,381,178 3,525,359 3,104,347 Export 477,486 472,656 712,685 Other products 99,624 130,406 148,824 Europe reportable segment 5,136,747 5,203,321 4,874,738 Mexico reportable segment: Fresh products 1,777,815 1,796,670 1,587,809 Prepared foods 220,270 212,651 167,589 Other products 113,530 121,832 89,891 Total Mexico reportable segment 2,111,615 2,131,153 1,845,289 Total net sales $ 17,878,291 $ 17,362,217 $ 17,468,377 Raw Materials Grains .
Compliance with existing or new environmental requirements, including more stringent limitations imposed or expected in recently-renewed or soon-to be renewed environmental permits, may require capital expenditures and operating expenses which may be significant.
Compliance with existing or new environmental requirements, including more stringent limitations imposed or expected in recently-renewed or soon-to be renewed environmental permits or raw material sourcing, may require additional capital expenditures and operating expenses which may be significant. Moreover, customers in select regions may require additional or more immediate adoption of various regulations, further increasing overall investments and costs.
Galvanoni started his career at PricewaterhouseCoopers LLP in 1994 and subsequently held several financial leadership positions at Exelon Corporation, where he most recently served as Assistant Corporate Controller. Mr. Galvanoni graduated from the University of Illinois with a Bachelor’s of Accounting degree and later received a Master’s of Business Administration degree from the Kellogg School of Management at Northwestern University.
Galvanoni started his career at PricewaterhouseCoopers LLP in 1994 and subsequently held several financial leadership positions at Exelon Corporation, where he most recently served as Assistant Corporate Controller. Mr.
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In 2023, our prepared foods products sales accounted for 9.8%, 67.8%, and 10.0% of our total U.S., U.K. and Europe, and Mexico chicken and pork sales, respectively. Exported Products Overview.
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These products are sold either refrigerated 1 Table of Contents or frozen and may be fully cooked, partially cooked or raw. In addition, these products may be breaded and/or marinated.
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We believe that promoting diversity and inclusion among our workforce helps to create a trusting and productive workplace. We encourage the management teams at each facility to hire from the local regions in which they are located.
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We value diversity in the workplace, and do not discriminate on the basis of age, color, disability, family or marital status, gender, national origin, or any other characteristic protected by applicable law, regulation, or ordinance. We prohibit discrimination in all recruiting, hiring, promotion, training, compensation, termination, and other employment decisions. Retention and Career Development.
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In addition: • Our Equal Employment Opportunity Policy (“EEO Policy”) affirms our commitment to employ and support employees of all races, religions, colors, national origins, sexes, sexual orientations, gender identities and ages.
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Galvanoni graduated from the University of Illinois with a Bachelor’s of Accounting degree and later received a Master’s of Business Administration degree from the Kellogg School of Management at Northwestern University. 5 Table of Contents
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Through the EEO Policy, we have been involved in diversity hiring initiatives and partnered with universities with an aim of recruiting from a diverse talent pool. • We track our progress in our efforts to promote diversity and inclusion.
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For example, in 2023, women comprised 41%, 40% and 37% of our total workforce in the U.S., the U.K. and Europe, and Mexico, respectively, and 70% of our total workforce in the U.S. were minorities. • Our management team members are expected to attend People First leadership training, which includes a model dedicated to training and awareness on diversity and inclusion. • We provide workshops on diversity and inclusion for our employees and we engage in targeted recruitment at 35 of the nation’s largest historically black colleges and universities. 4 Table of Contents Retention and Career Development.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeDeteriorating economic conditions could negatively affect consumer demand for protein generally or our products specifically, consumers’ ability to afford our products, consumer habits with respect to how they spend their food dollars, and the cost and availability of raw materials we need. 15 Table of Contents Disruptions in credit and other financial markets caused by deteriorating or weak national and international economic conditions could, among other things: • make it more difficult for us, our customers or our growers or prospective growers to obtain financing and credit on reasonable terms; • cause lenders to change their practice with respect to the industry generally or our company specifically in terms of granting credit extensions and terms; • impair the financial condition of our customers, suppliers or growers making it difficult for them to meet their obligations and supply raw material; or • impair the financial condition of our insurers, making it difficult or impossible for them to meet their obligations to us.
Biggest changeDisruptions in credit and other financial markets caused by deteriorating or weak national and international economic conditions could, among other things: • make it more difficult for us, our customers or our growers or prospective growers to obtain financing and credit on reasonable terms; • cause lenders to change their practice with respect to the industry generally or our company specifically in terms of granting credit extensions and terms; • impair the financial condition of our customers, suppliers or growers making it difficult for them to meet their obligations and supply raw material; or • impair the financial condition of our insurers, making it difficult or impossible for them to meet their obligations to us. 16 Table of Contents Our business may be negatively impacted by economic or other consequences from Russia’s war against Ukraine and the sanctions imposed as a response to that action.
However, events beyond our control, such as the outbreaks of disease, either in our own flocks and herds or elsewhere, could significantly affect the demand for our products or our ability to conduct our operations.
However, events beyond our control, such as outbreaks of disease, either in our own flocks and herds or elsewhere, could significantly affect the demand for our products or our ability to conduct our operations.
We are increasingly dependent on information technology, and our business and reputation could suffer if we are unable to protect our information technology systems against, or effectively respond to, cyber-attacks, to other cyber security incidents or breaches, or if our information technology systems are otherwise disrupted.
We are increasingly dependent on information technology, and our business and reputation could suffer if we are unable to protect our information technology systems against, or effectively respond to, cyber-attacks or other cyber security incidents or breaches, or if our information technology systems are otherwise disrupted.
These opportunities may expose us to successor liability relating to actions involving any acquired entities, their respective management or contingent liabilities incurred prior to our involvement and will expose us to liabilities associated with ongoing operations, in particular to the extent we are unable to adequately and safely manage such acquired operations.
These opportunities may expose us to successor liability relating to actions involving any acquired entities, their respective management or contingent liabilities incurred prior to our involvement and may expose us to liabilities associated with ongoing operations, in particular to the extent we are unable to adequately and safely manage such acquired operations.
Compliance with existing or changing environmental requirements, including more stringent limitations imposed or expected to be imposed in recently-renewed or soon to be renewed environmental permits, may require capital expenditures for installation of new or upgraded pollution control equipment at some of our facilities.
Compliance with existing or changing environmental requirements, including potentially more stringent limitations imposed or expected to be imposed in recently-renewed or soon to be renewed environmental permits, may require capital expenditures for installation of new or upgraded pollution control equipment at some of our facilities.
For example, the European Union’s Deforestation Regulation (the “EUDR”), which generally becomes effective on December 30, 2024, will require companies trading in cattle, cocoa, coffee, oil palm, rubber, soya, and wood, as well as products derived from these commodities, to conduct extensive diligence on the value chain to ensure the goods do not result from recent deforestation, forest degradation, or breaches of local laws in order to sell such products in the European Union market.
For example, the European Union’s Deforestation Regulation (the “EUDR”), which generally becomes effective on December 30, 2025, will require companies trading in cattle, cocoa, coffee, oil palm, rubber, soya, and wood, as well as products derived from these commodities, to conduct extensive diligence on the value chain to ensure the goods do not result from recent deforestation, forest degradation, or breaches of local laws in order to sell such products in the European Union market.
In addition, climate change could affect our ability to procure needed commodities at costs and in quantities we currently experience and may require us to make additional unplanned capital expenditures.
In addition, climate change could affect our ability to procure needed commodities at reasonable costs and in quantities we currently experience and may require us to make additional unplanned capital expenditures.
For example, consumer concerns related to human health, climate change, resource conservation and animal welfare of animal-based protein sources have driven consumer interest in plant-based protein sources. Because we primarily produce chicken and pork products, we may be limited in our ability to respond to changes in consumer preferences towards other animal-based proteins or away from animal-based proteins entirely.
For example, consumer concerns related to human health, climate change, resource conservation and animal welfare of animal-based protein sources have contributed to consumer interest in plant-based protein sources. Because we primarily produce chicken and pork products, we may be limited in our ability to respond to changes in consumer preferences towards other animal-based proteins or away from animal-based proteins entirely.
Any claims that may be made may create adverse publicity that would have a material adverse effect on our ability to market our products successfully or on our business, reputation, prospects, financial condition and results of operations. If our products become contaminated, spoiled, are tampered with or are mislabeled, we may be subject to product liability claims and product recalls.
Any claims that may be made may create adverse publicity that could have a material adverse effect on our ability to market our products successfully or on our business, reputation, prospects, financial condition and results of operations. If our products become contaminated, spoiled, are tampered with or are mislabeled, we may be subject to product liability claims and product recalls.
Any claims or litigation, even if fully indemnified or insured, could damage PPC’s reputation and make it more difficult to compete effectively or to obtain adequate insurance in the future. We may not be able to successfully integrate the operations of companies we acquire or benefit from growth opportunities.
Any claims or litigation, even if fully indemnified or insured, could damage the Company’s reputation and make it more difficult to compete effectively or to obtain adequate insurance in the future. We may not be able to successfully integrate the operations of companies we acquire or benefit from growth opportunities.
Moreover, our efforts to address network security vulnerabilities may not be successful, resulting potentially in the theft, loss, destruction or corruption of information we store electronically, as well as unexpected interruptions, delays or cessation of service, any of which would cause harm to our business operations.
Moreover, our efforts to address network security vulnerabilities may not be successful, resulting potentially in the theft, loss, destruction, or corruption of information we store electronically, as well as unexpected interruptions, delays, or cessation of service, any of which could cause harm to our business operations.
Operations at many of our facilities require the treatment and disposal of wastewater, stormwater and agricultural and food processing wastes, the use and maintenance of refrigeration systems, including ammonia-based chillers, noise, odor and dust management, the operation of mechanized processing equipment, and other operations that potentially could affect the environment, health and safety.
Operations at many of our facilities involve the treatment and disposal of wastewater, stormwater and agricultural and food processing wastes, the use and maintenance of refrigeration systems, including ammonia-based chillers, noise, odor and dust management, the operation of mechanized processing equipment, and other operations that potentially could affect the environment, health and safety.
If critical information systems fail or these systems or related software or services are otherwise unavailable, our ability to process orders, maintain proper levels of inventories, collect accounts receivable, pay expenses, and maintain the security of Company and customer data could be adversely affected.
If critical information systems fail or these systems or related software or services are otherwise unavailable, our ability to process orders, maintain proper levels of inventory, collect accounts receivable, pay expenses, and maintain the security of Company and customer data could be adversely affected.
Substantially all employees covered under collective bargaining agreements are covered under agreements that expire in 2024 or later. We have not experienced any labor-related work stoppage at any location in over ten years. We believe our relationship with our employees and union leadership is satisfactory.
Substantially all employees covered under collective bargaining agreements are covered under agreements that expire in 2025 or later. We have not experienced any labor-related work stoppage at any location in over ten years. We believe our relationship with our employees and union leadership is satisfactory.
These enforcement powers enable regulators to conduct investigations and dawn raids, to issue penalties up to the greater of €20 million or 4% of worldwide turnover for the most serious violations, and to require changes to the way that organizations (including the Company) use personal data.
These enforcement powers allow regulators to conduct investigations and dawn raids, to issue penalties up to the greater of €20 million or 4% of worldwide turnover for the most serious violations, and to require changes to the way that organizations (including the Company) use personal data.
This in turn could have a material adverse effect on our business, financial condition and results of operations.
This in turn could have a material adverse effect on our business, financial condition, and the results of operations.
New environmental, health and safety requirements, stricter interpretations of existing requirements, or obligations related to the investigation or clean-up of contaminated sites, may materially affect our business or operations in the future. Anti-Corruption We are subject to a number of anti-corruption laws, including the U.S. Foreign Corrupt Practices Act (“FCPA”) and the U.K. Bribery Act (“UKBA”).
New environmental, health and safety requirements, stricter interpretations of existing requirements, or obligations related to the investigation or clean-up of contaminated sites, may materially affect our business or operations in the future. 12 Table of Contents Anti-Corruption We are subject to a number of anti-corruption laws, including the U.S. Foreign Corrupt Practices Act (“FCPA”) and the U.K. Bribery Act (“UKBA”).
Increasing concern over climate change also may adversely impact demand for our products due to changes in 11 Table of Contents consumer preferences and result in additional legal or regulatory requirements designed to reduce or mitigate the effects of carbon dioxide and other greenhouse gas emissions on the environment.
Increasing concern over climate change also may adversely impact demand for our products due to changes in consumer preferences and result in additional legal or regulatory requirements designed to reduce or mitigate the effects of carbon dioxide and other greenhouse gas emissions on the environment.
While our industry generally operates with high employee turnover, any material increases in employee turnover rates or any widespread employee dissatisfaction could also have a material adverse effect on our business, financial condition and results of operations. Labor shortages and increased turnover or increases in employee and employee-related costs could have adverse effects on our profitability.
While our industry 13 Table of Contents generally operates with high employee turnover, any material increases in employee turnover rates or any widespread employee dissatisfaction could also have a material adverse effect on our business, financial condition and results of operations. Labor shortages and increased turnover or increases in employee and employee-related costs could have adverse effects on our profitability.
Our business could suffer significant setbacks in revenues and operating income if we lost one or more of our largest customers, or if our customers’ plans and/or markets should change significantly. We depend on contract growers and independent producers to supply us with livestock.
Our business could suffer significant setbacks in revenues and operating income if we lost one or more of our largest customers, or if our customers’ plans and/or markets should change significantly. 10 Table of Contents We depend on contract growers and independent producers to supply us with livestock.
For example, the implementation of new tariff schemes by various governments, such as those implemented by the U.S. 8 Table of Contents and China in recent years, could increase the costs of our operations and ultimately increase the cost of products sold from one country into another country.
For example, the implementation of new tariff schemes by various governments, such as those implemented by the U.S. and China in recent years, could increase the costs of our operations and ultimately increase the cost of products sold from one country into another country.
For example, between September 2, 2016 and October 13, 2016, a series of purported class action lawsuits were brought against PPC and other defendants by and on behalf of direct and indirect purchasers of broiler chickens alleging violations of antitrust and unfair competition laws.
For example, between September 2, 2016 and October 13, 2016, a series of purported class action lawsuits were brought against the Company and other defendants by and on behalf of direct and indirect purchasers of broiler chickens alleging violations of antitrust and unfair competition laws.
We take precautions designed to ensure that our flocks and herds are healthy and that our processing plants and other facilities operate in a sanitary and environmentally-sound manner.
We take precautions intended to ensure that our flocks and herds are healthy and that our processing plants and other facilities operate in a sanitary and environmentally-sound manner.
In addition, certain software used by us is licensed from, and certain services related to our information systems are provided by, third parties who could choose to discontinue their relationship with us or could encounter system disruptions or attacks of their own.
In addition, certain software we use is licensed from, and certain services related to our information systems are provided by, third parties who could choose to discontinue their relationship with us or who could encounter system disruptions or attacks of their own.
The vulnerability of our systems and our failure to identify or respond timely to cyber incidents could have an adverse effect on our operations and reputation and expose us to liability or regulatory enforcement actions. Our operations are subject to general risks of litigation.
The vulnerability of our systems and our failure to identify or respond timely to cyber incidents could have an adverse effect on our operations and reputation and expose us to liability or regulatory enforcement actions. 9 Table of Contents Our operations are subject to general risks of litigation.
Our success in these markets may be, and our success in recent periods has been, adversely affected by disruptions in export markets. A significant risk is disruption due to import restrictions and tariffs, other trade protection measures, and import or export licensing requirements regarding food products imposed by foreign countries.
Our success in these markets may be impacted, and in recent periods, has been influenced by disruptions in export markets. A significant risk is disruption due to import restrictions and tariffs, other trade protection measures, and import or export licensing requirements regarding food products imposed by foreign countries.
In addition, unknown matters, new laws and regulations, or stricter interpretations of existing laws or regulations may also materially affect our business or operations in the future. For example, the USDA amended the Packers and Stockyards Act to require new disclosures that live poultry dealers must provide to contract growers.
In addition, new laws and regulations, unforeseen developments, or stricter interpretations of existing laws or regulations may also materially affect our business or operations in the future. For example, the USDA amended the Packers and Stockyards Act to require new disclosures that live poultry dealers must provide to contract growers.
Our ability to make payments on and to refinance our debt, including our credit facilities, will depend on our ability to generate cash in the future.
Our ability to make payments on and to refinance our debt, including our credit facilities, would depend on our ability to generate cash in the future.
However, there can be no assurance that it would not significantly affect our ability to conduct our operations and/or demand for our products, in each case in a manner having a material adverse effect on our business, reputation and/or prospects. If our products become contaminated, we may be subject to product liability claims and product recalls.
However, we cannot provide assurance that it would not significantly affect our ability to conduct our operations and/or demand for our products, in each case in a manner having a material adverse effect on our business, reputation, or prospects. If our products become contaminated, we may be subject to product liability claims and product recalls.
We may not be able to successfully integrate any growth opportunities we may undertake in the future or successfully implement appropriate operational, financial and administrative systems and controls to achieve the benefits that we expect to 10 Table of Contents result therefrom.
We may not be able to successfully integrate any growth opportunities we may undertake in the future or successfully implement appropriate operational, financial and administrative systems and controls to achieve the benefits that we expect to result therefrom.
If we fail to achieve, fail to specify or improperly report on our progress toward achieving our carbon emissions reduction goals and targets, we could be subject to lawsuits, investigations, government actions, or other claims made by public or private entities, each of which could have a material adverse effect on our business, financial condition, results of operations and prospects.
If we fail to achieve, adequately specify or accurately report on our progress toward achieving our carbon emissions reduction goals and targets, we could be subject to lawsuits, investigations, government actions, or other claims made by public or private entities, each of which could have a material impact on our business, financial condition, results of operations and prospects.
Environmental, Health and Safety Our operations are subject to extensive and increasingly stringent federal, state, local and foreign laws and regulations pertaining to the protection of the environment, including those relating to the discharge of materials into the environment, the handling, treatment and disposal of wastes, and the remediation of soil and groundwater contamination.
Environmental, Health and Safety Our operations are subject to extensive federal, state, local and foreign laws and regulations pertaining to the protection of the environment, including those relating to the discharge of materials into the environment, the handling, treatment and disposal of wastes, and the remediation of soil and groundwater contamination. Certain regulations have become increasingly stringent over time.
Our success depends in part on our ability to manage costs and be efficient in the highly competitive poultry and pork industries, and our failure to manage costs and be efficient could materially and adversely affect our business, financial condition and results of operations.
Our success depends in part on our ability to manage costs and be efficient in the highly competitive poultry and pork industries, and our failure to do so may materially and adversely affect our business, financial condition, and results of operations.
Stock Ownership and Financial Risk Factors JBS USA beneficially owns a majority of our common stock and has the ability to control the vote on most matters brought before the holders of our common stock.
Stock Ownership and Financial Risk Factors JBS USA beneficially owns a majority of our common stock and has the ability to control the vote on most matters brought before the holders of our common stock. JBS USA Food Company Holdings, Inc.
A material liability associated with these types of opportunities, or our failure to successfully integrate any acquired entities into our business, could adversely affect our reputation and have a material adverse effect on us.
A material liability associated with these types of opportunities or our failure to successfully integrate any acquired entities into our business could have a material adverse effect on us.
Any of these factors could have an adverse effect on our financial results.
Any of these factors could have an adverse effect on our operations or financial results.
Because of these trends, our volume growth could slow or we may need to lower prices or increase promotional spending for our products, any of which could adversely affect our financial results. Our two largest customers together accounted for approximately 13.2% of our consolidated net sales in 2023.
Because of these trends, our volume growth could slow or we may need to lower prices or increase promotional spending for our products, any of which could adversely affect our financial results. Our two largest customers together accounted for approximately 16.6% of our consolidated net sales in 2024.
Historically, we have targeted international markets to generate additional demand for our products. In particular, given the general preference for white chicken meat by U.S. and U.K. consumers, we have targeted international markets for the sale of certain dark chicken meat and parts, such as chicken paws, which are generally not consumed in the U.S. or U.K.
Historically, we have targeted international markets to generate additional demand for our products. In particular, given the general preference for white chicken meat by U.S. and U.K. consumers, we have targeted international markets for the sale of certain dark chicken meat and parts, such as chicken paws.
Immigration Immigration reform continues to attract significant attention in the public arena and the U.S. Congress. Despite our past and continuing efforts to hire only U.S. citizens and/or persons legally authorized to work in the U.S., we may be unable to ensure that all of our employees and contractors are persons legally authorized to work in the U.S.
Immigration Immigration reform continues to attract significant attention in the public arena and the U.S. Congress. Despite our past and continuing efforts to hire only U.S. citizens and/or persons legally authorized to work in the U.S., we cannot guarantee that all of our employees and contractors are persons legally authorized to work in the U.S.
As a result, subject to restrictions on voting power and actions in the stockholders agreement and our organization documents, JBS USA Holdings has and will have the ability to control our management, policies and financing decisions, elect a majority of the members of our Board of Directors at the annual meeting and control the vote on most matters coming before the holders of our common stock.
As a result, subject to restrictions on voting power and actions in the Stockholders Agreement with JBS USA Holding Lux S.a.r.l. and our organization documents, JBS USA Holdings has the ability to control our management, policies and financing decisions, elect a majority of the members of our Board of Directors at the annual meeting and control the vote on most matters coming before the holders of our common stock.
Such product liability claims or product recalls can adversely affect our business reputation, expose us to increased scrutiny by federal and state regulators and may not be fully covered by insurance. Poultry and pork products may be subject to contamination by disease-producing organisms, or pathogens, such as Listeria monocytogenes , Salmonella , generic E.coli, Yersinia enterocolitica and Staphylococcus aureus .
Such product liability claims or product recalls could adversely affect our business reputation, expose us to increased scrutiny by federal and state regulators and may not be fully covered by insurance. Poultry and pork products are susceptible to contamination by harmful organisms, or pathogens, such as Listeria monocytogenes , Salmonella , generic E.coli, Yersinia enterocolitica and Staphylococcus aureus .
A widespread product recall could result in significant losses due to the cost of a recall, the destruction of product inventory and lost sales due to the unavailability of product for a period of time.
A widespread product recall could result in significant losses due to recall-related costs, the destruction of product inventory, and lost sales from product unavailability for a period of time.
We cannot assure you that we will not be required to perform product recalls, or that product liability claims will not be asserted against us, in the future.
We cannot provide assurance that we will not be required to perform product recalls, or that product liability claims will not be asserted against us in the future.
We have also targeted international markets for excess primary pork cuts and parts, such as hog heads and trotters, which are generally not consumed in the U.K. As part of this initiative, we have created a significant international distribution network into several markets in Mexico, the Middle East and Asia.
We have also targeted international markets for excess primary pork cuts and parts, such as hog heads and trotters. As part of this initiative, we have created a significant international distribution network into several markets in Mexico, the Middle East, and Asia.
Brand value could diminish significantly due to a number of factors, including consumer perception that we have acted in an irresponsible manner, adverse publicity about our products (whether or not valid), our failure to maintain the quality of our products, the failure of our products to deliver consistently positive consumer experiences or the products becoming unavailable to consumers.
Brand value may be impacted by a number of factors, including consumer perception that we have acted in an irresponsible manner, adverse publicity about our products (whether or not valid), our failure to maintain the quality of our products, the failure of our products to deliver consistently positive consumer experiences or the products becoming unavailable to consumers.
The food industry in general is subject to changing consumer trends, demands and preferences. Trends within the food industry change often, and failure to identify and react to changes in these trends could lead to, among other things, reduced demand and price reductions for our products, and could have an adverse effect on our financial results.
The food industry in general is subject to changing consumer trends, demands and preferences. Trends within the food industry can shift frequently, and failure to identify and respond to these trends could lead to, among other things, reduced demand and price reductions for our products, and could have an adverse effect on our financial results.
JBS USA Food Company Holdings (“JBS USA Holdings”) beneficially owns a majority of the shares and voting power of our common stock and is entitled to appoint a majority of the members of our Board of Directors.
(“JBS USA Holdings”) beneficially and indirectly owns a majority of the shares and voting power of our common stock and is entitled to appoint a majority of the members of our Board of Directors.
Any deterioration of those relations or increase in labor costs due to our compliance with labor laws could adversely affect our business. As of December 31, 2023, we employed approximately 61,200 persons. Approximately 35.2% of our workforce are covered by a collective bargaining agreement.
Any deterioration of those relations or increase in labor costs due to our compliance with labor laws could adversely affect our business. As of December 29, 2024, we employed approximately 61,600 persons. Approximately 35.4% of our workforce are covered by a collective bargaining agreement.
Our success is largely dependent on the skills, experience, and efforts of our management and other employees. The loss of the services of one or more members of our senior management or of numerous employees with essential skills could have a negative effect on our business, financial condition and results of operations.
The loss of the services of one or more members of our senior management or of numerous employees with essential skills could have a negative effect on our business, financial condition and results of operations.
Our operations will continue to be subject to or otherwise affected by federal, state and local governmental legislation and regulation, including in the health, safety and environmental areas. Changes in laws or regulations or the application thereof regarding areas such as wage and hour and environmental compliance may lead to government enforcement actions and resulting litigation by private litigants.
Our operations are and are expected to remain affected by federal, state and local governmental legislation and regulation, including in the health, safety and environmental areas. Changes in laws or regulations or the application thereof regarding areas such as wage and hour and environmental compliance may lead to government enforcement actions and potential litigation by private litigants.
The impact of the ongoing war and sanctions will not be limited to businesses that operate in Russia and Ukraine and may negatively impact other global economic markets including where we operate.
We face risks related to the ongoing Russia-Ukraine war that began in February 2022. The impact of the ongoing war and sanctions will likely not be limited to businesses that operate in Russia and Ukraine and may negatively impact other global economic markets including where we operate.
Even an inadvertent shipment of contaminated products is a violation of law and may lead to increased risk of exposure to product liability claims, product recalls and increased scrutiny by federal and state regulatory agencies and may have a material adverse effect on our business, reputation and/or prospects.
An inadvertent shipment of contaminated products which contravenes relevant legislative requirements may lead to increased risk of exposure to product liability claims, product recalls and increased scrutiny by federal and state regulatory agencies and may have a material adverse effect on our business, reputation and/or prospects.
Moreover, climate change, including the impact of global warming, has resulted in risks that include changes in weather conditions, extreme weather events and adverse impacts on agricultural production, as well as potential regulatory compliance risks, all of which could have a material adverse effect on our results of operations, financial condition and liquidity.
Moreover, climate change, including the impact of global warming, may contribute to risks including extreme weather events and adverse impacts on agricultural production, as well as potential regulatory compliance risks, all of which could have a material adverse effect on our results of operations, financial condition and liquidity.
Furthermore, an outbreak of disease could result in governmental restrictions on the import and export of our fresh chicken, fresh pork or other products to or from our suppliers, facilities or customers, or require us to destroy one or more of our flocks or herds.
Furthermore, an outbreak of disease could result in governmental restrictions on the import and export of our fresh chicken, fresh pork or other products involving our suppliers, facilities or customers, or require us to euthanize one or more of our flocks or herds in order to comply with disease control legislative requirements.
The EUDR, and other current or proposed regulations in the European Union and elsewhere, are likely to increase our compliance costs, could depress sales in such markets if our products are not in compliance by applicable effective dates, and could result in fines and penalties or reputational harm if we do not fully comply.
The EUDR, and other current or proposed regulations in the European Union and elsewhere, are expected to increase our compliance costs, may affect sales in such markets, and may result in fines and penalties or reputational harm if we do not fully comply.
Foreign operations are subject to a number of special risks such as currency exchange rate fluctuations, trade barriers, exchange controls, expropriation and changes in laws and policies, including tax laws and laws governing foreign-owned operations. Currency exchange rate fluctuations have adversely affected us in the past.
Foreign operations may be exposed to a number of special risks such as currency exchange rate fluctuations, trade barriers, exchange controls, expropriation and changes in laws and policies, including tax laws and laws governing foreign-owned operations. Currency exchange rate fluctuations have had adverse effects on us in the past.
In addition, the resulting negative publicity from any such allegations could adversely affect consumer preference for our products. Legal and Regulatory Risk Factors Regulation, present and future, is a constant factor affecting our business.
In addition, the resulting negative publicity from any such allegations could adversely affect consumer preference for our products. 11 Table of Contents Legal and Regulatory Risk Factors Regulations, present and future, are constant factors affecting our business.
JBS USA Holding’s concentration of ownership could also have the effect of delaying or preventing a change in control or otherwise discouraging a potential acquirer from attempting to obtain control of us, which could cause the market price of our common stock to decline or prevent our shareholders from realizing a premium over the market price for their common stock. 14 Table of Contents Our future financial and operating flexibility may be adversely affected by significant leverage.
JBS USA Holding’s concentration of ownership could also have the effect of delaying or preventing a change in control or otherwise discouraging a potential acquirer from attempting to obtain control of us, which could cause the market price of our common stock to decline or prevent our shareholders from realizing a premium over the market price for their common stock.
Maintaining and continually enhancing the value of these brands is critical to the success of our business. Brand value is based in large part on consumer perceptions. Success in promoting and enhancing brand value depends in large part on our ability to provide high-quality products.
Brand value is based in large part on consumer perceptions. Success in promoting and enhancing brand value depends in large part on our ability to provide high-quality products.
The fresh U.K. and continental Europe market is almost exclusively retailer private label. The U.K. fresh market is almost exclusively sourced from within the U.K., making vertical integration a prerequisite for operating in that market.
The fresh U.K. and continental Europe market primarily consists of retailer private label products. The U.K. fresh market is primarily sourced from within the U.K., making 8 Table of Contents vertical integration a prerequisite for operating in that market.
In the past, these laws have not had a material adverse effect on the ability of these subsidiaries to make these payments and distributions. However, laws such as these may have a material adverse effect on the ability of these subsidiaries to make these payments and distributions in the future.
To date, these laws have not had a material adverse effect on the ability of these subsidiaries to make these payments and distributions.
Significant political or regulatory developments in the jurisdictions in which we sell our products, such as those stemming from the presidential administration in the U.S., are difficult to predict and may have a material adverse effect on us.
Significant political or regulatory developments in the jurisdictions in which we sell our products, such as those stemming from the presidential administration in the U.S., are difficult to predict, may create uncertainty, and could impact our business.
Climate change may have a long-term adverse impact on our business and results of operations. Global average temperatures are gradually increasing due to increased concentration of carbon dioxide and other greenhouse gases in the atmosphere, which may contribute to significant changes in weather patterns around the globe and an increase in the frequency and severity of natural disasters.
Generally, global average temperatures are gradually increasing, which is likely due to increased concentration of carbon dioxide and other greenhouse gases in the atmosphere, which may contribute to significant changes in weather patterns around the globe and an increase in the frequency and severity of natural disasters.
Under the stockholders agreement, JBS USA Holdings has the ability to elect up to seven members of our Board of Directors and the other holders of our common stock have the ability to elect up to two members of our Board of Directors.
Under the Stockholders Agreement, and through its parent entity, JBS USA Holding Lux S.a.r.l., JBS USA Holdings has the ability to elect up to eight members of our Board of Directors and the other holders of our common stock have the ability to elect up to two members of our Board of Directors.
No assurances can be given that enforcement efforts by governmental authorities will not disrupt a portion of our workforce or operations at one or more facilities, thereby negatively impacting our business.
There is no certainty that enforcement efforts by governmental authorities will not disrupt a portion of our workforce or operations at one or more facilities, which could negatively impact our business.
Compliance with such existing, proposed and recently enacted laws and regulations can be costly and may necessitate the review and implementation of policies and processes relating to our collection, security, and use of data; any failure to comply with these regulatory standards could subject us to legal and reputational risks including proceedings against the Company by governmental entities or others, fines and penalties, damage to our reputation and credibility and could have a negative impact on our business and results of operations.
Any failure to comply with these regulatory standards could subject us to legal and reputational risks including proceedings against the Company by governmental entities or others, fines and penalties, or damage to our reputation and credibility and could have a negative impact on our business and results of operations.
We strive to respond to consumer preferences and expectations, but we may not be successful in our efforts. We could be adversely affected if consumers lose confidence in the quality of certain food products or ingredients. Prolonged negative perceptions of certain food products or ingredients could influence consumer preferences and acceptance of some of our products and marketing programs.
We strive to respond to consumer preferences and expectations, but there is no assurance that our efforts will be successful. We could be adversely affected if consumers lose confidence in the quality of certain food products or ingredients.
Some of our facilities have been operating for many years, and were built before current environmental standards were imposed, and/or are in areas that recently have become subject to residential and commercial development pressures.
Some of our facilities have been operating for many years were built before current environmental standards were imposed, and/or are in areas that have recently experienced increased residential and commercial development pressures. Failure to comply with current and future applicable environmental, health and safety standards could result in fines and penalties, and we have previously been subject to such sanctions.
We have significant operations and assets located in Mexico, the U.K., the Republic of Ireland, and continental Europe and may participate in or acquire operations and assets in other foreign countries in the future.
Our foreign operations and commerce in international markets pose special risks to our business and operations and subject us to additional regulatory frameworks and compliance costs. We have significant operations and assets located in Mexico, the U.K., the Republic of Ireland, and continental Europe and may participate in or acquire operations and assets in other foreign countries in the future.
Failure to comply with these requirements could have serious consequences for us, including criminal as well as civil and administrative penalties, claims for property damage, personal injury and damage to natural resources and negative publicity.
Failure to comply with these requirements may result in criminal as well as civil and administrative penalties, claims for property damage, personal injury and damage to natural resources. Additionally, adverse publicity could arise from regulatory actions.
Such a product recall also could result in adverse publicity, damage to our reputation and a loss of consumer confidence in our products, which could have a material adverse effect on our business results.
Such a product recall also could result in adverse publicity, damage to our reputation and a loss of consumer confidence in our products, which could have a material adverse effect on our business results. We currently maintain insurance coverage for certain risks, including product liability, business interruption, and general liability insurance. However, insurance can be expensive and difficult to obtain.
These risks may be controlled, although not eliminated, by adherence to good manufacturing practices and finished product testing. We have little, if any, control over proper handling once the product has been shipped. Illness and death may result if the pathogens are not eliminated at the further processing, foodservice or consumer level.
We have little, if any, control over proper handling once the product leaves our facilities. Illness and death may result if the pathogens are not eliminated at the further processing, foodservice or consumer level.
The U.S. government has inquired with the meat processing industry on matters such as market pricing to end consumers and market dynamics associated with the relationship between meat processors and the farming community.
The U.S. government has conducted inquiries related to the meat processing industry on matters such as market pricing and processor relationships with the farming community.
We are upgrading wastewater treatment facilities at a number of these locations, either pursuant to consent agreements with regulatory authorities or on a voluntary basis in anticipation of future permit requirements.
We are upgrading wastewater treatment facilities at a number of these locations, either pursuant to consent agreements with regulatory authorities or on a voluntary basis in anticipation of future permit requirements. For example, the EPA has proposed Meat and Poultry Products Effluent Guidelines and Standards, which may increase requirements and necessitate further upgrades to existing facilities.
Even if no further highly pathogenic or highly contagious strains of avian influenza are confirmed in the U.S., the U.K. or Mexico, there can be no assurance that outbreaks of these strains in other countries will not materially adversely affect international demand for poultry produced in our operating countries, and, if any of these strains were to spread to the U.S., the U.K. or Mexico, there can be no assurance that it would not significantly affect our ability to conduct our operations and/or demand for our products, in each case in a manner having a material adverse effect on our business, reputation and/or prospects.
Even if no additional highly pathogenic or highly contagious strains of avian influenza are confirmed in Europe, the U.S., the U.K. or Mexico, there can be no assurance that outbreaks elsewhere will not materially adversely affect international demand for poultry produced in our operating countries.
In addition, the encrypted backup servers, which were not affected by the Cyberattack, allowed for a return to full operations within two days. We incurred a loss of approximately $10.0 million related to the Cyberattack during the second quarter of 2021, which included an allocation of $2.4 million of the total $11.0 million ransom paid by our parent company.
In total, we incurred a loss of approximately $10.0 million related to the cyberattack during the second quarter of 2021, which included an allocation of $2.4 million of the total $11.0 million ransom paid by our parent company. However, there can be no assurances that future attacks would not have an adverse effect on our operations of financial condition.
For example, the EPA has proposed Meat and Poultry Products Effluent Guidelines and Standards, which may increase requirements and necessitate further upgrades to existing facilities. 12 Table of Contents In the past, we have acquired businesses with operations such as pesticide and fertilizer production that involved greater use of hazardous materials and generation of more hazardous wastes than our current operations.
In the past, we have acquired businesses with operations such as pesticide and fertilizer production that involved greater use of hazardous materials and generation of more hazardous wastes than our current operations.
There can be no assurance that we will be able to generate sufficient cash flow from operations or that future borrowings will be available under our credit facilities in an amount sufficient to enable us to pay our debt obligations, including obligations under our credit facilities, or to fund our other liquidity needs.
This, to a certain extent, is subject to various business factors (including, among others, the commodity prices of feed ingredients, chicken and pork) and general economic, financial, competitive, legislative, regulatory, and other factors that are beyond our control. 15 Table of Contents There can be no assurance that we will be able to generate sufficient cash flow from operations or that future borrowings will be available under our credit facilities in an amount sufficient to enable us to pay our debt obligations, including obligations under our credit facilities, or to fund our other liquidity needs.
The consequences of the litigation matters PPC faces are inherently uncertain, and adverse actions, judgments or settlements in some or all of these matters has resulted and may in the future result in materially adverse monetary damages, fines, penalties, or injunctive relief against PPC.
The outcome of the litigation matters involving the Company remains uncertain. Adverse actions, judgments, or settlements have previously and could result in materially adverse monetary damages, fines, penalties, or injunctive relief against the Company.
Even if we make changes to align ourselves with such legal or regulatory requirements, we may still be subject to significant fines if such laws and regulations are interpreted and applied in a manner inconsistent with our practices.
Furthermore, compliance with any such legal or regulatory requirements could necessitate significant changes to our business operations and strategy, which may require substantial time, attention and resources. There is no assurance that we will not be subject to significant fines if such laws and regulations are interpreted and applied in a manner inconsistent with our practices.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur CIO has significant experience in information technology and many of our information technology team members hold qualifications in technology security positions. We maintain a cross-functional Cybersecurity Committee, as well as a Global Security Committee consisting of the information technology professionals and security managers from each country in which we have operations.
Biggest changeWe maintain a cross-functional Cybersecurity Committee, as well as a Global Security Committee consisting of the information technology professionals and security managers from each country in which we have operations. 17 Table of Contents We have both policies and procedures that align with the National Institute of Standards and Technology Cybersecurity Framework.
As of the date of this report, we are not aware of any risks from cybersecurity threats that have materially affected or are reasonably likely to materially affect our business strategy, results of operations, or financial condition. 17 Table of Contents
As of the date of this report, we are not aware of any risks from cybersecurity threats that have materially affected or are reasonably likely to materially affect our business strategy, results of operations, or financial condition. 18 Table of Contents
Our CIO, together with our Global Security Committee, reviews emerging threats, controls, and procedures as part of assessing, identifying, and managing risks. Risks identified by our cybersecurity program are analyzed to determine the potential impact on us and the likelihood of occurrence. Such risks are continuously monitored to ensure that the circumstances and severity of such risks have not changed.
Risks identified by our cybersecurity program are analyzed to determine the potential impact on us and the likelihood of occurrence. Such risks are continuously monitored to ensure that the circumstances and severity of such risks have not changed.
We have both policies and procedures that align with the National Institute of Standards and Technology Cybersecurity Framework. Our information security program includes, among other aspects, vulnerability management, antivirus and malware protection, encryption and access control, and employee training.
Our information security program includes, among other aspects, vulnerability management, antivirus and malware protection, encryption and access control, and employee training. Our CIO, together with our Global Security Committee, reviews emerging threats, controls, and procedures as part of assessing, identifying, and managing risks.
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Our CIO has significant experience in information technology and many of our information technology team members hold qualifications in technology security positions.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeProperties Operating Facilities Our main operating facilities are as follows: Number of Facilities Owned Leased Total Capacity (a) Unit of Measure Average Capacity Utilization Chicken Operations: Fresh processing facilities 35 1 36 8.4 million Birds per day 92.2 % Prepared foods facilities 12 2 14 562,257 Tons per year 80.0 % Hatcheries 45 2 47 3.1 billion Eggs per year 92.6 % Other operation facilities (b) 48 1 49 16.0 million Tons per year 73.3 % Grain elevator 1 — 1 8.6 million Bushels per year 24.8 % Pork Operations: Fresh processing facilities 2 — 2 7,425 Pigs per day 90.8 % Prepared foods facilities 7 — 7 250,319 Tons per year 69.0 % Other operation facilities (c) 2 — 2 9,583 Pigs per year 100.0 % Lamb Operations (d) : Fresh processing facilities 1 — 1 3,625 Lambs per day 74.9 % Prepared foods facilities 1 — 1 487,077 Tons per year 82.2 % Prepared Meals Operations: Prepared foods facilities 5 3 8 276,373 Tons per year 73.3 % Distribution Centers and Other 10 17 27 N/A N/A (a) Capacity and utilization numbers do not include idled facilities.
Biggest changeProperties Operating Facilities Our main operating facilities are as follows: Number of Facilities Owned Leased Total Capacity (a) Unit of Measure Average Capacity Utilization Chicken Operations: Fresh processing facilities 35 1 36 8.3 million Birds per day 93.4 % Prepared foods facilities 12 2 14 535,368 Tons per year 81.7 % Hatcheries 47 2 49 3.2 billion Eggs per year 91.3 % Other operation facilities (b) 51 1 52 16.1 million Tons per year 73.9 % Grain elevator 1 — 1 8.6 million Bushels per year 13.6 % Pork Operations: Fresh processing facilities 2 — 2 8,550 Pigs per day 94.3 % Prepared foods facilities 7 — 7 232,401 Tons per year 66.1 % Other operation facilities (c) 1 — 1 3,750 Pigs per year 88.9 % Lamb Operations (d) : Fresh processing facilities 1 — 1 3,333 Lambs per day 89.7 % Prepared foods facilities 1 — 1 13,614 Tons per year 69.9 % Prepared Meals Operations: Prepared meals facilities 5 3 8 294,666 Tons per year 64.5 % Distribution Centers and Other 11 18 29 N/A N/A (a) Capacity and utilization numbers do not include idled facilities.
(b) Other facilities in the chicken operations include feed mills, protein conversion and rendering facilities, and pet food facilities in the U.S. (c) Other facilities in the pork operations include company-owned pig farms in the U.K. (d) Facilities in lamb operations are from the acquisition of Randall Parker Foods and are in the U.K. 18 Table of Contents
(b) Other facilities in the chicken operations include feed mills, protein conversion and rendering facilities, and pet food facilities in the U.S. (c) Other facilities in the pork operations include company-owned pig farms in the U.K. (d) Facilities in lamb operations are from the acquisition of Randall Parker Foods and are in the U.K. 19 Table of Contents

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe stock price performance represented by this graph is not necessarily indicative of future stock performance. 20 Table of Contents 12/30/18 06/30/19 12/29/19 06/30/20 12/27/20 06/30/21 12/26/21 06/30/22 12/25/22 06/30/23 12/31/23 PPC $ 100.00 $ 162.86 $ 211.48 $ 108.34 $ 124.12 $ 142.27 $ 176.72 $ 200.32 $ 152.66 $ 137.84 $ 177.42 Russell 2000 100.00 116.98 125.52 109.23 150.58 176.99 172.90 132.39 137.56 148.68 160.85 Peer Group 100.00 123.76 140.63 117.61 122.11 132.53 144.69 146.38 122.50 106.73 99.22
Biggest changeThe stock price performance represented by this graph is not necessarily indicative 21 Table of Contents of future stock performance. 12/29/19 06/30/20 12/27/20 06/30/21 12/26/21 06/30/22 12/25/22 06/30/23 12/31/23 06/30/24 12/29/24 PPC $ 100.00 $ 51.23 $ 58.69 $ 67.27 $ 83.56 $ 94.72 $ 72.19 $ 65.18 $ 83.89 $ 116.74 $ 139.28 Russell 2000 100.00 87.02 119.96 141.00 137.74 105.47 109.59 118.45 128.14 130.36 142.93 Peer Group 100.00 83.63 86.82 94.23 102.85 104.05 87.07 75.85 70.52 72.38 75.67
In addition, the terms of the U.K. and Europe Revolver Facility Agreement restrict the U.K. and Europe’s ability and the ability of certain of the U.K. and Europe’s subsidiaries to, among other things, make payments and distributions to us, which could in turn impair our ability to pay dividends to our stockholders. See “Note 13.
In addition, the terms of the Europe Revolver Facility Agreement restrict the Europe’s ability and the ability of certain of Europe’s subsidiaries to, among other things, make payments and distributions to us, which could in turn impair our ability to pay dividends to our stockholders. See “Note 13.
Revolving Syndicated Facility and the indentures governing the Company’s senior notes restrict, but do not prohibit, the Company from declaring dividends.
Credit Facility and the indentures governing the Company’s senior notes restrict, but do not prohibit, the Company from declaring dividends.
Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is listed on the Nasdaq Global Select Market (“Nasdaq”) under the symbol “PPC.” Holders As of February 27, 2024, the Company estimates that there were approximately 30,100 holders (including individual participants in security position listings) of the Company’s common stock.
Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is listed on the Nasdaq Global Select Market (“Nasdaq”) under the symbol “PPC.” Holders As of February 7, 2025, the Company estimates that there were approximately 85,000 holders (including individual participants in security position listings) of the Company’s common stock.
Performance Graph The graph below shows a comparison from December 30, 2018 through December 31, 2023 of the cumulative 5-year total stockholder return of holders of the Company’s common stock with the cumulative total returns of the Russell 2000 index and a customized peer group of two companies: Tyson Foods Inc and Hormel Foods Corp.
Performance Graph The graph below shows a comparison from December 29, 2019 through December 29, 2024 of the cumulative 5-year total stockholder return of holders of the Company’s common stock with the cumulative total returns of the Russell 2000 index and a customized peer group of two companies: Tyson Foods Inc and Hormel Foods Corp.
Dividends The Company has no current intention to pay any dividends to its stockholders. Any change in dividend policy will depend upon future conditions, including earnings and financial condition, general business conditions, any applicable contractual limitations and other factors deemed relevant by our Board of Directors in its discretion. Both the U.S.
Dividends The Company does not have a policy of paying dividends to its stockholders. Any change in dividend policy will depend upon future conditions, including earnings and financial condition, general business conditions, any applicable contractual limitations and other factors deemed relevant by our Board of Directors in its discretion. Both the U.S.
The graph assumes that the value of the investment in our common stock, in each index, and in the peer group (including reinvestment of dividends) was $100 on December 30, 2018 and tracks it through December 31, 2023.
The graph assumes that the value of the investment in our common stock, in each index, and in the peer group (including reinvestment of dividends) was $100 on December 29, 2019 and tracks it through December 29, 2024.
The graph covers the period from December 30, 2018 to December 31, 2023, and reflects the performance of the Company’s single class of common stock.
The graph covers the period from December 29, 2019 to December 29, 2024, and reflects the performance of the Company’s single class of common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest change(Unaudited) Year Ended December 31, 2023 December 25, 2022 Net income $ 322,317 $ 746,538 Add: Interest expense, net 166,621 143,644 Income tax expense 42,905 278,935 Depreciation and amortization 419,900 403,110 EBITDA 951,743 1,572,227 Add: Foreign currency transaction losses 20,570 30,817 Transaction costs related to acquisitions — 948 Litigation settlements expense 39,400 34,086 Restructuring activities losses 44,345 30,466 Minus: Property insurance recoveries 21,124 19,580 Net income attributable to noncontrolling interest 743 608 Adjusted EBITDA $ 1,034,191 $ 1,648,356 36 Table of Contents Reconciliation of Adjusted Net Income (Unaudited) Year Ended December 31, 2023 December 25, 2022 Net income attributable to Pilgrim’s $ 321,574 $ 745,930 Add: Foreign currency transaction losses 20,570 30,817 Restructuring activities losses 44,345 30,466 Transaction costs related to acquisitions — 948 Litigation settlements 39,400 34,086 Loss on early extinguishment of debt recognized as a component of interest expense (a) 20,694 — Minus: Property insurance recoveries 21,124 19,580 Adjusted net income attributable to Pilgrim’s before tax impact of adjustments 425,459 822,667 Net tax benefit of adjustments (b) (25,140) (19,115) Adjusted net income attributable to Pilgrim ’ s $ 400,319 $ 803,552 Weighted average diluted shares of common stock outstanding 237,297 240,394 Adjusted net income attributable to Pilgrim ’ s per common diluted share $ 1.69 $ 3.34 (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.
Biggest changeReconciliation of Adjusted EBITDA (Unaudited) Year Ended December 29, 2024 December 31, 2023 Net income $ 1,087,223 $ 322,317 Add: Interest expense, net 88,509 166,621 Income tax expense 325,046 42,905 Depreciation and amortization 433,622 419,900 EBITDA 1,934,400 951,743 Add: 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 — Minus: Property insurance recoveries — 21,124 Net income attributable to noncontrolling interest 785 743 Adjusted EBITDA $ 2,213,930 $ 1,034,191 36 Table of Contents Reconciliation of Adjusted Net Income (Unaudited) Year Ended December 29, 2024 December 31, 2023 Net income attributable to Pilgrim’s $ 1,086,438 $ 321,574 Add: Foreign currency transaction losses (gains) (10,025) 20,570 Litigation settlements 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 — Loss (gain) on early extinguishment of debt recognized as a component of interest expense (a) (11,211) 20,694 Minus: Property insurance recoveries — 21,124 Adjusted net income attributable to Pilgrim’s before tax impact of adjustments 1,355,542 425,459 Net tax benefit of adjustments (b) (66,057) (25,140) Adjusted net income attributable to Pilgrim ’ s $ 1,289,485 $ 400,319 Weighted average diluted shares of common stock outstanding 237,800 237,297 Adjusted net income attributable to Pilgrim ’ s per common diluted share $ 5.42 $ 1.69 (a) The gain on early extinguishment of debt recognized as a component of interest expense in 2024 was due to the bond repurchases.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Executive Summary Overview 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.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Executive Summary Overview 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.
The distribution of equity under the Tax Sharing Agreement is the 2022 distribution of equity that was paid in the first quarter of 2023. Long-Term Debt and Other Borrowing Arrangements Our long-term debt and other borrowing arrangements consist of senior notes, revolving credit facilities and other term loan agreements.
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 Our long-term debt and other borrowing arrangements consist of senior notes, revolving credit facilities and other term loan agreements.
Some of the limitations of these measures are: • They do not reflect our cash expenditures, future requirements for capital expenditures or contractual commitments; • They do not reflect changes in, or cash requirements for, our working capital needs; 35 Table of Contents • They do not reflect the significant interest expense or the cash requirements necessary to service interest or principal payments on our debt; • Although depreciation and amortization are noncash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements; • They are not adjusted for all noncash income or expense items that are reflected in our statements of cash flows; • EBITDA does not reflect the impact of earnings or charges attributable to noncontrolling interests; • They do not reflect the impact of earnings or charges resulting from matters we consider to not be indicative of our ongoing operations; and • They do not reflect limitations on or costs related to transferring earnings from our subsidiaries to us.
Some of the limitations of these measures are: • They do not reflect our cash expenditures, future requirements for capital expenditures or contractual commitments; • They do not reflect changes in, or cash requirements for, our working capital needs; • They do not reflect the significant interest expense or the cash requirements necessary to service interest or principal payments on our debt; • Although depreciation and amortization are noncash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements; • They are not adjusted for all noncash income or expense items that are reflected in our statements of cash flows; • EBITDA does not reflect the impact of earnings or charges attributable to noncontrolling interests; • They do not reflect the impact of earnings or charges resulting from matters we consider to not be indicative of our ongoing operations; and • They do not reflect limitations on or costs related to transferring earnings from our subsidiaries to us.
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 34 Table of Contents 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.
If management determines it is more 32 Table of Contents 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.
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.
The discount rates reflect yields on high-quality corporate bonds as of the measurement date and were compared to the effective discount rate determined by discounting plan cash flows using the 12/31/2023 Empower Above Mean Curve. 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 discount rates reflect yields on high-quality corporate bonds as of the measurement date and were compared to the effective discount rate determined by discounting plan cash flows using the 12/27/2024 Empower Above Mean Curve. 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.
GAAP, provides investors with additional perspective regarding the impact of certain significant items on EBITDA and facilitates a more direct comparison of our performance with our competitors. EBITDA and Adjusted EBITDA are not measurements of financial performance under U.S. GAAP.
GAAP, provides investors with additional perspective regarding the impact of certain significant items on EBITDA and facilitates a more direct comparison of our performance with our competitors. 35 Table of Contents EBITDA and Adjusted EBITDA are not measurements of financial performance under U.S. GAAP.
Management assessed if events or changes in circumstances indicated that the aggregate carrying amount of its identified intangible assets with definite lives might not be recoverable and determined that there were no impairment indicators during the years ended December 31, 2023 and December 25, 2022. Litigation and Contingent Liabilities.
Management assessed if events or changes in circumstances indicated that the aggregate carrying amount of its identified intangible assets with definite lives might not be recoverable and determined that there were no impairment indicators during the years ended December 29, 2024 and December 31, 2023. Litigation and Contingent Liabilities.
Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II of the 2022 Annual Report on Form 10-K filed on February 9, 2023. Liquidity and Capital Resources Our principal sources of liquidity are cash generated from operations, funds from borrowings, and existing cash on hand.
Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II of the 2023 Annual Report on Form 10-K filed on February 27, 2024. Liquidity and Capital Resources Our principal sources of liquidity are cash generated from operations, funds from borrowings, and existing cash on hand.
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.
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.
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 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 $142.5 million use of cash in 2022.
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.
Our 2022 and 2021 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.
Our 2022 indefinite-life intangible assets impairment analyses did not result in an impairment charge. 33 Table of Contents 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.
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. Social Responsibility . Safety of our team members is a condition at Pilgrim’s.
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.
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 32 Table of Contents amount of a reporting unit’s goodwill over the implied fair value of that goodwill.
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. For additional information, see “Note 20. Reportable Segments” of our Consolidated Financial Statements included in this annual report. Results of Operations 2023 Compared to 2022 Net sales.
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. Reportable Segments” of our Consolidated Financial Statements included in this annual report.
As a percent of net sales, interest expense in 2023 and 2022 was 1.0% and 0.8%, respectively. Income taxes. Our consolidated income tax expense in 2023 was $42.9 million, compared to income tax expense of $278.9 million in 2022.
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 following table presents our available sources of liquidity as of December 31, 2023: Sources of Liquidity Facility Amount Amount Outstanding Available (In millions) Cash and cash equivalents $ 731.2 Borrowing arrangements: U.S.
The following table presents our available sources of liquidity as of December 29, 2024: Sources of Liquidity Facility Amount Amount Outstanding Available (In millions) Cash and cash equivalents $ — $ — $ 2,043.2 Borrowing arrangements: U.S.
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.
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 $1.1 billion, or $4.57 per diluted common share, and profit before tax totaling $1.4 billion, for 2024.
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 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.
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. 31 Table of Contents We evaluate the transaction for distinct performance obligations, which are the sale of our products to customers.
We account for a contract, which may be verbal or written, when it is approved and committed by both parties, 31 Table of Contents the rights of the parties are identified along with payment terms, the contract has commercial substance and collectability is probable.
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.
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.
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 $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 $68.7 million use of cash in 2023. This change resulted primarily from the timing of payments.
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. 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.
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 at December 25, 2022. These amounts were considered immaterial to warrant quantitative goodwill impairment testing.
The decrease in income tax expense in 2023 resulted from a decrease in pre-tax income during 2023. 26 Table of Contents 2022 Compared to 2021 For discussion of 2022 results of operations in comparison to 2021 results of operations, see Item 7.
The increase in income tax expense in 2024 resulted primarily from an increase in pre-tax income during 2024. 27 Table of Contents 2023 Compared to 2022 For discussion of 2023 results of operations in comparison to 2022 results of operations, see Item 7.
Business and Summary of Significant Accounting Policies.” Critical Accounting Policies and Estimates General . Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with U.S. GAAP.
Recent Accounting Pronouncements Refer to Part II, Item 8, Notes to Consolidated Financial Statements, “Note 1. Business and Summary of Significant Accounting Policies.” Critical Accounting Policies and Estimates General . Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with U.S. GAAP.
“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.
“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) 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.
The change in trade accounts and other receivables, including accounts receivable from related parties, represented a $149.6 million use of cash in 2022. The change in cash was primarily due to the timing of customer payments. The change in inventories represented a $12.6 million source of cash in 2023.
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. The change in cash was primarily due to the timing of customer payments.
We eliminate all significant affiliate accounts and transactions upon consolidation. U.S. Reportable Segment. 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 2022.
We eliminate all significant affiliate accounts and transactions upon consolidation. U.S. Reportable Segment. 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.
Year Ended Cash Flows from Investing Activities December 31, 2023 December 25, 2022 (In millions) Acquisitions of property, plant and equipment $ (543.8) $ (487.1) Proceeds from insurance recoveries 20.7 16.0 Proceeds from property disposals 19.8 35.5 Purchase of acquired businesses, net of cash acquired — (9.7) Cash used in investing activities $ (503.4) $ (445.3) 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.
Year Ended Cash Flows from Investing Activities December 29, 2024 December 31, 2023 (In millions) Acquisitions of property, plant and equipment $ (476.2) $ (543.8) Proceeds from insurance recoveries — 20.7 Proceeds from property disposals 15.4 19.8 Cash used in investing activities $ (460.8) $ (503.4) 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.
The excess of the consideration over the amount allocated to the assets and liabilities, if any, is recorded to goodwill. We use all available information to estimate fair values.
Business Combination Accounting . We allocate the consideration of an acquired business to its identifiable assets and liabilities based on estimated fair values. The excess of the consideration over the amount allocated to the assets and liabilities, if any, is recorded to goodwill. We use all available information to estimate fair values.
Management has the option to bypass the qualitative assessment for any indefinite-life intangible asset in any period and proceed directly to performing the quantitative impairment test. 33 Table of Contents The fair value of our indefinite-life intangible assets is calculated principally using a relief-from-royalty valuation approach, which uses significant unobservable inputs as defined by the fair value hierarchy, and is believed to reflect market participant views which would exist in an exit transaction.
The fair value of our indefinite-life intangible assets is calculated principally using a relief-from-royalty valuation approach, which uses significant unobservable inputs as defined by the fair value hierarchy, and is believed to reflect market participant views which would exist in an exit transaction.
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 28 Table of Contents loss, represented a $8.9 million use of cash 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.
(c) Includes agreements to purchase goods or services that are enforceable and legally binding on us and that specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum, or variable price provisions; and the approximate timing of the transaction. 30 Table of Contents W e expect cash flows from operations, combined with availability under the U.S.
(c) Includes agreements to purchase goods or services that are enforceable and legally binding on us and that specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum, or variable price provisions; and the approximate timing of the transaction.
During 2023, the U.K. chicken market saw an increase in labor costs due to the national living wages change in April 2023. 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.
During 2024, the U.K. chicken market saw an increase in labor costs due to the national living wages change in April 2024. Through customer contracts and additional negotiations, we have offset the majority of these cost increases.
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. Louis Fed research center.
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.
Our defined benefit pension and other postretirement plans contains uncertainties because it requires management to make assumptions and apply judgments. The key assumptions made in developing key estimates include discount rates, expected returns on plan assets, retirement rates, and mortality. These assumptions can have a material impact on the funded status and the net periodic benefit cost.
The key assumptions made in developing key estimates include discount rates, expected returns on plan assets, retirement rates, and mortality. These assumptions can have a material impact on the funded status and the net periodic benefit cost.
These amounts were considered immaterial to warrant quantitative goodwill impairment testing. In 2023, we experienced (1) an increase in long-term treasury rates that management determined could negatively affect discount rates and (2) continued inflationary pressures impacting primarily our Moy Park and Pilgrim’s Food Masters reporting units that management determined could negatively affect our margins.
In 2023, we experienced (1) an increase in long-term treasury rates that management determined could negatively affect discount rates and (2) continued inflationary pressures impacting primarily our Moy Park and Pilgrim’s Food Masters reporting units that management determined could negatively affect our margins. Both discount rates and margins are used in estimating the fair value of the reporting units.
(b) As of December 31, 2023, the U.S. dollar-equivalent of the amount available under the Mexico BBVA Credit Facility was $65.4 million ($1.1 billion Mexican pesos). (c) As of December 31, 2023, the U.S. dollar-equivalent of the amount available under the U.K. and Europe Revolver Facility was $191.1 million (£150.0 million).
(b) As of December 29, 2024, the U.S. dollar-equivalent of the amount available under the Mexico Credit Facility was $54.6 million ($1.1 billion Mexican pesos). (c) As of December 29, 2024, the U.S. dollar-equivalent of the amount available under the Europe Credit Facility was $188.6 million (£150.0 million).
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 higher profitability in 2024 which increased our income tax payables and reduced income tax receivable.
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.
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.
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.
Since our products are commodity market-priced, the sales price is representative of the observable, standalone selling price.
We evaluate the transaction for distinct performance obligations, which are the sale of our products to customers. Since our products are commodity market-priced, the sales price is representative of the observable, standalone selling price.
Some of these plans are administered by a board of trustees made up of management within the participating companies and representatives 34 Table of Contents 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.
Our Pilgrim’s U.K. reporting unit reported goodwill of $2.3 million at December 31, 2023. 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.
Therefore, management elected to bypass qualitative assessments and performed quantitative goodwill impairment tests for the Moy Park, Pilgrim’s Food Masters, Pilgrim’s Mexico, and Pilgrim’s U.S. reporting units as of December 31, 2023. Our Pilgrim’s U.K. reporting unit reported goodwill of $2.3 million at December 31, 2023. This amount was considered immaterial to warrant quantitative goodwill impairment testing.
Other items affecting net noncash expenses were individually immaterial. 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.
Partially offsetting the net noncash expenses was an $6.1 million gain on property disposals. Other items affecting net noncash expenses were individually immaterial. Changes in Operating Assets and Liabilities The change in trade accounts and other receivables, including accounts receivable from related parties, represented a $88.3 million source of cash in 2024.
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. 27 Table of Contents Historical Flow of Funds Year Ended Cash Flows from Operating Activities December 31, 2023 December 25, 2022 (In millions) Net income $ 322.3 $ 746.5 Net noncash expenses 462.4 422.6 Changes in operating assets and liabilities: Trade accounts and other receivables (19.0) (149.6) Inventories 12.6 (472.2) Prepaid expenses and other current assets 17.8 18.3 Accounts payable and accrued expenses (68.7) 263.3 Income taxes (8.9) (142.5) Long-term pension and other postretirement obligations (10.0) (4.1) Other operating assets and liabilities (30.7) (12.3) Cash provided by operating activities $ 677.9 $ 669.9 Net Noncash Expenses 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.
Historical Flow of Funds Year Ended Cash Flows from Operating Activities December 29, 2024 December 31, 2023 (In millions) Net income $ 1,087.2 $ 322.3 Net noncash expenses 480.0 462.5 Changes in operating assets and liabilities: Trade accounts and other receivables 88.3 (19.0) Inventories 134.5 12.6 Prepaid expenses and other current assets (33.3) 17.8 Accounts payable and accrued expenses 126.7 (68.7) Income taxes 109.4 (8.9) Long-term pension and other postretirement obligations 26.1 (10.0) Other operating assets and liabilities (28.8) (30.7) Cash provided by operating activities $ 1,990.1 $ 677.9 Net Noncash Expenses 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.
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 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 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.
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. Reportable Segments We operate in three reportable segments: the U.S., the U.K. and Europe, and Mexico. We measure segment profit as operating income.
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., Europe, and Mexico. We measure segment profit as operating income.
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. dollar.
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. dollar.
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. Mexico 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 2024 decreased $2.3 million, or 3.6%, from SG&A expense incurred by the Mexico operations during 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 $18.9 million gain on property disposals.
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 28 Table of Contents $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.
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. Mexico Reportable Segment.
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.
U.S. 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.
Reportable Segment. U.S. 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.
We use independent third-party actuaries to assist in determining our pension obligations and net periodic benefit cost. We, along with the actuaries, review assumptions including estimates of the present value of projected future pension payments to participants. We accumulate and amortize the impact of actuarial gains and losses over future periods.
We, along with the actuaries, review assumptions including estimates of the present value of projected future pension payments to participants. We accumulate and amortize the impact of actuarial gains and losses over future periods. Our defined benefit pension and other postretirement plans contains uncertainties because it requires management to make assumptions and apply judgments.
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.
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.
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.
Pillar II Tax Initiative 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.
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.
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.
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 cash resulted from an decrease in our raw materials and work-in-process inventory values. The change in prepaid expenses and other current assets represented a $33.3 million use of cash in 2024.
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.
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.
Revolving Syndicated Facility (a) $ 850.0 $ — 824.9 Mexico BBVA Credit Facility (b) 65.4 — 65.4 U.K. and Europe Revolver Facility (c) 191.1 — 191.1 (a) Availability under the U.S. Revolving Syndicated Facility is also reduced by our outstanding standby letters of credit. Standby letters of credit outstanding at December 31, 2023 totaled $25.1 million.
Credit Facility (a) 850.0 — 825.8 Mexico Credit Facility (b) 54.6 — 54.6 Europe Credit Facility (c) 188.6 — 188.6 (a) Availability under the U.S. 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.
Year Ended Cash Flows from Financing Activities December 31, 2023 December 25, 2022 (In millions) Proceeds from revolving line of credit and long-term borrowings $ 1,768.2 $ 362.5 Payments on revolving line of credit, long-term borrowings, and finance lease obligations (1,616.3) (388.3) Payment of capitalized loan costs (19.8) (4.7) Payment on early extinguishment of debt (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) Cash provided by (used in) financing activities $ 116.7 $ (232.0) 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.
Proceeds from property disposals were primarily for the sale of a farm in Mexico and other miscellaneous equipment. 29 Table of Contents Year Ended Cash Flows from Financing Activities December 29, 2024 December 31, 2023 (In millions) Proceeds from revolving line of credit and long-term borrowings $ — $ 1,768.2 Payments on revolving line of credit, long-term borrowings, and finance lease obligations (152.1) (1,616.3) Payment of capitalized loan costs — (19.8) Payment on early extinguishment of debt (0.2) (13.8) 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 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.
Capital Expenditures We anticipate spending between $475 million and $525 million on the acquisition of property, plant and equipment in 2024. 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.
For a description, refer to Part II, Item 8, Notes to Consolidated Financial Statements, “Note 13. Debt.” 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 information technology system enhancement projects.
Therefore, management elected to bypass qualitative assessments for all indefinite-life intangible assets and performed quantitative impairment tests. Based on the outcome of the quantitative tests, management determined that no material impairment existed as of December 31, 2023. The estimated fair values of two indefinite-life intangible assets did not exceed their carrying amounts by more than 20% at December 31, 2023.
Therefore, management elected to bypass qualitative assessments for all indefinite-life intangible assets and performed quantitative impairment tests. Based on the outcome of the quantitative tests, management determined that no material impairment existed as of December 29, 2024. 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.
Contractual Obligations In addition to our debt commitments at December 31, 2023, we had other commitments and contractual obligations that require us to make specified payments in the future. The following table summarizes the total amounts due as of December 31, 2023 under all debt agreements, commitments and other contractual obligations.
The following table summarizes the total amounts due as of December 29, 2024 under all debt agreements, commitments and other contractual obligations. The table indicates the years in which payments are due under the contractual obligations.
Partially offsetting the net noncash expenses was an $6.1 million gain on property disposals. Other items affecting net noncash expenses were individually immaterial. Items necessary to reconcile from net income to cash flow provided by operating activities included net noncash expenses of $422.6 million for the year ended December 25, 2022.
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.
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. Global Economic Conditions During 2023, we continued to experience challenges from inflation in commodity, labor and other operating costs across all our businesses.
Any reference we make to a particular year applies to our fiscal year and not the calendar year. Fiscal year 2024 was a 52-week fiscal year and fiscal year 2023 was a 53-week fiscal year. Global Economic Conditions During 2024, global inflation levels declined, but remained above historical averages.
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 health of our workforce was our top priority throughout the COVID-19 pandemic, and we implemented hundreds of safety measures within our facilities, constantly 23 Table of Contents evolving our operations as needed.
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 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. Finally, ensuring the well-being of animals under our care is an uncompromising commitment at Pilgrim’s.
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 24 Table of Contents long-term community infrastructure through our Hometown Strong initiative. To date, we have approved over $15 million for these areas.
This process is further reinforced by a series of key performance indicators to evaluate and monitor progress. These performance indicators are linked with compensation for both senior executive and plant level personnel. As part of our business management processes, progress against these metrics is reviewed at least monthly and evaluated by external agencies to assess progress against industry peers.
To cultivate discipline and drive accountability for Sustainability-related matters, we use our annual budgeting process to establish strategies, plans, and risk mitigation tactics. This process is further reinforced by a series of key performance indicators to evaluate and monitor progress. These performance indicators are linked with compensation for both senior executive and plant level personnel.
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. U.K. prices for prepared foods have remained at elevated levels from inflationary pressure, primarily from increased pork prices.
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. U.K. pig farming became profitable in the second quarter of 2023 and has remained profitable since. U.K. prices for prepared foods have increased from inflationary pressures.
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. Business Combination Accounting . We allocate the consideration of an acquired business to its identifiable assets and liabilities based on estimated fair values.
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”).
We continually strive to improve our welfare efforts through the use of new technologies and the implementation of standards that meet and exceed regulatory requirements and industry guidelines. Governance . To cultivate discipline and drive accountability for Sustainability related matters, we use our annual budgeting process to establish strategies, plans, and risk mitigation tactics.
Finally, ensuring the well-being of animals under our care is an uncompromising commitment at Pilgrim’s. We continually strive to improve our welfare efforts through the use of new technologies and the implementation of standards that meet and exceed regulatory requirements and industry guidelines. Governance.
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.
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.
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. U.K. and Europe Reportable Segment.
We eliminate all significant affiliate accounts and transactions upon consolidation. U.S. Reportable Segment. Selling, general and administrative (“SG&A”) expense incurred by the U.S. 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.
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.
This change resulted primarily from a net decrease in the commodity derivatives assets. 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.
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.
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.
The following tables provide gross profit information: Change from 2022 Percent of Net Sales Components of gross profit 2023 Amount Percent 2023 2022 (In thousands, except percent data) Net sales $ 17,362,217 $ (106,160) (0.6) % 100.0 % 100.0 % Cost of sales 16,243,816 587,242 3.8 % 93.6 % 89.6 % Gross profit $ 1,118,401 $ (693,402) (38.3) % 6.4 % 10.4 % Sources of gross profit 2023 Change from 2022 Amount Percent (In thousands, except percent data) U.S. $ 522,484 $ (913,421) (63.6) % U.K. and Europe 374,699 134,027 55.7 % Mexico 221,432 86,260 63.8 % Elimination (a) (214) (268) (496.3) % Total gross profit $ 1,118,401 $ (693,402) (38.3) % Sources of cost of sales 2023 Change from 2022 Amount Percent (In thousands, except percent data) U.S. $ 9,505,258 $ 192,813 2.1 % U.K. and Europe 4,828,623 194,557 4.2 % Mexico 1,909,721 199,604 11.7 % Elimination (a) 214 268 (496.3) % Total cost of sales $ 16,243,816 $ 587,242 3.8 % (a) Our Consolidated Financial Statements include the accounts of our company and our majority owned subsidiaries.
The following tables provide gross profit information: Change from 2023 Percent of Net Sales Components of gross profit 2024 Amount Percent 2024 2023 (In thousands, except percent data) Net sales $ 17,878,291 $ 516,074 3.0 % 100.0 % 100.0 % Cost of sales 15,565,524 (678,292) (4.2) % 87.1 % 93.6 % Gross profit $ 2,312,767 $ 1,194,366 106.8 % 12.9 % 6.4 % Sources of gross profit 2024 Change from 2023 Amount Percent (In thousands, except percent data) U.S. $ 1,564,092 $ 1,041,608 199.4 % Europe 461,667 86,968 23.2 % Mexico 287,008 65,576 29.6 % Elimination (a) — 214 (100.0) % Total gross profit $ 2,312,767 $ 1,194,366 106.8 % Sources of cost of sales 2024 Change from 2023 Amount Percent (In thousands, except percent data) U.S. $ 9,065,837 $ (439,421) (4.6) % Europe 4,675,080 (153,543) (3.2) % Mexico 1,824,607 (85,114) (4.5) % Elimination (a) — (214) (100.0) % Total cost of sales $ 15,565,524 $ (678,292) (4.2) % (a) Our Consolidated Financial Statements include the accounts of our company and our majority owned subsidiaries.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe Mexican peso exchange rate can directly and indirectly impact our financial condition and results of operations. For this sensitivity analysis, market risk is estimated as a hypothetical 10% change in the current exchange rate used to convert Mexican pesos to U.S. dollars as of December 31, 2023. However, fluctuations greater than 10% could occur.
Biggest changeFor this sensitivity analysis, market risk is estimated as a hypothetical 10% change in exchange rates used to convert Mexican peso to U.S. dollars, and the effect of this change on our Mexican foreign investments. Net Assets. As of December 29, 2024, our Mexican subsidiaries that are denominated in Mexican peso had net assets of $796.9 million.
We have analyzed our portfolios of investments and, to the best of our knowledge, none of our investments, including money market funds units, commercial paper and municipal securities, have been downgraded, and neither we nor any fund in which we participate hold significant amounts of structured investment vehicles, auction rate securities, collateralized debt obligations, credit derivatives, hedge funds investments, fund of funds investments or perpetual preferred securities.
We have analyzed our portfolios of investments and, to the best of our knowledge, none of our investments, including money market funds units, commercial paper and municipal securities, have been downgraded, and neither we nor any fund in which we participate hold significant 38 Table of Contents amounts of structured investment vehicles, auction rate securities, collateralized debt obligations, credit derivatives, hedge funds investments, fund of funds investments or perpetual preferred securities.
A 10% increase in corn, soybean meal, soybean oil and wheat prices would have resulted in an increase in the fair value of our net commodity derivative asset position, including margin cash, as of December 31, 2023. Interest Rates Fixed-rate debt .
A 10% increase in corn, soybean meal, soybean oil and wheat prices would have resulted in an increase in the fair value of our net commodity derivative asset position, including margin cash, as of December 29, 2024. Interest Rates Fixed-rate debt .
We periodically enter into foreign currency forward contracts, which are designated and qualify as cash flow hedges, to hedge foreign currency risk on a portion of sales generated and purchases made by our U.K. and Europe subsidiaries.
We periodically enter into foreign currency forward contracts, which are designated and qualify as cash flow hedges, to hedge foreign currency risk on a portion of sales generated and purchases made by our Europe reportable segment.
Market risk for fixed-rate debt is estimated as the potential decrease in fair value resulting from a hypothetical increase in interest rates of 10%. Using a discounted cash flow analysis, a hypothetical 10% increase in interest rates would have decreased the fair value of our fixed-rate debt by $131.1 million as of December 31, 2023.
Market risk for fixed-rate debt is estimated as the potential decrease in fair value resulting from a hypothetical increase in interest rates of 10%. Using a discounted cash flow analysis, a hypothetical 10% increase in interest rates would have decreased the fair value of our fixed-rate debt by $101.4 million as of December 29, 2024.
A 10% strengthening in the British pound against the U.S. dollar exchange rate would cause an increase in the net assets of our U.K. and Europe subsidiaries by $457.6 million. Cash flow hedging transactions.
A 10% weakening in the British pound against the U.S. dollar exchange rate would cause a decrease in the net assets of our Europe subsidiaries by $70.7 million. A 10% strengthening in the British pound against the U.S. dollar exchange rate would cause an increase in the net assets of our Europe subsidiaries by $86.4 million. Cash flow hedging transactions.
For this sensitivity analysis, market risk is estimated as a hypothetical 10% change in exchange rates used to convert U.S. dollars to British pound and to euro, and the effect of this change on our U.K. and Europe subsidiaries. Net Assets.
For this sensitivity analysis, market risk is estimated as a hypothetical 10% change in exchange rates used to convert British pound and euro to U.S. dollars, and the effect of this change on our Europe foreign investments. Net Assets. As of December 29, 2024, our Europe subsidiaries that are denominated in the British pound had net assets of $0.8 billion.
(b) A 10% increase in ending feed ingredient prices would have increased inventories as of December 31, 2023. 37 Table of Contents December 31, 2023 Amount Impact of 10% Increase to the Fair Value of Commodity Derivative Assets (In thousands) Commodity derivative assets (a) $ 35,812 $ 3,581 (a) We purchase commodity derivative financial instruments, specifically exchange-traded futures and options, in an attempt to mitigate price risk related to our anticipated consumption of commodity inputs for the next 12 months.
December 29, 2024 Amount Impact of 10% Increase to the Fair Value of Commodity Derivative Assets (In thousands) Commodity derivative assets (a) $ 9,677 $ 968 (a) We purchase commodity derivative financial instruments, specifically exchange-traded futures and options, in an attempt to mitigate price risk related to our anticipated consumption of commodity inputs for the next 12 months.
A 10% weakening or strengthening of the U.S. dollar against the British pound and U.S. dollar against the euro would result in immaterial changes in the fair values of these derivative instruments.
A 10% weakening or strengthening of the U.S. dollar against the British pound and U.S. dollar against the euro would result in immaterial changes in the fair values of these derivative instruments. No assurance can be given as to how future movements in currency rates could affect our future financial condition or results of operations.
As of December 31, 2023, our U.K. and Europe subsidiaries that are denominated in the British pound had net assets of $4.1 billion. A 10% weakening in the British pound against the U.S. dollar exchange rate would cause a decrease in the net assets of our U.K. and Europe subsidiaries by $374.4 million.
A 10% weakening in Mexican peso against the U.S. dollar exchange rate would cause a decrease in the net assets of our Mexican subsidiaries by $72.4 million.
Year Ended December 31, 2023 Amount Impact of 10% Increase in Feed Ingredient Prices (In thousands) Feed ingredient purchases (a) $ 4,298,504 $ 429,850 Feed ingredient inventory (b) 206,198 20,620 (a) Based on our feed consumption, a 10% increase in the price of our feed ingredient purchases will have increased cost of sales for the year ended December 31, 2023.
Year Ended December 29, 2024 Amount Impact of 10% Increase in Feed Ingredient Prices (In thousands) Feed ingredient purchases (a) $ 3,451,498 $ 345,150 Feed ingredient inventory (b) 166,993 16,699 37 Table of Contents (a) Based on our feed consumption, a 10% increase in the price of our feed ingredient purchases would have increased cost of sales for the year ended December 29, 2024.
We are also exposed to the effect of potential currency exchange rate fluctuations to the extent that amounts are repatriated from Mexico to the U.S. We currently anticipate that the future cash flows of our Mexico subsidiaries will be reinvested in our Mexico operations.
A 10% strengthening in the Mexican peso against the U.S dollar exchange rate would cause an increase in the net assets of our Mexican subsidiaries of $88.5 million We are also exposed to the effect of potential currency exchange rate fluctuations to the extent that amounts are repatriated from Mexico to the U.S.
Certain postretirement funds in which we participate hold significant amounts of mortgage-backed securities. However, none of the mortgages collateralizing these securities are considered subprime. Impact of Inflation Our global operations were impacted by inflation during 2023, but less significantly than in 2022.
Certain postretirement funds in which we participate hold significant amounts of mortgage-backed securities. However, none of the mortgages collateralizing these securities are considered subprime. Impact of Inflation The U.S., Mexico and most of Europe continue to experience inflation at above-historical levels, though to a lesser degree than in the prior year.
No assurance can be given as to how future movements in currency rates could affect our future financial condition or results of operations. 38 Table of Contents Quality of Investments Certain retirement plans that we sponsor invest in a variety of financial instruments.
Quality of Investments Certain retirement plans that we sponsor invest in a variety of financial instruments.
Removed
Foreign Currency Mexico Subsidiaries Our earnings are also affected by foreign exchange rate fluctuations related to the Mexican peso net monetary position of our Mexico subsidiaries. We manage this exposure primarily by attempting to minimize our Mexican peso net monetary position.
Added
(b) A 10% increase in ending feed ingredient prices would have increased inventories as of December 29, 2024.
Removed
No assurance can be given as to how future movements in the Mexican peso could affect our future financial condition or results of operations.
Added
Foreign Currency Mexico Foreign Investments We are exposed to foreign exchange-related variability of investments and earnings from our Mexican subsidiaries. Foreign currency market risk is the possibility that our financial results or financial position could be better or worse than planned because of changes in foreign currency exchange rates.
Removed
Year Ended December 31, 2023 Impact of 10% Deterioration in Exchange Rate (a) Impact of 10% Appreciation in Exchange Rate (b) (In thousands, except for exchange rate data) Foreign currency remeasurement gain (loss) $ (18,310) $ 22,379 Exchange rate of Mexican pesos to the U.S. dollar: As reported 16.97 16.97 Hypothetical 10% change 18.67 15.28 U.K. and Europe Subsidiaries We are exposed to foreign exchange-related variability of investments and earnings from our U.K. and Europe subsidiaries.
Added
The Mexican peso exchange rate can directly and indirectly impact our financial condition and results of operations. Europe Foreign Investments We are exposed to foreign exchange-related variability of investments and earnings from our Europe subsidiaries.
Removed
Our global businesses negotiated with our customers to increase prices to mitigate the impacts of the increase in input costs such as feed ingredients, labor, utilities, freight and other input costs. Prior to 2022, inflation was significantly less impactful to our operations.
Added
None of the locations in which we operate are experiencing hyperinflation. We have responded to these inflationary challenges by continuing negotiations with customers to recoup the 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. 39 Table of Contents
Removed
We anticipate inflation in 2024 will be moderate compared to 2023 based on the monetary policy measures implemented in the jurisdictions in which we operate. 39 Table of Contents

Other PPC 10-K year-over-year comparisons