Good morning and welcome to JBS's third quarter of 2026 results conference call. At this time, all participants are in listen-only mode. Following management's remarks, we will open the floor for a question and answer session, and instructions will be given to participants on how to provide at that time. Please note that to ensure all analysts have the opportunity to ask a question, we kindly request that each analyst limit themselves to just one question. As a reminder, this conference is being recorded. Any statements eventually made during this conference call in connection with the company business outlook, projections, operating and financial targets, and potential growth should be understood as merely forecasts based on the company's management expectations in relation to the future of JBS. Such expectations are highly dependent on the industry and market conditions and therefore are subject to change. Our present with us today, Gilberto Tomazoni, Global CEO of JBS, Guilherme Cavalcanti, Global CFO of JBS, Wesley Batista Filio, CEO of JBS USA, and Christiane Aziz, Investor Relations Director. Now, I'll turn the conference over to Gilberto Tomazoni. Mr. Tomazoni, you may begin your presentation.

Good morning, everyone, and thank you for joining us today. The third quarter was a by a challenging market conditions across several of our business. Changing international trading flows, pressure on poultry margins, and a global oversupply of pork affected our results. At the same time, we made progress in important areas of our operation, reinforcing our confidence in the strategy we have been executing. Our experience in food industry has shown us the importance of understanding market cycles, improving efficiency, and making decisions that strengthen our business over the long term. Our important development in the quarter was the return to positive EBITDA in our U.S. beef business. This is an encouraging result of the work we have been doing to improve competitiveness. There is still more to do, but we are beginning to see the benefit of these initiatives. Wesley will provide more details of the performance of North America's business in the action underway. Turning to Pilgrim's Pride, as Fabio Sandri highlighted during the company third quarter earnings call, chicken continues to resonate with the consumer across its markets. supported by affordability and the strength of its diversified portfolio. He also emphasizes the progress in operation efficiency, innovation, and investment in high-value products. These remain important priorities as Pilgrim's continues to strengthen its business and build resiliency across market cycles. In Brazil, Despite a challenged quarter, our team responded promptly in adapting production and commercial strategy and leveraged our global network and distribution capabilities. While export to China declined sharply, Freeboy successfully redirected volumes to other markets and expanded domestic sales. This performance reflects the strength of Freeboy brands. The value of our Freeboy Plus Retail Relationship Programs, and the effectiveness of our commercial execution. We already see an improvement in October, reflecting this adjustment in renewed demand from China as a customer security volume under the 2027 quota. Together with seasonality and stronger domestic consumption, this created a more favorable environment for our Brazilian beef business in the fourth quarter. The recovery in export volumes, combined with the strongest seasonal demand in Brazil, give us confidence in a better fourth quarter for Friboi. Our strong brand-customer relationship and access to international markets remain important competitive advantage, allowing us to respond changing in demand and maximize The value of our products. Freeboy is a clear example of how strong brands, close relationships with retailers, and access to different markets helped us to respond to challenging conditions and strengthen our competitive position. At Seara, the quarter was affected by higher costs and more challenging commercial environment in Brazil. Despite this pressure, Seara gained market share across the categories and reaches the highest ever level of brand preference in consumer consideration. These results reflect the strength of Seara brand and its position with Brazilian consumers. We are focusing on what we can control, improving efficiency and commercial execution, strengthening the integration between our operations and customers, and increasing the value of our portfolio. We continue to invest in automation at Seara to improve productivity and efficiency. Seara is a strong brand. Innovation and investment in production capability provide a solid foundation for growth. The gains in market share and record brand indicators reinforce the competitiveness of Seara of the stress of the commercial execution. Internationally, the Middle East remains an important market. where our investments in local production and distribution are strengthening our presence and contributing positively to results. In Europe, we maintain production and build inventories during a period of trade restriction, position the business to benefit as sales resume. The fourth quarter is also an important period of Seara, supported by strong seasonal demand in the local markets Together with the recovery international sales and inventories built during the quarter, this supports a more favorable outlook for Seara in the final months of the year. Across the global operation, market conditions vary, but the pace of recovery will not be the same across the proteins and geography. This reinforces the importance of our diversification strategy. We have built JDS as a global multi-protein company with access to different markets and searching of earnings. Diversification does not eliminate industrial cycles, but it restricts our ability to navigate them, allocate capital, and continue developing our business. Our investment in efficient innovation, brands, and value-added products support this long-term strategy. And our people remain fundamental to the execution, with experienced teams close to our operations and customers. Cash generation is another important priority. Leverage increases during the quarter, as expected, reflecting the operating environment. We remain focused on working capital management, and Disciplined Capital Allocation. Maintaining the financial flexibility need to be support our investments. We have built JBS as a long-term vision. Investing consistently and strengthens our ability to compete in different markets and industrial cycles. Our strategy remains unchanged. We will continue to focus on execution, efficiency, and develop our people, creating conditions for sustainable growth and long-term value creation. Our leadership transition is progressing as planned, with Welder Batista Filho gradually taking on greater responsibility for JBS operations. This is a natural step in the company evolution, supported by our strong management team, consistent strategy and our ethos Thank you very much. I will now turn the call over to Edwin.

Good morning, everyone. The main highlight of the quarter was our U.S. beef business returning to positive adjusted EBITDA under the U.S. cap after two challenging years. This reflects both improving market conditions and the operational changes we've been implementing. Earlier this year, we brought our fat beef Regional Beef and Case Ready Business Units under one management structure to better coordinate procurement, production, and sales and optimize our production footprint. We've also increased our focus on yields, productivity, maintenance, operational reliability, and cost discipline. On the market side, the reopening of the U.S. border to Mexican cattle imports is an important development. Cattle are arriving heavier and reaching processing weights sooner. We expect approximately 1.5 million of imported cattle from Mexico per year. Cattle prices have declined from recent peaks, while beef prices remain resilient. Although cattle supplies remain tight, Mexican imports and a better balance in processing capacity support a more constructive outlook. Turning to U.S. pork, market conditions deteriorated rapidly during the quarter. Higher global supply and weaker demand have pressured prices and margins. We expect these conditions to remain challenging into the first half of 2027. Our focus is on cost management and operational efficiency. The U.S. has harvested its second largest corn crop on record, supporting ample grain availability and stable feed costs. In South America, soybean planting in Brazil has progressed within the ideal window. although it is still early to assess the second corn crop. Overall, we're encouraged by the improvements of the U.S. beef business. Our focus remains on what we can control, improving productivity, managing costs, and making our operations more competitive. Thank you, everyone. I will now turn the call over to Guilherme.

Thank you, Tomazoni and Wesley. Last night, we announced the acquisition of 100% of Flora, for the enterprise value of $442 million, of which $367 million for the equity and $175 million in that assumption. All the equity will be paid in JDS Treasury Class A shares. There will be no impact on JDS net leverage given Flora EBITDA. Flora brings higher margins than JBS, a portfolio of well-established home and personal care brands and significant synergies. Flora also brings an important strategic advantage to JBS. It is established B2C platform gives us access to new sales channels in Brazil, particularly drugstores and specialized retailers, which we can leverage to accelerate the growth of our higher value-added products, including Genuine, Our collagen-based health and nutrition platform. At the same time, flora is highly complementary to our value chain as it uses raw materials that JBS already produces. Talo is a clear example, with approximately 93% of flora's consumption already supplied by JBS. This combination allows us to move closer to the end consumer while creating new venues of growth. We see cost synergies from integrating corporate and commercial functions, as well as additional opportunities across logistics, procurement, and tax. Considering only 2,027 synergies, for acquisition multiple would reduce from 7 times to less than 4.9 times. Over 10 years, we estimate the present value of total synergies and monetization of tax credits at $422 million, further reinforcing the value creation of the transaction. On page 17 of the 10Q financial statements, we disclose approximately $800 million in VAT-related tax credits and $2.2 billion in income tax credits. Additional details, including breakdowns for their explanation, can be found on page 18 of our 2025 annual financial statements. Keep in mind, under Brazil's tax reform, VAT tax ICNS will be gradually replaced by CBS and IBS, but we expect the tax credit accumulation to continue to grow. To establish the synergies, you can use the applicable tax rate, Florida's revenue and net margins, incorporating a higher capacity utilization and additional capacity expected to come online over the next years. We also announced the acquisition of Canal Rural for the enterprise value of $16 million to be paid in JDS Treasury Class A shares. Canal Rural brings us closer to the producer, strengthens our ability to advance traceability across our indirect supplier base, and provides an important platform for engaging with society and policymakers. Let's now move on to the operational and financial highlights of the third quarter of 2026. Net sales reached $23 billion for the third quarter. Adjustability is up under IFRS, totaling $1.2 billion, with a margin of 5.2% for the quarter. Excluding market-to-market adjustments on biological assets, Adjusted beta margin would have been 5.5%. This metric is used by some of our peers, which also report under IFRS. The main impact was the market-to-market in US4, given the reduction in the future curve of light hubs. It's important to highlight that there is no cash impact related to that. Adjusting operating income was $521 million with a margin of 2.3% in IFRS and $597 million in US GAAP with a margin of 2.6%. Medi-income was $164 million in the quarter and an earnings per share of 50 cents Excluding the non-recurring items, adjusted net income would be $167 million, and earnings per share would be $0.16 in the quarter. Pre-cash flow was negative $167 million in the third quarter, with $551 million in decrease year over year, explained by $653 million decline in adjusted VISA and higher working capital consumption in Brazil, particularly inventories. The increase was mainly reflected in higher grains inventories at Seara, as well as higher chicken inventories at Seara in Europe. The company also stated high inventories in JDS Brazil beef products to be sent to China in the fourth quarter of 2026 to fulfill the 27 quotas. This offset the quarterly positive working capital contribution of $325 million positive from the U.S. and Australia business units. Total working capital consumption was $106 million in the quarter. Not considering guidance, but simply updating and increasing the cash flow break-evening exercise for the year, we expect $5.5 billion in 2026, driven by $2.1 billion in capital expenditures, working capital, expected consumption of $550 million in 2026, and improvement of $300 million year-over-year. Legal statements of $100 million already realized in 2026. Biological assets of $850 million flat over 2025. Interest expenses of $1.4 billion and increase of $100 million versus the previous estimated due to the higher net debt. Living expense at $500 million in 2026 and an effective tax rate of 25%. Another exercise, again without providing guidance, is to look at the potential for cash flow generation in 2027. In this North America, our largest segment adjusted to that was negative by $309 million year-to-date in U.S. gas. Considering year-to-date working capital consumption of $254 million and capital expenditure of $158 million, The cash consumption of this business unit was $721 million. For every 1% improvement in this North America digital margin, this would translate into approximately $300 million in EBITDA. We are still in the budgeting process, but we expect to reduce capital expenditures by around $500 million in 2027. Considering the closing of Australia's equity sale and cash flow improvement, we expect leverage to be within our target range for the end of 2027. Debt Profile We continue to strengthen our liquidity position. In August, we announced an increase in our revolving credit line from $3.5 billion to $4.2 billion while reducing the all-in cost of this line. Our cash liquidity combined with the revolving credit line facility totaled approximately $8.2 billion. Our average debt term reached 14.4 years with an average cost of 5.7%. Net leverage ended the quarter at 3.54 times. Excluding the market-to-market of the biological assets, our net leverage would have been 3.41 times. However, the company maintains a well-balanced debt maturity profile with no material maturities over the next five years. It is also worth noting that more than 95% of our debt has fixed interest rates, 33% maturing beyond 2050, and all the debt up to 2032 has coupons below the equivalent treasury rates. On August 18th, we delivered a proposal to the Board of Humans Pride Corporation to acquire the shares of PPC common stock that JBS and its affiliates don't already own, as announced to the market. Given our ownership of approximately 82% of PPC and our pending proposal, we will not take any questions related to PPCs. We appreciate your understanding. With that, I would like to open to Q&A session.

Thank you. The floor is now open for any questions from investors and analysts. As previously mentioned, we kindly request that each analyst limit themselves to just one question. Ladies and gentlemen, our first question comes from Mr. Gustavo Troiano with Itao. Mr. Troiano, you may go ahead with your question.

Hello, everybody. Thanks for taking my question. And my question is on USB 4.0. and especially thinking about the profitability levels going forward. I just wanted to hear your thoughts on the pace of the segment's margin recovery as we move into the fourth quarter, especially considering that you disclosed the monthly profitability levels for the segment throughout the third quarter and it seems that the fourth quarter could be better than what the seasonality would suggest. So I just wanted to hear from you if you think that the third quarter could be a bottom for this cycle and we... I think about 2027 if this margin should start to recover sequentially from the fourth quarter onwards and still on that topic just to follow up on a point that we discussed in JBS Day a couple of months ago when you mentioned that there were some operational improvements to be delivered in the segment if these numbers are starting to show off in the third quarter or if there's a potential for 2027 to incorporate these operational improvements. Thank you very much.

Gustavo, good morning. We had a good third quarter in our opinion. It started off actually quite tough, more in line with what the second quarter looked like, and it ended up a lot better. You know, Q4 is usually a little bit of, you know, December could always be a little bit of a surprise, but given how it has started in the first half of Q4 here, We expect that Q4 should be stronger than Q3. So we're expecting a sequential improvement into Q3. As of right now, because, again, we're in the middle of the quarter here, but so far it looks promising. And again, when we look into next year, based on a couple of things, based on just the market improving overall, the balance between supply and demand for cattle, we think we're going to have a much better year into next year and probably... As of right now, we think it's going to be a market that operates in the low single digits. But, you know, we could have maybe, you know, actually even a positive surprise depending on how things develop. And on top of that, just how the market is going to look like. You said it right. It's a big, big focus of ours. It's this integration that we're having between our business units. And we're seeing a lot of improvements. But we still expect a lot into next year. I still think that just on operational efficiencies and more, you know, some more synergies in sales, we could have a round or even above two percentage points into next year.

Thank you very much.

Thank you. And our next question comes from Mr. Ricardo Alves with MS. Mr. Alves, you may go ahead with your question.

Hello. Can you hear me, everyone?

Yes.

Good morning. Yes, good morning, Wesley, Tomazoni, Guilherme as well. Thanks for the call. Question on Florida. About 80% coming from taxes. I missed the very beginning of the explanation on the tax credits, Guilherme. Can you go over the tax credits again? Just... in terms of how much we should expect in the short term, if there's some time on when you can really monetize those credits. And then when we're thinking about Florida alone, our understanding is that the net debt to EBITDA ratio was closer to four times. So is it fair to say that the leverage was also a factor for the transaction, the leverage at the Florida level? So I'm not talking about the leverage of JBS. Because maybe in terms of short-term financing, given that long-term rates are in a much more difficult place today in Brazil, maybe you incorporate that into the balance sheet of JBS. Maybe you're going to be able to leverage more all the growth that you expect in the personal care, all the discussions that we've had in the past. So, just to understand how, within the JBS portfolio, how you could accelerate the growth potential you see there, if that was also a rationale for the transaction. So, just to follow us from the Florida transaction, please.

Okay, thank you, Ricardo. So, beginning with tax credits. The monetization of tax credits is pretty straightforward. As you know, the ICMS, the VAT tax, exporters are exempt But we pay ICMS on the inputs in the states we operate. But when we export the product, we cannot offset the ICMS we pay. So this becomes a credit. And those credits have to consolidate the balance sheet to around $800 million in JDS. So when we have flora inside JDS, with the same CNPJ, as we call the same For corporate, we can pay Flores ICMS on the domestic sales with the ones credits or the ICMS credits that we have accumulated, okay? Those ICMS as I mentioned will be replaced by CDS and IDF, which will have the same dynamic of credit accumulation. It may be even more. So then we'll be able to use, to monetize those credits with FLORA, okay? And the last is FLORA will start to pay income tax next year. Bear in mind that we have, as I mentioned, $2.2 billion in income tax credit in JBS balance sheet, which can also be paid to pay FLORA's income tax. So basically those are the major parts. of the tax credit synergies. As you mentioned, it's the most part of the synergies. Now, the net debt to BIDA, you are putting on the 2026 Florida BIDA. But Florida, some segments of Florida operated In 2016, with 49% capacity, which we expect to increase the capacity to 70% next year and so on, because we have some disruptions in 2036, factory renovation, things that decrease our capacity, and we have the CapEx, expansion CapEx that's being implemented, and new capacities coming online in the next years. So, because we have all these downtimes, because we have these disruptions, and we have the capacity coming online next year, it's better to look at 2027 EBITDA. That is around 420 million reais, okay, for next year. So, considering these 420 million reais, that EBITDA... The net effect of leverage throughout time is even positive with floor acquisition. And now let's talk to the strategic part. I'll begin and Leslie will help here.

Yeah, so what I would say here, Ricardo, is obviously all of those are the short-term, more simple parts of this whole opportunity here. But what we are very interested about is we see this as more of a continuation of the work we've been doing for the past five years, especially when we started our business with Genwing in Brazil and with Biotech. also in Spain and in the south of Brazil and you know we think that the future of the protein market is going to be obviously in the center of the plate that's a big you know the main part of a big part of the business and that continues to be a main focus of ours but we cannot ignore and we need to be very very much present in all of the nutritional supplements and nutritional part of the business that Thank you very much. and sort of the nutritional market. We think it's a big opportunity and something that will add a lot of value to our core products. And on top of that, enhance our portfolio on nutrition overall. So going from the center of the plate also to all of this nutritional side. And again, it's a business that's growing within JBS. And we think that in the future, in the next decade, this will become a huge business globally as a whole, and we want to be an important part of that. So this is an important step for us to grow in that direction.

I also want to highlight that it's also an important way for us to monetize our byproducts. For example, if you look at Darling, the company in the U.S., a great part of it Valuation is for the agreements that enhance human health and well-being.

Thank you for the very complete answer, Wesley. Thank you also, Guilherme. Helpful. Thank you.

Thank you. And now Mrs. Isabel Simonado would like to ask a question from Bank of America. Mrs. Simonado, you may go ahead.

Thank you very much. Good morning, everyone. So I want to follow up on the Florida deal. I guess the overall rationale is clear, but I wanted to ask if we could think about this acquisition as the first step of some category that can become bigger over time for JBS, right? I recall we had the discussion, I think, in the first JBS, Thank you very much. Thank you. and still on that matter, right, when we compare Florida to eventually other targets of acquisitions in that segment, right, if you could just give us a context about their peers, right, and eventually relative valuation and why do this now, right? My sense is that the implementation of the tax reform also matters in timing, but I just want to give a to understand a little bit better timing and the context for this. And I understand that there's no immediate balance sheet impact to JBS, but I wonder if adding complexity here and eventually any type of additional investments that might be required in this time, if that makes sense. Thank you.

Isabel, good morning. So I'll start here. Obviously, like I said, this part of nutrition and being able to develop a strong B2C business for all of this supplement category is a main target of ours, and it's one of the biggest parts of the vision of this acquisition on top of all the things that Guilherme mentioned that are very important as well from an integration and synergy perspective, verticalization as well of our core products. you know obviously we're also going to it's very important for us to grow all of this to have a complete portfolio and so we're going to have other portfolios that we're entering as a company right now and obviously we're going to do everything we can to be very successful in that and to have a leadership position in those categories within the Brazilian market and obviously we'll see what the future holds for that so if there's creative ways to Hi, Zarela. So, we have to speak in two frontiers. So, if you look at international peers, enterprise value deduct for 2007 multiples ranges from 10 to 14 times.

But if you look at the Brazilian comparables, these range from 5 to 10 times. So in Brazil, our multiples are lower than our international peers, but we think that we have potential. That's one of the reasons that we see potential value creation. And again, as I mentioned, if you look at all the synergies and put the net present value of them, Compared to the enterprise value paid, we see that the multiple is very, very compelling.

Thank you.

Thank you. And our next question comes from Mr. Henrique Rustolin from BVI. Mr. Rustolin, you may go ahead with your question.

Hello, everyone. Thank you for taking my question. My question is back to U.S. beef, especially about Mexican cattle imports, right? Wesley, you have mentioned, right, the relevance of cattle imports from Mexico to help rebalance the U.S. industry. We are seeing imports growing, but still at a somewhat slow pace, right, to get to the 1 million heads per year. And, of course, there is a natural ramp-up here. but it would be great to get your view in terms of how are imports right now shaping up relative to your expectations and how you expect the pace picking up going into 2027 so you can see this better environment in terms of cattle supply and beef margins. Thank you very much.

Good morning. We think that Mexico obviously when it first opened and we just had one port of entry was Below 1,000 heads, beginning at 1,000 heads per day. But given the volumes that are crossing as of right now, we think it's very relevant. Obviously, there's many variables here, but given what we know right now, we would expect an annualized basis of about 1 million heads. If you think that we have two biggest states of Mexico being open to export to the U.S., And you're doing 1.5 million out of the 1.2 million that used to come. I think it's pretty, I mean, it's pretty relevant. I mean, and it's a big deal. If you think about it also, I think it's a good way to think about it. In the past, again, Mexico, Mexican cattle would account for 4% to 5% of U.S. processing volumes. But if you look at just What that percentage was of the southern states, you're talking about, I don't know, probably 15, around 15% of the processing capacity of the southern plants. So it's a big deal, and just the amount of cattle that's been crossing, it's relevant enough to make a big difference, and I attribute a lot of the improvement in the cattle situation for us in the U.S. coming from

Thank you very much. Very clear, Wes.

And now Mr. Sharma from Stevens has a question. You may go ahead, Mr. Sharma.

Good morning, and thanks for the question here. Just wanted to focus on U.S. pork. My first question would be to understand the commentary you alluded to earlier. I believe you said you expected maybe some potential relief in the first half of 27, or at least you expect the conditions to drag on through the first half of 27. Just wanted to see what gives you confidence or visibility into improvement in the back half of For my follow-up, I wanted to understand just the differences between U.S. GAAP and IFRS a little bit better for this segment. We've seen the last few quarters a big divergence in these margins, and I think it's largely due to the biological asset valuation. Given the move we've seen in lean hogs and 4Q, I just wanted to get a sense if you would expect the same type of divergences between U.S. GAAP and IFRS to persist in 4Q for U.S. pork?

Sure, my good morning. So on the pork side, we expect that it will continue to get tough at least through the first half of the second year. of next year. What we expect, and we see the USDA number for just global production kind of similar in line with what we believe is, we think that there is going to be an adjustment of production globally. Obviously, countries that are more competitive and more productive are going to gain a bigger market share of the global pork supply, and countries that are less That was their total herd there of sows. and now they are close to 36 and that's a relevant decrease in a very, very large country and we think we're going to see that in other areas. Countries that are less competitive are going to lose space in the market and I think that globally overall we're going to see an adjustment. Obviously, you have to remember that, you know, Our expectation is that given what we're seeing globally, especially in some of these countries moving in to reduce production, we think that there is a good chance that we have a better second half of next year.

Okay, going to the market-to-market, you are totally right. The volatility all comes from the fact that the IFRS inventories are market-to-market, including the hogs, while the U.S. gap is at cost. And how is the market-to-market? You get all the future curve of hogs to price our inventories, and that's what the big swing was. So, Looking at the fourth quarter, it will depend only on this future curve. We think that the future curve is already inclined, so only if it inclines even more down, that would have another effect like that. But it's worth mentioning that, for example, WH, which reports in IFRS, and because of this hard volatility, it's adjusted for the market-to-market of biological assets.

I appreciate the clarification.

Thank you, and next is Mr. Thiago Duarte with BTG. If you would like to ask a question, please go ahead, Mr. Duarte.

Yeah, hello, everybody. Good morning. Thanks for the opportunity, as usual. I want to circle back to Guilherme's exercise in the end of the presentation, particularly when discussing, you know, The Outlook for 2027 and obviously you never provided a guidance but But looking at the exercise and trying to reconcile the numbers a little bit, you talked, Guilherme, about coming into the end of 2027 with the leverage of the company within what you call the safety zone, if I'm not mistaken, which is up to three times leverage, right? And as we try to sort of reconcile the numbers to your EBITDA, you know, the way I'm looking at the math here, it implies a pretty nice... Improvement in the company's EBITDA into 2027 relative to 2026. And my understanding is that the biggest contributor to that in your exercise has to come from the U.S. beef division. So my question to you guys, and obviously going back into the discussions about cattle imports from Mexico and so on and so on is, you know, are you comfortable that U.S. beef can approach The sort of historical normalized of low to mid single digit margin into 2027. So that would be the question trying to reconcile to the exercise that Guilherme did in the end of the presentation. Thank you. Okay, thank you, Thiago.

Yeah, I also read your report last night. So, as you mentioned that at the $1.4 billion bid out of the fourth quarter, we would be ending at $375. That's not correct. You forgot the free cash flow generation of the fourth quarter, which kind of sets part of the decrease in the last 12 months of bid out. Bear in mind that the last quarter we had a deferred livestock. We will have the inventory sales in Europe of Seara and we have the resume of Chinese purchase from the working capital we consume in JBS Brazil in the fourth quarter. So, therefore, With the 1.4 billion dollars EBITDA that you mentioned for the fourth quarter, we would be ending between 3.5 and 3.55 times net EBITDA, depending on, of course, the free cash flow, but I think it's a better estimate. So now for the next year, you're right. The main assumption here is the turnaround of U.S. beef. Remember, this year, U.S. beef consumed $721 million of free cash flow already because only working capital was $254 million and $310 million of EBITDA. So for next year, if this EBITDA comes to the positive side, so whatever, that's why I mentioned each 1% is $300 million EBITDA, and the working capital consumption was mainly due to the cattle prices increasing in the first semester. If we think of falling cattle prices or even stable cattle prices, we should release working capital from these business units instead of consuming working capital. So my assumption for next year, again, bear in mind we have the Australian equity sale of $800 million cash inflow. We have the fourth quarter, as I mentioned, free cash flow generation. And for next year, if we have a turnaround in the BIS standard and we end up with the BIDA between $5.5 or $6 billion, we'll be below three times.

That's super helpful. Thank you, Guilherme.

Thank you, and our next question comes from Mr. Benjamin Thurer with Barclays. You may go ahead with your question, Mr. Thurer.

Hi, good morning. Thanks for taking my question. I actually would like to pick up on that, on the exercise and one of the commentary you're making as it relates to CapEx next year. So if I picked it up the right way, I think you said you're looking into the budgeting to reduce CapEx. Approximately 500 million. Is that against the roughly 2 billion base in 2026? And if so, what would be areas we are looking at in terms of cutting CapEx? Is that cut outright or is that postponing? How should we think about that reduction in CapEx that you've mentioned? Thank you.

That's a very important point that I also forgot to put in the equation of the previous question that also I embedded Around $500 million of capital expenditure decrease for next year, including free cash flow. Our $2 billion free cash flow, $2.1 billion this year, bear in mind that around $1 billion in maintenance capex, there's not much change of that, but $1 billion is growth capex. So what we'll be doing for next year is that some capex, some projects that we started or we already began, and so we will finish it but do not start new projects or the ones that didn't start we will postpone for the other year or depending on how the year stays. So that's why we are still in the budgeting process. In fact, I'm going to Grila next Friday for budget and CAPEX meetings but we are very confident that we can cut around $500 million of CapEx. Remember that in 2003, when our BIDA was $3.5 billion, we budgeted $1 billion maintenance CapEx for 2024 and $300 million growth CapEx for 2024. But because 2024 was better than expected, in fact, we ended up with $6.8 billion in BIDA and $2.8 billion of free cash flow. Then we restarted some projects and we end up 2024 spending $500 million in those capex. So that's what we intend to do. We will stop postpone capex, reduce the $500 million. If the year is there and unexpected, we can anticipate the ones that we postpone.

It's cool. Yep, very cool.

Thank you. And our next question comes from Mr. Thiago Bertolucci with G.S. Please go ahead, Mr. Borlucci.

Hey, guys. Good morning, everyone. Thanks for the opportunity. I think my question is for Wesley, right? And I'd like to stress, again, the demand side in the U.S., right? And this is just to put in perspective a few of the information we have so far. We know pork has been under pressure for a while. It's not the first time you mentioned it in your press release. When I see the numbers for pilgrims, you continue to allude to, you know, strong demand. But then when I see top line growth, it's pressured within food service, fresh and retail. And then I think more importantly, when I see the evolution of the cutout for bees, Throughout the grading season, it moved actually downwards and ended the quarter even a little bit below last year, right? So, in a context when we have rates in the U.S. potentially higher for longer, inflation potentially higher, how confident you are that demand will remain sticking to next year? And more importantly, how confident you are in your pricing power? Thanks, Thiago.

So, look, we see demand for protein in general as being pretty strong. I think the fundamentals are all there. I don't want to be too repetitive and talk about all of them because it's something that in all conferences and all meetings we all talk a lot about and we all kind of see similar fundamental trends that everybody knows, but When we look at specifically per protein, we see these demands. You know, when you have such a big increase in prices, you know, obviously our price follows the price of cattle, so when we have such a large increase of cattle prices, and then we have such a large increase of cattle, of beef prices, sometimes it's even difficult to look at the seasonality, because maybe the price of cattle goes up in the N.V. is really strong. And when we talk to customers, we hear that, you know, the... Beef demand is quite inelastic, and actually, I'll even say, Thiago, much more inelastic than we even expected before all of this big shortage of cattle that we've had in the U.S. In chicken, we're seeing, you know, just in the worldwide, we're seeing the same thing. We're seeing demand for chicken pretty strong, especially food service, and we're seeing a lot of, you know, food service chains, QSRs, All going to chicken, so there is a big trend going there. Now, obviously, inflation overall across the board, especially in fuel, have taken a toll in consumers, and what we are seeing is that the protein that has had the toughest, the biggest challenge has been pork. Pork absolutely has had the biggest... We're seeing the softness in demand, very concentrated in pork, and I think it's not necessarily anything against pork that the consumer has, it's just that their preference for beef and chicken has been just so strong that the protein that they have, whenever they have to stretch a little bit more their gallard, they're still going to have their beef, they're still going to consume chicken, and maybe they cut back a little bit on pork. Thank you very much.

Thank you, and our next question comes from Mr. Andrew Strzelczyk with Bank of Montreal. You may go ahead with your question, Mr. Strzelczyk.

Hey, thanks for taking the question. I wanted to ask about Ciara. You talked about record chicken exports out of Brazil, but there were also some areas of weakness as well, and the margins were the lowest we've seen in a little while. I'm curious if we should anticipate CRR margins continuing to decline year over year in the fourth quarter and into 27, or if you see opportunities for that to recover. And if you do see opportunities for that to recover, what the drivers would be. Thank you.

Hi, Andrews. Thank you for your question. We see, firstly, I will answer directly your question. We see improvement on the margin of Seara for the fourth quarter compared to the third quarter. And what is the reason for that? First, I think one of the very important reasons is the appreciation of the dollar against real. And Seara exports 50% of its revenue, and this means a lot in terms of Impact in the bottom line. This is the first. The second point that the market for chicken, just to add the explanation of Wesley, we see the demand of chicken globally very strong. Seara reported was the largest volume that sold in one quarter to export. means that the market is very demanding. This is the point that demanding is strong and dollar is higher. And there is another point of Seara. In Europe, our team anticipated the restriction of Brazilian poultry export and cheaper chicken breast ahead of those restrictions. Building inventories in this region, we expect to sell these inventories in the fourth quarter allow us to serve customers even while shipments from Brazil were restricted. Together with the stronger seasonal demand in Brazil and support the favorable outlook of Seara for this month we are really expect higher margin than the third quarter of Seara.

Great. Thank you very much.

Thank you, and the next question comes from Mr. Leonardo Alansar with XP. You may go ahead, Mr. Alansar.

Okay, thank you. Good morning, everyone. Probably a follow-up on the last question. I understand there are many moving parts going on in Brazil right now, so with the new castle in Santa Catarina and now the restriction of park and sports to the Philippines, But also this inventory built up because of the Chinese quarter for this and Seattle's trade on corn, etc. to get a better view on the Q4. If you could just walk us through on this inventory release, I would expect probably beef and parts of this chicken in Europe to be released on Q4, but on farm maybe it would stay for longer, but then this impact on exports, how they could play on margins as well. So just some color on that. Thank you. Did you hear my question? I'm not listening to anything from your side.

Sorry, Leonard, I think some of them had a problem there with the... Oh, sorry, sorry, I beg your pardon. Sorry.

Did you get my question?

Yes, I think I got your question. Let me see it. I will start to answer about the... Hello?

Hello?

You are hearing me, Leonardo?

Yes.

Okay. Just to talk about, you mentioned the restriction that we have in terms of Philippines. We do not yet know the certain, what is the restriction will be. There is a talk that helping the import for at least 60 days, it is unclear whether this refers to stopping to issues of import license or health and shipments. If the decision of concerns import license, the impact will be not felt until around January. If the decision is to health and shipment, that impact will be immediately. Of course, We, this will be in part, we not know how is in part yet, but you know that pork is under pressure globally, Wesley have mentioned that it's not just in West, globally, and of course we have, we have market to sell with the lower price, that will be in part of margin, but we, that pork is really, if you consider all of the revenue of Seara, pork is the fresh pork, have a lower impact if you compare the other business that you have in Ceará. The other point that you mentioned is about, I think it's about the quota of China. I think it's important to let know that we start, began production for China's market in the second half of September. Anticipated this revenue demand under the 2027 quota. That production effort started in the third quarter. While the related sales we are expected to benefit in the fourth quarter. We are already seeing improvement in October. And we are, I think we'll be in an additional revenue that we produce in September, the second half, we just add the cost of the production and not the revenue. Now we are starting to ship to China, that we'll see the strong improvements on results of Fribo in Brazil. And the same will be with Seara. I mentioned before the other question, it was Andres asking about the product that we have in Europe. Europe is closed. We are selling the product. We are expecting that we reassume the importation on next year or end of this year, but the product will be around in Europe next year. It means that I think the strategy you have done, Bose and Seara, to build inventory in Europe, and the strategy to start to produce early to China and Triboy, will benefit our business in the port quarter.

Thank you, Tomazoni.

Thank you, and our next question comes from Mr. Matthias Enfield with UBS. Mr. Enfield, you may go ahead with your question.

Hi, morning. Thank you for your time. I want to have a question on U.S. beef. We stopped years partnering with cattle suppliers for a while now, but particularly more recently. And we discussed in the past whether the current U.S. cattle cycle was going to lead to a structure of different supply. So my question is more on your end. If you're, what's the way to get closer to the renter, if there are any alternatives there, anything that the company is considering or studying the direction, or if you want to restate the comments from previous calls that it's a business that it's a bit too different from yours. So, I'd like to understand how to get closer to the renter, if that's a strategy that JBS can also follow. Thank you.

So, we see that us entering a ranching business, the ranching business, or even the field of business is not our focus, is not our core, is not something that we are, we've done that in the past, and I think that, you know, our model today, which is to partner up with, you know, having long-term commitments with companies that are specialized to do that, is the best scenario for us, and we don't see ourselves, you know, Thank you.

And our next question is from Mr. Lucas Ferreira with J.P. Morgan. Mr. Ferreira, you may go ahead.

Hi, guys. Hope you are good. I also have a follow-up on the U.S. beef business, which is looking at 2027, obviously, we're going to have more and more cattle from Mexico. And with the ramp-up that we've been seeing, it's looking great. But on the other hand, we also expect retentions to increase, right? That's the expectation for some normalization ahead. And we started to see some announcements of more capacity being added back to the system. I wanted to hear also on the labor side, if there could be more labor available next year. So the question is really how do you see the net of this thing? So More cattle from Mexico, we mentioned 1 million heads, but eventually more retention and also more capacity being added or more shifts being added as these animals getting into the system. So, Wesley, what do you see that the net of the cattle availability in the country? And if you think there is a risk of more supply actually ends up limiting the upside for margins. Thank you very much.

Lucas, good morning. Our analysis on beef has always been with the information we have in the public, so I'm not going to talk about individual announcements by our peers, but a recent announcement nowadays was, I think, a little bit of a continuation of what we heard in the In the past, we don't see like there is any news, any new information that changes the way we see the market going forward. You know, we already expected that, you know, at least there is nothing new from recent announcements from our point of view. It's more of a continuation of what had previously been announced. So all of these comments that we're making is based on that as an assumption. We think that next year will be, again, a much better supply demand for cattle. And labor hasn't been a problem, at least from our perspective, for a few years now. So even if there is more labor next year, I don't think it changes. It's something that has already been the case for this year. Perfect. Thank you very much.

Thank you. Thank you. Our next question comes from Mrs. Heather Jones with Heather Jones. You may go ahead with your question, Mrs. Jones.

Good morning. Thanks for the question. My question is related to the U.S. pork business, specifically on the gap results. It was sharper than I expected, sequential deterioration, and just trying to get a sense of was that predominantly driven by lower hog production earnings or more evenly split between raising and the processing side?

Good morning. We had a sharp decline in hog producing for sure. And hog producing has been a big part of, it has been doing great for the past years. And it has been a great part of a good help to our business and now has been deteriorating more faster. So it's an important part of the decline. So, yeah, it's an important part of it. But also, just overall, spreads have been tighter, right? If you look at spread between cost and hog cost, and even hog cost has been kind of compressed on both sides.

Okay. Thanks so much.

Thank you.

Thank you. And our next question comes from Mr. Guilherme Paladares with Santander. Go ahead, Mr. Paladares.

Good morning, everyone. Question here for Guilherme. Guilherme, if you could just recap a bit the steps towards the closing of the Dun & Para deal, when we should see the $800 million flowing through the balance sheet, and just the overall step-by-step until then.

Thanks, Guilherme.

This depends on the regulatory authorities of Australia, including FERB.

Generally, it doesn't take so long, but it's something that is out of our control. But we don't expect to take a long time.

Thank you. Thank you, and next we have Mr. Ricardo Viatori from SAFRO. Mr. Viatori, you may go ahead with your question. Sorry, Mr. Bellotti, if you are trying to speak, you might be on mute. We may have some issues with the designers, so we'll go ahead to the next one, which comes from Priya Ori Gupta with Barclays. Mrs. Ori Gupta, you may go ahead with your question.

Hi, good morning. Thank you so much for taking the question. Guilherme, I was just wondering if we could dig a little bit into the leverage discussion.

So should we now be expecting fourth quarter leverage or year-end 26 leverage to be similar to where we are now?

and how does that sort of dovetail with some of the stronger free cash flow given the working capital unlock in fourth quarter that's expected. And then as we think about the leverage progression into 27, I think you talked a little bit about sort of the EBITDA improvement that could be needed to get you below three times. But should we be thinking of any potential for debt pay down? or any possible refinancing activity that could accompany this. Thank you.

Thank you, Priya. So basically, the fourth quarter, we will still have the negative impact of probably a lower fourth quarter than it was the fourth quarter last year. But again, that is always a quarter that we generate a lot of free cash flow. One of the reasons is the deferred livestock. We postpone payments for the next year as requested by the producers. But this year we also have, as we mentioned, We produced beef in Brazil in September, but we couldn't sell because of the quotas to China. But in October, we resumed to sell the 2027 quotas. So this is also released. And also the Seattle chicken event was in Europe, as I mentioned. So all this together, we think that the free cash flow of the fourth quarter Maybe kind of offset this statistical last of month effect, and we finish this year with the levels around where we are now. So for next year, then generally first quarter is a quarter that we consume free cash flow, mainly because of the postponement of the livestock deferral. But this year, again, we may have two effects that may be also offset these. First is better working capital. If the cattle prices stay as it is right now, we'll be releasing working capital in the first quarter. And also, the NBDA, very much as a beef of NBDA in the first quarter this year was negative. and if now we turn around for the positive side, we will have the opposite statistical effect. So if that, maybe we will start the leverage even in the first quarter and getting to the year end below three times. But again, some moving pieces here, but I think that the statistical effect should work in our favor next year.

And how should we think about the debt movement? On the back of that.

Okay, sorry. Yeah, no, remember, we have short-term debt that is mainly trade finance that is very easy to roll over and cheap as well. And for the next five years, we don't have any significant maturity. And up to 2032, all the coupons are below treasuries. So, again, and with increasing credit, there's a few opportunities for liability management, given we have some 34s with 675% coupon. That's the ones that are in JBS and PPC. That's the only one that I would say that would be more expensive to them Thank you. Thank you. That is the $150 million debt that we assumed with the floor due. Those debts are more expensive than JDS. They are capital markets debts, but they are more expensive than JDS. So probably those ones would be the first to be paid. Then I would say the short-term debts. The trade finance would be the second on the list to be paid. And I don't see much opportunity for bonds with purchase besides those high coupons that I mentioned.

Thank you so much.

Thank you. And our next question, we will go to Ricardo Boyani with Safra. Go ahead, Mr. Boyani. Can you hear me now?

Yeah, good morning. Yeah, thank you. Hi, good morning Tomazoni, Wesley, Guilherme. Thanks for taking my question. Regarding Australia, do you expect a rebound in exports already in Q4 or should we look to shipments to fulfill next year's quota to be more concentrated in Q1 2027 in Australia? October was impacted by rains, right? How are you seeing November and December turning out to be there? So I'm trying to understand how to think about sales and margins in Australia at Q4 and in 2027. Thank you.

Yeah, so we expect Australia to be stable, you know, somewhat stable here into Q4. Like you said, it's still raining quite a lot. It's incredible what's been going on in Australia in terms of rainfall. Thank you for joining us. Thank you very much. All of this rain obviously has a long-term effect that should create a more stable business for us in the future, we think. So, in the long run, it's not bad that it's raining that much. It's actually good news, and we want good weather for raising livestock. Obviously, it creates a short-term pinch that we didn't expect. But we're expecting that it should create a Thank you for joining us. and create a good business. We're very excited about the business in Australia. We think that our business in Australia is one of our strongest, stronger businesses within the company and we think we're going to have a more stable business in the future because of all this good weather that we're seeing.

Awesome, Wesley. Thanks a lot.

Our next question comes from Mrs. Carla Casella with J.P. Morgan. Mrs. Casella, you may go ahead with your question. Sorry, Mrs. Casella, if you're speaking, you may be on mute.

Sorry, can you hear me now?

Yeah, good morning.

Yeah, my question is on M&A opportunities. I was a little surprised by M&A, just given how high the leverage is now, recognizing that Thanks Carla. As you mentioned,

The far adieu was the equity was all paid in shares. We assumed $175 million in debt only, and it's bringing a bit up. The rationale to do now, as I mentioned, is that we have, as I mentioned in the beginning, $800 million in VAT tax credits and $2.2 billion in income tax credits. So those credits, the faster you use it, you monetize it, the better. So bringing Flora now, it's a way to fast monetize the VAT credits, also in light of the Brazilian tax reform. So that's the reason why to do now. Besides, again, the rationale, the strategic rationale that was mentioned, and as I mentioned, a great part of the valuation and the potential of Darling Company is the ingredients to health and nutrition. It's something that we want to go more and more with our byproducts. and because it's your customer and you have those high margins. Now, for general M&A, we just have the closing of the Oman deal, which is $150 million outflow. We have the sale of the Australia at $600 million inflow. I don't see any M&A that we would be using cash, maybe only very small M&As. Any M&A to a certain size, only if the seller accepts to receive JBS shares. which are generally very rare cases. But again, M&As, I would say, on some sites, only if the seller accepts to JDS shares, which is generally very rare cases that this happens. So we are not seeing M&As in the radar in the short term because we will be focusing really on the leveraging.

Okay, great. Thank you.

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

Thank you. To wrap up, this quarter showed the strength of our diversified global platform and the progress we are making across our business. The return to the positive EVTA in the U.S. was an important milestone We know there is more work ahead, and we remain focused on operational excellence, financial discipline, and creating long-term value. I want to thank our teams around the world for the hard work and dedication. Their commitment and execution make this process possible. And to everyone joining us today, thank you for your time, your attention, Continued interest in NGVS and your engagement. We look forward to continue to our dialogue. Thank you, everyone.