PILGRIMS PRIDE CORPPPC

PILGRIMS PRIDE CORP Income Taxes Disclosure

10-KFiled Feb 12, 20267 min read
INCOME TAXES
Income (loss) before income taxes by jurisdiction is as follows:
Year Ended
December 28, 2025December 29, 2024December 31, 2023
 (In thousands)
U.S.$1,363,533 $1,428,497 $26,887 
Foreign138,605 (16,228)338,335 
Total$1,502,138 $1,412,269 $365,222 
The components of income tax expense (benefit) are set forth below:
Year Ended
December 28, 2025December 29, 2024December 31, 2023
 (In thousands)
Current
Federal$244,524 $172,269 $(19,727)
Foreign121,437 113,194 59,326 
State and other42,794 34,752 (3,369)
Total current408,755 320,215 36,230 
Deferred
Federal19,293 21,334 12,783 
Foreign(16,577)(25,697)(10,573)
State and other7,323 9,194 4,465 
Total deferred10,039 4,831 6,675 
Current and Deferred
Federal263,817 193,603 (6,944)
Foreign104,860 87,497 48,753 
State and other50,117 43,946 1,096 
Total Current and Deferred$418,794 $325,046 $42,905 
The effective tax rate for 2025 was 28.0% compared to 23.0% for 2024 and 11.7% for 2023.
The following table reconciles the statutory U.S. federal income tax rate to the Company’s effective income tax rate:
Year Ended
December 28, 2025December 29, 2024December 31, 2023
(In thousands, except percent data)
U.S. federal statutory tax rate$315,449 21.0 %$296,577 21.0 %$76,697 21.0 %
United States
Changes in valuation allowances820 0.1 3,278 0.2 (1,071)(0.3)
Effect of cross-border tax laws
Global intangible low-taxed income(434)— 1,501 0.1 9,294 2.6 
Other6,502 0.3 5,936 0.4 (2,986)(0.8)
Nontaxable or nondeductible items
Other9,225 0.6 4,981 0.3 2,887 0.8 
Tax credits
Foreign tax credit— — — — (5,530)(1.5)
Other3,308 0.2 (7,534)(0.5)(2,267)(0.6)
State and local income taxes, net of federal income tax effect74,849 5.0 28,517 2.0 (13,031)(3.6)
Foreign tax effect
Ireland
Other— — 2,500 0.2 843 0.2 
Statutory income tax rate differential94 — 963 0.1 2,177 0.6 
Changes in valuation allowances(1,348)(0.1)(1,767)(0.1)2,286 0.6 
Luxembourg
Imputed interest on intercompany financing(14,754)(1.0)(14,907)(1.1)(15,871)(4.3)
Other1,495 0.1 22 — 11 — 
Statutory income tax rate differential1,498 0.1 1,699 0.1 2,435 0.7 
Changes in valuation allowances799 0.1 752 0.1 618 0.2 
Malta
Notional deduction against interest income— — — — (12,392)(3.4)
Notional deduction carryforward from prior year(24)— (25,963)(1.8)— — 
Other(523)— (451)— (1,082)(0.3)
Statutory income tax rate differential(1,043)(0.1)(899)(0.1)5,508 1.5 
Mexico
Non taxable and nondeductible items3,054 0.2 294 — 348 0.1 
Foreign currency translation5,563 0.4 (6,222)(0.4)(29,437)(8.1)
Other(9,610)(0.6)2,109 0.1 (4,594)(1.3)
Statutory income tax rate differential16,046 1.1 24,116 1.7 18,026 4.9 
Changes in valuation allowances(111)— 180 — (1,028)(0.3)
United Kingdom
Federal tax credit carryforward adjustment from prior years— — 19,168 1.4 592 0.2 
Other2,807 0.2 5,250 0.4 (6,478)(1.8)
Statutory income tax rate differential5,360 0.4 2,622 0.2 875 0.2 
Changes in valuation allowances(3,004)(0.2)(18,221)(1.3)14,155 3.9 
Other foreign jurisdictions2,776 0.2 545 — 1,920 0.5 
Total$418,794 28.0 %$325,046 23.0 %$42,905 11.7 %
In 2025, state and local taxes in California, Illinois, Florida and Minnesota comprise the majority of the state and local income taxes, net of federal effect category. In 2024, state and local income taxes in California, Texas and Illinois comprise the majority of the state and local income taxes, net of federal effect category. In 2023, state and local income taxes in Florida and South Carolina comprise the majority of the state and local income taxes, net of federal effect category.
Pilgrim’s historically would settle its stand-alone unitary tax liability with JBS USA the year subsequent to the actual state tax return filings. Due to the new tax sharing agreement with JBS USA effective December 30, 2024, Pilgrim’s is currently required to estimate and pay its stand-alone unitary tax liability on a quarterly basis following current year estimated state tax deadlines. Since the tax accounting method for Pilgrims’ state taxes is the cash method, this led to 2024 and 2025 state unitary payments being incurred in 2025, and a higher state effective tax rate for the 2025 year. See “Note 1. Business and Summary of Significant Accounting Policies” for more information regarding the new tax sharing agreement.
Nontaxable and Nondeductible items primarily relate to expenses for meals and entertainment and inflationary adjustments incurred by PPC Mexico that are not deductible for income tax purposes under applicable tax regulations. These amounts impact the effective tax rate as they represent permanent differences between financial reporting and taxable income.                            
Income taxes paid (net of refunds) exceeded 5% of total income taxes paid (net of refunds) in the following jurisdictions:
Year Ended
December 28, 2025December 29, 2024December 31, 2023
(In thousands)
U.S. federal$151,548 $125,143 $(28,777)
U.S. state and local
Florida— — 3,150 
Other74,131 23,513 (1,388)
Total state and local74,131 23,513 1,762 
Foreign
Mexico55,310 — 39,053 
United Kingdom67,361 30,909 2,741 
France— 11,668 3,847 
Other13,542 6,324 1,122 
Total foreign 136,213 48,901 46,763 
Total$361,892 $197,557 $19,748 
Significant components of the Company’s deferred tax liabilities and assets are as follows:
December 28, 2025December 29, 2024
 (In thousands)
Deferred tax liabilities
PP&E and identified intangible assets$523,968 $495,571 
Inventories104,591 93,513 
Operating lease assets65,910 63,717 
Other19,406 6,959 
Total deferred tax liabilities713,875 659,760 
Deferred tax assets
U.S. net operating losses1,025 14,603 
Foreign net operating losses82,035 49,166 
Credit carry forwards14,644 20,099 
Allowance for credit losses3,954 3,532 
Accrued liabilities119,226 92,565 
Workers’ compensation— 7,172 
Incentive compensation— 1,161 
Operating lease liabilities66,523 63,717 
Interest expense limitations59,121 72,615 
Other32,107 27,918 
Total deferred tax assets378,635 352,548 
Valuation allowance(85,875)(86,257)
Net deferred tax assets292,760 266,291 
Net deferred tax liabilities$421,115 $393,469 
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carry back and carry forward periods), projected future taxable income and tax-planning strategies in making this assessment.
As of December 28, 2025, the Company believes it has sufficient positive evidence to conclude that realization of its federal, state and foreign net deferred tax assets are more likely than not to be realized. As of December 28, 2025, the Company’s valuation allowance is $85.9 million, of which $14.7 million relates to our Europe operations, $0.2 million relates to our Mexico operations, $47.0 million relates to Onix Investments UK Limited, Sandstone Holdings Sàrl and Arkose Investments ULC, indirect subsidiaries of Pilgrim’s, $12.1 million relates to our Puerto Rico operations, $11.7 million relates to U.S. foreign tax credits and $0.2 million relates to state net operating losses.
Beginning BalanceAdditionsDeductionsEnding Balance
(In thousands)
Valuation allowance
2025$86,257 $4,470 $(4,852)$85,875 
202488,460 637 (2,840)86,257 
202364,361 25,296 (1,197)88,460 
As of December 28, 2025, the Company had federal and state net operating loss carry forwards of approximately $17.8 million that begin to expire in 2026. The Company also had Mexico net operating loss carry forwards as of December 28, 2025 of approximately $9.7 million that begin to expire in 2029. The Company also had U.K. net operating loss carry forwards as of December 28, 2025 of approximately $242.4 million that may be carried forward indefinitely.
As of December 28, 2025, the Company had approximately $1.6 million of state tax credit carry forwards that begin to expire in 2026.
For the years ended December 28, 2025 and December 29, 2024, there is a tax effect of $0.4 million and $(9.4) million, respectively, reflected in other comprehensive loss.
For the years ended December 28, 2025 and December 29, 2024, there are immaterial tax effects reflected in income tax expense due to excess tax benefits and shortfalls related to stock-based compensation. See “Note 1. Business and Summary of Significant Accounting Policies” for additional information.
A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:
December 28, 2025December 29, 2024
 (In thousands)
Unrecognized tax benefits, beginning of year$28,969 $37,565 
Increase as a result of tax positions taken during prior years2,831 — 
Decrease for lapse in statute of limitations(74)(8,300)
Decrease for tax positions of prior years(65)(296)
Unrecognized tax benefits, end of year$31,661 $28,969 
Included in unrecognized tax benefits of $31.7 million as of December 28, 2025, was $17.8 million of tax benefits that, if recognized, would reduce the Company’s effective tax rate.
The Company recognizes interest and penalties related to unrecognized tax benefits in its provision for income taxes. As of December 28, 2025, the Company had recorded a liability of $8.9 million for interest and penalties. During 2025, accrued interest and penalty amounts related to uncertain tax positions increased by $1.4 million.
The Company operates in the U.S. (including multiple state jurisdictions), Puerto Rico and several foreign locations including Mexico, the U.K., and the Republic of Ireland. With few exceptions, the Company is no longer subject to examinations by taxing authorities for years prior to 2020 in U.S. federal, state and local jurisdictions, for years prior to 2010 in Mexico, and for years prior to 2017 in the U.K.

Historical Timeline

Fiscal YearFiled
2025Feb 12, 2026Showing above
2024Feb 13, 2025
2023Feb 27, 2024
2022Feb 9, 2023
2021Feb 18, 2022
2020Feb 11, 2021
2019Feb 21, 2020
2018Feb 14, 2019
2017Feb 16, 2018
2016Feb 9, 2017
2015Feb 12, 2016

About Income Taxes Disclosures

The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.

Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.

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