Good morning, and welcome to the Third Quarter 2013 Pilgrim's Pride Earnings Conference Call and Webcast. [Operator Instructions] At the company's request, this call is being recorded. Please note that the slides referenced during today's call are available for download from the Investor Relations section of the company's website at www.pilgrims.com. After today's presentation, there will be an opportunity to ask questions. I would now like to turn the conference call over to Rosemary Geelan, Investor Relations for Pilgrim's Pride. Please, go ahead.

Good morning. Thank you for joining us today as we review our operating and financial results for the quarter ended September 29, 2013. Yesterday afternoon, we issued a corrected press release, which was the second one issued yesterday, providing an overview of our financial performance for the quarter, including a reconciliation of any non-GAAP measures we may discuss. A copy of the press release is available in the Investor Relations section of our website, along with the slides we will reference during this call. These items have also been filed as 8-Ks and are available online at www.sec.gov. Presenting to you today are Bill Lovette, President and Chief Executive Officer; and Fabio Sandri, our Chief Financial Officer. Before we begin our prepared remarks, I would like to remind everyone of our Safe Harbor disclaimer. Today's call may contain certain forward-looking statements that represent our outlook and current expectations as of the day of this release. Other additional factors not anticipated by management may cause the actual results to differ materially from those projected in these forward-looking statements. Further information regarding these factors have been provided in today's press release and many of our regular filings with the SEC. I would now like to turn the call over to Bill Lovette.

Good morning, everyone, and thank you for joining us today. I'm pleased to report Pilgrim's had net sales of $2.14 billion this quarter, 3.6% higher than the previous year's revenue of $2.07 billion. Our EBITDA for the quarter was $225 -- $222.5 million versus $103 million in 2012, an increase of 116% over the prior year. Our EBITDA margin was 10.4% for Q3, up from 5% in the third quarter of 2012. Our net income totaled to $161 million, an increase of 275% from the $42.9 million reported a year ago. Our earnings per share also increased to $0.62 from $0.17 in the same quarter. The successful execution of our strategy continues to be reflected in our results. Based on the benchmarking tools we utilize, we are clearly now a top third performer and we're determined to continue this improvement trend. Through our engagement with key customers, we're making progress in providing high-quality meal solutions to expand their business and have demonstrated our understanding of the market data that drives their success. We're currently in the contract season for 2014 and are incorporating feedback from our key customers into our discussions. As we're currently negotiating next year's commitments, our transparency and customer centric approach has resulted in similar success rates as we've experienced in 2011 and 2012. Our key customers value the consistent service and quality products that we provide, which helps us to agree on a fair and reasonable price. We continually balance our portfolio to keep a variety of pricing and contract options available to meet our customers needs while managing our own risk. For fiscal years 2012 and 2013, we decreased our 12-month fixed pricing to between 10% and 5%, respectively. But as we view 2014, if we can attain prices, which provide adequate margin and [indiscernible]…

Thank you, Bill, and good morning, everyone. Our net sales were $2.14 billion, with EBITDA of $222.5 million and an EBITDA margin of 10.4%. We achieved earnings per share of $0.62, and reflects solid results in the period from transition from old crop to new crop. U.S. net sales were higher than the same quarter last year due to 9% higher prices, while over 4.6% lower volumes. Feed ingredients were $19 million higher than the same quarter last year. As Bill mentioned, the transition period reflected much higher premiums than usual. Usually, there is a lag between the timing of the actual purchase of the corn and the point in which it flows through the P&L. Since it takes close to 60 days for the cycle of producing the feed to the time the birds are processed, most of the birds process in Q3 were fed corn purchase in Q2. Our SG&A was in line with the previous year after we take into account impairments on assets held for sale during the quarter, resulting from the acceptance on offers on Franconia plant, the old Plano [ph] office and other small buildings. Also, included in the quarter, our all expenses related to the selling of our Batesville operation, our smallest plant to Ozark Mountain Poultry, who will operate the facility in a niche segment. Our operating cash flow of $286 million during the quarter reflects our strong operations and continued focus on working capital management. We continue to manage our receivables and payables to sustainable levels. And with a reduction in prices and more domestic availability of grains. We are already reaping the benefits of lower life inventories and better accounts payable. Our capital spending for the quarter was consistent with our planned spending. And we are on track to stay…

[Operator Instructions] The first question comes from Brett Hundley with BB&T Capital Markets. Brett M. Hundley - BB&T Capital Markets, Research Division: Bill, I wanted to ask a general question just on supplies you alluded to in your prepared comments. Some of the commentary that we've heard is that there is a small bird breeder out there that, not only you might have supplies available at the start of 2014, but has supplies available currently. And the reason I wanted to get your opinion on if you think that's the case and how it could affect the market is really related to what we saw in Mexico where, when things were really humming in Q1 and Q2 and margins were great, there was commentary coming out of Mexico that this is going to stay in place for a while. "Hey, it's going to take time to rebuild supply.", "You're probably not going to see that affect until February, March of 2014", et cetera. And Mexican supply has come back, I think more quickly than people had anticipated. And so I think that in part makes people uneasy. And so I very much appreciate your commentary. But I just wanted to get you to respond to maybe that small bird breeder question as it relates to supply going forward?

Sure, Brett. I'll address the breeder question and then move in to Mexican supply for context to your question. We only know what we hear directly from the primary breeders with whom we deal and there's basically 3 primary breeders that supply the broader breeders for the global marketplace. And based on the conversations that we have with them and even an e-mail that I read as recent as last night regarding what I believe to be the largest hatching egg -- independent hatching egg supplier in the U.S., the primary breeders continue to be constrained in their supply chain going all the way back to the multiplier flocks and the great-grandparent flocks. I do know that as we've moved around some of our breed choices, especially into the large bird deboning segment and as we tried to make changes, we could not get new supply of those until August of 2014. And regarding the e-mail last night that I read, the hatching egg supply was having trouble with their late 2014 supply and even into early 2015. So all of this tells me that the reduction that was made between 2008, 2012 and into '13 from the primary breeders, that situation still exists. And that supply chain is still very tight as we said on last quarter's call and continue to say today, we don't believe that's going to change anytime soon, as it takes a significant amount of time to increase that supply chain. Now with respect to the Mexican supply, we have to remember that Mexico has supplanted Russia as largest export market for U.S. exports. And the data will indicate that the U.S. sent an enormous supply of products into Mexico the last 6 months, as was demanded by the market. And we believe that there's been a temporary oversupply situation from that. And with the local industry recovering at a fairly rapid pace. I don't know if it was any faster than they expected. But the local industry did respond and recover the supply chain their too. And so while we believe there is -- there has been an oversupply in Mexico, we think that will be temporary and demand in the fourth quarter, especially later in the quarter will come back and clear that supply and prices will increase as a result. Brett M. Hundley - BB&T Capital Markets, Research Division: Very helpful, I appreciate it. And then my second question is on contracts, Bill, I heard your comment was very interesting this morning. This week, we saw a large win concept that talked about more of a longer-term contract out in to 2015. And I was just wondering if you could flush that comment out a little bit more if you are seeing customers try to -- proactively try to extend contract terms on the industry? And what that could mean for you guys going forward?

Well, I'll tell you what we're seeing from our customers is a concern for supply and assurance of supply given the tightness the last couple of years. We've not necessarily seen a lot of activity toward extension, although we have seen some. And we're very pleased, as I said in the comments, about the progress of our contract negotiations. And to clarify, and I think this may be helpful to your pricing question, we have 4 basic methodologies as it relates to pricing. We, and all of them represent what makes up pricing in our portfolio. The first one is the cost plus pass through, cost pass through plus the margin rather. Second one is fixed quarterly to 6 months pricing. And 2 conditions have to be met in that case, one, we have to have an acceptable margin, and two, we have to have an acceptable risk profile with that book of business. The third one is basically a chicken market based formula of some type, whether it's priced weekly, monthly or quarterly. And then finally, is the fixed 12-month contract. But again, 2 conditions we look for that have to be met, one, perhaps, to be an acceptable margin. And two, we intend to purchase on a flat price basis the raw material from the market, so that we mitigate any risk from especially the second half of that time period. So that's how we're looking at pricing methodology as we move into 2014.

Next question comes from Sarkis with B Riley and Company.

So just to follow-up on some of the contract questions that were floating around. Did you indicate in your prepared comments that if you can get fixed contracts in as a greater part of your portfolio, you would? And can you, maybe give us some color as to why?

Sure. We did say -- I did say that, that we are open to, including more of that, as a percentage of, a greater percentage of our portfolio versus what we did last year. Last year -- or actually this year 2013, that 12-month fixed price arrangement represented less than 5% of our total book of business. And if 2 conditions are met, one, we have an acceptable margin. And two, we have an acceptable risk. And as I just described, we're going to mitigate that risk by purchasing flat price raw material from the market so that we know there is no unknowns with regard to both price and raw material costs then we're comfortable increasing that because, obviously, we've laid off that risk and we're dealing with knowns. What we still continue to dislike and probably won't do is a 12-month fixed price contract, where the last half, all of the risk on inputs is open. And that's what's not acceptable to us.

Okay. And so is the hope that when you engage with your customers that these would be additive contracts? Or these would be simply customers, maybe modifying their existing contracts?

It could be a combination of both, both additive and existing business that we have today.

Okay, that's helpful. And then just my last question here, you did mention that Mexico is a good place to evaluate growth despite what we've recently seen. Can you maybe just talk about what types of options you have in Mexico? And maybe just what the uses of capital and potential outlays we're thinking about there?

Sure, I'd be glad to. So as we've seen in the last couple of years, Mexico represents a great opportunity for growth and profitability for chicken. That's primarily due to a growing economy and more and more people, consumers that is, moving into the middle class. And thereby, increasing their consumption of protein and specifically, chicken. We don't think that's going to change anytime soon. We have a great business model there as we've demonstrated. One of the things that we're looking to do though is to add geographic diversification. So we're looking for opportunities and geographic areas where we don't have a large presence. Most of our business is contained to the central part of the country. And so we are evaluating other geographies and moving our business model to those geographies.

In terms of target, Sarkis, just -- the Mexican industry is very fragmented. So we don't see big targets out there. So we are contemplating M&As or greenfield projects.

Can -- and I'm not sure, if you have a chance to maybe talk about the size of the capital outlay that you're essentially going to do?

It depends on the opportunity at a given place at a given time. We've not put any necessarily constraints or limits on that at this moment.

Your next question comes from Farha Aslam with Stephens, Inc.

A question about leg quarters, I mean pricing's declined about 8% to 10% in the last month. Would you just share with us some color on why pricing has fallen so quickly and when and where you expect it to bottom? And what would be your outlook for leg quarters for 2013?

If you look back at history, Farha, this is not totally abnormal. At times, after Labor Day, we do see a weakness in the leg quarter market and it begins to increase in demand and price later in the year, specifically closer to December. And that's typically when we see a decline in inventories. There were some markets that have purchased a lot of U.S. leg quarters in the past few years that have not purchased as many leg quarters and that resulted in some inventory buildup. And obviously, when we see inventory buildup, that puts pressure on prices. So you're right, we have seen a decline in the last few weeks in the value of leg quarters. I think looking into next year, with what we believe will be continued minimal growth in chicken production in the U.S. And from what we hear in South America, our production is being reduced there as well. We believe we'll see leg quarter prices that have been substantially similar to what we've seen in the last 2 years. I would say a range of, perhaps, the high 30s to the mid-50s on an FAS basis. That would be my guess at this time.

I'll just add, Farha, that if you look at the breakdown of our exports lately, Mexico has been more and more important. And as we have the slowdown in Mexico, I think that plays a little bit of our role in the pressure on the leg quarters. So as Mexico resumes their growth and their demand now at the end of the year, we believe that leg quarters can stabilize and can go up again.

That's very helpful. And you had a great chart in your packet this morning on Page 17 that really breaks out kind of the parts and the revenue driver by part in the business. But when we kind of look at leg quarters down 10%, wing prices down about 27% year-over-year, and basically, breast meat and tenders only up about 2%, when we just kind of weighted and calculated that, we saw that pricing in the fourth quarter for you guys might be down as much as 6% to 7%. Is there anything in your contracts that will help mitigate that hit that we should be thinking about as we model Pilgrim?

Sure, good question. I think, the main mitigating factor, Farha, is just the breadth of our portfolio and the different channels that we do business in. And that allows us to have a varied pricing methodologies and schemes as I covered in response to the first question. And we think that's going to be a competitive advantage in 2014. And while revenue has declined, we also have to remember that feed ingredient costs have also declined and will continue to do so. And the one thing that I think is important to note is, while we do have some commodity exposure, and we do get a lift when commodity prices go up, because of the balance of our portfolio, when prices go down, we also don't get the complete hit, if you will, from those prices due to that diversification in our portfolio.

And 1 final question just, Fabio, on modeling. Your outlook for interest expense and tax rate, given that some of your taxes sounds like it's changing a little bit for next year.

Yes. What we expect is that by next year, we will be a taxpayer. So we don't expect the full year to be a taxpayer. But the tax rate that we are expecting is between 34% to 37% in U.S. And -- while in Mexico this year, we were in the 20% tax bracket. In Mexico, there is a tax reform in process. So we expect the next year tax rate to be closer to the U.S. But not for the full-year 2014 because, again, we don't expect to be a taxpayer for the full year of 2014. On the expense on the interest, we just renegotiated our loan -- our term loan, so we expect that to be lower next year. We will reset the interest next year on the term loan from LIBOR plus 2.25%, which is the current tax rate, to LIBOR plus 1.75%. That's what we expect. And the 2018 bonds, like we've said, it's a 7.78% yield. And we expect to continue to have them up to the end of the year in 2014.

The next question comes from Bryan Hunt with Wells Fargo.

And Bill, I was -- one of your other mitigants are going to be your cost savings targets, hopefully. And I was wondering if you can explore with us your cost savings goals for 2014, and how much of those goals are going to come from new capital investments versus mix improvements? As well as, maybe, Fabio, you can give us an idea of what CapEx may be for 2014? And then I've got a follow-up.

We can comfortably say that more of our savings in the future will come from CapEx projects, as we have a greater amount of liquidity and cash on our balance sheet. So we are able to do more with that cash in our operations. There's basically 2 components, 2 major components of those operational improvements. Yield improvements, which is an ongoing strategy in our company to improve yields at all levels. And then, processing cost. And the major -- the biggest component of processing cost, obviously, is labor. And we're doing a lot of things with respect to our labor costs, in terms of engineering our jobs, making sure that we have consistency and standardization across our entire production footprint and better managing our labor costs. The same with packaging and ingredients. We look to -- with some of the CapEx projects that are available to us now, we look to be able to create more savings in packaging and ingredient costs. So we believe, as I said in the prepared remarks, that our goal is going to move up from $125 million improvement year-over-year, this year, to something well over $200 million next year.

Just in terms of the CapEx targets, if you look into our history. In 2012, we spent $90 million. In 2013, we have a target, and we are at target, to reach $110 million. For next year, 2014, we are thinking around between $130 million to $150 million in CapEx.

Okay. And -- great. Last question is when you look at the balance sheet, you have a cash flow sweep that'll, needless to say, eat a big chunk of cash. And there may be some greenfield projects or M&A in Mexico. But you should still be a substantial free cash flow generator in 2014, over and beyond the uses of cash. I was wondering if you could evaluate what you might do with excess cash flow in the future, as well as, as the leverage has improved, what do you think the right level of leverage is for the company going forward?

Well, we're looking to the opportunities that we have. The right leverage, it is something that will provide good tax shield from our tax payments, and will not put a burden in our operations, right? So we continue to evaluate the best uses of our available balances. And we're thinking about dividends, share buybacks. They're all possible options. But like you mentioned, our primary objective was to prepare for the cash flow sweep that will happen in April next year. It's going to be around $400 million. So we have the cash in availability to face it. And now we're focusing on our efforts on the more long-term projects with strong paybacks and that will -- we already announced the $25 million investment in Alabama, and we have several other projects that we -- are being detailed, and the Mexico options. So the right leverage, we believe, that is the one that will provide a good tax shield for our operation, while not increase the risk of our operation.

I would add to that, that as we look at the opportunities for global chicken consumption growth, that's the most exciting part of our business. We believe that -- I've actually read reports that due to population growth and more consumers moving into the middle class in developing countries, chicken consumption demand may grow by as much as 30% in next 10 years. I can tell you that we're going to be a big part of that growth. And we look far beyond the borders of the U.S. in terms of supplying our product. That's been a big part of our strategy the last 2 years, and will continue to be. So we look forward to taking our excess cash flow and investing it in projects that will allow us to take advantage of that global growth in poultry consumption.

The only thing I would add is that we believe that the demand, the growing demand, will be supplied by the most competitive places to produce meat. And we believe that those places are not in South America. So if -- we're going to concentrate our geographic expansion into those regions.

The next question comes from Ken Zaslow with Bank of Montreal.

My 2 questions. First, what do you think the cadence of the supply changes will be for the next -- for each of the next 4 quarters. Because my sense is that it might actually ebb and flow throughout the quarters. Can you just talk about what you think the production levels for the industry would be like for each of the next 4 quarters?

Sure. I think if you look at the information we supplied on our website, you can see that the supply curve basically takes the same slope as what we've seen normally the last 5 years. What's a bit different than the last 2 years, in 2011, I would remind you that due to the dire economic conditions in the chicken business, the industry cut back severely in the summer heading into fall. And then last year, when it became apparent that we were facing one of the worst droughts in history, the industry also reduced production going into fall. This year was different from those 2, in that we didn't -- we've had a relatively good year financially in the industry; and then two, we saw a larger corn and soybean crop coming at us. And so the industry went back to more of a normalized reduction pattern. If you look at the absolute numbers, they're not really a lot different than what we've seen on a normal basis. They're different from those 2 years for the reasons that I just mentioned. But I don't see it being much different from what we normally see, as the industry reduces supply going into December and then, begins to ramp up again in January and through the spring and summer.

Great. And my next question is, if I assume that a substantial portion of your cost savings go through to the bottom line, plus the corn and soybean meal prices -- particularly, corn obviously going lower, can you come up with a reasonable case that -- why your margins should actually hold from this -- maybe not this quarter, but hold from the last 2 quarters into next year, given that you have substantially lower corn price in the cost savings? Or is that too ambitious of an assumption?

Well, I believe, Ken, that margins in the next couple of quarters will be fairly good for the reasons that you mentioned. Whether we'll take advantage of the ultrahigh prices that we saw this past summer, I don't know. Time will tell. But we do know that we're going to pay substantially less for our feed ingredients, so we'll get margin help on that side of the equation which, again, leads me to believe that margins will be relatively healthy going into the next couple of quarters and even through the summer and fall of 2014. And I think that a lot of that confidence also comes from the fact that, as we've stated the last couple of quarters, the breeder supply chain continues to be somewhat constrained. And whatever increase that we have in production largely would be due to the average weight gains.

Question comes from Carla Casella with JPMorgan. Carla Casella - JP Morgan Chase & Co, Research Division: One question, I may have missed this, you may have said -- the value-added business, have you said what percentage that is now of your total U.S. and Mexican business, and where you can see that ramping to in a near term?

We've not stated that, Carla. I will tell you that as we've changed our mix the last couple of years, we did exit some business that we didn't feel was long-term profitable for us. So it's been reduced for the last couple of years. But I would also tell you that we are very interested in growing that business on an absolute basis. And we'll grow it in areas where we feel like our core competencies line up with our customers' needs and we're able to create a very good margin business. So it has reduced the last couple of years, but I will tell you that we're planning and prepared to grow that business on an absolute basis going forward.

And again, especially on the export front, where we are developing a specific brand to target to new markets, with the Savoro brand. Carla Casella - JP Morgan Chase & Co, Research Division: The timing of the rollout of Savoro, I mean, at what point will it be fully rolled out?

We begin shipping product in November. And I expect by early spring, we'll be in full rollout mode. Carla Casella - JP Morgan Chase & Co, Research Division: Okay, great. And then, do you see any plant consolidation in the U.S. or industry consolidation, just given what we're seeing in the current trends? From any of the smaller players, I'm thinking.

Well, there's always that possibility. There's not anything that I know of, on a concrete basis, that we leads me to believe there will be in the near future. But it's always a possibility. Carla Casella - JP Morgan Chase & Co, Research Division: Are there any opportunities for you to buy or move into -- with your CapEx plans for the next few years, does that include any potential acquisitions to move to better locations?

That's definitely an option that would be appealing to us in geographies where we're not as strong. We are always looking for opportunities to strengthen our business that way. I think our key customers see us as a global supplier. And in the U.S., we're certainly a nationwide supplier. And so where we can bolster business or brands in an area that traditionally we've not been as strong, then we're always looking to that as an option.

The next question comes from Akshay Jagdale with KeyBanc Capital Markets.

I have a couple of questions, short-term, and then a couple of long-term. So the first, short-term, really is regarding 4Q. I think last quarter, just generally, you had said that 4Q margins could be, directionally, could be better than what they were in the June quarter. Since then, grain prices, about where they were, I would say, and maybe down slightly. But obviously, pricing in the marketplace on chicken has been much weaker. So what -- I know you said relatively strong, but I'm expecting margins in the fourth quarter to be weaker than the third quarter. Is that your expectation? Can you -- am I thinking about that correctly, like, the revenue will be softer than, let's say, what we were expecting back in June because there has been some soft trends on leg quarters and wings specifically?

Akshay, I can understand how you would come to that conclusion if, really, all you're looking at is the market prices and feed ingredients. But again, I'll go back to the diversification of our portfolio. And I think that's going to be a bigger benefit to us as opposed to, perhaps, some companies that are more exposed to commodity markets. And as we've gone through the year, we continued to improve our mix and our price impact of that mix as we move through the year. So I believe we'll gain benefit from that versus other companies on a competitive basis, and in Q4 specifically. And again, I can understand why you would come to that conclusion. Revenue or markets -- market pricing has declined, perhaps, a bit more than we or anyone else would've expected. But again, that's where the portfolio effect of our business, I think, becomes an advantage.

Sure. So you're saying you're going to do better than, perhaps, I'm saying. But will it -- just relative to this quarter, I mean the feed costs, I'm guessing, are going to be down. I mean, feed costs, in my estimates, were actually up sequentially a couple of pennies per pound. So they'll be down significantly, in my estimate, around $0.07. But in the marketplace, revenue per pound is down $0.10, $0.11, $0.12 this quarter so far versus what we saw in the September quarter. So I understand what you're saying. What you're saying is your revenue won't fall sequentially as much as the market will, right? But help me understand that in the context of your U.S. margins, right? EBIT or gross margins. Is there a possibility that 4Q margins in the U.S. could be similar or higher than 3Q?

I assume you're talking about Pilgrim specifically as opposed to...

Yes, just Pilgrims.

Yes. I think I would leave it as -- I believe Q4 is going to be a very solid quarter for Pilgrim's due to the portfolio pricing effect of our business and the fact that we are not going to be as exposed to the market as compared to companies that are purely market-based.

Okay. And then, just to follow-up, a little bit relate but not entirely. Leg quarters. So Farha asked you this question, and I interpreted your response as being the price softness, if I may, has been because of inventory's backing up in some countries. Now our research is telling us actually that a couple of cold storage facilities in the southeast closed, and that's causing product to back up there. So it's actually not -- in our estimates, not a demand issue, it's more logistics, which takes a few months to rectify. That's what we're hearing. If you can just comment, have you heard of that? And if not, can you give us some specifics on countries where you've seen in-country inventories up?

I've not heard of that specific instance to which you referred. As -- by way of example of a country that may not take as many U.S. leg quarters they have in recent years, Kazakhstan is one where they issued they're quota much later in the year than is typical of them. So just to the absolute timing with where we are in the year, will not allow for as many leg quarters to move into that country, as an example.

Okay. But it is -- so there's 1 or 2 -- so you're just saying, there's 1 or 2 sort of one-off situations where this has happened, but in aggregate, your expectations for leg quarter prices still seem to be implying good demand that, combined with what you said about exports in your presentation, says that as exports are not going to be a drag, if I may, correct? If anything, you think they'll continue to be a positive. Is that fair?

Sure, moving into next year, I believe so. Have leg quarters declined a bit more than we expected? Perhaps they have, but I think that's a short-term situation that will begin to clear out as we moved closer into December and into next year. I don't think there's been any structural issue, necessarily, with leg quarter demand on a global basis.

Okay, that's helpful. And just before I ask the longer-term question. Just point of clarification in your charts -- I think it's Page 17 or Slide 17. You have a revenue mix chart. Is that specific to Pilgrim's? Or is that an industry number? The revenue drivers where you've broken out the mix of revenue by part. Is that..?

That's an industry number, actually. Not specific to Pilgrim's.

So in that context, I mean, you said your mix is advantageous, meaning less commodity. I was under the impression that since you came on, you're doing a lot more big bird deboning and things of that sort, and that has actually increased your exposure to breast meat and commodity meat. But can you help me with that? Because clearly, you're saying that may not be the case.

Sure. Good question. So let's look at the big bird deboning business. So for example, when you debone the front half of the big bird, you also have the back half that you have a lot of options with. And you can sell those as bulk frozen leg quarters, that's 1 option. You can also debone those legs that, in many cases, give you a better return back to a fresh leg quarters. So we have, in fact, and continue to increase our share in boneless leg meat. That's provided us an advantage over those who only have the option of selling leg quarters, just as an example.

And actually, I'll remind you that what we said is we increased the big bird deboning in our operation compared to where we used to be in the past. By no means we are as exposed as some of our competitors to this market. So we have a more balanced portfolio of products.

And that's -- even in the large bird deboning sector, we have several plants deployed against that market segment. And we don't do the same thing in each one of those plants. We have a variety of options and mixed opportunities in each of those plants. And again, we believe that gives us an advantage over strictly a commodity supplier.

Okay, great. And just on longer-term, I mean, and I know there's a lot of concerns, and valid ones, regarding whether the supply in industry will increase at a rapid rate next year. But help me in my thinking, right? So I think the biggest evidence of more rational behavior, if I may, is what we're seeing from the 2 largest publicly traded companies. Case in point, I mean, I believe if I saw these numbers correctly, your pounds sold were down 4.5% or 4.6% this quarter, while I believe, industry production was up. And generally speaking, your production's been down and obviously, you have some plants that are idle. So it's clear to me that you, along with Tyson, are focused way more on margins than you've ever been. I think Tyson said publicly that they're short chicken, generally speaking, right, in their operations. And so isn't that pretty solid evidence that -- maybe you can just speak to Pilgrim's, that the focus still remains on margins ahead of, let's say, market share?

I have no reason to disagree with what you just said. We are absolutely focused on margin. We're focused on free cash flow generation. I think the track record we've established the last 2 years is a testament to that. And we'll continue to have that focus.

Your last question comes from Wesley Brooks from Morgan Stanley.

I just wanted to get your thoughts, if I may, on the Middle East markets, please, as an export market. Just looking at the USDA data. It seems there was a pretty meaningful increase in exports into the region during Q2, and a pullback in Q3. And now the Brazilian producers are talking about an oversupply there. So I was just wondering what you're seeing in the region and how you expect exports to progress there in the coming quarters and years?

Well, as you look on a globe, chicken consumption per capita, the Middle East represents the market where there's the most chicken consumed per capita on the planet. We don't believe that's going to change. We believe that continued population growth and continued economic benefits and more people moving into the middle-class is going to continue to move that number forward. We believe the Middle East is a great market for U.S. and Brazilian chicken. Like any market, there are times when the supply is less than demand, and there are other times when supply is more than demand. We don't think that's going to change. And because of the high demand and high prices that you referenced in the second quarter, more product moved into that market and has created, what I believe, is -- or what we believe is a temporary imbalance, and more supply than demand. But that should balance itself out in the very near future. And we believe that, just like in the U.S., the producers in Brazil will look at that, as that is a key market to Brazilian producers and attempt to balance that supply with demand to create a margin.

Okay. And going forward, is it going to be an increased focus for yourselves and other U.S. producers to try and put more product in there? And if so, how do you feel your cost position compares at getting product in there to the Brazilian guys?

Well, I can only speak for Pilgrim's, but I can tell you that we do have key customers in the Middle East. And we'll continue to view that market as a great opportunity to grow our business. We believe our cost position, relative to Brazil, is competitive, is good. What we can't control are currency valuation fluctuations. That has a vote in competitiveness and value from time to time, but we believe the base business is very competitive, U.S. versus Brazil, and we don't see any reason that, that will change anytime soon.

This concludes our question-and-answer session. I would now like to turn the conference back over to Bill Lovette for any closing remarks.

Thank you. As we are now approaching the end of what will be a great year financially for Pilgrim's, I want to thank our team members, shareholders and customers for their support. These past 3 years have been a defining period in changing the culture and the results for us. But we believe the next 2 to 3 years can have an even greater impact as we deploy our talent and resources with more confidence and velocity. Thank you, all, for joining us this morning.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.