Simmons Foods Inc (subsidiary issuer): Tight spreads won’t let this chicken fly; maintain Marketweight

Research evidence excerpt

Simmons Foods Inc (subsidiary issuer): Tight spreads won’t let this chicken fly; maintain Marketweight

Guidance and financial discussion

FY26 guidance was affirmed

Simmons affirmed its FY26 guidance, including:

• revenue of $3.2 to $3.3 billion;

• Adj EBITDA of $265 to $285 million; and

• net leverage in the range of 2.8x to 3.2x at year end.

Notably, the Adj EBITDA that we show in our model is the company’s Finance Lease-

Adjusted View.

Capex guidance affirmed

Simmons affirmed its FY26 capex guidance of $155 to $175 million.

Liquidity remains strong

As of the end of 1Q26, Simmons had $67 million of cash and $308 million of revolver

availability.

Leverage target remains conservative

Simmons maintains a reasonable long-term leverage target of 3x.

Dividend/Distributions

As an S-Corporation, Simmons does not pay tax. However, Simmons distributes cash to

its shareholders to pay taxes. In addition, the company distributes discretionary

dividends to its shareholders, which are typically $5 to $10 million annually.

Chicken Pricing

Chicken pricing remains depressed as an oversupply of poultry exists. The price of

boneless breasts has decreased 42% and the price of jumbo wings has declined 17% vs

last year.

Simmons is more insulated from volatile poultry prices due to high exposure to: (1)

Foodservice (~60% of sales, with QSRs representing 60%+ of Foodservice) and (2)

further-processed (value-added) products in the retail segment. Poultry sales are

completed through contracts (80%) and market prices (20%). Contracts include: (1)

commodity-based pricing (20%) and (2) fixed pricing (63%).

For market-based contracts, the price/value of chicken per pound in North America

decreased 30% year-over-year as of late May 2026. By volume, we estimate that