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May 10, 2018

Pilgrim’s Pride Reports Net Sales of $2.75 Billion, Operating Income of $202 Million and GAAP EPS of $0.48, or a 26% year over year increase for the First Quarter of 2018

GREELEY, Colo., May 10, 2018 (GLOBE NEWSWIRE) -- Pilgrim’s Pride Corporation (NASDAQ:PPC) reports first quarter 2018 financial results.

First Quarter Highlights

  • Consolidated numbers reflect Moy Park for the entire quarter, including historical data in accordance to U.S. GAAP.
  • Net Sales of $2.75 billion, +10.8% vs same quarter last year (+35.9% if excluding the Moy Park numbers from last year).
  • Net Income of $119.4 million, or an increase of 27.1% vs a year ago.
  • Operating Income margins of 6.9% in U.S., 14.6% in Mexico and 3.9% in Europe operations, respectively.
  • Adjusted EBITDA of $271.8 million (or a 9.9% margin), or 18.9% higher than last year and Adjusted EPS of $0.53, or a 39.5% increase.
  • Recent acquisitions and investments both in U.S. and international are already generating value and improving portfolio by adding more differentiated products while Key Customer approach has continued to produce growth and margin expansion beyond the underlying market conditions.
  • Mexican operations exceeded expectations driven by normalization of the market’s logistics and infrastructure disruptions caused by natural events. Diversification into premium Pilgrim’s brand is gaining momentum and producing great results.
  • Successful refinancing of the Moy Park Bonds, impacting the interest in the quarter but with strong support from market and favorable terms for future benefits.
Unaudited (2), In Millions, Except Per Share and Percentages
  Thirteen Weeks Ended
  Apr 1, 2018   Mar 26, 2017   Change
Net Sales $2,746.7   $2,479.3   +10.8%
GAAP EPS $0.48   $0.38   +26.3%
Operating Income $201.6   $166.7   +20.9%
Adjusted EBITDA (1) $271.8   $228.5   +18.9%
Adjusted EBITDA Margin (1) 9.9%   9.2%   +0.7pts
           

(1) Reconciliations for non-GAAP measures are provided in subsequent sections within this release.
(2) Figures have been adjusted to include full-quarter of Moy Park, in accordance to U.S. GAAP.

“For Q1 our U.S. operations continued to deliver solid performance, especially within the small-bird and case-ready businesses. Our big bird deboning experienced a soft start as prices remained unseasonally low through the first half of the quarter but prices recovered quickly and returned closer to normal seasonality. Despite some headwinds in feed, labor and logistics, the investments we made over the past few years, together with the recent acquisitions and our capture of operational improvements, helped us to generate consistent results and continued to contribute to the evolution of our portfolio in supporting our vision to become the best and most respected company in our industry,” stated Bill Lovette, Chief Executive Officer of Pilgrim's.

“We had a very strong performance at our Mexican operations in Q1 as the prior logistics and infrastructure dislocations caused by natural events normalized and demand returned at strong levels. Our volumes increased during the quarter, driving a very strong EBITDA performance that was not only well above the level from a year ago but also above initial expectations. The strength has continued, which we see as the continuation of the trend of a strong, growing market for chicken. Our Prepared Foods are growing at a double digit rate and are generating great results under both premium Pilgrim’s and Del Dia to drive the evolution of our Mexican portfolio towards more differentiated, higher-value products, and ultimately margin expansion.”

“In Europe, we are already seeing positive results from the integration, with significant share gained at a key customer and several other projects to further optimize our relationships, highlighting how our newly acquired operations are already benefiting from our team’s enhanced focus on Key Customer strategy. The operational improvements initiatives are also going well and we are slightly ahead of our $50 million synergy target for the next two years. Based on the success of the previous integrations, we continue to believe we have the method and the team to continue to grow the profitability and potential of our European business.”

Conference Call Information

A conference call to discuss Pilgrim’s quarterly results will be held tomorrow, May 11, at 7:00 a.m. MT (9 a.m. ET).  Participants are encouraged to pre-register for the conference call using the link below.  Callers who pre-register will be given a unique PIN to gain immediate access to the call and bypass the live operator.  Participants may pre-register at any time, including up to and after the call start time.

To pre-register, go to: https://services.choruscall.com/links/ppc180511.html

You may also reach the pre-registration link by logging in through the investor section of our website at www.pilgrims.com and clicking on the link under “Upcoming Events.”

For those who would like to join the call but have not pre-registered, access is available by dialing +1 (844) 883-3889 within the US, or +1 (412) 317-9245 internationally, and requesting the “Pilgrim’s Pride Conference.” Please note that to submit a question to management during the call, you must be logged in via telephone.

Replays of the conference call will be available on Pilgrim’s website approximately two hours after the call concludes and can be accessed through the “Investor” section of www.pilgrims.com. The webcast will be available for replay through August 11, 2018.

About Pilgrim’s Pride

Pilgrim’s employs approximately 51,400 people and operates chicken processing plants and prepared-foods facilities in 14 states, Puerto Rico, Mexico, the U.K, and continental Europe. The Company’s primary distribution is through retailers and foodservice distributors.  For more information, please visit www.pilgrims.com.

Forward-Looking Statements

Statements contained in this press release that state the intentions, plans, hopes, beliefs, anticipations, expectations or predictions of the future of Pilgrim’s Pride Corporation and its management are considered forward-looking statements. It is important to note that actual results could differ materially from those projected in such forward-looking statements. Factors that could cause actual results to differ materially from those projected in such forward-looking statements include: matters affecting the poultry industry generally; the ability to execute the Company’s business plan to achieve desired cost savings and profitability; future pricing for feed ingredients and the Company’s products; outbreaks of avian influenza or other diseases, either in Pilgrim’s Pride’s flocks or elsewhere, affecting its ability to conduct its operations and/or demand for its poultry products; contamination of Pilgrim’s Pride’s products, which has previously and can in the future lead to product liability claims and product recalls; exposure to risks related to product liability, product recalls, property damage and injuries to persons, for which insurance coverage is expensive, limited and potentially inadequate; management of cash resources; restrictions imposed by, and as a result of, Pilgrim’s Pride’s leverage; changes in laws or regulations affecting Pilgrim’s Pride’s operations or the application thereof; new immigration legislation or increased enforcement efforts in connection with existing immigration legislation that cause the costs of doing business to increase, cause Pilgrim’s Pride to change the way in which it does business, or otherwise disrupt its operations; competitive factors and pricing pressures or the loss of one or more of Pilgrim’s Pride’s largest customers; currency exchange rate fluctuations, trade barriers, exchange controls, expropriation and other risks associated with foreign operations; disruptions in international markets and distribution channel, including anti-dumping proceedings and countervailing duty proceedings; and the impact of uncertainties of litigation as well as other risks described under “Risk Factors” in the Company’s Annual Report on Form 10-K and subsequent filings with the Securities and Exchange Commission. Pilgrim’s Pride Corporation undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Contact:     Dunham Winoto
      Director, Investor Relations
      IRPPC@pilgrims.com
      (970) 506-8192
      www.pilgrims.com


PILGRIM’S PRIDE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
 
    April 1, 2018   December 31, 2017
    (Unaudited)    
    (In thousands)
Cash and cash equivalents   $ 580,811     $ 581,510  
Restricted cash   10,657     8,021  
Trade accounts and other receivables, less allowance for doubtful accounts   629,829     565,478  
Accounts receivable from related parties   1,471     2,951  
Inventories   1,242,352     1,255,070  
Income taxes receivable   160      
Prepaid expenses and other current assets   124,358     102,550  
Assets held for sale   2,923     708  
Total current assets   2,592,561     2,516,288  
Deferred tax assets   3,275      
Other long-lived assets   18,629     18,165  
Identified intangible assets, net   628,414     617,163  
Goodwill   1,033,126     1,001,889  
Property, plant and equipment, net   2,121,630     2,095,147  
Total assets   $ 6,397,635     $ 6,248,652  
         
Accounts payable   $ 782,757     $ 733,027  
Accounts payable to related parties   5,475     2,889  
Revenue contract liability   29,304     36,607  
Accrued expenses and other current liabilities   351,558     410,152  
Income taxes payable   122,613     222,073  
Current maturities of long-term debt   149,389     47,775  
Total current liabilities   1,441,096     1,452,523  
Long-term debt, less current maturities   2,625,698     2,635,617  
Deferred tax liabilities   212,316     208,492  
Other long-term liabilities   84,758     96,359  
Total liabilities   4,363,868     4,392,991  
Common stock   2,604     2,602  
Treasury stock   (231,758 )   (231,758 )
Additional paid-in capital   1,933,780     1,932,509  
Retained earnings   293,361     173,943  
Accumulated other comprehensive income (loss)   26,469     (31,140 )
Total Pilgrim’s Pride Corporation stockholders’ equity   2,024,456     1,846,156  
Noncontrolling interest   9,311     9,505  
Total stockholders’ equity   2,033,767     1,855,661  
Total liabilities and stockholders’ equity   $ 6,397,635     $ 6,248,652  


PILGRIM’S PRIDE CORPORATION
CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF INCOME
(Unaudited)
         
    Thirteen Weeks Ended
    April 1, 2018   March 26, 2017
    (In thousands, except per share data)
Net sales   $ 2,746,678     $ 2,479,340  
Cost of sales   2,459,013     2,222,805  
Gross profit   287,665     256,535  
Selling, general and administrative expense   85,283     89,811  
Administrative restructuring charges   789      
Operating income   201,593     166,724  
Interest expense, net of capitalized interest   50,300     19,112  
Interest income   (1,590 )   (368 )
Foreign currency transaction losses (gains)   (1,721 )   691  
Miscellaneous, net   (1,617 )   (2,843 )
Income before income taxes   156,221     150,132  
Income tax expense   36,997     49,394  
Net income   119,224     100,738  
Less: Net income from Granite Holdings Sàrl prior to
  acquisition by Pilgrim's Pride Corporation
      6,275  
Less: Net income (loss) attributable to noncontrolling interests   (194 )   542  
Net income attributable to Pilgrim’s Pride Corporation   $ 119,418     $ 93,921  
         
Weighted average shares of common stock outstanding:        
Basic   248,838     248,692  
Effect of dilutive common stock equivalents   151     234  
Diluted   248,989     248,926  
         
Net income attributable to Pilgrim's Pride Corporation per share of
  common stock outstanding:
       
Basic   $ 0.48     $ 0.38  
Diluted   $ 0.48     $ 0.38  


PILGRIM’S PRIDE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS
(Unaudited)
 
    Thirteen Weeks Ended
    April 1, 2018   March 26, 2017
    (In thousands)
Cash flows from operating activities:        
Net income   $ 119,224     $ 100,738  
Adjustments to reconcile net income to cash provided by operating activities:        
Depreciation and amortization   69,201     62,672  
Noncash loss on early extinguishment of debt   3,918      
Foreign currency transaction loss related to borrowing arrangements   5,745     2,158  
Amortization of premium related to Senior Notes   (167 )    
Accretion of discount related to Senior Notes   76      
Impairment expense   470      
Loss on property disposals   80     118  
Gain on equity method investment   (16 )   (13 )
Share-based compensation   1,273     1,460  
Deferred income tax expense (benefit)   (4,735 )   12,780  
Changes in operating assets and liabilities:        
Trade accounts and other receivables   (61,945 )   (50,492 )
Inventories   19,541     (62,530 )
Prepaid expenses and other current assets   (20,777 )   (17,754 )
Accounts payable, accrued expenses and other current liabilities   (29,171 )   (5,412 )
Income taxes   (98,784 )   25,216  
Long-term pension and other postretirement obligations   (2,759 )   (1,633 )
Other operating assets and liabilities   (534 )   (1,013 )
Cash provided by operating activities   640     66,295  
Cash flows from investing activities:        
Acquisitions of property, plant and equipment   (76,681 )   (121,639 )
Business acquisition       (359,698 )
Proceeds from property disposals   1,021     181  
Cash used in investing activities   (75,660 )   (481,156 )
Cash flows from financing activities:        
Proceeds from revolving line of credit and long-term borrowings   502,341     662,795  
Payments on revolving line of credit, long-term borrowings and capital lease obligations   (433,550 )   (334,453 )
Proceeds from equity contribution under Tax Sharing Agreement between JBS USA Food Company Holdings and Pilgrim's Pride Corporation   5,558     5,038  
Payment of capitalized loan costs   (4,061 )    
Purchase of common stock under share repurchase program       (14,641 )
Cash provided by (used in) financing activities   70,288     318,739  
Effect of exchange rate changes on cash and cash equivalents   6,669     2,182  
Increase (decrease) in cash, cash equivalents and restricted cash   1,937     (93,940 )
Cash, cash equivalents and restricted cash, beginning of period   589,531     297,524  
Cash, cash equivalents and restricted cash, end of period   $ 591,468     $ 203,584  


PILGRIM’S PRIDE CORPORATION

Selected Financial Information

(Unaudited)

“EBITDA” is defined as the sum of net income (loss) plus interest, taxes, depreciation and amortization.  “Adjusted EBITDA” is calculated by adding to EBITDA certain items of expense and deducting from EBITDA certain items of income that we believe are not indicative of our ongoing operating performance consisting of: (i) income (loss) attributable to non-controlling interests, (ii) restructuring charges, (iii) reorganization items, (iv) losses on early extinguishment of debt and (v) foreign currency transaction losses (gains). EBITDA is presented because it is used by management and we believe it is frequently used by securities analysts, investors and other interested parties, in addition to and not in lieu of results prepared in conformity with accounting principles generally accepted in the US (“GAAP”), to compare the performance of companies.  We believe investors would be interested in our Adjusted EBITDA because this is how our management analyzes EBITDA.  The Company also believes that Adjusted EBITDA, in combination with the Company’s financial results calculated in accordance with GAAP, provides investors with additional perspective regarding the impact of certain significant items on EBITDA and facilitates a more direct comparison of its performance with its competitors.  EBITDA and Adjusted EBITDA are not measurements of financial performance under GAAP.  They should not be considered as an alternative to cash flow from operating activities or as a measure of liquidity or an alternative to net income as indicators of our operating performance or any other measures of performance derived in accordance with GAAP.

PILGRIM'S PRIDE CORPORATION
Reconciliation of Adjusted EBITDA
       
(Unaudited) Thirteen Weeks Ended
  April 1, 2018   March 26, 2017
  (In thousands)
Net income $ 119,224     $ 100,738  
Add:      
Interest expense, net 48,710     18,744  
Income tax expense (benefit) 36,997     49,394  
Depreciation and amortization 69,201     62,672  
Minus:      
Amortization of capitalized financing costs 1,757     3,210  
EBITDA 272,375     228,338  
Add:      
Foreign currency transaction losses (gains) (1,721 )   691  
Acquisition charges 179      
Restructuring charges 789      
Minus:      
  Net income (loss) attributable to noncontrolling interest (194 )   542  
Adjusted EBITDA $ 271,816     $ 228,487  

EBITDA margins have been calculated by taking the relevant unaudited EBITDA figures, then dividing by Net Revenue for the applicable period.

PILGRIM'S PRIDE CORPORATION
Reconciliation of EBITDA Margin
                 
(Unaudited)   Thirteen Weeks Ended   Thirteen Weeks Ended
    April 1, 2018   March 26, 2017   April 1, 2018   March 26, 2017
    (In thousands)
Net income from continuing operations   $ 119,224     $ 100,738     4.34 %   4.06 %
Add:                
Interest expense, net   48,710     18,744     1.77 %   0.76 %
Income tax expense   36,997     49,394     1.35 %   1.99 %
Depreciation and amortization   69,201     62,672     2.52 %   2.53 %
Minus:                
Amortization of capitalized financing costs   1,757     3,210     0.06 %   0.13 %
EBITDA   272,375     228,338     9.92 %   9.22 %
Add:                
Foreign currency transaction losses (gains)   (1,721 )   691     (0.06 )%   0.03 %
Acquisition charges   179         0.01 %   %
Restructuring charges   789         0.03 %   %
Minus:                
  Net income (loss) attributable to noncontrolling interest   (194 )   542     (0.01 )%   0.02 %
Adjusted EBITDA   $ 271,816     $ 228,487     9.90 %   9.23 %
                 
Net Revenue:   $ 2,746,678     $ 2,479,340     $ 2,746,678     $ 2,479,340  

A reconciliation of net income (loss) attributable to Pilgrim's Pride Corporation per common diluted share to adjusted net income (loss) attributable to Pilgrim's Pride Corporation per common diluted share is as follows:

PILGRIM'S PRIDE CORPORATION
Reconciliation of Adjusted Earnings
(Unaudited)
         
    Thirteen Weeks Ended
    April 1,
 2018
  March 26,
 2017
    (In thousands, except per share data)
Net income (loss) attributable to Pilgrim's Pride Corporation   $ 119,418     $ 93,921  
Loss on early extinguishment of debt   12,895      
Acquisition and restructuring charges, net of taxes   968      
Foreign currency transaction losses (gains)   (1,721 )   691  
Income (loss) before loss on early extinguishment of debt and foreign
  currency transaction losses (gains)
  131,560     94,612  
Weighted average diluted shares of common stock outstanding   248,989     248,926  
Income (loss) before loss on early extinguishment of debt and foreign
  currency transaction losses (gains) per common diluted share
  $ 0.53     $ 0.38  

A reconciliation of GAAP earnings per share (EPS) to adjusted earnings per share (EPS) is as follows:

PILGRIM'S PRIDE CORPORATION
Reconciliation of GAAP EPS to Adjusted EPS
(Unaudited)
       
  Thirteen Weeks Ended
  April 1, 2018   March 26, 2017
  (In thousands, except per share data)
GAAP EPS $ 0.48     $ 0.38  
Loss on early extinguishment of debt 0.05      
Acquisition and restructuring charges, net of taxes 0.01      
Foreign currency transaction losses (gains) (0.01 )    
Adjusted EPS $ 0.53     $ 0.38  
       
Weighted average diluted shares of common stock outstanding 248,989     248,926  


PILGRIM'S PRIDE CORPORATION
Supplementary Selected Segment and Geographic Data
         
    Thirteen Weeks Ended
    April 1, 2018   March 26, 2017
    (Unaudited)
    (In thousands)
Sources of net sales by country of origin:        
US:   $ 1,841,105     $ 1,736,405  
Europe:   544,300     458,848  
Mexico:   361,273     284,087  
Total net sales:   $ 2,746,678     $ 2,479,340  
         
Sources of cost of sales by country of origin:        
US:   $ 1,658,734     $ 1,548,099  
Europe:   501,568     417,518  
Mexico:   298,735     257,212  
Elimination:   (24 )   (24 )
Total cost of sales:   $ 2,459,013     $ 2,222,805  
         
Sources of gross profit by country of origin:        
US:   $ 182,370     $ 188,306  
Europe:   42,733     41,330  
Mexico:   62,538     26,875  
Elimination:   24     24  
Total gross profit:   $ 287,665     $ 256,535  
         
Sources of operating income by country of origin:        
US:   $ 127,286     $ 133,556  
Europe   21,413     14,372  
Mexico:   52,870     18,772  
Elimination:   24     24  
Total operating income:   $ 201,593     $ 166,724  

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Source: Pilgrim's Pride Corporation