UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K |
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): October 26, 2016
PILGRIM'S PRIDE CORPORATION
(Exact Name of registrant as specified in its charter)
Delaware | 1-9273 | 75-1285071 | |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | |
1770 Promontory Circle Greeley, CO | 80634-9038 | ||
(Address of principal executive offices) | (Zip Code) | ||
Registrant's telephone number, including area code: (970) 506-8000
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 7.01. Regulation FD Disclosure
Attached hereto as Exhibit 99.1 is an overview of Pilgrim's Pride Corporation to be referenced during the Company's earnings conference call of October 27, 2016.
The information furnished in Item 7.01 and in Exhibit 99.1 shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or incorporated by reference in any of Pilgrim's Pride Corporation's filings under the Securities Act of 1933, as amended, or the Exchange Act.
Item 9.01 Financial Statements and Exhibits.
Exhibit 99.1 Press release dated October 26, 2016
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
PILGRIM’S PRIDE CORPORATION | |||
Date: | October 26, 2016 | /s/ Fabio Sandri | |
Fabio Sandri | |||
Chief Financial Officer | |||
Exhibit Index
Exhibit 99.1 Press release dated October 26, 2016
Pilgrim’s Pride Corporation
Financial Results for
Third Quarter Ended Sep 25, 2016
Statements contained in this presentation that share our intentions, beliefs, expectations or predictions for the future, denoted by the words “anticipate,” “believe,” “estimate,”
“should,” “expect,” “project,” “plan,” “imply,” “intend,” “foresee” and similar expressions, are forward-looking statements that reflect our current views about future events
and are subject to risks, uncertainties and assumptions. Such risks, uncertainties and assumptions include the following matters affecting the chicken industry generally,
including fluctuations in the commodity prices of feed ingredients and chicken; actions and decisions of our creditors; our ability to obtain and maintain commercially
reasonable terms with vendors and service providers; our ability to maintain contracts that are critical to our operations; our ability to retain management and other key
individuals; certain of our reorganization and exit or disposal activities, including selling assets, idling facilities, reducing production and reducing workforce, resulted in reduced
capacities and sales volumes and may have a disproportionate impact on our income relative to the cost savings; risk that the amounts of cash from operations together with
amounts available under our exit credit facility will not be sufficient to fund our operations; management of our cash resources, particularly in light of our substantial leverage;
restrictions imposed by, and as a result of, our substantial leverage; additional outbreaks of avian influenza or other diseases, either in our own flocks or elsewhere, affecting our
ability to conduct our operations and/or demand for our poultry products; contamination of our 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; changes in laws or regulations affecting our operations or the application thereof; new immigration legislation or increased enforcement
efforts in connection with existing immigration legislation that cause our costs of business to increase, cause us to change the way in which we do business or otherwise disrupt
our operations; competitive factors and pricing pressures or the loss of one or more of our largest customers; currency exchange rate fluctuations, trade barriers, exchange
controls, expropriation and other risks associated with foreign operations; disruptions in international markets and distribution channels; and the impact of uncertainties of
litigation as well as other risks described herein and under “Risk Factors” in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the
“SEC”).
Actual results could differ materially from those projected in these forward-looking statements as a result of these factors, among others, many of which are beyond our control.
In making these statements, we are not undertaking, and specifically decline to undertake, any obligation to address or update each or any factor in future filings or
communications regarding our business or results, and we are not undertaking to address how any of these factors may have caused changes to information contained in
previous filings or communications. Although we have attempted to list comprehensively these important cautionary risk factors, we must caution investors and others that
other factors may in the future prove to be important and affecting our business or results of operations.
This presentation may include information that may be considered non-GAAP financial information as contemplated by SEC Regulation G, Rule 100, including EBITDA, Adjusted
EBITDA, LTM EBITDA, Net Debt, Free Cash Flow, Adjusted EBITDA Margin and others. Accordingly, we have provided tables in the accompanying appendix and in our previous
filings with the SEC that reconcile these measures to their corresponding GAAP-based measures and explain why these measures are useful to investors, which can be obtained
from the Consolidated Statements of Income provided with our previous filings with the SEC. Our method of computation may or may not be comparable to other similarly
titled measures used in filings with the SEC by other companies. See the consolidated statements of income and consolidated statements of cash flows included in our financial
statements.
Cautionary Notes and Forward-Looking Statements
2
Eggs Sets Up Slightly YTD vs Last Year
Source: USDA
3
211,832
190,260
211,576
198,811
200,998
180,000
185,000
190,000
195,000
200,000
205,000
210,000
215,000
1/
9
1/
23 2/
6
2/
20 3/
5
3/
19 4/
2
4/
16
4/
30
5/
14
5/
28
6/
11
6/
25 7/
9
7/
23 8/
6
8/
20 9/
3
9/
17
10
/1
10
/1
5
10
/2
9
11
/1
2
11
/2
6
12
/1
0
12
/2
4
Th
ou
sa
nd
Eg
g
United States, Selected 19 Poultry
Chicken, broiler Sets
'11-'15 Range '14 '15 '16 '16 Est '11-'15 Avg
Placements Averaging Mostly Flat vs 2015
Source: USDA
4
174,769
156,050
174,543
162,442
168,915
145,000
150,000
155,000
160,000
165,000
170,000
175,000
180,000
1/
9
1/
23 2/
6
2/
20 3/
5
3/
19 4/
2
4/
16
4/
30
5/
14
5/
28
6/
11
6/
25 7/
9
7/
23 8/
6
8/
20 9/
3
9/
17
10
/1
10
/1
5
10
/2
9
11
/1
2
11
/2
6
12
/1
0
12
/2
4
Th
ou
sa
nd
H
ea
d
United States, Selected 19 Poultry
Chicken, broiler Placed
'11-'15 Range '14 '15 '16 '16 Est '11-'15 Avg
Benign Layer Flock Supportive of
Modest Growth in Production
Source: USDA
5
Jumbo Bird Accounting For Larger Share
Source: USDA
6
Hatching layers fell in Sep and remain
flat YTD from a year ago.
Pullet placements declined 18% in Sep,
and YTD are now better reflecting
changes in layer flock size.
Hatching Layers Remain Flat YTD,
Placements Lower in Sep
Source: USDA
7
Cold Storage Levels Slowly Declining
Source: USDA
Overall inventories 3.9% lower than 2015 levels. Leg Quarters continue to remain lower
year on year driven by strong exports.
8
Cutout Values Remain Ahead of 2015 while
Contracts Still Firm
Source: PPC
9
Cutout Value
Leg Quarters Improved vs 2015, Other Parts
In-line with Normal Seasonality
Source: USDA
10
Corn Stocks at Record High Levels
Global stocks hitting record high levels as harvest remains plentiful.
2016 stocks-to-use global inventories have backed off slightly compared to historically high
in 2015 but still elevated.
Source: USDA
11
Global Soybean Inventories Increasing
Global inventories of soybeans remain high and above 2015 levels.
Demand for oilseed products estimated to narrow slightly in 2016.
Source: USDA
12
Third Quarter 2016 Financial Review
Respectable Q3 performance: MX environment
weaker Q/Q but consistent with seasonality;
synergy capture on track. U.S. solid but
impacted by downtime due to slower than
expected ramp at largest PF plant.
SG&A also positively impacted by MX
synergies.
Adjusted Q3-16 EBITDA below Q3-15 because
of PF plant overhang however Fresh remains
solid.
Main Indicators ($M) Q3-16 Q3-15
Net Revenue 2,031.7 2,112.5
Gross Profit 210.2 284.5
SG&A 46.4 53.4
Operating Income 163.8 231.1
Net Interest 11.8 10.2
Net Income 98.7 137.1
Earnings Per Share
(EPS)
0.39 0.53
Adjusted EBITDA* 210.8 274.3
Adjusted EBITDA
Margin*
10.4% 13.0%
* This is a non-GAAP measurement considered by management to be
useful in understanding our results. Please see the appendix and most
recent SEC financial filings for definition of this measurement and
reconciliation to GAAP.
In $M U.S. MX
Net Revenue 1,724.6 307.1
Operating
Income
141.2 22.6
Operating
Income Margin
8.2% 7.4%
13 Source: PPC
Balance Sheet Strong, With Plenty of Room for
Strategic Investments
Source: PPC
Cash Flow From Operations generation of $242MM in the quarter.
Net debt multiple remains low at 1.05x LTM EBITDA, despite $700MM special dividend
payment paid in Q2.
14
307.1
307.1
Third Quarter 2016 Capital Spending
Capex (US$M)
Source: PPC
Strong Free Cash Flow generation has enabled us to direct more capital spending towards
identified projects with rapid payback and structural projects.
New strategic projects will support key customers growth and de-emphasize our
exposure to commodity markets.
15
Investor Relations Contact
Investor Relations: Dunham Winoto
Director, Investor Relations
E-mail: IRPPC@pilgrims.com
Address: 1770 Promontory Circle
Greeley, CO 80634 USA
Website: www.pilgrims.com
16
Appendix: EBITDA Reconciliation
“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.
Source: PPC 17
PILGRIM'S PRIDE CORPORATION
Reconciliation of Adjusted EBITDA
(Unaudited) Thirteen Weeks Ended Thirty-Nine Weeks Ended
September 25, 2016 September 27, 2015 September 25, 2016 September 27, 2015
(In thousands)
Net income $ 98,527 $ 137,095 $ 369,580 $ 582,912
Add:
Interest expense, net 11,834 10,182 34,039 23,784
Income tax expense (benefit) 51,060 73,153 192,062 313,751
Depreciation and amortization 45,772 41,415 134,455 116,485
Minus:
Amortization of capitalized financing costs 970 1,119 2,859 2,708
EBITDA 206,223 260,726 727,277 1,034,224
Add:
Foreign currency transaction losses (gains) 4,142 12,773 (837 ) 23,806
Restructuring charges 279 792 279 5,605
Minus:
Net income (loss) attributable to noncontrolling interest (130 ) 33 (334 ) 146
Adjusted EBITDA $ 210,774 $ 274,258 $ 727,053 $ 1,063,489
Appendix: Reconciliation of LTM EBITDA
Source: PPC
The summary unaudited consolidated income statement data for the twelve months ended September 25, 2016 (the LTM Period) have been calculated by
subtracting the applicable unaudited consolidated income statement data for the nine months ended September 27, 2015 from the sum of (1) the applicable audited
consolidated income statement data for the year ended December 27, 2015 and (2) the applicable audited consolidated income statement data for the nine months
ended September 25, 2016.
18
PILGRIM'S PRIDE CORPORATION
Reconciliation of LTM Adjusted EBITDA
(Unaudited)
Thirteen Weeks
Ended
Thirteen Weeks
Ended
Thirteen Weeks
Ended
Thirteen Weeks
Ended
LTM Ended
December 27,
2015
March 27,
2016
June 26,
2016
September 25,
2016
September 25,
2016
(In thousands)
Net income $ 63,050 $ 118,011 $ 153,042 $ 98,527 $ 432,630
Add:
Interest expense, net 10,091 11,340 10,865 11,834 44,130
Income tax expense (benefit) 33,045 62,604 78,398 51,060 225,107
Depreciation and amortization 42,490 42,391 46,293 45,772 176,946
Minus:
Amortization of capitalized financing costs 930
928
962
970
3,790
EBITDA 147,746 233,418 287,636 206,223 875,023
Add:
Foreign currency transaction losses (gains) 2,134
(235 ) (4,744 ) 4,142
1,297
Restructuring charges — — — 279 279
Minus:
Net income (loss) attributable to noncontrolling
interest (98 ) (360 ) 156
(130 ) (432 )
Adjusted EBITDA $ 149,978 $ 233,543 $ 282,736 $ 210,774 $ 877,031
Appendix: EBITDA Margin Reconciliation
Source: PPC
EBITDA margins have been calculated by taking the relevant unaudited EBITDA figures, then dividing by Net Revenue for the applicable period.
19
PILGRIM'S PRIDE CORPORATION
Reconciliation of EBITDA Margin
(Unaudited) Thirteen Weeks Ended Thirty-Nine Weeks Ended Thirteen Weeks Ended Thirty-Nine Weeks Ended
September 25,
2016
September 27,
2015
September 25,
2016
September 27,
2015
September 25,
2016
September 27,
2015
September 25,
2016
September 27,
2015
(In thousands)
Net income from continuing
operations $ 98,527
$ 137,095
$ 369,580
$ 582,912
4.85 % 6.49 % 6.14 % 9.37 %
Add:
Interest expense, net 11,834 10,182 34,039 23,784 0.58 % 0.48 % 0.57 % 0.38 %
Income tax expense (benefit) 51,060
73,153
192,062
313,751
2.51 % 3.46 % 3.19 % 5.04 %
Depreciation and amortization 45,772
41,415
134,455
116,485
2.25 % 1.96 % 2.23 % 1.87 %
Minus:
Amortization of capitalized
financing costs 970
1,119
2,859
2,708
0.05 % 0.05 % 0.05 % 0.04 %
EBITDA 206,223 260,726 727,277 1,034,224 10.15 % 12.34 % 12.08 % 16.63 %
Add:
Foreign currency transaction
losses (gains) 4,142
12,773
(837 ) 23,806
0.20 % 0.60 % (0.01 )% 0.38 %
Restructuring charges 279 792 279 5,605 0.01 % 0.04 % — % 0.09 %
Minus:
Net income (loss) attributable to
noncontrolling interest (130 ) 33
(334 ) 146
(0.01 )% — % (0.01 )% — %
Adjusted EBITDA $ 210,774 $ 274,258 $ 727,053 $ 1,063,489 10.37 % 12.98 % 12.07 % 17.10 %
Net Revenue: $ 2,031,721 $ 2,112,529 $ 6,022,973 $ 6,219,324 $ 2,031,721 $ 2,112,529 $ 6,022,973 $ 6,219,324
Appendix: Reconciliation of Adjusted Earnings
Source: PPC
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:
20
PILGRIM'S PRIDE CORPORATION
Reconciliation of Adjusted Earnings
(Unaudited)
Thirteen Weeks Ended Thirty-Nine Weeks Ended
September 25,
2016
September 27,
2015
September 25,
2016
September 27,
2015
(In thousands, except per share data)
Net income (loss) attributable to Pilgrim's Pride
Corporation $ 98,657
$ 137,062
$ 369,914
$ 582,766
Loss on early extinguishment of debt — — — 68
Foreign currency transaction losses (gains) 4,142 12,773 (837 ) 23,806
Income (loss) before loss on early extinguishment of debt
and foreign currency transaction losses (gains) 102,799
149,835
369,077
606,640
Weighted average diluted shares of common stock
outstanding 254,920
259,503
255,037
259,765
Income (loss) before loss on early extinguishment of debt
and foreign currency transaction losses (gains)
per common diluted share $ 0.40
$ 0.58
$ 1.45
$ 2.34
Appendix: Adjusted EPS Bridge
Source: PPC
A reconciliation of GAAP earnings per share (EPS) to adjusted earnings per share (EPS) is as follows:
21
PILGRIM'S PRIDE CORPORATION
Reconciliation of GAAP EPS to Adjusted EPS
(Unaudited)
Thirteen Weeks Ended Thirty-Nine Weeks Ended
September 25, 2016 September 27, 2015 September 25, 2016 September 27, 2015
(In thousands, except per share data)
GAAP EPS $ 0.39 $ 0.53 $ 1.45 $ 2.24
Loss on early extinguishment of debt — — — —
Foreign currency transaction losses (gains) 0.02 0.05 — 0.09
Adjusted EPS $ 0.40 $ 0.58 $ 1.45 $ 2.34
Weighted average diluted shares of common stock
outstanding 254,920
259,503
255,037
259,765
Appendix: Net Debt / Cash Position Reconciliation
Source: PPC
Net debt is defined as total long term debt less current maturities, plus current maturities of long term debt and notes payable, minus cash, cash equivalents and
investments in available-for-sale securities. Net debt is presented because it is used by management, and we believe it is frequently used by securities analysts,
investors and other parties, in addition to and not in lieu of debt as presented under GAAP, to compare the indebtedness of companies. A reconciliation of net
debt is as follows:
22
PILGRIM'S PRIDE CORPORATION
Reconciliation of Net Debt
(Unaudited)
December 29,
2013
December 28,
2014
December 27,
2015
September 27,
2015
September 25,
2016
(In thousands)
Long term debt, less current maturities $ 501,999 $ 3,980 $ 985,509 $ 1,000,398 $ 1,004,840
Add: Current maturities of long term debt and
notes payable 410,234
262
28,812
5,971
92
Minus: Cash and cash equivalents 508,206 576,143 439,638 396,719 85,994
Minus: Available-for-sale securities 96,902 — — — —
Net debt (cash position) $ 307,125 $ (571,901 ) $ 574,683 $ 609,650 $ 918,938
Appendix: Segment and Geographic Data
Source: PPC 23
PILGRIM'S PRIDE CORPORATION
Supplementary Selected Segment and Geographic Data
Thirteen Weeks Ended Thirty-Nine Weeks Ended
September 25, 2016 September 27, 2015 September 25, 2016 September 27, 2015
(Unaudited)
(In thousands)
Sources of net sales by country of origin:
US: $ 1,724,625 $ 1,798,375 $ 5,072,351 $ 5,479,992
Mexico: 307,096 314,154 950,622 739,332
Total net sales: $ 2,031,721 $ 2,112,529 $ 6,022,973 $ 6,219,324
Sources of cost of sales by country of origin:
US: $ 1,545,163 $ 1,552,282 $ 4,470,387 $ 4,511,158
Mexico: 276,365 275,727 818,748 614,554
Elimination: (24 ) (24 ) (72 ) (72 )
Total cost of sales: $ 1,821,504 $ 1,827,985 $ 5,289,063 $ 5,125,640
Sources of gross profit by country of origin:
US: $ 179,462 $ 246,093 $ 601,964 $ 968,836
Mexico: 30,731 38,427 131,874 124,777
Elimination: 24 24 72 71
Total gross profit: $ 210,217 $ 284,544 $ 733,910 $ 1,093,684
Sources of operating income by country of origin:
US: $ 141,194 $ 203,755 $ 480,278 $ 833,193
Mexico: 22,604 27,353 108,857 103,854
Elimination: 24 24 72 71
Total operating income: $ 163,822 $ 231,132 $ 589,207 $ 937,118