Pilgrim's Pride Corporation
Feb 8, 2017

Pilgrim's Pride Ends Fiscal Year 2016 with an Operating Income of $714 Million and an Operating Margin of 9.0%

GREELEY, Colo., Feb. 08, 2017 (GLOBE NEWSWIRE) -- Pilgrim's Pride Corporation (NASDAQ:PPC) reports fourth quarter and year-end 2016 financial results.

Fourth Quarter Results

2016 Highlights



Unaudited, In Millions, Except Per Share and Percentages 
  
 Thirteen Weeks  Ended Fifty-Two Weeks Ended 
   Dec 25,  
2016
   Dec 27,  
2015
 Y/Y
 Change 
   Dec 25,  
2016
   Dec 27,  
2015
 Y/Y
 Change 
Net Sales$1,908.2  $1,960.8  -2.7% $7,931.1  $8,180.1  -3.0%
GAAP EPS$0.28  $0.25  +12.0% $1.73  $2.50  -30.8%
Operating Income$124.3  $107.8  +15.3% $713.5  $1,044.9  -31.7%
Adjusted EBITDA (1)$172.2  $150.0   +14.8% $899.3  $1,213.5  -25.9%
Adjusted EBITDA Margin (1)   9.0%   7.7%  +1.3pts  11.3%   14.8%  -3.5pts

(1) Reconciliations for non-GAAP measures are provided in subsequent sections within this release.

"Our Fresh business continued to perform well in Q4 driven by our differentiated portfolio strategy of having a well-balanced mix of multiple bird sizes, geographical coverage, and strong relationships with key customers. Robust traffic at grocery retailers is driving strong demand for our products, a strong indication that chicken demand has remained healthy despite greater availability of other proteins. We remain committed to our prepared foods operations and expect growth in 2017, with new capacity additions at Moorefield to begin contributing to volumes starting in Q1," stated Bill Lovette, Chief Executive Officer of Pilgrim's.

"We continue to invest in facility improvements and diversify our portfolio by improving mix and offer more differentiated, innovative products to serve key customer requirements, reduce the impact of commodity markets, and further raise our margin profile. Reflecting our commitment to spend cash flows on strong ROI projects, we spent a total of $270 million on capex in 2016, higher than our depreciation and a record for our company; including strategic projects which will strengthen our operational efficiencies and tailored customer needs to improve competitive advantages for us.

"Signifying our commitment to generate shareholder value by optimizing capital structure while pursuing our growth strategy, above all investments in our operations, we paid a total of $2.2 billion in special dividends over the past two years, repurchased over $200 million in shares, successfully integrated our Mexican acquisition and acquired the GNP Company to broaden our geographical footprint and enhance our portfolio of on-trend value-added products."

Conference Call Information

A conference call to discuss Pilgrim's quarterly results will be held tomorrow, February 9, 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: http://services.choruscall.com/links/ppc170209.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 May 9, 2017.

About Pilgrim's Pride

Pilgrim's employs approximately 41,400 people and operates chicken processing plants and prepared-foods facilities in 14 states, Puerto Rico and Mexico.  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.

 
PILGRIM'S PRIDE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
 
  December 25, 2016 December 27, 2015
  (Unaudited)  
  (In thousands)
Cash and cash equivalents $120,328  $439,638 
Restricted cash and cash equivalents  4,979   
Trade accounts and other receivables, less allowance for doubtful accounts 317,170  348,994 
Account receivable from related parties 3,913  2,668 
Inventories 813,262  801,357 
Income taxes receivable   71,410 
Prepaid expenses and other current assets 57,457  75,602 
Assets held for sale  5,259  6,555 
Total current assets 1,322,368  1,746,224 
Other long-lived assets 15,710  15,672 
Identified intangible assets, net 38,593  47,453 
Goodwill 125,607  156,565 
Property, plant and equipment, net 1,505,940  1,352,529 
Total assets $3,008,218  $3,318,443 
     
Notes payable to banks $  $28,726 
Accounts payable 555,097   482,954 
Accounts payable to related parties 1,421  7,000 
Accrued expenses 290,699   314,966 
Income taxes payable 20,990  13,228 
Current maturities of long-term debt 94  86 
Total current liabilities 868,301  846,960 
Long-term debt, less current maturities 1,011,858  985,509 
Deferred tax liabilities 142,651  131,882 
Other long-term liabilities  88,661  92,282 
Total liabilities 2,111,471  2,056,633 
Commitments and contingencies    
Preferred stock, $.01 par value, 50,000,000 shares authorized; no shares issued    
Common stock, $.01 par value, 800,000,000 shares authorized; 259,682,000 and
  259,685,145 shares issued at year-end 2016 and year-end 2015, respectively;
  249,046,139 and 254,823,286 shares outstanding at year-end 2016 and year-end 
  2015, respectively
 2,597  2,597 
Treasury stock, at cost, 10,635,861 shares at year-end 2016 (217,117) (99,233)
Additional paid-in capital 1,686,742  1,675,674 
Retained earnings (accumulated deficit) (520,635) (261,252)
Accumulated other comprehensive loss (64,243) (58,930)
Total Pilgrim's Pride Corporation stockholders' equity 887,344  1,258,856 
Noncontrolling interest 9,403  2,954 
Total stockholders' equity 896,747  1,261,810 
Total liabilities and stockholders' equity  $3,008,218  $3,318,443 
          


 
PILGRIM'S PRIDE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 
  Thirteen Weeks Ended Fifty-Two Weeks Ended
  December 25, 2016  December 27, 2015 December 25, 2016 December 27, 2015
  (In thousands, except per share data)
Net sales $1,908,150  $1,960,780  $7,931,123  $8,180,104 
Cost of sales 1,727,700  1,800,087  7,016,763  6,925,727 
Gross profit 180,450  160,693  914,360  1,254,377 
Selling, general and administrative expense 55,357  52,920  199,781  203,881 
Administrative restructuring charges 790    1,069  5,605 
Operating income 124,303  107,773  713,510  1,044,891 
Interest expense, net of capitalized interest 10,381  10,678  45,921  37,548 
Interest income (223) (587) (1,724) (3,673)
Foreign currency transaction loss (gain) 4,734  2,134  3,897  25,940 
Miscellaneous, net  (1,582) (547) (7,219) (7,682)
Income before income taxes 110,993  96,095  672,635  992,758 
Income tax expense 40,844  33,045  232,906  346,796 
Net income 70,149  63,050  439,729  645,962 
Less: Net income (loss) attributable to noncontrolling interests (469) (98) (803) 48 
Net income attributable to Pilgrim's Pride Corporation $70,618  $63,148  $440,532  $645,914 
         
Weighted average shares of common stock outstanding:        
Basic 250,853  255,216  253,669  258,442 
Effect of dilutive common stock equivalents 542  262  457  234 
Diluted 251,395  255,478  254,126  258,676 
         
Net income attributable to Pilgrim's Pride Corporation per share of  
  common stock outstanding:
         
Basic $0.28  $0.25  $ 1.74  $2.50 
Diluted $0.28  $0.25  $1.73  $2.50 
                 


 
PILGRIM'S PRIDE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
  Fifty-Two Weeks Ended
  December 25, 2016   December 27, 2015
  (In thousands)
Cash flows from operating activities:    
Net income $439,729  $645,962 
Adjustments to reconcile net income to cash provided by operating
  activities:
    
Depreciation and amortization 180,515  158,975 
Asset impairment 790  4,813 
Foreign currency transaction losses (gains)     
Accretion of bond discount    
Loss (gain) on property disposals (7,660) (10,372)
Gain on investment securities 452   
Share-based compensation 6,102  2,975 
Deferred income tax expense (benefit) (3,424) 29,512 
Changes in operating assets and liabilities:    
Restricted cash and cash equivalents (4,979)  
Trade accounts and other receivables 35,617  61,294 
Inventories (11,905) 57,078 
Prepaid expenses and other current assets 18,146  19,840 
Accounts payable and accrued expenses 38,427  61,882 
Income taxes 74,597  (55,428)
Long-term pension and other postretirement obligations (10,165) (3,500)
Other (759) 3,797 
  Cash provided by operating activities 755,483  976,828 
Cash flows from investing activities:    
Acquisitions of property, plant and equipment (272,467) (175,764)
Business acquisition   (373,532)
Proceeds from property disposals 10,805  14,610 
  Cash used in investing activities (261,662) (534,686)
Cash flows from financing activities:    
Proceeds from notes payable to banks 36,838  28,726 
Payments on note payable to bank (65,564 )  
Proceeds from long-term debt 579,876  1,680,000 
Payments on long-term debt (556,658) (683,780)
Proceeds from equity contribution under Tax Sharing Agreement between
  JBS USA Holding, S.à.r.l. and Pilgrim's Pride Corporation
 3,690   
Tax benefit related to share-based compensation   6,474 
Contributions from noncontrolling interests 7,252   
Payment of capitalized loan costs (693) (12,364)
Purchase of common stock under share repurchase program (117,884) (99,233)
Purchase of common stock from retirement plan participants (73)  
Payment of special cash dividends (699,915) (1,498,470)
  Cash used in financing activities (813,131) (578,647)
Effect of exchange rate changes on cash and cash equivalents    
Increase in cash and cash equivalents (319,310) (136,505)
Cash and cash equivalents, beginning of period 439,638  576,143 
Cash and cash equivalents, end of period $120,328  $439,638 
Supplemental Disclosure Information:    
Interest paid (net of amount capitalized) $41,774  $24,210 
Income taxes paid 152,884  360,347 
       


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 Fifty-Two Weeks Ended
  December 25, 2016 December 27, 2015 December 25, 2016 December 27, 2015
  (In thousands)
Net income $70,149  $63,050  $439,729   $645,962 
Add:        
Interest expense, net 10,158  10,091  44,197  33,875 
Income tax expense (benefit) 40,844  33,045  232,906  346,796 
Depreciation and amortization 46,059  42,490  180,515  158,975 
Minus:        
Amortization of capitalized financing costs 972  930  3,832  3,638 
EBITDA 166,238  147,746  893,515  1,181,970 
Add:        
Foreign currency transaction losses (gains) 4,734  2,134  3,897  25,940 
Restructuring charges 790    1,069  5,605 
Minus:        
Net income (loss) attributable to noncontrolling interest  (469) (98) (803) 48 
Adjusted EBITDA $172,231  $149,978  $899,284  $1,213,467 
                 

The summary unaudited consolidated income statement data for the twelve months ended December 25, 2016 (the LTM Period) have been calculated by summing each of the unaudited thirteen week periods within the audited fifty-two week period ended December 25, 2016.

PILGRIM'S PRIDE CORPORATION
Reconciliation of LTM Adjusted EBITDA
            
(Unaudited)  Thirteen Weeks
Ended
  Thirteen Weeks
Ended
  Thirteen Weeks
Ended
  Thirteen Weeks
Ended
 LTM Ended
  March 27,
 2016
 June 26,
 2016
 September 25,
 2016
  December 25,
2016
  December 25,
2016
 (In thousands)
Net income $118,011  $153,042  $98,527  $70,149  $439,729 
Add:          
Interest expense, net 11,340  10,865  11,834  10,158  44,197 
Income tax expense (benefit) 62,604  78,398  51,060  40,844  232,906 
Depreciation and amortization 42,391  46,293  45,772  46,059  180,515 
Minus:          
Amortization of capitalized financing costs 928  962  970  972  3,832 
EBITDA 233,418  287,636  206,223  166,238  893,515 
Add:          
Foreign currency transaction losses (gains) (235) (4,744) 4,142  4,734  3,897 
Restructuring charges     279  790  1,069 
Minus:          
Net income (loss) attributable to noncontrolling interest  (360) 156  (130) (469) (803)
Adjusted EBITDA $233,543  $282,736  $210,774  $172,231  $899,284 
                     



 
PILGRIM'S PRIDE CORPORATION
Reconciliation of EBITDA Margin
 
(Unaudited) Thirteen Weeks Ended Fifty-Two Weeks Ended Thirteen Weeks Ended Fifty-Two Weeks Ended
   December
25, 2016
  December
27, 2015
  December
25, 2016
  December
27, 2015
  December
25, 2016
  December
27, 2015
  December
25, 2016
  December
27, 2015
 (In thousands)
Net income $70,149  $63,050  $439,729  $645,962  3.68%  3.22% 5.54% 7.90%
Add:                
Interest expense, net 10,158  10,091  44,197  33,875  0.53% 0.51% 0.56% 0.41%
Income tax expense (benefit) 40,844  33,045   232,906  346,796  2.14% 1.69% 2.94% 4.24%
Depreciation and amortization 46,059  42,490  180,515  158,975  2.41% 2.17% 2.28% 1.94 %
Minus:         % % % %
Amortization of capitalized financing costs 972  930  3,832  3,638  0.05% 0.05% 0.05% 0.04%
EBITDA 166,238  147,746  893,515  1,181,970  8.71% 7.54% 11.27% 14.45%
Add:                
Foreign currency transaction losses (gains) 4,734   2,134  3,897  25,940  0.25% 0.11% 0.05% 0.32%
Restructuring charges 790    1,069  5,605  0.04% % 0.01% 0.07%
Minus:                
Net income (loss) attributable to noncontrolling interest  (469) (98) (803) 48  (0.02)% % (0.01)% %
Adjusted EBITDA $172,231  $149,978  $899,284  $1,213,467  9.03% 7.65% 11.34% 14.83%
                 
Net Revenue: $1,908,150  $1,960,780  $7,931,123  $8,180,104  $1,908,150  $1,960,780  $7,931,123  $8,180,104 
                                 

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 Fifty-Two Weeks Ended
 December 25,
 2016
 December 27,
 2015
 December 25,
 2016
 December 27,
 2015
 (In thousands, except per share data)
Net income (loss) attributable to Pilgrim's Pride Corporation$70,618  $63,148  $440,532  $645,914 
Loss on early extinguishment of debt      1,470 
Foreign currency transaction losses (gains)4,734  2,134  3,897  25,940 
Income (loss) before loss on early extinguishment of debt and foreign currency transaction losses (gains)  75,352  65,282  444,429  673,324 
Weighted average diluted shares of common stock outstanding251,395  255,478  254,126  258,676 
Income (loss) before loss on early extinguishment of debt and foreign currency transaction losses (gains)
  per common diluted share
$0.30  $0.26  $1.75  $2.60 
                

A reconciliation of GAAP to non-GAAP financial measures. Net income (loss) per share is calculated by dividing the net income (loss) attributable to Pilgrim's Pride Corporation stockholders by the weighted average number of diluted shares.

PILGRIM'S PRIDE CORPORATION
Reconciliation of GAAP EPS to Adjusted EPS
(Unaudited)
        
 Thirteen Weeks Ended Fifty-Two Weeks Ended
 December 25, 2016 December 27, 2015 December 25, 2016 December 27, 2015
 (In thousands, except per share data)
GAAP EPS$0.28  $0.25  $1.73  $2.50 
Loss on early extinguishment of debt      0.01 
Foreign currency transaction losses (gains)0.02  0.01  0.02  0.10 
Adjusted EPS$0.30  $0.26  $1.75  $2.60 
        
Weighted average diluted shares of common stock outstanding  251,395  255,478  254,126  258,676 
             

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:

PILGRIM'S PRIDE CORPORATION
Reconciliation of Net Debt
(Unaudited)
    
  December 25,
2016
  December 27,
2015
  December 28,
2014
   
 (In thousands)
Long term debt, less current maturities$1,011,858  $985,509  $3,980 
Add:  Current maturities of long term debt and notes payable  94  28,812  262 
Minus:  Cash and cash equivalents120,328  439,638  576,143 
Minus:  Available-for-sale securities     
Net debt (cash position)$891,624  $574,683  $(571,901)
            


 
PILGRIM'S PRIDE CORPORATION
Supplementary Selected Segment and Geographic Data
         
  Thirteen Weeks Ended Fifty-Two Weeks Ended
  December 25, 2016 December 27, 2015  December 25, 2016 December 27, 2015
  (Unaudited)       
  (In thousands)
Sources of net sales by country of origin:        
US: $1,599,052  $1,663,362  $6,671,403  $7,143,354 
Mexico: 309,098  297,418  1,259,720  1,036,750 
Total net sales: $1,908,150  $1,960,780  $7,931,123  $8,180,104 
         
Sources of cost of sales by country of origin:        
US: $1,458,931  $1,505,335  $5,929,318  $6,016,493 
Mexico: 268,792  294,775  1,087,540  909,329 
Elimination: (23) (23) (95) (95)
Total cost of sales: $1,727,700  $1,800,087  $7,016,763  $6,925,727 
         
Sources of gross profit by country of origin:        
US: $140,121  $158,025  $742,085  $1,126,861 
Mexico: 40,306  2,644  172,180  127,421 
Elimination: 23  24  95  95 
Total gross profit: $180,450  $160,693  $914,360  $1,254,377 
         
Sources of operating income by country of origin:         
US: $92,280  $116,417   $572,558  $949,610 
Mexico: 32,000  (8,668) 140,857  95,186 
Elimination: 23  24  95  95 
Total operating income: $124,303  $107,773  $713,510  $ 1,044,891 

 

Contact:

Dunham Winoto

Director, Investor Relations

IRPPC@pilgrims.com

(970) 506-8192

www.pilgrims.com

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Source: Pilgrim's Pride Corporation

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