Pilgrim's Pride Corporation
Aug 2, 2017

Pilgrim's Pride Reports Operating Income of $359 Million and Operating Margin of 16.0% for the Second Quarter of 2017

GREELEY, Colo., Aug. 02, 2017 (GLOBE NEWSWIRE) -- Pilgrim's Pride Corporation (NASDAQ:PPC) reports second quarter 2017 financial results.

Second Quarter Highlights

 
Unaudited, In Millions, Except Per Share and Percentages
 Thirteen Weeks Ended
 June 25, 2017 June 26, 2016 Change
Net Sales$2,251.6 $2,028.3 +11.0%
GAAP EPS$0.94 $0.60 +56.7%
Operating Income$359.4 $236.6 +51.9%
Adjusted EBITDA (1)$420.6 $282.7 +48.8%
Adjusted EBITDA Margin (1)18.7% 13.9% +4.8pts
      
(1) Reconciliations for non-GAAP measures are provided in subsequent sections within this release.
 

"Our Q2 results materially improved from last quarter as well as from a year ago driven by much stronger results at our U.S. operations while Mexico continued to perform very well. Demonstrating the diversity of our portfolio of bird sizes; while small bird and tray-pack remained robust during the period, our team captured the strength in the large bird deboning environment, which significantly rebounded after a slower than expected start earlier in the year, driven by stronger exports and very good domestic demand as the grilling season kicked off. This portfolio approach is working well and is what fundamentally differentiates us from the competition, giving us the potential to reduce volatility and generate higher margins over time. This summer has brought strong demand for grilling season and we see continuation of chicken as a choice protein in domestic and international markets," stated Bill Lovette, Chief Executive Officer of Pilgrim's.

"We continue to search for solutions in delivering more differentiated customized products that are innovative to satisfy our key customers' needs. We currently have market leading positions in USDA-certified organic and NAE, two segments that resonate very well with new consumer trends for more natural products while adding more value to our portfolio. We also have the potential to expand into new segments with our broad channel approach using the Gold'n Plump brand as well as the new premium Just BARE chicken in the "better for you" category."

Conference Call Information

A conference call to discuss Pilgrim's quarterly results will be held tomorrow, August 3, 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/ppc170803.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 November 3, 2017.

About Pilgrim's Pride

Pilgrim's employs approximately 42,000 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
 
  June 25, 2017 December 25, 2016
  (Unaudited)  
  (In thousands)
Cash and cash equivalents $303,937  $120,328 
Restricted cash 20,348  4,979 
Trade accounts and other receivables, less allowance for doubtful accounts 406,586  317,170 
Accounts receivable from related parties 4,050  3,913 
Inventories 967,577  813,262 
Income taxes receivable 13,659   
Prepaid expenses and other current assets 66,572  57,457 
Assets held for sale 5,542  5,259 
Total current assets 1,788,271  1,322,368 
Other long-lived assets 17,484  15,710  
Identified intangible assets, net 153,855  38,593 
Goodwill 175,444   125,607 
Property, plant and equipment, net 1,721,948  1,505,940 
Total assets $3,857,002  $3,008,218 
     
Accounts payable $519,820  $555,097 
Accounts payable to related parties 3,622  1,421 
Accrued expenses and other current liabilities  324,727  290,699 
Income taxes payable 93,910  20,990 
Current maturities of long-term debt 40,098  94 
Total current liabilities 982,177  868,301 
Long-term debt, less current maturities 1,404,264  1,011,858 
Deferred tax liabilities 171,042  142,651 
Other long-term liabilities 89,422  88,661 
Total liabilities 2,646,905  2,111,471 
Common stock 2,602  2,597 
Treasury stock (231,758) (217,117)
Additional paid-in capital 1,688,684  1,686,742 
Accumulated deficit (193,073)  (520,635)
Accumulated other comprehensive loss (66,735) (64,243)
Total Pilgrim's Pride Corporation stockholders' equity 1,199,720  887,344 
Noncontrolling interest 10,377  9,403 
Total stockholders' equity 1,210,097  896,747 
Total liabilities and stockholders' equity $3,857,002  $3,008,218 
         


PILGRIM'S PRIDE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
         
  Thirteen Weeks Ended Twenty-Six Weeks Ended
  June 25, 2017 June 26, 2016 June 25, 2017 June 26, 2016
                 
  (In thousands, except per share data)
Net sales $2,251,604  $2,028,315  $4,272,096  $3,991,252 
Cost of sales 1,826,217  1,742,184  3,631,504  3,467,559 
Gross profit 425,387  286,131  640,592  523,693 
Selling, general and administrative expense 61,636  49,520  124,489  98,308 
Administrative restructuring charges 4,349    4,349   
Operating income 359,402  236,611  511,754  425,385 
Interest expense, net of capitalized interest 15,935  11,548  28,321   23,581 
Interest income (1,044) (683) (1,346) (1,376)
Foreign currency transaction gain (1,810) (4,744) (1,191) (4,979)
Miscellaneous, net (970) (950) (3,685)  (3,896)
Income before income taxes 347,291  231,440  489,655  412,055 
Income tax expense 113,218  78,398  161,119  141,002 
Net income 234,073  153,042  328,536  271,053 
Less: Net income (loss) attributable to noncontrolling interests 432  156  974  (204)
Net income attributable to Pilgrim's Pride Corporation $233,641  $152,886   $327,562  $271,257 
         
Weighted average shares of common stock outstanding:        
Basic 248,753  254,554  248,722  254,681 
Effect of dilutive common stock equivalents 220  390  228  364 
Diluted 248,973  254,944  248,950  255,045 
         
Net income attributable to Pilgrim's Pride Corporation per share of
  common stock outstanding:
        
Basic $0.94  $ 0.60  $1.32  $1.07 
Diluted $0.94  $0.60  $1.32  $1.06 
                 


PILGRIM'S PRIDE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
  Twenty-Six Weeks Ended
  June 25, 2017 June 26, 2016
         
  (In thousands)
Cash flows from operating activities:    
Net income $328,536  $271,053 
Adjustments to reconcile net income to cash provided by operating activities:    
Depreciation and amortization 107,671  88,683 
Foreign currency transaction loss related to borrowing arrangements 5,634   
Impairment expense 3,534   
Gain on property disposals (768) (6,755)
Gain on equity method investments (30)  
Share-based compensation 1,947  1,869 
Deferred income tax expense (benefit) 26,904  (700)
Changes in operating assets and liabilities:    
Trade accounts and other receivables (73,684) 6,610 
Inventories (97,857) (31,208)
Prepaid expenses and other current assets (5,702) (19,817)
Accounts payable, accrued expenses and other current liabilities (34,565) (23,028)
Income taxes 60,695   6,967 
Long-term pension and other postretirement obligations (3,916) (3,952)
Other operating assets and liabilities (2,265) (738)
Cash provided by operating activities 316,134  288,984 
Cash flows from investing activities:    
Acquisitions of property, plant and equipment (174,150) (93,978)
Business acquisition (359,698)  
Proceeds from property disposals 1,466  8,097 
Cash used in investing activities (532,382) (85,881)
Cash flows from financing activities:    
Proceeds from note payable to bank   36,838 
Payments on note payable to bank   (65,564)
Proceeds from revolving line of credit and long-term borrowings 1,013,662  351,089 
Payments on revolving line of credit, long-term borrowings and capital lease obligations (586,056) (219,812)
Proceeds from equity contribution under Tax Sharing Agreement between JBS USA Food Company Holdings and Pilgrim's Pride Corporation 5,038  3,691 
Payment of capitalized loan costs (2,777) (693)
Purchase of common stock under share repurchase program (14,641) (7,328)
Cash dividends   (699,915)
Cash provided by (used in) financing activities 415,226  (601,694)
Increase (decrease) in cash, cash equivalents and restricted cash 198,978  (398,591)
Cash, cash equivalents and restricted cash, beginning of period 125,307  439,638 
Cash, cash equivalents and restricted cash, end of period $324,285  $41,047  
         

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 Twenty-Six Weeks Ended
  June 25, 2017 June 26, 2016 June 25, 2017 June 26, 2016
                 
  (In thousands)
Net income $234,073  $153,042  $328,536  $271,053 
Add:        
Interest expense, net 14,891  10,865  26,975  22,205 
Income tax expense 113,218  78,398  161,119  141,002 
Depreciation and amortization 57,281  46,293  107,671  88,683 
Minus:        
Amortization of capitalized financing costs 997  962   1,947  1,889 
EBITDA 418,466  287,636  622,354  521,054 
Add:        
Foreign currency transaction gains (1,810) (4,744) (1,191) (4,979)
Restructuring charges 4,349    4,349   
Minus:        
Net income (loss) attributable to noncontrolling interest 432  156  974  (204)
Adjusted EBITDA $420,573  $282,736  $624,538  $516,279 
                 

The summary unaudited consolidated income statement data for the twelve months ended June 25, 2017 (the LTM Period) have been calculated by subtracting the applicable unaudited consolidated income statement data for the six months ended June 26, 2016 from the sum of (1) the applicable audited consolidated income statement data for the year ended December 25, 2016 and (2) the applicable audited consolidated income statement data for the six months ended June 25, 2017.

PILGRIM'S PRIDE CORPORATION
Reconciliation of LTM Adjusted EBITDA
           
(Unaudited) Thirteen Weeks
Ended
 Thirteen Weeks
Ended
 Thirteen Weeks
Ended
 Thirteen Weeks
Ended
 LTM Ended
  September 25,
 2016
 December 25,
 2016
 March 26,
 2017
 June 25,
 2017
 June 25,
 2017
                     
  (In thousands)
Net income $98,527  $70,149  $94,463  $234,073   $497,212 
Add:          
Interest expense, net 11,834  10,158  12,084  14,891  48,967 
Income tax expense 51,060  40,844  47,901  113,218  253,023 
Depreciation and amortization 45,772  46,059  50,390  57,281  199,502 
Minus:          
Amortization of capitalized financing costs 970  972  951  997  3,890 
EBITDA 206,223  166,238  203,887  418,466  994,814 
Add:          
Foreign currency transaction losses (gains) 4,142  4,734  619   (1,810) 7,685 
Restructuring charges 279  790    4,349  5,418 
Minus:          
Net income (loss) attributable to noncontrolling interest (130) (469) 542  432  375 
Adjusted EBITDA $210,774   $172,231  $203,964  $420,573   $1,007,542 
                     

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 Twenty-Six Weeks Ended Thirteen Weeks Ended Twenty-Six Weeks Ended
  June 25,
2017
 June 26,
2016
 June 25,
2017
 June 26,
2016
 June 25,
2017
 June 26,
2016
 June 25,
2017
 June 26,
2016
                                  
  (In thousands)
Net income from continuing operations $234,073  $153,042  $328,536  $271,053  10.40% 7.55% 7.69% 6.79%
Add:                
Interest expense, net 14,891  10,865  26,975  22,205  0.66% 0.54% 0.63% 0.56%
Income tax expense 113,218  78,398  161,119  141,002  5.03% 3.87% 3.77% 3.53%
Depreciation and amortization 57,281  46,293   107,671  88,683  2.54% 2.28% 2.52% 2.22%
Minus:                
Amortization of capitalized financing costs 997  962  1,947  1,889  0.04% 0.05% 0.05% 0.05%
EBITDA 418,466  287,636  622,354  521,054  18.59% 14.19% 14.56% 13.05%
Add:                
Foreign currency transaction gains (1,810) (4,744) (1,191) (4,979) (0.08)% (0.23)% (0.03)%  (0.12)%
Restructuring charges 4,349    4,349    0.19% % 0.10% %
Minus:                
Net income (loss) attributable to noncontrolling interest 432  156  974  (204) 0.02% 0.01% 0.02% (0.01)%
Adjusted EBITDA $420,573  $282,736   $624,538  $516,279  18.68% 13.95% 14.61% 12.94%
                 
Net Revenue: $2,251,604  $2,028,315  $4,272,096  $3,991,252  $2,251,604  $2,028,315  $4,272,096  $3,991,252 
                                 

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  Twenty-Six Weeks Ended
  June 25,
 2017
 June 26,
 2016
 June 25,
 2017
 June 26,
 2016
                  
  (In thousands, except per share data)
Net income attributable to Pilgrim's Pride Corporation $233,641  $152,886  $327,562  $271,257 
Loss on early extinguishment of debt        
Foreign currency transaction gains (1,810) (4,744) (1,191) (4,979)
Income before loss on early extinguishment of debt and foreign currency transaction gains 231,831  148,142  326,371  266,278 
Weighted average diluted shares of common stock outstanding 248,973  254,944  248,950  255,045 
Income before loss on early extinguishment of debt and foreign currency transaction gains
  per common diluted share
 $0.93  $0.58  $1.31  $1.04 
                  

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 Twenty-Six Weeks Ended
  June 25, 2017 June 26, 2016 June 25, 2017 June 26, 2016
                 
  (In thousands, except per share data)
GAAP EPS $0.94  $0.60  $1.32  $1.06 
Loss on early extinguishment of debt         
Foreign currency transaction gains (0.01) (0.02) (0.01) (0.02)
Adjusted EPS $0.93  $0.58  $1.31  $1.04 
         
Weighted average diluted shares of common stock outstanding  248,973  254,944  248,950  255,045 
             

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)
           
  June 25,
 2017
 June 26,
 2016
 December 25,
 2016
 December 27,
 2015
 December 28,
 2014
                     
  (In thousands)
Long term debt, less current maturities $1,404,264  $1,117,979  $1,011,858  $985,509  $3,980 
Add:  Current maturities of long term debt and notes payable 40,098  90  94  28,812  262 
Minus:  Cash and cash equivalents 303,937  41,047  120,328  439,638  576,143 
Net debt (cash position) $1,140,425  $1,077,022   $891,624  $574,683  $(571,901)
                     


PILGRIM'S PRIDE CORPORATION
Supplementary Selected Segment and Geographic Data
         
  Thirteen Weeks Ended Twenty-Six Weeks Ended
  June 25, 2017 June 26, 2016 June 25, 2017 June 26, 2016
  (Unaudited)      
  (In thousands)
Sources of net sales by country of origin:        
US: $1,882,142  $1,677,445  $3,618,547  $3,347,726 
Mexico: 369,462  350,870  653,549  643,526 
Total net sales: $2,251,604   $2,028,315  $4,272,096  $3,991,252 
         
Sources of cost of sales by country of origin:         
US: $1,547,247  $1,471,269  $ 3,095,346  $2,925,224 
Mexico: 278,993  270,939   536,205  542,383 
Elimination: (23) (24) (47) (48)
Total cost of sales: $1,826,217  $1,742,184  $3,631,504  $3,467,559 
         
Sources of gross profit by country of origin:        
US: $334,894  $206,176  $523,200  $422,502 
Mexico: 90,470  79,931  117,345  101,143 
Elimination: 23  24  47  48 
Total gross profit: $425,387  $286,131  $640,592  $523,693 
         
Sources of operating income by country of origin:        
US: $277,602  $164,494  $411,158  $339,084 
Mexico: 81,777  72,093  100,549  86,253 
Elimination: 23  24  47  48 
Total operating income: $359,402  $236,611  $511,754  $425,385 
                 
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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