Pilgrim's Pride Corporation Reports Financial Results for Second Quarter of Fiscal 2007
Company Posts Loss for Second Quarter, but is Currently Profitable in Third
Quarter on Strength of Production Cuts and Improved Pricing
PITTSBURG, Texas, May 1 /PRNewswire-FirstCall/ -- Pilgrim's Pride Corporation (NYSE: PPC), the world's largest chicken company, today reported a net loss of $40.1 million, or $0.60 per share, on total sales of $1.99 billion for the second quarter ended March 31, 2007. These results include, for the first time, the acquisition of Gold Kist Inc., which was completed Dec. 27, 2006. The results also include charges of $14.5 million, $9.1 million, net of tax or $0.14 per share, related to the early extinguishment of debt incurred by the Company in connection with the financing for the acquisition. For the second quarter of fiscal 2006, the Company reported a net loss of $32.0 million, or $0.48 per share, on total sales of $1.27 billion.
"Our financial performance in the second quarter of fiscal 2007 reflects some of the significant operating challenges faced by U.S. chicken processors during that period," said O.B. Goolsby, Jr., Pilgrim's Pride president and chief executive officer. "Feed-ingredient prices remain at very high levels amid rapidly growing demand for corn-based ethanol. While we have succeeded in passing along some of these higher costs to our customers this year, most of the benefit from those price increases was not fully realized in the second quarter. Additionally, we are continuing to address pricing opportunities in a number of below-market customer contracts we acquired through the Gold Kist transaction."
Mr. Goolsby noted, however, that the Company's U.S. operations returned to profitability late in the second quarter -- and the Company is currently profitable in the third quarter -- as production cutbacks in the United States helped strike a better balance between production and demand. In addition, U.S. market prices for chicken products have strengthened heading into the summer as well. Mr. Goolsby also said the Company's Mexico operations have returned to profitability in the third quarter to date. He said current U.S. production at Pilgrim's Pride is "in line" with the Company's previously announced 5.0% reduction target when compared to year-ago levels. The cuts will stay in place throughout the third quarter of fiscal 2007 before leveling off in the fourth quarter, when the Company cycles through the first anniversary of its production cutback from last summer.
"We are cautiously optimistic about the second half of the fiscal year. We believe that the combination of lower industry production levels year-over-year, should they remain in place, and stronger pricing heading into the summer months will lead to continuing improvement in our financial results for the remainder of the year," Mr. Goolsby said. "On the Gold Kist integration front, our employees are investing a lot of time and effort in the integration, and I'm excited by the tremendous opportunities they have uncovered for improving our combined businesses. They are clearly focused on our common goal of delivering the best possible service and value to our customers every day and are making good progress toward achieving our previously announced estimate of $100 million in synergy savings."
For the six months ended March 31, 2007, the Company reported a net loss of $48.8 million, or $0.73 per share, on total sales of $3.33 billion. Included in these results were charges of $14.5 million, $9.1 million, net of tax or $0.14 per share, related to the early extinguishment of debt incurred by the Company in connection with the financing for the Gold Kist acquisition. For the first six months of fiscal 2006, Pilgrim's Pride reported a net loss of $6.3 million, or $0.09 per share, on sales of $2.61 billion.
Conference Call Information
A conference call to discuss the Company's second-quarter results will be held at 10 a.m. Central (11 a.m. Eastern) on May 1, 2007. To listen live via telephone, call (877) 366-0713, verbal pass code Pilgrim's Pride or VC34864. The call will also be webcast live on the Internet at http://www.videonewswire.com/event.asp?id=39123. (Please copy and paste the link into the browser.)
Additionally, the Company has posted a slide presentation on its website at http://www.pilgrimspride.com, which may be viewed by listeners in connection with today's conference call. The webcast will be available for replay within two hours of the conclusion of the call. A telephone replay will be available beginning at approximately 2 p.m. (Central) on May 1 through May 8, 2007, at (800) 355-2355 pass code 34864#.
About Pilgrim's Pride Corporation
Pilgrim's Pride Corporation is the largest chicken company in the United States and Puerto Rico and the second-largest in Mexico. Pilgrim's Pride employs approximately 56,500 people and operates 37 processing and 12 prepared-foods facilities, with major operations in Texas, Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, North Carolina, Pennsylvania, South Carolina, Tennessee, Virginia, West Virginia, Mexico and Puerto Rico as well as other facilities in Arizona, Iowa, Mississippi, Ohio and Utah.
Pilgrim's Pride products are sold to foodservice, retail and frozen entree customers. The Company's primary distribution is through retailers, foodservice distributors and restaurants throughout the United States and Puerto Rico and in the Northern and Central regions of Mexico. For more information, please visit http://www.pilgrimspride.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, including as to the expected benefits and synergies associated with the acquisition of Gold Kist and changes in pricing, demand and market conditions for chicken products and profitability, are forward-looking statements. It is important to note that the 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, including fluctuations in the commodity prices of feed ingredients, chicken and turkey; 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; management of our cash resources, particularly in light of our substantial leverage; restrictions imposed by, and as a result of, our substantial leverage; changes in laws or regulations affecting our operations or the application thereof; competitive factors and pricing pressures or the loss of one or more of our largest customers; inability to consummate, or effectively integrate, any acquisition, including integrating our recent acquisition of Gold Kist, or realize the associated cost savings and operating synergies currently anticipated; currency exchange rate fluctuations, trade barriers, exchange controls, expropriation and other risks associated with foreign operations; and the impact of uncertainties of litigation as well as other risks described under "Risk Factors" in our 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.
Investor Contact: Kathy Costner, Vice President
(903) 434-1430
Media Contact: Gary Rhodes, Vice President
(903) 434-1495
PILGRIM'S PRIDE CORPORATION
Consolidated Statements of Income (Loss)
(Unaudited)
[In thousands, except share and per share data]
Three Months Ended March 31, April 1,
2007 2006
Net Sales $ 1,993,965 $ 1,265,709
Cost of sales 1,910,023 1,228,508
Gross profit 83,942 37,201
Selling, general and 95,641 75,137
administrative
Operating income (loss) (11,699) (37,936)
Other Expense (Income):
Interest expense 39,295 13,271
Interest income (1,684) (3,214)
Loss on early extinguishment of debt 14,475 --
Foreign exchange loss (gain) 10 (190)
Miscellaneous, net (3,678) (702)
Total other expenses, net 48,418 9,165
Income (loss) before income taxes (60,117) (47,101)
Income tax (benefit) expense (20,040) (15,147)
Net income (loss) $ (40,077) $ (31,954)
Net income (loss) per common share
-basic and diluted $ (0.60) $ (0.48)
Dividends declared per common share $ 0.0225 $ 0.0225
Weighted average shares outstanding 66,555,733 66,555,733
Six Months Ended March 31, April 1,
2007 2006
Net Sales $ 3,331,097 $ 2,609,521
Cost of sales 3,181,628 2,453,920
Gross profit 149,469 155,601
Selling, general and 164,073 147,339
administrative
Operating income (loss) (14,604) 8,262
Other Expense (Income):
Interest expense 53,209 25,666
Interest income (2,992) (7,161)
Loss on early extinguishment of debt 14,475 --
Foreign exchange loss (gain) 1,514 (810)
Miscellaneous, net (6,194) 1,028
Total other expenses, net 60,012 18,723
Income (loss) before income taxes (74,616) (10,461)
Income tax (benefit) expense (25,804) (4,185)
Net income (loss) $ (48,812) $ (6,276)
Net income (loss) per common share
-basic and diluted $ (0.73) $ (0.09)
Dividends declared per common share $ 0.0450 $ 1.0450
Weighted average shares outstanding 66,555,733 66,555,733
PILGRIM'S PRIDE CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited)
[In thousands]
March 31, September 30,
2007 2006
ASSETS
Cash and cash equivalents $ 69,170 $ 156,404
Investments in available for 24,000 21,246
sale securities
Other current assets 1,494,565 928,024
Total Current Assets 1,587,735 1,105,674
Goodwill 515,387 --
Other Assets 101,283 50,825
Investments in available for 31,042 115,375
sale securities
Property, Plant and Equipment, net 1,911,550 1,154,994
Total Assets $ 4,146,997 $ 2,426,868
LIABILITIES AND STOCKHOLDERS' EQUITY
Current maturities of long-term
debt $ 8,253 $ 10,322
Other current liabilities 854,510 566,515
Total Current Liabilities 862,763 576,837
Long-Term Debt, Less Current 1,789,519 554,876
Maturities
Deferred Income Taxes 338,788 175,869
Other Long-Term Liabilities 85,048 --
Minority Interest in Subsidiary 2,033 1,958
Total Stockholders' Equity 1,068,846 1,117,328
Total Liabilities and
Stockholders' Equity $ 4,146,997 $ 2,426,868
Pilgrim's Pride Corporation
Pro forma Financial Information
(Unaudited)
(In thousands except per share amounts)
The unaudited pro forma financial information has been presented as if the
acquisition of Gold Kist Inc. had occurred as of the beginning of the
fiscal year presented.
Three Months Ended March 31, April 1,
2007 2006
(Actual) (Pro forma)
Net sales $ 1,993,965 $ 1,795,249
Depreciation and
amortization $ 54,976 $ 57,347
Operating loss $ (11,699) $ (74,376)
Interest expense, net $ 37,611 $ 31,291
Income tax benefit $ (20,040) $ (37,592)
Net loss $ (40,077) $ (65,738)
Net loss per common
share $ (0.60) $ (0.99)
Weighted average
shares outstanding 66,555,733 66,555,733
Six Months Ended March 31, April 1,
2007 2006
(Pro forma) (Pro forma)
Net sales $ 3,858,907 $ 3,680,202
Depreciation and
amortization $ 112,775 $ 111,088
Operating loss $ (45,036) $ (31,490)
Interest expense, net $ 76,038 $ 61,293
Income tax benefit $ (46,511) $ (35,327)
Net loss $ (82,920) $ (55,073)
Net loss per common
share $ (1.25) $ (0.83)
Weighted average
shares outstanding 66,555,733 66,555,733
Selected Financial Information
(Unaudited)
(In thousands)
Note: "EBITDA" is defined as the sum of the net income (loss) before
interest, taxes, depreciation and amortization. EBITDA is presented
because it is used by us, and we believe it is frequently used by
securities analysts, investors and other interested parties, in addition
to and not in lieu of Generally Accepted Accounting Principles (GAAP)
results, to compare the performance of companies. EBITDA is not a
measurement of financial performance under GAAP and 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. EBITDA is calculated as follows:
Three Months Ended March 31, April 1,
2007 2006
Net Income (Loss) $ (40,077) $ (31,954)
Add:
Income tax (benefit)
expense (20,040) (15,147)
Interest expense, net 37,611 10,057
Depreciation and
amortization 54,976 34,744
Minus:
Amortization of capitalized
financing costs 1,110 976
EBITDA $ 31,360 $ (3,276)
Loss on early
extinguishment of debt 14,475 --
EBITDA - Adjusted $ 45,835 (3,276)
Capital expenditures $ 55,101 $ 30,653
Six Months Ended March 31, April 1,
2007 2006
Net Income (Loss) $ (48,812) $ (6,276)
Add:
Income tax (benefit) expense (25,804) (4,185)
Interest expense, net 50,217 18,505
Depreciation and amortization 87,673 65,092
Minus:
Amortization of capitalized
financing costs 1,815 1,557
EBITDA $ 61,459 $ 71,579
Loss on early
extinguishment of debt 14,475 --
EBITDA - Adjusted 75,934 71,579
Capital expenditures $ 94,449 $ 74,519
SOURCE Pilgrim's Pride Corporation
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Media Contact
Cameron Bruett
Communications
Phone: +1 970.506.7801 | Email: cameron.bruett@jbssa.com