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Release Details

Pilgrim's Pride Reports Operating Income of $372 Million and GAAP EPS of $0.93 for the Third Quarter of 2017

Nov 7, 2017

GREELEY, Colo., Nov. 07, 2017 (GLOBE NEWSWIRE) -- Pilgrim's Pride Corporation (NASDAQ:PPC) reports third quarter 2017 financial results.

Third Quarter Highlights

  • Consolidated numbers reflect Moy Park for the entire quarter, including historical data in accordance to U.S. GAAP.
  • Net Sales of $2.79 billion (+37.4% versus same quarter last year of $2.03 billion, excluding Moy Park).
  • Net Income of $232.7 million.
  • Adjusted Operating Income margins of 16.6% in U.S., 13.4% in Mexico and 4.1% in Europe operations, respectively.
  • Adjusted EBITDA of $463.6 million (or a 16.6% margin) and Adjusted EPS of $0.98.
  • Excluding Moy Park: Net Sales was $2.28 billion, Adjusted Operating Income was $367.7 million, Adjusted EBITDA was $427.6 million (or an 18.8% margin).
  • Acquisition of Moy Park positions us as the global leader in chicken and prepared foods, and aligns with our strategic priorities while providing a strong platform for future growth.
  • GNP integration is progressing well; operations and profitability significantly improved with synergy captured ahead of expectations.


Unaudited (2), In Millions, Except Per Share and Percentages
 Thirteen Weeks Ended
 Sep 24, 2017 Sep 25, 2016 Change
Net Sales$2,793.9  $2,495.3  +12.0%
GAAP EPS$0.93  $0.39  +138.5%
Operating Income$372.2  $176.8  +110.6%
Adjusted EBITDA (1)$463.6   $237.4  +95.3%
Adjusted EBITDA Margin (1) 16.6 %  9.5% +7.1pts 
      

(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.

"During Q3, our U.S. operations were robust across all business units and Mexico performed even better than our expectations. The results once again demonstrated the strength and diversity of our portfolio of bird sizes, and is what fundamentally differentiates us from the competition, giving us the potential to reduce volatility and generate higher margins over time. Despite greater availability of alternative protein, we saw strong demand for chicken during grilling season and we expect a continuation of chicken as a choice protein in domestic and international markets," stated Bill Lovette, Chief Executive Officer of Pilgrim's.

"We closed the acquisition of Moy Park last September and are very excited about the potential opportunities in Europe because it creates a stronger, more diverse and more stable global chicken and prepared foods leader in Pilgrim's. The new European operations align with our strategic priorities as we continue expanding our geographical and brands footprint, and extending our global poultry leadership position into attractive new markets while providing us a strong platform for future growth in the region."

"We continue to increase GNP performance, and margins have increased by 600 bps since we acquired the business in Q1. The integration is tracking above expectations and we are well ahead in delivering the previously announced $30 million synergy target. Together with the success we had in improving the profitability of the acquired assets in Mexico relative to the legacy operations, we believe we have the method and the team to continue to grow the profitability of our European business."

Conference Call Information

A conference call to discuss Pilgrim's quarterly results will be held tomorrow, November 8, 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/ppc3q2017.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 February 8, 2018.

About Pilgrim's Pride

Pilgrim's employs approximately 52,000 people and operates chicken processing plants and prepared-foods facilities in 14 states, Puerto Rico, Mexico, the U.K, Ireland 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.



PILGRIM'S PRIDE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
 
  September 24, 2017 December 25, 2016
  (Unaudited)  
  (In thousands)
Cash and cash equivalents $401,789  $292,544 
Restricted cash 4,841  4,979 
Trade accounts and other receivables, less allowance for doubtful accounts 624,802  445,553 
Accounts receivable from related parties 970  4,010 
Inventories 1,196,201  975,608 
Income taxes receivable 16,362  — 
Prepaid expenses and other current assets 102,914  81,932 
Assets held for sale 2,777  5,259 
Total current assets 2,350,656  1,809,885 
Other long-lived assets 20,007  19,260 
Identified intangible assets, net  620,693  471,591 
Goodwill 995,582  887,221 
Property, plant and equipment, net 2,076,347  1,833,985 
Total assets $6,063,285  $5,021,942 
     
Accounts payable $743,528  $790,378 
Accounts payable to related parties 7,091  4,468 
Accrued expenses and other current liabilities 416,476  347,021 
Income taxes payable 191,432  27,578 
Current maturities of long-term debt 61,811   15,712 
Total current liabilities 1,420,338  1,185,157 
Long-term debt, less current maturities 2,548,575  1,396,124 
Deferred tax liabilities 286,038  251,807 
Other long-term liabilities 98,098  102,722 
Total liabilities 4,353,049  2,935,810 
Common stock 2,602  307,288 
Treasury stock (231,758) (217,117)
Additional paid-in capital 1,926,386  3,100,332 
Retained earnings (accumulated deficit) 39,606  (782,785)
Accumulated other comprehensive loss (36,517) (329,858)
Total Pilgrim's Pride Corporation stockholders' equity 1,700,319  2,077,860 
Noncontrolling interest 9,917  8,272 
Total stockholders' equity 1,710,236  2,086,132 
Total liabilities and stockholders' equity $6,063,285  $ 5,021,942 



PILGRIM'S PRIDE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
         
  Thirteen Weeks Ended Thirty-Nine Weeks Ended
  September 24, 2017 September 25, 2016 September 24, 2017 September 25, 2016
  (In thousands, except per share data)
Net sales $2,793,885  $2,495,281   $8,025,511  $7,507,681 
Cost of sales 2,315,301  2,242,221  6,815,701  6,632,568 
Gross profit 478,584  253,060  1,209,810  875,113 
Selling, general and administrative expense 102,191  75,933  284,009  229,786 
Administrative restructuring charges 4,147  279  8,496  279 
Operating income 372,246  176,848  917,305  645,048 
Interest expense, net of capitalized interest 24,636  19,119  66,315  58,480 
Interest income (2,128) (253)  (3,600) (2,000)
Foreign currency transaction gain (888) 4,569   (2,500) (1,769)
Miscellaneous, net (1,083) (2,371) (5,198) (7,327)
Nonrecurring items —  —  —  — 
Income before income taxes 351,709  155,784   862,288  597,664 
Income tax expense 113,396  53,819  278,046  202,979 
Net income 238,313  101,965  584,242  394,685 
Less: Net income from Granite Holdings Sàrl prior to
  acquisition by Pilgrim's Pride Corporation		 6,093  3,438  23,486  25,105 
Less: Net income (loss) attributable to noncontrolling interests (460) (130) 514  (334)
Net income attributable to Pilgrim's Pride Corporation $232,680  $98,657  $560,242  $369,914 
         
Weighted average shares of common stock outstanding:        
Basic 248,753  254,460  248,732  254,607 
Effect of dilutive common stock equivalents 235  460  230  430 
Diluted 248,988  254,920  248,962  255,037 
         
Net income attributable to Pilgrim's Pride Corporation per share of
  common stock outstanding:		        
Basic $0.94  $0.39  $2.25  $1.45 
Diluted  $0.93  $0.39  $2.25  $1.45 



PILGRIM'S PRIDE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
  Thirty-Nine Weeks Ended
  September 24, 2017 September 25, 2016
  (In thousands)
Cash flows from operating activities:    
Net income $584,242  $394,685 
Adjustments to reconcile net income to cash provided by operating activities:    
Depreciation and amortization 204,625  174,128 
Foreign currency transaction loss related to borrowing arrangements 6,830  — 
Impairment expense 4,947  — 
Gain on property disposals (540) (7,315)
Loss (gain) on equity method investments (44) 194 
Share-based compensation 2,454  5,404 
Deferred income tax expense (benefit) 25,768  (6)
Changes in operating assets and liabilities:    
Trade accounts and other receivables (146,477) (65,649)
Inventories (149,806) (18,099)
Prepaid expenses and other current assets (15,377) 1,990 
Accounts payable, accrued expenses and other current liabilities (36,105) 35,346 
Income taxes 149,063  45,789 
Long-term pension and other postretirement obligations (9,660) (8,294)
Other operating assets and liabilities (1,429) (6,190)
Cash provided by operating activities 618,491  551,983 
Cash flows from investing activities:    
Acquisitions of property, plant and equipment (258,364) (221,035)
Business acquisition (658,520) — 
Proceeds from property disposals 2,585  12,977 
Cash used in investing activities (914,299) (208,058)
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  515,292 
Payments on revolving line of credit, long-term borrowings and capital lease obligations (609,678) (504,078)
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 (4,550) (693)
Purchase of common stock under share repurchase program (14,641) (20,333)
Cash dividends —  (715,711)
Cash provided by (used in) financing activities 389,831  (743,379)
Increase (decrease) in cash, cash equivalents and restricted cash 109,107  (428,391)
Cash, cash equivalents and restricted cash, beginning of period 297,523  696,553 
Cash, cash equivalents and restricted cash, end of period $406,630  $268,162 



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 Thirty-Nine Weeks Ended
 September 24, 2017 September 25, 2016 September 24, 2017 September 25, 2016
 (In thousands)
Net income$238,313  $101,965  $584,242  $394,685 
Add:       
Interest expense, net22,508  18,866   62,715  56,480 
Income tax expense113,396  53,819  278,046  202,979 
Depreciation and amortization71,763  58,718  204,625  174,128  
Minus:       
Amortization of capitalized financing costs1,181  970  3,129  2,859 
EBITDA444,799  232,398  1,126,499  825,413 
Add:       
Foreign currency transaction loss (gains)(888) 4,569  (2,500) (1,769)
Acquisition charges15,039  —  15,039  — 
Restructuring charges4,147  279  8,496  279 
Minus:       
  Net income (loss) attributable to noncontrolling interest(460) (130) 514  (334)
Adjusted EBITDA$463,557  $237,376   $1,147,020  $824,257 



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 Thirty-Nine Weeks Ended Thirteen Weeks Ended Thirty-Nine Weeks Ended
  September 24, 2017 September 25, 2016 September 24, 2017 September 25, 2016 September 24, 2017 September 25, 2016 September 24, 2017 September 25, 2016
  (In thousands)
Net income from continuing operations $238,313  $101,965  $584,242  $394,685  8.53% 4.09% 7.28% 5.26%
Add:                
Interest expense, net 22,508  18,866  62,715  56,480  0.81% 0.76% 0.78% 0.75%
Income tax expense 113,396  53,819  278,046  202,979  4.06% 2.16% 3.46% 2.70%
Depreciation and amortization 71,763  58,718  204,625  174,128  2.57% 2.35% 2.55 % 2.32%
Minus:                
Amortization of capitalized financing costs 1,181  970  3,129  2,859  0.04% 0.04% 0.04% 0.04%
EBITDA 444,799  232,398  1,126,499  825,413  15.92% 9.32% 14.03% 10.99%
Add:                
Foreign currency transaction gains (888) 4,569   (2,500) (1,769) (0.03)% 0.18% (0.03 )% (0.02)%
Acquisition charges 15,039  —  15,039  —  0.54% —% 0.19% —%
Restructuring charges 4,147  279  8,496  279  0.15% 0.01% 0.11% —%
Minus:                
  Net income (loss) attributable to noncontrolling interest (460) (130) 514  (334) (0.02)% (0.01)% 0.01% —%
Adjusted EBITDA $463,557  $237,376  $1,147,020  $824,257  16.59% 9.52% 14.28% 10.98%
                 
Net Revenue: $ 2,793,885  $2,495,281  $8,025,511  $7,507,681  $2,793,885  $2,495,281  $8,025,511  $7,507,681 



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 Thirty-Nine Weeks Ended
  September 24,
 2017		 September 25,
 2016		 September 24,
 2017		 September 25,
 2016
   (In thousands, except per share data)
Net income attributable to Pilgrim's Pride Corporation $232,680  $98,657  $560,242  $369,914 
Loss on early extinguishment of debt —  —  —  — 
Acquisition and restructuring charges, net of taxes 12,988  —  15,980  — 
Foreign currency transaction gains (888) 4,569  (2,500) (1,769)
Income before loss on early extinguishment of debt and foreign currency transaction gains 244,780  103,226  573,722  368,145 
Weighted average diluted shares of common stock outstanding 248,988  254,920  248,962  255,037 
Income before loss on early extinguishment of debt and foreign currency transaction gains
  per common diluted share		 $0.98  $0.41  $2.30  $ 1.44 



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 Thirty-Nine Weeks Ended
 September 24, 2017 September 25, 2016 September 24, 2017 September 25, 2016
 (In thousands, except per share data)
GAAP EPS$0.93  $0.39  $2.25   $1.45 
Loss on early extinguishment of debt—  —  —   — 
Acquisition and restructuring charges, net of taxes0.05  —  0.06  — 
Foreign currency transaction gains—  0.02  (0.01) (0.01)
Adjusted EPS$0.98  $0.41  $ 2.30  $1.44 
        
Weighted average diluted shares of common stock outstanding248,988  254,920  248,962  255,037 



PILGRIM'S PRIDE CORPORATION
Supplementary Selected Segment and Geographic Data
         
  Thirteen Weeks Ended Thirty-Nine Weeks Ended
  September 24, 2017 September 25, 2016 September 24, 2017 September 25, 2016
  (Unaudited)       
  (In thousands)
Sources of net sales by country of origin:        
US: $1,938,542  $1,724,625  $5,557,089   $5,072,351 
Mexico: 341,018  307,096  994,568   950,622 
Europe: 514,325  463,560  1,473,854  1,484,708 
Total net sales: $2,793,885  $2,495,281  $8,025,511  $7,507,681 
         
Sources of cost of sales by country of origin:         
US: $1,561,333  $1,545,289  $4,656,825  $4,470,648 
Mexico: 286,617  276,366  822,822  818,749 
Europe: 467,374  420,590  1,336,123  1,343,242 
Elimination: (23) (24) (69) (71)
Total cost of sales: $2,315,301  $2,242,221  $6,815,701  $6,632,568 
         
Sources of gross profit by country of origin:        
US: $377,209  $179,336  $900,262  $601,703 
Mexico : 54,401  30,730  171,745  131,874 
Europe: 46,951  42,970  137,734  141,466 
Elimination: 23  24  69  70 
Total gross profit:  $478,584  $253,060  $1,209,810   $875,113 
         
Sources of operating income by country of origin:        
US: $307,962  $141,195  $719,121  $480,280 
Mexico: 45,692  22,603  146,241  108,856 
Europe: 18,569  13,027  51,874  55,841 
Elimination: 23  23  69  71 
Total operating income: $372,246  $176,848  $917,305  $645,048 



Contact:

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

Source: Pilgrim's Pride Corporation

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