Pilgrim’s Pride Reports Q1 Net Sales of $3.07 Billion, Operating Income of $84 Million and GAAP EPS of $0.27
First Quarter Highlights
Net Sales of$3.07 billion .- Net GAAP Income of
$67.3 million , including one-time$0.09 per share gain on case settlement. - Operating Income margins of 4.4% in
U.S. , -7.3% inMexico and 2.8% inEurope operations, respectively. - Adjusted EBITDA of
$165.5 million , or a 5.4% margin. - Strong focus in execution and dedication by our team members, combined with portfolio strategy of differentiated products, strong Key Customer relationships, and diversified global footprint reducing volatility of specific market conditions, especially under unprecedented Covid-19 impact at end of first quarter.
U.S. continues to improve our relative performance versus the industry across all business units, supported by our business model and agility in changing mix.Mexico experiencing weak macro conditions persisting longer than expected, partially offset by growth inPrepared Foods .- Operating results from legacy European business (
Moy Park ) at strong levels with increasing operational efficiencies and input cost mitigation. Newly acquired operations continue to generate positive EBITDA, and remain on track to achieve performance comparable to leading companies with similar portfolio in next few years. - Our liquidity position remains strong, supported by our emphasis on cash flow generation, focus on working capital management, and disciplined investments in high-return projects, preserving the opportunity to maintain strategic priorities to continue strengthening our differentiated global platforms.
Unaudited (2) | Three Months Ended | ||||||||||
2020 |
2019 |
Y/Y Change | |||||||||
(In millions, except per share and percentages) | |||||||||||
Net sales | $ | 3,074.9 | $ | 2,724.7 | +12.9 | % | |||||
$ | 0.27 | $ | 0.34 | (20.6 | )% | ||||||
Operating income | $ | 84.4 | $ | 137.0 | (38.4 | )% | |||||
Adjusted EBITDA(1) | $ | 165.5 | $ | 204.4 | (19.0 | )% | |||||
Adjusted EBITDA margin(1) | 5.4 | % | 7.5 | % | -2.1 | pts |
(1) Reconciliations for non-
(2) Comparisons include Tulip from
“We are grateful to our team members for their commitment, dedication, and continued hard work, in supporting our ability to keep our team members safe and healthy, while maintaining production and supply to our customers during this unprecedented crisis. Despite the volatile and challenging markets in Q1, in part due to Covid-19, our strategy has continued to achieve solid results in relative performance to industry competition, and deliver more resilient performance regardless of changes in specific market conditions. Operating results in
“In the
“Market environment in
“The legacy European operations once again delivered robust results in Q1, maintaining the trend achieved in the last three quarters of 2019. We generated revenue that was in-line with last year while operating income significantly improved year on year, and was 8% higher than the previous quarter. Our newly acquired European operations also performed well and continued to generate positive EBITDA. The increase in performance was driven by robust demand at retail, partially offset by a reduction in foodservice, continuing strength in pork exports especially to
Conference Call Information
A conference call to discuss Pilgrim’s quarterly results will be held tomorrow,
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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
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
About Pilgrim’s Pride
Pilgrim’s employs approximately 58,600 people and operates protein processing plants and prepared-foods facilities in 14 states,
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
Contact: | |
Investor Relations | |
IRPPC@pilgrims.com | |
(970) 506-8192 | |
www.pilgrims.com |
PILGRIM’S PRIDE CORPORATION | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(Unaudited) | ||||||||
(In thousands) | ||||||||
Cash and cash equivalents | $ | 511,183 | $ | 260,568 | ||||
Restricted cash and cash equivalents | 25,234 | 20,009 | ||||||
Trade accounts and other receivables, less allowance for doubtful accounts | 754,246 | 741,281 | ||||||
Accounts receivable from related parties | 743 | 944 | ||||||
Inventories | 1,362,358 | 1,383,535 | ||||||
Income taxes receivable | 53,495 | 60,204 | ||||||
Prepaid expenses and other current assets | 152,920 | 131,695 | ||||||
Total current assets | 2,860,179 | 2,598,236 | ||||||
Deferred tax assets | 4,443 | 4,426 | ||||||
Other long-lived assets | 34,511 | 36,325 | ||||||
Identified intangible assets, net | 286,606 | 301,513 | ||||||
568,183 | 596,053 | |||||||
Operating lease assets, net | 935,266 | 973,750 | ||||||
Property, plant and equipment, net | 2,562,794 | 2,592,061 | ||||||
Total assets | $ | 7,251,982 | $ | 7,102,364 | ||||
Accounts payable | $ | 915,663 | $ | 993,780 | ||||
Accounts payable to related parties | 7,998 | 3,819 | ||||||
Revenue contract liability | 32,084 | 41,770 | ||||||
Accrued expenses and other current liabilities | 532,509 | 575,319 | ||||||
Income taxes payable | 1,951 | 7,075 | ||||||
Current maturities of long-term debt | 25,877 | 26,392 | ||||||
Total current liabilities | 1,516,082 | 1,648,155 | ||||||
Noncurrent operating lease liability, less current maturities | 219,860 | 235,382 | ||||||
Long-term debt, less current maturities | 2,620,907 | 2,276,029 | ||||||
Noncurrent income taxes payable | 7,731 | 7,731 | ||||||
Deferred tax liabilities | 309,471 | 301,907 | ||||||
Other long-term liabilities | 101,440 | 97,100 | ||||||
Total liabilities | 4,775,491 | 4,566,304 | ||||||
Common stock | 2,612 | 2,611 | ||||||
(262,798 | ) | (234,892 | ) | |||||
Additional paid-in capital | 1,955,936 | 1,955,261 | ||||||
Retained earnings | 945,080 | 877,812 | ||||||
Accumulated other comprehensive loss | (174,917 | ) | (75,129 | ) | ||||
Total Pilgrim’s |
2,465,913 | 2,525,663 | ||||||
Noncontrolling interest | 10,578 | 10,397 | ||||||
Total stockholders’ equity | 2,476,491 | 2,536,060 | ||||||
Total liabilities and stockholders’ equity | $ | 7,251,982 | $ | 7,102,364 |
PILGRIM’S PRIDE CORPORATION | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||
(Unaudited) | ||||||||
Three Months Ended | ||||||||
(In thousands, except per share data) | ||||||||
Net sales | $ | 3,074,928 | $ | 2,724,675 | ||||
Cost of sales | 2,897,829 | 2,505,736 | ||||||
Gross profit | 177,099 | 218,939 | ||||||
Selling, general and administrative expense | 92,713 | 81,924 | ||||||
Administrative restructuring activity | — | (27 | ) | |||||
Operating income | 84,386 | 137,042 | ||||||
Interest expense, net of capitalized interest | 32,688 | 33,562 | ||||||
Interest income | (1,690 | ) | (3,340 | ) | ||||
Foreign currency transaction losses (gains) | (18,385 | ) | 2,636 | |||||
Miscellaneous, net | (34,188 | ) | (357 | ) | ||||
Income before income taxes | 105,961 | 104,541 | ||||||
Income tax expense | 38,512 | 20,416 | ||||||
Net income | 67,449 | 84,125 | ||||||
Less: Net income (loss) attributable to noncontrolling interests | 181 | 114 | ||||||
Net income attributable to Pilgrim’s |
$ | 67,268 | $ | 84,011 | ||||
Weighted average shares of common stock outstanding: | ||||||||
Basic | 249,347 | 249,167 | ||||||
Effect of dilutive common stock equivalents | 275 | 390 | ||||||
Diluted | 249,622 | 249,557 | ||||||
Net income attributable to |
||||||||
Basic | $ | 0.27 | $ | 0.34 | ||||
Diluted | $ | 0.27 | $ | 0.34 |
PILGRIM’S PRIDE CORPORATION AND SUBSIDIARIES | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(Unaudited) | ||||||||
Three Months Ended | ||||||||
(In thousands) | ||||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 67,449 | $ | 84,125 | ||||
Adjustments to reconcile net income to cash provided by operating activities: | ||||||||
Depreciation and amortization | 79,773 | 67,182 | ||||||
Deferred income tax expense (benefit) | 17,023 | (4,089 | ) | |||||
Negative adjustment to previously recognized gain on bargain purchase | 1,740 | — | ||||||
Loan cost amortization | 1,212 | 1,201 | ||||||
Share-based compensation | 676 | 1,882 | ||||||
Gain on property disposals | (521 | ) | (108 | ) | ||||
Loss (gain) on equity-method investments | 309 | (16 | ) | |||||
Accretion of discount related to Senior Notes | 246 | 246 | ||||||
Amortization of premium related to Senior Notes | (167 | ) | (167 | ) | ||||
Foreign currency transaction loss (gain) related to borrowing arrangements | — | (1,034 | ) | |||||
Changes in operating assets and liabilities: | ||||||||
Trade accounts and other receivables | (26,296 | ) | 2,381 | |||||
Inventories | 9,333 | (1,368 | ) | |||||
Prepaid expenses and other current assets | (22,419 | ) | (11,479 | ) | ||||
Accounts payable, accrued expenses and other current liabilities | (108,004 | ) | (21,968 | ) | ||||
Income taxes | (16 | ) | 6,579 | |||||
Long-term pension and other postretirement obligations | (6,282 | ) | (1,315 | ) | ||||
Other operating assets and liabilities | 7,008 | (1,683 | ) | |||||
Cash provided by operating activities | 21,064 | 120,369 | ||||||
Cash flows from investing activities: | ||||||||
Acquisitions of property, plant and equipment | (77,168 | ) | (87,941 | ) | ||||
Business acquisition | (1,740 | ) | — | |||||
Proceeds from property disposals | 632 | 539 | ||||||
Cash used in investing activities | (78,276 | ) | (87,402 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from revolving line of credit and long-term borrowings | 356,547 | 67,193 | ||||||
Purchase of common stock under share repurchase program | (27,906 | ) | — | |||||
Payments on revolving line of credit, long-term borrowings and finance lease obligations | (13,396 | ) | (62,293 | ) | ||||
Proceeds from equity contribution under Tax Sharing Agreement between |
— | (525 | ) | |||||
Payment of capitalized loan costs | — | (458 | ) | |||||
Cash provided by (used in) financing activities | 315,245 | 3,917 | ||||||
Effect of exchange rate changes on cash and cash equivalents | (2,193 | ) | 429 | |||||
Increase (decrease) in cash, cash equivalents and restricted cash | 255,840 | 37,313 | ||||||
Cash, cash equivalents and restricted cash, beginning of period | 280,577 | 361,578 | ||||||
Cash, cash equivalents and restricted cash, end of period | $ | 536,417 | $ | 398,891 |
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: (1) income (loss) attributable to noncontrolling interests, (2) charges or income from restructuring activities, (3) reorganization items, (4) transaction costs related to acquisitions, (5) gain on bargain purchase and (6) 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
Reconciliation of Adjusted EBITDA | |||||||
(Unaudited) | Three Months Ended | ||||||
(In thousands) | |||||||
Net income | $ | 67,449 | $ | 84,125 | |||
Add: | |||||||
Interest expense, net | 30,998 | 30,222 | |||||
Income tax expense | 38,512 | 20,416 | |||||
Depreciation and amortization | 79,773 | 67,182 | |||||
EBITDA | 216,732 | 201,945 | |||||
Add: | |||||||
Foreign currency transaction losses (gains) | (18,385 | ) | 2,636 | ||||
Transaction costs related to acquisitions | 215 | — | |||||
Restructuring activity | — | (27 | ) | ||||
Minus: | |||||||
Negative adjustment to previously recognized gain on bargain purchase | (1,740 | ) | — | ||||
Shareholder litigation settlement | 34,643 | — | |||||
Net income attributable to noncontrolling interest | 181 | 114 | |||||
Adjusted EBITDA | $ | 165,478 | $ | 204,440 |
The summary unaudited consolidated income statement data for the twelve months ended
Reconciliation of LTM Adjusted EBITDA | ||||||||||||||||||||
(Unaudited) | Three Months Ended | LTM Ended | ||||||||||||||||||
2019 |
2019 |
2019 |
2020 |
2020 |
||||||||||||||||
(In thousands) | ||||||||||||||||||||
Net income | $ | 170,080 | $ | 110,096 | $ | 92,235 | $ | 67,449 | $ | 439,860 | ||||||||||
Add: | ||||||||||||||||||||
Interest expense, net | 30,150 | 27,330 | 30,650 | 30,998 | 119,128 | |||||||||||||||
Income tax expense | 75,547 | 46,365 | 18,681 | 38,512 | 179,105 | |||||||||||||||
Depreciation and amortization | 71,348 | 71,851 | 76,849 | 79,773 | 299,821 | |||||||||||||||
EBITDA | 347,125 | 255,642 | 218,415 | 216,732 | 1,037,914 | |||||||||||||||
Add: | ||||||||||||||||||||
Foreign currency transaction losses (gains) | 2,260 | 3,027 | (1,006 | ) | (18,385 | ) | (14,104 | ) | ||||||||||||
Transaction costs related to acquisitions | — | 63 | 1,239 | 215 | 1,517 | |||||||||||||||
Restructuring activity | (43 | ) | (20 | ) | 6 | — | (57 | ) | ||||||||||||
Minus: | ||||||||||||||||||||
Gain on bargain purchase | — | — | 56,880 | (1,740 | ) | 55,140 | ||||||||||||||
Shareholder litigation settlement | — | — | — | 34,643 | 34,643 | |||||||||||||||
Net income attributable to noncontrolling interest | 12 | 331 | 155 | 181 | 679 | |||||||||||||||
Adjusted EBITDA | $ | 349,330 | $ | 258,381 | $ | 161,619 | $ | 165,478 | $ | 934,808 |
EBITDA margins have been calculated by taking the relevant unaudited EBITDA figures, then dividing by Net Sales for the applicable period.
Reconciliation of EBITDA Margin | ||||||||||||||
(Unaudited) | Three Months Ended | Three Months Ended | ||||||||||||
(In thousands) | ||||||||||||||
Net income | $ | 67,449 | $ | 84,125 | 2.19 | % | 3.09 | % | ||||||
Add: | ||||||||||||||
Interest expense, net | 30,998 | 30,222 | 1.01 | % | 1.11 | % | ||||||||
Income tax expense | 38,512 | 20,416 | 1.25 | % | 0.75 | % | ||||||||
Depreciation and amortization | 79,773 | 67,182 | 2.59 | % | 2.47 | % | ||||||||
EBITDA | 216,732 | 201,945 | 7.05 | % | 7.41 | % | ||||||||
Add: | ||||||||||||||
Foreign currency transaction losses (gains) | (18,385 | ) | 2,636 | (0.59 | )% | 0.10 | % | |||||||
Acquisition charges | 215 | — | 0.01 | % | — | % | ||||||||
Shareholder litigation settlement | — | — | % | — | % | |||||||||
Restructuring activity | — | (27 | ) | — | % | — | % | |||||||
Minus: | ||||||||||||||
Negative adjustment to previously recognized gain on bargain purchase | (1,740 | ) | — | (0.06 | )% | — | % | |||||||
Shareholder litigation settlement | 34,643 | — | 1.13 | % | — | % | ||||||||
Net income (loss) attributable to noncontrolling interest | 181 | 114 | 0.01 | % | — | % | ||||||||
Adjusted EBITDA | $ | 165,478 | $ | 204,440 | 5.38 | % | 7.50 | % | ||||||
Net sales | $ | 3,074,928 | $ | 2,724,675 |
Supplementary Selected Segment and Geographic Data | ||||||||
(Unaudited) | Three Months Ended | |||||||
(In thousands) | ||||||||
Sources of net sales by geographic region of origin: | ||||||||
US | $ | 1,926,880 | $ | 1,883,591 | ||||
822,262 | 514,962 | |||||||
325,786 | 326,122 | |||||||
Total net sales | $ | 3,074,928 | $ | 2,724,675 | ||||
Sources of cost of sales by geographic region of origin: | ||||||||
US | $ | 1,788,777 | $ | 1,713,419 | ||||
770,134 | 485,378 | |||||||
338,942 | 306,963 | |||||||
Elimination | (24 | ) | (24 | ) | ||||
Total cost of sales | $ | 2,897,829 | $ | 2,505,736 | ||||
Sources of gross profit by geographic region of origin: | ||||||||
US | $ | 138,103 | $ | 170,172 | ||||
52,128 | 29,584 | |||||||
(13,156 | ) | 19,159 | ||||||
Elimination | 24 | 24 | ||||||
Total gross profit | $ | 177,099 | $ | 218,939 | ||||
Sources of operating income by geographic region of origin: | ||||||||
US | $ | 85,052 | $ | 114,840 | ||||
23,190 | 12,714 | |||||||
(23,880 | ) | 9,464 | ||||||
Elimination | 24 | 24 | ||||||
Total operating income | $ | 84,386 | $ | 137,042 |
Source: Pilgrim's Pride Corporation