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Apr 28, 2021

Pilgrim’s Pride Reports Q1 Net Sales of $3.27 billion, Operating Income of $158.5 million and GAAP EPS of $0.41

GREELEY, Colo., April 28, 2021 (GLOBE NEWSWIRE) -- Pilgrim’s Pride Corporation (NASDAQ: PPC) reports first quarter 2021 financial results.

First Quarter Highlights

  • Net Sales of $3.27 billion.
  • GAAP Net Income of $100.2 million. Adjusted Net Income of $103.0 million or adjusted EPS of $0.42.
  • Consolidated Operating Income margin of 4.8% with Operating Income margins of 3.4% in U.S., 19.0% in Mexico and 1.2% in Europe.
  • Adjusted EBITDA of $253.8 million, or a 7.8% margin, 53.4% higher than a year ago.
  • Throughout the global COVID-19 pandemic, we remain guided by our principles of an uncompromising commitment to the safety of our team members, our duty to provide quality food globally, and our responsibility to provide continued employment opportunities and benefits for our team during these unprecedented times.
  • Strong focus in execution and dedication by our team members, supported by our portfolio strategy of differentiated products, strong Key Customer relationships, and diversified global operations have helped us to mitigate challenging market conditions due to COVID-19 and improve the resiliency in our results.
  • Demand in U.S. continues to recover, with our foodservice business improving while Retail and QSR business maintaining strength despite higher input and operating costs, volume disruptions because of weather events, and less than optimal mix due to significant labor shortages. Commodity large bird deboning experienced a rapid increase in prices throughout the quarter, achieving the largest improvement relative to Q1 a year ago.
  • Mexico maintained the strength from the second half of 2020. Strong execution, improved overall economic conditions, better supply/demand balance, and our increased share of non-commodity products contributed to the strength.
  • Our combined European business continues to achieve operational improvements, offsetting high feed costs, not yet reflected in prices, lower year-over-year foodservice volume due to lockdowns, and COVID-19 mitigation costs.
  • Our commitment to achieve net-zero GHG emissions by 2040 demonstrates our leadership in ESG as a responsible steward of the environment and a good corporate citizen. In support, last month we successfully issued a $1 billion sustainability-linked bond tied to efforts to reduce greenhouse gas emission intensity across our global operations. The bond is the first of its kind to be issued by a global meat and poultry company, and aligns with our vision to be the best and most respected company in our industry.
Unaudited   Three Months Ended
    March 28,
2021
  March 29,
2020
  Y/Y Change
    (In millions, except per share and percentages)
Net sales   $ 3,273.4     $ 3,074.9     +6.5 %
U.S. GAAP EPS   $ 0.41     $ 0.27     +51.9 %
Operating income   $ 158.5     $ 84.4     +87.8 %
Adjusted EBITDA(1)   $ 253.8     $ 165.5     +53.4 %
Adjusted EBITDA margin(1)   7.8 %   5.4 %   +2.4 pts

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

“While overall demand conditions have incrementally improved, we are still faced with market specific volatility and challenges across our global operations. Throughout the COVID-19 pandemic, our team has continued to maintain their commitment, dedication and hard work, in supporting our ability to keep a safe and healthy working environment while allowing us the capability to maintain production and supply to our customers during this unprecedented crisis. Our diversified portfolio and strategy has continued to mitigate the difficult environment and produce the expected results in relative performance to the competition, while delivering more resilient performance regardless of changes in specific market conditions. During Q1, the U.S. generated a solid performance despite challenges from weather events and higher input costs; while Mexico maintained its strong results from the second half of 2020. In Europe, more expensive feed ingredients, COVID-19 mitigation costs, lower foodservice volumes due to pandemic restrictions, and export constraints to China presented a challenging environment. Nevertheless, we remain agile and are continuing to adapt our operations to changes in market conditions,” stated Fabio Sandri, Chief Executive Officer of Pilgrim's.

“During Q1, the market environment in the U.S. improved throughout the quarter, including a challenging February in part due to the significant weather event in the southeast, before a very strong recovery as we exited the quarter. With gradual loosening of restrictions, as a result of the increase in vaccinations, the market has been incrementally improving, especially in foodservice. The market for commodity large bird deboning experienced the largest improvement relative to the same period a year ago. Our retail and QSR results have remained solid due to strong demand across our customer base despite higher input and operating costs, and less than optimal mix due to significant labor shortages and COVID-19. Our Prepared Foods business remained resilient considering the challenging demand environment. The business continues to grow its sales in the branded segment, reflecting the investments made over the past few years, and we anticipate stronger results as COVID-19 restrictions are gradually lifted throughout 2021.”

“Compared to a very challenging Q1 last year, Mexico had another strong quarter following a robust performance during the second half 2020, driven by a balanced supply/demand and continuous improvements in operational performance. We adapted the operations well to generate strong performance despite volumes in the fresh segment that were below those of 2020. Our Prepared Foods also performed well, with improved demand. We maintain the pursuit of our strategy to invest in our brands, in both fresh and prepared food business, seeking to establish strong differentiated brands and products, and at the same time increase our share in modern channels with more stable margins over time, consistent with our vision for growth in Mexico.”

“In Q1, our Moy Park operations experienced some headwinds due to significant changes in the cost of feed ingredients, the year-over-year impact of lockdown restrictions on demand and COVID-19 mitigation costs, but are continuing to evolve as we strengthen its ability to manage the stability by adapting a sales model to better moderate future input cost challenges. In addition, our strong internal operating performance and commitment to innovation have helped in mitigating the difficult environment. Integration of Pilgrim’s UK is on track, and the business has continued to contribute positively to our results. During the quarter, we experienced a reduction in volume of exports to China due to the suspension of our export license at two plants as a result of COVID-19. We work diligently with the applicable authorities to reinstate these licenses. In addition, pig prices in the EU and UK were under pressure because of ASF in Germany; however, prices have already started to recover.”

Conference Call Information

A conference call to discuss Pilgrim’s quarterly results will be held tomorrow, April 29, 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/ppc210429.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 July 29, 2021.

About Pilgrim’s Pride

Pilgrim’s employs approximately 54,900 people and operates protein processing plants and prepared-foods facilities in 14 states, Puerto Rico, Mexico, the U.K, 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. Without limiting the foregoing, words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “should,” “targets,” “will” and the negative thereof and similar words and expressions are intended to identify 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: the impact of the COVID-19 pandemic, efforts to contain the pandemic and resulting economic downturn on our operations and financial condition, including the risk that our health and safety measures at Pilgrim’s Pride production facilities will not be effective, the risk that we may be unable to prevent the infection of our employees at these facilities, and the risk that we may need to temporarily close one or more of our production facilities; the risk that we may experience decreased production and sales due to the changing demand for food products; the risk that we may face a significant increase in delayed payments from our customers; and additional risks related to COVID-19 set forth in our most recent Form 10-K and Form 10-Q filed with the SEC; 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 and other legal matters described in our most recent Form 10-K and Form 10-Q, including the In re Broiler Chicken Antitrust Litigation, as well as other risks described under “Risk Factors” in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and subsequent filings with the Securities and Exchange Commission. The forward-looking statements in this release speak only as of the date hereof, and the Company undertakes no obligation to update any such statement after the date of this release, whether as a result of new information, future developments or otherwise, except as may be required by applicable law.

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





PILGRIM’S PRIDE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
         
    (Unaudited)    
    March 28, 2021   December 27, 2020
    (In thousands)
Cash and cash equivalents   $ 367,015     $ 547,624  
Restricted cash and cash equivalents   43,225     782  
Trade accounts and other receivables, less allowance for doubtful accounts   800,838     741,992  
Accounts receivable from related parties   1,227     1,084  
Inventories   1,439,915     1,358,793  
Income taxes receivable   59,026     69,397  
Prepaid expenses and other current assets   164,744     183,039  
Total current assets   2,875,990     2,902,711  
Deferred tax assets   5,358     5,471  
Other long-lived assets   25,744     24,780  
Operating lease assets, net   279,795     288,886  
Identified intangible assets, net   592,182     589,913  
Goodwill   1,019,323     1,005,245  
Property, plant and equipment, net   2,682,369     2,657,491  
     Total assets   $ 7,480,761     $ 7,474,497  
         
Accounts payable   $ 1,025,249     $ 1,028,710  
Accounts payable to related parties   9,556     9,650  
Revenue contract liabilities   35,334     65,918  
Accrued expenses and other current liabilities   606,759     807,847  
Income taxes payable   9,204      
Current maturities of long-term debt   25,457     25,455  
Total current liabilities   1,711,559     1,937,580  
Noncurrent operating lease liability, less current maturities   208,152     217,432  
Long-term debt, less current maturities   2,350,429     2,255,546  
Deferred tax liabilities   360,015     339,831  
Other long-term liabilities   114,850     148,761  
Total liabilities   4,745,005     4,899,150  
Common stock   2,613     2,612  
Treasury stock   (345,134 )   (345,134 )
Additional paid-in capital   1,956,375     1,954,334  
Retained earnings   1,072,777     972,569  
Accumulated other comprehensive income (loss)   37,279     (20,620 )
Total Pilgrim’s Pride Corporation stockholders’ equity   2,723,910     2,563,761  
Noncontrolling interest   11,846     11,586  
Total stockholders’ equity   2,735,756     2,575,347  
     Total liabilities and stockholders’ equity   $ 7,480,761     $ 7,474,497  


PILGRIM’S PRIDE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
         
    Three Months Ended
    March 28, 2021   March 29, 2020
    (In thousands, except per share data)
Net sales   $ 3,273,425     $ 3,074,928  
Cost of sales   3,012,182     2,897,829  
Gross profit   261,243     177,099  
Selling, general and administrative expense   102,779     92,713  
Operating income   158,464     84,386  
Interest expense, net of capitalized interest   30,334     32,688  
Interest income   (2,366 )   (1,690 )
Foreign currency transaction loss (gain)   2,514     (18,385 )
Miscellaneous, net   (7,844 )   (34,188 )
Income before income taxes   135,826     105,961  
Income tax expense   35,358     38,512  
Net income   100,468     67,449  
Less: Net income attributable to noncontrolling interests   260     181  
Net income attributable to Pilgrim’s Pride Corporation   $ 100,208     $ 67,268  
         
Weighted average shares of Pilgrim's Pride Corporation common stock outstanding:        
Basic   243,580     249,347  
Effect of dilutive common stock equivalents   278     275  
Diluted   243,858     249,622  
         
Net income attributable to Pilgrim's Pride Corporation per share of
common stock outstanding:
       
Basic   $ 0.41     $ 0.27  
Diluted   $ 0.41     $ 0.27  


PILGRIM’S PRIDE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
    Three Months Ended
    March 28, 2021   March 29, 2020
    (In thousands)
Cash flows from operating activities:        
Net income   $ 100,468     $ 67,449  
Adjustments to reconcile net income to cash provided by operating activities:        
Depreciation and amortization   86,532     79,773  
Deferred income tax expense   12,483     17,023  
Gain on property disposals   (2,396 )   (521 )
Stock-based compensation   2,042     676  
Loan cost amortization   1,215     1,212  
Accretion of discount related to Senior Notes   246     246  
Amortization of premium related to Senior Notes   (167 )   (167 )
Loss (gain) on equity-method investments   (4 )   309  
Negative adjustment to previously recognized gain on bargain purchase       1,740  
Changes in operating assets and liabilities:        
Trade accounts and other receivables   (54,892 )   (26,296 )
Inventories   (82,550 )   9,333  
Prepaid expenses and other current assets   20,228     (22,419 )
Accounts payable, accrued expenses and other current liabilities   (240,183 )   (108,004 )
Income taxes   25,440     (16 )
Long-term pension and other postretirement obligations   (10,841 )   (6,282 )
Other operating assets and liabilities   (1,172 )   7,008  
Cash provided by operating activities   (143,551 )   21,064  
Cash flows from investing activities:        
Acquisitions of property, plant and equipment   (102,167 )   (77,168 )
Proceeds from property disposals   13,074     632  
Purchase of acquired business, net of cash acquired       (1,740 )
Cash used in investing activities   (89,093 )   (78,276 )
Cash flows from financing activities:        
Proceeds from revolving line of credit and long-term borrowings   328,932     356,547  
Payments on revolving line of credit, long-term borrowings and finance lease obligations   (235,292 )   (13,396 )
Payment of equity distribution under Tax Sharing Agreement between JBS USA Food Company Holdings and Pilgrim’s Pride Corporation   (650 )    
Purchase of common stock under share repurchase program       (27,906 )
Cash provided by financing activities   92,990     315,245  
Effect of exchange rate changes on cash and cash equivalents   1,488     (2,193 )
Increase in cash, cash equivalents and restricted cash   (138,166 )   255,840  
Cash, cash equivalents and restricted cash, beginning of period   548,406     280,577  
Cash, cash equivalents and restricted cash, end of period   $ 410,240     $ 536,417  


PILGRIM’S PRIDE CORPORATION
Non-GAAP Financial Measures Reconciliation
(Unaudited)

“EBITDA” is defined as the sum of net income 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) foreign currency transaction loss (gain), (2) transaction costs from business acquisitions, (3) DOJ agreement & litigation settlements, (4) negative adjustment to previously recognized gain on bargain purchase, (5) shareholder litigation settlement, (6) deconsolidation of subsidiary and (7) net income attributable to noncontrolling interest. 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 U.S. (“U.S. 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 applicable to continuing operations. The Company also believes that Adjusted EBITDA, in combination with the Company’s financial results calculated in accordance with U.S. 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 U.S. GAAP. EBITDA and Adjusted EBITDA have limitations as analytical tools and should not be considered in isolation or as substitutes for an analysis of our results as reported under U.S. GAAP. In addition, other companies in our industry may calculate these measures differently limiting their usefulness as a comparative measure. Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as an alternative to net income as indicators of our operating performance or any other measures of performance derived in accordance with U.S. GAAP. These limitations should be compensated for by relying primarily on our U.S. GAAP results and using EBITDA and Adjusted EBITDA only on a supplemental basis.

PILGRIM'S PRIDE CORPORATION
Reconciliation of Adjusted EBITDA
(Unaudited)
       
  Three Months Ended
  March 28, 2021   March 29, 2020
  (In thousands)
Net income $ 100,468     $ 67,449  
Add:      
Interest expense, net(a) 27,968     30,998  
Income tax expense 35,358     38,512  
Depreciation and amortization 86,532     79,773  
EBITDA 250,326     216,732  
Add:      
Foreign currency transaction loss (gain)(b) 2,514     (18,385 )
Transaction costs related to acquisitions(c)     215  
DOJ agreement & litigation settlements(d) 2,399      
Minus:      
Negative adjustment to previously recognized gain on bargain purchase(e)     (1,740 )
Shareholder litigation settlement(f)     34,643  
Deconsolidation of subsidiary(g) 1,131      
Net income attributable to noncontrolling interest 260     181  
Adjusted EBITDA $ 253,848     $ 165,478  

(a) Interest expense, net, consists of interest expense less interest income.
(b) The Company measures the financial statements of its Mexico reportable segment as if the U.S. dollar were the functional currency. Accordingly, we remeasure assets and liabilities, other than nonmonetary assets, of the Mexico reportable segment at current exchange rates. We remeasure nonmonetary assets using the historical exchange rate in effect on the date of each asset’s acquisition. Currency exchange gains or losses resulting from these remeasurements, as well as, from our U.K. and Europe reportable segment are included in the line item Foreign currency transaction loss (gain) in the Condensed Consolidated Statements of Income.
(c) Transaction costs related to acquisitions includes those charges that are incurred in conjunction with business acquisitions.
(d) On October 13, 2020, Pilgrims announced that we have entered into a plea agreement (the “Plea Agreement”) with the DOJ. As a result of the Plea Agreement, we recognized a fine of $110,524,140. On February 23, 2021, the Colorado Court approved the Plea Agreement and assessed a fine of $107.9 million. The difference from prior accrual to updated amount was recognized during the three months ended March 28, 2021. This difference recognized in the three months ended March 28, 2021 was offset by an amount recognized in anticipation of a probable settlement in ongoing litigation.
(e) The gain on bargain purchase was recognized as a result of the PPL acquisition in October 2019. The amount shown above represents a working capital adjustment to the previously recorded gain on bargain purchase.
(f) Shareholder litigation settlement is income received as a result of a settlement in the first quarter of 2020.
(g) This represents a gain recognized as a result of deconsolidation of a subsidiary. 

The summary unaudited consolidated income statement data for the twelve months ended March 28, 2021 (the LTM Period) have been calculated by subtracting the applicable unaudited consolidated income statement data for the three months ended March 29, 2020 from the sum of (1) the applicable audited consolidated income statement data for the year ended December 27, 2020 and (2) the applicable unaudited consolidated income statement data for the three months ended March 28, 2021.

PILGRIM'S PRIDE CORPORATION
Reconciliation of LTM Adjusted EBITDA
(Unaudited)
                     
    Three Months Ended   LTM Ended
    June 28,
2020
  September 27,
2020
  December 27,
2020
  March 28,
2021
  March 28,
2021
    (In thousands)
Net income   $ (6,400 )   $ 33,691     $ 330     $ 100,468     $ 128,089  
Add:                    
Interest expense, net   31,165     28,801     27,849     27,968     115,783  
Income tax expense   (2,956 )   22,344     8,855     35,358     63,601  
Depreciation and amortization   84,603     84,265     88,463     86,532     343,863  
EBITDA   106,412     169,101     125,497     250,326     651,336  
Add:                    
Foreign currency transaction losses   5,525     9,092     4,528     2,514     21,659  
Transaction costs related to acquisitions   (81 )               (81 )
DOJ agreement & litigation settlements       110,524     75,000     2,399     187,923  
Restructuring charges           123         123  
Hometown Strong commitment       14,506     494         15,000  
Minus:                    
Negative adjustment to previously recognized gain on bargain purchase       (2,006 )           (2,006 )
Deconsolidation of subsidiary               1,131     1,131  
Net income (loss) attributable to
noncontrolling interest
  (364 )   245     251     260     392  
Adjusted EBITDA   $ 112,220     $ 304,984     $ 205,391     $ 253,848     $ 876,443  

EBITDA margins have been calculated by taking the relevant unaudited EBITDA figures, then dividing by net sales for the applicable period. EBITDA margins are presented because they are used by management and we believe it is frequently used by securities analysts, investors and other interested parties, as a supplement to our results prepared in accordance with U.S. GAAP, to compare the performance of companies.

PILGRIM'S PRIDE CORPORATION
Reconciliation of EBITDA Margin
(Unaudited)
                 
    Three Months Ended   Three Months Ended
    March 28, 2021   March 29, 2020   March 28, 2021   March 29, 2020
  (In thousands)
Net income   $ 100,468     $ 67,449     3.07 %   2.19 %
Add:                
Interest expense, net   27,968     30,998     0.85 %   1.01 %
Income tax expense   35,358     38,512     1.08 %   1.25 %
Depreciation and amortization   86,532     79,773     2.64 %   2.59 %
EBITDA   250,326     216,732     7.64 %   7.04 %
Add:                
Foreign currency transaction losses (gains)   2,514     (18,385 )   0.07 %   (0.59 )%
Transaction costs related to acquisitions       215     %   0.01 %
DOJ agreement & litigation settlements   2,399         0.07 %   %
Minus:                
Negative adjustment to previously recognized gain on bargain purchase       (1,740 )   %   (0.06 )%
Shareholder litigation settlement       34,643     %   1.13 %
Deconsolidation of subsidiary   1,131         0.03 %   %
Net income attributable to noncontrolling interest   260     181     0.01 %   0.01 %
Adjusted EBITDA   $ 253,848     $ 165,478     7.74 %   5.38 %
                 
Net sales   $ 3,273,425     $ 3,074,928     $ 3,273,425     $ 3,074,928  

Adjusted net income attributable to Pilgrim's Pride Corporation (“Pilgrim's”) is calculated by adding to Net income attributable to Pilgrim's certain items of expense and deducting from Net income attributable to Pilgrim's certain items of income, as shown below in the table. Adjusted net income attributable to Pilgrim’s Pride Corporation per common diluted share 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 U.S. GAAP, to compare the performance of companies. Management also believe that this non-U.S. GAAP financial measure, in combination with our financial results calculated in accordance with U.S. GAAP, provides investors with additional perspective regarding the impact of such charges on net income attributable to Pilgrim’s Pride Corporation per common diluted share. Adjusted net income attributable to Pilgrim’s Pride Corporation per common diluted share is not a measurement of financial performance under U.S. GAAP, has limitations as an analytical tool and should not be considered in isolation or as a substitute for an analysis of our results as reported under U.S. GAAP. Management believes that presentation of adjusted net income attributable to Pilgrim’s provides useful supplemental information about our operating performance and enables comparison of our performance between periods because certain costs shown below are not indicative of our current operating performance. A reconciliation of net income attributable to Pilgrim’s Pride Corporation per common diluted share to adjusted net income attributable to Pilgrim’s Pride Corporation per common diluted share is as follows:

PILGRIM'S PRIDE CORPORATION
Reconciliation of Adjusted Net Income
(Unaudited)
       
  Three Months Ended
  March 28, 2021   March 29, 2020
  (In thousands, except per share data)
Net income attributable to Pilgrim's $ 100,208     $ 67,268  
Add:      
Foreign currency transaction losses (gains) 2,514     (18,385 )
Transaction costs related to acquisitions     215  
DOJ agreement & litigation settlements 2,399      
Minus:      
Negative adjustment to previously recognized gain on bargain purchase     (1,740 )
Shareholder litigation settlement     34,643  
Deconsolidation of subsidiary 1,131      
Adjusted net income attributable to Pilgrim's before tax impact of adjustments 103,990     16,195  
Net tax impact of adjustments(a) (942 )   12,722  
Adjusted net income attributable to Pilgrim's $ 103,048     $ 28,917  
Weighted average diluted shares of common stock outstanding 243,858     249,622  
Adjusted net income attributable to Pilgrim's per common diluted share $ 0.42     $ 0.12  

(a) Net tax expense (benefit) of adjustments represents the tax impact of all adjustments shown above.

Adjusted EPS is calculated by dividing the adjusted net income attributable to Pilgrim's stockholders by the weighted average number of diluted shares. Management believes that Adjusted EPS provides useful supplemental information about our operating performance and enables comparison of our performance between periods because certain costs shown below are not indicative of our current operating performance. A reconciliation of U.S. GAAP to non-U.S. GAAP financial measures is as follows:

PILGRIM'S PRIDE CORPORATION
Reconciliation of GAAP EPS to Adjusted EPS
(Unaudited)
       
  Three Months Ended
  March 28, 2021   March 29, 2020
  (In thousands, except per share data)
GAAP EPS $ 0.41     $ 0.27  
Add:      
Foreign currency transaction losses (gains) 0.01     (0.07 )
Transaction costs related to acquisitions      
DOJ agreement & litigation settlements      
Minus:      
Negative adjustment to previously recognized gain on bargain purchase     (0.01 )
Shareholder litigation settlement     0.14  
Deconsolidation of subsidiary      
Adjusted EPS before tax impact of adjustments 0.42     0.07  
Net tax impact of adjustments(a)     0.05  
Adjusted EPS $ 0.42     $ 0.12  
       
Weighted average diluted shares of common stock outstanding 243,858     249,622  

(a) Net tax impact of adjustments represents the tax impact of all adjustments shown above.

PILGRIM'S PRIDE CORPORATION
Supplementary Selected Segment and Geographic Data
(Unaudited)
         
    Three Months Ended
    March 28, 2021   March 29, 2020
    (In thousands)
Sources of net sales by geographic region of origin:        
U.S.   $ 1,999,559     $ 1,926,880  
U.K. and Europe   854,734     822,262  
Mexico   419,132     325,786  
Total net sales   $ 3,273,425     $ 3,074,928  
         
Sources of cost of sales by geographic region of origin:        
U.S.   $ 1,866,700     $ 1,788,777  
U.K. and Europe   816,926     770,134  
Mexico   328,570     338,942  
Elimination   (14 )   (24 )
Total cost of sales   $ 3,012,182     $ 2,897,829  
         
Sources of gross profit by geographic region of origin:        
U.S.   $ 132,859     $ 138,103  
U.K. and Europe   37,808     52,128  
Mexico   90,562     (13,156 )
Elimination   14     24  
Total gross profit   $ 261,243     $ 177,099  
         
Sources of operating income by geographic region of origin:        
U.S.   $ 68,125     $ 85,052  
U.K. and Europe   10,495     23,190  
Mexico   79,830     (23,880 )
Elimination   14     24  
Total operating income   $ 158,464     $ 84,386  


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Source: Pilgrim's Pride Corporation