UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K |
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): February 8, 2017
PILGRIM'S PRIDE CORPORATION
(Exact Name of registrant as specified in its charter)
Delaware | 1-9273 | 75-1285071 | |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | |
1770 Promontory Circle Greeley, CO | 80634-9038 | ||
(Address of principal executive offices) | (Zip Code) | ||
Registrant's telephone number, including area code: (970) 506-8000
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 7.01. Regulation FD Disclosure
Attached hereto as Exhibit 99.1 is an overview of Pilgrim's Pride Corporation to be referenced during the Company's earnings conference call of February 9, 2017.
The information furnished in Item 7.01 and in Exhibit 99.1 shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or incorporated by reference in any of Pilgrim's Pride Corporation's filings under the Securities Act of 1933, as amended, or the Exchange Act.
Item 9.01 Financial Statements and Exhibits.
Exhibit 99.1 Press release dated February 8, 2017
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
PILGRIM’S PRIDE CORPORATION | |||
Date: | February 8, 2017 | /s/ Fabio Sandri | |
Fabio Sandri | |||
Chief Financial Officer | |||
Exhibit Index
Exhibit 99.1 Press release dated February 8, 2017
Pilgrim’s Pride Corporation
Financial Results for
Fourth Quarter and Year Ended
Dec 25, 2016
Statements contained in this presentation that share our intentions, beliefs, expectations or predictions for the future, denoted by the words “anticipate,” “believe,” “estimate,”
“should,” “expect,” “project,” “plan,” “imply,” “intend,” “foresee” and similar expressions, are forward-looking statements that reflect our current views about future events
and are subject to risks, uncertainties and assumptions. Such risks, uncertainties and assumptions include the following matters affecting the chicken industry generally,
including fluctuations in the commodity prices of feed ingredients and chicken; actions and decisions of our creditors; our ability to obtain and maintain commercially
reasonable terms with vendors and service providers; our ability to maintain contracts that are critical to our operations; our ability to retain management and other key
individuals; certain of our reorganization and exit or disposal activities, including selling assets, idling facilities, reducing production and reducing workforce, resulted in reduced
capacities and sales volumes and may have a disproportionate impact on our income relative to the cost savings; risk that the amounts of cash from operations together with
amounts available under our exit credit facility will not be sufficient to fund our operations; management of our cash resources, particularly in light of our substantial leverage;
restrictions imposed by, and as a result of, our substantial leverage; 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; changes in laws or regulations affecting our operations or the application thereof; new immigration legislation or increased enforcement
efforts in connection with existing immigration legislation that cause our costs of business to increase, cause us to change the way in which we do business or otherwise disrupt
our operations; competitive factors and pricing pressures or the loss of one or more of our largest customers; currency exchange rate fluctuations, trade barriers, exchange
controls, expropriation and other risks associated with foreign operations; disruptions in international markets and distribution channels; and the impact of uncertainties of
litigation as well as other risks described herein and under “Risk Factors” in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the
“SEC”).
Actual results could differ materially from those projected in these forward-looking statements as a result of these factors, among others, many of which are beyond our control.
In making these statements, we are not undertaking, and specifically decline to undertake, any obligation to address or update each or any factor in future filings or
communications regarding our business or results, and we are not undertaking to address how any of these factors may have caused changes to information contained in
previous filings or communications. Although we have attempted to list comprehensively these important cautionary risk factors, we must caution investors and others that
other factors may in the future prove to be important and affecting our business or results of operations.
This presentation may include information that may be considered non-GAAP financial information as contemplated by SEC Regulation G, Rule 100, including EBITDA, Adjusted
EBITDA, LTM EBITDA, Net Debt, Free Cash Flow, Adjusted EBITDA Margin and others. Accordingly, we have provided tables in the accompanying appendix and in our previous
filings with the SEC that reconcile these measures to their corresponding GAAP-based measures and explain why these measures are useful to investors, which can be obtained
from the Consolidated Statements of Income provided with our previous filings with the SEC. Our method of computation may or may not be comparable to other similarly
titled measures used in filings with the SEC by other companies. See the consolidated statements of income and consolidated statements of cash flows included in our financial
statements.
Cautionary Notes and Forward-Looking Statements
2
Eggs Sets Average Marginally Up in 2016 from 2015
Source: USDA
3
198,797.0
212,136.0
211,165.0
208,689.0
185,000
190,000
195,000
200,000
205,000
210,000
215,000
1/
7
1/
21 2/
4
2/
18 3/
4
3/
18 4/
1
4/
15
4/
29
5/
13
5/
27
6/
10
6/
24 7/
8
7/
22 8/
5
8/
19 9/
2
9/
16
9/
30
10
/1
4
10
/2
8
11
/1
1
11
/2
5
12
/9
12
/2
3
Th
ou
sa
nd
Eg
g
United States, Selected 19 Poultry
Chicken, broiler Sets
'12-'16 Range '15 '16 '17 '17 Est '12-'16 Avg
2016 Placements In-line with Prior Year
Source: USDA
4
174,543.0
162,419.0
172,333.0
172,103.0
154,000
159,000
164,000
169,000
174,000
179,000
1/
7
1/
21 2/
4
2/
18 3/
4
3/
18 4/
1
4/
15
4/
29
5/
13
5/
27
6/
10
6/
24 7/
8
7/
22 8/
5
8/
19 9/
2
9/
16
9/
30
10
/1
4
10
/2
8
11
/1
1
11
/2
5
12
/9
12
/2
3
Th
ou
sa
nd
H
ea
d
United States, Selected 19 Poultry
Chicken, broiler Placed
'12-'16 Range '15 '16 '17 '17 Est '12-'16 Avg
Broiler Type Hatching Layers Down Slightly in 2016
Source: USDA
5
Jumbo Bird Share Remains Steady
After Significant Increase Since 2011
Source: USDA
6
Hatching layers fell in Dec and remain
lower than 2015 levels.
Egg production is higher in Dec, while
pullet placements are flat year on year,
supportive of a modest production
growth in 2017.
Hatching Layers Lower vs 2015,
Placements Flat
Source: USDA
7
Cold Storage Levels Lower Than 2015
Source: USDA
Overall inventories 6% lower than 2015 levels. Leg Quarters continue to remain lower
year on year driven by strong exports.
8
Cutout Values Ended Year Higher vs 2015
Source: PPC
9
Cutout Value
Leg Quarters Improved vs 2015, Other Parts
In-line with Normal Seasonality
Source: USDA
10
11
High Correlation of
GA Dock and EMI Small Bird Value
Source: GA Department of Agriculture and EMI
70.00
75.00
80.00
85.00
90.00
95.00
100.00
105.00
110.00
115.00
120.00
C
e
n
ts
/L
b
EMI 2.5 - 3 LB. Wog and 8&9 Piece Value GA Wed.Dock
Corn Stocks at Record High Levels
Global stocks continue to stay at record high levels.
2016 stocks-to-use global inventories have backed off slightly compared to historically high
in 2015 but still elevated.
Source: USDA
12
Global Soybean Inventories Grow
Global inventories of soybeans remain high and at record high levels, surpassing 2014
previous highs.
Demand for oilseed products estimated to grow to finish out 2016.
Source: USDA
13
Fiscal Year 2016 Financial Review
Mix changes and new strategic capital
investment projects raised overall costs and
impacted near-term profitability but will
translate into more consistent, higher margin,
less commoditized portfolio, and stronger key
customer relationships.
SG&A benefited from MX synergies.
Adjusted FY-16 EBITDA margin remains in the
double digit range and compares favorably with
historicals.
Main Indicators ($M) FY-16 FY-15
Net Revenue 7,931.1 8,180.1
Gross Profit 914.4 1,254.4
SG&A 200.9 209.5
Operating Income 713.5 1,044.9
Net Interest 44.2 33.9
Net Income 440.5 645.9
Earnings Per Share
(EPS)
1.73 2.50
Adjusted EBITDA* 899.3 1,213.5
Adjusted EBITDA
Margin*
11.3% 14.8%
* This is a non-GAAP measurement considered by management to be
useful in understanding our results. Please see the appendix and most
recent SEC financial filings for definition of this measurement and
reconciliation to GAAP.
In $M U.S. MX
Net Revenue 6,671.4 1,259.7
Operating
Income
572.6 140.9
Operating
Income Margin
8.6% 11.2%
14 Source: PPC
Fourth Quarter 2016 Financial Review
Solid Q4 results in Fresh, case-ready and small
birds outperformed; MX performed well but
was impacted by a stronger than expected $,
synergy capture $10MM above expectations.
SG&A impacted by increase in bonus accruals.
Adjusted Q4-16 EBITDA above Q4-15 despite
strategic investment impacts, indicating
underlying strength of overall portfolio.
Main Indicators ($M) Q4-16 Q4-15
Net Revenue 1,908.2 1,960.8
Gross Profit 180.5 160.7
SG&A 56.1 52.9
Operating Income 124.3 107.8
Net Interest 10.2 10.1
Net Income 70.6 63.1
Earnings Per Share
(EPS)
0.28 0.25
Adjusted EBITDA* 172.2 150.0
Adjusted EBITDA
Margin*
9.0% 7.7%
* This is a non-GAAP measurement considered by management to be
useful in understanding our results. Please see the appendix and most
recent SEC financial filings for definition of this measurement and
reconciliation to GAAP.
In $M U.S. MX
Net Revenue 1,599.1 309.1
Operating
Income
92.3 32.0
Operating
Income Margin
5.8% 10.4%
15 Source: PPC
307.1
Balance Sheet Strong, With Plenty of Room for
Strategic Investments
Source: PPC
Cash Flow From Operations generation of $224MM in the quarter.
Net debt multiple remains low at 0.99x LTM EBITDA, well below target of 2-3x.
16
307.1
Fourth Quarter 2016 Capital Spending
Capex (US$M)
Source: PPC
Strong Free Cash Flow generation has enabled us to direct more capital spending towards
identified projects with rapid payback and structural projects.
New strategic projects will support key customers growth and de-emphasize our
exposure to commodity markets by bringing more differentiated portfolio.
17
Investor Relations Contact
Investor Relations: Dunham Winoto
Director, Investor Relations
E-mail: IRPPC@pilgrims.com
Address: 1770 Promontory Circle
Greeley, CO 80634 USA
Website: www.pilgrims.com
18
Appendix: EBITDA Reconciliation
“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.
Source: PPC 19
PILGRIM'S PRIDE CORPORATION
Reconciliation of Adjusted EBITDA
(Unaudited) Thirteen Weeks Ended Fifty-Two Weeks Ended
December 25, 2016 December 27, 2015 December 25, 2016 December 27, 2015
(In thousands)
Net income $ 70,149 $ 63,050 $ 439,729 $ 645,962
Add:
Interest expense, net 10,158 10,091 44,197 33,875
Income tax expense (benefit) 40,844 33,045 232,906 346,796
Depreciation and amortization 46,059 42,490 180,515 158,975
Minus:
Amortization of capitalized financing costs 972 930 3,832 3,638
EBITDA 166,238 147,746 893,515 1,181,970
Add:
Foreign currency transaction losses (gains) 4,734 2,134 3,897 25,940
Restructuring charges 790 — 1,069 5,605
Minus:
Net income (loss) attributable to noncontrolling interest (469 ) (98 ) (803 ) 48
Adjusted EBITDA $ 172,231 $ 149,978 $ 899,284 $ 1,213,467
Appendix: Reconciliation of LTM EBITDA
Source: PPC
The summary unaudited consolidated income statement data for the twelve months ended December 25, 2016 (the LTM Period) have been calculated by summing
each of the unaudited thirteen week periods within the audited fifty-two week period ended December 25, 2016.
20
PILGRIM'S PRIDE CORPORATION
Reconciliation of LTM Adjusted EBITDA
(Unaudited)
Thirteen Weeks
Ended
Thirteen Weeks
Ended
Thirteen Weeks
Ended
Thirteen Weeks
Ended
LTM Ended
March 27,
2016
June 26,
2016
September 25,
2016 December 25, 2016 December 25, 2016
(In thousands)
Net income $ 118,011 $ 153,042 $ 98,527 $ 70,149 $ 439,729
Add:
Interest expense, net 11,340 10,865 11,834 10,158 44,197
Income tax expense (benefit) 62,604 78,398 51,060 40,844 232,906
Depreciation and amortization 42,391 46,293 45,772 46,059 180,515
Minus:
Amortization of capitalized financing costs 928
962
970
972
3,832
EBITDA 233,418 287,636 206,223 166,238 893,515
Add:
Foreign currency transaction losses (gains) (235 ) (4,744 ) 4,142
4,734
3,897
Restructuring charges — — 279 790 1,069
Minus:
Net income (loss) attributable to
noncontrolling interest (360 ) 156
(130 ) (469 ) (803 )
Adjusted EBITDA $ 233,543 $ 282,736 $ 210,774 $ 172,231 $ 899,284
Appendix: EBITDA Margin Reconciliation
Source: PPC
EBITDA margins have been calculated by taking the relevant unaudited EBITDA figures, then dividing by Net Revenue for the applicable period.
21
PILGRIM'S PRIDE CORPORATION
Reconciliation of EBITDA Margin
(Unaudited) Thirteen Weeks Ended Fifty-Two Weeks Ended Thirteen Weeks Ended Fifty-Two Weeks Ended
December 25,
2016
December 27,
2015
December 25,
2016
December
27, 2015
December 25,
2016
December 27,
2015
December 25,
2016
December 27,
2015
(In thousands)
Net income $ 70,149
$ 63,050
$ 439,729
$ 645,962
3.68 % 3.22 % 5.54 % 7.90 %
Add:
Interest expense, net 10,158 10,091 44,197 33,875 0.53 % 0.51 % 0.56 % 0.41 %
Income tax expense (benefit) 40,844
33,045
232,906
346,796
2.14 % 1.69 % 2.94 % 4.24 %
Depreciation and amortization 46,059
42,490
180,515
158,975
2.41 % 2.17 % 2.28 % 1.94 %
Minus: — % — % — % — %
Amortization of capitalized
financing costs 972
930
3,832
3,638
0.05 % 0.05 % 0.05 % 0.04 %
EBITDA 166,238 147,746 893,515 1,181,970 8.71 % 7.54 % 11.27 % 14.45 %
Add:
Foreign currency transaction
losses (gains) 4,734
2,134
3,897
25,940
0.25 % 0.11 % 0.05 % 0.32 %
Restructuring charges 790 — 1,069 5,605 0.04 % — % 0.01 % 0.07 %
Minus:
Net income (loss)
attributable to noncontrolling
interest (469 ) (98 ) (803 ) 48
(0.02 )% — % (0.01 )% — %
Adjusted EBITDA $ 172,231 $ 149,978 $ 899,284 $ 1,213,467 9.03 % 7.65 % 11.34 % 14.83 %
Net Revenue: $ 1,908,150 $ 1,960,780 $ 7,931,123 $ 8,180,104 $ 1,908,150 $ 1,960,780 $ 7,931,123 $ 8,180,104
Appendix: Reconciliation of Adjusted Earnings
Source: PPC
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:
22
PILGRIM'S PRIDE CORPORATION
Reconciliation of Adjusted Earnings
(Unaudited)
Thirteen Weeks Ended Fifty-Two Weeks Ended
December 25,
2016
December 27,
2015
December 25,
2016
December 27,
2015
(In thousands, except per share data)
Net income (loss) attributable to Pilgrim's Pride Corporation $ 70,618
$ 63,148
$ 440,532
$ 645,914
Loss on early extinguishment of debt —
—
—
1,470
Foreign currency transaction losses (gains) 4,734
2,134
3,897
25,940
Income (loss) before loss on early extinguishment of debt and
foreign currency transaction losses (gains) 75,352
65,282
444,429
673,324
Weighted average diluted shares of common stock outstanding 251,395
255,478
254,126
258,676
Income (loss) before loss on early extinguishment of debt and
foreign currency transaction losses (gains)
per common diluted share $ 0.30
$ 0.26
$ 1.75
$ 2.60
Appendix: Adjusted EPS Bridge
Source: PPC
A reconciliation of GAAP earnings per share (EPS) to adjusted earnings per share (EPS) is as follows:
23
PILGRIM'S PRIDE CORPORATION
Reconciliation of GAAP EPS to Adjusted EPS
(Unaudited)
Thirteen Weeks Ended Fifty-Two Weeks Ended
December 25, 2016 December 27, 2015 December 25, 2016 December 27, 2015
(In thousands, except per share data)
GAAP EPS $ 0.28
$ 0.25
$ 1.73
$ 2.50
Loss on early extinguishment of debt —
—
—
0.01
Foreign currency transaction losses (gains) 0.02
0.01
0.02
0.10
Adjusted EPS $ 0.30
$ 0.26
$ 1.75
$ 2.60
Weighted average diluted shares of common stock
outstanding 251,395
255,478
254,126
258,676
Appendix: Net Debt / Cash Position Reconciliation
Source: PPC
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:
24
PILGRIM'S PRIDE CORPORATION
Reconciliation of Net Debt
(Unaudited)
December 25,
2016
December 27,
2015
December 28,
2014
(In thousands)
Long term debt, less current maturities $ 1,011,858 $ 985,509 $ 3,980
Add: Current maturities of long term debt and notes payable 94 28,812 262
Minus: Cash and cash equivalents 120,328 439,638 576,143
Minus: Available-for-sale securities — — —
Net debt (cash position) $ 891,624 $ 574,683 $ (571,901 )
Appendix: Segment and Geographic Data
Source: PPC 25
PILGRIM'S PRIDE CORPORATION
Supplementary Selected Segment and Geographic Data
Thirteen Weeks Ended Fifty-Two Weeks Ended
December 25, 2016 December 27, 2015 December 25, 2016 December 27, 2015
(Unaudited)
(In thousands)
Sources of net sales by country of origin:
US: $ 1,599,052 $ 1,663,362 $ 6,671,403 $ 7,143,354
Mexico: 309,098 297,418 1,259,720 1,036,750
Total net sales: $ 1,908,150 $ 1,960,780 $ 7,931,123 $ 8,180,104
Sources of cost of sales by country of origin:
US: $ 1,458,931 $ 1,505,335 $ 5,929,318 $ 6,016,493
Mexico: 268,792 294,775 1,087,540 909,329
Elimination: (23 ) (23 ) (95 ) (95 )
Total cost of sales: $ 1,727,700 $ 1,800,087 $ 7,016,763 $ 6,925,727
Sources of gross profit by country of origin:
US: $ 140,121 $ 158,025 $ 742,085 $ 1,126,861
Mexico: 40,306 2,644 172,180 127,421
Elimination: 23 24 95 95
Total gross profit: $ 180,450 $ 160,693 $ 914,360 $ 1,254,377
Sources of operating income by country of origin:
US: $ 92,280 $ 116,417 $ 572,558 $ 949,610
Mexico: 32,000 (8,668 ) 140,857 95,186
Elimination: 23 24 95 95
Total operating income: $ 124,303 $ 107,773 $ 713,510 $ 1,044,891