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): August 2, 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))
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
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 August 3, 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 August 2, 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: | August 2, 2017 | /s/ Fabio Sandri | |
Fabio Sandri | |||
Chief Financial Officer | |||
Exhibit Index
Exhibit 99.1 Press release dated August 2, 2017.
Pilgrim’s Pride Corporation
(NASDAQ: PPC)
Financial Results for Second Quarter Ended June 25, 2017
Cautionary Notes and Forward-Looking Statements
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..
2
Pullet placements are flat year on year, indicating modest production growth in 2017.
2017 Pullet Placements Flat
Source: USDA 3
Intended Pullet Placements
Decline in Egg Productivity Offsetting
Modest Layer Growth
Source: USDA 4
Hatching layers are up in June but only +0.9% YTD, to support less productive new
breed.
Lower Hatchability Reduces Impact of
+2% YTD Egg Sets
Source: USDA 5
Hatchery Utilization Close to Peak Levels
6 Source: Agristats/EMI
84.00%
85.00%
86.00%
87.00%
88.00%
89.00%
90.00%
91.00%
92.00%
93.00%
94.00%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
%
Hatchery Utilization
2017 2016 5 year avg.
2017 Chick Placements Modestly Higher
Source: USDA 7
Avg Weight Trending Down; Jumbo Bird Share Not Growing
After Significant Increase Since 2011
Source: USDA 8
Cold Storage Levels Below 2016
Source: USDA
Overall inventories -0.8% vs 2016 levels, driven by strong retail and improved demand
for export-oriented cuts.
9
Cutout Values Above 2016 and Closer to 5-Year Levels
Source: PPC
10
Cutout Value
Wings Counter-seasonally Strong,
Other Parts Tracking to 5-year Average
Source: USDA 11
USDA Boneless/Skinless Breast NE USDA Tenders NE
USDA Leg Quarters USDA Whole Wings NE
12
Strength in Small Bird and Retail Contracts Continues,
In-line with Seasonality
EMI WOG 2.5-4 LBS
Source: EMI
Corn Stocks Remain Close to Record High Levels
Global stocks continue to stay at record high in ‘16, projected to be lower in ‘17 crop year.
USDA lowered global stocks-to-use in both ‘16 and ’17.
Source: USDA 13
Global Soybean Inventories Elevated
Global inventories of soybeans remain at record high levels, with 2017 projected to
remain well supplied.
Demand for oilseed products estimated to grow to finish out the 2016 crop year.
Source: USDA 14
Second Quarter 2017 Financial Review
Case-ready and small birds strength
continues while portfolio strategy
captured significant rebound in
commodity segment; MX operating
results remained strong.
SG&A higher due to addition of GNP
and investments in brands in USA and
Mexico.
Adjusted Q2-17 EBITDA well above Q2-
16 and was among the top quarterly
performance in the U.S.
Main Indicators ($M) Q2-17 Q2-16
Net Revenue 2,251.6 2,028.3
Gross Profit 425.4 286.1
SG&A 61.6 49.5
Operating Income 359.4 236.6
Net Interest 14.9 10.9
Net Income 233.6 152.9
Earnings Per Share
(EPS)
0.94 0.60
Adjusted EBITDA* 420.6 282.7
Adjusted EBITDA
Margin*
18.7% 13.9%
* 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 1,882.1 369.5
Operating Income 277.6 81.8
Operating Income
Margin
14.8% 22.1%
15 Source: PPC
1,316.3
Solid Balance Sheet, With Plenty of Room for Strategic Actions
Source: PPC
Cash Flow From Operations generation of $255MM in the quarter due to strong
operating performance.
Net debt multiple is 1.1x LTM EBITDA, below target of 2-3x, underlining our capability
to fulfill strategic actions.
16
307.1
Net Debt ($MM)
1,140.4
Second Quarter 2017 Capital Spending
Capex (US$M)
Source: PPC
Strong Free Cash Flow generation has enabled us to direct more capital spending
towards identified projects with rapid payback and structural projects.
New strategic projects will support key customers growth and de-emphasize our
exposure to commodity markets by yielding a more differentiated portfolio.
17
Capex (US$M)
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
19
Appendix: EBITDA Reconciliation
Source: PPC.
“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.
20 Source: PPC
PILGRIM'S PRIDE CORPORATION
Reconciliation of Adjusted EBITDA
(Unaudited) Thirteen Weeks Ended Twenty-Six Weeks Ended
June 25, 2017 June 26, 2016 June 25, 2017 June 26, 2016
(In thousands)
Net income $ 234,073 $ 153,042 $ 328,536 $ 271,053
Add:
Interest expense, net 14,891 10,865 26,975 22,205
Income tax expense 113,218 78,398 161,119 141,002
Depreciation and amortization 57,281 46,293 107,671 88,683
Minus:
Amortization of capitalized financing costs 997 962 1,947 1,889
EBITDA 418,466 287,636 622,354 521,054
Add:
Foreign currency transaction gains (1,810 ) (4,744 ) (1,191 ) (4,979 )
Restructuring charges 4,349 — 4,349 —
Minus:
Net income (loss) attributable to
noncontrolling interest 432
156
974
(204 )
Adjusted EBITDA $ 420,573 $ 282,736 $ 624,538 $ 516,279
Appendix: Reconciliation of LTM EBITDA
21
Source: PPC.
The summary unaudited consolidated income statement data for the twelve months ended June 25, 2017 (the LTM Period) have been calculated by
subtracting the applicable unaudited consolidated income statement data for the six months ended June 26, 2016 from the sum of (1) the applicable
audited consolidated income statement data for the year ended December 25, 2016 and (2) the applicable audited consolidated income statement
data for the six months ended June 25, 2017.
Source: PPC
PILGRIM'S PRIDE CORPORATION
Reconciliation of LTM Adjusted EBITDA
(Unaudited)
Thirteen
Weeks Ended
Thirteen
Weeks Ended
Thirteen
Weeks Ended
Thirteen
Weeks Ended
LTM Ended
September 25,
2016
December 25,
2016
March 26,
2017
June 25,
2017
June 25,
2017
(In thousands)
Net income $ 98,527 $ 70,149 $ 94,463 $ 234,073 $ 497,212
Add:
Interest expense, net 11,834 10,158 12,084 14,891 48,967
Income tax expense 51,060 40,844 47,901 113,218 253,023
Depreciation and amortization 45,772 46,059 50,390 57,281 199,502
Minus:
Amortization of capitalized
financing costs 970
972
951
997
3,890
EBITDA 206,223 166,238 203,887 418,466 994,814
Add:
Foreign currency transaction losses
(gains) 4,142
4,734
619
(1,810 ) 7,685
Restructuring charges 279 790 — 4,349 5,418
Minus:
Net income (loss) attributable to
noncontrolling interest (130 ) (469 ) 542
432
375
Adjusted EBITDA $ 210,774 $ 172,231 $ 203,964 $ 420,573 $ 1,007,542
Appendix: EBITDA Margin Reconciliation
22
Source: PPC.
EBITDA margins have been calculated by taking the relevant unaudited EBITDA figures, then dividing by Net Revenue for the applicable period.
Source: PPC
PILGRIM'S PRIDE CORPORATION
Reconciliation of EBITDA Margin
(Unaudited) Thirteen Weeks Ended Twenty-Six Weeks Ended Thirteen Weeks Ended Twenty-Six Weeks Ended
June 25,
2017
June 26,
2016
June 25,
2017
June 26,
2016
June 25,
2017
June 26,
2016
June 25,
2017
June 26,
2016
(In thousands)
Net income from
continuing operations $ 234,073
$ 153,042
$ 328,536
$ 271,053
10.40 % 7.55 % 7.69 % 6.79 %
Add:
Interest expense, net 14,891 10,865 26,975 22,205 0.66 % 0.54 % 0.63 % 0.56 %
Income tax expense 113,218
78,398
161,119
141,002
5.03 % 3.87 % 3.77 % 3.53 %
Depreciation and
amortization 57,281
46,293
107,671
88,683
2.54 % 2.28 % 2.52 % 2.22 %
Minus:
Amortization of
capitalized financing
costs 997
962
1,947
1,889
0.04 % 0.05 % 0.05 % 0.05 %
EBITDA 418,466 287,636 622,354 521,054 18.59 % 14.19 % 14.56 % 13.05 %
Add:
Foreign currency
transaction gains (1,810 ) (4,744 ) (1,191 ) (4,979 ) (0.08
)
% (0.23
)
% (0.03
)
% (0.12
)
%
Restructuring charges 4,349 — 4,349 — 0.19 % — % 0.10 % — %
Minus:
Net income (loss)
attributable to
noncontrolling interest 432
156
974
(204 ) 0.02 % 0.01 % 0.02 % (0.01
)
%
Adjusted EBITDA $ 420,573 $ 282,736 $ 624,538 $ 516,279 18.68 % 13.95 % 14.61 % 12.94 %
Net Revenue: $ 2,251,604 $ 2,028,315 $ 4,272,096 $ 3,991,252 $ 2,251,604 $ 2,028,315 $ 4,272,096 $ 3,991,252
Appendix: Reconciliation of Adjusted Earnings
23
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:
Source: PPC
PILGRIM'S PRIDE CORPORATION
Reconciliation of Adjusted Earnings
(Unaudited)
Thirteen Weeks Ended Twenty-Six Weeks Ended
June 25,
2017
June 26,
2016
June 25,
2017
June 26,
2016
(In thousands, except per share data)
Net income attributable to Pilgrim's Pride Corporation $ 233,641
$ 152,886
$ 327,562
$ 271,257
Loss on early extinguishment of debt —
—
—
—
Foreign currency transaction gains (1,810 ) (4,744 ) (1,191 ) (4,979 )
Income before loss on early extinguishment of debt and foreign
currency transaction gains 231,831
148,142
326,371
266,278
Weighted average diluted shares of common stock outstanding 248,973
254,944
248,950
255,045
Income before loss on early extinguishment of debt and foreign
currency transaction gains
per common diluted share $ 0.93
$ 0.58
$ 1.31
$ 1.04
Appendix: Adjusted EPS Bridge
24
Source: PPC.
A reconciliation of GAAP earnings per share (EPS) to adjusted earnings per share (EPS) is as follows:
Source: PPC
PILGRIM'S PRIDE CORPORATION
Reconciliation of GAAP EPS to Adjusted EPS
(Unaudited)
Thirteen Weeks Ended Twenty-Six Weeks Ended
June 25, 2017 June 26, 2016 June 25, 2017 June 26, 2016
(In thousands, except per share data)
GAAP EPS $ 0.94
$ 0.60
$ 1.32
$ 1.06
Loss on early extinguishment of debt —
—
—
—
Foreign currency transaction gains (0.01 ) (0.02 ) (0.01 ) (0.02 )
Adjusted EPS $ 0.93
$ 0.58
$ 1.31
$ 1.04
Weighted average diluted shares of common stock outstanding 248,973
254,944
248,950
255,045
Appendix: Net Debt / Cash Position Reconciliation
25
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:
Source: PPC
PILGRIM'S PRIDE CORPORATION
Reconciliation of Net Debt
(Unaudited)
June 25,
2017
June 26,
2016
December 25,
2016
December 27,
2015
December 28,
2014
(In thousands)
Long term debt, less current maturities $ 1,404,264
$ 1,117,979
$ 1,011,858
$ 985,509
$ 3,980
Add: Current maturities of long term debt and notes
payable 40,098
90
94
28,812
262
Minus: Cash and cash equivalents 303,937
41,047
120,328
439,638
576,143
Net debt (cash position) $ 1,140,425
$ 1,077,022
$ 891,624
$ 574,683
$ (571,901 )
Appendix: Segment and Geographic Data
26
Source: PPC. Source: PPC
PILGRIM'S PRIDE CORPORATION
Supplementary Selected Segment and Geographic Data
Thirteen Weeks Ended Twenty-Six Weeks Ended
June 25, 2017 June 26, 2016 June 25, 2017 June 26, 2016
(Unaudited)
(In thousands)
Sources of net sales by country of origin:
US: $ 1,882,142 $ 1,677,445 $ 3,618,547 $ 3,347,726
Mexico: 369,462 350,870 653,549 643,526
Total net sales: $ 2,251,604 $ 2,028,315 $ 4,272,096 $ 3,991,252
Sources of cost of sales by country of origin:
US: $ 1,547,247 $ 1,471,269 $ 3,095,346 $ 2,925,224
Mexico: 278,993 270,939 536,205 542,383
Elimination: (23 ) (24 ) (47 ) (48 )
Total cost of sales: $ 1,826,217 $ 1,742,184 $ 3,631,504 $ 3,467,559
Sources of gross profit by country of origin:
US: $ 334,894 $ 206,176 $ 523,200 $ 422,502
Mexico: 90,470 79,931 117,345 101,143
Elimination: 23 24 47 48
Total gross profit: $ 425,387 $ 286,131 $ 640,592 $ 523,693
Sources of operating income by country of origin:
US: $ 277,602 $ 164,494 $ 411,158 $ 339,084
Mexico: 81,777 72,093 100,549 86,253
Elimination: 23 24 47 48
Total operating income: $ 359,402 $ 236,611 $ 511,754 $ 425,385