FORM 8-K |
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) |
Emerging growth company o |
PILGRIM’S PRIDE CORPORATION | |||
Date: | February 14, 2018 | /s/ Fabio Sandri | |
Fabio Sandri | |||
Chief Financial Officer |
• | Adjusted Operating Income margins of 11.8% in U.S., 10.6% in Mexico and 3.9% in Europe operations, respectively. |
• | Adjusted EBITDA of $1.39 billion (or a 12.9% margin and +54.3% versus last year, excluding Moy Park). |
• | Acquisition of Moy Park positions us as the global leader in chicken and chicken-based 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 synergies captured ahead of plan, and are already on par with legacy operations. |
• | Completion of $141MM in strategic capital investments, including the Sanford, NC organic tray-pack facility and Prepared Foods Line, further increasing product portfolio differentiation, strengthening key customer relationships, and improving margin profile. |
• | Consolidated numbers reflect Moy Park for the entire quarter and year, including historical data in accordance to U.S. GAAP. |
• | Net Sales of $2.74 billion (+43.5% versus same quarter last year of $1.91 billion, excluding Moy Park). |
• | Net Income of $134.3 million and GAAP EPS of $0.54. |
• | Adjusted Operating Income margins of 7.3% in U.S., 4.0% in Mexico and 5.0% in Europe operations, respectively, adjusted for non-recurring items related to weather events, Moy Park acquisition and Exchange Rate fluctuations. |
• | Adjusted EBITDA of $241.0 million (or an 8.8% margin). |
Unaudited (2), In Millions, Except Per Share and Percentages | ||||||||||||||||
Fourteen Weeks Ended | Thirteen Weeks Ended | Fifty-Three Weeks Ended | Fifty-Two Weeks Ended | |||||||||||||
Dec 31, 2017 | Dec 25, 2016 | Y/Y Change | Dec 31, 2017 | Dec 25, 2016 | Y/Y Change | |||||||||||
Net Sales | $2,742.4 | $2,370.9 | +15.7% | $10,767.9 | $9,878.6 | +9.0% | ||||||||||
GAAP EPS | $0.54 | $0.28 | +92.9% | $2.79 | $1.73 | +61.3% | ||||||||||
Operating Income | $155.0 | $147.0 | +5.4% | $1,072.3 | $792.1 | +35.4% | ||||||||||
Adjusted EBITDA (1) | $241.0 | $205.4 | +17.3% | $1,388.0 | $1,029.7 | +34.8% | ||||||||||
Adjusted EBITDA Margin (1) | 8.8% | 8.7% | +0.1pts | 12.9% | 10.4% | +2.5pts |
(1) | Reconciliations for non-GAAP measures are provided in subsequent sections within this release. |
(2) | Figures have been adjusted to include full-quarter and year of Moy Park, in accordance to U.S. GAAP. |
Contact: | Dunham Winoto |
Director, Investor Relations | |
IRPPC@pilgrims.com | |
(970) 506-8192 | |
www.pilgrims.com |
PILGRIM’S PRIDE CORPORATION | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
December 31, 2017 | December 25, 2016 | |||||||
(Unaudited) | ||||||||
(In thousands, except share and par value data) | ||||||||
Cash and cash equivalents | $ | 581,510 | $ | 292,544 | ||||
Restricted cash and cash equivalents | 8,021 | 4,979 | ||||||
Trade accounts and other receivables, less allowance for doubtful accounts | 565,478 | 445,553 | ||||||
Account receivable from related parties | 2,951 | 4,010 | ||||||
Inventories | 1,255,070 | 975,608 | ||||||
Prepaid expenses and other current assets | 102,550 | 81,932 | ||||||
Assets held for sale | 708 | 5,259 | ||||||
Total current assets | 2,516,288 | 1,809,885 | ||||||
Other long-lived assets | 18,165 | 19,260 | ||||||
Identified intangible assets, net | 617,163 | 471,591 | ||||||
Goodwill | 1,001,889 | 887,221 | ||||||
Property, plant and equipment, net | 2,095,147 | 1,833,985 | ||||||
Total assets | $ | 6,248,652 | $ | 5,021,942 | ||||
Accounts payable | $ | 762,444 | $ | 790,378 | ||||
Accounts payable to related parties | 2,889 | 4,468 | ||||||
Accrued expenses | 417,342 | 347,021 | ||||||
Income taxes payable | 222,073 | 27,578 | ||||||
Current maturities of long-term debt | 47,775 | 15,712 | ||||||
Total current liabilities | 1,452,523 | 1,185,157 | ||||||
Long-term debt, less current maturities | 2,635,617 | 1,396,124 | ||||||
Deferred tax liabilities | 208,492 | 251,807 | ||||||
Other long-term liabilities | 96,359 | 102,722 | ||||||
Total liabilities | 4,392,991 | 2,935,810 | ||||||
Commitments and contingencies | ||||||||
Preferred stock, $.01 par value, 50,000,000 shares authorized; no shares issued | — | — | ||||||
Common stock, $.01 par value, 800,000,000 shares authorized; 260,167,881 and 259,682,000 shares issued at year-end 2017 and year-end 2016, respectively; 248,752,508 and 249,046,139 shares outstanding at year-end 2017 and year-end 2016, respectively | 2,602 | 307,288 | ||||||
Treasury stock, at cost, 11,415,373 shares and 10,635,861 shares at year-end 2017 and year-end 2016, respectively | (231,758 | ) | (217,117 | ) | ||||
Additional paid-in capital | 1,932,509 | 3,100,332 | ||||||
Retained earnings (accumulated deficit) | 173,943 | (782,785 | ) | |||||
Accumulated other comprehensive loss | (31,140 | ) | (329,858 | ) | ||||
Total Pilgrim’s Pride Corporation stockholders’ equity | 1,846,156 | 2,077,860 | ||||||
Noncontrolling interest | 9,505 | 8,272 | ||||||
Total stockholders’ equity | 1,855,661 | 2,086,132 | ||||||
Total liabilities and stockholders' equity | $ | 6,248,652 | $ | 5,021,942 |
PILGRIM’S PRIDE CORPORATION | ||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Fourteen Weeks Ended | Thirteen Weeks Ended | Fifty-Three Weeks Ended | Fifty-Two Weeks Ended | |||||||||||||
December 31, 2017 | December 25, 2016 | December 31, 2017 | December 25, 2016 | |||||||||||||
(In thousands, except per share data) | ||||||||||||||||
Net sales | $ | 2,742,352 | $ | 2,370,883 | $ | 10,767,863 | $ | 9,878,564 | ||||||||
Cost of sales | 2,480,548 | 2,142,013 | 9,296,249 | 8,774,581 | ||||||||||||
Gross profit | 261,804 | 228,870 | 1,471,614 | 1,103,983 | ||||||||||||
Selling, general and administrative expense | 105,508 | 81,046 | 389,517 | 310,832 | ||||||||||||
Administrative restructuring charges | 1,279 | 790 | 9,775 | 1,069 | ||||||||||||
Operating income | 155,017 | 147,034 | 1,072,322 | 792,082 | ||||||||||||
Interest expense, net of capitalized interest | 40,868 | 17,156 | 107,183 | 75,636 | ||||||||||||
Interest income | (4,130 | ) | (301 | ) | (7,730 | ) | (2,301 | ) | ||||||||
Foreign currency transaction loss (gain) | (159 | ) | 5,824 | (2,659 | ) | 4,055 | ||||||||||
Miscellaneous, net | (1,340 | ) | (2,017 | ) | (6,538 | ) | (9,344 | ) | ||||||||
Income before income taxes | 119,778 | 126,372 | 982,066 | 724,036 | ||||||||||||
Income tax expense | (14,147 | ) | 40,940 | 263,899 | 243,919 | |||||||||||
Net income | 133,925 | 85,432 | 718,167 | 480,117 | ||||||||||||
Less: Net income (loss) from Granite holdings Sarl prior to acquisition by PPC | — | 15,283 | 23,486 | 40,388 | ||||||||||||
Less: Net income (loss) attributable to noncontrolling interests | (412 | ) | (469 | ) | 102 | (803 | ) | |||||||||
Net income attributable to Pilgrim’s Pride Corporation | $ | 134,337 | $ | 70,618 | $ | 694,579 | $ | 440,532 | ||||||||
Weighted average shares of common stock outstanding: | ||||||||||||||||
Basic | 248,753 | 250,853 | 248,738 | 253,669 | ||||||||||||
Effect of dilutive common stock equivalents | 241 | 542 | 233 | 457 | ||||||||||||
Diluted | 248,994 | 251,395 | 248,971 | 254,126 | ||||||||||||
Net income attributable to Pilgrim's Pride Corporation per share of common stock outstanding: | ||||||||||||||||
Basic | $ | 0.54 | $ | 0.28 | $ | 2.79 | $ | 1.74 | ||||||||
Diluted | $ | 0.54 | $ | 0.28 | $ | 2.79 | $ | 1.73 |
PILGRIM’S PRIDE CORPORATION AND SUBSIDIARIES | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(Unaudited) | ||||||||
Fifty-Three Weeks Ended | Fifty-Two Weeks Ended | |||||||
December 31, 2017 | December 25, 2016 | |||||||
(In thousands) | ||||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 718,167 | $ | 480,117 | ||||
Adjustments to reconcile net income to cash provided by operating activities: | ||||||||
Depreciation and amortization | 277,792 | 231,708 | ||||||
Asset impairment | 5,156 | 790 | ||||||
Foreign currency transaction gain related to borrowing arrangements | (1,387 | ) | — | |||||
Amortization of bond premium | (180 | ) | — | |||||
Gain on property disposals | (506 | ) | (8,914 | ) | ||||
Loss (gain) on equity method investments | (59 | ) | 452 | |||||
Share-based compensation | 3,020 | 6,102 | ||||||
Deferred income tax expense (benefit) | (49,963 | ) | (5,034 | ) | ||||
Changes in operating assets and liabilities: | ||||||||
Trade accounts and other receivables | (82,169 | ) | (32,428 | ) | ||||
Inventories | (207,399 | ) | (33,083 | ) | ||||
Prepaid expenses and other current assets | (14,827 | ) | 19,270 | |||||
Accounts payable and accrued expenses | (22,827 | ) | 75,893 | |||||
Income taxes | 188,120 | 75,238 | ||||||
Long-term pension and other postretirement obligations | (10,864 | ) | (10,165 | ) | ||||
Other | (753 | ) | (4,584 | ) | ||||
Cash provided by operating activities | 801,321 | 795,362 | ||||||
Cash flows from investing activities: | ||||||||
Acquisitions of property, plant and equipment | (339,872 | ) | (340,960 | ) | ||||
Business acquisition | (658,520 | ) | — | |||||
Proceeds from property disposals | 4,475 | 13,375 | ||||||
Proceeds from settlement of life insurance contract | 1,845 | — | ||||||
Cash used in investing activities | (992,072 | ) | (327,585 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from notes payable to banks | — | 36,838 | ||||||
Payments on note payable to bank | — | (65,564 | ) | |||||
Proceeds from long-term debt | 1,871,818 | 593,015 | ||||||
Payments on long-term debt | (628,677 | ) | (570,015 | ) | ||||
Proceeds from equity contribution under Tax Sharing Agreement between JBS USA Food Company Holdings and Pilgrim's Pride Corporation | 5,038 | 3,690 | ||||||
Tax benefit related to share-based compensation | — | — | ||||||
Contributions from noncontrolling interests | — | 7,252 | ||||||
Payment of capitalized loan costs | (13,631 | ) | (693 | ) | ||||
Purchase of common stock under share repurchase program | (14,641 | ) | (117,884 | ) | ||||
Purchase of common stock from retirement plan participants | — | (73 | ) | |||||
Payment of cash dividends | — | (714,785 | ) | |||||
Cash provided by financing activities | 1,219,907 | (828,219 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents | 16,364 | (38,587 | ) | |||||
Increase in cash and cash equivalents | 1,045,520 | (399,029 | ) |
Cash and cash equivalents, beginning of period | 297,523 | 696,552 | ||||||
Cash and cash equivalents, end of period | $ | 1,343,043 | $ | 297,523 | ||||
Supplemental Disclosure Information: | ||||||||
Interest paid (net of amount capitalized) | $ | 81,260 | $ | 69,857 | ||||
Income taxes paid | 122,956 | 161,026 |
PILGRIM'S PRIDE CORPORATION | ||||||||||||||||
Reconciliation of Adjusted EBITDA | ||||||||||||||||
(Unaudited) | Fourteen Weeks Ended | Thirteen Weeks Ended | Fifty-Three Weeks Ended | Fifty-Two Weeks Ended | ||||||||||||
December 31, 2017 | December 25, 2016 | December 31, 2017 | December 25, 2016 | |||||||||||||
(In thousands) | ||||||||||||||||
Net income | $ | 133,925 | $ | 85,432 | $ | 718,167 | $ | 480,117 | ||||||||
Add: | ||||||||||||||||
Interest expense, net | 36,738 | 16,855 | 99,453 | 73,335 | ||||||||||||
Income tax expense (benefit) | (14,147 | ) | 40,940 | 263,899 | 243,919 | |||||||||||
Depreciation and amortization | 73,167 | 57,580 | 277,792 | 231,708 | ||||||||||||
Minus: | ||||||||||||||||
Amortization of capitalized financing costs | 2,839 | 2,465 | 5,968 | 5,324 | ||||||||||||
EBITDA | 226,844 | 198,342 | 1,353,343 | 1,023,755 | ||||||||||||
Add: | ||||||||||||||||
Foreign currency transaction losses (gains) | (159 | ) | 5,824 | (2,659 | ) | 4,055 | ||||||||||
Acquisition charges | 4,567 | — | 19,606 | — | ||||||||||||
Restructuring charges | 1,279 | 790 | 9,775 | 1,069 | ||||||||||||
Puerto Rico hurricane impact | 8,066 | — | 8,066 | — | ||||||||||||
Minus: | ||||||||||||||||
Net income (loss) attributable to noncontrolling interest | (412 | ) | (469 | ) | 102 | (803 | ) | |||||||||
Adjusted EBITDA | $ | 241,009 | $ | 205,425 | $ | 1,388,029 | $ | 1,029,682 |
PILGRIM'S PRIDE CORPORATION | ||||||||||||||||||||||||||||||||
Reconciliation of EBITDA Margin | ||||||||||||||||||||||||||||||||
(Unaudited) | Fourteen Weeks Ended | Thirteen Weeks Ended | Fifty-Three Weeks Ended | Fifty-Two Weeks Ended | Fourteen Weeks Ended | Thirteen Weeks Ended | Fifty-Three Weeks Ended | Fifty-Two Weeks Ended | ||||||||||||||||||||||||
December 31, 2017 | December 25, 2016 | December 31, 2017 | December 25, 2016 | December 31, 2017 | December 25, 2016 | December 31, 2017 | December 25, 2016 | |||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||
Net income | $ | 133,925 | $ | 85,432 | $ | 718,167 | $ | 480,117 | 4.88 | % | 3.60 | % | 6.67 | % | 4.86 | % | ||||||||||||||||
Add: | ||||||||||||||||||||||||||||||||
Interest expense, net | 36,738 | 16,855 | 99,453 | 73,335 | 1.34 | % | 0.71 | % | 0.92 | % | 0.74 | % | ||||||||||||||||||||
Income tax expense (benefit) | (14,147 | ) | 40,940 | 263,899 | 243,919 | (0.52 | )% | 1.73 | % | 2.45 | % | 2.47 | % | |||||||||||||||||||
Depreciation and amortization | 73,167 | 57,580 | 277,792 | 231,708 | 2.67 | % | 2.43 | % | 2.58 | % | 2.35 | % | ||||||||||||||||||||
Minus: | ||||||||||||||||||||||||||||||||
Amortization of capitalized financing costs | 2,839 | 2,465 | 5,968 | 5,324 | 0.10 | % | 0.10 | % | 0.06 | % | 0.05 | % | ||||||||||||||||||||
EBITDA | 226,844 | 198,342 | 1,353,343 | 1,023,755 | 8.27 | % | 8.37 | % | 12.57 | % | 10.36 | % | ||||||||||||||||||||
Add: | ||||||||||||||||||||||||||||||||
Foreign currency transaction losses (gains) | (159 | ) | 5,824 | (2,659 | ) | 4,055 | (0.01 | )% | 0.25 | % | (0.02 | )% | 0.04 | % | ||||||||||||||||||
Acquisition charges | 4,567 | — | 19,606 | — | 0.17 | % | — | % | 0.18 | % | — | % | ||||||||||||||||||||
Restructuring charges | 1,279 | 790 | 9,775 | 1,069 | 0.05 | % | 0.03 | % | 0.09 | % | 0.01 | % | ||||||||||||||||||||
Puerto Rico hurricane impact | 8,066 | — | 8,066 | — | 0.29 | % | — | % | 0.07 | % | — | % | ||||||||||||||||||||
Minus: | ||||||||||||||||||||||||||||||||
Net income (loss) attributable to noncontrolling interest | (412 | ) | (469 | ) | 102 | (803 | ) | (0.02 | )% | (0.02 | )% | — | % | (0.01 | )% | |||||||||||||||||
Adjusted EBITDA | $ | 241,009 | $ | 205,425 | $ | 1,388,029 | $ | 1,029,682 | 8.79 | % | 8.66 | % | 12.89 | % | 10.42 | % | ||||||||||||||||
Net Revenue: | $ | 2,742,352 | $ | 2,370,883 | $ | 10,767,863 | $ | 9,878,564 | $ | 2,742,352 | $ | 2,370,883 | $ | 10,767,863 | $ | 9,878,564 |
PILGRIM'S PRIDE CORPORATION | |||||||||||||||
Reconciliation of Adjusted Operating Income | |||||||||||||||
(Unaudited) | |||||||||||||||
Fourteen Weeks Ended | Thirteen Weeks Ended | Fifty-Three Weeks Ended | Fifty-Two Weeks Ended | ||||||||||||
December 31, 2017 | December 25, 2016 | December 31, 2017 | December 25, 2016 | ||||||||||||
(In thousands) | |||||||||||||||
GAAP operating income (US operations) | $ | 122,370 | $ | 92,279 | $ | 841,491 | $ | 572,559 | |||||||
Administrative restructuring charges | 529 | 790 | 9,025 | 1,069 | |||||||||||
Acquisition charges | 4,567 | — | 19,606 | — | |||||||||||
Puerto Rico hurricane impact | 8,066 | — | 8,066 | — | |||||||||||
Adjusted operating income (US operations) | $ | 135,532 | $ | 93,069 | $ | 878,188 | $ | 573,628 | |||||||
Adjusted operating income margin (US operations) | 7.19 | % | 5.82 | % | 11.80 | % | 8.60 | % | |||||||
GAAP operating income (Mexico operations) | $ | 7,390 | $ | 32,000 | $ | 153,631 | $ | 140,856 | |||||||
Foreign exchange | 6,100 | — | (13,000 | ) | — | ||||||||||
Adjusted operating income (Mexico operations) | $ | 13,490 | $ | 32,000 | $ | 140,631 | $ | 140,856 | |||||||
Adjusted operating income margin (Mexico operations) | 4.04 | % | 10.35 | % | 10.59 | % | 11.18 | % | |||||||
GAAP operating income (Europe operations) | $ | 25,231 | $ | 22,731 | $ | 77,105 | $ | 78,572 | |||||||
Administrative restructuring charges | 750 | — | 750 | — | |||||||||||
Adjusted operating income (Europe operations) | $ | 25,981 | $ | 22,731 | $ | 77,855 | $ | 78,572 | |||||||
Adjusted operating income margin (Europe operations) | 4.97 | % | 4.91 | % | 3.90 | % | 4.03 | % |
PILGRIM'S PRIDE CORPORATION | ||||||||||||||||
Supplementary Selected Segment and Geographic Data | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Fourteen Weeks Ended | Thirteen Weeks Ended | Fifty-Three Weeks Ended | Fifty-Two Weeks Ended | |||||||||||||
December 31, 2017 | December 25, 2016 | December 31, 2017 | December 25, 2016 | |||||||||||||
(In thousands) | ||||||||||||||||
Sources of net sales by country of origin: | ||||||||||||||||
US: | $ | 1,886,133 | $ | 1,599,052 | $ | 7,443,222 | $ | 6,671,403 | ||||||||
Europe: | 522,465 | 462,733 | 1,996,319 | 1,947,441 | ||||||||||||
Mexico | 333,754 | 309,098 | 1,328,322 | 1,259,720 | ||||||||||||
Total net sales: | $ | 2,742,352 | $ | 2,370,883 | $ | 10,767,863 | $ | 9,878,564 | ||||||||
Sources of cost of sales by country of origin: | ||||||||||||||||
US: | $ | 1,691,586 | $ | 1,458,670 | $ | 6,348,411 | $ | 5,929,318 | ||||||||
Europe: | 472,016 | 414,576 | 1,808,139 | 1,757,818 | ||||||||||||
Mexico | 316,972 | 268,791 | 1,139,794 | 1,087,540 | ||||||||||||
Elimination: | (26 | ) | (24 | ) | (95 | ) | (95 | ) | ||||||||
Total cost of sales: | $ | 2,480,548 | $ | 2,142,013 | $ | 9,296,249 | $ | 8,774,581 | ||||||||
Sources of gross profit by country of origin: | ||||||||||||||||
US: | $ | 194,549 | $ | 140,382 | $ | 1,094,811 | $ | 742,085 | ||||||||
Europe: | 50,446 | 48,157 | 188,180 | 189,623 | ||||||||||||
Mexico | 16,783 | 40,306 | 188,528 | 172,180 | ||||||||||||
Elimination: | 26 | 25 | 95 | 95 | ||||||||||||
Total gross profit: | $ | 261,804 | $ | 228,870 | $ | 1,471,614 | $ | 1,103,983 | ||||||||
Sources of operating income by country of origin: | ||||||||||||||||
US: | $ | 122,370 | $ | 92,279 | $ | 841,491 | $ | 572,559 | ||||||||
Europe: | 25,231 | 22,731 | 77,105 | 78,572 | ||||||||||||
Mexico | 7,390 | 32,000 | 153,631 | 140,856 | ||||||||||||
Elimination: | 26 | 24 | 95 | 95 | ||||||||||||
Total operating income: | $ | 155,017 | $ | 147,034 | $ | 1,072,322 | $ | 792,082 |