×

Pilgrim’s Pride Reports Operating Income of $152 Million and Operating Margin of 7.5% for the First Quarter of 2017

GREELEY, Colo., May 03, 2017 (GLOBE NEWSWIRE) -- Pilgrim’s Pride Corporation (NASDAQ:PPC) reports first quarter 2017 financial results.

First Quarter Highlights

  • Net Sales of $2.02 billion.
  • Net Income of $93.9 million, GAAP EPS of $0.38.
  • Operating Income margins of 7.7% in U.S. and 6.6% in Mexico operations, respectively.
  • Adjusted EBITDA of $204.0 million (or a 10.1% margin).
  • Cash Flow from Operations of $61.5 million.
  • GNP integration is on track with additional synergies already identified increasing total annualized run-rate to $30 million, up from $20 million before.
  • Completion of previously announced capital investments, including strategic projects in organic and NAE, will deliver better product mix to reduce impact of commodity markets, strengthen operational efficiencies as well as tailored customer needs, and improve margin profile.

Unaudited, In Millions, Except Per Share and Percentages
Thirteen Weeks Ended
Mar 26, 2017 Mar 27, 2016 Change
Net Sales$2,020.5 $1,962.9 +2.9%
GAAP EPS$0.38 $0.46 -17.4%
Operating Income$152.4 $188.8 -19.3%
Adjusted EBITDA (1)$204.0 $233.5 -12.6%
Adjusted EBITDA Margin (1) 10.1% 11.9% -1.8pts


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

“In-line with expectations, our Q1 results improved sequentially from Q4 driven by stronger results at our U.S. operations while Mexico continued to deliver solid performance despite less favorable FX impact on cost. Highlighting the diversity of our portfolio of bird sizes, small bird and tray-pack have remained strong during the period, while large bird deboning has rebounded from a weaker than expected January and continued to improve with stronger exports and increasing domestic demand. With summer grilling season nearing and a supportive export environment, we expect profits for our large birds to further increase, given the improved cutout. Our exposure to multiple bird sizes through our well-balanced portfolio will provide an opportunity for us to capture the improvement in performance across all bird segments,” stated Bill Lovette, Chief Executive Officer of Pilgrim's.

“The GNP integration is proceeding well and we have already identified additional synergies to add to the prior $20 million target, which puts us at a higher, revised annualized run-rate of $30 million. We have a sustainable competitive advantage in the upper Midwest and the potential to expand into new markets with the Gold’n Plump brand as well as the new premium Just BARE chicken in the “better for you” category. We already started to grow and leverage our combined product offerings by introducing a new line of fully-cooked sausages under the Gold’n Plump brand to complement the NAE veg-fed fully cooked line of artisanal chicken sausages we launched recently, giving us a great solution to satisfy every consumer segment in this growing category.”

“The completion of some of our previously announced capital investments, including strategic projects in organic and NAE segments, will further diversify our portfolio by improving mix and offering more differentiated, customized solutions as well as innovative products to serve key customer requirements, reducing the impact of commodity markets, and further raising our margin profile. We are also increasing our capital investment target for 2017 to $250 million from $220 million to reflect the acquisition of GNP, higher than depreciation and just slightly below last year’s record level.”

Conference Call Information

A conference call to discuss Pilgrim’s quarterly results will be held tomorrow, May 4, 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: http://services.choruscall.com/links/ppc170504.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 August 4, 2017.

About Pilgrim’s Pride

Pilgrim’s employs approximately 41,900 people and operates chicken processing plants and prepared-foods facilities in 14 states, Puerto Rico and Mexico. 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. 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: 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 as well as other risks described under “Risk Factors” in the Company’s Annual Report on Form 10-K and subsequent filings with the Securities and Exchange Commission. Pilgrim’s Pride Corporation undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

PILGRIM’S PRIDE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
March 26, 2017 December 25, 2016
(Unaudited)
(In thousands)
Cash and cash equivalents $30,762 $120,328
Restricted cash 4,415 4,979
Trade accounts and other receivables, less allowance for doubtful accounts 367,351 317,170
Account receivable from related parties 3,282 3,913
Inventories 924,169 813,262
Income taxes receivable 6,754
Prepaid expenses and other current assets 77,587 57,457
Assets held for sale 5,015 5,259
Total current assets 1,419,335 1,322,368
Other long-lived assets 16,509 15,710
Identified intangible assets, net 121,880 38,593
Goodwill 222,778 125,607
Property, plant and equipment, net 1,709,843 1,505,940
Total assets $3,490,345 $3,008,218
Accounts payable $575,781 $555,097
Account payable to related parties 5,089 1,421
Accrued expenses and other current liabilities 284,834 290,699
Income taxes payable 50,993 20,990
Current maturities of long-term debt 96 94
Total current liabilities 916,793 868,301
Long-term debt, less current maturities 1,346,990 1,011,858
Deferred tax liabilities 158,494 142,651
Other long-term liabilities 88,717 88,661
Total liabilities 2,510,994 2,111,471
Common stock 2,602 2,597
Treasury stock (231,758) (217,117)
Additional paid-in capital 1,688,197 1,686,742
Accumulated deficit (426,714) (520,635)
Accumulated other comprehensive loss (62,921) (64,243)
Total Pilgrim’s Pride Corporation stockholders’ equity 969,406 887,344
Noncontrolling interest 9,945 9,403
Total stockholders’ equity 979,351 896,747
Total liabilities and stockholders’ equity $3,490,345 $3,008,218


PILGRIM’S PRIDE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Thirteen Weeks Ended
March 26, 2017 March 27, 2016
(In thousands, except per share data)
Net sales $2,020,492 $1,962,937
Cost of sales 1,805,287 1,725,375
Gross profit 215,205 237,562
Selling, general and administrative expense 62,853 48,788
Operating income 152,352 188,774
Interest expense, net of capitalized interest 12,386 12,033
Interest income (302) (693)
Foreign currency transaction loss (gain) 619 (235)
Miscellaneous, net (2,715) (2,946)
Income before income taxes 142,364 180,615
Income tax expense 47,901 62,604
Net income 94,463 118,011
Less: Net income (loss) attributable to noncontrolling interests 542 (360)
Net income attributable to Pilgrim’s Pride Corporation $93,921 $118,371
Weighted average shares of common stock outstanding:
Basic 248,692 254,807
Effect of dilutive common stock equivalents 234 340
Diluted 248,926 255,147
Net income attributable to Pilgrim's Pride Corporation per share of common stock outstanding:
Basic $0.38 $0.46
Diluted $0.38 $0.46


PILGRIM’S PRIDE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Thirteen Weeks Ended
March 26, 2017 March 27, 2016
(In thousands)
Cash flows from operating activities:
Net income $94,463 $118,011
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization 50,390 42,391
Foreign currency transaction losses 2,158
Gain on property disposals 118 (129)
Loss on equity method investments (13)
Share-based compensation 1,460 880
Deferred income tax expense (benefit) 13,330 (215)
Changes in operating assets and liabilities:
Trade accounts and other receivables (33,681) (1,894)
Inventories (54,448) 22,829
Prepaid expenses and other current assets (16,715) 7,023
Accounts payable, accrued expenses and other current liabilities (18,072) (55,990)
Income taxes 25,380 55,261
Long-term pension and other postretirement obligations (1,633) (2,311)
Other operating assets and liabilities (1,283) (362)
Cash provided by operating activities 61,454 185,494
Cash flows from investing activities:
Acquisitions of property, plant and equipment (114,487) (37,074)
Business acquisition (359,698)
Proceeds from property disposals 181 610
Cash used in investing activities (474,004) (36,464)
Cash flows from financing activities:
Proceeds from note payable to bank 8,885
Payments on note payable to bank (16,034)
Proceeds from revolving line of credit 662,795
Payments on revolving line of credit, long-term borrowings and capital lease obligations (330,772) (21)
Proceeds from equity contribution under Tax Sharing Agreement between JBS USA Food Company Holdings and Pilgrim's Pride Corporation 5,038 3,691
Payment of capitalized loan costs (13)
Purchase of common stock under share repurchase program (14,641) (2,657)
Cash used in financing activities 322,420 (6,149)
Increase (decrease) in cash, cash equivalents and restricted cash (90,130) 142,881
Cash, cash equivalents and restricted cash, beginning of period 125,307 439,638
Cash, cash equivalents and restricted cash, end of period $35,177 $582,519


PILGRIM’S PRIDE CORPORATION

Selected Financial Information

(Unaudited)

“EBITDA” is defined as the sum of net income (loss) plus interest, taxes, depreciation and amortization. “Adjusted EBITDA” is calculated by adding to EBITDA certain items of expense and deducting from EBITDA certain items of income that we believe are not indicative of our ongoing operating performance consisting of: (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.

PILGRIM'S PRIDE CORPORATION
Reconciliation of Adjusted EBITDA
(Unaudited) Thirteen Weeks Ended
March 26, 2017 March 27, 2016
(In thousands)
Net income $94,463 $118,011
Add:
Interest expense, net 12,084 11,340
Income tax expense (benefit) 47,901 62,604
Depreciation and amortization 50,390 42,391
Minus:
Amortization of capitalized financing costs 951 928
EBITDA 203,887 233,418
Add:
Foreign currency transaction losses (gains) 619 (235)
Restructuring charges
Minus:
Net income (loss) attributable to noncontrolling interest 542 (360)
Adjusted EBITDA $203,964 $233,543


The summary unaudited consolidated income statement data for the twelve months ended March 26, 2017 (the LTM Period) have been calculated by subtracting the applicable unaudited consolidated income statement data for the three months ended March 27, 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 three months ended March 26, 2017.

PILGRIM'S PRIDE CORPORATION
Reconciliation of LTM Adjusted EBITDA
(Unaudited) Thirteen Weeks
Ended
Thirteen Weeks
Ended
Thirteen Weeks
Ended
Thirteen Weeks
Ended
LTM Ended
June 26,
2016
September 25,
2016
December 25,
2016
March 26,
2017
March 26,
2017
(In thousands)
Net income $153,042 $98,527 $70,149 $94,463 $416,181
Add:
Interest expense, net 10,865 11,834 10,158 12,084 44,941
Income tax expense (benefit) 78,398 51,060 40,844 47,901 218,203
Depreciation and amortization 46,293 45,772 46,059 50,390 188,514
Minus:
Amortization of capitalized financing costs 962 970 972 951 3,855
EBITDA 287,636 206,223 166,238 203,887 863,984
Add:
Foreign currency transaction losses (gains) (4,744) 4,142 4,734 619 4,751
Restructuring charges 279 790 1,069
Minus:
Net income (loss) attributable to noncontrolling interest 156 (130) (469) 542 99
Adjusted EBITDA $282,736 $210,774 $172,231 $203,964 $869,705



EBITDA margins have been calculated by taking the relevant unaudited EBITDA figures, then dividing by Net Revenue for the applicable period.

PILGRIM'S PRIDE CORPORATION
Reconciliation of EBITDA Margin
(Unaudited) Thirteen Weeks Ended Thirteen Weeks Ended
March 26,
2017
March 27,
2016
March 26,
2017
March 27,
2016
(In thousands)
Net income from continuing operations $94,463 $118,011 4.68% 6.01%
Add:
Interest expense, net 12,084 11,340 0.60% 0.58%
Income tax expense (benefit) 47,901 62,604 2.37% 3.19%
Depreciation and amortization 50,390 42,391 2.49% 2.16%
Minus:
Amortization of capitalized financing costs 951 928 0.05% 0.05%
EBITDA 203,887 233,418 10.09% 11.89%
Add:
Foreign currency transaction losses (gains) 619 (235) 0.03% (0.01)%
Restructuring charges % %
Minus:
Net income (loss) attributable to noncontrolling interest 542 (360) 0.03% (0.02)%
Adjusted EBITDA $203,964 $233,543 10.09% 11.90%
Net Revenue: $2,020,492 $1,962,937 $2,020,492 $1,962,937


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:

PILGRIM'S PRIDE CORPORATION
Reconciliation of Adjusted Earnings
(Unaudited)
Thirteen Weeks Ended
March 26,
2017
March 27,
2016
(In thousands, except per share data)
Net income (loss) attributable to Pilgrim's Pride Corporation $93,921 $118,371
Loss on early extinguishment of debt
Foreign currency transaction losses (gains) 619 (235)
Income (loss) before loss on early extinguishment of debt and foreign currency transaction losses (gains) 94,540 118,136
Weighted average diluted shares of common stock outstanding 248,926 255,147
Income (loss) before loss on early extinguishment of debt and foreign currency transaction losses (gains) per common diluted share $0.38 $0.46



A reconciliation of GAAP earnings per share (EPS) to adjusted earnings per share (EPS) is as follows:

PILGRIM'S PRIDE CORPORATION
Reconciliation of GAAP EPS to Adjusted EPS
(Unaudited)
Thirteen Weeks Ended
March 26, 2017 March 27, 2016
(In thousands, except per share data)
GAAP EPS$0.38 $0.46
Loss on early extinguishment of debt
Foreign currency transaction losses (gains)
Adjusted EPS$0.38 $0.46
Weighted average diluted shares of common stock outstanding248,926 255,147


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:

PILGRIM'S PRIDE CORPORATION
Reconciliation of Net Debt
(Unaudited)
March 26,
2017
March 27,
2016
December 25,
2016
December 27,
2015
December 28,
2014
(In thousands)
Long term debt, less current maturities1,346,990 $986,400 $1,011,858 $985,509 $3,980
Add: Current maturities of long term debt and notes payable96 21,665 94 28,812 262
Minus: Cash and cash equivalents30,762 574,888 120,328 439,638 576,143
Minus: Available-for-sale securities
Net debt (cash position)$1,316,324 $433,177 $891,624 $574,683 $(571,901)


PILGRIM'S PRIDE CORPORATION
Supplementary Selected Segment and Geographic Data
Thirteen Weeks Ended
March 26, 2017 March 27, 2016
(Unaudited)
(In thousands)
Sources of net sales by country of origin:
US: $1,736,405 $1,670,281
Mexico: 284,087 292,656
Total net sales: $2,020,492 $1,962,937
Sources of cost of sales by country of origin:
US: $1,548,099 $1,453,955
Mexico: 257,212 271,444
Elimination: (24) (24)
Total cost of sales: $1,805,287 $1,725,375
Sources of gross profit by country of origin:
US: $188,306 $216,326
Mexico: 26,875 21,212
Elimination: 24 24
Total gross profit: $215,205 $237,562
Sources of operating income by country of origin:
US: $133,556 $174,590
Mexico: 18,772 14,160
Elimination: 24 24
Total operating income: $152,352 $188,774


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

Source:Pilgrim's Pride Corporation