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Pilgrim’s Pride Reports Operating Income of $372 Million and GAAP EPS of $0.93 for the Third Quarter of 2017

GREELEY, Colo., Nov. 07, 2017 (GLOBE NEWSWIRE) -- Pilgrim’s Pride Corporation (NASDAQ:PPC) reports third quarter 2017 financial results.

Third Quarter Highlights

  • Consolidated numbers reflect Moy Park for the entire quarter, including historical data in accordance to U.S. GAAP.
  • Net Sales of $2.79 billion (+37.4% versus same quarter last year of $2.03 billion, excluding Moy Park).
  • Net Income of $232.7 million.
  • Adjusted Operating Income margins of 16.6% in U.S., 13.4% in Mexico and 4.1% in Europe operations, respectively.
  • Adjusted EBITDA of $463.6 million (or a 16.6% margin) and Adjusted EPS of $0.98.
  • Excluding Moy Park: Net Sales was $2.28 billion, Adjusted Operating Income was $367.7 million, Adjusted EBITDA was $427.6 million (or an 18.8% margin).
  • Acquisition of Moy Park positions us as the global leader in chicken and 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 synergy captured ahead of expectations.


Unaudited (2), In Millions, Except Per Share and Percentages
Thirteen Weeks Ended
Sep 24, 2017 Sep 25, 2016 Change
Net Sales$2,793.9 $2,495.3 +12.0%
GAAP EPS$0.93 $0.39 +138.5%
Operating Income$372.2 $176.8 +110.6%
Adjusted EBITDA (1)$463.6 $237.4 +95.3%
Adjusted EBITDA Margin (1) 16.6% 9.5% +7.1pts

(1) Reconciliations for non-GAAP measures are provided in subsequent sections within this release.
(2) Figures have been adjusted to include full-quarter of Moy Park, in accordance to U.S. GAAP.

“During Q3, our U.S. operations were robust across all business units and Mexico performed even better than our expectations. The results once again demonstrated the strength and diversity of our portfolio of bird sizes, and is what fundamentally differentiates us from the competition, giving us the potential to reduce volatility and generate higher margins over time. Despite greater availability of alternative protein, we saw strong demand for chicken during grilling season and we expect a continuation of chicken as a choice protein in domestic and international markets,” stated Bill Lovette, Chief Executive Officer of Pilgrim's.

“We closed the acquisition of Moy Park last September and are very excited about the potential opportunities in Europe because it creates a stronger, more diverse and more stable global chicken and prepared foods leader in Pilgrim’s. The new European operations align with our strategic priorities as we continue expanding our geographical and brands footprint, and extending our global poultry leadership position into attractive new markets while providing us a strong platform for future growth in the region.”

“We continue to increase GNP performance, and margins have increased by 600 bps since we acquired the business in Q1. The integration is tracking above expectations and we are well ahead in delivering the previously announced $30 million synergy target. Together with the success we had in improving the profitability of the acquired assets in Mexico relative to the legacy operations, we believe we have the method and the team to continue to grow the profitability of our European business.”

Conference Call Information

A conference call to discuss Pilgrim’s quarterly results will be held tomorrow, November 8, 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/ppc3q2017.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 February 8, 2018.

About Pilgrim’s Pride

Pilgrim’s employs approximately 52,000 people and operates chicken processing plants and prepared-foods facilities in 14 states, Puerto Rico, Mexico, the U.K, Ireland 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. 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
September 24, 2017 December 25, 2016
(Unaudited)
(In thousands)
Cash and cash equivalents $401,789 $292,544
Restricted cash 4,841 4,979
Trade accounts and other receivables, less allowance for doubtful accounts 624,802 445,553
Accounts receivable from related parties 970 4,010
Inventories 1,196,201 975,608
Income taxes receivable 16,362
Prepaid expenses and other current assets 102,914 81,932
Assets held for sale 2,777 5,259
Total current assets 2,350,656 1,809,885
Other long-lived assets 20,007 19,260
Identified intangible assets, net 620,693 471,591
Goodwill 995,582 887,221
Property, plant and equipment, net 2,076,347 1,833,985
Total assets $6,063,285 $5,021,942
Accounts payable $743,528 $790,378
Accounts payable to related parties 7,091 4,468
Accrued expenses and other current liabilities 416,476 347,021
Income taxes payable 191,432 27,578
Current maturities of long-term debt 61,811 15,712
Total current liabilities 1,420,338 1,185,157
Long-term debt, less current maturities 2,548,575 1,396,124
Deferred tax liabilities 286,038 251,807
Other long-term liabilities 98,098 102,722
Total liabilities 4,353,049 2,935,810
Common stock 2,602 307,288
Treasury stock (231,758) (217,117)
Additional paid-in capital 1,926,386 3,100,332
Retained earnings (accumulated deficit) 39,606 (782,785)
Accumulated other comprehensive loss (36,517) (329,858)
Total Pilgrim’s Pride Corporation stockholders’ equity 1,700,319 2,077,860
Noncontrolling interest 9,917 8,272
Total stockholders’ equity 1,710,236 2,086,132
Total liabilities and stockholders’ equity $6,063,285 $5,021,942



PILGRIM’S PRIDE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Thirteen Weeks Ended Thirty-Nine Weeks Ended
September 24, 2017 September 25, 2016 September 24, 2017 September 25, 2016
(In thousands, except per share data)
Net sales $2,793,885 $2,495,281 $8,025,511 $7,507,681
Cost of sales 2,315,301 2,242,221 6,815,701 6,632,568
Gross profit 478,584 253,060 1,209,810 875,113
Selling, general and administrative expense 102,191 75,933 284,009 229,786
Administrative restructuring charges 4,147 279 8,496 279
Operating income 372,246 176,848 917,305 645,048
Interest expense, net of capitalized interest 24,636 19,119 66,315 58,480
Interest income (2,128) (253) (3,600) (2,000)
Foreign currency transaction gain (888) 4,569 (2,500) (1,769)
Miscellaneous, net (1,083) (2,371) (5,198) (7,327)
Nonrecurring items
Income before income taxes 351,709 155,784 862,288 597,664
Income tax expense 113,396 53,819 278,046 202,979
Net income 238,313 101,965 584,242 394,685
Less: Net income from Granite Holdings Sàrl prior to
acquisition by Pilgrim's Pride Corporation
6,093 3,438 23,486 25,105
Less: Net income (loss) attributable to noncontrolling interests (460) (130) 514 (334)
Net income attributable to Pilgrim’s Pride Corporation $232,680 $98,657 $560,242 $369,914
Weighted average shares of common stock outstanding:
Basic 248,753 254,460 248,732 254,607
Effect of dilutive common stock equivalents 235 460 230 430
Diluted 248,988 254,920 248,962 255,037
Net income attributable to Pilgrim's Pride Corporation per share of
common stock outstanding:
Basic $0.94 $0.39 $2.25 $1.45
Diluted $0.93 $0.39 $2.25 $1.45



PILGRIM’S PRIDE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Thirty-Nine Weeks Ended
September 24, 2017 September 25, 2016
(In thousands)
Cash flows from operating activities:
Net income $584,242 $394,685
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization 204,625 174,128
Foreign currency transaction loss related to borrowing arrangements 6,830
Impairment expense 4,947
Gain on property disposals (540) (7,315)
Loss (gain) on equity method investments (44) 194
Share-based compensation 2,454 5,404
Deferred income tax expense (benefit) 25,768 (6)
Changes in operating assets and liabilities:
Trade accounts and other receivables (146,477) (65,649)
Inventories (149,806) (18,099)
Prepaid expenses and other current assets (15,377) 1,990
Accounts payable, accrued expenses and other current liabilities (36,105) 35,346
Income taxes 149,063 45,789
Long-term pension and other postretirement obligations (9,660) (8,294)
Other operating assets and liabilities (1,429) (6,190)
Cash provided by operating activities 618,491 551,983
Cash flows from investing activities:
Acquisitions of property, plant and equipment (258,364) (221,035)
Business acquisition (658,520)
Proceeds from property disposals 2,585 12,977
Cash used in investing activities (914,299) (208,058)
Cash flows from financing activities:
Proceeds from note payable to bank 36,838
Payments on note payable to bank (65,564)
Proceeds from revolving line of credit and long-term borrowings 1,013,662 515,292
Payments on revolving line of credit, long-term borrowings and capital lease obligations (609,678) (504,078)
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 (4,550) (693)
Purchase of common stock under share repurchase program (14,641) (20,333)
Cash dividends (715,711)
Cash provided by (used in) financing activities 389,831 (743,379)
Increase (decrease) in cash, cash equivalents and restricted cash 109,107 (428,391)
Cash, cash equivalents and restricted cash, beginning of period 297,523 696,553
Cash, cash equivalents and restricted cash, end of period $406,630 $268,162



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 Thirty-Nine Weeks Ended
September 24, 2017 September 25, 2016 September 24, 2017 September 25, 2016
(In thousands)
Net income$238,313 $101,965 $584,242 $394,685
Add:
Interest expense, net22,508 18,866 62,715 56,480
Income tax expense113,396 53,819 278,046 202,979
Depreciation and amortization71,763 58,718 204,625 174,128
Minus:
Amortization of capitalized financing costs1,181 970 3,129 2,859
EBITDA444,799 232,398 1,126,499 825,413
Add:
Foreign currency transaction loss (gains)(888) 4,569 (2,500) (1,769)
Acquisition charges15,039 15,039
Restructuring charges4,147 279 8,496 279
Minus:
Net income (loss) attributable to noncontrolling interest(460) (130) 514 (334)
Adjusted EBITDA$463,557 $237,376 $1,147,020 $824,257



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 Thirty-Nine Weeks Ended Thirteen Weeks Ended Thirty-Nine Weeks Ended
September 24, 2017 September 25, 2016 September 24, 2017 September 25, 2016 September 24, 2017 September 25, 2016 September 24, 2017 September 25, 2016
(In thousands)
Net income from continuing operations $238,313 $101,965 $584,242 $394,685 8.53% 4.09% 7.28% 5.26%
Add:
Interest expense, net 22,508 18,866 62,715 56,480 0.81% 0.76% 0.78% 0.75%
Income tax expense 113,396 53,819 278,046 202,979 4.06% 2.16% 3.46% 2.70%
Depreciation and amortization 71,763 58,718 204,625 174,128 2.57% 2.35% 2.55% 2.32%
Minus:
Amortization of capitalized financing costs 1,181 970 3,129 2,859 0.04% 0.04% 0.04% 0.04%
EBITDA 444,799 232,398 1,126,499 825,413 15.92% 9.32% 14.03% 10.99%
Add:
Foreign currency transaction gains (888) 4,569 (2,500) (1,769) (0.03)% 0.18% (0.03)% (0.02)%
Acquisition charges 15,039 15,039 0.54% % 0.19% %
Restructuring charges 4,147 279 8,496 279 0.15% 0.01% 0.11% %
Minus:
Net income (loss) attributable to noncontrolling interest (460) (130) 514 (334) (0.02)% (0.01)% 0.01% %
Adjusted EBITDA $463,557 $237,376 $1,147,020 $824,257 16.59% 9.52% 14.28% 10.98%
Net Revenue: $2,793,885 $2,495,281 $8,025,511 $7,507,681 $2,793,885 $2,495,281 $8,025,511 $7,507,681



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 Thirty-Nine Weeks Ended
September 24,
2017
September 25,
2016
September 24,
2017
September 25,
2016
(In thousands, except per share data)
Net income attributable to Pilgrim's Pride Corporation $232,680 $98,657 $560,242 $369,914
Loss on early extinguishment of debt
Acquisition and restructuring charges, net of taxes 12,988 15,980
Foreign currency transaction gains (888) 4,569 (2,500) (1,769)
Income before loss on early extinguishment of debt and foreign currency transaction gains 244,780 103,226 573,722 368,145
Weighted average diluted shares of common stock outstanding 248,988 254,920 248,962 255,037
Income before loss on early extinguishment of debt and foreign currency transaction gains
per common diluted share
$0.98 $0.41 $2.30 $1.44



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 Thirty-Nine Weeks Ended
September 24, 2017 September 25, 2016 September 24, 2017 September 25, 2016
(In thousands, except per share data)
GAAP EPS$0.93 $0.39 $2.25 $1.45
Loss on early extinguishment of debt
Acquisition and restructuring charges, net of taxes0.05 0.06
Foreign currency transaction gains 0.02 (0.01) (0.01)
Adjusted EPS$0.98 $0.41 $2.30 $1.44
Weighted average diluted shares of common stock outstanding248,988 254,920 248,962 255,037



PILGRIM'S PRIDE CORPORATION
Supplementary Selected Segment and Geographic Data
Thirteen Weeks Ended Thirty-Nine Weeks Ended
September 24, 2017 September 25, 2016 September 24, 2017 September 25, 2016
(Unaudited)
(In thousands)
Sources of net sales by country of origin:
US: $1,938,542 $1,724,625 $5,557,089 $5,072,351
Mexico: 341,018 307,096 994,568 950,622
Europe: 514,325 463,560 1,473,854 1,484,708
Total net sales: $2,793,885 $2,495,281 $8,025,511 $7,507,681
Sources of cost of sales by country of origin:
US: $1,561,333 $1,545,289 $4,656,825 $4,470,648
Mexico: 286,617 276,366 822,822 818,749
Europe: 467,374 420,590 1,336,123 1,343,242
Elimination: (23) (24) (69) (71)
Total cost of sales: $2,315,301 $2,242,221 $6,815,701 $6,632,568
Sources of gross profit by country of origin:
US: $377,209 $179,336 $900,262 $601,703
Mexico: 54,401 30,730 171,745 131,874
Europe: 46,951 42,970 137,734 141,466
Elimination: 23 24 69 70
Total gross profit: $478,584 $253,060 $1,209,810 $875,113
Sources of operating income by country of origin:
US: $307,962 $141,195 $719,121 $480,280
Mexico: 45,692 22,603 146,241 108,856
Europe: 18,569 13,027 51,874 55,841
Elimination: 23 23 69 71
Total operating income: $372,246 $176,848 $917,305 $645,048



Contact:

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

Source:Pilgrim's Pride Corporation