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Pilgrim’s Pride Ends Fiscal Year 2017 with Net Sales of $10.77 Billion, Operating Income of 10% and Record GAAP EPS of $2.79

GREELEY, Colo., Feb. 14, 2018 (GLOBE NEWSWIRE) -- Pilgrim’s Pride Corporation (NASDAQ:PPC) reports fourth quarter and year-end 2017 financial results.

2017 Highlights

  • 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.

Fourth Quarter Results

  • 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.


“We generated strong, well-balanced consolidated performance in 2017. Our U.S. and Mexico operations were solid despite logistical challenges in Q4 due to the after-effects from natural events in Puerto Rico, Mexico and the U.S., while our newly acquired U.K. and continental Europe operations were consistent. The performance 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. While small-bird and tray-pack have remained strong during Q4, conditions in the commodity markets declined in-line with seasonality but are already recovering well in the new year, indicating the continuation of chicken demand as the protein of choice in domestic and international markets. Facing significant challenges, we are very proud of our team members who had worked tirelessly to continue the operations of our facilities while assisting with rebuilding the local communities,” stated Bill Lovette, Chief Executive Officer of Pilgrim's.

“We completed the announced strategic capital investment improvements, including Sanford, NC and Moorefield, WV, which will diversify our portfolio by improving mix, reduce the impact of commodity markets, and further raise our margin profile. The Sanford conversion from commodity to organic tray-pack and the acquisition of GNP bring us leadership in premium-branded and NAE chickens while fulfilling our strategy of creating a portfolio of differentiated products to key customers.”

“We are continuing to improve the performance of the GNP operations. Margins have substantially increased since the acquisition just over a year ago and have reached parity with our legacy business during Q4. The integration is going well and we have extracted significant operating and product synergies, and are also preparing to expand the distribution of our premium Just Bare Brand. Combined with the success in improving the profitability of our acquired Mexican operations, we believe we have the methodology and the experienced personnel required to grow the operating and financial performance of our U.K. and continental Europe business.”

Conference Call Information

A conference call to discuss Pilgrim’s quarterly results will be held tomorrow, February 15, 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/ppc180215.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 May 15, 2018.

About Pilgrim’s Pride

Pilgrim’s employs approximately 51,300 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.

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 at year-end 2017 (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 used in 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

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) 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


A reconciliation of GAAP operating income to adjusted operating income is as follows:

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 charges529 790 9,025 1,069
Acquisition charges4,567 19,606
Puerto Rico hurricane impact8,066 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 exchange6,100 (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 charges750 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
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
(Unaudited)
(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


Source:Pilgrim's Pride Corporation