Pilgrim's Pride Reports an Increase in Year Over Year Net Income of 175% for the Second Quarter

GREELEY, Colo., July 31, 2013 (GLOBE NEWSWIRE) -- Pilgrim's Pride Corporation (Nasdaq:PPC) reports second quarter 2013 financial results with net sales of $2.2 billion, compared to $2.0 billion reported in the second quarter of 2012. Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") of $264.6 million compared to the $125.1 million generated in the prior year. Net income of $190.7 million reflected an improvement of 175% compared to the $69.4 million reported in the same period in 2012, with earnings per share reaching $0.74 compared to $0.27 in the second quarter of 2012.

"Our second quarter results continue to validate our strategy. Our focus on our key customers and ability to adapt to changing market conditions has helped us gain significant business in strategic channels to improve our sales mix, enabling us to take advantage of strong industry fundamentals. We continue to reap the benefits of operational excellence in areas of yield improvements and plant cost and efficiency gains, all of which contributed to our positive results, while our export and Mexico business continue to operate more favorably," stated Bill Lovette, Pilgrim's Chief Executive Officer.

"We're also pleased to announce that we have substantially completed an amendment to our U.S. Credit Facility. With this amendment we will refinance the Revolver and the Term Loan B-1through 2018 with reduced interest costs and more favorable covenants. We view this amendment as further confirmation of the progress we have made in optimizing our capital structure, supported by strong operations and our effective management of working capital, which enabled us to reduce our net debt to $834 million at quarter end, a leverage of 1.5 times our EBITDA of the last twelve months."

Conference Call Information

A conference call to discuss Pilgrim's quarterly results will be held tomorrow, August 1 at 7:00 a.m. Mountain (9 a.m. Eastern). 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/ppc130801.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 (877) 270-2148 within the US or +1 (412) 902-6510 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 November 1, 2013.

About Pilgrim's Pride

Pilgrim's Pride Corporation employs approximately 37,500 people and operates chicken processing plants and prepared-foods facilities in 12 states, Puerto Rico and Mexico. The Company's primary distribution is through retailers and foodservice distributors.

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.

Condensed Consolidated Balance Sheets
June 30
December 30
(In thousands)
Cash and cash equivalents $ 78,231 $ 68,180
Trade accounts and other receivables, less allowance
for doubtful accounts
390,461 384,930
Account receivable from JBS USA, LLC 3,892 1,514
Inventories 952,191 950,296
Income taxes receivable 60,388 54,719
Prepaid expenses and other current assets 71,166 56,047
Assets held for sale 28,830 27,042
Total current assets 1,585,159 1,542,728
Deferred tax assets 97,434 97,431
Other long-lived assets 38,941 45,523
Identified intangible assets, net 35,395 38,266
Property, plant and equipment, net 1,166,985 1,189,921
Total assets $ 2,923,914 $ 2,913,869
Accounts payable $ 327,185 $ 312,365
Account payable to JBS USA, LLC 5,793 13,436
Accrued expenses and other current liabilities 285,075 283,540
Income taxes payable 10,592 468
Current deferred tax liabilities 104,486 104,482
Current maturities of long-term debt 393 15,886
Total current liabilities 733,524 730,177
Long-term debt, less current maturities 911,939 1,148,870
Other long-term liabilities 87,031 125,825
Total liabilities 1,732,494 2,004,872
Common stock 2,590 2,590
Additional paid-in capital 1,643,606 1,642,003
Accumulated deficit (424,424) (669,711)
Accumulated other comprehensive loss (32,710) (68,511)
Total Pilgrim's Pride Corporation stockholders' equity 1,189,062 906,371
Noncontrolling interest 2,358 2,626
Total stockholders' equity 1,191,420 908,997
Total liabilities and stockholders' equity $ 2,923,914 $ 2,913,869
Condensed Consolidated Statements of Operations
Thirteen Weeks Ended Twenty-Six Weeks Ended
June 30
June 24
June 30
June 24
(In thousands, except per share data) (In thousands, except per share data)
Net sales $ 2,184,119 $ 1,974,469 $ 4,221,048 $ 3,863,242
Costs and expenses:
Cost of sales 1,901,611 1,830,380 3,820,106 3,609,088
Gross profit 282,508 144,089 400,942 254,154
Selling, general and administrative expense 44,099 44,439 88,091 89,695
Administrative restructuring charges, net 480 389 964 3,274
Operating income 237,929 99,261 311,887 161,185
Interest expense 22,965 24,925 47,786 53,170
Interest income (707) (356) (923) (630)
Foreign currency transaction losses, net 9,713 8,212 2,089 2,284
Miscellaneous, net (717) (315) (722) (685)
Income before income taxes 206,675 66,795 263,657 107,046
Income tax expense (benefit) 15,884 (2,358) 18,638 (1,705)
Net income 190,791 69,153 245,019 108,751
Less: Net income (loss) attributable to
noncontrolling interests
86 (205) (268) 220
Net income attributable to
Pilgrim's Pride Corporation
$ 190,705 $ 69,358 $ 245,287 $ 108,531
Weighted average shares of common stock
Basic 258,826 258,726 258,825 241,144
Diluted 259,158 258,841 259,055 241,236
Net income per share of common
stock outstanding:
Basic $ 0.74 $ 0.27 $ 0.95 $ 0.45
Diluted $ 0.74 $ 0.27 $ 0.95 $ 0.45
Condensed Consolidated Statements of Cash Flows
Twenty-Six Weeks Ended
June 30
June 24
(In thousands)
Cash flows from operating activities:
Net income $ 245,019 $ 108,751
Adjustments to reconcile net income attributable to Pilgrim's Pride Corporation to cash provided by operating activities:
Depreciation and amortization 75,939 71,980
Foreign currency transaction losses (gains) 1,338 1,948
Accretion of bond discount 228 228
Asset impairment -- 1,342
(Gain) loss on property disposals (824) 628
Share-based compensation 1,603 299
Changes in operating assets and liabilities:
Restricted cash and cash equivalents -- 8,013
Trade accounts and other receivables (7,654) (2,123)
Inventories (579) (109,638)
Prepaid expenses and other current assets (15,114) 8,763
Accounts payable and accrued expenses and other current liabilities 7,097 7,403
Income taxes 4,687 (14,698)
Deposits 480 160
Long-term pension and other postretirement obligations (2,149) --
Other operating assets and liabilities 856 (2,734)
Cash provided by operating activities 310,927 80,322
Cash flows from investing activities:
Acquisitions of property, plant and equipment (48,969) (37,561)
Purchases of investment securities -- (162)
Proceeds from sale or maturity of investment securities -- 58
Proceeds from property sales and disposals 2,883 12,461
Cash used in investing activities (46,086) (25,204)
Cash flows from financing activities:
Proceeds from revolving line of credit 505,600 391,300
Payments on revolving line of credit, long-term borrowings and capital lease obligations (758,251) (584,904)
Payment of note payable to JBS USA -- (50,000)
Proceeds from sale of common stock -- 198,282
Cash used in financing activities (252,651) (45,322)
Effect of exchange rate changes on cash and cash equivalents (2,139) (2,178)
Increase in cash and cash equivalents 10,051 7,618
Cash and cash equivalents, beginning of period 68,180 41,609
Cash and cash equivalents, end of period 78,231 49,227
Selected Financial Information
"EBITDA" is defined as the sum of net income (loss) plus interest, taxes, depreciation and amortization. "Adjusted EBITDA" is defined as the sum of EBITDA plus restructuring charges, reorganization items and loss on early extinguishment of debt less net income attributable to noncontrolling interests. 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 from continuing operations. 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.
Thirteen Weeks Ended Twenty-Six Weeks Ended
June 30
June 24
June 30
June 24
(In thousands) (In thousands)
Net income from continuing operations $ 190,791 $ 69,153 $ 245,019 $ 108,751
Income tax expense (benefit) 15,884 (2,358) 18,638 (1,705)
Interest expense, net 22,258 24,569 46,863 52,540
Depreciation and amortization 38,149 36,214 75,939 71,980
Amortization of capitalized loan costs 2,518 2,469 5,034 4,937
EBITDA 264,564 125,109 381,425 226,629
Restructuring charges 480 389 964 3,274
Net income (loss) attributable to noncontrolling
86 (205) (268) 220
Adjusted EBITDA $ 264,958 $125,703 $382,657 $229,683

Net debt is defined as total long term debt, less current maturities, plus current maturities of long term debt minus cash and cash equivalents. Net debt is presented because it is used by us, 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:

Reconciliation of Net Debt
Period Ended
2011 2012 June 24, 2012 June 30, 2013
(in Thousands)
Long term debt, less current maturities 1,458,001 1,148,870 1,214,619 911,939
Add: Current maturities of long term debt 15,611 15,886 15,617 393
Minus: Cash and cash equivalents 41,609 68,180 49,227 78,231
Net debt 1,432,003 1,096,576 1,181,009 834,101
Supplementary Selected Segment and Geographic Data
Thirteen Weeks Ended Twenty-Six Weeks Ended
June 30
June 24
June 30
June 24
(In thousands) (In thousands)
Net sales to customers by country of origin:
US: $ 1,921,872 $ 1,776,740 $ 3,730,358 $ 3,461,344
Mexico: 262,247 197,729 490,690 401,898
Total net sales: $ 2,184,119 $ 1,974,469 $ 4,221,048 $ 3,863,242
Cost of sales by country of origin:
US: $ 1,707,256 $ 1,650,885 $ 3,437,092 $ 3,251,154
Mexico: 194,355 179,495 383,014 357,934
Total cost of sales: $ 1,901,611 $ 1,830,380 $ 3,820,106 $ 3,609,088
Components of gross profit
US: $ 214,616 $ 125,855 $ 293,266 $ 210,190
Mexico: 67,892 18,234 107,676 43,964
Total gross profit: $ 282,508 $ 144,089 $ 400,942 $ 254,154

CONTACT: Rosemary Geelan Pilgrim's Pride Corp Investor Relations Rosemary.geelan@pilgrims.com (970) 506-8192 www.pilgrims.comSource:Pilgrim's Pride Corporation