PPC
$16.75
Pilgrim's Pride
$.02
.12%
Earnings Details
1st Quarter March 2020
Wednesday, April 29, 2020 5:12:00 PM
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Summary

Pilgrim's Pride (PPC) Recent Earnings

Pilgrim's Pride (PPC) reported 1st Quarter March 2020 earnings of $0.18 per share on revenue of $3.1 billion. The consensus earnings estimate was $0.17 per share. Revenue grew 12.9% on a year-over-year basis.

Pilgrims Pride Corp is engaged in processing, marketing and distribution of fresh, frozen and value-added chicken products to retailers, distributors and food service operators. It offers whole chickens, whole cut-up chickens and selected chicken parts.

Results
Reported Earnings
$0.18
Earnings Whisper
-
Consensus Estimate
$0.17
Reported Revenue
$3.07 Bil
Revenue Estimate
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Pilgrim’s Pride Reports Q1 Net Sales of $3.07 Billion, Operating Income of $84 Million and GAAP EPS of $0.27

GREELEY, Colo., April 29, 2020 (GLOBE NEWSWIRE) -- Pilgrim’s Pride Corporation (NASDAQ: PPC) reports first quarter 2020 financial results.

First Quarter Highlights

  • Net Sales of $3.07 billion.
  • Net GAAP Income of $67.3 million, including one-time $0.09 per share gain on case settlement.
  • Operating Income margins of 4.4% in U.S., -7.3% in Mexico and 2.8% in Europe operations, respectively.
  • Adjusted EBITDA of $165.5 million, or a 5.4% margin.
  • Strong focus in execution and dedication by our team members, combined with portfolio strategy of differentiated products, strong Key Customer relationships, and diversified global footprint reducing volatility of specific market conditions, especially under unprecedented Covid-19 impact at end of first quarter.
  • U.S. continues to improve our relative performance versus the industry across all business units, supported by our business model and agility in changing mix.
  • Mexico experiencing weak macro conditions persisting longer than expected, partially offset by growth in Prepared Foods.
  • Operating results from legacy European business (Moy Park) at strong levels with increasing operational efficiencies and input cost mitigation. Newly acquired operations continue to generate positive EBITDA, and remain on track to achieve performance comparable to leading companies with similar portfolio in next few years.
  • Our liquidity position remains strong, supported by our emphasis on cash flow generation, focus on working capital management, and disciplined investments in high-return projects, preserving the opportunity to maintain strategic priorities to continue strengthening our differentiated global platforms.
Unaudited (2) Three Months Ended
  March 29,
2020
 March 31,
2019
 Y/Y Change
  (In millions, except per share and percentages)
Net sales $3,074.9  $2,724.7  +12.9%
U.S. GAAP EPS $0.27  $0.34  (20.6)%
Operating income $84.4  $137.0  (38.4)%
Adjusted EBITDA(1) $165.5  $204.4  (19.0)%
Adjusted EBITDA margin(1) 5.4% 7.5% -2.1 pts

(1)           Reconciliations for non-U.S. GAAP measures are provided in subsequent sections within this release.
(2)           Comparisons include Tulip from 10/15/19 forward.

“We are grateful to our team members for their commitment, dedication, and continued hard work, in supporting our ability to keep our team members safe and healthy, while maintaining production and supply to our customers during this unprecedented crisis. Despite the volatile and challenging markets in Q1, in part due to Covid-19, our strategy has continued to achieve solid results in relative performance to industry competition, and deliver more resilient performance regardless of changes in specific market conditions. Operating results in Europe significantly improved but were more than offset by difficult market dynamics in the U.S. and Mexico. In spite of the difficult global macro conditions, our results have remained well-balanced, and are the result of our vision to become the best and most respected company, creating the opportunity of a better future for our team members. To support our vision, we are continuing our strategy of developing a unique portfolio of diverse, complementary business models, continuing to relentlessly pursue operational excellence, becoming a more valued partner with Key Customers, and creating an environment for safe people, safe products and healthy attitudes,” stated Jayson Penn, Chief Executive Officer of Pilgrim's.

“In the U.S., the market tracked normal seasonality initially during Q1 before wider implementations of travel and movement restrictions due to Covid-19 disrupted retail and foodservice channel demand. The large bird deboning market was especially volatile during the quarter and remained challenging compared to 2019. Operationally however, we continue to improve our relative performance versus the industry across all our business units, including large bird deboning. We also adapted quickly to the change in channel demand by shifting the mix of our production capabilities, supported by our close partnerships with Key Customers, strong focus in execution by our team members, the geographical diversity of our footprint, and our presence across all bird size categories.”

“Market environment in Mexico during Q1 was difficult as weak macro conditions persisted longer than expected, contributing to uncertainties in consumer spending. Prices, especially in the traditional markets, were below seasonal expectations before rebounding to reach normal levels by the end of the quarter. Our increased share of non-commodity products, strong execution, and growth in Prepared Foods, have helped to partially offset the weakness.”

“The legacy European operations once again delivered robust results in Q1, maintaining the trend achieved in the last three quarters of 2019. We generated revenue that was in-line with last year while operating income significantly improved year on year, and was 8% higher than the previous quarter. Our newly acquired European operations also performed well and continued to generate positive EBITDA. The increase in performance was driven by robust demand at retail, partially offset by a reduction in foodservice, continuing strength in pork exports especially to China, as well as the initial implementations of operational improvements.”

Conference Call Information

A conference call to discuss Pilgrim’s quarterly results will be held tomorrow, April 30, 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/ppc200430.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 July 30, 2020.

About Pilgrim’s Pride

Pilgrim’s employs approximately 58,600 people and operates protein processing plants and prepared-foods facilities in 14 states, Puerto Rico, Mexico, the U.K, 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. Without limiting the foregoing, words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “should,” “targets,” “will” and the negative thereof and similar words and expressions are intended to identify 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: the impact of the COVID-19 pandemic, efforts to contain the pandemic and resulting economic downturn on our operations and financial condition, including the risk that our health and safety measures at Pilgrim’s Pride production facilities will not be effective, the risk that we may be unable to prevent the infection of our employees at these facilities, and the risk that we may need to temporarily close one or more of our production facilities; the risk that we may experience decreased production and sales due to the changing demand for food products; the risk that we may face a significant increase in delayed payments from our customers; and additional risks related to COVID-19 set forth in our Form 10-Q filed with the SEC; 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, Quarterly Reports on Form 10-Q and subsequent filings with the Securities and Exchange Commission. The forward-looking statements in this release speak only as of the date hereof, and the Company undertakes no obligation to update any such statement after the date of this release, whether as a result of new information, future developments or otherwise, except as may be required by applicable law.

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


 
PILGRIM’S PRIDE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
 
  March 29, 2020 December 29, 2019
  (Unaudited)  
  (In thousands)
Cash and cash equivalents $511,183  $260,568 
Restricted cash and cash equivalents 25,234  20,009 
Trade accounts and other receivables, less allowance for doubtful accounts 754,246  741,281 
Accounts receivable from related parties 743  944 
Inventories 1,362,358  1,383,535 
Income taxes receivable 53,495  60,204 
Prepaid expenses and other current assets 152,920  131,695 
Total current assets 2,860,179  2,598,236 
Deferred tax assets 4,443  4,426 
Other long-lived assets 34,511  36,325 
Identified intangible assets, net 286,606  301,513 
Goodwill 568,183  596,053 
Operating lease assets, net 935,266  973,750 
Property, plant and equipment, net 2,562,794  2,592,061 
Total assets $7,251,982  $7,102,364 
     
Accounts payable $915,663  $993,780 
Accounts payable to related parties 7,998  3,819 
Revenue contract liability 32,084  41,770 
Accrued expenses and other current liabilities 532,509  575,319 
Income taxes payable 1,951  7,075 
Current maturities of long-term debt 25,877  26,392 
Total current liabilities 1,516,082  1,648,155 
Noncurrent operating lease liability, less current maturities 219,860  235,382 
Long-term debt, less current maturities 2,620,907  2,276,029 
Noncurrent income taxes payable 7,731  7,731 
Deferred tax liabilities 309,471  301,907 
Other long-term liabilities 101,440  97,100 
Total liabilities 4,775,491  4,566,304 
Common stock 2,612  2,611 
Treasury stock (262,798) (234,892)
Additional paid-in capital 1,955,936  1,955,261 
Retained earnings 945,080  877,812 
Accumulated other comprehensive loss (174,917) (75,129)
Total Pilgrim’s Pride Corporation stockholders’ equity 2,465,913  2,525,663 
Noncontrolling interest 10,578  10,397 
Total stockholders’ equity 2,476,491  2,536,060 
Total liabilities and stockholders’ equity $7,251,982  $7,102,364 


 
PILGRIM’S PRIDE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
     
  Three Months Ended
  March 29, 2020 March 31, 2019
  (In thousands, except per share data)
Net sales $3,074,928  $2,724,675 
Cost of sales 2,897,829  2,505,736 
Gross profit 177,099  218,939 
Selling, general and administrative expense 92,713  81,924 
Administrative restructuring activity   (27)
Operating income 84,386  137,042 
Interest expense, net of capitalized interest 32,688  33,562 
Interest income (1,690) (3,340)
Foreign currency transaction losses (gains) (18,385) 2,636 
Miscellaneous, net (34,188) (357)
Income before income taxes 105,961  104,541 
Income tax expense 38,512  20,416 
Net income 67,449  84,125 
Less: Net income (loss) attributable to noncontrolling interests 181  114 
Net income attributable to Pilgrim’s Pride Corporation $67,268  $84,011 
     
Weighted average shares of common stock outstanding:    
Basic 249,347  249,167 
Effect of dilutive common stock equivalents 275  390 
Diluted 249,622  249,557 
     
Net income attributable to Pilgrim's Pride Corporation per share of common stock outstanding:    
Basic $0.27  $0.34 
Diluted $0.27  $0.34 


 
PILGRIM’S PRIDE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
  Three Months Ended
  March 29, 2020 March 31, 2019
  (In thousands)
Cash flows from operating activities:    
Net income $67,449  $84,125 
Adjustments to reconcile net income to cash provided by operating activities:    
Depreciation and amortization 79,773  67,182 
Deferred income tax expense (benefit) 17,023  (4,089)
Negative adjustment to previously recognized gain on bargain purchase 1,740   
Loan cost amortization 1,212  1,201 
Share-based compensation 676  1,882 
Gain on property disposals (521) (108)
Loss (gain) on equity-method investments 309  (16)
Accretion of discount related to Senior Notes 246  246 
Amortization of premium related to Senior Notes (167) (167)
Foreign currency transaction loss (gain) related to borrowing arrangements   (1,034)
Changes in operating assets and liabilities:    
Trade accounts and other receivables (26,296) 2,381 
Inventories 9,333  (1,368)
Prepaid expenses and other current assets (22,419) (11,479)
Accounts payable, accrued expenses and other current liabilities (108,004) (21,968)
Income taxes (16) 6,579 
Long-term pension and other postretirement obligations (6,282) (1,315)
Other operating assets and liabilities 7,008  (1,683)
Cash provided by operating activities 21,064  120,369 
Cash flows from investing activities:    
Acquisitions of property, plant and equipment (77,168) (87,941)
Business acquisition (1,740)  
Proceeds from property disposals 632  539 
Cash used in investing activities (78,276) (87,402)
Cash flows from financing activities:    
Proceeds from revolving line of credit and long-term borrowings 356,547  67,193 
Purchase of common stock under share repurchase program (27,906)  
Payments on revolving line of credit, long-term borrowings and finance lease obligations (13,396) (62,293)
Proceeds from equity contribution under Tax Sharing Agreement between JBS USA Food Company Holdings and Pilgrim's Pride Corporation   (525)
Payment of capitalized loan costs   (458)
Cash provided by (used in) financing activities 315,245  3,917 
Effect of exchange rate changes on cash and cash equivalents (2,193) 429 
Increase (decrease) in cash, cash equivalents and restricted cash 255,840  37,313 
Cash, cash equivalents and restricted cash, beginning of period 280,577  361,578 
Cash, cash equivalents and restricted cash, end of period $536,417  $398,891 


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: (1) income (loss) attributable to noncontrolling interests, (2) charges or income from restructuring activities, (3) reorganization items, (4) transaction costs related to acquisitions, (5) gain on bargain purchase and (6) 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 U.S. (“U.S. 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 U.S. 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 U.S. 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 U.S. GAAP.

 
PILGRIM'S PRIDE CORPORATION
Reconciliation of Adjusted EBITDA
    
(Unaudited)Three Months Ended
 March 29, 2020 March 31, 2019
 (In thousands)
Net income$67,449  $84,125 
Add:   
Interest expense, net30,998  30,222 
Income tax expense38,512  20,416 
Depreciation and amortization79,773  67,182 
EBITDA216,732  201,945 
Add:   
Foreign currency transaction losses (gains)(18,385) 2,636 
Transaction costs related to acquisitions215   
Restructuring activity  (27)
Minus:   
Negative adjustment to previously recognized gain on bargain purchase(1,740)  
Shareholder litigation settlement34,643   
Net income attributable to noncontrolling interest181  114 
Adjusted EBITDA$165,478  $204,440 


The summary unaudited consolidated income statement data for the twelve months ended March 29, 2020 (the LTM Period) have been calculated by subtracting the applicable unaudited consolidated income statement data for the three months ended March 31, 2019 from the sum of (1) the applicable audited consolidated income statement data for the year ended December 29, 2019 and (2) the applicable audited consolidated income statement data for the three months ended March 29, 2020.

 
PILGRIM'S PRIDE CORPORATION
Reconciliation of LTM Adjusted EBITDA
           
(Unaudited) Three Months Ended LTM Ended
  June 30,
2019
 September 29,
2019
 December 29,
2019
 March 29,
2020
 March 29,
2020
  (In thousands)
Net income $170,080  $110,096  $92,235  $67,449  $439,860 
Add:          
Interest expense, net 30,150  27,330  30,650  30,998  119,128 
Income tax expense 75,547  46,365  18,681  38,512  179,105 
Depreciation and amortization 71,348  71,851  76,849  79,773  299,821 
EBITDA 347,125  255,642  218,415  216,732  1,037,914 
Add:          
Foreign currency transaction losses (gains) 2,260  3,027  (1,006) (18,385) (14,104)
Transaction costs related to acquisitions   63  1,239  215  1,517 
Restructuring activity (43) (20) 6    (57)
Minus:          
Gain on bargain purchase     56,880  (1,740) 55,140 
Shareholder litigation settlement       34,643  34,643 
Net income attributable to noncontrolling interest 12  331  155  181  679 
Adjusted EBITDA $349,330  $258,381  $161,619  $165,478  $934,808 



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

 
PILGRIM'S PRIDE CORPORATION
Reconciliation of EBITDA Margin
         
(Unaudited) Three Months Ended Three Months Ended
  March 29, 2020 March 31, 2019 March 29, 2020 March 31, 2019
  (In thousands)
Net income $67,449  $84,125  2.19% 3.09%
Add:        
Interest expense, net 30,998  30,222  1.01% 1.11%
Income tax expense 38,512  20,416  1.25% 0.75%
Depreciation and amortization 79,773  67,182  2.59% 2.47%
EBITDA 216,732  201,945  7.05% 7.41%
Add:        
Foreign currency transaction losses (gains) (18,385) 2,636  (0.59)% 0.10%
Acquisition charges 215    0.01% %
Shareholder litigation settlement     % %
Restructuring activity   (27) % %
Minus:        
Negative adjustment to previously recognized gain on bargain purchase (1,740)   (0.06)% %
Shareholder litigation settlement 34,643    1.13% %
Net income (loss) attributable to noncontrolling interest 181  114  0.01% %
Adjusted EBITDA $165,478  $204,440  5.38% 7.50%
         
Net sales $3,074,928  $2,724,675     


 
PILGRIM'S PRIDE CORPORATION
Supplementary Selected Segment and Geographic Data
     
(Unaudited) Three Months Ended
  March 29, 2020 March 31, 2019
  (In thousands)
Sources of net sales by geographic region of origin:    
US $1,926,880  $1,883,591 
Europe 822,262  514,962 
Mexico 325,786  326,122 
Total net sales $3,074,928  $2,724,675 
     
Sources of cost of sales by geographic region of origin:    
US $1,788,777  $1,713,419 
Europe 770,134  485,378 
Mexico 338,942  306,963 
Elimination (24) (24)
Total cost of sales $2,897,829  $2,505,736 
     
Sources of gross profit by geographic region of origin:    
US $138,103  $170,172 
Europe 52,128  29,584 
Mexico (13,156) 19,159 
Elimination 24  24 
Total gross profit $177,099  $218,939 
     
Sources of operating income by geographic region of origin:    
US $85,052  $114,840 
Europe 23,190  12,714 
Mexico (23,880) 9,464 
Elimination 24  24 
Total operating income $84,386  $137,042 

 

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Source: Pilgrim's Pride Corporation