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

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GREELEY, Colo., April 29, 2020 (GLOBE NEWSWIRE) -- Pilgrim’s Pride Corporation (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, net

30,998

30,222

Income tax expense

38,512

20,416

Depreciation and amortization

79,773

67,182

EBITDA

216,732

201,945

Add:

Foreign currency transaction losses (gains)

(18,385

)

2,636

Transaction costs related to acquisitions

215

Restructuring activity

(27

)

Minus:

Negative adjustment to previously recognized gain on bargain purchase

(1,740

)

Shareholder litigation settlement

34,643

Net income attributable to noncontrolling interest

181

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