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Pilgrim's Pride (PPC) Q2 Earnings and Revenues Rise Y/Y

Zacks Equity Research

Pilgrim's Pride Corporation PPC reported second-quarter 2019 results, with the top and the bottom line increasing year over year. The quarterly results were backed by improved market conditions in the United States and Mexico. However, operations in Europe continued to face hurdles stemming from higher input costs.  Let’s take a closer look

Q2 in Details

Quarterly adjusted earnings came in at 69 cents per share, up almost 53% from the year-ago quarter’s figure. Improved sales and margins supported bottom-line results.

In the reported quarter, Pilgrim's Pride generated net sales of $2,843.1 million, up 0.2% year over year. Results were backed by higher sales in the United States and Mexico.

Revenues from U.S. operations amounted to $1,916.9 million, up 0.9% year over year. The upside was driven by strong results in differentiated markets. Improved market conditions for chicken and large bird deboning boosted demand in the commodity segment.  

Mexican operations generated revenues worth $390.2 million in the reported quarter, up 4.3% year over year. The region gained from higher pricing as well as favorable demand for chicken. Results were also supported by advancements in the Prepared Foods category, driven by robust performance of premium Pilgrim’s and Del Dia brands.

Revenues from European operations declined almost 4.8% year over year to $535.9 million. The company continued to witness higher input costs in the region.

The company’s overall cost of sales in the reported quarter declined 3.4% year over year to $2,475,2 million. Moreover, higher sales and lower cost of sales drove gross profit that rose 34.2% year on year to $367.9 million. Also, gross margin increased 3.2 percentage points to 12.9%.    

Further, adjusted EBITDA came in at $349.3 million, up 34.7% year over year. Adjusted EBITDA margin of 12.3% in the reported quarter reflects rise of 3.1 percentage points.

Other Financial Details  

Pilgrim's Pride exited the quarter with cash and cash equivalents of approximately $538.2 million, long-term debt (net of current portion) of $2,283.8 million and total shareholders’ equity of $2,273.3 million. Further, the company generated $403.3 million as cash from operating activities.

Growth Efforts on Track

This Zacks Rank #1 (Strong Buy) company is committed toward boosting operations in the United States through its Key Customer strategy as well as identifying opportunities for augmenting capacities and capabilities. In the Mexico region, the company continues to engage in product diversification. Also, in the European region, management is adhering to operational improvements, pricing adjustments and Key Customer strategy to mitigate the adversities stemming from higher input costs.

Price Performance

Pilgrim's Pride’s shares have inched up 0.8% in the past three months compared with the industry’s rise of 6.3%.

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