Pilgrim’s Pride Corporation (NASDAQ: PPC), one of the world's
largest poultry producers, reports its third quarter 2021 financial
results.
Third Quarter Highlights
- Net Sales of $3.83 billion, up 24% from prior year.
- Consolidated GAAP Operating Income margin of 3.2% with GAAP
Operating Income margins of 2.9% in U.S., 11.5% in Mexico and
marginally positive in Europe. Adjusted U.S. Operating Income
margin of 8.2%.
- GAAP Net Income of $60.8 million. Adjusted Net Income of $162.5
million or adjusted EPS of $0.67.
- Adjusted EBITDA of $346.9 million, or a 9.1% margin, 13.7%
higher than a year ago.
- Our portfolio continued to perform well, as demand in the U.S.
continues its recovery. Our foodservice business improved
year-over-year, achieving levels higher than pre-pandemic, while
Retail volumes remained strong. Our margins continued to improve,
especially on the Commodity large bird deboning operation, despite
higher input and operating costs and less than optimal mix due to
the significant ongoing labor shortages.
- Mexico continued to perform well and grow its sales of branded
products, while following the normal seasonality of the
business.
- Our combined European business was significantly impacted by
inflationary cost pressures on inputs, utility and freight costs
and increasing labor shortages; along with lower pig pricing in the
region. The business overcame significant supply chain challenges
to continue to support our Key Customers in the U.K.
- On September 24, we closed on the acquisition of the Kerry
Consumer Foods’ Meats and Meals business in the U.K. and Ireland.
The business will be known as Pilgrim’s Food Masters and will add
differentiated, value added protein and integrated prepared foods
to our portfolio, anchored by leading brands.
- Recorded an aggregate legal contingency accrual of $126 million
in the quarter.
- Our liquidity position remains strong with an Adjusted EBITDA
net leverage ratio at 2.2x following both the issuance of $900
million in aggregate principal amount of 3.50% Senior Notes due
2032 and increasing and extending our U.S. credit facility during
the third quarter.
(Unaudited) |
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 26,2021 |
|
September 27,2020 |
|
Y/Y Change |
|
September 26,2021 |
|
September 27,2020 |
|
Y/Y Change |
|
|
|
|
|
(In millions, except per share and
percentages) |
Net sales |
|
$ |
3,827.6 |
|
|
$ |
3,075.1 |
|
|
+24.5 |
% |
|
$ |
10,738.7 |
|
|
|
$ |
8,974.1 |
|
|
+19.7 |
% |
U.S. GAAP EPS |
|
$ |
0.25 |
|
|
$ |
0.14 |
|
|
+78.6 |
% |
|
$ |
(0.02 |
) |
|
|
$ |
0.38 |
|
|
-105.3 |
% |
Operating income |
|
$ |
120.8 |
|
|
$ |
94.3 |
|
|
+28.1 |
% |
|
$ |
156.1 |
|
|
|
$ |
206.0 |
|
|
-24.2 |
% |
Adjusted EBITDA(1) |
|
$ |
346.9 |
|
|
$ |
305.0 |
|
|
+13.7 |
% |
|
$ |
972.4 |
|
|
|
$ |
582.7 |
|
|
+66.9 |
% |
Adjusted EBITDA margin(1) |
|
9.1 |
% |
|
9.9 |
% |
|
-0.8 pts |
|
9.1 |
|
% |
|
6.5 |
% |
|
+2.6 pts |
(1) Reconciliations for non-U.S. GAAP measures are
provided in subsequent sections within this release.
“On the strength of our product portfolio, we performed well in
the third quarter with adjusted EBITDA up substantially over the
third quarter of 2020 and the more normalized results of Q3 2019,
despite the ongoing challenges brought on by the COVID pandemic,”
said Fabio Sandri, Chief Executive Officer of Pilgrim’s.
“Labor shortages continue to be our most pressing issue,” Sandri
said. “I’m extremely proud of the Pilgrim’s team members who work
hard every day to ensure our customers and consumers receive the
high-quality foods they expect from us. Staffing challenges,
however, have hindered our ability to achieve the ideal product mix
with efficient processes. We will continue to make adjustments on a
plant by plant basis to improve staffing levels and optimize our
mix.”
“In our U.S. business, demand and pricing have been robust,
driven by ongoing high levels of demand at retail and the continued
recovery in commercial foodservice. Prepared Foods volume was up 7%
overall and 16% in the consumer channel as we purposefully grow our
Pilgrim’s® and Just Bare® brands at retail in response to the
continued growth in interest in our brands in that segment.”
“In the third quarter in Mexico, our business continued to
perform well, and grain pricing began to moderate as we come off of
the seasonally strong summer months and head into fall.
“Moy Park and Pilgrim’s U.K. both faced shortages of labor and
truck drivers as E.U. workers left the U.K. following Brexit. In
addition, rising fuel costs put pressure on both these businesses.
Our portfolio in the region was complemented with the introduction
of Pilgrim’s Food Masters, and we look forward to partnering with
our Key Customers with our portfolio of prepared products and
iconic brands.
“Overall, I am extremely pleased with our team members and the
execution of our strategy, often under difficult circumstances. We
are committed to being the best and most respected company in our
industry, and we will continue to perform to the best of our
ability to serve Key Customers.”
Conference Call Information
A conference call to discuss Pilgrim’s quarterly results will be
held tomorrow, October 28, 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/ppc211028.html
You may also reach the pre-registration link by logging in
through the investor section of our website at
https://ir.pilgrims.com in the “Events & Presentations”
section.
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.”
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.
About Pilgrim’s Pride
Pilgrim’s employs approximately 58,900 people and operates
protein processing plants and prepared-foods facilities in 14
states, Puerto Rico, Mexico, the U.K, the Republic of 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. 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 most recent
Form 10-K and 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; the risk of
cyber-attacks, natural disasters, power losses, unauthorized
access, telecommunication failures, and other problems on our
information systems; and the impact of uncertainties of litigation
and other legal matters described in our most recent Form 10-K and
Form 10-Q, including the In re Broiler Chicken Antitrust
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: |
Julie Kegley - Financial Profiles |
|
Investor Relations |
|
IRPPC@pilgrims.com |
|
www.pilgrims.com |
|
|
PILGRIM’S PRIDE CORPORATION |
CONDENSED CONSOLIDATED BALANCE SHEETS |
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
|
September 26, 2021 |
|
December 27, 2020 |
|
|
|
|
|
(In thousands) |
Cash and cash equivalents |
|
$ |
511,084 |
|
|
$ |
547,624 |
|
Restricted cash and cash
equivalents |
|
54,111 |
|
|
782 |
|
Trade accounts and other
receivables, less allowance for doubtful accounts |
|
889,586 |
|
|
741,992 |
|
Accounts receivable from
related parties |
|
1,330 |
|
|
1,084 |
|
Inventories |
|
1,556,821 |
|
|
1,358,793 |
|
Income taxes receivable |
|
51,619 |
|
|
69,397 |
|
Prepaid expenses and other
current assets |
|
177,156 |
|
|
183,039 |
|
Total current assets |
|
3,241,707 |
|
|
2,902,711 |
|
Deferred tax assets |
|
5,465 |
|
|
5,471 |
|
Other long-lived assets |
|
26,190 |
|
|
24,780 |
|
Operating lease assets,
net |
|
300,476 |
|
|
288,886 |
|
Identified intangible assets,
net |
|
1,028,664 |
|
|
589,913 |
|
Goodwill |
|
1,381,872 |
|
|
1,005,245 |
|
Property, plant and equipment,
net |
|
2,848,469 |
|
|
2,657,491 |
|
Total assets |
|
$ |
8,832,843 |
|
|
$ |
7,474,497 |
|
|
|
|
|
|
Accounts payable |
|
$ |
1,176,866 |
|
|
$ |
1,028,710 |
|
Accounts payable to related
parties |
|
6,594 |
|
|
9,650 |
|
Revenue contract
liabilities |
|
20,564 |
|
|
65,918 |
|
Accrued expenses and other
current liabilities |
|
999,014 |
|
|
807,847 |
|
Income taxes payable |
|
48,006 |
|
|
— |
|
Current maturities of
long-term debt |
|
19,885 |
|
|
25,455 |
|
Total current liabilities |
|
2,270,929 |
|
|
1,937,580 |
|
Noncurrent operating lease
liability, less current maturities |
|
223,071 |
|
|
217,432 |
|
Long-term debt, less current
maturities |
|
3,195,866 |
|
|
2,255,546 |
|
Deferred tax liabilities |
|
418,430 |
|
|
339,831 |
|
Other long-term
liabilities |
|
108,164 |
|
|
148,761 |
|
Total liabilities |
|
6,216,460 |
|
|
4,899,150 |
|
Common stock |
|
2,614 |
|
|
2,612 |
|
Treasury stock |
|
(345,134 |
) |
|
(345,134 |
) |
Additional paid-in
capital |
|
1,962,750 |
|
|
1,954,334 |
|
Retained earnings |
|
966,815 |
|
|
972,569 |
|
Accumulated other
comprehensive income (loss) |
|
17,198 |
|
|
(20,620 |
) |
Total Pilgrim’s Pride Corporation stockholders’ equity |
|
2,604,243 |
|
|
2,563,761 |
|
Noncontrolling interest |
|
12,140 |
|
|
11,586 |
|
Total stockholders’ equity |
|
2,616,383 |
|
|
2,575,347 |
|
Total liabilities and stockholders’ equity |
|
$ |
8,832,843 |
|
|
$ |
7,474,497 |
|
|
PILGRIM’S PRIDE CORPORATION |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 26, 2021 |
|
September 27, 2020 |
|
September 26, 2021 |
|
September 27, 2020 |
|
|
|
|
|
(In thousands, except per share data) |
Net sales |
|
$ |
3,827,566 |
|
|
$ |
3,075,121 |
|
|
$ |
10,738,689 |
|
|
$ |
8,974,072 |
|
Cost of sales |
|
3,455,723 |
|
|
2,761,279 |
|
|
9,725,362 |
|
|
8,363,272 |
|
Gross profit |
|
371,843 |
|
|
313,842 |
|
|
1,013,327 |
|
|
610,800 |
|
Selling, general and
administrative expense |
|
251,066 |
|
|
219,554 |
|
|
857,217 |
|
|
404,837 |
|
Operating income |
|
120,777 |
|
|
94,288 |
|
|
156,110 |
|
|
205,963 |
|
Interest expense, net of
capitalized interest |
|
29,833 |
|
|
30,564 |
|
|
110,818 |
|
|
95,575 |
|
Interest income |
|
(1,244 |
) |
|
(1,763 |
) |
|
(4,452 |
) |
|
(4,611 |
) |
Foreign currency transaction
loss (gain) |
|
2,359 |
|
|
9,092 |
|
|
9,018 |
|
|
(3,768 |
) |
Miscellaneous, net |
|
(1,391 |
) |
|
360 |
|
|
(10,005 |
) |
|
(33,873 |
) |
Income before income taxes |
|
91,220 |
|
|
56,035 |
|
|
50,731 |
|
|
152,640 |
|
Income tax expense |
|
30,385 |
|
|
22,344 |
|
|
55,931 |
|
|
57,900 |
|
Net income (loss) |
|
60,835 |
|
|
33,691 |
|
|
(5,200 |
) |
|
94,740 |
|
Less: Net income attributable
to noncontrolling interests |
|
110 |
|
|
245 |
|
|
554 |
|
|
62 |
|
Net income (loss) attributable to Pilgrim’s Pride Corporation |
|
$ |
60,725 |
|
|
$ |
33,446 |
|
|
$ |
(5,754 |
) |
|
$ |
94,678 |
|
|
|
|
|
|
|
|
|
|
Weighted average
shares of Pilgrim's Pride Corporation common stock
outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
243,675 |
|
|
244,186 |
|
|
243,643 |
|
|
246,740 |
|
Effect of dilutive common stock equivalents |
|
520 |
|
|
190 |
|
|
— |
|
|
158 |
|
Diluted |
|
244,195 |
|
|
244,376 |
|
|
243,643 |
|
|
246,898 |
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Pilgrim's Pride Corporation per share of common
stock outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.25 |
|
|
$ |
0.14 |
|
|
$ |
(0.02 |
) |
|
$ |
0.38 |
|
Diluted |
|
$ |
0.25 |
|
|
$ |
0.14 |
|
|
$ |
(0.02 |
) |
|
$ |
0.38 |
|
|
PILGRIM’S PRIDE CORPORATION AND SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(Unaudited) |
|
|
|
Nine Months Ended |
|
|
September 26, 2021 |
|
September 27, 2020 |
|
|
|
|
|
(In thousands) |
Cash flows from operating
activities: |
|
|
|
|
Net income (loss) |
|
$ |
(5,200 |
) |
|
$ |
94,740 |
|
Adjustments to reconcile net income to cash provided by operating
activities: |
|
|
|
|
Depreciation and amortization |
|
274,336 |
|
|
248,641 |
|
Deferred income tax expense (benefit) |
|
(26,436 |
) |
|
37,739 |
|
Loss on early extinguishment of debt recognized as a component of
interest expense |
|
24,654 |
|
|
— |
|
Stock-based compensation |
|
8,418 |
|
|
(1,291 |
) |
Loan cost amortization |
|
3,762 |
|
|
3,635 |
|
Gain on property disposals |
|
(3,605 |
) |
|
(8,009 |
) |
Accretion of discount related to Senior Notes |
|
1,104 |
|
|
737 |
|
Amortization of premium related to Senior Notes |
|
(167 |
) |
|
(501 |
) |
Loss (gain) on equity-method investments |
|
(12 |
) |
|
297 |
|
Negative adjustment to previously recognized gain on bargain
purchase |
|
— |
|
|
3,746 |
|
Changes in operating assets and liabilities: |
|
|
|
|
Trade accounts and other receivables |
|
(138,948 |
) |
|
44,615 |
|
Inventories |
|
(149,653 |
) |
|
41,292 |
|
Prepaid expenses and other current assets |
|
13,718 |
|
|
(29,290 |
) |
Accounts payable, accrued expenses and other current
liabilities |
|
274,932 |
|
|
93,114 |
|
Income taxes |
|
66,413 |
|
|
(30,868 |
) |
Long-term pension and other postretirement obligations |
|
(13,491 |
) |
|
(823 |
) |
Other operating assets and liabilities |
|
(2,330 |
) |
|
10,561 |
|
Cash provided by operating
activities |
|
327,495 |
|
|
508,335 |
|
Cash flows from investing
activities: |
|
|
|
|
Acquisitions of property, plant and equipment |
|
(280,820 |
) |
|
(242,603 |
) |
Proceeds from property disposals |
|
22,896 |
|
|
21,715 |
|
Purchase of acquired business, net of cash acquired |
|
(953,947 |
) |
|
(4,216 |
) |
Cash used in investing
activities |
|
(1,211,871 |
) |
|
(225,104 |
) |
Cash flows from financing
activities: |
|
|
|
|
Proceeds from revolving line of credit and long-term
borrowings |
|
2,951,707 |
|
|
386,696 |
|
Payments on revolving line of credit, long-term borrowings and
finance lease obligations |
|
(2,005,960 |
) |
|
(56,763 |
) |
Payments on early extinguishment of debt |
|
(21,258 |
) |
|
— |
|
Payments of capitalized loan costs |
|
(22,293 |
) |
|
— |
|
Payment of equity distribution under Tax Sharing Agreement between
JBS USA Food Company Holdings and Pilgrim’s Pride Corporation |
|
(650 |
) |
|
— |
|
Purchase of common stock under share repurchase program |
|
— |
|
|
(107,806 |
) |
Cash provided by financing
activities |
|
901,546 |
|
|
222,127 |
|
Effect of exchange rate
changes on cash and cash equivalents |
|
(381 |
) |
|
(799 |
) |
Increase in cash, cash
equivalents and restricted cash |
|
16,789 |
|
|
504,559 |
|
Cash, cash equivalents and
restricted cash, beginning of period |
|
548,406 |
|
|
280,577 |
|
Cash, cash equivalents and
restricted cash, end of period |
|
$ |
565,195 |
|
|
$ |
785,136 |
|
|
|
|
|
|
|
|
|
|
PILGRIM’S PRIDE
CORPORATIONNon-GAAP Financial Measures
Reconciliation(Unaudited)
“EBITDA” is defined as the sum of net income
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) foreign currency transaction losses, (2) transaction costs
related to business acquisitions, (3) costs related to the DOJ
agreement and litigation settlements, (4) Hometown Strong
initiative expenses, (5) negative adjustment to previously
recognized gain on bargain purchase, (6) shareholder litigation
settlement, (7) deconsolidation of subsidiary and (8) 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
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 applicable to
continuing operations. 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. EBITDA
and Adjusted EBITDA have limitations as analytical tools and should
not be considered in isolation or as substitutes for an analysis of
our results as reported under U.S. GAAP. In addition, other
companies in our industry may calculate these measures differently
limiting their usefulness as a comparative measure. Because of
these limitations, EBITDA and Adjusted EBITDA should not be
considered as an alternative to net income as indicators of our
operating performance or any other measures of performance derived
in accordance with U.S. GAAP. These limitations should be
compensated for by relying primarily on our U.S. GAAP results and
using EBITDA and Adjusted EBITDA only on a supplemental basis.
PILGRIM'S PRIDE CORPORATION |
Reconciliation of Adjusted EBITDA |
(Unaudited) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
September 26, 2021 |
|
September 27, 2020 |
|
September 26, 2021 |
|
September 27, 2020 |
|
|
|
(In thousands) |
Net income (loss) |
$ |
60,835 |
|
|
$ |
33,691 |
|
|
$ |
(5,200 |
) |
|
$ |
94,740 |
|
Add: |
|
|
|
|
|
|
|
Interest expense, net(a) |
28,589 |
|
|
28,801 |
|
|
106,366 |
|
|
90,964 |
|
Income tax expense |
30,385 |
|
|
22,344 |
|
|
55,931 |
|
|
57,900 |
|
Depreciation and amortization |
92,076 |
|
|
84,265 |
|
|
274,336 |
|
|
248,641 |
|
EBITDA |
211,885 |
|
|
169,101 |
|
|
431,433 |
|
|
492,245 |
|
Add: |
|
|
|
|
|
|
|
Foreign currency transaction loss (gain)(b) |
2,359 |
|
|
9,092 |
|
|
9,018 |
|
|
(3,768 |
) |
Transaction costs related to acquisitions(c) |
6,773 |
|
|
— |
|
|
9,318 |
|
|
134 |
|
DOJ agreement and litigation settlements(d) |
126,000 |
|
|
110,524 |
|
|
524,285 |
|
|
110,524 |
|
Hometown Strong commitment(e) |
— |
|
|
14,506 |
|
|
— |
|
|
14,506 |
|
Minus: |
|
|
|
|
|
|
|
Negative adjustment to previously recognized gain on bargain
purchase(f) |
— |
|
|
(2,006 |
) |
|
— |
|
|
(3,746 |
) |
Shareholder litigation settlement(g) |
— |
|
|
— |
|
|
— |
|
|
34,643 |
|
Deconsolidation of subsidiary(h) |
— |
|
|
— |
|
|
1,131 |
|
|
— |
|
Net income attributable to noncontrolling interest |
110 |
|
|
245 |
|
|
554 |
|
|
62 |
|
Adjusted EBITDA |
$ |
346,907 |
|
|
$ |
304,984 |
|
|
$ |
972,369 |
|
|
$ |
582,682 |
|
(a) Interest expense, net, consists of
interest expense less interest income.(b) The Company
measures the financial statements of its Mexico reportable segment
as if the U.S. dollar were the functional currency. Accordingly, we
remeasure assets and liabilities, other than nonmonetary assets, of
the Mexico reportable segment at current exchange rates. We
remeasure nonmonetary assets using the historical exchange rate in
effect on the date of each asset’s acquisition. Currency exchange
gains or losses resulting from these remeasurements, as well as,
from our U.K. and Europe reportable segment are included in the
line item Foreign currency transaction loss (gain) in the Condensed
Consolidated Statements of Income.(c) Transaction costs
related to acquisitions includes those charges that are incurred in
conjunction with business acquisitions.(d) On October 13,
2020, Pilgrims announced that we entered into a plea agreement (the
“Plea Agreement”) with the DOJ. As a result of the Plea Agreement,
we recognized a fine of $110,524,140. On February 23, 2021, the
Colorado Court approved the Plea Agreement and assessed a fine of
$107.9 million. For the nine months ended September 26, 2021,
Pilgrims has settled and paid a total of $214.4 million for
litigation settlements and expensed a total of $524.3
million.(e) The Hometown Strong initiative was developed to
help communities in which we operate respond to unexpected
challenges.(f) The gain on bargain purchase was recognized as
a result of the PPL acquisition in October 2019. The amount shown
above represents a working capital adjustment to the previously
recorded gain on bargain purchase.(g) Shareholder litigation
settlement is income received as a result of a settlement in the
first quarter of 2020.(h) This represents a gain recognized
as a result of deconsolidation of a subsidiary.
The summary unaudited consolidated income
statement data for the twelve months ended September 26, 2021 (the
LTM Period) have been calculated by subtracting the applicable
unaudited consolidated income statement data for the nine months
ended September 27, 2020 from the sum of (1) the applicable audited
consolidated income statement data for the year ended December 27,
2020 and (2) the applicable unaudited consolidated income statement
data for the nine months ended September 26, 2021.
PILGRIM'S PRIDE CORPORATION |
Reconciliation of LTM Adjusted EBITDA |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
LTM Ended |
|
|
December 27,2020 |
|
March 28,2021 |
|
June 27,2021 |
|
September 26,2021 |
|
September 26,2021 |
|
|
|
|
|
(In thousands) |
Net income (loss) |
|
$ |
330 |
|
|
$ |
100,468 |
|
|
$ |
(166,503 |
) |
|
$ |
60,835 |
|
|
$ |
(4,870 |
) |
Add: |
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
27,849 |
|
|
27,968 |
|
|
49,809 |
|
|
28,589 |
|
|
134,215 |
|
Income tax expense (benefit) |
|
8,855 |
|
|
35,358 |
|
|
(9,812 |
) |
|
30,385 |
|
|
64,786 |
|
Depreciation and amortization |
|
88,463 |
|
|
86,532 |
|
|
95,728 |
|
|
92,076 |
|
|
362,799 |
|
EBITDA |
|
125,497 |
|
|
250,326 |
|
|
(30,778 |
) |
|
211,885 |
|
|
556,930 |
|
Add: |
|
|
|
|
|
|
|
|
|
|
Foreign currency transaction losses |
|
4,528 |
|
|
2,514 |
|
|
4,145 |
|
|
2,359 |
|
|
13,546 |
|
Transaction costs related to acquisitions |
|
— |
|
|
— |
|
|
2,545 |
|
|
6,773 |
|
|
9,318 |
|
DOJ agreement and litigation settlements |
|
75,000 |
|
|
2,399 |
|
|
395,886 |
|
|
126,000 |
|
|
599,285 |
|
Restructuring charges |
|
123 |
|
|
— |
|
|
— |
|
|
— |
|
|
123 |
|
Hometown Strong commitment |
|
494 |
|
|
— |
|
|
— |
|
|
— |
|
|
494 |
|
Minus: |
|
|
|
|
|
|
|
|
|
|
Deconsolidation of subsidiary |
|
— |
|
|
1,131 |
|
|
— |
|
|
— |
|
|
1,131 |
|
Net income attributable to noncontrolling interest |
|
251 |
|
|
260 |
|
|
184 |
|
|
110 |
|
|
805 |
|
Adjusted EBITDA |
|
$ |
205,391 |
|
|
$ |
253,848 |
|
|
$ |
371,614 |
|
|
$ |
346,907 |
|
|
$ |
1,177,760 |
|
EBITDA margins have been calculated by taking
the relevant unaudited EBITDA figures, then dividing by net sales
for the applicable period. EBITDA margins are presented because
they are used by management and we believe it is frequently used by
securities analysts, investors and other interested parties, as a
supplement to our results prepared in accordance with U.S. GAAP, to
compare the performance of companies.
PILGRIM'S PRIDE CORPORATION |
Reconciliation of EBITDA Margin |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 26,2021 |
|
September 27,2020 |
|
September 26,2021 |
|
|
September 27,2020 |
|
September 26,2021 |
|
September 27,2020 |
|
September 26,2021 |
|
September 27,2020 |
|
|
|
|
|
(In thousands) |
Net income (loss) |
|
$ |
60,835 |
|
$ |
33,691 |
|
|
$ |
(5,200 |
) |
|
$ |
94,740 |
|
|
1.59 |
% |
|
1.10 |
% |
|
(0.05 |
)% |
|
1.06 |
% |
Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
28,589 |
|
28,801 |
|
|
106,366 |
|
|
90,964 |
|
|
0.75 |
% |
|
0.94 |
% |
|
0.99 |
% |
|
1.01 |
% |
Income tax expense |
|
30,385 |
|
22,344 |
|
|
55,931 |
|
|
57,900 |
|
|
0.79 |
% |
|
0.73 |
% |
|
0.52 |
% |
|
0.65 |
% |
Depreciation and amortization |
|
92,076 |
|
84,265 |
|
|
274,336 |
|
|
248,641 |
|
|
2.40 |
% |
|
2.74 |
% |
|
2.55 |
% |
|
2.77 |
% |
EBITDA |
|
211,885 |
|
169,101 |
|
|
431,433 |
|
|
492,245 |
|
|
5.53 |
% |
|
5.51 |
% |
|
4.01 |
% |
|
5.49 |
% |
Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency transaction losses (gains) |
|
2,359 |
|
9,092 |
|
|
9,018 |
|
|
(3,768 |
) |
|
0.06 |
% |
|
0.29 |
% |
|
0.08 |
% |
|
(0.04 |
)% |
Transaction costs related to business acquisitions |
|
6,773 |
|
— |
|
|
9,318 |
|
|
134 |
|
|
0.18 |
% |
|
— |
% |
|
0.09 |
% |
|
— |
% |
DOJ agreement and litigation settlements |
|
126,000 |
|
110,524 |
|
|
524,285 |
|
|
110,524 |
|
|
3.29 |
% |
|
3.59 |
% |
|
4.88 |
% |
|
1.23 |
% |
Restructuring activity |
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
% |
|
— |
% |
|
— |
% |
|
— |
% |
Hometown Strong commitment |
|
— |
|
14,506 |
|
|
— |
|
|
14,506 |
|
|
— |
% |
|
0.47 |
% |
|
— |
% |
|
0.16 |
% |
Minus: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Negative adjustment to previously recognized gain on bargain
purchase |
|
— |
|
(2,006 |
) |
|
— |
|
|
(3,746 |
) |
|
— |
% |
|
(0.07 |
)% |
|
— |
% |
|
(0.04 |
)% |
Shareholder litigation settlement |
|
— |
|
— |
|
|
— |
|
|
34,643 |
|
|
— |
% |
|
— |
% |
|
— |
% |
|
0.39 |
% |
Deconsolidation of subsidiary |
|
— |
|
— |
|
|
1,131 |
|
|
— |
|
|
— |
% |
|
— |
% |
|
0.01 |
% |
|
— |
% |
Net income attributable to noncontrolling interest |
|
110 |
|
245 |
|
|
554 |
|
|
62 |
|
|
— |
% |
|
0.01 |
% |
|
0.01 |
% |
|
— |
% |
Adjusted EBITDA |
|
$ |
346,907 |
|
$ |
304,984 |
|
|
$ |
972,369 |
|
|
$ |
582,682 |
|
|
9.06 |
% |
|
9.92 |
% |
|
9.04 |
% |
|
6.49 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
3,827,566 |
|
$ |
3,075,121 |
|
|
$ |
10,738,689 |
|
|
$ |
8,974,072 |
|
|
$ |
3,827,566 |
|
|
$ |
3,075,121 |
|
|
$ |
10,738,689 |
|
|
$ |
8,974,072 |
|
Adjusted Operating Income is calculated by
adding to Operating Income certain items of expense and deducting
from Operating Income certain items of income. Management believes
that presentation of Adjusted Operating Income provides useful
supplemental information about our operating performance and
enables comparison of our performance between periods because
certain costs shown below are not indicative of our current
operating performance. A reconciliation of GAAP operating income to
adjusted operating income as follows:
PILGRIM'S PRIDE CORPORATION |
Reconciliation of Adjusted Operating Income |
(Unaudited) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
September 26, 2021 |
|
September 27, 2020 |
|
September 26, 2021 |
|
September 27, 2020 |
|
|
|
(In thousands) |
GAAP operating income (loss) (U.S. operations) |
$ |
70,666 |
|
|
$ |
2,451 |
|
|
$ |
(85,380 |
) |
|
$ |
126,951 |
|
Transaction costs related to acquisitions |
6,773 |
|
|
— |
|
|
9,318 |
|
|
— |
|
DOJ agreement and litigation settlements |
126,000 |
|
|
110,524 |
|
|
524,285 |
|
|
110,524 |
|
Hometown Strong commitment |
— |
|
|
14,506 |
|
|
— |
|
|
14,506 |
|
Adjusted operating income
(U.S. operations) |
$ |
203,439 |
|
|
$ |
127,481 |
|
|
$ |
448,223 |
|
|
$ |
251,981 |
|
Adjusted operating income
margin (U.S. operations) |
8.2 |
% |
|
6.7 |
% |
|
6.7 |
% |
|
4.5 |
% |
Adjusted Operating Income Margin for the U.S. is
calculated by dividing Adjusted operating income by Net Sales.
Management believes that presentation of Adjusted Operating Income
Margin provides useful supplemental information about our operating
performance and enables comparison of our performance between
periods because certain costs shown below are not indicative of our
current operating performance. A reconciliation of GAAP operating
income margin for the U.S. to adjusted operating income margin for
the U.S. is as follows:
PILGRIM'S PRIDE CORPORATION |
Reconciliation of GAAP Operating Income Margin to Adjusted
Operating Income Margin |
(Unaudited) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
September 26, 2021 |
|
September 27, 2020 |
|
September 26, 2021 |
|
September 27, 2020 |
|
|
|
(In percent) |
GAAP operating income (loss) margin (U.S. operations) |
2.9 |
% |
|
0.1 |
% |
|
(1.3 |
)% |
|
2.2 |
% |
Transaction costs related to acquisitions |
0.2 |
% |
|
— |
% |
|
0.1 |
% |
|
— |
% |
DOJ agreement and litigation settlements |
5.1 |
% |
|
5.8 |
% |
|
7.9 |
% |
|
2.0 |
% |
Hometown Strong commitment |
— |
% |
|
0.8 |
% |
|
— |
% |
|
0.3 |
% |
Adjusted operating income
margin (U.S. operations) |
8.2 |
% |
|
6.7 |
% |
|
6.7 |
% |
|
4.5 |
% |
Adjusted net income attributable to Pilgrim's
Pride Corporation (“Pilgrim's”) is calculated by adding to Net
income attributable to Pilgrim's certain items of expense and
deducting from Net income attributable to Pilgrim's certain items
of income, as shown below in the table. Adjusted net income
attributable to Pilgrim’s Pride Corporation per common diluted
share 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 U.S. GAAP, to compare the performance
of companies. Management also believe that this non-U.S. GAAP
financial measure, in combination with our financial results
calculated in accordance with U.S. GAAP, provides investors with
additional perspective regarding the impact of such charges on net
income attributable to Pilgrim’s Pride Corporation per common
diluted share. Adjusted net income attributable to Pilgrim’s Pride
Corporation per common diluted share is not a measurement of
financial performance under U.S. GAAP, has limitations as an
analytical tool and should not be considered in isolation or as a
substitute for an analysis of our results as reported under U.S.
GAAP. Management believes that presentation of adjusted net income
attributable to Pilgrim’s provides useful supplemental information
about our operating performance and enables comparison of our
performance between periods because certain costs shown below are
not indicative of our current operating performance. A
reconciliation of net income attributable to Pilgrim’s Pride
Corporation per common diluted share to adjusted net income
attributable to Pilgrim’s Pride Corporation per common diluted
share is as follows:
PILGRIM'S PRIDE CORPORATION |
Reconciliation of Adjusted Net Income |
(Unaudited) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
September 26, 2021 |
|
September 27, 2020 |
|
September 26, 2021 |
|
September 27, 2020 |
|
|
|
(In thousands, except per share data) |
Net income (loss) attributable to Pilgrim's |
$ |
60,725 |
|
|
$ |
33,446 |
|
|
$ |
(5,754 |
) |
|
$ |
94,678 |
|
Add: |
|
|
|
|
|
|
|
Foreign currency transaction losses (gains) |
2,359 |
|
|
9,092 |
|
|
9,018 |
|
|
(3,768 |
) |
Transaction costs related to acquisitions |
6,773 |
|
|
— |
|
|
9,318 |
|
|
134 |
|
DOJ agreement and litigation settlements |
126,000 |
|
|
110,524 |
|
|
524,285 |
|
|
110,524 |
|
Hometown Strong commitment |
— |
|
|
14,506 |
|
|
— |
|
|
14,506 |
|
Loss on early extinguishment of debt recognized as a component of
interest expense |
400 |
|
|
— |
|
|
24,654 |
|
|
— |
|
Minus: |
|
|
|
|
|
|
|
Deconsolidation of subsidiary |
— |
|
|
— |
|
|
1,131 |
|
|
— |
|
Adjusted net income
attributable to Pilgrim's before tax impact of adjustments |
196,257 |
|
|
167,568 |
|
|
560,390 |
|
|
216,074 |
|
Net tax impact of
adjustments(a) |
(33,761 |
) |
|
(5,916 |
) |
|
(141,026 |
) |
|
(9,158 |
) |
Adjusted net income
attributable to Pilgrim's |
$ |
162,496 |
|
|
$ |
161,652 |
|
|
$ |
419,364 |
|
|
$ |
206,916 |
|
Weighted average diluted
shares of common stock outstanding |
244,195 |
|
|
244,376 |
|
|
243,643 |
|
|
246,898 |
|
Adjusted net income
attributable to Pilgrim's per common diluted share |
$ |
0.67 |
|
|
$ |
0.66 |
|
|
$ |
1.72 |
|
|
$ |
0.84 |
|
(a) Net tax expense (benefit) of
adjustments represents the tax impact of all adjustments shown
above.
Adjusted EPS is calculated by dividing the adjusted net income
attributable to Pilgrim's stockholders by the weighted average
number of diluted shares. Management believes that Adjusted EPS
provides useful supplemental information about our operating
performance and enables comparison of our performance between
periods because certain costs shown below are not indicative of our
current operating performance. A reconciliation of U.S. GAAP to
non-U.S. GAAP financial measures is as follows:
PILGRIM'S PRIDE CORPORATION |
Reconciliation of GAAP EPS to Adjusted EPS |
(Unaudited) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
September 26, 2021 |
|
September 27, 2020 |
|
September 26, 2021 |
|
September 27, 2020 |
|
(In thousands, except per share data) |
GAAP EPS |
$ |
0.25 |
|
|
$ |
0.14 |
|
|
$ |
(0.02 |
) |
|
$ |
0.38 |
|
Add: |
|
|
|
|
|
|
|
Foreign currency transaction losses (gains) |
0.01 |
|
|
0.04 |
|
|
0.04 |
|
|
(0.02 |
) |
Transaction costs related to acquisitions |
0.03 |
|
|
— |
|
|
0.04 |
|
|
— |
|
DOJ agreement and litigation settlements |
0.52 |
|
|
0.45 |
|
|
2.15 |
|
|
0.45 |
|
Hometown Strong commitment |
— |
|
|
0.06 |
|
|
— |
|
|
0.06 |
|
Loss on early extinguishment of debt recognized as a component of
interest expense |
— |
|
|
— |
|
|
0.10 |
|
|
— |
|
Minus: |
|
|
|
|
|
|
|
Deconsolidation of subsidiary |
— |
|
|
— |
|
|
— |
|
|
— |
|
Adjusted EPS before tax impact
of adjustments |
0.81 |
|
|
0.69 |
|
|
2.31 |
|
|
0.87 |
|
Net tax impact of
adjustments(a) |
(0.14 |
) |
|
(0.02 |
) |
|
(0.59 |
) |
|
(0.03 |
) |
Adjusted EPS |
$ |
0.67 |
|
|
$ |
0.66 |
|
|
$ |
1.72 |
|
|
$ |
0.84 |
|
|
|
|
|
|
|
|
|
Weighted average diluted
shares of common stock outstanding |
244,195 |
|
|
244,376 |
|
|
243,643 |
|
|
246,898 |
|
|
|
|
|
|
|
|
|
(a) Net tax impact of adjustments represents the tax
impact of all adjustments shown above.
|
PILGRIM'S PRIDE CORPORATION |
Supplementary Selected Segment and Geographic
Data |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 26, 2021 |
|
September 27, 2020 |
|
September 26, 2021 |
|
September 27, 2020 |
|
|
|
|
|
(In thousands) |
Sources of net sales by
geographic region of origin: |
|
|
|
|
|
|
|
|
U.S. |
|
$ |
2,466,850 |
|
|
$ |
1,894,222 |
|
|
$ |
6,714,879 |
|
|
$ |
5,619,791 |
|
U.K. and Europe |
|
930,440 |
|
|
845,677 |
|
|
2,721,019 |
|
|
2,425,140 |
|
Mexico |
|
430,276 |
|
|
335,222 |
|
|
1,302,791 |
|
|
929,141 |
|
Total net sales |
|
$ |
3,827,566 |
|
|
$ |
3,075,121 |
|
|
$ |
10,738,689 |
|
|
$ |
8,974,072 |
|
|
|
|
|
|
|
|
|
|
Sources of cost of sales by
geographic region of origin: |
|
|
|
|
|
|
|
|
U.S. |
|
$ |
2,188,822 |
|
|
$ |
1,711,089 |
|
|
$ |
6,063,644 |
|
|
$ |
5,210,534 |
|
U.K. and Europe |
|
898,116 |
|
|
785,347 |
|
|
2,600,842 |
|
|
2,256,034 |
|
Mexico |
|
368,799 |
|
|
265,078 |
|
|
1,060,918 |
|
|
897,163 |
|
Elimination |
|
(14 |
) |
|
(235 |
) |
|
(42 |
) |
|
(459 |
) |
Total cost of sales |
|
$ |
3,455,723 |
|
|
$ |
2,761,279 |
|
|
$ |
9,725,362 |
|
|
$ |
8,363,272 |
|
|
|
|
|
|
|
|
|
|
Sources of gross profit by
geographic region of origin: |
|
|
|
|
|
|
|
|
U.S. |
|
$ |
278,028 |
|
|
$ |
183,133 |
|
|
$ |
651,235 |
|
|
$ |
409,257 |
|
U.K. and Europe |
|
32,324 |
|
|
60,330 |
|
|
120,177 |
|
|
169,106 |
|
Mexico |
|
61,477 |
|
|
70,144 |
|
|
241,873 |
|
|
31,978 |
|
Elimination |
|
14 |
|
|
235 |
|
|
42 |
|
|
459 |
|
Total gross profit |
|
$ |
371,843 |
|
|
$ |
313,842 |
|
|
$ |
1,013,327 |
|
|
$ |
610,800 |
|
|
|
|
|
|
|
|
|
|
Sources of operating income
(loss) by geographic region of origin: |
|
|
|
|
|
|
|
|
U.S. |
|
$ |
70,666 |
|
|
$ |
2,451 |
|
|
$ |
(85,380 |
) |
|
$ |
126,951 |
|
U.K. and Europe |
|
445 |
|
|
29,949 |
|
|
32,771 |
|
|
76,324 |
|
Mexico |
|
49,652 |
|
|
61,653 |
|
|
208,677 |
|
|
2,229 |
|
Elimination |
|
14 |
|
|
235 |
|
|
42 |
|
|
459 |
|
Total operating income |
|
$ |
120,777 |
|
|
$ |
94,288 |
|
|
$ |
156,110 |
|
|
$ |
205,963 |
|
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