Pilgrim’s Pride Reports Operating Income of $231 Million With a Margin of 10.9% for the Third Quarter of 2015

GREELEY, Colo., Oct. 28, 2015 (GLOBE NEWSWIRE) — Pilgrim’s Pride Corporation (NASDAQ:PPC) reports third quarter 2015 financial results with Net Sales of $2.11 billion for the thirteen week period, compared to $2.27 billion for the same period in 2014. The 2015 Q3 Net Income was $137.1 million compared to the $256.0 million reported in the same period in 2014. Adjusted Earnings Per Share was $0.58 in the third quarter of 2015 compared to $1.01 in the same period last year, while adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) was $274.3 million, or a 13.0% margin.

“The continued challenges in the export markets, the strong dollar and the lowest chicken cutout in the past five years during Q3 have had an impact on the commodity segments of our business, and on our U.S. export and Mexico sales. Additionally, non-routine costs at two of our facilities further weighed on our results. Despite these challenges, our team has managed to produce solid margins compared to periods when prices were at similar levels,” stated Bill Lovette, Chief Executive Officer of Pilgrim’s.

“The Q3 results are a strong validation of our portfolio model, and the strategy we have pursued and implemented over the past four years is fundamental in improving our ability to maintain strong performance, minimize the impact of different market conditions, and give us more consistent financial results. Although we expect export markets to gradually reopen soon depending on the domestic AI situation, we choose not to stand still and be complacent. Instead, we continue to seek alternative and creative ways to reduce our dependencies on commodity products to produce more consistent margins by sharpening our focus on high growth markets. We also remain on track to extract $200 million in operational improvements for the year.”

“In spite of the tough environment last quarter, our cash flow generation continues to be strong and our team remains relentless in uncovering additional methods to increase operational efficiencies, enhance relationships with key customers, and build competitive advantages. We remain committed to creating and maximizing shareholder value while retaining our financial discipline. Year to date, we have paid out $1.5 billion in special dividend to our shareholders, acquired additional Mexican operations to improve our geographic diversification and competitiveness in one of the strongest emerging markets, and instituted a $150 million share repurchase agreement.”

Conference Call Information

A conference call to discuss Pilgrim’s quarterly results will be held tomorrow, October 29, at 7:00 a.m. MDT (9 a.m. EDT).  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/ppc151029.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 (866) 777-2509 within the US, or +1 (412) 317-5413, 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 30, 2015.

About Pilgrim’s Pride

Pilgrim’s employs approximately 38,700 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.  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. 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.

 
PILGRIM’S PRIDE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
 
    September 27, 2015   December 28, 2014
    (Unaudited)    
    (In thousands)
Cash and cash equivalents   $ 396,719     $ 576,143  
Trade accounts and other receivables, less allowance for doubtful accounts   369,681     378,890  
Account receivable from related parties   2,581     5,250  
Inventories   841,273     790,305  
Income taxes receivable   4,971     10,288  
Current deferred tax assets   37,561     27,345  
Prepaid expenses and other current assets   96,857     95,439  
Assets held for sale   6,555     1,419  
Total current assets   1,756,198     1,885,079  
Other long-lived assets   31,813     24,406  
Identified intangible assets, net   32,177     26,783  
Goodwill   174,431      
Property, plant and equipment, net   1,347,239     1,182,795  
Total assets   $ 3,341,858     $ 3,119,063  
         
Notes payable to banks   $ 5,869     $  
Accounts payable   524,025     399,486  
Account payable to related parties   10,402     4,862  
Accrued expenses and other current liabilities   304,459     311,879  
Income taxes payable   20,874     3,068  
Current deferred tax liabilities   40,368     25,301  
Current maturities of long-term debt   102     262  
Total current liabilities   906,099     744,858  
Long-term debt, less current maturities   1,000,398     3,980  
Deferred tax liabilities   89,589     76,216  
Other long-term liabilities   103,104     97,208  
Total liabilities   2,099,190     922,262  
Common stock   2,597     2,590  
Treasury stock   (45,080 )    
Additional paid-in capital   1,672,501     1,662,354  
Retained earnings (accumulated deficit)   (324,400 )   591,492  
Accumulated other comprehensive loss   (66,002 )   (62,541 )
Total Pilgrim’s Pride Corporation stockholders’ equity   1,239,616     2,193,895  
Noncontrolling interest   3,052     2,906  
Total stockholders’ equity   1,242,668     2,196,801  
Total liabilities and stockholders’ equity   $ 3,341,858     $ 3,119,063  
 

 
PILGRIM’S PRIDE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 
    Thirteen Weeks Ended   Thirty-Nine Weeks Ended
    September 27, 2015   September 28, 2014   September 27, 2015   September 28, 2014
    (In thousands, except per share data)
Net sales   $ 2,112,529     $ 2,268,048     $ 6,219,324     $ 6,472,929  
Cost of sales   1,827,985     1,817,783     5,125,640     5,458,083  
Gross profit   284,544     450,265     1,093,684     1,014,846  
Selling, general and administrative expense   52,620     44,629     150,961     138,437  
Administrative restructuring charges   792     135     5,605     2,286  
Operating income   231,132     405,501     937,118     874,123  
Interest expense, net of capitalized interest   10,501     11,372     26,870     45,407  
Interest income   (319 )   (1,171 )   (3,086 )   (2,974 )
Foreign currency transaction loss (gain)   12,773     6,414     23,806     4,932  
Miscellaneous, net   (2,071 )   (610 )   (7,135 )   (2,609 )
Income before income taxes   210,248     389,496     896,663     829,367  
Income tax expense   73,153     133,693     313,751     284,932  
Net income   137,095     255,803     582,912     544,435  
Less: Net income (loss) attributable to noncontrolling interests   33     (181 )   146     (26 )
Net income attributable to Pilgrim’s Pride Corporation   $ 137,062     $ 255,984     $ 582,766     $ 544,461  
                 
Weighted average shares of common stock outstanding:                
Basic   259,280     258,999     259,540     258,966  
Effect of dilutive common stock equivalents   223     523     225     482  
Diluted   259,503     259,522     259,765     259,448  
                 
Net income attributable to Pilgrim’s Pride Corporation per share of
  common stock outstanding:
               
Basic   $ 0.53     $ 0.99     $ 2.25     $ 2.10  
Diluted   $ 0.53     $ 0.99     $ 2.24     $ 2.10  
                                 

 
PILGRIM’S PRIDE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
    Thirty-Nine Weeks Ended
    September 27, 2015   September 28, 2014
    (In thousands)
Cash flows from operating activities:        
Net income   $ 582,912     $ 544,435  
Adjustments to reconcile net income to cash provided by operating activities:        
Depreciation and amortization   116,485     112,740  
Foreign currency transaction losses       8,585  
Accretion of bond discount       342  
Impairment expense   4,813      
Loss (gain) on property disposals   (9,817 )   (1,112 )
Gain on investment securities       (49 )
Share-based compensation   2,132     3,504  
Deferred income tax benefit   (7,214 )   (79,619 )
Changes in operating assets and liabilities:        
Trade accounts and other receivables   40,694     (35,785 )
Inventories   17,162     (10,339 )
Prepaid expenses and other current assets   (1,415 )   (16,694 )
Accounts payable, accrued expenses and other current liabilities   92,159     36,686  
Income taxes   17,836     239,944  
Deposits        
Long-term pension and other postretirement obligations   (2,668 )   (1,764 )
Other operating assets and liabilities   3,234     1,534  
Cash provided by operating activities   856,313     802,408  
Cash flows from investing activities:        
Acquisitions of property, plant and equipment   (129,848 )   (131,349 )
Business acquisition   (373,532 )    
Purchases of investment securities       (55,100 )
Proceeds from sale or maturity of investment securities       152,050  
Proceeds from property disposals   13,553     8,422  
Cash provided by (used in) investing activities   (489,827 )   (25,977 )
Cash flows from financing activities:        
Proceeds from note payable to bank   5,869      
Proceeds from revolving line of credit   1,680,000      
             
Payments on revolving line of credit, long-term borrowings and capital lease obligations   (683,742 )   (410,199 )
Tax benefit related to share-based compensation   7,835      
Sale of subsidiary common stock       332  
Payment of capitalized loan costs   (12,322 )    
Purchase of treasury stock   (45,080 )    
Cash dividends   (1,498,470 )    
Cash used in financing activities   (545,910 )   (409,867 )
Effect of exchange rate changes on cash and cash equivalents       (6,173 )
Increase (decrease) in cash and cash equivalents   (179,424 )   360,391  
Cash and cash equivalents, beginning of period   576,143     508,206  
Cash and cash equivalents, end of period   $ 396,719     $ 868,597  
 

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: (i) income (loss) attributable to non-controlling interests, (ii) restructuring charges, (iii) reorganization items, (iv) losses on early extinguishment of debt and (v) 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 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.  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.

 
PILGRIM’S PRIDE CORPORATION
Reconciliation of Adjusted EBITDA
 
(Unaudited)      
  Thirteen Weeks Ended   Thirty-Nine Weeks Ended
  September 27, 2015   September 28, 2014   September 27, 2015   September 28, 2014
  (In thousands)
Net income $ 137,095     $ 255,803     $ 582,912     $ 544,435  
Add:              
Interest expense, net 10,182     10,201     23,784     42,433  
Income tax expense (benefit) 73,153     133,693     313,751     284,932  
Depreciation and amortization 41,415     36,218     116,485     112,740  
Minus:              
Amortization of capitalized financing costs 1,119     871     2,708     7,364  
EBITDA 260,726     435,044     1,034,224     977,176  
Add:              
Foreign currency transaction losses (gains) 12,773     6,414     23,806     4,932  
Restructuring charges 792     135     5,605     2,286  
Minus:              
Net income (loss) attributable to noncontrolling interest 33     (181 )   146     (26 )
Adjusted EBITDA $ 274,258     $ 441,774     $ 1,063,489     $ 984,420  
 

The summary unaudited consolidated income statement data for the twelve months ended September 27, 2015 (the LTM Period) have been calculated by subtracting the applicable unaudited consolidated income statement data for the nine months ended September 28, 2014 from the sum of (1) the applicable audited consolidated income statement data for the year ended December 28, 2014 and (2) the applicable audited consolidated income statement data for the nine months ended September 27, 2015.

 
PILGRIM’S PRIDE CORPORATION
Reconciliation of Adjusted EBITDA
 
 (Unaudited)                    
    Thirteen Weeks Ended   Thirteen Weeks Ended   Thirteen Weeks Ended   Thirteen Weeks Ended   LTM Ended
    December 28,
 2014
  March 27,
 2015
  June 28,
 2015
  September 27,
 2015
  September 27, 
2015
  (In thousands)
Net income   $ 167,003     $ 204,193     $ 241,624     $ 137,095     $ 749,915  
Add:                    
Interest expense, net   34,838     3,365     10,237     10,182     58,622  
Income tax expense (benefit)   106,021     111,494     129,104     73,153     419,772  
Depreciation and amortization   43,084     36,152     38,918     41,415     159,569  
Asset impairments                    
Minus:                    
Amortization of capitalized financing costs   6,348     725     864     1,119     9,056  
EBITDA   344,598     354,479     419,019     260,726     1,378,822  
Add:                    
Foreign currency transaction losses (gains)   23,047     8,974     2,059     12,773     46,853  
Restructuring charges           4,813     792     5,605  
Minus:                    
Net income (loss) attributable to noncontrolling interest   (184 )   (22 )   135     33     (38 )
Adjusted EBITDA   $ 367,829     $ 363,475     $ 425,756     $ 274,258     $ 1,431,318  
 

A reconciliation of net income (loss) attributable to Pilgrim’s Pride Corporation per common diluted share to adjusted net income (loss) attributable to Pilgrim’s Pride Corporation per common diluted share is as follows:

 
PILGRIM’S PRIDE CORPORATION
Reconciliation of Adjusted Earnings
(Unaudited)
                 
    Thirteen Weeks Ended   Thirty-Nine Weeks Ended
    September 27,
 2015
  September 28,
 2014
  September 27,
 2015
  September 28,
 2014
    (In thousands, except per share data)
Net income (loss) attributable to Pilgrim’s Pride Corporation   $ 137,062     $ 255,984     $ 582,766     $ 544,461  
Loss on early extinguishment of debt           68      
Foreign currency transaction losses (gains)   12,773     6,414     23,806     4,932  
Income (loss) before loss on early extinguishment of debt and foreign currency transaction losses (gains)   149,835     262,398     606,640     549,393  
Weighted average diluted shares of common stock outstanding   259,503     259,522     259,765     259,448  
Income (loss) before loss on early extinguishment of debt and foreign currency transaction losses (gains) per common diluted share   $ 0.58     $ 1.01     $ 2.34     $ 2.12  
 

Net debt is defined as total long term debt less current maturities, plus current maturities of long term debt and notes payable, minus cash, cash equivalents and investments in available-for-sale securities.  Net debt is presented because it is used by management, 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:

 
PILGRIM’S PRIDE CORPORATION
Reconciliation of Net Debt
(Unaudited)
               
  December 30,   December 29,   December 28,   Thirty-Nine Weeks Ended
  2012   2013   2014   September 28,
 2014
  September 27,
 2015
  (In thousands)
Long term debt, less current maturities $ 1,148,870     $ 501,999     $ 3,980     $ 502,115     $ 1,000,398  
Add:  Current maturities of long term debt and notes payable 15,886     410,234     262     260     5,971  
Minus:  Cash and cash equivalents 68,180     508,206     576,143     868,597     396,719  
Minus:  Available-for-sale securities     96,902              
Net debt (cash position) $ 1,096,576     $ 307,125     $ (571,901 )   $ (366,222 )   $ 609,650  
 

 
PILGRIM’S PRIDE CORPORATION
Supplementary Selected Segment and Geographic Data
                 
    Thirteen Weeks Ended   Thirty-Nine Weeks Ended
    September 27, 2015   September 28, 2014   September 27, 2015   September 28, 2014
    (Unaudited)            
    (In thousands)
Sources of net sales by country of origin:                
US:   $ 1,798,375     $ 2,026,277     $ 5,479,993     $ 5,758,704  
Mexico:   314,154     241,771     739,331     714,225  
Total net sales:   $ 2,112,529     $ 2,268,048     $ 6,219,324     $ 6,472,929  
                 
Sources of cost of sales by country of origin:                
US:   $ 1,552,282     $ 1,634,863     $ 4,511,157     $ 4,900,087  
Mexico:   275,727     182,920     614,554     557,996  
Elimination:   (24 )       (71 )    
Total cost of sales:   $ 1,827,985     $ 1,817,783     $ 5,125,640     $ 5,458,083  
                 
Sources of gross profit by country of origin:                
US:   $ 246,093     $ 391,414     $ 968,836     $ 858,617  
Mexico:   38,427     58,851     124,777     156,229  
Elimination:   24         71      
Total gross profit:   $ 284,544     $ 450,265     $ 1,093,684     $ 1,014,846  
 

 

CONTACT: Contact:

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