Pilgrim’s Pride Corporation (NASDAQ: PPC), one of the world's
largest poultry producers, reports its second quarter 2021
financial results.
Second Quarter Highlights
- Net Sales of $3.64 billion, up 29% from prior year.
- Consolidated GAAP Operating Income margin of (3.4)% with GAAP
Operating Income margins of (10.0)% in U.S., 17.5% in Mexico
and 2.3% in Europe. Adjusted U.S. Operating Income margin of
7.8%.
- GAAP Net Loss of $(166.7) million. Adjusted Net Income of
$153.8 million or adjusted EPS of $0.63.
- Adjusted EBITDA of $371.6 million, or a 10.2% margin, 231.2%
higher than a year ago.
- Demand in the U.S. continues to recover, with our foodservice
business improving year-over-year and sequentially, achieving
levels higher than pre-pandemic, while Retail volumes remain
strong. Our business has improved its margins, especially on the
Commodity large bird deboning operation, despite higher input costs
and less than optimal mix due to significant labor shortages.
- Mexico maintained its strong momentum during the second
quarter. Solid execution, improved overall economic conditions,
supply/demand balance, and our increased share of non-commodity
products contributed to the continued strength.
- Our combined European business continues to achieve operational
improvements and benefited in the quarter with year-over-year and
sequential improvements in foodservice volumes in the UK, offset by
continued increases in feed costs, which are not yet fully
reflected in prices, and lower pig pricing in the region.
- We continue to expand our ESG agenda by releasing our Pilgrim's
2020 Sustainability Report - “Eat Proudly.” The report details our
global progress in key priority areas such as animal care, team
members, environment, communities, customers and consumers, and
suppliers.
- Recorded an aggregate legal contingency accrual of $396
million.
- Our liquidity position remains strong with an Adjusted EBITDA
net leverage ratio at 1.6x.
- Continued with our growth strategy the announcement of our
intended acquisition of the Kerry Consumer Foods' Meats and Meals
business in the U.K. and Ireland. Following the acquisition,
Pilgrim's will be a leading food company with a significant
value-added protein and integrated prepared foods business anchored
by a portfolio of strong brands.
(Unaudited) |
|
Three Months Ended |
|
Six Months Ended |
|
|
June 27,2021 |
|
June 28,2020 |
|
Y/Y Change |
|
June 27,2021 |
|
June 28,2020 |
|
Y/Y Change |
|
|
(In millions, except per share and
percentages) |
Net sales |
|
$ |
3,637.7 |
|
|
$ |
2,824.0 |
|
|
+28.8 |
% |
|
$ |
6,911.1 |
|
|
$ |
5,899.0 |
|
|
+17.2 |
% |
U.S. GAAP EPS |
|
$ |
(0.68 |
) |
|
$ |
(0.02 |
) |
|
+3300.0 |
% |
|
$ |
(0.27 |
) |
|
$ |
0.25 |
|
|
(208.0 |
)% |
Operating income |
|
$ |
(123.1 |
) |
|
$ |
27.3 |
|
|
(550.9 |
)% |
|
$ |
35.3 |
|
|
$ |
111.7 |
|
|
(68.4 |
)% |
Adjusted EBITDA(1) |
|
$ |
371.6 |
|
|
$ |
112.2 |
|
|
+231.2 |
% |
|
$ |
625.5 |
|
|
$ |
277.7 |
|
|
+125.2 |
% |
Adjusted EBITDA margin(1) |
|
10.2 |
% |
|
4.0 |
% |
|
+6.2 |
pts |
|
9.1 |
% |
|
4.7 |
% |
|
+4.4 |
pts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Reconciliations for non-U.S. GAAP measures are provided in
subsequent sections within this release.
“As the world emerges from the COVID-19 pandemic, more of the
population gets vaccinated and activities gradually return to
normal, we are optimistic that dining out, gathering with friends
and family for meals and eating lunch at work or at school will
once again become routine,” stated Fabio Sandri, Chief Executive
Officer of Pilgrim’s. “Our second quarter results reflect a shift
to more normal patterns in the U.S. as we saw a slight increase in
retail store trips and more foodservice locations reopened.
“Our U.S. business turned in a solid operational performance
despite higher and more volatile input costs and product mix issues
resulting from continued, albeit improving, labor challenges. Our
big bird business performed very well on commodity pricing that has
remained consistently near or above historical ranges. Our
foodservice business was stronger than anticipated as restrictions
continued to ease, boosting demand back above 2019 levels. With
consumers’ continued emphasis on the retail channel, we further
expanded our retail branded presence. We grew our branded consumer
packaged foods business in the second quarter by 215% by investing
in our Just Bare® and Pilgrim’s® brands at retail and in
e-commerce.
“Meanwhile, our Mexico business had another strong quarter,
driven by a balanced supply/demand equation and continuous
improvements in operational performance, while effectively managing
higher grain pricing and supplying our customers with Fresh and
Prepared Foods under the Pilgrim’s®, Del Dia® and Alamesa®
brands.
“In Q2, although challenged by increasing grain costs, Moy Park
improved EBIT by 7% vs. the first quarter 2021. Moy Park continue
to deliver operational efficiencies, better agricultural
performance and improved yields to help offset grain cost and labor
challenges. Pilgrim’s UK has been affected by low hog prices and
rising grain costs. Despite similar labor challenges, the Pilgrim’s
UK operations have also improved its margins from the same period
last year.”
Conference Call Information
A conference call to discuss Pilgrim’s quarterly results will be
held tomorrow, July 29, 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/ppc210729.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 October 28, 2021.
About Pilgrim’s Pride
Pilgrim’s employs approximately 54,700 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 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 ProfilesInvestor
RelationsIRPPC@pilgrims.comwww.pilgrims.com |
|
|
|
PILGRIM’S PRIDE CORPORATION |
CONDENSED CONSOLIDATED BALANCE SHEETS |
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
|
June 27, 2021 |
|
December 27, 2020 |
|
|
(In thousands) |
Cash and cash equivalents |
|
$ |
391,805 |
|
|
$ |
547,624 |
|
Restricted cash and cash equivalents |
|
98,212 |
|
|
782 |
|
Trade
accounts and other receivables, less allowance for doubtful
accounts |
|
866,476 |
|
|
741,992 |
|
Accounts
receivable from related parties |
|
868 |
|
|
1,084 |
|
Inventories |
|
1,530,014 |
|
|
1,358,793 |
|
Income
taxes receivable |
|
51,351 |
|
|
69,397 |
|
Prepaid
expenses and other current assets |
|
190,574 |
|
|
183,039 |
|
Total current assets |
|
3,129,300 |
|
|
2,902,711 |
|
Deferred
tax assets |
|
5,494 |
|
|
5,471 |
|
Other
long-lived assets |
|
26,837 |
|
|
24,780 |
|
Operating lease assets, net |
|
295,391 |
|
|
288,886 |
|
Identified intangible assets, net |
|
589,536 |
|
|
589,913 |
|
Goodwill |
|
1,024,900 |
|
|
1,005,245 |
|
Property, plant and equipment, net |
|
2,677,387 |
|
|
2,657,491 |
|
Total assets |
|
$ |
7,748,845 |
|
|
$ |
7,474,497 |
|
|
|
|
|
|
Accounts
payable |
|
$ |
1,092,164 |
|
|
$ |
1,028,710 |
|
Accounts
payable to related parties |
|
8,595 |
|
|
9,650 |
|
Revenue
contract liabilities |
|
36,275 |
|
|
65,918 |
|
Accrued
expenses and other current liabilities |
|
1,051,546 |
|
|
807,847 |
|
Income
taxes payable |
|
30,681 |
|
|
— |
|
Current
maturities of long-term debt |
|
25,453 |
|
|
25,455 |
|
Total current liabilities |
|
2,244,714 |
|
|
1,937,580 |
|
Noncurrent operating lease liability, less current maturities |
|
221,345 |
|
|
217,432 |
|
Long-term debt, less current maturities |
|
2,270,298 |
|
|
2,255,546 |
|
Deferred
tax liabilities |
|
318,159 |
|
|
339,831 |
|
Other
long-term liabilities |
|
99,817 |
|
|
148,761 |
|
Total liabilities |
|
5,154,333 |
|
|
4,899,150 |
|
Common
stock |
|
2,614 |
|
|
2,612 |
|
Treasury
stock |
|
(345,134 |
) |
|
(345,134 |
) |
Additional paid-in capital |
|
1,959,558 |
|
|
1,954,334 |
|
Retained
earnings |
|
906,090 |
|
|
972,569 |
|
Accumulated other comprehensive income (loss) |
|
59,354 |
|
|
(20,620 |
) |
Total Pilgrim’s Pride Corporation stockholders’ equity |
|
2,582,482 |
|
|
2,563,761 |
|
Noncontrolling interest |
|
12,030 |
|
|
11,586 |
|
Total stockholders’ equity |
|
2,594,512 |
|
|
2,575,347 |
|
Total liabilities and stockholders’ equity |
|
$ |
7,748,845 |
|
|
$ |
7,474,497 |
|
|
|
|
|
|
|
|
|
|
PILGRIM’S PRIDE CORPORATION |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 27, 2021 |
|
June 28, 2020 |
|
June 27, 2021 |
|
June 28, 2020 |
|
|
(In thousands, except per share data) |
Net sales |
|
$ |
3,637,698 |
|
|
$ |
2,824,023 |
|
|
$ |
6,911,123 |
|
|
$ |
5,898,951 |
|
Cost of
sales |
|
3,257,457 |
|
|
2,704,164 |
|
|
6,269,639 |
|
|
5,601,993 |
|
Gross profit |
|
380,241 |
|
|
119,859 |
|
|
641,484 |
|
|
296,958 |
|
Selling,
general and administrative expense |
|
503,372 |
|
|
92,570 |
|
|
606,151 |
|
|
185,283 |
|
Operating income |
|
(123,131 |
) |
|
27,289 |
|
|
35,333 |
|
|
111,675 |
|
Interest
expense, net of capitalized interest |
|
50,651 |
|
|
32,323 |
|
|
80,985 |
|
|
65,011 |
|
Interest
income |
|
(842 |
) |
|
(1,158 |
) |
|
(3,208 |
) |
|
(2,848 |
) |
Foreign
currency transaction loss (gain) |
|
4,145 |
|
|
5,525 |
|
|
6,659 |
|
|
(12,860 |
) |
Miscellaneous, net |
|
(770 |
) |
|
(45 |
) |
|
(8,614 |
) |
|
(34,233 |
) |
Income before income taxes |
|
(176,315 |
) |
|
(9,356 |
) |
|
(40,489 |
) |
|
96,605 |
|
Income
tax expense |
|
(9,812 |
) |
|
(2,956 |
) |
|
25,546 |
|
|
35,556 |
|
Net income |
|
(166,503 |
) |
|
(6,400 |
) |
|
(66,035 |
) |
|
61,049 |
|
Less:
Net income attributable to noncontrolling interests |
|
184 |
|
|
(364 |
) |
|
444 |
|
|
(183 |
) |
Net income attributable to Pilgrim’s Pride Corporation |
|
$ |
(166,687 |
) |
|
$ |
(6,036 |
) |
|
$ |
(66,479 |
) |
|
$ |
61,232 |
|
|
|
|
|
|
|
|
|
|
Weighted average shares of Pilgrim's Pride Corporation
common stock outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
243,675 |
|
|
246,687 |
|
|
243,627 |
|
|
248,017 |
|
Effect of dilutive common stock equivalents |
|
— |
|
|
— |
|
|
— |
|
|
291 |
|
Diluted |
|
243,675 |
|
|
246,687 |
|
|
243,627 |
|
|
248,308 |
|
|
|
|
|
|
|
|
|
|
Net income attributable to Pilgrim's Pride Corporation per
share of common stock outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.68 |
) |
|
$ |
(0.02 |
) |
|
$ |
(0.27 |
) |
|
$ |
0.25 |
|
Diluted |
|
$ |
(0.68 |
) |
|
$ |
(0.02 |
) |
|
$ |
(0.27 |
) |
|
$ |
0.25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PILGRIM’S PRIDE CORPORATION AND SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(Unaudited) |
|
|
|
Six Months Ended |
|
|
June 27, 2021 |
|
June 28, 2020 |
|
|
(In thousands) |
Cash flows from operating
activities: |
|
|
|
|
Net income |
|
$ |
(66,035 |
) |
|
$ |
61,049 |
|
Adjustments to reconcile net income to cash provided by operating
activities: |
|
|
|
|
Depreciation and amortization |
|
182,260 |
|
|
164,376 |
|
Loss on early extinguishment of debt recognized as a component of
interest expense |
|
24,254 |
|
|
— |
|
Deferred income tax expense |
|
(32,809 |
) |
|
25,255 |
|
Stock-based compensation |
|
5,168 |
|
|
3,467 |
|
Gain on property disposals |
|
(5,057 |
) |
|
(1,587 |
) |
Loan cost amortization |
|
2,279 |
|
|
2,422 |
|
Accretion of discount related to Senior Notes |
|
675 |
|
|
491 |
|
Amortization of premium related to Senior Notes |
|
(167 |
) |
|
(334 |
) |
Loss (gain) on equity-method investments |
|
(8 |
) |
|
304 |
|
Negative adjustment to previously recognized gain on bargain
purchase |
|
— |
|
|
1,740 |
|
Changes in operating assets and liabilities: |
|
|
|
|
Trade accounts and other receivables |
|
(117,610 |
) |
|
29,920 |
|
Inventories |
|
(173,947 |
) |
|
16,350 |
|
Prepaid expenses and other current assets |
|
(6,027 |
) |
|
(22,072 |
) |
Accounts payable, accrued expenses and other current
liabilities |
|
266,487 |
|
|
(122,191 |
) |
Income taxes |
|
46,638 |
|
|
(27,350 |
) |
Long-term pension and other postretirement obligations |
|
(9,507 |
) |
|
(1,908 |
) |
Other operating assets and liabilities |
|
(1,642 |
) |
|
10,794 |
|
Cash provided by operating
activities |
|
114,952 |
|
|
140,726 |
|
Cash flows from investing
activities: |
|
|
|
|
Acquisitions of property, plant and equipment |
|
(183,744 |
) |
|
(148,175 |
) |
Proceeds from property disposals |
|
21,385 |
|
|
9,894 |
|
Purchase of acquired business, net of cash acquired |
|
— |
|
|
(4,216 |
) |
Cash used in investing
activities |
|
(162,359 |
) |
|
(142,497 |
) |
Cash flows from financing
activities: |
|
|
|
|
Proceeds from revolving line of credit and long-term
borrowings |
|
1,540,133 |
|
|
356,547 |
|
Payments on revolving line of credit, long-term borrowings and
finance lease obligations |
|
(1,522,416 |
) |
|
(20,105 |
) |
Payment on early extinguishment of debt |
|
(21,258 |
) |
|
— |
|
Payment of capitalized loan costs |
|
(8,650 |
) |
|
— |
|
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 |
|
— |
|
|
(77,879 |
) |
Cash provided by financing
activities |
|
(12,841 |
) |
|
258,563 |
|
Effect of exchange rate
changes on cash and cash equivalents |
|
1,859 |
|
|
(2,896 |
) |
Increase in cash, cash
equivalents and restricted cash |
|
(58,389 |
) |
|
253,896 |
|
Cash, cash equivalents and
restricted cash, beginning of period |
|
548,406 |
|
|
280,577 |
|
Cash, cash equivalents and
restricted cash, end of period |
|
$ |
490,017 |
|
|
$ |
534,473 |
|
|
|
|
|
|
|
|
|
|
PILGRIM’S PRIDE CORPORATION
Non-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 loss (gain), (2) transaction
costs from business acquisitions, (3) DOJ agreement &
litigation settlements, (4) negative adjustment to previously
recognized gain on bargain purchase, (5) shareholder litigation
settlement, (6) deconsolidation of a subsidiary and (7) net income
attributable to noncontrolling interest. 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 |
|
Six Months Ended |
|
June 27, 2021 |
|
June 28, 2020 |
|
June 27, 2021 |
|
June 28, 2020 |
|
(In thousands) |
Net income |
$ |
(166,503 |
) |
|
$ |
(6,400 |
) |
|
$ |
(66,035 |
) |
|
$ |
61,049 |
|
Add: |
|
|
|
|
|
|
|
Interest expense, net(a) |
49,809 |
|
|
31,165 |
|
|
77,777 |
|
|
62,163 |
|
Income tax expense |
(9,812 |
) |
|
(2,956 |
) |
|
25,546 |
|
|
35,556 |
|
Depreciation and amortization |
95,728 |
|
|
84,603 |
|
|
182,260 |
|
|
164,376 |
|
EBITDA |
(30,778 |
) |
|
106,412 |
|
|
219,548 |
|
|
323,144 |
|
Add: |
|
|
|
|
|
|
|
Foreign currency transaction loss (gain)(b) |
4,145 |
|
|
5,525 |
|
|
6,659 |
|
|
(12,860 |
) |
Transaction costs related to acquisitions(c) |
2,545 |
|
|
(81 |
) |
|
2,545 |
|
|
134 |
|
DOJ agreement & litigation settlements(d) |
395,886 |
|
|
— |
|
|
398,285 |
|
|
— |
|
Minus: |
|
|
|
|
|
|
|
Negative adjustment to previously recognized gain on bargain
purchase(e) |
— |
|
|
— |
|
|
— |
|
|
(1,740 |
) |
Shareholder litigation settlement(f) |
— |
|
|
— |
|
|
— |
|
|
34,643 |
|
Deconsolidation of subsidiary(g) |
— |
|
|
— |
|
|
1,131 |
|
|
— |
|
Net income attributable to noncontrolling interest |
184 |
|
|
(364 |
) |
|
444 |
|
|
(183 |
) |
Adjusted EBITDA |
$ |
371,614 |
|
|
$ |
112,220 |
|
|
$ |
625,462 |
|
|
$ |
277,698 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 have 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. The difference from prior accrual to updated amount
was recognized during the three months ended March 28, 2021. This
difference recognized in the three and six months ended June 28,
2021 was offset by amounts recognized in anticipation of probable
settlements in ongoing litigation.(e) 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.(f) Shareholder
litigation settlement is income received as a result of a
settlement in the first quarter of 2020. (g) 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 June 27, 2021 (the LTM
Period) have been calculated by subtracting the applicable
unaudited consolidated income statement data for the six months
ended June 28, 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 six months ended June 27, 2021.
PILGRIM'S PRIDE CORPORATION |
Reconciliation of LTM Adjusted EBITDA |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
LTM Ended |
|
|
September 27,2020 |
|
December 27,2020 |
|
March 28,2021 |
|
June 27,2021 |
|
June 27,2021 |
|
|
(In thousands) |
Net income |
|
$ |
33,691 |
|
|
$ |
330 |
|
|
$ |
100,468 |
|
|
$ |
(166,503 |
) |
|
$ |
(32,014 |
) |
Add: |
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
28,801 |
|
|
27,849 |
|
|
27,968 |
|
|
49,809 |
|
|
134,427 |
|
Income tax expense |
|
22,344 |
|
|
8,855 |
|
|
35,358 |
|
|
(9,812 |
) |
|
56,745 |
|
Depreciation and amortization |
|
84,265 |
|
|
88,463 |
|
|
86,532 |
|
|
95,728 |
|
|
354,988 |
|
EBITDA |
|
169,101 |
|
|
125,497 |
|
|
250,326 |
|
|
(30,778 |
) |
|
514,146 |
|
Add: |
|
|
|
|
|
|
|
|
|
|
Foreign currency transaction losses |
|
9,092 |
|
|
4,528 |
|
|
2,514 |
|
|
4,145 |
|
|
20,279 |
|
Transaction costs related to acquisitions |
|
— |
|
|
— |
|
|
— |
|
|
2,545 |
|
|
2,545 |
|
DOJ agreement & litigation settlements |
|
110,524 |
|
|
75,000 |
|
|
2,399 |
|
|
395,886 |
|
|
583,809 |
|
Restructuring charges |
|
— |
|
|
123 |
|
|
— |
|
|
— |
|
|
123 |
|
Hometown Strong commitment |
|
14,506 |
|
|
494 |
|
|
— |
|
|
— |
|
|
15,000 |
|
Minus: |
|
|
|
|
|
|
|
|
|
|
Negative adjustment to previously recognized gain on bargain
purchase |
|
(2,006 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(2,006 |
) |
Deconsolidation of subsidiary |
|
— |
|
|
— |
|
|
1,131 |
|
|
— |
|
|
1,131 |
|
Net income (loss) attributable to noncontrolling interest |
|
245 |
|
|
251 |
|
|
260 |
|
|
184 |
|
|
940 |
|
Adjusted EBITDA |
|
$ |
304,984 |
|
|
$ |
205,391 |
|
|
$ |
253,848 |
|
|
$ |
371,614 |
|
|
$ |
1,135,837 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
Six Months Ended |
|
Three Months Ended |
|
Six Months Ended |
|
|
June 27, 2021 |
|
June 28, 2020 |
|
June 27, 2021 |
|
June 28, 2020 |
|
June 27, 2021 |
|
June 28, 2020 |
|
June 27, 2021 |
|
June 28, 2020 |
|
|
(In thousands) |
Net income |
|
$ |
(166,503 |
) |
|
$ |
(6,400 |
) |
|
$ |
(66,035 |
) |
|
$ |
61,049 |
|
|
(4.58 |
)% |
|
(0.23 |
)% |
|
(0.96 |
)% |
|
1.03 |
% |
Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
49,809 |
|
|
31,165 |
|
|
77,777 |
|
|
62,163 |
|
|
1.37 |
% |
|
1.10 |
% |
|
1.13 |
% |
|
1.05 |
% |
Income tax expense |
|
(9,812 |
) |
|
(2,956 |
) |
|
25,546 |
|
|
35,556 |
|
|
(0.27 |
)% |
|
(0.10 |
)% |
|
0.37 |
% |
|
0.60 |
% |
Depreciation and amortization |
|
95,728 |
|
|
84,603 |
|
|
182,260 |
|
|
164,376 |
|
|
2.63 |
% |
|
2.99 |
% |
|
2.63 |
% |
|
2.78 |
% |
EBITDA |
|
(30,778 |
) |
|
106,412 |
|
|
219,548 |
|
|
323,144 |
|
|
(0.85 |
)% |
|
3.76 |
% |
|
3.17 |
% |
|
5.46 |
% |
Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency transaction losses (gains) |
|
4,145 |
|
|
5,525 |
|
|
6,659 |
|
|
(12,860 |
) |
|
0.11 |
% |
|
0.19 |
% |
|
0.09 |
% |
|
(0.21 |
)% |
Transaction costs related to business acquisitions |
|
2,545 |
|
|
(81 |
) |
|
2,545 |
|
|
134 |
|
|
0.07 |
% |
|
— |
% |
|
0.04 |
% |
|
— |
% |
DOJ agreement & litigation settlements |
|
395,886 |
|
|
— |
|
|
398,285 |
|
|
— |
|
|
10.88 |
% |
|
— |
% |
|
5.76 |
% |
|
— |
% |
Minus: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Negative adjustment to previously recognized gain on bargain
purchase |
|
— |
|
|
— |
|
|
— |
|
|
(1,740 |
) |
|
— |
% |
|
— |
% |
|
— |
% |
|
(0.03 |
)% |
Shareholder litigation settlement |
|
— |
|
|
— |
|
|
— |
|
|
34,643 |
|
|
— |
% |
|
— |
% |
|
— |
% |
|
0.59 |
% |
Deconsolidation of subsidiary |
|
— |
|
|
— |
|
|
1,131 |
|
|
— |
|
|
— |
% |
|
— |
% |
|
0.02 |
% |
|
— |
% |
Net income attributable to noncontrolling interest |
|
184 |
|
|
(364 |
) |
|
444 |
|
|
(183 |
) |
|
0.01 |
% |
|
(0.01 |
)% |
|
0.01 |
% |
|
— |
% |
Adjusted EBITDA |
|
$ |
371,614 |
|
|
$ |
112,220 |
|
|
$ |
625,462 |
|
|
$ |
277,698 |
|
|
10.20 |
% |
|
3.96 |
% |
|
9.03 |
% |
|
4.69 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
3,637,698 |
|
|
$ |
2,824,023 |
|
|
$ |
6,911,123 |
|
|
$ |
5,898,951 |
|
|
$ |
3,637,698 |
|
|
$ |
2,824,023 |
|
|
$ |
6,911,123 |
|
|
$ |
5,898,951 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
Six Months Ended |
|
June 27, 2021 |
|
June 28, 2020 |
|
June 27, 2021 |
|
June 28, 2020 |
|
(In thousands) |
GAAP operating income (U.S. operations) |
$ |
(224,171 |
) |
|
$ |
39,448 |
|
|
$ |
(156,046 |
) |
|
$ |
124,500 |
|
Transaction costs related to acquisitions |
2,545 |
|
|
(81 |
) |
|
2,545 |
|
|
134 |
|
DOJ agreement & litigation settlements |
395,886 |
|
|
— |
|
|
398,285 |
|
|
— |
|
Adjusted operating income
(U.S. operations) |
$ |
174,260 |
|
|
$ |
39,367 |
|
|
$ |
244,784 |
|
|
$ |
124,634 |
|
|
|
|
|
|
|
|
|
Adjusted operating income
margin (U.S. operations) |
7.8 |
% |
|
2.2 |
% |
|
5.8 |
% |
|
3.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
Six Months Ended |
|
June 27, 2021 |
|
June 28, 2020 |
|
June 27, 2021 |
|
June 28, 2020 |
|
(In percent) |
GAAP operating income margin (U.S. operations) |
(10.0 |
)% |
|
2.2 |
% |
|
(3.7 |
)% |
|
3.3 |
% |
Transaction costs related to acquisitions |
0.1 |
% |
|
— |
% |
|
0.1 |
% |
|
— |
% |
DOJ agreement & litigation settlements |
17.7 |
% |
|
— |
% |
|
9.4 |
% |
|
— |
% |
Adjusted operating income
margin (U.S. operations) |
7.8 |
% |
|
2.2 |
% |
|
5.8 |
% |
|
3.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
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 believes 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 |
|
Six Months Ended |
|
June 27, 2021 |
|
June 28, 2020 |
|
June 27, 2021 |
|
June 28, 2020 |
|
(In thousands, except per share data) |
Net income attributable to Pilgrim's |
$ |
(166,687 |
) |
|
$ |
(6,036 |
) |
|
$ |
(66,479 |
) |
|
$ |
61,232 |
|
Add: |
|
|
|
|
|
|
|
Foreign currency transaction losses (gains) |
4,145 |
|
|
5,525 |
|
|
6,659 |
|
|
(12,860 |
) |
Transaction costs related to acquisitions |
2,545 |
|
|
(81 |
) |
|
2,545 |
|
|
134 |
|
DOJ agreement & litigation settlements |
395,886 |
|
|
— |
|
|
398,285 |
|
|
— |
|
Loss on early extinguishment of debt recognized as a component of
interest expense |
24,254 |
|
|
— |
|
|
24,254 |
|
|
— |
|
Minus: |
|
|
|
|
|
|
|
Deconsolidation of subsidiary |
— |
|
|
— |
|
|
1,131 |
|
|
— |
|
Adjusted net income
attributable to Pilgrim's before tax impact of adjustments |
260,143 |
|
|
(592 |
) |
|
364,133 |
|
|
48,506 |
|
Net tax impact of
adjustments(a) |
(106,323 |
) |
|
(1,356 |
) |
|
(107,265 |
) |
|
3,170 |
|
Adjusted net income
attributable to Pilgrim's |
$ |
153,820 |
|
|
$ |
(1,948 |
) |
|
$ |
256,868 |
|
|
$ |
51,676 |
|
Weighted average diluted
shares of common stock outstanding |
243,675 |
|
|
246,687 |
|
|
243,627 |
|
|
248,308 |
|
Adjusted net income
attributable to Pilgrim's per common diluted share |
$ |
0.63 |
|
|
$ |
(0.01 |
) |
|
$ |
1.05 |
|
|
$ |
0.21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 |
|
Six Months Ended |
|
June 27, 2021 |
|
June 28, 2020 |
|
June 27, 2021 |
|
June 28, 2020 |
|
(In thousands, except per share data) |
GAAP EPS |
$ |
(0.68 |
) |
|
$ |
(0.02 |
) |
|
$ |
(0.27 |
) |
|
$ |
0.25 |
|
Add: |
|
|
|
|
|
|
|
Foreign currency transaction losses (gains) |
0.02 |
|
|
0.02 |
|
|
0.03 |
|
|
(0.05 |
) |
Transaction costs related to acquisitions |
0.01 |
|
|
— |
|
|
0.01 |
|
|
— |
|
DOJ agreement & litigation settlements |
1.62 |
|
|
— |
|
|
1.63 |
|
|
— |
|
Loss on early extinguishment of debt recognized as a component of
interest expense |
0.10 |
|
|
— |
|
|
0.10 |
|
|
— |
|
Minus: |
|
|
|
|
|
|
|
Deconsolidation of subsidiary |
— |
|
|
— |
|
|
— |
|
|
— |
|
Adjusted EPS before tax impact
of adjustments |
1.07 |
|
|
— |
|
|
1.50 |
|
|
0.20 |
|
Net tax impact of
adjustments(a) |
(0.44 |
) |
|
(0.01 |
) |
|
(0.45 |
) |
|
0.01 |
|
Adjusted EPS |
$ |
0.63 |
|
|
$ |
(0.01 |
) |
|
$ |
1.05 |
|
|
$ |
0.21 |
|
|
|
|
|
|
|
|
|
Weighted average diluted
shares of common stock outstanding |
243,675 |
|
|
246,687 |
|
|
243,627 |
|
|
248,308 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 |
|
Six Months Ended |
|
|
June 27, 2021 |
|
June 28, 2020 |
|
June 27, 2021 |
|
June 28, 2020 |
|
|
(In thousands) |
Sources of net sales by
geographic region of origin: |
|
|
|
|
|
|
|
|
U.S. |
|
$ |
2,248,470 |
|
|
$ |
1,798,689 |
|
|
$ |
4,248,029 |
|
|
$ |
3,725,569 |
|
U.K. and Europe |
|
935,845 |
|
|
757,201 |
|
|
1,790,579 |
|
|
1,579,463 |
|
Mexico |
|
453,383 |
|
|
268,133 |
|
|
872,515 |
|
|
593,919 |
|
Total net sales |
|
$ |
3,637,698 |
|
|
$ |
2,824,023 |
|
|
$ |
6,911,123 |
|
|
$ |
5,898,951 |
|
|
|
|
|
|
|
|
|
|
Sources of cost of sales by
geographic region of origin: |
|
|
|
|
|
|
|
|
U.S. |
|
$ |
2,008,122 |
|
|
$ |
1,710,668 |
|
|
$ |
3,874,822 |
|
|
$ |
3,499,445 |
|
U.K. and Europe |
|
885,800 |
|
|
700,553 |
|
|
1,702,726 |
|
|
1,470,687 |
|
Mexico |
|
363,549 |
|
|
293,143 |
|
|
692,119 |
|
|
632,085 |
|
Elimination |
|
(14 |
) |
|
(200 |
) |
|
(28 |
) |
|
(224 |
) |
Total cost of sales |
|
$ |
3,257,457 |
|
|
$ |
2,704,164 |
|
|
$ |
6,269,639 |
|
|
$ |
5,601,993 |
|
|
|
|
|
|
|
|
|
|
Sources of gross profit by
geographic region of origin: |
|
|
|
|
|
|
|
|
U.S. |
|
$ |
240,348 |
|
|
$ |
88,021 |
|
|
$ |
373,207 |
|
|
$ |
226,124 |
|
U.K. and Europe |
|
50,045 |
|
|
56,648 |
|
|
87,853 |
|
|
108,776 |
|
Mexico |
|
89,834 |
|
|
(25,010 |
) |
|
180,396 |
|
|
(38,166 |
) |
Elimination |
|
14 |
|
|
200 |
|
|
28 |
|
|
224 |
|
Total gross profit |
|
$ |
380,241 |
|
|
$ |
119,859 |
|
|
$ |
641,484 |
|
|
$ |
296,958 |
|
|
|
|
|
|
|
|
|
|
Sources of operating income by
geographic region of origin: |
|
|
|
|
|
|
|
|
U.S. |
|
$ |
(224,171 |
) |
|
$ |
39,448 |
|
|
$ |
(156,046 |
) |
|
$ |
124,500 |
|
U.K. and Europe |
|
21,831 |
|
|
23,185 |
|
|
32,326 |
|
|
46,375 |
|
Mexico |
|
79,195 |
|
|
(35,544 |
) |
|
159,025 |
|
|
(59,424 |
) |
Elimination |
|
14 |
|
|
200 |
|
|
28 |
|
|
224 |
|
Total operating income |
|
$ |
(123,131 |
) |
|
$ |
27,289 |
|
|
$ |
35,333 |
|
|
$ |
111,675 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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