Pilgrim's Pride Reports Third Quarter 2024 Results with $4.6 Billion in Net Sales and Operating Income of $508.4 Million
GREELEY, Colo., Oct. 30, 2024 (GLOBE NEWSWIRE) -- Pilgrim's Pride Corporation (NASDAQ:PPC), one of the world's largest poultry producers, reports its third quarter 2024 financial results.
Third Quarter Highlights
Net Sales of $4.6 billion.
Consolidated GAAP operating income margin of 11.1%.
GAAP Net Income of $350.0 million and GAAP EPS of $1.47. Adjusted Net Income of $387.0 million or Adjusted EPS of $1.63.
Adjusted EBITDA of $660.4 million, or a 14.4% margin.
Our U.S. Fresh portfolio continued to improve through progress in operational excellence, strong demand, and enhanced mix. Overall chicken demand was strong given competitive pricing and value delivered to the consumer, with our Key Customers expanding faster than category averages in the Case Ready and Small Bird segments. The Commodity segment improved given continued progress in production efficiencies and positive market fundamentals.
Diversification through value-added offerings continues to accelerate. Our branded prepared foods portfolio expanded across retail and foodservice through increased distribution and promotional activity.
Europe improved Adjusted EBITDA nearly 40% versus prior year given recent network and back office optimization efforts, enhanced mix with Key Customers, and further diversification through branded offerings and innovation. Richmond® and Fridge Raiders® continued to grow faster than category averages and our innovation efforts continue to be recognized by the market with multiple industry awards.
Mexico results followed normal seasonality, while continuing to cultivate partnerships with Key Customers as sales grew ahead of the market. Diversification efforts continued to progress as branded sales rose over 20%. Operational excellence efforts to expand production and mitigate risk remained on track.
Stronger liquidity position given healthy cash generation throughout the quarter. Net leverage ratio of 0.65x Adjusted EBITDA, providing the foundation to execute the company's growth strategy and create value for our shareholders.
Pilgrim's continued to demonstrate progress against its ESG aspirations as detailed in the publication of the 2023 Sustainability Report. Since 2019, performance against the Global Safety Index has improved by 69%, and Scope 1 and 2 absolute GHG emissions have been reduced by 17%. Also, since 2021, over 1,500 team members have signed up for tuition-free, higher education programs through our Better Futures initiative.
(Unaudited)
Three Months Ended
Nine Months Ended
September 29,2024
September 24,2023
Y/Y Change
September 29,2024
September 24,2023
Y/Y Change
(In millions, except per share and percentages)
Net sales
$
4,585.0
$
4,360.2
+5.2
%
$
13,506.2
$
12,833.9
+5.2
%
U.S. GAAP EPS
$
1.47
$
0.51
+188.2
%
$
3.58
$
0.79
+353.2
%
Operating income
$
508.4
$
206.4
+146.3
%
$
1,199.4
$
338.0
+254.9
%
Adjusted EBITDA(1)
$
660.4
$
324.0
+103.8
%
$
1,688.2
$
724.7
+133.0
%
Adjusted EBITDA margin(1)
14.4
%
7.4
%
+7.0pts
12.5
%
5.6
%
+6.9pts
(1)
Reconciliations for non-U.S. GAAP measures are provided in subsequent sections within this release.
"Throughout the quarter, we continued to emphasize operational excellence, diversify our portfolio and cultivate partnerships with Key Customers to drive value for the consumer. Our unrelenting focus on quality, service and innovation is reflected in our performance," said Fabio Sandri, Pilgrim's President and Chief Executive Officer.
In the U.S., the relative affordability and availability of chicken drove increased demand across retail and food service. Case Ready and Small Bird drove profitable growth as demand improved from Key Customers and there was continued progress in operational excellence. In Big Bird, profitability grew from sustained improvements in production efficiencies, lower input costs, and enhanced commodity cutout values. Similarly, Prepared continued to diversify the portfolio through incremental distribution across retail and foodservice.
"We partnered closely with our Key Customers to further cultivate consumer demand. As such, our approach accommodated changing input costs, enabling further investment in promotional activity, generating store traffic and driving growth well above the category. These efforts were amplified by attractive market fundamentals, especially in the Big Bird segment," Sandri said.
Europe realized its highest quarterly adjusted EBITDA to date given continued progress in operational excellence, further diversification through branded offerings and strengthening Key Customer partnerships. New product introductions continue to gain momentum as the business launched over 280 new products during the quarter.
"Our new product pipeline has generated significant marketplace interest. We received multiple industry awards during the quarter for innovation, quality and functionality for our recently launched items. Given these efforts, we can further scale partnerships with Key Customers, enhance mix through branded offerings, and grow our prepared portfolio," said Sandri.
Mexico continued to build its presence with Key Customers across retail and foodservice and further diversify its portfolio through brands. Investments in operational excellence to build capacity and drive operational efficiencies remained on track.
"Mexico continued to successfully drive all pillars of our strategies during typical seasonality for the business. As a result, we are increasingly well positioned to capture both short- and long-term growth opportunities," remarked Sandri.
Pilgrim's provided an update on its progress to become an industry leader in sustainability through the publication of its 2023 Sustainability Report. The report included an update on a variety of topics, including the company's exceptional safety performance, product integrity standards, and GHG emissions reductions.
"Sustainability is critical to achieve our vision of becoming the best and most respected company in our industry and creating a better future for our team members and their families," said Sandri.
Conference Call Information
A conference call to discuss Pilgrim's quarterly results will be held tomorrow, Oct. 31, at 7 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://dpregister.com/sreg/10193583/fdb3c986c1
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 62,000 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: 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 channels, including, but not limited to, the impacts of the Russia-Ukraine conflict; 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:
Andrew Rojeski
Head of Strategy, Investor Relations, & Sustainability
www.pilgrims.com
PILGRIM'S PRIDE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 29, 2024
December 31, 2023
(In thousands)
Cash and cash equivalents
$
1,877,981
$
697,748
Restricted cash and restricted cash equivalents
6,431
33,475
Investment in available-for-sale securities
10,099
—
Trade accounts and other receivables, less allowance for credit losses
1,067,650
1,129,178
Accounts receivable from related parties
1,964
1,778
Inventories
1,780,925
1,985,399
Income taxes receivable
63,418
161,062
Assets held for sale
5,640
—
Prepaid expenses and other current assets
241,365
195,831
Total current assets
5,055,473
4,204,471
Deferred tax assets
30,317
4,890
Operating lease assets, net
267,812
266,707
Other long-lived assets
59,110
35,646
Intangible assets, net
862,400
853,983
Goodwill
1,312,806
1,286,261
Property, plant and equipment, net
3,112,616
3,158,403
Total assets
$
10,700,534
$
9,810,361
Accounts payable
$
1,391,270
$
1,410,576
Accounts payable to related parties
19,404
41,254
Revenue contract liabilities
85,129
84,958
Accrued expenses and other current liabilities
1,001,263
926,727
Income taxes payable
89,815
31,678
Current maturities of long-term debt
546
674
Total current liabilities
2,587,427
2,495,867
Noncurrent operating lease liabilities, less current maturities
206,796
203,348
Long-term debt, less current maturities
3,184,080
3,340,841
Deferred tax liabilities
472,183
385,548
Other long-term liabilities
31,382
40,180
Total liabilities
6,481,868
6,465,784
Common stock
2,623
2,620
Treasury stock
(544,687
)
(544,687
)
Additional paid-in capital
1,988,591
1,978,849
Retained earnings
2,921,657
2,071,073
Accumulated other comprehensive loss
(163,590
)
(176,483
)
Total Pilgrim's Pride Corporation stockholders' equity
4,204,594
3,331,372
Noncontrolling interest
14,072
13,205
Total stockholders' equity
4,218,666
3,344,577
Total liabilities and stockholders' equity
$
10,700,534
$
9,810,361
PILGRIM'S PRIDE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
Nine Months Ended
September 29, 2024
September 24, 2023
September 29, 2024
September 24, 2023
(In thousands, except per share data)
Net sales
$
4,584,979
$
4,360,196
$
13,506,227
$
12,833,915
Cost of sales
3,901,009
4,014,314
11,746,722
12,036,561
Gross profit
683,970
345,882
1,759,505
797,354
Selling, general and administrative expense
144,780
138,569
478,017
420,683
Restructuring activities
30,836
940
82,070
38,684
Operating income
508,354
206,373
1,199,418
337,987
Interest expense, net of capitalized interest
41,597
45,645
114,041
135,459
Interest income
(22,099
)
(12,115
)
(48,308
)
(23,343
)
Foreign currency transaction losses (gains)
(678
)
8,924
(7,240
)
43,462
Miscellaneous, net
7,935
(2,201
)
5,153
(26,185
)
Income before income taxes
481,599
166,120
1,135,772
208,594
Income tax expense
131,609
44,553
284,321
20,488
Net income
349,990
121,567
851,451
188,106
Less: Net income attributable to noncontrolling interests
130
289
867
1,185
Net income attributable to Pilgrim's Pride Corporation
$
349,860
$
121,278
$
850,584
$
186,921
Weighted average shares of Pilgrim's Pride Corporation common stock outstanding:
Basic
237,123
236,787
236,953
236,702
Effect of dilutive common stock equivalents
768
560
733
542
Diluted
237,891
237,347
237,686
237,244
Net income attributable to Pilgrim's Pride Corporation per share of common stock outstanding:
Basic
$
1.48
$
0.51
$
3.59
$
0.79
Diluted
$
1.47
$
0.51
$
3.58
$
0.79
PILGRIM'S PRIDE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 29, 2024
September 24, 2023
(In thousands)
Cash flows from operating activities:
Net income
$
851,451
$
188,106
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization
321,768
307,414
Deferred income tax expense (benefit)
45,220
(46,808
)
Asset impairment
26,633
4,011
Gain on early extinguishment of debt recognized as a component of interest expense
(11,211
)
—
Stock-based compensation
9,205
5,236
Loan cost amortization
3,798
6,059
Accretion of discount related to Senior Notes
1,898
1,581
Loss (gain) on property disposals
1,104
(8,416
)
Loss (gain) on equity-method investments
(6
)
330
Changes in operating assets and liabilities:
Trade accounts and other receivables
62,646
(65,183
)
Inventories
172,990
(12,957
)
Prepaid expenses and other current assets
(65,555
)
(8,039
)
Accounts payable, accrued expenses and other current liabilities
79,672
12,224
Income taxes
151,902
40,463
Long-term pension and other postretirement obligations
13,135
(1,700
)
Other operating assets and liabilities
(23,858
)
(22,723
)
Cash provided by operating activities
1,640,792
399,598
Cash flows from investing activities:
Acquisitions of property, plant and equipment
(316,949
)
(432,339
)
Proceeds from property disposals
9,724
17,188
Proceeds from insurance recoveries
—
20,681
Cash used in investing activities
(307,225
)
(394,470
)
Cash flows from financing activities:
Payments on revolving line of credit, long-term borrowings and finance lease obligations
(151,671
)
(765,899
)
Proceeds from revolving line of credit and long-term borrowings
—
1,278,032
Proceeds from contribution (distribution) of capital under Tax Sharing Agreement between JBS USA Holdings and Pilgrim's Pride Corporation
1,425
(1,592
)
Payments on early extinguishment of debt
(200
)
—
Payments of capitalized loan costs
(16
)
(10,275
)
Cash provided by (used in) financing activities
(150,462
)
500,266
Effect of exchange rate changes on cash and cash equivalents
(29,916
)
(1,036
)
Increase in cash, cash equivalents and restricted cash
1,153,189
504,358
Cash, cash equivalents and restricted cash, beginning of period
731,223
434,759
Cash, cash equivalents and restricted cash, end of period
$
1,884,412
$
939,117
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 losses (gains), (2) costs related to litigation settlements, (3) restructuring activities losses, (4) loss on settlement of pension obligations due to plan termination, (5) write-downs of inventory as a result of hurricane, (6) property insurance recoveries for property damage losses, and (7) 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 29, 2024
September 24, 2023
September 29, 2024
September 24, 2023
(In thousands)
Net income
$
349,990
$
121,567
$
851,451
$
188,106
Add:
Interest expense, net(a)
19,498
33,530
65,733
112,116
Income tax expense
131,609
44,553
284,321
20,488
Depreciation and amortization
110,470
104,300
321,768
307,414
EBITDA
611,567
303,950
1,523,273
628,124
Add:
Foreign currency transaction losses (gains)(b)
(678
)
8,924
(7,240
)
43,462
Litigation settlements(c)
—
10,500
72,190
34,700
Restructuring activities losses(d)
30,836
940
82,070
38,684
Loss on settlement of pension from plan termination(e)
10,709
—
10,709
