EX-99.1 2 a2014_q3xppcearningsreleas.htm EXHIBIT 2014_Q3_PPC Earnings Release - 01




Pilgrim’s Pride Reports EBITDA of $435 Million and 19.2% EBITDA Margin for the Third Quarter

GREELEY, Colo., October 29, 2014 - Pilgrim’s Pride Corporation (NASDAQ: PPC) reports third quarter 2014 earnings with Net Sales of $2.3 billion, Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") of $435.0 million, and Net Income of $256.0 million, resulting in diluted Earnings Per Share of $0.99 for the quarter. These results compare to Net Sales of $2.1 billion, Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") of $222.5 million, and Net Income of $160.9 million, resulting in diluted Earnings Per Share of $0.62 for the third quarter of 2013.

"Our third quarter results reflect the discipline that Pilgrim's has demonstrated in managing the variables within our control as well as the strength we've seen in the chicken markets" stated Bill Lovette, Chief Executive Officer of Pilgrim's. "Our focus has been, and continues to be, the consistent execution of our strategy to be a valued partner to our key customers, relentless pursuit of operational excellence and value-added export growth. We are optimistic that we will continue to be one of the more profitable operators with our management philosophy conducive to continually operating at the top of our industry, even with varying levels of strength in chicken markets”

“We are pleased about the level of engagement from our team members as we move into 2015.Through our budgeting process for next year we have identified new targeted capital investments and additional operational improvement opportunities that will continue our trajectory towards our vision of being the best managed and most respected company in the industry."

Conference Call Information
A conference call to discuss Pilgrim’s quarterly results will be held tomorrow, October 30, 2014 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/ppc141030.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 (877) 270-2148 within the US or +1 (412) 902-6510 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 February 12, 2015.

About Pilgrim’s Pride

Pilgrim’s Pride Corporation employs approximately 35,500 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.

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.


Contact:
Pilgrim's Pride Corp Investor Relations
 
IRPPC@pilgrims.com
 
www.pilgrims.com






PILGRIM’S PRIDE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS



September 28, 2014

December 29, 2013


(Unaudited)


 

(In thousands)
Cash and cash equivalents

$
868,597


$
508,206

Investment in available-for-sale securities



96,902

Trade accounts and other receivables, less allowance for doubtful accounts

413,402


376,678

Account receivable from JBS USA, LLC

240


2,388

Inventories

817,892


808,832

Income taxes receivable



64,868

Current deferred tax assets

2,227


2,227

Prepaid expenses and other current assets

77,393


61,848

Assets held for sale

1,419


7,033

Total current assets

2,181,170


1,928,982

Deferred tax assets

85,213


18,921

Other long-lived assets

30,766


40,163

Identified intangible assets, net

28,219


32,525

Property, plant and equipment, net

1,180,414


1,151,811

Total assets

$
3,505,782


$
3,172,402








Accounts payable

$
383,779


$
370,360

Account payable to JBS USA, LLC

1,969


3,934

Accrued expenses and other current liabilities

307,153


283,355

Income taxes payable

176,153



Current deferred tax liabilities

15,070


15,515

Current maturities of long-term debt

260


410,234

Total current liabilities

884,384


1,083,398

Long-term debt, less current maturities

502,115


501,999

Deferred tax liabilities



13,944

Other long-term liabilities

88,490


80,459

Total liabilities

1,474,989


1,679,800

Common stock

2,590


2,590

Additional paid-in capital

1,656,623


1,653,119

Retained earnings (accumulated deficit)

424,305


(120,156
)
Accumulated other comprehensive loss

(55,815
)

(45,735
)
Total Pilgrim’s Pride Corporation stockholders’ equity

2,027,703


1,489,818

Noncontrolling interest

3,090


2,784

Total stockholders’ equity

2,030,793


1,492,602

Total liabilities and stockholders’ equity

$
3,505,782


$
3,172,402







PILGRIM’S PRIDE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

 

Thirteen Weeks Ended

Thirty-Nine Weeks Ended
 

September 28, 2014

September 29, 2013

September 28, 2014

September 29, 2013
 

(In thousands, except per share data)
Net sales

$
2,268,048


$
2,142,815


$
6,472,929


$
6,363,863

Cost of sales

1,817,783


1,906,242


5,458,083


5,726,348

Gross profit

450,265


236,573


1,014,846


637,515

Selling, general and administrative expense

44,629


43,797


138,437


131,888

Administrative restructuring charges

135


3,658


2,286


4,622

Operating income

405,501


189,118


874,123


501,005

Interest expense, net of capitalized interest

11,372


20,413


45,407


68,199

Interest income

(1,171
)

(571
)

(2,974
)

(1,494
)
Foreign currency transaction loss (gain)

6,414


2,682


4,932


4,771

Miscellaneous, net

(610
)

(8
)

(2,609
)

(730
)
Income before income taxes

389,496


166,602


829,367


430,259

Income tax expense

133,693


5,578


284,932


24,216

Net income

255,803


161,024


544,435


406,043

Less: Net income (loss) attributable to noncontrolling interests

(181
)

107


(26
)

(161
)
Net income attributable to Pilgrim’s Pride Corporation

$
255,984


$
160,917


$
544,461


$
406,204










Weighted average shares of common stock outstanding:








Basic

258,999


258,826


258,966


258,825

Effect of dilutive common stock equivalents

523


560


482


341

Diluted

259,522


259,386


259,448


259,166










Net income attributable to Pilgrim's Pride Corporation per share of
common stock outstanding:








Basic

$
0.99


$
0.62


$
2.10


$
1.57

Diluted

$
0.99


$
0.62


$
2.10


$
1.57







PILGRIM’S PRIDE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

 

Thirty-Nine Weeks Ended
 

September 28, 2014

September 29, 2013
 

(In thousands)
Cash flows from operating activities:




Net income

$
544,435


$
406,043

Adjustments to reconcile net income to cash provided by operating activities:




Depreciation and amortization

112,740


113,853

Foreign currency transaction losses

8,585


3,734

Accretion of bond discount

342


342

Gain on property disposals

(1,112
)

(509
)
Gain on investment securities

(49
)


Share-based compensation

3,504


2,415

Deferred income tax benefit

(79,619
)


Changes in operating assets and liabilities:




Trade accounts and other receivables

(35,785
)

(25,458
)
Inventories

(10,339
)

39,421

Prepaid expenses and other current assets

(16,694
)

(17,304
)
Accounts payable, accrued expenses and other current liabilities

36,686


69,895

Income taxes

239,944


(1,818
)
Deposits



1,898

Long-term pension and other postretirement obligations

(1,764
)

(3,174
)
Other operating assets and liabilities

1,534


3,921

Cash provided by operating activities

802,408


596,716

Cash flows from investing activities:




Acquisitions of property, plant and equipment

(131,349
)

(76,293
)
Purchases of investment securities

(55,100
)


Proceeds from sale or maturity of investment securities

152,050



Proceeds from property disposals

8,422


3,330

Cash provided by (used in) investing activities

(25,977
)

(72,963
)
Cash flows from financing activities:




Proceeds from revolving line of credit



505,600

Payments on revolving line of credit, long-term borrowings and capital lease
obligations

(410,199
)

(758,283
)
Sale of subsidiary common stock

332



Cash used in financing activities

(409,867
)

(257,689
)
Effect of exchange rate changes on cash and cash equivalents

(6,173
)

(3,928
)
Increase (decrease) in cash and cash equivalents

360,391


262,136

Cash and cash equivalents, beginning of period

508,206


68,180

Cash and cash equivalents, end of period

$
868,597


$
330,316







“EBITDA” is defined as the sum of net income (loss) plus interest, taxes, depreciation and amortization. “Adjusted EBITDA” is defined as the sum of EBITDA plus restructuring charges, reorganization items and loss on early extinguishment of debt less 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 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.

(Unaudited)
 
Thirteen Weeks Ended
 
Thirty-Nine Weeks Ended
 
 
September 28, 2014
 
September 29, 2013
 
September 28, 2014
 
September 29, 2013
 
 
(In thousands)
Net income from continuing operations
 
$
255,803


$
161,024


$
544,435


$
406,043

Add:
 

 
 
 
 
 
 
Interest expense, net
 
10,201


19,842


42,433

 
66,705

Income tax expense (benefit)
 
133,693


5,578


284,932


24,216

Depreciation and amortization
 
36,218

 
37,914

 
112,740

 
113,853

Asset impairments
 

 
361

 

 
361

Minus:
 

 
 
 
 
 
 
Amortization of capitalized financing costs
 
871

 
2,204

 
7,364

 
7,238

EBITDA
 
435,044

 
222,515

 
977,176

 
603,940

Add:
 

 
 
 
 
 
 
Restructuring charges
 
135

 
3,658

 
2,286

 
4,622

Minus:
 

 
 
 
 
 
 
   Net income (loss) attributable to noncontrolling interest
 
(181
)
 
106

 
(26
)
 
(162
)
Adjusted EBITDA
 
$
435,360

 
$
226,067

 
$
979,488

 
$
608,724







The summary unaudited consolidated income statement data for the last twelve months ended September 28, 2014 (the LTM Period) have been calculated by subtracting the applicable unaudited consolidated income statement data for the thirty-nine weeks ended September 29, 2013 from the sum of (1) the applicable audited consolidated income statement data for the year ended December 29, 2013 and (2) the applicable unaudited consolidated income statement data for the thirty-nine weeks ended September 28, 2014.
(Unaudited)
 
Thirteen Weeks Ended
 
Thirteen Weeks Ended
 
Thirteen Weeks Ended
 
Thirteen Weeks Ended
 
LTM Ended
 
 
December 29, 2013
 
March 30, 2014
 
June 29, 2014
 
September 28, 2014
 
September 28, 2014
 
(In thousands)
Net income from continuing operations
 
$
143,670

 
$
98,187

 
$
190,445

 
$
255,803

 
$
688,105

Add:
 
 
 
 
 
 
 

 
 
Interest expense, net
 
18,176

 
18,662

 
13,570

 
10,201

 
60,609

Income tax expense (benefit)
 
11

 
52,012

 
99,227

 
133,693

 
284,943

Depreciation and amortization
 
36,670

 
38,260

 
38,261

 
36,218

 
149,409

Asset impairments
 

 

 

 

 

Minus:
 
 
 
 
 
 
 

 

Amortization of capitalized financing costs
 
2,069

 
3,586

 
2,906

 
871

 
9,432

EBITDA
 
196,458

 
203,535

 
338,597

 
435,044

 
1,173,634

Add:
 
 
 
 
 
 
 

 

Restructuring charges
 
1,039

 
1,713

 
438

 
135

 
3,325

Minus:
 
 
 
 
 
 
 

 

   Net income (loss) attributable to noncontrolling interest
 
319

 
70

 
85

 
(181
)
 
293

Adjusted EBITDA
 
$
197,178

 
$
205,178

 
$
338,950

 
$
435,360

 
$
1,176,666







Net debt is defined as total long term debt less current maturities, plus current maturities of long term debt, 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,
 
Thirty-Nine Weeks Ended
 
2012
 
2013
 
September 28, 2014
 
September 29, 2013
 
(in thousands)
Long term debt, less current maturities
$
1,148,870

 
$
501,999

 
$
502,115

 
$
912,019

Add:  Current maturities of long term debt
15,886

 
410,234

 
260

 
396

Minus:  Cash and cash equivalents
68,180

 
508,206

 
868,597

 
330,316

Minus:  Available-for-sale Securities

 
96,902

 

 

Net debt (Cash position)
$
1,096,576

 
$
307,125

 
$
(366,222
)
 
$
582,099







PILGRIM'S PRIDE CORPORATION
Supplementary Selected Segment and Geographic Data
 
 
Thirteen Weeks Ended
 
Thirty-Nine Weeks Ended
 
September 28, 2014
 
September 29, 2013
 
September 28, 2014
 
September 29, 2013
 
(In thousands)
 
(Unaudited)
Sources of net sales by country of origin:
 
 
 
 
 
 
 
US:
$
2,026,277

 
$
1,932,634

 
5,758,704

 
$
5,662,991

Mexico:
241,771

 
210,181

 
714,225

 
700,872

Total net sales:
$
2,268,048

 
$
2,142,815

 
$
6,472,929

 
$
6,363,863

 
 
 
 
 
 
 
 
Sources of cost of sales by country of origin:
 
 
 
 
 
 
 
US:
$
1,634,863

 
$
1,702,791

 
4,900,087

 
$
5,139,883

Mexico:
182,920

 
203,451

 
557,996

 
586,465

Total cost of sales:
$
1,817,783

 
$
1,906,242

 
$
5,458,083

 
$
5,726,348

 
 
 
 
 
 
 
 
Sources of gross profit by country of origin:
 
 
 
 
 
 
 
US:
$
391,414

 
$
229,843

 
$
858,617

 
$
523,108

Mexico:
58,851

 
6,730

 
156,229

 
114,407

Total gross profit:
$
450,265

 
$
236,573

 
$
1,014,846

 
$
637,515