GREELEY, Colo., July 27, 2016 (GLOBE NEWSWIRE) -- Pilgrim’s Pride Corporation (NASDAQ:PPC) reports second quarter 2016 financial results.

Second Quarter Highlights

• Net Sales of $2.03 billion.
  
• Net Income of $152.9 million, GAAP EPS of $0.60.
  
• Operating Income margins of 9.8% in U.S. and 20.5% in Mexico operations, respectively.
  
• Adjusted EBITDA of $282.7 million (or a 13.9% margin).
  
• Cash Flow From Operations of $111.1 million.
  
• Prepared Foods to launch new ABF veg-fed chicken sausage products, leveraging our leadership in ABF veg-fed Fresh Chicken and entry into organic.
  
• Operational improvements in Prepared Foods operations impacting production in short-term but preparing facilities for long-term growth.
  
  

Unaudited, In Millions, Except Per Share and Percentages
	Thirteen Weeks Ended
	June 26, 2016				June 28, 2015				Change
Net Sales	$	2,028.3			$	2,053.9				-1.2	%
GAAP EPS	$	0.60			$	0.93				-35.5	%
Operating Income	$	236.6			$	378.4				-37.5	%
Adjusted EBITDA (1)	$	282.7			$	425.8				-33.6	%
Adjusted EBITDA Margin (1)		13.9	%			20.7	%		-6.8pts

(1)  Reconciliations for non-GAAP measures are provided in subsequent sections within this release.

“During Q2, our results further improved sequentially compared to the last two quarters. While our portfolio strategy of a well-balanced exposure to different bird sizes was an important factor, the diversity of our product and broad customer mix, as well as geographic exposure were also important contributors. We structured our portfolio to capture the strong commodity markets while lessening the impact of weaker markets to generate lower volatility and higher margins over the mid to long-term. We are generating the intended results and created a unique and meaningful advantage over competitors with less breadth in their portfolio,” stated Bill Lovette, Chief Executive Officer of Pilgrim's.

“To demonstrate our commitment to growing our Prepared Foods operations and to further leverage our leadership in the ABF market as well as our recent announcement to enter into organic Fresh Chicken, we will launch new ABF veg-fed artisanal chicken sausages. These products will be fully cooked, minimally processed using all natural and no artificial ingredients or nitrites. Similar to our ABF veg-fed and organic Fresh Chicken programs, this represents our effort to better resonate with new consumer trends for more natural products while adding further value to our portfolio. While the announced investments in our Moorefield, WV plant, and the operational improvements we are promoting in our other facilities pose an impact to volumes in the short run, they signify our commitment to Prepared Foods as an important source of future earnings growth while lessening the impact of volatile commodity markets in the long run.”

“Our operations in Mexico were a strong contributor to the Q2 results driven by an improved supply/demand environment, better operating performance, and increased synergies with the newly acquired assets. We are continuing to close and have meaningfully narrowed the gap in performance between our legacy and the newly acquired Northern Mexico operations. To further diversify our Mexico operations and grow our value-added segment, we are initiating a strategy to leverage our premium Pilgrim’s name while continuing to pursue opportunities through the popular Del Dia brand.”

Conference Call Information

A conference call to discuss Pilgrim’s quarterly results will be held tomorrow, July 28, at 7:00 a.m. MT (9 a.m. ET).  Participants are encouraged to pre-register for the conference call using the link below.  Callers who pre-register will be given a unique PIN to gain immediate access to the call and bypass the live operator.  Participants may pre-register at any time, including up to and after the call start time.

To pre-register, go to: http://services.choruscall.com/links/ppc160728 

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, 2016.

About Pilgrim’s Pride

Pilgrim’s employs approximately 37,700 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
		June 26, 2016				December 27, 2015
		(Unaudited)
		(In thousands)
Cash and cash equivalents		$	41,047			$	439,638
Trade accounts and other receivables, less allowance for doubtful accounts		343,255				348,994
Account receivable from related parties		1,797				2,668
Inventories		832,565				801,357
Income taxes receivable		88,358				71,410
Prepaid expenses and other current assets		95,420				75,602
Assets held for sale		6,549				6,555
Total current assets		1,408,991				1,746,224
Other long-lived assets		15,954				15,672
Identified intangible assets, net		42,503				47,453
Goodwill		125,607				156,565
Property, plant and equipment, net		1,414,895				1,352,529
Total assets		$	3,007,950			$	3,318,443
Notes payable to banks		$	—			$	28,726
Accounts payable		466,783				482,954
Account payable to related parties		4,053				7,000
Accrued expenses and other current liabilities		314,925				314,966
Income taxes payable		38,771				13,228
Current maturities of long-term debt		90				86
Total current liabilities		824,622				846,960
Long-term debt, less current maturities		1,117,979				985,509
Deferred tax liabilities		144,876				131,882
Other long-term liabilities		101,780				92,282
Total liabilities		2,189,257				2,056,633
Common stock		2,597				2,597
Treasury stock		(106,561		)		(99,233		)
Additional paid-in capital		1,677,543				1,675,674
Accumulated deficit		(689,910		)		(261,252		)
Accumulated other comprehensive loss		(67,726		)		(58,930		)
Total Pilgrim’s Pride Corporation stockholders’ equity		815,943				1,258,856
Noncontrolling interest		2,750				2,954
Total stockholders’ equity		818,693				1,261,810
Total liabilities and stockholders’ equity		$	3,007,950			$	3,318,443

PILGRIM’S PRIDE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
		Thirteen Weeks Ended								Twenty-Six Weeks Ended
		June 26, 2016				June 28, 2015				June 26, 2016				June 28, 2015
		(In thousands, except per share data)
Net sales		$	2,028,315			$	2,053,876			$	3,991,252			$	4,106,795
Cost of sales		1,742,184				1,621,856				3,467,559				3,297,655
Gross profit		286,131				432,020				523,693				809,140
Selling, general and administrative expense		49,520				48,834				98,308				98,341
Administrative restructuring charges		—				4,813				—				4,813
Operating income		236,611				378,373				425,385				705,986
Interest expense, net of capitalized interest		11,548				11,514				23,581				16,369
Interest income		(683		)		(1,277		)		(1,376		)		(2,767		)
Foreign currency transaction loss (gain)		(4,744		)		2,059				(4,979		)		11,033
Miscellaneous, net		(950		)		(4,651		)		(3,896		)		(5,064		)
Income before income taxes		231,440				370,728				412,055				686,415
Income tax expense		78,398				129,104				141,002				240,598
Net income		153,042				241,624				271,053				445,817
Less: Net income (loss) attributable to noncontrolling interests		156				135				(204		)		113
Net income attributable to Pilgrim’s Pride Corporation		$	152,886			$	241,489			$	271,257			$	445,704
Weighted average shares of common stock outstanding:
Basic		254,554				259,685				254,681				259,669
Effect of dilutive common stock equivalents		390				212				364				226
Diluted		254,944				259,897				255,045				259,895
Net income attributable to Pilgrim's Pride Corporation per share of   common stock outstanding:
Basic		$	0.60			$	0.93			$	1.07			$	1.72
Diluted		$	0.60			$	0.93			$	1.06			$	1.71

PILGRIM’S PRIDE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
		Twenty-Six Weeks Ended
		June 26, 2016				June 28, 2015
		(In thousands)
Cash flows from operating activities:
Net income		$	271,053			$	445,817
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		88,683				75,070
Impairment expense		—				4,813
Loss (gain) on property disposals		(6,755		)		(1,331		)
Share-based compensation		1,869				1,268
Deferred income tax benefit		(700		)		(4,781		)
Changes in operating assets and liabilities:
Trade accounts and other receivables		6,610				35,014
Inventories		(31,208		)		3,192
Prepaid expenses and other current assets		(19,817		)		7,236
Accounts payable, accrued expenses and other current liabilities		(23,028		)		53,960
Income taxes		6,967				(35,554		)
Long-term pension and other postretirement obligations		(3,952		)		966
Other operating assets and liabilities		(738		)		2,433
Cash provided by operating activities		288,984				588,103
Cash flows from investing activities:
Acquisitions of property, plant and equipment		(93,978		)		(87,694		)
Proceeds from property disposals		8,097				2,115
Cash provided by (used in) investing activities		(85,881		)		(85,579		)
Cash flows from financing activities:
Proceeds from note payable to bank		36,838				—
Payments on note payable to bank		(65,564		)		—
Proceeds from revolving line of credit		351,089				1,680,000
Payments on revolving line of credit, long-term borrowings and capital lease obligations		(219,812		)		(683,705		)
Proceeds from equity contribution under Tax Sharing Agreement between JBS USA Food Company Holdings and Pilgrim's Pride Corporation		3,691				—
Tax benefit related to share-based compensation		—				7,834
Payment of capitalized loan costs		(693		)		(10,132		)
Purchase of treasury stock		(7,328		)		—
Cash dividends		(699,915		)		(1,498,470		)
Cash used in financing activities		(601,694		)		(504,473		)
Increase (decrease) in cash and cash equivalents		(398,591		)		(1,949		)
Cash and cash equivalents, beginning of period		439,638				576,143
Cash and cash equivalents, end of period		$	41,047			$	574,194

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								Twenty-Six Weeks Ended
	June 26, 2016				June 28, 2015				June 26, 2016				June 28, 2015
	(In thousands)
Net income	$	153,042			$	241,624			$	271,053			$	445,817
Add:
Interest expense, net	10,865				10,237				22,205				13,602
Income tax expense (benefit)	78,398				129,104				141,002				240,598
Depreciation and amortization	46,293				38,918				88,683				75,070
Minus:
Amortization of capitalized financing costs	962				864				1,889				1,589
EBITDA	287,636				419,019				521,054				773,498
Add:
Foreign currency transaction losses (gains)	(4,744		)		2,059				(4,979		)		11,033
Restructuring charges	—				4,813				—				4,813
Minus:
Net income (loss) attributable to noncontrolling interest	156				135				(204		)		113
Adjusted EBITDA	$	282,736			$	425,756			$	516,279			$	789,231

The summary unaudited consolidated income statement data for the twelve months ended June 26, 2016 (the LTM Period) have been calculated by subtracting the applicable unaudited consolidated income statement data for the six months ended June 28, 2015 from the sum of (1) the applicable audited consolidated income statement data for the year ended December 27, 2015 and (2) the applicable audited consolidated income statement data for the six months ended June 26, 2016.

PILGRIM'S PRIDE CORPORATION
Reconciliation of LTM Adjusted EBITDA
(Unaudited)		Thirteen Weeks Ended				Thirteen Weeks Ended				Thirteen Weeks Ended				Thirteen Weeks Ended				LTM Ended
		September 27,  2015				December 27,  2015				March 27,  2016				June 26,  2016				June 26,  2016
	(In thousands)
Net income		$	137,095			$	63,050			$	118,011			$	153,042			$	471,198
Add:
Interest expense, net		10,182				10,091				11,340				10,865				42,478
Income tax expense (benefit)		73,153				33,045				62,604				78,398				247,200
Depreciation and amortization		41,415				42,490				42,391				46,293				172,589
Minus:
Amortization of capitalized financing costs		1,119				930				928				962				3,939
EBITDA		260,726				147,746				233,418				287,636				929,526
Add:
Foreign currency transaction losses (gains)		12,773				2,134				(235		)		(4,744		)		9,928
Restructuring charges		792				—				—				—				792
Minus:
Net income (loss) attributable to noncontrolling interest		33				(98		)		(360		)		156				(269		)
Adjusted EBITDA		$	274,258			$	149,978			$	233,543			$	282,736			$	940,515

EBITDA margins have been calculated by taking the relevant unaudited EBITDA figures, then dividing by Net Revenue for the applicable period.

PILGRIM'S PRIDE CORPORATION
Reconciliation of EBITDA Margin
(Unaudited)		Thirteen Weeks Ended								Twenty-Six Weeks Ended								Thirteen Weeks Ended								Twenty-Six Weeks Ended
		June 26, 2016				June 28, 2015				June 26, 2016				June 28, 2015				June 26, 2016				June 28, 2015				June 26, 2016				June 28, 2015
	(In thousands)
Net income from continuing operations		$	153,042			$	241,624			$	271,053			$	445,817			7.55		%		11.76		%		6.79		%		10.86		%
Add:
Interest expense, net		10,865				10,237				22,205				13,602				0.54		%		0.50		%		0.56		%		0.33		%
Income tax expense (benefit)		78,398				129,104				141,002				240,598				3.87		%		6.29		%		3.53		%		5.86		%
Depreciation and amortization		46,293				38,918				88,683				75,070				2.28		%		1.89		%		2.22		%		1.83		%
Minus:
Amortization of capitalized financing costs		962				864				1,889				1,589				0.05		%		0.04		%		0.05		%		0.04		%
EBITDA		287,636				419,019				521,054				773,498				14.18		%		20.40		%		13.05		%		18.83		%
Add:
Foreign currency transaction losses (gains)		(4,744		)		2,059				(4,979		)		11,033				(0.23		)%		0.10		%		(0.12		)%		0.27		%
Restructuring charges		—				4,813				—				4,813				—		%		0.23		%		—		%		0.12		%
Minus:
Net income (loss) attributable to noncontrolling interest		156				135				(204		)		113				0.01		%		0.01		%		(0.01		)%		—		%
Adjusted EBITDA		$	282,736			$	425,756			$	516,279			$	789,231			13.94		%		20.73		%		12.94		%		19.22		%
Net Revenue:		$	2,028,315			$	2,053,876			$	3,991,252			$	4,106,795			$	2,028,315			$	2,053,876			$	3,991,252			$	4,106,795

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								Twenty-Six Weeks Ended
		June 26,  2016				June 28,  2015				June 26,  2016				June 28,  2015
		(In thousands, except per share data)
Net income (loss) attributable to Pilgrim's Pride Corporation		$	152,886			$	241,489			$	271,257			$	445,704
Loss on early extinguishment of debt		—				68				—				68
Foreign currency transaction losses (gains)		(4,744		)		2,059				(4,979		)		11,033
Income (loss) before loss on early extinguishment of debt and foreign currency transaction losses (gains)		148,142				243,616				266,278				456,805
Weighted average diluted shares of common stock outstanding		254,944				259,897				255,045				259,895
Income (loss) before loss on early extinguishment of debt and foreign currency transaction losses (gains) per common diluted share		$	0.58			$	0.94			$	1.04			$	1.76

A reconciliation of GAAP earnings per share (EPS) to adjusted earnings per share (EPS) is as follows:

PILGRIM'S PRIDE CORPORATION
Reconciliation of GAAP EPS to Adjusted EPS
(Unaudited)
	Thirteen Weeks Ended								Twenty-Six Weeks Ended
	June 26, 2016				June 28, 2015				June 26, 2016				June 28, 2015
	(In thousands, except per share data)
GAAP EPS	$	0.60			$	0.93			$	1.06			$	1.71
Loss on early extinguishment of debt	—				—				—				—
Foreign currency transaction losses (gains)	(0.02		)		0.01				(0.02		)		0.04
Adjusted EPS	$	0.58			$	0.94			$	1.04			$	1.76
Weighted average diluted shares of common stock outstanding	254,944				259,897				255,045				259,895

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 29,  2013				December 28,  2014				December 27,  2015				June 28,  2015				June 26,  2016
	(In thousands)
Long term debt, less current maturities	$	501,999			$	3,980			$	985,509			$	1,000,420			$	1,117,979
Add:  Current maturities of long term debt and notes payable	410,234				262				28,812				117				90
Minus:  Cash and cash equivalents	508,206				576,143				439,638				574,194				41,047
Minus:  Available-for-sale securities	96,902				—				—				—				—
Net debt (cash position)	$	307,125			$	(571,901	)		$	574,683			$	426,343			$	1,077,022

PILGRIM'S PRIDE CORPORATION
Supplementary Selected Segment and Geographic Data
		Thirteen Weeks Ended								Twenty-Six Weeks Ended
		June 26, 2016				June 28, 2015				June 26, 2016				June 28, 2015
		(Unaudited)
		(In thousands)
Sources of net sales by country of origin:
US:		$	1,677,445			$	1,838,859			$	3,347,726			$	3,681,617
Mexico:		350,870				215,017				643,526				425,178
Total net sales:		$	2,028,315			$	2,053,876			$	3,991,252			$	4,106,795
Sources of cost of sales by country of origin:
US:		$	1,471,269			$	1,454,669			$	2,925,224			$	2,958,876
Mexico:		270,939				167,211				542,383				338,827
Elimination:		(24		)		(24		)		(48		)		(48		)
Total cost of sales:		$	1,742,184			$	1,621,856			$	3,467,559			$	3,297,655
Sources of gross profit by country of origin:
US:		$	206,176			$	384,190			$	422,502			$	722,742
Mexico:		79,931				47,806				101,143				86,350
Elimination:		24				24				48				48
Total gross profit:		$	286,131			$	432,020			$	523,693			$	809,140
Sources of operating income by country of origin:
US:		$	164,494			$	335,783			$	339,084			$	629,437
Mexico:		72,093				42,566				86,253				76,501
Elimination:		24				24				48				48
Total operating income:		$	236,611			$	378,373			$	425,385			$	705,986

 

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

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