GREELEY, Colo., July 26, 2023 (GLOBE NEWSWIRE) -- Pilgrim’s Pride Corporation (NASDAQ: PPC), one of the world's largest poultry producers, reports its second quarter 2023 financial results.
Second Quarter Highlights
- Net Sales of $4.3 billion.
- GAAP Net Income of $60.9 million and GAAP EPS of $0.25. Adjusted Net Income of $105.3 million and Adjusted EPS of $0.44.
- Consolidated GAAP operating income margin of 2.3%.
- Adjusted EBITDA of $248.7 million, or a 5.8% margin, with adjusted EBITDA margins of 4.6% in the U.S., 5.2% in the U.K. & Europe, and 12.2% in Mexico.
- All regions improved financial performance relative to prior quarter given operational excellence efforts, our portfolio diversification, higher attribute programs and branded offerings, in partnership with our Key Customers.
- The diversification across bird sizes and our operational excellence efforts enabled margin growth in our U.S. Fresh business relative to prior quarter, despite continuing challenging market conditions in the commodity Big Bird business.
- Our U.S. Prepared Foods business momentum continued in branded fully cooked products as Just Bare® and Pilgrim’s® collectively grew over 56% year over year, with E-commerce remaining a driving force in their growth as sales increased 125% year over year.
- Our U.K. and Europe business continue its margin growth trajectory, given benefits from our ongoing manufacturing network optimization program, growth with Key Customers, and synergies from back office integration.
- Mexico improved as supply and demand fundamentals became increasingly balanced and challenges from live operations are reduced, while we continue to grow our value-added programs and brands.
- Our organic growth programs to support our Key Customers and our strategy of portfolio diversification remain on track. Both our expansion project at our Athens, Georgia facility and our new protein conversion plant in South Georgia remain on track to be fully operational by the beginning of 2024.
- Our leadership journey in Sustainability continued as we completed an inventory of our GHG emissions footprint for our global supply chain and implemented a variety of programs and systems to reduce our energy usage which will be highlighted in our 2022 Sustainability Report to be published in the third quarter.
| (Unaudited) | Three Months Ended | Six Months Ended | ||||||||||||||||||
| June 25, 2023 | June 26, 2022 | Y/Y Change | June 25, 2023 | June 26, 2022 | Y/Y Change | |||||||||||||||
| (In millions, except per share and percentages) | ||||||||||||||||||||
| Net sales | $ | 4,308.1 | $ | 4,631.6 | (7.0)% | $ | 8,473.7 | $ | 8,872.0 | (4.5)% | ||||||||||
| U.S. GAAP EPS | $ | 0.25 | $ | 1.50 | (83.3)% | $ | 0.28 | $ | 2.65 | (89.4)% | ||||||||||
| Operating income | $ | 100.3 | $ | 512.9 | (80.4)% | $ | 131.6 | $ | 914.9 | (85.6)% | ||||||||||
| Adjusted EBITDA(1) | $ | 248.7 | $ | 623.3 | (60.1)% | $ | 400.7 | $ | 1,125.0 | (64.4)% | ||||||||||
| Adjusted EBITDA margin(1) | 5.8 | % | 13.5 | % | -7.7pts | 4.7 | % | 12.7 | % | -8.0pts | ||||||||||
| (1) Reconciliations for non-U.S. GAAP measures are provided in subsequent sections within this release. | ||||||||||||||||||||
“Throughout the past 12 months, our consistent execution and focus on portfolio diversification, growth with Key Customers, and operational excellence has been instrumental in our ability to navigate extremely volatile market conditions. Our business profitability increased quarter over quarter yet again despite challenges in overall protein availability and lingering inflation,” said Fabio Sandri, Chief Executive Officer.
In the U.S., margins significantly improved from the first quarter despite continuing challenges in the market conditions of the commodity Big Bird segment, given an intense focus on our operational excellence efforts. Case Ready and Small Bird maintained steady performance while cultivating promotional activity and growth with Key Customers. Prepared Foods continues its branded momentum as Just Bare® and Pilgrim’s® sales collectively grew over 56% from last year.
“Q2 was still challenging for the commodity segment. Although market conditions have recently improved, the team is in the process of executing a variety of action items to further drive operational excellence. We maintain our commitment to profitable growth through our continued investment in automation, expansion at our Athens, Georgia facility, and construction of a new protein conversion plant in South Georgia,” remarked Fabio Sandri.
As for the U.K. and Europe business, momentum continued as profitability grew for the fifth straight quarter given benefits from recent network optimization, continued cost recovery efforts, and growth with Key Customers through innovation and strong service levels.
“Throughout the past year, the team has been exceptionally diligent in driving cost efficiencies throughout our manufacturing network, recovery of inflationary impacts, and synergies from back office integration. We are pleased with the remarkable progress over the past year, we will continue to explore opportunities to profitably grow our business,” said Fabio Sandri.
Mexico results improved relative to both first quarter and prior year as supply and demand fundamentals became progressively balanced, overall live performance improved, and interest in our branded offerings increased.
“Throughout the past several quarters, Mexico maintained strong service levels to Key Customers and grew its branded presence despite challenges in live operations. We commend the team for their rapid response and operational excellence efforts to alleviate these issues. Our continued investments in this region will further lessen future potential concerns and provide the foundation for additional profitable growth,” remarked Fabio Sandri.
Pilgrim’s continues to make progress in Sustainability as it recently completed an inventory of its GHG emissions footprint. These efforts have been further amplified by energy audits, installation of metering systems, and training at its US locations.
“The completion of our GHG inventory strengthens the foundation to reduce our emissions footprint throughout our supply chain. Equally important, we have implemented a variety of tools and management processes to evaluate our progress and identify additional opportunities in our production facilities,” said Fabio Sandri.
Conference Call Information
A conference call to discuss Pilgrim’s quarterly results will be held tomorrow, July 27, 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/ppc230727.html
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: 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 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, & Net Zero Programs | |
| [email protected] | |
| www.pilgrims.com |
| PILGRIM’S PRIDE CORPORATION | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| (Unaudited) | ||||||||
| June 25, 2023 | December 25, 2022 | |||||||
| (In thousands) | ||||||||
| Cash and cash equivalents | $ | 730,980 | $ | 400,988 | ||||
| Restricted cash and restricted cash equivalents | 46,030 | 33,771 | ||||||
| Trade accounts and other receivables, less allowance for credit losses | 1,163,425 | 1,097,212 | ||||||
| Accounts receivable from related parties | 1,697 | 2,512 | ||||||
| Inventories | 2,047,817 | 1,990,184 | ||||||
| Income taxes receivable | 133,747 | 155,859 | ||||||
| Prepaid expenses and other current assets | 241,138 | 211,092 | ||||||
| Total current assets | 4,364,834 | 3,891,618 | ||||||
| Deferred tax assets | 17,949 | 1,969 | ||||||
| Other long-lived assets | 21,989 | 41,574 | ||||||
| Operating lease assets, net | 281,159 | 305,798 | ||||||
| Intangible assets, net | 868,095 | 846,020 | ||||||
| Goodwill | 1,282,946 | 1,227,944 | ||||||
| Property, plant and equipment, net | 3,085,539 | 2,940,846 | ||||||
| Total assets | $ | 9,922,511 | $ | 9,255,769 | ||||
| Accounts payable | $ | 1,515,540 | $ | 1,587,939 | ||||
| Accounts payable to related parties | 14,718 | 12,155 | ||||||
| Revenue contract liabilities | 61,233 | 34,486 | ||||||
| Accrued expenses and other current liabilities | 934,396 | 850,899 | ||||||
| Income taxes payable | 15,487 | 58,411 | ||||||
| Current maturities of long-term debt | 985 | 26,279 | ||||||
| Total current liabilities | 2,542,359 | 2,570,169 | ||||||
| Noncurrent operating lease liabilities, less current maturities | 213,350 | 230,701 | ||||||
| Long-term debt, less current maturities | 3,699,607 | 3,166,432 | ||||||
| Deferred tax liabilities | 336,579 | 364,184 | ||||||
| Other long-term liabilities | 58,028 | 71,007 | ||||||
| Total liabilities | 6,849,923 | 6,402,493 | ||||||
| Common stock | 2,619 | 2,617 | ||||||
| Treasury stock | (544,687 | ) | (544,687 | ) | ||||
| Additional paid-in capital | 1,973,498 | 1,969,833 | ||||||
| Retained earnings | 1,815,142 | 1,749,499 | ||||||
| Accumulated other comprehensive loss | (187,342 | ) | (336,448 | ) | ||||
| Total Pilgrim’s Pride Corporation stockholders’ equity | 3,059,230 | 2,840,814 | ||||||
| Noncontrolling interest | 13,358 | 12,462 | ||||||
| Total stockholders’ equity | 3,072,588 | 2,853,276 | ||||||
| Total liabilities and stockholders’ equity | $ | 9,922,511 | $ | 9,255,769 | ||||
| PILGRIM’S PRIDE CORPORATION | ||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 25, 2023 | June 26, 2022 | June 25, 2023 | June 26, 2022 | |||||||||||||
| (In thousands, except per share data) | ||||||||||||||||
| Net sales | $ | 4,308,091 | $ | 4,631,648 | $ | 8,473,719 | $ | 8,872,043 | ||||||||
| Cost of sales | 4,029,666 | 3,954,877 | 8,022,247 | 7,653,292 | ||||||||||||
| Gross profit | 278,425 | 676,771 | 451,472 | 1,218,751 | ||||||||||||
| Selling, general and administrative expense | 148,436 | 163,867 | 282,114 | 303,834 | ||||||||||||
| Restructuring activities | 29,718 | — | 37,744 | — | ||||||||||||
| Operating income | 100,271 | 512,904 | 131,614 | 914,917 | ||||||||||||
| Interest expense, net of capitalized interest | 47,152 | |||||||||||||||
