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Pilgrim’s Pride Closes Fiscal Year 2015 With an Operating Income of $1.04 Billion and a Margin of 12.8%, Confirming Benefits of Portfolio Strategy
Globe Newswire

GREELEY, Colo., Feb. 10, 2016 (GLOBE NEWSWIRE) -- Pilgrim’s Pride Corporation (NASDAQ:PPC) today reported fiscal year 2015 financial results with Net Sales of $8.18 billion, Net Income of $645.9 million, and an Adjusted Earnings Per Share of $2.60. For fiscal year 2014, Net Sales was $8.58 billion, Net Income was $711.6 million, and Adjusted Earnings Per Share was $2.96, respectively. The company generated $1.21 billion of adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) in 2015, or a 14.9% margin, compared to $1.35 billion, or a 15.8% margin, in the year before, demonstrating a consistent solid year-on-year performance despite a much softer market environment.

For the fourth quarter of 2015, Pilgrim’s recorded Net Sales of $1.96 billion, compared to $2.11 billion for the same period in 2014. Fourth quarter 2015 Net Income was $63.1 million compared to the $167.2 million reported in the prior year. Adjusted Earnings Per Share was $0.26 in the fourth quarter of 2015 compared to $0.83 in the same period last year, while adjusted EBITDA was $150.0 million last quarter, or a 7.7% margin, versus $367.8 million, or a 17.4% margin, for the same period a year ago.

“Our case ready and small bird operations continued to deliver strong results in spite of challenges in the export markets, while the weakest chicken cutout in the past five years continued to impact the commodity segments of our business, as well as our Mexico operations. Despite the headwinds, our team managed to deliver margins that are above periods when prices were at similar levels. Our performance is commendable and strongly validates the benefits of our strategy,” stated Bill Lovette, Chief Executive Officer of Pilgrim's.

“The implementation and execution of our portfolio model over the past five years are critical in supporting our ability to deliver stronger profitability while giving more consistent financial results, as we minimize the impact of specific market conditions in any given segment or geography. For example, as part of this operating strategy, in Fresh Chicken we are able to leverage our well-balanced mix of bird sizes to support key customers’ needs while in prepared foods, we could utilize our well-regarded Pierce brand to lead our efforts in building and solidifying relationships at key accounts.”

“During 2015, we paid out $1.5 billion in special dividend, acquired additional Mexican operations to improve our geographic diversification and competitiveness in one of the strongest emerging markets, and repurchased $99.2 million in shares, signifying our commitment to maximizing shareholder value creation while remaining financially disciplined.”

“Our cash flow generation was strong and our team remained relentless in identifying additional methods to increase operational efficiencies, enhance relationships with key customers, and build competitive advantages. To further support these initiatives and maximize return on capital, we have approved a targeted capital spending deployment for 2016, which enhances our growth prospects, improves our ability to partner with key customers and supports their growth. Additionally, our team has identified $185 million in operational improvements for 2016, to build on the over $1.0 billion in cumulative improvements we have made to the business in the last five years. We are committed to reinvesting our strong cash flow generation back into the business with the goal of more closely aligning with this strategy and optimizing our capital allocation, while remaining on track on the relentless pursuit of operational excellence.”

Conference Call Information

A conference call to discuss Pilgrim’s quarterly results will be held tomorrow, February 11, 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/ppc160211.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 (866) 777-2509 within the US, or +1 (412) 317-5413, 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 May 11, 2016.

About Pilgrim’s Pride

Pilgrim’s employs approximately 39,000 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
 
  December 27, 2015 December 28, 2014
  (Unaudited)  
  (In thousands)
Cash and cash equivalents $439,638  $576,143 
Investment in available-for-sale securities    
Trade accounts and other receivables, less allowance for doubtful accounts 348,994  378,890 
Account receivable from related parties 2,668  5,250 
Inventories 801,357  790,305 
Income taxes receivable 71,410  10,288 
Prepaid expenses and other current assets 75,602  95,439 
Assets held for sale 6,555  1,419 
Total current assets 1,746,224  1,857,734 
Other long-lived assets 15,672  24,406 
Identified intangible assets, net 47,453  26,783 
Goodwill 156,565   
Property, plant and equipment, net 1,352,529  1,182,795 
Total assets $3,318,443  $3,091,718 
     
Notes payable to banks $28,726  $ 
Accounts payable 482,954  399,486 
Accounts payable to related parties 7,000  4,862 
Accrued expenses 314,966  311,879 
Income taxes payable 13,228  3,068 
Current maturities of long-term debt 86  262 
Total current liabilities 846,960  719,557 
Long-term debt, less current maturities 985,509  3,980 
Deferred tax liabilities 131,882  74,172 
Other long-term liabilities 92,282  97,208 
Total liabilities 2,056,633  894,917 
Commitments and contingencies    
Preferred stock, $.01 par value, 50,000,000 shares authorized; no shares issued    
Common stock, $.01 par value, 800,000,000 shares authorized; 259,685,145 and
  259,029,033 shares issued at year-end 2015 and year-end 2014, respectively;
  254,823,286 and 259,029,033 shares outstanding at year-end 2015 and year-end 
  2014, respectively
 2,597  2,590 
Treasury stock, at cost, 4,861,859 shares at year-end 2015 (99,233)  
Additional paid-in capital 1,675,674  1,662,354 
Retained earnings (accumulated deficit) (261,252) 591,492 
Accumulated other comprehensive loss (58,930) (62,541)
Total Pilgrim’s Pride Corporation stockholders’ equity 1,258,856  2,193,895 
Noncontrolling interest 2,954  2,906 
Total stockholders’ equity 1,261,810  2,196,801 
Total liabilities and stockholders' equity $3,318,443  $3,091,718 
         


 
PILGRIM’S PRIDE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 
  Thirteen Weeks Ended Fifty-Two Weeks Ended
  December 27, 2015 December 28, 2014 December 27, 2015 December 28, 2014
  (In thousands, except per share data)
Net sales $1,960,780  $2,110,436  $8,180,104  $8,583,365 
Cost of sales 1,800,087  1,731,287  6,925,727  7,189,370 
Gross profit 160,693  379,149  1,254,377  1,393,995 
Selling, general and administrative expense 52,920  50,157  203,881  188,594 
Administrative restructuring charges     5,605  2,286 
Operating income 107,773  328,992  1,044,891  1,203,115 
Interest expense, net of capitalized interest 10,678  36,690  37,548  82,097 
Interest income (587) (1,852) (3,673) (4,826)
Foreign currency transaction loss (gain) 2,134  23,047  25,940  27,979 
Miscellaneous, net (547) (1,917) (7,682) (4,526)
Income before income taxes 96,095  273,024  992,758  1,102,391 
Income tax expense 33,045  106,021  346,796  390,953 
Net income 63,050  167,003  645,962  711,438 
Less: Net income (loss) attributable to noncontrolling interests (98) (184) 48  (210)
Net income attributable to Pilgrim’s Pride Corporation $63,148  $167,187  $645,914  $711,648 
         
Weighted average shares of common stock outstanding:        
Basic 255,216  258,999  258,442  258,974 
Effect of dilutive common stock equivalents 262  544  234  497 
Diluted 255,478  259,543  258,676  259,471 
         
Net income attributable to Pilgrim's Pride Corporation per share of  
  common stock outstanding:
        
Basic $0.25  $0.65  $2.50  $2.75 
Diluted $0.25  $0.64  $2.50  $2.74 
                 


 
PILGRIM’S PRIDE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
  Fifty-Two Weeks Ended
  December 27, 2015 December 28, 2014
  (In thousands)
Cash flows from operating activities:    
Net income $645,962  $711,438 
Adjustments to reconcile net income to cash provided by operating
  activities:
    
Depreciation and amortization 158,975  155,824 
Asset impairment 4,813   
Foreign currency transaction losses (gains)   38,129 
Accretion of bond discount   2,243 
Loss (gain) on property disposals (10,372) (1,407)
Gain on investment securities    
Share-based compensation 2,975  4,928 
Deferred income tax expense (benefit) 29,512  78,943 
Changes in operating assets and liabilities:    
Trade accounts and other receivables 61,294  (9,526)
Inventories 57,078  10,638 
Prepaid expenses and other current assets 19,840  (38,010)
Accounts payable and accrued expenses 61,882  44,833 
Income taxes (55,428) 74,705 
Deposits    
Long-term pension and other postretirement obligations (3,500) (5,784)
Other 3,797  (262)
  Cash provided by operating activities 976,828  1,066,692 
Cash flows from investing activities:    
Acquisitions of property, plant and equipment (175,764) (171,443)
Business acquisition (373,532)  
Purchases of investment securities   (55,100)
Proceeds from sale or maturity of investment securities   152,050 
Proceeds from property disposals 14,610  11,108 
  Cash used in investing activities (534,686) (63,385)
Cash flows from financing activities:    
Proceeds from notes payable to banks 28,726   
Proceeds from long-term debt 1,680,000   
Payments on long-term debt (683,780) (910,234)
Proceeds from sale of subsidiary common stock   332 
Proceeds from equity contribution under Tax Sharing Agreement between  
  JBS USA Holding, S.à.r.l. and Pilgrim's Pride Corporation
   3,849 
Tax benefit related to share-based compensation 6,474  458 
Payment of capitalized loan costs (12,364)  
Purchase of treasury stock (99,233)  
Payment of special cash dividends (1,498,470)  
  Cash used in financing activities (578,647) (905,595)
Effect of exchange rate changes on cash and cash equivalents   (29,775)
Increase in cash and cash equivalents (136,505) 67,937 
Cash and cash equivalents, beginning of period 576,143  508,206 
Cash and cash equivalents, end of period $439,638  $576,143 
Supplemental Disclosure Information:    
Interest paid (net of amount capitalized) $24,210  $71,558 
Income taxes paid 360,347  257,152 
       


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 Fifty-Two Weeks Ended
  December 27, 2015 December 28, 2014 December 27, 2015 December 28, 2014
  (In thousands)
Net income from continuing operations $63,050  $167,003  $645,962  $711,438 
Add:        
Interest expense, net 10,091  34,838  33,875  77,271 
Income tax expense (benefit) 33,045  106,021  346,796  390,953 
Depreciation and amortization 42,490  43,084  158,975  155,824 
Minus:        
Amortization of capitalized financing costs 930  6,348  3,638  13,712 
EBITDA 147,746  344,598  1,181,970  1,321,774 
Add:        
Foreign currency transaction losses (gains) 2,134  23,047  25,940  27,979 
Restructuring charges     5,605  2,286 
Minus:        
Net income (loss) attributable to noncontrolling interest   (98) (184) 48  (210)
Adjusted EBITDA $149,978  $367,829  $1,213,467  $1,352,249 
                 


The summary unaudited consolidated income statement data for the twelve months ended December 27, 2015 (the LTM Period) have been calculated by summing each of the unaudited thirteen week periods within the audited fifty-two week period ended December 27, 2015.

 
PILGRIM'S PRIDE CORPORATION
Reconciliation of LTM Adjusted EBITDA
           
(Unaudited) Thirteen Weeks Ended Thirteen Weeks Ended Thirteen Weeks Ended Thirteen Weeks Ended LTM Ended
  March 29,
 2015
 June 28,
 2015
 September 27,
 2015
 December 27,
2015
 December 27,
2015
 (In thousands)
Net income from continuing operations $204,193  $241,624  $137,095  $63,050  $645,962 
Add:          
Interest expense, net 3,365  10,237  10,182  10,091  33,875 
Income tax expense (benefit) 111,494  129,104  73,153  33,045  346,796 
Depreciation and amortization 36,152  38,918  41,415  42,490  158,975 
Asset impairments          
Minus:          
Amortization of capitalized financing costs 725  864  1,119  930  3,638 
EBITDA 354,479  419,019  260,726  147,746  1,181,970 
Add:          
Foreign currency transaction losses (gains) 8,974  2,059  12,773  2,134  25,940 
Restructuring charges   4,813  792    5,605 
Minus:          
Net income (loss) attributable to noncontrolling interest  (22) 135  33  (98) 48 
Adjusted EBITDA $363,475  $425,756  $274,258  $149,978  $1,213,467 
                     



 
PILGRIM'S PRIDE CORPORATION
Reconciliation of EBITDA Margin
 
(Unaudited) Thirteen Weeks Ended Fifty-Two Weeks Ended Thirteen Weeks Ended Fifty-Two Weeks Ended
  December 27, 2015 December 28, 2014 December 27, 2015 December 28, 2014 December 27, 2015 December 28, 2014 December 27, 2015 December 28, 2014
 (In thousands)
Net income from continuing operations $63,050  $167,003  $645,962  $711,438  3.22% 7.91% 7.90% 8.29%
Add:                
Interest expense, net 10,091  34,838  33,875  77,271  0.51% 1.65% 0.41% 0.90%
Income tax expense (benefit) 33,045  106,021  346,796  390,953  1.69% 5.02% 4.24% 4.55%
Depreciation and amortization 42,490  43,084  158,975  155,824  2.17% 2.04% 1.94% 1.82%
Asset impairments         % % % %
Minus:         % % % %
Amortization of capitalized financing costs 930  6,348  3,638  13,712  0.05% 0.30% 0.04% 0.16%
EBITDA 147,746  344,598  1,181,970  1,321,774  7.54% 16.33% 14.45% 15.40%
Add:                
Foreign currency transaction losses (gains) 2,134  23,047  25,940  27,979  0.11% 1.09% 0.32% 0.33%
Restructuring charges     5,605  2,286  % % 0.07% 0.03%
Minus:                
Net income (loss) attributable to noncontrolling interest  (98) (184) 48  (210) % (0.01)% % %
Adjusted EBITDA $149,978  $367,829  $1,213,467  $1,352,249  7.65% 17.43% 14.83% 15.75%
                 
Net Revenue: $1,960,780  $2,110,436  $8,180,104  $8,583,365  $1,960,780  $2,110,436  $8,180,104  $8,583,365 
                                 


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 Fifty-Two Weeks Ended
 December 27,
 2015
 December 28,
 2014
 December 27,
 2015
 December 28,
 2014
 (In thousands, except per share data)
Net income (loss) attributable to Pilgrim's Pride Corporation$63,148  $167,187  $645,914  $711,648 
Loss on early extinguishment of debt  25,271  1,470  29,475 
Foreign currency transaction losses (gains)2,134  23,047  25,940  27,979 
Income (loss) before loss on early extinguishment of debt and foreign currency transaction losses (gains)65,282  215,505  673,324  769,102 
Weighted average diluted shares of common stock outstanding255,478  259,543  258,676  259,471 
Income (loss) before loss on early extinguishment of debt and foreign currency transaction losses (gains)  
  per common diluted share
$0.26  $0.83  $2.60  $2.96 
                



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
 (In thousands)
Long term debt, less current maturities$501,999  $3,980  $985,509 
Add:  Current maturities of long term debt and notes payable  410,234  262  28,812 
Minus:  Cash and cash equivalents508,206  576,143  439,638 
Minus:  Available-for-sale securities96,902     
Net debt (cash position)$307,125  $(571,901) $574,683 
            


 
PILGRIM'S PRIDE CORPORATION
Supplementary Selected Segment and Geographic Data
         
  Thirteen Weeks Ended Fifty-Two Weeks Ended
  December 27, 2015 December 28, 2014 December 27, 2015 December 28, 2014
  (Unaudited)      
  (In thousands)
Sources of net sales by country of origin:        
US: $1,663,361  $1,888,332  $7,143,354  $7,647,036 
Mexico: 297,419  222,104  1,036,750  936,329 
Total net sales: $1,960,780  $2,110,436  $8,180,104  $8,583,365 
         
Sources of cost of sales by country of origin:        
US: $1,505,336  $1,544,147  $6,016,493  $6,444,234 
Mexico: 294,775  187,140  909,329  745,136 
Elimination: (24)   (95)  
Total cost of sales: $1,800,087  $1,731,287  $6,925,727  $7,189,370 
         
Sources of gross profit by country of origin:        
US: $158,025  $344,185  $1,126,861  $1,202,802 
Mexico: 2,644  34,964  127,421  191,193 
Elimination: 24    95   
Total gross profit: $160,693  $379,149  $1,254,377  $1,393,995 
                 

 

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

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