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
February 10, 2016: 04:30 PM ET
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.
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 outstanding
255,478
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 equivalents
508,206
576,143
439,638
Minus: Available-for-sale securities
96,902
—
—
Net debt (cash position)
$
307,125
$
(571,901
)
$
574,683
PILGRIM'S PRIDE CORPORATION
Supplementary Selected Segment and Geographic Data