Pilgrim’s Pride Reports Q1 Net Sales of $2.72 Billion, Operating Income of $137 Million and GAAP EPS of $0.34

GREELEY, Colo., May 01, 2019 (GLOBE NEWSWIRE) -- Pilgrim’s Pride Corporation (NASDAQ: PPC) reports first quarter 2019 financial results.

First Quarter Highlights

• Net Sales of $2.72 billion.
• Net Income of $84.0 million.
• Operating Income margins of 6.1% in U.S., 2.9% in Mexico and 2.5% in Europe operations, respectively.
• Adjusted EBITDA of $204.4 million (or a 7.5% margin), and Adjusted EPS of $0.35.
• Significant sequential rebound in U.S. operations vs. Q4, driven by stronger markets as feature activities tracked much closer to seasonality. Our balanced portfolio has continued to evolve, realizing the results of investments made over the past few years to further widen our products and brands, strengthen key customer relationships, and improve margin consistency.
• Weaker than seasonal markets in Mexico impacted results but conditions are already improving in Q2. Diversification into premium Pilgrim’s brand is gaining momentum and producing strong results, together with significant growth in Prepared Foods.
• In-line with the industry, Europe continued to be impacted by a substantial increase in input costs. We are offsetting the increase through capture of synergies and adjustments in pricing models.

Unaudited, In Millions, Except Per Share and Percentages
	Thirteen Weeks Ended
	Mar 31, 2019				Apr 1, 2018				Change
Net Sales	$	2,724.7			$	2,746.7			-0.8	%
GAAP EPS	$	0.34			$	0.48			-29.2	%
Operating Income	$	137.0			$	201.6			-32.0	%
Adjusted EBITDA (1)	$	204.4			$	271.8			-24.8	%
Adjusted EBITDA Margin (1)		7.5	%			9.9	%		-2.4pts

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

“After a very challenging market in 2018, we experienced a much better environment within our U.S. operations during Q1 particularly in commodity large bird deboning, with demand from retailers and QSR operators rebounding as they recognized the value of chicken. Feature activities normalized to seasonal levels throughout the quarter and the momentum has been sustained into early Q2. Commodity boneless prices have already surpassed levels from a year ago and are close to the five-year average, while wing prices are near historical highs. We have been heavily investing in further differentiating our portfolio to increase our capacities and capabilities to meet customer expectations. The investments in the operations and the focus of our people have yielded an increase in performance, and further growth prospects remain available. We are driving growth while continuing to pursue future opportunities by intensifying our efforts in innovation and marketing. We expect value added, differentiated products to account for a larger portion of our total results over the next few years as we continue to reduce the volatility of our commodity sales mix,” stated Jayson Penn, Chief Executive Officer of Pilgrim's.

“Market balance dynamics in Mexico were weaker than seasonal in Q1. Better than expected growing conditions and softer demand have impacted prices. Chicken demand was also affected by more availability of imported pork from the U.S. during the quarter but we believe chicken demand can continue to grow in-line with historical rates longer term. The environment has already started to recover in Q2 and prices have begun to react positively, with growing conditions reverting back to normal, demand improving, and competition from pork imports declining. Our Prepared Foods have continued to grow at a double digit rate and are generating great results under both premium Pilgrim’s and Del Dia brands to drive the evolution of our Mexican portfolio towards more differentiated, higher-value products giving us a clear path to margin expansion.”

“In-line with the whole industry, our European operations continued to be impacted by a substantial increase in input costs, including feed ingredients, higher utilities, labor and packaging. These increases were partially offset by cost reduction initiatives, synergies and price adjustments some of which have taken slightly longer than expected to be passed on and reflected in customer contracts. Despite the impact in results, we expect an improvement month over month as we adjust our prices based on key customer’s contracts and expect the full recovery within our pricing models.”

Conference Call Information

A conference call to discuss Pilgrim’s quarterly results will be held tomorrow, May 2, 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/ppc190502.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 [phone] within the US, or [phone] 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 August 2, 2019.

About Pilgrim’s Pride

Pilgrim’s employs approximately 52,100 people and operates chicken processing plants and prepared-foods facilities in 14 states, Puerto Rico, Mexico, the U.K., 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. 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:	Dunham Winoto
	Director, Investor Relations
	[e-mail]
	[phone]
	www.pilgrims.com

PILGRIM’S PRIDE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
		March 31, 2019				December 30, 2018
		(Unaudited)
		(In thousands)
Cash and cash equivalents		$	378,518			$	338,386
Restricted cash and cash equivalents		20,373				23,192
Trade accounts and other receivables, less allowance for doubtful accounts		564,055				561,549
Accounts receivable from related parties		854				1,331
Inventories		1,166,002				1,159,519
Income taxes receivable		31,985				38,479
Prepaid expenses and other current assets		124,265				112,023
Assets held for sale		178				178
Total current assets		2,286,230				2,234,657
Deferred tax assets		4,166				4,248
Other long-lived assets		16,275				16,717
Identified intangible assets, net		569,870				564,128
Goodwill		970,640				949,750
Operating lease assets, net		330,040				—
Property, plant and equipment, net		2,195,706				2,161,702
Total assets		$	6,372,927			$	5,931,202
Accounts payable		$	818,482			$	830,059
Accounts payable to related parties		5,550				7,269
Revenue contract liability		25,812				33,328
Accrued expenses and other current liabilities		472,365				386,941
Income taxes payable		7,884				8,221
Current maturities of long-term debt		27,637				30,405
Total current liabilities		1,357,730				1,296,223
Noncurrent operating lease liability, less current maturities		252,281				—
Long-term debt, less current maturities		2,303,735				2,295,190
Noncurrent income taxes payable		7,731				7,731
Deferred tax liabilities		236,931				237,422
Other long-term liabilities		70,019				75,051
Total liabilities		4,228,427				3,911,617
Common stock		2,609				2,604
Treasury stock		(231,994		)		(231,994		)
Additional paid-in capital		1,947,013				1,945,136
Retained earnings		505,899				421,888
Accumulated other comprehensive loss		(88,926		)		(127,834		)
Total Pilgrim’s Pride Corporation stockholders’ equity		2,134,601				2,009,800
Noncontrolling interest		9,899				9,785
Total stockholders’ equity		2,144,500				2,019,585
Total liabilities and stockholders’ equity		$	6,372,927			$	5,931,202

PILGRIM’S PRIDE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
		Thirteen Weeks Ended
		March 31, 2019				April 1, 2018
		(In thousands, except per share data)
Net sales		$	2,724,675			$	2,746,678
Cost of sales		2,505,736				2,459,013
Gross profit		218,939				287,665
Selling, general and administrative expense		81,924				85,283
Administrative restructuring activity		(27		)		789
Operating income		137,042				201,593
Interest expense, net of capitalized interest		33,562				50,300
Interest income		(3,340		)		(1,590		)
Foreign currency transaction losses (gains)		2,636				(1,721		)
Miscellaneous, net		(357		)		(1,617		)
Income before income taxes		104,541				156,221
Income tax expense		20,416				36,997
Net income		84,125				119,224
Less: Net income (loss) attributable to noncontrolling interests		114				(194		)
Net income attributable to Pilgrim’s Pride Corporation		$	84,011			$	119,418
Weighted average shares of common stock outstanding:
Basic		249,167				248,838
Effect of dilutive common stock equivalents		390				151
Diluted		249,557				248,989
Net income attributable to Pilgrim's Pride Corporation per share of   common stock outstanding:
Basic		$	0.34			$	0.48
Diluted		$	0.34			$	0.48

PILGRIM’S PRIDE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
		Fifty-three weeks ended
		March 31, 2019				April 1, 2018
		(In thousands)
Cash flows from operating activities:
Net income		$	84,125			$	119,224
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		67,182				67,444
Loan cost amortization		1,201				1,757
Noncash loss on early extinguishment of debt		—				3,918
Foreign currency transaction loss related to borrowing arrangements		(1,034		)		5,745
Amortization of premium related to Senior Notes		(167		)		(167		)
Accretion of discount related to Senior Notes		246				76
Impairment expense		—				470
Loss on property disposals		(108		)		80
Gain on equity method investment		(16		)		(16		)
Share-based compensation		1,882				1,273
Deferred income tax expense (benefit)		(4,089		)		(4,735		)
Changes in operating assets and liabilities:
Trade accounts and other receivables		2,381				(61,945		)
Inventories		(1,368		)		19,541
Prepaid expenses and other current assets		(11,479		)		(20,777		)
Accounts payable, accrued expenses and other current liabilities		(21,968		)		(29,171		)
Income taxes		6,579				(98,784		)
Long-term pension and other postretirement obligations		(1,315		)		(2,759		)
Other operating assets and liabilities		(1,683		)		(534		)
Cash provided by operating activities		120,369				640
Cash flows from investing activities:
Acquisitions of property, plant and equipment		(87,941		)		(76,681		)
Business acquisition		—				—
Proceeds from property disposals		539				1,021
Cash used in investing activities		(87,402		)		(75,660		)
Cash flows from financing activities:
Proceeds from revolving line of credit and long-term borrowings		67,193				502,341
Payments on revolving line of credit, long-term borrowings and capital lease obligations		(62,293		)		(433,550		)
Proceeds from equity contribution under Tax Sharing Agreement between JBS USA Food Company Holdings and Pilgrim's Pride Corporation		(525		)		5,558
Payment of capitalized loan costs		(458		)		(4,061		)
Cash provided by (used in) financing activities		3,917				70,288
Effect of exchange rate changes on cash and cash equivalents		429				6,669
Increase (decrease) in cash, cash equivalents and restricted cash		37,313				1,937
Cash, cash equivalents and restricted cash, beginning of period		361,578				589,531
Cash, cash equivalents and restricted cash, end of period		$	398,891			$	591,468

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
	March 31, 2019				April 1, 2018
	(In thousands)
Net income	$	84,125			$	119,224
Add:
Interest expense, net	30,222				48,710
Income tax expense (benefit)	20,416				36,997
Depreciation and amortization	67,182				67,444
EBITDA	201,945				272,375
Add:
Foreign currency transaction losses (gains)	2,636				(1,721		)
Acquisition charges	—				179
Restructuring activity	(27		)		789
Minus:
Net income (loss) attributable to noncontrolling interest	114				(194		)
Adjusted EBITDA	$	204,440			$	271,816

The summary unaudited consolidated income statement data for the twelve months ended March 31, 2019 (the LTM Period) have been calculated by subtracting the applicable unaudited consolidated income statement data for the three months ended April 1, 2018 from the sum of (1) the applicable audited consolidated income statement data for the year ended December 30, 2018 and (2) the applicable audited consolidated income statement data for the three months ended March 31, 2019.

PILGRIM'S PRIDE CORPORATION
Reconciliation of LTM Adjusted EBITDA
(Unaudited)		Thirteen Weeks Ended				Thirteen Weeks Ended				Thirteen Weeks Ended				Thirteen Weeks Ended				LTM Ended
		July 1, 2018				September 30, 2018				December 30, 2018				March 31, 2019				March 31, 2019
		(In thousands)
Net income (loss)		$	106,344			$	29,463			$	(8,227	)		$	84,125			$	211,705
Add:
Interest expense, net		35,433				31,093				33,765				30,222				130,513
Income tax expense		38,522				30,848				(20,944		)		20,416				68,842
Depreciation and amortization		70,278				71,971				68,207				67,182				277,638
Minus:
Amortization of capitalized financing   costs		2,453				944				1,232				—				4,629
EBITDA		248,124				162,431				71,569				201,945				684,069
Add:
Foreign currency transaction losses   (gains)		5,630				(6,711		)		19,962				2,636				21,517
Acquisition charges		125				16				—				—				141
Restructuring activity		1,135				257				2,584				(27		)		3,949
Other nonrecurring losses and expenses		3,298				164				16,023				—				19,485
Minus:
Net income (loss) attributable to   noncontrolling interest		(197		)		153				(903		)		114				(833		)
Adjusted EBITDA		$	258,509			$	156,004			$	111,041			$	204,440			$	729,994

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								Thirteen Weeks Ended
		March 31, 2019				April 1, 2018				March 31, 2019			April 1, 2018
		(In thousands)
Net income from continuing operations		$	84,125			$	119,224			3.09	%		4.34	%
Add:
Interest expense, net		30,222				48,710				1.11	%		1.77	%
Income tax expense		20,416				36,997				0.75	%		1.35	%
Depreciation and amortization		67,182				67,444				2.46	%		2.46	%
EBITDA		201,945				272,375				7.41	%		9.92	%
Add:
Foreign currency transaction losses (gains)		2,636				(1,721		)		0.09	%		(0.06	)%
Acquisition charges		—				179				—	%		—	%
Restructuring activity		(27		)		789				—	%		0.03	%
Minus:
Net income (loss) attributable to noncontrolling interest		114				(194		)		—	%		(0.01	)%
Adjusted EBITDA		$	204,440			$	271,816			7.50	%		9.90	%
Net sales		$	2,724,675			$	2,746,678

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
		March 31, 2019				April 1, 2018
		(In thousands, except per share data)
Net income attributable to Pilgrim's Pride Corporation		$	84,011			$	119,418
Adjustments, net of tax:
Loss on early extinguishment of debt		—				12,895
Acquisition charges and restructuring activity		(27		)		968
Foreign currency transaction losses (gains)		2,636				(1,721		)
Income before loss on early extinguishment of debt, acquisition   charges and restructuring activity, and foreign currency   transaction losses (gains)		86,620				131,560
Weighted average diluted shares of common stock outstanding		249,557				248,989
Income before loss on early extinguishment of debt, acquisition   charges and restructuring activity, and foreign currency    transaction losses (gains) per common diluted share		$	0.35			$	0.53

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
	March 31, 2019				April 1, 2018
	(In thousands, except per share data)
GAAP EPS	$	0.34			$	0.48
Adjustments, net of tax:
Loss on early extinguishment of debt	—				0.05
Foreign currency transaction losses (gains)	0.01				(0.01		)
Adjusted EPS	$	0.35			$	0.53
Weighted average diluted shares of common stock outstanding	249,557				248,989

PILGRIM'S PRIDE CORPORATION
Supplementary Selected Segment and Geographic Data
(Unaudited)		Thirteen Weeks Ended
		March 31, 2019				April 1, 2018
		(In thousands)
Sources of net sales by country of origin:
US		$	1,883,591			$	1,841,105
Europe		514,962				544,300
Mexico		326,122				361,273
Total net sales		$	2,724,675			$	2,746,678
Sources of cost of sales by country of origin:
US		$	1,713,419			$	1,658,734
Europe		485,378				501,568
Mexico		306,963				298,735
Elimination		(24		)		(24		)
Total cost of sales		$	2,505,736			$	2,459,013
Sources of gross profit by country of origin:
US		$	170,172			$	182,370
Europe		29,584				42,733
Mexico		19,159				62,538
Elimination		24				24
Total gross profit		$	218,939			$	287,665
Sources of operating income by country of origin:
US		$	114,840			$	127,286
Europe		12,714				21,413
Mexico		9,464				52,870
Elimination		24				24
Total operating income		$	137,042			$	201,593