• Pilgrim’s Pride Reports Fourth Quarter and Year-End 2022 Results

    Source: Nasdaq GlobeNewswire / 08 Feb 2023 16:00:01   America/Chicago

    GREELEY, Colo., Feb. 08, 2023 (GLOBE NEWSWIRE) -- Pilgrim’s Pride Corporation (NASDAQ: PPC), one of the world's largest poultry producers, reports its fourth quarter and year-end 2022 financial results.

    2022 Highlights

    • Net Sales of $17.5 billion, up 18.2% from prior year.
    • Consolidated GAAP Operating Income margin of 6.7% with GAAP operating income margins of 10.2% in U.S., 4.5% in Mexico, and break-even in Europe.
    • GAAP Net Income of $745.9 million. Adjusted Net Income of $803.6 million, or adjusted EPS of $3.34.
    • Adjusted EBITDA of $1.6 billion, or an 9.4% margin, 27.9% higher than prior year.
    • Sales and Adjusted EBITDA growth despite historically high market volatility and significant inflationary headwinds throughout the year.
    • Our U.S. business portfolio delivered strong results in the face of extreme volatility in the commodity markets and persistent inflation though its diversified portfolio across bird sizes and branded offerings and operation excellence initiatives to support our key customers.   
    • Our Prepared Foods business continued its momentum in branded fully cooked products as Just Bare® and Pilgrim’s® collectively grew 70% year over year.   E-commerce grew 48% and now accounts for over 23% of branded sales.
    • Our U.K. and Europe business continued efforts to further optimize its manufacturing network and consolidate its back-office operations, enhancing the foundation to drive operational efficiencies and future growth with Key Customers. The team achieved three consecutive quarters of margin improvement.
    • After a strong 1st half, our Mexico business strove to mitigate the impacts of challenges in its live operations and weakened market fundamentals throughout the second half of 2022 through its strong service levels with Key Customers.
    • Pilgrim’s was externally recognized for its progress in Sustainability as all ESG scores improved throughout the year. We have reduced our natural gas usage intensity and electrical usage intensity ahead of our targets.
    • We also continue in our growth and margin enhancing strategy with our investments in Athens, GA to support Key Customer growth, the construction of our new protein conversion plant and further investments in automation.

    Fourth Quarter

    • Net Sales of $4.1 billion.
    • GAAP Net Loss of $155.0 million and negative GAAP EPS of $0.66. Adjusted Net Loss of $115.7 million and negative adjusted EPS of $0.49.
    • Consolidated GAAP Operating Loss margin of 1.9%.
    • Adjusted EBITDA of $62.9 million, or a 1.5% margin.
    • Adjusted EBITDA margins of 0.6% in the U.S., negative 3.4% in Mexico, and 5.1% in Europe.
    • Our U.S. business was able to generate positive EBITDA results, despite unprecedented decline in commodity cutout values that were offset by our diversified portfolio and Key Customer partnerships in Case Ready, Small Bird, and Prepared.
    • Our U.K. and Europe business benefited from ongoing operational excellence efforts in manufacturing and back office integration, resulting in the consistent growth in adjusted EBITDA throughout the year.
    • Our Mexico business saw improvement throughout the quarter, as market conditions sequentially improve and our operations recover from the live challenges.
    Unaudited Three Months Ended Year Ended
      December 25,
    2022    		 December 26,
    2021    		 Y/Y Change December 25,
    2022    		 December 26,
    2021    		 Y/Y Change
      (In millions, except per share and percentages)  
    Net sales $4,127.4  $4,038.8  +2.2% $17,468.4  $14,777.5  +18.2%
    U.S. GAAP EPS $(0.66) $0.15  +100.0% $3.11  $0.13  NM(2) 
    Operating income $(77.5) $55.1  (240.8)% $1,176.6  $211.2  +457.1%
    Adjusted EBITDA(1) $62.9  $316.7  (80.1)% $1,648.4  $1,289.0  +27.9%
    Adjusted EBITDA margin(1)  1.5%  7.8% (6.3)pts   9.4%  8.7% +0.7pts 

    (1) Reconciliations for non-U.S. GAAP measures are provided in subsequent sections within this release.
    (2) This Y/Y change is designated not meaningful (or “NM”) due to significant one-time items recognized in prior year.

    Throughout the year, commodity cutout values experienced record volatility as markets reached all-time highs in the first half of the year and then suffered an unprecedented decline in value in the second half. Inflation also remained persistent with input costs, including grain, utilities, and labor.  

    “Although we faced remarkable challenges, our team members were constantly available to explore new opportunities to improve our business and were determined to drive results. This leadership mindset, when coupled with our strategies of portfolio diversification, Key Customer partnerships, and operational excellence, translated into strong growth in net sales and adjusted EBITDA for Pilgrim’s,” said Fabio Sandri, Chief Executive Officer.

    In the U.S., the more stable Case Ready, Small Bird, and Prepared Foods businesses all improved results throughout the quarter, offsetting extraordinary declines in cutout values impacting the commodity segment.  

    “Our performance in the U.S. highlights the benefits of Key Customer partnerships, diversification across bird sizes as well as branded offerings as means to mitigate dramatic market changes.   Even with an extremely challenging Q4, the U.S. grew year to date net sales and adjusted EBITDA compared to last year. To further improve our portfolio and continue our growth, our investments in expansion at our Athens, GA plant, the construction of a protein conversion plant in South Georgia and various automation projects remain on track,” remarked Fabio Sandri.

    The U.K. and Europe business continued to drive operational excellence through optimization of its manufacturing footprint and further integration of back office support activities. The team also continued to work in partnership with Key Customers to mitigate increased input costs from persistent inflation and generate product innovation.  

    “I’m continually impressed with the discipline and ownership of our U.K. and Europe team.   Their efforts to scale our manufacturing network and consolidate back office support activities creates a solid foundation to realize our growth aspirations and to create value with our Key Customers,” said Fabio Sandri.

    “The Mexico business faced unique circumstances on live operations and unbalanced market fundamentals throughout the 2nd half of the year which negatively impacted profitability and margins.   Nonetheless, the team cultivated Key Customer relationships by maintaining strong service levels under extraordinary conditions. We continue to support the growth of the region,” remarked Fabio Sandri.

    Pilgrim’s was also recognized by external agencies for its improvement in Sustainability as all ESG scores improved throughout the year.   Relative to 2021, Pilgrim’s has reduced its natural gas usage intensity and electrical usage intensity ahead of its targets.  

    “I am thoroughly impressed with our progress in Sustainability in 2022, especially as the team simultaneously reduced GHG emission intensity and enhanced operating efficiencies.   As such, we can continue to reinvest in our communities, create a better future for our team members, and realize our vision of becoming the best and most respected company in our industry,” said Fabio Sandri.  

    Conference Call Information

    A conference call to discuss Pilgrim’s quarterly results will be held tomorrow, February 9, 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/ppc230209.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 (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 over 61,500 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

      
    Contact:Andrew Rojeski
     Head of Strategy, Investor Relations, & Net Zero Programs
     IRPPC@pilgrims.com
     www.pilgrims.com
      


     
    PILGRIM’S PRIDE CORPORATION
    CONSOLIDATED BALANCE SHEETS

    (Unaudited)
      December 25, 2022 December 26, 2021
      (In thousands, except share and par value data)
    Cash and cash equivalents $400,988  $427,661 
    Restricted cash and cash equivalents  33,771   22,460 
    Trade accounts and other receivables, less allowance for doubtful accounts  1,097,212   1,013,437 
    Accounts receivable from related parties  2,512   1,345 
    Inventories  1,990,184   1,575,658 
    Income taxes receivable  155,859   27,828 
    Prepaid expenses and other current assets  211,092   237,565 
    Total current assets  3,891,618   3,305,954 
    Deferred tax assets  1,969   5,314 
    Other long-lived assets  41,574   32,410 
    Operating lease assets, net  305,798   351,226 
    Identified intangible assets, net  846,020   963,243 
    Goodwill  1,227,944   1,337,252 
    Property, plant and equipment, net  2,940,846   2,917,806 
    Total assets $9,255,769  $8,913,205 
         
    Accounts payable $1,587,939  $1,378,077 
    Accounts payable to related parties  12,155   22,317 
    Revenue contract liability  34,486   22,321 
    Accrued expenses and other current liabilities  850,899   859,885 
    Income taxes payable  58,411   81,977 
    Current maturities of long-term debt  26,279   26,246 
    Total current liabilities  2,570,169   2,390,823 
    Noncurrent operating lease liability, less current maturities  230,701   271,366 
    Long-term debt, less current maturities  3,166,432   3,191,161 
    Noncurrent income taxes payable  —   — 
    Deferred tax liabilities  364,184   369,185 
    Other long-term liabilities  71,007   101,736 
    Total liabilities  6,402,493   6,324,271 
    Common stock, $.01 par value, 800,000,000 shares authorized; 261,610,518 and
    261,348,030 shares issued at year-end 2022 and year-end 2021, respectively;
    236,469,365 and 243,675,522 shares outstanding at year-end 2022 and year-end
    2021, respectively    		  2,617   2,614 
    Treasury stock, at cost, 25,141,153 shares year-end 2022 and 17,672,508 shares at year-end 2021  (544,687)  (345,134)
    Additional paid-in capital  1,969,833   1,964,028 
    Retained earnings  1,749,499   1,003,569 
    Accumulated other comprehensive loss  (336,448)  (47,997)
    Total Pilgrim’s Pride Corporation stockholders’ equity  2,840,814   2,577,080 
    Noncontrolling interest  12,462   11,854 
    Total stockholders’ equity  2,853,276   2,588,934 
    Total liabilities and stockholders' equity $9,255,769  $8,913,205 


     
     
    PILGRIM’S PRIDE CORPORATION
    CONSOLIDATED AND COMBINED STATEMENTS OF INCOME
    (Unaudited)
     
      Three Months Ended Year Ended
      December 25,
    2022    		 December 26,
    2021    		 December 25,
    2022    		 December 26,
    2021
      (In thousands, except per share data)
    Net sales $4,127,365  $4,038,769  $17,468,377  $14,777,458 
    Cost of sales  4,031,583   3,686,269   15,656,574   13,411,631 
    Gross profit  95,782   352,500   1,811,803   1,365,827 
    Selling, general and administrative expense  142,840   291,644   604,742   1,148,861 
    Restructuring activities  30,466   5,802   30,466   5,802 
    Operating income (loss)  (77,524)  55,054   1,176,595   211,164 
    Interest expense, net of capitalized interest  41,369   34,974   152,672   145,792 
    Interest income  (4,071)  (1,604)  (9,028)  (6,056)
    Foreign currency transaction losses (gains)  16,469   (18,400)  30,817   (9,382)
    Gain on bargain purchase  —   —   —   — 
    Miscellaneous, net  (1,505)  (1,575)  (23,339)  (11,580)
    Income before income taxes  (129,786)  41,659   1,025,473   92,390 
    Income tax expense  25,256   5,191   278,935   61,122 
    Net income (loss)  (155,042)  36,468   746,538   31,268 
    Less: Net income (loss) attributable to noncontrolling Interests  (66)  (286)  608   268 
    Net income (loss) attributable to Pilgrim’s Pride Corporation $(154,976) $36,754  $745,930  $31,000 
             
    Weighted average shares of common stock outstanding:        
    Basic  236,469   243,652   239,766   243,652 
    Effect of dilutive common stock equivalents  —   477   628   477 
    Diluted  236,469   244,129   240,394   244,129 
             
    Net income (loss) attributable to Pilgrim's Pride Corporation per share of common stock outstanding:        
    Basic $(0.66) $0.15  $3.11  $0.13 
    Diluted $(0.66) $0.15  $3.11  $0.13 


     
     
    PILGRIM’S PRIDE CORPORATION
    CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS
    (Unaudited)
     
      Year Ended
      December 25, 2022 December 26, 2021
      (In thousands)
    Cash flows from operating activities:    
    Net income $746,538  $31,268 
    Adjustments to reconcile net income to cash provided by operating activities:    
    Depreciation and amortization  403,110   380,824 
    Deferred income tax expense (benefit)  21,295   (86,391)
    Gain on property disposals  (18,908)  (1,476)
    Share-based compensation  6,985   11,655 
    Loan cost amortization  4,753   5,095 
    Asset impairment  3,559   — 
    Accretion of bond discount  1,717   1,533 
    Gain on equity method investments  (2)  (16)
    Loss on early extinguishment of debt recognized as a component of interest expense  —   24,654 
    Amortization of bond premium  —   (167)
    Changes in operating assets and liabilities:    
    Trade accounts and other receivables  (149,599)  (259,377)
    Inventories  (472,224)  (177,864)
    Prepaid expenses and other current assets  18,264   (53,797)
    Accounts payable and accrued expenses  263,288   359,589 
    Income taxes  (142,455)  115,216 
    Long-term pension and other postretirement obligations  (4,128)  (18,461)
    Other operating assets and liabilities  (12,330)  (5,826)
         Cash provided by operating activities  669,863   326,459 
    Cash flows from investing activities:    
    Acquisitions of property, plant and equipment  (487,110)  (381,671)
    Proceeds from property disposals  35,516   24,724 
    Proceeds from insurance recoveries  16,034   — 
    Purchase of acquired businesses, net of cash acquired  (9,692)  (966,766)
         Cash used in investing activities  (445,252)  (1,323,713)
    Cash flows from financing activities:    
    Payments on revolving line of credit and long-term borrowings  (388,299)  (2,006,195)
    Proceeds from revolving line of credit and long-term borrowings  362,540   2,951,707 
    Purchase of common stock under share repurchase program  (199,553)  — 
    Payment of capitalized loan costs  (4,741)  (22,293)
    Distribution of capital under the TSA  (1,961)  (650)
    Payment on early extinguishment of debt  —   (21,258)
         Cash provided by (used in) financing activities  (232,014)  901,311 
    Effect of exchange rate changes on cash and cash equivalents  (7,959)  (2,342)
    Decrease in cash and cash equivalents  (15,362)  (98,285)
    Cash and cash equivalents, beginning of year  450,121   548,406 
    Cash and cash equivalents, end of year $434,759  $450,121 
    Supplemental Disclosure Information:    
    Interest paid (net of amount capitalized) $156,292  $119,328 
    Income taxes paid  385,585   20,863 
             

    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: (1) foreign currency transaction losses (gains), (2) transaction costs related to business acquisitions, (3) DOJ agreement and litigation settlements, (4) restructuring activities losses, (5) Hometown Strong initiative expenses, (6) charge for fair value markup of acquired inventory, (7) property insurance recoveries for Mayfield, Kentucky tornado property damage losses, (8) deconsolidation of subsidiary, and (9) net income (loss) attributable to noncontrolling interest. 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 U.S. (“U.S. 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 applicable to continuing operations. The Company also believes that Adjusted EBITDA, in combination with the Company’s financial results calculated in accordance with U.S. 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 U.S. GAAP. EBITDA and Adjusted EBITDA have limitations as analytical tools and should not be considered in isolation or as substitutes for an analysis of our results as reported under U.S. GAAP. In addition, other companies in our industry may calculate these measures differently limiting their usefulness as a comparative measure. Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as an alternative to net income as indicators of our operating performance or any other measures of performance derived in accordance with U.S. GAAP. These limitations should be compensated for by relying primarily on our U.S. GAAP results and using EBITDA and Adjusted EBITDA only on a supplemental basis.

     
    PILGRIM'S PRIDE CORPORATION
    Reconciliation of Adjusted EBITDA
    (Unaudited)
      Three Months Ended Year Ended
      December 25,
    2022    		 December 26,
    2021    		 December 25,
    2022    		 December 26,
    2021
      (In thousands)
    Net income (loss) $(155,042) $36,468  $746,538 $31,268 
    Add:        
    Interest expense, net(a)  37,298   33,370   143,644  139,736 
    Income tax expense  25,256   5,191   278,935  61,122 
    Depreciation and amortization  102,148   106,488   403,110  380,824 
    EBITDA  9,660   181,517   1,572,227  612,950 
    Add:        
    Foreign currency transaction losses (gains)(b)  16,469   (18,400)  30,817  (9,382)
    Transaction costs related to acquisitions(c)  (24)  9,540   948  18,858 
    DOJ agreement and litigation settlements(d)  5,804   131,940   34,086  656,225 
    Restructuring activities losses(e)  30,466   5,802   30,466  5,802 
    Hometown Strong commitment(f)  —   1,000   —  1,000 
    Charge for fair value markup of acquired inventory(g)  —   4,974   —  4,974 
    Minus:        
    Property insurance recoveries on Mayfield tornado losses(h)  (417)  —   19,580  — 
    Deconsolidation of subsidiary(i)  —   —   —  1,131 
    Net income (loss) attributable to noncontrolling interest  (66)  (286)  608  268 
    Adjusted EBITDA $62,858  $316,659  $1,648,356 $1,289,028 

    (a) Interest expense, net, consists of interest expense less interest income.
    (b) The Company measures the financial statements of its Mexico reportable segment as if the U.S. dollar were the functional currency. Accordingly, we remeasure assets and liabilities, other than nonmonetary assets, of the Mexico reportable segment at current exchange rates. We remeasure nonmonetary assets using the historical exchange rate in effect on the date of each asset’s acquisition. Currency exchange gains or losses resulting from these remeasurements, as well as, from our U.K. and Europe reportable segment are included in the line item Foreign currency transaction losses (gains) in the Consolidated Statements of Income.
    (c) Transaction costs related to acquisitions includes those charges that are incurred in conjunction with business acquisitions.
    (d) On October 13, 2020, Pilgrim's announced that we entered into a plea Agreement (the "Plea Agreement") with the DOJ. As a result of the Plea Agreement, we recognized a fine of $110.5 million. On February 23, 2021, the Colorado Court approved the Plea Agreement and assessed a fine of $107.9 million. The difference between the original accrual and the payment is recorded in DOJ agreement and litigation settlements in the year ended December 26, 2021. The expense adjustment recognized in the year ended December 26, 2021 was offset by amounts recognized in anticipation of probable settlements in ongoing litigation.
    (e) Restructuring charges is primarily related to restructuring initiatives at multiple production facilities throughout our U.K. and Europe reportable segment.
    (f) The Hometown Strong initiative was developed to help communities in which we operate respond to unexpected challenges.
    (g) This amount represents the flow-through of the value to step-up inventory to fair value at the acquisition date in accordance with business combination accounting rules recorded as part of the Pilgrim's Food Masters transaction.
    (h) This represents property insurance recoveries for the property damage losses incurred as a result of the tornado in Mayfield, KY in December 2021.
    (i) This represents a gain recognized as a result of deconsolidation of a subsidiary.

    The summary unaudited consolidated income statement data for the 12 months ended December 25, 2022 (the LTM Period) have been calculated by summing each of the unaudited three month periods within the audited year ended December 25, 2022.

     
    PILGRIM'S PRIDE CORPORATION
    Reconciliation of LTM Adjusted EBITDA
    (Unaudited)
      Three Months Ended  
      March 27, 2022 June 26, 2022 September 25,
    2022    		 December 25,
    2022    		 LTM Ended
    December 25,
    2022
     (In thousands)  
    Net income (loss) $280,560 $362,021  $258,999 $(155,042) $746,538
    Add:          
    Interest expense, net  35,022  37,102   34,222  37,298   143,644
    Income tax expense  75,219  112,711   65,749  25,256   278,935
    Depreciation and amortization  102,142  99,854   98,966  102,148   403,110
    EBITDA  492,943  611,688   457,936  9,660   1,572,227
    Add:          
    Foreign currency transaction losses (gains)  11,536  2,758   54  16,469   30,817
    Transaction costs related to acquisitions  717  255   —  (24)  948
    DOJ agreement and litigation settlements  500  8,482   19,300  5,804   34,086
    Restructuring activities losses  —  —   —  30,466   30,466
    Minus:          
    Property insurance recoveries for Mayfield tornado losses  3,815  —   16,182  (417)  19,580
    Net income (loss) attributable to noncontrolling interest  122  (95)  647  (66)  608
    Adjusted EBITDA $501,759 $623,278  $460,461 $62,858  $1,648,356
     

    EBITDA margins have been calculated by taking the relevant unaudited EBITDA figures, then dividing by net sales for the applicable period. EBITDA margins are presented because they are used by management and we believe they are frequently used by securities analysts, investors and other interested parties, as a supplement to our results prepared in accordance with U.S. GAAP, to compare the performance of companies.

    PILGRIM'S PRIDE CORPORATION
    Reconciliation of EBITDA Margin
    (Unaudited)
      Three Months Ended Year Ended Three Months Ended Year Ended
      December
    25, 2022    		 December
    26, 2021    		 December
    25, 2022    		 December
    26, 2021    		 December
    25, 2022    		 December
    26, 2021    		 December
    25, 2022    		 December
    26, 2021
     (In thousands, except percent of net sales)
    Net income (loss) $(155,042) $36,468  $746,538 $31,268  (3.76)        %  0.90%  4.27%  0.21%
    Add:                
    Interest expense, net  37,298   33,370   143,644  139,736   0.90%  0.83%  0.82%  0.95%
    Income tax expense  25,256   5,191   278,935  61,122   0.61%  0.13%  1.60%  0.41%
    Depreciation and amortization  102,148   106,488   403,110  380,824   2.47%  2.64%  2.31%  2.58%
    EBITDA  9,660   181,517   1,572,227  612,950   0.22%  4.50%  9.00%  4.15%
    Add:                      
    Foreign currency transaction losses (gains)  16,469   (18,400)  30,817  (9,382)  0.41%  (0.46)%  0.19%  (0.06)%
    Transaction costs related to acquisitions  (24)  9,540   948  18,858   —%  0.24%  0.01%  0.13%
    DOJ agreement and litigation settlements  5,804   131,940   34,086  656,225   0.14%  3.27%  0.18%  4.43%
    Restructuring activities losses  30,466   5,802   30,466  5,802   0.74%  0.14%  0.17%  0.04%
    Hometown Strong commitment  —   1,000   —  1,000   —%  0.02%  —%  0.01%
    Charge for fair value markup of acquired inventory  —   4,974   —  4,974   —%  0.12%  —%  0.03%
    Minus:                
    Proceeds of property insurance on Mayfield tornado losses  (417)  —   19,580  —   (0.01)%  —%  0.11%  —%
    Deconsolidation of a subsidiary  —   —   —  1,131   —%  —%  —%  0.01%
    Net income (loss) attributable to noncontrolling interest  (66)  (286)  608  268   —% (0.01)        %  —%  —%
    Adjusted EBITDA $62,858  $316,659  $1,648,356 $1,289,028   1.52%  7.84%  9.44%  8.72%
                     
     Net sales $4,127,365  $4,038,769  $17,468,377 $14,777,458  $4,127,365  $4,038,769  $17,468,377  $14,777,458 
                                    

    Adjusted EBITDA by segment figures s are presented because they are used by management and we believe they are frequently used by securities analysts, investors and other interested parties, as a supplement to our results prepared in accordance with U.S. GAAP, to compare the performance of companies.

     
    PILGRIM'S PRIDE CORPORATION
    Reconciliation of Adjusted EBITDA
    (Unaudited)
                     
      Three Months Ended Three Months Ended
      December 25, 2022 December 26, 2021
      U.S. U.K. &
    Europe    		 Mexico Total U.S. U.K. &
    Europe    		 Mexico Total
      (In thousands) (In thousands)
    Net income (loss) $(86,893) $(22,193) $(45,956) $(155,042) $45,854  $(23,454) $14,068  $36,468 
    Add:                
    Interest expense, net(a)  38,094   633   (1,429)  37,298   34,367   362   (1,359)  33,370 
    Income tax expense (benefit)  (22,097)  20,673   26,680   25,256   8,508   (8,085)  4,768   5,191 
    Depreciation and amortization  63,370   32,899   5,879   102,148   63,934   36,331   6,223   106,488 
    EBITDA  (7,526)  32,012   (14,826)  9,660   152,663   5,154   23,700   181,517 
    Add:                
    Foreign currency transaction losses (gains)(b)  17,060   442   (1,033)  16,469   (20,794)  (657)  3,051   (18,400)
    Transaction costs related to acquisitions(c)  —   (24)  —   (24)  157   9,383   —   9,540 
    DOJ agreement & litigation settlements(d)  5,804   —   —   5,804   131,940   —   —   131,940 
    Restructuring activities(e)  —   30,466   —   30,466   —   5,802   —   5,802 
    Hometown Strong commitment(f)  —   —   —   —   1,000   —   —   1,000 
    Charge for fair value markup of acquired inventory(g)  —   —   —   —   —   4,974   —   4,974 
    Minus:                
    Property insurance recoveries for Mayfield tornado losses(h)  (417)  —   —   (417)  —   —   —   — 
    Net income attributable to noncontrolling interest  —   —   (66)  (66)  —   —   (286)  (286)
    Adjusted EBITDA $15,755  $62,896  $(15,793) $62,858  $264,966  $24,656  $27,037  $316,659 

    (a) Interest expense, net, consists of interest expense less interest income.
    (b) The Company measures the financial statements of its Mexico reportable segment as if the U.S. dollar were the functional currency. Accordingly, we remeasure assets and liabilities, other than nonmonetary assets, of the Mexico reportable segment at current exchange rates. We remeasure nonmonetary assets using the historical exchange rate in effect on the date of each asset’s acquisition. Currency exchange gains or losses resulting from these remeasurements, as well as, from our U.K. and Europe reportable segment are included in the line item Foreign currency transaction losses (gains) in the Consolidated Statements of Income.
    (c) Transaction costs related to acquisitions includes those charges that are incurred in conjunction with business acquisitions.
    (d) On October 13, 2020, Pilgrim's announced that we entered into a plea Agreement (the "Plea Agreement") with the DOJ. As a result of the Plea Agreement, we recognized a fine of $110.5 million. On February 23, 2021, the Colorado Court approved the Plea Agreement and assessed a fine of $107.9 million. The difference between the original accrual and the payment is recorded in DOJ agreement and litigation settlements in the year ended December 26, 2021. The expense adjustment recognized in the year ended December 26, 2021 was offset by amounts recognized in anticipation of probable settlements in ongoing litigation.
    (e) Restructuring charges is primarily related to restructuring initiatives at multiple production facilities throughout our U.K. and Europe reportable segment.
    (f) The Hometown Strong initiative was developed to help communities in which we operate respond to unexpected challenges.
    (g) This amount represents the flow-through of the value to step-up inventory to fair value at the acquisition date in accordance with business combination accounting rules recorded as part of the Pilgrim's Food Masters transaction.
    (h) This represents property insurance recoveries for the property damage losses incurred as a result of the tornado in Mayfield, KY in December 2021.

     
    PILGRIM'S PRIDE CORPORATION
    Reconciliation of Adjusted EBITDA
    (Unaudited)
                     
      Year Ended Year Ended
      December 25, 2022 December 26, 2021
      U.S. U.K. &
    Europe    		 Mexico Total U.S. U.K. &
    Europe    		 Mexico Total
      (In thousands) (In thousands)
    Net income (loss) $706,704 $(3,642) $43,476  $746,538 $(103,502) $(23,254) $158,024  $31,268 
    Add:                
    Interest expense, net(a)  143,941  2,126   (2,423)  143,644  142,975   1,509   (4,748)  139,736 
    Income tax expense (benefit)  220,245  8,290   50,400   278,935  (38,424)  28,908   70,638   61,122 
    Depreciation and amortization  244,617  134,374   24,119   403,110  242,991   113,248   24,585   380,824 
    EBITDA  1,315,507  141,148   115,572   1,572,227  244,040   120,411   248,499   612,950 
    Add:                
    Foreign currency transaction losses (gains)(b)  35,702  (3,008)  (1,877)  30,817  (14,991)  (1,634)  7,243   (9,382)
    Transaction costs related to acquisitions(c)  847  101   —   948  9,475   9,383   —   18,858 
    DOJ agreement & litigation settlements(d)  34,086  —   —   34,086  656,225   —   —   656,225 
    Restructuring activities losses(e)  —  30,466   —   30,466  —   5,802   —   5,802 
    Hometown Strong commitment(f)  —  —   —   —  1,000   —   —   1,000 
    Charge for fair value markup of acquired inventory (g)  —  —   —   —  —   4,974   —   4,974 
    Minus:                
    Property insurance recoveries for Mayfield tornado losses(h)  19,580  —   —   19,580  —   —   —   — 
    Deconsolidation of subsidiary(i)  —  —   —   —  —   1,131   —   1,131 
    Net income attributable to noncontrolling interest  —  —   608   608  —   —   268   268 
    Adjusted EBITDA $1,366,562 $168,707  $113,087  $1,648,356 $895,749  $137,805  $255,474  $1,289,028 

    (a) Interest expense, net, consists of interest expense less interest income.
    (b) The Company measures the financial statements of its Mexico reportable segment as if the U.S. dollar were the functional currency. Accordingly, we remeasure assets and liabilities, other than nonmonetary assets, of the Mexico reportable segment at current exchange rates. We remeasure nonmonetary assets using the historical exchange rate in effect on the date of each asset’s acquisition. Currency exchange gains or losses resulting from these remeasurements, as well as, from our U.K. and Europe reportable segment are included in the line item Foreign currency transaction losses (gains) in the Consolidated Statements of Income.
    (c) Transaction costs related to acquisitions includes those charges that are incurred in conjunction with business acquisitions.
    (d) On October 13, 2020, Pilgrim's announced that we entered into a plea Agreement (the "Plea Agreement") with the DOJ. As a result of the Plea Agreement, we recognized a fine of $110.5 million. On February 23, 2021, the Colorado Court approved the Plea Agreement and assessed a fine of $107.9 million. The difference between the original accrual and the payment is recorded in DOJ agreement and litigation settlements in the year ended December 26, 2021. The expense adjustment recognized in the year ended December 26, 2021 was offset by amounts recognized in anticipation of probable settlements in ongoing litigation.
    (e) Restructuring charges is primarily related to restructuring initiatives at multiple production facilities throughout our U.K. and Europe reportable segment.
    (f) The Hometown Strong initiative was developed to help communities in which we operate respond to unexpected challenges.
    (g) This amount represents the flow-through of the value to step-up inventory to fair value at the acquisition date in accordance with business combination accounting rules recorded as part of the Pilgrim's Food Masters transaction.
    (h) This represents property insurance recoveries for the property damage losses incurred as a result of the tornado in Mayfield, KY in December 2021.
    (i) This represents a gain recognized as a result of deconsolidation of a subsidiary.

    Adjusted Operating Income is calculated by adding to Operating Income certain items of expense and deducting from Operating Income certain items of income. Management believes that presentation of Adjusted Operating Income provides useful supplemental information about our operating performance and enables comparison of our performance between periods because certain costs shown below are not indicative of our current operating performance. A reconciliation of GAAP operating income to adjusted operating income as follows:

     
    PILGRIM'S PRIDE CORPORATION
    Reconciliation of Adjusted U.S. Operating Income
    (Unaudited)
             
      Three Months Ended Year Ended
      December 25, 2022 December 26, 2021 December 25, 2022 December 26, 2021
      (In thousands)
    GAAP operating income (U.S. operations) $(52,796) $68,344  $1,094,025  $(17,036)
    DOJ agreement & litigation settlements(a)  5,804   131,940   34,086   656,225 
    Transaction costs related to acquisitions(b)  —   157   847   9,475 
    Hometown Strong commitment(c)  —   1,000   —   1,000 
    Adjusted operating income (U.S. operations) $(46,992) $201,441  $1,128,958  $649,664 
             
    Adjusted operating income margin (U.S. operations)  (1.9)%  8.4%  10.5%  7.1%

    (a) On October 13, 2020, Pilgrim's announced that we entered into a plea Agreement (the "Plea Agreement") with the DOJ. As a result of the Plea Agreement, we recognized a fine of $110.5 million. On February 23, 2021, the Colorado Court approved the Plea Agreement and assessed a fine of $107.9 million. The difference between the original accrual and the payment is recorded in DOJ agreement and litigation settlements in the year ended December 26, 2021. The expense adjustment recognized in the year ended December 26, 2021 was offset by amounts recognized in anticipation of probable settlements in ongoing litigation.
    (b) These costs represent charges incurred related to the acquisition of Pilgrim's Food Masters (formerly, Kerry Consumer Foods' Meats and Meals businesses).
    (c) The Hometown Strong initiative was developed to help communities in which we operate respond to unexpected challenges. For the year ended December 27, 2020, we recorded $15.0 million in incremental donations expense relating to this initiative. For the year ended December 26, 2021, we recorded $1.0 million in incremental donations expense relating to this initiative.

    Adjusted Operating Income Margin for the U.S. is calculated by dividing Adjusted operating income by Net Sales. Management believes that presentation of Adjusted Operating Income Margin provides useful supplemental information about our operating performance and enables comparison of our performance between periods because certain costs shown below are not indicative of our current operating performance. A reconciliation of GAAP operating income margin for the U.S. to adjusted operating income margin for the U.S. is as follows:

    PILGRIM'S PRIDE CORPORATION
    Reconciliation of GAAP Operating Income Margin to Adjusted U.S. Operating Income Margin
    (Unaudited)
             
      Three Months Ended Year Ended
      December 25, 2022 December 26, 2021 December 25, 2022 December 26, 2021
      (In percent)
    GAAP operating income margin (U.S. operations) (2.2)% 2.8% 10.2% (0.2)%
    DOJ agreement and litigation settlements 0.3% 5.6% 0.3% 7.2%
    Transaction costs related to acquisitions —% —% —% 0.1%
    Hometown Strong commitment —% —% —% —%
    Adjusted operating income margin (U.S. operations) (1.9)% 8.4% 10.5% 7.1%
     

    Adjusted net income attributable to Pilgrim's Pride Corporation ("Pilgrim's") is calculated by adding to net income attributable to Pilgrim's certain items of expense and deducting from net income attributable to Pilgrim's certain items of income, as shown below in the table. Adjusted net income attributable to Pilgrim’s Pride Corporation per common diluted share 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 U.S. GAAP, to compare the performance of companies. Management also believe that this non-U.S. GAAP financial measure, in combination with our financial results calculated in accordance with U.S. GAAP, provides investors with additional perspective regarding the impact of such charges on net income attributable to Pilgrim’s Pride Corporation per common diluted share. Adjusted net income attributable to Pilgrim’s Pride Corporation per common diluted share is not a measurement of financial performance under U.S. GAAP, has limitations as an analytical tool and should not be considered in isolation or as a substitute for an analysis of our results as reported under U.S. GAAP. Management believes that presentation of adjusted net income attributable to Pilgrim’s provides useful supplemental information about our operating performance and enables comparison of our performance between periods because certain costs shown below are not indicative of our current operating performance. A reconciliation of net income attributable to Pilgrim’s Pride Corporation per common diluted share to adjusted net income attributable to Pilgrim’s Pride Corporation per common diluted share is as follows:

     
    PILGRIM'S PRIDE CORPORATION
    Reconciliation of Adjusted Net Income
    (Unaudited)
             
      Three Months Ended Year Ended
      December 25,
    2022    		 December 26,
    2021    		 December 25,
    2022    		 December 26,
    2021
      (In thousands, except per share data)
    Net income (loss) attributable to Pilgrim's $(154,976) $36,754  $745,930  $31,000 
    Adjustments:        
    Foreign currency transaction losses (gains)  16,469   (18,400)  30,817   (9,382)
    Transaction costs related to acquisitions  (24)  9,540   948   18,858 
    DOJ agreement and litigation settlements  5,804   131,940   34,086   656,225 
    Restructuring activities losses  30,466   5,802   30,466   5,802 
    Hometown Strong commitment  —   1,000   —   1,000 
    Charge for fair value markup of acquired inventory  —   4,974   —   4,974 
    Loss on early extinguishment of debt recognized as a component of interest expense  —   —   —   24,654 
    Property insurance recoveries on Mayfield tornado losses  417   —   (19,580)  — 
    Deconsolidation of a subsidiary  —   —   —   (1,131)
    Net tax impact of adjustments(a)  (13,235)  (33,593)  (19,115)  (174,619)
    Adjusted net income (loss) attributable to Pilgrim's $(115,079) $138,017  $803,552  $557,381 
    Weighted average diluted shares of common stock outstanding  236,469   244,341   240,394   244,129 
    Adjusted net income attributable to Pilgrim's per common diluted share $(0.49) $0.56  $3.34  $2.28 

    (a) Net tax impact of adjustments represents the tax impact of all adjustments shown above with the exclusion of the DOJ agreement as this item is non-deductible for tax purposes.

    Adjusted EPS is calculated by dividing the adjusted net income attributable to Pilgrim's stockholders by the weighted average number of diluted shares. Management believes that Adjusted EPS provides useful supplemental information about our operating performance and enables comparison of our performance between periods because certain costs shown below are not indicative of our current operating performance. A reconciliation of U.S. GAAP to non-U.S. GAAP financial measures is as follows:

    PILGRIM'S PRIDE CORPORATION
    Reconciliation of GAAP EPS to Adjusted EPS
    (Unaudited)
             
      Three Months Ended Year Ended
      December 25,
    2022    		 December 26,
    2021    		 December 25,
    2022    		 December 26,
    2021
      (In thousands, except per share data)
    U.S. GAAP EPS $(0.66) $0.15  $3.11  $0.13 
    Adjustments:        
    Foreign currency transaction losses (gains)  0.08   (0.08)  0.13   (0.04)
    Transaction costs related to acquisitions  —   0.04   —   0.08 
    DOJ agreement and litigation settlements  0.02   0.54   0.14   2.69 
    Restructuring activities losses  0.13   0.03   0.12   0.02 
    Hometown Strong commitment  —   —   —   — 
    Charge for fair value markup of acquired inventory  —   0.02   —   0.02 
    Loss on early extinguishment of debt recognized as a component of interest expense  —   —   —   0.10 
    Property insurance recoveries on Mayfield tornado losses  —   —   (0.08)  — 
    Deconsolidation of a subsidiary  —   —   —   — 
    Net tax impact of adjustments(a)  (0.06)  (0.14)  (0.08)  (0.72)
    Adjusted EPS $(0.49) $0.56  $3.34  $2.28 
             
    Weighted average diluted shares of common stock outstanding  236,469   244,341   240,394   244,129 

    (a) Net tax impact of adjustments represents the tax impact of all adjustments shown above with the exclusion of the DOJ agreement as this item is non-deductible for tax purposes.

     
    PILGRIM'S PRIDE CORPORATION
    Supplementary Geographic Data
    (Unaudited)
             
      Three Months Ended Year Ended
      December 25,
    2022    		 December 26,
    2021    		 December 25,
    2022    		 December 26,
    2021
      (In thousands)
    Sources of net sales by country of origin:        
    U.S. $2,430,343  $2,399,000  $10,748,350  $9,113,879 
    Europe  1,234,609   1,213,043   4,874,738   3,934,062 
    Mexico  462,413   426,726   1,845,289   1,729,517 
    Total net sales $4,127,365  $4,038,769  $17,468,377  $14,777,458 
             
    Sources of cost of sales by country of origin:        
    U.S. $2,406,386  $2,124,315  $9,312,445  $8,187,959 
    Europe  1,154,440   1,168,996   4,634,066   3,769,838 
    Mexico  470,769   392,970   1,710,117   1,453,888 
    Elimination  (12)  (12)  (54)  (54)
    Total cost of sales $4,031,583  $3,686,269  $15,656,574  $13,411,631 
             
    Sources of gross profit by country of origin:        
    U.S. $23,957  $274,685  $1,435,905  $925,920 
    Europe  80,169   44,047   240,672   164,224 
    Mexico  (8,356)  33,756   135,172   275,629 
    Elimination  12   12   54   54 
    Total gross profit $95,782  $352,500  $1,811,803  $1,365,827 
             
    Sources of operating income (loss) by country of origin:        
    U.S. $(52,796) $68,344  $1,094,025  $(17,036)
    Europe  (1,340)  (33,398)  (934)  (627)
    Mexico  (23,400)  20,096   83,450   228,773 
    Elimination  12   12   54   54 
    Total operating income (loss) $(77,524) $55,054  $1,176,595  $211,164 

     


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