Pilgrim’s Pride Ends Fiscal Year 2018 with Net Sales of $10.94 Billion, Operating Income of $496 Million and GAAP EPS of $1.00

GREELEY, Colo., Feb. 13, 2019 (GLOBE NEWSWIRE) — Pilgrim’s Pride Corporation (NASDAQ: PPC) reports fourth quarter and year-end 2018 financial results.

2018 Highlights

• Adjusted Operating Income margins of 4.2% in U.S., 8.8% in Mexico and 4.3% in Europe operations, respectively.
• Adjusted EBITDA of $798 million, or a 7.3% margin.
• Portfolio strategy and geographic diversification reducing the impact of challenging market conditions, specifically in U.S. commodity chicken. We remain motivated to pursue additional growth potential and product differentiation in 2019, aligning our strategic priorities to continue providing stronger platforms for the future.
• Prepared Foods grew 15% in the U.S. and 33% in Mexico, and is increasing its momentum, realizing the results of investments made over the past few years to further widen our product and brand portfolio, strengthen key customer relationships, and improve margin consistency.
• Moy Park integration is better than expected; operations and profitability improving with synergies captured despite headwinds from feed costs caused by regional drought.

Fourth Quarter Results

• Net Sales of $2.66 billion, -3.1% versus same quarter last year.
• Adjusted Net Income of $21 million and adjusted EPS of $0.09.
• Adjusted Operating Income margins of 0.3% in U.S., 5.3% in Mexico and 3.8% in Europe operations, respectively, adjusted for non-recurring items related to weather events, Moy Park acquisition and Exchange Rate.
• Adjusted EBITDA of $111 million, or a 4.2% margin.

“In the U.S. we endured a very challenging environment in commodity chicken, slower than expected recovery from weather disruptions at some complexes, partially offset by an improvement in operating results from Prepared Foods. In Europe we improved the performance through expected synergies but were impacted by higher feed inputs as a result of a drought that will be passed to our prices in coming quarters. Our Mexican operations produced a very strong first half, a weaker than seasonal Q3, followed by a rebound in Q4. The diversity of our portfolio of bird sizes, geographical market exposure, our culture and our people, are what fundamentally differentiate us from the competition, giving us the potential to reduce volatility and generate higher margins over time, and the results for 2018 represented the power of that strategy. As we begin 2019, conditions in the U.S. commodity markets including exports are already recovering, supporting OECD-FAO data that over the longer term chicken as a protein will continue to outperform in terms of growth potential globally,” stated Bill Lovette, Chief Executive Officer of Pilgrim’s.

“Results from Prepared Foods are accelerating in momentum with a strong 15% increase in volume in the U.S. and 33% increase in Mexico, reflecting the investments we made over the past few years to grow capacities and capabilities to meet customer expectations. The build out for innovation and marketing to drive future strong growth continues. We believe the prospects for more growth remain and the improvement in performance is sustainable. To further support the growth initiatives, we are also transitioning to a more innovative package design.”

“We are continuing to improve the performance of our European (Moy Park) operations. Margins have increased since the acquisition just a year and a half ago, and are moving in a positive trajectory. The integration is better than expected and we have extracted both operating and product synergies with our other geographical facilities. The cost of feed inputs have increased due to the drought in Europe and some of this impact will only be mitigated in coming quarters. However, we have plans in place which, combined with the success in improving the profitability of our prior acquisitions, have reaffirmed our belief we have the methodology and the experienced personnel required to continue growing the operating and financial performance of the U.K. and continental Europe business.”

Conference Call Information

A conference call to discuss Pilgrim’s quarterly results will be held tomorrow, February 14, 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/ppc190214.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.” 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 14, 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.

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.

The summary unaudited consolidated income statement data for the twelve months ended December 30, 2018 (the LTM Period) have been calculated by summing each of the unaudited thirteen week periods within the audited fifty-two week period ended December 30, 2018.

A reconciliation of GAAP operating income to adjusted operating income is as follows:

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:

A reconciliation of GAAP to non-GAAP financial measures. Net income (loss) per share is calculated by dividing the net income (loss) attributable to Pilgrim’s Pride Corporation stockholders by the weighted average number of diluted shares.