Pilgrim’s Pride Reports Second Quarter 2021 Results with Strong Growth in Sales and Adjusted EBITDA Margins

·24 min read

GREELEY, Colo., July 28, 2021 (GLOBE NEWSWIRE) -- Pilgrim’s Pride Corporation (NASDAQ: PPC), one of the world's largest poultry producers, reports its second quarter 2021 financial results.

Second Quarter Highlights

  • Net Sales of $3.64 billion, up 29% from prior year.

  • Consolidated GAAP Operating Income margin of (3.4)% with GAAP Operating Income margins of (10.0)% in U.S., 17.5% in Mexico and 2.3% in Europe. Adjusted U.S. Operating Income margin of 7.8%.

  • GAAP Net Loss of $(166.7) million. Adjusted Net Income of $153.8 million or adjusted EPS of $0.63.

  • Adjusted EBITDA of $371.6 million, or a 10.2% margin, 231.2% higher than a year ago.

  • Demand in the U.S. continues to recover, with our foodservice business improving year-over-year and sequentially, achieving levels higher than pre-pandemic, while Retail volumes remain strong. Our business has improved its margins, especially on the Commodity large bird deboning operation, despite higher input costs and less than optimal mix due to significant labor shortages.

  • Mexico maintained its strong momentum during the second quarter. Solid execution, improved overall economic conditions, supply/demand balance, and our increased share of non-commodity products contributed to the continued strength.

  • Our combined European business continues to achieve operational improvements and benefited in the quarter with year-over-year and sequential improvements in foodservice volumes in the UK, offset by continued increases in feed costs, which are not yet fully reflected in prices, and lower pig pricing in the region.

  • We continue to expand our ESG agenda by releasing our Pilgrim's 2020 Sustainability Report - “Eat Proudly.” The report details our global progress in key priority areas such as animal care, team members, environment, communities, customers and consumers, and suppliers.

  • Recorded an aggregate legal contingency accrual of $396 million.

  • Our liquidity position remains strong with an Adjusted EBITDA net leverage ratio at 1.6x.

  • Continued with our growth strategy the announcement of our intended acquisition of the Kerry Consumer Foods' Meats and Meals business in the U.K. and Ireland. Following the acquisition, Pilgrim's will be a leading food company with a significant value-added protein and integrated prepared foods business anchored by a portfolio of strong brands.

(Unaudited)

Three Months Ended

Six Months Ended

June 27,
2021

June 28,
2020

Y/Y Change

June 27,
2021

June 28,
2020

Y/Y Change

(In millions, except per share and percentages)

Net sales

$

3,637.7

$

2,824.0

+28.8

%

$

6,911.1

$

5,899.0

+17.2

%

U.S. GAAP EPS

$

(0.68

)

$

(0.02

)

+3300.0

%

$

(0.27

)

$

0.25

(208.0

)%

Operating income

$

(123.1

)

$

27.3

(550.9

)%

$

35.3

$

111.7

(68.4

)%

Adjusted EBITDA(1)

$

371.6

$

112.2

+231.2

%

$

625.5

$

277.7

+125.2

%

Adjusted EBITDA margin(1)

10.2

%

4.0

%

+6.2

pts

9.1

%

4.7

%

+4.4

pts

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

“As the world emerges from the COVID-19 pandemic, more of the population gets vaccinated and activities gradually return to normal, we are optimistic that dining out, gathering with friends and family for meals and eating lunch at work or at school will once again become routine,” stated Fabio Sandri, Chief Executive Officer of Pilgrim’s. “Our second quarter results reflect a shift to more normal patterns in the U.S. as we saw a slight increase in retail store trips and more foodservice locations reopened.

“Our U.S. business turned in a solid operational performance despite higher and more volatile input costs and product mix issues resulting from continued, albeit improving, labor challenges. Our big bird business performed very well on commodity pricing that has remained consistently near or above historical ranges. Our foodservice business was stronger than anticipated as restrictions continued to ease, boosting demand back above 2019 levels. With consumers’ continued emphasis on the retail channel, we further expanded our retail branded presence. We grew our branded consumer packaged foods business in the second quarter by 215% by investing in our Just Bare® and Pilgrim’s® brands at retail and in e-commerce.

“Meanwhile, our Mexico business had another strong quarter, driven by a balanced supply/demand equation and continuous improvements in operational performance, while effectively managing higher grain pricing and supplying our customers with Fresh and Prepared Foods under the Pilgrim’s®, Del Dia® and Alamesa® brands.

“In Q2, although challenged by increasing grain costs, Moy Park improved EBIT by 7% vs. the first quarter 2021. Moy Park continue to deliver operational efficiencies, better agricultural performance and improved yields to help offset grain cost and labor challenges. Pilgrim’s UK has been affected by low hog prices and rising grain costs. Despite similar labor challenges, the Pilgrim’s UK operations have also improved its margins from the same period last year.”

Conference Call Information

A conference call to discuss Pilgrim’s quarterly results will be held tomorrow, July 29, 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/ppc210729.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 October 28, 2021.

About Pilgrim’s Pride

Pilgrim’s employs approximately 54,700 people and operates protein processing plants and prepared-foods facilities in 14 states, Puerto Rico, Mexico, the U.K. 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 channel, including anti-dumping proceedings and countervailing duty proceedings; 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 hereof, and the Company undertakes no obligation to update any such statement after the date of this release, whether as a result of new information, future developments or otherwise, except as may be required by applicable law.

Contact:

Julie Kegley – Financial Profiles
Investor Relations
IRPPC@pilgrims.com
www.pilgrims.com


PILGRIM’S PRIDE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

June 27, 2021

December 27, 2020

(In thousands)

Cash and cash equivalents

$

391,805

$

547,624

Restricted cash and cash equivalents

98,212

782

Trade accounts and other receivables, less allowance for doubtful accounts

866,476

741,992

Accounts receivable from related parties

868

1,084

Inventories

1,530,014

1,358,793

Income taxes receivable

51,351

69,397

Prepaid expenses and other current assets

190,574

183,039

Total current assets

3,129,300

2,902,711

Deferred tax assets

5,494

5,471

Other long-lived assets

26,837

24,780

Operating lease assets, net

295,391

288,886

Identified intangible assets, net

589,536

589,913

Goodwill

1,024,900

1,005,245

Property, plant and equipment, net

2,677,387

2,657,491

Total assets

$

7,748,845

$

7,474,497

Accounts payable

$

1,092,164

$

1,028,710

Accounts payable to related parties

8,595

9,650

Revenue contract liabilities

36,275

65,918

Accrued expenses and other current liabilities

1,051,546

807,847

Income taxes payable

30,681

Current maturities of long-term debt

25,453

25,455

Total current liabilities

2,244,714

1,937,580

Noncurrent operating lease liability, less current maturities

221,345

217,432

Long-term debt, less current maturities

2,270,298

2,255,546

Deferred tax liabilities

318,159

339,831

Other long-term liabilities

99,817

148,761

Total liabilities

5,154,333

4,899,150

Common stock

2,614

2,612

Treasury stock

(345,134

)

(345,134

)

Additional paid-in capital

1,959,558

1,954,334

Retained earnings

906,090

972,569

Accumulated other comprehensive income (loss)

59,354

(20,620

)

Total Pilgrim’s Pride Corporation stockholders’ equity

2,582,482

2,563,761

Noncontrolling interest

12,030

11,586

Total stockholders’ equity

2,594,512

2,575,347

Total liabilities and stockholders’ equity

$

7,748,845

$

7,474,497


PILGRIM’S PRIDE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

Three Months Ended

Six Months Ended

June 27, 2021

June 28, 2020

June 27, 2021

June 28, 2020

(In thousands, except per share data)

Net sales

$

3,637,698

$

2,824,023

$

6,911,123

$

5,898,951

Cost of sales

3,257,457

2,704,164

6,269,639

5,601,993

Gross profit

380,241

119,859

641,484

296,958

Selling, general and administrative expense

503,372

92,570

606,151

185,283

Operating income

(123,131

)

27,289

35,333

111,675

Interest expense, net of capitalized interest

50,651

32,323

80,985

65,011

Interest income

(842

)

(1,158

)

(3,208

)

(2,848

)

Foreign currency transaction loss (gain)

4,145

5,525

6,659

(12,860

)

Miscellaneous, net

(770

)

(45

)

(8,614

)

(34,233

)

Income before income taxes

(176,315

)

(9,356

)

(40,489

)

96,605

Income tax expense

(9,812

)

(2,956

)

25,546

35,556

Net income

(166,503

)

(6,400

)

(66,035

)

61,049

Less: Net income attributable to noncontrolling interests

184

(364

)

444

(183

)

Net income attributable to Pilgrim’s Pride Corporation

$

(166,687

)

$

(6,036

)

$

(66,479

)

$

61,232

Weighted average shares of Pilgrim's Pride Corporation common stock outstanding:

Basic

243,675

246,687

243,627

248,017

Effect of dilutive common stock equivalents

291

Diluted

243,675

246,687

243,627

248,308

Net income attributable to Pilgrim's Pride Corporation per share of common stock outstanding:

Basic

$

(0.68

)

$

(0.02

)

$

(0.27

)

$

0.25

Diluted

$

(0.68

)

$

(0.02

)

$

(0.27

)

$

0.25


PILGRIM’S PRIDE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Six Months Ended

June 27, 2021

June 28, 2020

(In thousands)

Cash flows from operating activities:

Net income

$

(66,035

)

$

61,049

Adjustments to reconcile net income to cash provided by operating activities:

Depreciation and amortization

182,260

164,376

Loss on early extinguishment of debt recognized as a component of interest expense

24,254

Deferred income tax expense

(32,809

)

25,255

Stock-based compensation

5,168

3,467

Gain on property disposals

(5,057

)

(1,587

)

Loan cost amortization

2,279

2,422

Accretion of discount related to Senior Notes

675

491

Amortization of premium related to Senior Notes

(167

)

(334

)

Loss (gain) on equity-method investments

(8

)

304

Negative adjustment to previously recognized gain on bargain purchase

1,740

Changes in operating assets and liabilities:

Trade accounts and other receivables

(117,610

)

29,920

Inventories

(173,947

)

16,350

Prepaid expenses and other current assets

(6,027

)

(22,072

)

Accounts payable, accrued expenses and other current liabilities

266,487

(122,191

)

Income taxes

46,638

(27,350

)

Long-term pension and other postretirement obligations

(9,507

)

(1,908

)

Other operating assets and liabilities

(1,642

)

10,794

Cash provided by operating activities

114,952

140,726

Cash flows from investing activities:

Acquisitions of property, plant and equipment

(183,744

)

(148,175

)

Proceeds from property disposals

21,385

9,894

Purchase of acquired business, net of cash acquired

(4,216

)

Cash used in investing activities

(162,359

)

(142,497

)

Cash flows from financing activities:

Proceeds from revolving line of credit and long-term borrowings

1,540,133

356,547

Payments on revolving line of credit, long-term borrowings and finance lease obligations

(1,522,416

)

(20,105

)

Payment on early extinguishment of debt

(21,258

)

Payment of capitalized loan costs

(8,650

)

Payment of equity distribution under Tax Sharing Agreement between JBS USA Food Company Holdings and Pilgrim’s Pride Corporation

(650

)

Purchase of common stock under share repurchase program

(77,879

)

Cash provided by financing activities

(12,841

)

258,563

Effect of exchange rate changes on cash and cash equivalents

1,859

(2,896

)

Increase in cash, cash equivalents and restricted cash

(58,389

)

253,896

Cash, cash equivalents and restricted cash, beginning of period

548,406

280,577

Cash, cash equivalents and restricted cash, end of period

$

490,017

$

534,473

PILGRIM’S PRIDE CORPORATION

Non-GAAP Financial Measures Reconciliation

(Unaudited)

“EBITDA” is defined as the sum of net income 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 loss (gain), (2) transaction costs from business acquisitions, (3) DOJ agreement & litigation settlements, (4) negative adjustment to previously recognized gain on bargain purchase, (5) shareholder litigation settlement, (6) deconsolidation of a subsidiary and (7) net income 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

Six Months Ended

June 27, 2021

June 28, 2020

June 27, 2021

June 28, 2020

(In thousands)

Net income

$

(166,503

)

$

(6,400

)

$

(66,035

)

$

61,049

Add:

Interest expense, net(a)

49,809

31,165

77,777

62,163

Income tax expense

(9,812

)

(2,956

)

25,546

35,556

Depreciation and amortization

95,728

84,603

182,260

164,376

EBITDA

(30,778

)

106,412

219,548

323,144

Add:

Foreign currency transaction loss (gain)(b)

4,145

5,525

6,659

(12,860

)

Transaction costs related to acquisitions(c)

2,545

(81

)

2,545

134

DOJ agreement & litigation settlements(d)

395,886

398,285

Minus:

Negative adjustment to previously recognized gain on bargain purchase(e)

(1,740

)

Shareholder litigation settlement(f)

34,643

Deconsolidation of subsidiary(g)

1,131

Net income attributable to noncontrolling interest

184

(364

)

444

(183

)

Adjusted EBITDA

$

371,614

$

112,220

$

625,462

$

277,698

(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 loss (gain) in the Condensed 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, Pilgrims announced that we have entered into a plea agreement (the “Plea Agreement”) with the DOJ. As a result of the Plea Agreement, we recognized a fine of $110,524,140. On February 23, 2021, the Colorado Court approved the Plea Agreement and assessed a fine of $107.9 million. The difference from prior accrual to updated amount was recognized during the three months ended March 28, 2021. This difference recognized in the three and six months ended June 28, 2021 was offset by amounts recognized in anticipation of probable settlements in ongoing litigation.
(e) The gain on bargain purchase was recognized as a result of the PPL acquisition in October 2019. The amount shown above represents a working capital adjustment to the previously recorded gain on bargain purchase.
(f) Shareholder litigation settlement is income received as a result of a settlement in the first quarter of 2020.
(g) This represents a gain recognized as a result of deconsolidation of a subsidiary.

The summary unaudited consolidated income statement data for the twelve months ended June 27, 2021 (the LTM Period) have been calculated by subtracting the applicable unaudited consolidated income statement data for the six months ended June 28, 2020 from the sum of (1) the applicable audited consolidated income statement data for the year ended December 27, 2020 and (2) the applicable unaudited consolidated income statement data for the six months ended June 27, 2021.

PILGRIM'S PRIDE CORPORATION

Reconciliation of LTM Adjusted EBITDA

(Unaudited)

Three Months Ended

LTM Ended

September 27,
2020

December 27,
2020

March 28,
2021

June 27,
2021

June 27,
2021

(In thousands)

Net income

$

33,691

$

330

$

100,468

$

(166,503

)

$

(32,014

)

Add:

Interest expense, net

28,801

27,849

27,968

49,809

134,427

Income tax expense

22,344

8,855

35,358

(9,812

)

56,745

Depreciation and amortization

84,265

88,463

86,532

95,728

354,988

EBITDA

169,101

125,497

250,326

(30,778

)

514,146

Add:

Foreign currency transaction losses

9,092

4,528

2,514

4,145

20,279

Transaction costs related to acquisitions

2,545

2,545

DOJ agreement & litigation settlements

110,524

75,000

2,399

395,886

583,809

Restructuring charges

123

123

Hometown Strong commitment

14,506

494

15,000

Minus:

Negative adjustment to previously recognized gain on bargain purchase

(2,006

)

(2,006

)

Deconsolidation of subsidiary

1,131

1,131

Net income (loss) attributable to noncontrolling interest

245

251

260

184

940

Adjusted EBITDA

$

304,984

$

205,391

$

253,848

$

371,614

$

1,135,837

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 it is 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

Six Months Ended

Three Months Ended

Six Months Ended

June 27, 2021

June 28, 2020

June 27, 2021

June 28, 2020

June 27, 2021

June 28, 2020

June 27, 2021

June 28, 2020

(In thousands)

Net income

$

(166,503

)

$

(6,400

)

$

(66,035

)

$

61,049

(4.58

)%

(0.23

)%

(0.96

)%

1.03

%

Add:

Interest expense, net

49,809

31,165

77,777

62,163

1.37

%

1.10

%

1.13

%

1.05

%

Income tax expense

(9,812

)

(2,956

)

25,546

35,556

(0.27

)%

(0.10

)%

0.37

%

0.60

%

Depreciation and amortization

95,728

84,603

182,260

164,376

2.63

%

2.99

%

2.63

%

2.78

%

EBITDA

(30,778

)

106,412

219,548

323,144

(0.85

)%

3.76

%

3.17

%

5.46

%

Add:

Foreign currency transaction losses (gains)

4,145

5,525

6,659

(12,860

)

0.11

%

0.19

%

0.09

%

(0.21

)%

Transaction costs related to business acquisitions

2,545

(81

)

2,545

134

0.07

%

%

0.04

%

%

DOJ agreement & litigation settlements

395,886

398,285

10.88

%

%

5.76

%

%

Minus:

Negative adjustment to previously recognized gain on bargain purchase

(1,740

)

%

%

%

(0.03

)%

Shareholder litigation settlement

34,643

%

%

%

0.59

%

Deconsolidation of subsidiary

1,131

%

%

0.02

%

%

Net income attributable to noncontrolling interest

184

(364

)

444

(183

)

0.01

%

(0.01

)%

0.01

%

%

Adjusted EBITDA

$

371,614

$

112,220

$

625,462

$

277,698

10.20

%

3.96

%

9.03

%

4.69

%

Net sales

$

3,637,698

$

2,824,023

$

6,911,123

$

5,898,951

$

3,637,698

$

2,824,023

$

6,911,123

$

5,898,951

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 Operating Income

(Unaudited)

Three Months Ended

Six Months Ended

June 27, 2021

June 28, 2020

June 27, 2021

June 28, 2020

(In thousands)

GAAP operating income (U.S. operations)

$

(224,171

)

$

39,448

$

(156,046

)

$

124,500

Transaction costs related to acquisitions

2,545

(81

)

2,545

134

DOJ agreement & litigation settlements

395,886

398,285

Adjusted operating income (U.S. operations)

$

174,260

$

39,367

$

244,784

$

124,634

Adjusted operating income margin (U.S. operations)

7.8

%

2.2

%

5.8

%

3.3

%

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 Operating Income Margin

(Unaudited)

Three Months Ended

Six Months Ended

June 27, 2021

June 28, 2020

June 27, 2021

June 28, 2020

(In percent)

GAAP operating income margin (U.S. operations)

(10.0

)%

2.2

%

(3.7

)%

3.3

%

Transaction costs related to acquisitions

0.1

%

%

0.1

%

%

DOJ agreement & litigation settlements

17.7

%

%

9.4

%

%

Adjusted operating income margin (U.S. operations)

7.8

%

2.2

%

5.8

%

3.3

%

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 believes 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

Six Months Ended

June 27, 2021

June 28, 2020

June 27, 2021

June 28, 2020

(In thousands, except per share data)

Net income attributable to Pilgrim's

$

(166,687

)

$

(6,036

)

$

(66,479

)

$

61,232

Add:

Foreign currency transaction losses (gains)

4,145

5,525

6,659

(12,860

)

Transaction costs related to acquisitions

2,545

(81

)

2,545

134

DOJ agreement & litigation settlements

395,886

398,285

Loss on early extinguishment of debt recognized as a component of interest expense

24,254

24,254

Minus:

Deconsolidation of subsidiary

1,131

Adjusted net income attributable to Pilgrim's before tax impact of adjustments

260,143

(592

)

364,133

48,506

Net tax impact of adjustments(a)

(106,323

)

(1,356

)

(107,265

)

3,170

Adjusted net income attributable to Pilgrim's

$

153,820

$

(1,948

)

$

256,868

$

51,676

Weighted average diluted shares of common stock outstanding

243,675

246,687

243,627

248,308

Adjusted net income attributable to Pilgrim's per common diluted share

$

0.63

$

(0.01

)

$

1.05

$

0.21

(a) Net tax expense (benefit) of adjustments represents the tax impact of all adjustments shown above.

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

Six Months Ended

June 27, 2021

June 28, 2020

June 27, 2021

June 28, 2020

(In thousands, except per share data)

GAAP EPS

$

(0.68

)

$

(0.02

)

$

(0.27

)

$

0.25

Add:

Foreign currency transaction losses (gains)

0.02

0.02

0.03

(0.05

)

Transaction costs related to acquisitions

0.01

0.01

DOJ agreement & litigation settlements

1.62

1.63

Loss on early extinguishment of debt recognized as a component of interest expense

0.10

0.10

Minus:

Deconsolidation of subsidiary

Adjusted EPS before tax impact of adjustments

1.07

1.50

0.20

Net tax impact of adjustments(a)

(0.44

)

(0.01

)

(0.45

)

0.01

Adjusted EPS

$

0.63

$

(0.01

)

$

1.05

$

0.21

Weighted average diluted shares of common stock outstanding

243,675

246,687

243,627

248,308

(a) Net tax impact of adjustments represents the tax impact of all adjustments shown above.

PILGRIM'S PRIDE CORPORATION

Supplementary Selected Segment and Geographic Data

(Unaudited)

Three Months Ended

Six Months Ended

June 27, 2021

June 28, 2020

June 27, 2021

June 28, 2020

(In thousands)

Sources of net sales by geographic region of origin:

U.S.

$

2,248,470

$

1,798,689

$

4,248,029

$

3,725,569

U.K. and Europe

935,845

757,201

1,790,579

1,579,463

Mexico

453,383

268,133

872,515

593,919

Total net sales

$

3,637,698

$

2,824,023

$

6,911,123

$

5,898,951

Sources of cost of sales by geographic region of origin:

U.S.

$

2,008,122

$

1,710,668

$

3,874,822

$

3,499,445

U.K. and Europe

885,800

700,553

1,702,726

1,470,687

Mexico

363,549

293,143

692,119

632,085

Elimination

(14

)

(200

)

(28

)

(224

)

Total cost of sales

$

3,257,457

$

2,704,164

$

6,269,639

$

5,601,993

Sources of gross profit by geographic region of origin:

U.S.

$

240,348

$

88,021

$

373,207

$

226,124

U.K. and Europe

50,045

56,648

87,853

108,776

Mexico

89,834

(25,010

)

180,396

(38,166

)

Elimination

14

200

28

224

Total gross profit

$

380,241

$

119,859

$

641,484

$

296,958

Sources of operating income by geographic region of origin:

U.S.

$

(224,171

)

$

39,448

$

(156,046

)

$

124,500

U.K. and Europe

21,831

23,185

32,326

46,375

Mexico

79,195

(35,544

)

159,025

(59,424

)

Elimination

14

200

28

224

Total operating income

$

(123,131

)

$

27,289

$

35,333

$

111,675


Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting