Pilgrim's Pride Reports Financial Results for Third Quarter of Fiscal 2010GREELEY, Colo.  (Food-News.net)  Pilgrim’s Pride Corporation (NYSE: PPC) today reported net earnings of $57.9 million, or $0.27 per share, on net sales of $1.7 billion for the third quarter ended September 26, 2010.  For the comparable quarter a year ago, the company reported net earnings of $82.7 million, or $1.07 per diluted share, on total sales of $1.7 billion.  Pilgrim’s currently has 214.3 million shares outstanding, compared to approximately 77.1 million diluted shares outstanding in the year-ago period.  Adjusted EBITDA, which excludes restructuring and reorganization charges, was $170.0 million for the third quarter of fiscal 2010, as compared to $185.3 million for the same period a year ago.  

“When compared to the second quarter of 2010, our financial performance in the third quarter reflects continued improvement in operating efficiencies and cost control,” said Don Jackson, Pilgrim’s president and chief executive.  “Our operational focus on improving yields, labor and other plant-related costs is driving better efficiencies, and we remain focused on sales mix and price improvement.”

Pilgrim’s said sales volumes rose across its retail and foodservice segments when compared to a year ago and the company succeeded in bringing in new, higher-margin business during the quarter.  When compared to the second quarter of 2010, gross margin as a percentage of sales in the third quarter increased across the company’s retail, foodservice and commodity channels.  

Jackson said the company is on track to restart deboning operations at its idled processing plant in Douglas, Ga., in mid-November 2010 to support other plants, with slaughter operations to begin in January 2011.  The company continues to target further expansion later in 2011 and 2012.  

“We are optimistic about the outlook for chicken heading into 2011,” Jackson said.  “While all of us are concerned about higher grain prices and the uncertain economy, there are several encouraging signs heading into next year.  Given the reduction in beef supply and the higher prices that are expected for beef and pork, chicken should be attractively positioned with consumers who are looking for the best value.  As a result, many of our customers are planning to feature chicken more prominently on their menus or in their stores next year.  We are already seeing an increase in foodservice demand for next year.”  

For the first three quarters of fiscal 2010, the company reported net income of $45.3 million, or $0.21 per share, on sales of nearly $5.1 billion.  These results include nonrecurring restructuring charges and reorganization expenses of $72.8 million pre-tax, or $45.3 million after tax, or $0.21 per diluted share.  For the same period a year ago, Pilgrim’s reported net income of $77.2 million, or $1.00 per diluted share, on sales of $5.2 billion.  Adjusted EBITDA for the first nine months of fiscal 2010 was $357.1 million, compared to $430.5 million for the same period a year ago.

Conference Call Information

A conference call to discuss the company’s quarterly results will be held today at 9 a.m. Mountain (11 a.m. Eastern).  To listen live via telephone, call toll-free 800-817-4887, passcode 9043889.  International callers should dial 913-981-5564, passcode 9043889. The presentation will be broadcast live over the Internet at  http://www.videonewswire.com/event.asp?id=73072.  (Please copy and paste the link into the browser.)  

Additionally, the company has posted a slide presentation on its website at http://www.pilgrimspride.com, which may be viewed by listeners in connection with today’s conference call.  The webcast will be available for replay within approximately two hours of the conclusion of the call.  A toll-free telephone replay will be available today beginning at approximately noon Mountain time by calling 888-203-1112, passcode 9043889. International callers may dial 719-457-0820, passcode 9043889.  The replay will be available for 30 days.  

About Pilgrim’s Pride

Pilgrim’s employs approximately 41,000 people and operates chicken processing plants and prepared-foods facilities in 12 states, Puerto Rico and Mexico.  The Company’s primary distribution is through retailers and foodservice distributors.  For more information, please visit http://www.pilgrimspride.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 forward-looking statements. It is important to note that the 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;  the ability of the company to achieve the anticipated synergistic gains from the sale of 64% of its common stock to JBS USA Holdings, Inc; the ability of the company to re-open its idled facilities in the manner and on the time schedule planned due to, among other things, the company’s  dependence on commodity prices and economic conditions; future pricing for feed ingredients and the company’s products; additional 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, particularly in light of Pilgrim’s Pride’s substantial leverage; restrictions imposed by, and as a result of, Pilgrim’s Pride’s substantial 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 exports into Russia, the anti-dumping proceeding in Ukraine and the anti-dumping and countervailing duty proceeding in China; and the impact of uncertainties of litigation as well as other risks described under “Risk Factors” in the Company’s Annual Report on Form 10-K and subsequent filings with the Securities and Exchange Commission. Pilgrim’s Pride Corporation undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Contact: Gary Rhodes  
Vice President, Corporate Communications and Investor Relations  
(903) 434-1495  
   
PILGRIM’S PRIDE CORPORATION  
Consolidated Statements of Operations  
(Unaudited)  
 
Three Months Ended Nine Months Ended  
September 26, September 26, September 26, September 26,  
2010 2009 2010 2009  
(In thousands, except per share data)  
 
Net sales $       1,719,850 $       1,736,149 $       5,070,336 $       5,211,064  
Costs and expenses:  
Cost of sales 1,560,031 1,560,934 4,726,007 4,791,630  
Operational restructuring charges, net 2,525 12,464 2,525 12,464  
 
Gross profit 157,294 162,751 341,804 406,970  
Selling, general and administrative expense 45,096 46,086 157,415 161,864  
Administrative restructuring charges, net (1,006) 51,695 (435)  
 
Total costs and expenses 1,606,646 1,619,484 4,937,642 4,965,523  
 
Operating income 113,204 116,665 132,694 245,541  
 
Other expenses (income):  
Interest expense 26,492 37,074 81,027 122,361  
Interest income (646) (543) (1,820) (3,855)  
Miscellaneous, net (1,676) 709 (8,505) (2,231)  
 
Total other expenses 24,170 37,240 70,702 116,275  
 
Income from continuing operations before reorganization
    items and income taxes
89,034 79,425 61,992 129,266  
Reorganization items, net 21,891 18,541 74,025  
 
Income from continuing operations before income taxes 89,034 57,534 43,451 55,241  
Income tax expense (benefit) 30,512 (24,766) (4,295) (21,864)  
 
Income from continuing operations 58,522 82,300 47,746 77,105  
Income from discontinued business, net of tax 25  
 
Net income 58,522 82,300 47,746 77,130  
Less:  Net income (loss) attributable to noncontrolling interest 596 (425) 2,449 (69)  
 
Net income attributable to Pilgrim’s Pride Corporation $            57,926 $            82,725 $            45,297 $            77,199  
 
Net income per common share:  
Basic $                0.27 $                1.12 $                0.21 $                1.04  
Diluted $                0.27 $                1.07 $                0.21 $                1.00  
 
Weighted average shares outstanding:  
Basic 214,282 74,056 214,282 74,056  
Diluted 214,282 77,141 214,282 76,802  
               
PILGRIM’S PRIDE CORPORATION  
Consolidated Balance Sheets  
(Unaudited)  
September 26, September 26,  
2010 2009  
(In thousands)  
Assets:  
Cash and cash equivalents $            46,213 $          220,029  
Investment in available-for-sale securities 8,800 5,302  
Trade accounts and other receivables, less allowance for doubtful accounts 354,837 316,953  
Inventories 910,625 763,869  
Income taxes receivable 53,872 15,028  
Prepaid expenses and other current assets 63,490 44,540  
Assets held for sale 59,218 473  
 
Total current assets 1,497,055 1,366,194  
 
Investment in available-for-sale securities 56,235 57,314  
Deferred tax assets 16,732  
Other long-lived assets 70,626 63,609  
Identified intangible assets, net 50,371 57,179  
Property, plant and equipment, net 1,343,694 1,499,476  
 
$       3,017,981 $       3,060,504  
 
Liabilities and stockholders’ equity:  
Accounts payable $          271,187 $          182,173  
Accounts payable to JBS USA, LLC 19,359  
Accrued expenses 276,506 309,259  
Pre-petition obligations 1,736  
Income taxes payable 16,549  
Current deferred tax liabilities 15,276 16,732  
Current maturities of long-term debt 75,355  
 
Total current liabilities 675,968 508,164  
 
Long-term debt, less current maturities 1,166,606 41,062  
Deferred tax liabilities 50,646 22,213  
Other long-term liabilities 88,522 98,783  
 
Total liabilities not subject to compromise 1,981,742 670,222  
 
Liabilities subject to compromise 2,233,161  
 
Common stock 2,143 771  
Additional paid-in capital 1,442,810 646,793  
Accumulated deficit (390,497) (469,407)  
Accumulated other comprehensive loss (23,572) (27,237)  
 
Total Pilgrim’s Pride Corporation stockholders’ equity 1,030,884 150,920  
 
Noncontrolling interest 5,355 6,201  
 
Total stockholders’ equity 1,036,239 157,121  
 
$       3,017,981 $       3,060,504  
 
       
PILGRIM’S PRIDE CORPORATION  
Selected Financial Information  
(Unaudited)  
 

Note:  “EBITDA” is defined as the sum of income (loss) from continuing operations plus interest, taxes, depreciation and amortization. “Adjusted EBITDA” is defined as the sum of EBITDA plus restructuring charges and reorganization items. EBITDA is presented because it is used by us 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 from continuing operations. 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.

 
Three Months Ended Nine Months Ended  
September 26, September 26, September 26, September 26,  
2010 2009 2010 2009  
(In thousands, except per share data)  
 
Net income attributable to Pilgrim’s Pride Corporation $            57,926 $            82,725 $            45,297 $            77,199  
 
Add:  
Income tax expense (benefit) 30,512 (24,766) (4,295) (21,864)  
Interest expense, net 25,846 36,531 79,207 118,506  
Depreciation and amortization 57,924 58,173 175,397 175,847  
Minus:  
Amortization of capitalized loan costs 3,726 1,706 11,266 5,244  
 
EBITDA 168,482 150,957 284,340 344,444  
 
Add:  
Restructuring charges, net 1,519 12,464 54,220 12,029  
Pre-petition reorganization items, net  
Post-petition reorganization items, net 21,891 18,541 74,025  
 
Adjusted EBITDA $          170,001 $          185,312 $          357,101 $          430,498  
               


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