PART I. FINANCIAL INFORMATION Presents the company's comprehensive financial statements and detailed notes for the reporting period [ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS](index=3&type=section&id=ITEM%201.%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) Pilgrim's Pride Corporation's unaudited condensed consolidated financial statements and detailed notes for periods ended September 25, 2022, and December 26, 2021 [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Presents the company's financial position, including assets, liabilities, and equity, as of specific reporting dates Condensed Consolidated Balance Sheet Highlights (In thousands) | Metric | Sep 25, 2022 | Dec 26, 2021 | | :--------------------------------- | :----------- | :----------- | | Cash and cash equivalents | $654,213 | $427,661 | | Total current assets | $4,032,920 | $3,305,954 | | Total assets | $9,079,012 | $8,913,205 | | Total current liabilities | $2,607,815 | $2,390,823 | | Total liabilities | $6,338,763 | $6,324,271 | | Total stockholders' equity | $2,740,249 | $2,588,934 | - **Total assets** increased to **$9.08 billion** as of September 25, 2022, from **$8.91 billion** at December 26, 2021, while **total liabilities** slightly increased to **$6.34 billion** from **$6.32 billion**[11](index=11&type=chunk) - **Total stockholders' equity** increased to **$2.74 billion** as of September 25, 2022, from **$2.59 billion** at December 26, 2021[11](index=11&type=chunk) [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Details the company's revenues, expenses, and net income (loss) over specific reporting periods Condensed Consolidated Statements of Income Highlights (In thousands, except per share data) | Metric | 3 Months Ended Sep 25, 2022 | 3 Months Ended Sep 26, 2021 | 9 Months Ended Sep 25, 2022 | 9 Months Ended Sep 26, 2021 | | :------------------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net sales | $4,468,969 | $3,827,566 | $13,341,012 | $10,738,689 | | Gross profit | $497,270 | $371,843 | $1,716,021 | $1,013,327 | | Operating income | $339,202 | $120,777 | $1,254,119 | $156,110 | | Net income (loss) attributable to Pilgrim's Pride Corporation | $258,352 | $60,725 | $900,906 | $(5,754) | | Diluted EPS | $1.08 | $0.25 | $3.73 | $(0.02) | - **Net sales** for the nine months ended September 25, 2022, increased by **24.2%** to **$13.34 billion**, compared to **$10.74 billion** in the prior year period[13](index=13&type=chunk) - **Net income attributable to Pilgrim's Pride Corporation** significantly improved to **$900.9 million** (**$3.73 diluted EPS**) for the nine months ended September 25, 2022, from a net loss of **$5.75 million** (**$0.02 diluted EPS**) in the same period last year[13](index=13&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Reports net income and other comprehensive income (loss) components, reflecting total changes in equity from non-owner sources Condensed Consolidated Statements of Comprehensive Income Highlights (In thousands) | Metric | 3 Months Ended Sep 25, 2022 | 3 Months Ended Sep 26, 2021 | 9 Months Ended Sep 25, 2022 | 9 Months Ended Sep 26, 2021 | | :------------------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income (loss) | $258,999 | $60,835 | $901,580 | $(5,200) | | Total other comprehensive income (loss), net of tax | $(313,019) | $(42,156) | $(556,997) | $37,818 | | Comprehensive income (loss) attributable to Pilgrim's Pride Corporation | $(54,667) | $18,569 | $343,909 | $32,064 | - **Total other comprehensive loss**, net of tax, was **$(557.0) million** for the nine months ended September 25, 2022, primarily due to foreign currency translation adjustments[15](index=15&type=chunk) - **Comprehensive income attributable to Pilgrim's Pride Corporation** for the nine months ended September 25, 2022, was **$343.9 million**, a significant increase from **$32.1 million** in the prior year period[15](index=15&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) Outlines changes in the company's equity accounts, including net income, other comprehensive income, and share transactions Changes in Stockholders' Equity (Nine Months Ended Sep 25, 2022, In thousands) | Metric | Balance at Dec 26, 2021 | Net Income | Other Comprehensive Loss | Stock-based Compensation | Common Stock Purchased | Balance at Sep 25, 2022 | | :--------------------------------- | :---------------------- | :--------- | :----------------------- | :----------------------- | :--------------------- | :---------------------- | | Total Stockholders' Equity | $2,588,934 | $900,906 | $(556,997) | $6,285 | $(199,553) | $2,740,249 | - The company repurchased **7.47 million shares** of common stock for approximately **$199.6 million** during the nine months ended September 25, 2022[18](index=18&type=chunk) - **Retained earnings** increased significantly from **$1,003.57 million** at December 26, 2021, to **$1,904.48 million** at September 25, 2022, driven by net income[18](index=18&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Summarizes cash inflows and outflows from operating, investing, and financing activities over specific periods Condensed Consolidated Statements of Cash Flows Highlights (Nine Months Ended, In thousands) | Cash Flow Activity | Sep 25, 2022 | Sep 26, 2021 | | :--------------------------------- | :----------- | :----------- | | Operating activities | $790,613 | $327,495 | | Investing activities | $(330,334) | $(1,211,871) | | Financing activities | $(212,375) | $901,546 | | Effect of exchange rate changes | $(13,932) | $(381) | | Increase in cash, cash equivalents, restricted cash and restricted cash equivalents | $233,972 | $16,789 | - **Cash provided by operating activities** increased significantly to **$790.6 million** for the nine months ended September 25, 2022, from **$327.5 million** in the prior year period[22](index=22&type=chunk) - **Cash used in investing activities** decreased to **$330.3 million**, compared to **$1.21 billion** in the prior year, primarily due to a lower purchase of acquired businesses[22](index=22&type=chunk) - **Cash used in financing activities** was **$212.4 million**, a shift from **$901.5 million** provided in the prior year, mainly due to common stock repurchases and changes in debt activities[22](index=22&type=chunk) [NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS](index=9&type=section&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) Provides detailed explanations and disclosures supporting the condensed consolidated financial statements [1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=9&type=section&id=1.%20BUSINESS%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) Describes the company's operations, product offerings, and key accounting principles applied in financial reporting - Pilgrim's Pride Corporation is one of the largest chicken producers globally, with operations in the U.S., U.K., Mexico, France, Puerto Rico, the Netherlands, and the Republic of Ireland, serving foodservice, retail, and frozen entrée customers[25](index=25&type=chunk) - The Company's product offerings include fresh (refrigerated whole or cut-up chicken, primary pork cuts) and prepared products (fully cooked chicken parts, processed sausages, bacon), as well as plant-based protein, ready-to-eat meals, and hot food-to-go solutions[25](index=25&type=chunk) - As of September 25, 2022, Pilgrim's had over **61,800 employees**, capacity to process approximately **43.1 million birds** and **49,500 pigs** per 5-day work week, and JBS S.A. beneficially owned **82.7%** of its outstanding common stock[25](index=25&type=chunk) - The Company adopted ASU 2021-10, Government Assistance, in 2022, which did not materially impact its financial statements, and plans to adopt ASU 2020-04, Reference Rate Reform, and ASU 2022-04, Supplier Finance Programs, effective December 26, 2022, with no material impact expected from the former[34](index=34&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk) [2. BUSINESS ACQUISITION](index=11&type=section&id=2.%20BUSINESS%20ACQUISITION) Details the financial impact and strategic rationale of recent business acquisitions - On September 24, 2021, Pilgrim's acquired **100%** of Kerry Consumer Foods' meats and meals businesses (Pilgrim's Food Masters, PFM) for **$954.1 million**, solidifying its position as a leading European food company[38](index=38&type=chunk) - The PFM acquisition contributed **$247.6 million** in net sales and **$4.9 million** in net income for the three months ended September 25, 2022, and **$774.1 million** in net sales and **$10.3 million** in net income for the nine months ended September 25, 2022[40](index=40&type=chunk) - **Goodwill of $353.4 million** was recorded, driven by strategic and synergistic benefits including complementary products, enhanced footprint in the U.K. and Republic of Ireland, and strengthened position in plant-based protein, direct-to-consumer, and hot food-to-go markets[41](index=41&type=chunk)[42](index=42&type=chunk) [3. REVENUE RECOGNITION](index=12&type=section&id=3.%20REVENUE%20RECOGNITION) Explains the company's policies and disaggregated data related to revenue generation from customer contracts - Revenue is primarily derived from customer orders, with control transferring upon destination or customer pick-up, typically within days to weeks of order acceptance[45](index=45&type=chunk)[46](index=46&type=chunk) Disaggregated Net Sales by Segment and Product Type (In thousands) | Segment | Fresh (9M Sep 2022) | Prepared (9M Sep 2022) | Export (9M Sep 2022) | Other (9M Sep 2022) | Total (9M Sep 2022) | | :---------------- | :------------------ | :--------------------- | :------------------- | :------------------ | :------------------ | | U.S. | $6,709,441 | $839,164 | $421,517 | $347,885 | $8,318,007 | | U.K. and Europe | $674,758 | $2,320,873 | $538,878 | $105,620 | $3,640,129 | | Mexico | $1,200,329 | $116,264 | — | $66,283 | $1,382,876 | | **Total** | **$8,584,528** | **$3,276,301** | **$960,395** | **$519,788** | **$13,341,012** | - **Revenue contract liabilities** increased to **$35.7 million** as of September 25, 2022, from **$22.3 million** at December 26, 2021, reflecting payments received in advance of satisfying performance obligations[51](index=51&type=chunk)[53](index=53&type=chunk) [4. DERIVATIVE FINANCIAL INSTRUMENTS](index=14&type=section&id=4.%20DERIVATIVE%20FINANCIAL%20INSTRUMENTS) Discusses the company's use of derivatives to manage commodity price and foreign currency risks, including their fair values - The Company uses exchange-traded futures and options to mitigate price risk for commodity inputs (corn, soybean meal, wheat, etc.) and foreign currency forward contracts to manage translational foreign exchange risk in its international operations[55](index=55&type=chunk)[56](index=56&type=chunk) Derivative Financial Instruments Fair Values (In thousands) | Metric | Sep 25, 2022 | Dec 26, 2021 | | :--------------------------------- | :----------- | :----------- | | Commodity derivative assets | $16,641 | $17,567 | | Commodity derivative liabilities | $(11,720) | $(14,119) | | Foreign currency derivative assets | $5,403 | $518 | | Foreign currency derivative liabilities | $(2,027) | $(4,958) | | Sales contract derivative liabilities | $(11,243) | $(12,691) | | Cash collateral posted with brokers | $29,880 | $22,459 | - For the nine months ended September 25, 2022, commodity derivatives generated **$47.8 million** in gains (recognized in Cost of sales), while foreign currency derivatives resulted in **$18.6 million** in losses (recognized in Foreign currency transaction losses)[64](index=64&type=chunk) [5. TRADE ACCOUNTS AND OTHER RECEIVABLES](index=16&type=section&id=5.%20TRADE%20ACCOUNTS%20AND%20OTHER%20RECEIVABLES) Provides a breakdown of the company's receivables and the allowance for credit losses Trade Accounts and Other Receivables (In thousands) | Metric | Sep 25, 2022 | Dec 26, 2021 | | :--------------------------------- | :----------- | :----------- | | Trade accounts receivable | $1,031,180 | $947,697 | | Receivables, gross | $1,124,560 | $1,023,110 | | Allowance for credit losses | $(9,404) | $(9,673) | | Receivables, net | $1,115,156 | $1,013,437 | | Accounts receivable from related parties | $9,855 | $1,345 | - **Net receivables** increased to **$1.12 billion** as of September 25, 2022, from **$1.01 billion** at December 26, 2021, primarily driven by an increase in trade accounts receivable[71](index=71&type=chunk) - The **allowance for credit losses** decreased slightly from **$(9.67) million** at the beginning of the period to **$(9.40) million** at September 25, 2022, with a provision charged to operating results of **$(0.77) million**[72](index=72&type=chunk) [6. INVENTORIES](index=17&type=section&id=6.%20INVENTORIES) Details the composition and valuation of the company's inventory, including raw materials and finished products Inventories Composition (In thousands) | Metric | Sep 25, 2022 | Dec 26, 2021 | | :--------------------------------- | :----------- | :----------- | | Raw materials and work-in-process | $1,215,034 | $1,034,518 | | Finished products | $548,960 | $369,292 | | Operating supplies | $82,949 | $87,332 | | Maintenance materials and parts | $87,755 | $84,516 | | Total inventories | $1,934,698 | $1,575,658 | - **Total inventories** increased to **$1.93 billion** as of September 25, 2022, from **$1.58 billion** at December 26, 2021, primarily due to increases in raw materials and work-in-process and finished products[73](index=73&type=chunk) [7. INVESTMENTS IN SECURITIES](index=17&type=section&id=7.%20INVESTMENTS%20IN%20SECURITIES) Outlines the company's investments in available-for-sale securities and related realized gains or losses Available-for-Sale Securities (In thousands) | Metric | Cost (Sep 25, 2022) | Fair Value (Sep 25, 2022) | Cost (Dec 26, 2021) | Fair Value (Dec 26, 2021) | | :-------------------- | :------------------ | :------------------------ | :------------------ | :------------------------ | | Fixed income securities | $359,542 | $359,660 | $48,851 | $48,851 | - **Gross realized gains** from available-for-sale securities were **$3.3 million** for the nine months ended September 25, 2022, compared to **$3.9 million** in the prior year period[74](index=74&type=chunk) [8. GOODWILL AND INTANGIBLE ASSETS](index=18&type=section&id=8.%20GOODWILL%20AND%20INTANGIBLE%20ASSETS) Presents the carrying amounts and changes in goodwill and other intangible assets by segment Goodwill by Segment (In thousands) | Segment | Dec 26, 2021 | Additions | Currency Translation | Sep 25, 2022 | | :---------------- | :----------- | :-------- | :------------------- | :----------- | | U.S. | $41,936 | — | — | $41,936 | | U.K. and Europe | $1,167,512 | $5,401 | $(218,367) | $954,546 | | Mexico | $127,804 | — | — | $127,804 | | Total | $1,337,252 | $5,401 | $(218,367) | $1,124,286 | - **Total goodwill** decreased to **$1.12 billion** as of September 25, 2022, from **$1.34 billion** at December 26, 2021, primarily due to a **$(218.4) million** negative currency translation impact in the U.K. and Europe segment[75](index=75&type=chunk) Intangible Assets, Net (In thousands) | Metric | Dec 26, 2021 | Amortization | Disposals | Currency Translation | Sep 25, 2022 | | :-------------------------- | :----------- | :----------- | :-------- | :------------------- | :----------- | | Trade names not subject to amortization | $609,713 | — | — | $(119,483) | $490,230 | | Customer relationships | $455,459 | — | — | $(53,724) | $401,735 | | Accumulated amortization | $(216,517) | $(25,629) | $320 | $17,079 | $(224,747) | | Intangible assets, net | $963,243 | $(25,629) | — | $(157,993) | $779,621 | - **Net intangible assets** decreased to **$779.6 million** as of September 25, 2022, from **$963.2 million** at December 26, 2021, largely due to currency translation impacts and amortization[75](index=75&type=chunk) [9. PROPERTY, PLANT AND EQUIPMENT](index=18&type=section&id=9.%20PROPERTY%2C%20PLANT%20AND%20EQUIPMENT) Details the company's tangible long-lived assets, including their gross value, accumulated depreciation, and capital expenditures Property, Plant and Equipment, Net (In thousands) | Metric | Sep 25, 2022 | Dec 26, 2021 | | :--------------------------------- | :----------- | :----------- | | PP&E, gross | $6,141,422 | $6,209,852 | | Accumulated depreciation | $(3,329,373) | $(3,292,046) | | PP&E, net | $2,812,049 | $2,917,806 | - **Net property, plant, and equipment** decreased to **$2.81 billion** as of September 25, 2022, from **$2.92 billion** at December 26, 2021[77](index=77&type=chunk) - **Depreciation expense** for the nine months ended September 25, 2022, was **$275.3 million**, up from **$256.9 million** in the prior year period[77](index=77&type=chunk) - **Capital expenditures** totaled **$342.6 million** for the nine months ended September 25, 2022, primarily for efficiency improvements and cost reduction[78](index=78&type=chunk) [10. CURRENT LIABILITIES](index=20&type=section&id=10.%20CURRENT%20LIABILITIES) Provides a breakdown of the company's short-term financial obligations, excluding income taxes and long-term debt maturities Current Liabilities (Excluding Income Taxes and Current Maturities of Long-Term Debt, In thousands) | Metric | Sep 25, 2022 | Dec 26, 2021 | | :--------------------------------- | :----------- | :----------- | | Total accounts payable | $1,539,752 | $1,378,077 | | Accounts payable to related parties | $17,055 | $22,317 | | Revenue contract liabilities | $35,734 | $22,321 | | Total accrued expenses and other current liabilities | $857,189 | $859,885 | | Total | $2,449,730 | $2,282,600 | - **Total current liabilities** (excluding income taxes and current maturities of long-term debt) increased to **$2.45 billion** as of September 25, 2022, from **$2.28 billion** at December 26, 2021, mainly due to higher trade accounts payable[83](index=83&type=chunk) - **Litigation settlements accrued** decreased from **$172.4 million** to **$93.4 million**[83](index=83&type=chunk) [11. INCOME TAXES](index=21&type=section&id=11.%20INCOME%20TAXES) Discusses the company's income tax expense, effective tax rates, and the impact of recent tax legislation - **Income tax expense** for the nine months ended September 25, 2022, was **$253.7 million** (**21.9% effective tax rate**), a significant increase from **$55.9 million** (**110.3% effective tax rate**) in the prior year, primarily due to increased profit before income taxes[84](index=84&type=chunk) - The Company is analyzing the tax effects of the Inflation Reduction Act of 2022, which includes significant law changes applicable for tax years beginning after December 31, 2022[89](index=89&type=chunk) [12. DEBT](index=21&type=section&id=12.%20DEBT) Details the company's long-term debt obligations, credit facilities, and recent amendments to debt covenants Long-Term Debt (In thousands) | Debt Type | Maturity | Sep 25, 2022 | Dec 26, 2021 | | :--------------------------------- | :------- | :----------- | :----------- | | Senior notes payable at 3.50% | 2032 | $900,000 | $900,000 | | Senior notes payable at 4.25% | 2031 | $991,441 | $990,691 | | Senior notes payable at 5.875% | 2027 | $846,403 | $845,866 | | U.S. Credit Facility Term note payable at 4.43% | 2026 | $486,405 | $506,250 | | Long-term debt, less current maturities, net of capitalized financing costs | $3,183,951 | $3,191,161 | - On September 22, 2022, the Company amended its Senior Notes due 2031 and 2032 indentures to reflect its investment grade status, permanently eliminating certain restrictive covenants such as limitations on additional debt, restricted payments, and asset sales[95](index=95&type=chunk)[98](index=98&type=chunk) - The U.S. Credit Facility provides an **$800.0 million** revolving credit commitment (with **$763.9 million** available as of Sep 25, 2022) and a **$700.0 million** term loan commitment (**$486.4 million** outstanding)[100](index=100&type=chunk)[101](index=101&type=chunk) - The U.K. and Europe Revolver Facility provides a multicurrency revolving loan commitment of up to **£150.0 million** (**$162.9 million** U.S. dollar-equivalent), with **$10.9 million** outstanding as of September 25, 2022[105](index=105&type=chunk) [13. STOCKHOLDERS' EQUITY](index=24&type=section&id=13.%20STOCKHOLDERS%27%20EQUITY) Explains changes in the company's equity, including accumulated other comprehensive loss and share repurchase programs Accumulated Other Comprehensive Loss Components (Nine Months Ended Sep 25, 2022, In thousands) | Component | Balance, beginning of period | Other comprehensive income (loss) before reclassifications | Amounts reclassified to net income | Currency translation | Balance, end of period | | :--------------------------------- | :--------------------------- | :--------------------------------------------------------- | :--------------------------------- | :------------------- | :--------------------- | | Gains (Losses) Related to Foreign Currency Translation | $27,241 | $(572,130) | — | — | $(544,889) | | Losses on Derivative Financial Instruments Classified as Cash Flow Hedges | $(2,365) | $(2,317) | $2,637 | $75 | $(1,970) | | Losses Related to Pension and Other Postretirement Benefits | $(72,873) | $14,061 | $698 | — | $(58,114) | | Gains (Losses) on Available-for-Sale Securities | — | $(21) | — | — | $(21) | | Total | $(47,997) | $(560,407) | $3,335 | $75 | $(604,994) | - **Accumulated other comprehensive loss** increased to **$(605.0) million** as of September 25, 2022, from **$(48.0) million** at December 26, 2021, primarily due to significant foreign currency translation losses[108](index=108&type=chunk) - The Board of Directors approved a **$200.0 million** share repurchase program on March 8, 2022, under which the Company repurchased approximately **7.5 million shares** for **$199.6 million** as of September 25, 2022[111](index=111&type=chunk) [14. PENSION AND OTHER POSTRETIREMENT BENEFITS](index=25&type=section&id=14.%20PENSION%20AND%20OTHER%20POSTRETIREMENT%20BENEFITS) Outlines the company's defined benefit and contribution plans, including their funded status and related expenses - **Total expenses** for all retirement plans were **$23.9 million** for the nine months ended September 25, 2022, compared to **$13.6 million** in the prior year period[114](index=114&type=chunk) Defined Benefit Plans Funded Status (In thousands) | Metric | Pension Benefits (Sep 25, 2022) | Other Benefits (Sep 25, 2022) | Pension Benefits (Dec 26, 2021) | Other Benefits (Dec 26, 2021) | | :--------------------------------- | :------------------------------ | :---------------------------- | :------------------------------ | :---------------------------- | | Projected benefit obligation, end of period | $236,565 | $1,121 | $386,424 | $1,472 | | Fair value of plan assets, end of period | $218,144 | — | $331,879 | — | | Unfunded benefit obligation, end of period | $(18,421) | $(1,121) | $(46,653) | $(1,346) | - The **unfunded benefit obligation for pension plans** decreased to **$(18.4) million** as of September 25, 2022, from **$(46.7) million** at December 26, 2021, primarily due to actuarial gains[115](index=115&type=chunk) - **Defined contribution plan expenses** were **$21.0 million** for the nine months ended September 25, 2022[121](index=121&type=chunk) [15. FAIR VALUE MEASUREMENT](index=28&type=section&id=15.%20FAIR%20VALUE%20MEASUREMENT) Describes the company's methodology for fair value measurements of financial instruments across different input levels - The Company categorizes fair value measurements into Level 1 (quoted prices in active markets), Level 2 (observable inputs), and Level 3 (unobservable inputs)[122](index=122&type=chunk) Fair Value of Financial Instruments (In thousands) | Instrument | Level 1 (Sep 25, 2022) | Level 2 (Sep 25, 2022) | Total (Sep 25, 2022) | | :--------------------------------- | :--------------------- | :--------------------- | :------------------- | | Commodity derivative assets | $16,641 | — | $16,641 | | Foreign currency derivative assets | $5,403 | — | $5,403 | | Commodity derivative liabilities | $(11,721) | — | $(11,721) | | Foreign currency derivative liabilities | $(2,027) | — | $(2,027) | | Sales contract derivative liabilities | — | $(11,243) | $(11,243) | - The **fair value of fixed-rate senior notes payable** (Level 2 inputs) was lower than their carrying amount as of September 25, 2022, indicating a market discount[129](index=129&type=chunk) [16. RELATED PARTY TRANSACTIONS](index=29&type=section&id=16.%20RELATED%20PARTY%20TRANSACTIONS) Details significant transactions and balances with related parties, including sales and purchases Related Party Transactions (Nine Months Ended, In thousands) | Transaction Type | Sep 25, 2022 | Sep 26, 2021 | | :--------------------------------- | :----------- | :----------- | | Total sales to related parties | $22,025 | $14,844 | | Total cost of goods purchased from related parties | $165,517 | $178,770 | | Total expenditures paid by related parties | $73,045 | $68,039 | | Total expenditures paid on behalf of related parties | $46,895 | $35,457 | - **Sales to related parties** increased to **$22.0 million** for the nine months ended September 25, 2022, from **$14.8 million** in the prior year, with JBS USA Food Company being the largest counterparty[133](index=133&type=chunk) - **Cost of goods purchased from related parties** decreased to **$165.5 million** for the nine months ended September 25, 2022, from **$178.8 million** in the prior year[133](index=133&type=chunk) [17. REPORTABLE SEGMENTS](index=31&type=section&id=17.%20REPORTABLE%20SEGMENTS) Provides financial performance data, including net sales and operating income, for each of the company's operating segments - The Company operates in three reportable segments: U.S., U.K. and Europe, and Mexico, with segment profit measured as operating income[135](index=135&type=chunk) Net Sales by Reportable Segment (Nine Months Ended, In thousands) | Segment | Sep 25, 2022 | Sep 26, 2021 | | :---------------- | :----------- | :----------- | | U.S. | $8,318,007 | $6,714,879 | | U.K. and Europe | $3,640,129 | $2,721,019 | | Mexico | $1,382,876 | $1,302,791 | | Total | $13,341,012 | $10,738,689 | Reportable Segment Profit (Operating Income, Nine Months Ended, In thousands) | Segment | Sep 25, 2022 | Sep 26, 2021 | | :---------------- | :----------- | :----------- | | U.S. | $1,146,821 | $(85,380) | | U.K. and Europe | $406 | $32,771 | | Mexico | $106,850 | $208,677 | | Total operating income | $1,254,119 | $156,110 | - The **U.S. segment's operating income** significantly improved to **$1.15 billion** for the nine months ended September 25, 2022, from a loss of **$(85.4) million** in the prior year[142](index=142&type=chunk) [18. COMMITMENTS AND CONTINGENCIES](index=32&type=section&id=18.%20COMMITMENTS%20AND%20CONTINGENCIES) Details the company's legal and regulatory exposures, including antitrust litigation and tax assessments - The Company is appealing Mexican tax assessments totaling approximately **$276.8 million** for tax years 2009, 2010, and related to the acquisition of Tyson de México, with no loss recorded at this time[147](index=147&type=chunk)[148](index=148&type=chunk) - In the Broiler Chicken Antitrust Litigation, PPC settled claims with Direct Purchaser Plaintiffs (DPPs) for **$75.0 million**, End-User Consumer Indirect Purchaser Plaintiff Class (EUCPs) for **$75.5 million**, and Commercial and Institutional Indirect Purchaser Plaintiff Class (CIIPPs) for **$45.0 million**[150](index=150&type=chunk)[151](index=151&type=chunk)[152](index=152&type=chunk) - PPC has recognized an expense of **$508.6 million** to cover settlements with various Opt Outs in the Broiler Chicken Antitrust Litigation and continues to litigate against remaining Opt Outs[153](index=153&type=chunk) - The DOJ opened civil investigations into human resources antitrust matters (Feb 2022) and grower contracts and payment practices (Oct 2022), with PPC cooperating[170](index=170&type=chunk) [19. BUSINESS INTERRUPTION INSURANCE](index=36&type=section&id=19.%20BUSINESS%20INTERRUPTION%20INSURANCE) Reports on insurance proceeds received related to business interruptions, such as natural disasters - Following a tornado in Mayfield, Kentucky in December 2021, the Company received **$5.5 million** in business interruption insurance proceeds and recognized **$12.2 million** in income from such insurance for the three and nine months ended September 25, 2022[171](index=171&type=chunk) [20. SUBSEQUENT EVENTS](index=36&type=section&id=20.%20SUBSEQUENT%20EVENTS) Discloses significant events occurring after the reporting period that may impact the company's financial position - On September 6, 2022, a U.K. subsidiary announced proposed closures of two facilities, potentially affecting **610 employees** and incurring estimated exit or disposal costs of approximately **£7.9 million**[172](index=172&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=37&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Provides an executive summary of Pilgrim's Pride Corporation's financial performance, global economic impacts, and operational strategies for the nine months ended September 25, 2022 [Executive Summary](index=37&type=section&id=Executive%20Summary) Summarizes Pilgrim's Pride Corporation's financial performance, including net income, sales, and operating margins, for the nine months ended September 25, 2022 - For the nine months ended September 25, 2022, Pilgrim's reported **net income of $900.9 million** (**$3.73 diluted EPS**), **net sales of $13.3 billion**, and **cash provided by operating activities of $790.6 million**[173](index=173&type=chunk) - Consolidated operating margin was **9.4%**, with segment operating margins of **13.8%** (U.S.), **0.0%** (U.K. and Europe), and **7.7%** (Mexico)[173](index=173&type=chunk) - The Company faced significant challenges from inflation in commodity, labor, and other operating costs across all businesses, exacerbated by the Russia-Ukraine war impacting global feed ingredient and energy markets[174](index=174&type=chunk)[176](index=176&type=chunk)[177](index=177&type=chunk) - In the U.K., labor shortages due to Brexit continued to affect processing, packing, and transport, while Mexico experienced volatility from inflationary pressures and bird disease[174](index=174&type=chunk)[184](index=184&type=chunk) - The Company is responding by negotiating with customers for cost recovery and focusing on operational initiatives to improve labor efficiencies, agricultural performance, and yields[175](index=175&type=chunk) [Results of Operations](index=39&type=section&id=Results%20of%20Operations) Analyzes the company's financial performance, including net sales, gross profit, and operating income, across its segments for the reporting periods Net Sales Growth by Segment (YoY Change) | Segment | 3 Months Ended Sep 25, 2022 | 9 Months Ended Sep 25, 2022 | | :---------------- | :-------------------------- | :-------------------------- | | U.S. | +15.0% | +23.9% | | U.K. and Europe | +29.3% | +33.8% | | Mexico | -0.3% | +6.1% | | Total | +16.8% | +24.2% | - **U.S. net sales** increased by **$1.6 billion** (**23.9%**) for the nine months ended September 25, 2022, driven by price increases to recover higher feed ingredients, labor, and utility costs[200](index=200&type=chunk) - **U.K. and Europe net sales** increased by **$919.1 million** (**33.8%**) for the nine months, with **$774.1 million** attributed to the PFM acquisition and the remainder from price increases offsetting foreign currency translation and volume decreases[201](index=201&type=chunk) - **Gross profit** increased by **$702.7 million** (**69.3%**) to **$1.7 billion** for the nine months ended September 25, 2022, with the U.S. segment contributing **$1.4 billion**, up **116.8%** YoY[202](index=202&type=chunk) - **Operating income** surged by **$1.1 billion** (**703.4%**) to **$1.3 billion** for the nine months, primarily due to a significant improvement in the U.S. segment's operating income, which rose by **$1.2 billion**[205](index=205&type=chunk)[206](index=206&type=chunk) - **U.S. SG&A expense** decreased by **$471.5 million** (**64.0%**) for the nine months, mainly due to the recognition of legal settlements and acquisition transaction costs in the prior year[207](index=207&type=chunk) - **Net interest expense** slightly decreased to **$106.3 million** for the nine months, benefiting from a **$24.7 million** loss on early extinguishment of debt in the prior year, despite increased average borrowings[210](index=210&type=chunk) [Liquidity and Capital Resources](index=45&type=section&id=Liquidity%20and%20Capital%20Resources) Assesses the company's ability to meet its financial obligations and fund operations through cash flows and available credit facilities Available Sources of Liquidity (As of Sep 25, 2022, In millions) | Source | Facility Amount | Amount Outstanding | Amount Available | | :--------------------------------- | :-------------- | :----------------- | :--------------- | | Cash and cash equivalents | — | — | $654.2 | | U.S. Credit Facility Revolving Note Payable | $800.0 | — | $763.9 | | U.S. Credit Facility Term Loans | $700.0 | $486.4 | — | | Mexico Credit Facility | $74.2 | — | $74.2 | | U.K. and Europe Revolver Facility | $162.9 | $10.9 | $152.0 | - The Company expects cash flows from operations and available credit facilities to provide sufficient liquidity for current obligations, working capital, debt maturities, and capital spending for at least the next twelve months[215](index=215&type=chunk) - **Cash provided by operating activities** for the nine months ended September 25, 2022, was **$790.6 million**, driven by net income and noncash expenses, partially offset by increased trade accounts receivable and inventories[216](index=216&type=chunk)[217](index=217&type=chunk)[219](index=219&type=chunk)[221](index=221&type=chunk) - **Cash used in financing activities** was **$212.4 million**, including **$199.5 million** for common stock repurchases and net payments on borrowings[226](index=226&type=chunk)[227](index=227&type=chunk) [Reconciliation of Net Income to EBITDA and Adjusted EBITDA](index=47&type=section&id=Reconciliation%20of%20Net%20Income%20to%20EBITDA%20and%20Adjusted%20EBITDA) Provides a reconciliation of net income to non-GAAP measures EBITDA and Adjusted EBITDA, highlighting adjustments for specific financial items - EBITDA and Adjusted EBITDA are non-GAAP measures used by management and investors to compare company performance, with Adjusted EBITDA excluding foreign currency transaction losses, acquisition costs, litigation settlements, and property insurance recoveries[231](index=231&type=chunk) EBITDA and Adjusted EBITDA Reconciliation (Nine Months Ended Sep 25, 2022, In thousands) | Metric | Amount | | :--------------------------------- | :------- | | Net income | $901,580 | | Add: Interest expense, net | $106,346 | | Add: Income tax expense | $253,679 | | Add: Depreciation and amortization | $300,962 | | **EBITDA** | **$1,562,567** | | Add: Foreign currency transaction losses | $14,348 | | Add: Transaction costs related to business acquisitions | $972 | | Add: Litigation settlements | $28,282 | | Minus: Property insurance recoveries for Mayfield tornado losses | $19,997 | | Minus: Net income attributable to noncontrolling interest | $674 | | **Adjusted EBITDA** | **$1,585,498** | [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=49&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) Outlines Pilgrim's Pride Corporation's exposure to market risks, including commodity prices, interest rates, and foreign currency exchange rates, with sensitivity analyses - A hypothetical **10% increase** in the weighted-average cost of primary feed ingredients would increase cost of sales by **$119.7 million** for the three months ended September 25, 2022, and increase inventories by **$24.7 million**[238](index=238&type=chunk)[239](index=239&type=chunk)[240](index=240&type=chunk) - A hypothetical **10% increase in interest rates** would decrease the fair value of fixed-rate debt by **$75.6 million** as of September 25, 2022[242](index=242&type=chunk) - An increase of **25 basis points** in variable interest rates would increase interest expense by **$2.5 million** for the three months ended September 25, 2022, given that variable-rate debt constitutes approximately **15.7%** of total debt[243](index=243&type=chunk) - A **10% weakening of the British pound** against the U.S. dollar would decrease the net assets of U.K. and Europe subsidiaries by **$218.8 million**, while a **10% appreciation** would increase them by **$267.4 million**[249](index=249&type=chunk) - The Company is responding to pronounced inflation in the U.S., Mexico, and Europe by negotiating with customers for cost recovery and implementing operational initiatives to improve efficiencies and yields[252](index=252&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=51&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Confirms that Pilgrim's Pride Corporation's management evaluated the effectiveness of its disclosure controls and procedures, concluding they were effective with no material changes - As of September 25, 2022, the Company's Chief Executive Officer and Chief Financial Officer concluded that the **disclosure controls and procedures were effective**[259](index=259&type=chunk) - No changes in internal control over financial reporting occurred during the three months ended September 25, 2022, that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[260](index=260&type=chunk) PART II. OTHER INFORMATION Provides additional information including legal proceedings, risk factors, equity sales, and required exhibits [ITEM 1. LEGAL PROCEEDINGS](index=52&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) Refers to Note 18, 'Commitments and Contingencies,' for detailed information regarding the Company's legal proceedings - Information regarding legal proceedings is incorporated by reference from Note 18. Commitments and Contingencies in Part I, Item 1 of this quarterly report[262](index=262&type=chunk) [ITEM 1A. RISK FACTORS](index=52&type=section&id=ITEM%201A.%20RISK%20FACTORS) Updates the Company's risk factors, highlighting new and ongoing concerns such as global economic impacts, commodity prices, and potential operational disruptions - The Russia-Ukraine war poses risks including higher commodity prices (food, ingredients, energy), increased inflation, and disrupted trade and supply chains, which could adversely affect the Company's business[264](index=264&type=chunk)[265](index=265&type=chunk)[266](index=266&type=chunk) - Extreme weather, natural disasters, and man-made problems like power disruptions (e.g., potential U.K. power cuts in winter 2023) could impair operations, production, or transportation, materially impacting financial results[268](index=268&type=chunk)[269](index=269&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=53&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) Details Pilgrim's Pride Corporation's share repurchase program, approved for $200.0 million, and the shares repurchased as of September 25, 2022 - On March 8, 2022, the Board of Directors approved a **$200.0 million** share repurchase program with no termination date[270](index=270&type=chunk) Issuer Purchases of Equity Securities (Three Months Ended Sep 25, 2022) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of the Shares That May Yet Be Purchased Under the Plans or Programs | | :--------------------------------- | :------------------------------- | :--------------------------- | :------------------------------------------------------------------------------- | :--------------------------------------------------------------------------------------- | | June 27, 2022 through July 24, 2022 | 260,464 | $29.9139 | 260,464 | $72,219,363 | | July 25, 2022 through August 28, 2022 | 494,654 | $29.7796 | 494,654 | $57,488,765 | | August 29, 2022 through September 25, 2022 | 2,081,950 | $27.3980 | 2,081,950 | $447,475 | | Total | 2,837,068 | $28.0442 | 2,837,068 | $447,475 | - As of September 25, 2022, the Company repurchased **7,468,645 shares** for an aggregate cost of **$199.6 million** at an average price of **$26.7187 per share**[270](index=270&type=chunk) [ITEM 6. EXHIBITS](index=54&type=section&id=ITEM%206.%20EXHIBITS) Lists the exhibits filed with the Form 10-Q, including corporate documents, supplemental indentures, and certifications - Exhibits include Amended and Restated Certificate of Incorporation and Bylaws, First Supplemental Indentures for Senior Notes, and Certifications of Principal Executive and Financial Officers (31.1, 31.2, 32.1, 32.2)[276](index=276&type=chunk) - The filing also includes Inline XBRL Instance Document and Taxonomy Extension files (Schema, Calculation, Definition, Label, Presentation)[276](index=276&type=chunk) [SIGNATURES](index=57&type=section&id=SIGNATURES) Contains the required signatures for the Form 10-Q, certifying its submission on behalf of Pilgrim's Pride Corporation - The report was signed on October 26, 2022, by Matthew Galvanoni, Chief Financial Officer and Chief Accounting Officer[279](index=279&type=chunk)

Pilgrim's Pride Corporation (NASDAQ:PPC) Q2 2022 Earnings Conference Call July 28, 2022 9:00 AM ET Company Participants Andy Rojeski - Head-Strategy, IR and Net Zero Programs Fabio Sandri - President and CEO Matt Galvanoni - CFO Conference Call Participants Ben Bienvenu - Stephens Ben Theurer - Barclays Ken Zaslow - Bank of Montreal Adam Samuelson - Goldman Sachs Michael Piken - Cleveland Research Peter Galbo - Bank of America Operator Good morning, and welcome to the Second Quarter 2022 Pilgrim's Pride Ear ...

Pilgrim's. Financial Results for Second Quarter Ended June 26, 2022 Pilgrim's Pride Corporation (NASDAQ: PPC) Cautionary Notes and 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," " ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q | | | For the quarterly period ended June 26, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 PILGRIM'S PRIDE CORPORATION (Exact name of registrant as specified in its charter) Delaware 75-1285071 (State or other jurisdiction of incorporation or organization) 1770 Promontory Circle 80634-9038 Greeley CO (Address of principal executive offices) (Zip code) Registrant's telephone ...

Pilgrim’s Pride Corporation (NASDAQ:PPC) Q1 2022 Earnings Conference Call April 28, 2022 9:00 AM ET Company Participants Andy Rojeski – Head-Strategy, Investor Relations and Net Zero Programs Fabio Sandri – President and Chief Executive Officer Matt Galvanoni – Chief Financial Officer Conference Call Participants Ben Bienvenu – Stephens Peter Galbo – Bank of America Michael Piken – Cleveland Research Ben Theurer – Barclays Adam Samuelson – Goldman Sachs Ken Zaslow – Bank of Montreal Operator Good morning a ...

PART I. FINANCIAL INFORMATION [Item 1. Condensed Consolidated Financial Statements](index=2&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) The company presents its unaudited condensed consolidated financial statements for the first quarters of 2022 and 2021 [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets (March 27, 2022 vs. December 26, 2021) | Item | March 27, 2022 (In thousands) | December 26, 2021 (In thousands) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $725,540 | $427,661 | | Total current assets | $3,792,825 | $3,305,954 | | Total assets | $9,317,867 | $8,913,205 | | **Liabilities & Equity** | | | | Total current liabilities | $2,475,775 | $2,390,823 | | Long-term debt, less current maturities | $3,377,893 | $3,191,161 | | Total liabilities | $6,524,261 | $6,324,271 | | Total stockholders' equity | $2,793,606 | $2,588,934 | | Total liabilities and stockholders' equity | $9,317,867 | $8,913,205 | [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Condensed Consolidated Statements of Income (Three Months Ended March 27, 2022 vs. March 28, 2021) | Item | March 27, 2022 (In thousands) | March 28, 2021 (In thousands) | | :--- | :--- | :--- | | Net sales | $4,240,395 | $3,273,425 | | Cost of sales | $3,698,415 | $3,012,182 | | Gross profit | $541,980 | $261,243 | | Operating income | $402,013 | $158,464 | | Income before income taxes | $355,779 | $135,826 | | Net income | $280,560 | $100,468 | | Net income attributable to Pilgrim's Pride Corporation | $280,438 | $100,208 | | Diluted EPS | $1.15 | $0.41 | [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Condensed Consolidated Statements of Comprehensive Income (Three Months Ended March 27, 2022 vs. March 28, 2021) | Item | March 27, 2022 (In thousands) | March 28, 2021 (In thousands) | | :--- | :--- | :--- | | Net income | $280,560 | $100,468 | | Total other comprehensive income (loss), net of tax | $(50,905) | $57,899 | | Comprehensive income | $229,655 | $158,367 | | Comprehensive income attributable to Pilgrim's Pride Corporation | $229,533 | $158,107 | [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Condensed Consolidated Statements of Stockholders' Equity (Three Months Ended March 27, 2022 vs. March 28, 2021) | Item | March 27, 2022 (In thousands) | March 28, 2021 (In thousands) | | :--- | :--- | :--- | | Balance at December 26, 2021 / December 27, 2020 | $2,588,934 | $2,575,347 | | Net income | $280,438 | $100,208 | | Other comprehensive loss, net of tax | $(50,905) | $57,899 | | Common stock purchased under share repurchase plan | $(27,023) | — | | Balance at March 27, 2022 / March 28, 2021 | $2,793,606 | $2,735,756 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows (Three Months Ended March 27, 2022 vs. March 28, 2021) | Item | March 27, 2022 (In thousands) | March 28, 2021 (In thousands) | | :--- | :--- | :--- | | Cash provided by (used in) operating activities | $226,996 | $(143,551) | | Cash used in investing activities | $(85,576) | $(89,093) | | Cash provided by financing activities | $166,330 | $92,990 | | Increase (decrease) in cash, cash equivalents and restricted cash | $305,677 | $(138,166) | | Cash, cash equivalents and restricted cash, end of period | $755,798 | $410,240 | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=8&type=section&id=1.%20BUSINESS%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) - Pilgrim's Pride Corporation is a global chicken producer with operations in the U.S., U.K., Mexico, France, Puerto Rico, Netherlands, and Republic of Ireland, selling products to foodservice, retail, and frozen entrée customers[24](index=24&type=chunk) - As of March 27, 2022, the company had over **59,000 employees** and processed approximately **43.3 million birds** and **49,500 pigs** per 5-day work week[24](index=24&type=chunk) - JBS S.A. beneficially owned **80.5%** of the Company's outstanding common stock as of March 27, 2022[24](index=24&type=chunk) - The company adopted ASU 2021-10, Government Assistance, which requires annual disclosures for government assistance transactions, but it did not have a material impact on the financial statements[33](index=33&type=chunk) - The company will apply ASU 2020-04 and ASU 2021-01, Reference Rate Reform, to update contracts and hedging relationships affected by the transition from LIBOR to new reference rates, with the option to apply the guidance through December 31, 2022[34](index=34&type=chunk) [2. BUSINESS ACQUISITION](index=9&type=section&id=2.%20BUSINESS%20ACQUISITION) - On September 24, 2021, Pilgrim's acquired 100% of Kerry Consumer Foods' meats and meals businesses (Pilgrim's Food Masters, PFM) for **£695.3 million ($954.1 million)**, solidifying its position as a leading European food company[35](index=35&type=chunk) - During Q1 2022, an additional **$4.8 million** was paid for working capital and net debt adjustments, bringing the total cash paid to **$958.9 million**[35](index=35&type=chunk) - The acquisition generated **$260.7 million in net sales** and **$1.9 million in net income** for the three months ended March 27, 2022, and resulted in **$353.4 million in goodwill**, driven by strategic and synergistic benefits[37](index=37&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk) [3. REVENUE RECOGNITION](index=10&type=section&id=3.%20REVENUE%20RECOGNITION) - The Company's revenue is primarily from product sales, with performance obligations typically fulfilled within days to weeks of order acceptance, upon transfer of control to the customer (destination or pick-up)[42](index=42&type=chunk)[43](index=43&type=chunk) Disaggregated Net Sales by Segment and Product Type (Three Months Ended March 27, 2022 vs. March 28, 2021) | Segment | Product Type | March 27, 2022 (In thousands) | March 28, 2021 (In thousands) | | :--- | :--- | :--- | :--- | | **U.S.** | Fresh | $2,087,621 | $1,597,423 | | | Prepared | $255,087 | $194,272 | | | Export | $133,797 | $113,971 | | | Other | $104,703 | $93,893 | | | **Total U.S.** | **$2,581,208** | **$1,999,559** | | **U.K. and Europe** | Fresh | $237,309 | $386,886 | | | Prepared | $746,636 | $376,122 | | | Export | $173,411 | $79,382 | | | Other | $34,626 | $12,345 | | | **Total U.K. and Europe** | **$1,191,982** | **$854,735** | | **Mexico** | Fresh | $410,420 | $372,721 | | | Prepared | $36,141 | $27,404 | | | Other | $20,644 | $19,006 | | | **Total Mexico** | **$467,205** | **$419,131** | | **Total Net Sales** | | **$4,240,395** | **$3,273,425** | Changes in Revenue Contract Liabilities (In thousands) | Item | Amount | | :--- | :--- | | Balance as of December 26, 2021 | $22,321 | | Revenue recognized | $(11,537) | | Cash received, excluding amounts recognized as revenue during the period | $10,738 | | Balance as of March 27, 2022 | $21,522 | [4. DERIVATIVE FINANCIAL INSTRUMENTS](index=12&type=section&id=4.%20DERIVATIVE%20FINANCIAL%20INSTRUMENTS) - Pilgrim's uses exchange-traded futures and options to mitigate price risk for commodity inputs (corn, soybean meal, soybean oil, wheat, natural gas, electricity, diesel fuel) for approximately the next twelve months[52](index=52&type=chunk)[53](index=53&type=chunk) - The Company uses foreign currency forward contracts to manage translational foreign exchange risk from its Mexico, U.K., France, Netherlands, and Republic of Ireland operations, and an interest rate swap to manage variable interest rate exposure on U.S. long-term debt[54](index=54&type=chunk)[55](index=55&type=chunk) Fair Values of Derivative Instruments (March 27, 2022 vs. December 26, 2021) | Item | March 27, 2022 (In thousands) | December 26, 2021 (In thousands) | | :--- | :--- | :--- | | Commodity derivative assets | $37,563 | $17,567 | | Commodity derivative liabilities | $(22,860) | $(14,119) | | Foreign currency derivative assets | $768 | $518 | | Foreign currency derivative liabilities | $(12,197) | $(4,958) | | Interest rate swap derivative liabilities | — | $(98) | | Sales contract derivative liabilities | $(21,357) | $(12,691) | | Cash collateral posted with brokers | $30,258 | $22,459 | Gains and Losses from Undesignated Derivative Instruments (Three Months Ended March 27, 2022 vs. March 28, 2021) | Type of Contract | March 27, 2022 (In thousands) | March 28, 2021 (In thousands) | Affected Line Item | | :--- | :--- | :--- | :--- | | Foreign currency derivatives gain (loss) | $(13,300) | $5,340 | Foreign currency transaction losses (gains) | | Commodity derivative gain | $31,540 | $17,378 | Cost of sales | | Sales contract derivative gain (loss) | $(8,666) | $(18,104) | Net sales | | Total | $9,574 | $4,614 | | [5. TRADE ACCOUNTS AND OTHER RECEIVABLES](index=15&type=section&id=5.%20TRADE%20ACCOUNTS%20AND%20OTHER%20RECEIVABLES) Trade Accounts and Other Receivables, Net (March 27, 2022 vs. December 26, 2021) | Item | March 27, 2022 (In thousands) | December 26, 2021 (In thousands) | | :--- | :--- | :--- | | Trade accounts receivable | $1,001,967 | $947,697 | | Notes receivable | $18,946 | $18,697 | | Other receivables | $59,900 | $56,716 | | Receivables, gross | $1,080,813 | $1,023,110 | | Allowance for credit losses | $(9,711) | $(9,673) | | Receivables, net | $1,071,102 | $1,013,437 | | Accounts receivable from related parties | $1,079 | $1,345 | Activity in Allowance for Credit Losses (Three Months Ended March 27, 2022) | Item | Amount (In thousands) | | :--- | :--- | | Balance, beginning of period | $(9,673) | | Provision charged to operating results | $(383) | | Account write-offs and recoveries | $487 | | Effect of exchange rate | $(142) | | Balance, end of period | $(9,711) | [6. INVENTORIES](index=16&type=section&id=6.%20INVENTORIES) Inventories (March 27, 2022 vs. December 26, 2021) | Item | March 27, 2022 (In thousands) | December 26, 2021 (In thousands) | | :--- | :--- | :--- | | Raw materials and work-in-process | $1,124,232 | $1,034,518 | | Finished products | $410,784 | $369,292 | | Operating supplies | $87,822 | $87,332 | | Maintenance materials and parts | $86,157 | $84,516 | | Total inventories | $1,708,995 | $1,575,658 | [7. INVESTMENTS IN SECURITIES](index=16&type=section&id=7.%20INVESTMENTS%20IN%20SECURITIES) Investments in Available-for-Sale Securities (March 27, 2022 vs. December 26, 2021) | Item | March 27, 2022 Cost (In thousands) | March 27, 2022 Fair Value (In thousands) | December 26, 2021 Cost (In thousands) | December 26, 2021 Fair Value (In thousands) | | :--- | :--- | :--- | :--- | :--- | | Fixed income securities (Cash equivalents) | $29,048 | $29,048 | $48,851 | $48,851 | - Gross realized gains on available-for-sale securities were immaterial for the three months ended March 27, 2022, and March 28, 2021[71](index=71&type=chunk) [8. GOODWILL AND INTANGIBLE ASSETS](index=16&type=section&id=8.%20GOODWILL%20AND%20INTANGIBLE%20ASSETS) Goodwill by Segment (March 27, 2022 vs. December 26, 2021) | Segment | December 26, 2021 (In thousands) | Additions (In thousands) | Currency Translation (In thousands) | March 27, 2022 (In thousands) | | :--- | :--- | :--- | :--- | :--- | | U.S. | $41,936 | — | — | $41,936 | | U.K. and Europe | $1,167,512 | $4,570 | $(21,722) | $1,150,360 | | Mexico | $127,804 | — | — | $127,804 | | Total | $1,337,252 | $4,570 | $(21,722) | $1,320,100 | - Additions to goodwill primarily reflect working capital adjustments from prior year business acquisitions[72](index=72&type=chunk) Intangible Assets, Net (March 27, 2022 vs. December 26, 2021) | Item | December 26, 2021 (In thousands) | Additions (In thousands) | Amortization (In thousands) | Currency Translation (In thousands) | March 27, 2022 (In thousands) | | :--- | :--- | :--- | :--- | :--- | :--- | | Trade names not subject to amortization | $609,713 | — | — | $(6,939) | $602,774 | | Trade names subject to amortization | $114,268 | — | $(1,076) | $(4,578) | $109,690 | | Customer relationships | $455,459 | — | $(7,622) | $(5,738) | $449,721 | | Non-compete agreements | $320 | — | — | — | $320 | | Accumulated amortization | $(216,517) | — | $(8,698) | $1,274 | $(223,941) | | Intangible assets, net | $963,243 | — | $(8,698) | $(15,981) | $938,564 | - Intangible assets are amortized over estimated useful lives: Customer relationships (3-18 years), Trade names subject to amortization (15-20 years), and Non-compete agreements (3 years)[73](index=73&type=chunk) [9. PROPERTY, PLANT AND EQUIPMENT](index=17&type=section&id=9.%20PROPERTY,%20PLANT%20AND%20EQUIPMENT) Property, Plant and Equipment, Net (March 27, 2022 vs. December 26, 2021) | Item | March 27, 2022 (In thousands) | December 26, 2021 (In thousands) | | :--- | :--- | :--- | | Land | $262,409 | $260,079 | | Buildings | $2,051,418 | $2,043,034 | | Machinery and equipment | $3,608,105 | $3,594,482 | | Autos and trucks | $76,700 | $76,710 | | Finance leases | $5,710 | $5,710 | | Construction-in-progress | $236,304 | $229,837 | | PP&E, gross | $6,240,646 | $6,209,852 | | Accumulated depreciation | $(3,350,630) | $(3,292,046) | | PP&E, net | $2,890,016 | $2,917,806 | - Depreciation expense was **$93.4 million** for the three months ended March 27, 2022, up from $80.7 million in the prior year period[74](index=74&type=chunk) - Capital expenditures totaled **$81.6 million** in Q1 2022, primarily for efficiency improvements and cost reduction, with $73.8 million of completed projects transferred from construction-in-progress[75](index=75&type=chunk) - The Company recognized an additional impairment loss of **$0.2 million** due to tornado damage to two hatcheries and a feed mill in Mayfield, Kentucky, in December 2021[77](index=77&type=chunk) [10. CURRENT LIABILITIES](index=18&type=section&id=10.%20CURRENT%20LIABILITIES) Current Liabilities (March 27, 2022 vs. December 26, 2021) | Item | March 27, 2022 (In thousands) | December 26, 2021 (In thousands) | | :--- | :--- | :--- | | Total accounts payable | $1,440,802 | $1,378,077 | | Accounts payable to related parties | $8,044 | $22,317 | | Revenue contract liabilities | $21,522 | $22,321 | | Accrued expenses and other current liabilities | $815,259 | $859,885 | | Total | $2,285,627 | $2,282,600 | - Accrued expenses and other current liabilities include significant amounts for compensation and benefits (**$184.4 million**), current maturities of operating lease liabilities (**$79.1 million**), taxes (**$77.2 million**), insurance and self-insured claims (**$73.3 million**), litigation settlements (**$69.0 million**), and derivative liabilities (**$56.4 million**) as of March 27, 2022[79](index=79&type=chunk) [11. INCOME TAXES](index=19&type=section&id=11.%20INCOME%20TAXES) Income Tax Expense and Effective Tax Rate (Three Months Ended March 27, 2022 vs. March 28, 2021) | Item | March 27, 2022 (In thousands) | March 28, 2021 (In thousands) | | :--- | :--- | :--- | | Income tax expense | $75,219 | $35,358 | | Effective tax rate | 21.1% | 26.0% | - The increase in income tax expense in Q1 2022 was primarily due to an **increase in profit before income taxes**[80](index=80&type=chunk) - As of March 27, 2022, the Company did not believe it had sufficient positive evidence to conclude that realization of a portion of its foreign net deferred tax assets are more likely than not to be realized[81](index=81&type=chunk) [12. DEBT](index=19&type=section&id=12.%20DEBT) Long-term Debt and Other Borrowing Arrangements (March 27, 2022 vs. December 26, 2021) | Item | Maturity | March 27, 2022 (In thousands) | December 26, 2021 (In thousands) | | :--- | :--- | :--- | :--- | | Senior notes payable at 3.50% | 2032 | $900,000 | $900,000 | | Senior notes payable, net of discount, at 4.25% | 2031 | $990,941 | $990,691 | | Senior notes payable, net of discount, at 5.875% | 2027 | $846,045 | $845,866 | | Term note payable at 2.09% (U.S. Credit Facility) | 2026 | $692,812 | $506,250 | | Pilgrim's Pride Limited Bank of Ireland Invoice Discounting Facility | 2022 | $9,911 | — | | Finance lease obligations | Various | $4,320 | $4,548 | | Long-term debt | | $3,444,029 | $3,247,358 | | Less: Current maturities of long-term debt | | $(36,162) | $(26,246) | | Long-term debt, less current maturities, net of capitalized financing costs | | $3,377,893 | $3,191,161 | - The Company has an **$800.0 million revolving credit commitment** and a **$700.0 million term loan commitment** under the U.S. Credit Facility, maturing on August 9, 2026[93](index=93&type=chunk)[95](index=95&type=chunk) - As of March 27, 2022, **$692.8 million** was outstanding under the term loan, and **$763.9 million** was available under the revolving credit commitment[93](index=93&type=chunk)[95](index=95&type=chunk) - The U.S. Credit Facility is secured by first priority liens on substantially all present and future personal property and assets of the Company and its guarantors[98](index=98&type=chunk) [13. STOCKHOLDERS' EQUITY](index=22&type=section&id=13.%20STOCKHOLDERS'%20EQUITY) Changes in Accumulated Other Comprehensive Income (Loss) (Three Months Ended March 27, 2022 vs. March 28, 2021) | Item | March 27, 2022 (In thousands) | March 28, 2021 (In thousands) | | :--- | :--- | :--- | | Balance, beginning of period | $(47,997) | $(20,620) | | Other comprehensive income before reclassifications | $(51,200) | $57,651 | | Amounts reclassified from accumulated other comprehensive income to net income | $290 | $236 | | Currency translation | $5 | $12 | | Net current period other comprehensive income (loss) | $(50,905) | $57,899 | | Balance, end of period | $(98,902) | $37,279 | - On March 8, 2022, the Board approved a **$200.0 million share repurchase authorization**[110](index=110&type=chunk) - As of March 27, 2022, the Company repurchased approximately **1.2 million shares for $27.0 million**[110](index=110&type=chunk) - Both the U.S. Credit Facility and senior notes indentures restrict, but do not prohibit, dividend declarations[111](index=111&type=chunk) [14. PENSION AND OTHER POSTRETIREMENT BENEFITS](index=23&type=section&id=14.%20PENSION%20AND%20OTHER%20POSTRETIREMENT%20BENEFITS) - Total expenses for all retirement plans were **$6.4 million** for the three months ended March 27, 2022, up from $5.3 million in the prior year period[113](index=113&type=chunk) Defined Benefit Plans - Funded Status (March 27, 2022 vs. December 26, 2021) | Item | March 27, 2022 (In thousands) | December 26, 2021 (In thousands) | | :--- | :--- | :--- | | Unfunded benefit obligation, end of period (Pension Benefits) | $(34,134) | $(46,653) | | Unfunded benefit obligation, end of period (Other Benefits) | $(1,268) | $(1,346) | | Recognized liability (Pension Benefits) | $(34,134) | $(46,653) | | Recognized liability (Other Benefits) | $(1,268) | $(1,346) | - The accumulated benefit obligation for defined benefit pension plans was **$340.8 million** at March 27, 2022, with all plans having obligations exceeding plan assets[115](index=115&type=chunk) - The Company anticipates contributing **$4.2 million** to its pension plans and **$0.2 million** to other postretirement plans during the remainder of 2022[133](index=133&type=chunk) - The Company's expenses related to its defined contribution plans totaled **$5.5 million** in Q1 2022, up from $4.6 million in Q1 2021[139](index=139&type=chunk) [15. FAIR VALUE MEASUREMENT](index=30&type=section&id=15.%20FAIR%20VALUE%20MEASUREMENT) Fair Value Measurements of Financial Instruments (March 27, 2022 vs. December 26, 2021) | Item | March 27, 2022 Level 1 (In thousands) | March 27, 2022 Level 2 (In thousands) | March 27, 2022 Total (In thousands) | December 26, 2021 Level 1 (In thousands) | December 26, 2021 Level 2 (In thousands) | December 26, 2021 Total (In thousands) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Assets:** | | | | | | | | Commodity derivative assets | $37,563 | — | $37,563 | $17,567 | — | $17,567 | | Foreign currency derivative assets | $768 | — | $768 | $518 | — | $518 | | **Liabilities:** | | | | | | | | Commodity derivative liabilities | $(22,860) | — | $(22,860) | $(14,119) | — | $(14,119) | | Foreign currency derivative liabilities | $(12,197) | — | $(12,197) | $(4,958) | — | $(4,958) | | Interest rate swap derivative liabilities | — | — | — | — | $(98) | $(98) | | Sales contract derivative liabilities | — | $(21,357) | $(21,357) | — | $(12,691) | $(12,691) | Carrying Amounts and Estimated Fair Values of Fixed-Rate Debt (March 27, 2022 vs. December 26, 2021) | Item | March 27, 2022 Carrying Amount (In thousands) | March 27, 2022 Fair Value (In thousands) | December 26, 2021 Carrying Amount (In thousands) | December 26, 2021 Fair Value (In thousands) | | :--- | :--- | :--- | :--- | :--- | | Fixed-rate senior notes payable at 3.50% | $(900,000) | $(782,721) | $(900,000) | $(915,120) | | Fixed-rate senior notes payable at 4.25% | $(990,941) | $(913,380) | $(990,691) | $(1,055,140) | | Fixed-rate senior notes payable at 5.875% | $(846,045) | $(853,562) | $(845,866) | $(900,193) | | Secured loans | — | — | $(3) | $(3) | [16. RELATED PARTY TRANSACTIONS](index=31&type=section&id=16.%20RELATED%20PARTY%20TRANSACTIONS) Sales to Related Parties (Three Months Ended March 27, 2022 vs. March 28, 2021) | Related Party | March 27, 2022 (In thousands) | March 28, 2021 (In thousands) | | :--- | :--- | :--- | | JBS USA Food Company | $4,611 | $3,065 | | Combo, Mercado de Congelados | $683 | $451 | | JBS Australia Pty. Ltd. | $532 | $883 | | JBS Chile Ltda. | $52 | $88 | | Total sales to related parties | $5,878 | $4,487 | Cost of Goods Purchased from Related Parties (Three Months Ended March 27, 2022 vs. March 28, 2021) | Related Party | March 27, 2022 (In thousands) | March 28, 2021 (In thousands) | | :--- | :--- | :--- | | JBS USA Food Company | $61,903 | $56,249 | | Penasul UK LTD | $3,540 | $2,318 | | JBS Asia Co Limited | $2,124 | $5 | | Seara Meats B.V. | $1,468 | $1,701 | | JBS Food Trading (Shanghai) Limited | $47 | — | | Vivera B.V. | $15 | — | | JBS Global (U.K.) Ltd. | — | $369 | | Total cost of goods purchased from related parties | $69,097 | $60,642 | Accounts Receivable from Related Parties (March 27, 2022 vs. December 26, 2021) | Related Party | March 27, 2022 (In thousands) | December 26, 2021 (In thousands) | | :--- | :--- | :--- | | JBS USA Food Company | $778 | $1,059 | | JBS Australia Pty. Ltd. | $245 | $200 | | JBS Chile Ltda. | $53 | $2 | | Combo, Mercado de Congelados | $3 | $84 | | Total accounts receivable from related parties | $1,079 | $1,345 | Accounts Payable to Related Parties (March 27, 2022 vs. December 26, 2021) | Related Party | March 27, 2022 (In thousands) | December 26, 2021 (In thousands) | | :--- | :--- | :--- | | JBS USA Food Company | $3,249 | $21,628 | | Penasul UK LTD | $2,244 | $147 | | JBS Asia Co Limited | $2,087 | — | | Seara Meats B.V. | $464 | $534 | | JBS Chile Ltda. | — | $8 | | Total accounts payable to related parties | $8,044 | $22,317 | [17. REPORTABLE SEGMENTS](index=32&type=section&id=17.%20REPORTABLE%20SEGMENTS) - Pilgrim's operates in three reportable segments: U.S., U.K. and Europe, and Mexico[153](index=153&type=chunk) - Segment profit is measured as operating income, with corporate expenses allocated based on specific expenditures[153](index=153&type=chunk) Net Sales by Reportable Segment (Three Months Ended March 27, 2022 vs. March 28, 2021) | Segment | March 27, 2022 (In thousands) | March 28, 2021 (In thousands) | | :--- | :--- | :--- | | U.S. | $2,581,208 | $1,999,559 | | U.K. and Europe | $1,191,982 | $854,734 | | Mexico | $467,205 | $419,132 | | Total | $4,240,395 | $3,273,425 | Reportable Segment Profit (Loss) (Three Months Ended March 27, 2022 vs. March 28, 2021) | Segment | March 27, 2022 (In thousands) | March 28, 2021 (In thousands) | | :--- | :--- | :--- | | U.S. | $355,075 | $68,125 | | U.K. and Europe | $(21,640) | $10,495 | | Mexico | $68,564 | $79,830 | | Total operating income | $402,013 | $158,464 | Total Assets by Reportable Segment (March 27, 2022 vs. December 26, 2021) | Segment | March 27, 2022 (In thousands) | December 26, 2021 (In thousands) | | :--- | :--- | :--- | | U.S. | $6,761,031 | $6,390,845 | | U.K. and Europe | $4,237,911 | $4,292,558 | | Mexico | $1,235,773 | $1,146,204 | | Eliminations | $(2,916,848) | $(2,916,402) | | Total assets | $9,317,867 | $8,913,205 | [18. COMMITMENTS AND CONTINGENCIES](index=34&type=section&id=18.%20COMMITMENTS%20AND%20CONTINGENCIES) - Pilgrim's is involved in various legal proceedings, including the In re Broiler Chicken Antitrust Litigation, where it has reached settlements with multiple plaintiff classes totaling **$195.5 million**[165](index=165&type=chunk)[167](index=167&type=chunk)[168](index=168&type=chunk) - The Company continues to litigate against Opt Outs in the Broilers Litigation and has recognized an expense of **$489.8 million** for negotiated and potential settlements[169](index=169&type=chunk) - Pilgrim's is cooperating with DOJ investigations into antitrust matters, including a **$107.9 million fine** for conspiracy in restraint of competition related to broiler chicken sales, and a new civil investigation into human resources antitrust matters[183](index=183&type=chunk)[186](index=186&type=chunk)[187](index=187&type=chunk)[190](index=190&type=chunk) - The Company faces ongoing litigation related to broiler chicken farmers, stockholder derivative actions, and class action lawsuits regarding Plant Workers' compensation, with a **$29.0 million settlement** reached for Plant Workers[177](index=177&type=chunk)[178](index=178&type=chunk)[180](index=180&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=39&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The company analyzes its Q1 2022 financial performance, highlighting sales growth, inflationary pressures, and segment results [Executive Summary](index=39&type=section&id=Executive%20Summary) Key Financial Highlights (Three Months Ended March 27, 2022) | Metric | Amount (In millions) | | :--- | :--- | | Net income attributable to Pilgrim's | $280.4 | | Income before tax | $355.8 | | Net sales | $4,200.0 | | Gross profit | $500.0 | | Cash provided by operating activities | $227.0 | | Consolidated operating margin | 9.5% | | U.S. operating margin | 13.8% | | U.K. and Europe operating margin | (1.8)% | | Mexico operating margin | 14.7% | | EBITDA | $492.9 | | Adjusted EBITDA | $501.8 | - The company experienced solid volume recoveries in Q1 2022 due to easing COVID-19 restrictions but faced **significant inflation** in commodity, labor, and other operating costs, exacerbated by the Russia-Ukraine war[193](index=193&type=chunk) - JBS withdrew its unsolicited proposal to acquire all outstanding shares of PPC common stock not already owned by JBS on February 17, 2022, after the Special Committee deemed the revised offer of **$28.50 per share insufficient**[195](index=195&type=chunk) - The company continues to implement COVID-19 safety measures, all production facilities remain operational, and demand for products has returned to pre-pandemic levels[197](index=197&type=chunk) [Raw Materials and Pricing](index=40&type=section&id=Raw%20Materials%20and%20Pricing) - U.S. and Mexico segments primarily use corn and soybean meal for feed, while the U.K. and Europe segment uses wheat, soybean meal, and barley[199](index=199&type=chunk) - U.S. chicken market prices remained high in Q1 2022 due to **sustained demand**, mild production growth, and low cold storage stocks, despite increased industry production[200](index=200&type=chunk) - The U.K. chicken market faced **unprecedented cost increases** in feed, utilities, and labor, partially offset by customer negotiations and foodservice recovery[201](index=201&type=chunk) - Mexico chicken commodity prices increased due to demand outpacing supply, with higher input costs for feed[202](index=202&type=chunk) - U.K. pork product market prices remained low in Q1 2022 due to excess EU supply, though German prices increased by over **50%** late in the quarter[204](index=204&type=chunk) [Results of Operations](index=41&type=section&id=Results%20of%20Operations) Net Sales by Segment (Three Months Ended March 27, 2022 vs. March 28, 2021) | Segment | March 27, 2022 (In thousands) | March 28, 2021 (In thousands) | Change Amount (In thousands) | Change Percent | | :--- | :--- | :--- | :--- | :--- | | U.S. | $2,581,208 | $1,999,559 | $581,649 | 29.1% | | U.K. and Europe | $1,191,982 | $854,734 | $337,248 | 39.5% | | Mexico | $467,205 | $419,131 | $48,073 | 11.5% | | Total net sales | $4,240,395 | $3,273,425 | $966,970 | 29.5% | - U.S. net sales increased by **29.1%** primarily due to a **29.2 percentage point increase** in net sales per pound, driven by higher chicken commodity prices[207](index=207&type=chunk) - U.K. and Europe net sales increased by **39.5%**, with **$260.7 million** from the PFM acquisition and **$76.5 million** from existing businesses, driven by price increases to offset inflation[208](index=208&type=chunk) - Mexico net sales increased by **11.5%**, mainly due to a **9.9 percentage point increase** in net sales per pound from higher chicken commodity prices and a **2.9 percentage point increase** in sales volume[209](index=209&type=chunk) Gross Profit and Cost of Sales (Three Months Ended March 27, 2022 vs. March 28, 2021) | Item | March 27, 2022 (In thousands) | March 28, 2021 (In thousands) | Change Amount (In thousands) | Change Percent | | :--- | :--- | :--- | :--- | :--- | | Gross profit | $541,980 | $261,243 | $280,737 | 107.5% | | Cost of sales | $3,698,415 | $3,012,182 | $686,233 | 22.8% | - U.S. cost of sales increased by **15.7%** due to higher cost per pound sold, including a **$94.3 million increase** in feed costs and a **$22.6 million increase** in chick costs[211](index=211&type=chunk) - U.K. and Europe cost of sales increased by **41.1%** due to PFM acquisition costs and inflation in feed ingredients, utilities, and labor in existing operations[212](index=212&type=chunk) - Mexico cost of sales increased by **17.6%** due to higher input costs (feed ingredients) and an unfavorable product mix, partially offset by favorable foreign currency remeasurement[213](index=213&type=chunk) Operating Income and SG&A Expense (Three Months Ended March 27, 2022 vs. March 28, 2021) | Item | March 27, 2022 (In thousands) | March 28, 2021 (In thousands) | Change Amount (In thousands) | Change Percent | | :--- | :--- | :--- | :--- | :--- | | Operating income | $402,013 | $158,464 | $243,549 | 153.7% | | SG&A expense | $139,967 | $102,779 | $37,188 | 36.2% | - U.S. operating income increased by **421.2% to $355.1 million**, while U.K. and Europe operating income decreased by **306.2% to a loss of $(21.6) million**[215](index=215&type=chunk) - U.K. and Europe SG&A expense increased by **122.3%** primarily due to the PFM acquisition[218](index=218&type=chunk) - Net interest expense increased to **$35.0 million** in Q1 2022 from $28.0 million in Q1 2021, driven by a **$1.0 billion increase** in average borrowings to $3.38 billion, primarily for the PFM acquisition[220](index=220&type=chunk) - Income tax expense increased to **$75.2 million (21.1% effective tax rate)** in Q1 2022 from $35.4 million (26.0% effective tax rate) in Q1 2021, mainly due to increased profit before taxes[221](index=221&type=chunk) [Liquidity and Capital Resources](index=44&type=section&id=Liquidity%20and%20Capital%20Resources) Available Sources of Liquidity (As of March 27, 2022) | Source of Liquidity | Facility Amount (In millions) | Amount Outstanding (In millions) | Amount Available (In millions) | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | — | — | $725.5 | | U.S. Credit Facility Revolving Note Payable | $800.0 | — | $763.9 | | U.S. Credit Facility Term Loans | $700.0 | $692.8 | $7.2 | | Mexico Credit Facility | $74.9 | — | $74.9 | | U.K. and Europe Credit Facilities | $131.8 | — | $131.8 | - The Company expects cash flows from operations and available credit facilities to provide sufficient liquidity for current obligations, working capital, debt maturities, and capital spending for at least the next twelve months[225](index=225&type=chunk) - A Mexican subsidiary received an observation letter from the Mexican Tax Authority regarding a withholding tax liability from a 2015 acquisition; the company plans to appeal any formal assessment[226](index=226&type=chunk) Cash Flows from Operating Activities (Three Months Ended March 27, 2022 vs. March 28, 2021) | Item | March 27, 2022 (In millions) | March 28, 2021 (In millions) | | :--- | :--- | :--- | | Net income | $280.6 | $100.5 | | Net noncash expenses | $85.8 | $100.0 | | Changes in operating assets and liabilities | $(139.4) | $(333.9) | | Cash provided by (used in) operating activities | $227.0 | $(143.6) | - Net noncash expenses for Q1 2022 included **$102.1 million** in depreciation and amortization, **$2.0 million** in stock-based compensation, and a **$21.9 million** deferred income tax benefit[228](index=228&type=chunk) - Changes in operating assets and liabilities resulted in a **$66.7 million use of cash** from trade accounts and other receivables (due to increased sales) and a **$146.0 million use of cash** from inventories (due to increased raw material costs) in Q1 2022[231](index=231&type=chunk)[232](index=232&type=chunk) Cash Flows from Investing Activities (Three Months Ended March 27, 2022 vs. March 28, 2021) | Item | March 27, 2022 (In millions) | March 28, 2021 (In millions) | | :--- | :--- | :--- | | Acquisitions of property, plant and equipment | $(81.6) | $(102.2) | | Purchase of acquired businesses, net of cash acquired | $(4.8) | — | | Proceeds from property disposals | $0.8 | $13.1 | | Cash used in investing activities | $(85.6) | $(89.1) | Cash Flows from Financing Activities (Three Months Ended March 27, 2022 vs. March 28, 2021) | Item | March 27, 2022 (In millions) | March 28, 2021 (In millions) | | :--- | :--- | :--- | | Proceeds from revolving line of credit and long-term borrowings | $228.5 | $328.9 | | Payments on revolving line of credit, long-term borrowings and finance lease obligations | $(32.1) | $(235.3) | | Purchase of common stock under share repurchase program | $(27.0) | — | | Distribution from Tax Sharing Agreement with JBS USA Holdings | $(2.0) | $(0.7) | | Payments of capitalized loan costs | $(1.1) | — | | Cash provided by financing activities | $166.3 | $92.9 | [Reconciliation of Net Income to EBITDA and Adjusted EBITDA](index=46&type=section&id=Reconciliation%20of%20Net%20Income%20to%20EBITDA%20and%20Adjusted%20EBITDA) Reconciliation of Net Income to EBITDA and Adjusted EBITDA (Three Months Ended March 27, 2022) | Item | Amount (In thousands) | | :--- | :--- | | Net income | $280,560 | | Add: Interest expense, net | $35,022 | | Add: Income tax expense | $75,219 | | Add: Depreciation and amortization | $102,142 | | **EBITDA** | **$492,943** | | Add: Foreign currency transaction losses | $11,536 | | Add: Transaction costs related to business acquisitions | $717 | | Add: Litigation settlements | $500 | | Minus: Insurance recoveries for Mayfield tornado losses | $3,815 | | Minus: Net income attributable to noncontrolling interest | $122 | | **Adjusted EBITDA** | **$501,759** | [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=48&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company details its exposure to market risks, including commodity prices, foreign currency exchange rates, and interest rates [Commodity Prices](index=48&type=section&id=Commodity%20Prices) - Pilgrim's is exposed to price fluctuations in feed ingredients (corn, soybean meal, soybean oil, wheat) and uses derivative financial instruments to mitigate this risk[247](index=247&type=chunk) Impact of Hypothetical 10% Increase in Feed Ingredient Prices (Three Months Ended March 27, 2022) | Item | Amount (In thousands) | Impact of 10% Increase (In thousands) | | :--- | :--- | :--- | | Feed purchases | $1,084,386 | $108,439 | | Feed inventory | $245,330 | $24,533 | | Net commodity derivative assets | $44,961 | $4,496 | [Interest Rates](index=48&type=section&id=Interest%20Rates) - A hypothetical **10% increase** in interest rates would decrease the fair value of fixed-rate debt by **$79.8 million** as of March 27, 2022[252](index=252&type=chunk) - Variable-rate debt constitutes approximately **20.3%** of total debt[253](index=253&type=chunk) - A **25 basis point increase** in interest rates would increase interest expense by **$0.4 million** for the three months ended March 27, 2022[253](index=253&type=chunk) [Foreign Currency](index=49&type=section&id=Foreign%20Currency) - The Company is exposed to foreign exchange rate fluctuations, particularly for the Mexican peso and British pound/euro, managing this by minimizing net monetary positions and using foreign currency forward contracts[255](index=255&type=chunk)[258](index=258&type=chunk)[260](index=260&type=chunk) Impact of Hypothetical 10% Change in Mexican Peso Exchange Rate (Three Months Ended March 27, 2022) | Item | Impact of 10% Deterioration (In thousands) | Impact of 10% Appreciation (In thousands) | | :--- | :--- | :--- | | Foreign currency remeasurement gain (loss) | $(4,124) | $5,041 | | Exchange rate of Mexican peso to the U.S. dollar (as reported) | 20.03 | 20.03 | | Exchange rate of Mexican peso to the U.S. dollar (hypothetical 10% change) | 22.04 | 18.03 | - A **10% weakening** of the U.S. dollar against the British pound would decrease the net assets of U.K. and Europe subsidiaries by **$260.5 million**, while a **10% strengthening** would increase them by **$318.3 million**[259](index=259&type=chunk) [Impact of Inflation](index=49&type=section&id=Impact%20of%20Inflation) - The U.S., Mexico, and most of Europe are experiencing pronounced inflation[262](index=262&type=chunk) - Pilgrim's is responding by negotiating with customers to recoup costs and focusing on operational initiatives to improve labor efficiencies, agricultural performance, and yields[262](index=262&type=chunk) [Forward Looking Statements](index=50&type=section&id=Forward%20Looking%20Statements) The company outlines various forward-looking statements, emphasizing that actual results may differ due to numerous risks and uncertainties - Forward-looking statements are subject to risks including the impact of COVID-19, commodity price fluctuations, supply chain disruptions, disease outbreaks, regulatory changes, competitive pressures, currency fluctuations, international market disruptions (e.g., Russia-Ukraine war), cyber-attacks, and litigation uncertainties[264](index=264&type=chunk)[267](index=267&type=chunk) - The Company does not undertake any obligation to update or address factors in future filings or communications[266](index=266&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=53&type=section&id=Item%201.%20Legal%20Proceedings) This section references Note 18 for detailed information on the company's ongoing legal proceedings and claims - Information on legal proceedings is incorporated by reference from Note 18, 'Commitments and Contingencies,' in Part I, Item 1 of this quarterly report[273](index=273&type=chunk) [Item 1A. Risk Factors](index=53&type=section&id=Item%201A.%20Risk%20Factors) The company updates its risk factors, highlighting new risks related to the Russia-Ukraine war's impact on operations - The ongoing Russia-Ukraine war poses significant risks, including **higher prices for commodities**, increased inflation, and disrupted trade and supply chains due to supply disruptions from the Black Sea region[275](index=275&type=chunk)[276](index=276&type=chunk) - Sanctions and export controls imposed by governments against Russia and Belarus could adversely affect the Company's business, supply chain, or customers, and there is an **increased risk of cyberattack**[277](index=277&type=chunk)[278](index=278&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=53&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company details its $200 million share repurchase plan, including shares repurchased during the quarter - On March 8, 2022, the Board of Directors approved a **$200.0 million share repurchase plan** with no termination date[279](index=279&type=chunk) Issuer Purchases of Equity Securities (Three Months Ended March 27, 2022) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of the Shares That May Yet Be Purchased Under the Plans or Programs | | :--- | :--- | :--- | :--- | :--- | | December 27, 2021 through January 23, 2022 | — | $— | — | $— | | January 24, 2022 through February 27, 2022 | — | $— | — | $— | | February 28, 2022 through March 27, 2022 | 1,158,452 | $23.3269 | 1,158,452 | $172,976,935 | | Total | 1,158,452 | $23.3269 | 1,158,452 | $172,976,935 | [Item 6. Exhibits](index=54&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications and corporate governance documents - Exhibits include the Cover Page Interactive Data File (Inline XBRL), Amended and Restated Certificate of Incorporation, Amended and Restated Corporate Bylaws, and Certifications of Principal Executive and Financial Officers pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[284](index=284&type=chunk)[286](index=286&type=chunk) [SIGNATURES](index=55&type=section&id=SIGNATURES) This section contains the required signatures for the Form 10-Q report, duly authorized by Pilgrim's Pride Corporation - The report is signed by Matthew Galvanoni, Chief Financial Officer and Chief Accounting Officer, on behalf of Pilgrim's Pride Corporation, dated April 27, 2022[288](index=288&type=chunk)[289](index=289&type=chunk)[290](index=290&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 26, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File number 1-9273 PILGRIM'S PRIDE CORPORATION Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the ...

Pilgrim's Pride Corporation (NASDAQ:PPC) Q4 2021 Earnings Conference Call February 10, 2022 9:00 AM ET Company Participants Matt Galvanoni – Chief Financial Officer Fabio Sandri – President and Global Chief Executive Officer Conference Call Participants Operator Good morning and welcome to the Fourth Quarter and Fiscal Year 2021 Pilgrim's Pride Earnings Conference Call and Webcast. All participants will be in listen-only mode. [Operator Instructions] Please note that the slides referenced during today's cal ...

Pilgrims Pride Corp (NASDAQ:PPC) Q3 2021 Earnings Conference Call October 28, 2021 9:00 AM ET Company Participants Matthew Galvanoni - SVP & CFO Fabio Sandri - President & CEO Conference Call Participants Operator Good morning, and welcome to the Third Quarter 2021 Pilgrim's Pride Earnings Conference Call and Webcast. [Operator Instructions]. Please note that the slides referenced during today's call are available for download from the company's investor website at ir.pilgrims.com in the Events and Presenta ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q | | | For the quarterly period ended September 26, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission File number 1-9273 PILGRIM'S PRIDE CORPORATION (Exact name of registrant as specified in its charter) Delaware 75-1285071 (State or other jurisdiction of incorporation or organization) 1770 Promontory Circle 80634-9038 ...