Pilgrim's(PPC) - 2024 Q2 - Quarterly Results

Pilgrim's Pride Second Quarter 2024 Financial Results Financial Highlights The company reported strong Q2 2024 results with significant growth in net sales, operating income, and EPS Q2 2024 Key Financial Metrics (vs. Q2 2023) | Metric | Q2 2024 | Q2 2023 | Y/Y Change | | :--- | :--- | :--- | :--- | | Net Sales | $4,559.3 M | $4,308.1 M | +5.8% | | GAAP Operating Income | $440.8 M | $100.3 M | +339.5% | | GAAP Net Income | $326.5 M | $60.9 M | +436.1% (calculated) | | GAAP EPS | $1.37 | $0.25 | +448.0% | | Adjusted EBITDA | $655.9 M | $248.7 M | +163.7% | | Adjusted EPS | $1.67 | $0.44 | +279.5% (calculated) | Q2 2024 Adjusted EBITDA Margins by Region | Region | Adjusted EBITDA Margin | | :--- | :--- | | U.S. | 16.7% | | Europe | 7.4% | | Mexico | 19.4% | | Consolidated | 14.4% | - The company maintained a strong liquidity position with a net leverage ratio of 1.1x Adjusted EBITDA, providing a solid foundation for its growth strategy[2] Management Commentary & Business Operations Management attributes strong profitability to strategic execution and favorable market fundamentals across its diversified portfolio U.S. Operations The U.S. business benefited from a diversified portfolio, strong commodity values, and growth with Key Customers - The U.S. portfolio's diversification allowed the company to capture upside from evolving commodity market conditions[5] - Growth was driven by partnerships with Key Customers, focusing on differentiated offerings and promotional activity[2][5] - The Just Bare® brand experienced double-digit net sales growth, outpacing the category, while new Pilgrim's® brand offerings secured additional distribution[2] Europe Operations European operations saw over 40% Adjusted EBITDA growth driven by an improved consumer environment and product innovation - Adjusted EBITDA in Europe increased by over 40% compared to the prior year[2] - Performance was boosted by improved mix with Key Customers, strong growth in branded products, and continued operational excellence[2][6] - The company launched over 85 new products and its Richmond® and Fridge Raiders® brands grew by nearly double digits[2] Mexico Operations The Mexico segment improved due to a sustained balance in commodity supply and demand and growth with Key Customers - The Mexico business improved due to balanced commodity fundamentals and growth with Key Customers[2][6] - Investments to expand production are expected to further develop the company's marketplace presence and diversify its portfolio[7] Strategic Investments The company is advancing its growth strategy through key investments, including a new protein conversion plant - The ramp-up of the new protein conversion plant in South Georgia is on schedule and supports future growth with Key Customers[2][7] Financial Statements The condensed consolidated financial statements detail the company's strong financial position and performance Condensed Consolidated Balance Sheets Total assets grew to $10.08 billion, while total liabilities decreased, strengthening the stockholders' equity position Balance Sheet Summary (in thousands) | Account | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $4,512,154 | $4,204,471 | | Total Assets | $10,078,457 | $9,810,361 | | Total Current Liabilities | $2,484,345 | $2,495,867 | | Total Liabilities | $6,332,976 | $6,465,784 | | Total Stockholders' Equity | $3,745,481 | $3,344,577 | Condensed Consolidated Statements of Income For Q2 2024, the company reported a substantial increase in gross profit, operating income, and net income Income Statement Summary - Three Months Ended (in thousands) | Account | June 30, 2024 | June 25, 2023 | | :--- | :--- | :--- | | Net Sales | $4,559,314 | $4,308,091 | | Gross Profit | $691,626 | $278,425 | | Operating Income | $440,790 | $100,271 | | Net Income Attributable to PPC | $326,303 | $60,456 | Condensed Consolidated Statements of Cash Flows The company generated significantly higher cash from operations year-over-year, boosting its overall cash position Cash Flow Summary - Six Months Ended (in thousands) | Activity | June 30, 2024 | June 25, 2023 | | :--- | :--- | :--- | | Cash provided by operating activities | $989,656 | $89,341 | | Cash used in investing activities | ($208,696) | ($250,941) | | Cash provided by (used in) financing activities | ($149,686) | $500,429 | | Cash, cash equivalents and restricted cash, end of period | $1,334,126 | $777,010 | Non-GAAP Financial Measures & Reconciliations This section provides reconciliations of GAAP to non-GAAP measures used by management to analyze ongoing performance - Non-GAAP measures like Adjusted EBITDA are used by management to assess ongoing operational performance, excluding certain items not considered indicative of core business trends[19] Reconciliation of Net Income to Adjusted EBITDA - Q2 2024 (in thousands) | Line Item | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Net Income | $326,523 | $60,908 | | Interest expense, net | $15,338 | $39,524 | | Income tax expense (benefit) | $100,650 | ($15,225) | | Depreciation and amortization | $107,948 | $104,857 | | EBITDA | $550,459 | $190,064 | | Adjustments (Litigation, Restructuring, etc) | $105,700 | $59,113 | | Adjusted EBITDA | $655,939 | $248,725 | Reconciliation of GAAP EPS to Adjusted EPS - Q2 2024 | Line Item | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | GAAP EPS | $1.37 | $0.25 | | Adjustments (per share) | $0.30 | $0.19 | | Adjusted EPS | $1.67 | $0.44 | Supplementary Segment and Geographic Data The U.S. segment remains the largest contributor to sales and was the primary driver of profit growth in Q2 2024 Net Sales by Geographic Region - Q2 (in thousands) | Region | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | U.S. | $2,663,965 | $2,446,208 | | Europe | $1,301,541 | $1,310,750 | | Mexico | $593,808 | $551,133 | | Total | $4,559,314 | $4,308,091 | Operating Income by Geographic Region - Q2 (in thousands) | Region | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | U.S. | $307,988 | $37,265 | | Europe | $23,993 | $2,513 | | Mexico | $108,809 | $60,719 | | Total | $440,790 | $100,271 | Forward-Looking Statements The report contains forward-looking statements subject to risks and uncertainties detailed in SEC filings - Actual results may differ materially from forward-looking statements[11] - Key risk factors include poultry industry conditions, feed prices, avian influenza outbreaks, product liability, currency fluctuations, and litigation[11]