Pilgrim's(US:PPC)2026-02-12 12:28Financial Performance - Pilgrim's Pride Corporation reported a net income of $1.1 billion, or $4.54 per diluted share, with a profit before tax of $1.5 billion for 2025 [134]. - Net sales increased by $0.6 billion, or 3.5%, from $17.9 billion in 2024 to $18.5 billion in 2025 [155]. - Gross profit increased by $45.4 million, or 2.0%, from $2.31 billion in 2024 to $2.36 billion in 2025 [158]. - Operating income rose by $107.5 million, or 7.1%, from $1.5 billion in 2024 to $1.6 billion in 2025 [161]. - Adjusted EBITDA for the year ended December 28, 2025, was $2,268,370, an increase from $2,213,930 in the previous year [235]. - Adjusted net income attributable to the company for the year ended December 28, 2025, was $1,233,861, compared to $1,289,485 for the previous year [237]. Sales and Revenue - U.S. net sales rose by $368.8 million, or 3.5%, primarily due to a sales volume increase of $365.2 million, or 3.4% [155]. - Europe sales increased by $242.1 million, or 4.7%, driven by a favorable foreign currency translation impact and a sales volume increase of $160.1 million, or 3.1% [156]. - Mexico sales grew by $8.3 million, or 0.4%, with a sales volume increase of $68.7 million, or 3.3%, despite a foreign currency translation loss of $106.5 million, or 5.1% [157]. Costs and Expenses - Consolidated interest expense increased by 24.6% to $110.3 million in 2025 from $88.5 million in 2024 [165]. - Consolidated income tax expense increased to $418.8 million in 2025 from $325.0 million in 2024 [166]. - U.S. operations' cost of sales increased by $298.8 million, or 3.3%, primarily due to a sales volume increase of $311.5 million [158]. - Europe operations' cost of sales increased by $211.0 million, or 4.5%, driven by a sales volume increase of $143.5 million [159]. - Mexico operations' cost of sales increased by $64.1 million, or 3.5%, due to a sales volume increase of $119.2 million [160]. - SG&A expenses for U.S. operations increased by $9.6 million, or 2.1%, primarily from higher incentive compensation and marketing costs [162]. Cash Flow and Investments - Cash provided by operating activities was $1,371.7 million in 2025, down from $1,990.1 million in 2024 [176]. - Cash used in investing activities was $705.5 million for the year ended December 28, 2025, primarily for growth projects and operational efficiencies [185]. - Payments for dividends in 2025 amounted to $1,994.3 million, related to special cash dividends paid in April and September [186]. - The company anticipates capital expenditures between $900 million and $950 million for 2026, aimed at growth and operational improvements [188]. - Cash flows from operations and credit facilities are expected to provide sufficient liquidity for current obligations and capital spending for at least the next twelve months [191]. Environmental and Community Initiatives - The company is committed to reducing its Scope 1 and Scope 2 greenhouse gas emissions intensity by 17.7% by 2025 and 30.0% by 2030 from a 2019 baseline [150]. - Pilgrim's Pride has invested $20 million in local projects to alleviate food insecurity and strengthen community infrastructure through its Hometown Strong initiative [152]. Tax and Regulatory Matters - The company identified no material tax exposure from the OECD's Pillar II global minimum tax initiative, which aims for a minimum effective tax rate of 15% [195]. - The change in income taxes represented a $35.4 million source of cash in 2025, primarily due to the timing of estimated tax payments [184]. Goodwill and Intangible Assets - As of December 31, 2023, the Pilgrim's U.K. reporting unit reported goodwill of $2.3 million, which was considered immaterial for quantitative goodwill impairment testing [210]. - Management performed quantitative goodwill impairment tests for the Moy Park, Pilgrim's Food Masters, Pilgrim's Mexico, and Pilgrim's U.S. reporting units, determining no goodwill impairment existed as of December 31, 2023 [210]. - The company assessed qualitative factors and determined no quantitative impairment tests were necessary for its goodwill as of December 28, 2025 [213]. - Identifiable intangible assets with definite lives are amortized over 15 to 20 years for trade names and three to 18 years for customer relationships, with no impairment indicators found for these assets in 2024 and 2025 [220]. Pension and Employee Benefits - The company terminated its Pilgrim's Pride Pension Plan for Legacy Gold Kist and Union Employees in 2024, settling all obligations through lump-sum payouts and annuity purchases [226]. - The termination of the pension plans was deemed a settlement, relieving the company of pension obligations and eliminating associated risks [227]. - The company liquidated all invested assets within the terminated plans, resulting in excess assets that were split between a 401(k) retirement plan and reverted to the company [226]. Market and Economic Conditions - The U.S. consumer price index inflation rose by 2.7% in the twelve months ended December 2025, impacting overall economic conditions [136]. - Commodity prices for chicken products in the U.S. moderated slightly in 2025 compared to elevated levels in 2024, reflecting increased production and improved supply chain stability [143]. - The company has experienced inflationary pressures but is negotiating with customers to recoup extraordinary costs and focusing on operational efficiencies [253]. Risk Management - The company utilizes various techniques, including purchase agreements and derivative financial instruments, to mitigate exposure to commodity price fluctuations [241]. - A 10% increase in feed ingredient purchases would have increased the cost of sales by approximately $335,731,000 for the year ended December 28, 2025 [243]. - The fair value of fixed-rate debt would decrease by $87.9 million with a hypothetical 10% increase in interest rates as of December 28, 2025 [246]. - Net assets of Mexican subsidiaries were $711.2 million as of December 28, 2025, with a 10% weakening of the peso potentially decreasing net assets by $64.7 million [248]. - Net assets of European subsidiaries were $1.1 billion as of December 28, 2025, with a 10% weakening of the British pound potentially decreasing net assets by $96.0 million [250]. - The company has engaged third-party valuation specialists to assist in fair value determination of tangible and intangible assets during business combinations [228].