PILGRIM'S PRIDE CORPORATION REPORTS FINANCIAL RESULTS
FOR THIRD QUARTER OF FISCAL 2006
PITTSBURG, Texas, August 1, 2006 - Pilgrim's Pride Corporation (NYSE: PPC) today reported a net loss of $20.5 million, or $0.31 per share, on total sales of $1.29 billion for the third quarter ended July 1, 2006. For the third quarter of fiscal 2005, the Company reported net earnings of $85.4 million, or $1.28 per share, on total sales of $1.44 billion.
“Despite recent upward trends in pricing for breast meat and leg quarters, our third-quarter results continued to reflect the challenging protein environment seen in the first half of the fiscal year,” said O.B. Goolsby, Jr., Pilgrim’s Pride president and chief executive officer. “Our net loss for the third quarter of 2006 was largely due to weak pricing caused by the lingering effects of lower export demand and higher inventory levels last winter and in the early spring. We are hopeful that the recent increases in leg quarter and breast meat prices will continue as international demand for U.S. chicken products improves and the full effect of the recently announced industry production cutbacks are realized in the marketplace.”
For the full third quarter, pricing for leg quarters and breast meat increased 118.8% and 36.2%, respectively, when compared to the second quarter, but were an average of 34.2% and 16.6% lower than the year-ago period.
In the third quarter, Pilgrim’s Pride initiated a multi-point plan designed to improve the Company’s competitive position. This plan included production cuts, which had been fully implemented by the end of July, as well as a reduction in capital investment and a sharpened focus on cost reductions and improved efficiencies.
“We are pleased with the progress we have achieved on our strategic plan. Operating efficiently has never been more important than it is in the current industry environment. We believe the combination of stronger domestic and export selling prices, resumption of demand for our products in the export markets, and improved operating efficiencies should position Pilgrim’s Pride for a return to profitability,” Goolsby said.
For the nine months ended July 1, 2006, the Company reported a net loss of $26.7 million, or $0.40 per share, on total sales of $3.90 billion. For the first nine months of fiscal 2005, Pilgrim’s Pride reported net earnings of $190.3 million, or $2.86 per share, on sales of $4.18 billion.
Conference Call Information
A conference call to discuss the Company's third-quarter results will be held at 10 a.m. CDT (11 a.m. EDT) on August 1, 2006. To listen live via telephone, call (800) 391-2548, verbal pass code Pilgrim’s Pride or VG495227. The call will also be webcast live on the Internet at http://www.videonewswire.com/event.asp?id=34647. (Please copy and paste the link into the browser).
Additionally, the Company has posted a slide presentation on its website at http://www.pilgrimspride.com, which may be viewed by listeners in connection with today’s conference call. The webcast will be available for replay within two hours of the conclusion of the call. A telephone replay will be available beginning at 2:00 p.m. CST on August 1 through August 8, 2006, at (800) 355-2355 pass code 495227#.
Pilgrim's Pride Corporation is the second-largest chicken producer in the United States and Mexico and the largest chicken producer in Puerto Rico. Pilgrim's Pride employs approximately 40,000 people and has major operations in Texas, Alabama, Arkansas, Georgia, Kentucky, Louisiana, North Carolina, Pennsylvania, Tennessee, Virginia, West Virginia, Mexico and Puerto Rico, with other facilities in Arizona, Florida, Iowa, Mississippi and Utah.
Pilgrim's Pride products are sold to foodservice, retail and frozen entree customers. The Company's primary distribution is through retailers, foodservice distributors and restaurants throughout the United States and Puerto Rico and in the Northern and Central regions of Mexico. For more information, please visit www.pilgrimspride.com.
Forward-Looking Statements:
Statements contained in this press release that state the intentions, plans, hopes, beliefs, anticipations, expectations or predictions of the future of Pilgrim's Pride Corporation and its management, including as to changes in pricing, demand and market conditions for chicken products and profitability, are forward-looking statements. It is important to note that the actual results could differ materially from those projected in such forward-looking statements. Factors that could cause actual results to differ materially from those projected in such forward-looking statements include: matters affecting the poultry industry generally, including fluctuations in the commodity prices of feed ingredients, chicken and turkey; additional outbreaks of avian influenza or other diseases, either in our own flocks or elsewhere, affecting our ability to conduct our operations and/or demand for our poultry products; contamination of our products, which has recently and can in the future lead to product liability claims and product recalls; exposure to risks related to product liability, product recalls, property damage and injuries to persons, for which insurance coverage is expensive, limited and potentially inadequate; changes in laws or regulations affecting our operations or the application thereof; competitive factors and pricing pressures or the loss of one or more of our largest customers; currency exchange rate fluctuations, trade barriers, exchange controls, expropriation and other risks associated with foreign operations; management of our cash resources, particularly in light of our leverage, and restrictions imposed by and as a result of, our leverage; and the impact of uncertainties of litigation as well as other risks described under "Risk Factors" in our Annual Report on Form 10-K and subsequent filings with the Securities and Exchange Commission. Pilgrim's Pride Corporation undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
For further information:
Investor Contact:
Kathy Costner, Vice President
Pilgrim's Pride Corporation
(903) 434-1430
Media Contact:
Gary Rhodes, Vice President
Pilgrim’s Pride Corporation
(903) 434-1495
PILGRIM'S PRIDE CORPORATION
News Release
August 1, 2006
Page 3
PILGRIM'S PRIDE CORPORATION
Consolidated Statements of Income (Loss)
(Unaudited)
[In thousands, except share and per share data]
Three Months Ended | | | July 1, 2006 | | | July 2, 2005 | |
| Net Sales | | $ | 1,287,646 | | $ | 1,440,039 | |
| Cost of sales | | | 1,244,950 | | | 1,220,818 | |
| Gross profit | | | 42,696 | | | 219,221 | |
| Selling, general and administrative | | | 69,433 | | | 83,228 | |
| | | | | | | | |
| Operating income (loss) | | | (26,737 | ) | | 135,993 | |
| | | | | | | | |
| Other Expense (Income): | | | | | | | |
| Interest expense | | | 12,736 | | | 13,602 | |
| Interest income | | | (1,268 | ) | | (1,280 | ) |
| Foreign exchange loss (gain) | | | 1,822 | | | (94 | ) |
| Miscellaneous, net | | | (2,053 | ) | | 88 | |
| Total other expenses, net | | | 11,237 | | | 12,316 | |
| | | | | | | | |
| Income (loss) before income taxes | | | (37,974 | ) | | 123,677 | |
| Income tax (benefit) expense | | | (17,501 | ) | | 38,324 | |
| Net income (loss) | | $ | (20,473 | ) | $ | 85,353 | |
| | | | | | | | |
| Net income (loss) per common share | | | | | | | |
| -basic and diluted | | $ | (0.31 | ) | $ | 1.28 | |
| Dividends declared per common share | | $ | 0.0225 | | $ | 0.0150 | |
| Weighted average shares outstanding | | | 66,555,733 | | | 66,555,733 | |
Nine Months Ended | | | July 1, 2006 | | | July 2, 2005 | |
| | | | | | | | |
| Net Sales | | $ | 3,897,167 | | $ | 4,183,607 | |
| Cost of sales | | | 3,698,870 | | | 3,639,213 | |
| Gross profit | | | 198,297 | | | 544,394 | |
| Selling, general and administrative | | | 216,772 | | | 228,431 | |
| | | | | | | | |
| Operating income (loss) | | | (18,475 | ) | | 315,963 | |
| | | | | | | | |
| Other Expense (Income): | | | | | | | |
| Interest expense, net | | | 38,402 | | | 37,436 | |
| Interest income | | | (8,429 | ) | | (3,572 | ) |
| Foreign exchange loss (gain) | | | 1,012 | | | (420 | ) |
| Miscellaneous, net | | | (1,025 | ) | | (11,659 | ) |
| Total other expenses, net | | | 29,960 | | | 21,785 | |
| | | | | | | | |
| Income (loss) before income taxes | | | (48,435 | ) | | 294,178 | |
| Income tax (benefit) expense | | | (21,686 | ) | | 103,928 | |
| Net income (loss) | | $ | (26,749 | ) | $ | 190,250 | |
| | | | | | | | |
| Net income (loss) per common share | | | | | | | |
| -basic and diluted | | $ | (0.40 | ) | $ | 2.86 | |
| Dividends declared per common share | | $ | 1.0675 | | $ | 0.0450 | |
| Weighted average shares outstanding | | | 66,555,733 | | | 66,555,733 | |
PILGRIM'S PRIDE CORPORATION
News Release
August 1, 2006
Page 4
PILGRIM'S PRIDE CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited)
[In thousands]
| | | July 1, 2006 | | October 1, 2005 | |
ASSETS | | | | | | | |
| Cash and cash equivalents | | $ | 44,069 | | $ | 132,567 | |
| Investments in available for sale securities | | | 54,322 | | | -- | |
| Other current assets | | | 894,231 | | | 866,848 | |
| Total Current Assets | | | 992,622 | | | 999,415 | |
| Investments in Available for Sale Securities | | | 148,123 | | | 304,593 | |
| Other Assets | | | 47,139 | | | 53,798 | |
| Property, Plant and Equipment, net | | | 1,147,687 | | | 1,154,097 | |
| | | | | | | | |
| Total Assets | | $ | 2,335,571 | | $ | 2,511,903 | |
| | | | | | | | |
LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | | |
| Current maturities of long-term debt | | $ | 7,768 | | $ | 8,603 | |
| Other current liabilities | | | 545,998 | | | 586,211 | |
| Total Current Liabilities | | | 553,766 | | | 594,814 | |
| Long-Term Debt, Less Current Maturities | | | 484,970 | | | 518,863 | |
| Deferred Income Taxes | | | 169,970 | | | 173,232 | |
| Minority Interest in Subsidiary | | | 2,004 | | | 1,396 | |
| Total Stockholders' Equity | | | 1,124,861 | | | 1,223,598 | |
| | | | | | | | |
| Total Liabilities and Stockholders’ Equity | | $ | 2,335,571 | | $ | 2,511,903 | |
| | | | | | | | |
PILGRIM'S PRIDE CORPORATION
News Release
August 1, 2006
Page 5
Selected Financial Information
(Unaudited)
(In thousands)
Note: “EBITDA” is defined as net income before interest, income taxes, and depreciation and amortization. EBITDA is presented because it is used by us and we believe it is frequently used by securities analysts, investors and other interested parties, in addition to and not in lieu of Generally Accepted Accounting Principles (GAAP) results, to compare the performance of companies. EBITDA is not a measurement of financial performance under GAAP and should not be considered as an alternative to cash flow from operating activities or as a measure of liquidity or an alternative to net income as indicators of our operating performance or any other measures of performance derived in accordance with GAAP.
EBITDA is calculated as follows:
| | | | | | | | |
Three Months Ended | | | July 1, 2006 | | | July 2, 2005 | |
| Net Income (Loss) | | $ | (20,473 | ) | $ | 85,353 | |
| Add: | | | | | | | |
| Income tax (benefit) expense | | | (17,501 | ) | | 38,324 | |
| Interest expense, net | | | 11,468 | | | 12,322 | |
| Depreciation and amortization | | | 34,960 | | | 30,421 | |
| Minus: | | | | | | | |
| Amortization of capitalized financing costs | | | 477 | | | 590 | |
| | | | | | | | |
| EBITDA | | $ | 7,977 | | $ | 165,830 | |
| | | | | | | | |
| Capital expenditures | | $ | 26,795 | | $ | 37,994 | |
| | | | | | | | |
| | | | | | |
Nine Months Ended | | | July 1, 2006 | | | July 2, 2005 | |
| | | | | | | | |
| Net Income (Loss) | | $ | (26,749 | ) | $ | 190,250 | |
| Add: | | | | | | | |
| Income tax (benefit) expense | | | (21,686 | ) | | 103,928 | |
| Interest expense, net | | | 29,973 | | | 33,864 | |
| Depreciation and amortization | | | 100,052 | | | 94,263 | |
| Minus: | | | | | | | |
| Amortization of capitalized financing costs | | | 2,034 | | | 1,740 | |
| | | | | | | | |
| EBITDA | | $ | 79,556 | | $ | 420,565 | |
| | | | | | | | |
| Capital expenditures | | $ | 101,314 | | $ | 90,148 | |
| | | | | | | | |
