PPC - Earnings call transcript Q3 2017 | Pilgrim's Pride Corporation

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Operator

Good morning, and welcome to the Third Quarter 2017 Pilgrim's Pride Earnings Conference Call Webcast. [Operator Instructions]. At the company's request, this call is being recorded. Please note that the slides referenced during today's call are available for download from the Investor Relations section of the company's website at www.pilgrims.com. [Operator Instructions]. to Investor conference Relations like Winoto, to now of Director for would turn over the Dunham I Pilgrim's Pride. ahead. go Please

Dunham Winoto

the A Good we will September Lovette, release performance quarter, of release at Chief XX, providing Executive the joining for for Yesterday evening, online Fabio X-Ks our in President and have Investor Relations the results thank Sandri, overview may along with a as section website as Bill non-GAAP copy XXXX. the available any is available and press issued for this www.sec.gov. ended items review of of financial operating Presenting the reconciliation reference of These filed us and Officer. are quarter our slides Officer; Financial including third an call. to been discuss. we a we we you measures and morning, today also and Chief you our financial are during today

now XX-K differ our actual to and those statements. turn Further our factors Lovette. Before by projected filings cause information harbor disclaimer. remarks, we day release. factors safe statements like to may of certain materially contain release, to in Bill and expectations of regular call results that the anticipated as Other I'd remind concerning forward-looking everyone today's the in has this current begin those not from the like our these Today's management I'd our outlook to may of SEC. our press represent forward-looking additional call been prepared over with provided

William Lovette

us everyone. morning, Dunham, joining and Thank Thank you good all you, today. for

year consolidated ago in U.S. $XXX XXXX, quarter ago, million the year million of resulting full adjusted $X.XX a of a -- an $X.X for $XXX includes X.X% margin or GAAP, Moy were or accordance Park EBITDA XX.X% For revenues versus margin. from XX% versus billion the in billion third quarter to net which

million compared compared earnings in of the QX. they $XXX share period while year was income in $X.XX and team our to before. results appreciative million the to the same net Our a adjusted delivered in XXXX, in $X.XX members $XX were We're

created As the which short minimize more most and long the the to the mid strategy years, to designed is robust the we've of know, run, a portfolio rather deliver peaks performance past structured a markets. commodity few term, over for you full troughs in to and than

company us All higher not over risk the expect upside, levels. and respected We expected the continuing capture time. recent while year the our more potential portfolio the are most give investments to and margins creating over become at the supporting the together, to of best we value CapEx more and they're our acquisitions, evaluation generating consistent operating our contribute more vision generating to with to our industry. market last made portfolio And in to and the

be value chicken was protein During revenue downside. QX, Europe orientation. proteins. across to channel continue effectiveness market Chicken the been from the year, our solid our what to and exposure, domestic in mix very meaningful very other the the in and consistent in commodity a to and convenience, momentum competing prices modest to availability a with capture U.S. of team markets QX XXXX of proteins strategy healthy, markets. production within product demand relative well-balanced up our robust good given growth sizes Margins and and will small still expected opportunity at disappearance strength despite exports commodity are bird in the differentiated resilient international higher our the in very very has give capita multiple performed to coverage demand sizes, well than a geographic level leadership across advantage compared have driving as case-ready as imports remained minimizing a for the an and of giving chicken quite with the bird better Despite and Pricing firm units. operations segment competitive our our us and X.X% markets grew of leveraged of during approach compared the narrower remaining in year demand peers obduction a diverse was to margins. portfolio and continues as performed for Mexico well to seasonality, ago of Demonstrating normal all XXXX. and U.S. operations expected, experienced business total these U.S. value was proteins. in U.S. strong all us bird other exports represent while portfolio, entire more be increase next very the domestic of per the sustain upside, to very

been is industry at has under grow Also, increasing are to is the NPD. at greater point traffic pressure, which is is menu dollar that indication has some and importance growth foodservice the highest its profits. outpaced While news growth, continuing volume to chicken chicken positive the volume according good servings

rebound During weaker-than-expected large in domestic reflecting from improvement and QX, from demand bird of XXXX, the markets. deboning a start export maintained the

cuts for Volumes grilling been solid grilling chicken-producing supported positive reflect to to trend our the it and world, demand returned a stronger by driven seasonality. ago, pricing increasing has normal supply has export-oriented pricing U.S. to strong for during other While to products. are -- the very since by summer and season, in thereby AI-related a ongoing compared year due countries by exports, around issues part demand on

above points and increase to operational of commodity basis facilities, strengthen our X improvements. help will The us sales our at since is is methods which XXX to reduced our close forward. target. early closing which the price us, GNP our profitability previously mix Margins moving integration of to acquisition expectations, have gap year the of applied in GNP generate for $XX of Specifically, the progressing we've also due We're quickly well to ahead of stated operations. to our and we're this million, very already goal we've improving improved deboning leg relative and exposure legacy delivering as

expand our Our brand Just that order fresh better, chicken goal offerings customers and private and our -- to provide prepared is best chicken brand and food good, to in encompass captive solutions BARE to offerings. strategically labels

BARE online is the versus top-selling which Just dollars in chicken AmazonFresh, seen significant brand increase this on year sales in has last channel.

represent our the these our segments, Given we of improve newer grocery in partnerships the further within online emerging excellent to momentum opportunity space, product and retail our portfolio distribution NAE. and believe organic including an

the well investments improve strengthen already product year our to of profile. capital announced completed, positioned last increase our differentiation, future key further customer margin our majority for we relationships the strategic our portfolio With are we very and

us Our increased our better United cooked operations the input producer Sanford, Prepared chicken meat best-in-class at Moorefield Foods, XX% seasonality improved North the we our nearing service, which in in is with Prepared for the Also expected the Foods are cost. perfect target well Foods indicates our fully in and be in new rate, from and favorable largest already than we operating The while Carolina Prepared makes U.S. prices of organic capacity should recovering to at addition that has of are previous in States. facility of is order Waco. returning track year our last to line our comparison on

market an delivered in has Mexico seasonality. results, while than an logistical experienced normalized. normal to of to with We was due a the since the which expected QX impact towards the market issues result consistent team end better as of Our demand earthquake QX,

given to outperform to continue expect satisfy excellence demand innovation. protein chicken income and remains rising seek on demand, there consumers in team their Mexico diet, in improve our We focused future To as levels. the operational to

have The in demand. the product including competitive volume is brand in pace launch NAE, which premium to generating introductions. in of new under Prepared strengthen more and value-added the started of As growth with Pilgrim's our premium we fresh our growing, than a maintained program part has Mexico, of XX% momentum year-to-date. results We brand, of strategy Pilgrim's seen chickens the great we're Foods our positioning strong innovative

Atri. we've legacy we our for prospect term, up a operations, while synergies double complex the multiple foreseeable it now profitability awards our targeted to better equal and before assets Also, the initially customers at continues expect or in is protein to the that believe including of to received production Longer from high demand for more Mexico good acquired was complete, very in Veracruz size our than we've integration consistency the the than acquisition. We outstrip only growth the to half mill as service. and with The and of continue facility, future. of continue supply level represents to the captured feed ramp the of

platform we've while into stronger, in very and and Europe. globalizing well further We're Foods as capabilities. extending prepared the locally-farmed in aligns Park strong continental production new geographic leading operations, value-added U.K. and Moy fresh, volatility strategic geographical Moy brings the with growth improved platform, of leadership business. Foods because generated strong improving diversing providing expanded foods footprint, Park, to poultry By more global our acquisition a while Our reach expand products much Park, in portfolio reputation for margin further our and Park's our and Further, food potential new company reducing margins our creates Europe's structure, adding we stable QX. earnings and across it markets. Prepared the continue region addition By about are brand more Moy opportunities a and The our of diverse have into we for sales meaningfully consistent our portfolio, providing chicken solid Pilgrim's. position global our also Prepared and future. attractive priorities and European poultry poultry with best-in-class the strengthened significantly we us and a and our producers, in the top Moy innovation Europe, growth U.K. leader in excited a high-quality, one our the U.K.

seen Europe a Mexico. record our Park that of the are creation U.S. track with we we've will into earnings long-term as opportunities structured expand value key and We given customer incremental along there agreements has as relationships and strategy majority commercial the growth, sustained see a customers. key Moy of in more joint

Moy of strategy U.S. tons, corn to their stocks, potential are tons the million it's global year, have forecasting the has team Harvest ability more and in the for year XXX a insights reports in are ongoing WASDE. to have X.XX to innovation forecasted wheat a decline an fallen October in and diversified The bushels results. across globe. the from feed of capabilities, of which addition stocks. this to is a global are field production, reported billion the Moy exports. even continue year, to innovation and is producing we USDA XXX initiatives. corn corn USDA XXX should million well in consumer excluding to Global the confirming place On but with tons supply. Park, product about by a stocks which an more stocks prices operational the in about our be Global consistent ample million growth, through despite a continues XX bushels stronger reflecting while forecasted enhance margin increase increase large from portfolio of be Park better last lows China, wheat improvement harvest to crop U.S. the reflection to achieve and expected leverage synergies the Together up with as than yields costs, than ending corn available million to of only not have reflection geographic headwind and more We stable structure, also we'll

U.S. of total input for We to reflecting Cash growing and of are believe headwind confident soybean forecasted medium categories all growth products. presence acres. surpluses USDA global Soybean we're do planted with increase expect XX.X million to not ending record well few mill feed for stocks a outperform in oilseeds, increase forecasted XXXX. will be over a million have yields decline weak, a to key the surplus XXXX, despite and soybeans World the to again costs globally. to term. and ability extremely year, XXX the this to to by to a industry continue demand soybean XX years tons, are despite portfolio pace bird is we at customers. soybean relationships our business broad to of well environment, stocks both production With million grains chicken industry oilseed driven a values the comparable and bushels next in the are increase will earnings supported a supply-demand as as in balanced strong given our forecasting be

partnerships capture products, our of strategic customers, key relationships. Despite giving XXXX in key categories outlook us of growth those U.S. differentiated advantage ultimately economic other in households intact accelerate complexes, to increase as total greater across growth translates an we and the while remains price the create believe while quality, or -- supported supporting U.S. opportunity giving demand much continuing export to to strong production consumption. environment addition the all In strengthening a of conditions providing which better of demand further for overall while meats, motivate in by to higher will proteins, chicken more more availability protein cuts

improvement more our portion While we products the exposure, in customized we'll our offering look terms key differentiated pursuing targets. opportunities to to our also by are while operational optimizing commodity product balanced size our and reduce for shift customers, already operations of bird well continue mix by to our portfolio by

performing our most in best vision company our supporting is industry. very executing strategies, to become and respected the our team Our well and

with to so Fabio Sandri, like I'd discuss that, results. our CFO, financial ask our And to

Fabio Sandri

Thank morning, you, Bill, and everyone. good

filings, U.S. the Park ago net and billion to begin, accordingly. our with million quarter reported the which earnings because to compares guidelines same Moy in I into before. the between also our subtracted $X.X compared to $XX closed the was XXXX, entities in prior the Under net $X.XX regarding the the requirement, the acquisition per a transaction U.S. financials of Moy reports $X.XX acquisition GAAP resulting $XXX quarter full year required during share third Net consolidate revenue billion versus XXXX, common-controlled that in both XXXX, we income million revenue XXXX of of same respectively. in growth has earnings Before the of all in of XX% Moy Europe, to quarter quarter across during the below considering in last note QX, business our and GAAP was in and were consistent Europe we being and in adjusted robust In Park margins. expectations line. year. revenue margins the better please Mexico were Adjusted and strong Park of Mexico been year-to-date than operating $X.XX this X% U.S., results XX% in Results in year saw

our related also and have of to and EPS adjusted consolidated consolidated operating $XX $XXX Park reported EBITDA and and our include Adjusting of EPS $X.XX. an charges, adjusted Our million restructuring Moy margins the GNP, adjusted nonrecurring would million results been impacted by $XXX charges that million. income acquisition an for with operating

XXXX, Excluding net $X.XX generated Park rose Mexico million XXX% year. million income before. revenue consolidated financials, to from Moy year the Operating the and net U.S. quarter billion during last revenue operations to compares to $X.XX versus of $XXX $XXX in in third which the billion

margins or also million million EBITDA adjusted to ago. to While XX.X% margins $XXX XX.X% or significantly compared $XXX a year increased

be the proteins adjusting U.S. and foodservice. normal of in in results. in a end-user to chicken the for to strong for firm operations to before availability in higher The convenience chicken Day. commodity compelling fresh terms after the to has retail overall continued both consumers, Our much continue cut stayed Labor of generate of in Despite quarter, and business value price seasonality out general, of

million and some challenges. we Our reduction U.S., GNP business unit better logistic to did due any have to is captured impact from our in though $XX than hurricanes operations, expectations, suffer even the target previously saw to we we Integration to temporary already damage mainly not a close due announced. of demand in have that

business when and margins being expectations. of consistent higher and to The results our of progress now level making points we we generate $XX XXX was market the and have acquired the improvement the we environment year, the laid new to operations. in much reflect moving legacy in mentioned, our more first synergy closer million above Bill our QX this Given we with were out. target than basis the team QX higher pace, are outperformed the our of seasonality GNP to that to Mexico increasing great profitability opportunities in are better with the Like revising made

legacy close margin profitability geographical to as to were as well demonstrating the this performance capture leverage Veracruz is coverage During tracking operations able our implementation at exceeding strategy. integration to our expectations, the continue how and increase north complex the its well, through in and of also to the by of new Production in remain to year. new of and we expect production product our assets, quarter, our acquired performance is the its and synergies the end we double the

As goal part have improve premium we brand. using the of focus our on Prepared our adding increasing our been Pilgrim's including differentiation to Foods, products Mexico, in

started has Pilgrim's which To strong to the momentum, the while at name, entry investment products, maintain due product the of seen local and our to is launch to period but generate both fresh suffer Foods This started to damage demand. have the under Mexico. disruptions to did year-to-date. Prepared higher-margin, the the some our of chicken also goal differentiated Mexico, and in the prepared, with including end having XX% we was fresh any Our results No-Antibiotics-Ever, in have There rebounded strategy up from good operations supportive of not economy brand our coverage premium, level quickly. increase earthquake we

the the creating growth, and the European Moy produced a consistent and portfolio a the We by the protecting able Park evolve capture but to the growth strong Park, upside downside. to operations, advantage being integrating new sustainable sales will continue of look margins. potential Moy diversification because During which forward QX, of market, for in to geography our

budgeting. zero-based We the are years, product of next optimization synergy over portfolio million including Park's targeting X implementing in $XX and Moy

sourcing life of efficiency yield sourcing. We cost, global will feed production, and improvements the by management improving across chain increase the optimizing and value

costs. to infrastructure and We will leverage marketing our SG&A optimize sales

significant -- synergies of delivering improvements. recent our the underlying beyond targets, of We performance In business synergy most improving and proven while deals, markets. the have we a actually exceeded on improving history have building our operation and initial an the just capturing

are field improve grow operations our and confident the to have methodology at leverage expertise We the to we global profits and team continue our the similarly our operations. -- of to their and experience

higher the the Foods mentioned X.X% the to in our reflecting this the product would have before charges, of Prepared inclusion the with in these of are brands, mix new restructuring that's and and and in BARE Also addition sales. at from additional our expectations operations, Mexico, U.S. X.X% year our We're in acquisition charges for capital SG&A year GNP During of ability support optimize Just the product sales, XXXX, our differentiated, Park. for of at Moy with at partnership included customers. SG&A QX GNP number key investment both and was strengthen the offerings Adjusting than to commoditized products spending this plans supply earlier. aimed line acquisition against tracking our well less been improving and

between year, on expect on and CapEx customer million to to of Park and Moy capital tailored next GNP $XXX commitment our invest procurement. improve within advantage to We invest we competitive further For and strong needs our account employed solidify inclusion our return reiterate that on for $XXX budget. efficiencies the to will million operational projects

operation focus emphasis to on on our be high management Our strong, projects. return sheet disciplined balance continued in capital investment continues and activities, flow of working cash given from

the for to which U.S., with building season, been winter our slightly caused disruptions the have capital. Foods hurricanes strategically in logistic We prepare together in by increased Prepared working also inventories upcoming the

$X.X Xx. our a our quarter, XX with month's the net EBITDA, During pro of optimal last of ratio forma of to range X X.Xx below billion debt leverage reached

issued at late the strategic to in financial offering and in support of Our continue our great than We investors and Xx flows, to oversubscribed. capability million bonds pursue total cash level, expect generate a the strong received options. September $XXX to leverage remains low from more we increasing with

for Given of should the be the in XXXX million. the existing outlook expenses capital $XXX structure, range interest

a strong leverage. low to maintain sheet a continue balance relatively will and We

create growth remain to the will that we by on while We value shareholder in our strategy. focused structure, capital our pursue care great flexibility ensuring optimizing exercising preserving

strategies We growth evaluate to remarks. and our all consider accordingly our we'll will allocation Operator, review that concludes our continue this pursuit call of will prospect standards. creating and the Please for each relevant value open continue match questions. the prepared to capital strategy, to

Operator

[Operator Instructions].

from Farha Stephens Our first Aslam comes question with Inc.

Farha Aslam

you for contracting how differently going with season season color the versus color You're contracting us the perhaps full contracting year? approaching give into how some And chicken you're progressing? Could overall and last the on on capacity. this season it's some

William Lovette

Yes.

be We least. we X than construct the different When will not for X oriented. by demand at we conscious it's contract is protein fixed for far choice the we to each So year grow younger it in to large were, years really think at the chicken way. or healthy continue X going in generation health both probably our that same going chicken Since is and any are going years be last value changed season retail as this it's XXXX, a what, into the ago, foodservice, approached believe been think of year we be and terms of that and and pricing, those who to one. going to

those be contract And so the has season going been. to is reasons, than any different don't for think that it we

Fabio Sandri

have we some service of operations because enough had only we think, that levels. we in last year year difference have inventories while the our I and disruptions is the Farha, this XXX% investments,

I think well help that should so. for us, as

Farha Aslam

we then for about think you the how you've That's should seen quarter pricing? with fourth ended, moderate. for helpful. share earnings since outlook and and Could us your XXXX, quarter And your margins prices chicken

William Lovette

right. All

terms in moderation moving back as were. on gone other it's than this QX, bit seasonal to it's the but the QX year different of we really a did norms than any to perhaps Except, previous the year. So higher of we started from no pricing, it year

through X were fourth last will in our We most our that our We're that the as very with all Mexico, year, the quarter improvements see remarks. we pleased quarter up like our now fourth we than they in be news good solid think is, we're to Europe. the picking us. our so in quarter year. we pace with operational -- right our team and in especially mentioned seasonally, And And going operations a better U.S. are prepared that be believe performing and for countries; GNP is

Fabio Sandri

QX Also, Mexico, off -- rebound softening we're profits disruptions of prices earthquake, because the levels we beginning already but saw mainly the by seeing for some in last at quickly caused in in very the the same but as year. a

Operator

come The BMO. question Zaslow Ken with next will from

Kenneth Zaslow

a of your volumes. next, Just production year? I issues be talk your Are questions. changing is, couple and growth X One they next about reestablishing know sort the you the over at went it, volumes the some in algorithm? back Can we where through you configuration. some quarter will call of plant's or

William Lovette

give of the you it. color, then side have number give and I'll Fabio I'll

So converting our we've better and a one been this to making entire has change been of lower industry that deboning of the especially reflective and in of think a byproducts of things that and the one is yielding breed I the that case-ready And large better is done, hatch. bird, a process of the bird have for we businesses.

especially we underperforming relative as our to how And male. to side learning hatch this our still history. So we're the to converted manage that male was this breed, breed, of

near we hatch but Our it's is have historically now, not where been. still improving

our production live especially volume, overall our impacted speak We're pounds. to terms that of so We're we in year. this nearly capacity catching now. early in up as And

XXXX, I into so going more normal. it be think will And

to what is of going hatch the be don't breed I percent was. this the breed ever think prior Although,

Fabio Sandri

Yes.

volumes in In U.S., Ken, higher, terms acquisition the due mainly are of we X% GNP. of overall to

Bill the than operation year Foods the some because is of Prepared are higher than and operations because year, hurricane. shipments quarter a a in because also of end lower actually bit disruptions at the bit Our last fresh little what while of of little last the mentioned,

expect higher period the profitability. to volumes leg quarters, the the QX last volumes we increasing sold, Also reduced which are X% the be than total year. deboning more to X% while We same

William Lovette

Yes.

go sales and selling get skin bone include the were don't before. leg you they whereas quarter to into trim and fall, all So whole we

Kenneth Zaslow

what we Can the so think as And could what seasonality going rate the as are my business well And into about should potential, on it. you Park. second is there that's ongoing question if margin Moy XXXX, margins, develops? of the margin an any? just understand with run And we as about talk that that, how is

William Lovette

and U.K. -- the seasons the though can chicken operate they a It's more U.S. in like much on business The do believe and seasonal basis, is on that margin in and consistent we Europe we apply done methods about in time. the over like just GNP margin in our recently, most this Park what we're Mexico, that's significant and And most with operating provide Moy and improvement acquisition. excited we've U.S.

Fabio Sandri

customers. only are time not with most long-term Ken, the -- as seasonality, it's because the well, contracts partnership sustainability It's of their long

they So we pass-through much a have higher than composition have at Pilgrim's.

downsides capture be very while a that's will market. able So we the the the good upsides, composition on to where protecting portfolio our to

Kenneth Zaslow

we the for you understanding would of there off Is Some parameters stabilize blocks, come are, expect profitability sort guidelines? year the just sort margin it? next the so we What of can to for where just or structure? any exactly

William Lovette

now, million of $XX synergy coming that half remarks, the right see, that XXXX. In in prepared capture about with state Yes. we did Fabio

with side Mexico there conservative be little as a Just for with numbers. be can and in on those may the GNP, now, using bit, we safe you I but think

Operator

The Group. will Jones Heather question from next with be Vertical

Heather Jones

I have time. to questions I'm was apologize you've but on another may ahead already call. I ask going of answered,

first So Mexico. on

is that, down but you the to not I business as was towards normalizing say QX. that related that beginning the considerably you still the early think much was the year-on-year, this because hurricanes It's in weaken of I pricing -- now saw I it say we hear and as there? heard quarter. Did

William Lovette

disrupted rebounded lot central levels. have The and in but back hurricanes and a especially to southern and of come the normalized Mexico, earthquake those distribution,

in last large we've the weeks. So seen few price uptick a levels just in

Heather Jones

Okay.

that So at should thought this business is time, approximate that, last year? your

William Lovette

Yes.

Fabio Sandri

Yes.

Heather Jones

sounds Okay. your a huge you you cadence could us sense us into performance it bird like big like for relative that was that that. you meaningful side, improvement wondering Then of I during mean, made the I a the could XXXX? So could on there. -- just of guys was guys wondering understand if because tailwind help I 'XX. give improving have strides you there be

William Lovette

have first We've picked much operator 'XX, we're And of XXXX, plant last of think years first in about the when first we then converted that metrics X.X in here. so through average to in 'XX that to that, the an Carolina mass years XXXX XXXX. sort Sanford, performance. away we and being for company up the large even we in from half last organic because our Beginning many half business the improved, into business XXXX, Well, in better had you through going had half and in continue We operations Yes. there, we better that into will improving the slipped nearly and in case-ready to were X 'XX, plants we in We've of from of the of we than of our improvement so business. the X XXXX. business actually of critical sort that half was of just were we significantly context. the be ago. The bird operating big X the arrived pace significantly went our expect in program, since and pace and that converted in started deboning North months, last not bird XX

and great be stars got bird acceptable. U.S. find moving in think in We've of which the to large changes. very about surpass company part our do of that's of one in forward. So be the management We've not of year. leadership business business our we We're just several XXXX proud next going that of our we're made to sort now, going deboning that and now, we average

Fabio Sandri

we built Bill And identified an budgets that the last improvement. in million we was year, because Heather, operation that our of improvements part of Big as $XXX everything bird important mentioned.

we again. opportunities already As opportunities in range to the expect are million there bird. the those budgets of right through we more capture we going identifying our $XXX next year, will now, in big And are probably all

Heather Jones

Okay, for 'XX.

here just is USDA the math the we that things X% at flock, in so the industry that back-of-the-envelope increased the of last increase juggling hens. have and looking Then it the that supply almost a month time the holding I'm a our Okay. U.S. -- couple mind few and a -- showed suggest my their has in side, on

But placements and the 'XX. comparisons pullet have but holding got X% we assume date, increase industry's looking as weight in lower time, you, at, improve call better the the of the be you're easier it, 'XX, have not should hatchability, we first you've we'd PPC, but to the you summer. And similar -- look your egg so if a yield, at for that in in X% hatchability half to roughly flock in

in all putting So in what -- thoughts what on of increase wondering your 'XX? that see together, we pounds should much how are

William Lovette

Yes.

that you did one slaughter, So the was is about down X.XX%. hen in thing not numbers mention of those all

you forever. going So killing were obviously, to hands what chicks, happened is not and more were hens can't extending of those to because we the we trying obviously. change, breeder age those That's as that hold flock, more get eggs

see as down size on and we the so than flock, up XXXX. to going hen the we we'll while pick meaning about more be overall per better the believe in And pulling output age is the a in flock, don't X% of hatch, one productivity, hand, the more the eggs of start

quarterly heads So the to have one that even a sort at the even issue monthly done, all to how you to I point. time; XXXX flock, see that in versus more think numbers at increase it's flock. or XXXX and head And so when your out many about of said in only of a basis we're a XXXX. think X% of we've of year-to-date, things looking don't we killing, productivity than seen is on versus lot about about or age those of the But basis coming X% point,

Fabio Sandri

also become to year-to-date, And breeding to are last flock, months the need to they X of XXXX, first pullet year. because lagging in of pullet the this placements as actually same the mature compared down period placements the

Operator

will come David KeyBanc Carlson with question next from The Capital Instructions]. [Operator Markets.

David Carlson

quarter. and in My But first quarter? grain during U.S. related, I the one's X% a say cost up volume you during have Fabio, did follow-up volume the segment then the regarding was

Fabio Sandri

of because mainly of acquisition the GNP. Yes,

of slightly new in we the the slightly And we in Prepared volume because call in legacy down. to it business, also last compared wing terms So the, were year were period up of let's same line. Foods, in fresh,

David Carlson

follow-up. be projects imply GNP How that I That's produce And have are would the are XXX now the able volume, back you'd out business. plains industry. basis several a that X% at to of backing so with confident in online following the volume about at XXXX? down of below or legacy these least that number in points So guys industry you line the the

William Lovette

industry Yes. forward. of the We're confident going the maintain going to we're pace

Fabio Sandri

of have Also, legs. impact Bill more eggs in management think, this, of is we flocks I the breeding of volume And the a of the little better the because bit deboning mentioned because more available.

So less profits. but there, more pounds, it some percent is

David Carlson

Fair. how much consolidated margin is -- year-over-year? grain benefit How cost much Fabio, lower did the gross

Fabio Sandri

million think of quarter, almost we're this prices. I lower flat. we're better year-over-year, think In $XX because grain I Well,

Operator

Cleveland question next Research. The from comes with Michael Piken

Michael Piken

What little see If opportunities and bit yourself terms we perspective do potential free XXXX? volume what more could expect and a talk from of about what in think overall growth? markets export you do potential an volume you you in as the

William Lovette

X in we we is that in XXXX. we chicken, much XXXX it's like Asia But because export countries market the AI and into believe more think, East, U.S. and had demand is any game have I Europe, Middle creates the look in influenza export did has in for that zero-sum lot happened to traditionally is, what the avian last found a it of a into months. what that Michael, is, going haven't

normal chicken for or is the we open of of export from to value growth of protein XX emerging next good much We So globally a in represents come and chicken. terms the to see demand going consumption all think our to so XX great in consumption. that markets markets, XX% we're of Chicken pretty years.

perspective next beyond. the so if news I good mostly, years an all, think into export going and year from not it's And

Fabio Sandri

year. the are year, Mexico And value Mexico dollar, of year. growth period and XX% to lower better same economy our the this the for in next the pace of potential than see last improving U.S. Also, we exports exports some as the to we see

Michael Piken

going net-net And to there's it the U.S., into is you? it for that, better Is the environment better a Mexico, Mexican what chicken on fewer, lot what respect an environment have with your a competition just to for business follow-up Mexico? more? is then benefits Or where of like from U.S. you less but

William Lovette

geography. the Yes. our across We Mexico. well the of exports We to Most there northern operate go portfolio constructed environments. in operate both into U.S. entire down

sales so acquisition of of and to of programs coming part years part into that southern it's And in programs, a exports that coming our way. the fit customize serving Mexico diverse in couple the asset of and -- one to U.S. we the of back of to different that's slightly And going the portfolio a we Mexico big part to in ago, country construct northern imports the that way jewels central one those saw that's for being Mexico also accommodate in. a able versus

Operator

question next Sachs. from be Goldman with will The Adam Samuelson

Adam Samuelson

were bit on there of the that's trying U.S., $XXX and the And would in disaggregate U.S. a order considerably million year-over-year. back bird probably up performance to just big values maybe I'm profit. out more and guess, worth I probably cut maybe year-over-year the guess the something I little So the clearly, of

is that incremental bridge yet, I You the EBIT provide? the incremental on so any kind of alluded the is Maybe up million could on mix, EBIT on performance or Q know But is so there some there $XX produced would still usually GNP color million, you $XX just year-on-year better in obviously, kind on you details and the there. improvement. coming that? cost in contribution profit haven't of I there, be short

William Lovette

haven't we But plant, the changes one mix within about that around so or just a of or lot other mix else. in the each our attribute, is that than of the really we other single and shifted much. learned my haven't of over made business shifted thing than mix Adam, we've more business about Sanford, chicken North types profitability terms really anything I've cost price career of impacts any Carolina

a And one mix. core managing competency things ours that is of so, the great of is

plants. We've we so, in our small profitable X it a than operation, so management great mix business and And about have far this year that year. for was was it improvement made which bird last more far in example, deboning in

that's been big a So contributor.

time be strong. very, small making there. Deli, well we bird that those and prices business, to the products our continue be greater Our improvements products very QSR goes to to our Those other in over and QX continue to business for demand perform continue very

managed each of not types deboning in made mix of we So that well, only our we've birds producing. the large business, those we've out we're have mix lot within but and improvements bird of the cost extremely a taken

just not it's of So business. been one type

Fabio Sandri

what think Foods achieve on I Bill other the are target the factor the that improvements, And our Prepared in connected as line is operation where operation is the well. million improvements partially to and in mentioned are line to -- we $XXX

William Lovette

you're us. And remind XXXX it a we lot effort not one -- last And think of in year, year of activity. pay And you would spending I a projects. time, they good I of remember, if the way, more good capital year that us, a we CapEx were big seeing you, it not do because off time. for we've for is And going we that you these projects by that of benefits -- last was year over was to we and measured the were told and those reasons identified we'll the

doing I seeing last making when investments last those CapEx for think see the we so projects rewards those better we're definitely less But were than disruption year. year, most do. we at you'll likely we're

Adam Samuelson

$XXX quarter, little a the business? of profit year just accrue humming And year-on-year to the in that million, full realized couple Clearly the those. year third higher line quantify any of quarter? there in kind product on that overall your a -- you with M&A to improvement much which the GNP. in The was the to the versus target, how maybe a was bit improvement. would component prices on undertook disaggregate market Foods plus way I'm was -- were of And bottom Prepared actions the your trying the there

Fabio Sandri

$XX the in achieve we this $XXX pace in are improvements on million, close are operation Yes. to Since we quarter. million to

operation improvements, as the and In -- well. included the improvements improvements it in -- terms the GNP and -- that big is bird other is operation Foods Prepared

Adam Samuelson

it quarter? quarters flow, the how finally, Okay. a some bit quarter the restatements on cash was with flow the operating for -- there What actual little because to was flow Park disaggregate prior in the gets And hard then just treated. I cash number think Moy operating cash were

Fabio Sandri

$XXX in on million, to close acquisition. Park are was the -- It Moy that adjusting considering

Adam Samuelson

inventory. about talked And Right. you've

inventory underlying is EBITA healthy So the is big -- year-over-year there delta to improvement? kind of relative

Fabio Sandri

Yes. the We're well Texas wing inventory in Florida because the on this there were disruptions impact the some season. quarter. major the in as of the wing in hurricanes for And That building capital exports. was working in the and

increased quarter So for us we working uptick see a this which inventory during well, but the leg little the bit our as whole industry, capital quarter. for in of

Operator

next The Instructions]. [Operator Akshay with Jefferies. will question be from Jagdale

Akshay Jagdale

at model it's now in seeing what saw the a Day And we when we've what see to of you're certainly, the us been can helped -- you've in going P&L data would Fabio, But quarters what as numbers, about in for that to I mean, be terms the you you're the what since Analyst that. a bit X there ask sense it. of of announced to off-line. just for Because maybe of expect we're wanted from U.S. company. in several Europe? of about a dollars of of a to in we quarterly been pull full reports. There different reporting business seen give I filing numbers from has terms deal, Can we acquired help thinking us That how got that model X we've was like and -- example, well might target has you today's JBS, quarters and us points for terms been now there in moving your that. clean

terms I'm view So P&L expectation business U.S. just a dollars what to us is in trying on that giving terms? your high-level get in of color more of

Fabio Sandri

the required U.S. quarter. rules, a Moy Park again, for transaction, Akshay, we it compliance GAAP Well, the common-controlled great. were in was Sure, entire to with because consolidate

year results. next As quarter, our next -- the quarter will filings will we the -- year-to-date as and to ago goes it reflect

our year. Moy will So our been year have comparison, operations between what with full could and this Park last a or we be operation have Moy apples-to-apples, Park with

comparison. you're year, full end to as the see the going So we

Akshay Jagdale

But seeing the profile starting point high sort margin though X% even good it's now margins, just of is is correct? that starting EBIT a good level a quarter, gross we're a X% margins, point,

Fabio Sandri

years, Yes, it being $XX million the million in following. is. $XX And two synergies and said, over we again, like next the we next expect million $XX year year

the that not to the So we GAAP expand is standards, it synergies. IFRS, in I'll expect was JBS. released margin margin that on U.S. just with what remind this is before by as

Akshay Jagdale

I both you the of June had everything unprecedented Is we've direction. of up industry slightly right? see do had of and is the X-year in slaughter, us the a was X.X for source but That changed we and a we flock the yes. relative challenge estimates Bill, that this just is mean, the age for year-over-year, those time a to can I bit years, little that Can also down But I for helpful. -- hen seen my little tell increased at X That's up basis, your X.X and which Yes, you bit. question the can -- moving year-over-year. increase mature to we pullet X.X -- and years, age really. the issue period, on over of from period see in Because flock that an years placements it's you -- or from an is age X- is slightly IFRS the actually have so years an looked on to from you ago flock. year-over-year is X only Because an to had it of understanding? 'XX I

points years. So of to the the X.X coming also those down over that flock age

flock understanding correctly. you characterize I'm way want it way it? issue So I sure make is the of characterized it, age Is the -- I'm the just -- just to I the also would

William Lovette

age to The not up, quarter-to-quarter. the of long-term it's from age last think to The down. quarter to around move going age Akshay. put you stay a It's be flock of going to flock context, I But quarter, this in is going of go is than Yes. have flock phenomenon. different

age about flock has change have breed the conjunction You change the that in of terms in issue bleeding with more and think flock. been productivity breed of the of to lower the of

therefore, that needing flock byproduct the eggs, in of extension really flock we longer. of And number like same breeders have less so a being hold companies of to ours the the age those productive is

As then to XX as back typically eventually more experience down pullets the which that a of so pull we that weeks breeders We compensate, growth normal back you're that out, hen more slaughter is more put we'll to at to normal pointing level get being we'll we more placed. and age, levels.

Fabio Sandri

of eggs. X you to in to end as longer In remember, we comparison on much flock. we of years the actually on X X breeding the much, in Just keeping X XXXX, if years pullets were to ago, disruption the produce you the had remember, and ago, terms our a in of field the big supply flock

to still and you at term a look higher. if age more flock, go the of is it So the long

Akshay Jagdale

it's of into said. you'd period for was would a of a just slaughter year, expectation came you that mature what helpful, just like lot is, my it's will you right, hen think up for hen right, because that super to quarter But more do the I mature but next period pounds another off a that's And my for extended for Yes. go year, go right? not we where up a the of translate math to point or X% another flock, up, going see imply slaughter, said, it breeder X, while.

appreciate all except can't we but skinless seasonality, why some literally think don't breasts. mean, seeing like weak That's normal exceptionally But at parts talk you have come recently fair. stay there. you a my you have terms is a then had up which And and at doing your boneless, X point. seeing I at, mean, I are just I ever, can X% the they they're breeder parts, to remember moving on like different way, need just bit curious additional forever, get of wing impact down? that what was pricing I had for why aren't any get the into trying meaningful saying that's it to mature recently? flock, a was in up you definitely extended exactly of translate But what which slaughter you breed trends, the -- response you an That's completely period one I as for but you've math of it productivity, and sort if bit current that's I is, one that's higher I last started that why know for $X.XX -- little a X%, happening it a to of you're about the about but point me, characterized to increase quite prices time. color hen mentioned those that. been started I just on So and in understand certain on guess from to pounds, the

William Lovette

repeats the it's way in itself. that November cycle To every reason and be this they're moving November it's because honest, have -- Thanksgiving and year we is

seen versus at much the in we've last were up year that ended the slope that's of we year even we number only any we're in in -- dollar other So other years and and the is steep, seeing started or place last higher this at same year business. not the at we a from was abnormal fall, really the anything but as prices this been We've the breast difference year. near curve under

really So no it's different.

basketball had early bit, we going in season. just season go into as -- time strong X, we'll of we We've we for a we wings, think our it's Super season wing abate belief as the seen time Bowl year. stronger a the On do but prices final very that that that wing that normally and see that

Fabio Sandri

And continue demand think chicken the wing despite to up wings seeing weakness, some on go cost for restaurants, the year-over-year. I and so of

and it wings was up. the go to than same demand So continue for consumption maybe the before, but not at pace

Operator

our and to this conference I concludes Lovette like question-and-answer the session. closing would Bill turn to back for over remarks. Ladies gentlemen,

William Lovette

drive remains and despite availability the proteins, volumes for strong the since outlook chicken a protein other consumption The board U.S consumption supplies. strong will more you. more and Thank economy greater of absorb export across

conditions. we pursue to refining products our our We specific key strategy and customized reduce our in believe more customers this is improve of to portfolio to differentiated to continue satisfy profile despite look our for goal opportunities demands volatility, as market even continuously of supportive margin

creation, forward, Thank joining advantages and going and and recent and Pilgrim's. strategic allow applying acquisitions to needs operational prove to that for customer improvements, tailored and competitive Our us our strengthening in we methods team's further interest our our our operational cash your for believe I'd always, value all generation in experience generate and our company. capability our flow sustain in our today. remain efficiencies will us the members key projects we investments appreciate team customer customers, robust like to you joint to thank improve

Operator

presentation. for The conference attending today's has now concluded. Thank you

now disconnect. You may

Pilgrim's Pride (PPC) 8 Nov 172017 Q3 Earnings call transcript