Pilgrims Pride Corp (PPC) Q2 2019 Earnings Call Transcript


Motley Fool Transcribers, The Motley Fool

via Yahoo Finance - August 5, 2019


Pilgrims Pride Corp  (NASDAQ: PPC)

Q2 2019 Earnings Call

Aug. 01, 2019, 9:00 a.m. ET




    Prepared Remarks

    Questions and Answers

    Call Participants


Prepared Remarks:




Good morning and welcome to the Second Quarter 2019 Pilgrim's Pride Earnings Conference Call and 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. After today's presentation there will be an opportunity to ask questions.


I would now like to turn the conference over to Mr. Dunham Winoto, Director of Investor Relations for Pilgrim's Pride. Please go ahead.


Dunham Winoto -- Director of Investor Relations


Good morning and thank you for joining us today as we review our operating and financial results for the second quarter ended June 30, 2019. Yesterday afternoon, we issued a press release providing an overview of our financial performance for the quarter, including a reconciliation of any non-GAAP measures we may discuss.


A copy of the release is available in the Investor Relations section of our website, along with the slides we will reference during this call. These items have also been filed with 8-Ks and are available online at www.sec.gov. Presenting to you today are Jayson Penn, President and Chief Executive Officer; and Fabio Sandri, Chief Financial Officer.


Before we begin our prepared remarks, I'd like to remind everyone of our safe harbor disclaimer. Today's call may contain certain forward-looking statements that represent our outlook and current expectations as of the day of this release. Other additional factors not anticipated by management may cause actual results to differ materially from those projected in these forward-looking statements. Further information concerning those factors has been provided in today's press release, our 10-K and our regular filings with the SEC.


I'd now like to turn the call over to Jayson Penn.


Jayson Penn -- Chief Executive Officer & President


Thank you, Dunham. Good morning, everyone. And thank you all for joining us today. For the second quarter of 2019, net revenues were $2.84 billion, unchanged from a year ago. Adjusted EBITDA increased to $349 million or a 12% margin, which is a 35% improvement versus $259 million a year ago or 9% margin. Adjusted net income was $171 million compared to $113 million in the same period in 2018, resulting in adjusted earnings of $0.69 per share compared to $0.45 in the year before or a 53% increase.


We believe our well-balanced performance is a result of our vision to create opportunities for our team members to thrive and prosper. To support our vision, we are continuing our strategy to provide safe, high quality differentiated products, relentlessly pursue excellence in our operations, unlock value by focusing on key customers whose priorities for growth in innovation match our own and optimize our product and portfolio mix to produce consistent results.


I truly believe that our results start with our people. As our team members thrive, so does our business. This year, we are on pace to promote more team members than in any year in our history. Our effort to provide competitive compensation, on the job training and development opportunities, a safe working environment that exceeds industry standards and opportunities for advancement in our organization are promoting the strength of our team members while providing more resilient, consistent results for Pilgrim's.


We're thankful for our team members for the improvement of our operations as well as results during Q2 and for producing a solid first half 2019. Our performance, along with the markets, has continued to increase across all our global operations. In the US, we experienced a much better environment in our fresh business compared to a year ago, most notably in commodity large bird deboning.


Our Prepared Foods business has improved in performance, reflecting the investments made over the past few years. Our European operations have begun to overcome recent input cost challenges, and we expect our results in Europe to continue growing for the remainder of the year. In Mexico, we had a strong recovery as the market significantly rebounded last quarter after an unseasonally weak Q1. Our Q2 results demonstrate the diversity and balance of our portfolio, which gives us a more consistent consolidated performance despite the volatility of specific market segments and geographies. We will continue to evolve our portfolio to better adapt and respond to individual market dynamics and improve our relative performance over the competition. We believe this approach will give us a higher and more consistent results for the mid to long run and minimize the full peaks and troughs of the volatile commodity sectors.


Compared to the very challenging demand conditions we experienced during last year's summer in the US, the market for commodity large bird deboning in Q2 has improved. The commodity large bird cutout was robust throughout the entire quarter, which was much closer to the five-year average, driven by strength in wings, leg quarters and tenders, with boneless slightly lagging.


In our less commoditized...