In this file:
· Pilgrim’s reports higher sales, profit for Q3
· Pilgrims Pride Corp (PPC) Q3 2019 Earnings Call Transcript
Pilgrim’s reports higher sales, profit for Q3
By Joel Crews, Meat+Poultry
GREELEY, Colo. – Pilgrim’s Pride Corp., a US-based subsidiary of Brazil’s JBS SA, reported higher net sales and operating income during its fiscal third quarter, ended Sept. 29, and for the first 39 weeks of 2019. The improvement was attributable in part to increased sales in the US and Mexico and continued positive demand for value-added, non-commodity chicken from the retail and quick-service-restaurant segments.
For the quarter, the company reported net sales of $2.78 billion, a 3 percent increase from the $2.70 billion reported during the same 13-week period last year. Adjusted net income for the quarter was $109.8 million compared to $29.3 billion the previous year and $363.8 billion for the first 39 weeks of 2019 compared to $255.3 billion during the same period in 2018. Pilgrim’s adjusted earnings per share (EPS) of $0.44 for Q3 was 267 percent higher than the previous year’s $0.12 EPS.
Profit for the company in the quarter was up nearly 50 percent to $282.2 million compared to the same time last year, at $169.7 million.
“After a challenging Q3 2018 within the US pure commodity market, conditions during Q3 of this year were much improved,” said Jayson Penn, CEO.
Operating income for the year spiked by more than 120 percent to $188.2 million in Q3, compared to 85.3 percent during the same quarter in 2018. Net sales derived from operations in the US and Mexico both increased for the quarter and for the year while sales in Europe lagged.
In the US, net sales of $1.93 billion in Q3 of 2019 exceeded the previous year’s Q3 sales of $1.86 billion by 4 percent. US sales for the first three quarters this year were $5.73 billion, 2 percent higher than the same three quarters of 2018, when sales were $5.60 billion.
“The environment in non-commodity chicken was in-line with seasonality and remained strong, driven by demand from retailers and QSRs,” Penn said, adding that the company remains committed to its Key Customer strategy while continuing to innovate in all its business segments. “We are investing to further differentiate our portfolio and increase our capacities and capabilities to meet customer expectations. We expect value added, differentiated products to account for a significantly larger portion of our total results over the next few years as we continue to reduce our mix of more volatile commodity sales and improve our margin profile.”
In Mexico, sales increased...
Pilgrims Pride Corp (PPC) Q3 2019 Earnings Call Transcript
PPC earnings call for the period ending September 29, 2019.
Motley Fool Transcribers
Oct 31, 2019
Pilgrims Pride Corp (NASDAQ:PPC)
Q3 2019 Earnings Call
Oct 31, 2019, 9:00 a.m. ET
Questions and Answers
Good morning, and welcome to the Third Quarter 2019 Pilgrim's Pride Earnings Conference Call and Webcast. [Operator Instructions] 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]
I would now like to turn the conference over to Dunham Winoto, Director of Investor Relations for Pilgrim's Pride. Please go ahead.
Dunham Winoto -- Director, Investor Relations
Good morning, and thank you for joining us today as we review our operating and financial results for the third quarter ended September 29, 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 would 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 -- President & Chief Executive Officer
Thank you, Dunham. Good morning, everyone, and thank you all for joining us today. For the third quarter of 2019, we reported net revenues of $2.78 billion and adjusted EBITDA of $258 million or 9% margin, and an adjusted EPS of $0.45. We significantly increased EBITDA by 66% compared to last year, driven by rebounded performance across all our businesses, including U.S., Mexico and Europe.
Our performance remains well balanced, and as a result of our vision to become the best and most respected company creating opportunity of a better future for our team members. To support our vision, we are continuing our strategy of developing a unique portfolio of diverse, complementary business models, continuing to relentlessly pursue operational excellence, becoming a more value partner with our key customers and creating an environment for safe people, safe products and healthy attitudes.
We are appreciative of our team members for the improvement of our operations as well as during Q3. Our performance along with the markets has continued to grow across all our global operations. In the U.S., 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 continues to grow reflecting the investments made over the past few years.
Our European operations have continued to mitigate recent input cost challenges and we expect our results in Europe to continue growing for the remainder of the year. In Mexico, the market was in line with seasonality and perform much better compared to 2018.
Our Q3 results once again reflect 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 summer in the U.S., the market for commodity large bird deboning in Q3 was materially better. The commodity large bird cutout improved throughout the entire quarter, and was much closer to the five-year average driven by strength in wings, leg quarters and tenders with boneless breast lagging. In the less commoditized small bird and case-ready segments, customer demand was in line with normal seasonality.
We are continuing to experience strong growth for our retail tray pack, rotisserie and QSR sandwich businesses with key customers. Our market leadership in these categories, and more differentiated product portfolio continues to give us a competitive advantage. The margin stability within our small bird and case-ready operations has continued to give us an offset to the more volatile commodity sectors to bring us a more consistent margin platform, while still giving us an opportunity to capture the upside potential.
The commitment to our key customer strategy remains relevant to our growth. Revenues from key customers more than doubled over the last eight years reducing our relative dependency on pure commodity sales. We continue to leverage our key customer strategy to earn more business and accelerate growth beyond just the underlying market conditions. Beyond driving growth, our key customer approach also promotes trust, enhances long-term relationships and strengthens our margin structure.
We are continuing to further differentiate our portfolio to reduce the impact of pure commodity markets. We've been increasing our mix of specialty birds including No Antibiotics Ever and organic attributes to support the evolution in our customers' expectations and market growth. Specialty birds will account for over 40% of our U.S. fresh portfolio during 2019, which is more than double the less than 20% just a few years ago.
We have now converted to large bird deboning plants to full NAE, supportive of our goal to double NAE contracted volume of large bird deboned in 2019 versus 2018. We are expanding our breast meat portioning capabilities, while increasing dark meat deboning capacity by 40% to de-emphasize our exposure to the volatile pure commodity markets. We are continuing to invest in automation and robotics to support strong demand for our products while minimizing the impact of tight labor conditions on margins.
In our U.S. Prepared Foods, we grew 11%...