Pilgrims Pride Corp 10-Q for FY2022 Q1

Pilgrims Pride Corp (PPC)

10-Q 2022-04-28 For: 2022-03-27

Added on April 04, 2026

About this 10-Q

Pilgrims Pride Corp filed this 10-Q on April 28, 2022, covering the quarter ended March 27, 2022 (FY2022 Q1).

Headline figures

Quarter ended March 27, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $4.24B; up 29.5% from $3.27B a year earlier
Net income: $280.44M; up 179.9% from net income of $100.21M a year earlier
Diluted EPS: $1.15; up 180.5% from $0.41 a year earlier

Search and read filings like this one from Claude or ChatGPT with the SEC filings MCP server →


Delaware		75-1285071
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1770 Promontory Circle		80634-9038
Greeley	CO
(Address of principal executive offices)		(Zip code)


PART I. FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements	2
	Condensed Consolidated Balance Sheets March 27, 2022 and December 26, 2021	2
	Condensed Consolidated Statements of Income Three Months Ended March 27, 2022 and March 28, 2021	3
	Condensed Consolidated Statements of Comprehensive Income Three Months Ended March 27, 2022 and March 28, 2021	4
	Condensed Consolidated Statements of Stockholders’ Equity Three Months Ended March 27, 2022 and March 28, 2021	5
	Condensed Consolidated Statements of Cash Flows Three Months Ended March 27, 2022 and March 28, 2021	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	45
Item 4.	Controls and Procedures	49
PART II. OTHER INFORMATION		50
Item 1.	Legal Proceedings	50
Item 1A.	Risk Factors	50
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	50

Item 6.	Exhibits	51
SIGNATURES		52


PILGRIM’S PRIDE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS

	(Unaudited)
	March 27, 2022		December 26, 2021
	(In thousands)
Cash and cash equivalents	$	725,540	$	427,661
Restricted cash and cash equivalents	30,258		22,460

Trade accounts and other receivables, less allowance for doubtful accounts	1,071,102		1,013,437
Accounts receivable from related parties	1,079		1,345
Inventories	1,708,995		1,575,658
Income taxes receivable	14,407		27,828
Prepaid expenses and other current assets	241,444		237,565
Total current assets	3,792,825		3,305,954
Deferred tax assets	5,191		5,314
Other long-lived assets	32,069		32,410
Operating lease assets, net	339,102		351,226
Intangible assets, net	938,564		963,243
Goodwill	1,320,100		1,337,252
Property, plant and equipment, net	2,890,016		2,917,806
Total assets	$	9,317,867	$	8,913,205


Accounts payable	$	1,440,802	$	1,378,077
Accounts payable to related parties	8,044		22,317
Revenue contract liabilities	21,522		22,321
Accrued expenses and other current liabilities	815,259		859,885
Income taxes payable	153,986		81,977
Current maturities of long-term debt	36,162		26,246
Total current liabilities	2,475,775		2,390,823
Noncurrent operating lease liabilities, less current maturities	262,830		271,366
Long-term debt, less current maturities	3,377,893		3,191,161

Deferred tax liabilities	344,492		369,185
Other long-term liabilities	63,271		101,736
Total liabilities	6,524,261		6,324,271
Common stock	2,616		2,614
Treasury stock	(372,157)		(345,134)
Additional paid-in capital	1,966,066		1,964,028
Retained earnings	1,284,007		1,003,569
Accumulated other comprehensive loss	(98,902)		(47,997)
Total Pilgrim’s Pride Corporation stockholders’ equity	2,781,630		2,577,080
Noncontrolling interest	11,976		11,854
Total stockholders’ equity	2,793,606		2,588,934
Total liabilities and stockholders’ equity	$	9,317,867	$	8,913,205


PILGRIM’S PRIDE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

	Three Months Ended
	March 27, 2022		March 28, 2021
	(in thousands, except per share data)
Net sales	$	4,240,395	$	3,273,425
Cost of sales	3,698,415		3,012,182
Gross profit	541,980		261,243
Selling, general and administrative expense	139,967		102,779

Operating income	402,013		158,464
Interest expense, net of capitalized interest	36,296		30,334
Interest income	(1,274)		(2,366)
Foreign currency transaction losses	11,536		2,514
Miscellaneous, net	(324)		(7,844)

Income before income taxes	355,779		135,826
Income tax expense	75,219		35,358
Net income	280,560		100,468
Less: Net income attributable to noncontrolling interests	122		260
Net income attributable to Pilgrim’s Pride Corporation	$	280,438	$	100,208

Weighted average shares of Pilgrim’s Pride Corporation common stock outstanding:
Basic	243,670		243,580
Effect of dilutive common stock equivalents	630		278
Diluted	244,300		243,858

Net income attributable to Pilgrim’s Pride Corporation per share of common stock outstanding:
Basic	$	1.15	$	0.41
Diluted	$	1.15	$	0.41


PILGRIM’S PRIDE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

	Three Months Ended
	March 27, 2022		March 28, 2021
	(In thousands)
Net income	$	280,560	$	100,468
Other comprehensive income (loss):
Foreign currency translation adjustment:
Gains (losses) arising during the period	(58,202)		33,291

Derivative financial instruments designated as cash flow hedges:
Gains arising during the period	528		1,468
Income tax effect	—		7
Reclassification to net earnings for losses (gains) realized	157		(168)
Income tax effect	(42)		(32)





Defined benefit plans:
Gains arising during the period	8,651		29,227
Income tax effect	(2,172)		(6,330)
Reclassification to net earnings of losses realized	232		571
Income tax effect	(57)		(135)
Total other comprehensive income (loss), net of tax	(50,905)		57,899
Comprehensive income	229,655		158,367
Less: Comprehensive income attributable to noncontrolling interests	122		260
Comprehensive income attributable to Pilgrim’s Pride Corporation	$	229,533	$	158,107


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Three Months Ended March 28, 2021	Common Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interest		Total
	Shares	Amount		Shares	Amount
	(In thousands)
Balance at December 27, 2020	261,185	$	2,612	(17,673)	$	(345,134)	$	1,954,334	$	972,569	$	(20,620)	$	11,586	$	2,575,347
Net income	—	—		—	—		—		100,208		—		260		100,468
Other comprehensive income, net of tax	—	—		—	—		—		—		57,899		—		57,899
Stock-based compensation plans:
Common stock issued under compensation plans	153	1		—	—		(1)		—		—		—		—
Requisite service period recognition	—	—		—	—		2,042		—		—		—		2,042


Balance at March 28, 2021	261,338	$	2,613	(17,673)	$	(345,134)	$	1,956,375	$	1,072,777	$	37,279	$	11,846	$	2,735,756


	Preliminary
Cash and cash equivalents	$	113
Trade accounts and other receivables	7,387
Inventories	60,341
Prepaid expenses and other current assets	1,727
Operating lease assets	14,648
Property, plant and equipment	247,133
Identifiable intangible assets	415,157
Other assets	335
Total assets acquired	746,841

Accounts payable	4,615
Other current liabilities	407
Operating lease liabilities	18,996
Deferred tax liabilities	114,701
Other long-term liabilities	2,612
Total liabilities assumed	141,331
Total identifiable net assets	605,510
Goodwill	353,397
Total consideration transferred	$	958,907


	Three Months Ended March 28, 2021
	(In thousands, except per share amounts)
Net sales	$	3,495,180
Net income attributable to Pilgrim's Pride Corporation	76,104
Net income attributable to Pilgrim's Pride Corporation per common share - diluted	$	0.31


	Three Months Ended March 27, 2022
	(In thousands)
	Fresh		Prepared		Export		Other		Total
U.S.	$	2,087,621	$	255,087	$	133,797	$	104,703	$	2,581,208
U.K. and Europe	237,309		746,636		173,411		34,626		1,191,982
Mexico	410,420		36,141		—		20,644		467,205


Total net sales	$	2,735,350	$	1,037,864	$	307,208	$	159,973	$	4,240,395


Balance as of December 26, 2021	$	22,321
Revenue recognized	(11,537)
Cash received, excluding amounts recognized as revenue during the period	10,738
Balance as of March 27, 2022	$	21,522


	Three Months Ended
Gains (Losses) by Type of Contract (a)	March 27, 2022		March 28, 2021		Affected Line Item in the Condensed Consolidated Statements of Income
	(In thousands)
Foreign currency derivatives gain (loss)	$	(13,300)	$	5,340	Foreign currency transaction losses (gains)
Commodity derivative gain	31,540		17,378		Cost of sales
Sales contract derivative gain (loss)	(8,666)		(18,104)		Net sales
Total	$	9,574	$	4,614


	Gain (Loss) Recognized in Other Comprehensive Income on Derivative
	Three Months Ended
	March 27, 2022		March 28, 2021
	(In thousands)
Foreign currency derivatives	$	523	$	1,485
Interest rate swap derivatives	—		(29)
Total	$	523	$	1,456


	Gain (Loss) Reclassified from AOCI into Income
	Three Months Ended March, 27, 2022						Three Months Ended March 28, 2021
	Net sales(a)		Cost of sales(b)		Interest expense, net of capitalized interest(b)		Net sales(a)		Cost of sales(b)		Interest expense, net of capitalized interest(b)
	(In thousands)
Total amounts of income and expense line items presented in the Condensed Consolidated Statements of Income in which the effects of cash flow hedges are recorded	$	4,240,395	$	3,698,415	$	36,296	$	3,273,425	$	3,012,182	$	30,334
Impact from cash flow hedging instruments:
Interest rates swaps	—		—		98		—		—		132
Foreign currency contracts	32		91		—		278		(22)		—


FORM			10-Q


PILGRIM’S PRIDE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

	Three Months Ended
	March 27, 2022		March 28, 2021
	(In thousands)
Cash flows from operating activities:
Net income	$	280,560	$	100,468
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	102,142		86,532
Deferred income tax expense (benefit)	(21,917)		12,483

Stock-based compensation	1,963		2,042
Loss (gain) on property disposals	1,855		(2,396)
Loan cost amortization	1,280		1,215
Accretion of discount related to Senior Notes	429		246
Loss (gain) on equity-method investments	8		(4)
Amortization of premium related to Senior Notes	—		(167)




Changes in operating assets and liabilities:
Trade accounts and other receivables	(66,669)		(54,892)
Inventories	(146,035)		(82,550)
Prepaid expenses and other current assets	(5,889)		20,228
Accounts payable, accrued expenses and other current liabilities	(2,454)		(240,183)
Income taxes	84,780		25,440

Long-term pension and other postretirement obligations	(1,101)		(10,841)
Other operating assets and liabilities	(1,956)		(1,172)
Cash provided by (used in) operating activities	226,996		(143,551)
Cash flows from investing activities:
Acquisitions of property, plant and equipment	(81,578)		(102,167)
Purchase of acquired business, net of cash acquired	(4,847)		—
Proceeds from property disposals	849		13,074


	March 27, 2022
	(In thousands)
Balance, beginning of period	$	(9,673)
Provision charged to operating results	(383)
Account write-offs and recoveries	487
Effect of exchange rate	(142)
Balance, end of period	$	(9,711)


	March 27, 2022		December 26, 2021(a)
	(In thousands)
Raw materials and work-in-process	$	1,124,232	$	1,034,518
Finished products	410,784		369,292
Operating supplies	87,822		87,332
Maintenance materials and parts	86,157		84,516
Total inventories	$	1,708,995	$	1,575,658


	March 27, 2022				December 26, 2021
	Cost		Fair Value		Cost		Fair Value
	(In thousands)
Cash equivalents:
Fixed income securities	$	29,048	$	29,048	$	48,851	$	48,851


	December 26, 2021		Additions		Currency Translation		March 27, 2022
	(In thousands)
U.S.	$	41,936	$	—	$	—	$	41,936
U.K. and Europe	1,167,512		4,570		(21,722)		1,150,360
Mexico	127,804		—		—		127,804
Total	$	1,337,252	$	4,570	$	(21,722)	$	1,320,100


	December 26, 2021		Additions		Amortization		Currency Translation		March 27, 2022
	(In thousands)
Cost:
Trade names not subject to amortization	$	609,713	$	—	$	—	$	(6,939)	$	602,774
Trade names subject to amortization	114,268		—				(4,578)		109,690
Customer relationships	455,459		—		—		(5,738)		449,721
Non-compete agreements	320		—		—		—		320
Accumulated amortization:
Trade names	(49,901)		—		(1,076)		22		(50,955)
Customer relationships	(166,296)		—		(7,622)		1,252		(172,666)
Non-compete agreements	(320)		—		—		—		(320)
Intangible assets, net	$	963,243	$	—	$	(8,698)	$	(15,981)	$	938,564


Customer relationships			3-18 years
Trade names subject to amortization			15-20 years
Non-compete agreements			3 years


	Maturity	March 27, 2022		December 26, 2021
		(In thousands)
Senior notes payable at 3.50%	2032	$	900,000	$	900,000
Senior notes payable, net of discount, at 4.25%	2031	990,941		990,691
Senior notes payable, net of discount, at 5.875%	2027	846,045		845,866
Fifth Amended and Restated U.S. Credit Facility (defined below):
Term note payable at 2.09%	2026	692,812		506,250
Revolving note payable at 3.50%	2026	—		—
Pilgrim's Pride Limited Bank of Ireland Invoice Discounting Facility with notes payable at 2.25%	2022	9,911		—
Moy Park Bank of Ireland Revolving Facility with notes payable at LIBOR or EURIBOR plus 1.25% to 2.00%	2023	—		—
Mexico Credit Facility (defined below) with notes payable at TIIE plus 1.50%	2023	—		—
Secured loans with payables at weighted average of 3.34%	2022	—		3
Finance lease obligations	Various	4,320		4,548

Long-term debt		3,444,029		3,247,358
Less: Current maturities of long-term debt		(36,162)		(26,246)
Long-term debt, less current maturities		3,407,867		3,221,112
Less: Capitalized financing costs		(29,974)		(29,951)
Long-term debt, less current maturities, net of capitalized financing costs		$	3,377,893	$	3,191,161


	Three Months Ended March 27, 2022(a)
	Gains (Losses) Related to Foreign Currency Translation		Losses on Derivative Financial Instruments Classified as Cash Flow Hedges		Losses Related to Pension and Other Postretirement Benefits		Total
	(In thousands)
Balance, beginning of period	$	27,241	$	(2,365)	$	(72,873)	$	(47,997)

Other comprehensive income before reclassifications	(58,202)		523		6,479		(51,200)
Amounts reclassified from accumulated other comprehensive income to net income	—		115		175		290
Currency translation	—		5		—		5
Net current period other comprehensive income (loss)	(58,202)		643		6,654		(50,905)
Balance, end of period	$	(30,961)	$	(1,722)	$	(66,219)	$	(98,902)


	Three Months Ended March 28, 2021(a)
	Gains Related to Foreign Currency Translation		Gains on Derivative Financial Instruments Classified as Cash Flow Hedges		Losses Related to Pension and Other Postretirement Benefits		Total
	(In thousands)
Balance, beginning of period	$	82,782	$	(1,191)	$	(102,211)	$	(20,620)

Other comprehensive income before reclassifications	33,291		1,463		22,897		57,651
Amounts reclassified from accumulated other comprehensive loss to net income	—		(200)		436		236
Currency translation	—		12		—		12
Net current period other comprehensive income	33,291		1,275		23,333		57,899
Balance, end of period	$	116,073	$	84	$	(78,878)	$	37,279


	Amount Reclassified from Accumulated Other Comprehensive Income(a)
Details about Accumulated Other Comprehensive Income Components	Three Months Ended March 27, 2022		Three Months Ended March 28, 2021		Affected Line Item in the Condensed Consolidated Statements of Income
	(In thousands)
Realized gain on settlement of foreign currency derivatives classified as cash flow hedges	$	32	$	278	Net sales
Realized gain (loss) on settlement of foreign currency derivatives classified as cash flow hedges	(91)		22		Cost of sales
Realized loss on settlement of interest rate swap derivatives classified as cash flow hedges	(98)		(132)		Interest expense, net of capitalized interest
Amortization of pension and other postretirement plan actuarial losses(b)	(232)		(571)		Miscellaneous, net
Total before tax	(389)		(403)
Tax expense	99		167
Total reclassification for the period	$	(290)	$	(236)


	March 27, 2022				December 26, 2021
	Pension Benefits		Other Benefits		Pension Benefits		Other Benefits
	(In thousands)
Funded status:
Unfunded benefit obligation, end of period	$	(34,134)	$	(1,268)	$	(46,653)	$	(1,346)


	Increase in Discount Rate of 0.25%		Decrease in Discount Rate of 0.25%
	(In thousands)
Impact on projected benefit obligation for pension benefits	$	(9,122)	$	9,604


	March 27, 2022								December 26, 2021
	Level 1(a)		Level 2(b)		Level 3(c)		Total		Level 1(a)		Level 2(b)		Level 3(c)		Total
	(In thousands)
Cash and cash equivalents	$	35,288	$	—	$	—	$	35,288	$	6,166	$	—	$	—	$	6,166
PSAs for the Union Plan:
Large U.S. equity funds(d)	—		2,385		—		2,385		—		2,595		—		2,595
Small/Mid U.S. equity funds(e)	—		1,254		—		1,254		—		1,338		—		1,338
International equity funds(f)	—		1,800		—		1,800		—		1,954		—		1,954
Fixed income funds(g)	—		4,878		—		4,878		—		5,186		—		5,186
PSAs and CCTs for the GK Pension Plan:
Large U.S. equity funds(d)	—		29,346		—		29,346		—		31,960		—		31,960
Small/Mid U.S. equity funds(e)	—		15,226		—		15,226		—		16,232		—		16,232
International equity funds(f)	—		14,711		—		14,711		—		15,710		—		15,710
Fixed income funds(g)	—		38,586		—		38,586		—		40,470		—		40,470
Real estate(h)	—		5,759		—		5,759		—		5,405		—		5,405
PSAs for the Tulip Plan:
Large U.S. equity funds(d)	—		34,788		—		34,788		—		45,373		—		45,373
International equity funds(f)	—		27,059		—		27,059		—		60,188		—		60,188
Fixed income funds(g)	—		1,058		—		1,058		—		55,107		—		55,107
Liability driven investments(h)	—		58,886		—		58,886		—		—		—		—
Real estate(i)	—		19,121		—		19,121		—		18,601		—		18,601
PSAs for the Geo Adams Plan:
Large U.S. equity funds(d)	—		—		—		—		—		2,621		—		2,621
International equity funds(f)	—		8,606		—		8,606		—		11,696		—		11,696
Fixed income funds(g)	—		2,901		—		2,901		—		5,807		—		5,807
Liability driven investments(h)	—		4,989		—		4,989		—		—		—		—
Total assets	$	35,288	$	271,353	$	—	$	306,641	$	6,166	$	320,243	$	—	$	326,409


Level 1						Unadjusted quoted prices in active markets for identical assets or liabilities;

Level 2						Quoted prices in active markets for similar assets and liabilities and inputs that are observable for the asset or liability; or

Level 3						Unobservable inputs, such as discounted cash flow models or valuations.


	March 27, 2022				December 26, 2021
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(In thousands)
Fixed-rate senior notes payable at 3.50%, at Level 2 inputs	$	(900,000)	$	(782,721)	$	(900,000)	$	(915,120)
Fixed-rate senior notes payable at 4.25%, at Level 2 inputs	(990,941)		(913,380)		(990,691)		(1,055,140)
Fixed-rate senior notes payable at 5.875%, at Level 2 inputs	(846,045)		(853,562)		(845,866)		(900,193)
Secured loans, at Level 3 inputs	—		—		(3)		(3)


	Three Months Ended
	March 26, 2022(a)		March 28, 2021(b)
	(In thousands)
Net sales
U.S.	$	2,581,208	$	1,999,559
U.K. and Europe	1,191,982		854,734
Mexico	467,205		419,132
Total	$	4,240,395	$	3,273,425


Sources of net sales	Three Months Ended March 27, 2022		Change from Three Months Ended March 28, 2021
			Amount		Percent
	(In thousands, except percent data)
U.S.	$	2,581,208	$	581,649	29.1	%
U.K. and Europe	1,191,982		337,248		39.5	%
Mexico	467,205		48,073		11.5	%
Total net sales	$	4,240,395	$	966,970	29.5	%


Components of gross profit	Three Months Ended March 27, 2022		Change from Three Months Ended March 28, 2021				Percent of Net Sales
							Three Months Ended
			Amount		Percent		March 27, 2022		March 28, 2021
	(In thousands, except percent data)
Net sales	$	4,240,395	$	966,970	29.5	%	100.0	%	100.0	%
Cost of sales	3,698,415		686,233		22.8	%	87.2	%	92.0	%
Gross profit	$	541,980	$	280,737	107.5	%	12.8	%	8.0	%


Sources of gross profit	Three Months Ended March 27, 2022		Change from Three Months Ended March 28, 2021
			Amount		Percent
	(In thousands, except percent data)
U.S.	$	422,004	$	289,145	217.6	%
U.K. and Europe	39,079		1,271		3.4	%
Mexico	80,883		(9,679)		(10.7)	%
Elimination	14		—		—	%
Total gross profit	$	541,980	$	280,737	107.5	%


Sources of cost of sales	Three Months Ended March 27, 2022		Change from Three Months Ended March 28, 2021
			Amount		Percent
	(In thousands, except percent data)
U.S.	$	2,159,204	$	292,504	15.7	%
U.K. and Europe	1,152,903		335,977		41.1	%
Mexico	386,322		57,752		17.6	%
Elimination	(14)		—		—	%
Total cost of sales	$	3,698,415	$	686,233	22.8	%


Components of operating income	Three Months Ended March 27, 2022		Change from Three Months Ended March 28, 2021				Percent of Net Sales
							Three Months Ended
			Amount		Percent		March 27, 2022		March 28, 2021
	(In thousands, except percent data)
Gross profit	$	541,980	$	280,737	107.5	%	12.8	%	8.0	%
SG&A expense	139,967		37,188		36.2	%	3.3	%	3.1	%

Operating income	$	402,013	$	243,549	153.7	%	9.5	%	4.8	%


Sources of operating income	Three Months Ended March 27, 2022		Change from Three Months Ended March 28, 2021
			Amount		Percent
	(In thousands, except percent data)
U.S.	$	355,075	$	286,950	421.2	%
U.K. and Europe	(21,640)		(32,135)		(306.2)	%
Mexico	68,564		(11,266)		(14.1)	%
Eliminations	14		—		—	%
Total operating income	$	402,013	$	243,549	153.7	%

Sources of SG&A expense	Three Months Ended March 27, 2022		Change from Three Months Ended March 28, 2021
			Amount		Percent
	(In thousands, except percent data)
U.S.	$	66,929	$	2,195	3.4	%
U.K. and Europe	60,719		33,406		122.3	%
Mexico	12,319		1,587		14.8	%
Total SG&A expense	$	139,967	$	37,188	36.2	%