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Pilgrim’s Pride Reports Third Quarter 2024 Results with $4.6 Billion in Net Sales and Operating Income of $508.4 Million
Source: Nasdaq GlobeNewswire / 30 Oct 2024 16:30:01 America/New_York
GREELEY, Colo., Oct. 30, 2024 (GLOBE NEWSWIRE) -- Pilgrim’s Pride Corporation (NASDAQ: PPC), one of the world's largest poultry producers, reports its third quarter 2024 financial results.
Third Quarter Highlights
- Net Sales of $4.6 billion.
- Consolidated GAAP operating income margin of 11.1%.
- GAAP Net Income of $350.0 million and GAAP EPS of $1.47. Adjusted Net Income of $387.0 million or Adjusted EPS of $1.63.
- Adjusted EBITDA of $660.4 million, or a 14.4% margin.
- Our U.S. Fresh portfolio continued to improve through progress in operational excellence, strong demand, and enhanced mix. Overall chicken demand was strong given competitive pricing and value delivered to the consumer, with our Key Customers expanding faster than category averages in the Case Ready and Small Bird segments. The Commodity segment improved given continued progress in production efficiencies and positive market fundamentals.
- Diversification through value-added offerings continues to accelerate. Our branded prepared foods portfolio expanded across retail and foodservice through increased distribution and promotional activity.
- Europe improved Adjusted EBITDA nearly 40% versus prior year given recent network and back office optimization efforts, enhanced mix with Key Customers, and further diversification through branded offerings and innovation. Richmond® and Fridge Raiders® continued to grow faster than category averages and our innovation efforts continue to be recognized by the market with multiple industry awards.
- Mexico results followed normal seasonality, while continuing to cultivate partnerships with Key Customers as sales grew ahead of the market. Diversification efforts continued to progress as branded sales rose over 20%. Operational excellence efforts to expand production and mitigate risk remained on track.
- Stronger liquidity position given healthy cash generation throughout the quarter. Net leverage ratio of 0.65x Adjusted EBITDA, providing the foundation to execute the company’s growth strategy and create value for our shareholders.
- Pilgrim’s continued to demonstrate progress against its ESG aspirations as detailed in the publication of the 2023 Sustainability Report. Since 2019, performance against the Global Safety Index has improved by 69%, and Scope 1 and 2 absolute GHG emissions have been reduced by 17%. Also, since 2021, over 1,500 team members have signed up for tuition-free, higher education programs through our Better Futures initiative.
(Unaudited) Three Months Ended Nine Months Ended September 29,
2024September 24,
2023Y/Y Change September 29,
2024September 24,
2023Y/Y Change (In millions, except per share and percentages) Net sales $ 4,585.0 $ 4,360.2 +5.2 % $ 13,506.2 $ 12,833.9 +5.2 % U.S. GAAP EPS $ 1.47 $ 0.51 +188.2 % $ 3.58 $ 0.79 +353.2 % Operating income $ 508.4 $ 206.4 +146.3 % $ 1,199.4 $ 338.0 +254.9 % Adjusted EBITDA(1) $ 660.4 $ 324.0 +103.8 % $ 1,688.2 $ 724.7 +133.0 % Adjusted EBITDA margin(1) 14.4 % 7.4 % +7.0pts 12.5 % 5.6 % +6.9pts (1) Reconciliations for non-U.S. GAAP measures are provided in subsequent sections within this release. “Throughout the quarter, we continued to emphasize operational excellence, diversify our portfolio and cultivate partnerships with Key Customers to drive value for the consumer. Our unrelenting focus on quality, service and innovation is reflected in our performance,” said Fabio Sandri, Pilgrim’s President and Chief Executive Officer.
In the U.S., the relative affordability and availability of chicken drove increased demand across retail and food service. Case Ready and Small Bird drove profitable growth as demand improved from Key Customers and there was continued progress in operational excellence. In Big Bird, profitability grew from sustained improvements in production efficiencies, lower input costs, and enhanced commodity cutout values. Similarly, Prepared continued to diversify the portfolio through incremental distribution across retail and foodservice.
“We partnered closely with our Key Customers to further cultivate consumer demand. As such, our approach accommodated changing input costs, enabling further investment in promotional activity, generating store traffic and driving growth well above the category. These efforts were amplified by attractive market fundamentals, especially in the Big Bird segment,” Sandri said.
Europe realized its highest quarterly adjusted EBITDA to date given continued progress in operational excellence, further diversification through branded offerings and strengthening Key Customer partnerships. New product introductions continue to gain momentum as the business launched over 280 new products during the quarter.
“Our new product pipeline has generated significant marketplace interest. We received multiple industry awards during the quarter for innovation, quality and functionality for our recently launched items. Given these efforts, we can further scale partnerships with Key Customers, enhance mix through branded offerings, and grow our prepared portfolio,” said Sandri.
Mexico continued to build its presence with Key Customers across retail and foodservice and further diversify its portfolio through brands. Investments in operational excellence to build capacity and drive operational efficiencies remained on track.
“Mexico continued to successfully drive all pillars of our strategies during typical seasonality for the business. As a result, we are increasingly well positioned to capture both short- and long-term growth opportunities,” remarked Sandri.
Pilgrim’s provided an update on its progress to become an industry leader in sustainability through the publication of its 2023 Sustainability Report. The report included an update on a variety of topics, including the company’s exceptional safety performance, product integrity standards, and GHG emissions reductions.
“Sustainability is critical to achieve our vision of becoming the best and most respected company in our industry and creating a better future for our team members and their families,” said Sandri.
Conference Call Information
A conference call to discuss Pilgrim’s quarterly results will be held tomorrow, Oct. 31, at 7 a.m. MT (9 a.m. ET). Participants are encouraged to pre-register for the conference call using the link below. Callers who pre-register will be given a unique PIN to gain immediate access to the call and bypass the live operator. Participants may pre-register at any time, including up to and after the call start time.
To pre-register, go to: https://dpregister.com/sreg/10193583/fdb3c986c1
You may also reach the pre-registration link by logging in through the investor section of our website at https://ir.pilgrims.com in the “Events & Presentations” section.
For those who would like to join the call but have not pre-registered, access is available by dialing +1 (844) 883-3889 within the US, or +1 (412) 317-9245 internationally, and requesting the “Pilgrim’s Pride Conference.”
Replays of the conference call will be available on Pilgrim’s website approximately two hours after the call concludes and can be accessed through the “Investor” section of www.pilgrims.com.
About Pilgrim’s Pride
Pilgrim’s employs approximately 62,000 people and operates protein processing plants and prepared-foods facilities in 14 states, Puerto Rico, Mexico, the U.K, the Republic of Ireland and continental Europe. The Company’s primary distribution is through retailers and foodservice distributors. For more information, please visit www.pilgrims.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 are considered forward-looking statements. Without limiting the foregoing, words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “should,” “targets,” “will” and the negative thereof and similar words and expressions are intended to identify forward-looking statements. It is important to note that 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; the ability to execute the Company’s business plan to achieve desired cost savings and profitability; future pricing for feed ingredients and the Company’s products; outbreaks of avian influenza or other diseases, either in Pilgrim’s Pride’s flocks or elsewhere, affecting its ability to conduct its operations and/or demand for its poultry products; contamination of Pilgrim’s Pride’s products, which has previously 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; management of cash resources; restrictions imposed by, and as a result of, Pilgrim’s Pride’s leverage; changes in laws or regulations affecting Pilgrim’s Pride’s operations or the application thereof; new immigration legislation or increased enforcement efforts in connection with existing immigration legislation that cause the costs of doing business to increase, cause Pilgrim’s Pride to change the way in which it does business, or otherwise disrupt its operations; competitive factors and pricing pressures or the loss of one or more of Pilgrim’s Pride’s largest customers; currency exchange rate fluctuations, trade barriers, exchange controls, expropriation and other risks associated with foreign operations; disruptions in international markets and distribution channels, including, but not limited to, the impacts of the Russia-Ukraine conflict; the risk of cyber-attacks, natural disasters, power losses, unauthorized access, telecommunication failures, and other problems on our information systems; and the impact of uncertainties of litigation and other legal matters described in our most recent Form 10-K and Form 10-Q, including the In re Broiler Chicken Antitrust Litigation, as well as other risks described under “Risk Factors” in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and subsequent filings with the Securities and Exchange Commission. The forward-looking statements in this release speak only as of the date hereof, and the Company undertakes no obligation to update any such statement after the date of this release, whether as a result of new information, future developments or otherwise, except as may be required by applicable law.
Contact: Andrew Rojeski Head of Strategy, Investor Relations, & Sustainability IRPPC@pilgrims.com www.pilgrims.com PILGRIM’S PRIDE CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) September 29, 2024 December 31, 2023 (In thousands) Cash and cash equivalents $ 1,877,981 $ 697,748 Restricted cash and restricted cash equivalents 6,431 33,475 Investment in available-for-sale securities 10,099 — Trade accounts and other receivables, less allowance for credit losses 1,067,650 1,129,178 Accounts receivable from related parties 1,964 1,778 Inventories 1,780,925 1,985,399 Income taxes receivable 63,418 161,062 Assets held for sale 5,640 — Prepaid expenses and other current assets 241,365 195,831 Total current assets 5,055,473 4,204,471 Deferred tax assets 30,317 4,890 Operating lease assets, net 267,812 266,707 Other long-lived assets 59,110 35,646 Intangible assets, net 862,400 853,983 Goodwill 1,312,806 1,286,261 Property, plant and equipment, net 3,112,616 3,158,403 Total assets $ 10,700,534 $ 9,810,361 Accounts payable $ 1,391,270 $ 1,410,576 Accounts payable to related parties 19,404 41,254 Revenue contract liabilities 85,129 84,958 Accrued expenses and other current liabilities 1,001,263 926,727 Income taxes payable 89,815 31,678 Current maturities of long-term debt 546 674 Total current liabilities 2,587,427 2,495,867 Noncurrent operating lease liabilities, less current maturities 206,796 203,348 Long-term debt, less current maturities 3,184,080 3,340,841 Deferred tax liabilities 472,183 385,548 Other long-term liabilities 31,382 40,180 Total liabilities 6,481,868 6,465,784 Common stock 2,623 2,620 Treasury stock (544,687 ) (544,687 ) Additional paid-in capital 1,988,591 1,978,849 Retained earnings 2,921,657 2,071,073 Accumulated other comprehensive loss (163,590 ) (176,483 ) Total Pilgrim’s Pride Corporation stockholders’ equity 4,204,594 3,331,372 Noncontrolling interest 14,072 13,205 Total stockholders’ equity 4,218,666 3,344,577 Total liabilities and stockholders’ equity $ 10,700,534 $ 9,810,361 PILGRIM’S PRIDE CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended Nine Months Ended September 29, 2024 September 24, 2023 September 29, 2024 September 24, 2023 (In thousands, except per share data) Net sales $ 4,584,979 $ 4,360,196 $ 13,506,227 $ 12,833,915 Cost of sales 3,901,009 4,014,314 11,746,722 12,036,561 Gross profit 683,970 345,882 1,759,505 797,354 Selling, general and administrative expense 144,780 138,569 478,017 420,683 Restructuring activities 30,836 940 82,070 38,684 Operating income 508,354 206,373 1,199,418 337,987 Interest expense, net of capitalized interest 41,597 45,645 114,041 135,459 Interest income (22,099 ) (12,115 ) (48,308 ) (23,343 ) Foreign currency transaction losses (gains) (678 ) 8,924 (7,240 ) 43,462 Miscellaneous, net 7,935 (2,201 ) 5,153 (26,185 ) Income before income taxes 481,599 166,120 1,135,772 208,594 Income tax expense 131,609 44,553 284,321 20,488 Net income 349,990 121,567 851,451 188,106 Less: Net income attributable to noncontrolling interests 130 289 867 1,185 Net income attributable to Pilgrim’s Pride Corporation $ 349,860 $ 121,278 $ 850,584 $ 186,921 Weighted average shares of Pilgrim's Pride Corporation common stock outstanding: Basic 237,123 236,787 236,953 236,702 Effect of dilutive common stock equivalents 768 560 733 542 Diluted 237,891 237,347 237,686 237,244 Net income attributable to Pilgrim's Pride Corporation per share of common stock outstanding: Basic $ 1.48 $ 0.51 $ 3.59 $ 0.79 Diluted $ 1.47 $ 0.51 $ 3.58 $ 0.79 PILGRIM’S PRIDE CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended September 29, 2024 September 24, 2023 (In thousands) Cash flows from operating activities: Net income $ 851,451 $ 188,106 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 321,768 307,414 Deferred income tax expense (benefit) 45,220 (46,808 ) Asset impairment 26,633 4,011 Gain on early extinguishment of debt recognized as a component of interest expense (11,211 ) — Stock-based compensation 9,205 5,236 Loan cost amortization 3,798 6,059 Accretion of discount related to Senior Notes 1,898 1,581 Loss (gain) on property disposals 1,104 (8,416 ) Loss (gain) on equity-method investments (6 ) 330 Changes in operating assets and liabilities: Trade accounts and other receivables 62,646 (65,183 ) Inventories 172,990 (12,957 ) Prepaid expenses and other current assets (65,555 ) (8,039 ) Accounts payable, accrued expenses and other current liabilities 79,672 12,224 Income taxes 151,902 40,463 Long-term pension and other postretirement obligations 13,135 (1,700 ) Other operating assets and liabilities (23,858 ) (22,723 ) Cash provided by operating activities 1,640,792 399,598 Cash flows from investing activities: Acquisitions of property, plant and equipment (316,949 ) (432,339 ) Proceeds from property disposals 9,724 17,188 Proceeds from insurance recoveries — 20,681 Cash used in investing activities (307,225 ) (394,470 ) Cash flows from financing activities: Payments on revolving line of credit, long-term borrowings and finance lease obligations (151,671 ) (765,899 ) Proceeds from revolving line of credit and long-term borrowings — 1,278,032 Proceeds from contribution (distribution) of capital under Tax Sharing Agreement between JBS USA Holdings and Pilgrim’s Pride Corporation 1,425 (1,592 ) Payments on early extinguishment of debt (200 ) — Payments of capitalized loan costs (16 ) (10,275 ) Cash provided by (used in) financing activities (150,462 ) 500,266 Effect of exchange rate changes on cash and cash equivalents (29,916 ) (1,036 ) Increase in cash, cash equivalents and restricted cash 1,153,189 504,358 Cash, cash equivalents and restricted cash, beginning of period 731,223 434,759 Cash, cash equivalents and restricted cash, end of period $ 1,884,412 $ 939,117 PILGRIM’S PRIDE CORPORATION Non-GAAP Financial Measures Reconciliation (Unaudited)
“EBITDA” is defined as the sum of net income plus interest, taxes, depreciation and amortization. “Adjusted EBITDA” is calculated by adding to EBITDA certain items of expense and deducting from EBITDA certain items of income that we believe are not indicative of our ongoing operating performance consisting of: (1) foreign currency transaction losses (gains), (2) costs related to litigation settlements, (3) restructuring activities losses, (4) loss on settlement of pension obligations due to plan termination, (5) write-downs of inventory as a result of hurricane, (6) property insurance recoveries for property damage losses, and (7) net income attributable to noncontrolling interests. EBITDA is presented because it is used by management and we believe it is frequently used by securities analysts, investors and other interested parties, in addition to and not in lieu of results prepared in conformity with accounting principles generally accepted in the U.S. (“U.S. GAAP”), to compare the performance of companies. We believe investors would be interested in our Adjusted EBITDA because this is how our management analyzes EBITDA applicable to continuing operations. The Company also believes that Adjusted EBITDA, in combination with the Company’s financial results calculated in accordance with U.S. GAAP, provides investors with additional perspective regarding the impact of certain significant items on EBITDA and facilitates a more direct comparison of its performance with its competitors. EBITDA and Adjusted EBITDA are not measurements of financial performance under U.S. GAAP. EBITDA and Adjusted EBITDA have limitations as analytical tools and should not be considered in isolation or as substitutes for an analysis of our results as reported under U.S. GAAP. In addition, other companies in our industry may calculate these measures differently limiting their usefulness as a comparative measure. Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as an alternative to net income as indicators of our operating performance or any other measures of performance derived in accordance with U.S. GAAP. These limitations should be compensated for by relying primarily on our U.S. GAAP results and using EBITDA and Adjusted EBITDA only on a supplemental basis.PILGRIM'S PRIDE CORPORATION Reconciliation of Adjusted EBITDA (Unaudited) Three Months Ended Nine Months Ended September 29, 2024 September 24, 2023 September 29, 2024 September 24, 2023 (In thousands) Net income $ 349,990 $ 121,567 $ 851,451 $ 188,106 Add: Interest expense, net(a) 19,498 33,530 65,733 112,116 Income tax expense 131,609 44,553 284,321 20,488 Depreciation and amortization 110,470 104,300 321,768 307,414 EBITDA 611,567 303,950 1,523,273 628,124 Add: Foreign currency transaction losses (gains)(b) (678 ) 8,924 (7,240 ) 43,462 Litigation settlements(c) — 10,500 72,190 34,700 Restructuring activities losses(d) 30,836 940 82,070 38,684 Loss on settlement of pension from plan termination(e) 10,709 — 10,709 — Inventory write-down as a result of hurricane(f) 8,075 — 8,075 — Minus: Property insurance recoveries(g) — — — 19,086 Net income attributable to noncontrolling interest 130 289 867 1,185 Adjusted EBITDA $ 660,379 $ 324,025 $ 1,688,210 $ 724,699 (a) Interest expense, net, consists of interest expense less interest income. (b) Prior to April 1, 2024, the Company measures the financial statements of its Mexico reportable segment as if the U.S. dollar were the functional currency. Accordingly, we remeasure assets and liabilities, other than nonmonetary assets, of the Mexico reportable segment at current exchange rates. We remeasure nonmonetary assets using the historical exchange rate in effect on the date of each asset’s acquisition. Currency exchange gains or losses resulting from these remeasurements were previously recognized in the line item Foreign currency transaction losses (gains) in the Condensed Consolidated Statements of Income. Effective April 1, 2024, the Company changed the functional currency of its Mexico reportable segment from U.S. dollar to Mexican peso, which means all translation gains/losses on outstanding balances are now recognized in accumulated other comprehensive income. Transactional functional currency gains/losses are included in the line item Foreign currency transaction losses (gains) in the Condensed Consolidated Statements of Income. (c) This represents expenses recognized in anticipation of probable settlements in ongoing litigation. (d) Restructuring activities losses are related to costs incurred, such as severance, asset impairment, contract termination, and others, as part of multiple ongoing restructuring initiatives throughout our Europe reportable segment. (e) This represents a loss recognized on the settlement of pension plan obligations related to an ongoing plan termination of our two U.S. defined benefit plans. We expect the termination to be substantially complete by the end of the year. (f) This primarily represents broiler losses incurred as a result of Hurricane Helene in late September 2024. (g) This represents property insurance recoveries primarily for the property damage losses incurred as a result of the tornado in Mayfield, KY in December 2021. The summary unaudited consolidated income statement data for the twelve months ended September 29, 2024 (the LTM Period) have been calculated by subtracting the applicable unaudited consolidated income statement data for the nine months ended September 24, 2023 from the sum of (1) the applicable audited consolidated income statement data for the year ended December 31, 2023 and (2) the applicable unaudited consolidated income statement data for the nine months ended September 29, 2024.
PILGRIM'S PRIDE CORPORATION Reconciliation of LTM Adjusted EBITDA (Unaudited) Three Months Ended LTM Ended December 31,
2023March 31,
2024June 30,
2024September 29,
2024September 29,
2024(In thousands) Net income $ 134,211 $ 174,938 $ 326,523 $ 349,990 $ 985,662 Add: Interest expense, net 54,505 30,897 15,338 19,498 120,238 Income tax expense 22,417 52,062 100,650 131,609 306,738 Depreciation and amortization 112,486 103,350 107,948 110,470 434,254 EBITDA 323,619 361,247 550,459 611,567 1,846,892 Add: Foreign currency transaction losses (gains) (22,892 ) (4,337 ) (2,225 ) (678 ) (30,132 ) Litigation settlements 4,700 940 71,250 — 76,890 Restructuring activities losses 5,661 14,559 36,675 30,836 87,731 Loss on settlement of pension from plan termination — — — 10,709 10,709 Inventory write-down as a result of hurricane — — — 8,075 8,075 Minus: Property insurance recoveries 2,038 — — — 2,038 Net income (loss) attributable to noncontrolling interest (442 ) 517 220 130 425 Adjusted EBITDA $ 309,492 $ 371,892 $ 655,939 $ 660,379 $ 1,997,702
EBITDA margins have been calculated by taking the relevant unaudited EBITDA figures, then dividing by net sales for the applicable period. EBITDA margins are presented because they are used by management and we believe it is frequently used by securities analysts, investors and other interested parties, as a supplement to our results prepared in accordance with U.S. GAAP, to compare the performance of companies.PILGRIM'S PRIDE CORPORATION Reconciliation of EBITDA Margin (Unaudited) Three Months Ended Nine Months Ended Three Months Ended Nine Months Ended September 29, 2024 September 24, 2023 September 29, 2024 September 24, 2023 September 29, 2024 September 24, 2023 September 29, 2024 September 24, 2023 (In thousands) Net income $ 349,990 $ 121,567 $ 851,451 $ 188,106 7.63 % 2.79 % 6.30 % 1.47 % Add: Interest expense, net 19,498 33,530 65,733 112,116 0.43 % 0.77 % 0.49 % 0.87 % Income tax expense 131,609 44,553 284,321 20,488 2.87 % 1.02 % 2.11 % 0.16 % Depreciation and amortization 110,470 104,300 321,768 307,414 2.40 % 2.39 % 2.38 % 2.39 % EBITDA 611,567 303,950 1,523,273 628,124 13.33 % 6.97 % 11.28 % 4.89 % Add: Foreign currency transaction losses (gains) (678 ) 8,924 (7,240 ) 43,462 (0.01 ) % 0.20 % (0.05 ) % 0.33 % Litigation settlements — 10,500 72,190 34,700 — % 0.24 % 0.53 % 0.27 % Restructuring activities losses 30,836 940 82,070 38,684 0.67 % 0.02 % 0.61 % 0.30 % Loss on settlement of pension from plan termination 10,709 — 10,709 — 0.23 % — % 0.08 % — % Inventory write-down as a result of hurricane 8,075 — 8,075 — 0.18 % — % 0.06 % — % Minus: Property insurance recoveries — — — 19,086 — % — % — % 0.15 % Net income attributable to noncontrolling interest 130 289 867 1,185 — % 0.01 % 0.01 % 0.01 % Adjusted EBITDA $ 660,379 $ 324,025 $ 1,688,210 $ 724,699 14.40 % 7.42 % 12.50 % 5.63 % Net sales $ 4,584,979 $ 4,360,196 $ 13,506,227 $ 12,833,915 $ 4,584,979 $ 4,360,196 $ 13,506,227 $ 12,833,915
Adjusted EBITDA by segment figures are presented because they are used by management and we believe they are frequently used by securities analysts, investors and other interested parties, as a supplement to our results prepared in accordance with U.S. GAAP, to compare the performance of companies.PILGRIM'S PRIDE CORPORATION Reconciliation of Adjusted EBITDA (Unaudited) Three Months Ended Three Months Ended September 29, 2024 September 24, 2023 U.S. Europe Mexico Total U.S. Europe Mexico Total (In thousands) (In thousands) Net income $ 278,241 $ 36,209 $ 35,540 $ 349,990 $ 31,124 $ 35,743 $ 54,700 $ 121,567 Add: Interest expense, net(a) 30,734 (4,195 ) (7,041 ) 19,498 42,331 (649 ) (8,152 ) 33,530 Income tax expense 101,478 14,038 16,093 131,609 20,953 5,550 18,050 44,553 Depreciation and amortization 70,121 34,959 5,390 110,470 63,052 35,927 5,321 104,300 EBITDA 480,574 81,011 49,982 611,567 157,460 76,571 69,919 303,950 Add: Foreign currency transaction losses (gains)(b) (1 ) 202 (879 ) (678 ) 6,168 2,933 (177 ) 8,924 Litigation settlements(c) — — — — 10,500 — — 10,500 Restructuring activities losses(d) — 30,836 — 30,836 — 940 — 940 Loss on settlement of pension from plan termination(e) 10,709 — — 10,709 — — — — Inventory write-down as a result of hurricane(f) 8,075 — — 8,075 — — — — Minus: Net income attributable to noncontrolling interest — — 130 130 — — 289 289 Adjusted EBITDA $ 499,357 $ 112,049 $ 48,973 $ 660,379 $ 174,128 $ 80,444 $ 69,453 $ 324,025 (a) Interest expense, net, consists of interest expense less interest income. (b) Transactional functional currency gains/losses are included in the line item Foreign currency transaction losses (gains) in the Condensed Consolidated Statements of Income. (c) This represents expenses recognized in anticipation of probable settlements in ongoing litigation. (d) Restructuring activities losses are related to costs incurred, such as severance, asset impairment, contract termination, and others, as part of multiple ongoing restructuring initiatives throughout our Europe reportable segment. (e) This represents a loss recognized on the settlement of pension plan obligations related to an ongoing plan termination of our two U.S. defined benefit plans. We expect the termination to be substantially complete by the end of the year. (f) This primarily represents broiler losses incurred as a result of Hurricane Helene in late September 2024. PILGRIM'S PRIDE CORPORATION Reconciliation of Adjusted EBITDA (Unaudited) Nine Months Ended Nine Months Ended September 29, 2024 September 24, 2023 U.S. Europe Mexico Total U.S. Europe Mexico Total (In thousands) (In thousands) Net income (loss) $ 579,948 $ 102,232 $ 169,271 $ 851,451 $ (43,801 ) $ 68,485 $ 163,422 $ 188,106 Add: Interest expense, net(a) 100,266 (8,734 ) (25,799 ) 65,733 127,234 (1,470 ) (13,648 ) 112,116 Income tax expense (benefit) 215,655 9,383 59,283 284,321 (9,895 ) 4,743 25,640 20,488 Depreciation and amortization 200,006 104,852 16,910 321,768 187,048 103,483 16,883 307,414 EBITDA 1,095,875 207,733 219,665 1,523,273 260,586 175,241 192,297 628,124 Add: Foreign currency transaction losses (gains)(b) — (53 ) (7,187 ) (7,240 ) 55,027 835 (12,400 ) 43,462 Litigation settlements(c) 72,190 — — 72,190 34,700 — — 34,700 Restructuring activities losses(d) — 82,070 — 82,070 — 38,684 — 38,684 Loss on settlement of pension from plan termination(e) 10,709 — — 10,709 — — — — Inventory write-down as a result of hurricane(f) 8,075 — — 8,075 — — — — Minus: Property insurance recoveries(g) — — — — 19,086 — — 19,086 Net income attributable to noncontrolling interest — — 867 867 — — 1,185 1,185 Adjusted EBITDA $ 1,186,849 $ 289,750 $ 211,611 $ 1,688,210 $ 331,227 $ 214,760 $ 178,712 $ 724,699 (a) Interest expense, net, consists of interest expense less interest income. (b) Prior to April 1, 2024, the Company measures the financial statements of its Mexico reportable segment as if the U.S. dollar were the functional currency. Accordingly, we remeasure assets and liabilities, other than nonmonetary assets, of the Mexico reportable segment at current exchange rates. We remeasure nonmonetary assets using the historical exchange rate in effect on the date of each asset’s acquisition. Currency exchange gains or losses resulting from these remeasurements were previously recognized in the line item Foreign currency transaction losses (gains) in the Condensed Consolidated Statements of Income. Effective April 1, 2024, the Company changed the functional currency of its Mexico reportable segment from U.S. dollar to Mexican peso, which means all translation gains/losses on outstanding balances are now recognized in accumulated other comprehensive income. Transactional functional currency gains/losses are included in the line item Foreign currency transaction losses (gains) in the Condensed Consolidated Statements of Income. (c) This represents expenses recognized in anticipation of probable settlements in ongoing litigation. (d) Restructuring activities losses are related to costs incurred, such as severance, asset impairment, contract termination, and others, as part of multiple ongoing restructuring initiatives throughout our Europe reportable segment. (e) This represents a loss recognized on the settlement of pension plan obligations related to an ongoing plan termination of our two U.S. defined benefit plans. We expect the termination to be substantially complete by the end of the year. (f) This primarily represents broiler losses incurred as a result of Hurricane Helene in late September 2024. (g) This represents property insurance recoveries primarily for the property damage losses incurred as a result of the tornado in Mayfield, KY in December 2021. Adjusted Operating Income is calculated by adding to Operating Income certain items of expense and deducting from Operating Income certain items of income. Management believes that presentation of Adjusted Operating Income provides useful supplemental information about our operating performance and enables comparison of our performance between periods because certain costs shown below are not indicative of our current operating performance. A reconciliation of GAAP operating income to adjusted operating income as follows:
PILGRIM'S PRIDE CORPORATION Reconciliation of Adjusted Operating Income (Unaudited) Three Months Ended Nine Months Ended September 29, 2024 September 24, 2023 September 29, 2024 September 24, 2023 (In thousands) GAAP operating income, U.S. operations $ 419,844 $ 101,382 $ 907,249 $ 110,541 Litigation settlements — 10,500 72,190 34,700 Inventory write-down as a result of hurricane 8,075 — 8,075 — Adjusted operating income, U.S. operations $ 427,919 $ 111,882 $ 987,514 $ 145,241 Adjusted operating income margin, U.S. operations 15.4 % 4.5 % 12.3 % 2.0 % Three Months Ended Nine Months Ended September 29, 2024 September 24, 2023 September 29, 2024 September 24, 2023 (In thousands) GAAP operating income, Europe operations $ 45,601 $ 42,809 $ 100,710 $ 70,583 Restructuring activities losses 30,836 940 82,070 38,684 Adjusted operating income, Europe operations $ 76,437 $ 43,749 $ 182,780 $ 109,267 Adjusted operating income margin, Europe operations 5.8 % 3.3 % 4.7 % 2.8 % Three Months Ended Nine Months Ended September 29, 2024 September 24, 2023 September 29, 2024 September 24, 2023 (In thousands) GAAP operating income, Mexico operations $ 42,909 $ 62,182 $ 191,459 $ 157,076 No adjustments — — — — Adjusted operating income, Mexico operations $ 42,909 $ 62,182 $ 191,459 $ 157,076 Adjusted operating income margin, Mexico operations 8.5 % 11.1 % 11.9 % 9.8 %
Adjusted Operating Income Margin for each of our reportable segments is calculated by dividing Adjusted operating income by Net Sales. Management believes that presentation of Adjusted Operating Income Margin provides useful supplemental information about our operating performance and enables comparison of our performance between periods because certain costs shown below are not indicative of our current operating performance. A reconciliation of GAAP operating income margin for each of our reportable segments to adjusted operating income margin for each of our reportable segments is as follows:PILGRIM'S PRIDE CORPORATION Reconciliation of GAAP Operating Income Margin to Adjusted Operating Income Margin (Unaudited) Three Months Ended Nine Months Ended September 29, 2024 September 24, 2023 September 29, 2024 September 24, 2023 (In percent) GAAP operating income margin, U.S. operations 15.1 % 4.1 % 11.3 % 1.5 % Litigation settlements — % 0.4 % 0.9 % 0.5 % Inventory write-down as a result of hurricane 0.3 % — % 0.1 % — % Adjusted operating income margin, U.S. operations 15.4 % 4.5 % 12.3 % 2.0 % Three Months Ended Nine Months Ended September 29, 2024 September 24, 2023 September 29, 2024 September 24, 2023 (In percent) GAAP operating income margin, Europe operations 3.5 % 3.3 % 2.6 % 1.8 % Restructuring activities losses 2.3 % — % 2.1 % 1.0 % Adjusted operating income margin, Europe operations 5.8 % 3.3 % 4.7 % 2.8 % Three Months Ended Nine Months Ended September 29, 2024 September 24, 2023 September 29, 2024 September 24, 2023 (In percent) GAAP operating income margin, Mexico operations 8.5 % 11.1 % 11.9 % 9.8 % No adjustments — % — % — % — % Adjusted operating income margin, Mexico operations 8.5 % 11.1 % 11.9 % 9.8 %
Adjusted net income attributable to Pilgrim's Pride Corporation (“Pilgrim's”) is calculated by adding to Net income attributable to Pilgrim's certain items of expense and deducting from Net income attributable to Pilgrim's certain items of income, as shown below in the table. Adjusted net income attributable to Pilgrim’s Pride Corporation per common diluted share is presented because it is used by management, and we believe it is frequently used by securities analysts, investors and other interested parties, in addition to and not in lieu of results prepared in conformity with U.S. GAAP, to compare the performance of companies. Management also believe that this non-U.S. GAAP financial measure, in combination with our financial results calculated in accordance with U.S. GAAP, provides investors with additional perspective regarding the impact of such charges on net income attributable to Pilgrim’s Pride Corporation per common diluted share. Adjusted net income attributable to Pilgrim’s Pride Corporation per common diluted share is not a measurement of financial performance under U.S. GAAP, has limitations as an analytical tool and should not be considered in isolation or as a substitute for an analysis of our results as reported under U.S. GAAP. Management believes that presentation of adjusted net income attributable to Pilgrim’s provides useful supplemental information about our operating performance and enables comparison of our performance between periods because certain costs shown below are not indicative of our current operating performance. A reconciliation of net income (loss) attributable to Pilgrim’s Pride Corporation per common diluted share to adjusted net income attributable to Pilgrim’s Pride Corporation per common diluted share is as follows:PILGRIM'S PRIDE CORPORATION Reconciliation of Adjusted Net Income (Unaudited) Three Months Ended Nine Months Ended September 29, 2024 September 24, 2023 September 29, 2024 September 24, 2023 (In thousands, except per share data) Net income attributable to Pilgrim's $ 349,860 $ 121,278 $ 850,584 $ 186,921 Add: Foreign currency transaction losses (gains) (678 ) 8,924 (7,240 ) 43,462 Litigation settlements — 10,500 72,190 34,700 Restructuring activities losses 30,836 940 82,070 38,684 Loss on settlement of pension from plan termination 10,709 — 10,709 — Inventory write-down as a result of hurricane 8,075 — 8,075 — Minus: Gain on early extinguishment of debt (52 ) — 11,159 — Property insurance recoveries — — — 19,086 Adjusted net income attributable to Pilgrim's before tax impact of adjustments 398,854 141,642 1,005,229 284,681 Net tax impact of adjustments(a) (11,857 ) (4,927 ) (37,423 ) (23,657 ) Adjusted net income attributable to Pilgrim's $ 386,997 $ 136,715 $ 967,806 $ 261,024 Weighted average diluted shares of common stock outstanding 237,891 237,347 237,686 237,244 Adjusted net income attributable to Pilgrim's per common diluted share $ 1.63 $ 0.58 $ 4.07 $ 1.10 (a) Net tax expense (benefit) of adjustments represents the tax impact of all adjustments shown above. Adjusted EPS is calculated by dividing the adjusted net income attributable to Pilgrim's stockholders by the weighted average number of diluted shares. Management believes that Adjusted EPS provides useful supplemental information about our operating performance and enables comparison of our performance between periods because certain costs shown below are not indicative of our current operating performance. A reconciliation of U.S. GAAP to non-U.S. GAAP financial measures is as follows:
PILGRIM'S PRIDE CORPORATION Reconciliation of GAAP EPS to Adjusted EPS (Unaudited) Three Months Ended Nine Months Ended September 29, 2024 September 24, 2023 September 29, 2024 September 24, 2023 (In thousands, except per share data) GAAP EPS $ 1.47 $ 0.51 $ 3.58 $ 0.79 Add: Foreign currency transaction losses (gains) — 0.04 (0.03 ) 0.18 Litigation settlements — 0.04 0.30 0.15 Restructuring activities losses 0.13 — 0.35 0.16 Loss on settlement of pension from plan termination 0.05 — 0.05 — Inventory write-down as a result of hurricane 0.03 — 0.03 — Minus: Gain on early extinguishment of debt — — 0.05 — Property insurance recoveries — — — 0.08 Adjusted EPS before tax impact of adjustments 1.68 0.59 4.23 1.20 Net tax impact of adjustments(a) (0.05 ) (0.01 ) (0.16 ) (0.10 ) Adjusted EPS $ 1.63 $ 0.58 $ 4.07 $ 1.10 Weighted average diluted shares of common stock outstanding 237,891 237,347 237,686 237,244 (a) Net tax impact of adjustments represents the tax impact of all adjustments shown above. PILGRIM'S PRIDE CORPORATION Supplementary Selected Segment and Geographic Data (Unaudited) Three Months Ended Nine Months Ended September 29, 2024 September 24, 2023 September 29, 2024 September 24, 2023 (In thousands) Sources of net sales by geographic region of origin: U.S. $ 2,773,391 $ 2,488,317 $ 8,016,688 $ 7,367,093 Europe 1,308,127 1,312,205 3,877,571 3,862,219 Mexico 503,461 559,674 1,611,968 1,604,603 Total net sales $ 4,584,979 $ 4,360,196 $ 13,506,227 $ 12,833,915 Sources of cost of sales by geographic region of origin: U.S. $ 2,280,425 $ 2,317,661 $ 6,834,091 $ 7,044,003 Europe 1,176,286 1,216,258 3,539,695 3,595,051 Mexico 444,298 480,395 1,372,936 1,397,294 Elimination — — — 213 Total cost of sales $ 3,901,009 $ 4,014,314 $ 11,746,722 $ 12,036,561 Sources of gross profit by geographic region of origin: U.S. $ 492,966 $ 170,656 $ 1,182,597 $ 323,090 Europe 131,841 95,947 337,876 267,168 Mexico 59,163 79,279 239,032 207,309 Elimination — — — (213 ) Total gross profit $ 683,970 $ 345,882 $ 1,759,505 $ 797,354 Sources of operating income by geographic region of origin: U.S. $ 419,844 $ 101,382 $ 907,249 $ 110,541 Europe 45,601 42,809 100,710 70,583 Mexico 42,909 62,182 191,459 157,076 Elimination — — — (213 ) Total operating income $ 508,354 $ 206,373 $ 1,199,418 $ 337,987