PILGRIMS PRIDE CORP Annual Report - A Deeper Dive for Investors

Considering an investment in Pilgrim's Pride? This guide helps you understand the company's recent performance and what it could mean for your portfolio. We'll break down their operations and financials in plain English, highlighting key insights from their annual report.

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1. Business Overview

Pilgrim's Pride stands as a major player in the global chicken industry. The company operates across key regions, including the US, Europe, and Mexico, offering a diverse range of products from fresh chicken to prepared foods. Its products reach consumers through both retail stores (supermarkets) and food service channels (restaurants, institutions), supported by significant export operations. Pilgrim's Pride typically manages a vertically integrated operation, overseeing everything from breeding and hatching to growing, processing, and distributing poultry products.

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2. Financial Performance

For the fiscal year ending December 2024, Pilgrim's Pride reported total revenue of approximately $17.47 billion. This revenue came from its primary operating segments:

• US operations: About $10.81 billion
• Europe operations: About $4.00 billion
• Mexico operations: About $2.66 billion

The company's Selling, General, and Administrative (SG&A) expenses—the day-to-day costs of running the business, excluding direct production—totaled about $1.05 billion for the same period.

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3. Risk Factors

Investors should understand potential threats that could impact the company's performance and stock price:

• Commodity Price Swings: Despite hedging efforts, significant and sustained increases in feed ingredients like corn and soybean meal (major input costs) could still squeeze profit margins.
• Currency Fluctuations: International operations mean changes in exchange rates can impact the value of earnings from Europe and Mexico when converted to US dollars.
• Debt Levels: While manageable, $3 billion in long-term debt requires ongoing interest payments. Rising interest rates could make future borrowing more expensive or increase the cost of variable-rate debt.
• Disease Outbreaks: The poultry industry remains vulnerable to diseases like avian influenza, which can lead to significant production losses, trade restrictions, and consumer apprehension.
• Labor Costs & Availability: The food processing industry is labor-intensive. Rising labor costs or shortages could impact production and profitability.
• Changing Consumer Preferences: Shifts towards plant-based alternatives, different dietary trends, or increased demand for specific animal welfare standards could affect demand for conventional chicken products.
• Regulatory Changes: New environmental regulations, animal welfare laws, or food safety standards could increase operational costs or require significant capital investments.
• Competition: The poultry industry is highly competitive, and intense competition could impact pricing and market share.
• Supply Chain Disruptions: Global events, geopolitical tensions, or natural disasters could disrupt supply chains, affecting the availability of inputs or product distribution.

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4. Management Discussion (MD&A Highlights)

Management actively manages the company's capital structure and mitigates certain market risks:

• Financing Activities: In October 2023, the company issued new Senior Notes (long-term debt) totaling $1 billion, maturing in 2034 with an interest rate of 6.875%. This move secures long-term funding.
• Capital Management: Pilgrim's Pride announced a bond repurchase program for 2025. This strategy typically aims to reduce outstanding debt, potentially lowering future interest expenses, improving financial ratios, and signaling confidence in the company's financial health.
• Risk Management: The company actively uses derivatives (financial contracts) to hedge against price fluctuations in key commodities like corn and soybean meal (major feed costs) and to manage foreign exchange rate risks, demonstrating a proactive approach to market volatility.

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5. Financial Health

As of December 2024, Pilgrim's Pride's financial position includes:

• Cash & Investments: The company held $1 billion in cash and cash equivalents, reporting no short-term investments.
• Long-Term Debt: Pilgrim's Pride carries significant long-term debt of about $3 billion, primarily in Senior Notes maturing between 2031 and 2034, with interest rates ranging from 3.50% to 6.875%.
• Credit Lines: The company maintains access to various revolving credit facilities (flexible loan arrangements) in the US (due 2028), Europe (due 2027), and Mexico, providing additional liquidity. It also holds a specific loan for the Live Oak CHP Project at 5.15% interest.
• Current Obligations: Its current accrued liabilities (short-term bills) totaled about $1 billion.

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6. Future Outlook

The company's plan to repurchase bonds in 2025 and its recent long-term debt issuance demonstrate an active approach to capital structure management.

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7. Competitive Position

The poultry industry generally features intense competition, with numerous domestic and international players. Competition typically revolves around price, product quality, brand recognition, distribution capabilities, and customer service.

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This guide provides a snapshot of Pilgrim's Pride Corp's recent financial and operational highlights. Investors can use this information to better understand the company's market position, financial structure, and risk profile.