Food products company Pilgrim’s Pride Corporation (PPC) reported better-than-expected results for third-quarter 2014. Earnings came in at 99 cents per share, up from 62 cents earned in the year-ago quarter. The bottom line also surpassed the Zacks Consensus Estimate of 85 cents per share.
Revenues
Pilgrim’s Pride generated net revenues of $2,268 million in the third quarter, increasing 5.8% year over year. However, the top line fell short of the Zacks Consensus Estimate of $2,371 million.
Total revenues came in at $2,026.3 million, with the company deriving nearly 89.3% of it from the U.S. operations. It represented a year-over-year increase of 4.8%. Revenues from Mexican businesses, contributing 10.7% of total revenues, amounted to $241.8 million, up 15% year over year.
Costs/Margins
Pilgrim’s Pride’s cost of sales declined 4.6% year over year, representing 80.1% of total revenues versus 89% in the year-ago quarter. Gross margin grew by 890 basis points (bps) year over year to 19.9%. Selling, general and administrative expenses climbed 1.9% to $44.6 million.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) soared up 92.6% year over year to $435.4 million, with margin coming in at 19.2%.
Balance Sheet and Cash Flow
Exiting third-quarter 2014, Pilgrim’s Pride had cash and cash equivalents of approximately $868.6 million, up 64.7% from $527.4 million in the preceding quarter. Long-term debt (net of current portion) stood at $502.1 million, roughly flat on a sequential basis.
In the nine months ended Sep 28, 2014, Pilgrim’s Pride generated cash of $802.4 million from its operating activities, up 34.5% from $596.7 million generated in the year-ago comparable period. Capital spending amounted to $131.3 million, up 72.2% year over year.
Outlook: Management expects to attain higher operational efficiencies in the coming quarters. The company targets to reduce costs by $220 million in 2014.
With a market capitalization of $7.2 billion, Pilgrim’s Pride currently sports a Zacks Rank #1 (Strong Buy). Other stocks worth considering in the food products industry include Post Holdings, Inc. (POST), Sanderson Farms, Inc. (SAFM) and Tyson Foods, Inc. (TSN). While Post Holdings sports a Zacks Rank #1, both Sanderson Farms and Tyson Foods carry a Zacks Rank #2 (Buy).
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