Food products company, Pilgrim's Pride Corporation (PPC) reported moderate results for fourth-quarter 2014. While the company’s adjusted earnings reported significant year-over-year improvement, revenues lagged the Zacks Consensus Estimate.
The bottom line came in at 83 cents per share, up 50.9% from 55 cents earned in the year-ago quarter. The figure also surpassed the Zacks Consensus Estimate of 72 cents per share. The company’s net income for fourth-quarter 2014 stood at $167.0 million, up 16.2% from the year-ago tally.
For full year 2014, the company reported adjusted earnings of $2.96 per share, up 38.3% from the year-ago tally. Net income for full year 2014 totaled $711.4 million versus $549.7 million earned at the end of 2013.
Revenues
Pilgrim's Pride generated net revenue of $2,110.4 million in the fourth quarter, climbing 3.1% year over year. The top line, however, fell short of the Zacks Consensus Estimate of $2,208 million.
Nearly 89.5% of the revenues were sourced from the U.S. operations. It represented a year-over-year increase of 2.9%. Revenues from Mexican businesses, accounting for 10.5% of total revenue, were $222.1 million, up 5.7% year over year.
Net revenue totaled $8,583.4 million in 2014 versus $8,411.1 million in 2013. The company’s U.S. trade contributed 89.1% of full year 2014 revenues, while the remaining 10.6% was added by its Mexican sales.
Costs/Margins
Pilgrim's Pride's cost of sales declined 5.9% year over year, representing 82% of total revenue versus 89.8% in the year-ago quarter. Gross margin grew 780 basis points year over year to 18%. Selling, general and administrative expenses climbed 2.3% to $50.2 million.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) soared 86% year over year to $367.8 million, with margin at 17.4%.
The company’s gross margin in 2014 was 16.2% versus 10.1% a year ago. Yearly adjusted EBITDA came in at $1352.2 million, with a margin of 15.8%.
Balance Sheet and Cash Flow
Exiting 2014, Pilgrim's Pride had cash and cash equivalents of approximately $576.1 million, up 13.4% from $508.2 million at 2013-end. Long-term debt (net of current portion) stood at $4.0 million, plummeting 99.2% from $502.0 million as on Dec 29, 2013.
In 2014, Pilgrim's Pride generated cash of $1066.7 million from its operating activities, up 21.4% from $878.5 million generated in the year-ago comparable period. Capital spending totaled $171.4 million, up 47.5% year over year.
Dividend Update
On the strength of solid cash flow generation, the board of directors of Pilgrim's Pride declared a special dividend of $5.77 per share. The special dividend, worth $1.5 billion in total, will be paid on Feb 17 2015 to shareholders of record as on Jan 30.
Outlook
Management, on assumptions of higher operational efficiencies, aims to augment its shareholders’ value in the coming quarters. With demand for chicken rising globally, Pilgrim's Pride expects superior financial results in 2015.
Other Stocks to Consider
With a market capitalization of $6.70 billion, Pilgrim's Pride currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Sanderson Farms, Inc. (SAFM) and Tyson Foods, Inc. (TSN). These stocks hold a Zacks Rank #2 (Buy).
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