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Pilgrim’s Pride Reports Second Quarter 2024 Results with $4.6 Billion in Net Sales and Operating Income of $440.8 Million
المصدر: Nasdaq GlobeNewswire / 31 يوليو 2024 16:30:01 America/New_York
GREELEY, Colo., July 31, 2024 (GLOBE NEWSWIRE) -- Pilgrim’s Pride Corporation (NASDAQ: PPC), one of the world's largest food companies, reports its second quarter 2024 financial results.
Second Quarter Highlights
- Net Sales of $4.6 billion.
- Consolidated GAAP operating income margin of 9.7%.
- GAAP Net Income of $326.5 million and GAAP EPS of $1.37. Adjusted Net Income of $398.0 million or Adjusted EPS of $1.67.
- Adjusted EBITDA of $655.9 million, or a 14.4% margin, with Adjusted EBITDA margins of 16.7% in the U.S., 7.4% in Europe, and 19.4% in Mexico.
- Our U.S. fresh portfolio continued to strengthen given enhanced market conditions and disciplined execution of our strategies. Case Ready and Small Bird continue to improve through expanding partnerships with Key Customers with differentiated offerings, and Big Bird improved from better commodity fundamentals and progress in operational excellence.
- Diversification through Prepared Foods continues to gain momentum as fully cooked branded offerings grew across retail and food service through innovation, increased distribution, and promotional activity. Net sales of Just Bare® grew double digits and ahead of the category; and our new and innovative offerings under the Pilgrim’s® brand has secured incremental distribution.
- Europe grew Adjusted EBITDA over 40% compared to prior year as mix with Key Customers improved and operational excellence remained on track. Our performance in safety, quality and service was recognized at the National Egg & Poultry Awards as Processor of the Year for United Kingdom. Diversification through brands and innovation accelerated as Richmond® and Fridge Raiders® grew nearly double digits, and over 85 new products have been launched.
- Mexico improved given sustained balance in commodity supply and demand fundamentals, growth with Key Customers, and continued momentum of brands across Fresh and Prepared offerings.
- Strong liquidity position with a net leverage ratio of 1.1x Adjusted EBITDA providing the foundation to execute our growth strategy.
- Advancing our strategy of growing and adding value to our portfolio, we ramped up our new protein conversion plant in South Georgia during the quarter and continue to partner with Key Customers to support future growth.
(Unaudited) Three Months Ended Six Months Ended June 30,
2024June 25,
2023Y/Y Change June 30,
2024June 25,
2023Y/Y Change (In millions, except per share and percentages) Net sales $ 4,559.3 $ 4,308.1 +5.8 % $ 8,921.2 $ 8,473.7 +5.3 % U.S. GAAP EPS $ 1.37 $ 0.25 +448.0 % $ 2.11 $ 0.28 +653.6 % Operating income $ 440.8 $ 100.3 +339.5 % $ 691.1 $ 131.6 +425.2 % Adjusted EBITDA(1) $ 655.9 $ 248.7 +163.7 % $ 1,027.8 $ 400.7 +156.5 % Adjusted EBITDA margin(1) 14.4 % 5.8 % +8.6pts 11.5 % 4.7 % +6.8pts (1) Reconciliations for non-U.S. GAAP measures are provided in subsequent sections within this release.
“Our global portfolio delivered significant year-over-year profitability growth. We remained disciplined in the execution of our strategies, focusing on what we can control and continuing to expand our relationships with Key Customers, elevating our performance as market fundamentals became increasingly attractive,” said Fabio Sandri, President and Chief Executive Officer.
In the U.S., Big Bird realized benefits from enhanced commodity cutout values, further production efficiencies and lower input costs; Case Ready and Small Bird delivered above market growth with Key Customers through differentiated and customized offerings; and Prepared Foods increased its marketplace presence through innovation of branded, value-added items across retail and food service.
“Our diversified U.S. portfolio enabled our business to capture market upside as conditions evolved in the commodity market. At the same time, we also worked in partnership with our Key Customers to cultivate demand through promotional activity and innovation, further creating value for our customers and consumers alike. We also continued to strengthen our quality and service through operational excellence,” remarked Sandri.
In Europe, consumer sentiment improved as wage growth surpassed inflation. Given this environment, the team optimized mix with Key Customers and drove branded offerings. Additionally, the team identified and implemented our plan to optimize our manufacturing network and increase efficiencies.
“Europe’s performance demonstrates the robust nature of our strategies and agility of our team. Our diversified portfolio allowed us to rapidly adjust to consumer preferences and meet Key Customer needs. These efforts were further amplified by continued operational excellence to improve production efficiencies,” said Sandri.
Mexico improved given continued balance in supply and demand fundamentals in the commodity market, growth with Key Customers across retail and foodservice, and increased momentum of branded offerings in both Fresh and Prepared. Investments in operational excellence to enhance biosecurity in live operations and build capacity also remained on schedule.
“Mexico continues to drive growth above market for our Key Customers and branded offerings. Given our investments to expand production, we have an opportunity to further develop our marketplace presence and diversify our portfolio,” said Sandri.
The ramp up of our recently completed protein conversion plant in South Georgia remains on schedule and continues to cultivate additional business from Key Customers.
“Our investment in protein conversion reinforces our strategies to drive profitable growth and mitigates our operational risk. We will continue to explore opportunities to strengthen our business and further diversify our portfolio,” remarked Sandri.
Conference Call Information
A conference call to discuss Pilgrim’s quarterly results will be held tomorrow, Aug. 1, 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://services.choruscall.com/links/ppc240801.html
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 62,400 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) June 30, 2024 December 31, 2023 (In thousands) Cash and cash equivalents $ 1,317,087 $ 697,748 Restricted cash and restricted cash equivalents 17,039 33,475 Trade accounts and other receivables, less allowance for credit losses 1,045,860 1,129,178 Accounts receivable from related parties 2,055 1,778 Inventories 1,806,244 1,985,399 Income taxes receivable 93,259 161,062 Prepaid expenses and other current assets 230,610 195,831 Total current assets 4,512,154 4,204,471 Deferred tax assets 31,980 4,890 Operating lease assets, net 270,872 266,707 Other long-lived assets 53,236 35,646 Intangible assets, net 828,902 853,983 Goodwill 1,258,285 1,286,261 Property, plant and equipment, net 3,123,028 3,158,403 Total assets $ 10,078,457 $ 9,810,361 Accounts payable $ 1,337,691 $ 1,410,576 Accounts payable to related parties 23,331 41,254 Revenue contract liabilities 67,176 84,958 Accrued expenses and other current liabilities 999,075 926,727 Income taxes payable 56,487 31,678 Current maturities of long-term debt 585 674 Total current liabilities 2,484,345 2,495,867 Noncurrent operating lease liabilities, less current maturities 212,219 203,348 Long-term debt, less current maturities 3,183,095 3,340,841 Deferred tax liabilities 419,366 385,548 Other long-term liabilities 33,951 40,180 Total liabilities 6,332,976 6,465,784 Common stock 2,621 2,620 Treasury stock (544,687 ) (544,687 ) Additional paid-in capital 1,986,198 1,978,849 Retained earnings 2,571,797 2,071,073 Accumulated other comprehensive loss (284,390 ) (176,483 ) Total Pilgrim’s Pride Corporation stockholders’ equity 3,731,539 3,331,372 Noncontrolling interest 13,942 13,205 Total stockholders’ equity 3,745,481 3,344,577 Total liabilities and stockholders’ equity $ 10,078,457 $ 9,810,361 PILGRIM’S PRIDE CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended Six Months Ended June 30, 2024 June 25, 2023 June 30, 2024 June 25, 2023 (In thousands, except per share data) Net sales $ 4,559,314 $ 4,308,091 $ 8,921,248 $ 8,473,719 Cost of sales 3,867,688 4,029,666 7,845,713 8,022,247 Gross profit 691,626 278,425 1,075,535 451,472 Selling, general and administrative expense 214,161 148,436 333,237 282,114 Restructuring activities 36,675 29,718 51,234 37,744 Operating income 440,790 100,271 691,064 131,614 Interest expense, net of capitalized interest 31,201 47,152 72,444 89,814 Interest income (15,863 ) (7,628 ) (26,209 ) (11,228 ) Foreign currency transaction losses (gains) (2,225 ) 16,395 (6,562 ) 34,538 Miscellaneous, net 504 (1,331 ) (2,782 ) (23,984 ) Income before income taxes 427,173 45,683 654,173 42,474 Income tax expense (benefit) 100,650 (15,225 ) 152,712 (24,065 ) Net income 326,523 60,908 501,461 66,539 Less: Net income attributable to noncontrolling interests 220 452 737 896 Net income attributable to Pilgrim’s Pride Corporation $ 326,303 $ 60,456 $ 500,724 $ 65,643 Weighted average shares of Pilgrim's Pride Corporation common stock outstanding: Basic 236,943 236,733 236,894 236,659 Effect of dilutive common stock equivalents 790 476 721 527 Diluted 237,733 237,209 237,615 237,186 Net income attributable to Pilgrim's Pride Corporation per share of common stock outstanding: Basic $ 1.38 $ 0.26 $ 2.11 $ 0.28 Diluted $ 1.37 $ 0.25 $ 2.11 $ 0.28 PILGRIM’S PRIDE CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended June 30, 2024 June 25, 2023 (In thousands) Cash flows from operating activities: Net income $ 501,461 $ 66,539 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 211,298 203,114 Gain on early extinguishment of debt recognized as a component of interest expense (11,159 ) — Asset impairment 13,412 4,011 Deferred income tax expense (benefit) 8,952 (56,151 ) Stock-based compensation 6,811 3,300 Loss (gain) on property disposals 2,715 (9,316 ) Loan cost amortization 2,573 4,733 Accretion of discount related to Senior Notes 1,289 980 Gain (loss) on equity-method investments (3 ) 328 Changes in operating assets and liabilities: Trade accounts and other receivables 62,350 (54,971 ) Inventories 146,189 (45,242 ) Prepaid expenses and other current assets (43,532 ) (27,754 ) Accounts payable, accrued expenses and other current liabilities 14,290 5,139 Income taxes 88,631 9,933 Long-term pension and other postretirement obligations 3,652 944 Other operating assets and liabilities (19,273 ) (16,246 ) Cash provided by operating activities 989,656 89,341 Cash flows from investing activities: Acquisitions of property, plant and equipment (213,247 ) (286,630 ) Proceeds from property disposals 4,551 15,008 Proceeds from insurance recoveries — 20,681 Cash used in investing activities (208,696 ) (250,941 ) Cash flows from financing activities: Payments on revolving line of credit, long-term borrowings and finance lease obligations (150,895 ) (565,658 ) Proceeds from revolving line of credit and long-term borrowings — 1,078,032 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 ) (10,353 ) Cash provided by (used in) financing activities (149,686 ) 500,429 Effect of exchange rate changes on cash and cash equivalents (28,371 ) 3,422 Increase in cash, cash equivalents and restricted cash 602,903 342,251 Cash, cash equivalents and restricted cash, beginning of period 731,223 434,759 Cash, cash equivalents and restricted cash, end of period $ 1,334,126 $ 777,010 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) property insurance recoveries for property damage losses, and (5) 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 Six Months Ended June 30, 2024 June 25, 2023 June 30, 2024 June 25, 2023 (In thousands) Net income $ 326,523 $ 60,908 $ 501,461 $ 66,539 Add: Interest expense, net(a) 15,338 39,524 46,235 78,586 Income tax expense (benefit) 100,650 (15,225 ) 152,712 (24,065 ) Depreciation and amortization 107,948 104,857 211,298 203,114 EBITDA 550,459 190,064 911,706 324,174 Add: Foreign currency transaction losses (gains)(b) (2,225 ) 16,395 (6,562 ) 34,538 Litigation settlements(c) 71,250 13,000 72,190 24,200 Restructuring activities losses(d) 36,675 29,718 51,234 37,744 Minus: Property insurance recoveries(e) — — — 19,086 Net income attributable to noncontrolling interest 220 452 737 896 Adjusted EBITDA $ 655,939 $ 248,725 $ 1,027,831 $ 400,674 (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 property insurance recoveries primarily for the property damage losses incurred as a result of the tornado in Mayfield, KY in December 2021.
(f) The summary unaudited consolidated income statement data for the twelve months ended June 30, 2024 (the LTM Period) have been calculated by subtracting the applicable unaudited consolidated income statement data for the six months ended June 25, 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 six months ended June 30, 2024.PILGRIM'S PRIDE CORPORATION Reconciliation of LTM Adjusted EBITDA (Unaudited) Three Months Ended LTM Ended September 24,
2023December 31,
2023March 31,
2024June 30,
2024June 30,
2024(In thousands) Net income $ 121,567 $ 134,211 $ 174,938 $ 326,523 $ 757,239 Add: Interest expense, net 33,530 54,505 30,897 15,338 134,270 Income tax expense 44,553 22,417 52,062 100,650 219,682 Depreciation and amortization 104,300 112,486 103,350 107,948 428,084 EBITDA 303,950 323,619 361,247 550,459 1,539,275 Add: Foreign currency transaction losses (gains) 8,924 (22,892 ) (4,337 ) (2,225 ) (20,530 ) Litigation settlements 10,500 4,700 940 71,250 87,390 Restructuring activities losses 940 5,661 14,559 36,675 57,835 Minus: Property insurance recoveries — 2,038 — — 2,038 Net income (loss) attributable to noncontrolling interest 289 (442 ) 517 220 584 Adjusted EBITDA $ 324,025 $ 309,492 $ 371,892 $ 655,939 $ 1,661,348 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 Six Months Ended Three Months Ended Six Months Ended June 30, 2024 June 25, 2023 June 30, 2024 June 25, 2023 June 30, 2024 June 25, 2023 June 30, 2024 June 25, 2023 (In thousands) Net income $ 326,523 $ 60,908 $ 501,461 $ 66,539 7.16 % 1.41 % 5.62 % 0.79 % Add: Interest expense, net 15,338 39,524 46,235 78,586 0.34 % 0.92 % 0.52 % 0.93 % Income tax expense (benefit) 100,650 (15,225 ) 152,712 (24,065 ) 2.21 % (0.35 )% 1.71 % (0.28 )% Depreciation and amortization 107,948 104,857 211,298 203,114 2.36 % 2.43 % 2.36 % 2.39 % EBITDA 550,459 190,064 911,706 324,174 12.07 % 4.41 % 10.21 % 3.83 % Add: Foreign currency transaction losses (gains) (2,225 ) 16,395 (6,562 ) 34,538 (0.04 )% 0.38 % (0.07 )% 0.40 % Litigation settlements 71,250 13,000 72,190 24,200 1.56 % 0.30 % 0.81 % 0.29 % Restructuring activities losses 36,675 29,718 51,234 37,744 0.80 % 0.69 % 0.57 % 0.45 % Minus: Property insurance recoveries — — — 19,086 — % — % — % 0.23 % Net income attributable to noncontrolling interest 220 452 737 896 — % 0.01 % 0.01 % 0.01 % Adjusted EBITDA $ 655,939 $ 248,725 $ 1,027,831 $ 400,674 14.39 % 5.77 % 11.51 % 4.73 % Net sales $ 4,559,314 $ 4,308,091 $ 8,921,248 $ 8,473,719 — — — — 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 June 30, 2024 June 25, 2023 U.S. Europe Mexico Total U.S. Europe Mexico Total (In thousands) (In thousands) Net income (loss) $ 199,076 $ 41,511 $ 85,936 $ 326,523 $ (21,335 ) $ 11,929 $ 70,314 $ 60,908 Add: Interest expense, net(a) 24,946 (2,556 ) (7,052 ) 15,338 43,538 (623 ) (3,391 ) 39,524 Income tax expense (benefit) 82,117 (14,212 ) 32,745 100,650 (14,026 ) (6,730 ) 5,531 (15,225 ) Depreciation and amortization 67,200 34,865 5,883 107,948 63,759 35,279 5,819 104,857 EBITDA 373,339 59,608 117,512 550,459 71,936 39,855 78,273 190,064 Add: Foreign currency transaction losses (gains)(b) (1 ) (39 ) (2,185 ) (2,225 ) 28,546 (1,482 ) (10,669 ) 16,395 Litigation settlements(c) 71,250 — — 71,250 13,000 — — 13,000 Restructuring activities losses(d) — 36,675 — 36,675 — 29,718 — 29,718 Minus: Net income attributable to noncontrolling interest — — 220 220 — — 452 452 Adjusted EBITDA $ 444,588 $ 96,244 $ 115,107 $ 655,939 $ 113,482 $ 68,091 $ 67,152 $ 248,725 (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.PILGRIM'S PRIDE CORPORATION Reconciliation of Adjusted EBITDA (Unaudited) Six Months Ended Six Months Ended June 30, 2024 June 25, 2023 U.S. Europe Mexico Total U.S. Europe Mexico Total (In thousands) (In thousands) Net income (loss) $ 301,707 $ 66,023 $ 133,731 $ 501,461 $ (74,925 ) $ 32,742 $ 108,722 $ 66,539 Add: Interest expense, net(a) 69,532 (4,539 ) (18,758 ) 46,235 84,903 (821 ) (5,496 ) 78,586 Income tax expense (benefit) 114,177 (4,655 ) 43,190 152,712 (30,848 ) (807 ) 7,590 (24,065 ) Depreciation and amortization 129,885 69,893 11,520 211,298 123,996 67,556 11,562 203,114 EBITDA 615,301 126,722 169,683 911,706 103,126 98,670 122,378 324,174 Add: Foreign currency transaction losses (gains)(b) 1 (255 ) (6,308 ) (6,562 ) 48,859 (2,098 ) (12,223 ) 34,538 Litigation settlements(c) 72,190 — — 72,190 24,200 — — 24,200 Restructuring activities losses(d) — 51,234 — 51,234 — 37,744 — 37,744 Minus: Property insurance recoveries(e) — — — — 19,086 — — 19,086 Net income attributable to noncontrolling interest — — 737 737 — — 896 896 Adjusted EBITDA $ 687,492 $ 177,701 $ 162,638 $ 1,027,831 $ 157,099 $ 134,316 $ 109,259 $ 400,674 (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 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 Six Months Ended June 30, 2024 June 25, 2023 June 30, 2024 June 25, 2023 (In thousands) GAAP operating income, U.S. operations $ 307,988 $ 37,265 $ 487,405 $ 9,159 Litigation settlements 71,250 13,000 72,190 24,200 Adjusted operating income, U.S. operations $ 379,238 $ 50,265 $ 559,595 $ 33,359 Adjusted operating income margin, U.S. operations 14.2 % 2.1 % 10.7 % 0.7 % Three Months Ended Six Months Ended June 30, 2024 June 25, 2023 June 30, 2024 June 25, 2023 (In thousands) GAAP operating income, Europe operations $ 23,993 $ 2,513 $ 55,109 $ 27,774 Restructuring activities losses 36,675 29,718 51,234 37,744 Adjusted operating income, Europe operations $ 60,668 $ 32,231 $ 106,343 $ 65,518 Adjusted operating income margin, Europe operations 4.7 % 2.5 % 4.1 % 2.6 % Three Months Ended Six Months Ended June 30, 2024 June 25, 2023 June 30, 2024 June 25, 2023 (In thousands) GAAP operating income, Mexico operations $ 108,809 $ 60,719 $ 148,550 $ 94,894 No adjustments — — — — Adjusted operating income, Mexico operations $ 108,809 $ 60,719 $ 148,550 $ 94,894 Adjusted operating income margin, Mexico operations 18.3 % 11.0 % 13.4 % 9.1 % 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 Six Months Ended June 30, 2024 June 25, 2023 June 30, 2024 June 25, 2023 (In percent) GAAP operating income margin, U.S. operations 11.6 % 1.5 % 9.3 % 0.2 % Litigation settlements 2.6 % 0.6 % 1.4 % 0.5 % Adjusted operating income margin, U.S. operations 14.2 % 2.1 % 10.7 % 0.7 % Three Months Ended Six Months Ended June 30, 2024 June 25, 2023 June 30, 2024 June 25, 2023 (In percent) GAAP operating income margin, Europe operations 1.8 % 0.2 % 2.1 % 1.1 % Restructuring activities losses 2.9 % 2.3 % 2.0 % 1.5 % Adjusted operating income margin, Europe operations 4.7 % 2.5 % 4.1 % 2.6 % Three Months Ended Six Months Ended June 30, 2024 June 25, 2023 June 30, 2024 June 25, 2023 (In percent) GAAP operating income margin, Mexico operations 18.3 % 11.0 % 13.4 % 9.1 % No adjustments — % — % — % — % Adjusted operating income margin, Mexico operations 18.3 % 11.0 % 13.4 % 9.1 % 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 Six Months Ended June 30, 2024 June 25, 2023 June 30, 2024 June 25, 2023 (In thousands, except per share data) Net income attributable to Pilgrim's $ 326,303 $ 60,456 $ 500,724 $ 65,643 Add: Foreign currency transaction losses (gains) (2,225 ) 16,395 (6,562 ) 34,538 Litigation settlements 71,250 13,000 72,190 24,200 Restructuring activities losses 36,675 29,718 51,234 37,744 Minus: Gain on early extinguishment of debt 11,159 — 11,159 — Property insurance recoveries — — — 19,086 Adjusted net income attributable to Pilgrim's before tax impact of adjustments 420,844 119,569 606,427 143,039 Net tax impact of adjustments(a) (22,879 ) (14,306 ) (25,580 ) (18,729 ) Adjusted net income attributable to Pilgrim's $ 397,965 $ 105,263 $ 580,847 $ 124,310 Weighted average diluted shares of common stock outstanding 237,733 237,209 237,615 237,186 Adjusted net income attributable to Pilgrim's per common diluted share $ 1.67 $ 0.44 $ 2.44 $ 0.52 (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 Six Months Ended June 30, 2024 June 25, 2023 June 30, 2024 June 25, 2023 (In thousands, except per share data) GAAP EPS $ 1.37 $ 0.25 $ 2.11 $ 0.28 Add: Foreign currency transaction losses (gains) (0.01 ) 0.07 (0.03 ) 0.15 Litigation settlements 0.30 0.05 0.30 0.09 Restructuring activities losses 0.15 0.13 0.23 0.16 Minus: Gain on early extinguishment of debt 0.05 — 0.05 — Property insurance recoveries — — — 0.08 Adjusted EPS before tax impact of adjustments 1.76 0.50 2.56 0.60 Net tax impact of adjustments(a) (0.09 ) (0.06 ) (0.12 ) (0.08 ) Adjusted EPS $ 1.67 $ 0.44 $ 2.44 $ 0.52 Weighted average diluted shares of common stock outstanding 237,733 237,209 237,615 237,186 (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 Six Months Ended June 30, 2024 June 25, 2023 June 30, 2024 June 25, 2023 (In thousands) Sources of net sales by geographic region of origin: U.S. $ 2,663,965 $ 2,446,208 $ 5,243,297 $ 4,878,776 Europe 1,301,541 1,310,750 2,569,444 2,550,014 Mexico 593,808 551,133 1,108,507 1,044,929 Total net sales $ 4,559,314 $ 4,308,091 $ 8,921,248 $ 8,473,719 Sources of cost of sales by geographic region of origin: U.S. $ 2,211,626 $ 2,332,103 $ 4,553,666 $ 4,726,342 Europe 1,187,671 1,223,722 2,363,409 2,378,793 Mexico 468,391 473,615 928,638 916,899 Elimination — 226 — 213 Total cost of sales $ 3,867,688 $ 4,029,666 $ 7,845,713 $ 8,022,247 Sources of gross profit by geographic region of origin: U.S. $ 452,339 $ 114,105 $ 689,631 $ 152,434 Europe 113,870 87,028 206,035 171,221 Mexico 125,417 77,518 179,869 128,030 Elimination — (226 ) — (213 ) Total gross profit $ 691,626 $ 278,425 $ 1,075,535 $ 451,472 Sources of operating income by geographic region of origin: U.S. $ 307,988 $ 37,265 $ 487,405 $ 9,159 Europe 23,993 2,513 55,109 27,774 Mexico 108,809 60,719 148,550 94,894 Elimination — (226 ) — (213 ) Total operating income $ 440,790 $ 100,271 $ 691,064 $ 131,614