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Item 5. Market for Registrant’s Common Equity

2021-02-11 compared with 2020-02-21 · 117 added, 60 removed, 89 unchanged (67% of the section changed)

9 unchanged sentences

See "Note 13.

Long-Term Debt and Other Borrowing Arrangements” of our Consolidated and Combined Financial Statements included in this annual report for additional information.

Debt” of our Consolidated Financial Statements included in this annual report for additional information.

Issuer Purchases of Equity Securities

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The Company plans to repurchase shares through various means, which may include but are not limited to open market purchases, privately negotiated transactions, the use of derivative instruments and/or accelerated share repurchase programs.

The extent to which the Company repurchases its shares and the timing of such repurchases will vary and depend upon market conditions and other corporate considerations, as determined by the Company’s management team.

The extent to which the Company repurchases its share and the timing of such repurchases will vary and depend upon market conditions and other corporate considerations, as determined by the Company’s management team.

The Company reserves the right to limit or terminate the repurchase program at any time without notice.

For the fifty-two weeks ended December 29, 2019, the Company had repurchased 115,994 shares under this program for an aggregate cost of $2.9 million and an average price of $24.98 per share.

Set forth below is information regarding our stock repurchases for the thirteen weeks ended December 29, 2019.

As of December 27, 2020, the Company had repurchased 6,257,135 shares under this program for an aggregate cost of $113.4 million and an average price of $18.1195 per share.

Set forth below is information regarding our stock repurchases for the three months ended December 27, 2020.

Issuer Purchases of Equity Securities

Total Number of Shares Purchased

Average Price

Paid per Share

Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs

Approximate Dollar Value of the Shares That May Yet Be Purchased Under the Plans or Programs (a)

Period Total Number of Shares Purchased Average Price

Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of the Shares That May Yet Be Purchased Under the Plans or Programs (a)

September 28, 2020 through October 25, 2020 49,700 $ 15.62 6,155,144 $ 88,283,745

October 28, 2019 through December 1, 2019

December 2, 2019 through December 29, 2019

Reflects the remaining dollar value of shares that may yet be repurchased under our share repurchase authorization, the parameters of which are described above.

October 26, 2020 through November 29, 2020 101,991 16.27 6,257,135 86,624,088

November 30, 2020 through December 27, 2020 — — 6,257,135 86,624,088

Total 151,691 $ 16.06 6,257,135 $ 86,624,088

(a) Reflects the remaining dollar value of shares that may yet be repurchased under our share repurchase authorization, the parameters of which are described above.

The plan was announced on October 31, 2018.

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The stock price performance represented by this graph is not necessarily indicative of future stock performance.

12/27/15 06/30/16 12/25/16 06/30/17 12/31/17 06/30/18 12/30/18 06/30/19 12/29/19 06/01/20 12/27/20

PPC $ 100.00 $ 125.88 $ 93.96 $ 108.29 $ 153.44 $ 99.45 $ 77.02 $ 125.43 $ 162.88 $ 83.44 $ 95.59

Russell 2000 100.00 102.22 121.31 127.36 139.08 149.73 123.76 144.78 155.35 135.19 186.36

Peer Group 100.00 106.20 102.35 102.92 122.77 113.35 108.34 131.79 150.91 127.43 132.33

Selected Financial Data

(In thousands, except ratios and per share data)

2020 2019 (c)

Operating Results Data:

Gross profit (a)

Operating income (a)

Interest expense, net (b)

(In thousands, except ratios and per share data)

Net sales $ 12,091,901 $ 11,409,219 $ 10,937,784 $ 10,767,863 $ 9,878,564

838,196 1,070,394 843,476 1,471,614 1,103,983

Operating income

245,463 690,568 495,686 1,072,322 792,082

Interest expense, net (a)

118,813 118,353 149,001 99,453 73,335

Gain on bargain purchase 3,746 (56,880) — — —

Loss on early extinguishment of debt — — 16,758 166 —

Income before income taxes (a)

Income tax expense (c)

Net income (a)

Income before income taxes 161,825 617,545 332,227 982,066 724,036

Income tax expense

66,755 161,009 85,423 263,899 243,919

95,070 456,536 246,804 718,167 480,117

Net income (loss) attributable to noncontrolling interest 313 612 (1,141) 102 (803)

Net income attributable to Pilgrim’s Pride Corporation (a)

Net income attributable to Pilgrim’s Pride Corporation 94,757 455,924 247,945 694,579 440,532

Per Common Diluted Share Data:

Net income attributable to Pilgrim’s Pride Corporation $ 0.39 $ 1.83 $ 1.00 $ 2.79 $ 1.73

Adjusted net income attributable to Pilgrim’s Pride Corporation (d)

Adjusted net income attributable to Pilgrim’s Pride Corporation (b)

1.02 1.62 1.28 2.89 1.75

Book value 10.52 10.11 8.06 7.45 8.21

Balance Sheet Summary:

Working capital

$ 965,131 $ 950,081 $ 938,434 $ 1,063,765 $ 624,728

Total assets 7,474,497 7,102,364 5,931,202 6,248,652 5,021,942

Notes payable and current maturities of long-term debt 25,455 26,392 30,405 47,775 15,712

Long-term debt, less current maturities

2,255,546 2,276,029 2,295,190 2,635,617 1,396,124

Total stockholders’ equity 2,575,347 2,536,060 2,019,585 1,855.661 2,086,132

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Depreciation and amortization

337,104 287,230 274,088 271,824 226,384

Impairment of property, plant and equipment — — 3,504 5,156 790

1 unchanged sentence

Purchase of acquired business, net of cash acquired

(4,216) (384,694) — (658,520) —

Payment of cash dividends

— — — — (714,785)

Cash flows from financing activities (136,708) (34,526) (384,246) 466,395 (828,219)

Adjusted EBITDA (e)

$ 617,742 $ 1,023,128 $ 755,316 $ 1,353,343 $ 1,023,755

Adjusted EBITDA (d)

788,073 973,771 798,187 1,388,029 1,029,682

Key Indicators (as a percent of net sales):

Gross profit (a)

6.9 % 9.4 % 7.7 % 13.7 % 11.2 %

Selling, general and administrative expenses 4.9 % 3.3 % 3.1 % 3.6 % 3.1 %

Operating income (a)

Operating income

2.0 % 6.1 % 4.5 % 10.0 % 8.0 %

Interest expense, net 1.0 % 1.0 % 1.4 % 0.9 % 0.7 %

Net income (a)

Operating income and net income include the following restructuring charges for each of the years presented:

Interest expense, net, consists of interest expense less interest income.

Income tax expense in 2019, 2018, 2017, 2016 and 2015 resulted primarily from expense recorded on our year-to-date income.

0.8 % 4.0 % 2.3 % 6.5 % 4.5 %

(a) Interest expense, net, consists of interest expense less interest income.

(b) Adjusted net income attributable to Pilgrim’s Pride Corporation 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 in the reconciliation table below.

Adjusted net income attributable to Pilgrim’s Pride Corporation per common diluted share is presented because it is used by us, 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.

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We also believe that this non-U.S.

GAAP financial measure, in combination with the our financial results calculated in accordance with 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.

1 unchanged sentence

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.

It does not reflect the impact of earnings or charges resulting from matters we consider to not be indicative of our ongoing operations.

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 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:

2020 2019 2018 2017 2016

(In thousands except per share data)

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Loss on early extinguishment of debt — — 16,758 166 —

Restructuring activities and transaction costs related to acquisitions

Other nonrecurring losses — — 19,486 8,066 —

Foreign currency transaction losses (gains)

760 6,917 17,160 (2,659) 4,055

Restructuring activities and transaction costs related to acquisitions

257 1,218 5,085 29,381 1,069

DOJ agreement 110,524 — — — —

Nonrecurring legal settlement 75,000 — — — —

Hometown Strong commitment 15,000 — — — —

Gain on bargain purchase

3,746 (56,880) — — —

Shareholder litigation settlement (34,643)

Net tax expense of adjustments (14,976) (2,122) (15,039) (9,402) (1,773)

250,425 405,057 291,395 720,131 443,883

Tax Cuts & Jobs Act transition tax — — 26,400 — —

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per common diluted share $ 1.02 $ 1.62 $ 1.28 $ 2.89 $ 1.75

Refer below for the calculation of earnings before interest, tax, depreciation and amortization (“EBITDA”) and Adjusted EBITDA

Includes the material impact of new business acquisitions as follows:

Fiscal 2019 includes approximately two and one-half months of operating results from the acquisition of Tulip, acquired for cash of $391.5 million on October 15, 2019.

• Fiscal 2019 includes approximately two and one-half months of operating results from the acquisition of PPL, acquired for cash of $391.5 million on October 15, 2019.

• Fiscal 2017 includes approximately three and one-half months of operating results from the acquisition of Moy Park, acquired for cash of $301.3 million and a note payable to the seller in the amount of £562.5 million on September 8, 2017.

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Fiscal 2018 and thereafter includes a full year of operating results.

A reconciliation of net income to EBITDA and Adjusted EBITDA is as follows:

(In thousands)

Interest expense, net (a)

Income tax expense

Depreciation and amortization

EBITDA (e)(f)

Foreign currency transaction loss (gain) (b)

Restructuring activities loss (gain) (c)

Transaction costs related to acquisitions

Other nonrecurring losses (d)

Gain on bargain purchase

Net income (loss) attributable to noncontrolling interest

Adjusted EBITDA (e)(f)

Interest expense, net, consists of interest expense less interest income.

The Company measures the financial statements of its Mexico subsidiaries as if the U.S.

dollar were the functional currency.

Accordingly, we remeasure assets and liabilities, other than nonmonetary assets, of the Mexico subsidiaries 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 are included in the line item Foreign currency transaction losses (gains) in the Consolidated and Combined Statements of Income.

Restructuring charges includes tangible asset impairment, severance and change-in-control compensation costs, and losses incurred on both the sale of unneeded broiler eggs and flock depletion.

Other nonrecurring losses include expenses incurred for Hurricane Maria in Puerto Rico, Hurricane Michael in Florida and certain Moy Park severance charges.

“EBITDA” is defined as the sum of net income (loss) plus interest, taxes, depreciation and amortization.

(d) “EBITDA” is defined as the sum of net income (loss) 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) in the period from 2015 through 2019, (2) restructuring activities in the period from 2015 through 2019, (3) transaction costs from business acquisitions in the period from 2015 through 2019, (4) gain on bargain purchase in the period from 2015 through 2019, (5) net income (loss) attributable to noncontrolling interests in the period from 2015 through 2019 and (6) other nonrecurring losses in the period from 2015 through 2019.

(1) foreign currency transaction losses (gains), (2) transaction costs from business acquisitions, (3) DOJ agreement, (4) nonrecurring legal settlement, (5) restructuring activities, (6) Hometown Strong initiative expenses, (7) gain on bargain purchase, (8) shareholder litigation settlement, (9) net income (loss) attributable to noncontrolling interests and (10) other nonrecurring losses.

EBITDA is presented because it is used by us 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.

We believe investors would be interested in our Adjusted EBITDA because this is how our management analyzes EBITDA

applicable to continuing operations.

We believe investors would be interested in our Adjusted EBITDA because this is how our management analyzes EBITDA applicable to continuing operations.

We also believe that Adjusted EBITDA, in combination with our financial results calculated in accordance with U.S.

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In addition, other companies in our industry may calculate these measures differently than we do, limiting their usefulness as a comparative measure.

Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as an alternative to cash flow from operating activities or as a measure of liquidity or an alternative to net income as indicators of our operating performance or any other measures of performance derived in accordance with U.S.

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.

You should compensate for these limitations by relying primarily on our U.S.

GAAP results and using EBITDA and Adjusted EBITDA only on a supplemental basis.

A reconciliation of net income to EBITDA and Adjusted EBITDA is as follows:

2020 2019 2018 2017 2016

(In thousands)

Net income $ 95,070 $ 456,536 $ 246,804 $ 718,167 $ 480,117

Interest expense, net (a)

118,813 118,353 149,001 99,453 73,335

Income tax expense 66,755 161,009 85,423 263,899 243,919

Depreciation and amortization 337,104 287,230 274,088 271,824 226,384

EBITDA 617,742 1,023,128 755,316 1,353,343 1,023,755

Other nonrecurring losses (b)

— — 19,485 8,066 —

Foreign currency transaction loss (gain) (c)

760 6,917 17,160 (2,659) 4,055

Transaction costs related to acquisitions (d)

134 1,302 320 19,606 —

DOJ agreement (e)

110,524 — — — —

Nonrecurring legal settlement (f)

75,000 — — — —

Restructuring activities loss (gain) (g)

123 (84) 4,765 9,775 1,069

Hometown Strong commitment (h)

15,000 — — — —

Gain on bargain purchase (i)

(3,746) 56,880 — — —

Shareholder litigation settlement (j)

34,643 — — — —

Net income (loss) attributable to noncontrolling interest 313 612 (1,141) 102 (803)

Adjusted EBITDA $ 788,073 $ 973,771 $ 798,187 $ 1,388,029 $ 1,029,682

(a) Interest expense, net, consists of interest expense less interest income.

(b) Other nonrecurring losses include expenses incurred for Hurricane Maria in Puerto Rico, Hurricane Michael in Florida and certain Moy Park severance charges.

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, as well as, from our U.K.

and Europe reportable segment are included in the line item Foreign currency transaction losses (gains) in the Consolidated Statements of Income.

(d) Transaction costs related to acquisitions includes those charges that are incurred in conjunction with business acquisitions.

See Part II, Item 8, Notes to Consolidated Financial Statements, “Note 2.

Business Acquisitions” for more information regarding recent business acquisitions.

(e) On October 13, 2020, Pilgrims announced that we have entered into a plea agreement (the “Plea Agreement”) with the DOJ.

As a result of the Plea Agreement, we recognized a fine of $110,524,140.

(f) On January 11, 2021, we announced that we have entered an agreement to settle all claims made by the putative Direct Purchaser Plaintiff Class relating to broiler chicken antitrust litigation.

As a result of the settlement, we recognized an expense of $75.0 million.

(g) Restructuring charges includes tangible asset impairment, severance, change-in-control compensation costs and losses incurred on both the sale of unneeded broiler eggs and flock depletion.

(h) The Hometown Strong initiative was developed to help communities in which we operate respond to unexpected challenges.

For the year ended December 27, 2020, we recorded $15.0 million in incremental donations expense relating to this initiative.

(i) The gain on bargain purchase was recognized as a result of the PPL acquisition in October 2019.

See Part II, Item 8, Notes to Consolidated Financial Statements, “Note 2.

Business Acquisitions” for more information regarding this acquisition.

(j) Shareholder litigation settlement is income received as a result of a settlement in the first quarter of 2020.

See Part II, Item 8, Notes to Consolidated Financial Statements, “Note 20.

Commitments and Contingencies” for more information regarding this settlement.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity