PILGRIMS PRIDE CORP
For the period ended Sep 29, 2024. Filed Oct 31, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 29, 2024 · Filed Oct 31, 2024
PPC$28.53-0.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-01.
0000802481-24-000066
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-29; filed 2024-10-31.
0000802481-24-000094
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 102 previous paragraphs and 90 current paragraphs.
31 unchanged; 53 reworded; 5 added; 17 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 22 previous and 20 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (5)
Current report
U.K. market prices for pork products decreased slightly throughout the third quarter of 2024 from downward pressure as a result of the price differential between U.K. and E.U. pork prices as well as reduced retail demand due to weather impacts. The pig supply has increased throughout 2024 though largely due to increased weights. U.K. pig farming became profitable in the second quarter of 2023 and continues to remain profitable.
Current report
Europe Reportable Segment. Cost of sales incurred by our Europe operations during the three months ended September 29, 2024 decreased $40.0 million, or 3.3%, from cost of sales incurred by our Europe segment during the three months ended September 24, 2023. The decrease in cost of sales was primarily driven by a decrease in cost per pound from lower input costs.
Current report
Europe Reportable Segment. SG&A expense incurred by our Europe reportable segment during the three months ended September 29, 2024 increased $3.2 million, or 6.1%, from SG&A expense incurred by our Europe segment during the three months ended September 24, 2023. The increase in SG&A expense was primarily due to an increase in incentive compensation expense.
Current report
Mexico Reportable Segment. SG&A expense incurred by our Mexico reportable segment during the three months ended September 29, 2024 decreased approximately $0.8 million, or 4.9%, from SG&A expense incurred by our Mexico segment during the three months ended September 24, 2023 primarily due to the favorable impact of foreign currency translation. This decrease was partially offset by an increase in payroll and incentive compensation costs.
Current report
Nine Months Ended September 29, 2024 Compared to the Nine Months Ended September 24, 2023
Removed paragraphs (17)
Previous report
Domestic volume demand growth in foodservice distribution and retail were sufficient to absorb broiler production and reduce cold storage inventories of chicken at rates that allowed the U.S. chicken market to maintain price levels above the five-year historical average throughout the second quarter.
Previous report
U.K. market prices for pork products are flat compared to first quarter of 2024, while declining slightly from fourth quarter of 2023. The current levels are above 2022, reflecting pig reduction from a 15% reduction of the English sow herd since 2022. As the level of pigs stabilized, the pig prices have started to wear off and the E.U. pig price ended the quarter at 5.6% below the U.K. standard pig price. The pig supply is shrinking for the first half of 2024 as U.K. head kill is 1.5% below first half of 2023. U.K. pig farming became profitable in the second quarter of 2023 and remained profitable through the end of 2023.
Previous report
Europe Reportable Segment. Cost of sales incurred by our Europe operations during the three months ended June 30, 2024 decreased $36.1 million, or 2.9%, from cost of sales incurred by our Europe segment during the three months ended June 25, 2023. The increase in cost of sales was primarily driven by a decrease in cost per pound sold of $83.5 million, or 6.8 percentage points. The decrease in cost per pound sold was partially offset by an increase in sales volume and the unfavorable impact of foreign currency translation of $35.7 million, or 2.9 percentage points, and $11.7 million, or 1.0 percentage points, respectively.
Previous report
Mexico Reportable Segment. SG&A expense incurred by our Mexico reportable segment during the three months ended June 30, 2024 decreased approximately $0.2 million, or 1.1%, from SG&A expense incurred by our Mexico segment during the three months ended June 25, 2023. All factors affecting Mexico SG&A expense were individually immaterial.
Previous report
Six Months Ended June 30, 2024 Compared to the Six Months Ended June 25, 2023
Previous report
Obligor Group Summarized Financial Information
Previous report
All of the senior unsecured registered notes (collectively, the “Pilgrim’s Senior Notes”) issued by Pilgrim’s Pride Corporation prior to June 30, 2024 are fully and unconditionally guaranteed by Pilgrim’s Pride Corporation of West Virginia Inc., JFC LLC, Gold’n Plump Farms LLC and Gold’n Plump Poultry LLC (the “Subsidiary Guarantors”). As of the date of this report, except for bond repurchases described in Item 1. Note 12 herein, there have been no significant changes to our senior unsecured registered notes from those described in “Part II, Item 8. Financial Statements and Supplementary Data-Note 13. Debt” in our annual report on Form 10-K for the fiscal year ended December 31, 2023, filed with the Securities and Exchange Commission (the “SEC”) on February 27, 2024 (the “2023 Annual Report”).
Previous report
The following tables present summarized financial information for Pilgrim’s Pride Corporation parent company only (as issuer of the Pilgrim’s Senior Notes) and the Subsidiary Guarantors (together, the “Obligor Group”), on a combined basis after the elimination of all intercompany balances and transactions between Pilgrim’ Pride Corporation parent company only and the Subsidiary Guarantors and investments in any non-obligated subsidiary.
Previous report
(a) Represents receivables and short-term lending due from and payables and short-term lending due to non-obligated subsidiaries.
Previous report
(b) Represents receivables due from and payables due to JBS affiliates.
Previous report
(a) For the six months ended June 30, 2024, the Obligor Group recognized $73.0 million of net sales to the non-obligated subsidiaries and no purchases from the non-obligated subsidiaries.
Previous report
(b) For the six months ended June 30, 2024, the Obligor Group recognized $471.4 million of dividend income from distributions from our Mexico reportable segment.
Previous report
Pillar II Tax Initiative
Previous report
Starting in 2024, Pillar II legislation has come into effect in various countries, impacting multinational companies operating in these jurisdictions. As of June 30, 2024, the Company continues to monitor Pillar II legislation and guidance and has yet to accrue any top-up taxes in the Condensed Consolidated Financial Statements.
Previous report
Recent Accounting Pronouncements
Previous report
See “Note 1. Business and Summary of Significant Accounting Policies” of our Condensed Consolidated Financial Statements included in this quarterly report for additional information relating to these recent accounting pronouncements.
Previous report
Critical Accounting Policies and Estimates
Reworded paragraphs (53)
Previous wording
As of the date of this report, there have been no significant changes to our critical accounting policies and estimates from those described in “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies and Estimates” in our 2023 Annual Report.
Current wording
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Previous wording
Pilgrim’s Pride Corporation (referred to herein as “Pilgrim’s,” “PPC,” “the Company,” “we,” “us,” “our,” or similar terms) is one of the largest chicken producers in the world, with operations in the United States (“U.S.”), the United Kingdom (“U.K.”), Mexico, France, Puerto Rico, the Netherlands and the Republic of Ireland. We reported net income attributable to Pilgrim’s of $500.7 million, or $2.11 per diluted common share, and income before tax totaling $654.2 million, for the six months ended June 30, 2024. These operating results included net sales of $8.9 billion, gross profit of $1.1 billion and $989.7 million of cash provided by operating activities. We generated a consolidated operating margin of 7.7%. For the six months ended June 30, 2024, we generated EBITDA and Adjusted EBITDA of $911.7 million and $1.0 billion, respectively. A reconciliation of net income to EBITDA and Adjusted EBITDA is included below.
Current wording
Pilgrim’s Pride Corporation (referred to herein as “Pilgrim’s,” “PPC,” “the Company,” “we,” “us,” “our,” or similar terms) is one of the largest chicken producers in the world, with operations in the United States (“U.S.”), the United Kingdom (“U.K.”), Mexico, France, Puerto Rico, the Netherlands and the Republic of Ireland. We reported net income attributable to Pilgrim’s of $850.6 million, or $3.58 per diluted common share, and income before tax totaling $1.1 billion, for the nine months ended September 29, 2024. These operating results included net sales of $13.5 billion, gross profit of $1.8 billion and $1.6 billion of cash provided by operating activities. We generated a consolidated operating margin of 8.9%. For the nine months ended September 29, 2024, we generated EBITDA and Adjusted EBITDA of $1.5 billion and $1.7 billion, respectively. A reconciliation of net income to EBITDA and Adjusted EBITDA is included below.
Previous wording
During the second quarter of 2024, global inflation levels continued to decline, but remain above historical averages, in commodity, labor and other operating costs leading to reduced costs from these inputs across all our businesses. The global energy market continues to be impacted by the Russia-Ukraine war, driving up prices as supply out of the Black Sea region is disrupted and future production is at risk. The Russia-Ukraine war's impact on the global feed ingredient market is currently less pronounced as global supply in other growing areas has developed and grain exports from the Black Sea region have remained steady throughout the first half of 2024, with exception of moderate impact on winter wheat crop as noted below. The U.K. and E.U. region saw a continued decrease in inflation rate and flat demand, leading to cost recovery for our business and stabilizing prices for customers, though labor costs continue to be a challenge for our Europe operations. We have and will continue to invest in our people and implement supply chain solutions to mitigate global economic impacts in our Europe operations. In Mexico, inflation remains high and the peso weakened against the U.S. dollar in the second quarter of 2024. Mexico remains a relatively volatile market given overall business seasonality.
Current wording
During the third quarter of 2024, global inflation levels continued to decline, but remain above historical averages, in commodity, labor and other operating costs leading to reduced costs from these inputs across all our businesses. The global energy market continues to be impacted by the Russia-Ukraine war, driving up prices as supply out of the Black Sea region is disrupted and future production is at risk. The Russia-Ukraine war's impact on the global feed ingredient market is currently less pronounced as global supply in other growing areas has developed and grain exports from the Black Sea region have remained steady throughout the first nine months of 2024, with exception of moderate impact on winter wheat crop as noted below. The U.K. and E.U. region saw a continued decrease in inflation rate and flat demand, leading to cost recovery for our business and stabilizing prices for customers, though labor costs continue to be a challenge for our Europe operations. We have and will continue to invest in our people and implement supply chain solutions to mitigate global economic impacts in our Europe operations. In Mexico, inflation remains high and the peso continued to weaken against the U.S. dollar in the third quarter of 2024. Mexico remains a relatively volatile market given overall business seasonality.
Previous wording
The Russia-Ukraine war began in February 2022. The impact of the ongoing war and sanctions has not been limited to businesses that operate in Russia and Ukraine and has negatively impacted and will likely continue to negatively impact other global economic markets including where we operate. The impacts have included and may continue to include, but are not limited to, higher prices for commodities, such as food products, ingredients and energy products, increasing inflation in some countries, and disrupted trade and supply chains. The conflict has disrupted shipments of grains, vegetable oils, fertilizer and energy products. Russia’s suspension of the Black Sea Grain Initiative, which allowed Ukraine to export grain and other food items, may further exacerbate rising food prices and supply chain issues if not reinstated.
Current wording
The impact of the ongoing Russia-Ukraine war and sanctions has not been limited to businesses that operate in Russia and Ukraine and has negatively impacted and will likely continue to negatively impact other global economic markets including where we operate. The impacts have included and may continue to include, but are not limited to, higher prices for commodities, such as food products, ingredients and energy products, increasing inflation in some countries, and disrupted trade and supply chains. The conflict has disrupted shipments of grains, vegetable oils, fertilizer and energy products.
Previous wording
The impact on the agriculture markets falls into two main categories: (1) the effect on Ukrainian crop production, as the region is key in global grain production; and (2) the duration of the disruption in trade flows. Safety and financing concerns in the region are restricting export execution, which is in turn forcing grain and oil demand to find alternative supply. The duration of the war and related volatility makes global markets extremely sensitive to growing-season weather in other global grain producing regions and has led to a large risk premium in futures prices. The continued volatility in the global markets as a result of the war has adversely impacted our costs by driving up prices, raising inflation and increasing pressure on the supply of feed ingredients and energy products throughout the global markets. During the second quarter of 2024, feed wheat price increased 12% as a result of deterioration in Russia winter wheat crop. These gains were reversed 9% in June as weather turned favorable for spring production in the northern hemisphere and winter planting in the southern hemisphere.
Current wording
The impact on the agriculture markets falls into two main categories: (1) the effect on Ukrainian crop production, as the region is key in global grain production; and (2) the duration of the disruption in trade flows. Safety and financing concerns in the region are restricting export execution, which is in turn forcing grain and oil demand to find alternative supply. The duration of the war and related volatility makes global markets extremely sensitive to growing-season weather in other global grain producing regions and has led to a large risk premium in futures prices. The continued volatility in the global markets as a result of the war could adversely impact our costs by driving up prices, raising inflation and increasing pressure on the supply of feed ingredients and energy products throughout the global markets.
Previous wording
U.S. commodity market prices for chicken products continued to increase during the second quarter of 2024 above the historical five-year average and stabilized late in the second quarter. Per the July 2024 U.S. Department of Agriculture (or “USDA”) report on poultry slaughter, estimated industry ready-to-cook production ended the quarter 0.9% above prior year levels primarily due to incremental increases in broilers processed and average liveweights.
Current wording
U.S. commodity market prices for chicken products trended above the historical five-year average as sustained price support delayed the normal seasonal price decreases until late in the quarter. Year-over-year price increases were supported by each major cut. Per the October 2024 U.S. Department of Agriculture (or “USDA”) report on poultry slaughter, estimated industry ready-to-cook production ended the quarter 2.7% above prior year levels primarily due to incremental increases in broilers processed and average liveweights.
Previous wording
During the second quarter of 2024, the U.S. chicken market experienced robust volume demand, supported by growth in both the retail and foodservice distribution channels throughout the quarter. Export volume in shipments were lower than the five-year historical average, but were sufficient to prevent buildup of dark meat inventories in cold storage while sustaining price levels which were higher than prior year. Chicken cold storage inventories ended the quarter 12.6% below prior year levels after declining seasonally during the quarter.
Current wording
During the third quarter of 2024, the U.S. chicken market experienced firm volume demand, supported by growth in both the retail and foodservice distribution channels throughout the quarter. Export volume in shipments were lower than the five-year historical average for the first two months of the quarter, but were sufficient to prevent buildup of dark meat inventories in cold storage while sustaining price levels that were higher than prior year. Chicken cold storage inventories ended the quarter 6.9% below prior year levels after declining seasonally during the quarter.
Previous wording
During the second quarter of 2024, the U.K. chicken market volume was higher than in the same quarter of the prior year and also increased compared to the first quarter of 2024. European supplies into U.K. are increasing slightly as other markets for the E.U. are declining. Our utilities and feed ingredient costs are lower relative to second quarter of 2023. We continue to focus on managing costs, including labor and yield efficiencies, agricultural performance and increasing operational efficiency through investments in capital projects.
Current wording
During the third quarter of 2024, the U.K. chicken market volume was higher than in the same quarter of the prior year and also increased compared to the first half of 2024. European supplies into U.K. are increasing slightly as other markets for the E.U. are declining. Our utilities and feed ingredient costs are lower relative to third quarter of 2023. We continue to focus on managing costs, including labor and yield efficiencies, agricultural performance and increasing operational efficiency through investments in capital projects.
Previous wording
Commodity prices for chicken in Mexico increased incrementally during the second quarter and on average were above prior year prices, but stabilized towards the end of the second quarter.
Current wording
Commodity prices for chicken in Mexico decreased during the third quarter and on average were below prior year prices, but trended upwards towards the end of the third quarter.
Previous wording
Prices for the remainder of the year will depend on (1) the evolution of foodservice, retail and export meat demand and (2) factors such as government regulation, the ongoing Russia-Ukraine war, feed production input costs, further spread of avian influenza both domestically and abroad, uncertainty surrounding the general economy and overall protein supply.
Current wording
Prices for the remainder of the year will depend on (1) the evolution of foodservice, retail and export meat demand and (2) factors such as feed production input costs, further spread of avian influenza both domestically and abroad, uncertainty surrounding the general economy and overall protein supply.
Previous wording
Net sales. Net sales generated in the three months ended June 30, 2024 increased $251.2 million, or 5.8%, from net sales generated in the three months ended June 25, 2023. The following table provides net sales information:
Current wording
Net sales. Net sales generated in the three months ended September 29, 2024 increased $224.8 million, or 5.2%, from net sales generated in the three months ended September 24, 2023. The following table provides net sales information:
Previous wording
U.S. Reportable Segment. U.S. net sales generated in the three months ended June 30, 2024 increased $217.8 million, or 8.9%, from U.S. net sales generated in the three months ended June 25, 2023 primarily due to an increase in net sales per pound of $164.0 million, or 6.7 percentage points, and an increase in sales volume of $53.7 million, or 2.2 percentage points. The increase in net sales per pound was driven primarily by favorable market pricing conditions. The second quarter average commodity chicken market prices were above both prior year and the historical five-year average.
Current wording
U.S. Reportable Segment. U.S. net sales generated in the three months ended September 29, 2024 increased $285.1 million, or 11.5%, from U.S. net sales generated in the three months ended September 24, 2023 primarily due to an increase in net sales per pound of $248.4 million, or 10.0 percentage points, and an increase in sales volume of $36.7 million, or 1.5 percentage points. The increase in net sales per pound was driven primarily by favorable market pricing conditions and shift in product mix. The third quarter average commodity chicken market prices were above both prior year and the historical five-year average.
Previous wording
Europe Reportable Segment. Europe net sales generated inthe three months ended June 30, 2024 decreased $9.2 million, or 0.7%, from Europe net sales generated in the three months ended June 25, 2023 primarily due to a decrease in net sales per pound of $60.3 million, or 4.6 percentage points. The decrease in net sales per pound was partially offset by an increase in an increase in sales volume and favorable impact of foreign currency translation of $38.3 million, or 2.9 percentage points, and $12.8 million, or 1.0 percentage points, respectively. The decrease in net sales per pound was primarily due to the structure of certain customer contracts impacted by lower input costs.
Current wording
Europe Reportable Segment. Europe net sales generated inthe three months ended September 29, 2024 decreased $4.1 million, or 0.3%, from Europe net sales generated in the three months ended September 24, 2023 primarily due to a decrease in net sales per pound of $51.3 million, or 3.9 percentage points. The decrease in net sales per pound was primarily due to shift in product mix and due to the structure of certain customer contracts impacted by lower input costs. The decrease in net sales per pound was partially offset by the favorable impact of foreign currency translation and an increase in sales volume of $31.0 million, or 2.4 percentage points, and $16.2 million, or 1.2 percentage points, respectively.
Previous wording
Mexico Reportable Segment. Mexico net sales generated in the three months ended June 30, 2024 increased $42.7 million, or 7.7%, from Mexico net sales generated in the three months ended June 25, 2023 due to an increase in net sales per pound of $16.1 million, or 2.9%, the favorable impact of foreign currency translation of $15.7 million, or 2.8 percentage points, and an increase in sales volume of $10.9 million, or 2.0 percentage points. The increase in net sales per pound was driven by an increase in commodity chicken prices. The increase in sales volume was driven by shifts in product mix.
Current wording
Mexico Reportable Segment. Mexico net sales generated in the three months ended September 29, 2024 decreased $56.2 million, or 10.0%, from Mexico net sales generated in the three months ended September 24, 2023 due to the unfavorable impact of foreign currency translation of $55.4 million, or 9.9 percentage points, and a decrease in net sales per pound of $8.6 million, or 1.5 percentage points. These decreases were partially offset by an increase in sales volume of $7.8 million, or 1.4 percentage points. The decrease in net sales per pound was driven by an decrease in commodity chicken prices based on market requirements. The increase in sales volume was driven by shifts in product mix.
Previous wording
Gross profit and cost of sales. Gross profit increased by $413.2 million, or 148.4%, from $278.4 million generated in the three months ended June 25, 2023 to $691.6 million generated in the three months ended June 30, 2024. The following tables provide information regarding gross profit and cost of sales information:
Current wording
Gross profit and cost of sales. Gross profit increased by $338.1 million, or 97.7%, from $345.9 million generated in the three months ended September 24, 2023 to $684.0 million generated in the three months ended September 29, 2024. The following tables provide information regarding gross profit and cost of sales information:
Previous wording
U.S. Reportable Segment. Cost of sales incurred by our U.S. operations during the six months ended June 30, 2024 decreased $172.7 million, or 3.7%, from cost of sales incurred by our U.S. segment during the six months ended June 25, 2023. The decrease in cost of sales was primarily driven by a decrease in cost per pound sold of $268.5 million, or 5.7 percentage points, partially offset by an increase in sales volume of $95.8 million, or 2.0 percentage points. The decrease from prior year in cost per pound sold is primarily due to declining feed ingredients costs, specifically corn and soybean meal. Corn market prices decreased approximately 28% from prior year levels and soybean meal market prices decreased approximately 16% from prior year levels. Factors that are partially offsetting the decrease in cost of sales from feed ingredients are increased payroll and incentive compensation costs and an increase in insurance costs related to prior year recognition of income for business interruption insurance recoveries.
Current wording
U.S. Reportable Segment. Cost of sales incurred by our U.S. operations during the three months ended September 29, 2024 decreased $37.2 million, or 1.6%, from cost of sales incurred by our U.S. segment during the three months ended September 24, 2023. The decrease in cost of sales was primarily driven by a decrease in cost per pound sold of $71.5 million, or 3.1 percentage points, partially offset by an increase in sales volume of $34.2 million, or 1.5 percentage points. The decrease from prior year in cost per pound sold is primarily due to declining feed ingredients costs, specifically corn and soybean meal. Corn market prices decreased approximately 28% from prior year levels and soybean meal market prices decreased approximately 14% from prior year levels. Factors that are partially offsetting the decrease in cost of sales from feed ingredients are increased payroll and incentive compensation costs, grower costs, and other operating costs.
Previous wording
Mexico Reportable Segment. Cost of sales incurred by our Mexico operations during thethree months ended June 30, 2024 decreased $5.2 million, or 1.1%, from cost of sales incurred by our Mexico segment during the three months ended June 25, 2023. This decrease was driven by a decrease in cost per pound sold of $27.0 million, or 5.7 percentage points. The decrease was partially offset by the unfavorable impact of foreign currency translation of $12.4 million, or 2.6 percentage points and an increase in sales volume of $9.4 million, or 2.0 percentage points. The decrease in cost per pound sold was driven by decreased input costs, such as commodity feed ingredients.
Current wording
Mexico Reportable Segment. Cost of sales incurred by our Mexico operations during thethree months ended September 29, 2024 decreased $36.1 million, or 7.5%, from cost of sales incurred by our Mexico segment during the three months ended September 24, 2023. This decrease was driven by the favorable impact of foreign currency translation of $48.9 million, or 10.2 percentage points. Partially offsetting this decrease were increases in sales volume and cost per pound sold of $6.7 million, or 1.4 percentage points, and $6.1 million, or 1.3 percentage points, respectively.
Previous wording
Operating income and SG&A expense. Operating income increased by $340.5 million, or 339.6%, from income of$100.3 million generated in the three months ended June 25, 2023 to income of $440.8 million generated in the three months ended June 30, 2024. The following tables provide information regarding operating income and selling, general and administrative (“SG&A”) expense:
Current wording
Operating income and SG&A expense. Operating income increased by $302.0 million, or 146.3%, from income of$206.4 million generated in the three months ended September 24, 2023 to income of $508.4 million generated in the three months ended September 29, 2024. The following tables provide information regarding operating income and selling, general and administrative (“SG&A”) expense:
Previous wording
U.S. Reportable Segment. SG&A expense incurred by our U.S. reportable segment during the three months ended June 30, 2024 increased $67.5 million, or 87.9%, from SG&A expense incurred by our U.S. reportable segment during the three months ended June 25, 2023. The increase in SG&A expense resulted primarily from incremental legal settlement expense recognized in the three months ended June 30, 2024 and an increase in incentive compensation costs.
Current wording
U.S. Reportable Segment. SG&A expense incurred by our U.S. reportable segment during the three months ended September 29, 2024 increased $3.8 million, or 5.6%, from SG&A expense incurred by our U.S. reportable segment during the three months ended September 24, 2023. The increase in SG&A expense resulted primarily from an increase in incentive compensation costs, partially offset by a net decrease in legal settlement expense.
Previous wording
Restructuring activities. Losses on restructuring activities of $36.7 million were recognized in the three months ended June 30, 2024. These charges were incurred by our Europe reportable segment primarily as a result of asset impairment recognized on assets in our Pilgrim’s U.K. business that had previously ceased operations, severance and asset impairment related to the closure of facilities within our Pilgrim’s Food Masters business, and severance related to our Pilgrim’s Europe restructuring initiative.
Current wording
Restructuring activities. Restructuring activities costs of $30.8 million were recognized in the three months ended September 29, 2024. These charges were incurred by our Europe reportable segment primarily as a result of severance, asset impairment, and other charges related to the closure of facilities within our Pilgrim’s Food Masters and Pilgrim's U.K. businesses.
Previous wording
Net interest expense. Net interest expense decreased to $46.2 million recognized in the six months ended June 30, 2024 from $78.6 million recognized in the six months ended June 25, 2023. The decrease in net interest expense resulted primarily from gains on early extinguishment of debt and an increase in interest income on higher cash balances.
Current wording
Net interest expense. Net interest expense decreased to $19.5 million recognized in the three months ended September 29, 2024 from $33.5 million recognized in the three months ended September 24, 2023. The decrease in net interest expense resulted primarily from a decrease in interest expense on outstanding borrowings due to decreased borrowings and an increase in interest income on higher cash balances.
Previous wording
Income taxes. Income tax expense increased to $100.7 million, a 23.6% effective tax rate, for the three months ended June 30, 2024 compared to an income tax benefit of $15.2 million, a (33.3)% effective tax rate, for the three months ended June 25, 2023. The change from an income tax benefit to an income tax expense in 2024 resulted primarily from the increase in profit before income taxes, recognition of a deferred tax asset in a corporate legal entity, and intercompany dividend distributions from our Mexico reportable segment to our U.S. reportable segment.
Current wording
Income taxes. Income tax expense increased to $131.6 million, a 27.3% effective tax rate, for the three months ended September 29, 2024 compared to an income tax expense of $44.6 million, a 26.8% effective tax rate, for the three months ended September 24, 2023.
Previous wording
Net sales. Net sales generated in the six months ended June 30, 2024 increased $447.5 million, or 5.3%, from net sales generated in the six months ended June 25, 2023. The following table provides net sales information:
Current wording
Net sales. Net sales generated in the nine months ended September 29, 2024 increased $672.3 million, or 5.2%, from net sales generated in the nine months ended September 24, 2023. The following table provides net sales information:
Previous wording
U.S. Reportable Segment. U.S. net sales generated in the six months ended June 30, 2024 increased $364.5 million, or 7.5%, from U.S. net sales generated in the six months ended June 25, 2023 primarily due to an increase in net sales per pound of $265.6 million, or 5.5 percentage points, and an increase in sales volume of $98.9 million, or 2.0 percentage points. The increase in net sales per pound was driven primarily by favorable market pricing conditions. The first half average commodity chicken market prices were above both prior year and the historical five-year average.
Current wording
U.S. Reportable Segment. U.S. net sales generated in the nine months ended September 29, 2024 increased $649.6 million, or 8.8%, from U.S. net sales generated in the nine months ended September 24, 2023 primarily due to an increase in net sales per pound and an increase in sales volume of $514.0 million, or 7.0 percentage points, and $135.6 million, or 1.8 percentage points, respectively. The increase in net sales per pound was driven primarily by favorable market pricing conditions. The first nine months average commodity chicken market prices were above both prior year and the historical five-year average.
Previous wording
Europe Reportable Segment. Europe net sales generated inthe six months ended June 30, 2024 increased $19.4 million, or 0.8%, from Europe net sales generated in the six months ended June 25, 2023 primarily due to a favorable impact of foreign currency translation and an increase in sales volume of $69.6 million, or 2.8 percentage points, and $48.1 million, or 1.9 percentage points, respectively. The increase in net sales was partially offset by a decrease in net price per pound sold of $98.2 million, or 3.9 percentage points. The decrease in net sales per pound was primarily due to the structure of certain customer contracts impacted by lower input costs.
Current wording
Europe Reportable Segment. Europe net sales generated inthe nine months ended September 29, 2024 increased $15.4 million, or 0.4%, from Europe net sales generated in the nine months ended September 24, 2023 primarily due to a favorable impact of foreign currency translation and an increase in sales volume of $100.8 million, or 2.6 percentage points, and $64.4 million, or 1.7 percentage points, respectively. The increase in net sales was partially offset by a decrease in net price per pound sold of $149.8 million, or 3.9 percentage points. The decrease in net sales per pound was primarily due to the structure of certain customer contracts impacted by lower input costs.
Previous wording
Mexico Reportable Segment. Mexico net sales generated in the six months ended June 30, 2024 increased $63.6 million, or 6.1%, from Mexico net sales generated in the six months ended June 25, 2023 primarily due to an increase from the impact of foreign currency translation and an increase in sales volume of $68.6 million, or 6.6 percentage points, and $29.4 million, or 2.8 percentage points, respectively, partially offset by a decrease in net sales per pound of $34.4 million, or 3.3 percentage points. The increase in sales volume was driven by market requirements in mix with a year-over-year increase in volume in live chicken markets and an increase in imports, partially offset by a decrease in processed chicken volumes. The decrease in price per pound sold was driven by the shift in product mix.
Current wording
Mexico Reportable Segment. Mexico net sales generated in the nine months ended September 29, 2024 increased $7.4 million, or 0.5%, from Mexico net sales generated in the nine months ended September 24, 2023 primarily due to an increase in sales volume and the favorable impact of foreign currency translation of $37.2 million, or 2.3 percentage points, and $11.5 million, or 0.8 percentage points, respectively, partially offset by a decrease in net sales per pound of $41.3 million, or 2.6 percentage points. The increase in sales volume was driven by sales mix with a year-over-year increase in imports and processed chicken volumes, partially offset by a decrease in live chicken volumes. The decrease in price per pound sold was driven by the shift in product mix.
Previous wording
Gross profit and cost of sales. Gross profit increased by $624.1 million from $451.5 million generated in the six months ended June 25, 2023 to $1.1 billion generated in the six months ended June 30, 2024. The following tables provide information regarding gross profit and cost of sales information:
Current wording
Gross profit and cost of sales. Gross profit increased by $962.2 million from $797.4 million generated in the nine months ended September 24, 2023 to $1.8 billion generated in the nine months ended September 29, 2024. The following tables provide information regarding gross profit and cost of sales information:
Previous wording
U.S. Reportable Segment. Cost of sales incurred by our U.S. operations during the three months ended June 30, 2024 decreased $120.5 million, or 5.2%, from cost of sales incurred by our U.S. segment during the three months ended June 25, 2023. The decrease in cost of sales was primarily driven by a decrease in cost per pound sold of $171.7 million, or 7.4 percentage points, partially offset by an increase in sales volume of $51.2 million, or 2.2 percentage points. The decrease from prior year in cost per pound sold is primarily due to declining feed ingredients costs, specifically corn and soybean meal. Corn market prices decreased approximately 31% from prior year levels and soybean meal market prices decreased approximately 23% from prior year levels. Factors that are partially offsetting the decrease in cost of sales from feed ingredients are increased payroll and incentive compensation costs and an increase in insurance costs related to prior year recognition of income for business interruption insurance recoveries.
Current wording
U.S. Reportable Segment. Cost of sales incurred by our U.S. operations during the nine months ended September 29, 2024 decreased $209.9 million, or 3.0%, from cost of sales incurred by our U.S. segment during the nine months ended September 24, 2023. The decrease in cost of sales was primarily driven by a decrease in cost per pound sold of $339.6 million, or 4.8 percentage points, partially offset by an increase in sales volume of $129.6 million, or 1.8 percentage points. The decrease from prior year in cost per pound sold is primarily due to declining feed ingredients costs, specifically corn and soybean meal. Corn market prices decreased approximately 28% from prior year levels and soybean meal market prices decreased approximately 23% from prior year levels. Factors that are partially offsetting the decrease in cost of sales from feed ingredients are increased payroll and incentive compensation costs and an increase in insurance costs related to prior year recognition of income for business interruption insurance recoveries.
Previous wording
Europe Reportable Segment. Cost of sales incurred by our Europe operations during the six months ended June 30, 2024 decreased $15.4 million, or 0.6%, from cost of sales incurred by our Europe segment during the six months ended June 25, 2023. The increase in cost of sales was primarily driven by a decrease in cost per pound sold of $124.2 million, or 5.2 percentage points. The decrease in cost per pound sold was partially offset by the unfavorable impact of foreign currency translation and an increase in sales volume of $64.0 million, or 2.8 percentage points, and $44.8 million, or 1.9 percentage points, respectively. The decrease in cost per pound sold was driven bycost recovery from feed ingredients, labor, utilities and other operating costs and was partially offset by an increase related to the prior year one-time recognition of business interruption insurance income.
Current wording
Europe Reportable Segment. Cost of sales incurred by our Europe operations during the nine months ended September 29, 2024 decreased $55.4 million, or 1.5%, from cost of sales incurred by our Europe segment during the nine months ended September 24, 2023. The decrease in cost of sales was primarily driven by a decrease in cost per pound sold. The decrease in cost per pound sold was driven by lower feed ingredients, labor, utilities and other operating costs and was partially offset by an increase related to the prior year one-time recognition of business interruption insurance income.
Previous wording
Mexico Reportable Segment. Cost of sales incurred by our Mexico operations during thesix months ended June 30, 2024 increased $11.7 million, or 1.3%, from cost of sales incurred by our Mexico segment during thesix months ended June 25, 2023 June 25, 2023. This increase was driven by an unfavorable impact of foreign currency remeasurement and an increase in volume of $57.4 million, or 6.3 percentage points, and $25.8 million, or 2.8 percentage points, respectively. These increases in cost of sales were partially offset by a decrease in cost per pound sold of $71.5 million, or 7.8 percentage points. The increase in volume was driven by market requirements in mix with a year-over-year increase in volume in live chicken markets and an increase in imports, partially offset by a decrease in processed chicken volumes. The decrease in cost per pound sold was driven by decreased commodity feed ingredient input costs.
Current wording
Mexico Reportable Segment. Costof sales incurred by our Mexico operations during thenine months ended September 29, 2024 decreased $24.4 million, or 1.7%, from cost of sales incurred by our Mexico segment during thenine months ended September 24, 2023. This decrease was driven by a decrease in cost per pound sold of $66.5 million, or 4.8 percentage points. The decrease in cost per pound sold was driven by decreased commodity feed ingredient input costs. The decrease in cost per pound sold was partially offset by increases in sales volume and the unfavorable impact of foreign currency translation of $32.4 million, or 2.3 percentage points, and $9.8 million, or 0.7 percentage points, respectively. The increase in volume was driven by changes in mix with a year-over-year increase in imports, partially offset by a decrease in processed and live chicken volumes.
Previous wording
Operating income and SG&A expense. Operating income increased by$559.5 million, or 425.1%, from income of$131.6 million generated in the six months ended June 25, 2023 to income of $691.1 million generated in the six months ended June 30, 2024. The following tables provide information regarding operating income and selling, general and administrative (“SG&A”) expense:
Current wording
Operating income and SG&A expense. Operating income increased by$861.4 million, or 254.9%, from income of$338.0 million generated in the nine months ended September 24, 2023 to income of $1,199.4 million generated in the nine months ended September 29, 2024. The following tables provide information regarding operating income and selling, general and administrative (“SG&A”) expense:
Previous wording
U.S. Reportable Segment. SG&A expense incurred by our U.S. reportable segment during the six months ended June 30, 2024 increased $59.0 million, or 41.1%, from SG&A expense incurred by our U.S. reportable segment during the six months ended June 25, 2023. The increase in SG&A expense resulted primarily from an increase in legal settlement expense and incentive compensation costs, partially offset by an insurance recovery recognized in the current year.
Current wording
U.S. Reportable Segment. SG&A expense incurred by our U.S. reportable segment during the nine months ended September 29, 2024 increased $62.8 million, or 29.5%, from SG&A expense incurred by our U.S. reportable segment during the nine months ended September 24, 2023. The increase in SG&A expense resulted primarily from an increase in legal settlement expense and incentive compensation costs, partially offset by an insurance recovery recognized in the current year.
Previous wording
Europe Reportable Segment. SG&A expense incurred by our Europe reportable segment during the three months ended June 30, 2024 decreased $1.6 million, or 2.9%, from SG&A expense incurred by our Europe segment during the three months ended June 25, 2023. The decrease in SG&A expense was primarily due to a decrease in salaries expense related to the Pilgrim’s Europe central restructuring initiative.
Current wording
Europe Reportable Segment. SG&A expense incurred by our Europe reportable segment during the nine months ended September 29, 2024 decreased $2.8 million, or 1.8%, from SG&A expense incurred by our Europe segment during the nine months ended September 24, 2023. The decrease in SG&A expense was primarily due to a decrease in salaries expense related to the Pilgrim’s Europe central restructuring initiative.
Previous wording
Mexico Reportable Segment. SG&A expense incurred by our Mexico reportable segment during the six months ended June 30, 2024 decreased $1.8 million, or 5.5%, from SG&A expense incurred by our Mexico segment during the six months ended June 25, 2023. The primary driver of the decrease in SG&A expense was a decrease in marketing spend and labor costs, partially offset by an increase driven by the unfavorable impact of foreign currency translation.
Current wording
Mexico Reportable Segment. SG&A expense incurred by our Mexico reportable segment during the nine months ended September 29, 2024 decreased $2.7 million, or 5.3%, from SG&A expense incurred by our Mexico segment during the nine months ended September 24, 2023. The primary driver of the decrease in SG&A expense was a decrease in marketing spend and labor costs, partially offset by an increase driven by the unfavorable impact of foreign currency translation.
Previous wording
Restructuring activities. Losses on restructuring activities of $51.2 million were recognized in the six months ended June 30, 2024. These charges were incurred by our Europe reportable segment primarily as a result of asset impairment recognized on assets in our Pilgrim’s U.K. business that had previously ceased operations, severance and asset impairment related to the closure of facilities within our Pilgrim’s Food Masters business, and severance related to our Pilgrim’s Europe restructuring initiative.
Current wording
Restructuring activities. Restructuring activities costs of $82.1 million were recognized in the nine months ended September 29, 2024. These charges were incurred by our Europe reportable segment primarily as a result of asset impairment, severance, and other charges in our Pilgrim’s Food Masters and Pilgrim’s U.K. businesses related to site closures.
Previous wording
Net interest expense. Net interest expense decreased to $15.3 million recognized in the three months ended June 30, 2024 from $39.5 million recognized in the three months ended June 25, 2023. The decrease in net interest expense resulted primarily from a gain on early extinguishment of deb t and an increase in interest income on higher cash balances. During the three months ended June 30, 2024, we repurchased $143.6 million of outstanding principal of the Senior Notes due 2031 and $20.0 million of outstanding principal of the Senior Notes due 2033, resulting in gross realized gains of $13.7 million.
Current wording
Net interest expense. Net interest expense decreased to $65.7 million recognized in the nine months ended September 29, 2024 from $112.1 million recognized in the nine months ended September 24, 2023. The decrease in net interest expense resulted primarily from a decrease in interest expense on outstanding borrowings due to decreased borrowings and an increase in interest income on higher cash balances. Contributing to the decrease in net interest expense is gross realized gains of
Previous wording
Income taxes. Income tax expense increased to $152.7 million, a 23.3% effective tax rate, for the six months ended June 30, 2024 compared to an income tax benefit of $24.1 million, a (56.7)% effective tax rate, for the six months ended June 25, 2023. The change from an income tax benefit to an income tax expense in 2024 resulted primarily from the increase in profit before income taxes.
Current wording
Income taxes. Income tax expense increased to $284.3 million, a 25.0% effective tax rate, for the nine months ended September 29, 2024 compared to an income tax expense of $20.5 million, a 9.8% effective tax rate, for the nine months ended September 24, 2023. The change from an income tax benefit to an income tax expense in 2024 resulted primarily from the increase in profit before income taxes.
Previous wording
(a)Availability under the U.S. Credit Facility is also reduced by our outstanding standby letters of credit. Standby letters of credit outstanding at June 30, 2024 totaled $24.8 million.
Current wording
(a)Availability under the U.S. Credit Facility is also reduced by our outstanding standby letters of credit. Standby letters of credit outstanding at September 29, 2024 totaled $24.7 million.
Previous wording
(b)The U.S. dollar-equivalent of the facility amount under the Mexico Credit Facility is $60.6 million (Mex$1.1 billion).
Current wording
(b)The U.S. dollar-equivalent of the facility amount under the Mexico Credit Facility is $56.4 million (Mex$1.1 billion).
Previous wording
(c)The U.S. dollar-equivalent of the facility amount under the Europe Credit Facility is $189.7 million (£150 million).
Current wording
(c)The U.S. dollar-equivalent of the facility amount under the Europe Credit Facility is $200.6 million (£150 million).
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Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
$13.8 million recognized on the repurchases of $144.3 million of outstanding principal of the Senior Notes due 2031 and $20.0 million of outstanding principal of the Senior Notes due 2033.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Europe Reportable Segment. SG&A expense incurred by our Europe reportable segment during the six months ended June 30, 2024 decreased $6.0 million, or 5.7%, from SG&A expense incurred by our Europe segment during the six months ended June 25, 2023. The decrease in SG&A expense was primarily due to a decrease in salaries expense related to the Pilgrim’s Europe central restructuring initiative.