Pilgrim's Pride Profit Falls in Q2

Adjusted EBITDA, which excludes restructuring and reorganization charges, was $127.6 million for the second quarter of fiscal 2010, as compared to adjusted EBITDA of $166.0 million for the same period a year ago.

Aug 2 2010 --- Pilgrim's Pride Corporation has reported net earnings of $32.9 million, or $0.15 per diluted share, on net sales of $1.7 billion for the second quarter ended June 27, 2010. These results include nonrecurring administrative restructuring charges of $16.9 million pre-tax, or $10.5 million after tax, or $0.05 per diluted share, related to the writedown of net book value of two office buildings. For the comparable quarter a year ago, the company reported net earnings of $53.2 million, or $0.72 per share, on total sales of nearly $1.8 billion. Adjusted EBITDA, which excludes restructuring and reorganization charges, was $127.6 million for the second quarter of fiscal 2010, as compared to adjusted EBITDA of $166.0 million for the same period a year ago.

"Our results for the second quarter reflect significant improvement from the first quarter, a sign that the operational and structural changes we have made over the past 18 months are beginning to pay off," said Don Jackson, Pilgrim's Pride president and chief executive. "We are making progress in a number of areas, including new business, cost control and operating efficiencies. We continue to make gains in live operations and plant costs."

The company said the administrative restructuring charges include $14.8 million in non-cash impairment costs related to writing down the net book value of its former corporate headquarters building in east Texas and a satellite corporate office building in Atlanta. Those offices were recently closed as part of the relocation of the corporate headquarters to Greeley, CO.

"Cost improvement in the short-term, and product mix and price in the long-term, continue to be our largest opportunities for creating value. We are succeeding in bringing in new, higher-margin business in both retail and foodservice in the third quarter. Overall we are seeing good demand from customers and we intend to grow our share and volume in every channel. Sales and volume in the second quarter increased across our retail and foodservice segments when compared to the first quarter. In terms of supply and demand, we are in balance with our boneless skinless breast meat, with all of that product being absorbed by our core retail and foodservice businesses," he explained.

Jackson said he is cautiously optimistic about industry fundamentals heading into the second half of the year, as overall production is estimated to rise 2.7 percent in 2010. "That is still well below the pre-cutback levels of 2008 and supplies at this point remain fairly tight. Based on the current supply across all three meat proteins, I believe the industry will remain relatively strong. In general, our customers appear to be optimistic, and I believe we will see more price support for chicken as supplies remain below pre-cutback levels."

"Looking ahead, we are focused on upgrading the value of our product mix, operating our plants more efficiently, and taking full advantage of our stronger financial and competitive position in the marketplace," Mr. Jackson said.

For the first two quarters of fiscal 2010, the company reported a net loss of $12.6 million, or $0.06 per share, on sales of $3.4 billion. These results include nonrecurring administrative restructuring charges and reorganization expenses of $71.2 million pre-tax, or $44.3 million after tax, or $0.21 per diluted share. For the same period a year ago, Pilgrim's Pride reported a net loss of $5.5 million, or $0.07 per share, on sales of $3.5 billion. Adjusted EBITDA for the first six months of fiscal 2010 was $187.1 million, compared to $246.7 million for the same period a year ago.