Boston, MA 05/14/2014 (wallstreetpr) – Pilgrim’s Pride Corporation (NASDAQ:PPC) reported first quarter 2014 (1Q2014) results with net sales of $2.0 billion and net income of $98.1 million with EPS of $0.38.
Volume growth drive the performance
Pilgrim reported higher sales volume during the quarter due to higher consumer demand for chicken products such as tenders, small whole chickens, boneless chickens and skinless breast portions. Despite a strong demand in the U.S. and Mexico for chicken products, Pilgrim’s Pride Corporation (NASDAQ:PPC) posted 0.9% down in overall net sales, due to decreasing in net sales per pound. During 1Q2014, the U.S. sales were $1.8 billion and Mexico reported sales of $224 million.
Cost of production decreased due to lower feed ingredient costs that helped to improve the gross profit significantly to $215.1 million (+82%) from $118.4 million, hence, it progressed the operating income to $168.2 million (1Q2013: $94.2 million). So, adjusted EBITDA during 1Q2014 increased to $205.2 million from $117.7 million in 1Q2013.
The operating income growth and lower interest expenses offset the increased tax expenses resulted from higher effective tax rate. So, Pilgrim’s Pride Corporation (NASDAQ:PPC) posted net income of $98.1 million or EPS of $0.38 compared to $54.6 million or EPS of $0.21 in same quarter 2013.
Strong operating cash flow
The increased earnings and improvement in working capital generated $195.7 million cash from operation and capital expenditure for the period was ~$47 million. So, the Company’s free cash flow was ~$149 million in 1Q2014. Gain on sale of investment securities and lower debt repayments improved the net cash. Consequently, the cash balance for the Company as of March 31, 2014 was ~$515 million that improved the Company’s net debt to $155 million.
Conclusion
The current environment in the chicken industry will provide robust growth in 2014. Pilgrim’s Pride Corporation (NASDAQ:PPC) competitive advantage with solid product mix and large customers’ base will benefit the Company in the growing market.
