Pilgrim's(PPC) - 2024 Q4 - Annual Report

Financial Performance - Net income attributable to Pilgrim's Pride Corporation for 2024 was $1.1 billion, or$ 4.57 per diluted common share, with a gross profit of $2.3 billion and cash generated from operations totaling$ 2.0 billion[136]. - Total net sales increased by $516.1 million, or 3.0%, from$ 17.4 billion in 2023 to $17.9 billion in 2024, driven primarily by a 6.0% increase in U.S. net sales[156]. - Gross profit rose by$ 1.2 billion, or 106.8%, from $1.1 billion in 2023 to$ 2.3 billion in 2024, with gross profit margins improving from 6.4% to 12.9%[159]. - Operating income increased by $983.8 million, or 188.4%, from$ 522.3 million in 2023 to $1,506.1 million in 2024[163]. - Net income for the year ended December 29, 2024, was$ 1,087,223, compared to $322,317 for the year ended December 31, 2023, representing a significant increase[231]. - Adjusted EBITDA for the year ended December 29, 2024, was$ 2,213,930, up from $1,034,191 in the previous year, indicating a growth of approximately 114%[231]. - The company’s comprehensive income for the year was$ 893.41 million, compared to $482.28 million in the previous year, demonstrating overall financial health and performance improvement[271]. Sales and Revenue - U.S. operating margins were reported at 10.5%, while Europe and Mexico segments had operating margins of 3.3% and 10.6%, respectively[136]. - Europe sales decreased by$ 66.6 million, or 1.3%, primarily due to lower net sales per pound and a decrease in sales volume[157]. - Mexico sales decreased by $19.5 million, or 0.9%, impacted by unfavorable foreign currency translation due to a weakening peso[158]. - Total net sales for the year ended December 29, 2024, reached$ 17,878.291 million, with U.S. sales contributing $10,629.929 million, Europe$ 5,136.747 million, and Mexico $2,111.615 million[334]. Cost and Expenses - Cost of sales for U.S. operations decreased by$ 439.4 million, or 4.6%, in 2024 compared to 2023, driven by a reduction in cost per pound sold and sales volume[160]. - SG&A expenses for U.S. operations rose by $167.5 million, or 59.1%, primarily due to increased litigation settlement and incentive compensation costs[165]. - Consolidated interest expense decreased by 46.9% to$ 88.5 million in 2024 from $166.6 million in 2023, with net interest expense as a percentage of net sales dropping from 1.0% to 0.5%[168]. - Consolidated income tax expense increased to$ 325.0 million in 2024 from $42.9 million in 2023, primarily due to higher pre-tax income[169]. Cash Flow and Liquidity - Cash provided by operating activities was$ 1,990.1 million in 2024, significantly up from $677.9 million in 2023[175]. - As of December 29, 2024, the company had cash and cash equivalents of$ 2,043.2 million available for liquidity[171]. - Cash provided by financing activities in 2024 was $(150.9) million, compared to$ 116.7 million in 2023, reflecting significant payments on long-term borrowings[185]. - The company expects sufficient liquidity from cash flows and credit facilities to meet obligations and capital spending for at least the next twelve months[190]. Investments and Capital Expenditures - Cash used in investing activities for the year ended December 29, 2024, was $460.8 million, a decrease from$ 503.4 million in the previous year[184]. - Capital expenditures for 2025 are anticipated to be between $450 million and$ 500 million, primarily for growth projects and operational efficiencies[187]. - The company plans to fund capital expenditures through cash flow from operations and cash on hand[187]. Environmental and Social Responsibility - The company is committed to reducing Scope 1 and 2 global greenhouse gas emissions intensity by 17.7% by 2025 and by 30.0% by 2030 from a 2019 baseline[151]. - The company has approved over $15 million for local projects aimed at alleviating food insecurity through its Hometown Strong initiative[153]. Goodwill and Intangible Assets - The goodwill balance as of December 29, 2024, was$ 1.24 billion, with $1.1 billion attributed to the Europe reportable segment[260]. - The company assessed its indefinite-life intangible assets in 2023 and found no material impairment, despite bypassing qualitative assessments due to increased long-term treasury rates[215]. - Goodwill and indefinite-lived intangible assets are tested for impairment annually, with no impairment indicators noted as of December 29, 2024[308]. Debt and Obligations - Long-term debt as of December 29, 2024, totals$ 3,256.3 million, with interest obligations amounting to $1,339.3 million[189]. - Total contractual obligations amount to$ 5,334.5 million, with $644.2 million due within one year[189]. - The company terminated its Pilgrim's Pride Pension Plan for Legacy Gold Kist and Union Plan in 2024, settling all obligations through lump-sum payouts and annuity purchases[224]. Market Conditions and Risks - The average global price of corn was approximately 30% lower than the previous year, while wheat prices were about 14% lower at the end of 2024 compared to the prior year[141]. - The company continues to face inflationary pressures but is negotiating with customers to recoup extraordinary costs and focusing on operational efficiencies[248]. - A hypothetical 10% increase in feed ingredient prices could increase the cost of sales by approximately$ 345,150,000 for the year ended December 29, 2024[238]. Accounting and Reporting - The Company recognizes revenue upon transfer of control to the customer, typically within days to weeks of order acceptance, ensuring timely revenue recognition[283]. - The Company evaluates impairment of long-lived assets at the country level, indicating a focus on operational efficiency and asset utilization[305]. - The Company applies the normal purchases and normal sales exception for certain forward physical grain purchase contracts, with no amounts recorded in the financial statements as of December 29, 2024[322].