Pilgrim's Pride Corporation (PPC Quick QuotePPC - Free Report) reported third-quarter 2021 results wherein the bottom line missed the Zacks Consensus Estimate. Nonetheless, both the top and the bottom line increased year over year on healthy performance across all regions.

The company reported adjusted earnings of 67 cents a share, which increased a penny from the year-ago quarter’s reported figure. However, quarterly earnings lagged the Zacks Consensus Estimate of 69 cents.

This producer, marketer and distributor of fresh, frozen as well as value-added chicken and pork products generated net sales of $3,827.6 that increased 24% from the year-ago quarter’s levels. Net sales increased in Mexico, the U.K. and Europe as well as in the U.S. operations.

Shares of this currently Zacks Rank #3 (Hold) company have increased 47.1% so far this year compared with the industry’s growth of 7.3%.

Q3 in Detail

Net sales in the U.S. operations amounted to $2,466.9 million, up from $1,894.2 million reported in the year-ago quarter. Management stated that demand in the United States is steadily recovering with foodservice business improving on a year-over-year basis and accomplishing higher levels than the pre-pandemic period.

The company’s Retail volumes in the region were solid. Also, margins have been improving for a while, particularly in the Commodity large bird deboning operation in spite of increased input and operating costs. We note that Prepared Foods volumes grew 7% overall and 16% in the consumer channel, driven by strength in Pilgrim’s and Just Bare brands at Retail.

Mexico operations generated net sales of $430.3 million in the reported quarter, up from $335.2 million in the prior-year quarter. Management notified that this region continues to perform outstandingly on the back of higher sales of the branded products and normal seasonality of the business.

Net sales from the U.K. and Europe operations rose to $930.4 million from $845.7 million in the quarter under review. The company highlighted that its combined European business was majorly hurt by inflationary pressures on inputs, utility and freight costs as well as rising labor shortages and lower pig pricing.

Rising fuel costs further hampered these businesses. However, the same overcame supply-chain issues to support the key customers in the UK. We note that the company concluded the buyout of Kerry Consumer Foods’ Meats and Meals business in the U.K. and Ireland on Sep 24. This business will be Pilgrim’s Food Masters, adding a unique value-supplemented protein and integrated prepared foods to the company’s portfolio. The company’s portfolio in the region was complemented with the launch of Pilgrim’s Food Masters.

Pilgrim's Pride’s cost of sales increased to $3,455.7 million from $2,761.3 million reported in the year-ago period. Gross profit climbed to $371.8 million from $313.8 million. Adjusted EBITDA came in at $346.9 million, up from $305 million reported in the year-ago quarter. However, adjusted EBITDA margin decreased to 9.1% from 9.9% recorded in the prior-year quarter.

Other Financial Details

Pilgrim's Pride ended the quarter with cash and cash equivalents of $511.1 million, long-term debt (less current maturities) of $3,195.9 million and total shareholders’ equity of $2,616.4 million. The company generated $327.5 million of cash from operating activities for the nine months ended Sep 26, 2021.

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