GlobeNewswire Inc | Apr 28, 2021 04:20PM EDT

April 28, 2021

GREELEY, Colo., April 28, 2021 (GLOBE NEWSWIRE) -- Pilgrims Pride Corporation (NASDAQ: PPC) reports first quarter 2021 financial results.

First Quarter Highlights

-- Net Sales of $3.27 billion. -- GAAP Net Income of $100.2 million. Adjusted Net Income of $103.0 million or adjusted EPS of $0.42. -- Consolidated Operating Income margin of 4.8% with Operating Income margins of 3.4% in U.S., 19.0% in Mexico and 1.2% in Europe. -- Adjusted EBITDA of $253.8 million, or a 7.8% margin, 53.4% higher than a year ago. -- Throughout the global COVID-19 pandemic, we remain guided by our principles of an uncompromising commitment to the safety of our team members, our duty to provide quality food globally, and our responsibility to provide continued employment opportunities and benefits for our team during these unprecedented times. -- Strong focus in execution and dedication by our team members, supported by our portfolio strategy of differentiated products, strong Key Customer relationships, and diversified global operations have helped us to mitigate challenging market conditions due to COVID-19 and improve the resiliency in our results. -- Demand in U.S. continues to recover, with our foodservice business improving while Retail and QSR business maintaining strength despite higher input and operating costs, volume disruptions because of weather events, and less than optimal mix due to significant labor shortages. Commodity large bird deboning experienced a rapid increase in prices throughout the quarter, achieving the largest improvement relative to Q1 a year ago. -- Mexico maintained the strength from the second half of 2020. Strong execution, improved overall economic conditions, better supply/demand balance, and our increased share of non-commodity products contributed to the strength. -- Our combined European business continues to achieve operational improvements, offsetting high feed costs, not yet reflected in prices, lower year-over-year foodservice volume due to lockdowns, and COVID-19 mitigation costs. -- Our commitment to achieve net-zero GHG emissions by 2040 demonstrates our leadership in ESG as a responsible steward of the environment and a good corporate citizen. In support, last month we successfully issued a $1 billion sustainability-linked bond tied to efforts to reduce greenhouse gas emission intensity across our global operations. The bond is the first of its kind to be issued by a global meat and poultry company, and aligns with our vision to be the best and most respected company in our industry.

Unaudited Three Months Ended March 28, March 29, Y/Y Change 2021 2020 (In millions, except per share and percentages)Net sales $ 3,273.4 $ 3,074.9 +6.5 %U.S. GAAP EPS $ 0.41 $ 0.27 +51.9 %Operating income $ 158.5 $ 84.4 +87.8 %Adjusted EBITDA^(1) $ 253.8 $ 165.5 +53.4 %Adjusted EBITDA margin^(1) 7.8 % 5.4 % +2.4 pts

(1) Reconciliations for non-U.S. GAAP measures are provided in subsequent sections within this release.

While overall demand conditions have incrementally improved, we are still faced with market specific volatility and challenges across our global operations. Throughout the COVID-19 pandemic, our team has continued to maintain their commitment, dedication and hard work, in supporting our ability to keep a safe and healthy working environment while allowing us the capability to maintain production and supply to our customers during this unprecedented crisis. Our diversified portfolio and strategy has continued to mitigate the difficult environment and produce the expected results in relative performance to the competition, while delivering more resilient performance regardless of changes in specific market conditions. During Q1, the U.S. generated a solid performance despite challenges from weather events and higher input costs; while Mexico maintained its strong results from the second half of 2020. In Europe, more expensive feed ingredients, COVID-19 mitigation costs, lower foodservice volumes due to pandemic restrictions, and export constraints to China presented a challenging environment. Nevertheless, we remain agile and are continuing to adapt our operations to changes in market conditions, stated Fabio Sandri, Chief Executive Officer of Pilgrim's.

During Q1, the market environment in the U.S. improved throughout the quarter, including a challenging February in part due to the significant weather event in the southeast, before a very strong recovery as we exited the quarter. With gradual loosening of restrictions, as a result of the increase in vaccinations, the market has been incrementally improving, especially in foodservice. The market for commodity large bird deboning experienced the largest improvement relative to the same period a year ago. Our retail and QSR results have remained solid due to strong demand across our customer base despite higher input and operating costs, and less than optimal mix due to significant labor shortages and COVID-19. Our Prepared Foods business remained resilient considering the challenging demand environment. The business continues to grow its sales in the branded segment, reflecting the investments made over the past few years, and we anticipate stronger results as COVID-19 restrictions are gradually lifted throughout 2021.

Compared to a very challenging Q1 last year, Mexico had another strong quarter following a robust performance during the second half 2020, driven by a balanced supply/demand and continuous improvements in operational performance. We adapted the operations well to generate strong performance despite volumes in the fresh segment that were below those of 2020. Our Prepared Foods also performed well, with improved demand. We maintain the pursuit of our strategy to invest in our brands, in both fresh and prepared food business, seeking to establish strong differentiated brands and products, and at the same time increase our share in modern channels with more stable margins over time, consistent with our vision for growth in Mexico.

In Q1, our Moy Park operations experienced some headwinds due to significant changes in the cost of feed ingredients, the year-over-year impact of lockdown restrictions on demand and COVID-19 mitigation costs, but are continuing to evolve as we strengthen its ability to manage the stability by adapting a sales model to better moderate future input cost challenges. In addition, our strong internal operating performance and commitment to innovation have helped in mitigating the difficult environment. Integration of Pilgrims UK is on track, and the business has continued to contribute positively to our results. During the quarter, we experienced a reduction in volume of exports to China due to the suspension of our export license at two plants as a result of COVID-19. We work diligently with the applicable authorities to reinstate these licenses. In addition, pig prices in the EU and UK were under pressure because of ASF in Germany; however, prices have already started to recover.

Conference Call Information

A conference call to discuss Pilgrims quarterly results will be held tomorrow, April 29, at 7:00 a.m. MT (9 a.m. ET). Participants are encouraged to pre-register for the conference call using the link below. Callers who pre-register will be given a unique PIN to gain immediate access to the call and bypass the live operator. Participants may pre-register at any time, including up to and after the call start time.To pre-register, go to: https://services.choruscall.com/links/ppc210429.html

You may also reach the pre-registration link by logging in through the investor section of our website at www.pilgrims.comand clicking on the link under Upcoming Events.

For those who would like to join the call but have not pre-registered, access is available by dialing +1 (844) 883-3889 within the US, or +1 (412) 317-9245 internationally, and requesting the Pilgrims Pride Conference. Please note that to submit a question to management during the call, you must be logged in via telephone.

Replays of the conference call will be available on Pilgrims website approximately two hours after the call concludes and can be accessed through the Investor section of www.pilgrims.com. The webcast will be available for replay through July 29, 2021.

About Pilgrims Pride

Pilgrims employs approximately 54,900 people and operates protein processing plants and prepared-foods facilities in 14 states, Puerto Rico, Mexico, the U.K, and continental Europe. The Companys primary distribution is through retailers and foodservice distributors. For more information, please visit www.pilgrims.com.

Forward-Looking Statements

Statements contained in this press release that state the intentions, plans, hopes, beliefs, anticipations, expectations or predictions of the future of Pilgrims Pride Corporation and its management are considered forward-looking statements. Without limiting the foregoing, words such as anticipates, believes, estimates, expects, intends, may, plans, projects, should, targets, will and the negative thereof and similar words and expressions are intended to identify forward-looking statements. It is important to note that actual results could differ materially from those projected in such forward-looking statements. Factors that could cause actual results to differ materially from those projected in such forward-looking statements include: the impact of the COVID-19 pandemic, efforts to contain the pandemic and resulting economic downturn on our operations and financial condition, including the risk that our health and safety measures at Pilgrims Pride production facilities will not be effective, the risk that we may be unable to prevent the infection of our employees at these facilities, and the risk that we may need to temporarily close one or more of our production facilities; the risk that we may experience decreased production and sales due to the changing demand for food products; the risk that we may face a significant increase in delayed payments from our customers; and additional risks related to COVID-19 set forth in our most recent Form 10-K and Form 10-Q filed with the SEC; matters affecting the poultry industry generally; the ability to execute the Companys business plan to achieve desired cost savings and profitability; future pricing for feed ingredients and the Companys products; outbreaks of avian influenza or other diseases, either in Pilgrims Prides flocks or elsewhere, affecting its ability to conduct its operations and/or demand for its poultry products; contamination of Pilgrims Prides products, which has previously and can in the future lead to product liability claims and product recalls; exposure to risks related to product liability, product recalls, property damage and injuries to persons, for which insurance coverage is expensive, limited and potentially inadequate; management of cash resources; restrictions imposed by, and as a result of, Pilgrims Prides leverage; changes in laws or regulations affecting Pilgrims Prides operations or the application thereof; new immigration legislation or increased enforcement efforts in connection with existing immigration legislation that cause the costs of doing business to increase, cause Pilgrims Pride to change the way in which it does business, or otherwise disrupt its operations; competitive factors and pricing pressures or the loss of one or more of Pilgrims Prides largest customers; currency exchange rate fluctuations, trade barriers, exchange controls, expropriation and other risks associated with foreign operations; disruptions in international markets and distribution channel, including anti-dumping proceedings and countervailing duty proceedings; and the impact of uncertainties of litigation and other legal matters described in our most recent Form 10-K and Form 10-Q, including the In re Broiler Chicken Antitrust Litigation, as well as other risks described under Risk Factors in the Companys Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and subsequent filings with the Securities and Exchange Commission. The forward-looking statements in this release speak only as of the date hereof, and the Company undertakes no obligation to update any such statement after the date of this release, whether as a result of new information, future developments or otherwise, except as may be required by applicable law.

Contact: Dunham Winoto Investor Relations IRPPC@pilgrims.com (970) 506-8192 www.pilgrims.com

PILGRIM?S PRIDE CORPORATIONCONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) March 28, December 27, 2021 2020 (In thousands)Cash and cash equivalents $ 367,015 $ 547,624 Restricted cash and cash equivalents 43,225 782 Trade accounts and other receivables, less 800,838 741,992 allowance for doubtful accountsAccounts receivable from related parties 1,227 1,084 Inventories 1,439,915 1,358,793 Income taxes receivable 59,026 69,397 Prepaid expenses and other current assets 164,744 183,039 Total current assets 2,875,990 2,902,711 Deferred tax assets 5,358 5,471 Other long-lived assets 25,744 24,780 Operating lease assets, net 279,795 288,886 Identified intangible assets, net 592,182 589,913 Goodwill 1,019,323 1,005,245 Property, plant and equipment, net 2,682,369 2,657,491 Total assets $ 7,480,761 $ 7,474,497 Accounts payable $ 1,025,249 $ 1,028,710 Accounts payable to related parties 9,556 9,650 Revenue contract liabilities 35,334 65,918 Accrued expenses and other current liabilities 606,759 807,847 Income taxes payable 9,204 ? Current maturities of long-term debt 25,457 25,455 Total current liabilities 1,711,559 1,937,580 Noncurrent operating lease liability, less 208,152 217,432 current maturitiesLong-term debt, less current maturities 2,350,429 2,255,546 Deferred tax liabilities 360,015 339,831 Other long-term liabilities 114,850 148,761 Total liabilities 4,745,005 4,899,150 Common stock 2,613 2,612 Treasury stock (345,134 ) (345,134 )Additional paid-in capital 1,956,375 1,954,334 Retained earnings 1,072,777 972,569 Accumulated other comprehensive income (loss) 37,279 (20,620 )Total Pilgrim?s Pride Corporation stockholders? 2,723,910 2,563,761 equityNoncontrolling interest 11,846 11,586 Total stockholders? equity 2,735,756 2,575,347 Total liabilities and stockholders? equity $ 7,480,761 $ 7,474,497

PILGRIM?S PRIDE CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF INCOME(Unaudited) Three Months Ended March 28, March 29, 2021 2020 (In thousands, except per share data)Net sales $ 3,273,425 $ 3,074,928 Cost of sales 3,012,182 2,897,829 Gross profit 261,243 177,099 Selling, general and administrative expense 102,779 92,713 Operating income 158,464 84,386 Interest expense, net of capitalized interest 30,334 32,688 Interest income (2,366 ) (1,690 )Foreign currency transaction loss (gain) 2,514 (18,385 )Miscellaneous, net (7,844 ) (34,188 )Income before income taxes 135,826 105,961 Income tax expense 35,358 38,512 Net income 100,468 67,449 Less: Net income attributable to noncontrolling 260 181 interestsNet income attributable to Pilgrim?s Pride $ 100,208 $ 67,268 Corporation Weighted average shares of Pilgrim's Pride Corporation common stock outstanding:Basic 243,580 249,347 Effect of dilutive common stock equivalents 278 275 Diluted 243,858 249,622 Net income attributable to Pilgrim's PrideCorporation per share of common stock outstanding:Basic $ 0.41 $ 0.27 Diluted $ 0.41 $ 0.27

PILGRIM?S PRIDE CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)

Three Months Ended March 28, March 29, 2021 2020 (In thousands)Cash flows from operating activities: Net income $ 100,468 $ 67,449 Adjustments to reconcile net income to cash provided by operating activities:Depreciation and amortization 86,532 79,773 Deferred income tax expense 12,483 17,023 Gain on property disposals (2,396 ) (521 )Stock-based compensation 2,042 676 Loan cost amortization 1,215 1,212 Accretion of discount related to Senior Notes 246 246 Amortization of premium related to Senior Notes (167 ) (167 )Loss (gain) on equity-method investments (4 ) 309 Negative adjustment to previously recognized gain ? 1,740 on bargain purchaseChanges in operating assets and liabilities: Trade accounts and other receivables (54,892 ) (26,296 )Inventories (82,550 ) 9,333 Prepaid expenses and other current assets 20,228 (22,419 )Accounts payable, accrued expenses and other (240,183 ) (108,004 )current liabilitiesIncome taxes 25,440 (16 )Long-term pension and other postretirement (10,841 ) (6,282 )obligationsOther operating assets and liabilities (1,172 ) 7,008 Cash provided by operating activities (143,551 ) 21,064 Cash flows from investing activities: Acquisitions of property, plant and equipment (102,167 ) (77,168 )Proceeds from property disposals 13,074 632 Purchase of acquired business, net of cash acquired ? (1,740 )Cash used in investing activities (89,093 ) (78,276 )Cash flows from financing activities: Proceeds from revolving line of credit and 328,932 356,547 long-term borrowingsPayments on revolving line of credit, long-term (235,292 ) (13,396 )borrowings and finance lease obligationsPayment of equity distribution under Tax SharingAgreement between JBS USA Food Company Holdings and (650 ) ? Pilgrim?s Pride CorporationPurchase of common stock under share repurchase ? (27,906 )programCash provided by financing activities 92,990 315,245 Effect of exchange rate changes on cash and cash 1,488 (2,193 )equivalentsIncrease in cash, cash equivalents and restricted (138,166 ) 255,840 cashCash, cash equivalents and restricted cash, 548,406 280,577 beginning of periodCash, cash equivalents and restricted cash, end of $ 410,240 $ 536,417 period

PILGRIMS PRIDE CORPORATIONNon-GAAP Financial Measures Reconciliation(Unaudited)

EBITDA is defined as the sum of net income plus interest, taxes, depreciation and amortization. Adjusted EBITDA is calculated by adding to EBITDA certain items of expense and deducting from EBITDA certain items of income that we believe are not indicative of our ongoing operating performance consisting of: (1) foreign currency transaction loss (gain), (2) transaction costs from business acquisitions, (3) DOJ agreement & litigation settlements, (4) negative adjustment to previously recognized gain on bargain purchase, (5) shareholder litigation settlement, (6) deconsolidation of subsidiary and (7) net income attributable to noncontrolling interest. EBITDA is presented because it is used by management and we believe it is frequently used by securities analysts, investors and other interested parties, in addition to and not in lieu of results prepared in conformity with accounting principles generally accepted in the U.S. (U.S. GAAP), to compare the performance of companies. We believe investors would be interested in our Adjusted EBITDA because this is how our management analyzes EBITDA applicable to continuing operations. The Company also believes that Adjusted EBITDA, in combination with the Companys financial results calculated in accordance with U.S. GAAP, provides investors with additional perspective regarding the impact of certain significant items on EBITDA and facilitates a more direct comparison of its performance with its competitors. EBITDA and Adjusted EBITDA are not measurements of financial performance under U.S. GAAP. EBITDA and Adjusted EBITDA have limitations as analytical tools and should not be considered in isolation or as substitutes for an analysis of our results as reported under U.S. GAAP. In addition, other companies in our industry may calculate these measures differently limiting their usefulness as a comparative measure. Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as an alternative to net income as indicators of our operating performance or any other measures of performance derived in accordance with U.S. GAAP. These limitations should be compensated for by relying primarily on our U.S. GAAP results and using EBITDA and Adjusted EBITDA only on a supplemental basis.

PILGRIM'S PRIDE CORPORATIONReconciliation of Adjusted EBITDA(Unaudited) Three Months Ended March 28, March 29, 2021 2020 (In thousands)Net income $ 100,468 $ 67,449 Add: Interest expense, net^(a) 27,968 30,998 Income tax expense 35,358 38,512 Depreciation and amortization 86,532 79,773 EBITDA 250,326 216,732 Add: Foreign currency transaction loss (gain)^(b) 2,514 (18,385 )Transaction costs related to acquisitions^(c) ? 215 DOJ agreement & litigation settlements^(d) 2,399 ? Minus: Negative adjustment to previously recognized gain on ? (1,740 )bargain purchase^(e)Shareholder litigation settlement^(f) ? 34,643 Deconsolidation of subsidiary^(g) 1,131 ? Net income attributable to noncontrolling interest 260 181 Adjusted EBITDA $ 253,848 $ 165,478

(a)Interest expense, net, consists of interest expense less interest income.(b) The Company measures the financial statements of its Mexico reportable segment as if the U.S. dollar were the functional currency. Accordingly, we remeasure assets and liabilities, other than nonmonetary assets, of the Mexico reportable segment at current exchange rates. We remeasure nonmonetary assets using the historical exchange rate in effect on the date of each assets acquisition. Currency exchange gains or losses resulting from these remeasurements, as well as, from our U.K. and Europe reportable segment are included in the line item Foreign currency transaction loss (gain) in the Condensed Consolidated Statements of Income.(c) Transaction costs related to acquisitions includes those charges that are incurred in conjunction with business acquisitions.(d) On October 13, 2020, Pilgrims announced that we have entered into a plea agreement (the Plea Agreement) with the DOJ. As a result of the Plea Agreement, we recognized a fine of $110,524,140. On February 23, 2021, the Colorado Court approved the Plea Agreement and assessed a fine of $107.9 million. The difference from prior accrual to updated amount was recognized during the three months ended March 28, 2021. This difference recognized in the three months ended March 28, 2021 was offset by an amount recognized in anticipation of a probable settlement in ongoing litigation.(e) The gain on bargain purchase was recognized as a result of the PPL acquisition in October 2019. The amount shown above represents a working capital adjustment to the previously recorded gain on bargain purchase.(f) Shareholder litigation settlement is income received as a result of a settlement in the first quarter of 2020. (g) This represents a gain recognized as a result of deconsolidation of a subsidiary.

The summary unaudited consolidated income statement data for the twelve months ended March 28, 2021 (the LTM Period) have been calculated by subtracting the applicable unaudited consolidated income statement data for the three months ended March 29, 2020 from the sum of (1) the applicable audited consolidated income statement data for the year ended December 27, 2020 and (2) the applicable unaudited consolidated income statement data for the three months ended March 28, 2021.

PILGRIM'S PRIDE CORPORATIONReconciliation of LTM Adjusted EBITDA(Unaudited) Three Months Ended LTM Ended June 28, September December March 28, March 28, 2020 27, 27, 2021 2021 2020 2020 (In thousands)Net income $ (6,400 ) $ 33,691 $ 330 $ 100,468 $ 128,089 Add: Interest 31,165 28,801 27,849 27,968 115,783 expense, netIncome tax (2,956 ) 22,344 8,855 35,358 63,601 expenseDepreciationand 84,603 84,265 88,463 86,532 343,863 amortizationEBITDA 106,412 169,101 125,497 250,326 651,336 Add: Foreigncurrency 5,525 9,092 4,528 2,514 21,659 transactionlossesTransactioncosts related (81 ) ? ? ? (81 )to acquisitionsDOJ agreement &litigation ? 110,524 75,000 2,399 187,923 settlementsRestructuring ? ? 123 ? 123 chargesHometown Strong ? 14,506 494 ? 15,000 commitmentMinus: Negativeadjustment topreviously ? (2,006 ) ? ? (2,006 )recognized gainon bargainpurchaseDeconsolidation ? ? ? 1,131 1,131 of subsidiaryNet income(loss)attributable to (364 ) 245 251 260 392 noncontrollinginterestAdjusted EBITDA $ 112,220 $ 304,984 $ 205,391 $ 253,848 $ 876,443

EBITDA margins have been calculated by taking the relevant unaudited EBITDA figures, then dividing by net sales for the applicable period. EBITDA margins are presented because they are used by management and we believe it is frequently used by securities analysts, investors and other interested parties, as a supplement to our results prepared in accordance with U.S. GAAP, to compare the performance of companies.

PILGRIM'S PRIDE CORPORATIONReconciliation of EBITDA Margin(Unaudited) Three Months Ended Three Months Ended March 28, March 29, March 28, March 29, 2021 2020 2021 2020 (In thousands)Net income $ 100,468 $ 67,449 3.07 % 2.19 %Add: Interest 27,968 30,998 0.85 % 1.01 %expense, netIncome tax 35,358 38,512 1.08 % 1.25 %expenseDepreciationand 86,532 79,773 2.64 % 2.59 %amortizationEBITDA 250,326 216,732 7.64 % 7.04 %Add: Foreigncurrency 2,514 (18,385 ) 0.07 % (0.59 )transaction %losses (gains)Transactioncosts related ? 215 ? % 0.01 %to acquisitionsDOJ agreement &litigation 2,399 ? 0.07 % ? %settlementsMinus: Negativeadjustment topreviously ? (1,740 ) ? % (0.06 )recognized gain %on bargainpurchaseShareholderlitigation ? 34,643 ? % 1.13 %settlementDeconsolidation 1,131 ? 0.03 % ? %of subsidiaryNet incomeattributable to 260 181 0.01 % 0.01 %noncontrollinginterestAdjusted EBITDA $ 253,848 $ 165,478 7.74 % 5.38 % Net sales $ 3,273,425 $ 3,074,928 $ 3,273,425 $ 3,074,928

Adjusted net income attributable to Pilgrim's Pride Corporation (Pilgrim's) is calculated by adding to Net income attributable to Pilgrim's certain items of expense and deducting from Net income attributable to Pilgrim's certain items of income, as shown below in the table. Adjusted net income attributable to Pilgrims Pride Corporation per common diluted share is presented because it is used by management, and we believe it is frequently used by securities analysts, investors and other interested parties, in addition to and not in lieu of results prepared in conformity with U.S. GAAP, to compare the performance of companies. Management also believe that this non-U.S. GAAP financial measure, in combination with our financial results calculated in accordance with U.S. GAAP, provides investors with additional perspective regarding the impact of such charges on net income attributable to Pilgrims Pride Corporation per common diluted share. Adjusted net income attributable to Pilgrims Pride Corporation per common diluted share is not a measurement of financial performance under U.S. GAAP, has limitations as an analytical tool and should not be considered in isolation or as a substitute for an analysis of our results as reported under U.S. GAAP. Management believes that presentation of adjusted net income attributable to Pilgrims provides useful supplemental information about our operating performance and enables comparison of our performance between periods because certain costs shown below are not indicative of our current operating performance. A reconciliation of net income attributable to Pilgrims Pride Corporation per common diluted share to adjusted net income attributable to Pilgrims Pride Corporation per common diluted share is as follows:

PILGRIM'S PRIDE CORPORATIONReconciliation of Adjusted Net Income(Unaudited) Three Months Ended March 28, March 29, 2021 2020 (In thousands, except per share data)Net income attributable to Pilgrim's $ 100,208 $ 67,268 Add: Foreign currency transaction losses (gains) 2,514 (18,385 )Transaction costs related to acquisitions ? 215 DOJ agreement & litigation settlements 2,399 ? Minus: Negative adjustment to previously recognized gain on ? (1,740 )bargain purchaseShareholder litigation settlement ? 34,643 Deconsolidation of subsidiary 1,131 ? Adjusted net income attributable to Pilgrim's before 103,990 16,195 tax impact of adjustmentsNet tax impact of adjustments^(a) (942 ) 12,722 Adjusted net income attributable to Pilgrim's $ 103,048 $ 28,917 Weighted average diluted shares of common stock 243,858 249,622 outstandingAdjusted net income attributable to Pilgrim's per $ 0.42 $ 0.12 common diluted share

(a) Net tax expense (benefit) of adjustments represents the tax impact of all adjustments shown above.

Adjusted EPS is calculated by dividing the adjusted net income attributable to Pilgrim's stockholders by the weighted average number of diluted shares. Management believes that Adjusted EPS provides useful supplemental information about our operating performance and enables comparison of our performance between periods because certain costs shown below are not indicative of our current operating performance. A reconciliation of U.S. GAAP to non-U.S. GAAP financial measures is as follows:

PILGRIM'S PRIDE CORPORATIONReconciliation of GAAP EPS to Adjusted EPS(Unaudited) Three Months Ended March 28, March 29, 2021 2020 (In thousands, except per share data)GAAP EPS $ 0.41 $ 0.27 Add: Foreign currency transaction losses (gains) 0.01 (0.07 )Transaction costs related to acquisitions ? ? DOJ agreement & litigation settlements ? ? Minus: Negative adjustment to previously recognized gain ? (0.01 )on bargain purchaseShareholder litigation settlement ? 0.14 Deconsolidation of subsidiary ? ? Adjusted EPS before tax impact of adjustments 0.42 0.07 Net tax impact of adjustments^(a) ? 0.05 Adjusted EPS $ 0.42 $ 0.12 Weighted average diluted shares of common stock 243,858 249,622 outstanding

(a) Net tax impact of adjustments represents the tax impact of all adjustments shown above.

PILGRIM'S PRIDE CORPORATIONSupplementary Selected Segment and Geographic Data(Unaudited) Three Months Ended March 28, 2021 March 29, 2020 (In thousands)Sources of net sales by geographic region of origin:U.S. $ 1,999,559 $ 1,926,880 U.K. and Europe 854,734 822,262 Mexico 419,132 325,786 Total net sales $ 3,273,425 $ 3,074,928 Sources of cost of sales by geographic region of origin:U.S. $ 1,866,700 $ 1,788,777 U.K. and Europe 816,926 770,134 Mexico 328,570 338,942 Elimination (14 ) (24 )Total cost of sales $ 3,012,182 $ 2,897,829 Sources of gross profit by geographic region of origin:U.S. $ 132,859 $ 138,103 U.K. and Europe 37,808 52,128 Mexico 90,562 (13,156 )Elimination 14 24 Total gross profit $ 261,243 $ 177,099 Sources of operating income by geographic region of origin:U.S. $ 68,125 $ 85,052 U.K. and Europe 10,495 23,190 Mexico 79,830 (23,880 )Elimination 14 24 Total operating income $ 158,464 $ 84,386