Pilgrim's Pride (NASDAQ: PPC) reported Q2 EPS of $0.00, $0.09 worse than the analyst estimate of $0.09. Revenue for the quarter came in at $2.82 billion versus the consensus estimate of $2.95 billion.

Second Quarter Highlights

• Net Sales of $2.82 billion.
• Net GAAP loss of $(6.0) million.
• Operating Income margins of 2.2% in U.S., -13.3% in Mexico and 3.1% in Europe operations, respectively.
• Adjusted EBITDA of $112.2 million, or a 4.0% margin.
• Faced with 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.
• Strong focus in execution and dedication by our team members, supported by portfolio strategy of differentiated products, strong Key Customer relationships, and diversified global presence helped us to reduce volatility of market conditions, especially under unexpected and unprecedented Covid-19 impact.
• After significant impact as we started the quarter, performance improved, and during June 2020 the U.S. was similar, Europe slightly ahead and Mexico in-line compared to June 2019, despite significant disruptions, sub-optimal mix, and added costs.
• Volatility and challenging conditions in the U.S. remained, partially offset by improvement in relative performance versus the industry, further supported by our business model and agility in changing mix.
• In Mexico, challenging macro environment, impacting overall demand, and a weak Peso were partially offset by the stability in Branded and Prepared Foods. Supply and demand in balance at quarter end with markets re-opening.
• The legacy European business (Moy Park) delivered comparable operating results to last year despite Covid-19 impact, with better operational efficiencies and input cost mitigation. Momentum of newly acquired assets in generating positive EBITDA continuing, and on track to achieve performance comparable to leading companies with similar portfolio in next few years.
• Our liquidity position remains strong, supported by the emphasis on cash flow generation, focus on working capital management, and disciplined investments in high-return projects, preserving the opportunity to maintain strategic growth priorities while strengthening our differentiated global platforms.

“We are once again extremely proud of our team for their continued commitment, dedication and hard work, in supporting our ability to keep our team members safe and healthy, and allowing us the capability to maintain production and supply to our customers during this unprecedented crisis. Despite the continuing volatility and very challenging markets in Q2 due to Covid-19, our diversified strategy has continued to produce respectable results in relative performance to industry competition, and deliver more resilient performance regardless of changes in specific market conditions. For the entire Q2, Europe generated operating results similar to a year ago but were more than offset by tough market dynamics in the U.S. and Mexico. After a very challenging beginning of the quarter, markets have adapted. During the month of June, results were quite encouraging and showing a noticeable improvement globally. Compared to June of last year, the U.S. was roughly the same, Europe slightly better and Mexico in-line, even when considering all the disruptions, less than optimal product mix, and added operating costs because of Covid-19,” stated Fabio Sandri, interim Chief Executive Officer of Pilgrim's.

“In the U.S., the first half of Q2 the market was significantly challenged before a gradual loosening of travel and movement restrictions due to Covid-19 drove an improvement in channel demand, especially from foodservice. Similar to Q1, large bird deboning was once again the most volatile this quarter, with quick moves between the lows and the highs, and remained challenging compared to 2019. Operationally however, we continue to improve our relative performance versus the industry across all our business units, including in large bird deboning. We also continue to adapt quickly to changes in channel demand by adjusting the mix of our production capabilities, supported by our close partnerships with Key Customers, strong focus in execution by our team members, the geographical diversity of our footprint, and our presence across all bird size categories.”

“In continuation from Q1, Mexico remained challenged as the effects of weak macro conditions, which added to uncertainties in consumer spending, have persisted. In addition, the Peso continued to be weak putting additional pressure on the results. Industry prices were also below seasonality, driven by much better than expected growing conditions, before reverting closer to normal levels by the end of the quarter. Our increased share of non-commodity products, strong execution, and growth in Prepared Foods, have also helped to partially offset the softness.”

“Our legacy European operations performed in-line with last year, driven by strong retail demand and despite the significant impact of Covid-19 on the operations, as our strong internal operating performance and improved SG&A management helped in mitigating the difficult environment. The improvement in results from the newly acquired European assets has been maintained, with positive EBITDA continuing to increase. The performance was driven by strong demand at retail partially offset by a reduction in foodservice, continuing strength in pork exports especially to China, as well as the implementations of operational improvements and synergy capture.”

For earnings history and earnings-related data on Pilgrim's Pride (PPC) click here.