PILGRIMS PRIDE CORP [PPC] Filings

10-Q 1 ppc-20240929.htm 10-Q ppc-20240929

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM			10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 29, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission File number 1-9273

PILGRIM’S PRIDE CORPORATION

(Exact name of registrant as specified in its charter)


Delaware		75-1285071
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1770 Promontory Circle		80634-9038
Greeley	CO
(Address of principal executive offices)		(Zip code)

Registrant’s telephone number, including area code: (970) 506-8000

Former name, former address and former fiscal year, if changed since last report: Not Applicable

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common Stock, Par Value $0.01

PPC

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

Accelerated Filer

☐

Non-accelerated Filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ý

Number of shares outstanding of the issuer’s common stock, $0.01 par value per share, as of October 30, 2024, was 237,123,061.

INDEX

PILGRIM’S PRIDE CORPORATION


PART I. FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements	2
	Condensed Consolidated Balance Sheets September 29, 2024 and December 31, 2023	2
	Condensed Consolidated Statements of Income Three and Nine Months Ended September 29, 2024 and September 24, 2023	3
	Condensed Consolidated Statements of Comprehensive Income Three and Nine Months Ended September 29, 2024 and September 24, 2023	4
	Condensed Consolidated Statements of Stockholders’ Equity Three and Nine Months Ended September 29, 2024 and September 24, 2023	5
	Condensed Consolidated Statements of Cash Flows Three and Nine Months Ended September 29, 2024 and September 24, 2023	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	48
Item 4.	Controls and Procedures	51
PART II. OTHER INFORMATION		52
Item 1.	Legal Proceedings	52
Item 1A.	Risk Factors	52

Item 5.	Other Information	52
Item 6.	Exhibits	52
SIGNATURES		53

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


PILGRIM’S PRIDE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS

	(Unaudited)
	September 29, 2024		December 31, 2023
	(In thousands)
Cash and cash equivalents	$	1,877,981	$	697,748
Restricted cash and restricted cash equivalents	6,431		33,475
Investment in available-for-sale securities	10,099		—
Trade accounts and other receivables, less allowance for credit losses	1,067,650		1,129,178
Accounts receivable from related parties	1,964		1,778
Inventories	1,780,925		1,985,399
Income taxes receivable	63,418		161,062
Assets held for sale	5,640		—
Prepaid expenses and other current assets	241,365		195,831
Total current assets	5,055,473		4,204,471
Deferred tax assets	30,317		4,890
Other long-lived assets	59,110		35,646
Operating lease assets, net	267,812		266,707
Intangible assets, net	862,400		853,983
Goodwill	1,312,806		1,286,261
Property, plant and equipment, net	3,112,616		3,158,403
Total assets	$	10,700,534	$	9,810,361


Accounts payable	$	1,391,270	$	1,410,576
Accounts payable to related parties	19,404		41,254
Revenue contract liabilities	85,129		84,958
Accrued expenses and other current liabilities	1,001,263		926,727
Income taxes payable	89,815		31,678
Current maturities of long-term debt	546		674
Total current liabilities	2,587,427		2,495,867
Noncurrent operating lease liabilities, less current maturities	206,796		203,348
Long-term debt, less current maturities	3,184,080		3,340,841

Deferred tax liabilities	472,183		385,548
Other long-term liabilities	31,382		40,180
Total liabilities	6,481,868		6,465,784
Common stock	2,623		2,620
Treasury stock	(544,687)		(544,687)
Additional paid-in capital	1,988,591		1,978,849
Retained earnings	2,921,657		2,071,073
Accumulated other comprehensive loss	(163,590)		(176,483)
Total Pilgrim’s Pride Corporation stockholders’ equity	4,204,594		3,331,372
Noncontrolling interest	14,072		13,205
Total stockholders’ equity	4,218,666		3,344,577
Total liabilities and stockholders’ equity	$	10,700,534	$	9,810,361

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.


PILGRIM’S PRIDE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

	Three Months Ended				Nine Months Ended
	September 29, 2024		September 24, 2023		September 29, 2024		September 24, 2023
	(In thousands, except per share data)
Net sales	$	4,584,979	$	4,360,196	$	13,506,227	$	12,833,915
Cost of sales	3,901,009		4,014,314		11,746,722		12,036,561
Gross profit	683,970		345,882		1,759,505		797,354
Selling, general and administrative expense	144,780		138,569		478,017		420,683
Restructuring activities	30,836		940		82,070		38,684
Operating income	508,354		206,373		1,199,418		337,987
Interest expense, net of capitalized interest	41,597		45,645		114,041		135,459
Interest income	(22,099)		(12,115)		(48,308)		(23,343)
Foreign currency transaction losses (gains)	(678)		8,924		(7,240)		43,462
Miscellaneous, net	7,935		(2,201)		5,153		(26,185)
Income before income taxes	481,599		166,120		1,135,772		208,594
Income tax expense	131,609		44,553		284,321		20,488
Net income	349,990		121,567		851,451		188,106
Less: Net income attributable to noncontrolling interests	130		289		867		1,185
Net income attributable to Pilgrim’s Pride Corporation	$	349,860	$	121,278	$	850,584	$	186,921

Weighted average shares of Pilgrim’s Pride Corporation common stock outstanding:
Basic	237,123		236,787		236,953		236,702
Effect of dilutive common stock equivalents	768		560		733		542
Diluted	237,891		237,347		237,686		237,244

Net income attributable to Pilgrim’s Pride Corporation per share of common stock outstanding:
Basic	$	1.48	$	0.51	$	3.59	$	0.79
Diluted	$	1.47	$	0.51	$	3.58	$	0.79

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.


PILGRIM’S PRIDE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

	Three Months Ended				Nine Months Ended
	September 29, 2024		September 24, 2023		September 29, 2024		September 24, 2023
	(In thousands)
Net income	$	349,990	$	121,567	$	851,451	$	188,106
Other comprehensive income (loss):
Foreign currency translation adjustment:
Gains (losses) arising during the period	110,012		(104,656)		(4,124)		39,269
Derivative financial instruments designated as cash flow hedges:
Gains (losses) arising during the period	2,314		1,384		4,321		(275)

Reclassification to net earnings for losses (gains) realized	(639)		133		(2,700)		(216)

Available-for-sale securities:
Gains (losses) arising during the period	(43)		(112)		109		(166)
Income tax effect	10		27		(27)		40
Reclassification to net earnings for losses (gains) realized	152		139		(82)		168
Income tax effect	(37)		(34)		20		(41)
Defined benefit plans:
Gains (losses) arising during the period	1,016		(365)		9,135		9,628
Income tax effect	(351)		(1,583)		(2,386)		(4,710)
Reclassification to net earnings of losses realized	11,037		266		11,381		714
Income tax effect	(2,671)		(67)		(2,754)		(173)
Total other comprehensive income (loss), net of tax	120,800		(104,868)		12,893		44,238
Comprehensive income	470,790		16,699		864,344		232,344
Less: Comprehensive income attributable to noncontrolling interests	130		289		867		1,185
Comprehensive income attributable to Pilgrim’s Pride Corporation	$	470,660	$	16,410	$	863,477	$	231,159

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.


PILGRIM’S PRIDE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)

Nine Months Ended September 29, 2024	Common Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interest		Total
	Shares	Amount		Shares	Amount
	(In thousands)
Balance at December 31, 2023	261,931	$	2,620	(25,142)	$	(544,687)	$	1,978,849	$	2,071,073	$	(176,483)	$	13,205	$	3,344,577
Net income	—	—		—	—		—		850,584		—		867		851,451
Other comprehensive income, net of tax	—	—		—	—		—		—		12,893		—		12,893
Stock-based compensation plans:
Common stock issued under compensation plans	332	3		—	—		(3)		—		—		—		—
Requisite service period recognition	—	—		—	—		9,745		—		—		—		9,745
Balance at September 29, 2024	262,263	$	2,623	(25,142)	$	(544,687)	$	1,988,591	$	2,921,657	$	(163,590)	$	14,072	$	4,218,666


Three Months Ended September 29, 2024	Common Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interest		Total
	Shares	Amount		Shares	Amount
	(In thousands)
Balance at June 30, 2024	262,084	$	2,621	(25,142)	$	(544,687)	$	1,986,198	$	2,571,797	$	(284,390)	$	13,942	$	3,745,481
Net income	—	—		—	—		—		349,860		—		130		349,990
Other comprehensive income, net of tax	—	—		—	—		—		—		120,800		—		120,800
Stock-based compensation plans:
Common stock issued under compensation plans	179	2		—	—		(2)		—		—		—		—
Requisite service period recognition	—	—		—	—		2,395		—		—		—		2,395
Balance at September 29, 2024	262,263	$	2,623	(25,142)	$	(544,687)	$	1,988,591	$	2,921,657	$	(163,590)	$	14,072	$	4,218,666


Nine Months Ended September 24, 2023	Common Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interest		Total
	Shares	Amount		Shares	Amount
	(In thousands)
Balance at December 25, 2022	261,611	$	2,617	(25,142)	$	(544,687)	$	1,969,833	$	1,749,499	$	(336,448)	$	12,462	$	2,853,276
Net income	—	—		—	—		—		186,921		—		1,185		188,106
Other comprehensive income, net of tax	—	—		—	—		—		—		44,238		—		44,238
Stock-based compensation plans:
Common stock issued under compensation plans	264	2		—	—		(2)		—		—		—		—
Requisite service period recognition	—	—		—	—		5,603		—		—		—		5,603
Balance at September 24, 2023	261,875	$	2,619	(25,142)	$	(544,687)	$	1,975,434	$	1,936,420	$	(292,210)	$	13,647	$	3,091,223


Three Months Ended September 24, 2023	Common Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interest		Total
	Shares	Amount		Shares	Amount
	(In thousands)
Balance at June 25, 2023	261,875	$	2,619	(25,142)	$	(544,687)	$	1,973,498	$	1,815,142	$	(187,342)	$	13,358	$	3,072,588
Net income	—	—		—	—		—		121,278		—		289		121,567
Other comprehensive loss, net of tax	—	—		—	—		—		—		(104,868)		—		(104,868)
Stock-based compensation plans:
Requisite service period recognition	—	—		—	—		1,936		—		—		—		1,936
Balance at September 24, 2023	261,875	$	2,619	(25,142)	$	(544,687)	$	1,975,434	$	1,936,420	$	(292,210)	$	13,647	$	3,091,223

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.


PILGRIM’S PRIDE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

	Nine Months Ended
	September 29, 2024		September 24, 2023
	(In thousands)
Cash flows from operating activities:
Net income	$	851,451	$	188,106
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	321,768		307,414
Deferred income tax expense (benefit)	45,220		(46,808)
Asset impairment	26,633		4,011
Gain on early extinguishment of debt recognized as a component of interest expense	(11,211)		—
Stock-based compensation	9,205		5,236
Loan cost amortization	3,798		6,059
Accretion of discount related to Senior Notes	1,898		1,581
Loss (gain) on property disposals	1,104		(8,416)
Loss (gain) on equity-method investments	(6)		330
Changes in operating assets and liabilities:
Trade accounts and other receivables	62,646		(65,183)
Inventories	172,990		(12,957)
Prepaid expenses and other current assets	(65,555)		(8,039)
Accounts payable, accrued expenses and other current liabilities	79,672		12,224
Income taxes	151,902		40,463
Long-term pension and other postretirement obligations	13,135		(1,700)
Other operating assets and liabilities	(23,858)		(22,723)
Cash provided by operating activities	1,640,792		399,598
Cash flows from investing activities:
Acquisitions of property, plant and equipment	(316,949)		(432,339)
Proceeds from property disposals	9,724		17,188
Proceeds from insurance recoveries	—		20,681
Cash used in investing activities	(307,225)		(394,470)
Cash flows from financing activities:
Payments on revolving line of credit, long-term borrowings and finance lease obligations	(151,671)		(765,899)
Proceeds from revolving line of credit and long-term borrowings	—		1,278,032
Proceeds from contribution (payment of distribution) of capital under Tax Sharing Agreement between JBS USA Holdings and Pilgrim’s Pride Corporation	1,425		(1,592)
Payments on early extinguishment of debt	(200)		—
Payments of capitalized loan costs	(16)		(10,275)
Cash provided by (used in) financing activities	(150,462)		500,266
Effect of exchange rate changes on cash and cash equivalents	(29,916)		(1,036)
Increase in cash, cash equivalents, restricted cash and restricted cash equivalents	1,153,189		504,358
Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of period	731,223		434,759
Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period	$	1,884,412	$	939,117

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business

Pilgrim’s Pride Corporation (referred to herein as “Pilgrim’s,” “PPC,” “the Company,” “we,” “us,” “our,” or similar terms) is one of the largest chicken producers in the world, with operations in the United States (“U.S.”), the United Kingdom (“U.K.”), Mexico, France, Puerto Rico, the Netherlands and the Republic of Ireland. Pilgrim’s products are sold to foodservice, retail and frozen entrée customers. The Company’s primary distribution is through retailers, foodservice distributors and restaurants throughout the countries listed above. Additionally, the Company exports chicken and pork products to over 110 countries. Our fresh products consist of refrigerated whole or cut-up chicken, selected chicken parts that are either marinated or non-marinated, primary pork cuts, added value pork, and pork ribs. The Company’s prepared products include fully cooked, ready-to-cook and individually frozen chicken parts, strips, nuggets and patties, processed sausages, bacon, smoked meat, gammon joints, pre-packed meats, sandwich and deli counter meats and meatballs. The Company’s other products include plant-based protein offerings, ready-to-eat meals, multi-protein frozen foods, vegetarian foods and desserts. The Company also provides direct-to-consumer meals and hot food to-go solutions in the U.K. and the Republic of Ireland. We operate feed mills, hatcheries, processing plants and distribution centers in the U.S., the U.K., Mexico, France, Puerto Rico, the Netherlands and the Republic of Ireland. As of September 29, 2024, Pilgrim’s had approximately 62,000 employees and had the capacity to process approximately 41.8 million birds per 5-day work week. Approximately 4,400 contract growers supply chicken for the Company’s operations. As of September 29, 2024, PPC had the capacity to process approximately 42,750 pigs per 5-day work week and 206 contract growers supply pigs for the Company’s U.K. operations. As of September 29, 2024, JBS S.A., through its indirect wholly-owned subsidiaries (collectively, “JBS”), beneficially owned 82.4% of the Company’s outstanding common stock.

Condensed Consolidated Financial Statements

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal and recurring adjustments unless otherwise disclosed) considered necessary for a fair presentation have been included. Operating results for the nine months ended September 29, 2024 are not necessarily indicative of the results that may be expected for the year ending December 29, 2024. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2023.

The Company operates on the basis of a 52/53 week fiscal year ending on the Sunday falling on or before December 31. Any reference we make to a particular year (for example, 2024) in the notes to these Condensed Consolidated Financial Statements applies to our fiscal year and not the calendar year. The nine months ended September 29, 2024 represents the period from January 1, 2024 through September 29, 2024. The nine months ended September 24, 2023 represents the period from December 26, 2022 through September 24, 2023.

The Condensed Consolidated Financial Statements include the accounts of the Company and its majority-owned subsidiaries. We eliminate all significant affiliate accounts and transactions upon consolidation.

The Condensed Consolidated Financial Statements have been prepared in conformity with U.S. GAAP using management’s best estimates and judgments. These estimates and judgments affect the reported amounts of assets and liabilities and disclosure of the contingent assets and liabilities at the date of the financial statements. The estimates and judgments will also affect the reported amounts for certain revenues and expenses during the reporting period. Actual results could differ materially from these estimates and judgments. Significant estimates made by the Company include the allowance for credit losses, reserves related to inventory obsolescence or valuation, useful lives of long-lived assets, goodwill, valuation of deferred tax assets, insurance accruals, valuation of pension and other postretirement benefits obligations, income tax accruals, certain derivative positions, certain litigation reserves and valuations of acquired businesses.

The functional currency of the Company’s U.S. operations and certain holding-company subsidiaries in Luxembourg, the U.K., Malta and the Republic of Ireland is the U.S. dollar. The functional currency of its U.K. operations is the British pound. The functional currency of the Company’s operations in France, the Netherlands and the Republic of Ireland is the euro. The Company has determined that there was a significant change in economic factors that necessitated a reassessment of the appropriate functional currency of the Mexico reportable segment. The primary economic factors driving the change include 1)

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the recent sustained, historical strengthening of the Mexican peso against the U.S. dollar and against other global currencies without a correlated impact on the average product sales prices of our Mexico operations and 2) a shift in the proportional volume of spend we have that is denominated in Mexican peso in relation to spend that is denominated in U.S. dollar. As a result of this reassessment, on April 1, 2024, the Company changed the functional currency of its Mexico operations from U.S. dollar to the Mexican peso. The change in the functional currency was accounted for on April 1, 2024, and did not have a material impact on our consolidated financial statements. For foreign currency-denominated entities, including the Company’s Mexico operations after April 1, 2024, translation from local currencies into U.S. dollars is performed for assets and liabilities using the exchange rates in effect as of the balance sheet date. Income and expense accounts are remeasured using average exchange rates for the period. Adjustments resulting from translation of these financial records are reflected as a separate component of Accumulated other comprehensive loss in the Condensed Consolidated Balance Sheets. For the Company’s Mexico operations prior to April 1, 2024, remeasurement from the Mexican peso to U.S. dollars was performed for monetary assets and liabilities using the exchange rate in effect as of the balance sheet date. Remeasurement was performed for non-monetary assets using the historical exchange rate in effect on the date of each asset’s acquisition. Income and expense accounts were remeasured using average exchange rates for the period. Net adjustments that resulted from remeasurement of the financial records, as well as foreign currency transaction gains and losses, are reflected in Foreign currency transaction losses (gains) in the Condensed Consolidated Statements of Income.

Restricted Cash and Restricted Cash Equivalents

The Company is required to maintain cash balances with brokers as collateral for exchange-traded futures contracts. These balances are classified as restricted cash as they are not available for use by the Company to fund daily operations. The balance of restricted cash and restricted cash equivalents may also include investments in U.S. Treasury Bills that qualify as restricted cash equivalents, as required by the brokers, to offset the obligation to return cash collateral.

The following table reconciles cash, cash equivalents, restricted cash and restricted cash equivalents as reported in the Condensed Consolidated Balance Sheets to the total of the same amounts shown in the Condensed Consolidated Statements of Cash Flows:


	September 29, 2024		December 31, 2023
	(In thousands)
Cash and cash equivalents	$	1,877,981	$	697,748
Restricted cash and restricted cash equivalents	6,431		33,475
Total cash, cash equivalents, restricted cash and restricted cash equivalents shown in the Condensed Consolidated Statements of Cash Flows	$	1,884,412	$	731,223

Industrial Revenue Bond Transaction

On August 22, 2024, the Company closed an industrial revenue bond transaction with the Douglas-Coffee County Industrial Authority d/b/a Douglas-Coffee County Development Authority (the “County”) in order to receive a five-year real property tax abatement on the Company’s newly constructed Douglas, Georgia protein conversion facility. Pursuant to this transaction, the County issued an industrial revenue bond for $130.0 million principal amount to the Company and then used the proceeds of the bond issuance to purchase the land and facility from the Company. The County then leased the facility back to the Company under a finance lease, the terms of which provide for the payment of rent in an amount equal to that of bond service costs. The related land and building are recorded as assets in Property, plant, and equipment, net on the Company’s Condensed Consolidated Balance Sheet. The Company has the legal right to set-off and intends to set-off the corresponding lease and bond service payments, therefore the Company has netted the finance lease obligation with the bond asset. As such, no amount for our obligation under the finance lease or the corresponding industrial revenue bond asset are reflected in our Consolidated Balance Sheet.

Recent Accounting Pronouncements Not Yet Adopted as of September 29, 2024

In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires additional disclosures for reportable segments. The guidance requires disclosures about significant segment expenses that are regularly provided to the chief operating decision maker along with additional measures of segment profit that are regularly used by the chief operating decision maker in assessing segment performance and deciding how to allocate resources. The provisions of the new guidance will be effective for years beginning after December 15, 2023 and interim periods in fiscal years beginning after December 15, 2024. The Company plans to adopt this guidance for the annual reporting period of the current fiscal year and is still assessing the impacts on our Consolidated Financial Statements.

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In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires additional disclosures for income taxes to enhance transparency and usefulness of income tax disclosures. The guidance requires additional disclosures for the tabular rate reconciliation, income taxes paid, and the disaggregation of domestic, federal and state, and foreign components within income (or loss) from continuing operations before income tax expense (or benefit) and income tax expense (or benefit) from continuing operations. The provisions of the new guidance will be effective for years beginning after December 15, 2024. The Company plans to adopt this guidance as it becomes effective and is assessing the impacts on our Consolidated Financial Statements.

2. REVENUE RECOGNITION

The vast majority of the Company’s revenue is derived from contracts which are based upon a customer ordering our products. While there may be master agreements, the contract is only established when the customer’s order is accepted by the Company. The Company accounts for a contract, which may be verbal or written, when it is approved and committed by both parties, the rights of the parties are identified along with payment terms, the contract has commercial substance and collectability is probable.

The Company evaluates the transaction for distinct performance obligations, which are the sale of its products to customers. Since its products are commodity market-priced, the sales price is representative of the observable, standalone selling price. Each performance obligation is recognized based upon a pattern of recognition that reflects the transfer of control to the customer at a point in time, which is upon destination (customer location or port of destination), which faithfully depicts the transfer of control and recognition of revenue. There are instances of customer pick-up at the Company’s facility, in which case control transfers to the customer at that point and the Company recognizes revenue. The Company’s performance obligations are typically fulfilled within days to weeks of the acceptance of the order.

The Company makes judgments regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from revenue and cash flows with customers. Determination of a contract requires evaluation and judgment along with the estimation of the total contract value and if any of the contract value is constrained. Due to the nature of our business, there is minimal variable consideration, as the contract is established at the acceptance of the order from the customer. When applicable, variable consideration is estimated at contract inception and updated on a regular basis until the contract is completed. Allocating the transaction price to a specific performance obligation based upon the relative standalone selling prices includes estimating the standalone selling prices including discounts and variable consideration.

Disaggregated Revenue

Revenue has been disaggregated into the categories below to show how economic factors affect the nature, amount, timing and uncertainty of revenue and cash flows:


	Three Months Ended September 29, 2024
	(In thousands)
	Fresh		Prepared		Export		Other		Total
U.S.	$	2,287,016	$	288,539	$	121,838	$	75,998	$	2,773,391
Europe	312,086		847,480		123,718		24,843		1,308,127
Mexico	425,089		50,968		—		27,404		503,461
Total net sales	$	3,024,191	$	1,186,987	$	245,556	$	128,245	$	4,584,979


	Three Months Ended September 24, 2023
	(In thousands)
	Fresh		Prepared		Export		Other		Total
U.S.	$	2,020,480	$	241,933	$	129,624	$	96,280	$	2,488,317
Europe	267,748		888,299		114,768		41,390		1,312,205
Mexico	479,100		53,126		—		27,448		559,674
Total net sales	$	2,767,328	$	1,183,358	$	244,392	$	165,118	$	4,360,196

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	Nine Months Ended September 29, 2024
	(In thousands)
	Fresh		Prepared		Export		Other		Total
U.S.	$	6,602,557	$	811,854	$	350,600	$	251,677	$	8,016,688
Europe	869,890		2,569,788		351,473		86,420		3,877,571
Mexico	1,363,962		162,563		—		85,443		1,611,968
Total net sales	$	8,836,409	$	3,544,205	$	702,073	$	423,540	$	13,506,227


	Nine Months Ended September 24, 2023
	(In thousands)
	Fresh		Prepared		Export		Other		Total
U.S.	$	5,956,474	$	708,389	$	397,397	$	304,833	$	7,367,093
Europe	813,118		2,598,748		349,492		100,861		3,862,219
Mexico	1,364,761		149,330		—		90,512		1,604,603
Total net sales	$	8,134,353	$	3,456,467	$	746,889	$	496,206	$	12,833,915

Additional disaggregation of revenue by sales channel is provided below:


	Three Months Ended September 29, 2024
	(In thousands)
	Retail		Foodservice		Export		Other		Total
U.S.	$	1,464,948	$	1,083,508	$	121,838	$	103,097	$	2,773,391
Europe	831,869		207,757		123,718		144,783		1,308,127
Mexico(a)	129,294		234,954		—		139,213		503,461
Total net sales	$	2,426,111	$	1,526,219	$	245,556	$	387,093	$	4,584,979


	Three Months Ended September 24, 2023
	(In thousands)
	Retail		Foodservice		Export		Other		Total
U.S.	$	1,257,026	$	973,493	$	129,624	$	128,174	$	2,488,317
Europe	803,971		231,774		114,768		161,692		1,312,205
Mexico(a)	134,067		265,011		—		160,596		559,674
Total net sales	$	2,195,064	$	1,470,278	$	244,392	$	450,462	$	4,360,196


	Nine Months Ended September 29, 2024
	(In thousands)
	Retail		Foodservice		Export		Other		Total
U.S.	$	4,253,747	$	3,082,396	$	350,600	$	329,945	$	8,016,688
Europe	2,465,912		639,384		351,473		420,802		3,877,571
Mexico(a)	401,794		752,210		—		457,964		1,611,968
Total net sales	$	7,121,453	$	4,473,990	$	702,073	$	1,208,711	$	13,506,227


	Nine Months Ended September 24 2023
	(In thousands)
	Retail		Foodservice		Export		Other		Total
U.S.	$	3,730,554	$	2,826,967	$	397,397	$	412,175	$	7,367,093
Europe	2,389,647		685,781		349,492		437,299		3,862,219
Mexico(a)	358,486		777,498		—		468,619		1,604,603
Total net sales	$	6,478,687	$	4,290,246	$	746,889	$	1,318,093	$	12,833,915

(a)Included in Mexico foodservice channel are sales to wholesale public meat markets that typically sell product on to foodservice customers. Included in Mexico other channel are sales to live chicken markets.

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Contract Costs

The Company can incur incremental costs to obtain or fulfill a contract such as broker expenses that are not expected to be recovered. The amortization period for such expenses is less than one year; therefore, the costs are expensed as incurred.

Taxes

The Company excludes all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the entity from a customer (for example, sales, use, value added and some excise taxes) from the transaction price.

Contract Balances

The Company receives payment from customers based on terms established with the customer. Payments are typically due within 14 to 30 days of delivery. Revenue contract liabilities relate to payments received in advance of satisfying the performance under the customer contract. The revenue contract liabilities relate to customer prepayments and the advanced consideration, such as cash, received from governmental agency contracts for which performance obligations to the end customer have not been satisfied.

Changes in the revenue contract liabilities balance are as follows (in thousands):


Balance as of December 31, 2023	$	84,958
Revenue recognized	(82,047)
Cash received, excluding amounts recognized as revenue during the period	82,218
Balance as of September 29, 2024	$	85,129

Accounts Receivable

The Company records accounts receivable when revenue is recognized. We record an allowance for credit losses, reducing our receivables balance to an amount we estimate is collectible from our customers. Estimates used in determining the allowance for credit losses are based on historical collection experience, current trends, aging of accounts receivable and periodic credit evaluations of our customers’ financial condition. We write off accounts receivable when it becomes apparent, based upon age or customer circumstances, that such amounts will not be collected. Generally, the Company does not require collateral for its accounts receivable.

3. DERIVATIVE FINANCIAL INSTRUMENTS

The Company utilizes various raw materials in its operations, including corn, soybean meal, soybean oil, wheat, natural gas, electricity and diesel fuel, which are all considered commodities. The Company considers these raw materials generally available from a number of different sources and believes it can obtain them to meet its requirements. These commodities are subject to price fluctuations and related price risk due to factors beyond our control, such as economic and political conditions, supply and demand, weather, governmental regulation and other circumstances. Generally, the Company purchases derivative financial instruments, specifically exchange-traded futures and options, in an attempt to mitigate price risk related to its anticipated consumption of commodity inputs for approximately the next twelve months. The Company may purchase longer-term derivative financial instruments on particular commodities if deemed appropriate.

The Company has operations in Mexico, the U.K., France, the Netherlands and the Republic of Ireland. Therefore, it has exposure to translational foreign exchange risk when the financial results of those operations are remeasured in U.S. dollars. The Company has purchased foreign currency forward contracts to manage a portion of this foreign exchange risk.

The fair value of derivative assets is included in the line item Prepaid expenses and other current assets on the Condensed Consolidated Balance Sheets while the fair value of derivative liabilities is included in the line item Accrued expenses and other current liabilities on the same statements. The Company’s counterparties require that it post collateral for changes in the net fair value of the derivative contracts. This cash collateral is reported in the line item Restricted cash and restricted cash equivalents on the Condensed Consolidated Balance Sheets.

Undesignated contracts may include contracts not designated as hedges or contracts that do not qualify for hedge accounting. The fair value of each of these derivatives is recognized in the Condensed Consolidated Balance Sheets within Prepaid expenses and other current assets or Accrued expenses and other current liabilities. Changes in fair value of each derivative are recognized immediately in the Condensed Consolidated Statements of Income within Net sales, Cost of sales, or Foreign currency transaction losses (gains) depending on the risk the derivative is intended to mitigate. While management

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believes these instruments help mitigate various market risks, they are not designated and accounted for as hedges as a result of the extensive record keeping requirements.

The Company does not apply hedge accounting treatment to certain derivative financial instruments that it has purchased to mitigate commodity purchase exposures in the U.S. and Mexico or foreign currency transaction exposures on our Mexico operations. Therefore, the Company recognized changes in the fair value of these derivative financial instruments immediately in earnings. Gains or losses related to the commodity derivative financial instruments are included in the line item Cost of sales in the Condensed Consolidated Statements of Income. Realized gains and losses related to cash flows are disclosed in the Condensed Consolidated Statements of Cash Flows in Cash provided by operating activities. Unrealized gains and losses related to cash flows are disclosed in the Condensed Consolidated Statements of Cash Flows in the line item Other operating assets and liabilities. Gains or losses related to the foreign currency derivative financial instruments are included in the line item Foreign currency transaction losses (gains) in the Condensed Consolidated Statements of Income.

The Company does apply hedge accounting treatment to certain derivative financial instruments related to its Europe reportable segment that it has purchased to mitigate foreign currency transaction exposures. Before the settlement date of the financial derivative instruments, the Company recognizes changes in the fair value of the cash flow hedge into accumulated other comprehensive income (“AOCI”). When the derivative financial instruments are settled, the amount in AOCI is then reclassified to earnings. Gains or losses related to these derivative financial instruments are included in the line item Net sales and Cost of sales in the Condensed Consolidated Statements of Income.

We have generally applied the normal purchase and normal sale scope exception (“NPNS”) to our forward physical grain purchase contracts delivered by truck and to our forward physical natural gas and solar-generated power purchase contracts. NPNS contracts are accounted for using the accrual method of accounting; therefore, amounts payable under these contracts are recorded when we take delivery of the contracted product and no amounts were recorded for the fair value of these contracts in the condensed consolidated financial statements at September 29, 2024 and December 31, 2023.

Information regarding the Company’s outstanding derivative instruments and cash collateral posted with brokers is included in the following table:


	September 29, 2024			December 31, 2023
	(In thousands)
Fair values:
Commodity derivative assets	$	9,349		$	1,202
Commodity derivative liabilities	(4,503)			(17,118)
Foreign currency derivative assets	1,299			175
Foreign currency derivative liabilities	(226)			(723)
Sales contract derivative assets	678			960

Cash collateral posted with brokers(a)	6,431			33,475
Derivatives coverage(b):
Corn	10.3		%	10.9		%
Soybean meal	7.4		%	39.6		%
Period through which stated percent of needs are covered:
Corn	December 2025			July 2024
Soybean meal	December 2025			March 2024

(a)Collateral posted with brokers consists primarily of cash, short-term treasury bills or other cash equivalents.

(b)Derivatives coverage is the percent of anticipated commodity needs covered by outstanding derivative instruments through a specified date.

The following table presents the gains and losses of each derivative instrument held by the Company not designated or qualifying as hedging instruments:

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	Three Months Ended				Nine Months Ended
Gains (Losses) by Type of Contract (a)	September 29, 2024		September 24, 2023		September 29, 2024		September 24, 2023		Affected Line Item in the Condensed Consolidated Statements of Income
	(In thousands)
Foreign currency derivatives loss	$	—	$	(6,164)	$	—	$	(53,818)	Foreign currency transaction losses
Commodity derivative gain (loss)	12,612		3,324		(3,582)		(13,023)		Cost of sales
Sales contract derivative gain (loss)	(3,815)		3,100		(282)		5,628