Q4 2021 Pilgrims Pride Corp Earnings Call
Speaker 1: Good morning and welcome to the fourth quarter and fiscal year 2021 program spread earnings conference call and webcast. All participants will be
Good morning.
So the fourth quarter and fiscal year 2021, Pilgrim's Pride earnings conference call and webcast.
All participants will be in listen only mode.
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Speaker 1: Please note that the slides referenced during today's call are available for download from the company's investor website at ir.programs.com in the events and presentation section.
Please note that the slides referenced during today's call are available for download from the company's investor website at IR Dod programs about com in the events and presentations section.
Speaker 1: As a reminder, today's conference is being recorded.
As a reminder, today's conference is being recorded.
Speaker 1: I would now like to turn the conference over to Program's Chief Financial Officer Matt Governor. Please go ahead, sir.
I would now like to turn the conference over to programs from the Chief Financial Officer, Bob Galvin. Please go ahead Sir.
Speaker 2: Good morning and thank you for joining us today as we review our operating and financial results for the 4th quarter and fiscal year ended December 26 2021. Yesterday afternoon, we issued a press release, providing an overview of our financial performance for the quarter, including a reconciliation of any non-GAAP measures . We may discuss.
Good morning, and thank you for joining us today as we review our operating and financial results for the fourth quarter and fiscal year ended December 26 2021.
Yesterday afternoon, we issued a press release, providing an overview of our financial performance for the quarter, including a reconciliation of any non-GAAP measures we may discuss.
Speaker 2: A copy of this, of the release, is available on our website at ir.tildrums.com along with slides for reference. These items also have been filed as Form 8K's and are available online at sec.gov. Fabio Sandri, President and Chief Executive Officer, and I will present on today's call.
A copy of this release is available on our website at IR Dot Pilgrim's Dot com along with slides for reference. These items also had been filed its form eight Ks and are available online at SEC Gov.
Fabio Sandri, President and Chief Executive Officer, and I will present on today's call.
Speaker 2: Before we begin our prepared remarks, I would like to remind everyone of our Safe Harbor disclaimer. Today's call may contain certain forward-looking statements that represent our outlook and current expectations as of the day of this release.
Before we begin our prepared remarks, I would like to remind everyone of our safe Harbor disclaimer today's call may contain certain forward looking statements that represent our outlook and current expectations as of the date of this release.
Speaker 2: Other additional factors not anticipated by management may cause actual results to differ materially from those projected in these forward-looking states.
Other additional factors not anticipated by management may cause actual results to differ materially from those projected in these forward looking statements.
Speaker 2: Further information concerning those factors has been provided in today's press release, our Form 10-K , and in our regular filings with the SEC.
Further information concerning those factors has been provided in today's press release, our Form 10-K and in our regular filings with the SEC I.
I will now turn the call over to Fabio.
Speaker 3: Thank you, Matt. Good morning, everyone. And thank you for joining us today. For the fourth quarter of 2021, we reported net revenues of $4 billion, a 30% increase over the same quarter last year, being 20.6% organic growth, and 9.4% of sales contribution from the acquisition of PIRNOS with Matt.
Thank you Matt Good morning, everyone and thank you for joining us today for the fourth quarter of 2021, we reported net revenues of 4 billion, a 30% increase over the same quarter last year being 26% organic growth and nine 4% of sales contribution from the acquisition of students would masters we had adjusted EBITDA.
Speaker 3: We had adjusted EBITDA of $317 million, up 54% versus Q4 last year, and up 96% compared to Q4 2019. Our adjusted EBITDA margin was 7.8%, compared to 6.6% a year ago, and 5.3% in Q4 2019. Adjusted EPS was $0.56 versus $0.25 in the fourth quarter of 2020, and $0.14 in Q4 2019.
317 million up 54% versus Q4 last year and up 96% compared to Q4 2019, our adjusted EBITDA margin was seven 8% compared to six 6% a year ago and five 3% in Q4 2019, adjusted EPS was <unk> 56.
It's 25 in the fourth quarter of 2020 and 14 in Q4 2019 for the 2021 fiscal year net revenues were $14 8 billion, a 22% increase over last year and adjusted EBITDA of $1 3 billion was up six 4% compared to the previous year.
Speaker 3: For the 2021 fiscal year, NEP revenues were $14.8 billion, a 22% increase over last year, and adjusted EBITDA of $1.3 billion, was up 6.4% compared to the previous year.
Speaker 3: Adjusted EBITDA margin was 8.7% compared to 6.5% for 2020 and 8.5% in 2019.
Adjusted EBITDA margin was eight 7% compared to six 5% for 2020 and eight 5% in 2019 adjusted EPS was <unk> 20.
Speaker 3: Adjusted EPS was $2.28 in 2021 and $1.02 in 2020 and $1.62 in 2019. We're pleased with our overall performance in the fourth quarter of the year. Our U.S. and Mexico business have shown strength throughout the year, with robust demand driving growth market prices.
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2021, and a dollar or two in 2020 and $1 62 in 2019, we're pleased with our overall performance in the fourth quarter of the year, our U S and Mexico business had showed strength throughout the year with robust demand driving growth market pricing erode.
Speaker 3: Our European business was severely challenged in the second half of the year while battling inflationary headwinds and labor shortages.
In business were severely challenged in the second half of the year, while gasoline inflationary headwinds and labor shortages. We welcome gives us food Masters in late September and are excited to have them as part of the business family, you're pruning our portfolio and generating strong profitability in the fourth quarter with the addition of the branded prepared foods in Europe .
Speaker 3: We welcome Pilgrim's Foodmasters in late September and are excited to have them as part of the Pilgrim's family, improving our portfolio and generating strong profitability in the fourth quarter. With the addition of the branded prepared foods in Europe and with our presence and differentiated portfolios in the US and Mexico, we have an excellent base with the synergies and scale for further growth in the future.
And we need our presence and differentiated portfolios in the U S and Mexico, we have an excellent base with the synergies and scale for further growth in the future.
Speaker 3: We are proud of the successful execution of our strategy to have a diverse portfolio of products across multiple geographies to provide more consistent financial results.
Proud of the successful execution of our strategy to have a diverse portfolio of products.
Across multiple geographies to provide more consistent financial results, we still have significant opportunities and we have remained focused on execution and serving our key customers, while keeping our team members health and safety at the forefront.
Speaker 3: we still have significant opportunities, and we have remained focused on execution and on serving our key customers while keeping our team members' health and safety at the forefront.
Speaker 3: Turning to general market conditions for US chicken, in the fourth quarter, industry production was up 1.1% over Q4 2020 on increased head count and heavier average live weights. Production grew despite ongoing poor hatchability.
Turning to general market conditions for U S chicken in the fourth quarter industry production was up one 1% over Q4 2020, an increased head count and have your average live weights production grew despite the ongoing pool hatch ability weights.
Speaker 3: The USDA outlook for 2022 indicates an expected 1.6% annual increase in supply, with stronger year-over-year growth expected in the first half of the year. It is important to note, in an effort to produce more eggs, the industry is holding its flocks longer. The industry is fedding more eggs, but by holding the hens longer, the hatchability performed declines due to the age of the hens.
Ill look for 2020 to indicate the unexpected one 6% annual increase in supply with stronger year over year growth expected in the first half of the year. It is important to note in an effort to produce more eggs the industry's holding its flux longer the industry setting more eggs, but by holding hens longer the hatch ability to perform.
Declines due to the age of the head.
Speaker 3: In the U.S. market, overall domestic demand was very strong for the year. Food service saw year-over-year improvements due to the sustained recovery in both the commercial and non-commercial segments, while annual food service demand was also 4% higher than 2019 pre-pandemic levels. 2021 commercial restaurant volume, sales remain above 2020 and 2019 as operators increase their chicken purchase.
The U S market overall domestic demand was very strong for the year, so year over year improvements due to the sustained recovery in both the commercial and noncommercial segments. While annual food service demand was also 4% higher than 2019 pre pandemic levels 2021 commercial restaurant volume.
Sales remain on both 2020, and 2000 2019 and operated increase their chicken purchases are.
Speaker 3: Although still below 2019 levels, the non-commercial segment also posted significant year-over-year growth as the education, recreation, and lodging sub-segments recovered significantly to support the volume growth. The retail channel, while demanding less volume when compared to the pantry loading during 2020, continued to exceed demand levels experienced in 2019.
Now those two below 2019 levels Danone commercial segment also posted significant year over year growth as the education recreation and lodging segments recover significantly to support the volume growth there.
New channel widen many less volume when compared to the pantry loading during 'twenty 'twenty continues to exceed demand levels experienced in 2019 demand for fresh chicken into 2021 declined versus prior year. However was up 4% versus 2019, while retail dania posted.
Speaker 3: Demand for fresh chicken in 2021 declined versus prior year. However, was up 4% versus 2019.
Speaker 3: while Retail Daily posted positive year-over-year improvements. Combined, the net increase in demand pressure cold storage stocks, which remain 14% below December 2021.
Year over year improvement combined the net increasing demand pressure cold storage stocks, which remained 14% below December 2020 levels.
Speaker 3: as a result of sustained strong demand, which we estimated to be above pre-COVID baselines, coupled with only mild supply growth.
As a result of sustained strong demand, which we estimated to be above pre COVID-19 baseline coupled with only mild supply growth.
Speaker 3: Prices for commodity chicken should remain sustained, as demonstrated by the jumbo cutout, which priced at 71% above the five-year average during the fourth quarter. Even with the increasing prices, we see chicken to be the most affordable and most available meat protein option, as the aggregate production of all other meat proteins is anticipated to be down year-over-year in 2021.
So commodity chicken shoe remains sustained as demonstrated by the gimbal cut out which breath at 71% above the five year average during the fourth quarter, even with the increase in prices with the chicken to beat the minute. The most affordable and most available meat protein option has the aggregate production all of their meat protein.
<unk> is anticipated to be down year over year in 2022.
Speaker 3: Turning to our business segment, in the U.S. chicken, very strong consumer demand supported market pricing at high levels as we continue to work with our customers to pass along the inflationary input costs and increase labor costs with it.
Turning to our business segments in U S chicken very strong consumer demand supported market pricing at high levels as we continue to work with our customers to pass along the inflationary input costs and increased labor cost.
Speaker 3: Our mix continues to be impacted due to the continued labor shortage.
Our mix continues to be impacted due to the continued labor shortages.
Speaker 3: The labor shortage affects our ability to hand portion and trim products that command a higher margin. As has been seen, labor is a nationwide problem across numerous industries. And while showing signs of improvement, it will still take time to resolve. We will continue to invest in automation to increase the safety of our team members and reduce repetitive and redundant tasks.
<unk> shortage affects our ability to hand portion and trim products that command a higher margin.
It has been seen LIBOR as a nation wide problem across numerous industries and why is showing signs of improvement. He will still take time to resolve we will continue to invest in automation to increase the safety of our team members and reduce repetitive and redundant.
In the U S market.
Speaker 3: In the U.S. market, our retail sales in Q4 were flat year-over-year. However, that performance beat the overall market, which was down 3% due to a difficult comparison versus 2020 pantry lows.
You can see also in Q4 were flat year over year. However, net performance beat the overall market, which was down 3% due to a difficult comparison versus 'twenty 'twenty pantry loading.
Speaker 3: With cheap frequency increasing Q4, above the 2019 baseline, we saw retail daily sales improve year over year versus 2019. We see upside potential in the category, as year over year improvements in unit sales continue, and chicken remains the most affordable meat protein for the customer.
With cheap frequency, increasing Q4 at both digit thousand 19 baseline we saw retail daily sales improved year over year versus 2019, we see upside potential in the category as you move through the year improvements in unit sales continue and chicken remains the most affordable meat protein for the customer.
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Speaker 3: Commercial food service in the U.S. has experienced continuous strength with full-service restaurants demand improving again in Q4, with a third consecutive quarter of double-digit year-over-year growth.
Continued strength with full service restaurants demand improving again in Q4 with a physical.
Quarter of double digit year over year growth concur.
Speaker 3: Contributing to the commercial food service year over year improvement was food service restaurant growth and operators continue to increase buy rates of
Contributing to the commercial foodservice euro per year improvement with full service restaurant growth and operators continue to increase by rates of chicken.
Speaker 3: manual data suggests that certain core items such as tenders, strips, and nuggets increased penetration during 2021. We believe this is due to the prevalence of off-premise eating and chicken's versatility and convenience.
Mainly data suggest a certain core items, such as tenders strips and Nuggets increased penetration. During 2021. We believe this is due to the prevalence of off premise eating and chico's versatility and convenience the local merchant channel posted a total cycle this quarter with year over year growth dumping 40.
Speaker 3: The non-commercial channel hosted a third consecutive quarter with year-over-year growth, topping 40% with the recovery in orders from education, recreation, and lodging segments. However, the channel continues to lack 2019 levels. Piglet has adjusted volumes and mix between channels to adapt to changing consumer demand patterns.
<unk> percent with the recovery in orders from education Recreation and lodging segments. However, the channel continues to lag 2019 levels <unk> has adjusted volumes and mix between channels to adapt to changing consumer demand patterns.
Speaker 3: We are well positioned to adjust production and channel mix, given our presence across all bird sizes, from large to small. Commodities, large bird deboning continued its momentum throughout the year, and once again in the fourth quarter generated the largest profit improvement year over year. The volume, revenue, and profit growth were driven by support from food service demand and overall strong market price.
We're well positioned to adjust production and channel mix, given our presence across all bird sizes from large to small commodity large bird debone <unk> continued its momentum throughout the year and also again in the fourth quarter generated the largest profit improvement year over year, the volume revenue and profit growth were driven by support from foodservice.
This demand and overall strong market pricing, our case ready business delivered revenue growth in the quarter versus the prior year, but especially by the increase in grain and labor costs. We have negotiated prices in order to recover the ingredient costs. We are experienced but most importantly, we continue to partner with key customers delivering.
Speaker 3: Our case-ready business delivered revenue growth in this quarter versus the prior year, but it's pressured by the increasing grain and labor costs. We have negotiated prices in order to recover the increased costs we are experiencing, but most importantly, we continue to partner with key customers, delivering superior service levels and generating both growth and value for them.
Superior service levels, and generating both growth and value for them.
Speaker 3: Strong QSR and improved retail daily demand drove year-over-year revenue and profitability improvements in our small bird business for both the quarter and the full year. We continue strengthening this business unit with our partnership with key QSR companies.
Strong Q4, and improve the retail daily demand drove year over year revenue and profitability improvements in our small bird business for both the quarter and the full year. We continue to strengthen this business unit with our partnership with <unk> customers in our U S prepared food business Q4 sales grew over 50.
Speaker 3: In our US prepared food business, Q4 sales grew over 50% year over year and volume was up 7%.
Percent year over year and volume was up 7%.
Speaker 3: Margins improve despite higher input costs as we focus our product lines on more profitable segments. For the full year, we grew our top line by 25% and significantly improved our operations.
Margins improved despite higher input costs as we focus on our product lines on more profitable segments for the full year, we grew our topline by 25% and significantly improved our operations.
Speaker 3: During the fourth quarter, our branded products, JustBear and Pilgrims, sales grew 94% year-over-year. Prepared sales were up 385% versus Q4 2020, while fresh was up 45%.
During the fourth quarter, our branded products just bear in peer groups sales grew 94% year over year. The better sales were up 385% versus Q4 2021 fresh was up 45% new product innovation is driving sales and leading our category growth is innovation reached 30.
Speaker 3: New product innovation is driving sales and leading our category growth as innovation reached 30% of sales. We continue to gain distribution and build the JustBear brand through e-commerce channels.
Percent of sales, we continue to gain distribution and viewed the just bare brand through e-commerce channels.
Speaker 3: These channels represent 25% of prepared and case-ready branded sales and remain a strong channel for the JustBear brand, with the fourth quarter e-commerce sales up 56% versus Q4 last year.
These channels with us and 25% of prepared in case ready branded sales and remains a strong channel for the just bare brand with the fourth quarter E Commerce sales up 56% versus Q4 of last year.
We experienced significant inflation in our feed inputs corn prices rallied in Q4 as outside commodity and Mark to market provided support to parents USDA has reported a domestic corn crop with more than 15 billion bushels, which is expected to increase the carryout to one fine to be nimble shows this year.
Speaker 3: Corn prices rallied in Q4 as outside commodity and macro markets provided support to guarantees. USDA has reported a domestic corn crop of more than 15 billion bushels, which is expected to increase the carryout to 1.5 billion bushels this year from 1.2 billion last year, even with large demand estimates, particularly from Mexico.
2 billion last year, even with the largest demand estimates, particularly from exports.
Speaker 3: We have recently seen a slowdown in both the ethanol market and the corn export market to China. We feel confident on an increase in corn stocks this year, even if prices stay elevated on inflation concerns and strength in the energy market.
We have recently seen a slowdown in both of the ethanol market in the corn export market, China, we feel confident on an increase in corn stocks. This year, even if prices stay elevated on inflation concerns and strength in the energy markets slightly.
Speaker 3: Slightly new prices have rapidly increased in recent weeks due to production concerns from the South American export.
So it'd be new practice have rapidly increase in recent weeks due to prediction concerns from the South American exporters.
Speaker 3: Persistent drought has reduced soybean production potential, notably in southern Brazil and Argentina. USDA is projecting a U.S. soybean crop of 350 million bushels, up from 257 million last
Assistant drought has reduced soybean production potential, notably he's moved salt in Brazil, and Argentina, USDA projecting a U S. Soybean very well of 350 million bushels up from 257 million last year.
Speaker 3: We expect production losses in South America and global growth in vegetable oil demand to continue supporting oilseed markets in the near future.
We expect additional losses in South America, and global growth in visit about oil demand to continue supporting oilseeds markets in the near term.
Speaker 3: European field wheat prices peaked during Q4, but have recently come off of their highs as larger crops were realized from the southern hemisphere exporters. We believe stocks in the major wheat exporters have bottomed out and are set to increase both this year and next year. Geopolitical tensions in the Black Sea must continue to be monitored, but we believe the expansion in the world wheat supplies will help ease feed costs and wheat.
European feed wheat breakfast peaked during Q4, but have recently come off of their height as larger crops were realized from the southern hemisphere exporters, we believe stocks in the major wheat exporters have bought them out and then start to increase both this year and next year.
Your political tensions in the Black sea.
<unk> continues to be monitor, but we believe the expansion in the world wheat supplies will help ease feed costs and weak over the medium term.
Speaker 3: over the medium term. As always, we have a current grain position that reflects our view on the risk in the market, with anticipation of this increasing supply of grain in 2020.
As always we have a current grain position that reflects our view on the risk in the market. We didn't see dissipation of this increasing supply of grain in 2022.
USDA chicken inventory with no 14% from the previous year combine dark meat inventories decreased 2% from September 2021 and are down 8% year over year. The decrease was expected given only marginal production growth and strong demand. We believe the margin of 1% increase in Q4 inventories compared to September were due to <unk>.
Speaker 3: USDA chicken inventory was now 14% from the previous year. Combined, dark meat inventories decreased 3% from September 2021 and are now 8% year-over-year. The decrease was expected, giving only marginal production growth and strong demand. We believe the marginal 1% increase in Q4 inventories compared to September were due to export supply chain disruption.
But the supply chain disruptions.
Speaker 3: Total U.S. D.A. broader export sales to November were flat, driven by declines in shipments to China and Vietnam related to intermittent COVID lockdowns that affected demand offset by increases in export sales to Mexico and Cuba.
Although we have SDA broiler and export sales through November were flat driven by declines in shipments to China and Vietnam related to intermittent.
<unk> locked out that affected demand offset by increases in exports sales to Mexico and Cuba.
Speaker 3: China's pricing and consumer demands for cost, however, remain historically high levels that are expected to continue to any time.
China's pricing and consumer demands for path. However remained historically high levels that are expected to continue.
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Speaker 3: Exports are indicative of a resilient market and a more balanced growth trade environment despite supply chain issues with ports and container lines. As we enter Q1, we are seeing increased demand in markets most affected by COVID-19 in 2021, along with ongoing growth in other markets carrying over from 2021.
Exports are indicative of a resilient market in a more balanced growth trade environment, despite supply chain issues with sports and continually lives as we enter Q1, we are seeing increased demand in markets. Most affected by Covid and 2021, along with ongoing growth in all their markets carrying over from 2021.
Speaker 3: As the supply chain begins to recover, we expect exports this year to outpace 2021 and achieve new record volume.
As the supply chain begins to recover we expect that exports to outpace 2021 and achieved new record volumes.
Speaker 3: The drivers for the U.S. chicken export growth in 2022 will be the recovery of COVID-impacted foreign markets and their currencies, an improved supply chain environment, and higher oil prices. Any additional spread of avian influenza and avian swine fever overseas will boost their U.S. exports, as those countries impacted will have negative effects on their ability to export to certain countries.
The drivers for the U S chicken export growth in 2022 will be the recovery of Covid impacted foreign markets and their currency and improved supply chain environment and higher oil prices and the additional spread over evenly influenza and everyone's swine fever overseas were boosted U S exports as those countries.
The impact that will have negative effects on their ability to export to certain countries.
Speaker 3: Pigment's export volumes continue to outpace the industry, and we expect this to continue as we expand our client and country base. We are taking specific positions where appropriate, and we are confident in our ability to execute throughout the supply chain, prioritizing profitable business for us.
It was export volumes continued to outpace the industry and we expect this to continue as we expand our client and contrabass takings.
Taking specific positions where appropriate and we are confident in our ability to execute throughout the supply chain.
The profitable business for us.
Speaker 3: I mentioned avian influenza as it relates to other countries, and as you likely know, there have been reported cases of high-pet AI in wild birds in the UK and in the US in the Carolinas, Virginia, Indiana, and Florida. Related to the UK, we are closely monitoring the situation, but there has not been a significant impact to my.
I mentioned that even if there is and as it relates to other countries and as we likely know there has been we bought that gives us a high path AI in wild birds in U K and the U S. In the Carolinas, and Virginia, Indiana, and Florida related to the U K. We are closely monitoring the situation, but it has not been a significant impact in Moy Park.
Speaker 3: We have a strong biosecurity protocol, and we have implemented extended measures in those regions where AI has been used.
We have a strong bias security protocol and we have implemented extended measures in those regions, where AI has to be found.
Speaker 3: Turning to our international business, Mexico has another strong year. During Q4, Mexico's volume increased 3.4% while net revenues increased 8.7%.
Turning to our international business, Mexico has another strong year during Q4, Mexico's volume increased three 4%, while net revenues increased eight 7% EBITDA margins were impacted by weaker demand at the beginning of Q4 combined with the arrival of additional chicken input quota.
Speaker 3: EBITDA margins were impacted by weaker demand at the beginning of Q4, combined with the arrival of additional chicken import quotas. However, demand picked up again in early November and lasted through the end of November .
However demand picked up again in early November and lasted through the end of the year.
Speaker 3: As we begin 2022, we are seeing much stronger demand and it's typical for this time of the year. As is often the case with Mexico, our results can be quite volatile quarter to quarter, but are stable on our annualized.
As we begin 2022, we're seeing much stronger demand than is typical for this time of the year as is often the case with mesh Mexico, our results can be quite volatile quarter to quarter, but stable or not our annualized base.
Speaker 3: In Mexico, we continue to invest in our brands. Our prepared food business with our pigments, Del Dia and Alameda brands, again grew sales double digits in 2021. In the fresh business, we also grew double digits with our pigments brand and true evolving to higher value segments, including successful launch of Granavia, a Sismo brand and Selecto de la Greja as we seek to increase our brand awareness in modern shares.
In Mexico, we continue to invest in our brands.
Our prepared food business with our <unk> and <unk> brands again grew sales double digits in 2021, and the fresh business. We also grew double digits with our biggest brand and to evolve into higher value segments, including the successful launch of grain out here.
As more brands and selected the Legrand.
As we seek to increase our brand awareness and modern channels.
Speaker 3: We continue to be excited about opportunities in Mexico. We continue investing in expansions in Veracruz and investing in line expansions in current operations in order to support growth in both our fresh and branded businesses.
Continue to be excited about opportunities in Mexico, we continue investing expansions in Veracruz and investing in line expenses and current operations in order to support the growth in both our fresh and branded business.
Moving to the U K and Europe in Q4 are more multi pack business as well as the poultry initiative as a whole continued to face cost increases and labor challenges. In addition to COVID-19 related at <unk>. Both the exit route that made it more difficult for the EU workers, who entered UK, causing some workers to simply redone.
Speaker 3: Moving to the UK and Europe , in Q4, Moy Park business, as well as the poultry industry as a whole, continue to face steep cost increases and labour challenges. In addition to COVID-related absentees, post-Brexit rules have made it more difficult for EU workers to enter the UK, causing some workers to simply return home.
Well have more parts Q4 revenue and volume grew 7% year over year EBITDA was impacted by impressive cost increases, including veins nutrients utilities and freight during the second half of the year I think did not keep pace with inputs. However, we continue to negotiate with key customers and establishing new pricing models to recover.
Speaker 3: However, we continue to negotiate with key customers and are establishing new pricing models to recover and mitigate the inflationary impacts facing the world.
And mitigate the inflationary impact facing the business.
Speaker 3: As always, we will continue to deliver operational excellence through programs designed for labor efficiencies, better agricultural performance, and improving yields, in addition to tight SG&A control.
As always we will continue to deliver operational excellence through programs designed for labor efficiencies better agricultural performance and improving yields in addition to tight SG&A control.
Speaker 3: As we expect negotiations with our customers to wrap up in the first quarter, the challenging environment is expected to continue in the first half of 2022, with improvements coming in the back half. Additionally, we improved the CAPEX deployment, order bookings, pricing, and food service recovery. We are confident the Moai Park will continue to grow and return to its profitable growth trajectory.
As we expect negotiations with our customers to wrap up in the first quarter. The challenging environment is expected to continue into the first half of 2022 with improvements coming in the back half. Additionally, we improvement Capex deployment order bookings pricing in foodservice recover we are confident that <unk> will continue to grow and return to its profitable.
Growth trajectory.
Speaker 3: Despite the challenging environment, we are very proud of our fuel rates to our key customers and high quality products that enable us to increase our share of the market.
Despite the challenging environment, we are very proud of our few rates to our key customers and high quality products that enable us to increase our share of the market.
Speaker 3: As a result of our superior value offerings, we are able to achieve a significant long-term volume increase with one of our key customers in the UK that will deliver efficiencies for both parties.
As a result of our superior value offerings, we are able to achieve a significant long term volume increase with one of our key customer in the UK that will deliver efficiencies for both parties.
Speaker 3: In previous UK business, volumes of sales grew at a rate of less than 1% each. Sales were negatively impacted by lower export prices and lower EU meat prices.
Giving us UK business one into the sales grew at a rate of less than 1%. Each sales were negatively impacted by lower export prices and lower you meet the prices the market and we made very challenge will be downward pressure on beef prices do a surplus of fixing Germany, resulting from export bans associated with African swine flu.
Speaker 3: The market remains very challenging with downward pressure on pig prices due to a surplus of pigs in Germany, resulting from export bans associated with African swine fever.
Speaker 3: Feed prices have continued to rise while labor and utility costs remain inflated. As a result, despite having an advantage when compared to the market, the live operations are at an unsustainable loss due to market pricing being below cost of production.
Pizza prices.
They have continued to rise while labor and utility costs remain inflated as a result, despite having an advantage when compared to the market. The life operations at an unsustainable loss due to market pricing being below cost of production.
Speaker 3: With the losses producers are incurring, the UK breeding herd has started to downsize and Conservative estimates that approximately 7.5% of sows have been removed from production in the past six months. Despite this significant herd production, pig prices across the EU and China are currently at unsustainable levels.
With the losses to this is that including the UK breeding herds have started to downsize and conservative estimates that are approximately 75% of cells have been removed from production in the past six months. Despite the significant production speak prices across the EU and China are currently at unsustainable levels.
Speaker 3: Looking ahead, our facilities that could not export to China have been audited and is awaiting approval to regain access.
Looking ahead.
A facility that could not export to China have be audited and is awaiting approval to regain axis.
Speaker 3: Although current market pricing of prime parts to China is low, it is the best market for some other parts of the world.
Although current market pricing of Brian parts to China is low it is the best market for some other parts of the big we expected market conditions will continue to be challenging in the first quarter of 2022 due to the backlog of big low profitability and headwinds on labor supply chain inflation. However, we are negotiating our contracts with our key customers.
Speaker 3: We expect that market conditions will continue to be challenging in the first quarter of 2022 due to the backlog of pigs, low profitability, and headwinds on labor, supply chain, and inflation. However, we are negotiating our contracts with our key customers to address recovering of the inflationary factors and we expect the market will begin to turn in Q2 due to the hard reduction.
Address recovering inflationary factors and we expect the market will begin to turn in Q2 due to the reduction.
Speaker 3: Even through the significant headwinds, we are committed to support and add value to our key customers in this difficult time and to deliver high quality products to customers.
You've been through the significant headwinds, we are committed to support and add value to our key customers in this difficult time and to deliver high quality products to consumers as the largest producer of high welfare peaks in U K, we are adapting our portfolio to current market conditions and driving forward with numerous operational excellence initiatives to conclude.
Speaker 3: As the largest producer of high-welfare pigs in the UK, we are adapting our portfolio to current market conditions and driving forward with numerous operational excellence initiatives.
Speaker 3: To conclude on Fumers UK, I'm pleased to say that we are awarded for our leading sustainability program. Sustainability is part of our culture throughout the company and I am proud of the team for their efforts being recognized.
Kim with UK I'm pleased to say that we are rewarded for our leading sustainability program sustainability as part of our culture throughout the company and I am proud of the team for their efforts are being recognized.
Speaker 3: Turning to Figures Foodmasters, the meats and meal business were acquired in last September .
Turning to biggest with masters the meet the new business win applying less at Denver.
Speaker 3: Foodmasters posted a solid quarter in a challenging environment, with revenue and profitability in line with expectations.
Food Masters posted a solid quarter in a challenging environment with revenue and profitability in line with expectations.
Speaker 3: We outperformed the market in our UK-branded meat portfolio, which share, again...
We outperformed the market in our UK branded meat portfolio, we'd share again.
Speaker 3: each of our pillar brands, Richmond Sausages, Fridge Raider Meat Snacks, and Denny's Meats in the Irish.
Each of our pillar brands reached one sausages frigerator meat snacks and Daniel meets in the Irish markets. We didn't meet free reach Moen brand continued to gain traction with market share growth of 84% driven by strong brand activation, new retail listings and the launch of which more meat free baked them.
Speaker 3: Within meat-free, our Richemont brand continued to gain traction with market share growth of 84%, driven by strong brand activation, new retailer listings, and the launch of Richemont meat-free bacon. With our meal solution business, chimney-ready meals grow well ahead of the market, with double-digit growth from increasing contributions from new business wins that are secure over the last 12 months.
We thought a meal solution business chimney readiness.
Well ahead of the market with double digit growth from increasing contribution from new business wins that are secured over the last 12 months.
Speaker 3: Our Food to Go business, Rollover, reported strong growth at the evening of COVID. Restrictions in the UK benefit the category. During Q4,
<unk> business rollover reported strong growth at the evening of Covid restriction, the new K benefit the category.
During Q4 raw material cost increases rising supply chain, often disruptions driven by labor availability impacted margins in response, we work with our key customers to recover the input cost and other inflationary.
Speaker 3: Rising supply chain costs and disruptions driven by labor availability impacted margins.
Speaker 3: In response, we work with our key customers to recover input costs and make good progress with them.
And made good progress in what continues to be a dynamic environment.
Speaker 3: While it was a busy period commercially for foodmasters, we moved forward in several important strategic initiatives. Our CAPEX program progressed to plan with the construction underway and expansion of our snacking capacity in investments of approximately five minutes. Integration activities are progressing well and we are investing significantly in technology to drive efficiencies and improving ways of working to enable food safety.
But it was a busy periods commercially for food Masters, we'd move forward several important strategic initiatives, our Capex program progress to plan with the construction underway and expansion of our snacking capacity in investments of approximately $5 million integration activities are progressing well and we are investing figuring.
Currently the technology to drive efficiencies and improve and ways of working to enable future growth.
Speaker 3: As we enter 2022, we expect to see further volatility in UK and Irish markets. However, we believe our food master business is well-positioned to deliver grants from our straw-based industry, leading brands and private label solutions.
As we enter 2022, we expect to see further volatility in UK and Irish markets. However, we believe our food message business is well positioned to deliver growth from our strong base of industry, leading brands and private label solutions.
With our history of successful acquisitions in U S. Mexican William and Kate we have demonstrated our ability to grow our business and diversify our portfolio in a disciplined manner and look forward to leverage again.
Speaker 3: With our history of successful acquisitions in the U.S., Mexico, and the U.K., we have demonstrated our ability to grow our business and diversify our portfolio in a disciplined manner. We look forward to leverage again our global scale to grow in our portfolio and provide current and future customers with high-quality products.
Scale to grow and our portfolio and provide current and future customers with high quality products.
Speaker 3: Another very important priority for our global business is progressing our sustainability agenda. We are focusing on advancing the company through a number of ESG related initiatives.
Another very important priority for our global business is probably our sustainability agenda, we're focusing on advancing the company through a number of ESG related initiatives with committed on being net zero greenhouse emissions by 2040 in support of this initiative in April we issued a 1 billion dollar brands bond are sustainable.
Speaker 3: We committed on being net zero greenhouse emissions by 2040. In support of this initiative in April , we issued a $1 billion bond of sustainably linked, which requires to reduce our global greenhouse emissions intensity by 30% by 2030. We are happy to report that we are ahead of our target reductions as we close 2021.
Linked which required us to reduce our global greenhouse emissions intensity by 30% by 2030, we're happy to report that we are ahead of our target redemptions as we close 2021.
Speaker 3: As we think about our social scorecard, we are very proud that we have again achieved a safety record that is far superior to the industry. Safety is a condition of illness, and our progress in this area has been outstanding. Also, during the year, we followed through on our commitment to create a better future for our team members through our hometown strong contributions, where we developed projects to support the communities we are in.
As we think about our social scorecard, we are very proud that we have a game that achieve a safety record that it is far superior to the industry safety is a condition that business and our progress in this area has been outstanding also during the year, we followed through on our commitment to create a better future for our team members to our hometown strong.
<unk> when we developed projects to support the communities. We are inserted finally, we continued to strengthen our overall compliance programs to first class standards.
Speaker 3: Finally, we continue to strengthen our overall compliance programs to first-class standards.
Speaker 3: With that, I would like to ask our CFO , Matt Galvinoni, to discuss our financial...
I would like to ask our CFO , Matt government wanted to discuss our financial results.
Speaker 2: Thank you, Fabio. For the fourth quarter of 2021, net revenues were $4.0 billion versus $3.1 billion a year ago, with an adjusted EBITDA of $316.7 million in a 7.8% margin compared to $205.4 million in a 6.6% margin in Q4 last year.
Thank you Fabio for the fourth quarter of 2021, net revenues were 4.0 billion versus $3 $1 billion, a year ago with an adjusted EBITDA of $316 $7 million and a seven 8% margin compared to $205 4 million and six 6% margin in Q4.
Last year, we achieved $138 million adjusted net income compared to $60 4 million in Q4 2020.
Speaker 2: We achieved $138 million of adjusted net income compared to $60.4 million in Q4.
Speaker 2: In the quarter, we reported gap net income of $36.8 million versus being essentially flat.
In the quarter, we reported GAAP net income of $36 8 million versus being essentially flat in 2020.
Speaker 2: The most significant adjustment in the current quarter was related to an additional $132 million accrual related to legal services.
The most significant adjustment in the current quarter was related to an additional $132 million accrual related to legal settlements.
Speaker 2: For the fiscal year, net revenues were $14.8 billion versus $12.1 billion in fiscal 2020 with adjusted EBITDA of $1.3 billion in an 8.7% margin compared to $788 million in a 6.5% margin last year. We achieved $557.4 million of adjusted net income.
For the fiscal year net revenues were $14 $8 billion versus $12 1 billion in fiscal 2020 with adjusted EBITDA of $1 3 billion, an 8% eight 7% margin compared to 70 $788 million and a six 5% margin last year, we achieved 557 four.
$2 million of adjusted net income this year.
Speaker 2: For the year, we reported GAAP net income of $31 million versus GAAP net income of $94.8 million.
For the year, we reported GAAP net income of $31 million versus GAAP net income of $94 $8 million in 2020.
Speaker 2: Adjusted EBITDA margins for the quarter were 11% in the U.S., 6.3% in Mexico, and 2% in Europe . For the fiscal year, adjusted EBITDA margins were 9.8% in the U.S., 14.8% in Mexico, and 3.5% in Europe . For the fiscal year, adjusted EBITDA margins were 9.8% in the U.S., 14.8% in Mexico, and
Adjusted EBITDA margin for the quarter were 11% and six 3% in Mexico and 2% in Europe for the fiscal year adjusted EBITDA margins were nine 8% in the U S 14, 8% in Mexico, and three 5% in Europe .
Speaker 2: Adjusted EBITDA in the U.S. in Q4 was $265 million compared to $74.9 million a year ago and $115.9 million in 2019.
Adjusted EBITDA in the U S. In Q4 was $265 million compared to $74 $9 million, a year ago and $115 $9 million in 2019 sales.
Speaker 2: Sales are up due to increased pricing supported by strong consumer.
Sales were up due to increased pricing supported by strong consumer demand.
Speaker 2: Gross profit margins were higher compared to both 2020 and 2019.
Profit margins were higher compared to both 2020 and 2019.
Speaker 2: In Mexico, adjusted EBITDA in Q4 was $27 million versus $77.7 million a year ago, and $6.7 million a year.
In Mexico adjusted EBITDA in Q4 was $27 million versus $77 $7 million, a year ago and $6 $7 million in 2019.
Speaker 2: Net sales were up due to higher volumes at relatively flat year-over-year pricing. However, margins were negatively impacted due to elevated input costs, primarily.
Net sales were up due to higher volumes at relatively flat year over year pricing. However margins were negatively impacted due to elevated input costs primarily great.
Speaker 2: In Europe , adjusted EBITDA in Q4 was $24.7 million versus $52.8 million in 2020.
In Europe adjusted EBITDA in Q4 was $24 $7 million versus $52 $8 million in 2020.
Speaker 2: As Fabio previously stated, our UK business's profitability was significantly impacted by inflationary headwinds in the quarter. Grain, nutrients, utility, packaging, labor, and transport costs all were significantly higher over a year. Relative to these costs, Moy Park experienced approximately $150 million of annualized cost increases over the last year.
As <unk> previously stated our U K business as profitability was significantly impacted by inflationary headwinds in the quarter grain nutrients utility packaging labor and transport costs, all were significantly higher year over year relative to these cost White park experienced approximately $150 million of <unk>.
Annualized cost increases over the last quarter. The team continues down the path to finalize contracting structures with our customers to mitigate these cost increases.
Speaker 2: The team continues down the path to finalize contracting structures with our customers to mitigate these costs.
Speaker 2: Also included in Tobrim's UK's fourth quarter results is an $8 million charge to reduce its inventory value due to the market price of pigs being so depressed.
So included in Pilgrim's U K fourth quarter result is an $8 million charge to reduce its inventory value due to the market valley market price it takes being so depressed.
Speaker 2: Similar to Moy Park, the Tokam's UK team is working diligently with customers to recover the increase in input cost that has been occurring as current pricing levels are
Similar to Moy Park to tokens UK team is working diligently with customers to recover the increase in input cost has been incurring as current pricing levels are unsustainable.
Speaker 2: As Fabio mentioned, we are very pleased with our first quarterly results from Food Masters. It's fourth quarter, just as easy.
Bob had mentioned we are very pleased with our first quarterly results include Masters', It's fourth quarter. Adjusted EBITDA margins were 9%. This business is not immune to the inflationary headwinds in the U K and as anticipated feel some of this impact in the first quarter of 2022. However, we are confident in recovering the impacts of these increased costs through pricing.
Speaker 2: This business is not immune to the inflationary headwinds in the UK and is anticipating to feel some of this impact in the first quarter of 2022. However, we are confident in recovering the impacts of these increased costs due pricing and are very excited about the growth prospects for this newly acquired business.
Very excited about the growth prospects for this newly acquired business.
Speaker 2: Company-wide, we incurred COVID-related costs of approximately $6 million in the fourth quarter, compared to $18 million in the prior year. For the full year, we incurred $37 million of COVID-related costs, compared to approximately $100 million in 2012.
Any wide, we incurred COVID-19 related costs of approximately $6 million in the fourth quarter compared to $18 million in the prior year for the full year, we incurred $37 million of COVID-19 related costs compared to approximately $100 million in 2020 overall, our SG&A in the fourth quarter was higher than prior year, primarily due to the addition of food Masters and <unk>.
Speaker 2: Overall, our SG&A in the fourth quarter was higher than prior year, primarily due to the addition of food masters and increases in legal defunding.
Increases in legal defense costs.
Speaker 2: We finished the year spending $382 million in CapEx.
We finished the year spending $382 million in Capex, we will continue to prioritize our capital spending plans in 2022 to optimize our product mix and strengthen our partnerships with key customers.
Speaker 2: We will continue to prioritize our capital spending plans in 2022 to optimize our product mix and strengthen our partnerships with key customers.
Speaker 2: We reiterate our commitment to invest in strong ROCE projects that will improve our operational efficiencies through automation and tailor our operations to address key customer needs to further solidify competitive advantages for Pilgrim.
We reiterate our commitment to invest in strong <unk> projects.
Improve our operational efficiencies through automation and Taylor operation to address key customer needs to further solidify competitive advantages for Pilgrim's we.
Speaker 2: We anticipate spending $410 to $430 million of capital this year with the addition of food masks.
We anticipate spending $410 million to $430 million of capital. This year with the addition of food Masters increased spending on automation and for projects to support our journey to net zero greenhouse gas emissions by 2040.
Speaker 2: increased spending on automation, and for projects to support our journey to net zero greenhouse gas emissions by 2040.
Speaker 2: We have a strong balance sheet and will continue to emphasize cash flows from operating activities, management of working capital, and disciplined investment in high-return projects.
We have a strong balance sheet, we will continue to emphasize cash flows from operating activities management of working capital and disciplined investment in high return projects.
Speaker 2: Our liquidity position remains very strong. At the end of the fiscal year, we had approximately $1.7 billion in total cash and available credit.
Our liquidity position remains very strong at the end of the fiscal year, we had approximately $1 $7 billion in total cash and available credit.
Speaker 2: We have no short-term immediate cash requirements, with our bonds maturing in 2027, 2031, and 2032, and our term loan maturing in 2021.
We had no short term immediate cash requirements with our bonds maturing in 2027, 2031, and 2032 and our term loan maturing in 2026.
Speaker 2: At the end of the fiscal year, our net debt was $2.8 billion, with a leverage ratio of less than 2.2 times the last 12 months of just.
At the end of the fiscal year, our net debt was $2 8 billion with a leverage ratio of less than two two times. The last 12 months adjusted EBITDA, which is at the lower end of our target leverage ratio range of two to three times.
Speaker 2: which is at the lower end of our target leverage ratio range of 2 to 3%.
Speaker 2: Net interest expense for the year was approximately $115 million, exclusive of the debt extinguishment cost of $24.7 million we recorded in the second quarter. We anticipate our 2022 net interest expense to be between $125 million and $135 million.
Net interest expense for the year was approximately $115 million exclusive of the debt extinguishment costs of $24 7 million, we recorded in the second quarter.
We anticipate our 'twenty two 2022 net interest expense to be between $125 million and $135 million.
Speaker 2: Also, we anticipate our effective tax rate to be between 25% and 27%.
Also we anticipate our effective tax rate to be between 25 and 27% in 2022.
Speaker 2: As always, we are focused on optimizing our capital structure to create shareholder value and grow the company. Our capital allocation strategies will remain aligned with our growth strategy, and each opportunity will be evaluated against our value creation standards. I will now turn the call back.
As always we are focused on optimizing our capital structure to create shareholder value and grow the company our capital allocation strategy will remain aligned with our growth strategy and each opportunity to be evaluated against our value creation standards I will now turn the call back over to Fabio for closing remarks. Thank you, Matt as we conclude the call I'd like to speak to them the seating.
Speaker 3: Thank you, Matt. As we conclude the call, I'd like to speak to the devastating tornadoes in December . As the largest employer in the greatest county, Kentucky, which suffered overwhelming loss of life, we have committed a million dollars in relief and instituted a $4.5 million annualized wage increase for the team members at our Mayfield production facility.
Neither was in December as the largest employer in the greatest County, Kentucky, which suffered overwhelming loss of life, we have committed $1 million in relief and instituted a $4 5 million annualized wage increase for the team members at our Mayfield production facility.
Speaker 3: We did this to show our support for and commitment to this community, which we are so proud to be part of it. We stand with Matthew and his entire community in our thoughts and in our prayers during this time of recovery and healing. Finally, I would like to thank all of our global team members for everything they do for the Pugnas family every day. Your dedication and support in this very challenging environment the past few years has not gone unnoticed. We thank you and commend you for continuing to provide high quality products to our customers.
We didn't use to show our support for and commitment to this community, which we are so proud to be part of it we stand with Mayfield and his entire community and our thoughts and prayers. During this time of recovery and healing finally, I would like to thank all of our global team members for everything they do from the previous family every day.
Vacation and support in this very challenging environment. The past two years has not gone unnoticed. We thank you and commend you for continuing to provide high quality products to our consumers that concludes our remarks today. Thank you for your interest in <unk>.
Speaker 3: That concludes our remarks today. Thank you for your interest in peer-to-peer.
Speaker 1: Thank you. And as the company will not be taking questions today, the conference is now concluded. We thank you for attending today's presentation. You may now disconnect your line.
Thank you and that was the company will now think there were some questions from the call.
France has now concluded.
Thank you for attending today's presentation you may now disconnect your lines.
Yes.