In a press release dated May 1st Pilgrim’s Pride Corp. (PPC) announced results for the 1st Quarter FY 202 ending March 31st 2023. The quarterly figures showed positive earnings for all three segments with higher revenue and operating profit across all three geographic areas. Earnings were appreciably above Q1 2023 and exceeded consensus estimates on both revenue and earnings for Q1 2024.

The following table summarizes the results for Q1 2024 derived from the SEC 10-Q form and the Company release. Values are compared with the corresponding Q3 FY 2022 (Values expressed as US$ x 103 except EPS)

1. March 31st 2014/ December 31st 2023.

• Q1 2024, $10.3 million interest income (Q1 2023, $36 million)
• Q1 2024  $3.3 million miscellaneous income (Q1 2023, $22.7 million)
• Q1 2024  $4.3 million gain in foreign currency transactions (Q1 2023 $22.7 million loss)

Operating income and sales posted by the three business segments during Q1 2024 were:-

      U.S.      71.7 percent of company operating income on 59.1 percent of sales

      Europe  12.4 percent of company operating income on 29.1 percent of sales

      Mexico  15.9 percent of company operating income on 11.8 percent of sales

52-Week Range in Share Price of PPC:  $19.96 to $36.99.  50-day Moving average,  $34.05

Market Close: May 1st pre-release    $35.54.

             Close: May 2nd post-release $35.95.

Current Forward P/E 14.6    Beta 0.8  

Equity held by insiders and holding Company: 82.6 percent, Institutions, 17.0 percent

In commenting on Q4 results Fabio Sandri, CEO stated “Although we experienced depressed market conditions and persistent consumer inflation throughout 2023, we saw this as opportunity to enhance our competitive advantage. To that end, we focused on consistent execution of our strategies, controlling what we can control, and maintaining investment in our operations. These efforts further strengthened our business, accelerating our profitable growth as market conditions evolved,”

Sandri continued “During the first quarter, the U.S. continued to improve as Big Bird realized significant benefits from enhanced operational efficiencies and market fundamentals. Case Ready and Small Bird continued to grow from increased distribution to Key Customers, promotional activity, and the value of chicken to consumers. Prepared Foods also drove significant growth in both retail and food service through branded offerings, further diversifying the portfolio.

Addressing Europe, Sandri noted “Consumer inflation and labor costs continue to be challenging. Nonetheless, the team secured additional business with retail Key Customers, drove branded growth above category averages, and identified further

In relation to Mexico, Sandri observed, ”We improved through a combination of enhanced supply and demand fundamentals in the commodity market, increased Key Customer partnerships, and further momentum of branded offerings”.

Sandri concluded, “Our strategies continue to demonstrate their effectiveness as we’ve grown ahead of the markets with our Key Customers. Similarly, our branded portfolio continues to gain acceptance throughout the market, further diversifying our portfolio. When these efforts are combined with our operational excellence initiatives to expand capacity, we can further drive our profitable growth,”

In a press release dated May 6th Tyson Foods Inc. (TSN) announced results for the 2nd quarter of FY 2024 ending March 30th 2024. TSN posted lower revenue than the $13,100 anticipated but was higher on adjusted earnings ($0.62 vs. $0.39).

The following table summarizes the results for the period compared with the values for the corresponding quarter of the previous fiscal year (Values expressed as US$ x 1,000 except EPS)

* Goodwill and intangibles 42.3 percent of total assets

52-Week Range in Share Price of TSN:  $44.94 to $61.71.  50-day Moving average,  $57.43

Market Close: Friday May 3rd $61.93. Monday May 6th Open post release, $61.02.

Forward P/E 27.0                  Beta 0.8

The Chicken Segment attained sales of $4,065 million ($4,430 million in Q2 FY 2023) representing 31.1 percent of Company revenue. GAAP operating income attained $158 million in Q2 representing 50.5 percent of net Company operating income. Operating loss in Q2 FY 2023 was $(258) million.  For the Chicken Segment the report stated:- “The USDA projects chicken production will be up 1.0% in FY 2024”. Anticipated adjusted operating income for the segment was forecast at $700 to $900 million for FY 2024. Improvement in the Chicken Segment is attributed to lower feed cost estimated at $190 million for Q2 and reduced operating expenses with consolidation following closure of six plants in four states.

For comparison among Tyson Foods’ business segments the adjusted operating income (loss) in Q1 2024 were respectively:- Pork, $(1) million; Beef, $(35) million; Prepared Foods $230 million and International $(40) million.

In commenting on results Donnie King, president and CEO stated, “During the second quarter, we continued our positive momentum and made progress on our key initiatives. The strategies we have implemented are delivering tangible results, as evidenced by our return to year-over-year bottom line growth." He added, "Looking to the back half of the year, we will continue to focus on executing the fundamentals and leveraging our multi-protein portfolio. We are energized by our progress to-date and laser-focused on driving long-term value."

Despite improved Q2 earnings TSN fell on negative comments during the investors’ call suggesting headwinds in Q3.

Guidance for FY 2024 included Revenue unchanged from FY 2023. Adjusted operating income for the Company was raised to $1.4 to $1.8 billion with Prepared Foods contributing $850 to $950 million. Capital expenditure was projected at $1.2 to $1.4 billion. In the Q2 2013 report Tyson Foods projected $1 billion in savings from the “Productivity Program” by the end of 2024 although this prediction was not confirmed as a quantitative value in the most recent quarterly report.

On May 1st Wingstop Inc. (WING) reported on Q1 ending March 30, 2024. Results exceeded consensus estimates on revenue by 7.2 percent and on earnings by 27 percent. For the period, total revenue including royalties and advertising fees attained $145,789 million. Net income was $28.8 million with a diluted EPS of $0.98. For Q1 FY 2023, total revenue was $108.7 million with net income of $15.7 million and a diluted EPS of $0.52.

Comparing Q1 FY 2024 with Q1 2023, revenue was up 34.1 percent and operating margin was 31.6 percent compared to 26.4 percent.

For Q1 growth in same-store sales attained 21.6 percent and digital orders represented 68.3 percent of systemwide sales.  At the end of Q1 Wingstop operated 2,279 locations of which 98 percent were franchised including 305 international units. The chain was extended by 65 locations during Q1.

In commenting on Q1, Michael Skipworth CEO stated, “Our fiscal first quarter 2024 showcased the momentum behind the Wingstop brand and the continued strength of our strategies, delivering same-store sales growth driven almost entirely by transaction growth,” He added, “Our domestic average unit volume exceeded $1.9 million, further strengthening returns for our brand partners and is strengthening our development pipeline, which gives us confidence in our ability to scale Wingstop into a Top-10 Global Restaurant Brand.”

Guidance for FY 2024 included low double-digit growth in domestic same-store sales.

The company posted total assets of $412.3 million of which $167.8 million comprised intangibles including goodwill, trademarks and ‘relationships’.  The company carries long-term debt of $730.8 million. 

Wingstop has a market capitalization of $11,410 million and has traded over 52-weeks in a range of $150.08 to $396.00 with a 50-day moving average of $368.85. The company generated a twelve-month trailing operating margin of 29.3 percent and a profit margin of 16.8 percent.  The return on assets attained 19.1 percent.  Shareholding is held almost entirely by institutions, but on April 15th, 6.9 percent of the float was short. 

USDA posted a wholesale price of $2.31 per pound for cut wings for the week ending April 19th.  According to the April 24nd USDA Cold Storage Report, there was a 19.6 percent decrease in inventory of wings on March 31st 2024, compared to the corresponding date in 2023 with a stock of 51.8 million pounds. During March 2024, inventory fell 1.7 percent reflecting stable demand despite sports events associated with consumption of chicken wings.

Rhode Island Beef and Veal Inc. and owner Michael Quattrucci were found guilty of fraud by claiming that uninspected meat products had passed federal inspection.  The verdict resulted in a $20,500 fine for the company and three years of federal probation and a $1,000 fine, and one year of federal probation for the owner. 

The USDA-FSIS terminated federal inspection of the plant on August 20th for cause. Rhode Island Beef and Veal continued to process carcasses, fraudulently applying the USDA mark.  Subsequent inspection confirmed the violation resulting in the guilty plea and penalty.

The National Cattlemen’s Beef Association supports the USDA Animal and Plant Health Inspection Service Program to introduce electronic ID ear tags.  The objective is to enhance traceability especially in the event of an outbreak of an exotic disease.  The recent emergence of bovine influenza-H5N1 is an example of how APHIS could regulate and control movement of both lactating and immature cattle to prevent dissemination of the infection.  Previously the need for positive and rapid traceability was demonstrated in investigation of cases of rare spontaneous atypical bovine spongiform encephalopathy.

Although the NCBA is concerned over cost, USDA has provided $15 million in funding to support the transition from existing “dumb” ear tags subject to detachment and fraud to a more effective and secure system.

In a press release dated May 2nd Maple Leaf Foods Inc. (MFI-TO) announced results for Q1 FY 2024 ended March 31st 2023.

The following table summarizes the results for the period compared with the values for the corresponding quarter of the previous fiscal year (Values expressed as US$ x 1,000 except EPS (conversion of CAN$1=US$0.73)

1.  Restructuring charge: Q1 2023, $5.6 million;

2.  Other expenses: Q1 2024, $0.9 million: Q1 2023, $3.1 million

52-Week Range in Share Price:  $15.71  to  $23.09   50-day Moving average  $17.01

Forward P/E 30.5      Beta  0.5

Insider shareholding 40.0%. Institutional shareholding 25.8%

In commenting on Q4 results Curtis Frank president and CEO stated “In the first quarter of 2024, we delivered Adjusted EBITDA of $116 million, 55% higher than the same period last year. With sales growth within our prepared meats portfolio, and a sequential improvement in our meat protein Adjusted EBITDA margin to 10.8%, and a 310 basis point improvement over last year, we took a meaningful step forward toward delivering our full business potential”.

Frank explained,  “The modest decline we saw in overall sales compared to Q1 2023 was primarily a function of sourcing decisions to reduce outside purchases in poultry and pork, impacting sales in the short term while setting us up to deliver on our plans moving forward.

He concluded, “Looking ahead, we expect the momentum in our business to continue to accelerate. Pork headwinds, while still a challenge, are easing, and our attention is squarely on executing our refreshed Strategic Blueprint,” continued Frank. “With a powerful platform of brands, a network of world-class assets and our leadership in sustainability, we have the right strategy and team in place to drive growth in Canada, accelerate our reach in the U.S. and fully realize the benefits of our recent capital investments.”

The Company provided the following comments on strategy and guidance:-

“The Company has combined its Meat and Plant Protein businesses and aligned its organizational structure to focus on its growth potential in key markets, drive operational efficiencies, and provide clear accountability for strategic execution. Based on this realignment and focus as a protein company, as of the first quarter of 2024, Maple Leaf Foods is reporting its business and operational results as a consolidated protein company, to align with how management monitors and measures business performance. With these changes, the Company believes it is positioned to achieve a consolidated Adjusted EBITDA margin target of 14% to 16% in normal market conditions. Previously, the Company's Adjusted EBITDA margin target of 14% to 16% in normal market conditions was solely for meat protein. The Company achieved an Adjusted EBITDA margin for meat protein of 10.8% in the first quarter of 2024”.

“As a consolidated protein company, Maple Leaf Foods has two operating units: Prepared Foods and Pork, which represent on average approximately 75% and 25% of total Company revenue respectively. Prepared Foods combines the operations of prepared meats, plant protein, and poultry, which represent on average approximately 50%, 5% and 20% of total Company revenue respectively”.

It will no longer be able to evaluate the plant-protein business or to confirm that this previous segment achieved profitability. It appears that Maple Leaf Foods has followed the approach of “if you can’t fix it, bury it”!

Seaboard Corporation is the majority shareholder in Butterball LLC with 52.5 percent of equity The subsidiary is ranked as the second largest turkey producer in the U.S.

The Seaboard Corporation SEC 10-Q filing recorded net income from Butterball of $7 million  corresponding to a Q1 net income for Butterball of $13.5 million based on shareholding. The Company statement noted:- “Net income for Butterball decreased $33 million for the three-month period of 2024 compared to the same period in 2023. The decrease in net income was primarily the result of a $38 million decrease in sales due to a 7 percent decrease in the average selling price related to a decline in commodity pricing and a 3 percent decrease in volumes sold. The decrease in sales was partially offset by a 14 percent decrease in production costs, primarily related to lower feed costs. Management is unable to predict market prices for turkey products or the cost of feed for future periods; however, management anticipates this segment will be profitable for the remainder of 2024”.

At the end of FY 2023 on December 31st 2023, Butterball LLC posted assets of $1,120 million, with $172 million represented by goodwill and intangibles.  Given total liabilities of $408 million the shareholders’ equity is $702 of which $365 million accrues to the majority shareholder.

Nan-Dirk Mulder, Senior Analyst at Rabobank anticipates a four to five percent annual growth rate in poultry production in South Asia and Southeast Asia through 2030.  Growth is anticipated due to an increase in population and a growing preference for poultry meat.  His projection suggests that supply will come from domestic production with only Thailand expanding their export market.  Mulder envisages restructuring of poultry production with greater integration and modernization.  Expansion will also involve marketing of poultry meat through a cold chain, disfavoring live-bird markets.

Rabobank recognizes investment opportunities in Southeast and South Asia both in poultry production and the cultivation and processing of oilseeds.

The State Senate of Arizona has enacted a more moderate version of the State House Bill requiring labeling of cell-cultured meat and poultry products.  The House version would have banned the terms “meat” and “poultry” on cell-cultured products.  The amended version will require labeling that specifies that the product was not derived from a live-animal. As a result of the modification, the bill has been transformed from protectionist to informative in intent.