Q2 2008 Pilgrim's Pride Earnings Conference Call - Final.

Original Source: FD (FAIR DISCLOSURE) WIRE

OPERATOR: Good morning and welcome to the Pilgrim's Pride conference call to review the company's financial results for the second quarter of fiscal 2008. At the company's request, this conference call is being recorded. Please note that slides referenced during today's call are available for downloading from the Investor Relations's section of the company's website at www.pilgrimspride.com.

Beginning today's call will be Gary Rhodes, Vice President of Corporate Communications and Investor Relations for Pilgrim's Pride. Mr. Rhodes.

GARY RHODES, VP CORPORATE COMMUNICATIONS AND INVESTOR RELATIONS, PILGRIM'S PRIDE: Good morning and thank you for joining us today as we review our financial results for the second fiscal quarter and the year-to-date. Earlier today we issued a press release that provides an overview of our financial performance for these periods. If you have not already seen this release, a copy is available on our website along with other downloadable information. Joining me on today's call are Clint Rivers, President and CEO; Bob Wright, Chief Operating Officer; and Rick Cogdill, our Chief Financial Officer. On today's call we will review our second quarter financial results and the key factors of our performance during the period. We'll also talk about some of the operating challenges facing our industry and the steps we're taking to return to profitability. After our prepared remarks, we will be happy to take any questions that you may have.

Before I turn the call over to Clint, I'll remind everyone that today's call contains certain forward-looking statements. These include our expectations of future results, sales and cost of sales information and market dynamics. Actual results might differ materially from those projected in these forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from these forward-looking statements is contained in today's press release as well as in our forward-looking statement and risk factor disclosures contained in our forms 10-K, 10-Q and 8-K as filed with the SEC. Additionally, I would like to remind everyone that the second quarter of fiscal year 2007 was the first full quarter which included the results of Gold Kist. Accordingly, at times we will be discussing the results of our operations compared to the pro forma amounts for the prior six-month period which includes the full effect of that acquisition as if it had been included in our actual reported results for the entire period. I will now turn the call over to Clint to begin our prepared remarks.

CLINT RIVERS, PRESIDENT, CEO, PILGRIM'S PRIDE: Thanks, Gary. Good morning, everyone. Pilgrim's Pride today reported a net loss of $111.4 million, or $1.67 per share, on sales of $2.1 billion for the second quarter of fiscal 2008. Of this loss, $0.17 per share was related to restructuring and asset impairment charges which will be discussed in greater detail later. These results compared to a net loss of $40.1 million or $0.60 per share on sales of $2 billion for the second fiscal quarter fiscal 2007. Rick will go into more detail on the numbers later in the call, but our financial results in the second quarter of fiscal 2008 reflect the significant unprecedented challenges facing our company and industry from record high feed costs and an oversupply of chicken in the United States. Our cost for corn and soybean meal in the quarter climbed $200 million when compared to the same period a year ago. As the average price for a bushel of corn increased 29% and soybean meal gained more than 63%.

Based on the actual costs incurred during the first half of this fiscal year and the current commodity futures markets for the remainder, the company's total feed ingredient costs for fiscal 2008 would be more than $800 million higher than last fiscal year. To help us respond more quickly to these increasing costs, we have taken aggressive steps to shorten our fixed price sales contracts to 90 day periods in most cases, down from the standard one-year term previously. Bob will talk about this in a little more detail in a few minutes. In addition, as we announced previously, we are closing our chicken processing plant in Siler City, North Carolina and six distribution centers located throughout the United States. Three weeks ago we announced that we had taken (inaudible - audio cut out) by 5% year-over-year for the second half of fiscal 2008. This reduction, which already includes the closing of Siler City, will remain in effect until average industry margins return to more normalized levels.