Pilgrim's Pride Corp. announced this week a strategic capital investment plan to enhance growth with key customers and expand production of the Pilgrim's Pierce Chicken brand. The company said the $190 million strategy, initiated in the fourth quarter of 2015, is part of a focused effort to reinvest cash flow back into the business to support sustained margin growth and improve efficiencies.
"We believe one of our competitive advantages is the valued partnership we provide to key customers," Bill Lovette, Pilgrim’s president and chief executive officer, said. "Our cash flow reinvestment plan will present opportunities for our customers to accelerate sales, improve profitability and grow their businesses. Importantly, this effort redirects cash flow back into an area of core business strength in order to maximize return on capital and enhance shareholder value."
The company said the cash flow reinvestment plan is tailored to meet customer needs through targeted capital spending in feed production, fresh chicken and prepared foods, including case ready. Strategic investments within the plan include, but are not limited to:
- An $18 million investment at a Pilgrim's case-ready facility to streamline deboning and packaging processes;
- A $25 million investment at the Pilgrim's Moorefield, W.Va., prepared foods facility to enhance existing fully cooked chicken lines and add an additional line to meet growth demands for the Pierce Chicken brand;
- A $35 million investment to acquire property and construct a new feed mill in Nashville, Ark., to lower feed costs, enhance feed conversion and improve live poultry performance, and
- A $20 million investment at the Pilgrim's Mayfield, Ky., poultry complex to re-engineer the facility to improve its value-added product mix in alignment with the needs of a key customer. The project will result in the addition of approximately 150 new jobs in 2016.
"We are excited to have the opportunity to leverage our strong balance sheet to reinvest into our company," Fabio Sandri, Pilgrim’s chief financial officer, said. "Our strategy remains to explore every opportunity at our disposal to grow our business and create shareholder value.”
The total $190 million cash flow reinvestment represents an amount greater than the company's depreciation allowance, which Pilgrim's said further demonstrates its willingness to invest for future success.