# Dear Fellow Pilgrim's Shareholders

_Source: `DeepSeekOCR_Ardian_pruned_1k/consumer-defensive-packaged-foods/NASDAQ_PPC_2020/NASDAQ_PPC_2020.mmd` · pages 60-66_

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Dear Fellow Pilgrim's Shareholders:

The year 2020 presented one of the most significant business challenges across many industries here in the United States and globally. Safety is paramount at Pilgrim's and our team members responded admirably to the unprecedented conditions, guided by three principles: an uncompromising commitment to the safety of our team members; recognizing and embracing our responsibility to provide quality food for the world; and endeavoring to provide continued employment opportunities and benefits to our team members during a time of unprecedented economic upheaval.

We are continuously adapting our global operations to the changes in customer demand, while adjusting our facilities to be able to maintain operations at all our plants, diligently implementing precautionary and proactive steps to better safeguard the health and wellness of each team member. Countering the significant challenges of 2020, our portfolio strategy has continued to generate strong relative performance, outpace the competition and deliver solid results for the full-year. These results were driven by our resilient business models across all business units, including the United States, Mexico and Europe. The unique challenges as a result of Covid-19 presented an opportunity to demonstrate the value and strength of Pilgrim's well-diversified portfolio strategy, and our ability to generate more consistent results despite specific volatility in our markets. We are continuing to further evolve our strategy of developing a differentiated portfolio of diverse, complementary business models, while continuing to relentlessly pursue operational excellence, becoming a more valued partner with our Key Customers, and creating an environment for safe people, safe products and healthy attitudes.

During 2020, our U.S. retail and QSR businesses performed extremely well due to strong demand from our Key Customers and across our broader customer base. Operationally, our commodity large bird deboning also continued to improve despite the tough market conditions. Our Prepared Foods business remained resilient considering the challenging demand environment, and we believe the business continues to develop in anticipation of stronger results in 2021, reflecting the investments made over the past few years. Our legacy European operations continued to evolve and we have further strengthened our ability to adapt a model aimed at improved mitigation of future input cost challenges. Integration of our newly acquired European operations is on track, and the business has continued to contribute robust positive results. In Mexico, the market was very weak in the first half of last year but rebounded strongly during the second half, once again producing a solid performance for the full year in 2020. We continue to develop our brands in all regions, fulfilling consumer demand with higher value offerings that help our customers to grow in alignment with new, emerging consumer trends.

For fiscal year 2020, we achieved net sales of \(12.1 billion while generating net income of \)94.8 million, and a GAAP EPS of \(0.39. Our adjusted EBITDA* (Earnings Before Interest, Taxes Depreciation and Amortization) was \)788 million, or a 6.5% margin.

Our strategy is making a measurable difference – we believe the results are evident in all regions and segments in which we operate. For the long term, we expect our competitive advantage to be sustainable, supporting our vision to become the best and most respected company in our industry, while creating the opportunity of a better future for our team members.

Thank you for your continued support.

![](images/60_0.jpg)

Fabio Sandri

President and Chief Executive Officer

* For a reconciliation of this non-GAAP financial measure to the comparable GAAP measure, please see Annex A to this proxy statement.

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