# Dear Fellow Pilgrim's Shareholders

_Source: `DeepSeekOCR_Ardian_pruned_1k/consumer-defensive-packaged-foods/NASDAQ_PPC_2018/NASDAQ_PPC_2018.mmd` · pages 90-96_

---

Dear Fellow Pilgrim's Shareholders:

Our Strategy, with the diverse portfolio of bird sizes, geographical market exposure, our culture and our people, are what fundamentally differentiate us from the competition, giving us the potential to reduce volatility and generate higher margins over time. During 2018 our team members have remained focused on executing and delivering the best performance possible against differing market conditions across our global footprints. In the U.S. we endured a very challenging environment in commodity chicken, slower than expected recovery from weather disruptions at some complexes, partially offset by an improvement in operating results from Prepared Foods. In Europe we improved the performance through expected synergies but were impacted by higher feed inputs as a result of a drought that will be passed to our prices in coming quarters. Our Mexican operations produced a very strong first half, a weaker than seasonal Q3, followed by a rebound in Q4.

We continue to differentiate our portfolio and reduce the share of commodity sales to further reduce the impact of market fluctuation into our margins and improve our relative performance to competitors. We have grown revenues to Key Customers by over 100% the last seven years, supporting their growth with a full range of products. We have been increasing the percentage of specialty birds (including NAE and organic) and expect them to be over 40% of our US fresh portfolio during 2019, up from less than 20% just a few years ago. Prepared Foods are accelerating in momentum and grew 12% in revenue and 15% in volume, reflecting the results of the investments we made in the plants, operations and people to expand our capacities and capabilities to service customer expectations.

The integration in Europe is better than expected and we have extracted both operating and product synergies with our other geographical facilities. Margins have increased since the acquisition, and we are excited about our growth prospects. In Mexico, our Prepared Foods business is growing at a double digit rate and generating excellent results under both premium Pilgrim's and Del Dia, both brands have continued to receive very favorable acceptance by consumers at retail, club stores, and QSRs.

For fiscal year 2018, we achieved Net Revenues of \(10.94 billion while generating Net Income of \)248 million, and a GAAP EPS of \(1.00. Our adjusted EBITDA* (Earnings Before Interest, Taxes Depreciation and Amortization) was \)798 million, or a 7.3% margin.

The strategy we implemented eight years ago have made a tangible difference – the result is evident in all three geographic regions in which we operate. It magnifies our relentless pursuit of operational excellence and presence in diverse and differentiated business models, segments, channels, and geographies. For the long term, we expect our competitive advantage to sustain.

Thank you for your continued support.

![](images/90_0.jpg)

Jayson Penn

Chief Executive Officer and President