# Dear Fellow Pilgrim's Shareholders

_Source: `DeepSeekOCR_Ardian_pruned_1k/consumer-defensive-packaged-foods/NASDAQ_PPC_2017/NASDAQ_PPC_2017.mmd` · pages 58-64_

---

Dear Fellow Pilgrim's Shareholders:

Our team continued to generate strong, well-balanced consolidated results during 2017. Our U.S. and Mexico operations were solid despite logistical challenges in Q4 due to the after-effects from natural events in Puerto Rico, Mexico and the U.S., while our newly acquired U.K. and continental Europe operations were consistent. The balanced performance once again demonstrated the strength and diversity of our portfolio, and is what fundamentally differentiates us from the competition, giving us the potential to produce consistent results and generate higher margins over time. Last year, we achieved some important milestones to build on the strategy to improve upon our existing portfolio, generate more value for our shareholders, and move forward in our vision of becoming the best and most respected company in our industry, creating the opportunity of a better future for our team members. Also, faced with significant challenges we are very proud of our team members who had worked tirelessly to continue the operations of our facilities while assisting with rebuilding their local communities.

In 2017 we completed several strategic capital investments to further increase our product portfolio differentiation, strengthen key customer relationships, and improve our margin profile. Our Sanford, NC facility is operating well following the conversion from commodity large bird debone to USDA-certified organic tray pack processing. Together with the GNP acquisition, the conversion contributes to our leadership in premium-branded and NAE chickens while putting us ahead of our internal target to offer a differentiated portfolio to our key customers. Our purchase of Moy Park created the largest global chicken and chicken-based Prepared Foods company while adding more diversification to our existing portfolio, increasing our footprint, and generating improved margin performance and reducing volatility. The acquisition aligns well with our strategic priorities as we continue expanding our geographical and brands footprint, and extending our global poultry leadership position into attractive new markets while providing us a solid platform in the region for future growth.

We continue to invest in facility improvements and diversify our portfolio by improving mix and offering more differentiated, innovative products to serve key customers, reduce the impact of commodity markets, and further raise margins. Reflecting our strong cash flow generation capability, and a focus on maximizing capital structure and shareholder value, we have deployed \(2.2 billion of cash in special dividends, \)1.8 billion in M&A, $1.2 billion in capital expenditures, and over $200 million in share buyback during the past five years.

For fiscal year 2017, we achieved Net Revenues of \(10.77 billion while generating Net Income of \)695 million, and a record GAAP EPS of \(2.79. Our adjusted EBITDA* (Earnings Before Interest, Taxes Depreciation and Amortization) reached \)1.39 billion, or a 12.9% margin, remaining in the double digit range and compares favorably with historical levels.

<--- Page Split --->

We look forward to another great year in 2018. With GNP and the newly acquired U.K. and continental Europe operations, we are much better represented globally and are well positioned to improve our margin profile and reduce volatility despite specific market conditions. We will continue to look for opportunities in refining our portfolio to pursue differentiated, customized products to fulfill our key customers' needs in support of our vision of becoming the best and most respected company in our industry.

Thank you for your continued support.

![](images/59_0.jpg)

William W. Lovette

Chief Executive Officer and President
April 9, 2018

* As defined in our reconciliation to GAAP within our annual report on Form 10-K for the period ended December 31, 2017 and supporting 8-Ks.