Financial Results in Focus: Industrias Bachoco, S.A.B. de C.V. (NYSE: IBA)

On Thursday, Shares of Industrias Bachoco, S.A.B. de C.V. (NYSE: IBA) gained 1.41% to $58.83. The stock opened its trade at $58.50 and after floating in a price range of $57.77 to $59.30; the stock grabbed the investor’s attention and traded 4,085 shares as compared to its average daily volume of 9.85K shares. The stock’s institutional ownership stands at 3.90%.

Industrias Bachoco, S.A.B. de C.V., “Bachoco” or “the Company”, (NYSE: IBA; BMV: Bachoco) declared recently its unaudited results for the fourth quarter (“4Q17”) and 2017 year (“2017”) results ending December 31, 2017.

QUARTERLY RESULTS:

The Company’s 4Q17 net sales totaled $15,039.10M, $832.60M or 5.9% more than $14,206.60M stated in 4Q16.  The increase is a mainly result of more volume sold when contrast to 4Q16. In 4Q17, sales of our U.S. operations represented 31.7% of our total sales; this compares with 27.7% it represented in 4Q16.  Most of the increase comes from the integration of Albertville Quality Foods (AQF).

In 4Q17, the cost of sales totaled $12,808.80M, $9230M or 7.8% higher than $11,885.90M stated in 4Q16. The increase in cost of sales is mainly attributed to higher volume sold and a mix effect, because of higher percentage of our US operation as we integrated AQF. The gross profit was $230.40M with a gross margin of 14.8% in 4Q17.  The gross profit is higher than the $2,320.70M stated in 4Q16 and lower than the gross margin of 16.3% stated in 4Q16.

Total SG&A expenses in 4Q17 were $1,510.20M, $188.30M or 14.2% more than the $1,321.90M stated in 4Q16, this increase is due mainly to higher volume sold and one-time expenses in our US operation as part of the AQF integration process. Total SG&A expenses as a percentage of net sales represented 10.0% in 4Q17 contrast to 9.3% in 4Q16.

Operating income in 4Q17 totaled $765.60M with an operating margin of 5.1%, a decrease when contrast to operating income of $1,017.20M and a 7.2% operating margin stated in 4Q16.

In 4Q17, the Company stated net financial income of $527.30M, contrast to income of $327.00M stated in the same period of 2016. Total taxes for the 4Q17 were ($182.60)M, contrast with total taxes of $379.70M in the same period of 2016.  In 4Q17 we recognize a positive effect in deferred tax as a result of the fiscal change approved by the US government at the end of the year.

NET INCOME

The net income for 4Q17 was $1,475.50M, representing a basic and diluted income of $2.46 pesos per share, contrast with a net income of $964.60M, $1.61 pesos of basic and diluted income per share in 4Q16. This income represents a net margin of 9.8% and 6.8% for 4Q17 and 4Q16, respectively.

EBITDA in 4Q17 reached $1,074.30M, representing an EBITDA margin of 7.1%, contrast to an EBITDA of $1,293.40M in 4Q16, with an EBITDA margin of 9.1%.

NET VOLUME SOLD BY SEGMENT

In 2017, net sales totaled $58,056.50M, $6,036.20M or 11.6% more than the $52,020.30M stated in the same period of 2017. The sales increase is mainly attributed to higher volume sold and higher prices in poultry. In 2017, sales of our U.S. operations represented 28.5% of our total sales, contrast with 25.8% in 2016.

ACCUMULATED OPERATING RESULTS

In 2017, the cost of sales totaled $47,536.50M, $4,901.50M or 11.5% higher than the $42,635.10M stated in 2016, mainly as a result of higher volume sold, higher inflation rate in Mexico and a mix effect, because of higher percentage of our US operation.

As a result, we reached a gross profit of $10,520.00M and a gross margin of 18.1% in 2017, which is higher than $9,385.20M of gross profit and a margin of 18.0% reached in the same period of 2016.

Total SG&A expenses in 2017 were $5,415.80M, $567.90M or 11.7% more than the $4,847.90M stated in 2016. Total SG&A expenses as a percentage of sales represented 9.3% in 2017 contrast to 9.3% in 2016.

In 2017, we had other income of $82.10M, contrast with other income of $260.20M stated in 2016.

The operating income in 2017 was $5,186.30M, which represents an operating margin of 8.9%, which is higher than the operating income of $4,797.60M but lower than the operating margin of 9.2% in 2016.

The net financial income in 2017 was $747.50M; lower when contrast to net financial income of $797.00M in 2016.

Total taxes were $1,084.70M for 2017.  These taxes include $1,238.50M of income tax and ($153.80)M of deferred income taxes. This figure compares to total taxes of $1,643.40M, which includes income taxes of $1,260.5 and $382.90M of deferred income taxes in 2016.

All the above result in a net income of $4,849.10M or 8.4% of net margin for 2017, which represents $8.07 pesos of earnings per share, meanwhile in 2016 the net income totaled $3,951.20M, 7.6% of the net margin and $6.58 pesos of net income per share.

EBITDA in 2017 reached $6,319.00M, representing an EBITDA margin of 10.9%, contrast to an EBITDA of $5,777.10M in 2016, with an EBITDA margin of 11.1%.

BALANCE SHEET:

Cash and equivalents as of December 31st, 2017 totaled $17,240.1; $1,588.60M more than the level we had on December 31st, 2016.

Total debt as of December 31st, 2017 was $5,260.40M, lower when contrast to $5,547.90M stated as of December 31, 2016.

Net cash as of December 31, 2017 was $11,979.70M, higher when contrast with net cash of $10,103.60M as of December 31, 2016.

Total CAPEX for 2017 was $3,479.30M and $2,459.70M in 2016. This was mainly allocated towards organic growth and productivity projects across all our facilities and as we also include here our recent acquisitions.

IBA has a market value of $2.95B while its EPS was booked as $4.66 in the last 12 months. The stock has 50.07M shares outstanding. In the profitability analysis, the company has gross profit margin of 18.50% while net profit margin was 7.20%. Beta value of the company was 0.45; beta is used to measure riskiness of the security. Analyst recommendation for this stock stands at 2.00.

Melinda Duque

Finance Reporter

I am Melinda Duque and I give “The Stock Gem” an insight into the most recent news hitting the “Financial” sector in Wall Street. I have been an independent financial adviser for over 11 years in the city and in recent years turned my experience in finance and passion for journalism into a full time role. I perform analysis of Companies and publicize valuable information for shareholder community.

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