Sanderson Farms, Inc. Reports Results for Fourth Quarter and Fiscal 2012

  Sanderson Farms, Inc. Reports Results for Fourth Quarter and Fiscal 2012

Business Wire

LAUREL, Miss. -- December 18, 2012

Sanderson Farms, Inc. (NASDAQ: SAFM) today reported resultsfor the fourth
quarter and fiscal year ended October 31, 2012.

Net sales for the fourth quarter of fiscal 2012 were $648.4 million compared
with $559.8million for the same period a year ago. For the quarter, the
Company reported net income of $9.3 million, or $0.41 per share, compared with
a net loss of $21.6 million, or $0.97 per share, for the fourth quarter of
fiscal 2011.

Net sales for fiscal 2012 were $2.386 billion compared with $1.978 billion for
fiscal 2011. Netincome for the year totaled $53.9million, or $2.35 per
share, compared with a net loss of $127.1million, or $5.74 per share, for
last year.

"The fourth quarter of fiscal 2012 marked the end of another challenging year
for Sanderson Farms and the poultry industry,” said Joe F. Sanderson, Jr.,
chairman and chief executive officer of Sanderson Farms, Inc. "We reported
record annual sales of $2.386 billion, a 20.6 percent increase over fiscal
2011. However, while poultry markets improved compared to fiscal 2011, grain
prices surged to record levels during August as a result of drought conditions
across much of the corn belt. As a result, the improvement in poultry market
prices was offset in part by higher feed costs. Our increased sales and return
to profitability during the year reflect higher production as we completed the
ramp up to near full production at our Kinston, North Carolina, facility. For
the year, we sold 2.952 billion pounds of dressed poultry, another record,
compared with 2.794 billion pounds in fiscal 2011.”

According to Sanderson, overall market prices for poultry products were higher
in the fourth quarter of fiscal 2012 compared with prices a year ago. As
measured by a simple average of the Georgia dock price for whole chickens,
prices were higher by approximately 7.7 percent in the Company's fourth fiscal
quarter compared with the same period in fiscal 2011, and were higher by
7.3percent for the fiscal year compared with the prior year. The higher
Georgia Dock whole bird price is consistent with steady demand for our retail
chill pack product during this fiscal year. Boneless breast meat prices
averaged 11.6 percent higher in the fourth quarter than the prior-year period.
For fiscal 2012, boneless prices were 9.1 percent higher when compared with
fiscal 2011. Jumbo wing prices averaged $1.58 per pound during the fiscal
year, up 81.2 percent from the average of $0.87 per pound for fiscal 2011. The
average market price for bulk leg quarters decreased approximately one percent
for the quarter, but increased approximately 16.7 percent forfiscal 2012. The
relatively strong dark meat prices reflect good export demand during the year.
Pricespaid for corn and soybean meal, the Company’s primary feed ingredients,
increased duringthe year and were up 11.6 percent and 39.7 percent,
respectively, during the fourth fiscal quarter when compared with the fourth
quarter a year ago. For the year, total feed costs in broiler flocks processed
were 1.4 percent higher than fiscal 2011.

“The start-up of our new Kinston, North Carolina, poultry complex continued
during the first half of fiscal 2012,” Sanderson continued. “The increased
production at the Kinston plant during fiscal 2012 more than offset the four
percent production cut instituted at our other plants in January2012 to
better balance our production with our customers’ demand. Because we expect
demand from our food service customers to remain soft until American consumers
regain their confidence and the employment outlook brightens, and in light of
continued high prices for grain anduncertainty regarding supply, we have
instituted the additional two percent production cut weannounced in August of
2012. We currently plan to leave our production cut in place through fiscal
2013.”

Sanderson concluded, “We are pleased that our profitability during fiscal 2012
allowed us tosignificantly reduce outstanding debt and strengthen our balance
sheet. As a result, we believe weare well positioned to continue our growth
strategy once market conditions improve. As of October 31, 2012, our balance
sheet reflected $896.5 million in assets, stockholders’ equity of
$550.1million and net working capital of $262.2 million. Our total long-term
debt at year-end was $150.2 million. A strong balance sheet is an important
advantage in our industry, especially given today’s economic environment, and
provides us with the financial strength to not only support our growth
strategy, but also to manage through challenging conditions. We deeply
appreciate the hard work and dedication to excellence of everyone associated
with our Company, including our employees and growers.”

Sanderson Farms will hold a conference call to discuss this press release
today, December18,2012, at 10:00 a.m. Central, 11:00 a.m. Eastern. Investors
will have the opportunity to listen to a live Internet broadcast of the
conference call through the Company's Web site at www.sandersonfarms.com or
through www.earnings.com. To listen to the live call, please go to the
Website at least 15 minutes earlyto register, download, and install any
necessary audio software. For those who cannot listen to thelive broadcast,
an Internet replay will be available shortly after thecall andcontinue
through December 28,2012. Those without Internet access or who prefer to
listen via telephonemay call 1-888-256-9075, access code 3973364.

Sanderson Farms, Inc. is engaged in the production, processing, marketing and
distribution of fresh and frozen chicken and other prepared food items. Its
shares trade on the NASDAQ Global Select Market under the symbol SAFM.

This press release includes forward-looking statements within the meaning of
the “safe harbor” provisions of the Private Securities Litigation Reform Act
of 1995, as amended. Forward-looking statements are based on a number of
assumptions about future events and are subject to various risks,
uncertainties and other factors that may cause actual results to differ
materially fromthe views, beliefs, projections and estimatesexpressed in
such statements. Theserisks, uncertainties and other factors include, but are
not limited to those discussed under“Risk Factors” inthe Company’s Annual
Report on Form 10-K for the year ended October 31,2012, and the following:

(1) Changes in the market price for the Company’s finished products and feed
grains, both of whichmay fluctuate substantially and exhibit cyclical
characteristics typically associated with commodity markets.

(2) Changes in economic and business conditions, monetary and fiscal policies
or the amount of growth, stagnation or recession in the global or U.S.
economies, either of which may affect the value of inventories, the
collectability of accounts receivable or the financial integrity of customers,
and theability of the end user or consumer to afford protein.

(3) Changes in the political or economic climate, trade policies, laws and
regulations or the domesticpoultry industry of countries to which the Company
or other companies in the poultry industry ship product, and other changes
that might limit the Company’s or the industry’s access to foreign markets.

(4) Changes in laws, regulations, and other activities in government agencies
and similar organizations applicable to the Company and the poultry industry
and changes in laws, regulations and other activities in government agencies
and similar organizations related to food safety.

(5) Various inventory risks due to changes in market conditions including, but
not limited to, the risk that market values of live and processed poultry
inventories might be lower than the cost of such inventories, requiring a
downward adjustment to record the value of such inventories at the lower of
cost or market as required by generally accepted accounting principles.

(6) Changes in and effects of competition, which is significant in all markets
in which the Company competes, and the effectiveness of marketing and
advertising programs. The Company competes with regional and national firms,
some of which have greater financial and marketing resources thanthe Company.

(7) Changes in accounting policies and practices adopted voluntarily by the
Company or required tobe adopted by accounting principles generally accepted
in the United States.

(8) Disease outbreaks affecting the production performance and/or
marketability of the Company’s poultry products, or the contamination of its
products.

(9) Changes in the availability and cost of labor and growers.

(10) The loss of any of the Company’s major customers.

(11) Inclement weather that could hurt Company flocks or otherwise adversely
affect its operations, or changes in global weather patterns that could impact
the supply and price of feed grains.

(12) Failure to respond to changing consumer preferences.

(13) Failure to successfully and efficiently start up and run a new plant or
integrate any business theCompany might acquire.

Readers are cautioned not to place undue reliance on forward-looking
statements made byoron behalf of Sanderson Farms. Each such statement speaks
only as of the day it was made. The Company undertakes no obligation to update
or to revise any forward-looking statements. Thefactors described above
cannot be controlled by the Company. When used in this press release or in the
related conference call,thewords “believes”, “estimates”, “plans”,
“expects”, “should”, “outlook”, and “anticipates” and similarexpressions as
they relate to the Company or its management are intended to
identifyforward-looking statements. Examples of forward-looking statements
include statements ofthe Company’s belief about future demand for its
products, future prices for feed grains and future production levels.


SANDERSON FARMS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)


                    Three Months Ended         Twelve Months Ended
                     October 31,                 October 31,
                     2012         2011          2012           2011
                     (Unaudited)   (Unaudited)
Net sales            $ 648,379     $ 559,842     $ 2,386,105     $ 1,978,085
Costs and
expenses:
Cost of sales          612,547       562,347       2,212,692       2,085,248
Live inventory       0               9,000       0                 9,000
adjustment
Selling, general       20,325        17,984        77,097          72,217
and administrative
                       632,872       589,331       2,289,789       2,166,465

Operating income       15,507        (29,489 )     96,316          (188,380  )
(loss)

Other income
(expense):
Interest income      8             3               17              41
Interest expense       (1,814  )     (2,443  )     (9,201    )     (6,413    )
Other                0             9               (560      )     510
                       (1,806  )     (2,431  )     (9,744    )     (5,862    )

Income (loss)
before income          13,701        (31,920 )     86,572          (194,242  )
taxes
Income tax expense     4,354         (10,358 )     32,628          (67,165   )
(benefit)
Net income (loss)    $ 9,347       $ (21,562 )   $ 53,944        $ (127,077  )

Basic earnings       $ 0.41        $ (0.97   )   $ 2.35          $ (5.74     )
(loss) per share
Diluted earnings     $ 0.41        $ (0.97   )   $ 2.35          $ (5.74     )
(loss) per share
Dividends per        $ 0.17        $ 0.17        $ 0.68          $ 0.68
share
                                                                             


SANDERSON FARMS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)


                                          October 31,   October 31,
                                           2012           2011

ASSETS
Current assets:
Cash and cash equivalents                  $ 27,802       $ 11,075
Accounts receivable, net                     98,022         94,021
Inventories                                  235,912        211,753
Refundable income taxes                      4,467          88,512
Deferred income taxes                        3,945          6,357
Prepaid expenses                             27,639         26,240
Total current assets                         397,787        437,958

Property, plant and equipment                985,198        939,535
Less accumulated depreciation                (489,885 )     (434,030 )
                                             495,313        505,505

Other assets                                 3,353          5,058

Total assets                               $ 896,453      $ 948,521


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable                           $ 82,755       $ 66,761
Accrued expenses                             42,082         35,795
Current maturities of long-term debt         10,757         11,106
Total current liabilities                    135,594        113,662

Long-term debt, less current maturities      150,212        273,670
Claims payable                               4,000          3,300
Deferred income taxes                        56,572         50,989
Stockholders' equity:
Common stock                                 22,969         22,872
Paid-in capital                              135,283        130,528
Retained earnings                            391,823        353,500
Total stockholders’ equity                   550,075        506,900
Total liability and stockholders’ equity   $ 896,453      $ 948,521
                                                                     

SAFM-G

Contact:

Sanderson Farms, Inc.
Mike Cockrell, 601-426-1454
Treasurer & Chief Financial Officer
 
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