Sanderson Farms, Inc. Reports Results for Second Quarter of Fiscal 2013 Business Wire LAUREL, Miss. -- May 30, 2013 Sanderson Farms, Inc. (NASDAQ: SAFM) today reported resultsfor its second fiscal quarter and six months ended April30,2013. Net sales for the second quarter of fiscal 2013 were $621.2 million compared with $595.0million for the same period a year ago. For the quarter, net income was $24.4 million, or $1.06 pershare, compared with net income of $23.9 million, or $1.04 per share, forthe second quarter of fiscal 2012. Net sales for the first six months of fiscal 2013 were $1,217.0 million compared with $1,112.9million for the same period of fiscal 2012. Net income for the first half of the year totaled $17.4million, or $0.76 per share, compared with net income of $15.9 million, or $0.69pershare, for the first six months of last year. “The results for our second quarter of fiscal 2013 reflect improved market conditions driven primarily by an overall increase in demand for poultry products," said Joe F. Sanderson, Jr., chairman and chiefexecutive officer of Sanderson Farms, Inc. “Our net sales were 4.4 percent higher compared with the second quarter of fiscal 2012, reflecting higher average sales prices of chicken. While our volumes reflect the production cuts we put in place last fall, demand for chicken remains strong from our retail grocery store and export customers. In addition, while customer traffic through food service establishments remains challenged by macroeconomic factors, several new chicken items on quick serve menus and chicken promotions in casual dining restaurants, coupled with relatively high priced beef, contributed to better market prices during the quarter for products produced at our food service plants. “Our profitability for the second quarter continued to be adversely affected by relatively high feed costs,” added Sanderson. “Feed costs in flocks processed increased 14.3 percent compared with last year’s second fiscal quarter, and remain high relative to historical costs. Because of the tight supply of both corn and soybeans, we expect grain prices to remain high and volatile at least until markets get some visibility on the quantity and quality of this year’s corn and soybean crops. The late planting season caused by cold and wet weather across much of the corn belt is contributing to price volatility. That said, we have priced most all of our grain needs through July at levels that will allow us to slightly reduce our feed costs per pound each successive month through July.” According to Sanderson, overall market prices for poultry products were higher during the second quarter of fiscal 2013 compared with the same quarter a year ago. As measured by a simple average of the Georgia dock price for whole chickens, prices increased approximately 9.9percent inthe Company's second fiscalquarter compared with the same period in 2012 and remain at recordlevels. Bulk leg quarter market prices were flat with last year's second quarter, and continue toreflectstrong export demand. Boneless breast meat prices during the second quarter were 14.2percent higher than the prior year period, and have continued to move higher in May. Jumbo wing prices were down 4.4 percent for the second quarter of 2013 compared with the same period lastyear. Prices paid for corn and soybean meal, the Company’s primary feed ingredients, increased15.9 percent and 37.2 percent, respectively, compared with the second quarter of fiscal2012. “Looking ahead, we are reasonably optimistic as we head into the summer months and what is typically a period of better demand for chicken. While grain costs remain above historical levels, demand for chicken products is strong. Weekly broiler egg sets continue to run slightly above last year’s numbers, but breeder placements remain lower and it appears the reduced size of the breeder flock will constrain production over the short term despite higher industry returns. While macroeconomic conditions have continued to affect consumer behavior, market prices for boneless breast meat sold to our food service customers improved through April and May, and market prices for retail grocery store products have also moved higher. Regardless of market conditions, however,we will maintain our focus on our operating performance and sales execution,” Sanderson concluded. Sanderson Farms will hold a conference call to discuss this press release today, May30,2013, 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 theWeb site at least 15 minutes early to register and download and install any necessary audio software. For those who cannot listen to the live broadcast, an Internet replay will be available shortly after thecall and continue through June 30, 2013. Those without Internet access may listen and participate in the call by dialing 888-596-2572, confirmation code 6119362. Sanderson Farms, Inc. is engaged in the production, processing, marketing and distribution of fresh and frozen chicken and other prepared chicken 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 estimates expressed in such statements. Theserisks, uncertainties and other factors include, but are not limited to, those discussed under“Risk Factors” inthe Company’s Quarterly Report on Form 10-Q for the quarter ended April 30,2013, and the following: (1) Changes in the market price for the Company’s finished products and feed grains, both of which may 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 the ability of the end user or consumer to afford protein. (3) Changes in the political or economic climate, trade policies, laws and regulations or the domestic poultry 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 than the Company. (7) Changes in accounting policies and practices adopted voluntarily by the Company or required to be 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 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 the Company 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 futureearnings, production levels, grain prices, supply and demand factors, and other industry conditions. SANDERSON FARMS, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Income (Unaudited) (In thousands, except per share amounts) Three Months Ended Six Months Ended April 30, April 30, 2013 2012 2013 2012 Net sales $ 621,195 $ 595,046 $ 1,216,955 $ 1,112,872 Costs and expenses: Cost of sales 562,233 535,901 1,147,100 1,044,905 Selling, general and 19,832 18,165 40,397 36,068 administrative 582,065 554,066 1,187,497 1,080,973 Operating 39,130 40,980 29,458 31,899 income Other income (expense): Interest 4 4 7 6 income Interest (1,807 ) (2,426 ) (3,612 ) (5,388 ) expense Other (120 ) (1 ) 51 (565 ) (1,923 ) (2,423 ) (3,554 ) (5,947 ) Income before 37,207 38,557 25,904 25,952 income taxes Income tax 12,836 14,692 8,476 10,076 expense Net income $ 24,371 $ 23,865 $ 17,428 $ 15,876 Basic earnings $ 1.06 $ 1.04 $ 0.76 $ 0.69 per share Diluted earnings per $ 1.06 $ 1.04 $ 0.76 $ 0.69 share Dividends per $ 0.17 $ 0.17 $ 0.34 $ 0.34 share SANDERSON FARMS, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (In thousands) April 30, October 31, 2013 2012 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 24,087 $ 27,802 Accounts receivable, net 113,092 98,022 Inventories 226,590 235,912 Refundable income taxes 0 4,467 Deferred income taxes 1,895 3,945 Prepaid expenses and other current assets 27,466 27,639 Total current assets 393,130 397,787 Property, plant and equipment 1,009,432 985,198 Less accumulated depreciation (515,475 ) (489,885 ) 493,957 495,313 Other assets 3,142 3,353 Total assets $ 890,229 $ 896,453 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable and accrued expenses $ 114,418 $ 124,837 Current maturities of long-term debt 10,757 10,757 Total current liabilities 125,175 135,594 Long-term debt, less current maturities 139,840 150,212 Claims payable 9,900 4,000 Deferred income taxes 54,378 56,572 Stockholders' equity: Common stock 23,015 22,969 Paid-in capital 136,495 135,283 Retained earnings 401,426 391,823 Total stockholders’ equity 560,936 550,075 $ 890,229 $ 896,453 SAFM-G Contact: Sanderson Farms, Inc. Mike Cockrell, 601-649-4030 Treasurer & Chief Financial Officer
Sanderson Farms, Inc. Reports Results for Second Quarter of Fiscal 2013
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