Sanderson Farms, Inc. Reports Results for Second Quarter of Fiscal 2013
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
“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
(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
(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
SANDERSON FARMS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(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
Cost of sales 562,233 535,901 1,147,100 1,044,905
general and 19,832 18,165 40,397 36,068
582,065 554,066 1,187,497 1,080,973
Operating 39,130 40,980 29,458 31,899
Interest 4 4 7 6
Interest (1,807 ) (2,426 ) (3,612 ) (5,388 )
Other (120 ) (1 ) 51 (565 )
(1,923 ) (2,423 ) (3,554 ) (5,947 )
Income before 37,207 38,557 25,904 25,952
Income tax 12,836 14,692 8,476 10,076
Net income $ 24,371 $ 23,865 $ 17,428 $ 15,876
Basic earnings $ 1.06 $ 1.04 $ 0.76 $ 0.69
earnings per $ 1.06 $ 1.04 $ 0.76 $ 0.69
Dividends per $ 0.17 $ 0.17 $ 0.34 $ 0.34
SANDERSON FARMS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
April 30, October 31,
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 )
Other assets 3,142 3,353
Total assets $ 890,229 $ 896,453
LIABILITIES AND STOCKHOLDERS’ EQUITY
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
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
Sanderson Farms, Inc.
Mike Cockrell, 601-649-4030
Treasurer & Chief Financial Officer
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