Sanderson Farms, Inc. Reports Results for Third Quarter of Fiscal 2013
LAUREL, Miss. -- August 27, 2013
Sanderson Farms, Inc. (NASDAQ: SAFM) today reported results forthe third
fiscal quarter and nine months ended July 31, 2013.
Net sales for the third quarter of fiscal 2013 were $739.0 million compared
with $624.9 million for the same period a year ago. For the quarter, the
Company reported net income of $67.9 million, or$2.95 per share, compared
with net income of $28.7 million, or $1.25 per share, for the third quarter of
Net sales for the first nine months of fiscal 2013 were $1,955.9 million
compared with $1,737.7 millionfor the first nine months of fiscal 2012. Net
income for the first nine months of fiscal 2013 totaled $85.3million, or
$3.71 per share, compared with net income of $44.6million, or $1.94per
share, forthe firstnine months of last year.
“Sanderson Farms’ financial results for the third quarter of fiscal 2013
reflect improved market conditions when compared to last year’s third
quarter,” said Joe F. Sanderson, Jr., chairman and chief executive officer of
SandersonFarms, Inc. “Market prices for poultry products were higher than the
third quarter of fiscal 2012, as the Georgia Dock whole bird price remained
historically high during the quarter. The Georgia Dock price reflects steady
retail grocery store demand. In addition, market prices for wings, while below
last year’s third quarter levels, improved during the quarter. Boneless breast
meat prices remained well above last year’s prices and peaked in May as
several quick serve restaurants and other food service establishments featured
chicken on their menus.”
Overall market prices for poultry products were higher inthe thirdquarter of
fiscal 2013 compared with prices in the third quarter of fiscal 2012. As
measured by a simple average of the Georgia dock price for whole chickens,
prices increased 11.6 percent compared with the third quarter of fiscal 2012.
Boneless breast prices improved when compared to last year’s third fiscal
quarter, averaging 32.3 percent higher than the prior-year period. Jumbo wing
prices averaged $1.28 per pound for the third quarter of fiscal 2013, down
19.3 percent from the average of $1.59 per pound for the third quarter of
fiscal 2012. The average quoted market price for bulk leg quarters was
essentially flat during the quarter, averaging $0.51 per pound during the
third fiscal quarter of 2013 compared to $0.50 during the third fiscal quarter
of 2012. Cash prices for corn delivered to the Company increased 8.1 percent
compared with the third quarter a year ago, while the price for soybean meal
delivered to the Company increased 10.3 percent. For the nine months ended
July 31, 2013, the Company’s cash prices for corn increased 13.2percent and
soybean meal increased 29.3 percent when compared to the nine months ended
July 31, 2012.
“While poultry market prices improved during our third fiscal quarter, the
Company continued to experience higher grain prices compared with the same
period last year,” added Sanderson. “Market prices for grain have remained
high through most of August, but favorable growing conditions this summer have
fueled considerable optimism about this year’s corn and soybean crops. While
the available grain quantity and prices during the coming months will
ultimately depend on this year’s final crop performance, prices have recently
moved lower. If we priced all of our needs for the remainder of the fiscal
year at yesterday’s market prices, cash paid for feed grains would be
approximately $79 million higher during fiscal 2013 compared to fiscal 2012.
However, fourth quarter cash market prices would be $65 million lower than
last year’s fourth quarter. We have priced our grain needs through August but
will be on the market for our needs starting in September.”
“We are also pleased to report that our due diligence and related permitting
processes are substantially complete for our previously announced Palestine,
Texas facility,” said Sanderson. “Most conditions precedent to breaking ground
on the new poultry complex have been met, and we hope to finalize a date to
begin construction of the new feed mill, hatchery, processing plant and
wastewater treatment facilities in September, subject to final approval by our
board of directors. We greatly appreciate the support, encouragement and
welcome we have received from the public officials and communities in
Palestine, Anderson County, Freestone County and Austin, and we are anxious to
begin this next phase of growth for our shareholders, employees and other
Sanderson Farms will hold a conference call to discuss this press release
today, August27,2013, at10:00 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. To
listen to the live call, please go to the Web site at least 15 minutes
earlytoregister, download, and install any necessary audio software.
Forthose who cannot listen tothe livebroadcast, an Internet replay will be
available shortly after the call and continue throughSeptember6, 2013. Those
without internet access or who prefer to participate via telephone maycall
888-228-5307, access code8155309.
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 from the views, beliefs, projections and estimates expressed in
such statements. These risks, uncertainties and other factors include, but are
not limited to, those discussed under “Risk Factors” in the Company’s Annual
Report on Form 10-K for the year ended October 31,2012 and its subsequent
Quarterly Reports on Form 10-Q filed with the SEC, 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
(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 the Company’s 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 by or on 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. Most of the factors described
above cannot be controlled by the Company. When used in this press release,
the words “believes”, “estimates”, “plans”, “expects”, “should”, “outlook”,
and “anticipates” and similar expressions as they relate to the Company or its
management are intended to identify forward-looking statements. Examples of
forward-looking statements include (but are not limited to) statements of the
Company’s belief about future earnings, expansion plans, sales, production,
and expenses, including feed grain costs.
SANDERSON FARMS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
July 31, July 31,
2013 2012 2013 2012
Net sales $ 738,964 $ 624,854 $ 1,955,919 $ 1,737,726
Cost of sales 605,018 555,240 1,752,118 1,600,145
general and 29,505 20,704 69,902 56,772
634,523 575,944 1,822,020 1,656,917
Operating 104,441 48,910 133,899 80,809
Interest 5 3 12 9
Interest (1,365 ) (1,999 ) (4,977 ) (7,387 )
Other (17 ) 5 34 (560 )
(1,377 ) (1,991 ) (4,931 ) (7,938 )
Income before 103,064 46,919 128,968 72,871
Income tax 35,145 18,198 43,621 28,274
Net income $ 67,919 $ 28,721 $ 85,347 $ 44,597
Basic earnings $ 2.95 $ 1.25 $ 3.71 $ 1.94
earnings per $ 2.95 $ 1.25 $ 3.71 $ 1.94
Dividends per $ 0.17 $ 0.17 $ 0.51 $ 0.51
SANDERSON FARMS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
July 31, October 31,
Cash and cash equivalents $ 62,878 $ 27,802
Accounts receivable, net 118,744 98,022
Inventories 241,343 235,912
Refundable income taxes 0 4,467
Deferred income taxes 0 3,945
Prepaid expenses and other current assets 32,665 27,639
Total current assets 455,630 397,787
Property, plant and equipment 1,020,243 985,198
Less accumulated depreciation (531,006 ) (489,885 )
Other assets 2,958 3,353
Total assets $ 947,825 $ 896,453
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable $ 86,743 $ 82,755
Accrued expenses 51,519 42,082
Accrued income taxes 28,898 0
Current maturities of long-term debt 10,757 10,757
Deferred income taxes 125 0
Total current liabilities 178,042 135,594
Long-term debt, less current maturities 77,149 150,212
Claims payable 10,300 4,000
Deferred income taxes 53,926 56,572
Common stock 23,014 22,969
Paid-in capital 139,960 135,283
Retained earnings 465,434 391,823
Total stockholders’ equity 628,408 550,075
Total liabilities and stockholder’s equity $ 947,825 $ 896,453
Sanderson Farms, Inc.
Mike Cockrell, 601-649-4030
Treasurer & Chief Financial Officer
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