Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - SANDERSON FARMS INC | g27370e8vk.htm |
| EX-99.2 - EX-99.2 - SANDERSON FARMS INC | g27370exv99w2.htm |
Exhibit 99.1
| Contact: | Mike Cockrell Treasurer & Chief Financial Officer (601) 649-4030 |
SANDERSON FARMS, INC. REPORTS
RESULTS FOR SECOND QUARTER OF FISCAL 2011
RESULTS FOR SECOND QUARTER OF FISCAL 2011
LAUREL, Miss. (May 24, 2011) — Sanderson Farms, Inc. (NASDAQ: SAFM) today reported results
for its second fiscal quarter and six months ended April 30, 2011.
Net sales for the second quarter of fiscal 2011 were $479.3 million compared with $487.1
million for the same period a year ago. For the quarter, the net loss was $16.3 million, or $0.74
per share, compared with net income of $35.1 million, or $1.62 per share, for the second quarter of
fiscal 2010. The Company’s results for the second quarter of fiscal 2011 include a charge of $6.0
million, before income taxes, to reduce the value of live inventory from cost to market. Excluding
this adjustment, the net loss for the second quarter of fiscal 2011 was $12.3 million, or $0.56 per
share.
Net sales for the first six months of fiscal 2011 were $907.1 million compared with
$907.2 million for the same period of fiscal 2010. The net loss for the first half of
the year totaled $49.8 million, or $2.25 per share, compared with net income of $50.9 million, or
$2.39 per share, for the first six months of last year.
“The results for our second quarter of fiscal 2011 reflect current market conditions and the
overall economic environment,” said Joe F. Sanderson, Jr., chairman and chief executive officer of
Sanderson Farms, Inc. “Despite slightly higher volume as a result of our new North Carolina
facility, our net sales were down 1.6% percent compared with the second quarter of fiscal 2010
reflecting overall lower average sales prices of chicken. Retail grocery store demand for chicken
has remained strong. Export demand improved during the second quarter compared with the same
period last year when U.S. poultry meat was banned from Russia. Demand from our food service
customers has remained weak, and we expect this trend will continue with rising gas prices and high
unemployment keeping consumers from dining away from home.
“Our profitability for the second quarter was also adversely affected by the significant
increase in our feed costs. Feed costs in flocks sold increased 41.3% compared to last year’s
second fiscal quarter, and we expect grain prices to remain high and volatile for at least the rest
of this year, as there is no margin for error with the 2011 grain crop. While market conditions
remain challenging, our operating performance during the second quarter was solid, and we are
pleased with the performance of our growers, managers and employees,” added Sanderson.
According to Sanderson, market prices for poultry products were mixed, but lower overall,
during the second quarter of fiscal 2011 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 2.0
percent in the Company’s second fiscal quarter compared with the same period in 2010. Bulk leg
quarter market prices were 17.7 percent higher compared with last year’s second quarter, primarily
due to the resumption of export volume to Russia. Boneless breast meat prices during the second
quarter were 10.6 percent lower than the prior year period. Jumbo wing prices have
-MORE-
Sanderson Farms Reports Results for Second Quarter Fiscal 2011
Page 2
May 24, 2011
Page 2
May 24, 2011
remained very weak and were down 45.5 percent for the second quarter of 2011 compared with the same
period last year. Prices paid for corn and soybean meal, the Company’s primary feed ingredients,
increased 82.3 percent and 27.4 percent, respectively, compared with the second quarter of fiscal
2010.
The Company records the value of its inventory of live birds at the lower of cost or market
value. When market conditions are favorable, the Company values its live broiler inventory on hand
at cost, and accumulates costs as the birds are grown to a marketable age subsequent to the balance
sheet date. Because market prices for corn and soybean meal have increased substantially, the
projected cost to complete, process and sell broilers included in live inventory at April 30, 2011,
is expected to exceed the market value of the finished product. As a result, inventories of live
poultry on hand at April 30, 2011, were reported at market value, resulting in an adjustment of
$6.0 million, before income taxes.
Sanderson added, “We are pleased with the continued progress at our Kinston, North Carolina,
facility. We began processing chickens in January and this plant is now operating at about 25
percent capacity. We expect to meet our scheduled production goal to reach full capacity in
January 2012.
“Looking ahead, we will continue to closely monitor the chicken markets and production levels
as we head into the summer months and what is typically a period of better demand for chicken.
Broiler egg sets ran slightly higher than a year ago until two weeks ago. Egg sets for the past
two weeks have been below a year ago and remain below historical averages. With the current
economic conditions affecting consumer behavior, we expect to see continued weakness in food
service demand. We are mindful of these cycles that characterize our industry and remain confident
in our ability to execute our strategy, regardless of market conditions. Above all, we remain
focused on operating at the top of our industry and delivering long-term value for our
shareholders.”
Sanderson Farms will hold a conference call to discuss this press release today, May 24, 2011,
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 Web site at least 15
minutes early to register, download, and install any necessary audio software. For those who
cannot listen to the live broadcast, an Internet replay will be available shortly after the call
and continue through June 24, 2011. Those without Internet access may listen and participate in
the call by dialing 888-211-9937, confirmation code 7310367.
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 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 Quarterly Reports on Form 10-Q for the quarter ended April 30, 2011, 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.
-MORE-
Sanderson Farms Reports Results for Second Quarter Fiscal 2011
Page 3
May 24, 2011
Page 3
May 24, 2011
(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.
(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 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. The factors
described above cannot be controlled by the Company. When used in this press release or in the
related conference call, 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 statements of the Company’s belief about future earning, grain prices, supply
and demand factors, and other industry conditions.
-MORE-
Sanderson Farms Reports Results for Second Quarter Fiscal 2011
Page 4
May 24, 2011
Page 4
May 24, 2011
SANDERSON FARMS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Unaudited)
(In thousands, except per share amounts)
Condensed Consolidated Statements of Income
(Unaudited)
(In thousands, except per share amounts)
| Three Months Ended | Six Months Ended | |||||||||||||||
| April 30, | April 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
Net sales |
$ | 479,342 | $ | 487,101 | $ | 907,074 | $ | 907,224 | ||||||||
Costs and expenses: |
||||||||||||||||
Cost of sales |
479,366 | 412,109 | 938,305 | 790,153 | ||||||||||||
Live inventory adjustment |
6,000 | 0 | 6,000 | 0 | ||||||||||||
Selling, general and administrative |
16,813 | 19,277 | 37,224 | 35,637 | ||||||||||||
| 502,179 | 431,386 | 981,529 | 825,790 | |||||||||||||
Operating income (loss) |
(22,837 | ) | 55,715 | (74,455 | ) | 81,434 | ||||||||||
Other income (expense): |
||||||||||||||||
Interest income |
9 | 11 | 30 | 16 | ||||||||||||
Interest expense |
(1,491 | ) | (1,161 | ) | (1,947 | ) | (2,293 | ) | ||||||||
Other |
468 | 2 | 497 | 7 | ||||||||||||
| (1,014 | ) | (1,148 | ) | (1,420 | ) | (2,270 | ) | |||||||||
Income (loss) before income taxes |
(23,851 | ) | 54,567 | (75,875 | ) | 79,164 | ||||||||||
Income tax expense (benefit) |
(7,575 | ) | 19,480 | (26,043 | ) | 28,260 | ||||||||||
Net income (loss) |
$ | (16,276 | ) | $ | 35,087 | $ | (49,832 | ) | $ | 50,904 | ||||||
Basic earnings (loss) per share |
$ | (0.74 | ) | $ | 1.62 | $ | (2.25 | ) | $ | 2.39 | ||||||
Diluted earnings (loss) per share |
$ | (0.74 | ) | $ | 1.62 | $ | (2.25 | ) | $ | 2.39 | ||||||
Dividends per share |
$ | 0.17 | $ | 0.15 | $ | 0.34 | $ | 0.30 | ||||||||
-MORE-
Sanderson Farms Reports Results for Second Quarter Fiscal 2011
Page 5
May 24, 2011
Page 5
May 24, 2011
SANDERSON FARMS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
Condensed Consolidated Balance Sheets
(In thousands)
| April 30, | October 31, | |||||||
| 2011 | 2010 | |||||||
| (Unaudited) | ||||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 1,171 | $ | 73,419 | ||||
Accounts receivable, net |
77,376 | 92,467 | ||||||
Inventories |
213,844 | 153,289 | ||||||
Refundable income taxes |
34,591 | 0 | ||||||
Deferred income taxes |
5,373 | 1,760 | ||||||
Prepaid expenses and other current assets |
24,282 | 24,033 | ||||||
Total current assets |
356,637 | 344,968 | ||||||
Property, plant and equipment |
919,574 | 883,638 | ||||||
Less accumulated depreciation |
(411,913 | ) | (389,911 | ) | ||||
| 507,661 | 493,727 | |||||||
Other assets |
4,970 | 2,925 | ||||||
Total assets |
$ | 869,268 | $ | 841,620 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable and accrued expenses |
$ | 84,985 | $ | 105,754 | ||||
Current maturities of long-term debt |
1,048 | 1,048 | ||||||
Total current liabilities |
86,033 | 106,802 | ||||||
Long-term debt, less current maturities |
154,441 | 62,075 | ||||||
Claims payable |
2,300 | 2,100 | ||||||
Deferred income taxes |
35,850 | 24,930 | ||||||
Stockholders’ equity: |
||||||||
Common stock |
22,139 | 22,078 | ||||||
Paid-in capital |
130,011 | 127,580 | ||||||
Retained earnings |
438,494 | 496,055 | ||||||
Total stockholders’ equity |
590,644 | 645,713 | ||||||
| $ | 869,268 | $ | 841,620 | |||||
-END-