Sanderson Farms, Inc. Reports Results for Second Quarter of Fiscal 2019
Net sales for the second quarter of fiscal 2019 were
Net sales for the first six months of fiscal 2019 were
“Financial results for our second quarter of fiscal 2019 reflect higher
feed costs per pound, continued favorable demand for poultry products
from retail grocery store customers and a favorable export environment,"
“Lower volumes of fresh and frozen chicken processed and sold during the
second fiscal quarter compared to last year’s second quarter reflect
scheduled down days at four plants to install new equipment, and lower
live weights at our
According to Sanderson, overall market prices for chicken products sold to retail grocery store customers remained relatively strong during the second quarter and continued to reflect good demand. Compared with the second fiscal quarter of 2018, quoted boneless breast meat market prices were approximately 2.4 percent lower, the average market price for bulk leg quarters decreased approximately 7.0 percent, and jumbo wing market prices were higher by 32.7 percent. Market prices for chicken breast tenders averaged 4.4 percent higher than a year ago. The Company’s average feed costs per pound of poultry products processed increased by 3.0 percent when compared with the second quarter of fiscal 2018, while prices paid for corn and soybean meal, the Company’s primary feed ingredients, increased 4.9 percent and decreased 11.6 percent, respectively, compared with the second quarter of fiscal 2018.
“Looking ahead to the second half of the fiscal year, we continue to
expect prices paid for grain to be lower for the year compared to fiscal
2018,” added Sanderson. “While there are ample supplies of both corn and
soybeans worldwide, a slow start to
“With respect to chicken production numbers, the USDA reports that
“We believe these hourly rate increases, when combined with other benefits, will allow the Company to remain very competitive in an economic climate where employees have more choices available to them. We also estimate that the costs of this increase can be offset with increased efficiencies, by reaching our target plant yields and by achieving our target live weights,” Sanderson concluded.
This press release includes forward-looking statements within the
meaning of the “safe harbor” provisions of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, 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
fiscal year ended
(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, any 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 net realizable 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 net realizable value 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
(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 the Company’s operations, or changes in global weather patterns that could affect the supply and price of feed grains.
(12) Failure to respond to changing consumer preferences and negative or competitive media campaigns.
(13) Failure to successfully and efficiently start up and run a new plant or integrate any business the Company might acquire.
(14) Unfavorable results from currently pending litigation and proceedings or litigation and proceedings that could arise in the future.
Readers are cautioned not to place undue reliance on forward-looking
statements made by or on behalf of
|SANDERSON FARMS, INC. AND SUBSIDIARIES|
|Condensed Consolidated Statements of Operations|
(In thousands, except per share amounts)
Three Months Ended
Six Months Ended
|Cost and expenses:|
|Cost of sales||740,833||703,410||1,449,233||1,405,511|
Selling, general and administrative
|Other income (expense)|
|Income before income taxes||53,995||55,430||29,939||72,600|
|Income tax expense (benefit)||13,359||13,482||7,136||(20,554||)|
|Earnings per share:|
|Dividends per share||$||0.32||$||0.32||$||0.64||$||0.64|
|SANDERSON FARMS, INC. AND SUBSIDIARIES|
|Condensed Consolidated Balance Sheets|
|April 30, 2019||October 31, 2018|
|Cash and cash equivalents||$||96,938||$||121,193|
|Accounts receivable, net||126,889||121,932|
|Receivable from insurance companies||5,983||7,094|
|Refundable income taxes||5,611||32,974|
|Prepaid expenses and other current assets||52,250||43,240|
|Total current assets||573,144||566,489|
|Property, plant and equipment||2,091,324||1,961,497|
|Less accumulated depreciation||(923,947||)||(873,909||)|
|Liabilities and stockholders' equity|
|Total current liabilities||167,472||198,889|
|Claims payable and other liabilities||10,056||9,865|
|Deferred income taxes||69,492||62,793|
|Commitments and contingencies|
|Total stockholders' equity||1,400,712||1,387,893|
|Total liabilities and stockholders' equity||$||1,747,732||$||1,659,440|
(1) The Condensed Consolidated Balance Sheet at
Treasurer & Chief Financial Officer