Sanderson Farms, Inc. Reports Results for Third Quarter of Fiscal 2018
Net sales for the third quarter of fiscal 2018 were
Net sales for the first nine months of fiscal 2018 were
Net income for the third fiscal quarter reflects an accrual for probable
liability for a contribution to the Company’s Employee Stock Ownership
“Sanderson Farms’ financial results for the third quarter of fiscal 2018
reflect significant counter-seasonal weakness in market prices for
boneless breast meat produced for food service customers,” said Joe F.
Sanderson, Jr., chairman and chief executive officer of
According to Sanderson, compared with the third fiscal quarter of 2017,
market prices for chickens sold to retail grocery store customers
remained relatively flat at levels reflecting a good supply and demand
balance. Compared with the third fiscal quarter of 2017, jumbo boneless
breast meat prices were lower by approximately 26.6 percent, the average
market price for bulk leg quarters decreased approximately 12.0 percent,
and jumbo wing prices were lower by 35.4 percent. The Company’s average
feed cost per pound of poultry products processed increased
Prices paid for corn and soybean meal, the Company’s primary feed
ingredients, increased 4.3 percent and 15.5 percent, respectively,
compared with the third quarter of fiscal 2017. In its report published
Sanderson added, “The USDA expects chicken production growth of 2.3 percent during calendar 2018, which alone shouldn’t be a burdensome supply number. However, chicken will continue to compete against an abundant domestic supply of protein, which may continue to pressure market prices. As always, we will manage our business consistently regardless of market cycles.
“We continue to make progress at our new
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 October 31, 2017, the Company’s subsequent reports on Form 10-Q, 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, 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
Nine Months Ended
|Costs and expenses:|
|Cost of sales||781,568||692,585||2,187,079||1,954,259|
|Selling, general and administrative||55,778||62,036||163,390||151,747|
|Other income (expense):|
|Income before income taxes||15,317||177,095||87,917||315,735|
|Income tax expense (benefit)||3,842||61,261||(16,712||)||108,861|
|Basic earnings per share||$||0.50||$||5.09||$||4.58||$||9.10|
|Diluted earnings per share||$||0.50||$||5.09||$||4.58||$||9.10|
|Dividends per share||$||0.32||$||0.24||$||0.96||$||0.72|
SANDERSON FARMS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
|Cash and cash equivalents||$||288,284||$||419,285|
|Accounts receivable, net||130,921||138,868|
|Refundable income taxes||26,266||0|
|Prepaid expenses and other current assets||44,235||38,620|
|Total current assets||771,762||849,538|
|Property, plant and equipment||1,869,845||1,657,084|
|Less accumulated depreciation||(856,039||)||(780,276||)|
|LIABILITIES AND STOCKHOLDERS’ EQUITY|
|Accrued income taxes||0||6,649|
|Total current liabilities||188,889||198,721|
|Claims payable and other liabilities||9,667||9,762|
|Deferred income taxes||68,036||91,898|
|Commitments and contingencies|
|Total stockholders’ equity||1,525,012||1,432,862|
|Total liabilities and stockholders’ equity||$||1,791,604||$||1,733,243|
|(1)||The Condensed Consolidated Balance Sheet at October 31, 2017, was derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements.|
Sanderson Farms, Inc.
Mike Cockrell, 601-649-4030
Treasurer & Chief Financial Officer