Sanderson Farms, Inc. Reports Results for First Quarter of Fiscal 2021
Net sales for the first quarter of fiscal 2021 were
“Our results for the first quarter of fiscal 2021 reflect continuing challenges presented by the COVID-19 pandemic and higher feed grain prices, but we ended the quarter on a strong note amidst encouraging end-market trends and remain optimistic about the future,” said
“Our employees are our most important asset, and our operations have continued to run efficiently and safely despite the ongoing challenges created by the COVID-19 pandemic thanks to their heroic efforts. Our employees have allowed us to continue to produce and deliver poultry products to our customers and contribute to a stable food supply.
“In addition to the challenges created by the COVID-19 pandemic, our employees, managers, contractors and independent contract poultry producers in
“As a result of these interruptions, we will have approximately 1.6 million fewer chickens to process at our
Overall market prices for poultry products were higher during the first quarter of fiscal 2021 compared with the same period last year. Compared with the first quarter of fiscal 2020, the average realized prices of the Company’s retail tray pack products were approximately 3.1 percent higher, boneless breast meat quoted market prices were approximately 10.5 percent higher, tender quoted market prices increased by approximately 27.4 percent, and jumbo wing quoted market prices were higher by 34.3 percent. Quoted market prices for bulk leg quarters were approximately 26.4 percent lower during the first quarter of fiscal 2021 compared with the same period last year. The Company’s average feed cost per pound of poultry products processed was higher by 1.3 percent compared with the first quarter of fiscal 2020, and prices paid during the first quarter of fiscal 2021 for corn and soybean meal, the Company’s primary feed ingredients, increased 8.9 percent and 27.5 percent, respectively, compared with the first quarter of fiscal 2020.
“Both corn and soybean balance tables reflect very tight supplies heading into the 2021 planting season,” added Sanderson. “Since
“We remain optimistic about poultry markets in 2021 for many reasons. Market prices for boneless breast meat produced for food service customers moved significantly higher during January and February, and we believe this is partly due to improved demand from quick serve food service customers who are promoting new chicken products. Market prices for chicken wings and tenders also improved, as those products are favored by food service customers with significant pick-up and delivery sales. We are optimistic that demand from food service customers will improve further once the COVID-19 vaccines are more widely distributed and consumers are more comfortable dining in restaurants. We also expect to see continued favorable demand from our retail grocery store customers as
Sanderson concluded, “We believe we can continue to generate significant value for shareholders and other stakeholders by executing our organic growth strategy and being prudent with respect to capital allocation and other opportunities. We are continuing to evaluate the site for our next new poultry complex, and are confident in the opportunities created by our expanded facility footprint.”
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 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
(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 accepted in
(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.
(15) Changes resulting from the COVID-19 pandemic, which could exacerbate any of the risks described above, and could include: high absentee rates that have prevented and may continue to prevent us from running some of our facilities at full capacity, or could in the future cause facility closures; an inability of our contract growers to manage their flocks; supply chain disruptions for feed grains; further changes in customer orders due to shifting consumer patterns; disruptions in logistics and the distribution chain for our products; liquidity challenges; and a continued or worsening decline in global commercial activity, among other unfavorable conditions.
Readers are cautioned not to place undue reliance on forward-looking statements made by or on behalf of the Company. 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,” “could,” “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 growth plans, future earnings, production levels, capital expenditures, grain prices, global economic conditions, supply and demand factors and other industry conditions.
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Condensed Consolidated Statements of Operations |
|||||||
(Unaudited) |
|||||||
(In thousands, except per share amounts) |
|||||||
Three Months Ended
|
|||||||
2021 |
2020 |
||||||
Net sales |
$ |
909,306 |
|
$ |
823,078 |
|
|
Cost and expenses: | |||||||
Cost of sales |
|
839,322 |
|
|
823,524 |
|
|
Selling, general and administrative |
|
56,599 |
|
|
49,485 |
|
|
|
895,921 |
|
|
873,009 |
|
||
Operating income (loss) |
|
13,385 |
|
|
(49,931 |
) |
|
Other income (expense) | |||||||
Interest expense |
|
(638 |
) |
|
(1,188 |
) |
|
Other |
|
3 |
|
|
2 |
|
|
|
(635 |
) |
|
(1,186 |
) |
||
Income (loss) before income taxes |
|
12,750 |
|
|
(51,117 |
) |
|
Income tax expense (benefit) |
|
3,272 |
|
|
(12,541 |
) |
|
Net income (loss) |
$ |
9,478 |
|
$ |
(38,576 |
) |
|
Earnings (loss) per share: | |||||||
Basic |
$ |
0.42 |
|
$ |
(1.76 |
) |
|
Diluted |
$ |
0.42 |
|
$ |
(1.76 |
) |
|
Dividends per share |
$ |
0.44 |
|
$ |
0.32 |
|
|
|
|||||
Condensed Consolidated Balance Sheets |
|||||
(In thousands) |
|||||
|
|
||||
(unaudited) |
(1) |
||||
Assets | |||||
Current assets: | |||||
Cash and cash equivalents |
$ |
50,090 |
$ |
49,061 |
|
Accounts receivable, net |
|
167,711 |
|
147,546 |
|
Inventories |
|
325,672 |
|
290,007 |
|
Refundable income taxes |
|
31,901 |
|
33,977 |
|
Prepaid expenses and other current assets |
|
61,735 |
|
57,544 |
|
Total current assets |
|
637,109 |
|
578,135 |
|
Property, plant and equipment, net |
|
1,223,169 |
|
1,224,746 |
|
Right-of-use assets |
|
36,894 |
|
40,785 |
|
Other assets |
|
5,092 |
|
5,365 |
|
Total assets |
$ |
1,902,264 |
$ |
1,849,031 |
|
Liabilities and stockholders' equity | |||||
Current liabilities: | |||||
Accounts payable |
$ |
131,332 |
$ |
111,463 |
|
Dividends payable |
|
9,823 |
|
- |
|
Accrued expenses |
|
94,277 |
|
98,663 |
|
Lease liabilities |
|
14,253 |
|
13,981 |
|
Total current liabilities |
|
249,685 |
|
224,107 |
|
Long-term debt |
|
55,000 |
|
25,000 |
|
Claims payable and other liabilities |
|
12,615 |
|
12,175 |
|
Deferred income taxes |
|
142,841 |
|
141,672 |
|
Long-term lease liabilities |
|
22,641 |
|
26,804 |
|
Commitments and contingencies | |||||
Stockholders' equity: | |||||
Common stock |
|
22,326 |
|
22,251 |
|
Paid-in capital |
|
90,900 |
|
90,420 |
|
Retained earnings |
|
1,306,256 |
|
1,306,602 |
|
Total stockholders' equity |
|
1,419,482 |
|
1,419,273 |
|
Total liabilities and stockholders' equity |
$ |
1,902,264 |
$ |
1,849,031 |
(1) |
The Condensed Consolidated Balance Sheet at |
View source version on businesswire.com: https://www.businesswire.com/news/home/20210225005232/en/
Treasurer, Chief Financial Officer & Chief Legal Officer
(601) 649-4030
Source: