EX-99.1 2 g05803exv99w1.htm EX-99.1 PRESS RELEASE 02/27/07 EX-99.1 PRESS RELEASE 02/27/07
 

Exhibit 99.1
(LOGO)
     
Contact:
  Mike Cockrell
 
  Treasurer & Chief Financial Officer
 
  (601) 649-4030
SANDERSON FARMS, INC. REPORTS
RESULTS FOR FIRST QUARTER OF FISCAL 2007
LAUREL, Miss. (February 27, 2007) — Sanderson Farms, Inc. (NASDAQ: SAFM) today reported results for the first fiscal quarter ended January 31, 2007.
     Net sales for the first quarter of fiscal 2007 were $292.7 million compared with $236.2 million for the same period a year ago. For the quarter, the net loss was $2.8 million, or $0.14 per diluted share, compared with the net loss of $8.6 million, or $0.43 per diluted share, for the first quarter of fiscal 2006. Operating income for the first quarter of fiscal 2006 was reduced by incurred but unrecognized lost profits and expenses of approximately $3.0 million related to losses sustained as a result of Hurricane Katrina.
     “The results for the first quarter of fiscal 2007 showed improvement over the same period last year, although we still faced a challenging poultry market, particularly in the first half of the period,” said Joe F. Sanderson, Jr., chairman and chief executive officer of Sanderson Farms, Inc. “Market prices were soft at the beginning of the quarter, but began to improve in December and have continued to trend higher through February. Overall, poultry prices were higher than the same period a year ago. However, we continue to see higher and more volatile prices for corn and soybean meal, our primary feed ingredients, and the significantly higher costs affected our profitability during the quarter.”
     According to Sanderson, overall market prices for poultry products improved steadily during the first quarter of fiscal 2007. While a simple average of the Georgia dock price for whole chickens was approximately 1.7% lower in the Company’s first fiscal quarter compared with the same period in 2006, the Georgia Dock price for the week of February 26, 2007, was 75 cents per pound, versus 69 cents per pound for the same week a year ago. Bulk leg quarter prices were higher by 21.4% during the quarter compared with last year’s first quarter, reflecting year-over-year improvement in the export markets. Export demand during the first quarter of fiscal 2006 was negatively impacted by Avian Influenza concerns, and these concerns have not been a factor so far this year. Boneless breast meat prices during the quarter were approximately 12.9% higher than the prior-year period. Wing prices averaged $1.07 per pound during the first quarter of fiscal 2007, compared with the average of $0.87 per pound during the first quarter of fiscal 2006. At the same time, costs for corn and soybean meal, the Company’s primary feed ingredients, increased 57.4% and 0.1%, respectively, compared with the first quarter a year ago.
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Sanderson Farms Reports First Quarter 2007 Results
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February 27, 2007
     “We are pleased with our operating performance for the quarter as we resumed full production in January following the production cuts implemented for the second half of calendar 2006. Our volumes during the quarter were up significantly when compared to last year’s first quarter as a result of the additional production from Moultrie, Georgia, the conversion of our Collins, Mississippi plant to big bird deboning, and the absence this year of the effects of Hurricane Katrina. The construction of our Waco, Texas, facility is ahead of schedule and we expect to begin processing in the fourth fiscal quarter of 2007.
     “While all of these factors, along with the favorable trends in chicken prices, are positive indicators for our business going forward in fiscal 2007, we expect our feed costs will continue to rise,” Sanderson continued. “The demand for corn from ethanol producers is affecting market prices for corn and soybeans. However, we remain confident that the chicken and grain markets will strike a favorable balance over time.”
     Sanderson Farms will hold a conference call to discuss this press release today, February 27, 2007, 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 March 6, 2007. Those without Internet access or who would rather listen by telephone can call (800) 475-3716, confirmation no. 2448722.
     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 Stock Market, LLC under the symbol SAFM.
     This press release contains forward-looking statements based on management’s current views and assumptions. Actual results and events may differ. For a discussion of these matters, please refer to the “Cautionary Statement Regarding Risks and Uncertainties That May Affect Future Performance” in Item 7 of the Company’s 2006 Annual Report on Form 10-K and please refer to the cautionary statement found in Management’s Discussion and Analysis of Financial Condition and Results of Operations under the heading “General” in Part I, Item 2 of the Quarterly Report on Form 10-Q for the Company’s first quarter ended January 31, 2007.
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Sanderson Farms Reports First Quarter 2007 Results
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February 27, 2007
SANDERSON FARMS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations

(Unaudited)
(In thousands, except per share amounts)
                 
    Three Months Ended  
    January 31,  
    2007     2006  
Net sales
  $ 292,711     $ 236,203  
Costs and expenses:
               
Cost of sales
    283,673       236,854  
Selling, general and administrative
    12,467       13,384  
 
           
 
    296,140       250,238  
 
           
Operating loss
    (3,429 )     (14,035 )
 
               
Other income (expense):
               
Interest income
    46       124  
Interest expense
    (1,220 )     (76 )
Other
    4       39  
 
           
 
    (1,170 )     87  
 
           
Loss before income taxes
    (4,599 )     (13,948 )
Income tax benefit
    (1,750 )     (5,342 )
 
           
Net loss
  $ (2,849 )   $ (8,606 )
 
           
 
               
Basic loss per share
  $ (0.14 )   $ (0.43 )
 
           
Diluted loss per share
  $ (0.14 )   $ (0.43 )
 
           
Dividends per share
  $ 0.12     $ 0.12  
 
           
 
               
Weighted average shares outstanding:
               
Basic
    20,103       20,064  
 
           
Diluted
    20,103       20,064  
 
           
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Sanderson Farms Reports First Quarter 2007 Results
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February 27, 2007
SANDERSON FARMS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets

(In thousands)
                 
    January 31,     October 31,  
    2007     2006  
    (Unaudited)          
ASSETS
               
Current assets:
               
Cash and cash equivalents
  $ 906     $ 7,396  
Accounts receivable, net
    53,170       40,930  
Refundable income taxes
    17,199       14,402  
Inventories
    104,632       96,490  
Prepaid expenses and other current assets
    16,429       13,179  
 
           
Total current assets
    192,336       172,397  
 
               
Property, plant and equipment
    605,353       573,422  
Less accumulated depreciation
    (270,236 )     (263,112 )
 
           
 
    335,117       310,310  
Other assets
    2,145       2,360  
 
           
Total assets
  $ 529,598     $ 485,067  
 
           
 
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
Current liabilities:
               
Accounts payable
  $ 48,148     $ 31,514  
Accrued expenses
    23,550       23,567  
Current maturities of long-term debt
    4,440       4,433  
 
           
Total current liabilities
    76,138       59,514  
 
               
Long-term debt, less current maturities
    111,933       77,078  
Claims payable
    3,200       3,200  
Deferred income taxes
    13,930       16,935  
Stockholders’ equity
    324,397       328,340  
 
           
Total liabilities and stockholders’ equity
  $ 529,598     $ 485,067  
 
           
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