EX-99.1 2 d772429dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

Contact:    Mike Cockrell

Treasurer, Chief Financial Officer

 & Chief Legal Officer

                   (601) 649-4030

SANDERSON FARMS, INC. REPORTS

RESULTS FOR THIRD QUARTER OF FISCAL 2019

LAUREL, Miss. (August 29, 2019) — Sanderson Farms, Inc. (NASDAQ: SAFM) today reported results for the third fiscal quarter and nine months ended July 31, 2019.

Net sales for the third quarter of fiscal 2019 were $945.2 million compared with $852.4 million for the same period a year ago. For the quarter, the Company reported net income of $53.4 million, or $2.41 per share, compared with net income of $11.5 million, or $0.50 per share, for the third quarter of fiscal 2018.

Net sales for the first nine months of fiscal 2019 were $2,533.8 million compared with $2,437.9 million for the first nine months of fiscal 2018. Net income for the first nine months of fiscal 2019 totaled $76.2 million, or $3.44 per share, compared with net income of $104.6 million, or $4.58 per share, for the first nine months of fiscal 2018. Net income for the first nine months of fiscal 2018 reflects a one-time non-cash benefit of $37.5 million, or $1.64 per share, as a result of an adjustment to the Company’s deferred income tax liability to reflect a lower tax rate resulting from the federal tax reform legislation passed during the first fiscal quarter of 2018.

Net income for the third quarter of fiscal 2019 reflects an accrual for probable liability for a contribution to the Company’s Employee Stock Ownership Plan of $2.7 million before income tax, or $0.10 per share net of income tax, compared to $2.4 million before income tax, or $0.08 per share net of income tax, for the same period a year ago.

“Similar to last year’s third fiscal quarter, Sanderson Farms’ financial results for the third quarter of fiscal 2019 reflect significant counter-seasonal weakness in market prices for boneless breast meat produced at our plants that process a larger bird for food service customers,” said Joe F. Sanderson, Jr., chairman and chief executive officer of Sanderson Farms, Inc. “Fortunately, market prices for other products produced at those plants were higher than last year, and reflected good demand during the quarter. Average market prices for dark meat, jumbo wings and chicken tenders were all higher than the same period a year ago. Average realized prices for poultry products produced for retail grocery store customers were slightly higher than last year’s third fiscal quarter and continue to reflect a more balanced supply and demand environment.”

According to Sanderson, compared with the third fiscal quarter of fiscal 2018, jumbo boneless breast meat market prices were lower by approximately 3.2 percent, the average market price for bulk leg quarters increased approximately 17.1 percent, and market prices for jumbo wings were higher by 37.6 percent. The Company’s average feed cost per pound of poultry products processed decreased 1.1 cents per pound, or 4.1 percent, compared with the third quarter of fiscal 2018.

 

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Sanderson Farms Reports Results for Third Quarter of Fiscal 2019

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August 29, 2019

 

Prices paid for corn and soybean meal, the Company’s primary feed ingredients, decreased 1.4 percent and 18.0 percent, respectively, compared with the third quarter of fiscal 2018. In its report published August 12, 2019, the USDA increased its supply estimate for corn for the 2019/20 crop year. While the USDA lowered its estimate for harvested acres as a result of the late planting season, it increased its yield estimate. The published USDA report estimates for corn acres and yields were higher than the market expected. While the USDA lowered its estimate of soybean harvested acres, it held its yield estimate steady and lowered its demand estimate. Market prices for both corn and soybean meal fell following the release of the report. If realized, the USDA’s current yield and harvest estimates for the United States’ 2019 corn and soybean crops would leave both grains adequately supplied going into fiscal 2020.

“The USDA expects chicken production growth of 1.7 percent during calendar 2019 compared to 2018, which alone shouldn’t be a burdensome supply number. However, market prices for boneless breast meat produced at our plants that process a larger chicken for food service customers remain under pressure. As always, we will manage our business consistently regardless of market cycles,” added Sanderson.

“We continue to make progress at our new Tyler, Texas, facilities,” said Sanderson. “The start-up has gone well, and the plant is now processing at 50 percent capacity. We expect to reach full capacity during the second fiscal quarter of 2020.”

Sanderson Farms will hold a conference call to discuss this press release today, August 29, 2019, 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 website at www.sandersonfarms.com. To listen to the live call, please go to the website 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 October 1, 2019. Those without internet access or who prefer to participate via telephone may call 888-394-8218, access code 8585385.

Sanderson Farms, Inc. is engaged in the production, processing, marketing and distribution of fresh, frozen and minimally prepared chicken. 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 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, 2018, 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.

 

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Sanderson Farms Reports Results for Third Quarter of Fiscal 2019

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(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 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 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. 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 earnings, production levels, capital expenditures, grain prices, global economic conditions, supply and demand factors, growth plans and other industry conditions.

 

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Sanderson Farms Reports Results for Third Quarter of Fiscal 2019

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SANDERSON FARMS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share amounts)

 

     Three Months Ended
July 31,		      Nine Months Ended
July 31,		  
     2019      2018      2019      2018  

Net sales

     $  945,152         $  852,434         $  2,533,769         $  2,437,856    

Cost and expenses:

            

Cost of sales

      824,144          781,568          2,273,377          2,187,079    

Selling, general and administrative

      52,226          55,778          159,991          163,390    
  

 

 

     

 

 

     

 

 

     

 

 

  
     876,370          837,346          2,433,368          2,350,469    
  

 

 

     

 

 

     

 

 

     

 

 

  

Operating income

      68,782          15,088          100,401          87,387    

Other income (expense)

            

Interest income

      -          745          -          2,069    

Interest expense

      (1,492)         (519)         (3,174)         (1,548)   

Other

      4          3          6          9    
  

 

 

     

 

 

     

 

 

     

 

 

  
     (1,488)         229          (3,168)         530    
  

 

 

     

 

 

     

 

 

     

 

 

  

Income before income taxes

      67,294          15,317          97,233          87,917    

Income tax expense (benefit)

      13,932          3,842          21,068          (16,712)   
  

 

 

     

 

 

     

 

 

     

 

 

  

Net income

     $ 53,362         $ 11,475         $ 76,165         $ 104,629    
  

 

 

     

 

 

     

 

 

     

 

 

  

Earnings per share:

            

Basic

     $ 2.41         $ 0.50         $ 3.44         $ 4.58    
  

 

 

     

 

 

     

 

 

     

 

 

  

Diluted

     $ 2.41         $ 0.50         $ 3.44         $ 4.58    
  

 

 

     

 

 

     

 

 

     

 

 

  

Dividends per share

     $ 0.32         $ 0.32         $ 0.96         $ 0.96    
  

 

 

     

 

 

     

 

 

     

 

 

  

 

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Sanderson Farms Reports Results for Third Quarter of Fiscal 2019

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August 29, 2019

 

SANDERSON FARMS, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands)

 

         July 31, 2019              October 31, 2018    
  

 

 

  
     (unaudited)      (1)  

Assets

      

Current assets:

      

Cash and cash equivalents

     $ 74,262         $ 121,193    

Accounts receivable, net

      132,226          121,932    

Receivable from insurance companies

      5,600          7,094    

Inventories

      306,246          240,056    

Refundable income taxes

      7,255          32,974    

Prepaid expenses and other current assets

      60,334          43,240    
  

 

 

     

 

 

  

Total current assets

      585,923          566,489    

Property, plant and equipment

      2,114,730          1,961,497    

Less accumulated depreciation

      (934,091)         (873,909)   
  

 

 

     

 

 

  
     1,180,639          1,087,588    

Other assets

      7,423          5,363    
  

 

 

     

 

 

  

Total assets

     $  1,773,985         $  1,659,440    
  

 

 

     

 

 

  

Liabilities and stockholders’ equity

      

Current liabilities:

      

Accounts payable

     $ 115,003         $ 128,936    

Dividends payable

      7,089          -         

Accrued expenses

      76,909          69,953    
  

 

 

     

 

 

  

Total current liabilities

      199,001          198,889    

Long-term debt

      30,000          -         

Claims payable and other liabilities

      10,726          9,865    

Deferred income taxes

      83,793          62,793    

Commitments and contingencies

      

Stockholders’ equity:

      

Common stock

      22,153          22,100    

Paid-in capital

      88,891          81,269    

Retained earnings

      1,339,421          1,284,524    
  

 

 

     

 

 

  

Total stockholders’ equity

      1,450,465          1,387,893    
  

 

 

     

 

 

  

Total liabilities and stockholders’ equity

     $ 1,773,985         $ 1,659,440    
  

 

 

     

 

 

  

(1) The Condensed Consolidated Balance Sheet at October 31, 2018, 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.

 

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