Sanderson Farms, Inc. (NASDAQ: SAFM) today reported results for
the first quarter of fiscal 2018.
Net sales for the first quarter of fiscal 2018 were $771.9
million compared with $688.3 million for the same period a year
ago. The Company reported net income of $51.2 million, or $2.24 per
share, for the quarter compared with net income of $24.0 million,
or $1.06 per share, for the first quarter of fiscal 2017.
As a result of the Company’s adoption of Accounting Standards
Update 2016-09, Improvements to Employee Share-Based Payment
Accounting, during the third quarter of fiscal 2017, the income tax
expense on the statement of operations for the three months ended
January 31, 2017, is $852,000 less than the amount originally
reported in the Company’s financial statements for the first
quarter of fiscal 2017. In turn, adoption increased the Company’s
net income by $852,000, or $0.04 per share, from what was
originally reported.
Net income for the quarter reflects a one-time non-cash tax
benefit of $37.5 million as a result of an adjustment to the
Company’s deferred income tax liability to reflect a lower tax rate
resulting from the recent federal tax reform legislation.
“Our results for the first quarter reflect higher market prices
for dark meat products sold from our big bird deboning plants
compared with last year’s first quarter, offset by lower white meat
prices,” said Joe F. Sanderson, Jr., chairman and chief executive
officer of Sanderson Farms, Inc. “Poultry market prices for tray
pack products sold to retail grocery store customers were higher
when compared with the same period a year ago and continued to
reflect a healthy supply and demand balance in that customer
market. On the other hand, the overall food service market remains
weak. Traffic numbers through legacy food service chains continue
to trend lower, and market prices for boneless breast meat reflect
that weakness. Demand and prices for jumbo wings weakened counter
seasonally during the quarter, and market prices were lower by nine
percent when compared to last year’s first quarter.”
According to Sanderson, overall market prices for poultry
products were lower during the first quarter compared with the same
period last year. Compared with the first fiscal quarter of 2017,
the average prices of the Company’s retail tray pack products were
approximately 2.1 percent higher, boneless breast meat prices were
approximately 2.8 percent lower, bulk leg quarters increased by
approximately 15.9 percent, and jumbo wing prices were lower by 9.0
percent. The Company’s average feed cost per pound of poultry
products processed decreased approximately one half cent per pound,
or 1.9 percent, compared with the first quarter of fiscal 2017, and
prices paid during the quarter for corn and soybean meal, the
Company’s primary feed ingredients, increased 1.0 percent and
decreased 3.5 percent, respectively, compared with the first
quarter of fiscal 2017.
“Record corn and soybean crops harvested in the United States
last fall contributed to healthy soybean and corn balance tables
heading into the 2018 planting season,” added Sanderson. “Strong
export demand and weather challenges for the Argentine crops,
however, have supported higher prices for both corn and soybeans
despite ample supplies of both grains.
“Construction at our new Tyler, Texas, complex began in the fall
of 2017 and continues on schedule to open in the first calendar
quarter of 2019. We reached near full production at the Company’s
St. Pauls, North Carolina, plant in January and will move to full
production in April,” added Sanderson.
Sanderson Farms will hold a conference call to discuss this
press release tomorrow, February 22, 2018, 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 March 21, 2018. Those who would like to
participate in the call can do so by dialing 888-339-3513;
confirmation code 8580523.
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
year ended October 31, 2017, the Company’s subsequent reports
on Form 10Q, 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 market 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 market 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 its 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 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 earnings, grain prices, supply and demand
factors, growth plans and other industry conditions.
SANDERSON FARMS, INC. AND
SUBSIDIARIESCondensed Consolidated Statements of
Operations(Unaudited)(In thousands, except per share
amounts)
Three Months Ended January 31,
2018 2017 Net sales $ 771,948 $ 688,346
Cost and expenses: Cost of sales 702,101 606,391 Selling, general
and administrative 52,575 46,070
754,676 652,461 Operating income 17,272 35,885
Other income (expense): Interest income 419 195 Interest expense
(523 ) (432 ) Other 2 2 (102 )
(235 ) Income before income taxes 17,170 35,650 Income tax
expense (benefit) (34,036 ) 11,625 Net
income $ 51,206 $ 24,025 Earnings per share:
Basic $ 2.24 $ 1.06 Diluted $ 2.24 $ 1.06
Dividends per share $ 0.32 $ 0.24
SANDERSON FARMS, INC. AND
SUBSIDIARIESCondensed Consolidated Balance Sheets(In
thousands)
January 31,2018
October 31,2017 (unaudited) (1) Assets Current
assets: Cash and cash equivalents $ 388,896 $ 419,285 Accounts
receivable, net 134,045 138,868 Inventories 253,081 252,765 Prepaid
expenses and other current assets 43,497
38,620 Total current assets 819,519 849,538 Property, plant
and equipment 1,700,092 1,657,084 Less accumulated depreciation
(804,382 ) (780,276 ) 895,710 876,808 Other assets
6,995 6,897 Total assets $ 1,722,224
$ 1,733,243 Liabilities and
stockholders’ equity Current liabilities: Accounts payable $
104,990 $ 90,904 Dividends payable 7,305 -- Accrued expenses 56,606
101,168 Accrued income taxes 6,649 6,649
Total current liabilities 175,550 198,721 Claims payable and
other liabilities 10,481 9,762 Deferred income taxes 57,862 91,898
Commitments and contingencies Stockholders’ equity: Common Stock
22,829 22,803 Paid-in capital 136,541 134,999 Retained earnings
1,318,961 1,275,060 Total stockholders’
equity 1,478,331 1,432,862 Total
liabilities and stockholders’ equity $ 1,722,224 $ 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.
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version on businesswire.com: http://www.businesswire.com/news/home/20180221006272/en/
Sanderson Farms, Inc.Mike Cockrell,
601-649-4030Treasurer & Chief Financial Officer
Sanderson Farms (NASDAQ:SAFM)
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