SANDERSON FARM : Sanderson Farms, Inc. Reports Results for Third Quarter of Fiscal 2010
08/23/2010| 06:35am US/Eastern
Sanderson Farms, Inc. (NASDAQ: SAFM) today reported results for the
third fiscal quarter and nine months ended July 31, 2010.
Net sales for the third quarter of fiscal 2010 were $489.1 million
compared with $504.8 million for the same period a year ago. For the
quarter, the Company reported net income of $36.1 million, or $1.55 per
share, compared with $43.0 million, or $2.06 per share, for the third
quarter of fiscal 2009.
Net sales for the first nine months of fiscal 2010 were $1,396.3 million
compared with $1,320.5 million for the first nine months of fiscal 2009.
Net income for the first nine months of fiscal 2010 totaled
$87.0 million, or $3.96 per share, compared with $62.5 million, or $3.00
per share, for the first nine months of last year.
?Sanderson Farms' financial results for the third quarter of fiscal 2010
reflect favorable market conditions and solid execution in our
operations, offset by the effect of the extreme heat on our live
operations,? said Joe F. Sanderson, Jr., chairman and chief executive
officer of Sanderson Farms, Inc. ?Market prices for poultry products
were lower than last year's third quarter. Retail grocery store demand
has remained strong, although food service demand has remained sluggish,
and will likely remain that way until the employment market gains
traction and more consumers return to restaurants. Overall, our
operations continue to run well, resulting in solid operating margins
for the third quarter. We were also able to benefit from slightly lower
costs for corn and soybean meal, our primary feed ingredients, compared
with the same period a year ago. Despite lower grain costs, live
production costs were negatively affected by the extreme heat across our
production areas. Heat negatively impacts live weights and feed
conversions, which in turn results in fewer pounds processed and sold.?
According to Sanderson, overall market prices for poultry products were
slightly lower in the third quarter of fiscal 2010 compared with prices
in the third quarter of fiscal 2009. As measured by a simple average of
the Georgia dock price for whole chickens, prices were relatively flat,
showing a one percent decline compared with the third quarter of fiscal
2009. Driven by seasonal demand, boneless breast meat prices improved
during the quarter, and averaged almost nine percent higher than the
prior-year period, and averaged 7.9 percent higher for the first nine
months of the year compared with the prior year. Jumbo wing prices
weakened seasonally and averaged $1.07 per pound for the third quarter
of fiscal 2010, down 19 percent from the average of $1.32 per pound for
the third quarter of fiscal 2009. The average quoted market price for
bulk leg quarters decreased approximately 22 percent for the quarter,
reflecting weaker export sales. Cash prices for corn and soybean meal
delivered to the Company decreased 9.3 percent and
10.2 percent, respectively, compared with the third quarter a year ago.
For the nine months ended July 31, 2010, corn decreased 8.4 percent and
soybean meal increased 1.3 percent when compared to the nine
months ended July 31, 2009.
?Solid execution through our first three fiscal quarters by our managers
has put the Company in a position where it is probable that the
Company's fiscal 2010 earnings will trigger bonuses under the Company's
bonus award program and a contribution to the Company's Employee Stock
Ownership Plan,? added Sanderson. ?Accordingly, our third quarter
results reflect total accruals for both the bonus award program and the
ESOP of approximately $16.1 million. Approximately $8.7 million of this
total is reflected in our cost of goods sold for the quarter, with $7.4
million in administrative costs. By comparison, our results for the
third fiscal quarter of 2009 included total accruals for bonuses and the
ESOP of $14.6 million, with $6.3 million allocated to cost of goods sold
and $8.3 million to administrative costs.
?The development of our new Kinston, North Carolina, complex is moving
forward on schedule,? added Sanderson. ?We have moved into the hatchery,
the feed mill will be completed soon, and we expect to begin processing
birds in January 2011. We look forward to the new opportunities this
plant will provide for Sanderson Farms, our employees, customers and
Sanderson Farms will hold a conference call to discuss this press
release today, August 23, 2010, 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
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
August 31, 2010. Those without internet access or who prefer to listen
via telephone may call 800-817-8869, access code 1490852.
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 Global Select Market
under the symbol SAFM.
This press release includes forward-looking statements within the
meaning of the ?safe harbor? provisions of the Private Securities
Litigation Reform Act of 1995, 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 Quarterly Reports on
Form 10-Q for the quarters ended April 30, 2010 and July 31, 2010, and
(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, either 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.
(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
(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 impact the supply of feed grains.
(12)Failure to respond to changing consumer preferences.
(13) Failure to successfully and efficiently start up and run a new
plant or integrate any business the Company might acquire.
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, the words ?believes?, ?estimates?, ?plans?,
?expects?, ?should?, ?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.