Sanderson Farms, Inc. (NASDAQ: SAFM) today reported results for its second fiscal quarter ended April 30, 2008.
Net sales for the second quarter of fiscal 2008 were $433.9 million compared with $360.5 million for the same period a year ago. For the quarter, net income was $6.2 million, or $0.30 per share, compared with net income of $26.9 million, or $1.33 per share, for the second quarter of fiscal 2007.
Net sales for the first six months of fiscal 2008 were $796.4 million compared with $653.2 million for the first half of fiscal 2007. Net income for the first half of the year totaled $12.4 million, or $0.61 per share, compared with net income of $24.1 million, or $1.19 per share, for the first six months of last year.
“We are pleased to report a profit during our second fiscal quarter, in spite of challenging industry fundamentals," said Joe F. Sanderson, Jr., chairman and chief executive officer of Sanderson Farms, Inc. “Like others in our industry, the Company’s financial results were affected by feed grain costs, which were significantly higher than they were in the same period a year ago, and higher than the first quarter of this year. We expect this trend to continue with feed grain costs projected to remain high and volatile at least through fiscal 2009. Despite these higher costs, we continue to focus on improving the efficiency with which we operate, and the number of pounds we have to leverage into the market to absorb these costs. Overall, we are pleased with the solid performance of our operations in a difficult environment.”
According to Sanderson, overall market prices for poultry products were mixed in the second quarter of fiscal 2008 compared with prices a year ago. As measured by a simple average of the Georgia dock price for whole chickens, prices increased approximately 6.1% in the Company's second fiscal quarter compared with the same period in 2007. Bulk leg quarter prices were also higher, up 3.9% compared with last year's second quarter. However, boneless breast meat prices during the quarter were approximately 10.1% lower than the prior year period. Jumbo wing prices averaged $0.97 per pound during the second quarter of fiscal 2008, compared with the average of $1.15 per pound during the second quarter of fiscal 2007, a decrease of 15.4%. At the same time, the Company’s costs for corn and soybean meal, the Company's primary feed ingredients, increased 28.3% and 46.8%, respectively, compared with the second quarter a year ago. For the first six months of the fiscal year, these costs have increased 21.7% and 44.4%, respectively.
“We recognize that there are many things about our business over which we have no control, including the higher grain prices and the constant variability in market prices for chicken products,” added Sanderson. “While we remain confident that the fundamental rules of supply and demand will work to maintain industry profitability over the long term, we also note that current conditions are creating short-term fluctuations in markets and profitability. Egg sets for early May have been lower than a year ago, which bodes well for future supply.”
Sanderson Farms will hold a conference call to discuss this press release today, May 22, 2008, 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 June 24, 2008. Those without Internet access may listen to the call by dialing (877) 856-1965.
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 2007 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 second quarter ended April 30, 2008.
| SANDERSON FARMS, INC. AND SUBSIDIARIES | ||||||||||||||||
| Condensed Consolidated Statements of Income | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| April 30, | April 30, | |||||||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||||||
| Net sales | $ | 433,876 | $ | 360,471 | $ | 796,442 | $ | 653,182 | ||||||||
| Costs and expenses: | ||||||||||||||||
| Cost of sales | 409,250 | 303,764 | 746,389 | 587,437 | ||||||||||||
| Selling, general and administrative | 14,146 | 12,988 | 27,951 | 25,455 | ||||||||||||
| 423,396 | 316,752 | 774,340 | 612,892 | |||||||||||||
| Operating income | 10,480 | 43,719 | 22,102 | 40,290 | ||||||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | 23 | 61 | 95 | 107 | ||||||||||||
| Interest expense | (1,806 | ) | (1,266 | ) | (3,854 | ) | (2,486 | ) | ||||||||
| Other | 24 | 7 | 41 | 11 | ||||||||||||
| (1,759 | ) | (1,198 | ) | (3,718 | ) | (2,368 | ) | |||||||||
| Income before income taxes | 8,721 | 42,521 | 18,384 | 37,922 | ||||||||||||
| Income tax expense | 2,504 | 15,590 | 5,945 | 13,840 | ||||||||||||
| Net income | $ | 6,217 | $ | 26,931 | $ | 12,439 | $ | 24,082 | ||||||||
| Basic earnings per share | $ | 0.31 | $ | 1.34 | $ | 0.61 | $ | 1.20 | ||||||||
| Diluted earnings per share | $ | 0.30 | $ | 1.33 | $ | 0.61 | $ | 1.19 | ||||||||
| Dividends per share | $ | 0.14 | $ | 0.12 | $ | 0.28 | $ | 0.24 | ||||||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic | 20,269 | 20,120 | 20,254 | 20,111 | ||||||||||||
| Diluted | 20,469 | 20,267 | 20,443 | 20,223 | ||||||||||||
| SANDERSON FARMS, INC. AND SUBSIDIARIES | ||||||||
| Condensed Consolidated Balance Sheets | ||||||||
| (In thousands) | ||||||||
| April 30, | October 31, | |||||||
| 2008 | 2007 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 6,759 | $ | 2,623 | ||||
| Accounts receivable, net | 76,121 | 69,484 | ||||||
| Refundable income taxes | 4,488 | 1,102 | ||||||
| Inventories | 172,698 | 119,258 | ||||||
| Prepaid expenses | 18,043 | 14,734 | ||||||
| Total current assets | 278,109 | 207,201 | ||||||
| Property, plant and equipment | 699,815 | 674,018 | ||||||
| Less accumulated depreciation | (301,590 | ) | (283,328 | ) | ||||
| 398,225 | 390,690 | |||||||
| Other assets | 2,728 | 2,482 | ||||||
| Total assets | $ | 679,062 | $ | 600,373 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | 98,953 | $ | 78,697 | ||||
| Current maturities of long-term debt | 462 | 455 | ||||||
| Total current liabilities | 99,415 | 79,152 | ||||||
| Long-term debt, less current maturities | 146,471 | 96,623 | ||||||
| Claims payable | 4,100 | 3,700 | ||||||
| Deferred income taxes | 15,245 | 16,352 | ||||||
| Stockholders' equity: | ||||||||
| Common stock | 20,276 | 20,239 | ||||||
| Paid-in capital | 27,344 | 24,719 | ||||||
| Retained earnings | 366,211 | 359,588 | ||||||
| Total stockholders' equity | 413,831 | 404,546 | ||||||
| $ | 679,062 | $ | 600,373 | |||||
Contacts:
Mike Cockrell, 601-649-4030
Treasurer
& Chief Financial Officer
