Sanderson Farms, Inc. Reports Results for First Quarter of Fiscal 2009

LAUREL, Miss., Feb 26, 2009 (BUSINESS WIRE) — Sanderson Farms, Inc. (NASDAQ: SAFM) today reported results for the first fiscal quarter ended January 31, 2009.

Net sales for the first quarter of fiscal 2009 were $388.9 million compared with $362.6 million for the same period a year ago. For the quarter, the company had a net loss of $6.7 million, or $0.33 per share, compared with net income of $6.2 million, or $0.30 per share, for the first quarter of fiscal 2008.

“The results for the first quarter of fiscal 2009 reflect prevailing economic conditions and reduced consumer demand for protein consumed away from home,” said Joe F. Sanderson, Jr., chairman and chief executive officer of Sanderson Farms, Inc. “Demand for chicken products held steady in the retail grocery market, but the slowdown in restaurant traffic continues to adversely affect sales to our food service customers. While market prices improved during the quarter compared to where the markets stood at the end of fiscal 2008, it was not enough to offset our costs. Grain prices for the quarter were actually down sequentially compared to our fourth quarter of fiscal 2008, but were still higher than last year’s first quarter.”

According to Sanderson, overall market prices for poultry products were mixed during the first quarter of fiscal 2009 compared with the same three months of fiscal 2008. A simple average of the Georgia dock price for whole chickens was approximately 13 percent higher in the Company’s first fiscal quarter compared with the same period in 2008, reflecting the relative strength of the market for chicken in the retail grocery market. Bulk leg quarter prices were down by almost 25 percent during the quarter compared with last year’s first quarter, as the difficult worldwide economic issues began to affect the Company’s export customers’ access to credit during the fourth quarter of calendar 2008. Boneless breast meat prices during the quarter were approximately 9 percent lower than the prior-year period, reflecting the soft market for any protein consumed away from home. Conversely, jumbo wing prices hit historic highs at an average of $1.15 per pound compared with an average of $1.08 per pound a year ago, reflecting strong seasonal demand during the football season and the Super Bowl. At the same time, costs for corn and soybean meal, the Company’s primary feed ingredients, increased 4.5 percent and 9.2 percent, respectively, compared with the first quarter a year ago.

“We do not expect demand to improve until the economy gains some traction and consumers resume spending and dining out again,” Sanderson continued. “We will continue to manage our operations as efficiently as possible through this cycle and we do not plan to return to full production until we see an improvement in market conditions. However, we do expect that our feed costs will be lower this year as grain prices are also being affected by the economy and reduced demand.

“We continue to believe market forces will balance supply and demand for our industry over the long-term. Until consumer demand returns, any market price improvement will have to come from supply side reductions,” concluded Sanderson.

Sanderson Farms will hold a conference call to discuss this press release today, February 26, 2009, 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 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 5, 2009. Those without Internet access may listen to the call by dialing (877) 718-5095.

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 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 2008 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, 2009.

 
 

SANDERSON FARMS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(Unaudited)
(In thousands, except per share amounts)
         
   

Three Months Ended

   

January 31,

   

2009

 

2008

Net sales   $ 388,884     $ 362,566  
Costs and expenses:        
Cost of sales     383,912       337,139  
Selling, general and administrative     11,914       13,805  
      395,826       350,944  
         
Operating income (loss)     (6,942 )     11,622  
         
Other income (expense):        
Interest income   7       72  
Interest expense     (3,211 )     (2,048 )
Other     (3 )     17  
      (3,207 )     (1,959 )
         
Income (loss) before income taxes     (10,149 )     9,663  
Income tax expense (benefit)     (3,400 )     3,441  
Net income (loss)   $ (6,749 )   $ 6,222  
         
Basic income (loss) per share   $ (0.33 )   $ 0.31  
Diluted income (loss) per share   $ (0.33 )   $ 0.30  
Dividends per share   $ 0.14     $ 0.14  
         
Weighted average shares outstanding:        
Basic     20,296       20,239  
Diluted     20,296       20,416  
 
 

SANDERSON FARMS, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands)
         
   

January 31,

 

October 31,

   

2009

 

2008

    (Unaudited)    
ASSETS        
Current assets:        
Cash and cash equivalents   $ 509     $ 4,261  
Accounts receivable, net     65,305       63,516  
Inventories     137,121       137,015  
Refundable income taxes     39,658       31,033  
Deferred tax asset     925       15,885  
Prepaid expenses and other current assets     22,594       15,853  
Total current assets     266,112       267,563  
         
Property, plant and equipment     729,903       722,815  
Less accumulated depreciation     (322,268 )     (311,485 )
      407,635       411,330  
         
Other assets     2,226       2,265  
Total assets   $ 675,973     $ 681,158  
         
         
LIABILITIES AND STOCKHOLDERS’ EQUITY        
Current liabilities:        
Accounts payable and accrued expenses   $ 61,851     $ 77,565  
Current maturities of long-term debt     968       1,219  
Total current liabilities     62,819       78,784  
         
Long-term debt, less current maturities     245,273       225,322  
Claims payable     2,600       3,000  
Deferred income taxes     20,015       20,085  
Stockholders’ equity:        
Common stock     20,309       20,289  
Paid-in capital     29,811       28,859  
Retained earnings     295,146       304,819  
Total stockholders’ equity     345,266       353,967  
Total liabilities and stockholder’s equity   $ 675,973     $ 681,158  

SOURCE: Sanderson Farms, Inc.

Sanderson Farms, Inc.
Mike Cockrell
Treasurer & Chief Financial Officer
601-649-4030