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.
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SANDERSON FARMS, INC. AND SUBSIDIARIES |
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Condensed Consolidated Statements of Operations |
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Three Months Ended |
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January 31, |
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2009 |
2008 |
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| 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 | ||||||
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SANDERSON FARMS, INC. AND SUBSIDIARIES |
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Condensed Consolidated Balance Sheets |
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January 31, |
October 31, |
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2009 |
2008 |
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| 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