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Sanderson Farms, Inc. Reports Results For Third Quarter Of Fiscal 2012

Stocks in this article: SAFM

Sanderson Farms will hold a conference call to discuss this press release today, August 28, 2012, 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 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 September 6, 2012. Those without internet access or who prefer to listen via telephone may call 888-726-2458, access code 2613435.

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 Annual Report on Form10-K for the year ended October 31,2011 and its subsequent Quarterly Reports on Form 10-Q filed with the SEC, 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, 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, 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 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 the Company’s 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. Most of 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 (but are not limited to) statements of the Company’s belief about future earnings, expansion plans, sales, production, and expenses, including feed grain costs.



Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

Three Months Ended

Nine Months Ended

July 31,

July 31,





Net sales $ 624,854 $ 511,169 $ 1,737,726 $ 1,418,243
Costs and expenses:
Cost of sales 555,240 556,596 1,600,145 1,500,901

Live inventory adjustment

0 22,000 0 22,000
Selling, general and administrative   20,704     17,009     56,772     54,233  
  575,944     595,605     1,656,917     1,577,134  
Operating income (loss) 48,910 (84,436 ) 80,809 (158,891 )
Other income (expense):
Interest income 3 8 9 38
Interest expense (1,999 ) (2,023 ) (7,387 ) (3,970 )
Other   5     4     (560 )   501  
  (1,991 )   (2,011 )   (7,938 )   (3,431 )
Income (loss) before income taxes 46,919 (86,447 ) 72,871 (162,322 )
Income tax expense (benefit)   18,198     (30,764 )   28,274     (56,807 )
Net income (loss) $ 28,721   $ (55,683 ) $ 44,597   $ (105,515 )
Basic earnings (loss) per share $ 1.25   $ (2.51 ) $ 1.94   $ (4.77 )
Diluted earnings (loss) per share $ 1.25   $ (2.51 ) $ 1.94   $ (4.77 )
Dividends per share $ 0.17   $ 0.17   $ 0.51   $ 0.51  


Condensed Consolidated Balance Sheets

(In thousands)

July 31,

October 31,



Current assets:
Cash and cash equivalents $ 26,621 $ 11,075
Accounts receivable, net 88,278 94,021
Inventories 233,355 211,753
Refundable income taxes 0 88,512
Deferred income taxes 2,729 6,357
Prepaid expenses and other current assets   31,273     26,240  
Total current assets 382,256 437,958
Property, plant and equipment 976,184 939,535
Less accumulated depreciation   (476,945 )   (434,030 )
499,239 505,505
Other assets   3,065     5,058  
Total assets $ 884,560   $ 948,521  
Current liabilities:
Accounts payable and accrued expenses $ 124,237 $ 102,556
Current maturities of long-term debt   11,106     11,106  
Total current liabilities 135,343 113,662
Long-term debt, less current maturities 145,437 273,670
Claims payable 4,000 3,300
Deferred income taxes 56,228 50,989
Stockholders' equity:
Common stock 22,971 22,872
Paid-in capital 134,198 130,528
Retained earnings   386,383     353,500  
Total stockholders’ equity   543,552     506,900  
Total liabilities and stockholder’s equity $ 884,560   $ 948,521  


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