Sanderson Farms reports fiscal Q3 net earnings of US$67.9M, up 136.6% from year-ago period as net sales rise 18.3% to US$739M

Nevin Barich

LAUREL, Massachusetts , August 27, 2013 (press release) – Sanderson Farms, Inc. (NASDAQ: SAFM) today reported results for the third fiscal quarter and nine months ended July 31, 2013.

Net sales for the third quarter of fiscal 2013 were $739.0 million compared with $624.9 million for the same period a year ago. For the quarter, the Company reported net income of $67.9 million, or $2.95 per share, compared with net income of $28.7 million, or $1.25 per share, for the third quarter of fiscal 2012.

Net sales for the first nine months of fiscal 2013 were $1,955.9 million compared with $1,737.7 million for the first nine months of fiscal 2012. Net income for the first nine months of fiscal 2013 totaled $85.3 million, or $3.71 per share, compared with net income of $44.6 million, or $1.94 per share, for the first nine months of last year.

“Sanderson Farms’ financial results for the third quarter of fiscal 2013 reflect improved market conditions when compared to last year’s third quarter,” said Joe F. Sanderson, Jr., chairman and chief executive officer of Sanderson Farms, Inc. “Market prices for poultry products were higher than the third quarter of fiscal 2012, as the Georgia Dock whole bird price remained historically high during the quarter. The Georgia Dock price reflects steady retail grocery store demand. In addition, market prices for wings, while below last year’s third quarter levels, improved during the quarter. Boneless breast meat prices remained well above last year’s prices and peaked in May as several quick serve restaurants and other food service establishments featured chicken on their menus.”

Overall market prices for poultry products were higher in the third quarter of fiscal 2013 compared with prices in the third quarter of fiscal 2012. As measured by a simple average of the Georgia dock price for whole chickens, prices increased 11.6 percent compared with the third quarter of fiscal 2012. Boneless breast prices improved when compared to last year’s third fiscal quarter, averaging 32.3 percent higher than the prior-year period. Jumbo wing prices averaged $1.28 per pound for the third quarter of fiscal 2013, down 19.3 percent from the average of $1.59 per pound for the third quarter of fiscal 2012. The average quoted market price for bulk leg quarters was essentially flat during the quarter, averaging $0.51 per pound during the third fiscal quarter of 2013 compared to $0.50 during the third fiscal quarter of 2012. Cash prices for corn delivered to the Company increased 8.1 percent compared with the third quarter a year ago, while the price for soybean meal delivered to the Company increased 10.3 percent. For the nine months ended July 31, 2013, the Company’s cash prices for corn increased 13.2 percent and soybean meal increased 29.3 percent when compared to the nine months ended July 31, 2012.

“While poultry market prices improved during our third fiscal quarter, the Company continued to experience higher grain prices compared with the same period last year,” added Sanderson. “Market prices for grain have remained high through most of August, but favorable growing conditions this summer have fueled considerable optimism about this year’s corn and soybean crops. While the available grain quantity and prices during the coming months will ultimately depend on this year’s final crop performance, prices have recently moved lower. If we priced all of our needs for the remainder of the fiscal year at yesterday’s market prices, cash paid for feed grains would be approximately $79 million higher during fiscal 2013 compared to fiscal 2012. However, fourth quarter cash market prices would be $65 million lower than last year’s fourth quarter. We have priced our grain needs through August but will be on the market for our needs starting in September.”

“We are also pleased to report that our due diligence and related permitting processes are substantially complete for our previously announced Palestine, Texas facility,” said Sanderson. “Most conditions precedent to breaking ground on the new poultry complex have been met, and we hope to finalize a date to begin construction of the new feed mill, hatchery, processing plant and wastewater treatment facilities in September, subject to final approval by our board of directors. We greatly appreciate the support, encouragement and welcome we have received from the public officials and communities in Palestine, Anderson County, Freestone County and Austin, and we are anxious to begin this next phase of growth for our shareholders, employees and other stakeholders.”

Sanderson Farms will hold a conference call to discuss this press release today, August 27, 2013, 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. 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, 2013. Those without internet access or who prefer to participate via telephone may call 888-228-5307, access code 8155309.

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.

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