UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

___________________________

FORM 10-Q

___________________________

(MARK ONE)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~January 31,~~April 30, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 1-14977

___________________________

Sanderson Farms, Inc.

(Exact name of registrant as specified in its charter)

___________________________


Mississippi			64-0615843
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

127 Flynt Road, Laurel, Mississippi 39443

(Address of principal executive offices) (Zip Code)

(601) 649-4030

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report.)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $1 par value per share	SAFM	NASDAQ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS

DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. Common Stock, $1 Par Value Per Share: ~~22,323,097~~22,320,192 shares outstanding as of ~~February 22,~~May 24, 2022.

Table of Contents

TABLE OF CONTENTS

SANDERSON FARMS, INC. AND SUBSIDIARIES


PART I. FINANCIAL INFORMATION		3
Item 1.	Financial Statements (Unaudited)	3
	Condensed consolidated balance sheets—~~January 31,~~April 30 , 2022 and October 31, 2021	3
	Condensed consolidated statements of operations—Three and six months ended ~~January 31,~~April 3 0 , 2022 and 2021	4
	Condensed consolidated statements of stockholders' equity—Three an d six months ended ~~January 31,~~April 30 , 2022 and 2021	5
	Condensed consolidated statements of cash flows—~~Three~~Six months ended ~~January 31,~~April 3 0 , 2022 and 2021	6
	Notes to condensed consolidated financial statements—~~January 31,~~April 3 0 , 2022	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2628
Item 4.	Controls and Procedures	2729
PART II. OTHER INFORMATION		2729
Item 1.	Legal Proceedings	2729
Item 1A.	Risk Factors	2729
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2831
Item 6.	Exhibits	3032
INDEX TO EXHIBITS		3133
SIGNATURES		3234

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

SANDERSON FARMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except number of shares)


		January 31, 2022		October 31, 2021			April 30, 2022		October 31, 2021
		(Unaudited)		(Note 1)			(Unaudited)		(Note 1)
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	685,823	$	439,339	Cash and cash equivalents	$	829,124	$	439,339
Accounts receivable, net	Accounts receivable, net	224,082		223,865		Accounts receivable, net	260,438		223,865
Receivable from insurance companies	Receivable from insurance companies	—		2,057		Receivable from insurance companies	—		2,057
Inventories	Inventories	367,454		350,959		Inventories	434,458		350,959
Refundable income taxes	Refundable income taxes	—		7,418		Refundable income taxes	—		7,418
Prepaid expenses and other current assets	Prepaid expenses and other current assets	69,807		62,632		Prepaid expenses and other current assets	67,375		62,632
Total current assets	Total current assets	1,347,166		1,086,270		Total current assets	1,591,395		1,086,270
Property, plant and equipment, net	Property, plant and equipment, net	1,207,512		1,224,334		Property, plant and equipment, net	1,208,826		1,224,334
Right of use assets	Right of use assets	24,112		28,238		Right of use assets	20,618		28,238
Other assets	Other assets	5,927		6,191		Other assets	5,675		6,191
Total assets	Total assets	$	2,584,717	$	2,345,033	Total assets	$	2,826,514	$	2,345,033
Liabilities and stockholders’ equity	Liabilities and stockholders’ equity					Liabilities and stockholders’ equity
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	206,895	$	152,421	Accounts payable	$	169,621	$	152,421
Dividends payable	Dividends payable	9,823		—		Dividends payable	9,821		—
Accrued expenses	Accrued expenses	80,566		144,453		Accrued expenses	86,126		144,453
Lease liabilities	Lease liabilities	10,707		12,189		Lease liabilities	9,120		12,189
Accrued income taxes	Accrued income taxes	50,946		—		Accrued income taxes	13,159		—

Total current liabilities	Total current liabilities	358,937		309,063		Total current liabilities	287,847		309,063

Claims payable and other liabilities	Claims payable and other liabilities	13,005		13,078		Claims payable and other liabilities	13,203		13,078
Deferred income taxes	Deferred income taxes	160,465		156,531		Deferred income taxes	155,752		156,531
Long-term lease liabilities	Long-term lease liabilities	13,477		16,122		Long-term lease liabilities	11,570		16,122
Commitments and contingencies	Commitments and contingencies	0		0		Commitments and contingencies	0		0
Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Preferred Stock:	Preferred Stock:					Preferred Stock:
Series A Junior Participating Preferred Stock, $100 par value: authorized 500,000 shares, none issued	Series A Junior Participating Preferred Stock, $100 par value: authorized 500,000 shares, none issued	0		0		Series A Junior Participating Preferred Stock, $100 par value: authorized 500,000 shares, none issued	0		0
Par value to be determined by the Board of Directors: authorized 4,500,000 shares; none issued	Par value to be determined by the Board of Directors: authorized 4,500,000 shares; none issued	0		0		Par value to be determined by the Board of Directors: authorized 4,500,000 shares; none issued	0		0
Common Stock, $1 par value: authorized 100,000,000 shares; issued and outstanding shares—22,324,066 and 22,329,731 at January 31, 2022 and October 31, 2021, respectively		22,324		22,330
Common Stock, $1 par value: authorized 100,000,000 shares; issued and outstanding shares—22,320,192 and 22,329,731 at April 30, 2022 and October 31, 2021, respectively						Common Stock, $1 par value: authorized 100,000,000 shares; issued and outstanding shares—22,320,192 and 22,329,731 at April 30, 2022 and October 31, 2021, respectively	22,320		22,330
Paid-in capital	Paid-in capital	111,133		105,517		Paid-in capital	119,077		105,517
Retained earnings	Retained earnings	1,905,376		1,722,392		Retained earnings	2,216,745		1,722,392
Total stockholders’ equity	Total stockholders’ equity	2,038,833		1,850,239		Total stockholders’ equity	2,358,142		1,850,239
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	2,584,717	$	2,345,033	Total liabilities and stockholders’ equity	$	2,826,514	$	2,345,033

See notes to condensed consolidated financial statements.

Table of Contents

SANDERSON FARMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(In thousands, except per share amounts)


		Three Months Ended January 31,				Three Months Ended April 30,				Six Months Ended April 30,
		2022		2021				2022		2021		2022		2021
Net sales	Net sales	$	1,327,428	$	909,306		Net sales	$	1,539,714	$	1,133,880	$	2,867,142	$	2,043,186
Cost and expenses:	Cost and expenses:						Cost and expenses:
Cost of sales	Cost of sales	1,008,054		839,322			Cost of sales	1,051,845		941,936		2,059,899		1,781,258

Selling, general and administrative	Selling, general and administrative	65,738		56,599			Selling, general and administrative	66,382		64,245		132,120		120,844
		1,073,792		895,921				1,118,227		1,006,181		2,192,019		1,902,102
Operating income	Operating income	253,636		13,385			Operating income	421,487		127,699		675,123		141,084
Other income (expense):	Other income (expense):						Other income (expense):
Interest income	Interest income	97		—			Interest income	67		—		164		—
Interest expense	Interest expense	(577)		(638)			Interest expense	(567)		(697)		(1,144)		(1,335)
Other	Other	3		3			Other	3		13		6		16
		(477)		(635)				(497)		(684)		(974)		(1,319)
Income before income taxes	Income before income taxes	253,159		12,750			Income before income taxes	420,990		127,015		674,149		139,765
Income tax expense	Income tax expense	60,352		3,272			Income tax expense	99,800		30,104		160,152		33,376
Net income	Net income	$	192,807	$	9,478		Net income	$	321,190	$	96,911	$	513,997	$	106,389
Earnings per share:	Earnings per share:						Earnings per share:
Basic	Basic	$	8.64	$	0.42		Basic	$	14.39	$	4.34	$	23.03	$	4.76
Diluted	Diluted	$	8.64	$	0.42		Diluted	$	14.39	$	4.34	$	23.03	$	4.76
Dividends per share	Dividends per share	$	0.44	$	0.44		Dividends per share	$	0.44	$	0.44	$	0.88	$	0.88

See notes to condensed consolidated financial statements.

Table of Contents

SANDERSON FARMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)

(In thousands, except shares and per share amounts)


Fiscal Year 2021	Fiscal Year 2021	Common Stock			Paid-In Capital				Retained Earnings				Total Stockholders’ Equity		Fiscal Year 2021		Common Stock							Paid-In Capital		Retained Earnings		Total Stockholders’ Equity
		Shares	Amount								Shares								Amount
Balance at October 31, 2020	Balance at October 31, 2020	22,251,071	$	22,251			$	90,420			$	1,306,602			$	1,419,273		Balance at October 31, 2020	22,251,071			$	22,251			$	90,420	$	1,306,602	$	1,419,273
Net income - first quarter 2021	Net income - first quarter 2021	—	—		—				9,478				9,478		Net income - first quarter 2021		—			—				—		9,478		9,478
Cash dividends ($0.44 per share)	Cash dividends ($0.44 per share)	—	—		—				(9,824)				(9,824)		Cash dividends ($0.44 per share)		—			—				—		(9,824)		(9,824)
Stock compensation plan transactions	Stock compensation plan transactions	74,564	75		(1,667)				—				(1,592)		Stock compensation plan transactions		74,564			75				(1,667)		—		(1,592)
Amortization of unearned compensation	Amortization of unearned compensation	—	—		2,147				—				2,147		Amortization of unearned compensation		—			—				2,147		—		2,147
Balance at January 31, 2021	Balance at January 31, 2021	22,325,635	$	22,326	$	90,900			$	1,306,256			$	1,419,482	Balance at January 31, 2021		22,325,635			$	22,326			$	90,900	$	1,306,256	$	1,419,482
Net income - second quarter 2021															Net income - second quarter 2021		—			—				—		96,911		96,911
Cash dividends ($0.44 per share)															Cash dividends ($0.44 per share)		—			—				—		(9,825)		(9,825)
Stock compensation plan transactions															Stock compensation plan transactions		6,675			6				1,514		—		1,520
Amortization of unearned compensation															Amortization of unearned compensation		—			—				2,202		—		2,202
Balance at April 30, 2021															Balance at April 30, 2021		22,332,310			$	22,332			$	94,616	$	1,393,342	$	1,510,290


Fiscal Year 2022	Fiscal Year 2022	Common Stock			Paid-In Capital				Retained Earnings				Total Stockholders’ Equity		Fiscal Year 2022		Common Stock							Paid-In Capital		Retained Earnings		Total Stockholders’ Equity
		Shares	Amount								Shares								Amount
Balance at October 31, 2021	Balance at October 31, 2021	22,329,731	$	22,330			$	105,517			$	1,722,392			$	1,850,239		Balance at October 31, 2021	22,329,731			$	22,330			$	105,517	$	1,722,392	$	1,850,239
Net income - first quarter 2022	Net income - first quarter 2022	—	—		—				192,807				192,807		Net income - first quarter 2022		—			—				—		192,807		192,807
Cash dividends ($0.44 per share)	Cash dividends ($0.44 per share)	—	—		—				(9,823)				(9,823)		Cash dividends ($0.44 per share)		—			—				—		(9,823)		(9,823)
Stock compensation plan transactions	Stock compensation plan transactions	(5,665)	(6)		(2,267)				—				(2,273)		Stock compensation plan transactions		(5,665)			(6)				(2,267)		—		(2,273)
Amortization of unearned compensation	Amortization of unearned compensation	—	—		7,883				—				7,883		Amortization of unearned compensation		—			—				7,883		—		7,883
Balance at January 31, 2022	Balance at January 31, 2022	22,324,066	$	22,324	$	111,133			$	1,905,376			$	2,038,833	Balance at January 31, 2022		22,324,066			$	22,324			$	111,133	$	1,905,376	$	2,038,833
Net income - second quarter 2022															Net income - second quarter 2022		—			—				—		321,190		321,190
Cash dividends ($0.44 per share)															Cash dividends ($0.44 per share)		—			—				—		(9,821)		(9,821)
Stock compensation plan transactions															Stock compensation plan transactions		(3,874)			(4)				(4)		—		(8)
Amortization of unearned compensation															Amortization of unearned compensation		—			—				7,948		—		7,948
Balance at April 30, 2022															Balance at April 30, 2022		22,320,192			$	22,320			$	119,077	$	2,216,745	$	2,358,142

See notes to condensed consolidated financial statements.

Table of Contents

SANDERSON FARMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In thousands)


		Three Months Ended January 31,					Six Months Ended April 30,
		2022		2021			2022		2021
Operating activities	Operating activities					Operating activities
Net income	Net income	$	192,807	$	9,478	Net income	$	513,997	$	106,389
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	43,523		40,566		Depreciation and amortization	86,523		81,618
Amortization of share-based compensation	Amortization of share-based compensation	8,406		2,671		Amortization of share-based compensation	16,702		5,751

Deferred income taxes	Deferred income taxes	3,934		1,169		Deferred income taxes	(779)		3,681
Gain on asset disposals		(119)		(48)
Loss on asset disposals						Loss on asset disposals	58		46
Change in assets and liabilities:	Change in assets and liabilities:					Change in assets and liabilities:
Accounts receivable - trade	Accounts receivable - trade	(217)		(20,165)		Accounts receivable - trade	(36,573)		(41,324)
Accounts receivable - insurance	Accounts receivable - insurance	2,057		—		Accounts receivable - insurance	2,057		(3,951)
Income taxes	Income taxes	58,364		2,076		Income taxes	20,576		21,458
Inventories	Inventories	(16,495)		(35,665)		Inventories	(83,499)		(57,435)
Prepaid expenses and other assets	Prepaid expenses and other assets	(7,164)		(4,191)		Prepaid expenses and other assets	(4,732)		41
Right of use assets	Right of use assets	4,126		3,891		Right of use assets	7,621		8,587
Lease liabilities	Lease liabilities	(4,126)		(3,891)		Lease liabilities	(7,621)		(8,587)
Accounts payable	Accounts payable	55,865		17,995		Accounts payable	19,560		23,209
Accrued expenses and other liabilities	Accrued expenses and other liabilities	(64,459)		(4,455)		Accrued expenses and other liabilities	(59,011)		4,092
Total adjustments	Total adjustments	83,695		(47)		Total adjustments	(39,118)		37,186
Net cash provided by operating activities	Net cash provided by operating activities	276,502		9,431		Net cash provided by operating activities	474,879		143,575
Investing activities	Investing activities					Investing activities
Capital expenditures	Capital expenditures	(27,876)		(36,859)		Capital expenditures	(73,134)		(86,345)
Net proceeds from sale of property and equipment	Net proceeds from sale of property and equipment	156		65		Net proceeds from sale of property and equipment	206		452
Net cash used in investing activities	Net cash used in investing activities	(27,720)		(36,794)		Net cash used in investing activities	(72,928)		(85,893)
Financing activities	Financing activities					Financing activities

Payment of debt issuance costs						Payment of debt issuance costs	—		(1,877)
Borrowings from revolving line of credit	Borrowings from revolving line of credit	—		30,000		Borrowings from revolving line of credit	—		30,000

Proceeds from issuance of restricted stock under stock compensation plans	Proceeds from issuance of restricted stock under stock compensation plans	656		265		Proceeds from issuance of restricted stock under stock compensation plans	656		523
Payments from issuance of common stock under stock compensation plans	Payments from issuance of common stock under stock compensation plans	(2,954)		(1,873)		Payments from issuance of common stock under stock compensation plans	(2,999)		(2,655)

Dividends paid						Dividends paid	(9,823)		(9,823)
Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities	(2,298)		28,392		Net cash provided by (used in) financing activities	(12,166)		16,168
Net change in cash and cash equivalents	Net change in cash and cash equivalents	246,484		1,029		Net change in cash and cash equivalents	389,785		73,850
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	439,339		49,061		Cash and cash equivalents at beginning of period	439,339		49,061
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	685,823	$	50,090	Cash and cash equivalents at end of period	$	829,124	$	122,911
Supplemental disclosure of non-cash investing and financing activities:	Supplemental disclosure of non-cash investing and financing activities:					Supplemental disclosure of non-cash investing and financing activities:
Capital expenditures included in accounts payable	Capital expenditures included in accounts payable	$	3,740	$	5,405	Capital expenditures included in accounts payable	$	2,770	$	5,117
Dividends payable	Dividends payable	$	9,823	$	9,823	Dividends payable	$	9,821	$	9,826

See notes to condensed consolidated financial statements.

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SANDERSON FARMS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

~~January 31,~~April 30, 2022

NOTE 1—ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments consisting of normal recurring accruals considered necessary for a fair presentation have been included. Operating results for the three and six months ended ~~January 31,~~April 30, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending October 31, 2022.

The condensed consolidated balance sheet at October 31, 2021 has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. For further information, reference is made to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for its fiscal year ended October 31, 2021.

New Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Accounting Standards Codification 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2020, our fiscal 2022. We adopted this guidance during the first quarter of fiscal 2022, and adoption did not materially affect our consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying U.S. GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. This guidance, which became effective on March 12, 2020, and can be applied through December 31, 2022, has not affected our consolidated financial statements. We have a revolving credit facility that references LIBOR, and we are assessing how this standard may be applied to specific contract modifications through December 31, 2022.

NOTE 2—REVENUE

Revenue Recognition

The Company recognizes revenue in connection with a contract in which the Company has agreed to sell, and a customer has agreed to purchase, specific quantities of product at agreed-upon prices and when the Company's performance obligation related to that contract has been satisfied. In the majority of its contracts with customers, the Company's performance obligation is satisfied when delivery of the product has occurred, either at the customer's facility or the Company's facility, depending on the terms of each contract. In a smaller number of contracts, ownership of the product passes from the Company to the customer at some point during transit, at which time the performance obligation is satisfied and revenue is recognized. Revenue and related receivables are recognized based on the transaction price within the contract and are reduced by estimated or known amounts for items such as rebates, discounts, cooperative advertising allowances and other various items.

The cost incurred for shipping and handling activities to deliver the product to the customer is recognized in cost of sales during the period in which the corresponding revenue is recognized. Where shipping and handling activities occur after the customer has obtained control of the product, the Company has elected to account for those expenses as fulfillment costs in cost of sales, rather than an additional promised service. Revenue is reported gross of any freight charge that is separately invoiced to a customer, and all freight costs are accounted for as cost of sales.

Due to the nature of our contracts, commissions associated with such contracts provide only a short-term benefit (i.e. less than one year); therefore, we recognize costs of commissions paid to third-party brokers as selling, general and administrative expenses.

Table of Contents

Disaggregation of Revenue

The following ~~table disaggregates~~tables disaggregate our net sales by product category:


Product Category	Product Category	Three Months Ended January 31, 2022		Three Months Ended January 31, 2021		Product Category	Three Months Ended April 30, 2022		Three Months Ended April 30, 2021
		(in thousands)					(in thousands)
Fresh, vacuum-sealed chicken	Fresh, vacuum-sealed chicken	$	519,631	$	294,118	Fresh, vacuum-sealed chicken	$	584,707	$	428,661
Fresh, chill-packed chicken	Fresh, chill-packed chicken	427,191		376,252		Fresh, chill-packed chicken	474,228		387,328
Fresh, ice-packed chicken	Fresh, ice-packed chicken	229,125		131,681		Fresh, ice-packed chicken	318,647		193,757
Frozen chicken	Frozen chicken	80,624		63,403		Frozen chicken	78,677		71,924
Prepared chicken	Prepared chicken	64,256		38,915		Prepared chicken	75,585		46,498
Other	Other	6,601		4,937		Other	7,870		5,712
Total net sales	Total net sales	$	1,327,428	$	909,306	Total net sales	$	1,539,714	$	1,133,880


Product Category	Six Months Ended April 30, 2022		Six Months Ended April 30, 2021
	(in thousands)
Fresh, vacuum-sealed chicken	$	1,104,338	$	722,779
Fresh, chill-packed chicken	901,419		763,580
Fresh, ice-packed chicken	547,772		325,438
Frozen chicken	159,301		135,327
Prepared chicken	139,841		85,413
Other	14,471		10,649
Total net sales	$	2,867,142	$	2,043,186

NOTE 3—INVENTORIES

Inventories consisted of the following:


Inventory type	Inventory type	January 31, 2022		October 31, 2021		Inventory type	April 30, 2022		October 31, 2021
		(in thousands)					(in thousands)
Live poultry-broilers and breeders	Live poultry-broilers and breeders	$	236,713	$	229,245	Live poultry-broilers and breeders	$	279,301	$	229,245
Feed, eggs and other	Feed, eggs and other	62,813		57,994		Feed, eggs and other	77,209		57,994
Processed poultry	Processed poultry	42,911		42,775		Processed poultry	38,696		42,775
Prepared chicken	Prepared chicken	14,252		11,157		Prepared chicken	28,611		11,157
Packaging materials	Packaging materials	10,765		9,788		Packaging materials	10,641		9,788
Total Inventories	Total Inventories	$	367,454	$	350,959	Total Inventories	$	434,458	$	350,959

NOTE 4—PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment, net, consisted of the following:


Description	April 30, 2022		October 31, 2021
	(in thousands)
Land and buildings	$	984,721	$	976,012
Machinery and equipment	1,476,116		1,439,762
Work-in-process	33,099		19,924
	2,493,936		2,435,698
Less accumulated depreciation	(1,285,110)		(1,211,364)
Property, plant and equipment, net	$	1,208,826	$	1,224,334

Description January 31, 2022 October 31, 2021
(in thousands)
Land and buildings $ 978,853 $ 976,012
Machinery and equipment 1,467,741 1,439,762
Work-in-process 13,791 19,924
2,460,385 2,435,698
Less accumulated depreciation (1,252,873) (1,211,364)
Property, plant and equipment, net $ 1,207,512 $ 1,224,334

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NOTE 5—STOCK COMPENSATION PLANS

Refer to Note 10 and Note 11 of the Company’s October 31, 2021 audited financial statements in the Company's 2021 Annual Report on Form 10-K for further information on our employee benefit plans and stock based compensation plans, respectively. Total stock based compensation expense during the three and six months ended ~~January 31,~~April 30, 2022 was ~~$8.4~~$8.3 million and $16.7 million, respectively, as compared to total stock based compensation expense of ~~$2.7~~$3.1 million and $5.8 million, respectively, for the three and six months ended ~~January 31,~~April 30, 2021.

During the ~~three~~six months ended ~~January 31,~~April 30, 2022, participants in the Company’s Management Share Purchase Plan ("MSPP") elected to receive a total of 3,443 shares of restricted stock at an average price of $190.64 per share instead of a specified percentage of their cash compensation, and the Company issued 824 matching restricted shares. During the three and six months ended ~~January 31,~~April 30, 2022, the Company recorded compensation expense for the MSPP shares, included in the total stock based compensation expense above, of ~~$58,000,~~$70,000 and $128,000, respectively, as compared to ~~$75,000~~$125,000 and $200,000, respectively, during the three and six months ended ~~January 31,~~April 30, 2021.

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Pursuant to the Agreement and Plan of Merger with Walnut Sycamore Holdings LLC, a Delaware limited liability company (“Parent”), Sycamore Merger Sub LLC, a Delaware limited liability company and an indirect wholly owned subsidiary of Parent (“Merger Sub”), and solely for purposes of certain provisions specified therein, Wayne Farms LLC, a Delaware limited liability company (the “Merger Agreement”), no new cash compensation reduction elections under the MSPP may be made after August 8, 2021, and no participants may increase their cash compensation reduction elections under the MSPP after August 8, 2021.

During fiscal 2020 and 2021, the Company entered into performance share agreements that grant certain officers and key employees the right to receive shares of the Company's common stock, subject to the Company's achievement of certain performance measures. The performance share agreements specify a target number of shares that a participant can receive based upon the Company's average return on equity and average return on sales, as defined, during a two-year performance period beginning November 1 of each performance period. Although the performance share agreements have a two-year performance period, there is an additional one-year period during which the participant must remain employed by the Company before the shares are paid out. If the Company's average return on equity and average return on sales meet or exceed certain threshold amounts for the performance period, participants will receive 50 percent to 200 percent of the target number of shares, depending upon the Company's level of performance. Accruals for performance shares begin during the period management determines that achievement of the applicable performance based criteria is probable at some level. In estimating the probability of the number of shares that will be awarded, the Company considers, among other factors, current and projected grain costs and chicken volumes and pricing, as well as the amount of the Company's commitments to procure grain at a fixed price throughout the performance period. Due to the high level of volatility of these commodity prices and the impact that the change in pricing can have on the Company's results, the Company's assessment of probability can change from period to period and can result in a significant ~~revision~~revisions to the amounts accrued related to the arrangements, as the accruals are adjusted using the cumulative catch-up method of accounting.

The target number of shares specified in the performance share agreements executed on November 1, 2020 totaled 87,350. During the first quarter of fiscal 2022, the Company determined that achievement of the applicable performance based criteria for the November 1, 2020 agreements iswas probable at a level between threshold and target for the return on equity criteria and at a level between target and maximum for the return on sales criteria. Accordingly, the quarter ended January 31, 2022 includes compensation expense of ~~$5,137,000,~~$5.1 million, included in the total stock based compensation expense above, related to the agreements executed on November 1, 2020. During the second quarter of fiscal 2022, the Company determined that achievement of the applicable performance based criteria for the November 1, 2020 agreements is probable at the maximum level for both the return on sales and return on equity criteria. Due to the revision to the initial determination of probability, the Company recorded an additional catch-up accrual during the second quarter of fiscal 2022. Accordingly, the three months ended April 30, 2022 includes compensation expense of $5.9 million, included in the total stock based compensation expense above, as compared to no compensation expense related to those same agreements recorded during the quarter ended ~~January 31,~~April 30, 2021.

As of ~~January 31,~~April 30, 2022, the aggregate number of shares estimated to be awarded related to the performance share agreements entered into on November 1, 2020 totaled ~~88,924~~167,306 shares. The actual number of shares that can be awarded for those agreements could change materially from that estimate due to the Company's actual performance during the remaining ~~nine~~six months of the performance period ending October 31, 2022, and due to potential forfeitures. The Company will recognize the remaining unearned compensation related to these agreements over the remaining service period, which ends on October 31, 2023. Had the Company determined that it was probable that the maximum amount of those outstanding awards from the agreements entered into on November 1, 2020 would be earned, an additional $3.5 million of compensation expense would have been accrued as of January 31, 2022.

The Company also has performance share agreements in place with certain officers and key employees that were entered into on November 1, 2019. The target number of shares specified in those agreements totaled 56,575. The Company has determined that shares covered by these agreements have been earned at a level between the threshold and target for the portion

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dependent upon return on equity criteria and at a level between target and maximum for the portion dependent upon return on sales criteria. Accordingly, the quarter ended ~~January 31,~~April 30, 2022 includes compensation expense of ~~$881,000~~$659,000 related to those agreements, included in the total stock based compensation expense above, as compared to no compensation expense related to those agreements recorded during the quarter ended ~~January 31,~~April 30, 2021. There was no compensation expense recorded during the ~~first~~second quarter of fiscal 2021 related to these agreements, because the Company first determined it was probable that some portion of these shares would be earned during the third quarter of fiscal 2021. As of ~~January 31,~~April 30, 2022, the aggregate number of shares estimated to be awarded related to the performance share agreements entered into on November 1, 2019 totaled ~~60,682~~59,642 shares. Since the performance period for these agreements has ended, the actual number of shares that will be awarded can change only due to potential forfeitures during the remaining ~~nine~~six months of the service period ending October 31, 2022. The Company will recognize the remaining unearned compensation related to these agreements over the remaining service period.

Typically, the Company would have also entered into performance share agreements dated November 1, 2021, with its officers and key employees, but covenants in the Merger Agreement prohibited the Company from doing so.

The Company's compensation expense related to performance share agreements is summarized as follows (in thousands, except number of shares):

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~~Three Months Ended~~

~~Date of Performance Share Agreement~~

~~Number of shares issued (actual (a) or estimated (e))~~

~~January 31, 2022~~

~~January 31, 2021~~

~~November 1, 2019~~

~~60,682 (e)~~

~~881~~

—

~~November 1, 2020~~

~~88,924 (e)~~

~~5,137~~

—

~~Total performance share compensation expense~~

~~6,018~~

—


		Three Months Ended				Six Months Ended
Date of Performance Share Agreement	Number of shares issued (actual (a) or estimated (e))	April 30, 2022		April 30, 2021		April 30, 2022		April 30, 2021
November 1, 2019	59,642 (e)	$	659	—		$	1,540	—
November 1, 2020	167,306 (e)	5,907		—		11,044		—
Total performance share compensation expense		$	6,566	$	—	$	12,584	$	—

The Company has unvested restricted stock grants outstanding that were granted during prior fiscal years to its officers, key employees and outside directors. The aggregate number of shares outstanding at ~~January 31,~~April 30, 2022 related to all unvested restricted stock grants totaled ~~223,767.~~220,167. During the three and six months ended ~~January 31,~~April 30, 2022, the Company recorded compensation expense, included in the total stock based compensation expense above, of ~~$2.3~~$1.7 million and $4.0 million, respectively, related to restricted stock grants, as compared to ~~$2.6~~$3.0 million and $5.6 million, respectively, during the three and six months ended ~~January 31,~~April 30, 2021. The Company had ~~$13.2~~$11.2 million in unrecognized share-based compensation expense as of ~~January 31,~~April 30, 2022, which will be recognized over a weighted average remaining vesting period of approximately 1 year, 87 months. Typically, the Company would have made new restricted stock grants to its officers and key employees effective on November 1, 2021, but covenants in the Merger Agreement prohibited the Company from doing so.

NOTE 6—EARNINGS PER SHARE

Certain share-based payment awards described in Note 5 - Stock Compensation Plans above entitling holders to receive non-forfeitable dividends before vesting are considered participating securities and thus are included in the calculation of basic earnings per share, to the extent they are dilutive. These awards are included in the calculation of basic earnings per share under the two-class method. The two-class method allocates earnings for the period between common shareholders and other security holders. The participating awards receiving dividends are allocated the same amount of income as if they were vested shares.

The following ~~table presents~~tables present earnings per share:


		Three Months Ended					Three Months Ended
		January 31, 2022		January 31, 2021			April 30, 2022		April 30, 2021
		(in thousands, except per share amounts)					(in thousands, except per share amounts)
Net income	Net income	$	192,807	$	9,478	Net income	$	321,190	$	96,911
Distributed and undistributed (earnings) to unvested restricted stock	Distributed and undistributed (earnings) to unvested restricted stock	$	(2,186)	$	(133)	Distributed and undistributed (earnings) to unvested restricted stock	$	(3,555)	$	(1,343)
Distributed and undistributed earnings to common shareholders—Basic	Distributed and undistributed earnings to common shareholders—Basic	$	190,621	$	9,345	Distributed and undistributed earnings to common shareholders—Basic	$	317,635	$	95,568
Weighted average shares outstanding—Basic	Weighted average shares outstanding—Basic	22,069		22,010		Weighted average shares outstanding—Basic	22,074		22,021
Weighted average shares outstanding—Diluted	Weighted average shares outstanding—Diluted	22,069		22,010		Weighted average shares outstanding—Diluted	22,074		22,021
Earnings per common share—Basic	Earnings per common share—Basic	$	8.64	$	0.42	Earnings per common share—Basic	$	14.39	$	4.34
Earnings per common share—Diluted	Earnings per common share—Diluted	$	8.64	$	0.42	Earnings per common share—Diluted	$	14.39	$	4.34

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	Six Months Ended
	April 30, 2022		April 30, 2021
	(in thousands, except per share amounts)
Net income	$	513,997	$	106,389
Distributed and undistributed (earnings) to unvested restricted stock	$	(5,759)	$	(1,487)
Distributed and undistributed earnings to common shareholders—Basic	$	508,238	$	104,902
Weighted average shares outstanding—Basic	22,071		22,015
Weighted average shares outstanding—Diluted	22,071		22,015
Earnings per common share—Basic	$	23.03	$	4.76
Earnings per common share—Diluted	$	23.03	$	4.76

NOTE 7—COMMITMENTS AND CONTINGENCIES

Litigation

In re Broiler Chicken Antitrust Litigation

Between September 2, 2016 and October 13, 2016, Sanderson Farms, Inc. and our subsidiaries were named as defendants, along with 13 other poultry producers and certain of their affiliated companies, in multiple putative class action lawsuits filed by direct and indirect purchasers of broiler chickens in the United States District Court for the Northern District of Illinois. The complaints allege that the defendants conspired to unlawfully fix, raise, maintain, and stabilize the price of broiler chickens, thereby violating federal and certain states’ antitrust laws, and also allege certain related state-law claims. The complaints also allege that the defendants fraudulently concealed the alleged anticompetitive conduct in furtherance of the conspiracy. The complaints seek damages, including treble damages for the antitrust claims, injunctive relief, costs, and attorneys’ fees. As detailed below, the Court has consolidated all of the direct purchaser complaints into 1 case, and the indirect purchaser complaints into 2 cases, 1 on behalf of commercial and institutional indirect purchaser plaintiffs and 1 on behalf of end-user consumer plaintiffs. The cases are part of a coordinated proceeding captioned In re Broiler Chicken Antitrust Litigation.

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On October 28, 2016, the direct and indirect purchaser plaintiffs filed consolidated, amended complaints, and on November 23, 2016, the direct and indirect purchaser plaintiffs filed second amended complaints. On December 16, 2016, the indirect purchaser plaintiffs separated into 2 cases. On that date, the commercial and institutional indirect purchaser plaintiffs filed a third amended complaint, and the end-user consumer plaintiffs filed an amended complaint.

On January 27, 2017, the defendants filed motions to dismiss the amended complaints in all of the cases, and on November 20, 2017, the motions to dismiss were denied. On February 7, 2018, the direct purchaser plaintiffs filed their third amended complaint, adding 3 additional poultry producers as defendants. On February 12, 2018, the end-user consumer plaintiffs filed their second amended complaint, in which they also added 3 additional poultry producers as defendants, along with Agri Stats, Inc. On February 20, 2018, the commercial and institutional indirect purchaser plaintiffs filed their fourth amended complaint. On November 13, 2018, the commercial and institutional indirect purchaser plaintiffs filed their fifth amended complaint, adding 3 additional poultry producers as defendants. On November 28, 2018, the end-user consumer plaintiffs filed their third amended complaint. On January 15, 2019, the direct purchaser plaintiffs filed their fourth amended complaint, and the commercial and institutional indirect purchaser plaintiffs filed their sixth amended complaint. Both the direct purchaser plaintiffs and the commercial and institutional indirect purchaser plaintiffs added 2 new poultry producers as defendants, as well as Agri Stats, Inc. On August 6, 2020, the end-user consumer plaintiffs filed a motion for leave to file a fifth amended complaint. The Court granted the end-user consumer plaintiffs’ motion on September 22, 2020 and deemed the version of the complaint filed on August 7, 2020 operative on October 19, 2020. On October 23, 2020, the direct purchaser plaintiffs filed their fifth amended complaint and the commercial and institutional indirect purchaser plaintiffs filed their seventh amended complaint.

Between December 8, 2017 and ~~June 11, 2020,~~April 25, 2022, additional purported direct-purchaser entities individually brought separate suits against 20 poultry producers, including Sanderson Farms and Agri Stats, Inc., which have been consolidated with the other cases. These suits allege substantially similar claims to the direct purchaser class complaint described above; certain of the suits additionally allege related state-law and common-law claims, and related claims under federal and Georgia RICO statutes. NaN complaints filed on June 12, 2020 also plead allegations of federal bid rigging. Since that time, an additional NaN individual actions have been filed, some of which also plead allegations of federal bid rigging. On January 29, 2021, the

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individual-action plaintiffs filed a consolidated amended complaint. Those suits filed in the Northern District of Illinois are now pending in front of the same judge as the putative class action lawsuits.

On October 30, 2020, direct purchaser plaintiffs, commercial and institutional indirect purchaser plaintiffs, and end-user consumer plaintiffs filed motions for class certification. Defendants' oppositions to class certification were filed January 22, 2021. Class plaintiffs' replies in support of class certification were filed March 29, 2021. ~~Those~~The court held a hearing on those motions on May 10 - 11, 2022, and those motions remain pending.

On October 15, 2021, the Court ordered 2 different tracks of litigation with different timelines. The Court further clarified the 2 tracks at a December 20, 2021 hearing and in a December 20, 2021 order. ~~One track~~Track 1 consists of litigation regarding an alleged conspiracy to reduce supply and fix price via the Georgia Dock index. Track 2 consists of those same allegations, plus allegations based on an alleged bid-rigging theory. Track 1 is engaged in merits expert discovery. Plaintiffs proceeding on ~~the second track will file~~Track 2 filed a consolidated amended complaint on February 28, 2022. ~~Otherwise,~~Defendants, including the Company, filed motions to dismiss certain of the second track's claims on May 6, 2022. Second track ~~does not have an agreed-upon schedule to date.~~Plaintiffs' oppositions are due July 12, 2022, and Defendants' replies are due August 17, 2022. It is possible additional individual actions may be filed.

Department of Justice Antitrust Investigation

The Company is aware that certain plaintiffs’ counsel in In re Broiler Chicken Antitrust Litigation received from the United States Department of Justice, Antitrust Division, a subpoena that included a request to produce all discovery in the case to a grand jury. On June 27, 2019, the Court in In re Broiler Chicken Antitrust Litigation permitted the United States Department of Justice to intervene in the case, as well as ordered certain discovery stayed until September 27, 2019. Before the discovery stay expired on September 27, 2019, the United States Department of Justice asked the Court in In re Broiler Chicken Antitrust Litigation to extend the discovery stay for an additional six months. On September 25, 2019, the Court granted the additional stay of not less than three months. On October 16, 2019, after further consideration, the Court extended the stay until June 27, 2020. On December 18, 2019, the Court after further consideration ordered that the stay be lifted on March 31, 2020, with the exception of certain discovery related to alleged bid-rigging claims brought by plaintiffs on the second track in In re Broiler Chicken Antitrust Litigation.

The Company received a grand jury subpoena in connection with the United States Department of Justice Antitrust Division investigation on September 9, 2019. The Company is complying with the subpoena and providing documents and information as requested by the Department of Justice in connection with its investigation.

State of New Mexico, ex rel. Hector Balderas v. Koch Foods Inc., et al.

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On September 1, 2020, the Attorney General of the State of New Mexico filed a lawsuit in New Mexico state court against Agri Stats, Inc. and producer defendants, including the Company. The lawsuit is substantially similar to those brought in In re Broiler Chicken Antitrust Litigation. The case also brings claims under the New Mexico Antitrust Act and New Mexico Unfair Trade Practices Act, as well as a common law unjust enrichment claim. Defendants responded to the complaint on February 1, 2021. The parties are currently engaged in discovery.

State of Alaska v. Agri Stats, Inc. et al.

On February 19, 2021, the Attorney General of the State of Alaska filed a lawsuit in Alaska state court against Agri Stats, Inc. and producer defendants, including the Company. The lawsuit is substantially similar to those brought in In re Broiler Chicken Antitrust Litigation. The case also brings claims under Alaska's antitrust statute and the Alaska Unfair Trade Practices and Consumer Protection Act, as well as a common law unjust enrichment claim. On May 12, 2021, certain defendants, including the Company, filed motions to dismiss the complaint for lack of personal jurisdiction. On November 18, 2021, the Court heard arguments on the motions to dismiss, but deferred ruling on the motions pending jurisdictional discovery.

State of Washington v. Tyson Foods, Inc. et al.

On August 6, 2020, the Company received a civil investigative demand ("CID") from the Office of the Attorney General for the State of Washington seeking information in connection with its investigation of possible violations of the Washington Consumer Protection Act and/or the Sherman Act concerning contracts, combinations, or conspiracies in restraint of trade or commerce in the market for broiler chicken. The Company cooperated with the investigative demand and provided documents and information as requested by the Office of the Attorney General. On October 25, 2021, the Attorney General filed an action

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in Washington state court against Agri Stats, Inc. and producer defendants, including the Company. The lawsuit is substantially similar to those brought in In re Broiler Chicken Antitrust Litigation. The complaint brings claims under the Washington Consumer Protection Act. Sanderson Farms was served with the complaint on November 1, 2021. The Company filed an answer denying the substance of the allegations on January 21, 2022. Discovery is ongoing.

We intend to defend the In re Broiler Chicken Antitrust Litigation and related lawsuits vigorously; however, the Company cannot predict the outcome of these actions. If the plaintiffs were to prevail or the Department of Justice were to pursue charges, the Company could be liable for damages or other sanctions, which could have a material, adverse effect on our financial position and results of operations.

In re Broiler Chicken Grower Litigation

On January 27, 2017, Sanderson Farms, Inc. and our subsidiaries were named as defendants, along with 4 other poultry producers and certain of their affiliated companies, in a putative class action lawsuit filed in the United States District Court for the Eastern District of Oklahoma. On March 27, 2017, Sanderson Farms, Inc. and our subsidiaries were named as defendants, along with 4 other poultry producers and certain of their affiliated companies, in a second putative class action lawsuit filed in the United States District Court for the Eastern District of Oklahoma. The Court ordered the suits consolidated into 1 proceeding, and on July 10, 2017, the plaintiffs filed a consolidated amended complaint. The consolidated amended complaint alleges that the defendants unlawfully conspired by sharing data on compensation paid to broiler farmers, with the purpose and effect of suppressing the farmers’ compensation below competitive levels. The consolidated amended complaint also alleges that the defendants unlawfully conspired to not solicit or hire the broiler farmers who were providing services to other defendants. The consolidated amended complaint seeks treble damages, costs and attorneys’ fees. On September 8, 2017, the defendants filed a motion to dismiss the amended complaint, on October 23, 2017, the plaintiffs filed their response, and on November 22, 2017, the defendants filed a reply. On January 19, 2018, the Court granted the Sanderson Farms defendants’ motion to dismiss for lack of personal jurisdiction.

On February 21, 2018, the plaintiffs filed a substantially similar lawsuit in the United States District Court for the Eastern District of North Carolina against Sanderson Farms and our subsidiaries and another poultry producer. The plaintiffs subsequently moved to consolidate this action with the Eastern District of Oklahoma action in the Eastern District of Oklahoma for pre-trial proceedings, with the defendants in support thereof. That motion was denied.

On July 13, 2018, the defendants moved to dismiss the lawsuit in the Eastern District of North Carolina, and briefing was completed on September 4, 2018. On January 15, 2019, the Court granted in part the defendants’ motion to dismiss and stayed the action in the Eastern District of North Carolina pending resolution of the action in the Eastern District of Oklahoma. On January 6, 2020, the Court in the Eastern District of Oklahoma denied defendants’ motion to dismiss. On May 27, 2020, the

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Company moved to dismiss the action in the Eastern District of North Carolina under the first-to-file rule. Plaintiffs filed their opposition on June 17, 2020, and the Company filed its reply on July 1, 2020.

On September 11, 2020, additional named grower plaintiffs filed an identical putative class action in the District Court of Colorado against Sanderson Farms, Inc. and its Foods, Production, and Processing Divisions, as well as the other poultry producer defendants in the Oklahoma action. On October 14, 2020, Defendants moved to dismiss the case under the first-to-file doctrine because it is substantively identical to the earlier-filed cases pending in Oklahoma and North Carolina. Briefing on that motion was completed on December 16, 2020.

On September 18, 2020, another named grower plaintiff filed another duplicate class action in the District Court of Kansas against the same defendants as the Colorado action. On October 13, 2020, Defendants moved to dismiss the case under the first-to-file doctrine because it is substantively identical to the earlier-filed cases pending in Oklahoma, North Carolina, and Colorado. Briefing on that motion was completed on December 15, 2020.

On October 8, 2020, new named grower plaintiffs filed another duplicate class action in the Northern District of California against the same defendants as the Colorado and Kansas actions.

On October 23, 2020, the District Court of Kansas stayed proceedings in that action (other than those related to the first-to-file motion) pending resolution of the first-to-file motion and the multi-district litigation ("MDL") consolidation motion discussed below. On November 12, 2020, the District Court of Colorado stayed proceeding in that action (other than those related to the first-to-file motion) pending resolution of the first-to-file motion and the MDL consolidation motion discussed below.

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On October 6, 2020, Plaintiffs in the Oklahoma action moved to consolidate all of these duplicative cases into a MDL before the judge presiding over the Oklahoma case. Briefing on that motion was completed on November 6, 2020, and oral argument on the motion occurred on December 3, 2020. On December 15, 2020, the panel ordered that all actions be consolidated in the Eastern District of Oklahoma for pretrial proceedings. Given the panel's ruling on consolidation, the Company does not expect rulings on the first-to-file motions in the various actions described above.

On February 19, 2021, Plaintiffs filed a Consolidated Class Action Complaint in the MDL Court. The complaint is substantively identical to previous complaints. Fact discovery in the MDL is ongoing and is currently scheduled to end in August 2022.

We intend to defend these cases vigorously; however, the Company cannot predict the outcome of these actions. If the plaintiffs were to prevail, the Company could be liable for damages, which could have a material, adverse effect on our financial position and results of operations.

Antitrust Civil Investigative Demands

On February 21, 2017, Sanderson Farms, Inc. received an antitrust CID from the Office of the Attorney General, Department of Legal Affairs, of the State of Florida. Among other things, the demand seeks information related to the Georgia Dock Index and other information on poultry and poultry products published by the Georgia Department of Agriculture and its Poultry Market News division. The Company is cooperating fully with the investigative demand, and we have responded to all requests received to date; however, we are unable to predict its outcome at this time.

Separately, the Company is also aware that certain plaintiffs’ counsel in In re Broiler Chicken Antitrust Litigation received from the Office of the Attorney General, Department of Legal Affairs, of the State of Florida, an antitrust CID that includes a request to produce all documents submitted by the recipients to the Department of Justice relating to In re Broiler Chicken Antitrust Litigation.

The Company is also aware that certain plaintiffs’ counsel in In re Broiler Chicken Antitrust Litigation received from the Louisiana Department of Justice - Office of the Attorney General a CID that included a request to produce all deposition transcripts from the civil litigation.

The Company is unable to predict the outcome of these investigations at this time.

Judy Jien v. Perdue Farms, Inc., et al.

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On August 30, 2019, Sanderson Farms, Inc. and its Foods and Processing Divisions, as well as 17 other poultry producers and their affiliates; Agri Stats, Inc.; and Webber, Meng, Sahl and Company, Inc. (“WMS”), were named in a putative class action filed in the United States District Court for the District of Maryland. To date, 3 other nearly identical putative class action complaints, each seeking to represent the same putative class, also were filed. The complaints, brought on behalf of non-supervisory production and maintenance employees at broiler chicken processing plants, alleged that the defendants unlawfully conspired by agreeing to fix and depress the compensation paid to them, including hourly wages and compensation benefits, from January 1, 2009 to the present. The plaintiffs claim that broiler producers shared competitively sensitive wage and benefits compensation information in three ways: (1) attending in-person meetings in Destin, Florida; (2) receiving Agri Stats reports, as well as surveys taken and published by WMS; and (3) directly exchanging wage and benefits information with plant managers at other defendant broiler producers. Plaintiffs allege that this conduct violated the Sherman Antitrust Act.

On November 12, 2019, the Court ordered that the 4 putative class action complaints would be consolidated for all pretrial purposes. The Court ordered plaintiffs to file their consolidated complaint on or before November 14, 2019. Defendants’ motions to dismiss the consolidated complaint were filed on November 22, 2019. Briefing was scheduled to be completed on or before February 28, 2020; however, after the defendants filed their motions to dismiss, on November 26, 2019, plaintiffs notified defendants that they intended to file an amended consolidated complaint. Plaintiffs filed an amended consolidated complaint on December 20, 2019. Plaintiffs name as defendants Sanderson Farms, Inc. and its Foods and Processing Divisions, as well as 10 other broiler chicken producers and their affiliates; 3 turkey producers and their affiliates; Agri Stats, Inc.; and WMS. Plaintiffs brought their amended consolidated complaint on behalf of employees at broiler chicken and turkey processing plants and allege that the defendants unlawfully conspired by agreeing to fix and depress the compensation paid to them. On January 9, 2020 and January 27, 2020, the court approved the voluntary dismissal without prejudice of two of the three nearly identical putative class action lawsuits. On March 12, 2020, the Court approved the voluntary dismissal without prejudice of the third nearly identical putative class action lawsuit.

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On March 2, 2020, defendants moved to dismiss the amended consolidated complaint. The Company also filed an individual motion to dismiss plaintiffs’ claims against the Company. After several COVID-19 related extensions, plaintiffs filed their omnibus opposition to defendants’ motions to dismiss on July 17, 2020. Defendants filed their reply brief on August 13, 2020. On September 16, 2020, the Court granted in part and denied in part defendants’ motion without prejudice, finding that plaintiffs’ allegations against certain corporate defendant families, including Sanderson Farms, were deficient.

Plaintiffs filed a second amended complaint against Sanderson Farms, Inc. on November 2, 2020. Sanderson Farms filed a renewed motion to dismiss resisting plaintiffs' amended allegations. The Court denied that motion and allowed plaintiffs' case to go forward in an order dated March 10, 2021. Sanderson Farms filed an answer denying the substance of plaintiffs' allegations on April 7, 2021. Discovery in this case is underway.

On February 16, 2022, Plaintiffs filed a ~~motion for leave to file a~~ Third Amended ~~Complaint on December 17, 2021, and the Plaintiffs filed an amended motion for leave to file a~~Consolidated Complaint. The Third Amended ~~Complaint on January 20, 2022. Defendants filed their response to Plaintiffs' motion on February 4, 2022. Plaintiffs' proposed Third Amended~~Consolidated Complaint, among other things, adds new allegations, expands the putative class to include workers at hatcheries and feed mills, and extends the putative class period to January 1, 2000 through July 20, 2021. Sanderson Farms moved to dismiss in part the Third Amended Consolidated Complaint on April 18, 2022. On May 18, 2022, Plaintiffs filed their opposition to Sanderson Farms' motion to dismiss in part. Sanderson Farms' reply brief in support of its motion to dismiss in part is due on June 8, 2022.

We intend to defend this case vigorously; however, the Company cannot predict the outcome of these actions. If the plaintiffs were to prevail, the Company could be liable for damages, which could have a material, adverse effect on our financial position and results of operations.

The Company is also aware that the United States Department of Justice, Antitrust Division, has opened a civil investigation into human resources antitrust matters and that at least one party to Judy Jien v. Perdue Farms, Inc. et al. has received a civil investigative demand in relation to that investigation.

Other

On January 30, 2017, the Company received a letter from an attorney representing a putative shareholder demanding that the Company take action against current and/or former officers and directors of the Company for alleged breach of their fiduciary duties. The shareholder asserted that the officers and directors (i) failed to take any action to stop the alleged antitrust conspiracy described above, despite their alleged knowledge of the conspiracy, and (ii) made and/or caused the Company to make materially false and misleading statements by failing to disclose the alleged conspiracy. The shareholder also asserted that certain directors engaged in “insider sales” from which they improperly benefited. In addition to demanding that the officers and directors be sued, the shareholder also demanded that the Company adopt unspecified corporate governance improvements. On February 9, 2017, pursuant to statutory procedures available in connection with demands of this type, the Company’s board of directors appointed a special committee of qualified directors to determine, after conducting a reasonable inquiry, whether it was in the Company’s best interests to pursue any of the actions demanded in the shareholder’s letter. On April 26, 2017, the special committee reported to the Company’s board of directors its determination that it was not in the Company’s best interests to take any of the demanded actions at that time, and that no governance improvements related to the subject matter of the

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demand were needed. On May 5, 2017, the special committee’s counsel informed the shareholder’s counsel of the committee’s determination. As of the date of filing of this report, and to the Company’s knowledge, no legal proceedings related to the shareholder’s demand have been filed.

The Company is involved in various other claims and litigation incidental to its business. Although the outcome of these matters cannot be determined with certainty, management, upon the advice of counsel, is of the opinion that the final outcome of currently pending matters, other than those discussed above, should not have a material effect on the Company’s consolidated results of operations or financial position.

The Company recognizes the costs of legal defense for the legal proceedings to which it is a party in the periods incurred. After a considerable analysis of each case, the Company has determined that no accrual is required for any of the foregoing matters as of ~~January 31,~~April 30, 2022. Future reserves may be required if losses are deemed reasonably estimable and probable due to changes in the Company’s assumptions, the effectiveness of legal strategies, or other factors beyond the Company’s control. Future results of operations may be materially affected by the creation of reserves or by accruals of losses to reflect any adverse determinations in these legal proceedings.

NOTE 8—CREDIT AGREEMENT

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The Company has a 1-time right, at any time during the term of the agreement, to increase the maximum debt-to-total capitalization ratio then in effect by 5 percentage points in connection with the construction of a new poultry complex for the four fiscal quarters beginning on the first day of the fiscal quarter during which the Company gives written notice of its intent to exercise this right. The Company has not exercised this right. The facility also sets a minimum net worth requirement that at ~~January 31,~~April 30, 2022, was ~~$1.3~~$1.5 billion. The credit is unsecured and, unless extended, will expire on April 23, 2026. As of ~~January 31,~~April 30, 2022 ~~the Company had no outstanding borrowings~~ and ~~had approximately $24.1 million outstanding in letters of credit, leaving $975.9 million of borrowing capacity available under the facility. As of February 23,~~May 25, 2022, the Company had no outstanding borrowings and had approximately $29.1 million outstanding in letters of credit, leaving $970.9 million of borrowing capacity available under the facility.

NOTE 9—INCOME TAXES

The Company’s estimated annual effective tax ~~rate~~rates for the three and six months ended ~~January 31,~~April 30, 2022 ~~was~~were 23.7% and 23.8%, respectively, as compared to an estimated annual effective tax ~~rate~~rates of ~~25.7%~~23.7% and 23.9%, respectively, for the three and six months ended ~~January 31,~~April 30, 2021. ~~Excluding the effects of~~There were no significant discrete items recognized during any of the periods, the Company's estimated annual effective tax rate for the three months ended January 31, 2022 would have remained approximately 23.8%, as compared to an estimated annual effective tax rate of 23.8% for the three months ended January 31, 2021.comparative periods. The Company estimates its effective tax rate for the full fiscal year 2022, exclusive of discrete items, will be approximately 23.8%.

As of ~~January 31,~~April 30, 2022, the Company's deferred income tax liability was ~~$160.5~~$155.8 million, as compared to $156.5 million at October 31, 2021, ~~an increase~~a decrease of ~~$3.9~~$0.8 million.

NOTE 10—MERGER AGREEMENT

On August 8, 2021, the Company agreed to be acquired by a joint venture between Cargill, Inc. (“Cargill”) and Continental Grain Company (“CGC”) pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) with Walnut Sycamore Holdings LLC, a Delaware limited liability company (“Parent”), Sycamore Merger Sub LLC, a Delaware limited liability company and an indirect wholly owned subsidiary of Parent (“Merger Sub”), and solely for purposes of certain provisions specified therein, Wayne Farms LLC, a Delaware limited liability company, pursuant to which, among other things, Merger Sub will be merged with and into the Company (the “Merger”), with the Company continuing as the surviving corporation and as an indirect wholly owned subsidiary of Parent. Under the terms of the Merger Agreement, each outstanding share of the Company, other than certain excluded shares, will receive $203 per share in cash. The closing of the Merger is subject to the receipt of specified regulatory approvals and other customary closing conditions including, among other things, expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Waiting Period"). On December 20, 2021, the Company and Parent each received a request for additional information and documentary material (the "Second Request") from the Department of Justice (the "DOJ") in connection with the DOJ's review of the transaction contemplated by the Merger Agreement. Issuance of the Second Request extends the HSR Waiting Period until 30 days after both the Company and Parent have substantially complied with the Second Request, unless

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the waiting period is terminated earlier by the DOJ or extended by agreement of the Company and Parent. The Company and Parent will continue to cooperate with the DOJ staff in its review of the transactions contemplated by the Merger Agreement. The parties expect that the Merger will be completed in the first half of calendar year 2022.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Item 7 of the Company’s Annual Report on Form 10-K for its fiscal year ended October 31, 2021.

This Quarterly Report, and other periodic reports filed by the Company under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and other written or oral statements made by it or on its behalf, may include forward-looking statements within the meaning of the "Safe Harbor" provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. These 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 and estimates expressed in such statements. These risks, uncertainties and other factors include, but are not limited to, the risks described in the "Risk Factors" ~~section~~sections of our latest 10-K and 10-Q reports, 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, any 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 net realizable 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 net realizable value 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 affect the supply and price of feed grains.

(12)Failure to respond to changing consumer preferences and negative or competitive media campaigns.

(13)Failure to successfully and efficiently start up and run a new plant or integrate any business the Company might acquire.

(14)Unfavorable results from currently pending litigation and proceedings, or litigation and proceedings that could arise in the future.

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(15)Changes resulting from the COVID-19 pandemic, which could exacerbate any of the risks described above, and could include: high absentee rates that have prevented and may continue to prevent us from running some of our facilities at full capacity, or could in the future cause facility closures; an inability of our contract growers to manage their flocks; supply chain disruptions for feed grains; further changes in customer orders due to shifting consumer patterns; disruptions in logistics and the distribution chain for our products; liquidity challenges; and a continued or worsening decline in global commercial activity, among other unfavorable conditions.

(16)Risks relating to the Company’s entry into a definitive agreement to be acquired by a joint venture between Cargill, Incorporated (“Cargill”) and Continental Grain Company (“CGC”), including: the timing, receipt and terms and conditions of any required governmental or regulatory approvals of the proposed transaction and the related transactions involving affiliates of Cargill and CGC that could reduce the anticipated benefits of or cause the parties to abandon the proposed transaction; risks related to the satisfaction of the conditions to closing the proposed transaction (including the failure to obtain necessary regulatory approvals), and the related transactions involving affiliates of Cargill and CGC, in the anticipated timeframe or at all; the risk that any announcements relating to the proposed transaction could have adverse effects on the market price of the Company's common stock; disruption from the proposed transaction making it more difficult to maintain business and operational relationships, including retaining and hiring key personnel and maintaining relationships with the Company's customers, vendors and others with whom it does business; the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement entered into pursuant to the proposed transaction or of the transactions involving affiliates of Cargill and CGC; risks related to disruption of management's attention from the Company's ongoing business operations due to the proposed transaction; significant transaction costs; and the risk of litigation and/or regulatory actions related to the proposed transaction or unfavorable results from litigation and proceedings that could arise in the future.

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. The factors described above cannot be controlled by the Company. When used in this report, 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 statements about management’s beliefs about future growth plans, earnings, production levels, capital expenditures, grain prices, global economic conditions, supply and demand factors and other industry conditions.

GENERAL

The Company’s poultry operations are fully, vertically-integrated through its control of all functions relating to the production of its chicken products, including hatching egg production, hatching, feed manufacturing, raising chickens to marketable age (“grow-out”), processing and marketing. Consistent with the poultry industry, the Company’s profitability is substantially affected by the market price for its finished products and feed grains, both of which may fluctuate substantially and independently of each other, and exhibit cyclical characteristics typically associated with commodity markets. Other costs, excluding feed grains, related to the profitability of the Company’s poultry operations, including hatching egg production, hatching, growing, and processing ~~cost,~~costs, are responsive to efficient cost containment programs and management practices.

The Company believes that value-added products are subject to less price volatility and generate higher, more consistent profit margin than whole chickens ice-packed and shipped in bulk form. To reduce its exposure to market cycles that have historically characterized commodity chicken market prices, the Company has increasingly concentrated on the production and marketing of value-added product lines with emphasis on product quality, customer service, and brand recognition. However, the Company cannot eliminate its exposure to fluctuations in commodity market prices for chicken since market prices for value-added products also demonstrate cyclical characteristics typical of commodity markets. The Company adds value to its poultry products by performing one or more processing steps beyond the stage where the whole chicken is first salable as a finished product, such as cutting, deboning, deep chilling, packaging and labeling the product.

The Company also has a prepared chicken product line that includes approximately 5055 institutional and consumer-packaged chicken items that it sells nationally, primarily to distributors and food service establishments. A majority of the prepared chicken items are made to the specifications of food service users.

COVID-19

The effects of the COVID-19 pandemic and the related governmental actions to contain the spread of the novel coronavirus have materially affected our business, including our labor force, revenues, expenses, production levels, and senior management's time, among other things.

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In late February 2020, we formed a COVID-19 response team of senior managers, including our CEO, President, and CFO, to coordinate our response to the pandemic and manage and mitigate related risks. Additionally, our Board of Directors has actively overseen our management of and response to the pandemic. During the first few months of the pandemic, the Board met weekly to receive updates and discuss our response with our executive leadership team. Today, the Board continues to receive COVID-19-related updates ~~on a monthly basis.~~as conditions warrant.

Our top priority throughout the crisis has been protecting the health, safety and welfare of our employees. In consultation with infectious disease specialists and epidemiologists, including an infectious disease expert who toured our facilities, we implemented a number of steps and procedures to promote health and safety in our operations. We continue to consult with experts and update our protocols and procedures as the number of infections nationwide and in the areas in which we operate fluctuates. Practices that remain in place include, but are not limited to, the following:

•We have on-site medical clinics at each of our processing plants that are staffed by third-party medical providers. The clinics provide telemedicine services, flu and coronavirus tests, and flu and coronavirus vaccinations at no cost to our employees.

•Any employee who becomes fully-vaccinated against COVID-19 receives a $1,000 bonus.

•In areas of our facilities where space allows, we have implemented social distancing measures, and in areas where equipment configurations allow, we have installed physical barriers between work stations. Additionally, we have optimized ventilation throughout our facilities to mitigate the risk of exposure to the virus.

•A third-party sanitation service provider performs an antiviral sanitation process as needed at our facilities, and we have increased the frequency of cleaning common areas and frequently touched surfaces.

•We continuously track COVID-19 positive cases and exposure within our workforce, and impose isolation or quarantine periods that vary based on individual circumstances.

The COVID-19 response team met daily throughout the first quarter of fiscal 2022 to coordinate our response to the threat of the new Omicron variant of the virus, which significantly impacted all of the communities in which we operate. As the number of active cases across our geographic footprint dropped significantly during February 2022, the team transitioned to meeting on an as needed basis.

In the second quarter and first ~~quarter~~six months of fiscal 2022, we incurred approximately ~~$6.8~~$3.1 million and $10.0 million, respectively, in costs directly related to COVID-19. These included payroll expenses for employees who were quarantined, vaccination bonuses, and items and services related to workplace safety, including personal protective equipment, thermometers, barriers and other social-distancing measures, professional cleaning, on-site medical clinics, and additional nursing staff, among other things. By comparison, our results for the second quarter and first ~~quarter~~six months of fiscal 2021 included approximately ~~$11.4~~$8.6 million and $20.1 million, respectively, in direct COVID-19 expenses.

EXECUTIVE OVERVIEW OF RESULTS

For the ~~first~~second quarter of fiscal 2022, we earned net income of ~~$192.8~~$321.2 million, or ~~$8.64~~$14.39 per share, as compared to net income of ~~$9.5~~$96.9 million, or ~~$0.42~~$4.34 per share, during the ~~first~~second quarter of fiscal 2021. The significant improvement in our results during the ~~first~~second quarter of fiscal 2022 as compared to the ~~first~~second quarter of fiscal 2021 is primarily attributable to an increase in the average selling prices for our products of ~~$0.3129~~$0.3110 per pound sold, or ~~40.3%~~33.6%, partially offset by an increase in feed costs per pound of broilers processed of ~~$0.0655,~~$0.0449, or ~~24.9%~~14.1%, ~~and~~as well as higher ~~labor and other variable~~non-feed costs.

The increase in average selling prices for fresh and frozen chicken products during the ~~first~~second quarter of fiscal 2022 versus the same quarter a year ago reflects significantly higher realized prices for products from our plants that process a larger bird primarily for food service customers and further processors. These prices are determined by contractually negotiated formulas based on published quotes for ~~commodity~~ chicken products. The quoted market prices typically move higher or lower based on the supply and demand dynamics of chicken products sold into the food service market. The higher quoted market prices during the quarter reflect significantly improved demand from food service customers as consumers continue to become more comfortable dining away from home given improving pandemic conditions, combined with a limited supply and relatively elevated prices of competing proteins. Although we produce little for this market, demand is particularly strong from quick service restaurants featuring chicken sandwich menu items. In addition, wing concept restaurants have operated well throughout the pandemic, and demand for wing products remains good. This strong demand for chicken has coincided with constraints on the supply side, including limited capacity expansion in the industry due to labor shortages, ~~and~~ supply chain ~~logistics.~~logistics, and elevated construction costs. In addition, the United States Department of Agriculture ("USDA") reports low hatchability rates for hatching eggs and well below average livability rates for broiler chickens. Finally, while somewhat constrained by logistical challenges, export demand has improved relative to a year ago, which has ~~impacted~~further strengthened domestic ~~supplies.~~market prices for chicken products.

Realized prices for products sold to retail grocery store customers were also higher when compared to a year ago. These prices are typically negotiated on an annual basis, use either a flat price or a pricing formula based on a regularly quoted market price, and are fixed for one to three years. However, many of these contracts ~~provide~~include provisions that allow either party ~~can request price~~to

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request price adjustments during the term of the agreements to reflect material changes in grain and other costs and other factors. While neither party is required to adjust prices, we ~~were~~have been able to negotiate price increases during the contract terms with ~~some~~many of our grocery store customers over the past few quarters to reflect materially higher grain ~~costs.~~costs and continued strong consumer demand for chicken at grocery stores. A portion of the price increases were fully reflected in the first quarter of fiscal 2022, resulting in a 7.0% increase in average realized prices for products sold to retail grocery store customers when compared to the first quarter of fiscal 2021. ~~Additionally, a~~A larger portion of the negotiated price increases were effective either during January or February 2022 and ~~will be~~were fully reflected in our second fiscal ~~quarter. Despite~~quarter of fiscal 2022, resulting in a 13.1% increase in average realized selling prices when compared to the second quarter of fiscal 2021 and a 7.7% increase when compared to the first quarter of fiscal 2022. Although these price increases ~~however,~~have significantly improved our margins earned on products sold to retail grocery stores, ~~during the first fiscal quarter declined significantly,~~such margins continue to lag behind those earned on products sold to food service and further processor customers, due in part to higher grain costs, as discussed below. Finally, additional negotiated price increases became effective in April or May 2022 or will become effective in June 2022 and will be reflected in our results for our third fiscal quarter of 2022.

Demand for our products from our traditional export partners has improved from levels we experienced during the early stages of the pandemic. We believe this relative strength is the result of several factors, including the benefit of higher crude oil prices to countries whose economies depend on oil, the value of the United States dollar in relation to foreign currencies, and the lessening of governmental restrictions related to COVID-19.

However, during December 2021, a highly pathogenic strain of avian influenza ("AI") was detected in North America and has since been detected in many wild birds and ~~five~~ commercial poultry flocks ~~within~~across the ~~eastern~~United States, including one of our broiler flocks in North Carolina. AI was also detected in a commercial pheasant flock in Texas, a state in which we operate. To date, no cases of AI have been detected in commercial flocks in any other state in which we operate. We have initiated our Crisis Management Response for Avian Influenza and ~~central United States.~~are taking appropriate and best practice steps to protect the health of our flocks. China and Mexico, the top two countries by volume and value to which we export, ~~will~~ initially ban all product from any state where AI is detected in a commercial flock. Mexico will subsequently initiate a process to coordinate with United States officials to reduce the ban from a statewide level to a county level as specified information regarding detection and remediation of AI is ~~provided. To~~provided, and that process has been completed for both Texas and North Carolina. It is China's policy to leave the statewide import ban in place until ninety days following the date AIthat the United States government certifies the most recently affected farm in the state has been cleaned and disinfected, which has not ~~been detected~~yet occurred in ~~a commercial flock~~either Texas or North Carolina. Barring any additional AI findings in ~~a state where~~Texas, we ~~operate, so~~estimate China's ban on product from Texas will be lifted during the latter part of July 2022. Barring any additional AI findings in North Carolina, we have not experienced any material disruptions to our operations or export sales. We have initiated our Crisis Management Response for Avian Influenza and are taking appropriate and best practice steps to protect the health of our flocks. However, we cannotestimate China's ban on product from North Carolina will be ~~certain one or more of our flocks won't be affected by the AI virus.~~lifted during September 2022.

During fiscal 2021, we sold 444.1 million pounds of product to customers in Mexico at a gross sales value of approximately $228.3 million, and we sold 91.8 million pounds of product to customers in China at a gross sales value of approximately $121.7 million. IfDue to the brief duration of Mexico's ban on imports from Texas and North Carolina and because our ~~exports~~geographic footprint allowed us to export product to Mexico ~~are banned,~~from other states in which we ~~would be forced to seek alternative markets for products sold to that market at potentially lower returns.~~operate, Mexico's ban did not have a material effect on our results. The primary products we export to China are chicken paws and wing tips. Because there are no material domestic or export markets for these products other than China, we ~~would be~~are forced to render those products for significantly lower returns ifwhile our exports to China from a particular state are banned. Based on actual market prices, we estimate China's ban cost the Company $5.0 million, net of taxes, during the second quarter of fiscal 2022, and we estimate the ban will continue to adversely affect our results by approximately $0.8 million per week, net of taxes, as long as the ban remains in effect.

Our higher average cost of goods sold during the ~~first~~second quarter of fiscal 2022 as compared to the same period a year ago reflects increases in both non-feed related costs of goods sold, details of which are described in the "Results of Operations" section below, and in feed costs per pound of chicken processed. The average cash prices paid by the Company for grain were significantly higher during the ~~first~~second quarter of fiscal 2022 as compared to the ~~first~~second quarter of fiscal 2021, which contributed to an increase in feed costs in broiler flocks processed. ~~Unfavorable growing conditions~~Russia's invasion of Ukraine makes it likely that Ukrainian farmers will be unable or unwilling to plant a significant number of acres that would normally be planted with corn and ~~weather events in~~wheat, and sanctions imposed on Russia as a result of the war are also limiting Russia's ability to export certain ~~areas~~crop inputs, such as fertilizer, to other parts of the world. Those uncertainties, along with a slow start to the United States ~~during the late summer~~planting season due to cold, wet weather, have caused volatility and ~~fall of 2020 caused~~rising prices for corn and soybean meal. Additionally, final South American soybean crop production inis expected to be much lower than normal due to drought conditions experienced during most of the growing season, which is adding further upward pressure to soybean meal prices. Finally, the USDA's planting intentions report released on March 31, 2022, estimated that United States ~~to fall below levels that were originally estimated by~~farmers will plant 89.5 million acres of corn in 2022, a 4.2% decrease from the ~~United States Department~~93.4 million acres planted in 2021. This reduction in acreage, coupled with already tight world corn stocks, has placed further upward pressure on corn prices.

Table of Agriculture and other industry analysts. The production shortfall, combined with significant export demand and uncertainty about the 2021 corn and soybean crops, contributed to significantly higher market prices during fiscal 2021. Market prices for grain began to moderate during the fourth quarter of fiscal 2021, but remain elevated compared to the pricing environment during the first quarter of fiscal 2021. Contents

The Company has priced very little of its grain needs past ~~February~~May 2022. Had we priced our remaining fiscal 2022 needs at ~~February 22,~~May 25, 2022 cash market prices quoted on the Chicago Board of Trade, we estimate our costs of feed grains based on fiscal 2021 volumes would be approximately ~~$144.0~~$208.3 million higher during fiscal 2022 as compared to fiscal 2021. Based on our ~~projected~~estimated production levels for fiscal 2022, we estimate that higher grain costs, along with estimated basis costs, would result in approximately ~~$0.0339~~$0.0372 per pound higher feed costs in broiler flocks processed for fiscal 2022 as compared to fiscal 2021. These numbers are estimates and are subject to change as we move through the balance of the year and as grain prices and actual production levels fluctuate.

We processed ~~1.21~~1.23 billion pounds of dressed poultry during the ~~first~~second fiscal quarter of 2022, up ~~4.4%~~0.3% from the ~~1.15~~1.22 billion pounds processed during the ~~first~~second fiscal quarter of 2021. The slight increase in pounds processed resulted from improved yields, partially offset by a ~~4.2% increase~~slight reduction in the number of head ~~processed, partially offset by a slight decrease in the~~processed. Our average live ~~weight~~weights of birds processed were relatively flat during the ~~birds processed.~~two periods. We reduced production at our plants processing a larger bird for food service customers at the onset of the pandemic in response to reduced demand and labor and logistical challenges. As ~~those~~pandemic conditions ~~moderate,~~have continued to subside, we ~~intend~~remain on a path to return to full production. We now estimate we will process ~~1.19 billion pounds of dressed poultry during the second quarter of fiscal 2022, 1.26~~1.28 billion pounds of dressed poultry during the third quarter of fiscal 2022 and ~~1.27~~1.30 billion pounds during the fourth quarter of fiscal 2022. These are estimates, ~~may~~and actual results could change based on weather, production decisions, bird weights and market conditions. Based on actual production through the first half of fiscal 2022 and the estimates for the second half, we estimated that we will produce 5.01 billion pounds of dressed poultry during the year, which would represent a 3.2% increase compared to the 4.86 billion pounds produced during fiscal 2021.

While demand for our retail grocery products and demand from our food service distribution customers continues to be favorable, resulting in selling prices for our products that are more than offsetting the higher prices we are paying for feed grains and other costs, it is uncertain how long these conditions will persist. How long current conditions will last ~~and the future effect of the pandemic on our business~~ will depend on many factors, including:

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•the extent to which resurgences in COVID-19 infections make people fearful of dining out or cause state, local and foreign governments to extend or reimpose stay-at-home restrictions, as well as varying restrictions on restaurants;

•the extent to which inflationary conditions affect the amount of disposable income consumers have to spend on food and how consumers allocate their food dollars;

•the persistence of supply constraints in the U.S. poultry industry, discussed above;

•with respect to our export sales, the condition of the oil market, the relative strength of foreign currencies against the U.S. dollar, the impact of avian influenza in the U.S., and political uncertainty that could affect trade relations with other countries, especially with China;

•the effect of the pandemic on our operations, including labor shortages we have experienced at various times throughout the pandemic and could continue to experience as a result of the pandemic; ~~and~~

•with respect to feed grain prices, the quality and quantity of the 2022 corn and soybean ~~crops.~~crops worldwide; and

•the duration and effect of the war in Ukraine and its impact on the agricultural and energy markets and geopolitical conditions.

RESULTS OF OPERATIONS

Net sales for the ~~first~~second quarter ended ~~January 31,~~April 30, 2022 were ~~$1,327.4~~$1,539.7 million as compared to ~~$909.3~~$1,133.9 million for the ~~first~~second quarter ended ~~January 31,~~April 30, 2021, an increase of ~~$418.1~~$405.8 million, or ~~46.0%~~35.8%. Net sales of poultry products for the ~~first~~second quarter ended ~~January 31,~~April 30, 2022 and 2021, were ~~$1,263.1~~$1,464.0 million and ~~$870.2~~$1,087.2 million, respectively, an increase of ~~$392.9~~$376.8 million, or ~~45.1%~~34.7%. The increase in net sales of poultry products resulted from a ~~40.5%~~32.9% increase in the average sales price of poultry products sold and a ~~3.3%~~1.4% increase in the pounds of poultry products sold, each of which is primarily the result of improved demand from food service customers and supply constraints, as discussed in the Executive Overview above. During the ~~first~~second quarter of fiscal 2022, the Company sold ~~1.19~~1.22 billion pounds of poultry products, up from ~~1.15~~1.20 billion pounds during the ~~first~~second quarter of fiscal 2021. The increase in pounds of poultry products sold resulted primarily from a 4.2% increase in the number of head processed, partially offset by a slight decrease in the average live weight of the birds processed.

~~Quoted~~Overall, quoted market prices for poultry products increased during the ~~first~~second quarter of fiscal 2022 as compared to the same quarter of fiscal 2021. When compared to the second quarter of fiscal 2021, Urner Barry average market prices for boneless breast meat, boneless thigh meat and tenders increased by 85.2%, 58.6% and 47.5%, respectively, while Urner Barry average market prices for leg quarters and jumbo wings decreased by 0.6% and 19.8%, respectively. Average realized prices for chicken products sold to retail grocery store customers increased by 13.1% during the second quarter of fiscal 2022 as compared to the same period of fiscal 2021, and retail grocery store demand remains strong.

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Net sales of prepared chicken products for the quarters ended April 30, 2022 and 2021 were $75.7 million and $46.6 million, respectively, an increase of 62.3%. This increase is primarily attributable to a 39.9% increase in the average sales price of prepared chicken products sold and a 16.1% increase in the pounds of prepared chicken products sold. The increase in pounds and sales price of prepared chicken products was primarily the result of improved demand from our food service customers. During the second quarter of fiscal 2022, the Company sold 28.4 million pounds of prepared chicken products, up from 24.5 million pounds during the second quarter of fiscal 2021.

Net sales for the six months ended April 30, 2022 were $2,867.1 million as compared to $2,043.2 million for the six months ended April 30, 2021, an increase of $824.0 million, or 40.3%. Net sales of poultry products for the six months ended April 30, 2022 and 2021 were $2,727.1 million and $1,957.5 million, respectively, an increase of $769.6 million, or 39.3%. The increase in net sales of poultry products resulted from a 36.2% increase in the average sales price of poultry products sold and a 2.3% increase in the pounds of poultry products sold. During the first ~~quarter~~six months of fiscal 2022, the Company sold 2,404.8 million pounds of poultry products, up from 2,350.6 million pounds during the first six months of fiscal 2021. This increase in pounds of poultry products sold is primarily the result of an increase of 1.9% in the number of head processed.

Overall, quoted market prices for poultry products increased during the first six months of fiscal 2022 as compared to the same period of fiscal 2021. When compared to the first six months of fiscal 2021, Urner Barry average market prices for boneless thigh meat, boneless breast meat, tenders and leg quarters increased by 102.5%, 93.5%, 54.5% and 11.3%, respectively, while Urner Barry average market prices for jumbo wings ~~increased~~decreased by ~~187.5%, 108.1%, 63.7%, 30.8% and 24.5%, respectively.~~0.2%. Average realized prices for chicken products sold to retail grocery store customers increased by ~~7.0%~~10.1% during the first ~~quarter~~six months of fiscal 2022 as compared to the same period of fiscal 2021, and retail grocery store demand remains strong.

Net sales of prepared chicken products for the ~~quarters~~six months ended ~~January 31,~~April 30, 2022 and 2021 were ~~$64.4~~$140.1 million and ~~$39.1~~$85.7 million, respectively, an increase of ~~64.6%~~63.4%. This increase is primarily attributable to a ~~44.4%~~26.4% increase in ~~the pounds of prepared chicken products sold, while~~ the average sales price of prepared chicken products sold ~~also increased by 14.0%.~~and a 29.2% increase in the pounds of prepared chicken products sold. The increase in pounds and sales price of prepared chicken products was primarily the result of improved demand from our food service customers. During the first ~~quarter~~six months of fiscal 2022, the Company sold ~~30.6~~59.0 million pounds of prepared chicken products, up from ~~21.2~~45.7 million pounds during the first ~~quarter~~six months of fiscal 2021.

Cost of sales for the ~~first~~second quarter of fiscal 2022 was ~~$1,008.1~~$1,051.8 million as compared to ~~$839.3~~$941.9 million during the ~~first~~second quarter of fiscal 2021, an increase of ~~$168.7~~$109.9 million, or ~~20.1%~~11.7%. Cost of sales of poultry products during the ~~first~~second quarter of fiscal 2022, as compared to the ~~first~~second quarter of fiscal 2021, was ~~$928.8~~$963.6 million and ~~$802.3~~$893.1 million, respectively, which represents a ~~12.1%~~6.5% increase in the average cost of sales per pound of poultry products. As illustrated in the table below, which for comparative purposes includes poultry products transferred to the Company's prepared chicken plant, the increase in the cost of sales per pound of poultry products resulted from an increase in the cost of feed per pound of broilers processed of ~~$0.0655,~~$0.0449, or ~~24.9%~~14.1%, and a ~~$0.0279~~$0.0184 per pound increase, or ~~6.3%~~4.2%, ~~increase~~ in other costs of sales of poultry products.

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Poultry Cost of Sales

(In thousands, except per pound data)


		Three Months Ended January 31, 2022					Three Months Ended January 31, 2021					Incr/(Decr)					Three Months Ended April 30, 2022					Three Months Ended April 30, 2021					Incr/(Decr)
Description	Description	Dollars			Per lb.		Dollars			Per lb.		Dollars		Per lb.		Description	Dollars			Per lb.		Dollars			Per lb.		Dollars		Per lb.
Beginning Inventory	Beginning Inventory	$	42,775		$	0.5646	$	32,952		$	0.4701	$	9,823	$	0.0945	Beginning Inventory	$	42,912		$	0.5488	$	30,596		$	0.4985	$	12,316	$	0.0503
Feed in broilers processed	Feed in broilers processed	396,435			0.3286		303,047			0.2631		93,388		0.0655		Feed in broilers processed	443,581			0.3631		388,976			0.3182		54,605		0.0449

All other cost of sales	All other cost of sales	565,854			0.4691		508,226			0.4412		57,628		0.0279		All other cost of sales	556,400			0.4554		534,152			0.4370		22,248		0.0184

Less: Ending Inventory	Less: Ending Inventory	42,912			0.5488		30,596			0.4985		12,316		0.0503		Less: Ending Inventory	38,696			0.5681		41,645			0.5838		(2,949)		(0.0157)
Total poultry cost of sales	Total poultry cost of sales	$	962,152	(1)	$	0.7992	$	813,629	(1)	$	0.7010	$	148,523	$	0.0982	Total poultry cost of sales	$	1,004,197	(1)	$	0.8152	$	912,079	(1)	$	0.7523	$	92,118	$	0.0629

Pounds:	Pounds:															Pounds:
Beginning Inventory	Beginning Inventory	75,757					70,103									Beginning Inventory	78,191					61,374

Poultry processed/other	Poultry processed/other	1,206,367					1,151,917									Poultry processed/other	1,221,815					1,222,279
Poultry sold	Poultry sold	1,203,933		(1)			1,160,646		(1)							Poultry sold	1,231,897		(1)			1,212,315		(1)
Ending Inventory	Ending Inventory	78,191					61,374									Ending Inventory	68,110					71,338

Note (1) - For comparative purposes, includes the costs and pounds of product sold to the Company's prepared chicken plant.

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$13.7 million in direct expenses incurred as a result of the winter storms. Excluding the effects of the proceeds and expenses directly related to the winter storms, other costs of sales of poultry products would have increased by $0.0331 per pound processed, or 7.8%, primarily attributable to higher labor ~~packaging, maintenance~~ and ~~repairs and certain other variable~~packaging costs in our processing facilities, higher freight costs incurred for the delivery of finished product, and higher chick costs. COVID-19-related expenses included in other costs of sales of poultry products during the ~~first~~second quarter of fiscal 2022 total approximately $1.6 million and include payroll expenses for employees who were quarantined, vaccination bonuses, expenses related to various items and services including personal protective equipment, thermometers, barriers and other social-distancing measures and additional nursing staff to protect the health and safety of our employees.$0.4 million. By comparison, COVID-19-related expenses in other costs of sales of poultry products during the ~~first~~second quarter of fiscal 2021 totaled ~~$5.2~~$3.7 million.

Cost of sales of the Company’s prepared chicken products during the ~~first~~second quarter of fiscal 2022 were ~~$79.2~~$88.3 million as compared to ~~$37.0~~$48.8 million during the same quarter a year ago, an increase of ~~$42.2~~$39.5 million, or ~~114.2%~~80.9%. This increase was attributable to a ~~44.4%~~16.1% increase in the pounds of prepared chicken sold, resulting from improved customer demand, and ~~substantially~~significantly higher costs for the fresh chicken purchased by the plant.

Cost of sales for the first six months of fiscal 2022 was $2,059.9 million as compared to $1,781.3 million during the first six months of fiscal 2021, an increase of $278.6 million, or 15.6%. Cost of sales of poultry products during the first six months of fiscal 2022, as compared to the first six months of fiscal 2021, was $1,892.4 million and $1,695.5 million, respectively, which represents a 9.1% increase in the average cost of sales per pound of poultry products. As illustrated in the table below, which for comparative purposes includes poultry products sold to the Company's prepared chicken plant, the increase in the cost of sales per pound of poultry products resulted from an increase in the cost of feed per pound of broilers processed of $0.0544, or 18.7%, and a $0.0232 per pound, or 5.3%, increase in other costs of sales of poultry products.

Poultry Cost of Sales

(In thousands, except per pound data)


	Six Months Ended April 30, 2022					Six Months Ended April 30, 2021					Incr/(Decr)
Description	Dollars			Per lb.		Dollars			Per lb.		Dollars		Per lb.
Beginning Inventory	$	42,775		$	0.5646	$	32,952		$	0.4701	$	9,823	$	0.0945
Feed in broilers processed	840,016			0.3459		692,023			0.2915		147,993		0.0544

All other cost of sales	1,122,253			0.4622		1,042,378			0.4390		79,875		0.0232



Less: Ending Inventory	38,696			0.5681		41,645			0.5838		(2,949)		(0.0157)
Total poultry cost of sales	$	1,966,348	(1)	$	0.8073	$	1,725,708	(1)	$	0.7272	$	240,640	$	0.0801

Pounds:
Beginning Inventory	75,757					70,103


Poultry processed/other	2,428,182					2,374,195
Poultry sold	2,435,830		(1)			2,372,961		(1)
Ending Inventory	68,110					71,338

Note (1) - For comparative purposes, includes the costs and pounds of product sold to the Company's prepared chicken plant.

Other costs of sales of poultry products consists primarily of labor, packaging, freight, maintenance and repairs, utilities, antimicrobial interventions, contract grower pay, chick costs and certain fixed costs. Collectively, these non-feed related costs of poultry products sold increased by $0.0232 per pound processed, or 5.3%, during the first six months of fiscal 2022, as compared to the same period a year ago. The first half of fiscal 2022 includes a benefit of approximately $7.4 million for insurance proceeds received as a result of the winter storms of 2021. Conversely, the first half of fiscal 2021 includes approximately $13.7 million in direct expenses incurred as a result of the winter storms. Excluding the effects of the proceeds and expenses directly related to the winter storms, other costs of sales of poultry products would have increased by $0.0320 per pound processed, or 7.4%, primarily attributable to higher labor and packaging costs in our processing facilities, higher freight costs incurred for the delivery of finished product, and higher chick costs. These increases were partially offset by lower COVID-19-related expenses included in other costs of sales of poultry products, which totaled $2.0 million during the first six months of fiscal 2022, as compared to $9.0 million during the first six months of fiscal 2021.

Cost of sales of the Company’s prepared chicken products during the first six months of fiscal 2022 was $167.5 million as compared to $85.8 million during the same period a year ago, an increase of $81.7 million, or 95.3%. This increase was primarily attributable to a 29.2% increase in the pounds of prepared chicken sold, resulting from improved customer demand, and significantly higher costs for the fresh chicken purchased by the plant.

The Company recorded the value of live broiler inventories on hand at ~~January 31,~~April 30, 2022 and October 31, 2021 at cost. In periods when the Company estimates that the cost to grow live birds in inventory to a marketable age and then process and distribute those birds will be lower in the aggregate than the anticipated sales proceeds, the Company values the broiler inventories on hand at cost and accumulates costs as the birds are grown to a marketable age subsequent to the balance sheet

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date. In periods when the Company estimates those costs will be higher in the aggregate than the anticipated sales proceeds, the Company will make an adjustment to reduce the value of live birds in inventory to the net realizable value. No such adjustment was required at ~~January 31,~~April 30, 2022 or ~~January 31,~~April 30, 2021.

Selling, general and administrative ("SG&A") costs during the ~~first~~second quarter of fiscal 2022 were ~~$65.7~~$66.4 million, an increase of ~~$9.1~~$2.1 million compared to the ~~$56.6~~$64.2 million during the ~~first~~second quarter of fiscal 2021. SG&A costs during the six months ended April 30, 2022 were $132.1 million, an increase of $11.3 million compared to the $120.8 million during the six months ended April 30, 2021. The following ~~table includes~~tables include the components of SG&A costs for the three and six months ended ~~January 31,~~April 30, 2022 and 2021.

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Selling, General and Administrative Costs

(in thousands)


Description	Description	Three Months Ended January 31, 2022		Three Months Ended January 31, 2021		Increase/(Decrease)		Description	Three Months Ended April 30, 2022		Three Months Ended April 30, 2021		Increase/(Decrease)
Stock compensation expense	Stock compensation expense	8,218		2,402		5,816		Stock compensation expense	$	8,245	$	2,776	$	5,469
Fees and expenses related to the pending merger								Fees and expenses related to the pending merger	4,748		—		4,748
Administrative salaries								Administrative salaries	13,381		12,806		575
Legal expense	Legal expense	11,473		8,464		3,009		Legal expense	9,506		9,137		369
Administrative salaries		12,899		12,357		542
Sanderson Farms Championship expense	Sanderson Farms Championship expense	2,207		1,950		257		Sanderson Farms Championship expense	2,207		1,953		254
Broker commissions	Broker commissions	3,471		3,294		177		Broker commissions	3,058		3,302		(244)
Trainee expense	Trainee expense	2,512		2,986		(474)		Trainee expense	2,532		3,095		(563)
Advertising expense	Advertising expense	2,127		2,707		(580)		Advertising expense	2,093		2,787		(694)
COVID-19-related expense	COVID-19-related expense	5,167		6,162		(995)		COVID-19-related expense	2,708		4,927		(2,219)
ESOP expense								ESOP expense	—		6,500		(6,500)
All other SG&A	All other SG&A	17,664		16,277		1,387		All other SG&A	17,904		16,962		942
Total SG&A	Total SG&A	$	65,738	$	56,599	$	9,139	Total SG&A	$	66,382	$	64,245	$	2,137

Selling, General and Administrative Costs

(in thousands)


Description	Six Months Ended April 30, 2022		Six Months Ended April 30, 2021		Increase/(Decrease)
Stock compensation expense	$	16,463	$	5,178	$	11,285
Fees and expenses related to the pending merger	5,528		—		5,528
Legal expense	20,979		17,601		3,378
Administrative salaries	26,280		25,163		1,117
Sanderson Farms Championship expense	4,414		3,903		511
Broker commissions	6,529		6,596		(67)
Trainee expense	5,044		6,081		(1,037)
Advertising expense	4,220		5,494		(1,274)
COVID-19-related expense	7,875		11,089		(3,214)
ESOP expense	—		6,500		(6,500)
All other SG&A	34,788		33,239		1,549
Total SG&A	$	132,120	$	120,844	$	11,276

Regarding ~~the table~~both tables above, the ~~increase~~increases in stock-based compensation expense isare primarily attributable to the timing of accruals related to the Company's performance share agreements with key employees, as described in "Part I, Item 1, Note 5 - Stock Compensation Plans" of this Form 10-Q. The ~~increase~~increases in merger-related fees and expenses are the result of various expenses incurred to date related to the Company's entry into a definitive agreement on August 8, 2021 to be acquired by a joint venture between Cargill, Incorporated and Continental Grain Company (the "Merger Agreement"). The increases in legal expense isare primarily attributable to our ongoing defense of the litigation described in "Part I, Item 1, Note 7 - Commitments and Contingencies" of this Form 10-Q. The ~~increase~~increases in all other SG&A expenses isare primarily the result of travel and entertainment expenses returning to a more normal level during ~~a large portion of our first quarter of~~ fiscal 2022, as compared to ~~our first quarter of~~ fiscal 2021, when a substantial

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portion of business travel was halted due to the pandemic. The decreases in ESOP expense are due to the fact that we are unable to make an ESOP contribution during fiscal 2022 under the terms of the Merger Agreement.

The Company’s operating income for the three and six months ended ~~January 31,~~April 30, 2022 was ~~$253.6~~$421.5 million and $675.1 million, respectively, as compared to an operating income for the three and six months ended ~~January 31,~~April 30, 2021 of ~~$13.4 million.~~$127.7 million and $141.1 million, respectively. The improvement in operating results for the period ended ~~January 31,~~April 30, 2022, as compared to the same period a year ago, resulted primarily from significantly higher average selling prices, partially offset by higher average costs of goods sold.

Interest expense during the second quarter and first ~~quarter~~half of fiscal 2022 was $0.6 million and $1.1 million, respectively, as compared to ~~$0.6~~$0.7 million and $1.3 million, respectively, during the second quarter and first ~~quarter~~half of fiscal 2021.

During the three and six months ended ~~January 31,~~April 30, 2022, the Company’s net income was ~~$192.8~~$321.2 million, or ~~$8.64~~$14.39 per ~~share.~~share, and $514.0 million, or $23.03 per share, respectively. For the three and six months ended ~~January 31,~~April 30, 2021, the Company’s net income was ~~$9.5~~$96.9 million, or ~~$0.42~~$4.34 per ~~share.~~share, and $106.4 million, or $4.76 per share, respectively. The increase in net income for the comparative periods is primarily attributable to significantly higher average selling prices, partially offset by higher average costs of goods sold. Details related to each of the aforementioned drivers of the changes in net income have been discussed above.

Liquidity and Capital Resources

The Company’s working capital, calculated by subtracting current liabilities from current assets, at ~~January 31,~~April 30, 2022 was ~~$988.2~~$1,303.5 million, and its current ratio, calculated by dividing current assets by current liabilities, was ~~3.8~~5.5 to 1. The Company’s working capital and current ratio at October 31, 2021 were $777.2 million and 3.5 to 1, respectively. These measures reflect the Company’s ability to meet its short-term obligations and are included here as a measure of the Company’s short-term market liquidity. The Company’s principal sources of liquidity during fiscal 2022 include cash on hand at October 31, 2021, cash flows from operations, and funds available under the Company’s revolving credit facility. As described below, the Company is a party to a revolving credit facility dated April 23, 2021, with a maximum available borrowing capacity of $1.0 billion. As of ~~January 31,~~April 30, 2022 and May 25, 2022, the Company had no outstanding draws under the facility, and had approximately $24.1 million outstanding in letters of credit, leaving $975.9 million of borrowing capacity available under the facility. As of February 23, 2022, the Company had no outstanding borrowings and had approximately $29.1 million outstanding in letters of credit, leaving $970.9

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million of borrowing capacity available under the facility. Management believes the Company has sufficient liquidity available to meet its needs.

The Company’s cash position at ~~January 31,~~April 30, 2022 and October 31, 2021 consisted of ~~$685.8~~$829.1 million and $439.3 million, respectively, in cash and short-term cash investments. The Company’s ability to invest cash is limited by covenants in its revolving credit agreement to short-term investments. All of the Company’s cash at ~~January 31,~~April 30, 2022 and October 31, 2021 was held in bank accounts or highly-liquid investment accounts. There were no restrictions on the Company’s access to its cash, and such cash was available to the Company on demand to fund its operations.

Cash flows provided by operating activities during the ~~three~~six months ended ~~January 31,~~April 30, 2022 totaled ~~$276.5~~$474.9 million, as compared to cash flows provided by operating activities of ~~$9.4~~$143.6 million during the ~~three~~six months ended ~~January 31, 2021. Cash flows from operating activities increased by $267.1~~April 30, 2021, an increase of $331.3 million. During the first ~~three~~six months of fiscal 2022, the Company realized higher margins due to higher average selling prices, partially offset by higher average costs of goods sold, as compared to the first ~~three~~six months of fiscal 2021. This increase in cash flows was partially offset by an increase in inventories, especially our live bird and feed inventories, during the first ~~three~~six months of fiscal 2022. The increase in inventories is primarily the result of significantly higher prices paid for corn and soybean meal, our primary feed ~~ingredient,~~ingredients, during the first ~~three~~six months of fiscal 2022 as compared to the same period in fiscal 2021. Details related to the corn and soy markets are discussed above in the Executive Overview of Results section. The increase in cash flows between the two periods was further offset by outflows for cash bonuses paid during December 2021. These bonus payments totaled approximately $55.9 million, compared to no such payout during the first ~~quarter~~six months of fiscal 2021.

Cash flows used in investing activities during the first ~~three~~six months of fiscal 2022 and 2021 were ~~$27.7~~$72.9 million and ~~$36.8~~$85.9 million, respectively. The Company’s capital expenditures during the first ~~three~~six months of fiscal 2022 were approximately ~~$27.9~~$73.1 million, and included approximately ~~$7.8~~$13.9 million for multiple large-scale equipment and building upgrades at multiple complexes and approximately ~~$0.5~~$2.1 million to purchase new vehicles that would have been leased prior to fiscal 2020. Capital expenditures for the first ~~three~~six months of fiscal 2021 were ~~$36.9~~$86.3 million, and included approximately ~~$12.2~~$22.1 million for multiple

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large-scale equipment and building upgrades at multiple complexes, $6.6 million to purchase new vehicles and ~~$4.9~~$9.8 million on construction of a new hatchery in Jones County, Mississippi.

Cash flows used in financing activities during the ~~three~~six months ended ~~January 31,~~April 30, 2022 totaled ~~$2.3~~$12.2 million, as compared to cash flows provided by financing activities of ~~$28.4~~$16.2 million during the ~~three~~six months ended ~~January 31,~~April 30, 2021. The change in cash flows from financing activities is primarily attributable to the change in outstanding borrowings under the Company's revolving credit facility. During the ~~three~~six months ended ~~January 31,~~April 30, 2022, the Company's outstanding borrowings remained unchanged, as compared to an increase in outstanding borrowings of $30.0 million under the facility during the ~~three~~six months ended ~~January 31,~~April 30, 2021.

As of ~~February 14,~~May 13, 2022, the Company's fiscal 2022 capital budget is approximately ~~$201.7~~$221.4 million. The Company expects the 2022 capital budget to be funded by cash on hand, internally generated working capital and cash flows from ~~operations and funds available under the Company's revolving credit facility.~~operations. The fiscal 2022 capital budget includes an aggregate of approximately ~~$59.5~~$68.2 million for multiple large-scale equipment and building upgrades at multiple complexes and ~~$18.1~~$20.3 million to purchase new vehicles that would have been leased prior to fiscal 2020. Excluding the budgeted amounts for the items detailed above, the fiscal 2022 capital budget is approximately ~~$124.1~~$132.9 million. These amounts are estimates and are subject to change as we move through the remainder of fiscal 2022.

On October 2, 2020, the Company filed a shelf registration statement on Form S-3 to register for possible future sale shares of the Company's common and/or preferred stock. An indeterminate amount of common stock and preferred stock may be offered by the Company in amounts, at prices and on terms to be determined by the board of directors if and when shares are issued. The registration statement became automatically effective upon filing with the SEC on October 2, 2020.

The Company regularly evaluates both internal and external growth opportunities, including acquisition opportunities and the possible construction of new production assets, and conducts due diligence activities in connection with such opportunities. The cost and terms of any financing to be raised in conjunction with any growth opportunity, including the Company’s ability to raise debt or equity capital on terms and at costs satisfactory to the Company, and the effect of such opportunities on the Company’s balance sheet, are critical considerations in any such evaluation. Covenants in the pending Merger Agreement to which the Company is a party limit the Company's ability to pursue any strategy outside the ordinary course of business.

Revolving Credit Facility

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The Company is a party to a revolving credit facility dated April 23, 2021, with a maximum available borrowing capacity of $1.0 billion. Under the credit facility, the Company may not exceed a maximum debt-to-total capitalization ratio of 50%. The Company has a one-time right, at any time during the term of the agreement, to increase the maximum debt-to-total capitalization ratio then in effect by five percentage points in connection with the construction of a new poultry complex for the four fiscal quarters beginning on the first day of the fiscal quarter during which the Company gives written notice of its intent to exercise this right. The Company has not exercised this right. The facility also sets a minimum net worth requirement that at ~~January 31,~~April 30, 2022, was ~~$1.3~~$1.5 billion. The credit is unsecured and, unless extended, will expire on April 23, 2026. As of ~~January 31,~~April 30, 2022 and May 25, 2022, the Company had no outstanding draws under the facility and had approximately $24.1 million outstanding in letters of credit, leaving $975.9 million of borrowing capacity available under the facility. As of February 23, 2022, the Company had no outstanding borrowings and had approximately $29.1 million outstanding in letters of credit, leaving $970.9 million of borrowing capacity available under the facility. For more information about the facility, see Item 1.01 of our Current Report on Form 8-K filed April 28, 2021.

Critical Accounting Estimates

We consider accounting policies related to allowance for doubtful accounts, inventories, long-lived assets, accrued self-insurance, performance share plans, income taxes and contingencies to be critical accounting estimates. These policies are summarized in Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended October 31, 2021.

New Accounting Pronouncements

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December 31, 2022, has not affected our consolidated financial statements. We have a revolving credit facility that references LIBOR, and we are assessing how this standard may be applied to specific contract modifications through December 31, 2022.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

The Company is a purchaser of certain commodities, primarily corn and soybean meal, for use in manufacturing feed for its chickens. As a result, the Company’s earnings are affected by changes in the price and availability of such feed ingredients. Feed grains are subject to volatile price changes caused by factors described below that include weather, size of harvest, transportation and storage costs and the agricultural policies of the United States and foreign governments. The price fluctuations of feed grains have a direct and material effect on the Company’s profitability.

Generally, the Company commits to purchase feed ingredients for deferred delivery from one month to nine months after the time of the commitment. The grain purchases are made directly with our usual grain suppliers, which are companies in the business of regularly supplying grain to end users, and do not involve options to purchase. Such purchases occur when our chief operating decision maker concludes that market factors indicate that prices at the time the grain is needed are likely to be higher than current prices, or where, based on current and expected market prices for the Company’s poultry products, our chief operating decision maker believes the Company can purchase feed ingredients at prices that will allow the Company to earn a reasonable return for its shareholders. The Company sometimes purchases its feed ingredients for prompt delivery to its feed mills at market prices at the time of such purchases. Market factors considered by our chief operating decision maker in determining whether or not and to what extent to commit to buy grain for deferred delivery include:

•Current market prices;

•Current and predicted weather patterns in the United States, South America, China and other grain producing areas, as such weather patterns might affect the planting, growing, harvesting and yield of feed grains;

•The expected size of the harvest of feed grains in the United States and other grain producing areas of the world as reported by governmental and private sources;

•Current and expected changes to the agricultural policies of the United States and foreign governments;

•The relative strength of United States currency and expected changes therein as it might affect the ability of foreign countries to buy United States feed grain commodities;

•The current and expected volumes of export of feed grain commodities as reported by governmental and private sources;

•The current and expected use of available feed grains for uses other than as livestock feed grains (such as the use of corn for the production of ethanol, which use is generally affected by the price of crude oil); and

•Current and expected market prices for the Company’s poultry products.

The Company purchases physical grain, not financial instruments such as puts, calls or straddles that derive their value from the value of physical grain. Thus, the Company does not use derivative financial instruments as defined in ASC 815, “Accounting for Derivatives for Instruments and Hedging Activities,” or any market risk sensitive instruments of the type contemplated by Item 305 of Regulation S-K. The Company does not enter into any derivative transactions or purchase any grain-related contracts other than the physical grain contracts described above.

Although the Company does not use derivative financial instruments as defined in ASC 815 or purchase market risk sensitive instruments of the type contemplated by Item 305 of Regulation S-K, the commodities that the Company does purchase for physical delivery, primarily corn and soybean meal, are subject to price fluctuations that have a direct and material effect on the Company’s profitability as mentioned above. During the ~~first~~second quarter of fiscal 2022, the Company purchased approximately ~~31.3~~32.1 million bushels of corn and approximately ~~285,771~~297,234 tons of soybean meal for use in manufacturing feed for its live chickens. A $1.00 change in the average market price paid per bushel for corn would have affected the Company’s cash outlays for corn by approximately ~~$31.3~~$32.1 million in the ~~first~~second quarter of fiscal 2022. Likewise, a $10.00 change in the price paid per ton for soybean meal would affect the Company’s cash outlays by approximately ~~$2.9~~$3.0 million.

Although changes in the market price paid for feed grains affect cash outlays at the time the Company purchases the grain, such changes do not immediately affect cost of sales. The cost of feed grains is recognized in cost of sales, on a first-in-first-out basis, at the same time that the sales of the chickens that consume the feed grains are recognized. Thus, there is a lag between the time cash is paid for feed ingredients and the time the cost of such feed ingredients is reported in cost of goods sold. For example, corn delivered to a feed mill and paid for one week might be used to manufacture feed the following week. However, the chickens that eat that feed might not be processed and sold for another 48-62 days, and only at that time will the costs of the feed consumed by the chicken become included in cost of goods sold.

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During the ~~first~~second quarter of fiscal 2022, the Company’s average feed cost per pound of broilers processed totaled ~~$0.3286~~$0.3631 per pound. Feed costs per pound of broilers processed consist primarily of feed grains, but also include other feed ingredients such as vitamins, fat and mineral feed supplements. The average feed cost per pound is influenced not only by the price of feed ingredients, but also by the efficiency with which live chickens convert feed into body weight. Factors such as weather, poultry

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husbandry, quality of feed ingredients and the quality, size and health of the bird, among others, affect the quantity of feed necessary to mature chickens to the target live weight and the efficiency of that process. Generally, however, a $1.00 change in the average price paid per bushel of corn fed to a chicken during its life would have affected average feed cost per pound of broilers processed by ~~$0.0260,~~$0.0262, based on the quantity of grain used during the ~~first~~second quarter of fiscal 2022. Similarly, a $10.00 change in the average price paid per ton of soybean meal would have influenced the average feed cost per pound of broilers processed by $0.0024 during the ~~first~~second quarter of fiscal 2022.

The following table shows the impact of hypothetical changes in the price of corn and soybean meal on both the Company’s cash flow and cost of goods sold, based on quantities actually purchased in the ~~first~~second quarter of fiscal 2022:

Feed Ingredient

Quantity Purchased

during the ~~First~~Second

Fiscal Quarter of

2022

Hypothetical Price
Change

Impact on Cash
Outlay

Ultimate Impact on
Feed Cost per
Pound of broilers
Processed

Corn

~~31.3~~32.1 million bushels

$1.00 per bushel

$~~31.3~~32.1 million

$~~0.0260/~~0.0262/lb processed

Soybean meal

~~285,771~~297,234 tons

$10.00 per ton

$~~2.9~~3.0 million

$0.0024/lb processed

The Company’s interest expense is sensitive to changes in the general level of interest rates in the United States, and when the Company is indebted, it sometimes maintains certain of its debt as fixed rate in nature to mitigate the impact of fluctuations in interest rates. Although the Company had no fixed-rate debt on its balance sheet at ~~January 31,~~April 30, 2022, management believes the potential effects of near-term changes in interest rates on the Company's debt are immaterial.

Item 4. Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As of ~~January 31,~~April 30, 2022, an evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on that evaluation, the Company’s management, including the Chief Executive Officer and Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were effective as of ~~January 31,~~April 30, 2022.

There have been no changes in the Company’s internal control over financial reporting during the fiscal quarter ended ~~January 31,~~April 30, 2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

For information regarding our legal proceedings, refer to "Litigation" within "Part I, Item 1, Notes to Consolidated Financial Statements, Note 7 - Commitments and Contingencies," which is incorporated herein by reference.

Item 1A. Risk Factors

In addition to the other information set forth in this quarterly report, you should carefully consider the risks discussed in our Annual Report on Form 10-K for the fiscal year ended October 31, 2021, including under the heading “Item 1A. Risk Factors,” which, along with risks described in this report, are risks we believe could materially affect the Company’s business, financial condition and future results. These are not the only risks facing the Company. Other risks and uncertainties we are not currently aware of or that we currently consider immaterial also may materially adversely affect the Company’s business, financial condition and future results. Risks we have identified but currently consider immaterial could still materially adversely affect the Company’s business, financial condition and future results if our assumptions about those risks are incorrect or if circumstances change.

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There were no material changes during the period covered in this report to the risk factors previously disclosed in Part I, Item 1A, of our Annual Report on Form 10-K for the year ended October 31, 2021, except as follows:

Operational Risks

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Outbreaks of avian disease, such as avian influenza, or the perception that outbreaks may occur, can significantly restrict our ability to conduct our operations and can significantly affect demand for our products.

Events beyond our control, such as the outbreak of avian disease or the perception that an outbreak may occur, even if it does not affect our flocks, could significantly restrict our ability to conduct our operations or our sales. An outbreak of disease could result in governmental restrictions on the import and export of fresh and frozen chicken, including our fresh and frozen chicken products, or other products to or from our suppliers, facilities or customers, or require us to destroy one or more of our flocks. This could result in the cancellation of orders by our customers and create adverse publicity that may have a material adverse effect on our business, reputation and prospects. In addition, world-wide fears about avian disease, such as avian influenza, have, in the past, depressed demand for fresh chicken, which adversely affected our sales during and around that time.

In past years there has been substantial publicity regarding a highly pathogenic Asian strain of avian influenza, or AI, known as H5N1, which has affected Asia since 2002 and which has been found in Europe, the Middle East and Africa. ~~It is widely believed that this~~This strain of AI is typically spread by migratory birds, such as ducks and geese. There have also been some cases where this strain of AI is believed to have passed from birds to humans as humans came into contact with live birds that were infected with the disease.

Until 2015, AI outbreaks in North America had not generated the same level of concern, or received the same level of publicity, or been accompanied by the same reduction in demand for poultry products in certain countries, as that associated with the Asian strains. Beginning in January 2015, however, the United States experienced what some industry observers believe was the worst AI outbreak in United States history during which, according to the United States Animal and Plant Health Inspection Service (APHIS), approximately 7.8 million turkeys and 40.3 million chickens were affected. The affected chickens were almost all hens that lay eggs for the table egg industry, and not broiler chickens such as those we raise.

On February 8, 2022 the highly pathogenic H5N1 strain of AI was discovered in a commercial turkey flock in Indiana and has subsequently been detected in ~~four~~many other commercial poultry flocks ~~at least~~within the United States. As of May 13, 2022, the current outbreak has affected approximately 37.6 million commercial birds, of which approximately 28.7 million were table egg layers, 5.2 million were turkeys and 2.3 million were broiler chickens.

To date, only one of our broiler flocks, which was ~~a broiler flock, within~~located in North Carolina, has been affected by the ~~eastern and central United States.~~

current AI outbreak. We have a high degree of confidence in our industry’s biosecurity program, but we cannot be certain our flocks or others in our industry will not be significantly affected by AI. Given our high degree of confidence in our biosecurity programs, we believe the primary risks associated with domestic outbreaks of AI are market risks, as many countries to which our industry sells product typically impose bans on the import of broiler meat produced in the United States when AI is found. The extent of the bans varies by country and can range from county-specific, which means product of a certain county is banned, to nationwide, under which any poultry produced in the United States is banned.

While the bans were in place following the 2015 outbreak, the market price for leg quarters fell significantly below historical averages. While domestic demand for broiler meat was not materially affected by the 2015 outbreak, we cannot assure you that additional outbreaks, including the 2022 outbreak, will not materially adversely affect both domestic and international demand for poultry products produced in the United States. Because the virus is carried by migratory water fowl, it is possible the virus could be spread to domestic poultry flocks during any seasonal migration of those water fowl. If AI were to affect a significant number of our flocks, or materially reduce domestic demand for our products, either or both of these events could have a material adverse effect on our business, reputation or prospects.

Our operations may be negatively affected by Russia's invasion of Ukraine and its consequences.

The primary risk to our business from Russia’s invasion of Ukraine is the resulting uncertainty surrounding the region’s corn and fertilizer production and exports and the impact that uncertainty has had and could continue to have on the price of corn, which is the largest component of our total feed costs. In the 2020/2021 growing year, Ukraine was the world's seventh-largest producer and fourth-largest exporter of corn, responsible for 13% of global exports. In addition, the country produces approximately one-fifth of the world's high-grade wheat and 7% of all wheat. It is uncertain when or if Ukrainian farmers will be willing or able to plant new crops while the country is at war, and the planting season for this year's crops is nearly over. In late April, Ukraine’s Ministry of Agrarian Policy announced it expects that at least 60-70% of crops will be sown on time this spring, but in areas where active hostilities continue, it expects only 30-40% will be planted on time. While we do not import corn or other feed grains directly from the region, Ukraine’s inability to plant, grow and harvest a material portion of its grain crops will negatively impact the worldwide supply of grain, including corn, and will continue to put upward pressure on grain prices. Due to the ongoing conflict, shipping channels through which old-crop grain would normally be exported are blocked or disrupted, and only a fraction of normal exports are able to be transported. These uncertainties, together with already tight global grain supplies, have caused grain prices to rise and exhibit significant volatility since the invasion began. That trend will likely continue.

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Additionally, Russia is the world’s largest exporter of fertilizers, accounting for 23% of ammonia exports, 14% of urea exports, 10% of processed phosphate exports, and 21% of potash exports, according to data from The Fertilizer Institute.Exports of fertilizers from Russia have dropped significantly because of the war and resulting economic sanctions.While the supply of fertilizers in the United States should be better than in other parts of the world due to the United States' robust domestic production, United States farmers are likely to face significantly higher prices because of the interconnectedness of the global fertilizer industry. This could impact planting and fertilizer use decisions by United States farmers, which could impact the quality, quantity and pricing of feed grain crops in the United States.

Following Russia's invasion and annexation of Crimea from Ukraine in 2014, the U.S. Government imposed sanctions on Russia. In response, Russia banned the import of poultry products from the U.S. As a result, we do not currently export product to Russia. We also do not currently export to Ukraine and have not for many years. As a result, we do not expect the war to have a material effect on our export markets.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the ~~first~~second quarter of fiscal 2022, the company repurchased shares of its common stock as follows:

Period
(a) Total Number of
Shares Purchased(1)
(b) Average Price
Paid per Share
(c) Total Number of
Shares Purchased as
Part of Publicly
Announced Plans
or
Programs(2)
(d) Maximum
Number (or
Approximate Dollar
Value) of Shares that
May Yet Be
Purchased Under the
Plans or Programs(2) (3)
Nov. 1 - Nov. 30, 2021 10,944 $ 191.46 10,944 2,000,000
Dec. 1 - Dec. 31, 2021 4,498 189.93 4,498 2,000,000
Jan. 1 - Jan. 31, 2022 — — — 2,000,000
Total 15,442 $ 191.01 15,442 2,000,000

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Period	(a) Total Number of Shares Purchased(1)	(b) Average Price Paid per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(2)	(d) Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs(2) (3)
Feb. 1 - Feb. 28, 2022	—	$	—	—	2,000,000
Mar. 1 - Mar. 31, 2022	130	183.19		130	2,000,000
Apr. 1 - Apr. 30, 2022	—	—		—	2,000,000
Total	130	$	183.19	130	2,000,000

___________________

1All purchases were made pursuant to the Company’s Stock Incentive Plan, as amended and restated on February 13, 2020, under which shares were withheld to satisfy tax withholding obligations.

2On October 22, 2020, the Company’s Board of Directors expanded and extended the share repurchase program originally approved on October 22, 2009, under which the Company was originally authorized to purchase up to one million shares of its common stock and is now authorized to purchase up to two million shares of its common stock in open market transactions or negotiated purchases, subject to market conditions, share price and other considerations. The authorization will expire on October 22, 2023. The Company’s repurchases of vested restricted stock to satisfy tax withholding obligations of its Stock Incentive Plan participants are not made under the general repurchase plan.

3Does not include vested restricted shares that may yet be repurchased under the Stock Incentive Plan as described in Note 1.

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Item 6. Exhibits

The following exhibits are filed with this report.


Exhibit No.						Description of Exhibit
3.1						Restated Articles of Incorporation of the Registrant. (Incorporated by reference to Exhibit 3.1 filed with the Registrant's Quarterly Report on Form 10-Q for the Quarter ended on July 31, 2015.)

3.2						Bylaws of the Registrant, amended and restated as of December 30, 2020. (Incorporated by reference to Exhibit 3.1 filed with the Registrant’s Current Report on Form 8-K on January 5, 2021.)

31.1*						Certification of Chief Executive Officer.

31.2*						Certification of Chief Financial Officer.

32.1**						Section 1350 Certification.

32.2**						Section 1350 Certification.

101.INS						XBRL Instance Document - the instance document does not appear in the Interactive Data File, because its XBRL tags are embedded within the Inline XBRL document.

101.SCH						XBRL Taxonomy Extension Schema

101.CAL						XBRLTaxonomy Extension Calculation Linkbase

101.DEF						XBRL Taxonomy Extension Definition Linkbase

101.LAB						XBRL Taxonomy Extension Label Linkbase

101.PRE						XBRL Taxonomy Extension Presentation Linkbase

104						Cover Page Interactive Data File (embedded within the Inline XBRL document).

___________________

* Filed herewith.

** Furnished herewith.

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INDEX TO EXHIBITS


Exhibit Number						Description of Exhibit

3.1						Restated Articles of Incorporation of the Registrant. (Incorporated by reference to Exhibit 3.1 filed with the Registrant's Quarterly Report on Form 10-Q for the Quarter ended on July 31, 2015.)

3.2						Bylaws of the Registrant, amended and restated as of December 30, 2020. (Incorporated by reference to Exhibit 3.1 filed with the Registrant’s Current Report on Form 8-K on January 5, 2021.)

31.1*						Certification of Chief Executive Officer

31.2*						Certification of Chief Financial Officer

32.1**						Section 1350 Certification.

32.2**						Section 1350 Certification.

101.INS						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH						XBRL Taxonomy Extension Schema

101.CAL						XBRL Taxonomy Extension Calculation Linkbase

101.DEF						XBRL Taxonomy Definition Linkbase

101.LAB						XBRL Taxonomy Extension Label Linkbase

101.PRE						XBRL Taxonomy Extension Presentation Linkbase

104						Cover Page Interactive Data File (embedded within the Inline XBRL document).

___________________

* Filed herewith.

** Furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	SANDERSON FARMS, INC.
	(Registrant)

Date: ~~February 24,~~May 26, 2022	By:	/s/ D. Michael Cockrell
		Treasurer, Chief Financial Officer and Chief Legal Officer

Date: ~~February 24,~~May 26, 2022	By:	/s/ Tim Rigney
		Secretary, Corporate Controller and
		Chief Accounting Officer

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