Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Apr. 30, 2020 | May 26, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Apr. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 1-14977 | |
Entity Registrant Name | SANDERSON FARMS INC | |
Entity Incorporation, State or Country Code | MS | |
Entity Tax Identification Number | 64-0615843 | |
Entity Address, Address Line One | 127 Flynt Road | |
Entity Address, City or Town | Laurel | |
Entity Address, State or Province | MS | |
Entity Address, Postal Zip Code | 39443 | |
City Area Code | 601 | |
Local Phone Number | 649-4030 | |
Title of 12(b) Security | Common Stock, $1 par value per share | |
Trading Symbol | SAFM | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Share Outstanding (in shares) | 22,239,574 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 | |
Entity Central Index Key | 0000812128 | |
Current Fiscal Year End Date | --10-31 |
FAIR VALUE OF FINANCIAL INSTRUM
FAIR VALUE OF FINANCIAL INSTRUMENTS | 6 Months Ended |
Apr. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | FAIR VALUE OF FINANCIAL INSTRUMENTS The Company holds certain items that are required to be disclosed at fair value, primarily debt instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A three-level hierarchy is followed for disclosure to show the extent and level of judgment used to estimate fair value measurements: Level 1 – Inputs used to measure fair value are unadjusted quoted prices that are available in active markets for the identical assets or liabilities as of the reporting date. Level 2 – Inputs used to measure fair value, other than quoted prices included in Level 1, are either directly or indirectly observable as of the reporting date through correlation with market data, including quoted prices for similar assets and liabilities in active markets and quoted prices in markets that are not active. Level 2 also includes assets and liabilities that are valued using models or other pricing methodologies that do not require significant judgment since the input assumptions used in the models, such as interest rates and volatility factors, are corroborated by readily observable data from actively quoted markets for substantially the full term of the financial instrument. Level 3 – Inputs used to measure fair value are unobservable inputs that are supported by little or no market activity and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions. Fair values for debt are based on quoted market prices or published forward interest rate curves, and were categorized as Level 2 measurements. As of April 30, 2020 and October 31, 2019, the fair values of the Company's borrowings under its revolving credit facility approximate the carrying values. |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Apr. 30, 2020 | Oct. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 61,330 | $ 95,417 |
Accounts receivable, net | 132,072 | 131,778 |
Receivable from insurance companies | 0 | 445 |
Inventories | 297,477 | 289,928 |
Refundable income taxes | 127,372 | 6,612 |
Prepaid expenses and other current assets | 63,396 | 56,931 |
Total current assets | 681,647 | 581,111 |
Property, plant and equipment, net | 1,235,556 | 1,185,860 |
Right of use assets | 45,913 | 0 |
Other assets | 6,394 | 7,163 |
Total assets | 1,969,510 | 1,774,134 |
Current liabilities: | ||
Accounts payable | 119,961 | 132,741 |
Dividends payable | 7,117 | 0 |
Accrued expenses | 82,214 | 82,940 |
Lease liabilities | 15,188 | 0 |
Total current liabilities | 224,480 | 215,681 |
Long-term debt | 200,000 | 55,000 |
Claims payable and other liabilities | 11,475 | 11,646 |
Deferred income taxes | 131,388 | 74,132 |
Long-term lease liabilities | 30,725 | 0 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Common Stock, $1 par value: authorized 100,000,000 shares; issued and outstanding shares—22,239,574 and 22,203,920 at April 30, 2020 and October 31, 2019, respectively | 22,239 | 22,204 |
Paid-in capital | 86,430 | 86,010 |
Retained earnings | 1,262,773 | 1,309,461 |
Total stockholders’ equity | 1,371,442 | 1,417,675 |
Total liabilities and stockholders’ equity | 1,969,510 | 1,774,134 |
Series A Junior Participating Preferred Stock, $100 par value: authorized 500,000 shares, none issued | ||
Stockholders’ equity: | ||
Preferred Stock | ||
Par value to be determined by the Board of Directors: authorized 4,500,000 shares; none issued | ||
Stockholders’ equity: | ||
Preferred Stock |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Apr. 30, 2020 | Oct. 31, 2019 |
Common Stock, par value (in usd per share) | $ 1 | $ 1 |
Common Stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common Stock, shares issued (in shares) | 22,239,574 | 22,203,920 |
Common Stock, shares outstanding (in shares) | 22,239,574 | 22,203,920 |
Series A Junior Participating Preferred Stock | ||
Preferred Stock, par value (in usd per share) | $ 100 | $ 100 |
Preferred Stock, authorized shares (in shares) | 500,000 | 500,000 |
Preferred Stock, shares issued (in shares) | 0 | 0 |
Other Preferred Stock | ||
Preferred Stock, authorized shares (in shares) | 4,500,000 | 4,500,000 |
Preferred Stock, shares issued (in shares) | 0 | 0 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Apr. 30, 2020 | Apr. 30, 2019 | Apr. 30, 2020 | Apr. 30, 2019 | |
Income Statement [Abstract] | ||||
Net sales | $ 844,711 | $ 845,229 | $ 1,667,789 | $ 1,588,617 |
Cost and expenses: | ||||
Cost of sales | 832,283 | 740,833 | 1,655,807 | 1,449,233 |
Selling, general and administrative | 56,214 | 49,230 | 105,699 | 107,765 |
Cost and expenses | 888,497 | 790,063 | 1,761,506 | 1,556,998 |
Operating income (loss) | (43,786) | 55,166 | (93,717) | 31,619 |
Other income (expense): | ||||
Interest expense | (1,783) | (1,173) | (2,971) | (1,682) |
Other | 3 | 2 | 5 | 2 |
Other income (expense) | (1,780) | (1,171) | (2,966) | (1,680) |
Income (loss) before income taxes | (45,566) | 53,995 | (96,683) | 29,939 |
Income tax expense (benefit) | (51,684) | 13,359 | (64,225) | 7,136 |
Net income (loss) | $ 6,118 | $ 40,636 | $ (32,458) | $ 22,803 |
Earnings (loss) per share: | ||||
Basic (in usd per share) | $ 0.28 | $ 1.83 | $ (1.48) | $ 1.03 |
Diluted (in usd per share) | 0.28 | 1.83 | (1.48) | 1.03 |
Dividends per share (in usd per share) | $ 0.32 | $ 0.32 | $ 0.64 | $ 0.64 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) - USD ($) $ in Thousands | Total | Common Stock | Paid-In Capital | Retained Earnings |
Beginning Balance (in shares) at Oct. 31, 2018 | 22,099,780 | |||
Beginning Balance at Oct. 31, 2018 | $ 1,387,893 | $ 22,100 | $ 81,269 | $ 1,284,524 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income (loss) | (17,833) | (17,833) | ||
Cash dividends ($0.32 per share) | (7,089) | (7,089) | ||
Stock compensation plan transactions (in shares) | 53,688 | |||
Stock compensation plan transactions | (2,073) | $ 53 | (2,126) | |
Amortization of unearned compensation | 2,313 | 2,313 | ||
Ending Balance (in shares) at Jan. 31, 2019 | 22,153,468 | |||
Ending Balance at Jan. 31, 2019 | 1,363,211 | $ 22,153 | 81,456 | 1,259,602 |
Beginning Balance (in shares) at Oct. 31, 2018 | 22,099,780 | |||
Beginning Balance at Oct. 31, 2018 | 1,387,893 | $ 22,100 | 81,269 | 1,284,524 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income (loss) | 22,803 | |||
Ending Balance (in shares) at Apr. 30, 2019 | 22,154,245 | |||
Ending Balance at Apr. 30, 2019 | 1,400,712 | $ 22,154 | 85,409 | 1,293,149 |
Beginning Balance (in shares) at Jan. 31, 2019 | 22,153,468 | |||
Beginning Balance at Jan. 31, 2019 | 1,363,211 | $ 22,153 | 81,456 | 1,259,602 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income (loss) | 40,636 | 40,636 | ||
Cash dividends ($0.32 per share) | (7,089) | (7,089) | ||
Stock compensation plan transactions (in shares) | 777 | |||
Stock compensation plan transactions | 1,629 | $ 1 | 1,628 | |
Amortization of unearned compensation | 2,325 | 2,325 | ||
Ending Balance (in shares) at Apr. 30, 2019 | 22,154,245 | |||
Ending Balance at Apr. 30, 2019 | 1,400,712 | $ 22,154 | 85,409 | 1,293,149 |
Beginning Balance (in shares) at Oct. 31, 2019 | 22,203,920 | |||
Beginning Balance at Oct. 31, 2019 | 1,417,675 | $ 22,204 | 86,010 | 1,309,461 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income (loss) | (38,576) | (38,576) | ||
Cash dividends ($0.32 per share) | (7,113) | (7,113) | ||
Stock compensation plan transactions (in shares) | 25,292 | |||
Stock compensation plan transactions | (4,696) | $ 25 | (4,721) | |
Amortization of unearned compensation | 2,082 | 2,082 | ||
Ending Balance (in shares) at Jan. 31, 2020 | 22,229,212 | |||
Ending Balance at Jan. 31, 2020 | 1,369,372 | $ 22,229 | 83,371 | 1,263,772 |
Beginning Balance (in shares) at Oct. 31, 2019 | 22,203,920 | |||
Beginning Balance at Oct. 31, 2019 | 1,417,675 | $ 22,204 | 86,010 | 1,309,461 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income (loss) | (32,458) | |||
Ending Balance (in shares) at Apr. 30, 2020 | 22,239,574 | |||
Ending Balance at Apr. 30, 2020 | 1,371,442 | $ 22,239 | 86,430 | 1,262,773 |
Beginning Balance (in shares) at Jan. 31, 2020 | 22,229,212 | |||
Beginning Balance at Jan. 31, 2020 | 1,369,372 | $ 22,229 | 83,371 | 1,263,772 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income (loss) | 6,118 | 6,118 | ||
Cash dividends ($0.32 per share) | (7,117) | (7,117) | ||
Stock compensation plan transactions (in shares) | 10,362 | |||
Stock compensation plan transactions | 1,109 | $ 10 | 1,099 | |
Amortization of unearned compensation | 1,960 | 1,960 | ||
Ending Balance (in shares) at Apr. 30, 2020 | 22,239,574 | |||
Ending Balance at Apr. 30, 2020 | $ 1,371,442 | $ 22,239 | $ 86,430 | $ 1,262,773 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) (Parenthetical) - $ / shares | 3 Months Ended | |||
Jan. 31, 2020 | Oct. 31, 2019 | Jan. 31, 2019 | Oct. 31, 2018 | |
Statement of Stockholders' Equity [Abstract] | ||||
Cash dividends, per share (in usd per share) | $ 0.32 | $ 0.32 | $ 0.32 | $ 0.32 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Apr. 30, 2020 | Apr. 30, 2019 | |
Operating activities | ||
Net income (loss) | $ (32,458) | $ 22,803 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 75,474 | 62,379 |
Amortization of share-based compensation | 5,173 | 5,907 |
Live inventory adjustment (net of prior period reversal) | (2,800) | (9,600) |
Provision for losses (recoveries) on accounts receivable | 0 | (1,500) |
Deferred income taxes | 57,256 | 6,699 |
Gain (Loss) on Disposition of Assets | 238 | 0 |
Change in assets and liabilities: | ||
Accounts receivable - trade | (294) | (3,457) |
Accounts receivable - insurance | 445 | 1,111 |
Income taxes | (120,760) | 27,363 |
Inventories | (4,749) | (35,817) |
Prepaid expenses and other assets | (6,242) | (9,160) |
Right of use assets | 8,733 | 0 |
Lease liabilities | (8,733) | 0 |
Accounts payable | (8,159) | (10,738) |
Accrued expenses and other liabilities | (353) | (6,193) |
Total adjustments | (4,771) | 26,994 |
Net cash provided by (used in) operating activities | (37,229) | 49,797 |
Investing activities | ||
Capital expenditures | (129,691) | (162,268) |
Net proceeds from sale of property and equipment | 207 | 880 |
Net cash used in investing activities | (129,484) | (161,388) |
Financing activities | ||
Payment of debt issuance costs | 0 | (2,225) |
Borrowings from revolving line of credit | 145,000 | 100,000 |
Proceeds from issuance of restricted stock under stock compensation plans | 600 | 479 |
Payments from issuance of common stock under stock compensation plans | (5,861) | (3,829) |
Dividends paid | (7,113) | (7,089) |
Net cash provided by financing activities | 132,626 | 87,336 |
Net change in cash and cash equivalents | (34,087) | (24,255) |
Cash and cash equivalents at beginning of period | 95,417 | 121,193 |
Cash and cash equivalents at end of period | 61,330 | 96,938 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Capital expenditures included in accounts payable | 5,588 | 5,174 |
Dividends payable | $ 7,117 | $ 7,089 |
LEASES
LEASES | 6 Months Ended |
Apr. 30, 2020 | |
Leases [Abstract] | |
LEASES | LEASESThe Company, using the guidance in Accounting Standards Codification ("ASC") 842, Leases, determines if an agreement is a lease at the inception of the agreement, and when a lease exists, we follow the guidance in ASC 842 to determine whether the lease is an operating or finance lease. The Company is a party to certain agreements that are classified as operating leases, and those are recorded on our Condensed Consolidated Balance Sheet as Right of Use Assets, Current Lease Liabilities, and Long-term Lease Liabilities. The Company is not a party to any finance lease arrangements. The Company has elected not to record short-term leases with initial terms of twelve months or less in our Condensed Consolidated Balance Sheet. Lease expenses related to those short-term leases are recognized on a straight-line basis over the term of the lease. The initial assets and corresponding liabilities recorded at commencement of our operating leases are based on the present value of the future minimum lease payments over the lease term. In determining the present value, we use the implicit interest rate in the agreement, if provided. If an implicit interest rate is not provided, we determine the present value of the future minimum lease payments using our incremental borrowing rate based on available information at the lease commencement. |
ACCOUNTING POLICIES
ACCOUNTING POLICIES | 6 Months Ended |
Apr. 30, 2020 | |
Accounting Policies [Abstract] | |
ACCOUNTING POLICIES | 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 April 30, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending October 31, 2020. The condensed consolidated balance sheet at October 31, 2019 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, 2019. New Accounting Pronouncements In February 2016, the FASB issued Accounting Standards Update ("ASU") 2016-02, Leases. The guidance is intended to increase transparency and comparability among companies by requiring an entity that is a lessee to recognize on the balance sheet the right-of-use assets and lease liabilities arising from all leases with terms, as defined by the guidance, of greater than twelve months. The guidance also requires disclosure of key information about leasing arrangements. The Company adopted this guidance during the first quarter of fiscal 2020, and we used the transition method that requires a cumulative-effect adjustment to the beginning balance of retained earnings during the period of adoption, rather than restating prior-period financial statements; however no such cumulative-effect adjustment was required under our circumstances. This guidance also provides certain practical expedients, including a practical expedient package during transition. We elected to use this package, which allowed the Company to carry forward its determination of whether a lease exists, the classification of a lease, and whether initial direct lease costs exist for purposes of transition to the new standard. We did not utilize the hindsight practical expedient. As of April 30, 2020, we recognized right-of-use assets and lease liabilities of approximately $45.9 million, primarily related to transportation equipment. Adoption did not have a material effect on our consolidated statements of operations and cash flows. For further information regarding the Company's leases, refer to "Part I, Item 1, Notes to Condensed Consolidated Financial Statements, Note 11 - Leases." In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses, which intends to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2019, our fiscal 2021. Early adoption is permitted. We do not expect adoption to have a material effect on our consolidated financial statements. |
REVENUE
REVENUE | 6 Months Ended |
Apr. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE | 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. Disaggregation of Revenue The following tables disaggregate our net sales by product category (in thousands): Product Category Three Months Ended April 30, 2020 Three Months Ended April 30, 2019 Fresh, vacuum-sealed chicken $ 265,258 $ 330,713 Fresh, chill-packed chicken 343,165 269,304 Fresh, ice-packed chicken 130,798 132,427 Prepared chicken 38,810 61,995 Frozen chicken 62,187 44,109 Other 4,493 6,681 Total net sales $ 844,711 $ 845,229 Product Category Six Months Ended April 30, 2020 Six Months Ended April 30, 2019 Fresh, vacuum-sealed chicken $ 576,554 $ 590,782 Fresh, chill-packed chicken 630,432 537,768 Fresh, ice-packed chicken 251,261 232,459 Prepared chicken 90,192 119,391 Frozen chicken 108,861 92,700 Other 10,489 15,517 Total net sales $ 1,667,789 $ 1,588,617 |
INVENTORIES
INVENTORIES | 6 Months Ended |
Apr. 30, 2020 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | INVENTORIES Inventories consisted of the following (in thousands): Inventory type April 30, 2020 October 31, 2019 Live poultry-broilers and breeders $ 195,265 $ 179,870 Feed, eggs and other 40,599 47,417 Processed poultry 37,969 35,121 Prepared chicken 15,936 20,032 Packaging materials 7,708 7,488 Total Inventories $ 297,477 $ 289,928 |
PROPERTY, PLANT AND EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT | 6 Months Ended |
Apr. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, PLANT AND EQUIPMENT | PROPERTY, PLANT AND EQUIPMENTProperty, plant and equipment, net, consisted of the following (in thousands): Description April 30, 2020 October 31, 2019 Land and buildings $ 900,897 $ 892,089 Machinery and equipment 1,302,518 1,236,095 Work-in-process 54,468 11,149 2,257,883 2,139,333 Less accumulated depreciation 1,022,327 953,473 Property, plant and equipment, net $ 1,235,556 $ 1,185,860 |
STOCK COMPENSATION PLANS
STOCK COMPENSATION PLANS | 6 Months Ended |
Apr. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
STOCK COMPENSATION PLANS | STOCK COMPENSATION PLANS Refer to Note 9 and Note 10 of the Company’s October 31, 2019 audited financial statements in the Company's 2019 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 April 30, 2020 was $2.4 million and $5.2 million, respectively, as compared to total stock based compensation expense of $3.0 million and $5.9 million, respectively, for the three and six months ended April 30, 2019. During the six months ended April 30, 2020, participants in the Company’s Management Share Purchase Plan ("MSPP") elected to receive a total of 4,209 shares of restricted stock at an average price of $142.45 per share instead of a specified percentage of their cash compensation, and the Company issued 1,007 matching restricted shares. During the three and six months ended April 30, 2020, the Company recorded compensation expense for the MSPP shares, included in the total stock based compensation expense above, of $48,000 and $104,000, respectively, as compared to $105,000 and $196,000, respectively, during the three and six months ended April 30, 2019. During fiscal 2020, 2019 and 2018, 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 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, 2019 totaled 56,575. As of April 30, 2020, the Company could not determine that achievement of the applicable performance based criteria is probable due to operating results to date and the uncertainties discussed above, and therefore recorded no compensation expense related to those agreements. The Company also has performance share agreements in place with certain officers and key employees that were entered into on November 1, 2018. The target number of shares specified in those agreements totaled 74,650. As of April 30, 2020, the Company could not determine that achievement of the applicable performance based criteria is probable due to operating results to date and the uncertainties discussed above, and therefore recorded no compensation expense related to those agreements. The Compensation Committee of the Company's Board of Directors has determined that the performance share agreements entered into on November 1, 2017 have been earned at a level between the threshold and target levels for the return on sales criterion and that the threshold level for the return on equity criterion was not achieved. The shares earned as a result of achieving the return on sales criterion are subject to the satisfaction of the additional one-year service period ending on October 31, 2020. Accordingly, the three and six months ended April 30, 2020 include compensation expense of $157,000 and $347,000, respectively, related to those agreements, as compared to no compensation expense related to those agreements during the three and six months ended April 30, 2019. There was no compensation expense recorded during the first six months of fiscal 2019, because management's initial determination of probability was made during the third quarter of fiscal 2019 and because the accrual is made using the cumulative catch-up method. As of April 30, 2020, the aggregate number of shares estimated to be awarded related to the performance share agreements entered into on November 1, 2017 totaled 13,093 shares. Because the performance period for those agreements has ended, the actual number of shares that will be awarded can change only due to potential forfeitures during the remaining six months of the service period ending October 31, 2020. The Company will recognize the remaining $324,000 of unearned compensation related to these shares over the remaining service period. Had the Company determined that it was probable that the maximum amount of those outstanding awards from the agreements entered into on November 1, 2018 and November 1, 2019 would be earned, an additional $7.5 million and $3.0 million, respectively, would have been accrued as of April 30, 2020. The Company's compensation cost related to performance share agreements is summarized as follows (in thousands, except number of shares): Three Months Ended Six Months Ended Date of Performance Share Agreement Number of shares issued (actual (a) or estimated (e)) April 30, 2020 April 30, 2019 April 30, 2020 April 30, 2019 November 1, 2016 84,511 (a) $ — $ 650 $ — $ 1,263 November 1, 2017 13,093 (e) 157 — 347 — November 1, 2018 (1) — (e) — — — — November 1, 2019 (1) — (e) — — — — Total compensation cost $ 157 $ 650 $ 347 $ 1,263 Note (1) - As of April 30, 2020, the Company could not determine that achievement of the applicable performance-based criteria is probable for the agreements entered into on November 1, 2018 and November 1, 2019, due to the uncertainties discussed above, and therefore recorded no compensation expense related to those agreements. On November 1, 2019, the Company granted 56,575 shares of restricted stock to certain officers and key management employees. The restricted stock had a grant date fair value of $159.76 per share and will vest on November 1, 2023. On February 13, 2020, the Company granted an aggregate of 12,100 shares of restricted stock to all of its non-employee directors. The restricted stock had a grant date fair value of $136.76 per share and vests one, two or three years from the date of grant. The Company also 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 April 30, 2020 related to all unvested restricted stock grants totaled 265,353. During the three and six months ended April 30, 2020, the Company recorded compensation expense, included in the total stock based compensation expense above, of $2.2 million and $4.7 million, respectively, related to restricted stock grants, as compared to $2.2 million and $4.4 million, respectively, during the three and six months ended April 30, 2019. The Company had $18.0 million in unrecognized share-based compensation costs as of April 30, 2020, which will be recognized over a weighted average remaining vesting period of approximately 2 years. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 6 Months Ended |
Apr. 30, 2020 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | 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 tables present earnings per share: Three Months Ended April 30, 2020 April 30, 2019 (in thousands except per share amounts) Net income $ 6,118 $ 40,636 Distributed and undistributed (earnings) to unvested restricted stock (81) (597) Distributed and undistributed earnings to common shareholders—Basic $ 6,037 $ 40,039 Weighted average shares outstanding—Basic 21,943 21,830 Weighted average shares outstanding—Diluted 21,943 21,830 Earnings per common share—Basic $ 0.28 $ 1.83 Earnings per common share—Diluted $ 0.28 $ 1.83 Six Months Ended April 30, 2020 April 30, 2019 (in thousands except per share amounts) Net income (loss) $ (32,458) $ 22,803 Distributed and undistributed (earnings) to unvested restricted stock — (340) Distributed and undistributed earnings (loss) to common shareholders—Basic $ (32,458) $ 22,463 Weighted average shares outstanding—Basic 21,939 21,822 Weighted average shares outstanding—Diluted 21,939 21,822 Earnings (loss) per common share—Basic $ (1.48) $ 1.03 Earnings (loss) per common share—Diluted $ (1.48) $ 1.03 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Apr. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIESProperty, Plant and Equipment In October 2019, the Company announced plans to construct a new hatchery in Jones County, Mississippi. Upon completion of the project, the Company will relocate its existing hatchery operations from its current, nearby hatchery facility located in Laurel, Mississippi. Construction commenced during the first quarter of fiscal 2020, and initial operations are expected to begin during the first quarter of fiscal 2021. The Company has entered into construction agreements related to the project totaling approximately $14.2 million. The Company estimates the total cost of the project will be approximately $18.5 million, of which $15.0 million is budgeted for fiscal 2020 and $3.5 million is expected to be budgeted for fiscal 2021. As of April 30, 2020, the Company has spent approximately $3.6 million on the project. 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 one case, and the indirect purchaser complaints into two cases, one on behalf of commercial and institutional indirect purchaser plaintiffs and one on behalf of end-user consumer plaintiffs. The cases are part of a coordinated proceeding captioned In re Broiler Chicken Antitrust Litigation . 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 two 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 three additional poultry producers as defendants. On February 12, 2018, the end-user consumer plaintiffs filed their second amended complaint, in which they also added three additional poultry producers as defendants, along with Agri Stats. 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 three 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 two new poultry producers as defendants, as well as Agri Stats. On April 29, 2019, the end-user consumer plaintiffs filed their fourth amended complaint. The parties are currently engaged in discovery. Between December 8, 2017 and April 11, 2020, additional purported direct-purchaser entities individually brought thirty-six separate suits against 19 poultry producers, including Sanderson Farms and Agri Stats, in the United States District Court for the Northern District of Illinois, the United States District Court for the District of Kansas, the United States District Court for the Western District of Arkansas, and the United States District Court for the District of Puerto Rico. 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. 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 June 26, 2018, the defendants filed a motion to transfer the case filed in the District of Kansas to the Northern District of Illinois, and that motion was granted on September 13, 2018. On June 7, 2019, the plaintiffs filed a motion to transfer the case filed in the Western District of Arkansas to the Northern District of Illinois, and that motion was granted on June 11, 2019. On July 24, 2019, one of the defendants filed a motion to transfer the case filed in the District of Puerto Rico to the Northern District of Illinois, and that motion was granted on July 25, 2019. On July 22, 2019, the Company moved to dismiss in part those direct-purchaser complaints that allege claims under federal and Georgia RICO statutes against it. The motion was fully briefed on September 20, 2019, and the Court heard argument on the motion on December 18, 2019. On March 3, 2020, the Court denied the Company's motion. On October 18, 2019, defendants moved to dismiss the case filed by the Commonwealth of Puerto Rico on its behalf and on behalf of its citizens. The motion was fully briefed on January 21, 2020. The parties are currently engaged in discovery, subject to the COVID-19-related delays discussed below. It is possible additional individual actions may be filed. 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. 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. Since March 16, 2020, given the current COVID-19 public health emergency, the Northern District of Illinois has issued three orders extending all deadlines in civil cases by 21 days, 28 days and 28 days, respectively, and a fourth order that will take effect on May 29, 2020, which does not extend any deadlines. These orders apply to the litigation described above. The Northern District of Illinois will vacate, amend or extend the Fourth Amended General Order on or before July 13, 2020. We intend to continue to defend the 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. 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 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. On January 27, 2017, Sanderson Farms, Inc. and our subsidiaries were named as defendants, along with four 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 four 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 one 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 January 27, 2020, plaintiffs in the Oklahoma case moved for leave to amend their complaint. The Court in the Eastern District of Oklahoma granted the plaintiffs' motion, and the plaintiffs filed a consolidated amended complaint on February 21, 2020. The Oklahoma case is ongoing. We intend to defend the Eastern District of North Carolina case vigorously; however, the Company cannot predict the outcome of this action. 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. On February 21, 2017, Sanderson Farms, Inc. received an antitrust civil investigative demand 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 has become 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 civil investigative demand 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 Civil Investigation Demand that included a request to produce all deposition transcripts from the civil litigation. On June 22, 2017, the Company was named as a defendant in a lawsuit filed in the United States District Court for the Northern District of California. The complaint, which was brought by three non-profit organizations (the Organic Consumers Association, Friends of the Earth, and Center for Food Safety) alleged that the Company is violating the California Unfair Competition Law and the California False Advertising Law by representing that its poultry products are “100% Natural” products raised with “100% Natural” farming procedures. Among other things, the plaintiffs alleged that the Company’s products contain residues of human and animal antibiotics, other pharmaceuticals, hormones, steroids, and pesticides. Plaintiffs sought an order enjoining the Company from continuing its allegedly unlawful marketing program and requiring the Company to conduct a corrective advertising campaign; an accounting of the Company’s profits derived from the allegedly unlawful marketing practices; and attorneys’ fees, costs and interest. On August 2, 2017, the Company moved to dismiss the lawsuit on various grounds. On August 23, 2017, the plaintiffs filed an amended complaint, which included substantially similar allegations as the original complaint, and the Company filed a motion to dismiss the amended complaint on September 13, 2017. On February 9, 2018, the Court denied the Company’s motion to dismiss. An initial scheduling conference was held on March 1, 2018, and discovery started thereafter. On June 25, 2018, the plaintiffs amended their complaint for a second time, including to remove allegations that USDA had found the Company’s chicken samples to contain residues of antibiotics or other substances. On July 9, 2018, the Company filed a motion to dismiss the second amended complaint. On July 18, 2018, during the pendency of that motion, the parties stipulated to the voluntary dismissal of one of the plaintiff organizations (the Organic Consumers Association). The other two plaintiffs continued to prosecute their claims. On September 11, 2018, the Court granted the motion to dismiss the second amended complaint with leave to amend the complaint, and on October 2, 2018, the remaining plaintiffs filed a third amended complaint. The third amended complaint alleged that the Company misleads consumers with regard to (1) the presence of unnatural residues in its chicken products; (2) the fact that it uses antibiotics in raising its chickens; (3) the conditions in which it raises its chickens; and (4) the risks of human antibiotic resistance caused by the Company’s use of antibiotics. On October 16, 2018, the Company filed a motion to dismiss the third amended complaint, and on December 3, 2018, the Court denied that motion. Fact discovery concluded on March 18, 2019. On April 1, 2019, the Company filed a motion to dismiss for lack of subject matter jurisdiction on grounds that the remaining plaintiffs lacked standing. The Court held a hearing on the Company’s motion on May 30, 2019. On July 31, 2019, the Court granted the Company’s motion without prejudice, stating that dismissal for lack of standing must be without prejudice, but denied the plaintiffs leave to amend their complaint. On October 8, 2019, the Court taxed $12,701 in costs in favor of the Company as the prevailing party. On August 30, 2019, plaintiffs filed a notice of appeal of the District Court’s order of dismissal before the United States Court of Appeals for the Ninth Circuit. Plaintiffs’ filed their opening brief on appeal on January 8, 2020, the Company filed its response brief on March 9, 2020, and Plaintiffs filed their reply brief on April 29, 2020. Oral argument is likely to be scheduled for late 2020 or early 2021. We intend to vigorously defend the appeal. However, the Company cannot predict the outcome of this action. If the plaintiffs were to prevail, the Company’s reputation and marketing program could be materially, adversely affected, which could have a material, adverse effect on our financial position and results of operations. On August 30, 2019, Sanderson Farms, Inc. and its Foods and Processing Divisions, as well as seventeen 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. Three 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 four 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 ten other broiler chicken producers and their affiliates; three turkey producers and their affiliates; Agri Stats, Inc.; and WMS. Plaintiffs bring 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. 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. Plaintiffs’ oppositions were originally due on April 24, 2020 and defendants’ replies were due on May 21, 2020. However, on March 20, 2020, the District of Maryland issued Second Amended Standing Order 2020-02, extending all filing deadlines set to fall between March 16, 2020 and April 24, 2020 by 42 days. On April 10, 2020, the District of Maryland issued Standing Order 2020-07, extending all filing deadlines set to fall between March 16, 2020 and June 5, 2020 by 84 days. Under the current Standing Order, plaintiffs’ oppositions to defendants’ motions to dismiss are due July 17, 2020. Defendants’ replies are due August 13, 2020. No discovery has taken place to date. 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. On October 11, 2019, three named plaintiffs - Daniel Lentz, Pam La Fosse, and Marybeth Norman - filed, in the United States District Court for the Northern District of California, a nationwide class action against the Company on behalf of a putative class of all individuals and businesses throughout the United States who purchased one or more of the Company's chicken products in the prior four years. The lawsuit alleges that the named plaintiffs and other class members purchased the Company's chicken products based on misleading representations in the Company’s advertising. Specifically, the plaintiffs in this case allege that the Company’s advertising (including, but not limited to, on its website, television commercials, radio advertisements, social media, print magazines, billboards, and trucks) misleads consumers into believing that (i) the Company’s chickens were not given antibiotics or other pharmaceuticals, (ii) the chickens were raised in a “natural” environment, (iii) there is no evidence that the use of antibiotics or other pharmaceuticals in poultry contributes to the evolution of antibiotic-resistant bacteria, and (iv) the Company’s chicken products do not contain antibiotic or pharmaceutical residues. Plaintiffs allege that (i) the Company “routinely” feeds antibiotics and pharmaceuticals to its chickens, (ii) the Company raises its chickens indoors in “unnatural” indoor conditions amounting to “intensive confinement” and without natural light (iii) there is “extensive” reliable evidence that the use of antibiotics in poultry contributes to antibiotic-resistant bacteria, and (iv) the Company’s chickens have been found to contain antibiotic and pharmaceutical residue. The original Complaint asserted five causes of action under California and North Carolina law. The plaintiffs sought injunctive relief directing the Company to correct its practices and to comply with consumer protection laws nationwide. The plaintiffs also sought monetary, compensatory, statutory, and punitive damages, as well as attorneys’ and experts’ fees, costs, and expenses. On December 20, 2019, the Company filed a motion to dismiss. On February 10, 2020, the Court granted the motion to dismiss in part, denied it in part, and granted the plaintiffs leave to amend the Complaint. On March 23, 2020, two of the three original plaintiffs (Pam La Fosse and Marybeth Norman) filed a First Amended Class Action Complaint in which they were joined by five additional named plaintiffs. The core allegations and theories set forth in the First Amended Complaint are the same as in the original complaint. The First Amended Complaint asserts one cause of action under federal law and sixteen causes of action under the laws of various states. The plaintiffs again seek injunctive relief directing the Company to correct its practices and to comply with consumer protection laws nationwide, as well as monetary, compensatory, statutory and punitive damages and attorneys' and experts' fees, costs and expenses. On May 6, 2020, the Company filed a motion to dismiss the First Amended Complaint. No discovery has taken place to date. 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. 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 |
CREDIT AGREEMENT
CREDIT AGREEMENT | 6 Months Ended |
Apr. 30, 2020 | |
Debt Disclosure [Abstract] | |
CREDIT AGREEMENT | CREDIT AGREEMENTThe Company is a party to a revolving credit facility dated March 21, 2019, 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 April 30, 2020, was $999.2 million. The credit is unsecured and, unless extended, will expire on March 21, 2024. As of April 30, 2020 and May 27, 2020, the Company had borrowed $200.0 million, and had approximately $23.1 million outstanding in letters of credit, leaving $776.9 million of borrowing capacity available under the facility. |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Apr. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act ("the CARES Act") was enacted. The CARES Act contains several income tax provisions, as well as other measures, that are intended to assist businesses impacted by the economic effects of the COVID-19 pandemic. The most significant provisions of the CARES Act that will materially affect our accounting for income taxes include, but are not limited to, a five-year carry-back allowance for taxable net operating losses generated in tax years 2018 through 2020, our fiscal years 2019 through 2021, and a technical correction to the Tax Cut and Jobs Act, enacted on December 22, 2017, that provides a two-year carry-back allowance for our taxable net operating loss generated in fiscal year 2018. Our financial statements for the second quarter and first six months of fiscal 2020 were materially affected by the changes enacted by the CARES Act. U.S. GAAP requires that the effects from changes in tax laws be recognized in the period in which the new law is enacted, which for the CARES Act is our second quarter of fiscal 2020. As a result of the applicable accounting guidance and the provisions enacted by the CARES Act, our income tax provision for the second quarter and first six months of fiscal 2020 reflects the carry-back of taxable net operating losses generated during periods in which the statutory federal income tax rate was 21% to periods in which the statutory federal income tax rate was 35%. Due to the difference in statutory rates, we recorded a $49.4 million discrete income tax benefit related to the carry-back provisions during the three and six months ended April 30, 2020. Because the net operating losses were carried back to years in which we initially reduced our taxable income using the Domestic Production Activities Deduction, we recorded a partially offsetting $11.9 million discrete income tax expense during the three and six months ended April 30, 2020 to account for the reduced taxable income. The Company’s effective tax rates for the three and six months ended April 30, 2020 were 113.4% and 66.4%, respectively, as compared to estimated annual effective tax rates of 24.7% and 23.8%, respectively, for the three and six months ended April 30, 2019. Excluding the effects of discrete items recognized during the periods, primarily related to the CARES Act, the Company's effective tax rates for the three and six months ended April 30, 2020 would have been approximately 30.2% and 26.9%, respectively, as compared to estimated annual effective tax rates of 24.9% and 24.5%, respectively, for the three and six months ended April 30, 2019. Normally during interim periods, the Company has estimated its annual effective tax rate for the full fiscal year to use when recording the interim period tax provision. Given significant volatility in the poultry markets as a result of the COVID-19 pandemic, as well as factors related to the carry-back provisions of the CARES Act, the Company is not able to reliably estimate its annual effective tax rate for the interim period ending April 30, 2020. Therefore, the income tax provision for the second quarter and first six months of fiscal 2020 was made using the actual effective tax rate for the six-month period ending April 30, 2020. |
ACCOUNTING POLICIES (Policies)
ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Apr. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Accounting | 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 April 30, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending October 31, 2020. The condensed consolidated balance sheet at October 31, 2019 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, 2019. |
New Accounting Pronouncements | New Accounting Pronouncements In February 2016, the FASB issued Accounting Standards Update ("ASU") 2016-02, Leases. The guidance is intended to increase transparency and comparability among companies by requiring an entity that is a lessee to recognize on the balance sheet the right-of-use assets and lease liabilities arising from all leases with terms, as defined by the guidance, of greater than twelve months. The guidance also requires disclosure of key information about leasing arrangements. The Company adopted this guidance during the first quarter of fiscal 2020, and we used the transition method that requires a cumulative-effect adjustment to the beginning balance of retained earnings during the period of adoption, rather than restating prior-period financial statements; however no such cumulative-effect adjustment was required under our circumstances. This guidance also provides certain practical expedients, including a practical expedient package during transition. We elected to use this package, which allowed the Company to carry forward its determination of whether a lease exists, the classification of a lease, and whether initial direct lease costs exist for purposes of transition to the new standard. We did not utilize the hindsight practical expedient. As of April 30, 2020, we recognized right-of-use assets and lease liabilities of approximately $45.9 million, primarily related to transportation equipment. Adoption did not have a material effect on our consolidated statements of operations and cash flows. For further information regarding the Company's leases, refer to "Part I, Item 1, Notes to Condensed Consolidated Financial Statements, Note 11 - Leases." In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses, which intends to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2019, our fiscal 2021. Early adoption is permitted. We do not expect adoption to have a material effect on our consolidated financial statements. |
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. |
Fair Value Of Financial Instruments | The Company holds certain items that are required to be disclosed at fair value, primarily debt instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A three-level hierarchy is followed for disclosure to show the extent and level of judgment used to estimate fair value measurements: Level 1 – Inputs used to measure fair value are unadjusted quoted prices that are available in active markets for the identical assets or liabilities as of the reporting date. Level 2 – Inputs used to measure fair value, other than quoted prices included in Level 1, are either directly or indirectly observable as of the reporting date through correlation with market data, including quoted prices for similar assets and liabilities in active markets and quoted prices in markets that are not active. Level 2 also includes assets and liabilities that are valued using models or other pricing methodologies that do not require significant judgment since the input assumptions used in the models, such as interest rates and volatility factors, are corroborated by readily observable data from actively quoted markets for substantially the full term of the financial instrument. Level 3 – Inputs used to measure fair value are unobservable inputs that are supported by little or no market activity and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions. |
Commitments and Contingencies | 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 April 30, 2020. 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. |
LEASES (Tables)
LEASES (Tables) | 6 Months Ended |
Apr. 30, 2020 | |
Leases [Abstract] | |
Lease, Cost | The following table presents the components of our lease costs (in thousands) paid during the three and six months ended April 30, 2020: Description Three Months Ended April 30, 2020 Six Months Ended April 30, 2020 Operating lease cost $ 3,871 $ 8,268 Short-term lease cost 922 1,787 Variable lease cost (1) 102,298 203,940 Total lease cost $ 107,091 $ 213,995 (1) Variable lease costs are attributable to payments made to independent contract poultry producers and are based on or influenced by output received from contract producers, birds placed, poultry house size and relative performance. Other information regarding our operating leases includes the following: Description Amount Cash outflows for operating leases included in the measurement of lease liabilities during the six months ended April 30, 2020 (in thousands) $ 8,733 Non-cash amount of right of use assets and lease liabilities recorded upon adoption (in thousands) (1) $ 54,665 Weighted-average remaining lease term as of April 30, 2020 (years) 4.0 Weighted-average discount rate as of April 30, 2020 2.45 % (1) There were no new right of use assets obtained in exchange for lease liabilities during the six months ended April 30, 2020. |
Schedule of Future Minimum Rental Payments for Operating Leases | The future maturities of obligations under non-cancelable operating leases at April 30, 2020 were as follows (in thousands): Fiscal Year Amount 2020 (remainder) $ 7,299 2021 14,398 2022 11,969 2023 8,327 2024 4,744 Thereafter 2,430 Total undiscounted operating lease payments 49,167 Less: imputed interest (3,254) Present value of lease liabilities $ 45,913 |
REVENUE (Tables)
REVENUE (Tables) | 6 Months Ended |
Apr. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | The following tables disaggregate our net sales by product category (in thousands): Product Category Three Months Ended April 30, 2020 Three Months Ended April 30, 2019 Fresh, vacuum-sealed chicken $ 265,258 $ 330,713 Fresh, chill-packed chicken 343,165 269,304 Fresh, ice-packed chicken 130,798 132,427 Prepared chicken 38,810 61,995 Frozen chicken 62,187 44,109 Other 4,493 6,681 Total net sales $ 844,711 $ 845,229 Product Category Six Months Ended April 30, 2020 Six Months Ended April 30, 2019 Fresh, vacuum-sealed chicken $ 576,554 $ 590,782 Fresh, chill-packed chicken 630,432 537,768 Fresh, ice-packed chicken 251,261 232,459 Prepared chicken 90,192 119,391 Frozen chicken 108,861 92,700 Other 10,489 15,517 Total net sales $ 1,667,789 $ 1,588,617 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 6 Months Ended |
Apr. 30, 2020 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | Inventories consisted of the following (in thousands): Inventory type April 30, 2020 October 31, 2019 Live poultry-broilers and breeders $ 195,265 $ 179,870 Feed, eggs and other 40,599 47,417 Processed poultry 37,969 35,121 Prepared chicken 15,936 20,032 Packaging materials 7,708 7,488 Total Inventories $ 297,477 $ 289,928 |
Property, Plant, and Equipment
Property, Plant, and Equipment (Tables) | 6 Months Ended |
Apr. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | Property, plant and equipment, net, consisted of the following (in thousands): Description April 30, 2020 October 31, 2019 Land and buildings $ 900,897 $ 892,089 Machinery and equipment 1,302,518 1,236,095 Work-in-process 54,468 11,149 2,257,883 2,139,333 Less accumulated depreciation 1,022,327 953,473 Property, plant and equipment, net $ 1,235,556 $ 1,185,860 |
STOCK COMPENSATION PLANS (Table
STOCK COMPENSATION PLANS (Tables) | 6 Months Ended |
Apr. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Compensation Cost Related to Performance Share Agreements | The Company's compensation cost related to performance share agreements is summarized as follows (in thousands, except number of shares): Three Months Ended Six Months Ended Date of Performance Share Agreement Number of shares issued (actual (a) or estimated (e)) April 30, 2020 April 30, 2019 April 30, 2020 April 30, 2019 November 1, 2016 84,511 (a) $ — $ 650 $ — $ 1,263 November 1, 2017 13,093 (e) 157 — 347 — November 1, 2018 (1) — (e) — — — — November 1, 2019 (1) — (e) — — — — Total compensation cost $ 157 $ 650 $ 347 $ 1,263 Note (1) - As of April 30, 2020, the Company could not determine that achievement of the applicable performance-based criteria is probable for the agreements entered into on November 1, 2018 and November 1, 2019, due to the uncertainties discussed above, and therefore recorded no compensation expense related to those agreements. |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 6 Months Ended |
Apr. 30, 2020 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | The following tables present earnings per share: Three Months Ended April 30, 2020 April 30, 2019 (in thousands except per share amounts) Net income $ 6,118 $ 40,636 Distributed and undistributed (earnings) to unvested restricted stock (81) (597) Distributed and undistributed earnings to common shareholders—Basic $ 6,037 $ 40,039 Weighted average shares outstanding—Basic 21,943 21,830 Weighted average shares outstanding—Diluted 21,943 21,830 Earnings per common share—Basic $ 0.28 $ 1.83 Earnings per common share—Diluted $ 0.28 $ 1.83 Six Months Ended April 30, 2020 April 30, 2019 (in thousands except per share amounts) Net income (loss) $ (32,458) $ 22,803 Distributed and undistributed (earnings) to unvested restricted stock — (340) Distributed and undistributed earnings (loss) to common shareholders—Basic $ (32,458) $ 22,463 Weighted average shares outstanding—Basic 21,939 21,822 Weighted average shares outstanding—Diluted 21,939 21,822 Earnings (loss) per common share—Basic $ (1.48) $ 1.03 Earnings (loss) per common share—Diluted $ (1.48) $ 1.03 |
Lease Cost (Details)
Lease Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Apr. 30, 2020 | Apr. 30, 2020 | |
Leases [Abstract] | ||
Operating lease cost | $ 3,871 | $ 8,268 |
Short-term lease cost | 922 | 1,787 |
Variable lease cost | 102,298 | 203,940 |
Total lease cost | $ 107,091 | $ 213,995 |
Operating Leases and Service Co
Operating Leases and Service Commitment - Other lease information (Details) $ in Thousands | 6 Months Ended |
Apr. 30, 2020USD ($) | |
Leases [Abstract] | |
Cash outflows for operating leases included in the measurement of lease liabilities | $ 8,733 |
Non-cash amount of right of use assets and lease liabilities recorded upon adoption | $ 54,665 |
Weighted-average remaining lease term (years) | 4 years |
Weighted-average discount rate | 2.45% |
Lease Payments of Obligations U
Lease Payments of Obligations Under Non-Cancelable Operating Leases (Details) $ in Thousands | Apr. 30, 2020USD ($) |
Leases [Abstract] | |
2020 (remainder) | $ 7,299 |
2021 | 14,398 |
2022 | 11,969 |
2023 | 8,327 |
2024 | 4,744 |
Thereafter | 2,430 |
Total undiscounted operating lease payments | 49,167 |
Lessee, Operating Lease, Liability, Undiscounted Excess Amount | (3,254) |
Present value of lease liabilities | $ 45,913 |
ACCOUNTING POLICIES (Details)
ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands | Apr. 30, 2020 | Oct. 31, 2019 |
Accounting Policies [Abstract] | ||
Right of use assets | $ 45,913 | $ 0 |
Present value of lease liabilities | $ 45,913 |
REVENUE - Disaggregation of Rev
REVENUE - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Apr. 30, 2020 | Apr. 30, 2019 | Apr. 30, 2020 | Apr. 30, 2019 | |
Revenue from External Customer [Line Items] | ||||
Net sales | $ 844,711 | $ 845,229 | $ 1,667,789 | $ 1,588,617 |
Fresh, vacuum-sealed chicken | ||||
Revenue from External Customer [Line Items] | ||||
Net sales | 265,258 | 330,713 | 576,554 | 590,782 |
Fresh, chill-packed chicken | ||||
Revenue from External Customer [Line Items] | ||||
Net sales | 343,165 | 269,304 | 630,432 | 537,768 |
Fresh, ice-packed chicken | ||||
Revenue from External Customer [Line Items] | ||||
Net sales | 130,798 | 132,427 | 251,261 | 232,459 |
Prepared chicken | ||||
Revenue from External Customer [Line Items] | ||||
Net sales | 38,810 | 61,995 | 90,192 | 119,391 |
Frozen chicken | ||||
Revenue from External Customer [Line Items] | ||||
Net sales | 62,187 | 44,109 | 108,861 | 92,700 |
Other | ||||
Revenue from External Customer [Line Items] | ||||
Net sales | $ 4,493 | $ 6,681 | $ 10,489 | $ 15,517 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Apr. 30, 2020 | Oct. 31, 2019 |
Inventory [Line Items] | ||
Inventories | $ 297,477 | $ 289,928 |
Live poultry-broilers and breeders | ||
Inventory [Line Items] | ||
Inventories | 195,265 | 179,870 |
Feed, eggs and other | ||
Inventory [Line Items] | ||
Inventories | 40,599 | 47,417 |
Processed poultry | ||
Inventory [Line Items] | ||
Inventories | 37,969 | 35,121 |
Prepared chicken | ||
Inventory [Line Items] | ||
Inventories | 15,936 | 20,032 |
Packaging materials | ||
Inventory [Line Items] | ||
Inventories | $ 7,708 | $ 7,488 |
Property, Plant, and Equipmen_2
Property, Plant, and Equipment (Details) - USD ($) $ in Thousands | Apr. 30, 2020 | Oct. 31, 2019 |
Property, Plant and Equipment [Abstract] | ||
Land and buildings | $ 900,897 | $ 892,089 |
Machinery and equipment | 1,302,518 | 1,236,095 |
Work-in-process | 54,468 | 11,149 |
Property, plant and equipment, net | 2,257,883 | 2,139,333 |
Less accumulated depreciation | 1,022,327 | 953,473 |
Property, plant and equipment, net | $ 1,235,556 | $ 1,185,860 |
STOCK COMPENSATION PLANS - Addi
STOCK COMPENSATION PLANS - Additional Information (Details) - USD ($) | Nov. 01, 2019 | Feb. 14, 2019 | Apr. 30, 2020 | Apr. 30, 2019 | Apr. 30, 2020 | Apr. 30, 2019 | Nov. 01, 2018 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Total stock based compensation expense | $ 2,400,000 | $ 3,000,000 | $ 5,200,000 | $ 5,900,000 | |||
Restricted Stock | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Total stock based compensation expense | $ 2,200,000 | 2,200,000 | $ 4,700,000 | 4,400,000 | |||
Aggregate number of shares outstanding (in shares) | 265,353 | 265,353 | |||||
Unrecognized share-based compensation costs | $ 18,000,000 | $ 18,000,000 | |||||
Weighted average vesting period | 2 years | ||||||
Restricted Stock | Outside Directors | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Shares of restricted stock granted (in shares) | 12,100 | ||||||
Grant date fair value of restricted shares (in usd per share) | $ 136.76 | ||||||
Restricted Stock | Outside Directors | Scenario One | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting period (in years) | 1 year | ||||||
Restricted Stock | Outside Directors | Scenario Two | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting period (in years) | 2 years | ||||||
Restricted Stock | Outside Directors | Scenario Three | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting period (in years) | 3 years | ||||||
Performance Based Awards | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Total stock based compensation expense | 157,000 | 650,000 | $ 347,000 | 1,263,000 | |||
Additional service period | 1 year | ||||||
Management Share Purchase Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Total stock based compensation expense | $ 48,000 | 105,000 | $ 104,000 | 196,000 | |||
Management Share Purchase Plan | Restricted Stock | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of shares issued (in shares) | 4,209 | ||||||
Average price per share purchased by participants (in usd per share) | $ 142.45 | $ 142.45 | |||||
Management Share Purchase Plan | Matching Restricted Shares | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of shares issued (in shares) | 1,007 | ||||||
Performance Share Plan 2018 | Performance Based Awards | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Total stock based compensation expense | $ 0 | 0 | $ 0 | 0 | |||
Target number of common stock to be granted (in shares) | 56,575 | ||||||
Aggregate number of shares outstanding (in shares) | 0 | 0 | |||||
Potential accrued compensation cost | $ 3,000,000 | $ 3,000,000 | |||||
Performance Share Plan 2018 | Performance Based Awards | Officers And Key Management Employees | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Shares of restricted stock granted (in shares) | 56,575 | ||||||
Grant date fair value of restricted shares (in usd per share) | $ 159.76 | ||||||
Performance Share Plan 2017 | Performance Based Awards | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Total stock based compensation expense | $ 157,000 | 0 | $ 347,000 | 0 | |||
Aggregate number of shares outstanding (in shares) | 13,093 | 13,093 | |||||
Compensation not yet recognized | $ 324,000 | $ 324,000 | |||||
Potential accrued compensation cost | 7,500,000 | 7,500,000 | |||||
Performance Share Plan 2016 | Performance Based Awards | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Total stock based compensation expense | $ 0 | $ 650,000 | $ 0 | $ 1,263,000 | |||
Additional service period | 1 year | ||||||
Aggregate number of shares outstanding (in shares) | 84,511 | 84,511 | |||||
Minimum | Performance Based Awards | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Percentage of potential performance shares received | 50.00% | ||||||
Maximum | Performance Based Awards | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Percentage of potential performance shares received | 200.00% |
STOCK COMPENSATION PLANS - Comp
STOCK COMPENSATION PLANS - Compensation Costs (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Apr. 30, 2020 | Apr. 30, 2019 | Apr. 30, 2020 | Apr. 30, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock based compensation expense | $ 2,400,000 | $ 3,000,000 | $ 5,200,000 | $ 5,900,000 |
Performance Based Awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock based compensation expense | $ 157,000 | 650,000 | $ 347,000 | 1,263,000 |
Performance Based Awards | Performance Share Plan 2016 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of share issued (in shares) | 84,511 | 84,511 | ||
Total stock based compensation expense | $ 0 | 650,000 | $ 0 | 1,263,000 |
Performance Based Awards | Performance Share Plan 2017 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of share issued (in shares) | 13,093 | 13,093 | ||
Total stock based compensation expense | $ 157,000 | 0 | $ 347,000 | 0 |
Performance Based Awards | Performance Share Plan 2018 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of share issued (in shares) | 0 | 0 | ||
Total stock based compensation expense | $ 0 | 0 | $ 0 | 0 |
Performance Based Awards | Performance Share Plan 2019 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of share issued (in shares) | 0 | 0 | ||
Total stock based compensation expense | $ 0 | $ 0 | $ 0 | $ 0 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Apr. 30, 2020 | Jan. 31, 2020 | Apr. 30, 2019 | Jan. 31, 2019 | Apr. 30, 2020 | Apr. 30, 2019 | |
Earnings Per Share [Abstract] | ||||||
Net income (loss) | $ 6,118 | $ (38,576) | $ 40,636 | $ (17,833) | $ (32,458) | $ 22,803 |
Distributed and undistributed (earnings) to unvested restricted stock | (81) | (597) | 0 | (340) | ||
Distributed and undistributed earnings to common shareholders—Basic | $ 6,037 | $ 40,039 | $ (32,458) | $ 22,463 | ||
Weighted average shares outstanding—Basic (in shares) | 21,943 | 21,830 | 21,939 | 21,822 | ||
Weighted average shares outstanding—Diluted (in shares) | 21,943 | 21,830 | 21,939 | 21,822 | ||
Earnings per common share-Basic (in usd per share) | $ 0.28 | $ 1.83 | $ (1.48) | $ 1.03 | ||
Earnings per common share-Diluted (in usd per share) | $ 0.28 | $ 1.83 | $ (1.48) | $ 1.03 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Detail) - USD ($) $ in Thousands | 6 Months Ended | |
Apr. 30, 2020 | Apr. 30, 2019 | |
Long-term Purchase Commitment [Line Items] | ||
Total purchase obligation | $ 18,500 | |
Purchase obligation, 2021 | 3,500 | |
Capital expenditures | 129,691 | $ 162,268 |
MISSISSIPPI | ||
Long-term Purchase Commitment [Line Items] | ||
Estimated cost of investment | 14,200 | |
Purchase obligation, 2020 | 15,000 | |
Capital expenditures | $ 3,600 |
CREDIT AGREEMENT (Details)
CREDIT AGREEMENT (Details) | Apr. 30, 2020USD ($) | Oct. 31, 2019USD ($) | Mar. 21, 2019USD ($) |
Debt Instrument [Line Items] | |||
Revolving credit facility, maximum borrowing capacity | $ 1,000,000,000 | ||
Long-term debt | $ 200,000,000 | $ 55,000,000 | |
Line of credit | Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Ratio of indebtedness to net capital | 0.50 | ||
Ratio of indebtedness to net capital, maximum increase | 0.05 | ||
Revolving credit facility, minimum net worth requirement | 999,200,000 | ||
Long-term debt | 200,000,000 | ||
Revolving credit facility, remaining available balance | 776,900,000 | ||
Line of credit | Letter of Credit | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 23,100,000 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Apr. 30, 2020 | Apr. 30, 2019 | Apr. 30, 2020 | Apr. 30, 2019 | Oct. 31, 2019 | |
Income Tax Disclosure [Abstract] | |||||
CARES act, income tax benefit | $ 49,400 | ||||
CARES act, income tax expense | $ 11,900 | ||||
Effective income tax rate | 113.40% | 24.70% | 66.40% | 23.80% | |
Effective income tax rate, excluding discrete items | 30.20% | 24.90% | 26.90% | 24.50% | |
Deferred income taxes | $ 131,388 | $ 131,388 | $ 74,132 | ||
Increase in deferred income taxes | $ 57,300 |