EXHIBIT 99.1
(SANDERSON FARMS, INC. LETTERHEAD)
CONTACT: MIKE COCKRELL
TREASURER & CHIEF FINANCIAL OFFICER
(601) 649-4030
SANDERSON FARMS, INC. REPORTS
SECOND QUARTER RESULTS FOR FISCAL 2004
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COMPANY ANNOUNCES SITE FOR NEW POULTRY COMPLEX IN GEORGIA
LAUREL, Miss. (May 25, 2004) -- Sanderson Farms, Inc. (NASDAQ/NM: SAFM) today
reported results for the second fiscal quarter and six months ended April 30,
2004.
Net sales for the second quarter of fiscal 2004 were $272.7 million
compared with $201.2 million for the same period a year ago. For the quarter,
the Company reported net income of $33.4 million, or $1.67 per diluted share,
compared with net income of $12.8 million, or $0.65 per diluted share, for the
second quarter of fiscal 2003. In the prior-year quarter, the Company recognized
$3.8 million, net of income taxes, or $0.19 per diluted share, for Sanderson
Farms' share in the partial settlement of litigation against vitamin and
methionine suppliers for overcharges.
Net sales for the first six months of fiscal 2004 were $499.1 million
compared with $385.4 million for the first half of fiscal 2003. Net income for
the first half of the year totaled $52.4 million, or $2.64 per diluted share,
compared with net income of $18.1 million, or $0.92 per diluted share, for the
first six months of last year. During the first quarter of fiscal 2004, the
Company recognized $177,000, net of income taxes, for Sanderson Farms' share in
the partial settlement of lawsuits against vitamin and methionine suppliers for
overcharges, compared with total similar recoveries of $7.6 million, or $0.38
per diluted share, during the first half of last year.
On January 29, 2004, the Company's Board of Directors approved a
three-for-two stock split effected in the form of a 50% stock dividend. All per
share numbers for the periods presented have been adjusted to reflect this
split.
"Sanderson Farms had another strong financial and operating performance
in the second quarter of fiscal 2004," said Joe F. Sanderson, Jr., president and
chief executive officer of Sanderson Farms, Inc. "Our results reflect solid
execution throughout our operations and a favorable market environment. We have
continued to benefit from stronger consumer demand and improved market prices
for poultry products compared with the same period last year."
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Sanderson Farms Reports Second Quarter 2004 Results
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May 25, 2004
According to Sanderson, market prices for all poultry products
continued to trend higher during the second quarter of fiscal 2004 than in the
prior-year period. As measured by a simple average of the Georgia dock price for
whole chickens, prices increased approximately 15.0% in the Company's second
fiscal quarter compared with the same period in 2003, and were up 13.2% for the
first six months of the fiscal year compared with the first half of last year.
Bulk leg quarter prices increased approximately 77% for the quarter and 73% for
the first half of the year compared with the same periods last year. In
addition, boneless breast meat prices during the quarter were approximately 39%
higher than the prior-year period, and were up 30% through the first six months
of the year. Wing prices averaged $1.11 per pound through the first six months
of the fiscal year, up 82% from the average of $0.61 per pound for the first
half of fiscal 2003. However, at the same time, market prices for corn and
soybean meal, the Company's primary feed ingredients, increased 20.8% and 55.7%,
respectively, compared with the second quarter a year ago. While grain prices
have been volatile, the Company expects that prices will continue to trend
higher for the remainder of fiscal 2004.
"While we are pleased with our overall sales and marketing performance
and our strong competitive position, we remain focused on pursuing additional
opportunities to leverage the strength of our operations," added Sanderson. "We
believe that Sanderson Farms is well positioned to benefit from the strong
market environment and favorable demand trends as we head into the summer
months. In light of current and expected market conditions, and considering
higher grain costs for the balance of the fiscal year, we are comfortable with
estimated earnings for the fiscal year in the range of $5.35 to $5.85 per
share."
The Company also announced today that sites in Colquitt and Cook
Counties, Georgia, have been selected for the construction of a new poultry
processing complex. Sites near Adel in Cook County, Georgia, have been selected
for a new feed mill and hatchery, while a site near Moultrie in Colquitt County,
Georgia, has been selected for the construction of a new poultry processing
plant and wastewater treatment facility. These facilities will comprise a
state-of-the-art poultry complex with capacity to process 1.2 million birds per
week. At full capacity, the complex will employ approximately 1,700 people and
require 130 contract growers.
Sanderson Farms expects to invest approximately $96 million in the
Georgia complex and anticipates that associated contract growers will invest an
additional $85 million in poultry production facilities. The Company expects to
begin construction of the facilities this summer, with initial operations at the
new complex scheduled to begin during the Company's fourth fiscal quarter of
2005.
According to Sanderson, the selection of these sites followed a
thorough and deliberate process by the Company that has been ongoing for some
time. "We received an extraordinary amount of cooperation from the economic
development and government officials in the cities of Adel and Moultrie, as well
as Cook and Colquitt Counties, the Georgia Department of Industry, Trade and
Tourism, the University of Georgia Poultry Science Department, the Georgia
Poultry Federation and the Governor of Georgia," said Sanderson. "We believe our
expansion into the state of Georgia offers a unique opportunity to begin the
next phase of growth for Sanderson Farms. The location of this new
state-of-the-art poultry complex will put us closer to our growing list of
customers. More importantly, we believe this expansion will enhance our ability
to drive
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Sanderson Farms Reports Second Quarter 2004 Results
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May 25, 2004
revenues and earnings, and allow us to continue our record of building value for
our shareholders."
Sanderson Farms will hold a conference call to discuss this press
release today, May 25, 2004, at 10:00 a.m. Central, 11:00 a.m. Eastern.
Investors will have the opportunity to listen to a live Internet broadcast of
the conference call through the Company's Web site at www.sandersonfarms.com or
through www.fulldisclosure.com. To listen to the live call, please go to the Web
site at least 15 minutes early to register, download, and install any necessary
audio software. For those who cannot listen to the live broadcast, an Internet
replay will be available shortly after the call and continue through June 25,
2004.
Sanderson Farms, Inc. is engaged in the production, processing,
marketing and distribution of fresh and frozen chicken and other prepared food
items. Its shares trade on the Nasdaq Stock Market under the symbol SAFM.
This press release contains forward-looking statements based on
management's current views and assumptions. Actual results and events may
differ. For a discussion of these matters, please refer to the "Cautionary
Statement Regarding Risks and Uncertainties That May Affect Future Performance"
in Item 7 of the Company's 2003 Annual Report on Form 10-K and please refer to
the cautionary statement found in Management's Discussion and Analysis of
Financial Condition and Results of Operations under the heading "General" in
Part I, Item 2 of the Quarterly Report on Form 10-Q for the Company's second
quarter ended April 30, 2004.
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Sanderson Farms Reports Second Quarter 2004 Results
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May 25, 2004
SANDERSON FARMS, INC. AND SUBSIDIARIES
(Unaudited)
(In thousands, except per share amounts)
THREE MONTHS ENDED SIX MONTHS ENDED
APRIL 30, APRIL 30,
----------------------------- -----------------------------
2004 2003 2004 2003
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Net sales $ 272,710 $ 201,184 $ 499,151 $ 385,372
Costs and expenses:
Cost of sales 203,495 172,803 387,293 340,396
Selling, general and administrative 14,243 7,059 25,503 14,250
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217,738 179,862 412,796 354,646
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Operating income 54,972 21,322 86,355 30,726
Other income (expense):
Interest income 50 12 95 26
Interest expense (432) (694) (864) (1,432)
Other 5 41 7 (37)
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(377) (641) (762) (1,443)
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Income before income taxes 54,595 20,681 85,593 29,283
Income tax expense 21,158 7,865 33,170 11,130
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Net income $ 33,437 $ 12,816 $ 52,423 $ 18,153
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Basic earnings per share $ 1.69 $ 0.66 $ 2.67 $ 0.93
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Diluted earnings per share $ 1.67 $ 0.65 $ 2.64 $ 0.92
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Dividends per share $ 0.08 $ 0.07 $ 0.16 $ 0.13
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Weighted average shares outstanding:
Basic 19,753 19,413 19,655 19,464
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Diluted 19,972 19,678 19,893 19,750
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Sanderson Farms Reports Second Quarter 2004 Results
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May 25, 2004
SANDERSON FARMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
APRIL 30, OCTOBER 31,
2004 2003
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(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 51,174 $ 22,224
Accounts receivable, net 48,489 46,195
Inventories 76,544 61,753
Prepaid expenses 13,491 13,001
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Total current assets 189,698 143,173
Property, plant and equipment 388,569 376,234
Less accumulated depreciation (232,057) (221,010)
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156,512 155,224
Other assets 2,034 508
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Total assets $ 348,244 $ 298,905
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 18,390 $ 19,033
Accrued expenses 32,287 37,540
Current maturities of long-term debt 10,670 4,364
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Total current liabilities 61,347 60,937
Long-term debt, less current maturities 15,178 21,604
Claims payable 2,600 2,600
Deferred income taxes 17,005 16,665
Stockholders' equity 252,114 197,099
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Total liabilities and stockholders' equity $ 348,244 $ 298,905
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