EXHIBIT 99.1
(SANDERSON FARMS LOGO) SANDERSON FARMS, INC.
GENERAL OFFICES
Post Office Box 988 - Laurel, Mississippi 39441-0988
Telephone (601) 649-4030 - Facsimile (601) 426-1461
CONTACT: MIKE COCKRELL
TREASURER & CHIEF FINANCIAL OFFICER
(601) 649-4030
SANDERSON FARMS, INC. REPORTS
RESULTS FOR THIRD QUARTER FISCAL 2004
LAUREL, Miss. (August 24, 2004) -- Sanderson Farms, Inc. (NASDAQ/NM: SAFM) today
reported results for the third quarter and nine months ended July 31, 2004.
Net sales for the third quarter of fiscal 2004 were $293.9 million
compared with $232.2 million for the same period a year ago. For the quarter,
net income more than doubled to $33.9 million, or $1.69 per diluted share,
compared with net income of $15.4 million, or $0.78 per diluted share, for the
third quarter of fiscal 2003.
Net sales for the first nine months of fiscal 2004 were $793.1 million
compared with $617.5 million for the same period of fiscal 2003. Net income for
the first nine months of the year totaled $86.4 million, or $4.33 per diluted
share, compared with net income of $33.6 million, or $1.70 per diluted share,
for the first nine 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, net of
income taxes, or $0.38 per diluted share, during the first nine months of fiscal
2003.
On January 29, 2004, the Company's Board of Directors approved a
three-for-two stock split effected as a 50% stock dividend. All share and per
share data for the periods presented have been adjusted to reflect this split.
"We are pleased with the positive momentum in our business through the
third fiscal quarter of 2004," said Joe F. Sanderson, Jr., president and chief
executive officer of Sanderson Farms, Inc. "Our strong financial results reflect
the strength of our operations as well as the significant overall improvement in
the chicken market compared with conditions a year ago. Consumer demand for
chicken continues to be favorable, and Sanderson Farms is positioned to benefit
from this trend."
According to Sanderson, overall market prices for poultry products
continued to trend higher and reached record levels during the third quarter of
fiscal 2004 before falling after the July 4 holiday. The market price for
boneless breast meat during the quarter peaked at $2.56 per pound, but has since
dropped significantly and today stands at $1.75 per pound. As measured by a
simple average of the Georgia dock price for whole chickens, prices increased
approximately 19.7% in the Company's third fiscal quarter compared with the same
period in 2003, and increased 15.4% for the first nine months of the fiscal year
compared with the same period last year. Bulk leg quarter prices increased
approximately 37.2% during the quarter compared with last year's third quarter,
and are 58.4% higher for the first nine months of the year compared with the
first nine months of last year. Boneless breast meat prices during the quarter
were approximately 44.3% higher than the prior-year period, and were up 35.1%
through the first nine months of the year. Wing prices averaged $1.05
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Sanderson Farms Reports Third Quarter 2004 Results
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August 24, 2004
per pound, up 57.9% from the average of 66.5 cents per pound during the third
quarter of fiscal 2003. At the same time, however, market prices for corn and
soybean meal, the Company's primary feed ingredients, increased 15.8% and 46.0%,
respectively, compared with the third quarter a year ago. As previously
announced, the Company expects grain costs to be approximately $25 million
higher for the last half of the fiscal year than for the first six months.
"During the third fiscal quarter, we commenced construction of
Sanderson Farms' new poultry processing complex in Colquitt and Cook Counties,
Georgia. As we announced last quarter, 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. We have increased our capital budget for this
complex from $96 million to $106 million to reflect higher-than-expected
construction material costs, primarily steel. We are proceeding on schedule and
expect that initial operations at the new complex will begin during the
Company's fourth fiscal quarter of 2005.
"We were also able to reduce outstanding debt by more than $10 million
during the third quarter, while at the same time continued to build a strong
cash position. On June 1, 2004, we called for early retirement $6.3 million of
outstanding industrial revenue bonds, and on July 1, 2004, paid the second
amortization of $4 million on our outstanding fixed debt.
"Looking ahead to the remainder of fiscal 2004, leading indicators of
future production, such as weekly broiler egg sets and chick placements,
continue to indicate only modest growth in chicken supplies. However, market
prices, particularly for boneless breast meat, have dipped below the peak levels
we saw earlier this summer - and typically soften seasonally following the Labor
Day holiday. We will also experience higher grain costs, as we previously
announced. In light of current and expected market conditions, and considering
higher grain costs for the last quarter of the fiscal year, we now expect
earnings for the fiscal year in the range of $4.85 to $5.35 per share.
Sanderson Farms will hold a conference call to discuss this press
release today, August 24, 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 September
24, 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 third
quarter ended July 31, 2004.
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Sanderson Farms Reports Third Quarter 2004 Results
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August 24, 2004
SANDERSON FARMS, INC. AND SUBSIDIARIES
(Unaudited)
(In thousands, except per share amounts)
THREE MONTHS ENDED NINE MONTHS ENDED
JULY 31, JULY 31,
------------------------- -------------------------
2004 2003 2004 2003
--------- --------- --------- ---------
Net sales $ 293,923 $ 232,151 $ 793,074 $ 617,523
Costs and expenses:
Cost of sales 222,011 195,160 609,304 535,556
Selling, general and administrative 16,137 11,265 41,640 25,515
--------- --------- --------- ---------
238,148 206,425 650,944 561,071
--------- --------- --------- ---------
Operating income 55,775 25,726 142,130 56,452
Other income (expense):
Interest income 101 25 196 51
Interest expense (383) (602) (1,247) (2,034)
Other (69) 6 (62) (31)
--------- --------- --------- ---------
(351) (571) (1,113) (2,014)
--------- --------- --------- ---------
Income before income taxes 55,424 25,155 141,017 54,438
Income tax expense 21,480 9,747 54,650 20,877
--------- --------- --------- ---------
Net income $ 33,944 $ 15,408 $ 86,367 $ 33,561
========= ========= ========= =========
Basic earnings per share $ 1.71 $ 0.79 $ 4.38 $ 1.73
========= ========= ========= =========
Diluted earnings per share $ 1.69 $ 0.78 $ 4.33 $ 1.70
========= ========= ========= =========
Dividends per share $ 0.08 $ 0.07 $ 0.24 $ 0.20
========= ========= ========= =========
Weighted average shares outstanding:
Basic 19,905 19,420 19,739 19,449
========= ========= ========= =========
Diluted 20,090 19,804 19,960 19,741
========= ========= ========= =========
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Sanderson Farms Reports Third Quarter 2004 Results
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August 24, 2004
SANDERSON FARMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
JULY 31, OCTOBER 31,
2004 2003
--------- ----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 84,180 $ 22,224
Accounts receivable, net 46,203 46,195
Inventories 82,743 61,753
Prepaid expenses 12,301 13,001
--------- ---------
Total current assets 225,427 143,173
Property, plant and equipment 389,757 376,234
Less accumulated depreciation (236,753) (221,010)
--------- ---------
153,004 155,224
Other assets 2,033 508
--------- ---------
Total assets $ 380,464 $ 298,905
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 58,150 $ 56,573
Current maturities of long-term debt 4,370 4,364
--------- ---------
Total current liabilities 62,520 60,937
Long-term debt, less current maturities 11,178 21,604
Claims payable 2,600 2,600
Deferred income taxes 17,625 16,665
Stockholders' equity 286,541 197,099
--------- ---------
Total liabilities and stockholders' equity $ 380,464 $ 298,905
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