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 2005
LAUREL, Miss. (May 24, 2005) -- Sanderson Farms, Inc. (NASDAQ/NM: SAFM) today
reported results for the second fiscal quarter and six months ended April 30,
2005.
Net sales for the second quarter of fiscal 2005 were $259.2 million
compared with $272.7 million for the same period a year ago. For the quarter,
the Company reported net income of $26.5 million, or $1.32 per diluted share,
compared with $33.4 million, or $1.67 per diluted share, for the second quarter
of fiscal 2004.
Net sales for the first six months of fiscal 2005 were $492.5 million
compared with $499.2 million for the first half of fiscal 2004. Net income for
the first half of the year totaled $36.6 million, or $1.82 per diluted share,
compared with $52.4 million, or $2.64 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.
"Sanderson Farms delivered a solid performance for the second fiscal
quarter of 2005," said Joe F. Sanderson, Jr., chairman and chief executive
officer of Sanderson Farms, Inc. "While overall market prices for chicken were
not as strong during the second quarter as we saw a year ago, the market
continues to reflect above average pricing and good demand. The Company has and
will continue to benefit from lower grain prices, and the Company's operations
continue to perform at the top of the industry. We look forward to further
improvement in our sales execution and operating performance as we head into the
summer months, which typically mark the period of highest demand for chicken
products."
According to Sanderson, market prices for all poultry products were
flat or decreased during the second quarter of fiscal 2005 when compared with
the second quarter of fiscal 2004. As measured by a simple average of the
Georgia dock price for whole chickens, prices were flat, increasing
approximately 1.3 percent in the Company's second fiscal quarter compared with
the same period in 2004, and increasing 4.2 percent for the first six months of
the fiscal year compared with the first half of last year. Boneless breast meat
prices during the quarter averaged 24.6 percent lower than the prior-year
period, and averaged 18.6 percent lower for the first six months of the year
compared with the prior year. Wing prices averaged $1.05 per pound through the
first six months of the fiscal year, down 5.6 percent from the average of $1.11
per pound for the first half of fiscal 2004. The average market price for bulk
leg quarters decreased approximately 6.4 percent for the quarter and 3.3 percent
for the first half of the year compared with the same periods last year. At the
same time, market prices for corn and soybean meal, the Company's primary feed
ingredients, declined 25.4 percent and 33.6 percent, respectively, compared with
the second quarter a year ago.
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Sanderson Farms Reports Second Quarter 2005 Results
Page 2
May 24, 2005
"We remain optimistic about the second half of our fiscal year,"
Sanderson continued. "Our expansion into Georgia continues to progress on
schedule, and we look forward to our initial operations there in late August. As
previously announced, our board of directors has also approved an expansion
project for our Collins, Mississippi, facility, converting that plant to all big
bird deboning. The Collins conversion will be timed to coordinate with the
opening of the new Georgia facility. As we shift chill pack production from
Mississippi to Georgia, we will be closer to our southeastern customers with the
ability to meet their needs more efficiently. In addition, the Georgia plant
will commence production with an established customer base as well as the
capacity to meet additional demand as we expand this market area. Notably, after
this shift, we will continue to maintain a favorable product mix between the
retail market and big bird deboning, processing approximately 50 percent of
total pounds for each market segment.
"The market environment looks favorable as consumer demand for chicken
products continues to be strong in the United States, and export volume is
showing renewed growth. Furthermore, estimates for the domestic supply of
chicken continue to call for modest growth, based on trends in breeder stock
placements and egg sets. Along with these favorable market conditions, we expect
to benefit from lower corn and soybean meal prices during fiscal 2005. As we
have previously announced, we believe we will realize between $60 million and
$65 million in savings for grain costs this fiscal year. As such, we believe
Sanderson Farms is well positioned in the market and we look forward to the new
opportunities before us for fiscal 2005," concluded Sanderson.
Sanderson Farms will hold a conference call to discuss this press
release today, May 24, 2005, 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.earnings.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 24, 2005.
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 2004 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, 2005.
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Sanderson Farms Reports Second Quarter 2005 Results
Page 3
May 24, 2005
SANDERSON FARMS, INC. AND SUBSIDIARIES
(Unaudited)
(In thousands, except per share amounts)
THREE MONTHS ENDED SIX MONTHS ENDED
APRIL 30, APRIL 30,
------------------------ ------------------------
2005 2004 2005 2004
--------- --------- --------- ---------
Net sales $ 259,176 $ 272,710 $ 492,466 $ 499,151
Costs and expenses:
Cost of sales 199,979 203,495 403,734 387,293
Selling, general and administrative 16,385 14,243 29,412 25,503
--------- --------- --------- ---------
216,364 217,738 433,146 412,796
--------- --------- --------- ---------
Operating income 42,812 54,972 59,320 86,355
Other income (expense):
Interest income 422 50 621 95
Interest expense 0 (432) (318) (864)
Other 64 5 68 7
--------- --------- --------- ---------
486 (377) 371 (762)
--------- --------- --------- ---------
Income before income taxes 43,298 54,595 59,691 85,593
Income tax expense 16,778 21,158 23,130 33,170
--------- --------- --------- ---------
Net income $ 26,520 $ 33,437 $ 36,561 $ 52,423
========= ========= ========= =========
Basic earnings per share $ 1.33 $ 1.69 $ 1.83 $ 2.67
========= ========= ========= =========
Diluted earnings per share $ 1.32 $ 1.67 $ 1.82 $ 2.64
========= ========= ========= =========
Dividends per share $ 0.10 $ 0.08 $ 0.20 $ 0.16
========= ========= ========= =========
Weighted average shares outstanding:
Basic 20,002 19,753 19,982 19,655
========= ========= ========= =========
Diluted 20,128 19,972 20,121 19,893
========= ========= ========= =========
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Sanderson Farms Reports Second Quarter 2005 Results
Page 4
May 24, 2005
SANDERSON FARMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
APRIL 30, OCTOBER 31,
2005 2004
--------- ---------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 74,990 $ 75,910
Accounts receivable, net 38,301 49,240
Inventories 73,079 75,603
Refundable income taxes 0 2,592
Prepaid expenses 12,857 13,077
--------- ---------
Total current assets 199,227 216,422
Property, plant and equipment
Land and buildings 145,868 134,219
Machinery and equipment 259,124 257,671
Construction in progress 52,934 7,508
--------- ---------
457,926 399,398
Less accumulated depreciation (253,963) (242,685)
--------- ---------
203,963 156,713
Other assets 2,249 1,872
--------- ---------
Total assets $ 405,439 $ 375,007
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 58,201 $ 61,413
Current maturities of long-term debt 4,391 4,385
--------- ---------
Total current liabilities 62,592 65,798
Long-term debt, less current maturities 10,787 10,918
Claims payable 2,600 2,600
Deferred income taxes 15,538 16,350
Stockholders' equity 313,922 279,341
--------- ---------
Total liabilities and stockholders' equity $ 405,439 $ 375,007
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