EXHIBIT 99.1
(SANDERSON FARMS, INC. LETTERHEAD)
CONTACT: MIKE COCKRELL
TREASURER & CHIEF FINANCIAL OFFICER
(601) 649-4030
SANDERSON FARMS, INC. REPORTS
RESULTS FOR SECOND QUARTER OF FISCAL 2006
LAUREL, Miss. (May 25, 2006) -- Sanderson Farms, Inc. (NASDAQ/NM: SAFM) today
reported results for the second fiscal quarter ended April 30, 2006.
Net sales for the second quarter of fiscal 2006 were $225.1 million
compared with $259.2 million for the same period a year ago. For the quarter,
the net loss was $16.6 million, or $.83 per diluted share, compared with net
income of $26.5 million, or $1.32 per diluted share, for the second quarter of
fiscal 2005.
Net sales for the first six months of fiscal 2006 were $477.2 million
compared with $492.5 million for the first half of fiscal 2005. Net loss for the
first half of the year totaled $25.3 million, or $1.26 per diluted share,
compared with net income of $36.6 million, or $1.82 per diluted share, for the
first six months of last year.
The Company's financial statements for the year-to-date period ended
April 30, 2006, reflect a receivable from the Company's insurance carriers of
$5.8 million for property damage and expenses incurred resulting from Hurricane
Katrina. The Company's total insurance claim through April 30, 2006, for
property damage, expenses incurred and lost profits is approximately $26.0
million, net of the applicable deductible of $2,750,000. The Company recovered
$5.0 million during the first quarter of fiscal 2006 and $7.5 million during the
second quarter of fiscal 2006 from insurance carriers as initial draws on the
claim. During the first quarter of fiscal 2006 and the fourth quarter of fiscal
2005, operating income was reduced by unrecognized lost profits and expenses of
approximately $3.0 million and $5.1 million, respectively. The Company had no
such unrecognized lost profits during the second quarter of fiscal 2006. The
unrecognized lost profits and expenses of $8.1 million during the first quarter
of fiscal 2006 and the fourth quarter of fiscal 2005 were the direct result of
the effect of Hurricane Katrina, and the Company's efforts to minimize the
potential loss from the hurricane and will be recognized for accounting purposes
once negotiations with the insurance carriers are complete and the final amounts
are determined. The Company intends to seek reimbursement for all of its insured
losses, including the unrecognized lost profits and expenses. Negotiations with
the Company's insurance carriers are expected to be completed during fiscal
2006.
"Our financial results for the second quarter of fiscal 2006 reflect a
difficult market environment for our industry," said Joe F. Sanderson, Jr.,
chairman and chief executive officer of Sanderson Farms, Inc. "The combination
of sluggish demand for poultry products in the domestic market with the decline
in exports has depressed market prices compared with the levels we experienced
in the prior year period."
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Sanderson Farms Reports Second Quarter Fiscal 2006 Results
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May 25, 2006
According to Sanderson, overall market prices for poultry products were
significantly lower in the second quarter of 2006 compared with prices a year
ago. As measured by a simple average of the Georgia dock price for whole
chickens, prices decreased approximately 7.3% in the Company's second fiscal
quarter compared with the same period in 2005. Bulk leg quarter prices declined
43.1% during the quarter compared with last year's second quarter. These leg
quarter prices reflect continued weak demand in the export market during the
quarter. Boneless breast meat prices during the quarter were approximately 30.1%
lower than the prior-year period. Wing prices averaged $.91 per pound during the
second quarter of fiscal 2006, compared with the average of $1.05 per pound
during the second quarter of fiscal 2005. At the same time, cash market prices
for corn and soybean meal, the Company's primary feed ingredients, increased
6.5% and decreased 4.1%, respectively, compared with the second quarter a year
ago.
"While current market conditions are better than those experienced
during our second quarter, they remain challenging," Sanderson added. "In light
of these conditions, we are reducing our production levels at all of our big
bird deboning plants and at our McComb, Mississippi, chill pack plant. Total
weekly production will be reduced by approximately 4.3 percent to more
appropriately balance our production with current market demand. We will also
defer the additional head previously scheduled to begin in Collins, Mississippi,
in July, and a portion of the additional head previously scheduled for Moultrie,
Georgia, until market conditions improve. We have reviewed all of our internal
operating budgets and have identified opportunities to reduce our selling,
general & administrative expenses without jeopardizing product quality, customer
service or long-term operations. Additionally, we have decided to postpone
construction on our new poultry complex in Waco, Texas, for 90 days, which will
defer approximately $29 million of related capital expenditures to fiscal 2007.
We believe we are taking the right steps to deal with the current market
environment. In spite of the short-term market challenges, we are optimistic
about the longer-term fundamentals of our industry and remain confident that
Sanderson Farms is well positioned to resume its pattern of profitable growth
when market conditions improve."
Sanderson Farms will hold a conference call to discuss this press
release today, May 25, 2006, 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 25, 2006.
Those without Internet access or who would rather listen by telephone can call
800-967-7134, access code 2936419.
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 2005 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, 2006.
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Sanderson Farms Reports Second Quarter Fiscal 2006 Results
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May 25, 2006
SANDERSON FARMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
APRIL 30, OCTOBER 31,
2006 2005
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ASSETS
Current assets:
Cash and cash equivalents $ 6,237 $ 34,616
Accounts receivable, net 38,311 38,833
Receivable from insurance companies 5,834 14,892
Inventories 90,674 84,713
Prepaid expenses 14,648 11,599
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Total current assets 155,704 184,653
Property, plant and equipment 553,622 508,912
Less accumulated depreciation (262,706) (249,586)
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290,916 259,326
Other assets 2,226 1,812
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Total assets $ 448,846 $ 445,791
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 43,620 $ 72,616
Current maturities of long-term debt 4,413 4,406
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Total current liabilities 48,033 77,022
Long-term debt, less current maturities 66,373 6,511
Claims payable 2,900 2,900
Deferred income taxes 13,945 13,705
Stockholders' equity 317,595 345,653
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Total liabilities and stockholders' equity $ 448,846 $ 445,791
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Sanderson Farms Reports Second Quarter Fiscal 2006 Results
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May 25, 2006
SANDERSON FARMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)
THREE MONTHS ENDED SIX MONTHS ENDED
APRIL 30, APRIL 30,
----------------------------- -----------------------------
2006 2005 2006 2005
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Net sales $ 225,069 $ 259,176 $ 447,183 $ 492,466
Costs and expenses:
Cost of sales 237,167 199,979 459,932 403,734
Selling, general and administrative 14,367 16,385 27,751 29,412
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251,534 216,364 487,683 433,146
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Operating income (loss) (26,465) 42,812 (40,500) 59,320
Other income (expense):
Interest income 25 422 149 621
Interest expense (560) 0 (636) (318)
Other 15 64 54 68
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(520) 486 (433) 371
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Income (loss) before income taxes (26,985) 43,298 (40,933) 59,691
Income tax (benefit) expense (10,336) 16,778 (15,678) 23,130
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Net income (loss) $ (16,649) $ 26,520 $ (25,255) $ 36,561
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Basic earnings (loss) per share $ (0.83) $ 1.33 $ (1.26) $ 1.83
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Diluted earnings (loss) per share $ (0.83) $ 1.32 $ (1.26) $ 1.82
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Dividends per share $ 0.12 $ 0.10 $ 0.24 $ 0.20
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Weighted average shares outstanding:
Basic 20,067 20,002 20,066 19,982
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Diluted 20,067 20,128 20,066 20,121
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