SAFM - Earnings call transcript Q4 2020

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Operator

Good day, and welcome to Sanderson Farms, Inc. Fourth Quarter 2020 Conference Call. Today's call is being recorded. At this time for opening remarks and introductions, I would like to turn the call over to Mr. Joe Sanderson. sir. ahead, go Please

Joe Sanderson

for morning yearend to we conference $XX.X per income Good XXXX. quarter quarter reported Farms and of share $X.XX or fiscal call. million fourth and you. fiscal Sanderson of welcome fourth net our Thank This morning

share. quarter per the or fourth lost million last of During we year, $XX.X $X.XX

For the million XXXX, $X.XX share. per XX, or net reported year we ended October $XX.X income of

of $XX.X For million $X.XX net fiscal XXXX, we per income reported share. or

release not and on did If receive they're www.sandersonfarms.com. of the financial a available accompanying you our copy summary, at website

cautionary I'll regarding Before Mike we continue, ask statements. to give the statement forward-looking

Mike Cockrell

which the Thank the statements everyone. SEC available press and XXK and about today. are ended to could on October uncertainties. that from company you, The the on report These prospects These This at forward-looking released described financial our business, will company. XXXX, Form filed annual condition differ and statements risks risks in materially contain in good various sandersonfarms.com. fiscal Joe by documents because the our year morning of and our indicated of of and was morning's uncertainties forward-looking performance morning with the for published are website call XX, this actual the

affecting our might update very undue course revise view the make on of cost, speak days not among Any now. we the and our volatile uncertain our market the You a statements should not forward-looking place highly of any view business be morning. from COVID-XX remain or factors this feed today economy, prices pandemic strong today might reliance our as we for from few and Such forward-looking and grain statements only of others statements. such different as health poultry meat, and

pandemic closure one supply customer labor XX-Q at of this feed chain or the the and flocks, challenges possible our facilities in worsening among continued by business our created of commercial decline our uncertainties of to to our our the shortages, As in rates logistics our risks the facilities, disruptions producers or for and include manage inability shifting morning, COVID-XX further other or changes for continuing unfavorable in grains, global stated absentee more a chain worsening due liquidity for products, disruption their activity conditions. in and consumer patterns, and disruptions orders contract

Joe Sanderson

Thank Mike. you,

continues the for unprecedented and caused Our fourth challenges pandemic resulted fiscal ended United and service XX breast COVID-XX economic by other products financial market the bird quarter social These year the our October reflect conditions produced weak and States. on meat plants. the big to the have for the virus have and at food results impact boneless extraordinary prices in

fourth fiscal the during in company year. last compared the to to process the cost remained fiscal fiscal prices the at compared this grocery XXXX. the both home to but customers home from of performed [ph] challenges Despite to year and prices respects. chicken decreased as realized Feed well year, for On we enormous demand were year year, faced sold for store away to well, products during through quarter ago quarter market more for year lower the the end for increased given retail limited the continued poultry ban. consumers and most years past the positive for during in side, and compared Overall a prices products our strong last fourth compared preparing nation meals options very

is our of keep communities the worked were we employees of for we've highest our been fiscal poultry $X.XXX the protocols Throughout all areas. million was diligently testament the per at last and months, Farms. to income sales the XXXX products. to and production several work million record down our $X.XX a This up billion safe shift $X.XXX net demand net share. hard sold able to pounds Our and to by teams to and Sanderson line implement We

Sanderson our so well buy during to rising the supply our during and producers, contract I the helped have the our to operate Farms and have hard products maintain challenges US perform of We our food families thank very to team which associated and and in Our XXXX. communities American grateful customers, times. their dedication perseverance and for and who am poultry unprecedented the we states our the feed these sincerely for employees, operations everyone continued pandemic. work, with consumers our vendors, for

continue As confident discuss ahead, for the We're in value our I'll highest details they that the continue to our delivering will best execute your products ability our and during quality on our provide to then during strategic growth to to Mike quarter our and on executing focus I and fiscal enhance Lampkin cycling. and our customers will all stakeholder. to to we return after With we of organic focus introduction, strategy our answer to questions. continue look XXXX ask plan and -- and service finish the

Lampkin Butts

Thank you, Joe and good morning, everyone.

lower said, for to pack year during customers the strong last lower and who overall fourth were home. at store market year prices compared from and prices market to consumers cost of most year. retail our quarter during pound fiscal Tray grocery continued demand fiscal their the reflect year continue cook from and fiscal for to As chicken meals per our than feed our were XXXX Joe

increase we pound in our packed for our year, with products. fiscal realized lower average improvement tray trade prices compared an slightly XXXX, were $X.XX overall realized the price per our the For $X.XX with in but pound of market mix, per

six per XXXX. to pack were past the added new pound which realized our customers during constructive prices months, were higher remain markets the allow quarter tray compared prices $X.XX us improve We mix. outlook fourth whould by the sale continue the flat. For essentially pack on tray realized quarter, for XXXX. of our with fourth pack tray over Sequentially We to

pound pricing up has the compared were as quarter year market Demand the slightly to wing of fourth mix X.X% reflected compared per and Quoted but change XXXX of our is price. market remain full demand improved October China $XX.X year compared mix is price per and moved through calendar demand prices food the to boneless prices pound from recent market for during has lower late breast export have quarter lower a demand quarter the our to a quarters Unabated from quarter customer quarter quarter food quarters Call averaged XX.X% by but boneless were averaged higher under [audio tone supporting when improved as year. traditional for service Market $X.XX for weeks Total were that in as to fiscal result was the $X.XX and markets compared a said for ago for Cuba year. higher. Kazakhstan the quarter and during price the XXXX. also fiscal Mexico, jumbo pound pressure many prices. under [ph] pandemic. markets to for That The result Vietnam, were in such customers. the and has the been XX.X% for in and overall remained the by quarter approximately for year per the during fourth year's and compared lower gap] last fourth $XX.X pressure While lower in XXXX. late year prices strong. for by the the for change Boneless in service during X.X% of

X% is quoted prices during $X.XX up quarter, from the which per pound, averaged fourth fourth our $X.XX quarter. per pound year's wing jumbo average of During last

prices wing quote per average for current jumbo an an pound. during per jumbo lower your fiscal however, of average were XXXX. year of from X.X% wings XXXX is unabated the For pound by per during with The $X.XX $X.XX $X.XX

year per sales year lower to during the price ended decreasing XXXX. of average compared for compared October XXXX for the X% Our the products year when poultry ended four XX, tenths XX% was XX, year pound by October to last full

$X.XX For just brawler pound feed and or year, lower X.X%. processed cost the by were fiscal full under per

our grain our quarter compared last delivered by meal mills were X.X%. lower to For while higher the our fourth were feed cash during year's higher cost by quarter. paid XX.X% soybean overall last than to delivered prices fourth fourth quarter quarter fourth year's corn Prices for were for

beef brawler cost however a were fourth compared quarter ago. per by year's this plots during in processed pound to XX.X% Our lower $X.XX year or

X.XXX During billion billion we pounds. sold processed this sold quarter, and breast fiscal processed fourth fiscal X.XXX pounds poultry billion We X.XXX pounds. and XXXX during pounds of billion X.XXX

product demand QX. of keep we to Hazel reflect expected, estimates in currently pounds or XXXX, wage our Hertz be would Hazel as If million food bird which be in estimates Looking Thease a XXXX at run pack food plant first billion Hertz billion wage return in Mississippi expect processed be poultry to or note. pounds least to reflect our breast our those fiscal at X.X% pounds at X.XX we lower processed from ship X.XX plant. processed bird in million would for in until our production we XXXX. some full during as will billion QX, to service big at of at increase XXXX, that plant X.XXX also service to market semblance ahead food the service our big tray billion bird plants of under and with least on plant billion also X.XXX Approximately tray X.XXX would estimates QX to of X.XXX expect quarter attempt and calendar pounds reflect lower X.XXX our plants order as These at Mississippi remain to QX, processed represent customers. XX% pressure through billion XX% These bird compared process followed. pack.

over for estimates new Sanderson vendors conditions I'll these with Joe, weather, growers, of look in results. forward point, to year. I as other quarter’s to At course Of weights, the target turn and always and Farms, result call to of this associated changes am lab for our the everyone financial market as subject customers discussion grateful the a change employees, factors. are a Like Mike and

Mike Cockrell

X.X% the and Net by decrease year. million for an net sales Lampkin quarter and for same a that's XXXX. totaled The Thank you, for offset pounds for again. the from poultry of increase in last quarter up quarter realized down the good of products compared sold sales $XXX fiscal prices reflect million in fourth poultry increase $XXX.X to X.X% morning in fiscal

cost sales and by XX sold for feed Our pound a decrease poultry ended reflecting during offset nonfeed decreased quarter in X.X% brawlers of increase per quarter of an product processed slight $X.XX of October the related costs. the in cost lower pounds of the and

$X.XX up ago. million year year, million fiscal sales For $X.X the a net totaled $X.XX from million

related fewer chicken pound primarily for a result price higher million million per other $X.XX per pound decrease our in for $X.XXX the $XX.XX to for increased pound COVID $XX.X and our was sales decrease compared which last almost in or million a and per totalled $X.X pound $X.XX our higher 'XX pound by X.X% poultry higher expenses of fiscal on costs to The processing related to averaged increased about by up a to a cost cost increase. expenses COGS higher Tyler were COGS compared reflecting sold sales startup XXXX and prepared offset during related third compared of $X.XX plants ago professional administrative fiscal to of business about fiscal fiscal a higher to compared $X.XXX year, Non-feed cost Non-feed by related our cost pounds lower both X% by year, offset in XXXX salaries fiscal $XX.X due quarters feed average were Labor SG&A. fall per $X.XXX pound COVID but XX% million pound fiscal per expenses. year costs in higher increases cent our and cost to lower Our SG&A expenses, with XXXX higher a year per three pound, were related associated in X.X% XX.X fxied during primarily nonfeed a We and cost book were million. compared cost. trainee were of XXXX. per lab returns. were to as all lower cost percent facility expenses

home include to $XX not expenses the For QX, modeling and related bonus, our we move consider and on whether estimate in the these cleaning $XXX million accruals the to of equity continued plans the We've not working both compensation in balance fiscal million or XXXX sheet We end we'll $XX SG&A $XXX side in continued reflect approvals each of relate capital deep the which of million of for our for add facilities. billion $XX COVID-XX million At as $XX estimate primarily for QX. fiscal and to our $X.XXX profitability depends in or QX does year, clinics stockholder's we're million all year. that medical through quarter million expenditures, net our QX, SG&A. estimates That included ESOP of which $X and of million. of any in

For million on $XXX.X the and million year we improvements $XX.X capital spent dividends. in paid

$X.X interest $XX last interest the million $X.X expense end million, debt For sheet an the balance We from million was the expense the had of fiscal in XXXX, of year. long-term on at year. increase

Absent for and I forward but to and any will discrete that as tax benefits modeling benefits, income last know fiscal Our discrete items. been Cares income rate our COVID a of exclusive strange, have we're effective rate tax quarter, tax due XXXX those going and I tax be rate effective we tax that sounds was XXX% discrete related XX% the Act. would explained XX.X% had

us and our to be our invest well continue We organic capitalized, opportunities drive pursue to value company. growth to enabling in business for

annual funded hatchery our cash expect is XXXX credit upgrades currently were operations $XX.X flows during working XXXX. The under per on $XXX.X in be and hatchery and million generated and hand, that available $XXX.X needed new and construction, to company replace unsecured was million revolving million building and $X County credit all, at revolving which the vehicles, million capital, million be CapEx has Mississippi total multiple billion for by the that for Jones Of liquidity from of We of to $XX.X as for facility. approximately maintenance. a cash that to our for special large-scale projects $XXX.X October $XX.X expand equipment line facilities is and building million at bit serving XX, internally maintenance

in XXXX $XXX.X was in QX, thoughts for $XX we're million $XX.X $XXX fiscal amortization that, million turn XXXX we and over on QX modeling XXX. With and that expect the million call depreciation down and QX, during depreciation and breaking comments million million $XX.X in approximately and about Our million for [indiscernible] and Joe in QX. in back $XX.X to I'll

Joe Sanderson

Thank you, Mike.

cost per $X.XX lower fiscal by this previous feed were just and per lower a the under pound cost. eighth during year Our or of year pound represented XXXX freight flat straight to the compared relatively

that and Board including and values, we our needs soybeans of have lock for we current regarding if States. values Corn fiscal have for also XXXX flat tightened we both United USDA's the this higher. in XXXX is XXXX. XXXX demand opposed these the year prices our in for corn carryout night, then fiscal that considerably trend during for challenges XXXX. soybean's since future XXXX, what already increased both volumes, and million both end current to have Chicago last will estimates priced and grains crop for be moved cash fiscal during in cost a prices trade $XXX.X as higer If as [indiscernible] to contract XXXX estimate XXXX using with grain of given for export current However, for corn at result crops the of all of and feed now August expect basis needs soybeans

needs have we basis have soybean for our soybean through priced and corn We corn bulk our December. both and March through of and

closely watching the as fiscal call, the we're As new year. we always share things few yearend I'll a on start

the we'll South an corn keep American crops. on soybean First eye and

in on dry we rest are It is those those keep South an of As still crops. as hot today, are early, cautious America. for but in America of will eye and Brazil expectations crops there the South weather pockets of

domestic supplies. will course crops of affect challenge export demand Of for through

would to demand, United with and XX while is and corn intention watch If will current planning higher-priced. acres stocks be acres. highest the will that flat essentially estimates owned will ending reports acreage be March. acres XXXX, we USDA's export next acres X% record acres Second, these consistent million will be soybean States strong at million in $XX realized, lower second increase

calendar to produce compared Third, production that XXXX estimated more USDA of the will watch chicken XXXX. during industry chicken approximately the we pounds numbers. X% will

chick the flock, [ph] at is Looking sets, the estimate USDAs size egg reasonable. in of hand believe we the placement, placement

course seasonally breast of service plants boneless moved dark prices over the Market same also the past for have for our will meat We to markets. higher big produced weeks. for The chicken bird food be market true at watching counter meat prices. few is

COVID comfortable and we out vaccine customers is consumers pressure expect service remain under large However distributed until demand the feel from going eat to numbers. again in food widely to

we continues China. key reports in chicken wish markets of as much war also will market such as are That encouraged We participants pressure sandwich the the in face XXXX to said, and success. watching QSR we all export demand by a markets global be and

going demand As XXXX service grocery Volume continue. shape. expect at and demand feel here good Lampkin that away fiscal we home shift retail started food We the XXXX good reflected about trend in to we said, and consumer forward. in in toward cooking from

balance is well, new our outstanding execute continues to to our performing Our placing continue do has sales and job strategic plan. our business strong, to an and so sheet we're operations very are growth done team well-positioned

As continue shareholder strategy, degree to have value. and noted in ability high to deliver our our financial a confidence of our we position

a of share our recently a and our share repurchase cash by annual Directors Board As result, extended increased dividend $X.XX plan. our

site and during start our site project will continue growth on able next we for We that that to evaluate announce phase and we're optimistic be XXXX. a of to work

widely begin should during become into meat COVID expect rebound. to optimism try we will comfortable the are the for to available grocery demand, continue announced of and will for dining Regardless push the more feel a demand large foodservice move out higher chicken XXXX. new boneless consumers good retail with predict XXXX. there plans QSR prices While support to year. we as breast sandwich Hopefully never markets, once vaccines reasons demand into the calendar to participant together That we chicken

some provide we their calendar nothing again sales their work as year. be producers as to essential Their and As up our business mix Lampkin conditions in want new commitment my contract improve move grow the close as this through performance their new under optimistic our With and and for resilience, new and the mentioned, the during dedication, into year. will challenging and continue team is picked they move remarkable. and to thanking now responsibilities employees that by year It fall summer we on to I to questions. honor reason of workers be is we'll we this their to short that, a take your company. past

Operator

Thank JPMorgan. Ken ahead. [Operator Please from First from the begin We'll you. instructions] question-and-answer Goldman session. is question go

Ken Goldman

Wanted much a inventory or to you mentioned optimism, to they build starting as customers the about think be demand of to it some seeing you Broadening about them you hearing sandwich for asking or potential you build inventory Joe are food summer you for hearing is chicken to ask out will ask better toward to service about reasons even look you food them any signs that that? for are hopefully too any in them, war. general, or to service it early talked what just

Joe Sanderson

early. too It's

on one sandwich. that's distributed of going any wry major have vaccine of going it. We of inventory, time the vaccine That's -- talked happen one how now thing again, this been are don't to nobody QSR just have is are one We people start and of going take out get to to think but aware a it and many to participant we've chicken about, roll that to are people take widely to until and resolution but I preparing only building out their know people it. eat waiting to the for don’t no the is it's take and the we going else. the we and aware we've

question. that I think the is

Ken Goldman

cut you a not thoughts I you to just to or anticipation little couple X% you from X% cutbacks US. in wanted Joe disappointed the as USDA really estimate expect. back increase came out and Yeah being optimistic follow-up played chicken Are your supply was? it get follow-up more are industry didn't ago. on quarters felt comment your on of that and the wanted your more? you the I versus how a that am I this sure things it think increase of I that makes think sense what then terms in it was the year

Joe Sanderson

remember No, there I a was my cutback, can't numbers now.

small, placement me and very March they chick back to to screen you the million, read Let in up in chicks the the so can't week were then February and look them, million they're if XXX me total, running and they're I but at US were they're then August, but million. I'll small you March and February on tell to recently say a XXX put running they chicks XXX they're XXX XXX million more million, cut for

So and My that's fast have selling leg a but is and but black quarters a they've for it people is substantially not core do demand. the they're that pound and big and prices cutbck did boneless up, Lampkin are not people pound, the cut I'm to report black that disappointed. for were been pound, and and we have $X.XX up Rae now is no but $X.XX I'm to all we're going industry bird the respond have that food packers cut deboning profitability not selling selling to January. pound, what $X.XX tray quarters going guess breast for the idea disappointed industry and right $X.XX that a a

Operator

question is ahead. Bank Peter from Galbo from Please of The America. next go

Peter Galbo

just Joe cadence on to wanted grain the question that Mike around certainly morning. cost, ask getting I a we're this and

to through. would that that to began about just as cost the roll of fiscal I kind if quarter you're see second talked and or material really more to around quarter still increase you I change grain case think your last maybe thinking that? wanted in see was you if had those

Joe Sanderson

down our the big processed delivered little fiscal was here be our bit at actually I quarter meals fourth unit in think a chicken We will so. -- in cost for QX. corn and actually Yeah

the the impact the So will quarter. in grain full be of higher second

Mike Cockrell

in some you'll quarter, price. the the first the prices, brunt you'll quarter blended of of see in new of have new prices second the You'll the and have but the old some

Peter Galbo

clarifying in month to or I more a make XXXX so last for early gained in you guess have remembering of chickens guys lot and Joe, particularly the the that and sure your markets Thank you of warm I weight correctly, maybe wanted of particularly It I was some operation. was the had this where than normal.

Just your within as potential processed maybe possibility just revert your standpoint? of the have of that the a bit high we think right too of production out a about if we numbers guidance, modeling normalized pounds weight USDA and mean. that a number there the and is winter context to It kind

Joe Sanderson

model last out, remember can't target Try Last was in extraordinarily fluctuation. mild and always across everybody. year's It that and industry, Lampkin numbers threw quarter It's the our I wage first we remember did wage. year. was have The weather we higher

to numbers think I subject fluctuation. they're these are but always good,

Peter Galbo

first talking about. quarter Is that you're

Joe Sanderson

They're right the on on right now, the money. money right

Operator

The is from ahead. Ken from next question go Please Bank Montreal. of Zaslow

Ken Zaslow

questions. pressure how was you look pricing is at you much Just by created two think it? COVID back One do

Joe Sanderson

XX% up items that XX% restaurant certainly weighing sale in to to the tenders, Huge and XX%. distributor then at if is volume orders started boneless all buy you when XX% was look X% wings our they down and flows, XX% boneless only to December breasts right they're the distributors breasts, down and now all the

they than the The the on It's got more COVID. only parts more all streets also is service it's on the during closed California weeks So pressure Every of but boneless different COVID. serve tenders of you more. country. food but New got and are better any this closing in products you York, summer restaurants for three of there do more demand not the of midst for it. not bit is all can't breast. It because

Ken Zaslow

that fair the So goes if you well normal, back a everything back, would get and to pricing expectation? under came the think Is if we vaccine $XX.XX.without COVID be

Joe Sanderson

know still There than is If than is no would it it and it what There of would lot but is way there would telling COVID, certainly no better beef be. be and have to is but we would what pork it it better what be. didn’t be it what COVID would nowm chicken out a

Ken Zaslow

you And leave then terms that do bird? your mix, and of you be are How and do for you be do big my there out keep guys the coming Will well plan I'll what the to back of will you look guys. need second prepare you as start for out mix? to milestones of question is going shipping COVID what that? and would the it cadence What the in

Joe Sanderson

that the in at We products this additional level you. Lampkin Bird Thank We back a Big back tray and need product need our fall but would plants. tray Hazel sold birds we're in – we into our of sales tray now, X,XXX,XXX we so Hertz of would able in as now pack and back we plants have can X,XXX,XXX. product right pack week add reduced and some add not that move were to the cause be the the right plants. have and people

that Hertz don’t I the So believe goes be production could we to that we we do. would and as customers. normal immediately step back keep we levels serving would long take first Hazel as

Mike Cockrell

We Hertz Hazel made our at plant. that product

Operator

The go [indiscernible] from ahead. Stevens Please from Incorporated. next question comes

Unidentified Analyst

at from we Stevens is as you 'XX I moment? something freight is for on your that costs just freight thinking the this potentially? the for think This to thoughts [indiscernible] to FY Do on Good get Ben. be are cars? mindful need about What you pressure morning. wanted cost

Joe Sanderson

a not a lot. bit, little It's up it's

a a and but do not third that quarter the it's said? quantified checked call remember are after huge you that, amount. what was was issue. huge We We It Brittany on not it

Mike Cockrell

They're bidding now.

Joe Sanderson

don't bids we're huge going now are so XXXX a she didn't just to manager carriers what going going I it's increase. for but know think did see it to out right not -- be way was They our be to think on logistics for our and of

Mike Cockrell

to attention number. it up compared and is it, XX be XX unit question, your to a there I XX, an of going we not XXXX for answer To it's be concerned course but but big flat anything basis at were to pay was Maybe on to with don’t about, to

Joe Sanderson

The contract it and issue of issue was drivers of availability the drivers fuel, was was the hours not for and year. the the age we the up the

spot use drivers. don’t we So

don’t into. we So run

Mike Cockrell

We to contract first we'll free that that able be a way don’t appeal with increase and in on huge drivers to expect party we'll call. price improves the quarter and see be

Unidentified Analyst

about you there Thank Great. is supply seeing. ask to wanted and Okay. just we're that some indicator

on quite get placement declining. Do to what kind nature still a to short-term numbers characterize given which have that weekly year? been production in bit. next went just given it's Just are numbers, We're be fact that up you think expected on the just the particularly your more to egg is wanted fair interested thoughts of up

Mike Cockrell

put our a September instead week five week of a have number normally it is. placement number. doubts We about number, four the believe which We that is

of there four period. number a in the five think reported week the ever That's instead there's industry know we largest fact As X.X week in a the of matter weeks to published. enough house that period a million housing one pillets. don't been of that's primary breeders We four out

and people comfortable that pots males been mortality X.X don't but pillet next take and because of only the doubt vaccinated any want go September rest not their I very the pillets, October I there is back because I and not in right. the So am antibody. any I running out we if them them if using and that's they're that's are -- but these as with division program at they and liverability when one, The but high of grow males think pretty one taking half that's accurate of don’t look you number using where pillets antibody and -- have that's no on antibiotics is only have the are those are have pillets and breeder the to male those think

of own because not that they're pillets. So using

pillets an on So placing the heavy you’re lot because them of a there's die. so a and pillets getting element mortality of more think I

Operator

Cleveland Piken Michael is question Research. next go The ahead. from Please

Michael Piken

if and of you long-term of facility a have different how can bird want you on just ultimately retail light new plant your do do I would and little imagine or to get detail COVID to want in between whatever, be terms mix service? food proposed you a more big in I a

Joe Sanderson

will be plant. It a retail

one some learned it, COVID kind things, things some don't incorporate ventilation spacing of employee about those it air will but some of being treck separation spacing them, back we in of plan. be a now that and the will exchange We have in where we've areas

Michael Piken

or to the XX-XX net of in mix you between home thing because then have sort been or ideal plan, going that you're see and think of targeting pack? an the you to your people after even more get just eating at historically And in of big and close term tray do do estimation? bird close like you we're to Do want to terms long XX-XX your you’ve COVID

Joe Sanderson

and and now think XXXX we No, expansion. to out of to pork period result people when going protein as 'XX, result three in just period all lot in money comfortable expanded we're a all and that. profitability of after and business XXXX we eat a expanded, industries feel 'XX that they that, believe made XXXX, still a the of 'XX go they right all a be now and the the in of right chicken of doing We're people are so

of are believe back that we resolve you which at and and vaccinated people protein some So will got when to have point going comfortable a eat. feel lot

I back out them to to going I I three eat. call I eat that have home. to or York are and like like there going go up They're go like New where back to to over want to the going they into eat. they're where eat and to to two So stay to restaurants

Lampkin Butts

Mike the numbers right of mix we provided big described, and that now we that face My on bird pack. have XX% try and a XX%

going big pack pack. just to be not to If trail bird a Hazel mix try Hazel grow build shift move plan. new out bird, back bird. you you're your got be the going this and a to It big because there plant. but was going It's it's the Hertz did back you're XX% to a big the It's big of lot to and to in Hertz cycle, out you are then if build move plan really move

point. back some and the build moved not to ultimately we at move So new trial pack. it It's

Joe Sanderson

so that be mid right comfortable been the now years to we're for but And and 'XX, two Right and be 'XXs, most pack comfortable that's we XX market the the case that's in big very excellent has in is one. we're just bird since that niche. we're need still profitable trail segment only can't We segments. player a in

Operator

Barclays. ahead. from question from Please go Ben Theurer The is next

Ben Theurer

see related that the the that's into and So start one, want second up in announce that start you XQ little new Could for cost up year elaborate plant just to you SG&A what's your the in first or bit outlook half and the X% significant half then assume driving next to particularly by and some driving there fiscal spike up be a to cost basically XQ on quick going which a what's increase? you

Joe Sanderson

won't There start be any up cost.

Mike Cockrell

quarter I following at not looking but XXXX, compared in in $XX.X the year. had your XXXX We estimating you're question million first XXXX. $XX am what If am to we sure last million are was I

Once a So COVID.$XX that's the increased and a of around we've is the bit. our not that moving year travel. little $XX start up for in big COVID but million, place, it's vaccine and of move most you're is we'll million there

travel… Our

Ben Theurer

Okay.

there follow-up on of wanted of the AI positive one Asia. basically you've year that related to So it both Europe issues and COVID Asia it's a and signs and and little you export in elaborate the from could where then having COVID the chicken bit already about on because export relatively incremental last some you're Europe what is markets or of being and said planet to you’ve that's impact the still is that it's but talked on taking the demand if

Mike Cockrell

We you’ve January. think really any that him We pack Tell those demand in directly booked issues that XXXX. directly. create our any directly from demand got from opportunities what could in sales some have

Joe Sanderson

shipments. $X.XX got in pillets and improved Mexico in to $X.XX quote for those as export low They delivered shipping November than price $X.XX, higher into January prices have improved. beginning as and and and $X.XX Our December our for we're below plant to FOB a

Our The little helps always mixture exports. weak that and believe dollar a a things, of people it's export is

bird reason most then better holiday. I for some have then and For in debones are is demand big the most cut Medico back and

got that you supply for a way So and little it's been into half new less of year. December going

of less still got and demand and some in you Mexico supply China and we little and the so ship is mix. China improved a to Cuba markets the export even And in

Mike Cockrell

some it only in $X.XX they China then at be for seeing, answers from January. hope Hog And the than I Europe still your question. and us other We're next that doubt had that that's booked we're AI in plus thing going on we year. didn’t but really lastly buy I benefitting a and but with what's they, should all

Ben Theurer

more And you're seeing out Cuba, correct? demand of some

Mike Cockrell

you Thank much happy Perfect. Okay. very and holidays.

Operator

Adam question Sachs. next ahead. The from is from Please Samuelson Goldman go

Adam Samuelson

plants of lower to cost So guess specifically first the about the a the on in first that big thinking utilization just of I just in bird COGS hone the the part I with and little bit wanted non feed of some year? part the

Mike Cockrell

We'll and purchase. be don’t you not Your a happening. and increases in have our wage because bit labor plants then little January cost in effective capitalized going good depreciation to full you have running by up got plant things two depreciation to increases your a are

everything of Oh in up labor some. the about going pound 'XX. for That's be heard we you Third a year. calculate 'XX to year,

be, to is to until be we your earn Your up million labor back is depreciation $X.X going going get to

Adam Samuelson

Okay. full kind And can costs we on still... bucket hold the a line little get that offsets a COVID lower by of bit kind or so hold as just into is related you the basis, maybe year spring of non-feed

Joe Sanderson

increase $XX had in SG&A. I there. have you do What in just saw million you

Adam Samuelson

the and nursery That's the stations. nurseries that the to be whole going and cleaning year. Is the

Joe Sanderson

employees take we've had Less April. nursery of we're than we problem March in or becomes employees flu in shot. a to flu We the explain work. -- think XX% our screening to flu had additional at nurses had coming providing on took all -- of been Corona give for we been the -- shots on of every misconceptions employees to shots lot they by an plant a physical screen a didn't our have that where for nursery are the available, and plants. plant now interviewing put bad preparing at app stations to vaccinations station put video already determined for everybody were employees our We've doctor telephone we hopefully coming and shot. their there on new We've when virus flu and why COVID new we flu to We're for employees

a address doctor had we misconceptions. So those

want these So vaccine, or not with hope than the another shot. flu take XXX COVID built stations this COVID We more take do that will nursery happen we've that and So had vaccination. now XXX to people we we've

-- of source the our up SG&A -- was yeah, noted it. that's of So somebody that part that's

Mike Cockrell

to in $XX depreciation to up XXXX. year, The is for the going XXXX million be compared

Adam Samuelson

New all that's -- holidays and there. happy a stop okay have Happy incredibly Year. all helpful. all you that's I Okay, I'll hope

Operator

The next question is from Credit ahead. Robert go Moskow Please from Suisse.

Robert Moskow

on pricing typically Does think sequentially? Should I quarter behavior flat ones, now me retail I price follow-up. tray retail pricing is also. some going had expect help quick your kind pack first? a quick in there I Maybe of Couple seasonal you said counter with the of right thanks. current sequentially in Hi, down you stay that at go to and

Joe Sanderson

wouldn't Yes. don't go December, after before are and chicken it different, And be before surprise on I go day week week -- of those two months. and they see I those were down. be week up surprised They up run person. January, but January it a not will November, thereby Thanksgiving, anything, but November, but haven't We week Thanksgiving down up, they week each if might Christmas would me a weeks just January prices December wants that, weeks any say Christmas. for about don't where each two of if cutback to The have know for months. two I

Robert Moskow

costs breakeven mix, are trying first feed you quarter? has pricing, into take surprise and close just quarter this I below higher -- you'll still on probably like for Consensus there's Right. was in your breakeven account be that just positive because a you I'm seasonal want impact to roughly to get first quarter and such think do of the to the

Joe Sanderson

this, since most I'll are Turkey Texas, more Mississippi, this absentees Georgia, us at quarter. pandemic Carolina, more we headwind plants headwind are you pandemic but running as for this in this, than going we're rise having and more quarter We're -- running Louisiana, Right really been operating become not our now nobody began. out we cases very States And -- to COVID any we're but We'll at Thanksgiving instances to this the the it's it and having running the than report any of has in base. and well, well, they United had and these our okay, hit more more well becoming are do and as right have more we haven't numerous Christmas than asked we've higher cases back -- well, but grow challenging we challenge still out the We're good, are our the Hams since yet, We going and grain Labs are as of -- now always hadn't it, but it We're prices absentees in but now a we summer we plant, we of these in operating have and we're capacity, break at has is we're or started. still having of employee had had spring. all

Robert Moskow

to I'm Okay. that. hear thank much. very well sorry you All right,

Operator

The is Global from Seaport from question next go Please Larson ahead. Eric Securities.

Eric Larson

here. Happy have a you thanks and to Yeah, season hope good holidays guys. you

is, the of question beginning the your guys in at always my So basis you lock year. Joe,

'XX? So what beans your and on basis for is corn

Joe Sanderson

we year It hadn't and gotten really quote little strengthened a in now but ago it is than every than looks bit soy through corn to quote it bought was March. a higher where available basis it little is out a there much I it's past ago, now what compared a get it. week where we where has purchased to a -- early. And higher higher priced It's not it's locked it year we than locked than a But a than higher where year -- is, good is was bit ago. Basis right it's lower it where it it. it. we much bought We just in considerably we We see from now. March.

Eric Larson

Okay.

So good you advantage great. took market opportunities. of that's mean, some I

will second say, more versus, half? at So you be your this half grain think by do point let's your cost negatively first impacted

Joe Sanderson

when the just on of in depends -- -- their Argentina doom to dollar. those versus a and the is real the okay. South for a South America in questions that crop. doesn't in American it calls -- March of next be parts, just not on it's And the going available. as Pacific moving what It crop buying weather If of China spotty, depends There little more crops potential. event causing fine it the not it's the Brazil. now full look and and that's right weeks exchange started out new reach crop in challenged is can January, they've lot two on right yield Brazil there rates, Brazil February, historically looks It the The become are currency now also lot a crop in

Eric Larson

Sounds Have know good. guys. Thanks holiday short of great I time. we're a season.

Operator

for This the Sanderson to would I any over concludes turn our question-and-answer closing like Joe session. conference to remarks. back

Joe Sanderson

all Farms, we Sanderson everyone safe Year. on Thanks And Happy Good. at Christmas of Merry and for Hanukkah, behalf being us Happy a today. and New you with everyone wish

Operator

attending now presentation. The for Thank concluded. you conference today's has

now may You disconnect.

Sanderson Farms (SAFM) 17 Dec 202020 Q4 Earnings call transcript