US poultry processor Sanderson Farms has rounded off a year of higher sales and profits with fourth-quarter earnings that beat Wall Street expectations.

The company booked earnings per share of US$4.04 for the three months to the end of October, compared to $1.97 a year earlier and above the consensus forecast on Wall Street of $4.01.

Net income more than doubled from $45.3m a year ago to $93.1m. Operating income was almost twice as high, climbing from $71.8m in last year's fourth quarter to $142.3m.

Net sales grew 4.6% to $760.9m and Sanderson also benefited from a drop in the cost of sales amid a drop in grain prices.

"While poultry markets improved only slightly compared to fiscal 2013, grain prices, especially corn prices, were significantly lower during the year when compared to fiscal 2013," chairman and CEO Joe Sanderson Jr said. "The fourth quarter of fiscal 2014 marked a strong finish to a successful year for Sanderson Farms."

BB&T Capital Markets Brett Hundley agreed the company's fourth quarter was a "strong performance" and said 2015 would be another "strong year".

"We are increasing our FY'15 EPS estimate to $10.38 from $10.14; our new estimate takes company guidance into account on production, D&A, and tax, as well as assumptions on another hefty round of SG&A plus a smaller benefit from feed," Hundley said.

However, shares in Sanderson closed down 1.89% and Hundley added: "We think that 2015 will be another strong year of earnings for Sanderson Farms; we note that many investors are concerned about 2016 industry prospects, and this could limit upside potential in the shares from here."

Show the press release

SANDERSON FARMS, INC. REPORTS RESULTS FOR FOURTH QUARTER AND FISCAL 2014

 

LAUREL, Miss.--(BUSINESS WIRE)-- Sanderson Farms, Inc. (NASDAQ: SAFM) today reported results for the fourth quarter and fiscal year ended October 31, 2014.

Net sales for the fourth quarter of fiscal 2014 were $760.9 million compared with $727.1 million for the same period a year ago. For the quarter, the Company reported net income of $93.1 million, or $4.04 per share, compared with net income of $45.3 million, or $1.97 per share, for the fourth quarter of fiscal 2013.

Net sales for fiscal 2014 were $2.775 billion compared with $2.683 billion for fiscal 2013. Net income for the year totaled $249.0 million, or $10.80 per share, compared with net income of$130.6 million, or $5.68 per share, for last year.

"The fourth quarter of fiscal 2014 marked a strong finish to a successful year for Sanderson Farms," said Joe F. Sanderson, Jr., chairman and chief executive officer of Sanderson Farms, Inc."We reported record annual sales of $2.775 billion, a 3.4 percent increase over fiscal 2013. While poultry markets improved only slightly compared to fiscal 2013, grain prices, especially corn prices, were significantly lower during the year when compared to fiscal 2013. For the year, we sold 3.045 billion pounds of dressed poultry, another record, compared with 3.031 billion pounds in fiscal 2013."

According to Sanderson, overall market prices for poultry products were higher in the fourth quarter of fiscal 2014 compared with prices a year ago. As measured by an average of the Georgiadock price for whole chickens, prices were higher by approximately 7.1 percent in the Company's fourth fiscal quarter compared with the same period in fiscal 2013, and were higher by 5.7 percent for the fiscal year compared with the prior year. The Georgia Dock whole bird price remained in record territory during fiscal 2014 and reflected strong demand for the Company's retail chill pack product during this fiscal year. Boneless breast meat prices averaged 15.8 percent higher in the fourth quarter than the prior-year period. For fiscal 2014, boneless prices were 3.7 percent higher when compared with fiscal 2013. Jumbo wing prices averaged $1.50 per pound during the fourth quarter of fiscal 2014, up 5.2 percent from the average of $1.43 per pound during the prior-year period. Jumbo wing prices averaged $1.20 per pound during the fiscal year, down 19.9 percent from the average of $1.50 per pound for fiscal 2013. The average market price for bulk leg quarters decreased approximately 6.5 percent for the quarter, and decreased approximately 9.6 percent for fiscal 2014. Cash prices for corn and soybean meal, the Company's primary feed ingredients, were down 23.2 percent and 10.5 percent, respectively, during the fourth fiscal quarter when compared with the fourth quarter a year ago. For the year, total feed costs in broiler flocks processed were 18.0 percent lower than fiscal 2013.

"We are pleased that our profitability during fiscal 2014 allowed us to fund our planned expansion in Palestine, Texas, further reduce outstanding debt, strengthen our balance sheet, reward our shareholders with a special dividend and increase our regular quarterly dividend rate," Sanderson continued. "We are well positioned to continue our growth strategy as we begin operations at our new poultry complex in Palestine, Texas, in February 2015. The pounds produced in Palestine, at full production, will represent a 16 percent increase in our capacity."

"As of October 31, 2014, our balance sheet reflected $1.111 billion in assets, stockholders' equity of $897.9 million and net working capital of $363.1 million. Our total long-term debt at year-end was $10 million. A strong balance sheet is an important advantage in our industry and provides us with the financial strength to not only support our growth strategy, but also to manage our operations through cycles that characterize our industry. We deeply appreciate the hard work and dedication to excellence of our employees, growers and everyone associated with our Company," Sanderson concluded.

Sanderson Farms will hold a conference call to discuss this press release today, December 18, 2014, 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. 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 throughDecember 28, 2014. Those without Internet access, or who prefer to participate via telephone, may call 1-888-256-9075, access code 5121663.

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 Global Select Market under the symbol SAFM.

SANDERSON FARMS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)
         
         
   

Three Months Ended

   

Twelve Months Ended

   

October 31,

   

October 31,

     

2014

     

2013

       

2014

     

2013

 
    (Unaudited)   (Unaudited)      

(1)

 

   

(1)

 

Net sales   $ 760,850     $ 727,061       $ 2,774,845     $ 2,682,980  
Costs and expenses:                  
Cost of sales     578,499       624,937         2,253,898       2,377,055  
Selling, general and administrative     39,824       30,345         139,025       100,247  
      618,323       655,282         2,392,923       2,477,302  
         
Operating income     142,527       71,779         381,922       205,678  
         
Other income (expense):                  
Interest income     23       15         60       27  
Interest expense     (486 )     (1,159 )       (2,577 )     (6,136 )
Other     12       510         61       544  
      (451 )     (634 )       (2,456 )     (5,565 )
         
Income before income taxes     142,076       71,145         379,466       200,113  
Income tax expense     48,967       25,875         130,418       69,496  
Net income   $ 93,109    

$

45,270

     

$

249,048

    $ 130,617  
         
Basic earnings per share   $ 4.04    

$

1.97

     

$

10.80

   

$

5.68

 
Diluted earnings per share   $ 4.04    

$

1.97

     

$

10.80

   

$

5.68

 
Dividends per share   $ 0.72    

$

0.20

     

$

1.32

   

$

0.71

 

Original source: Sanderson Farms