Sanderson Farms (SAFM) Tops Q1 EPS by 97c, Revenues Beat
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Sanderson Farms (NASDAQ: SAFM) reported Q1 EPS of $0.42, $0.97 better than the analyst estimate of ($0.55). Revenue for the quarter came in at $909.3 million versus the consensus estimate of $838.9 million.
“Our results for the first quarter of fiscal 2021 reflect continuing challenges presented by the COVID-19 pandemic and higher feed grain prices, but we ended the quarter on a strong note amidst encouraging end-market trends and remain optimistic about the future,” said Joe F. Sanderson, Jr., chairman and chief executive officer of Sanderson Farms, Inc. “While market prices for boneless breast meat produced at our plants that process larger birds for food service customers remained under pressure during the first two months of the quarter, we saw more favorable trends in January and February. Retail demand remains strong and, as a result of both improved pricing and product mix, average prices for tray pack products sold to retail grocery store customers were higher when compared with the same period a year ago, and prices continue to reflect a good supply and demand balance in that market. Demand and prices for jumbo wings strengthened seasonally during the quarter, and market prices averaged above last year’s first quarter.
“Our employees are our most important asset, and our operations have continued to run efficiently and safely despite the ongoing challenges created by the COVID-19 pandemic thanks to their heroic efforts. Our employees have allowed us to continue to produce and deliver poultry products to our customers and contribute to a stable food supply.
“In addition to the challenges created by the COVID-19 pandemic, our employees, managers, contractors and independent contract poultry producers in Texas, Louisiana, and Mississippi have navigated an historic weather event over the past two weeks. Because of the record low temperatures, power failures, snow and ice, and hazardous road conditions, we were unable to operate our processing plants, deliver day old chicks to broiler farms on our regular schedule, pick up hatching eggs from breeder farms and place those eggs in our hatcheries, or manufacture and deliver chicken feed to the farms of our independent contract poultry producers. Fortunately, none of our facilities were damaged, our employees remained safe, and we returned to normal operations at all our facilities on February 22, 2021, except the Hazlehurst, Mississippi, processing plant, which resumed normal operations on February 23, 2021. However, our live production supply chain experienced interruptions and losses similar to a hurricane. We lost 455,000 broilers in houses that lost power, water or feed, or had roofs collapse under the weight of snow and ice. We were forced to humanely euthanize 545,000 chicks in our Texas hatcheries and were unable to pick up and place 703,000 hatching eggs in our hatcheries. We deeply regret the losses incurred due to extraordinary circumstances beyond our control or our independent contract poultry producers’ control.
“As a result of these interruptions, we will have approximately 1.6 million fewer chickens to process at our Mississippi, Louisiana, and Texas processing plants over the next ten weeks. These losses represent just under one percent of the head we expected to process during our second fiscal quarter. In addition, breeder and broiler chickens exposed to extreme temperatures typically suffer some performance losses over their lives. While the Company is insured for these catastrophic events, it retains $2.75 million of the risk and is subject to a seven-day deductible under its business interruption coverage. We will work with our insurance partners over the next few months to quantify these losses. Our primary focus as we managed through this weather event was to ensure the safety of our employees, contractors and independent contract producers, and the health and wellbeing of the animals under our care. I am grateful for everyone associated with Sanderson Farms for their resourcefulness and sheer determination. Working with our public utility and fuel suppliers, local authorities and emergency management authorities, our employees and contract poultry producers enabled the Company to mitigate what could have been a much more significant impact on our operations and the animals under our care.”
For earnings history and earnings-related data on Sanderson Farms (SAFM) click here.
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