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2nd Quarter Ending April 30th
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2021
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2020
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Difference (%)
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Sales:
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$1,133,880
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$844,711
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+34.2
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Gross profit:
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$191,944
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$12,428
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+1,444
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Operating income:
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$127,699
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$(43,786)
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+391.6
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Pre-tax Income
Net Income
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$127,015
$96,911
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$(45,566)
$6,1181
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+378.8
+1,484
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Diluted earnings per share:
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$4.34
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$0.28
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+1,454
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Gross Margin (%)
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16.9
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1.5
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+1,027
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Operating Margin (%)
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11.3
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-5.2
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+317.3
|
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Profit Margin (%)
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8.5
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0.7
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+1,114
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Long-term Debt and leases:
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$74,139
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$51,804
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+43.1
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12 Months Trailing:
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Return on Assets (%)
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3.3
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Return on Equity (%)
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5.5
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Operating Margin (%)
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2.7
|
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Profit Margin (%)
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2.1
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Total Assets
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$2,003,196
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$1,849,031
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+8.3
|
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Market Capitalization
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$3,734,000
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Note 1. $51,684 Tax Benefit
52-Week Range in Share Price: $108.57 to $177.48
Market Close May 26th pre-release $166.65. Noon May 27th $167.20
Forward P/E 23.0 Beta 0.7
 In commenting on Q2 results, Joe F. Sanderson, Jr., Chairman and CEO stated, “Improved poultry markets more than offset feed grain costs that were significantly higher compared to last year’s second fiscal quarter, resulting in increased operating margins. The improvement in the domestic poultry markets was driven largely by increased demand from food service customers, as U.S. consumers slowly returned to restaurants and several quick serve restaurant chains featured chicken sandwiches on their menus. In addition, export demand also improved during the quarter due to higher crude oil prices, improved liquidity as a result of currency valuations and some relief from COVID-19-related restrictions.”
According to Sanderson, overall realized prices for chicken products sold to retail grocery store customers increased 6.2 cents per pound during the second fiscal quarter of 2021 compared to the same period of last year. Volumes reflected strong demand, as many consumers have continued to prepare more meals at home instead of dining out. In addition, commodity quoted markets for products from the Company’s food service plants were significantly higher across the board.
In discussing unit revenue and feed cost Sanderson noted:-“compared with the second fiscal quarter of 2020, quoted boneless breast meat market prices were approximately 60.4 percent higher, the average quoted market price for bulk leg quarters increased approximately 12.3 percent, and jumbo wing quoted market prices were higher by 88.9 percent. The Company’s average feed costs per pound of poultry products processed increased by 26.6 percent when compared with the second quarter of fiscal 2020, while prices paid for corn and soybean meal, the Company’s primary feed ingredients, increased 39.7 percent and 40.0 percent, respectively, compared with the second quarter of fiscal 2020.
In projecting future trends Sanderson commented “looking ahead to the second half of the fiscal year, we continue to expect prices paid for feed grain to be significantly higher for the year compared to fiscal 2020. With respect to chicken production numbers, the USDA reports that weekly broiler egg sets are well ahead of 2020 numbers that were negatively affected by COVID-19. However, certain live production challenges, including lower than historical average hatch rates and broiler livability, have resulted in fewer poultry pounds than expected given the size of the layer flock”
Sanderson Farms expects total production during Q3 and Q4 of 2021 to be down 0.6 percent and 2.3 percent, respectively, compared to the same quarters of fiscal 2020. During April 2020, Sanderson Farms reduced production of larger birds for food service customers by five percent completing the reduction in July 2020. Plants will begin to return to full production starting in June 2021, and most plants will be back to full production by early September.
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