In a press release dated August 26th Sanderson Farms Inc. (SAFM) announced results for the 3rd Quarter of FY 2021 ending July 31 st.
The following table summarizes the results for the period compared with the values for the corresponding quarter of the previous fiscal year (Values expressed as US$ x 1,000 except EPS)
|
3rd Quarter Ending July 31st
|
2021
|
2020
|
Difference (%)
|
|
Sales:
|
$1,352,756
|
$956,455
|
+41.4
|
|
Gross profit:
|
$302,942
|
$90,458
|
+234.9
|
|
Operating income:
|
$215,224
|
$39,868
|
+439.8
|
|
Pre-tax Income
Net Income
|
$214,604
$164,763
|
$38,815
$32,810
|
+452.9
+402.2
|
|
Diluted earnings per share:
|
$7.38
|
$1.48
|
398.6
|
|
Gross Margin (%)
|
22.3
|
9.5
|
+134.7
|
|
Operating Margin (%)
|
15.9
|
4.2
|
+278.6
|
|
Profit Margin (%)
|
12.2
|
3.4
|
+258.8
|
|
Long-term Debt and Lease Obligations:
|
$18,235
|
$51,804
|
-64.8
|
|
12 Months Trailing:
|
|
|
|
|
Return on Assets (%)
|
13.4
|
|
|
|
Return on Equity (%)
|
19.5
|
|
|
|
Operating Margin (%)
|
10.0
|
|
|
|
Profit Margin (%)
|
6.9
|
|
|
|
Total Assets
|
$2,156,220
|
$1,849,031
|
+16.6
|
|
Market Capitalization
|
$4,328,000
|
|
|
52-Week Range in Share Price: $112.73 to $197.25 50-day Moving average $187.75
Market Close, Wednesday 26th August pre-release, $192.40. Close Thursday 27th $193.25
Forward P/E 16.7
On August 9th third-ranked U.S. broiler producer by volume, Sanderson Farms announced their acquisition by a consortium comprising Continental Grain and Cargill Inc.
In commenting on results Joe F. Sanderson, Jr., Chairman and CEO stated, “Our financial results for the third quarter of fiscal 2021 reflect significantly improved demand and prices for products sold to food service customers, continued strong demand for products sold to retail grocery store customers, reduced volumes due to planned egg set reductions that we implemented during the early stages of the COVID-19 pandemic, and higher costs of feed grains”. He continued “Our results also reflect superior execution in all areas of our business, including live production, processing and sales. We benefitted from improved market conditions for the products we sell to food service customers due to the phased reopening of more food service establishments across the nation. While food service customer demand has improved with more people dining out, consumers also continue to prepare meals at home.
According to Sanderson, overall realized prices for chicken products sold to retail grocery store customers remained strong during the third quarter, and volumes reflected the strong demand. In addition, the quoted commodity markets for products sold to food service customers were higher across the board, reflecting the improved demand from food service customers. The average quoted market price for boneless breast meat was 71.4 percent higher during the quarter compared with the third quarter of fiscal 2020, the average market price for bulk leg quarters increased by 66.3 percent, the average market price for chicken breast tenders increased by 107.3 percent and the average market price for jumbo wings increased by 107.0 percent.
Sanderson concluded, “With respect to chicken production levels, the USDA’s latest estimates forecast United States broiler production during calendar year 2021 to increase less than one percent compared to calendar year 2020. While egg sets have returned to pre-pandemic levels, lower hatchability rates have resulted in fewer chicks placed than egg set activity would suggest. We estimate our total production during the fourth quarter of fiscal 2021 will be lower by 3.1 percent compared to the fourth quarter of fiscal 2020. If that projection holds true, our total fiscal 2021 production will be 0.6 percent lower than our fiscal 2020 production.”