Frozen chicken processing company Sanderson Farms, Inc. (SAFM) Tuesday posted a profit for the third quarter, compared with a loss last year, helped by higher revenues coupled with increased margins on lower feed costs. Both earnings and revenues for the quarter surpassed analysts' estimates.
Third-quarter net income was $43.05 million or $2.09 per share compared with a net loss of $3.64 million or $0.18 per share for the third quarter of 2008.
Net income included a charge of $1.7 million or $0.09 per share paid for the settlement of the company's donning and doffing litigation.
On an average, eight analysts polled by Thomson Reuters expected the company to earn $1.81 per share. Analysts' estimates typically exclude special items.
Net sales increased to $504.85 million from $466.91 million for the same period a year ago. Analysts had a consensus revenue estimate of $475.98 million.
Chairman Joe Sanderson said, "Our results for the third quarter of fiscal 2009 reflect much improved market conditions for our Company and our industry when compared to last year. The combination of lower costs and improved market conditions resulted in much higher margins for the quarter, and we are pleased with our performance."
Third-quarter prices were higher by around 2.3% as shown by an average of the Georgia dock price for whole chickens compared with the same period in 2008. Boneless breast meat prices averaged 3.4% higher, while bulk leg quarters' averaged around 4.9% lower than the prior-year period.
Sanderson said the cash market prices for corn and soybean meal delivered to the company decreased 26.7% and 1.2%, respectively, compared with the third quarter of 2008. "Market prices for both corn and soybean meal were lower than last year's third quarter, and we will continue to benefit from lower feed grain costs during our fourth fiscal quarter compared to last year," Sanderson added.
Nine-month net income increased to $62.51 million or $3.04 per share from $8.79 million or $0.43 per share for the first nine months of fiscal 2008. Net sales rose to $1.32 billion from $1.26 billion last year.
Monday, SAFM closed regular trading session at $40.93 on the Nasdaq.
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