Sanderson Farms, Inc. (NASDAQ:SAFM) Q1 2016 Earnings Conference Call - Final Transcript

Feb 25, 2016 • 11:00 am ET


Sanderson Farms, Inc. (NASDAQ:SAFM) Q1 2016 Earnings Conference Call - Final Transcript


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Mike Cockrell

deferred income tax liability was $81 million, and that compares to $52.2 million at October 31, 2015, an increase of $28.8 million. The increase in both the effective tax rate and the long term deferred tax liability is primarily attributable to the company's decision to take advantage of legislation enacted during the first quarter of fiscal 2016 that allowed for bonus depreciation to be taken on qualifying assets placed in service during the 2015 calendar year.

This legislation and the company's election to accelerate depreciation on those items resulted in a favorable and tacked on the company's first quarter income tax receivable, but had an unfavorable and effect on the tax deductions that are based on levels of pre tax income, most especially the Internal Revenue Code Section 199, domestic production activities deduction. Had the company not elected to take advantage of this legislation, our effective tax rate would have been approximately 35.1%.

The higher tax rate cost approximately $2 million during the quarter $0.09 per share after income tax. The company expects its effective rate for the remainder of the fiscal year to be approximately 35.1%. And as I mentioned earlier, we did collect that $34 million refund in February after the quarter ended.

With that, Nicky our prepared remarks are over and you can open the line for questions.