Sanderson Farms, Inc. (NASDAQ:SAFM) Q2 2018 Earnings Conference Call Transcript

May 24, 2018 • 11:00 am ET

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Sanderson Farms, Inc. (NASDAQ:SAFM) Q2 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good day, ladies and gentlemen, and welcome to Sanderson Farms Incorporated Second Quarter Fiscal 2018 Conference Call. Today's call is being recorded.

At this time for opening remarks and introductions, I would like to turn the conference over to Mr. Joe Sanderson. Please go ahead, sir.

Executive
Joe F. Sanderson

Thank you. Good morning and welcome to Sanderson Farms second quarter conference call. We published second quarter results this morning and have seen net income of $41.9 million or $1.84 per share for our second fiscal quarter of 2018. This compares to net income of $67 million or $2.95 per share during last year's second quarter.

I'll begin the call with some general observations, but before I do I will ask Mike to give the cautionary statement regarding forward-looking statements.

Executive
D. Michael Cockrell

Thank you, Joe, and good morning, everyone.

This morning's call will contain forward-looking statements about the business, financial condition and prospects of the Company. The actual performance of the Company could differ materially from that indicated by the forward-looking statements because of various risks and uncertainties. These risks and uncertainties are described in our most recent annual report on Form 10-K and in the Company's quarterly report on Form 10-Q filed this morning with the SEC in connection with our second fiscal quarter. And in our press release published this morning. These documents are all available on our website at sandersonfarms.com.

Please do not place undue reliance on forward-looking made this morning. Each such -- each statement speaks only as of today and we undertake no obligation to update or revise our forward-looking statements. External factors affecting our business, such as feed grain cost, market prices for poultry meat, and the health of the economy among others remain volatile and our view today may be very different from our view a few days from now.

Executive
Joe F. Sanderson

Thank you, Mike. Lower feed cost per pound processed, good demand for chicken at retail grocery stores, lower market prices for white meat produced at our plants for food service customers, higher volumes and steady export demand drove our results during our second fiscal quarter.

Our sales volumes of fresh and frozen chicken was up 3.1% compared to last spring's volume and reflects new production in St. Pauls. Our feed cost per pound of fresh chicken processed was down 3.3% during the quarter compared to last year's second quarter, while our average net sales price per pound chicken sold was down 1.7%.

Weak food service demand offset good retail grocery store demand. Market prices for jumbo wings, boneless breast meat and tenders produced at our food service plant were lower. While trade issues and politics continue to impact export markets, export demand was steady this spring. Leg quarter market prices moved higher as we move through the quarter and leg quarter inventories remain manageable. However, our short-term outlook for the export market is less constructive.

On Sunday, the California Department of Food and Agriculture confirmed the presence of virulent Newcastle disease in a small flock of backyard chickens in Los