safm-20210731

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

___________________________

FORM 10-Q

___________________________

(MARK ONE)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 31, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 1-14977

___________________________

Sanderson Farms, Inc.

(Exact name of registrant as specified in its charter)

___________________________


Mississippi			64-0615843
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

127 Flynt Road, Laurel, Mississippi 39443

(Address of principal executive offices) (Zip Code)

(601) 649-4030

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report.)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $1 par value per share	SAFM	NASDAQ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS

DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. Common Stock, $1 Par Value Per Share: 22,328,785 shares outstanding as of August 25, 2021.

Table of Contents

TABLE OF CONTENTS

SANDERSON FARMS, INC. AND SUBSIDIARIES


PART I. FINANCIAL INFORMATION		3
Item 1.	Financial Statements (Unaudited)	3
	Condensed consolidated balance sheets—July 3 1 , 2021 and October 31, 2020	3
	Condensed consolidated statements of operations—Three and nine months ended July 3 1 , 2021 and 2020	4
	Condensed consolidated statements of stockholders' equity—Three and nine months ended July 31 , 2021 and 2020	5
	Condensed consolidated statements of cash flows—Nine months ended July 31 , 2021 and 2020	6
	Notes to condensed consolidated financial statements—July 3 1 , 2021	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	34
PART II. OTHER INFORMATION		34
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 6.	Exhibits	39
INDEX TO EXHIBITS		40
SIGNATURES		41

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

SANDERSON FARMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except number of shares)


	July 31, 2021		October 31, 2020
	(Unaudited)		(Note 1)
Assets
Current assets:
Cash and cash equivalents	$	245,429	$	49,061
Accounts receivable, net	211,016		147,546
Receivable from insurance companies	4,138		—
Inventories	364,262		290,007
Refundable income taxes	2,986		33,977
Prepaid expenses and other current assets	62,924		57,544
Total current assets	890,755		578,135
Property, plant and equipment, net	1,227,772		1,224,746
Right of use assets	30,849		40,785
Other assets	6,844		5,365
Total assets	$	2,156,220	$	1,849,031
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	141,367	$	111,463
Dividends payable	9,825		—
Accrued expenses	139,798		98,663
Lease liabilities	12,686		13,981


Total current liabilities	303,676		224,107
Long-term debt	—		25,000
Claims payable and other liabilities	13,082		12,175
Deferred income taxes	149,476		141,672
Long-term lease liabilities	18,235		26,804
Commitments and contingencies
Stockholders’ equity:
Preferred Stock:
Series A Junior Participating Preferred Stock, $100 par value: authorized 500,000 shares, none issued
Par value to be determined by the Board of Directors: authorized 4,500,000 shares; none issued
Common Stock, $1 par value: authorized 100,000,000 shares; issued and outstanding shares—22,329,135 and 22,251,071 at July 31, 2021 and October 31, 2020, respectively	22,329		22,251
Paid-in capital	101,142		90,420
Retained earnings	1,548,280		1,306,602
Total stockholders’ equity	1,671,751		1,419,273
Total liabilities and stockholders’ equity	$	2,156,220	$	1,849,031

See notes to condensed consolidated financial statements.

Table of Contents

SANDERSON FARMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(In thousands, except per share amounts)


	Three Months Ended July 31,				Nine Months Ended July 31,
	2021		2020		2021		2020
Net sales	$	1,352,756	$	956,455	$	3,395,942	$	2,624,244
Cost and expenses:
Cost of sales	1,049,814		865,997		2,831,072		2,521,804

Selling, general and administrative	87,718		50,590		208,562		156,289
	1,137,532		916,587		3,039,634		2,678,093
Operating income (loss)	215,224		39,868		356,308		(53,849)
Other income (expense):
Interest income	—		466		—		466
Interest expense	(623)		(1,521)		(1,958)		(4,492)
Other	3		2		19		7
	(620)		(1,053)		(1,939)		(4,019)
Income (loss) before income taxes	214,604		38,815		354,369		(57,868)
Income tax expense (benefit)	49,841		6,005		83,217		(58,220)
Net income	$	164,763	$	32,810	$	271,152	$	352
Earnings per share:
Basic	$	7.38	$	1.48	$	12.14	$	0.02
Diluted	$	7.38	$	1.48	$	12.14	$	0.02
Dividends per share	$	0.44	$	0.32	$	1.32	$	0.96

See notes to condensed consolidated financial statements.

Table of Contents

SANDERSON FARMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)

(In thousands, except shares and per share amounts)


Fiscal Year 2020	Common Stock			Paid-In Capital		Retained Earnings		Total Stockholders’ Equity
	Shares	Amount
Balance at October 31, 2019	22,203,920	$	22,204	$	86,010	$	1,309,461	$	1,417,675
Net loss - first quarter 2020	—	—		—		(38,576)		(38,576)
Cash dividends ($0.32 per share)	—	—		—		(7,113)		(7,113)
Stock compensation plan transactions	25,292	25		(4,721)		—		(4,696)
Amortization of unearned compensation	—	—		2,082		—		2,082
Balance at January 31, 2020	22,229,212	$	22,229	$	83,371	$	1,263,772	$	1,369,372
Net income - second quarter 2020	—	—		—		6,118		6,118
Cash dividends ($0.32 per share)	—	—		—		(7,117)		(7,117)
Stock compensation plan transactions	10,362	10		1,099		—		1,109
Amortization of unearned compensation	—	—		1,960		—		1,960
Balance at April 30, 2020	22,239,574	$	22,239	$	86,430	$	1,262,773	$	1,371,442
Net income - third quarter 2020	—	—		—		32,810		32,810
Cash dividends ($0.32 per share)	—	—		—		(7,117)		(7,117)
Stock compensation plan transactions	399	1		152		—		153
Amortization of unearned compensation	—	—		2,000		—		2,000
Balance at July 31, 2020	22,239,973	$	22,240	$	88,582	$	1,288,466	$	1,399,288


Fiscal Year 2021	Common Stock			Paid-In Capital		Retained Earnings		Total Stockholders’ Equity
	Shares	Amount
Balance at October 31, 2020	22,251,071	$	22,251	$	90,420	$	1,306,602	$	1,419,273
Net income - first quarter 2021	—	—		—		9,478		9,478
Cash dividends ($0.44 per share)	—	—		—		(9,824)		(9,824)
Stock compensation plan transactions	74,564	75		(1,667)		—		(1,592)
Amortization of unearned compensation	—	—		2,147		—		2,147
Balance at January 31, 2021	22,325,635	$	22,326	$	90,900	$	1,306,256	$	1,419,482
Net income - second quarter 2021	—	—		—		96,911		96,911
Cash dividends ($0.44 per share)	—	—		—		(9,825)		(9,825)
Stock compensation plan transactions	6,675	6		1,514		—		1,520
Amortization of unearned compensation	—	—		2,202		—		2,202
Balance at April 30, 2021	22,332,310	$	22,332	$	94,616	$	1,393,342	$	1,510,290
Net income - third quarter 2021	—	—		—		164,763		164,763
Cash dividends ($0.44 per share)	—	—		—		(9,825)		(9,825)
Stock compensation plan transactions	(3,175)	(3)		216

SEC Form 10-Q filed by Sanderson Farms, Inc.