Sanderson Farms Inc. Reports Operating Results (10-K)
Sanderson Farms Inc. has a market cap of $965.9 million; its shares were traded at around $42.48 with a P/E ratio of 8.7 and P/S ratio of 0.5. The dividend yield of Sanderson Farms Inc. stocks is 1.6%.SAFM is in the portfolios of Chuck Royce of Royce& Associates, Arnold Schneider of Schneider Capital Management, Paul Tudor Jones of The Tudor Group, David Dreman of Dreman Value Management, Jim Simons of Renaissance Technologies LLC, Jeremy Grantham of GMO LLC.
Highlight of Business Operations: Sanderson Farms announced plans on April 24, 2008, to invest approximately $126.5 million for construction of a new feed mill, poultry processing plant and a hatchery on separate sites in Kinston and Lenoir County, North Carolina. On June 26, 2008, the Company announced its decision to postpone the project due to market conditions and escalating grain prices. On July 23, 2009, the Company announced plans to proceed with the construction and start-up of the Companys Kinston, North Carolina, poultry complex with an expected budget of approximately $121.4 million. The Kinston facilities comprise a state-of-the-art poultry complex with the capacity to process 1.25 million chickens per week for the retail chill pack market. At full capacity, the complex will employ approximately 1,500 people, will require 130 contract growers, and will be equipped to process and sell 6.7 million pounds per week of dressed poultry meat. Initial operation of the new complex will begin during January 2011.
Capital expenditures for fiscal 2010 were funded by working capital, cash generated by our operations and proceeds from the April 7, 2010 secondary offering of the Companys common stock. On May 1, 2008, the Company entered into a new revolving credit facility to, among other things, increase the available credit to $300.0 million, increase the capital expenditure limits to allow construction of the Kinston, North Carolina facility, and to change the covenant requiring a maximum debt to total capitalization ratio to 50% during fiscal 2008, 55% during fiscal 2009 and not to exceed 50% for fiscal 2010 and thereafter. On December 13, 2010, the Company entered into an amendment to the facility to increase the capital expenditure limitation to $55 million during fiscal 2011, 2012 and 2013, and to permit up to $115 million in capital expenditures to be spent at any time during the term of the agreement on the potential second new poultry complex in North Carolina. The credit remains unsecured and, unless extended, expires May 1, 2013. As of October 31, 2010, the Company was in compliance with all covenants, had $8.4 million outstanding letters of credit under the facility, and had $291.6 million available to borrow under the revolving credit facility.
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