Sanderson Farms stock is at record high prices, closing May 13 at $64 a share. Mike Cockrell, chief financial officer of Sanderson Farms, told the BMO Capital Markets Conference May 14 that while the shareholder who sold his stock at $64 a share has made money, Sanderson Farms has an obligation to improve profits for the new buyers that paid $64 a share.
In 2010, the company earned $6 per share, Cockrell said. Since then, Sanderson Farms has added 16 percent to its capacity. The Palestine, Texas, plant, when completed, will add another 15 percent, Cockrell estimated.
"We're putting ourselves in a position to reward our shareholders with more money, even if the margins don't allow us to earn the same per pound than we did in the past," he said. "We feel good about our strategy and about continuing to add more pounds to be able to leverage in the market."
Palestine project still on hold
While the company has announced its plans to build a big bird-deboning complex in Palestine, construction dates have not been announced. Joe Sanderson Jr., CEO of Sanderson Farms, said the company does not want to move hastily with the new plant. Instead, they are waiting for feed prices to drop as supplies are replenished. "That plant is on hold until we see a crop made, which we certainly hope we will see this summer," Sanderson said, also during the BMO conference.
The complex, when completed, will consist of a feed mill, hatchery, poultry processing plant and wastewater treatment facility.
Many of the early stages of the project have already been completed. In April, the company was awarded tax abatement for the value of improvements to the property from the Palestine City Council and the Anderson County Commission in Texas. The company also scheduled a meeting with Palestine area landowners with an interest in providing poultry houses to grow birds for the supply. "Palestine is the next plant, but we haven't announced what's next," Cockrell said during the conference.
Still eyeing North Carolina
Cockrell said Sanderson Farms' hopes of constructing a new processing complex in North Carolina did not end in 2012 when the company abandoned plans to build in Nash County. "We want to go back to North Carolina," said Cockrell. "We had a site in North Carolina that we had to walk away from, but we'll be back there."
He said that with much infrastructure already in place in North Carolina, building in that state is viable. "It's no secret that we built that feed mill in North Carolina for two plants, so we have a way to continue to grow the company," Cockrell said. "That's our plan, when our balance sheet allows us to do that, and when market conditions are such that we think it's prudent."