Sanderson highlights capital expenditures for FY 2018

The chief financial officer (CFO) of Sanderson Farms told investors on December 14 that the company is budgeting about $344.4 million in capital expenditures for construction, maintenance and special projects.

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(Alexander Kalina, Freeimages.com)
(Alexander Kalina, Freeimages.com)

The chief financial officer (CFO) of Sanderson Farms told investors on December 14 that the company is budgeting about $344.4 million in capital expenditures for construction, maintenance and special projects during fiscal year 2018.

Sanderson Farms CFO Mike Cockrell, speaking during a conference call in which the third largest poultry company in the United States released its financial results for the 2017 fiscal year, which ended on October 31.

Investing in new poultry complex

Of that $344.4 million, about $178 million will be spent on the new complex under construction in Tyler, Texas.

When Sanderson Farms announced that it would be constructing the Tyler complex, it estimated it would represent an investment of about $200 million.

The new complex will include a new feed mill, hatchery, poultry processing plant and waste water treatment facility. The plant will have the capacity to process 1.25 million birds per week for retail chill pack customers. At full capacity, the complex will employ approximately 1,700 people, will require 80 contract growers, and will be equipped to process and sell approximately 375 million pounds of dressed poultry meat annually at full production.

Expansion of prepared chicken plant

The company also intends to invest about $4.2 million to complete the expansion of its prepared chicken plant in Flowood, Mississippi.

Cockrell, in an-email to WATT Global Media, said the Flowood plant reached full capacity several years ago on the fry line. Sanderson Farms is adding an additional fry line at the plant, which should increase sales from the plant by about 40 percent.

The Flowood plant expansion project was started in fiscal year in 2017, and will be completed by mid-January 2018.  

Other upgrades and investments

Cockrell told investors that aside from the two previously mentioned plants, about $37.3 million is being budgeted for “various equipment upgrades of several of our processing plants. The biggest equipment need is new eviscerating equipment.

“We build new plants all the time. We kind of understand what type of equipment is most efficient and works well, and we find an opportunity, we will go back in to our older plants, and make sure they have the same quality of assets as our new plants do,” Cockrell explained.

Sanderson Farms also expects to spend about $32.2 million on new aircraft.

Those expenditures will be funded using cash on hand, internally generated working capital, cash flows from operations, and as needed, liquidity under the credit revolver.

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