My hat goes off to Sanderson Farms, which during the first half of fiscal year 2016 accomplished something so many companies – or families – strive to do.
“We ended the quarter totally debt-free,” Joe Sanderson Jr., CEO and chairman of the third largest broiler company in the United States said during a quarterly earnings call on May 26.
That is quite an accomplishment, especially considering all the growth projects the company had undertaken over the past quarter of a century. Then when you think about fluctuating feed costs, trade barriers that have been implemented over fears of avian influenza in the United States, and a recession that has left still many families limiting their food budgets, it becomes even more impressive.
Eliminating debt a 25-year process
Sanderson revealed on the call that the last time the company’s balance sheet was essentially debt-free was in 1991, before it began the execution of the growth plan it initiated shortly after becoming a publicly traded company.
“Since that time we have invested $1.5 billion in our business, constructed six poultry complexes, have a seventh under construction, and plans are ongoing to build an eighth,” said Sanderson.
“We have grown our sales from $186 million to $2.8 billion and grown our poultry processing capacity from 280 million pounds to 3.8 billion. The growth plan we put in place in 1991 had nothing to do with size, but everything to do with creating value for our shareholders who placed confidence in the company with their investment. Our stock price in 1992 adjusted for stock dividends, was $5, and today it trades for $90.”
Achievement was not a goal
While the management team at Sanderson Farms has plenty to be proud of in becoming debt-free, Sanderson said he is more concerned in continuing to create shareholder value.
“Becoming debt-free was not a goal, but maintaining a strong balance sheet was and will remain a priority. We know we have an obligation for our balance sheet to work for our shareholders, and we are planning diligently to do just that,” he said.
Sanderson Farms ended its second quarter of fiscal year 2016 with a net income of $47.6 million.