Sanderson Farms CEO, Joe Frank Sanderson, Jr., is savoring a successful fiscal 2014, but as the Christmas stockings are hung at the nation’s third largest broiler company in Laurel, Mississippi, Mr. Sanderson is still checking a few things on his corporate “to-do” list.
Just call Sanderson exacting, because the company’s success in 2014 was considerable:
• Net income for the year totaled $249.0 million, or $10.80 per share, compared with net income of $130.6 million, or $5.68 per share, for 2013.
• The profitability during fiscal 2014 allowed the company to fund construction of a new broiler complex in Palestine, Texas.
• That profitability allowed the company reduce outstanding debt, strengthen the balance sheet, and reward shareholders with a special dividend and increase the regular quarterly dividend rate.
Money "left on the table" in 2014
It was clear in the company’s fourth-quarter conference call, however, Sanderson isn’t allowing company executives to rest on 2014’s results. He thanked growers and employees for their efforts in 2014 – and revealed that managers had earned bonuses based on earnings per share and company performance based on industry benchmarks. But, he punctuated those remarks with reference to top management’s “lively discussion” about “money left on the table in 2014.”
“I look forward to getting that [money] back in 2015,” Sanderson said.
“No matter the market conditions, we will continue to focus on those things we can control, and manage the others as best we can,” he continued. “That process started two weeks ago with the lively discussion among our top managers on where we left money on the table in 2014.”
Sanderson’s operational goals for 2015
It did not take long for analysts on the call to ask for details about those discussions.
“It’s something we do every year,” Sanderson replied to questioning. “We identify things in production, processing and sales operations in which we did not perform in the top 25 percent in every category. We identify and quantify how much money is involved and those are our operational goals for 2015.”
Sanderson singled out an “opportunity” not executed on in 2014. “This year we had a problem with our breeder males and that affected performance for about four months, and that was on our list. We have never had a hatch down like that,” he said.
Things to watch for in 2015
Sanderson identified three things being closely watched as the new fiscal year begins:
• The quality and quantity of the South American corn and soybean crops is the next event that could impact feed grain fundamentals and production costs. “As of today, the corn and soybean crops of Brazil and the rest of South America are progressing nicely,” he reported.
• Planting intentions of U.S. farmers are being closely monitored. More acres of soybeans and fewer acres of corn may be planted in 2015.
• Sanderson projects chicken production numbers will be up 2.5 percent to 3.5 percent in 2015. “Although healthy, more optimistic and fully employed American consumers could easily absorb that increase in production, we won’t know the impact until we get there,” he said.
“While today’s grain markets suggest that we will enjoy lower costs during 2015, whether and to what extent we give back some of those lower costs to the chicken market is a question we will have to wait to answer,” Sanderson said.